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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
____________ TO ____________
Commission file number: 1-13107
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REPUBLIC INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 73-1105145
(State of Incorporation) (I.R.S. Employer Identification No.)
110 S.E. 6TH STREET 33301
FORT LAUDERDALE, FLORIDA (Zip Code)
(Address of Principal Executive Offices)
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Registrant's telephone number, including area code: (954) 769-7200
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class Name of Each Exchange on which Registered
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COMMON STOCK, PAR VALUE $.01 PER SHARE THE NEW YORK STOCK EXCHANGE
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Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 25, 1998, the registrant had 447,082,516 shares of Common Stock
outstanding and, at such date, the aggregate market value of the shares of
Common Stock held by non-affiliates of the registrant was approximately
$10,409,508,000.
DOCUMENTS INCORPORATED BY REFERENCE
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Part III Portions of the Registrant's Proxy Statement relative to the
1998 Annual Meeting of Stockholders.
Part IV Portions of previously filed reports and registration
statements.
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INDEX
TO FORM 10-K
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PAGE NUMBER
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Part I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 21
Item 3. Legal and Administrative Proceedings........................ 29
Item 4. Submission of Matters to a Vote of Security Holders......... 29
Part II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters....................................... 30
Item 6. Selected Financial Data..................................... 31
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (including Item 7A)............. 32
Item 8. Financial Statements and Supplementary Data................. 41
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 67
Part III
Item 10. Directors and Executive Officers of the Registrant.......... 68
Item 11. Executive Compensation...................................... 68
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 68
Item 13. Certain Relationships and Related Transactions.............. 68
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 69
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PART I
ITEM 1. BUSINESS
INTRODUCTION
Republic Industries, Inc. (the "Company") operates subsidiaries in the
automotive retail, automotive rental, and solid waste services industries. The
Company owns the nation's largest chain of franchised automotive dealerships and
is building a chain of used vehicle megastores that it operates under the
AutoNation USA(SM) brand name. The Company also owns National Car Rental System,
Inc. ("National"), Alamo Rent-A-Car, Inc. ("Alamo"), and several other vehicle
rental companies. The Company also owns one of the largest solid waste services
businesses in the United States.
The Company's automotive retail business consists of the sale, lease and
financing of new and used vehicles and related automotive services and products.
According to Automotive News, an industry trade publication, the Company is the
single largest automotive retailer in the United States as measured by total
annual revenue. The Company recently organized its retail operations into ten
regional districts which cover 24 major domestic markets. The Company has
acquired or contracted to acquire over 260 franchised automotive dealerships
which own and operate franchises granted by the manufacturers of approximately
36 different brands of cars and light trucks. The Company also operates 26
AutoNation USA used vehicle megastores.
The Company's automotive rental business primarily rents vehicles on a
daily or weekly basis to leisure and business travelers principally from
on-airport or near airport locations through Alamo and National. The Company's
automotive rental business operates in all 50 states in the United States, and
in Canada, the Caribbean, Latin America, the Pacific, Australia, Europe, Africa
and the Middle East. In 1997, the Company operated an average aggregate domestic
rental fleet of approximately 310,000 vehicles. According to Auto Rental News,
an industry trade publication, the Company has the largest combined automotive
rental fleet in the United States.
The Company's solid waste services business provides integrated solid waste
collection and disposal services. The Company provides solid waste collection
services for municipal, residential, commercial and industrial customers through
95 collection companies in 23 states. The Company also owns or operates 54
transfer stations, 24 materials recycling facilities, and 42 solid waste
landfills. These landfills have an aggregate of approximately 5,468 permitted
acres with a total available permitted disposal capacity of approximately 1.1
billion in-place cubic yards as of December 31, 1997.
The Company was incorporated in Oklahoma in 1980 and reincorporated in
Delaware in 1991. The Company's common stock, par value $.01 per share ("Common
Stock"), is listed on The New York Stock Exchange ("NYSE") under the symbol
"RII." For information concerning financial condition, results of operations,
related financial data and business segment information, and regarding business
combinations, see "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS." For certain risk factors related to the
Company's business, operations and financial performance, see "-- Risk Factors."
BUSINESS STRATEGY
The Company's business strategy is to improve stockholder value by (i)
capitalizing on its market leading positions in its existing lines of business
to continue to generate high levels of internal growth, (ii) enhancing and
broadening its operations by making selective acquisitions of businesses and
(iii) continuing to integrate and consolidate operations in its existing lines
of business to become a low cost provider in each industry, and to increase
operating margins and profitability. For certain risks involved with the
Company's business strategy, see "-- Risk Factors."
In building its automotive operations, the Company's goal is to become the
premier national provider for consumers' automotive needs. According to the
National Automotive Dealers Association ("NADA") and other sources, the
automotive industry as a consumer market generates over one trillion dollars in
annual revenue. In 1997, this market included retail sales of new vehicles
(approximately $330 billion), retail sales of
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used vehicles (approximately $370 billion), retail sales of vehicle parts and
maintenance/repair services (approximately $189 billion) and rental of vehicles
(approximately $15 billion). In addition, consumers financed approximately $459
billion of vehicles retailed in 1997. Notwithstanding the tremendous size of
this market and of each of its individual components, the Company believes that
the automotive consumer market generally suffers from high degrees of
inefficiency, fragmentation and consumer dissatisfaction.
At the end of 1997, NADA and industry analysts estimated that there were
more than 22,000 franchised automotive dealerships and 56,000 independent used
vehicle retailers in operation in the United States. Vehicles, both new and
used, are being retailed through a decreasing number of outlets. Excluding the
relatively new brands of vehicles (Acura, Hyundai, Infiniti, Isuzu, Kia, Lexus
and Saturn) being distributed in the United States, since 1970 the number of
franchised automotive dealerships operating in the United States has decreased
by more than 40%. Although there has been rapid consolidation of the automotive
retailing industry, the Company believes there is still room for significant
additional consolidation. This is due to a number of factors including, but not
limited to, increased consumer information, aging dealership principals,
declining new vehicle gross margins, high-cost distribution systems, vehicle
manufacturer programs to reduce the number of franchises, the advent and growth
of specialty retailers for used vehicles, parts and service, the increasing
acceptance of public ownership of franchised automotive dealerships by
automobile manufacturers and the changing retailing environment.
The Company believes consumers are generally dissatisfied with the service
and retail experience offered by existing automotive retailers, particularly
with respect to used vehicles. For example, the Company believes that consumers
generally are unable to find used vehicles that have been extensively
reconditioned, to obtain comprehensive warranties on used vehicles, to see and
test drive a broad selection of used vehicles in one location, or to be offered
a convenient and pleasant, no pressure, "no haggle" shopping environment. As a
result, approximately 30% of the total number of used vehicle sales each year
are made through casual private transactions between individuals rather than
through an established retailer, according to industry estimates.
The Company believes the inefficiency, fragmentation and consumer
dissatisfaction in the retail of used vehicles exists throughout the automotive
industry. The Company believes that this lack of consumer confidence in the
existing automotive retail markets is due in part to the absence of a nationally
branded retailer. The Company's strategy is to capitalize on these opportunities
by becoming a nationally recognized branded retailer and provider of products
and services to automotive consumers.
Through the completed and pending acquisitions of dealership groups which
operate over 260 franchised automotive dealerships and the development and
operation of its AutoNation USA megastores, the Company is well-established as
the nation's largest automotive retailer. The Company's management believes that
tremendous growth opportunities remain in the fragmented automotive retail
markets, and expects that the Company's significant growth will continue for the
foreseeable future.
The Company's automotive retail businesses recently have been organized
under a business model in which all automotive retail businesses that serve
local customers within defined geographic areas function as one business unit
under one local management team (each called an "Automotive Retail District" or
"District"). The Company has determined that its automotive retail businesses
are best managed at the local level, with decision-making authority in close
proximity to the customers. In the automotive retail business, for example, the
popularity of different brands and models of vehicles varies by local markets.
The Districts are organized in a manner which will allow the Company to maximize
sales and improve profitability by (i) adjusting inventory and pricing to target
the local markets and (ii) reducing costs throughout its vast retail network.
The goal of the Automotive Retail Districts is to maximize retail sales and
profits, improve store margins, and improve market share and penetration of all
products. The Automotive Retail Districts will allow the Company to develop
AutoNation USA into a national, highly recognized brand. It is expected that
each District will advertise aggressively in its local markets to maximize
traffic in stores, establish effective inter-store communications and referral
sales among stores, and implement in all stores in the District the best
demonstrated practices of all the Company's franchised dealerships and used
vehicle megastores. While the former owners and managers of franchised
automotive dealerships acquired by the Company generally have
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been retained to capitalize on their local market knowledge and to instill their
entrepreneurial drive at all levels, all employees in a District will be
trained, motivated, compensated and focused under one clearly defined local
management team. The Company believes this approach will achieve high customer
satisfaction and will develop "Customers for Life" who return to the Company's
businesses for all of their automotive needs. As a result, the Company expects
to generate higher levels of earnings and improve stockholder value.
In implementing its growth strategy for its automotive retail business, the
Company generally has targeted major domestic markets in each District for the
clustering of dealerships offering the most popular brands of new vehicles
together with AutoNation USA megastores. The Company has sought out dealerships
with well established reputations for quality service, competitive pricing and
programs designed to improve customer convenience and satisfaction. By owning
and operating numerous retail locations in a given market which sell and lease
new and used vehicles, as well as provide financing, insurance, service and
parts for vehicles, the Company benefits from multiple transactions involving
the same vehicles. In addition, the Company benefits from its internally created
supply of used vehicles which are traded-in or returned off-lease at its
dealerships and AutoNation USA megastores. By offering a broad spectrum of
vehicle brands, the Company also is less dependent on the success of particular
vehicle manufacturers.
The Company anticipates that its unique and extensive network of franchised
automotive dealerships and AutoNation USA megastores will provide consumers with
access to benefits and discounts not available elsewhere. The ownership and
operation of numerous franchised dealerships within each District permits the
Company to sell to customers many brands and models of vehicles, however
equipped, from the vast inventory within the District. The large number of
stores within each District also permits the Company to capture the warranty,
service and parts needs of consumers who purchase many brands and models of
vehicles, and to offer vehicle rental service to customers through the Company's
local/replacement vehicle rental operations at all of the Company's larger
dealerships and AutoNation USA megastores when vehicles are being serviced or
repaired.
The vast size of the Company's automotive retail business also provides the
Company with immediate margin benefits and competitive advantages by leveraging
economies of scale. For example, the Company's cost of capital for floor plan
inventory financing is lower than most of its competitors. Additional savings
should result from consolidated purchasing of advertising and insurance, and
more efficient administrative, information and other business systems. As a
result, the Company expects to become the low cost provider of new and used
vehicles at its franchised dealerships and AutoNation USA megastores.
The Company also expects that vehicle manufacturers will benefit from the
Company's consolidation of the retail market. By eliminating inefficiencies in
the distribution system, the average price of a new vehicle can be lowered
substantially. The Company also believes that its programs and benefits will
result in higher customer satisfaction ratings. These programs and benefits will
continue to improve as the Company implements the best dealer practices in its
retail network. Finally, the Company will be able to accumulate a unique
customer data base to further identify and meet consumer needs. The Company
plans to eventually identify its franchised automotive dealerships as affiliated
with AutoNation USA, while continuing to ensure that each of the manufacturers'
brands remains predominant for the vehicles themselves. The Company's goal is to
establish AutoNation as a brand which consumers identify with trust,
reliability, convenience and wide-ranging services for any number of vehicle
brands.
In its automotive rental business, the Company intends to become a fully
integrated and leading provider of services to consumers in the business and
leisure travel markets and to expand its presence in the local/replacement
vehicle rental market. The Company is combining numerous duplicative operations
of National and Alamo to achieve economies of scale in fleet purchasing,
utilization and financing, as well as in revenue management. The Company's goal
is to have a common fleet in place for National and Alamo for the 1999 vehicle
model year, which will allow for greater capacity to reallocate vehicles between
facilities to meet National's greater demand by business travelers during
weekdays and to meet Alamo's greater demand by leisure travelers during
weekends. The Company expects that its automotive rental business will
experience continued internal growth, increased operating margins, and higher
levels of earnings, thereby improving stockholder value.
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In its solid waste services business, the Company operates 95 solid waste
collection companies, 54 transfer stations, 42 solid waste landfills and 24
materials recycling facilities. The collection companies generally provide solid
waste collection and hauling services in high growth markets, and the Company
expects its solid waste business will experience continued internal growth. The
Company generally operates waste collection companies that are in markets served
by the Company's existing landfill facilities, and in markets with attractive
third party disposal fees. The Company's solid waste business is focused on
integrating its operations and consolidating duplicative facilities to maximize
cost efficiencies and economies of scale, and it expects to maintain attractive
operating margins. In making acquisitions, the Company principally targets waste
collection companies which have long term collection contracts with
municipalities, with particular focus on "tuck-in" companies that operate in
markets already serviced by the Company. The Company also may consider acquiring
companies which own or operate landfills with significant permitted disposal
capacity and appropriate levels of waste volume. The Company generally targets
acquisitions in markets where it will be, or will have favorable prospects of
becoming, a significant provider of integrated solid waste services in that
market. However, the Company is not limited to these target criteria for
acquisitions, and may acquire additional solid waste operations as opportunities
arise.
Although management believes that the Company currently has sufficient
resources, including cash on hand, cash flow from operating activities, credit
facilities and access to the financial markets, to fund current and planned
operations, service its outstanding debt and make certain acquisitions, there
can be no assurance that additional financing will be available on a timely
basis, if at all, or that it will be available on terms acceptable to the
Company for such purposes. See "-- Risk Factors" and "ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
OPERATIONS
The Company's operations are organized primarily into three general
industry segments: (1) automotive retail, (2) automotive rental and (3) solid
waste services.
Automotive Retail
The Company owns and operates, or has contracted to acquire, over 260
franchised automotive dealerships and 26 AutoNation USA megastores in eighteen
states. These franchises include the Acura, Audi, BMW, Buick, Cadillac,
Chevrolet, Chrysler, Dodge, Ford, GMC, Geo, Honda, Hyundai, Infiniti, Isuzu,
Jaguar, Jeep-Eagle, Kia, Lamborghini, Land Rover, Lexus, Lincoln-Mercury, Mazda,
Mercedes-Benz, Mitsubishi, Nissan, Oldsmobile, Plymouth, Pontiac, Porsche, Rolls
Royce, Saab, Subaru, Suzuki, Toyota, Volkswagen and Volvo brands of cars and
light trucks.
At present, the Company has established ten Automotive Retail Districts to
operate its automotive retail businesses, including its franchised automotive
dealerships and its AutoNation USA megastores. Each Automotive Retail District
is designed to serve local retail consumers in a defined geographic area and
function as a distinct business unit under one local management team. As more
retail outlets are acquired and opened by the Company, additional, and in some
cases more concentrated, Districts will be established on the basis of geography
and local media ADI (areas of dominant influence). The number of stores in each
District will vary, while revenue within each District is expected to range from
$500 million to $3 billion per year when acquisitions of franchised automotive
dealerships and development of AutoNation USA megastores are completed.
A central element of the Company's strategy is to improve customer
perceptions of the vehicle buying experience. The Company's establishment of its
Automotive Retail Districts is based on management's belief that automotive
retail businesses are best managed at the local level with a focus on the needs
and demands of local consumers. In all of its Districts, the Company intends to
create a pleasant shopping environment by, among other things, providing
convenient hours of operation, courteous and knowledgeable personnel and
competitive pricing. The Company has acquired, and intends to continue to
acquire, automotive dealerships with well established reputations for quality
service, competitive pricing and programs designed to improve
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customer convenience and satisfaction. In that regard, whenever the Company
makes acquisitions, it generally intends to retain each automotive dealership's
principal management in order to benefit from their years of automotive
retailing experience.
Each of the Company's franchised automotive dealerships offers brand name
new and used vehicles. New vehicles are generally acquired directly from the
manufacturers and the mix of vehicles is generally determined by the
manufacturers based on several factors including the size and location of the
dealership and the dealer's sales record and customer satisfaction rating. Used
vehicles are generally acquired from customer trade-ins and off-lease vehicles.
Customers generally have a choice of purchasing or leasing any vehicle. In
recent years the number of leasing transactions has increased due to the rising
prices of new vehicles and the support of vehicle manufacturers. Through the use
of captive leasing companies, manufacturers have supported the residual values
of leased vehicles which has lowered the monthly payments on leased vehicles
relative to purchased vehicles that are financed. Each of the Company's
franchised automotive dealerships also offers aftermarket products such as
cellular phones, upgraded sound systems, alarms, and extended service contracts.
The Company's franchised automotive dealerships also generally have service
facilities which provide a wide range of vehicle maintenance and repair
services.
The Company's AutoNation USA megastores maintain a retail inventory of up
to 1,000 used vehicles. The used vehicles at AutoNation USA megastores feature a
low "no haggle" price, extensive reconditioning, warranties, roadside assistance
plans and other benefits not typically offered by independent used vehicle
retailers. Prominent among these benefits is a 7 day, 300 mile money-back
guaranty. The showrooms at the AutoNation USA megastores are large, and contain
vehicle display space, a supervised children's area, a retail store for
automotive accessories, a community room, an eating area and other amenities.
The AutoNation USA megastores have several sources of supply for used
vehicles. The inventory of used vehicles is purchased primarily from automotive
dealerships and, to a lesser extent, auctions and other sources. At the
auctions, the Company purchases used vehicles through competitive bidding. The
Company anticipates that it will obtain the substantial majority of its used
vehicles in the future from customer trade-ins and off-lease vehicles at the
Company's franchised automotive dealerships and AutoNation USA megastores.
All used vehicles acquired from any source for retail sale at AutoNation
USA megastores are extensively reconditioned by the Company. The mechanical,
safety and cosmetic condition of each vehicle is thoroughly inspected by
certified technicians, and the vehicles are repaired, serviced, painted, cleaned
and processed, as necessary, prior to being delivered to the AutoNation USA
megastores. The Company owns and operates its own vehicle reconditioning centers
and also uses the service facilities at its franchised automotive dealerships to
recondition used vehicles.
Each of the Company's automotive dealerships operates under a franchise
agreement with a vehicle manufacturer. The franchise agreements generally grant
the franchised automotive dealership a non-exclusive right to sell the
manufacturer's brand of vehicles and offer related parts and service within a
specified market area. Generally, a manufacturer will retain the discretion to
allocate the mix of vehicles distributed to its franchised dealerships within a
given market area. The franchise agreements also grant the dealerships the right
to use the manufacturer's trade names in connection with the sale of its
vehicles. The franchise agreements generally impose operational requirements and
restrictions on the automotive dealerships relating to inventory levels, working
capital requirements, showroom and service facilities, personnel and monthly
financial reporting, among other things. The franchise agreements generally
provide for termination of the agreement by the manufacturer or non-renewal for
a variety of causes including changes of ownership without prior approval,
certain bankruptcy related events, the death, disability or conviction of the
dealer principal, the failure to maintain certain customer satisfaction ratings,
or any material breach of the franchise agreement.
In furtherance of the Company's strategy to expand its automotive retail
operations, the Company has entered into agreements with certain major vehicle
manufacturers, including General Motors Corporation ("General Motors"), Ford
Motor Company and Toyota Motor Sales USA, Inc. These agreements generally
contain provisions relating to the Company's acquisition, ownership structure,
management and operation of automotive dealerships franchised by such
manufacturers. Such agreements also set certain limits on the
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number of dealerships which the Company may acquire of the particular
manufacturer, based upon either the manufacturer's total sales revenue or a
fixed number of dealerships. The Company will approach such limits as it
continues to expand and acquire franchised automotive dealership groups. In
addition, such agreements generally provide that the manufacturer will have the
right to acquire, for fair market value, any of manufacturer's franchised
automotive dealerships operated by the Company in the event of a change in
control of the Company or certain other extraordinary corporate transactions
such as a merger or sale of all of the Company's assets.
There are also various federal and state laws that govern the franchise
relationships for automotive dealerships. These include statutes that prohibit
manufacturers from terminating or failing to renew a franchise without good
cause and that prohibit manufacturers from unreasonably withholding approval of
a proposed change in ownership. Under such statutes, a vehicle manufacturer may
disapprove of a proposed change in ownership for certain enumerated reasons
involving such matters as the moral character, financial capability and/or
business experience of the proposed transferee.
Automotive Rental
The automotive rental industry is composed of three principal markets: the
market for business travelers, the market for leisure travelers and the market
for replacement vehicles to local consumers. In the business and leisure
markets, the Company rents vehicles principally from on-airport or near-airport
locations. In the local/replacement market, the Company rents vehicles primarily
to individuals who have temporarily lost the use of their vehicles through
accident, theft, breakdown or other occurrences. The local/replacement market
rents principally from locations in downtown or suburban areas. The Company's
automotive rental operations have a strong presence in each of these markets.
National principally targets the general use market for business travelers.
National's vehicle rental business operates in all 50 states in the United
States and in Canada, the Caribbean, Latin America, the Pacific, Australia,
Europe, Africa and the Middle East. National has approximately 800 rental
locations in the United States and Canada. National also has approximately 164
locations in the Caribbean, Latin America and the Pacific. National serves its
customers in Japan and other parts of the Pacific through a marketing
affiliation with Nippon Rent-A-Car. Prior to February 1, 1998, National served
its customers in Europe, Africa and the Middle East through a marketing
affiliation with Europcar/Interrent. Beginning February 1, 1998, as a result of
the Company's recent acquisition of EuroDollar Rent A Car, National began to
operate, and in some cases license, approximately 840 locations in Europe,
Africa and the Middle East. Certain EuroDollar Rent A Car operations in Europe
are being rebranded as National operations in 1998. In the United States,
National will operate an average fleet of approximately 150,000 vehicles in
1998.
Alamo principally targets the general use market for leisure travelers.
Alamo's vehicle rental business operates in 45 states in the United States and
in Canada, Mexico and Europe. Alamo has approximately 148 rental locations in
the United States and Canada. Alamo also has approximately 162 locations in
Europe. As a result of the Company's recent acquisition of EuroDollar Rent A
Car, Alamo is being co-branded with National at numerous locations through
Europe, Africa and the Middle East. In the United States and Canada, Alamo will
operate an average fleet of approximately 145,000 cars in 1998.
The Company has a strong presence in the local/replacement vehicle rental
market following its acquisitions of Spirit Rent-A-Car, Inc. and Snappy Car
Rental, Inc. in 1997. The Company's local/replacement vehicle rental business is
being rebranded under the CarTemps USA brand name. Expansion of the Company's
312 locations serving the local/replacement market by an additional 108
locations is planned throughout 1998, for a total of 420 CarTemps USA locations
by year end in the United States. The Company expects to provide its own
local/replacement vehicle rental service at all of the Company's larger
franchised automotive dealerships and AutoNation USA megastores. In the United
States, CarTemps USA will operate a fleet of approximately 32,000 vehicles in
1998.
By combining certain operations of these companies, the Company plans to
leverage its brands across distribution channels as well as achieve economies of
scale in fleet purchasing, fleet utilization, revenue management and financing.
The Company expects to further integrate Alamo and National operations
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through a common fleet, common fleet maintenance program and common information
technology platforms. In addition, the Company is in the process of integrating
back-office operations such as claims administration, accounting functions, and
reservation systems.
In the United States, all of Alamo's rental locations and most of
National's rental locations are corporate-owned. National licenses a number of
its locations to third party operators, generally in smaller domestic markets
and in many foreign markets. Alamo licenses a number of its locations to third
party operators in Europe. The licensing arrangements provide greater depth of
coverage for customers while maintaining operating efficiencies. All of the
Company's operations in the CarTemps USA local/replacement segment are
corporate-owned.
In general, concession fees for airport locations are based on a percentage
of total revenue (as determined by each airport), 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 minimum
guaranteed fees, most smaller rental companies are not located at airports. At
near-airport locations, airport authorities generally charge permit fees for the
privilege of customer pick-up and drop-off at terminals by courtesy vans or
buses. Generally, on-airport locations have more high-yielding walk-up rentals
(i.e., customers without reservations) and fewer no-shows (i.e., customers with
reservations who fail to rent). At almost all airports at which they operate,
Alamo and National are two of several vehicle rental concessionaires.
General Motors has been the principal supplier of rental vehicles to
National and Alamo for many years. In the 1997 model year, vehicles manufactured
by General Motors made up approximately 70% of rental fleet purchases. The
percentage of rental vehicles that are purchased from General Motors has
declined slightly over the last three years. In the last few years, several
other vehicle manufacturers have also supplied rental vehicles to the Company.
A large percentage of the Company's fleet purchases are subject to
manufacturer repurchase programs ("Repurchase Programs"). Alamo and National
purchased approximately 97% of their combined U.S. rental fleet during model
year 1996 and 94% during 1997 under Repurchase Programs pursuant to which either
(i) in the case of a traditional repurchase program, the manufacturer is
obligated to repurchase vehicles within designated periods of time or (ii) in
the case of a guaranteed depreciation program, the manufacturer has guaranteed
that the vehicles will not depreciate more than a certain specified amount
compared to actual auction prices, in each case in accordance with the terms and
conditions of the specific program. Approximately 80% of the Company's combined
vehicle rental fleet in 1998 will be acquired under Repurchase Programs. The
Company may, at its option, require the manufacturers to repurchase vehicles
under the Repurchase Programs at any time during allowable periods. If vehicles
subject to Repurchase Programs are returned earlier than originally anticipated,
the depreciation expense is usually increased for the period such vehicles were
in service. Vehicles acquired under Repurchase Programs in the United States are
purchased by the Company through franchised automotive dealerships, including,
where feasible, the Company's dealerships.
Under the Repurchase Programs with General Motors, the rental fleets of
Alamo and National must consist of specified minimum percentages of General
Motors vehicles. Through model year 2000, Alamo and National must maintain at
least 51% and 85%, respectively, of General Motors vehicles in order to receive
certain discounts and incentives. In return, General Motors has agreed to make
available a specified minimum number of vehicles each model year. As part of its
European operations, the Company has committed to buy approximately 20,000
vehicles per year for 3 years from Vauxhall, a unit of General Motors.
Purchases made outside of Repurchase Programs are made from a number of
sources, including private and public auctions, wholesalers, automotive
dealerships and vehicle manufacturers. In the future, the number of vehicles
purchased outside Repurchase Programs may increase or decrease based on a number
of factors, including a determination of the acceptable level of residual risk
related to the disposition of vehicles in the used vehicle market. The Company's
local/replacement vehicle rental business generally purchases vehicles outside
Repurchase Programs, as Repurchase Programs are generally not available to these
companies. Alamo also acquires vehicles pursuant to short term leases, the terms
of which are generally less than one year. The
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number of vehicles which Alamo leases depends upon a number of factors,
including price, term and availability.
The age of vehicles in the rental fleets, whether or not acquired through
Repurchase Programs, generally has not exceeded two model years. Vehicles that
are not subject to Repurchase Programs are disposed of through private and
public auctions and resales to wholesalers and automotive dealerships, among
other methods. The Company anticipates that it also will dispose of a certain
number of rental vehicles that are not subject to Repurchase Programs through
its franchised automotive dealerships and AutoNation USA megastores.
Vehicle depreciation is the single largest cost component of the Company's
automotive rental operations, and it is materially affected by vehicle
manufacturers' Repurchase Programs. Other automotive rental operating expenses
consist of interest and lease expenses, personnel, insurance, fleet maintenance
and rental location occupancy costs.
Both Alamo and National use proprietary integrated fleet management systems
to efficiently utilize their rental fleets and revenue management systems to
optimize the pricing of their rental vehicles. These systems identify and
indicate the status of every vehicle in the fleet on a real-time basis. This
enables Alamo and National to evaluate fleet needs based on market demands and
reservation projections on a daily basis. The result is that the Company is able
to optimize its ability to rent each available vehicle in the fleet each day at
the highest possible rate. The fleet management systems perform many functions
including vehicle purchase ordering (including vehicle specifications),
in-fleeting, registration, invoicing, dealer payment, title control, fleet
movement tracking, physical inventory, inactive vehicle management, fleet cost
allocation (both purchased and leased), maintenance record keeping, grounding
and vehicle sales. The revenue management systems take into account the present
bookings, factor in traditional no-show percentages and compare historical data
for walk-ups and incoming reservations. This analysis helps the Company maximize
revenue from its rental fleet.
The Company performs routine maintenance on its rental fleet. The Company's
computerized maintenance systems identify the vehicles due for maintenance and
the type of maintenance required based on mileage and the in-service period. The
Company's vehicle rental facilities typically include maintenance areas, and
trained employees dedicated to fleet maintenance. Where feasible, the Company
expects to eliminate duplicative off-site maintenance facilities in markets
where Alamo and National both have facilities, as well as eliminate such
facilities in markets where the Company's franchised automotive dealerships or
reconditioning centers can service the rental fleets. Vehicles are cleaned
between rental transactions and are regularly inspected as part of the Company's
routine maintenance program.
The Company operates five state-of-the-art reservations centers used
primarily for bookings by business and leisure travelers. The reservation
systems collectively handle an average of approximately 113,000 calls per
weekday with a peak capacity of up to 161,000 calls per weekday. The systems
reroute calls to less utilized centers so that customers get the best and
quickest service. In addition, the Alamo and National systems are linked so that
if one is sold out the customer will be rerouted to the other for service. A
large percentage of Alamo's and National's bookings are also made through an
automated global distribution system as commercial renters typically book
reservations through travel agencies.
In addition to basic vehicle rental charges, the sale of rental related
products generates a significant, but declining, percentage of revenue. Such
rental related products include collision damage waivers, additional liability
protection, personal accident and personal effects protection, other travel
related insurance coverages and travel related products such as vehicle
upgrades, gasoline sales, inter-city drop-off charges, and miscellaneous items
such as baby seats, ski racks, cellular phones and additional driver fees. The
Company also earns a small percentage of its overall rental revenue from its
airport parking operations.
Solid Waste Services
The Company's solid waste services operations primarily consist of the
collection, hauling and disposal of non-hazardous solid wastes.
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Collection Services. As of December 31, 1997, the Company provided solid
waste collection services to municipal, residential, commercial and industrial
customers in 23 states through 95 collection companies.
The Company's commercial and residential collection operations involve the
curbside collection of refuse from small containers into collection vehicles for
transport to transfer stations or directly to landfills. Commercial collection
services are generally performed under one to three-year service agreements, and
fees are determined by such considerations as market factors, collection
frequency, type of equipment furnished, the type and volume or weight of the
waste collected, the distance to the disposal facility and cost of disposal.
Residential solid waste collection services are typically performed under
contracts with municipalities, generally secured by competitive bid, which give
the Company exclusive rights to service all or a portion of the homes in their
respective jurisdictions. Such contracts or franchises usually range in duration
from one to five years, although some are for as long as 20 years. Residential
solid waste collection services may also be performed on a subscription basis,
in which individual households contract directly with the Company. The fees
received for residential collection are based primarily on market factors,
frequency and type of service, the distance to the disposal facility and cost of
disposal. Residential collection fees are paid by the residential customers
receiving the service.
In addition, the Company currently provides recycling services through many
of its collection subsidiaries and has 24 materials recycling facilities or
other recycling operations. The recycling services provided by the Company's
collection subsidiaries include the curbside collection of recyclable waste and
the provision of a variety of recycling services. In certain areas, the Company
receives certain types of commercial and industrial solid waste which is sorted
at its facilities into recyclable materials and non-recyclable waste. The
recyclable materials are salvaged, repackaged and sold to third parties and the
non-recyclable waste is disposed of at landfills or incinerators.
The Company also owns or operates 54 transfer stations. Waste is collected
and deposited at these stations by the Company and other private haulers for
compaction and transfer to trailers for transport to landfills, incinerators,
recycling facilities or other disposal sites.
In its industrial collection operations, the Company supplies its customers
with waste containers known as "roll-off" containers. The Company collects the
roll-off containers and transports them to a landfill where the waste is
deposited. Waste collection services are provided to individual facilities on a
contractual basis with terms generally ranging from a single pickup to a
one-year term.
Disposal Services. The Company owns or operates 42 solid waste landfills
with approximately 5,468 permitted acres and total available permitted disposal
capacity of approximately 1.1 billion cubic in-place yards as of December 31,
1997. See "ITEM 2. PROPERTIES -- Solid Waste Services." The in-place capacity of
the Company's landfills is subject to change based on engineering factors and
requirements of regulatory authorities. Certain of the landfills accept
nonhazardous special waste, including utility ash, asbestos and contaminated
soils. The majority of the Company's landfill revenue is derived from long-term
integrated waste disposal and collection contracts with industrial customers and
municipalities, and disposal contracts with certain third party collection
companies.
Most of the Company's existing landfill sites have the potential for
expanded disposal capacity beyond the currently permitted acreage. The Company
monitors the availability of permitted disposal capacity at each of its
landfills and evaluates whether to pursue expansion at a given landfill based on
estimated future waste volumes, remaining capacity and likelihood of obtaining
expansion. Each of the Company's landfills currently has adequate permitted
capacity. The Company is currently seeking to expand permitted capacity at
certain of its landfills in connection with favorable design modifications.
SALES AND MARKETING
The Company believes in providing quality services which will enable it to
maintain high levels of satisfaction from its customers in all business
segments. The Company derives its business from a broad customer base which the
Company believes will enable it to experience stable growth. Marketing efforts
focus on continuing and increasing business with existing customers as well as
attracting new customers.
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Automotive Retail. With respect to the Company's automotive retail
operations, the Company expects to engage in mass marketing and advertising in
various media to attract a broad retail customer base in the markets in which it
operates, and to make AutoNation USA a nationally-recognized brand.
The Company's marketing and advertising activities may vary among its
Automotive Retail Districts and advertising purchases are determined at the
local level in each District. The Company advertises primarily through
newspapers, radio and television in each District's local ADI. Under
arrangements with certain vehicle manufacturers, the Company's franchised
automotive dealerships may receive a subsidy for advertising expenses incurred
in connection with such manufacturers' vehicles. The Company expects to continue
to realize cost savings and efficiencies with respect to advertising expenses,
due to volume discounts and other concessions as it clusters multiple franchised
automotive dealerships and AutoNation USA megastores within particular markets.
Sales guides at AutoNation USA megastores are paid a fee per vehicle sold
based primarily on customer satisfaction ratings. The sales guides are not paid
a commission based on a percentage of the price paid by the customer, unlike the
typical industry practice. Rather, the sales guides are trained to sell the
vehicle which the customer wants, not a higher priced or other vehicle, so that
customers can shop in an environment free from the high pressure sales tactics
that are prevalent in the industry. Using computer kiosks in the showroom,
shoppers can browse the complete inventory of used vehicles available at each
location. The kiosks also display pricing models which show the consumer the
total and monthly payments for any vehicle in inventory under different lease or
financing alternatives, and with different accessories, warranties and other
aftermarket products.
Automotive Rental. The Company's sales and marketing strategy for Alamo
and National is to maintain their brand identifications through a variety of
media, cooperative advertising relationships with airlines, hotels and others in
the travel industry, and building and maintaining close relationships with the
travel agent community, tour operators and major corporate customers. Alamo
principally targets leisure travelers and cost-conscious business travelers.
National principally targets business travelers who are typically covered under
corporate travel contracts which establish specific rates for various categories
of vehicle classes, locations and travel periods. Alamo's objective is to be the
low-cost provider of quality vehicle rental service and to increase customer
satisfaction and retention by developing innovative, time saving options for
customers and other quality services based on the customer's specific needs.
National's objective is to be the global vehicle rental service company of
choice, to enhance customer loyalty and satisfaction and to be the value leader
in selected market segments. CarTemps USA, the Company's local/replacement
vehicle rental business, generates the majority of its revenue from insurance
replacement customers with the remainder coming from dealership referrals, local
body shops, and local retail customer walk ins. The primary customer base for
this rental market is the insurance replacement, local neighborhood, and car
dealership and shop temporary rental market. The ability of CarTemps USA to
directly connect via E.D.I. (Electronic Data Interchange) with the major
insurance companies has proven to be a competitive benefit in this rental
market.
Solid Waste Services. The Company's solid waste services business has more
than 250 sales representatives. The Company's sales and marketing strategy is to
provide high quality comprehensive solid waste collection, hauling and disposal
services to its customers at competitive prices. The Company targets potential
customers of all sizes, from small quantity generators to large "Fortune 500"
companies and municipalities.
CUSTOMERS
As of December 31, 1997, no one customer individually comprised more than
10% of the total revenue of any business segment of the Company.
REGULATIONS
Automotive Regulations
The Company's automotive retail operations are subject to various federal,
state and local laws and regulations including those relating to taxing and
licensing of vehicles, consumer protection, insurance, advertising, currency
controls, used vehicle sales, zoning and land use, and labor matters.
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The Company's automotive rental operations generally are subject to similar
laws and regulations. In addition, approximately 40 states have considered
legislation affecting the sale of collision damage waiver products. To date, 18
of those states have enacted legislation requiring the disclosure to each
customer at the time of rental that damage to the rental vehicle may be covered
by the customer's personal automobile insurance and that purchase of a collision
damage waiver may not be necessary. In addition, adoption of national or state
legislation limiting the sale, or capping the rates, of collision damage waiver
products could further restrict sales of this product and additional limitations
of potential customer liability would increase the cost of the Company's vehicle
rental operations.
As a result of private and governmental regulatory legal proceedings in
certain states regarding the sale of optional service items at the rental
counter, including liability insurance, personal accident coverage, personal
effects coverage and other travel related coverages and refueling charges, the
vehicle rental industry has lobbied regulatory agencies and legislative bodies
to provide affirmative authorization for the sale of these services and
products. The outcome of the legal proceedings and the results of the industry
lobbying initiatives may result in a modification of current laws which could
negatively impact the revenue generated from the sale of these services and
products.
The Company's vehicle rental operations are also subject to various
federal, state and local consumer protection laws and regulations including
those relating to advertising and disclosure of charges to customers. The
National Association of Attorneys General has promulgated suggested guidelines
for vehicle rental advertisements. Alamo and two other industry participants are
subject to substantially similar consent decrees resulting from Federal Trade
Commission inquiries initiated in 1989, which consent decrees require certain
disclosures to customers at each stage of the rental transaction, including in
advertisements, of charges that are mandatory and not otherwise reasonably
avoidable.
The Company's automotive retail and rental operations are also subject to
the National Traffic and Motor Vehicle Safety Act, Federal Motor Vehicle Safety
Standards promulgated by the United States Department of Transportation and
various state motor vehicle regulatory agencies.
Environmental Regulations
The operation of the Company's businesses are subject to a variety of
federal, state and local requirements which regulate health, safety, the
environment, zoning and land-use. Operating and other permits are generally
required for landfills, certain waste collection vehicles, fuel storage tanks
and other facilities owned or operated by the Company, and these permits are
subject to revocation, modification and renewal. Federal, state and local
regulations vary, but generally govern disposal activities and the location and
use of facilities and also impose restrictions to prohibit or minimize air and
water pollution. In addition, governmental authorities have the power to enforce
compliance with these regulations and to obtain injunctions or impose fines in
the case of violations, including criminal penalties. These regulations are
administered by the Environmental Protection Agency ("EPA") and various other
federal, state and local environmental, health and safety agencies and
authorities, including the Occupational Safety and Health Administration of the
U.S. Department of Labor ("OSHA").
The Company strives to conduct its operations in compliance with applicable
laws and regulations, but believes that in the existing climate of heightened
environmental concerns, companies in the waste management and environmental
services industry, including the Company, may from time to time be faced with
citations or notices from governmental authorities and the need to expend funds
for remedial work and related activities at landfills and other facilities. The
Company has established a reserve which it believes will be adequate to cover
any potential regulatory costs.
Federal Regulation. The following summarizes the primary environmental and
safety-related federal statutes of the United States of America affecting the
business of the Company:
(l) The Solid Waste Disposal Act ("SWDA") as amended by the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"). SWDA and its
implementing regulations establish a frame-work for regulating the
handling, transportation, treatment and disposal of hazardous and
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nonhazardous solid wastes, and require states to develop programs to ensure
the safe disposal of solid wastes in sanitary landfills.
Subtitle D of RCRA establishes a framework for regulating the disposal
of municipal solid wastes. Regulations under Subtitle D now include minimum
federal comprehensive solid waste management criteria and guidelines,
including location restrictions, facility design and operating criteria,
closure and post-closure requirements, financial assurance standards,
groundwater monitoring requirements and corrective action standards, many
of which have not commonly been in effect or enforced in the past in
connection with municipal solid waste landfills. Each state was required to
submit a permit program designed to implement Subtitle D regulations to the
EPA by April 9, 1993. These state permit programs may include landfill
requirements which are more stringent than those of Subtitle D. Some states
have not yet fully implemented permit programs pursuant to RCRA and
Subtitle D. Once a state has an approved permit program it is required to
review all existing landfill permits to ensure compliance with the new
regulations.
All of the Company's planned landfill expansions or new landfill
development projects have been engineered to meet or exceed Subtitle D
requirements. Operating and design criteria for existing operations have
been modified to comply with these new regulations. Compliance with the
Subtitle D regulations has resulted in increased costs and may in the
future require expenditures in addition to other costs normally associated
with the Company's waste management activities.
(2) The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"). CERCLA, among other things,
provides for the cleanup of sites from which there is a release or
threatened release of a hazardous substance into the environment. CERCLA
imposes strict, joint and several liability for the costs of cleanup and
for damages to natural resources upon current owners and operators of the
site, parties who were owners or operators of the site at the time the
hazardous substances were disposed of, as well as parties who arranged for
disposal at the site. Under the authority of CERCLA and its implementing
regulations, detailed requirements apply to the manner and degree of
remediation of facilities and sites where hazardous substances have been or
are threatened to be released into the environment. CERCLA liability is not
dependent upon the existence or disposal of "hazardous wastes" but can also
be based upon the existence of small quantities of more than 700
"substances" characterized by the EPA as "hazardous", many of which may be
found in common household waste.
Among other things, CERCLA authorizes the federal government either to
remediate sites at which hazardous substances were disposed of any have
been or are threatened to be released into the environment, or to order (or
offer an opportunity to) persons potentially liable for the cleanup of the
hazardous substances to do so. In addition, CERCLA requires the EPA to
establish a National Priorities List ("NPL") of sites at which hazardous
substances have been or are threatened to be released and which require
investigation or cleanup.
Liability under CERCLA is not dependent upon the intentional disposal
of hazardous wastes. It can be founded upon the release or threatened
release, even as a result of unintentional and non-negligent action, of
thousands of hazardous substances, including very small quantities of such
substances. More than 20% of the sites on the NPL are solid waste landfills
which ostensibly never received any hazardous wastes. Thus, even if the
Company's landfills have never received hazardous wastes as such, it is
possible that one or more hazardous substances may have come to be located
or "released" at its landfills or at other properties which the Company may
have owned or operated. The Company could thus be liable under CERCLA for
the cost of cleaning up such hazardous substances at the sites and for
damages to natural resources, even if those substances were deposited at
the Company's facilities before the Company acquired or operated them. As
is the case with automotive dealerships and vehicle rental operations
generally, and service, parts and body shop operations in particular, the
Company's automotive businesses involve the use, handling, storage,
manifesting and contracting for recycling or disposal of hazardous or toxic
substances or waste, including environmentally sensitive materials such as
motor oil, waste motor oil and filters, transmission fluid, antifreezes,
freon, waste paint and lacquer thinner, batteries, solvents, lubricants,
degreasing agents, gasoline and diesel fuels. The costs of a CERCLA
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cleanup can be very expensive. Given the difficulty of obtaining insurance
for environmental impairment liability, such liability could have a
material impact on the Company's business and financial condition. For a
further discussion, see "-- Liability Insurance and Bonding."
(3) The Federal Water Pollution Control Act of 1972 (the "Clean Water
Act"). The Clean Water Act regulates the discharge of pollutants from a
variety of sources, including solid waste disposal sites, into streams,
rivers and other waters. Point source runoff from the Company's landfills
and transfer stations that is discharged into surface waters must be
covered by discharge permits, that generally require the Company to conduct
sampling and monitoring and, under certain circumstances, reduce the
quantity of pollutants in those discharges. Storm water discharge
regulations under the Clean Water Act require a permit for certain
construction activities, which may affect the Company's operations. If a
landfill or transfer station discharges wastewater through a sewage system
to a publicly-owned treatment works ("POTW"), the facility must comply with
discharge limits imposed by the POTW. In addition, states may adopt
groundwater protection programs under the Clean Water Act or Safe Drinking
Water Act that could affect solid waste landfills. Furthermore, development
which alters or affects "wetlands" must generally be permitted prior to
such development commencing, and certain mitigation requirements may be
required by the permitting agencies.
(4) The Clean Air Act. The Clean Air Act imposes limitations on
emissions from various sources, including landfills. On March 12, 1996, the
EPA enacted rules which require large municipal solid waste landfills to
install landfill gas monitoring systems. These EPA regulations apply to
landfills which have been operating since November 8, 1987, and which can
accommodate 2.5 million cubic meters or more of municipal solid waste. The
regulations apply whether the landfill is active or closed. The date by
which each affected landfill must have the required gas collection and
control system is dependent upon the adoption of state regulations and the
date EPA approves the state program. Many state regulatory agencies
currently require monitoring systems for the collection and control of
landfill gas. Compliance with the new EPA regulations is not expected to
have a material effect on the Company.
(5) The Occupational Safety and Health Act of 1970 (the "OSH
Act"). The OSH Act authorizes OSHA to promulgate occupational safety and
health standards. Various of these standards, including standards for
notices of hazardous chemicals and the handling of asbestos, apply to the
Company's operations.
State Regulation. Each state in which the Company operates has its own
laws and regulations governing solid waste disposal, water and air pollution
and, in most cases, releases and cleanup of hazardous substances and liability
for such matters. The states also have adopted regulations governing the design,
operation, maintenance and closure of landfills and transfer stations. The
Company's facilities and operations are likely to be subject to these types of
requirements. In addition, the Company's solid waste collection and landfill
operations may be affected by the trend in many states toward requiring the
development of waste reduction and recycling programs. For example, several
states have enacted laws that require counties or municipalities to adopt
comprehensive plans to reduce, through waste planning, composting, recycling or
other programs, the volume of solid waste deposited in landfills. Additionally,
laws and regulations restricting the disposal of certain wastes, including yard
waste, newspapers, beverage containers, unshredded tires, lead-acid batteries
and household appliances, in solid waste landfills have been promulgated in
several states and are being considered in others. Legislative and regulatory
measures to mandate or encourage waste reduction at the source and waste
recycling also are under consideration by Congress and the EPA.
In order to construct, expand and operate a landfill, one or more
construction or operating permits, as well as zoning approvals, must be
obtained. These are difficult and time-consuming to obtain, are often opposed by
neighboring landowners and citizens' groups, may be subject to periodic renewal
and are subject to modification and revocation by the issuing agency. In
connection with the Company's acquisition of existing landfills, it may be
necessary to expend considerable time, effort and money to bring the acquired
facilities into compliance with applicable requirements and to obtain the
permits and approvals necessary to increase their capacity.
Many of the Company's facilities own and operate underground storage tanks
("USTs") which are generally used to store petroleum based products. USTs are
generally subject to federal, state and local laws
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and regulations which mandate periodic testing, upgrading, closure and removal
of UST's and which, in the event of leaks from USTs, require that polluted
groundwater and soils be remediated. The Company has a number of USTs which,
under federal regulations, will have to be upgraded, removed or closed in place
by December 31, 1998. The exact nature and extent of associated costs cannot be
assessed until the Company has conducted soil or groundwater testing in
connection with the upgrading, removal and/or closure of the USTs. If USTs owned
or operated by the Company leak, and such leakage migrates onto the property of
others, the Company could be subject to civil liability for response costs and
other damages to third parties. Compliance with regulations related to USTs is
not expected to have a material adverse affect on the Company.
Finally, with regard to its solid waste transportation operations, the
Company is subject to the jurisdiction of the Interstate Commerce Commission and
is regulated by the Federal Highway Administration, Office of Motor Carriers and
by regulatory agencies in each state. Various states have enacted, or are
considering enacting, laws and regulations that would restrict the interstate
transportation and processing of solid waste. In 1978, the United States Supreme
Court held similar laws and regulations unconstitutional, however, states have
attempted to distinguish proposed laws and regulations from the laws and
regulations involved in that ruling. In May 1994, the Supreme Court ruled that
state and local flow control laws and ordinances (which attempt to restrict
waste from leaving its place of generation) were an impermissible burden on
interstate commerce, and therefore, were unconstitutional. In response to these
Supreme Court rulings, Congress has considered passing legislation authorizing
states and local governments to restrict the free movement of solid waste in
interstate commerce. If federal legislation authorizing state and local
governments to restrict the free movement of solid waste in interstate commerce
is enacted, such legislation could adversely affect the Company's solid waste
collection, transportation and disposal operations.
COMPETITION
All of the Company's businesses operate in highly competitive industries.
In addition, all of such industries are changing as a result of rapid
consolidation. Entry into any of the Company's lines of business and the ability
to operate profitably in such industries requires substantial amounts of capital
and managerial experience.
Competition in the Automotive Retail Industry. According to NADA,
Automotive News and reports of various financial analysts, the automotive retail
industry is served by over 22,000 franchised automotive dealerships, most of
which also have significant used vehicle retail operations, by an additional
56,000 independent used vehicle dealers, and by individual consumers who sell
used vehicles in casual private transactions primarily through classified ads
and by word of mouth. In addition to the Company, several other companies
attempting to establish national automotive retail chains with significant used
vehicle operations have recently conducted initial public offerings of their
securities, with proceeds generally targeted to be used for acquisitions of
automotive dealerships. The Company believes that the principal competitive
factors in the automotive retail business are price, service, location,
availability of vehicles and warranties.
Competition in the Automotive Rental Industry. The automotive rental
industry is characterized by intense price and service competition. In any given
location, the Company's vehicle rental business may encounter competition from
national, regional and local vehicle rental companies. The Company's main
domestic competitors in the business and leisure travel markets are Avis, Inc.,
Budget Rent A Car Corporation, The Hertz Corporation, and, in certain locations,
Dollar Rent A Car and, in the local/replacement vehicle rental market, those
companies and Enterprise Rent-A-Car Company. In Europe and other foreign
markets, the Company's vehicle rental business competes with the companies
listed above, as well as with their international affiliates and licensees and
other national and local vehicle rental companies. At times, the major vehicle
rental companies have been adversely affected by industry-wide price pressures,
and the Company's vehicle rental business has, on such occasions, priced its
product in response to such pressures. Moreover, at times when the vehicle
rental industry has experienced vehicle oversupply, there has been intensified
competitive pressure. This oversupply has had a negative impact on the
industry's ability to raise rental rates. The Company's vehicle rental business
has taken steps to address its fixed cost structure to improve its overall
competitive position; however, future oversupply or other factors affecting
competition could still adversely affect the Company's business, financial
condition and future prospects.
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Competition in the Solid Waste Industry. Competition in the solid waste
industry comes from a number of large national companies including Waste
Management, Inc., Browning-Ferris Industries, Inc. and USA Waste Services, Inc.
as well as numerous regional solid waste companies, some of which are also
engaging in aggressive acquisition strategies. Some of the Company's competitors
have significantly larger operations than the Company. In each market in which
it owns or operates a landfill, the Company competes for landfill business on
the basis of disposal fees (commonly known as "tipping fees"), geographical
location and quality of operations. The Company's ability to obtain landfill
business may be limited by the fact that some major collection companies also
own or operate landfills to which they send their waste. Further, alternatives
to landfill disposal (such as recycling, composting and incinerating) are
increasingly competing with landfills. There also has been an increasing trend
at the state and local levels to mandate waste reduction at the source and to
prohibit the disposal of certain types of wastes, such as yard wastes, at
landfills. This may result in the volume of waste going to landfills being
reduced in certain areas, which may affect the Company's ability to operate its
landfills at their full capacity and/or affect the prices that can be charged
for landfill disposal services. In addition, most of the states in which the
Company operates landfills have adopted plans or requirements which set goals
for specified percentages of certain solid waste items to be recycled. In
addition to national and regional firms and numerous local companies, the
Company may compete with those municipalities that maintain waste collection or
disposal operations. These municipalities may have financial advantages due to
the availability of tax revenues and tax-exempt financing. The Company competes
for collection accounts primarily on the basis of price and the quality of its
services. From time to time, competitors may reduce the price of their services
in an effort to expand market share or to win a competitively bid municipal
contract.
LIABILITY INSURANCE AND BONDING
General
The nature of the Company's solid waste services business, automotive
rental business and automotive retail business exposes it to the risk of
liabilities arising out of its operations. Such potential liabilities could
involve, for example, claims for remediation costs, personal injury, property
damage, and damage to the environment in cases where the Company may be held
responsible for the escape of harmful materials; claims of employees, customers
or third parties for personal injury or property damage occurring in the course
of the Company's operations; or claims alleging negligence or professional
errors and omissions in the planning or performance of work. The Company could
also be subject to fines and civil and criminal penalties in connection with
alleged violations of regulatory requirements.
The Company either purchases commercial insurance or is a qualified self
insurer for automobile liability, general liability, workers compensation and
employer's liability claims. The Company retains up to $1 million of risk per
claim, plus claims handling expense under its various liability insurance
programs for third party property damage and bodily injury claims, primarily
relating to claims arising from the Company's automotive rental operations.
Umbrella liability insurance is purchased to provide insurance in excess of the
primary insurance policy and/or retained losses. Additionally, the Company
purchases property insurance subject to a $100,000 loss retention. The level of
risk retained by the Company may change in the future as insurance market
conditions or other factors affecting the economics of the Company's insurance
purchasing change. Although the Company strives to operate safely and prudently
and has, subject to certain limitations and exclusions, substantial liability
insurance, no assurance can be given that the Company will not be exposed to
uninsured liabilities which could have a material adverse effect on its
financial condition.
Provisions for retained or self insured claims are made by charges to
expense based upon periodic evaluations of the estimated ultimate liabilities on
reported and unreported claims. At December 31, 1997, the Company's consolidated
liability was estimated at $297.2 million against which the Company provides
approximately $115.5 million of collateral to insurance companies in the form of
letters of credit and surety bonds. The Company's collateral requirements are
set by insurance companies which underwrite the Company's insurance programs.
The Company's collateral requirements may change from time to time, based on,
among other things, the Company's claims experience.
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In the normal course of business, the Company may be required to post a
performance bond or a bank letter of credit in connection with municipal
residential collection contracts, the operation, closure or post-closure of
landfills, certain remediation contracts, certain environmental permits, and
certain business licenses and permits. Bonds issued by surety companies operate
as a financial guarantee of the Company's performance. To date, the Company has
satisfied financial responsibility requirements by making cash deposits,
obtaining bank letters of credit or by obtaining surety bonds.
Solid Waste Services
The nature of the Company's solid waste services business exposes it to the
risk of liability for damages arising out of its operations, including possible
damages to the environment. Because of the nature and scope of the possible
environmental damages, liabilities imposed in environmental litigation can be
significant. The majority of the Company's solid waste operations have third
party environmental liability insurance, subject to certain limitations and
exclusions, with limits in excess of those required by permit regulations;
however, there is no assurance that such limits would be adequate in the event
of a major loss, nor is there assurance that the Company would continue to carry
environmental liability insurance should market conditions in the insurance
industry make such coverage costs prohibitive.
Automotive Rental
The nature of the Company's automobile rental business exposes it to
significant risk of liability for damages arising primarily out of accidents
involving automobiles rented from the Company's vehicle rental fleet. Some
states impose vicarious liability on the Company which increases the Company's
risk. The Company manages its exposure through a combination of qualified self
insurance and risk transfer to insurance companies, subject to the risk
retention levels discussed in the preceding "General" section, which are rated
as financially sound by insurance rating agencies. The Company carries
substantial limits of liability coverage, but there is no assurance that
catastrophic losses might not exceed such limits.
Automotive Retail
The nature of the Company's automotive retail business exposes it to the
risk of liability for damages arising out of its operations. Additionally, this
industry segment has substantial risk of property loss due to the significant
concentration of property values at the Company's automotive retail locations.
Accordingly, the Company has purchased liability and property insurance as
discussed in the preceding "General" section.
EMPLOYEES
As of January 29, 1998, the Company employed approximately 56,000 full time
employees, approximately 4,000 of whom were covered by collective bargaining
agreements. The management of the Company believes that it has good relations
with its employees.
SEASONALITY
The Company's automotive retail operations generally experience higher
volumes of vehicle sales in the second and third quarters of each year due in
part to manufacturer incentives and consumer buying trends.
The Company's automotive rental operations and particularly the leisure
travel segment is highly seasonal. In these operations, the third quarter, which
includes the peak summer travel months, has historically been the strongest
quarter of the year. During the peak season, the Company increases its vehicle
rental fleet and workforce to accommodate increased rental activity. As a
result, any occurrence that disrupts travel patterns during the summer period
could have a material adverse effect on the annual performance of this segment.
The first and fourth quarters for the Company's automotive rental operations are
generally the weakest, when there is limited leisure travel and a greater
potential for adverse weather conditions. Many of the operating expenses such as
rent, general insurance and administrative personnel are fixed and cannot be
reduced during periods of decreased vehicle rental demand.
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TRADEMARKS
The Company, through its automotive retail operations, owns a number of
registered service marks and trademarks and also has a number of applications
pending to register, among other marks, "AUTONATION USA(SM)," "THE BETTER WAY TO
BUY A CAR(SM)" and "AMERICA'S BEST AUTOMOTIVE VALUE(SM)."
Pursuant to its franchise agreements, the Company has the non-exclusive
right to use and display vehicle manufacturers' trademarks, service marks and
designs in the form and manner approved by the applicable manufacturers at its
franchised automotive dealerships.
The Company, through its automotive rental operations, owns a number of
registered trademarks and service marks, including "ALAMO(R)", "ALAMO
EXPRESS(R)", "NATIONAL CAR RENTAL(R)" and "EMERALD CLUB"(R) and also has a
number of applications pending to register, among other marks, "JUST ASK
ALAMO(SM)", "QUICKSILVER(SM)", "TRAVEL SMART(SM)" and "CARTEMPS USA(SM)".
The current registrations of the Company's service marks and trademarks in
the United States and foreign countries are effective for varying periods of
time, and may be renewed periodically provided that the registered owner
complies with all applicable laws. For a description of certain challenges to
the Company's marks, See "ITEM 3. LEGAL AND ADMINISTRATIVE PROCEEDINGS."
RISK FACTORS
The businesses, financial condition, results of operations and future
prospects of the Company, and the prevailing market price and performance of the
Company's Common Stock, may be adversely affected by a number of factors,
including the matters discussed below. Certain statements and information
contained throughout this report on Form 10-K constitute "forward-looking
statements" within the meaning of the Federal Private Securities Litigation
Reform Act of 1995. Such forward-looking statements generally can be identified
by the use of terms such as "may," "will," "should," "expect," "anticipate,"
"estimate" or "continue" or variations thereof, or the use of such terms in the
negative, or words of similar import in the context presented. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance, or achievements
of the Company to be materially different from any future results, performance,
or achievements, expressed or implied, by such forward-looking statements. Such
risks, uncertainties and other factors include, among other things:
Risks of Rapid Expansion in Automotive Retail Business. The Company has
rapidly expanded and anticipates that it will continue to rapidly expand its
operations in automotive retail and related businesses through acquisitions of
franchised automotive dealerships and the development of AutoNation USA
megastores. The success of the Company's aggressive expansion plans in the
automotive retail industry is dependent on a number of factors including, but
not limited to, economic conditions, competitive environment, adequate capital,
proper site selection, construction schedules, supply of new and used vehicles,
consumer acceptance of the megastore concept in automotive retailing, vehicle
manufacturers' approval and control over dealership franchises, and the building
of brand recognition. Additionally, as the Company opens new AutoNation USA
megastores and reconditioning centers, such operations will incur fixed
operating and administrative costs immediately while revenue volume will tend to
grow more gradually. There can be no assurance that the Company will be
successful in the automotive retail industry or in any related automotive
industries it enters.
Need for Substantial Additional Capital. Additional capital will be
necessary to continue the Company's rapid expansion in its capital intensive
lines of business and to fully capitalize on acquisition and expansion
opportunities that may become available to the Company. There can be no
assurance that sufficient financing will be available on a timely basis, if at
all, or on terms acceptable to the Company. In the event that financing is not
available or is not available in the amounts or on terms acceptable to the
Company, the implementation of the Company's business strategy could be impeded
and the Company's ability to react to changes in the industries in which it does
business could be limited. This could have a material adverse effect on the
Company's business, financial condition and future prospects.
Risks of Acquisition Strategy and Uncertainties in Integrating Operations
and Achieving Cost Savings. The Company has an aggressive acquisition strategy
that has involved, and is expected to continue to involve,
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the acquisition of a significant number of companies. There can be no assurance,
however, that significant acquisitions will continue to occur at the same pace
or be available to the Company on favorable terms, if at all. Many of the
companies that the Company recently has acquired and companies that the Company
may acquire, are large enterprises with operations in different markets. The
success of any business combination is in part dependent on management's ability
following the transaction to consolidate operations, integrate departments,
systems and procedures and thereby obtain business efficiencies, economies of
scale and related cost savings. The challenges posed to the Company's management
may be particularly significant because integrating the recently acquired
companies must be addressed contemporaneously. There can be no assurance that
future consolidated results will improve as a result of cost savings and
efficiencies from any such acquisitions or proposed acquisitions, or as to the
timing or extent to which cost savings and efficiencies will be achieved.
Dependence on and Restrictions Imposed by Vehicle Manufacturers.
Automotive dealerships operate pursuant to franchise agreements with vehicle
manufacturers. In connection with the Company's acquisition of franchised
automotive dealerships, prior approval of the applicable vehicle manufacturer
may be required under the franchise agreement of each franchised automotive
dealership to be acquired, subject to state laws protecting a franchisee's right
to transfer such franchise. Although the Company has established framework
agreements with certain manufacturers to facilitate the acquisition of
dealerships operating their franchises, no assurance can be given that such
manufacturers or any other manufacturers will approve any particular franchised
automotive dealership acquisition by the Company or will not otherwise seek to
impose restrictions on the Company's future acquisitions, operations or capital
structure as a condition to granting such approval. Moreover, with respect to
certain brands of vehicles, the Company has negotiated certain limits on the
number of dealerships which the Company may acquire based upon either the
manufacturer's total sales revenue or a fixed number of dealerships. The Company
will approach such limits as it continues to expand. No assurance can be given
that the Company's growth strategy will be unaffected by such limits. In
addition, once the Company has acquired a franchised automotive dealership, the
Company must operate the dealership in accordance with the applicable franchise
agreement and in some cases, a framework agreement. Such agreements generally
provide the manufacturers with considerable influence over the operations of the
dealership and generally provide for termination of the franchise agreement for
a variety of causes. Finally, the success of any franchised automotive
dealership is dependent, to a large extent, on the success of the vehicle
manufacturer. Therefore, the success of the Company's automotive dealerships is
dependent on the financial condition, management, marketing, production and
distribution capabilities of the vehicle manufacturers of which the Company
holds franchises. Any event that may have a material adverse effect on a vehicle
manufacturer, such as labor strikes or adverse publicity, may have a material
adverse effect on the Company's business, financial condition and future
prospects.
Cost of Vehicle Rental Fleet. Fleet cost is the single largest expense of
the Company's automotive rental business, and it is materially affected by
vehicle manufacturers' Repurchase Programs. Repurchase prices under Repurchase
Programs are based on either (i) a predetermined percentage of a vehicle's
original capitalized cost and the month in which the vehicle is returned or (ii)
the original capitalized cost less a set monthly depreciation amount. Repurchase
Programs limit the risk of market value decline at the time of vehicle
disposition and enable vehicle rental companies to accurately project their
vehicle depreciation expense. The Company currently has Repurchase Programs with
General Motors and, to a lesser extent, with several other vehicle
manufacturers. During model year 1997, the Company purchased substantially all
of its U.S. vehicle rental fleet for Alamo and National and a majority of its
European vehicle rental fleet under Repurchase Programs. If vehicle
manufacturers reduce the number of vehicles available to vehicle rental
companies through Repurchase Programs, eliminate Repurchase Programs or increase
vehicle costs, there can be no assurance that the Company will be able to
control its rental fleet costs or selection, or to pass on any increases in
vehicle cost to rental customers. This could have a material adverse effect on
the Company's business, financial condition and future prospects.
Dependence on Vehicle Manufacturer's Credit. The Company's automotive
rental business depends upon debt financing for the purchase of revenue earning
vehicles for the Company's vehicle rental fleet. Since a substantial portion of
such financing is incurred in connection with major vehicle manufacturers'
Repurchase
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Programs, a significant change in the financial conditions of the vehicle
manufacturers, particularly General Motors, impairing their ability to
repurchase vehicles or their investment grade rating could significantly affect
the Company's ability to obtain such financing on as favorable terms. This could
have a material adverse effect on the Company's business, financial condition
and future prospects.
Dependence on Principal Vehicle Rental Fleet Supplier. General Motors has
been the principal supplier of rental vehicles to the Company. Under the terms
of the Company's Repurchase Programs with General Motors, the Company's vehicle
rental fleets must consist of specified minimum percentages of General Motors
vehicles (at least 51% for Alamo and at least 85% for National) during model
years 1996 through 2000 in order to receive certain discounts and other
incentives. Given the volume of vehicles purchased from General Motors, shifting
significant portions of the fleet purchases to other manufacturers would require
significant lead time. As a result, if General Motors were unable to supply the
Company with the planned number and type of rental vehicles, it could have a
material adverse effect on the Company's business, financial condition and
future prospects.
Regulation of Collision Damage Waivers and Other Vehicle Rental Related
Products. Adoption of national or additional state legislation limiting or
eliminating the sale or capping the rates of collision damage waivers, which
constitute a significant percentage of the Company's revenue from automotive
rental operations, could further restrict sales of this product. Also,
legislation imposing additional limitations on potential customer liability or
on the sale of other rental related products could increase the Company's costs
or decrease the Company's revenue in its vehicle rental business.
Loss of Airport Concessions. Certain vehicle rental competitors have on
occasion made objections to various airport authorities that, because Alamo and
National are commonly owned and share a number of back office functions, they
should not both be allowed to bid for or maintain airport concession agreements
in the same airport. No United States airport has accepted this position. Should
an airport take this position, it could prevent either Alamo or National from
doing business at that airport. This would most likely result in a decrease in
the Company's revenue from its automotive rental operations.
Seasonality; Dependence on Travel Industry and Fuel Supply. The Company's
automotive rental operations and particularly the leisure travel segment is
highly seasonal. In these operations, the third quarter, which includes the peak
summer travel months, has historically been the strongest quarter of the year.
During the peak season, the Company increases its rental fleet and workforce to
accommodate increased rental activity. As a result, any occurrence that disrupts
travel patterns during the summer period could have a material adverse effect on
the annual performance of this segment. The first and fourth quarters for the
Company's automotive rental operations are generally the weakest, when there is
limited leisure travel and a greater potential for adverse weather conditions.
Many of the operating expenses such as rent, general insurance and
administrative personnel are fixed and cannot be reduced during periods of
decreased rental demand. There can be no assurance that protracted periods of
inclement weather, decrease in air travel or any other occurrences that disrupt
travel patterns, disruption of fuel supplies or increases in fuel prices will
not have a material adverse effect on the Company's businesses and financial
condition.
Interest Rates and Restrictive Covenants. A substantial portion of the
Company's outstanding indebtedness is at floating interest rates. At times, the
Company uses interest rate swaps to manage the risk of interest rate
fluctuations. However, a substantial increase in interest rates could adversely
affect the Company's cost of indebtedness for borrowed money. In addition, most
of the Company's debt instruments contain covenants establishing certain
financial and operating restrictions. A failure to comply with any covenant or
any obligation contained in any credit agreement could result in an event of
default which could accelerate debt under certain other credit agreements.
Environmental Regulation. It may be necessary to expend considerable time,
effort and money to keep the Company's existing or acquired facilities in
compliance with applicable federal, state and local requirements which regulate
health, safety, environment, zoning and land use, and as to which there may not
be adequate insurance coverages or reserves. In addition, certain of the
Company's waste disposal operations that traverse state boundaries could be
adversely affected if the federal government or the state in which a landfill is
located limits or prohibits, imposes discriminatory fees on or otherwise seeks
to discourage the disposal,
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within state boundaries, of waste collected outside of the state. If
environmental laws become more stringent, the Company's environmental capital
expenditures and costs for environmental compliance may increase in the future.
In addition, due to the possibility of unanticipated factual or regulatory
developments, the amounts and timing of future environmental expenditures could
vary substantially from those currently anticipated.
Risks of Legal Proceedings. The Company generally will continue to be
involved in legal proceedings in the ordinary course of business. Citizen's
groups have become increasingly active in challenging the grant or renewal of
permits and licenses for landfills and other waste facilities, as well as for
automotive retail megastores and related facilities, and responding to such
challenges has further increased the costs associated with establishing new
facilities or expanding current facilities. A significant judgment against the
Company, the loss of a significant permit or license or the imposition of a
significant fine could have a material adverse effect on the Company's business,
financial condition and future prospects. The Company has been engaged in legal
and administrative proceedings in several states arising out of certain vehicle
manufacturers' attempts to limit the number and timing of the Company's
acquisitions of franchised automotive dealerships. The Company is also currently
a party to various other administrative and legal proceedings, particularly in
its automotive rental business, which have arisen in the ordinary course of its
business. See also "ITEM 3. LEGAL AND ADMINISTRATIVE PROCEEDINGS." No assurance
can be given with respect to the outcome of these administrative and legal
proceedings and the effect such outcomes may have on the Company.
Competitive Environment. All of the Company's businesses operate in highly
competitive environments. In addition, the solid waste industry and the
automotive retail industry are each changing as a result of rapid consolidation.
The future success of the Company will be affected by such changes, the nature
of which cannot be forecast with certainty. There can be no assurance that such
developments will not create additional competitive pressures on some or all of
the Company's businesses.
Possible Depressing Effect of Future Sales of Common Stock. As of the date
hereof, the Company has registered for sale, from time to time on a continuous
basis under several shelf registration statements, by certain selling
stockholders, an aggregate of approximately 345.2 million shares of Common
Stock. Although many of these shares have been sold, future sales of such shares
not yet sold, or the perception that such sales could occur, could adversely
affect the market price of Common Stock. There can be no assurance as to when,
and how many of, such shares will be sold and the effect such sales may have on
the market price of Common Stock. In addition, the Company intends to continue
to issue Common Stock in connection with certain of its acquisitions and in
other transactions. Such securities may be subject to resale restrictions in
accordance with the Securities Act and the regulations promulgated thereunder.
As such restrictions lapse or if such shares are registered for sale to the
public, such securities may be sold to the public. To facilitate the issuance of
shares of Common Stock in connection with acquisitions, since December 1996 the
Company registered an additional 91 million shares of Common Stock pursuant to
two acquisition shelf registration statements, under which an aggregate of
approximately 34.2 million shares have been issued as of February 1998. In the
event of the issuance and subsequent resale of a substantial number of shares of
Common Stock, or a perception that such sales could occur, there could be a
material adverse effect on the prevailing market price of Common Stock.
Dependence on Key Personnel. The Company's future success depends to a
significant extent on certain key executive officers, the loss of whom (whether
such loss is through resignation or other causes) could have a material adverse
effect on the Company's business and future prospects and the prevailing market
price of the Company's Common Stock.
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ITEM 2. PROPERTIES
INTRODUCTION
The Company's corporate headquarters are located in two office buildings in
downtown Fort Lauderdale, Florida, the Republic Tower and the Republic Plaza.
The Company owns, and occupies a substantial portion of, the Republic Tower
which consists of approximately 382,000 square feet of space; the remainder is
leased to third parties. The Republic Plaza consists of 165,110 square feet of
space, which is fully occupied by the Company. The Republic Plaza is one of the
properties leased by the Company under its operating lease credit facility.
Certain of the property and equipment of the Company and its subsidiaries are
subject to liens securing payment of portions of the Company's and its
subsidiaries' indebtedness. The Company and its subsidiaries also lease certain
of their offices and equipment. The Company believes that all of its facilities
are sufficient for its needs.
AUTOMOTIVE RETAIL
The Company's automotive retail operations own or lease approximately 164
sites in eighteen states, including franchised automotive dealerships,
AutoNation USA megastores and vehicle reconditioning centers. The Company
currently has 26 additional properties under construction or in the permitting
phase for AutoNation USA megastores and is in various stages of evaluating,
contracting and closing on 22 additional sites for such purpose.
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The following table lists by Automotive Retail District the automotive
retail properties owned or operated by the Company as of February 5, 1997:
SOUTH FLORIDA DISTRICT
FRANCHISED DEALERSHIPS
Steve Moore Chevrolet/
Cadillac/Buick/Oldsmobile 1700 E. Palm Beach Road, Belle Glade,
FL
Fronrath Chrysler-Plymouth
Jeep 4250 N. State Road 7, Coconut Creek,
FL
Steve Moore Chevrolet Delray 310 S.E. 6th Avenue, Delray Beach, FL
Wallace Dodge I-95 and Linton Blvd., Delray Beach,
FL
Wallace Ford I-95 and Linton Blvd., Delray Beach,
FL
Wallace Nissan I-95 and Linton Blvd., Delray Beach,
FL
Maroone Chevrolet 1300 N. Federal Highway, Ft.
Lauderdale, FL
Maroone Ford 1333 N. Federal Highway, Ft.
Lauderdale, FL
Steve Moore Chevrolet 5757 Lake Worth Road, Greenacres, FL
Hollywood Honda 1450 N. State Road 7, Hollywood, FL
Hollywood Kia 1350 N. State Road 7, Hollywood, FL
Hollywood Nissan Chevrolet 1640 S. State Road 7, Hollywood, FL
Wallace Lincoln-Mercury 3626 Northlake Boulevard, Lake Park,
FL
Mullinax Ford South 5401 W. Copans Road, Margate, FL
Anthony Abraham Chevrolet 4181 SW 8th Street, Miami, FL
Central Hyundai/Kia 3199 N.W. 36th Street, Miami, FL
Kendall Kia 17120 S. Dixie Highway, Miami, FL
Kendall Toyota 10943 S. Dixie Highway, Miami, FL
Lexus of Kendall 10943 S. Dixie Highway, Miami, FL
Maroone Dodge 21151 N.W. 2nd Avenue, Miami, FL
Miami Honda 3100 N.W. 36th Street, Miami, FL
Sunshine Ford 16800 N.W. 57th Ave., Miami, FL
Maroone Chevrolet 8600 Pines Boulevard, Pembroke Pines,
FL
Maroone Oldsmobile/Isuzu 8600 Pines Boulevard, Pembroke Pines,
FL
Maroone Dodge Pompano 2300 N. Federal Highway, Pompano, FL
Wallace Stuart
Lincoln-Mercury 3801 S.E. Federal Highway, Stuart, FL
Wallace Stuart Mitsubishi 3801 S.E. Federal Highway, Stuart, FL
AUTONATION USA MEGASTORES
AutoNation USA 4401 West Sample Road, Coconut Creek,
FL
AutoNation USA 13601 Pines Boulevard, Pembroke
Pines, FL
AutoNation USA 17305 S. Dixie Hwy., Perrine, FL
NORTH FLORIDA DISTRICT
FRANCHISED DEALERSHIPS
Jim Quinlan
Ford/Lincoln-Mercury 7200 Broad Street, Brooksville, FL
Courtesy Buick 2725 S. Highway 17-92, Casselbury, FL
Carlisle Lincoln-Mercury 2085 Gulf-to-Bay Blvd., Clearwater,
FL
Jim Quinlan Chevrolet 15005 U.S. Highway 19 North,
Clearwater, FL
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Jim Quinlan Nissan 15005 U.S. Highway 19 North,
Clearwater, FL
Kenyon Dodge 19400 U.S. Highway 19 North,
Clearwater, FL
Lexus of Clearwater 27547 U.S. Highway 19 North,
Clearwater, FL
Lokey Honda/Isuzu 17275 U.S. Highway 19 North,
Clearwater, FL
Mike Shad
Chrysler-Plymouth/Jeep-Eagle 1736 Cassat Avenue, Jacksonville, FL
Mike Shad Ford 7700 Blanding Boulevard,
Jacksonville, FL
Orange Park Toyota 7897 Blanding Blvd., Jacksonville, FL
Sunrise Nissan of
Jacksonville 1810 Cassat Avenue, Jacksonville, FL
Courtesy Suzuki 2180 E. Irlo Bronson Mem. Hwy. 192,
Kissimmee, FL
Courtesy Kia 690 N. Highway 17-92, Longwood, FL
Courtesy's Magic Isuzu 690 N. Highway 17-92, Longwood, FL
Courtesy Pontiac/GMC 650 N. Highway 17-92, Longwood, FL
Courtesy Suzuki 690 N. Highway 17-92, Longwood, FL
Sunrise Nissan of Orange
Park 1565 Welly Road, Orange Park, FL
Courtesy Acura 8620 S. Orange Blossom Trail,
Orlando, FL
Courtesy Suzuki/South 8600 S. Orange Blossom Trail,
Orlando, FL
Sutherlin Toyota 8501 U.S. Highway 19 North, Pinellas
Park, FL
Coastal Cadillac 9929 U.S. Highway 19, Port Richey, FL
Carlisle Ford 2525 34th Street North, St.
Petersburg, FL
Anthony Abraham
Chevrolet/Geo 1700 East Hillsborough Ave., Tampa,
FL
Lexus of Tampa Bay 5852 Dale Mabry, Tampa, FL
AUTONATION USA MEGASTORES
AutoNation USA 13600 Icot Boulevard, Clearwater, FL
AutoNation USA 7155 Bonneval Road, Jacksonville, FL
AutoNation USA 4911 Wayside Drive, Sanford, FL
AutoNation USA 3738 Autoway Drive, Tampa, FL
SOUTHEAST DISTRICT
FRANCHISED DEALERSHIPS
Hoover Toyota 1595 Montgomery Highway, Birmingham,
AL
Lexus of Mobile 3040 South Government Blvd., Mobile,
AL
Springhill Toyota 3062 South Government Blvd., Mobile,
AL
Treadwell Ford 901 S. Beltine Highway, Mobile, AL
Treadwell Honda 3024 South Government Blvd., Mobile,
AL
Miller - Sutherlin
Automotive 902 North Martin Street, Pell City,
AL
Sutherlin Imports, Inc. 9295 Highway 5, Douglasville, GA
Sutherlin
Chrysler-Plymouth/Jeep-Eagle 1968 Thornton Road, Lithia Springs,
GA
Sutherlin Nissan of Lithia
Springs 811 Thornton Road, Lithia Springs, GA
Sutherlin Nissan of Marietta 925 Cobb Parkway, Marietta, GA
Hub Ford 6275 Lawrenceville Highway, Tucker,
GA
Gene Evans Ford 4355 Jonesboro Road, Union City, GA
Superior Nissan 9215 South Blvd., Charlotte, NC
Northside Nissan 7131 Rivers Avenue, Charleston, SC
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West Ashley Toyota 2100 Savannah Highway, Charleston, SC
West Side Honda 8809 Kingston Pike, Knoxville, TN
Courtesy Honda 2785 Mendenhall Road South, Memphis,
TN
Covington Pike Honda 1990 Covington Pike, Memphis, TN
Dobbs Bros. Lexus 2711 Mendenhall Road South, Memphis,
TN
Dobbs Bros.
Mazda/Buick/Mitsubishi 6400 Winchester Road, Memphis, TN
Dobbs Bros. Pontiac-GMC 2621 Mendenhall Road South, Memphis,
TN
Dobbs Ford 2515 Mt. Moriah Road, Memphis, TN
AUTONATION USA MEGASTORES
AutoNation USA 1555 Mansell Road, Alpharetta, GA
AutoNation USA 6850 Mount Zion Blvd., Morrow, GA
AutoNation USA 4550 Greer Circle, Stone Mountain, GA
SOUTH TEXAS DISTRICT
FRANCHISED DEALERSHIPS
Champion Ford, Inc. 14515 Auto Park Way, Houston, TX
Mike Hall Chevrolet 8100 South Highway 6, Houston, TX
Texan Lincoln-Mercury, Inc. 11411 FM 1960 West, Houston, TX
Texan Ford 20777 Katy Freeway, Katy, TX
AUTONATION USA MEGASTORES
AutoNation USA 12800 Gulf Freeway, Almeda, TX
AutoNation USA 17510 N. Expressway, Houston, TX
AutoNation USA 5611 UTSA Blvd., San Antonio, TX
AutoNation USA 12053 S.W. Freeway, Stafford, TX
NORTH TEXAS DISTRICT
FRANCHISED DEALERSHIPS
Bledsoe Dodge 1911 E. Division, Arlington, TX
Bankston Lincoln Mercury
Saab 4747 LBJ Freeway, Dallas, TX
Bankston Nissan of Dallas 13130 Preston Rd., Dallas TX
Bledsoe Dodge 12000 E. Northwest Hwy., Dallas, TX
Bledsoe Dodge - North 7100 Marvin D. Love Freeway, Dallas,
TX
Charlie Hillard Buick 5000 Bryant Irvin Road, Ft. Worth, TX
Charlie Hillard Ford 5000 Bryant Irvin Road, Ft. Worth, TX
Charlie Hillard Mazda 5000 Bryant Irvin Road, Ft. Worth, TX
Hillard Kia of Ft. Worth 5000 Bryant Irvin Road, Ft. Worth, TX
Lexus of Ft. Worth 5000 Bryant Irvin Road, Ft. Worth, TX
Bankston Ford of Frisco 2391 Preston Rd. at Hwy. 121, Frisco,
TX
Bankston Nissan of Irving 1500 E. Airport Freeway, Irving, TX
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Bankston Nissan of
Lewisville 1601 S. Stemmons, Lewisville, TX
Jack Sherman Buick 4100 West Wall Street, Midland, TX
Jack Sherman Chevrolet 4100 West Wall Street, Midland, TX
Jack Sherman Mazda 4100 West Wall Street, Midland, TX
AUTONATION USA MEGASTORES
AutoNation USA 11990 N. Central Expressway, Dallas
TX
AutoNation USA 2615 Interstate 20, Grand Prairie, TX
AutoNation USA 1251 E. Airport Freeway, Irving, TX
AutoNation USA 601 Waters Ridge, Lewisville, TX
SOUTHWEST DISTRICT
FRANCHISED DEALERSHIPS
Bell Dodge 1645 West Bell Road, Phoenix, AZ
Lou Grubb Chevrolet 2646 W Camelback Road, Phoenix, AZ
Lou Grubb Ford 8555 E. Frank Lloyd Wright Blvd.,
Scottsdale, AZ
Tempe Toyota 7970 South Autoplex Loop, Tempe, AZ
Desert Valley GMC 330 N. Gibson Road, Henderson, NV
Desert Buick GMC 6400 W. Sahara Avenue, Las Vegas, NV
Desert GMC East 3222 E. Sahara Avenue, Las Vegas, NV
Desert Lincoln-Mercury 5750 West Sahara Avenue, Las Vegas,
NV
AUTONATION USA MEGASTORES
AutoNation USA 7450 W. Orchid Lane, Chandler, AZ
AutoNation USA 1000 W. Warm Springs Road, Henderson,
NV
SOUTHERN CALIFORNIA DISTRICT
FRANCHISED DEALERSHIPS
Champion Chevrolet 707 N. Sepulveda Blvd., Manhattan
Beach, CA
Magic Ford 23920 Creekside Road, Valencia, CA
Valencia Lincoln-Mercury 24135 Creekside Road, Valencia, CA
AUTONATION USA MEGASTORES
AutoNation USA 9101 Research Drive, Irvine, CA
NORTHWEST DISTRICT
FRANCHISED DEALERSHIPS
Anderson Chevrolet -
Cupertino 20955-A Stevens Creek Blvd.,
Cupertino, CA
Anderson Chrysler-Plymouth 20955-B Stevens Creek Blvd.,
Cupertino, CA
Anderson Lexus 43690 Auto Mall Circle, Fremont, CA
Anderson Chevrolet - Los
Gatos 15600 Los Gatos Blvd., Los Gatos, CA
Anderson Cadillac-Oldsmobile 1300 El Camino Real, Menlo Park, CA
Anderson Chevrolet - Menlo
Park 300 El Camino Real, Menlo Park, CA
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Anderson Honda-Isuzu 1766 Embarcadero Road, Palo Alto, CA
BMW of Bellevue 13617 Northrop Way Northwest,
Bellevue, WA
Appleway Chevrolet-GEO 8500 E. Sprague Avenue, Spokane, WA
Appleway Mazda-Subaru-VW-Audi 10000 E. Sprague Avenue, Spokane, WA
Appleway Mitsubishi 8400 E. Sprague Avenue, Spokane, WA
Appleway Toyota 8600 E. Sprague Avenue, Spokane, WA
Lexus of Spokane 8520 E. Sprague Avenue, Spokane, WA
DENVER DISTRICT
FRANCHISED DEALERSHIPS
Emich Lincoln-Mercury, Inc. 100 Havana, Aurora, CO
Marshall Ford/Kia 3200 28th St., Boulder, CO
Marshall
Lincoln-Mercury/Mazda 2470 49th St., Boulder, CO
Chesrown Chevrolet 7300 N. Broadway, Denver, CO
Chesrown Collision Center 7420 N. Washington, Denver, CO
Chesrown's SW Dodge 7890 W. Tufts Ave., Denver, CO
Emich Chrysler-Plymouth 5001 S. Broadway, Englewood, CO
Emich Pontiac-Buick-GMC
Truck-Subaru 9899 East Arapahoe Road, Englewood,
CO
Emich Chrysler-Plymouth/
Jeep-Eagle 16300 West Colfax Avenue, Golden, CO
Emich Oldsmobile, Inc. 16400 West Colfax Avenue, Golden, CO
Emich Subaru West, Inc. 16401 West Colfax Avenue, Golden, CO
Emich Mitsubishi, Inc. 5700 West Colfax Avenue, Lakewood, CO
Emich Dodge, Inc. 5445 S. Broadway, Littleton, CO
Chesrown's Friendly Ford 3765 Wadsworth Blvd., Wheatridge, CO
NORTH/NORTHEAST DISTRICT
FRANCHISED DEALERSHIPS
Libertyville Toyota 1180 S. Milwaukee Avenue,
Libertyville, IL
Taylor Jeep Eagle 12000 Telegraph Road, Taylor, MI
Flemington
Chrysler/Plymouth/Dodge/
Jeep Eagle/Mazda Route 202 & Route 31, Flemington, NJ
Flemington Circle
Buick/GMC/Chevy/Isuzu Route 202 & Route 31, Flemington, NJ
Flemington Ford,
Lincoln-Mercury, Nissan Route 202 & Route 31, Flemington, NJ
Flemington Infiniti 204 US Highway 202 North, Flemington,
NJ
Flemington Mitsubishi Route 202 & Route 31, Flemington, NJ
Flemington Pontiac/Subaru 167 Route 31, Flemington, NJ
Flemington Porsche-Audi-VW-BMW Route 202 & Route 31, Flemington, NJ
Hunterdon BMW 1080 Route 22W, Lebanon, NJ
Land Rover Princeton 1125 U.S. Highway Route 206,
Princeton, NJ
Princeton Nassau
Ford/Lincoln-Mercury-Audi 902 Route 206, Princeton, NJ
Al Maroone Ford 4045 Transit Road, Williamsville, NY
26
<PAGE> 29
Ed Mullinax Ford 8000 Leavitt Road, Amherst, OH
Mullinax Lincoln-Mercury 1700 Pearl Road, Brunswick, OH
Mullinax Jeep-Eagle of
Mayfield 5930 Mayfield Road, Mayfield, OH
Mullinax Lincoln-Mercury of
Mayfield 5930 Mayfield Road, Mayfield, OH
Mullinax Ford North Canton 5600 Whipple Avenue, North Canton, OH
John Lance Ford 23775 Center Ridge Rd, Westlake, OH
Mullinax Ford East 28825 Euclid Avenue, Wickliffe, OH
AUTONATION USA MEGASTORES
AutoNation USA 9820 Kincaid Drive, Fishers, IN
AutoNation USA 39600 Ford Road, Canton, MI
AutoNation USA 36250 Van Dyke, Sterling Hts., MI
AutoNation USA 3725 Colonel Glenn Hwy., Beaver
Creek, OH
AutoNation USA 12105 Omniplex Court, Forest Park, OH
AUTOMOTIVE RENTAL
The Company owns or leases its vehicle rental facilities. The facilities
serving airport locations are located on airport property or near the airport in
locations convenient for bus transport of customers to the airport. Almost all
of the airport locations are leased from governmental authorities charged with
the operation of such airports under arrangements generally providing for either
the payment of a fixed rent or the payment of rent based on a percentage of
revenues at a location with a guaranteed annual minimum, while most of the
Company's other facility leases provide for fixed rental payments. The Company's
airport facility in each metropolitan area includes, in addition to concession
space, vehicle storage and maintenance areas, as well as rental and return
facilities. The typical airport facility leases are not necessarily coterminous
with the Company's local airport concession agreement. Most of the Company's
airport facility leases expire at varying times over the next ten years. Certain
of such leases also have purchase options at the end of their terms.
Alamo's corporate headquarters is located in and occupies a substantial
portion of the Company's headquarters in Fort Lauderdale, Florida. Alamo also
currently owns its car rental reservation and data center in Fort Lauderdale,
Florida and leases its reservation centers in Charlotte, North Carolina, Boca
Raton, Florida and Salt Lake City, Utah. The Fort Lauderdale reservation center
shares a 60,000 square foot facility which houses Alamo's fleet control and data
processing departments.
National owns its corporate headquarters facility in Minneapolis,
Minnesota, which consists of 327,353 square feet of space. National occupies a
substantial portion of such facility, with the remainder leased to non-Company
tenants. National occupies an 83,000 square foot service center in Charleston,
S.C., which houses a new state-of-the-art reservations center.
The Company's local/replacement vehicle rental division had approximately
312 locations in the United States at December 31, 1997. The real estate is
leased by either Spirit Rent-A-Car, Inc., Snappy Car Rental, Inc. or Alamo.
Spirit leases its headquarters facility in Solon, Ohio, which consists of
approximately 26,059 square feet.
27
<PAGE> 30
SOLID WASTE SERVICES
The following table provides certain information regarding the landfills
owned or operated by the Company as of December 31, 1997:
<TABLE>
<CAPTION>
UNUSED
TOTAL PERMITTED PERMITTED
LANDFILL NAME MARKETS SERVED ACREAGE ACREAGE ACREAGE
- ------------- -------------- ------- --------- ---------
<S> <C> <C> <C> <C>
Anderson................. Northern California 1,200 150 100
Apex..................... Las Vegas, Clark County, Nevada 2,340 1,233 1,153
Broadhurst Landfill...... Wayne County, Georgia 900 80 64
C&T Regional............. Rio Grande Valley, Texas 194 94 45
Charter Waste............ West Texas 396 300 270
City of Rotterdam........ Albany, New York 33 5 --
Cleveland Container...... Southwest North Carolina 183 34 --
CWI Florida (f/k/a
Schofield)............. Winter Haven, Florida 80 60 53
Dozit Landfill........... Union County, Kentucky 232 47 33
East Carolina Landfill... Bertie County, North Carolina 729 113 74
Epperson Landfill........ Grant County, Kentucky 704 100 58
Forest Lawn.............. Three Oaks, Michigan 387 126 48
Green Valley Landfill.... Greenup County, Kentucky 263 37 12
Holland Excavating....... DeLand, Florida 60 24 10
Laughlin................. Las Vegas, Clark County, Nevada 80 40 16
Los Mangos............... Alajuela, Costa Rica 41 16 --
Mid-State Landfill....... Bibb County, Georgia 792 73 73
National ServAll......... Fort Wayne, Indiana 519 204 158
Nine Mile Road........... Northeast Florida 154 19 5
Northeast Sanitary....... Eastover, South Carolina 73 42 15
Northwest Tennessee...... Union City, Tennessee 600 120 106
Oak Grove................ North Georgia 202 60 39
Ohio County Landfill..... Ohio County, Kentucky 908 179 143
Pepperhill............... Southeast South Carolina 37 22 17
Pine Ridge............... South Atlanta, Georgia 850 101 96
Pinellas................. Central Florida 733 478 200
Presidio................. West Texas 10 10 6
Republic/CSC............. North Central Texas 289 254 183
Republic/Alpine.......... Southwest Texas 96 85 63
Republic/Imperial........ Southern California 160 79 48
Republic/Maloy........... East Central Texas 389 270 204
Safety Lights............ Memphis, Tennessee 49 21 11
San Angelo............... West Texas 283 283 133
Southern Illinois
Regional............... DeSoto, Illinois 219 113 35
Springfield
Environmental.......... Mt. Vernon, Indiana 54 25 14
Taymouth................. Central Michigan 138 25 10
Tri-K Landfill........... Lincoln County, Kentucky 572 64 49
United Refuse............ Fort Wayne, Indiana 305 84 --
Upper Piedmont
Environmental.......... Central North Carolina 614 70 62
Uwharrie Landfill........ Montgomery County, North Carolina 905 58 49
Victory Environmental.... Terre Haute, Indiana 461 204 84
Wabash Valley............ Northeast Indiana 262 66 12
------ ----- -----
Total............................................. 17,496 5,468 3,751
====== ===== =====
</TABLE>
28
<PAGE> 31
ITEM 3. LEGAL AND ADMINISTRATIVE PROCEEDINGS
By letter dated January 11, 1996, Acme Commercial Corp. d/b/a CarMax, The
Auto Superstore, ("CarMax") accused AutoNation USA of infringing CarMax's
trademark rights by using the marks AutoNation USA and "The Better Way to Buy a
Car." AutoNation denied such allegations and on February 5, 1996, filed suit in
the U.S. District Court for the Southern District of Florida seeking a
declaratory judgment that its use and registration of such marks do not violate
any of the rights of CarMax. On or about October 11, 1996, CarMax filed a
counterclaim against AutoNation seeking damages and an order enjoining
AutoNation from using certain marks, including the marks AutoNation USA and "The
Better Way to Buy a Car." The case is expected to go to trial in the near
future. Although it is impossible to predict the outcome of this litigation, the
Company believes that AutoNation USA has a valid basis for its complaint and
that CarMax's allegations and counterclaims are without merit.
The Company is also a party to various other general corporate legal
proceedings which have arisen in the ordinary course of its business. While the
results of these matters, as well as matter described above, cannot be predicted
with certainty, the Company believes that losses, if any, resulting from the
ultimate resolution of these matters will not have a material adverse effect on
the Company's consolidated results of operations, cash flows or financial
position. However, unfavorable resolution of each matter individually or in the
aggregate could affect the consolidated results of operations or cash flows for
the quarterly periods in which they are resolved.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the stockholders of the Company
during the fourth quarter of the fiscal year ended December 31, 1997.
29
<PAGE> 32
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET INFORMATION, HOLDERS AND DIVIDENDS
Since June 20, 1997, the Company's Common Stock has been traded on the NYSE
under the symbol "RII." Prior to that date, the Common Stock was listed on the
Nasdaq Stock Market -- National Market ("NASDAQ") and traded under the symbol
"RWIN." The following table sets forth, for the periods indicated, the high and
low prices per share of the Common Stock as reported by the NYSE or by NASDAQ,
whichever is applicable. All prices presented herein have been adjusted to
reflect the two for one stock split in the form of a 100% stock dividend
distributed in June 1996.
<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C> <C>
1996
First Quarter............................................... $ 17 15/16 $ 13 3/16
Second Quarter.............................................. 34 1/8 15
Third Quarter............................................... 31 19 1/4
Fourth Quarter.............................................. 34 5/8 27 3/8
1997
First Quarter............................................... 44 3/8 25 5/8
Second Quarter.............................................. 34 19 7/8
Third Quarter............................................... 33 1/8 21 7/8
Fourth Quarter.............................................. 36 19
</TABLE>
On March 25, 1998, the closing price of the Common Stock was $27.50 per
share as reported by the NYSE. On March 25, 1998, there were approximately 5,650
holders of record of the Common Stock.
Since December 1989, the Company has not declared or paid any cash
dividends on the Common Stock. The Company currently intends to retain its
earnings for future growth and, therefore, does not anticipate paying cash
dividends in the foreseeable future.
SALES OF UNREGISTERED SECURITIES DURING THE FOURTH QUARTER OF 1997
From time to time throughout the fourth quarter of 1997, the Company
issued, in reliance upon Section 4(2) of the Securities Act of 1933, as amended,
an aggregate of 102,666 shares of Common Stock to certain warrant holders in
connection with the exercise of warrants to purchase shares of Common Stock at
exercise prices ranging from $2.95 to $7.13 per share.
30
<PAGE> 33
ITEM 6. SELECTED FINANCIAL DATA
The following Selected Financial Data should be read in conjunction with
"ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS," the Company's Consolidated Financial Statements and Notes
thereto and other financial information included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenue.............................. $ 10,305.6 $ 6,094.6 $ 4,526.9 $ 3,376.8 $ 2,695.3
Income from continuing
operations before extraordinary
charge............................. 200.2 7.4 38.3 48.5 37.8
Net income (loss).................... 439.7 (15.8) 18.1 47.1 12.2
Basic earnings (loss) per share:
Continuing operations.............. .50 .02 .16 .26 .21
Discontinued operations............ .59 .03 (.08) (.01) (.14)
Extraordinary charge............... -- (.10) -- -- --
Net income (loss).................. 1.09 (.05) .08 .25 .07
Diluted earnings (loss) per share:
Continuing operations.............. .46 .02 .15 .26 .21
Discontinued operations............ .56 .02 (.08) (.01) (.14)
Extraordinary charge............... -- (.09) -- -- --
Net income (loss).................. 1.02 (.05) .07 .25 .07
Total assets......................... 10,527.3 6,735.0 5,336.8 3,405.5 2,921.9
Revenue earning vehicle debt......... 4,172.1 3,380.4 2,961.2 1,829.2 1,509.1
Long-term debt, net of current
maturities......................... 370.9 393.6 329.7 298.9 265.2
Shareholders' equity................. 3,484.3 1,413.0 772.8 425.8 368.2
</TABLE>
See Notes 2, 4, 6, 10 and 11 of Notes to Consolidated Financial Statements
for discussion of business combinations, notes payable and long-term debt,
shareholders' equity, restructuring and other charges and discontinued
operations and their effect on comparability of year-to-year data. See "ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS" for a
discussion of the Company's dividend policy.
31
<PAGE> 34
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto of Republic Industries, Inc.
(the "Company") which are included elsewhere herein. The historical financial
statements of the Company have been restated to include the financial position
and results of operations of significant businesses acquired in 1997 and
accounted for under the pooling of interests method of accounting as if the
companies had operated as one entity since inception. All references to
historical share and per share data of the Company's common stock, par value
$.01 per share ("Common Stock"), have been retroactively adjusted to reflect the
two-for-one stock split that occurred in June 1996, which is more fully
described in Note 6, Shareholders' Equity, of Notes to Consolidated Financial
Statements.
In October 1997, the Company sold its electronic security services
division. Accordingly, the operating results and gain on disposition of the
electronic security services segment have been classified as discontinued
operations for all periods presented in the accompanying Consolidated Financial
Statements.
BUSINESS COMBINATIONS
The Company makes its decisions to acquire or invest in businesses based on
financial and strategic considerations.
Significant businesses acquired through December 31, 1997 and accounted for
under the pooling of interests method of accounting have been included
retroactively in the Consolidated Financial Statements as if the companies had
operated as one entity since inception. Businesses acquired through December 31,
1997 and accounted for under the purchase method of accounting are included in
the Consolidated Financial Statements from the date of acquisition.
During the year ended December 31, 1997, the Company acquired various
businesses in the automotive retail, automotive rental and solid waste services
industries. The Company issued an aggregate of approximately 53.7 million shares
of Common Stock and paid approximately $346.6 million of cash or notes in such
transactions which have been accounted for under the purchase method of
accounting, and issued an aggregate of approximately 83.5 million shares of
Common Stock in such transactions which have been accounted for under the
pooling of interests method of accounting. Included in the shares of Common
Stock issued for acquisitions accounted for under the pooling of interests
method of accounting are approximately 15.2 million shares issued for
acquisitions which were not material individually or in the aggregate and,
consequently, prior period financial statements were not restated for such
acquisitions.
During the year ended December 31, 1996, the Company acquired various
businesses in the automotive retail, automotive rental, solid waste services and
electronic security services industries. The Company issued an aggregate of
approximately 9.1 million shares of Common Stock and paid approximately $52.1
million of cash in such transactions which have been accounted for under the
purchase method of accounting, and issued an aggregate of approximately 71.4
million shares of Common Stock in such transactions which have been accounted
for under the pooling of interests method of accounting. Included in the shares
of Common Stock issued for acquisitions accounted for under the pooling of
interests method of accounting are approximately 13.0 million shares issued for
acquisitions which were not material individually or in the aggregate and,
consequently, prior period financial statements were not restated for such
acquisitions.
During the year ended December 31, 1995, the Company acquired various
businesses in the automotive rental, solid waste services and electronic
security services industries. The Company issued an aggregate of approximately
17.3 million shares of Common Stock and paid approximately $1.3 billion of cash
in such transactions which have been accounted for under the purchase method of
accounting, and issued an aggregate of approximately 36.3 million shares of
Common Stock for such transactions which have been accounted for under the
pooling of interests method of accounting. The cash paid for acquisitions in
1995 relates primarily to National Car Rental System, Inc.'s ("National")
acquisition of its predecessor company from General Motors Corporation. National
was acquired by the Company during 1997 and accounted for under the pooling of
interests method of accounting.
As discussed in Note 11, Discontinued Operations, of Notes to Consolidated
Financial Statements, the Company sold its electronic security services division
in October 1997. Accordingly, the financial position and
32
<PAGE> 35
results of operations of businesses acquired in the electronic security services
segment have been accounted for as discontinued operations in the accompanying
Consolidated Financial Statements.
In January 1998, the Company acquired various businesses in the automotive
retail and solid waste services industries for an aggregate purchase price of
approximately $434.0 million consisting of cash and/or shares of Common Stock.
In addition, through January 1998, the Company has signed definitive agreements
to acquire various businesses which own and operate franchised automotive
dealerships for an aggregate purchase price of approximately $478.0 million to
be paid in cash and/or shares of Common Stock. These completed and pending
acquisitions will be accounted for under the purchase method of accounting. The
closing of each pending transaction is subject to customary conditions,
including manufacturer and regulatory approval.
See Note 2, Business Combinations, of Notes to Consolidated Financial
Statements, for further discussion of business combinations.
CONSOLIDATED RESULTS OF OPERATIONS
Overview
The Company reported net income of $439.7 million or $1.02 per share on a
diluted basis for the year ended December 31, 1997 as compared to a net loss of
$(15.8) million or $(.05) per share in 1996 and net income of $18.1 million or
$.07 per share in 1995. Operating results for the year ended December 31, 1997
include gains on the sale of the electronic security services division and the
ADT Limited common stock which were partially offset by restructuring and other
pre-tax charges as further described below. Operating results for the year ended
December 31, 1996 also include restructuring and other pre-tax charges as well
as an extraordinary charge, both of which are further described below.
The diluted earnings per share effect of restructuring and other pre-tax
charges and certain non-recurring gains (losses) on the Company's net income was
to increase diluted earnings per share by $.32 from $.70 to $1.02 in 1997, and
to decrease diluted earnings per share by $.34 in 1996 and $.13 in 1995.
Restructuring and Other Charges
During the year ended December 31, 1997, the Company recorded pre-tax
charges of approximately $244.1 million. These charges consisted of $150.0
million associated with combining the Company's franchised automotive
dealerships and used vehicle megastore operations into one automotive retail
division and $94.1 million associated with integrating the Company's automotive
rental operations. Approximately $85.0 million of the automotive retail charge
appears as restructuring and other charges in the Company's Consolidated
Statement of Operations for the year ended December 31, 1997 and consists of:
$42.0 million for consolidation of information systems; $25.0 million related
primarily to relocating the Company's Valu Stop(SM) operations; and $18.0
million of severance and other costs. The remaining $65.0 million of the
automotive retail charge relates to inventory consolidation and is included in
cost of automotive retail sales in the Company's Consolidated Statement of
Operations for the year ended December 31, 1997. The primary components of the
$94.1 million automotive rental charge are as follows: $32.0 million related to
elimination of redundant information systems; $18.0 million related to fleet
consolidation; and $44.1 million related to closure or sale of duplicate rental
facilities and merger and other non-recurring expenses. Through December 31,
1997, the Company has spent approximately $58.1 million related to integration
and other activities and has recorded $92.3 million of these charges against
certain assets. As of December 31, 1997, approximately $93.7 million remained in
accrued liabilities related to these charges. The Company believes the
integration activities associated with these charges will be substantially
completed within one year.
During the year ended December 31, 1996, the Company recorded pre-tax
charges of approximately $95.5 million related primarily to the integration of
the operations of Alamo Rent-A-Car, Inc. ("Alamo")into those of the Company.
Also included in these charges are merger expenses associated with certain
acquisitions accounted for under the pooling of interests method of accounting.
Approximately $38.3 million of such expenses appear as restructuring and other
charges in the Company's Consolidated Statement of Operations for the year ended
December 31, 1996 with the remainder of approximately $57.2 million included in
cost of automotive rental operations and selling, general and administrative
expenses. These costs primarily include asset write-offs, severance benefits,
accounting and legal merger costs and changes in various estimated
33
<PAGE> 36
reserve requirements. Through December 31, 1997, the Company has spent
substantially all of the $38.3 million included in restructuring and other
charges in the 1996 Consolidated Statement of Operations.
Extraordinary Charge
During the year ended December 31, 1996, in connection with refinancing
Alamo's debt at substantially lower interest rates, the Company recorded an
extraordinary charge of approximately $31.6 million, net of income taxes.
Included in this charge are bond redemption premiums, the write-off of debt
issue costs, prepayment penalties and other related fees. See Note 4, Notes
Payable and Long-Term Debt, of Notes to Consolidated Financial Statements for
further discussion of this charge.
Discontinued Operations
In October 1997, the Company sold its electronic security services division
for approximately $610.0 million resulting in an after tax gain of approximately
$230.0 million. Accordingly, the operating results and the gain on disposition
of the electronic security services segment have been classified as discontinued
operations for all periods presented in the accompanying Consolidated Financial
Statements.
During the year ended December 31, 1995, the Company disposed of its mining
and citrus operations and spun-off its hazardous waste services segment
resulting in a loss from discontinued operations of approximately $25.1 million,
net of income taxes. Operating results for the periods prior to disposition have
been classified as discontinued operations in the accompanying Consolidated
Financial Statements.
See Note 11, Discontinued Operations, of Notes to Consolidated Financial
Statements, for further discussion of these transactions.
BUSINESS SEGMENT INFORMATION
The following table sets forth revenue with percentages of total revenue,
and sets forth cost of operations, selling, general and administrative expenses,
restructuring and other charges and operating income (loss) with percentages of
the applicable segment revenue, for each of the Company's business segments for
the years ended December 31 (in millions):
<TABLE>
<CAPTION>
1997 % 1996 % 1995 %
-------- --- -------- --- -------- ---
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Automotive retail......................................... $6,122.8 59 $2,569.7 42 $1,962.4 43
Automotive rental......................................... 3,055.1 30 2,699.4 44 1,992.8 44
Solid waste services...................................... 1,127.7 11 825.5 14 571.7 13
-------- --- -------- --- -------- ---
10,305.6 100 6,094.6 100 4,526.9 100
-------- -------- --------
Cost of Operations:
Automotive retail......................................... 5,459.0 89 2,290.2 89 1,718.4 87
Automotive rental......................................... 2,377.0 78 2,167.2 80 1,613.9 81
Solid waste services...................................... 809.1 72 608.6 74 401.4 70
-------- -------- --------
8,645.1 5,066.0 3,733.7
-------- -------- --------
Selling, General and Administrative:
Automotive retail......................................... 647.2 11 254.9 10 211.3 11
Automotive rental......................................... 497.4 16 537.1 20 393.5 20
Solid waste services...................................... 107.1 9 102.1 12 89.8 16
Corporate................................................. 30.1 -- 21.7 -- 4.3 --
-------- -------- --------
1,281.8 915.8 698.9
-------- -------- --------
Restructuring and Other Charges:
Automotive retail......................................... 85.0 1 -- -- -- --
Automotive rental......................................... 94.1 3 23.5 1 -- --
Solid waste services...................................... -- -- 8.8 1 3.3 1
Corporate................................................. -- -- 6.0 -- -- --
-------- -------- --------
179.1 38.3 3.3
-------- -------- --------
Operating Income (Loss):
Automotive retail......................................... (68.4) (1) 24.6 1 32.7 2
Automotive rental......................................... 86.6 3 (28.4) (1) (14.6) (1)
Solid waste services...................................... 211.5 19 106.0 13 77.2 13
Corporate................................................. (30.1) -- (27.7) -- (4.3) --
-------- -------- --------
$ 199.6 $ 74.5 $ 91.0
======== ======== ========
</TABLE>
34
<PAGE> 37
AUTOMOTIVE RETAIL
The Company's automotive retail business consists of the sale, lease and
financing of new and used vehicles and related automotive services and products.
The Company owns and operates or has contracted to acquire a total of
approximately 260 franchised automotive dealerships. The Company also currently
operates 26 used vehicle megastores under the name AutoNation USA(SM). The
Company has aggressively expanded its automotive retail operations through the
acquisition of franchised automotive dealerships and currently plans to continue
this expansion. The Company has established framework agreements with various
manufacturers which allow the Company to acquire franchised automotive
dealerships nationwide.
Automotive retail revenue was $6.1 billion, $2.6 billion and $2.0 billion
for the years ended December 31, 1997, 1996 and 1995, respectively. The increase
in 1997 over 1996 of $3.5 billion or 138% is a result of acquisitions (114%),
volume (18%) and pricing (6%). The increase in 1996 over 1995 of $607.3 million
or 31% is primarily a result of volume and acquisitions.
Cost of automotive retail operations was $5.5 billion, $2.3 billion and
$1.7 billion or, as percentages of automotive retail revenue, 89%, 89% and 87%
for the years ended December 31, 1997, 1996 and 1995, respectively. The
increases in aggregate dollars are attributed to acquisitions and higher volume
of vehicle sales during the periods. The 1996 increase in cost of operations as
a percentage of revenue over 1995 is primarily due to changes in product mix and
1996 start-up costs associated with the initial development of the Company's
used vehicle megastore operations.
Selling, general and administrative expenses related to the Company's
automotive retail operations were $647.2 million, $254.9 million and $211.3
million or, as percentages of automotive retail revenue, 11%, 10% and 11% for
the years ended December 31, 1997, 1996 and 1995, respectively. The increases in
aggregate dollars primarily reflect the expansion of the Company's automotive
retail operations.
Operating income (loss) from the Company's automotive retail operations was
$(68.4) million, $24.6 million and $32.7 million for the years ended December
31, 1997, 1996 and 1995, respectively. Excluding restructuring and other pre-tax
charges in 1997 as previously discussed, operating income from the Company's
automotive retail operations would have been $81.6 million or 1% of automotive
retail revenue.
The Company is in the process of acquiring and/or developing additional
AutoNation USA megastore sites. As the Company opens new AutoNation USA
megastores and reconditioning centers such operations will incur fixed operating
and administrative costs immediately while revenue volume will tend to grow more
gradually.
AUTOMOTIVE RENTAL
The Company's automotive rental business primarily rents vehicles on a
daily or weekly basis to leisure and business travelers principally from
on-airport or near airport locations through Alamo and National.
Automotive rental revenue was $3.1 billion, $2.7 billion and $2.0 billion
for the years ended December 31, 1997, 1996 and 1995, respectively. The increase
in 1997 over 1996 of $355.7 million or 13% is a result of volume (5%), pricing
(4%) and acquisitions (4%). The increase in 1996 over 1995 of $706.6 million or
35% is primarily a result of acquisitions.
Cost of automotive rental operations was $2.4 billion, $2.2 billion and
$1.6 billion or, as a percentage of automotive rental revenue, 78%, 80% and 81%
for the years ended December 31, 1997, 1996 and 1995, respectively. The
increases in aggregate dollars are primarily attributed to rental volume,
acquisitions and maintaining a larger fleet. The 1997 decrease in such expenses
as a percentage of revenue versus 1996 is primarily a result of revenue
improvement from rental rate increases. The 1996 decrease in such expenses as a
percentage of revenue versus 1995 is primarily due to lower fleet costs.
Selling, general and administrative expenses related to the Company's
automotive rental operations were $497.4 million, $537.1 million and $393.5
million or, as percentages of automotive rental revenue, 16%, 20% and 20% for
the years ended December 31, 1997, 1996 and 1995, respectively. The 1997
decrease in aggregate dollars and as a percentage of automotive rental revenue
is primarily due to the reduction of selling and
35
<PAGE> 38
administrative expenses of acquired businesses. The 1996 increase in aggregate
dollars over 1995 is primarily due to acquisitions.
Operating income (loss) from the Company's automotive rental operations was
$86.6 million, $(28.4) million and $(14.6) million for the years ended December
31, 1997, 1996 and 1995, respectively. Excluding restructuring and other pre-tax
charges as previously discussed, operating income from the Company's automotive
rental operations would have been $180.7 million and $47.3 million in 1997 and
1996, respectively.
SOLID WASTE SERVICES
The Company's solid waste services business provides integrated solid waste
disposal services. The Company owns and operates 42 solid waste landfills in 13
states. The Company also owns or operates 54 transfer stations, and provides
collection and recycling services to municipal, residential, commercial and
industrial customers in 23 states.
Revenue from the Company's solid waste services operations was $1.1
billion, $825.5 million and $571.7 million for the years ended December 31,
1997, 1996 and 1995, respectively. The increase in 1997 over 1996 of $302.2
million or 37% is a result of acquisitions (24%) and volume (13%). The increase
in 1996 over 1995 of $253.8 million or 44% is primarily a result of
acquisitions.
Cost of solid waste services operations was $809.1 million, $608.6 million
and $401.4 million or, as a percentage of solid waste revenue, 72%, 74% and 70%
for the years ended December 31, 1997, 1996 and 1995, respectively. The
increases in aggregate dollars are a result of the expansion of the Company's
solid waste services operations through acquisitions and internal growth. The
1997 decrease in cost of solid waste services operations as a percentage of
revenue is primarily a result of improvements in overall operating efficiency
achieved through reductions in operating costs of acquired businesses. The 1996
increase in cost of solid waste services operations as a percentage of solid
waste revenue is primarily a result of certain of the Company's acquired
collection companies which had higher levels of operating costs than the
Company's historical operations.
Selling, general and administrative expenses related to the Company's solid
waste services operations were $107.1 million, $102.1 million and $89.8 million
or, as percentages of solid waste revenue, 9%, 12% and 16% for the years ended
December 31, 1997, 1996 and 1995, respectively. The increases in aggregate
dollars from year to year primarily reflect the growth of the Company's business
through acquisitions. The decreases in selling, general and administrative
expenses as percentages of revenue in each of the years are primarily due to the
reduction of administrative expenses for acquired businesses and, in 1997, cost
savings from centralizing administrative functions in certain regions.
Operating income from the Company's solid waste services operations was
$211.5 million, $106.0 million and $77.2 million for the years ended December
31, 1997, 1996 and 1995, respectively. Excluding restructuring and other
charges, operating income from the Company's solid waste services operations
would have been $114.8 million and $80.5 million in 1996 and 1995, respectively.
CORPORATE
Excluding restructuring and other charges, corporate expenses were $30.1
million, $21.7 million and $4.3 million for the years ended December 31, 1997,
1996 and 1995, respectively. Such increases are a result of the overall growth
experienced by the Company.
INTEREST INCOME
Interest income was $18.2 million, $31.4 million and $22.1 million for the
years ended December 31, 1997, 1996 and 1995, respectively. The decrease in 1997
versus 1996 is primarily a result of lower cash balances on hand during 1997.
The increase in 1996 over 1995 is due to the increase in interest income from
proceeds from sales of Common Stock. For further discussion of the sales of
Common Stock, see Note 6, Shareholders' Equity, of Notes to Consolidated
Financial Statements.
36
<PAGE> 39
INTEREST EXPENSE
Interest expense was incurred on general corporate debt and the debt
assumed in acquisitions. Interest expense was $16.8 million, $45.4 million and
$35.5 million for the years ended December 31, 1997, 1996 and 1995,
respectively. The decrease in 1997 versus 1996 is primarily due to the repayment
of debt. The increase in 1996 over 1995 is primarily due to higher average
outstanding borrowings and debt assumed in acquisitions. Interest expense
related to revenue earning vehicle financing and vehicle inventory financing is
included in cost of automotive rental operations and cost of automotive retail
sales, respectively, in the accompanying Consolidated Statements of Operations.
OTHER INCOME, NET
Other income, net for the year ended December 31, 1997 consists primarily
of a $102.3 million pre-tax gain from the May 1997 sale of the Company's 15.0
million shares of ADT Limited common stock, net of fees and expenses. Such
shares of ADT Limited common stock were received in March 1997 upon the
Company's exercise of a warrant which became exercisable upon termination of the
Company's agreement to acquire ADT Limited by mutual agreement of the parties in
September 1996.
INCOME TAXES
The provision for income taxes was $115.2 million, $57.0 million and $47.7
million for the years ended December 31, 1997, 1996 and 1995, respectively. The
effective income tax rate was 36.5%, 88.5% and 55.5% for the years ended
December 31, 1997, 1996 and 1995, respectively. The higher 1996 and 1995
effective income tax rates are primarily due to the Company providing valuation
allowances on certain deferred tax assets and varying higher historical
effective income tax rates of acquired businesses.
ENVIRONMENTAL AND LANDFILL MATTERS
The Company provides for accrued environmental and landfill costs which
include landfill site closure and post-closure costs. Landfill site closure and
post-closure costs include estimated costs to be incurred for final closure of
the landfills and estimated costs for providing required post-closure monitoring
and maintenance of landfills. These costs are accrued based on consumed
airspace. The Company estimates its future cost requirements for closure and
post-closure monitoring and maintenance for its solid waste facilities based on
its interpretation of the technical standards of the Environmental Protection
Agency's Subtitle D regulations. These estimates do not take into account
discounts for the present value of such total estimated costs. The Company
periodically reassesses its methods and assumptions used to estimate such
accruals for environmental and landfill costs and adjusts such accruals
accordingly. At December 31, 1997, approximately $280.0 million of such costs
are to be expensed over the remaining lives of these facilities.
Environmental costs are accrued by the Company through a charge to income
in the period such liabilities become probable and can be reasonably estimated.
FINANCIAL CONDITION
At December 31, 1997, the Company had $148.0 million in cash and
approximately $681.0 million of availability under its $1.0 billion unsecured
revolving credit facility which may be used for general corporate purposes.
In October 1997, the Company completed a refinancing program to finance
vehicle purchases for its automotive rental operations. The aggregate program of
$3.35 billion is comprised of a $2.3 billion commercial paper program and three
commercial paper conduit facilities totaling $1.05 billion. Bank lines of credit
of $2.1 billion (terminating October 1998) and $945.0 million (terminating
October 2000) provide liquidity backup for the facilities. Letters of credit
totaling $335.0 million provide collateral and additional liquidity backup for
the facilities. Borrowings under these programs are secured by eligible vehicle
collateral and bear interest based on market-dictated commercial paper rates.
The Company refinanced borrowings under its pre-existing commercial paper
programs with borrowings under this program. As of December 31, 1997, the
Company had
37
<PAGE> 40
approximately $400.0 million of availability under this program. The Company
expects to continue to fund its purchases of revenue earning vehicles with
secured vehicle financings. Revenue earning vehicles with a net book value of
$3.8 billion at December 31, 1997 were acquired under programs that allow the
Company to require counterparties to repurchase vehicles held for periods of up
to 24 months. The Company has various other credit facilities to finance its
automotive retail and rental operations.
In connection with the development of the AutoNation USA megastores, the
Company is the lessee under a $500.0 million operating lease facility
established to acquire and develop properties used in its business. The Company
has guaranteed the residual value of the properties under this facility which
guarantee totaled approximately $326.5 million at December 31, 1997.
The Company uses interest rate swap agreements to manage the impact of
interest rate changes on the Company's variable rate revenue earning vehicle
obligations. The amounts exchanged by the counterparties to interest rate swap
agreements normally are based upon the notional amounts and other terms,
generally related to interest rates, of the derivatives. While notional amounts
of interest rate swaps form part of the basis for the amounts exchanged by the
counterparties, the notional amounts are not themselves exchanged, therefore, do
not represent a measure of the Company's exposure as an end user of derivative
financial instruments. At December 31, 1997, notional principal amounts related
to interest rate swaps (variable to fixed rate) were $2.25 billion. As of
December 31, 1997, the weighted average fixed rate payment on variable to fixed
rate swaps was 5.93%. Variable rates received are indexed to the Commercial
Paper Nonfinancial rate ($2.2 billion notional principal amount) and LIBOR
($50.0 million notional principal amount). Including the Company's variable to
fixed interest rate swaps, the Company's ratio of fixed interest rate debt to
total debt outstanding was 60% and 40% as of December 31, 1997 and 1996,
respectively.
The Company believes that it has sufficient operating cash flow and other
financial resources necessary to meet its anticipated capital requirements and
obligations as they come due.
CASH FLOWS
Cash and cash equivalents decreased by $193.1 million and $36.8 million
during the years ended December 31, 1997 and 1996, respectively, and increased
$308.1 million during the year ended December 31, 1995. The major components of
these changes are discussed below.
Cash Flows from Operating Activities
Cash (used in) provided by operating activities was $(548.7) million,
$(314.6) million and $373.2 million for the years ended December 31, 1997, 1996
and 1995, respectively. The increases in cash used in operating activities in
1997 and 1996 versus cash provided in 1995 is due to increased revenue earning
vehicle purchases.
Cash Flows from Investing Activities
Cash flows from investing activities consist primarily of cash used for
capital additions and business acquisitions and other transactions as further
described below.
Capital additions were $459.8 million, $240.6 million and $229.1 million
during the years ended December 31, 1997, 1996 and 1995, respectively. The
increases are primarily a result of expansion of the Company's businesses.
Cash used in business acquisitions was $193.3 million, $42.6 million and
$1.3 billion for the years ended December 31, 1997, 1996 and 1995. See "Business
Combinations" of Management's Discussion and Analysis of Financial Condition and
Results of Operations and Note 2, "Business Combinations" of Notes to
Consolidated Financial Statements for a further discussion of businesses
acquired.
In October 1997, the Company sold its electronic security services division
for approximately $610.0 million.
38
<PAGE> 41
In March 1997, the Company exercised its warrant to acquire 15.0 million
common shares of ADT Limited for $20 per share. In May 1997, the Company sold
the 15.0 million ADT Limited common shares for $27.50 per share to certain
institutional investors.
The Company expects capital expenditures and cash used in business
acquisitions to increase during 1998 and in the foreseeable future due to
continued internal growth of existing businesses and future acquisitions. The
Company intends to finance capital expenditures and cash used in business
acquisitions through cash on hand, revolving credit facilities and other
financings.
Cash Flows from Financing Activities
Cash flows from financing activities during the years ended December 31,
1997, 1996 and 1995 included revenue earning vehicle financing, commercial bank
borrowings, repayments of debt and issuances of Common Stock.
During the year ended December 31, 1997, the Company sold 15.8 million
shares of Common Stock in a private placement transaction resulting in net
proceeds of approximately $552.7 million.
During the year ended December 31, 1996, the Company sold an aggregate of
22.0 million shares of Common Stock in private placement transactions resulting
in net proceeds of approximately $550.9 million.
During the year ended December 31, 1995, the Company sold an aggregate of
44.1 million shares of Common Stock and warrants to purchase an additional 33.4
million shares of Common Stock in various private placement and other equity
transactions resulting in net proceeds of approximately $262.4 million. The
warrants are exercisable at prices ranging from $2.25 to $3.50 per share.
These financing activities were used to fund revenue earning vehicle
purchases, capital additions and acquisitions as well as to repay debt assumed
in acquisitions and expand the Company's business during these years.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (ITEM 7A)
The table below provides information about the Company's market sensitive
financial instruments and constitutes a "forward-looking statement." The
Company's major market risk exposure is changing interest rates, primarily in
the United States. The Company's policy is to manage interest rates through use
of a combination of fixed and floating rate debt. Interest rate swaps may be
used to adjust interest rate exposures when appropriate, based upon market
conditions. These swaps are entered into with a group of financial institutions
with investment grade credit ratings, thereby minimizing the risk of credit
loss. All items described are non-trading.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
---------------------------------------------------------------------- FAIR VALUE
1998 1999 2000 2001 2002 THEREAFTER TOTAL DECEMBER 31, 1997
-------- ------ -------- ------ ------ ---------- -------- -----------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VARIABLE RATE DEBT
Current................... $2,715.0 $ -- $ -- $ -- $ -- $ -- $2,715.0 $2,715.0
Average interest
rates................. 6.17%
Non-current............... -- 155.2 1,074.4 1.8 286.9 35.1 1,553.4 1,553.4
Average interest
rates................. -- 6.19% 5.86% 4.75% 5.96% 4.75%
Interest rate swaps....... 300.0 650.0 1,000.0 150.0 150.0 -- 8.0
Average pay rate........ 5.85% 5.81% 5.95% 6.50% 5.88%
Average receive rate.... 5.50% 5.50% 5.50% 5.50% 5.50%
</TABLE>
SEASONALITY
The Company's automotive retail operations generally experience higher
volumes of vehicle sales in the second and third quarters of each year in part
due to manufacturer incentives and consumer buying trends.
39
<PAGE> 42
The Company's automotive rental operations and particularly the leisure
travel segment is highly seasonal. In these operations, the third quarter, which
includes the peak summer travel months, has historically been the strongest
quarter of the year. During the peak season, the Company increases its rental
fleet and workforce to accommodate increased rental activity. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the annual performance of this segment. The first and
fourth quarters for the Company's automotive rental operations are generally the
weakest, when there is limited leisure travel and a greater potential for
adverse weather conditions. Many of the operating expenses such as rent, general
insurance and administrative personnel are fixed and cannot be reduced during
periods of decreased rental demand.
YEAR 2000 SYSTEMS COSTS
The Company utilizes software and related technologies throughout its
businesses that will be affected by the date change in the year 2000. The
Company is in the process of evaluating the full scope and related costs to
insure that the Company's systems continue to meet its internal needs and those
of its customers. Anticipated costs for system modifications will be expensed as
incurred and are not expected to have a material impact on the Company's
consolidated results of operations. However, the Company cannot measure the
impact that the Year 2000 issue will have on its vendors, suppliers, customers
and other parties with which it conducts business.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income", was issued by the Financial Accounting
Standards Board in June 1997. This Statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company will adopt SFAS
130 beginning January 1, 1998.
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information", was
issued by the Financial Accounting Standards Board in June 1997. This Statement
establishes standards for reporting information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company will adopt SFAS 131 beginning
January 1, 1998. Adoption of this standard will not have a material impact on
the Company's existing segment reporting disclosures.
FORWARD-LOOKING STATEMENTS
Certain statements and information included herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the ability to develop and implement operational and financial systems
to manage rapidly growing operations; competition in the Company's lines of
business; the ability to integrate and successfully operate acquired businesses
and the risks associated with such businesses; the ability to obtain financing
on acceptable terms to finance the Company's operations and growth strategy and
for the Company to operate within the limitations imposed by financing
arrangements; the dependence on vehicle manufacturers to approve dealership
acquisitions and the restrictions imposed by vehicle manufacturers on dealership
acquisitions and operations; the possibility of unfavorable changes to the cost
or financing of the Company's vehicle rental fleet; the Company's dependence on
key personnel; and other factors contained in the Company's filings with the
Securities and Exchange Commission.
40
<PAGE> 43
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants.......... 42
Consolidated Balance Sheets as of December 31, 1997 and
1996...................................................... 43
Consolidated Statements of Operations for Each of the Three
Years Ended December 31, 1997............................. 44
Consolidated Statements of Shareholders' Equity for Each of
the
Three Years Ended December 31, 1997....................... 45
Consolidated Statements of Cash Flows for Each of the Three
Years Ended December 31, 1997............................. 46
Notes to Consolidated Financial Statements.................. 47
Financial Statement Schedule II, Valuation and Qualifying
Accounts and Reserves, for Each of
the Three Years Ended December 31, 1997................... 71
</TABLE>
41
<PAGE> 44
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Republic Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Republic
Industries, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
schedule 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Republic
Industries, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for the purpose of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 29, 1998.
42
<PAGE> 45
REPUBLIC INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 148.0 $ 341.1
Receivables, net.......................................... 977.3 576.0
Revenue earning vehicles, net............................. 4,466.5 3,583.0
Inventory................................................. 1,094.8 338.5
Other current assets...................................... 139.2 445.7
--------- --------
Total Current Assets.............................. 6,825.8 5,284.3
PROPERTY AND EQUIPMENT, NET................................. 2,096.9 1,146.4
INTANGIBLE AND OTHER ASSETS, NET............................ 1,604.6 304.3
--------- --------
$10,527.3 $6,735.0
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 260.8 $ 216.4
Accrued liabilities....................................... 557.9 280.7
Liability insurance reserves.............................. 297.2 222.4
Revenue earning vehicle debt.............................. 2,209.4 2,535.6
Notes payable and current maturities of long-term debt.... 532.0 334.0
Other current liabilities................................. 405.3 255.9
--------- --------
Total Current Liabilities......................... 4,262.6 3,845.0
LONG-TERM DEBT, NET OF CURRENT MATURITIES................... 370.9 393.6
LONG-TERM REVENUE EARNING VEHICLE DEBT...................... 1,962.7 844.8
OTHER LIABILITIES........................................... 446.8 238.6
COMMITMENTS AND CONTINGENCIES...............................
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; 5,000,000
shares authorized; none issued......................... -- --
Common stock, par value $.01 per share; 1,500,000,000 and
500,000,000 shares authorized, respectively;
432,705,796 and 327,042,548 shares issued and
outstanding, respectively.............................. 4.3 3.3
Additional paid-in capital................................ 3,048.1 1,377.4
Retained earnings......................................... 431.9 32.3
--------- --------
Total Shareholders' Equity........................ 3,484.3 1,413.0
--------- --------
$10,527.3 $6,735.0
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
43
<PAGE> 46
REPUBLIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUE:
Automotive retail sales................................... $6,122.8 $2,569.7 $1,962.4
Automotive rental revenue................................. 3,055.1 2,699.4 1,992.8
Solid waste services revenue.............................. 1,127.7 825.5 571.7
-------- -------- --------
10,305.6 6,094.6 4,526.9
EXPENSES:
Cost of automotive retail sales........................... 5,459.0 2,290.2 1,718.4
Cost of automotive rental operations...................... 2,377.0 2,167.2 1,613.9
Cost of solid waste services operations................... 809.1 608.6 401.4
Selling, general and administrative....................... 1,281.8 915.8 698.9
Restructuring and other charges........................... 179.1 38.3 3.3
-------- -------- --------
OPERATING INCOME............................................ 199.6 74.5 91.0
INTEREST INCOME............................................. 18.2 31.4 22.1
INTEREST EXPENSE............................................ (16.8) (45.4) (35.5)
OTHER INCOME, NET........................................... 114.4 3.9 8.4
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES....... 315.4 64.4 86.0
PROVISION FOR INCOME TAXES.................................. 115.2 57.0 47.7
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY
CHARGE.................................................... 200.2 7.4 38.3
-------- -------- --------
DISCONTINUED OPERATIONS:
Income from discontinued operations, net of income
taxes.................................................. 9.5 8.4 10.3
Gain (loss) on disposal of segment, net of income tax
provision of $233.7 in 1997 and benefit of $10.0 in
1995................................................... 230.0 -- (30.5)
-------- -------- --------
Income (loss) from discontinued operations................ 239.5 8.4 (20.2)
-------- -------- --------
INCOME BEFORE EXTRAORDINARY CHARGE.......................... 439.7 15.8 18.1
EXTRAORDINARY CHARGE RELATED TO EARLY EXTINGUISHMENT OF
DEBT, NET OF BENEFIT FOR INCOME TAXES OF $15.0............ -- (31.6) --
-------- -------- --------
NET INCOME (LOSS)........................................... $ 439.7 $ (15.8) $ 18.1
======== ======== ========
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations..................................... $ .50 $ .02 $ .16
Discontinued operations................................... .59 .03 (.08)
Extraordinary charge...................................... -- (.10) --
-------- -------- --------
Net income (loss)......................................... $ 1.09 $ (.05) $ .08
======== ======== ========
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations..................................... $ .46 $ .02 $ .15
Discontinued operations................................... .56 .02 (.08)
Extraordinary charge...................................... -- (.09) --
-------- -------- --------
Net income (loss)......................................... $ 1.02 $ (.05) $ .07
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
44
<PAGE> 47
REPUBLIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED
STOCK PAID-IN CAPITAL EARNINGS
------ --------------- --------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994................................ $1.9 $ 283.1 $140.8
Sales of common stock and warrants........................ .4 262.0 --
Stock issued in acquisitions.............................. .2 83.9 --
Exercise of stock options and warrants, including income
tax benefit of $4.1 million............................ -- 15.7 --
Distributions to former owners of pooled companies........ -- -- (56.3)
Other..................................................... .3 10.3 12.4
Net income................................................ -- -- 18.1
---- -------- ------
BALANCE AT DECEMBER 31, 1995................................ 2.8 655.0 115.0
Sales of common stock..................................... .2 550.7 --
Stock issued in acquisitions.............................. .2 101.2 --
Exercise of stock options and warrants, including income
tax benefit of $20.3 million........................... -- 43.7 --
Distributions to former owners of pooled companies........ -- -- (68.1)
Other..................................................... .1 26.8 1.2
Net loss.................................................. -- -- (15.8)
---- -------- ------
BALANCE AT DECEMBER 31, 1996................................ 3.3 1,377.4 32.3
Sales of common stock..................................... .2 552.5 --
Stock issued in acquisitions.............................. .7 969.6 --
Exercise of stock options and warrants, including income
tax benefit of $32.7 million........................... .1 92.0 --
Distributions to former owners of pooled companies........ -- -- (30.6)
Other..................................................... -- 56.6 (9.5)
Net income................................................ -- -- 439.7
---- -------- ------
BALANCE AT DECEMBER 31, 1997................................ $4.3 $3,048.1 $431.9
==== ======== ======
</TABLE>
The accompanying notes are an integral part of these statements.
45
<PAGE> 48
REPUBLIC INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES OF
CONTINUING OPERATIONS:
Net income (loss)......................................... $ 439.7 $ (15.8) $ 18.1
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation on revenue earning vehicles............... 831.9 747.9 555.1
Depreciation, amortization and depletion on property
and equipment........................................ 138.8 104.4 84.5
Amortization of intangible assets...................... 32.9 13.0 8.3
Non-cash restructuring and other charges............... 186.0 95.5 3.3
Loss on extinguishment of debt, net of income taxes.... -- 31.6 --
Gain on sale of marketable securities.................. (102.3) -- --
(Income) loss from discontinued operations, net of
income taxes......................................... (239.5) (8.4) 20.2
Purchases of revenue earning vehicles.................. (5,227.3) (4,695.3) (3,195.5)
Sales of revenue earning vehicles...................... 3,892.3 3,356.4 2,841.6
Changes in assets and liabilities, net of effects from
business acquisitions
Receivables.......................................... (209.3) (111.4) (39.0)
Inventory............................................ (205.9) (15.3) (42.5)
Other assets......................................... 93.5 (50.1) 1.0
Accounts payable and accrued liabilities............. (291.0) 74.2 91.5
Other liabilities.................................... 111.5 158.7 26.6
--------- --------- ---------
(548.7) (314.6) 373.2
--------- --------- ---------
CASH (USED IN) PROVIDED BY DISCONTINUED OPERATIONS.......... (48.0) (50.1) 2.5
--------- --------- ---------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Cash received on disposal of segment...................... 610.0 -- 34.3
Purchases of property and equipment....................... (459.8) (240.6) (229.1)
Purchases of marketable securities........................ (300.0) -- --
Sale of marketable securities............................. 402.3 -- --
Cash used in business acquisitions, net of cash
acquired............................................... (193.3) (42.6) (1,333.7)
Other..................................................... (55.5) (208.0) 46.5
--------- --------- ---------
3.7 (491.2) (1,482.0)
--------- --------- ---------
CASH PROVIDED BY FINANCING ACTIVITIES:
Proceeds from revenue earning vehicle financing........... 29,103.7 17,802.7 11,134.4
Payments on revenue earning vehicle financing............. (28,688.7) (17,452.0) (9,990.9)
Proceeds from long-term debt and notes payable............ 378.4 257.7 185.9
Payments of long-term debt and notes payable.............. (832.3) (437.0) (223.1)
Net (payments) proceeds from revolving credit and vehicle
inventory financing facilities......................... (139.7) 154.7 16.3
Sales of common stock..................................... 552.7 550.9 262.4
Other..................................................... 25.8 (57.9) 29.4
--------- --------- ---------
399.9 819.1 1,414.4
--------- --------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............ (193.1) (36.8) 308.1
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 341.1 377.9 69.8
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 148.0 $ 341.1 $ 377.9
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
46
<PAGE> 49
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABLES IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying Consolidated Financial Statements include the accounts of
Republic Industries, Inc. and its subsidiaries ("Republic" or the "Company").
All intercompany accounts and transactions have been eliminated. In October
1997, the Company sold its electronic security services division. In 1995, the
Company disposed of all of its mining and citrus operations and spun-off its
hazardous waste services segment to the Company's shareholders. Accordingly, as
discussed in Note 11, Discontinued Operations, these operations have been
accounted for as discontinued operations and the accompanying Consolidated
Financial Statements presented herein have been restated to report separately
the operating results of these discontinued operations.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
financial statements to conform with the financial statement presentation of the
current period.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
The accompanying Consolidated Financial Statements have been restated to
include the financial position and results of operations of significant
businesses acquired in 1997 and accounted for under the pooling of interests
method of accounting (the "Pooled Entities") as if the companies had operated as
one entity since inception. See Note 2, Business Combinations, for further
discussion of these transactions.
All per share data and numbers of shares of the Company's common stock, par
value $.01 per share ("Common Stock") for all periods included in the
consolidated financial statements and notes thereto have been adjusted to
reflect a two-for-one stock split in the form of a 100% stock dividend that
became effective in June 1996, as more fully described in Note 6, Shareholders'
Equity.
RECEIVABLES
The components of receivables, net of allowance for doubtful accounts at
December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------- ------
<S> <C> <C>
Trade....................................................... $ 445.2 $301.2
Vehicle..................................................... 357.6 228.1
Other....................................................... 225.4 64.2
-------- ------
1,028.2 593.5
Less: allowance for doubtful accounts....................... (50.9) (17.5)
-------- ------
$ 977.3 $576.0
======== ======
</TABLE>
REVENUE EARNING VEHICLES
Revenue earning vehicles are stated at cost less accumulated depreciation.
The straight-line method is used to depreciate revenue earning vehicles to their
estimated residual values over periods typically ranging from three to twelve
months. Depreciation expense includes costs relating to damaged vehicles and
gains and losses on revenue earning vehicle sales in the ordinary course of
business and is included as a component of cost of automotive rental operations
in the accompanying Consolidated Statements of Operations.
47
<PAGE> 50
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of revenue earning vehicles at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Revenue earning vehicles.................................... $4,980.1 $4,011.2
Less: accumulated depreciation.............................. (513.6) (428.2)
-------- --------
$4,466.5 $3,583.0
======== ========
</TABLE>
Revenue earning vehicles with a net book value of $3.8 billion at December
31, 1997 were acquired under programs that allow the Company to require
counterparties to repurchase vehicles held for periods of up to twenty-four
months. The agreements contain varying mileage and damage limitations.
The Company also leases vehicles under operating lease agreements which
require the Company to provide normal maintenance and liability coverage. The
agreements generally have terms of four to thirteen months. Many agreements
provide for an option to terminate the leases early and allow for the purchase
of leased vehicles subject to certain restrictions.
INVENTORY
Inventory consists primarily of retail vehicles held for sale valued using
the specific identification method, net of reserves. Cost includes acquisition
expenses, including reconditioning and transportation costs. Parts and
accessories are valued at the factory list price which approximates lower of
cost (first-in, first-out) or market.
A summary of inventory at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
-------- ------
<S> <C> <C>
New vehicles................................................ $ 642.7 $256.4
Used vehicles............................................... 377.4 52.0
Parts, accessories and other................................ 74.7 30.1
-------- ------
$1,094.8 $338.5
======== ======
</TABLE>
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized, while minor replacements,
maintenance and repairs are charged to expense as incurred. When property is
retired or otherwise disposed of, the cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is reflected in the
Consolidated Statements of Operations.
The Company revises the estimated useful lives of property and equipment
acquired through its business acquisitions to conform with its policies
regarding property and equipment. Depreciation is provided over the estimated
useful lives of the assets involved using the straight-line method. The
estimated useful lives are: twenty to forty years for buildings and
improvements, three to fifteen years for trucks and equipment and five to ten
years for furniture and fixtures.
Landfills are stated at cost and are depleted based on consumed airspace.
Landfill improvements include direct costs incurred to obtain a landfill permit
and direct costs incurred to construct and develop the site. These costs are
depleted based on consumed airspace. All indirect landfill development costs are
expensed as incurred.
48
<PAGE> 51
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of property and equipment at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Land, landfills and improvements............................ $ 895.0 $ 525.5
Furniture, fixtures, trucks and equipment................... 968.7 659.5
Buildings and improvements.................................. 878.6 439.4
-------- --------
2,742.3 1,624.4
Less: accumulated depreciation, amortization and
depletion................................................. (645.4) (478.0)
-------- --------
$2,096.9 $1,146.4
======== ========
</TABLE>
INTANGIBLE AND OTHER ASSETS
Intangible and other assets consist primarily of the cost of acquired
businesses in excess of the fair value of net tangible assets acquired. The cost
in excess of the fair value of net tangible assets is amortized over forty years
on a straight-line basis. Accumulated amortization of intangible assets was
$89.6 million and $52.4 million at December 31, 1997 and 1996, respectively.
The Company continually evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of intangible
assets or whether the remaining balance of intangible assets should be evaluated
for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the intangible assets in
measuring their recoverability.
ACCRUED ENVIRONMENTAL AND LANDFILL COSTS
Accrued environmental and landfill costs are included in other liabilities
and include landfill site closure and post-closure costs. Landfill site closure
and post-closure costs include estimated costs to be incurred for final closure
of the landfills and estimated costs for providing required post-closure
monitoring and maintenance of landfills. These costs are accrued based on
consumed airspace. Estimated aggregate closure and post-closure costs will be
fully accrued for these landfills at the time that such facilities cease to
accept waste and are closed. At December 31, 1997, approximately $280.0 million
of such costs are to be expensed over the remaining lives of these facilities.
The Company estimates its future cost requirements for closure and post-closure
monitoring and maintenance for its solid waste facilities based on its
interpretation of the technical standards of the United States Environmental
Protection Agency's Subtitle D regulations. These estimates do not take into
account discounts for the present value of such total estimated costs. The
Company periodically reassesses its methods and assumptions used to estimate
such accruals for environmental and landfill costs and adjusts such accruals
accordingly.
In the normal course of business, the Company is subject to ongoing
environmental investigations by certain regulatory agencies, as well as other
claims and disputes that could result in litigation. Environmental costs are
accrued by the Company through a charge to income in the period such liabilities
become probable and can be reasonably estimated.
LIABILITY INSURANCE
The Company retains up to $1.0 million of risk per claim plus claims
handling expense under its various liability insurance programs for third party
property damage and bodily injury claims, primarily relating to claims arising
from the Company's automotive rental operations. Costs in excess of this
retained risk per claim are insured under various contracts with insurance
carriers. The ultimate costs of these retained insurance risks are estimated by
management and by actuarial evaluation based on historical claims experience,
adjusted for current trends and changes in claims-handling procedures. In 1996,
the Company changed its method of
49
<PAGE> 52
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
accounting for estimated auto rental liability insurance claims by no longer
discounting such liability. The effect of this change was not material to the
Company's consolidated financial position or results of operations.
REVENUE RECOGNITION
Revenue from the Company's automotive retail operations consists of sales
of new and used vehicles, parts and service and finance and insurance products.
An estimated allowance for chargebacks against revenue recognized from sales of
finance and insurance products is established during the period in which related
revenue is recognized. Revenue from the Company's automotive rental operations
consists primarily of fees from rentals and the sale of related rental products
from the leisure, business travel and insurance replacement segments. Revenue
from the Company's solid waste services operations consists of collection fees
from residential, commercial and industrial customers and landfill disposal fees
charged to third parties. The Company recognizes revenue over the period in
which products are sold, vehicles are rented or services are provided.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company utilizes interest rate protection agreements with several
counterparties to manage the impact of interest rate changes on the Company's
debt obligations. The Company does not use derivative financial instruments for
trading purposes. Under interest rate swaps, the Company agrees with other
parties to exchange, at specified intervals, the difference between fixed-rate
and floating-rate interest amounts calculated by reference to an agreed notional
principal amount. Income or expense on derivative financial instruments used to
manage interest rate exposure is recorded on an accrual basis, as an adjustment
to the yield of the underlying exposures over the periods covered by the
contracts. If an interest rate swap is terminated early, any resulting gain or
loss is deferred and amortized as an adjustment of the cost of the underlying
exposure position over the remaining periods originally covered by the
terminated swap. If all or part of an underlying position is terminated, the
related pro-rata portion of any unrecognized gain or loss on the swap is
recognized in income at that time as part of the gain or loss on the
termination. Amounts receivable or payable under the agreements are included in
receivables or accrued liabilities in the accompanying Consolidated Balance
Sheets and were not material at December 31, 1997 or 1996.
ADVERTISING
The Company expenses the cost of advertising as incurred or when such
advertising initially takes place. No advertising costs were capitalized at
December 31, 1997 or 1996. Advertising expense was $318.2 million, $148.8
million and $119.9 million for the years ended December 31, 1997, 1996 and 1995,
respectively.
STATEMENTS OF CASH FLOWS
The Company considers all highly liquid investments with purchased
maturities of three months or less to be cash equivalents unless the investments
are legally or contractually restricted for more than three months. The effect
of non-cash transactions related to business combinations, as discussed in Note
2, Business Combinations, and other non-cash transactions are excluded from the
accompanying Consolidated Statements of Cash Flows.
The Company made interest payments on revenue earning vehicle debt and
notes payable and long-term debt of approximately $248.2 million, $293.0 million
and $217.0 million for the years ended December 31, 1997, 1996 and 1995,
respectively. The Company made income tax payments of approximately $72.1
million, $19.7 million and $17.9 million for the years ended December 31, 1997,
1996 and 1995, respectively.
50
<PAGE> 53
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income", was issued by the Financial Accounting
Standards Board in June 1997. This Statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company will adopt SFAS
130 beginning January 1, 1998.
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information", was
issued by the Financial Accounting Standards Board in June 1997. This Statement
establishes standards for reporting of selected information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company will
adopt SFAS 131 beginning January 1, 1998. Adoption of this standard will not
have a material impact on the Company's existing segment reporting disclosures.
2. BUSINESS COMBINATIONS
Significant businesses acquired through December 31, 1997 and accounted for
under the pooling of interests method of accounting have been included
retroactively in the Consolidated Financial Statements as if the companies had
operated as one entity since inception. Businesses acquired through December 31,
1997 and accounted for under the purchase method of accounting are included in
the Consolidated Financial Statements from the date of acquisition.
During the year ended December 31, 1997, the Company acquired various
businesses in the automotive retail, automotive rental and solid waste services
industries. The Company issued an aggregate of approximately 53.7 million shares
of Common Stock and paid approximately $346.6 million of cash or notes in such
transactions which have been accounted for under the purchase method of
accounting, and issued an aggregate of approximately 83.5 million shares of
Common Stock in such transactions which have been accounted for under the
pooling of interests method of accounting. Included in the shares of Common
Stock issued for acquisitions accounted for under the pooling of interests
method of accounting are approximately 15.2 million shares issued for
acquisitions which were not material individually or in the aggregate and,
consequently, prior period financial statements were not restated for such
acquisitions.
Details of the results of operations of the Company and the Pooled Entities
for the periods before the pooling of interests combinations were consummated
for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- --------
<S> <C> <C> <C>
Revenue:
The Company........................................... $ 8,927.0 $2,280.2 $1,741.6
Pooled Entities....................................... 1,378.6 3,814.4 2,785.3
--------- -------- --------
$10,305.6 $6,094.6 $4,526.9
========= ======== ========
Income (loss) from continuing operations before
extraordinary charge:
The Company........................................... $ 152.3 $ (36.3) $ (6.4)
Pooled Entities....................................... 47.9 43.7 44.7
--------- -------- --------
$ 200.2 $ 7.4 $ 38.3
========= ======== ========
</TABLE>
51
<PAGE> 54
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's unaudited pro forma consolidated results of operations
assuming all significant 1997 acquisitions accounted for under the purchase
method of accounting had occurred on January 1, 1996 are as follows for the
years ended December 31:
<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Revenue..................................................... $11,786.9 $9,676.6
Income (loss) from continuing operations before
extraordinary charge...................................... 200.0 (16.5)
Diluted earnings (loss) per share from continuing
operations................................................ .45 (.05)
</TABLE>
The unaudited pro forma results of operations are presented for
informational purposes only and may not necessarily reflect the future results
of operations of the Company or what the results of operations would have been
had the Company owned and operated these businesses as of January 1, 1996.
During the year ended December 31, 1996, the Company acquired various
businesses in the automotive retail, automotive rental, solid waste services and
electronic security services industries. The Company issued an aggregate of
approximately 9.1 million shares of Common Stock and paid approximately $52.1
million of cash in such transactions which have been accounted for under the
purchase method of accounting, and issued an aggregate of approximately 71.4
million shares of Common Stock in such transactions which have been accounted
for under the pooling of interests method of accounting. Included in the shares
of Common Stock issued for acquisitions accounted for under the pooling of
interests method of accounting are approximately 13.0 million shares issued for
acquisitions which were not material individually or in the aggregate and,
consequently, prior period financial statements were not restated for such
acquisitions.
In July 1996, the Company entered into an agreement to acquire ADT Limited
(the "ADT Agreement"), which was terminated by mutual agreement of the parties
in September 1996. In connection with the execution of the ADT Agreement, ADT
Limited granted to the Company a warrant ("the ADT Warrant") to purchase 15.0
million common shares of ADT Limited at a purchase price of $20 per share (which
approximated fair market value). In March 1997, the Company exercised the ADT
Warrant resulting in the purchase of 15.0 million common shares of ADT Limited
at $20 per share. In May 1997, the Company sold the ADT Limited common shares
for $27.50 per share resulting in a gain of approximately $102.3 million, net of
fees and expenses.
During the year ended December 31, 1995, the Company acquired various
businesses in the automotive rental, solid waste services and electronic
security services industries. The Company issued an aggregate of approximately
17.3 million shares of Common Stock and paid approximately $1.3 billion of cash
in such transactions which have been accounted for under the purchase method of
accounting, and issued an aggregate of approximately 36.3 million shares of
Common Stock for such transactions which have been accounted for under the
pooling of interests method of accounting. The cash paid for acquisitions in
1995 relates primarily to National Car Rental System, Inc.'s ("National")
acquisition of its predecessor company from General Motors Corporation. National
was acquired by the Company during 1997 and accounted for under the pooling of
interests method of accounting.
52
<PAGE> 55
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The preliminary purchase price allocations for business combinations
accounted for under the purchase method of accounting (including historical
accounts of immaterial acquisitions accounted for under the pooling of interests
method of accounting) for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- ------- --------
<S> <C> <C> <C>
Revenue earning vehicles................................ $ 415.3 $ 79.4 $1,455.2
Property and equipment.................................. 616.2 110.9 99.3
Intangible and other assets............................. 1,305.0 109.8 101.3
Working capital (deficiency), net of cash acquired...... 82.1 (16.1) 16.8
Long-term debt assumed.................................. (1,218.4) (121.1) (123.5)
Other liabilities....................................... (36.6) (18.9) (131.3)
Common stock issued..................................... (970.3) (101.4) (84.1)
--------- ------- --------
Cash used in acquisitions, net of cash acquired......... $ 193.3 $ 42.6 $1,333.7
========= ======= ========
</TABLE>
As discussed in Note 11, Discontinued Operations, the Company sold its
electronic security services division in October 1997. Accordingly, the
financial position and results of operations of businesses acquired in the
electronic security services segment have been accounted for as discontinued
operations in the accompanying Consolidated Financial Statements.
In January 1998, the Company acquired various businesses in the automotive
retail and solid waste services industries for an aggregate purchase price of
approximately $434.0 million, consisting of cash and/or shares of Common Stock.
In addition, through January 1998, the Company has signed definitive agreements
to acquire various businesses which own and operate franchised automotive
dealerships for an aggregate purchase price of approximately $478.0 million to
be paid in cash and/or shares of Common Stock. These completed and pending
acquisitions will be accounted for under the purchase method of accounting. The
closing of each pending transaction is subject to customary conditions,
including manufacturer and regulatory approval.
53
<PAGE> 56
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. REVENUE EARNING VEHICLE DEBT
Revenue earning vehicle debt at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Amounts under various commercial paper programs secured by
eligible vehicle collateral; interest based on
market-dictated commercial paper rates; weighted average
interest rates of 5.85% and 5.93% at December 31, 1997 and
1996, respectively........................................ $ 2,919.4 $2,253.1
Amounts under various medium-term note programs secured by
eligible vehicle collateral:
Fixed rate component; weighted average interest rates of
7.09% and 7.13% at December 31, 1997 and 1996,
respectively; maturities through 2003.................. 736.3 656.3
Floating rate component based on a spread over 3 month
LIBOR; maturities through 2001......................... 166.5 143.3
Other uncommitted secured financings primarily with
financing institutions in the United Kingdom; secured by
eligible vehicle collateral for periods that approximate
the expected hold period for the vehicle at LIBOR based
interest rates; weighted average interest rates of 6.99%
and 6.29% at December 31, 1997 and 1996, respectively..... 349.9 327.7
--------- --------
4,172.1 3,380.4
Less: long-term portion..................................... (1,962.7) (844.8)
--------- --------
$ 2,209.4 $2,535.6
========= ========
</TABLE>
In October 1997, the Company refinanced borrowings under its pre-existing
commercial paper programs with borrowings under a $3.35 billion financing
program comprised of a $2.3 billion commercial paper program and three
commercial paper conduit facilities totaling $1.05 billion. Bank lines of credit
of $2.1 billion (terminating October 1998) and $945.0 million (terminating
October 2000) provide liquidity backup for the facilities. Letters of credit
totaling $335.0 million provide collateral and additional liquidity backup for
the facilities. The weighted average interest rate on total revenue earning
vehicle debt was 6.17% and 6.20% at December 31, 1997 and 1996, respectively.
Interest expense on revenue earning vehicle debt is included as a component of
cost of automotive rental operations in the accompanying Consolidated Statements
of Operations.
At December 31, 1997, aggregate maturities of revenue earning vehicle debt
were as follows:
<TABLE>
<S> <C>
1998........................................................ $2,209.4
1999........................................................ 310.0
2000........................................................ 1,144.0
2001........................................................ 333.7
2002........................................................ --
Thereafter.................................................. 175.0
--------
$4,172.1
========
</TABLE>
54
<PAGE> 57
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt at December 31 is as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Revolving credit facility; interest payable using LIBOR
based rates; unsecured; matures 2002...................... $ 250.0 $ 150.0
Vehicle inventory credit facilities; secured by the
Company's vehicle inventory; weighted average interest
rates of 6.36% and 9.25% at
December 31, 1997 and 1996, respectively.................. 472.5 225.7
Other notes; secured by real property, equipment and other
assets; interest ranging from 4% to 13%; maturing through
2009...................................................... 180.4 351.9
------- -------
902.9 727.6
Less: current portion....................................... (532.0) (334.0)
------- -------
$ 370.9 $ 393.6
======= =======
</TABLE>
In April 1997, the Company replaced its existing $250.0 million credit
facility with a $1.0 billion unsecured revolving credit facility (the "Credit
Facility") with certain banks for a term of five years. Outstanding advances, if
any, are payable at the expiration of the five-year term. The Credit Facility
requires, among other items, that the Company maintain certain financial ratios
and comply with certain financial covenants.
In December 1996, the Company completed a tender offer and consent
solicitation resulting in the repurchase of approximately $100.0 million
aggregate principal amount 11.75% senior notes due 2006 ("Senior Notes"), which
were issued in February 1996. The Company recorded an extraordinary charge of
$31.6 million, net of income taxes, during 1996 related to the early
extinguishment of the Senior Notes and certain other debt. Included in this
charge are bond redemption premiums, the write-off of debt issue costs,
prepayment penalties and other fees related to the tender offer and the
repayment of other debt.
Interest expense on vehicle inventory credit facilities is included as a
component of cost of automotive retail sales in the accompanying Consolidated
Statements of Operations.
At December 31, 1997, aggregate maturities of long-term debt were as
follows:
<TABLE>
<S> <C>
1998........................................................ $532.0
1999........................................................ 26.6
2000........................................................ 9.4
2001........................................................ 5.4
2002........................................................ 288.8
Thereafter.................................................. 40.7
------
$902.9
======
</TABLE>
5. INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". Accordingly, deferred income taxes have been
provided to show the effect of temporary differences between the recognition of
revenue and expenses for financial and income tax reporting purposes and between
the tax basis of assets and liabilities and their reported amounts in the
financial statements.
The Company files a consolidated federal income tax return which includes
the operations of businesses acquired for periods subsequent to the dates of the
acquisitions. Certain businesses acquired and accounted for under the pooling of
interests method of accounting were subchapter S corporations for income tax
purposes. The subchapter S corporation status of these companies was terminated
effective with the closing date of the
55
<PAGE> 58
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
acquisitions. For purposes of these Consolidated Financial Statements, federal
and state income taxes have been recorded as if these companies had filed
subchapter C corporation tax returns for the pre-acquisition periods, and the
current income tax expense is reflected as an increase to additional paid-in
capital.
The components of the provision for income taxes related to continuing
operations for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ----- -----
<S> <C> <C> <C>
Current:
Federal................................................... $ 23.1 $50.0 $25.7
State..................................................... 7.0 4.7 4.9
Federal and state deferred.................................. 89.6 (9.4) 15.1
Foreign deferred............................................ (4.5) (8.8) (1.4)
Change in valuation allowance............................... -- 20.5 3.4
------ ----- -----
Provision for income taxes.................................. $115.2 $57.0 $47.7
====== ===== =====
</TABLE>
A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate for continuing operations for the years ended December 31 is
shown below:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate........................... 35.0% 35.0% 35.0%
Non-deductible expenses..................................... .5 9.5 6.2
State income taxes, net of federal benefit.................. 2.0 6.4 4.7
Change in valuation allowance............................... -- 31.6 4.0
Other, net.................................................. (1.0) 6.0 5.6
---- ---- ----
Effective tax rate.......................................... 36.5% 88.5% 55.5%
==== ==== ====
</TABLE>
Components of the net deferred income tax liability included in other
liabilities in the accompanying Consolidated Balance Sheets at December 31 are
as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Deferred income tax liabilities:
Book basis in property over tax basis..................... $ 450.3 $ 287.5
Deferred income tax assets:
Net operating losses...................................... (59.0) (103.3)
Accruals not currently deductible......................... (293.0) (97.1)
Valuation allowance......................................... 146.1 66.9
------- -------
Net deferred income tax liability........................... $ 244.4 $ 154.0
======= =======
</TABLE>
At December 31, 1997, the Company had available domestic net operating loss
carryforwards of approximately $61.8 million which begin to expire in the year
2011 and foreign net operating loss carryforwards of approximately $60.1
million, the majority of which have an indefinite carryforward. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The Company has provided a valuation allowance to offset a portion of
the deferred tax assets due to uncertainty surrounding the future realization of
such deferred tax assets. The Company adjusts the valuation allowance in the
period management determines it is more likely than not that deferred tax assets
will or will not be realized.
The foreign losses included in income from continuing operations before
income taxes and extraordinary charge for the years ended December 31, 1997,
1996 and 1995 were $(11.5) million, $(22.0) million and $(20.8) million,
respectively.
56
<PAGE> 59
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. SHAREHOLDERS' EQUITY
During the year ended December 31, 1997, the Company sold 15.8 million
shares of Common Stock in a private placement transaction resulting in net
proceeds of approximately $552.7 million. In addition, in May 1997, the
Company's Certificate of Incorporation was amended to increase the number of
authorized shares of Common Stock from 500.0 million to 1.5 billion shares.
During the year ended December 31, 1996, the Company sold an aggregate of
22.0 million shares of Common Stock in private placement transactions resulting
in net proceeds of approximately $550.9 million. In May 1996, the Board of
Directors declared a two-for-one split of the Company's Common Stock in the form
of a 100% stock dividend, payable June 8, 1996, to holders of record on May 28,
1996. In addition, in May 1996 the Company's Certificate of Incorporation was
amended to increase the number of authorized shares of Common Stock from 350.0
million shares to 500.0 million shares.
During the year ended December 31, 1995, the Company sold an aggregate of
44.1 million shares of Common Stock and warrants to purchase an additional 33.4
million shares of Common Stock in various private placement and other equity
transactions resulting in net proceeds of approximately $262.4 million. The
warrants are exercisable at prices ranging from $2.25 to $3.50 per share.
The Company has 5.0 million authorized shares of preferred stock, par value
$.01 per share, none of which are issued or outstanding. The Board of Directors
has the authority to issue the preferred stock in one or more series and to
establish the rights, preferences and dividends.
7. STOCK OPTIONS AND WARRANTS
The Company has various stock option plans under which shares of Common
Stock may be granted to key employees and directors of the Company. Options
granted under the plans are non-qualified and are granted at a price equal to
the fair market value of the Common Stock at the date of grant. Generally,
options granted will have a term of ten years from the date of grant, and will
vest in increments of 25% per year over a four year period on the yearly
anniversary of the grant date. On January 3, 1997, the Compensation Committee of
the Company's Board of Directors approved management's recommended 1997 annual
employee stock option grant of 6.7 million shares of Common Stock (2.0 million
shares of which were granted under the Company's 1997 Employee Stock Option Plan
subject to shareholder approval obtained in May 1997). These stock options were
granted using the quoted market price at the date of management's recommendation
($28.625 at December 31, 1996) as opposed to the quoted market price at the
grant date ($29.9375 at January 3, 1997). No compensation expense associated
with these grants has been recognized in the accompanying Consolidated Financial
Statements as it would not be material to the consolidated financial position or
results of operations.
57
<PAGE> 60
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of stock option and warrant transactions is as follows for the
years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ ------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Options and warrants outstanding at
beginning of period................ 52.5 $ 7.63 49.6 $ 4.87 8.1 $4.54
Granted.............................. 15.2 28.52 8.7 21.86 45.1 4.92
Exercised............................ (18.7) 3.24 (5.6) 4.03 (2.9) 4.14
Canceled............................. (.9) 24.59 (.2) 9.44 (.7) 7.49
----- ---- ----
Options and warrants outstanding at
end of period...................... 48.1 15.67 52.5 7.63 49.6 4.87
===== ==== ====
Options and warrants exercisable at
end of period...................... 26.8 8.71 38.5 4.12 39.9 3.50
Options available for future
grants............................. 14.0 7.9 4.3
</TABLE>
The following table summarizes information about outstanding and
exercisable stock options and warrants at December 31, 1997:
<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
---------------------------------- -------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
CONTRACTUAL EXERCISE EXERCISE
RANGE OF EXERCISE PRICE SHARES LIFE(YRS.) PRICE SHARES PRICE
----------------------- ------ ----------- --------- ------ ---------
<S> <C> <C> <C> <C> <C>
$ 1.13 -- $ 3.50 16.4 1.28 $ 3.03 16.1 $ 3.05
3.78 -- 27.00 16.8 7.18 15.16 7.8 12.80
27.25 -- 41.88 14.9 8.78 30.18 2.9 29.06
---- ----
1.13 -- 41.88 48.1 5.67 15.67 26.8 8.71
==== ====
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" in accounting for stock-based employee
compensation arrangements whereby no compensation cost related to stock options
is deducted in determining net income (loss). Had compensation cost for the
Company's stock option plans been determined pursuant to SFAS No. 123,
"Accounting for Stock-Based Compensation", the Company's net income (loss) and
earnings (loss) per share would have decreased (increased) accordingly. Using
the Black-Scholes option pricing model for all options granted after December
31, 1994, the Company's pro forma net income (loss), pro forma earnings (loss)
per share and pro forma weighted average fair value of options granted, with
related assumptions, are as follows for the years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- ---------------- ---------------
<S> <C> <C> <C>
Pro forma net income (loss)....... $375.3 $(33.6) $10.2
Pro forma diluted earnings (loss)
per share....................... .88 (.11) .04
Pro forma weighted average fair
value of options granted........ 10.03 9.80 5.28
Risk free interest rates.......... 5.74% - 5.78% 5.98% - 6.17% 5.98% - 6.17%
Expected lives.................... 5-7 years 5-7 years 5-7 years
Expected volatility............... 40% 40% 40%
</TABLE>
58
<PAGE> 61
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
By letter dated January 11, 1996, Acme Commercial Corp. d/b/a CarMax, The
Auto Superstore, ("CarMax") accused the Company's wholly-owned subsidiary,
AutoNation USA of infringing CarMax's trademark rights by using the marks
AutoNation USA(SM) and "The Better Way to Buy a Car(SM)." AutoNation USA denied
such allegations and on February 5, 1996, filed suit in the U.S. District Court
for the Southern District of Florida seeking a declaratory judgment that its use
and registration of such marks do not violate any of the rights of CarMax. On or
about October 11, 1996, CarMax filed a counterclaim against AutoNation USA
seeking damages and an order enjoining AutoNation USA from using certain marks,
including the marks AutoNation USA and "The Better Way to Buy a Car." The case
is in the court's March 1998 trial calendar. Although it is impossible to
predict the outcome of this litigation, the Company believes that AutoNation USA
has a valid basis for its complaint and that CarMax's allegations and
counterclaims are without merit.
The Company is also a party to various other general corporate legal
proceedings which have arisen in the ordinary course of business. While the
results of these matters, as well as the matter described above cannot be
predicted with certainty, the Company believes that losses, if any, resulting
from the ultimate resolution of these matters will not have a material adverse
effect on the Company's consolidated results of operations, cash flows or
financial position. However, unfavorable resolution could affect the
consolidated results of operations or cash flows for the quarterly periods in
which they are resolved.
LEASE COMMITMENTS
The Company and its subsidiaries lease real property, equipment and
software under various operating leases with terms from 1 to 25 years. The
Company has also entered into various airport concession and permit agreements
which generally provide for payment of a percentage of revenue from vehicle
rentals with a guaranteed minimum lease obligation.
Expenses under real property, equipment and software leases and airport
concession agreements (excluding amounts charged through to customers) for the
years ended December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Real property............................................... $ 61.8 $ 53.2 $ 44.4
Equipment and software...................................... 43.7 23.8 25.0
Airport concession and permit fees:
Minimum fixed obligations................................. 93.3 89.6 68.0
Additional amounts, based on revenue from vehicle
rentals................................................ 103.0 94.5 60.1
------ ------ ------
Total............................................. $301.8 $261.1 $197.5
====== ====== ======
</TABLE>
Future minimum lease obligations under noncancelable real property,
equipment and software leases and airport agreements with initial terms in
excess of one year at December 31, 1997 are as follows:
<TABLE>
<S> <C>
Year Ending December 31:
1998........................................................ $154.4
1999........................................................ 117.8
2000........................................................ 101.1
2001........................................................ 73.3
2002........................................................ 53.6
Thereafter.................................................. 119.8
------
$620.0
======
</TABLE>
59
<PAGE> 62
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with the development of the AutoNation USA megastores, the
Company is the lessee under a $500.0 million operating lease facility
established to acquire and develop properties used in its business. The Company
has guaranteed the residual value of the properties under this facility which
guarantee totaled approximately $326.5 million at December 31, 1997.
OTHER MATTERS
In the normal course of business, the Company is required to post
performance bonds, letters of credit, and/or cash deposits as a financial
guarantee of the Company's performance. To date, the Company has satisfied
financial responsibility requirements for regulatory agencies by making cash
deposits, obtaining bank letters of credit or by obtaining surety bonds. At
December 31, 1997, letters of credit and surety bonds totaling $368.6 million
expire through October 1999.
The Company's solid waste and environmental services activities are
conducted in the context of a developing and changing statutory and regulatory
framework. Governmental regulation of the waste management industry requires the
Company to obtain and retain numerous governmental permits to conduct various
aspects of its operations. These permits are subject to revocation, modification
or denial. The costs and other capital expenditures which may be required to
obtain or retain the applicable permits or comply with applicable regulations
could be significant.
9. EARNINGS (LOSS) PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings Per Share" during 1997. SFAS 128 establishes standards
for computing and presenting basic and diluted earnings (loss) per share. Basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding during the year. Diluted
earnings (loss) per share is based on the combined weighted average number of
common shares and common share equivalents outstanding which include, where
appropriate, the assumed exercise or conversion of warrants and options. In
computing diluted earnings (loss) per share, the Company has utilized the
treasury stock method. All prior period earnings (loss) per share data have been
restated to conform with SFAS 128.
The computation of weighted average common and common equivalent shares
used in the calculation of basic and diluted earnings (loss) per share is as
follows for the years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Weighted average shares outstanding used in calculating
basic earnings per share.................................. 403.1 307.0 234.6
Gross common equivalent shares.............................. 63.6 58.1 53.8
Weighted average treasury shares purchased.................. (24.3) (15.2) (7.6)
Effect of using weighted average common equivalent shares
outstanding............................................... (11.5) (8.3) (35.6)
----- ----- -----
Weighted average common and common equivalent shares used in
calculating diluted earnings per share.................... 430.9 341.6 245.2
===== ===== =====
</TABLE>
10. RESTRUCTURING AND OTHER CHARGES
During the year ended December 31, 1997, the Company recorded pre-tax
charges of approximately $244.1 million. These charges consisted of $150.0
million associated with combining the Company's franchised automotive
dealerships and used vehicle megastore operations into one automotive retail
division and $94.1 million associated with integrating the Company's automotive
rental operations. Approximately $85.0 million of the automotive retail charge
appears as restructuring and other charges in the Company's Consolidated
Statement of Operations for the year ended December 31, 1997 and consists of:
$42.0 million for
60
<PAGE> 63
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
consolidation of information systems; $25.0 million related primarily to
relocating the Company's Valu Stop(SM) operations; and $18.0 million of
severance and other costs. The remaining $65.0 million of the automotive retail
charge relates to inventory consolidation and is included in cost of automotive
retail sales in the Company's Consolidated Statement of Operations for the year
ended December 31, 1997. The primary components of the $94.1 million automotive
rental charge are as follows: $32.0 million related to elimination of redundant
information systems; $18.0 million related to fleet consolidation; and $44.1
million related to closure or sale of duplicate rental facilities and merger and
other non-recurring expenses. Through December 31, 1997, the Company has spent
approximately $58.1 million related to integration and other activities and has
recorded $92.3 million of these charges against certain assets. As of December
31, 1997, approximately $93.7 million remained in accrued liabilities related to
these charges. The Company believes the integration activities associated with
these charges will be substantially completed within one year.
During the year ended December 31, 1996, the Company recorded pre-tax
charges of approximately $95.5 million related primarily to the integration of
the operations of Alamo Rent-A-Car, Inc. into those of the Company. Also
included in these charges are merger expenses associated with certain
acquisitions accounted for under the pooling of interests method of accounting.
Approximately $38.3 million of such expenses appear as restructuring and other
charges in the Company's Consolidated Statement of Operations for the year ended
December 31, 1996 with the remainder of approximately $57.2 million included in
cost of automotive rental operations and selling, general and administrative
expenses. These costs primarily include asset write-offs, severance benefits,
accounting and legal merger costs and changes in various estimated reserve
requirements. Through December 31, 1997, the Company has spent substantially all
of the $38.3 million included in restructuring and other charges in the 1996
Consolidated Statement of Operations.
11. DISCONTINUED OPERATIONS
In October 1997, the Company sold its electronic security services division
for approximately $610.0 million resulting in an after tax gain of approximately
$230.0 million. Accordingly, the operating results and gain on disposition of
the electronic security services segment have been classified as discontinued
operations for all periods presented in the accompanying Consolidated Financial
Statements. Revenue from the electronic security services segment was $83.8
million in 1997 for the period prior to disposition and $85.3 million and $49.8
million for the years ended December 31, 1996 and 1995, respectively.
During the year ended December 31, 1995, the Company disposed of its mining
and citrus operations and spun-off its hazardous waste services segment
resulting in a loss from discontinued operations of approximately $25.1 million,
net of income taxes. Included in the 1995 loss from discontinued operations is a
$30.5 million loss on disposal of the Company's mining and citrus operations,
net of income tax benefits of $10.0 million. Revenue from the mining and citrus
and hazardous waste services operations was $118.4 million in 1995 for the
period prior to disposition. Operating results for the period prior to
disposition have been classified as discontinued operations in the accompanying
Consolidated Financial Statements.
12. DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to market risks arising from changes in interest
rates. Due to its limited foreign operations, the Company does not have material
market risk exposures relative to changes in foreign exchange rates.
CREDIT EXPOSURE
The Company is exposed to credit related losses in the event of
non-performance by counterparties to certain derivative financial instruments.
The Company monitors the credit worthiness of the counterparties and presently
does not expect default by any of the counterparties. The Company does not
obtain collateral in connection with its derivative financial instruments.
61
<PAGE> 64
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The credit exposure that results from interest rate contracts is
represented by the fair value of contracts with a positive fair value as of the
reporting date. See Note 13, Fair Value of Financial Instruments, for the fair
value of derivatives. The Company's credit exposure on its interest rate
derivatives was not material at December 31, 1997 or 1996.
INTEREST RATE RISK MANAGEMENT
The Company uses interest rate swap agreements to manage the impact of
interest rate changes on the Company's variable rate revenue earning vehicle
obligations. The amounts exchanged by the counterparties to interest rate swap
agreements normally are based upon the notional amounts and other terms,
generally related to interest rates, of the derivatives. While notional amounts
of interest rate swaps form part of the basis for the amounts exchanged by the
counterparties, the notional amounts are not themselves exchanged, therefore, do
not represent a measure of the Company's exposure as an end user of derivative
financial instruments. At December 31, 1997 and 1996, notional principal amounts
related to interest rate swaps (variable to fixed rate) were $2.25 billion and
$801.9 million, respectively. The swap portfolio maturities are as follows as of
December 31, 1997: $300.0 million in 1998; $650.0 million in 1999; $1.0 billion
in 2000; $150.0 million in 2001; and $150.0 million in 2002. As of December 31,
1997, the weighted average fixed rate payment on variable to fixed rate swaps
was 5.93%. Variable rates received are indexed to the Commercial Paper
Nonfinancial rate ($2.2 billion notional principal amount) and LIBOR ($50.0
million notional principal amount).
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation.
Fair value estimates are made at a specific point in time, based on
relevant market information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment, and therefore cannot be determined with precision. The assumptions
used have a significant effect on the estimated amounts reported.
The following methods and assumptions were used by the Company in
estimating fair value disclosures for financial instruments:
- Cash and cash equivalents, receivables, other current assets, accounts
payable, accrued liabilities and variable rate debt: The amounts reported
in the accompanying Consolidated Balance Sheets approximate fair value.
- Medium-term notes payable: The estimated fair value of medium-term notes
payable is estimated based on the quoted market prices for the same or
similar issues.
- Other fixed-rate debt: Fixed rate mortgages are valued based upon
discounted expected cash flows at rates then offered to the Company for
debt of similar terms. The carrying amount of remaining fixed-rate debt
approximates fair value.
- Interest rate swaps: The fair value of interest rate swaps was determined
from dealer quotations and represents the discounted future cash flows
through maturity or expiration using current rates, and is effectively
the amount the Company would pay or receive to terminate the agreements.
62
<PAGE> 65
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the carrying amounts and fair values of the
Company's financial instruments, except for those noted above for which carrying
amounts approximate fair values, as of December 31:
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
CARRYING FAIR CARRYING FAIR
(ASSETS) LIABILITIES AMOUNT VALUE AMOUNT VALUE
- -------------------- -------- ------ -------- ------
<S> <C> <C> <C> <C>
Medium-term notes payable............................ $902.8 $917.7 $799.6 $792.8
Other fixed-rate debt................................ 70.3 70.3 184.6 186.5
Interest rate swaps.................................. -- 8.0 -- .7
</TABLE>
14. BUSINESS AND CREDIT CONCENTRATIONS
AUTOMOTIVE RETAIL INDUSTRY
The Company owns and operates or has contracted to acquire a total of
approximately 260 franchised automotive dealerships located in 18 states.
Automotive dealerships operate pursuant to franchise agreements with
vehicle manufacturers. Franchise agreements generally provide the manufacturers
with considerable influence over the operations of the dealership and generally
provide for termination of the franchise agreement for a variety of causes. The
success of any franchised automotive dealership is dependent, to a large extent,
on the financial condition, management, marketing, production and distribution
capabilities of the vehicle manufacturers of which the Company holds franchises.
The Company purchases substantially all of its new vehicles from various
manufacturers at the prevailing prices charged by the manufacturers to all
franchised dealers. The Company's sales volume could be adversely impacted by
the manufacturers' inability to supply the dealerships with an adequate supply
of vehicles.
Concentrations of credit risk with respect to trade receivables related to
the Company's automotive retail operations are limited due to the wide variety
of customers and markets in which the Company's products are sold as well as
their dispersion across many different geographic areas in the United States.
Consequently, at December 31, 1997, the Company does not consider itself to have
any significant concentrations of credit risk in the automotive retail segment.
AUTOMOTIVE RENTAL INDUSTRY
The Company owns and operates vehicle rental facilities primarily in the
United States. The automotive rental industry in which the Company operates is
highly seasonal.
The Company enters into vehicle repurchase programs with one principal
vehicle manufacturer, as well as other vehicle manufacturers. At December 31,
1997 and 1996, the Company had vehicle receivables from manufacturers of $214.9
million and $125.4 million, respectively. During model year 1997, the Company
purchased approximately 70% of its vehicle fleet under repurchase programs with
one vehicle manufacturer.
Concentrations of credit risk with respect to non-vehicle receivables
related to the Company's automotive rental operations are limited due to the
wide variety of customers and markets in which services are provided as well as
their dispersion across many different geographic areas primarily in the United
States. Consequently, at December 31, 1997, the Company does not consider itself
to have any significant non-vehicle receivable concentrations of credit risk in
the automotive rental segment.
SOLID WASTE SERVICES INDUSTRIES
Concentrations of credit risk with respect to trade receivables related to
the Company's solid waste services segment are limited due to the wide variety
of customers and markets in which services are provided
63
<PAGE> 66
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
as well as their dispersion across many different geographic areas in the United
States. As a result, at December 31, 1997, the Company does not consider itself
to have any significant concentrations of credit risk in the solid waste
services segment.
15. RELATED PARTY TRANSACTIONS
As of December 31, 1996, approximately $247.5 million was due from
AutoNation Incorporated ("AutoNation") pursuant to a loan agreement whereby the
Company agreed to provide advances at an interest rate of LIBOR plus 2% to fund
AutoNation's cash flow requirements prior to its acquisition by the Company in
January 1997.
The Company purchased approximately $631.3 million and $351.8 million of
revenue earning vehicles from a group of automotive dealerships owned primarily
by a former director of a pooled company during the years ended December 31,
1996 and 1995, respectively.
16. OPERATIONS BY INDUSTRY SEGMENT
The Company operates subsidiaries in the automotive retail, automotive
rental, and solid waste services industries. The following table presents
financial information regarding the Company's different industry segments as of
and for the years ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- --------
<S> <C> <C> <C>
Revenue:
Automotive retail..................................... $ 6,122.8 $2,569.7 $1,962.4
Automotive rental..................................... 3,055.1 2,699.4 1,992.8
Solid waste services.................................. 1,127.7 825.5 571.7
--------- -------- --------
$10,305.6 $6,094.6 $4,526.9
========= ======== ========
Cost of operations:
Automotive retail..................................... $ 5,459.0 $2,290.2 $1,718.4
Automotive rental..................................... 2,377.0 2,167.2 1,613.9
Solid waste services.................................. 809.1 608.6 401.4
--------- -------- --------
$ 8,645.1 $5,066.0 $3,733.7
========= ======== ========
Selling, general and administrative:
Automotive retail..................................... $ 647.2 $ 254.9 $ 211.3
Automotive rental..................................... 497.4 537.1 393.5
Solid waste services.................................. 107.1 102.1 89.8
Corporate............................................. 30.1 21.7 4.3
--------- -------- --------
$ 1,281.8 $ 915.8 $ 698.9
========= ======== ========
Restructuring and other charges:
Automotive retail..................................... $ 85.0 $ -- $ --
Automotive rental..................................... 94.1 23.5 --
Solid waste services.................................. -- 8.8 3.3
Corporate............................................. -- 6.0 --
--------- -------- --------
$ 179.1 $ 38.3 $ 3.3
========= ======== ========
</TABLE>
64
<PAGE> 67
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- --------
<S> <C> <C> <C>
Operating income (loss):
Automotive retail..................................... $ (68.4) $ 24.6 $ 32.7
Automotive rental..................................... 86.6 (28.4) (14.6)
Solid waste services.................................. 211.5 106.0 77.2
Corporate............................................. (30.1) (27.7) (4.3)
--------- -------- --------
$ 199.6 $ 74.5 $ 91.0
========= ======== ========
Depreciation and amortization:
Automotive retail..................................... $ 32.6 $ 8.2 $ 7.5
Automotive rental..................................... 878.6 789.3 586.0
Solid waste services.................................. 87.8 67.2 54.4
Corporate............................................. 4.6 .6 --
--------- -------- --------
$ 1,003.6 $ 865.3 $ 647.9
========= ======== ========
Capital expenditures:
Automotive retail..................................... $ 168.9 $ 57.2 $ 50.7
Automotive rental..................................... 84.5 45.1 22.3
Solid waste services.................................. 165.1 137.0 156.1
Corporate............................................. 41.3 1.3 --
--------- -------- --------
$ 459.8 $ 240.6 $ 229.1
========= ======== ========
Assets:
Automotive retail..................................... $ 3,064.4 $ 659.2 $ 539.6
Automotive rental..................................... 5,899.1 4,734.1 3,908.3
Solid waste services.................................. 1,362.4 1,146.4 714.9
Corporate............................................. 201.4 195.3 174.0
--------- -------- --------
$10,527.3 $6,735.0 $5,336.8
========= ======== ========
</TABLE>
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The Company's automotive rental operations and particularly the leisure
travel segment is highly seasonal. In these operations, the third quarter which
includes the peak summer travel months has historically been the strongest
quarter of the year. During the peak season the Company increases its rental
fleet and workforce to accommodate increased rental activity. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the annual performance of this segment. The first and
fourth quarters for the Company's automotive rental operations are generally the
weakest, when there is limited leisure travel and a greater potential for
adverse weather conditions. Many of the operating expenses such as rent, general
insurance and administrative personnel are fixed and cannot be reduced during
periods of decreased rental demand.
The second and fourth quarters of 1997 included restructuring and other
pre-tax charges of approximately $94.1 million and $150.0 million, respectively,
as described in Note 10, Restructuring and Other Charges. The second quarter of
1997 also contained a gain on the sale of ADT Limited common stock of
approximately $102.3 million as described in Note 2, Business Combinations.
The third and fourth quarters of 1996 included pre-tax charges of
approximately $7.6 million and $87.9 million, respectively, as described in Note
10, Restructuring and Other Charges. The fourth quarter of 1996 also included an
extraordinary charge of approximately $31.6 million, net of income tax benefit,
related to the early extinguishment of debt as described in Note 4, Long-Term
Debt and Notes Payable.
65
<PAGE> 68
REPUBLIC INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is an analysis of certain items in the Consolidated
Statements of Operations by quarter for 1997 and 1996. Quarterly amounts have
been restated from amounts previously reported in Form 10-Q for significant
business combinations accounted for under the pooling of interests method of
accounting, to account for the Company's electronic security services segment as
discontinued operations and for the effect of adopting SFAS 128.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenue........................................ 1997 $1,825.4 $2,428.4 $3,123.6 $2,928.2
1996 1,331.0 1,558.8 1,603.6 1,601.2
Operating income (loss)........................ 1997 $ 47.5 $ 10.1 $ 194.7 $ (52.7)
1996 33.7 56.6 79.9 (95.7)
Income (loss) from continuing operations before
extraordinary charge......................... 1997 $ 34.9 $ 69.7 $ 124.4 $ (28.8)
1996 17.8 29.0 43.0 (82.4)
Basic earnings (loss) per share from continuing
operations before extraordinary charge....... 1997 $ .09 $ .18 $ .30 $ (.07)
1996 .06 .10 .14 (.26)
Diluted earnings (loss) per share from
continuing operations before extraordinary
charge....................................... 1997 $ .09 $ .17 $ .28 $ (.07)
1996 .06 .09 .12 (.26)
Net income (loss).............................. 1997 $ 37.6 $ 73.3 $ 127.6 $ 201.2
1996 18.8 31.8 45.1 (111.5)
</TABLE>
66
<PAGE> 69
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
67
<PAGE> 70
PART III
The information required by Items 10, 11, 12 and 13 of Part III of Form
10-K will be set forth in the Proxy Statement of the Company relating to the
1998 Annual Meeting of Stockholders and is incorporated herein by reference.
68
<PAGE> 71
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements of the Company are set forth in Part II, Item
8.
(2) Financial Statement Schedule II, Valuation and Qualifying Accounts
and Reserves, for each of the three years ended December 31, 1997
is submitted herewith.
(3) Exhibits -- (See Index to Exhibits included elsewhere herein.)
(b) Form 8-K dated October 3, 1997, Item 2 (as amended by Form 8-K/A),
relating to the sale of substantially all of the assets of the
Company's electronic security services business segment to Ameritech
Corporation.
Form 8-K dated November 20, 1997, Item 5, reporting certain financial
information for consummated acquisitions.
69
<PAGE> 72
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REGISTRANT:
REPUBLIC INDUSTRIES, INC.
By: /s/ H. WAYNE HUIZENGA
------------------------------------
H. Wayne Huizenga
Chairman of the Board and
Co-Chief Executive Officer
March 26, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ H. WAYNE HUIZENGA Chairman of the Board and March 26, 1998
- ----------------------------------------------------- Co-Chief Executive
H. Wayne Huizenga Officer (Principal
Executive Officer)
/s/ STEVEN R. BERRARD Co-Chief Executive Officer, March 26, 1998
- ----------------------------------------------------- President and Director
Steven R. Berrard
/s/ MICHAEL S. KARSNER Senior Vice President and March 26, 1998
- ----------------------------------------------------- Chief Financial Officer
Michael S. Karsner (Principal Financial and
Accounting Officer)
/s/ HARRIS W. HUDSON Vice Chairman and Director March 26, 1998
- -----------------------------------------------------
Harris W. Hudson
/s/ MICHAEL G. DEGROOTE Director March 26, 1998
- -----------------------------------------------------
Michael G. DeGroote
/s/ J.P. BRYAN Director March 26, 1998
- -----------------------------------------------------
J.P. Bryan
/s/ RICK L. BURDICK Director March 26, 1998
- -----------------------------------------------------
Rick L. Burdick
/s/ GEORGE D. JOHNSON, JR. Director March 26, 1998
- -----------------------------------------------------
George D. Johnson, Jr.
/s/ JOHN J. MELK Director March 26, 1998
- -----------------------------------------------------
John J. Melk
/s/ ROBERT J. BROWN Director March 26, 1998
- -----------------------------------------------------
Robert J. Brown
</TABLE>
70
<PAGE> 73
REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNT AND RESERVES
SCHEDULE II
(IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE
AT ADDITIONS ACCOUNTS BALANCE
BEGINNING CHARGED TO WRITTEN AT END
OF YEAR INCOME OFF OTHER(1) OF YEAR
--------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
CLASSIFICATIONS
Allowance for doubtful accounts:
1997............................................. $17.5 $12.5 $(9.0) $29.9 $50.9
1996............................................. 11.4 9.9 (6.3) 2.5 17.5
1995............................................. 6.3 4.4 (.9) 1.6 11.4
</TABLE>
- ---------------
(1) Allowance of acquired businesses.
71
<PAGE> 74
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger and Reorganization, dated May
30, 1991, by and between Republic Waste Industries, Inc., an
Oklahoma corporation, and Republic Waste Industries, Inc., a
Delaware corporation (incorporated by reference to Exhibit
3.1 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1991)
3.1 -- Third Amended and Restated Certificate of Incorporation of
Republic Industries, Inc. (incorporated by reference to
Exhibit 99 to the Registrant's Current Report on Form 8-K
Dated May 14, 1997).
3.2 -- Bylaws of Republic Industries, Inc., as amended to date
(incorporated by reference to Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
4.1 -- Credit Facilities and Reimbursement Agreement dated as of
April 23, 1997, by and among Republic Industries, Inc., and
Republic Resources Company, as Borrowers, NationsBank,
National Association (South), as Arranger and Administrative
Agent, Various Co-Agents Listed Therein and Various Lenders
Listed Therein (incorporated by reference to Exhibit 4.22 to
the Registrant's Current Report on Form 8-K, dated June 13,
1997).
4.2* -- Base Indenture dated as of April 30, 1996, between National
Car Rental Financing L.P. as Issuer and The Bank of New York
as Trustee.
4.3* -- Master Motor Vehicle Lease and Servicing Agreement dated as
of October 29, 1997, among National Car Rental Financing
Limited Partnership; National Car Rental System, Inc.; Alamo
Rent-A-Car, Inc.; Spirit Rent-A-Car, Inc.; and those
subsidiaries and affiliates of Republic Industries from time
to time becoming Lessees and Servicers thereunder; and
Republic Industries, Inc.
4.4* -- Second Amended and Restated Master Collateral Agency
Agreement among Republic Industries, Inc.; National Car
Rental Financing Limited Partnership; Alamo Rent-A-Car,
Inc.; National Car Rental System, Inc.; Spirit Rent-A-Car,
Inc.; Value Rent-A-Car, Inc.; Citibank, N.A.; Various
Financing Sources Parties Thereto; and Various Beneficiaries
Parties Thereto.
4.5* -- Series 1997-1 Supplement to the Base Indenture between
National Car Rental Financing Limited Partnership and The
Bank of New York.
4.6* -- Series 1997-1 Support Reimbursement Agreement among Republic
Industries Funding Corp.; Alamo Rent-A-Car, Inc.; National
Car Rental System, Inc.; Spirit Rent-A-Car, Inc.; Value
Rent-A-Car, Inc.; those additional Subsidiaries and
Affiliates of Republic Industries, Inc. from time to time
becoming Additional Lessees thereunder; National Car Rental
Financing Limited Partnership; Republic Industries, Inc.;
and those financial institutions identified on the signature
pages thereto as the Series 1997-1 Support Letter of Credit
Providers.
4.7* -- Series 1997-1 Letter of Credit Agreement among Republic
Industries Funding Corp.; Alamo Rent-A-Car, Inc.; National
Car Rental System, Inc.; Spirit Rent-A-Car, Inc.; Value
Rent-A-Car, Inc.; those additional Subsidiaries and
Affiliates of Republic Industries, Inc. from time to time
becoming Additional lessees thereunder; Republic Industries,
Inc.; and Westdeutsche Landesbank Girozentrale, New York
Branch.
4.8* -- Series 1997-1 Note Purchase Agreement (Variable Funding
Rental Car Asset Backed Notes, Series 1997-1) among National
Car Rental Financing Limited Partnership; Republic
Industries Funding Corp.; and Credit Suisse First Boston.
4.9* -- Series 1997-1 Liquidity Agreement among Republic Industries
Funding Corp.; Certain Financial Institutions; and Credit
Suisse First Boston.
</TABLE>
72
<PAGE> 75
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
<C> <C> <S>
4.10* -- Series 1997-1 Collateral Agreement among Republic Industries
Funding Corp.; General Motors Corporation; Certain Financing
Institutions identified therein as the Series 1997-1 Support
Letter of Credit Providers; Westdeutsche Landesbank
Girozentrale, New York Branch; Credit Suisse First Boston;
Credit Suisse First Boston Corporation; Bancamerica
Robertson Stephens; Chase Securities, Inc.; Citicorp
Securities, Inc.; and Merrill Lynch Money Markets, Inc.; and
Citibank, N.A.
Note: Pursuant to the provisions of Item 601(b)(4)(iii) of
Regulation S-K, the registrant hereby undertakes to furnish
to the Commission upon request copies of any instruments
governing long-term debt of Republic and its consolidated
subsidiaries that does not exceed 10% of the total assets of
Republic and its subsidiaries on a consolidated basis.
10.1 -- Republic Waste Industries, Inc. 1990 Stock Option and Stock
Purchase Plan (incorporated by reference to Exhibit 10.1(a)
to the Registrant's Registration Statement on Form S-1
Commission File No. 33-37191).
10.2 -- Warrant to Purchase 1,150,000 Shares of Republic Waste
Industries, Inc. Common Stock issued to MGD Holdings Ltd.
(incorporated by reference to Exhibit 10.18 to the
Registrant's Registration Statement on Form S-1 Commission
File No. 33-42530).
10.3 -- Republic Waste Industries, Inc. 1991 Stock Option Plan
(incorporated by reference to Exhibit 10.42 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992).
10.4 -- Form of Warrant to purchase 50,000 shares of Republic Waste
Industries, Inc. Common Stock issued to Rick L. Burdick
(incorporated by reference to Exhibit 10.35 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
10.5 -- Stock Purchase Agreement, dated May 21, 1995, by and between
H. Wayne Huizenga and Republic Waste Industries, Inc.
(incorporated by reference to Exhibit (c)(1) to the
Registrant's Current Report on Form 8-K/A, dated July 17,
1995).
10.6 -- Stock Purchase Agreement, dated May 21, 1995, by and between
Harris W. Hudson and Republic Waste Industries, Inc.
(incorporated by reference to Exhibit (c)(4) to the
Registrant's Current Report on Form 8-K/A, dated July 17,
1995).
10.7 -- Stock Purchase Agreement, dated May 21, 1995, by and between
Westbury (Bermuda) Ltd. and Republic Waste Industries, Inc.
(incorporated by reference to Exhibit (c)(5) to the
Registrant's Current Report on Form 8-K/A, dated July 17,
1995).
10.8 -- First Amendment to Stock Purchase Agreement, dated July 17,
1995, by and between Republic Waste Industries, Inc. and H.
Wayne Huizenga (incorporated by reference to Exhibit (c)(8)
to the Registrant's Current Report on Form 8-K/A, dated July
17, 1995).
10.9 -- Republic Industries, Inc. 1995 Amended and Restated Employee
Stock Option Plan (incorporated by reference to Appendix B
to the Registrant's Proxy Statement for the 1996 Annual
Meeting of Stockholders).
10.10 -- Republic Industries, Inc. Amended and Restated 1995
Non-Employee Director Stock Option Plan (incorporated by
reference to Exhibit B to the Registrant's Information
Statement dated November 8, 1995).
10.11 -- Merger Agreement, dated as of May 8, 1996 ("AutoNation
Merger Agreement"), by and among Republic Industries, Inc.,
RI/ANI Merger Corp., AutoNation Incorporated, H. Wayne
Huizenga, Steven R. Berrard and JM Family Enterprises, Inc.
(incorporated by reference to Exhibit 99.1 to the
Registrant's Current Report on Form 8-K, dated May 8, 1996).
10.12 -- Loan Agreement, dated May 8, 1996 ("AutoNation Loan
Agreement"), by and between AutoNation Incorporated and
Republic Industries, Inc. (incorporated by reference to
Exhibit 99.2 to the Registrant's Current Report on Form 8-K,
dated May 8, 1996).
10.13 -- Employment Agreement, dated as of May 8, 1996, among
Republic Industries, Inc. and Steven R. Berrard
(incorporated by reference to Exhibit 10.34 to the
Registrant's Registration Statement on Form S-4 Commission
File No. 333-17867).
</TABLE>
73
<PAGE> 76
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
<C> <C> <S>
10.14 -- First Amendment to AutoNation Merger Agreement, dated as of
September 30, 1996 (incorporated by reference to Annex A to
the Registrant's Schedule 14A Proxy Statement, dated
December 13, 1996).
10.15 -- Second Amendment to AutoNation Merger Agreement and First
Amendment to AutoNation Loan Agreement and Related Loan
Documents, dated as of October 31, 1996 (incorporated by
reference to Annex A to the Registrant's Schedule 14A Proxy
Statement dated December 13, 1996).
10.16 -- Third Amendment to AutoNation Merger Agreement, dated as of
December 31, 1996 (incorporated by reference to Exhibit 2.2
to the Registrant's Current Report on Form 8-K/A dated
January 16, 1997).
10.17 -- Agreement and Plan of Merger, dated as of June 25, 1996,
among Addington Resources, Inc., Republic Industries, Inc.
and RI/AR Merger Corp. (incorporated by reference to Exhibit
99.1 to the Registrant's Current Report on Form 8-K dated
June 25, 1996).
10.18 -- Agreement and Plan of Merger, dated as of June 27, 1996,
among Continental Waste Industries, Inc., Republic
Industries, Inc., and RI/CW Merger Corp. (incorporated by
reference to Exhibit 99.1 to the Registrant's Current Report
on Form 8-K, dated June 27, 1996).
10.19** -- Letter Agreement between National Car Rental System, Inc.
and General Motors Corporation dated September 23, 1996.
10.20** -- Letter Agreement between Alamo Rent-A-Car, Inc. and General
Motors Corporation dated October 8, 1996.
10.21 -- Agreement and Plan of Reorganization, dated November 6,
1996, among Republic Industries, Inc., certain acquisition
subsidiaries of Republic Industries, Inc., Michael S. Egan,
Norman D. Tripp, William H. Kelly, Michael S. Egan as
trustee of certain trusts, Alamo Rent-A-Car, Inc., and
certain affiliated entities of Alamo Rent-A-Car, Inc.
(incorporated by reference to Exhibit 2 to the Registrant's
Current Report on Form 8-K dated November 25, 1996).
10.22 -- Letter Agreement between Alamo Rent-A-Car, Inc. and General
Motors Corporation (incorporated by reference to Exhibit
10.16 to the Registration Statement on Form S-1 of Alamo
Rent-A-Car, Inc. Commission File No. 33-80271).
10.23 -- Share Exchange Agreement, dated as of January 5, 1997, among
Republic Industries, Inc., National Car Rental Systems, Inc.
("National") and the stockholders of National (incorporated
by reference to Exhibit 2 to the Registrant's Current Report
on Form 8-K dated January 5, 1997).
10.24 -- Asset Purchase Agreement, dated as of September 26, 1997
among Republic Industries, Inc., Republic Security Companies
Holding Co. II, Inc., Ameritech Corporation and Ameritech
Monitoring Services, Inc. (incorporated by reference from
Exhibit 2.1 to the Registrant's Current Report on Form 8-K
dated October 3, 1997).
10.25** -- Letter Agreement between Alamo Rent-A-Car, Inc. and General
Motors Corporation dated November 18, 1997.
10.26** -- Letter Agreement between National Car Rental System, Inc.
and General Motors Corporation dated November 18, 1997.
10.27* -- Amended and Restated 1997 Employee Stock Option Plan.
21.1* -- Subsidiaries of Republic Industries, Inc.
23.1* -- Consent of Arthur Andersen LLP.
27.1* -- 1997 Financial Data Schedule (for SEC use only).
</TABLE>
- ---------------
* Filed herewith.
** Filed herewith; portions of this agreement have been omitted pursuant to a
request for confidential treatment filed with the Securities and Exchange
Commission.
74
<PAGE> 1
EXHIBIT 4.2
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP,
as Issuer,
and
THE BANK OF NEW YORK,
as Trustee
----------
BASE INDENTURE
Dated as of April 30, 1996
----------
Rental Car Asset Backed Notes
(Issuable in Series)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
1.1. Definitions................................................................................... 1
1.2. Cross-References.............................................................................. 1
1.3. Accounting and Financial Determinations; No Duplication....................................... 2
1.4. Rules of Construction......................................................................... 2
ARTICLE 2.
THE NOTES
2.1. Designation and Terms of Notes................................................................ 3
2.2. Notes Issuable in Series...................................................................... 3
2.3. Supplement For Each Series.................................................................... 7
2.4. Execution and Authentication.................................................................. 10
2.5. Form of Notes; Book Entry Provisions; Title................................................... 11
2.6. Registrar and Paying Agent.................................................................... 12
2.7. Paying Agent to Hold Money in Trust........................................................... 13
2.8. Noteholder Lists.............................................................................. 14
2.9. Transfer and Exchange......................................................................... 14
2.10. Legending of Notes............................................................................ 21
2.11. Replacement Notes............................................................................. 21
2.12. Treasury Notes................................................................................ 22
2.13. Temporary Notes............................................................................... 23
2.14. Cancellation.................................................................................. 23
2.15. Principal and Interest........................................................................ 24
2.16. Book-Entry Notes.............................................................................. 24
2.17. Notices to Clearing Agency.................................................................... 27
2.18. Definitive Notes.............................................................................. 27
2.19. Tax Treatment................................................................................. 29
2.20. Certain Purchaser Representations and Certifications.......................................... 30
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE 3.
SECURITY
3.1. Grant of Security Interest.................................................................... 31
3.2. Certain Rights and Obligations of NFLP Unaffected............................................. 33
3.3. Performance of Agreement...................................................................... 35
3.4. Release of Lien on Vehicles................................................................... 35
3.5. Stamp, Other Similar Taxes and Filing Fees.................................................... 35
ARTICLE 4.
REPORTS
4.1. Agreement of Servicer to Provide Reports...................................................... 36
ARTICLE 5.
ALLOCATION AND APPLICATION OF COLLECTIONS
5.1. Collection Account............................................................................ 36
5.2. Collections and Allocations................................................................... 38
5.3. Determination of Monthly Interest............................................................. 41
5.4. Determination of Monthly Principal............................................................ 41
5.5. Paired Series................................................................................. 41
ARTICLE 6.
DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS
6.1. Distributions in General...................................................................... 42
6.2. Distributions to Retained Distribution Account................................................ 43
6.3. Optional Repurchase of Notes.................................................................. 43
6.4. Monthly Noteholders' Statement................................................................ 44
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
7.1. Legal Existence and Power..................................................................... 45
7.2. Authorization................................................................................. 45
7.3. Binding Effect................................................................................ 46
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
7.4. Financial Information; Financial Condition.................................................... 46
7.5. Litigation.................................................................................... 46
7.6. No ERISA Plan................................................................................. 47
7.7. Tax Filings and Expenses...................................................................... 47
7.8. Disclosure.................................................................................... 47
7.9. Investment Company Act; Securities Act........................................................ 47
7.10. Regulations G, T, U and X..................................................................... 48
7.11. No Consent.................................................................................... 48
7.12. Solvency...................................................................................... 48
7.13. Ownership; Subsidiary......................................................................... 48
7.14. Security Interests............................................................................ 49
7.15. Binding Effect of Lease....................................................................... 50
7.16. Non-Existence of Other Agreements............................................................. 50
7.17. Manufacturer Programs......................................................................... 50
7.18. Other Representations......................................................................... 50
ARTICLE 8.
COVENANTS
8.1. Payment of Notes.............................................................................. 50
8.2. Maintenance of Office or Agency............................................................... 51
8.3. Information................................................................................... 51
8.4. Payment of Obligations........................................................................ 53
8.5. Reserved...................................................................................... 53
8.6. Conduct of Business and Maintenance of Existence.............................................. 53
8.7. Compliance with Laws.......................................................................... 53
8.8. Inspection of Property, Books and Records..................................................... 53
8.9. Compliance with Related Documents............................................................. 54
8.10. Notice of Defaults............................................................................ 54
8.11. Notice of Material Proceedings................................................................ 54
8.12. Further Requests.............................................................................. 55
8.13. Further Assurances............................................................................ 55
8.14. Manufacturer Programs......................................................................... 56
8.15. Liens......................................................................................... 57
8.16. Other Indebtedness............................................................................ 57
8.17. Mergers....................................................................................... 58
8.18. Sales of Assets............................................................................... 58
8.19. Acquisition of Assets......................................................................... 58
8.20. Dividends, Officers' Compensation, etc........................................................ 58
8.21. Name; Principal Office........................................................................ 58
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
8.22. Organizational Documents...................................................................... 59
8.23. Investments................................................................................... 59
8.24. No Other Agreements........................................................................... 59
8.25. Other Business................................................................................ 60
8.26. Maintenance of Separate Existence............................................................. 60
8.27. Rule 144A Information Requirement............................................................. 61
8.28. Use of Proceeds of Notes...................................................................... 61
8.29. Vehicles...................................................................................... 62
8.30. Amendments to Exchange Documents.............................................................. 62
8.31. Demand Note................................................................................... 62
ARTICLE 9.
AMORTIZATION EVENTS AND REMEDIES
9.1. Amortization Events........................................................................... 62
9.2. Rights of the Trustee upon Amortization Event or Certain Other Events of Default.............. 64
9.3. Special Provisions Concerning Remedies Upon Liquidation Event of Default in Conjunction with
a Manufacturer Event of Default or Inability to Turn Back under Manufacturer Program..... 68
9.4. Other Remedies................................................................................ 70
9.5. Waiver of Past Events......................................................................... 70
9.6. Control by Requisite Investors................................................................ 71
9.7. Limitation on Suits........................................................................... 71
9.8. Unconditional Rights of Holders to Receive Payment............................................ 72
9.9. Collection Suit by the Trustee................................................................ 72
9.10. The Trustee May File Proofs of Claim.......................................................... 72
9.11. Priorities.................................................................................... 73
9.12. Undertaking for Costs......................................................................... 73
9.13. Rights and Remedies Cumulative................................................................ 73
9.14. Delay or Omission Not Waiver.................................................................. 73
9.15. Reassignment of Surplus....................................................................... 74
ARTICLE 10.
THE TRUSTEE
10.1. Duties of the Trustee......................................................................... 74
10.2. Rights of the Trustee......................................................................... 76
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
10.3. Individual Rights of the Trustee.............................................................. 77
10.4. Notice of Amortization Events and Potential Amortization Events............................... 77
10.5. Compensation.................................................................................. 77
10.6. Replacement of the Trustee.................................................................... 78
10.7. Successor Trustee by Merger, etc.............................................................. 79
10.8. Eligibility Disqualification.................................................................. 80
10.9. Appointment of Co-Trustee or Separate Trustee................................................. 80
10.10. Representations and Warranties of Trustee..................................................... 82
ARTICLE 11.
DISCHARGE OF INDENTURE
11.1. Termination of NFLP's Obligations............................................................. 82
11.2. Application of Trust Money.................................................................... 84
11.3. Repayment to NFLP............................................................................. 84
ARTICLE 12.
AMENDMENTS
12.1. Without Consent of the Noteholders............................................................ 85
12.2. With Consent of the Noteholders............................................................... 86
12.3. Supplements................................................................................... 88
12.4. Revocation and Effect of Consents............................................................. 88
12.5. Notation on or Exchange of Notes.............................................................. 88
12.6. The Trustee to Sign Amendments, etc........................................................... 88
ARTICLE 13.
MISCELLANEOUS
13.1. Notices....................................................................................... 89
13.2. Communication by Noteholders With Other Noteholders........................................... 90
13.3. Certificate as to Conditions Precedent........................................................ 90
13.4. Statements Required in Certificate............................................................ 91
13.5. Rules by the Trustee and the Paying Agent..................................................... 91
13.6. No Recourse Against Others.................................................................... 91
13.7. Duplicate Originals........................................................................... 91
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
13.8. Benefits of Indenture......................................................................... 92
13.9. Payment on Business Day....................................................................... 92
13.10. Governing Law................................................................................. 92
13.11. No Adverse Interpretation of Other Agreements................................................. 92
13.12. Successors.................................................................................... 92
13.13. Severability.................................................................................. 92
13.14. Counterpart Originals......................................................................... 93
13.15. Table of Contents, Headings, etc.............................................................. 93
13.16. Termination; Collateral....................................................................... 93
13.17. No Bankruptcy Petition Against NFLP or the General Partner.................................... 93
13.18. No Recourse................................................................................... 94
</TABLE>
EXHIBITS AND SCHEDULES
SCHEDULE 1 DEFINITIONS LIST (ss. 1.1)
EXHIBIT A-1 RM OF TRANSFER CERTIFICATE (ss. 2.8)
EXHIBIT A-2 RESERVED
EXHIBIT A-3 FORM OF TRANSFER CERTIFICATE FOR EXCHANGE
OR TRANSFER FROM RESTRICTED GLOBAL
NOTE TO TEMPORARY GLOBAL NOTE (ss. 2.9)
EXHIBIT A-4 FORM OF TRANSFER CERTIFICATE
FOR EXCHANGE OR TRANSFER FROM RESTRICTED GLOBAL
NOTE TO PERMANENT GLOBAL NOTE (ss. 2.9)
EXHIBIT A-5 FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OR EXCHANGE FROM TEMPORARY GLOBAL
NOTE TO RESTRICTED GLOBAL NOTE (ss. 2.9)
EXHIBIT B FORM OF CLEARING SYSTEM CERTIFICATE
EXHIBIT C FORM OF CERTIFICATE OF BENEFICIAL OWNERSHIP
EXHIBIT D FORM OF REPRESENTATION LETTERS
EXHIBIT E FORM OF MONTHLY TRUSTEE'S CERTIFICATE
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BASE INDENTURE, dated as of April 30, 1996, between NATIONAL
CAR RENTAL FINANCING LIMITED PARTNERSHIP, a special purpose Delaware limited
partnership, as issuer ("NFLP"), and THE BANK OF NEW YORK, a New York banking
corporation, as trustee (in such capacity, the "Trustee").
W I T N E S S E T H:
WHEREAS, NFLP 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 NFLP's Rental Car Asset Backed Notes (the "Notes"), issuable as
provided in this Indenture;
WHEREAS, all things necessary to make this Indenture a legal,
valid and binding agreement of NFLP, in accordance with its terms, have been
done, and NFLP proposes to do all the things necessary to make the Notes, when
executed by NFLP and authenticated and delivered by the Trustee hereunder and
duly issued by NFLP, the legal, valid and binding obligations of NFLP as
hereinafter provided;
NOW, THEREFORE, for and in consideration of the premises and
the receipt of the Notes by the Noteholders, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Noteholders, as follows:
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
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.
Section 1.2. Cross-References.
Unless otherwise specified, references in this Indenture and
in each other Related Document to any Article or Section are references to such
Article or Section of this Indenture or such other Related 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.
<PAGE> 9
Section 1.3. Accounting and Financial Determinations;
No Duplication.
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 used
herein, the term "financial statement" shall include the notes and schedules
thereto. All accounting determinations and computations hereunder or under any
other Related Documents shall be made without duplication.
Section 1.4. Rules of Construction.
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".
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ARTICLE 2.
THE NOTES
Section 2.1. Designation and Terms of Notes.
Each Series of Notes shall be substantially in the form
specified in the applicable Supplement and shall bear, upon its face, the
designation for such Series to which it belongs so selected by NFLP. Except as
specified in any Supplement for a related Series, all Notes of any Series shall
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 Supplement. The aggregate
principal amount of Notes which may be authenticated and delivered under this
Indenture is unlimited. The Notes shall be in denominations of $250,000 and
integral multiples of $1,000 in excess thereof.
Section 2.2. Notes Issuable in Series.
The Notes may be issued in one or more Series. Each Series of
Notes shall be created by a Supplement. Notes of a new Series may from time to
time be executed by NFLP and delivered to the Trustee for authentication and
thereupon the same shall be authenticated and delivered by the Trustee upon the
receipt by the Trustee of a Company Request at least two (2) Business Days in
advance of the Closing Date for such Series and upon delivery by NFLP to the
Trustee, and receipt by the Trustee, of the following:
(a) a Company Order authorizing and directing the
authentication and delivery of the Notes of such new Series by the
Trustee and specifying the designation of such new Series, the
aggregate principal amount of Notes of such new Series to be
authenticated and the Note Rate (or the method for allocating interest
payments or other cash flow) with respect to such new Series;
(b) a Supplement in form satisfactory to the Trustee executed
by NFLP, the General Partner and the Trustee and specifying the
Principal Terms of such new Series;
(c) the related Enhancement Agreement, if any,
executed by each of the parties thereto, other than the
Trustee;
(d) written confirmation that the Rating Agency Condition
shall have been satisfied with respect to such issuance;
(e) an Officer's Certificate of NFLP dated as of the
applicable Closing Date to the effect that (i) no Amortization Event,
Asset Amount Deficiency, Enhancement Agreement Event of Default, if
applicable, Lease Event of Default, Manufacturer Event of Default,
Potential Amortization Event, Potential Enhancement Agreement Event of
Default, Potential Lease Event of Default, or Potential Manufacturer
Event of Default is continuing or will occur as a result of the
issuance of the new Series of Notes, (ii) the aggregate Market Value of
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all Non-Program Vehicles on such date (including all Non-Program
Vehicles to be acquired, financed or refinanced on the Closing Date for
such Series) equals or exceeds the aggregate Net Book Value of such
Non-Program Vehicles as of such date, (iii) the issuance of the new
Series of 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 NFLP 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 NFLP is a party
or by which it or its property may be bound or to which it or its
property may be subject, (iv) all conditions precedent provided in this
Base Indenture and the related Supplement with respect to the
authentication and delivery of the new Series of Notes have been
complied with and (v) if such new Series of Notes is a Segregated
Series, the criteria used to select the Series-Specific Collateral will
not have a material adverse effect on the quality of the Collateral
securing any other outstanding Series of Notes;
(f) unless otherwise specified in the related Supplement, an
Opinion of Counsel, subject to the assumptions and qualifications
stated therein, and in a form substantially acceptable to the Trustee,
dated the applicable Closing Date, substantially to the effect that:
(i) (x) the new Series of Notes will be treated as
indebtedness of NFLP for Federal and Minnesota state income
tax purposes and (y) the issuance of such Series will not
adversely affect the Federal or Minnesota state income tax
characterization of the Outstanding Notes of any Series;
(ii) all instruments furnished to the Trustee conform
in all material respects to the requirements of this Base
Indenture and the related Supplement and constitute all the
documents required to be delivered hereunder and thereunder
for the Trustee to authenticate and deliver the new Series of
Notes, and all conditions precedent provided for in this Base
Indenture and the related Supplement with respect to the
authentication and delivery of the new Series of Notes have
been complied with in all material respects;
(iii) (x) NFLP is a limited partnership duly
organized under the laws of the jurisdiction of its
organization and has the partnership power and authority to
execute and deliver the related Supplement (and, in the case
of the first Series to be
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authenticated hereunder, this Base Indenture and each other
Related Document to which it is a party) and to issue the new
Series of Notes, (y) the General Partner is duly incorporated
under the jurisdiction of its incorporation and has the
corporate power and authority to execute and deliver the
related Supplement (and, in the case of the first Series to be
authenticated hereunder, this Base Indenture and each other
Related Document to which it is a party) and to issue the new
Series of Notes and (z) National, in its capacity as Lessee
and as Servicer is duly incorporated in the jurisdiction of
its incorporation and, as of the date of this Indenture, has
the corporate power and authority to execute and deliver each
of the Related Documents to which it is a party;
(iv) the related Supplement, this Base Indenture and
each of the other Related Documents to which NFLP, the General
Partner, the Lessee or the Servicer is a party have been duly
authorized, executed and delivered by NFLP, the General
Partner, the Lessee or the Servicer, as the case may be;
(v) the new Series of Notes has been
duly authorized and executed and, when authenticated and
delivered in accordance with the provisions of this Base
Indenture and the related Supplement, will constitute a valid,
binding and enforceable obligation of NFLP entitled to the
benefits of this Base Indenture and the related Supplement,
subject, in the case of enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditor's rights generally and to general
principles of equity;
(vi) this Base Indenture, the related Supplement and
each of the other Related Documents to which NFLP, the General
Partner, the Lessee or the Servicer is a party are legal,
valid and binding agreements of NFLP, the General Partner, the
Lessee or the Servicer, as the case may be, enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and to general
principles of equity;
(vii) NFLP 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
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<PAGE> 13
Company Act of 1940, and this Base Indenture and the related
Supplement are not required to be registered under the Trust
Indenture Act;
(viii) the offer and sale of the new
Series of Notes is not required to be
registered under the Securities Act; and
(ix) as to the new Series of Notes and any
Outstanding Series of Notes, the opinions of counsel relating
to (A) the validity, perfection and priority of security
interests, (B) the nature of the lease of Acquired Vehicles
pursuant to the Lease as a true operating lease and not as a
financing, (C) the analysis of substantive consolidation of
the assets of NFLP or the General Partner with the assets of
the Lessee in the event of the insolvency of the Lessee, (D)
the status of NFLP as not being an investment company or
controlled by an investment company under the Investment
Company Act, as furnished by counsel retained by NFLP in
connection with the issuance of the initial Series of Notes,
are reaffirmed in all respects.
(g) such other documents, instruments, certifications,
agreements or other items as the Trustee may reasonably require.
Upon satisfaction of such conditions, the Trustee shall authenticate and
deliver, as provided above, such Series of Notes.
Section 2.3. Supplement For Each Series.
(a) In conjunction with the issuance of a new Series, the
parties hereto shall execute a Supplement, which shall specify the
relevant terms with respect to such new Series of Notes, which shall
include, as applicable: (i) its name or designation, (ii) the aggregate
principal amount of Notes of such Series, (iii) the Note Rate (or the
method for calculating such Note Rate) with respect to such Series,
(iv) the interest payment date or dates and the date or dates from
which interest shall accrue, (v) the method of allocating Collections
with respect to such Series and the method by which the principal
amount of Notes of such Series shall amortize or accrete, (vi) the
names of any accounts to be used by such Series and the terms governing
the operation of any such account, (vii) the Servicing Fee Percentage,
(viii) the terms of any Enhancement, (ix) the Enhancement Provider, if
any, (x) whether the Notes may be issued in bearer form and any
limitations imposed thereon, (xi) the Series Termination Date, (xii)
whether the Notes will be issued in multiple classes and, if so, the
method of allocating Collections among such classes, (xiii) whether
such Series of Notes shall
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have the benefit of Series- Specific Collateral and (xiv) any other
relevant terms of such Series of Notes that do not (subject to Section
2.3(b) and Article 12 hereof) change the terms of any Outstanding
Series of Notes or otherwise materially conflict with the provisions of
this Indenture and that do not prevent the satisfaction of the Rating
Agency Condition with respect to the issuance of such new Series (all
such terms, the "Principal Terms" of such Series);
(b) (i) A Supplement may specify that the related Series of
Notes (each, a "Segregated Series") will have Collateral that is to be
solely for the benefit of the Noteholders of such Segregated Series of
Notes (such Collateral being referred to as "Series-Specific
Collateral"); provided, however, that no such Segregated Series of
Notes will be issued unless (x) the Rating Agency Condition is met, (y)
NFLP shall have delivered to the Trustee an Officer's Certificate to
the effect that the issuance of such Segregated Series of Notes will
not have a material adverse effect upon the Noteholders of any Series
of Notes outstanding at the time of the issuance of the Segregated
Series of Notes, and (z) the applicable Supplement provides, in form
satisfactory to the Trustee, for the changes and modifications to the
Indenture and the other Related Documents as are described in clause
(ii) below.
(ii) In the event any Segregated Series of Notes is
issued, the related Supplement will provide that (A) the
Servicer, the Master Collateral Agent and the Trustee will
identify the Collateral for such Segregated Series of Notes
such that (x) the Series- Specific Collateral will secure only
the Segregated Series of Notes to which such Series-Specific
Collateral is applicable and (y) the Noteholders with respect
to any other Series of Notes will not be entitled to the
benefit of such Series-Specific Collateral, (B) the Trustee
will adjust the allocations and distributions to be made under
the Indenture at the direction of the Servicer so that the
Noteholders with respect to the Segregated Series of Notes
will be entitled to all allocations and distributions arising
from the Series-Specific Collateral applicable to such
Segregated Series of Notes and the Noteholders with respect to
the non-Segregated Series of Notes will be entitled to
allocations and distributions arising solely from the
non-Series-Specific Collateral, (C) the Trustee will act as
collateral agent under the Indenture (and in such capacity the
Trustee, together with the Master Collateral Agent, shall (x)
establish and maintain a master collection account, and one or
more segregated collection accounts, into which Collections
allocated to all Series of Notes will be deposited and, after
such deposit, further allocated among one or more Segregated
Series of Notes and the non-Segregated Series of Notes and (y)
hold its lien encumbering the non-Series-Specific Collateral
for the benefit of the non-Segregated Series of Notes and hold
its lien encumbering the Series-Specific Collateral for the
benefit of the Segregated Series of Notes), (D) the Servicer
and the Master Collateral Agent each will designate on its
computer
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system the source of the funds for the financing of each
Vehicle (as between one or more Segregated Series of Notes and
the nonSegregated Series of Notes, the "Financing Provider"
with respect to such Series of Notes), (E) the Noteholders of
any Segregated Series of Notes will, subject to the
limitations contained in this Base Indenture and the
applicable Supplement, be entitled to cause the Trustee and
the Master Collateral Agent to exercise the remedies under the
Indenture and the Master Collateral Agency Agreement, as
applicable, each solely on behalf of such Segregated Series of
Notes, (F) separate monthly reports and other information will
be furnished under the Indenture by the Trustee for the
Series-Specific Collateral, which monthly reports and other
information will contain substantially the same type of
information as the monthly reports provided under the
Indenture prior to the issuance of such Segregated Series of
Notes, (G) a separate segregated Master Motor Vehicle Lease
and Servicing Agreement pertaining, as applicable, solely or
in part to the Series-Specific Collateral will be executed and
delivered by NFLP, as lessor, and National, as lessee, (H) to
the extent specified in the Supplement for such Segregated
Series of Notes, NFLP and the Servicer will take such actions
as are necessary to perfect (1) the Master Collateral Agent's
interest in the portion of the Series-Specific Collateral that
would constitute Master Collateral and to designate NFLP as
the "Financing Source" and the Trustee, on behalf of the
Noteholders of such Series, as the "Beneficiary" under the
Master Collateral Agency Agreement with respect to the
Series-Specific Collateral and (2) the Trustee's interest on
behalf of the Noteholders of such Series in the
Series-Specific Collateral, (I) amendments will be made to
this Indenture and the other Related Documents, if necessary,
to reflect the foregoing, which amendments will, among other
things, provide for revisions to the terms "Aggregate Asset
Amount", "Required Asset Amount", "Collateral", "Collection
Account", "NFLP Agreements", "Lease", "Related Documents",
"Aggregate Invested Amount" and "Requisite Investors" and such
other terms as may be appropriate to reflect the creation of
the Segregated Series, provided that any such amendment shall
not have a material adverse effect on the Noteholders or Note
Owners of any Series unless the Required Noteholders of such
Series shall have given their prior written consent thereto
(and, with respect to each Series, the Trustee may rely on an
Officer's Certificate of the Servicer as sufficient evidence
of such lack of a material adverse effect) and (J) references
herein to "all" Series of Notes (other than as specifically
stated herein) shall be modified to refer to all Series of
Notes other than any Segregated Series of Notes which may
hereafter be issued.
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Section 2.4. Execution and Authentication.
(a) An Authorized Officer shall sign the Notes for NFLP by
manual or facsimile signature. If an Authorized Officer whose signature
is on a Note no longer holds that office at the time the Note is
authenticated, the Note shall nevertheless be valid.
(b) At any time and from time to time after the execution and
delivery of this Indenture, NFLP may deliver Notes of any particular
Series executed by NFLP to the Trustee for authentication, together
with one or more Company Orders for the authentication and delivery of
such Notes, and the Trustee, in accordance with such Company Order and
this Indenture, shall authenticate and deliver such Notes.
(c) No Note shall be entitled to any benefit under this
Indenture or be valid for any purpose unless there appears on such Note
a certificate of authentication substantially in the form provided for
herein, duly executed by the Trustee by the manual signature of a Trust
Officer (and the Luxembourg agent (the "Luxembourg Agent"), if such
Notes are listed on the Luxembourg Stock Exchange). Such signatures on
such certificate shall be conclusive evidence, and the only evidence,
that the Note has been duly authenticated under this Indenture. The
Trustee may appoint an authenticating agent acceptable to NFLP to
authenticate Notes. Unless limited by the term of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with NFLP or an Affiliate of NFLP. The
Trustee's certificate of authentication shall be in substantially the
following form:
This is one of the Notes of a series issued under the within
mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
-------------------------------------
Authorized Signatory
(d) Each Note shall be dated and issued as of the date
of its authentication by the Trustee.
(e) Notwithstanding the foregoing, if any Note shall have been
authenticated and delivered hereunder but never issued and sold by
NFLP, and NFLP shall deliver such Note to the Trustee for cancellation
as provided in Section 2.14 together with a
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written statement (which need not comply with Section 13.3 and need not
be accompanied by an Opinion of Counsel) stating that such Note has
never been issued and sold by NFLP, for all purposes of this Indenture
such Note shall be deemed never to have been authenticated and
delivered hereunder and shall not be entitled to the benefits of this
Indenture.
Section 2.5. Form of Notes; Book Entry Provisions;
Title.
(a) Restricted Global Note. Any Series of Notes, or any class
of such Series to be issued in the United States will be in registered
form and sold initially to institutional accredited investors within
the meaning of Regulation D under the Securities Act in reliance on an
exemption from the registration requirements of the Securities Act and
thereafter to qualified institutional buyers within the meaning of, and
in reliance on, Rule 144A under the Securities Act ("Rule 144A") as
provided in the applicable Supplement and shall be issued in the form
of and represented by one or more permanent global Notes in fully
registered form without interest coupons (each, a "Restricted Global
Note"), substantially in the form set forth in the applicable
Supplement, with such legends as may be applicable thereto, which shall
be deposited on behalf of the subscribers for the Notes represented
thereby with a custodian for DTC, and registered in the name of DTC or
a nominee of DTC, duly executed by NFLP and authenticated by the
Trustee as provided in Section 2.4 for credit to the accounts of the
subscribers at DTC. The aggregate initial principal amount of a
Restricted Global Note may from time to time be increased or decreased
by adjustments made on the records of the custodian for DTC, DTC or its
nominee, as the case may be, as hereinafter provided.
(b) Temporary Global Note; Permanent Global Note. Any Series
of Notes, or any class of such Series, offered and sold outside of the
United States will be offered and sold in reliance on Regulation S
("Regulation S") under the Securities Act and shall initially be issued
in the form of one or more temporary global Notes (each, a "Temporary
Global Note") in fully registered form without interest coupons
substantially in the form set forth in the applicable Supplement with
such legends as may be applicable thereto, registered in the name of
DTC or a nominee of DTC, duly executed by NFLP and authenticated by the
Trustee as provided in Section 2.4, for credit to the subscribers'
accounts at Morgan Guaranty Trust Company of New York, Brussels Office,
as operator of Euroclear or Cedel. Interests in a Temporary Global Note
will be exchangeable, in whole or in part, for interests in a permanent
global note (a "Permanent Global Note") in fully registered form
without interest coupons, representing Notes of the same Series,
substantially in the form set forth in the applicable Supplement, in
accordance with the provisions of the Temporary Global Note and this
Indenture. Until the Exchange Date, interests in a Temporary Global
Note may only be held by the agent members of Euroclear and Cedel. The
aggregate
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initial principal amount of the Temporary Global Note and the Permanent
Global Note may from time to time be increased or decreased by
adjustments made on the records of the custodian for DTC, DTC or its
nominee, as the case may be, as hereinafter provided.
Section 2.6. Registrar and Paying Agent.
(a) NFLP shall maintain (i) an office or agency where Notes
may be presented for registration of transfer or for exchange
("Registrar") and (ii) an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange (the "Note Register").
NFLP may appoint one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying
agent and the term "Registrar" includes any co-registrars. NFLP may
change any Paying Agent or Registrar without prior notice to any
Noteholder. NFLP shall notify the Trustee in writing of the name and
address of any Agent not a party to this Indenture. The Trustee is
hereby initially appointed as the Registrar, Paying Agent and agent for
service of notices and demands in connection with the Notes.
(b) NFLP shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. Such agency agreement shall
implement the provisions of this Indenture that relate to such Agent.
NFLP shall notify the Trustee in writing of the name and address of any
such Agent. If NFLP fails to maintain a Registrar or Paying Agent and
the Trustee has knowledge of such failure, or if NFLP fails to give the
foregoing notice, the Trustee shall act as such, and shall be entitled
to appropriate compensation in accordance with this Indenture, until
NFLP shall appoint a replacement Registrar and Paying Agent.
Section 2.7. Paying Agent to Hold Money in Trust.
(a) NFLP will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee (and if the Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this
Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of
amounts due with respect to the 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;
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(ii) give the Trustee notice of any default by NFLP
(or any other obligor under the Notes) of which it has actual
knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent;
(iv) immediately resign as a Paying Agent and
forthwith pay to the Trustee all sums held by it in trust for
the payment of Notes if at any time it ceases to meet the
standards required to be met by a Trustee hereunder 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
Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in
connection therewith.
(b) NFLP may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose,
by Company Order direct any Paying Agent to pay to the Trustee all sums
held in trust by such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with
respect to such money.
(c) Subject to applicable laws with respect to escheat of
funds, any money held by the Trustee or any Paying Agent or a Clearing
Agency in trust for the payment of any amount due with respect to any
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 NFLP
on Company Request; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to NFLP for payment thereof (but
only to the extent of the amounts so paid to NFLP), and all liability
of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at
the expense of NFLP 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, if the
related Series of Notes has been listed on the Luxembourg Stock
Exchange, and if the Luxembourg Stock Exchange so requires, in a
newspaper customarily published on each Luxembourg business day and of
general circulation in Luxembourg City, Luxembourg, notice that such
money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days
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from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to NFLP. The Trustee may also adopt and
employ, at the expense of NFLP, any other reasonable means of
notification of such repayment.
Section 2.8. Noteholder 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 Noteholders of each Series of Notes. If the Trustee is not the
Registrar, NFLP shall furnish to the Trustee at least seven Business Days before
each Distribution 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 Noteholders of each Series of Notes.
Section 2.9. Transfer and Exchange.
(a) No Note may be resold, pledged or transferred (including,
without limitation, by pledge or hypothecation) unless such sale or
transfer is (1) to NFLP (upon redemption thereof or otherwise), (2) to
any person the transferor reasonably believes is a qualified
institutional buyer (as defined in Rule 144A) in a transaction meeting
the requirements of Rule 144A, (3) outside the United States to a
person who is not a U.S. Person (as such term is defined
in Regulation S) in a transaction meeting the requirements of
Regulation S, (4) in a transaction complying with or exempt from the
registration requirements of the Securities Act. Subject to provisions
of clauses (i) through (vii) of this Section 2.9(a), when a request to
register a transfer or exchange of global Notes is presented to the
Registrar or co-registrar or, in the case of Definitive Notes, when
Definitive Notes of any particular Series are presented to the
Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal principal amount of Notes of other
authorized denominations of the same Series, the Registrar shall
register the transfer or make the exchange if its requirements for such
transaction are met; provided, however, that the Notes surrendered for
transfer or exchange (a) shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to NFLP and the
Registrar, duly executed by the holder thereof or its attorney, duly
authorized in writing and (b) shall be transferred or exchanged in
compliance with the following provisions:
(i) Transfer of Restricted Global Notes.
(A) if such Note is being acquired for the account of
such Holder, without transfer, a certification from such Holder to that
effect (in substantially the form of Exhibit A-1 hereto); or
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(B) if such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A) in accordance with Rule
144A or pursuant to an exemption from registration in accordance with
Regulation S, a certification to that effect (in substantially the form
of Exhibit A-1 hereto); or
(C) if such Note is being transferred in reliance on
another exemption from the registration requirements of the Securities
Act, a certification to that effect (in substantially the form of
Exhibit A-1 hereto) and an opinion of counsel in form and substance
acceptable to NFLP and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(ii) Temporary Global Note to Permanent Global Note.
Interests in a Temporary Global Note as to which the Trustee
has received from Euroclear or Cedel, as the case may be, a
certificate substantially in the form of Exhibit B to the
effect that Euroclear or Cedel, as applicable, has received a
certificate substantially in the form of Exhibit C from the
holder of a beneficial interest in such Note, will be
exchanged, on and after the 40th day after the completion of
the distribution of the relevant Series (the "Exchange Date"),
for interests in a Permanent Global Note. To effect such
exchange NFLP shall execute and the Trustee shall authenticate
and deliver to DTC, or its nominee, for credit to the
respective accounts of the holders of Notes, a duly executed
and authenticated Permanent Global Note, representing the
principal amount of interests in the Temporary Global Note
initially exchanged for interests in the Permanent Global
Note. The delivery to the Trustee by Euroclear or Cedel of the
certificate or certificates referred to above may be relied
upon by NFLP and the Trustee as conclusive evidence that the
certificate or certificates referred to therein has or have
been delivered to Euroclear or Cedel pursuant to the terms of
this Indenture and the Temporary Global Note. Upon any
exchange of interests in a Temporary Global Note for interests
in a Permanent Global Note, the Trustee shall endorse the
Temporary Global Note to reflect the reduction in the
principal amount represented thereby by the amount so
exchanged and shall endorse the Permanent Global Note to
reflect the corresponding increase in the amount represented
thereby. The Temporary Global Note or the Permanent Global
Note shall also be endorsed upon any cancellation of principal
amounts upon surrender of Notes purchased by NFLP or any of
its respective subsidiaries or affiliates or upon any
repayment of the principal amount represented thereby or any
payment of interest in respect of such Notes.
(iii) Restricted Global Note to Temporary Global Note
Prior to the Exchange Date. If, prior to the Exchange Date, a
holder of a beneficial interest in a Restricted Global Note
registered in the name of DTC or its nominee wishes at any
time to exchange its interest in such Restricted Global Note
for an
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interest in a Temporary Global Note or to transfer its
interest in such Restricted Global Note to a Person who wishes
to take delivery thereof in the form of an interest in a
Temporary Global Note, such holder may, subject to the rules
and procedures of DTC, exchange or cause the exchange or
transfer of such interest for an equivalent beneficial
interest in the Temporary Global Note. Upon receipt by the
Registrar of (1) instructions given in accordance with DTC's
procedures from an agent member directing the Trustee as
Registrar to credit or cause to be credited a beneficial
interest in the Temporary Global Note in an amount equal to
the beneficial interest in the Restricted Global Note to be
exchanged or transferred, (2) a written order given in
accordance with DTC's procedures containing information
regarding the Euroclear or Cedel account to be credited with
such increase and the name of such account, and (3) a
certificate in the form of Exhibit A-3 attached hereto given
by the holder of such beneficial interest stating that the
exchange or transfer of such interest has been made in
compliance with the transfer restrictions applicable to the
Notes and pursuant to and in accordance with Regulation S, the
Registrar shall instruct DTC to reduce the Restricted Global
Note by the aggregate principal amount of the beneficial
interest in the Restricted Global Note to be so exchanged or
transferred and the Registrar, shall instruct DTC,
concurrently with such reduction, to increase the principal
amount of the Temporary Global Note by the aggregate principal
amount of the beneficial interest in the Restricted Global
Note to be so exchanged or transferred, and to credit or cause
to be credited to the account of the person specified in such
instructions (who shall be the agent member of Euroclear or
Cedel, or both, as the case may be) a beneficial interest in
the Temporary Global Note equal to the reduction in the
principal amount of the Restricted Global Note.
(iv) Restricted Global Note to Permanent Global Note
After the Exchange Date. If, after the Exchange Date, a holder
of a beneficial interest in the Restricted Global Note
registered in the name of DTC or its nominee wishes at any
time to transfer its interest in such Restricted Global Note
to a Person who wishes to take delivery thereof in the form of
an interest in a Permanent Global Note, such holder may,
subject to the rules and procedures of DTC, exchange or cause
the exchange or transfer of such interest for an equivalent
beneficial interest in such Permanent Global Note. Upon
receipt by the Registrar of (1) instructions given in
accordance with DTC's procedures from an agent member
directing the Trustee to credit or cause to be credited a
beneficial interest in the applicable Permanent Global Note in
an amount equal to the beneficial interest in the applicable
Restricted Global Note to be exchanged or transferred, (2) a
written order given in accordance with DTC's procedures
containing information regarding the participant account with
DTC and, in the case of a transfer pursuant to and in
accordance with Regulation S,
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the Euroclear or Cedel account to be credited with such
increase and (3) a certificate in the form of Exhibit A-4
attached hereto given by the holder of such beneficial
interest stating that the exchange or transfer of such
interest has been made in compliance with the transfer
restrictions applicable to the Notes (A) and pursuant to and
in accordance with Regulation S or (B) and that the Note being
exchanged or transferred is not a "restricted security" as
defined in Rule 144, the Trustee shall instruct DTC to reduce
such Restricted Global Note by the aggregate principal amount
of the beneficial interest in such Restricted Global Note to
be so exchanged or transferred and the Registrar shall
instruct DTC, concurrently with such reduction, to increase
the principal amount of the applicable Permanent Global Note
by the aggregate principal amount of the beneficial interest
in such Restricted Global Note to be so exchanged or
transferred, and to credit or cause to be credited to the
account of the person specified in such instructions a
beneficial interest in the applicable Permanent Global Note
equal to the reduction in the principal amount of such
Restricted Global Note.
(v) Temporary Global Note to Restricted Global Note.
If a holder of a beneficial interest in a Temporary Global
Note registered in the name of DTC or its nominee wishes at
any time to exchange its interest in such Temporary Global
Note for an interest in a Restricted Global Note, or to
transfer its interest in such Temporary Global Note to a
Person who wishes to take delivery thereof in the form of an
interest in a Restricted Global Note, such holder may, subject
to the rules and procedures of Euroclear or Cedel and DTC, as
the case may be, exchange or cause the exchange or transfer of
such interest for an equivalent beneficial interest in a
Restricted Global Note. Upon receipt by the Registrar of (1)
instructions from Euroclear or Cedel or DTC, as the case may
be, directing the Registrar to credit or cause to be credited
a beneficial interest in a Restricted Global Note equal to the
beneficial interest in a Temporary Global Note to be exchanged
or transferred, such instructions to contain information
regarding the agent member's account with DTC to be credited
with such increase, and, with respect to an exchange or
transfer of an interest in a Temporary Global Note after the
Exchange Date, information regarding the agent member's
account with DTC to be debited with such decrease, and (2)
with respect to an exchange or transfer of an interest in a
Temporary Global Note for an interest in a Restricted Global
Note prior to the Exchange Date, a certificate in the form of
Exhibit A-5 attached hereto given by the holder of such
beneficial interest and stating that the Person transferring
such interest in such Temporary Global Note reasonably
believes that the Person acquiring such interest in the
applicable Restricted Global Note is a Qualified Institutional
Buyer (as defined in Rule 144A) and is obtaining such
beneficial interest in a transaction meeting the requirements
of Rule 144A, Euroclear or Cedel or the
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<PAGE> 24
Registrar, as the case may be, shall instruct DTC to reduce
such Temporary Global Note by the aggregate principal amount
of the beneficial interest in such Temporary Global Note to be
exchanged or transferred, and the Registrar shall instruct
DTC, concurrently with such reduction, to increase the
principal amount of such Restricted Global Note by the
aggregate principal amount of the beneficial interest in such
Temporary Global Note to be so exchanged or transferred, and
to credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in such
Restricted Global Note equal to the reduction in the principal
amount of such Temporary Global Note.
(vi) Permanent Global Note to Restricted Global
Note. Interests in a Permanent Global Note may not be
transferred for interests in a Restricted Global Note.
(vii) Other Transfers or Exchanges. In the event that
a Global Note is exchanged for Notes in definitive registered
form without interest coupons, pursuant to Section 2.18
hereof, such Notes may be exchanged or transferred for one
another only in accordance with such procedures as are
substantially consistent with the provisions of clauses (i)
through (vi) above (including the certification requirements
intended to insure that such exchanges or transfers comply
with Rule 144A or Regulation S, as the case may be) and as may
be from time to time adopted by NFLP and the Trustee.
(b) The Registrar shall not register the exchange of interests
in a Global Note for a Definitive Note or the transfer of or exchange
of a Note during the period beginning on any Record Date and ending on
the next following Distribution Date.
(c) NFLP or the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or registration of transfer of
Notes. No service charge shall be made for any such transaction.
(d) If the Notes are listed on the Luxembourg Stock
Exchange, the Trustee or the Luxembourg Agent, as the case may be,
shall send to NFLP upon any transfer or exchange of any Note
information reflected in the copy of the register for the Notes
maintained by the Registrar or the Luxembourg Agent, as the case may
be.
(e) To permit registrations of transfers and exchanges, NFLP
shall execute and the Trustee shall authenticate Notes, subject to such
rules as the Trustee may reasonably require. No service charge to the
Noteholder shall be made for any registration of transfer or exchange
(except as otherwise expressly permitted herein), but the Registrar may
require payment of a sum sufficient to cover any transfer tax or
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similar government charge payable in connection therewith (other than
any such transfer tax or similar governmental charge payable upon
exchanges pursuant to Section 2.13 hereof in which event the Registrar
will be responsible for the payment of any such taxes.)
(f) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of NFLP, evidencing
the same debt, and entitled to the same benefits under this Indenture,
as the Notes surrendered upon such registration of transfer or
exchange.
(g) Prior to due presentment for registration of transfer of
any Note, the Trustee, any Agent and NFLP may deem and treat the Person
in whose name any Note is registered (as of the day of determination)
as the absolute owner of such Note for the purpose of receiving payment
of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and neither the
Trustee, any Agent nor NFLP shall be affected by notice to the
contrary.
(h) Notwithstanding any other provision of this Section 2.9,
the typewritten Note or Notes representing Book-Entry Notes for any
Series may be transferred, in whole but not in part, only to another
nominee of the Clearing Agency for such Series, or to a successor
Clearing Agency for such Series selected or approved by NFLP or to a
nominee of such successor Clearing Agency, only if in accordance with
this Section 2.9 and Section 2.18.
(i) By its acceptance of a Note, each Noteholder and Note
Owner shall be deemed to have represented and warranted that its
purchase and holding of the Note will not, throughout the term of its
holding an interest therein, constitute a non-exempt "prohibited
transaction" under Section 406(a) of ERISA or Section 4975 of the Code.
Section 2.10. Legending of Notes.
Unless otherwise provided for in a Supplement and except as
permitted by the following sentence, in addition to any legend required by
Section 2.16, each Note shall bear a legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY"
LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS A-1 NOTE, AGREES FOR THE
BENEFIT OF NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP (THE "ISSUER") THAT
THIS CLASS A-1 NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO
DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
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ONLY (1) TO THE ISSUER (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON
WHO THE "TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON
(AS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN
COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION
COMPLYING WITH OR EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE.
Upon any transfer, exchange or replacement of Notes bearing such legend, or if a
request is made to remove such legend on a Note, the Notes so issued shall bear
such legend, or such legend shall not be removed, as the case may be, unless
there is delivered to NFLP and the Trustee or the Luxembourg Agent, if the Notes
are listed on the Luxembourg Exchange, such satisfactory evidence, which may
include an opinion of counsel, as may be reasonably required by NFLP that
neither such legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of Rule
144A, Rule 144 or Regulation S. Upon provision of such satisfactory evidence,
the Trustee, at the direction of NFLP, shall authenticate and deliver a Note
that does not bear such legend.
Section 2.11. Replacement Notes.
(a) If (i) any mutilated Note is surrendered to the Trustee,
or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, and (ii) there is delivered to
the Trustee such security or indemnity as may be required by it to hold
NFLP and the Trustee harmless then, in the absence of notice to NFLP,
the Registrar or the Trustee that such Note has been acquired by a bona
fide purchaser, and provided that the requirements of Section 8-405 of
the UCC (which generally permit NFLP to impose reasonable requirements)
are met, NFLP shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note;
provided, however, that if any such destroyed, lost or stolen Note, but
not a mutilated Note, shall have become or within seven days shall be
due and payable, instead of issuing a replacement Note, NFLP may pay
such destroyed, lost or stolen Note when so due or payable without
surrender thereof. If, after the delivery of such replacement Note or
payment of a destroyed, lost or stolen Note pursuant to the proviso to
the preceding sentence, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment
such original Note, NFLP and the Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person
to whom such
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replacement Note was delivered or any assignee of such Person, except a
bona fide purchaser, 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 NFLP or the Trustee in connection therewith.
(b) Upon the issuance of any replacement Note under this
Section, the Registrar, the Trustee or NFLP may require the payment by
the Holder of such Note of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any
other reasonable expenses (including the fees and expenses of the
Trustee) connected therewith.
(c) Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall be
entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
(d) 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 Notes.
Section 2.12. Treasury Notes.
In determining whether the Noteholders of the required
principal amount of Notes have concurred in any direction, waiver or consent,
Notes owned by NFLP or any Affiliate of NFLP shall be considered as though they
are not Outstanding, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes of which the Trustee has received written notice of such ownership
shall be so disregarded. Absent written notice to the Trustee of such ownership,
the Trustee shall not be deemed to have knowledge of the identity of the
individual beneficial owners of the Notes.
Section 2.13. Temporary Notes.
(a) Pending the preparation of Definitive Notes issued under
Section 2.18 hereof, NFLP may prepare and the Trustee, upon receipt of
a Company Order, shall authenticate and deliver temporary Notes of such
Series. Temporary Notes shall be substantially in the form of
Definitive Notes of like Series but may have variations that are not
inconsistent with the terms of this Indenture as the officers executing
such Notes may determine, as evidenced by their execution of such
Notes.
(b) If temporary Notes are issued pursuant to Section 2.13(a)
above, NFLP will cause Definitive Notes to be prepared without
unreasonable delay. After the
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preparation of Definitive Notes, the temporary Notes shall be
exchangeable for Definitive Notes upon surrender of the temporary Notes
at the office or agency of NFLP to be maintained as provided in Section
8.2, without charge to the Noteholder. Upon surrender for cancellation
of any one or more temporary Notes, NFLP shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal
amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as Definitive Notes.
Section 2.14. Cancellation.
NFLP may at any time deliver to the Trustee for cancellation
any Notes previously authenticated and delivered hereunder which NFLP may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Trustee. The Registrar and Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation. NFLP may not issue new
Notes to replace Notes that it has redeemed or paid or that have been delivered
to the Trustee for cancellation. All cancelled Notes held by the Trustee shall
be disposed of in accordance with the Trustee's standard disposition procedures
unless by a written order, signed by two Authorized Officers, NFLP shall direct
that cancelled Notes be returned to it.
Section 2.15. Principal and Interest.
(a) The principal of each Series of Notes shall be payable at
the times and in the amount set forth in the related Supplement in
accordance with Section 6.1.
(b) Each Series of Notes shall accrue interest as provided in
the related Supplement and such interest shall be payable on each
Distribution Date for such Series in accordance with Section 6.1 and
the related Supplement.
(c) Except as provided in the following sentence, the person
in whose name any Note is registered at the close of business on any
Record Date with respect to a Distribution Date for such Note shall be
entitled to receive the principal and interest payable on such
Distribution Date notwithstanding the cancellation of such Note upon
any registration of transfer, exchange or substitution of such Note
subsequent to such Record Date. Any interest payable at maturity shall
be paid to the Person to whom the principal of such Note is payable.
(d) If NFLP defaults in the payment of interest on the Notes
of any Series, such interest, to the extent paid on any date that is
more than five (5) Business Days after
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the applicable due date, shall at the option of NFLP, cease to be
payable to the persons who were Noteholders of such Series at the
applicable Record Date and, in such case, NFLP 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 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 Notes of such Series. NFLP shall
fix or cause to be fixed each such special record date and payment
date, and at least fifteen (15) days before the special record date,
NFLP (or, if so requested by NFLP, the Trustee in the name of and at
the expense of NFLP) shall mail to 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.
Section 2.16. Book-Entry Notes.
(a) For each Series of Notes to be issued in registered form,
NFLP shall duly execute the Notes, and the Trustee shall, in accordance
with Section 2.4 hereof, authenticate and deliver initially one or more
Global Notes that (a) shall be registered on the Note Register in the
name of DTC or DTC's nominee, and (b) shall bear legends substantially
to the following effect:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
NFLP OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. ("CEDE") OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE 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 SINCE THE REGISTERED OWNER HEREOF, CEDE, HAS AN INTEREST
HEREIN.
So long as DTC or its nominee is the registered owner or
holder of a Global Note, DTC or its nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Global Note
for purposes of this Indenture and such Notes. Members of, or participants in,
DTC shall have no rights under this Indenture with respect to any Global Note
held on their behalf by DTC, and DTC may be treated by NFLP, the Trustee, the
Registrar, any Paying Agent and any agent of such entities as the absolute owner
of such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent NFLP, the Trustee, the Registrar, any Paying Agent
and any agent of such entities from giving effect to any written certification,
proxy or other authorization
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furnished by DTC or impair, as between DTC and its agent members, the operation
of customary practices governing the exercise of the rights of a holder of any
Note.
(b) The provisions of the "Operating Procedures of the
Euroclear System" and the "Terms and Conditions Governing Use of
Euroclear" and the "Management Regulations" and "Instructions to
Participants" of Cedel, respectively, shall be applicable to the Global
Note insofar as interests in a Global Note are held by the agent
members of Euroclear or Cedel (which shall only occur in the case of
the Temporary Global Note and the Permanent Global Note). Account
holders or participants in Euroclear and Cedel shall have no rights
under this Indenture with respect to such Global Note, and the
registered holder may be treated by NFLP, the Trustee, the Registrar,
the Paying Agent and any agent of NFLP or any such entity as the owner
of such Global Note for all purposes whatsoever.
(c) Title to the Notes shall pass only by registration in the
Note Register maintained by the Registrar pursuant to Section 2.6.
(d) Any typewritten Note or Notes representing Book-Entry
Notes shall provide that they represent the aggregate
or a specified amount of Outstanding Notes from time to time endorsed
thereon and may also provide that the aggregate amount of Outstanding
Notes represented thereby may from time to time be reduced to reflect
exchanges. Any endorsement of a typewritten Note or Notes representing
Book-Entry Notes to reflect the amount, or any increase or decrease in
the amount, or changes in the rights of Note Owners represented
thereby, shall be made in such manner and by such Person or Persons as
shall be specified therein or in the Company Order to be delivered to
the Trustee pursuant to Section 2.4. Subject to the provisions of
Section 2.5, the Trustee shall deliver and redeliver any typewritten
Note or Notes representing Book-Entry Notes in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. Any instructions by NFLP with respect to
endorsement or delivery or redelivery of a typewritten Note or Notes
representing the Book-Entry Notes shall be in writing but need not
comply with Section 13.3 hereof and need not be accompanied by an
Opinion of Counsel.
(e) Unless and until definitive, fully registered Notes
("Definitive Notes") have been issued to Note Owners pursuant to
Section 2.18:
(i) the provisions of this Section 2.16
shall be in full force and effect;
(ii) the Paying Agent, the Registrar and the Trustee
may deal with the Clearing Agency and the Clearing Agency
Participants for all purposes of this Indenture (including the
making of payments on the
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Notes and the giving of instructions or directions hereunder)
as the authorized representatives of the Note Owners;
(iii) to the extent that the provisions of this
Section 2.16 conflict with any other provisions of this
Indenture, the provisions of this Section 2.16 shall control;
(iv) whenever this Indenture requires or permits
actions to be taken based upon instructions or directions of
Holders of Notes evidencing a specified percentage of the
Outstanding principal amount of the Notes, the applicable
Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such
effect from Note Owners and/or their related Clearing Agency
Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes
and has delivered such instructions to the Trustee; and
(v) the rights of Note Owners shall be exercised only
through the applicable Clearing Agency and their related
Clearing Agency Participants and shall be limited to those
established by law and agreements between such Note Owners and
their related Clearing Agency and/or the Clearing Agency
Participants. Unless and until Definitive Notes are issued
pursuant to Section 2.18, the applicable Clearing Agencies
will make book-entry transfers among their related Clearing
Agency Participants and receive and transmit payments of
principal and interest on the Notes to such Clearing Agency
Participants.
Section 2.17. Notices to Clearing Agency.
Whenever notice or other communication to the Noteholders is
required under this Indenture, unless and until Definitive Notes shall have been
issued to Note Owners pursuant to Section 2.18, the Trustee, the Servicer and
NFLP shall give all such notices and communications specified herein to be given
to Noteholders to the applicable Clearing Agency for further distribution to the
Note Owners in accordance with the customary practices and procedures of such
Clearing Agency and Clearing Agency Participants.
Section 2.18. Definitive Notes.
(a) Conditions for Issuance. Interests in a Restricted Global
Note or Permanent Global Note deposited with DTC or a custodian of DTC
pursuant to Section 2.5 shall be transferred to the beneficial owners
thereof in the form of definitive registered Notes only if such
transfer complies with Section 2.9 and (x) DTC notifies NFLP that it is
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unwilling or unable to continue as depositary for such Restricted
Global Note or Permanent Global Note or at any time ceases to be a
"clearing agency" registered under the Exchange Act, and, in either
case, a successor depositary so registered is not appointed by NFLP
within 90 days of such notice or (y) NFLP determines that the
Restricted Global Note or Permanent Global Notes with respect to the
relevant Series of Notes shall be exchangeable for definitive
registered Notes, in which case Definitive Notes shall be issuable or
exchangeable only in respect of such Global Notes or the category of
Definitive Notes represented thereby or (z) any Note Owner or purchaser
or transferee of a beneficial interest in a Restricted Global Note or a
Permanent Global Note requests the same in the form of a Definitive
Note and NFLP, in its sole discretion, consents to such request (in
which case a Definitive Note shall be issuable or transferable only to
such Noteholder, purchaser or transferee), NFLP will deliver Notes in
definitive registered form, without interest coupons, in exchange for
the Restricted Global Notes or the Permanent Global Notes or, in the
case of an exchange or transfer described in clause (z) above, in
exchange for the applicable beneficial interest in one or more Global
Notes. Definitive registered Notes shall be issued without coupons in
amounts of U.S.$1,000,000 and integral multiples of U.S.$1,000, subject
to compliance with all applicable legal and regulatory requirements.
(b) Issuance. If interests in any Restricted Global Note or
Permanent Global Note, as the case may be, are to be transferred to the
beneficial owners thereof in the form of Definitive Notes pursuant to
this Section 2.18, such Restricted Global Note or Permanent Global
Note, as the case may be, shall be surrendered by DTC or its custodian
or agent to the office or agency of the Registrar located in the
Borough of Manhattan, the City of New York, or if the Notes are listed
on the Luxembourg Stock Exchange, to the applicable Luxembourg Agent in
Luxembourg, to be so transferred, without charge. If interests in any
Permanent Global Note are to be transferred to the beneficial owners
thereof in the form of Definitive Notes pursuant to this Section 2.18,
such Permanent Global Note shall be surrendered by DTC or its custodian
or agent to the Registrar or its agent located in London to be so
transferred, without charge. The Trustee shall authenticate and
deliver, upon such transfer of interests in such Restricted Global Note
or Permanent Global Note, an equal aggregate principal amount of
Definitive Notes of authorized denominations; provided, that in the
case of an interest in a Restricted Global Note, no such interest will
be transferred except upon delivery of a certificate substantially in
the form of Exhibit A-1 hereto. The Definitive Notes transferred
pursuant to this Section 2.18 shall be executed, authenticated and
delivered only in the denominations specified in paragraph (a) above or
in the related Supplement, and Definitive Notes shall be registered in
such names as DTC shall direct in writing. The Registrar shall have at
least 30 days from the date of its receipt of Definitive Notes and
registration information to authenticate and deliver such Definitive
Notes. Any Definitive Note delivered in exchange for an interest in a
Restricted Global Note or Permanent Global Note shall, except as
otherwise provided
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by Section 2.10, bear, and be subject to, the legend regarding transfer
restrictions set forth in Section 2.10. NFLP will promptly make
available to the Registrar a reasonable supply of Definitive Notes.
NFLP shall bear the costs and expenses of printing or preparing any
Definitive Notes.
(c) Transfer of Definitive Notes. Subject to the terms of this
Indenture, the Holder of any Definitive Note may transfer the same in
whole or in part, in an amount equivalent to an authorized
denomination, by surrendering at the office maintained by the Registrar
for such purpose in the Borough of Manhattan, The City of New York,
such Note with the form of transfer endorsed on it duly completed and
executed by, or accompanied by a written instrument of transfer in form
satisfactory to NFLP and the Registrar by, the holder thereof and
accompanied by a certificate substantially in the form of Exhibit A-1
hereto. In exchange for any Definitive Note properly presented for
transfer, NFLP shall execute and the Trustee shall promptly
authenticate and deliver or cause to be authenticated and delivered in
compliance with applicable law, to the transferee at such office, or
send by mail (at the risk of the transferee) to such address as the
transferee may request, Definitive Notes for the same aggregate
principal amount as was transferred. In the case of the transfer of any
Definitive Note in part, NFLP shall execute and the Trustee shall also
promptly authenticate and deliver or cause to be authenticated and
delivered to the transferor at such office, or send by mail (at the
risk of the transferor) to such address as the transferor may request,
Definitive Notes for the aggregate principal amount that was not
transferred. No transfer of any Definitive Note shall be made unless
the request for such transfer is made by the registered Holder at such
office.
(d) Neither NFLP nor the Trustee shall be liable for any delay
in delivery of transfer instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes for such Series, the Trustee shall recognize the
Holders of the Definitive Notes as Noteholders of such Series.
Section 2.19. Tax Treatment.
NFLP has structured this Indenture and the Notes have been (or
will be) issued with the intention that the Notes will qualify under applicable
tax law as indebtedness of NFLP and any entity acquiring any direct or indirect
interest in any Note by acceptance of its Notes (or, in the case of a Note
Owner, by virtue of such Note Owner's acquisition of a beneficial interest
therein) agrees to treat the 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 NFLP. Each Noteholder agrees that it will cause any Note Owner
acquiring an interest in a Note through it to comply with this Indenture as to
treatment as indebtedness for such tax purposes.
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Section 2.20. Certain Purchaser Representations and
Certifications.
(a) Prior to any sale or transfer of the Notes described in clause (2)
of Section 2.9(a) above, each prospective purchaser of the Notes shall be deemed
to have represented and agreed as follows:
(1) It is a qualified institutional buyer as defined in Rule
144A, it is aware that any sale of the Notes to it will be made in
reliance on Rule 144A and it is acquiring the Notes for its own
institutional account or for the account of a qualified institutional
buyer.
(2) The purchaser understands that the Notes are being offered
in a transaction not involving any public offering in the United States
within the meaning of the Securities Act, that the Notes have not been
registered under the Securities Act and that (A) such Notes may be
offered, resold, pledged or otherwise transferred only (i) to the
Issuer, (ii) to a person who the seller reasonably believes is a
qualified institutional buyer (as defined in Rule 144A) in a
transaction meeting the requirements of Rule 144A, (iii) outside the
United States to a person other than a U.S. Person (as defined in
Regulation S) in a transaction meeting the requirements of Regulation S
under the Securities Act, (iv) in a transaction exempt from the
registration requirements of the Securities Act and the applicable
securities laws of any State of the United States and any other
jurisdiction or (v) pursuant to an effective registration statement
under the Securities Act, in each such case in accordance with the
Indenture and any applicable securities laws of any State of the United
States and (B) the purchaser will, and each subsequent holder of a Note
is required to, notify any subsequent purchaser of a Note of the resale
restrictions set forth in (A) above.
(b) Prior to (a) (i) any direct placement of the Notes from
the Issuer or (ii) any placement by a placement agent selected by the Issuer, to
an institutional accredited investor or (b) any sale or transfer of the Notes
described in clause (4) of Section 2.9(a) above, each such prospective purchaser
of the Notes shall represent and agree as follows:
(i) to the restrictions on transfer set forth in
clause (a) (2) above, (ii) that it is (w) a qualified institutional
buyer within the meaning of Rule 144A or an accredited investor as
defined in Rule 501(a)(1),(2),(3) or (7) under the Securities Act; (x)
acquiring Notes having a minimum purchase price of not less than
$250,000 for its own account or for any separate account for which it
is acting; (y) acquiring such Notes for its own institutional account
or the account of an accredited investor as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act or a qualified institutional
buyer within the meaning of Rule 144A; and (z) not acquiring the Notes
with a view to distribution thereof or with any present intention of
offering or selling any of the Notes in a transaction that would
violate the Securities Act or the securities
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laws of any State of the United States or any other applicable
jurisdiction, (iii) that the registrar and transfer agent for the Notes
will not be required to accept for registration of transfer any Notes
acquired by them, except upon presentation of evidence satisfactory to
the transfer agent that the restrictions on transfer set forth in
clause (a) (2) above have been complied with and (iv) to execute and
deliver to the Issuer and the Trustee a Purchaser Representation Letter
in the form of Exhibit D hereto.
(c) In addition, NFLP shall require such prospective purchaser
to provide additional information or certifications, as shall be reasonably
requested by the Trustee, the Issuer or the Initial Purchasers, to support the
truth and accuracy of the foregoing acknowledgements, representations and
agreements, it being understood that such additional information is not intended
to create additional restrictions on the transfer of the Notes. NFLP, the
Initial Purchasers and the Trustee are not obligated, in their individual
capacities or as a group, to register the Notes under the Securities Act or any
state securities laws.
ARTICLE 3.
SECURITY
Section 3.1. Grant of Security Interest.
(a) To secure the NFLP Obligations, NFLP hereby pledges,
assigns, conveys, delivers, transfers and sets over to the Trustee, for
the benefit of the Noteholders and the Note Owners (the Noteholders and
the Note Owners being referred to as the "Secured Parties"), and hereby
grants to the Trustee, for the benefit of the Secured Parties, a
security interest in all of the right, title and interest in and to all
of the following assets, property and interests in property of NFLP
whether now owned or hereafter acquired or created (all of such right,
title and interest, together with the portion of the Master Collateral
with respect to which the Trustee is named as a Beneficiary, being
referred to as the "Collateral"):
(i) all right, title and interest of NFLP in, to and
under the NFLP Agreements, including, without limitation, all
rights of NFLP arising thereunder in respect of the National
Master Collateral, all monies due and to become due to NFLP
from the Lessee or the Servicer under or in connection with
NFLP Agreements, whether payable as rent, guaranty payments,
supplemental payments, fees, expenses, costs, indemnities,
insurance recoveries, damages for the breach of any of NFLP
Agreements or otherwise, and all rights, remedies, powers,
privileges and claims of NFLP against any other party under or
with respect to NFLP Agreements (whether arising pursuant to
the terms of
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such NFLP Agreements or otherwise available to NFLP at law or
in equity), the right to enforce any of the NFLP Agreements as
provided herein and to give or withhold any and all consents,
requests, notices, directions, approvals, extensions or
waivers under or with respect to NFLP Agreements or the
obligations of any party thereunder; and
(ii) (a) the Collection Account (including any
accounts designated in a Supplement or otherwise as a
subaccount thereof), (b) all funds on deposit therein from
time to time, (c) all certificates and instruments, if any,
representing or evidencing any or all of the Collection
Account or any subaccount thereof or the funds on deposit
therein from time to time, and (d) all Permitted Investments
made at any time and from time to time with the moneys in the
Collection Account or any subaccount thereof (including income
thereon); and
(iii) all right, title and interest of NFLP in, to
and under the Master Collateral Agency Agreement with respect
to the portion of the Master Collateral for which NFLP is
designated as a Financing Source and the Trustee is designated
as a Beneficiary thereunder; and
(iv) all additional property that may from time to
time hereafter (pursuant to the terms of any Supplement or
otherwise) be subjected to the grant and pledge hereof by NFLP
or by anyone on its behalf; and
(v) all proceeds, products, rents or profits of any
and all of the foregoing including, without limitation,
payments under insurance (whether or not the Master Collateral
Agent or the Trustee is the loss payee thereof) or Vehicle
warranties and cash.
(b) To secure the NFLP Obligations, NFLP hereby confirms the
grant, pledge, hypothecation, assignment, conveyance, delivery and
transfer to the Master Collateral Agent under the Master Collateral
Agency Agreement for the benefit of the Trustee of a continuing first
priority perfected Lien on all right, title and interest of NFLP in, to
and under all the NFLP Master Collateral.
(c) Notwithstanding anything to the contrary contained in (a)
and (b) above, the Collateral shall not include the Retained
Distribution Account, any funds on deposit therein from time to time,
any certificates or instruments, if any, representing or evidencing any
or all of the Retained Distribution Account or the funds on deposit
therein from time to time, or any Permitted Investments made at any
time and from time to time with the funds on deposit in the Retained
Distribution Account (including the income thereon); provided, further,
the Collateral shall not include any right, title
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or interest in the Fleet Finance Agreement or the NFLP Fleet Finance
Agreement and payments thereunder.
(d) The foregoing grant is made in trust to secure the NFLP
Obligations and to secure compliance with the provisions of this
Indenture and any Supplement, all as provided in this Indenture. The
Trustee, as Trustee on behalf of the Secured Parties, acknowledges such
grant, accepts the trusts under this Indenture in accordance with the
provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its abilities to the end that the
interests of the Noteholders may be adequately and effectively
protected. The Collateral shall secure the Notes equally and ratably
without prejudice, priority (except, with respect to any Series of
Notes, as otherwise stated in the applicable Supplement) or
distinction.
Section 3.2. Certain Rights and Obligations of NFLP
Unaffected.
(a) Notwithstanding the assignment and security interest so
granted to the Trustee, NFLP shall nevertheless be permitted, subject
to the Trustee's right to revoke such permission in the event of an
Amortization Event and subject to the provisions of Section 3.3 hereof,
to give all consents, requests, notices, directions, approvals,
extensions or waivers, if any, which are required to be given in the
normal course of business (which does not include waivers of defaults
under any of the NFLP Agreements or any of the Manufacturer Programs or
revocation of powers of attorney to the Lessee) to the Lessee by NFLP
and by National to the Manufacturers by the specific terms of the Lease
and each Manufacturer Program, respectively.
(b) The grant of a security interest in the Collateral to the
Trustee shall not (i) relieve NFLP from the performance of any term,
covenant, condition or agreement on NFLP's part to be performed or
observed under or in connection with any of the NFLP Agreements or any
of the Manufacturer Programs or from any liability to National or the
Manufacturers, as the case may be, subject to the limitations contained
in Section 13.18, or (ii) impose any obligation on the Trustee or any
of the Secured Parties to perform or observe any such term, covenant,
condition or agreement on NFLP's part to be so performed or observed or
impose any liability on the Trustee or any of the Secured Parties for
any act or omission on the part of NFLP or from any breach of any
representation or warranty on the part of NFLP. NFLP hereby agrees to
indemnify and hold harmless the Trustee, each Noteholder and each Note
Owner (including, in each case, their respective directors, officers,
employees and agents) from and against any and all losses, liabilities
(including liabilities for penalties), claims, demands, actions, suits,
judgments, out-of-pocket costs and expenses arising out of or resulting
from the security interest granted hereby or by any Assignment
Agreement, whether arising by virtue of any act or omission on the part
of NFLP or otherwise, including, without limitation, out-of-pocket
costs, expenses, and
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disbursements (including reasonable attorneys' fees and expenses)
incurred by the Trustee, any of the Noteholders and any of the Note
Owners in enforcing this Indenture or preserving any of their
respective rights to, or realizing upon, any of the Collateral;
provided, however, the foregoing indemnification shall not extend to
any action by the Trustee, a Noteholder or a Note Owner which
constitutes negligence or willful misconduct by the Trustee, such
Noteholder, such Note Owner or any other Indemnified Person hereunder.
The indemnification provided for in this Section 3.2 shall survive the
removal of, or a resignation by, such Person as Trustee as well as the
termination of this Indenture, any Supplement or any Assignment
Agreement.
Section 3.3. Performance of Agreement.
Upon the occurrence of a Limited Liquidation Event of Default
or Liquidation Event of Default, promptly following a request from the Trustee
or the Master Collateral Agent to do so and at NFLP's expense, NFLP agrees to
take all such lawful action as permitted under this Indenture as the Trustee or
the Master Collateral Agent may request to compel or secure the performance and
observance by: (i) National or by any other party to any of the NFLP Agreements
or any other Related Document of its obligations to NFLP, and (ii) a
Manufacturer under a Manufacturer Program of its obligations to the Lessor or
the Lessee, or the Master Collateral Agent, as assignee, in each case in
accordance with the applicable terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to NFLP to the extent
and in the manner directed by the Trustee or the Master Collateral Agent, as
applicable, 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 National (or such party to any NFLP Agreement or
any other Related Document) or by a Manufacturer under a Manufacturer Program,
of their respective obligations thereunder. If NFLP or National shall have
failed, within 30 days of receiving the direction of the Trustee or the Master
Collateral Agent, as applicable, to take commercially reasonable action to
accomplish such directions of the Trustee or the Master Collateral Agent, as
applicable, the Trustee or the Master Collateral Agent, as applicable, may take
such previously directed action and any related action permitted under this
Indenture which the Trustee or the Master Collateral Agent, as applicable,
thereafter determines is appropriate, without the need under this provision or
any other provision under the Indenture to direct NFLP to take such action) on
behalf of NFLP and the Noteholders.
Section 3.4. Release of Lien on Vehicles.
The Lien of the Trustee on the Vehicles shall automatically be deemed
to be released concurrently with any release thereof as provided in the Lease,
or Sections 2.3 or 2.7 of the Master Collateral Agency Agreement.
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Section 3.5. Stamp, Other Similar Taxes and Filing
Fees.
NFLP shall indemnify and hold harmless the Trustee, the Master
Collateral Agent and each 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. NFLP shall pay, or
reimburse the 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.
ARTICLE 4.
REPORTS
Section 4.1. Agreement of Servicer to Provide Reports.
(a) Pursuant to the Lease and the Master Collateral Agency Agreement,
the Servicer has agreed to provide certain reports specified therein. The
Noteholders by their acceptance of the Notes consent to the provision of such
reports by the Servicer in lieu of the Trustee or NFLP.
(b) The Trustee and the Paying Agent shall promptly follow the
instructions of the Servicer given pursuant to the Lease to withdraw funds from
the Collection Account and make drawings under any Enhancement, as provided in
the applicable Supplement.
ARTICLE 5.
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 5.1. Collection Account.
(a) Establishment of Collection Account. The Trustee shall
establish and maintain in the name of the Trustee for the benefit of
the Secured Parties, or cause to be established and maintained, an
account (the "Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Secured Parties. The Collection Account shall be maintained (i)
with a Qualified Institution, or (ii) as a segregated trust account
with the corporate trust department of a depository institution or
trust company having corporate trust powers and acting as trustee for
funds deposited in the Collection Account. If the Collection Account is
not maintained in accordance with the previous sentence, then within 10
Business Days after obtaining knowledge of such fact, the Trustee shall
establish a new Collection Account which complies with such sentence
and transfer into the new Collection
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Account all cash and investments from the non-qualifying Collection
Account. Initially, the Collection Account will be established with the
Trustee.
(b) Establishment of Retained Distribution Account. The
Trustee shall establish and maintain in the name of the Retained
Interestholder, for the benefit of the Retained Interestholder, or
cause to be established and maintained, an account (the "Retained
Distribution Account") bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Retained
Interestholder. Unless otherwise instructed by NFLP, the Retained
Distribution Account shall be maintained (i) with a Qualified
Institution, or (ii) as a segregated trust account with the corporate
trust department of a depository institution or trust company having
corporate trust powers and acting as trustee for funds deposited in the
Retained Distribution Account. If the Retained Distribution Account is
not maintained in accordance with the previous sentence, then within
ten (10) Business Days after obtaining knowledge of such fact, the
Trustee shall establish a new Retained Distribution Account which
complies with such sentence and transfer into the new Retained
Distribution Account all cash and investments from the non-qualifying
Retained Distribution Account. Initially, the Retained Distribution
Account will be established with the Trustee.
(c) Establishment of Additional Accounts. To the extent
specified in the Supplement with respect to any Series of Notes, the
Trustee may establish and maintain one or more additional accounts
and/or administrative sub- accounts to facilitate the proper allocation
of Collections in accordance with the terms of such Supplement.
(d) Administration of the Collection Account. NFLP shall
instruct the institution maintaining the Collection Account to invest
funds on deposit in the Collection Account (including any
administrative subaccount thereof) at all times in Permitted
Investments selected by NFLP; provided, however, that any such
investment shall mature not later than the Business Day prior to the
Distribution Date following the date on which such funds were so
invested, except for any Permitted Investment held in the Collection
Account which is in an investment made by the Paying Agent institution,
in which event such investment may mature on such Distribution Date and
such funds shall be available for withdrawal on or prior to such
Distribution Date provided, further, that any such investment described
in clause (iv) of the definition of "Permitted Investments" need not
mature on or prior to such Distribution Date but need only permit
withdrawals therefrom not less frequently than on each Distribution
Date. The Trustee shall hold, for the benefit of the Secured Parties,
possession of any negotiable instruments or securities evidencing the
Permitted Investments until their maturity.
(e) Earnings from Collection Account. Subject to the
restrictions set forth above, NFLP shall
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have the authority to instruct the Trustee (which instructions shall be
in writing) with respect to (i) the investment of funds on deposit in
the Collection Account and (ii) liquidation of such investments. All
interest and earnings (net of losses and investment expenses) paid on
funds on deposit in the Collection Account shall be deemed to be
available and on deposit for distribution.
(f) Earnings from Retained Distribution Account. Subject to
the restrictions set forth above, the Servicer shall have the authority
to instruct the Trustee with respect to the investment of funds on
deposit in the Retained Distribution Account. All interest and earnings
(net of losses and investment expenses) on funds on deposit in the
Retained Distribution Account shall be deemed to be available and on
deposit for distribution to the Retained Interestholder.
Section 5.2. Collections and Allocations.
(a) Collections in General. Until this Indenture is terminated
pursuant to Section 11.1, NFLP shall, and the Trustee is authorized to,
cause all Collections due and to become due to NFLP or the Trustee, as
the case may be, (i) under or in connection with the Master Collateral
for which NFLP is designated as a Financing Source and the Trustee is
designated as a Beneficiary under the Master Collateral Agency
Agreement (including, without limitation, amounts due from
Manufacturers under their Manufacturer Programs with respect to
Vehicles other than Exchanged Vehicles but excluding amounts
representing the proceeds from sales of Vehicles by the Lessee or the
Lessor to third parties other than the Manufacturers, warranty payments
and insurance proceeds) to be paid directly to the Master Collateral
Agent for deposit into the Master Collateral Account; (ii) with respect
to amounts representing the proceeds from sales of Vehicles (other than
Exchanged Vehicles) by the Lessee or the Lessor to third parties other
than the Manufacturers (including proceeds from sales of Vehicles at
Auction which are due from third parties other than the Manufacturer)
to be deposited by the Lessee or the Lessor, as applicable, within two
Business Days of its receipt thereof into the Master Collateral
Account; (iii) under the Lease to be paid directly to the Trustee for
deposit into the Collection Account; and (iv) from any other source
(other than Collections excluded from deposit into the Master
Collateral Account under clause (i) above) to be paid either (a)
directly into the Collection Account at such times as such
amounts are due or (b) by the Lessee or the Lessor, as applicable, into
the Collection Account within two Business Days of its receipt thereof
(and, in each case, NFLP represents to the Trustee for the benefit of
the Secured Parties that it has instructed the Lessee, the Servicer,
the Manufacturers, and that it will instruct any other source of
Collections, as applicable, to so remit such amounts). Upon the
occurrence and during the continuance of an Amortization Event or
Potential Amortization Event, insurance proceeds (with respect to
Vehicles other than Exchanged Vehicles) will be deposited in the Master
Collateral Account within two Business Days of their receipt by the
Lessee, the Lessor or the Servicer, as applicable; provided,
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however, upon the delivery of an Officer's Certificate of the Servicer
to the Trustee (upon which it may conclusively rely) certifying (i)
that a Vehicle for which insurance proceeds have been received in the
Collection Account has been repaired and (ii) as to the dollar amount
of such repairs, the Trustee shall release to National insurance
proceeds in such dollar amount. NFLP agrees that if any such monies,
instruments, cash or other proceeds shall be received by NFLP in an
account other than the Master Collateral Account or the Collection
Account or in any other manner, such monies, instruments, cash and
other proceeds will not be commingled by NFLP 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 NFLP for, and immediately paid
over to, but in any event within two Business Days from receipt, the
Trustee or the Master Collateral Agent, as applicable, with any
necessary endorsement. All amounts on deposit in the Master Collateral
Account shall be allocated and distributed to the Trustee and other
Beneficiaries as provided in the Master Collateral Agency Agreement.
All monies, instruments, cash and other proceeds received by the
Trustee pursuant to this Indenture (including amounts received from the
Master Collateral Agent) shall be immediately deposited in the
Collection Account and shall be applied as provided in this Article 5.
Notwithstanding the foregoing, to the extent that the aggregate amount
of proceeds received in the Collection Account with respect to any
Financed Vehicle exceeds the Termination Value of such Vehicle, the
Trustee shall, upon the written direction (on which it may conclusively
rely) of NFLP delivered by 12:00 noon (New York City time) on a
Business Day, release such excess to the Lessee on such Business Day,
or, if such written direction is received by the Trustee after 12:00
noon (New York City time) on a Business Day, on the next succeeding
Business Day.
(b) Disqualification of Institution Maintaining
Collection Account. In the event the Qualified Institution
maintaining the Collection Account ceases to be such, then, upon the
occurrence of such event and the establishment of a new Collection
Account with a Qualified Institution or qualified corporate trust
department pursuant to Section 5.1(a) and thereafter, the Servicer, the
Lessee and NFLP shall deposit or cause to be deposited all Collections
as set forth in Section 5.2(a) into the new Collection Account, and in
no such event shall deposit or cause to be deposited any Collections
thereafter into any account established, held or maintained with the
institution formerly maintaining the Collection Account (unless it
later becomes a Qualified Institution or qualified corporate trust
department). NFLP will instruct the Lessee and the Servicer as to the
foregoing requirements of this subsection (b).
(c) Right of Servicer to Deduct Fees. Notwithstanding anything
in this Indenture to the contrary but subject to any limitations set
forth in the applicable Supplement, as long as the Servicer is National
or an Affiliate of National and the Retained Interest Amount equals or
exceeds zero, the Servicer (i) may make or cause to be made deposits to
the Collection Account net of any amounts which are allocable to
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the Retained Distribution Account and represent amounts due and owing
to the Servicer or National, and (ii) need not deposit or cause to be
deposited any amounts to be paid to the Servicer or National pursuant
to this Section 5.2 and such amounts will be deemed paid to National or
the Servicer, as the case may be, pursuant to this Section 5.2.
(d) Sharing Collections. To the extent that Principal
Collections that are allocated to any Series on a Distribution Date are
not needed to make payments to Noteholders of such Series or required
to be deposited in a Distribution Account for such Series on such
Distribution Date, such Principal Collections may at the direction of
the Servicer, be applied to cover principal payments due to or for the
benefit of Noteholders of another Series. Any such reallocation will
not result in a reduction of the Principal Balance or Invested Amount
of the Series to which such Principal Collections were initially
allocated.
(e) Unallocated Principal Collections. If, after giving effect
to Section 5.2(d), Principal Collections allocated to any Series on any
Distribution Date are in excess of the amount required to be paid in
respect of such Series on such Distribution Date, then any such excess
Principal Collections shall be allocated to the Retained Distribution
Account, to the extent that the Retained Interest Amount, calculated as
of such Distribution Date, equals or exceeds zero and such payment will
not violate any restriction contained in this Indenture.
Section 5.3. Determination of Monthly Interest.
Monthly interest with respect to each Series of Notes shall be
determined, allocated and distributed in accordance with the procedures set
forth in the applicable Supplement.
Section 5.4. Determination of Monthly Principal.
Monthly principal with respect to each Series of Notes shall
be determined, allocated and distributed in accordance with the procedures set
forth in the applicable Supplement. However, all principal or interest with
respect to any Series of Notes shall be due and payable no later than the Series
Termination Date with respect to such Series.
Section 5.5. Paired Series.
To the extent provided in a Supplement, any Series of Notes
may be paired with one or more other Series (each, a "Paired Series"). Each
Paired Series may be prefunded with an initial deposit to a pre-funding account
in an amount up to the initial principal balance of such Paired Series,
primarily from the proceeds of the sale of such Paired Series, or will have
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a variable principal amount. Any such pre-funding account will be held for the
benefit of such Paired Series and not for the benefit of the Noteholders of the
Series paired therewith. As funds are accumulated in a principal funding account
or paid to Noteholders either (i) in the case of a pre-funded Paired Series, an
equal amount of funds on deposit in any pre-funding account for such pre-funded
Paired Series will be released and paid to NFLP or (ii) in the case of a Paired
Series having a variable principal amount, an interest in such variable Paired
Series in an equal or lesser amount may be sold by NFLP and, in either case, the
invested amount of such Paired Series will increase by up to a corresponding
amount. Upon payment in full of the Series paired to the Paired Series, the
aggregate invested amount of such related Paired Series will have been increased
by an amount up to an aggregate amount equal to the Invested Amount of such
Series paid to the Noteholders thereof. The issuance of a Paired Series may be
subject to certain conditions described in the related Supplement.
[THE REMAINDER OF ARTICLE 5 IS RESERVED AND MAY BE SPECIFIED IN
ANY SUPPLEMENT WITH RESPECT TO ANY SERIES]
ARTICLE 6.
DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS
Section 6.1. Distributions in General.
(a) Unless otherwise specified in the applicable Supplement,
on each Distribution Date with respect to each Outstanding Series, (i)
the Paying Agent shall deposit (in accordance with the Monthly
Certificate delivered by the Servicer to the Trustee) in the
Distribution Account for each such Series the amounts on deposit in the
Collection Account allocable to Noteholders of such Series as interest
and, if during an Amortization Period, principal, and (ii) to the
extent provided for in the applicable Supplement, the Trustee (in
accordance with the Monthly Certificate or other instructions of the
Servicer) shall deposit in the Distribution Account for each such
Series the amount of Enhancement for such Series drawn in connection
with such Distribution Date.
(b) Unless otherwise specified in the applicable Supplement,
on each Distribution Date, the Paying Agent shall distribute to the
Noteholders of each Series, to the extent amounts are on deposit in the
Distribution Account for such Series, an amount sufficient to pay all
principal and interest due on such Series on such Distribution Date.
Such distribution shall be to each Noteholder of record of such Series
on the preceding Record Date based on such Noteholder's pro rata share
of the aggregate principal amount of the Notes of such Series held by
such Noteholder; provided, however, that, the final principal payment
due on a Note shall only be paid
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to the holder of a Note on due presentment of such Note for
cancellation in accordance with the provisions of the Note.
(c) Unless otherwise specified in the applicable Supplement,
amounts distributable to a Noteholder pursuant to this Section 6.1
shall be payable by check mailed first-class postage prepaid to such
Noteholder at the address for such Noteholder appearing in the Note
Register except that with respect to 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 Paying Agent
from the Distribution Account no later than 2:00 p.m. (New York City
time) for credit to the account designated by such Clearing Agency or
its nominee, as applicable.
(d) Unless otherwise specified in the applicable
Supplement (i) all distributions to Noteholders of all classes within a
Series of 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 Noteholders of a Series is not sufficient to pay all sums required
to be paid to such Noteholders on such date, then each class of
Noteholders will receive its ratable share (based upon the aggregate
amount due to such class of Noteholders) of the aggregate amount
available to be distributed in respect of the Notes of such Series.
(e) All distributions in respect of Notes represented by a
Temporary Global Note will be made only with respect to that portion of
the Temporary Global Note in respect of which Euroclear or Cedel shall
have delivered to the Trustee a certificate or certificates
substantially in the form of Exhibit B. The delivery to the Trustee by
Euroclear or Cedel of the certificate or certificates referred to above
may be relied upon by NFLP and the Trustee as conclusive evidence that
the certificate or certificates referred to therein has or have been
delivered to Euroclear or Cedel pursuant to the terms of this Indenture
and the Temporary Global Note. No payments of interest will be made on
a Temporary Global Note after the Exchange Date therefor.
Section 6.2. Distributions to Retained Distribution
Account.
Subject to the terms and conditions of the related Supplement
or Supplements, at any time and from time to time upon receipt of a duly
executed Company Order, the Trustee will transfer funds from the Collection
Account to the Retained Distribution Account; provided, however, that the
Trustee will not make any such transfer on any date other than on a Distribution
Date unless the Trustee receives an Officer's Certificate from the Servicer
stating that, on the date such transfer is made and, in the reasonable
anticipation of the Servicer, on the next Distribution Date, (i) the transfer of
such funds from the Collection Account to the Retained Distribution Account will
not cause an Asset Amount Deficiency to exist and (ii) the transfer of such
funds from the Collection Account to the Retained
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Distribution Account will not violate any restriction contained in this
Indenture or any Supplement.
Section 6.3. Optional Repurchase of Notes.
On any Distribution Date occurring on or after the date on
which the aggregate Principal Balance 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 Supplement related to such Series, or at such other time
otherwise provided for in the Supplement relating to such Series, NFLP shall
have the option to purchase all Outstanding 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 Distribution Date) equal to (unless otherwise
specified in the related Supplement) the Principal Balance of such Series or
class, as applicable, on such Distribution Date, plus accrued and unpaid
interest on the unpaid Principal Balance of the Notes of such Series or class
(calculated at the applicable Note Rate of such Series or class) through the day
immediately prior to the date of such purchase plus, if provided for in the
related Supplement, any premium payable at such time. NFLP shall give the
Trustee at least 30 days prior written notice of the date on which NFLP intends
to exercise such option to purchase. Not later than 12:00 noon, New York City
time, on such Distribution Date, the purchase price of the Notes being
repurchased on such Distribution Date and the amount of accrued and unpaid
interest with respect to such Notes and any applicable premium will be deposited
into the Distribution Account for such Series in immediately available funds.
The funds deposited into such Distribution Account or distributed to the Paying
Agent will be passed through in full to the Noteholders on such Distribution
Date.
Section 6.4. Monthly Noteholders' Statement.
(a) On each Distribution Date, the Paying Agent shall forward
to each Noteholder of record of all outstanding Series, the Rating
Agencies, the Trustee (if other than the Paying Agent) and any
Enhancement Provider the Monthly Noteholders' Statement prepared by the
Servicer pursuant to
the Lease.
(b) Annual Noteholders' Tax Statement. On or before January 31
of each calendar year, beginning with calendar year 1997, the Paying
Agent shall furnish to each Person who at any time during the preceding
calendar year was a Noteholder a statement prepared by the Servicer
containing the information prepared by the Servicer which is required
to be contained in the Monthly Noteholders' Statement aggregated for
such calendar year or the applicable portion thereof during which such
Person was an Noteholder, together with such other customary
information (consistent with the treatment of the Notes as debt) as the
Servicer deems necessary or desirable to enable the Noteholders to
prepare their tax returns (each such statement, an "Annual Noteholders'
Tax Statement"). Such obligations of the Servicer to prepare and the
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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 Paying Agent pursuant
to any requirements of the Code as from time to time in effect.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
NFLP hereby represents and warrants, for the benefit of the
Trustee and the Noteholders, as follows as of each Closing Date:
Section 7.1. Legal Existence and Power.
(a) NFLP (i) is a limited partnership duly organized, 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 partnership 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 partnership powers and all
material 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 Related Documents; except that NFLP
may not have all required authorizations to purchase, rent and sell vehicles in
all states where it operates but NFLP has applied for all such authorizations
and expects to receive them within 90 days after the initial Closing Date.
(b) The General Partner (i) is the sole general partner of
NFLP, (ii) is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, (iii) is duly qualified to do
business as a foreign corporation 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 (iv)
has all corporate powers and all material 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
Related Documents.
Section 7.2. Authorization.
The execution, delivery and performance by NFLP of this
Indenture, the related Supplement and the other Related Documents to which it is
a party (a) is within NFLP's partnership powers, has been duly authorized by all
necessary partnership 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
provision
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of applicable law or regulation or of the certificate of limited partnership or
partnership agreement of NFLP or of any law or governmental regulation, rule,
contract, agreement, judgment, injunction, order, decree or other instrument
binding upon NFLP or any of its Assets or result in the creation or imposition
of any Lien on any Asset of NFLP, except for Liens created by this Indenture,
the Master Collateral Agency Agreement or the other Related Documents. This
Indenture and each of the other Related Documents to which NFLP is a party has
been executed and delivered by a duly authorized officer of NFLP.
Section 7.3. Binding Effect.
This Indenture and each other Related Document is a legal,
valid and binding obligation of NFLP enforceable against NFLP 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).
Section 7.4. Financial Information; Financial
Condition.
All balance sheets, all statements of operations, of
shareholders' equity and of cash flow, and other financial data (other than
projections) of NFLP which have been or shall hereafter be furnished by NFLP to
the Trustee and the Rating Agencies pursuant to Section 8.3 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 entities involved as of the dates
thereof and the results of their operations for the periods covered thereby,
subject, in the case of all unaudited statements, to normal year-end adjustments
and lack of footnotes and presentation items.
Section 7.5. Litigation.
There is no action, suit or proceeding pending against or, to
the knowledge of NFLP, threatened against NFLP before any court or arbitrator or
any Governmental Authority with respect to which there is a reasonable
possibility of an adverse decision that could materially adversely affect the
financial position, results of operations, business, properties, performance, or
condition (financial or otherwise) of NFLP or which in any manner draws into
question the validity or enforceability of this Indenture, any Supplement or any
other Related Document or the ability of NFLP to perform its obligations
hereunder or thereunder.
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Section 7.6. No ERISA Plan.
NFLP 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 Notes are Outstanding.
Section 7.7. Tax Filings and Expenses.
NFLP has filed all federal, state and local tax returns and
all other tax returns which, to the knowledge of NFLP, 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 NFLP, except
such taxes, if any, as are being contested in good faith and for which adequate
reserves have been set aside on its books. NFLP has paid all fees and expenses
required to be paid by it in connection with the conduct of its business, the
maintenance of its partnership existence and its qualification as a foreign
partnership authorized to do business in each State in which it is required to
so qualify, except where the failure to pay any such fees and expenses is not
reasonably likely to have a Material Adverse Effect.
Section 7.8. Disclosure.
The Private Placement Memorandum does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. All certificates, reports, statements,
documents and other information furnished to the Trustee by or on behalf of NFLP
pursuant to any provision of this Indenture or any Related Document, or in
connection with or pursuant to any amendment or modification of, or waiver
under, this Indenture or any Related Document, shall, at the time the same are
so furnished, be complete and correct to the extent necessary to give the
Trustee true and accurate knowledge of the subject matter thereof in all
material respects, and the furnishing of the same to the Trustee shall
constitute a representation and warranty by NFLP made on the date the same are
furnished to the Trustee to the effect specified herein.
Section 7.9. Investment Company Act; Securities Act.
NFLP 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. It is not
necessary in connection with the issuance and sale of the Notes under the
circumstances contemplated in the Private Placement Memorandum, any Placement
Memorandum Supplement
thereto and in any note purchase or similar agreement to register any security
under the Securities Act or to qualify any indenture under the Trust Indenture
Act.
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Section 7.10. Regulations G, T, U and X.
The proceeds of the 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 G, T, U and X
thereof). NFLP is not engaged in the business of extending credit for the
purpose of purchasing or carrying any margin stock.
Section 7.11. 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 execution and delivery of this
Indenture or any Supplement or for the performance of any of NFLP's obligations
hereunder or thereunder or under any other Related Document other than such
consents, approvals, authorizations, registrations, declarations or filings as
shall have been obtained by NFLP prior to the initial Closing Date or as
contemplated in Section 7.14, or in the case of NFLP's authorization to
purchase, rent and sell vehicles in each state in which it operates, within 90
days after the initial Closing Date.
Section 7.12. Solvency.
Both before and after giving effect to the transactions
contemplated by this Indenture and the other Related Documents, NFLP is solvent
within the meaning of the Bankruptcy Code and NFLP is not the subject of any
voluntary or involuntary case or proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any bankruptcy or
insolvency law and no Event of Bankruptcy has occurred with respect to NFLP.
Section 7.13. Ownership; Subsidiary.
The sole general partner of NFLP is the General Partner and
the sole limited partner of NFLP is National, all of the issued and outstanding
common stock of the General Partner is owned by National, all of which common
stock has been validly issued, is fully paid and non-assessable and is owned of
record by such corporation. NFLP has no subsidiaries and owns no capital stock
of, or other interest in, any other Person.
Section 7.14. Security Interests.
(a) All action necessary (including the filing of UCC-1
financing statements and the notation on the Certificates of Title for
all Vehicles (other than Initial Vehicles) of the Master Collateral
Agent's Lien for the benefit of NFLP and the Trustee) to protect and
perfect the Trustee's security interest in the Collateral and the
Master
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Collateral Agent's security interest in the Master 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 NFLP 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 NFLP in favor of the Trustee in connection with
this Indenture or the Master Collateral Agent in connection with the
Master Collateral Agency Agreement.
(c) This Indenture constitutes a valid and continuing Lien on
the Collateral in favor of the Trustee, which Lien will be prior to all
other Liens (other than Permitted Liens), and the Master Collateral
Agency Agreement constitutes a valid and continuing Lien on the Master
Collateral in favor of the Master Collateral Agent prior to all other
Liens (other than Permitted Liens) and, in each case, will be
enforceable as such as against creditors of and purchasers from NFLP 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) NFLP's principal place of business and chief executive
office shall be at: 7700 France Avenue South, Minneapolis, Minnesota
55435, and the place where its records concerning the Collateral are
kept is at: 7700 France Avenue South, Minneapolis, Minnesota 55435.
NFLP does not transact, and has not transacted, business under any
other name.
(e) All authorizations in this Indenture for the Trustee to
endorse checks, instruments and securities and to execute financing
statements, continuation statements,
security agreements, Certificates of Title, and other instruments with
respect to the Collateral are powers coupled with an interest and are
irrevocable.
Section 7.15. Binding Effect of Lease.
The Lease is in full force and effect and there are no
existing Lease Events of Default or Manufacturer Events of Default thereunder
nor have events occurred which with the giving of notice, the passage of time or
both would constitute a Lease Event of Default or Manufacturer Event of Default.
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Section 7.16. Non-Existence of Other Agreements.
As of the date of the issuance of the first Series of Notes,
other than as permitted by Section 8.24 and Section 8.26 hereof (i) NFLP is not
a party to any contract or agreement of any kind or nature and (ii) NFLP is not
subject to any obligations or liabilities of any kind or nature in favor of any
third party, including, without limitation, Contingent Obligations.
Section 7.17. Manufacturer Programs.
Each Manufacturer and Manufacturer Program in respect of which
Vehicles will be acquired or financed under the Lease is an Eligible
Manufacturer and Eligible Manufacturer Program, respectively, and each of NFLP
and National is an Authorized Fleet Purchaser under each such Manufacturer
Program.
Section 7.18. Other Representations.
All representations and warranties of NFLP made in each
Related Document to which it is a party are true and correct (in all material
respects to the extent any such representations and warranties do not
incorporate a materiality limitation in their terms) and are repeated herein as
though fully set forth herein.
ARTICLE 8.
COVENANTS
NFLP and, where specified, the General Partner, hereby
covenants, to the Trustee for the benefit of the Secured Parties, as follows:
Section 8.1. Payment of Notes.
NFLP shall pay the principal of (and premium, if any)
and interest on the Notes pursuant to the provisions of this
Indenture and any applicable 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.
Section 8.2. Maintenance of Office or Agency.
NFLP will maintain an office or agency (which may be an office
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or exchange, where notices and demands to or upon NFLP
in respect of the Notes and this
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Indenture may be served, and where, at any time when NFLP is obligated to make a
payment of principal and premium upon the Notes, the Notes may be surrendered
for payment. NFLP will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time NFLP 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.
NFLP may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations. NFLP will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
NFLP hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of NFLP.
Section 8.3. Information.
NFLP will deliver or cause to be delivered to the Trustee and
each Rating Agency (provided that, if Duff & Phelps is then a Rating Agency, the
Trustee, not NFLP, will deliver such items to Duff & Phelps promptly upon
receipt of same from NFLP):
(a) promptly upon the delivery by the Servicer to NFLP, a copy
of the financial information and other materials required to be
delivered by the Servicer to NFLP and the Master Collateral Agent
pursuant to Section 24.6(i) of the Lease;
(b) promptly upon the delivery by the Servicer to NFLP, copies
of the financial information and other materials required to be
delivered by the Servicer to NFLP and the Master Collateral Agent
pursuant to Section 24.6(ii) of the Lease;
(c) promptly upon the delivery by the Servicer to NFLP, the
financial information and other materials required to be delivered by
the Servicer pursuant to Section 24.6(vi) of the Lease;
(d) promptly upon the delivery by the Servicer to NFLP, the
financial information and other materials required to be delivered by
the Servicer pursuant to Section 24.6(ix) of the Lease;
(e) promptly upon the delivery by the Servicer to NFLP, the
financial information and other materials required to be delivered by
the Servicer pursuant to Section 24.6(x) of the Lease;
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(f) promptly upon the delivery by the Servicer to NFLP, the
financial information and other materials required to be delivered by
the Servicer pursuant to Section 24.6(xi) of the Lease;
(g) from time to time such additional information regarding
the financial position, results of operations or business of National
and its Subsidiaries as the Trustee may reasonably request to the
extent that National delivers such information to NFLP pursuant to
Section 24.6(xii) of the Lease;
(h) at the time of delivery of the items described in clauses
(a) through (g) above, a certificate of an officer of NFLP that, except
as provided in any certificate delivered in accordance with Section
8.10, no Amortization Event, Lease Event of Default or (to the best of
such officer's knowledge) Potential Amortization Event or Potential
Lease Event of Default has occurred or is continuing during such fiscal
quarter;
(i) on or prior to June 30 of each year, a certificate of the
chief financial officer of NFLP certifying that (i) the ratings
assigned by the Rating Agencies in respect of any outstanding Series of
Notes have not been withdrawn or downgraded since the date of the
related Supplement, (ii) no change in the Manufacturer Program of any
Manufacturer in respect of any new model year shall have given rise to
any request on the part of the Rating Agencies that any modification be
made to the Lease or any other Related Document, and (iii) NFLP has
apprised the Rating Agencies of all material changes in the
Manufacturer Programs occurring since the date of this Indenture;
(j) on or prior to the twentieth day of each month (or if such
day is not a Business Day, on the next succeeding Business Day), a copy
of the Monthly Vehicle Statement
relating to the Collateral as of the last Business Day of the
immediately preceding month received by NFLP from the Servicer pursuant
to Section 24.6(iv) of the Lease; and
(k) promptly following the introduction of any prospective
change in any Manufacturer Program or the introduction of any new
Manufacturer Program by an existing Manufacturer, or, if later, the
date NFLP or National obtains notice thereof, notice of the same and
notice thereof to the Rating Agencies describing the principal terms
thereof, and at least annually a copy of each Manufacturer Program to
the Rating Agencies.
Section 8.4. Payment of Obligations.
NFLP will pay and discharge, at or before maturity, all of its
respective material obligations and liabilities, including, without limitation,
tax liabilities and other
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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.
Section 8.5. Reserved.
Section 8.6. Conduct of Business and Maintenance of
Existence.
NFLP will maintain its corporate existence as a corporation
validly existing and in good standing under the laws of the State of Delaware
and duly qualified as a foreign corporation licensed under the laws of each
state in which the failure to so qualify would have a material adverse effect on
the business and operations of NFLP.
Section 8.7. Compliance with Laws.
NFLP will comply in all respects with all Requirements of Law
(including, without limitation, ERISA and the rules and regulations thereunder)
except where such noncompliance would not materially and adversely affect the
condition, financial or otherwise, operations, performance, properties of NFLP
or its ability to carry out the transactions contemplated in this Indenture and
each other Related Document; provided, however, such noncompliance will not
result in a Lien (other than a Permitted Lien) on any Assets of NFLP.
Section 8.8. Inspection of Property, Books and
Records.
NFLP 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 its Assets, business and activities in accordance
with GAAP; and will permit the 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.
Section 8.9. Compliance with Related Documents.
NFLP will perform and comply with each and every obligation,
covenant and agreement required to be performed or observed by it in or pursuant
to this Indenture and each other Related Document to which it is a party,
subject to the grace periods set forth therein, and will not take any action
which would permit the Lessee, the Servicer or National to have the right to
refuse to perform any of its obligations under any Related Document. NFLP will
not amend the Lease, except in accordance with Section 22 thereof.
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Section 8.10. Notice of Defaults.
(a) Promptly upon becoming aware of any Potential Amortization
Event, Amortization Event, Lease Event of Default or Potential Lease
Event of Default, NFLP shall give the Trustee, each Enhancement
Provider and the Rating Agencies notice thereof, together with a
certificate of the President, Vice President or principal financial
officer of NFLP setting forth the details thereof and any action with
respect thereto taken or contemplated to be taken by NFLP, and
(b) Promptly upon becoming aware of any default under any
Related Document or under any Manufacturer Program, NFLP shall give the
Trustee, each Enhancement Provider and the Rating Agencies notice
thereof.
Section 8.11. Notice of Material Proceedings.
Promptly upon becoming aware thereof, NFLP shall give the
Trustee and the Rating Agencies written notice of the commencement or existence
of any proceeding by or before any Governmental Authority against or affecting
NFLP which is reasonably likely to have a material adverse effect on the
business, condition (financial or otherwise), results of operations, properties
or performance of NFLP or the ability of NFLP to perform its obligations under
this Indenture or under any other Related Document to which it is a party.
Section 8.12. Further Requests.
NFLP will promptly furnish to the Trustee, each Enhancement
Provider and the Rating Agencies such other information as, and in such form as,
the Trustee or such Enhancement Provider or the Rating Agencies may reasonably
request in connection with the transactions contemplated hereby.
Section 8.13. Further Assurances.
(a) NFLP shall do such further acts and things, and shall
execute and deliver to the Trustee such additional assignments,
agreements, powers and instruments, as the Trustee or the Required
Noteholders reasonably determine to be necessary to carry into effect
the purposes of this Indenture or the other Related Documents or to
better assure and confirm unto the Trustee or the Noteholders their
rights, powers and remedies hereunder including, without limitation,
the filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with respect to
the liens and security interests granted hereby and pursuant to the
Master Collateral Agency Agreement. NFLP also hereby acknowledges that
the Trustee has the right but not the obligation to file any such
financing statement or continuation statement without the signature of
NFLP to the extent permitted by applicable law. If
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any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any promissory note, chattel paper or
other instrument, such note, chattel paper or instrument shall be
deemed to be held in trust and immediately pledged to the Trustee
hereunder, and shall, subject to the rights of any Person in whose
favor a prior Lien has been perfected, be duly endorsed in a manner
satisfactory to the Trustee and delivered to the Trustee promptly.
Without limiting the generality of the foregoing provisions of this
Section 8.13(a), NFLP shall take all actions that are required to
maintain the security interest of the Trustee in the Collateral and of
the Master Collateral Agent in the Master Collateral as a perfected
security interest subject to no prior Liens, including, without
limitation (i) filing all Uniform Commercial Code financing statements,
continuation statements and amendments thereto necessary to achieve the
foregoing, (ii) causing the Lien of the Master Collateral Agent to be
noted on all Certificates of Title (other than with respect to Initial
Vehicles) and (iii) causing the Servicer, as agent for the Master
Collateral Agent, to maintain possession of the Certificates of Title
for the benefit of the Master Collateral Agent pursuant to Section
[2.6] of the Master Collateral Agency Agreement.
(b) NFLP will warrant and defend the Trustee's right, title
and interest in and to the Collateral and the income, distributions and
proceeds thereof, for the benefit of the Noteholders and the Trustee,
against the claims and demands of all Persons whomsoever.
(c) If so requested by Noteholders holding 10% or in excess of
10% of the aggregate Invested Amount of any Series of Notes (excluding
for the purposes of making the foregoing calculation, any Notes held by
National or any Affiliate of National), NFLP will provide, no more
frequently than annually and, without the request of Noteholders on the
fifth anniversary of the date hereof, an Opinion of Counsel to the
effect that no UCC financing or continuation statements are required to
be filed with respect to any of the Collateral in which a security
interest may be perfected by the filing of UCC financing statements.
Section 8.14. Manufacturer Programs.
(a) Prior to acquiring or financing the acquisition of any
Program Vehicles under the Lease for any model year after the 1996
model year, (i) NFLP will have received an executed Assignment
Agreement with respect to National's rights under such Manufacturer
Program for such model year (to the extent National will be acquiring
Financed Vehicles (other than Texas Vehicles) under the Lease under
such Manufacturer Program), (ii) NFLP shall have delivered an executed
Assignment Agreement with respect to NFLP's rights under such
Manufacturer Program for such model year, (iii) if any Series of Notes
is then being rated by Standard & Poor's and/or Duff & Phelps, NFLP
shall have received a written confirmation from Standard &
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Poor's and/or Duff & Phelps, as applicable, that the acquisition of
Vehicles pursuant to such Manufacturer Program will not result in the
reduction or withdrawal of any rating issued by Standard & Poor's
and/or Duff & Phelps, as applicable, in respect of any outstanding
Series of Notes and (iv) if there is a material change to a
Manufacturer Program during a model year, NFLP shall have received
written confirmation from Standard & Poor's and/or Duff & Phelps, as
applicable, that the acquisition of Vehicles pursuant to such
Manufacturer Program will not result in the reduction or withdrawal of
any rating issued by Standard & Poor's and/or Duff & Phelps, as
applicable, in respect of any outstanding Series of Notes. A copy of
the rating confirmations set forth in clauses (iii) and (iv) will
promptly be delivered to the Trustee for delivery to the Noteholders of
any outstanding Series of Notes.
(b) NFLP will (a) provide the Trustee with at least 30 days'
prior written notice of its intention to finance Vehicles from any new
Manufacturer, (b) provide the Trustee with a copy of the final
Manufacturer Program of such Manufacturer promptly upon its being
available and (c) certify to the Trustee and the Noteholders that such
new Manufacturer is an Eligible Manufacturer and that such Manufacturer
Program is an Eligible Manufacturer Program at such time. In no event
shall NFLP agree, to the extent any consent of NFLP is solicited or
required by the Manufacturer or any assignor of such Manufacturer
Program, to any change in any Manufacturer Program that is reasonably
likely to materially adversely affect its rights or the rights of the
Noteholders with respect to any Vehicle previously purchased or
financed under such Manufacturer Program.
(c) On the date of acquisition by NFLP of each Acquired
Vehicle (and each Texas Vehicle) which is a Program Vehicle, NFLP shall
be an Authorized Fleet Purchaser under the related Manufacturer Program
and on the date of financing under the Lease of any Financed Vehicle
which is a Program Vehicle (other than any Texas Vehicle), National
shall be an Authorized Fleet Purchaser under the related Manufacturer
Program.
Section 8.15. Liens.
NFLP will not create, incur, assume or permit to exist any
Lien upon any of its Assets (including the Collateral), other than (i) Liens in
favor of the Trustee for the benefit of the Secured Parties, (ii) Liens upon
Exchanged Vehicle Repurchase Rights and Exchanged Vehicle Insurance Payments in
favor of the Exchange Lender and (iii) Liens created by or permitted under the
Related Documents.
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Section 8.16. Other Indebtedness.
Neither NFLP nor the General Partner will create, assume,
incur, suffer to exist or otherwise become or remain liable in respect of any
Indebtedness other than (i) Indebtedness hereunder, (ii) Indebtedness permitted
under any other Related Document, (iii) Indebtedness to an Exchange Lender for
the purchase of Replacement Vehicles, which Indebtedness is non-recourse to NFLP
or any Master Collateral, and is created pursuant to an Exchange Financing
Agreement and (iv) Indebtedness permitted under NFLP's certificate of limited
partnership or under the General Partner's certificate of incorporation.
Section 8.17. Mergers.
Neither NFLP nor the General Partner will merge or consolidate
with or into any other Person.
Section 8.18. Sales of Assets.
NFLP will not sell, lease, transfer, liquidate or otherwise
dispose of any Assets, except as contemplated by the Related Documents and
provided that the proceeds received by NFLP are paid directly to the Collection
Account or the Master Collateral Account or deposited by NFLP into the
Collection Account or the Master Collateral Account within 2 Business Days after
receipt thereof by NFLP (except that amounts payable to NFLP with respect to
Exchanged Vehicles by the related Manufacturer under its Manufacturer Program
shall be paid into the Exchange Account).
Section 8.19. Acquisition of Assets.
Neither NFLP nor the General Partner will acquire, by
long-term or operating lease or otherwise, any Assets except in accordance with
to the terms of the Related Documents.
Section 8.20. Dividends, Officers' Compensation, etc.
(a) NFLP may make any distribution (by reduction of capital or
otherwise, whether in cash, property, securities or a combination thereof), with
respect to any partnership interest in NFLP and directly or indirectly redeem,
purchase, retire or otherwise acquire for value any such partnership interest or
set aside any amount for such purpose, as permitted by its agreement of limited
partnership; except to the extent that an Amortization Event or Potential
Amortization Event has occurred and is continuing, or would result therefrom.
(b) The General Partner will not (i) declare or pay any
dividends on any shares of its capital stock or make any other distribution on,
or any purchase, redemption or other
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acquisition of, any shares of its capital stock or (ii) pay any wages or
salaries or other compensation to officers, directors, employees or others
except, in each case, to the extent no Amortization Event or Potential
Amortization Event has occurred and is continuing or would result therefrom.
Section 8.21. Name; Principal Office.
NFLP 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
notice to the Trustee and the Master Collateral Agent nor (b) change its name
without prior notice to the Trustee and the Master Collateral Agent sufficient
to allow the Trustee and the Master Collateral Agent to make all filings
(including filings of financing statements on form UCC-1) and recordings
necessary to maintain the perfection of the interest of the Trustee in the
Collateral pursuant to this Indenture and the perfection of the interest of the
Master Collateral Agent in the Master Collateral pursuant to the Master
Collateral Agency Agreement. In the event that NFLP desires to so change its
office or change its name, NFLP will make any required filings and prior to
actually changing its office or its name NFLP will deliver to the Trustee and
the Master Collateral Agent (i) an Officer's Certificate and (except with
respect to a change of the location of NFLP'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 Trustee in the Collateral and the perfected interest
of the Master Collateral Agent in the Master Collateral in respect of the new
office or new name of NFLP and (ii) copies of all such required filings with the
filing information duly noted thereon by the office in which such filings were
made.
Section 8.22. Organizational Documents.
Neither NFLP nor the General Partner will amend any of its
organizational documents, including the certificate of limited partnership and
the limited partnership of NFLP and the Certificate of Incorporation and By-Laws
of the General Partner, unless, prior to such amendment, each Rating Agency
confirms that after such amendment the Rating Agency Condition will be met.
Section 8.23. Investments.
Neither NFLP nor the General Partner will make, incur, or
suffer to exist any loan, advance, extension of credit or other investment in
any Person other than (in the case of NFLP), pursuant to the Demand Note or as
permitted by the Lease and this Indenture and with respect to Permitted
Investments and (in the case of the General Partner) in NFLP and, in addition,
without limiting the generality of the foregoing, NFLP will not cause the
Trustee to make any Permitted Investments on NFLP's behalf that would have the
effect of causing NFLP to be an "investment company" within the meaning of the
Investment Company Act.
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Section 8.24. No Other Agreements.
NFLP will not (a) enter into or be a party to any agreement or
instrument other than any Related Document, any documents related to any
Enhancement, an Exchange Agreement, a Master Deposit Agreement, an Exchange
Financing Agreement and
documents and agreements incidental to any of the foregoing or entered into as
contemplated in Section 8.26 or (b) except as provided for in Sections 12.1 or
12.2, amend, modify or waive any provision of any Related Document to which it
is a party, or (c) give any approval or consent or permission provided for in
any Related Document, except as permitted in Section 3.2(a).
Section 8.25. Other Business.
Neither NFLP nor the General Partner will engage in any
business or enterprise or enter into any transaction other than (in the case of
NFLP) the acquisition, financing, refinancing, leasing and disposition of
Vehicles pursuant to the Lease and pursuant to the other Related Documents, the
related exercise of its rights as lessor thereunder, the making of loans to
National pursuant to the Demand Note, the incurrence and payment of ordinary
course operating expenses, the issuing and selling of the Notes and other
activities related to or incidental to either of the foregoing (including
transactions contemplated in Sections 8.24 and 8.26) and (in the case of the
General Partner) executing and entering into NFLP's limited partnership
agreement and performing the obligations of the General Partner thereunder.
Section 8.26. Maintenance of Separate Existence.
Each of NFLP and the General Partner will do all things
necessary to maintain its corporate or partnership existence separate and apart
from that of National and Affiliates of National including, without limitation,
(i) practicing and adhering to corporate or partnership formalities, such as
maintaining appropriate corporate or partnership books and records; (ii) in the
case of the General Partner, maintaining at least two corporate directors who
are not officers, directors or employees of any of its Affiliates; (iii) owning
or leasing (including through shared arrangements with Affiliates) all office
furniture and equipment necessary to operate its business; (iv) not (A)
guaranteeing or otherwise becoming liable for any obligations of any of its
Affiliates, (B) having obligations guaranteed by any of its Affiliates, (C)
holding itself out as responsible for debts of any of its Affiliates or for
decisions or actions with respect to the affairs of any of its Affiliates and
(D) being directly or indirectly named as a direct or contingent beneficiary or
loss payee on any insurance policy of any Affiliate other than as required by
the Related Documents with respect to insurance on the Vehicles; (v) other than
as provided in the Related Documents, maintaining its deposit and other bank
accounts and all of its assets separate from those of any other Person; (vi)
maintaining its financial records and books of account separate and apart from
those of any other Person; (vii) compensating all its employees, officers,
consultants and agents for services provided to it by such Persons, or
reimbursing any of its Affiliates in respect of services provided to it by
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employees, officers, consultants and agents of such Affiliate, out of its own
funds; (viii) maintaining office space separate and apart from that of any of
its Affiliates (even if such office space is subleased from or is on or near
premises occupied by any of its Affiliates) and a telephone number separate and
apart from that of any of its Affiliates; (ix) accounting for and managing all
of its liabilities separately from those of any of its Affiliates; (x)
allocating, on an arm's-length basis, all shared corporate or partnership
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; (xi) refraining from filing or
otherwise initiating or supporting the filing of a motion in any bankruptcy or
other insolvency proceeding involving NFLP, the General Partner, National or any
Affiliate of National, to substantively consolidate NFLP or the General Partner
with National or any Affiliate of National; (xii) remaining solvent and (xiii)
conducting all of its business (whether written or oral) solely in its own name.
Each of NFLP and the General Partner acknowledges its receipt of a copy of that
certain opinion letter issued by Mayer, Brown & Platt dated the date of issuance
of the initial Series of Notes addressing the issue of substantive consolidation
as it may relate to National, the General Partner and NFLP. NFLP and the General
Partner hereby agree to maintain in place all policies and procedures, and take
and continue to take all action, described in the factual assumptions set forth
in such opinion letter and relating to NFLP or the General Partner. On an annual
basis, NFLP will provide to the Rating Agencies, the Trustee and the Master
Collateral Agent, an Officer's Certificate certifying that it is in compliance
with its obligations under this Section 8.26.
Section 8.27. Rule 144A Information Requirement.
For so long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, NFLP covenants and agrees that it shall, during any period in
which it is not subject to Section 13 or 15(d) under the Exchange Act, make
available to any Noteholder in connection with any sale thereof and any
prospective purchaser of Notes from such Noteholder in each case upon request,
the information specified in, and meeting the requirements of, Rule 144A(d)(4)
under the Securities Act.
Section 8.28. Use of Proceeds of Notes.
NFLP shall use the proceeds of Notes solely for one or
more of the following purposes: (a) to pay amortizing Notes when
due, in accordance with this Indenture; and (b) to acquire, finance or refinance
the acquisition of Eligible Vehicles in accordance with the Lease.
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Section 8.29. Vehicles.
NFLP shall use commercially reasonable efforts to maintain,
and to cause the Lessee to maintain good, legal and marketable title to the
Vehicles leased under the Lease, free and clear of all Liens except for
Permitted Liens.
Section 8.30. Amendments to Exchange Documents. NFLP
shall not agree to any amendment of or waiver under (a) any Exchange Agreement,
except such amendments or waivers as will not, in the aggregate, result in a
material adverse effect on the interest of the Noteholders of any Series, or (b)
any Master Deposit Agreement or Exchange Financing Agreement, except such
amendments or waivers as are made only to cure any ambiguity, defect or
inconsistency in, or to correct or supplement any provision of, this Indenture,
unless, prior to the effectiveness of any such amendment or waiver, each Rating
Agency has confirmed in writing that such amendment or waiver will not result in
the reduction or withdrawal of the then current rating of any outstanding Series
of Notes.
Section 8.31. Demand Note. NFLP shall not reduce the amount of
the Demand Note or forgive amounts payable thereunder unless NFLP has first
delivered to the Trustee an Opinion of Counsel (from counsel that is nationally
recognized as to tax matters) that such reduction or forgiveness will not have
an adverse effect on the tax characterization of any Series of Notes.
ARTICLE 9.
AMORTIZATION EVENTS AND REMEDIES
Section 9.1. Amortization Events.
If any one of the following events shall occur during the
Revolving Period, the Accumulation Period or the Controlled Amortization Period
with respect to any Series of Notes:
(a) NFLP defaults in the payment of any interest on any Note
of such Series when the same becomes due and payable and such default
continues for a period of five (5) days;
(b) NFLP defaults in the payment of any principal or premium
on any Note of such Series when the same becomes due and payable and
such default continues for a period of five (5) Business Days;
(c) NFLP fails to comply with any of its other agreements or
covenants in, or provisions of, the Notes of a Series or this Indenture
and the failure to so comply materially and adversely affects the
interests of the Noteholders of any Series and continues to materially
and adversely affect the interests of the
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Noteholders of such Series for a period of 60 days after the earlier of
(i) the date on which a Responsible Officer of NFLP obtains knowledge
thereof or (ii) the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to NFLP by the
Trustee or to NFLP or by the Required Noteholders of such Series;
(d) there occurs an Event of Bankruptcy, with
respect to NFLP, the General Partner or National;
(e) (i) any Lease Event of Default described in Section
17.1.1(i) or 17.1.5 of the Lease shall occur, whether or not
subsequently waived by NFLP or (ii) any other Lease Event of Default
shall occur, whether or not subsequently waived by NFLP;
(f) subject to the provisions of Section 9.2(g),
any Asset Amount Deficiency exists and continues for a
period of ten (10) days;
(g) NFLP shall have become an "investment company" or shall
have become under the "control" of an "investment company" under the
Investment Company Act of 1940, as amended;
(h) the Lease is terminated for any reason;
(i) any representation made by NFLP or National in this Base
Indenture or any Related Document is false and such false
representation materially and adversely affects the interests of the
Noteholders of any Series of Notes and such false representation is not
cured for a period of 60 days after the earlier of (i) the date on
which a Responsible Officer of NFLP or National (as applicable) obtains
knowledge thereof or (ii) the date that written notice thereof is given
to NFLP or National (as applicable) by the Trustee or to NFLP or
National (as applicable) and the Trustee by the Required Noteholders of
such Series; or
(j) any other event shall occur which may be
specified in any Supplement as an "Amortization Event";
then (i) in the case of any event described in clause (a), (b),
(c) or (i) above, either the Trustee, by written notice to NFLP, or the Required
Noteholders of the applicable Series of Notes, by written notice to NFLP and the
Trustee, may declare that an amortization event ("Amortization Event") has
occurred with respect to such Series as of the date of the notice, or (ii) in
the case of any event described in clause (j) above, an Amortization Event may
be declared in a manner specified in the related Supplement, or (iii) in the
case of any event described in clause (e)(ii) above, either the Trustee, by
written notice to NFLP, or the
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Required Noteholders of any Series of Notes, by written notice to NFLP and the
Trustee, may declare that an Amortization Event has occurred with respect to
such Series as of the date of the notice, or (iv) in the case of any event
described in clause (d), (e)(i), (f), (g) or (h) above, an Amortization Event
with respect to all Series of Notes then outstanding shall immediately occur
without any notice or other action on the part of the Trustee or any
Noteholders; provided, however, that the Trustee shall have no liability in
connection with any action or inaction taken, or not taken by it upon the
occurrence of an Amortization Event unless the Trustee has actual knowledge of
such Amortization Event; provided, further, however, the provisions of this
sentence shall not insulate the Trustee from liability arising out of its
negligence or willful misconduct.
Section 9.2. Rights of the Trustee upon Amortization
Event or Certain Other Events of Default.
(a) General. If and whenever an Amortization Event, or certain
events of default under any Enhancement Agreement (as specified in the
applicable Supplement) shall have occurred and be continuing, the
Trustee may and, at the direction of the Requisite Investors shall,
exercise (or direct the Master Collateral Agent to exercise) from time
to time any rights and remedies available to it under applicable law or
any Related Document; provided, however, that if such Amortization
Event is based solely on an event described in clauses (a), (b), (c),
(e)(ii), (i) or (j) of Section 9.1, then the Trustee's rights and
remedies pursuant to the provisions of this Section 9.2 shall, to the
extent not detrimental to the rights of the holders of the applicable
Series of Notes, be limited to rights and remedies pertaining only to
those Series of Notes with respect to which such Amortization Event has
occurred. Any amounts obtained by the Trustee (or by the Master
Collateral Agent at the direction of the Trustee) on account of or as a
result of the exercise by the Trustee of any right shall be held by the
Trustee as additional collateral for the repayment of NFLP Obligations
and shall be applied as provided in Article 5 hereof.
(b) Lease. If a Liquidation Event of Default or a Limited
Liquidation Event of Default shall have occurred and be continuing, the
Trustee, at the direction of the Requisite Investors (in the case of a
Liquidation Event of Default) or the Required Noteholders (in the case
of a Limited Liquidation Event of Default), shall direct NFLP and the
Master Collateral Agent to exercise (and NFLP agrees to exercise) all
rights, remedies, powers, privileges and claims of NFLP against
National and National's Franchisees under or in connection with the
Lease, the Subleases, the Master Collateral Agency Agreement and any of
the Related Documents and against any party to any Related Document,
including the right or power to take any action to compel performance
or observance by National, National's Franchisees, or any such party of
its obligations to NFLP, the right to take possession of any of the
Vehicles, and to give any consent, request, notice, direction,
approval, extension or waiver in respect of the
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Lease, and any right of NFLP to take such action independent of such
direction shall be suspended.
(c) Manufacturer Programs. If a Liquidation Event of Default
or a Limited Liquidation Event of Default shall have occurred and be
continuing, the Trustee may, and at the direction of the Requisite
Investors (in the case of a Liquidation Event of Default) or at the
direction of the Required Noteholders (in the case of a Limited
Liquidation Event of Default) shall, direct the Master Collateral
Agent, to exercise or cause NFLP or the Lessee, as applicable, to
exercise all rights, remedies, powers, privileges and claims of NFLP,
the Lessee or the Master Collateral Agent against the Manufacturers
under or in connection with the Manufacturer Programs. Upon the
occurrence of a Liquidation Event of Default, the Trustee shall
promptly instruct the Master Collateral Agent to return or to cause
NFLP or the Lessee, as applicable, to return the Program Vehicles to
the related Manufacturers (after the minimum holding period specified
in the Manufacturer's Manufacturer Program) and then, to the extent any
Manufacturer fails to accept any such Vehicles under the terms of the
applicable Manufacturer Program, to direct the Master Collateral Agent
to liquidate or to cause NFLP or the Lessee, as applicable, to
liquidate the Vehicles in accordance with the rights of NFLP under the
Lease and to otherwise sell or cause to be sold to third parties all
Non-Program Vehicles in accordance with the rights of NFLP under the
Lease. Upon the occurrence of a Limited Liquidation Event of Default,
the Trustee shall promptly instruct the Master Collateral Agent to
return or to cause NFLP or the Lessee, as applicable, to return Program
Vehicles to the related Manufacturers and to use
commercially reasonable efforts to sell Non-Program Vehicles or cause
Non-Program Vehicles to be sold to third parties to generate proceeds
in an amount sufficient to pay all interest and principal on the
related Series of Notes, and to the extent that any Manufacturer fails
to accept any such Program Vehicles under the terms of the applicable
Manufacturer Program, to direct the Master Collateral Agent to return
or to cause NFLP or the Lessee, as applicable to liquidate the Vehicles
in accordance with the rights of NFLP under the Lease.
(d) NFLP Fleet Finance Agreement. Notwithstanding anything to
the contrary contained herein, if a Liquidation Event of Default or a
Limited Liquidation Event of Default shall have occurred and be
continuing, the Trustee shall take such action to cause Vehicles
manufactured by GM to be turned back to GM in such manner as NFLP has
instructed the Trustee in writing (and NFLP hereby agrees to provide
such instructions) to preserve any and all of NFLP's right to receive
payments from GM under the NFLP Fleet Finance Agreement in respect of
deficiencies in the sale prices of such Vehicles as described
thereunder; provided that the Trustee shall not return such Vehicles to
GM if it is instructed not to do so by Holders of Notes evidencing 66-
2/3% or more of the Aggregate Invested Amount; provided further, that
the Noteholders shall not be entitled to direct the Trustee to cause
Vehicles manufactured by GM to be
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turned back or sold in any manner that would not preserve NFLP's rights
under the NFLP Fleet Finance Agreement described above.
(e) Failure of NFLP, the Lessee or the Master Collateral Agent
to Take Action. If NFLP, National or the Master Collateral Agent shall
have failed, within 15 Business Days of receiving the direction of the
Trustee, to take commercially reasonable action to accomplish
directions of the Trustee given pursuant to clauses (b) or (c) above,
the Trustee may (and at the direction of the Required Noteholders of
the affected Series of Notes (with respect to any Limited Liquidation
Event of Default) or the Requisite Investors (with respect to any
Amortization Event or any Liquidation Event of Default) shall, take
such previously directed action (and any related action as permitted
under this Indenture thereafter determined by the Trustee to be
appropriate without the need under this provision or any other
provision under this Indenture to direct NFLP, National or the Master
Collateral Agent to take such action) on behalf of NFLP and the
Noteholders.
(f) Right to Appointment of Receiver. In the event
that the Trustee determines to take action pursuant to the
provisions of clause (e) above, the Trustee may, without notice to
NFLP, the Servicer or the Lessee, direct the Master Collateral Agent to
take legal proceedings for the appointment of a receiver to take
possession of Acquired Vehicles pending the sale thereof and in any
such event the Trustee shall be entitled to the appointment of a
receiver, and neither NFLP, the Servicer or the Lessee shall object to
such appointment.
(g) Right of NFLP to Cure Asset Amount Deficiency.
Notwithstanding anything to the contrary contained in this Article 9,
if (i) a Rapid Amortization Period commences with respect to any Series
of Notes as a result of an Amortization Event described in Section
9.1(f), (ii) during such Rapid Amortization Period (but prior to the
Series Termination Date with respect to such Series of Notes) the Asset
Amount Deficiency is cured, (iii) no other Amortization Event then
exists and is continuing, and (iv) NFLP delivers to the Trustee an
Officer's Certificate stating that such Asset Amount Deficiency has
been cured and requesting that such Rapid Amortization Period
terminate, then such Rapid Amortization Period shall automatically
terminate as of the date the foregoing conditions are satisfied and the
applicable Revolving Period, Accumulation Period or Controlled
Amortization Period that would have been in effect if such Rapid
Amortization Period had not commenced shall commence or recommence;
provided, however, (x) no Revolving Period, Accumulation Period or
Controlled Amortization Period shall be extended as a result of such
Rapid Amortization Period interrupting the applicable Revolving Period,
Accumulation Period or Controlled Amortization Period, (y) no
Controlled Amortization Amount shall change as a result of such Rapid
Amortization Period changing the timing or amounts of payments made
during any applicable Controlled Amortization Period and NFLP
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shall be obligated to pay the full amount of all Controlled
Distribution Amounts (provided that, with respect to each Series of
Notes, the payments of principal received by the Noteholders of such
Series during the terminated Rapid Amortization Period will be credited
against the controlled amortization payments scheduled to be made
during the Controlled Amortization Period for such Series (whether such
controlled amortization payments were originally scheduled to be made
during the period of time in which the terminated Rapid Amortization
Period was occurring or are scheduled to be made thereafter) such that
the Controlled Amortization Period for such Series will not terminate
sooner than originally contemplated), and (z) if at the time of the
termination of such Rapid Amortization Period pursuant to the
provisions of this Section 9.2 such Series of Notes would otherwise be
in a Rapid Amortization Period, then such Rapid Amortization Period
will not terminate but shall continue uninterrupted.
(h) If on the Series Termination Date any Notes of a Series
are Outstanding and all Collateral and Master Collateral allocable to
such Series has been liquidated and the amount of all proceeds
reasonably expected to be received by the Trustee on account of such
liquidation has been determined, the Trustee shall direct NFLP to, and
NFLP shall, draw on the Demand Note in an amount equal to the Invested
Amount of the Notes of the applicable Series which will remain
Outstanding after receipt of all such liquidation proceeds.
Section 9.3. Special Provisions Concerning Remedies Upon
Liquidation Event of Default in Conjunction with a Manufacturer Event of Default
or Inability to Turn Back under Manufacturer Program.
(a) Upon the occurrence of a Liquidation Event of Default in
conjunction with a Manufacturer Event of Default, the Trustee shall
have the right to (and shall, upon the direction of the Requisite
Investors) direct the Master Collateral Agent to, or cause NFLP, the
Lessee or the Servicer to, take such reasonable actions at reasonable
expense necessary to sell any or all of the Program Vehicles
manufactured by such Manufacturer at a public or private sale. If the
Master Collateral Agent, NFLP, the Lessee or the Servicer shall have
failed, within 15 Business Days of receiving the direction of the
Trustee, to take commercially reasonable action to accomplish such
directions of the Trustee, the Trustee may take such previously
directed action (and any related action as permitted under this
Indenture thereafter determined by the Trustee to be appropriate
without the need under this provision or any other provision under this
Indenture to direct NFLP to take such action) on behalf of NFLP and the
Noteholders. The Trustee may institute legal proceedings for the
appointment of a receiver or receivers (to which the Trustee shall be
entitled as a matter of right) to take possession of the Vehicles
pending the sale thereof pursuant either to the powers of sale granted
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by this Indenture or to a judgment, order or decree made in any
judicial proceeding for the foreclosure or involving the enforcement of
this Indenture.
(b) Upon any sale of any of the Collateral directly by the
Trustee, or by the Master Collateral Agent at the direction of the
Trustee, whether made under the power of sale given under Section
9.2(c), this Section 9.3 or under judgment, order or decree in any
judicial proceeding for the foreclosure or involving the enforcement of
this Indenture:
(i) the Trustee, any Noteholder and/or any
Enhancement Provider may bid for and purchase the property
being sold, and upon compliance with the terms of sale may
hold, retain and possess and dispose of such property in its
own absolute right without further accountability;
(ii) the Trustee, or the Master Collateral Agent at
the direction of the Trustee, may make and deliver to the
purchaser or purchasers a good and sufficient deed, bill of
sale and instrument of assignment and transfer of the property
sold;
(iii) the Trustee is hereby irrevocably appointed the
true and lawful attorney-in-fact of NFLP, in its name and
stead, to make all necessary deeds, bills of sale and
instruments of assignment and transfer of the property of NFLP
thus sold and for such other purposes as are necessary or
desirable to effectuate the provisions (including, without
limitation, this Section 9.3) of this Indenture, and for that
purpose it may execute and deliver all necessary deeds, bills
of sale and instruments of assignment and transfer, and may
substitute one or more Persons with like power, NFLP hereby
ratifying and confirming all that its said attorney, or such
substitute or substitutes, shall lawfully do by virtue hereof,
but if so requested by the Trustee or by any purchaser, NFLP
shall ratify and confirm any such sale or transfer by
executing and delivering to the Trustee or to such purchaser
all such property, deeds, bills of sale, instruments of
assignment and transfer and releases as may be designated in
any such request;
(iv) all right, title, interest, claim and demand
whatsoever, either at law or in equity or otherwise, of NFLP
of, in and to the property so sold shall be divested; and such
sale shall be a perpetual bar both at law and in equity
against NFLP, its successors and assigns, and against any and
all Persons claiming or who may claim the property sold or any
part thereof from, through or under NFLP, its successors or
assigns;
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(v) the receipt of the Trustee or of the officer
thereof making such sale shall be a sufficient discharge to
the purchaser or purchasers at such sale for his or their
purchase money, and such purchaser or purchasers, and his or
their assigns or personal representatives, shall not, after
paying such purchase money and receiving such receipt of the
Trustee or of such officer therefor, be obliged to see to the
application of such purchase money or be in any way answerable
for any loss, misapplication or non-application thereof; and
(vi) to the extent that it may lawfully do so, NFLP
agrees 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 appraisal, valuation, stay, extension or
redemption laws, or any law permitting it to direct the order
in which the Vehicles shall be sold, now or at any time
hereafter in force, which may delay, prevent or otherwise
affect the performance or enforcement of this Indenture or any
of the Related Documents.
(c) In addition to any rights and remedies now or hereafter
granted hereunder or under applicable law with respect to the
Collateral, the Trustee shall (subject to the foregoing provisions in
respect of the Vehicles) have all of the rights and remedies of a
secured party under the UCC as enacted in any applicable jurisdiction.
Section 9.4. Other Remedies.
Subject to the terms and conditions of this Indenture, if an
Amortization Event occurs and is continuing, the Trustee may pursue any remedy
available under applicable law or in equity to collect the payment of principal
or interest on the Notes (or the applicable Series of Notes, in the case of an
Amortization Event that affects only one Series of Notes) or to enforce the
performance of any provision of the Notes, this Indenture or any Supplement. If
an Amortization Event has occurred in accordance with Section 9.1, the Trustee
shall instruct NFLP to cease issuing Notes and the right of NFLP to issue Notes
shall automatically terminate. In addition, the Trustee may, or shall at the
direction of the Requisite Investors (or the Required Noteholders, in the case
of an Amortization Event that affects only one Series of Notes), direct NFLP or
the Master Collateral Agent to exercise any rights or remedies available under
any Related Document or under applicable law or authorized by a court of equity.
The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in the proceeding,
and any such proceeding instituted by the Trustee shall be in its own name as
trustee. All remedies are cumulative to the extent permitted by law.
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Section 9.5. Waiver of Past Events.
Subject to Section 12.2 hereof, the Noteholders of any Series
owning an aggregate principal amount of Notes in excess of 66-2/3% of the
aggregate principal amount of the Outstanding Notes of such Series, by notice to
the Trustee, may waive any existing Potential Amortization Event or Amortization
Event related to clauses (a), (b), (c), (e)(ii), (i) and (j) of Section 9.1
which relate to such Series and its consequences except a continuing Potential
Amortization Event or Amortization Event in the payment of the principal of or
interest on any Note. Upon any such waiver, such Potential Amortization Event
shall cease to exist with respect to such Series, and any Amortization Event
with respect to such Series arising therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Potential Amortization Event or impair any right consequent
thereon. A Potential Amortization Event or an Amortization Event related to
clauses (d), (e)(i), (f), (g), or (h) of Section 9.1 shall not be subject to
waiver.
Section 9.6. Control by Requisite Investors.
The Requisite Investors (or, to the extent such remedy relates
only to a particular Series of Notes, the Required Noteholders of such Series)
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee. However, subject to Section 10.1, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture, that the Trustee
determines may be unduly prejudicial to the rights of other Noteholders, or that
may involve the Trustee in personal liability.
Section 9.7. Limitation on Suits.
Any other provision of this Indenture to the contrary
notwithstanding, a Noteholder may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) The Noteholder gives to the Trustee written notice of a
continuing Amortization Event;
(b) The Noteholders of at least 25% in principal amount of all
then Outstanding Notes of such Series make a written request to the
Trustee to pursue the remedy;
(c) Such Noteholder or Noteholders offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) The Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
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(e) During such 60-day period the Required Noteholders do not
give the Trustee a direction inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
Section 9.8. Unconditional Rights of Holders to Receive
Payment.
Notwithstanding any other provision of this Indenture, the
right of any Noteholder of a Note to receive payment of principal and interest
on the Note, on or after the respective due dates expressed in the Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Noteholder.
Section 9.9. Collection Suit by the Trustee.
If any Amortization Event specified in clauses (a) or (b) of
Section 9.1 occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against NFLP for the
whole amount of principal and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and 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 Trustee, its agents and counsel.
Section 9.10. The Trustee May File Proofs of Claim.
The Trustee is authorized 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 Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Noteholders allowed in any judicial proceedings relative to NFLP (or any
other obligor upon the Notes), its creditors or its property, and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Noteholders, to pay the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 10.5 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 10.5 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, Notes and other
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properties which the Noteholders of the Notes may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Noteholder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceeding.
Section 9.11. Priorities.
If the Trustee collects any money pursuant to this Article,
the Trustee shall pay out the money in accordance with the provisions of Article
5 of this Indenture.
Section 9.12. 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 a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of any 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 a
Noteholder pursuant to Section 9.7, or a suit by Noteholders of more than 10% in
principal amount of all then outstanding Notes.
Section 9.13. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the
Trustee or to the holders of Notes is intended to be exclusive of any other
right or remedy, and every right or remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given under
this Indenture or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy under this Indenture, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 9.14. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any holder of any
Note to exercise any right or remedy accruing upon any Amortization Event shall
impair any such right or remedy or constitute a waiver of any such Amortization
Event or an acquiescence therein. Every right and remedy given by this Article 9
or by law to the Trustee or to the holders of Notes may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
holders of Notes, as the case may be.
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Section 9.15. Reassignment of Surplus.
After termination of this Indenture and the payment in full of
NFLP Obligations, any proceeds of all the Collateral received or held by the
Trustee shall be turned over to NFLP and the Collateral shall be reassigned to
NFLP by the Trustee without recourse to the Trustee and without any
representations, warranties or agreements of any kind.
ARTICLE 10.
THE TRUSTEE
Section 10.1. Duties of the Trustee.
(a) If an Amortization Event has occurred and is continuing,
the 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; provided, however,
that the Trustee shall have no liability in connection with any action
or inaction taken, or not taken, by it upon the deemed occurrence of an
Amortization Event of which a Trust Officer has not received notice;
provided, further, however, that the preceding sentence shall not have
the effect of insulating the Trustee from liability arising out of the
Trustee's negligence or willful misconduct.
(b) Except during the occurrence and continuance of an
Amortization Event:
(i) The Trustee undertakes to perform only those
duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(ii) 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, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(i) This clause does not limit the effect of
clause (b) of this Section 10.1.
(ii) 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.
(iii) 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
9.4.
(iv) The Trustee shall not be charged with knowledge
of any default by the Servicer or the Lessee in the
performance of its obligations under any Related Document,
unless a Trust Officer of the Trustee (a) receives written
notice of such failure from National or any Holders of Notes
evidencing not less than 10% of the aggregate principal amount
of the Notes of any Series adversely affected thereby or (b)
otherwise has actual knowledge thereof.
(d) Notwithstanding anything to the contrary contained in this
Indenture or any of the Related Documents, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
incur any liability if there is reasonable ground (as determined by the
Trustee in its sole discretion) for believing that the repayment of
such funds is not reasonably assured to it by the security afforded to
it by the terms of this Indenture. The Trustee may refuse to perform
any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(e) 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 Trustee shall be obligated as soon as practicable
upon actual knowledge of a Trust Officer thereof and receipt of
appropriate records and information, if any, to perform such
obligation, duty or agreement in the manner so required.
(f) Subject to Section 10.3, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in
trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by law or the
Related Documents. The Trustee may allow and credit to NFLP interest
agreed upon by NFLP and the Trustee from time to time as may be
permitted by law.
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Section 10.2. Rights of the Trustee.
Except as otherwise provided by Section 10.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting based upon any document believed by it to be
genuine and to have been signed or presented by the proper person.
(b) The 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 Trustee may act through agents, custodians and
nominees 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 conferred upon it by the Indenture.
(e) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture or any
Supplement, or to institute, conduct or defend any litigation hereunder
or in relation hereto, at the request, order or direction of any of the
Noteholders, pursuant to the provisions of this Indenture or any
Supplement, unless such Noteholders shall have offered to the Trustee
reasonable security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of a default by the Servicer or
NFLP (which has not been cured), to exercise such of the rights and
powers vested in it by this Indenture or any Supplement, and to 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.
(f) The Trustee shall not be bound to make any investigation
into the facts of 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 so to do by the Required Noteholders of any Series which could
be adversely affected if the Trustee does not perform such acts;
provided, however, that within two Business Days of its receipt of any
Monthly Certificate, the Trustee shall verify the mathematical
computations contained therein on the form attached hereto as Exhibit
E, based solely on the
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information and amounts received, and calculations required to be made,
by the Trustee pursuant to the Indenture, and shall notify the Servicer
and each of the Rating Agencies of the accuracy of such computations or
of any discrepancies therein, provided that the rounding of numbers
will not constitute a discrepancy, whereupon the Servicer shall deliver
to the Rating Agencies within 5 Business Days thereafter a certificate
describing the nature and cause of any such discrepancies and the
action that the Servicer proposes to take with respect thereto.
Concurrently with its notice to each of the Rating Agencies referred to
above, the Trustee shall provide the Rating Agencies with a
certificate, signed by an authorized officer of the Trustee, disclosing
whether or not the Trustee has actual knowledge of any Amortization
Event (and, if it does have actual knowledge of any Amortization Event,
specifying the nature of that event).
(g) The 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
Trustee's own willful misconduct, negligence or bad faith.
(h) The Trustee shall have the right, but not the obligation
to file or record any document or instrument necessary or advisable to
evidence the security interest in the Collateral granted pursuant to
this Indenture.
Section 10.3. Individual Rights of the Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with NFLP or an Affiliate
of NFLP with the same rights it would have if it were not Trustee. Any Paying
Agent may do the same with like rights. However, the Trustee is subject to
Section 10.8.
Section 10.4. Notice of Amortization Events and
Potential Amortization Events.
If an Amortization Event or a Potential Amortization Event
occurs and is continuing and if a Trust Officer of the Trustee receives written
notice thereof, the Trustee shall promptly provide the Noteholders with notice
of such Amortization Event or the Potential Amortization Event, if such Notes
are represented by a Global Note, by telephone and facsimile, and, if such Notes
are represented by Definitive Notes, by first class mail.
Section 10.5. Compensation.
(a) NFLP shall cause the Servicer to promptly pay to the
Trustee from time to time compensation for its acceptance of this
Indenture and services hereunder as set forth in the letter agreement
dated as of April 30, 1996 between the Servicer and the Trustee, as may
be amended from time to time. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust.
NFLP shall
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reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition
to the compensation for its services. Such expenses shall include (i)
the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel and (ii) the reasonable expenses of the
Trustee's agents in administering the Collateral.
(b) The indemnification provisions in favor of the Trustee and
its officers, directors, agents and employees provided for in the Lease
are hereby incorporated by reference with the same force and effect as
if set forth herein in full. NFLP shall not be required to reimburse
any expense or indemnify the Trustee against any loss, liability, or
expense incurred by the Trustee through the Trustee's own willful
misconduct, negligence or bad faith.
(c) When the Trustee incurs expenses or renders services after
an Amortization Event occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under
the Bankruptcy Code.
(d) The provisions of this Section 10.5 shall survive the
termination of this Indenture and the resignation and removal of the
Trustee.
Section 10.6. Replacement of the Trustee.
(a) A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section.
(b) The Trustee may, after giving sixty (60) days prior
written notice to NFLP and to each Noteholder, resign at any time and
be discharged from the trust hereby created by so notifying NFLP and
the Servicer; provided, however, that no such resignation of the
Trustee shall be effective until a successor trustee has assumed the
obligations of the Trustee hereunder. The Requisite Investors may
remove the Trustee by so notifying the Trustee, the Servicer and NFLP.
NFLP or the Servicer may remove the Trustee if:
(i) the Trustee fails to comply with
Section 10.8;
(ii) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to
the Trustee as a debtor under the Bankruptcy Code;
(iii) a custodian or public officer takes
charge of the Trustee or its property; or
(iv) the Trustee becomes incapable of
acting.
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If the Trustee resigns or is removed or if a vacancy exists in
the office of the Trustee for any reason, NFLP shall promptly appoint a
successor Trustee.
(c) If a successor Trustee does not take office within
30 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Servicer, NFLP or any Secured Party may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(d) If the Trustee, after written request by any Noteholder
who has been a Noteholder for at least six months, fails to comply with
Section 10.8, such Noteholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee, the Servicer and NFLP.
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 and any
Supplement. The successor Trustee shall mail a notice of its succession
to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee; provided,
however, that all sums owing to the Trustee hereunder have been paid.
Notwithstanding replacement of the Trustee pursuant to this Section
10.6, NFLP's obligations under Section 10.5 hereof shall continue for
the benefit of the retiring Trustee.
Section 10.7. Successor Trustee by Merger, etc.
Subject to Section 10.8, if the Trustee consolidates, merges
or converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee.
Section 10.8. Eligibility Disqualification.
(a) There shall at all times be a Trustee hereunder which
shall be (i) a corporation organized and doing business under the laws
of the United States of America or of any state thereof authorized
under such laws to exercise corporate trustee power, (ii) subject to
supervision or examination by Federal or state authority and shall have
a combined capital and surplus of at least $50,000,000 as set forth in
its most recent published annual report of condition, and (iii) if such
Trustee is other than The Bank of New York as the original Trustee
hereunder, acceptable to the Requisite Investors.
(b) At any time the Trustee shall cease to satisfy the
eligibility requirements of clauses (a)(i) or (a)(ii) above, the
Trustee shall resign immediately in the manner and with the effect
specified in Section 10.6.
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Section 10.9. Appointment of Co-Trustee or Separate
Trustee.
(a) Notwithstanding any other provisions of this Indenture or
any 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 Trustee shall have the power and may
execute and deliver all instruments to appoint one or more persons to
act as a co-trustee or co-trustees, or separate trustee or separate
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, and,
subject to the other provisions of this Section 10.9, such powers,
duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor
trustee under Section 10.8 of and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required
under Section 10.6 of this Base Indenture. No co-trustee shall be
appointed without the consent of the Servicer unless such appointment
is required as a matter of state law or to enable the Trustee to
perform its functions hereunder.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) The Notes of each Series shall be authenticated
and delivered solely by the Trustee or an authenticating agent
appointed by the Trustee;
(ii) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or
imposed upon and exercised or performed by the Trustee and
such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not
authorized to act separately without the 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 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 trustee or
co-trustee, but solely at the direction of the Trustee;
(iii) No trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder; and
(iv) The Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the 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 Indenture and the conditions of this Article 10. 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 the Trustee or
separately, as may be provided therein, subject to all the provisions
of this Indenture and any Supplement, specifically including every
provision of this Indenture or any Supplement relating to the conduct
of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
constitute the 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 Supplement 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 shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
(e) In connection with the appointment of a co-trustee, the
Trustee may, at any time, at the Trustee's sole cost and expense,
without notice to the Noteholders, delegate its duties under this Base
Indenture and any 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 Trustee of its obligations and
responsibilities hereunder with respect to any such delegated duties.
Section 10.10. Representations and Warranties of Trustee.
The Trustee represents and warrants that:
(i) The Trustee is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of New York;
(ii) The Trustee has full power, authority and right
to execute, deliver and perform this Indenture and any
Supplement issued concurrently with this Indenture and to
authenticate the Notes, and has taken all necessary action to
authorize the execution, delivery and performance by it of
this Indenture and any Supplement issued concurrently with
this Indenture and to authenticate the Notes;
(iii) This Indenture has been duly executed
and delivered by the Trustee; and
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(iv) The Trustee meets the requirements of
eligibility as a trustee hereunder set forth in Section 10.8
hereof.
ARTICLE 11.
DISCHARGE OF INDENTURE
Section 11.1. Termination of NFLP's Obligations.
(a) This Indenture shall cease to be of further effect (except
that NFLP's obligations under Section 10.5 and NFLP's, the Trustee's
and Paying Agent's obligations under Section 11.3 shall survive) when
all Outstanding Notes theretofore authenticated and issued have been
delivered (other than destroyed, lost or stolen Notes which have been
replaced or paid) to the Trustee for cancellation and NFLP has paid all
sums payable hereunder.
(b) In addition, except as may be provided to the contrary in
any Supplement, NFLP may terminate all of its obligations under this
Indenture if:
(i) NFLP irrevocably deposits in trust with the
Trustee or at the option of the Trustee, with a trustee
reasonably satisfactory to the Trustee and NFLP under the
terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, money or U.S. Government
Obligations sufficient to pay when due principal and interest
on the 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 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 Trustee
and (2) the 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 Notes;
(ii) NFLP delivers to the 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 and a certificate
from a firm of certified public accountants to the same
effect; and
(iii) NFLP delivers to the Trustee an Officer's
Certificate stating that no Potential Amortization Event or
Amortization Event, in either case, described in Section
9.1(d) shall have occurred and be continuing on the date of
such deposit.
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Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of NFLP, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture.
(c) After such irrevocable deposit made pursuant to Section
11.1(b) and satisfaction of the other conditions set forth herein, the
Trustee upon request shall acknowledge in writing the discharge of
NFLP'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 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.
"U.S. Government Obligations" means direct obligations of the
United States of America, or any agency or instrumentality thereof for the
payment of which the full faith and credit of the United States of America is
pledged.
Section 11.2. Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and NFLP
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 11.1. The 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 Notes.
The provisions of this Section shall survive the expiration or
earlier termination of this Indenture.
Section 11.3. Repayment to NFLP.
The Trustee and the Paying Agent shall promptly pay or return
to NFLP upon written request any excess money or, pursuant to Sections 2.11 and
2.14, any Notes held by them at any time.
Subject to Section 2.7(c), the Trustee and the Paying Agent
shall pay to NFLP upon written request any money held by them for the payment of
principal or interest that remains unclaimed for two years after the date upon
which such payment shall have become due.
The provisions of this Section shall survive the expiration or
earlier termination of this Indenture.
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ARTICLE 12.
AMENDMENTS
Section 12.1. Without Consent of the Noteholders.
Without the consent of any Noteholder but with the consent of
the Rating Agencies, NFLP, the Trustee, and any applicable Enhancement Provider,
at any time and from time to time, may enter into one or more Supplements
hereto, in form satisfactory to the Trustee, for any of the following purposes;
(a) to create a new Series of Notes (including, without
limitation, making such modifications to the Indenture and the other
Related Documents as may be required to issue a Segregated Series of
Notes; provided, however, that the creation of any Segregated Series of
Notes shall not result in a material adverse effect on the Noteholders
or Note Owners of any Series unless the Required Noteholders of such
Series shall have given their prior written consent to the creation
thereof);
(b) to add to the covenants of NFLP for the benefit of the
Noteholders of all or any Series of Notes (and if such covenants are to
be for the benefit of less than all Series of 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 NFLP
(provided, however, that NFLP will not pursuant to this subsection
12.1(b) surrender any right or power it has against the Servicer, the
Lessee or any Manufacturer);
(c) to mortgage, pledge, convey, assign and transfer to the
Trustee any property or assets as security for the Notes and to specify
the terms and conditions upon which such property or assets are to be
held and dealt with by the 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 NFLP and the 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 Trustee;
(d) to cure any mistake, ambiguity, defect, or inconsistency
or to correct or supplement any provision contained herein or in any
Supplement or in any Notes issued hereunder;
(e) to provide for uncertificated Notes in addition to
certificated Notes;
(f) to add to or change any of the provisions of the Indenture
to such extent as shall be necessary to permit or facilitate the
issuance of Notes in
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bearer form, registrable or not registrable as to principal, and with
or without interest coupons;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the 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 Trustee; or
(h) to correct or 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;
provided, however, that, as evidenced by an Opinion of Counsel, such action
shall not adversely affect in any material respect the interests of any
Noteholders. Upon the request of NFLP, accompanied by a resolution of the Board
of Directors authorizing the execution of any Supplement to effect such
amendment, and upon receipt by the Trustee and National of the documents
described in Section 2.2 hereof, the Trustee shall join with NFLP in the
execution of any 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 Trustee shall not be obligated to enter
into such Supplement which affects its own rights, duties or immunities under
this Indenture or otherwise.
Section 12.2. With Consent of the Noteholders.
Except as provided in Section 12.1, the provisions of this
Indenture and any Supplement (unless otherwise provided in such Supplement) and
each other Related Document to which NFLP 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 NFLP, National, the Trustee, any
applicable Enhancement Provider, the Rating Agencies, and the Requisite
Investors (or the Required Noteholders of a Series of Notes, in respect of any
amendment, modification or waiver of or to this Indenture, the Supplement with
respect to such Series of Notes or any Related Document which affects only the
Noteholders of such Series of Notes and does not affect the Noteholders of any
other Series of Notes, as substantiated by an Opinion of Counsel to such effect,
which Opinion of Counsel may, to the extent same is based on any factual matter,
rely upon an Officer's Certificate as to the truth of such factual matter).
Notwithstanding the foregoing:
(i) any modification of this Section 12.2, any
requirement hereunder that any particular action be taken by
Noteholders holding the relevant percentage in principal
amount of the Notes or any change in the definition of the
terms "Aggregate Asset Amount" or "Asset Amount Deficiency"
(other than in connection with the issuance of a Segregated
Series of Notes), "Eligible Manufacturer" or "Eligible
Manufacturer
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Program" (other than in connection with a waiver of such
eligibility requirement by the Noteholders of any Series of
Notes, but only to the extent so provided in the related
Supplement in respect of such Series of Notes), "Invested
Amount", "Invested Percentage", or the applicable amount of
Enhancement or any defined term used for the purpose of any
such definitions shall require the consent of each affected
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 Note (or reduce the principal amount of or rate of
interest on any Note) shall require the consent of each
affected Noteholder; (b) approve the assignment or transfer by
NFLP of any of its rights or obligations hereunder or under
any other Related Document to which it is a party except
pursuant to the express terms hereof or thereof shall require
the consent of each Noteholder; (c) release any obligor under
any Related Document to which it is a party except pursuant to
the express terms of such Related Document shall require the
consent of each 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
Noteholder individually in comparison to any other Noteholder
shall require the consent of such Noteholder; or (e) amend or
otherwise modify any Amortization Event shall require the
consent of each affected Noteholder.
No failure or delay on the part of any Noteholder or the Trustee in exercising
any power or right under this Indenture or any other Related Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise thereof or the
exercise of any other power or right.
Section 12.3. Supplements.
Each amendment or other modification to this Indenture or the
Notes shall be set forth in a Supplement. Each Supplement shall require the
consent of the Rating Agencies. In addition to the manner provided in Sections
12.1 and 12.2, each Supplement may be amended as provided for in such
Supplement.
Section 12.4. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Noteholder of a Note is a continuing consent by the Noteholder and every
subsequent Noteholder of a Note or portion of a Note that evidences the same
debt as the consenting Noteholder's Note, even if notation of the consent is not
made on any Note. However, any
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such Noteholder or subsequent Noteholder may revoke the consent as to his Note
or portion of a Note if the 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
Noteholder. NFLP may fix a record date for determining which Noteholders must
consent to such amendment or waiver.
Section 12.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated. NFLP in exchange for
all Notes may issue and the Trustee shall authenticate new Notes that reflect
the amendment or waiver. Failure to make the appropriate notation or issue a new
Note shall not affect the validity and effect of such amendment or waiver.
Section 12.6. The Trustee to Sign Amendments, etc.
The Trustee shall sign any Supplement authorized pursuant to
this Article 12 if the Supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does have such adverse effect,
the Trustee may, but need not, sign it. In signing such Supplement, the 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 Supplement is authorized or permitted by this Indenture and
that it will be valid and binding upon NFLP in accordance with its terms. NFLP
may not sign a Supplement until its Board of Directors approves it.
ARTICLE 13.
MISCELLANEOUS
Section 13.1. Notices.
(a) Any notice or communication by NFLP, the General Partner
or the Trustee to the others 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 parties' respective
addresses:
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If to NFLP:
National Car Rental Financing Limited Partnership
7700 France Avenue South
Minneapolis, Minnesota 55435
Attn: Michael J. Becker
Phone: (612) 830-2522
Fax: (612) 830-2413
If to the General Partner:
National Car Rental Financing Corporation
7700 France Avenue South
Minneapolis, Minnesota 55435
Attn: Michael J. Becker
Phone: (612) 830-2133
Fax: (612) 830-2413
If to the Trustee:
The Bank of New York
101 Barclay Street
Floor 12 East
New York, New York 10286
Attn: Corporate Trust Division
Phone: (212) 815-5218
Fax: (212) 815-5999
NFLP, the General Partner or the Trustee by notice to the
other parties may designate additional or different addresses for subsequent
notices or communications; provided, however, NFLP 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
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 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
Notes.
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If NFLP mails a notice or communication to Noteholders, it
shall mail a copy to the Trustee and the Master Collateral Agent at the same
time.
(b) Where the Indenture provides for notice to 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 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 Noteholder is
given by mail, neither the failure to mail such notice, nor any defect
in any notice so mailed, to any particular Noteholder shall affect the
sufficiency of such notice with respect to other 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 Noteholders shall be filed with the 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 Trustee shall constitute a sufficient notification for every purpose
hereunder.
Section 13.2. Communication by Noteholders With Other
Noteholders.
Noteholders may communicate with other Noteholders with
respect to their rights under this Indenture or the Notes.
Section 13.3. Certificate as to Conditions Precedent.
Upon any request or application by NFLP to the Trustee to take
any action under this Indenture, NFLP shall furnish to the Trustee an Officer's
Certificate in form and substance reasonably satisfactory to the Trustee (which
shall include the statements set forth in Section 13.4) stating that, in the
opinion of the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been complied with.
Section 13.4. Statements Required in Certificate.
Each certificate with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(a) a statement that the Person giving such certificate has
read such covenant or condition;
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(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate are based;
(c) a statement that, in the opinion of such Person, 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
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Section 13.5. Rules by the Trustee and the Paying Agent.
The Trustee may make reasonable rules for action by or at a
meeting of Noteholders.
Section 13.6. No Recourse Against Others.
A director, Authorized Officer, employee or stockholder of
NFLP, as such, shall not have any liability for any obligations of NFLP under
the Notes or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Noteholder by accepting a
Note waives and releases all such liability.
Section 13.7. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
Section 13.8. Benefits of Indenture.
Nothing in this Indenture or in the 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.
Section 13.9. Payment on Business Day.
In any case where any Distribution Date, redemption date or
maturity date of any 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 Distribution Date, redemption date, or maturity date; provided,
however, that no interest shall accrue for the period from and after such
redemption date, or maturity date, as the case may be to and including such next
Business Day.
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Section 13.10. Governing Law.
The laws of the State of New York, including, without
limitation, the UCC, but excluding any conflicts of laws, shall govern and be
used to construe this Indenture and the Notes and the rights and duties of the
Trustee, Registrar, Paying Agent, Noteholders and Note Owners.
Section 13.11. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of NFLP or an Affiliate of NFLP. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
Section 13.12. Successors.
All agreements of NFLP in this Indenture and the Notes shall
bind its successor; provided, however, NFLP may not assign its obligations or
rights under this Indenture or any Related Document. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 13.13. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 13.14. Counterpart 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.
Section 13.15. Table of Contents, Headings, etc.
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.
Section 13.16. Termination; Collateral.
This Indenture, and any grants, pledges and assignments
hereunder, shall become effective concurrently with the issuance of the first
Series of Notes and shall terminate when (a) all NFLP Obligations shall have
been fully paid and satisfied, (b) the obligations of each Enhancement Provider
under any Enhancement and related documents have terminated,
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and (c) any Enhancement shall have terminated, at which time the Trustee, at the
request of NFLP and upon receipt of an Officer's Certificate from NFLP to the
effect that the conditions in clauses (a), (b) and (c) above have been complied
with and upon receipt of a certificate from the Trustee and each Enhancement
Provider to the effect that the conditions in clauses (a), (b) and (c) above
relating to NFLP Obligations to the Noteholders and each Enhancement Provider
have been complied with, shall reassign (without recourse upon, or any warranty
whatsoever by, the Trustee) and deliver all Collateral and documents then in the
custody or possession of the Trustee promptly to NFLP.
NFLP and the Secured Parties hereby agree that, if any
Deposited Funds remain on deposit in the Collection Account after the
termination of this Indenture, such amounts shall be released by the Trustee and
paid to NFLP.
Section 13.17. No Bankruptcy Petition Against NFLP or
the General Partner.
Each of the Secured Parties, the Servicer, the Retained
Interestholder and the Trustee hereby covenants and agrees that, prior to the
date which is one year and one day after the payment in full of the latest
maturing Note, it will not institute against, or join with any other Person in
instituting, against NFLP or the General Partner any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any Federal or state bankruptcy or similar law; provided, however, that nothing
in this Section 13.17 shall constitute a waiver of any right to indemnification,
reimbursement or other payment from NFLP or the General Partner pursuant to this
Indenture. In the event that any such Secured Party, the Servicer, the Retained
Interestholder or the Trustee takes action in violation of this Section 13.17,
NFLP or the General Partner, as applicable, shall file an answer with the
bankruptcy court or otherwise properly contesting the filing of such a petition
by any such Secured Party, the Servicer, the Retained Interestholder or the
Trustee against NFLP or the General Partner or the commencement of such action
and raising the defense that such Secured Party, the Servicer, the Retained
Interestholder or the Trustee has agreed in writing not to take such action and
should be estopped and precluded therefrom and such other defenses, if any, as
its counsel advises that it may assert. The provisions of this Section 13.17
shall survive the termination of this Indenture, and the resignation or removal
of the Trustee. Nothing contained herein shall preclude participation by any
Secured Party, the Servicer, the Retained Interestholder or the Trustee in the
assertion or defense of its claims in any such proceeding involving NFLP or the
General Partner.
Section 13.18. No Recourse.
The obligations of NFLP under this Indenture are solely the
obligations of NFLP and are payable solely from the assets of NFLP. No recourse
shall be had for the payment of any amount owing in respect of any fee hereunder
or any other obligation or claim arising out of or based upon this Indenture
against any limited partner of NFLP or against the capital or any other asset of
the General Partner or against any stockholder, employee, officer, director or
incorporator of the General Partner. Fees, expenses or costs payable by NFLP
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hereunder shall be payable by NFLP to the extent and only to the extent that
NFLP is reimbursed therefor pursuant to the Lease or the Related Documents, or
funds are then available or thereafter become available for such purpose
pursuant to Article 5.
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IN WITNESS WHEREOF, the Trustee and NFLP have caused this Base
Indenture to be duly executed by their respective duly authorized officers as of
the day and year first written above.
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP,
as Issuer
By: NATIONAL CAR RENTAL FINANCING
CORPORATION,
its General Partner
By: /s/ Erv Zinter
--------------------------------
Name: Erv Zinter
Title:
THE BANK OF NEW YORK,
as Trustee
By: /s/ [Duly Authorized Officer]
-------------------------------------
Name:
Title:
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SCHEDULE 1
TO THE
BASE INDENTURE
DEFINITIONS LIST
"Accrued Amounts" means, with respect to any Series of Notes (or any
class of such Series of Notes), on any date of determination, the sum of (i)
accrued and unpaid interest on the Notes of such Series of Notes (or the
applicable class thereof) as of such date, (ii) the portion of the accrued and
unpaid Monthly Servicing Fee (and any Supplemental Monthly Servicing Fee)
allocated to such Series of Notes (or the applicable class thereof) pursuant to
Section 26.1 of the Lease, on such date, and (iii) the product of (A) all other
accrued and unpaid fees and expenses of NFLP on such date, times (B) a fraction,
the numerator of which is the Invested Amount of such Series of Notes (or the
applicable class thereof) on such date and the denominator of which is the
Aggregate Invested Amount of all Series of Notes on such date.
"Accumulation Period" means, with respect to any Series of Notes, the
period, if any, specified in the applicable Supplement.
"Acquired Vehicle" means any Eligible Vehicle, other than a Financed
Vehicle, that is acquired by NFLP.
"Affiliate" means, with respect to any 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. For purposes
of this definition, "control" means the power to direct the management and
policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and "controlled" and "controlling"
have meanings correlative to the foregoing. For purposes of the Lease, the
Lessor shall not be considered to be an Affiliate of National.
"Agent" means any Registrar or Paying Agent.
"Aggregate Asset Amount" means, on any date of determination, without
duplication, the sum of (i) the Net Book Value of all Eligible Vehicles leased
under the Lease as of such date pursuant to Section 3.1 of the Lease, plus (ii)
all amounts receivable, as of such date, by NFLP or National from Eligible
Manufacturers under and in accordance with their respective Eligible
Manufacturer Programs (other than Excluded Payments), with respect to Eligible
Vehicles (other than Exchanged Vehicles) at any time owned, financed or
refinanced by NFLP plus (iii) all amounts (other than amounts specified in
clause (ii) above) receivable, as of such date, by NFLP or National from any
person or entity in connection with the Auction, sale or
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other disposition of Eligible Vehicles at any time leased under the Lease (other
than Excluded Payments), plus (iv) all accrued and unpaid Monthly Base Rent and
Monthly Supplemental Payments (other than amounts specified in clauses (ii) and
(iii) above), plus (v) cash and Permitted Investments on deposit in the
Collection Account, minus (vi) any Ineligible Asset Amount.
"Aggregate Invested Amount" means the sum of the Invested Amounts with
respect to all Series of Notes then Outstanding.
"Amortization Commencement Date" means, with respect to a Series of
Notes, the date on which an Amortization Event for such Series is deemed to have
occurred pursuant to Section 9.1 of the Base Indenture.
"Amortization Event" with respect to each Series of Notes, has the
meaning specified in Section 9.1 of the Base Indenture.
"Amortization Period" means, with respect to any Series of Notes, the
period following the Revolving Period (as defined in any related Supplement)
which shall be the Accumulation Period, the Controlled Amortization Period, or
the Rapid Amortization Period, each as defined in the related Supplement.
"Annual Certificate" is defined in Section 24.6(ix) of the
Lease.
"Approved Non-Program Vehicle Manufacturer" means each of GM and
Chrysler.
"Asset Amount Deficiency" means, with respect to any date of
determination, the amount, if any, by which the Required Asset Amount on such
date exceeds the Aggregate Asset Amount on such date.
"Asset Purchase Agreement" means the Asset Purchase Agreement, dated as
of April 4, 1995, among National Car Rental System, Inc., a wholly-owned
subsidiary of GM ("Old National"), as seller, NCR Acquisition Corp., as buyer,
and GM, as amended prior to the date hereof.
"Assets" means any interest of any kind in any assets or property of
any kind (including, without limitation, any security interest in Vehicles),
tangible or intangible, real, personal or mixed, now owned or hereafter acquired
by NFLP.
"Assignment Agreement" means the agreement with respect to each
Manufacturer and its Manufacturer Program, entered into or to be entered into
among NFLP and/or National, as assignor, and the Master Collateral Agent, as
assignee, and acknowledged by such Manufacturer, assigning to the Master
Collateral Agent certain of NFLP's and/or National's
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right, title and interest in such Manufacturer's Manufacturer Program as it
relates to Vehicles purchased from such Manufacturer.
"Auction" means the set of procedures specified in a Guaranteed
Depreciation Program for sale or disposition of Program Vehicles through
auctions and at auction sites designated by such Vehicles' Manufacturer pursuant
to such Manufacturer Program.
"Authorized Fleet Purchaser" means a Person authorized by a
Manufacturer to acquire Program Vehicles pursuant to, and to enforce such
Manufacturer's obligations under, the Manufacturer Program of such Manufacturer.
"Authorized Officer" means (a) as to NFLP, any of the President, any
Vice President, the Secretary or any Assistant Secretary of the General Partner,
and (b) as to National, those officers, employees and agents of National whose
signatures and incumbency shall have been certified to NFLP pursuant to Section
34(d) of the Lease or in such other certificates as may be delivered by National
to NFLP from time to time as duly authorized to execute and deliver the Lease
and any instruments, certificates, notices and other documents in connection
herewith on behalf of National and to take, from time to time, all other actions
on behalf of National in connection therewith.
"Availability Payment" is defined in Section 5.2 of the Lease.
"Available Subordinated Amount Losses" with respect to a Series shall
have the meaning specified in the related Supplement.
"Bankruptcy Code" means The Bankruptcy Reform Act of 1978, as amended
from time to time, and as codified as 11 U.S.C. Section 101 et seq.
"Base Amount" means, as of any date of determination, the sum of the
Net Book Values of all Financed Vehicles leased under the Financing Lease as of
such date, each such Net Book Value calculated as of the first day contained
within both the calendar month in which such date of determination occurs and
the Vehicle Term for the related Financed Vehicle, plus all accrued and unpaid
Monthly Base Rent thereunder as of such date.
"Base Indenture" means the Base Indenture, dated as of April 30, 1996,
between NFLP and the Trustee, as amended, supplemented, restated or otherwise
modified from time to time in accordance with its terms, exclusive of
Supplements creating a new Series of Notes.
"Base Lease" means the Master Motor Vehicle Lease and Servicing
Agreement, dated as of April 30, 1996, between NFLP, as the lessor thereunder,
and National, as the lessee and servicer thereunder, as the same may be amended,
modified or supplemented from time to time in accordance with its terms,
exclusive of Lease Annexes.
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"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the higher of
(a) the Prime Rate for such day; and
(b) the Federal Funds Rate plus 0.25% per annum.
"Beneficiary" is defined in the preamble of the Master Collateral
Agency Agreement.
"Board of Directors" means the Board of Directors of the General
Partner or National, as applicable, or any authorized committee of the Board of
Directors.
"Book-Entry Notes" means beneficial interests in the Notes, ownership
and transfers of which shall be evidenced or made through book entries by a
Clearing Agency as described in Section 2.16 of the Base Indenture; provided
that after the occurrence of a condition whereupon book-entry registration and
transfer are no longer permitted and Definitive Notes are issued to the Note
Owners, such Definitive Notes shall replace Book-Entry Notes.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banks are authorized by law to close in New York City, New York or
Minneapolis, Minnesota.
"Capitalized Cost" means, with respect to each Vehicle, the price paid
for such Vehicle by the Lessee or the Lessor to the dealer or Manufacturer
selling such Vehicle, including dealer profit and delivery charges but excluding
taxes and any registration or titling fees.
"Carrying Charges" means, as of any day, without duplication, the
aggregate of all Trustee fees, Servicing Fees (other than Supplemental Servicing
Fees) and other fees and expenses and indemnity amounts, if any, payable by the
Lessor or the Servicer under the Indenture or the other Related Documents which
have accrued during the Related Month.
"Carryover Controlled Amortization Amount" means, with respect to each
Series of Notes, the amount specified as such in the related Supplement.
"Casualty" means, with respect to any Vehicle, that (i) such Vehicle is
lost, converted or stolen for a period of at least 90 days or (ii) such Vehicle
is destroyed, seized or otherwise rendered permanently unfit or unavailable for
use (including vehicles that are rejected pursuant to Section 2.2 of the Lease).
"Casualty Payment" is defined in Section 7 of the Lease.
"Cede" means Cede & Co., a nominee of DTC.
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"Cedel" means Cedel Bank, societe anonyme.
"Certificate of Title" means, with respect to each Vehicle, the
certificate of title applicable to such Vehicle duly issued in accordance with
the certificate of title act or statute of the jurisdiction applicable to such
Vehicle.
"Chrysler" means Chrysler Corporation, a Delaware corporation.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended, or any successor provision thereto or Euroclear and Cedel. The initial
Clearing Agencies shall be DTC, Euroclear and Cedel.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means, with respect to any Series of Notes, the date of
issuance of such Series of Notes, as specified in the related Supplement.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, and any successor statute of similar
import, in each case as in effect from time to time. References to sections of
the Code also refer to any successor sections.
"Collateral" is defined in Section 3.1 of the Base Indenture.
"Collection Account" is defined in Section 5.1 of the Base Indenture.
"Collections" means (i) all payments (including, without limitation,
Recoveries) by, or on behalf of National under the Lease, (ii) all payments on
the Master Collateral allocable to the Trustee as a Beneficiary, including
payments (other than Excluded Payments) made by, or on behalf of, any
Manufacturer or auction dealer, under the related Manufacturer Program (other
than payments thereunder with respect to Exchanged Vehicles), (iii) all payments
by, or on behalf of, any other Person as proceeds from the sale of Vehicles
(other than Exchanged Vehicles) or payments of insurance proceeds which are
required to be deposited into the Master Collateral Account, whether such
payments are in the form of cash, checks, wire transfers or other forms of
payment and whether in respect of principal, interest, repurchase price, fees,
expenses or otherwise, (iv) all payments by or on behalf of Old National under
the Vehicle Title Nominee Agreement with respect to Vehicles and all payments
under the GM Guaranty with respect to Vehicles and (v) all amounts earned on
Permitted Investments of
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funds in the Collection Account. To the extent so specified in a Supplement,
Collections shall also include all proceeds from the sale of the Notes issued
under such Supplement.
"Company Order" and "Company Request" means a written order or request
signed in the name of NFLP by any one of its Authorized Officers and delivered
to the Trustee.
"Condition Report" means a condition report with respect to a Vehicle,
signed and dated by the Lessee and Manufacturer or its agent in accordance with
the applicable Manufacturer Program.
"Consolidated Subsidiary" means, at any time, with respect to National,
any Subsidiary or other entity the accounts of which would be consolidated with
those of National in its consolidated financial statements as of such time.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (a) with respect to
any indebtedness, lease, dividend, letter of credit or other obligation of
another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof or (b) under any letter of credit issued for the account of that Person
or for which that Person is otherwise liable for reimbursement thereof.
Contingent Obligation shall include (a) the direct or indirect guarantee,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another and (b) any liability of such Person for the
obligations of another through any agreement (contingent or otherwise) (i) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), (ii) to maintain the solvency of any balance sheet item, level of
income or financial condition of another or (iii) to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, if in the case of any agreement described under subclause (i)
or (ii) of this sentence the primary purpose or intent thereof is as described
in the preceding sentence. The amount of any Contingent Obligation shall be
equal to the amount of the obligation so guaranteed or otherwise supported.
"Contractual Obligation" means, with respect to any Person, any
provision of any security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
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"Controlled Amortization Period" means, with respect to any Series of
Notes, the period specified in the applicable Supplement.
"Controlled Distribution Amount" means, with respect to any Class of
Notes, the amount (or amounts) specified in the applicable Supplement.
"Controlled Group" means, with respect to any Person, such Person,
whether or not incorporated, and any corporation, trade or business that is,
along with such Person, a member of a controlled group of corporations or a
controlled group of trades or businesses as described in Sections 414(b) and
(c), respectively, of the Code.
"Corporate Trust Office" shall mean the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered which office at the date of the execution of the Base Indenture is
located at 101 Barclay Street, Floor 12 East, New York, New York 10286,
Attention: Corporate Trust Division, or at any other time at such other address
as the Trustee may designate from time to time by notice to the Noteholders and
NFLP.
"Credit Suisse" means Credit Suisse, a Swiss banking corporation acting
through its New York branch.
"Daily Report" is defined in Section 24.6(v) of the Base Lease.
"Defaulting Manufacturer" is defined in Section 18 of the Lease.
"Definitions List" means this Definitions List, as amended or modified
from time to time in accordance with the terms of the Indenture.
"Definitive Notes" is defined in Section 2.16(e) of the Base
Indenture.
"Demand Note" means the demand note made by National to NFLP which (a)
evidences advances made by NFLP to National from time to time, and (b) is
payable by National upon NFLP's demand; provided that, from and after the
initial Closing Date, NFLP shall make advances to National under the Demand Note
only if immediately before and after giving effect to the making of each such
advance, the Retained Interest Amount is greater than or equal to zero.
"Deposited Funds" means all funds on deposit in the Collection Account.
"Depreciation Charge" means, with respect to (a) any Program Vehicle
subject to GM's Manufacturer Program, the rate determined by dividing (x) 100%
minus the repurchase price percentage specified in respect of such Vehicle
pursuant to the terms of GM's
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Manufacturer Program for the Designated Period applicable to such Vehicle by (y)
the number of days in such Designated Period (or, if such Vehicle is held past
the Designated Period set forth in the related Vehicle Acquisition Schedule, the
applicable depreciation charge set forth in the GM Manufacturer Program for such
Vehicle calculated on a daily basis), (b) any Program Vehicle subject to an
Eligible Manufacturer Program other than the GM Manufacturer Program, the
applicable depreciation charge set forth in the related Manufacturer Program for
such Vehicle with respect to such Vehicle calculated on a daily basis and (c)
with respect to any Non-Program Vehicle, the scheduled daily depreciation charge
for such Vehicle set forth by the Servicer in the Depreciation Schedule for such
Vehicle. If such charge is expressed as a percentage, the Depreciation Charge
for such Vehicle for such day shall be such percentage multiplied by the
Capitalized Cost for such Vehicle calculated on a daily basis.
"Depreciation Schedule" means a schedule of estimated daily
depreciation prepared by the Servicer, and revised from time to time in the
Servicer's sole discretion, with respect to each Non-Program Vehicle that is an
Eligible Vehicle.
"Designated Period" shall mean, with respect to any Vehicle subject to
GM's Manufacturer Program, the period (up to a maximum of 18 months) designated
by the Servicer in the applicable Vehicle Acquisition Schedule relating to such
Vehicle as the period of time for which the Servicer expects such Vehicle to be
subject to the Lease.
"Designated Vehicle" means a Vehicle owned by NFLP or a Financed
Vehicle owned by National with respect to which the Servicer, National or NFLP
has notified the Master Collateral Agent in writing that such Vehicle has been
designated to be exchanged for one or more Replacement Vehicles or released for
exchange pursuant to an Exchange Agreement.
"Determination Date" means the date five days prior to each
Distribution Date.
"Disposition Date" means:
(a) with respect to any Program Vehicle, (i) if such Vehicle was sold at Auction
pursuant to a Guaranteed Depreciation Program or returned to a Manufacturer for
repurchase pursuant to a Repurchase Program, (x) the earliest of the date on
which such Vehicle is received or deemed to be received by the designated
auction site pursuant to the terms of such Guaranteed Depreciation Program or is
sold at Auction under such Guaranteed Depreciation Program or (y) the date on
which such Vehicle is accepted for return by such Manufacturer or its agent
under such Repurchase Program and, in each case, the Depreciation Charges ceased
to accrue pursuant to such Manufacturer Program, or (ii) if such Vehicle was
sold to any Person (other than to a Manufacturer pursuant to such Manufacturer's
Repurchase Program or to a third party through an Auction conducted by or
through or arranged by the Manufacturer pursuant
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to its Guaranteed Depreciation Program), the date on which the proceeds of such
sale are received by the Lessor, the Master Collateral Agent or the Trustee; and
(b) with respect to any (i) Non-Program Vehicle that is an
Exchanged Vehicle, the date on which such Vehicle became an Exchanged
Vehicle or (ii) other Non-Program Vehicle, the date on which the
proceeds of such sale are received by the Lessor, the Master Collateral
Agent or the Trustee.
"Disposition Proceeds" means the net proceeds (other than the portion
of the Repurchase Price payable by the Manufacturer) from the sale or
disposition of a Vehicle to any Person, whether at Auction or otherwise.
"Distribution Account" means, with respect to any Series of Notes, an
account established as such pursuant to the related Supplement.
"Distribution Date" means, unless otherwise specified in any Supplement
for the related Series of Notes, the twentieth day of each calendar month, or,
if such day is not a Business Day, the next succeeding Business Day, commencing
May 20, 1996.
"Dollar" and the symbol "$" mean the lawful currency of the United
States.
"DTC" means the Depository Trust Company.
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
"Eligible Franchisee" means a Franchisee having rental offices located
in the United States which meets the normal credit and other approval criteria
of National, and which may be an affiliate of National, provided that National
shall not permit any Eligible Franchisee to garage or lease Vehicles at offices
outside of the United States.
"Eligible Manufacturer" means (a) with respect to any Program Vehicle
and for the purpose of determining whether a Manufacturer Program is an Eligible
Manufacturer Program, GM, Chrysler and any other Manufacturer that (i) has been
approved by the Rating Agencies or has been reviewed by the Rating Agencies and
the Rating Agencies have indicated that the inclusion of such Manufacturer as an
Eligible Manufacturer will not adversely affect the current rating of any Series
of Notes, and (ii) if such Manufacturer has an unsecured long-term debt rating
of less than "A" from Standard & Poor's or the comparable rating from Duff &
Phelps (if Duff & Phelps is then a Rating Agency and rates such Manufacturer's
unsecured long-term debt), has been approved by the Requisite Investors,
(provided, however, that upon the occurrence of a Manufacturer Event of Default
with respect to such Manufacturer, such Manufacturer shall no longer qualify as
an Eligible Manufacturer) and (b) with respect to any Non-Program Vehicle, GM,
Chrysler, Ford Motor Company, Toyota Motor Sales U.S.A.,
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Inc., American Honda Motor Co., Inc., Nissan Motor Corporation in U.S.A. and any
other Manufacturer; provided that with respect to any such other Manufacturer
the Rating Agencies have confirmed that the purchase of Non-Program Vehicles
from such Manufacturer will not adversely affect the current rating of any
outstanding Series of Notes.
"Eligible Manufacturer Program" means, at any time, a Manufacturer
Program that is in full force and effect with an Eligible Manufacturer (i)
pursuant to which the repurchase price or guaranteed auction sale price is at
least equal to (a) with respect to GM, a specified percentage of the Capitalized
Cost of each Vehicle, such percentage being determined for each Vehicle based
upon the model year of such Vehicle and the calendar month in which such Vehicle
is returned to the Manufacturer minus Excess Mileage Charges, minus Excess
Damage Charges minus Missing Equipment Charges, or (b) with respect to any other
Manufacturer, the Capitalized Cost of each Vehicle, minus all Depreciation
Charges accrued with respect to such Vehicle prior to the date that the Vehicle
is submitted for repurchase, minus Excess Mileage Charges, minus Excess Damage
Charges minus Missing Equipment Charges, (ii) that cannot be amended or
terminated with respect to any Vehicle after the purchase of that Vehicle, and
(iii) under which, with respect to Acquired Vehicles and Texas Vehicles, NFLP is
an Authorized Fleet Purchaser or, with respect to Financed Vehicles (other than
Texas Vehicles), National is an Authorized Fleet Purchaser and, in each case,
the assignment of the benefits of which to the Master Collateral Agent has been
acknowledged in writing by the related Manufacturer pursuant to an Assignment
Agreement (provided that NFLP may also assign to the Qualified Intermediary and
the Exchange Lender NFLP's rights to Exchanged Vehicle Repurchase Rights with
respect to Exchanged Vehicles) and NFLP, the Master Collateral Agent and the
Trustee have been provided with an opinion of counsel reasonably satisfactory to
them that NFLP (and the Master Collateral Agent on behalf of NFLP and the
Trustee) can enforce the applicable Manufacturer's obligations thereunder with
respect to Program Vehicles other than Exchanged Vehicles; provided that (a)
with respect to any new Manufacturer Program (including a new model year
Manufacturer Program of an Eligible Manufacturer and a Manufacturer Program of a
new Manufacturer) that is proposed for consideration after the date hereof as an
Eligible Manufacturer Program, prior to such new Manufacturer Program
constituting an "Eligible Manufacturer Program" hereunder, the Rating Agencies
have been given 30 days notice (or such shorter period of time as shall be
acceptable to the Rating Agencies) of a draft of such new Manufacturer Program
as it then exists at the time of such notice (and shall be provided a final copy
of such Manufacturer Program promptly upon its being available) and shall have
consented to the inclusion of such new Manufacturer Program as an "Eligible
Manufacturer Program" hereunder and if Standard & Poor's is then rating any
Series of Notes at the request of NFLP, Standard & Poor's shall have confirmed
that the acquisition of Vehicles pursuant to such Manufacturer Program will not
result in the reduction or withdrawal of any rating issued by Standard & Poor's
with respect to such Series of Notes, and (b) with respect to any change (other
than as specified in clause (a)) in the terms of any existing Eligible
Manufacturer Program, prior to such Manufacturer Program constituting an
"Eligible Manufacturer Program" hereunder, the Rating Agencies shall have been
notified of
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such change and shall have approved such change; provided, further that in
either case described in clause (a) or (b), if such new Manufacturer Program or
such change in the terms of an existing Manufacturer Program would have a
material adverse effect on the interests of the Secured Parties, prior to any
such Manufacturer Program constituting an "Eligible Manufacturer Program", NFLP
shall have obtained the written consent of the Trustee thereto.
"Eligible Vehicle" means, on any date of determination, an automobile
or light truck that, (i) either is a Program Vehicle (other than a light truck
manufactured by Chrysler and that is subject to a 9 month or longer minimum hold
period under the Guaranteed Depreciation Program with Chrysler) or a Non-Program
Vehicle manufactured by an Eligible Manufacturer, in each case at the time of
leasing under the Lease, (ii) is owned by National or NFLP free and clear of all
Liens other than Permitted Liens, (iii) except for the Initial Vehicles, with
respect to which the Master Collateral Agent is noted as the first lienholder on
the Certificate of Title therefor, or the Certificate of Title has been
submitted to the appropriate state authorities for such notation and (iv) is a
Related Vehicle with the Trustee designated as the Beneficiary pursuant to the
Master Collateral Agency Agreement.
"Enhancement" means, with respect to any Series of Notes, the rights
and benefits provided to the Noteholders of such Series of Notes pursuant to any
letter of credit, surety bond, cash collateral account, overcollateralization,
issuance of subordinated Notes, spread account, guaranteed rate agreement,
maturity guaranty facility, tax protection agreement, interest rate swap or any
other similar arrangement.
"Enhancement Agreement" means any contract, agreement, instrument or
document governing the terms of any Enhancement or pursuant to which any
Enhancement is issued or outstanding.
"Enhancement Agreement Event of Default" means with respect to any
Series of Notes any event of default under any Enhancement Agreement specified
in the related Supplement.
"Enhancement Deficiency" with respect to a Series of Notes has the
meaning specified in the related Supplement.
"Enhancement Percentage" means, with respect to any Series of Notes or
class of Notes, the percentage, if any, specified in the applicable Supplement.
"Enhancement Provider" means the Person providing any Enhancement as
designated in the applicable Supplement, other than any Noteholders the Notes of
which are subordinated to any Series of Notes.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, in each case as in effect
from time to time. References to sections of ERISA also refer to any successor
sections.
"Euroclear" means Euroclear System.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
a Person if:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up,
or composition or readjustment of debts of such Person, the appointment
of a trustee, receiver, custodian, liquidator, assignee, sequestrator
or the like for such Person or all or any substantial part of its
assets, or any similar action with respect to such Person under any law
relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors; or
(c) the board of directors of such Person (if such Person is a
corporation or similar entity) shall vote to implement any of the
actions set forth in clause (b) above.
"Excess Damage Charges" means, with respect to any Program Vehicle, the
amount charged to NFLP (or the Lessee), or deducted from the Repurchase Price,
by the Manufacturer of such Vehicle due to damage over a prescribed limit to the
Vehicle at the time that the Vehicle is turned in to such Manufacturer or its
agent for repurchase or Auction pursuant to the applicable Manufacturer Program.
"Excess Mileage Charges" means, with respect to any Program Vehicle,
the amount charged to NFLP (or the Lessee), or deducted from the Repurchase
Price, by the Manufacturer of such Vehicle due to the fact that such Vehicle has
mileage over a prescribed limit at the time that such Vehicle is turned in to
such Manufacturer or its agent for repurchase or Auction pursuant to the
applicable Manufacturer Program.
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"Exchange Account" means an account with a Qualified Intermediary held
for the benefit of NFLP or National, as applicable, and established pursuant to
an Exchange Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agreement" means an agreement among NFLP, National and a
Qualified Intermediary which provides for the assignment by NFLP and National,
respectively, to such Qualified Intermediary of (a) Exchanged Vehicles, (b) all
Exchanged Vehicle Repurchase Rights, (c) all right, title and interest of NFLP
or National, as applicable, in, to and under any contracts for the sale of any
Exchanged Vehicle and (d) all right, title and interest of NFLP or National, as
applicable, in, to and under any contracts for the purchase of Replacement
Vehicles; provided that any such Exchange Agreement will not become effective
with respect to Vehicles subject to the Lease until NFLP and National obtain (i)
from each Rating Agency, written confirmation that entry into such Exchange
Agreement will not result in the reduction or withdrawal of the then current
rating of any outstanding Series of Notes and (ii) opinions of counsel with
respect to perfection, priority and non-consolidation in substantially the same
form as those delivered on the initial Closing Date.
"Exchange Assignment Agreement" means an agreement with respect to a
Manufacturer and its Manufacturer Program, entered into or to be entered into
among NFLP and/or National, as assignor, and the Manufacturer, permitting NFLP
and/or National to assign to the Qualified Intermediary NFLP's and/or National's
right, title and interest in Exchanged Vehicle Repurchase Rights arising under
such Manufacturer Program, which agreement will (i) not become effective unless
each Rating Agency has confirmed in writing that execution of such agreement by
NFLP will not result in the reduction or withdrawal of the then current rating
of any outstanding Series of Notes and (ii) be in form and substance reasonably
satisfactory to counsel acceptable to the Trustee.
"Exchange Financing Agreement" means an agreement entered into between
the Qualified Intermediary acting in its capacity as the qualified intermediary
of NFLP and the Exchange Lender pursuant to which the Exchange Lender agrees to
finance the purchase of Replacement Vehicles by the Qualified Intermediary on
behalf of NFLP, which financing is non-recourse to NFLP and the Qualified
Intermediary and is secured by Exchanged Vehicle Repurchase Rights arising from
time to time; provided that any such Exchange Assignment Agreement will not
become effective with respect to Vehicles subject to the Lease until NFLP
obtains (i) from each Rating Agency written confirmation that entry into such
Exchange Assignment Agreement will not result in the reduction or withdrawal of
the then current rating of any outstanding Series of Notes and (ii) opinions of
counsel with respect to perfection, priority and non-consolidation in
substantially the same form as those delivered as of the initial Closing Date.
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"Exchange Date" is defined in Section 2.9 of the Base Indenture.
"Exchange Documents" means the Exchange Agreement, Master Deposit
Agreement, Exchange Assignment Agreement and Exchange Financing Agreement.
"Exchange Lender" means a third party provider of financing to the
Qualified Intermediary acting in its capacity as the qualified intermediary of
NFLP for the purchase of Replacement Vehicles.
"Exchanged Vehicle" means a Designated Vehicle that (a) (i) if subject
to a Repurchase Program, has been accepted for repurchase by the Manufacturer
under the related Repurchase Program, or (ii) if not subject to a Repurchase
Program, has been sold to a third party, (b) (i) with respect to which NFLP or
National has received or concurrently receives delivery of one or more
Replacement Vehicles with an aggregate Net Book Value equal to or greater than
the Termination Value of such Designated Vehicles or (ii) with respect to which
the release of the Lien of the Master Collateral Agent thereon would not cause
an Asset Amount Deficiency to exist and (c) with respect to which the Lien of
the Master Collateral Agent has been released in accordance with Section 2.7 of
the Master Collateral Agency Agreement.
"Exchanged Vehicle Insurance Proceeds" means, with respect to each
Exchanged Vehicle, all payments under insurance policies (whether or not the
Master Collateral Agent is named as the loss payee thereof) or any warranty
payable by reason of loss or damage to, or otherwise with respect to, any
Exchanged Vehicle.
"Exchanged Vehicle Repurchase Rights" means, with respect to each
Exchanged Vehicle that is a Program Vehicle, all right, title and interest of
NFLP or National in, to and under each Manufacturer Program associated with such
Exchanged Vehicle, to the extent such right, title and interest relate to such
Exchanged Vehicle, including any amendments thereof and all monies due and to
become due in respect of such Exchanged Vehicle under or in connection with such
Repurchase Program, whether payable as Vehicle repurchase prices, auction sales
proceeds, fees, expenses, costs, indemnities, insurance recoveries, damages for
breach of the Repurchase Program or otherwise and all rights to compel
performance and otherwise exercise remedies thereunder.
"Excluded Payments" means the following amounts payable to National or
NFLP pursuant to the Manufacturer Programs: (i) all incentive payments payable
to National or NFLP to purchase vehicles under the Manufacturer Programs (but
not any amounts payable to National or NFLP by a Manufacturer as an incentive
for selling Program Vehicles outside of the related Manufacturer Program), (ii)
all amounts payable to National or NFLP as compensation for the preparation by
National or NFLP of newly delivered vehicles under the Manufacturer Programs,
(iii) all amounts payable to National or NFLP in reimbursement for warranty work
performed by National or NFLP on the vehicles under the Manufacturer
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Programs and (iv) all amounts payable to National under Section 6.11 of the
Asset Purchase Agreement.
"Expected Final Distribution Date" means, with respect to any Series of
Notes, the date stated in the related Supplement as the date on which such
Series of Notes is expected to be paid in full.
"Federal Funds Rate" means, with respect to any day, an interest rate
per annum equal to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York or,
(b) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day for such transactions received
by the Trustee from three federal funds brokers of recognized standing selected
by it.
"Financed Vehicle" means an Eligible Vehicle that is (a) a Refinanced
Vehicle, (b) acquired by National and financed by NFLP on or after the Lease
Commencement Date and prior to the 90th day after the Lease Commencement Date
for lease in any state in which NFLP has not, as of the date of acquisition of
such Vehicle, obtained all licenses and qualifications necessary to conduct its
leasing and other businesses, or (c) a Texas Vehicle.
"Financial Officer" means, with respect to any corporation, the chief
financial officer, vice-president-finance, principal accounting officer,
controller or treasurer of such corporation.
"Financing Lease" means the Base Lease supplemented by Annex B to the
Lease.
"Financing Provider" is defined in Section 2.3(b)(ii) of the Base
Indenture.
"Financing Source" is defined in the preamble of the Master Collateral
Agency Agreement.
"Fleet Finance Agreement" means the Fleet Financing Support Agreement
dated June 7, 1995 among GM, Citibank, N.A. and Credit Suisse.
"Fleet Report" is defined in Section 1.1 of the Master Collateral
Agency Agreement.
"Franchisee" means a franchisee of National.
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"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" means the generally accepted accounting principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors and
successors from time to time.
"General Partner" means National Car Rental Financing Corporation, a
special purpose Delaware corporation and wholly- owned subsidiary of National.
"GM" means General Motors Corporation, a Delaware corporation.
"GMAC" means General Motors Acceptance Corporation, a Delaware
corporation.
"GM Commitment" shall have the meaning specified in Section 2.1(a) of
the Support Reimbursement Agreement.
"GM Commitment Expiration Date" shall have the meaning specified in
Section 2.1(a) of the Support Reimbursement Agreement.
"GM Guaranty" means the guaranty issued by GM to National, dated as of
June 7, 1995, guaranteeing the obligations of Old National under the Vehicle
Title Nominee Agreement.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental department, commission, board, bureau, agency, authority,
instrumentality or regulatory body.
"Guaranteed Depreciation Program" means a guaranteed depreciation
program pursuant to which a Manufacturer has agreed with National or NFLP to (a)
cause Vehicles manufactured by it or one of its Affiliates that are turned back
during the specified Repurchase Period to be sold at Auction by an auction
dealer, (b) cause the proceeds of any such sale to be paid to National or NFLP
(or NFLP's Qualified Intermediary), as applicable, by such auction dealer within
seven days of such sale and (c) pay to National or NFLP, as applicable, the
excess, if any, of the guaranteed payment amount with respect to any such
Vehicle calculated as of the Disposition Date in accordance with the provisions
of such guaranteed depreciation program over the amount paid to National or
NFLP, as applicable, by an auction dealer pursuant to clause (b) above.
"Guaranteed Payment" means the amount payable by a Manufacturer under a
Guaranteed Depreciation Program in respect of any particular vehicle.
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"herein", "hereof", "hereto", "hereunder" and similar terms contained
in any Related Document refer to such Related Document as a whole and not to any
particular Section, paragraph or provision of such Related Document.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of each Related Document, the
parties thereto agree that the rule of ejusdem generis shall not be applicable
to limit a general statement, which is followed by or referable to an
enumeration of specific matters, to matters similar to the matters specifically
mentioned.
"Indebtedness", as applied to any Person, means, without duplication,
(a) all indebtedness for borrowed money, (b) that portion of obligations with
respect to any lease of any property (whether real, personal or mixed) that is
properly classified as a liability on a balance sheet in conformity with GAAP,
(c) notes payable and drafts accepted representing extensions of credit whether
or not representing obligations for borrowed money, (d) any obligation owed for
all or any part of the deferred purchase price for property or services, which
purchase price is (i) due more than six months from the date of the incurrence
of the obligation in respect thereof or (ii) evidenced by a note or similar
written instrument, (e) all indebtedness secured by any Lien on any property or
asset owned by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person, and (f) all Contingent Obligations of such Person in respect of
any of the foregoing.
"Indemnified Persons" is defined in Section 15.1 of the Lease.
"Indenture" means the Base Indenture, together with all Supplements, as
the same may be amended, modified or supplemented from time to time.
"Ineligible Asset Amount" means, as of any date of determination, an
amount equal to the sum (without duplication) of (a) the aggregate of all
amounts (other than Excluded Payments and payments receivable in respect of
Exchanged Vehicles) receivable as of such date by NFLP or National under and in
accordance with a Manufacturer Program (with respect to Financed Vehicles or
Acquired Vehicles) from a Manufacturer with respect to which a Manufacturer
Event of Default has occurred, plus (b) the aggregate of all amounts specified
in clause (ii) of the definition of "Aggregate Asset Amount" which are Past Due
Amounts with respect to Financed Vehicles as of such date, plus (c) the
aggregate of all amounts specified in clause (iii) of the definition of
"Aggregate Asset Amount" which remain unpaid more than 90 days after the date
such amounts became payable, plus (d) the aggregate of all amounts specified in
clause (iv) of the definition of "Aggregate Asset Amount" which are past due as
of such date.
"Initial Acquisition Cost" is defined in Section 2.3 of the Lease.
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"Initial Invested Amount" means, with respect to any Series of Notes,
the aggregate initial principal amount specified in the applicable Supplement.
"Initial Vehicles" means the Vehicles acquired by National from Old
National under the Asset Purchase Agreement on June 9, 1995.
"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement dated as of June 7, 1995 among National, certain subordinated
creditors listed on Schedule A thereto and certain senior creditors listed on
Schedule B thereto, as amended or otherwise modified from time to time in
accordance with its terms.
"Interest Collections" means on any date of determination, all
Collections which, pursuant to the Lease, represent Monthly Variable Rent,
Monthly Finance Rent or the Availability Payment, plus any amounts earned on
Permitted Investments in the Collection Account which are available for
distribution on such date.
"Interest Period" means, with respect to any Series of Notes, the
period specified in the related Supplement between, with respect to the initial
Interest Period, the Closing Date and the first Distribution Date and
thereafter, between Distribution Dates during which interest will accrue.
"Invested Amount" means, with respect to each Series of Notes, the
amount specified in the applicable Supplement.
"Invested Percentage" means, with respect to any Series of Notes, the
percentage specified in the applicable Supplement.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Joinder Agreement" means the Joinder to the Intercreditor and
Subordination Agreement, dated as of April 30, 1996, pursuant to which the
Trustee has agreed to become a party to, and be bound by all the provisions of,
the Intercreditor Agreement as a holder of senior debt thereunder.
"Late Return Payment" is defined in Section 13 of the Lease.
"Lease" means the Base Lease, together with all Lease Annexes, as the
same may be amended, modified or supplemented from time to time in accordance
with its terms.
"Lease Annex" means Annex A or Annex B to the Base Lease, as the same
may be amended, supplemented or modified from time to time in accordance with
its terms.
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"Lease Commencement Date" is defined in Section 3.2 of the Lease.
"Lease Event of Default" is defined in Section 17.1 of the Lease.
"Lease Expiration Date" is defined in Section 3.2 of the Lease.
"Lessee" means National, in its capacity as Lessee under the Lease, or
any successor by merger to National, in accordance with Section 25.1 of the
Lease, or any other permitted successor or assignee of National, in its capacity
as Lessee, pursuant to Section 16 of the Lease.
"Lessee Agreements" means any and all Subleases entered into by the
Lessee the subject of which includes any Vehicle leased by the Lessor to the
Lessee under the Lease, and any and all other contracts, agreements, guarantees,
insurance, warranties, instruments or certificates entered into or delivered to
the Lessee in connection therewith.
"Lessor" means NFLP, in its capacity as the lessor under the Lease.
"Lien" means, when used with respect to any Person, any interest in any
real or personal property, asset or other right held, owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation, and shall include any mortgage, lien, pledge, encumbrance, charge,
retained security title of a conditional vendor or lessor, or other security
interest of any kind, whether arising under a security agreement, mortgage,
lease, deed of trust, chattel mortgage, assignment, pledge, retention or
security title, financing or similar statement, or notice or arising as a matter
of law, judicial process or otherwise.
"Limited Liquidation Event of Default" means, with respect to any
Series of Notes, any event specified as such in the related Supplement.
"Liquidation Event of Default" means, so long as such event or
condition continues, any of the following: (a) any event or condition with
respect to NFLP or National of the type described in Section 9.1(d) of the Base
Indenture, (b) a payment default by NFLP under the Base Indenture as specified
in Sections 9.1(a) and 9.1(b) of the Base Indenture or (c) an event specified in
Section 9.1(e)(i) of the Base Indenture.
"Losses", with respect to any Series of Notes, has the meaning, if any,
provided for in the applicable Supplement.
"Luxembourg Agent" is defined in Section 2.4(c) of the Base
Indenture.
"Manufacturer" means a manufacturer of passenger automobiles and/or
light trucks.
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"Manufacturer Event of Default" means, with respect to (i) (a) a
Manufacturer whose Manufacturer Program is a Guaranteed Depreciation Program,
the failure by such Manufacturer or any related auction dealers to pay any
amount due under such Manufacturer's Manufacturer Program with respect to a
Program Vehicle turned in to such Manufacturer and such failure continues for
more than 90 days following the Disposition Date for such Vehicle and (b) any
other Manufacturer, the failure by such Manufacturer to pay any amount due under
its Manufacturer Program with respect to a Program Vehicle turned in to such
Manufacturer and such failure continues for more than 90 days following the
Disposition Date for such Vehicle (in either case, a "Past Due Amount") and the
aggregate Past Due Amounts relating to such Manufacturer are equal to or in
excess of the lesser of $25 million and the then outstanding aggregate amount of
repurchase obligations of such Manufacturer under its Manufacturer Program in
respect of Program Vehicles, in each case net of Past Due Amounts, aggregating
no more than $50 million, that are the subject of a good faith dispute as
evidenced in a writing by National or NFLP, as applicable or the Manufacturer
questioning the accuracy of amounts paid or payable in respect of certain
Program Vehicles tendered for repurchase under a Manufacturer Program (as
distinguished from any dispute relating to the repudiation by such Manufacturer
generally of its obligations under such Manufacturer Program or the assertion by
such Manufacturer of the invalidity or unenforceability as against it of such
Manufacturer Program); (ii) occurrence of an Event of Bankruptcy with respect to
such Manufacturer or (iii) the termination of such Manufacturer's Manufacturer
Program or the failure of such Manufacturer's Manufacturer Program to meet the
requirements of an Eligible Manufacturer Program.
"Manufacturer Program" means any Repurchase Program or Guaranteed
Depreciation Program.
"Market Value" shall have the meaning specified in the applicable
Supplement.
"Master Collateral" is defined in Section 2.1(b) of the Master
Collateral Agency Agreement.
"Master Collateral Account" is defined in Section 2.5 of the Master
Collateral Agency Agreement.
"Master Collateral Agency Agreement" means the Amended and Restated
Master Collateral Agency Agreement, dated as of April 30, 1996, among National,
as grantor and Servicer, NFLP, as grantor, the various Financing Sources from
time to time parties thereto, the various Beneficiaries from time to time
parties thereto, and the Master Collateral Agent, as further amended, modified
or supplemented from time to time.
"Master Collateral Agent" means Citibank, N.A., in its capacity as
master collateral agent under the Master Collateral Agency Agreement and any
successor thereto.
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"Master Deposit Agreement" means an agreement between a Manufacturer
and a financial institution, which agreement will not become effective unless
(i) NFLP and the Master Collateral Agent have consented in writing to the form
thereof, (ii) each Rating Agency has confirmed in writing that execution of such
agreement will not result in the reduction or withdrawal of rating of any
outstanding Series of Notes and (iii) opinions of counsel with respect to
perfection, priority and non-consolidation have been delivered in substantially
the same form as those delivered as of the initial Closing Date.
"Master Deposit Account" means an account of a Manufacturer established
pursuant to a Master Deposit Agreement.
"Material Adverse Effect" means, with respect to any occurrence, event
or condition:
(i) a materially adverse effect on the financial
condition, business, assets or operations of National and its
Consolidated Subsidiaries taken as a whole, other than a materially
adverse effect on the business prospects of National and its
Consolidated Subsidiaries taken as a whole that have similarly affected
National's major competitors;
(ii) a materially adverse effect on the ability of (a)
National to perform its material obligations under any of the Related
Documents or (b) the Lessor to perform its material obligations under
any of the Related Documents; and
(iii) an adverse effect on (a) the enforceability of the
Lease or (b) on the priority or perfection of the Trustee's or the
Master Collateral Agent's Lien on a material portion of the Collateral
or the Master Collateral.
"Maximum Lease Commitment" means, on any date of determination, the sum
(without duplication) of (i) the Aggregate Invested Amount on such date, plus
(ii) with respect to all Series of Notes that provide for Enhancement in the
form of overcollateralization, the sum of the available subordinated amounts on
such date for each such Series of Notes, plus (iii) the aggregate Net Book
Values of all Vehicles leased under the Lease on such date that were acquired,
financed or refinanced with funds representing any portion of the Retained
Interest (other than available subordinated amounts), plus (iv) any amounts held
in the Retained Distribution Account that the Lessor commits on or prior such
date to invest in new Vehicles (as evidenced by a Company Order) in accordance
with the terms of the Lease and the Indenture.
"Maximum Manufacturer Amount" with respect to a Series of Notes is
defined in the related Supplement.
"Maximum Non-Program Vehicle Amount" with respect to a Series of Notes
is defined in the related Supplement.
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"Missing Equipment Charges" means, with respect to any Program Vehicle,
the amount charged to NFLP or National, as applicable, or deducted from the
Repurchase Price, by the Manufacturer of such Vehicle due to missing equipment
at the time such Vehicle is turned in to such Manufacturer or its agent for
repurchase pursuant to the applicable Manufacturer Program.
"Monthly Base Rent", with respect to the Acquired Vehicles and the
Financed Vehicles, respectively, is defined in the related Lease Annex.
"Monthly Certificate" is defined in Section 24.6(vi) of the Lease.
"Monthly Finance Rent" is defined in paragraph 6 of Annex B to the
Lease.
"Monthly Noteholders' Statement" means a statement substantially in the
form of Exhibit B to the Lease.
"Monthly Servicing Fee" is defined in Section 26.1 of the Lease.
"Monthly Supplemental Payment" is defined in paragraph 6 of Annex B to
the Lease.
"Monthly Variable Rent" is defined in paragraph 9 of Annex A to the
Lease.
"Monthly Vehicle Statement" is defined in Section 24.6(iv) of the
Lease.
"National" means National Car Rental System, Inc., a Delaware
corporation formerly known as NCR Acquisition Corp.
"National Master Collateral" is defined in Section 2.1(a) of the Master
Collateral Agency Agreement.
"NCR Acquisition Corp." means NCR Acquisition Corp., a Delaware
corporation.
"Net Book Value" means, with respect to each Vehicle as of any date of
determination, such Vehicle's Capitalized Cost minus the aggregate Depreciation
Charges accrued with respect to such Vehicle through the last day of the Related
Month.
"NFLP" means National Car Rental Financing Limited Partnership, a
Delaware limited partnership.
"NFLP Agreements" means the Lease, the Subleases, the Assignment
Agreements, the Indenture, the Master Collateral Agency Agreement, any
Enhancement Agreement and any other agreements to which NFLP is a party (other
than such ordinary course agreements as are
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permitted pursuant to Sections 8.24 and 8.26 of the Base Indenture and other
than Exchange Documents.)
"NFLP Fleet Finance Agreement" means a Fleet Financing Support
Agreement between GM, the Master Collateral Agent and NFLP.
"NFLP Master Collateral" is defined in Section 2.1(b) of the Master
Collateral Agency Agreement.
"NFLP Obligations" means all principal and interest, at any time and
from time to time, owing by NFLP on the Notes and all costs, fees and expenses
payable by, or obligations of, NFLP under the Indenture and/or the Related
Documents.
"Non-Program Vehicle" means a Vehicle that, when acquired by NFLP or
National from an Eligible Manufacturer or when so designated by the Servicer, in
each case subject to the limitations described in the Related Documents, is not
eligible for inclusion in an Eligible Manufacturer Program.
"Non-Program Vehicle Report" is defined in Section 24.6(xi) of the
Lease.
"Non-Program Vehicle Termination Payment" is defined in Section 12.3 of
the Lease.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
"Note Rate" means, with respect to any Series of Notes, the annual rate
at which interest accrues on the Notes of such Series of Notes (or formula on
the basis of which such rate shall be determined) as stated in the applicable
Supplement.
"Note Register" means the register maintained pursuant to Section
2.6(a) of the Base Indenture, providing for the registration of the Notes and
transfers and exchanges thereof.
"Noteholder" and "Holder" mean the Person in whose name a Note is
registered in the Note Register.
"Notes" is defined in the recitals to the Base Indenture.
"Notice of Claim" is defined in Section 15.4 of the Lease.
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"Officer's Certificate" means a certificate signed by an Authorized
Officer of NFLP or National, as the case may be.
"Old National" has the meaning set forth in the definition of the Asset
Purchase Agreement.
"Operating Lease" means the Base Lease as supplemented by Annex A to
the Lease.
"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 NFLP
or National, as the case may be, unless the Requisite Investors shall notify the
Trustee of objection thereto.
"Outstanding" means with respect to Notes, all Notes theretofore
authenticated and delivered under the Indenture, except (a) Notes theretofore
cancelled or delivered to the Registrar for cancellation, (b) Notes which have
not been presented for payment but funds for the payment of which are on deposit
in the Distribution Account established with respect thereto and are available
for payment of such Notes, and Notes which are considered paid pursuant to
Section 8.1 of the Base Indenture, or (c) Notes in exchange for or in lieu of
other Notes which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee is presented that any such
Notes are held by a bona fide purchaser. Subject to Section 2.12 of the Base
Indenture, a Note does not cease to be Outstanding because NFLP or an Affiliate
of NFLP holds the Note.
"Paired Series" is defined in Section 5.5 of the Base Indenture.
"Past Due Amount" has the meaning specified in the definition of
"Manufacturer Event of Default".
"Paying Agent" is defined in Section 2.6(a) of the Base Indenture.
"Payment Date" means the 20th day of each month, or if such date is not
a Business Day, the next succeeding Business Day.
"Pension Plan" means any "employee pension benefit plan", as such term
is defined in ERISA, which is subject to Title IV of ERISA (other than a
"multiemployer plan", as defined in Section 4001 of ERISA) and to which any
company in the Controlled Group has liability, including any liability by reason
of having been a substantial employer within the meaning of Section 4063 of
ERISA for any time within the preceding five years or by reason of being deemed
to be a contributing sponsor under Section 4069 of ERISA.
"Permanent Global Note" is defined in Section 2.5(b) of the Base
Indenture.
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"Permitted Encumbrances" means: (a) a Lien securing a tax, assessment
or other governmental charge or levy (excluding any Lien arising under any of
the provisions of ERISA) or the claim of a materialman, mechanic, carrier,
warehouseman or landlord for labor, materials, supplies or rentals incurred in
the ordinary course of business, and foreclosure, distraint, sale or other
similar proceedings shall not have been commenced; (b) a Lien on the properties
and assets of a Subsidiary of National securing Indebtedness owing to National;
(c) a Lien consisting of a deposit or pledge made, in the ordinary course of
business, in connection with, or to secure payment of, obligations under
worker's compensation, unemployment insurance or similar legislation; (d) a Lien
constituting an encumbrance in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property which does not
materially detract from the value of such property or impair the use thereof in
the business of National or any Subsidiary; (e) a Lien constituting a lease or
sublease granted by National or any Subsidiary to others in the ordinary course
of business; (f) a Lien existing on (i) property of any Person at the time such
Person becomes a Consolidated Subsidiary of National or (ii) any asset prior to
the acquisition thereof by National or a Consolidated Subsidiary, but only, in
the case of either (i) or (ii), if such Lien was not created in contemplation
thereof and so long as the obligation secured by such Lien is not in default and
such Lien is and will remain confined to the property subject to it at the time
such Person becomes a Consolidated Subsidiary of National or such property is
acquired and to fixed improvements thereafter erected on such property; (g) a
Lien in existence on the Closing Date, but only, in the case of each such Lien,
to the extent it secures Existing Indebtedness; (h) a Lien securing Purchase
Money Indebtedness but only if, in the case of each such Lien: (i) such Lien
shall at all times be confined solely to the asset the purchase price of which
was financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien and to fixed improvements then or thereafter erected on such asset;
(ii) such Lien attached to such asset within 90 days of the acquisition of such
property; and (iii) the aggregate principal amount of Purchase Money
Indebtedness secured by such Lien at no time exceeds an amount equal to the
lesser of (A) the cost (including the principal amount of such Indebtedness,
whether or not assumed) to National or a Consolidated Subsidiary of the asset
subject to such Lien and (B) the fair value of such asset at the time of such
acquisition; (i) a Lien constituting a renewal, extension or replacement of a
Lien constituting a Permitted Encumbrance by virtue of clause (f), (g) or (h) of
this definition, but only, in the case of each such renewal, extension or
replacement Lien, to the extent that the principal amount of indebtedness
secured by such Lien does not exceed the principal amount of such indebtedness
so secured at the time of the extension, renewal or replacement, and that such
renewal, extension or replacement Lien is limited to all or a part of the
property that was subject to the Lien extended, renewed or replaced and to fixed
improvements then or thereafter erected on such property; and (k) a Lien arising
pursuant to an order of attachment, distraint or similar legal process arising
in connection with legal proceedings, but only if and so long as the execution
or other enforcement thereof is not unstayed for more than 20 days. For this
purpose "Existing Indebtedness" means Indebtedness issued and outstanding on the
Closing Date, and "Purchase Money Indebtedness" means Indebtedness of National
or any Consolidated Subsidiary that,
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within 90 days of such purchase, is incurred to finance part or all of (but not
more than) the purchase price of a tangible asset in which neither National nor
any Subsidiary had at any time prior to such purchase any interest other than a
security interest or an interest as lessee under an operating lease and, in the
case of both Existing Indebtedness and Purchase Money Indebtedness, renewals,
extensions or refundings, thereof, but not any increases in the principal
amounts thereof or interest rates thereon, except for increases in interest
rates upon the occasion of any such renewal, extension or refunding that are
commercially reasonable at such time.
"Permitted Investments" means negotiable instruments or securities
maturing on or before the Distribution Date next occurring after the investment
therein, represented by instruments in bearer or registered or in book-entry
form which evidence (i) obligations the full and timely payment of which are to
be made by or is fully guaranteed by the United States of America; (ii) demand
deposits of, time deposits in, or certificates of deposit issued by, any
depositary institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by Federal or state banking or depositary institution authorities;
provided, however, that at the earlier of (x) the time of the investment and (y)
the time of the contractual commitment to invest therein, the certificates of
deposit or short-term deposits, if any, or long-term unsecured debt obligations
(other than such obligation whose rating is based on collateral or on the credit
of a Person other than such institution or trust company) of such depositary
institution or trust company shall have a credit rating from Standard & Poor's
of "A-1" (and, if any Series is then rated by Duff & Phelps at the request of
NFLP or National and such Permitted Investment is rated by Duff & Phelps, such
Permitted Investment receives a rating from Duff & Phelps of at least D-1), in
the case of certificates of deposit or short-term deposits, or a rating from
Standard & Poor's not lower than "AA" (and, if any Series is then rated by Duff
& Phelps at the request of NFLP or National and such Permitted Investment is
rated by Duff & Phelps, such Permitted Investment receives a rating from Duff &
Phelps of at least "AA"), in the case of long-term unsecured debt obligations;
(iii) commercial paper having, at the earlier of (x) the time of the investment
and (y) the time of the contractual commitment to invest therein, a rating from
Standard & Poor's of "A-1" (and, if any Series is then rated by Duff & Phelps at
the request of NFLP or National and such Permitted Investment is rated by Duff &
Phelps, such Permitted Investment receives a rating from Duff & Phelps of at
least D-1); (iv) demand deposits or time deposits which are fully insured by the
FDIC; (v) bankers' acceptances issued by any depositary institution or trust
company described in clause (ii) above; (vi) investments in money market funds
rated "AAm" by Standard & Poor's or otherwise approved in writing by Standard &
Poor's (and, if any Series is then rated by Duff & Phelps at the request of NFLP
or National and such Permitted Investment is rated by Duff & Phelps, such
Permitted Investment receives a rating from Duff & Phelps of at least AA or
otherwise approved in writing by Duff & Phelps); (vii) Eurodollar time deposits
having a credit rating from Standard & Poor's of "A-1" (and, if any Series is
then rated by Duff & Phelps at the request of NFLP or National and such
Permitted Investment is rated by Duff & Phelps, such Permitted
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Investment receives a rating from Duff & Phelps of at least D-1); (viii)
repurchase agreements involving any of the Permitted Investments described in
clauses (i) and (vii) above and the certificates of deposit described in clause
(ii) above which are entered into with a depositary institution or trust
company, having a commercial paper or short-term certificate of deposit rating
of "A-1" by Standard & Poor's (and, if any Series is then rated by Duff & Phelps
at the request of NFLP or National and such Permitted Investment is rated by
Duff & Phelps, such Permitted Investment receives a rating from Duff & Phelps of
at least D-1 or which otherwise is approved as to collateralization by the
Rating Agencies; and (ix) any other instruments or securities, if the Rating
Agencies confirm in writing that the investment in such instruments or
securities will not adversely affect any ratings with respect to any Series of
Notes.
"Permitted Liens" means (i) Liens for current taxes not delinquent or
for taxes being contested in good faith and by appropriate proceedings, and with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP, (ii) mechanics', materialmen's, landlords',
warehousemen's and carrier's Liens, and other Liens imposed by law, securing
obligations arising in the ordinary course of business that are not more than
thirty days past due or are being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves have been established,
and are being maintained, in accordance with GAAP, (iii) Liens in favor of the
Lessor, (iv) Liens pursuant to an Exchange Assignment Agreement and (v) the
Liens in favor of the Master Collateral Agent pursuant to the Master Collateral
Agency Agreement and the Trustee pursuant to the Indenture.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, joint stock company, corporation,
trust, unincorporated organization or Governmental Authority.
"Placement Memorandum Supplement" means a Placement Memorandum
Supplement, which supplements the Private Placement Memorandum and relates to a
Series of the Notes.
"Pool Factor" means, a number carried out to eight significant decimals
representing the ratio of the applicable Invested Amount of a Series or class as
of the end of the Related Month to the applicable Initial Invested Amount of
such Series or class.
"Potential Amortization Event" means any occurrence or event which,
with the giving of notice, the passage of time or both, would constitute an
Amortization Event.
"Potential Enhancement Agreement Event of Default" means an event
which, with the giving of notice, the passage or time or both would constitute
an Enhancement Agreement Event of Default under any Enhancement Agreement.
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"Potential Lease Event of Default" means an event which, with the
giving of notice or lapse of time or both would constitute a Lease Event of
Default.
"Potential Manufacturer Event of Default" means an event which, with
the giving of notice, the passage or time, or both, would constitute a
Manufacturer Event of Default.
"Power of Attorney" is defined in Section 9 of the Lease.
"Prime Rate" means the rate of interest most recently announced by
Citibank, N.A. at its office located at 339 Park Avenue, New York, New York
10043, as its corporate base rate; provided, however, that the Prime Rate is not
necessarily intended to be the lowest rate of interest determined by Citibank,
N.A. in connection with extensions of credit.
"Principal Collections" means any Collections other than Interest
Collections.
"Principal Terms" is defined in Section 2.3 of the Base Indenture.
"Private Placement Memorandum" means each final Private Placement
Memorandum, dated the date set forth on the cover page thereof, relating to a
Series of Notes, as amended, modified or supplemented.
"Program Vehicle" means a Vehicle subject to an Eligible Manufacturer
Program.
"Program Vehicle Termination Payment" is defined in Section 12.3 of the
Lease.
"Qualified Institution" means a depositary institution or trust company
(which may include the Trustee) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia; provided,
however, that at all times such depositary institution or trust company is a
member of the FDIC and has (i) from Standard & Poor's a long-term indebtedness
rating not lower than AA and a short-term indebtedness rating of A-1+ (and not
lower than the comparable ratings from Duff & Phelps, if Duff & Phelps is a
Rating Agency and provides such ratings with respect to such institution or
company), or (ii) such other rating which has been approved by the Rating
Agencies.
"Qualified Intermediary" means a party, rated not less than "A" by
Standard & Poor's and "A" by Duff & Phelps (if rated by Duff & Phelps),
designated in an Exchange Agreement as an intermediary for exchanges of Vehicles
by NFLP or National pursuant to such Exchange Agreement.
"Rapid Amortization Period" means, with respect to any Series of Notes,
the period specified in the applicable Supplement.
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"Rating Agency" means, with respect to each outstanding Series of
Notes, any rating agency or agencies then issuing a rating for such Series of
Notes at the request of NFLP or National.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have notified NFLP, National, any Enhancement Provider and
the Trustee in writing that such action will not result in a reduction or
withdrawal of the rating (in effect immediately before the taking of such
action) of any outstanding Series of Notes with respect to which it is a Rating
Agency and, with respect to the issuance of a Series of Notes, the "Rating
Agency Condition" also means that each Rating Agency that is referred to in the
related Supplement as being required to deliver its rating with respect to such
Series of Notes shall have notified NFLP, National, any Enhancement Provider and
the Trustee in writing that such rating has been issued by such Rating Agency.
"Record Date" means, with respect to any Distribution Date, the last
day of the Related Month.
"Recoveries" with respect to any Series of Notes, has the meaning, if
any, specified in the applicable Supplement.
"Refinanced Vehicles" means Eligible Vehicles owned by National prior
to the Lease Commencement Date which are subject to the lien of the Master
Collateral Agent and refinanced by NFLP under the Financing Lease on any day
from and including the Lease Commencement Date to the 90 day after the Closing
Date.
"Registrar" is defined in Section 2.6(a) of the Base Indenture.
"Regulation S" is defined in Section 2.5(b) of the Base Indenture.
"Related Documents" means, collectively, the Indenture, the Notes, any
Enhancement Agreement, the Lease, the Master Collateral Agency Agreement, the
Assignment Agreements, the Intercreditor Agreement, any Purchase Agreement, the
Vehicle Title Nominee Agreement, the GM Guaranty and any agreements
relating to the purchase of any of the Notes.
"Related Month" means, with respect to any Payment Date, Determination
Date, Distribution Date or other date, the most recently ended calendar month;
provided, however, that the initial Related Month shall be the period from and
including the date of issuance of the first Series of Notes to and including the
last day of the calendar month in which such issuance occurs.
"Related Vehicles" is defined in Section 2.2 of the Master Collateral
Agency Agreement.
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"Rent", with respect to each Acquired Vehicle and each Financed
Vehicle, is defined in paragraph 9 of Annex A to the Lease and in paragraph 6 of
Annex B to the Lease, respectively.
"Replacement Vehicle" means an Eligible Vehicle (i) which is owned by
NFLP or National, (ii) which is in the possession of NFLP or National, (iii)
with respect to which the Vehicle Perfection and Documentation Requirements have
been satisfied, (iv) which is subject to no Liens other than the Lien of the
Master Collateral Agent and (v) which (a) has been acquired pursuant to an
Exchange Agreement as a Replacement Vehicle for a Designated Vehicle or
Designated Vehicles, (b) (1) has a Net Book Value equal to or greater than the
aggregate Termination Value of the Designated Vehicle or Designated Vehicles
which it replaces or (2) has a Net Book Value when aggregated with the Net Book
Value of one or more other Replacement Vehicles tendered in exchange for a
Designated Vehicle equal to or greater than the Termination Value for such
Designated Vehicle and (c) has been designated on the Servicer's computer system
as a Related Vehicle with respect to the Beneficiary to which the related
Designated Vehicle or Designated Vehicles are designated.
"Repurchase Amount" means, with respect to any Series of Notes, the
amount specified in the applicable Supplement.
"Repurchase Period" means, with respect to any Program Vehicle, the
period during which such Vehicle may be turned in to the Manufacturer thereof
for repurchase or sale at Auction pursuant to the applicable Manufacturer
Program.
"Repurchase Price" with respect to any Vehicle (i) subject to a
Repurchase Program means the price paid or payable by the Manufacturer thereof
to repurchase such Vehicle pursuant to its Manufacturer Program and (ii) subject
to a Guaranteed Depreciation Program means the amount which the Manufacturer
thereof guarantees will be paid to National or NFLP as the seller of such
vehicle by such Manufacturer and/or the related auction dealers upon the
disposition of such Vehicle pursuant to its Manufacturer Program.
"Repurchase Program" means a program pursuant to which a Manufacturer
has agreed with National or NFLP to repurchase Vehicles manufactured by such
Manufacturer or one of its Affiliates during the specified Repurchase Period.
"Required Asset Amount" means, at any date of determination, the sum of
(i) the Invested Amounts for all Series of Notes that do not provide for
Enhancement in the form of overcollateralization plus (ii) the aggregate amount,
with respect to all Series of Notes that provide for Enhancement in the form of
overcollateralization, of (a) the Invested Amount for each such Series of Notes
(less the Invested Amount of any subordinated class of Notes constituting a
portion of such Series of Notes and the Letter of Credit Amount, if any,
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specified in the Supplement for such Series of Notes) plus (in the case only of
clause (ii) above) (b) the Required Enhancement Amount for such Series of Notes.
"Required Enhancement Amount" with respect to a Series of Notes has the
meaning specified in the related Supplement.
"Required Noteholders" means Noteholders holding in excess of 50% of
the aggregate Invested Amount of a Series of Notes (excluding, for the purposes
of making the foregoing calculation, any Notes held by National, or any
Affiliate of National).
"Requirements of Law" means, with respect to any Person or any of its
property, the certificate of incorporation or articles of association and
by-laws, certificate of limited partnership, limited partnership agreement or
other organizational or governing documents of such Person, and any law,
ordinance, treaty, rule or regulation, requirement 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 Federal, state or local (including, without
limitation, usury laws, the Federal Truth in Lending Act and retail installment
sales acts).
"Requisite Investors" means Noteholders holding in excess of 50% of the
aggregate Invested Amount of all outstanding Series of Notes (excluding, for the
purposes of making the foregoing calculation, any notes held by National, or any
Affiliate of National).
"Responsible Officer" means, with respect to NFLP or National, any Vice
President, Assistant Vice President, Secretary, Assistant Secretary, Treasurer
or Assistant Treasurer of the General Partner or National, as applicable, or any
officer customarily performing functions similar to those performed by the
person who at the time shall be such officer.
"Restricted Global Note" is defined in Section 2.5(a) of the Base
Indenture.
"Retained Distribution Account" is defined in Section 5.1(b) of the
Base Indenture.
"Retained Interest" means a transferable indirect interest in NFLP's
assets held by the Retained Interestholder, including the right to receive
payments in respect of the Retained Interest Amount.
"Retained Interest Amount" means, on any date of determination, the
amount, if any, by which the Aggregate Asset Amount at the end of the day
immediately prior to such date of determination, exceeds the Aggregate Invested
Amount at the end of such day.
"Retained Interestholder" means National or any permitted successor or
assign.
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"Revolving Period" means, with respect to any Series of Notes, the
period specified in the applicable Supplement.
"Rule 144A" is defined in Section 2.5(a) of the Base Indenture.
"Scheduled GM Commitment Expiration Date" shall have the meaning
specified in Section 2.1(a) of the Support Reimbursement Agreement.
"SEC" means the Securities and Exchange Commission, and any successor
agency thereto.
"Secured Parties" is defined in Section 3.1 of the Base Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Segregated Series" is defined in Section 2.3(b) of the Base Indenture.
"Series of Notes" or "Series" means each Series of Notes issued and
authenticated pursuant to the Base Indenture and a related Supplement.
"Series Monthly Servicing Fee" is defined in Section 26.1 of the Lease.
"Series-Specific Collateral" is defined in Section 2.3(b) of the Base
Indenture.
"Series Termination Date" means, with respect to any Series of Notes,
the date stated in the related Supplement as the termination date.
"Servicer" means National, in its capacity as servicer of Vehicles
under the Lease and the Master Collateral Agency Agreement, unless the Master
Collateral Agent shall have assumed any duties and obligations of the Servicer
pursuant to the applicable provisions of the Master Collateral Agency Agreement,
and thereafter "Servicer" shall, to such extent, include the Master Collateral
Agent.
"Servicing Fee Percentage" means, with respect to any Series of Notes,
the percentage specified in the related Supplement.
"Standard & Poor's" means Standard & Poor's Structured Ratings, a
Division of The McGraw-Hill Companies, Inc.
"Sublease" means a lease agreement, for the leasing of Vehicles,
between National, as sublessor, and an Eligible Franchisee, as sublessee.
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"Sublessee" means an Eligible Franchisee, as sublessee under a Sublease
with National as sublessor.
"Subordinated Promissory Note" means the Promissory Note in the
principal amount of $35,000,000 issued on June 1, 1995 by NCR Acquisition Corp.
in favor of Old National.
"Subsidiary" means, with respect to any Person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held by the parent or (b) that is, at the
time any determination is being made, otherwise controlled, by the parent or one
or more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent.
"Supplement" means a supplement to the Base Indenture complying (to the
extent applicable) with the terms of Section 2.3 or Article 12 of the Base
Indenture.
"Supplemental Documents" is defined in Section 2.1 of the Lease.
"Supplemental Servicing Fee" is defined in Section 26.1 of the Lease.
"Support Event of Default" shall have the meaning specified in Section
2.7 of the Support Reimbursement Agreement.
"Support Event of Default Disbursement" shall have the meaning
specified in Section 2.3(iii)(b) of the Support Reimbursement Agreement.
"Support Credit Enhancer" means General Motors Corporation.
"Support Loan Disbursement" shall have the meaning specified in Section
2.2(a) of the Support Reimbursement Agreement.
"Support Termination Disbursement" shall have the meaning specified in
Section 2.2(b) of the Support Reimbursement Agreement.
"Temporary Global Note" is defined in Section 2.5(b) of the Base
Indenture.
"Term" is defined in Section 3.2 of the Lease.
"Termination Payment" is defined in Section 12.3 of the Lease.
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"Termination Value" means, with respect to any Vehicle, as of any date,
an amount equal to (i) the Capitalized Cost of such Vehicle, minus (ii) unless
otherwise deducted in the calculation of "Capitalized Cost", all Depreciation
Charges for such Vehicle accrued prior to such date.
"Texas Vehicle" means an Eligible Vehicle acquired by NFLP on or after
the Lease Commencement Date for lease in the State of Texas.
"Transfer Agent" is defined in Section 2.9(iii) of the Base Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Officer" means, with respect to the Trustee, any Senior Vice
President, Vice President, Assistant Vice President, Assistant Secretary or
Assistant Treasurer of the Corporate Trust Office, or any trust officer, or any
officer customarily performing functions similar to those performed by the
person who at the time shall be such officers, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with a particular
subject, or any successor thereto responsible for the administration of the Base
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.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the specified jurisdiction.
"U.S. Government Obligations" is defined in Section 11.1 of the Base
Indenture.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Vehicle" means a passenger automobile or light truck purchased,
financed or refinanced by NFLP under the Lease and pledged under the Master
Collateral Agency Agreement for the benefit of the Trustee (on behalf of the
Noteholders), but solely during the Vehicle Term for such Vehicle.
"Vehicle Acquisition Schedule" is defined in Section 2.1 of the Lease.
"Vehicle Lease Commencement Date" is defined in Section 3.1 of the
Lease.
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"Vehicle Lease Expiration Date", with respect to each Vehicle, means
the earliest of (i) the Disposition Date for such Vehicle, (ii) if such Vehicle
becomes a Casualty, the date funds in the amount of the Net Book Value thereof
are received by the Lessor, the Master Collateral Agent or the Trustee
(including deposit into the Collection Account or the Master Collateral Account)
from the Lessee in accordance with the Lease, and (iii) the last day of the
maximum Vehicle Lease term of the Operating Lease and the Financing Lease, as
applicable, as specified in, respectively, paragraph 5 of each of Annex A and
Annex B to the Lease.
"Vehicle Order" is defined in Section 2.1 of the Lease.
"Vehicle Perfection and Documentation Requirements" means, with respect
to (i) a Vehicle (other than an Initial Vehicle), submission within the
applicable statutory period of an application for the issuance of a certificate
of title for such Vehicle with the department of registry of motor vehicles of
the applicable state in which such Vehicle is to be registered, which
application shall reflect the following: National or NFLP, as applicable, as the
registered owner and the Master Collateral Agent as the first lienholder or (ii)
an Initial Vehicle, the assignment by GMAC to the Master Collateral Agent of its
lien with respect to such Initial Vehicle.
"Vehicle Purchase Price" means, on any date of determination and for
any Acquired Vehicle, an amount equal to the greater of (a) the sum of the
applicable Net Book Value of the Vehicle and all unpaid Depreciation Charges
accruing with respect thereto through the last day of the Related Month to the
date of purchase by the Lessee, and (b) the fair market value of such Vehicle
based on (1) (x) an independent third-party data source approved by each Rating
Agency that rated any Series of Notes at the request of the Lessor and (y) the
average equipment and average mileage of each Acquired Vehicle of such model
class and model year, or (2) such other methodology approved by each such Rating
Agency.
"Vehicle Ratio" means, with respect to any calendar month or series of
calendar months, the percentage equivalent of a fraction the numerator of which
is the sum of the Capitalized Costs of all Vehicles manufactured by Chrysler and
acquired or financed during such calendar month or series of consecutive
calendar months and the denominator of which is the sum of the Capitalized Costs
of all Vehicles manufactured by Chrysler and acquired or financed during the
twelve-month period ending on the last day of the calendar month or series of
consecutive calendar months with respect to which such calculation is made;
provided that, if no Chrysler Vehicles were purchased during such twelve-month
period, the denominator shall be the sum of the Capitalized Costs of all
Vehicles manufactured by Chrysler that were acquired or financed during the
twelve-month period ending on the last day of the last month in which a Vehicle
manufactured by Chrysler was acquired or financed under the Lease.
"Vehicle Term" is defined in Section 3.1 of the Lease.
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"Vehicle Title Nominee Agreement" means the Vehicle Title Nominee
Agreement, dated as of June 7, 1995, between Old National and National.
"VFR" means, for any Interest Period, an interest rate equal to the
quotient, expressed as a percentage, of (i) the amount of interest accrued
during such Interest Period with respect to all Series of Notes, divided by (ii)
the average daily aggregate Invested Amount of all Series of Notes during such
period.
"VIN" is defined in Section 18 of the Lease.
"written" or "in writing" means any form of written communication,
including, without limitation, by means of telex, telecopier device, telegraph
or cable.
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EXHIBIT 4.3
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees and Servicers hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
AS SET FORTH IN SECTION 21 HEREOF, THE LESSOR HAS ASSIGNED TO THE TRUSTEE (AS
DEFINED HEREIN) ALL OF THE LESSOR'S RIGHT, TITLE AND INTEREST IN AND TO THIS
LEASE. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED THROUGH THE
TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED
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SECTION 1. CERTAIN DEFINITIONS.............................................................................2
Section 1.1. Certain Definitions...............................................................2
Section 1.2. Accounting and Financial Determinations...........................................2
Section 1.3. Cross References; Headings........................................................2
Section 1.4. Interpretation....................................................................3
SECTION 2. GENERAL AGREEMENT...............................................................................3
Section 2.1. Leasing of Vehicles...............................................................4
Section 2.2. Right of Lessee to Act as Lessor's Agent; Titling of
Series 1997 Vehicles in the Name of Nominees....................................................6
Section 2.3. Payment of Purchase Price by Lessor, Certain Additional
Payments to the Servicer........................................................................6
Section 2.4. Non-liability of Lessor...........................................................7
SECTION 3. TERM ..........................................................................................8
Section 3.1. Vehicle Lease Commencement Date...................................................8
Section 3.2. Lease Commencement Date...........................................................9
SECTION 4. CONDITIONS PRECEDENT............................................................................9
Section 4.1. Conditions to Effectiveness of this Lease.........................................9
Section 4.2. Conditions to Each Lease of Vehicles.............................................11
Section 4.3. Additional Conditions to Leases of
Refinanced Vehicles............................................................................13
SECTION 5. RENT AND CHARGES...............................................................................14
Section 5.1. Payment of Rent..................................................................14
Section 5.2. Payment of Monthly Supplemental Payments and
Additional Synthetic Lease Payments............................................................14
Section 5.3. Payment of Termination Payments and Casualty
Payments.......................................................................................14
Section 5.4. Late Payment.....................................................................14
Section 5.5. Making of Payments...............................................................14
SECTION 6. RESERVED.......................................................................................15
SECTION 7. CASUALTY AND INELIGIBLE VEHICLES...............................................................15
SECTION 8. VEHICLE USE....................................................................................15
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SECTION 9. REGISTRATION; LICENSE; TRAFFIC SUMMONSES;
PENALTIES AND FINES............................................................................16
SECTION 10. MAINTENANCE AND REPAIRS........................................................................17
SECTION 11. MANUFACTURER WARRANTIES........................................................................18
SECTION 12. VEHICLE RETURN GUIDELINES......................................................................18
Section 12.1. Vehicle Turn-in Condition.......................................................18
Section 12.2. Disposition Procedure...........................................................18
Section 12.3. Termination Payments............................................................18
SECTION 13. [RESERVED].....................................................................................19
SECTION 14. REDESIGNATION OF VEHICLES......................................................................19
SECTION 15. GENERAL INDEMNITY AND PAYMENT OF EXPENSES......................................................20
Section 15.1. Indemnity and Payment of Expenses by the Lessees................................20
Section 15.2. Indemnification of the Trustee..................................................22
Section 15.3. Reimbursement Obligation by the Lessees.........................................22
Section 15.4. Notice to Lessee of Claims......................................................22
Section 15.5. Defense of Claims...............................................................23
SECTION 16. SUCCESSORS AND ASSIGNS; ASSIGNMENT.............................................................23
SECTION 17. DEFAULT AND REMEDIES THEREFOR..................................................................24
Section 17.1. Events of Default...............................................................24
Section 17.2. Effect of Lease Event of Default; Series 1997-1 Limited
Liquidation Event of Default or Liquidation Event of Default25...................................
Section 17.3. Rights of Lessor and Trustee Upon Lease Event of
Default, Liquidation Event of Default or Series 1997 Limited
Liquidation Event of Default...................................................................26
Section 17.4. Measure of Damages..............................................................29
Section 17.5. Application of Proceeds.........................................................29
SECTION 18. MANUFACTURER EVENTS OF DEFAULT; LESSEE PARTIAL
WIND-DOWN EVENTS...............................................................................29
SECTION 19. CERTIFICATION OF TRADE OR BUSINESS USE.........................................................30
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SECTION 20. SURVIVAL.......................................................................................30
SECTION 21. RIGHTS OF LESSOR PLEDGED TO MASTER COLLATERAL
AGENT AND TRUSTEE..............................................................................30
SECTION 22. MODIFICATION AND SEVERABILITY..................................................................32
SECTION 23. CERTAIN REPRESENTATIONS AND WARRANTIES.........................................................33
Section 23.1. Organization; Power; Qualification..............................................33
Section 23.2. Authorization; Enforceability...................................................33
Section 23.3. Compliance......................................................................33
Section 23.4. Financial Information; Financial Condition......................................34
Section 23.5. Litigation......................................................................34
Section 23.6. Liens...........................................................................34
Section 23.7. Employee Benefit Plans..........................................................34
Section 23.8. Securities Laws.................................................................35
Section 23.9. Regulations G, T, U and X.......................................................35
Section 23.10. Business Locations; Trade Names................................................35
Section 23.11. Taxes..........................................................................35
Section 23.12. Governmental Authorizations....................................................35
Section 23.13. Absence of Default.............................................................35
Section 23.14. Compliance with Requirements of Law............................................36
Section 23.15. Eligible Vehicles; Fleet Sharing Parties.......................................36
Section 23.16. Title to Assets................................................................36
Section 23.17. Accuracy of Information........................................................36
Section 23.18. Environmental Matters..........................................................36
Section 23.19. Burdensome Provisions..........................................................37
Section 23.20. Solvency.......................................................................37
Section 23.21. Ownership......................................................................37
Section 23.22. Necessary Actions..............................................................37
Section 23.23. Supplemental Documents True and Correct........................................37
Section 23.24. Initial Vehicles...............................................................38
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS..................................................................38
Section 24.1. Corporate Existence; Foreign Qualification......................................38
Section 24.2. Books, Records and Inspections..................................................38
Section 24.3. Maintenance of Properties.......................................................39
Section 24.4. Accounting Methods; Financial Records...........................................39
Section 24.5. Insurance.......................................................................39
Section 24.6. Manufacturer Programs...........................................................40
Section 24.7. Reporting Requirements..........................................................40
Section 24.8. Taxes and Liabilities...........................................................44
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Section 24.9. Maintenance of the Vehicles....................................................44
Section 24.10. Maintenance of Separate Existence..............................................44
Section 24.11. Maintenance of Enhancement.....................................................44
Section 24.12. Repurchase Payments; Sales Proceeds............................................44
Section 24.13. Certificates of Title: Verification of Titles..................................45
Section 24.14. Master Collateral Agency Agreement.............................................45
Section 24.15. Compliance with Laws...........................................................46
Section 24.16. Delivery of Information........................................................46
Section 24.17. Restrictions...................................................................46
Section 24.18. Deliveries: Further Assurances.................................................46
Section 24.19. Additional Actions.............................................................46
Section 24.20. Fleet Sharing Agreements.......................................................47
Section 24.21. Minimum Depreciation Rate......................................................47
SECTION 25. CERTAIN NEGATIVE COVENANTS.....................................................................47
Section 25.1. Mergers, Consolidations.........................................................47
Section 25.2. Regulations G, T, U and X.......................................................47
Section 25.3. Liens...........................................................................48
Section 25.4. Use of Vehicles.................................................................48
Section 25.5. Change of Location or Name......................................................48
SECTION 26. SERVICING COMPENSATION; DELEGATION OF SERVICING
DUTIES.........................................................................................48
Section 26.1...................................................................................48
Section 26.2...................................................................................48
Section 26.3...................................................................................49
SECTION 27. RELEASE OF COLLATERAL..........................................................................49
SECTION 28. GUARANTY.......................................................................................50
Section 28.1. Guaranty........................................................................50
Section 28.2. Scope of Guarantor's Liability..................................................50
Section 28.3. Lessor's Right to Amend this Lease..............................................51
Section 28.4. Waiver of Certain Rights by Guarantor...........................................51
Section 28.5. Lessees' Obligations to Guarantor and Guarantor's
Obligations to Lessees Subordinated............................................................52
Section 28.6. Guarantor to Pay Lessor's Expenses..............................................53
Section 28.7. Reinstatement...................................................................53
Section 28.8. Pari Passu Indebtedness.........................................................54
Section 28.9. Third-Party Beneficiaries.......................................................54
</TABLE>
<PAGE> 6
TABLE OF CONTENTS
(continued)
<TABLE>
<S> <C> <C>
SECTION 29. ADDITIONAL LESSEES.............................................................................54
Section 29.1. Additional Affiliate and Subsidiary Lessees....................................54
SECTION 30. BANKRUPTCY PETITION AGAINST LESSOR.............................................................55
SECTION 31. FORUM SELECTION AND CONSENT TO JURISDICTION....................................................56
SECTION 32. GOVERNING LAW..................................................................................56
SECTION 33. JURY TRIAL.....................................................................................56
SECTION 34. NOTICES........................................................................................57
SECTION 35. HEADINGS.......................................................................................57
SECTION 36. EXECUTION IN COUNTERPARTS......................................................................57
</TABLE>
EXHIBITS
ANNEX A - Operating Lease Annex
ANNEX B - Financing Lease Annex
ANNEX C - Synthetic Lease Annex
SCHEDULE 23.10 - Business Locations
ATTACHMENT A-1 -Information on Refinanced Vehicles and Eligible Receivables
ATTACHMENT A-2 -Vehicle Order
ATTACHMENT B -Form of Power of Attorney
ATTACHMENT C -Form of Certification of Trade or Business Use
ATTACHMENT D -Form of Affiliate Joinder in Lease
EXHIBIT A - Form of Monthly Certificate
EXHIBIT B - Form of Series 1997-1 Lease Payment Deficit Notice
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<PAGE> 7
COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART
CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE TRUSTEE ON THE
SIGNATURE PAGE THEREOF.
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<PAGE> 8
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
This Master Motor Vehicle Lease and Servicing Agreement (the "Base
Lease" and, as supplemented by the Lease Annexes, this "Lease" or the "Series
1997 Lease"), dated as of October 29, 1997, is by and among NATIONAL CAR RENTAL
FINANCING LIMITED PARTNERSHIP, a special purpose Delaware limited partnership
(the "Lessor" or "NFLP"), NATIONAL CAR RENTAL SYSTEM, INC., a Delaware
corporation ("National"), as a lessee and a servicer, ALAMO RENT-A-CAR, INC., a
Florida corporation ("Alamo"), as a lessee and a servicer, VALUE RENT-A-CAR,
INC., a Florida corporation ("Value"), as a lessee and a servicer, SPIRIT
RENT-A-CAR, INC., an Ohio corporation ("Spirit"), as a lessee and a servicer,
and those subsidiaries of Republic Industries, Inc. from time to time becoming
Lessees hereunder pursuant to Section 29 hereof (each, an "Additional Lessee"),
as a lessee and a servicer (each of National, Alamo, Value and Spirit, and each
of the Additional Lessees, in their respective capacities as lessees, a "Lessee"
and, collectively, the "Lessees", and, in their respective capacities as
servicers, a "Servicer" and, collectively, the "Servicers") and REPUBLIC
INDUSTRIES, INC. a Delaware corporation ("Republic"), as master servicer (in
such capacity, the "Master Servicer") and as guarantor (in such capacity, the
"Guarantor").
W I T N E S S E T H:
WHEREAS, the Lessor (such capitalized term, together with each other
capitalized term used herein, shall have the meaning assigned thereto in Section
1) intends to refinance the Refinanced Vehicles and certain Eligible Receivables
and to purchase, and finance and refinance the purchase of, additional Eligible
Vehicles and Eligible Receivables with the proceeds obtained by the issuance of
its Series 1997-1 Notes, Series 1997-2 Notes, Series 1997-3 Notes and Series
1997-4 Notes (collectively, the "Series 1997 Variable Funding Notes") (and, if
any, other Shared Collateral Series Notes) issued pursuant to the Indenture and
the borrowing of Advances from time to time and with certain other funds; and
WHEREAS, the Lessor desires to lease to the Lessees and the Lessees
desire to lease from the Lessor, Vehicles for use in the domestic daily rental
car operations of the Lessees and their Fleet Sharing Parties;
WHEREAS, the Lessees desire to refinance the Refinanced Vehicles and
certain Eligible Receivables and finance and refinance the acquisition of the
Financed Vehicles and Synthetic Lease Vehicles and the Lessor desires to
facilitate such financing and refinancing.
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
<PAGE> 9
SECTION 1. CERTAIN DEFINITIONS.
Section 1.1. Certain Definitions. As used in this Lease and unless the
context requires a different meaning, capitalized terms not otherwise defined
herein or in the Annexes hereto shall have the meanings assigned to such terms
in the Definitions List, attached as Schedule 1 to the Base Indenture, dated as
of April 30, 1996, as amended by the Supplement and Amendment to Base Indenture,
dated as of December 20, 1996, and as such agreement may be further amended,
supplemented, restated or otherwise modified from time to time in accordance
with its terms, the "Base Indenture"), between NFLP and The Bank of New York, as
trustee, as in effect on the date hereof and as such Schedule 1 has been, for
purposes of the Series 1997 Variable Funding Notes, supplemented by the
applicable Series 1997 Variable Funding Supplements and may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms of the Base Indenture (the "Definitions List").
Section 1.2. Accounting and Financial Determinations. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined, or any accounting computation is required to be made,
for the purpose of this Lease, such determination or calculation shall, to the
extent applicable, be made in accordance with GAAP applied on a Consistent Basis
except insofar as:
(a) a Lessee or the Guarantor shall have elected (with the
concurrence of its independent public accountants and upon prior
written notification to the Lessor and the Trustee) to adopt more
recently promulgated GAAP (which election shall continue to be
effective for subsequent years); and
(b) the Trustee and the Required VFN Noteholders shall have
consented to such election.
Upon a change in GAAP which becomes effective after the VFN Closing
Date and which would have a material effect on a Lessee's or the Guarantor's
consolidated financial statements and the assets and liabilities reflected
therein or otherwise affect the application or effect of the terms of this
Lease, such change shall not be given effect for purposes hereof until sixty
(60) days from the otherwise effective date of such change. Prior to such
effectiveness, the Trustee, the Lessor, the Guarantor and the Lessees shall in
good faith negotiate to amend the pertinent provisions of this Lease to account
for such change to the extent appropriate to effect the substance thereof as of
the VFN Closing Date. If such an amendment is not entered into with respect to
any such change, such change shall not be given effect for purposes hereof.
Section 1.3. Cross References; Headings. The words "hereof", "herein"
and "hereunder" and words of a similar import when used in this Lease shall
refer to this Lease as a whole and not to any particular provision of this
Lease. Annex, Section, Schedule and Exhibit references contained in this Lease
are references to Annexes, Sections, Schedules and Exhibits in
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<PAGE> 10
or to this Lease unless otherwise specified. Any reference in any Section or
definition to any clause is, unless otherwise specified, to such clause of such
Section or definition. The various headings in this Lease are inserted for
convenience only and shall not affect the meaning or interpretation of this
Lease or any provision hereof.
Section 1.4. Interpretation. In this Lease, unless the context
otherwise requires:
(a) the singular includes the plural and vice versa;
(b) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Lease, and reference to any Person in a particular
capacity only refers to such Person in such capacity;
(c) reference to any gender includes the other gender;
(d) reference to any Requirement of Law means such Requirement
of Law as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time;
(e) "including" (and, with correlative meaning, "include")
means including without limiting the generality of any description
preceding such term;
(f) "or" is not exclusive;
(g) provisions apply to successive events and transactions;
(h) with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
and
(i) reference to a "Vehicle" or "Vehicles" means a Series 1997
Vehicle or Series 1997 Vehicles, respectively.
SECTION 2. GENERAL AGREEMENT. (a) As specified in the Lease Annexes,
the Lessees and the Lessor intend that this Lease be (i) an operating lease with
respect to the Acquired Vehicles, (ii) a financing arrangement with respect to
the Financed Vehicles and (iii) a lease for accounting purposes and a financing
arrangement for tax purposes with respect to the Synthetic Lease Vehicles.
(b) If, notwithstanding the intent of the parties to this Lease, this
Lease is deemed by any court, tribunal, arbitrator or other adjudicative
authority in any proceeding (each, a "Court") to constitute a financing
arrangement or otherwise not to constitute a "true lease" with respect to the
Acquired Vehicles, then it is the intention of the parties that this Lease
together with the Master
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<PAGE> 11
Collateral Agency Agreement, as such agreements apply to the Acquired Vehicles,
shall constitute a security agreement under applicable law. It is also the
intention of the parties that this Lease together with the Master Collateral
Agency Agreement, as such agreements apply to the Financed Vehicles and the
Synthetic Lease Vehicles, shall in all events constitute a security
agreement under applicable law. Each Lessee hereby acknowledges that it has
granted to the Master Collateral Agent, pursuant to the Master Collateral Agency
Agreement, for the benefit of the Trustee (on behalf of the Series 1997 Variable
Funding Noteholders) and the Other VFN Beneficiaries a first priority security
interest in all of such Lessee's right, title and interest in and to the Lessee
Grantor Master Collateral (as defined therein) as collateral security for the
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all of the obligations and
liabilities of the Lessee to the Lessor and the Trustee, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred (including interest accruing after the Lease Expiration Date
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding), which may
arise under, out of, or in connection with, this Lease and any other document
made, delivered or given by such Lessee in connection herewith, whether on
account of rent, principal, interest, reimbursement obligations, fees,
indemnities, costs or expenses (including all fees and disbursements of counsel
to the Lessor or the Trustee that are required to be paid by the Lessee pursuant
to the terms hereof).
Section 2.1. Leasing of Vehicles. (a) General. From time to time,
subject to the terms and conditions hereof, the Lessor agrees to lease to each
Lessee and each Lessee agrees to lease from the Lessor the Refinanced Vehicles
and each additional Acquired Vehicle, Financed Vehicle or Synthetic Lease
Vehicle identified in Vehicle Orders (as defined below) produced from time to
time by such Lessee, listing Vehicles ordered by the Lessee from Eligible
Manufacturers, dealers or other sellers, for itself or as agent for the Lessor,
pursuant to the terms of any applicable Manufacturer Programs or otherwise. The
Lessor shall, subject to Section 4 and in compliance with the terms of the
Indenture, make available to the Lessee under this Lease, financing for Financed
Vehicles, Synthetic Lease Vehicles and Eligible Receivables in an aggregate
amount, and Acquired Vehicles for lease to the Lessee hereunder in an aggregate
Net Book Value, which collectively shall not exceed the Maximum Lease
Commitment. Notwithstanding anything to the contrary contained in this Lease,
the Lessor shall lease to the Lessees, and the Lessees shall lease from the
Lessor, only Vehicles that are Eligible Vehicles.
(b) Refinanced Vehicles and Eligible Receivables. On or prior to the
applicable Vehicle Funding Date, each Lessee desiring to refinance Refinanced
Vehicles and Eligible Receivables under this Lease shall prepare, and upon
request of the Lessor, make available to the Lessor, a schedule as set forth in
Attachment A-1 hereto containing information concerning the Refinanced Vehicles
of such Lessee and the Eligible Receivables to be refinanced under this Lease on
the applicable Vehicle Funding Date (each such schedule, a "Refinanced Vehicle
Schedule").
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<PAGE> 12
(c) Program Vehicles. On or prior to the applicable Vehicle Funding
Date, each Lessee desiring to lease Program Vehicles (other than Refinanced
Vehicles) under this Lease shall prepare and, upon request of the Lessor, make
available to the Lessor (i) a summary of each additional Program Vehicle to be
leased hereunder by such Lessee (including, in the case of each such Program
Vehicle subject to GM's "Matrix" Manufacturer Program, the Designated Period for
such Program Vehicle) and the Capitalized Cost thereof, (ii) a schedule
containing the information with respect to the Vehicles included within such
Vehicle Order as is set forth in Attachment A-2 hereto, or in such form as is
otherwise requested by the Lessor (each, a "Vehicle Order") and (iii) the
Manufacturer's invoice. In addition, the applicable Lessee shall provide such
other information regarding such Program Vehicles as the Lessor may reasonably
require from time to time. Each Lessee agrees that any Program Vehicles ordered
by such Lessee on behalf of the Lessor pursuant to this Section 2.1(c) shall be
ordered utilizing the procedures consistent with the applicable Manufacturer
Program, in each case as and to the extent applicable. This Lease, together with
the Manufacturer Programs and any other related documents attached to this Lease
or submitted with a Vehicle Order (collectively, the "Supplemental Documents"),
will constitute the entire agreement regarding the leasing of Program Vehicles
by the Lessor to the Lessees.
(d) Non-Program Vehicles. On or prior to the applicable Vehicle Funding
Date, each Lessee desiring to lease Non-Program Vehicles (other than Refinanced
Vehicles or Auction Acquired Vehicles) under this Lease shall prepare and, upon
request of the Lessor, make available to the Lessor (i) a summary of each
additional Non-Program Vehicle to be leased hereunder by such Lessee and the
Capitalized Cost thereof, (ii) a Vehicle Order for such NonProgram Vehicles and
(iii) an invoice for the Capitalized Cost of such Non-Program Vehicles. In
addition, the applicable Lessee shall provide such other information regarding
such NonProgram Vehicles as the Lessor may reasonably require from time to time.
This Lease, together with any Supplemental Documents related to or submitted
with a Vehicle Order will constitute the entire agreement regarding the leasing
of Non-Program Vehicles by the Lessor to the Lessees.
(e) Auction Acquired Vehicles. Either concurrently with the execution
and delivery of this Lease or after the date of this Lease on or prior to the
applicable Vehicle Funding Date, any Lessee may request that the Lessor
purchase, or finance the Lessee's purchase of, a NonProgram Vehicle from a
licensed independent automobile dealer, through an auction or pursuant to
another vehicle sale (an "Auction Acquired Vehicle") for a purchase price equal
to the Capitalized Cost of such Auction Acquired Vehicle, in which event such
Lessee shall, immediately upon the consummation of such sale, lease such Auction
Acquired Vehicle from the Lessor pursuant to this Lease (each such transaction
is referred to as an "Auction Sale Transaction"). In connection with each
Auction Sale Transaction, to evidence the conveyance of the Auction Acquired
Vehicles from the applicable dealer to the Lessor (in the case of Acquired
Vehicles) or the applicable Lessee (in the case of Financed Vehicles and
Synthetic Lease Vehicles), the applicable Lessee shall have obtained the
original Certificate of Title for each
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<PAGE> 13
Auction Acquired Vehicle and shall prepare or obtain and, upon request of the
Lessor, make available to the Lessor, the following:
(i) a Vehicle Order with respect to all Auction Acquired
Vehicles covered by such Auction Sale Transaction; and
(ii) a bill of sale or other instrument of transfer
customarily used in the wholesale motor vehicle resale market (each, an
"Auction Bill of Sale"), conveying title to the Auction Acquired
Vehicles, and copies of any certificate given by the related auction
house regarding the absence of liens and/or the ownership of each such
Auction Acquired Vehicle.
After any purchase of Auction Acquired Vehicles by the Lessor or a Lessee under
this Section 2.1(e), such Vehicles will be subject to all the terms and
conditions of this Agreement. Promptly following such Auction Sale Transaction,
the applicable Lessee shall complete and deliver an application to retitle such
Auction Acquired Vehicle in the name of the Lessor (in the case of Acquired
Vehicles or Company Vehicles) or such Lessee (in the case of Financed Vehicles
and Synthetic Lease Vehicles) and to have noted thereon the Master Collateral
Agent's security interest in such Auction Acquired Vehicle pursuant to the
Master Collateral Agency Agreement.
Section 2.2. Right of Lessee to Act as Lessor's Agent; Titling of
Series 1997 Vehicles in the Name of Nominees. (a) The Lessor agrees that each
Lessee may act as the Lessor's agent in placing Vehicle Orders on behalf of the
Lessor, conducting pre-delivery inspection, titling and liening of Series 1997
Vehicles, filing claims on behalf of the Lessor for damage in transit, and other
delivery claims related to the Vehicles leased by such Lessee hereunder,
facilitating payment for Vehicles leased by such Lessee hereunder and performing
any other duties of the Lessee as a Servicer hereunder; provided, however, that
the Lessor may hold the applicable Lessee liable for losses due to such Lessee's
actions in performing as the Lessor's agent hereunder. In addition, the Lessor
agrees that each Lessee may make arrangements for delivery of Vehicles leased by
such Lessee hereunder to a location selected by the Lessee at the Lessee's
expense to the extent that any such expense has not been included in the
Capitalized Cost of such Vehicle. A Lessee may accept or reject Eligible
Vehicles upon delivery in accordance with the Lessee's customary business
practices, and any Eligible Vehicle, if rejected, will be deemed a Casualty
hereunder to the extent the Lessor has paid the Capitalized Cost thereof to the
Manufacturer, dealer or other seller thereof or to the applicable Lessee. The
relevant Lessee, acting as agent for the Lessor, shall be responsible for
pursuing any rights of the Lessor with respect to the return of any Eligible
Vehicle to the Manufacturer, dealer or other seller thereof pursuant to the
preceding sentence.
(b) Notwithstanding any provision in this Lease to the contrary, any
Series 1997 Vehicle titled in the name of a nominee for the Lessor or any Lessee
pursuant to a vehicle title nominee
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<PAGE> 14
agreement with respect to which the Lessor or such Lessee has received Rating
Agency Confirmation shall nonetheless be deemed for purposes of this Lease to be
titled in the name of the Lessor or such Lessee, as the case may be.
Section 2.3. Payment of Purchase Price by Lessor, Certain Additional
Payments to the Servicer. (a) Refinanced Vehicles and Eligible Receivables on
Lease Commencement Date. With respect to the Refinanced Vehicles of National,
Alamo, Value and Spirit being refinanced on the Lease Commencement Date, subject
to satisfaction of the requirements of Section 4, the Lessor shall, on the Lease
Commencement Date, (i) pay to the party specified in the National Payoff Letter
an amount equal to (x) the aggregate Net Book Value as of the LeaseCommencement
Date of the Refinanced Vehicles with respect to which National is the Lessee and
(y) the face amount of the Eligible Receivables being refinanced by National on
the Lease Commencement Date, (ii) pay to the party specified in the Alamo Payoff
Letter an amount equal to (x) the aggregate Net Book Value as of the Lease
Commencement Date of the portion of the Refinanced Vehicles with respect to
which Alamo is the Lessee and (y) the face amount of the Eligible Receivables
being refinanced by Alamo on the Lease Commencement Date, (iii) pay to the party
specified in the Value Payoff Letter an amount equal to (x) the aggregate Net
Book Value as of the Lease Commencement Date of the portion of the Refinanced
Vehicles with respect to which Value is the Lessee and (y) the face amount of
the Eligible Receivables being refinanced by Value on the Lease Commencement
Date and (iv) pay to the party specified in the Spirit Payoff Letter an amount
equal to (x) the aggregate Net Book Value as of the Lease Commencement Date of
the portion of the Refinanced Vehicles with respect to which Spirit is the
Lessee and (y) the face amount of the Eligible Receivables being refinanced by
Spirit on the Lease Commencement Date.
(b) Refinanced Vehicles and Eligible Receivables. On any Vehicle
Funding Date on which a Lessee (including any Additional Lessee) desires to
refinance Refinanced Vehicles and related Eligible Receivables, the Lessor
shall, subject to satisfaction of the requirements of Section 4, on the related
Vehicle Funding Date, pay to or as directed by such Lessee an amount equal to
(x) the aggregate Net Book Value as of such Vehicle Funding Date of such
Refinanced Vehicles and (y) the face amount of the Eligible Receivables being
refinanced by such Lessee on the related Vehicle Funding Date.
(c) Vehicles Other than Refinanced Vehicles. Upon satisfaction of the
requirements of Section 2.1 in respect of any Vehicle, then on or prior to the
proposed Vehicle Funding Date for such Vehicle, but not more than five Business
Days prior to such proposed Vehicle Funding Date, the Lessor or its agent shall,
subject to satisfaction of the requirements of Section 4, pay or cause to be
paid the Capitalized Cost of such Vehicle to the Manufacturer, dealer or other
seller of such Vehicle or reimburse or cause to be reimbursed the applicable
Lessee for funds expended by such Lessee to purchase such Vehicle. Such payment
shall be made in accordance with the payment terms of such Manufacturer, dealer
or other seller, as applicable. The Master Servicer or the applicable Lessee, as
agent of the Lessor, shall be authorized to transfer funds of the
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<PAGE> 15
Lessor (but not funds in any account in which the Trustee has a Lien or
other interest) representing the amount payable by the Lessor in accordance with
the foregoing by check, wire transfer or other electronic funds transfer to the
Manufacturer, dealer or other seller of such Vehicle or to reimburse the
applicable Lessee for funds expended by such Lessee to purchase such Vehicle.
The Lessee leasing such Vehicle shall pay all applicable costs and expenses of
freight, packing, handling, storage, shipment and delivery of such Vehicle to
the extent that the same have not been included within the Capitalized Cost.
(d) Excluded Payments. All amounts paid by the Manufacturer, dealer or
other seller on account of vehicle preparation services or work covered by
warranty performed by a Servicer with respect to Vehicles acquired or financed
pursuant to this Lease or as incentive payments shall inure to the benefit of
such Servicer and, to the extent any such payments are received by
the Lessor, the Trustee or the Master Collateral Agent, shall promptly be paid
over to such Servicer.
Section 2.4. Non-liability of Lessor. The Lessor shall not be liable to
any Lessee for any failure or delay in obtaining Vehicles or making delivery
thereof. AS BETWEEN THE LESSOR AND ANY LESSEE, ACCEPTANCE FOR LEASE OF THE
VEHICLES SHALL CONSTITUTE THE LESSEE'S ACKNOWLEDGMENT AND AGREEMENT THAT THE
LESSEE HAS FULLY INSPECTED SUCH VEHICLES, THAT THE VEHICLES ARE IN GOOD ORDER
AND CONDITION AND ARE OF THE MANUFACTURE, DESIGN, SPECIFICATIONS AND CAPACITY
SELECTED BY THE LESSEE, THAT THE LESSEE IS SATISFIED THAT THE SAME ARE SUITABLE
FOR THIS USE AND THAT THE LESSOR IS NOT A MANUFACTURER, AN AGENT OF THE
MANUFACTURER OR OTHERWISE ENGAGED IN THE SALE OR DISTRIBUTION OF VEHICLES, AND
HAS NOT MADE AND DOES NOT HEREBY MAKE ANY REPRESENTATION, WARRANTY OR COVENANT,
EXPRESS OR IMPLIED, WITH RESPECT TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, CONDITION, QUALITY, CAPABILITY, WORKMANSHIP, DURABILITY OR SUITABILITY
OF THE VEHICLE IN ANY RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES OR USES
OF THE LESSEE, OR ANY WARRANTY THAT THE LEASED VEHICLES WILL SATISFY THE
REQUIREMENTS OF ANY LAW OR ANY CONTRACT SPECIFICATION, OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT THERETO AND AS BETWEEN THE LESSOR AND THE LESSEE, THE
APPLICABLE LESSEE AGREES TO BEAR ALL SUCH RISKS AT ITS SOLE COST AND EXPENSE.
EACH LESSEE SPECIFICALLY WAIVES ALL RIGHTS TO MAKE CLAIMS AGAINST THE LESSOR AND
ANY LEASED VEHICLE FOR BREACH OF ANY WARRANTY OF ANY KIND WHATSOEVER AND, AS TO
THE LESSOR, EACH LESSEE LEASES THE LEASED VEHICLES "AS IS." The Lessor shall not
be liable for any failure or delay in delivering any Vehicle ordered for lease
pursuant to this Lease, or for any failure to perform any provision hereof,
resulting from fire or other casualty, natural disaster, riot, strike or other
labor difficulty, governmental regulation or
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<PAGE> 16
restriction, or any cause beyond the Lessor's direct control. IN NO EVENT SHALL
THE LESSOR BE LIABLE FOR ANY INCONVENIENCE, LOSS OF PROFITS OR ANY OTHER
CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES, WHATSOEVER OR HOWSOEVER CAUSED,
WHETHER RESULTING FROM ANY DEFECT IN OR ANY THEFT, DAMAGE, LOSS OR FAILURE OF
ANY VEHICLE, OR OTHERWISE, AND THERE SHALL BE NO ABATEMENT OF RENT BECAUSE OF
THE SAME.
SECTION 3. TERM.
Section 3.1. Vehicle Lease Commencement Date. The "Vehicle Lease
Commencement Date" shall mean, (i) for each Vehicle in the Initial Fleet as of
the VFN Closing Date, the VFN Closing Date, or with respect to each Vehicle in
the Initial Fleet of an Additional Lessee, the Additional Lessee Closing Date,
or with respect to each Vehicle included in the Initial Fleet of a Lessee
pursuant to a Fleet Purchase Transaction, the Vehicle Funding Date for such
Vehicle, and (ii) for each other Vehicle, including Refinanced Vehicles other
than the Initial Fleet, the date referenced in the Vehicle Order or Refinanced
Vehicle Schedule, as applicable, with respect to such Vehicle, which in no event
shall be later than the date that funds are expended by the Lessor to acquire,
finance or refinance the acquisition of such Vehicle (the "Vehicle Funding Date"
for such Vehicle). A vehicle shall be deemed hereunder to be a Vehicle leased
under this Lease on each day during the period (the "Vehicle Term") from and
including the Vehicle Lease Commencement Date for such Vehicle to but excluding
the Vehicle Lease Expiration Date for such Vehicle.
Section 3.2. Lease Commencement Date. The "Lease Commencement Date"
shall mean the VFN Closing Date. The "Lease Expiration Date" shall mean the
later of (i) the date of the final payment in full of the last Series 1997
Variable Funding Note outstanding and, if any, all other Shared Collateral
Series Notes, and all outstanding Carrying Charges, following the termination of
the agreement of the Series 1997 Variable Funding Noteholders to make Advances
and the ability of the Trustee to make available to the Lessor proceeds from the
VFN Collection Accounts pursuant to the Series 1997 Variable Funding
Supplements, and (ii) the Vehicle Lease Expiration Date for the last Vehicle
subject to lease by the Lessee hereunder. The "Term" of this Lease shall mean
the period commencing on the Lease Commencement Date and ending on the Lease
Expiration Date.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1. Conditions to Effectiveness of this Lease. It shall be a
condition precedent to the leasing of any Vehicles under this Lease that this
Lease shall have become effective in accordance with this Section 4.1. This
Lease shall become effective on the Lease Commencement Date, subject to the
satisfaction of the following conditions:
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(a) All conditions to the effectiveness of the Series 1997
Variable Funding Supplements and the issuance of the Series 1997
Variable Funding Notes thereunder and the Second Amended and Restated
Master Collateral Agreement shall have been satisfied in all respects;
and
(b) The prior or concurrent delivery by the Lessees to the
Lessor, the Master Collateral Agent and the Trustee of each of the
following documents (in form and substance satisfactory to the Lessor,
the Master Collateral Agent and the Trustee):
(i) Resolutions. Copies of resolutions of the
Board of Directors of the Guarantor and each Lessee
authorizing or ratifying the execution, delivery and
performance of this Lease and the other Related Documents to
which it is party and capacity as Guarantor, Lessee or as
Servicer or otherwise, with respect to this Lease and such
other Related Documents, duly certified by the Secretary or an
Assistant Secretary thereof;
(ii) Consents, etc. Certified copies of all
documents evidencing any necessary corporate action, consents
and governmental approvals (if any) with respect to this Lease
and the other Related Documents to which the Guarantor or any
Lessee is party;
(iii) Incumbency and Signatures. A certificate of
the Secretary or an Assistant Secretary of the Guarantor and
each authorized to sign this Lease and the other Related
Documents signature of each such individual (the Lessor, the
Master Collateral Agent and the Trustee may conclusively rely
on each uch certificate until formally advised by a like
certificate of any changes therein);
(iv) Opinions of Counsel. The favorable opinions of
Mayer, Brown & Platt, special New York counsel for the Lessees
and the Guarantor, and Tripp, Scott, Conklin & Smith, counsel
to the Lessees and the Guarantor, in each case addressed to
the Lessor, the Trustee, the Master Collateral Agent, the
Series 1997-1 Support Letter of Credit Providers, the initial
Series 1997 Variable Funding Noteholders and the Rating
Agencies and satisfactory in form and substance to the
addressees thereof;
(v) Good Standing Certificates. Certificates of
good standing for the Guarantor and each Lessee in the
jurisdiction of its organization and the jurisdiction of its
principal place of business;
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(vi) Search Reports. A written search report from a
Person satisfactory to the Lessor, the Master Collateral Agent
and the Trustee, listing all effective financing statements
that name any Lessee as debtor or assignor and that are filed
in the jurisdictions in which filings were made pursuant to
subsection (vii) below, together with copies of such financing
statements, and tax and judgment lien search reports from a
Person satisfactory to the Lessor, the Master Collateral Agent
and the Trustee showing no evidence of such liens filed
against any Lessee and covering any Series 1997 VFN Collateral
(other than in connection with any Related Documents);
(vii) Financing Statements. Executed, proper
financing statements on Form UCC-1 with respect to each
Lessee, (i) naming the Lessee as debtor and the Master
Collateral Agent as secured party, or other, similar
instruments or documents, as may be necessary or, in the
reasonable opinion of the Lessor, the Master Collateral Agent
or the Trustee, desirable under the UCC of all applicable
jurisdictions to perfect the Master Collateral Agent's
interest in the Master Collateral with respect to which the
Trustee (for the benefit of the Series 1997 Variable Funding
Noteholders) is designated as the Beneficiary and (ii) naming
the Lessee as debtor, the Lessor as secured party and the
Master Collateral Agent as assignee, as may be necessary or
desirable under the UCC of all applicable jurisdictions to
perfect the security interest of the Lessor hereunder and the
assignment of the same to the Master Collateral Agent;
(viii) Series 1997 Variable Funding Supplements. An
executed copy of each Series 1997 Variable Funding Supplement;
(ix) Indenture. An executed copy of the Indenture;
(x) Master Collateral Agreement. An executed copy
of the Second Amended and Restated Master Collateral Agency
Agreement;
(xi) Assignment Agreement. An executed copy of the
Assignment Agreement of each Manufacturer of Program Vehicles
(including Refinanced Vehicles) which will be leased under
this Lease on the VFN Closing Date;
(xii) Certified Copy of Manufacturer Program. A copy
of each Manufacturer Program (and, to the extent required by a
Rating Agency, an opinion of counsel to such Manufacturer or
Officer's Certificate on behalf of such Manufacturer as to the
enforceability thereof in form satisfactory to the Trustee and
the Lessor and addressed to the Master Collateral Agent)
relating to Program Vehicles which will be leased hereunder on
the VFN Closing Date and, from each Lessee, an Officer's
Certificate, dated as of the VFN Closing Date, and duly
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executed by an Authorized Officer of such Lessee, certifying
that each such copy is true, correct and complete as of the
VFN Closing Date; and
(xiii) Other. Such other documents as the Master
Collateral Agent, the Trustee or the Lessor may reasonably
request.
Section 4.2. Conditions to Each Lease of Vehicles. The agreement of the
Lessor to make available any Acquired Vehicle for lease to a Lessee, to make
available financing for the acquisition or refinancing of any Financed Vehicle
or Synthetic Lease Vehicle for lease to a Lessee as described in a Vehicle
Order, or to make available funding for the financing or refinancing of
Refinanced Vehicles and Eligible Receivables, is subject to the terms and
conditions of the Indenture and the following conditions precedent as of the
Vehicle Funding Date for such Vehicle and each Lessee hereby agrees that each
delivery of a Master Servicer direction to the Trustee pursuant to a Series 1997
Variable Funding Supplement requesting the Trustee to make available to the
Lessor funds for the making of Series 1997 Lease Advances or the acceptance of
proceeds of Series 1997 Lease Advances in respect of any applicable Vehicle
Orders or Refinanced Vehicle Schedules shall be deemed hereunder to constitute a
representation and warranty by it, to and in favor of the Lessor and the
Trustee, that all the conditions precedent to the acquisition and leasing of the
Vehicles and Eligible Receivables identified in such Vehicle Order or Refinanced
Vehicle Schedule have been satisfied as of the date of such Vehicle Order or
Refinanced Vehicle Schedule:
(a) Vehicle Order. The applicable Lessee shall have complied
with the applicable provisions of Section 2.1 of this Lease.
(b) No Default. No Potential Lease Event of Default or Lease
Event of Default shall have occurred and be continuing on such date or
would result from the making of such Series 1997 Lease Advance.
(c) Funding. The aggregate amount of funds to be expended by
the Lessor on any one date to acquire or finance the acquisition of any
Vehicles shall not exceed the sum of (a) the aggregate Net Book Value
of all such Vehicles plus (b) the aggregate face amount of any related
Eligible Receivables being refinanced on such date.
(d) Related Documents. The leasing of such Vehicle shall not
be prohibited by the provisions of this Lease or the Series 1997
Variable Funding Supplements or any other Supplement, if any, relating
to any Shared Collateral Series Notes, and sufficient proceeds shall be
available therefor under the Series 1997 Variable Funding Supplements
as a result of the issuance of the Series 1997 Variable Funding Notes
or, if applicable, any other Shared Collateral Series Notes, and all
conditions precedent to the making of Advances from the VFN Collection
Accounts, as provided in and pursuant to the terms of the Series 1997
Variable Funding Supplements, shall have been satisfied.
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(e) Maximum Non-Program Percentage. The leasing of such
Vehicles will not cause the aggregate Net Book Value of Non-Program
Vehicles then being leased under this Lease to exceed the Maximum
Non-Program Percentage, will not cause any of the Lease commitments
expressed in Section 3 of each of Annex A, B and C to be exceeded and
will not cause a violation of the Maximum Manufacturer Concentration.
(f) Title. NFLP or, with respect to the Financed Vehicles and
Synthetic Lease Vehicles, the applicable Lessee, as the case may be,
shall have good and marketable title to each Series 1997 Vehicle
purchased thereby with the proceeds of Series 1997 Variable Funding
Notes, free and clear of all Liens and encumbrances, other than any
Permitted Liens.
(g) Master Collateral Agent. Each Lessee shall have granted to
the Master Collateral Agent, for the benefit of the Trustee on behalf
of the Series 1997 Noteholders, a first priority security interest in
all Series 1997 Vehicles now or hereafter purchased or financed by NFLP
with the proceeds of Series 1997 Variable Funding Notes or with any
other capital of NFLP.
(h) Assignment Agreements. On or prior to the lease thereof,
the Trustee shall have received executed counterparts of the Assignment
Agreements related to the assignment of rights under each Manufacturer
Program under which Series 1997 Vehicles will be or have been purchased
and are proposed to be leased under the Series 1997 Lease, dated as of
the Series 1997 Closing Date (or, if later, on or prior to the date the
related Manufacturer Program becomes an Eligible Manufacturer Program),
duly executed by the applicable Lessee and/or NFLP, as assignor, and
the Master Collateral Agent, as assignee.
(i) Manufacturer Programs. On or prior to the lease thereof,
the Trustee shall have received a copy of each Manufacturer Program
under which Series 1997 Vehicles will be or have been purchased and are
proposed to be leased under the Series 1997 Lease and an Officer's
Certificate, dated the Series 1997 Closing Date (or, if later, on or
prior to the date such Manufacturer Program becomes an Eligible
Manufacturer Program), and duly executed by an Authorized Officer of
NFLP, certifying that each such copy is true, correct and complete as
of the VFN Closing Date (or, if later, on or prior to the date such
Manufacturer Program becomes an Eligible Manufacturer Program). Each
Manufacturer Program covering Program Vehicles being leased under the
Series 1997 Lease shall be in full force and effect, and shall be
enforceable against the related Manufacturer in accordance with its
terms.
(j) Limitation on Acquisition of Non-Program Vehicles. NFLP
shall not acquire any Non-Program Vehicle for leasing under this Lease
if, after giving effect to the acquisition of such Vehicle by NFLP and
the leasing of each other Series 1997 Vehicle on such date, the Series
1997-1 Minimum Non-Program Enhancement Percentage, the Series 1997-2
Minimum Non-Program Enhancement Percentage, the Series 1997-3
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Minimum Non-Program Enhancement Percentage or the Series 1997-4 Minimum
NonProgram Enhancement Percentage would exceed 25.0%.
(k) Eligible Vehicle. Each Vehicle to be leased hereunder on
such date shall be an Eligible Vehicle.
Section 4.3. Additional Conditions to Leases of Refinanced Vehicles. In
addition to the conditions set forth in Section 4.2 above, in connection with
the leasing of Refinanced Vehicles and related Eligible Receivables, to evidence
the refinancing of such Refinanced Vehicles and related Eligible Receivables on
the applicable Vehicle Funding Date and the conveyance on such date of a
security interest in such Refinanced Vehicles and related Eligible Receivables
to the Master Collateral Agent, the applicable Lessees shall have made available
to the Lessor on or prior to the applicable Vehicle Funding Date the following:
(a) a Refinanced Vehicle Schedule concerning such Refinanced
Vehicles and related Eligible Receivables being refinanced on such
Vehicle Funding Date;
(b) a report of the results of a search of the appropriate
records of each state in which each Lessee of such Refinanced Vehicles
does business and the county and state in which each Lessee's principal
office is located, which shall show no liens or other security
interests (other than Permitted Liens) with respect to such Vehicles
and the related Manufacturer Programs (to the extent not already liened
and assigned to the Master Collateral Agent) or, in the event that such
search reveals any such non-permitted Lien or security interest, there
shall be delivered to the Trustee a termination of such Lien or
security interest together with appropriate UCC termination statements
or UCC partial releases thereof;
(c) confirmation from each lender holding a security interest
in any Refinanced Vehicle and Eligible Receivable stating
unconditionally (A) that, if any sums are to be paid to such lender in
connection with the lease of such Refinanced Vehicle and the
refinancing of the related Eligible Receivables, such lender has been
paid the full amount due to it in connection with such refinancing and
(B) that any lien or security interest of such lender in such
Refinanced Vehicle and related Eligible Receivable has been released;
(d) a fully executed assignment agreement granting and
assigning to the Master Collateral Agent (to the extent not already
granted and assigned) a first priority security interest in each such
Refinanced Vehicle and any Eligible Receivables, the related
Manufacturer Programs, if any, and any other Series 1997 VFN Collateral
relating to such Refinanced Vehicles and Eligible Receivables;
(e) with respect to any of such Refinanced Vehicles which are
in the Initial Fleet, each Lessee thereof shall have delivered to the
Master Collateral Agent a duly executed Assignment and Nominee
Agreement satisfactory in form to the Lessor and the Trustee;
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(f) delivery to the Lessor for filing in the appropriate
filing office fully executed UCC-1 Financing Statements necessary to
perfect (if not already perfected) the interests of the Master
Collateral Agent in the Eligible Receivables;
(g) an Officer's Certificate stating that all the conditions
precedent under this Lease to the leasing of such Refinanced Vehicles
and financing of the Eligible Receivables under this Lease have been
satisfied, including a representation that each such receivable is an
Eligible Receivable.
SECTION 5. RENT AND CHARGES. Each Lessee will pay Rent and certain
other charges on a monthly basis as set forth in this Section 5.
Section 5.1. Payment of Rent. On each Payment Date, each Lessee shall
pay to the Lessor the aggregate of all Rent payable on such Payment Date with
respect to the Vehicles leased by such Lessee, as provided in the related Lease
Annexes.
Section 5.2. Payment of Monthly Supplemental Payments and Additional
Synthetic Lease Payments. On each Payment Date, each Lessee shall pay to the
Lessor the Monthly Supplemental Payment that has accrued during the Related
Month with respect to the Financed Vehicles, as provided in Sections 6 and 7 of
Annex B and all Additional Synthetic Lease Payments and other payments due on
such Payment Date with respect to the Synthetic Lease Vehicles, as provided in
Sections 6, 8 and 11 of Annex C.
Section 5.3. Payment of Termination Payments and Casualty Payments. On
each Payment Date, each Lessee shall pay to the Lessor all Casualty Payments and
Termination Payments that have accrued with respect to the Series 1997 Vehicles,
as provided in, respectively, Sections 7 and 12.3 of the Base Lease.
Section 5.4. Late Payment. In the event any Lessee fails to remit
payment of any amount due under this Series 1997 Lease on or before the Payment
Date therefor or when otherwise due and payable hereunder, the amount not paid
will be considered delinquent and such Lessee will pay a late charge during each
Interest Period equal to the product of (a) the VFR for such Interest Period
(converted to a rate per annum) plus 1%, times (b) the delinquent amount for the
period from the Payment Date (or other date) on which such payment was due until
the date such delinquent amount (with accrued interest) is received by the
Trustee (calculated on the basis of a 360-day year).
Section 5.5. Making of Payments. All payments of Rent and of all other
Liabilities shall be made by the applicable Lessee to, or for the account of,
the Lessor (or, in the case of any payment pursuant to Section 15, the
applicable Indemnified Person) in immediately available funds, without setoff,
counterclaim or deduction of any kind. All such payments shall be made to the
Series 1997 Collection Account or, in the case of payments made pursuant to
Section 24.12(iii) or (iv), the Master Collateral Account (or, in each such
case, such other account as the Trustee may from time to time specify to the
Lessees) or, in the case of any such payment
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pursuant to Section 15 to, or for the account of, any Indemnified Person other
than NFLP, to the account designated by such Indemnified Person to the
applicable Lessee, in each case with such payment to be made not later than
12:00 noon, New York City time, on the date due; and funds received after that
hour shall be deemed to have been received by or for the account of the
Indemnified Person on the next following Business Day. The Lessor hereby
specifies that all (i) payments made in respect of Program Vehicles by the
Manufacturers and related auction dealers under the Manufacturer Programs, (ii)
amounts representing the proceeds from sales of Program Vehicles (including
amounts paid to a Lessee by a Manufacturer as a result of the Lessee's sale of
such Program Vehicle outside such Manufacturer's Manufacturer Program) by a
Lessee to third parties (other than under any related Manufacturer Program) and
(iii) payments with respect to any other Master Collateral for the Series 1997
Variable Funding Notes (other than amounts described in Section 2.3(d)), shall
be deposited in the Master Collateral Account for the benefit of the Trustee (on
behalf of the Series 1997 Noteholders) and the Other VFN Beneficiaries. If any
payment of Rent (or other Liability) falls due on a day which is not a Business
Day, then such due date shall be extended to the next following Business Day and
Monthly Finance Rent and Monthly Variable Rent (as the case may be) shall accrue
through such Business Day.
SECTION 6. RESERVED.
SECTION 7. CASUALTY AND INELIGIBLE VEHICLES. If a Series 1997 Vehicle
becomes a Casualty or ceases to be an Eligible Vehicle, then the Lessee thereof
shall (a) cause the Master Servicer to include notice of such occurrence in the
next Monthly Certificate required to be delivered by the Master Servicer under
Section 24.7(vi), and (b) on the Payment Date next succeeding the last day of
the Related Month in which the Lessee obtained actual knowledge that such
Vehicle has become a Casualty or ceased to be an Eligible Vehicle, pay to the
Lessor an amount (a "Casualty Payment") equal to the Termination Value of such
Vehicle, calculated as of the first day of the Related Month in which the Lessee
obtained actual knowledge that such Vehicle became a Casualty or ceased to be an
Eligible Vehicle (net of Monthly Base Rent, Monthly Supplemental Payments and
Additional Synthetic Lease Payments made in respect of such Vehicle during such
Related Month). Upon payment by the Lessee to the Lessor in accordance herewith
of the Casualty Payment for any Series 1997 Vehicle that has become a Casualty
or ceased to be an Eligible Vehicle, (i) the Lessor, if requested by the Lessee,
shall cause title to any such Vehicle that is an Acquired Vehicle to be
transferred to the Lessee to facilitate liquidation of such Vehicle by the
Lessee, (ii) the Lessee shall be entitled to any physical damage insurance
proceeds applicable to such Vehicle (if at such time the Lessee carries such
insurance coverage), and (iii) the Lien of the Master Collateral Agent on such
Vehicle shall automatically be released thereby.
SECTION 8. VEHICLE USE. Each Lessee shall use Vehicles leased hereunder
solely for such Lessee's domestic daily rental car operations, whether through
Fleet Sharing Parties or directly; provided that a Lessee (the "Named Lessee")
may permit another Lessee to use Vehicles leased by the Named Lessee hereunder
in the ordinary course of the domestic daily rental car operations of such other
Lessee (but the Named Lessee shall remain fully liable for its obligations under
this Series 1997 Lease and the other Related Documents); provided further that
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a Lessee may, from time to time, permit Fleet Sharing Parties to use Vehicles
leased by such Lessee hereunder pursuant to Lessee Agreements, including Fleet
Sharing Agreements, used in the ordinary course of the Lessee's business and
each such Fleet Sharing Party shall rent Vehicles used by it pursuant to a Fleet
Sharing Agreement to consumers in the ordinary course of such Fleet Sharing
Party's domestic daily rental car operations; provided further, however, that
the aggregate Net Book Value of all Vehicles subject to Fleet Sharing Agreements
on any day shall not exceed an amount equal to (a) 10% of the aggregate Net Book
Value of all Vehicles leased under this Series 1997 Lease on such day, or (b)
such greater amount as each Rating Agency shall have confirmed in writing will
not result in the reduction or withdrawal of the then current rating of any
outstanding Commercial Paper Notes of any Series 1997 Variable Funding
Noteholder. Notwithstanding any such Lessee Agreement, the Lessee shall remain
fully liable for its obligations under this Lease and the other Related
Documents (including any obligation hereunder or thereunder that it may cause
any Fleet Sharing Party to perform or fulfill). Each Lessee shall promptly and
duly execute, deliver, file and record all such documents, statements, filings
and registrations, and take such further actions as the Lessor, the Master
Collateral Agent, the Master Servicer or the Trustee shall from time to time
reasonably request in order (x) to establish, perfect and maintain the Lessor's
title to and interest in the Acquired Vehicles and the related Certificates of
Title and the Lessee's title to and interest in all other Vehicles and the
related Certificates of Title as against any third party in any applicable
jurisdiction and (y) to establish, perfect and maintain the Master Collateral
Agent's lien on all Series 1997 Vehicles as noted (other than in respect of the
Initial Fleet) on the related Certificates of Title as a perfected
first-priority lien in any applicable jurisdiction. A Lessee may, at the
Lessee's sole expense, change the place of principal location of any Series 1997
Vehicles. Within sixty (60) days after any such change of location, the Lessee
shall take all actions necessary (i) to maintain the perfected first-priority
Lien of the Master Collateral Agent on such Vehicles as noted (other than in
respect of the Initial Fleet) on the Certificates of Title with respect to such
Vehicles and the Lessor shall cooperate to the extent required for the Lessee to
do so, and (ii) to meet all material legal requirements applicable to such
Vehicles. Following a Lease Event of Default or Manufacturer Event of Default,
and upon the Lessor's request, each Lessee shall advise the Lessor in writing
where all Vehicles leased hereunder as of such date are principally located. No
Lessee shall knowingly use any Vehicles, or knowingly permit the same to be
used, for any unlawful purpose. Each Lessee shall and shall require the Fleet
Sharing Parties to use reasonable precautions to prevent loss or damage to
Vehicles. Each Lessee shall or shall cause the Fleet Sharing Parties to comply
in all material respects with all applicable statutes, decrees, ordinances and
regulations regarding acquiring, titling, registering, leasing, insuring and
disposing of Vehicles and shall and shall require the Fleet Sharing Parties to
take reasonable steps to ensure that operators are licensed. Each Lessee shall
or shall cause the Fleet Sharing Parties to perform, at its own expense, such
vehicle preparation and conditioning services with respect to Vehicles leased by
it as are customary.
SECTION 9. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND
FINES. Each Lessee, at its expense, shall be responsible for proper registration
and licensing of Vehicles leased by it hereunder, for submitting the appropriate
documentation to the appropriate state authorities to obtain Certificates of
Title for Series 1997 Vehicles reflecting the
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name of the Lessor (in the case of Acquired Vehicles) or such Lessee (in the
case of Financed Vehicles and Synthetic Lease Vehicles), in each case (other
than with respect to Vehicles in the Initial Fleet) with the Lien of the Master
Collateral Agent noted thereon as first lienholder, and where required, the
Lessee shall or shall cause the Fleet Sharing Parties to have Vehicles inspected
by any appropriate governmental authority; provided, however, that possession of
all Certificates of Title shall remain with the Servicer of the related Vehicles
or the Master Servicer unless a Liquidation Event of Default or Series 1997
Limited Liquidation Event of Default shall have occurred and be continuing, in
which event, upon the request of the Trustee or the Master Collateral Agent,
each Lessee shall deliver the Certificates of Title for the Series 1997 Vehicles
leased by it to the Master Collateral Agent. Each Lessee shall pay or cause to
be paid all registration fees, title fees, license fees, traffic summonses,
penalties, judgments and fines and other similar amounts incurred with respect
to any Series 1997 Vehicle during the Vehicle Term for such Vehicle or imposed
during the Vehicle Term for such Vehicle by any governmental authority or any
court of law or equity in connection with the Lessee's operation of Vehicles,
and any such amounts paid by the Lessor on a Lessee's behalf, in its discretion
upon at least fifteen (15) days' prior notice to the Lessee, will be reimbursed
within thirty (30) days of the Lessor notifying the Lessee of such payment;
provided, however, that the Lessor shall not pay on any Lessee's behalf any
traffic summons, or any penalty, judgment or fine for so long as such amount is
being contested by the Lessee in good faith and by appropriate proceedings with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP and provided that such Lessee has agreed in
writing to indemnify and hold the Lessor harmless from and against all loss,
liability and expense arising out of such unpaid amounts (and, in any case, for
so long as forfeiture of any Vehicles or other Master Collateral will not result
from the failure to pay any such amounts). The Lessor agrees to execute a power
of attorney substantially in the form of Attachment B hereto (a "Power of
Attorney"), and such other documents as may be necessary in order to allow the
Lessee to title, register and dispose of the Acquired Vehicles; and each Lessee
acknowledges and agrees that with respect to the Acquired Vehicles, it has no
right, title or interest in or with respect to any Certificate of Title.
Notwithstanding anything herein to the contrary, the Lessor may terminate such
Power of Attorney as provided in Section 17.3(vii).
SECTION 10. MAINTENANCE AND REPAIRS. Each Lessee shall or shall cause
the Fleet Sharing Parties to pay for all maintenance and repairs to keep
Vehicles leased by it hereunder in good working order and condition, and shall
or shall cause the Fleet Sharing Parties to maintain such Vehicles as required
in order to keep the Manufacturer's warranty in force. Each Lessee shall or
shall cause the Fleet Sharing Parties to return each Vehicle to an authorized
Manufacturer facility or the applicable Manufacturer's authorized warranty
station (which may be a facility of any Lessee) for warranty work. Each Lessee
shall or shall cause the Fleet Sharing Parties to comply with any Manufacturer's
recall of any Vehicle. Each Lessee shall or shall cause the Fleet Sharing
Parties to pay, or cause to be paid, all usual and routine expenses incurred in
the use and operation of Series 1997 Vehicles leased by it hereunder including,
but not limited to, fuel, lubricants, and coolants. The Lessor, upon thirty (30)
days' prior notice to the applicable Lessee, may pay any such expenses that have
not otherwise been paid by, or on behalf of, such Lessee (including any failure
by a Fleet Sharing Party to pay any such expenses),
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and any expenses paid by the Lessor on a Lessee's behalf for maintenance,
repair, operation or use by the Lessee of Vehicles will promptly be reimbursed
(in any event no later than the next Payment Date following such payment) by
such Lessee to the Lessor. No Lessee shall, without the prior consent of the
Lessor, make any material alterations to (i) any Series 1997 Vehicle which is a
Program Vehicle which would result in a reduction of the Repurchase Price for
such Vehicle or make the Vehicle no longer eligible for repurchase under the
applicable Manufacturer Program or (ii) any Series 1997 Vehicle which is a
Non-Program Vehicle which is likely to materially adversely affect the resale
value of such Non-Program Vehicle. Any improvements or additions to an Acquired
Vehicle shall become and remain the property of the Lessor, except that any
addition or improvement to an Acquired Vehicle made by the Lessee shall remain
the property of the Lessee if it can be disconnected or removed from the Vehicle
without impairing the functioning or resale value thereof, other than any
function or value provided by such addition or improvement.
SECTION 11. MANUFACTURER WARRANTIES. If a Vehicle is covered by a
manufacturer's warranty, the Lessee thereof, during the Vehicle Term, shall have
the right to make any claims under such warranty which the Lessor could make and
to receive related proceeds directly.
SECTION 12. VEHICLE RETURN GUIDELINES.
Section 12.1. Vehicle Turn-in Condition. As used herein, the term
"vehicle turn-in condition" with respect to each Series 1997 Vehicle that is a
Program Vehicle means a set of criteria for evaluating a Vehicle upon its
delivery at the end of the applicable Vehicle Term, which criteria will be
determined in accordance with the related Manufacturer Program. Each Program
Vehicle not meeting the applicable Manufacturer Program's vehicle turn-in
condition requirements will, unless redesignated as a Non-Program Vehicle in
accordance with Section 14, be purchased by the related Lessee as if it were a
Casualty in accordance with the procedure set forth in Section 7.
Section 12.2. Disposition Procedure. (a) Program Vehicles. Unless such
Vehicle is redesignated as a Non-Program Vehicle in accordance with Section 14
or the Lessee thereof exercises its option to purchase such Vehicle as permitted
by, and pursuant to the requirements of, this Lease, or such Vehicle is sold in
the ordinary course outside the Manufacturer Program for proceeds that equal or
exceed the payment that would be obtained from the Manufacturerunder the
Manufacturer Program as contemplated by Section 27, then prior to the end of the
Vehicle Term, each Lessee will or will cause the related Fleet Sharing Party to
deliver each Program Vehicle leased by it hereunder (other than a Casualty or a
Vehicle that has ceased to be an Eligible Vehicle) to the nearest related
Manufacturer official auction or other facility designated by such Manufacturer
at the Lessee's sole expense and in accordance with the terms of the applicable
Manufacturer Program. Any transportation allowance (for delivery costs), auction
assistance allowance and any other allowances offered under a Manufacturer
Program, and any rebates or credits applicable to the unexpired term of any
license plates for a Vehicle shall inure to the benefit of the Lessee thereof
and, to the extent received by the Lessor, the
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Trustee or the Master Collateral Agent, shall promptly be paid over to the
applicable Lessee. Each Lessee will comply with the requirements of law and the
requirements of the Manufacturer Programs in connection with, among other
things, the delivery of Certificates of Title, documents of transfer signed as
necessary, signed Condition Reports, and signed odometer statements for the
Vehicles.
(b) Non-Program Vehicles. Each Lessee agrees to use commercially
reasonable efforts to dispose of, at its own expense, each Series 1997 Vehicle
that is a Non-Program Vehicle (i) in a manner reasonably likely to maximize
proceeds from such disposition and consistent with industry practice and (ii)
prior to the expiration of the Non-Program Maximum Term for such Non-Program
Vehicle.
Section 12.3. Termination Payments. On the first Payment Date on or
after the earlier of (a) the last day of the Related Month in which the
Repurchase Price with respect to any Program Vehicle that is an Acquired Vehicle
is received by the applicable Lessee, the Lessor, the Master Collateral Agent or
the Trustee by deposit into the Series 1997 Collection Account (provided that,
if for any reason the Repurchase Price has been received directly by a Lessee,
then to the extent that such Repurchase Price has not theretofore been deposited
in the Series 1997 Collection Account, it shall be deemed "received" for
purposes of this Section 12.3 no later than the second Business Day thereafter)
and (b) the thirtieth (30th) day after the expiration of the Repurchase Period
for such Acquired Vehicle that has not been redesignated as a Non-Program
Vehicle pursuant to Section 14, the applicable Lessee shall pay to the Lessor in
respect of such Acquired Vehicle any Excess Damage Charges, Excess Mileage
Charges, Missing Equipment Charges, early turnback surcharges and any other
similar charges and penalties (collectively a "Program Vehicle Termination
Payment") as determined by the Manufacturer or its agent in accordance with the
applicable Manufacturer Program. Upon the request of the Lessor, on the first
Payment Date on or after the earlier of (x) the last day of the Related Month in
which Disposition Proceeds from the sale or other disposition of an Acquired
Vehicle that is a NonProgram Vehicle, but is not a Casualty, are received by the
applicable Lessee, the Lessor, the Master Collateral Agent or the Trustee by
deposit into the Series 1997 Collection Account (provided that, if for any
reason the Repurchase Price has been received directly by a Lessee, then to the
extent that such Repurchase Price has not theretofore been deposited in the
Series 1997 Collection Account, it shall be deemed "received" for purposes of
this Section 12.3 no later than the second Business Day thereafter) and (y) the
thirtieth (30th) day after the date on which the Non-Program Maximum Term for
such Vehicle expires, the applicable Lessee shall pay to the Lessor an amount (a
"Non-Program Vehicle Termination Payment") equal to the product of (A) the sum
of all Program Vehicle Termination Payments due on such Payment Date, multiplied
by (B) a fraction, the numerator of which is the number of Series 1997 Vehicles
that are Non-Program Vehicles leased under this Lease during the Related Month
and the denominator of which is the number of Series 1997 Vehicles that are
Program Vehicles leased under this Lease during the Related Month (Program
Vehicle Termination Payments and NonProgram Vehicle Termination Payments,
collectively, "Termination Payments). If a Vehicle's age is unknown as of its
Vehicle Lease Commencement Date, such age (in months) shall be the lesser of (i)
the number obtained by dividing the number of miles on the odometer of such
Vehicle at the Vehicle
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Lease Commencement Date by 1,500 and (ii) the number of months in the period
commencing on September 1 of the calendar year prior to the model year of such
Vehicle through the Vehicle Lease Commencement Date for such Vehicle. The
provisions of this Section 12.3 will survive the expiration or earlier
termination of the Term.
SECTION 13. [RESERVED].
SECTION 14. REDESIGNATION OF VEHICLES. (a) At any time, including upon
the occurrence of a Manufacturer Event of Default with respect to the
Manufacturer of any Program Vehicle or a Program Vehicle's becoming ineligible
for repurchase by its Manufacturer or for sale at Auction under the applicable
Manufacturer Program, due to physical damage, repair charges or accrued mileage,
in each case in excess of that permitted under the related Manufacturer Program,
or due to any failure or inability to return the Vehicle to the Manufacturer or
the designated auction prior to the expiration of the Repurchase Period, or due
to any other event or circumstance, the Servicer thereof may designate the
related Vehicle as a Non-Program Vehicle if such Vehicle, as a Non-Program
Vehicle, will be an Eligible Vehicle; provided that no Amortization Event or
Potential Amortization Event has occurred and is continuing and provided further
that no failure or violation of the requirements of Section 24.17 has occurred
and is continuing or would be caused by such redesignation and no failure or
violation of any other condition, requirement, or restriction specified in any
Series 1997 Variable Funding Supplement would be caused by such redesignation
(subject to the right of the Series 1997 Variable Funding Noteholders holding
the requisite Invested Amount of each applicable Series of Series 1997 Variable
Funding Notes to waive such violation, in each case as and to the extent
permitted under the Series 1997 Variable Funding Supplements); provided, in each
case, that (x) any additional Monthly Base Rent due with respect to each such
Vehicle, relating to the decrease, if any, of the Net Book Value of such Vehicle
under the newly applicable Depreciation Schedule, shall be paid on the next
succeeding Payment Date, and (y) the minimum level of Enhancement required under
each Series 1997 Variable Funding Supplement, after giving effect to such
designation, shall be satisfied on the date of designation.
(b) At any time, the Servicer may designate a Non-Program Vehicle as a
Program Vehicle if such Vehicle, as a Program Vehicle, will be an Eligible
Vehicle; provided that the related Manufacturer Program is an Eligible
Manufacturer Program, the related Manufacturer has acknowledged that such
Vehicle is entitled to the benefits of its Manufacturer Program and no failure
or violation of the conditions precedent to leasing of Program Vehicles in
Section 4.2 or any other condition, requirement, or restriction specified in any
Series 1997 Variable Funding Supplement would be caused by such redesignation;
provided, further, in each case, that any additional Monthly Base Rent due with
respect to each such Vehicle, relating to the decrease, if any, of the Net Book
Value of such Vehicle under the newly applicable Depreciation Schedule, shall be
paid on the next succeeding Payment Date.
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SECTION 15. GENERAL INDEMNITY AND PAYMENT OF EXPENSES.
Section 15.1. Indemnity and Payment of Expenses by the Lessees. Each
Lessee agrees jointly and severally to indemnify and hold harmless the Lessor
and the Lessor's directors, officers, agents and employees (collectively,
together with the Persons subject to indemnity under Section 15.2, the
"Indemnified Persons") against any and all claims, demands, actions, causes of
action, losses, costs, liabilities and damages of whatsoever nature, and all
reasonable expenses incurred in connection therewith (including reasonable fees
and disbursements of counsel), relating to or in any way arising out of:
Section 15.1.1. the ordering, delivery, acquisition, title on
acquisition, rejection, installation, possession, ownership, titling, retitling,
registration, re-registration, custody by the Lessee of title and registration
documents, use, non-use, misuse, operation, leasing, deficiency, defect,
transportation, repair, maintenance, control or disposition of any Vehicle
leased hereunder or to be leased hereunder, including, without limitation, any
such Vehicle shared with a Fleet Sharing Party. The foregoing shall include,
without limitation, any liability (or any alleged liability) of the Lessor or
any other Indemnified Person to any third party arising out of any of the
foregoing, including, without limitation, all reasonable legal fees, costs and
disbursements arising out of such liability (or alleged liability);
Section 15.1.2. all (i) federal, state, county, municipal, foreign or
other fees and taxes of whatsoever nature (other than income taxes on the
taxable net income attributable to the Lessor and any franchise taxes),
including but not limited to license, qualification, registration, sales, use,
gross receipts, ad valorem, business, property (real or personal), excise, motor
vehicle, and occupation fees and taxes, with respect to any Series 1997 Vehicle
or the acquisition, purchase, sale, lease, rental, use, operation, control,
ownership or disposition of any Series 1997 Vehicle by any Person or measured in
any way by the value thereof or by the business of, investment by, or ownership
by the Lessor or a Lessee with respect thereto, (ii) federal, state, local and
foreign income taxes and penalties and interest thereon, whether assessed,
levied against or payable by the Lessor or otherwise as a result of its being a
member of any group of corporations including the Lessee that file any tax
returns on a consolidated or combined basis (other than with respect to income
tax on the Lessor's own income), and (iii) documentary, stamp, filing,
recording, mortgage or other taxes (other than income taxes), if any, which may
be payable by the Lessor, a Lessee or any other Indemnified Person in connection
with the execution, delivery, recording or filing of this Lease or the other
Related Documents or the leasing of any Series 1997 Vehicles hereunder and any
penalties or interest with respect thereto;
Section 15.1.3. any violation by a Lessee of this Lease or of any
Related Documents to which a Lessee is a party or by which it is bound or any
laws, rules, regulations, orders, writs, injunctions, decrees, consents,
approvals, exemptions, authorizations, licenses and withholdings of objection of
any governmental or public body or authority and all other requirements having
the force of law applicable at any time to any Series 1997 Vehicle or any action
or transaction by a Lessee with respect thereto or pursuant to this Lease;
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Section 15.1.4. all reasonable out-of-pocket costs of the Lessor
(including the fees and out-of-pocket expenses of counsel for the Lessor) in
connection with the execution, delivery and performance of this Lease and the
other Related Documents, including, without limitation, overhead expenses and
any and all fees of the Trustee, all fees payable in connection with any
Enhancement for the benefit of the Series 1997 Variable Funding Noteholders, any
and all fees of the Servicers under the Indenture (to the extent attributable to
the Series 1997 Variable Funding Notes), fees payable to the Rating Agencies in
connection with their rating of the Commercial Paper Notes and any underwriting
or placement agency fees incurred in connection with the sale of the Series 1997
Variable Funding Notes or Commercial Paper Notes;
Section 15.1.5. all reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by the
Lessor, the Master Collateral Agent, the Trustee, the Series 1997 Variable
Funding Noteholders or, if any, other Noteholders of Shared Collateral Series
Notes in connection with the administration (other than overhead expenses),
enforcement, waiver or amendment of this Lease and any other Related Documents,
and all indemnification and reimbursement obligations of the Lessor under the
Related Documents; and
Section 15.1.6. all costs, fees, expenses, damages and liabilities
(including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel) in connection with, or arising out of, any claim made by any third
party against the Lessor for any reason (including, without limitation, with
respect to Program Vehicles in connection with any audit or investigation
conducted by a Manufacturer under its Manufacturer Program).
All obligations provided for in this Section 15 shall survive any termination of
this Lease, and, to the extent that any of such obligations are unenforceable
for any reason, each Lessee agrees to the payment and satisfaction of each such
obligation which is permissible under applicable law.
Notwithstanding the foregoing, the Lessee shall have no duty to
indemnify any Indemnified Person for any claim, demand, liability, cost, or
expense to the extent such claim, demand, liability, cost or expense arises out
of or is due to such Person's gross negligence or willful misconduct.
Section 15.2. Indemnification of the Trustee. Each Lessee agrees to
indemnify and hold harmless the Trustee (and its officers, directors, employees
and agents) from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of, or arising out of or in connection with: (i)
any acts or omissions of such Lessee pursuant to this Lease and (ii) the
Trustee's appointment under the Indenture and the Trustee's performance of its
obligations thereunder, or any document pertaining to any of the foregoing to
which the Trustee is a signatory, including, but not limited to any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; provided, however, no Lessee shall have any duty to
indemnify the Trustee to the extent such loss, liability, expense, damage or
injury suffered or sustained is due to the Trustee's negligence or willful
misconduct. Any such indemnification shall not be payable from the assets of the
Lessor. The provisions of this indemnity shall run
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directly to and be enforceable by the Trustee or any other Indemnified Person
subject to the limitations hereof. The indemnification provided for in this
Section 15.2 shall be in addition to any other indemnities available to the
Trustee and shall survive the termination of the duties of any Lessee hereunder
and the termination of this Lease or a document to which the Trustee is a
signatory or the resignation or removal of the Trustee.
Section 15.3. Reimbursement Obligation by the Lessees. Each Lessee
shall forthwith upon demand reimburse each Indemnified Person or the Trustee, as
the case may be, for any sum or sums expended with respect to any of the
foregoing, or shall pay such amounts directly upon request from such Indemnified
Person or the Trustee, as the case may be; provided, however, that, if so
requested by a Lessee, such Indemnified Person or the Trustee, as the case may
be, shall submit to such Lessee a statement documenting any such demand for
reimbursement or payment. To the extent that a Lessee in fact indemnifies any
Indemnified Person or the Trustee under the indemnity provisions of this Lease,
such Lessee shall be subrogated to the rights of such Indemnified Person or the
Trustee, as the case may be, in the affected transaction and shall have a right
to determine the settlement of claims therein. The obligations of each Lessee
contained in this Section 15 shall survive the expiration or earlier termination
of this Lease or any lease of any Vehicle hereunder; provided, however, that, in
the case of indemnities relating to the acquisition or leasing of Vehicles, the
factual or legal circumstances giving rise to the Lessor's or any other
Indemnified Person's exposure to liability occur during the period that this
Lease is in effect as to the Vehicle for which such exposure to liability arose.
Section 15.4. Notice to Lessee of Claims. Each applicable Indemnified
Person or the Trustee, as the case may be, shall promptly notify the Lessee in
writing (a "Notice of Claim") of the pendency of any such claim, action or facts
referred to in this Section 15 for which indemnity may be required.
Section 15.5. Defense of Claims. Defense of any claim referred to in
this Section 15 for which indemnity may be required shall, at the option and
request of a Lessee, be conducted by the Lessee. Following receipt of any Notice
of Claim, the Lessee will inform the Indemnified Person of its election to
defend such claim. Such Indemnified Person may participate in any such defense
at its own expense, provided such participation, in the Lessee's reasonable
opinion, does not interfere with the Lessee's defense. Each Lessee agrees that
no Indemnified Person will be liable to the Lessee for any claim caused directly
or indirectly by the inadequacy of any Vehicle for any purpose or any deficiency
or defect therein or the use or maintenance thereof or any repairs, servicing or
adjustments thereto or any delay in providing or failure to provide such or any
interruption or loss of service or use thereof or any loss of business, all of
which shall be the risk and responsibility of the Lessees, except to the extent
that any of the foregoing is caused by the gross negligence or willful
misconduct of such Indemnified Person. The rights and indemnities of each
Indemnified Person hereunder are expressly made for the benefit of, and will be
enforceable by, each Indemnified Person notwithstanding the fact that such
Indemnified Person is not or is no longer a party to (or entitled to receive the
benefits of) this Lease. This general indemnity shall not affect any claims of
the type discussed above, or otherwise, which the Lessee may have against the
Manufacturer.
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SECTION 16. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Lease shall be
binding upon the Lessor, the Lessees, the Servicers, the Master Servicer, the
Guarantor and their respective successors and assigns, and shall inure to the
benefit of the Lessees, the Lessor, the Servicers, the Master Servicer, the
Guarantor and the Trustee (for the benefit of the Series 1997 Variable Funding
Noteholders and, if any, the other Noteholders of Shared Collateral Series
Notes), the Master Collateral Agent (for the benefit of the Trustee (on behalf
of the Series 1997 Variable Funding Noteholders and, if any, the other
Noteholders of Shared Collateral Series Notes) and the Other VFN Beneficiaries),
any other Indemnified Person, and their respective successors and assigns;
provided, however, that no Lessee or the Guarantor shall have the right to
assign its rights or delegate its duties under this Lease without (i) the prior
written consent of the Lessor, the Trustee, the Required VFN Noteholders and the
Majority Credit Enhancers and (ii) receipt of written confirmation from each of
the Rating Agencies that its then current rating will not be reduced or
withdrawn with respect to any outstanding Commercial Paper Notes or, if
applicable, Shared Collateral Series Notes as a result thereof; provided,
further, however, that nothing herein contained shall be deemed to restrict (w)
the right of any Lessee to rent Series 1997 Vehicles to customers in the
ordinary course of its domestic daily rental businesses, (x) the right of any
Named Lessee to permit another Lessee to use Vehicles leased by the Named Lessee
hereunder in the ordinary course of the domestic daily rental car operations of
such other Lessee in accordance with the terms of this Lease (but the Named
Lessee shall remain fully liable for its obligations under this Lease and the
other Related Documents), (y) the right of any Lessee to share certain of the
Vehicles leased by it with Fleet Sharing Parties (subject to the limitations
specified in Section 8), for use in the ordinary course of the domestic daily
rental businesses of such Fleet Sharing Parties in accordance with the terms of
this Lease or (z) the right of any Named Servicer to perform its obligations as
Servicer through another Servicer, subject to the limitations specified in
Section 26 and provided that the Named Servicer shall remain fully liable for
its obligations under this Lease and the other Related Documents. Any purported
assignment in violation of this Section 16 shall be void and of no force or
effect. Nothing contained herein shall be deemed to restrict the right of any
Lessee to acquire or dispose of, by purchase, lease, financing, or otherwise,
motor vehicles that are not subject to the provisions of this Lease.
SECTION 17. DEFAULT AND REMEDIES THEREFOR.
Section 17.1. Events of Default. Any one or more of the following
will constitute an event of default (a "Lease Event of Default") as that term is
used herein:
Section 17.1.1. Non-Payment of Liabilities . The occurrence of (i) a
default in the payment when due of any Monthly Base Rent, Additional Base Rent,
Monthly Variable Rent, Monthly Finance Rent, Termination Payment, Casualty
Payment, Additional Synthetic Lease Payment or Monthly Supplemental Payment, and
the continuance thereof for, except in the case of any Monthly Variable Rent or
Monthly Finance Rent, two (2) Business Days and, in the case of any Monthly
Variable Rent or Monthly Finance Rent, five (5) Business Days, or (ii) a default
by any Lessee or the Guarantor in the payment when due of any amount payable
under this Lease
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(other than amounts described in clause (i) above) and the continuance thereof
for five (5) Business Days;
Section 17.1.2. Unauthorized Assignment. Subject to the provisions of
Section 18 regarding Lessee Partial Wind-Down Events, any unauthorized
assignment or transfer of this Lease by a Lessee occurs;
Section 17.1.3. Non-Performance of Covenants and Obligations. Subject
to the provisions of Section 18 regarding Lessee Partial Wind-Down Events, any
Lessee, any Servicer or the Guarantor fails to comply with or perform any
covenant, condition, agreement or provision of this Lease (which failure does
not constitute a Lease Event of Default under any of the other provisions of
this Section 17) and the continuance of such failure (other than any such
failure to comply with the provisions of Section 25.1 or 25.2 hereof, as to
which there shall be no cure period) for thirty (30) days after the earlier of
(x) the date the Lessor, the Master Collateral Agent or the Trustee delivers
written notice thereof to such Lessee or the Guarantor and (y) the date such
Lessee or the Guarantor obtains actual knowledge thereof;
Section 17.1.4. Breach of Representation or Warranty. Subject to the
provisions of Section 18 regarding Lessee Partial Wind-Down Events, any
representation or warranty made by a Lessee, a Servicer or the Guarantor in this
Lease or any Related Document is incorrect in any material respect (to the
extent that such representation or warranty does not incorporate a materiality
limitation in its terms) as of the date such warranty or representation is made
and continues to be incorrect in any material respect (to the extent that such
warranty or representation does not incorporate a materiality limitation in its
terms) for a period of thirty (30) days after the earlier of (i) the date on
which written notice thereof shall have been given to such Lessee, or Servicer
or the Guarantor by the Lessor, the Master Collateral Agent or the Trustee, and
(ii) the date on which such Lessee or Servicer or the Guarantor obtains actual
knowledge thereof; or any schedule, certificate, financial statement, report,
notice, or other material writing furnished by a Lessee or a Servicer or the
Guarantor to the Lessor is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified and which
continues to be incorrect in any material respect for a period of ten (10) days
after the earlier of (a) the date on which written notice thereof shall have
been given to such Lessee or Servicer or the Guarantor by the Lessor, the Master
Collateral Agent or the Trustee, and (b) the date on which such Lessee or
Servicer or the Guarantor obtains actual knowledge thereof;
Section 17.1.5. Event of Bankruptcy. Subject to the provisions of
Section 18 regarding Lessee Partial Wind-Down Events, the occurrence of an Event
of Bankruptcy with respect to any Lessee or the Guarantor;
Section 17.1.6. Invalidity of Related Documents. All or any portion of
any Related Document (other than the Dealer Agreement) shall at any time and for
any reason not be in full force and effect or be declared to be null and void,
or a proceeding shall be commenced by a Lessee or the Guarantor, or by any
governmental authority having jurisdiction over the Lessee or
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the Guarantor, as applicable, seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof).
Section 17.1.7. Series 1997 VFN Enhancement Deficiency. A Series 1997
VFN Enhancement Deficiency shall occur and such condition shall continue to
exist for more than one Business Day.
Section 17.1.8. Support Reimbursement Agreement. An Event of Default
occurs with respect to the Guarantor or (subject to the provisions of Section 18
regarding Lessee Partial Wind-Down Events) a Lessee under a Support
Reimbursement Agreement which continues beyond any applicable cure period
specified in such Support Reimbursement Agreement.
Section 17.1.9. Default Under Another Lease. There occurs a payment
default which results in the occurrence of a "lease event of default," as
defined under any other lease supporting any Series of Notes issued under the
Indenture (including, without limitation, any Series of Notes that is not a
Shared Collateral Series of Notes; provided that if such other lease is not
guaranteed by the Guarantor and not all of the Lessees are lessees under such
other lease, such default shall only be a Lease Event of Default and a Lessee
Partial Wind-Down Event with respect to the Lessees who are also lessees under
such other lease).
Section 17.2. Effect of Lease Event of Default; Series 1997-1 Limited
Liquidation Event of Default or Liquidation Event of Default. (a) If a Lease
Event of Default described in Section 17.1.1(i), 17.1.2, 17.1.5, 17.1.8, or
17.1.9 (subject to the provisions of Section 18, if such event is a Lessee
Partial Wind-Down Event) shall occur, then the Monthly Base Rent, Additional
Base Rent, Monthly Supplemental Payments, Additional Synthetic Lease Payments,
Casualty Payments (in each case calculated as if all Financed Vehicles and
Synthetic Lease Vehicles had become Casualties or had ceased to be Eligible
Vehicles during the Related Month), the Monthly Variable Rent, the Monthly
Finance Rent (in each case calculated as if the full amount of interest,
principal and other charges under the Series 1997 Variable Funding Notes and, if
any, other Shared Collateral Series Notes were then due and payable in full),
Termination Payments and all other charges, payments and amounts payable under
this Lease shall, subject to Section 17.4, automatically, without further action
by the Lessor or the Trustee, become immediately due and payable.
(b) If a Series 1997 Limited Liquidation Event of Default shall occur,
then, the Monthly Base Rent, Additional Base Rent, the Monthly Supplemental
Payments, the Additional Synthetic Lease Payments and Casualty Payments (in each
case, calculated as if each Financed Vehicle and Synthetic Lease Vehicle with
respect to which the Lessor has terminated the applicable Lessee's
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right to possession pursuant to Section 17.3(ii) or (iii) had become a Casualty
or had ceased to be an Eligible Vehicle during the Related Month), the Monthly
Variable Rent and the Monthly Finance Rent (in each case calculated as if the
full amount of interest, principal and other charges under the Series 1997
Variable Funding Notes and, if any, other applicable Shared Collateral Series
Notes were then due and payable in full) and Termination Payments (in each case,
with respect to each Vehicle with respect to which the Lessor has terminated the
applicable Lessee's right to possession pursuant to Section 17.3(ii) or (iii))
shall, subject to Section 17.4, automatically, without further action by the
Lessor or the Trustee, become immediately due and payable.
(c) If any Lease Event of Default (other than one described in
paragraph (a) above) or a Liquidation Event of Default shall occur, then,
subject to Section 18 if such event is a Lessee Partial Wind-Down Event, the
Lessor or the Trustee may declare the Rent and all other charges, amounts and
payments (calculated as described in paragraph (a) above) to be due and payable,
whereupon such Rent and such other charges, amounts and payments (as so
calculated) shall, subject to Section 17.4, become immediately due and payable.
Section 17.3. Rights of Lessor and Trustee Upon Lease Event of Default,
Liquidation Event of Default or Series 1997 Limited Liquidation Event of
Default. If a Lease Event of Default, Liquidation Event of Default or Series
1997 Limited Liquidation Event of Default shall occur:
(i) In the case of a Lease Event of Default that shall have
occurred and be continuing, the Lessor at its option may (or if and as
directed by the Trustee shall) proceed by appropriate court action or
actions, either at law or in equity, to enforce performance by the
applicable Lessee of the applicable covenants and terms of this Lease
or to recover damages for the breach hereof calculated in accordance
with Section 17.4;
(ii) In the case of a Liquidation Event of Default or a
Series 1997 Limited Liquidation Event of Default that shall have
occurred and be continuing, the Lessor and the Trustee, to the extent
provided in the Indenture and subject to Section 17.4 and Section 18,
shall have all the rights against the Lessees and the Series 1997 VFN
Collateral provided in the Indenture upon such a Liquidation Event of
Default or a Series 1997 Limited Liquidation Event of Default, as the
case may be, including the right to take (under the specified
circumstances) possession of Series 1997 Vehicles (to the extent
specified in this Lease or the Indenture, as applicable) immediately;
(iii) In the case of a Liquidation Event of Default that shall
have occurred and be continuing, the Trustee may, by notice in writing
to the Lessees (or, in the case of a Liquidation Event of Default
resulting from an event referred to in Section 17.1.5 of this Lease
with respect to a Lessee, the Lessee in respect of which such event has
occurred), terminate this Lease in its entirety (or, in the case of a
Liquidation Event of Default resulting from an event referred to in
Section 17.1.5 of this Lease with respect to a Lessee, terminate this
Lease only in respect of the Lessee in respect of which such event has
occurred), and/or the right of possession hereunder of the applicable
Lessees as to the Series 1997 Vehicles, and the Lessor may direct
delivery by the applicable Lessees of documents of title to the Series
1997 Vehicles, whereupon all rights and interests of the Lessees (or,
in the case of a Liquidation Event of Default resulting from an event
referred to in Section 17.1.5 of this Lease with respect to a Lessee,
the Lessee in respect of which such event has occurred), to the Series
1997 Vehicles (except as otherwise provided
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herein) will cease and terminate (but the Lessees will remain liable
hereunder as herein provided, calculated in accordance with Section
17.4); and, in the case of a Series 1997 Limited Liquidation Event of
Default that shall have occurred and be continuing, the Trustee may, by
notice in writing to the Lessees, terminate the right of possession
hereunder of any Lessee as to such number of Vehicles as will generate
proceeds from liquidation in an amount sufficient to pay all principal
of and interest on (and all other amounts due to the holders of) the
applicable Series 1997 Variable Funding Notes and, if any, all other
related Shared Collateral Series Notes, and the Lessor may direct
delivery by such Lessees of documents of title to such Vehicles,
whereupon all right, title and interest of such Lessees to such
Vehicles (except as otherwise provided herein) will cease and terminate
(but such Lessees will remain liable hereunder as herein provided,
calculated in accordance with Section 17.4). Upon any termination of
the right to possession of any one or more Lessees pursuant to the
previous sentence, the Lessor or its agents may peaceably enter upon
the premises of any Lessee or other premises where such Vehicles may be
located and take possession of them and thenceforth hold, possess and
enjoy the same free from any right of any Lessee, or its successors or
assigns, to employ such Vehicles for any purpose whatsoever consistent
with the mitigation of losses and damages, and the Lessor will,
nevertheless, have a right to recover from the applicable Lessee any
and all amounts which under the terms of Section 17.2 (as limited by
Section 17.4) of this Lease may be then due. The Lessor will provide
the Lessees with written notice of the place and time of any sale of
Financed Vehicles or Synthetic Lease Vehicles pursuant to this Section
17.3 at least five (5) days prior to the proposed sale, which notice
period shall be deemed commercially reasonable, and the Lessee may
purchase the Vehicle(s) at the sale. Each and every power and remedy
hereby specifically given to the Lessor will be in addition to every
other power and remedy hereby specifically given or now or hereafter
existing at law, in equity or in bankruptcy and each and every power
and remedy may be exercised from time to time and simultaneously and as
often and in such order as may be deemed expedient by the Lessor;
provided, however, that the measure of damages recoverable against the
Lessees will in any case be calculated in accordance with Section 17.4.
All such powers and remedies will be cumulative, and the exercise of
one will not be deemed a waiver of the right to exercise any other or
others. No delay or omission of the Lessor in the exercise of any such
power or remedy and no renewal or extension of any payments due
hereunder will impair any such power or remedy or will be construed to
be a waiver of any default or any acquiescence therein. Any extension
of time for payment hereunder or other indulgence duly granted to any
Lessee will not otherwise alter or affect the rights of the Lessor or
the obligations hereunder of any Lessee. The acceptance by the Lessor
of any payment after it will have become due hereunder will not be
deemed to alter or affect the rights of the Lessor hereunder with
respect to any subsequent payments or defaults therein;
(iv) If a Lessee shall default in the due performance and
observance of any of its obligations under Section 10, 24.5, 24.6,
24.7(iv), 24.7(viii), 24.9, 24.11, 25.3 or 25.4 hereof, and such
default shall continue unremedied for a period of 30 days (other than
in
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the case of a default under Section 24.6, for which the period will be
10 days) after notice thereof shall have been given to the Lessee by
the Lessor or the Master Collateral Agent, then the Lessor shall have
the ability to exercise all rights, remedies, powers, privileges and
claims of such Lessee against the Manufacturers under or in connection
with the Manufacturer Programs with respect to (1) Series 1997 Vehicles
the Lessee has determined to turn back to the Manufacturers under such
Manufacturer Programs and (2) whether or not the Lessee shall then have
determined to turn back such Vehicles, any Series 1997 Vehicles for
which the applicable Repurchase Period will end within one month or
less;
(v) Upon a default in the performance (after giving effect to
any grace periods provided herein) by a Lessee of its obligations or
representations under Section 23.6 or 24.18 hereof with respect to any
Series 1997 Vehicle, the Lessor, the Master Collateral Agent or the
Trustee shall have the right to take actions reasonably necessary to
correct such default with respect to the subject Vehicle including the
execution of UCC-1 financing statements with respect to Manufacturer
Programs and other general intangibles and the completion of Vehicle
Perfection and Documentation Requirements on behalf of the Lessees or
the Lessor, as applicable;
(vi) Upon the occurrence of a Liquidation Event of Default,
each Servicer (or, in the case of a Liquidation Event of Default
resulting from an event referred to in Section 17.1.5 of this Lease
with respect to a Lessee, the Servicer in respect of which such event
has occurred), will return all Series 1997 Vehicles serviced by it
which are Program Vehicles to the related Manufacturer, in each case in
accordance with the instructions of the Lessor. Upon the occurrence of
a Series 1997 Limited Liquidation Event of Default, each Servicer will
return Series 1997 Vehicles serviced by it which are Program Vehicles
to the related Manufacturer and will otherwise dispose of NonProgram
Vehicles to the extent necessary to generate proceeds in an amount
sufficient to pay all interest on and principal of (and all other
amounts due to the holders of) the applicable Series 1997 Variable
Funding Notes and, if any, all other related Shared Collateral Series
Notes, in each case in accordance with the instructions of the Lessor.
To the extent any Manufacturer fails to accept any such Vehicles under
the terms of the applicable Manufacturer Program, the Lessor shall have
the right otherwise to dispose of such Vehicles and to direct the
applicable Servicer to dispose of such Vehicles in accordance with its
instructions. In addition, the Lessor shall have all of the rights,
remedies, powers, privileges and claims vis-a-vis each Lessee necessary
or desirable to allow the Trustee to exercise the rights, remedies,
powers, privileges and claims given to the Trustee pursuant to Sections
9.2 and 9.3 of the Base Indenture and each Lessee acknowledges that it
has hereby granted the Lessor all of the rights, remedies, powers,
privileges and claims granted to the Trustee pursuant to Article 9 of
the Base Indenture and that, under certain circumstances set forth in
the Base Indenture, the Trustee may act in lieu of the Lessor in the
exercise of such rights, remedies, powers, privileges and claims; and
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(vii) Upon the occurrence and during the continuation of a
Lease Event of Default, the Lessor by notice in writing to a Lessee,
may terminate the Power of Attorney as to such Lessee (provided that,
after any such termination of the Power of Attorney, the Lessor will
follow the direction of the applicable Servicer to release liens on
Acquired Vehicles which liens are required to be released under the
terms of this Lease).
Section 17.4. Measure of Damages. If a Lease Event of Default occurs
and the Lessor, the Master Collateral Agent or the Trustee exercises the
remedies granted to the Lessor, the Master Collateral Agent or the Trustee under
this Section 17 or under Section 9.2 of the Indenture, the amount that the
Lessor shall be permitted to recover shall be equal to:
(i) all Rent and other charges, payments and amounts owed
under this Lease (calculated as provided in Section 17.2); plus
(ii) any out-of-pocket damages and expenses which the Lessor,
the Master Collateral Agent or the Trustee shall have sustained by
reason of such Lease Event of Default, together with reasonable sums
for such attorneys' fees and such expenses as will be expended or
incurred in the seizure, storage, rental or sale of the Vehicles or in
the enforcement of any right or privilege hereunder or in any
consultation or action in such connection.
(iii) without duplication of payments made pursuant to Section
5.4, interest (calculated on the basis of a 360-day year) from time to
time on amounts due and unpaid under this Lease for each Interest
Period in the period from the date of the Lease Event of Default or the
date payments were originally due the Lessor under this Lease or from
the date of each expenditure by the Lessor, the Master Collateral Agent
or the Trustee, as applicable, which is recoverable from the Lessee
pursuant to this Section 17, as applicable, to and including the date
payments are made by the Lessee at a rate for each such Interest Period
equal to the VFR for such Interest Period (converted to a rate per
annum) plus 1%;
provided, however, that, to avoid duplication of payments, to the extent any
amounts described in (i) through (iii) above have been paid to the Lessor, the
Master Collateral Agent or the Trustee from the liquidation of the Financed
Vehicles and Synthetic Lease Vehicles leased hereunder (either by receipt of
payment from the Manufacturers under Manufacturer Programs, from sales of
Vehicles to third parties, or otherwise), such amounts shall be deducted from
amounts under this Section 17.4.
Section 17.5. Application of Proceeds. The proceeds of any sale or
other disposition of any Financed Vehicles or Synthetic Lease Vehicles pursuant
to Section 17.3 shall be applied in the following order: (i) to the reasonable
out-of-pocket costs and expenses incurred by the Lessor or its agent in
connection with such sale or disposition, including any reasonable costs
associated with repairing such Vehicles, and reasonable attorneys' fees in
connection with the enforcement of this Lease, (ii) to the payment of
outstanding Rent and other charges, payments and amounts
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under this Lease (such proceeds to be applied first, to outstanding Monthly
Variable Rent and Monthly Finance Rent pro rata, second, to outstanding Base
Rent, Monthly Supplemental Payments, Additional Base Rent and Additional
Synthetic Lease Payments, pro rata, third, to outstanding Termination Payments
and Casualty Payments pro rata and fourth, to outstanding late charges pursuant
to Sections 5.4 and 17.4(iii)), (iii) to the payment of all other amounts due
hereunder and (iv) any remaining proceeds to the applicable Lessee or such
Person as may be lawfully entitled thereto.
SECTION 18. MANUFACTURER EVENTS OF DEFAULT; LESSEE PARTIAL WIND-DOWN
EVENTS. (a) Upon the occurrence of a Manufacturer Event of Default with respect
to a Manufacturer, the Lessees on behalf of the Lessor (a) shall no longer place
Vehicle Orders for additional Vehicles from such Manufacturer (each, a
"Defaulting Manufacturer"); provided that, if such Defaulting Manufacturer
continues to be an Eligible Non-Program Manufacturer, then the Lessees may
continue to place Vehicle Orders for Non-Program Vehicles with such Defaulting
Manufacturer, and (b) shall cancel any Vehicle Order for Vehicles of such
Defaulting Manufacturer to which a vehicle identification number (a "VIN") has
not been assigned as of the date of such Manufacturer Event of Default (to the
extent such Vehicle Order is cancelable, with or without penalty); provided
that, if such Defaulting Manufacturer continues to be an Eligible Non-Program
Manufacturer, then the Lessees shall not be required to cancel Vehicle Orders
for Non-Program Vehicles of such Defaulting Manufacturer.
(b) Upon the occurrence of any of the events described in Section
17.1.2, 17.1.3, 17.1.4, 17.1.5, 17.1.8 or 17.1.9 (a "Lessee Partial Wind-Down
Event") with respect to any Lessee (such Lessee, the "Defaulting Lessee"), then
such Defaulting Lessee shall (a) no longer place Vehicle Orders for additional
Series 1997 Vehicles and (b) shall cancel Vehicle Orders for Series 1997
Vehicles; provided, however, that if a Vehicle Order has been placed for an
Acquired Vehicle and the related Manufacturer has assigned a VIN as of the date
such Lessee Partial Wind-Down Event occurs, then such Vehicle Order will not be
canceled. In the case of a Lessee Partial Wind-Down Event, the Lessor may (i)
exercise any right or remedy in respect only of such Defaulting Lessee provided
for pursuant to the provisions of Section 17.2 or 17.3 hereof and (ii) terminate
the Power of Attorney with respect to such Defaulting Lessee; provided that,
after any such termination of the Power of Attorney, the Lessor will follow the
direction of the applicable Servicer to release liens on Acquired Vehicles,
which liens are required to be released under the terms of this Lease.
SECTION 19. CERTIFICATION OF TRADE OR BUSINESS USE. Pursuant to Section
7701 of the Code, each Lessee will deliver to the Lessor a certificate in the
form of Attachment C hereto, warranting and certifying that (1) such Lessee
intends to use the Acquired Vehicles leased by it hereunder in a trade or
business of the Lessee, and (2) such Lessee has been advised that it will not be
treated as the owner of the Acquired Vehicles leased by it hereunder for federal
income tax purposes.
SECTION 20. SURVIVAL. In the event that, during the term of this Lease,
a Lessee or the Guarantor becomes liable for the payment or reimbursement of any
obligations, claims or
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taxes pursuant to any provision hereof, such liability will continue,
notwithstanding the expiration or termination of this Lease, until all such
amounts are paid or reimbursed by the Lessee or the Guarantor.
SECTION 21. RIGHTS OF LESSOR PLEDGED TO MASTER COLLATERAL AGENT AND
TRUSTEE. Notwithstanding anything to the contrary contained in this Lease, each
Lessee acknowledges that each of the Lessees and the Lessor, pursuant to the
Master Collateral Agency Agreement, has granted a security interest to the
Master Collateral Agent, for the benefit of the Trustee (for the benefit of the
Series 1997 Variable Funding Noteholders), in all of its right, title and
interest in, to and under the Series 1997 Vehicles, the related Manufacturer
Programs, the Master Collateral Account and all other Master Collateral
specified in the Master Collateral Agency Agreement as being pledged by any
Lessee or NFLP, and each Lessee and the Guarantor further acknowledges that the
Lessor, pursuant to the NFLP Receivables Trust Agreement has conveyed to the
NFLP Receivables Trustee, all NFLP's right, title and interest in respect of the
Lease Payments and the Manufacturer Payment Rights and that, pursuant to the
Series 1997 Variable Funding Supplements and the Indenture, the Lessor has
granted a security interest to the Trustee (for the benefit of the Series 1997
Variable Funding Noteholders) in all of its right, title and interest in, to and
under the NFLP Agreements (other than the Lease Payments, and the Manufacturer
Payment Rights), the NFLP Receivables Trust Agreement, the NFLP Beneficial
Interest, the VFN Collection Accounts and the other Series 1997 VFN Collateral
described in the Series 1997 Variable Funding Supplements. Accordingly, each
Lessee and the Guarantor agree that:
(i) Subject to the terms of the Indenture, the Trustee shall
have all the rights, powers, privileges and remedies of the Lessor
hereunder. Specifically, each Lessee and the Guarantor agrees that,
upon the occurrence of an Amortization Event, the Trustee or, with
respect to any Master Collateral, the Master Collateral Agent (for and
on behalf of the Trustee) may exercise any right or remedy available
upon the occurrence of the event or events giving rise to such
Amortization Event against any Lessee or the Guarantor provided for
herein or in the Indenture or the Master Collateral Agency Agreement,
as applicable, and neither any Lessee nor the Guarantor will interpose
as a defense that such claim should have been asserted by the Lessor;
(ii) Upon the delivery by the Master Collateral Agent or the
Trustee of any notice to a Lessee or the Guarantor stating that a Lease
Event of Default or any Amortization Event has occurred, then the
Lessee or the Guarantor, will, if so requested by the Master Collateral
Agent (with respect to the Master Collateral) or the Trustee (with
respect to the Series 1997 VFN Collateral), treat the Master Collateral
Agent or the Trustee, as the case may be, or the designee of the Master
Collateral Agent or the Trustee, as the case may be, for all purposes
as the Lessor hereunder and in all respects comply with all obligations
under this Lease that are asserted by the Master Collateral Agent or
the Trustee, as the case may be, as the successor to the Lessor
hereunder, irrespective of whether the Lessee or the Guarantor has
received any such notice from the Lessor;
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(iii) Each Lessee acknowledges that pursuant to the Indenture,
the Lessor has irrevocably authorized and directed the Lessees to, and
the Lessees shall, make payments of Rent and other charges and payments
under this Lease by deposit directly to the Series 1997 Collection
Account established by the Trustee for receipt of such payments
pursuant to the Indenture and the Series 1997 Variable Funding
Supplements (or to such other account as the Trustee may from time to
time specify to the Lessees), and such payments shall discharge the
obligation of the Lessees to the Lessor hereunder with respect to Rent
and other charges and payments to the extent of such payments;
(iv) Upon request made by the Master Collateral Agent at any
time, each Lessee will take such actions as are requested by the Master
Collateral Agent to maintain the Master Collateral Agent's perfected
first priority security interest in the Vehicles leased by such Lessee
under this Lease, the Certificates of Title with respect thereto and
the Master Collateral pursuant to the Master Collateral Agency
Agreement;
(v) The Trustee is hereby irrevocably appointed the true and
lawful attorney-in-fact of each Lessee, in its name and stead, to make
all necessary deeds, bills of sale and instruments of assignment and
transfer of the property of such Lessee sold pursuant to Section 9.3 of
the Base Indenture (including without limitation, any Financed Vehicles
and Synthetic Lease Vehicles), and for such other purposes as are
necessary or desirable to effectuate the provisions of the Indenture
and for that purpose the Trustee may execute and deliver all necessary
deeds, bills of sale and instruments of assignment and transfer, and
may substitute one or more Persons with like power, each Lessee hereby
ratifying and confirming all that its said attorney, or such substitute
or substitutes, shall lawfully do by virtue hereof, but if so requested
by the Trustee or by any purchaser, the Lessee shall ratify and confirm
any such sale or transfer by executing and delivering to the Trustee or
to such purchaser all such property, deeds, bills of sale, instruments
of assignment and transfer and releases as may be designated in any
such request;
(vi) In the event that the Trustee determines to take action
pursuant to the provisions of Section 9.2(e) of the Base Indenture, the
Trustee may, without notice to the Lessor (unless such notice is
required by applicable state law), any Servicer, any Lessee or the
Guarantor, direct the Master Collateral Agent to take legal proceedings
for the appointment of a receiver to take possession of Series 1997
Vehicles pending the sale thereof and in any such event the Trustee
shall be entitled to the appointment of a receiver for the Series 1997
Vehicles, and none of the Lessor, any Servicer, any Lessee or the
Guarantor shall object to such appointment; and
(vii) Each Lessee hereby authorizes the Lessor and the
Trustee, as applicable, to give directions to the Master Collateral
Agent to perform any obligation which the Lessee shall have failed to
perform under the Related Documents, including, but not limited to, any
directions permitted by Section 3.4 of the Master Collateral Agency
Agreement.
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SECTION 22. MODIFICATION AND SEVERABILITY. No delay on the part of the
Lessor, the Trustee or the Master Collateral Agent in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial exercise by any of them of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or remedy.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Lease shall in any event be effective unless (a) the same
shall be in writing and signed and delivered by the Lessor, the Lessees, and
(except as to the matters referred to in Section 28.3) the Guarantor, and
consented to in writing by the Trustee, Required VFN Noteholders and the
Majority Credit Enhancers, and (b) the Lessor shall have received in writing
confirmation from each of the Rating Agencies that its then current rating with
respect to any Commercial Paper Notes will not be reduced or withdrawn as a
result thereof.
Notwithstanding the foregoing provisions of this Section 22, the
Lessor, the Lessees and the Guarantor may, at any time and from time to time,
without the consent of the Trustee or the Series 1997 Variable Funding
Noteholders, enter into any amendment, supplement or other modification to this
Lease to cure any apparent ambiguity or to correct or supplement any provision
in this Lease that may be inconsistent with any other provision herein;
provided, however, that (i) any such action shall not have a materially adverse
effect on the interests of the providers of Enhancement for any Series 1997
Variable Funding Notes or the Series 1997 Variable Funding Noteholders as set
forth, at the request of the Trustee, in an Opinion of Counsel and a certificate
of the Lessor and Lessees addressed to the Trustee and (ii) a copy of such
amendment, supplement or other modification is furnished to the Trustee, each
Enhancement Provider with respect to any Series 1997 Variable Funding Notes and
each Rating Agency in accordance with the notice provisions hereof not later
than ten days prior to the execution thereof by the Lessor, the Lessees and the
Guarantor.
SECTION 23. CERTAIN REPRESENTATIONS AND WARRANTIES. Each Lessee and
Servicer represents and warrants to the Lessor, as to itself and the Series 1997
Vehicles leased by it, and the Guarantor represents and warrants to the Lessor
as to itself and as to each Lessee and Servicer and as to all Series 1997
Vehicles, that, as of the VFN Closing Date and, except to the extent such
representation and warranty expressly relates to an earlier date, (i) as of each
Vehicle Funding Date and (ii) as of the Closing Date with respect to each Series
of Shared Collateral Series Notes):
Section 23.1. Organization; Power; Qualification. The Guarantor and
each Lessee (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own its properties and to carry on its business
as now being and hereafter proposed to be conducted, and (iii) is duly
qualified, in good standing and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its businesses
requires such qualification or authorization, except where the failure to so
qualify is not reasonably likely to have a Material Adverse Effect.
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Section 23.2. Authorization; Enforceability. The Guarantor and each
Lessee (in its capacities as Lessee and as Servicer) has the corporate power and
has taken all necessary corporate action to authorize it to execute, deliver and
perform this Lease and each of the other Related Documents to which it is a
party in accordance with their respective terms, and to consummate the
transactions contemplated hereby and thereby. This Lease has been duly executed
and delivered by the Guarantor and each Lessee and is, and each of the other
Related Documents to which any Lessee or the Guarantor is a party is, a legal,
valid and binding obligation of such Lessee or the Guarantor, as applicable,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and similar laws
affecting creditors generally and by the availability of equitable remedies.
Section 23.3. Compliance. The execution, delivery and performance, in
accordance with their respective terms, by each Lessee (in its capacities as a
Lessee and as a Servicer) and the Guarantor of this Lease and each of the other
Related Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) require
any consent, approval, authorization or registration not already obtained or
effected, except where the failure to obtain any such consent, approval or
authorization or to register is not reasonably likely to have a Material Adverse
Effect, (ii) violate any applicable law with respect to any Lessee, Servicer or
the Guarantor or otherwise, as applicable, which violation is reasonably likely
to have a Material Adverse Effect, (iii) conflict with, result in a breach of,
or constitute a default under the certificate of incorporation or by-laws of any
Lessee, Servicer or the Guarantor, or under any indenture, agreement, or other
instrument to which any Lessee (in its capacity as Lessee or as Servicer or
otherwise) or the Guarantor, is a party or by which its properties may be bound,
which conflict, breach or default is reasonably likely to have a Material
Adverse Effect, or (iv) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by the
Guarantor or any Lessee, except Permitted Encumbrances.
Section 23.4. Financial Information; Financial Condition. All
financial statements (including the notes thereto) referred to in the following
sentence and hereafter furnished to the Lessor, the Master Collateral Agent or
the Trustee pursuant to Section 24.7 hereof have been and will be prepared in
accordance with GAAP and do and will present fairly the financial condition of
the entities involved as of the dates thereof and the results of their
operations for the periods covered thereby, subject, in the case of all
unaudited statements, to normal year-end adjustments and lack of footnotes and
other presentation items. Such financial statements include the audited
consolidated balance sheet of the Guarantor and its Consolidated Subsidiaries as
of December 31, 1996 (restated as of August 19, 1997) and the related statements
of income, changes in stockholders' equity and cash flow as of and for the
fiscal year ending on such date, which have been furnished to the Lessor and the
Trustee on or prior to the date hereof.
Section 23.5. Litigation. Except for claims as to which the insurer
has admitted coverage in writing and which are fully covered by insurance, no
claims, litigation (including, without limitation, derivative actions),
arbitration, governmental investigation or proceeding or inquiry is
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pending or, to the best of the Guarantor's and the Lessee's knowledge,
threatened against the Guarantor or any Lessee which is reasonably likely to
have a Material Adverse Effect.
Section 23.6. Liens. The Series 1997 Vehicles and other Master
Collateral are free and clear of all Liens other than Permitted Liens. The
Lessor (or the Master Collateral Agent on behalf of the Lessor) has obtained, as
security for the liabilities of the Lessees under this Lease, a first priority
perfected security interest on all Series 1997 Vehicles and all the other Master
Collateral with respect to which the Trustee (for the benefit of the Series 1997
Variable Funding Noteholders) or any Other VFN Beneficiary is designated as the
Beneficiary under the Master Collateral Agency Agreement. All Vehicle Perfection
and Documentation Requirements with respect to all Series 1997 Vehicles (other
than Series 1997 Vehicles in the Initial Fleet) on or after the date hereof have
and will continue to be satisfied, except to the extent that the failure to
comply with such requirements does not, in the aggregate, materially adversely
affect either the interests of the Lessor or Series 1997 Variable Funding
Noteholders under this Lease or the Indenture or the likelihood of payment of
all Rent and other charges and payments due under this Lease.
Section 23.7. Employee Benefit Plans. (a): (i) During the twelve
consecutive month period prior to the date hereof and prior to the VFN Closing
Date, each Vehicle Funding Date and the Closing Date for each Series of Shared
Collateral Series Notes, no steps have been taken by the Guarantor, any Lessee,
or any member of the Controlled Group, or to the knowledge of the Guarantor or
any Lessee, by any Person, to terminate any Pension Plan that could give rise to
any liability under Title IV of ERISA and (ii) no contribution failure has
occurred or exists with respect to any Pension Plan maintained or previously
maintained by the Guarantor, any Lessee, or any member of the Controlled Group
sufficient to give rise to a Lien under Section 302(f)(1) of ERISA in connection
with such Pension Plan; and (b) no condition exists or event or transaction has
occurred with respect to any Pension Plan which could reasonably be expected to
result in the incurrence by the Guarantor, any Lessee, or any member of the
Controlled Group of liabilities (including, without limitation, Multiemployer
Plan and Multiple Employer Plan withdrawal liabilities), fines or penalties in
an amount that will have a Material Adverse Effect.
Section 23.8. Securities Laws. Neither the Guarantor nor any Lessee is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act, and the entering into or
performance by the Guarantor and the Lessees of this Lease does not violate any
provision of such Act and does not require any consent, approval or
authorization of, or registration with, the Securities and Exchange Commission
or any other similar governmental or public body or authority.
Section 23.9. Regulations G, T, U and X. Neither the Guarantor nor any
Lessee is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System). Neither the Guarantor nor any Lessee nor any
Person acting on behalf of any of them has taken or will take action to cause
the execution, delivery or performance of this Lease or the financing or
acquisition of the Series
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1997 Vehicles to violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
Section 23.10. Business Locations; Trade Names. Schedule 23.10 lists
where each Lessee and the Guarantor maintains its chief executive office,
principal place of business, and location of its consolidated business and
financial records as of the VFN Closing Date; and Schedule 23.10 also lists as
of the VFN Closing Date the legal name of each Lessee and the Guarantor and each
name under or by which each Lessee and the Guarantor conducts its business and
each state in which any Lessee or the Guarantor conducts business.
Section 23.11. Taxes. The Guarantor and each Lessee has filed all
material tax returns which have been required to be filed by it, and has paid or
provided in all material respects adequate reserves for the payment of all
taxes, including, without limitation, all payroll taxes and federal and state
withholding taxes, and all assessments payable by it that have become due, other
than those that are not yet delinquent or that are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP. As of the VFN
Closing Date, there is no ongoing audit (other than routine audits) or, to the
Guarantor's or any Lessee's knowledge, other governmental investigation of the
tax liability of the Guarantor or any Lessee and there is no unresolved claim by
a taxing authority concerning the Guarantor's or any Lessee's tax liability for
any period for which returns have been filed or were due other than those
contested in good faith by appropriate proceedings and with respect to which, in
all material respects, adequate reserves have been established, and are being
maintained, in accordance with GAAP.
Section 23.12. Governmental Authorizations. The Guarantor and each
Lessee has all licenses, franchises, permits and other governmental
authorizations necessary for all businesses presently carried on by it
(including owning and leasing the real and personal property owned and leased by
it), except where failure to obtain such licenses, franchises, permits and other
governmental authorizations is not reasonably likely to have a Material Adverse
Effect.
Section 23.13. Absence of Default. The Guarantor and each Lessee is in
compliance with all of the provisions of its certificate of incorporation and
by-laws and no event has occurred or failed to occur which has not been remedied
or waived, the occurrence or non-occurrence of which constitutes (i) a Lease
Event of Default or Potential Lease Event of Default, or (ii) an event of
default by the Guarantor and each Lessee, under any material indenture,
agreement or other instrument (other than the Related Documents) that is
reasonably likely to have a Material Adverse Effect, and neither the Guarantor
nor any Lessee is subject to any judgment, decree or final order pursuant to
which the Guarantor and each Lessee, or any of their respective properties may
be bound or affected that is reasonably likely to have a Material Adverse
Effect.
Section 23.14. Compliance with Requirements of Law. The Guarantor and
each Lessee: (i) are not in violation of any law, ordinance, rule, regulation or
order of any Governmental Authority applicable to it or its property (other than
Environmental Laws, which are separately addressed in Section 23.18 hereof),
which violation is reasonably likely to have a Material
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Adverse Effect, and no such violation has been alleged, (ii) have filed in a
timely manner all reports, documents and other materials required to be filed by
it with any governmental bureau, agency or instrumentality (and the information
contained in each of such material filings is true, correct and complete in all
material respects), except where failure to make such filings is not reasonably
likely to have a Material Adverse Effect and (iii) have retained all records and
documents required to be retained by it pursuant to any Requirement of Law,
except where failure to retain such records is not reasonably likely to have a
Material Adverse Effect.
Section 23.15. Eligible Vehicles; Fleet Sharing Parties. Each Vehicle
is or will be, on the Vehicle Funding Date therefor hereunder, an Eligible
Vehicle, and each party sharing a Vehicle with the Lessor is or will be, as the
case may be, a Fleet Sharing Party on the date that the Fleet Sharing Agreement
applicable to such Vehicle commences.
Section 23.16. Title to Assets. The Guarantor and each Lessee has good,
legal and marketable title to, or a valid leasehold interest in, all of its
assets, except to the extent no Material Adverse Effect is reasonably likely to
result. The assets of the Guarantor and each Lessee are in reasonably good
repair and operating condition (subject to normal wear and tear and normal
course reserves and accruals), except to the extent no Material Adverse Effect
is likely to result.
Section 23.17. Accuracy of Information. All certificates, reports,
statements, documents and other information furnished to the Lessor, the Trustee
or the Master Collateral Agent by the Guarantor or any Lessee pursuant to any
provision of any Related Document, or in connection with or pursuant to any
amendment or modification of, or waiver under, any Related Document, shall, at
the time the same are so furnished, be complete and correct in all material
respects to the extent necessary to give the Lessor, the Trustee or the Master
Collateral Agent, as the case may be, true and accurate knowledge of the subject
matter thereof, and the furnishing of the same to the Lessor, the Trustee or the
Master Collateral Agent, as the case may be, shall constitute a representation
and warranty by the Guarantor and the Lessee made on the date the same are
furnished to the Lessor, the Trustee or the Master Collateral Agent, as the case
may be, to the effect specified herein.
Section 23.18. Environmental Matters. (a) The Guarantor and each
Lessee, to its knowledge, is in compliance with all Environmental Laws, except
where the failure to comply would not reasonably be expected to have a Material
Adverse Effect.
(b) The Guarantor and each Lessee, to its knowledge, has obtained and
is in compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental Laws for the occupation of its facilities and
the operation of its business, except for such failure to obtain or comply
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
(c) The Guarantor and each Lessee, to its knowledge, has not, since the
VFN Closing Date, received any written notice, claim, demand, report or other
information that it has not
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provided to the Lessor, the Trustee and each Rating Agency regarding any
violation by the Guarantor or any Lessee of, or liabilities of the Guarantor or
any Lessee under, Environmental Laws (including without limitation liability for
investigatory costs, cleanup or remediation or removal costs, governmental
response costs, natural resource damages, property damage, personal injury,
fines, or penalties arising out of or relating to the presence, discharge,
emission, release or threatened release of any Hazardous Substances at any
location), except for any such violation or liability that would not reasonably
be expected to have a Material Adverse Effect.
(d) Neither the Guarantor nor any Lessee has entered into, has agreed
to, or is subject to any judgment, decree, or order under any Environmental Law,
including without limitation relating to compliance or to investigation,
cleanup, remediation or removal of Hazardous Substances, which judgment, decree,
or order would reasonably be expected to have a Material Adverse Effect.
Section 23.19. Burdensome Provisions. Neither the Guarantor nor any
Lessee is a party to or bound by any Contractual Obligation that is reasonably
likely to have a Material Adverse Effect.
Section 23.20. Solvency. Neither the Guarantor nor any Lessee is
insolvent (as such term is defined in the Bankruptcy Code), and the Guarantor
and each Lessee has adequate capital or assets to carry on its businesses, and
intends to and believes that it will be able to pay its debts as such debts
become due.
Section 23.21. Ownership. All partnership interests in the Lessor, or
stock of the General Partner, owned by the Guarantor or any Lessee are owned
free and clear of all Liens.
Section 23.22. Necessary Actions. Upon the applicable Servicer causing
the Lien of the Master Collateral Agent to be noted on the Certificates of Title
with respect to the Vehicles or as otherwise provided for by the Master
Collateral Agency Agreement or the Indenture, all filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted to the Master Collateral Agent in respect of the
Master Collateral have been accomplished and the security interest granted to
the Master Collateral Agent pursuant to the Master Collateral Agency Agreement
in and to the Master Collateral constitutes a perfected security interest
therein prior to the rights of all other Persons therein and subject to no other
Liens other than Permitted Liens and is entitled to all rights, priorities and
benefits afforded to perfected security interests by the UCC or other relevant
law as enacted in any relevant jurisdiction.
Section 23.23. Supplemental Documents True and Correct. All information
contained in any Vehicle Order or any other material Supplemental Document which
has been submitted, or which may hereafter be submitted by the Guarantor or any
Lessee to the Lessor is, or will be, true, correct and complete in all material
respects.
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Section 23.24. Initial Vehicles. As of the VFN Closing Date, there are
no Initial Vehicles that are part of the Refinanced Vehicles.
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS. Each Lessee and, as
applicable, each Servicer and the Master Servicer, covenants and agrees that,
until the expiration or termination of this Lease, and thereafter until the
obligations of such Lessee and such Servicer under this Lease and the Related
Documents are satisfied in full, unless at any time the Lessor, the Master
Collateral Agent (solely in respect of Sections 24.2, 24.3, 24.4 (as it relates
to keeping adequate books and records of account in which complete entries will
be made), 24.6, clauses (iii) through (viii) of Section 24.7 and Sections 24.8,
24.12, 24.13, 24.14 and 24.18) and the Trustee shall otherwise expressly consent
in writing, it will:
Section 24.1. Corporate Existence; Foreign Qualification. Do and cause
to be done at all times all things necessary to (i) maintain and preserve its
corporate existence and corporate power and authority to own its properties and
to carry on its business, (ii) be duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction where the nature of its
business makes such qualification necessary except where the failure to so
qualify is not reasonably likely to have a Material Adverse Effect and (iii)
comply with all Contractual Obligations and Requirements of Law binding upon it,
except to the extent that the failure to comply therewith is not reasonably
likely to, in the aggregate, have a Material Adverse Effect.
Section 24.2. Books, Records and Inspections. (i) Maintain complete and
accurate books and records with respect to Vehicles leased under this Lease and
the other Master Collateral; (ii) at any time and from time to time during
regular business hours, upon not less than reasonable prior notice from the
Lessor, the Master Collateral Agent or the Trustee, permit the Lessor, the
Master Collateral Agent or the Trustee (or such other person who may be
designated from time to time by the Lessor, the Master Collateral Agent or the
Trustee), or its agents or representatives to examine and make copies of such
books, records and documents in the possession or under the control of the
Lessee relating to the Vehicles leased under this Lease and the other Master
Collateral as the Lessor, the Master Collateral Agent, the Trustee, or such
person may reasonably request (including in connection with the Lessor's, the
Trustee's or the Master Collateral Agent's satisfaction of any requests of a
Manufacturer performing an audit under its Manufacturer Program); (iii) permit
the Lessor, the Master Collateral Agent or the Trustee to visit the office
(which office shall be in the continental United States and, if it is not the
office where such materials normally are kept, shall be accessible without
unreasonable effort or expense) and properties of the Lessee, Servicer or Master
Servicer for the purpose of examining such materials, and to discuss matters
relating to the Vehicles leased under this Lease and the other Master
Collateral or the Lessee's (or the Servicer's or Master Servicer's) performance
under this Lease with the Lessee's or Master Servicer's independent public
accountants or with any of the officers or employees of the Lessee or the
Master Servicer having knowledge of such matters; (iv) permit the Lessor, the
Master Collateral Agent or the Trustee or any authorized representative of the
Lessor, the Master Collateral Agent or the Trustee, during reasonable business
hours from time to time, upon reasonable prior notice, without disruption of
the Lessees' or the Fleet Sharing Parties' business and subject to applicable
law, to inspect Series
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1997 Vehicles and registration certificates, Certificates of Title and related
documents covering Series 1997 Vehicles wherever the same may be located; and
(v) make reasonable efforts to confirm to the Lessor, the Master Collateral
Agent and the Trustee the location, mileage and condition of each Vehicle and to
make available for the Lessor's, the Master Collateral Agent's or the Trustee's
inspection (such inspection to be conducted without disturbing the ordinary
conduct of such Lessee's business) within a reasonable time period, not to
exceed forty-five (45) days, the Vehicles at the location where the Vehicles are
normally domiciled; provided, however, that in the case of clauses (ii), (iii)
and (iv) above, any of the Master Collateral Agent and the Trustee and/or their
agents or representatives, as applicable, examining any such material shall
perform such examination at the same time as the other such parties performing
such examination of such material.
Section 24.3. Maintenance of Properties. Maintain or cause to be
maintained (i) in the ordinary course of business in good repair, working order
and condition (reasonable wear and tear excepted) all properties, including,
without limitation, vehicles necessary for the operation of its businesses, and
from time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements, additions, betterments, and improvements thereto, except
to the extent no Material Adverse Effect is reasonably likely to result, and
(ii) good, legal and marketable title to, or a valid leasehold interest in, all
of its assets other than in the case of any Vehicles or other assets that, in
the aggregate, are immaterial.
Section 24.4. Accounting Methods; Financial Records. Maintain, and
cause its material Subsidiaries to maintain, a system of accounting established
and administered in accordance with GAAP, keep, and cause its material
Subsidiaries to keep, adequate records and books of account in which complete
entries will be made in accordance with such accounting principles and
reflecting all transactions required to be reflected by such accounting
principles and keep, and cause its material Subsidiaries to keep, accurate and
complete records of their respective properties and assets.
Section 24.5. Insurance. (a) Maintain or cause to be maintained, with
financially sound and reputable insurers satisfactory to the Lessor and the
Trustee, (i) personal injury and damage insurance (including self-insurance)
with respect to the Vehicles and (ii) insurance with respect to its properties
and business against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations and the Guarantor
and each Lessee shall, from time to time, deliver to the Lessor and the Trustee
(as the Lessor or the Trustee shall request), copies of certificates describing
all insurance then in effect; provided, however, that any Lessee may continue
its current practices of self-insurance setting aside adequate reserves to cover
any and all losses: (x) which would otherwise be covered under any standard
comprehensive and collision policies of insurance; and (y) arising from
liability to third parties for bodily injuries, death, and property damage in
an aggregate amount reasonably determined by such Lessee and not less than that
which is customary for companies of a similar size or engaged in the same or
similar activities; provided, further, however, that the Lessees shall obtain
excess insurance
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coverage in an amount not less than Thirty Million Dollars ($30,000,000) for any
claims of liability against the Lessees relating to their ownership or use of
vehicles.
(b) Require that each insurance policy referred to in the foregoing
clause (a) provide for at least thirty (30) days' prior written notice to the
Master Collateral Agent of any termination of or proposed cancellation or
nonrenewal of such policy and that each insurance policy insuring assets pledged
to the Master Collateral Agent name the Master Collateral Agent as an additional
insured or additional loss payee, as appropriate, pursuant to certificates in
form and substance reasonably satisfactory to the Master Collateral Agent.
Section 24.6. Manufacturer Programs. Turn in each Program Vehicle
leased by a Lessee hereunder to the relevant Manufacturer within the Repurchase
Period therefor pursuant to Section 12.2. (unless the Lessee (i) sells such
Vehicle pursuant to Section 27 and, prior to the end of the Repurchase Period
therefor, causes to be deposited to the Master Collateral Account the sales
proceeds therefor in cash in the amount required pursuant to such Section, (ii)
purchases such Vehicle as permitted by, and pursuant to the requirements of,
this Lease and, prior to the end of the Repurchase Period therefor, deposits to
the Series 1997 Collection Account the purchase price therefor in cash in the
amount so required, (iii) in the case of any Series 1997 Vehicle that becomes a
Casualty or ceases to be an Eligible Vehicle, deposits to the Series 1997
Collection Account the Casualty Payment therefor in cash pursuant to Section 7
or (iv) redesignates such Vehicle as a Non-Program Vehicle in accordance with
Section 14); and, with respect to each Program Vehicle leased by the Lessee
hereunder, comply in all material respects with all of its obligations under the
Manufacturer Program relating to such Vehicle.
Section 24.7. Reporting Requirements. Except as otherwise specified
below, furnish, or cause to be furnished to the Lessor, the Master Collateral
Agent, each Support Credit Enhancer and the Trustee and, in the case of items
(i), (ii), (iii)(b), (vi) and (x) below, each Rating Agency, and, in the case of
items (i), (ii), (iii), (vi), (viii) and (xi), any Holder of any Series 1997
Variable Funding Note that has delivered to the Lessor a written request for
same:
(i) Audit Report. As soon as available and in any event within
one hundred and twenty (120) days after the end of each fiscal year of
the Guarantor, (x) consolidated financial statements consisting of a
balance sheet of the Guarantor and its Subsidiaries as at the end of
such fiscal year and statements of income, stockholders' equity and
cash flows of the Guarantor and its Subsidiaries for such fiscal year,
setting forth in comparative form the corresponding figures for the
preceding fiscal year (if applicable), certified by and containing an
opinion, unqualified as to scope, of Arthur Andersen L.L.P. or other
independent certified public accountants of nationally recognized
standing selected by the Guarantor and acceptable to the Lessor and the
Trustee, and (y) an Officer's Certificate of the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of Republic, addressed to the Lessor, the Trustee
and the Master Collateral Agent stating that, such officer has
reviewed the books and records of the Guarantor and its Subsidiaries,
and certifying that no Potential Lease Event of Default or Lease Event
of Default has occurred which was continuing at
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the close of such fiscal year or on the date of such Officer's
Certificate or, if such an event has occurred and was continuing at the
close of such fiscal year or on the date of such Officer's Certificate,
the nature of such event;
(ii) Quarterly Statements. As soon as available and in any
event within sixty (60) days after the end of each of the first three
quarters of each fiscal year of the Guarantor, (x) financial statements
consisting of consolidated balance sheets of the Guarantor and its
Subsidiaries as at the end of such quarter and statements of income,
stockholders' equity and cash flows of the Guarantor and its
Subsidiaries for each such quarter, setting forth in comparative form
the corresponding figures for the corresponding periods of the
preceding fiscal year (if applicable), all in reasonable detail and
certified (subject to normal year-end audit adjustments) by a senior
financial officer of the Guarantor as having been prepared in
accordance with GAAP, and (y) a letter from such officer addressed to
the Lessor, the Trustee and the Master Collateral Agent stating that no
Potential Lease Event of Default or Lease Event of Default has come to
his attention which was continuing at the end of such quarter or on the
date of his letter, or, if such an event has come to his attention and
was continuing at the end of such quarter or on the date of his letter,
indicating the nature of such event and the action which the Guarantor
proposes to take with respect thereto;
(iii) Lease Events of Default; Amortization Events. Promptly
after becoming aware thereof, (a) notice of the occurrence of any
Potential Lease Event of Default or Lease Event of Default, together
with a written statement of an Authorized Officer of the Lessee
describing such event and the action that the Guarantor or the
applicable Lessee proposes to take with respect thereto, and (b) notice
of any Potential Amortization Event or Amortization Event;
(iv) Monthly Vehicle Statements. To the Master Collateral
Agent, on or before each Determination Date, the Master Servicer shall
deliver a monthly vehicle statement (each, a "Monthly Vehicle
Statement") which shall specify (i) the last eight digits of the VIN
for each Series 1997 Vehicle leased hereunder during the Related Month
by each Lessee, (ii) whether such Vehicle is leased under Annex A,
Annex B or Annex C hereto, (iii) the Capitalized Cost for each such
Vehicle and (iv) the aggregate Net Book Value of such Vehicles as of
the end of the Related Month;
(v) Daily Reports. To the Master Collateral Agent, within one
Business Day after a request for any Daily Report (as defined below) is
made by the Master Collateral Agent, the Master Servicer shall deliver
a copy of such Daily Report. On each Business Day commencing on the
Lease Commencement Date, the Master Servicer shall prepare and maintain
at its office a record (each, a "Daily Report") setting forth the
aggregate of the amounts deposited in the Collection Account on the
immediately preceding Business Day, which shall consist of: (A) the
aggregate amount of payments received from Manufacturers and/or auction
dealers under Manufacturer Programs related to the Series 1997 Vehicles
and deposited in the Collection Account from the Master Collateral
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Account or otherwise, plus (B) the aggregate amount of proceeds
received from third parties (other than Manufacturers and auction
dealers) with respect to the sale of Series 1997 Vehicles and deposited
in the Collection Account from the Master Collateral Account or
otherwise, plus (C) the aggregate amount of other Collections deposited
in the VFN Collection Account;
(vi) Monthly Certificate. On or before each Determination
Date, an Officer's Certificate of the Master Servicer substantially in
the form of Exhibit A (each, a "Monthly Certificate") setting forth,
inter alia, the following information (which, in the cases of clauses
(c), (d) and (e) below, will be expressed as a dollar amount per $1,000
of the original principal amount of the applicable Series of Series
1997 Notes and as a percentage of the outstanding principal balance of
the Notes as of such date): (a) the aggregate amount of payments
received in respect of Series 1997 Vehicles from the Manufacturers
and/or auction dealers under Manufacturer Programs and the aggregate
amount of payments received from third parties (other than
Manufacturers and auction dealers) with respect to the sale of Series
1997 Vehicles and deposited in the Collection Account from the Master
Collateral Account or otherwise and the aggregate amount of other
Collections deposited in the Collection Account; (b) the Invested
Percentage with respect to Principal Collections and with respect to
Interest Collections on the last day of the Related Month of each
Series of the Series 1997 Variable Funding Notes and, if any, each
other Series of Shared Collateral Series Notes and each class of each
Series of Shared Collateral Series Notes; (c) for each Series of the
Series 1997 Variable Funding Notes and, if any, each other Series of
Shared Collateral Series Notes and each class of each Series of Shared
Collateral Series Notes, the total amount to be distributed to
Noteholders of such Series on the next succeeding Distribution Date;
(d) for each Series of the Series 1997 Variable Funding Notes and, if
any, each other Series of Shared Collateral Series Note and each class
of each Series of Shared Collateral Series Notes, the amount of such
distribution allocable to principal on the Notes; (e) for each Series
of the Series 1997 Variable Funding Notes and, if any, each other
Series of Shared Collateral Series Notes and each class of each Series
of Shared Collateral Series Notes, the amount of such distribution
allocable to interest on the Notes; (f) for each Series of the Series
1997 Variable Funding Notes and, if any, each other Series of Shared
Collateral Series Notes and each class of each Series of Shared
Collateral Series Notes, the amount of Enhancement used or drawn in
connection with the distribution to Noteholders of such Series or class
on the next succeeding Distribution Date, together with the aggregate
amount of remaining Enhancement not theretofore used or drawn; (g) for
each Series of the Series 1997 Variable Funding Notes and, if any, each
other Series of Shared Collateral Series Notes, the Series Monthly
Servicing Fee for the next succeeding Payment Date; (h) for each other
Series, if any, of Shared Collateral Series Notes and each class of
each Series of Shared Collateral Series Notes, the existing Carryover
Controlled Amortization Amount, if any; (i) the Series 1997 Aggregate
Asset Amount and the amount of the Series 1997 Asset Amount Deficiency,
if any, at the close of business on the last day of the Related Month;
(j) if Enhancement is provided for any other Series, if any, of Shared
Collateral Series Notes or any class of a Series of Shared
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Collateral Series Notes by means of overcollateralization, the amount
of recoveries and losses for the Related Month, whether an Enhancement
Deficiency exists with respect to such Series or class and the amount
thereof, or the amount available for such overcollateralization; (k)
whether, to the knowledge of the Master Servicer, any Lien exists on
any of the Master Collateral or Series 1997 Collateral (other than
Liens granted pursuant to the Indenture and the other Related Documents
or permitted thereunder) which is reasonably likely to have a Material
Adverse Effect ; (l) the Series 1997 Program Percentage as of the end
of the Related Month; (m) the Series 1997 NonProgram Percentage as of
the end of the Related Month; (n) with respect to each Manufacturer,
the percentage of all Series 1997 Vehicles as of the end of the Related
Month which were Program Vehicles manufactured by such Manufacturer;
(o) with respect to each Manufacturer, the percentage of all Series
1997 Vehicles as of the end of the Related Month which were Non-Program
Vehicles manufactured by such Manufacturer; and (p) a list of each
Additional Lessee that became a party to this Lease during the Related
Month;
(vii) Non-Program Vehicle Report. On a semi-annual basis
commencing March 31, 1998, or as otherwise agreed by Standard & Poor's,
the Master Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to
the Servicer and which is acceptable to Standard & Poor's) to furnish a
report (the "Non-Program Vehicle Report") to the Rating Agencies, with
a copy furnished to the Lessor and the Trustee, to the effect that they
have performed certain agreed upon procedures, specifically (i)
compared the procedures related to the calculation of Disposition
Proceeds and Termination Payments obtained from the sale or other
disposition of Non-Program Vehicles (other than Casualties) sold or
otherwise disposed of during each Related Month to those procedures
outlined in the Related Documents and compared the results of such
procedures to the corresponding amounts set forth in the Daily Reports
prepared by the Master Servicer pursuant to Section 24.7(v), (ii)
compared the procedures related to the calculation of the Measurement
Month Average for each Measurement Month in such period to those
procedures outlined in the Related Agreements and compared the results
of such procedures with the corresponding amounts set forth in the
Monthly Certificate prepared by the Master Servicer pursuant to Section
24.7(vi) and (iii) compared the procedures related to the calculation
of the Net Book Value of Series 1997 Vehicles which are Non-Program
Vehicles for the Related Month to those procedures outlined in the
Related Documents and compared the results of such procedures to the
amounts set forth in the Monthly Certificate prepared by the Master
Servicer, and that on the basis of such comparisons referenced in (i),
(ii) and (iii) such accountants are reporting that (a) the procedures
are in compliance with the requirements of the Related Documents and
(b) the results of such procedures are in agreement with the amounts
set forth in the various reports provided by the Master Servicer, in
each case except for such exception resulting in a discrepancy of no
more than 5% in a reported dollar amount and such other exceptions as
shall be set forth in such Non-Program Vehicle Report;
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(viii) Manufacturers. Promptly after obtaining actual
knowledge thereof, notice of any Manufacturer Event of Default or
termination or replacement of a Manufacturer Program or prospective
change in any Manufacturer Program;
(ix) Litigation. Promptly after becoming aware thereof,
notice of any claims, litigation, arbitration, governmental
investigation or proceeding or inquiry that is pending or, to the best
of the Guarantor's or any Lessee's knowledge, threatened against the
Guarantor or any Lessee which is reasonably likely to have a Material
Adverse Effect;
(x) ERISA. Promptly after becoming aware thereof, notice of
(x) the termination of any Pension Plan; (y) the failure to make a
contribution to any Pension Plan maintained by the Guarantor, any
Lessee or any member of the Controlled Group sufficient to give rise to
a Lien under Section 302(f)(1) of ERISA; and (z) the existence or
occurrence of a condition, event or transaction with respect to any
Pension Plan which could reasonably be expected to result in the
incurrence by the Guarantor, any Lessee or any member of the Controlled
Group of liabilities, fines or penalties in an amount that is
reasonably likely to have a Material Adverse Effect;
(xi) Notice of Final Judgement. Promptly, provide to
Moody's notice of any final judgement rendered against the Lessor; and
(xii) Other. Promptly, from time to time, such other
information, documents, or reports respecting the Series 1997 Vehicles
or the other Master Collateral or the condition, financial or
otherwise, or operations of the Guarantor, the Lessees, the Master
Servicer or the Servicers as the Lessor, the Master Collateral Agent
or the Trustee may from time to time reasonably request in order to
protect the interests of the Lessor, the Master Collateral Agent or
the Trustee under or as contemplated by this Lease or any other
Related Document.
Section 24.8. Taxes and Liabilities. Pay when due all material taxes,
assessments and other material (determined on a consolidated basis) liabilities
(including titling fees and registration fees payable with respect to Vehicles)
except as contested in good faith and by appropriate proceedings with respect to
which in all material respects adequate reserves have been established, and are
being maintained, in accordance with GAAP and such nonpayment is not reasonably
likely to result in a Material Adverse Effect.
Section 24.9. Maintenance of the Vehicles. (i) Maintain and cause to be
maintained in good repair, working order, and condition all of the Series 1997
Vehicles in accordance with its ordinary business practices with respect to all
other vehicles owned by it and will use commercially reasonable efforts to
maintain each such Vehicle that is a Program Vehicle as an eligible vehicle
under the related Manufacturer Program, except in each case to the extent that
any such failure to comply with such requirements is not reasonably likely to,
in the aggregate, materially adversely affect the interests of the Lessor, the
Master Collateral Agent, any Support Credit Enhancer or the Trustee in, to and
under this Lease, the Master Collateral Agency Agreement and its supplements and
addenda, the Indenture and the Series 1997 Variable Funding Supplements, or the
likelihood of the Lessee's payment of its obligations hereunder and (ii) perform
all of its obligations as Servicer as set forth in the Master Collateral Agency
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Agreement and its supplements and addenda, the Indenture and the Series 1997
Variable Funding Supplements, or the likelihood of the Lessee's payment of its
obligations hereunder and (ii) perform all of its obligations as Servicer as set
forth in the Master Collateral Agency Agreement.
Section 24.10. Maintenance of Separate Existence. (i) Maintain in place
all policies and procedures, and take and continue to take all actions,
described in the factual assumptions set forth in that certain opinion letter
issued by Mayer, Brown & Platt, dated October 29, 1997 addressing the issue of
substantive consolidation as it may relate to the Guarantor, the Lessees and the
Lessor (a copy of which opinion letter the Guarantor and each Lessee hereby
acknowledges it has received) and relating to it, and (ii) on a semi-annual
basis, provide to the Rating Agencies, the Trustee and the Master Collateral
Agent an Officer's Certificate certifying that it is in compliance with its
obligations under this Section 24.10.
Section 24.11. Maintenance of Enhancement. Maintain the Series 1997
Letters of Credit or other Enhancement for the Series 1997 Variable Funding
Notes and, if any, other Shared Collateral Series Notes in a stated amount equal
to or greater than the amount required by Moody's and S&P in order to maintain a
rating of not less than A-1 by S&P and (after the earlier of the issuance of a
rating of the Commercial Paper Notes by Moody's and the 31st day after the VFN
Closing Date) P-1 by Moody's on the Commercial Paper Notes.
Section 24.12. Repurchase Payments; Sales Proceeds. (i) Direct each
Manufacturer to make all payments under the Manufacturer Programs with respect
to Program Vehicles leased under this Lease directly to the Master Collateral
Account; (ii) cause all payments by any other Persons (including payments
contemplated by Section 12.2) with respect to any Master Collateral (other than
the Master Collateral described in the proviso to this Section) to be made
directly to the Master Collateral Account; (iii) in the case of any such
payments with respect to any Master Collateral received directly by the Lessee,
except as described in the proviso to this Section, by the second Business Day
following its receipt thereof, deposit such payments into the Master Collateral
Account; and (iv) within two Business Days of the Lessee's receipt thereof,
deposit all amounts representing the proceeds from sales by auction dealers
under a Guaranteed Depreciation Program and sales (including amounts paid to the
Lessee by a Manufacturer as a result of the Lessee's sale of such Vehicle
outside such Manufacturer's Manufacturer Program) of Vehicles by the Lessee to
third parties (other than under any related Manufacturer Program) into the
Master Collateral Account; provided, however, that insurance proceeds with
respect to Vehicles will only be deposited into the Master Collateral Account if
an Amortization Event or Potential Amortization Event shall have occurred and be
continuing.
Section 24.13. Certificates of Title: Verification of Titles. (i) Take,
or cause to be taken, such action as shall be necessary to submit all of the
Certificates of Title (except the Certificates of Title for the Initial Fleet)
to the appropriate state authority for notation of the Master Collateral Agent's
lien thereon (it being understood and agreed that pursuant to the Master
Collateral Agency Agreement, the original Certificates of Title relating to the
Series 1997 Vehicles and reflecting such lien notation by the appropriate state
authority shall be held by the applicable Servicer thereof, in trust for the
benefit of the Master Collateral Agent and the Trustee as
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assignee of the Lessor, and the Certificates of Title shall be subject to all of
the provisions of the Master Collateral Agency Agreement); (ii) no more than
semiannually, upon the request of any one (but not more than one) of the Lessor,
the Trustee or the Master Collateral Agent, cause a title check of a
representative or random sample of titles (such random sample to be compiled
taking into account the multiple locations at which the Certificates of Title
with respect to the Series 1997 Vehicles are held by the Servicer) by a Person
acceptable to the Lessor, the Trustee and the Master Collateral Agent on a
reasonable number (but in no event less than 2%) of the Series 1997 Vehicles,
including verification that the titles reflect the pledge to the Master
Collateral Agent, and prepare a report of exceptions with the results of such
title check and cause such report to be furnished to the Lessor, the Trustee,
the Master Collateral Agent and the Rating Agencies (provided, however, if (x)
any such title check reveals that 10% of such sample does not comply with the
requirement that (1) the Master Collateral Agent be noted as the first
lienholder on such titles or (2) the Lessor (or, in the case of Financed
Vehicles and the Synthetic Lease Vehicles, the applicable Lessee) be listed as
the registered owner on such titles or (y) a Potential Lease Event of Default or
Lease Event of Default has occurred and is continuing, then upon the request of
the Master Collateral Agent, the Lessor or the Trustee, the Master Servicer will
cause additional title checks to be performed (at the Lessee's expense) on a
reasonable number of the Series 1997 Vehicles); and (iii) at any time, upon the
request of the Lessor, the Trustee or the Master Collateral Agent, cause (at the
requesting party's expense) a title check in accordance with the above stated
procedures to be performed on the Series 1997 Vehicles.
Section 24.14. Master Collateral Agency Agreement. Concurrently with
each leasing of a Vehicle under this Lease, indicate on its computer records
that the Master Collateral Agent as assignee of the Lessor or the Lessee, as the
case may be, is the holder of a Lien on such Vehicle for the benefit of the
Trustee and the Other VFN Beneficiaries pursuant to the terms of the Master
Collateral Agency Agreement. The Lessee shall not utilize selection procedures
which it believes are adverse to the Lessor or the Trustee in selecting the
Series 1997 Vehicles to be designated to NFLP, as a Financing Source and the
Trustee (for the benefit of the Series 1997 Variable Funding Noteholders), as a
Beneficiary under the Master Collateral Agreement or to the Other VFN
Beneficiaries.
Section 24.15. Compliance with Laws. (i) Not violate any law,
ordinance, rule, regulation or order of any Governmental Authority applicable to
it or its property, which violation is reasonably likely to have a Material
Adverse Effect, (ii) file in a timely manner all reports, documents and other
materials required to be filed by it with any governmental bureau, agency or
instrumentality, except where failure to make such filings is not reasonably
likely to have a Material Adverse Effect and (iii) retain all records and
documents required to be retained by it pursuant to any Requirement of Law,
except where failure to retain such records is not reasonably likely to have a
Material Adverse Effect.
Section 24.16. Delivery of Information. Provide the Lessor with any
information or materials reasonably necessary for the Lessor to comply with its
obligations under the Indenture or any of the Liquidity Agreements.
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Section 24.17. Restrictions. Insure that the Series 1997 Non-Program
Percentage shall not exceed the Maximum Non-Program Percentage.
Section 24.18. Deliveries: Further Assurances. At its sole expense, (i)
immediately deliver or cause to be delivered to the Lessor (or the Master
Collateral Agent on the Lessor's behalf), in due form for transfer (i.e.,
endorsed in blank), all securities, chattel paper, instruments and documents, if
any, at any time representing all or any of the Master Collateral with respect
to which the Trustee (for the benefit of the Series 1997 Variable Funding
Noteholders) or any Other VFN Beneficiary, is designated as the Beneficiary (it
being understood that the Certificates of Title shall be held by the Servicer of
such Vehicles or the Master Collateral Agent, as the case may be, pursuant to
the provisions of the Master Collateral Agency Agreement), and (ii) execute and
deliver, or cause to be executed and delivered, to the Lessor or the Master
Collateral Agent, as the case may be, in due form for filing or recording (and
pay the cost of filing or recording the same in all public offices reasonably
deemed necessary or advisable by the Lessor, the Master Collateral Agent or the
Trustee, as the case may be), such assignments, security agreements, mortgages,
consents, waivers, financing statements, and other documents, and do such other
acts and things, all as may from time to time be reasonably necessary or
desirable to establish and maintain to the satisfaction of the Lessor, the
Master Collateral Agent, the Trustee and each Other VFN Beneficiary a valid
perfected first-priority Lien on and security interest in all of the Master
Collateral with respect to which the Trustee (for the benefit of the Series 1997
Variable Funding Noteholders) or any Other VFN Beneficiary is designated as the
Beneficiary now or hereafter existing or acquired.
Section 24.19. Additional Actions. The Master Servicer shall:
(a) instruct the Trustee or the Paying Agent, as applicable,
to make withdrawals and payments from the VFN Collection Accounts, as
contemplated in the Indenture;
(b) at the request of the Trustee as required or permitted
upon or after the occurrence of events specified in the Indenture and,
to the extent permitted under and in compliance with applicable laws
and regulations, execute and deliver, for the benefit of the Series
1997 Variable Funding Noteholders under the Indenture, any and all
instruments necessary or appropriate to commence or maintain
enforcement proceedings with respect to Manufacturer Programs or any
Enhancement;
(c) upon the occurrence of a Lease Payment Deficit, deliver to
the Trustee a notice in the form attached hereto as Exhibit B; and
(d) supervise the servicing of the Series 1997 Vehicles and
perform such other functions and take such other actions as it is
designated to perform or take pursuant to the terms and conditions of
any Related Document.
Section 24.20. Fleet Sharing Agreements. Each Lessee agrees that each
Fleet Sharing Agreement will include provisions consistent with those contained
in Section 31 of this Lease
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pursuant to which, inter alia, each Fleet Sharing Party expressly and
irrevocably submits to the non-exclusive jurisdiction of all federal and state
courts of the State of New York and shall also include a provision whereby each
Fleet Sharing Party agrees to be bound by the provisions of Section 9.2(b) of
the Base Indenture.
Section 24.21. Minimum Depreciation Rate. Each Servicer and the Master
Servicer agree that the Depreciation Schedules with respect to Non-Program
Vehicles leased under this Lease shall be established such that the weighted
average Depreciation Charges accruing with respect to each Non-Program Vehicle
during each Related Month shall be at least equal to 1.25%.
SECTION 25. CERTAIN NEGATIVE COVENANTS. Until the expiration or
termination of this Lease and thereafter until the Liabilities are paid in full,
each Lessee agrees that, unless at any time the Lessor, the Master Collateral
Agent (other than in respect of Sections 25.1 and 25.2) and the Trustee shall
otherwise expressly consent in writing, it will not:
Section 25.1. Mergers, Consolidations. Be a party to any merger or
consolidation, other than a merger or consolidation of any Affiliate of a Lessee
into or with such Lessee (provided that the Lessee is the surviving corporation
or, if such Affiliate is also a Lessee, a Lessee is the surviving corporation).
Section 25.2. Regulations G, T, U and X. Use or permit any amounts
funded by the Lessor pursuant to the Financing Lease or the Synthetic Lease to
be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying margin stock" within the
meaning of Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System, as amended from time to time.
Section 25.3. Liens. Create or permit to exist any Lien with respect to
any Master Collateral with respect to which the Trustee (for the benefit of the
Series 1997 Variable Funding Noteholders) or any Other VFN Beneficiary is
designated as the Beneficiary, whether now or hereafter existing or acquired,
except Permitted Liens.
Section 25.4. Use of Vehicles. Use or contractually permit any Series
1997 Vehicles to be used in any manner (i) that would make such Series 1997
Vehicles which are Program Vehicles ineligible for repurchase or auction under
the related Eligible Manufacturer Program (unless such Vehicles are redesignated
as Non-Program Vehicles pursuant to Section 14), (ii) for any illegal purposes
or (iii) that could subject any Vehicles to confiscation.
Section 25.5. Change of Location or Name. Change (a) the location of
its principal place of business, chief executive office or its consolidated
records concerning its business and financial affairs, or (b) its legal name or
the name under or by which it conducts its business, in each case without first
giving the Master Collateral Agent, the Trustee, each Support Credit Enhancer,
the Rating Agencies and the Lessor at least sixty (60) days' advance written
notice thereof and having taken any and all action required to maintain and
preserve the first priority
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perfected Lien of the Master Collateral Agent in the Master Collateral;
provided, however, that notwithstanding the foregoing, the Lessee shall not
change the location of its principal place of business, chief executive office
or its consolidated records concerning its business and financial affairs to any
place outside the United States of America.
SECTION 26. SERVICING COMPENSATION; DELEGATION OF SERVICING
DUTIES.
Section 26.1. As compensation for its servicing activities hereunder
and reimbursement for its expenses as set forth in Section 26.2, each Servicer
shall be entitled to receive from the Lessor a monthly servicing fee (the
"Monthly Servicing Fee"), payable in arrears on each Payment Date prior to the
termination of this Lease, the Indenture and the Master Collateral Agency
Agreement in an amount equal to the sum of the monthly servicing fees for all
Series of Shared Collateral Series Notes. Except as otherwise specified in the
related Supplement, the Monthly Servicing Fee for each Series of Shared
Collateral Series Notes (each, a "Series Monthly Servicing Fee") on each Payment
Date shall be equal to (i) the portion of the Supplemental Servicing Fee
allocated to such Series of Shared Collateral Series Notes pursuant to the
related Supplement, plus (ii) one-twelfth of the product of (A) the Servicing
Fee Percentage for such Series and (B) the Invested Amount of such Series as of
the preceding Payment Date (after giving effect to any payments of principal on
such date). The Series Monthly Servicing Fee for each Series shall be paid to
the Servicer pursuant to the procedures set forth in the applicable Supplement.
The supplemental servicing fee (the "Supplemental Servicing Fee") for any period
shall be equal to all Carrying Charges comprising payments due from the
Servicers under Section 26.2 hereof.
Section 26.2. The Servicers' expenses include, and each Servicer agrees
to pay (pro rata, on the basis of the Net Book Value of Series 1997 Vehicles
serviced by such Servicer), the amounts due to the Trustee pursuant to Section
10.5 of the Indenture, plus the reasonable fees and disbursements of independent
accountants in connection with reports furnished pursuant to Sections 24.7(i)
and (ii), plus all other fees, expenses and indemnities by the Servicer or the
Lessor in connection with the Servicer's activities hereunder or under the
Related Documents. The Servicer, however, shall not be liable for any
liabilities, costs or expenses of the Lessor, the Trustee or the Noteholders
arising under any tax law, including without limitation any Federal, state or
local income or franchise taxes or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith), except to the extent incurred as a result of the
Servicer's violation of the provisions of this Lease or of the Related
Documents; provided, however, the foregoing provisions of this sentence shall
not affect the indemnification obligations of the Lessees under Section 15 of
this Lease. In the event that a Servicer fails to pay any amount due to the
Trustee pursuant to Section 10.5 of the Base Indenture, the Trustee will be
entitled to receive such amounts due from the Monthly Servicing Fee prior to
payment thereof to the Servicers.
Section 26.3. Any Servicer (the "Named Servicer") may delegate to
another Servicer the performance of the Named Servicer's obligations as a
Servicer in respect of Series 1997 Vehicles
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leased by the Named Servicer in its capacity as a Lessee (but the Named Servicer
shall remain fully liable for its obligations in respect of such Vehicles under
this Series 1997 Lease and the other Related Documents).
SECTION 27. RELEASE OF COLLATERAL. The parties agree that pursuant to
the provisions of this Section 27 and Sections 2.3 and 2.7 of the Master
Collateral Agency Agreement, any and all Liens for the benefit of the Lessor
(including the Lien of the Trustee as assignee of the Lessor, and as Beneficiary
under the Master Collateral Agency Agreement) on the Series 1997 Vehicles and
the Certificates of Title therefor shall be released or deemed to be released,
as provided below. From and after the earliest of:
(a) in the case of a Vehicle subject to a Guaranteed
Depreciation Program, the date of the sale of such Vehicle by an
auction dealer to a third party, and in the case of any other Program
Vehicle, the Disposition Date for such Vehicle; or
(b) receipt of the purchase price by the Lessor or the Trustee
for a Vehicle sold in an ordinary course sale; or
(c) the payment in full of all obligations of the applicable
Servicer and the applicable Lessee under this Lease with respect to a
Vehicle,
any and all Liens for the benefit of the Lessor (including the Lien of the
Trustee as assignee of the Lessor and as Beneficiary under the Master Collateral
Agency Agreement) on such Vehicle and the Certificate of Title therefor shall be
deemed to be released. Subject to the applicable Servicer's right to redesignate
Program Vehicles as Non-Program Vehicles in accordance with Section 14, the
Lessor or the applicable Servicer, acting as the agent of the Lessor, may direct
the Lessee to sell any Program Vehicle that is a Financed Vehicle or a Synthetic
Lease Vehicle during the Repurchase Period therefor in an ordinary course sale,
provided that, if such sale is not made pursuant to the related Manufacturer
Program, it is made in accordance with the requirements of this Section 27. Each
Lessee agrees that for purposes of this Section 27 if an ordinary course sale
occurs during the Repurchase Period with respect to a Program Vehicle that is a
Financed Vehicle or a Synthetic Lease Vehicle, the Lessee shall only sell such
Vehicle for a purchase price (including any amounts paid by the Manufacturer as
an incentive for selling such Vehicle outside of the related Manufacturer
Program), net of all fees and expenses incurred in connection with such sale,
equal to or greater than the Repurchase Price that it would have received under
the related Manufacturer Program if it had turned back such Vehicle to the
Manufacturer, net of all fees and expenses that would have been incurred in
connection with such turn-back less reasonably predictable Excess Mileage
Charges, Excess Damage Charges, Missing Equipment Charges and other similar
charges payable by the Lessee to such Manufacturer as a result of the Lessee's
sale of such Program Vehicle. In addition, each Lessee agrees that ordinary
course sales of Program Vehicles occurring during the Repurchase Period related
to such Program Vehicles will be limited to a maximum number of Vehicles so sold
of ten percent (10%) per month of the number of Vehicles leased under this
Agreement. The Lessor shall, and shall cause the Trustee and the Master
Collateral Agent to, execute such documents and
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instruments as a Lessee may reasonably request (including a power of
attorney of the Master Collateral Agent appointing such Lessee to act as the
agent of the Master Collateral Agent in taking such actions as are required to
evidence the release of the Lien of the Master Collateral Agent on Vehicles
leased by such Lessee turned back or sold pursuant to the provisions of this
Section 27, which power of attorney shall be revocable pursuant to Section
2.7(c) of the Master Collateral Agency Agreement).
SECTION 28. GUARANTY.
Section 28.1. Guaranty. In order to induce the Lessor to execute and
deliver this Lease and to lease Series 1997 Vehicles to the Lessees, and in
consideration thereof, the Guarantor hereby (i) unconditionally and irrevocably
guarantees to the Lessor the obligations of the Lessees to make any payments
required to be made by them under this Lease, (ii) agrees to cause the Lessees
to duly and punctually perform and observe all of the terms, conditions,
covenants, agreements and indemnities of the Lessees (whether in their
respective capacities as Lessees or as Servicers) under this Lease, and (iii)
agrees that, if for any reason whatsoever, any Lessee (whether in its capacity
as a Lessee or as a Servicer) fails to so perform and observe such terms,
conditions, covenants, agreements and indemnities, the Guarantor will duly and
punctually perform and observe the same (the obligations referred to in clauses
(i) through (iii) above are collectively referred to as the "Guaranteed
Obligations"). The liabilities and obligations of the Guarantor under the
guaranty contained in this Section 28 (this "Guaranty") will be absolute and
unconditional under all circumstances. This Guaranty shall be a guaranty of
payment and not of collection, and the Guarantor hereby agrees that it shall not
be required that the Lessor or the Trustee assert or enforce any rights against
any of the Lessees, Servicers or any other person before or as a condition to
the obligations of the Guarantor pursuant to this Guaranty.
Section 28.2. Scope of Guarantor's Liability. The Guarantor's
obligations hereunder are independent of the obligations of the Lessees (whether
as Lessee or as Servicer), any other guarantor or any other Person, and the
Lessor may enforce any of its rights hereunder independently of any other right
or remedy that the Lessor may at any time hold with respect to this Lease or any
security or other guaranty therefor. Without limiting the generality of the
foregoing, the Lessor may bring a separate action against the Guarantor without
first proceeding against any of the Lessees, any other guarantor or any other
Person, or any security held by the Lessor, and regardless of whether the
Lessees or any other guarantor or any other Person is joined in any such action.
The Guarantor's liability hereunder shall at all times remain effective with
respect to the full amount due from the Lessees hereunder. The Lessor's rights
hereunder shall not be exhausted by any action taken by the Lessor until all
Guaranteed Obligations have been fully paid and performed.
Section 28.3. Lessor's Right to Amend this Lease. The Guarantor
authorizes the Lessor, at any time and from time to time without notice and
without affecting the liability of the Guarantor hereunder, to: (a) alter the
terms of all or any part of the Guaranteed Obligations and any security and
guaranties therefor including without limitation modification of times for
payment and rates of interest; (b) accept new or additional instruments,
documents, agreements,
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security or guaranties in connection with all or any part of the Guaranteed
Obligations; (c) accept partial payments on the Guaranteed Obligations; (d)
waive, release, reconvey, terminate, abandon, subordinate, exchange, substitute,
transfer, compound, compromise, liquidate and enforce all or any part of the
Guaranteed Obligations and any security or guaranties therefor, and apply any
such security and direct the order or manner of sale thereof (and bid and
purchase at any such sale), as the Lessor in its discretion may determine; (e)
release any Lessee, any guarantor or any other Person from any personal
liability with respect to all or any part of the Guaranteed Obligations; and (f)
assign its rights under this Guaranty in whole or in part.
Section 28.4. Waiver of Certain Rights by Guarantor. The Guarantor
hereby waives each of the following to the fullest extent allowed by law:
(a) any defense based upon:
(i) the unenforceability or invalidity of any security or
other guaranty for the Guaranteed Obligations or the
lack of perfection or failure of priority of any
security for the Guaranteed Obligations; or
(ii) any act or omission of the Lessor or any other Person
that directly or indirectly results in the discharge
or release of any of the Lessees or any other Person
or any of the Guaranteed Obligations or any security
therefor; provided that the Guarantor's liability in
respect of this Guaranty shall be released to the
extent the Lessor expressly releases such Lessee or
other Person, in a writing conforming to the
requirements of Section 22, from any obligations with
respect to any of the foregoing; or
(iii) any disability or any other defense of any Lessee or
any other Person with respect to the Guaranteed
Obligations, whether consensual or arising by
operation of law or any bankruptcy, insolvency or
debtor-relief proceeding, or from any other cause;
(b) any right (whether now or hereafter existing) to require the
Lessor, as a condition to the enforcement of this Guaranty, to:
(i) accelerate the Guaranteed Obligations;
(ii) give notice to the Guarantor of the terms, time and
place of any public or private sale of any security
for the Guaranteed Obligations; or
(iii) proceed against any Lessee, any other guarantor or
any other Person, or proceed against or exhaust any
security for the Guaranteed Obligations;
(c) presentment, demand, protest and notice of any kind, including
without limitation notices of default and notice of acceptance of this Guaranty;
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(d) all suretyship defenses and rights of every nature otherwise
available under New York law and the laws of any other jurisdiction;
(e) any right that the Guarantor has or may have to set-off with
respect to any right to payment from any Lessee; and
(f) all other rights and defenses the assertion or exercise of which
would in any way diminish the liability of the Guarantor hereunder.
Section 28.5. Lessees' Obligations to Guarantor and Guarantor's
Obligations to Lessees Subordinated. Until all of the Guaranteed Obligations
have been paid in full, the Guarantor agrees that all existing and future
unsecured debts, obligations and liabilities of the Lessees to the Guarantor or
the Guarantor to any of the Lessees (hereinafter collectively referred to as
"Subordinated Debt") shall be and hereby are expressly subordinated to the prior
payment in full of the Guaranteed Obligations, on the terms set forth in clauses
(a) through (e) below, and the payment thereof is expressly deferred in right of
payment to the prior payment in full of the Guaranteed Obligations. For purposes
of this Section 28.5, to the extent the Guaranteed Obligations consist of the
obligation to pay money, the Guaranteed Obligations shall not be deemed paid in
full unless and until paid in full in cash.
(a) Upon any distribution of assets of the Guarantor or any Lessee upon
any dissolution, winding up, liquidation or reorganization of the Guarantor or
such Lessee, whether in bankruptcy, insolvency, reorganization or receivership
proceedings, or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Guarantor or such Lessee, or
otherwise:
(i) the holders of the Guaranteed Obligations shall be
entitled to receive payment in full of the Guaranteed
Obligations before the Guarantor or the Lessee, as
the case may be, is entitled to receive any payment
on account of the Subordinated Debt;
(ii) any payment by, or distribution of assets of, the
Guarantor or such Lessee of any kind or character,
whether in cash, property or securities, to which
such Lessee or the Guarantor would be entitled except
for this subordination shall be paid or delivered by
the Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or
liquidating trustee, or otherwise, directly to the
Trustee, for the benefit of the holders of the
Guaranteed Obligations to be held as additional
security for the Guaranteed Obligations in an
interest bearing account until the Guaranteed
Obligations have been paid in full; and
(iii) if, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Guarantor or such
Lessee of any kind or character, whether in cash,
property or securities, in respect of any
Subordinated Debt shall be
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received by such Lessee or the Guarantor before the
Guaranteed Obligations are paid in full, such payment
or distribution shall be held in trust in an interest
bearing account of the Guarantor or such Lessee, as
appropriate, and immediately paid over in kind to the
holders of the Guaranteed Obligations until the
Guaranteed Obligations have been paid in full.
(b) The Guarantor authorizes and directs each Lessee and each Lessee
authorizes and directs the Guarantor to take such action as may be necessary or
appropriate to effectuate and maintain the subordination provided herein.
(c) No right of any holder of the Guaranteed Obligations to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Guarantor, any Lessee, the
Lessor or any other Person or by any noncompliance by the Guarantor, any Lessee,
the Lessor or any other Person with the terms, provisions and covenants hereof
or of the Related Documents regardless of any knowledge thereof that any such
holder of the Guaranteed Obligations may have or be otherwise charged with.
(d) Except as provided in Section 28.9, nothing express or implied
herein shall give any Person other than the Lessees, the Lessor, the Trustee and
the Guarantor any benefit or any legal or equitable right, remedy or claim
hereunder.
(e) If the Guarantor shall institute or participate in any suit, action
or proceeding against any Lessee or any Lessee shall institute or participate in
any suit, action or proceeding against the Guarantor, in violation of the terms
hereof, such Lessee or the Guarantor, as the case may be, may interpose as a
defense or dilatory plea this subordination, and the holders of the Guaranteed
Obligations are irrevocably authorized to intervene and to interpose such
defense or plea in their name or in the name of such Lessee or the Guarantor, as
the case may be.
Section 28.6. Guarantor to Pay Lessor's Expenses. The Guarantor agrees
to pay to the Lessor (or the Trustee), on demand, all costs and expenses,
including attorneys' and other professional and paraprofessional fees, incurred
by the Lessor (or the Trustee) in exercising any right, power or remedy
conferred by this Guaranty, or in the enforcement of this Guaranty, whether or
not any action is filed in connection therewith. Until paid to the Lessor, such
amounts shall bear interest, commencing with the Lessor's demand therefor, for
each Interest Period during the period from the date of such demand until paid,
at the VFR for such Interest Period plus 1% (calculated on the basis of a
360-day year).
Section 28.7. Reinstatement. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment of any of
the amounts payable by any Lessee under this Lease is rescinded or must
otherwise be restored or returned by the Lessor, upon an event of bankruptcy,
dissolution, liquidation or reorganization of any Lessee or the Guarantor or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Lessee, the Guarantor, any other
guarantor or any other Person,
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or any substantial part of their respective property, or otherwise, all as
though such payment had not been made.
Section 28.8. Pari Passu Indebtedness. The Guarantor (i) represents and
warrants that, as of the date hereof, the obligations of the Guarantor under
this Guaranty will rank pari passu with any existing unsecured indebtedness of
the Guarantor and (ii) covenants and agrees that from and after the date hereof
the obligations of the Guarantor under this Guaranty will rank pari passu with
any unsecured indebtedness of the Guarantor incurred after the date hereof.
Section 28.9. Third-Party Beneficiaries. The Guarantor acknowledges
that the Trustee (on behalf of the Series 1997 Variable Funding Noteholders) has
accepted the assignment of the Lessor's rights under this Lease as collateral
for the Series 1997 Variable Funding Notes in reliance on the Guaranty and that
the Trustee (for the benefit of the Series 1997 Variable Funding Noteholders)
shall be a third-party beneficiary hereunder.
SECTION 29. ADDITIONAL LESSEES.
Section 29.1. Additional Affiliate and Subsidiary Lessees. Any direct
or indirect subsidiary of the Guarantor (each, a "Guarantor Subsidiary") shall
have the right to become a "Lessee" under and pursuant to the terms of this
Agreement by complying with the provisions of this Section 29.1. In the event a
Guarantor Subsidiary desires to become a "Lessee" under this Agreement, then the
Guarantor and such Guarantor Subsidiary shall execute (if appropriate) and
deliver to the Lessor and the Trustee:
(a) a Joinder in Lease Agreement in the form attached hereto
as Attachment D (each, an "Affiliate Joinder in Lease");
(b) the certificate of incorporation for such Guarantor
Subsidiary, duly certified by the Secretary of State of the
jurisdiction of such Guarantor Subsidiary's incorporation, together
with a copy of the by-laws of such Guarantor Subsidiary, duly certified
by a Secretary or Assistant Secretary of such Guarantor Subsidiary;
(c) copies of resolutions of the Board of Directors of such
Guarantor Subsidiary authorizing or ratifying the execution, delivery
and performance, respectively, of those documents and matters required
of it with respect to this Agreement, duly certified by the Secretary
or Assistant Secretary of such Guarantor Subsidiary;
(d) a certificate of the Secretary or Assistant Secretary of
such Guarantor Subsidiary certifying the names of the individual or
individuals authorized to sign the Affiliate Joinder in Lease Agreement
and the other Related Documents to be executed by it, together with
samples of the true signatures of each such individual;
(e) a good standing certificate for such Guarantor Subsidiary
in the jurisdiction of its incorporation and the jurisdiction of its
principal place of business;
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(f) a written search report from a Person satisfactory to the
Lessor and the Trustee listing all effective financing statements that
name such Guarantor Subsidiary as debtor or assignor, and that are
filed in the jurisdictions in which filings were made pursuant to
clause (g) below, together with copies of such financing statements,
and tax and judgment lien search reports from a Person satisfactory to
the Lessor and the Trustee showing no evidence of liens filed against
such Guarantor Subsidiary that purport to affect any Vehicles leased
hereunder or any Collateral under the Indenture;
(g) evidence of the filing of proper financing statements on
Form UCC-1 naming such Guarantor Subsidiary, as debtor, and the Lessor
as secured party covering the collateral described in Section 2(b)
hereof;
(h) an Officers' Certificate and an opinion of counsel each
stating that such joinder by such Guarantor Subsidiary complies with
this Section 29.1 and that all conditions precedent herein provided for
relating to such transaction have been complied with;
(i) a statement from each of the Rating Agencies that such
Guarantor Subsidiary becoming a "Lessee" under this Agreement will not
cause a failure to meet the Rating Agency Condition; and
(j) any additional documentation that the Lessor or the
Trustee may reasonably require to evidence the assumption by such
Guarantor Subsidiary of the obligations and liabilities set forth in
this Agreement.
Upon satisfaction of the foregoing conditions and receipt by such Guarantor
Subsidiary of the applicable Affiliate Joinder in Lease executed by the Lessor,
such Guarantor Subsidiary shall for all purposes be deemed to be a "Lessee" for
purposes of this Agreement (including, without limitation, the Guaranty) and
shall be entitled to the benefits and subject to the liabilities and obligations
of a Lessee hereunder.
SECTION 30. BANKRUPTCY PETITION AGAINST LESSOR. The Guarantor and each
Lessee hereby covenants and agrees that, prior to the date which is one year and
one day after the payment in full of all Series 1997 Variable Funding Notes, all
Series of Shared Collateral Series Notes and all other obligations of the Lessor
under the Related Documents, it will not institute against, or join any other
Person in instituting against, the Lessor any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States. In the
event that the Guarantor or any Lessee takes action in violation of this Section
30, the Lessor agrees, for the benefit of the Series 1997 Variable Funding
Noteholders and all Shared Collateral Series Noteholders, that it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such a petition by the Guarantor or such Lessee against the Lessor or the
commencement of such action and raise the defense that the Guarantor or such
Lessee has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other
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<PAGE> 67
defenses, if any, as its counsel advises that it may assert. The
provisions of this Section 30 shall survive the termination of this Lease.
SECTION 31. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS LEASE, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE TRUSTEE, THE LESSOR, THE GUARANTOR OR THE LESSEES SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY VEHICLE, OTHER
MASTER COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE LESSOR'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE SUCH VEHICLE, OTHER MASTER COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE GUARANTOR AND EACH LESSEE HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE
COURTS OF THE STATE OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE GUARANTOR AND EACH LESSEE FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE
GUARANTOR AND EACH LESSEE AND THE LESSOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR OR ANY LESSEE
HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM
ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS LEASE.
SECTION 32. GOVERNING LAW. THIS LEASE SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Whenever possible each provision of this Lease
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Lease shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Lease.
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<PAGE> 68
All obligations of the Guarantor and the Lessees and all rights of the Lessor,
the Master Collateral Agent or the Trustee expressed herein shall be in addition
to and not in limitation of those provided by applicable law or in any other
written instrument or agreement.
SECTION 33. JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS LEASE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS LEASE
OR ANY RELATED TRANSACTION, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 34. NOTICES. All notices, amendments, waivers, consents and
other communications provided to any party hereto under this Lease shall be in
writing and addressed, delivered or transmitted to such party at its address or
facsimile number set forth below its signature hereto or at such other address
or facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed by certified or registered mail and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted upon receipt of electronic
confirmation of such. In each case, a copy of all notices, requests and other
communications (other than any such notices, requests and other communications
in the ordinary course of business) that are sent by any party or signatory
hereunder shall be sent to the Trustee at the following address:
THE BANK OF NEW YORK
101 Barclay Street
Floor 12 East
New York, New York 10286
Attention: Corporate Trust Division
Telephone: (212) 815-5218
Facsimile: (212) 815-5999
SECTION 35. HEADINGS. Section headings used in this Lease are for
convenience of reference only and shall not affect the construction of this
Lease.
SECTION 36. EXECUTION IN COUNTERPARTS. This Lease may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute one and the same agreement.
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<PAGE> 69
[Remainder of Page Intentionally Blank]
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<PAGE> 70
IN WITNESS WHEREOF, the parties have executed this Lease or caused it to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
LESSEES AND SERVICERS:
NATIONAL CAR RENTAL SYSTEM, INC.
By: /s/ Kathleen W. Hyle
--------------------------------------------
Name: Kathleen W. Hyle
Title: Assistant Treasurer
Address: 7700 France Avenue South
Minneapolis, Minnesota 55435
Facsimile: (612) 830-2087
Telephone: (612) 830-2552
ALAMO RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
--------------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: c/o Republic Industries, Inc.
200 S. Andrews Avenue, 11th Floor
Ft. Lauderdale, FL 33301
Facsimile: (954) 769-4135
Telephone: (954) 769-7297
VALUE RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
--------------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: c/o Republic Industries, Inc.
200 S. Andrews Avenue, 11th Floor
Ft. Lauderdale, FL 33301
<PAGE> 71
Facsimile: (954) 769-4135
Telephone: (954) 769-7297
SPIRIT RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
-------------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: 29100 Aurora Road
Suite 400
Solon, OH 44139
Facsimile: (440) 715-1130
Telephone: (440) 715-1000 ext. 320
LESSOR:
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP
By: NATIONAL CAR RENTAL FINANCING
CORPORATION, its general partner
By: /s/ Dwight Jenkins
--------------------------------------------
Name: Dwight Jenkins
Title:Vice President and Assistant Secretary
Address: 7700 France Avenue South
Minneapolis, Minnesota 55435
Facsimile: (612) 830-2087
Telephone: (612) 830-2552
<PAGE> 72
GUARANTOR:
------------
REPUBLIC INDUSTRIES, INC.
By: /s/ Kathleen W. Hyle
--------------------------------------------
Name: Kathleen W. Hyle
Title: Vice President Finance and Treasurer
Address: 200 South Andrews Avenue
11th Floor
Ft. Lauderdale, FL 33301
Facsimile: (954) 769-4135
Telephone: (954) 769-7297
Acknowledged by:
MASTER COLLATERAL AGENT:
- -----------------------
CITIBANK, N.A.
By: /s/ Jenny Cheng
---------------------------------
Name: Jenny Cheng
Title: Assistant Vice President
Address: 111 Wall Street
5th Floor
New York, NY 10043
Attention: Jenny Cheng
Telephone: (212) 657-3778
Facsimile: (212) 657-3872
<PAGE> 73
ANNEX A
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer,
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer,
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
<PAGE> 74
1. Scope of Annex. This Annex A shall apply only to the acquisition,
leasing and servicing of the Acquired Vehicles by NFLP pursuant to the Base
Lease, as supplemented by this Lease Annex (collectively, the "Operating
Lease").
2. General Agreement. The Lessor and the Lessee intend that for all
purposes (including, but not limited to, financial accounting, regulatory
accounting, federal income tax purposes and all applicable state and local
income, franchise, sales, use and excise tax purposes and for purposes of any
foreign corporation, business registration or doing business statutes), (A) the
Series 1997 Lease with regard to Acquired Vehicles will be treated as an
"operating lease" pursuant to Statement of Financial Accounting Standards No.
13, as amended, as well as for all tax purposes, (B) the Lessor will be treated
as the owner and lessor of the Acquired Vehicles, (C) the Lessee thereof will
be treated as the lessee of the Acquired Vehicles, and (D) the Lessor will be
entitled to all tax benefits ordinarily available to an owner of property
similar to the Acquired Vehicles for such tax purposes.
3. Operating Lease Commitment. (a) Upon the execution and delivery of
this Operating Lease, the Lessor shall, subject to the terms and conditions of
the Agreement, purchase from time to time on or after the Lease Commencement
Date and prior to the Lease Expiration Date, all Acquired Vehicles identified
in Vehicle Orders placed under this Lease by a Lessee for a purchase price
equal to the Capitalized Cost thereof, and simultaneously therewith, the Lessor
shall under the Operating Lease enter into operating leases with the applicable
Lessee with respect to such Vehicles; provided, that the aggregate Net Book
Value of Acquired Vehicles leased under this Operating Lease, plus past due
Monthly Base Rent under this Operating Lease on any date shall not exceed the
Maximum Lease Commitment, reduced by (a) the Base Amount as of such date with
respect to the Financing Lease and (b) the Base Amount as of such date with
respect to the Synthetic Lease.
4. Reserved.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of the
Operating Lease as it relates to each Acquired Vehicle leased hereunder shall
be from the Vehicle Lease Commencement Date to the date that is twenty-four
(24) months from the Vehicle Lease Commencement Date; (provided, however, the
maximum Vehicle lease term of the Operating Lease as it relates to any Acquired
Vehicle titled in the state of Illinois shall be from the Vehicle Lease
Commencement Date to the date that is three hundred and sixty-four (364) days
from the Vehicle Lease Commencement Date; provided, further, that if on such
three hundred sixty-fourth (364th) day, the Vehicle lease term for any Acquired
Vehicle titled in the State of Illinois has not theretofore been terminated,
and the Vehicle lease term for such Acquired Vehicle has not previously been
terminated and renewed pursuant to this Paragraph 5, the Vehicle lease term as
it relates to such Acquired Vehicle shall be deemed to have been terminated and
renewed for an additional Vehicle lease term of up to three hundred sixty-four
(364) days). On the occurrence of such date for a Vehicle not previously
disposed of, the Lessee of such Vehicle shall, (a) on behalf of the Lessor,
promptly purchase or dispose of such Vehicle in accordance with the terms of
this Lease and in accordance with any instructions of the Lessor for such
disposition, which instructions shall not be inconsistent with the terms of
this Lease, (b) in each case, provide that Disposition Proceeds be paid
directly to
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<PAGE> 75
the Master Collateral Account for the benefit of the Trustee and (c) pay to the
Master Collateral Agent or the Trustee, in accordance with this Operating
Lease, any other amounts unpaid and owing from the Lessee under the Series 1997
Lease in respect of such Vehicle.
6. Lessee's Rights to Purchase Vehicles. Each Lessee will have the
option, exercisable with respect to any Acquired Vehicle leased by it hereunder
during the Vehicle Term with respect to such Acquired Vehicle, to purchase any
such Acquired Vehicles leased under this Lease at the Vehicle Purchase Price,
in which event the Lessee will pay the Vehicle Purchase Price to the Master
Collateral Agent on or before the Payment Date next succeeding such purchase by
the Lessee plus all accrued and unpaid Monthly Base Rent, Monthly Variable Rent
and other unpaid charges, payments and amounts due and payable on such Payment
Date with respect to such Vehicle through the date of such purchase. In
addition, each Lessee will have the option, exercisable with respect to any
Manufacturer Receivable related to an Acquired Vehicle which was leased by such
Lessee under this Lease, to purchase such Manufacturer Receivable for a price
equal to the amount due from the Manufacturer under such Manufacturer
Receivable, in which event the Lessee will pay such amount to the Master
Collateral Agent on or before the Payment Date next succeeding such purchase by
the Lessee. Upon receipt of such funds by the Master Collateral Agent, the
Lessor, at the request of the Lessee, shall cause title to any such Vehicle or
Manufacturer Receivable, as applicable, to be transferred to the Lessee, the
lien of the Master Collateral Agent in such Vehicle or Manufacturer Receivable,
as applicable, will automatically be released and, with respect to a purchase
of a Vehicle, the Servicer thereof shall cause the Master Collateral Agent to
cause the notation of its lien to be removed from the certificate of title for
such Vehicle, concurrently with or promptly after the Vehicle Purchase Price
for such Vehicle (and any unpaid Monthly Base Rent, unpaid Monthly Variable
Rent and other unpaid charges, payments and amounts) is paid by the Lessee to
the Master Collateral Agent or the Trustee.
7. Vehicle Disposition. Subject to the applicable Servicer's right to
redesignate Program Vehicles as Non-Program Vehicles under Section 14 of the
Base Lease, the Lessor and the Lessees agree that, with respect to Acquired
Vehicles leased hereunder that are Program Vehicles, the applicable Lessee
shall, pursuant to Section 24.6 of the Base Lease (unless not required by such
Section) deliver each Vehicle for sale at auction or return each Vehicle to the
related Manufacturer, in each case in accordance with the applicable
Manufacturer Program during the Repurchase Period for such Vehicle; provided,
however, if for any reason, the Lessee fails to deliver such a Vehicle to the
applicable Manufacturer for repurchase by the Manufacturer or to an auction for
sale, in each case in accordance with the applicable Manufacturer Program,
during the Repurchase Period, and such Lessee does not or is not entitled to
redesignate such Program Vehicle as a Non-Program Vehicle in accordance with
Section 14 of the Base Lease, then such Lessee shall be obligated to pay a
Casualty Payment in respect of such Vehicle, as provided in Section 7 of the
Base Lease. Each Lessee shall, with respect to Acquired Vehicles which are
Program Vehicles leased by it hereunder, pay the Monthly Variable Rent accrued
with respect to such Vehicle through the date of return, plus the equivalent of
the Monthly Base Rent for the minimum holding period under the applicable
Manufacturer Program for Program Vehicles returned before the expiration of
such minimum holding period, regardless of actual usage, unless such minimum
holding period is waived by the
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<PAGE> 76
Manufacturer or such a Vehicle is a Casualty or has ceased to be an Eligible
Vehicle, in which case Section 7 of the Base Lease shall apply with respect to
such Vehicle. All Repurchase Prices and Disposition Proceeds due from the
disposition of Vehicles pursuant to this Section shall be due and payable to
the Lessor and shall be deposited to the Master Collateral Account. The Lessor
and the Lessee agree, with respect to Acquired Vehicles that are Non-Program
Vehicles, that the Lessee thereof shall use commercially reasonable efforts to
dispose of each Non-Program Vehicle leased by it hereunder (a) in a manner
reasonably likely to maximize proceeds from such disposition and consistent
with industry practice and (b) within forty-two (42) months after the date of
the original dealer invoice for such Vehicle sold as a new vehicle. All
Disposition Proceeds due from the disposition of Non-Program Vehicles pursuant
to this Section shall be due and payable to the Lessor and shall be deposited
into the Master Collateral Account.
8. Lessor's Right to Cause Vehicles to be Sold. Notwithstanding
anything to the contrary contained in this Lease (subject to the applicable
Servicer's right to redesignate Program Vehicles as Non-Program Vehicles under
Section 14 of the Base Lease), the Lessor shall have the right, at any time
after the date fourteen (14) days prior to the expiration of the Repurchase
Period for any Program Vehicle leased under this Operating Lease, to require
that the Lessee thereof deliver such Program Vehicle to the Manufacturer for
repurchase or, as applicable, to the designated auction for sale, or exercise
commercially reasonable efforts to arrange for the sale of such Program Vehicle
to a third party for a price greater than the Net Book Value thereof, in which
event the Lessee shall, prior to the expiration of such Repurchase Period,
deliver such Vehicle to its Manufacturer or the designated auction or arrange
for the sale of such Vehicle to a third party for a price greater than the Net
Book Value (or purchase the Vehicle itself from the Lessor for the Vehicle
Purchase Price). If a sale of the Program Vehicle is arranged by the Lessee
prior to the expiration of such Repurchase Period, then the Lessee shall
deliver the Program Vehicle to the purchaser thereof, the Lien of the Master
Collateral Agent on the Certificate of Title of such Program Vehicle shall be
released, and the Lessee shall cause to be delivered to the Lessor the funds
paid for such Program Vehicle by the purchaser. If the Lessee is unable to
arrange for a sale of the Program Vehicle prior to the expiration of such
Repurchase Period, then the Lessee shall cease attempting to arrange for such a
sale and shall return such Program Vehicle to the applicable Manufacturer or
tender such Program Vehicle for auction or purchase such Vehicle as herein
provided. In no event may any Program Vehicle be sold pursuant to this Section
8 (other than pursuant to a Manufacturer Program) unless such sale
complies with Section 12.2 of the Base Lease.
9. Calculation of Rent. Rent shall be due and payable on a monthly basis
as set forth in this paragraph 9:
"Additional Base Rent" with respect to the Non-Program Vehicles
leased hereunder, with respect to each Payment Date shall equal the
amount, if any, by which (a) 100% of the aggregate Net Book Value of such
Non-Program Vehicles leased under this Lease on the last day of the
Related Month exceeds (b) the three (3) month rolling average of the Fair
Market Value of such Non-Program Vehicles for the preceding three (3)
calendar months.
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<PAGE> 77
"Monthly Base Rent", with respect to each Payment Date and
each Acquired Vehicle leased under the Series 1997 Lease on any day
during the Related Month, shall be the sum of all Depreciation Charges
that have accrued with respect to such Vehicle during the Related
Month.
"Monthly Variable Rent", with respect to each Payment Date
and each Acquired Vehicle leased under the Series 1997 Lease on any
day during the Related Month, shall equal the sum of (I) the product
of (a) an amount equal to the sum, without double counting, of (i) the
Series 1997-1 Note Interest accruing during the Series 1997-1 Interest
Period occurring during such Related Month plus (ii) the Series 1997-2
Note Interest accruing during the Series 1997-2 Interest Period
occurring during such Related Month plus (iii) the Series 1997-3 Note
Interest accruing during the Series 1997-3 Note Period occurring
during such Related Month plus (iv) the Series 1997-4 Note Interest
accruing during the Series 1997-4 Interest Period occurring during
such Related Month plus (v) the note interest accruing during the
Related Month with respect to any other Shared Collateral Series plus
(vi) all Carrying Charges for the Related Month, and (b) the quotient
obtained by dividing the Net Book Value of such Acquired Vehicle as of
the last day of the Related Month by the Net Book Value of all
Vehicles leased under the Series 1997 Lease as of the last day of the
Related Month plus (II) 0.50% of the amount determined pursuant to
clause (I).
"Rent" means Monthly Base Rent plus Monthly Variable Rent
plus Additional Base Rent.
10. Payment of Rent and Other Payments.
(a) Monthly Base Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below,
each Lessee shall pay to the Lessor the Monthly Base Rents that have
accrued during the Related Month with respect to all Vehicles that
were leased by such Lessee under the Operating Lease on any day during
the Related Month;
(c) Monthly Variable Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below,
each Lessee shall pay to the Lessor the Monthly Variable Rents that
have accrued during the Related Month with respect to all Vehicles
that were leased by such Lessee under the Operating Lease on any day
during the Related Month. On each other date on which Note Interest is
due and payable under the terms of a Series 1997 Variable Funding
Supplement, each Lessee shall pay to the Lessor, as Monthly Variable
Rent, an amount equal to the amount of Note Interest due and payable
on such date in respect of the Series 1997 Variable Funding Notes.
(c) Termination Payments and Casualty Payments. On each Payment
Date, after giving credit for all prepayments on account thereof
pursuant to (f) below, each Lessee shall pay to the Lessor all
Termination Payments and Casualty Payments payable by such Lessee as
provided in Section 5.3 of the Base Lease; and
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<PAGE> 78
(d) Additional Base Rent. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee
shall pay to the Lessor an amount equal to the product of (A) the
monthly Additional Base Rent that has accrued during the Related Month
with respect to the Non-Program Vehicles leased under this Lease by
the Lessees and (B) a fraction, the numerator of which is the Net Book
Value of all Non-Program Vehicles leased by such Lessee under the
Operating Lease and the denominator of which is the Net Book Value of
all Non-Program Vehicles leased by the Lessees under this Lease; and
(e) Certain Other Payments. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee
shall direct all Repurchase Prices and Disposition Proceeds payable in
respect of Acquired Vehicles to be deposited directly to the Master
Collateral Account for the benefit of the Trustee. Each Servicer and
each Lessee each agrees that in the event that any such Servicer or
any such Lessee shall receive directly any such payment, including
cash, securities, obligations or other property, the Servicer or the
Lessee, as the case may be, shall accept the same as the agent of the
Master Collateral Agent and shall hold the same in trust on behalf of
and for the benefit of the Master Collateral Agent, and shall deposit
the same, by the date required for such deposit in Section 24.12 of
the Base Lease, into the Master Collateral Account in the same form
received, with the endorsement of the Servicer or the Lessee, as the
case may be, when necessary or appropriate.
(f) Prepayments. On any date, a Lessee may prepay to the
Lessor, in whole or in part, the Rent or other payments accrued during
the Related Month with respect to any Acquired Vehicles leased by such
Lessee.
11. Net Lease. THE OPERATING LEASE SHALL BE A NET LEASE, AND EACH
LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE
AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT OR REDUCTION FOR
ANY REASON WHATSOEVER. The obligations and liabilities of each Lessee hereunder
shall in no way be released, discharged or otherwise affected (except as may be
expressly provided herein including, without limitation, the right of the
Lessee to reject Vehicles pursuant to Section 2.2 of the Base Lease) for any
reason, including without limitation: (i) any defect in the condition,
merchantability, quality or fitness for use of the Vehicles or any part
thereof; (ii) any damage to, removal, abandonment, salvage, loss, scrapping or
destruction of or any requisition or taking of the Vehicles or any part
thereof; (iii) any restriction, prevention or curtailment of or interference
with any use of the Vehicles or any part thereof; (iv) any defect in, or any
Lien on, title to the Vehicles or any part thereof; (v) any change, waiver,
extension, indulgence or other action or omission in respect of any obligation
or liability of the Lessee or the Lessor; (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Lessee, the Lessor or any other Person, or any
action taken with respect to the Operating Lease by any trustee or receiver of
any Person mentioned above, or by any court; (vii) any claim that the Lessee
has or might have against any Person, including without limitation the Lessor;
(viii) any failure on the part of the Lessor to perform or comply with any of
the terms hereof or of any other agreement; (ix) any invalidity or
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<PAGE> 79
unenforceability or disaffirmance of the Operating Lease or any provision
hereof or any of the other Related Documents or any provision of any thereof,
in each case whether against or by the Lessee or otherwise; (x) any insurance
premiums payable by the Lessee with respect to the Vehicles; or (xi) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not the Lessee shall have notice or knowledge of any of the foregoing and
whether or not foreseen or foreseeable. The Operating Lease shall be
noncancelable by the Lessees and, except as expressly provided herein, each
Lessee, to the extent permitted by law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender the Operating
Lease, or to any diminution or reduction of Rent payable by the Lessee
hereunder. All payments by a Lessee made hereunder shall be final (except to
the extent of adjustments provided for herein), absent manifest error and,
except as otherwise provided herein, no Lessee shall seek to recover any such
payment or any part thereof for any reason whatsoever, absent manifest error.
If for any reason whatsoever the Operating Lease shall be terminated in whole
or in part by operation of law or otherwise except as expressly provided
herein, each Lessee shall nonetheless pay an amount equal to each Rent payment
at the time and in the manner that such payment would have become due and
payable under the terms of the Operating Lease as if it had not been terminated
in whole or in part. All covenants and agreements of any Lessee herein shall be
performed at its cost, expense and risk unless expressly otherwise stated.
12. Liens. Except for Permitted Liens, each Lessee shall keep all
Vehicles leased by it free of all Liens arising during the Term. Upon the
Vehicle Lease Expiration Date for each Vehicle leased hereunder, the Lessor
may, in its discretion, remove any such Lien and any sum of money that may be
paid by the Lessor in release or discharge thereof, including attorneys' fees
and costs, will be paid by the applicable Lessee upon demand by the Lessor. The
Lessor may grant security interests in the Vehicles and the other Master
Collateral to the Master Collateral Agent, and in this Lease and the other
Series 1997 VFN Collateral to the Trustee, in accordance with the Master
Collateral Agency Agreement and the Indenture, and each Series 1997 Variable
Funding Noteholder may grant security interests in its Series 1997 Variable
Funding Notes, the Series 1997 Variable Funding Supplements and the other
Assigned Collateral to certain of its creditors, without consent of any Lessee.
Each Lessee acknowledges that the granting of Liens and the taking of other
actions pursuant to the Indenture and the Related Documents does not interfere
with the rights of the Lessee under the Operating Lease.
13. Non-Disturbance. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Vehicles will not be
disturbed during the Term subject, however, to Section 8 of this Annex A and
except that the Lessor, the Master Collateral Agent and the Trustee each
retains the right, but not the duty, to inspect the Vehicles without disturbing
the ordinary conduct of such Lessee's business in accordance with Section 24.2
of the Base Lease.
14. Certain Risks of Loss Borne by Lessees. Upon delivery of each
Vehicle to the applicable Lessee, as between the Lessor and the Lessee, the
Lessee assumes and bears the risk of loss, damage, theft, taking, destruction,
attachment, seizure, confiscation or requisition and all other risks and
liabilities with respect to such Vehicle, however caused or occasioned,
including personal injury or
A-6
<PAGE> 80
death and property damage, arising with respect to any Vehicle due to the
manufacturer, purchase, acceptance, rejection, delivery, leasing, possession,
use, inspection, registration, operation, condition, maintenance, repair or
storage of such Vehicle, howsoever arising.
15. Title. This is an agreement to lease only, and title to the Acquired
Vehicles will at all times remain in the Lessor's name. No Lessee will have any
rights or interest in such Acquired Vehicles whatsoever other than the rights
of possession and use as provided by this Lease. In addition, each Lessee, by
its execution hereof, acknowledges and agrees that (i) the Lessor is the sole
owner and holder of all right, title and interest in and to the Manufacturer
Programs as they relate to the Acquired Vehicles leased hereunder and (ii) the
Lessee has no right, title or interest in any Manufacturer Program as it
relates to any Acquired Vehicle leased hereunder. To confirm the foregoing,
each Lessee, by its execution hereof, hereby assigns and transfers to the
Lessor any rights that the Lessee may have in respect to any Manufacturer
Programs as they relate to the Acquired Vehicles leased hereunder.
* * *
A-7
<PAGE> 81
ANNEX B
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer,
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer,
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
<PAGE> 82
1. Scope of Annex. This Annex B shall apply only to the acquisition or
financing, leasing and servicing of the Financed Vehicles by the Lessees
pursuant to the Base Lease, as supplemented by this Lease Annex (collectively,
the "Financing Lease").
2. General Agreement. The Lessor and each Lessee intend that for all
purposes (including, but not limited to, financial accounting, regulatory
accounting, federal income tax purposes and all applicable state and local
income, franchise, sales, use and excise tax purposes and for purposes of any
foreign corporation, business registration or doing business statutes), with
respect to the Financed Vehicles, (A) this Lease, as supplemented by this Lease
Annex, will be treated as a financing arrangement, (B) the Lessor will be
treated as a lender making loans to the Lessees in amounts equal to the
Capitalized Costs or, in the case of Refinanced Vehicles, the Net Book Value of
Financed Vehicles, which loans are secured by the Financed Vehicles, (C) the
Lessees will be treated as making payments of principal and interest
(denominated as Monthly Base Rent and Monthly Supplemental Payments, and
Monthly Finance Rent, respectively) to the Lessor and (D) each Lessee will be
treated as the owner of the Financed Vehicles leased by it and will be entitled
to all tax benefits ordinarily available to an owner of property similar to the
Financed Vehicles for such tax purposes.
(b) It is the intention of the parties that this Agreement together with
the Master Collateral Agency Agreement shall constitute a security agreement
under applicable law.
3. Financing Lease Commitment. Subject to the terms and conditions of
the Financing Lease, upon execution and delivery of the Financing Lease, the
Lessor shall (i) on the Lease Commencement Date refinance the Refinanced
Vehicles in an amount equal to the aggregate Net Book Value thereof, and (ii)
from time to time on or after the Lease Commencement Date and prior to the
Lease Expiration Date finance the purchase of all other Financed Vehicles
identified in Vehicle Orders placed by each Lessee for a purchase price equal
to the Capitalized Cost thereof, and in each case simultaneously therewith
enter into the Financing Lease with the applicable Lessee with respect to the
Refinanced Vehicles and other Financed Vehicles, as the case may be; provided,
that the aggregate Net Book Value of Financed Vehicles leased under this
Financing Lease, plus past due Monthly Base Rent under this Financing Lease,
shall not on any date exceed the Maximum Lease Commitment reduced by (a) the
Base Amount as of such date with respect to the Operating Lease and (b) the
Base Amount as of such date with respect to the Synthetic Lease.
4. Reserved.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of the
Financing Lease as it relates to each Financed Vehicle leased hereunder shall
be from the Vehicle Lease Commencement Date to the date that is sixty (60)
months from the Vehicle Lease Commencement Date. On the occurrence of such
date, the Lessee shall pay to the Master Collateral Agent or the Trustee, in
accordance with this Financing Lease, any amounts unpaid and owing under the
Series 1997 Lease in respect of such Vehicle.
B-1
<PAGE> 83
6. Calculation of Rent and Monthly Supplemental Payment. Rent and the
Monthly Supplemental Payment shall be due and payable on a monthly basis as set
forth in this Section 6:
"Additional Base Rent" with respect to the Non-Program Vehicles
leased hereunder, with respect to each Payment Date shall equal the
amount, if any, by which (a) 100% of the aggregate Net Book Value of such
Non-Program Vehicles leased under this Lease on the last day of the
Related Month exceeds (b) the three (3) month rolling average of the Fair
Market Value of such Non-Program Vehicles for the preceding three (3)
calendar months.
"Monthly Base Rent", with respect to each Payment Date and each
Financed Vehicle leased under the Series 1997 Lease on any day during the
Related Month, shall be the sum of all Depreciation Charges that have
accrued with respect to such Vehicle during the Related Month.
"Monthly Finance Rent", with respect to each Payment Date and
each Financed Vehicle leased under the Series 1997 Lease on any day during
the Related Month, shall equal the sum of (I) the product of (a) an amount
equal to the sum, without double counting, of (i) the Series 1997-1 Note
Interest accruing during the Series 1997-1 Interest Period occurring
during such Related Month plus (ii) the Series 1997-2 Note Interest
accruing during the Series 1997-2 Interest Period occurring during such
Related Month plus (iii) the Series 1997-3 Note Interest accruing during
the Series 1997-3 Interest Period occurring during such Related Month plus
(iv) the Series 1997-4 Note Interest accruing during the Series 1997-4
Interest Period occurring during such Related Month plus (v) the note
interest accruing during the Related Month with respect to any other
Shared Collateral Series plus (vi) all Carrying Charges for the Related
Month, and (b) the quotient obtained by dividing the Net Book Value of
such Financed Vehicle as of the last day of the Related Month by the Net
Book Value of all Vehicles leased under the Series 1997 Lease as of the
last day of the Related Month plus (II) 0.50% of the amount determined
pursuant to clause (I).
"Monthly Supplemental Payment", with respect to each Payment
Date and all Vehicles that were leased under the Financing Lease on any
day during the Related Month, shall be an amount equal to the sum of (i)
the aggregate Termination Values (each as of the date on which such
Financed Vehicle is no longer an Eligible Vehicle or becomes a Casualty,
as applicable) of all the Financed Vehicles financed under this Financing
Lease at any time during such Related Month that, without double counting,
while so financed either are no longer Eligible Vehicles or have suffered
a Casualty during the Related Month, plus (ii) the aggregate Termination
Values (each as of the date on which such Financed Vehicle is sold or
returned by the Lessee) of all the Financed Vehicles financed under this
Financing Lease at any time during such Related Month that, without double
counting, are sold or returned by the Lessee during the Related Month (it
being understood that the Lessee has agreed to sell Financed Vehicles only
in a manner consistent with the provisions hereof and of the Related
Documents) to any Person (including the Lessee) other than to a
Manufacturer pursuant to such Manufacturer's Manufacturer Program or to a
third party pursuant to an auction conducted through a Manufacturer's
Manufacturer Program plus (iii) the aggregate Termination Values (each as
of the applicable Disposition Date) of all the Financed Vehicles
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<PAGE> 84
financed under this Finance Lease that while so financed were returned
to (a) a Manufacturer whose Manufacturer Program is a Guaranteed
Depreciation Program by the Lessee with respect to which, during the
Related Month, (x) the Repurchase Price has been deposited in the
Series 1997 Collection Account or, if for any reason the Repurchase
Price has been received directly by a Lessee, and such Repurchase
Price has not theretofore been deposited in the Series 1997 Collection
Account, the two Business Day period referred to in Section 24.12 of
the Base Lease has expired during the Related Month or (y) a
Manufacturer Event of Default has occurred or (z) the one hundredth
(100th) day after the Due Date with respect thereto has occurred and
the Repurchase Price has not been received or (b) any other applicable
Manufacturer by the Lessee with respect to which, during the Related
Month, (1) such Repurchase Price has been deposited in the Series 1997
Collection Account during the Related Month or, if for any reason the
Repurchase Price has been received directly by a Lessee and such
Repurchase Price has not theretofore been deposited in the Series 1997
Collection Account, the two Business Day period referred to in Section
24.12 of the Base Lease has expired during the Related Month or (2) a
Manufacturer Event of Default has occurred or (3) the Repurchase Price
has not been received as of the one hundredth (100th) day after the
Due Date with respect thereto has occurred and the Repurchase Price
has not been received, plus (iv) the aggregate face amount of all
Eligible Receivables financed under this Financing Lease with respect
to which, during the Related Month, (a) payment from the obligor
thereon has been deposited in the Series 1997 Collection Account
during the Related Month or, if for any reason such payment has been
received directly by a Lessee and such payment has not theretofore
been deposited in the Series 1997 Collection Account, the two Business
Day period referred to in Section 24.12 of the Base Lease has expired
during the Related Month or (b) a Manufacturer Event of Default has
occurred with respect to the obligor or (c) the one hundredth (100th)
day after the Due Date with respect thereto has occurred and the
payment due from the obligor thereon has not been received, minus (v)
any amounts received by the Lessor or the Trustee, or deposited into
the Series 1997 Collection Account, during the Related Month
representing (a) Repurchase Prices for repurchases of Financed
Vehicles or (b) the sales proceeds (including amounts paid to a Lessee
by a Manufacturer as a result of the Lessee's sale of such Vehicle
outside such Manufacturer's Manufacturer Program) for sales of
Financed Vehicles financed at the time of such sale under this Finance
Lease to a third party other than (1) to a Manufacturer or (2) through
an auction dealer of a Manufacturer whose Manufacturer Program is a
"guaranteed depreciation program" or (c) payments from obligors on
Eligible Receivables financed under the Financing Lease.
"Rent" means Monthly Base Rent plus Monthly Finance Rent plus
Additional Base Rent plus Monthly Supplemental Payments.
7. Payment of Rent and Other Payments. (a) On each Payment Date:
(i) Monthly Base Rent. After giving credit for all prepayments
on account thereof pursuant to (c) below, each Lessee shall pay to the
Lessor the Monthly Base Rents that have accrued during the Related Month
with respect to all Vehicles that were leased by such Lessee under the
Finance Lease on any day during the Related Month.
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<PAGE> 85
(ii) Monthly Finance Rent. After giving credit for all
prepayments on account thereof pursuant to (c) below, each Lessee
shall pay to the Lessor the Monthly Finance Rents that have accrued
during the Related Month with respect to all Vehicles that were leased
by such Lessee under the Finance Lease on any day during the Related
Month. On each other date on which Note Interest is due and payable
under the terms of a Series 1997 Variable Funding Supplement, each
Lessee shall pay to the Lessor, as Monthly Variable Rent, an amount
equal to the amount of Note Interest due and payable on such date in
respect of the Series 1997 Variable Funding Notes.
(iii) Additional Base Rent. After giving credit for all
prepayments on account thereof pursuant to (c) below, each Lessee
shall pay to the Lessor an amount equal to the product of (A) the
monthly Additional Base Rent that has accrued during the Related Month
with respect to the Non-Program Vehicles leased under this Lease by
the Lessees and (B) a fraction, the numerator of which is the Net Book
Value of all Non-Program Vehicles leased by such Lessee under the
Financing Lease and the denominator of which is the Net Book Value of
all Non-Program Vehicles leased by the Lessees under this Lease; and
(iv) Monthly Supplemental Payment. After giving credit for all
prepayments on account thereof pursuant to (c) below, each Lessee
shall pay to the Lessor the Monthly Supplemental Payment that has
accrued during the Related Month,.
(b) On the expiration of the term of the Series 1997 Lease with
respect to a Financed Vehicle, any remaining Base Amount, plus all other
amounts payable by any Lessee under the Financing Lease with respect to any
Vehicle leased by such Lessee shall be immediately due and payable.
(c) On any date, a Lessee may prepay to the Lessor, in whole or in
part, the Rent or other payments accrued during the Related Month with respect
to any Financed Vehicles leased by such Lessee.
8. Risk of Loss Borne by Lessees. Upon delivery of each Vehicle to
the applicable Lessee, as between the Lessor and the Lessee, the Lessee assumes
and bears the risk of loss, damage, theft, taking, destruction, attachment,
seizure, confiscation or requisition with respect to such Vehicle, however
caused or occasioned, and all other risks and liabilities, including personal
injury or death and property damage, arising with respect to any Vehicle or the
manufacture, purchase, acceptance, rejection, ownership, delivery, leasing,
possession, use, inspection, registration, operation, condition, repair,
storage, sale, return or other disposition of such Vehicle, howsoever arising.
9. Mandatory Repurchase of Company Vehicles. Prior to the Vehicle
Lease Expiration Date with respect to each Company Vehicle (other than a
Vehicle Lease Expiration Date arising in connection with the purchase of such
Company Vehicle pursuant to this Section 9), the Lessee of a Company Vehicle
shall purchase such Company Vehicle (including any such Vehicle which has
become a Casualty or has ceased to be an Eligible Vehicle) at a purchase price
equal to the Net Book Value of such Vehicle calculated as of the date of
purchase (or, in the case of a Casualty or a Vehicle that has ceased to be an
Eligible Vehicle, at a purchase price equal to the Monthly Supplemental
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<PAGE> 86
Payments accruing in respect of such Vehicle during the Related Month in which
such Vehicle became a Casualty or ceased to be an Eligible Vehicle), which
shall be payable to the Master Collateral Agent by deposit to the Master
Collateral Account (together with all accrued and unpaid Rent and other charges
and payments due and payable on such Payment Date with respect to such Company
Vehicle through the date of such purchase) on or prior to the Payment Date next
succeeding such purchase by the Lessee. Upon receipt of such purchase price by
the Lessor or the Master Collateral Agent, the Lessor shall, at the request of
the Lessee, cause title to each Company Vehicle to be transferred to the
Lessee, the lien of the Master Collateral Agent in such Company Vehicle will
automatically be released and the Servicer shall cause the Master Collateral
Agent to cause the notation of its lien to be removed from the Certificate of
Title for such Vehicle, concurrently with or promptly after such purchase price
for such Company Vehicle (and any such unpaid Rent, charges and payments) is
paid by the Lessee to the Master Collateral Agent. Notwithstanding anything to
the contrary in this Lease, no Company Vehicle may be sold or otherwise
disposed of (other than pursuant to Section 17.3 of the Base Lease), including
at auction or by return to its Manufacturer pursuant to a Manufacturer Program,
prior to its purchase by the Lessee pursuant to and in accordance with this
Section 9.
10. Non-Disturbance. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Financed Vehicles
will not be disturbed during the Term, except that the Lessor, the Master
Collateral Agent, and the Trustee each retains the right, but not the duty, to
inspect the Vehicles without disturbing the ordinary conduct of such Lessee's
business in accordance with Section 24.2 of the Base Lease.
11. Liens. Except for Permitted Liens, each Lessee shall keep all
Vehicles leased by it free of all Liens arising during the Term. The Lessor may
grant security interests in the Master Collateral to the Master Collateral
Agent, and in this Lease and the other Series 1997 VFN Collateral to the
Trustee, in accordance with the Master Collateral Agency Agreement and the
Indenture, and each Series 1997 Variable Funding Noteholder may grant security
interests in its Series 1997 Variable Funding Notes, the Series 1997 Variable
Funding Supplements and the other Assigned Collateral to certain of its
creditors without consent of any Lessee. Each Lessee acknowledges that the
granting of Liens and the taking of other actions pursuant to the Indenture and
the Related Documents does not interfere with the rights of the Lessee under
the Financing Lease.
12. Lessee's Rights to Purchase Manufacturer Receivables. In addition,
each Lessee will have the option, exercisable with respect to any Manufacturer
Receivable related to a Financed Vehicle which was leased by such Lessee under
this Lease, to purchase such Manufacturer Receivable for a price equal to the
amount due from the Manufacturer under such Manufacturer Receivable, in which
event the Lessee will pay such amount to the Master Collateral Agent on or
before the Payment Date next succeeding such purchase by the Lessee. Upon
receipt of such funds by the Master Collateral Agent, the Lessor, at the
request of the Lessee, shall cause title to any such Manufacturer Receivable to
be transferred to the Lessee, the lien of the Master Collateral Agent in such
Manufacturer Receivable will automatically be released concurrently with or
promptly after the purchase price for such Manufacturer Receivable (and any
unpaid Monthly Base Rent, unpaid Monthly Variable Rent and other unpaid
charges, payments and amounts) is paid by the Lessee to the Master Collateral
Agent or the Trustee.
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<PAGE> 87
***
B-6
<PAGE> 88
ANNEX C
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of October 29, 1997
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee and Servicer,
ALAMO RENT-A-CAR, INC.,
as Lessee and Servicer,
VALUE RENT-A-CAR, INC.,
as Lessee and Servicer,
SPIRIT RENT-A-CAR, INC.,
as Lessee and Servicer,
and those subsidiaries and affiliates
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Master Servicer
<PAGE> 89
1. Scope of Annex. This Annex C shall apply only to the acquisition,
leasing and servicing of the Synthetic Lease Vehicles by the Lessees pursuant
to the Base Lease, as supplemented by this Lease Annex (collectively, the
"Synthetic Lease").
2. General Agreement. (a) Each Lessee and the Lessor each intend that
this Agreement constitute an operating lease for accounting purposes and a
financing arrangement for tax purposes and that the relationship between the
Lessor and each Lessee pursuant hereto shall always be only that of lessor and
lessee, and the Lessor hereby declares, acknowledges and agrees that the tax
ownership of the Synthetic Lease Vehicles rests solely with the applicable
Lessee subject to the security interest granted hereunder and under the Master
Collateral Agency Agreement. The Lessor and each Lessee further agree that the
obligations of each such Lessee to the Lessor hereunder shall constitute debt
for all federal and state income tax purposes.
(b) It is the intention of the parties that this Agreement together with
the Master Collateral Agency Agreement shall constitute a security agreement
under applicable law.
3. Synthetic Lease Commitment. Upon the execution and delivery of this
Synthetic Lease, the Lessor shall, subject to the terms and conditions of the
Agreement, purchase from time to time on or after the Lease Commencement Date
and prior to the Lease Expiration Date, all Synthetic Lease Vehicles identified
in Vehicle Orders placed by each Lessee for a purchase price equal to the
Acquisition Price thereof, and simultaneously therewith, the Lessor shall under
the Synthetic Lease enter into synthetic leases with the applicable Lessee with
respect to such Vehicles; provided, that the aggregate Net Book Value of
Synthetic Lease Vehicles leased under this Synthetic Lease, plus past due
Monthly Base Rent under this Synthetic Lease, shall not on any date exceed the
Maximum Lease Commitment reduced by (a) the Base Amount as of such date with
respect to the Operating Lease and (b) the Base Amount as of such date with
respect to the Financing Lease.
4. Reserved.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of the
Synthetic Lease as it relates to each Synthetic Lease Vehicle leased hereunder
shall be from the Vehicle Lease Commencement Date to the date that is
twenty-four (24) months from the Vehicle Lease Commencement Date (provided,
however, the maximum Vehicle lease term of the Synthetic Lease as it relates to
any Synthetic Lease Vehicle titled in the state of Illinois shall be from the
Vehicle Lease Commencement Date to the date that is three hundred and
sixty-four (364) days from the Vehicle Lease Commencement Date; provided,
further, that if on such three hundred sixty-fourth (364th) day, the Vehicle
lease term for any Synthetic Lease Vehicle titled in the State of Illinois has
not theretofore been terminated, and the Vehicle lease term for such Synthetic
Lease Vehicle has not previously been terminated and renewed pursuant to this
Paragraph 5, the Vehicle lease term as it relates to such Synthetic Lease
Vehicle shall be deemed to have been terminated and renewed for an additional
Vehicle lease term of up to three hundred sixty four (364) days). On the
occurrence of such date for a Synthetic Lease Vehicle not previously disposed
of or purchased by the applicable Lessee in accordance with the terms hereof,
the Lessee shall, (a) on behalf of the Lessor, promptly dispose of such Vehicle
in accordance with the terms of this Synthetic Lease and in accordance with any
instructions of the Lessor for such disposition, which instructions shall not
be inconsistent with
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<PAGE> 90
the terms of this Lease, (b) in each case, provide that Disposition Proceeds be
paid directly to the Master Collateral Account for the benefit of the Trustee
and (c) pay to the Master Collateral Agent or the Trustee, in accordance with
this Synthetic Lease, any other amounts unpaid and owing from such Lessee under
the Lease in respect of such Vehicle.
6. Lessee's Rights to Purchase Vehicles. (a) Each Lessee will have the
option, exercisable with respect to any Synthetic Lease Vehicle leased by it
during the Vehicle Term with respect to such Synthetic Lease Vehicle, to
purchase any Synthetic Lease Vehicle leased under this Lease at the Vehicle
Purchase Price, in which event such Lessee will pay the Vehicle Purchase Price
to the Master Collateral Agent on or before the Payment Date next succeeding
such purchase by such Lessee plus all accrued and unpaid Monthly Base Rent and
Monthly Variable Rent and any other charges, payments and amounts due and
payable hereunder on such Payment Date with respect to such Vehicle through the
date of such purchase. In addition, each Lessee will have the option,
exercisable with respect to any Manufacturer Receivable related to a Synthetic
Lease Vehicle which was leased by such Lessee under this Lease, to purchase
such Manufacturer Receivable for a price equal to the amount due from the
Manufacturer under such Manufacturer Receivable, in which event the Lessee will
pay such amount to the Master Collateral Agent on or before the Payment Date
next succeeding such purchase by the Lessee. Upon receipt of such funds by the
Master Collateral Agent, the Lessor, at the request of the Lessee, shall cause
title to any such Vehicle or Manufacturer Receivable, as applicable, to be
transferred to the Lessee, the lien of the Master Collateral Agent in such
Vehicle or Manufacturer Receivable, as applicable, will automatically be
released and, with respect to a purchase of a Vehicle, the Servicer thereof
shall cause the Master Collateral Agent to cause the notation of its lien to be
removed from the certificate of title for such Vehicle, concurrently with or
promptly after the Vehicle Purchase Price for such Vehicle (and any unpaid
Monthly Base Rent, unpaid Monthly Variable Rent and any other unpaid charges,
payments and amounts) are paid by such Lessee to the Master Collateral Agent.
(b) Each Lessee shall have the option on the Vehicle Lease Expiration
Date (unless such Lessee has purchased such Vehicle pursuant to Section 6(a))
to purchase any Synthetic Lease Vehicle leased by it under this Lease for an
amount equal to the Termination Value of such Vehicle on such date. Such Lessee
shall pay such Termination Value plus all accrued and unpaid Monthly Base Rent,
unpaid Monthly Variable Rent and any other unpaid charges, payments and amounts
with respect to such Vehicle to the Master Collateral Agent on the Payment Date
occurring on or immediately following the applicable Vehicle Lease Expiration
Date.
7. Program Vehicle Disposition. Subject to Sections 6 and 11 hereof, the
Lessor and each Lessee agree that, with respect to Synthetic Lease Vehicles
that are Program Vehicles, the Lessee shall, pursuant to Section 24.6 of the
Base Lease (unless not required by such Section), deliver each Vehicle for sale
at auction or return each Program Vehicle to the related Manufacturer, in each
case in accordance with the applicable Manufacturer Program during the
Repurchase Period for such Vehicle; provided, however, if for any reason, such
Lessee fails to deliver a Program Vehicle to the applicable Manufacturer for
repurchase by the Manufacturer or to an auction for sale, in each case in
accordance with the applicable Manufacturer Program, during the Repurchase
Period, and such Lessee does not or is not entitled to redesignate such Program
Vehicle as a Non-Program Vehicle in accordance with Section 14 of the Base
Lease, then such Lessee shall be obligated to pay a
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<PAGE> 91
Casualty Payment in respect of such Vehicle, as provided in Section 7 of the
Base Lease. Each Lessee shall, with respect to Synthetic Lease Vehicles that
are Program Vehicles, pay any Monthly Variable Rent accrued with respect to
such Vehicle through the date of return, plus pay the equivalent of the Monthly
Base Rent for the minimum holding period under the applicable Manufacturer
Program for Vehicles returned before the expiration of such minimum holding
period, regardless of actual usage, unless such minimum holding period is
waived by the Manufacturer or such a Vehicle is a Casualty or ceased to be an
Eligible Vehicle, in which case Section 7 of the Base Lease shall apply with
respect to such Vehicle. All Repurchase Prices and Disposition Proceeds due
from the disposition of Vehicles pursuant to this Section shall be due and
payable to the Lessor and shall be deposited to the Master Collateral Account.
The Lessor and each Lessee agree, with respect to Synthetic Lease Vehicles that
are Non-Program Vehicles, that the Lessee thereof shall use commercially
reasonable efforts to dispose of each Non-Program Vehicle leased by it
hereunder (a) in a manner reasonably likely to maximize proceeds from such
disposition and consistent with industry practice and (b) within forty-two (42)
months after the date of the original dealer invoice for such Vehicle sold as a
new vehicle. All Disposition Proceeds due from the disposition of Non-Program
Vehicles pursuant to this Section shall be due and payable to the Lessor and
shall be deposited into the Master Collateral Account.
8. Lessor's Right to Cause Vehicles to be Sold. If any Lessee does not
elect to purchase such Vehicle pursuant to Section 6 hereof, then subject to
such Lessee's right, if any, to redesignate such Vehicle as a Non-Program
Vehicle pursuant to Section 14 of the Base Lease and to Section 11 hereof, the
Lessor shall have the right, at any time after the date fourteen (14) days
prior to the expiration of the Repurchase Period for any Program Vehicle leased
under this Synthetic Lease, to require that such Lessee deliver such Program
Vehicle to the Manufacturer for repurchase or, as applicable, to the designated
auction for sale, or exercise commercially reasonable efforts to arrange for
the sale of such Program Vehicle to a third party for a price greater than the
Net Book Value thereof, in which event such Lessee shall, prior to the
expiration of such Repurchase Period, deliver such Program Vehicle to its
Manufacturer or the designated auction or arrange for the sale of such Program
Vehicle to a third party for a price greater than the Net Book Value (or
purchase the Program Vehicle itself from the Lessor for the Vehicle Purchase
Price). If a sale of the Program Vehicle is arranged by such Lessee prior to
the expiration of such Repurchase Period, then such Lessee shall deliver the
Program Vehicle to the purchaser thereof, the Lien of the Master Collateral
Agent on the Certificate of Title of such Program Vehicle shall be released,
and such Lessee shall cause to be delivered to the Lessor the funds paid for
such Program Vehicle by the purchaser. If any Lessee is unable to arrange for a
sale of the Program Vehicle prior to the expiration of such Repurchase Period,
then such Lessee shall cease attempting to arrange for such a sale and shall
return such Program Vehicle in the manner provided in Section 11(a)(y) hereof.
If any Lessee shall fail to satisfy any provision of Section 11(a)(y) hereof or
11(b) hereof, then such Lessee shall purchase such vehicle by paying within
five (5) days after the Vehicle Lease Expiration Date the amount of the
Termination Value of such Program Vehicle immediately prior to such Vehicle
Lease Expiration Date (rather than the Residual Value Payment required by
Section 8(c)), plus any unpaid Monthly Base Rent, unpaid Monthly Variable Rent
and other unpaid charges, payments and amounts due in respect of such Vehicle.
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<PAGE> 92
(b) If the Lessee thereof does not elect to purchase a Non-Program
Vehicle leased under this Synthetic Lease Pursuant to Section 6 hereof, the
Lessor and the Lessee agree that the Lessee shall use commercially reasonable
efforts to arrange for the sale of each such Non-Program Vehicle to a third
party for the Vehicle Purchase Price with respect to such Non-Program Vehicle
on or prior to the related Vehicle Synthetic Lease Expiration Date. In no event
may any Non- Program Vehicle be sold pursuant to this Section 8(b) unless the
funds to be paid to the Lessor with respect to such Non-Program Vehicle (net of
any disposition expenses) equal or exceed the Termination Value of such
Non-Program Vehicle, plus any unpaid Monthly Base Rent, unpaid Monthly Variable
Rent and other unpaid charges, payments and amounts due in respect of such
Vehicle. Notwithstanding the Lessee's disposition of a Synthetic Lease Vehicle
which is a Non-Program Vehicle on or prior to the related Vehicle Synthetic
Lease Expiration Date, the Lessee shall pay to the Lessor all accrued and
unpaid Monthly Base Rent due with respect to such Non- Program Vehicle, unless
such Non-Program Vehicle is a Casualty or ceases to be an Eligible Vehicle, in
which event the provisions of Section 7 of the Base Lease will apply.
(c) In the event any Vehicle is not purchased by the applicable Lessee
pursuant to Section 6 hereof or sold pursuant to Section 8(a) or (b) above,
then such Lessee shall return the Vehicle to the Lessor or dispose of the same
in accordance with Section 11(a)(y), 11(b) or 11(c) hereof, as the case may be,
on the Payment Date with respect to the Related Month in which the applicable
Vehicle Lease Expiration Date falls, and with respect to returns under Section
11(a)(y), such Lessee shall pay an amount equal to the Residual Value Payment
plus all accrued but unpaid Monthly Base Rent and Monthly Variable Rent and
other unpaid charges, payments and amounts due and payable hereunder with
respect to such Vehicle through such Payment Date. In no event may any Vehicle
be sold pursuant to this Section 8 (other than pursuant to a Manufacturer
Program) unless such sale complies with Section 12.2 of the Base Lease.
9. Calculation of Rent. Rent shall be due and payable on a monthly basis
as set forth in this Section 9:
"Additional Base Rent" with respect to the Non-Program Vehicles
leased hereunder, with respect to each Payment Date shall equal the
amount, if any, by which (a) 100% of the aggregate Net Book Value of such
Non-Program Vehicles leased under this Lease on the last day of the
Related Month exceeds (b) the three (3) month rolling average of the Fair
Market Value of such Non-Program Vehicles for the preceding three (3)
calendar months.
"Monthly Base Rent", with respect to each Payment Date and each
Synthetic Lease Vehicle leased under the Lease on any day during the
Related Month, shall be the sum of all Depreciation Charges that have
accrued with respect to such Vehicle during the Related Month.
"Monthly Variable Rent", with respect to each Payment Date and
each Synthetic Lease Vehicle leased under the Lease on any day during the
Related Month, shall equal the sum of (I) the product of (a) an amount
equal to the sum, without double counting, of (i) the Series 1997-1 Note
Interest accruing during the Series 1997-1 Interest Period occurring
during such Related Month plus (ii) the Series 1997-2 Note Interest
accruing during the
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Series 1997-2 Interest Period occurring during such Related Month plus
(iii) the Series 1997-3 Note Interest accruing during the Series 1997-3
Interest Period occurring during such Related Month plus (iv) the Series
1997-4 Note Interest accruing during the Series 1997-4 Interest Period
occurring during such Related Month plus (v) the note interest accruing
during the Related Month with respect to any other Shared Collateral
Series plus (vi) all Carrying Charges for the Related Month, and (b) the
quotient obtained by dividing the Net Book Value of such Synthetic Lease
Vehicle as of the last day of the Related Month by the Net Book Value of
all Vehicles leased under the Lease as of the last day of the Related
Month plus (II) 0.50% of the amount determined pursuant to clause (I).
"Rent" means Monthly Base Rent plus Monthly Variable Rent plus
Additional Base Rent plus Additional Synthetic Lease Payments.
10. Payment of Rent and Other Payments.
(a) Monthly Base Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below, each
Lessee shall pay to the Lessor the Monthly Base Rents that have accrued
during the Related Month with respect to all Vehicles that were leased by
such Lessee under the Synthetic Lease on any day during the Related Month;
(b) Monthly Variable Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (f) below, each
Lessee shall pay to the Lessor the Monthly Variable Rents that have
accrued during the Related Month with respect to all Vehicles that were
leased by such Lessee under the Synthetic Lease on any day during the
Related Month. On each other date on which Note Interest is due and
payable under the terms of a Series 1997 Variable Funding Supplement, each
Lessee shall pay to the Lessor, as Monthly Variable Rent, an amount equal
to the amount of Note Interest due and payable on such date in respect of
the Series 1997 Variable Funding Notes.
(c) Additional Synthetic Lease Payments. On each Payment Date,
after giving credit for all prepayments on account thereof pursuant to (f)
below, each Lessee shall pay to the Lessor all payments due on such
Payment Date pursuant to the provisions of Sections 8 and 11 of this Annex
C ("Additional Synthetic Lease Payments"); and
(d) Additional Base Rent. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee shall
pay to the Lessor an amount equal to the product of (A) the monthly
Additional Base Rent that has accrued during the Related Month with
respect to the Non-Program Vehicles leased under this Lease by the Lessees
and (B) a fraction, the numerator of which is the Net Book Value of all
Non-Program Vehicles leased by such Lessee under the Synthetic Lease and
the denominator of which is the Net Book Value of all Non-Program Vehicles
leased by the Lessees under this Lease; and
(e) Certain Other Payments. After giving credit for all
prepayments on account thereof pursuant to (f) below, each Lessee shall
direct all Repurchase Prices and Disposition
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<PAGE> 94
Proceeds payable in respect of Synthetic Lease Vehicles, to be
deposited directly to the Master Collateral Account for the benefit of
the Trustee. Each Servicer and each Lessee agrees that in the event
that any such Servicer or any such Lessee shall receive directly any
such payment, including cash, securities, obligations or other
property, the Servicer or the Lessee, as the case may be, shall accept
the same as the agent of the Master Collateral Agent and shall hold
the same in trust on behalf of and for the benefit of the Master
Collateral Agent, and shall deposit the same, by the date required for
such deposit in Section 24.12 of the Base Lease, into the Master
Collateral Account in the same form received, with the endorsement of
the Servicer or the Lessee, as the case may be, when necessary or
appropriate.
(f) Prepayments. On any date, a Lessee may prepay to the
Lessor, in whole or in part, the Rent or other payments accrued during
the Related Month with respect to any Synthetic Lease Vehicles leased
by such Lessee.
11. Return. (a) On or prior to the date that is ninety (90) days
prior to the end of the Term of this Lease, each Lessee shall notify the Lessor
in writing if it elects to purchase all the Synthetic Lease Vehicles leased by
such Lessee at the end of the Term of this Lease pursuant to Section 6. If any
Lessee does not elect to purchase all the Synthetic Lease Vehicles leased by
such Lessee pursuant to the terms of Section 6, as long as no Lease Event of
Default shall have occurred and be continuing, such Lessee shall, on or prior
to the Lease Expiration Date (x) pay to the Master Collateral Account an amount
equal to the Residual Value Payment for all such non-purchased Synthetic Lease
Vehicles leased by it hereunder as of the Vehicle Lease Expiration Date for
each such Vehicle plus all accrued but unpaid Monthly Base Rent and all Monthly
Variable Rent payable at such time and (y) return each such Synthetic Lease
Vehicle to the Lessor in accordance with the following, as applicable:
(1) each such Synthetic Vehicle shall:
(A) have an engine, transmission, differential, exhaust
system (including the catalytic converter and any other pollution
control equipment), brakes, and any other operating part or system or
accessory which is necessary or advisable to be in an operating
condition which is generally considered as "good" for a vehicle of
such Vehicle's age, and/or which is necessary to enable such Vehicle
to meet any motor vehicle inspection standard or environmental
standard applicable to such Vehicle on its Vehicle Lease Expiration
Date;
(B) be in a condition which would meet its next inspection as
required by such applicable federal, state or local law;
(C) other than any condition that would reasonably be
considered to be normal wear and tear or otherwise de minimis by a
Manufacturer (or its authorized agent) accepting possession of a
Vehicle subject to its Manufacturer Program: have no body dents, rust,
corrosion, paint mismatches or special colors, or paint which is less
than factory grade, dented, rusted, broken, missing chrome or trim,
ripped or stained, upholstery, seats, dash,
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<PAGE> 95
headliner, carpeting, trunk, or convertible vinyl top, missing
interior trim, sprung or misaligned doors or their openings, or worn,
cracked, split, broken or leaking weatherstripping, faulty window
mechanisms, or broken, cracked, missing glass, mirrors or lights,
faulty electronic systems, including on-board computers, processors,
sensors, controls, radios, stereos, and the like, faulty heating, air
conditioning or climate control systems, worn or faulty shock
absorbers or other suspension or steering parts, systems or
mechanisms;
(D) have an engine that does not burn an abnormal amount of
oil for a vehicle of comparable age or mileage, and there shall be no
uneven compression ratios across cylinders; no fluid leaks in the
engine, transmission(s), differential(s), steering mechanism, brake
system, or cooling system, faulty hoses, or faulty exhaust systems;
(E) have all accessories, insignia, decals, lettering or
special identification, or other auxiliary equipment or markings on
the body, fenders, bumpers, dash or elsewhere removed and there must
be no holes left by the removal thereof;
(F) have tires which:
I. are comparable to those initially delivered
with such Vehicle in design and quality;
II. are in accordance with the specifications of
the manufacturer of the Vehicles;
III. are part of a matching set of four, plus spare
(which may be a "donut" if a "donut" spare is initially
delivered with such Vehicle);
IV. have no less than 1/8 inch in tread remaining at
its shallowest point, show an excess wear marker built in by
its manufacturer; and
V. have no obvious defect;
(G) have wheels which:
I. are comparable to those initially delivered
with such Vehicle in design and quality;
II. are in accordance with the specifications of
the manufacturer of the Vehicle;
III. are part of a matching set of four, plus spare
(which may be a "donut" if a "donut" spare is initially
delivered with such Vehicle); and
IV. have no obvious defect; and
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<PAGE> 96
(H) be in Vehicle Turn-In Condition.
(b) Each Lessee will return each Synthetic Vehicle leased by it which
is a Program Vehicle (other than Casualties and Vehicles that have ceased to be
Eligible Vehicles) to the nearest related Manufacturer official auction or
other facility designated by such Manufacturer at such Lessee's sole expense or
to such other location designated by the Lessor, (with any additional cost of
delivery in excess of what would have been incurred upon delivery to the
related Manufacturer for the account of the Lessor), in each case in accordance
with the requirements of Section 7 hereof.
(c) Each Lessee will, subject to Section 6, dispose of each
Non-Program Vehicle (other than Casualties and Vehicles that have ceased to be
Eligible Vehicles) in accordance with the requirements of Section 8(b) hereof.
(d) Any rebates or credits applicable to the unexpired term of any
license plates for a Synthetic Lease Vehicle shall inure to the benefit of the
applicable Lessee.
(e) If any Lessee shall fail to satisfy any provision of Section 11(a)
of this Annex C, then such Lessee shall purchase the outstanding Synthetic
Lease Vehicles by paying within five (5) days after the end of the Term of this
Agreement the aggregate of the Termination Values of all the Synthetic Lease
Vehicles subject to this Lease immediately prior to the end of the Term (rather
than the Residual Value Payment required by subclause (x) of Section 11(a)
hereof).
12. Net Lease. THE SYNTHETIC LEASE SHALL BE A NET LEASE, AND EACH
LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE
AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT OR REDUCTION FOR
ANY REASON WHATSOEVER. The obligations and liabilities of each Lessee hereunder
shall in no way be released, discharged or otherwise affected (except as may be
expressly provided herein including, without limitation, the right of the
Lessee to reject Vehicles pursuant to Section 2.2 of the Base Lease) for any
reason, including without limitation: (i) any defect in the condition,
merchantability, quality or fitness for use of the Vehicles or any part
thereof; (ii) any damage to, removal, abandonment, salvage, loss, scrapping or
destruction of or any requisition or taking of the Vehicles or any part
thereof; (iii) any restriction, prevention or curtailment of or interference
with any use of the Vehicles or any part thereof; (iv) any defect in, or any
Lien on, title to the Vehicles or any part thereof; (v) any change, waiver,
extension, indulgence or other action or omission in respect of any obligation
or liability of the Lessee or the Lessor; (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Lessee, the Lessor or any other Person, or any
action taken with respect to the Synthetic Lease by any trustee or receiver of
any Person mentioned above, or by any court; (vii) any claim that the Lessee
has or might have against any Person, including without limitation the Lessor;
(viii) any failure on the part of the Lessor to perform or comply with any of
the terms hereof or of any other agreement; (ix) any invalidity or
unenforceability or disaffirmance of the Synthetic Lease or any provision
hereof or any of the other Related Documents or any provision of any thereof,
in each case whether against or by the Lessee or otherwise; (x) any insurance
premiums payable by the Lessee with respect to the Vehicles; or (xi) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not the
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<PAGE> 97
Lessee shall have notice or knowledge of any of the foregoing and whether or
not foreseen or foreseeable. The Synthetic Lease shall be noncancelable by the
Lessees and, except as expressly provided herein, each Lessee, to the extent
permitted by law, waives all rights now or hereafter conferred by statute or
otherwise to quit, terminate or surrender the Synthetic Lease, or to any
diminution or reduction of Rent payable by such Lessee hereunder. All payments
by a Lessee made hereunder shall be final (except to the extent of adjustments
provided for herein), absent manifest error and, except as otherwise provided
herein, no Lessee shall seek to recover any such payment or any part thereof
for any reason whatsoever, absent manifest error. If for any reason whatsoever
the Synthetic Lease shall be terminated in whole or in part by operation of law
or otherwise except as expressly provided herein, each Lessee shall nonetheless
pay an amount equal to each Rent payment at the time and in the manner that
such payment would have become due and payable under the terms of the Synthetic
Lease as if it had not been terminated in whole or in part. All covenants and
agreements of the any Lessee herein shall be performed at its cost, expense and
risk unless expressly otherwise stated.
13. Liens. Except for Permitted Liens, each Lessee shall keep all
Synthetic Lease Vehicles leased by it free of all Liens arising during the
Term. Upon the Vehicle Lease Expiration Date for each Synthetic Lease Vehicle
leased hereunder, the Lessor may, in its discretion, remove any such Lien and
any sum of money that may be paid by the Lessor in release or discharge
thereof, including attorneys' fees and costs, will be paid by the applicable
Lessee upon demand by the Lessor. The Lessor may grant security interests in
the other Master Collateral to the Master Collateral Agent, and in this Lease
and the other Series 1997 VFN Collateral to the Trustee, in accordance with the
Master Collateral Agency Agreement and the Indenture, and each Series 1997
Variable Funding Noteholder may grant security interests in its Series 1997
Variable Funding Notes, the Series 1997 Variable Funding Supplements and the
other Assigned Collateral to certain of its creditors without the consent of
any Lessee. Each Lessee acknowledges that the granting of Liens and the taking
of other actions pursuant to the Indenture and the Related Documents does not
interfere with the rights of the Lessee under the Synthetic Lease.
14. Non-Disturbance. So long as each Lessee satisfies its obligations
hereunder, its quiet enjoyment, possession and use of the Synthetic Lease
Vehicles will not be disturbed during the Term subject, however, to Section 8
of this Annex C and except that the Lessor, the Master Collateral Agent, and
the Trustee each retains the right, but not the duty, to inspect the Vehicles
without disturbing the ordinary conduct of such Lessee's business in accordance
with Section 24.2.
15. Risks of Loss Borne by Lessees. Upon delivery of each Synthetic
Lease Vehicle to the applicable Lessee, as between the Lessor and the Lessee,
the Lessee assumes and bears the risk of loss, damage, theft, taking,
destruction, attachment, seizure, confiscation or requisition and all other
risks and liabilities with respect to such Synthetic Lease Vehicle, however
caused or occasioned, including personal injury or death and property damage,
arising with respect to any Synthetic Lease Vehicle due to the manufacturer,
purchase, acceptance, rejection, delivery, leasing, possession, use,
inspection, registration, operation, condition, maintenance, repair or storage
of such Synthetic Lease Vehicle, howsoever arising.
* * *
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<PAGE> 1
EXHIBIT 4.4
================================================================================
SECOND AMENDED AND RESTATED
MASTER COLLATERAL AGENCY AGREEMENT
among
REPUBLIC INDUSTRIES, INC.,
as Master Servicer,
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as a grantor,
ALAMO RENT-A-CAR, INC.,
as a grantor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as a grantor,
SPIRIT RENT-A-CAR, INC.,
as a grantor,
VALUE RENT-A-CAR, INC.,
as a grantor,
CITIBANK, N.A.
not in its individual capacity but solely
as Master Collateral Agent,
VARIOUS FINANCING SOURCES PARTIES HERETO
and
VARIOUS BENEFICIARIES PARTIES HERETO
Dated as of October 29, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I
CERTAIN DEFINITIONS
1.1. Certain Definitions...................................................3
1.2. Interpretation and Construction......................................12
ARTICLE II
MASTER COLLATERAL AGENT AS LIENHOLDER
FOR THE BENEFICIARIES
2.1. Security Interest....................................................13
2.2. Designation of Beneficiaries.........................................15
2.3. Redesignation of Beneficiaries.......................................16
2.4. Master Servicer's Fleet Report.......................................17
2.5. Master Collateral Account............................................17
2.6. Certificates of Title................................................20
2.7. Release of Collateral................................................20
2.8. Power of Attorney....................................................22
ARTICLE III
THE MASTER SERVICER
3.1. Acceptance of Appointment............................................22
3.2. Master Servicer Functions............................................22
3.3. The Master Servicer Not to Resign....................................23
3.4. Servicing Rights of Master Collateral Agent..........................23
3.5. Incumbency Certificate...............................................23
ARTICLE IV
THE MASTER COLLATERAL AGENT
4.1. Appointment..........................................................24
4.2. Representations......................................................25
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
4.3. Exculpatory Provisions...............................................26
4.4. Limitations on Duties of the Master Collateral Agent.................26
4.5. Resignation and Removal of Master Collateral Agent...................29
4.6. Qualification of Successors to Master Collateral Agent...............30
4.7. Merger of the Master Collateral Agent................................30
4.8. Compensation and Expenses............................................31
4.9. Stamp, Other Similar Taxes and Filing Fees...........................31
4.10. Indemnification......................................................32
ARTICLE V
MISCELLANEOUS
5.1. Amendments, Supplements and Waivers..................................33
5.2. Notices..............................................................34
5.3. Headings.............................................................34
5.4. Severability.........................................................34
5.5. Counterparts.........................................................34
5.6. Conflicts with Financing Documents; Reservation of Rights............35
5.7. Binding Effect.......................................................35
5.8. Governing Law........................................................35
5.9. Effectiveness........................................................35
5.10. Termination of Beneficiary...........................................35
5.11. Termination of this Agreement........................................35
5.12. Assignment by Financing Sources......................................36
5.13. No Bankruptcy Petition Against Financing Sources.....................36
5.14. Jurisdiction; Consent to Service of Process..........................36
5.15. Waiver of Jury Trial.................................................37
5.16. Insurance Notification...............................................37
5.17. Waiver of Set-Off With Respect to NFLP, the Lessee Grantors and
Republic...........................................................37
5.18. Confidentiality......................................................38
EXHIBITS
Exhibit A Financing Source Supplement
Exhibit B Grantor Supplement
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
Exhibit C Master Servicer's Fleet Report
Exhibit D Certificate of Title Locations
Exhibit E Power of Attorney
</TABLE>
-iii-
<PAGE> 5
SECOND AMENDED AND RESTATED
MASTER COLLATERAL AGENCY AGREEMENT
THIS SECOND AMENDED AND RESTATED MASTER COLLATERAL AGENCY AGREEMENT,
dated as of October 29, 1997 (amending and restating the Amended and Restated
Master Collateral Agency Agreement, dated as of April 30, 1996, as supplemented
by the Supplements to Amended and Restated Master Collateral Agency Agreement,
dated as of May 20, 1996, and supplemented and amended by the Supplement and
Amendment to Amended and Restated Master Collateral Agency Agreement, dated as
of December 20, 1996, in each case among National Car Rental System, Inc., a
Delaware corporation, and the other parties named therein (the "Original Amended
and Restated Agreement")) (as the same may be further amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
hereof, this "Agreement"), among REPUBLIC INDUSTRIES, INC., a Delaware
corporation ("Republic"), as master servicer (in such capacity, the "Master
Servicer"), NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP, a Delaware
limited partnership ("NFLP"), as a grantor, ALAMO RENT-A-CAR, INC., a Florida
corporation ("Alamo"), as a grantor, NATIONAL CAR RENTAL SYSTEM, INC., a
Delaware corporation ("National"), as a grantor, SPIRIT RENT-A-CAR, INC., an
Ohio corporation, as a grantor ("Spirit"), VALUE RENT-A-CAR, INC., a Florida
corporation, as a grantor ("Value"), such other grantors as are added pursuant
to a Grantor Supplement substantially in the form of Exhibit B hereto (such
additional grantors, together with Alamo, National, Spirit and Value, the
"Lessee Grantors"), CITIBANK, N.A., a national banking association, not in its
individual capacity but solely as master collateral agent for the Beneficiaries
referred to below (in such capacity, the "Master Collateral Agent"), any other
party which from time to time executes a Financing Source and Beneficiary
Supplement substantially in the form of Exhibit A hereto as a Financing Source
(any such party being herein called individually a "Financing Source" and
collectively, the "Financing Sources"), and any other party which from time to
time executes a Financing Source and Beneficiary Supplement substantially in the
form of Exhibit A hereto as a Beneficiary (any such party being herein called
individually a "Beneficiary" and collectively, the "Beneficiaries").
BACKGROUND
1. The parties to the Original Amended and Restated Agreement (such
term and all other capitalized terms used herein and not otherwise defined
herein having the meanings assigned thereto in Section 1.1 hereof) desire to
amend and restate the Original Amended and Restated Agreement in its entirety to
provide for, among other things, the addition of Republic as Master Servicer
hereunder, the addition of Alamo, Spirit and Value and such other grantors as
may be added by the execution and delivery of a Grantor Supplement as grantors
hereunder in connection with the financing to be provided by NFLP to Alamo,
Spirit and Value and such other grantors and the acquisition of Vehicles by NFLP
to be leased to Alamo, Spirit and Value and
<PAGE> 6
such other grantors (in addition to continuing to provide financing to National
and continuing to acquire Vehicles to be leased to National).
2. National, Alamo, Spirit and Value now own, and each of the Lessee
Grantors will from time to time hereafter acquire or lease, certain Vehicles for
use in their respective daily domestic rental operations. NFLP will from time to
time acquire and lease to each of the Lessee Grantors, certain Vehicles for use
in their respective daily domestic rental operations.
3. Pursuant to the Financing Documents executed by National Fleet
Funding Corporation ("NFC"), a Delaware corporation, NFC has made advances to
NFLP under the Series 1996-2 Note issued by NFLP pursuant to the Series 1996-2
Supplement secured by, among other things, Vehicles and related rights, and NFC
has assigned to the NFC Collateral Agent the Series 1996-2 Note and related
security.
4. Simultaneously herewith, (i) NFLP shall redeem the Series 1996-2
Note and cancel the Series 1996-2 Supplement, (ii) NFC shall change its name to
"Republic Industries Funding Corp." ("RFC"), and (iii) NFLP and the Trustee
shall execute the Series 1997 Variable Funding Supplements and, in exchange for
the Series 1996-2 Note, NFLP shall issue to Republic Funding the Series 1997
Variable Funding Notes to be issued under the Series 1997 Variable Funding
Supplements.
5. Pursuant to the Financing Documents executed, or to be executed, by
NFLP, (i) NFLP has extended financing to National and may from time to time
extend financing to each of the Lessee Grantors secured by, among other things,
Vehicles and related rights, (ii) NFLP has assigned to the Trustee, on behalf of
the holders of the Series 1996-1 Notes, the rights of NFLP as lessor and the
obligations of National as lessee under the Series 1996-1 Lease related to the
Series 1996-1 Notes and related security, (iii) NFLP has assigned to the
Trustee, on behalf of the holders of the Series 1997 Variable Funding Notes
issued under the Series 1997 Variable Funding Supplements, the rights of NFLP as
lessor and the obligations of the Lessee Grantors as lessees under the Series
1997 Lease related to the Series 1997 Variable Funding Notes and related
security, (iv) from time to time NFLP may assign to the Trustee, on behalf of
the holders of additional Series of Shared Collateral Series Notes issued under
the Base Indenture, additional rights of NFLP as Lessor and obligations of the
Lessee Grantors under the Series 1997 Lease related to such Shared Collateral
Series Notes and (v) from time to time NFLP may assign to the Trustee, on behalf
of the holders of additional Series of Notes issued under the Base Indenture,
additional rights of NFLP and obligations of the Lessee Grantors under
additional Financing Documents.
6. Pursuant to the Financing Documents executed, or to be executed, by
NFLP, (i) NFLP may from time to time acquire Vehicles and lease such Vehicles to
each of the Lessee Grantors, and (ii) NFLP is granting a security interest in
the Vehicles acquired by it and related
2
<PAGE> 7
security to the Master Collateral Agent hereunder for the benefit of the Trustee
on behalf of the holders of Notes issued under the Base Indenture.
7. Each of the Lessee Grantors and NFLP may from time to time obtain
financing with respect to Vehicles acquired by it or obtain credit enhancement
to support such financing from other Persons (which Persons providing financing
or credit enhancement to any of the Lessee Grantors may include NFLP) which are
or shall hereafter become parties hereto as Financing Sources or shall hereafter
be named as Beneficiaries with respect to a Financing Source and each Lessee
Grantor is granting a security interest in the Vehicles and related security
acquired by it with such financing to the Master Collateral Agent hereunder for
the benefit of the Trustee on behalf of the holders of certain Series of Notes
issued under the Base Indenture.
8. Citibank, N.A., has agreed to act as Master Collateral Agent, and in
its capacity as Master Collateral Agent to be named as the lienholder of the
Certificates of Title for the Vehicles for the benefit of the Beneficiaries from
time to time.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.1. Certain Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below or set forth in
another section hereof or in any other agreement as indicated. Capitalized terms
not otherwise defined herein (i) shall have the meanings assigned to such terms
in the Definitions List attached as Schedule 1 to the Base Indenture as in
effect on the date hereof or (ii) if defined in the Supplement for a Series of
Notes issued under the Base Indenture, shall, with respect to such Series of
Notes, have the meaning specified in such Supplement (as such Schedule 1 or
Supplement, as applicable, may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms of the Base Indenture,
the "Definitions List").
"Agreement" has the meaning set forth in the preamble hereto.
"Alamo" means Alamo Rent-A-Car, Inc., a Florida corporation, and its
successors and assigns in accordance with the terms hereof.
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<PAGE> 8
"Asset Purchase Agreement" means the Asset Purchase Agreement, dated as
of April 4, 1995, among National Car Rental System, Inc., a wholly owned
subsidiary of GM ("Old National"), as seller, NCR Acquisition Corp., as buyer,
and GM, as amended.
"Assignment Agreement" means each agreement with respect to each
Manufacturer and its Manufacturer Program, entered into or to be entered into
among NFLP and/or a Lessee Grantor, as assignor, and the Master Collateral
Agent, as assignee, and acknowledged by such Manufacturer, assigning to the
Master Collateral Agent certain of NFLP's and/or such Lessee Grantor's right,
title and interest in such Manufacturer Program as it relates to Vehicles
purchased from such Manufacturer.
"Authorized Agents" has the meaning set forth on Section 3.5.
"Authorized Employee" has the meaning set forth in Section 2.5(b).
"Base Indenture" means the Base Indenture dated as of April 30, 1996
between NFLP and the Trustee, as amended by the Supplement and Amendment to the
Base Indenture, dated as of December 20, 1996, between NFLP and the Trustee, as
the same may be further amended, supplemented, restated or otherwise modified
from time to time in accordance with its terms, exclusive of Series Supplements
creating a new Series of Notes.
"Beneficiary" has the meaning set forth in the preamble hereto.
"Business Day" means any day that is not (i) a Saturday, Sunday, or
(ii) any other day on which banks are authorized or obligated by law or
executive order to close in New York City, New York or the city in which the
Corporate Trust Office is located, or (iii) in connection with any Financing
Document any other day not designated as a "Business Day" in such Financing
Document.
"Capitalized Cost" shall, with respect to a Vehicle, have the meaning
specified in the Financing Documents of the related Financing Source.
"CSFB" means Credit Suisse First Boston, a Swiss banking corporation.
"Corporate Trust Office" means the principal corporate trust office of
the Master Collateral Agent, located at 111 Wall Street, 5th Floor, New York,
New York 10043, Attention: Jenny Cheng, or at such other address as the Master
Collateral Agent may designate from time to time by notice to Republic.
"Default" means any event of default or amortization event or any
default, event, act or condition which with the lapse of time or notice or both
would become an event of default or
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amortization event (other than any scheduled amortization event) under any of
the Financing Documents.
"Depreciation Charge" means with respect to any Vehicle which is a
Related Vehicle of a Beneficiary, Depreciation Charge as defined in the
Financing Documents related to such Beneficiary, and if Depreciation Charge is
not defined in such Financing Documents, "Depreciation Charge" means, with
respect to any Vehicle covered by a Manufacturer Program, the scheduled daily
depreciation charge set forth by the Manufacturer in its Manufacturer Program
for such Vehicle calculated as set forth in such Manufacturer Program.
"Designated Vehicle" means a Vehicle owned by NFLP or a Lessee Grantor
with respect to which the applicable Servicer, such Lessee Grantor or NFLP has
notified the Master Collateral Agent in writing that such Vehicle has been
designated to be exchanged for one or more Replacement Vehicles or released for
exchange pursuant to an Exchange Agreement.
"Eligible Receivables" has the meaning set forth in the related
Financing Documents.
"Exchange Agreement" means an agreement among NFLP, a Lessee Grantor
and the Qualified Intermediary which provides for the assignment by NFLP or such
Lessee Grantor to the Qualified Intermediary of (i) Exchanged Vehicles, (ii) all
Exchanged Vehicle Repurchase Rights, (iii) all right, title and interest of NFLP
or a Lessee Grantor in, to and under any contracts for the sale of any Exchanged
Vehicle and (iv) all right, title and interest of NFLP in, to and under any
contracts for the purchase of Replacement Vehicles; provided that any such
Exchange Agreement covering Vehicles financed under any Financing Documents will
not become effective with respect to Vehicles financed under such Financing
Documents until NFLP and such Lessee Grantor obtain (i) from each Rating Agency
written confirmation that entry into such Exchange Agreement will not result in
the reduction or withdrawal of the then current rating of any outstanding
securities or indebtedness issued by a Financing Source and (ii) opinions of
counsel with respect to perfection, priority and non-consolidation in
substantially the same form as those delivered as of the Closing Date under such
Financing Documents.
"Exchanged Vehicle" means a Designated Vehicle that (i) (a) if subject
to a Manufacturer Program, has been accepted for repurchase or auction by the
Manufacturer under the related Manufacturer Program or (b) if not subject to a
Manufacturer Program, has been sold to a third party, (ii) (a) with respect to
which NFLP or the applicable Lessee Grantor has received or concurrently
receives delivery of one or more Replacement Vehicles with an aggregate Net Book
Value equal to or greater than the Termination Value of such Designated Vehicle
or (b) with respect to which the release of the lien of the Master Collateral
Agent thereon would not cause an Asset Amount Deficiency to exist and (iii) with
respect to which the Lien of the Master Collateral Agent has been released in
accordance with Section 2.7 of this Agreement; provided that until the Trustee
provides written notice to the contrary to the Master Collateral Agent, no
Vehicle that is a Related Vehicle with respect to the Trustee shall be an
Exchanged Vehicle.
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"Exchanged Vehicle Insurance Proceeds" means, with respect to each
Exchanged Vehicle, all payments under insurance policies (whether or not the
Master Collateral Agent is named as the loss payee thereof) or any warranty
payable by reason of loss or damage to, or otherwise with respect to, any
Exchanged Vehicle.
"Exchanged Vehicle Repurchase Rights" means, with respect to each
Exchanged Vehicle that is subject to a Manufacturer Program, all right, title
and interest of NFLP or the applicable Lessee Grantor in, to and under each
Manufacturer Program associated with any Exchanged Vehicles, to the extent such
right, title and interest relates to such Exchanged Vehicles, including any
amendments thereof and all monies due and to become due in respect of such
Exchanged Vehicle under or in connection with such Manufacturer Program, whether
payable as Vehicle repurchase prices, auction sales proceeds, fees, expenses,
costs, indemnities, insurance recoveries, damages for breach of the Manufacturer
Program or otherwise and all rights to compel performance and otherwise exercise
remedies thereunder.
"Excluded Payments" means the following amounts payable to NFLP or any
of the Lessee Grantors pursuant to the Manufacturer Programs: (i) all incentive
payments payable to NFLP or any of the Lessee Grantors in respect of purchases
and other dispositions of Vehicles under the Manufacturer Programs (but not any
amounts payable to any of the Lessee Grantors or NFLP by a Manufacturer as an
incentive for selling Program Vehicles outside of the related Manufacturer
Program), (ii) all amounts payable to NFLP or any of the Lessee Grantors as
compensation for the preparation by NFLP or any of the Lessee Grantors of newly
delivered vehicles under the Manufacturer Programs, (iii) all amounts payable to
NFLP or any of the Lessee Grantors in reimbursement for warranty work performed
by NFLP or any of the Lessee Grantors on the vehicles under the Manufacturer
Programs and (iv) all amounts payable to National under Section 6.11 of the
Asset Purchase Agreement, dated as of April 4, 1995 among GM, Old National and
National.
"Financing Documents" means, with respect to a Financing Source, any
and all agreements, instruments and contracts evidencing or related to any
financing arrangement between NFLP and/or any of the Lessee Grantors and a
Financing Source (and/or a Beneficiary) providing for the making or credit
enhancing of loans or advances to NFLP and/or any of the Lessee Grantors, the
purchase of assets, or undivided interests therein, from NFLP or any of the
Lessee Grantors, the lease to any of the Lessee Grantors of Vehicles, except any
agreement to provide financing to a Qualified Intermediary, any other
arrangement providing for the financing of the Vehicles and all agreements,
indentures, instruments and contracts pursuant to which any Financing Source
grants an interest in any portion of the Master Collateral to a Beneficiary, in
any such case, as such agreements, indentures, instruments and contracts may be
amended, supplemented, restated, extended or otherwise modified from time to
time in accordance with the terms thereof.
"Financing Source" has the meaning set forth in the preamble hereto.
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"Financing Source and Beneficiary Supplement" means a supplement to
this Agreement, substantially in the form of Exhibit A hereto.
"Fleet Report" means the monthly report substantially in the form of
Exhibit C hereto required to be delivered by the Master Servicer to the Master
Collateral Agent pursuant to Section 2.4 hereof.
"Grantor Supplement" means a supplement to this Agreement,
substantially in the form of Exhibit B hereto.
"Guaranteed Depreciation Program" means a guaranteed depreciation
program pursuant to which a Manufacturer has agreed with any of the Lessee
Grantors or NFLP to (a) cause Vehicles manufactured by it or one of its
Affiliates that are turned back during the specified Repurchase Period to be
sold at Auction by an auction dealer, (b) cause the proceeds of any such sale to
be paid to any of the Lessee Grantors or NFLP, as applicable, by such auction
dealer within seven days of such sale and (c) pay to any of the Lessee Grantors
or NFLP, as applicable, the excess, if any, of the guaranteed payment amount
with respect to any such Vehicle calculated as of the Disposition Date in
accordance with the provisions of such guaranteed depreciation program over the
amount paid to any such Lessee Grantor or NFLP, as applicable, by an auction
dealer pursuant to clause (b) above.
"Incumbency Certificate" has the meaning set forth in Section 3.5.
"Initial Fleet" (i) means with respect to the Series 1996-1 Notes,
Vehicles titled in the name of National and the Vehicles acquired by National
from Old National under the Asset Purchase Agreement on June 9, 1995 and
refinanced by NFLP under the related Financing Documents on the Series 1996-1
Closing Date, and (ii) with respect to the Series 1997 Variable Funding Notes
and any other Series of Notes other than the Series 1996-1 Notes shall have the
meaning specified in the Financing Documents related to such Financing Source.
"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement, dated as of June 7, 1995, among National, certain subordinated
creditors listed on Schedule A thereto and certain senior creditors listed on
Schedule B thereto, as modified by the Joinder by Senior Debt Holder, executed
by BONY as of April 30, 1996, the Acceptance by Subordinated Debt Holder,
executed by GM as of April 30, 1996, the Acceptance by Subordinated Debt Holder,
executed by Credit Agricole as of May 24, 1996, and the Acceptance by
Subordinated Debt Holder, executed by BONY as of May 29, 1996, and as amended by
the Amendment to Intercreditor and Subordination Agreement, dated as of December
20, 1996, and as further amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"Investment Letter" has the meaning set forth in Section 2.5(e) hereof.
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"Lessee Grantor Master Collateral" has the meaning set forth in Section
2.1(a).
"Lessee Grantors" has the meaning set forth in the preamble hereto.
"Majority Beneficiaries" means, at any time, Beneficiaries (other than
Republic and any of its Affiliates (excluding NFLP), if applicable) that hold or
represent or act on behalf of Financing Sources (other than Republic and any of
its Affiliates (excluding NFLP), if applicable) that hold (including by way of
pledge or assignment) more than 66-2/3% (in the case of Series 1996-1 Notes) or
50% (in the case of Series 1997 Variable Funding Notes and any other Series of
notes other than the Series 1996-1 Notes) of the outstanding principal amount of
indebtedness of any of the Lessee Grantors or NFLP under the Financing Documents
related to a Financing Source and Beneficiary Supplement at such time (excluding
any such indebtedness held by any of the Lessee Grantors or NFLP).
"Manufacturer Program" means any Repurchase Program or Guaranteed
Depreciation Program.
"Master Collateral" has the meaning set forth in Section 2.1 (b).
"Master Collateral Account" has the meaning set forth in Section
2.5(a).
"Master Collateral Agent" has the meaning set forth in the preamble
hereto, and includes any successor to Citibank, N.A., in its capacity as Master
Collateral Agent in accordance with the terms hereof.
"Master Servicer" means Republic and any successor thereto.
"Moody's" means Moody's Investors Services, Inc.
"National" means National Car Rental System, Inc., a Delaware
corporation, and its successors and assigns in accordance with the terms hereof.
"Net Book Value" means, at any time with respect to each Related
Vehicle, such Vehicle's Capitalized Cost minus the aggregate Depreciation
Charges, if any, accrued for such Vehicle through the last day of the Related
Month and/or as more specifically calculated in accordance with the Financing
Documents for the related Financing Source.
"NFLP" means National Car Rental Financing Limited Partnership, a
Delaware limited partnership, and its successors and assigns in accordance with
the terms hereof.
"NFLP Master Collateral" has the meaning set forth in Section 2.1(b).
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"Notes" or "Series of Notes" means any of the series of Rental Car
Asset Backed Notes issued by NFLP pursuant to the Base Indenture and a Series
Supplement.
"Old National" has the meaning set forth in the definition of Asset
Purchase Agreement.
"Original Amended and Restated Agreement" has the meaning set forth in
the preamble hereto.
"Permitted Investments" means negotiable instruments or securities
represented by instruments in bearer or registered or in book entry form which
evidence (i) obligations the full and timely payment of which is to be made by
or is fully guaranteed by the United States of America; (ii) demand deposits,
time deposits in, or certificates of deposit issued by, any depositary
institution or trust company incorporated under the laws of the United States of
America or any state thereof and subject to supervision and examination by
Federal or State banking or depositary institution authorities; provided,
however, that at the time of the investment or contractual commitment to invest
therein, the certificates of deposit or short-term deposits, if any, or
long-term unsecured debt obligations (other than such obligation whose rating is
based on collateral or on the credit of a Person other than such institution or
trust company) of such depositary institution or trust company shall have a
credit rating from Standard & Poor's of A-1 and from Moody's of at least P-1, in
the case of certificates of deposit or short-term deposits, or a rating from
Standard & Poor's not lower than AA or from Moody's not lower than Aa3, in the
case of long-term unsecured debt obligations; (iii) commercial paper having, at
the time of the investment or contractual commitment to invest therein, a rating
from Standard & Poor's of at least A-1 and from Moody's of at least P-1; (iv)
demand deposits or time deposits which are fully insured by the Federal Deposit
Insurance Corporation; (v) bankers, acceptances issued by any depositary
institution or trust company described in clause (ii) above; (vi) investments in
money market funds rated AAm or AAmG by Standard & Poor's or otherwise approved
in writing by Standard & Poor's and a comparable rating from Moody's or
otherwise approved in writing by Moody's; (vii) Eurodollar time deposits having
a credit rating from Standard & Poor's of A-1 and from Moody's of at least P-1;
(viii) repurchase agreements involving any of the Permitted Investments
described in clauses (i) and (vii) above and the certificates of deposit
described in clause (ii) above which are entered into with a depository
institution or trust company, having a commercial paper or short-term
certificate of deposit rating of A-1 by Standard & Poor's and at least P-1 by
Moody's; and (ix) any other instruments or securities, if the Rating Agencies
confirm in writing that such investment in such instruments or securities will
not adversely affect any ratings with respect to any Series of Notes or the
Commercial Paper Notes (as defined in the Series 1997-1 Supplement).
"Pro rata" means, at any time as to any interest or amount with respect
to any Beneficiary, a fraction the numerator of which is the then aggregate
indebtedness and other obligations of each of the Lessee Grantors and NFLP, as
applicable, then owing to the Financing Source and relating to such Beneficiary
as specified in a Financing Source and Beneficiary
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Supplement and the denominator of which is the then aggregate indebtedness and
other obligations of each of the Lessee Grantors and NFLP, as applicable, then
owing to all Financing Sources as specified under all Financing Source and
Beneficiary Supplements; provided, however, that if a Beneficiary must return
any amount paid with respect to such obligations for any reason, such returned
amounts shall be reinstated as obligations for purposes of the foregoing
calculation.
"Qualified Institution" means a depositary institution or trust company
(which may include the Master Collateral Agent) organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia; provided, however, that at all times such depositary institution or
trust company is a member of the Federal Deposit Insurance Corporation and has a
short-term debt rating of at least A-1 by S&P and P-1 by Moody's.
"Republic" means Republic Industries, Inc., a Delaware corporation, and
its successors and assigns in accordance with the terms hereof.
"Rating Agencies" means any rating agency, to the extent such agency,
at the request of any of the Lessee Grantors or NFLP pursuant to the applicable
Financing Documents, is then rating the outstanding securities or indebtedness
of any Financing Source.
"Related Master Collateral" has the meaning set forth in Section 2.2.
"Related Month" means, with respect to any date, the most recently
ended calendar month.
"Related Vehicles" has the meaning set forth in Section 2.2.
"Replacement Vehicle" means an Eligible Vehicle (i) which is owned by
NFLP or National, (ii) with respect to which the Master Collateral Agent is
noted as the first lienholder on the Certificate of Title therefor, (iii) which
is subject to no Liens other than the Lien of the Master Collateral Agent and
(iv) which (a) has been acquired pursuant to an Exchange Agreement as a
Replacement Vehicle for a Designated Vehicle or Designated Vehicles (b)(1) has a
Net Book Value equal to or greater than the aggregate Termination Value of the
Designated Vehicles or Vehicles which it replaces or (2) has a Net Book Value
when aggregated with the Net Book Value of one or more other Replacement
Vehicles tendered in exchange for a Designated Vehicle equal to or greater than
the Termination Value for such Designated Vehicle and (c) has been designated on
the applicable Servicer's computer system as a Related Vehicle with respect to
the Beneficiary to which the related Designated Vehicle or Designated Vehicles
are designated.
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"Repurchase Period" means, with respect to any Vehicle covered by a
Manufacturer Program, the period during which such Vehicle may be turned in to
the Manufacturer thereof for repurchase pursuant to the applicable Manufacturer
Program.
"Repurchase Program" means a program pursuant to which a Manufacturer
has agreed with any of the Lessee Grantors or NFLP to repurchase Vehicles
manufactured by it or one of its Affiliates during the specified Repurchase
Period.
"Series 1996-1 Lease" means the Master Motor Vehicle Lease and
Servicing Agreement, dated as of April 30, 1996, executed in connection with the
issuance of the related Series of Notes, among NFLP, as lessor, and National, as
lessee.
"Series 1996-1 Notes" means, collectively, the Rental Car Asset Backed
Notes executed by NFLP and authenticated and delivered by or on behalf of the
Trustee, substantially in the form of Exhibit A to the Series 1996-1 Supplement.
"Series 1996-1 Supplement" means the Series 1996-1 Supplement, dated as
of April 30, 1996, to the Base Indenture, between NFLP, as issuer, and the
Trustee.
"Series 1996-2 Notes" means, collectively, the Variable Funding Rental
Car Asset Backed Notes executed by NFLP and authenticated and delivered by or on
behalf of the Trustee, substantially in the form of Exhibit A to the Series
1996-2 Supplement.
"Series 1996-2 Supplement" means the Series 1996-2 Supplement, dated as
of December 20, 1996, between NFLP, as issuer, and the Trustee.
"Series 1997 Lease" means the Master Motor Vehicle Lease and Servicing
Agreement, dated as of October 29, 1997, executed in connection with the
issuance of the Series 1997 Variable Funding Notes, among NFLP, as lessor,
National, Alamo, Value and Spirit, and certain affiliates thereof, as lessees
and servicers, and Republic, as guarantor and Master Servicer, as the same may
be amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof.
"Series 1997 Supplements" means, collectively, the Series 1997-1
Supplement, the Series 1997-2 Supplement, the Series 1997-3 Supplement, the
Series 1997-4 Supplement and any Series Supplement providing for the issuance of
Shared Collateral Series Notes, pursuant to which the Series 1997 Variable
Funding Notes are issued by NFLP.
"Series 1997 Variable Funding Notes" means, collectively, the Variable
Funding Rental Car Notes executed by NFLP and authenticated and delivered by or
on behalf of the Trustee, substantially in the form of Exhibit A to the Series
1997 Supplements.
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"Series 1997-1 Note" means any one of the Variable Funding Rental Car
Asset Backed Notes executed by NFLP and authenticated and delivered by or on
behalf of the Trustee, substantially in the form of Exhibit A to the Series
1997-1 Supplement.
"Series 1997-1 Supplement" means the Series 1997-1 Supplement, dated as
of October 29, 1997, to the Base Indenture, among NFLP, as issuer, the Trustee
and the Enhancement Agent.
"Series 1997-2 Supplement" means the Series 1997-2 Supplement, dated as
of October 29, 1997, to the Base Indenture, among NFLP, as issuer, the Trustee
and the Enhancement Agent.
"Series 1997-3 Supplement" means the Series 1997-3 Supplement, dated as
of October 29, 1997, to the Base Indenture, among NFLP, as issuer, the Trustee
and the Enhancement Agent.
"Series 1997-4 Supplement" means the Series 1997-4 Supplement, dated as
of October 29, 1997, to the Base Indenture, among NFLP, as issuer, the Trustee
and the Enhancement Agent.
"Series Supplement" means a supplement to the Base Indenture complying
(to the extent applicable) with the terms of Section 2.3 or Article 11 of the
Base Indenture.
"Shared Collateral Series Notes" means the Series 1997 Variable Funding
Notes and any other Series of Notes issued pursuant to a Series Supplement that
provides that the obligations of NFLP with respect to such Series of Notes are
secured by all or part of the collateral securing the other Series 1997 Variable
Funding Notes pursuant to the related Series 1997 Supplements.
"Spirit" means Spirit Rent-A-Car, Inc., an Ohio corporation, and its
successors and assigns in accordance with the terms hereof.
"Standard & Poor's" means Standard & Poor's Structured Ratings Group.
"Trustee" means, initially, The Bank of New York, as trustee under the
Base Indenture and any Series Supplement, or any successor trustee thereunder.
"Value" means Value Rent-A-Car, Inc., a Florida corporation, and its
successors and assigns in accordance with the terms hereof.
"Vehicle" means each passenger automobile or light truck owned by any
of the Lessee Grantors or NFLP and purchased, financed or refinanced by any of
the Lessee Grantors or NFLP with proceeds obtained from a Financing Source (i)
which is in the Initial Fleet or (ii) with
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respect to which the Lien of the Master Collateral Agent is noted on the
Certificate of Title, together with any replacement parts and repairs thereto.
"VFN Closing Date" means October 29, 1997.
SECTION 1.2. Interpretation and Construction. Unless the context of
this Agreement otherwise clearly requires, references to the plural include the
singular, to the singular include the plural and to the part include the whole.
The words "hereof ", "herein", "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding". Sections and other headings contained in this Agreement are for
reference purposes only and shall not control or effect the construction of this
Agreement or the interpretation hereof in any respect. Section, subsection and
exhibit references are to this Agreement unless otherwise specified. As used in
this Agreement, the masculine, feminine or neuter gender shall each be deemed to
include the others whenever the context so indicates.
ARTICLE II
MASTER COLLATERAL AGENT AS LIENHOLDER
FOR THE BENEFICIARIES
SECTION 2.1. Security Interest.
(a) Grant by the Lessee Grantors. As security for the payment of the
respective obligations from time to time owing by each of the Lessee Grantors to
each Financing Source (and any Beneficiary as assignee thereof) under the
related Financing Documents, each of the Lessee Grantors hereby (i) with respect
to National, confirms its grant, pledge and assignment pursuant to the Original
Amended and Restated Agreement and (ii) to the extent not covered under clause
(i), grants, pledges and assigns to the Master Collateral Agent for the benefit
of the Beneficiaries, a continuing, first priority security interest on all
right, title and interest of such Lessee Grantor in, to and under the following,
whether existing or acquired as of the Closing Date with respect to any Series
of Notes or any Financing Documents related to a Financing Source or thereafter
(the "Lessee Grantor Master Collateral"):
(i) all Vehicles owned by such Lessee Grantor and purchased,
financed or refinanced by such Lessee Grantor with proceeds obtained
from a Financing Source and all Certificates of Title with respect
thereto;
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(ii) the Master Collateral Account and all funds from time to
time deposited or held therein;
(iii) all investments of funds on deposit in the Master
Collateral Account, and all certificates, instruments and documents
related to such investments;
(iv) each Manufacturer Program associated with the Vehicles
referred to in (i) above owned by such Lessee Grantor to the extent
such right, title and interest relates to such Vehicles, including any
amendments thereof and all monies due and to become due in respect of
such Vehicles under or in connection with each such Manufacturer
Program (other than Excluded Payments) whether payable as Vehicle
repurchase prices, auction sales proceeds, guaranteed depreciation
payments, fees, expenses, costs, indemnities, insurance recoveries,
damages for breach of the Manufacturer Program or otherwise and all
rights to compel performance and otherwise exercise remedies
thereunder;
(v) all sale or other disposition proceeds payable by any
Person in respect of the disposition of Vehicles purchased, financed or
refinanced by such Lessee Grantor with proceeds obtained from a
Financing Source, including, without limitation, auction proceeds;
(vi) all payments under insurance policies (whether or not
the Master Collateral Agent is named as the loss payee thereof) or any
warranty payable by reason of loss or damage to, or otherwise with
respect to, any of the Vehicles owned by such Lessee Grantor; and
(vii) any and all products and proceeds of any of the
foregoing; provided that, in no event shall any of the foregoing
include any right, title or interest in Excluded Payments, the Fleet
Finance Agreement or the NFLP Fleet Finance Agreement and payments made
thereunder.
Notwithstanding anything to the contrary contained in this Master Collateral
Agency Agreement, the pledge and security interest granted by each of the Lessee
Grantors hereunder is an extension of the pledge and security interest granted
under the Original Amended and Restated Agreement.
(b) Grant by NFLP. As security for the payment of the respective
obligations from time to time owing by NFLP to each Financing Source (and any
Beneficiary as assignee thereof) under the related Financing Documents, NFLP
hereby (i) confirms its grant, pledge and assignment pursuant to the Original
Amended and Restated Agreement and (ii) to the extent not covered by (i), hereby
grants, pledges and assigns to the Master Collateral Agent for the benefit of
the Beneficiaries, a continuing, first priority security interest on all NFLP's
right, title and interest in, to and under the following, whether now or
hereafter existing or acquired (the "NFLP
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Master Collateral" and together with the Lessee Grantor Master Collateral, the
"Master Collateral"):
(i) all Vehicles owned by NFLP and purchased, financed or
refinanced by NFLP with proceeds obtained from a Financing Source and
all Certificates of Title with respect thereto;
(ii) the Master Collateral Account and all funds from time to
time deposited or held therein;
(iii) all investments of funds on deposit in the Master
Collateral Account, and all certificates, instruments and documents
related to such investments;
(iv) each Manufacturer Program associated with the Vehicles
referred to in (i) above owned by NFLP to the extent such right, title
and interest relates to such Vehicles, including any amendments thereof
and all monies due and to become due in respect of such Vehicles under
or in connection with each such Manufacturer Program (other than
Excluded Payments) whether payable as Vehicle repurchase prices,
auction sales proceeds, guaranteed depreciation payments, fees,
expenses, costs, indemnities, insurance recoveries, damages for breach
of the Manufacturer Program or otherwise and all rights to compel
performance and otherwise exercise remedies thereunder;
(v) all sale or other disposition proceeds payable by any
Person in respect of the disposition of Vehicles purchased, financed or
refinanced by such Lessee Grantor with proceeds obtained from a
Financing Source, including, without limitation, auction proceeds;
(vi) all payments under insurance policies (whether or not
the Master Collateral Agent is named as the loss payee thereof) or any
warranty payable by reason of loss or damage to, or otherwise with
respect to, any of the Vehicles owned by NFLP; and
(vii) any and all products and proceeds of any of the
foregoing; provided that, in no event shall any of the foregoing
include any right, title or interest in Excluded Payments, the Fleet
Finance Agreement or the NFLP Fleet Finance Agreement and payments made
thereunder.
Notwithstanding anything to the contrary contained in this Master Collateral
Agency Agreement, the pledge and security interest granted by NFLP hereunder is
an extension of the pledge and security interest granted under the Original
Amended and Restated Agreement.
Each of Republic, the Lessee Grantors, NFLP, each Financing Source and
each Beneficiary hereby authorizes the Master Collateral Agent to be named as
the first lienholder on the Certificates of Title for the Vehicles (or, with
respect to any Vehicles in the Initial Fleet, to be
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the assignee of the first lienholder on the Certificates of Title), in a
representative capacity, as Master Collateral Agent for the Beneficiaries. The
Master Collateral Agent agrees that all of its right, title and interest in and
to the Master Collateral shall be solely for the respective benefit of each
Beneficiary.
Each Financing Source and each Beneficiary hereby directs the Master
Collateral Agent to execute and deliver as of the date set forth therein in its
capacity as Master Collateral Agent hereunder each Assignment Agreement
hereafter entered into by any of the Lessee Grantors or NFLP.
SECTION 2.2. Designation of Beneficiaries. Any party which from time to
time executes a Financing Source and Beneficiary Supplement as a beneficiary is
hereby designated as the Beneficiary with respect to the Vehicles designated on
the Master Servicer's computer system as Vehicles acquired by or financed with
the proceeds advanced by the related Financing Source or as otherwise provided
in such Financing Source and Beneficiary Supplement with respect to such
Beneficiary ("Related Vehicles") and the other Master Collateral related thereto
(the "Related Master Collateral"). The designation of Related Vehicles with
respect to each Beneficiary on the Master Servicer's computer system shall be
considered prima facie evidence of such Beneficiary's rights with respect to
such Related Vehicles and the Related Master Collateral. If at any time a
Beneficiary reasonably believes that such designation by the Master Servicer is
incorrect, it may dispute such designation by delivering a written notice to the
Master Collateral Agent setting forth its claim as to the correct designation of
its Related Vehicles (each a "Redesignation"). The Master Collateral Agent
shall, promptly upon receipt of such notice, distribute a copy thereof to each
of Republic, the Lessee Grantors, NFLP, each Financing Source and each
Beneficiary (other than the Beneficiary disputing the Master Servicer's
designation of Related Vehicles). Each such Financing Source and Beneficiary
shall, within ten (10) Business Days of receipt of such notice from the Master
Collateral Agent, notify the Master Collateral Agent in writing as to whether it
consents to the disputing Beneficiary's Redesignation. If the Master Collateral
Agent receives written notice from each such Beneficiary and Financing Source
containing its consent to the disputing Beneficiary's Redesignation within the
period set forth above, it shall promptly notify the Master Servicer, and the
Master Servicer shall effect such Redesignation. Each Beneficiary shall be
entitled to the benefits of this Agreement only with respect to its Related
Vehicles and Related Master Collateral. No Beneficiary shall have any interest
in (i) any Vehicle which is not a Related Vehicle as to such Beneficiary, or
(ii) any funds in the Master Collateral Account that are proceeds of any Vehicle
which is not a Related Vehicle as to such Beneficiary, (iii) rights under any
Manufacturer Program with respect to any Vehicle which is not a Related Vehicle
as to such Beneficiary or (iv) any other Master Collateral which is not Related
Master Collateral as to such Beneficiary, in each case regardless of the time,
order, manner or nature of attachment or perfection of security interests in
Vehicles (including the giving of or failure to give any purchase money security
interest or other notice, or the order of filing financing statements), or any
provision of the Uniform Commercial Code, the federal Bankruptcy Code, or other
applicable law.
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SECTION 2.3. Redesignation of Beneficiaries. Each of the Lessee
Grantors and NFLP may, from time to time (i) finance additional Vehicles (and,
to the extent provided in the related Financing Documents, Eligible
Receivables), with proceeds from a Financing Source, and/or (ii) refinance
Vehicles then owned by it (and, to the extent provided in the related Financing
Documents, Eligible Receivables) and financed by a Financing Source with
proceeds from a different Financing Source. In connection therewith, the Master
Servicer shall designate on its computer system the Financing Source the
proceeds of which are used to finance or refinance such Vehicles and/or such
Eligible Receivables, and, upon repayment of the old Financing Source (x) in the
case of refinanced Vehicles and/or such Eligible Receivables, as the case maybe,
such Vehicles and/or such Eligible Receivables shall automatically constitute
Related Vehicles and/or Eligible Receivables of the Beneficiary related to such
new Financing Source, and (y) in the case of a refinancing, such Vehicles and/or
such Eligible Receivables, as the case maybe, shall cease to be Related Vehicles
and/or Eligible Receivables of the Beneficiary related to the old Financing
Source. Notwithstanding the foregoing, in connection with a refinancing, the
right of the Master Servicer to designate Vehicles (and, to the extent provided
in the related Financing Documents, Eligible Receivables) that will cease to be
Related Vehicles and/or Eligible Receivables with respect to a Beneficiary,
shall be subject to the conditions that immediately after giving effect to such
designation:
(a) no Default shall exist under the Financing Documents
related to such Beneficiary (provided, however, that the Master
Servicer shall have the right to make such designation for the purpose
of curing such Default); and
(b) such Beneficiary shall continue to have designated to it
Related Vehicles and, to the extent provided in the Financing Documents
of such Beneficiary, Eligible Receivables with a collateral value (as
determined under the Financing Documents relating to the Financing
Source with respect to such Beneficiary) not less than the collateral
value required in such Financing Documents to support the outstanding
loans or securities issued under such Financing Documents.
Each designation or redesignation by the Master Servicer shall automatically
constitute a representation and warranty for the benefit of such Beneficiary
that the conditions in Sections 2.3(a) and 2.3(b) have been met and that all
Related Vehicles of a Beneficiary meet the eligibility criteria set forth in the
relevant Financing Documents and that, in the case of refinanced Vehicles, the
loans or securities of the original Financing Source with respect to such
refinanced Vehicles have been repaid. Such Vehicles shall be redesignated at
their Net Book Value calculated in accordance with the Financing Documents
relating to the Financing Source with respect to the applicable Beneficiary.
Except as provided in Section 2.5(c), no Beneficiary shall have any interest in
any Vehicle or other Master Collateral for which it is no longer designated as
the Beneficiary, it being understood that, subject to the satisfaction of the
conditions set forth in Sections 2.3(a) and 2.3(b) and repayment of the loans or
securities of the original Financing
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Source with respect to refinanced Vehicles, any such redesignation shall
automatically constitute a release by such Beneficiary of any interest therein.
SECTION 2.4. Master Servicer's Fleet Report. Within twenty (20) days
after the end of each calendar month, the Master Servicer shall furnish to the
Master Collateral Agent a report (which may be on diskette, magnetic tape or
other electronic medium reasonably acceptable to the Master Collateral Agent)
substantially in the form of Exhibit C ("Fleet Report") showing for each
Beneficiary as of the last day of such calendar month and after giving effect to
the most recent redesignation of Vehicles (i) the Related Vehicles designated to
such Beneficiary identified by the vehicle identification numbers with respect
to such Related Vehicles, (ii) whether such Related Vehicles are owned by Alamo,
National, Spirit, Value, any other Lessee Grantor or NFLP, (iii) the Capitalized
Cost and Net Book Value of such Related Vehicles (calculated in accordance with
the Financing Documents relating to the applicable Financing Source) and (iv)
the state in which each Vehicle is titled. The Master Collateral Agent shall
make the Fleet Report available for inspection by any Beneficiary at the
Corporate Trust Office, during normal business hours, upon such Beneficiary's
prior written request.
SECTION 2.5. Master Collateral Account. (a) The Master Collateral Agent
shall establish and maintain for the benefit of the Beneficiaries, or cause to
be established and maintained, an account (the "Master Collateral Account"), in
the name of Master Collateral Agent, bearing a designation clearly indicating
that the funds deposited therein are held for the respective benefit of each
Beneficiary. The Master Collateral Account shall be maintained (i) with a
Qualified Institution, or (ii) as a segregated trust account with the corporate
trust department of a depository institution or trust company having corporate
trust powers so long as such institution has a credit rating for its unsecured
long-term debt not lower than Baa3 by Moody's and not lower than investment
grade by Standard & Poor's. If the Master Collateral Account is not maintained
in accordance with the previous sentence, then within ten (10) Business Days of
obtaining knowledge of such fact, the Master Collateral Agent shall establish a
new Master Collateral Account which complies with such sentence and transfer
into the new Master Collateral Account all funds from the non-qualifying Master
Collateral Account. Initially, the Master Collateral Account will be established
with the Master Collateral Agent.
(b) A Lessee Grantor or NFLP may enter into an Exchange Agreement with
respect to Vehicles owned by each of them respectively, an interest in which has
been pledged hereunder; provided that the conditions to effectiveness of any
such Exchange Agreement with respect to such Vehicles specified in the
definition thereof shall have been satisfied. A Lessee Grantor or NFLP may
designate certain Vehicles as Designated Vehicles to be exchanged, pursuant to
an Exchange Agreement, for one or more Replacement Vehicles. Upon receiving
either (i) the required Replacement Vehicle or Replacement Vehicles as Master
Collateral and confirming their compliance with the requirements set forth in
the definition of "Replacement Vehicle" by receipt of Vehicle Orders and a
Vehicle Acquisition Schedule, if any, covering such Replacement Vehicle or
Vehicles, or (ii) written confirmation from the Master Servicer, dated
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not more than seven (7) days prior to the requested release date, to the effect
that the release of the Master Collateral Agent's Lien on such Designated
Vehicle and on any Exchanged Vehicle Repurchase Rights and sales proceeds with
respect thereto will not result in the Required Asset Amount (calculated on such
date) exceeding the Aggregate Asset Amount (calculated on such date, giving
effect to all increases in the Ineligible Asset Amount through such date), the
Master Collateral Agent shall release its Lien on the related Designated Vehicle
in accordance with Section 2.7 hereof, and such Designated Vehicle shall become
an Exchanged Vehicle. All proceeds related to Exchanged Vehicles, whether sale
proceeds, amounts due under a Manufacturer Program, or payments from
Manufacturers in respect of turned-back Exchange Vehicles sold at Auction shall
no longer be part of the Master Collateral and shall not be required to be
deposited into the Master Collateral Account.
(c) Other than as set forth in the next sentence, the Master Servicer
and NFLP, as applicable, shall cause payments (i) representing amounts payable
under Manufacturer Programs (including Guaranteed Payments) and (ii) relating to
the other Master Collateral to be made directly to the Master Collateral Agent
for deposit into the Master Collateral Account (and the Master Servicer hereby
instructs the Master Collateral Agent to deposit any such payments in to the
Master Collateral Account). By the second Business Day following its receipt
thereof in available funds, any of the Lessee Grantors or NFLP will deposit into
the Master Collateral Account proceeds received by any of the Lessee Grantors or
NFLP from (i) sales of Vehicles other than to or through a Manufacturer under
its Manufacturer Program, (ii) sales of Vehicles at Auction, and (iii) insurance
proceeds and warranty payments received by any of the Lessee Grantors or NFLP
during the continuance of a default or amortization event with respect to any
Financing Source under its Financing Documents. Each of the Lessee Grantors and
NFLP will designate the Master Collateral Agent as loss payee on its physical
damage and comprehensive insurance policies on the Vehicles. The Master
Collateral Agent shall promptly notify the Master Servicer when funds are
deposited in the Master Collateral Account and promptly thereafter, but in no
event more than seven (7) days after the receipt of funds by any of the Lessee
Grantors or any Financing Source or receipt of such notice from the Master
Collateral Agent, as the case may be, the Master Servicer shall instruct the
Master Collateral Agent in writing, which instructions may be given by any
employee (an "Authorized Employee") of the Master Servicer as to whom a
Authorized Agent has notified the Master Collateral Agent that such employee is
authorized to deliver such instructions, and upon which instructions the Master
Collateral Agent may conclusively rely, as to (i) the amount thereof which
represents payments arising from the Related Vehicles and Related Master
Collateral of each Beneficiary and (ii) upon the occurrence and during the
continuance of a Default and as needed under clauses (c) and (d) below, the
dollar amount thereof that is derived from the Lessee Grantor Master Collateral
and the NFLP Master Collateral, respectively. The Master Collateral Agent shall
pursuant to and promptly after receipt of instructions from the Master Servicer,
which instructions may be given by an Authorized Employee, distribute or cause
to be distributed to each Beneficiary the funds in the Master Collateral Account
representing payments arising from the Related Vehicles and Related Master
Collateral of such Beneficiary to an account previously specified in writing by
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such Beneficiary to the Master Collateral Agent, provided, however, that the
Master Servicer shall not direct the Master Collateral Agent to so remit an
amount in respect of Lessee Grantor Master Collateral or NFLP Master Collateral,
as the case may be, that would exceed the amount required to pay all amounts
owing to such Beneficiary or to the Financing Source related to such Beneficiary
by each of the Lessee Grantors and NFLP, respectively.
(d) At such time as no further distribution from any of the Lessee
Grantors or NFLP (as applicable) to any Beneficiary of a Financing Source,
pursuant to the related Financing Documents, is required or will be required to
be made pursuant to Section 2.5(c), all remaining funds allocated to such
Beneficiaries of a Financing Source in the Master Collateral Account shall be
distributed to each of the Lessee Grantors and NFLP, as their interests appear
upon the written direction of the Master Servicer.
(e) If at any time the Master Collateral Agent, the Master Servicer or
any Beneficiary shall receive any funds to which it is not entitled pursuant to
the provisions of this Agreement, the Master Servicer or such Beneficiary shall
so advise the Master Collateral Agent (upon which advice the Master Collateral
Agent may conclusively rely) and the Master Collateral Agent, such Beneficiary
or the Master Servicer, as the case may be, shall forthwith take reasonable
steps to ensure that such funds are remitted to the Person so entitled thereto,
such remittance to be made promptly after determination or, in the case of the
Master Collateral Agent, advise thereof.
(f) The Master Servicer may instruct (upon which instruction the Master
Collateral Agent may conclusively rely) the Master Collateral Agent to invest
funds on deposit in the Master Collateral Account in Permitted Investments. Such
investment instructions may be given by any employee of the Master Servicer as
to whom any of the Authorized Agents has notified the Master Collateral Agent
that such employee is authorized to deliver such instructions. If the Master
Collateral Agent does not receive instructions from the Master Servicer prior to
1:00 p.m. on any day as to the distribution or investment of any funds in the
Master Collateral Account then the Master Collateral Agent shall invest such
funds in Permitted Investments pursuant to a letter (the "Investment Letter")
previously delivered by the Master Servicer to the Master Collateral Agent. All
such investments shall be redeemable or mature on the next Business Day. The
Master Collateral Agent shall not be responsible for any losses incurred on any
investments made pursuant to this paragraph (f).
SECTION 2.6. Certificates of Title. The Master Servicer shall cause
each of the Lessee Grantors to hold all of their respective Certificates of
Title (as well as Certificates of Title with respect to Vehicles owned by NFLP
and leased by NFLP to any of the Lessee Grantors) in trust on behalf of the
Master Servicer, in the Master Servicer's capacity as agent of, and custodian
for, the Master Collateral Agent. The Master Servicer shall cause each of the
Lessee Grantors and NFLP to (i) hold all such Certificates of Title, under lock
and key, in a safe fireproof location at one or more of the offices specified in
Exhibit D (as the same may be from time to time revised by the Master Servicer
on thirty (30) days' prior written notice to the parties hereto), and (ii) not
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release or surrender any Certificate of Title except in accordance with this
Agreement (and in any event not release or surrender any of the Certificates of
Title other than Certificates of Title as to which the security interest of the
Master Collateral Agent has been released in accordance with this Agreement).
Except as provided in the Financing Documents, the Master Servicer shall cause
the Certificates of Title with respect to each Vehicle owned by any of the
Lessee Grantors to show such Lessee Grantor, and each Vehicle owned by NFLP to
show NFLP, as the registered owner and the Master Collateral Agent, as agent, as
the first lienholder, at the address referred to in the next sentence. The
Master Collateral Agent has established a separate lock-box or post office box
for each of the Lessee Grantors to be used exclusively as its address as first
lienholder noted on the Certificate of Title, to which each lock-box or post
office box the Master Servicer and each respective Servicer and the Master
Collateral Agent shall have access; provided, however, that the Master
Collateral Agent may, at any time after the occurrence and during the
continuance of any Default under any Financing Document to which any Vehicles
relate, upon instruction from any Beneficiary (upon which instruction the Master
Collateral Agent may conclusively rely) and upon notice to the Master Servicer
and each Servicer, establish a post office box in New York City for each of the
Lessee Grantors thereafter to be used exclusively thereafter as its address as
first lienholder noted on the Certificates of Title for such Vehicles (in which
case) the Master Collateral Agent shall thereafter, on a semi-weekly basis,
forward to each Servicer at its address set forth in Section 5.2 hereof all
Certificates of Title received at such post office box address titled in the
name of any Lessee Grantor or in the name of NFLP, as appropriate).
SECTION 2.7. Release of Collateral. (a) With respect to any Designated
Vehicle, upon receiving the required items specified in clause (i) or (ii) of
Section 2.5(b) hereof, and upon satisfaction of the following conditions
precedent immediately prior to the release of the Master Collateral Agent's
security interest: (I) such Designated Vehicles satisfy all the requirements
specified in clause (ii) of the definition of "Exchanged Vehicle", (II) no
Amortization Event, Liquidation Event of Default or Limited Liquidation Event of
Default has occurred and is continuing, and (III) all conditions precedent, if
any, specified in any Financing Document with respect to the release of the
related Beneficiary's Lien on such Designated Vehicle have been satisfied, then
the Lien and security interest of the Master Collateral Agent on such a
Designated Vehicle, and on any Exchanged Vehicle Repurchase Rights related
thereto and on any sales proceeds with respect to Exchanged Vehicles that are
not subject to a Manufacturer Program will be automatically released.
(b) The Master Collateral Agent hereby grants to the Master Servicer
and each Lessee Grantor a power of attorney, with full power of substitution, to
take any and all actions, in the name of the Master Collateral Agent, (i) to
note the Master Collateral Agent as the holder of a first lien on the
Certificates of Title, and/or otherwise ensure that the first Lien shown on any
and all Certificates of Title (other than any Certificate of Title relating to
Vehicles in the Initial Fleet) is in the name of the Master Collateral Agent,
(ii) to release the Master Collateral Agent's Lien on any Certificate of Title
in connection with the sale or disposition of the related Vehicle
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permitted pursuant to the provisions of the Financing Documents relating to such
Vehicle; and (iii) to release the Master Collateral Agent's Lien on any
Certificate of Title with respect to any Vehicle which is not a Related Vehicle
with respect to any Beneficiary. Nothing in this Agreement shall be construed as
authorization from the Master Collateral Agent to the Master Servicer or any
Lessee Grantor to release any Lien on the Certificates of Title except upon
compliance with this Agreement.
(c) Each Beneficiary may cause the Master Collateral Agent to terminate
the power of attorney referred to in Section 2.7(b) (including the related power
granted under Section 2.8) with respect to such Beneficiary's Related Vehicles
after the occurrence, and during the continuance, of a Default (after giving
effect to any cure period or grace period) under the Financing Documents
relating to the Financing Source with respect to such Beneficiary by giving
written notice to such effect to the Master Servicer and the Master Collateral
Agent. The Master Collateral Agent agrees that upon receipt of any such notice
(upon which notice the Master Collateral Agent may conclusively rely) it shall
promptly terminate such power of attorney by giving written notice to such
effect to the Master Servicer and Republic. After any such termination, the
Master Collateral Agent will follow the direction (upon which direction the
Master Collateral Agent may conclusively rely) of the Master Servicer to release
liens on Vehicles unless a contrary direction is received from a Financing
Source or Beneficiary or if the Master Collateral Agent becomes aware that the
Financing Documents require direction to be given by another party.
The Master Servicer will, upon request of the Master Collateral Agent,
provide the Master Collateral Agent or any applicable Beneficiary with a list of
Vehicles as to which the Lien of the Master Collateral Agent has been released
during the Related Month. In connection with any release permitted under this
Section 2.7, the Master Collateral Agent and each Beneficiary agrees to execute
such further documents, if any, as may be reasonably requested by the Master
Servicer to effect such release.
SECTION 2.8. Power of Attorney. To further evidence the power of
attorney referred to in Section 2.7, the Master Collateral Agent agrees that
upon request of the Master Servicer it will execute a separate power of attorney
substantially in the form of Exhibit E.
ARTICLE III
THE MASTER SERVICER
SECTION 3.1. Acceptance of Appointment. The Master Collateral Agent
hereby appoints Republic, and Republic hereby agrees to act, as the initial
Master Servicer under this Agreement. Each Financing Source and each Beneficiary
hereby appoints Republic to act as Master Servicer.
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SECTION 3.2. Master Servicer Functions. The Master Servicer shall
service and administer the Vehicles, and without limitation of the foregoing,
the Master Servicer shall: (i) except as provided in the Financing Documents,
cause the Master Collateral Agent to be shown as the first lienholder on all
Certificates of Title (other than Certificates of Title relating to the Initial
Fleet), (ii) in accordance with the requirements of the Financing Documents
related to a Financing Source and as applicable thereunder, either (a) designate
Vehicles as Related Vehicles on its computer system in accordance with Sections
2.2 and 2.3 hereof such that after giving effect thereto each Beneficiary shall
have designated to it Related Vehicles (and, to the extent provided in the
related Financing Documents, Eligible Receivables) that have been purchased,
financed or refinanced with funds provided from the Financing Source or as
otherwise provided in a Financing Source and Beneficiary Supplement with respect
to such Beneficiary, or (b) designate Vehicles as Related Vehicles on its
computer system in accordance with Sections 2.2 and 2.3 hereof such that after
giving effect thereto each Beneficiary shall have designated to it Related
Vehicles (and, to the extent provided in the related Financing Documents,
Eligible Receivables) with a collateral value (as determined under the relevant
Financing Documents relating to the Financing Source with respect to such
Beneficiary) not less than the collateral value required in the Financing
Documents of such Beneficiary to support the outstanding loans or securities
issued under such Financing Documents, (iii) direct payments due under the
Manufacturer Programs (to the extent not paid directly to the Master Collateral
Agent) and payments with respect to other Master Collateral (other than sales
proceeds from sales of Vehicles to third parties (other than under any related
Manufacturer Program) or insurance proceeds in respect of Vehicles received
directly by the Master Servicer) to be deposited directly to the Master
Collateral Account by the Manufacturers and related auction dealers in
accordance with this Agreement and deposit into the Master Collateral Account
sale proceeds (including amounts paid to the Master Servicer by a Manufacturer
as a result of the Master Servicer's sale of such Vehicle outside such
Manufacturer's Manufacturer Program) or insurance proceeds in respect of the
Vehicles received directly by the Master Servicer, by the second (2nd) Business
Day following the Master Servicer's receipt thereof, (iv) to the extent provided
under the applicable Financing Documents, turn in Vehicles owned by the Lessee
Grantors and NFLP and covered by Manufacturer Programs to the relevant
Manufacturer within the applicable repurchase period and comply with all of its
obligations under the Manufacturer Programs, (v) furnish the Master Servicer's
Fleet Report as provided in Section 2.4, (vi) instruct the Master Collateral
Agent to make distributions, withdrawals and payments from the Master Collateral
Account in accordance with Section 2.5(b), 2.5(c), and 2.5(d), (vii) execute and
deliver, for the benefit of the Beneficiaries, any and all documents with
respect to the Vehicles and the Manufacturer Programs and, to the extent
permitted under and in compliance with applicable law and regulations, to
commence enforcement proceedings with respect to such Manufacturer Programs,
(viii) perform the functions described in Section 2.7, and (ix) otherwise
administer and service Vehicles in accordance with the Financing Documents. The
Master Servicer shall have full power and authority, acting alone or through any
party properly designated by it hereunder, to do any and all things in
connection with its servicing and administration duties which it may deem
necessary or desirable to accomplish such servicing and
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administration duties and which does not materially adversely affect the
interests of any Beneficiary or the likelihood of repayment of the indebtedness
to the Financing Sources unless otherwise prohibited by applicable Financing
Documents. Nothing in this Agreement shall at any time prevent the Master
Servicer from in good faith taking any action to assure that its systems and
records relating to the Vehicles and the Financing Sources are at all times
accurate.
SECTION 3.3. The Master Servicer Not to Resign. Without the prior
written consent of the Master Collateral Agent, each of the Beneficiaries and
the Rating Agencies, the Master Servicer shall not resign from the obligations
and duties hereby imposed on it hereunder.
SECTION 3.4. Servicing Rights of Master Collateral Agent. If the Master
Servicer shall fail to perform any of its obligations hereunder, which failure
adversely affects one or more Beneficiaries, the Master Collateral Agent, at the
direction and at the expense of the Beneficiaries so adversely affected thereby,
shall take such action or cause such action to be taken (pursuant to Section
4.1(d)), to perform such obligations as shall be so directed by such
Beneficiaries, whereupon the Master Collateral Agent shall have full right and
authority to take or cause to be taken such action so directed, provided, that,
such action or direction is permitted by the related Financing Documents or this
Agreement.
SECTION 3.5. Incumbency Certificate. With the delivery of this
Agreement and from time to time thereafter, each of the Lessee Grantors, NFLP
and the Master Servicer shall furnish to the Master Collateral Agent a
certificate (each, an "Incumbency Certificate") certifying as to the incumbency
and specimen signatures of officers and employees of the Lessee Grantors, NFLP
and the Master Servicer, respectively (the "Authorized Agents") authorized to
act, and to give instructions and notices, on behalf of each of the Lessee
Grantors, NFLP and the Master Servicer, respectively, hereunder. Until the
Master Collateral Agent receives a subsequent Incumbency Certificate, the Master
Collateral Agent shall be entitled to rely on the last such Incumbency
Certificate delivered to it for purposes of determining the Authorized Agents.
ARTICLE IV
THE MASTER COLLATERAL AGENT
SECTION 4.1. Appointment. (a) Each Financing Source and each
Beneficiary, by its execution of this Agreement, appoints the Master Collateral
Agent as its Master Collateral Agent under and for purposes of this Agreement.
Each Financing Source and each Beneficiary authorizes the Master Collateral
Agent to act on behalf of such Financing Source and Beneficiary under this
Agreement and, in the absence of other written instructions from a Beneficiary
with respect to its Related Vehicles and Related Master Collateral as may be
received from time to time by the Master Collateral Agent (with respect to which
the Master Collateral Agent agrees that it will comply), subject to the other
provisions of this Article IV, to exercise such powers
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hereunder as are specifically delegated to or required of the Master Collateral
Agent by the terms hereof and to exercise such powers as are provided to each
Financing Source and Beneficiary with respect to its Related Vehicles and other
Related Master Collateral under the related Financing Documents and with such
powers as may be reasonably incidental thereto. The Master Collateral Agent is
hereby irrevocably appointed the true and lawful attorney-in-fact of each of the
Beneficiaries, in its name and stead, for such purposes as are necessary or
desirable to effectuate the provisions of this Agreement, including, without
limitation, in exercising remedies upon or otherwise dealing with the Master
Collateral. Each such power of attorney is irrevocable and coupled with an
interest.
(b) If any Beneficiary represents to the Master Collateral Agent that
it has the right to act with respect to its related Master Collateral pursuant
to its related Financing Documents, then the Master Collateral Agent may
conclusively rely upon such representation and shall exercise any and all
rights, remedies, powers and privileges available to such Beneficiary with
respect to its related Master Collateral to the extent and in the manner
directed by such Beneficiary, at such Beneficiary's expense and subject to the
other provisions of this Agreement (including without limitation Section
4.4(g)), as permitted under the related Financing Documents, including, without
limitation, the transmission of notices of default, repossession of Related
Vehicles, and the institution of legal or administrative actions or proceedings.
Each of the Lessee Grantors, NFLP, the Beneficiaries and the Financing Sources
agrees that the Master Collateral Agent may exercise such rights, remedies,
powers and privileges in lieu of a Beneficiary in accordance with the preceding
sentence and agrees that the appropriate Lessee Grantor or NFLP shall reimburse
the Master Collateral Agent for such enforcement expenses only to the same
extent that it would be obligated to reimburse the applicable Beneficiary for
such enforcement expenses pursuant to the related Financing Documents.
(c) Instructions given to the Master Collateral Agent by any
Beneficiary shall comply (and delivery of any such instructions by a Beneficiary
to the Master Collateral Agent shall be deemed to be a representation and
warranty by such Beneficiary that such instructions comply) with the Financing
Documents of such Beneficiary.
(d) The Master Collateral Agent, with the approval of the Master
Servicer, may at any time delegate any duties or obligations hereunder
(including, but not limited to, any duties or obligations arising pursuant to
Section 3.4 or 4.1(b) hereof) to any Person satisfying the requirements of
Section 4.6 who agrees to conduct such duties in accordance with the terms
hereof. Any such delegation shall not constitute a resignation within the
meaning of Section 4.5 hereof, and the Master Collateral Agent shall not be
liable for the acts of such Persons so long as such Persons are selected with
reasonable care. If any such delegation occurs, notification thereof shall be
given to the Master Servicer, the Beneficiaries and the Rating Agencies.
(e) If, at the time a Default exists under the Financing Documents
related to a Beneficiary, the Master Collateral Agent shall default in its
obligation to exercise the rights,
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remedies, powers or privileges of a Beneficiary with respect to its Master
Collateral in accordance with the direction of such Beneficiary (including any
rights under Sections 3.4 or 4.1(b)), the Master Collateral Agent shall, upon
the written request of such Beneficiary, assign to such Beneficiary the Master
Collateral Agent's security interest in the Related Master Collateral of such
Beneficiary and shall, at the Master Collateral Agent's expense, execute those
instruments and documents necessary to effectuate such assignment (including, if
necessary, the execution of documents necessary to change the name of the first
lienholder on Certificates of Title for such Beneficiary's Related Vehicles to
such Beneficiary or its agent or assignee) and such Beneficiary may thereafter
direct that payments that would otherwise be paid into the Master Collateral
Account with respect to its Related Vehicles be paid to another account
permitted by the applicable Financing Documents.
(f) The Master Collateral Agent, in its individual or in any other
capacity, may be a Beneficiary hereunder and as such shall be entitled to all of
the protections and rights of a Beneficiary under this Agreement without regard
to its capacity as Master Collateral Agent hereunder.
(g) Upon receipt by the Master Collateral Agent from a Manufacturer of
any information pertaining to payments made by such Manufacturer or an auction
dealer to the Master Collateral Account in connection with any Manufacturer
Program, the Master Collateral Agent shall provide such information to the
Master Servicer.
SECTION 4.2. Representations. The Master Collateral Agent hereby
represents and warrants that (i) it is a national banking association, duly
organized, validly existing and in good standing under the laws of the United
States and it has all requisite power and authority to enter into and perform
its obligations under this Agreement and (ii) the execution, delivery and
performance by it of this Agreement have been duly authorized by all necessary
corporate action on its part, and this Agreement is the legal, valid and binding
obligation of the Master Collateral Agent, enforceable against it in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally and by the application of equitable principles.
SECTION 4.3. Exculpatory Provisions. The Master Collateral Agent makes
no representations as to the value or condition of the Master Collateral or any
part thereof, as to the status or designation of any Vehicle as a Related
Vehicle to any Beneficiary pursuant to Section 2.2 hereof, as to the title of
any of the Lessee Grantors or NFLP thereto, as to the protection afforded by
this Agreement, as to any statements, representations or warranties made by any
Person (other than itself) in or in connection with this Agreement or any
Financing Document, as to the validity, execution (except its own execution),
enforceability, priority, perfection, legality or sufficiency of this Agreement
or any Financing Document or any documents or instruments referred to therein,
or the sufficiency or effectiveness or perfection or priority of any Lien on any
collateral described in this Agreement, or as to the validity or collectibility
of any obligation
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contemplated by this Agreement, and the Master Collateral Agent shall incur no
liability or responsibility in respect of any such matters. The Master
Collateral Agent shall not be responsible for insuring the Master Collateral or
for the payment of taxes, charges, assessments or Liens upon the Master
Collateral or for perfecting or maintaining the perfection of its security
interest in the Master Collateral purported to be granted hereby or otherwise as
to the maintenance of the Master Collateral. Any reference herein to actual
knowledge of the Master Collateral Agent shall mean actual knowledge of an
officer of the Master Collateral Agent assigned to and working in its Corporate
Trust Office or such other department as the Master Collateral Agent may
designate from time to time in a notice to the Master Servicer, each of the
Lessee Grantors, NFLP and the Beneficiaries.
SECTION 4.4. Limitations on Duties of the Master Collateral Agent. (a)
The Master Collateral Agent undertakes to perform only the duties expressly set
forth herein and no implied duties shall be read into this Agreement. Nothing
herein shall be deemed to constitute the Master Collateral Agent a trustee or
fiduciary for any Financing Source or any Beneficiary.
(b) The Master Collateral Agent may exercise the rights and powers
granted to it by this Agreement, together with such powers as are reasonably
incidental thereto, but only pursuant to the terms of this Agreement.
(c) The Master Collateral Agent's duty of care shall be solely to deal
with the Master Collateral as it would with property of its own, the Master
Collateral Agent shall not be liable for any error of judgment made in good
faith by an officer thereof, or for any action taken or omitted to be taken by
it in accordance with this Agreement, except to the extent caused by the gross
negligence or willful misconduct of the Master Collateral Agent.
(d) The Master Collateral Agent shall have no authority to grant,
convey or assign the Certificates of Title or change the notation of a security
interest thereon or deal with the Certificates of Title in any way except as
expressly provided herein.
(e) The Master Collateral Agent shall have no liability or
responsibility for (i) any release of Master Collateral by the Master Servicer
pursuant to Sections 2.7 or 2.8, (ii) any act of the Master Servicer taken in
its own name or the name of the Master Collateral Agent, or (iii) custody of any
Certificates of Title not delivered to it and required to be held by it in
connection with this Agreement.
(f) The Master Collateral Agent shall have no duty to calculate,
compute or verify, and shall not be held in any manner responsible for the
content of the Master Servicer's Fleet Report, except to verify that the
certificate filed therewith conforms to the form of Exhibit B.
(g) Except as required by the specific terms of this Agreement, the
Master Collateral Agent shall not be required to exercise any discretion and
shall have no duty to exercise or to
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refrain from exercising any right, power, remedy or privilege granted to it
hereby, or to take any affirmative action or refrain from taking any affirmative
action hereunder, unless directed to do so by Beneficiaries specified herein as
being entitled to direct the Master Collateral Agent hereunder (and shall be
fully protected in acting or refraining from acting pursuant to or in accordance
with such directions, which shall be binding on each of the Financing Sources
and Beneficiaries). Notwithstanding anything herein to the contrary, the Master
Collateral Agent shall not be required to take any action (a) that in its
reasonable opinion is or may be contrary to law or to the terms of this
Agreement, any Financing Document or any other agreement or instrument relating
to the Master Collateral, or which might or would in its reasonable opinion
subject it or any of its directors, officers, employees or agents to personal or
financial liability or (b) unless it is indemnified hereunder to its
satisfaction (and if any indemnity should become, in the determination of the
Master Collateral Agent, inadequate, the Master Collateral Agent may call for
additional indemnity and cease to act until such additional indemnity is given.
(h) Subject to Section 4.8(ii), the Master Collateral Agent may, in its
sole discretion, retain counsel, independent accountants and other experts
(including the Series 1997-1 Liquidity Agent) selected by it and may act in
reliance upon the advice of such counsel, independent accountants and other
experts concerning all matters pertaining to the agencies hereby created and its
duties hereunder, and shall be held harmless and shall not be liable for any
action taken or omitted to be taken by it in good faith in reliance upon or in
accordance with the statements and advice of such counsel (or counsel to
Republic, any of the Lessee Grantors or NFLP), accountants and other experts.
(i) In the event that the Master Collateral Agent receives conflicting
instructions delivered in accordance with this Agreement, the Master Collateral
Agent shall have the right to seek instructions concerning its duties and
actions under this Agreement from any court of competent jurisdiction. If the
Master Collateral Agent receives unclear or conflicting instructions, it shall
be entitled to refrain from taking action until clear or non-conflicting
instructions are received, but shall inform the instructing party or parties
promptly of its decision to refrain from taking such action. Without limiting
the foregoing, in the event that the Master Collateral Agent receives unclear or
conflicting instructions from Beneficiaries hereunder or there is any other
disagreement between the other parties hereto resulting in adverse claims and
demands being made in connection with the Master Collateral, or in the event
that the Master Collateral Agent in good faith is in doubt as to what action it
should take hereunder, the Master Collateral Agent shall be entitled to retain
the Master Collateral until the Master Collateral Agent shall have received (i)
a final order of a court of competent jurisdiction directing delivery of the
Master Collateral or (ii) a written agreement executed by the other parties
hereto directing delivery of the Master Collateral in which event the Master
Collateral Agent shall disburse the Master Collateral in accordance with such
order or agreement. Upon request of the Master Collateral Agent, any such court
order shall be accompanied by a legal opinion by counsel for the presenting
party satisfactory to the Master Collateral Agent to the effect that such order
is final.
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(j) The Master Collateral Agent shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, any Financing Document or any other agreements or
instruments relating to the Master Collateral on the part of any party hereto or
thereto or to inspect any books and records relating to the Master Collateral
other than as it determines necessary in the fulfillment of its own obligations
hereunder.
(k) The Master Collateral Agent shall be entitled to rely on any
communication, certificate, instrument, opinion, report, notice, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed, given or sent by the proper Person or Persons. The Master Collateral
Agent shall be entitled to assume that no Default shall have occurred and be
continuing and that the Master Collateral Account, and any funds on deposit in
or to the credit of such Master Collateral Account, are not subject to any writ,
order, judgment, warrant of attachment, execution or similar process
(collectively, a "writ"), unless (i) in the case of any writ, the Master
Collateral Agent has actual knowledge thereof or (ii) the Master Collateral
Agent has received written notice from the Master Servicer, any of the Lessee
Grantors, a Beneficiary or a Financing Source that such a Default has occurred
or such writ has been issued and, in each case, continues to be in effect, which
notice specifies the nature thereof.
(l) The Master Collateral Agent, in its individual capacity, may accept
deposits from, lend money to and generally engage in any kind of business with
the Master Servicer, NFLP, any of the Lessee Grantors, any Financing Source, any
Manufacturer and their respective affiliates as if it were not the agent of the
Beneficiaries or the Financing Sources.
(m) Any action or proceeding alleging any breach by the Master
Collateral Agent of duties under this Agreement shall be prosecuted only in the
courts of the State of New York or in the United States District Court for the
Southern District of New York.
(n) The Master Collateral Agent shall not be accountable for the use or
application by any person of disbursements properly made by the Master
Collateral Agent in conformity with the provisions of this Agreement.
(o) The Master Collateral Agent may exercise any of its duties
hereunder by or through agents or employees. The possession of the Master
Collateral by such agents or employees shall be deemed to be the possession of
the Master Collateral Agent. No provision of this Agreement shall require the
Master Collateral Agent to expend or risk its own funds or otherwise incur any
financial or other liability in the performance of any duties hereunder or in
the exercise of any rights and powers hereunder unless the Master Collateral
Agent is provided with an indemnity from one or more of the Beneficiaries,
satisfactory to the Master Collateral Agent in its sole discretion.
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SECTION 4.5. Resignation and Removal of Master Collateral Agent. (a)
The Master Collateral Agent may, at any time with or without cause by giving
sixty (60) days' prior written notice to the Master Servicer, NFLP, each of the
Lessee Grantors and the Beneficiaries, resign and be discharged of its
responsibilities hereunder created, such resignation to become effective upon
the appointment by the Master Servicer and NFLP of a successor Master Collateral
Agent with the approval of the Majority Beneficiaries, which approval shall not
be unreasonably withheld, and the acceptance of such appointment by such
successor Master Collateral Agent. The Master Servicer shall, promptly upon
receipt thereof, provide a copy of the notice from the Master Collateral Agent
referred to in the preceding sentence to each Rating Agency. The Master
Collateral Agent may be removed by the Master Servicer or NFLP at any time (with
or without cause) upon thirty (30) days' written notice by the Master Servicer
or NFLP, as the case may be, to the Master Collateral Agent and each of the
Rating Agencies, and the approval of the successor Master Collateral Agent by
the Majority Beneficiaries, which approval will not be unreasonably withheld;
provided, however, that if either the Master Servicer or NFLP is in default
(beyond all applicable grace and cure periods) under this Agreement or any
Financing Document and such default has a material adverse effect on the
Beneficiaries, then so long as such default continues, the right of the Master
Servicer or NFLP, as applicable, to remove the Master Collateral Agent shall
cease and the non-defaulting grantor shall have, or if both the Master Servicer
and NFLP are then in default, then the Majority Beneficiaries shall have, the
right to remove the Master Collateral Agent (with or without cause) upon thirty
(30) days' written notice to the Master Servicer, NFLP, each of the Lessee
Grantors, the Master Collateral Agent and each of the Rating Agencies; provided,
further, that no removal of the Master Collateral Agent shall be effective until
the appointment of a successor Master Collateral Agent and acceptance of such
appointment by such Master Collateral Agent. Any removed Master Collateral Agent
shall be entitled to its reasonable fees and expenses to the date the successor
Master Collateral Agent assumes the Master Collateral Agent's duties hereunder.
The indemnification of Section 4.10 shall survive the termination of the other
provisions of this Agreement as to the predecessor Master Collateral Agent. If
no successor Master Collateral Agent shall be appointed and approved within
thirty (30) days from the date of the giving of the aforesaid notice of
resignation or within thirty (30) days from the date of such notice of removal,
the Master Collateral Agent, on behalf of the Master Servicer, NFLP, each of the
Lessee Grantors, each Financing Source and each Beneficiary may appoint, or
petition a court of competent jurisdiction to appoint, a successor Master
Collateral Agent to act until such time, if any, as a successor Master
Collateral Agent shall be appointed as above provided. Any successor Master
Collateral Agent so appointed by such court shall immediately without further
act supersede any predecessor Master Collateral Agent. Upon the appointment of a
successor Master Collateral Agent hereunder, the predecessor Master Collateral
Agent shall be discharged of and from any and all further obligations arising in
connection with this Agreement.
(b) The appointment and designation referred to in Section 4.5(a)
shall, after any required filing, be full evidence of the right and authority to
make the same and of all the facts therein recited, and this Agreement shall
vest in such successor Master Collateral Agent, without
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any further act, deed or conveyance, all of the estate and title of its
predecessors and upon such filing for record the successor Master Collateral
Agent shall become fully vested with all the estates, properties, rights,
powers, duties, authority and title of its predecessors; but any predecessor
Master Collateral Agent shall, nevertheless on payment of its charges and on the
written request of the Majority Beneficiaries, the Master Servicer, NFLP, any of
the Lessee Grantors or any successor Master Collateral Agent empowered to act as
such at the time any such request is made, execute and deliver an instrument
without recourse or representation transferring to such successor all the
estates, properties, rights, powers, duties, authority and title of such
predecessor hereunder and shall deliver all securities and moneys held by it to
such successor Master Collateral Agent. Upon the appointment of a successor
Master Collateral Agent hereunder, the predecessor Master Collateral Agent shall
be discharged of and from any and all further obligations arising in connection
with this Agreement; provided, however, that the predecessor Master Collateral
Agent will serve as nominee lienholder for the successor Master Collateral
Agent.
SECTION 4.6. Qualification of Successors to Master Collateral Agent.
Every successor to the Master Collateral Agent appointed pursuant to Section 4.5
shall be a bank or trust company in good standing and having power so to act and
incorporated under the laws of the United States or any State thereof or the
District of Columbia, and shall also have capital, surplus and undivided profits
of not less than $100,000,000 if there be such an institution with such
capital, surplus and undivided profits willing, qualified and able to accept the
trust upon reasonable or customary terms. The Master Servicer shall give the
Rating Agencies written notice prior to any successor Master Collateral Agent
being appointed pursuant to Section 4.5.
SECTION 4.7. Merger of the Master Collateral Agent. Any corporation
into which the Master Collateral Agent may be merged, or with which it may be
converted or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Master Collateral Agent shall be a
party shall be the Master Collateral Agent under this Agreement without the
execution or filing of any paper or any further act on the part of the parties
hereto. The Master Collateral Agent shall give the Rating Agencies, the Master
Servicer, NFLP, each of the Lessee Grantors and the Master Servicer prior
written notice of any such merger, conversion or consolidation.
SECTION 4.8. Compensation and Expenses. (a) National, with respect to
Series 1996-1 Notes, shall pay to the Master Collateral Agent, from time to time
(i) compensation for its services hereunder for administering the Master
Collateral as set forth in the fee letter dated as of October 29, 1997,
between the Master Servicer and the Master Collateral Agent, as such letter may
be amended, modified or supplemented from time to time, and (ii) all reasonable
out-of-pocket costs and expenses of the Master Collateral Agent (A) arising in
connection with the preparation, execution, delivery, or modification of this
Agreement and/or the enforcement of any of the provisions hereof or (B) incurred
in connection with the administration of the Master Collateral, the sale or
other disposition of Master Collateral pursuant to any Financing Document
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and/or the preservation, protection or defense of the Master Collateral Agent's
rights under this Agreement and in and to the Master Collateral.
(b) The Lessee Grantors, severally (and to the extent not paid by a
Lessee Grantor, Republic), with respect to Series 1997 Variable Funding Notes
and any other Series of Notes other than the Series 1996-1 Notes to which they
are each Grantors, shall pay to the Master Collateral Agent, from time to time
(i) compensation for its services hereunder for administering the Master
Collateral as set forth in the fee letter dated as of October 29, 1997,
between the Master Servicer and the Master Collateral Agent, as such letter may
be amended, modified or supplemented from time to time, and (ii) all reasonable
out-of-pocket costs and expenses of the Master Collateral Agent (A) arising in
connection with the preparation, execution, delivery, or modification of this
Agreement and/or the enforcement of any of the provisions hereof or (B) incurred
in connection with the administration of the Master Collateral, the sale or
other disposition of Master Collateral pursuant to any Financing Document and/or
the preservation, protection or defense of the Master Collateral Agent's rights
under this Agreement and in and to the Master Collateral.
SECTION 4.9. Stamp, Other Similar Taxes and Filing Fees. (a) National,
with respect to Series 1996-1 Notes, shall indemnify and hold harmless the
Master Collateral Agent 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 Agreement or any Master Collateral. National, with respect to Series 1996-1
Notes, shall pay, or reimburse the Master Collateral Agent for, any and all
amounts in respect of, all search, filing, recording and registration fees,
taxes, excise taxes and other similar imposts payable in respect of the
execution, delivery, performance and/or enforcement of this Agreement.
(b) The Lessee Grantors, severally (and to the extent not paid by a
Lessee Grantor, Republic), with respect to Series 1997 Variable Funding Notes
and any other Series of Notes other than the Series 1996-1 Notes to which they
are each Grantors, shall indemnify and hold harmless the Master Collateral Agent
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 Agreement or any
Master Collateral. The Lessee Grantors, severally (and to the extent not paid by
a Lessee Grantor, Republic), with respect to Series 1997 Variable Funding Notes
and any other Series of Notes other than the Series 1996-1 Notes to which they
are each Grantors, shall pay, or reimburse the Master Collateral Agent for, any
and all amounts in respect of, all search, filing, recording and registration
fees, taxes, excise taxes and other similar imposts payable in respect of the
execution, delivery, performance and/or enforcement of this Agreement.
SECTION 4.10. Indemnification. (a) National, with respect to Series
1996-1 Notes, shall pay, and indemnify and hold the Master Collateral Agent and
each of the officers, employees, directors and agents thereof harmless from and
against, any and all liabilities
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(including liabilities for penalties and liabilities arising or resulting from
actions or suits), obligations, losses, judgments, demands, damages, claims,
costs or expenses of any kind or nature whatsoever that may at any time be
imposed on, incurred by, or asserted against, the Master Collateral Agent or any
such officers, employees, directors or agents in any way relating to or arising
out of the execution, delivery, amendment, enforcement, performance and/or
administration of this Agreement (and any agreements related thereto including,
without limitation, the Assignment Agreements), including reasonable fees and
expenses of counsel and other experts, and National shall reimburse each
Beneficiary in respect of Series 1996-1 Notes for any payments made by such
Beneficiary to the Master Collateral Agent or any such officers, employees,
directors or agents for any of the foregoing provided that such payments were
permitted to be made by such Beneficiary under the related Financing Documents;
provided, however, that National shall not be liable for the payment of any
portion of such liabilities (including liabilities for penalties and liabilities
arising or resulting from actions or suits), obligations, losses, judgments,
demands, damages, claims, costs or expenses of the Master Collateral Agent or
any such officers, employees, directors or agents which are determined by a
court of competent jurisdiction in a final proceeding to have resulted from the
gross negligence or willful misconduct of the Master Collateral Agent or any
such agent.
Each of the Beneficiaries in respect of Series 1996-1 Notes agrees in
accordance with its pro rata portion of the Master Collateral, to indemnify and
hold the Master Collateral Agent and each of its officers, employees, directors
and agents harmless to the same extent as National in accordance with the
foregoing paragraph but only to the extent that the Master Collateral Agent has
not been paid by National pursuant to such paragraph; provided that the
Trustee's obligation to indemnify the Master Collateral Agent shall be limited
to actions taken by the Master Collateral Agent at the direction of the Trustee,
it being understood that the indemnification obligation of the Trustee shall be
paid solely out of funds constituting servicing fees under the Base Indenture.
(b) The Lessee Grantors, severally (and to the extent not paid by a
Lessee Grantor, Republic), with respect to Series 1997 Variable Funding Notes
and any other Series of Notes other than the Series 1996-1 Notes with respect to
which they are each Grantors, shall pay, and indemnify and hold the Master
Collateral Agent and each of the officers, employees, directors and agents
thereof harmless from and against, any and all liabilities (including
liabilities for penalties and liabilities arising or resulting from actions or
suits), obligations, losses, judgments, demands, damages, claims, costs or
expenses of any kind or nature whatsoever that may at any time be imposed on,
incurred by, or asserted against, the Master Collateral Agent or any such
officers, employees, directors or agents in any way relating to or arising out
of the execution, delivery, amendment, enforcement, performance and/or
administration of this Agreement (and any agreements related thereto including,
without limitation, the Assignment Agreements), including reasonable fees and
expenses of counsel and other experts, and the Lessee Grantors, severally (and
to the extent not paid by a Lessee Grantor, Republic) shall reimburse each
Beneficiary other than Beneficiaries in respect of Series 1996-1 Notes for any
payments made by
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such Beneficiary to the Master Collateral Agent or any such officers, employees,
directors or agents for any of the foregoing provided that such payments were
permitted to be made by such Beneficiary under the related Financing Documents;
provided, however, that no Lessee Grantor (nor Republic, if applicable) shall be
liable for the payment of any portion of such liabilities (including liabilities
for penalties and liabilities arising or resulting from actions or suits),
obligations, losses, judgments, demands, damages, claims, costs or expenses of
the Master Collateral Agent or any such officers, employees, directors or agents
which are determined by a court of competent jurisdiction in a final proceeding
to have resulted from the gross negligence or willful misconduct of the Master
Collateral Agent or any such agent.
Each of the Beneficiaries agrees in accordance with its pro rata
portion of the Master Collateral, to indemnify and hold the Master Collateral
Agent and each of its officers, employees, directors and agents harmless to the
same extent as the Lessee Grantors (and to the extent not paid by a Lessee
Grantor, Republic) in accordance with the foregoing paragraph but only to the
extent that the Master Collateral Agent has not been paid by the Lessee Grantors
(and to the extent not paid by a Lessee Grantor, Republic) pursuant to such
paragraph; provided that the Trustee's obligation to indemnify the Master
Collateral Agent shall be limited to actions taken by the Master Collateral
Agent at the direction of the Trustee, it being understood that the
indemnification obligation of the Trustee shall be paid solely out of funds
constituting servicing fees under the Base Indenture.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Amendments, Supplements and Waivers. This Agreement may be
amended, waived, terminated, supplemented or otherwise modified pursuant to a
writing executed by the Master Collateral Agent, each Beneficiary, each
Financing Source, NFLP, each of the Lessee Grantors and the Master Servicer;
provided, however, that (i) the consent of each Beneficiary and each Financing
Source need not be obtained in connection with the execution of a supplement or
amendment that only adds a Financing Source or Beneficiary as a party to this
Agreement and (ii) an amendment may be executed without the consent of a
Beneficiary or a Financing Source if such amendment is effected only to cure any
ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or which is otherwise defective, or
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or any other such Related Document; provided, such action pursuant to
this clause shall not adversely affect the interests of a Beneficiary or a
Financing Source in any material respect. Additional Financing Sources or
Beneficiaries may from time to time become parties hereto and Financing Sources
or Beneficiaries hereunder by the execution of a Financing Source and
Beneficiary Supplement by such additional Financing Source or Beneficiary, the
Master
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Collateral Agent, the Master Servicer, NFLP and each of the Lessee Grantors.
Additional Lessee Grantors may from time to time become parties hereto by the
execution and delivery of a Grantor Supplement by such additional Lessee
Grantor, the Master Collateral Agent, the Master Servicer and NFLP. The Master
Servicer shall give the Rating Agencies prior written notice of any amendment,
supplement, waiver or modification of this Agreement. Upon execution of a
Financing Source and Beneficiary Supplement or a Grantor Supplement, the Master
Servicer shall furnish a copy thereof to the other parties hereto.
SECTION 5.2. Notices. All notices, amendments, waivers, consents and
other communications provided to any party hereto under this Agreement shall be
in writing and addressed, delivered or transmitted to such party at its address
or facsimile number set forth in (a) or (b) below or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed by certified or registered mail and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted upon receipt of electronic
confirmation of such, and shall be addressed as follows:
(a) if to the Master Servicer, NFLP, any of the Lessee
Grantors or the Master Collateral Agent, at the address specified for
such party on the signature pages hereto; or
(b) if to any Beneficiary, Financing Source or other Person
specified in a Financing Source and Beneficiary Supplement, at the
address specified in such Financing Source and Beneficiary Supplement.
SECTION 5.3. Headings. Section, subsection and other headings used in
this Agreement are for convenience only and shall not affect the construction of
this Agreement.
SECTION 5.4. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall not invalidate 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.
SECTION 5.5. Counterparts. This Agreement may be executed in separate
counterparts and by the different parties on different counterparts, each of
which shall be an original and all of which taken together shall constitute one
and the same instrument.
SECTION 5.6. Conflicts with Financing Documents; Reservation of Rights.
The parties agree that in the event of any conflict between the provisions of
this Agreement and the provisions of any Financing Documents, the provisions of
this Agreement shall control. Except as expressly provided herein, nothing
contained in this Agreement is intended to affect or limit, in any way, the
rights that each of the Beneficiaries has insofar as the rights of such parties
and
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third parties are involved. Except as expressly provided herein, the
Beneficiaries specifically reserve all their respective rights against Republic,
the Master Servicer, the Lessee Grantors, NFLP, any Financing Source and/or any
third party.
SECTION 5.7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors and assigns. Nothing herein is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in respect of this
Agreement or the Master Collateral.
SECTION 5.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 5.9. Effectiveness. This Agreement shall become effective on
the execution and delivery hereof and shall remain in effect until no amounts
are owed to any Financing Source under any Financing Document and no Beneficiary
or Financing Source shall have any claim on the Master Collateral.
SECTION 5.10. Termination of Beneficiary. Upon receipt by the Master
Collateral Agent of a notice from a Beneficiary to the effect that (i) (A) such
Beneficiary then has no Related Vehicles hereunder, no amounts are then owing to
the related Financing Source under its Financing Documents and such Financing
Documents have been terminated and are of no further force or effect or (B) the
Master Collateral Agent's security interest has been reassigned to such
Beneficiary pursuant to Sections 4.1(e) or 5.11(b) and (ii) such Beneficiary has
elected to terminate this Agreement, this Agreement shall terminate as to such
Beneficiary.
SECTION 5.11. Termination of this Agreement. At any time that there are
no Beneficiaries, the Master Servicer may terminate this Agreement upon notice
to the Master Collateral Agent, and the Master Collateral Agent shall take all
actions reasonably requested by the Master Servicer, at the Master Servicer's
expense, to evidence the termination of this Agreement and the Master Collateral
Agent's interest in the Master Collateral, including, without limitation,
execute such documents and instruments as the Master Servicer may reasonably
request in connection with such reassignment; provided, however, that Sections
4.3, 4.4(a), (c), and (e) through (o), 4.8, and the indemnification set forth in
Sections 4.9 and 4.10 shall survive the termination of this Agreement.
SECTION 5.12. Assignment by Financing Sources. Each Financing Source
acknowledges that it has assigned and does hereby assign to its related
Beneficiary all of its rights and interests under this Agreement and further
acknowledges that its related Beneficiary may exercise all of such Financing
Source's rights hereunder.
36
<PAGE> 41
SECTION 5.13. No Bankruptcy Petition Against Financing Sources. The
Master Collateral Agent hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of the latest maturing
debt security issued by a Financing Source, it will not institute against, or
join with any other Person in instituting against, such Financing Source, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other similar proceedings under any Federal or state bankruptcy or similar
law; provided, however, that nothing in this Section 5.13 shall constitute a
waiver of any right to indemnification, reimbursement or other payment from any
Financing Source or Beneficiary pursuant to this Agreement; provided, further,
that this Section 5.13 shall only be effective with respect to a Financing
Source for which the related Financing Documents contain a no bankruptcy
petition provision similar to this Section 5.13. In the event that the Master
Collateral Agent takes action in violation of this Section 5.13, each affected
Financing Source agrees that it shall file an answer with the bankruptcy court
or otherwise properly contest the filing of such a petition by the Master
Collateral Agent against such Financing Source or the commencement of such
action and raise the defense that the Master Collateral Agent has agreed in
writing not to take such action and should be estopped and precluded therefrom
and such other defenses, if any, as its counsel advises that it may assert; and
if the Master Collateral Agent acts in violation of this Section 5.13 it shall
be liable for and pay the costs and expenses of such Financing source in
connection therewith. The provisions of this Section 5.13 shall survive the
termination of this Agreement, and the resignation or removal of the Master
Collateral Agent.
SECTION 5.14. Jurisdiction; Consent to Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST REPUBLIC, ANY FINANCING SOURCE OR ANY BENEFICIARY
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR (TO THE EXTENT
PERMITTED BY LAW) FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, REPUBLIC, EACH FINANCING
SOURCE AND EACH BENEFICIARY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. REPUBLIC DESIGNATES AND APPOINTS CT
CORPORATION SYSTEM, INC., 1633 BROADWAY, NEW YORK, NEW YORK 10019, AND EACH
FINANCING SOURCE AND EACH BENEFICIARY DESIGNATES AND APPOINTS CT CORPORATION
SYSTEM, 1633 BROADWAY, NEW YORK, NEW YORK 10019, AND SUCH OTHER PERSONS AS MAY
HEREAFTER BE SELECTED BY REPUBLIC, EACH FINANCING SOURCE AND EACH BENEFICIARY
IRREVOCABLY AGREEING IN WRITING TO SERVE, AS ITS AGENT TO RECEIVE ON ITS BEHALF,
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY REPUBLIC, EACH FINANCING SOURCE AND EACH
BENEFICIARY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
37
<PAGE> 42
A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO REPUBLIC,
SUCH FINANCING SOURCE OR SUCH BENEFICIARY SO SERVED AT ITS ADDRESS PROVIDED IN
THE APPLICABLE SIGNATURE PAGE HERETO, EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY REPUBLIC, SUCH FINANCING SOURCE OR
SUCH BENEFICIARY REFUSES TO ACCEPT SERVICE, REPUBLIC, EACH FINANCING SOURCE AND
EACH BENEFICIARY HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHTS TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY FINANCING
SOURCE OR BENEFICIARY TO BRING PROCEEDINGS AGAINST REPUBLIC IN THE COURTS OF ANY
OTHER JURISDICTION.
SECTION 5.15. Waiver of Jury Trial. THE MASTER COLLATERAL AGENT, EACH
LESSEE GRANTOR, EACH FINANCING SOURCE, EACH BENEFICIARY AND REPUBLIC HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE MASTER
COLLATERAL AGENT, ANY FINANCING SOURCE, ANY BENEFICIARY, ANY LESSEE GRANTOR OR
REPUBLIC IN CONNECTION HEREWITH OR THEREWITH. REPUBLIC ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE MASTER COLLATERAL AGENT,
EACH FINANCING SOURCE, EACH BENEFICIARY, REPUBLIC AND EACH LESSEE GRANTOR
ENTERING INTO THIS AGREEMENT.
SECTION 5.16. Insurance Notification. The Master Collateral Agent
shall, promptly upon its receipt of notification of any termination of or
proposed cancellation or nonrenewal of any insurance policies required to be
maintained under any of the Financing Documents, notify the Beneficiary thereof
of any such termination, proposed cancellation or nonrenewal.
SECTION 5.17. Waiver of Set-Off With Respect to NFLP, the Lessee
Grantors and Republic. Each of the Beneficiaries hereby waives and relinquishes
any right that it has or may have to set-off or to exercise any banker's lien or
any right of attachment or garnishment with respect to any funds at any time and
from time to time on deposit in, or otherwise to the credit of, any account and
any claims of NFLP, the Lessee Grantors and Republic therein or with respect to
any right to payment from NFLP, the Lessee Grantors and Republic, it being
understood, however, that nothing contained in this Section 5.17 shall, or is
intended to, derogate from the
38
<PAGE> 43
assignment and security interest granted to any Beneficiary under the Financing
Documents or the Master Collateral Agent under this Agreement or impair any
rights of the Beneficiaries or the Master Collateral Agent hereunder or
thereunder.
SECTION 5.18. Confidentiality. Each party hereto (other than Republic,
NFLP and the Lessee Grantors) agrees that it shall not disclose any Confidential
Information to any Person without the prior written consent of Republic, NFLP or
the applicable Lessee Grantor, as the case may be, other than (a) to any
Beneficiary, and then only on a confidential basis, (b) as required by any law,
rule or regulation or any judicial process of which Republic, NFLP or the
applicable Lessee Grantor, as the case may be, has knowledge; provided that any
party hereto may disclose Confidential Information as required by law, rule or
regulation or any judicial process of which Republic, NFLP or the applicable
Lessee Grantor, as the case may be, does not have knowledge if such party is
prohibited by law from disclosing such requirement to Republic, NFLP or the
applicable Lessee Grantor, as the case may be, and (c) in the course of
litigation with Republic, NFLP or any of the Lessee Grantors, as the case may
be, or any Beneficiary.
"Confidential Information" means information that Republic, NFLP or any
of the Lessee Grantors, as applicable, furnishes to a Beneficiary on a
confidential basis, but does not include any such information that is or becomes
generally available to the public other than as a result of a disclosure by such
Beneficiary or other Person to which such Beneficiary delivered such information
or that is or becomes available to such Beneficiary from a source other than
Republic, NFLP or any of the Lessee Grantors, as the case maybe, provided that
such source is not (1) known to such Beneficiary to be bound by a
confidentiality agreement with Republic, NFLP or any of the Lessees, as the case
may be, or (2) known to such Beneficiary to be otherwise prohibited from
transmitting the information by a contractual, legal or fiduciary obligation.
[Remainder of Page Intentionally Blank]
39
<PAGE> 44
IN WITNESS WHEREOF, each party hereto has executed this Agreement or
caused this Agreement to be duly executed by its officer thereunto duly
authorized as of the day and year first above written.
REPUBLIC INDUSTRIES, INC.,
as Master Servicer
By: /s/ Kathleen W. Hyle
-----------------------------------------
Name: Kathleen W. Hyle
Title: Vice President - Finance and
Address: 200 South Andrews Avenue
11th Floor
Ft. Lauderdale, FL 33301
Telephone: (954) 769-7297
Facsimile: (954) 769-4135
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP, as grantor
By: NATIONAL CAR RENTAL FINANCING
CORPORATION, its General Partner
By: /s/ Dwight Jenkins
---------------------------------------
Name: Dwight Jenkins
Title: Vice President and Assistant Secretary
Address: 7700 France Avenue South
Minneapolis, MN
Attention: J. Benzian
Telephone: (612) 830-2552
Facsimile: (612) 830-2087
<PAGE> 45
ALAMO RENT-A-CAR, INC.,
as grantor
By: /s/ Kathleen W. Hyle
-----------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: 200 South Andrews Avenue
11th Floor
Ft. Lauderdale, FL 33301
Telephone: (954) 769-7297
Facsimile: (954) 769-4135
NATIONAL CAR RENTAL SYSTEM, INC.,
as grantor
By: /s/ Kathleen W. Hyle
-----------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: 7700 France Avenue South
Minneapolis, MN
Attention: J. Benzian
Telephone: (612) 830-2552
Facsimile: (612) 830-2087
<PAGE> 46
SPIRIT RENT-A-CAR, INC.,
as grantor
By: /s/ Kathleen W. Hyle
-----------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: 29100 Aurora Road, Suite 400
Solon, OH 44139
Attention: J. Zeman
Telephone: (440) 715-1000 ext. 320
Facsimile: (440) 715-1130
VALUE RENT-A-CAR, INC.,
as grantor
By: /s/ Kathleen W. Hyle
-----------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: 200 South Andrews Avenue
11th Floor
Ft. Lauderdale, FL 33301
Telephone: (954) 769-7297
Facsimile: (954) 769-4135
<PAGE> 47
CITIBANK, N.A.,
not in its individual capacity but
solely as Master Collateral Agent
By: /s/ Jenny Cheng
-----------------------------------------
Name: Jenny Cheng
Title: Assistant Vice President
Address: 111 Wall Street
5th Floor
New York, NY 10043
Attention: Jenny Cheng
Telephone: (212) 657-3778
Facsimile: (212) 657-3872
<PAGE> 1
EXHIBIT 4.5
- --------------------------------------------------------------------------------
SERIES 1997-1 SUPPLEMENT
dated as of October 29, 1997
to the
BASE INDENTURE,
dated as of April 30, 1996
between
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as the Issuer
THE BANK OF NEW YORK,
as the Trustee and as Enhancement Agent
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRELIMINARY STATEMENT
ARTICLE 1
DESIGNATION
ARTICLE 2
DEFINITIONS
Section 2.1 Definitions...................................................................2
Section 2.2 Cross References..............................................................3
ARTICLE 3
SECURITY; REPORTS; COVENANT
Section 3.1 Grant of Security Interest....................................................3
Section 3.2 Reports.......................................................................6
ARTICLE 4
INITIAL ISSUANCE AND INCREASES AND DECREASES OF
SERIES 1997-1 INVESTED AMOUNT OF SERIES 1997-1 NOTES
Section 4.1 Issuance in Definitive Form...................................................6
Section 4.2 Procedure for Increasing the Invested Amount..................................7
Section 4.3 Decreases.....................................................................8
ARTICLE 5
SERIES 1997-1 ALLOCATIONS
Section 5.1 Establishment of Series 1997-1 Collection Account and Series 1997-1
Accrued Interest Account......................................................9
Section 5.2 Allocations with Respect to the Series 1997-1 Notes..........................10
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
Section 5.3 Monthly Payments from the Series 1997-1 Accrued Interest Account..............19
Section 5.4 Payment of Note Interest......................................................20
Section 5.5 Payment of Note Principal.....................................................21
Section 5.6 Servicer's or Republic's Failure to Make a Deposit or Payment.................22
Section 5.7 Series 1997-1 Distribution Account............................................22
Section 5.8 Allocation of Certain Amounts to Interest.....................................23
Section 5.9 Draw on Series 1997-1 Letter of Credit........................................23
Section 5.10 The Series 1997-1 Available Subordinated Amount, the Subordinated
Note and the Demand Note......................................................24
Section 5.11 Letter of Credit Termination Demand...........................................26
Section 5.12 Conversion....................................................................28
Section 5.13 The Series 1997-1 Cash Collateral Account.....................................28
Section 5.14 Appointment of Enhancement Agent..............................................31
ARTICLE 6
Reserved.
ARTICLE 7
AMORTIZATION EVENTS
Section 7.1 Amortization Events...........................................................31
Section 7.2 Right of NFLP to Cure Asset Amount Deficiency.................................33
ARTICLE 8
GENERAL
ANNEX A - Definitions List
EXHIBIT A - Form of Series 1997-1 Note
EXHIBIT B - Reserved.
EXHIBIT C - Form of Notice of Series 1997-1 Lease Payment Deficit
EXHIBIT D - List of Approved Manufacturers
EXHIBIT D-1 - Eligible Non-Program Manufacturers
EXHIBIT D-2 - Eligible Program Manufacturers
</TABLE>
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<PAGE> 4
THIS SERIES 1997-1 SUPPLEMENT, dated as of October 29, 1997 (as the
same may be amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms hereof, this "Supplement"), among NATIONAL CAR
RENTAL FINANCING LIMITED PARTNERSHIP, a special purpose Delaware limited
partnership ("NFLP"), THE BANK OF NEW YORK, a New York banking corporation
(together with its successors in trust under the Base Indenture referred to
below as provided thereunder, the "Trustee") and as enhancement agent (in such
capacity, the "Enhancement Agent"), to the Base Indenture, dated as of April 30,
1996, between NFLP and the Trustee (as amended by the Supplement and Amendment
to Base Indenture dated as of December 20, 1996, between NFLP and the Trustee,
and as the same may be further amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof and in effect, exclusive of
Supplements creating a new Series of Notes, the "Base Indenture").
PRELIMINARY STATEMENT
WHEREAS, Sections 2.2 and 12.1 of the Base Indenture provide, among
other things, that NFLP and the Trustee may at any time and from time to time
enter into a supplement to the Base Indenture for the purpose of authorizing the
issuance of one or more Series of Notes.
WHEREAS, all conditions precedent as set forth in such Sections with
respect to entering into a supplement to the Base Indenture have been satisfied;
provided that, as permitted to be specified in a Supplement, no Opinion of
Counsel shall be delivered pursuant to Section 2.2(f)(i)(x) or Section
2.2(f)(ix)(B), which Sections are hereby specified as not applicable to the
Series 1997-1 Notes.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, and for due and adequate consideration, which the parties
hereto hereby acknowledge, the parties hereto hereby agree as follows:
ARTICLE 1
DESIGNATION
There is hereby created a Series of Notes to be issued pursuant to the
Base Indenture and this Supplement and such Series of Notes (as defined below)
shall be designated generally as Variable Funding Rental Car Asset Backed Notes,
Series 1997-1. The Series 1997-1 Notes shall be issued in one class and are
referred to as the "Series 1997-1 Notes".
The proceeds from the sale of the Series 1997-1 Notes and of Increases
in respect thereof shall be deposited in the Series 1997-1 Collection Account
and shall be available to NFLP and
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<PAGE> 5
used to (i) purchase, finance or refinance Eligible Vehicles for leasing to the
Lessees under the Series 1997 Lease, (ii) to finance or refinance Eligible
Receivables and (iii) in certain circumstances, to make payments in reduction of
the Invested Amount of other Series 1997 Variable Funding Notes. Any proceeds
not so used in accordance with (i), (ii) and (iii) from the preceding sentence
shall remain in the Series 1997-1 Collection Account for future application to
purchase, finance or refinance Eligible Vehicles or to finance or refinance
Eligible Receivables under the Series 1997 Lease or to prepay the Series 1997-1
Notes.
As described herein, the Series 1997-1 Notes will share an undivided
interest in certain collateral which also secures the Series 1997-2 Notes, the
Series 1997-3 Notes and the Series 1997-4 Notes and other Shared Collateral
Series Notes, if any. The Series 1997-1 Notes will not share in the collateral
securing the 1996-1 Notes, and neither the 1996-1 Notes nor any other Series of
Notes that is not a Shared Collateral Series of Notes will share in the
collateral securing the Series 1997-1 Notes. All references in this Supplement
to "all" Series of Notes (and all references in this Supplement to terms defined
in the Base Indenture that contain references to "all" Series of Notes) shall
refer to all Series of Notes other than Segregated Series of Notes.
ARTICLE 2
DEFINITIONS
Section 2.1 Definitions.
(a) Capitalized terms used but not defined herein (including the
preamble and the recitals hereto) shall have the meanings assigned to such terms
in (a) the Definitions List attached hereto as Annex A, as such Definitions List
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms hereof, (b) the Definitions List attached as
Schedule 1 to the Base Indenture, as such Definitions List may be further
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms of the Base Indenture, and (c) the Definitions List
attached as Annex A to the Series 1997-1 Liquidity Agreement, provided that to
the extent, if any, that any capitalized term used but not defined herein has a
meaning assigned to such term in more than one of the lists referred to above,
then (x) if a meaning is assigned to such term in the Definitions List attached
hereto as Annex A as in effect, then such meaning as in effect shall apply
herein, and (y) if a meaning is not assigned to such term in the Definitions
List attached hereto as Annex A, then the meaning assigned to such term in the
Definitions List attached as Schedule 1 to the Base Indenture as in effect shall
apply herein.
(b) For purposes of the Series 1997-1 Notes, any reference in the Base
Indenture to (i) the term "Aggregate Asset Amount" shall be deemed to be a
reference to the Series 1997 Aggregate Asset Amount, (ii) the term "Required
Asset Amount" shall be deemed to be a
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<PAGE> 6
reference to the Series 1997 Required Asset Amount, (iii) the term "Collateral"
shall be deemed to be a reference to the Series 1997 VFN Collateral or the
Series 1997-1 Collateral, as the context may require, (iv) the term "Collection
Account" shall be deemed to be a reference to the Series 1997 Collection Account
or the Series 1997-1 Collection Account, as the context may require, (v) the
term "Lease" shall be deemed to be a reference to the Series 1997 Lease, (vi)
the term "Aggregate Invested Amount" shall be deemed to be a reference to the
Aggregate VFN Invested Amount, (vii) the term "Required Noteholders" shall be
deemed to be a reference to the Series 1997-1 Required Noteholders, (viii) the
term "Requisite Investors"shall be deemed to be a reference to the Required VFN
Noteholders and (ix) the term "Servicer" shall be deemed to be a reference to
the Master Servicer.
(c) Unless otherwise stated herein, each capitalized term used or
defined herein shall relate only to the Series 1997-1 Notes and not to any other
Series of Notes issued by NFLP.
Section 2.2 Cross References. Article, Section or Subsection references
herein shall refer to Articles, Sections or Subsections of the Base Indenture,
except as otherwise provided herein.
ARTICLE 3
SECURITY; REPORTS; COVENANT
Section 3.1 Grant of Security Interest.
(a) To secure the NFLP Obligations with respect to the Series 1997-1
Notes (and the other Series 1997 Variable Funding Notes), NFLP hereby pledges,
assigns, conveys, delivers, transfers and sets over to the Trustee, for the
benefit of the Series 1997 Variable Funding Noteholders and the Retained
Interestholder (the Series 1997 Variable Funding Noteholders being referred to
as the "Secured Parties"), and hereby grants to the Trustee, for the benefit of
the Secured Parties, a security interest in all of NFLP's right, title and
interest in and to all of the following assets, property and interests in
property, whether now owned or hereafter acquired or created (all of such right,
title and interest, together with the portion of the Master Collateral with
respect to which the Trustee is named as a Beneficiary, being referred to as the
"Series 1997 VFN Collateral"):
(i) all right, title and interest of NFLP in, to and under the
Series 1997 NFLP Agreements (other than the Series 1997 Lease Payments
and the Manufacturer Payment Rights), including, without limitation,
all monies due and to become due to NFLP from the Lessees or the
Servicers under or in connection with the Series 1997 NFLP Agreements
(other than the Series 1997 Lease Payments and the Manufacturer Payment
Rights), whether payable as fees, expenses, costs, indemnities,
insurance recoveries,
-3-
<PAGE> 7
damages for the breach of any of Series 1997 NFLP Agreements or
otherwise, and all rights, remedies, powers, privileges and claims of
NFLP against any other party under or with respect to the Series 1997
NFLP Agreements (whether arising pursuant to the terms of such Series
1997 NFLP Agreements or otherwise available to NFLP at law or in
equity), the right to enforce any of the Series 1997 NFLP Agreements as
provided herein and to give or withhold any and all consents, requests,
notices, directions, approvals, extensions or waivers under or with
respect to any Series 1997 NFLP Agreements or the obligations of any
party thereunder; and
(ii) all right, title and interest of NFLP in, to and under
the NFLP Receivables Trust Agreement, the NFLP Beneficial Interest and
the right to receive all distributions and payments pursuant thereto
and in respect thereof; and
(iii) the Series 1997 Collection Account, (b) all funds on
deposit therein allocable to Series 1997 Vehicles from time to time,
(c) all certificates and instruments, if any, representing or
evidencing any or all of the Series 1997 Collection Account or the
funds on deposit therein allocable to Series 1997 Vehicles from time to
time, and (d) all Permitted Investments made at any time and from time
to time with the moneys allocable to Series 1997 Vehicles in the Series
1997 Collection Account or any subaccount thereof (including income
thereon); and
(iv) all right, title and interest of NFLP in, to and under
the Master Collateral (other than the Manufacturer Payment Rights) with
respect to the portion of the Master Collateral for which NFLP is
designated as a Financing Source and the Trustee is designated as a
Beneficiary (on behalf of the Series 1997 Variable Funding Noteholders)
thereunder; and
(v) the Demand Note and the Subordinated Note; and
(vi) all additional property that may from time to time
hereafter (pursuant to the terms of any Supplement or otherwise) be
subjected to the grant and pledge hereof by NFLP or by anyone on its
behalf; and
(vii) all proceeds, products, rents or profits of any and all
of the foregoing including, without limitation, payments under
insurance (whether or not the Master Collateral Agent or the Trustee is
the loss payee thereof) or Vehicle warranties and cash, but not
including (for the avoidance of doubt) payments under consumer rental
agreements.
The Series 1997 VFN Collateral shall secure the Series 1997 Variable Funding
Notes equally and ratably without prejudice, priority or distinction. No Person
other than the Secured Parties will be entitled to the benefit of any of the
Series 1997 VFN Collateral.
-4-
<PAGE> 8
(b) NFLP hereby confirms the sale, grant, pledge, hypothecation,
assignment, conveyance, delivery and transfer to the NFLP Receivables Trustee
under the NFLP Receivables Trust Agreement, in exchange for the NFLP Beneficial
Interest, of all NFLP's right, title and interest in, to, under and in respect
of the Series 1997 Lease Payments and the Manufacturer Payment Rights.
(c) To secure the NFLP Obligations with respect to the Series 1997
Variable Funding Notes, NFLP hereby confirms the grant, pledge, hypothecation,
assignment, conveyance, delivery and transfer to the Master Collateral Agent
under the Master Collateral Agency Agreement for the benefit of the Trustee of a
continuing first priority perfected security interest in all right, title and
interest of NFLP in, to and under all the NFLP Master Collateral.
(d) To further secure the NFLP Obligations with respect to the Series
1997-1 Notes (but not any other Series of Notes), NFLP hereby pledges, assigns,
conveys, delivers, transfers and sets over to the Enhancement Agent, in the case
of items (i) and (ii), and the Trustee, in the case of items (iii) and (iv)
below, for the benefit of the Series 1997-1 Noteholders (but not any other
Series of Notes) (the Series 1997-1 Noteholders being referred to as the "Series
1997-1 Secured Parties"), and hereby grants to the Enhancement Agent, in the
case of items (i) and (ii), and the Trustee, in the case of items (iii) and (iv)
below, for the benefit of the Series 1997-1 Secured Parties, a security interest
in all of NFLP's right, title and interest in and to all of the following
assets, property and interests in property, whether now owned or hereafter
acquired or created (the "Series 1997-1 Separate Collateral"):
(i) the Series 1997-1 Letter of Credit; and
(ii) (A) any Series 1997-1 Cash Collateral Account; (B) all
funds on deposit therein from time to time; (C) all certificates and
instruments, if any, representing or evidencing any or all of any such
Series 1997-1 Cash Collateral Account or the funds on deposit therein
from time to time; (D) all investments made at any time and from time
to time with moneys in any such Series 1997-1 Cash Collateral Account;
and (E) all proceeds of any and all of the foregoing, including,
without limitation, cash;
(iii) (A) the Series 1997-1 Distribution Account; (B) all
funds on deposit therein from time to time; (C) all certificates and
instruments, if any, representing or evidencing any or all of the
Series 1997-1 Distribution Account or the funds on deposit therein from
time to time; (D) all Permitted Investments made at any time and from
time to time with moneys in the Series 1997-1 Distribution Account; and
(E) all proceeds of any and all of the foregoing, including, without
limitation, cash (the items in the foregoing clauses (A) through (E)
are referred to, collectively, as the "Series 1997-1 Distribution
Account Collateral"); and
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<PAGE> 9
(iv) (A) the Series 1997-1 Collection Account; (B) all funds
on deposit therein from time to time; (C) all certificates and
instruments, if any, representing or evidencing any or all of the
Series 1997-1 Collection Account or the funds on deposit therein from
time to time; (D) all Permitted Investments made at any time and from
time to time with moneys in the Series 1997-1 Collection Account or any
subaccount thereof (including income thereon); and (E) all proceeds of
any and all of the foregoing, including, without limitation, cash.
The Series 1997-1 Separate Collateral shall secure the Series 1997-1 Notes
equally and ratably without prejudice, priority or distinction.
(e) Notwithstanding anything to the contrary contained in (a), (b), (c)
and (d) above, the Series 1997 VFN Collateral shall not include (i) any Excluded
Payments or (ii) the Retained Distribution Account, any funds properly remitted
and deposited therein from time to time, any certificates or instruments, if
any, representing or evidencing any or all of the Retained Distribution Account
or any Permitted Investments made at any time and from time to time with the
moneys properly remitted and deposited in the Retained Distribution Account
(including the income thereon or any proceeds thereof, including, without
limitation, cash); provided, further, the Series 1997 VFN Collateral shall not
include any right, title or interest in the Fleet Finance Agreement or the NFLP
Fleet Finance Agreement and payments thereunder.
(f) The foregoing grants are made in trust to secure the NFLP
Obligations with respect to the Series 1997-1 Notes and to secure compliance
with the provisions of this Indenture and this Series 1997-1 Supplement, all as
provided in this Indenture. The Trustee and the Enhancement Agent, as trustees
on behalf of the Series 1997-1 Secured Parties, acknowledge such grant, accept
the trusts under this Indenture in accordance with the provisions of this
Indenture and agree to perform their respective duties required in this
Indenture to the best of its abilities to the end that the interests of the
Series 1997-1 Noteholders may be adequately and effectively protected.
Section 3.2 Reports. Not later than the third (3rd) Business Day
immediately preceding each Distribution Date, the Master Servicer shall furnish
to the Trustee a Monthly Certificate (which shall include the Liquidity Amount
as of the last Business Day of the Related Month) and a Fleet Report with
respect to the Series 1997-1 Collateral.
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ARTICLE 4
INITIAL ISSUANCE AND INCREASES AND DECREASES OF
SERIES 1997-1 INVESTED AMOUNT OF SERIES 1997-1 NOTES
Section 4.1 Issuance in Definitive Form. Pursuant to Section 2.18 of
the Base Indenture, upon request by NFLP, NFLP and the Series 1997-1 Noteholder
hereby consent to the issuance of the Series 1997-1 Notes in the form of
Definitive Notes. The Series 1997-1 Notes and each Increase shall initially be
sold to investors in reliance on an exemption from the registration requirements
of the Securities Act, and shall be issued in the form of one or more Definitive
Notes, in fully registered form without interest coupons, substantially in the
form attached hereto as Exhibit A, with such legends as may be applicable
thereto, duly executed by NFLP and authenticated by the Trustee as provided in
Section 2.4 of the Base Indenture, in an aggregate stated principal amount of up
to the Series 1997-1 Maximum Invested Amount. The aggregate Principal Balance of
the Series 1997-1 Notes outstanding at any time may not exceed the Series 1997-1
Maximum Invested Amount at such time.
Section 4.2 Procedure for Increasing the Invested Amount.
(a) Subject to satisfaction of the conditions precedent set forth in
subsection (c) of this Section 4.2 (as evidenced by an Officer's Certificate of
the Master Servicer delivered to the Trustee), on the Series 1997-1 Closing
Date, NFLP may issue Series 1997-1 Notes in the initial aggregate principal
amount equal to the Series 1997-1 Initial Invested Amount. Such Series 1997-1
Notes shall be issued to the Series 1997-1 Noteholder. Proceeds from such Series
1997-1 Notes shall be deposited into the Series 1997-1 Collection Account and
allocated in accordance with Section 5.2 hereof.
(b) On the Series 1997-1 Closing Date and thereafter on any Business
Day during the Series 1997-1 Revolving Period, NFLP may, upon request by a
Lessee to lease Series 1997 Vehicles under the Series 1997 Lease, increase the
Series 1997-1 Invested Amount (each such increase referred to as an "Increase")
by issuing, at par, additional Series 1997-1 Invested Amount of Series 1997-1
Notes in amounts that satisfy the following requirements: (i) the portion of the
Increase represented by additional Series 1997-1 Invested Amount shall be such
that no Series 1997-1 Enhancement Deficiency would result after giving effect to
such Increase in the Series 1997-1 Invested Amount and the application of the
proceeds thereof to leasing Vehicles under the Series 1997 Lease; and (ii) no
Series 1997 Asset Amount Deficiency will result from such Increase. Satisfaction
of the above conditions shall be evidenced by the delivery of a certificate from
the Master Servicer to such effect. Proceeds from any Increase shall be
deposited into the Series 1997-1 Collection Account and allocated in accordance
with Section 5.2 hereof. Upon each Increase, the Trustee shall, or shall cause
the Note Registrar to, indicate in the Note Register such Increase.
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(c) The Series 1997-1 Invested Amount may be increased pursuant to
subsection (a) or (b) above only upon satisfaction of each of the following
conditions (as evidenced by an Officers' Certificate delivered by NFLP to the
Trustee) with respect to each proposed Increase:
(i) the amount of such Increase shall be equal to or greater
than $100,000;
(ii) after giving effect to such Increase, the Principal
Balance of the Series 1997-1 Notes shall not exceed the Series 1997-1
Maximum Invested Amount;
(iii) there shall not then exist, nor shall such Increase
result in the occurrence of, (x) an Amortization Event, a Liquidation
Event of Default or a Series 1997-1 Limited Liquidation Event of
Default, or (y) an event or occurrence, which, with the passing of time
or the giving of notice thereof, or both, would become an Amortization
Event, a Liquidation Event of Default or a Series 1997-1 Limited
Liquidation Event of Default;
(iv) all conditions precedent (1) to the acquisition of
additional Vehicles under the Series 1997 Lease, (2) to the making of
Advances under the Series 1997-1 Note Purchase Agreement and (3) to the
issuance of Commercial Paper Notes as specified in the Series 1997-1
Liquidity Agreement shall have, in each case, been satisfied;
(v) with respect to the Initial Fleet, each applicable Lessee
shall have delivered to the Master Collateral Agent a duly executed
Assignment and Nominee Agreement satisfactory in form to the Lessor and
the Trustee;
(vi) notice of such Increase shall have been delivered to the
Series 1997-1 Collateral Agent and the Series 1997-1 Liquidity Agent;
(vii) all representations and warranties set forth in Article
7 of the Base Indenture and in Section 23 of the Series 1997 Lease
shall be true and correct in all material respects;
(viii) with respect to the Increase on the VFN Closing Date
only, the Master Servicer shall have calculated the Series 1997-1
Available Subordinated Amount and the Series 1997-1 Enhancement Amount
and the Trustee shall have confirmed receipt of such written
calculation;
(ix) with respect to the Increase on the VFN Closing Date
only, after giving effect to such Increase, the Aggregate VFN Invested
Amount shall not exceed the Maximum Aggregate VFN Invested Amount; and
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(x) with respect to the Increase on the VFN Closing Date only,
NFLP shall have granted to the Trustee a first priority security
interest in its right, title and interest in and to the Series 1997 VFN
Collateral and the Series 1997-1 Separate Collateral.
Section 4.3 Decreases.
(a) Mandatory Decreases. Whenever (i) a Series 1997-1 Enhancement
Deficiency exists, then, on the Distribution Date immediately following
discovery of such Series 1997-1 Enhancement Deficiency, NFLP shall, on or before
the next Distribution Date pay or deposit to the Series 1997-1 Collection
Account to be allocated in accordance with Section 5.2 hereof, a principal
payment to decrease the Series 1997-1 Invested Amount (subject to the
limitations specified in Section 4.3(c) below) by the amount necessary, so that
after giving effect to all Decreases of the Series 1997-1 Invested Amount on
such Distribution Date, no such Series 1997-1 Enhancement Deficiency shall exist
and (ii) a Series 1997 Asset Amount Deficiency exists, then, on the Distribution
Date immediately following discovery of such Series 1997 Asset Amount
Deficiency, NFLP shall, on or before the next Distribution Date pay or deposit
to the Series 1997-1 Collection Account to be allocated in accordance with
Section 5.2 hereof, a principal payment to decrease the Series 1997-1 Invested
Amount (subject to the limitations specified in Section 4.3(c) below) in an
amount equal to the Series 1997-1 Invested Percentage (with respect to Principal
Collections) of the amount of such Series 1997 Asset Amount Deficiency (each
reduction of the Series 1997-1 Invested Amount pursuant to this Section 4.3(a),
a "Mandatory Decrease"). Upon discovery of such a Series 1997-1 Enhancement
Deficiency, NFLP shall deliver notice of any such Mandatory Decreases to the
Trustee.
(b) Voluntary Decreases. NFLP may voluntarily prepay all or a portion
of the Series 1997-1 Invested Amount of the Series 1997-1 Notes to be paid or
deposited into the Series 1997-1 Collection Account and to be allocated in
accordance with Section 5.2 hereof and in accordance with the procedures set
forth herein (each reduction of the Series 1997-1 Invested Amount pursuant to
this Section 4.3(b), a "Voluntary Decrease"); provided that the Series 1997
Vehicles released in connection with any such Voluntary Decrease pursuant to
this Section 4.3(b) shall be selected such that no Series 1997-1 Enhancement
Deficiency exists after giving effect to such Decrease. Each such Decrease shall
be, in the aggregate for all Series 1997-1 Notes, in a minimum principal amount
of $100,000.
(c) Upon receipt by a Trust Officer of written notice that a Decrease
has been completed, the Trustee shall, or shall cause the Note Registrar to,
indicate in the Note Register such Decrease. The amount of any Decrease shall
not exceed the amount on deposit in the VFN Collection Accounts and available
for distribution to Series 1997-1 Noteholders in respect of principal on the
Series 1997-1 Notes on the date of such Decrease pursuant to the terms hereof
and as Shared Series 1997 VFN Collections pursuant to the terms of the other
Series 1997 Variable Funding Supplements.
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ARTICLE 5
SERIES 1997-1 ALLOCATIONS
With respect to the Series 1997-1 Notes only, the following shall
apply:
Section 5.1 Establishment of Series 1997-1 Collection Account and
Series 1997-1 Accrued Interest Account.
(a) The Trustee will establish and maintain a segregated trust account
for the benefit of the Series 1997-1 Noteholders (the "Series 1997-1 Collection
Account"). Amounts on deposit in the Series 1997-1 Collection Account shall be
invested in accordance with Sections 5.1(d) and (e) of the Base Indenture.
(b) The Trustee will establish and maintain an administrative
sub-account within the Series 1997-1 Collection Account with respect to Interest
Collections (such sub-account, the "Series 1997-1 Accrued Interest Account").
Funds on deposit in the Series 1997-1 Accrued Interest Account shall be invested
in accordance with Sections 5.1(d) and (e) of the Base Indenture.
(c) The Trustee will establish and maintain a segregated trust account
for the benefit of the Series 1997 Variable Funding Noteholders (the "Series
1997 Collection Account"). Amounts on deposit in the Series 1997 Collection
Account shall be invested in accordance with Sections 5.1(d) and (e) of the Base
Indenture.
Section 5.2 Allocations with Respect to the Series 1997-1 Notes. The
proceeds from the sale of the Series 1997-1 Notes will initially be delivered by
or on behalf of NFLP to the Trustee by depositing such proceeds in the Series
1997-1 Collection Account. On each Business Day thereafter, all VFN Collections
shall initially be deposited into the Series 1997 Collection Account. On each
Business Day on which VFN Collections are deposited into the Series 1997
Collection Account (each such date, a "Deposit Date"), the Master Servicer,
prior to 12:00 noon (New York City time), will direct the Trustee in writing to
allocate to the Series 1997-1 Collection Account (1) a portion of such VFN
Collections (including Recoveries, which shall be treated as Principal
Collections) equal to the Series 1997-1 Collections for such Deposit Date and
(2) all Shared Series 1997 VFN Collections allocable to the series 1997-1 Notes
from other VFN Collection Accounts, in each case, for further allocation in
accordance with the provisions of this Section 5.2.
(a) Allocations of Collections During the Series 1997-1
Revolving Period. During the Series 1997-1 Revolving Period, the Master
Servicer, at the Master Servicer's option in the case of subsection (x)
(except to extent provided in such subsection(x)(i)), will direct the
Trustee in writing to allocate all Series 1997-1 Collections and Shared
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Series 1997 VFN Collections from other VFN Collection Accounts
deposited into the Series 1997-1 Collection Account (including
Recoveries) as set forth below:
(x) On each Deposit Date, prior to 1:00 p.m. (New
York City time):
(i) allocate to the Series 1997-1 Accrued
Interest Account an amount, as stated in such Master
Servicer direction, not to exceed the excess of
accrued and unpaid Series 1997-1 Note Interest as of
such date over the amount on deposit in the Series
1997-1 Accrued Interest Account on such date
(provided that the allocation pursuant to this
subsection (x)(i) shall be mandatory on any day on
which Commercial Paper Notes mature and, to the
extent that the amount allocated pursuant to this
subsection (x)(i) on such maturity date is
insufficient to pay the interest due on maturing
Commercial Paper Notes on such date, the allocation
pursuant to this subsection (x)(i) will be mandatory
on each succeeding day until such shortfall is paid;
and provided further that all amounts allocated
pursuant to this subsection (x)(i) in respect of
maturing Commercial Paper Notes shall be applied on
such date in accordance with Section 5.4); and
(ii) allocate to the Series 1997-1
Distribution Account the amount, as stated in such
Master Servicer direction, of any Mandatory Decreases
in the Series 1997-1 Invested Amount to be made in
accordance with Section 4.3(a) hereof for payment on
the date designated in such Master Servicer direction
as a principal payment on account of the Series
1997-1 Notes to reduce the Series 1997-1 Invested
Amount; and
(iii) make available to NFLP an amount, as
stated in such Master Servicer direction, equal to
any Series 1997 Lease Advances that are in accordance
with the requirements of and conditions precedent
under the Series 1997 Lease; and
(iv) to the extent that a mandatory decrease
is payable to the Holders of any other Series of
Series 1997 Variable Funding Notes on such Deposit
Date and remains unpaid after application of all
available VFN Collections initially allocated to such
Series of Notes, allocate to the distribution account
for each such other Series (pro rata (1) from each
other VFN Collection Account with funds available for
application to pay such mandatory decrease on the
basis of the amounts available in all such VFN
Collection Accounts and (2) to each VFN Collection
Account having an unpaid mandatory decrease on the
basis of the portion of such mandatory decrease
remaining unpaid) the amounts remaining in the Series
1997-1 Collection Account on such Deposit Date after
application
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<PAGE> 15
pursuant to clauses (i) through (iii) above (up to
the aggregate amount of such unpaid mandatory
decreases in respect of such other Series of Series
1997 Variable Funding Notes) for application to pay
such mandatory decrease; provided, however, that such
allocation shall not be deemed to reduce the Series
1997-1 Invested Amount (such amounts and similar
amounts from other VFN Collection Accounts, "Shared
Series 1997 VFN Collections"); and
(v) allocate to the Series 1997-1
Distribution Account the amount, as stated in such
Master Servicer direction, of any Voluntary Decreases
in the Series 1997-1 Invested Amount to be made in
accordance with Section 4.3(b) hereof for payment on
the date designated in such Master Servicer direction
as a principal payment on account of the Series
1997-1 Notes to reduce the Series 1997-1 Invested
Amount; and
(vi) allocate to the Retained Distribution
Account the amount, as stated in such Master Servicer
direction, of any transfer to be made in accordance
with Section 5.2(d)(y) hereof; and
(vii) the amounts remaining in the Series
1997-1 Collection Account on such Deposit Date after
application pursuant to clauses (i) through (vi)
above shall be retained on deposit and shall be
available on future Deposit Dates for application in
accordance with this Section 5.2.
(y) On each Distribution Date during the Series
1997-1 Revolving Period and the first Distribution Date
following the end of the Series 1997-1 Revolving Period, the
Master Servicer will direct the Trustee in writing (prior to
10:00 a.m., New York City time) to allocate all Series 1997-1
Collections on deposit in the Series 1997-1 Collection Account
and, if specified below, pay to the account specified below:
(i) with respect to each Servicer which is
not Republic or an Affiliate of Republic, withdraw
and pay to such Servicer an amount, as stated in such
Master Servicer direction, equal to (i) the Series
1997-1 Monthly Servicing Fee (and any Series 1997-1
Monthly Supplemental Servicing Fee) accrued since the
preceding Distribution Date in respect of such
non-Affiliate Servicer, plus (ii) all accrued and
unpaid Series 1997-1 Monthly Servicing Fees (and any
Series 1997-1 Monthly Supplemental Servicing Fees) in
respect of previous periods in respect of such
non-Affiliate Servicer; and
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<PAGE> 16
(ii) allocate to the Series 1997-1 Accrued
Interest Account an amount, as stated in such Master
Servicer direction, equal to the excess of the Series
1997-1 Note Interest due on such Distribution Date
over the amount on deposit in the Series 1997-1
Accrued Interest Account for application in
accordance with Section 5.4 hereof;
(iii) with respect to each Servicer which is
Republic or an Affiliate thereof, withdraw and pay to
such Servicer an amount, as stated in such Master
Servicer direction, equal to (i) the Series 1997-1
Monthly Servicing Fee (and any Series 1997-1 Monthly
Supplemental Servicing Fee) accrued since the
preceding Distribution Date in respect of each
Servicer that is Republic or an Affiliate, plus (ii)
all accrued and unpaid Series 1997-1 Monthly
Servicing Fees (and any Series 1997-1 Monthly
Supplemental Servicing Fees) in respect of previous
periods in respect of each Servicer that is Republic
or an Affiliate, minus (iii) the amount of any Series
1997-1 Monthly Servicing Fees (and Series 1997-1
Monthly Supplemental Servicing Fees) withheld by the
Servicers since the preceding Distribution Date
pursuant to Section 5.2(c) of the Base Indenture. On
such Distribution Date, the Trustee shall withdraw
such amount from the Series 1997-1 Collection Account
and remit such amount to the Servicers; and
(iv) allocate to the Series 1997-1
Distribution Account the amount, as stated in such
Master Servicer direction, of any Mandatory Decreases
in the Series 1997-1 Invested Amount to be made in
accordance with Section 4.3(a) hereof for payment on
the related Distribution Date as a principal payment
on account of the Series 1997-1 Notes to reduce the
Series 1997-1 Invested Amount; and
(v) make available to NFLP an amount, as
stated in such Master Servicer direction, equal to
any Series 1997 Lease Advances that are in accordance
with the requirements of and conditions precedent
under the Series 1997 Lease; and
(vi) to the extent that a mandatory decrease
is payable to the Holders of any other Series of 1997
Variable Funding Notes on such Distribution Date and
remains unpaid after application of all available VFN
Collections initially allocated to such Series of
Notes, allocate to the distribution account for each
such other Series (pro rata (1) from each other VFN
Collection Account with funds available for
application to pay such mandatory decrease on the
basis of the amounts available in all such VFN
Collection Accounts and (2) to each VFN Collection
Account having
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<PAGE> 17
an unpaid mandatory decrease on the basis of the
portion of such mandatory decrease remaining unpaid)
the amounts remaining in the Series 1997-1 Collection
Account after application pursuant to clauses (i)
through (v) above (up to the aggregate amount of such
unpaid mandatory decreases in respect of such other
Series of Series 1997 Variable Funding Notes) for
application as Shared Series 1997 VFN Collections to
pay such mandatory decrease (provided, however, that
such allocation shall not be deemed to reduce the
Series 1997-1 Invested Amount); and
(vii) allocate to the Series 1997-1
Distribution Account the amount, as stated in such
Master Servicer direction, of any Voluntary Decreases
in the Series 1997-1 Invested Amount to be made in
accordance with Section 4.3(b) hereof for payment on
the related Distribution Date as a principal payment
on account of the Series 1997-1 Notes to reduce the
Series 1997-1 Invested Amount; and
(viii) so long as no Series 1997 Asset
Amount Deficiency exists or would result and so long
as no Series 1997-1 Enhancement Deficiency exists or
would result, allocate to the Retained Distribution
Account the remainder of such Series 1997-1
Collections; provided that, at the option of NFLP,
any portion of such remaining Series 1997-1
Collections constituting Profits shall not be
allocated to the Retained Distribution Account but
will instead be available to be lent under the
Subordinated Note in accordance with Section 5.10
hereof.
(b) Allocations During the Series 1997-1 Rapid Amortization
Period. During the Series 1997-1 Rapid Amortization Period, the Master
Servicer will direct the Trustee in writing to allocate, prior to 12:00
noon (New York City time) on each Distribution Date, all Series 1997-1
Collections (including Recoveries) and all Shared Series 1997 VFN
Collections deposited in the Series 1997-1 Collection Account as set
forth below:
(i) with respect to each Servicer which is not
Republic or an Affiliate of Republic, withdraw and pay to such
Servicer an amount, as stated in such Master Servicer
direction, equal to (i) the Series 1997-1 Monthly Servicing
Fee (and any Series 1997-1 Monthly Supplemental Servicing Fee)
accrued since the preceding Distribution Date in respect of
such non-Affiliate Servicer, plus (ii) all accrued and unpaid
Series 1997-1 Monthly Servicing Fees (and any Series 1997-1
Monthly Supplemental Servicing Fees) in respect of previous
periods in respect of such non-Affiliate Servicer; and
(ii) allocate to the Series 1997-1 Accrued Interest
Account an amount, as stated in such Master Servicer
direction, equal to the excess of the Series 1997-1
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<PAGE> 18
Note Interest due on such Distribution Date over the amount on
deposit in the Series 1997-1 Accrued Interest Account for
allocation in accordance with Section 5.4 hereof;
(iii) with respect to each Servicer which is Republic
or an Affiliate thereof, withdraw and pay to such Servicer an
amount, as stated in such Master Servicer direction, equal to
(i) the Series 1997-1 Monthly Servicing Fee (and any Series
1997-1 Monthly Supplemental Servicing Fee) accrued since the
preceding Distribution Date in respect of each Servicer that
is Republic or an Affiliate, plus (ii) all accrued and unpaid
Series 1997-1 Monthly Servicing Fees (and any Series 1997-1
Monthly Supplemental Servicing Fees) in respect of previous
periods in respect of each Servicer that is Republic or an
Affiliate, minus (iii) the amount of any Series 1997-1 Monthly
Servicing Fees (and Series 1997-1 Monthly Supplemental
Servicing Fees) withheld by the Servicers since the preceding
Distribution Date pursuant to Section 5.2(c) of the Base
Indenture. On such Distribution Date, the Trustee shall
withdraw such amount from the Series 1997-1 Collection Account
and remit such amount to the Servicers; and
(iv) allocate to the Series 1997-1 Distribution
Account Series 1997-1 Collections and Shared Series 1997 VFN
Collections up to the then outstanding Series 1997-1 Invested
Amount, as stated in such Master Servicer direction for
application in accordance with Section 5.5 hereof;
(v) allocate to the Series 1997-1 Distribution
Account, all remaining Series 1997-1 Collections and Shared
Series 1997 VFN Collections allocable to the Series 1997-1
Collection Account up to the Principal Balance of, and
interest on, the Series 1997-1 Notes and all other amounts due
under this Series 1997-1 Supplement and the Series 1997-1 Note
Purchase Agreement; and
(vi) allocate to the Retained Distribution Account
all remaining Series 1997-1 Collections after allocations in
clauses (i) through (iv) above for allocation in accordance
with Section 5.2(d) hereof.
(c) Additional Allocations for All Periods. The Master
Servicer will direct the Trustee in writing to allocate the amounts set
forth below as follows:
(x) Monthly, for each Distribution Date, allocate in
respect of the Series 1997-1 Notes an amount, as stated in
such Master Servicer direction, equal to the Series 1997-1
Losses for the Related Month in the following manner:
(i) first, reduce the Series 1997-1
Available Subordinated Amount by the amount of such
Series 1997-1 Losses until the Series 1997-1
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<PAGE> 19
Available Subordinated Amount has been reduced to
zero for allocation in accordance with Section 5.10
hereof;
(ii) second, to the extent any such Series
1997-1 Losses are Series 1997 Non-Program Losses of
the type described in part (a) of the definition
thereof or Series 1997 Program Losses of the type
described in part (a) of the definition thereof and
remain after the Series 1997-1 Available Subordinated
Amount has been reduced to zero, draw on the Series
1997-1 Letter of Credit or make a withdrawal from the
Series 1997-1 Cash Collateral Account in the amount
of such Series 1997-1 Losses in accordance with
Section 5.9 hereof and deposit the proceeds of such
draw in the Series 1997-1 Distribution Account for
allocation in accordance with Section 5.5 hereof;
(iii) third, to the extent any such Series
1997-1 Losses are Series 1997 Non-Program Losses of
the type described in part (b) of the definition
thereof or Series 1997 Program Losses of the type
described in part (b) of the definition thereof and
remain after the Series 1997-1 Available Subordinated
Amount has been reduced to zero, make a demand for
payment under the Subordinated Note in the amount
stated in such Master Servicer direction, up to the
Series 1997-1 Invested Percentage (with respect to
Losses) of the outstanding principal amount of the
Subordinated Note, and then make a demand for payment
of any remainder under the Demand Note in the amount
stated in such Master Servicer direction, up to the
Series 1997-1 Invested Percentage (with respect to
Losses) of the outstanding principal amount of the
Demand Note in accordance with Section 5.10 hereof
(any failure of National to pay under the Demand Note
shall give rise to a Series 1997-1 Letter of Credit
draw as specified in Section 5.10 hereof) and deposit
the proceeds of such payment or draw in the Series
1997-1 Distribution Account for allocation in
accordance with Section 5.5 hereof; and
(iv) fourth, any Series 1997-1 Losses
remaining after making the allocations, withdrawals
and claims under clauses (i), (ii) and (iii) above
will be allocated, as stated in such Master Servicer
direction, to reduce the Series 1997-1 Invested
Amount.
(y) Monthly, for each Distribution Date, allocate to
the Series 1997-1 Notes an amount, as stated in such Master
Servicer direction, equal to the Series 1997-1 Recoveries for
the Related Month in the following manner:
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<PAGE> 20
(i) first, allocate all such Series 1997-1
Recoveries to reinstate the Series 1997-1 Invested
Amount, to the extent the Series 1997-1 Invested
Amount has been reduced pursuant to Section
5.2(c)(x)(iv) above;
(ii) second, if the Series 1997-1 Cash
Collateral Account has been funded, deposit into such
account all remaining Series 1997-1 Recoveries after
making the allocations in clause (i) above until the
amount on deposit in the Series 1997-1 Cash
Collateral Account equals the Series 1997-1 Required
Letter of Credit Amount as stated in such Master
Servicer direction;
(iii) third, allocate all remaining Series
1997-1 Recoveries after making the allocations in
clauses (i) and (ii) above up to the amount, as
stated in such Master Servicer direction, necessary
to reinstate the Series 1997-1 Available Subordinated
Amount to the Series 1997-1 Required Subordinated
Amount; and
(iv) fourth, the remainder of such Series
1997-1 Recoveries after making the allocations in
(i), (ii) and (iii) above shall constitute Series
1997-1 Profits that shall be allocated to the
Retained Distribution Account for allocation in
accordance with Section 5.2(d) hereof or, at the
option and direction of the Master Servicer, lent
under the Subordinated Note in accordance with
Section 5.10 hereof or to be re-advanced under the
terms of the Demand Note.
(d) Additional Allocations to VFN Retained Interest Amount.
(x) On or before 10:00 a.m. (New York City time) on each date specified
below, the Master Servicer will direct the Trustee in writing to
allocate the amounts set forth below as follows:
(i) On each Deposit Date, allocate to the Retained
Distribution Account an amount equal to (x) the VFN Retained
Interest Percentage (as of such day) of the aggregate amount
of VFN Collections deposited into the Series 1997 Collection
Account on such Deposit Date which are Principal Collections,
minus (y) any amounts, other than Monthly Servicing Fees,
which have been withheld by the Master Servicer pursuant to
Section 5.2(c) of the Base Indenture (in accordance with the
limitations set forth in Section 5.2(e)(A) of this Series
1997-1 Supplement), to the extent such amounts withheld
constitute all or part of the VFN Retained Interest;
(ii) On each Distribution Date, allocate to the VFN
Retained Interest Amount an amount equal to the applicable VFN
Retained Interest Percentage of
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the aggregate amount of Losses for the Related Month, which
amount shall reduce the VFN Retained Interest Amount; and
(iii) On each Distribution Date, allocate to the VFN
Retained Interest Amount an amount equal to the applicable VFN
Retained Interest Percentage of the aggregate amount of
Recoveries for the Related Month, which amount shall increase
the VFN Retained Interest Amount;
provided, however, that clauses (d)(i), (ii) and (iii) above shall not
be duplicative with any similar provisions contained in any other
Supplement and the Retained Interestholder shall only be paid or
allocated such amount once on any Deposit Date or other day.
(y) At any time and from time to time upon receipt of a duly
executed Master Servicer direction, the Trustee will transfer funds
from the Series 1997-1 Collection Account to the Retained Distribution
Account; provided, however, that the Trustee will not make any such
transfer on any date unless the Trustee receives an Officer's
Certificate from the Master Servicer stating that (i) the Master
Servicer has calculated the Series 1997 Aggregate Asset Amount, the
Series 1997 Required Asset Amount, the Series 1997-1 Enhancement Amount
and the Series 1997-1 Minimum Enhancement Amount as of the date of such
transfer, (ii) on the date such transfer is made no Series 1997 Asset
Amount Deficiency exists and no Series 1997 Asset Amount Deficiency
will result from the making of such transfer and (iii) on the date such
transfer is made no Series 1997-1 Enhancement Deficiency exists and no
Series 1997-1 Enhancement Deficiency will result from the making of
such transfer.
(e) Allocation Adjustments. Notwithstanding the foregoing
provisions of this Section 5.2:
(A) notwithstanding anything contained in Section
5.2(c) of the Base Indenture, to the extent that the VFN
Retained Interest Amount exceeds zero, the Master Servicer (i)
may make or cause to be made deposits to the Series 1997-1
Collection Account net of any portions thereof which are
allocable to the Retained Distribution Account and represent
amounts due and owing to the Master Servicer and (ii) need not
deposit or cause to be deposited any amounts to be paid to the
Master Servicer pursuant to Section 5.2 of the Base Indenture,
and such amounts will be deemed to have been paid to the
Master Servicer pursuant to Section 5.2 of the Base Indenture;
provided, however, that no Master Servicer other than Republic
or an Affiliate of Republic, nor any Master Servicer with
respect to which a Lease Event of Default has occurred and is
continuing, shall be entitled to withhold any amounts pursuant
to Section 5.2(c) of the Base Indenture and the Trustee shall
deposit amounts payable to the Master Servicer in the Series
1997-1
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Collection Account pursuant to the provisions of Section 5.2
of the Base Indenture on each Deposit Date;
(B) any amounts withheld by the Master Servicer and
not deposited in the Series 1997-1 Collection Account pursuant
to Section 5.2(c) of the Base Indenture (and in accordance
with the limitations set forth in (A) above) shall be deemed
to be deposited in the Series 1997-1 Collection Account on the
date such amounts are withheld for purposes of determining the
amounts to be allocated pursuant to this Section 5.2;
(C) NFLP may, from time to time in its sole
discretion, increase the Series 1997-1 Available Subordinated
Amount by (i) transferring funds to the Series 1997-1
Collection Account and (ii) delivering to the Master Servicer
and the Trustee an Officers' Certificate setting forth the
amount of such transferred funds and stating that such
transferred funds shall be allocated to the Series 1997-1
Available Subordinated Amount; provided, however, that (a)
NFLP shall have no obligation to so increase the Series 1997-1
Available Subordinated Amount, (b) NFLP may not increase the
Series 1997-1 Available Subordinated Amount at any time if,
after such increase, an "enhancement deficiency" (as defined
in any other Series 1997 Variable Funding Supplement) would
exist with respect to such other Series of Series 1997
Variable Funding Notes; provided that, if a Series 1997-1
Enhancement Deficiency exists, NFLP may increase the Series
1997-1 Available Subordinated Amount so long as simultaneously
with such increase the available subordinated amount of each
other Series of Series 1997 Variable Funding Notes with
respect to which there exists an "enhancement deficiency" (as
defined in any other Series 1997 Variable Funding Supplement)
shall also be increased pro rata (on the basis of the
outstanding Series 1997-1 Enhancement Deficiency and the
enhancement deficiencies outstanding with respect to such
other Series 1997 Variable Funding Notes) and (c) NFLP may not
increase the Series 1997-1 Available Subordinated Amount at
any time if the amount of such increase, together with the sum
of the amounts of all prior increases, if any, of the Series
1997-1 Available Subordinated Amount, would exceed the Series
1997-1 Available Subordinated Amount Maximum Increase;
(D) NFLP may, from time to time in its sole
discretion, increase the VFN Retained Interest Amount by (i)
transferring funds to the Series 1997-1 Collection Account and
(ii) delivering to the Master Servicer and the Trustee an
Officers' Certificate setting forth the amount of such
transferred funds and stating that such transferred funds
shall be allocated to the VFN Retained Interest Amount;
provided, however, that (a) NFLP shall have no obligation to
so increase the VFN Retained Interest Amount, (b) the source
of such funds shall be either (x) a loan of such funds to NFLP
by one or more Affiliates of NFLP or (y) a contribution to
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NFLP by one or more of the direct or indirect owners of a
partnership interest in NFLP and (c) the transfer to NFLP of
such funds by such source shall not be in violation of Section
24.10 of the Series 1997 Lease; and
(E) in the event that a Series 1997-1 Enhancement
Deficiency occurs, an Amortization Event and a Series 1997-1
Limited Liquidation Event of Default shall be deemed to have
occurred with respect to the Series 1997-1 Notes; provided,
however, (i) the Issuer may prevent an Amortization Event from
occurring if, within one (1) Business Day after the occurrence
of such Series 1997-1 Enhancement Deficiency, the Issuer
contributes to the Series 1997-1 Available Subordinated Amount
(in accordance with Section 5.2(e)(C) above) a portion of the
VFN Retained Interest Amount in an amount sufficient, in the
aggregate, to increase the Series 1997-1 Available
Subordinated Amount by an amount sufficient to eliminate such
Series 1997-1 Enhancement Deficiency; provided, however, the
amount of such contribution (together with the sum of the
amounts of all prior contributions) shall not exceed the
Series 1997-1 Available Subordinated Amount Maximum Increase,
excluding from such calculation any increase in the Series
1997-1 Available Subordinated Amount (1) through Recoveries or
from funds constituting repayments of principal under the
Demand Note, the Subordinated Note or any intercompany demand
note made by any Affiliate of NFLP in favor of NFLP, or (2)
relating to an increase in the Series 1997-1 Minimum
Enhancement Amount that results from (a) an increase in the
ratio of Non-Program Vehicles to all Vehicles, (b) a reduction
in the aggregate amount of cash and Permitted Investments
allocable to Series 1997 Vehicles in the Series 1997-1
Collection Account, or (c) a decline in the resale performance
of Non-Program Vehicles within the twelve calendar months
preceding the applicable date of determination, and (ii) the
Issuer may prevent a Series 1997-1 Limited Liquidation Event
of Default from occurring if within the thirty (30) day period
after the occurrence of such Series 1997-1 Enhancement
Deficiency (x) the Issuer contributes to the Series 1997-1
Available Subordinated Amount (in accordance with Section
5.2(e)(C) above) a portion of the VFN Retained Interest Amount
sufficient to increase the Series 1997-1 Available
Subordinated Amount by an amount sufficient to eliminate such
Series 1997-1 Enhancement Deficiency and (y) obtains written
notice from the Rating Agencies to the Issuer, RFC and the
Trustee that after such cure of such Series 1997-1 Enhancement
Deficiency is provided for, the Commercial Paper Notes will
receive the same rating from the Rating Agencies as they
received prior to the occurrence of such Series 1997-1
Enhancement Deficiency.
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Section 5.3 Monthly Payments from the Series 1997-1 Accrued Interest
Account.
(a) On each Determination Date, as provided below, the Master Servicer
shall instruct the Trustee or the Paying Agent in writing to withdraw, and on
the following Distribution Date the Trustee or the Paying Agent, acting in
accordance with such instructions, shall withdraw the amounts required to be
withdrawn from the Series 1997-1 Collection Account as set forth below in
respect of all funds available from Series 1997-1 Collections processed since
the preceding Distribution Date and allocated to the holders of the Series
1997-1 Notes.
(b) Note Interest With Respect to the Series 1997-1 Notes. On each
Distribution Date or on any date on which NFLP is required to or has elected to
prepay Series 1997-1 Note Interest in accordance with Section 5.4(a), the Master
Servicer shall, after all distributions required to be made pursuant to this
Section 5.3(b) have been made, instruct the Trustee and the Paying Agent in
writing as to the amount to be withdrawn from the Series 1997-1 Accrued Interest
Account to the extent funds will be available and processed from but not
including the preceding Distribution Date through the succeeding Distribution
Date in respect of Series 1997-1 Note Interest. On the Distribution Date related
to such Determination Date (or, if applicable, on the date on which NFLP has
elected to prepay Series 1997-1 Note Interest), the Trustee shall withdraw from
the Series 1997-1 Accrued Interest Account the amount on deposit therein
available for the payment of Series 1997-1 Note Interest and deposit such amount
in the Series 1997-1 Distribution Account.
Section 5.4 Payment of Note Interest.
(a) On any day, on which NFLP has elected or is required to prepay all
or a portion of the Series 1997-1 Note Interest that will be due on the next
Distribution Date NFLP shall notify the Trustee and the Master Servicer thereof
in writing. If NFLP so elects to prepay Series 1997-1 Note Interest, the Paying
Agent shall, in accordance with the direction of the Master Servicer delivered
under Section 5.3(b), pay to the Series 1997-1 Noteholders from the Series
1997-1 Distribution Account the amount deposited in the Series 1997-1
Distribution Account for the payment of Series 1997-1 Note Interest on such day
pursuant to Section 5.3(b).
(b) On each Distribution Date, the Paying Agent shall, in accordance
with Section 6.1 of the Base Indenture, pay to the Series 1997-1 Noteholders
from the Series 1997-1 Distribution Account the amount deposited in the Series
1997-1 Distribution Account for the payment of interest pursuant to Section
5.3(b) and, to the extent that such amount is insufficient to pay all Series
1997-1 Note Interest payable on such Distribution Date, after giving credit for
all prepayments on account thereof pursuant to (a) above (the amount of such
insufficiency, a "Note Interest Shortfall"), the Master Servicer shall instruct
the Trustee in writing (a) to withdraw from the Series 1997-1 Collection Account
the lesser of (i) the amount on deposit in the Series 1997-1 Collection Account
(up to the Series 1997-1 Available Subordinated Amount on such date) and (ii)
the amount of such Note Interest Shortfall and (b) to the extent of any
remaining Note
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<PAGE> 25
Interest Shortfall, to apply to pay such Note Interest Shortfall amounts on
deposit in the Series 1997-1 Distribution Account representing the proceeds of a
Credit Draw up to the lesser of (i) the remaining Note Interest Shortfall and
(ii) the proceeds of such Credit Draw.
Section 5.5 Payment of Note Principal.
(a) On the date specified in the applicable Master Servicer direction
and on each Distribution Date during the Series 1997-1 Revolving Period and the
first Distribution Date following the end of the Series 1997-1 Revolving Period,
if funds have been allocated to the Series 1997-1 Distribution Account pursuant
to Section 5.2(a)(x)(ii), (iv) or (v) or Section 5.2(a)(y)(iv), (vi) or (vii),
the Master Servicer shall instruct the Trustee and the Paying Agent in writing
to pay to the Series 1997-1 Noteholders the amount so allocated as a principal
payment on account of the Series 1997-1 Notes.
(b) Commencing on the first Distribution Date after the commencement of
the Series 1997-1 Rapid Amortization Period, the Master Servicer shall instruct
the Trustee and the Paying Agent in writing as to the amount of Series 1997-1
Collections allocated to the Series 1997-1 Notes during the Related Month
pursuant to Section 5.2(b)(iv) of this Supplement (such amount, the "Monthly
Principal Allocation") and to pay to the Series 1997-1 Noteholders the amount so
allocated as a principal payment on account of the Series 1997-1 Notes.
Commencing on the first Distribution Date after the commencement of the Series
1997-1 Rapid Amortization Period, to the extent that the Monthly Principal
Allocation is insufficient to pay all principal due in respect of the Series
1997-1 Notes on such Distribution Date (the amount of such insufficiency, a
"Principal Shortfall"), the Master Servicer shall instruct the Trustee in
writing (i) to withdraw from the Series 1997-1 Collection Account the lesser of
(A) the amount on deposit in the Series 1997-1 Collection Account (up to the
Series 1997-1 Available Subordinated Amount on such date after giving effect to
any reduction thereof pursuant to Section 5.4) and (B) the amount of such
Principal Shortfall, (ii) to the extent of any remaining Principal Shortfall, to
apply to the payment thereof Principal Collections with respect to any other
Series of Notes which pursuant to Section 5.2(d) of the Base Indenture are
available on such Distribution Date to pay principal of the Series 1997-1 Notes
(up to the amount of such Principal Shortfall remaining) and (iii) to the extent
of any remaining Principal Shortfall, to apply amounts on deposit in the Series
1997-1 Distribution Account representing the proceeds of a Credit Draw up to the
lesser of (A) the remaining Principal Shortfall and (B) the proceeds of such
Credit Draw remaining after any application thereof pursuant to Section 5.4;
provided, however, that with respect to the final Distribution Date, the Trustee
shall, in accordance with the written instructions of the Master Servicer,
withdraw from the Series 1997-1 Collection Account pursuant to clause (i) of
this sentence an amount which (in the aggregate) is no greater than the
Principal Balance of the Series 1997-1 Notes on such Distribution Date. The
entire principal amount of all Outstanding Series 1997-1 Notes shall be due and
payable on the Series 1997-1 Termination Date.
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<PAGE> 26
(c) Commencing on the first Distribution Date after the commencement of
the Series 1997-1 Rapid Amortization Period, the Paying Agent shall, in
accordance with Section 6.1 of the Base Indenture, pay to the Series 1997-1
Noteholders the amount deposited in the Series 1997-1 Distribution Account for
the payment of principal pursuant to Section 5.5(a) and (b) of this Supplement.
Section 5.6 Servicer's or Republic's Failure to Make a Deposit or
Payment. If a Servicer, the Master Servicer or Republic fails to make, or give
notice or instructions to make, any payment from or deposit to the Series 1997-1
Collection Account or the Series 1997-1 Accrued Interest Account required to be
made or given by such Servicer, the Master Servicer or Republic, respectively,
at the time specified in the Indenture (including applicable grace periods), the
Master Servicer shall, upon request of the Trustee, promptly provide the Trustee
with all information necessary to allow the Trustee, in the event it elects to
do so, to make such a payment. Such funds shall be applied by the Trustee in the
manner in which such payment or deposit should have been applied had it been
made by the Master Servicer, such Servicer or Republic.
Section 5.7 Series 1997-1 Distribution Account.
(a) Establishment of the Series 1997-1 Distribution Account. The
Trustee shall establish and maintain in the name of the Trustee for the benefit
of the Series 1997-1 Noteholders, or cause to be established and maintained, an
account (the "Series 1997-1 Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series 1997-1 Noteholders. The Series 1997-1 Distribution Account shall be
maintained (i) with a Qualified Institution, or (ii) as a segregated trust
account with the corporate trust department of a depository institution or trust
company having corporate trust powers and acting as trustee for funds deposited
in the Series 1997-1 Distribution Account. If the Series 1997-1 Distribution
Account is not maintained in accordance with the previous sentence, the Master
Servicer shall establish a new Series 1997-1 Distribution Account, within ten
(10) Business Days after obtaining knowledge of such fact, which complies with
such sentence, and transfer all cash and investments from the non-qualifying
Series 1997-1 Distribution Account into the new Series 1997-1 Distribution
Account. Initially, the Series 1997-1 Distribution Account will be established
with the Trustee.
(b) Administration of the Series 1997-1 Distribution Account. The
Master Servicer shall instruct the institution maintaining the Series 1997-1
Distribution Account in writing to invest funds on deposit in the Series 1997-1
Distribution Account at all times in Permitted Investments; provided, however,
that any such investment shall mature not later than the Business Day prior to
the Distribution Date following the date on which such funds were received,
unless any Permitted Investment held in the Series 1997-1 Distribution Account
is held with the Paying Agent, then such investment may mature on such
Distribution Date and such funds shall be available for withdrawal on or prior
to such Distribution Date. The Trustee shall hold, for the
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benefit of the Series 1997-1 Noteholders and the Master Servicer, possession of
the negotiable instruments or securities evidencing the Permitted Investments
described in clause (i) of the definition thereof from the time of purchase
thereof until the time of maturity.
(c) Earnings from Series 1997-1 Distribution Account. Subject to the
restrictions set forth above, the Master Servicer shall have the authority to
instruct the Trustee in writing with respect to the investment of funds on
deposit in the Series 1997-1 Distribution Account. All interest and earnings
(net of losses and investment expenses) on funds on deposit in the Series 1997-1
Distribution Account shall be deemed to be on deposit and available for
distribution to pay amounts payable from the Series 1997-1 Distribution Account
hereunder, or, to the extent of amounts not necessary to pay such principal, to
pay and be deposited in the Series 1997-1 Collection Account for allocation in
accordance with Section 5.2 hereof.
(d) Series 1997-1 Distribution Account Constitutes Additional
Collateral for Series 1997-1 Notes. In order to secure and provide for the
repayment and payment of the NFLP Obligations with respect to the Series 1997-1
Notes (but not the Notes of any other Series), NFLP has, pursuant to Section
3.1(c) of this Supplement, assigned to the Trustee, for the benefit of the
Series 1997-1 Noteholders, the Series 1997-1 Distribution Account Collateral.
The Trustee shall possess all right, title and interest in all funds on deposit
from time to time in the Series 1997-1 Distribution Account and in all proceeds
thereof. The Series 1997-1 Distribution Account Collateral shall be under the
sole dominion and control of the Trustee for the benefit of the Series 1997-1
Noteholders.
Section 5.8 Allocation of Certain Amounts to Interest. Notwithstanding
anything to the contrary set forth in the Indenture, for the period ending on
the earlier of (x) the date that is five months after the occurrence of an Event
of Bankruptcy with respect to Republic and (y) the date on which the underlying
case, application or petition with respect to such Event of Bankruptcy is
withdrawn or dismissed or any stay thereunder in respect of the Trustee is
lifted, the Liquidity Amount shall be allocated and distributed solely in
respect of interest on the Series 1997-1 Notes as the same shall become due and
payable pursuant hereto to the extent Series 1997-1 Collections allocated and
distributed pursuant to this Article 5 are otherwise insufficient to pay such
amounts. Upon the expiration of the period described in clauses (x) and (y) of
this Section 5.8, Disposition Proceeds, Guaranteed Payments and Repurchase
Prices shall be allocated and distributed in accordance with this Article 5
(exclusive of this Section 5.8).
Section 5.9 Draw on Series 1997-1 Letter of Credit.
(a) On or before 10:00 a.m. (New York City time) on each Distribution
Date, the Master Servicer shall notify the Trustee and the Enhancement Agent of
the amount of any Series 1997-1 Lease Payment Deficit, such notification to be
in the form of Exhibit C to this Series 1997-1 Supplement.
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(b) So long as the Series 1997-1 Letter of Credit shall not have been
terminated, on any Business Day that a Series 1997-1 Lease Payment Deficit
exists, the Enhancement Agent, by 11:00 a.m. (New York City time) on the
relevant Distribution Date, if such Series 1997-1 Lease Payment Deficit exceeds
the Series 1997-1 Available Subordinated Amount, (i) draw on the Series 1997-1
Letter of Credit by presenting a draft in an amount equal to the lesser of (x)
the Series 1997-1 Fronting Letter of Credit Percentage of the excess of such
Series 1997-1 Lease Payment Deficit over the Series 1997-1 Available
Subordinated Amount and (y) the available Series 1997-1 Fronting Letter of
Credit Amount on such Business Day accompanied by a Certificate of Credit Demand
in the form of Annex A to the Series 1997-1 Letter of Credit and (ii) if the
Series 1997-1 Cash Collateral Account has been established and funded pursuant
to Section 5.11, direct the Trustee to withdraw from the Series 1997-1 Cash
Collateral Account an amount equal to the Series 1997-1 Cash Collateral
Percentage of the excess of such Series 1997-1 Lease Payment Deficit over the
Series 1997-1 Available Subordinated Amount. The Enhancement Agent shall deliver
the proceeds of any draw pursuant to (i) above to the Trustee no later than 4:00
p.m. (New York City time) for deposit in the Series 1997-1 Distribution Account
and the Trustee shall deposit the proceeds of any withdrawal pursuant to (b)
above in the Series 1997-1 Distribution Account, in each case, application in
accordance with Sections 5.2(c)(x)(ii), 5.4 (b) and 5.5 hereof.
(c) So long as the Series 1997-1 Letter of Credit shall not have been
terminated, on any Business Day that the Enhancement Agent has received written
notice from the Series 1997-1 Collateral Agent pursuant to Section 5.05(b) of
the Series 1997-1 Collateral Agreement notifying the Enhancement Agent of the
existence and amount of a Liquidity Deficiency and directing the Enhancement
Agent to make a draw under the Series 1997-1 Letter of Credit, the Enhancement
Agent shall, by 11:00 a.m. (New York City time) on the date of such notice (or,
in the case of any notice given to the Enhancement Agent after 11:30 a.m. (New
York City time), by 12:00 noon (New York City time) on the next following
Business Day), (i) draw on the Series 1997-1 Letter of Credit by presenting a
draft in an amount equal to the lesser of (x) the Series 1997-1 Fronting Letter
of Credit Percentage of such Liquidity Deficiency and (y) the available Series
1997-1 Fronting Letter of Credit Amount on such Business Day accompanied by a
Certificate of Liquidity Demand in the form of Annex B to the Series 1997-1
Letter of Credit and (ii) if the Series 1997-1 Cash Collateral Account has been
established and funded pursuant to Section 5.11, direct the Trustee to withdraw
from the Series 1997-1 Cash Collateral Account an amount equal to the Series
1997-1 Cash Collateral Percentage of the amount of such Liquidity Deficiency.
The Enhancement Agent shall deliver the proceeds of such draw to the Collateral
Agent for application in accordance with Section 5.01(d) of the Series 1997-1
Collateral Agreement.
(d) The Series 1997-1 Letter of Credit may also be drawn in accordance
with Section 5.10(d).
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Section 5.10 The Series 1997-1 Available Subordinated Amount, the
Subordinated Note and the Demand Note.
(a) Series 1997 Aggregate Available Subordinated Amount.
(i) On the Series 1997-1 Closing Date, NFLP has subordinated
its interest in a portion of the Series 1997 Aggregate Asset Amount
constituting the Series 1997 Aggregate Available Subordinated Amount.
(ii) NFLP may, from time to time, in its sole discretion,
increase the Series 1997 Available Subordinated Amount in accordance
with Section 5.2(e)(C) and (E) hereof.
(iii) Series 1997-1 Losses and Series 1997-1 Recoveries shall
be allocated to the Series 1997-1 Available Subordinated Amount in
accordance with Section 5.2(c)(x)(i) and 5.2(c)(y)(iii) hereof.
(b) Subordinated Note.
(i) On or after the VFN Closing Date, NFLP may cause to be
executed and delivered to the Trustee, for the benefit of the Series
1997 Variable Funding Noteholders, the Subordinated Note.
(ii) Series 1997-1 Profits may be retained in the Series
1997-1 Collection Account to be lent under the Subordinated Note
pursuant to Section 5.2(a)(y)(viii) and 5.2(c)(y)(iv) hereof.
(iii) Demands for payment under the Subordinated Note and (at
the discretion of NFLP) loans of Profits under the Subordinated Note in
respect of Profits, Series 1997-1 Losses and Series 1997-1 Recoveries
shall be made in accordance with Section 5.2(c)(x)(iii) and
5.2(c)(y)(iv) hereof.
(iv) On each Determination Date, the Master Servicer shall
determine the aggregate amount, if any, of Series 1997-1 Disposition
Losses that have occurred during the Related Month. In the event that
Series 1997-1 Disposition Losses occurring during such Related Month
exceed the amount of all Recoveries in respect thereof received during
such Related Month, the Master Servicer shall, at or before 12:30 p.m.
(New York City time) on such Determination Date, notify , the
Enhancement Agent, and the Trustee in writing of the aggregate amount
of such net Losses (the "Net Disposition Losses"), and the Trustee
shall, prior to 5:00 p.m. (New York City time) on such date, as
specified in such notice from the Master Servicer, transmit to National
a demand for repayment of the Subordinated Note in the amount of the
lesser of the outstanding principal amount under the Subordinated Note
and the amount of such Net Disposition Losses for the Related
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<PAGE> 30
Month remaining after application of Sections 5.2(c)(x)(i) and (ii).
The proceeds of any draw on the Subordinated Note pursuant to this
Section 5.10(b)(iv) shall be allocated in accordance with Section
5.2(c)(x)(iii).
(c) Demand Note.
(i) On or after the VFN Closing Date, NFLP may cause
National to execute and deliver to the Trustee, for the benefit of the
Series 1997 Variable Funding Noteholders, the Demand Note.
(ii) Draws under the Demand Note in respect of Series 1997-1
Losses shall be made in accordance with Section 5.2(c)(x)(iii) hereof.
(iii) On each Determination Date, to the extent that any Net
Disposition Losses remain after application of amounts drawn on the
Subordinated Note pursuant to (b) above, the Master Servicer shall, at
or before 12:30 p.m. (New York City time) on such Determination Date,
notify, the Enhancement Agent, and the Trustee in writing of the
aggregate remaining amount of such Net Disposition Losses, and the
Trustee shall, prior to 5:00 p.m. (New York City time) on such date, as
specified in such notice from the Master Servicer, transmit to National
a demand for payment (each, a "Demand Notice") under the Demand Note in
the amount of the lesser of (x) the outstanding amount of such Demand
Note and (y) the Net Disposition Losses for the Related Month less the
amount demanded under the Subordinated Note. The proceeds of any draw
on the Demand Note pursuant to this Section 5.10(c)(iii) shall be
allocated in accordance with Section 5.2(c)(x)(iii).
(d) In the event that on or prior to 10:00 a.m. (New York City time) on
the Distribution Date next succeeding any Determination Date on which a Demand
Notice has been transmitted to National pursuant to Section 5.2(c)(x)(iii) and
5.10 hereof, National shall have failed to deposit into the Series 1997-1
Collection Account the amount specified in such Demand Notice, so long as the
Series 1997-1 Letter of Credit shall not have been terminated, the Enhancement
Agent shall, by 12:00 p.m. (New York City time) on the same Business Day, (i)
draw on the Series 1997-1 Letter of Credit by presenting a draft in an amount
equal to the lesser of (x) the available Series 1997-1 Fronting Letter of Credit
Amount and (y) the Series 1997-1 Fronting Letter of Credit Percentage of the
unpaid portion of that portion of the amount demanded under the Demand Note
allocable to the Series 1997-1 Distribution Account in accordance with Section
5.10(c) above (the "Unpaid Demand") that has not been deposited into the Series
1997-1 Collection Account as of 10:00 a.m. (New York City time), accompanied by
a Certificate of Credit Demand in the form of Annex A to the Series 1997-1
Letter of Credit and (ii) if the Series 1997-1 Cash Collateral Account has been
established and funded pursuant to Section 5.11, direct the Trustee to withdraw
from the Series 1997-1 Cash Collateral Account an amount equal to the Series
1997-1 Cash Collateral Percentage of the Unpaid Demand. The proceeds of such
draw
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<PAGE> 31
shall be delivered to the Trustee by 4:00 p.m. (New York City time) and be
deposited by the Trustee in the Series 1997-1 Distribution Account for
application pursuant to Sections 5.4 and 5.5 hereof.
Section 5.11 Letter of Credit Termination Demand.
(a) If prior to the date which is thirty (30) days prior to the then
scheduled Series 1997-1 Letter of Credit Expiration Date,
(i) there shall not have been appointed a successor
institution which is an Eligible Credit Enhancer to act as Series
1997-1 Letter of Credit Provider, or
(ii) the payments to be made by the Lessees under the Series
1997 Lease shall not have otherwise been credit enhanced with (A) the
funding of the Series 1997-1 Cash Collateral Account with cash in the
amount of the Series 1997-1 Required Letter of Credit Amount, (B) other
cash collateral accounts, overcollateralization or subordinated
securities or (C) with the consent of the Series 1997-1 Required
Noteholders, a surety bond or other similar arrangements; provided,
however, that
(1) Rating Agency Confirmation shall have been
obtained with respect to any such other form of substitute
credit enhancement referred to in the foregoing Section
5.11(a)(ii)(B) or (C); and
(2) any such other form of substitute credit
enhancement referred to in the foregoing Section
5.11(a)(ii)(C) shall, if the ratings with respect to such
substitute credit enhancement, if applicable, are less than
A-1 or the equivalent from Standard & Poor's and P-1 or the
equivalent from Moody's, be approved by the Series 1997-1
Required Noteholders;
then the Master Servicer shall notify the Trustee and the Enhancement Agent in
writing no later than one Business Day prior to the Series 1997-1 Letter of
Credit Expiration Date of (x) the principal balance of all Outstanding Series
1997-1 Notes on such date, and (y) the amount available to be drawn on the
Series 1997-1 Letter of Credit on such date. Upon receipt of such notice by the
Trustee and the Enhancement Agent on or prior to 10:00 a.m. (New York City time)
on any Business Day, the Enhancement Agent shall, by 12:00 p.m. (New York City
time) on such Business Day (or, in the case of any notice given to the Trustee
after 10:00 a.m. (New York City time), by 12:00 p.m. (New York City time) on the
next following Business Day), draw the lesser of the amounts set forth in
clauses (x) and (y) above on the Series 1997-1 Letter of Credit by presenting a
draft accompanied by a Certificate of Termination Demand in the form of Annex C
to the Series 1997-1 Letter of Credit and shall deliver the proceeds of the
disbursement resulting therefrom to the Trustee for deposit in a special deposit
account (the "Series 1997-1 Cash Collateral Account").
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(b) If a Support Termination Disbursement is made upon a Series 1997-1
Support Letter of Credit pursuant to Section 2.2(d) of the Series 1997-1 Support
Reimbursement Agreement or the GM Series 1997-1 Support Agreement pursuant to
Section 2.2(c) of the GM Series 1997-1 Support Reimbursement Agreement, then,
simultaneously with its delivery of notice of such draw to the Enhancement Agent
as provided under Section 2.1(f) of the Series 1997-1 Support Reimbursement
Agreement or Section 2.1(d) of the GM Series 1997-1 Support Reimbursement
Agreement, as applicable, the Master Servicer shall notify the Trustee thereof
in writing. The proceeds of such draws less any amounts deducted from such
proceeds by the Series 1997-1 Letter of Credit Provider as amounts due and
payable to the Series 1997-1 Letter of Credit Provider from the related Series
1997-1 Support Letter of Credit Provider in connection with the related Series
1997-1 Support Letter of Credit or the GM Series 1997-1 Support Provider in
connection with the GM Series 1997-1 Support Agreement, as the case may be, will
be deposited to the Series 1997-1 Cash Collateral Account.
(c) The Master Servicer shall notify the Trustee and the Enhancement
Agent in writing pursuant to the Series 1997 Lease within one Business Day of
becoming aware that the short-term debt credit rating of the Series 1997-1
Letter of Credit Provider has fallen below "A-1" as determined by Standard &
Poor's or "P-1" as determined by Moody's (or, in the case of any substitute form
of credit enhancement referred to in Section 5.11(a)(ii)(C), that such
enhancement provider's long-term debt credit rating has fallen below "AA" as
determined by Standard & Poor's or "Aa" as determined by Moody's). At such time
the Master Servicer shall also notify the Trustee of (i) the principal balance
of all Outstanding Series 1997-1 Notes on such date, and (ii) the Series 1997-1
Fronting Letter of Credit Amount on such Business Day. Upon receipt of such
notice by the Enhancement Agent on or prior to 10:00 a.m. (New York City time)
on any Business Day, the Enhancement Agent shall, by 12:00 p.m. (New York City
time) on such Business Day (or, in the case of any notice given to the
Enhancement Agent after 10:00 a.m. (New York City time), by 12:00 p.m. (New York
City time) on the next following Business Day), draw on the Series 1997-1 Letter
of Credit (or such substitute enhancement) in an amount equal to the lesser of
(x) the principal balance of all Outstanding Series 1997-1 Notes on such
Business Day and (y) the available Series 1997-1 Fronting Letter of Credit
Amount on such Business Day by presenting a draft accompanied by a Certificate
of Termination Demand in the form of Annex C to the Series 1997-1 Letter of
Credit (or, in the case of any substitute form of credit enhancement referred to
in Section 5.11(a)(ii)(C), the applicable draw certificate) and shall deliver
the proceeds of the disbursement resulting therefrom to the Trustee for deposit
in the Series 1997-1 Cash Collateral Account.
Section 5.12 Conversion. If on any Business Day there exists a Series
1997-1 Lease Payment Deficit, including after a Series 1997-1 LOC Termination
Disbursement has been made as provided in Section 5.11 above or a draw under
Section 5.9(c), and if on such day (i) the amount of such Series 1997-1 Lease
Payment Deficit exceeds the Series 1997-1 Letter of Credit Amount on such day,
and (ii) Series 1997-1 LOC Liquidity Disbursements are Outstanding, then (A)
such amount of Series 1997-1 LOC Liquidity Disbursements shall be reduced, and
(B) the
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amount of Series 1997-1 LOC Credit Disbursements Outstanding shall be increased,
in each case, by an amount equal to the lesser of (a) the amount by which the
Series 1997-1 Lease Payment Deficit exceeds the Series 1997-1 Letter of Credit
Amount (which Series 1997-1 Letter of Credit Amount shall, in any event, be
drawn, in accordance with the second paragraph of Section 5.9 as a Credit Draw)
and (b) the aggregate amount of Series 1997-1 LOC Liquidity Disbursements (such
reduction and increase shall be referred to as a "Conversion"). On the Business
Day any such Conversion is required, the Trustee (upon receiving written notice
of such Series 1997-1 Lease Payment Deficit) shall direct the Enhancement Agent
to deliver to each Series 1997-1 Support Letter of Credit Provider and the GM
Series 1997-1 Support Provider a Notice of Conversion in the form of Exhibit B
by 1:00 p.m. (New York City time) on such Business Day.
Section 5.13 The Series 1997-1 Cash Collateral Account.
(a) Upon receipt of notice of a draw on the Series 1997-1 Letter of
Credit or of a draw on any Series 1997-1 Support Letter of Credit or the GM
Series 1997-1 Support Reimbursement Agreement, in each case, pursuant to Section
5.11, the Trustee shall establish and maintain in the name of the Trustee for
the benefit of the Series 1997-1 Noteholders, or cause to be established and
maintained, the Series 1997-1 Cash Collateral Account bearing a designation
clearly indicating that the funds deposited therein are held for the Series
1997-1 Noteholders. The Series 1997-1 Cash Collateral Account shall be
maintained (i) with a Qualified Institution, or (ii) as a segregated trust
account with the corporate trust department of a depository institution or trust
company having corporate trust powers and acting as trustee for funds deposited
in the Series 1997-1 Cash Collateral Account. If the Series 1997-1 Cash
Collateral Account is not maintained in accordance with the prior sentence, then
within 10 Business Days after obtaining knowledge of such fact, the Master
Servicer shall establish a new Series 1997-1 Cash Collateral Account which
complies with such sentence and shall instruct the Trustee to transfer into the
new Series 1997-1 Cash Collateral Account all cash and investments from the
non-qualifying Series 1997-1 Cash Collateral Account. When established, the
Series 1997-1 Cash Collateral Account is intended to function in all respects as
the replacement for, and the equivalent of, the Series 1997-1 Letter of Credit.
Accordingly (subject to Section 5.9(b)), following its creation, each reference
to a draw on the Series 1997-1 Letter of Credit shall refer to withdrawals from
the Series 1997-1 Cash Collateral Account and references to similar terms shall
mean and be a reference to actions taken with respect to the Series 1997-1 Cash
Collateral Account that correspond to actions that otherwise would have been
taken with respect to the Series 1997-1 Letter of Credit. Without limiting the
generality of the foregoing, upon funding of the Series 1997-1 Cash Collateral
Account, the Trustee shall, at all times when the Enhancement Agent is otherwise
required to make a draw under the Series 1997-1 Letter of Credit pursuant to
Section 5.9 of this Supplement, make a draw from the Series 1997-1 Cash
Collateral Account in the amount and at such time as a draw would be made under
the Series 1997-1 Letter of Credit pursuant to Section 5.9 of this Supplement.
The Trustee shall provide written notice to the
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Master Servicer of any draw from the Series 1997-1 Cash Collateral Account
pursuant to Section 5.9 of this Supplement.
(b) In order to secure and provide for the repayment and payment of the
NFLP Obligations with respect to the Series 1997-1 Notes (but not any other
Series of Notes), NFLP has, pursuant to Section 3.1(d) of this Supplement,
assigned to the Trustee, for the benefit of the Series 1997-1 Noteholders, all
of NFLP's right, title and interest in and to the Series 1997-1 Cash Collateral
Account and certain other property. The Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Series 1997-1 Cash
Collateral Account and in all proceeds thereof. The Series 1997-1 Cash
Collateral Account shall be under the sole dominion and control of the Trustee
for the benefit of the Series 1997-1 Noteholders, the Series 1997-1 Letter of
Credit Provider, the Series 1997-1 Support Letter of Credit Providers and the GM
Series 1997-1 Support Provider, as their interests appear herein, which interest
in the case of the Series 1997-1 Letter of Credit Provider, the Series 1997-1
Support Letter of Credit Providers and the GM Series 1997-1 Support Provider
shall be subject to the interests of the holders of Series 1997-1 Notes as
provided herein.
(c) Funds on deposit in the Series 1997-1 Cash Collateral Account on
any Distribution Date, after giving effect to any deposits to or withdrawals
from the Series 1997-1 Cash Collateral Account on such Distribution Date, shall
be invested in Permitted Investments that will mature at such time that such
funds will be available for withdrawal on or prior to the following Distribution
Date. The proceeds of any such investment, to the extent not distributed on such
Distribution Date, shall be invested in Permitted Investments that will mature
at such time that such funds will be available for withdrawal on or prior to the
Distribution Date immediately following the date of such investment. The Trustee
shall maintain for the benefit of the Series 1997-1 Noteholders, the Series
1997-1 Letter of Credit Provider, the Series 1997-1 Support Letter of Credit
Providers and the GM Series 1997-1 Support Provider, as their interests appear
herein, which interest in the case of the Series 1997-1 Letter of Credit
Provider, the Series 1997-1 Support Letter of Credit Providers and the GM Series
1997-1 Support Provider shall be subject to the interests of the holders of the
Series 1997-1 Notes as provided herein, possession of the negotiable instruments
or securities evidencing the Permitted Investments from the time of purchase
thereof until the time of sale or maturity. On each Distribution Date, all
interest and earnings (net of losses and investment expenses) accrued since the
preceding Distribution Date on funds on deposit in the Series 1997-1 Cash
Collateral Account shall be paid in the following order of priority: first, to
the Series 1997-1 Letter of Credit Provider to the extent of any unreimbursed
draws on the Series 1997-1 Letter of Credit, second, to the Series 1997-1
Support Letter of Credit Providers for application in accordance with the Series
1997-1 Support Reimbursement Agreement and third, to the GM Series 1997-1
Support Provider for application in accordance with the GM Series 1997-1 Support
Reimbursement Agreement. Subject to the restrictions set forth above, the Master
Servicer, or a Person designated in writing by the Master Servicer with written
notification thereof to the Trustee, shall instruct the Trustee in writing with
respect to the investment of funds on deposit in the Series 1997-1 Cash
Collateral Account. For
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purposes of determining the availability of funds or the balance in the Series
1997-1 Cash Collateral Account for any reason under the Indenture, all net
investment earnings on such funds shall be deemed not to be available or on
deposit.
(d) Series 1997-1 Cash Collateral Account Surplus. In the event that
there is a Series 1997-1 Cash Collateral Account Surplus on any Distribution
Date, after giving effect to all withdrawals from the Series 1997-1 Cash
Collateral Account, the Trustee, acting in accordance with the written
instructions of the Master Servicer, shall withdraw from the Series 1997-1 Cash
Collateral Account an amount equal to the Series 1997-1 Cash Collateral Amount
Surplus and shall pay such amount in the following order of priority: first, to
the Series 1997-1 Letter of Credit Provider to the extent of unreimbursed draws
under the Series 1997-1 Letter of Credit and, second, to the Series 1997-1
Support Letter of Credit Providers, an amount equal to the remainder of such
Series 1997-1 Cash Collateral Account Surplus for application in accordance with
the provisions of the Series 1997-1 Support Reimbursement Agreement and, third,
to the GM Series 1997-1 Support Provider for application in accordance with the
provisions of the GM Series 1997-1 Support Reimbursement Agreement and, fourth,
to NFLP any remaining amount.
(e) Disposition of Funds on Termination. Upon the payment in full of
all obligations under or in respect of the Commercial Paper Notes and the
Liquidity Agreement (in respect of interest, principal and commitment fees), all
Deposited Funds on deposit in the Series 1997-1 Cash Collateral Account shall be
paid in the following order of priority: first, to the Series 1997-1 Letter of
Credit Provider to the extent of unreimbursed draws under the Series 1997-1
Letter of Credit and, second, to the Series 1997-1 Support Letter of Credit
Providers, an amount equal to any remaining amount of such Series 1997-1 Cash
Collateral Account Surplus for application in accordance with the provisions of
the Series 1997-1 Support Reimbursement Agreement and, third, to the GM Series
1997-1 Support Provider, an amount equal to any remaining amount of such Series
1997-1 Cash Collateral Account Surplus for application in accordance with the
provisions of the GM Series 1997-1 Support Reimbursement Agreement and, fourth,
to NFLP any remaining amount.
Section 5.14 Appointment of Enhancement Agent. The Bank of New York is
hereby appointed to act as Enhancement Agent in respect of the Series 1997-1
Letter of Credit and The Bank of New York hereby accepts such appointment and
agrees to hold the Series 1997-1 Letter of Credit as beneficiary on behalf of
the Trustee and the Series 1997-1 Collateral Agent pursuant to the terms hereof
and to make draws thereon pursuant to the terms of the Series 1997-1 Letter of
Credit, this Supplement and the Series 1997-1 Collateral Agreement. The
Enhancement Agent shall promptly follow the instructions of either the Trustee
or the Series 1997-1 Collateral Agent to make a claim under the Series 1997-1
Letter of Credit or withdrawal from the Series 1997-1 Cash Collateral Account.
The Enhancement Agent shall have all the rights of the Trustee under Sections
10.2 and 10.3 of the Base Indenture. The Enhancement Agent hereby acknowledges
and agrees to perform the duties set forth with respect to the Enhancement Agent
in Sections 2.1(f) and 2.3 of the Series 1997-1 Support Reimbursement Agreement
and Sections
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2.1(d) and 2.3 of the GM Series 1997-1 Support Reimbursement Agreement and, in
the case of such Sections 2.1(f) and 2.1(d), agrees to execute and deliver to
the Series 1997-1 Letter of Credit Provider a notice substantially in the form
of Annex B hereto. The Enhancement Agent also agrees to execute and deliver to
the Series 1997-1 Letter of Credit Provider (x) a Notice of Reduction of Series
1997-1 Letter of Credit Amount in substantially the form attached as Annex D to
the Series 1997-1 Letter of Credit promptly following the deposit of any Support
Termination Disbursement or any Support Reduction Disbursement to the Series
1997-1 Cash Collateral Account pursuant to Section 2.1(f) of the Series 1997-1
Support Reimbursement Agreement or paragraph 1(a) of the GM Series 1997-1
Support Agreement, as applicable, and (y) a Certificate of Series 1997-1 Letter
of Credit Termination substantially in the form of Annex F to the Series 1997-1
Letter of Credit promptly following its receipt from Republic of a certificate
certifying to the Enhancement Agent the information set forth in such Notice of
Support Termination. Notwithstanding anything to the contrary contained in this
Series 1997-1 Supplement or the Base Indenture, (i) the Master Servicer shall be
solely responsible for payment of the fees of the Enhancement Agent and such
fees shall not be paid out of the fees otherwise payable to the Trustee, (ii)
the Servicers, jointly and severally, shall indemnify the Enhancement Agent to
the same extent as the Servicer's indemnification of the Trustee pursuant to
Section 15.2 of the Series 1997 Lease and (iii) the Trustee shall not be
responsible for the acts or omissions of the Enhancement Agent.
ARTICLE 6
Reserved.
ARTICLE 7
AMORTIZATION EVENTS
Section 7.1 Amortization Events. In addition to the Amortization Events
set forth in Section 9.1 of the Base Indenture, the following shall be
Amortization Events with respect to the Series 1997-1 Notes (without notice or
other action on the part of the Trustee or any holders of the Series 1997-1
Notes) and shall not be subject to waiver:
(a) a Series 1997-1 Enhancement Deficiency shall occur and
exist for more than one (1) Business Day unless during such one (1)
Business Day period the Issuer or the Servicer shall have cured the
Series 1997-1 Enhancement Deficiency in accordance with the terms and
conditions of Section 5.2(e)(E) of this Supplement;
(b) if (i) the payment of any Series 1997-1 Note Interest is
not made when due and payable and such non-payment continues for a
period of five (5) days, or (ii) all
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principal and interest of the Series 1997-1 Notes is not paid in full
on or before the Series 1997-1 Termination Date;
(c) any Related Document is not in full force and effect, or
the Issuer, the Master Servicer, the Guarantor, any Lessee or any
Servicer so asserts in writing;
(d) the Series 1997-1 Letter of Credit shall not be in full
force and effect or is repudiated, a proper draw thereon is not honored
or the Series 1997-1 Letter of Credit Provider experiences an Event of
Bankruptcy and (i) the Series 1997-1 Cash Collateral Account has not
been funded with an amount at least equal to the Series 1997-1 Required
Letter of Credit Amount pursuant to Section 5.11 of this Supplement and
(ii) other enhancement of the type set forth in Section 5.11(a)(ii)(C)
is not in full force and effect in an amount at least equal to the
Series 1997-1 Required Letter of Credit Amount as of such date;
(e) from and after the funding of the Series 1997-1 Cash
Collateral Account pursuant to Section 5.11 of this Supplement, the
Series 1997-1 Cash Collateral Account shall be subject to an
injunction, estoppel or other stay or a Lien (other than Liens
permitted under the Related Documents);
(f) (i) there shall occur any Lease Event of Default described
in Section 17.1.1(i) of the Series 1997 Lease or any Event of
Bankruptcy with respect to the Guarantor, in either case, whether or
not subsequently waived by NFLP, or (ii) there shall occur any other
Lease Event of Default under the Series 1997 Lease, whether or not
subsequently waived by NFLP;
(g) subject to the provisions of Section 7.2, any Series 1997
Asset Amount Deficiency exists and continues for a period of ten (10)
days;
(h) the Series 1997 Lease is terminated for any reason;
(i) a Liquidity Agreement Amortization Event occurs under the
Series 1997-1 Liquidity Agreement.
(j) NFLP fails to comply with any of its other agreements or
covenants in, or provisions of, the Series 1997-1 Notes or the Related
Documents and the failure to so comply materially and adversely affects
the interests of the Series 1997-1 Noteholders and continues to
materially and adversely affect the interests of the Series 1997-1
Noteholders for a period of 60 days after the earlier of (i) the date
on which a Responsible Officer of NFLP obtains knowledge thereof or
(ii) the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to NFLP by the Trustee or to
NFLP by the Series 1997-1 Required Noteholders;
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(k) the amount available to be drawn under the Demand Note on
any date is less than an amount equal to five (5) times the aggregate
amount receivable under Manufacturer Receivables in respect of Series
1997 Vehicles which were Acquired Vehicles which, as of the end of the
Related Month remained unpaid more than sixty (60) days after the Due
Date therefor and such condition continues to exist for five (5)
Business Days; or
(l) all principal and interest of the Series 1997-1 Notes is
not paid in full before the Series 1997-1 Termination Date.
Notwithstanding anything to the contrary contained in the Base Indenture, except
to the extent otherwise provided in this Series 1997-1 Supplement, (i) the
occurrence with respect to National of an event described in Section 9.1(d) of
the Base Indenture shall not in and of itself constitute an Amortization Event
with respect to the Series 1997-1 Notes and (ii) the occurrence of an event
described in Section 9.1(h) of the Base Indenture with respect to the
termination of the Lease dated April 30, 1996 (as amended from time to time),
shall not in and of itself constitute an Amortization Event with respect to the
Series 1997-1 Notes.
Section 7.2 Right of NFLP to Cure Asset Amount Deficiency.
Notwithstanding anything to the contrary contained in this Article 7, if (i) the
Series 1997-1 Rapid Amortization Period commences as a result of an Amortization
Event described in Section 7.1(g) above, (ii) during such Series 1997-1 Rapid
Amortization Period (but prior to the Series 1997-1 Termination Date) the Series
1997 Asset Amount Deficiency is cured, (iii) no other Amortization Event then
exists and is continuing with respect to the Series 1997-1 Notes, and (iv) NFLP
delivers to the Trustee an Officer's Certificate stating that such Series 1997
Asset Amount Deficiency has been cured and requesting that such Series 1997-1
Rapid Amortization Period terminate, then such Series 1997-1 Rapid Amortization
Period shall automatically terminate as of the date the foregoing conditions are
satisfied and the Series 1997-1 Revolving Period recommence; provided, however,
(x) the Series 1997-1 Revolving Period shall not be extended as a result of such
Series 1997-1 Rapid Amortization Period interrupting the Series 1997-1 Revolving
Period and (y) if at the time of the termination of the Series 1997-1 Rapid
Amortization Period pursuant to the provisions of this Section 7.2 the Series
1997-1 Notes would otherwise be in the Series 1997-1 Rapid Amortization Period,
then the Series 1997-1 Rapid Amortization Period will not terminate but shall
continue uninterrupted.
ARTICLE 8
GENERAL
(a) Repurchase. The Series 1997-1 Notes shall be subject to repurchase
by NFLP at its option in accordance with Section 6.3 of the Base Indenture on
any Distribution Date. The
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repurchase price (the "Series 1997-1 Repurchase Amount") for the Series 1997-1
Notes shall equal the aggregate outstanding principal balance of the Series
1997-1 Notes (determined after giving effect to any payments of principal and
interest, any allocations of Losses or Recoveries and any Increases or Decreases
as of such Distribution Date), plus accrued and unpaid interest on such
outstanding principal balance, plus all fees, expenses and other amounts
expressly payable under the Series 1997-1 Note Purchase Agreement.
(b) Payment of Rating Agency Fees. NFLP agrees to pay all reasonable
fees and expenses of the Rating Agencies and to promptly provide all documents
and other information that the Rating Agencies may reasonably request.
(c) Exhibits. The following exhibits attached hereto supplement the
exhibits included in the Indenture.
Exhibit A: Form of Series 1997-1 Note
Exhibit B: Form of Notice of Conversion.
Exhibit C: Form of Notice of Series 1997-1 Lease Payment Deficit
Exhibit D: List of Approved Manufacturers
(d) Ratification of Base Indenture. As supplemented by this Supplement,
the Base Indenture is in all respects ratified and confirmed and the Base
Indenture as so supplemented by this Series Supplement shall be read, taken, and
construed as one and the same instrument.
(e) Counterparts. This Supplement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
(F) GOVERNING LAW. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PROVISIONS
THEREOF REGARDING CONFLICTS OF LAWS), AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAW.
(g) Amendments. This Supplement may not be modified or amended at any
time except in a writing signed by the Issuer, the Series 1997-1 Required
Noteholders, the Series 1997-1 Majority Credit Enhancers and the Trustee, and if
any such modification or amendment may have an adverse effect on any other
Series 1997 Variable Funding Noteholders, such modification or amendment shall
be consented to in writing by the Required VFN Noteholders.
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[Remainder of Page Intentionally Blank]
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<PAGE> 41
IN WITNESS WHEREOF, NFLP, the Trustee and the Enhancement Agent have
caused this Supplement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP
By: NATIONAL CAR RENTAL FINANCING
CORPORATION, its general partner
By: /s/ Dwight Jenkins
-------------------------------------
Name: Dwight Jenkins
Title: Vice President and Assistant
Secretary
THE BANK OF NEW YORK, as Trustee and
Enhancement Agent
By: /s/ [Duly Authorized Officer]
-------------------------------------
Name:
Title:
ACKNOWLEDGED
REPUBLIC INDUSTRIES, INC.
By: /s/ Kathleen W. Hyle
-------------------------------------
Name: Kathleen W. Hyle
Title: Vice President - Finance and
Treasurer
Note: Pursuant to Instruction 2 to Item 601(a) of Regulation S-K, the registrant
has not filed the documents relating to Series 1997-2 notes, Series 1997-3
notes or Series 1997-4 notes which are substantially similar to the
document filed herewith relating to the Series 1997-1 notes.
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<PAGE> 42
ANNEX A TO THE
SERIES 1997-1 SUPPLEMENT
Definitions List
Dated as of October 29, 1997
"Accrued Amounts" means, with respect to any Series of Notes (or any
class of such Series of Notes), on any date of determination, the sum of (i)
accrued and unpaid "Note Interest" (calculated in accordance with the provisions
of the applicable Series 1997 Variable Funding Supplement) on the Notes of such
Series of Notes (or the applicable class thereof) as of such date, (ii) the
portion of the accrued and unpaid Monthly Servicing Fee (and any Supplemental
Monthly Servicing Fee) allocated to such Series of Notes (or the applicable
class thereof) pursuant to Section 26.1 of the Series 1997 Lease, on such date,
and (iii) all other accrued and unpaid fees and expenses of NFLP on such date.
"Acquired Vehicle" means an Eligible Vehicle that is acquired or owned
by, and titled in the name of, NFLP and leased to a Lessee under Annex A to the
Series 1997 Lease on or after the Series 1997 Lease Commencement Date.
"Additional Base Rent" has the meaning specified in Section 9 of Annex
A, Section 6 of Annex B or Section 9 of Annex C of the Series 1997 Lease, as
applicable.
"Additional Lessee Closing Date" means the initial Vehicle Funding Date
with respect to Series 1997 Vehicles (including Refinanced Vehicles) leased by
an Additional Lessee.
"Additional Lessees" means those subsidiaries of Republic from time to
time becoming Lessees under the Series 1997 Lease in accordance with the
requirements of Section 29 of the Series 1997 Lease.
"Additional Overcollateralization Amount" means, with respect to the
Series 1997-1 Notes on any date, a dollar amount equal to the excess of (a) a
dollar amount equal to (i) the Series 1997-1 Invested Amount as of such day
divided by (ii) 1.00 minus the Overcollateralization Enhancement Percentage
(expressed as a decimal) as of such day over (b) the sum of (i) the Series
1997-1 Invested Amount as of such day and (ii) the product of (x) the
Overcollateralization Enhancement Percentage and (y) the Series 1997-1 Invested
Amount as of such day.
"Additional Synthetic Lease Payments" has the meaning specified in
Section 10(c) of Annex C to the Series 1997 Lease.
A-1
<PAGE> 43
"Advances", with respect to the Series 1997-1 Notes, has the meaning
specified in paragraph 2 of the recitals to the Series 1997-1 Note Purchase
Agreement.
"Affiliate" means, with respect to any 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. For purposes
of this definition, "control" means the power to direct the management and
policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and "controlled" and "controlling"
have meanings correlative to the foregoing. For purposes of the Series 1997
Lease, the Lessor shall not be considered to be an Affiliate of any of the
Lessees.
"Affiliate Joinder in Lease" has the meaning specified in Section
29.1(a) of the Series 1997 Lease.
"Aggregate VFN Invested Amount" means, as of any date of determination,
an amount equal to the aggregate of the invested amounts of all Series 1997
Variable Funding Notes.
"Alamo" means Alamo Rent-A-Car, Inc., a Florida corporation and its
successors or assigns.
"Alamo Collateral Agent" means NationsBank, N.A. (formerly known as
NationsBank of Georgia, N.A.), in its capacity as collateral agent under the
Amended and Restated Security Agreement dated as of December 17, 1993, as
amended.
"Alamo Payoff Letter" means a letter dated on or before the initial
Vehicle Funding Date with respect to Alamo under the Series 1997 Lease
specifying the amount required to pay in full all indebtedness of Alamo secured
by any of the Refinanced Vehicles to be refinanced under the Series 1997 Lease
on such initial Vehicle Funding Date with respect to which Alamo is the Lessee.
"Assignment and Nominee Agreement" means, (a) with respect to the
portion of the Initial Fleet titled in the name of Alamo, the Assignment and
Nominee Agreement dated as of October 29, 1997 among Alamo, the Master
Collateral Agent and the Alamo Collateral Agent, pursuant to which the Alamo
Collateral Agent has assigned its lien in such Vehicles to the Master Collateral
Agent, (b) with respect to a certain portion of the Initial Fleet titled in the
name of Spirit, the Assignment and Nominee Agreement dated as of October 29,
1997 among Spirit, the Master Collateral Agent and [General Motors Acceptance
Corporation], pursuant to which [Bank One Indiana, N.A.] has assigned its lien
in such Vehicles to the Master Collateral Agent and (c) with respect to the
portion of the Initial Fleet titled in the name of Spirit, the Assignment and
Nominee Agreement dated as of October 29, 1997 among Spirit, the Master
Collateral Agent and [Bank One Indiana, N.A.], pursuant to which [Bank One
Indiana, N.A.] has assigned its lien in such Vehicles to the Master Collateral
Agent.
A-2
<PAGE> 44
"Auction Acquired Vehicle" has the meaning specified in Section 2.1(e)
of the Series 1997 Lease.
"Auction Bill of Sale" has the meaning specified in Section 2.1(e)(iii)
of the Series 1997 Lease.
"Auction Sale Transaction" has the meaning specified in Section 2.1(e)
of the Series 1997 Lease.
"Authorized Officer" means (a) as to NFLP, any of the President, any
Vice-President, the Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer of the General Partner and those officers, employees and
agents of the General Partner whose signatures and incumbency shall have been
certified to the Trustee in such certificates as may be delivered by the General
Partner to the Trustee from time to time as duly authorized to execute and
deliver the Series 1997 Lease and any instruments, certificates, notices and
other documents in connection herewith on behalf of the General Partner or NFLP
and to take, from time to time, all other actions on behalf of the General
Partner or NFLP in connection therewith and (b) as to Republic or any Lessee,
any of the President, any Vice President, the Secretary or any Assistant
Secretary, the Treasurer or any Assistant Treasurer, and those officers,
employees and agents of Republic or such Lessee whose signatures and incumbency
shall have been certified to NFLP in such certificates as may be delivered by
such Lessee to NFLP from time to time as duly authorized to execute and deliver
the Series 1997 Lease and any instruments, certificates, notices and other
documents in connection herewith on behalf of such Lessee and to take, from time
to time, all other actions on behalf of such Lessee in connection therewith.
"Available GM Amount" has the meaning specified in paragraph 1(a) of
the GM Series 1997-1 Support Agreement.
"Base Amount" means, as of any date of determination, (a) with respect
to the Operating Lease, the sum of (i) the Net Book Values of all Acquired
Vehicles leased under the Operating Lease as of such date, plus (ii) all past
due and unpaid Monthly Base Rent and Additional Base Rent under the Operating
Lease as of such date, (b) with respect to the Financing Lease, the sum of (i)
the Net Book Values of all Financed Vehicles leased under the Financing Lease as
of such date, plus (ii) all past due and unpaid Monthly Base Rent and Additional
Base Rent under the Financing Lease as of such date and (c) with respect to the
Synthetic Lease, the sum of (i) the Net Book Values of all Synthetic Lease
Vehicles leased under the Synthetic Lease as of such date, plus (ii) all past
due and unpaid Monthly Base Rent and Additional Base Rent under the Synthetic
Lease as of such date.
"Base Indenture" has the meaning set forth in the preamble.
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"Base Rate Tranche" means that portion of the Principal Balance of the
Series 1997-1 Notes purchased or maintained with Advances which bear interest by
reference to the Base Rate.
"Beneficiary" has the meaning specified in the preamble to the Master
Collateral Agency Agreement.
"Board of Directors" means the Board of Directors of Republic, the
General Partner, RFC or any of the Lessees, as applicable, or any authorized
committee of such Board of Directors.
"Business Day" means
(a) any day other than a Saturday, Sunday or other day on
which banks are authorized or required by law to be closed in New York
City, New York or Chicago, Illinois; and
(b) relative to the making, continuing, prepaying or repaying
of Eurodollar Advances, any day on which dealings in Dollars are
carried on in the London interbank market.
"Capitalized Cost" means, (i) with respect to each Series 1997 Vehicle
(other than a Refinanced Vehicles) the amount payable to the Manufacturer,
dealer or other seller selling such Vehicle in order to purchase such Series
1997 Vehicle, as established by the invoice delivered in connection with such
Series 1997 Vehicle, and (ii) with respect to each Series 1997 Vehicle that is a
Refinanced Vehicle, the initial purchase price thereof (as established by the
invoice delivered in connection with such Vehicle at the time the Lessee
purchased such Vehicle) less all Depreciation Charges accrued through the
Vehicle Funding Date for such Vehicle; provided, however, that with respect to
any Series 1997 Vehicle, "Capitalized Cost" may include dealer profit and
delivery charges but shall not include any taxes, registration fees or titling
fees with respect to such Series 1997 Vehicle.
"Casualty" means, with respect to any Series 1997 Vehicle, that (i)
such Series 1997 Vehicle is lost, converted or stolen for a period of at least
90 days, (ii) such Series 1997 Vehicle is destroyed, seized or otherwise
rendered permanently unfit or unavailable for use (including vehicles that are
rejected pursuant to Section 2.2 of the Series 1997 Lease) or (iii) in the case
of a Program Vehicle not redesignated under Section 14 of the Series 1997 Lease,
the return of such Series 1997 Vehicle cannot be, or is not, effected for any
reason or the Manufacturer thereof did not accept such Series 1997 Vehicle for
repurchase or Auction under the terms of the applicable Manufacturer Program, in
either case, for any reason other than the Manufacturer's willful refusal or
inability to comply with its obligations under its Manufacturer Program.
"Casualty Payment" has the meaning specified in Section 7 of the Series
1997 Lease.
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"Commercial Paper Notes" means the promissory notes of RFC issued by
RFC in the commercial paper market pursuant to the Depositary Agreement.
"Company Vehicle" means an Eligible Vehicle that is titled in the name
of NFLP in the States of Hawaii, Texas, Louisiana, Nevada, New Mexico,
Washington, Oklahoma, Maryland or Delaware, the lease of which shall be pursuant
to Annex B to the Series 1997 Lease.
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited financial
statements of Republic, RFC, any of the Lessees or NFLP, as applicable.
"CP Collateral Agents" means, collectively, the Series 1997-1
Collateral Agent, the Series 1997-2 Collateral Agent, the Series 1997-3
Collateral Agent and the Series 1997-4 Collateral Agent.
"CP Market Disruption Event" shall have the meaning set forth therefor
in the Series 1997-1 Note Purchase Agreement.
"CP Tranche" means that portion of the Principal Balance of the Series
1997-1 Notes purchased or maintained with Advances which bear interest by
reference to the CP Rate.
"Credit Agreement" means the Credit Facilities and Reimbursement
Agreement dated as of April 23, 1997, among Republic Industries, Inc. and
Republic Resources Company, as co-borrowers, NationsBank, N.A. (formerly known
as NationsBank, N.A. (South)), as arranger and administrative agent, and the
institutions parties thereto as lenders, as such agreement may be amended,
supplemented, amended and restated or otherwise modified from time to time in
accordance with the terms thereof.
"Credit Draw" means a draw on the Series 1997-1 Letter of Credit
pursuant to a Certificate of Credit Demand.
"Daily Interest Amount" means, for any day in a Series 1997-1 Interest
Period, an amount equal to (a) the product of (i) the Series 1997-1 Note Rate
for such Series 1997-1 Interest Period and (ii) the outstanding principal amount
of all Advances under the Series 1997-1 Notes as of the close of business on
such date (b) divided by 360; provided, however, that the portion of the amount
set forth in clause (ii) above allocable to Commercial Paper Notes issued to
fund Advances shall be limited to the portion thereof which is allocable to
Commercial Paper Notes maturing on such day.
"Daily Report" has the meaning specified in Section 24.7(v) of the
Series 1997 Lease.
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"Decrease" means a Voluntary Decrease or a Mandatory Decrease, as
applicable.
"Defaulting Lessee" has the meaning specified in Section 18(b) of the
Series 1997 Lease.
"Defaulting Manufacturer" has the meaning specified in Section 18(a) of
the Series 1997 Lease.
"Demand Note" means the demand note made by National to NFLP which is
payable by Republic upon NFLP's demand.
"Demand Notice" has the meaning specified in Section 5.10(c)(ii) of
this Supplement.
"Deposit Date" has the meaning specified in Section 5.2 of this
Supplement.
"Deposited Funds", for purposes of the Series 1997-1 Supplement, has
the meaning provided in the Definitions List attached on Annex A to the Series
1997-1 Liquidity Agreement.
"Designated Period" means, with respect to any Series 1997 Vehicle that
is subject to the Matrix Manufacturer Program provided by GM, the period (up to
a maximum of twenty-four (24) months) designated by the related Servicer in the
applicable Vehicle Acquisition Schedule relating to such Vehicle as the period
of time for which such Servicer expects such Vehicle to be subject to the Series
1997 Lease.
"Determination Date" means the third Business Day prior to each
Distribution Date.
"Distribution Date" means, with respect to the Series 1997-1 Notes, the
20th day of each calendar month or, if such day is not a Business Day, the next
succeeding Business Day, commencing November 20, 1997.
"Due Date" means, with respect to any payment due from a Manufacturer
or auction dealer in respect of a Program Vehicle turned back for repurchase
pursuant to the terms of the related Manufacturer Program, the thirtieth (30th)
day after the Disposition Date for such Vehicle.
"Eligible Affiliate" means an Affiliate of Republic that regularly
operates a United States domestic daily car rental business and is not a Lessee.
"Eligible Credit Enhancer" means (a) a commercial bank having total
assets in excess of $500,000,000, (b) a finance company, insurance company or
other financial institution that in the ordinary course of business enters into
transactions of a type similar to that entered into by the Series 1997-1 Letter
of Credit Provider or the Series 1997-1 Support Letter of Credit Providers, as
applicable, under the Series 1997-1 Letter of Credit or the Series 1997-1
Support Letter and
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has total assets in excess of $200,000,000, and with respect to which providing
or becoming an assignee of the obligations of the Series 1997-1 Letter of Credit
Provider or the Series 1997-1 Support Letter of Credit Providers, as applicable,
would not constitute a prohibited transaction under Section 4975 of ERISA, and
(c) any other financial institution, in each case reasonably satisfactory to
Republic and NFLP, having a short-term rating from Standard & Poor's and Moody's
at least equal to A-1, or better, by Standard & Poor's and P-1 by Moody's;
provided, however, that any Person who does not have either a short-term rating
from Standard & Poor's or Moody's shall be deemed to have the required rating
set forth above if such Rating Agency confirms in writing that such Person, if
its short-term debt obligations were rated, would be assigned such required
rating.
"Eligible Franchisee" means a franchisee of a Lessee having rental
offices located in the United States which meets the normal credit and other
approval criteria of such Lessee, and which may be an Affiliate of such Lessee;
provided that no Lessee shall permit any Eligible Franchisee to garage or lease
Vehicles at offices outside of the United States.
"Eligible Manufacturer" means an Eligible Program Manufacturer or an
Eligible Non-Program Manufacturer.
"Eligible Manufacturer Program" means, at any time, a Manufacturer
Program that is in full force and effect with an Eligible Manufacturer (i)
pursuant to which the repurchase price or guaranteed auction sale price is at
least equal to (a) with respect to GM's Matrix Manufacturer Program, a specified
percentage of the Capitalized Cost of each Vehicle, such percentage being
determined for each Vehicle based upon the model year of such Vehicle and the
calendar month in which such Vehicle is returned to the Manufacturer minus
Excess Mileage Charges, minus Excess Damage Charges minus Missing Equipment
Charges minus other similar charges, or (b) with respect to any other
Manufacturer or any other Manufacturer Program of GM, the Capitalized Cost of
each Vehicle, minus all Depreciation Charges accrued with respect to such
Vehicle prior to the date that the Vehicle is submitted for repurchase or
auction minus Excess Mileage Charges, minus Excess Damage Charges minus Missing
Equipment Charges minus other similar charges, (ii) that cannot be amended or
terminated with respect to any Vehicle after the purchase of that Vehicle, and
(iii) under which, with respect to Acquired Vehicles and Company Vehicles, NFLP
is an Authorized Fleet Purchaser or, with respect to Financed Vehicles (other
than Company Vehicles) and Synthetic Lease Vehicles, the Lessee thereof is an
Authorized Fleet Purchaser and, in each case, the assignment of the benefits of
which to the Master Collateral Agent has been acknowledged in writing by the
related Manufacturer pursuant to an Assignment Agreement and NFLP, the Master
Collateral Agent and the Trustee have been provided with an officer's
certificate or opinion of counsel reasonably satisfactory to them and each
Rating Agency that NFLP (and the Master Collateral Agent on behalf of NFLP and
the Trustee) can enforce the applicable Manufacturer's obligations thereunder
with respect to Program Vehicles; provided that with respect to any new
Manufacturer Program (including a new model year Manufacturer Program of an
Eligible Manufacturer and a Manufacturer Program
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of a new Manufacturer) that is proposed for consideration after the date hereof
as an Eligible Manufacturer Program, prior to such new Manufacturer Program
constituting an "Eligible Manufacturer Program" hereunder, if the Series 1997-1
Notes or the Commercial Paper Notes are then being rated by Standard & Poor's or
Moody's, NFLP shall have received Rating Agency Confirmation that the
acquisition of Vehicles pursuant to such Manufacturer Program will not result in
the reduction or withdrawal of any rating issued by Standard & Poor's or Moody's
in respect of such Series of Notes or the Commercial Paper Notes; and provided
further that, if there is a major change to a Manufacturer Program during a
model year, NFLP shall have received Rating Agency Confirmation that the
continuing acquisition of Vehicles pursuant to such Manufacturer Program will
not result in a reduction or withdrawal of any rating issued by each Rating
Agency in respect of the Commercial Paper Notes.
"Eligible Non-Program Manufacturer" means (a) each Manufacturer listed
on Exhibit D-1 to this Supplement, and (b) any other Manufacturer with respect
to the addition of which NFLP has obtained the approval of the Majority Credit
Enhancers and the Required VFN Noteholders and Rating Agency Confirmation that
the acquisition of Non-Program Vehicles from such Manufacturer will not result
in a reduction or withdrawal of any rating issued by each Rating Agency in
respect of the Commercial Paper Notes (unless (i) a Manufacturer Event of
Default has occurred pursuant to clause (i) of the definition thereof with
respect to such Manufacturer and such Manufacturer is not generally paying its
debts as they are due or (ii) such Manufacturer has experienced an Event of
Bankruptcy).
"Eligible Program Manufacturer" means (a) each Manufacturer listed on
Exhibit D-2 to this Supplement and (b) any other Manufacturer that (i) has an
Eligible Manufacturer Program, (ii) is rated or whose parent is rated at least
"BBB-" by Standard and Poor's and "Baa3" by Moody's or is otherwise approved by
a majority of the lenders under each liquidity facility supporting debt issued
by any Series 1997 Variable Funding Noteholder to fund advances made by it under
its respective Series 1997 Variable Funding Note and by the Majority Credit
Enhancers, and (c) has not experienced a Manufacturer Event of Default which is
continuing.
"Eligible Receivable" means a legal, valid and binding receivable (a)
due from any Eligible Program Manufacturer under a Manufacturer Program to NFLP,
a Lessee, an Additional Lessee or a creditor of NFLP or such Lessee or
Additional Lessee, (b) in respect of a Program Vehicle purchased by such
Eligible Program Manufacturer, which absent such purchase, would have
constituted an Eligible Vehicle with respect to which either (i) the Lien of the
Master Collateral Agent was noted on the Certificate of Title at the time of
purchase or (ii) such Vehicle is in the Initial Fleet of a Lessee seeking to
refinance such receivable, and (c) the right to payments in respect of which has
been assigned by the payee thereof to the Master Collateral Agent for the
benefit of the Secured Parties; provided that no amount receivable from an
Eligible Program Manufacturer or auction dealer under a Manufacturer Program
shall be an Eligible Receivable if such amount remains unpaid more than ten (10)
days after the Due Date in respect of such Vehicle.
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"Eligible Vehicle" means, on any date of determination, an automobile
or light truck that, (i) either is a Program Vehicle (other than a light truck
manufactured by Chrysler and that is subject to a 9 month or longer minimum hold
period under the Guaranteed Depreciation Program with Chrysler) or a Non-Program
Vehicle manufactured by an Eligible Manufacturer, in each case at the time of
leasing under the Series 1997 Lease, (ii) is not older than forty-two (42)
months from the date of the original manufacturer invoice therefor, (iii) is
owned by NFLP or the Lessee thereof under the Series 1997 Lease free and clear
of all Liens other than Permitted Liens, (iv) other than Vehicles in the Initial
Fleet, with respect to which the Master Collateral Agent is noted as the first
lienholder on the Certificate of Title therefor, or the Certificate of Title has
been submitted to the appropriate state authorities for such notation and (v) is
a Related Vehicle with the Trustee designated as the Beneficiary pursuant to the
Master Collateral Agency Agreement.
"Enhancement Agent" means The Bank of New York, a New York banking
corporation, or its permitted successors and assigns under Section 5.14 hereof.
"Enhancement Percentage" means (for purposes of determining the Series
1997 Required Asset Amount) on any day, a percentage equal to the sum of (i) the
Series 1997-1 Minimum Non-Program Enhancement Percentage times the Series 1997
Non-Program Percentage on such day plus (ii) the Series 1997-1 Minimum Program
Enhancement Percentage times the Series 1997 Program Percentage on such day.
"Eurodollar Tranche" means that portion of the Principal Balance of the
Series 1997-1 Notes purchased or maintained with Advances which bear interest by
reference to the Eurodollar Rate.
"Excess Damage Charges" means, with respect to any Program Vehicle, the
amount charged to NFLP (or any of the Lessees), or deducted from the Repurchase
Price, by the Manufacturer of such Vehicle due to damage over a prescribed limit
to the Vehicle at the time that the Vehicle is turned in to such Manufacturer or
its agent for repurchase or Auction pursuant to the applicable Manufacturer
Program.
"Excess Mileage Charges" means, with respect to any Program Vehicle,
the amount charged to NFLP (or any of the Lessees), or deducted from the
Repurchase Price, by the Manufacturer of such Vehicle due to the fact that such
Vehicle has mileage over a prescribed limit at the time that such Vehicle is
turned in to such Manufacturer or its agent for repurchase or Auction pursuant
to the applicable Manufacturer Program.
"Excluded Payments" means the following amounts payable to NFLP or any
Servicer (whether payable under the Manufacturer Programs or otherwise): (i) all
incentive payments payable to NFLP or any Servicer to purchase Vehicles, (ii)
all amounts payable to NFLP or any Servicer as compensation for the preparation
by NFLP or any Servicer of newly delivered
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Vehicles and (iii) all amounts payable to NFLP or any Servicer in reimbursement
for warranty work performed by NFLP or any Servicer on the Vehicles.
"Existing Indebtedness" means, with respect to a specified Person,
Indebtedness of such Person issued and outstanding on the VFN Closing Date, and
any renewals, extensions or refundings thereof, but not any increases in the
principal amounts thereof or interest rates and fees thereon, except for
increases in interest rates upon the occasion of any such renewal, extension or
refunding that are commercially reasonable at such time.
"Fair Market Value" means, with respect to any Non-Program Vehicle as
of any date of determination, the market value of such Non-Program Vehicle as
specified in the Related Month's published National Automobile Dealers
Association, Official Used Car Guide, Central Edition (the "NADA Guide") for the
model class and model year of such Vehicle based on the average equipment and
the average mileage of each Vehicle of such model class and model year. If such
Vehicle is not listed in the NADA Guide published in the Related Month preceding
such date of determination, then the Black Book Official Finance/Lease Guide at
the beginning of the model year (the "Lease Guide") shall be used to estimate
the wholesale price of the Vehicle, based on the Vehicle's model class and model
year or the closest model class and model year thereto, for purposes of such
months for which the wholesale price of such Vehicle is not so published in the
NADA Guide; provided, however, if the NADA Guide was not published in the
Related Month, then the Lease Guide shall be relied upon in its place, and if
the Lease Guide is unavailable, the Market Value of such Vehicle shall be based
on an independent third-party data source approved by each Rating Agency that is
rating any Series of Series 1997 Variable Funding Notes or Commercial Paper
Notes at the request of NFLP or Republic based on the average equipment and
average mileage of each Vehicle of such model class and model year or based upon
such other methodology approved by each such Rating Agency.
"Financing Lease" means the Base Lease as supplemented by Annex B to
the Series 1997 Lease.
"Financing Source" has the meaning specified in the preamble to the
Master Collateral Agency Agreement.
"Financed Vehicle" means an Eligible Vehicle that is (a) acquired or
owned by a Lessee and financed or refinanced by NFLP under Annex B to the Series
1997 Lease on or after the Series 1997 Lease Commencement Date, or (b) a Company
Vehicle.
"Fleet Purchase Transaction" means a transaction in which a Lessee
purchases in a single transaction a pool of Eligible Vehicles with respect to
which each of the following is true: (a) the aggregate Net Book Value of the
vehicles in such pool, together with the aggregate Net Book Value (as of the
date of inclusion in the Initial Fleet) of all vehicles leased under the Series
1997 Lease during the preceding 12 calendar months which were acquired by a
Lessee in a Fleet
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Purchase Transaction, is less than 25% of the Program Size, (b) all the vehicles
in such pool are titled in the same name, (c) all the certificates of title for
the vehicles in such pool show the same party as lienholder and (d) the named
lienholder in respect of such vehicles is rated at least investment grade by
each Rating Agency.
"Fleet Sharing Agreement" means, with respect to the Series 1997 Lease,
an agreement pursuant to which a Lessee agrees to let a Fleet Sharing Party use
Series 1997 Vehicles leased by such Lessee under the Series 1997 Lease.
"Fleet Sharing Party" means an Eligible Affiliate or Eligible
Franchisee that is using Series 1997 Vehicles pursuant to a Fleet Sharing
Agreement.
"GAAP" means those principles of accounting set forth in pronouncements
of the Financial Accounting Standards Board, the American Institute of Certified
Public Accountants or which have other substantial authoritative support and are
applicable in the circumstances as of the date of a report, as such principles
are from time to time supplemented and amended.
"GM Series 1997-1 Support Agreement" means the GM Series 1997-1 Support
Agreement, dated as of October 29, 1997, executed and delivered by the GM
Series 1997-1 Support Provider to the Series 1997-1 Letter of Credit Provider,
as the same may be amended, supplemented, restated or otherwise modified or
substituted or replaced from time to time in accordance with the terms thereof.
"GM Series 1997-1 Support Provider" means General Motors Corporation, a
Delaware corporation, in its capacity as the GM Series 1997-1 Support Provider
under the GM Series 1997-1 Support Agreement.
"GM Series 1997-1 Support Reimbursement Agreement" means the GM Series
1997-1 Support Reimbursement Agreement, dated as of October 29, 1997, among
RFC, the GM Series 1997-1 Support Provider, the Lessees, and those additional
Subsidiaries and Affiliates of Republic from time to time becoming parties
thereunder, as such agreement may be amended, supplemented, restated or
otherwise modified or substituted or replaced from time to time in accordance
with the terms thereof.
"Guaranteed Depreciation Program" means, with respect to the Series
1997-1 Notes, a guaranteed depreciation program pursuant to which a Manufacturer
has agreed with a Lessee or NFLP to (a) cause Vehicles manufactured by it or one
of its Affiliates that are turned back during the specified Repurchase Period to
be sold at Auction by an auction dealer, (b) cause the proceeds of any such sale
to be paid to such Lessee or NFLP, as applicable, by such auction dealer within
seven days of such sale and (c) pay to such Lessee or NFLP, as applicable, the
excess, if any, of the guaranteed payment amount with respect to any such
Vehicle calculated as of the Disposition Date in accordance with the provisions
of such guaranteed depreciation
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program over the amount paid to such Lessee or NFLP, as applicable, by an
auction dealer pursuant to clause (b) above.
"Guaranteed Obligations" has the meaning specified in Section 28.1 of
the Series 1997 Lease.
"Guarantor" means Republic, in its capacity as such under the Series
1997 Lease or the Series 1997-1 Support Reimbursement Agreement.
"Guarantor Subsidiary" has the meaning specified in Section 29.1 of the
Series 1997 Lease.
"Guaranty" has the meaning specified in Section 28.1 of the Series 1997
Lease.
"Increase" has the meaning specified in Section 4.2(a) of this
Supplement.
"Increase Date" means the date on which an Increase occurs.
"Initial Determination Date" means, with respect to any Series 1997
Vehicle, the Determination Date with respect to the Related Month in which the
Vehicle Lease Commencement Date for such Vehicle occurs.
"Initial Fleet" means (a) the Refinanced Vehicles owned by and titled
in the name of Alamo, Value or Spirit on the VFN Closing Date and refinanced by
NFLP under the Series 1997 Lease pursuant to the initial Vehicle Order of Alamo,
Value or Spirit, respectively, (b) on the date any Additional Lessee is added
pursuant to Section 29 of the Series 1997 Lease, the Eligible Vehicles titled in
the name of such Additional Lessee prior to the date such party becomes an
Additional Lessee which are refinanced by NFLP under the Series 1997 Lease
pursuant to the initial Vehicle Order of such Additional Lessee, (c) on any
other Vehicle Funding Date, the Refinanced Vehicles included in a Fleet Purchase
Transaction and (d) on any other Vehicle Funding Date, Eligible Vehicles which
were ordered from a Manufacturer prior to the VFN Closing Date but are delivered
to a Lessee or NFLP and financed by NFLP under the Series 1997 Lease after the
VFN Closing Date.
"Interest Reset Date" means the first day of the applicable Series
1997-1 Interest Period.
"L/C Percentage" means, with respect to the Series 1997-1 Notes on any
day, the percentage equivalent of a fraction, (a) the numerator of which is the
Series 1997-1 Letter of Credit Amount on such date and (b) the denominator of
which is the Series 1997-1 Invested Amount on such date.
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"Lease Commencement Date" has the meaning specified in Section 3.2 of
the Series 1997 Lease.
"Lease Event of Default" has the meaning specified in Section 17.1 of
the Series 1997 Lease.
"Lease Expiration Date" has the meaning specified in Section 3.2 of the
Series 1997 Lease.
"Lessee" means each of National, Alamo, Value and Spirit, and each
Additional Lessee, in its respective capacity as a lessee under the Series 1997
Lease.
"Lessee Agreements" means any and all Fleet Sharing Agreements entered
into by any of the Lessees the subject of which includes any Vehicle leased by
the Lessor to any Lessee under the Series 1997 Lease, and any and all other
contracts, agreements, guarantees, insurance, warranties, instruments or
certificates entered into or delivered to the Lessee in connection therewith.
"Lessee Grantor Master Collateral" has the meaning specified in the
Master Collateral Agency Agreement.
"Lessee Partial Wind-Down Event" with respect to a Lessee has the
meaning specified in Section 18(b) of the Series 1997 Lease.
"Lessee Termination Reimbursement Share" has the meaning specified in
Section 2.3(c) of the Series 1997-1 Support Reimbursement Agreement or Section
2.3(c) of the GM Series 1997-1 Support Reimbursement Agreement, as applicable.
"Letter of Credit" means the Series 1997-1 Letter of Credit or any of
the other irrevocable letters of credit issued by any of the Letter of Credit
Providers in favor of the Enhancement Agent for the benefit of any of the Series
1997 Variable Funding Noteholders, as the same may be amended, supplemented,
restated or otherwise modified or substituted or replaced from time to time in
accordance with the terms thereof.
"Letter of Credit Provider" means the Series 1997-1 Letter of Credit
Provider or any of the other Persons that issue an irrevocable letter of credit
in favor of the Enhancement Agent for the benefit of the Series 1997 Variable
Funding Noteholders.
"Liabilities" means all obligations to the Lessor of the Lessees or the
Guarantor arising under or in connection with the Series 1997 Lease, howsoever
created, arising or evidenced, whether direct or indirect, joint or several,
absolute or contingent, or now or hereafter existing, or
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due or to become due including, without limitation, interest accruing after the
filing of a bankruptcy petition whether or not allowed as a claim.
"Liquidation Event of Default" means with respect to the Series 1997-1
Notes, so long as such event or condition continues, any of the following: (a)
any event or condition with respect to NFLP, the General Partner, Republic or
(subject to the provisions of Section 18 of the Series 1997 Lease) a Lessee of
the type described in Section 9.1(d) of the Base Indenture, (b) a payment
default by NFLP under the Base Indenture as specified in Sections 9.1(a) and
9.1(b) of the Base Indenture, (c) an event specified in Section 7.1(f)(i) of the
Series 1997-1 Supplement, (d) any "Liquidation Event of Default" as defined in
the Series 1997-1 Liquidity Agreement or (e) the occurrence of a Series 1997
Limited Liquidation Event of Default, "liquidation event of default" or other
event resulting in the liquidation of any Series 1997 VFN Collateral or Master
Collateral with respect to any other Series of Series 1997 Variable Funding
Notes.
"Liquidity Agreement" means the Series 1997-1 Liquidity Agreement or
any of the other liquidity agreements among RFC, the parties identified therein
as the "Liquidity Lenders" and the party identified therein as the "Liquidity
Agent" on behalf of the Liquidity Lenders referred to therein that are with
respect to any liquidity facility and other related matters to be provided in
connection with the Series 1997 Variable Funding Notes, as any of such
agreements may be amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms thereof.
"Liquidity Amount" means, with respect to any date of determination, an
amount equal to $50 Million.
"Losses" means, on any date of determination, the sum of all Series
1997 Non-Program Losses and Series 1997 Program Losses.
"Majority Credit Enhancers" means, with respect to the Series 1997
Variable Funding Notes the support letter of credit providers for all Series
1997 Variable Funding Notes holding commitments representing not less than a
majority of the aggregate amount of all support letter of credit commitments for
all Series 1997 Variable Funding Notes.
"Mandatory Decrease" has the meaning specified in Section 4.3(a) of
this Supplement.
"Manufacturer Event of Default" means, with respect to a Manufacturer,
(i) the failure by such Manufacturer (or if such Manufacturer's Manufacturer
Program is a Guaranteed Depreciation Program, such Manufacturer or any related
auction dealers) to pay any amount due under such Manufacturer's Manufacturer
Program with respect to a Program Vehicle turned in to such Manufacturer and
such failure continues for more than one hundred (100) days following the Due
Date ("Past Due Amounts") and the aggregate Past Due Amounts relating to such
Manufacturer are equal to or in excess of the lesser of (x) $25 million and (y)
the then
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outstanding aggregate amount of repurchase obligations of such Manufacturer
under its Manufacturer Program in respect of Program Vehicles, in each case net
of Past Due Amounts, aggregating no more than $50 million, that are (A) the
subject of a good faith dispute as evidenced in a writing by any of the Lessees
or NFLP, as applicable, or the Manufacturer questioning the accuracy of amounts
paid or payable in respect of certain Program Vehicles tendered for repurchase
under a Manufacturer Program (as distinguished from any dispute relating to the
repudiation by such Manufacturer generally of its obligations under such
Manufacturer Program or the assertion by such Manufacturer of the invalidity or
unenforceability as against it of such Manufacturer Program) and (B) with
respect to which the applicable Lessee or NFLP has provided adequate reserves as
reasonably determined by such Lessee or NFLP, (ii) the occurrence of an Event of
Bankruptcy with respect to such Manufacturer or (iii) the termination of such
Manufacturer's Manufacturer Program or the failure of such Manufacturer's
Manufacturer Program to meet the requirements of an Eligible Manufacturer
Program.
"Manufacturer Payment Rights" means the rights of NFLP under any
Manufacturer Program to receive payments on account of Repurchase Prices of
Program Vehicles leased under the Series 1997 Lease.
"Manufacturer Program" means a Repurchase Program or a Guaranteed
Depreciation Program.
"Manufacturer Receivable" means an amount due from a Manufacturer or
auction dealer under a Manufacturer Program in respect of or in connection with
a Program Vehicle turned back to such Manufacturer.
"Master Collateral" has the meaning specified in Section 2.1(b) of the
Master Collateral Agency Agreement.
"Master Collateral Agency Agreement" means the Second Amended and
Restated Master Collateral Agency Agreement, dated as of even date herewith,
among Republic, NFLP, the Lessees and the Master Collateral Agent, as such
agreement may be amended, supplemented, restated or otherwise modified from time
to time in accordance with the terms thereof.
"Master Collateral Agent" means Citibank, N.A., a national banking
association, in its capacity as Master Collateral Agent under the Master
Collateral Agency Agreement and its permitted successors and assigns in such
capacity thereunder.
"Master Servicer" means Republic, in its capacity as the master
servicer under the Series 1997 Lease, and its permitted successors and assigns
in such capacity thereunder.
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"MATERIAL ADVERSE EFFECT" means (A) with respect to any Lessee, NFLP,
RFC or Republic, and any occurrence, event or condition with respect to any of
them:
(i) a material adverse change in the financial condition, business,
assets or operations of any Lessee, NFLP, RFC or Republic, as the case may be,
and its Consolidated Subsidiaries taken as a whole, that materially adversely
affects the ability of any Lessee, RFC, NFLP or Republic to perform its
respective obligations under any of the Related Documents; or
(ii) a material adverse effect on the ability of any Lessee, RFC, NFLP
or Republic, as the case may be, to perform its material obligations under any
of the Related Documents; and
(B) with respect to the Series 1997-1 Notes, an adverse effect on (a)
the enforceability of the Series 1997 Lease or (b) the priority or perfection of
the Trustee's or the Master Collateral Agents' Lien on a material portion of the
Collateral or Master Collateral applicable thereto, respectively.
"MATRIX MANUFACTURER PROGRAM" means the Manufacturer Program titled
"General Motors Corporation Passenger Car and Light Duty Truck 100% Repurchase
Program for Daily Rental Operators - Program No. 97-02," and any substantially
similar Manufacturer Program for any other model years, and pursuant to which
the repurchase price for any Program Vehicle subject thereto is calculated based
upon a specified percentage of the Capitalized Cost of such Vehicle and the
month of return as set forth in such Manufacturer Program.
"MAXIMUM AGGREGATE VFN INVESTED AMOUNT" means, as of any date of
determination, the sum of (i) the Series 1997-1 Maximum Invested Amount on such
date, (ii) the Series 1997-2 Maximum Invested Amount on such date, (iii) the
Series 1997-3 Maximum Invested Amount on such date, (iv) the Series 1997-4
Maximum Invested Amount on such date and (v) the maximum invested amount for
each other Series of Shared Collateral Series Notes on such date.
"MAXIMUM LEASE COMMITMENT" means, on any date of determination, the sum
of (i) the maximum face amount of the Series 1997 Variable Funding Notes, PLUS
(ii) the Series 1997 Aggregate Available Subordinated Amount on such date, PLUS
(iii) the aggregate Net Book Values of all Series 1997 Vehicles leased under the
Series 1997 Lease as of such date which were acquired, financed, or refinanced
with funds other than proceeds of Series 1997 Variable Funding Notes or the
available subordinated amount for any Series of Series 1997 Variable Funding
Notes, PLUS (iv) any amounts held in the Retained Distribution Account that NFLP
commits on or prior to such date to invest in new Series 1997 Vehicles (as
evidenced by an Officer's Certificate of NFLP) in accordance with the terms of
the Series 1997 Lease and the Indenture.
"MAXIMUM MANUFACTURER CONCENTRATION" means as of any date of
determination (a) that the Net Book Value of all Series 1997 Vehicles that are
Non-Program Vehicles manufactured by
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Hyundai, Isuzu and Suzuki and are leased under the Series 1997 Lease as of such
date does not exceed 10% of the Program Size on such date, (b) that the Net Book
Value of Series 1997 Vehicles that are Non-Program Vehicles manufactured by
Hyundai and are leased under the Series 1997 Lease as of such date does not
exceed 5% of the Program Size on such date, (c) that the Net Book Value of
Series 1997 Vehicles that are Non-Program Vehicles manufactured by Isuzu and are
leased under the Series 1997 Lease as of such date does not exceed 5% of the
Program Size on such date and (d) that the Net Book Value of Series 1997
Vehicles that are Non- Program Vehicles manufactured by Suzuki and are leased
under the Series 1997 Lease as of such date does not exceed 5% of the Program
Size on such date
"MAXIMUM NON-PROGRAM PERCENTAGE" means, with respect to Series 1997
Non-Program Vehicles, twenty percent (20%) of the Maximum Aggregate VFN Invested
Amount or such other percentage amount agreed upon by the Lessor and the
Lessees, subject to Rating Agency Confirmation.
"MEASUREMENT MONTH" on any date, means each calendar month, or the
smallest number of consecutive calendar months, preceding such date in which (a)
at least 2,000 Non-Program Vehicles leased under the Series 1997 Lease
(excluding salvage sales) were sold at auction or (b) at least one-twelfth of
the aggregate Net Book Value of the Non-Program Vehicles leased under the Series
1997 Lease as of the last day of such calendar month or consecutive calendar
months (excluding salvage sales) were sold at auction; PROVIDED, HOWEVER, that
no calendar month included in a Measurement Month shall be included in any other
Measurement Month.
"MEASUREMENT MONTH AVERAGE" means, with respect to any Measurement
Month, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Disposition Proceeds and Termination Payments in respect of
all Series 1997 Vehicles (excluding salvage sales) that are Non-Program Vehicles
sold at auction or otherwise during such Measurement Month and the denominator
of which is the aggregate Net Book Value of such Vehicles on the dates of their
respective sales; PROVIDED, HOWEVER, that, until the completion of the initial
Measurement Month, the Measurement Month Average shall be deemed to be 100%.
"MISSING EQUIPMENT CHARGES" means, with respect to any Program Vehicle,
the amount charged to NFLP or any of the Lessees, as applicable, or deducted
from the Repurchase Price, by the Manufacturer of such Vehicle due to missing
equipment at the time such Vehicle is turned in to such Manufacturer or its
agent for repurchase pursuant to the applicable Manufacturer Program.
"MONTHLY BASE RENT" has the meaning specified in Section 9 of Annex A,
Section 6 of Annex B or Section 9 of Annex C of the Series 1997 Lease, as
applicable.
"MONTHLY CERTIFICATE", with respect to the Series 1997 Lease, has the
meaning specified in Section 24.7(vi) of the Series 1997 Lease.
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"MONTHLY FINANCE RENT" has the meaning specified in Section 6 of Annex
B of the Series 1997 Lease.
"MONTHLY PRINCIPAL ALLOCATION" has the meaning specified in SECTION
5.5(b) of this Supplement.
"MONTHLY SERVICING FEE" has the meaning specified in Section 26.1 of
the Series 1997 Lease.
"MONTHLY SUPPLEMENTAL PAYMENT" has the meaning specified in Section 6
of Annex B of the Series 1997 Lease.
"MONTHLY SUPPLEMENTAL SERVICING FEE" means, on any Distribution Date,
the product of the Supplemental Servicing Fee accrued on such date and a
fraction, the numerator of which shall be the Series 1997-1 Invested Amount on
such Distribution Date and the denominator of which shall be the sum of the
aggregate of the invested amounts outstanding for all Series 1997 Variable
Funding Notes on such Distribution Date.
"MONTHLY VARIABLE RENT" has the meaning specified in Section 9 of Annex
A of the Series 1997 Lease or Section 9 of Annex C of the Series 1997 Lease, as
applicable.
"MONTHLY VEHICLE STATEMENT" has the meaning specified in Section
24.7(iv) of the Series 1997 Lease.
"NAMED LESSEE" has the meaning specified in Section 8 of the Series
1997 Lease.
"NAMED SERVICER" has the meaning specified in Section 26.3 of the
Series 1997 Lease.
"NATIONAL PAYOFF LETTER" means a letter dated on or before the initial
Vehicle Funding Date with respect to National under the Series 1997 Lease
specifying the amount required to pay in full all indebtedness of National
secured by any of the Refinanced Vehicles to be refinanced under the Series 1997
Lease on such initial Vehicle Funding Date with respect to which National is the
Lessee.
"NET BOOK VALUE" means, with respect to any Vehicle being leased under
the Series 1997 Lease (a) as of any date of determination during the period from
the Vehicle Lease Commencement Date for such Vehicle to but excluding the
Initial Determination Date, the Capitalized Cost of such Vehicle, (b) as of the
Initial Determination Date for such Vehicle, (i) the Capitalized Cost for such
Vehicle MINUS (ii) the aggregate Depreciation Charges accrued with respect to
such Vehicle through the last day of the Related Month in which the Vehicle
Lease Commencement Date for such Vehicle occurred, (c) as of any Determination
Date after the Initial Determination Date, (i) the Net Book Value of such
Vehicle as calculated on the
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immediately preceding Determination Date MINUS (ii) the aggregate Depreciation
Charges accrued with respect to such Vehicle during the Related Month (through
the last day thereof), LESS, (d) if such Vehicle is a Non-Program Vehicle which
was leased under the Series 1997 Lease on the last day of the Related Month, an
amount equal to (i) the amount of Additional Base Rent, if any, paid (or, prior
to the applicable Payment Date, payable) on the Payment Date immediately
following such Related Month DIVIDED by (ii) the number of Non-Program Vehicles
leased under the Series 1997 Lease on the last day of the Related Month. After
the Initial Determination Date, on any day which is not a Determination Date,
the Net Book Value of a Vehicle shall be the Net Book Value calculated for such
Vehicle on the most recent Determination Date.
"NET DISPOSITION LOSSES" has the meaning specified in SECTION
5.10(b)(iv).
"NFLP AGREEMENTS" means the collective reference to the documents
referred to in the definition of NFLP Agreements in Schedule 1 to the Base
Indenture and the Series 1997 NFLP Agreements.
"NFLP BENEFICIAL INTEREST" means the 100% beneficial interest owned by
NFLP in the NFLP Receivables Trust.
"NFLP MASTER COLLATERAL" has the meaning specified in Section 2.1(b) of
the Master Collateral Agency Agreement.
"NFLP RECEIVABLES TRUST" means the irrevocable trust established
pursuant to the NFLP Receivables Trust Agreement.
"NFLP RECEIVABLES TRUST AGREEMENT" means the trust agreement dated as
of October [ ], 1997 between NFLP, as grantor, and the Receivables Trustee, as
trustee.
"NFLP RECEIVABLES TRUSTEE" means The Bank of New York (Delaware), in
its capacity as trustee under the NFLP Receivables Trust Agreement.
"NON-PROGRAM MAXIMUM TERM" means with respect to a Series 1997 Vehicle
that is a Non-Program Vehicle, the last day of the forty-second (42nd) month
after the date of the original new dealer invoice for such Non-Program Vehicle.
"NON-PROGRAM VEHICLE" means, with respect to the Series 1997-1 Notes, a
Series 1997 Vehicle which is not subject to an Eligible Manufacturer Program at
the time of its leasing under the Series 1997 Lease or which is redesignated as
a Non-Program Vehicle pursuant to Section 14 of the Series 1997 Lease.
"NON-PROGRAM VEHICLE REPORT" has the meaning specified in Section
24.7(vii) of the Series 1997 Lease.
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"NON-PROGRAM VEHICLE TERMINATION PAYMENT" has the meaning specified in
Section 12.3 of the Series 1997 Lease.
"NOTE INTEREST SHORTFALL" with respect to the Series 1997-1 Notes, has
the meaning specified in SECTION 5.4 of this Supplement.
"NOTICE OF CONVERSION" means, as applicable, a notice substantially in
the form of Exhibit C to the Series 1997-1 Supplement.
"OFFICER'S CERTIFICATE" means a certificate signed by an Authorized
Officer of Republic, the General Partner or any of the Lessees, as applicable.
"OPERATING LEASE" means the Base Lease as supplemented by Annex A to
the Series 1997 Lease.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The Counsel may be an employee of or
counsel to NFLP or any of the Lessees, as the case may be, unless the Series
1997-1 Required Noteholders shall notify the Trustee of their objection thereto.
"OTHER VFN BENEFICIARIES" means, on any date, the parties, including
each Series 1997 Support Letter of Credit Provider, including the GM Series
1997-1 Support Provider, named on such date as Beneficiaries under the Master
Collateral Agency Agreement in respect of Series 1997 Vehicles.
"OVERCOLLATERALIZATION ENHANCEMENT PERCENTAGE" means, as of any day,
the excess of the (a) Weighted Average Enhancement Percentage as of such day
over (b) the L/C Percentage as of such day.
"PERMITTED ENCUMBRANCES" means: (a) a Lien securing a tax, assessment
or other governmental charge or levy (excluding any Lien arising under any of
the provisions of ERISA) or the claim of any materialman, mechanic, carrier,
warehouseman or landlord for labor, materials, supplies or rentals incurred in
the ordinary course of business, and foreclosure, distraint, sale or other
similar proceedings shall not have been commenced; (b) a Lien on the properties
and assets of a Subsidiary of any of the Lessees securing Indebtedness owing to
such Lessee; (c) a Lien consisting of a deposit or pledge made, in the ordinary
course of business, in connection with, or to secure payment of, obligations
under worker's compensation, unemployment insurance or similar legislation; (d)
a Lien constituting an encumbrance in the nature of zoning restrictions,
easements, and rights or restrictions of record on the use of real property
which does not materially detract from the value of such property or impair the
use thereof in the business of a Lessee or any of its Subsidiaries; (e) a Lien
constituting a lease or sublease granted by a Lessee or any Subsidiary to others
in the ordinary course of business; (f) a
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Lien existing on (i) property of any Person at the time such Person becomes a
Consolidated Subsidiary of any of the Lessees or (ii) any asset prior to the
acquisition thereof by any of the Lessees or a Consolidated Subsidiary, but
only, in the case of either (i) or (ii), if such Lien was not created in
contemplation thereof and so long as the obligation secured by such Lien is not
in default and such Lien is and will remain confined to the property subject to
it at the time such Person becomes a Consolidated Subsidiary of a Lessee or such
property is acquired and to fixed improvements thereafter erected on such
property; (g) a Lien in existence on the VFN Closing Date, but only, in the case
of each such Lien, to the extent it secures Existing Indebtedness; (h) a Lien
securing Purchase Money Indebtedness but only if, in the case of each such Lien:
(i) such Lien shall at all times be confined solely to the asset the purchase
price of which was financed through the incurrence of the Purchase Money
Indebtedness secured by such Lien and to fixed improvements then or thereafter
erected on such asset; (ii) such Lien attached to such asset within 90 days of
the acquisition of such property; and (iii) the aggregate principal amount of
Purchase Money Indebtedness secured by such Lien shall at no time exceed an
amount equal to the lesser of (A) the cost (including the principal amount of
such Indebtedness, whether or not assumed) to any of the Lessees or a
Consolidated Subsidiary of the asset subject to such Lien and (B) the fair value
of such asset at the time of such acquisition; (i) a Lien constituting a
renewal, extension or replacement of a Lien constituting a Permitted Encumbrance
by virtue of clause (f), (g) or (h) of this definition, but only, in the case of
each such renewal, extension or replacement Lien, to the extent that the
principal amount of indebtedness secured by such Lien does not exceed the
principal amount of such indebtedness so secured at the time of the extension,
renewal or replacement, and that such renewal, extension or replacement Lien is
limited to all or a part of the property that was subject to the Lien extended,
renewed or replaced and to fixed improvements then or thereafter erected on such
property; and (k) a Lien arising pursuant to an order of attachment, distraint
or similar legal process arising in connection with legal proceedings, but only
if and so long as the execution or other enforcement thereof is not unstayed for
more than twenty (20) days.
"PERMITTED INVESTMENTS" means negotiable instruments or securities
maturing on or before the related Distribution Date represented by instruments
in bearer or registered or in book entry form which evidence (i) obligations the
full and timely payment of which is to be made by or is fully guaranteed by the
United States of America; (ii) demand deposits, time deposits in, or
certificates of deposit issued by, any depositary institution or trust company
incorporated under the laws of the United States of America, any state thereof
or any other jurisdiction and subject to supervision and examination by Federal
or State banking or depositary institution authorities; PROVIDED, HOWEVER, that
at the time of the investment or contractual commitment to invest therein, the
certificates of deposit or short-term deposits, if any, or long-term unsecured
debt obligations (other than such obligation whose rating is based on collateral
or on the credit of a Person other than such institution or trust company) of
such depositary institution or trust company shall have a credit rating from
Standard & Poor's of A-1 and from Moody's of at least P-1, in the case of
certificates of deposit or short-term deposits, or a rating from Standard &
Poor's not lower than AA or from Moody's not lower than Aa3, in the case of
long-term
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unsecured debt obligations; (iii) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a rating from Standard &
Poor's of at least A-1 and from Moody's of at least P-1; (iv) demand deposits or
time deposits which are fully insured by the Federal Deposit Insurance
Corporation; (v) bankers' acceptances issued by any depositary institution or
trust company described in CLAUSE (ii) above; (vi) investments in money market
funds rated AAm or AAmG by Standard & Poor's or otherwise approved in writing by
Standard & Poor's and a comparable rating from Moody's or otherwise approved in
writing by Moody's; (vii) Eurodollar time deposits having a credit rating from
Standard & Poor's of A-1 and from Moody's of at least P-1; (viii) repurchase
agreements involving any of the Permitted Investments described in CLAUSES (i)
and (vii) above and the certificates of deposit described in CLAUSE (ii) above
which are entered into with a depository institution or trust company, having a
commercial paper or short-term certificate of deposit rating of A-1 by Standard
& Poor's and at least P-1 by Moody's; and (ix) any other instruments or
securities, if the Rating Agencies confirm in writing that such investment in
such instruments or securities will not adversely affect any ratings with
respect to any Series of Notes or the Commercial Paper Notes.
"POTENTIAL LEASE EVENT OF DEFAULT" means an event that, with the giving
of notice or passage of time, would become a Lease Event of Default.
"POWER OF ATTORNEY", for purposes of the Series 1997 Lease, has the
meaning specified in Section 9 of the Series 1997 Lease.
"PRINCIPAL BALANCE" means, when used with respect to any date, an
amount equal to (a) the Series 1997-1 Initial Invested Amount MINUS (b) the
amount of principal payments made to Series 1997-1 Noteholders and Decreases on
or prior to such date PLUS (c) all Increases on or prior to such date.
"PRINCIPAL SHORTFALL" has the meaning specified in SECTION 5.5(b) of
this Supplement.
"PRO RATA SHARE" has the meaning set forth in any of the Series 1997-1
Support Letters of Credit or paragraph 20 of the GM Series 1997-1 Support
Agreements, as applicable.
"PROFITS" means, for any Related Month, the sum of (without double
counting) (a) Disposition Proceeds received in respect of Non-Program Vehicles
leased under the Series 1997 Lease disposed of during the Related Month that
exceed the sum of the Net Book Values for such Non-Program Vehicles and any
amounts due and payable under the Series 1997 Lease in respect of such Vehicles,
plus (b) amounts allocated under SECTION 5.2(a)(y)(viii) hereof and the
comparable provisions of the Series 1997-2 Supplement, the Series 1997-3
Supplement, the Series 1997-4 Supplement and the VFN Supplement for any other
Series of Shared Collateral Series Notes.
"PROGRAM SIZE" has the meaning specified in the Series 1997-1 Liquidity
Agreement.
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"PROGRAM VEHICLE" means, with respect to the Series 1997 Variable
Funding Notes, a Series 1997-1 Vehicle eligible for repurchase under an Eligible
Manufacturer Program.
"PROGRAM VEHICLE TERMINATION PAYMENT" has the meaning specified in
Section 12.3 of the Series 1997 Lease.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of a Lessee or any
Consolidated Subsidiary that, within ninety (90) days of such purchase, is
incurred to finance part or all of (but not more than) the purchase price of a
tangible asset in which neither such Lessee nor any Subsidiary had at any time
prior to such purchase any interest other than a security interest or an
interest as lessee under an operating lease, and renewals, extensions or
refundings thereof, but not any increases in the principal amounts thereof or
interest rates thereon, except for increases in interest rates upon the occasion
of any such renewal, extension or refunding that are commercially reasonable at
such time.
"RATING AGENCIES" means, with respect to the Commercial Paper Notes,
Standard & Poor's and Moody's.
"RATING AGENCY CONDITION" means receipt of Rating Agency Confirmation.
"RATING AGENCY CONFIRMATION" means written confirmation by each Rating
Agency that the proposed action, amendment, waiver or modification will not
result in a downgrading or withdrawal of the then current rating on the
Commercial Paper Notes.
"RECOVERIES" means, for any Related Month, the sum of Series 1997
Program Recoveries and Series 1997 Non-Program Recoveries.
"REFINANCED VEHICLES" means Eligible Vehicles (a) owned by National,
Alamo, Spirit or Value prior to the Series 1997 Lease Commencement Date under
the Series 1997 Lease (i) (A) which are subject to the lien of the Master
Collateral Agent (in the case of any such Vehicles owned by National), (B) in
which a first priority lien in which has been assigned to the Master Collateral
Agent pursuant to the applicable Assignment and Nominee Agreement (in the case
of any such Vehicles owned by Alamo, Spirit or Value), and (ii) are refinanced
by NFLP under the Financing Lease or the Synthetic Lease on the Series 1997-1
Closing Date, (b) owned by any Additional Lessee prior to the Additional Lessee
Closing Date with respect to such Additional Lessee (i) a first priority lien in
which has been assigned to the Master Collateral Agent, and (ii) which are
refinanced by NFLP under the Financing Lease or the Synthetic Lease on the
Additional Lessee Closing Date with respect to such Additional Lessee, (c) owned
by NFLP or a Lessee and (i) with respect to which the lien of the Master
Collateral Agent is noted on the Certificate of Title and (ii) which are
refinanced by NFLP under the Series 1997 Lease on any date after the Series 1997
Lease Commencement Date under the Series 1997 Lease or (d) acquired by a Lessee
in a Fleet Purchase Transaction (i) a first priority lien in which has been
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assigned to the Master Collateral Agent and (ii) which are refinanced by NFLP
under the Financing Lease or the Synthetic Lease.
"REFINANCED VEHICLE SCHEDULE" has the meaning specified in Section
2.1(b) of the Series 1997 Lease.
"RELATED DOCUMENTS" means, as used herein, in the Series 1997-1 Note
Purchase Agreement, the Series 1997-1 Notes and the Series 1997-1 Support
Reimbursement Agreement, the collective reference to the documents referred to
in the definition of Related Documents in Schedule 1 to the Base Indenture, the
Series 1997 Lease, the Series 1997-1 Note Purchase Agreement, the Series 1997
Intercreditor Agreement, the Series 1997-1 Letter of Credit, the Series 1997-1
Support Reimbursement Agreement, the GM Series 1997-1 Support Reimbursement
Agreement, the Series 1997-1 Notes and the CP Program Documents and, without
limiting the generality of the foregoing, all definitions used in such
documents.
"RELATED MONTH" means, on any date of determination with respect to the
Series 1997-1 Notes, the most recently ended calendar month; PROVIDED, HOWEVER,
that the initial Related Month with respect to the Series 1997-1 Notes shall be
the period from and including the VFN Closing Date to and including the last day
of the calendar month in which such the VFN Closing Date occurs.
"RENT" has the meaning specified in Section 9 of Annex A, Section 6 of
Annex B or Section 9 of Annex C of the Series 1997 Lease, as applicable.
"REPUBLIC" means Republic Industries, Inc., a Delaware corporation and
its successors and assigns.
"REPURCHASE PRICE" with respect to any Vehicle (i) subject to a
Repurchase Program means the price paid or payable by the Manufacturer thereof
to repurchase such Vehicle pursuant to its Manufacturer Program and (ii) subject
to a Guaranteed Depreciation Program means the amount which the Manufacturer
thereof guarantees will be paid to any of the Lessees or NFLP as the seller of
such vehicle by such Manufacturer and/or the related auction dealers upon the
disposition of such Vehicle pursuant to its Manufacturer Program.
"REPURCHASE PROGRAM" means a program pursuant to which a Manufacturer
has agreed with a Lessee or NFLP to repurchase Vehicles manufactured by such
Manufacturer or one of its Affiliates during the specified Repurchase Period.
"REQUIRED VFN NOTEHOLDERS" means, on any date of determination, with
respect to the Series 1997 Variable Funding Notes, (a) Liquidity Lenders under
the Series 1997-1 Liquidity Agreement, Series 1997-1 Support Letter of Credit
Providers, the GM Series 1997-1 Support Provider, Series 1997-2 Noteholders,
Series 1997-3 Noteholders and Series 1997-4 Noteholders
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which collectively hold more than 50% of (b) the sum of (i) the Program Size
under the Series 1997-1 Liquidity Agreement, (ii) the Program Size under the
Series 1997-2 Note Purchase Agreement, (iii) the Program Size under the Series
1997-3 Note Purchase Agreement and (iv) the Program Size under the Series 1997-4
Note Purchase Agreement.
"RESIDUAL VALUE PAYMENT" means, with respect to a Series 1997 Vehicle
that is a Synthetic Lease Vehicle as of the date of calculation, an amount equal
to the Termination Value of such Vehicle, PROVIDED, HOWEVER, that in no event
shall the sum of the net present value of the Monthly Base Rent paid or accrued
with respect to such Vehicle to the date of calculation plus the net present
value of the Termination Value of such Vehicle exceed [88] percent of the
Capitalized Cost of such Vehicle, with such net present value calculated to the
Vehicle Synthetic Lease Commencement Date for such Vehicle with the discount
rate equal to the interest rate utilized to calculate the interest component of
the Monthly Base Rent heretofore paid or accrued for such Vehicle to the date of
calculation. This Residual Value Payment will be reduced (but not below zero) by
the proceeds received by the Lessor on the sale of the Vehicle including any
sale pursuant to any Manufacturer Program.
"RESPONSIBLE OFFICER" means, with respect to NFLP or any of the
Lessees, the President, any Vice President, Assistant Vice President, Secretary,
Assistant Secretary, Treasurer or Assistant Treasurer of the General Partner or
such Lessee, as applicable, or any officer customarily performing functions
similar to those performed by the person who at the time shall be such officer.
"RFC" means Republic Industries Funding Corp., a special purpose
Delaware corporation and wholly owned subsidiary of Republic.
"RFC TERMINATION REIMBURSEMENT SHARE" has the meaning specified in
Section 2.3(c) of the Series 1997-1 Support Reimbursement Agreement or Section
2.3(c) of the GM Series 1997-1 Support Reimbursement Agreement, as applicable.
"SCHEDULED SUPPORT EXPIRATION DATE" has the meaning specified in
Section 2.1(a) of the Series 1997-1 Support Reimbursement Agreement or Section
2.1(a) of the GM Series 1997-1 Support Reimbursement Agreement, as applicable.
"SECURED PARTIES" has the meaning specified in SECTION 3.1(a) of this
Supplement.
"SERIES MONTHLY SERVICING FEE" has the meaning specified in Section
26.1 of the Series 1997 Lease.
"SERIES 1996-1 NOTES" means the Rental Car Asset Backed Notes, Series
1996-1, issued by NFLP pursuant to the related Supplement.
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"SERIES 1997 AGGREGATE ASSET AMOUNT" means, with respect to the Series
1997 Variable Funding Notes, for any date of determination, the sum, rounded to
the nearest $100,000, of (i) the Net Book Value of all Program Vehicles leased
under the Series 1997 Lease as of such date and not turned in to the
Manufacturer thereof pursuant to its Manufacturer Program or not otherwise sold
or deemed to be sold under the Related Documents, PLUS (ii) the Net Book Value
of all Non-Program Vehicles leased under the Series 1997 Lease as of such date,
PLUS (iii) all amounts receivable as of such date from Manufacturers under
Manufacturer Programs with respect to Series 1997 Vehicles turned in to such
Manufacturers pursuant to any such Manufacturer Program or delivered to an
authorized auction, pursuant to any Manufacturer Program and the outstanding
amount of Eligible Receivables from such Manufacturer that have been refinanced
under the Series 1997 Lease, in each case, other than any such amounts which
have become Losses, PLUS (iv) all amounts receivable (other than amounts set
forth in CLAUSE (iii) above) with respect to the disposition of Series 1997
Vehicles as of such date from any other Person, other than any such amounts
which have become Losses, PLUS (v) with regard to Series 1997 Vehicles that have
been turned in to the Manufacturer or otherwise sold, any accrued and unpaid
Monthly Base Rent under the Series 1997 Lease with respect to such Series 1997
Vehicles (net of amounts set forth in CLAUSES (iii) and (iv) above), other than
any such amounts which have become Losses, PLUS (vi) cash and Permitted
Investments on deposit in any of the VFN Collection Accounts and on deposit in
the Series 1997 Collection Account, if any, allocable to the Series 1997
Variable Funding Notes MINUS (vii) the excess, if any, of (A) the amount
determined under CLAUSE (ii) above over (B) the product of the Maximum
Non-Program Percentage and the Maximum Aggregate VFN Invested Amount on such
date.
"SERIES 1997 AGGREGATE AVAILABLE SUBORDINATED AMOUNT" (a) means [$ ]
on the VFN Closing Date and (b) on any date of determination thereafter, means a
dollar amount equal to the sum of (i) the Series 1997-1 Available Subordinated
Amount as of such date and (ii) the available subordinated amounts for all other
Series 1997 Variable Funding Notes as of such date (including any Shared
Collateral Series of Notes issued after the VFN Closing Date).
"SERIES 1997 ASSET AMOUNT DEFICIENCY" with respect to the Series 1997
Variable Funding Notes, will occur if, at any time, the Series 1997 Required
Asset Amount exceeds the Series 1997 Aggregate Asset Amount (the amount of any
such Series 1997 Asset Amount Deficiency being the amount of such excess).
"SERIES 1997 COLLECTION ACCOUNT" has the meaning specified in SECTION
5.1(c) of this Supplement.
"SERIES 1997 INTERCREDITOR AGREEMENT" means the Intercreditor and
Subordination Agreement, dated as of October 29, 1997, by and among Republic,
Alamo, National, Spirit, Value, certain subordinated creditors listed on
Schedule A thereto from time to time and certain senior creditors listed on
Schedule B thereto from time to time, as the same may be amended,
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supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"SERIES 1997 LEASE" means the Master Motor Vehicle Lease and Servicing
Agreement, dated as of the date hereof, executed in connection with the issuance
of the Series 1997 Variable Funding Notes, among NFLP, as lessor, National,
Alamo, Value and Spirit, and certain affiliates thereof, as lessees, and
Republic, as guarantor, as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof.
"SERIES 1997 LEASE ADVANCE" means an advance of funds by the Lessor
pursuant to Section 2.1 of the Series 1997 Lease.
"SERIES 1997 LEASE PAYMENTS" means all rights of NFLP to receive
payments of Monthly Base Rent, Additional Base Rent, Monthly Variable Rent,
Monthly Finance Rent, Termination Payments, Casualty Payments, Additional
Synthetic Lease Payments and Monthly Supplemental Payments under the Series 1997
Lease, whether payable by any Lessee or the Guarantor.
"SERIES 1997 LIMITED LIQUIDATION EVENT OF DEFAULT" means a Series
1997-1 Limited Liquidation Event of Default, or a "limited liquidation event of
default" with respect to any other Shared Collateral Series Notes.
"SERIES 1997 NFLP AGREEMENTS" means the Series 1997 Lease, the Series
1997 Variable Funding Supplements, the Series 1997-1 Note Purchase Agreement,
the purchase agreements in respect of the Series 1997-2 Notes, the Series 1997-3
Notes and the Series 1997-4 Notes, the Master Collateral Agency Agreement and
the NFLP Receivables Trust Agreement, as such documents may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with their respective terms.
"SERIES 1997 NON-PROGRAM LOSSES" means, with respect to any Related
Month, the sum (without duplication) of (a) any payment in respect of Monthly
Variable Rent, Monthly Finance Rent, Monthly Base Rent, Monthly Supplemental
Payments, Additional Synthetic Lease Payments and Additional Base Rent that has
become due to the Lessor under the Series 1997 Lease in respect of Non-Program
Vehicles that is not paid to NFLP or the Trustee prior to the expiration of any
grace period provided for in the Series 1997 Lease for the making of such
payment, but only if such grace period, if any, expires during such Related
Month, and (b) the amount by which the aggregate Net Book Value of all Acquired
Vehicles that are Non-Program Vehicles leased under the Series 1997 Lease
disposed of during the Related Month exceeds the Disposition Proceeds related to
such Non-Program Vehicles, plus any amounts due and unpaid under the Series 1997
Lease as of the end of the Related Month with respect to such Non-Program
Vehicles, such aggregate amount being net of all Profits on all Non-Program
Vehicles leased under the Series 1997 Lease and being disposed of during such
Related Month.
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"SERIES 1997 NON-PROGRAM PERCENTAGE" means, on any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the aggregate Net Book Value of all Non-Program Vehicles leased under the
Series 1997 Lease as of such date and the denominator of which is the aggregate
Net Book Value of all Series 1997 Vehicles leased under the Series 1997 Lease as
of such date.
"SERIES 1997 NON-PROGRAM RECOVERIES" means, with respect to any Related
Month, the sum of (without duplication) all amounts received during such Related
Month by NFLP or the Trustee (including deposits into any Series 1997 Collection
Account) from any source (other than any Series 1997 Letter of Credit or Series
1997 Cash Collateral Account) in respect of Series 1997 Non-Program Losses, as
determined by the related Servicer consistent with its methods of tracking and
allocating to vehicles and Series, Disposition Proceeds, insurance proceeds and
other proceeds of such Vehicles.
"SERIES 1997 PROGRAM LOSSES" means, with respect to any Related Month,
the sum (without duplication) of (a) any payment in respect of Monthly Variable
Rent, Monthly Finance Rent, Monthly Base Rent, Monthly Supplemental Payments,
Additional Synthetic Lease Payments and Additional Base Rent that has become due
to the Lessor under the Series 1997 Lease in respect of Program Vehicles that is
not paid to NFLP or the Trustee prior to the expiration of any grace period
provided for in the Series 1997 Lease for the making of such payment, but only
if such grace period, if any, expires during such Related Month and (b) the
amount owed by any Manufacturer under an Eligible Manufacturer Program with
respect to Acquired Vehicles that are Program Vehicles leased under the Series
1997 Lease that remains unpaid more than (A) one hundred (100) days after the
Due Date with respect to such amount, but only if such 100-day period expires
during such Related Month.
"SERIES 1997 PROGRAM PERCENTAGE" means, on any date of determination,
the percentage equivalent of a fraction, the numerator of which is the aggregate
Net Book Value of all Program Vehicles leased under the Series 1997 Lease as of
such date and the denominator of which is the sum of the aggregate Net Book
Value of all Series 1997 Vehicles leased under the Series 1997 Lease as of such
date.
"SERIES 1997 PROGRAM RECOVERIES" means, with respect to any Related
Month, the sum of (without duplication) all amounts received during such Related
Month by NFLP or the Trustee as deposits into the Series 1997 Collection Account
(PROVIDED that, if for any reason any such amounts have been received directly
by a Servicer, then to the extent that such amounts have not theretofore been
deposited in the Series 1997 Collection Account, such amounts shall be deemed
"received" by NFLP or the Trustee for purposes hereof no later than the eighth
(8th) day after actual receipt by such Servicer) from any source (other than any
Series 1997 Letters of Credit or any Series 1997 Cash Collateral Account) in
respect of Series 1997 Program Losses, as determined by the related Servicer
consistent with its methods of tracking and allocating to
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vehicles and Series, Disposition Proceeds, Guaranteed Payments, Repurchase
Prices, insurance proceeds and other proceeds of such Vehicles.
"SERIES 1997 REQUIRED ASSET AMOUNT" means, at any time, the quotient of
(a) the Aggregate VFN Invested Amount at such time divided by (b) an amount
equal to (i) one hundred percent minus (ii) the excess of (x) the Enhancement
Percentage at such time over (y) the VFN L/C Percentage.
"SERIES 1997 SUPPORT LETTER OF CREDIT PROVIDER" means each provider of
a support letter of credit or support letter of credit agreement for any Series
1997 Variable Funding Notes.
"SERIES 1997 VARIABLE FUNDING NOTEHOLDERS" means, collectively, the
Series 1997-1 Noteholders, the Series 1997-2 Noteholders, the Series 1997-3
Noteholders, the Series 1997-4 Noteholders and any other holders of Shared
Collateral Series Notes.
"SERIES 1997 VARIABLE FUNDING NOTES" means, collectively, the Series
1997-1 Notes, the Series 1997-2 Notes, the Series 1997-3 Notes and the Series
1997-4 Notes and any other Series of Shared Collateral Series Notes.
"SERIES 1997 VARIABLE FUNDING SUPPLEMENTS" means, collectively, the
Series 1997-1 Supplement, the Series 1997-2 Supplement, the Series 1997-3
Supplement, the Series 1997-4 Supplement and the Supplement for any other Shared
Collateral Series Notes.
"SERIES 1997 VEHICLE" means a Vehicle leased under the Series 1997
Lease.
"SERIES 1997 VFN COLLATERAL" has the meaning specified in SECTION
3.1(a) of this Supplement.
"SERIES 1997 VFN ENHANCEMENT DEFICIENCY" means an "enhancement
deficiency" in respect of any Series 1997 Variable Funding Notes, as defined in
the Supplement for the applicable Series.
"SERIES 1997-1 ACCRUED INTEREST ACCOUNT" has the meaning specified in
SECTION 5.1(c) of this Supplement.
"SERIES 1997-1 AVAILABLE SUBORDINATED AMOUNT" means (a) on the VFN
Closing Date, the product of (i) a fraction the numerator of which is the
Program Size on the VFN Closing Date and the denominator of which is the sum of
(a) the Program Size, (b) the "program size" as defined in the Series 1997-2
Supplement, (c) the "program size" as defined in the Series 1997-3 Supplement
and (d) the "program size" as defined in the Series 1997-4 Supplement and (ii)
the Series 1997 Aggregate Available Subordinated Amount as of the VFN Closing
Date, and (b) on any date of determination after the VFN Closing Date, means (i)
the Series 1997-1 Available
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Subordinated Amount for the preceding Determination Date PLUS (ii) the Series
1997-1 Available Subordinated Amount Incremental Recoveries for the Related
Month, PLUS (iii) the Series 1997-1 Invested Percentage (for allocations with
respect to Principal Collections) of any other additional amounts contributed by
NFLP to the Series 1997-1 Collection Account or otherwise for allocation to the
Series 1997 Aggregate Available Subordinated Amount since the preceding
Determination Date (or, in the case of the first Determination Date, since the
Series 1997-1 Closing Date), MINUS (iv) the Series 1997-1 Available Subordinated
Amount Incremental Losses for the Related Month, MINUS (v) any amounts withdrawn
from the Series 1997-1 Collection Account and allocated to the Retained
Distribution Account.
"SERIES 1997-1 AVAILABLE SUBORDINATED AMOUNT INCREMENTAL LOSSES" means
for any Related Month, the sum of all Losses that became Losses during such
Related Month and which were allocated to the Series 1997-1 Available
Subordinated Amount pursuant to SECTION 5.2(c) hereof.
"SERIES 1997-1 AVAILABLE SUBORDINATED AMOUNT INCREMENTAL RECOVERIES"
means, for any Related Month, the sum of all Recoveries that became Recoveries
during such Related Month and which were allocated to the Series 1997-1
Available Subordinated Amount pursuant to SECTION 5.2(c) hereof.
"SERIES 1997-1 AVAILABLE SUBORDINATED AMOUNT MAXIMUM INCREASE" means,
as of any date of determination, an amount equal to 1.1% of the Series 1997-1
Maximum Invested Amount on such date; PROVIDED, HOWEVER, if (i) a Series 1997-1
Enhancement Deficiency arises out of any Losses and (ii) each of NFLP and the
Trustee shall have received Rating Agency Confirmation, then the Series 1997-1
Available Subordinated Amount Maximum Increase shall not be limited in amount.
"SERIES 1997-1 AVAILABLE SUBORDINATED AMOUNT PERCENTAGE" means on any
date of determination:
(a) when used with respect to VFN Collections that are
Principal Collections, the percentage equivalent of a fraction, the
numerator of which will be equal to the Series 1997-1 Available
Subordinated Amount, determined during the Series 1997-1 Revolving
Period as of such date of determination, or, during the Series 1997-1
Rapid Amortization Period, as of the end of the Series 1997-1 Revolving
Period, and the denominator of which shall be the greater of (A) the
Series 1997 Aggregate Asset Amount, determined during the Series 1997-1
Revolving Period as of such date of determination or, during the Series
1997-1 Rapid Amortization Period, as of the end of the Series 1997-1
Revolving Period, and (B) as of the same date as in clause (A), the sum
of the numerators used to determine (i) invested percentages for
allocations with respect to VFN Collections that are Principal
Collections (for all Series of Series 1997 Variable Funding Notes) and
(ii) available subordinated amount percentages for allocations with
respect to VFN
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Collections that are Principal Collections (for all Series of Series
1997 Variable Funding Notes that provide for credit enhancement in the
form of overcollateralization);
(b) when used with respect to Losses, the percentage
equivalent of a fraction, the numerator of which will be the average
daily Series 1997-1 Available Subordinated Amount during the Related
Month and the denominator of which will be the greater of (A) the
average daily Series 1997 Aggregate Asset Amount during the Related
Month and (B) the sum of (i) the aggregate average daily invested
amounts for all Series of Series 1997 Variable Funding Notes during the
Related Month and (ii) the aggregate average daily available
subordinated amounts for all Series of Series 1997 Variable Funding
Notes during the Related Month; and
(c) when used with respect to Recoveries, the percentage
equivalent of a fraction, the numerator of which will be the cumulative
amount of all unreimbursed Losses allocated to the Series 1997-1
Available Subordinated Amount as of the end of the Related Month and
the denominator of which will be the cumulative amount of all
unreimbursed Losses for the Noteholders of all Series of Series 1997
Variable Funding Notes and the Retained Interestholder (including all
unreimbursed Losses in respect of available subordinated amounts, if
any, for all Series 1997 Variable Funding Notes) as of the end of such
Related Month.
"SERIES 1997-1 CARRYING CHARGES" means, as of any day, the sum of (i)
the aggregate of all Trustee Fees, servicing fees (other than supplemental
servicing fees) and other fees, expenses and amounts (including indemnity
amounts), if any, payable by the Lessor or a Servicer under the Indenture, the
Series 1997-1 Note Purchase Agreement, the Series 1997-1 Support Reimbursement
Agreement or the Related Documents which have accrued and remain unpaid with
respect to the Series 1997-1 Notes, (ii) without duplication, the Series 1997-1
Invested Percentage (as calculated with respect to Principal Collections) of all
amounts payable by the Lessees pursuant to SECTION 15 of the Series 1997 Lease
which have accrued and remain unpaid and (iii) the fees, expenses and
indemnities payable by NFLP to the NFLP Receivables Trustee pursuant to or in
connection with the NFLP Receivables Trust Agreement.
"SERIES 1997-1 CASH COLLATERAL ACCOUNT" has the meaning specified in
SECTION 5.11(a).
"SERIES 1997-1 CASH COLLATERAL ACCOUNT SURPLUS" means, as of any date
of determination subsequent to the establishment and funding of the Series
1997-1 Cash Collateral Account pursuant to SECTION 5.11, the amount, if any, by
which the Series 1997-1 Letter of Credit Amount exceeds the Series 1997-1
Required Letter of Credit Amount.
"SERIES 1997-1 CASH COLLATERAL PERCENTAGE" means as of any date of
determination, a fraction, expressed as a percentage, (a) the numerator of which
is the amount on deposit in the
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Series 1997-1 Cash Collateral Account as of such date and (b) the denominator of
which is the Series 1997-1 Letter of Credit Amount as of such date.
"SERIES 1997-1 CERTIFICATE OF CREDIT DEMAND" means a certificate in the
form of Annex A to the Series 1997-1 Letter of Credit.
"SERIES 1997-1 CERTIFICATE OF LIQUIDITY DEMAND" means a certificate in
the form of Annex B to the Series 1997-1 Letter of Credit.
"SERIES 1997-1 CERTIFICATE OF SUPPORT CREDIT DEMAND" means a
certificate in the form of Annex A to any Series 1997-1 Support Letter of Credit
or Annex A to the GM Series 1997-1 Support Agreement.
"SERIES 1997-1 CERTIFICATE OF SUPPORT LIQUIDITY DEMAND" means a
certificate in the form of Annex B to any Series 1997-1 Support Letter of Credit
or Annex B to the GM Series 1997-1 Support Agreement.
"SERIES 1997-1 CERTIFICATE OF SUPPORT REDUCTION DEMAND" means a
certificate in the form of Annex D to the GM Series 1997-1 Support Agreement.
"SERIES 1997-1 CERTIFICATE OF SUPPORT TERMINATION DEMAND" means a
certificate in the form of Annex C to any Series 1997-1 Support Letter of Credit
or Annex C to the GM Series 1997-1 Support Agreement.
"SERIES 1997-1 CERTIFICATE OF SUPPORT TERMINATION DEMAND FOR
NONEXTENSION" means a certificate in the form of Annex D to any Series 1997-1
Support Letter of Credit.
"SERIES 1997-1 CERTIFICATE OF TERMINATION DEMAND" means a certificate
in the form of Annex C to the Series 1997-1 Letter of Credit.
"SERIES 1997-1 CLOSING DATE" means October 29, 1997.
"SERIES 1997-1 COLLATERAL" is defined in SECTION 3.1(a) of this
Supplement.
"SERIES 1997-1 COLLATERAL AGENT" means Credit Suisse First Boston, in
its capacity as such under the Series 1997-1 Collateral Agreement, and any
successor thereto.
"SERIES 1997-1 COLLATERAL AGREEMENT" means the Series 1997-1 Collateral
Agreement of even date herewith among the Series 1997-1 Noteholder, the Series
1997-1 Support Letter of Credit Providers, the GM Series 1997-1 Support
Providers, Credit Suisse First Boston, as Series 1997-1 Liquidity Agent, the
Dealers, and Citibank, N.A., as Depositary, as the same may be
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amended, supplemented, restated or otherwise modified from time to time in
accordance with the term thereof.
"SERIES 1997-1 COLLECTION ACCOUNT" is defined in SECTION 5.1(a) of this
Supplement.
"SERIES 1997-1 COLLECTIONS" means, with respect to any Deposit Date,
(I) (a) the sum of (i) the Series 1997-1 Invested Percentage (as of such day)
and (ii) the Series 1997-1 Available Subordinated Amount Percentage (as of such
day), multiplied by (b) the aggregate amount of VFN Collections on such Deposit
Date which are Interest Collections, plus (II) (a) the sum of (i) the Series
1997-1 Invested Percentage (as of such day) and (ii) the Series 1997-1 Available
Subordinated Amount Percentage (as of such day), multiplied by (b) the aggregate
amount of VFN Collections on such Deposit Date which are Principal Collections.
"SERIES 1997-1 DISPOSITION LOSSES" means, for any Related Month, the
Series 1997-1 Invested Percentage (for allocations with respect to Losses) of
the sum of (i) the amount in CLAUSE (b) of the definition of Series 1997 Program
Losses and (ii) the amount in CLAUSE (b) of the definition of Series 1997
Non-Program Losses.
"SERIES 1997-1 DISTRIBUTION ACCOUNT" has the meaning specified in
SECTION 5.7(a) of this Supplement.
"SERIES 1997-1 DISTRIBUTION ACCOUNT COLLATERAL" has the meaning
specified in SECTION 3.1(c)(iii) of this Supplement.
"SERIES 1997-1 ENHANCEMENT AMOUNT" means, for any date of
determination, the Series 1997-1 Available Subordinated Amount plus the Series
1997-1 Letter of Credit Amount.
"SERIES 1997-1 ENHANCEMENT DEFICIENCY" means, with respect to any date
of determination, the amount, if any, by which the Series 1997-1 Minimum
Enhancement Amount exceeds the Series 1997-1 Enhancement Amount.
"SERIES 1997-1 FRONTING LETTER OF CREDIT AMOUNT" has the meaning
specified in the Series 1997-1 Letter of Credit.
"SERIES 1997-1 FRONTING LETTER OF CREDIT PERCENTAGE" means as of any
date of determination, a fraction, expressed as a percentage, (a) the numerator
of which is the Series 1997-1 Fronting Letter of Credit Amount as of such date
and (b) the denominator of which is the Series 1997-1 Letter of Credit Amount as
of such date.
"SERIES 1997-1 INITIAL INVESTED AMOUNT" means the aggregate initial
principal amount of the Series 1997-1 Notes.
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"SERIES 1997-1 INITIAL LETTER OF CREDIT AMOUNT" means $230,000,000.
"SERIES 1997-1 INTEREST ALLOCATION" has the meaning specified in
SECTION 5.2(a)(x)(i) of this Supplement.
"SERIES 1997-1 INTEREST PERIOD" means, with respect to any
Determination Date, Distribution Date or other date, the Related Month;
PROVIDED, HOWEVER, that the initial Series 1997-1 Interest Period shall commence
on the Series 1997-1 Closing Date and end on [ ], 1997; and PROVIDED FURTHER,
that
(i) any Series 1997-1 Interest Period in respect of which
interest is computed by reference to the CP Rate may be terminated at
the election of, and upon notice thereof, to NFLP and the Master
Servicer by the Series 1997-1 Collateral Agent any time upon the
occurrence and during the continuance of a CP Market Disruption Event;
(ii) if at any time any Series 1997-1 Interest Period is
terminated pursuant to clause (i) above, the portion of the Series
1997-1 Principal Balance previously allocated to such terminated Series
1997-1 Interest Period shall be allocated to a new Series 1997-1
Interest Period to commence on such date and end on the next succeeding
calendar month end; and
(iii) upon the occurrence and during the continuance of a
Series 1997-1 Rapid Amortization Period, any Series 1997-1 Interest
Period in respect of which interest is computed by reference to the CP
Rate or the Eurodollar Rate may be terminated at the election of, and
upon notice thereof to NFLP and the Master Servicer by the Series
1997-1 Collateral Agent, and interest on the applicable CP Tranches and
Eurodollar Tranches shall form part of the Base Rate Tranche for the
remainder of such Series 1997-1 Interest Period and each Series 1997-1
Interest Period commencing thereafter until payment in full of the
Series 1997-1 Notes.
"SERIES 1997-1 INVESTED AMOUNT" means, when used with respect to any
date, an amount equal to (a) the Series 1997-1 Initial Invested Amount MINUS (b)
the amount of principal payments made to Series 1997-1 Noteholders and Decreases
on or prior to such date MINUS (c) all Losses allocated to the Series 1997-1
Invested Amount on or prior to such date PLUS (d) all Recoveries allocated to
the Series 1997-1 Invested Amount on or prior to such date PLUS (e) all
Increases on or prior to such date.
"SERIES 1997-1 INVESTED PERCENTAGE" means on any date of determination:
(a) when used with respect to VFN Collections that are
Principal Collections, the percentage equivalent of a fraction, the
numerator of which will be equal to the Series 1997-1 Invested Amount,
determined during the Series 1997-1 Revolving Period as of
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such date of determination, or, during the Series 1997-1 Rapid
Amortization Period, as of the end of the Series 1997-1 Revolving
Period, and the denominator of which shall be the greater of (A) the
Series 1997 Aggregate Asset Amount, determined during the Series 1997-1
Revolving Period as of such date of determination or, during the Series
1997-1 Rapid Amortization Period, as of the end of the Series 1997-1
Revolving Period, and (B) as of the same date as in clause (A), the sum
of the numerators used to determine (i) invested percentages for
allocations with respect to VFN Collections that are Principal
Collections (for all Series of Series 1997 Variable Funding Notes) and
(ii) available subordinated amount percentages for allocations with
respect to VFN Collections that are Principal Collections (for all
Series of Series 1997 Variable Funding Notes that provide for credit
enhancement in the form of overcollateralization);
(b) when used with respect to VFN Collections that are
Interest Collections, the percentage equivalent of a fraction the
numerator of which shall be the Accrued Amounts with respect to the
Series 1997-1 Notes on such date of determination, and the denominator
of which shall be the aggregate Accrued Amounts with respect to all
Series of Series 1997 Variable Funding Notes on such date of
determination;
(c) when used with respect to Losses, the percentage
equivalent of a fraction, the numerator of which will be the average
daily Series 1997-1 Invested Amount during the Related Month and the
denominator of which will be the greater of (A) the average daily
Series 1997 Aggregate Asset Amount during the Related Month and (B) the
sum of (i) the aggregate average daily invested amounts for all Series
of Series 1997 Variable Funding Notes during the Related Month and (ii)
the aggregate average daily available subordinated amounts for all
Series of Series 1997 Variable Funding Notes during the Related Month;
and
(d) when used with respect to Recoveries, the percentage
equivalent of a fraction, the numerator of which will be the cumulative
amount of all unreimbursed Losses allocated to the Series 1997-1
Noteholders as of the end of the Related Month and the denominator of
which will be the cumulative amount of all unreimbursed Losses for the
Noteholders of all Series of Series 1997 Variable Funding Notes and the
Retained Interestholder (including all unreimbursed Losses in respect
of available subordinated amounts, if any, for all Series 1997 Variable
Funding Notes) as of the end of such Related Month.
"SERIES 1997-1 LEASE PAYMENT DEFICIT" means, for any Related Month, an
amount equal to the product of (a) the Series 1997-1 Invested Percentage (for
allocations with respect to Principal Collections) and (b) the excess, if any,
of (i) the aggregate amount of payments required to be made under the Series
1997 Lease with respect to the Related Month, over (ii) the aggregate amount of
payments actually made under the Series 1997 Lease during the Related Month.
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"SERIES 1997-1 LETTER OF CREDIT" means the irrevocable letter of credit
issued by the Series 1997-1 Letter of Credit Provider in favor of the
Enhancement Agent for the benefit of the Series 1997-1 Noteholders.
"SERIES 1997-1 LETTER OF CREDIT AGREEMENT" means the Series 1997-1
Letter of Credit Agreement, dated as of October 29, 1997, among RFC, the
Lessees, Republic and the Series 1997-1 Letter of Credit Provider, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"SERIES 1997-1 LETTER OF CREDIT AMOUNT" means, as of any date of
determination, the amount (a) available to be drawn on such date under the
Series 1997-1 Letter of Credit, as specified in the Series 1997-1 Letter of
Credit and (b) if the Series 1997-1 Cash Collateral Account has been established
and funded pursuant to SECTION 5.11, the amount on deposit in the Series 1997-1
Cash Collateral Account (exclusive of net investment earnings).
"SERIES 1997-1 LETTER OF CREDIT EXPIRATION DATE" means the date the
Series 1997-1 Letter of Credit expires as specified in the Series 1997-1 Letter
of Credit, as such date may be extended in accordance with the terms of such
Series 1997-1 Letter of Credit.
"SERIES 1997-1 LETTER OF CREDIT PROVIDER" means Westdeutsche Landesbank
Girozentrale, New York Branch, and any permitted successors or assigns.
"SERIES 1997-1 LIMITED LIQUIDATION EVENT OF DEFAULT" means, so long as
such event or condition continues, any event or condition of the type specified
in (a) SECTION 7.1(a) of this Series 1997-1 Supplement that continues for thirty
(30) days (without double counting the one (1) Business Day cure period provided
for in said SECTION 7.1(a)); PROVIDED, HOWEVER, that such event or condition
shall not constitute a Series 1997-1 Limited Liquidation Event of Default if (i)
within such thirty (30) day period, NFLP shall have contributed a portion of the
Retained Interest to the Series 1997-1 Available Subordinated Amount sufficient
to cure the Series 1997-1 Enhancement Deficiency and (ii) each Rating Agency
shall have notified NFLP and the Trustee in writing that after such cure of such
Series 1997-1 Enhancement Deficiency is provided for, the Commercial Paper Notes
will receive the same rating from the Rating Agency as they received prior to
the occurrence of such Series 1997-1 Enhancement Deficiency or (b) SECTION
7.1(d), (e) or (l) of this Series 1997-1 Supplement.
"SERIES 1997-1 LIQUIDITY AGENT" means Credit Suisse First Boston, in
its capacity as liquidity agent under the Liquidity Agreement dated as of
October 29, 1997 among RFC, certain financial institutions, as liquidity
lenders, and Credit Suisse First Boston, as liquidity agent for the liquidity
lenders.
"SERIES 1997-1 LIQUIDITY AGREEMENT" means the Liquidity Agreement,
dated as of even date herewith, among RFC, certain financial institutions party
thereto as liquidity lenders and
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Credit Suisse First Boston, as liquidity agent, as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"SERIES 1997-1 LOC CREDIT DISBURSEMENT" means an amount drawn under the
Series 1997-1 Letter of Credit pursuant to a Certificate of Credit Demand.
"SERIES 1997-1 LOC DISBURSEMENT" means any Series 1997-1 LOC Credit
Disbursement, Series 1997-1 LOC Liquidity Disbursement or Series 1997-1 LOC
Termination Disbursement, as applicable.
"SERIES 1997-1 LOC LIQUIDITY DISBURSEMENT" means an amount drawn under
the Series 1997-1 Letter of Credit pursuant to a Certificate of Liquidity
Demand.
"SERIES 1997-1 LOC TERMINATION DISBURSEMENT" means an amount drawn
under the Series 1997-1 Letter of Credit pursuant to a Certificate of
Termination Demand in the form of Annex C to the Series 1997-1 Letter of Credit.
"SERIES 1997-1 LOSSES" means, with respect to any Distribution Date, an
amount equal to the product of (a) the sum of (i) the Series 1997-1 Invested
Percentage and (ii) the Series 1997-1 Available Subordinated Amount Percentage,
multiplied by (b) the aggregate amount of Losses with respect to the Related
Month.
"SERIES 1997-1 MAJORITY CREDIT ENHANCERS" means Series 1997-1 Support
Letter of Credit Providers and, if applicable, the GM Series 1997-1 Support
Letter of Credit Provider, holding commitments in an amount aggregating more
than 50% of the total commitments represented by the Series 1997-1 Support
Letters of Credit and the GM Series 1997-1 Support Letter of Credit Agreement.
"SERIES 1997-1 MAXIMUM INVESTED AMOUNT" means, as of any date, the
Program Size less the aggregate discount on Commercial Paper Notes Outstanding
on such date.
"SERIES 1997-1 MINIMUM ENHANCEMENT AMOUNT" means, as of any date, the
greater of (I) the sum of (a) the Series 1997-1 Minimum Non-Program Enhancement
Amount on such date PLUS (b) the Series 1997-1 Minimum Program Enhancement
Amount on such date PLUS (c) the Additional Overcollateralization Amount on such
date and (II) $109,250,000.
"SERIES 1997-1 MINIMUM NON-PROGRAM ENHANCEMENT AMOUNT" means, with
respect to the Series 1997-1 Notes on any day, the product of (x) the Series
1997-1 Minimum Non-Program Enhancement Percentage and (y) a dollar amount equal
to the product of (1) the Series 1997-1 Invested Amount as of such date, MINUS
the aggregate amount of cash and Permitted Investments in the Series 1997-1
Collection Account on such date, and (2) the Series 1997 Non-Program Percentage
as of such date.
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"SERIES 1997-1 MINIMUM NON-PROGRAM ENHANCEMENT PERCENTAGE" means, with
respect to any date of determination, the greater of (a) 14.5% and (b) an amount
equal to (i) 100% MINUS (ii) an amount equal to the lowest Measurement Month
Average of any full Measurement Month within the preceding twelve calendar
months MINUS 14.5%.
"SERIES 1997-1 MINIMUM PROGRAM ENHANCEMENT AMOUNT" means, with respect
to the Series 1997-1 Notes on any day, the product of (x) the Series 1997-1
Minimum Program Enhancement Percentage, and (y) a dollar amount equal to the
product of (1) the Series 1997-1 Invested Amount as of such date, MINUS the
aggregate amount of cash and Permitted Investments in the Series 1997-1
Collection Account on such date and (2) the Series 1997 Program Percentage as of
such date.
"SERIES 1997-1 MINIMUM PROGRAM ENHANCEMENT PERCENTAGE" means, with
respect to any date of determination, an amount equal to 10%; PROVIDED that if
(a) the percentage equivalent of a fraction (i) the numerator of which is the
excess of (A) the aggregate Net Book Value of all 1997 model year Program
Vehicles returned pursuant to Manufacturer Programs by any of the Lessees or
NFLP through June 30, 1998 (including, without limitation, vehicles other than
Series 1997 Vehicles and vehicles disposed of prior to the VFN Closing Date)
(such vehicles, the "SOLD VEHICLES") over (B) the aggregate Disposition Proceeds
obtained by the Lessees or NFLP in respect of the Sold Vehicles as of June 30,
1998 and (ii) the denominator of which is the aggregate Capitalized Cost of the
Sold Vehicles, is less than (b) 0.75% as of June 30, 1998, then the Series
1997-1 Minimum Program Enhancement Percentage shall mean, with respect to any
date of determination thereafter, an amount equal to 9.5%.
"SERIES 1997-1 MONTHLY SERVICING FEE" means, on any Distribution Date,
1/12th of 0.50 % of the Series 1997-1 Invested Amount as of the preceding
Distribution Date (or the Series 1997-1 Issuance Date, in the case of the
initial Distribution Date).
"SERIES 1997-1 MONTHLY SUPPLEMENTAL SERVICING FEE" means, on any
Distribution Date, the product of (a) the Supplemental Servicing Fee accrued on
such date and (b) a fraction, the numerator of which shall be the Series 1997-1
Invested Amount on such Distribution Date and the denominator of which shall be
the sum of (i) the aggregate of the invested amounts for all outstanding Series
of Notes (including non-Segregated Series) on such Distribution Date PLUS (ii)
the Retained Interest (including available subordinated amounts, if any, for all
Series).
"SERIES 1997-1 NOTEHOLDER" means any of the Persons in whose name a
Series 1997-1 Note is registered in the Note Register.
"SERIES 1997-1 NOTE INTEREST" means, with respect to any Distribution
Date, the sum of (i) the Daily Interest Amounts for each day in the related
Series 1997-1 Interest Period, plus (ii) all previously due and unpaid Series
1997-1 Note Interest with respect to prior Interest Periods (together with
interest on such unpaid amounts required to be paid in this CLAUSE (ii) at
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the Series 1997-1 Note Rate), PLUS (iii) any Series 1997-1 Carrying Charges due
to the Series 1997-1 Noteholders and unpaid as of such Distribution Date.
"SERIES 1997-1 NOTE PURCHASE AGREEMENT" means the Note Purchase
Agreement dated as of October 29, 1997 among NFLP, the Series 1997-1 Noteholder,
the Master Servicer and the Series 1997-1 Collateral Agent, pursuant to which
the Series 1997-1 Noteholder agrees to purchase the Series 1997-1 Notes from
NFLP, subject to the terms and conditions set forth therein, or any successor
agreement to such effect among NFLP and the Series 1997-1 Noteholder or its
successor, as amended, supplemented or otherwise modified from time to time.
"SERIES 1997-1 NOTE RATE" means, for any Series 1997-1 Interest Period,
the weighted average of the CP Rates for the portion of the Principal Balance of
the Series 1997-1 Notes comprised of that portion of the CP Tranche maturing
during such Series 1997-1 Interest Period and the weighted average of the
Eurodollar Rate applicable to the portion of the Principal Balance of the Series
1997-1 Notes comprised of the Eurodollar Tranche and the weighted average of the
Base Rates applicable to the portion of the Principal Balance of the Series
1997-1 Notes comprised of the Base Rate Tranche; PROVIDED, HOWEVER, that the
Series 1997-1 Note Rate will in no event be higher than the maximum rate
permitted by applicable law.
"SERIES 1997-1 NOTES" means any one of the Variable Funding Rental Car
Asset Backed Notes executed by NFLP and authenticated and delivered by or on
behalf of the Trustee, substantially in the form of EXHIBIT A. Definitive Series
1997-1 Notes shall have such insertions and deletions as are necessary to give
effect to the provisions of Section 2.18 of the Base Indenture.
"SERIES 1997-1 PROFITS" means, for any Related Month, the product of
(a) the sum of the Series 1997-1 Invested Percentage and the Series 1997-1
Available Subordinated Amount Percentage multiplied by (b) Profits for such
Related Month.
"SERIES 1997-1 RAPID AMORTIZATION PERIOD" means the period beginning on
the close of business on the Business Day immediately preceding the day on which
an Amortization Event is deemed to have occurred with respect to the Series
1997-1 Notes and, in either case, ending upon the earliest to occur of (i) the
date on which the Series 1997-1 Notes are fully paid, together with all other
amounts payable under the Series 1997-1 Supplement and the Series 1997-1 Note
Purchase Agreement, (ii) the Series 1997-1 Termination Date and (iii) the
termination of the Indenture.
"SERIES 1997-1 RECOVERIES" means, with respect to any Distribution
Date, an amount equal to the product of (a) the sum of (i) the Series 1997-1
Invested Percentage and (ii) the Series 1997-1 Available Subordinated Amount
Percentage, multiplied by (b) the aggregate amount of Recoveries with respect to
the Related Month.
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"SERIES 1997-1 REPURCHASE AMOUNT" has the meaning specified in ARTICLE
8 of this Supplement.
"SERIES 1997-1 REQUIRED LETTER OF CREDIT AMOUNT" means the Series
1997-1 Minimum Enhancement Amount less the Series 1997-1 Available Subordinated
Amount, but in no event less than the Liquidity Amount.
"SERIES 1997-1 REQUIRED NOTEHOLDERS" means, on any date of
determination, with respect to the Series 1997-1 Notes, the Required Liquidity
Providers on such date under the Series 1997-1 Liquidity Agreement.
"SERIES 1997-1 REQUIRED SUBORDINATED AMOUNT" means at any time the
Series 1997-1 Minimum Enhancement Amount minus the Series 1997-1 Letter of
Credit Amount.
"SERIES 1997-1 REVOLVING PERIOD" means the period from and including
the Series 1997-1 Closing Date to the commencement of the Series 1997-1 Rapid
Amortization Period.
"SERIES 1997-1 SECURED PARTIES" has the meaning specified in SECTION
3.1(d) of this Supplement.
"SERIES 1997-1 SEPARATE COLLATERAL" has the meaning specified in
SECTION 3.1(d) of this Supplement.
"SERIES 1997-1 SUPPLEMENT" means this Supplement to the Base Indenture
of even date herewith among NFLP, the Trustee and the Enhancement Agent with
respect to which this Definitions List attached as Annex A thereto and a part
thereof, as the same may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms thereof, providing for
the issuance of the Series of Series 1997 Variable Funding notes referred to as
the "Series 1997-1 Notes".
"SERIES 1997-1 SUPPORT LETTER OF CREDIT" means any irrevocable letter
of credit substantially in the form of Exhibit A of the Series 1997-1 Support
Reimbursement Agreement issued by a Series 1997-1 Support Letter of Credit
Provider pursuant to Section 2.1(a) of the Series 1997-1 Support Reimbursement
Agreement.
"SERIES 1997-1 SUPPORT LETTER OF CREDIT PROVIDER'S OFFICE", with
respect to any Series 1997-1 Support Letter of Credit Provider, has the meaning
specified in its Series 1997-1 Support Letter.
"SERIES 1997-1 SUPPORT LETTER OF CREDIT PROVIDERS" means the parties
identified as such in the Series 1997-1 Support Reimbursement Agreement, in
their capacities as providers of the Series 1997-1 Support Letters of Credit
issued or entered into in connection with the Series
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1997-1 Support Reimbursement Agreement, and any permitted successors or assigns
thereof under the Series 1997-1 Support Reimbursement Agreement.
"SERIES 1997-1 SUPPORT REIMBURSEMENT AGREEMENT" means the Series 1997-1
Support Reimbursement Agreement, dated as of even date herewith, among RFC, the
Series 1997-1 Support Letter of Credit Providers, the Lessees, those additional
Subsidiaries of Republic from time to time becoming Lessees thereunder, Republic
in its capacity as the Guarantor thereunder, and NFLP, as such agreement may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof.
"SERIES 1997-1 TERMINATION DATE" means October 29, 2004.
"SERIES 1997-2 MAXIMUM INVESTED AMOUNT" has the meaning specified in
the Series 1997-2 Supplement.
"SERIES 1997-2 NOTEHOLDERS" has the meaning specified in the Series
1997-2 Supplement.
"SERIES 1997-2 NOTES" means the Series of Series 1997 Variable Funding
Notes issued pursuant to the Series 1997-2 Supplement.
"SERIES 1997-2 SUPPLEMENT" means the Supplement to the Base Indenture
of even date herewith among NFLP, the Trustee and the Enhancement Agent, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, providing for the issuance of the Series of Series 1997
Variable Funding Notes referred to as the "Series 1997-2 Notes".
"SERIES 1997-3 MAXIMUM INVESTED AMOUNT" has the meaning specified in
the Series 1997-2 Supplement.
"SERIES 1997-3 NOTEHOLDERS" has the meaning specified in the Series
1997-3 Supplement.
"SERIES 1997-3 NOTES" means the Series of Series 1997 Variable Funding
Notes issued pursuant to the Series 1997-3 Supplement
"SERIES 1997-3 SUPPLEMENT" means the Supplement to the Base Indenture
of even date herewith among NFLP, the Trustee and the Enhancement Agent, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, providing for the issuance of the Series of Series 1997
Variable Funding Notes referred to as the "Series 1997-3 Notes".
"SERIES 1997-4 MAXIMUM INVESTED AMOUNT" has the meaning specified in
the Series 1997-4 Supplement.
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"SERIES 1997-4 NOTEHOLDERS" has the meaning specified in the Series
1997-4 Supplement.
"SERIES 1997-4 NOTES" means the Series of Series 1997 Variable Funding
Notes issued pursuant to the Series 1997-4 Supplement.
"SERIES 1997-4 SUPPLEMENT" means the Supplement to the Base Indenture
of even date herewith among NFLP, the Trustee and the Enhancement Agent, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, providing for the issuance of the Series of Series 1997
Variable Funding Notes referred to as the "Series 1997-4 Notes".
"SERVICER" means, with respect to the Series 1997 Variable Funding
Notes, each of National, Alamo, Value, Spirit and each Additional Lessee, in its
respective capacity as a Servicer under the Series 1997 Lease.
"SHARED COLLATERAL SERIES" means the Notes issued and comprising a
Shared Collateral Series.
"SHARED COLLATERAL SERIES NOTES" means any Series of Notes issued
pursuant to a Supplement which provides that the NFLP Obligations with respect
to such Series are secured by the Series 1997 Lease, the Vehicles leased
thereunder and any other Series 1997 VFN Collateral or a portion thereof.
"SHARED SERIES 1997 VFN COLLECTIONS" has the meaning specified in
SECTION 5.2(a)(x)(iv) of the Series 1997-1 Supplement.
"SPIRIT" means Spirit Rent-A-Car, Inc., an Ohio corporation and its
successors and assigns.
"SPIRIT PAYOFF LETTER" means a letter dated on or before the initial
Vehicle Funding Date with respect to Spirit under the Series 1997 Lease,
specifying the amount required to pay in full all indebtedness of Spirit secured
by any of the Refinanced Vehicles to be refinanced under the Series 1997 Lease
on such initial Vehicle Funding Date with respect to which Spirit is the Lessee.
"SUBORDINATED DEBT" has the meaning specified in Section 28.5 of the
Series 1997 Lease.
"SUBORDINATED NOTE" means the note from National to NFLP evidencing
indebtedness owed to NFLP in respect of loans made by NFLP to National out of
Profits.
"SUPPLEMENTAL DOCUMENTS" has the meaning specified in Section 2.1(c) of
the Series 1997 Lease.
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"SUPPLEMENTAL SERVICING FEE" has the meaning specified in Section 26.1
of the Series 1997 Lease.
"SUPPORT CREDIT DEMAND" has the meaning specified in the Series 1997-1
Support Letter of Credit or paragraph 1(a) of the GM Series 1997-1 Support
Agreement, as applicable.
"SUPPORT CREDIT DISBURSEMENT" means a disbursement by any Series 1997-1
Support Letter of Credit Provider or the GM Series 1997-1 Support Provider, as
applicable, to the Series 1997-1 Letter of Credit Provider pursuant to a Support
Credit Demand.
"SUPPORT DISBURSEMENTS" means, collectively, the Support Credit
Disbursements, the Support Liquidity Disbursements, the Support Reduction
Disbursements and the Support Termination Disbursements.
"SUPPORT EVENT OF DEFAULT" means an Event of Default as defined in
Section 2.17 of the Series 1997-1 Support Reimbursement Agreement.
"SUPPORT EXPIRATION DATE" has the meaning set forth in Section 2.1(a)
of the Series 1997- 1 Support Reimbursement Agreement or Section 2.1(a) of the
GM Series 1997-1 Support Reimbursement Agreement, as applicable.
"SUPPORT LETTER OF CREDIT" means a Series 1997-1 Support Letter of
Credit or any of the other irrevocable letters of credit or other agreements
issued by or entered into by any of the Support Letter of Credit Providers
pursuant to the related Support Reimbursement Agreement by which such Support
Letter of Credit Provider agrees to reimburse the related Letter of Credit
Provider for amounts drawn on the related Letter of Credit, as the same may be
amended, supplemented, restated or otherwise modified or substituted or replaced
from time to time in accordance with the terms thereof.
"SUPPORT LETTER OF CREDIT COMMITMENT" has the meaning specified in
Section 2.1(a) of the Series 1997-1 Support Reimbursement Agreement.
"SUPPORT LETTER OF CREDIT PROVIDER" means a Series 1997-1 Support
Letter of Credit Provider or any of the other Persons that issues or enters into
an irrevocable letter of credit or other agreement pursuant to which such Person
agrees to reimburse the related Letter of Credit Provider for amounts drawn on
such Letter of Credit Provider's Letter of Credit.
"SUPPORT LIQUIDITY DEMAND" has the meaning specified in the related
Series 1997-1 Support Letter of Credit or paragraph 1(b) of the GM Series 1997-1
Support Agreement, as applicable.
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"SUPPORT LIQUIDITY DISBURSEMENT" means a disbursement by any Series
1997-1 Support Letter of Credit Provider or the GM Series 1997-1 Support
Provider, as applicable, to the Series 1997-1 Letter of Credit Provider pursuant
to a Support Liquidity Demand.
"SUPPORT POTENTIAL EVENT OF DEFAULT" means a Potential Event of Default
as defined in Section 2.17 of the Series 1997-1 Support Reimbursement Agreement.
"SUPPORT REDUCTION DEMAND" has the meaning specified in paragraph 1(d)
of the GM Series 1997-1 Support Reimbursement Agreement.
"SUPPORT REDUCTION DISBURSEMENT" means a disbursement by the GM Series
1997-1 Support Provider for deposit to the Series 1997-1 Cash Collateral Account
pursuant to a Support Reduction Demand.
"SUPPORT REIMBURSEMENT AGREEMENT" means any of the Series 1997-1
Support Reimbursement Agreements or any of the other agreements pursuant to
which RFC, the Lessees and Republic agree subject to the terms and conditions
set forth therein to reimburse the related Support Letter of Credit Providers
for draws under their respective Support Letters of Credit, as the same may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof.
"SUPPORT TERMINATION DEMAND" has the meaning specified in the related
Series 1997-1 Support Letter of Credit of Credit or paragraph 1(c) of the GM
Series 1997-1 Support Agreement, as applicable.
"SUPPORT TERMINATION DEMAND FOR NONEXTENSION" has the meaning specified
in the related Series 1997-1 Support Letter of Credit.
"SUPPORT TERMINATION DISBURSEMENT" means a disbursement by any Series
1997-1 Support Letter of Credit Provider or the GM Series 1997-1 Support
Provider pursuant to a Support Termination Demand or by any Series 1997-1
Support Letter of Credit Provider pursuant to a Support Termination Demand for
Nonextension, as the case may be.
"SYNTHETIC LEASE" means the Base Lease as supplemented by Annex C to
the Series 1997 Lease.
"SYNTHETIC LEASE VEHICLE" means an Eligible Vehicle that is acquired or
owned by a Lessee and financed or refinanced by NFLP under the Annex C to the
Series 1997 Lease on or after the Series 1997 Lease Commencement Date.
"TERM" has the meaning specified in Section 3.1 of the Series 1997
Lease.
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"TERMINATION PAYMENTS" has the meaning specified in Section 12.3 of the
Series 1997 Lease.
"TERMINATION VALUE" means, with respect to any Vehicle, as of any date,
an amount equal to (i) the Capitalized Cost of such Vehicle minus (ii) all
Depreciation Charges accrued with respect to such Vehicle prior to such date.
"UNPAID DEMAND" has the meaning specified in SECTION 5.10(d)
"VALUE" means Value Rent-A-Car, Inc., a Florida corporation, and its
successors and assigns.
"VALUE PAYOFF LETTER" means a letter dated on or before the initial
Funding Date with respect to Value under the Series 1997 Lease, specifying the
amount required to pay in full all indebtedness of Value secured by any of the
Refinanced Vehicles to be refinanced under the Series 1997 Lease on such initial
Vehicle Funding Date with respect to which Value is the Lessee.
"VEHICLE FUNDING DATE" has the meaning specified in Section 3.1 of the
Series 1997 Lease.
"VEHICLE LEASE COMMENCEMENT DATE" has the meaning specified in Section
3.1 of the Series 1997 Lease.
"VEHICLE LEASE EXPIRATION DATE" with respect to each Series 1997
Vehicle, means the earliest of (i) the Disposition Date for such Vehicle, (ii)
if such Vehicle becomes a Casualty, the date funds in the amount of the Net Book
Value thereof are received by the Lessor, the Master Collateral Agent or the
Trustee (including deposit into the Series 1997-1 Collection Account or the
Master Collateral Account) from the Lessee in accordance with the Series 1997
Lease, (iii) with respect to the Synthetic Lease Vehicles only, if the Lessee
thereof purchases the Synthetic Lease Vehicle pursuant to Section 6 of Annex C
to the Series 1997 Lease, the date on which the Vehicle Purchase Price is
received by the Trustee, and (iv) the last day of the maximum Vehicle Lease term
of the Operating Lease, the Financing Lease and the Synthetic Lease, as
applicable, as specified in, respectively, PARAGRAPH 5 of each of Annex A, Annex
B and Annex C to the Series 1997 Lease.
"VEHICLE ORDER" has the meaning specified in Section 2.1(c) of the
Series 1997 Lease.
"VEHICLE PURCHASE PRICE" means, on any date of determination and for
any Acquired Vehicle, an amount equal to the greater of (a) the sum of the
applicable Net Book Value of the Vehicle and all unpaid Depreciation Charges
accruing with respect thereto through the last day of the Related Month to the
date of purchase by any of the Lessees, and (b) the fair market value of
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such Vehicle based on (1) (x) an independent third-party data source approved by
each Rating Agency that rated any Series of Notes at the request of the Lessor
and (y) the average equipment and average mileage of each Acquired Vehicle of
such model class and model year, or (2) such other methodology approved by each
such Rating Agency.
"VEHICLE TERM" has the meaning specified in Section 3.1 of the Series
1997 Lease.
"VEHICLE TURN-IN CONDITION" has the meaning specified in Section 12.1
of the Series 1997 Lease.
"VFN CLOSING DATE" means October 29, 1997.
"VFN COLLECTION ACCOUNTS" means, collectively, the Series 1997-1
Collection Account, the Series 1997-1 Collection Account, the Series 1997-3
Collection Account, the Series 1997-4 Collection Account and any other
series-specific collection account related to a Shared Collateral Series.
"VFN COLLECTIONS" means (a) all payments made under the Series 1997
Lease, (b) all Disposition Proceeds, Repurchase Prices and Guaranteed Payments
on Series 1997 Vehicles, (c) any insurance proceeds or other payments with
respect to the Series 1997 Vehicles and (d) all amounts earned on Permitted
Investments allocable to VFN Collections arising out of funds on deposit in the
Series 1997 Collection Account allocable to the Series 1997 Variable Funding
Notes; PROVIDED that, in the case of amounts in CLAUSES (b) and (c), such
amounts shall be allocated to the Series 1997 Vehicles in accordance with the
terms hereof and the Servicer's normal practices and procedures for determining
and allocating vehicle proceeds.
"VFN L/C PERCENTAGE" means, with respect to the Series 1997 Variable
Funding Notes on any day, the percentage equivalent of a fraction, (a) the
numerator of which is the sum of the aggregate amount available to be drawn on
such date under the letters of credit providing credit enhancement for the
Series 1997 Lease and (b) the denominator of which is the Aggregate VFN Invested
Amount on such date.
"VFN RETAINED INTEREST AMOUNT" means, on any date of determination, the
amount, if any, by which the Series 1997 Aggregate Asset Amount at the end of
the day immediately prior to such date of determination exceeds the sum of (a)
Aggregate VFN Invested Amount PLUS (b) the Series 1997 Aggregate Available
Subordinated Amount on such day.
"VFN RETAINED INTEREST PERCENTAGE" means, on any date of determination,
when used with respect to Principal Collections, Recoveries and Losses, an
amount equal to one hundred percent (100%) MINUS the sum of (a) the invested
percentages for all outstanding Series 1997 Variable Funding Notes and (b) the
available subordinated amount percentages for all Series 1997 Variable Funding
Notes that provide for credit enhancement in the form of
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overcollateralization, in each case as such percentages are calculated on such
date with respect to Principal Collections, Recoveries or Losses, as applicable.
"VFR" with respect to the Series 1997 Lease, means, for any period, an
interest rate equal to the quotient (expressed as a percentage) of (i) the
amount of interest accrued during such period with respect to all Series of
Series 1997 Variable Funding Notes, DIVIDED BY (ii) the average daily aggregate
invested amounts of all Series of Series 1997 Variable Funding Notes during such
period.
"VIN" has the meaning specified in Section 18(a) of the Series 1997
Lease.
"VOLUNTARY DECREASE" has the meaning specified in SECTION 4.3(b).
"WEIGHTED AVERAGE ENHANCEMENT PERCENTAGE" means, with respect to the
Series 1997-1 Notes on any day, the percentage equivalent of a fraction, (a) the
numerator of which is the sum of (i) the Series 1997-1 Minimum Non-Program
Enhancement Amount and (ii) the Series 1997-1 Minimum Program Enhancement Amount
and (b) the denominator of which is the Series 1997-1 Invested Amount on such
date.
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<PAGE> 1
EXHIBIT 4.6
================================================================================
SERIES 1997-1 SUPPORT REIMBURSEMENT AGREEMENT
Dated as of October 29, 1997
among
REPUBLIC INDUSTRIES FUNDING CORP.,
ALAMO RENT-A-CAR, INC.,
as a Lessee,
NATIONAL CAR RENTAL SYSTEM, INC.,
as a Lessee,
SPIRIT RENT-A-CAR, INC.,
as a Lessee,
VALUE RENT-A-CAR, INC.,
as a Lessee,
those additional Subsidiaries and Affiliates
of Republic Industries, Inc.
from time to time becoming Additional Lessees hereunder,
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
REPUBLIC INDUSTRIES, INC.,
as the Guarantor,
and
those financial institutions identified on the
signature pages hereto as the Series 1997-1
Support Letter of Credit Providers
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
ISSUANCE OF SERIES 1997-1 SUPPORT LETTERS OF CREDIT;
REIMBURSEMENT OBLIGATION-6-
Section 2.1. Issuance of Series 1997-1 Support Letters of Credit; Substitute Series 1997-1 Support Letters of Credit;
Extensions of the Series 1997-1 Support Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.4. Advances; Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.5. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.6. Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.7. No Liability of Series 1997-1 Support Letter of Credit Providers . . . . . . . . . . . . . . . . . . . 17
Section 2.8. Surrender of the Series 1997-1 Support Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.9. Conditions Precedent to Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.10. Eurodollar Lending Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.11. Deposits Unavailable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.12. Increased Costs, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.13. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.14. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.16. Obligation Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.17. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.18. Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.19. Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.20. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.21. Replacement of Series 1997-1 Support Letter of Credit Providers . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. Representations and Warranties of the Lessees and Republic . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.2. Affirmative Covenants of the Lessees and Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.3. Negative Covenants of the Lessees and Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.4. Representations and Warranties of RFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.5. Affirmative Covenants of RFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 3.6. Negative Covenants of RFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.7. Negative Covenant of NFLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.8. Series 1997-1 Support Letter of Credit Provider Covenants . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE IV
MISCELLANEOUS
Section 4.1. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.5. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.6. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.7. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.10. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.11. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.13. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.14. Bankruptcy Petition Against RFC or NFLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.15. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.16. Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.17. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.18. Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.19. Limited Recourse to RFC and NFLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.20. Waiver of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 4.21. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 4.22. Additional Series 1997-1 Support Letter of Credit Providers . . . . . . . . . . . . . . . . . . . . . . 58
Section 4.23. Obligations Several, Not Joint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 4.24. Additional Lessees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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Section 4.25. Subordination of Obligations Pursuant to Intercreditor Agreement . . . . . . . . . . . . . . . . . . . 60
Section 4.26. Subrogation, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Schedule 1 Addresses for Notices as of Date of Execution of Agreement
Schedule 2 Series 1997-1 Support Letter of Credit Providers
as of Date of Execution of Agreement
EXHIBIT A Form of Series 1997-1 Support Letter of Credit
EXHIBIT B Form of Notice of Conversion
EXHIBIT C Form of Assignment
EXHIBIT D Form of Series 1997-1 Support Letter of Credit Provider Joinder in Series
1997-1 Support Reimbursement Agreement
EXHIBIT E Form of Lessee Joinder in Series 1997-1 Support Reimbursement Agreement
</TABLE>
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SERIES 1997-1 SUPPORT REIMBURSEMENT AGREEMENT
THIS SERIES 1997-1 SUPPORT REIMBURSEMENT AGREEMENT, dated as of
October 29, 1997 (as amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms hereof, this "Agreement"), is entered
into by and among REPUBLIC INDUSTRIES FUNDING CORP., a Delaware corporation
("RFC"), ALAMO RENT-A-CAR, INC., a Florida corporation ("Alamo"), NATIONAL CAR
RENTAL SYSTEM, INC., a Delaware corporation ("National"), SPIRIT RENT-A-CAR,
INC., an Ohio corporation ("Spirit"), VALUE RENT-A-CAR, INC., a Florida
corporation ("Value"), those additional Subsidiaries and other Affiliates of
Republic (as defined below) that become party to this Agreement from time to
time pursuant to the provisions of Section 4.22 hereof (each an "Additional
Lessee" and, collectively, the "Additional Lessees"; each of the Additional
Lessees, Alamo, National, Spirit and Value, a "Lessee" and, collectively, the
"Lessees"), NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP, a Delaware
limited partnership ("NFLP"), REPUBLIC INDUSTRIES, INC., a Delaware corporation
("Republic" or the "Guarantor"), and the financial institutions identified on
the signature pages hereto as the Series 1997-1 Support Letter of Credit
Providers (each a "Series 1997-1 Support Letter of Credit Provider" and,
collectively, the "Series 1997-1 Support Letter of Credit Providers").
RECITALS
1. Contemporaneously with the execution and delivery of this
Agreement, NFLP, as Issuer (in such capacity, the "Issuer"), and The Bank of
New York, a New York banking corporation, as Trustee (in such capacity, the
"Trustee") and as Enhancement Agent (in such capacity, the "Enhancement
Agent"), are entering into the Series 1997-1 Supplement, dated as of even date
herewith (as the same may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms thereof, the "Series
1997-1 Supplement"), to the Base Indenture, dated as of April 30, 1996 (as
amended by the Supplement and Amendment to Base Indenture, dated as of December
20, 1996, between NFLP and the Trustee, and as the same may be further amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof, the "Base Indenture"), between NFLP and the Trustee,
pursuant to which NFLP will issue its Variable Funding Rental Car Asset Backed
Notes, Series 1997-1 (the "Series 1997-1 Notes").
2. Contemporaneously with the execution and delivery of this
Agreement, NFLP, RFC, as the Series 1997-1 Note Purchaser, Republic, as Master
Servicer, and Credit Suisse First Boston, as the Series 1997-1 Collateral
Agent, are entering into the Series 1997-1 Note Purchase Agreement, dated as of
even date herewith (as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof, the
"Series 1997-1 Note Purchase Agreement"), pursuant to which RFC will purchase
the Series 1997-1 Notes from
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<PAGE> 6
NFLP and make advances from time to time to NFLP, the proceeds of which will be
used to acquire, finance the acquisition of and/or refinance Vehicles and
Eligible Receivables (such capitalized terms, together with all other
capitalized terms used herein, shall have the meanings assigned thereto in
Section 1.1) to be leased to the Lessees in the respective domestic daily
rental businesses of the Lessees and Fleet Sharing Parties pursuant to the
Master Motor Vehicle Lease and Servicing Agreement, dated as of even date
herewith (as the same may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms thereof, the "Series
1997 Lease"), among NFLP, as lessor (in such capacity, the "Lessor"), Republic,
as guarantor, and the Lessees.
3. Contemporaneously with the execution and delivery of this
Agreement, RFC and the Depositary are entering into the Depositary Agreement,
dated as of even date herewith (as the same may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof, the "Depositary Agreement"), providing for the issuance and sale by
RFC of its Commercial Paper Notes in the commercial paper market.
4. Contemporaneously with the execution and delivery of this
Agreement, RFC, Republic and the Dealers are entering into the Dealer
Agreement, dated as of even date herewith (as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof, the "Dealer Agreement"), providing for, among other
things, each Dealer to act as a commercial paper dealer for the Commercial
Paper Notes.
5. Contemporaneously with the execution and delivery of this
Agreement, RFC, Credit Suisse First Boston, as the Series 1997-1 Liquidity
Agent, and certain financial institutions as the Liquidity Lenders are entering
into the Series 1997-1 Liquidity Agreement, dated as of even date herewith (as
the same may be amended, supplemented, restated or otherwise modified from time
to time in accordance with the terms thereof, the "Series 1997-1 Liquidity
Agreement"), providing for, among other things, the Liquidity Commitments of
the Liquidity Lenders to make Liquidity Advances on behalf of RFC from time to
time that will be used to (i) repay the maturing Commercial Paper Notes, (ii)
repay maturing Liquidity Advances and (iii) make additional Advances (as
defined in the Series 1997-1 Note Purchase Agreement) under the Series 1997-1
Notes.
6. Contemporaneously with the execution and delivery of this
Agreement, Republic, the Lessees, NFLP and Citibank, N.A., a national banking
association, as Master Collateral Agent, are entering into the Second Amended
and Restated Master Collateral Agency Agreement, dated as of even date herewith
(as the same may be amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms thereof, the "Master Collateral
Agency Agreement"), pursuant to which (i) NFLP has granted to the Master
Collateral Agent a first priority security interest in the NFLP Master
Collateral (as defined therein) and (ii) the Lessees have granted to the Master
Collateral Agent a first priority security interest in the Lessee Grantor
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<PAGE> 7
Master Collateral (as defined therein), in each case as master collateral agent
for the benefit of the parties named from time to time as the Financing Sources
and the Beneficiaries thereunder.
7. Contemporaneously with the execution and delivery of this
Agreement, RFC, the Series 1997-1 Liquidity Agent, the Depositary, the Series
1997-1 Collateral Agent, the Dealers, the Series 1997-1 Support Letter of
Credit Providers and General Motors Corporation, a Delaware corporation ("GM"),
as the issuer of the GM Series 1997-1 Support Agreement referred to below (in
such capacity, the "GM Series 1997-1 Support Provider"), are entering into the
Series 1997-1 Collateral Agreement, dated as of even date herewith (as the same
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms thereof, the "Series 1997-1 Collateral
Agreement"), for the purpose of, among other things, providing for the
repayment or payment of all amounts at any time and from time to time owing by
RFC to (i) the Liquidity Lenders or the Series 1997-1 Liquidity Agent under or
in connection with the Series 1997-1 Liquidity Agreement or the Series 1997-1
Collateral Agreement, (ii) the Series 1997-1 Cash Collateral Account under or
in connection with the Series 1997-1 Supplement, the Series 1997-1 Letter of
Credit, the Series 1997-1 Support Letters of Credit (as defined in Section
2.1(a)), the GM Series 1997-1 Support Agreement, this Agreement or the Series
1997-1 Collateral Agreement, (iii) the holders of the Commercial Paper Notes or
the Depositary under the Depositary Agreement or the Series 1997-1 Collateral
Agreement, (iv) the Series 1997-1 Letter of Credit Provider under the Series
1997-1 Letter of Credit Agreement referred to below or the Series 1997-1
Collateral Agreement, (v) the Series 1997-1 Support Letter of Credit Providers
under this Agreement or the Series 1997-1 Collateral Agreement, (vi) GM in its
capacity as the GM Series 1997-1 Support Provider under the GM Series 1997-1
Support Reimbursement Agreement referred to below and under the Series 1997-1
Collateral Agreement, (vii) the Series 1997-1 Collateral Agent under the
Series 1997-1 Collateral Agreement and (viii) the Dealers under the Dealer
Agreement or the Series 1997-1 Collateral Agreement.
8. Contemporaneously with the execution and delivery of this
Agreement, the Series 1997-1 Letter of Credit Provider is issuing the Series
1997-1 Letter of Credit, dated as of even date herewith, to the Enhancement
Agent (i) as liquidity support for RFC's obligation to repay maturing
Commercial Paper Notes, (ii) as partial credit support for amounts owed by the
Lessees under the Series 1997 Lease and (iii) as credit support for amounts
owed by National under Section 5.10 of the Series 1997-1 Supplement.
9. Contemporaneously with the execution and delivery of this
Agreement, GM, in its capacity as the GM Series 1997-1 Support Provider, is
issuing its GM Series 1997-1 Support Agreement, dated as of even date herewith
(as the same may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof, the "GM Series 1997-1 Support
Agreement"), to reimburse the Series 1997-1 Letter of Credit Provider for
amounts drawn under the Series 1997-1 Letter of Credit subject to the terms and
conditions set forth therein in an amount up to the Available GM Support Amount
(as defined in the GM Series
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<PAGE> 8
1997-1 Support Agreement) on a pro rata basis with the reimbursement of such
amounts by the Series 1997-1 Support Letter of Credit Providers in an amount up
to their respective Support Letter of Credit Amounts (as defined in their
respective Series 1997-1 Support Letters of Credit) as discussed below,
provided that as set forth in the preamble to this Agreement, references herein
to any "Series 1997-1 Support Letter of Credit Provider" or the "Series 1997-1
Support Letter of Credit Providers" shall not include GM in its capacity as the
GM Series 1997-1 Support Provider and references herein to any "Series 1997-1
Support Letter of Credit" or the "Series 1997-1 Support Letters of Credit"
shall not include the GM Series 1997-1 Support Agreement unless in each case
expressly provided for herein.
10. Contemporaneously with the execution and delivery of this
Agreement, each of the Series 1997-1 Support Letter of Credit Providers
hereunder is issuing a Series 1997-1 Support Letter of Credit to the Series
1997-1 Letter of Credit Provider to reimburse the Series 1997-1 Letter of
Credit Provider for amounts drawn under the Series 1997-1 Letter of Credit on a
pro rata basis with respect to each other and with respect to GM's
reimbursement of such amounts pursuant to the GM Series 1997-1 Support
Agreement.
11. Contemporaneously with the execution and delivery of this
Agreement, GM, in its capacity as a GM Series 1997-1 Support Provider pursuant
to the GM Series 1997-1 Support Agreement, RFC, the Lessees and NFLP are
entering into that certain GM Series 1997-1 Support Reimbursement Agreement,
dated as of even date herewith (as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof, the
"GM Series 1997-1 Support Reimbursement Agreement"), to provide for (i) the
reimbursement by RFC of draws upon the GM Series 1997-1 Support Agreement that
are made by the Series 1997-1 Letter of Credit Provider as reimbursement for
draws upon the Series 1997-1 Letter of Credit that were made as liquidity
support for RFC's obligation to repay maturing Commercial Paper Notes, (ii) the
reimbursement by any Lessee of any draws upon the GM Series 1997-1 Support
Agreement that are made by the Series 1997-1 Letter of Credit Provider as
reimbursement for draws upon the Series 1997-1 Letter of Credit that were made
as partial credit support for the failure by such Lessee to pay amounts owed by
such Lessee under the Series 1997 Lease, (iii) the reimbursement by RFC and the
Lessees of any draws that are made upon the GM Series 1997-1 Support Agreement
by the Series 1997-1 Letter of Credit Provider as reimbursement for a Series
1997-1 LOC Termination Disbursement and (iv) the reimbursement by National of
any draws that are made upon the GM Series 1997-1 Support Agreement by the
Series 1997-1 Letter of Credit Provider as reimbursement for any draws upon the
Series 1997-1 Letter of Credit that were made as credit support for amounts
owed by National under Section 5.10 of the Series 1997-1 Supplement, all of
which payments as of any date by each of RFC, National and the other Lessees
shall be made only after the payment in full of all amounts payable by RFC,
National and the other Lessees to the Series 1997-1 Support Letter of Credit
Providers as of such date pursuant to this Agreement.
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12. Contemporaneously with the execution and delivery of this
Agreement, RFC, the Lessees and Republic are entering into the Series 1997-1
Letter of Credit Agreement, dated as of even date herewith (as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the "Series 1997-1 Letter of Credit Agreement"), to
provide for the payment and repayment of certain fees and expenses and other
obligations of RFC, the Lessees and Republic to the Series 1997-1 Letter of
Credit Provider in connection with the execution and delivery by the Series
1997-1 Letter of Credit Provider of the Series 1997-1 Letter of Credit.
13. RFC, the Lessees, NFLP, Republic and the Series 1997-1 Support
Letter of Credit Providers hereunder are entering into this Agreement to
provide for (i) the reimbursement by RFC of draws upon the Series 1997-1
Support Letters of Credit that are made by the Series 1997-1 Letter of Credit
Provider as reimbursement for draws upon the Series 1997-1 Letter of Credit
that were made as liquidity support for RFC's obligation to repay maturing
Commercial Paper Notes, (ii) the reimbursement by any Lessee of any draws upon
the Series 1997-1 Support Letters of Credit that are made by the Series 1997-1
Letter of Credit Provider as reimbursement for draws upon the Series 1997-1
Letter of Credit that were made as partial credit support for the failure by
such Lessee to pay amounts owed by such Lessee under the Series 1997 Lease,
(iii) the reimbursement by RFC (and the Lessees) of draws upon the Series
1997-1 Support Letters of Credit that are made by the Series 1997-1 Letter of
Credit Provider as reimbursement for a Series 1997-1 LOC Termination
Disbursement, (iv) the guaranty of the reimbursement obligations of each of the
Lessees by Republic and ( v) the reimbursement by National of any draws that
are made upon the Series 1997-1 Support Letters of Credit by the Series 1997-1
Letter of Credit Provider as reimbursement for any draws upon the Series 1997-1
Letter of Credit that were made as credit support for amounts owed by National
under Section 5.10 of the Series 1997-1 Supplement.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, and for due and adequate consideration, which the parties
hereto hereby acknowledge, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement and unless the
context requires a different meaning, capitalized terms used but not defined
herein (including the preamble and the recitals hereto) shall have the meanings
assigned to such terms in (i) the Definitions List attached as Annex A to the
Series 1997-1 Liquidity Agreement, as such Definitions List may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms of
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the Series 1997-1 Liquidity Agreement and Section 4.5, (ii) the Definitions
List attached as Annex A to the Series 1997-1 Supplement, as such Definitions
List may be amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof and Section 4.5, and (iii) the
Definitions List attached as Schedule 1 to the Base Indenture, as such
Definitions List may be amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms of the Base Indenture, provided
that to the extent, if any, that any capitalized term used but not defined
herein has a meaning assigned to such term in more than one of the lists or
agreements referred to in clauses (i) through (iii), then (x) if a meaning is
assigned to such term in the Definitions List attached as Annex A to the Series
1997-1 Liquidity Agreement, such meaning shall apply herein, and (y) if a
meaning is not assigned to such term in the Definitions List attached as Annex
A to the Series 1997-1 Liquidity Agreement, then the meaning assigned to such
term in the Definitions List attached as Annex A to the Series 1997-1
Supplement shall apply herein.
ARTICLE II
ISSUANCE OF SERIES 1997-1 SUPPORT LETTERS OF CREDIT;
REIMBURSEMENT OBLIGATION
Section 2.1. Issuance of Series 1997-1 Support Letters of Credit;
Substitute Series 1997-1 Support Letters of Credit; Extensions of the Series
1997-1 Support Letters of Credit. (a) Each of the Series 1997-1 Support
Letter of Credit Providers hereby agrees, on the terms and subject to the
conditions hereinafter set forth, to issue an irrevocable letter of credit of
even date herewith in substantially the form attached hereto as Exhibit A (as
any such letter of credit may be amended, supplemented, restated or otherwise
modified or substituted or replaced from time to time in accordance with the
terms hereof and thereof, each a "Series 1997-1 Support Letter of Credit" and,
together with any other Series 1997-1 Support Letter of Credit, the "Series
1997-1 Support Letters of Credit"), in each case in the amount set forth in
Schedule 2 attached hereto (such Series 1997-1 Support Letter of Credit
Provider's "Support Letter of Credit Commitment" and, together with each other
Series 1997-1 Support Letter of Credit Provider's Support Letter of Credit
Commitment, the "Support Letter of Credit Commitments") to the Series 1997-1
Letter of Credit Provider to reimburse the Series 1997-1 Letter of Credit
Provider for draws that are made on the Series 1997-1 Letter of Credit (i) as
liquidity support for the Commercial Paper Notes (in respect of Liquidity
Demands and Termination Demands under the Series 1997-1 Letter of Credit, which
shall be Support Liquidity Demands and Support Termination Demands under the
Series 1997-1 Support Letters of Credit, respectively), (ii) as credit support
for payments due under the Series 1997 Lease, the rights under which have been
assigned by NFLP to the Enhancement Agent under the Series 1997-1 Supplement
(in respect of Credit Demands and Termination Demands under the Series 1997-1
Letter of Credit, which shall be Support Credit Demands and Support Termination
Demands under the Series 1997-1 Support Letters of Credit, respectively), (iii)
as support for a Series 1997-1 LOC Termination Disbursement under Section
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5.11 of the Series 1997-1 Supplement, and (iv) as credit support for payments
due from National under Section 5.10 of the Series 1997-1 Supplement. Each
Series 1997-1 Support Letter of Credit Provider's Support Letter of Credit
Commitment will be for a term expiring on the date (the "Support Expiration
Date") that is the earlier of (i) October 29, 2000 or such later date to which
the term of such Series 1997-1 Support Letter of Credit Provider's Series
1997-1 Support Letter of Credit is extended pursuant to Section 2.1(c) (or if
any such date is not a Business Day, the immediately preceding Business Day)
(the "Scheduled Support Expiration Date") and (ii) the date on which all
amounts outstanding under the Series 1997-1 Letter of Credit have been repaid
in full and the Series 1997-1 Letter of Credit has expired or been terminated.
(b) If a successor Series 1997-1 Letter of Credit Provider is
appointed, promptly following the appointment of such successor Series 1997-1
Letter of Credit Provider, pursuant to the terms of each Series 1997-1 Support
Letter of Credit Provider's respective Series 1997-1 Support Letter of Credit,
and upon receipt of an Instruction to Transfer substantially in the form of
Annex G to the related Series 1997-1 Support Letter of Credit, each Series
1997-1 Support Letter of Credit Provider shall deliver for the benefit of such
successor and the current Series 1997-1 Letter of Credit Provider, in exchange
for its outstanding Series 1997-1 Support Letter of Credit, a substitute letter
of credit substantially in the form of Exhibit A hereto having terms
substantially identical to its then outstanding Series 1997-1 Support Letter of
Credit, but in favor of such successor.
(c) If Republic, on behalf of the Lessees, and RFC wish to extend the
Scheduled Support Expiration Date for purposes of this Agreement and the Series
1997-1 Support Letters of Credit, they shall give each of the Series 1997-1
Support Letter of Credit Providers written notice to such effect not more than
one hundred (100) days and not less than eighty-five (85) days prior to the
date that is one year from the Series 1997-1 Closing Date (or if such day is
not a Business Day then on the next succeeding Business Day) and thereafter not
more than one hundred (100) days and not less than eighty-five (85) days prior
to each subsequent one-year anniversary of the Series 1997-1 Closing Date. If
Republic, on behalf of the Lessees, and RFC shall make such request, each
Series 1997-1 Support Letter of Credit Provider shall notify each of Republic,
RFC, the Series 1997-1 Letter of Credit Provider and the Enhancement Agent in
writing of its decision whether or not to so extend its Scheduled Support
Expiration Date, which decision shall be in its sole and absolute discretion,
not later than thirty (30) days after the notice is given from the RFC and
Republic on behalf of the Lessees referred to above, stating that such Series
1997-1 Support Letter of Credit Provider has or has not agreed to extend such
Scheduled Support Expiration Date for an additional year (or lesser period)
and, if such Series 1997-1 Support Letter of Credit Provider does so consent,
the conditions of such consent (including conditions relating to legal
documentation). If any Series 1997-1 Support Letter of Credit Provider shall
not so notify RFC and Republic on behalf of the Lessees, such Series 1997-1
Support Letter of Credit Provider shall be deemed not to have consented to such
request. Subject to paragraph (e) of this Section 2.1, if any Series 1997-1
Support Letter of Credit Provider desires to extend its Scheduled Support
Expiration Date, such Series 1997-1 Support Letter of Credit Provider shall, as
the Series 1997-1
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<PAGE> 12
Letter of Credit Provider may elect, either (i) issue to the Series 1997-1
Letter of Credit Provider in exchange for and upon receipt of its then
outstanding Series 1997-1 Support Letter of Credit, a substitute letter of
credit having terms substantially identical to the then outstanding Series
1997-1 Support Letter of Credit but expiring on the Scheduled Support
Expiration Date, as so extended, or (ii) deliver to the Series 1997-1 Letter of
Credit Provider an amendment to its then outstanding Series 1997-1 Support
Letter of Credit, to reflect such extension of the Scheduled Support Expiration
Date.
(d) If any such Series 1997-1 Support Letter of Credit Provider does
not consent to the extension of its Scheduled Support Expiration Date pursuant
to paragraph (c) of this Section 2.1, each of the Lessees, Republic and RFC
shall use their best efforts to obtain, no later than forty-five (45) days
prior to the Scheduled Support Expiration Date for such Series 1997-1 Support
Letter of Credit Provider, a successor institution to act as such Series 1997-1
Support Letter of Credit Provider subject to the satisfaction of the conditions
set forth in Section 4.22 with respect to the participation of an additional
Series 1997-1 Support Letter of Credit Provider or, in the alternative, no
later than the Scheduled Support Expiration Date for such Series 1997-1 Support
Letter of Credit Provider, to otherwise provide support to the credit
enhancement to be provided by such Series 1997-1 Support Letter of Credit
Provider for the Series 1997 Lease payments to be made by the Lessees with (1)
the funding of the Series 1997-1 Cash Collateral Account with cash, (2) other
cash collateral accounts, overcollateralization or subordinated securities or
(3) a surety bond or other similar arrangement, in each case in an amount equal
to the amount of such Series 1997-1 Support Letter of Credit Provider's Support
Letter of Credit Amount (as defined in the related Series 1997-1 Support Letter
of Credit) immediately prior to any drawing referred to in subsection (f) below
(whether funded from a Support Termination Disbursement or otherwise), and in
which case the Series 1997-1 Fronting Letter of Credit Amount (as defined in
the Series 1997-1 Letter of Credit) shall be reduced by such amount as provided
in the Series 1997-1 Letter of Credit; provided, however, that any such other
form of substitute credit enhancement referred to in the foregoing clauses (2)
and (3) shall be subject to (x) receipt by the Series 1997-1 Liquidity Agent of
the prior written notification of each Rating Agency that its then current
rating of RFC's Commercial Paper Notes Outstanding shall not be reduced or
withdrawn as a result thereof, and (y) with respect to any such form of
substitute credit enhancement referred to in the foregoing clause (3), if the
ratings with respect to such substitute credit enhancement, if applicable, are
less than "A-1" or the equivalent from S&P and "P-1" or the equivalent from
Moody's, the approval of the Majority Banks; provided further, however, that
only after all amounts then owing to such Series 1997-1 Support Letter of
Credit Provider hereunder have been paid in full shall the letter of credit
issued by such successor bank or banks or such other substitute credit
enhancement be substituted for such Series 1997-1 Support Letter of Credit
Provider's Series 1997-1 Support Letter of Credit. If such a successor
institution or such other substitute credit enhancement is obtained, each of
the Lessees and RFC and, if applicable, such successor institution shall (i)
sign such documents and instruments as shall be appropriate to evidence such
successor institution's issuance of a substitute letter of credit or such other
substitute credit enhancement, (ii) return to such Series 1997-1 Support Letter
of
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<PAGE> 13
Credit Provider its then outstanding Series 1997-1 Support Letter of Credit and
(iii) deliver to the Series 1997-1 Letter of Credit Provider a substitute
letter of credit having terms substantially identical to the then outstanding
Series 1997-1 Support Letter of Credit but expiring on the Scheduled Support
Expiration Date as so extended and with such successor institution as the
issuer thereof or deliver such other substitute credit enhancement in form and
substance acceptable to the Series 1997-1 Letter of Credit Provider in its sole
discretion.
(e) Neither any extension of the Scheduled Support Expiration Date
with respect to any Series 1997-1 Support Letter of Credit pursuant to Section
2.1(c) nor any substitution of any Series 1997-1 Support Letter of Credit
pursuant to Section 2.1(d) shall be effective unless, on the date of such
extension of the Scheduled Support Expiration Date or substitution of any
Series 1997-1 Support Letter of Credit, (i) the conditions with respect to such
extension or substitution have been satisfied or waived, and (ii) the related
Series 1997-1 Support Letter of Credit Provider has not notified the Series
1997-1 Liquidity Agent in writing on such date of such non-extension or
non-substitution.
(f) If (i) Republic, acting on behalf of the Lessees, and RFC do not
request an extension of the Scheduled Support Expiration Date with respect to
any Series 1997-1 Support Letter of Credit or (ii) the related Series 1997-1
Support Letter of Credit Provider does not consent to the extension of its
Scheduled Support Expiration Date pursuant to paragraph (c) of this Section 2.1
and the Lessees, Republic and RFC do not obtain a successor Series 1997-1
Support Letter of Credit Provider or other substitute support credit
enhancement prior to the date which is forty-five (45) days prior to the
Scheduled Support Expiration Date, then Republic, acting on behalf of the
Lessees, and RFC shall immediately notify the Enhancement Agent and the
Enhancement Agent, pursuant to the terms of the Series 1997-1 Supplement, is to
execute and deliver to the Series 1997-1 Letter of Credit Provider a
certificate notifying the Series 1997-1 Letter of Credit Provider of the
nonextension of a Series 1997-1 Support Letter of Credit and immediately upon
the receipt of such certificate the Series 1997-1 Letter of Credit Provider,
pursuant to the terms of the Series 1997-1 Letter of Credit Agreement, is to
execute and deliver to the Series 1997-1 Support Letter of Credit Provider
whose Series 1997-1 Support Letter of Credit has not been extended or
substituted a Certificate of Support Termination Demand for Nonextension
substantially in the form attached as Annex D to the related Series 1997-1
Support Letter of Credit and the Series 1997-1 Support Letter of Credit
Provider shall deliver to the Series 1997-1 Letter of Credit Provider the
amount set forth in such Certificate of Support Termination Demand for
Nonextension.
(g) If an institution is obtained to succeed any Series 1997-1
Support Letter of Credit Provider or other substitute credit enhancement is
obtained to replace the related Series 1997-1 Support Letter of Credit pursuant
to this Section 2.1, then the Lessees and RFC and, if applicable, such
successor institution shall (a) sign such documents and instruments as shall be
appropriate to evidence such successor institution's issuance of a substitute
letter of credit or such other substitute credit enhancement, (b) cause the
return to such Series 1997-1 Support
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<PAGE> 14
Letter of Credit Provider of its then outstanding Series 1997-1 Support Letter
of Credit and (c) deliver to the Series 1997-1 Letter of Credit Provider a
substitute letter of credit having terms identical to the then outstanding
Series 1997-1 Support Letter of Credit but with such successor institution as
the issuer thereof or deliver such other substitute credit enhancement in form
and substance acceptable to the Series 1997-1 Letter of Credit Provider in its
sole discretion. RFC shall provide prompt written notice to each Rating Agency
and the Dealers of the appointment of any such successor institution in
accordance with the terms of this Agreement.
Section 2.2. Disbursements. (a) Upon presentation by the Series
1997-1 Letter of Credit Provider to each Series 1997-1 Support Letter of Credit
Provider of a certificate in the form of Annex A to its Series 1997-1 Support
Letter of Credit, each Series 1997-1 Support Letter of Credit Provider shall
make a disbursement (each such disbursement, a "Support Credit Disbursement")
in an amount equal to its Pro Rata Share (as defined below) of the amount drawn
upon the Series 1997-1 Letter of Credit (as determined by the Series 1997-1
Letter of Credit Provider) as a Series 1997-1 LOC Credit Disbursement at the
time, in the manner and to the account specified in its Series 1997-1 Support
Letter of Credit. "Pro Rata Share" means, for purposes of this Agreement, with
respect to any Series 1997-1 Support Letter of Credit Provider as of any date,
the fraction (expressed as a percentage) obtained by dividing such Series
1997-1 Support Letter of Credit Provider's Support Letter of Credit Amount as
of such date by an amount equal to the sum of (i) the aggregate amount of the
Support Letter of Credit Amounts of all the Series 1997-1 Support Letter of
Credit Providers under their respective Series 1997-1 Support Letters of Credit
as of such date plus (ii) the Available GM Support Amount as of such date;
provided that only for purposes of calculating the Pro Rata Share with respect
to any Series 1997-1 Support Letter of Credit Provider as of any date, the
Support Letter of Credit Amount as of such date of any Series 1997-1 Support
Letter of Credit Provider who has not paid any Support Credit Demand, Support
Liquidity Demand, Support Termination Demand or Support Termination Demand for
Nonextension (as such terms are defined in Exhibit A hereto) payable as of such
date (and the Available GM Support Amount as of such date of the GM Series
1997-1 Support Provider if the GM Series 1997-1 Support Provider has not paid
any Support Credit Demand, Support Liquidity Demand, Support Termination Demand
or Support Reduction Demand payable as of such date) will be deemed to be
reduced (for calculation purposes only) by the amount of such Support Credit
Demand, Support Liquidity Demand, Support Termination Demand, Support
Termination Demand for Nonextension or Support Reduction Demand in making such
calculation (provided that the foregoing calculation shall not in any manner
reduce the actual liability of any Series 1997-1 Support Letter of Credit
Provider or the GM Series 1997-1 Support Provider in respect of any failure to
pay any such Support Credit Demand, Support Liquidity Demand, Support
Termination Demand, Support Termination Demand for Nonextension or Support
Reduction Demand).
(b) Upon presentation by the Series 1997-1 Letter of Credit Provider
to each Series 1997-1 Support Letter of Credit Provider of a certificate in the
form of Annex B to its Series 1997-1 Support Letter of Credit, each Series
1997-1 Support Letter of Credit Provider shall make
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<PAGE> 15
a disbursement (each such disbursement, a "Support Liquidity Disbursement") in
an amount equal to its Pro Rata Share of the amount drawn upon the Series
1997-1 Letter of Credit (as determined by the Series 1997-1 Letter of Credit
Provider) as a Series 1997-1 LOC Liquidity Disbursement at the time, in the
manner and to the account specified in its Series 1997-1 Support Letter of
Credit.
(c) Upon presentation by the Series 1997-1 Letter of Credit Provider
to each Series 1997-1 Support Letter of Credit Provider of a certificate in the
form of Annex C to its Series 1997-1 Support Letter of Credit, each Series
1997-1 Support Letter of Credit Provider shall make a disbursement in an amount
equal to its Pro Rata Share of the amount drawn upon the Series 1997-1 Letter
of Credit (as determined by the Series 1997-1 Letter of Credit Provider) as a
Series 1997-1 LOC Termination Disbursement, in the manner and to the account
specified in its Series 1997-1 Support Letter of Credit.
(d) Upon presentation by the Series 1997-1 Letter of Credit Provider
to any Series 1997-1 Support Letter of Credit Provider of a certificate in the
form of Annex D to its Series 1997-1 Support Letter of Credit, such Series
1997-1 Support Letter of Credit Provider shall make a disbursement in an amount
equal to its Series 1997-1 Support Letter of Credit Amount as of the date of
such certificate, in the manner and to the account specified in its Series
1997-1 Support Letter of Credit (any such disbursement (or any disbursement
described in Section 2.2(c)), a "Support Termination Disbursement").
Section 2.3. Reimbursement. (a) Each Lessee agrees to pay to each
Series 1997-1 Support Letter of Credit Provider on demand (which demand may be
made upon Republic) on or after each date on which such Series 1997-1 Support
Letter of Credit Provider shall make any Support Credit Disbursement under its
Series 1997-1 Support Letter of Credit or on which any amount shall be
converted to a Support Credit Disbursement pursuant to Section 2.18 (provided,
that with respect to any Support Credit Disbursement that is with respect to a
Series 1997-1 LOC Credit Disbursement for amounts owed by National under
Section 5.10 of the Series 1997-1 Supplement, such agreement is made solely by
National), (A) an amount equal to the portion of such Support Credit
Disbursement allocable to amounts due and payable by such Lessee under the
Series 1997 Lease as determined by the Enhancement Agent upon any such demand
by such Series 1997-1 Letter of Credit Provider or, in the event such Support
Credit Disbursement is in respect of amounts owed by National under Section
5.10 of the Series 1997-1 Supplement, an amount equal to such amount owed by
National, plus (B) interest on any amount remaining unpaid by such Lessee to
such Series 1997-1 Support Letter of Credit Provider under clause (A) above,
from (and including) the date such amount is paid by such Series 1997 Support
Letter of Credit Provider under its Series 1997-1 Support Letter of Credit (or,
if earlier, the date such Series 1997-1 Support Letter of Credit Provider is
obligated to pay interest to the Series 1997-1 Letter of Credit Provider in
respect of the Series 1997-1 LOC Credit Disbursement which resulted in such
Support Credit Disbursement), or on the date of such conversion, as the case
may be, until payment in full thereof (after as well as before judgment), at a
rate equal to the
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<PAGE> 16
Base Rate from time to time in effect (as calculated in accordance with Section
2.4, including paragraph (f) thereof), such interest to be payable on demand
(which demand may be made upon Republic) or, if prior to such demand, on the
third (3rd) Business Day of each calendar quarter.
(b) Any Support Liquidity Disbursement paid under the Series 1997-1
Support Letters of Credit shall be due from RFC to the extent of funds
available for the payment of Support Liquidity Disbursements, in accordance
with the terms of the Series 1997-1 Collateral Agreement, on each date on which
principal in respect of a Liquidity Advance is being repaid, in an amount equal
to (i) the unpaid balance of such Support Liquidity Disbursement (or if such
repayment is due to a Borrowing Base Deficiency, the amount necessary to cure
such Borrowing Base Deficiency), plus (ii) interest on such Support Liquidity
Disbursement remaining unpaid (or portion thereof being repaid if not at the
end of an Interest Period) by RFC from (and including) the date the Series
1997-1 Support Letter of Credit Providers pay such Support Liquidity
Disbursement (or, if earlier, the date such Series 1997-1 Support Letter of
Credit Provider is obligated to pay interest to the Series 1997-1 Letter of
Credit Provider in respect of the Series 1997-1 LOC Liquidity Disbursement
which resulted in such Support Liquidity Disbursement) until payment in full
thereof (after as well as before judgment) or until the date such Support
Liquidity Disbursement is converted to a Support Credit Disbursement pursuant
to Section 2.18 (but solely to the extent such Support Liquidity Disbursement
is converted to a Support Credit Disbursement) at the interest rate applicable
to such Support Liquidity Disbursement in accordance with Section 2.4.
(c) In the event of a Support Termination Disbursement under a Series
1997-1 Support Letter of Credit in accordance with Section 2.2(c) or Section
2.2(d), RFC agrees to pay to the Series 1997-1 Support Letter of Credit
Provider with respect to such Series 1997-1 Support Letter of Credit, not later
than the Scheduled Support Expiration Date therefor (but subject to the
immediately succeeding sentence), an amount equal to:
(i) a percentage of the amount of such Support Termination
Disbursement from time to time outstanding (the "RFC Termination
Reimbursement Share") equal to the product of (A) the quotient (but no
greater than one) obtained by dividing (1) the result (but no less
than zero) of (x) the Aggregate Face Amount minus (y) the Aggregate
Liquidity Commitment net of Liquidity Advances Outstanding by (2) the
Series 1997-1 Letter of Credit Amount, in each case immediately prior
to such Support Termination Disbursement and (B) 100,
plus
(ii) interest on the RFC Termination Reimbursement Share
remaining unpaid by RFC from the date of payment of such Support
Termination Disbursement by such Series 1997-1 Support Letter of
Credit Provider or, if earlier, the date such Series 1997-1 Support
Letter of Credit Provider is obligated to pay interest to the Series
1997-1 Letter
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<PAGE> 17
of Credit Provider in respect of the Series 1997-1 LOC Termination
Disbursement which resulted in such Support Termination Disbursement
until payment in full of the RFC Termination Reimbursement Share by
RFC to the Series 1997-1 Support Letter of Credit Providers (after as
well as before judgment), at the interest rate applicable to such
Support Termination Disbursement in accordance with Section 2.4.
Such amounts shall be considered due from RFC to the extent of funds available
for the payment of the RFC Termination Reimbursement Share of such Support
Termination Disbursement in accordance with the terms of the Series 1997-1
Collateral Agreement and in any event shall be paid in full within eighteen
(18) months after the making of such Support Termination Disbursement. For
purposes hereof, Support Liquidity Disbursements Outstanding shall include the
RFC Termination Reimbursement Share of any Support Termination Disbursement.
In the event of a Support Termination Disbursement under a Series
1997-1 Support Letter of Credit in accordance with Section 2.2(c) or Section
2.2(d), each Lessee agrees to pay to the Series 1997-1 Support Letter of Credit
Provider with respect to such Series 1997-1 Support Letter of Credit an amount
equal to:
(x) a percentage of the amount of such Support Termination
Disbursement that is allocable, as determined by the Enhancement
Agent, to amounts due and payable by such Lessee under the Series 1997
Lease (the "Lessee Termination Reimbursement Share") and which in the
aggregate for all such Lessees is equal to 100% minus the percentage
for computing the RFC Termination Reimbursement Share defined in
clause (i) above;
plus
(y) interest on the Lessee Termination Reimbursement Share
allocable to such Lessee remaining unpaid by such Lessee from the date
of payment of such Support Termination Disbursement by such Series
1997-1 Support Letter of Credit Provider (or, if earlier, the date
such Series 1997-1 Support Letter of Credit Provider is obligated to
pay interest to the Series 1997-1 Letter of Credit Provider in respect
of the Series 1997-1 LOC Termination Disbursement which resulted in
such Support Termination Disbursement) until payment in full of the
Lessee Termination Reimbursement Share by such Lessee to the Series
1997-1 Support Letter of Credit Providers (after as well as before
judgment), at the interest rate applicable to such Support Termination
Disbursement in accordance with Section 2.4.
Such amounts shall be considered immediately due and payable from each such
Lessee except with respect to the Lessee Termination Reimbursement Share of any
Support Termination Disbursement that is due and payable pursuant to Section
5.11(c) of the Series 1997-1 Supplement, which amounts shall be due and payable
30 days (or if such 30th day is not a Business Day, the immediately following
Business Day) following the date of payment. For
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<PAGE> 18
purposes hereof, Support Credit Disbursements Outstanding shall include the
Lessee Termination Reimbursement Share of any Support Termination Disbursement.
(d) Earnings from investments in the Series 1997-1 Cash Collateral
Account shall be paid to (i) the Series 1997-1 Support Letter of Credit
Providers and the GM Series 1997-1 Support Provider on a pro rata basis based
upon their respective payments to such account (as determined by the
Enhancement Agent) to the extent accruing on the amount of a Support
Termination Disbursement (as defined in Section 2.2(d) with respect to any
Series 1997-1 Support Letter of Credit Provider and as defined in Section
2.2(c) of the GM Series 1997-1 Support Agreement with respect to the GM Series
1997-1 Support Provider) until the earlier of the date on which each of the
Series 1997-1 Support Letter of Credit Providers and the GM Series 1997-1
Support Provider has been reimbursed for such amount or the date interest
begins to accrue on the amount of such Support Termination Disbursement (as
defined in Section 2.2(d) with respect to any Series 1997-1 Support Letter of
Credit Provider and as defined in Section 2.2(c) of the GM Series 1997-1
Support Agreement with respect to the GM Series 1997-1 Support Provider), and
(ii) to RFC or the related Lessee, as applicable, otherwise. Any amounts
(other than earnings on investments) released from the Series 1997-1 Cash
Collateral Account in accordance with Section 5.13(d) of the Series 1997-1
Supplement shall be paid to the Series 1997-1 Support Letter of Credit
Providers and the GM Series 1997-1 Support Provider on a pro rata basis (as
determined by the Enhancement Agent) to the extent any of the Series 1997-1
Support Letter of Credit Providers or the GM Series 1997-1 Support Provider has
not been fully reimbursed by RFC and the Lessees under clauses (a) and (c)
above for Support Credit Disbursements or a Support Termination Disbursement
payable to the Series 1997-1 Support Letter of Credit Providers or Section 2.3
(a) and (c) of the GM Series 1997-1 Support Reimbursement Agreement for Support
Credit Disbursements or Support Termination Disbursements payable to the GM
Series 1997-1 Support Provider (as such terms are defined thereunder). Upon
reimbursement in full to the Series 1997-1 Support Letter of Credit Providers
of amounts owed under clauses (a) and (c) above and to the GM Series 1997-1
Support Letter of Credit Provider under the GM Series 1997-1 Support
Reimbursement Agreement of such amounts owed to the GM Series 1997-1 Support
Provider under Sections 2.3(a) and (c) of the GM Series 1997-1 Support
Reimbursement Agreement, amounts released from the Series 1997-1 Cash
Collateral Account in accordance with Section 5.13(d) of the Series 1997-1
Supplement shall be paid to RFC and the Lessees on a pro rata basis up to the
amounts paid by RFC and the Lessees as reimbursement for Support Termination
Disbursements hereunder and Support Termination Disbursements under the Series
1997-1 GM Support Reimbursement Agreement.
(e) After a Support Termination Disbursement has been made, any
withdrawals made by the Enhancement Agent from the Series 1997-1 Cash
Collateral Account in respect of a Series 1997-1 Lease Payment Deficit shall be
reimbursed to the Series 1997-1 Cash Collateral Account in accordance with
Section 5.2 of the Series 1997-1 Supplement.
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<PAGE> 19
Section 2.4. Advances; Interest. (a) Each Support Liquidity
Disbursement and the RFC Termination Reimbursement Share of each Support
Termination Disbursement made by the Series 1997-1 Support Letter of Credit
Providers shall constitute an advance to RFC which shall initially be a Base
Rate Advance in the amount of any such Support Disbursement.
(b) So long as no Event of Default or Potential Event of Default (as
such terms are defined in Section 2.17) then exists, (i) RFC, in the case of a
Support Liquidity Disbursement or the RFC Termination Reimbursement Share of a
Support Termination Disbursement, (ii) Republic, in the case of a Support
Termination Disbursement pursuant to Section 5.11 of the Series 1997-1
Supplement resulting from the downgrade of the Series 1997-1 Letter of Credit
Provider and (iii) Republic (on behalf of the Lessees), in the case of a
Support Credit Disbursement that was a Support Liquidity Disbursement converted
to a Support Credit Disbursement pursuant to Section 2.18, may from time to
time elect to have such Support Disbursement that is deemed to be a Base Rate
Advance pursuant to subsection (a) above converted into a Eurodollar Advance
with an Interest Period as specified by RFC or Republic, as the case may be, by
notice to the Series 1997-1 Support Letter of Credit Providers, stating the
amount of such Eurodollar Advance and the first day and length of the Interest
Period for such Eurodollar Advance, received by the Series 1997-1 Support
Letter of Credit Providers before 11:00 a.m. (New York City time) not less than
three (but in any event not more than five) Business Days prior to the first
day of such Interest Period.
(c) With respect to each Eurodollar Advance hereunder, such
Eurodollar Advance shall automatically be converted to a Base Rate Advance at
the end of each Interest Period therefor unless RFC or Republic, as applicable,
shall have given the Series 1997-1 Support Letter of Credit Providers a notice
requesting an additional Eurodollar Advance to be made upon the expiration of
the Interest Period of the Eurodollar Advance Outstanding and no Event of
Default or Potential Event of Default hereunder then exists. Such notice shall
be given by RFC or Republic and received by the Series 1997-1 Support Letter of
Credit Providers not later than 11:00 a.m. (New York City time) not less than
three (3) (but in any event not more than five (5)) Business Days prior to the
expiration of the Interest Period of the Eurodollar Advance Outstanding.
(d) RFC shall pay accrued interest in respect of each Base Rate
Advance and Eurodollar Advance hereunder in arrears (whether by demand or
otherwise) on each payment date as follows: (i) with respect to any Base Rate
Advance, on the third Business Day of each calendar quarter, beginning with the
first such date to occur after such Base Rate Advance is made; (ii) with
respect to any Eurodollar Advance, on the last day of each applicable Interest
Period (and, if such Interest Period shall exceed three months, on the
three-month anniversary of the commencement of such Interest Period); (iii) in
the case of any payment or prepayment, in whole or in part, of principal
outstanding on any Base Rate Advance or Eurodollar Advance, on the amount and
on the date of such payment or prepayment; (iv) with respect to any Base Rate
Advance converted into a Eurodollar Advance on a day when interest would not
otherwise have
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<PAGE> 20
been payable pursuant to the preceding clause (i), on the date of such
conversion; and (v) on that portion of any Base Rate Advance or Eurodollar
Advance which is due and payable upon demand or accelerated pursuant to any
provision of this Agreement, immediately upon such demand or acceleration. The
interest payable on any Base Rate Advance hereunder is equal to the aggregate
interest accrued for the period during which such Base Rate Advance has been
Outstanding, calculated as the product of, with respect to each day during the
term of such Base Rate Advance, (A) the Base Rate for such day multiplied by
(B) the unpaid principal amount of such Base Rate Advance. The interest
payable on any Eurodollar Advance hereunder is equal to the aggregate interest
accrued for the period during which such Eurodollar Advance has been
Outstanding, calculated as the product of, with respect to each day during the
term of such Eurodollar Advance, (A) the Eurodollar Rate (Reserve Adjusted) for
the Interest Period within which such day occurs multiplied by (B) the unpaid
principal amount of such Eurodollar Advance. Interest on each Support
Disbursement shall begin to accrue on the date on which such Support
Disbursement is made.
(e) Interest accruing based on the Base Rate shall be computed on the
basis of the actual number of days elapsed and a 365 (or, if applicable, 366)
day year. Interest accruing based on the Eurodollar Rate (Reserve Adjusted)
shall be computed on the basis of the actual number of days elapsed and a 360
day year. The Series 1997-1 Support Letter of Credit Providers shall be
entitled to receive notice of changes in the Eurodollar Rate pursuant to the
Series 1997-1 Liquidity Agreement.
(f) After the date on which any Support Disbursement is due and
payable (whether on the last day of an Interest Period or otherwise), or after
any other monetary obligation of any of the Lessees, RFC or Republic under this
Agreement is due and payable, each such Lessee, RFC or Republic, as the case
may be, shall pay, but only to the extent permitted by law, interest (after as
well as before judgment) on the principal amount of such Support Disbursement
then outstanding (whether or not the same shall then be due and payable) and on
each such other monetary obligation of such Lessee, RFC or Republic hereunder
(but only if the same shall then be due and payable in accordance with the
terms of this Agreement) at a rate per annum equal to a margin of 2% per annum
plus (i) in the case of any Support Disbursements then outstanding and in
respect of which Interest Periods remain in effect, the respective interest
rates then applicable to such Support Disbursements, and (ii) in all other
cases, a rate per annum equal to the rate per annum that would then be in
effect with respect to a Base Rate Advance.
Section 2.5. Prepayments. (a) Any Support Disbursements may be
prepaid in whole or in part at any time on a pro rata basis, provided that (i)
each prepayment of a Support Disbursement shall be accompanied by the payment
of accrued interest on the amount prepaid to but not including the date of
repayment and shall be made prior to 11:00 a.m. New York City time on such
date and (ii) if any portion of a Eurodollar Advance hereunder is repaid on a
day other than the last day of an Interest Period applicable thereto, such
prepayment shall be accompanied by the payment of any amount owing under
Section 2.13.
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(b) If Commercial Paper Notes can be issued on any day when Support
Liquidity Disbursements are Outstanding, then RFC agrees to issue such
Commercial Paper Notes to the extent it is permitted to do so under the
Depositary Agreement and the Series 1997-1 Liquidity Agreement and, if any of
the proceeds of such Commercial Paper Notes are not necessary to repay in full
all Commercial Paper Notes maturing on such day, for pro rata application to
(i) reimburse the Liquidity Lenders for Liquidity Advances made under the
Series 1997-1 Liquidity Agreement on such day and (ii) reimburse the Series
1997-1 Support Letter of Credit Providers for any Support Liquidity
Disbursement made on such day on a pro rata basis, then RFC shall immediately
use such proceeds not necessary for any of the foregoing purposes to (A) prepay
pro rata any Support Liquidity Disbursements Outstanding hereunder made as a
Base Rate Advance and any Base Rate Advances Outstanding under the Series
1997-1 Liquidity Agreement and (B) repay pro rata any Support Liquidity
Disbursements Outstanding hereunder made as a Eurodollar Advance and any
Eurodollar Advances Outstanding under the Series 1997-1 Liquidity Agreement
each with an Interest Period ending on such day. RFC shall not be obligated to
issue Commercial Paper Notes on such day to the extent the proceeds are not
necessary to make all of the repayments and reimbursements referred to above or
to the extent RFC would incur amounts under Section 2.13 from the prepayment of
any Eurodollar Advance hereunder. Each such repayment shall be accompanied by
accrued interest on the amount repaid to the date of repayment.
(c) Support Liquidity Disbursements shall be prepaid, together with
interest accrued thereon and any amounts payable in respect thereto on any date
on which Borrowing Base Deficiency exists on a pro rata basis with Liquidity
Advances in the manner and to the extent provided in Section 4.1.2(b) of the
Series 1997-1 Liquidity Agreement.
(d) Any prepayments payable by RFC pursuant to this Section 2.5 shall
be, in each case, an application of funds in accordance with Section 2.01 or
5.02(b) of the Series 1997-1 Collateral Agreement.
Section 2.6. Facility Fees. Republic hereby agrees to pay to each of
the Series 1997-1 Support Letter of Credit Providers a letter of credit
commission (the "Support Letter of Credit Facility Fee"), as set forth in the
fee letters between Republic and each Series 1997-1 Support Letter of Credit
Provider, dated as of even date herewith.
Section 2.7. No Liability of Series 1997-1 Support Letter of Credit
Providers. RFC, the Series 1997-1 Lessees and Republic each acknowledge that
the Series 1997-1 Support Letter of Credit Providers are not responsible for
any risks of acts or omissions of the Series 1997-1 Letter of Credit Providers
or any other beneficiary or transferee of the Series 1997-1 Support Letters of
Credit with respect to its use of the Series 1997-1 Support Letters of Credit.
Neither the Series 1997-1 Support Letter of Credit Providers nor any of their
respective employees, officers or directors shall be liable or responsible for:
(a) the use which may be made of the Series 1997-1 Support Letters of Credit or
any acts or omissions of the Series 1997-1 Letter of Credit Provider
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and any transferee in connection therewith; (b) the validity or genuineness of
documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, fraudulent or forged; (c) payment by the
Series 1997-1 Support Letter of Credit Providers against presentation of
documents which do not comply with the terms of the Series 1997-1 Support
Letters of Credit including failure of any documents to bear any reference or
adequate reference to the Series 1997-1 Support Letters of Credit; or (d) any
other circumstances whatsoever in making or failing to make payment under the
Series 1997-1 Support Letters of Credit; provided, however, that the Series
1997-1 Support Letter of Credit Providers shall be liable to RFC and each
Lessee, to the extent of any direct, as opposed to consequential, damages
suffered by RFC or any Lessee which were caused by (i) any Series 1997-1
Support Letter of Credit Provider's willful misconduct or gross negligence in
determining whether documents presented under the related Series 1997-1 Support
Letter of Credit comply with the terms of the Series 1997-1 Support Letter of
Credit, (ii) any Series 1997-1 Support Letter of Credit Provider's gross
negligence in failing to make or willful failure to make lawful payment under
the related Series 1997-1 Support Letter of Credit after the presentation to
such Series 1997-1 Support Letter of Credit Provider by the Series 1997-1
Letter of Credit Provider of a certificate strictly complying with the terms
and conditions of the Series 1997-1 Support Letters of Credit or (iii) any
Series 1997-1 Support Letter of Credit Provider's gross negligence or willful
misconduct in making or failing to make payment under the related Series 1997-1
Support Letter of Credit under any other circumstances whatsoever. In
furtherance and not in limitation of the foregoing, the Series 1997-1 Support
Letter of Credit Providers may accept documents that appear on their face, to
be in order, without responsibility for further investigation.
Section 2.8. Surrender of the Series 1997-1 Support Letters of
Credit. Provided that any Series 1997-1 Support Letter of Credit Provider is
not then in default under the related Series 1997-1 Support Letter of Credit by
reason of its having wrongfully failed to honor a demand for payment previously
made by the Series 1997-1 Letter of Credit Provider under such Series 1997-1
Support Letter of Credit, such Series 1997-1 Support Letter of Credit Provider
shall instruct the Series 1997-1 Letter of Credit Provider to surrender, and
the Series 1997-1 Letter of Credit Provider shall surrender, the related
Series 1997-1 Support Letter of Credit to such Series 1997-1 Support Letter of
Credit Provider on the earliest of (i) the date on which such Series 1997-1
Support Letter of Credit Provider honors a Support Termination Demand or
Support Termination Demand for Nonextension (as such terms are defined in
Exhibit A hereto) presented thereunder to the extent of its full Support Letter
of Credit Amount as in effect on such date, (ii) the date on which notice is
received by such Series 1997-1 Support Letter of Credit Provider from the
Series 1997-1 Letter of Credit Provider that an alternate letter of credit or
other form of credit enhancement support has been substituted for its Series
1997-1 Support Letter of Credit and such alternate letter of credit or other
form of credit enhancement support has been received by the Series 1997-1
Letter of Credit Provider, (iii) the date on which the Series 1997-1 Support
Letter of Credit Provider receives written notice from the Series 1997-1 Letter
of Credit Provider substantially in the form attached as Annex F to the related
Series 1997-1 Support Letter of Credit that (v) RFC is no longer permitted to
issue Commercial Paper Notes under the terms of
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<PAGE> 23
the Series 1997-1 Liquidity Agreement and the Depositary Agreement, (w) the
Aggregate Liquidity Commitment of the Liquidity Lenders to make Liquidity
Advances is terminated, (x) there are no Liquidity Advances or other
obligations supported by its Series 1997-1 Support Letter of Credit outstanding
under the Series 1997-1 Liquidity Agreement, (y) there are no longer any
Commercial Paper Notes Outstanding and (z) the Series 1997-1 Letter of Credit
has expired or been terminated, and (iv) the Support Letter of Credit
Expiration Date.
Section 2.9. Conditions Precedent to Issuance. The following
constitute conditions precedent to the obligation of each Series 1997-1 Support
Letter of Credit Provider to issue its Series 1997-1 Support Letter of Credit
(provided, that such conditions will be deemed to be satisfied upon the
issuance of such Series 1997-1 Support Letter of Credit):
(i) On the date of issuance of the Series 1997-1 Support
Letters of Credit, each condition precedent to (A) the issuance of the
Series 1997-1 Note under the Series 1997-1 Note Purchase Agreement and
the Series 1997-1 Supplement, (B) the initial Series 1997 Lease
Advance under the Series 1997 Lease and (C) the effectiveness of the
Series 1997-1 Note Purchase Agreement and the Series 1997-1 Liquidity
Agreement shall be satisfied.
(ii) On the date of issuance of the Series 1997-1 Support
Letters of Credit, all representations and warranties of each of the
Lessees and Republic contained in this Agreement and in each other
Related Document to which any of the Lessees or Republic is a party
shall be true and correct in all material respects immediately prior
to, and after giving effect to, the issuance of the Series 1997-1
Support Letters of Credit.
(iii) On the date of issuance of the Series 1997-1 Support
Letters of Credit, all representations and warranties of RFC contained
in this Agreement and in each other CP Program Document to which RFC
is a party shall be true and correct immediately prior to, and after
giving effect to, the issuance of the Series 1997-1 Support Letters of
Credit.
(iv) On the date of issuance of the Series 1997-1 Support
Letters of Credit, and after giving effect to the transactions
contemplated by this Agreement and the Series 1997-1 Support Letters
of Credit, there shall exist no Potential Event of Default or Event of
Default under this Agreement.
(v) The Series 1997-1 Support Letter of Credit Providers
shall each have received as of the Series 1997-1 Closing Date a copy
of the confirmation letter of S&P to the effect that the Commercial
Paper Notes shall have been given a rating of at least "A-1" by S&P,
which rating shall be in full force and effect.
(vi) The Series 1997-1 Support Letter of Credit Providers
shall each have received (A) copies of the opinions of counsel to
each of the Lessees, RFC, NFLP and Republic, addressed to each Series
1997-1 Support Letter of Credit Provider and
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<PAGE> 24
reasonably satisfactory in form and substance to each Series 1997-1
Support Letter of Credit Provider, (B) copies of any representation
letters or certificates (or similar documents) provided to the Rating
Agencies, the Trustee, any of the Lessees, RFC, or NFLP or Republic by
any Eligible Manufacturer with respect to its Manufacturer Program,
including any certified copies of any Manufacturer Program or any
Assignment and Nominee Agreements, (C) solely to the extent requested
by the Rating Agencies, copies of any favorable written opinion of
counsel to any Eligible Manufacturer covering the enforceability of
such Manufacturer Program by NFLP and the Trustee or any assignee
thereof against such Eligible Manufacturer or any other matter
addressed therein, (D) a certificate of an officer of each of the
Lessees, RFC and Republic dated the Series 1997-1 Closing Date and
certifying that attached thereto are true and complete copies of the
certificate of incorporation and by-laws of such Lessee, RFC or
Republic, as applicable, including any amendments thereto as of the
Series 1997-1 Closing Date, and (E) copies of certificates as to the
good standing of each of the Lessees, RFC and Republic from the
Secretary of State of its state of formation.
(vii) The Series 1997-1 Support Letter of Credit Providers
shall each have received from each of the Lessees, RFC and Republic
(A) a copy of the resolutions of its Board of Directors or other
governing body, certified as of the Series 1997-1 Closing Date by the
secretary or assistant secretary thereof, authorizing the execution,
delivery and performance of this Agreement (if applicable) and the
other Related Documents to which it is a party and the procurement of
the Series 1997-1 Support Letters of Credit and (B) an incumbency
certificate thereof with respect to its officers, agents or other
representatives authorized to execute this Agreement (if applicable)
and the Related Documents to which it is a party.
(viii) The Series 1997-1 Support Letter of Credit Providers
shall each be satisfied with the final terms and conditions of the
transactions contemplated hereby, including, without limitation, all
legal and tax aspects thereof; and all documentation relating to the
transactions shall be in form and substance satisfactory to each of
the Series 1997-1 Support Letter of Credit Providers.
(ix) The Series 1997-1 Support Letter of Credit Providers
shall each be satisfied with the corporate and legal structure and
capitalization of each of NFLP and RFC, including, without limitation,
the charter and bylaws or other organizational documents of each of
NFLP and RFC, as applicable, and each agreement or instrument relating
thereto.
(x) On the date of issuance of the Series 1997-1 Support
Letters of Credit, immediately prior to, and after giving effect to,
the issuance of the Series 1997-1 Support Letters of Credit, there
shall be no action, suit, investigation, litigation or proceeding
pending against or, to the knowledge of Republic, any Lessee, NFLP or
RFC, threatened against or affecting Republic, any Lessee, NFLP or
RFC, before any court or arbitrator or
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<PAGE> 25
any governmental body, agency or official that (A) would be reasonably
likely to have a Material Adverse Effect, or (B) which in any manner
draws into question the legality, validity or enforceability of this
Agreement or any Related Document, the consummation of the
transactions contemplated hereby or thereby, or the ability of
Republic, any Lessee, NFLP or RFC to comply with any of the respective
terms thereunder.
(xi) All governmental and third party consents and approvals
necessary in connection with this Agreement and the Series 1997-1
Support Letters of Credit or the transactions contemplated hereby or
thereby shall have been obtained (without the imposition of any
conditions that are not, in its reasonable judgment, acceptable to
each of the Series 1997-1 Support Letter of Credit Providers) and
shall remain in effect; all applicable waiting periods shall have
expired without any action being taken by any competent authority; and
no law or regulation shall be applicable that restrains, prevents or
imposes materially adverse conditions upon this Agreement or the
Series 1997-1 Support Letters of Credit or the transactions
contemplated hereby or thereby.
(xii) The Series 1997-1 Support Letter of Credit Providers
shall each have received such other documents (including, without
limitation, an executed copy (or duplicate thereof) of each other
Related Document) certificates, instruments, approvals or opinions as
each of the Series 1997-1 Support Letter of Credit Provider may
reasonably request.
(xiii) The following shall be true and correct (and each of
the Series 1997-1 Support Letter of Credit Providers shall have
received a certificate of each of the Lessees and NFLP as to the
following):
(A) Each Eligible Manufacturer Program shall be in
full force and effect, enforceable against the related
Manufacturer.
(B) Each of the Lessees and NFLP shall not have
sold, assigned, or otherwise encumbered any of the Vehicles
purchased or otherwise financed with the proceeds of the
Series 1997-1 Notes except as permitted under the Related
Documents.
(C) NFLP and each Lessee shall have assigned to the
Master Collateral Agent a first priority security interest in
their respective rights under the Manufacturer Programs and
amounts receivable from the Manufacturers pursuant to the
Manufacturer Programs.
(D) The Series 1997-1 Collateral Account and the
Commercial Paper Account shall have been established.
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<PAGE> 26
(xiv) The Series 1997-1 Support Letter of Credit Providers
shall each have received an Officer's Certificate, dated the Series
1997-1 Closing Date, from each Lessee and Republic, duly executed and
delivered by an Authorized Officer of such Lessee or Republic, as
applicable, in which such Lessee or Republic, as applicable, shall
have represented and warranted that the representations and warranties
of such Lessee or Republic, as applicable, in this Agreement and the
other Related Documents to which it is a party are true and correct as
of the Series 1997-1 Closing Date (in all material respects to the
extent any such representations and warranties do not incorporate a
materiality limitation in their terms) and that no Event of Default or
Potential Event of Default under this Agreement has occurred and is
continuing, and, at the time such Officer's Certificate is delivered,
each of the Series 1997-1 Support Letter of Credit Providers shall be
satisfied that such statements are in fact true and correct and (B) an
additional Officer's Certificate of Republic, dated as of the Series
1997-1 Closing Date, in which an Authorized Officer of Republic
certifies that attached thereto is a true, complete and correct copy
of the Credit Agreement as in effect as of the date of such
certificate, including any amendments, supplements, restatements or
other modifications thereto as of such date.
(xv) The Series 1997-1 Support Letter of Credit Providers
shall each have received a Series 1997-1 Closing Date Certificate,
dated the Series 1997-1 Closing Date, duly executed and delivered by
an Authorized Officer of RFC, in which RFC shall have represented and
warranted that the representations and warranties of RFC in the CP
Program Documents to which it is a party are true and correct as of
the Series 1997-1 Closing Date (in all material respects to the extent
any such representations and warranties do not incorporate a
materiality limitation in their terms) and that no Event of Default
or, to the best of such Authorized Officer's knowledge, Potential
Event of Default under this Agreement has occurred and is continuing,
and, at the time such certificate is delivered, each of the Series
1997-1 Support Letter of Credit Providers shall be satisfied that such
statements are in fact true and correct.
(xvi) The Series 1997-1 Support Letter of Credit Providers
shall each consent to the composition of the Board of Directors of RFC
and NFLP (including the Independent Directors), which consent shall
not be unreasonably withheld.
(xvii) The Series 1997-1 Support Letter of Credit Providers
shall each have received a certificate from each Lessee and each of
RFC, NFLP and Republic, in each case dated the Series 1997-1 Closing
Date, and duly executed by a Financial Officer of each Lessee, RFC,
NFLP and Republic, respectively, in scope and substance satisfactory
to each of the Series 1997-1 Support Letter of Credit Providers, to
the effect that each Lessee, RFC, NFLP and Republic, respectively,
will be solvent after giving effect to the transactions contemplated
by this Agreement, each of the other CP Program Documents
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and each of the other Related Documents and the issuance and sale of
the Commercial Paper Notes.
(xviii) The Series 1997-1 Support Letter of Credit Providers
shall each have received any fees and expenses due and payable
pursuant to Sections 2.6 and 4.2 or pursuant to any fee letter or
commitment letter entered into between Republic or any Affiliate
thereof with such Series 1997-1 Support Letter of Credit Provider in
connection with the transactions contemplated by this Agreement
(including all reasonable legal fees and expenses).
(xix) Each of the Lessees shall have acknowledged and
confirmed their respective grants to the Series 1997-1 Support Letter
of Credit Providers and the other Financing Sources (and any
Beneficiary as assignee thereof) under Sections 2.1 of the Master
Collateral Agency Agreement of a security interest in all Vehicles now
or hereafter purchased or otherwise financed with the proceeds of the
Series 1997-1 Notes and the Manufacturer Programs relating to such
Vehicles that are Program Vehicles, and the other Lessee Grantor
Master Collateral.
Section 2.10. Eurodollar Lending Unlawful. If any Series 1997-1
Support Letter of Credit Provider shall reasonably determine (which
determination shall, upon notice thereof to the Enhancement Agent, RFC,
Republic and the other Series 1997-1 Support Letter of Credit Providers, be
conclusive and binding on RFC, Republic and the Lessees absent manifest error)
that the introduction of or any change in or in the interpretation of any law
or regulation makes it unlawful, or any central bank or other Governmental
Authority asserts that it is unlawful, for such Series 1997-1 Support Letter of
Credit Provider to make, continue or maintain any Support Disbursement as, or
to convert any Support Disbursement into, a Eurodollar Advance, the obligation
of such Series 1997-1 Support Letter of Credit Provider to make, continue or
maintain or convert any such Support Disbursement as a Eurodollar Advance
shall, upon such determination, forthwith be suspended until such Series 1997-1
Support Letter of Credit Provider shall notify the Enhancement Agent, RFC,
Republic and the other Series 1997-1 Support Letter of Credit Providers that
the circumstances causing such suspension no longer exist, and RFC and the
Lessees shall immediately convert (in the manner provided for in Section 2.18)
all Eurodollar Advances of such Series 1997-1 Support Letter of Credit Provider
into Base Rate Advances at the end of the then current Interest Periods with
respect thereto or sooner, if required by such law or assertion.
Section 2.11. Deposits Unavailable. If any Series 1997-1 Support
Letter of Credit Provider shall have reasonably determined that (a) (i) Dollar
deposits in the relevant amount and for the relevant Interest Period are not
available to all Reference Lenders in the relevant market or (ii) by reason of
circumstances affecting all Reference Lenders' relevant market, adequate means
do not exist for ascertaining the interest rate applicable hereunder to
Eurodollar Advances or (b) the Series 1997-1 Majority Credit Enhancers have
notified the Enhancement Agent, RFC
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and Republic that, with respect to any interest rate otherwise applicable
hereunder to any Eurodollar Advances the Interest Period for which has not then
commenced, such interest rate will not adequately reflect the cost to such
Series 1997-1 Majority Credit Enhancers of making, funding or maintaining their
respective Eurodollar Advances for such Interest Period, then, upon notice from
such Series 1997-1 Support Letter of Credit Provider (in the case of clause
(a)) or such Series 1997-1 Majority Credit Enhancers (in the case of clause
(b)) to RFC and Republic, the obligations of all Series 1997-1 Support Letter
of Credit Providers under Section 2.2 and Section 2.18 to make or continue any
Support Disbursement as, or to convert any Support Disbursement into,
Eurodollar Advances shall forthwith be suspended until such Series 1997-1
Support Letter of Credit Provider or Series 1997-1 Majority Credit Enhancers,
as the case may be, shall notify RFC and Republic that the circumstances
causing such suspension no longer exist.
Section 2.12. Increased Costs, etc. RFC, solely with respect to
Support Liquidity Disbursements and the RFC Termination Reimbursement Share of
Support Termination Disbursements, and the Lessees, with respect to Support
Credit Disbursements and the Lessee Termination Reimbursement Share of Support
Termination Disbursements, agree to reimburse each Series 1997-1 Support Letter
of Credit Provider for any increase in the cost to such Series 1997-1 Support
Letter of Credit Provider of, or any reduction in the amount of any sum
receivable by such Series 1997-1 Support Letter of Credit Provider, including
reductions in the rate of return on such Series 1997-1 Support Letter of Credit
Provider's capital, in respect of, making, continuing or maintaining (or of its
obligation to make, continue or maintain) any Support Disbursements as, or of
converting (or of its obligation to convert) any Support Disbursements into,
Eurodollar Advances that arise in connection with any change in, or the
introduction, adoption, effectiveness, interpretation or reinterpretation or
phase-in, in each case, after the date hereof of, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other Governmental Authority,
except for such changes with respect to increased capital costs and taxes which
are governed by Sections 2.14 and 2.15, respectively; provided, however, that
RFC and the Lessees shall have no obligation to pay any such additional amount
under this Section 2.12 with respect to any day or days unless such Series
1997-1 Support Letter of Credit Provider shall have notified RFC with respect
to any Support Liquidity Disbursements and any RFC Termination Reimbursement
Share of Support Termination Disbursements and Republic with respect to any
Support Credit Disbursements and any Lessee Termination Reimbursement Share of
Support Termination Disbursements and any other circumstances resulting in any
such increased cost or reduced amount of return of its demand therefor within
forty-five (45) days of the date upon which such Series 1997-1 Support Letter
of Credit Provider has obtained audited information with respect to the fiscal
year of such Series 1997-1 Support Letter of Credit Provider in which such day
or days occurred. Each such demand shall be provided to RFC and/or Republic,
as applicable, in writing, and shall state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate such Series
1997-1 Support Letter of Credit Provider for such increased cost or reduced
amount or return. Such additional amounts shall be payable by
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<PAGE> 29
RFC with respect to any Support Liquidity Disbursements and any RFC Termination
Reimbursement Share of Support Termination Disbursements and the Lessees on a
pro rata basis with respect to any Support Credit Disbursements and any Lessee
Termination Reimbursement Share of Support Termination Disbursements directly
to such Series 1997-1 Support Letter of Credit Provider within five (5)
Business Days of its receipt of such notice, and such notice shall, in the
absence of manifest error, be conclusive and binding on RFC and the Lessees.
Section 2.13. Funding Losses. In the event any Series 1997-1 Support
Letter of Credit Provider shall incur any loss or expense (including any loss
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Series 1997-1 Support Letter of Credit Provider to
make, continue or maintain any portion of the principal amount of any Support
Disbursement as, or to convert any portion of the principal amount of any
Support Disbursement into, a Eurodollar Advance) as a result of
(a) any conversion or repayment or prepayment (for any
reason, including, without limitation, as a result of the acceleration
of the maturity of a Eurodollar Advance or the assignment of a
Eurodollar Advance) of the principal amount of any Eurodollar Advance
on a date other than the scheduled last day of the Interest Period
applicable thereto;
(b) any Support Disbursement not being made or maintained as
a Eurodollar Advance in accordance with Sections 2.4(b) and (c); or
(c) any Support Disbursement not being continued as, or
converted into, Eurodollar Advance in accordance with the notice of
conversion therefor,
then, upon the written notice of such Series 1997-1 Support Letter of Credit
Provider to RFC with respect to any Support Liquidity Disbursements and any RFC
Termination Reimbursement Share of Support Termination Disbursements and
Republic (on behalf of the Lessees) with respect to any Support Credit
Disbursements and any Lessee Termination Reimbursement Share of Support
Termination Disbursements (with a copy to the Enhancement Agent), RFC and/or
the Lessees, as applicable, shall, within five (5) Business Days of its receipt
thereof, pay directly to such Series 1997-1 Support Letter of Credit Provider
such amount as will (in the reasonable determination of such Series 1997-1
Support Letter of Credit Provider) reimburse such Series 1997-1 Support Letter
of Credit Provider for such loss or expense. Such written notice (which shall
include calculations in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on RFC and/or the Lessees, as applicable.
Section 2.14. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation or reinterpretation or
phase-in of, in each case after the date hereof, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other Governmental Authority
affects or would
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affect the amount of capital required or reasonably expected to be maintained
by any Series 1997-1 Support Letter of Credit Provider or any Person
controlling such Series 1997-1 Support Letter of Credit Provider, and such
Series 1997-1 Support Letter of Credit Provider reasonably determines (in its
sole and absolute discretion) that the rate of return on its or such
controlling Person's capital as a consequence of its Support Letter of Credit
Commitment, its issuance of a Series 1997-1 Support Letter of Credit or the
Support Disbursements made by such Series 1997-1 Support Letter of Credit
Provider is reduced to a level below that which such Series 1997-1 Support
Letter of Credit Provider or such controlling Person would have achieved but
for the occurrence of any such circumstance, then, in any such case after
notice from time to time by such Series 1997-1 Support Letter of Credit
Provider to RFC with respect to any Support Liquidity Disbursements and any RFC
Termination Reimbursement Share of Support Termination Disbursements and
Republic (on behalf of the Lessees) with respect to any Support Credit
Disbursements, any Lessee Termination Reimbursement Share of Support
Termination Disbursements or otherwise, shall pay an incremental Support Letter
of Credit Facility Fee sufficient to compensate such Series 1997-1 Support
Letter of Credit Provider or such controlling Person for such reduction in rate
of return; provided, however, that RFC and/or the Lessees, as applicable, shall
have no obligation to pay any such additional amount under this Section 2.14
with respect to any day or days unless such Series 1997-1 Support Letter of
Credit Provider shall have notified RFC and/or Republic (on behalf of the
Lessees), as applicable, of its demand therefor within forty-five (45) days of
the date upon which such Series 1997-1 Support Letter of Credit Provider has
obtained audited information with respect to the fiscal year of such Series
1997-1 Support Letter of Credit Provider in which such day or days occurred. A
statement of such Series 1997-1 Support Letter of Credit Provider as to any
such additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
RFC and/or the Lessees, as applicable; and provided, further, that the initial
payment of such increased Support Letter of Credit Facility Fee shall include a
payment for accrued amounts due under this Section 2.14 prior to such initial
payment. In determining such additional amount, such Series 1997-1 Support
Letter of Credit Provider may use any method of averaging and attribution that
it (in its reasonable discretion) shall deem applicable so long as it applies
such method to other similar transactions.
Section 2.15. Taxes. All payments by RFC and the Lessees of
principal of, and interest on, the Support Disbursements and all other amounts
payable hereunder (including fees) shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes
and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding in the case of each
Series 1997-1 Support Letter of Credit Provider, taxes imposed on or measured
by its overall net income, overall receipts or overall assets and franchise
taxes imposed on it by the jurisdiction of such Series 1997-1 Support Letter of
Credit Provider in which it is organized or is operating or any political
subdivision thereof and, in the case of each Series 1997-1 Support Letter of
Credit Provider, taxes imposed on or measured by its overall net income,
overall receipts or overall assets or franchise taxes imposed on it by the
jurisdiction of such Series 1997-1 Support Letter of
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Credit Provider's Domestic Office or Eurodollar Office (as such terms are
defined below), as the case may be, or any political subdivision thereof (such
non-excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by RFC, Republic or any of the Lessees
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then RFC, Republic or such Lessee will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the related Series 1997-1 Support
Letter of Credit Provider an official receipt or other documentation
satisfactory to such Series 1997-1 Support Letter of Credit Provider,
evidencing such payment to such authority; and
(c) pay to the related Series 1997-1 Support Letter of Credit
Provider for the account of such Series 1997-1 Support Letter of
Credit Provider such additional amount or amounts as is necessary to
ensure that the net amount actually received by such Series 1997-1
Support Letter of Credit Provider will equal the full amount such
Series 1997-1 Support Letter of Credit Provider would have received
had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any Series 1997-1 Support
Letter of Credit Provider with respect to any payment received by such Series
1997-1 Support Letter of Credit Provider hereunder, such Series 1997-1 Support
Letter of Credit Provider may pay such Taxes and RFC and/or the Lessees, as
applicable, will promptly upon receipt of prior written notice stating the
amount of such Taxes pay such additional amounts (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
such person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such person would have received had
not such Taxes been asserted. Any Series 1997-1 Support Letter of Credit
Provider's "Eurodollar Office" or "Domestic Office" for purposes of this
Agreement shall mean the office or offices of such Series 1997-1 Support Letter
of Credit Provider designated as such in Schedule 2 attached hereto, provided
that such Series 1997-1 Support Letter of Credit Provider may designate another
office as such from time to time by prior written notice thereof to Republic
(including on behalf of the Lessees) and RFC.
If RFC, Republic and/or any of the Lessees, as applicable, fails to
pay any Taxes when due to the appropriate taxing authority or fails to remit to
the related Series 1997-1 Support Letter of Credit Provider the required
receipts or other required documentary evidence, RFC, Republic and/or the
Lessees, as applicable, shall indemnify any such Series 1997-1 Support Letter
of Credit Provider for any incremental Taxes, interest or penalties that may
become payable by such Series 1997-1 Support Letter of Credit Provider as a
result of any such failure. For purposes of this Section 2.15, a distribution
hereunder by any Series 1997-1 Support Letter
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of Credit Provider to or for the account of any Series 1997-1 Support Letter of
Credit Provider shall be deemed a payment by RFC and/or the Lessees, as
applicable.
Upon the request of RFC, Republic or any of the Lessees, each Series
1997-1 Support Letter of Credit Provider that is organized under the laws of a
jurisdiction other than the United States shall, prior to the initial due date
of any payments hereunder and to the extent permissible under then current law,
execute and deliver to RFC, Republic or such Lessee on or about the first
scheduled payment date in each calendar year thereafter, one or more (as RFC,
Republic or such Lessee may reasonably request) United States Internal Revenue
Service Forms 4224 or Forms 1001 or such other forms or documents (or successor
forms or documents), appropriately completed, as may be applicable to establish
the extent, if any, to which a payment to such Series 1997-1 Support Letter of
Credit Provider is exempt from withholding or deduction of Taxes. RFC,
Republic and the Lessees shall not, however, be required to pay any increased
amount under this Section 2.15 to any Series 1997-1 Support Letter of Credit
Provider that is organized under the laws of a jurisdiction other than the
United States if such Series 1997-1 Support Letter of Credit Provider fails to
comply with the requirements set forth in this paragraph.
Section 2.16. Obligation Absolute. The payment obligations of RFC,
Republic and each Lessee under this Agreement and any other agreement or
instrument relating to the Series 1997-1 Support Letters of Credit shall be
absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and the Series 1997-1 Collateral
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of this Agreement,
any of the Series 1997-1 Support Letters of Credit or any other
Related Document;
(b) any change in the time, manner or place of payment of, or
in any other terms of, all or any of the obligations of RFC, Republic
or any Lessee in respect of the Series 1997-1 Support Letters of
Credit or any other amendment or waiver of or any consent to departure
from all or any of the Related Documents;
(c) the existence of any claim, set-off, defense or other
right which RFC, Republic or any Lessee may have at any time against
the Series 1997-1 Collateral Agent, the Trustee, the Series 1997-1
Letter of Credit Provider or any other beneficiary or any transferee
of the Series 1997-1 Support Letters of Credit (or any persons or
entities for whom the Series 1997-1 Collateral Agent, the Trustee, the
Series 1997-1 Letter of Credit Provider, any such beneficiary or any
such transferee may be acting), any of the Liquidity Lenders, or any
other person or entity, whether in connection with this Agreement, the
transactions contemplated hereby or by the Related Documents or any
unrelated transaction;
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(d) any statement or any other document presented under any
of the Series 1997-1 Support Letters of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect;
(e) any statement or any other document presented under any
of the Series 1997-1 Support Letters of Credit proving to be
insufficient in any respect;
(f) payment by any of Series 1997-1 Support Letter of Credit
Providers under the related Series 1997-1 Support Letter of Credit
against presentation of a draft or certificate which does not comply
with the terms of the related Series 1997-1 Support Letter of Credit;
(g) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the obligations of RFC
and each Lessee in respect of the Series 1997-1 Support Letters of
Credit; or
(h) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, RFC or any Lessee or a guarantor;
Section 2.17. Events of Default. Upon the occurrence and continuance
of any of the following events (herein referred to as an "Event of Default"):
(a) the occurrence and continuance of any "event of default"
set forth in Section 9.01 of the Credit Agreement (as defined in the
Series 1997-1 Supplement) after giving effect to any grace and cure
periods set forth therein, without giving effect to any amendment to
such agreement or any waiver of any such event of default in each case
on or subsequent to the date hereof not approved in an instrument in
writing signed by the Majority Credit Enhancers, provided, that for
purposes of this Agreement the "events of default" set forth in
Section 9.01 of the Credit Agreement shall survive the termination of
the Revolving Credit Commitments (as defined in the Credit Agreement)
of the Lenders (as defined in the Credit Agreement) under the Credit
Agreement, the payment in full of all Obligations (as defined in the
Credit Agreement) under the Credit Agreement and the termination of
such Agreement pursuant to the terms thereof; or
(b) (i) any Lessee (or Republic on behalf of such Lessee)
shall fail to pay the principal amount of any Support Credit
Disbursement owing by such Lessee or the principal amount of any
Support Termination Disbursement owing by such Lessee, on the date on
which such payment is due, (ii) RFC shall fail to pay the principal
amount of any Support Liquidity Disbursement owing by RFC or the
principal amount of any Support
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Termination Disbursements owing by RFC, in each case within two (2)
Business Days of the date on which such payment is due, or (iii) RFC
shall fail to pay the principal amount of any Commercial Paper Notes
owing by RFC on the date when such amount is due; or
(c) RFC shall fail to pay interest on the principal amount of
any Support Liquidity Disbursement, or RFC or any Lessee (or Republic
on behalf of any such Lessee) shall fail to pay any other interest,
fees or other amounts payable under this Agreement, in each case
within five (5) Business Days of the date when such interest, fees or
other amounts are due; or
(d) RFC shall default in the due performance and observance
of any of its obligations contained in Section 3.6 and such default
shall continue unremedied for a period of ten (10) days (or thirty
(30) days with respect to a default under Section 8.2.1 or 8.2.3 of
the Series 1997-1 Liquidity Agreement) after the earlier of (i) the
date on which written notice thereof shall have been given to RFC by
the Enhancement Agent or any Series 1997-1 Support Letter of Credit
Provider and (ii) the date on which RFC obtains actual knowledge
thereof; or
(e) RFC shall default in the due performance and observance
of any covenant or agreement contained herein or in any other CP
Program Document or other Related Document to which it is a party
(other than those specified in clauses (a) through (d) above), and any
such default shall continue unremedied for a period of thirty (30)
days after notice thereof shall have been given to RFC by the
Enhancement Agent or any Series 1997- 1 Support Letter of Credit
Provider or such default shall continue unremedied for a period of
thirty (30) days after RFC initially becomes aware of such failure to
perform or comply with such covenant; or
(f) any representation or warranty made by any Lessee, RFC or
Republic in this Agreement or any other CP Program Document or other
Related Document to which it is a party shall have been incorrect in
any material respect as of the date such representation or warranty is
made and shall continue to be incorrect in any material respect for a
period of 30 days (or such earlier period set forth in this Agreement
with respect to such representation or warranty) after the earlier of
(i) the date on which written notice thereof shall have been given to
such Lessee, RFC or Republic, as the case may be, by the Enhancement
Agent or any Series 1997-1 Support Letter of Credit Provider and (ii)
the date on which such Lessee, RFC or Republic, as the case may be,
obtains actual knowledge thereof, or any certificate, financial
statement or any other material writing furnished by any Lessee, RFC
or Republic pursuant to this Agreement or any other CP Program
Document or any other Related Document shall have been incorrect in
any material respect for a period of 10 days after the earlier of (a)
the date on which written notice thereof shall have been given to such
Lessee, RFC or Republic, as the case may be, by the Enhancement Agent
or any Series 1997-1 Support Letter of Credit Provider and
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(b) the date on which such Lessee, RFC or Republic, as the case may
be, obtains actual knowledge thereof; or
(g) (i) the occurrence of any Event of Bankruptcy as
described in clause (a) of the definition thereof set forth in the
Base Indenture with respect to RFC immediately upon the occurrence
thereof or (ii) the occurrence of any Event of Bankruptcy as described
in clauses (b) or (c) of the definition thereof set forth in the Base
Indenture with respect to RFC and such Event of Bankruptcy is not
dismissed within sixty (60) calendar days of the occurrence thereof;
or
(h) any final and non-appealable (or, if capable of appeal,
such appeal is not being diligently pursued or enforcement thereon has
not been stayed) judgment or order for the payment of money in excess
of $100,000 which is not fully covered by insurance shall be rendered
against RFC and such judgment or order shall continue unsatisfied and
unstayed for a period of sixty (60) days as it relates to RFC; or
(i) RFC shall have become an "investment company" or shall
have become under the "control" of an "investment company" under the
Investment Company Act; or
(j) any Liquidity Agreement Amortization Event or any Lease
Event of Default shall have occurred and be continuing; or
(k) any Lessee or Republic shall default in the due
performance and observance of any covenant or agreement contained in
this Agreement (other than those specified elsewhere in this Section
2.17) and any such default shall continue unremedied for a period of
thirty (30) days (or ten (10) days with respect to a default under
Section 3.3(c)) after the earlier of (i) the date on which written
notice thereof shall have been given to such Lessee or Republic, as
the case may be, and (ii) the date on which such Lessee or Republic
obtains actual knowledge thereof);
(l) all or any portion of any other CP Program Document or
Related Document (other than the Dealer Agreement) shall at any time
and for any reason not be in full force and effect or be declared to
be null and void, or a proceeding shall be commenced by RFC, any
Lessee or Republic, or by any governmental authority having
jurisdiction over RFC, any Lessee or Republic, as applicable, seeking
to establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or RFC, any
Lessee or Republic shall deny that it has any liability or obligation
for the payment of principal or interest purported to be created under
any other CP Program Document or Related Document; or
(m) NFLP shall default in the due performance and observance
of any of its obligations contained in Section 3.7 and such default
shall continue unremedied for a
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period of ten (10) days after the earlier of (i) the date on which
written notice thereof shall have been given to NFLP by the
Enhancement Agent or any Series 1997-1 Support Letter of Credit
Provider and (ii) the date on which NFLP obtains actual knowledge
thereof.
then, (i) the Series 1997-1 Majority Credit Enhancers may by notice to RFC and
Republic, in the case of an Event of Default caused by or regarding RFC, but
only upon the declaration or automatic occurrence of a Liquidity Agreement
Amortization Event, declare the principal amount of Support Liquidity
Disbursements Outstanding and the RFC Termination Reimbursement Share of
Support Termination Disbursements Outstanding, to be due and payable, together
with accrued interest thereon and all other sums payable by RFC hereunder and
thereunder, whereupon the same shall become due and payable without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by RFC and, in any case, the Series 1997-1 Majority
Credit Enhancers may take any other action permitted to be taken by them
hereunder, under any Related Document or under applicable law or otherwise and
(ii) the Majority Credit Enhancers may by notice to Republic on behalf of the
applicable Lessee or Lessees, in the case of an Event of Default caused by or
regarding any such Lessee or Lessees, declare the principal amount of Support
Credit Disbursements Outstanding and the Lessee Termination Reimbursement Share
of Support Termination Disbursements Outstanding, to be due and payable,
together with accrued interest thereon and all other sums payable by such
Lessee or Lessees, hereunder and thereunder, whereupon the same shall become
due and payable without presentment, demand, protest, or further notice of any
kind, all of which are hereby expressly waived by such Lessee or Lessees and
Republic, and, in any case, the Series 1997-1 Support Letter of Credit
Providers may take any other action permitted to be taken by them hereunder,
under any Related Document or under applicable law or otherwise; provided that
if an Event of Bankruptcy shall have occurred with respect to any Lessee or
Republic all sums payable by the Lessees and Republic hereunder shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
each of the Lessees and Republic; and if an Event of Bankruptcy shall have
occurred with respect to RFC, the principal amount of any Support Liquidity
Disbursements Outstanding and the RFC Termination Reimbursement Share of
Support Termination Disbursements Outstanding, together with accrued interest
thereon and all other sums payable by RFC hereunder, shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by RFC.
"Potential Event of Default" shall mean, for purposes of this
Agreement, any occurrence or event which, after notice or lapse of time or
both, would constitute an Event of Default hereunder.
Section 2.18. Conversion. Upon receipt from the Enhancement Agent of
a Notice of Conversion substantially in the form of Exhibit B hereto, each of
the Series 1997-1 Support Letter of Credit Providers shall, on such date, to
the extent permitted by applicable law, decrease the amount of Support
Liquidity Disbursements Outstanding payable by RFC and increase the
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amount of Support Credit Disbursements Outstanding payable by the Lessees by
the amount specified in such Notice of Conversion (such action a "Conversion"),
provided, that any such Conversion shall be on a pro rata basis with respect to
each the Series 1997-1 Support Letter of Credit Providers and the GM Series
1997-1 Support Provider. The Series 1997-1 Support Letter of Credit Providers
shall, upon such Conversion, have no further claim against RFC with respect to
such amounts so converted and any costs, expense, taxes and indemnities with
respect thereto; and RFC is not responsible, but each Lessee will be
responsible and obligated, from the date of such Conversion for all such
amounts. The respective obligation of each of the Lessees shall be determined
in the manner set forth in Section 2.3(c).
Section 2.19. Grant of Security Interest. (a) As security for the
prompt and complete payment and performance of the obligations of RFC hereunder
to the Series 1997-1 Support Letter of Credit Providers, RFC hereby
acknowledges and confirms the pledge, hypothecation, assignment, transfer and
delivery to the Series 1997-1 Collateral Agent under the Series 1997-1
Collateral Agreement for the benefit of the Series 1997-1 Support Letter of
Credit Providers and the other Secured Parties (subject to the terms and
priorities set forth therein) of a continuing, first priority security interest
in, all Assigned Collateral.
(b) As security for the prompt and complete payment and performance of
the obligations of the Lessees hereunder to the Series 1997-1 Support Letter of
Credit Providers, each of the Lessees hereby acknowledges and confirms its
respective pledge, hypothecation, assignment, transfer and delivery to the
Master Collateral Agent under the Master Collateral Agency Agreement for the
benefit of the Series 1997-1 Support Letter of Credit Providers under Section
2.1 of the Master Collateral Agency Agreement of a continuing, second priority
security interest in the Lessee Grantor Master Collateral, whether now existing
or hereafter created, subject to the terms and priorities set forth therein and
in the other Related Documents, including, without limitation, the security
interest in such collateral granted by each of the Lessees pursuant to the
Series 1997 Lease and by NFLP to the Trustee for the benefit of any Series of
Notes outstanding.
In the event the Trustee elects to exercise its remedies to liquidate
any of the collateral pursuant to the Series 1997-1 Supplement, each of the
Series 1997-1 Support Letter of Credit Providers waives any right it may have,
on account of the security interest granted to it in its capacity as a
Financing Source pursuant to Section 2.1 of the Master Collateral Agency
Agreement, to contest the validity of or the value obtained as a result of the
exercise by the Trustee of its remedies, including, without limitation, a
foreclosure, a sale pursuant to the UCC or the acceptance of collateral by the
Trustee in lieu of foreclosure. Each of the Series 1997-1 Support Letter of
Credit Providers waives any right of marshaling it may have, on account of the
security interest granted to it in its capacity as a Financing Source pursuant
to Section 2.1 of the Master Collateral Agency Agreement, in connection with
the assets of NFLP. Each of the Series 1997-1 Support Letter of Credit
Providers further waives any right it may have, on account of the security
interest granted to it in its capacity as a Financing Source pursuant to
Section 2.1 of the Master Collateral Agency Agreement, either in or out of any
bankruptcy, insolvency or similar
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proceeding to challenge any action taken by the Trustee on behalf of the Series
1997-1 Noteholders as either a preference or a fraudulent conveyance and
further agrees not to take any active role in such a proceeding.
Section 2.20. Guaranty.
(a) Guaranty. In order to induce the Series 1997-1 Support Letter of
Credit Providers to execute and deliver this Agreement and to issue their
respective Series 1997-1 Support Letters of Credit, and in consideration
thereof, Republic, in its capacity as the Guarantor hereunder (the
"Guarantor"), hereby (i) unconditionally and irrevocably guarantees to each of
the Series 1997-1 Support Letter of Credit Providers the obligations of the
Lessees to make any payments required to be made by them under this Agreement,
(ii) agrees to cause the Lessees to duly and punctually perform and observe all
of the terms, conditions, covenants, agreements and indemnities of the Lessees
under this Agreement, and (iii) agrees that, if for any reason whatsoever, any
Lessee fails to so perform and observe such terms, conditions, covenants,
agreements and indemnities, the Guarantor will duly and punctually perform and
observe the same (the obligations referred to in clauses (i) through (iii)
above are collectively referred to as the "Guaranteed Obligations"). The
liabilities and obligations of the Guarantor under the guaranty contained in
this Section 2.20 (this "Guaranty") will be absolute and unconditional under
all circumstances. This Guaranty shall be a guaranty of payment and not of
collection, and the Guarantor hereby agrees that it shall not be required that
any of the Series 1997-1 Support Letter of Credit Providers or the Enhancement
Agent assert or enforce any rights against any of the Lessee or any other
person before or as a condition to the obligations of the Guarantor pursuant to
this Guaranty.
(b) Scope of Guarantor's Liability. The Guarantor's obligations
hereunder are independent of the obligations of the Lessees, any other
guarantor or any other Person, and each Series 1997-1 Support Letter of Credit
Provider may enforce any of its rights hereunder independently of any other
right or remedy that such Series 1997-1 Support Letter of Credit Provider may
at any time hold with respect to this Agreement or any security or other
guaranty therefor. Without limiting the generality of the foregoing, each
Series 1997-1 Support Letter of Credit Provider may bring a separate action
against the Guarantor without first proceeding against any of the Lessees, any
other guarantor or any other Person, or any security held by such Series 1997-1
Support Letter of Credit Provider, and regardless of whether the Lessees or any
other guarantor or any other Person is joined in any such action. The
Guarantor's liability hereunder shall at all times remain effective with
respect to the full amount due from the Lessees hereunder. Each Series 1997-1
Support Letter of Creditor Provider's rights hereunder shall not be exhausted
by any action taken by such Series 1997-1 Support Letter of Credit Provider
until all Guaranteed Obligations have been fully paid and performed.
(c) Right to Amend this Agreement. The Guarantor authorizes each
Series 1997-1 Support Letter of Credit Provider (and each other provider of a
letter of credit in connection with the Series 1997 Variable Funding Notes) at
any time and from time to time without notice and
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without affecting the liability of the Guarantor hereunder, to: (a) alter the
terms of all or any part of the Guaranteed Obligations and any security and
guaranties therefor including without limitation modification of times for
payment and rates of interest; (b) accept new or additional instruments,
documents, agreements, security or guaranties in connection with all or any
part of the Guaranteed Obligations; (c) accept partial payments on the
Guaranteed Obligations; (d) waive, release, reconvey, terminate, abandon,
subordinate, exchange, substitute, transfer, compound, compromise, liquidate
and enforce all or any part of the Guaranteed Obligations and any security or
guaranties therefor, and apply any such security and direct the order or manner
of sale thereof (and bid and purchase at any such sale), as the Majority Credit
Enhancers in their discretion may determine; (e) release any Lessee, any
guarantor or any other Person from any personal liability with respect to all
or any part of the Guaranteed Obligations; and (f) assign its rights under this
Guaranty in whole or in part.
(d) Waiver of Certain Rights by Guarantor. The Guarantor hereby
waives each of the following to the fullest extent allowed by law:
(i) any defense based upon:
(A) the unenforceability or invalidity of any
security or other guaranty for the Guaranteed
Obligations or the lack of perfection or
failure of priority of any security for the
Guaranteed Obligations; or
(B) any act or omission of any of the Series
1997-1 Support Letter of Credit Providers or
any other Person that directly or indirectly
results in the discharge or release of any of
the Lessees or any other Person or any of the
Guaranteed Obligations or any security
therefor; provided that the Guarantor's
liability in respect of this Guaranty shall
be released to the extent any of the Series
1997-1 Support Letter of Credit Providers
voluntarily releases such Lessee or other
Person from any obligations with respect to
any of the foregoing with respect to such
Series 1997-1 Support Letter of Credit
Provider; or
(C) any disability or any other defense of any
Lessee or any other Person with respect to
the Guaranteed Obligations, whether
consensual or arising by operation of law or
any bankruptcy, insolvency or debtor-relief
proceeding, or from any other cause;
(ii) any right (whether now or hereafter existing) to require
any Series 1997-1 Support Letter of Credit Provider, as a condition to
the enforcement of this Guaranty, to:
(A) accelerate the Guaranteed Obligations;
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(B) give notice to the Guarantor of the terms,
time and place of any public or private sale
of any security for the Guaranteed
Obligations; or
(C) proceed against any Lessee, any other
guarantor or any other Person, or proceed
against or exhaust any security for the
Guaranteed Obligations;
(iii) presentment, demand, protest and notice of any kind,
including without limitation notices of default and notice of
acceptance of this Guaranty;
(iv) all suretyship defenses and rights of every nature
otherwise available under New York law and the laws of any other
jurisdiction; and
(v) all other rights and defenses the assertion or exercise
of which would in any way diminish the liability of the Guarantor
hereunder.
(e) Lessees' Obligations to Guarantor and Guarantor's Obligations to
Lessees Subordinated. Until all of the Guaranteed Obligations have been paid
in full, the Guarantor agrees that all existing and future unsecured debts,
obligations and liabilities of the Lessees to the Guarantor or the Guarantor to
any of the Lessees (hereinafter collectively referred to as "Subordinated
Debt") shall be and hereby are expressly subordinated to the prior payment in
full of the Guaranteed Obligations under this Agreement, on the terms set forth
in clauses (a) through (d) below, and the payment thereof is expressly deferred
in right of payment to the prior payment in full of the Guaranteed Obligations.
For purposes of this clause (e), to the extent the Guaranteed Obligations
consist of the obligation to pay money, the Guaranteed Obligations shall not be
deemed paid in full unless and until paid in full in cash.
(i) Upon any distribution of assets of the Guarantor or any
Lessee upon any dissolution, winding up, liquidation or reorganization
of the Guarantor or such Lessee, whether in bankruptcy, insolvency,
reorganization or receivership proceedings, or upon an assignment for
the benefit of creditors or any other marshaling of the assets and
liabilities of the Guarantor or such Lessee, or otherwise:
(A) the holders of the Guaranteed Obligations
shall be entitled to receive payment in full
of any Guaranteed Obligations which are due
and unpaid before the Guarantor or the
Lessee, as the case may be, is entitled to
receive any payment on account of the
Subordinated Debt;
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(B) any payment by, or distribution of assets of,
the Guarantor or such Lessee of any kind or
character, whether in cash, property or
securities, to which such Lessee or the
Guarantor would be entitled except for this
subordination shall be paid or delivered by
the Person making such payment or
distribution, whether a trustee in
bankruptcy, a receiver or liquidating
trustee, or otherwise, directly to the
Trustee, for the benefit of the holders of
the Guaranteed Obligations to be held as
additional security for the Guaranteed
Obligations in an interest bearing account
until the Guaranteed Obligations have been
paid in full; and
(C) if, notwithstanding the foregoing, any
payment by, or distribution of assets of, the
Guarantor or such Lessee of any kind or
character, whether in cash, property or
securities, in respect of any Subordinated
Debt shall be received by such Lessee or the
Guarantor before the Guaranteed Obligations
are paid in full, such payment or
distribution shall be held in trust in an
interest bearing account of the Guarantor or
such Lessee, as appropriate, and immediately
paid over in kind to the holders of the
Guaranteed Obligations until the Guaranteed
Obligations have been paid in full.
(ii) The Guarantor authorizes and directs each Lessee and
each Lessee authorizes and directs the Guarantor to take such action
as may be necessary or appropriate to effectuate and maintain the
subordination provided herein.
(iii) No right of any holder of the Guaranteed Obligations to
enforce the subordination herein shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of the
Guarantor, any Lessee, any of the Series 1997-1 Support Letter of
Credit Providers or any other Person or by any noncompliance by the
Guarantor, any Lessee, any of the Series 1997-1 Support Letter of
Credit Providers or any other Person with the terms, provisions and
covenants hereof or of the Related Documents regardless of any
knowledge thereof that any such holder of the Guaranteed Obligations
may have or be otherwise charged with.
(iv) Nothing express or implied herein shall give any Person
other than the Lessees, any of the Series 1997-1 Support Letter of
Credit Providers, the Trustee and the Guarantor any benefit or any
legal or equitable right, remedy or claim hereunder.
(v) If the Guarantor shall institute or participate in any
suit, action or proceeding against any Lessee or any Lessee shall
institute or participate in any suit, action or proceeding against the
Guarantor, in violation of the terms hereof, such Lessee or the
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Guarantor, as the case may be, may interpose as a defense or dilatory
plea this subordination, and the holders of the Guaranteed Obligations
are irrevocably authorized to intervene and to interpose such defense
or plea in their name or in the name of such Lessee or the Guarantor,
as the case may be.
(f) Guarantor to Pay Each Series 1997-1 Support Letter of Credit
Provider's Expenses. The Guarantor agrees to pay to any of the Series 1997-1
Support Letter of Credit Providers, on demand, all costs and expenses,
including attorneys' and other professional and paraprofessional fees, incurred
by such Series 1997-1 Support Letter of Credit Provider in exercising any
right, power or remedy conferred by this Guaranty, or in the enforcement of
this Guaranty, whether or not any action is filed in connection therewith.
Until paid to such Series 1997-1 Support Letter of Credit Provider, such
amounts shall bear interest, commencing with such Series 1997-1 Support Letter
of Credit Provider's demand therefor, for each Interest Period during the
period from the date of such demand until paid, at the rate per annum that
would then be in effect with respect to a Base Rate Advance plus 2% (calculated
on the basis of a 360-day year).
(g) Reinstatement. This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time payment of any of the amounts
payable by any Lessee under this Agreement is rescinded or must otherwise be
restored or returned by any of the Series 1997-1 Support Letter of Credit
Providers, upon an event of bankruptcy, dissolution, liquidation or
reorganization of any Lessee or the Guarantor or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Lessee, the Guarantor, any other guarantor or any other
Person, or any substantial part of their respective property, or otherwise, all
as though such payment had not been made.
(h) Pari Passu Indebtedness. The Guarantor (i) represents and
warrants that, as of the date hereof, the obligations of the Guarantor under
this Guaranty will rank pari passu with any existing unsecured indebtedness of
the Guarantor and (ii) covenants and agrees that from and after the date hereof
the obligations of the Guarantor under this Guaranty will rank pari passu with
any unsecured indebtedness of the Guarantor incurred after the date hereof.
Section 2.21. Replacement of Series 1997-1 Support Letter of Credit
Providers. In the event that (i) any Series 1997-1 Support Letter of Credit
Provider shall have notified Republic or RFC (and shall not have retracted such
notification) that its compliance with any of its obligations hereunder or
under the related Series 1997-1 Support Letter of Credit would be unlawful,
(ii) any Series 1997-1 Support Letter of Credit Provider fails to extend its
Support Letter of Credit Commitment pursuant to Section 2.1(c), (iii) any of
the Lessees, RFC or Republic is required pursuant to Sections 2.12 through 2.15
to make any payment to or on behalf of any Series 1997-1 Support Letter of
Credit Provider (or would be so required on or prior to the next following date
on which a payment hereunder (other than pursuant to Sections 2.12 through
2.15) is required to be made to or for any such Series 1997-1 Support Letter of
Credit Provider) or (iv) any Series 1997-1 Support Letter of Credit Provider
shall have failed to fund any Support
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Disbursement when required hereunder, then Republic shall have the right, at
its own expense, upon notice to such Series 1997-1 Support Letter of Credit
Provider and the Series 1997-1 Letter of Credit Provider to require such Series
1997-1 Support Letter of Credit Provider, and such Series 1997-1 Support Letter
of Credit Provider hereby agrees, to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 4.11 with
respect to assignments including, without limitation, the written consent of
the Series 1997-1 Letter of Credit Provider with respect to such assignment
evidenced by its execution and delivery of a Series 1997-1 Support Letter of
Credit Provider Joinder in Series 1997-1 Support Reimbursement Agreement
substantially in the form of Exhibit D) all the interests, rights and
obligations of such Series 1997-1 Support Letter of Credit Provider to an
Eligible Credit Enhancer provided by Republic on behalf of the Lessees and RFC;
provided, however, that (v) no such assignment shall be effective without the
prior written consent of the Series 1997-1 Letter of Credit Provider, (w) no
such assignment shall conflict with any law, rule, regulation or order of any
Governmental Authority, (x) such assignment shall be without recourse,
representation and warranty and shall be on terms and conditions reasonably
satisfactory to such replaced Series 1997-1 Support Letter of Credit Provider
and such replacement Eligible Credit Enhancer, (y) the purchase price paid by
such replacement Eligible Credit Enhancer shall be in an amount equal to the
aggregate amount of the Support Disbursements owed by the Lessees, RFC and
Republic to such replaced Series 1997-1 Support Letter of Credit Provider under
this Agreement as of the date of such assignment, and (z) Republic or such
Eligible Credit Enhancer, as the case may be, shall pay to such replaced Series
1997-1 Support Letter of Credit Provider in same day funds on the date of such
assignment the principal of and interest accrued to the date of payment on the
Support Disbursements made by such replaced Series 1997-1 Support Letter of
Credit Provider hereunder and all other amounts accrued for such replaced
Series 1997-1 Support Letter of Credit Provider's account or owed to it
hereunder, including those amounts owed pursuant to Section 2.6 and Sections
2.12 through 2.15; provided further, however, that only after all amounts then
owing to the Series 1997-1 Support Letter of Credit Provider to be replaced
hereunder have been paid in full shall the letter of credit issued by the
successor Series 1997-1 Support Letter of Credit Provider be substituted for
such Series 1997-1 Support Letter of Credit Provider's Series 1997-1 Support
Letter of Credit. If such a successor Series 1997-1 Support Letter of Credit
is obtained, each of the Lessees and RFC and, if applicable, such successor
institution shall (i) sign such documents and instruments as shall be
appropriate to evidence such successor institution's issuance of a substitute
letter of credit or such other substitute credit enhancement, (ii) so long as
the Series 1997-1 Letter of Credit Provider has been paid the amount of each
Support Credit Demand, Support Liquidity Demand, Support Termination Demand and
Support Termination Demand for Nonextension (as such terms are defined in
Exhibit A hereto) theretofore made of such replaced Series 1997-1 Support
Letter of Credit Provider, return to such Series 1997-1 Support Letter of
Credit Provider its then outstanding Series 1997-1 Support Letter of Credit and
(iii) deliver to the Series 1997-1 Letter of Credit Provider a substitute
letter of credit having terms substantially identical to the then outstanding
Series 1997-1 Support Letter of Credit but with such successor institution as
the issuer thereof.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. Representations and Warranties of the Lessees and
Republic. Each of the Lessees hereby represents and warrants (which
representations and warranties shall be deemed made on the date of issuance of
each Series 1997-1 Support Letter of Credit, on the date of each issuance of
any substitute Series 1997-1 Support Letter of Credit or any amendment to an
outstanding Series 1997-1 Support Letter of Credit pursuant to Section 2.1(b),
(c) or (d) (including the date of any extension of any Series 1997-1 Support
Letter of Credit pursuant to Section 2.1(c)) and on the date of each Lease
Advance under the Series 1997 Lease) to the Series 1997-1 Support Letter of
Credit Providers, as to itself and the Series 1997 Vehicles leased by it, and
Republic represents and warrants (which representations and warranties shall be
deemed made on the date of issuance of each Series 1997-1 Support Letter of
Credit, on the date of each issuance of any substitute Series 1997-1 Support
Letter of Credit or any amendment to an outstanding Series 1997-1 Support
Letter of Credit pursuant to Section 2.1(b), (c) or (d) (including the date of
any extension of any Series 1997-1 Support Letter of Credit pursuant to
Section 2.1(c)) and on the date of each Lease Advance under the Series 1997
Lease) to the Series 1997-1 Support Letter of Credit Providers, as to itself
and as to each of the Lessees and as to all Series 1997 Vehicles that:
(a) Representations and Warranties under the Credit
Agreement. Each of the representations and warranties set forth in
the Credit Agreement (other than those expressly stated to relate
solely to an earlier date, which representations and warranties shall
be true and correct as of such earlier date) without regard to any
amendment to or waiver of any of such representations or warranties on
or subsequent to the date hereof not approved by an instrument in
writing signed by the Majority Credit Enhancers, including, without
limitation, those set forth in Section 6.01 thereof, is true and
correct and is hereby incorporated herein by this reference, mutatis
mutandis, and which representations and warranties for purposes of
this Agreement shall survive the termination of the Revolving Credit
Commitments (as defined in the Credit Agreement) of the Lenders (as
defined in the Credit Agreement) under the Credit Agreement, the
payment in full of all Obligations (as defined in the Credit
Agreement) under the Credit Agreement and the termination of such
Agreement pursuant to the terms thereof.
(b) Representations and Warranties under the Series 1997
Lease. Each of the representations and warranties of Republic and
each of the Lessees set forth in the Series 1997 Lease (other than
those expressly stated to relate solely to an earlier date, which
representations and warranties shall be true and correct as of such
earlier date) without regard to any amendment to or waiver of any such
representations or warranties on or subsequent to the date hereof not
approved by an instrument in writing signed by the Majority Credit
Enhancers, including, without limitation, those set forth in Section
23
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thereof, is true and correct and is hereby incorporated herein by this
reference, by each of the Lessees as to itself and by Republic as to
itself and each of the Lessees.
(c) Financial Information; Financial Condition. All
financial statements (including the notes thereto) referred to in the
following sentence and hereafter furnished to each of the Series
1997-1 Support Letter of Credit Providers pursuant to Section 24.7 of
the Series 1997 Lease have been and will be prepared in accordance
with GAAP and do and will present fairly the financial condition of
the entities involved as of the dates thereof and the results of their
operations for the periods covered thereby, subject, in the case of
all unaudited statements, to normal year-end adjustments and lack of
footnotes and other presentation items. Such financial statements
include the audited consolidated balance sheet of Republic and its
Consolidated Subsidiaries as of December 31, 1996 and the related
statements of income, changes in stockholders' equity and cash flow as
of and for the fiscal year ending on such date, which have been
furnished to each of the Series 1997-1 Support Letter of Credit
Providers on or prior to the date hereof.
(d) Liens. The Series 1997 Vehicles and other Master
Collateral are free and clear of all Liens other than Permitted Liens.
The Series 1997-1 Support Letter of Credit Providers have obtained, as
security for the liabilities of the Lessees under this Agreement, a
continuing, second priority security interest in all right, title and
interest of the Lessees in and to the Lessee Grantor Master Collateral
with respect to which NFLP is designated as the Financing Source under
the Master Collateral Agency Agreement, whether now existing or
hereafter created.
(e) Perfection. All Vehicle Perfection and Documentation
Requirements with respect to all Series 1997 Vehicles on or after the
date hereof have and will continue to be satisfied by the Lessees,
except to the extent that the failure to comply with such requirements
does not, in the aggregate, materially adversely affect (i) the
interests of the Lessor or the Series 1997 Variable Funding
Noteholders under the Series 1997 Lease or the Indenture, (ii) the
interests of the Series 1997-1 Support Letter of Credit Providers
under the Master Collateral Agency Agreement or this Agreement or
(iii) the likelihood of payment of all Rent and other charges and
payments due under the Series 1997 Lease.
(f) Accuracy of Information. All certificates, reports,
statements, documents and other information furnished to the Series
1997-1 Support Letter of Credit Providers by Republic or any Lessee
pursuant to any provision of any Related Document, or in connection
with or pursuant to any amendment or modification of, or waiver under,
any Related Document, shall, at the time the same are so furnished, be
complete and correct in all material respects to the extent necessary
to give the Series 1997-1 Support Letter of Credit Providers true and
accurate knowledge of the subject matter thereof, and the furnishing
of the same to the Series 1997-1 Support Letter of Credit Providers
shall constitute a representation and warranty by Republic and each of
the Lessees made on the
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date the same are furnished to the Series 1997-1 Support Letter of
Credit Providers to the effect specified herein.
Section 3.2. Affirmative Covenants of the Lessees and Republic.
Until the expiration or termination of each Series 1997-1 Support Letter of
Credit and the payment in full in cash of all amounts owing to each of the
Series 1997-1 Support Letter of Credit Providers hereunder, each of the Lessees
and Republic agrees that it will, and in the case of Republic, it will cause
each of the Lessees to:
(a) Affirmative Covenants of Republic under the Credit
Agreement. Comply with each of the affirmative covenants set forth in
the Credit Agreement without regard to any amendment to or waiver of
any such affirmative covenant on or subsequent to the date hereof not
approved by an instrument in writing signed by the Majority Credit
Enhancers including, without limitation, those set forth in Section
7.01 through 7.18 thereof, which affirmative covenants are hereby
incorporated herein by this reference, mutatis mutandis, and which
representations and warranties for purposes of this Agreement shall
survive the termination of the Revolving Credit Commitments (as
defined in the Credit Agreement) of the Lenders (as defined in the
Credit Agreement) under the Credit Agreement, the payment in full of
all Obligations (as defined in the Credit Agreement) under the Credit
Agreement and the termination of such Agreement.
(b) Affirmative Covenants of Republic and the Lessees under
the Series 1997 Lease. Comply with each of the affirmative covenants
set forth in the Series 1997 Lease without regard to any amendment to
or waiver of any such affirmative covenant on or subsequent to the
date hereof not approved by an instrument in writing signed by the
Majority Credit Enhancers, including, without limitation, Section 24
thereof, which affirmative covenants are hereby incorporated herein by
this reference by each of the Lessees as to itself and by Republic as
to itself and each of the Lessees.
(c) Books, Records and Inspections. (i) Maintain complete
and accurate books and records with respect to Vehicles leased under
the Series 1997 Lease and the other Master Collateral; (ii) at any
time and from time to time during regular business hours (but not more
often than once per year prior to the occurrence of an Event of
Default hereunder) upon not less than reasonable prior notice from any
Series 1997-1 Support Letter of Credit Provider, permit such Series
1997-1 Support Letter of Credit Provider (or such other Person who may
be designated from time to time by such Series 1997-1 Support Letter
of Credit Provider), or its agents or representatives to examine and
make copies of such books, records and documents in the possession or
under the control of the Lessee relating to the Vehicles leased under
the Series 1997 Lease and the other Master Collateral and the Fleet
Sharing Agreements as such Series 1997-1 Support Letter of Credit
Provider or such Person may reasonably request; (iii) permit any
Series 1997-1 Support Letter of Credit Provider to visit the office
(which office shall be in the
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continental United States and, if it is not the office where such
materials normally are kept, shall be accessible without unreasonable
effort or expense) and properties of the Lessee or Republic for the
purpose of examining such materials, and to discuss matters relating
to the Vehicles leased under the Series 1997 Lease and the other
Master Collateral or the Lessee's (or Republic's) performance under
the Series 1997 Lease with the Lessee's or Republic's independent
public accountants or with any of the officers or employees of the
Lessee or Republic having knowledge of such matters; (iv) permit any
Series 1997-1 Support Letter of Credit Provider or any authorized
representative of such Series 1997-1 Support Letter of Credit Provider
during reasonable business hours from time to time (but not more often
than once per year prior to the occurrence of an Event of Default
hereunder), upon reasonable prior notice, without disruption of the
Lessee's or the Fleet Sharing Parties' business and subject to
applicable law, to inspect Series 1997 Vehicles and registration
certificates, Certificates of Title and related documents covering
Series 1997 Vehicles wherever the same may be located; and (v) make
reasonable efforts to confirm to the Series 1997-1 Support Letter of
Credit Provider the location, mileage and condition of each Vehicle
and to make available for the Series 1997-1 Support Letter of Credit
Provider's inspection (such inspection to be conducted without
disturbing the ordinary conduct of such Lessee's business) within a
reasonable time period, not to exceed forty-five (45) days, the
Vehicles at the location where the Vehicles are normally domiciled;
provided, however, that in the case of clauses (ii), (iii), (iv) and
(v), above, any of the Series 1997-1 Support Letter of Credit
Providers and/or their agents or representatives, as applicable,
examining any such material shall use their commercially reasonable
efforts to perform such examination at the same time as any other
Series 1997 Support Letter of Credit Provider performs such
examination and at the same time as a Liquidity Lender or as the
Series 1997-1 Liquidity Agent performs such examination (provided
Republic provides reasonable prior written notice to each of the
Series 1997-1 Support Letter of Credit Providers of each such
examination by a Series 1997 Support Letter of Credit Provider, a
Liquidity Lender or the Series 1997-1 Liquidity Agent).
(d) Certain Agreements. Deliver to each of the Series 1997-1
Support Credit Letter of Credit Providers a copy of each amendment,
supplement or other modification to any CP Program Document (which
copy need not be an original executed copy of such amendment,
supplement or other modification) to which Republic or any of the
Lessees is a party promptly following receipt by Republic or any of
the Lessees, as the case may be, of counterparts of such amendment,
supplement or other modification fully executed by each of the parties
thereto.
Section 3.3. Negative Covenants of the Lessees and Republic. Until
the expiration or termination of each Series 1997-1 Support Letter of Credit
and the payment in full in cash of all amounts owing to each of the Series
1997-1 Support Letter of Credit Providers hereunder, each of the Lessees and
Republic agrees that it will not and, in the case of Republic, will not permit
any Lessee to:
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(a) Negative Covenants of Republic under the Credit
Agreement. Fail to comply with each of the negative covenants of
Republic with respect to itself and its Subsidiaries set forth in the
Credit Agreement without regard to any amendment to or waiver of any
such negative covenant on or subsequent to the date hereof not
approved by an instrument in writing signed by the Majority Credit
Enhancers including, without limitation, those set forth in Sections
8.01 through 8.12 thereof, which negative covenants are hereby
incorporated herein by this reference, mutatis mutandis, and which
representations and warranties for purposes of this Agreement shall
survive the termination of the Revolving Credit Commitments (as
defined in the Credit Agreement) of the Lenders (as defined in the
Credit Agreement) under the Credit Agreement, the payment in full of
all Obligations (as defined in the Credit Agreement) under the Credit
Agreement and the termination of such Agreement.
(b) Negative Covenants of Republic and the Lessees under the
Series 1997 Lease. Fail to comply with each of the negative covenants
of Republic and the Lessees set forth in the Series 1997 Lease without
regard to any amendment to or waiver of any such negative covenant on
or subsequent to the date hereof not approved by an instrument in
writing signed by the Majority Credit Enhancers, which negative
covenants are hereby incorporated herein by this reference by each of
the Lessees as to itself and Republic as to itself and each of the
Lessees.
(c) Certain Agreements. Without the prior written consent of
the Majority Credit Enhancers, amend, modify, waive or give any
approval, consent or permission under, any provision of the Master
Collateral Agency Agreement if such amendment, modification, waiver
approval, consent or permission could reasonably be expected to have an
adverse effect on the Series 1997-1 Support Letter of Credit Providers.
Section 3.4. Representations and Warranties of RFC. RFC hereby
represents and warrants (which representations and warranties shall be deemed
made on the date of issuance of each Series 1997-1 Support Letter of Credit, on
the date of each issuance of any substitute Series 1997-1 Support Letter of
Credit or any amendment pursuant to an outstanding Series 1997-1 Support Letter
of Credit pursuant to Section 2.1(b), (c) or (d) (including the date of any
extension of any Series 1997-1 Support Letter of Credit pursuant to Section
2.1(c)) and on the date of each Liquidity Advance under the Series 1997-1
Liquidity Agreement) to the Series 1997-1 Support Letter of Credit Providers
that:
(a) Representations and Warranties of RFC under the Series
1997-1 Liquidity Agreement. Each of the representations and
warranties of RFC set forth in the Series 1997-1 Liquidity Agreement
(other than those expressly stated to relate solely to an earlier
date, which representations and warranties shall be true and correct
as of such earlier date) without regard to any amendment to or waiver
of any such representations or warranties on or subsequent to the date
hereof not approved by an instrument in writing
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signed by the Series 1997-1 Majority Credit Enhancers, including,
without limitation, Sections 7.1 through 7.17 thereof, is true and
correct and is hereby incorporated herein by this reference.
(b) Financial Information; Financial Condition. All
financial statements (including the notes thereto) referred to in the
following sentence and hereafter furnished to the Series 1997-1
Support Letter of Credit Providers pursuant to Section 8.1.6(a) of the
Series 1997-1 Liquidity Agreement have been and will be prepared in
accordance with GAAP and do and will present fairly the financial
condition of RFC as of the dates thereof and the results of their
operations for the periods covered thereby, subject, in the case of
all unaudited statements, to normal year-end adjustments and lack of
footnotes and other presentation items. Such financial statements
include the audited consolidated balance sheet of RFC as of September
30, 1997 and the related statements of income as of and for the fiscal
month ending on such date, which have been furnished to each of the
Series 1997-1 Support Letter of Credit Providers on or prior to the
date hereof.
(c) Absence of Default. RFC is in compliance with all of the
provisions of its certificate of incorporation and by-laws and no
event has occurred or failed to occur which has not been remedied or
waived, the occurrence or non-occurrence of which constitutes an Event
of Default or a Potential Event of Default hereunder.
(d) Accuracy of Information. All certificates, reports,
statements, documents and other information furnished to the Series
1997-1 Support Letter of Credit Providers by RFC pursuant to any
provision of this Agreement or any Related Document, or in connection
with or pursuant to any amendment or modification of, or waiver under,
any Related Document, shall, at the time the same are so furnished, be
complete and correct in all material respects to the extent necessary
to give the Series 1997-1 Support Letter of Credit Providers true and
accurate knowledge of the subject matter thereof, and the furnishing
of the same to the Series 1997-1 Support Letter of Credit Providers
shall constitute a representation and warranty by RFC made on the date
the same are furnished to the Series 1997-1 Support Letter of Credit
Providers to the effect specified herein..
Section 3.5. Affirmative Covenants of RFC. RFC hereby covenants
that, until the expiration or termination of each Series 1997-1 Support Letter
of Credit and the payment in full in cash of all amounts owing to each of the
Series 1997-1 Support Letter of Credit Providers hereunder:
(a) Affirmative Covenants of RFC under the Series 1997-1
Liquidity Agreement. RFC shall comply with each of the affirmative
covenants set forth in the Series 1997-1 Liquidity Agreement without
regard to any amendment to or waiver of any such affirmative covenant
on or subsequent to the date hereof not approved by an instrument in
writing signed by the Series 1997-1 Majority Credit Enhancers,
including, without
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limitation, Sections 8.1.1 through 8.1.14 thereof, which affirmative
covenants are hereby incorporated herein by this reference.
(b) Inspections. RFC will permit representatives of any
Series 1997-1 Support Letter of Credit Provider, at RFC's expense in
the event an Event of Default hereunder has occurred and is
continuing, 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 and
as often as such Series 1997-1 Support Letter of Credit Provider may
reasonably deem appropriate (but not more often than once a month
prior to the occurrence of an Event of Default hereunder); provided,
however, the Series 1997-1 Support Letter of Credit Providers and/or
their agents or representatives, as applicable, examining any such
material shall use their commercially reasonable efforts to perform
such examination at the same time as any other Series 1997-1 Support
Letter of Credit Provider performs such examination and at the same
time as a Liquidity Lender or as the Series 1997-1 Liquidity Agent
performs such examination (provided RFC provides reasonable prior
written consent notice to each of the Series 1997-1 Support Letter of
Credit Providers of each such examination by Series 1997-1 Support
Letter of Credit Providers, a Liquidity Lender or the Series 1997-1
Liquidity Agent).
(c) Reporting Requirements. Except as otherwise specified
below, RFC shall furnish, or cause to be furnished to each of the
Series 1997-1 Support Letter of Credit Providers the items being
delivered to the Liquidity Lenders or the Series 1997-1 Liquidity
Agent under Sections 8.1.6 , 8.1.8 and 8.1.13 of the Series 1997-1
Liquidity Agreement.
(d) Delivery of Information. RFC shall provide the Series
1997-1 Support Letter of Credit Providers with any information or
materials reasonably necessary for the Series 1997-1 Support Letter of
Credit Providers to comply with its obligations under this Agreement
and their respective Series 1997-1 Support Letters of Credit.
(e) Further Requests. RFC will promptly furnish to each
Series 1997-1 Support Letter of Credit Provider such other information
as, and in such form as, such Series 1997-1 Support Letter of Credit
Provider may reasonably request.
(f) Series 1997-1 Majority Credit Enhancer's Approval. RFC
shall obtain the approval of the Series 1997-1 Majority Credit
Enhancers in each instance where approval of the Majority Banks is
required under Sections 8.2.3, 8.2.4, 8.2.9 and 8.2.11 of the Series
1997-1 Liquidity Agreement.
(g) Certain Agreements. (i) RFC will not, without the prior
written consent of the Series 1997-1 Majority Credit Enhancers, amend,
modify, waive or give any approval,
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consent or permission under, any provision of the Series 1997-1
Liquidity Agreement (including the Definitions List attached as Annex
A thereto) if such amendment, modification, waiver, approval, consent
or permission could reasonably be expected to have an adverse effect
on the Series 1997-1 Support Letter of Credit Providers, and (ii) RFC
will deliver to each of the Series 1997-1 Support Letter of Credit
Providers a copy of any amendment, supplement or other modification to
any CP Program Document (which copy need not be an original executed
copy of such amendment, supplement or other modification) to which RFC
is a party promptly following receipt by RFC of counterparts of such
amendment, supplement or other modification fully executed by each of
the parties thereto, provided that RFC shall not be required to make
such delivery if RFC has been notified by Republic that Republic or
any of the Lessees has made such delivery pursuant to Section 3.2(d).
Section 3.6. Negative Covenants of RFC. RFC hereby covenants and
agrees that, until the expiration or termination of each Series 1997-1 Support
Letter of Credit and the payment in full in cash of all amounts owing to each
of the Series 1997-1 Support Letter of Credit Providers hereunder:
(a) Negative Covenants of RFC under the Series 1997-1
Liquidity Agreement. RFC shall comply with each of the negative
covenants set forth in the Series 1997-1 Liquidity Agreement without
regard to any amendment to or waiver of any such negative covenants on
or subsequent to the date hereof not approved by an instrument in
writing signed by the Series 1997-1 Majority Credit Enhancers,
including, without limitation, Sections 8.2.1 through 8.2.13 thereof,
which negative covenants are hereby incorporated herein by this
reference.
(b) Name; Chief Executive Office. RFC will neither (i)
change the location of its chief executive office (within the meaning
of the UCC) without sixty (60) days' prior notice to the Series 1997-1
Collateral Agent, each Series 1997-1 Support Letter of Credit Provider
and each Rating Agency nor (ii) change its name without prior notice
to the Series 1997-1 Collateral Agent, each Series 1997-1 Support
Letter of Credit Provider and each Rating Agency sufficient to allow
the Series 1997-1 Collateral Agent to make all filings (including
filings of financing statements on form UCC-1) and recordings
necessary to perfect the interest of the Series 1997-1 Collateral
Agent in the Assigned Collateral pursuant to the Series 1997-1
Collateral Agreement.
(c) Offering Document. RFC will not include in any offering
document for the Commercial Paper Notes any information regarding any
Series 1997-1 Support Letter of Credit Provider which was not approved
or furnished by such Series 1997-1 Support Letter of Credit Provider.
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Section 3.7. Negative Covenant of NFLP. NFLP hereby covenants and
agrees that, until the expiration or termination of each Series 1997-1 Support
Letter of Credit and the payment in full in cash of all amounts owing to each
of the Series 1997-1 Support Letter of Credit Providers hereunder, NFLP will
not, without the prior written consent of the Series 1997-1 Majority Credit
Enhancers (in the case of clause (i) below) or the Majority Credit Enhancers
(in the case of clause (ii) below), amend, modify, waive or give any approval,
consent or permission under, (i) any provision of the Series 1997-1 Supplement
(including the Definitions List attached as Annex A thereto), the Series 1997-1
Note Purchase Agreement or the Series 1997-1 Notes or (ii) any provision of the
Master Collateral Agency Agreement if such amendment, modification, waiver,
approval, consent or permission could reasonably be expected to have an adverse
effect on the Series 1997-1 Support Letter of Credit Providers; provided that
any such amendment, modification, waiver, approval, consent or permission with
respect to Section 5.9 or 5.11 of the Series 1997-1 Supplement shall require
the prior written consent of the Series 1997-1 Majority Credit Enhancers.
Section 3.8. Series 1997-1 Support Letter of Credit Provider
Covenants. Each of the Series 1997-1 Support Letter of Credit Providers
covenants and agrees with each of the Lessees, RFC and Republic that on the
Series 1997-1 Closing Date it will provide to the Series 1997-1 Letter of
Credit Provider, the Series 1997-1 Liquidity Agent, the Trustee and the Series
1997-1 Collateral Agent the favorable written opinion of its special New York
counsel and, if necessary, the favorable written opinion of its internal
counsel, which opinions shall address the due authorization, execution and
delivery of its Series 1997-1 Support Letter of Credit and the enforceability
thereof against such Series 1997-1 Support Letter of Credit Provider.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Payments. (a) Unless otherwise specified herein, all
payments to the Series 1997-1 Support Letter of Credit Provider hereunder shall
be made in lawful currency of the United States and in immediately available
funds prior to 11:00 a.m. (New York City time) on the date such payment is due
by wire transfer to the respective addresses for wiring of funds to the Series
1997-1 Support Letter of Credit Providers set forth in Schedule 2 hereto, or to
such other office or account maintained by the Series 1997-1 Support Letter of
Credit Providers as any of the Series 1997-1 Support Letter of Credit Providers
may direct.
(b) Whenever any payment under this Agreement shall be stated to be
due on a day which is not a Business Day, such payment, unless otherwise
provided herein, shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in computing interest,
commissions or fees, if any, in connection with such payment.
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(c) RFC shall make payment of all amounts owing by it hereunder,
including, without limitation, reimbursement of Support Disbursements payable
by RFC and interest thereon, increased costs, fees and expenses, only to the
extent funds are available to RFC therefor, provided, however, that if RFC has
not made payment of any amount owing by it hereunder on the date on which such
payment is due, such non-payment may, in accordance with the terms of Section
2.17, constitute an Event of Default hereunder and the Series 1997-1 Support
Letter of Credit Providers shall have all rights pursuant thereto.
(d) Unless otherwise expressly provided in this Agreement or any
other Related Document, all payments by RFC, any of the Lessees or Republic
pursuant to this Agreement or any other Related Document shall be made by RFC,
such Lessee or Republic, as the case may be, to the Series 1997-1 Support
Letter of Credit Providers on a pro rata basis, which with respect to RFC
shall be on the basis of Support Liquidity Disbursements Outstanding or the RFC
Termination Reimbursement Share of Support Termination Disbursements
Outstanding to the extent such payments are on such basis, and which with
respect to any of the Lessees or Republic shall be on the basis of Support
Credit Disbursements Outstanding or the Lessee Termination Reimbursement Share
of Support Credit Disbursements Outstanding to the extent such payments are on
such basis, and if no Support Disbursements are Outstanding with respect to
RFC, any Lessee or Republic, as applicable, shall be on the basis of the
Support Letter of Credit Commitments of the Series 1997-1 Support Letter of
Credit Providers entitled to receive such payment. All such payments required
to be made to any of the Series 1997-1 Support Letter of Credit Providers by
RFC, any of the Lessees or Republic shall be made, without setoff, deduction or
counterclaim on the date due, in same day or immediately available funds,
pursuant to the wiring instructions set forth with respect to the related
Series 1997-1 Support Letter of Credit Providers in Schedule 2 attached hereto.
Section 4.2. Expenses. RFC agrees, solely with respect to Support
Liquidity Disbursements and the RFC Termination Reimbursement Share of Support
Termination Disbursements, and the Lessees and Republic agree, with respect to
Support Credit Disbursements and the Lessee Termination Reimbursement Share of
Support Termination Disbursements and in all other cases, to pay reasonable
attorneys' fees and expenses and all other reasonable out-of-pocket costs and
reasonable expenses incurred by the Series 1997-1 Support Letter of Credit
Providers, if any, in connection with the preparation, execution and delivery,
administration (other than overhead expenses), enforcement, amendment or waiver
of the obligations of RFC, NFLP the Lessees or Republic under this Agreement or
any other Related Document or any other agreement furnished hereto or in
connection herewith or in connection with any negotiations arising out of any
Potential Event of Default hereunder or any events or circumstances that may
give rise to a Potential Event of Default hereunder and with respect to
presenting claims in or otherwise participating in any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
ancillary proceedings (provided that attorneys' fees and expenses in connection
with the preparation, execution and delivery of this Agreement shall be paid by
a Lessee or Republic to the extent charged or incurred by counsel
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actually preparing this Agreement or to the extent otherwise previously agreed
to in writing by such Lessee or Republic).
The Lessees each agree to pay on demand all reasonable expenses of the
Series 1997-1 Support Letter of Credit Providers in connection with the filing,
recording, refiling or rerecording of this Agreement, the Related Documents
and/or any UCC financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or refiled or
rerecorded by the terms hereof.
In addition, RFC, solely with respect to Support Liquidity
Disbursements and the RFC Termination Reimbursement Share of Support
Termination Disbursements, and each of the Lessees agrees with respect to
Support Credit Disbursements and the Lessee Termination Reimbursement Share of
Support Termination Disbursements and in all other cases, to pay any and all
stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the Series 1997-1 Support Letters of Credit (or any payment thereunder or
transfer thereof), any CP Program Document and any other document executed or
delivered in connection therewith, and agree to save the Series 1997-1 Support
Letter of Credit Providers harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
Section 4.3. Indemnity. (a) The Lessees and Republic each agree to
indemnify and hold harmless the Series 1997-1 Letter of Credit Provider and
each Series 1997-1 Support Letter of Credit Provider and, in their capacities
as such, officers, directors, shareholders, affiliates, controlling persons,
employees, agents and servants of the Series 1997-1 Letter of Credit Provider
and each Series 1997-1 Support Letter of Credit Provider, from and against any
and all claims, damages (direct but not consequential), losses, liabilities,
costs or expenses whatsoever which the Series 1997- 1 Letter of Credit Provider
or such Series 1997-1 Support Letter of Credit Provider may incur or which may
be claimed against the Series 1997-1 Letter of Credit Provider or such Series
1997-1 Support Letter of Credit Provider by any Person whatsoever (including
reasonable fees and expenses of counsel) in each case arising out of or by
reason of or in connection with, or in connection with the preparation of a
defense of, any investigation, litigation or proceeding arising out of,
relating to or in connection with (x) the execution and delivery of the Series
1997-1 Letter of Credit, the related Series 1997-1 Support Letter of Credit,
this Agreement or other CP Program Document or other Related Document, (y) the
payment of (i) with respect to the Series 1997-1 Letter of Credit Provider, any
Series 1997-1 LOC Credit Disbursement or that share of any Series 1997-1 LOC
Termination Disbursement allocable to the Lessees as the Lessee Termination
Reimbursement Share of any Support Termination Disbursement or (ii) with respect
to the Series 1997-1 Support Letter of Credit Providers, any Support Credit
Disbursement or the Lessee Termination Reimbursement Share of any Support
Termination Disbursement payable by the Lessees or Republic under, the Series
1997-1 Letter of Credit, the related Series 1997-1 Support Letter of Credit,
this Agreement or other CP Program
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Document or other Related Document, or (z) the offering and sale of the
Commercial Paper Notes, or any acts or omissions of any of the Lessees or
Republic in connection herewith or therewith, or any transactions contemplated
hereby or thereby (whether or not consummated), or any inaccuracies or alleged
inaccuracies in any material respect or any untrue statement or alleged untrue
statement of any of the Lessees or Republic contained or incorporated by
reference in each CP Program Document and each Related Document or the omission
or alleged omission by any of the Lessees or Republic to state therein a
material fact necessary to make such statements, in the light of the
circumstances under which they are or were made, not misleading, except to the
extent that such claim, damage, loss, liability, cost or expense is caused by
the willful misconduct or gross negligence of the Series 1997-1 Letter of
Credit Provider or such Series 1997-1 Support Letter of Credit Provider. Each
of the Series 1997-1 Support Letter of Credit Providers hereby agrees to
indemnify the Series 1997-1 Letter of Credit Provider on a pro rata basis
(based on their respective Pro Rata Shares at the time the event that resulted
in the incurrence of the claim, damage, loss, liability, cost or expense
requiring indemnification occurred) to the extent, if any, that the Lessees or
Republic do not comply with their respective obligations to indemnify the
Series 1997-1 Letter of Credit Provider in the manner provided herein (provided
that any indemnity obligation of a Series 1997-1 Support Letter of Credit
Provider under this Section 4.3(a) shall not include any liability related to
any other Series 1997-1 Letter of Credit Provider's failure to pay under its
Series 1997-1 Letter of Credit).
(b) RFC agrees to indemnify and hold harmless the Series 1997-1
Letter of Credit Provider and each Series 1997-1 Support Letter of Credit
Provider and, in their capacities as such, officers, directors, shareholders,
affiliates, controlling persons, employees, agents and servants of the Series
1997-1 Letter of Credit Provider and each Series 1997-1 Support Letter of
Credit Provider, from and against any and all claims, damages (direct but not
consequential), losses, liabilities, costs or expenses whatsoever which the
Series 1997-1 Letter of Credit Provider or any Series 1997-1 Support Letter of
Credit Provider may incur or which may be claimed against the Series 1997-1
Letter of Credit Provider or such Series 1997-1 Support Letter of Credit
Provider by any Person whatsoever (including reasonable fees and expenses of
counsel) in each case arising out of or by reason of or in connection with, or
in connection with the preparation of a defense of, any investigation,
litigation or proceeding arising out of, relating to or in connection with (x)
the execution and delivery of the Series 1997-1 Letter of Credit, the related
Series 1997-1 Support Letter of Credit, this Agreement or other CP Program
Documents or other Related Documents, (y) the payment of (i) with respect to
the Series 1997-1 Letter of Credit Provider, any Series 1997-1 LOC Liquidity
Disbursement or any Series 1997-1 LOC Termination Disbursement allocable to RFC
as the RFC Termination Reimbursement Share of any Support Termination
Disbursement, and (ii) with respect to any Series 1997-1 Support Letter of
Credit Provider, any Support Liquidity Disbursement or the RFC Termination
Reimbursement Share of any Support Termination Disbursement, the Series 1997-1
Letter of Credit, the related Series 1997-1 Support Letter of Credit or this
Agreement or any other Related Document or (z) any acts or omissions of RFC in
connection herewith or therewith, or any transactions contemplated hereby or
thereby, except to the extent that such claim, damage, loss, liability, cost
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or expense is caused by the willful misconduct or gross negligence of the
Series 1997-1 Letter of Credit Provider or such Series 1997-1 Support Letter of
Credit Provider. Each of the Series 1997-1 Support Letter of Credit Providers
hereby agrees to indemnify the Series 1997-1 Letter of Credit Provider on a pro
rata basis (based on their respective Pro Rata Shares at the time the event
that resulted in the incurrence of the claim, damage, loss, liability, cost or
expense requiring indemnification occurred) to the extent, if any, that RFC
does not comply with its obligation to indemnify the Series 1997-1 Letter of
Credit Provider in the manner provided herein (provided that any indemnity
obligation of a Series 1997-1 Support Letter of Credit Provider under this
Section 4.3(b) shall not include any liability related to any other Series
1997-1 Letter of Credit Provider's failure to pay under its Series 1997-1
Letter of Credit).
Section 4.4. Notices. All notices, amendments, waivers, consents and
other communications provided to any party with respect to which any notice or
other communication is to be provided pursuant to this Agreement shall be in
writing and addressed, delivered or transmitted to such party at its address or
facsimile number set forth with respect to such party in Schedule 1 (with
respect to RFC, NFLP, the Lessees and Republic) or Schedule 2 (with respect to
the Series 1997-1 Support Letter of Credit Providers), as applicable, or in
each case at such other address or facsimile number as may be designated by any
such party or Person in a notice to the other parties hereto. Any notice, if
mailed or properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted
upon receipt of electronic confirmation of transmission.
Section 4.5. Waivers, Amendments, etc. Without limiting the effect of
any other provision of this Agreement, (i) the provisions of this Agreement and
the Series 1997 Lease and (ii) the provisions of the Series 1997-1 Letter of
Credit, the Series 1997-1 Collateral Agreement, the Series 1997-1 Collateral
Sharing Agreement and the Intercreditor Agreement may not be amended, modified
or waived, unless such amendment, modification or waiver is in writing and
consented to in writing by RFC, each of the Lessees and Republic, in each case
to the extent a beneficiary thereof, and the Majority Credit Enhancers (in the
case of clause (i) above) or the Series 1997-1 Majority Credit Enhancers (in
the case of the clause (ii) above); provided, however, (A) such consent will
not be required in connection with the extension of the scheduled expiration
date of the Series 1997-1 Letter of Credit, the increase of the Series 1997-1
Fronting Letter of Credit Amount or the modification of any notification or
delivery information set forth in the Series 1997-1 Letter of Credit; (B) any
modification of Section 2.9 or this Section 4.5, any requirement hereunder that
any action be taken by all the Series 1997-1 Support Letter of Credit Providers
or by the Series 1997-1 Majority Credit Enhancers or the Majority Credit
Enhancers or any change in the definition of the term "Majority Credit
Enhancers", "Series 1997-1 Majority Credit Enhancers", or any defined term used
for the purpose of any such definition shall require the consent of each Series
1997-1 Support Letter of Credit Provider and (C) any modification, amendment or
waiver of this Agreement that would directly or indirectly affect (x) the
obligations or liabilities of the Series 1997-1 Letter of Credit Provider under
the Series 1997-1
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Letter of Credit or (y) the rights and benefits of the Series 1997-1 Letter of
Credit Provider under any Series 1997-1 Support Letter of Credit or the GM
Series 1997-1 Support Agreement shall in each case require the prior written
consent of the Series 1997-1 Letter of Credit Provider. Notwithstanding the
foregoing, any amendment, waiver or other modification that would:
(a) increase any Series 1997-1 Support Letter of Credit
Provider's Support Letter of Credit Commitment or reduce fees payable
to the Series 1997-1 Support Letter of Credit Providers under Article
II shall require the consent of such Series 1997-1 Support Letter of
Credit Provider;
(b) amend the definition of Scheduled Support Expiration
Date shall require the consent of each Series 1997-1 Support Letter of
Credit Provider affected thereby;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on or
any other fees payable in connection with any Support Disbursement of
any Series 1997-1 Support Letter of Credit Provider (or reduce the
principal amount of or rate of interest on any Support Disbursement of
any Series 1997-1 Support Letter of Credit Provider), including,
without limitation, any term set forth in the Series 1997-1 Liquidity
Agreement, the Series 1997-1 Collateral Agreement or any other Related
Document necessary for determining any such due date, amount or rate
of interest, shall require the consent of each Series 1997-1 Support
Letter of Credit Provider affected thereby;
(d) modify or waive the conditions precedent to the
effectiveness of this Agreement set forth in Section 2.9 shall require
the consent of each Series 1997-1 Support Letter of Credit Provider;
(e) approve the assignment or transfer by RFC, any Lessee or
Republic of any of its rights or obligations hereunder or under any
other CP Program Document or other Related Document to which it is a
party except pursuant to the express terms hereof or thereof shall
require the consent of each Series 1997-1 Support Letter of Credit
Provider;
(f) release any of the Assigned Collateral from the Lien
under the Series 1997-1 Collateral Agreement or the Master Collateral
Agency Agreement, or release any obligor under any other CP Program
Document or other Related Document to which such obligor it is a party
except pursuant to the express terms of such CP Program Document or
such Related Document shall require the consent of each Series 1997-1
Support Letter of Credit Provider, provided, however, that the Series
1997-1 Collateral Agent or the Master Collateral Agent may release
liens on Vehicles in accordance with the Series 1997-1 Collateral
Agreement or the Master Collateral Agency Agreement; or
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(g) affect adversely the interests, rights or obligations of
RFC, any Lessee or Republic to any Series 1997-1 Support Letter of
Credit Provider individually in comparison to other Series 1997-1
Support Letter of Credit Providers shall require the consent of such
Series 1997-1 Support Letter of Credit Provider.
No failure or delay on the part of RFC, any of the Lessees, Republic,
the Series 1997-1 Support Letter of Credit Providers or the Enhancement Agent
in exercising any power or right under this Agreement or any other CP Program
Document or other Related Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
notice or demand on RFC, any of the Lessees, Republic, the Series 1997-1
Support Letter of Credit Providers or the Enhancement Agent in any case shall
entitle them to any notice or demand in similar or other circumstances. No
waiver or approval by RFC, any of the Lessees, Republic, the Series 1997-1
Support Letter of Credit Providers or the Enhancement Agent under this
Agreement or any other CP Program Document or other Related Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
Section 4.6. Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST ANY LESSEE, RFC, NFLP OR REPUBLIC WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR (TO THE EXTENT PERMITTED BY LAW)
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT EACH LESSEE, RFC, NFLP AND REPUBLIC
ACCEPT FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. REPUBLIC, RFC, NFLP AND EACH LESSEE DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM, WHOSE ADDRESS IS 1633 BROADWAY, NEW YORK, NEW
YORK 10019, AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY REPUBLIC,
EACH OF THE LESSEES, RFC, NFLP AND REPUBLIC IRREVOCABLY AGREEING IN WRITING TO
SERVE, AS ITS AGENT TO RECEIVE ON ITS BEHALF, SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
REPUBLIC, EACH OF THE LESSEES, RFC, NFLP AND REPUBLIC AS THE CASE MAY BE, TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF SUCH PROCESS SO
SERVED SHALL BE MAILED BY REGISTERED MAIL TO RFC SO SERVED AT ITS ADDRESS
PROVIDED PURSUANT TO SECTION 4.4, EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY
APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF
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SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY RFC REFUSES TO ACCEPT SERVICE,
RFC HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE SERIES 1997-1 SUPPORT
LETTER OF CREDIT PROVIDERS TO BRING PROCEEDINGS AGAINST ANY LESSEE, RFC, NFLP
OR REPUBLIC IN THE COURTS OF ANY OTHER JURISDICTION.
Section 4.7. Waiver of Jury Trial. THE SERIES 1997-1 SUPPORT LETTER
OF CREDIT PROVIDERS, EACH LESSEE, RFC, NFLP AND REPUBLIC HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE SERIES 1997-1 SUPPORT
LETTER OF CREDIT PROVIDERS, ANY LESSEE, RFC, NFLP OR REPUBLIC IN CONNECTION
HEREWITH OR THEREWITH. EACH LESSEE, RFC, NFLP AND REPUBLIC EACH ACKNOWLEDGE
AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SERIES
1997-1 SUPPORT LETTER OF CREDIT PROVIDERS ENTERING INTO THIS AGREEMENT.
Section 4.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE AN
AGREEMENT MADE UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 4.9. Severability. Any provisions of this Agreement which
are 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.
Section 4.10. Term. This Agreement shall remain in full force and
effect until the reimbursement of all Support Disbursements by the Lessees,
Republic or RFC, as the case may be, and the payment by the Lessees, Republic
or RFC, as the case may be, of all other amounts payable hereunder,
notwithstanding the earlier termination of each of the Series 1997-1 Support
Letters of Credit.
Section 4.11. Successors and Assigns. This Agreement shall be
binding upon each Series 1997-1 Support Letter of Credit Provider and its
successors and assigns, each Lessee and
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its successors and assigns, RFC and its successors and assigns, Republic and
its successors and assigns and NFLP and its successors and assigns; provided,
however, that none of the Lessees, RFC, NFLP or Republic may transfer or assign
any of its obligations, rights, or interests hereunder without the prior
written consent of each of the Series 1997-1 Support Letter of Credit Providers
and the prior written notification of each Rating Agency that its then current
rating of RFC's Outstanding Commercial Paper Notes shall not be reduced or
withdrawn as a result of such action; provided further, however, that each of
the Series 1997-1 Support Letter of Credit Providers may at any time (i) assign
all or a portion of its obligations under its Series 1997-1 Support Letter of
Credit and its rights under this Agreement to an Eligible Credit Enhancer;
provided, that with respect to any assignment by a Series 1997-1 Support Letter
of Credit Provider of all or a portion of such obligations and rights, (A) each
of the Series 1997-1 Letter of Credit Provider, RFC and Republic acting on
behalf of the Lessees shall have consented in writing to such assignment (which
consent in each case shall not be unreasonably withheld except with respect to
the Series 1997-1 Letter of Credit Provider, which shall consent to any
assignment in its sole discretion), (B) each such assignment shall be a
constant, and not a varying percentage of the assigning Series 1997-1 Support
Letter of Credit Provider's Support Letter of Credit Commitment and to its
related rights and obligations under this Agreement, (C) with respect to a
partial assignment, such assignment shall be for an amount at least equal to
the lesser of (i) $10,000,000 and (ii) such assignor's Support Letter of Credit
Commitment, (D) after giving effect to such assignment, the assignor thereof
shall have either no Support Letter of Credit Commitment or a Support Letter of
Credit Commitment aggregating at least $10,000,000 and the assignee thereof
shall have a Support Letter of Credit Commitment aggregating at least
$10,000,000, (E) the assignor and the assignee thereof shall each have executed
and delivered to the Series 1997-1 Letter of Credit Provider, Republic and RFC
an Assignment substantially in the form attached hereto as Exhibit C and the
assignee thereof shall have provided to the Series 1997-1 Letter of Credit
Provider an opinion or opinions of counsel in substantially the form attached
as Annexes A-1 and A-2 to such Exhibit C or otherwise reasonably satisfactory
to the Series 1997-1 Letter of Credit Provider (and such assignment shall not
be effective unless and until such assignment and such opinion are so executed
and delivered), (F) the assignor (if the assignor will continue to have a
Support Letter of Credit Commitment outstanding following such assignment) and
the assignee shall each have executed and delivered to the Series 1997-1
Support Letter of Credit Provider Series 1997-1 Support Letters of Credit in
substantially the form attached as Exhibit A hereto in amounts equal to their
respective Support Letter of Credit Commitments following such assignment and
(G) the assignor shall have paid all amounts due and owing by such Series
1997-1 Support Letter of Credit Provider to the Series 1997-1 Letter of Credit
Provider, or (ii) grant a participation to any other Person, in all or part of
its obligations under its Series 1997-1 Support Letter of Credit and its rights
under this Agreement (it being understood and agreed that the Lessees and RFC
shall have no obligation to give notices to any such participant, that such
participation will not in any way reduce the Series 1997-1 Support Letter of
Credit Provider's commitment to make Support Disbursements hereunder, and that
such participation (other than a participation held by another Series 1997
Support Letter of Credit Provider under any Series 1997 Support Reimbursement
Agreement) shall not increase the
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obligations (including with respect to costs and expenses) of the Series 1997-1
Lessees or RFC hereunder); provided that any Series 1997-1 Support Letter of
Credit Provider shall be entitled to receive any increased costs or indemnities
payable hereunder incurred by such Series 1997-1 Support Letter of Credit
Provider or such participant to the extent not in excess of such amounts
calculated as if there were no participation. Each of the Series 1997-1
Support Letter of Credit Providers hereby acknowledges and agrees that any
participation will not alter or affect such Series 1997-1 Support Letter of
Credit Provider's direct obligations to the Series 1997-1 Letter of Credit
Provider and that none of the Lessees, RFC or NFLP shall have any obligations
to have any communication or relationship with any participant in order to
enforce such obligations of such Series 1997-1 Support Letter of Credit
Provider hereunder and under the related Series 1997-1 Support Letters of
Credit. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement.
Section 4.12. Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties hereto on the same or
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same agreement.
Section 4.13. Further Assurances. The Lessees, Republic, RFC and
NFLP each agree to do such further acts and things and to execute and deliver
to any of the Series 1997-1 Support Letter of Credit Providers such additional
assignments, agreements, powers and instruments as are reasonably required by
such Series 1997-1 Support Letter of Credit Provider to carry into effect the
purposes of this Agreement and the other CP Program Documents or to better
assure and confirm to such Series 1997-1 Support Letter of Credit Provider its
rights, powers and remedies hereunder and under this Agreement and the other CP
Program Documents.
Section 4.14. Bankruptcy Petition Against RFC or NFLP. Each of the
Series 1997-1 Support Letter of Credit Providers hereby covenants and agrees
that, prior to the date which is one year and one day after the payment in full
of both (i) the latest maturing Commercial Paper Note and (ii) the Series
1997-1 Notes, it will not institute against, or join with any other Person in
instituting against, RFC or NFLP 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; provided, however,
that nothing in this Section 4.14 shall constitute a waiver of any right to
indemnification, reimbursement or other payment from any Lessee or RFC pursuant
to this Agreement. In the event that any of the Series 1997-1 Support Letter
of Credit Providers takes action in violation of this Section 4.14, RFC and
NFLP each agrees, for the benefit of the Holders, that it shall file an answer
with the bankruptcy court or otherwise properly contest the filing of such a
petition by such Series 1997-1 Support Letter of Credit Provider against RFC or
NFLP or the commencement of such action and raise the defense that any such
Series 1997-1 Support Letter of Credit Provider has agreed in writing not to
take such action and should be estopped and precluded therefrom and such other
defenses, if any, as its counsel advises that it may assert; and any such
Series 1997-1 Support Letter of Credit Provider acting
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on violation of this Section 4.14 shall be liable for and pay any costs and
expenses incurred by RFC or NFLP in connection therewith. The provisions of
this Section 4.14 shall survive the termination of the Agreement and the
replacement or removal of any of the Series 1997-1 Support Letter of Credit
Providers.
Section 4.15. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by Republic,
RFC, the Lessees and NFLP in connection herewith shall survive the execution
and delivery of this Agreement, regardless of any investigation made by any of
the Series 1997-1 Support Letter of Credit Providers or on its behalf and shall
continue so long as and until such time as all obligations hereunder and under
the CP Program Documents and all Commercial Paper Notes Outstanding shall have
been paid in full. The obligations of Republic, RFC and the Lessees under
Sections 2.7, 2.12, 2.13, 2.14, 2.15, 4.2 and 4.3 shall in each case survive
any termination of this Agreement, the payment in full of all obligations
hereunder or under any other CP Program Document and the termination of the
Series 1997-1 Support Letters of Credit.
Section 4.16. Obligation. The Series 1997-1 Support Letter of Credit
Providers, each of the Lessees and RFC each understand and agree that the
Series 1997-1 Support Letters of Credit are irrevocable and the obligations of
the Series 1997-1 Support Letter of Credit Providers as issuers thereof shall
be unaffected by any default hereunder, including, without limitation any
failure to pay the amounts due and payable to any of the Series 1997-1 Support
Letter of Credit Providers under Section 2.6. None of the failure of any of
the Lessees, Republic or RFC (or any person or organization acting on behalf of
either) or the Trustee or the Series 1997-1 Collateral Agent to take any action
(whether required hereunder or otherwise), nor any action taken by any of the
Lessees, Republic or RFC shall be asserted by any of the Series 1997-1 Support
Letter of Credit Providers as a defense to payment under its Series 1997-1
Support Letter of Credit (except for the failure of any documents presented
thereunder to comply with the terms of such Series 1997-1 Support Letter of
Credit) or as the basis of a right of set off by such Series 1997-1 Support
Letter of Credit Provider against its obligations to make any such payment.
Each Series 1997-1 Support Letter of Credit Provider acknowledges and agrees
that, in the event such Series 1997-1 Support Letter of Credit Provider makes a
Support Credit Disbursement, Support Liquidity Disbursement or Support
Termination Disbursement described in Section 2.2(c) to the Series 1997-1
Letter of Credit Provider on a date which is later than the date the Series
1997-1 Letter of Credit Provider made the Series 1997-1 LOC Credit
Disbursement, Series 1997-1 LOC Liquidity Disbursement or Series 1997-1 LOC
Termination Disbursement which resulted in such Support Credit Disbursement,
Support Liquidity Disbursement or Support Termination Disbursement,
respectively, interest shall accrue on such Support Credit Disbursement,
Support Liquidity Disbursement or Support Termination Disbursement, as the case
may be, at the Federal Funds Rate (as defined below) from (and including) the
date the respective Series 1997-1 LOC Credit Disbursement, Series 1997-1 LOC
Liquidity Disbursement or Series 1997-1 Termination Disbursement was made to
(but excluding) the date the corresponding amount of such Support Credit
Disbursement, Support Liquidity Disbursement or Support Termination
Disbursement is
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made and such interest shall be payable on demand by the Series 1997-1 Letter
of Credit Provider; provided that such interest shall not accrue to the extent
any delay in payment arises out of the failure of the Series 1997-1 Letter of
Credit Provider to draw on such Series 1997-1 Support Letter of Credit
Provider. "Federal Funds Rate" means, with respect to any day, the rate per
annum (rounded upward to the nearest 1/100 of 1%) announced by the Federal
Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight Federal funds transactions arranged by
Federal funds brokers on the previous trading day, as computed and announced by
such Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average it
refers to as the "Federal Funds Effective Rate" as of the date hereof;
provided, that if such Federal Reserve Bank (or its successor) does not
announce such rate on any day, the "Federal Funds Rate" for such day shall be
the Federal Funds Rate for the last day on which such rate was announced.
Section 4.17. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 4.18. Application of Funds. Upon receipt of the Deposited
Funds from the Series 1997-1 Cash Collateral Account pursuant to Section 5.13
of the Series 1997-1 Supplement, the Series 1997-1 Support Letter of Credit
Providers shall apply such amounts to the payment in full of any and all
obligations of the Lessees or RFC under or in respect of their respective
Series 1997-1 Support Letters of Credit or hereunder; any amounts remaining
thereafter shall be returned to the Lessees or to whomever is legally entitled
thereto.
Section 4.19. Limited Recourse to RFC and NFLP. (a) Notwithstanding
any other provision of this Agreement or any other agreement or instrument
relating to the Series 1997-3 Support Letters of Credit, the Series 1997-1
Support Letter of Credit Providers each agree that (i) the obligations of RFC
to the Series 1997-1 Support Letter of Credit Providers hereunder shall be
payable in the order and priority set forth in Sections 2.01 and 5.02(b), as
applicable, of the Series 1997-1 Collateral Agreement and (ii) the obligations
of NFLP under the Series 1997-1 Note shall be payable in the order and priority
set forth in Articles 6 and 9 of the Base Indenture and Article V of the Series
1997-1 Supplement. The Series 1997-1 Support Letter of Credit Providers agree
that, during any period prior to the Scheduled Liquidity Commitment Expiration
Date that Commercial Paper Notes shall be outstanding (any such period being a
"Designated Period"), the obligations of RFC to the Series 1997-1 Support
Letter of Credit Providers hereunder or NFLP under the Series 1997-1 Note shall
be due and payable only to the extent that RFC's or NFLP's assets, as the case
may be, are sufficient to pay the same. If, during any Designated Period, the
Series 1997-1 Majority Credit Enhancers shall exercise their right, pursuant to
Section 2.17, to accelerate Support Disbursements outstanding payable by RFC,
such acceleration shall have the limited effect of allowing the Series 1997-1
Support Letter of Credit Providers, in any determination of the allocative
share of any disbursement to be made to
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Secured Parties under the Series 1997-1 Collateral Agreement or otherwise among
creditors of RFC, to treat all of the Support Disbursements payable by RFC
outstanding as then being due and payable. No claims of the Series 1997-1
Support Letter of Credit Providers arising under or in connection with this
Agreement are intended to be impaired or waived by this Section 4.19.
(b) Without limiting the obligations of RFC hereunder, no recourse
shall be had for the payment of any amount owing in respect of any disbursement
made under this Agreement or for the payment of any fee hereunder or any other
obligation or claim arising out of or based upon this Agreement against any
stockholder, employee, officer, director, affiliate or incorporator of RFC
based on their status as such or their actions in connection therewith. The
provisions of this Section 4.19(b) shall survive the termination of this
Agreement.
Section 4.20. Waiver of Set-Off. Each of the Series 1997-1 Support
Letter of Credit Providers hereby waives and relinquishes any right that it has
or may have to set-off or to exercise any banker's lien or any right of
attachment or garnishment with respect to any funds at any time and from time
to time on deposit in, or otherwise to the credit of, any account and any
claims of RFC or NFLP therein or with respect to any right to payment from RFC
or NFLP, it being understood, however, that nothing contained in this Section
4.20 shall, or is intended to, derogate from the assignment and security
interest granted to the Series 1997-1 Collateral Agent under the Series 1997-1
Collateral Agreement or impair any rights of the Series 1997-1 Support Letter
of Credit Providers or the Series 1997-1 Collateral Agent thereunder.
Section 4.21. Confidentiality. Each of the Series 1997-1 Support
Letter of Credit Providers hereby agrees that it shall not disclose any
Confidential Information (as defined below) to any Person without the consent
of Republic, the Lessees, RFC or NFLP, as applicable, other than (a) to such
Series 1997-1 Support Letter of Credit Provider's Affiliates and their
respective officers, directors, employees, agents and advisors and to actual or
prospective assignees and participants, and then only on a confidential basis,
(b) as required by any law, rule or regulation or judicial process and (c) as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.
"Confidential Information" means information that Republic, any
Lessees, RFC or NFLP furnishes to any of the Series 1997-1 Support Letter of
Credit Providers on a confidential basis, but does not include any such
information that is or becomes generally available to the public other than as
a result of a disclosure by any Series 1997-1 Support Letter of Credit Provider
or other Person to which a Series 1997-1 Support Letter of Credit Provider
delivered such information or that is or becomes available to the Series 1997-1
Support Letter of Credit Providers from a source other than Republic, the
Lessees, RFC or NFLP , provided that such source is not (i) known to such
Series 1997-1 Support Letter of Credit Provider to be bound by a
confidentiality agreement with Republic, the applicable Lessee, RFC or NFLP, as
the case may be, or (ii) known to such Series 1997-1 Support Liquidity Provider
to be otherwise prohibited from transmitting the information by a contractual,
legal or fiduciary obligation.
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Section 4.22. Additional Series 1997-1 Support Letter of Credit
Providers. Each of the Series 1997-1 Support Letter of Credit Providers
acknowledges and agrees that the Lessees, Republic and RFC may obtain
additional commitments from additional Series 1997-1 Support Letter of Credit
Providers from time to time (including, without limitation, any additional
Series 1997-1 Support Letter of Credit issued pursuant to Section 2.1(c)(ii) of
the GM Series 1997-1 Support Reimbursement Agreement), which commitments,
unless the Series 1997-1 Support Letter of Credit Providers and the Series
1997-1 Letter of Credit Provider otherwise consent, shall be in all material
respects on the same terms and provisions as set forth in this Agreement and
with respect to which each Lessee's, RFC's and Republic's obligations will rank
pari passu with the obligations of each Lessee, RFC and Republic hereunder;
provided that (i) any such additional commitments from additional Series 1997-1
Support Letter of Credit Providers shall be subject to the prior written
consent of the Series 1997-1 Letter of Credit Provider as evidenced by its
execution and delivery of the Series 1997-1 Support Letter of Credit Provider
Joinder in Support Reimbursement Agreement referred to below with respect to
any additional Series 1997-1 Support Letter of Credit Provider and (ii) such
additional Series 1997-1 Support Letter of Credit Provider's Support Letter of
Credit Commitment shall be an amount at least equal to $10,000,000 (unless
otherwise consented to by the Series 1997-1 Letter of Credit Provider). In the
event that the Lessees, RFC and Republic desire for any Person to become an
additional "Series 1997-1 Support Letter of Credit Provider" under this
Agreement in respect of any such additional commitments, then:
(i) RFC, Republic (acting on its own behalf and on behalf of
the Lessees), such Person and the Series 1997-1 Letter of Credit
Provider shall execute and deliver to each other a Series 1997-1
Support Letter of Credit Provider Joinder in Support Reimbursement
Agreement substantially in the form attached hereto as Exhibit D (a
"Series 1997-1 Support Letter of Credit Provider Joinder in Support
Reimbursement Agreement");
(ii) such Person shall execute and deliver to the Series
1997-1 Letter of Credit Provider a Series 1997-1 Support Letter of
Credit substantially in the form of Exhibit A hereto in an amount
equal to the Support Letter of Credit Commitment proposed by Republic
with respect to such Person and otherwise in form and substance
acceptable to Republic, RFC and the Series 1997-1 Letter of Credit
Provider;
(iii) such Person shall execute and deliver to the Series
1997-1 Letter of Credit Provider an Officer's Certificate and an
opinion of counsel addressed to the Series 1997-1 Letter of Credit
Provider as to the Series 1997-1 Support Letter of Credit executed and
delivered by such Person, in form and substance reasonably acceptable
to each of Republic, RFC and the Series 1997-1 Letter of Credit
Provider.
Upon satisfaction of the foregoing conditions, such Person shall for all
purposes be deemed to be a "Series 1997-1 Support Letter of Credit Provider"
for purposes of this Agreement and shall be
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entitled to the benefits and subject to the liabilities and obligations of a
Series 1997-1 Support Letter of Credit Provider hereunder.
Section 4.23. Obligations Several, Not Joint. The obligations of
each Lessee hereunder to the Series 1997-1 Support Letter of Credit Providers,
on the one hand, and RFC hereunder to the Series 1997-1 Support Letter of
Credit Providers, on the other hand, shall be several and not joint. No
obligation of the Lessees shall be payable by RFC, and no obligation of RFC
shall be payable by the Lessees.
Section 4.24. Additional Lessees. Any direct or indirect Subsidiary
of or other Affiliate of Republic (each a "Republic Affiliate") shall have the
right to become a "Lessee" under and pursuant to the terms of this Agreement by
complying with the provisions of Section 29.1 of the Series 1997 Lease and the
provisions of this Section 4.24. In the event a Republic Affiliate desires to
become a "Lessee" under this Agreement, then Republic and such Republic
Affiliate shall execute and deliver to the Enhancement Agent (which will
deliver copies thereof to each of the Series 1997-1 Support Letter of Credit
Providers as of the date thereof):
(i) a Lessee Joinder in Support Reimbursement Agreement
substantially in the form attached hereto as Exhibit E (each, a
"Lessee Joinder in Support Reimbursement Agreement");
(ii) copies of the documentation set forth in Section 29.1 of
the Series 1997 Lease;
(iii) an Officer's Certificate and an opinion of counsel each
stating that the Lessee Joinder in Support Reimbursement Agreement
executed and delivered by such Republic Affiliate complies with this
Section 4.24 and that all conditions precedent herein provided for
relating to such transaction have been complied with;
(iv) a Lessee Joinder in Series 1997-1 Letter of Credit
Agreement substantially in the form of Exhibit B to the Series 1997-1
Letter of Credit Agreement; and
(v) any additional documentation that any of the Series
1997-1 Support Letter of Credit Providers or the Enhancement Agent may
require to evidence the assumption by such Republic Affiliate of the
obligations and liabilities set forth in this Agreement.
Upon satisfaction of the foregoing conditions and receipt by each of the
Enhancement Agent, the Trustee and the Series 1997-1 Letter of Credit Provider
of the Lessee Joinder in Support Reimbursement Agreement executed by such
Republic Affiliate and Republic such Republic Affiliate shall be deemed to be a
"Lessee" for purposes of this Agreement and shall be entitled to the benefits
and subject to the liabilities and obligations of a Lessee hereunder.
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<PAGE> 67
Section 4.25. Subordination of Obligations Pursuant to Intercreditor
Agreement. The parties hereto hereby acknowledge and agree that the
obligations of RFC and each of the Lessees represented hereby are subject to
the terms and provisions of the Intercreditor Agreement which, among other
things, contains provisions subordinating to the prior payment in full, in
cash, of the obligations hereunder of RFC and each of the Lessees to the
obligations of RFC and each of the Lessees to the holders of Senior Debt (as
defined in the Intercreditor Agreement) in the manner provided in the
Intercreditor Agreement, to which provisions each of the parties hereunder
agrees.
Section 4.26. Subrogation, etc. In the event a Series 1997-1 Support
Letter of Credit Provider fails to honor a Support Credit Demand, Support
Liquidity Demand, Support Termination Demand or Support Termination Demand for
Nonextension (as such terms are defined in Exhibit A hereto), the Series 1997-1
Letter of Credit Provider shall be deemed to have made a Support Credit
Disbursement, Support Liquidity Disbursement or Support Termination
Disbursement in the amount of such Support Credit Demand, Support Liquidity
Demand, Support Termination Demand or Support Termination Demand for
Nonextension, respectively, not paid to the Series 1997-1 Letter of Credit
Provider and, until such Support Credit Demand, Support Liquidity Demand,
Support Termination Demand or Support Termination Demand for Nonextension is
paid in full, shall be entitled to receive from the Lessees, Republic, NFLP,
RFC or any other Person obligated hereunder any and all payments and
distributions payable hereunder in respect of such Support Credit Disbursement,
Support Liquidity Disbursement or Support Termination Disbursement
("Subrogation Payments") and shall be subrogated to all other rights of such
Series 1997-1 Support Letter of Credit Provider hereunder to the extent of such
Support Credit Disbursement, Support Liquidity Disbursement or Support
Termination Disbursement that is so deemed to have been made hereunder;
provided, however, that, to the extent any Lessee, Republic, NFLP, RFC or any
other Person makes any payment or distribution described in this Section 4.26
to the Series 1997-1 Letter of Credit Provider, it shall be subrogated to the
rights of the Series 1997-1 Letter of Credit Provider against such Series
1997-1 Support Letter of Credit Provider; provided, further, however, that (i)
the Series 1997-1 Support Letter of Credit Provider's obligations in favor of
the Series 1997-1 Letter Credit Provider are not reduced, diminished or
substituted hereby (except to the extent of Subrogation Payments received and
retained by the Series 1997-1 Letter of Credit Provider), (ii) the Series
1997-1 Support Letter of Credit Provider continues to be fully obligated to
honor drawings under its Series 1997-1 Support Letter of Credit and (iii) the
Series 1997-1 Letter of Credit Provider incurs no duty, liability or obligation
in favor or any Lessee, Republic, NFLP, RFC, the Series 1997-1 Support Letter
of Credit Provider or any other Person as a result of the rights granted to it
under this Section 4.26.
[Remainder of Page Intentionally Blank]
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<PAGE> 68
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers, as of the day and year
first above written.
REPUBLIC INDUSTRIES FUNDING CORP.
By: /s/ Dwight Jenkins
--------------------------------
Name: Dwight Jenkins
Title: Vice President and
Assistant Secretary
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP
By: NATIONAL CAR RENTAL
FINANCING CORPORATION,
its General Partner
By: /s/ Dwight Jenkins
---------------------------
Name: Dwight Jenkins
Title: Vice President and
Assistant Secretary
REPUBLIC INDUSTRIES, INC.
By: /s/ Kathleen W. Hyle
--------------------------------
Name: Kathleen W. Hyle
Title: Vice President and Treasurer
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<PAGE> 69
LESSEES:
ALAMO RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
--------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
NATIONAL CAR RENTAL SYSTEM, INC.
By: /s/ Kathleen W. Hyle
--------------------------------
Name: Kathleen W. Hyle
Title: Assistant Treasurer
SPIRIT RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
--------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
VALUE RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
--------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
S-2
<PAGE> 70
SERIES 1997-1 SUPPORT LETTER
OF CREDIT PROVIDERS:
CREDIT SUISSE FIRST BOSTON,
as a Series 1997-1 Support Letter of Credit
Provider
By: /s/ Robert N. Finney
----------------------------------
Name: Robert N. Finney
Title: Managing Director
NATIONSBANK, N.A.,
as a Series 1997-1 Support Letter of Credit
Provider
By: /s/ Andrew M. Airheart
----------------------------------
Name: Andrew M. Airheart
Title: Senior Vice President
CANADIAN IMPERIAL BANK OF COMMERCE, as a Series
1997-1 Support Letter of Credit Provider
By: /s/ Roger Colden
--------------------------------------
Name: Roger Colden
Title: Director, CIBC Wood Gundy
Securities, Corp., as Agent
THE FIRST NATIONAL BANK OF CHICAGO,
as a Series 1997-1 Support Letter of Credit
Provider
By: /s/ Brooks P. Crankshaw
----------------------------------
Name: Brooks P. Crankshaw
Title: Authorized Agent
CAISSE NATIONALE DE CREDIT AGRICOLE,
as a Series 1997-1 Support Letter of Credit
Provider
By: /s/ Katherine L. Abbott
----------------------------------
Name: Katherine L. Abbott
Title: First Vice President
S-3
<PAGE> 71
THE BANK OF NEW YORK,
as a Series 1997-1 Support Letter of
Credit Provider
By: /s/ David C. Siegel
----------------------------------
Name: David C. Siegel
Title: Vice President
Note: Pursuant to Instruction 2 to Item 601(a) of Regulation S-K, the registrant
has not filed the documents relating to Series 1997-2 notes, Series 1997-3
notes or Series 1997-4 notes which are substantially similar to the
document filed herewith relating to the Series 1997-1 notes.
S-4
<PAGE> 1
EXHIBIT 4.7
================================================================================
SERIES 1997-1 LETTER OF CREDIT AGREEMENT
Dated as of October 29, 1997
among
REPUBLIC INDUSTRIES FUNDING CORP.,
ALAMO RENT-A-CAR, INC.,
NATIONAL CAR RENTAL SYSTEM, INC.,
SPIRIT RENT-A-CAR, INC.,
VALUE RENT-A-CAR, INC.,
those additional Subsidiaries and Affiliates
of Republic Industries, Inc.
from time to time becoming Additional Lessees hereunder,
REPUBLIC INDUSTRIES, INC.
and
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
as the Series 1997-1 Letter of Credit Provider
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
RECITALS......................................................................1
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.....................................................3
ARTICLE II
ISSUANCE OF SERIES 1997-1 LETTER OF CREDIT
AND CERTAIN RELATED MATTERS
Section 2.1. Issuance of Series 1997-1 Letter of Credit .....................4
Section 2.2. Facility Fees...................................................6
Section 2.3. No Liability of Series 1997-1 Letter of Credit Provider.........6
Section 2.4. Surrender of the Series 1997-1 Letter of Credit.................7
Section 2.5. Conditions Precedent to Issuance................................7
Section 2.6. Increased Capital Costs, etc...................................10
Section 2.7. Taxes..........................................................11
Section 2.8. Replacement of Series 1997-1 Letter of Credit Provider.........13
Section 2.9. Obligation Absolute............................................13
Section 2.10. Amendments to GM Series 1997-1
Support Reimbursement Agreement................................14
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. Representations and Warranties of the Lessees and Republic.....15
Section 3.2. Representations and Warranties of RFC..........................16
Section 3.3. Series 1997-1 Letter of Credit Provider Covenants..............17
</TABLE>
<PAGE> 3
ARTICLE IV
MISCELLANEOUS
<TABLE>
<S> <C> <C> <C>
Section 4.1. Payments......................................................18
Section 4.2. Expenses......................................................18
Section 4.3. Indemnity.....................................................19
Section 4.4. Notices.......................................................20
Section 4.5. Amendments, etc...............................................20
Section 4.6. Consent to Jurisdiction.......................................20
Section 4.7. Waiver of Jury Trial..........................................21
Section 4.8. Governing Law.................................................21
Section 4.9. Severability..................................................21
Section 4.10. Term..........................................................22
Section 4.11. Successors and Assigns........................................22
Section 4.12. Counterparts..................................................22
Section 4.13. Bankruptcy Petition Against RFC...............................22
Section 4.14. Survival of Representations and Warranties....................22
Section 4.15. Obligation....................................................23
Section 4.16. Headings......................................................23
Section 4.17. [Reserved]....................................................23
Section 4.18. Limited Recourse to RFC.......................................23
Section 4.19. Waiver of Set-Off.............................................23
Section 4.20. Confidentiality...............................................24
Section 4.21. Nature of Obligations.........................................24
Section 4.22. Additional Lessees............................................24
Section 4.23. Other Obligations and Rights of the Series
1997-1 Letter of Credit Provider..............................25
Section 4.24. Benefit for the Series 1997-1 Letter of Credit Provider.......25
</TABLE>
Schedule 1 - Addresses for Notices as of Date of Execution of Agreement
EXHIBIT A - Form of Irrevocable Letter of Credit
EXHIBIT B - Form of Lessee Joinder in Series 1997-1 Letter of Credit Agreement
<PAGE> 4
SERIES 1997-1 LETTER OF CREDIT AGREEMENT
THIS SERIES 1997-1 LETTER OF CREDIT AGREEMENT, dated as of October 29,
1997 (as amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms hereof, this "Agreement"), is entered into by and
among REPUBLIC INDUSTRIES FUNDING CORP., a Delaware corporation ("RFC"), ALAMO
RENT-A-CAR, INC., a Florida corporation ("Alamo"), NATIONAL CAR RENTAL SYSTEM,
INC., a Delaware corporation ("National"), SPIRIT RENT-A-CAR, INC., an Ohio
corporation ("Spirit"), VALUE RENT-A-CAR, INC., a Florida corporation ("Value"),
those additional Subsidiaries and other Affiliates of Republic (as defined
below) that become party to this Agreement from time to time pursuant to the
provisions of Section 4.22 hereof (each an "Additional Lessee" and,
collectively, the "Additional Lessees"; each of the Additional Lessees, Alamo,
National, Spirit and Value, a "Lessee" and, collectively, the "Lessees"),
REPUBLIC INDUSTRIES, INC., a Delaware corporation ("Republic"), and WESTDEUTSCHE
LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as the Series 1997-1 Letter of Credit
Provider (in such capacity, the "Series 1997-1 Letter of Credit Provider").
RECITALS
1. Contemporaneously with the execution and delivery of this Agreement,
National Car Rental Financing Limited Partnership, a Delaware limited
partnership ("NFLP"), as issuer, and The Bank of New York, a New York banking
corporation, as Trustee (in such capacity, the "Trustee") and Enhancement Agent
(in such capacity, the "Enhancement Agent"), are entering into the Series 1997-1
Supplement, dated as of even date herewith (as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof, the "Series 1997-1 Supplement"), to the Base Indenture,
dated as of April 30, 1996 (as amended by the Supplement and Amendment to Base
Indenture, dated as of December 20, 1996, between NFLP and the Trustee, and as
the same may be further amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms thereof, the "Base Indenture"),
between NFLP and the Trustee, pursuant to which NFLP will issue the Series 1997-
1 Notes (such capitalized terms, together with all other capitalized terms used
herein, shall have the meanings assigned thereto pursuant to Section 1.1).
2. Contemporaneously with the execution and delivery of this Agreement,
RFC will purchase the Series 1997-1 Notes from NFLP pursuant to the Series
1997-1 Note Purchase Agreement and will thereafter make advances to NFLP from
time to time, the proceeds of which will be used by NFLP to acquire, finance the
acquisition of and/or refinance Vehicles and Eligible Receivables to be leased
by NFLP in its capacity as the Lessor to the Lessees for use in
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<PAGE> 5
the respective domestic daily rental businesses of the Lessees and Fleet Sharing
Parties pursuant to the Lease.
3. Contemporaneously with the execution and delivery of this Agreement,
RFC and the Depositary are entering into the Depositary Agreement pursuant to
which RFC will issue its Commercial Paper Notes for sale in the commercial paper
markets and RFC and the Dealers are entering into the Dealer Agreement pursuant
to which the Dealers will act as Dealers with respect to RFC's sale of the
Commercial Paper Notes in the commercial paper markets.
4. Contemporaneously with the execution and delivery of this Agreement,
RFC, the Liquidity Lenders and the Series 1997-1 Liquidity Agent are entering
into the Series 1997-1 Liquidity Agreement to provide for the Liquidity Lenders
to make Liquidity Advances to RFC from time to time that will be used to (i)
repay the maturing Commercial Paper Notes, (ii) repay maturing Liquidity
Advances and (iii) make additional advances to NFLP under the Series 1997- 1
Notes.
5. Contemporaneously with the execution and delivery of this Agreement,
NFLP, the Lessees, the Master Collateral Agent, Republic and the Financing
Sources and Beneficiaries as of the Series 1997-1 Closing Date are entering into
the Master Collateral Agency Agreement in which NFLP and the Lessees will grant
to the Master Collateral Agent for the benefit of the Financing Sources and the
Beneficiaries a first priority security interest in their respective interests
in the Vehicles, the Manufacturer Programs and the other property identified
therein as the Master Collateral.
6. Contemporaneously with the execution and delivery of this Agreement,
RFC, the Series 1997-1 Liquidity Agent, the Depositary, the Dealers, the Series
1997-1 Support Letter of Credit Providers, the GM Series 1997-1 Support Provider
and the Series 1997-1 Collateral Agent are entering into the Series 1997-1
Collateral Agreement in which RFC will pledge and assign its right, title and
interest in and to the Master Collateral to the Series 1997-1 Collateral Agent
for the benefit of the other parties to the Series 1997-1 Collateral Agreement,
the Liquidity Lenders, the holders of the Commercial Paper Notes and the Series
1997-1 Cash Collateral Account.
7. Contemporaneously with the execution and delivery of this Agreement,
the Series 1997-1 Letter of Credit Provider is issuing the Series 1997-1 Letter
of Credit to the Enhancement Agent (i) as liquidity support for RFC's obligation
to repay maturing Commercial Paper Notes, (ii) as partial credit support for
amounts owed by the Lessees under the Series 1997 Lease and (iii) as credit
support for amounts owed by National under Section 5.10 of the Series 1997-1
Supplement.
8. Contemporaneously with the execution and delivery of this Agreement,
the Series 1997-1 Support Letter of Credit Providers are issuing their
respective Series 1997-1 Support Letters of Credit and the GM Series 1997-1
Support Provider is issuing the GM Series 1997-1
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<PAGE> 6
Support Agreement to reimburse the Series 1997-1 Letter of Credit Provider on a
pro rata basis for amounts drawn on the Series 1997-1 Letter of Credit.
9. Contemporaneously with the execution and delivery of this Agreement,
RFC, the Lessees, NFLP, Republic and the Series 1997-1 Support Letter of Credit
Providers are entering into the Series 1997-1 Support Reimbursement Agreement to
provide for the reimbursement by RFC and the Lessees of amounts drawn on the
Series 1997-1 Support Letters of Credit by the Series 1997-1 Letter of Credit
Provider and the guaranty of the Lessees' reimbursement obligations by Republic.
10. Contemporaneously with the execution and delivery of this
Agreement, RFC, the Lessees, NFLP and the GM Series 1997-1 Support Provider are
entering into the GM Series 1997-1 Support Reimbursement Agreement to provide
for the reimbursement by RFC and the Lessees of amounts drawn on the GM Series
1997-1 Support Agreement by the Series 1997-1 Letter of Credit Provider,
provided that any such payment by RFC or any Lessee on any date shall only be
after payment by RFC or such Lessee of any amounts due and payable by RFC or
such Lessee as of such date to the Series 1997-1 Support Letter of Credit
Providers under the Series 1997-1 Support Reimbursement Agreement as of such
date.
11. RFC, the Lessees, Republic and the Series 1997-1 Letter of Credit
Provider are entering into this Agreement to provide for the payment and
repayment of certain fees and expenses and other obligations of RFC, the Lessees
and Republic to the Series 1997-1 Letter of Credit Provider in connection with
the issuance and delivery by the Series 1997-1 Letter of Credit Provider of the
Series 1997-1 Letter of Credit.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, and for due and adequate consideration, which the parties
hereto hereby acknowledge, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement and unless the
context requires a different meaning, capitalized terms used but not defined
herein (including the preamble and the recitals hereto) shall have the meanings
assigned to such terms, in all cases only as of the date hereof and with such
amendments and modifications as may be agreed upon in writing by the Series
1997-1 Letter of Credit Provider, in Section 2.1 of the Series 1997-1 Supplement
(including by reference therein to the Definitions Lists attached as (i) Annex A
to the Series
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<PAGE> 7
1997-1 Supplement, (ii) Schedule 1 to the Base Indenture, as amended and
supplemented as of the date hereof, and (iii) Annex A to the Liquidity
Agreement).
ARTICLE II
ISSUANCE OF SERIES 1997-1 LETTER OF CREDIT
AND CERTAIN RELATED MATTERS
Section 2.1. Issuance of Series 1997-1 Letter of Credit . (a) The
Series 1997-1 Letter of Credit Provider hereby agrees, on the terms and subject
to the conditions hereinafter set forth, to issue to the Enhancement Agent an
irrevocable letter of credit of even date herewith in substantially the form
attached hereto as Exhibit A (as such letter of credit may be amended,
supplemented, restated or otherwise modified or substituted or replaced from
time to time in accordance with the terms thereof, the "Series 1997-1 Letter of
Credit") in an initial amount equal to TWO HUNDRED THIRTY MILLION DOLLARS
($230,000,000) (the Series 1997-1 Letter of Credit Provider's "Series 1997-1
Letter of Credit Commitment") as such amount may be reduced and increased from
time to time in accordance with the terms of the Series 1997-1 Letter of Credit,
for a term expiring on September 24, 2000 (or if any such date is not a Business
Day, the immediately preceding Business Day) or such later date to which the
term is extended pursuant to Section 2.1(c) (the "Scheduled Letter of Credit
Expiration Date").
(b) If a successor Enhancement Agent is appointed, promptly following
the appointment of such successor Enhancement Agent pursuant to the terms of the
Series 1997-1 Letter of Credit, and upon receipt of an Instruction to Transfer
substantially in the form of Annex G to the Series 1997-1 Letter of Credit, the
Series 1997-1 Letter of Credit Provider shall deliver for the benefit of such
successor Enhancement Agent, in exchange for the then outstanding Series 1997-1
Letter of Credit, a substitute letter of credit having terms substantially
identical to the then outstanding Series 1997-1 Letter of Credit but in favor of
such successor.
(c) If Republic, on behalf of the Lessees, and RFC wish to extend the
Scheduled Letter of Credit Expiration Date for purposes of this Agreement, they
shall give the Series 1997-1 Letter of Credit Provider written notice to such
effect not more than ninety (90) days and not less than seventy-five (75) days
prior to the date that is one year from the Series 1997-1 Closing Date (or if
such day is not a Business Day then on the next succeeding Business Day) and
thereafter not more than ninety (90) days and not less than seventy-five (75)
days prior to each subsequent one-year anniversary of the Series 1997-1 Closing
Date. If Republic, on behalf of the Lessees, and RFC shall make such request,
the Series 1997-1 Letter of Credit Provider shall notify each of Republic, RFC
and the Enhancement Agent in writing of its decision whether or not to so extend
its Scheduled Letter of Credit Expiration Date, which decision shall be in its
sole and absolute discretion, not later than thirty (30) days after the notice
is given from RFC and Republic on behalf of the Lessees referred to above,
stating that the Series 1997-1 Letter of Credit Provider
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<PAGE> 8
has or has not agreed to extend such Scheduled Letter of Credit Expiration Date
for an additional year (or lesser period) and, if the Series 1997-1 Letter of
Credit Provider does so consent, the conditions of such consent (including
conditions relating to legal documentation). If the Series 1997-1 Letter of
Credit Provider shall not so notify RFC and Republic on behalf of the Lessees,
the Series 1997-1 Letter of Credit Provider shall be deemed not to have
consented to such request. If the Series 1997-1 Letter of Credit Provider
desires to extend its Scheduled Letter of Credit Expiration Date, the Series
1997-1 Letter of Credit Provider shall, as it elects, either (i) issue to the
Enhancement Agent in exchange for and upon receipt of the then outstanding
Series 1997-1 Letter of Credit, a substitute letter of credit having terms
substantially identical to the then outstanding Series 1997-1 Letter of Credit
but expiring on the Scheduled Letter of Credit Expiration Date as so extended or
(ii) deliver to the Enhancement Agent an amendment to the then outstanding
Series 1997-1 Letter of Credit to reflect such extension of the Scheduled Letter
of Credit Expiration Date.
(d) If the Series 1997-1 Letter of Credit Provider does not consent to
the extension of its Scheduled Letter of Credit Expiration Date pursuant to
paragraph (c) of this Section 2.1, each of the Lessees, Republic and RFC shall
use their best efforts to obtain, no later than the Scheduled Letter of Credit
Expiration Date, a successor institution to act as the Series 1997-1 Letter of
Credit Provider or, in the alternative, no later than the Scheduled Letter of
Credit Expiration Date, to otherwise provide the credit enhancement to be
provided by the Series 1997-1 Letter of Credit Provider for the Series 1997
Lease payments to be made by the Lessees with (1) the funding of the Series
1997-1 Cash Collateral Account with cash, (2) other cash collateral accounts,
overcollateralization or subordinated securities or (3) a surety bond or other
similar arrangement, in each case in an amount equal to the Series 1997-1
Fronting Letter of Credit Amount (as defined in the Series 1997-1 Letter of
Credit) immediately prior to any drawing referred to in subsection (e) below
(whether funded from a Series 1997-1 LOC Termination Disbursement or otherwise);
provided, however, that any such other form of substitute credit enhancement
referred to in the foregoing clauses (2) and (3) shall be subject to (x) receipt
by the Series 1997-1 Liquidity Agent of the prior written notification of each
Rating Agency that its then current rating of RFC's Commercial Paper Notes
Outstanding shall not be reduced or withdrawn as a result thereof, and (y) with
respect to any such form of substitute credit enhancement referred to in the
foregoing clause (3), if the ratings with respect to such substitute credit
enhancement, if applicable, are less than "A-1" or the equivalent from S&P and
"P-1" or the equivalent from Moody's, the approval of the Majority Banks;
provided further, however, that only after all amounts then owing to the Series
1997-1 Letter of Credit Provider hereunder have been paid in full shall the
letter of credit issued by such successor bank or banks or such other substitute
credit enhancement be substituted for the Series 1997-1 Letter of Credit. If
such a successor institution or such other substitute credit enhancement is
obtained, each of the Lessees and RFC and, if applicable, such successor
institution shall (i) sign such documents and instruments as shall be
appropriate to evidence such successor institution's issuance of a letter of
credit or such other substitute credit enhancement, (ii) return to the Series
1997-1 Letter of Credit Provider its then outstanding Series 1997-1 Letter of
Credit and (iii) deliver to the Enhancement
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<PAGE> 9
Agent a substitute letter of credit having terms substantially identical to the
then outstanding Series 1997-1 Letter of Credit but expiring on the Scheduled
Letter of Credit Expiration Date as so extended and with such successor
institution as the issuer thereof or deliver such other substitute credit
enhancement in form and substance reasonably acceptable to the Enhancement
Agent.
(e) If (i) Republic, acting on behalf of the Lessees, and RFC do not
request an extension of the Scheduled Letter of Credit Expiration Date with
respect to the Series 1997-1 Letter of Credit or (ii) the Series 1997-1 Letter
of Credit Provider does not consent to the extension of its Scheduled Letter of
Credit Expiration Date pursuant to paragraph (c) of this Section 2.1 and the
Lessees, Republic and RFC do not obtain a successor Series 1997-1 Letter of
Credit Provider or other substitute credit enhancement prior to the date which
is thirty (30) days prior to the Scheduled Letter of Credit Expiration Date,
then Republic, acting on behalf of the Lessees, and RFC shall immediately notify
the Enhancement Agent and the Enhancement Agent, pursuant to the terms of the
Series 1997-1 Supplement, to immediately request a Series 1997-1 LOC Termination
Disbursement from the Series 1997-1 Letter of Credit Provider in accordance with
the Series 1997-1 Letter of Credit no later than one (1) Business Day prior to
the Scheduled Letter of Credit Expiration Date in an amount equal to the Series
1997-1 Fronting Letter of Credit Amount.
Section 2.2. Facility Fees. Republic hereby agrees to pay to the Series
1997-1 Letter of Credit Provider a letter of credit commission (the "Letter of
Credit Facility Fee"), as set forth in that certain fee letter between Republic
and the Series 1997-1 Letter of Credit Provider dated as of September 24, 1997.
Section 2.3. No Liability of Series 1997-1 Letter of Credit Provider.
RFC, the Lessees and Republic each acknowledges that the Series 1997-1 Letter of
Credit Provider is not responsible for any risks of acts or omissions of the
Enhancement Agent or any other beneficiary or transferee of the Series 1997-1
Letter of Credit with respect to its use of the Series 1997-1 Letter of Credit.
Neither the Series 1997-1 Letter of Credit Provider nor any of its employees,
officers or directors shall be liable or responsible for: (a) the use which may
be made of the Series 1997-1 Letter of Credit or any acts or omissions of the
Enhancement Agent and any transferee in connection therewith; (b) the validity
or genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, fraudulent or
forged; (c) payment by the Series 1997-1 Letter of Credit Provider against
presentation of documents which do not comply with the terms of the Series
1997-1 Letter of Credit including failure of any documents to bear any reference
or adequate reference to the Series 1997-1 Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under the Series
1997-1 Letter of Credit; provided, however, that the Series 1997-1 Letter of
Credit Provider shall be liable to RFC and each Lessee, to the extent of any
direct, as opposed to consequential, damages suffered by RFC or any Lessee which
were caused by (i) the Series 1997-1 Letter of Credit Provider's willful
misconduct or gross negligence in
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<PAGE> 10
determining whether documents presented under the Series 1997-1 Letter of Credit
comply with the terms of the Series 1997-1 Letter of Credit or (ii) the Series
1997-1 Letter of Credit Provider's gross negligence in failing to make or
willful failure to make lawful payment under the Series 1997-1 Letter of Credit
after the presentation to the Series 1997-1 Letter of Credit Provider by the
Enhancement Agent of a certificate strictly complying with the terms and
conditions of the Series 1997-1 Letter of Credit. In furtherance and not in
limitation of the foregoing, the Series 1997-1 Letter of Credit Provider may
accept documents that appear on their face, to be in order, without
responsibility for further investigation.
Section 2.4. Surrender of the Series 1997-1 Letter of Credit. Republic,
RFC and the Lessees shall cause the Enhancement Agent under the Series 1997-1
Letter of Credit to surrender, and the Enhancement Agent shall surrender, the
Series 1997-1 Letter of Credit to the Series 1997-1 Letter of Credit Provider on
the earliest of (i) the date on which the Series 1997-1 Letter of Credit
Provider honors a Certificate of Termination Demand presented under the Series
1997-1 Letter of Credit to the extent of the full Series 1997-1 Fronting Letter
of Credit Amount as in effect on such date, (ii) so long as the Series 1997-1
Letter of Credit Provider has not wrongfully failed to honor a demand for
payment previously made by the Enhancement Agent under the Series 1997-1 Letter
of Credit, the date on which written notice is received by the Series 1997-1
Letter of Credit Provider from the Enhancement Agent that an alternate letter of
credit or other form of credit enhancement has been substituted for the Series
1997-1 Letter of Credit, (iii) the date on which written notice is received by
the Series 1997-1 Letter of Credit Provider from the Enhancement Agent that (v)
RFC is no longer permitted to issue Commercial Paper Notes under the terms of
the Series 1997-1 Liquidity Agreement and the Depositary Agreement, (w) the
Aggregate Liquidity Commitment of the Liquidity Lenders to make Liquidity
Advances is terminated, (x) there are no Liquidity Advances or other obligations
supported by the Series 1997-1 Letter of Credit outstanding under the Series
1997-1 Liquidity Agreement, (y) there are no longer any Commercial Paper Notes
Outstanding, and (z) that the Series 1997-1 Letter of Credit is deemed
terminated and (iv) the Scheduled Letter of Credit Expiration Date.
Section 2.5. Conditions Precedent to Issuance. The following constitute
conditions precedent to the obligation of the Series 1997-1 Letter of Credit
Provider to issue the Series 1997-1 Letter of Credit (provided, that such
conditions will be deemed to be satisfied upon the issuance of the Series 1997-1
Letter of Credit):
(i) On the date of issuance of the Series 1997-1 Letter of Credit,
each condition precedent to (A) the issuance of the Series 1997-1 Note
under the Series 1997-1 Note Purchase Agreement and the Series 1997-1
Supplement, (B) the initial Series 1997 Lease Advance under the Series
1997 Lease and (C) the effectiveness of the Series 1997-1 Note Purchase
Agreement and the Series 1997-1 Liquidity Agreement shall be satisfied.
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<PAGE> 11
(ii) On the date of issuance of the Series 1997 Letter of Credit,
all representations and warranties of each of the Lessees and Republic
contained in this Agreement and in each other Related Document to which
any of the Lessees or Republic is a party shall be true and correct
immediately prior to, and after giving effect to, the issuance of the
Series 1997-1 Letter of Credit .
(iii) On the date of issuance of the Series 1997-1 Letter of
Credit, all representations and warranties of RFC contained in this
Agreement and in each other CP Program Document to which RFC is a party
shall be true and correct immediately prior to, and after giving effect
to, the issuance of the Series 1997-1 Letter of Credit.
(iv) On the date of issuance of the Series 1997-1 Letter of
Credit, (A) the Series 1997-1 Letter of Credit Provider shall have
received duly executed original copies of the Series 1997-1 Support
Letters of Credit and the GM Series 1997-1 Support Agreement, and (B)
the aggregate sum of the Support Letter of Credit Commitments of all
the Series 1997-1 Support Letter of Credit Providers and the Available
GM Support Amount shall be an amount equal to the Series 1997-1
Fronting Letter of Credit Amount.
(v) The Series 1997-1 Letter of Credit Provider shall have
received as of the Series 1997-1 Closing Date a copy of the
confirmation letter from S&P to the effect that the Commercial Paper
Notes shall have been given a rating of at least "A-1" by S&P, which
rating shall be in full force and effect.
(vi) The Series 1997-1 Letter of Credit Provider shall have
received copies of the opinions of counsel to each of the Series 1997-1
Support Letter of Credit Providers and the GM Series 1997-1 Support
Provider, addressed to the Series 1997-1 Letter of Credit Provider and
reasonably satisfactory in form and substance to the Series 1997-1
Letter of Credit Provider.
(vii) The Series 1997-1 Letter of Credit Provider shall be
satisfied with the final terms and conditions of the transactions
contemplated hereby, including, without limitation, all legal and tax
aspects thereof; and all documentation relating to the transactions
shall be in form and substance satisfactory to the Series 1997-1 Letter
of Credit Provider.
(viii) On the date of issuance of the Series 1997-1 Letter of
Credit, immediately prior to, and after giving effect to, the issuance
of the Series 1997-1 Letter of Credit there shall be no action, suit,
investigation, litigation or proceeding pending against or, to the
knowledge of Republic, any Lessee, NFLP or RFC, threatened against or
affecting Republic, any Lessee, NFLP or RFC, before any court or
arbitrator or any governmental body, agency or official that (A) would
be reasonably likely to have a Material Adverse Effect, or (B) which in
any manner draws into question the legality, validity or
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<PAGE> 12
enforceability of this Agreement or any Related Document, the
consummation of the transactions contemplated hereby or thereby, or the
ability of Republic, any Lessee, NFLP or RFC to comply with any of the
respective terms thereunder.
(ix) All governmental and third party consents and approvals
necessary in connection with this Agreement and the Series 1997-1
Letter of Credit or the transactions contemplated hereby or thereby
shall have been obtained (without the imposition of any conditions that
are not, in its reasonable judgment, acceptable to each of the Series
1997-1 Letter of Credit Provider) and shall remain in effect; all
applicable waiting periods shall have expired without any action being
taken by any competent authority; and no law or regulation shall be
applicable that restrains, prevents or imposes materially adverse
conditions upon this Agreement or the Series 1997-1 Letter of Credit or
the transactions contemplated hereby or thereby.
(x) The Series 1997-1 Letter of Credit Provider shall have
received from each of the Lessees, RFC and Republic (A) a copy of the
resolutions of its Board of Directors or other governing body,
certified as of the Series 1997-1 Closing Date by the secretary or
assistant secretary thereof, authorizing the execution, delivery and
performance of this Agreement (if applicable) and the other Related
Documents to which it is a party and the procurement of the Series
1997-1 Letter of Credit and (B) an incumbency certificate thereof with
respect to its officers, agents or other representatives authorized to
execute this Agreement (if applicable) and the Related Documents to
which it is a party.
(xi) The Series 1997-1 Letter of Credit Provider shall have
received an Officer's Certificate, dated the Series 1997-1 Closing
Date, from each Lessee and Republic, duly executed and delivered by an
Authorized Officer of such Lessee or Republic, as applicable, in which
such Lessee or Republic, as applicable, shall have represented and
warranted that the representations and warranties of such Lessee or
Republic, as applicable, in this Agreement and the other Related
Documents to which it is a party are true and correct as of the Series
1997-1 Closing Date (in all material respects to the extent any such
representations and warranties do not incorporate a materiality
limitation in their terms) and, at the time such Officer's Certificate
is delivered, the Series 1997-1 Letter of Credit Provider shall be
satisfied that such statements are in fact true and correct.
(xii) The Series 1997-1 Letter of Credit Provider shall have
received a Series 1997-1 Closing Date Certificate, dated the Series
1997-1 Closing Date, duly executed and delivered by an Authorized
Officer of RFC, in which RFC shall have represented and warranted that
the representations and warranties of RFC in the CP Program Documents
to which it is a party are true and correct as of the Series 1997-1
Closing Date (in all material respects to the extent any such
representations and warranties do not incorporate a materiality
limitation in their terms) at the time such certificate is delivered,
the Series
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<PAGE> 13
1997-1 Letter of Credit Provider shall be satisfied that such
statements are in fact true and correct.
(xiii) The Series 1997-1 Letter of Credit Provider shall have
received a certificate from each Lessee and each of RFC, NFLP and
Republic, in each case dated the Series 1997-1 Closing Date, and duly
executed by a Financial Officer of each Lessee, RFC, NFLP and Republic,
respectively, in scope and substance satisfactory to the Series 1997-1
Letter of Credit Provider, to the effect that each Lessee, RFC, NFLP
and Republic, respectively, will be solvent after giving effect to the
transactions contemplated by this Agreement, each of the other CP
Program Documents and each of the other Related Documents and the
issuance and sale of the Commercial Paper Notes.
(xiv) The Series 1997-1 Letter of Credit Provider shall have
received such other documents (including, without limitation, an
executed copy (or duplicate thereof) of each other Related Document)
certificates, instruments, approvals or opinions as the Series 1997-1
Letter of Credit Provider may reasonably request.
(xv) The Series 1997-1 Letter of Credit Provider shall have
received fees and expenses due and payable pursuant to Sections 2.6 and
4.2 or pursuant to any fee letter or commitment letter entered into
between Republic or any Affiliate thereof with the Series 1997-1 Letter
of Credit Provider in connection with the transactions contemplated by
this Agreement (including all reasonable legal fees and expenses, if
then invoiced).
Section 2.6. Increased Capital Costs, etc. (a) If any change in, or the
introduction, adoption, effectiveness, interpretation or reinterpretation or
phase-in of, in each case after the date hereof, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other Governmental Authority
affects or would affect the amount of capital required or reasonably expected to
be maintained by the Series 1997-1 Letter of Credit Provider or any Person
controlling the Series 1997-1 Letter of Credit Provider, and the Series 1997-1
Letter of Credit Provider reasonably determines (in its sole and absolute
discretion) that the rate of return on its or such controlling Person's capital
as a consequence of the Series 1997-1 Letter of Credit Commitment, its issuance
or maintenance of the Series 1997-1 Letter of Credit or the making of any Series
1997-1 LOC Disbursement is reduced to a level below that which the Series 1997-1
Letter of Credit Provider or such controlling Person would have achieved but for
the occurrence of such circumstance, then, in any such case after notice from
time to time by the Series 1997-1 Letter of Credit Provider to RFC or Republic,
as the case may be, RFC, solely with respect to Series 1997-1 LOC Liquidity
Disbursements, and each of the Lessees and Republic (jointly and severally) with
respect to Series 1997-1 LOC Credit Disbursements and in all other cases and for
all other disbursements with respect to the Series 1997-1 Letter of Credit,
shall pay an incremental fee sufficient to compensate the Series 1997-1 Letter
of Credit Provider or such controlling Person for such reduction in rate of
return; provided, however, that RFC, each of the Lessees and Republic shall
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<PAGE> 14
have no obligation to pay any such additional amount under this Section 2.6(a)
with respect to any day or days unless the Series 1997-1 Letter of Credit
Provider shall have notified RFC or Republic (including on behalf of the
Lessees), as applicable, of its demand therefor within forty-five (45) days of
the date upon which the Series 1997-1 Letter of Credit Provider has obtained
audited information with respect to the fiscal year of the Series 1997-1 Letter
of Credit Provider in which such day or days occurred. A statement of the Series
1997-1 Letter of Credit Provider as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on RFC, each of the Lessees and
Republic, as applicable; and provided, further, that the initial payment of such
increased fee shall include a payment for accrued amounts due under this Section
2.6(a) prior to such initial payment. In determining such additional amount, the
Series 1997-1 Letter of Credit Provider may use any method of averaging and
attribution that it (in its reasonable discretion) shall deem applicable so long
as it applies such method to other similar transactions.
(b) If, due to either (i) the introduction of, or any change in, or in
the administration or interpretation of, any law, rule or regulation (domestic
of foreign) or (ii) the compliance with any directive, guideline or request from
any central bank or other governmental or monetary authority (whether or not
having the force of law) promulgated or made after the date hereof, there shall
be an increase in the cost to or a reduction in the amount received or
receivable by the Series 1997-1 Letter of Credit Provider of issuing, making,
funding or maintaining, the Series 1997-1 Letter of Credit or any Series 1997-1
LOC Disbursements (including, without limitation, as a result of the imposition
or modification of any reserve, special deposit or similar requirement or any
assessment by the Federal Deposit Insurance Corporation (or any successor
thereto) against the Series 1997-1 Letter of Credit or any Series 1997-1 LOC
Disbursements), then RFC, solely with respect to any Series 1997-1 LOC Liquidity
Disbursement, and each of the Lessees and Republic (jointly and severally) with
respect to Series 1997-1 LOC Credit Disbursements and in all other cases and for
all other disbursements with respect to the Series 1997-1 Letter of Credit,
shall, from time to time, upon written notice by the Series 1997-1 Letter of
Credit Provider to RFC or Republic (including on behalf of the Lessees) as
applicable, pay the Series 1997-1 Letter of Credit Provider additional amounts
sufficient to compensate the Series 1997-1 Letter of Credit Provider for such
increased cost or reduction. A statement of the Series 1997-1 Letter of Credit
Provider as to any such additional amounts (including calculations thereof in
reasonable detail) shall, in the absence of demonstrable error, be conclusive
and binding on RFC, each of the Lessees and Republic, as applicable.
Section 2.7. Taxes. (a) All payments by RFC, each of the Lessees and
Republic of all amounts payable hereunder (including fees) and all payments by
the GM Series 1997-1 Support Provider of all amounts payable under the GM Series
1997-1 Support Agreement and all payments by the Series 1997-1 Support Letter of
Credit Providers shall in each case be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding taxes imposed on the
Series 1997-1 Letter of
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<PAGE> 15
Credit Provider on or measured by its overall net income, overall receipts or
overall assets and franchise taxes imposed on it by the jurisdiction in which it
is organized or is operating or any political subdivision thereof and taxes
imposed on or measured by the Series 1997-1 Letter of Credit Provider's overall
net income, overall receipts or overall assets or franchise taxes imposed on it
by the jurisdiction of the Series 1997-1 Letter of Credit Provider's office
issuing and/or administering the Series 1997-1 Letter of Credit, or any
political subdivision thereof (such non-excluded items being called "Taxes"). In
the event that any withholding or deduction from any payment to be made by RFC,
any of the Lessees, or Republic hereunder, or by the GM Series 1997-1 Support
Provider under the GM Series 1997-1 Support Agreement, or by the Series 1997-1
Support Letter of Credit Providers under their respective Series 1997-1 Support
Letters of Credit, is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then RFC, in connection with any payment to
be made by RFC, and each of the Lessees and Republic, in connection with any
payment to be made by it, including with respect to any such payment with
respect to the GM Series 1997-1 Support Provider or the Series 1997-1 Support
Letter of Credit Providers promptly upon receipt by Republic of written notice
from the Series 1997-1 Letter of Credit Provider that any such payment is due
and payable, will:
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Series 1997-1 Letter of Credit
Provider an official receipt or other documentation satisfactory to the
Series 1997-1 Letter of Credit Provider, evidencing such payment to
such authority; and
(iii) pay to the Series 1997-1 Letter of Credit Provider for the
account of the Series 1997-1 Letter of Credit Provider such additional
amount or amounts as is necessary to ensure that the net amount
actually received by the Series 1997-1 Letter of Credit Provider will
equal the full amount the Series 1997-1 Letter of Credit Provider would
have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Series 1997-1 Letter of
Credit Provider with respect to any payment received by the Series 1997-1 Letter
of Credit Provider hereunder or under the GM Series 1997-1 Support Agreement or
any Series 1997-1 Support Letter of Credit, the Series 1997-1 Letter of Credit
Provider may pay such Taxes and RFC, in connection with any payment to be made
by RFC, and each of the Lessees and Republic, in connection with payment to be
made, by it, including with respect to any such payment with respect to the GM
Series 1997-1 Support Provider or Series 1997-1 Support Letter of Credit
Providers promptly upon receipt by Republic of written notice from the Series
1997-1 Letter of Credit Provider that any such payment is due and payable, will
promptly upon receipt of prior written notice stating the amount of such Taxes
pay such additional amounts (including any penalties, interest or expenses) as
is necessary in order that the net amount received by such person after the
payment of such
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<PAGE> 16
Taxes (including any Taxes on such additional amount) shall equal the amount
such person would have received had not such Taxes been asserted.
(b) If RFC, any of the Lessees or Republic, as the case may be, fails
to pay any Taxes when due to the appropriate taxing authority or fails to remit
to the Series 1997-1 Letter of Credit Provider the required receipts or other
required documentary evidence, RFC, any of the Lessees or Republic, as the case
may be, shall indemnify the Series 1997-1 Letter of Credit Provider for any
incremental Taxes, interest or penalties that may become payable by the Series
1997-1 Letter of Credit Provider as a result of any such failure.
(c) Upon the request of RFC, any of the Lessees or Republic, the Series
1997-1 Letter of Credit Provider shall, prior to the initial due date of any
payments hereunder and to the extent permissible under then current law, execute
and deliver to RFC, such Lessee or Republic, as the case may be, on or about the
first scheduled payment date in each calendar year thereafter, one or more (as
RFC, such Lessee or Republic, as the case may be, may reasonably request) United
States Internal Revenue Service Forms 4224 or Forms 1001 or such other
appropriate forms or documents (or successor forms or documents), appropriately
completed, as may be applicable to establish the extent, if any, to which a
payment to the Series 1997-1 Letter of Credit Provider is exempt from
withholding or deduction of Taxes. RFC, each of the Lessees and Republic shall
not, however, be required to pay any increased amount under this Section 2.7(c)
to the Series 1997-1 Letter of Credit Provider if the Series 1997-1 Letter of
Credit Provider fails to comply with the requirements set forth in this
paragraph.
Section 2.8. Replacement of Series 1997-1 Letter of Credit Provider. In
the event that (i) the Series 1997-1 Letter of Credit Provider shall have
notified Republic or RFC (and shall not have retracted such notification) that
its compliance with any of its material obligations hereunder or under the
Series 1997-1 Letter of Credit would be unlawful, (ii) the Series 1997-1 Letter
of Credit Provider fails to extend its Series 1997-1 Letter of Credit Commitment
pursuant to Section 2.1(c), (iii) any of the Lessees, RFC or Republic is
required pursuant to Section 2.6 or 2.7 to make any payment to or on behalf of
the Series 1997-1 Letter of Credit Provider (or would be so required on or prior
to the next following date on which a payment hereunder (other than pursuant to
Sections 2.6 and 2.7) is required to be made to or for the Series 1997-1 Letter
of Credit Provider) or (iv) the Series 1997-1 Letter of Credit Provider shall
have failed to fund any Series 1997-1 LOC Disbursement under the Series 1997-1
Letter of Credit, then Republic shall have the right, at its own expense, upon
notice to the Series 1997-1 Letter of Credit Provider and the Enhancement Agent,
to require the Series 1997-1 Letter of Credit Provider, and the Series 1997-1
Letter of Credit Provider hereby agrees, to transfer and assign without recourse
all the interests, rights and obligations of the Series 1997-1 Letter of Credit
Provider to an Eligible Credit Enhancer provided by Republic on behalf of the
Lessees and RFC; provided, however, that (w) no such assignment shall conflict
with any law, rule, regulation or order of any Governmental Authority, (x) such
assignment shall be without recourse, representation and warranty and shall be
on terms and conditions reasonably satisfactory to such replaced Series
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<PAGE> 17
1997-1 Letter of Credit Provider and such replacement Eligible Credit Enhancer,
(y) the purchase price paid by such replacement Eligible Credit Enhancer shall
be in an amount equal to the aggregate amount of all Series 1997-1 LOC
Disbursements and all other amounts owed by the Series 1997-1 Support Letter of
Credit Providers and the Series 1997-1 GM Support Letter of Credit Provider to
such replaced Series 1997-1 Letter of Credit Provider under the Series 1997-1
Support Letters of Credit and the GM Series 1997-1 Support Agreement, as
applicable, as of the date of such assignment, and (z) Republic or such Eligible
Credit Enhancer, as the case may be, shall pay to such replaced Series 1997-1
Letter of Credit Provider in same day funds on the date of such assignment all
sums specified in clause (y) and interest accrued to the date of payment on the
Series 1997-1 LOC Disbursements made by such replaced Series 1997-1 Letter of
Credit Provider hereunder and all other amounts accrued for such replaced Series
1997-1 Letter of Credit Provider's account or owed to it hereunder and under the
Series 1997-1 Support Reimbursement Agreement, including those amounts owed
pursuant to Sections 2.6 and 2.7.
Section 2.9. Obligation Absolute. The payment obligations of RFC,
Republic and each Lessee under this Agreement and any other agreement or
instrument relating to the Series 1997-1 Letter of Credit shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(a) any lack of validity or enforceability of this Agreement,
the Series 1997-1 Letter of Credit or any other Related Document;
(b) any change in the time, manner or place of payment of, or
in any other terms of, all or any of the obligations of RFC, Republic
or any Lessee in respect of the Series 1997-1 Letter of Credit or any
other amendment or waiver of or any consent to departure from all or
any of the Related Documents;
(c) the existence of any claim, set-off, defense or other
right which RFC, Republic or any Lessee may have at any time against
the Series 1997-1 Collateral Agent, the Trustee, the Series 1997-1
Letter of Credit Provider or any other beneficiary or any transferee of
the Series 1997-1 Letter of Credit (or any persons or entities for whom
the Series 1997-1 Collateral Agent, the Trustee, the Series 1997-1
Letter of Credit Provider, any such beneficiary or any such transferee
may be acting), any of the Liquidity Lenders, or any other person or
entity, whether in connection with this Agreement, the transactions
contemplated hereby or by the Related Documents or any unrelated
transaction;
(d) any statement or any other document presented under any of
the Series 1997-1 Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or
inaccurate in any respect;
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(e) any statement or any other document presented under any of
the Series 1997-1 Letter of Credit proving to be insufficient in any
respect;
(f) payment by any of Series 1997-1 Letter of Credit Providers
under the Series 1997-1 Letter of Credit against presentation of a
draft or certificate which does not comply with the terms of the Series
1997-1 Letter of Credit;
(g) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any guarantee, for all or any of the obligations of RFC, Republic and
each Lessee in respect of the Series 1997-1 Letter of Credit; or
(h) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, RFC, Republic or any Lessee or a guarantor.
Section 2.10. Amendments to GM Series 1997-1 Support Reimbursement
Agreement. None of RFC, Republic or any Lessee shall, without the Series 1997-1
Letter of Credit Provider's prior written consent, make or agree to make any
modification, amendment or waiver to or of the GM Series 1997-1 Support
Reimbursement Agreement that would directly or indirectly affect (x) the
obligations of liabilities of the Series 1997-1 Letter of Credit Provider under
the Series 1997-1 Letter of Credit or (y) any rights or benefits of the Series
1997-1 Letter of Credit Provider under the GM Series 1997-1 Support Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. Representations and Warranties of the Lessees and
Republic. To induce the Series 1997-1 Letter of Credit Provider to enter into
this Agreement and to issue the Series 1997- 1 Letter of Credit, each of the
Lessees hereby represents and warrants (which representations and warranties
shall be deemed made on the dates of issuance and extension, if any, of the
Series 1997-1 Letter of Credit) to the Series 1997-1 Letter of Credit Provider,
and Republic represents and warrants (which representations and warranties shall
be deemed made on the dates of issuance and extension, if any, of the Series
1997-1 Letter of Credit) to the Series 1997-1 Letter of Credit Provider, as to
itself and as to each of the Lessees that:
(a) Organization; Ownership; Power; Qualification. Each of
Republic and the Lessees (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority
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<PAGE> 19
to own its properties and to carry on its business as now being and
hereafter proposed to be conducted, and (iii) is duly qualified, in
good standing and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its businesses
requires such qualification or authorization, except where the failure
to so qualify is not reasonably likely to have a Material Adverse
Effect.
(b) Authorization; Enforceability. Each of Republic and the
Lessees has the corporate power and has taken all necessary corporate
action to authorize it to execute, deliver and perform this Agreement
and each of the other Related Documents to which it is a party in
accordance with their respective terms, and to consummate the
transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by each of Republic and the Lessees and is,
and each of the other Related Documents to which Republic or any of the
Lessees is a party is, a legal, valid and binding obligation of
Republic or such Lessee, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization and similar laws affecting creditors
generally and by the availability of equitable remedies.
(c) Compliance. (i) The execution, delivery and performance by
each of Republic and the Lessees of this Agreement and each of the
other Related Documents to which it is a party, and the consummation of
the transactions contemplated hereby and thereby, do not and will not
(A) require any consent, approval, authorization or registration not
already obtained or effected, except where the failure to obtain any
such consent, approval or authorization or to register is not
reasonably likely to have a Material Adverse Effect, (B) violate any
applicable law with respect to Republic or such Lessee which violation
is reasonably likely to have a Material Adverse Effect, (C) conflict
with, result in a breach of, or constitute a default under (x) the
certificate of incorporation or by-laws of Republic or such Lessee, or
(y) any indenture, agreement, or other instrument to which Republic or
such Lessee is a party or by which its properties may be bound which
conflict, breach or default (in the case of clause (y)) is reasonably
likely to have a Material Adverse Effect, or (D) result in or require
the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by Republic or such Lessee
except Permitted Encumbrances.
(ii) Each of Republic and the Lessees (i) is not in violation of
any law, ordinance, rule, regulation or order of any Governmental
Authority applicable to it or its property, other than Environmental
Laws, which violation is reasonably likely to have a Material Adverse
Effect, and no such violation has been alleged, (ii) has filed in a
timely manner all reports, documents and other materials required to be
filed by it with any governmental bureau, agency or instrumentality
(and the information contained in each of such material filings is
true, correct and complete in all material respects), except where
failure to make such filings is not reasonably likely to have a
Material Adverse Effect and (iii) has retained all records and
documents required to be retained by it pursuant to any
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Requirement of Law, except where failure to retain such records is not
reasonably likely to have a Material Adverse Effect.
Section 3.2. Representations and Warranties of RFC. To induce the
Series 1997-1 Letter of Credit Provider to enter into this Agreement and to
issue the Series 1997-1 Letter of Credit hereunder, RFC represents and warrants
(which representations and warranties shall be deemed to be made on the date of
issuance and extension, if any, of the Series 1997-1 Letter of Credit) to the
Series 1997-1 Letter of Credit Provider that:
(a) Organization; Power; Qualification. RFC (i) is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (ii) has the corporate power and
authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted, and (iii) is duly
qualified, in good standing and authorized to do business in each
jurisdiction in which the character of its properties or the nature of
its businesses requires such qualification or authorization, except
where the failure to so qualify is not reasonably likely to have a
Material Adverse Effect.
(b) Authorization; Enforceability. RFC has the corporate power and
has taken all necessary corporate action to authorize it to execute,
deliver and perform this Agreement and each of the other Related
Documents to which it is a party in accordance with their respective
terms, and to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by RFC and
is, and each of the other Related Documents to which RFC is a party is,
a legal, valid and binding obligation of RFC enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting
creditors generally and by the availability of equitable remedies.
(c) Compliance. (i) The execution, delivery and performance, in
accordance with their respective terms, by RFC of this Agreement and
each of the other Related Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, do
not and will not (A) require any consent, approval, authorization or
registration not already obtained or effected, (B) violate any
applicable law with respect to RFC or otherwise, as applicable, (C)
conflict with, result in a breach of, or constitute a default under the
certificate of incorporation or by-laws of RFC, or under any indenture,
agreement, or other instrument to which RFC is a party or by which its
properties may be bound, or (D) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned
or hereafter acquired by RFC except Permitted Encumbrances.
(ii) RFC (A) is not in violation of any law, ordinance, rule,
regulation or order of any Governmental Authority applicable to it or
its property and no such violation has been
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<PAGE> 21
alleged, (B) has filed in a timely manner all reports, documents and
other materials required to be filed by it with any governmental
bureau, agency or instrumentality (and the information contained in
each of such filings is true, correct and complete in all material
respects), and (C) has retained all records and documents required to
be retained by it pursuant to any Requirement of Law.
Section 3.3. Series 1997-1 Letter of Credit Provider Covenants. (a) The
Series 1997-1 Letter of Credit Provider covenants and agrees with each of the
Lessees, RFC and Republic that on the Series 1997-1 Closing Date it will provide
to each of the Rating Agencies, the Series 1997-1 Liquidity Agent, the Trustee,
the Enhancement Agent, the Series 1997-1 Collateral Agent, the Master Collateral
Agent, the Dealers, the Depositary, the Series 1997-1 Support Letter of Credit
Providers, the GM Series 1997-1 Support Provider, RFC, each of the Lessees and
Republic the favorable written opinion of its special New York counsel and the
favorable written opinion of its internal counsel, which opinions shall address
the due authorization, execution and delivery of the Series 1997-1 Letter of
Credit and the enforceability thereof against the Series 1997-1 Letter of Credit
Provider.
(b) The Series 1997-1 Letter of Credit Provider hereby acknowledges and
agrees with Republic, RFC and each of the Lessees that it will (x) so long as
all sums due and owing by the related Series 1997-1 Support Letter of Credit
Provider to the Series 1997-1 Letter of Credit Provider have been paid in full,
comply with its obligation set forth in Section 2.8 of the Series 1997-1 Support
Reimbursement Agreement to surrender any Series 1997-1 Support Letter of Credit
to the related Series 1997-1 Support Letter of Credit Provider upon the Series
1997-1 Letter of Credit Provider's receipt of written notice from the
Enhancement Agent that the conditions for the surrender of such Series 1997-1
Support Letter of Credit set forth in clauses (i) through (iv) of Section 2.8 of
the Series 1997-1 Support Reimbursement Agreement have been satisfied, (y)
provide prompt written notice to Republic immediately following any payment by
any Series 1997-1 Support Letter of Credit Provider or the GM Series 1997-1
Support Provider to the Series 1997-1 Letter of Credit Provider pursuant to the
related Series 1997-1 Support Letter of Credit or the GM Series 1997-1 Support
Agreement, as applicable, including the dollar amount of such reimbursement and
(z) immediately upon its receipt of any Support Termination Disbursement (as
defined in Annex D of a Series 1997-1 Letter of Credit) or Support Reduction
Disbursement (as defined in Annex D of the GM Series 1997-1 Support Agreement),
as the case may be, deposit or cause to be deposited, subject to the proviso set
forth below, an amount equal to such Support Termination Disbursement or Support
Reduction Disbursement to the Series 1997-1 Cash Collateral Account, provided
that with respect to any Support Termination Disbursement or Support Reduction
Disbursement the Series 1997-1 Letter of Credit may withhold from deposit to the
Series 1997-1 Cash Collateral Account and retain for the Series 1997-1 Letter of
Credit Provider's account an amount up to the aggregate amount of any Support
Disbursements due and payable to the Series 1997-1 Letter of Credit Provider by
the related Series 1997-1 Support Letter of Credit Provider or the GM Series
1997-1 Support Provider, as the case may be, as of the date of such
disbursement.
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<PAGE> 22
ARTICLE IV
MISCELLANEOUS
Section 4.1. Payments. (a) Unless otherwise specified herein, all
payments to the Series 1997-1 Letter of Credit Provider hereunder shall be made
in lawful currency of the United States and in immediately available funds prior
to 2:00 p.m. (New York City time) on the date such payment is due by wire
transfer to the Series 1997-1 Letter of Credit Provider, Westdeutsche Landesbank
Girozentrale, New York Branch at such account as the Series 1997-1 Letter of
Credit Provider may direct in writing.
(b) Whenever any payment under this Agreement shall be stated to be due
on a day which is not a Business Day, such payment, unless otherwise provided
herein, shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in computing interest, commissions or fees,
if any, in connection with such payment.
(c) RFC shall make payment of all amounts owing by it hereunder,
including, without limitation, interest thereon, increased costs, fees and
expenses, but only to the extent funds are available to RFC therefor.
Section 4.2. Expenses. RFC agrees, solely with respect to Series 1997-1
LOC Liquidity Disbursements, and the Lessees and Republic agree, with respect to
Series 1997-1 LOC Credit Disbursements, Series 1997-1 LOC Termination
Disbursements and in all other cases and for all other disbursements, to pay
reasonable attorneys' fees and expenses and all other reasonable out-of-pocket
costs and reasonable expenses incurred by the Series 1997-1 Letter of Credit
Provider, if any, in connection with the preparation, execution and delivery,
administration (other than overhead expenses), extension, enforcement, amendment
or waiver of the obligations of this Agreement, the Series 1997-1 Letter of
Credit, the Series 1997-1 Support Letter of Credit, the GM Series 1997-1 Support
Agreement, the Series 1997-1 Support Reimbursement Agreement or any other
Related Document or any other agreement furnished hereto or in connection
herewith and with respect to presenting claims in or otherwise participating in
any bankruptcy, insolvency or other similar proceeding involving creditors'
rights generally and any ancillary proceedings .
The Lessees each agree to pay on demand all reasonable expenses of the
Series 1997-1 Letter of Credit Provider in connection with the filing,
recording, refiling or rerecording of the Series 1997-1 Letter of Credit, this
Agreement, the Related Documents and/or any UCC financing statements relating
thereto and all amendments, supplements and modifications to any thereof and any
and all other documents or instruments of further assurance required to be filed
or recorded or refiled or rerecorded by the terms hereof.
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<PAGE> 23
In addition, RFC, solely with respect to Series 1997-1 LOC Liquidity
Disbursements, and each of the Lessees and Republic with respect to Series
1997-1 LOC Credit Disbursements and in all other cases, each agree to pay any
and all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of the Series
1997-1 Letter of Credit, this Agreement, any Related Document and any other
document executed or delivered in connection therewith, and agree to save the
Series 1997-1 Letter of Credit Provider harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
Section 4.3. Indemnity. (a) The Lessees and Republic each agree to
indemnify and hold harmless the Series 1997-1 Letter of Credit Provider and, in
their capacities as such, officers, directors, shareholders, affiliates,
controlling persons, employees, agents and servants of the Series 1997-1 Letter
of Credit Provider, from and against any and all claims, damages (direct but not
consequential), losses, liabilities, costs or expenses whatsoever which any the
Series 1997-1 Letter of Credit Provider may incur or which may be claimed
against the Series 1997-1 Letter of Credit Provider by any Person whatsoever
(including reasonable fees and expenses of counsel) in each case arising out of
or by reason of or in connection with, or in connection with the preparation of
a defense of, any investigation, litigation or proceeding arising out of,
relating to or in connection with (x) the execution and delivery of the Series
1997-1 Letter of Credit or this Agreement, (y) the payment of any Series 1997-1
LOC Credit Disbursement or that share of any Series 1997-1 LOC Termination
Disbursement allocable to the Lessees as the Lessee Termination Reimbursement
Share of any Support Termination Disbursement in connection with, the Series
1997-1 Letter of Credit or this Agreement or any other Related Document, or (z)
the offering and sale of the Commercial Paper Notes, or any acts or omissions of
any of the Lessees or Republic in connection herewith or therewith, or any
transactions contemplated hereby or thereby (whether or not consummated), or any
inaccuracies or alleged inaccuracies in any material respect or any untrue
statement or alleged untrue statement of any of the Lessees or Republic
contained or incorporated by reference in any Related Document or the omission
or alleged omission by any of the Lessees or Republic to state therein a
material fact necessary to make such statements, in the light of the
circumstances under which they are or were made, not misleading, except to the
extent that such claim, damage, loss, liability, cost or expense is caused by
the willful misconduct or gross negligence of the Series 1997-1 Letter of Credit
Provider.
(b) RFC agrees to indemnify and hold harmless the Series 1997-1 Letter
of Credit Provider and, in their capacities as such, officers, directors,
shareholders, affiliates, controlling persons, employees, agents and servants of
the Series 1997-1 Letter of Credit Provider, from and against any and all
claims, damages (direct but not consequential), losses, liabilities, costs or
expenses whatsoever which any the Series 1997-1 Letter of Credit Provider may
incur or which may be claimed against the Series 1997-1 Letter of Credit
Provider by any Person whatsoever (including reasonable fees and expenses of
counsel) in each case arising out of or by reason of or in connection with, or
in connection with the preparation of a defense of, any investigation,
litigation or proceeding arising out of, relating to or in connection with (x)
the execution and
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<PAGE> 24
delivery of the Series 1997-1 Letter of Credit or this Agreement, (y) the
payment of any Series 1997-1 LOC Liquidity Disbursement or that share of any
Series 1997-1 LOC Termination Disbursement allocable to RFC as the RFC
Termination Reimbursement Share of any Support Termination Disbursement in
connection with, or the Series 1997-1 Letter of Credit or this Agreement or any
other Related Document, or the offering and sale of the Commercial Paper Notes,
or (z) any acts or omissions of RFC in connection herewith or therewith, or any
transactions contemplated hereby or thereby (whether or not consummated), or any
inaccuracies or alleged inaccuracies in any material respect or any untrue
statement or alleged untrue statement of any of the Lessees or Republic
contained or incorporated by reference in any Related Document or the omission
or alleged omission by RFC to state therein a material fact necessary to make
such statements, in the light of the circumstances under which they are or were
made, not misleading, except to the extent that such claim, damage, loss,
liability, cost or expense is caused by the willful misconduct or gross
negligence of the Series 1997-1 Letter of Credit Provider.
Section 4.4. Notices. All notices, amendments, waivers, consents and
other communications provided to any party or any Person with respect to which
any notice or other communication is to be provided pursuant to this Agreement
shall be in writing and addressed, delivered or transmitted to such party at its
address or facsimile number set forth in Schedule 1, or in each case at such
other address or facsimile number as may be designated by any such party or
Person in a notice to the other parties hereto. Any notice, if mailed or
properly addressed with postage prepaid or if properly addressed and sent by
pre-paid courier service, shall be deemed given when received; any notice, if
transmitted by facsimile, shall be deemed given when transmitted upon receipt of
electronic confirmation of transmission.
Section 4.5. Amendments, etc. This Agreement and the rights and
obligations of the parties hereunder may only be amended by an instrument in
writing signed by the Series 1997-1 Letter of Credit Provider and each other
party hereto against whom enforcement of such amendment or modification is
sought.
Section 4.6. Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST ANY LESSEE, RFC OR REPUBLIC WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN ANY STATE OR (TO THE EXTENT PERMITTED BY LAW) FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT EACH LESSEE, RFC AND REPUBLIC ACCEPT FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. REPUBLIC, RFC AND
EACH LESSEE DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, WHOSE ADDRESS IS
1633 BROADWAY, NEW YORK, NEW YORK 10019, AND
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<PAGE> 25
SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY REPUBLIC, EACH OF THE
LESSEES, RFC AND REPUBLIC IRREVOCABLY AGREEING IN WRITING TO SERVE, AS ITS AGENT
TO RECEIVE ON ITS BEHALF, SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY
SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY REPUBLIC, EACH OF THE
LESSEES, RFC AND REPUBLIC AS THE CASE MAY BE, TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY
REGISTERED MAIL TO RFC SO SERVED AT ITS ADDRESS PROVIDED PURSUANT TO SECTION
4.4, EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO
MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT
APPOINTED BY RFC REFUSES TO ACCEPT SERVICE, RFC HEREBY AGREES THAT SERVICE UPON
IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE SERIES 1997-1 LETTER OF CREDIT PROVIDER TO BRING PROCEEDINGS
AGAINST ANY LESSEE, RFC OR REPUBLIC IN THE COURTS OF ANY OTHER JURISDICTION.
Section 4.7. Waiver of Jury Trial. THE SERIES 1997-1 LETTER OF CREDIT
PROVIDER, EACH LESSEE, RFC AND REPUBLIC HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE SERIES 1997-1 LETTER OF CREDIT PROVIDER, ANY
LESSEE, RFC OR REPUBLIC IN CONNECTION HEREWITH OR THEREWITH. EACH LESSEE, RFC
AND REPUBLIC EACH ACKNOWLEDGE AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE SERIES 1997-1 LETTER OF CREDIT PROVIDER ENTERING INTO THIS
AGREEMENT.
Section 4.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE
AN AGREEMENT MADE UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 4.9. Severability. Any provisions of this Agreement which are
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
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such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 4.10. Term. Subject to Section 4.14, this Agreement shall
remain in full force and effect until the termination of the Series 1997-1
Letter of Credit.
Section 4.11. Successors and Assigns. This Agreement shall be binding
upon the Series 1997-1 Letter of Credit Provider and its successors and assigns,
each Lessee and its successors and assigns, RFC and its successors and assigns,
Republic and its successors and assigns; provided, however, that none of the
Lessees, RFC or Republic may transfer or assign any of its obligations, rights,
or interests hereunder without the prior written consent of the Series 1997-1
Letter of Credit Provider. All agreements, representations and warranties made
herein shall survive the execution and delivery of this Agreement.
Section 4.12. Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties hereto on the same or
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same agreement.
Section 4.13. Bankruptcy Petition Against RFC. The Series 1997-1 Letter
of Credit Provider hereby covenants and agrees that, prior to the date which is
one year and one day after the payment in full of both (i) the latest maturing
Commercial Paper Note and (ii) the Series 1997-1 Notes, it will not institute
against, or join with any other Person in instituting against, RFC 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; provided, however, that nothing in this Section 4.13 shall
constitute a waiver of any right to indemnification, reimbursement or other
payment from any Lessee or RFC pursuant to this Agreement. In the event that the
Series 1997-1 Letter of Credit Provider takes action in violation of this
Section 4.13, RFC agrees, for the benefit of the Holders of the Commercial Paper
Notes, that it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such a petition by the Series 1997-1 Letter of
Credit Provider against RFC or the commencement of such action and raise the
defense that any the Series 1997-1 Letter of Credit Provider has agreed in
writing not to take such action and should be estopped and precluded therefrom
and such other defenses, if any, as its counsel advises that it may assert; and
the Series 1997-1 Letter of Credit Provider acting on violation of this Section
4.13 shall be liable for and pay any costs and expenses incurred by RFC in
connection therewith. The provisions of this Section 4.13 shall survive the
termination of the Agreement and the replacement or removal of the Series 1997-1
Letter of Credit Provider.
Section 4.14. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by Republic,
RFC and the Lessees in connection herewith shall survive the execution and
delivery of this Agreement, regardless of any
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<PAGE> 27
investigation made by the Series 1997-1 Letter of Credit Provider or on its
behalf and shall continue so long as and until such time as all obligations
hereunder and under the CP Program Documents and all Commercial Paper Notes
Outstanding shall have been paid in full. The obligations of Republic, RFC and
the Lessees under Sections 2.6, 2.7, 4.2 and 4.3 shall in each case survive any
termination of this Agreement, the payment in full of all obligations hereunder
or under any other CP Program Document and the termination of the Series 1997-1
Letter of Credit.
Section 4.15. Obligation. The Series 1997-1 Letter of Credit Provider,
each of the Lessees and RFC each understand and agree that the Series 1997-1
Letter of Credit is irrevocable and the obligations of the Series 1997-1 Letter
of Credit Provider as issuer thereof shall be unaffected by any default
hereunder. None of the failure of any of the Lessees, Republic or RFC (or any
person or organization acting on behalf of either) or the Trustee or the Series
1997-1 Collateral Agent to take any action (whether required hereunder or
otherwise), nor any action taken by any of the Lessees, Republic or RFC shall be
asserted by the Series 1997-1 Letter of Credit Provider as a defense to payment
under the Series 1997-1 Letter of Credit (except for the failure of any
documents presented thereunder to comply with the terms of the Series 1997-1
Letter of Credit) or as the basis of a right of set off by the Series 1997-1
Letter of Credit Provider against its obligations to make any such payment.
Section 4.16. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 4.17. [Reserved].
Section 4.18. Limited Recourse to RFC. (a) The Series 1997-1 Letter of
Credit Provider agrees that, during any period prior to the Scheduled Liquidity
Commitment Expiration Date that Commercial Paper Notes shall be outstanding (any
such period being a "Designated Period"), the obligations of RFC to the Series
1997-1 Letter of Credit Provider hereunder shall be due and payable only to the
extent that RFC's assets are sufficient to pay the same. No claims of the Series
1997-1 Letter of Credit Provider arising under or in connection with this
Agreement are intended to be impaired or waived by this Section 4.18.
(b) Without limiting the obligations of RFC hereunder, no recourse
shall be had for the payment of any amount owing in respect of any disbursement
made under this Agreement or for the payment of any fee hereunder or any other
obligation or claim arising out of or based upon this Agreement against any
stockholder, employee, officer, director, affiliate or incorporator of RFC based
on their status as such or their actions in connection therewith. The provisions
of this Section 4.18(b) shall survive the termination of this Agreement.
-25-
<PAGE> 28
Section 4.19. Waiver of Set-Off. The Series 1997-1 Letter of Credit
Provider hereby waives and relinquishes any right that it has or may have to
set-off or to exercise any banker's lien or any right of attachment or
garnishment with respect to any funds at any time and from time to time on
deposit in, or otherwise to the credit of, any account and any claims of RFC
therein or with respect to any right to payment from RFC, it being understood,
however, that nothing contained in this Section 4.19 shall, or is intended to,
derogate from the assignment and security interest granted to the Series 1997-1
Collateral Agent under the Series 1997-1 Collateral Agreement or impair any
rights of the Series 1997-1 Letter of Credit Provider or the Series 1997-1
Collateral Agent thereunder.
Section 4.20. Confidentiality. The Series 1997-1 Letter of Credit
Provider hereby agrees that it shall not disclose any Confidential Information
(as defined below) to any Person without the consent of Republic, the Lessees or
RFC, as applicable, other than (a) to the Series 1997-1 Letter of Credit
Provider's Affiliates and their respective officers, directors, employees,
agents and advisors and to actual or prospective assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.
"Confidential Information" means information that Republic, any Lessees
or RFC furnishes to the Series 1997-1 Letter of Credit Provider on a
confidential basis, but does not include any such information that is or becomes
generally available to the public other than as a result of a disclosure by any
Series 1997-1 Letter of Credit Provider or other Person to which the Series
1997-1 Letter of Credit Provider delivered such information or that is or
becomes available to the Series 1997-1 Letter of Credit Provider from a source
other than Republic, the Lessees or RFC, provided that such source is not (i)
known to the Series 1997-1 Letter of Credit Provider to be bound by a
confidentiality agreement with Republic, the applicable Lessee or RFC, as the
case may be, or (ii) known to the Series 1997-1 Liquidity Provider to be
otherwise prohibited from transmitting the information by a contractual, legal
or fiduciary obligation.
Section 4.21. Nature of Obligations. No obligation hereunder of the
Lessees shall be payable by RFC, and no obligation hereunder of RFC shall be
payable by the Lessees.
Section 4.22. Additional Lessees. In the event that any direct or
indirect Subsidiary of or other Affiliate of Republic (each a "Republic
Affiliate") shall have become a "Lessee" under and pursuant to the Series 1997-1
Support Reimbursement of this Agreement, then Republic and such Republic
Affiliate shall execute and deliver to the Series 1997-1 Letter of Credit
Provider:
(i) a Lessee Joinder in Letter of Credit Agreement
substantially in the form attached hereto as Exhibit B (each, a "Lessee
Joinder in Letter of Credit Agreement"); and
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<PAGE> 29
(ii) any additional documentation that the Series 1997-1
Letter of Credit Provider or the Enhancement Agent may require to
evidence the assumption by such Republic Affiliate of the obligations
and liabilities set forth in this Agreement.
Upon satisfaction of the foregoing conditions and receipt by the Series 1997-1
Letter of Credit Provider of the Lessee Joinder in Letter of Credit Agreement
executed by such Republic Affiliate and Republic, such Republic Affiliate shall
be deemed to be a "Lessee" for purposes of this Agreement and shall be entitled
to the benefits and subject to the liabilities and obligations of a Lessee
hereunder.
Section 4.23. Other Obligations and Rights of the Series 1997-1 Letter
of Credit Provider. No term or provision hereof shall in any manner modify,
amend or affect the Series 1997-1 Letter of Credit Provider's (i) obligations or
liabilities under its Series 1997-1 Letter of Credit or (ii) rights or benefits
under any Series 1997-1 Support Letter of Credit or the GM Series 1997-1 Support
Letter of Credit.
Section 4.24. Benefit for the Series 1997-1 Letter of Credit Provider.
With regard to the Lessee's obligations hereunder and under the Series 1997-1
Support Reimbursement Agreement in favor of the Series 1997-1 Letter of Credit
Provider, the Series 1997-1 Letter of Credit Provider shall receive the full
benefit of Section 2.20 of the Series 1997-1 Support Reimbursement Agreement (as
in effect on the date hereof, along with all amendments, modifications and
waivers consented thereto by the Series 1997-1 Letter of Credit Provider).
[Remainder of Page Intentionally Blank]
-27-
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, as of the day and year first
above written.
REPUBLIC INDUSTRIES FUNDING CORP.
By: /s/ Dwight Jenkins
----------------------------------
Name: Dwight Jenkins
Title: Vice President
and Assistant Secretary
REPUBLIC INDUSTRIES, INC.
By: /s/ Kathleen W. Hyle
----------------------------------
Name: Kathleen W. Hyle
Title: Vice President - Finance
and Treasurer
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ Alan S. Bookspan
----------------------------------
Name: Alan S. Bookspan
Title: Vice President
By: /s/ Salvatore Battinelli
----------------------------------
Name: Salvatore Battinelli
Title: Vice President
Credit Department
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<PAGE> 31
LESSEES:
ALAMO RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
NATIONAL CAR RENTAL SYSTEM, INC.
By: /s/ Kathleen W. Hyle
------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
SPIRIT RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
VALUE RENT-A-CAR, INC.
By: /s/ Kathleen W. Hyle
------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Note: Pursuant to Instruction 2 to Item 601(a) of Regulation S-K, the registrant
has not filed the documents relating to Series 1997-2 notes, Series 1997-3
notes or Series 1997-4 notes which are substantially similar to the
document filed herewith relating to the Series 1997-1 notes.
<PAGE> 1
EXHIBIT 4.8
================================================================================
SERIES 1997-1 NOTE PURCHASE AGREEMENT
(VARIABLE FUNDING RENTAL CAR ASSET BACKED NOTES, SERIES 1997-1),
dated as of October 29, 1997,
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
REPUBLIC INDUSTRIES, INC.,
as Master Servicer,
REPUBLIC INDUSTRIES FUNDING CORP.,
as Series 1997-1 Note Purchaser,
and
CREDIT SUISSE FIRST BOSTON,
as Series 1997-1 Collateral Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C> <C>
SECTION 1.01 Definitions...................................................2
ARTICLE II
PURCHASE AND SALE OF THE NOTES
SECTION 2.01 Purchases.....................................................5
SECTION 2.02 Borrowing Procedures..........................................5
SECTION 2.03 Decreases.....................................................5
SECTION 2.04 CP Stop Issuance Events.......................................6
ARTICLE III
INTEREST AND FEES
SECTION 3.01 Interest .....................................................6
SECTION 3.02 [Reserved.]..................................................7
SECTION 3.03 Eurodollar Lending Unlawful...................................7
SECTION 3.04 Deposits Unavailable..........................................7
SECTION 3.05 Increased Costs, etc..........................................8
SECTION 3.06 Funding Losses................................................8
SECTION 3.07 Increased Capital Costs.......................................9
SECTION 3.08 Taxes .....................................................9
SECTION 3.09 Carrying Charges.............................................11
ARTICLE IV
OTHER PAYMENT TERMS
SECTION 4.01 Time and Method of Payment...................................11
</TABLE>
-i-
<PAGE> 3
ARTICLE V
REPRESENTATIONS AND WARRANTIES
<TABLE>
<S> <C> <C>
SECTION 5.01 NFLP ....................................................12
SECTION 5.02 Master Servicer..............................................12
SECTION 5.03 Series 1997-1 Note Purchaser.................................13
ARTICLE VI
CONDITIONS
SECTION 6.01 Conditions to Issuance.......................................14
SECTION 6.02 Conditions to Initial Borrowing..............................15
SECTION 6.03 Conditions to Each Borrowing.................................15
ARTICLE VII
COVENANTS
SECTION 7.01 Covenants....................................................16
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01 Amendments...................................................17
SECTION 8.02 No Waiver; Remedies..........................................17
SECTION 8.03 Binding on Successors and Assigns............................17
SECTION 8.04 Survival of Agreement........................................18
SECTION 8.05 Payment of Costs and Expenses; Indemnification...............18
SECTION 8.06 Characterization as Related Document; Entire Agreement.......19
SECTION 8.07 Notices ....................................................19
SECTION 8.08 Severability of Provisions...................................20
SECTION 8.09 Tax Characterization.........................................20
SECTION 8.10 No Proceedings; Limited Recourse.............................20
SECTION 8.11 Confidentiality..............................................21
SECTION 8.12 Governing Law................................................22
SECTION 8.13 Counterparts.................................................22
</TABLE>
EXHIBITS
EXHIBIT A Up-Front Fee
EXHIBIT B Form of Advance Request
-ii-
<PAGE> 4
SERIES 1997-1 NOTE PURCHASE AGREEMENT
THIS SERIES 1997-1 NOTE PURCHASE AGREEMENT, dated as of October 29,
1997 (as amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms hereof, this "Agreement"), is made among NATIONAL
CAR RENTAL FINANCING LIMITED PARTNERSHIP, a Delaware limited partnership
("NFLP"), REPUBLIC INDUSTRIES, INC., a Delaware corporation ("Republic" or the
"Master Servicer"), REPUBLIC INDUSTRIES FUNDING CORP., a Delaware corporation
("RFC" or the "Series 1997-1 Note Purchaser") and CREDIT SUISSE FIRST BOSTON, a
Swiss banking corporation ("CSFB"), as Series 1997-1 Collateral Agent for the
Series 1997- 1 Note Purchaser (in such capacity, together with any successors in
such capacity, the "Series 1997-1 Collateral Agent").
BACKGROUND
1. Contemporaneously with the execution and delivery of this
Agreement, NFLP is entering into (a) the Series 1997-1 Supplement, dated as of
even date herewith (as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof, the
"Series 1997-1 Supplement"), between NFLP, as Issuer, and The Bank of New York,
a New York banking corporation, as the Trustee (in such capacity, together with
its successors in trust in such capacity, the "Trustee"), and as the Enhancement
Agent (in such capacity, the "Enhancement Agent"), to the Base Indenture, dated
as of April 30, 1996 (as amended by the Supplement and Amendment to Base
Indenture, dated as of December 20, 1996, and as the same may be further
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, the "Base Indenture"), between NFLP and the Trustee, and (b)
the Master Motor Vehicle Lease and Servicing Agreement, dated as of October 29,
1997 (as the same may be amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms thereof, the "Series 1997 Lease")
among NFLP, as lessor, the parties identified therein as the Lessees and
Servicers, those additional Subsidiaries and Affiliates of Republic, from time
to time becoming Lessees and Servicers thereunder, and Republic, as Guarantor
and Master Servicer, and (c) the other Related Documents (such term, as with the
other capitalized terms used herein, shall have the meaning assigned thereto in
Section 1.01 hereof) and CP Program Documents to which NFLP is a party. Pursuant
to the Base Indenture and the Series 1997-1 Supplement, NFLP will issue the
Rental Car Asset Backed Variable Funding Notes, Series 1997-1 (each a "Series
1997-1 Note" and, collectively, the "Series 1997-1 Notes").
2. NFLP wishes to issue the Series 1997-1 Notes in favor of
the Series 1997- 1 Note Purchaser and obtain the agreement of the Series 1997-1
Note Purchaser to make loans from time to time (each, an "Advance") for the
purchase of Series 1997-1 Invested Amounts, all of which Advances (including the
Initial Advance) will constitute Increases, and all of
<PAGE> 5
which Advances (including the Initial Advance) will be evidenced by the Series
1997-1 Notes purchased in connection herewith and will constitute purchases of
Series 1997-1 Invested Amounts corresponding to the amount of such Advances.
Subject to the terms and conditions of this Agreement, the Series 1997-1 Note
Purchaser is willing to make Advances from time to time to fund purchases of
Series 1997-1 Invested Amounts in an aggregate out standing amount up to the
amount set forth below its name on the signature pages to this Agreement until
the occurrence of the Series 1997-1 Rapid Amortization Period. Republic has
joined in this Agreement to confirm certain representations, warranties and
covenants made by it as Master Servicer for the benefit of the Series 1997-1
Note Purchaser and the Series 1997-1 Collateral Agent.
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. As used in this Agreement and unless
the context requires a different meaning, capitalized terms used but not defined
herein (including the preamble and the recitals hereto) shall have the meanings
assigned to such terms in (i) the Definitions List attached as Annex A to the
Series 1997-1 Supplement, as such Definitions List may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof, (ii) the Definitions List attached as Annex A to the Series 1997-1
Liquidity Agreement, as such Definitions List may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms of
the Series 1997-1 Liquidity Agreement, and (iii) the Definitions List attached
as Schedule 1 to the Base Indenture as in effect as of the date hereof, as such
Definitions List may be further amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms of the Base Indenture,
provided that to the extent, if any, that any capitalized term used but not
defined herein has a meaning assigned to such term in more than one of the lists
or agreements referred to in clauses (i) through (iii), then (x) if a meaning is
assigned to such term in the Definitions List attached as Annex A to the Series
1997-1 Supplement, such meaning shall apply herein, and (y) if a meaning is not
assigned to such term in the Definitions List attached as Annex A to the Series
1997-1 Supplement, then the meaning assigned to such term in the Definitions
List attached as Annex A to the Series 1997-1 Liquidity Agreement shall apply
herein. In addition, the following terms shall have the following meanings 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:
"Advance" has the meaning set forth in paragraph 2 of the
preambles hereto.
"Advance Request" has the meaning set forth in Section
6.03(c).
"Base Rate" has the meaning specified in the Series 1997-1
Supplement.
-2-
<PAGE> 6
"Base Rate Tranche" has the meaning specified in the Series
1997-1 Supplement.
"Borrowing" has the meaning set forth in Section 2.01.
"Commitment Amount" means, as to the Series 1997-1 Note
Purchaser, the dollar amount set forth under its name on the signature pages
hereof, as such amount may be modified from time to time by written agreement
between the Series 1997-1 Note Purchaser, the Master Servicer and NFLP in
accordance with the terms hereof.
"Confidential Information", for purposes of this agreement,
has the meaning set forth in Section 8.10.
"CP Market Disruption Event" means, at any time for any reason
whatsoever, RFC shall be unable to raise, or shall be precluded or prohibited
from raising, funds through the issuance of Commercial Paper Notes in the United
States commercial paper market at such time.
"CP Rate" means, for any Series 1997-1 Interest Period, to the
extent that RFC funds the Series 1997-1 Invested Amount for such Series 1997-1
Interest Period through the issuance of Commercial Paper Notes, a rate per annum
equal to the weighted average of the interest rates applicable to each
Commercial Paper Note which has matured during such Series 1997-1 Interest
Period; provided that if such rate is a discount rate (or rates), then such rate
shall be the rate (or, if more than one rate, the weighted average of the rates)
resulting from converting such discount rate (or rates) to an interest-bearing
equivalent rate per annum.
"CP Stop Issuance Event" means (i) a Lease Event of Default
under Section 17.1 of the Series 1997 Lease or (ii) an Amortization Event under
Article 7 of the Series 1997-1 Supplement or (iii) with respect to the issuance
and sale of any additional Commercial Paper Notes, the conditions precedent to
any issuance or sale of Commercial Paper Notes set forth in Sections 2.1 and 2.2
of the Series 1997-1 Liquidity Agreement are not satisfied as of the date of the
proposed issuance and sale.
"CP Tranche" has the meaning specified in the Series 1997-1
Supplement.
"Eurodollar Rate" has the meaning specified in the Series
1997-1 Supplement.
"Eurodollar Rate (Reserve Adjusted)" has the meaning specified
in the Series 1997-1 Supplement.
"Eurodollar Tranche" has the meaning specified in the Series
1997-1 Supplement.
-3-
<PAGE> 7
"Fed Funds Rate" has the meaning specified in the Definitions
List attached as Annex A to the Series 1997-1 Liquidity Agreement.
"Financial Statements" has the meaning set forth in Section
5.02(b).
"Increase Date" shall mean the Business Day on which an
Increase in the Series 1997-1 Invested Amount occurs.
"Initial Advance" means the Advance made under this Agreement
as part of the initial Borrowing.
"Majority Program Support Providers" means Program Support
Providers holding more than 50% of the aggregate commitments of all Program
Support Providers.
"Offering Memorandum" has the meaning specified in the Series
1997-1 Supplement.
"Program Support Agreement" means and includes the Series
1997-1 Liquidity Agreement and any other agreement entered into by any Program
Support Provider providing for the issuance of one or more letters of credit for
the account of RFC, the issuance of one or more surety bonds for which RFC is
obligated to reimburse the applicable Program Support Provider for any drawings
thereunder, the sale by RFC to any Program Support Provider of the Series 1997-1
Notes (or portions thereof) and/or the making of loans and/or other extensions
of credit to RFC in connection with RFC's securitization program, together with
any letter of credit, surety bond or other instrument issued thereunder (but
excluding any discretionary advance facility provided by the Series 1997-1
Collateral Agent).
"Program Support Provider" means and includes any financial
institutions party to the Series 1997-1 Liquidity Agreement and any other or
additional Person (other than any customer of the Issuer) now or hereafter
extending credit or having a commitment to extend credit to or for the account
of, and to make purchases from, RFC or issuing a letter of credit or surety bond
or other instrument to support any obligations arising under or in connection
with RFC's securitization program, in each case pursuant to a Program Support
Agreement.
"Series 1997-1 Note Purchaser" means RFC, together with any
successors and assigns thereof in accordance with the terms hereof and the other
CP Program Documents.
"Series 1997-1 Note" and "Series 1997-1 Notes" have the
meanings set forth in paragraph 1 of the preambles hereto.
"Taxes" has the meaning set forth in Section 3.06.
-4-
<PAGE> 8
ARTICLE II
PURCHASE AND SALE OF THE NOTES
SECTION 2.01 Purchases. Subject to the terms and conditions of
this Agreement and the Series 1997-1 Supplement, the Series 1997-1 Note
Purchaser shall upon NFLP's request and satisfaction of all conditions precedent
thereto, make Advances from time to time during the Series 1997-1 Revolving
Period, provided, that (x) the Series 1997-1 Note Purchaser will not be required
or permitted to make an Advance on any date if, after giving effect to such
Advance, the Series 1997-1 Invested Amount would exceed the Series 1997-1
Maximum Invested Amount, (y) the Series 1997-1 Note Purchaser will not be
required or permitted to make any Advance if, after giving effect thereto and
the use of proceeds therefrom, either (i) a Series 1997-1 Enhancement Deficiency
exists or would exist or (ii) a Series 1997 Asset Amount Deficiency exists or
would exist. All Advances on any date shall be allocated (i) with respect to the
Initial Advance, according to the Initial Invested Amount; and (ii) thereafter,
according to the provisions in Section 4.2 of the Series 1997-1 Supplement for
allocating Increases to the Series 1997-1 Invested Amount. Each of the Advances
to be made on any date shall be made singly as part of a single borrowing (each
such single borrowing being a "Borrowing"). Subject to the terms of this
Agreement and the Series 1997-1 Supplement, the aggregate principal amount of
the Advances represented by the Series 1997-1 Notes may be increased or
decreased from time to time.
SECTION 2.02 Borrowing Procedures. Whenever NFLP wishes the
Series 1997-1 Note Purchaser to make an Advance, NFLP shall (or shall cause the
Master Servicer to) notify the Series 1997-1 Collateral Agent upon irrevocable
written notice delivered to the Series 1997-1 Collateral Agent no later than the
Business Day of the proposed Borrowing (which Borrowing date shall, except in
the case of the Initial Advances, be an Increase Date). Each such notice shall
be irrevocable and shall in each case refer to this Agreement and specify the
aggregate amount of the requested Borrowing to be made on such date (which
Borrowing shall be in an amount equal to at least $250,000 and, in the case of
the Initial Advance only, in an aggregate minimum amount of $1,000,000. The
Series 1997-1 Collateral Agent shall promptly advise the Series 1997-1 Note
Purchaser of any notice given pursuant to this section and shall promptly
thereafter (but in no event later than 11:00 a.m. New York City time on the
proposed date of Borrowing) notify NFLP whether RFC has determined to make such
Advances. On the date of each Borrowing and subject to the other conditions set
forth herein and in the Series 1997-1 Supplement, the Series 1997-1 Note
Purchaser shall make available to NFLP the amount of such Advance by wire
transfer in U.S. dollars of such amount in same day funds to the Series 1997-1
Collection Account no later than 3:00 p.m. (New York time) on the proposed date
of such Borrowing.
SECTION 2.03 Decreases. (a) Mandatory Decreases. Whenever the
Series 1997-1 Enhancement Amount is less than the Series 1997-1 Minimum
Enhancement Amount or a Series 1997 Asset Amount Deficiency exists, then, on the
Distribution Date immediately
-5-
<PAGE> 9
following discovery of such deficiency, NFLP shall decrease the Series 1997-1
Invested Amount of the Series 1997-1 Notes as required under Section 4.3(a) of
the Series 1997-1 Supplement.
(b) Voluntary Decreases. Upon at least three (3) Business
Days' prior irrevocable notice to the Series 1997-1 Note Purchaser in writing,
NFLP may voluntarily reduce the Series 1997-1 Invested Amount of the Series
1997-1 Notes in accordance with the procedures set forth in Section 4.3(b) of
the Series 1997-1 Supplement.
SECTION 2.04 CP Stop Issuance Events. Notwithstanding anything
to the contrary herein, upon the occurrence and during the continuation of a CP
Stop Issuance Event, the Series 1997-1 Note Purchaser shall not make any
Advances hereunder and shall not issue Commercial Paper Notes in order to fund
or maintain its investments in the Series 1997-1 Notes. Each of NFLP and the
Master Servicer agrees to give the Series 1997-1 Collateral Agent and the Series
1997-1 Note Purchaser prompt written notice of any CP Stop Issuance Event. It is
expressly understood that the occurrence of a CP Stop Issuance Event shall not
relieve the Series 1997-1 Note Purchaser of its obligation to make future
Advances hereunder.
ARTICLE III
INTEREST AND FEES
SECTION 3.01 Interest. Each Advance funded or maintained by
the Series 1997-1 Note Purchaser during the relevant Series 1997-1 Interest
Period (a) through the issuance of Commercial Paper Notes shall bear interest at
the CP Rate for such Series 1997-1 Interest Period and (b) through means other
than the issuance of Commercial Paper Notes shall bear interest at (i) the Base
Rate or (ii) if the required notice has been given, the Eurodollar Rate for such
Series 1997-1 Interest Period, except as otherwise provided in the definition of
Series 1997-1 Interest Period or in Section 3.04; provided, however, that in
each case, if a Series 1997-1 Rapid Amortization Period has commenced and is
continuing, then interest on the Advances shall bear interest at a per annum
rate equal to the Base Rate plus 0.50%. The Series 1997-1 Collateral Agent
shall promptly (but in no event later than the Business Day preceding the next
Determination Date) notify NFLP and the Master Servicer of the applicable
interest rate for the Advances as of the first day of each Series 1997-1
Interest Period.
(a) Interest shall be due and payable on each Distribution
Date in accordance with the provisions set forth in Section 5.4 of the Series
1997-1 Supplement.
(b) All computations of interest at the CP Rate and Eurodollar
Rate shall be made on the basis of a year of 360 days and the actual number of
days elapsed and all computations of interest at the Base Rate shall be made on
the basis of a 365 (or 366, as applicable) day year and actual number of days
elapsed. Whenever any payment of interest or
-6-
<PAGE> 10
principal in respect of any Advance shall be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the amount of interest
owed.
SECTION 3.02 [Reserved.]
SECTION 3.03 Eurodollar Lending Unlawful. If the Series 1997-1
Note Purchaser or any Program Support Provider shall reasonably determine (which
determination shall, upon notice thereof to RFC and NFLP, be conclusive and
binding on RFC and NFLP absent manifest error) that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other Governmental Authority asserts that it is unlawful,
for any such Program Support Provider to make, continue or maintain any Advance
as, or to convert any Advance into, the Eurodollar Tranche of such Advance, the
obligation of such Person to make, continue or maintain or convert any such
Advance as the Eurodollar Tranche of such Advance shall, upon such
determination, forthwith be suspended until such Person shall notify the Series
1997-1 Note Purchaser and NFLP that the circumstances causing such suspension no
longer exist, and the Series 1997-1 Note Purchaser shall immediately convert (in
the manner provided for in the applicable CP Program Document) all Advances of
any such Program Support Provider, as applicable, into the Base Rate Tranche of
such Advance at the end of the then current Series 1997-1 Interest Periods with
respect thereto or sooner, if required by such law or assertion.
SECTION 3.04 Deposits Unavailable. If the Series 1997-1 Note
Purchaser or any Program Support Provider shall have reasonably determined that
(a) Dollar deposits in the relevant amount and for the
relevant Series 1997- 1 Interest Period are not available to all
Reference Lenders in the relevant market; or
(b) by reason of circumstances affecting all Reference
Lenders' relevant market, adequate means do not exist for ascertaining
the interest rate applicable hereunder to the Eurodollar Tranche of any
Advance; or
(c) the Series 1997-1 Note Purchaser or the Majority
Program Support Providers have notified RFC and NFLP that, with respect
to any interest rate otherwise applicable hereunder to the Eurodollar
Tranche of any Advance the Series 1997-1 Interest Period for which has
not then commenced, such interest rate will not adequately reflect the
cost to such Majority Program Support Providers of making, funding or
maintaining their respective Eurodollar Tranche of such Advance for
such Series 1997-1 Interest Period,
then, upon notice from the Series 1997-1 Note Purchaser or the Majority Program
Support Providers to RFC and NFLP, the obligations of the Series 1997-1 Note
Purchaser and all
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Program Support Providers to make or continue any Advance as, or to convert any
Advances into, the Eurodollar Tranche of such Advance shall forthwith be
suspended until the Series 1997-1 Note Purchaser shall notify RFC that the
circumstances causing such suspension no longer exist.
SECTION 3.05 Increased Costs, etc. NFLP agrees to reimburse
the Series 1997-1 Note Purchaser for an increase in the cost to any Program
Support Provider of, or any reduction in the amount of any sum receivable by any
such Program Support Provider, including reductions in the rate of return on
such Program Support Provider's capital, in respect of, making, continuing or
maintaining (or of its obligation to make, continue or maintain) any Advances
as, or of converting (or of its obligation to convert) any Advances into, the
Eurodollar Tranche of such Advance that arise in connection with any change in,
or the introduction, adoption, effectiveness, interpretation reinterpretation or
phase-in, in each case, after the date hereof of, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other Governmental Authority,
except for such changes with respect to increased capital costs and taxes which
are governed by Sections 3.07 and 3.08, respectively; provided, however, that
NFLP shall have no obligation to pay any such additional amount under this
Section 3.05 with respect to any day or days unless any such Program Support
Provider shall have notified RFC and NFLP of its demand therefor within
forty-five (45) days of the date upon which such Program Support Provider, has
obtained audited information with respect to the fiscal year of such Program
Support Provider in which such day or days occurred. Each such demand shall be
provided to RFC and NFLP in writing and shall state, in reasonable detail, the
reasons therefor and the additional amount required fully to compensate such
Program Support Provider for such increased cost or reduced amount or return.
Such additional amounts shall be payable by NFLP to RFC and by RFC directly to
such Program Support Provider within five (5) Business Days of its receipt of
such notice, and such notice shall, in the absence of manifest error, be
conclusive and binding on RFC and NFLP.
SECTION 3.06 Funding Losses. In the event the Series 1997-1
Note Purchaser or any Program Support Provider shall incur any loss or expense
(including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Program Support
Provider to make, continue or maintain any portion of the principal amount of
any Advance as, or to convert any portion of the principal amount of any Advance
into, the Eurodollar Tranche of such Advance) as a result of:
(a) any conversion or repayment or prepayment (for any
reason, including, without limitation, as a result of the acceleration
of the maturity of the Eurodollar Tranche of such Advance) of the
principal amount of any Eurodollar Tranche on a date other than the
scheduled last day of the Series 1997-1 Interest Period applicable
thereto;
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(b) any Advance not being made as an Advance under the
Eurodollar Tranche; or
(c) any Advance not being continued as, or converted
into, an Advance under the Eurodollar Tranche,
then, upon the written notice of the Series 1997-1 Note Purchaser or any such
Program Support Provider to RFC and NFLP, NFLP shall pay to RFC and RFC shall,
within five (5) Business Days of its receipt thereof, pay directly to such
Program Support Provider such amount as will (in the reasonable determination of
such Program Support Provider) reimburse such Program Support Provider for such
loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on RFC and NFLP.
SECTION 3.07 Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation or reinterpretation or
phase-in of, in each case after the date hereof, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other Governmental Authority
affects or would affect the amount of capital required or reasonably expected to
be maintained by any Program Support Provider or any Person controlling such
Program Support Provider, and such Program Support Provider reasonably
determines (in its sole and absolute discretion) that the rate of return on its
or such controlling Person's capital as a consequence of its commitment or the
Advances made by such Program Support Provider is reduced to a level below that
which such Program Support Provider or such controlling Person would have
achieved but for the occurrence of any such circumstance, then, in any such case
after notice from time to time by such Program Support Provider to RFC and NFLP,
NFLP shall pay to RFC and RFC shall pay an incremental commitment fee sufficient
to compensate such Program Support Provider or such controlling Person for such
reduction in rate of return; provided, however, that neither NFLP nor RFC shall
have any obligation to pay any such additional amount under this Section 3.07
with respect to any day or days unless such Program Support Provider shall have
notified RFC and NFLP of its demand therefor within forty-five (45) days of the
date upon which such Program Support Provider has obtained audited information
with respect to the fiscal year of such Program Support Provider in which such
day or days occurred. A statement of such Program Support Provider as to any
such additional amount or amounts (including calculations thereof in reasonable
detail), shall, in the absence of manifest error, be conclusive and binding on
RFC and NFLP; and provided, further, that the initial payment of such increased
commitment fee shall include a payment for accrued amounts due under this
Section 3.07 prior to such initial payment. In determining such additional
amount, such Program Support Provider may use any method of averaging and
attribution that it (in its reasonable discretion) shall deem applicable so long
as it applies such method to other similar transactions.
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SECTION 3.08 Taxes. All payments by RFC of principal of, and
interest on, the Advances and all other amounts payable hereunder (including
fees) shall be made free and clear of and without deduction for any present or
future income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding in the case of the Series 1997-1 Note Purchaser or any
such Program Support Provider, taxes imposed on or measured by its overall net
income, overall receipts or overall assets and franchise taxes imposed on it by
the jurisdiction of the Series 1997-1 Note Purchaser or any such Program Support
Provider, as the case may be, in which it is organized or is operating or any
political subdivision thereof and taxes imposed on or measured by its overall
net income, overall receipts or overall assets or franchise taxes imposed on it
by the jurisdiction of the Series 1997-1 Note Purchaser and each Program Support
Provider's Domestic Office or Eurodollar Office, as the case may be, or any
political subdivision thereof (such non-excluded items being called "Taxes"). In
the event that any withholding or deduction from any payment to be made by RFC
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then NFLP will pay to RFC and RFC will
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the agent for the relevant
Program Support Provider an official receipt or other documentation
satisfactory to the agent for the relevant Program Support Provider
evidencing such payment to such authority; and
(c) pay to the agent for the relevant Program Support
Provider such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Program Support Provider
will equal the full amount such Program Support Provider would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any Program Support
Provider with respect to any payment received by the such Program Support
Provider or its agent hereunder, such Program Support Provider or its agent may
pay such Taxes and RFC will promptly upon receipt of prior written notice
stating the amount of such Taxes pay such additional amounts (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by such person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such person would have received
had not such Taxes been asserted.
If RFC fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Program Support Provider or its agent
the required receipts or other required documentary evidence, RFC shall
indemnify the Program Support Providers and their
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agent for any incremental Taxes, interest or penalties that may become payable
by any such Program Support Provider or its agent as a result of any such
failure. For purposes of this Section 3.08, a distribution hereunder by the
agent for the relevant Program Support Provider shall be deemed a payment by
RFC.
Upon the request of RFC, each Program Support Provider that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the initial due date of any payments hereunder and to the extent
permissible under then current law, execute and deliver to RFC on or about the
first scheduled payment date in each calendar year thereafter, one or more (as
RFC may reasonably request) United States Internal Revenue Service Forms 4224 or
Forms 1001 or such other forms or documents (or successor forms or documents),
appropriately completed, as may be applicable to establish the extent, if any,
to which a payment to such Program Support Provider is exempt from withholding
or deduction of Taxes. RFC shall not, however, be required to pay any increased
amount under this Section 3.08 to any Program Support Provider that is organized
under the laws of a jurisdiction other than the United States if such Program
Support Provider fails to comply with the requirements set forth in this
paragraph.
SECTION 3.09 Carrying Charges. Any amounts payable by NFLP or RFC under
Sections 3.05, 3.06, 3.07 or 3.08 shall constitute Carrying Charges within the
meaning of the Base Indenture.
ARTICLE IV
OTHER PAYMENT TERMS
SECTION 4.01 Time and Method of Payment. (a) All amounts
payable to the Series 1997-1 Note Purchaser hereunder or with respect to the
Series 1997-1 Notes shall be made to the Series 1997-1 Collateral Agent for the
account of the Series 1997-1 Note Purchaser by wire transfer of immediately
available funds in Dollars not later than [1:00] p.m., New York City time, on
the date due. Any funds received after that time will be deemed to have been
received on the next Business Day. The Series 1997-1 Collateral Agent shall
distribute all payments to the Series 1997-1 Note Purchaser prior to the close
of business on the Business Day on which any payment is deemed received.
(b) On any date on which a payment to the Series 1997-1 Note
Purchaser or under the Series 1997-1 Notes is due and payable, the Series 1997-1
Collateral Agent may (but in no event shall be required to) assume that the
payment has been made available to the Series 1997-1 Collateral Agent on the
date of the payment in accordance with this section, and the Series 1997-1
Collateral Agent may (but in no event shall be required to), in reliance upon
this assumption, make payment of a corresponding amount to the Series 1997-1
Note Purchaser. If and to the extent any amounts shall not have so been made
available to the Series 1997-1
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Collateral Agent, the Series 1997-1 Note Purchaser irrevocably and
unconditionally agrees to repay to the Series 1997-1 Collateral Agent forthwith
on demand the amount of payment it received together with interest thereon, for
each day from the date payment is made by the Series 1997-1 Collateral Agent
until the date the amount is repaid to the Series 1997-1 Collateral Agent, (i)
for the first three (3) days following the date the payment is made, at a rate
per annum equal to the Federal Funds Rate and (ii) thereafter, at a rate per
annum equal to the Federal Funds Rate plus 0.05%.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 NFLP. NFLP represents and warrants to the Series
1997-1 Note Purchaser that each of its representations and warranties in the
Base Indenture, the Series 1997 Lease and the other Related Documents is true
and correct and further represents and warrants that:
(a) no Amortization Event, Liquidation Event of
Default or Series 1997-1 Limited Liquidation Event of Default or event
which, with the giving of notice or the passage of time or both would
constitute any of the foregoing, has occurred and is continuing;
(b) assuming the Series 1997-1 Note Purchaser is not
purchasing with a view toward further distribution and there has been
no general solicitation or general advertising within the meaning of
the Securities Act, the offer and sale of the Series 1997-1 Notes in
the manner contemplated by this Agreement is a transaction exempt from
the registration requirements of the Securities Act, and the Base
Indenture is not required to be qualified under the Trust Indenture
Act;
(c) NFLP has furnished to the Series 1997-1
Collateral Agent true, accurate and (except as otherwise consented by
the Series 1997-1 Collateral Agent) complete copies of all other
Related Documents (including all other series supplements) to which it
is a party as of the Series 1997-1 Closing Date, all of which Related
Documents are in full force and effect as of the Series 1997-1 Closing
Date and no terms of any such agreements or documents have been
amended, modified or otherwise waived as of such date; and
(d) the Commercial Paper Notes have been rated A-1 by
Standard & Poor's and P-1 by Moody's, both of which ratings are in
effect and neither of which ratings has been reduced or withdrawn.
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SECTION 5.02 Master Servicer. The Master Servicer represents
and warrants to the Series 1997-1 Note Purchaser that:
(a) each representation and warranty made by it in
the Series 1997 Lease and each Related Document to which it is a party
(including any representations and warranties made by it as Master
Servicer) is true and correct in all material respects as of the date
originally made and as of the Series 1997-1 Closing Date;
(b) the audited consolidated balance sheet of the
Master Servicer and its Consolidated Subsidiaries as of December 31,
1996 and the related statements of income, changes in stockholders
equity and cash flow as of and for the fiscal year ending on such date
(including in each case the schedules and notes thereto) (the
"Financial Statements"), have been prepared in accordance with GAAP and
present fairly the financial position of the Master Servicer and its
Consolidated Subsidiaries as of the dates thereof and the results of
their operations for the periods covered thereby subject, in the case
of all unaudited statements, to normal year-end adjustments and lack of
footnotes and other presentation items;
SECTION 5.03 Series 1997-1 Note Purchaser. The Series 1997-1
Note Purchaser represents and warrants to NFLP and the Master Servicer, as of
the date hereof (or as of a subsequent date on which a successor as assign of
the Series 1997-1 Note Purchaser shall become a party hereto), that:
(a) it has had an opportunity to discuss NFLP's and
the Master Servicer's business, management and financial affairs, and
the terms and conditions of the proposed purchase, with NFLP and the
Master Servicer and their respective representatives;
(b) it is an "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act and has sufficient knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of
investing in, and is able and prepared to bear the economic risk of
investing in, the Series 1997-1 Notes;
(c) it is purchasing the Series 1997-1 Notes for its
own account, or for the account of one or more "accredited investors"
within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act that meet the criteria described in subsection
(b) and for which it is acting with complete investment discretion, for
investment purposes only and not with a view to distribution, subject,
nevertheless, to the understanding that the disposition of its property
shall at all times be and remain within its control;
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(d) it understands that the Series 1997-1 Notes have
not been and will not be registered or qualified under the Securities
Act or any applicable state securities laws or the securities laws of
any other jurisdiction and are being offered only in a transaction not
involving any public offering within the meaning of the Securities Act
and may not be resold or otherwise transferred unless so registered or
qualified or unless an exemption from registration or qualification is
available, that NFLP is not required to register the Series 1997-1
Notes, and that any transfer must comply with provisions of Section 2.9
of the Base Indenture;
(e) it understands that the Series 1997-1 Notes will
bear the legend set out in the form of Series 1997-1 Notes attached as
Exhibit A to the Series 1997-1 Supplement and be subject to the
restrictions on transfer described in such legend;
(f) it will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the
Series 1997-1 Notes;
(g) it understands that the Series 1997-1 Notes may
be offered, resold, pledged or otherwise transferred with the Master
Servicer's prior written consent only (A) to NFLP, (B) in a transaction
meeting the requirements of Rule 144A under the Securities Act, (C)
outside the United States to a foreign person in a transaction meeting
the requirements of Regulation S under the Securities Act, or (D) in a
transaction complying with or exempt from the registration requirements
of the Securities Act and in accordance with any applicable securities
laws of any state of the United States or any other jurisdiction;
(h) if it desires to offer, sell or otherwise
transfer, pledge or hypothecate the Series 1997-1 Notes as described in
clause (B) or (D) of the preceding paragraph, the transferee of the
Series 1997-1 Notes will be required to deliver a certificate and may
under certain circumstances be required to deliver an opinion of
counsel, in each case, as described in the Base Indenture, reasonably
satisfactory in form and substance to the applicable seller, that an
exemption from the registration requirements of the Securities Act
applies to such offer, sale, transfer or hypothecation. Upon original
issuance thereof, and until such time as the same may no longer be
required under the applicable requirements of the Securities Act, the
certificate evidencing the Series 1997-1 Notes (and all securities
issued in exchange therefor or substitution thereof) shall bear a
legend substantially in the form of the Series 1997-1 Notes included in
the Series 1997-1 Supplement. The Series 1997-1 Notes Purchaser
understands that the registrar and transfer agent for the Series 1997-1
Notes will not be required to accept for registration of transfer the
Series 1997-1 Notes acquired by it, except upon presentation of an
executed letter in this form; and
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(i) it will obtain from any purchaser of the Series
1997-1 Notes substantially the same representations and warranties
contained in the foregoing paragraphs.
ARTICLE VI
CONDITIONS
SECTION 6.01 Conditions to Issuance. The Series 1997-1 Note
Purchaser will have no obligation to purchase the Series 1997-1 Notes hereunder
unless:
(a) the Base Indenture shall be in full force and
effect; and
(b) at the time of such issuance, all conditions to
the issuance of the Series 1997-1 Notes under the Series 1997-1
Supplement and under Section 2.2 of the Base Indenture shall have been
satisfied.
SECTION 6.02 Conditions to Initial Borrowing. The obligation
of the Series 1997-1 Note Purchaser to fund the initial Borrowing hereunder
shall be subject to the satisfaction of the conditions precedent that the Series
1997-1 Collateral Agent shall have received duly executed and authenticated
Series 1997-1 Notes registered in its name and stating that the principal amount
thereof shall not exceed the Series 1997-1 Maximum Invested Amount.
SECTION 6.03 Conditions to Each Borrowing. The obligation of
the Series 1997-1 Note Purchaser to fund any Borrowing on any day (including the
initial Borrowing) shall be subject to the conditions precedent that on the date
of the Borrowing, before and after giving effect thereto and to the application
of any proceeds therefrom, the following statements shall be true:
(a) (i) the representations and warranties of NFLP
set out in this Agreement (with the exception of Sections 5.01(b) and
5.01(d), which shall have been true and accurate in all material
respects on the Series 1997-1 Closing Date), (ii) the representations
and warranties of the Master Servicer set out in this Agreement (with
the exception of Sections 5.02(a) and 5.02(b), which shall have been
true and accurate on the Series 1997-1 Closing Date), and (iii) the
representations and warranties of NFLP and the Master Servicer set out
in the Base Indenture and the other CP Program Documents and other
Related Documents to which each is a party (with the exception of
Sections 23.5, 23.10 and 23.24 of the Series 1997 Lease, which shall
have been true and accurate on the Series 1997-1 Closing Date) shall,
in each such case, be true and accurate as of the date of the Borrowing
with the same effect as though made on that date (unless stated to
relate solely to an earlier date, in which case such representations
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and warranties shall be true and correct as of such earlier date);
provided that, with respect to the representations and warranties of
NFLP and the Master Servicer in the Base Indenture only, and without
limiting any representations and warranties of NFLP contained in any
other Related Document or CP Program Document, the condition precedent
set forth in this Section 6.03(a) shall be satisfied if such
representations and warranties are true and correct in all material
respects (to the extent such representation and warranty does not
contain a materiality limitation in its terms) on the applicable date
referred to in this Section 6.03(a);
(b) the Series 1997-1 Rapid Amortization Period has
not commenced;
(c) the Series 1997-1 Collateral Agent shall have
received the Monthly Noteholders' Statement for the Related Month
immediately preceding the date of such Borrowing and an executed
advance request in the form of Exhibit B hereto (each such request, an
"Advance Request") certifying as to the current Series 1997 Aggregate
Asset Amount and Series 1997-1 Enhancement Amount; and
(d) all limitations specified in Section 2.01 of this
Agreement shall have been satisfied.
The giving of any notice pursuant to Section 2.02 shall
constitute a representation and warranty by NFLP and the Master Servicer that
all conditions precedent to such Borrowing have been satisfied.
ARTICLE VII
COVENANTS
SECTION 7.01 Covenants. NFLP and the Master Servicer each
severally covenants and agrees that, until the Series 1997-1 Notes has been paid
in full and the obligation of the Series 1997-1 Note Purchaser to make Advances
have terminated, it will:
(a) duly and timely perform and cause the Lessees to
duly and timely perform all of their respective covenants and
obligations under each Related Document to which it is a party;
(b) not and will cause the Lessees not to, except as
contemplated by Section 3.2(a) of the Base Indenture with respect to
the Series 1997 Lease or clauses (c) through (h) of Section 12.1 of the
Base Indenture, amend, modify, waive or give any approval, consent or
permission under, any provision of the Base Indenture or any other
Related Document to which it is a party unless any such amendment,
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modification, waiver or other action is in writing and made in
accordance with the terms of the Base Indenture or such other Related
Document, as applicable;
(c) at the same time any report, notice or other
document is provided to the Rating Agencies and/or the Trustee, or
caused to be provided, by NFLP or the Master Servicer under the Base
Indenture (including, without limitation, under Sections 8.3, 8.10,
8.11 and/or 8.14 thereof), or by any of the Lessees or the Master
Servicer to NFLP under the Series 1997 Lease (including, without
limitation, under Section 24.7 thereof), provide the Series 1997-1
Collateral Agent with a copy of such report, notice or other document;
provided, however, that neither the Master Servicer nor NFLP shall have
any obligation under this Section 7.01(c) to deliver to the Series
1997-1 Collateral Agent copies of any (i) Monthly Noteholders'
Statements which relate solely to a series of Notes other than the
Series 1997-1 Notes or (ii) vehicle identification number listings; and
(d) at any time and from time to time, following
reasonable prior notice from the Series 1997-1 Collateral Agent, and
during regular business hours, permit the Series 1997-1 Collateral
Agent, or its agents, representatives or permitted assigns, access to
the offices of, the Master Servicer, any Lessee and NFLP applicable,
(i) to examine and make copies of and abstracts from all documentation
relating to the Collateral on the same terms as are provided to the
Trustee under Section 8.8 of the Base Indenture, as applicable, and
(ii) to visit the offices and properties of, the Master Servicer, any
Lessee and NFLP for the purpose of examining such materials described
in clause (i) above, and to discuss matters relating to the Collateral,
or the administration and performance of the Base Indenture, the Series
1997-1 Supplement and the other Related Documents with any of the
officers or employees of, the Master Servicer, any Lessee and/or NFLP,
as applicable, having knowledge of such matters.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01 Amendments. No amendment to or waiver of any
provision of this Agreement, nor consent to any departure by the Master
Servicer, NFLP or the Series 1997-1 Collateral Agent therefrom, shall in any
event be effective unless the same shall be in writing and signed by the Master
Servicer, NFLP, the Series 1997-1 Collateral Agent and the Series 1997-1 Note
Purchaser, and Rating Agency Confirmation shall have been obtained with respect
thereto; provided, however, that any amendment to or waiver of any provision of
this Agreement, or any consent to or any departure by the Master Servicer, NFLP
or the Series 1997-1 Collateral Agent herefrom shall not require Rating Agency
Confirmation to be obtained with respect thereto if such amendment or waiver or
any such consent or departure herefrom is effected only to cure any ambiguity,
to correct or supplement any provision herein which may be
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inconsistent with any other provision herein or which is otherwise defective, or
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or the other CP Program Documents or other Related Documents.
SECTION 8.02 No Waiver; Remedies. Any waiver, consent or
approval given by any party hereto shall be effective only in the specific
instance and for the specific purpose for which given, and no waiver by a party
of any breach or default under this Agreement shall be deemed a waiver of any
other breach or default. 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, or any
abandonment or discontinuation of steps to enforce the right, power or
privilege, preclude any other or further exercise thereof or the exercise of any
other right. No notice to or demand on any party hereto in any case shall
entitle such party to any other or further notice or demand in the same, similar
or other circumstances. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.03 Binding on Successors and Assigns. (a) This
Agreement shall be binding upon, and inure to the benefit of, NFLP, the Master
Servicer, the Series 1997-1 Collateral Agent, the Series 1997-1 Note Purchaser
and their respective successors and assigns; provided, however, that neither
NFLP nor the Master Servicer may assign its rights or obligations hereunder or
in connection herewith or any interest herein (voluntarily, by operation of law
or otherwise) without the prior written consent of the Series 1997-1 Note
Purchaser and provided, further, that the Series 1997-1 Note Purchaser may not
transfer, pledge, assign, sell participations in or otherwise encumber its
rights or obligations hereunder or in connection herewith or any interest herein
except as permitted under this section. Nothing expressed herein is intended or
shall be construed to give any Person other than the Persons referred to in the
preceding sentence any legal or equitable right, remedy or claim under or in
respect of this Agreement.
(b) Notwithstanding any other provision set forth in this
Agreement, the Series 1997-1 Note Purchaser may at any time grant to one or more
Program Support Providers a participating interest in or lien on the Series
1997-1 Note Purchaser's interests in the Advances made hereunder and such
Program Support Provider, with respect to its participating interest, shall be
entitled to the benefits of the Series 1997-1 Note Purchaser under this
Agreement.
SECTION 8.04 Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the Series 1997-1 Notes
delivered pursuant hereto shall survive the making and the repayment of the
Advances and the execution and delivery of this Agreement and the Series 1997-1
Notes and shall continue in full force and effect until all interest and
principal on the Series 1997-1 Notes and other amounts owed hereunder have been
paid in full and the commitment of the Series 1997-1 Note Purchaser
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hereunder has been terminated. In addition, the obligations of NFLP and RFC
under Sections 3.03, 3.04, 3.05, 3.06, 3.07 and 3.08 shall survive the
termination of this Agreement.
SECTION 8.05 Payment of Costs and Expenses; Indemnification.
(a) Payment of Costs and Expenses. NFLP agrees to pay on demand all reasonable
expenses of the Series 1997-1 Note Purchaser (including the reasonable fees and
out-of-pocket expenses of counsel to the Series 1997-1 Note Purchaser, if any,
who may be retained by counsel to the Series 1997-1 Note Purchaser) in
connection with
(i) the negotiation, preparation, execution, delivery and
administration of this Agreement and of each other Related Document,
including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to this Agreement or any
other Related Document as may from time to time hereafter be proposed,
whether or not the transactions contemplated hereby or thereby are
consummated, and
(ii) the consummation of the transactions contemplated by this
Agreement and the other Related Documents.
NFLP further agrees to pay, and to save the Series 1997-1 Note Purchaser
harmless from all liability for, (i) any breach by NFLP of its obligations under
this Agreement (ii) all reasonable costs incurred by the Series 1997-1 Note
Purchaser in enforcing this Agreement and (iii) any stamp, documentary or other
taxes which may be payable in connection with the execution or delivery of this
Agreement, any Borrowing hereunder, or the issuance of the Series 1997-1 Notes
or any other Related Documents. NFLP also agrees to reimburse the Series 1997-1
Note Purchaser upon demand for all reasonable out-of-pocket expenses incurred by
the Series 1997-1 Note Purchaser in connection with (x) the negotiation of any
restructuring or "work-out", whether or not consummated, of the Related
Documents and (y) the enforcement of the Related Documents.
(b) Indemnification. In consideration of the execution and delivery of
this Agreement by the Series 1997-1 Note Purchaser, NFLP hereby indemnifies and
holds the Series 1997-1 Note Purchaser and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties")
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and reasonable expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought and including, without
limitation, any liability in connection with the offering and sale of the Series
1997-1 Notes), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them (whether in prosecuting or defending against such
actions, suits or claims) as a result of, or arising out of, or relating to
-19-
<PAGE> 23
(i) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Advance;
or
(ii) the entering into and performance of this Agreement
and any other Related Document by any of the Indemnified Parties,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, NFLP hereby agrees to make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The indemnity set forth
in this Section 8.05(b) shall in no event include indemnification for any Taxes
(which indemnification is provided in Section 3.08). NFLP shall give notice to
the Rating Agencies of any claim for Indemnified Liabilities made under this
Section.
SECTION 8.06 Characterization as Related Document; Entire
Agreement. This Agreement shall be deemed to be a Related Document for all
purposes of the Base Indenture and the other Related Documents. This Agreement,
together with the Base Indenture, the Series 1997-1 Supplement, the documents
delivered pursuant to Section 6.01 and the other Related Documents, including
the exhibits and schedules thereto, contains a final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, superseding all previous oral statements
and other writings with respect thereto.
SECTION 8.07 Notices. All notices, amendments, waivers,
consents and other communications provided to any party hereto under this
Agreement shall be in writing and addressed, delivered or transmitted to such
party at its address or facsimile number set forth below its signature hereto or
at such other address or facsimile number as may be designated by such party in
a notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when transmitted upon receipt of electronic confirmation
of transmission.
SECTION 8.08 Severability of Provisions. Any covenant,
provision, agreement or term of this Agreement that is prohibited or is held to
be void or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the prohibition or unenforceability without
invalidating the remaining provisions of this Agreement.
SECTION 8.09 Tax Characterization. Each party to this
Agreement (a) acknowledges that it is the intent of the parties to this
Agreement that, for accounting purposes and for all Federal, state and local
income and franchise tax purposes, the Series 1997-1 Notes
-20-
<PAGE> 24
will be treated as evidence of indebtedness issued by NFLP, (b) agrees to treat
the Series 1997-1 Notes for all such purposes as indebtedness and (c) agrees
that the provisions of the Related Documents shall be construed to further these
intentions.
SECTION 8.10 No Proceedings; Limited Recourse. (a) NFLP. Each
of the Series 1997-1 Collateral Agent (solely in its capacity as such) and the
Series 1997-1 Note Purchaser (solely in its capacity as such) hereby covenants
and agrees that, prior to the date which is one year and one day after the
payment in full of any Notes issued by NFLP pursuant to the Base Indenture, it
will not institute against, or join with any other Person in instituting
against, NFLP, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any Federal or state
bankruptcy or similar law, all as more particularly set forth in Section 13.17
of the Base Indenture and subject to any retained rights set forth therein;
provided, however, that nothing in this Section 8.09(a) shall constitute a
waiver of any right to indemnification, reimbursement or other payment from NFLP
pursuant to this Agreement, the Series 1997-1 Supplement or the Base Indenture.
In the event that the Series 1997-1 Collateral Agent (solely in its capacity as
such) or the Series 1997-1 Note Purchaser (solely in its capacity as such) takes
action in violation of this Section 8.09(a), NFLP agrees that it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such a petition by any such Person against NFLP or the commencement of such
action and raise the defense that such Person has agreed in writing not to take
such action and should be estopped and precluded therefrom and such other
defenses, if any, as its counsel advises that it may assert. The provisions of
this Section 8.09(a) shall survive the termination of this Agreement and the
resignation or removal of the Series 1997-1 Collateral Agent. Nothing contained
herein shall preclude participation by the Series 1997-1 Collateral Agent or the
Series 1997-1 Note Purchaser in assertion or defense of its claims in any such
proceeding involving NFLP. No recourse shall be had for the payment of any
amount owing in respect of this Agreement, including the payment or any fee
hereunder or any other obligation or claim arising out of or based upon this
Agreement, against any stockholder, employee, officer, director, affiliate or
incorporator of NFLP or the General Partner; provided, however, nothing in this
Section 8.09(b) shall relieve any of the foregoing Persons from any liability
which any such Person may otherwise have for its gross negligence or willful
misconduct. In addition, each of the parties hereto agree that all fees,
expenses and other costs payable hereunder by NFLP shall be payable only to the
extent set forth in Section 13.18 of the Base Indenture and that all other
amounts owed to them by NFLP shall be payable solely from amounts that become
available for payment pursuant to the Base Indenture and the Series 1997-1
Supplement.
(b) RFC. Each of NFLP, the Master Servicer and the Series
1997-1 Collateral Agent (solely in its capacity as such), hereby covenants and
agrees that it will not, and the Master Servicer will cause the Lessees not to,
prior to the date which is one year and one day after the payment in full of the
latest maturing Commercial Paper Notes, institute against, or join with any
other Person in instituting against, RFC, any bankruptcy, reorganization,
-21-
<PAGE> 25
arrangement, insolvency or liquidation proceedings, or other proceedings under
any Federal or state bankruptcy or similar law, subject to any retained rights
set forth therein; provided, however, that nothing in this Section 8.09(b) shall
constitute a waiver of any right to indemnification, reimbursement or other
payment from RFC pursuant to the Series 1997-1 Collateral Agreement or other CP
Program Document or other Related Document. In the event that NFLP, the Master
Servicer, the Series 1997-1 Collateral Agent (solely in its capacity as such) or
any of the Lessees takes action in violation of this Section 8.09(b), RFC agrees
that it shall file an answer with the bankruptcy court or otherwise properly
contest the filing of such a petition by any such Person against RFC or the
commencement of such action and raise the defense that such Person has agreed in
writing not to take such action and should be estopped and precluded therefrom
and such other defenses, if any, as its counsel advises that it may assert. The
provisions of this Section 8.09(b) shall survive the termination of this
Agreement and the resignation or removal of the Series 1997-1 Collateral Agent.
Nothing contained herein shall preclude participation by NFLP, the Master
Servicer, the Series 1997-1 Collateral Agent or any Lessee in assertion or
defense of its claims in any such proceeding involving RFC. The obligations of
RFC under this Agreement are solely the corporate obligations of RFC. No
recourse shall be had for the payment of any amount owing in respect of this
Agreement, including the payment or any fee hereunder or any other obligation or
claim arising out of or based upon this Agreement, against any stockholder,
employee, officer, director, affiliate or incorporator of RFC; provided,
however, nothing in this Section 8.09(b) shall relieve any of the foregoing
Persons from any liability which any such Person may otherwise have for its
gross negligence or willful misconduct.
SECTION 8.11 Confidentiality. Each of the Series 1997-1
Collateral Agent and the Series 1997-1 Note Purchaser agrees that it shall not
disclose any Confidential Information to any Person without the prior written
consent of RFC, the Master Servicer, NFLP and the applicable Lessee, other than
(a) to their Affiliates and their officers, directors, employees, agents and
advisors and to actual or prospective assignees and participants, and then only
on a confidential basis, (b) as required by any law, rule or regulation or
judicial process of which RFC, NFLP, the Master Servicer or the applicable
Lessee, as the case may be, has knowledge; provided that the Series 1997-1
Collateral Agent and the Series 1997-1 Note Purchaser may disclose Confidential
Information as required by any law, rule or regulation or judicial process of
which RFC, NFLP, the Master Servicer or the applicable Lessee, as the case may
be, does not have knowledge if the Series 1997-1 Collateral Agent or the Series
1997-1 Note Purchaser is prohibited by law from disclosing such requirement to
RFC, NFLP, the Master Servicer or the applicable Lessee, as the case may be, or
(c) in the course of litigation with RFC, NFLP, the Master Servicer or the
applicable Lessee, the Series 1997-1 Collateral Agent or the Series 1997-1 Note
Purchaser.
"Confidential Information" means information that RFC, NFLP, the Master
Servicer or the applicable Lessee furnishes to the Series 1997-1 Collateral
Agent or the Series 1997-1 Note Purchaser on a confidential basis, but does not
include any such information that is or becomes
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<PAGE> 26
generally available to the public other than as a result of a disclosure by the
Series 1997-1 Collateral Agent or the Series 1997-1 Note Purchaser or other
Person to which the Series 1997-1 Collateral Agent or the Series 1997-1 Note
Purchaser delivered such information or that is or becomes available to the
Series 1997-1 Collateral Agent or the Series 1997-1 Note Purchaser from a source
other than RFC, NFLP, the Master Servicer or applicable Lessee, provided that
such source is not (1) known to the Series 1997-1 Collateral Agent or the Series
1997-1 Note Purchaser to be bound by a confidentiality agreement with RFC, NFLP,
the Master Servicer or the applicable Lessee, as the case may be, or (2) known
to the Series 1997-1 Collateral Agent or the Series 1997-1 Note Purchaser to be
otherwise prohibited from transmitting the information by a contractual, legal
or fiduciary obligation.
SECTION 8.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
SECTION 8.13 Counterparts. This Agreement may be executed in
any number of counterparts (which may include facsimile) and by the different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original, and all of which together shall constitute one and the
same instrument.
[Remainder of Page Intentionally Blank]
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<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and delivered as
of the day and year first above written.
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP
By: NATIONAL CAR RENTAL FINANCING
CORPORATION, its General Partner
By: /s/ Dwight Jenkins
-----------------------------------
Title: Vice President
Address: 7700 France Avenue South
Minneapolis, Minnesota 55435
Attention: J. Benzian
Telephone: (612) 830-2552
Facsimile: (612) 830-2087
REPUBLIC INDUSTRIES, INC.
By: /s/ Kathleen W. Hyle
-----------------------------------
Title: Vice President Finance
and Treasurer
Address: 200 South Andrews Avenue
11th Floor
Ft. Lauderdale, FL 33301
Attention: Kathleen W. Hyle
Telephone: (954) 769-7297
Facsimile: (954) 769-4135
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<PAGE> 28
REPUBLIC INDUSTRIES FUNDING CORP.
By: /s/ Dwight Jenkins
------------------------------------------
Name: Dwight Jenkins
Title: Vice President and
Assistant Secretary
Address: 770 France Avenue South
Minneapolis, MN 55435
Attention: J. Benzian
Telephone: (612) 830-2552
Facsimile: (612) 830-2087
COMMITMENT AMOUNT: $2,300,000,000
PERCENTAGE: 100%
CREDIT SUISSE FIRST BOSTON,
as Series 1997-1 Collateral Agent
By: /s/ Robert N. Finney
------------------------------------------
Name: Robert N. Finney
Title: Managing Director
By: /s/ Christian Bourqui
------------------------------------------
Name: Christian Bourqui
Title: Associate
Address: Eleven Madison Avenue
New York, NY 10010-3629
Attention: Agency Administration
Telephone: (212) 325-9942
Facsimile: (212) 325-8304
Note: Pursuant to Instruction 2 to Item 601(a) of Regulation S-K, the registrant
has not filed the documents relating to Series 1997-2 notes, Series 1997-3
notes or Series 1997-4 notes which are substantially similar to the
document filed herewith relating to the Series 1997-1 notes.
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<PAGE> 1
EXHIBIT 4.9
SERIES 1997-1 LIQUIDITY AGREEMENT,
Dated as of October 29, 1997,
among
REPUBLIC INDUSTRIES FUNDING CORP.
CERTAIN FINANCIAL INSTITUTIONS,
as the Liquidity Lenders,
and
CREDIT SUISSE FIRST BOSTON,
as the Series 1997-1 Liquidity Agent for
the Liquidity Lenders,
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
SECTION 1.1. Definitions..............................................................3
SECTION 1.2. Cross References; Headings...............................................3
SECTION 1.3. Accounting and Financial Determinations; No Duplication..................4
SECTION 1.4. Interpretation...........................................................4
ARTICLE II
COMMERCIAL PAPER OPERATIONS
SECTION 2.1. Issuance of Commercial Paper Notes.......................................5
SECTION 2.2. Conditions to the Issuance of Commercial Paper Notes.....................6
SECTION 2.2.1. Representations and Warranties...........................................6
SECTION 2.2.2. No Liquidity Agreement Amortization Event................................7
SECTION 2.2.3. Available Liquidity Commitment...........................................7
SECTION 2.2.4. No CP Borrowing Base Deficiency..........................................7
SECTION 2.2.5. Borrowing Base Certificates..............................................7
SECTION 2.2.6. Non-Payment of Series 1997-1 Notes.......................................7
SECTION 2.3. Commercial Paper Notes...................................................7
SECTION 2.4. Commercial Paper Account; Payment of Commercial Paper Notes..............8
SECTION 2.5. Series 1997-1 Pledge Account.............................................8
ARTICLE III
LIQUIDITY COMMITMENTS, BORROWING PROCEDURES,
LIQUIDITY ADVANCES AND NOTES
SECTION 3.1. Liquidity Commitments....................................................8
SECTION 3.1.1. Revolving Advance Commitment.............................................9
SECTION 3.1.2. Refunding Advance Commitment.............................................9
SECTION 3.1.3. Swing Line Commitment....................................................9
SECTION 3.1.4. Use of Proceeds.........................................................10
SECTION 3.2. Liquidity Lenders Not Required to Make Certain Liquidity
Advances................................................................10
SECTION 3.2.1. Revolving Advances......................................................10
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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<S> <C> <C>
SECTION 3.2.2. Refunding and Swing Line Advances.......................................10
SECTION 3.2.3. Failure To Fund.........................................................10
SECTION 3.3. Termination and Reduction of the Liquidity Commitments..................11
SECTION 3.4. Increase of the Aggregate Liquidity Commitment..........................11
SECTION 3.5. Extensions of Scheduled Liquidity Commitment Termination Date...........12
SECTION 3.6. Borrowing Procedures....................................................12
SECTION 3.6.1. Revolving Advances......................................................12
SECTION 3.6.2. Refunding Advances......................................................12
SECTION 3.6.3. Swing Line Advances.....................................................13
SECTION 3.6.4. Commitment Termination Date Liquidity Advances..........................14
SECTION 3.6.5. Nature of Funding Obligations...........................................14
SECTION 3.6.6. Failure to Fund by Lender...............................................15
SECTION 3.7. Disbursement of Funds...................................................16
SECTION 3.8. Continuation and Conversion Elections...................................16
SECTION 3.9. Eurodollar Funding......................................................17
SECTION 3.10. Liquidity Advance Notes.................................................17
ARTICLE IV
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES, ETC.
SECTION 4.1. Repayments and Prepayments..............................................18
SECTION 4.1.1. Voluntary Prepayments...................................................18
SECTION 4.1.2. Mandatory Prepayments...................................................18
SECTION 4.2. Interest Provisions.....................................................19
SECTION 4.2.1. Rates...................................................................19
SECTION 4.2.2. Post Default Rates......................................................20
SECTION 4.3. Payments of Interest....................................................20
SECTION 4.4. Computation Basis.......................................................21
SECTION 4.5. Fees....................................................................21
ARTICLE V
CERTAIN EURODOLLAR AND OTHER PROVISIONS
SECTION 5.1. Eurodollar Lending Unlawful.............................................22
SECTION 5.2. Deposits Unavailable....................................................22
SECTION 5.3. Increased Costs, etc....................................................22
SECTION 5.4. Funding Losses..........................................................23
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 5.5. Increased Capital Costs.................................................24
SECTION 5.6. Taxes...................................................................24
SECTION 5.7. Payments, Computations, etc.............................................26
SECTION 5.8. Sharing of Payments.....................................................26
SECTION 5.9. Replacement of Liquidity Lenders........................................27
SECTION 5.10. Order and Priority......................................................28
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Effectiveness.............................................28
SECTION 6.1.1. Organic Documents, Resolutions..........................................28
SECTION 6.1.2. Series 1997-1 Liquidity Agreement.......................................29
SECTION 6.1.3. Liquidity Advance Notes.................................................29
SECTION 6.1.4. Master Collateral Agency Agreement; Series 1997-1 Collateral
Sharing Agreement and Series 1997-1 Collateral Agreement................29
SECTION 6.1.5. Series 1997-1 Supplement................................................30
SECTION 6.1.6. Series 1997-1 Letter of Credit..........................................30
SECTION 6.1.7. Depositary Agreement....................................................30
SECTION 6.1.8. Dealer Agreement........................................................30
SECTION 6.1.9. Series 1997-1 Closing Date Certificate..................................30
SECTION 6.1.10. Accounts................................................................30
SECTION 6.1.11. Rating Letters..........................................................31
SECTION 6.1.12. [Reserved]..............................................................31
SECTION 6.1.13. Assignments.............................................................31
SECTION 6.1.14. Board of Directors......................................................31
SECTION 6.1.15. Solvency Certificate....................................................31
SECTION 6.1.16. Closing Fees and Expenses...............................................31
SECTION 6.1.17. Certified Copy of Manufacturer Program..................................31
SECTION 6.1.18. Opinions................................................................31
SECTION 6.1.19. Offering Materials......................................................31
SECTION 6.1.20. Satisfactory Legal Form.................................................32
SECTION 6.1.21. Credit Rating of Initial Liquidity Lenders..............................32
SECTION 6.2. Conditions to the Making of Each Revolving Advance......................32
SECTION 6.2.1. Representations and Warranties..........................................32
SECTION 6.2.2. No Liquidity Agreement Amortization Event...............................32
SECTION 6.2.3. No Borrowing Base Deficiency............................................32
SECTION 6.2.4. Availability............................................................33
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 6.2.5. Attachments.............................................................33
SECTION 6.2.6. Receipt of Monthly Report...............................................33
SECTION 6.2.7. Borrowing Request.......................................................33
SECTION 6.2.8. Borrowing Base Certificate..............................................33
SECTION 6.2.9. Inability to Issue Commercial Paper Notes...............................33
SECTION 6.3. Conditions Precedent to the Making of Each Refunding Advance............33
SECTION 6.3.1. No Bankruptcy...........................................................34
SECTION 6.3.2. Availability............................................................34
SECTION 6.3.3. No Borrowing Base Deficiency............................................34
SECTION 6.3.4. Borrowing Request.......................................................34
SECTION 6.3.5. Borrowing Base Certificate..............................................34
SECTION 6.3.6. Inability to Issue Commercial Paper Notes...............................34
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Organization; Power; Qualification......................................35
SECTION 7.2. Authorization; Enforceability...........................................35
SECTION 7.3. Compliance..............................................................35
SECTION 7.4. Financial Information; Financial Condition..............................35
SECTION 7.5. Litigation..............................................................36
SECTION 7.6. No Security Interest....................................................36
SECTION 7.7. Employee Benefit Plans..................................................36
SECTION 7.8. Securities Laws.........................................................36
SECTION 7.9. Regulations G, T, U and X...............................................36
SECTION 7.10. Taxes...................................................................36
SECTION 7.11. Governmental Authorizations.............................................37
SECTION 7.12. Absence of Default......................................................37
SECTION 7.13. Compliance with Requirements of Law.....................................37
SECTION 7.14. Accuracy of Information.................................................37
SECTION 7.15. Solvency................................................................37
SECTION 7.16. Ownership; Subsidiaries.................................................38
SECTION 7.17. Other Representations...................................................38
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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ARTICLE VIII
COVENANTS
<S> <C> <C>
SECTION 8.1. Affirmative Covenants...................................................38
SECTION 8.1.1. Corporate Existence; Foreign Qualification..............................38
SECTION 8.1.2. Inspections.............................................................38
SECTION 8.1.3. Maintenance of Properties...............................................38
SECTION 8.1.4. Accounting Methods; Financial Records...................................39
SECTION 8.1.5. Compliance with Covenants...............................................39
SECTION 8.1.6. Reporting Requirements..................................................39
SECTION 8.1.7. Taxes and Liabilities...................................................40
SECTION 8.1.8. Maintenance of Separate Existence.......................................40
SECTION 8.1.9. Maintenance of Enhancement..............................................41
SECTION 8.1.10. Compliance with Laws....................................................41
SECTION 8.1.11. Deliveries; Further Assurances..........................................41
SECTION 8.1.12. Further Requests........................................................41
SECTION 8.1.13. Manufacturer Programs...................................................41
SECTION 8.1.14. Use of Proceeds of Commercial Paper Notes...............................42
SECTION 8.2. Negative Covenants......................................................42
SECTION 8.2.1. Liens...................................................................42
SECTION 8.2.2. Absence of Certain Actions..............................................42
SECTION 8.2.3. Other Indebtedness......................................................42
SECTION 8.2.4. Consolidations and Mergers..............................................42
SECTION 8.2.5. Sales of Assets.........................................................43
SECTION 8.2.6. Acquisition of Assets...................................................43
SECTION 8.2.7. Dividends, Officers' Compensation, etc..................................43
SECTION 8.2.8. Name; Chief Executive Office............................................43
SECTION 8.2.9. Organic Documents.......................................................43
SECTION 8.2.10. Investments.............................................................43
SECTION 8.2.11. No Other Agreements; Amendments to Related Documents....................43
SECTION 8.2.12. Other Business..........................................................43
SECTION 8.2.13. No ERISA Plan or ERISA Plan Contributions...............................44
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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ARTICLE IX
LIQUIDITY AGREEMENT AMORTIZATION EVENTS
<S> <C> <C>
SECTION 9.1. Liquidity Agreement Amortization Event..................................44
SECTION 9.1.1. Non-Payment of RFC Obligations..........................................44
SECTION 9.1.2. Breach of Warranty......................................................44
SECTION 9.1.3. Non-Performance of Certain Covenants and RFC Obligations................44
SECTION 9.1.4. Non-Performance of Other Covenants and RFC Obligations..................45
SECTION 9.1.5. Judgments...............................................................45
SECTION 9.1.6. Bankruptcy, Insolvency, etc.............................................45
SECTION 9.1.7. [Reserved]..............................................................45
SECTION 9.1.8. Enforceability of Related Documents.....................................45
SECTION 9.1.9. Amortization Event......................................................45
SECTION 9.1.10. Investment Company......................................................45
SECTION 9.1.11. Program Downgrade.......................................................45
SECTION 9.1.12. Termination of Liquidity Commitments or Reduction of Aggregate
Liquidity Commitment....................................................45
SECTION 9.2. Action if Liquidity Agreement Amortization Event........................46
SECTION 9.3. Limited Liquidity Agreement Amortization Events.........................46
SECTION 9.3.1. Termination of Liquidity Commitment.....................................47
SECTION 9.3.2. Rating Downgrade of Liquidity Lender....................................47
SECTION 9.4. Action Upon Limited Liquidity Agreement Amortization Event..............47
ARTICLE X
THE SERIES 1997-1 LIQUIDITY AGENT
SECTION 10.1. Actions.................................................................47
SECTION 10.2. Series 1997-1 Collateral Agreement......................................48
SECTION 10.3. Exculpation.............................................................48
SECTION 10.4. Successor...............................................................49
SECTION 10.5. Liquidity Advances by CSFB..............................................49
SECTION 10.6. Credit Decisions........................................................50
SECTION 10.7. Copies, etc.............................................................50
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
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ARTICLE XI
MISCELLANEOUS PROVISIONS
<S> <C> <C>
SECTION 11.1. Waivers, Amendments, etc................................................50
SECTION 11.2. Notices.................................................................52
SECTION 11.3. Payment of Costs and Expenses...........................................52
SECTION 11.4. Indemnification.........................................................53
SECTION 11.5. Survival................................................................54
SECTION 11.6. Severability............................................................54
SECTION 11.7. Headings................................................................54
SECTION 11.8. Execution in Counterparts...............................................54
SECTION 11.9. Governing Law; Entire Agreement.........................................54
SECTION 11.10. Successors and Assigns..................................................55
SECTION 11.11. Sale and Transfer of Liquidity Advances and Notes; Participations
in Notes................................................................55
SECTION 11.11.1. Assignments...........................................................55
SECTION 11.11.2. Participations........................................................57
SECTION 11.12. Other Transactions......................................................58
SECTION 11.13. Bankruptcy Petition Against RFC.........................................58
SECTION 11.14. Limited Recourse to RFC; No Recourse....................................58
SECTION 11.15. Survival of Representations and Warranties..............................59
SECTION 11.16. Confidentiality.........................................................59
SECTION 11.17. Jurisdiction; Consent to Service of Process.............................59
SECTION 11.18. Waiver of Jury Trial....................................................60
SECTION 11.19. Waiver of Set-Off.......................................................61
</TABLE>
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EXHIBITS
EXHIBIT A-1 - Form of Revolving Note
EXHIBIT A-2 - Form of Master Revovling Note
EXHIBIT B-1 - Form of Refunding Note
EXHIBIT B-2 - Form of Master Refunding Note
EXHIBIT C - Form of Borrowing Request
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - [Reserved]
EXHIBIT F - Form of Liquidity Lender Assignment Agreement
EXHIBIT G - Form of Series 1997-1 Closing Date Certificate
EXHIBIT H - Form of Dealer Agreement
EXHIBIT I - Form of Liquidity Commitment Agreement
ANNEXES
ANNEX A - Definitions
ANNEX B - Disclosure Materials
++++
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SERIES 1997-1 LIQUIDITY AGREEMENT
THIS SERIES 1997-1 LIQUIDITY AGREEMENT, dated as of October 29, 1997
(as amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms hereof, this "Series 1997-1 Liquidity Agreement"),
among REPUBLIC INDUSTRIES FUNDING CORP., a Delaware corporation ("RFC"), the
financial institutions listed on the signature pages hereof under the heading
"Liquidity Lenders" (each such financial institution, together with each of the
financial institutions that has become party hereto pursuant to Section 11.11.1,
including any such financial institution acting in the capacity of Swing Line
Lender, being a "Liquidity Lender" and, collectively, the "Liquidity Lenders")
and CREDIT SUISSE FIRST BOSTON, a Swiss banking corporation ("CSFB"), as Series
1997-1 Liquidity Agent (in such capacity, together with any successors and
assigns thereto, the "Series 1997-1 Liquidity Agent") for the Liquidity Lenders.
W I T N E S S E T H:
WHEREAS, RFC proposes to issue and sell its Commercial Paper Notes
(such capitalized term, together with each other capitalized term used herein
and not otherwise defined herein, shall have the meanings assigned thereto in
Section 1.1) in the commercial paper market and use the net proceeds thereof to,
among other things, make Series 1997-1 Advances to National Car Rental Financing
Limited Partnership, a special purpose Delaware limited partnership ("NFLP"),
from time to time under the Series 1997-1 Notes to be issued by NFLP pursuant to
the Series 1997-1 Supplement dated as of the date hereof (as the same may be
amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms thereof, the "Series 1997-1 Supplement"), between
NFLP, the Bank of New York, a New York banking corporation, as trustee (together
with its successors in trust thereunder as provided in the Base Indenture
referred to below, the "Trustee"), and as Enhancement Agent (in such capacity,
the "Enhancement Agent"), which supplements the Base Indenture dated as of April
30, 1996 (as amended by the Supplement and Amendment to Base Indenture, dated as
of December 20, 1996, between NFLP and the Trustee, and as the same may be
further amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms thereof, the "Base Indenture"), between NFLP and
the Trustee;
WHEREAS, concurrently with the execution and delivery of this Series
1997-1 Liquidity Agreement, NFLP, RFC, as Note Purchaser, Republic Industries,
Inc., a Delaware corporation ("Republic"), as Master Servicer, and CSFB,
individually and as Series 1997-1 Collateral Agent, are entering into the Series
1997-1 Note Purchase Agreement to provide for the sale by NFLP to RFC of the
Series 1997-1 Notes;
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WHEREAS, concurrently with the execution and delivery of this Series
1997-1 Liquidity Agreement, NFLP, as Lessor, Republic, as Guarantor and Master
Servicer, and National Car Rental System, Inc., Alamo Rent-A-Car Inc., Value
Rent-A-Car, Inc. and Spirit Rent-A-Car, Inc., each as Lessee and Servicer, are
entering into the Series 1997 Lease, pursuant to which NFLP will use the
proceeds of Series 1997-1 Advances under the Series 1997-1 Notes to acquire
Acquired Vehicles and to finance the Financed Vehicles, the Synthetic Lease
Vehicles and the Refinanced Vehicles, which Vehicles will be leased by NFLP to
the Lessees under the Series 1997 Lease for use in the domestic daily rental
businesses of the Lessees, Eligible Franchisees and Eligible Affiliates;
WHEREAS, to secure the NFLP Obligations with respect to the Series
1997-1 Notes, NFLP will under the Series 1997-1 Supplement grant to the Trustee,
for the benefit of the Series 1997-1 Noteholders, a first priority perfected
security interest in all of NFLP's right, title and interest in, among other
things, the Series 1997 Lease and all collateral pledged thereunder.
WHEREAS, concurrently with the execution and delivery of this Series
1997-1 Liquidity Agreement, Republic, the Lessees, NFLP, the Trustee and the
Master Collateral Agent are entering into the Second Amended and Restated Master
Collateral Agency Agreement, pursuant to which (i) as security for the payment
of the respective obligations from time to time owing by the Lessees to NFLP and
other Financing Sources (or any Beneficiary as assignee thereof) under the
Series 1997 Lease and other related Financing Documents (as defined therein),
the Lessees will grant to the Master Collateral Agent for the benefit of the
Series 1997-1 Secured Parties a first priority perfected security interest in
such Financed Vehicles and Synthetic Lease Vehicles and the other Master
Collateral for the Series 1997-1 Notes, and (ii) as security for the payment of
the respective obligations from time to time owing by NFLP to the Trustee for
the benefit of the Series 1997-1 Noteholders (or any Beneficiary as assignee
thereof) under the Series 1997-1 Notes and other related Financing Documents,
NFLP will grant to the Master Collateral Agent for the benefit of the Series
1997-1 Secured Parties a first priority perfected security interest in such
Acquired Vehicles and the other Master Collateral for the Series 1997-1 Notes;
WHEREAS, concurrently with the execution and delivery of this Series
1997-1 Liquidity Agreement, RFC, the Series 1997-1 Support Letter of Credit
Providers, the Series 1997-1 Liquidity Agent, the Series 1997-1 Collateral
Agent, the Depositary and the Dealers are entering into the Series 1997-1
Collateral Agreement, pursuant to which, as security for the payment of the RFC
Obligations (including, without limitation, the obligations of RFC under this
Series 1997-1 Liquidity Agreement), RFC will grant to the Series 1997-1
Collateral Agent for the benefit of the Series 1997-1 Secured Parties
(including, without limitation, the Liquidity Lenders and the Series 1997-1
Liquidity Agent) a security interest in the Series 1997-1 Notes and the RFC
Beneficial Interest as well as the other Assigned Collateral.
WHEREAS, concurrently with the execution and delivery of this Series
1997-1 Liquidity Agreement, RFC desires to obtain Liquidity Commitments from the
Liquidity Lenders to make
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Liquidity Advances pursuant to this Series 1997-1 Liquidity Agreement in an
aggregate principal amount not to exceed the Aggregate Liquidity Commitment at
any one time outstanding to RFC from time to time prior to the Liquidity
Commitment Termination Date; and
WHEREAS, the Liquidity Lenders are willing, on the terms and subject to
the conditions hereinafter set forth (including Article VI), to provide such
Liquidity Commitments and make such Liquidity Advances to RFC;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Definitions. (a) Capitalized terms used but not defined
herein (including the preamble and recitals hereto) shall have the meanings
assigned to such terms in (i) the Definitions List attached hereto as Annex A,
as such Definitions List may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms hereof, (ii) the
Definitions List attached as Annex A to the Series 1997-1 Supplement, as such
Definitions List may be amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms of the Series 1997-1 Supplement
and (iii) the Definitions List attached as Schedule 1 to the Base Indenture as
such Definitions List may be further amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms of the Base
Indenture; provided, that to the extent, if any, that any capitalized term used
but not defined herein has a meaning assigned to such term in more than one of
the lists referred to in clauses (i) through (iii), then (x) if a meaning is
assigned to such term in the Definitions List attached as Annex A hereto, such
meaning shall apply herein, and (y) if a meaning is not assigned to such term in
the Definitions List attached hereto as Annex A, then the meaning assigned to
such term in the Definitions List attached as Annex A to the Series 1997-1
Supplement shall apply herein.
(b) Terms for which meanings are provided in this Series 1997-1
Liquidity Agreement (including meanings assigned to such terms under Section
1.1(a) hereof), shall, unless otherwise defined or the context otherwise
requires, have such meanings when used in each notice and other communication
delivered from time to time in connection with this Series 1997-1 Liquidity
Agreement or any instrument hereafter executed pursuant hereto.
SECTION 1.2. Cross References; Headings. The words "hereof", "herein"
and "hereunder" and words of a similar import when used in this Series 1997-1
Liquidity Agreement shall refer to this Series 1997-1 Liquidity Agreement as a
whole and not to any particular provision of this Series 1997-1 Liquidity
Agreement. Section, Schedule and Exhibit references
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<PAGE> 13
contained in this Series 1997-1 Liquidity Agreement are references to Sections,
Schedules and Exhibits in or to this Series 1997-1 Liquidity Agreement unless
otherwise specified. Any reference in any Section or definition to any clause
is, unless otherwise specified, to such clause of such Section or definition.
The various headings in this Series 1997-1 Liquidity Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Series 1997-1 Liquidity Agreement or any provision hereof.
SECTION 1.3. Accounting and Financial Determinations; No Duplication.
(a) Where the character or amount of any asset or liability or item of income or
expense is required to be determined, or any accounting computation is required
to be made, for the purpose of this Agreement, such determination or calculation
shall, to the extent applicable, be made in accordance with GAAP applied on a
Consistent Basis except insofar as:
(i) RFC shall have elected (with the concurrence of its
independent public accountant and upon prior written notification to
each of the Series 1997-1 Liquidity Agent and the Series 1997-1
Collateral Agent) to adopt more recently promulgated GAAP (which
election shall continue to be effective for subsequent years); and
(ii) the Series 1997-1 Liquidity Agent and the Majority Banks
shall have consented to such election (it being understood that such
consent may be conditioned upon the implementation of such changes to
the financial representations, warranties and covenants and other
applicable provisions contained herein as are appropriate to reflect
such adoption of more recently promulgated GAAP and it being further
understood that such consent shall be deemed to have been given upon
the implementation of such changes).
(b) Upon a change in GAAP which becomes effective after the Series
1997-1 Closing Date which would have a material effect on RFC's consolidated
financial statements and the assets and liabilities reflected therein or
otherwise affect the application or effect of the terms of this Series 1997-1
Liquidity Agreement, such change shall not be given effect for purposes hereof
until sixty (60) days from the otherwise effective date of such change. Prior to
such effectiveness the Series 1997-1 Liquidity Agent, the Series 1997-1
Collateral Agent and RFC shall in good faith negotiate to amend the pertinent
provisions of this Series 1997-1 Liquidity Agreement to account for such change
to the extent appropriate to effect the substance thereof as of the Series
1997-1 Closing Date. If such an amendment is not entered into with respect to
any such change, such change shall not be given effect for purposes hereof.
(c) All accounting determinations and computations hereunder or
under any other Related Documents shall be made without duplication.
SECTION 1.4. Interpretation. In this Series 1997-1 Liquidity Agreement
(including the Definitions List attached hereto as Annex A), unless the context
otherwise requires:
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<PAGE> 14
(a) the singular includes the plural and vice versa;
(b) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Series 1997-1 Liquidity Agreement, and
reference to any Person in a particular capacity only refers to such
Person in such capacity;
(c) reference to any gender includes the other gender;
(d) reference to any Requirement of Law means such
Requirement of Law as amended, modified, codified or reenacted, in
whole or in part, and in effect from time to time;
(e) "including" (and, with correlative meaning,
"include") means including without limiting the generality of any
description preceding such term;
(f) "or" is not exclusive;
(g) provisions apply to successive events and
transactions;
(h) with respect to the determination of any period of
time, "from" means "from and including" and "to" means "to but
excluding"; and
(i) reference to a "Vehicle" or "Vehicles" means a Series
1997 Vehicle or Series 1997 Vehicles, respectively.
ARTICLE II
COMMERCIAL PAPER OPERATIONS
SECTION 2.1. Issuance of Commercial Paper Notes. On the terms and
subject to the provisions of this Series 1997-1 Liquidity Agreement and the
other Related Documents, RFC may from time to time on or after the Series 1997-1
Closing Date and prior to the Liquidity Commitment Termination Date, issue and
sell Commercial Paper Notes; provided, however, that RFC shall not issue and
sell Commercial Paper Notes if
(a) RFC and the Depositary have received instructions then in
effect from the Series 1997-1 Liquidity Agent (copies of which will
also be sent to the Dealers), given in accordance with this Section
2.1, not to issue or deliver Commercial Paper Notes because (i) the
Liquidity Commitment Termination Date shall have occurred, or (ii) the
Commercial Paper Account or any funds on deposit in, or otherwise to
the credit of, the
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<PAGE> 15
Commercial Paper Account shall be subject to any stay, writ, judgment,
warrant of attachment, execution or similar process; provided, however,
that if any such stay, writ, judgment, warrant of attachment, execution
or similar process is removed or dismissed, RFC may recommence the
issuance and sale of Commercial Paper Notes,
(b) the issuance of Commercial Paper Notes is prohibited
by Sections 2.1, 2.2, 9.2 or 9.4 hereof, Sections 3 or 10 of the
Depositary Agreement or Section 5.01 of the Series 1997-1 Collateral
Agreement,
(c) after giving effect to such issuance and the use of
proceeds thereof, the weighted average interest rate of the Commercial
Paper Notes Outstanding, Liquidity Advances and Support Liquidity
Disbursements would be in excess of 10% per annum, unless (i) RFC and
the Series 1997-1 Liquidity Agent shall have given their written
consent to a weighted average interest rate in excess of 10% per annum,
(ii) the Series 1997-1 Minimum Enhancement Amount shall be increased if
required by the Rating Agencies in connection therewith and (iii) the
Rating Agencies shall have confirmed that such weighted average
interest rate will not result in the downgrading or withdrawal of the
then current ratings of the Commercial Paper Notes; provided, however,
that if the ratings of the Commercial Paper Notes by S&P and Moody's
will be less than A-1 and P-1, respectively, after giving effect to
such weighted average interest rate in excess of 10% per annum, such
Commercial Paper Notes will not be issued unless the Majority Banks
shall have given their written consent thereto, or
(d) RFC and the Depositary shall have received
instructions then in effect from the Series 1997-1 Liquidity Agent not
to issue or deliver Commercial Paper Notes because any of the
conditions set forth in clauses (b) through (d) of this Section 2.1
shall be true.
The Series 1997-1 Liquidity Agent shall have no obligation to deliver any
instructions set forth in clause (a) or clause (d) of this Section 2.1 except
upon the instructions of the Majority Banks and any delivery by the Series
1997-1 Liquidity Agent of any such instructions shall be subject to the
provisions of Section 10.3 and the rights of the Series 1997-1 Liquidity Agent
hereunder and shall not relieve RFC, the Series 1997-1 Collateral Agent or the
Depositary of any of their respective obligations under any Related Document or
with respect to the issuance of Commercial Paper Notes. Any instructions from
the Series 1997-1 Liquidity Agent to RFC and the Depositary in accordance with
clause (a) or clause (d) of this Section 2.1 shall specify the reason(s) to
cease issuing and delivering Commercial Paper Notes. Without prior instruction
as set forth above, the Series 1997-1 Liquidity Agent agrees that it shall only
instruct RFC and the Depositary not to issue and sell Commercial Paper Notes if
there shall have occurred an event described in subclause (i) of clause (a) of
this Section 2.1. Concurrently with the giving of any such instructions to RFC
and the Depositary, the Series 1997-1 Liquidity Agent shall give notice thereof
to the Liquidity Lenders, the Series 1997-1 Collateral Agent, the Dealers, and
S&P and
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<PAGE> 16
Moody's, but failure to do so shall not impair the effect of such instructions
and the giving of such notice shall be subject to Section 10.3.
SECTION 2.2. Conditions to the Issuance of Commercial Paper Notes. The
right of RFC to issue Commercial Paper Notes (whether such Commercial Paper
Notes are to be issued to refinance Commercial Paper Notes maturing on the day
such Commercial Paper Notes are to be issued or to increase the Aggregate Face
Amount over that of the preceding day) is subject to the satisfaction of the
following conditions:
SECTION 2.2.1. Representations and Warranties. With respect to the
issuance of any Commercial Paper Note and after giving effect thereto, the
representations and warranties of RFC set forth in Article VII hereof, or in any
other Related Document to which RFC is a party, and the representations and
warranties of NFLP set forth in Article 7 of the Base Indenture, or in
any other Related Document to which NFLP is a party, shall be true and correct
with the same effect as if then made (unless stated to relate solely to an
earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date).
SECTION 2.2.2. No Liquidity Agreement Amortization Event. At the time
of such issuance and after giving effect thereto, no Liquidity Agreement
Amortization Event and no Potential Liquidity Agreement Amortization Event with
respect to RFC under Section 9.1.6 shall have occurred and be continuing and, in
the case of any increase in the Aggregate Face Amount over that of the day
preceding the day of such issuance, no other Potential Liquidity Agreement
Amortization Event shall have occurred and be continuing.
SECTION 2.2.3. Available Liquidity Commitment. At the time of the
issuance of each Commercial Paper Note and after giving effect thereto and to
the use of proceeds thereof on such day, the sum of the Aggregate Liquidity
Commitment and the Series 1997-1 Letter of Credit Amount shall be equal to or
greater than the sum of the Aggregate Outstanding CP and the aggregate principal
amount of Liquidity Advances Outstanding net of any amounts on deposit at such
time in the Series 1997-1 Collateral Account set aside for the repayment of the
principal of Liquidity Advances.
SECTION 2.2.4. No CP Borrowing Base Deficiency. With respect to the
issuance of any Commercial Paper Note, a CP Borrowing Base Deficiency shall not
exist and the issuance of such Commercial Paper Note, after giving effect to the
repayment of any Commercial Paper Notes, Liquidity Advances and Support
Liquidity Disbursements made with the proceeds thereof, would not result in a CP
Borrowing Base Deficiency.
SECTION 2.2.5. Borrowing Base Certificates. The Series 1997-1 Liquidity
Agent shall have received an Officer's Certificate, dated the date of such
issuance, duly executed and delivered by an Authorized Officer of RFC,
certifying the amount of the CP Borrowing Base as of the close of business of
the day immediately preceding such date.
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SECTION 2.2.6. Non-Payment of Series 1997-1 Notes. At the time of such
issuance and after giving effect thereto, no Amortization Event under Section
9.1(a) or (b) of the Base Indenture or Lease Event of Default under Section
17.1.1(i) or (ii) of the Series 1997 Lease shall have occurred and be
continuing.
SECTION 2.3. Commercial Paper Notes. RFC agrees that each promissory
note constituting Commercial Paper Notes shall (a) be substantially in the form
of Exhibit A to the Depositary Agreement or in the form of the Master Note
attached to the Depositary Agreement, and be completed in accordance with this
Series 1997-1 Liquidity Agreement and the Depositary Agreement (including any
provisions for book-entry securities contained therein), (b) be dated the date
of issuance thereof, (c) be made payable to the order of a named payee or
bearer, (d) have a maturity date which shall not be later than the earlier of
(i) three (3) Business Days prior to the earliest of the Scheduled Liquidity
Commitment Termination Date and the Letter of Credit Expiration Date in effect
on the date of issuance thereof and (ii) the date which is fifty-eight (58) days
after the date of issuance thereof, (e) be in a face amount of at least $100,000
and an integral multiple of $1,000, and (f) be exempt from the registration
requirements of the Securities Act pursuant to Section 3(a)(3) thereof. Subject
to the provisions of the Depositary Agreement, all Commercial Paper Notes shall
be delivered and issued against payment therefor in immediately available funds
on the date of issuance, and otherwise in accordance with the terms of this
Series 1997-1 Liquidity Agreement and the Depositary Agreement.
SECTION 2.4. Commercial Paper Account; Payment of Commercial Paper
Notes. (a) Contemporaneously with the execution and delivery by RFC of the
Depositary Agreement, and for the purposes of this Series 1997-1 Liquidity
Agreement and the Depositary Agreement, RFC shall cause the Depositary to
establish at its office at 120 Wall Street, 13th Floor, New York, New York
10043, a segregated trust account in its corporate trust department for the
exclusive benefit of the Holders of the outstanding Commercial Paper Notes (the
"Commercial Paper Account"), over which the Depositary shall have exclusive
control and sole right of withdrawal.
(b) Proceeds of the sale of Commercial Paper Notes shall be deposited
in the Commercial Paper Account only to the extent necessary to pay matured and
concurrently maturing Commercial Paper Notes, whether or not presented to the
Depositary for payment; otherwise proceeds of the sale of Commercial Paper Notes
shall be applied according to the terms of the Series 1997-1 Collateral
Agreement.
SECTION 2.5. Series 1997-1 Pledge Account. RFC from time to time may
deposit funds of RFC into the Series 1997-1 Pledge Account to be held by the
Collateral Agent as additional security for the payment and performance of RFC's
obligations to the Secured Parties. If on any date a Borrowing Base Deficiency
continues to exist after application of all Deposited Funds required to be
applied on such date from the Series 1997-1 Collateral Account, the Series
1997-1 Termination Advance Account and the Series 1997-1 Liquidity Lender
Account pursuant
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to Section 2.01 or 5.02 of the Collateral Agreement, as applicable, then amounts
on deposit in the Series 1997-1 Pledge Account shall be applied to make payments
on such date, in accordance with Section 5.01(e) of the Collateral Agreement, to
the extent necessary to reduce such Borrowing Base Deficiency to zero.
ARTICLE III
LIQUIDITY COMMITMENTS, BORROWING PROCEDURES,
LIQUIDITY ADVANCES AND NOTES
SECTION 3.1. Liquidity Commitments. Subject to and in accordance with
the terms and conditions of this Series 1997-1 Liquidity Agreement (including
Article VI), each Liquidity Lender severally and not jointly agrees to make
Revolving Advances and Refunding Advances, and the Swing Line Lender agrees to
make Swing Line Advances (relative to such Liquidity Lender, or to the Swing
Line Lender, as the case may be, collectively, together with its Commitment
Termination Date Liquidity Advance, its "Liquidity Advances"), to RFC pursuant
to this Section 3.1.
SECTION 3.1.1. Revolving Advance Commitment. Subject to and in
accordance with the terms and conditions hereof (including, without limitation,
the terms and conditions set forth in Section 6.2), each Liquidity Lender
severally and not jointly agrees to make, from time to time, on or before the
earlier to occur of such Liquidity Lender's Scheduled Liquidity Commitment
Termination Date and the Revolving Advance Commitment Termination Date, advances
for the purposes set forth in Section 3.1.4(a) (relative to such Liquidity
Lender, its "Revolving Advances") to RFC equal to such Liquidity Lender's
Percentage of the aggregate amount of the Borrowing of Revolving Advances
requested by RFC to be made on such day. On the terms and subject to the
conditions hereof, RFC may from time to time borrow, prepay and reborrow
Revolving Advances.
SECTION 3.1.2. Refunding Advance Commitment. Subject to and in
accordance with the terms and conditions hereof (including, without limitation,
the terms and conditions set forth in Section 6.3), each Liquidity Lender
severally and not jointly agrees to make, from time to time, on or before such
Liquidity Lender's Liquidity Commitment Termination Date, advances for the
purposes set forth in Section 3.1.4(b) (relative to such Liquidity Lender
(including its Commitment Termination Date Liquidity Advance), its "Refunding
Advances") to RFC equal to (a) in the case of Refunding Advances (other than any
Commitment Termination Date Liquidity Advance), such Liquidity Lender's
Percentage of the aggregate amount of the Borrowing of Refunding Advances
requested by RFC or the Series 1997-1 Collateral Agent, as attorney-in-fact for
RFC, to be made on such day, and (b) in the case of Commitment Termination Date
Liquidity Advances, such Liquidity Lender's Overall Percentage of the Aggregate
Face Amount on the date of such Commitment Termination Date Liquidity Advance.
On the terms and subject to the
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conditions hereof, RFC may from time to time borrow, prepay and reborrow
Refunding Advances (other than Commitment Termination Date Liquidity Advances).
SECTION 3.1.3. Swing Line Commitment. Subject to and in accordance with
the terms and conditions hereof (including, without limitation, the terms and
conditions set forth in Section 6.3), the Swing Line Lender agrees to make, from
time to time, on or before such Liquidity Lender's Liquidity Commitment
Termination Date, Swing Line Advances equal to the aggregate amount of the
Borrowing of Swing Line Advances requested by RFC or the Series 1997-1
Collateral Agent, as attorney-in-fact for RFC, to be made on such day. On the
terms and subject to the conditions hereof, RFC may from time to time borrow,
prepay and reborrow Swing Line Advances.
SECTION 3.1.4. Use of Proceeds. Proceeds from the Liquidity Advances
shall be applied by RFC as follows:
(a) Proceeds from each Revolving Advance shall be used by RFC
to: (i) make Series 1997-1 Advances pursuant to the Series 1997-1
Supplement or (ii) repay matured Liquidity Advances (other than any
Commitment Termination Date Liquidity Advance) together with any
accrued interest thereon.
(b) Proceeds of each Refunding Advance and each Swing Line
Advance shall be deposited by RFC into the Commercial Paper Account and
proceeds of each Commitment Termination Date Liquidity Advance shall be
deposited by RFC into the Series 1997-1 Termination Advance Account, in
each case, for the repayment of maturing Commercial Paper Notes
together with any accrued interest thereon.
RFC shall not use the proceeds of any Liquidity Advance for any other purpose.
SECTION 3.2. Liquidity Lenders Not Required to Make Certain Liquidity
Advances.
SECTION 3.2.1. Revolving Advances. No Liquidity Lender shall be
required to make a Revolving Advance to the extent that after giving effect to
such Revolving Advance, (i) the aggregate principal amount of all Liquidity
Advances (including any Swing Line Advances) Outstanding would exceed the
Aggregate Liquidity Commitment, or (ii) the aggregate principal amount of such
Liquidity Lender's Liquidity Advances (including, in the case of the Swing Line
Lender, any Swing Line Advances) Outstanding would exceed such Liquidity
Lender's Liquidity Commitment.
SECTION 3.2.2. Refunding and Swing Line Advances. No Liquidity Lender
shall be required to make a Refunding Advance (including, in the case of the
Swing Line Lender, a Swing Line Advance) to the extent that after giving effect
to such Refunding Advance (or Swing Line Advance, as the case may be), (i) the
aggregate principal amount of all Liquidity Advances
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(including any Swing Line Advances) Outstanding would exceed the Aggregate
Liquidity Commitment or (ii) the aggregate principal amount of such Liquidity
Lender's Liquidity Advances (including, in the case of the Swing Line Lender,
any Swing Line Advances) Outstanding would exceed such Liquidity Lender's
Liquidity Commitment.
SECTION 3.2.3. Failure To Fund. The provisions of this Section 3.2.3
shall only be operative at any time when the number of Liquidity Lenders whose
respective Liquidity Commitments have not expired or been terminated shall
exceed ten (10) in the aggregate.
Subject to Sections 3.2.1 and 3.2.2, in the event that one or more
Liquidity Lenders fails to fund its or their Percentage of the Liquidity
Advances to be provided by the Liquidity Lenders by 2:00 p.m., New York City
time, on any Business Day (other than a Commitment Termination Date Liquidity
Advance or a Revolving Advance the proceeds of which are to be used to repay
maturing Liquidity Advances), the Series 1997-1 Liquidity Agent shall notify
each of the other Liquidity Lenders not later than 3:00 p.m., New York City
time, on such Business Day and each of the other Liquidity Lenders shall, before
5:00 p.m., New York City time, on such Business Day, make available to the
Series 1997-1 Liquidity Agent at the Series 1997-1 Liquidity Agent's address
specified for such purpose, in immediately available funds, a Liquidity Advance
in a principal amount equal to such unfunded amount multiplied by a fraction,
the numerator of which is the Liquidity Commitment of such Liquidity Lender and
the denominator of which is the Aggregate Liquidity Commitment (less the
Liquidity Commitments of the defaulting Liquidity Lenders). After the Series
1997-1 Liquidity Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article VI, the Series 1997-1 Liquidity Agent
will make such funds available to RFC by 5:45 p.m., New York City time. Any
Liquidity Advance made pursuant to this Section 3.2.3 shall be a Base Rate
Advance subject to conversion in accordance with the provisions of Section 3.8
hereof.
SECTION 3.3. Termination and Reduction of the Liquidity Commitments.
(a) RFC may, upon at least three (3) Business Days' prior written notice to the
Series 1997-1 Liquidity Agent (who shall give prompt written notice thereof to
each Liquidity Lender, the Dealers and the Depositary), irrevocably terminate or
reduce ratably in part the Aggregate Liquidity Commitment; provided, however,
that the Aggregate Liquidity Commitment shall not be reduced on any day in an
amount such that the Aggregate Liquidity Commitment would be less than the sum
of (i)(x) the Aggregate Outstanding CP on such day, less (y) the Letter of
Credit Amount, plus (ii) the aggregate principal amount of all Liquidity
Advances (including any Swing Line Advances) Outstanding (other than Commitment
Termination Date Liquidity Advances) on such day net of any amounts on deposit
on such day in the Series 1997-1 Collateral Account set aside for the repayment
of the principal of Liquidity Advances; provided, further, that any partial
reduction shall be at least $5,000,000 and in an integral multiple of
$1,000,000. Any such reduction of the Aggregate Liquidity Commitment shall
reduce ratably the Liquidity Commitment of each Liquidity Lender.
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(b) The Series 1997-1 Liquidity Agent shall give notice to the Dealers
as to any change in the Aggregate Liquidity Commitment promptly after any
reduction thereof.
(c) No termination or reduction of the Aggregate Liquidity Commitment
by RFC pursuant to this Section 3.3 shall be effective unless the Series 1997-1
Liquidity Agent or RFC shall have given notice to S&P and Moody's of such
termination or reduction.
SECTION 3.4. Increase of the Aggregate Liquidity Commitment. The
Aggregate Liquidity Commitment may be increased from time to time to an amount
greater than the amount of the Aggregate Liquidity Commitment on the Series
1997-1 Closing Date through the increase of a Liquidity Lender's Liquidity
Commitment or the addition of one or more Eligible Liquidity Lenders as a party
to this Series 1997-1 Liquidity Agreement; provided, however, that no such
increase shall become effective unless all of the following conditions shall
have been satisfied:
(a) RFC and the Series 1997-1 Liquidity Agent shall have given
their written consent thereto;
(b) such Liquidity Lender or Eligible Liquidity Lender, as the
case may be, and RFC shall have executed and delivered to the Series
1997-1 Liquidity Agent a Liquidity Commitment Agreement;
(c) the Series 1997-1 Enhancement Amount shall be increased to
the Series 1997-1 Minimum Enhancement Amount that would be required by
the increased Series 1997-1 Maximum Invested Amount resulting from the
increase in the Aggregate Liquidity Commitment;
(d) the conditions to making Advances under Section 2.01 of
the Note Purchase Agreement shall have been met; and
(e) the Rating Agencies shall have confirmed in writing that
such increase in the Aggregate Liquidity Commitment will not result in
the downgrading below A-1 by S&P and P-1 by Moody's or withdrawal of
the ratings of the Commercial Paper Notes.
SECTION 3.5. Extensions of Scheduled Liquidity Commitment Termination
Date. Each Liquidity Lender's Scheduled Liquidity Commitment Termination Date
may be extended from time to time by a written agreement among RFC, such
Liquidity Lender and the Series 1997-1 Liquidity Agent.
SECTION 3.6. Borrowing Procedures. Borrowings of Revolving Advances,
Refunding Advances, Commitment Termination Date Liquidity Advances and Swing
Line Advances shall be made in accordance with this Section 3.6.
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SECTION 3.6.1. Revolving Advances. By delivering a Borrowing Request to
the Series 1997-1 Liquidity Agent for a borrowing consisting of Revolving
Advances, which will be accompanied by telephonic notification, RFC may
irrevocably request, (a) in the case of Eurodollar Advances, not later than
[11:15 a.m.], New York City time, on not less than three (3) nor more than five
(5) Business Days' prior notice, that a Borrowing be made in a minimum amount of
$5,000,000 and an integral multiple of $1,000,000, or (b) in the case of Base
Rate Advances, not later than [11:30 a.m.], New York City time, on the date of
such borrowing and, in any case, on not more than five Business Days' prior
notice (which notice shall be given in writing), that a Borrowing be made in a
minimum amount of $5,000,000 and an integral multiple of $1,000,000. On the
terms and subject to the conditions of this Series 1997-1 Liquidity Agreement,
each such Borrowing shall be comprised of Liquidity Advances of the same type
(and, in the case of Eurodollar Advances, shall have the same Interest Period),
and shall be made on the Business Day, specified in such Borrowing Request.
SECTION 3.6.2. Refunding Advances. Upon receipt from the Depositary of
notice (not later than [11:00 a.m.], New York City time) pursuant to Section
5(b) of the Depositary Agreement that, on any Business Day that any Commercial
Paper Notes mature, the amount required to pay in full all Commercial Paper
Notes maturing on such Business Day will be more than the net amount obtained by
the issuance of Commercial Paper Notes on such day plus the amount available for
payment of such Commercial Paper Notes in the Commercial Paper Account (the
amount of such excess, the "Commercial Paper Deficit"), the Series 1997-1
Collateral Agent shall, if such notice contains an instruction from the
Depositary to the Series 1997-1 Collateral Agent to deliver a Borrowing Request,
by delivering a Borrowing Request to the Series 1997-1 Liquidity Agent (who will
notify the other Liquidity Lenders of such Borrowing Request not later than
[1:00 p.m.], New York City time) for a Borrowing consisting of Refunding
Advances, irrevocably request, not later than [11:30 a.m.], New York City time,
on the date of a proposed Borrowing, that a Borrowing be made in an aggregate
principal amount equal to the excess of (i) the Commercial Paper Deficit over
(ii) the sum of the aggregate amount, if any, applied or to be applied on such
Business Day to the Commercial Paper Deficit from amounts available therefor in
the Series 1997-1 Collateral Account and the Series 1997-1 Termination Advance
Account that are allocated to the payment of maturing Commercial Paper Notes and
from the proceeds of Swing Line Advances being made on such day. On the terms
and subject to the conditions of this Series 1997-1 Liquidity Agreement, each
such Borrowing shall be initially comprised of Base Rate Advances (subject to
conversion in accordance with the provisions of Section 3.8) and shall be made
on the Business Day specified in such Borrowing Request. For the purposes of
this Section, Commercial Paper Notes maturing on any day which have been paid
from an advance made by the Depositary shall nonetheless be deemed to be unpaid.
SECTION 3.6.3. Swing Line Advances. If on any Business Day that RFC or
the Series 1997-1 Collateral Agent, as the case may be, determines that there
exists a Commercial Paper Deficit, and the excess of such Commercial Paper
Deficit over the sum of the aggregate amount,
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if any, applied or to be applied on such Business Day to the Commercial Paper
Deficit from amounts available therefor in the Series 1997-1 Collateral Account
and the Series 1997-1 Termination Advance Account that are allocated to the
payment of maturing Commercial Paper Notes is equal to or less than the Swing
Line Commitment, RFC or the Series 1997-1 Collateral Agent, as the case may be,
shall promptly (and in no case later than [10:30 a.m.] on the date of such
discovery) notify the Depositary of such Commercial Paper Deficit and RFC or the
Series 1997-1 Collateral Agent, as attorney-in-fact for RFC, may, or the Series
1997-1 Collateral Agent, upon the instruction of the Depositary pursuant to
Section 5(b) of the Depositary Agreement, shall by delivering a Borrowing
Request to the Series 1997-1 Liquidity Agent for forwarding to the Swing Line
Lender for a Borrowing consisting of a Swing Line Advance, irrevocably request,
not later than [11:30 a.m.], New York City time, on the date of a proposed
Borrowing, that a Borrowing be made in an aggregate principal amount equal to
the least of
(a) The Swing Line Commitment minus the aggregate principal
amount of all Swing Line Advances then outstanding;
(b) the excess, if any, of the Swing Line Lender's Liquidity
Commitment as a Liquidity Lender over the aggregate principal amount of
all of its Liquidity Advances Outstanding on the date of such proposed
Borrowing (without giving effect to such proposed Borrowing); and
(c) the excess of the Commercial Paper Deficit over the sum of
the aggregate amount, if any, applied or to be applied on such Business
Day to the Commercial Paper Deficit from amounts available therefor in
the Series 1997-1 Collateral Account and the Series 1997-1 Termination
Advance Account that are allocated to the payment of maturing
Commercial Paper Notes.
On the terms and subject to the conditions of this Series 1997-1 Liquidity
Agreement (including the conditions precedent to borrowing set forth in Section
6.3 hereof), each such Borrowing shall be a Base Rate Advance (subject to
conversion in accordance with the provisions of Section 3.8), and shall be made
on the Business Day specified in such Borrowing Request. For the purposes of
this Section, Commercial Paper Notes maturing on any day which have been paid
from an advance made by the Depositary that has not been reimbursed shall
nonetheless be deemed to be unpaid. If, after giving effect to any Swing Line
Advance requested pursuant to this Section 3.6.3, (a) the aggregate principal
amount of Swing Line Advances would be greater than the Swing Line Commitment,
or (b) the aggregate principal amount of Swing Line Advances is less than or
equal to the Swing Line Commitment and such Swing Line Advances are not repaid
within five (5) Business Days or (c) the aggregate principal amount of all
Liquidity Advances Outstanding made by the Swing Line Lender would exceed its
Liquidity Commitment, then in any such case each Liquidity Lender shall
immediately and unconditionally, upon written notice thereof by the Swing Line
Lender, make Liquidity Advances to RFC, the proceeds of which will be applied to
the repayment of Swing Line Advances made by the Swing Line Lender, in an
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amount equal to such Liquidity Lender's Percentage of the aggregate principal
amount of the Swing Line Advances Outstanding. Notwithstanding Section 6.2 or
Section 6.3, the obligation of the Liquidity Lenders to make Liquidity Advances
under this Section 3.6.3 to repay Swing Line Advances shall be unconditional and
shall be comprised of Base Rate Advances, subject to conversion in accordance
with the provisions of Section 3.8 hereof.
SECTION 3.6.4. Commitment Termination Date Liquidity Advances. RFC may
request each Liquidity Lender, on the Scheduled Liquidity Commitment Termination
Date with respect to such Liquidity Lender's Liquidity Commitment, to make a
Refunding Advance to RFC on the terms and subject to the conditions of this
Series 1997-1 Liquidity Agreement. Any such Commitment Termination Date
Liquidity Advance shall not exceed such Liquidity Lender's Overall Percentage of
the Aggregate Face Amount on the date of such Commitment Termination Date
Liquidity Advance and the aggregate amount of any previously made Liquidity
Advances of such Liquidity Lender that are outstanding on such date shall be
converted into, and for all purposes of this Agreement shall be treated as, a
Commitment Termination Date Liquidity Advance, and with respect to which
interest shall accrue and be payable in the manner provided for Revolving
Advances in Section 4.2.
SECTION 3.6.5. Nature of Funding Obligations. The obligations of the
Liquidity Lenders hereunder are several and not joint. All Liquidity Advances
(other than Swing Line Advances and Commitment Termination Date Liquidity
Advances) under this Series 1997-1 Liquidity Agreement shall be made by the
Liquidity Lenders simultaneously and proportionately to their respective
Percentages, it being understood that, subject to Section 3.2.3, no Liquidity
Lender shall be responsible for any failure by any other Liquidity Lender to
perform its obligation to make a Liquidity Advance hereunder and that the
Liquidity Commitment of any Liquidity Lender shall not be increased or decreased
as a result of the failure by any other Liquidity Lender to perform its
obligation to make a Liquidity Advance. The failure of any Liquidity Lender to
make available to the Series 1997-1 Liquidity Agent its ratable share of any
Borrowing shall not relieve any other Liquidity Lender of its obligation
hereunder to make available to the Series 1997-1 Liquidity Agent such other
Liquidity Lender's pro rata share of such Borrowing on the date such funds are
to be made available pursuant to the terms of this Series 1997-1 Liquidity
Agreement. Notwithstanding the foregoing, each Liquidity Lender shall continue
to be obligated to make Liquidity Advances upon a default by a Liquidity Lender
as required by Section 3.2.3.
SECTION 3.6.6. Failure to Fund by Lender. Unless the Series 1997-1
Liquidity Agent shall have been notified by any Liquidity Lender prior to 1:00
p.m., New York City time, on the date of any Borrowing in respect of any
Liquidity Advances that such Liquidity Lender does not intend to make available
to the Series 1997-1 Liquidity Agent such Liquidity Lender's Liquidity Advances
on such date of Borrowing, the Series 1997-1 Liquidity Agent may assume that
such Liquidity Lender has made such amount available to the Series 1997-1
Liquidity Agent on such date of Borrowing and the Series 1997-1 Liquidity Agent
in its sole discretion may, but
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shall not be obligated to, make available to RFC a corresponding amount on such
date of Borrowing. If such corresponding amount is not in fact made available to
the Series 1997-1 Liquidity Agent by such Liquidity Lender on or prior to a date
of Borrowing, such Liquidity Lender agrees to pay to the Series 1997-1 Liquidity
Agent forthwith on demand such corresponding amount together with interest
thereon, and, if amounts are not otherwise available from the other Liquidity
Lenders under Section 3.2.3, then RFC agrees to repay to the Series 1997-1
Liquidity Agent forthwith on the Business Day immediately following the date of
demand therefor such corresponding amount together with interest thereon, for
each day from the date such amount is made available to RFC until the date such
amount is paid or repaid to the Series 1997-1 Liquidity Agent, at (a) in the
case of such Liquidity Lender, the Federal Funds Rate for the first Business Day
and thereafter at the Base Rate, and (b) in the case of RFC, the interest rate
that would be applicable at the time to a Borrowing of Base Rate Advances made
on such date of Borrowing. If such Liquidity Lender shall pay to the Series
1997-1 Liquidity Agent such corresponding amount, such amount so paid shall
constitute such Liquidity Lender's Liquidity Advance, and if both such Liquidity
Lender and RFC shall have paid and repaid, respectively, such corresponding
amount, the Series 1997-1 Liquidity Agent shall promptly pay over to RFC such
corresponding amount in same day funds, but RFC shall remain obligated for all
interest thereon. To the extent any such amount due to the Series 1997-1
Liquidity Agent under this Section 3.6.6 has not been paid in full, the Series
1997-1 Liquidity Agent may make a demand on the Series 1997-1 Collateral Agent
to pay such amount in accordance with Sections 2.01 and 5.02(b) of the Series
1997-1 Collateral Agreement. The defaulting Liquidity Lender shall be liable to
RFC for any and all damages incurred by RFC resulting from such Liquidity
Lender's default.
SECTION 3.7. Disbursement of Funds. (a) Upon receipt of each Borrowing
Request for Refunding Advances or for Revolving Advances, the Series 1997-1
Liquidity Agent shall give to each Liquidity Lender prompt notice thereof and of
such Liquidity Lender's share of the Borrowing requested thereby. On or before
2:00 p.m., New York City time, on the proposed Borrowing date, each Liquidity
Lender shall deposit with the Series 1997-1 Liquidity Agent same day funds in an
amount equal to such Liquidity Lender's Percentage of the requested Borrowing.
Such deposit will be made to a deposit account with an institution rated at
least A-1 by S&P and P-1 by Moody's established by the Series 1997-1 Liquidity
Agent or such other account which the Series 1997-1 Liquidity Agent shall
specify from time to time by notice to the Liquidity Lenders (the "Series 1997-1
Liquidity Agent's Account"). No Liquidity Lender's obligation to make any
Revolving Advances or Refunding Advances, as the case may be, shall be
diminished by any other Liquidity Lender's failure to make any Revolving
Advances or Refunding Advances, as the case may be.
(b) Upon receipt of a Borrowing Request for a Swing Line Advance, the
Series 1997-1 Liquidity Agent shall give the Swing Line Lender prompt notice
thereof and of the amount of the Borrowing requested thereby. On or before [1:30
p.m.], New York City time, on the date of the proposed Borrowing, the Swing Line
Lender shall deposit with the Series 1997-1 Liquidity
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Agent in the Series 1997-1 Liquidity Agent's Account in same day funds in an
amount equal to the requested Borrowing. Such deposit shall be made to an
account which the Series 1997-1 Liquidity Agent shall specify from time to time
by notice to the Swing Line Lender.
(c) Unless the Series 1997-1 Liquidity Agent determines that any
condition specified in Section 6.2, in the case of Revolving Advances, or
Section 6.3, in the case of Refunding Advances or Swing Line Advances, has not
been satisfied, the Series 1997-1 Liquidity Agent will remit the aggregate of
the amounts of (i) Refunding Advances or Swing Line Advances so made available
by the Liquidity Lenders (or, in the case of any Swing Line Advance, the Swing
Line Lender) to the Commercial Paper Account, (ii) Commitment Termination Date
Liquidity Advances so made available by the Liquidity Lenders to the Series
1997-1 Termination Advance Account and (iii) Revolving Advances so made
available by the Liquidity Lenders to the Series 1997-1 Collateral Account, in
each case not later than 2:00 p.m., New York City time.
SECTION 3.8. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Series 1997-1 Liquidity Agent (which will
give prompt notice to the Liquidity Lenders) on or before 11:15 a.m., New York
City time, on a Business Day, RFC may from time to time irrevocably elect that
all or any portion in an aggregate minimum amount of $5,000,000 and an
integral multiple of $1,000,000 of any Liquidity Advances be
(a) in the case of Base Rate Advances, (i) on not less than
three nor more than five Business Days' prior notice, converted into
Eurodollar Advances, or (ii) continued as Base Rate Advances; or
(b) in the case of Eurodollar Advances, (i) on prior notice
given not less than three nor more than five Business Days prior to the
end of the related Interest Period, continued as Eurodollar Advances or
(ii) converted into Base Rate Advances.
In the absence of delivery of a Continuation/Conversion Notice at least three
(3) Business Days prior to the last day of the related Interest Period, in the
case of any Eurodollar Advance, such Eurodollar Advance shall, on such last day,
automatically convert to a Base Rate Advance. In the absence of delivery of a
Continuation/Conversion Notice at least three Business Days prior to the last
day of the related Interest Period, in the case of any Base Rate Advance, such
Base Rate Advance shall automatically continue as a Base Rate Advance. No
portion of the principal amount of any Liquidity Advances Outstanding may be
continued as, or be converted into, Eurodollar Advances when any Liquidity
Agreement Amortization Event or Potential Liquidity Agreement Amortization Event
has occurred and is continuing.
SECTION 3.9. Eurodollar Funding. (a) Each Liquidity Lender may, if it
so elects, fulfill its obligation to make, continue or convert Eurodollar
Advances hereunder by causing one of its foreign branches or Affiliates (or an
international banking facility created by such Liquidity Lender) to make or
maintain such Eurodollar Advance; provided, however, that such Eurodollar
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Advance shall nonetheless be deemed to have been made and to be held by such
Liquidity Lender, and the obligation of RFC to repay such Eurodollar Advance
shall nevertheless be to such Liquidity Lender for the account of such foreign
branch, Affiliate or international banking facility.
(b) RFC shall not be permitted to request, and the Liquidity Lenders
shall not be required to maintain, any number of Interest Periods with respect
to Eurodollar Advances in effect at any time hereunder in excess of twenty (20).
SECTION 3.10. Liquidity Advance Notes. Each Liquidity Lender's
Revolving Advances and Refunding Advances (including its Commitment Termination
Date Liquidity Advance and, in the case of the Swing Line Lender, any Swing Line
Advances) under its Liquidity Commitment shall be evidenced by a Revolving Note
and a Refunding Note, respectively, each duly executed on behalf of RFC, and
each payable to the order of such Liquidity Lender in a maximum principal amount
equal in each case to such Liquidity Lender's original Liquidity Commitment
(which Revolving Note and Refunding Note shall, unless requested by such
Liquidity Lender, be in substantially the form of Exhibits A-2 and B-2,
respectively, to this Series 1997-1 Liquidity Agreement and shall be held by the
Series 1997-1 Liquidity Agent on behalf of the Liquidity Lenders). RFC hereby
irrevocably authorizes each Liquidity Lender to make (or cause to be made)
appropriate notations on the grid attached to such Liquidity Lender's Liquidity
Advance Notes (or on any continuation of such grid), which notations, if made,
shall evidence, inter alia, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to the Liquidity Advances evidenced
thereby. Such notations shall be conclusive and binding on RFC absent manifest
error; provided, however, that the failure of any Liquidity Lender to make any
such notation or any error in any such notation shall not limit or otherwise
affect any RFC Obligations.
ARTICLE IV
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES, ETC.
SECTION 4.1. Repayments and Prepayments. RFC shall repay in full the
unpaid principal amount of each Liquidity Advance on the earlier to occur of (i)
the Scheduled Maturity Date and (ii) the date all RFC Obligations are declared
or otherwise become due and payable under Section 9.2. Prior thereto, RFC shall
make repayments and prepayments in accordance with this Section 4.1.
SECTION 4.1.1. Voluntary Prepayments. From time to time on any Business
Day, RFC may make a voluntary prepayment, in whole or in part, of the
outstanding principal amount of any Liquidity Advance; provided, however, that
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(a) all such voluntary prepayments which are partial
prepayments shall be in a minimum aggregate principal amount equal to
$1,000,000 and in an integral multiple of $100,000;
(b) all such voluntary prepayments shall be applied, unless
otherwise specified by RFC, to the payment of, first, Base Rate
Advances (pro rata among Base Rate Advances) and second, Eurodollar
Advances (pro rata among the Liquidity Lenders with Eurodollar Advances
having the same Interest Period in the inverse order of their
maturities); and
(c) no such voluntary prepayment of any Eurodollar Advance may
be made on any day other than the last day of the Interest Period for
such Eurodollar Advance unless at least three but no more than five
business days' prior written notice has been given to the Series 1997-1
Liquidity Agent and, as required by Section 5.4, breakage fees are paid
in connection with such prepayment.
SECTION 4.1.2. Mandatory Prepayments. (a) Concurrently with any partial
reduction or termination of the Aggregate Liquidity Commitment pursuant to
Section 3.3, all funds available on such day in the Series 1997-1 Collateral
Account for the payment of Liquidity Advances, as provided in Section 2.01 or
5.02, as applicable, of the Series 1997-1 Collateral Agreement, shall be applied
to repay as much of the Liquidity Advances (and interest accrued thereon) as
shall be necessary so that the sum of the aggregate principal amount of
Liquidity Advances Outstanding (other than Commitment Termination Date Liquidity
Advances) plus the Aggregate Outstanding CP will not exceed the Aggregate
Liquidity Commitment plus the Letter of Credit Amount after giving effect to
such termination or reduction and, to the extent such funds are not sufficient
to pay any such excess (and interest accrued thereon), all funds subsequently
deposited in the Series 1997-1 Collateral Account and allocated to the payment
of Liquidity Advances in accordance with the priorities set forth in Section
2.01 or 5.02, as applicable, of the Series 1997-1 Collateral Agreement shall be
applied to pay such excess (and interest accrued thereon) until so paid.
(b) If, on any Business Day, a Borrowing Base Deficiency or CP
Borrowing Base Deficiency, as applicable, exists, all funds available for the
payment of Commercial Paper Notes, Liquidity Advances or Support Liquidity
Disbursements on such day in the Series 1997-1 Collateral Account, as provided
in Section 2.01 or 5.02, as applicable, of the Series 1997-1 Collateral
Agreement, shall be (i) first, deposited in the Commercial Paper Account for
application to the payment of maturing Commercial Paper Notes and (ii) second,
applied to repay Liquidity Advances and Support Liquidity Disbursements (and
interest accrued thereon) pro rata in accordance with their outstanding
principal amount, in each case, as shall be necessary so that after giving
effect to such application there shall be no such Borrowing Base Deficiency or
CP Borrowing Base Deficiency, as applicable, and, to the extent such funds or
other amounts are not sufficient therefor, all funds subsequently deposited in
the Series 1997-1 Collateral Account and
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allocated to the payment of Liquidity Advances and Support Liquidity
Disbursements in accordance with the priorities set forth in Section 2.01 or
5.02, as applicable, of the Series 1997-1 Collateral Agreement shall be applied
or set aside for the pro rata application to Liquidity Advances Outstanding and
Support Liquidity Disbursements Outstanding until there shall be no such
Borrowing Base Deficiency or CP Borrowing Base Deficiency, as applicable.
(c) Each mandatory payment required by clause (a) (in the case of a
reduction or termination pursuant to Section 3.3) or clause (b) above shall, for
purposes of Section 9.1.1 and all other provisions of this Series 1997-1
Liquidity Agreement, be due and payable in full on the Business Day on which
such reduction or termination or such Borrowing Base Deficiency or CP Borrowing
Base Deficiency exists, whether or not sufficient funds are then available to
make such payment.
SECTION 4.2. Interest Provisions. Interest on the principal amount of
Liquidity Advances Outstanding shall accrue and be payable in accordance with
this Section 4.2.
SECTION 4.2.1. Rates. (a) Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, RFC may elect that
Liquidity Advances comprising a Borrowing accrue interest at a rate per annum:
(i) on that portion maintained from time to time as a Base
Rate Advance, equal to the Base Rate from time to time in effect; or
(ii) on that portion maintained as a Eurodollar Advance,
during each Interest Period applicable thereto, equal to the Eurodollar
Rate (Reserve Adjusted) for such Interest Period.
(b) If any Liquidity Lender shall determine in good faith that reserves
under Regulation D of the Board of Governors of the Federal Reserve System
("Regulation D") are required to be maintained by it in respect of, or that a
portion of its costs of maintaining reserves under Regulation D is properly
attributable to, one or more of its Eurodollar Advances, RFC shall pay to such
Liquidity Lender additional interest on the unpaid principal amount of each such
Eurodollar Advance from the date such reserves were required to be maintained
until such principal amount is paid in full or converted into a Base Rate
Advance, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such
Eurodollar Advance from (ii) the rate obtained by dividing such Eurodollar Rate
by an amount equal to one minus the Eurodollar Reserve Percentage (expressed as
a decimal) of such Liquidity Lender for such Interest Period. Any Liquidity
Lender claiming any additional interest payable pursuant to this clause (b)
shall provide a written certificate to the Series 1997-1 Liquidity Agent, RFC
and the Rating Agencies setting forth the amount of such additional interest and
reasonable detail as to the calculation thereof. RFC shall pay such
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Liquidity Lender the amount shown as due on any such certificate within thirty
(30) days following the date on which such certificate was delivered to RFC.
SECTION 4.2.2. Post Default Rates. Without giving effect to Section
5.10 hereof, after the date on which any amount of any Liquidity Advance is due
and payable (whether on the last day of a Interest Period, on the Scheduled
Maturity Date, on the date on which a mandatory prepayment initially becomes due
or upon acceleration or otherwise), or after any other monetary RFC Obligation
shall have become due and payable, RFC shall pay, but only to the extent
permitted by law, interest (after as well as before judgment) on the principal
amount of such Liquidity Advances then outstanding (whether or not the same
shall then be due and payable) and each such other monetary RFC Obligation
hereunder (but only if the same shall then be due and payable in accordance with
the terms of this Series 1997-1 Liquidity Agreement) at a rate per annum equal
to a margin of one percent (1%) per annum plus (i) in the case of any Liquidity
Advances then outstanding and in respect of which Interest Periods remain in
effect, the respective interest rates then applicable to such Liquidity
Advances, and (ii) in all other cases, a rate per annum equal to the rate per
annum that would then be in effect with respect to a Base Rate Advance.
SECTION 4.3. Payments of Interest. Accrued interest in respect of each
Liquidity Advance shall be payable in arrears (whether by acceleration, demand
or otherwise) on each payment date set forth below:
(a) with respect to any Base Rate Advance, on the 3rd Business
Day of each calendar quarter, beginning with the first such date to
occur after such Base Rate Advance is made;
(b) with respect to any Eurodollar Advance, on the last day of
each applicable Interest Period (and, if such Interest Period shall
exceed three (3) months, on the three-month anniversary of the
commencement of such Interest Period);
(c) in the case of any payment or prepayment, in whole or in
part, of principal outstanding on any Liquidity Advance, on the amount
and on the date of such payment or prepayment;
(d) with respect to any Base Rate Advance converted into a
Eurodollar Advance on a day when interest would not otherwise have been
payable pursuant to clause (a), on the date of such conversion; and
(e) on that portion of any Liquidity Advance which is
accelerated pursuant to Section 9.2, immediately upon such
acceleration.
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Interest accrued on Liquidity Advances or other monetary RFC Obligations arising
under this Series 1997-1 Liquidity Agreement or any other Related Document after
the date such amount is due and payable shall be payable upon demand.
SECTION 4.4. Computation Basis. Interest accruing based on the Base
Rate shall be computed on the basis of the actual number of days elapsed and a
365 (or, if applicable, 366) day year. Interest accruing based on the Eurodollar
Rate (Reserve Adjusted) shall be computed on the basis of the actual number of
days elapsed and a 360 day year. The Series 1997-1 Liquidity Agent will give
notice promptly to RFC, the Series 1997-1 Support Letter of Credit Providers and
the Series 1997-1 Collateral Agent of changes in the Eurodollar Rate.
SECTION 4.5. Fees. (a) Commitment Fee. RFC agrees to pay to the Series
1997-1 Liquidity Agent for the account of each Liquidity Lender an ongoing
commitment fee (the "Commitment Fee") equal to the amount specified in that
certain fee letter dated as of October __, 1997 between RFC and the Series
1997-1 Liquidity Agent, as such letter may be amended, modified or replaced from
time to time (the "Series 1997-1 Liquidity Agent Fee Letter"), such fee to
accrue from the Series 1997-1 Closing Date until the Liquidity Commitment
Termination Date. The Commitment Fee shall be computed based on the actual
number of days elapsed and a year of 365/366 days. The Commitment Fee shall be
payable in arrears on the last Business Day of each calendar quarter occurring
after the Series 1997-1 Closing Date and on the Liquidity Commitment Termination
Date.
(b) Upfront Fee. RFC agrees to pay to the Series 1997-1 Liquidity Agent
for the account of each Liquidity Lender, as applicable, a one time upfront fee
(the "Upfront Fee") as specified in the Series 1997-1 Liquidity Agent Fee
Letter. In the event that RFC elects to replace such Liquidity Lender pursuant
to Section 5.9 of this Series 1997-1 Liquidity Agreement, then such Liquidity
Lender shall reimburse RFC for an amount equal to the pro rata portion of the
Upfront Fee of such Liquidity Lender (based on the remaining period from the
date of such replacement to such Liquidity Lender's Scheduled Commitment
Termination Date).
ARTICLE V
CERTAIN EURODOLLAR AND OTHER PROVISIONS
SECTION 5.1. Eurodollar Lending Unlawful. If any Liquidity Lender shall
reasonably determine (which determination shall, upon notice thereof to RFC and
the other Liquidity Lenders, be conclusive and binding on RFC absent manifest
error) that the introduction of or any change in or in the interpretation of any
law or regulation makes it unlawful, or any central bank or other Governmental
Authority asserts that it is unlawful, for such Liquidity Lender to make,
continue or maintain any Liquidity Advance as, or to convert any Liquidity
Advance into, a Eurodollar Advance, the obligation of such Liquidity Lender to
make, continue or maintain or
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convert any such Liquidity Advance as a Eurodollar Advance shall, upon such
determination, forthwith be suspended until such Liquidity Lender shall notify
the Series 1997-1 Liquidity Agent and RFC that the circumstances causing such
suspension no longer exist, and RFC shall immediately convert (in the manner
provided for in Section 3.8) all Eurodollar Advances of such Liquidity Lender
into Base Rate Advances at the end of the then current Interest Periods with
respect thereto or sooner, if required by such law or assertion.
SECTION 5.2. Deposits Unavailable. If the Series 1997-1 Liquidity Agent
shall have reasonably determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to all Reference Lenders in
the relevant market; or
(b) by reason of circumstances affecting all Reference
Lenders' relevant market, adequate means do not exist for ascertaining
the interest rate applicable hereunder to Eurodollar Advances; or
(c) the Majority Banks have notified the Series 1997-1
Liquidity Agent that, with respect to any interest rate otherwise
applicable hereunder to any Eurodollar Advances the Interest Period for
which has not then commenced, such interest rate will not adequately
reflect the cost to such Majority Banks of making, funding or
maintaining their respective Eurodollar Advances for such Interest
Period,
then, upon notice from the Series 1997-1 Liquidity Agent to RFC and the
Liquidity Lenders, the obligations of all Liquidity Lenders under Section 3.6
and Section 3.8 to make or continue any Liquidity Advance as, or to convert any
Liquidity Advances into, Eurodollar Advances shall forthwith be suspended until
the Series 1997-1 Liquidity Agent shall notify RFC and the Liquidity Lenders
that the circumstances causing such suspension no longer exist.
SECTION 5.3. Increased Costs, etc. RFC agrees to reimburse each
Liquidity Lender for any increase in the cost to such Liquidity Lender of, or
any reduction in the amount of any sum receivable by such Liquidity Lender,
including reductions in the rate of return on such Liquidity Lender's capital,
in respect of, making, continuing or maintaining (or of its obligation to make,
continue or maintain) any Liquidity Advances as, or of converting (or of its
obligation to convert) any Liquidity Advances into, Eurodollar Advances that
arise in connection with any change in, or the introduction, adoption,
effectiveness, interpretation or reinterpretation or phase-in, in each case,
after the date hereof of, any law or regulation, directive, guideline, decision
or request (whether or not having the force of law) of any court, central bank,
regulator or other Governmental Authority, except for such changes with respect
to increased capital costs and taxes which are governed by Sections 5.5 and 5.6,
respectively; provided, however, that RFC shall have no obligation to pay any
such additional amount under this Section 5.3 with respect to any day or days
unless such Liquidity Lender shall have notified RFC of its demand therefor
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within forty-five (45) days of the date upon which such Liquidity Lender has
obtained audited information with respect to the fiscal year of such Liquidity
Lender in which such day or days occurred. Each such demand shall be provided to
the Series 1997-1 Liquidity Agent and RFC in writing and shall state, in
reasonable detail, the reasons therefor and the additional amount required fully
to compensate such Liquidity Lender for such increased cost or reduced amount or
return. Such additional amounts shall be payable by RFC directly to such
Liquidity Lender within five (5) Business Days of its receipt of such notice,
and such notice shall, in the absence of manifest error, be conclusive and
binding on RFC.
SECTION 5.4. Funding Losses. In the event any Liquidity Lender shall
incur any loss or expense (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Liquidity Lender to make, continue or maintain any portion of the principal
amount of any Liquidity Advance as, or to convert any portion of the principal
amount of any Liquidity Advance into, a Eurodollar Advance) as a result of
(a) any conversion or repayment or prepayment (for any reason,
including, without limitation, as a result of the acceleration of the
maturity of a Eurodollar Advance or the assignment of a Eurodollar
Advance pursuant to Section 5.9 hereof) of the principal amount of any
Eurodollar Advance on a date other than the scheduled last day of the
Interest Period applicable thereto;
(b) any Liquidity Advance not being made as a Eurodollar
Advance in accordance with the Borrowing Request therefor;
(c) any Liquidity Advance not being continued as, or converted
into, a Eurodollar Advance in accordance with the
Continuation/Conversion Notice therefor; or
(d) any failure of RFC to prepay any Liquidity Advance after
giving notice of prepayment under Section 4.1.1(c),
then, upon the written notice of such Liquidity Lender to RFC (with a copy to
the Series 1997-1 Liquidity Agent), RFC shall, within five (5) Business Days of
its receipt thereof, pay directly to such Liquidity Lender such amount as will
(in the reasonable determination of such Liquidity Lender) reimburse such
Liquidity Lender for such loss or expense. Such written notice (which shall
include calculations in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on RFC.
SECTION 5.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation or reinterpretation or
phase-in of, in each case after the date hereof, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other Governmental Authority
affects or would affect the amount of capital required or reasonably expected to
be maintained by any Liquidity
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Lender or any Person controlling such Liquidity Lender, and such Liquidity
Lender reasonably determines (in its sole and absolute discretion) that the rate
of return on its or such controlling Person's capital as a consequence of its
Liquidity Commitment or the Liquidity Advances made by such Liquidity Lender is
reduced to a level below that which such Liquidity Lender or such controlling
Person would have achieved but for the occurrence of any such circumstance,
then, in any such case after notice from time to time by such Liquidity Lender
to RFC, RFC shall pay an incremental Commitment Fee or increased costs
sufficient to compensate such Liquidity Lender or such controlling Person for
such reduction in rate of return; provided, however, that RFC shall have no
obligation to pay any such additional amount under this Section 5.5 with respect
to any day or days unless such Liquidity Lender shall have notified RFC of its
demand therefor within forty-five (45) days of the date upon which such
Liquidity Lender has obtained audited information with respect to the fiscal
year of such Liquidity Lender in which such day or days occurred. A statement of
such Liquidity Lender as to any such additional amount or amounts (including
calculations thereof in reasonable detail), shall, in the absence of manifest
error, be conclusive and binding on RFC; and provided, further, that the initial
payment of such increased Commitment Fee shall include a payment for accrued
amounts due under this Section 5.5 prior to such initial payment. In determining
such additional amount, such Liquidity Lender may use any method of averaging
and attribution that it (in its reasonable discretion) shall deem applicable so
long as it applies such method to other similar transactions.
SECTION 5.6. Taxes. All payments by RFC of principal of, and interest
on, the Liquidity Advances and all other amounts payable hereunder (including
fees) shall be made free and clear of and without deduction for any present or
future income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding in the case of each Liquidity Lender and the Series
1997-1 Liquidity Agent, taxes imposed on or measured by its overall net income,
overall receipts or overall assets and franchise taxes imposed on it by the
jurisdiction of such Liquidity Lender or the Series 1997-1 Liquidity Agent, as
the case may be, in which it is organized or is operating or any political
subdivision thereof and, in the case of each Liquidity Lender, taxes imposed on
or measured by its overall net income, overall receipts or overall assets or
franchise taxes imposed on it by the jurisdiction of such Liquidity Lender's
Domestic Office or Eurodollar Office, as the case may be, or any political
subdivision thereof (such non-excluded items being called "Taxes"). In the event
that any withholding or deduction from any payment to be made by RFC hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then RFC will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Series 1997-1 Liquidity Agent an
official receipt or other documentation satisfactory to the Series
1997-1 Liquidity Agent evidencing such payment to such authority; and
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(c) pay to the Series 1997-1 Liquidity Agent for the account
of the Liquidity Lenders such additional amount or amounts as is
necessary to ensure that the net amount actually received by each
Liquidity Lender will equal the full amount such Liquidity Lender would
have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Series 1997-1 Liquidity
Agent or any Liquidity Lender with respect to any payment received by the Series
1997-1 Liquidity Agent or such Liquidity Lender hereunder, the Series 1997-1
Liquidity Agent or such Liquidity Lender may pay such Taxes and RFC will
promptly upon receipt of prior written notice stating the amount of such Taxes
pay such additional amounts (including any penalties, interest or expenses) as
is necessary in order that the net amount received by such person after the
payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount such person would have received had no such Taxes been
asserted.
If RFC fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Series 1997-1 Liquidity Agent, for the
account of the respective Liquidity Lenders, the required receipts or other
required documentary evidence, RFC shall indemnify the Liquidity Lenders and the
Series 1997-1 Liquidity Agent for any incremental Taxes, interest or penalties
that may become payable by any Liquidity Lender or the Series 1997-1 Liquidity
Agent as a result of any such failure. For purposes of this Section 5.6, a
distribution hereunder by the Series 1997-1 Liquidity Agent or any Liquidity
Lender to or for the account of any Liquidity Lender shall be deemed a payment
by RFC.
Upon the request of RFC or the Series 1997-1 Liquidity Agent, each
Liquidity Lender that is organized under the laws of a jurisdiction other than
the United States shall, prior to the initial due date of any payments hereunder
and to the extent permissible under then current law, execute and deliver to RFC
and the Series 1997-1 Liquidity Agent on or about the first scheduled payment
date in each calendar year thereafter, one or more (as RFC or the Series 1997-1
Liquidity Agent may reasonably request) United States Internal Revenue Service
Forms 4224 or Forms 1001 or such other forms or documents (or successor forms or
documents), appropriately completed, as may be applicable to establish the
extent, if any, to which a payment to such Liquidity Lender is exempt from
withholding or deduction of Taxes. RFC shall not, however, be required to pay
any increased amount under this Section 5.6 to any Liquidity Lender that is
organized under the laws of a jurisdiction other than the United States if such
Liquidity Lender fails to comply with the requirements set forth in this
paragraph.
SECTION 5.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by RFC pursuant to this Series 1997-1 Liquidity
Agreement, the Liquidity Advance Notes and any other CP Program Document shall
be made by RFC to the Series 1997-1 Liquidity Agent for the pro rata account, on
the basis of Liquidity Advances Outstanding, or if no Liquidity Advances are
outstanding, on the basis of Liquidity Commitments, of the Liquidity Lenders
entitled to receive such payment. All such payments required to be made to the
Series
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1997-1 Liquidity Agent by RFC shall be made, without setoff, deduction or
counterclaim on the date due, in same day or immediately available funds, to the
Series 1997-1 Liquidity Agent's Account. The Series 1997-1 Liquidity Agent shall
promptly upon receipt thereof remit in same day funds to each Liquidity Lender
its share, if any, of such funds received by the Series 1997-1 Liquidity Agent
for the account of such Liquidity Lender. Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by the second proviso of the definition of the
term "Interest Period" with respect to Eurodollar Advances) be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest in connection with such payment.
SECTION 5.8. Sharing of Payments. If any Liquidity Lender shall obtain
any payment or other recovery (whether voluntary or involuntary) on account of
any Liquidity Advance (other than pursuant to the terms of Sections 5.3, 5.4,
5.5 and 5.6) in excess of its pro rata share of payments, on the basis of
Liquidity Advances Outstanding, or if no Liquidity Advances are outstanding, on
the basis of Liquidity Commitments, then or therewith obtained by all Liquidity
Lenders, such Liquidity Lender shall purchase from the other Liquidity Lenders
such participation in Liquidity Advances made by them as shall be necessary to
cause such purchasing Liquidity Lender to share the excess payment or other
recovery with each of them on a pro rata basis, computed on the basis of each
Liquidity Lender's Liquidity Advances Outstanding or Liquidity Commitment, as
the case may be, on the date of such computation; provided, however, that if all
or any portion of the excess payment or other recovery is thereafter recovered
from such purchasing Liquidity Lender, the purchase shall be rescinded and each
Liquidity Lender which has sold a participation to the purchasing Liquidity
Lender shall repay to the purchasing Liquidity Lender the purchase price to the
ratable extent of such recovery together with an amount equal to such selling
Liquidity Lender's ratable share (according to the proportion of
(a) the amount of such selling Liquidity Lender's required
repayment to the purchasing Liquidity Lender
to
(b) the total amount so recovered from the purchasing
Liquidity Lender)
of any interest or other amount paid or payable by the purchasing Liquidity
Lender in respect of the total amount so recovered. RFC agrees that any
Liquidity Lender so purchasing a participation from another Liquidity Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment with respect to such participation as fully as if such
Liquidity Lender were the direct creditor of RFC in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Liquidity Lender receives a secured claim to which this Section
applies, such Liquidity Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the
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rights of the Liquidity Lenders entitled under this Section to share in the
benefits of any recovery on such secured claim.
SECTION 5.9. Replacement of Liquidity Lenders. (a) If at any time the
credit rating assigned to the short-term obligations of any Liquidity Lender (an
"Affected Liquidity Lender") is withdrawn or downgraded below the rating then
assigned by S&P or Moody's, respectively, to the Commercial Paper Notes, RFC
may, upon five (5) Business Days' prior written notice given to the Series
1997-1 Liquidity Agent and such Affected Liquidity Lender, replace such Affected
Liquidity Lender with an Eligible Liquidity Lender or a Liquidity Lender already
party to this Series 1997-1 Liquidity Agreement and such replacement shall be
made in accordance with clause (a) of Section 11.11.1 and the proviso of clause
(b) of this Section 5.9; provided, however, that no such replacement pursuant to
this clause (a) shall be effective unless S&P and Moody's shall have confirmed
in writing to RFC and the Series 1997-1 Liquidity Agent that such replacement
(i) would not result in a withdrawal or reduction of the rating by S&P or
Moody's of the Commercial Paper Notes below the rating then assigned by such
Rating Agency to the Commercial Paper Notes or (ii) if the Commercial Paper
Notes are then rated less than A-1 by S&P or P-1 by Moody's, would result in an
upgrade of the rating by S&P or Moody's of the Commercial Paper Notes over the
rating then assigned by such Rating Agency to the Commercial Paper Notes.
(b) In the event that (i) any Liquidity Lender shall have notified the
Series 1997-1 Liquidity Agent or RFC (and shall not have retracted such
notification) that its compliance with any of its obligations hereunder would be
unlawful, (ii) any Liquidity Lender fails to extend its Liquidity Commitment
upon request, (iii) RFC is required pursuant to Section 4.2.1(b) or Sections 5.3
through 5.6 to make any payment to or on behalf of any Liquidity Lender (or
would be so required on or prior to the next following date on which a payment
hereunder (other than pursuant to Sections 5.3 through 5.6) is required to be
made to or for any such Liquidity Lender) or (iv) any Liquidity Lender shall
have failed to fund any Liquidity Advance when required hereunder, then RFC
shall have the right, at its own expense, upon notice to such Liquidity Lender
and the Series 1997-1 Liquidity Agent, to require such Liquidity Lender, and
such Liquidity Lender hereby agrees, to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 11.11) all
the interests, rights and obligations of such Liquidity Lender to an Eligible
Liquidity Lender provided by RFC; provided, however, that (w) no such assignment
shall conflict with any law, rule, regulation or order of any Governmental
Authority, (x) such assignment shall be without recourse, representation and
warranty and shall be on terms and conditions reasonably satisfactory to such
replaced Liquidity Lender and such replacement Eligible Liquidity Lender, (y)
the purchase price paid by such replacement Eligible Liquidity Lender shall be
in an amount equal to the aggregate amount of all Liquidity Advances owed to
such replaced Liquidity Lender, and (z) RFC or such Eligible Liquidity Lender,
as the case may be, shall pay to such replaced Liquidity Lender in same day
funds on the date of such assignment the principal of and interest accrued to
the date of payment on the Liquidity Advances made by such replaced Liquidity
Lender hereunder and all other
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amounts accrued for such replaced Liquidity Lender's account or owed to it
hereunder, including those amounts owed pursuant to Section 4.2.1(b) and
Sections 5.3 through 5.6. Any replacement of a Liquidity Lender under Section
5.9(a) or (b) shall give rise to the rebate of the Upfront Fee as specified in
the Series 1997-1 Liquidity Agent Fee Letter.
SECTION 5.10. Order and Priority. Notwithstanding any other provision
of this Series 1997-1 Liquidity Agreement (other than Section 4.2.2), the Series
1997-1 Liquidity Agent and the Liquidity Lenders agree that the RFC Obligations
to the Series 1997-1 Liquidity Agent and the Liquidity Lenders hereunder shall
be payable in the order and priority set forth in Section 2.01 and 5.02(b), as
applicable, of the Series 1997-1 Collateral Agreement. The Series 1997-1
Liquidity Agent and the Liquidity Lenders agree that, during any period prior to
the eighteen (18) month anniversary of the Amortization Commencement Date that
Commercial Paper Notes shall be outstanding (any such period being a "Specified
Period"), the RFC Obligations shall be due and payable only to the extent that
RFC's assets and the Series 1997-1 Letter of Credit are sufficient to pay the
same. If, during any Specified Period, the Liquidity Lenders shall exercise
their rights, pursuant to Section 9.2(ii), to accelerate the RFC Obligations,
such acceleration shall have the limited effect of (i) causing the interest
rates contemplated in Section 4.2.2 to become effective with respect to the
outstanding RFC Obligations and (ii) allowing the Liquidity Lenders, in any
determination of the Liquidity Lenders' allocative share of any disbursement to
be made to Series 1997-1 Secured Parties under the Series 1997-1 Collateral
Agreement or otherwise among creditors of RFC, to treat all of the RFC
Obligations as then being due and payable. No claims of the Liquidity Lenders
arising under or in connection with this Series 1997-1 Liquidity Agreement are
intended to be impaired or waived by this Section 5.10.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Effectiveness. This Series 1997-1 Liquidity
Agreement shall become effective on the date (the "Series 1997-1 Closing Date")
when all of the conditions set forth in Section 6.1 have been satisfied (and
each Liquidity Lender's signature hereto evidences that such conditions have
been satisfied with respect to such Liquidity Lender).
SECTION 6.1.1. Organic Documents, Resolutions. The Series 1997-1
Liquidity Agent shall have received: (i) a copy of RFC's certificate of
incorporation, including all amendments thereto, certified as of a recent date
by the Secretary of State of the State of Delaware, and a certified copy of all
other Organic Documents of RFC, and such certificate, articles or Organic
Documents shall be in form and substance satisfactory to the Series 1997-1
Liquidity Agent and its counsel, and a certificate as to the good standing of
RFC as of a recent date, from such Secretary of State; (ii) a certificate of the
Secretary or Assistant Secretary of RFC dated the Series 1997-1 Closing Date and
certifying (A) that attached thereto is a true and complete copy
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of the Bylaws of RFC as in effect on the Series 1997-1 Closing 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 resolutions in
form and substance satisfactory to the Series 1997-1 Liquidity Agent and its
counsel and duly adopted by the Board of Directors of RFC authorizing the
execution, delivery and performance of this Series 1997-1 Liquidity Agreement
and each of the other Related Documents to which RFC is a party and the
transactions contemplated hereby and thereby, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect, (C) that
the certificate of incorporation of RFC has not been amended since the date of
the last amendment thereto shown on the certificate of good standing furnished
pursuant to clause (i) above and (D) as to the incumbency and specimen signature
of each officer executing this Series 1997-1 Liquidity Agreement and each of the
other Related Documents to which RFC is a party or any other document delivered
in connection herewith or therewith on behalf of RFC; (iii) a certificate of an
Authorized Officer of RFC (other than the Secretary or Assistant Secretary
providing the certificate referred to in clause (ii) above) as to the incumbency
and specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to clause (ii) above; and (iv) such other documents as the
Series 1997-1 Liquidity Agent may reasonably request.
SECTION 6.1.2. Series 1997-1 Liquidity Agreement. The Series 1997-1
Liquidity Agent shall have received executed counterparts of this Series 1997-1
Liquidity Agreement, duly executed by RFC, the Series 1997-1 Liquidity Agent,
and each Liquidity Lender.
SECTION 6.1.3. Liquidity Advance Notes. The Series 1997-1 Liquidity
Agent shall have received, for the account of each Liquidity Lender, such
Liquidity Lender's Liquidity Advance Notes duly executed and delivered by RFC.
SECTION 6.1.4. Master Collateral Agency Agreement; Series 1997-1
Collateral Sharing Agreement and Series 1997-1 Collateral Agreement. (a) The
Series 1997-1 Liquidity Agent shall have received executed counterparts of the
Series 1997-1 Collateral Agreement, dated as of the Series 1997-1 Closing Date,
duly executed by RFC, the Series 1997-1 Collateral Agent, the Series 1997-1
Liquidity Agent, the Depositary, the Dealer, the Series 1997-1 Support Letter of
Credit Providers, the Enhancement Agent and GM.
(b) The Series 1997-1 Liquidity Agent shall have received executed
counterparts of [the supplement to] the Series 1997-1 Collateral Sharing
Agreement, dated as of the Series 1997- 1 Closing Date, duly executed by the
Series 1997-1 Collateral Agent.
(c) The Series 1997-1 Liquidity Agent shall have received executed
counterparts of the Second Amended and Restated Master Collateral Agency
Agreement, dated as of the Series 1997-1 Closing Date, duly executed by RFC,
Republic, the Lessees, NFLP, the Trustee, the Series 1997-1 Collateral Agent and
the Master Collateral Agent, designating (i) the Trustee on behalf of the
holders of any Shared Collateral Series Notes as a "Financing Source" and any
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assignee or pledgee of such holders as a "Beneficiary" thereunder with respect
to Financed Vehicles and Synthetic Lease Vehicles financed with the proceeds of
Series 1997-1 Advances pursuant to the Series 1997-1 Supplement and (ii) NFLP as
a "Financing Source" and the Trustee on behalf of the holders of any Shared
Collateral Series Notes and any assignee or pledgee thereof as a "Beneficiary"
thereunder with respect to Acquired Vehicles financed with the proceeds of
Series 1997-1 Advances pursuant to the Series 1997-1 Supplement.
SECTION 6.1.5. Series 1997-1 Supplement. The Series 1997-1 Liquidity
Agent shall have received executed counterparts of the Series 1997-1 Supplement,
dated as of the Series 1997-1 Closing Date, duly executed by RFC, the Trustee
and the Enhancement Agent, and copies of all documents and opinions required to
be delivered to RFC thereunder, and all conditions to the effectiveness thereof
set forth therein shall have been satisfied in all respects.
SECTION 6.1.6. Series 1997-1 Letter of Credit. The Series 1997-1
Liquidity Agent shall have received executed counterparts of the Series 1997-1
Letter of Credit in form and substance satisfactory to the Series 1997-1
Liquidity Agent, and, in each case, evidence that all conditions to the
effectiveness thereof set forth therein shall have been satisfied in all
respects. The Series 1997-1 Letter of Credit in an amount equal to the Series
1997-1 Initial Letter of Credit Amount shall have been delivered to the
Enhancement Agent and shall be in full force and effect.
SECTION 6.1.7. Depositary Agreement. The Series 1997-1 Liquidity Agent
shall have received executed counterparts of the Depositary Agreement, dated as
of the Series 1997-1 Closing Date, duly executed by RFC and the Depositary, and
all of the conditions to the effectiveness thereof set forth therein shall have
been satisfied in all respects.
SECTION 6.1.8. Dealer Agreement. The Series 1997-1 Liquidity Agent
shall have received executed counterparts of the Dealer Agreement, dated as of
the Series 1997-1 Closing Date, duly executed by RFC and each Dealer, and all of
the conditions to the effectiveness thereof set forth therein shall have been
satisfied in all respects.
SECTION 6.1.9. Series 1997-1 Closing Date Certificate. The Series
1997-1 Liquidity Agent shall have received a Series 1997-1 Closing Date
Certificate, dated the Series 1997-1 Closing Date, duly executed and delivered
by an Authorized Officer of RFC, in which RFC shall have represented and
warranted that the representations and warranties of RFC in the Related
Documents are true and correct as of the Series 1997-1 Closing Date and that no
Liquidity Agreement Amortization Event, Limited Liquidity Agreement Amortization
Event or, to the best of such Authorized Officer's knowledge, Potential
Liquidity Agreement Amortization Event has occurred and is continuing, and, at
the time such certificate is delivered, the Series 1997-1 Liquidity Agent shall
be satisfied that such statements are in fact true and correct.
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SECTION 6.1.10. Accounts. The Commercial Paper Account, the Master
Collateral Account, the Series 1997-1 Termination Advance Account, the Series
1997 Collection Account, the Series 1997-1 Collection Account and the Series
1997-1 Collateral Account shall have been established and shall be in full force
and effect.
SECTION 6.1.11. Rating Letters. The Series 1997-1 Liquidity Agent shall
have received as of the Series 1997-1 Closing Date a confirmation letter from
S&P to the effect that the Commercial Paper Notes shall have been given a rating
of at least A-1 by S&P, which rating shall be in full force and effect.
SECTION 6.1.12. [Reserved]
SECTION 6.1.13. Assignments. RFC shall have granted to the Series
1997-1 Collateral Agent a first priority security interest in its right, title
and interest in and to the Assigned Collateral.
SECTION 6.1.14. Board of Directors. The Series 1997-1 Liquidity Agent
shall consent to the independent directors on RFC's Board of Directors, which
consent shall not be unreasonably withheld.
SECTION 6.1.15. Solvency Certificate. The Series 1997-1 Liquidity Agent
shall have received a certificate, dated the Series 1997-1 Closing Date, and
duly executed by a Financial Officer of RFC, in scope and substance satisfactory
to the Series 1997-1 Liquidity Agent, to the effect that RFC will be solvent
after giving effect to the transactions contemplated by this Series 1997-1
Liquidity Agreement, each of the other Related Documents and the issuance and
sale of the Commercial Paper Notes.
SECTION 6.1.16. Closing Fees and Expenses. The Series 1997-1 Liquidity
Agent shall have received for its own account and for the account of the
Liquidity Lenders any fees and expenses due and payable pursuant to Sections 4.5
and 11.3 and any fees and expenses due and payable pursuant to any fee letters
or commitment letters entered into with any Liquidity Lender and/or the Series
1997-1 Liquidity Agent.
SECTION 6.1.17. Certified Copy of Manufacturer Program. The Series
1997-1 Liquidity Agent shall have received a copy of the materials delivered
pursuant to Sections 4.1(xi)and (xii) of the Series 1997-1 Lease.
SECTION 6.1.18. Opinions. The Series 1997-1 Liquidity Agent shall have
received opinions of counsel being delivered to the Rating Agencies, RFC, NFLP
or the Trustee, addressed to the Series 1997-1 Liquidity Agent and the Liquidity
Lenders hereto, reasonably satisfactory in form and substance to the Series
1997-1 Liquidity Agent and the Liquidity Lenders.
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SECTION 6.1.19. Offering Materials. Each offering circular, offering
memorandum (including, without limitation, the Offering Memorandum) or
information circular to be used by RFC or the Dealers in connection with the
offer or sale of Commercial Paper Notes, insofar as it describes or refers to
the Series 1997-1 Liquidity Agent or any Liquidity Lender, shall be reasonably
satisfactory to the Series 1997-1 Liquidity Agent or such Liquidity Lender,
respectively.
SECTION 6.1.20. Satisfactory Legal Form. This Series 1997-1 Liquidity
Agreement, each of the other Related Documents and all other documents executed
or submitted pursuant hereto or thereto by or on behalf of RFC shall be
satisfactory in form and substance to the Series 1997-1 Liquidity Agent and its
counsel; and the Series 1997-1 Liquidity Agent and its counsel shall have
received all information, approvals, opinions, documents or instruments as the
Series 1997-1 Liquidity Agent or its counsel may have reasonably requested not
later than three (3) Business Days prior to the Series 1997-1 Closing Date.
SECTION 6.1.21. Credit Rating of Initial Liquidity Lenders. As of the
Series 1997-1 Closing Date, each initial Liquidity Lender and the Series 1997-1
Letter of Credit Provider shall have a credit rating assigned to its short-term
obligations of at least A-1 by S&P and P-1 by Moody's.
SECTION 6.2. Conditions to the Making of Each Revolving Advance. The
obligation of any Liquidity Lender to make any Revolving Advance (including any
continuation or conversion thereof pursuant to Section 3.8 except as otherwise
specified below) hereunder is subject to the satisfaction of the following
conditions:
SECTION 6.2.1. Representations and Warranties. On the date of the
making of such Revolving Advance (other than any continuation or conversion
thereof pursuant to Section 3.8) and after giving effect thereto, the
representations and warranties of RFC set forth in Article VII hereof, or in any
other Related Document to which RFC is a party, and the representations and
warranties of NFLP set forth in Article 7 of the Base Indenture, or in any other
Related Document to which NFLP is a party, shall be true and correct with the
same effect as if then made (unless stated to relate solely to an earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date).
SECTION 6.2.2. No Liquidity Agreement Amortization Event. (a) On the
date of the making of such Revolving Advance, continuation or conversion, and
after giving effect thereto, no Liquidity Agreement Amortization Event shall
have occurred and be continuing.
(b) On the date of the making of such Revolving Advance (other than any
continuation or conversion thereof pursuant to Section 3.8), and after giving
effect thereto, no Potential Liquidity Agreement Amortization Event shall have
occurred and be continuing.
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SECTION 6.2.3. No Borrowing Base Deficiency. A Borrowing Base
Deficiency shall not exist after giving effect to the application of funds in
accordance with Section 5.02 of the Series 1997-1 Collateral Agreement and the
making of such Revolving Advance, continuation or conversion would not result in
a Borrowing Base Deficiency.
SECTION 6.2.4. Availability. (a) The Series 1997-1 Enhancement Amount
shall not have been reduced to zero.
(b) The aggregate amount of all Borrowings of Liquidity Advances
requested by RFC to be made on such day shall not exceed the lesser of (i) the
Aggregate Liquidity Commitment minus Liquidity Advances Outstanding (other than
Commitment Termination Date Liquidity Advances) net of any amounts on deposit on
such day in the Series 1997-1 Collateral Account set aside for the repayment of
the principal of Liquidity Advances, and (ii) the Borrowing Base (after giving
effect to the use of the proceeds of such Liquidity Advances) minus the sum of
(A) the aggregate Support Liquidity Disbursements Outstanding plus (B) the
Aggregate Outstanding CP plus (C) the Outstanding Liquidity Advances net of any
amounts on deposit on such day in the Series 1997-1 Collateral Account set aside
for the repayment of the principal of Liquidity Advances or Support Liquidity
Disbursements.
SECTION 6.2.5. Attachments. RFC shall not have received notice that any
of the Accounts, the Commercial Paper Account or the Series 1997-1 Cash
Collateral Account or any funds on deposit in, or otherwise to the credit of any
thereof aggregating $100,000 or more are or have become subject to any stay,
writ, judgment, warrant of attachment, execution or similar process; provided,
however, that if any such stay, writ, judgment, warrant of attachment, execution
or similar process is removed or dismissed, RFC may recommence the requesting of
Revolving Advances.
SECTION 6.2.6. Receipt of Monthly Report. The Series 1997-1 Liquidity
Agent shall have received, on or prior to the twentieth (20th) day of each month
(or if not a Business Day, on the next succeeding Business Day), a Monthly
Certificate relating to the Assigned Collateral as of the last Business Day of
the immediately preceding month occurring on or immediately preceding such date.
SECTION 6.2.7. Borrowing Request. The Series 1997-1 Liquidity Agent
shall have received a Borrowing Request for such Borrowing.
SECTION 6.2.8. Borrowing Base Certificate. The Series 1997-1 Liquidity
Agent shall have received an Officer's Certificate, dated the date of the making
of such Revolving Advance, duly executed and delivered by an Authorized Officer
of RFC, certifying the amount of the Borrowing Base as of the close of business
on the day immediately preceding such date.
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SECTION 6.2.9. Inability to Issue Commercial Paper Notes. RFC shall be
unable to raise, or shall be precluded or prohibited from raising, funds through
the issuance of Commercial Paper Notes in the United States commercial paper
market at such time.
SECTION 6.3. Conditions Precedent to the Making of Each Refunding
Advance. The obligation of any Liquidity Lender to make any Refunding Advance
(including any Commitment Termination Date Liquidity Advance) and of the Swing
Line Lender to make any Swing Line Advance shall be subject to the satisfaction
of the following conditions at the time of making of such Refunding Advance or
Swing Line Advance:
SECTION 6.3.1. No Bankruptcy. (i) No Event of Bankruptcy of the type
described in clauses (a) or (b) of the definition thereof with respect to RFC
shall have occurred and be continuing and (ii) no Event of Bankruptcy of the
type described in clauses (a) or (b) of the definition thereof with respect to
the Series 1997-1 Letter of Credit Provider shall have occurred and be
continuing at any time prior to the funding in full of the Series 1997-1 Cash
Collateral Account.
SECTION 6.3.2. Availability. (a) The Series 1997-1 Enhancement Amount
shall not have been reduced to zero.
(b) The aggregate amount of all Borrowings of Liquidity Advances
requested by RFC to be made on such day shall not exceed the lesser of (i) the
Aggregate Liquidity Commitment minus Liquidity Advances Outstanding (other than
Commitment Termination Date Liquidity Advances) net of any amounts on deposit on
such day in the Series 1997-1 Collateral Account set aside for the repayment of
the principal of Liquidity Advances, and (ii) the Borrowing Base (after giving
effect to the use of the proceeds of such Liquidity Advances) minus the sum of
(A) the aggregate Support Liquidity Disbursements Outstanding plus (B) the
Aggregate Outstanding CP plus (C) the Outstanding Liquidity Advances net of any
amounts on deposit on such day in the Series 1997-1 Collateral Account set aside
for the repayment of the principal of Liquidity Advances or Support Liquidity
Disbursements.
SECTION 6.3.3. No Borrowing Base Deficiency. A Borrowing Base
Deficiency shall not exist after giving effect to the application of funds in
accordance with Section 5.02 of the Series 1997-1 Collateral Agreement and the
making of such Refunding Advance, continuation or conversion would not result in
a Borrowing Base Deficiency.
SECTION 6.3.4. Borrowing Request. The Series 1997-1 Liquidity Agent
shall have received a Borrowing Request for such Borrowing.
SECTION 6.3.5. Borrowing Base Certificate. The Series 1997-1 Liquidity
Agent shall have received an Officer's Certificate, dated the date of the making
of such Refunding Advance or Swing Line Advance, duly executed and delivered by
an Authorized Officer of RFC,
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certifying the amount of the Borrowing Base as of the close of business on the
day immediately preceding such date.
SECTION 6.3.6. Inability to Issue Commercial Paper Notes. RFC shall be
unable to raise, or shall be precluded or prohibited from raising, funds through
the issuance of Commercial Paper Notes in the United States commercial paper
market at such time.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce the Liquidity Lenders and the Series 1997-1 Liquidity Agent
to enter into this Series 1997-1 Liquidity Agreement and to make Liquidity
Advances hereunder, RFC represents and warrants to the Series 1997-1 Liquidity
Agent and each Liquidity Lender as set forth in this Article VII.
SECTION 7.1. Organization; Power; Qualification. RFC (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (ii) has the corporate power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted, and (iii) is duly qualified, in good
standing and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its businesses requires such
qualification or authorization, except where the failure to so qualify is not
reasonably likely to have a Material Adverse Effect.
SECTION 7.2. Authorization; Enforceability. RFC has the corporate power
and has taken all necessary corporate action to authorize it to execute, deliver
and perform this Series 1997-1 Liquidity Agreement and each of the other Related
Documents to which it is a party in accordance with their respective terms, and
to consummate the transactions contemplated hereby and thereby. This Series
1997-1 Liquidity Agreement has been duly executed and delivered by RFC and is,
and each of the other Related Documents to which RFC is a party is, a legal,
valid and binding obligation of RFC enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting creditors generally and by the
availability of equitable remedies.
SECTION 7.3. Compliance. The execution, delivery and performance, in
accordance with their respective terms, by RFC of this Series 1997-1 Liquidity
Agreement and each of the other Related Documents to which it is a party, and
the consummation of the transactions contemplated hereby and thereby, do not and
will not (i) require any consent, approval, authorization or registration not
already obtained or effected, (ii) violate any applicable law with respect to
RFC or otherwise, as applicable, (iii) conflict with, result in a breach of, or
constitute a default under the certificate of incorporation or by-laws of RFC,
or under any indenture,
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agreement, or other instrument to which RFC is a party or by which its
properties may be bound, or (iv) result in or require the creation or imposition
of any Lien upon or with respect to any property now owned or hereafter acquired
by RFC except Permitted Liens.
SECTION 7.4. Financial Information; Financial Condition. All financial
statements (including the notes thereto) referred to in the following sentence
and hereafter furnished to the Series 1997-1 Liquidity Agent pursuant to Section
8.1.6(a) hereof have been and will be prepared in accordance with GAAP and do
and will present fairly the financial condition of RFC as of the dates thereof
and the results of their operations for the periods covered thereby, subject, in
the case of all unaudited statements, to normal year-end adjustments and lack of
footnotes and other presentation items.
SECTION 7.5. Litigation. There is no action, suit or proceeding pending
against or, to the knowledge of RFC, threatened against RFC before any court or
arbitrator or any Governmental Authority in which there is a reasonable
possibility of any adverse decisions that is likely to have a Material Adverse
Effect or which in any manner draws into question the validity or enforceability
of this Series 1997-1 Liquidity Agreement or any other Related Document.
SECTION 7.6. No Security Interest. (A) There is no effective financing
statement listing RFC as debtor (other than any which may have been filed on
behalf of the Series 1997-1 Collateral Agent) covering any of the Assigned
Collateral that is on file in any public office; (B) at the date of each deposit
of Deposited Funds in the Commercial Paper Account there are no Liens on the
Deposited Funds or the Commercial Paper Account, except the assignment made
pursuant to the Series 1997-1 Collateral Agreement in favor of the Series 1997-1
Collateral Agent; and (C) RFC is and will be the lawful owner of (with good and
marketable title to), and has and will have beneficial ownership of all Assigned
Collateral, free and clear of all Liens except Permitted Liens.
SECTION 7.7. Employee Benefit Plans. RFC has not established and does
not maintain or contribute to any employee benefit plan that is covered by Title
IV of ERISA.
SECTION 7.8. Securities Laws. RFC is not an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act, and the entering into or performance by RFC of this
Series 1997-1 Liquidity Agreement does not violate any provision of such Act and
does not require any consent, approval or authorization of, or registration
with, the Securities and Exchange Commission or any other similar governmental
or public body or authority. Assuming compliance by each Dealer with the
procedures in Section 3 of the applicable Dealer Agreement, the Commercial Paper
Notes will be exempt from the registration requirements of the Securities Act of
1933, as amended.
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SECTION 7.9. Regulations G, T, U and X. RFC is not engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System). Neither RFC nor any Person acting on behalf of any of RFC has taken or
will take action to cause the execution, delivery or performance of this Series
1997-1 Liquidity Agreement or the financing or acquisition of the Series 1997-1
Notes to violate Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
SECTION 7.10. Taxes. RFC has filed all tax returns which have been
required to be filed by it, and has paid or provided adequate reserves for the
payment of all taxes, including, without limitation, all payroll taxes and
federal and state withholding taxes, and all assessments payable by it that have
become due, other than those that are not yet delinquent or that are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established, and are being maintained, in accordance
with GAAP. As of the Series 1997-1 Closing Date, there is no ongoing audit or,
to RFC's knowledge, other governmental investigation of the tax liability of RFC
and there is no unresolved claim by a taxing authority concerning RFC's tax
liability for any period for which returns have been filed or were due other
than those contested in good faith by appropriate proceedings and with respect
to which adequate reserves have been established, and are being maintained, in
accordance with GAAP.
SECTION 7.11. Governmental Authorizations. RFC has all licenses,
franchises, permits and other governmental authorizations necessary for all
businesses presently carried on by it.
SECTION 7.12. Absence of Default. RFC is in compliance with all of the
provisions of its certificate of incorporation and by-laws and no event has
occurred or failed to occur which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes a Liquidity Agreement
Amortization Event, Limited Liquidity Agreement Amortization Event or Potential
Liquidity Agreement Amortization Event. RFC is not subject to any judgment,
decree or final order in an amount exceeding $100,000 pursuant to which it, or
any of its properties may be bound or affected.
SECTION 7.13. Compliance with Requirements of Law. RFC (i) is not in
violation of any law, ordinance, rule, regulation or order of any Governmental
Authority applicable to it or its property and no such violation has been
alleged, (ii) has filed in a timely manner all reports, documents and other
materials required to be filed by it with any governmental bureau, agency or
instrumentality (and the information contained in each of such filings is true,
correct and complete in all material respects), and (iii) has retained all
records and documents required to be retained by it pursuant to any Requirement
of Law.
SECTION 7.14. Accuracy of Information. All certificates, reports,
statements, documents and other information furnished to the Series 1997-1
Liquidity Agent or any Liquidity Lender by RFC pursuant to any provision of any
Related Document, or in connection with or
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pursuant to any amendment or modification of, or waiver under, any Related
Document, shall, at the time the same are so furnished, be complete and correct
in all material respects to the extent necessary to give the Series 1997-1
Liquidity Agent or such Liquidity Lender, as the case may be, true and accurate
knowledge of the subject matter thereof, and the furnishing of the same to the
Series 1997-1 Liquidity Agent or such Liquidity Lender, as the case may be,
shall constitute a representation and warranty by RFC made on the date the same
are furnished to the Series 1997-1 Liquidity Agent or such Liquidity Lender, as
the case may be, to the effect specified herein.
SECTION 7.15. Solvency. Both before and after giving effect to the
transactions contemplated by this Series 1997-1 Liquidity Agreement and the
other Related Documents, RFC is solvent and RFC 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, or of any other event of the type described in Section 9.1.6
hereof.
SECTION 7.16. Ownership; Subsidiaries. As of the Series 1997-1 Closing
Date, 100% of the common stock of RFC is owned, directly or indirectly, by
Republic. As of the Series 1997-1 Closing Date, RFC has no Subsidiaries and owns
no capital stock of, or other interest in, any other Person.
SECTION 7.17. Other Representations. All representations and warranties
of RFC made in each Related Document to which it is a party are true and correct
and are repeated herein as though fully set forth herein.
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. RFC covenants and agrees with the
Series 1997- 1 Liquidity Agent and each Liquidity Lender that, until all
Liquidity Commitments have terminated and all RFC Obligations have been paid or
performed in full, unless the Majority Banks shall otherwise consent in writing,
RFC will perform the covenants set forth in this Section 8.1.
SECTION 8.1.1. Corporate Existence; Foreign Qualification. RFC shall do
and cause to be done at all times all things necessary to (i) maintain and
preserve its corporate existence and corporate power and authority to own its
properties and to carry on its business, (ii) be duly qualified to do business
and in good standing as a foreign corporation in each jurisdiction where the
nature of its business makes such qualification necessary and the failure to so
qualify is reasonably likely to have a Material Adverse Effect and (iii) comply
with all Contractual
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Obligations and Requirements of Law binding upon it, except to the extent that
the failure to comply therewith is not reasonably likely to, in the aggregate,
have a Material Adverse Effect.
SECTION 8.1.2. Inspections. RFC will permit representatives of the
Series 1997-1 Liquidity Agent and, if an Liquidity Agreement Amortization Event
shall have occurred and is continuing, representatives of any Liquidity Lender,
at RFC's expense, 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 and as often as the Series
1997-1 Liquidity Agent or such Liquidity Lender may reasonably deem appropriate
(but not more often than once a month in the case (i) of any Liquidity Lender
and (ii) of the Series 1997-1 Liquidity Agent prior to the occurrence of an
Liquidity Agreement Amortization Event).
SECTION 8.1.3. Maintenance of Properties. RFC shall maintain or cause
to be maintained (i) in the ordinary course of business in good repair, working
order and condition (reasonable wear and tear excepted) all properties necessary
for the operation of its businesses, and (ii) good, legal and marketable title
to, or a valid leasehold interest in, all of its assets other than in the case
of any assets that, in the aggregate, are immaterial.
SECTION 8.1.4. Accounting Methods; Financial Records. RFC shall
maintain a system of accounting established and administered in accordance with
GAAP, keep adequate records and books of account in which complete entries will
be made in accordance with such accounting principles and reflecting all
transactions required to be reflected by such accounting principles and keep
accurate and complete records of its properties and assets.
SECTION 8.1.5. Compliance with Covenants. RFC will comply with all
covenants made by it and contained in each Related Document to which it is a
party (subject to the grace periods set forth therein).
SECTION 8.1.6. Reporting Requirements. Except as otherwise specified
below, RFC shall furnish, or cause to be furnished to the Series 1997-1
Liquidity Agent (with sufficient copies for the Series 1997-1 Liquidity Agent to
distribute to each of the Liquidity Lenders), each Rating Agency and the
Dealers:
(a) promptly upon the delivery by Republic or any Lessee or
Servicer to RFC, copies of the financial information and other
materials required to be delivered by Republic or any Lessee or
Servicer to RFC pursuant to Section 24.7(i), (ii), (iii)(a), (vi),
(viii) and (xi) of the Series 1997 Lease;
(b) at the time of delivery of the items described in clause
(a) above, a certificate of an officer of RFC that, except as provided
in any certificate delivered in accordance with Section 8.1.6 (e), no
Liquidity Agreement Amortization Event or (to the
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best of such officer's knowledge) Potential Liquidity Agreement
Amortization Event has occurred or is continuing during such fiscal
quarter;
(c) on or prior to June 30 of each year, a certificate of a
financial officer of RFC certifying (i) that the ratings assigned by
the Rating Agencies in respect of the commercial paper issued by RFC
have not been withdrawn or downgraded below A-1 by S&P or P-1 by
Moody's since the Series 1997-1 Closing Date, (ii) whether any Rating
Agency has determined that the Series 1997-1 Minimum Required
Enhancement Amount must be increased, (iii) that no change in the
Manufacturer Program of any Manufacturer in respect of any new model
year shall have given rise to any request on the part of the Rating
Agencies that any modification be made to the Series 1997-1 Notes, the
Series 1997-1 Supplement, the Series 1997 Lease or any other Related
Document, and (iv) that RFC has apprised the Rating Agencies of all
material changes in the Manufacturer Programs occurring since the
Series 1997-1 Closing Date.
(d) on each Business Day when any Liquidity Advance is
outstanding RFC shall cause the Series 1997-1 Collateral Agent to
provide to the Series 1997-1 Liquidity Agent a statement setting forth
(A) the maturity date and face amount of each outstanding Commercial
Paper Note and (B) the aggregate principal amount of outstanding
Liquidity Advances (or, at RFC's option, a statement updating any
statement previously provided by RFC to the Series 1997-1 Liquidity
Agent which contained such information as of a prior date);
(e) promptly upon becoming aware of any Potential Liquidity
Agreement Amortization Event or Liquidity Agreement Amortization Event,
RFC shall give the Series 1997-1 Liquidity Agent, the Dealers and each
Rating Agency notice thereof, together with a certificate of a
financial officer of RFC setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by RFC.
(f) promptly upon becoming aware thereof, RFC shall give the
Series 1997-1 Liquidity Agent, the Dealers and each Rating Agency
written notice of the commencement or existence of any proceeding by or
before any Governmental Authority against or affecting RFC which is
reasonably likely to have a Material Adverse Effect on RFC or the
ability of RFC to perform its obligations under this Series 1997-1
Liquidity Agreement or under any other Related Document to which it is
a party.
(g) as soon as available and in any event within one hundred
and twenty (120) days after the end of each fiscal year of RFC
financial statements consisting of a balance sheet of RFC as at the end
of such fiscal year and statements of income of RFC for such fiscal
year, setting forth in comparative form the corresponding figures for
the preceding fiscal year (if applicable), certified by an officer of
RFC as being true and complete in all material respects as of their
respective dates.
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SECTION 8.1.7. Taxes and Liabilities. RFC shall pay when due all taxes,
assessments and other liabilities, except as contested in good faith and by
appropriate proceedings with respect to which adequate reserves have been
established, and are being maintained, in accordance with GAAP, if and so long
as forfeiture of any Assigned Collateral will not result from the failure to pay
any such taxes, assessments or other material liabilities during the period of
any such contest.
SECTION 8.1.8. Maintenance of Separate Existence. RFC shall (i)
maintain in place all policies and procedures, and take and continue to take all
actions, described in the factual assumptions set forth in that certain opinion
letter issued by Mayer, Brown & Platt, dated [ ], 1997 addressing the issue of
substantive consolidation as it may relate to RFC, Republic, NFLP or the Lessees
(a copy of which opinion letter RFC hereby acknowledges it has received), (ii)
on a semi-annual basis, provide to the Series 1997-1 Liquidity Agent and the
Rating Agencies an Officer's Certificate certifying that it is in compliance
with its obligations under this Section 8.1.8 and (iii) on an annual basis
provide to the Series 1997-1 Liquidity Agent and the Rating Agencies a letter of
independent certified public accountants of nationally recognized standing
selected by RFC and acceptable to the Rating Agencies, addressed to the Rating
Agencies, stating that such accountants have performed certain agreed upon
procedures (which procedures shall be agreed to among the Rating Agencies, RFC
and such accountants on or before the 60th day after the VFN Closing Date) with
respect to the matters referred to in the Officer's Certificate most recently
delivered pursuant to clause (1) above.
SECTION 8.1.9. Maintenance of Enhancement. RFC shall maintain the
Series 1997-1 Letter of Credit or other Enhancement for the Series 1997 Variable
Funding Notes and, if any, other Shared Collateral Series Notes in a stated
amount equal to or greater than the amount required by Moody's and S&P in order
to maintain a rating of not less than A-1 by S&P and P-1 by Moody's on the
Commercial Paper Notes.
SECTION 8.1.10. Compliance with Laws. RFC shall (i) not violate any
law, ordinance, rule, regulation or order of any Governmental Authority
applicable to it or its property, (ii) file in a timely manner all reports,
documents and other materials required to be filed by it with any governmental
bureau, agency or instrumentality and (iii) retain all records and documents
required to be retained by it pursuant to any Requirement of Law.
SECTION 8.1.11. Deliveries; Further Assurances. RFC shall, at its sole
expense, execute and deliver, or cause to be executed and delivered, to the
Series 1997-1 Liquidity Agent in due form for filing or recording (and pay the
cost of filing or recording the same in all public offices reasonably deemed
necessary or advisable by the Series 1997-1 Liquidity Agent), such assignments,
security agreements, mortgages, consents, waivers, financing statements, and
other documents, and do such other acts and things, all as may from time to time
be reasonably necessary or desirable to establish and maintain to the
satisfaction of the Series 1997-1 Liquidity Agent a valid perfected
first-priority Lien on and security interest in all of the Assigned
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Collateral now or hereafter existing or acquired, to carry into effect the
purposes of this Series 1997-1 Liquidity Agreement or to better assure and
confirm unto the Series 1997-1 Liquidity Agent its rights, powers and remedies
hereunder.
SECTION 8.1.12. Further Requests. RFC will promptly furnish to the
Series 1997-1 Liquidity Agent with any information or materials reasonably
necessary for the Series 1997-1 Liquidity Agent to comply with its obligations
under this Series 1997-1 Liquidity Agreement and will promptly furnish to the
Series 1997-1 Liquidity Agent and each Rating Agency such other information as,
and in such form as, the Series 1997-1 Liquidity Agent or any Rating Agency may
reasonably request.
SECTION 8.1.13. Manufacturer Programs. RFC agrees that it will (i)
provide the Series 1997-1 Liquidity Agent and each Rating Agency with at least
thirty (30) days' prior written notice of its intention to make Series 1997-1
Advances to NFLP under the Series 1997-1 Supplement for the purchase or
financing of Program Vehicles manufactured by any new Manufacturer, (ii) provide
the Series 1997-1 Liquidity Agent and each Rating Agency with a copy of the
draft Manufacturer Program of such Manufacturer as it then exists at the time of
such notice and (iii) certify to the Series 1997-1 Liquidity Agent and the
Liquidity Lenders that such new Manufacturer is an Eligible Manufacturer and, if
purchasing or financing Program Vehicles, that such Manufacturer Program is an
Eligible Manufacturer Program at such time. In no event shall RFC agree, to the
extent any consent of RFC is solicited or required by the Manufacturer or any
assignor of such Manufacturer Program, to any change in any Manufacturer Program
that is reasonably likely to materially adversely affect its rights or the
rights of the Series 1997-1 Secured Parties with respect to any Program Vehicles
(except for an immaterial number of Vehicles) previously purchased under such
Manufacturer Program.
SECTION 8.1.14. Use of Proceeds of Commercial Paper Notes. RFC shall
use the proceeds of the Commercial Paper Notes solely for one or more of the
following purposes: (a) to pay matured Commercial Paper Notes when due, in
accordance with the Depositary Agreement; (b) to fund Series 1997-1 Advances;
and (c) to pay principal of, or interest on, any Liquidity Advance or any other
amount payable by RFC under this Series 1997-1 Liquidity Agreement or to
reimburse the Series 1997-1 Support Letter of Credit Providers for any Support
Liquidity Disbursements and any interest thereon or the Series 1997-1 Cash
Collateral Account for any LOC Liquidity Disbursement and any interest thereon.
SECTION 8.2. Negative Covenants. RFC covenants and agrees with the
Series 1997-1 Liquidity Agent and each Liquidity Lender that until all Liquidity
Commitments have been terminated and all RFC Obligations have been paid or
performed in full, unless the Majority Banks otherwise consent in writing, RFC
will perform the obligations set forth in this Section 8.2.
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SECTION 8.2.1. Liens. RFC will not create, incur, assume or permit to
exist any Lien upon any of its Assets (including the Assigned Collateral), the
Accounts, the Commercial Paper Account, the Series 1997-1 Cash Collateral
Account or the Deposited Funds, other than Liens created by or permitted under
the Related Documents.
SECTION 8.2.2. Absence of Certain Actions. RFC will not take any action
which would permit Republic or any Lessee or Servicer to have the right to
refuse to perform any of its respective obligations under the Series 1997 Lease
or permit NFLP to have the right to refuse to perform any of its obligations
under the Series 1997-1 Notes or the Series 1997-1 Supplement.
SECTION 8.2.3. Other Indebtedness. Without (a) the prior written
consent of the Majority Banks and (b) the prior receipt of written confirmation
of the Rating Agencies that any such action will not result in the downgrading
or withdrawal of the then current ratings of the Commercial Paper Notes by the
Rating Agencies, RFC will not create, assume, incur, suffer to exist or
otherwise become or remain liable in respect of any Indebtedness other than
Indebtedness under this Series 1997-1 Liquidity Agreement, Indebtedness
evidenced by the Commercial Paper Notes and Indebtedness under or permitted
under any other Related Document.
SECTION 8.2.4. Consolidations and Mergers. RFC will not, except as may
be permitted by the express written approval of the Majority Banks and upon the
receipt of written confirmation of the Rating Agencies that such action will not
result in the downgrading or withdrawal of the then current ratings on the
Commercial Paper Notes of the Rating Agencies, merge with or into, enter into
any joint venture or other association with, or consolidate with, any other
Person.
SECTION 8.2.5. Sales of Assets. RFC will not sell, lease, transfer,
liquidate or otherwise dispose of any Assets, except as contemplated by the
Related Documents and provided that the proceeds thereof are paid directly to
the Series 1997-1 Collateral Account.
SECTION 8.2.6. Acquisition of Assets. RFC will not acquire, by
long-term or operating lease or otherwise, any Assets, except pursuant to the
terms of the Related Documents.
SECTION 8.2.7. Dividends, Officers' Compensation, etc. RFC will not
declare or pay any dividends on any shares of its capital stock or make any
other distribution on, or any purchase, redemption or other acquisition of, any
shares of its capital stock, or pay any wages or salaries or other compensation
to officers, directors, employees or others except out of earnings computed in
accordance with GAAP.
SECTION 8.2.8. Name; Chief Executive Office. RFC will neither (i)
change the location of its chief executive office (within the meaning of the
UCC) without sixty (60) days' prior notice to the Series 1997-1 Collateral
Agent, the Series 1997-1 Liquidity Agent and each Rating Agency nor (ii) change
its name without prior notice to the Series 1997-1 Collateral Agent, the Series
1997-1 Liquidity Agent and each
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Rating Agency sufficient to allow the Series 1997-1 Collateral Agent to make all
filings (including filings of financing statements on form UCC-1) and recordings
necessary to perfect the interest of the Series 1997-1 Collateral Agent in the
Assigned Collateral pursuant to the Series 1997-1 Collateral Agreement.
SECTION 8.2.9. Organic Documents. RFC will not amend any of its Organic
Documents without the prior written consent of the Majority Banks and
confirmation from each of the Rating Agencies that such amendment will not
result in the downgrading or withdrawal of the then current rating of the
Commercial Paper Notes, except to the extent that such amendment will not
adversely affect the bankruptcy protections afforded by such Organic Documents.
SECTION 8.2.10. Investments. RFC will not make, incur, or suffer to
exist any loan, advance, extension of credit to, or other investment in, any
Person other than pursuant to the Series 1997 Variable Funding Supplements and
the transactions contemplated thereby and with respect to Permitted Investments.
SECTION 8.2.11. No Other Agreements; Amendments to Related Documents.
RFC will not, without the prior written consent of the Majority Banks, (i) enter
into or be a party to any material agreement or instrument other than any
Related Document or documents and agreements incidental thereto or (ii) amend,
modify, waive or give any approval, consent or permission under, any provision
of any CP Program Document to which it is a party (other than the Dealer
Agreement) except in conformity with the requirements of Section 11.1.
SECTION 8.2.12. Other Business. RFC will not engage in any business or
enterprise or enter into any transaction other than the making of Series 1997-1
Advances to NFLP under the Series 1997-1 Supplement, the related exercise of its
rights as a secured creditor, the issuance of Commercial Paper Notes, the
incurrence of Indebtedness under this Series 1997-1 Liquidity Agreement and the
Series 1997-1 Support Reimbursement Agreement, the incurrence and payment of
ordinary course operating expenses and as otherwise contemplated by the Related
Documents.
SECTION 8.2.13. No ERISA Plan or ERISA Plan Contributions. RFC will not
establish and will not maintain or contribute to any employee benefit plan that
is covered by Title IV of ERISA.
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ARTICLE IX
LIQUIDITY AGREEMENT AMORTIZATION EVENTS
SECTION 9.1. Liquidity Agreement Amortization Event. Each of the
following events or occurrences described in this Section 9.1 shall constitute a
"Liquidity Agreement Amortization Event".
SECTION 9.1.1. Non-Payment of RFC Obligations. RFC shall (a) fail to
repay maturing Commercial Paper Notes when due; (b) fail to make a payment on
the Scheduled Maturity Date or prepayment (as a result of a mandatory prepayment
requirement under Section 4.1.2) of principal of any Liquidity Advance, within
two (2) Business Days of the date on which such payment is due; or (c) fail to
make a payment of any interest on any Liquidity Advance, any fees or any other
amounts payable hereunder within five (5) Business Days of the date on which
such payment is due.
SECTION 9.1.2. Breach of Warranty. Any representation or warranty made
by RFC herein or in any other Related Document to which it is a party shall have
been incorrect in any material respect as of the date such representation or
warranty is made and shall continue to be incorrect in any material respect for
a period of thirty (30) days after the earlier of (i) the date on which written
notice thereof shall have been given to RFC by the Series 1997-1 Liquidity Agent
or any Liquidity Lender and (ii) the date on which RFC obtains actual knowledge
thereof, or any certificate, financial statement or any other material writing
furnished by RFC pursuant to this Series 1997-1 Liquidity Agreement or any such
other Related Document shall have been incorrect in any material respect when
made (or deemed made) and shall continue to be incorrect in any material respect
for a period of ten (10) days (other than with respect to any Officer's
Certificate delivered with respect to the Borrowing Base, for which such period
is one Business Day) after the earlier of (a) the date on which written notice
thereof shall have been given to RFC by the Series 1997-1 Liquidity Agent or any
Liquidity Lender and (b) the date on which RFC obtains actual knowledge thereof.
SECTION 9.1.3. Non-Performance of Certain Covenants and RFC
Obligations. RFC shall default in the due performance and observance of any of
its obligations under Section 8.2 and such default shall continue unremedied for
a period of ten (10) days (or thirty (30) days with respect to a default under
Section 8.2.1 or 8.2.3) after the earlier of (i) the date on which written
notice thereof shall have been given to RFC by the Series 1997-1 Liquidity Agent
or any Liquidity Lender and (ii) the date on which RFC obtains actual knowledge
thereof.
SECTION 9.1.4. Non-Performance of Other Covenants and RFC Obligations.
RFC shall default in the due performance and observance of any covenant or
agreement contained herein or in any other Related Document to which it is a
party (other than those specified in Sections 9.1.1, 9.1.2 and 9.1.3), and, in
the case of defaults other than with respect to Section 8.1.8 or 8.1.9, such
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default shall continue unremedied for a period of thirty (30) days after notice
thereof shall have been given to RFC by the Series 1997-1 Liquidity Agent or any
Liquidity Lender or, in the case of Section 8.1.8 or 8.1.9, such default shall
continue unremedied for a period of thirty (30) days after RFC initially becomes
aware of such failure to perform or comply with such covenant.
SECTION 9.1.5. Judgments. Any final and nonappealable (or, if capable
of appeal, such appeal is not being diligently pursued or enforcement thereof
has not been stayed) judgment or order for the payment of money in excess of
$100,000, shall be rendered against RFC and such judgment or order shall
continue unsatisfied and unstayed for a period of sixty (60) days.
SECTION 9.1.6. Bankruptcy, Insolvency, etc. The occurrence of any Event
of Bankruptcy with respect to RFC, NFLP or the General Partner.
SECTION 9.1.7. [Reserved]
SECTION 9.1.8. Enforceability of Related Documents. Any of the Related
Documents to which RFC is a party or any portion thereof shall not be in full
force and effect and enforceable against RFC in accordance with its terms or
RFC, Republic, NFLP or any Manufacturer shall so assert in writing.
SECTION 9.1.9. Amortization Event. Any Amortization Event as defined in
Section 9.1(a), (b), (c), (g), (i) or (j) of the Base Indenture or Article 7 of
the Series 1997-1 Supplement or any Lease Event of Default as defined in the
Series 1997 Lease shall have occurred and be continuing.
SECTION 9.1.10. Investment Company. RFC shall have become an
"investment company" or shall have become under the "control" of an "investment
company" under the Investment Company Act.
SECTION 9.1.11. Program Downgrade; Failure to Obtain Moody's Rating.
(a) The rating on the Commercial Paper Notes shall have been downgraded to A-2
by S&P or (after issuance of a rating by Moody's) P-2 by Moody's, or less, or
withdrawn, and all of the Liquidity Lenders shall have a rating of A-1, or
better, by S&P and P-1 by Moody's or (b) RFC shall have failed to deliver to the
Liquidity Agent, on or before the thirtieth (30th) day after the VFN Closing
Date, a copy of a rating letter issued by Moody's to the effect that the
Commercial Paper Notes shall have been given a rating of at least P-1 by
Moody's.
SECTION 9.1.12. Termination of Liquidity Commitments or Reduction of
Aggregate Liquidity Commitment. The Liquidity Commitment Termination Date with
respect to all Liquidity Lenders shall have occurred or the Aggregate Liquidity
Commitment is reduced due to the failure of certain Liquidity Lenders to renew
their Liquidity Commitments on any date to
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50% or less than the Aggregate Liquidity Commitment in effect immediately prior
to such reduction.
SECTION 9.2. Action if Liquidity Agreement Amortization Event. If any
Liquidity Agreement Amortization Event set forth in Sections 9.1.1, 9.1.5,
9.1.6, 9.1.10, 9.1.11 or 9.1.12 shall have occurred and be continuing, the
Series 1997-1 Collateral Agent, upon having actual knowledge thereof, without
the request or consent of the Series 1997-1 Liquidity Agent or the Majority
Banks, in every such event and at any time thereafter during the continuance of
such event, shall, and if any other Liquidity Agreement Amortization Event has
occurred, the Series 1997-1 Collateral Agent, at the request or with the consent
of the Majority Banks conveyed through the Series 1997-1 Liquidity Agent, shall,
in every such event and at any time thereafter during the continuance of such
event, by notice to RFC and Republic, at the same or different times, notify the
Depositary and the Dealers of the occurrence of such Liquidity Agreement
Amortization Event, and instruct RFC and the Depositary to cease issuing
Commercial Paper Notes and the right of RFC to issue Commercial Paper Notes
shall automatically terminate. In addition, the Series 1997-1 Liquidity Agent
may, (i) upon the occurrence of any Liquidity Agreement Amortization Event
pursuant to Section 9.1.6 with respect to RFC, terminate the Liquidity
Commitments hereunder; (ii) upon the occurrence of any event specified in
Sections 9.1.1 through 9.1.11 at the request, or with the consent, of Liquidity
Lenders then holding, in the aggregate, Liquidity Commitments in excess of 50%
of the Aggregate Liquidity Commitment (or, if the Aggregate Liquidity Commitment
shall have been terminated, Liquidity Lenders then holding, in the aggregate in
excess of 50% of the principal amount of Liquidity Advances then outstanding),
by notice to RFC, declare the aggregate principal amount of any Liquidity
Advances then outstanding, together with accrued interest and all fees and other
RFC Obligations hereunder, immediately due and payable whereupon all such
principal, accrued interest, fees and other RFC Obligations hereunder shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by RFC;
provided, however, that in the case of any Liquidity Agreement Amortization
Event under Section 9.1.6 with respect to RFC, (A) the Liquidity Commitment of
each Liquidity Lender shall automatically be terminated and (B) all such
principal, interest, fees and other RFC Obligations shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by RFC; (iii) instruct RFC to
terminate making Series 1997-1 Advances and cease funding the purchase or
financing of Vehicles under the Series 1997-1 Supplement and the Series 1997
Lease; and (iv) pursue any other right or remedy under this Series 1997-1
Liquidity Agreement and the other Related Documents or under applicable law or
otherwise.
SECTION 9.3. Limited Liquidity Agreement Amortization Events. Each of
the following events or occurrences described in this Section 9.3 shall
constitute a "Limited Liquidity Agreement Amortization Event".
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SECTION 9.3.1. Termination of Liquidity Commitment. The Liquidity
Commitment of any Liquidity Lender shall have been terminated and RFC shall have
failed to replace such Liquidity Lender.
SECTION 9.3.2. Rating Downgrade of Liquidity Lender. A Rating Downgrade
below A-2 by S&P or P-2 by Moody's shall occur and be continuing for sixty (60)
days (or such other period permitted by the Rating Agencies) with respect to any
Liquidity Lender and such Liquidity Lender shall not have been replaced pursuant
to Section 5.9 hereof.
SECTION 9.4. Action Upon Limited Liquidity Agreement Amortization
Event. (a) If any Limited Liquidity Agreement Amortization Event set forth in
Section 9.3.1 shall have occurred and be continuing, then RFC shall not issue
Commercial Paper Notes to the extent that after giving effect to such issuance
(and the use of proceeds thereof), the Aggregate Face Amount shall exceed the
Program Size (reduced by the aggregate Liquidity Commitments of the Liquidity
Lenders that have been terminated).
(b) If any Limited Liquidity Agreement Amortization Event set forth in
Section 9.3.2 shall have occurred and be continuing, then RFC shall not issue
Commercial Paper Notes to the extent that after giving effect to such issuance
(and the use of proceeds thereof), the Aggregate Face Amount shall exceed the
Program Size (reduced by the aggregate Liquidity Commitments of the Affected
Liquidity Lenders).
ARTICLE X
THE SERIES 1997-1 LIQUIDITY AGENT
SECTION 10.1. Actions. Each Liquidity Lender hereby appoints CSFB as
its Series 1997-1 Liquidity Agent under and for purposes of this Series 1997-1
Liquidity Agreement, the Liquidity Advance Notes and each other Related
Document. Each Liquidity Lender hereby authorizes the Series 1997-1 Liquidity
Agent to act on behalf of such Liquidity Lender under this Series 1997-1
Liquidity Agreement, the Liquidity Advance Notes and each other Related Document
and, in the absence of other written instructions from the Majority Banks
received from time to time by the Series 1997-1 Liquidity Agent (with respect to
which the Series 1997-1 Liquidity Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Series 1997-1 Liquidity Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto. Each
Liquidity Lender hereby indemnifies (which indemnity shall survive any
termination of this Series 1997-1 Liquidity Agreement) the Series 1997-1
Liquidity Agent, pro rata according to such Liquidity Lender's Percentage, from
and against any and all liabilities, obligations, losses, damages, claims, costs
or expenses of any kind or nature whatsoever which may at any time be imposed
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on, incurred by, or asserted against, the Series 1997-1 Liquidity Agent in any
way relating to or arising out of this Series 1997-1 Liquidity Agreement, the
Liquidity Advance Notes and any other Related Document, including reasonable
attorneys' fees, and as to which the Series 1997-1 Liquidity Agent is not
reimbursed by RFC; provided, however, that no Liquidity Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted from the Series 1997-1
Liquidity Agent's gross negligence or wilful misconduct. The Series 1997-1
Liquidity Agent shall not be required to take any action hereunder, under the
Liquidity Advance Notes or under any other Related Document, or to prosecute or
defend any suit in respect of this Series 1997-1 Liquidity Agreement, the
Liquidity Advance Notes or any other Related Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of the Series 1997-1
Liquidity Agent shall be or become, in the Series 1997-1 Liquidity Agent's
determination, inadequate, the Series 1997-1 Liquidity Agent may call for
additional indemnification from the Liquidity Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given.
SECTION 10.2. Series 1997-1 Collateral Agreement. Without limiting the
authorizations otherwise set forth in this Article X, each Liquidity Lender
hereby authorizes the Series 1997-1 Liquidity Agent to execute and deliver the
Series 1997-1 Collateral Agreement and each of the other Related Documents as
Series 1997-1 Liquidity Agent and on behalf of such Liquidity Lender, with the
same effect as if such Liquidity Lender had executed the Series 1997- 1
Collateral Agreement or such Related Document in its own name. Each Liquidity
Lender acknowledges that the Series 1997-1 Collateral Agreement contains certain
provisions, including, without limitation, Section 7.02 thereof, which give rise
to indemnification obligations in respect of the Series 1997-1 Collateral Agent
on the part of such Liquidity Lender and such Liquidity Lender hereby agrees to
be bound by such provisions, as the same may from time to time be modified in
accordance with the terms of the Series 1997-1 Collateral Agreement and this
Series 1997-1 Liquidity Agreement.
SECTION 10.3. Exculpation. Neither the Series 1997-1 Liquidity Agent
nor any of its directors, officers, employees or agents shall be liable to any
Liquidity Lender for any action taken or omitted to be taken by it under this
Series 1997-1 Liquidity Agreement or any other Related Document, or in
connection herewith or therewith, except for its own wilful misconduct or gross
negligence, nor responsible for any recitals or warranties herein or therein,
nor for the effectiveness, enforceability, validity or due execution of this
Series 1997-1 Liquidity Agreement or any other Related Document, nor for the
creation, perfection or priority of any Liens purported to be created by any of
the Related Documents, or the validity, genuineness, enforceability, existence,
value or sufficiency of any collateral security, nor to make any inquiry
respecting the performance by RFC of its obligations hereunder or under any
other Related Document. Any such inquiry which may be made by the Series 1997-1
Liquidity Agent shall not obligate it to make any further inquiry or to take any
action. The Series 1997-1 Liquidity Agent shall be entitled to rely upon advice
of counsel concerning legal matters and upon any notice, consent,
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certificate, statement or writing which the Series 1997-1 Liquidity Agent
believes to be genuine and to have been presented by a proper Person. As to any
matters not expressly provided for in this Series 1997-1 Liquidity Agreement or
any other Related Document, the Series 1997-1 Liquidity Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks.
SECTION 10.4. Successor. The Series 1997-1 Liquidity Agent may resign
as such at any time upon at least thirty (30) days' prior written notice to RFC
and all Liquidity Lenders, and the Series 1997-1 Liquidity Agent may be removed
at any time with cause by the Majority Banks. If the Series 1997-1 Liquidity
Agent at any time shall resign or be removed, the Majority Banks may appoint
(with, if no Potential Liquidity Agreement Amortization Event or Liquidity
Agreement Amortization Event then exists, the consent of RFC, which consent
shall not be unreasonably withheld or delayed) another Liquidity Lender as a
successor Series 1997-1 Liquidity Agent which shall thereupon become the Series
1997-1 Liquidity Agent hereunder. If no successor Series 1997-1 Liquidity Agent
shall have been so appointed by the Majority Banks, and shall have accepted such
appointment, within thirty (30) days after the retiring Series 1997-1 Liquidity
Agent's giving notice of resignation or the Majority Banks' removal of the
retiring Series 1997-1 Liquidity Agent, then the retiring Series 1997-1
Liquidity Agent may, on behalf of the Liquidity Lenders, appoint a successor
Series 1997-1 Liquidity Agent, which shall be one of the Liquidity Lenders or an
Eligible Liquidity Lender. The resignation or removal of the Series 1997-1
Liquidity Agent shall not become effective until a successor Series 1997-1
Liquidity Agent has been appointed and shall have accepted such appointment.
Upon the acceptance of any appointment as Series 1997-1 Liquidity Agent
hereunder by a successor Series 1997-1 Liquidity Agent, such successor Series
1997-1 Liquidity Agent shall be entitled to receive from the retiring Series
1997-1 Liquidity Agent such documents of transfer and assignment as such
successor Series 1997-1 Liquidity Agent may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties of the retiring Series 1997-1 Liquidity Agent, and the retiring Series
1997-1 Liquidity Agent shall be discharged from its duties and obligations under
this Series 1997-1 Liquidity Agreement and all other Related Documents. After
any retiring Series 1997-1 Liquidity Agent's resignation or removal hereunder as
the Series 1997-1 Liquidity Agent, the provisions of
(a) this Article X shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Series
1997-1 Liquidity Agent under this Series 1997-1 Liquidity Agreement;
and
(b) Section 11.3 and Section 11.4 shall continue to inure to
its benefit.
SECTION 10.5. Liquidity Advances by CSFB. CSFB (and any successor
thereto in its capacity as Series 1997-1 Liquidity Agent that is also a
Liquidity Lender) shall have the same rights and powers with respect to (x) the
Liquidity Advances made by it or any of its Affiliates,
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and (y) the Liquidity Advance Notes held by it or any of its Affiliates as any
other Liquidity Lender and may exercise the same as if it were not the Series
1997-1 Liquidity Agent. CSFB (and such successor) and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
RFC or any Affiliate of RFC as if CSFB (and such successor) were not the Series
1997-1 Liquidity Agent hereunder.
SECTION 10.6. Credit Decisions. Each Liquidity Lender acknowledges that
it has, independently of the Series 1997-1 Liquidity Agent and each other
Liquidity Lender, and based on such Liquidity Lender's review of the financial
information of RFC, Republic and each Lessee, this Series 1997-1 Liquidity
Agreement, the other Related Documents (the terms and provisions of which being
satisfactory to such Liquidity Lender) and such other documents, information and
investigations as such Liquidity Lender has deemed appropriate, made its own
credit decision to extend its Liquidity Commitment. Each Liquidity Lender also
acknowledges that it will, independently of the Series 1997-1 Liquidity Agent
and each other Liquidity Lender, and based on such other documents, information
and investigations as it shall deem appropriate at any time, continue to make
its own credit decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Series 1997-1 Liquidity
Agreement or any other Related Document.
SECTION 10.7. Copies, etc. The Series 1997-1 Liquidity Agent shall give
prompt notice to each Liquidity Lender of each notice or request required or
permitted to be given to the Series 1997-1 Liquidity Agent by RFC pursuant to
the terms of this Series 1997-1 Liquidity Agreement (unless concurrently
delivered to the Liquidity Lenders by RFC). The Series 1997-1 Liquidity Agent
will distribute to each Liquidity Lender each document or instrument received
for its account and copies of all other communications received by the Series
1997-1 Liquidity Agent from RFC for distribution to the Liquidity Lenders by the
Series 1997-1 Liquidity Agent in accordance with the terms of this Series 1997-1
Liquidity Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this Series
1997-1 Liquidity Agreement and each other CP Program Document to which RFC is a
party (other than the Dealer Agreement) may not be amended, modified or waived
by RFC, unless (i) prior written notice of such amendment, modification or
waiver is given to each of the Rating Agencies, (ii) such amendment,
modification or waiver is in writing and consented to in writing by RFC and the
Majority Banks and (iii) such amendment, modification or waiver shall not, as
evidenced by written confirmation of the Rating Agencies, result in the
downgrading or withdrawal of the then current ratings of the Commercial Paper
Notes by the Rating Agencies; provided, however, that such written confirmation
will not be required in connection with the extension of a
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Liquidity Lender's Scheduled Liquidity Commitment Termination Date pursuant to
Section 3.5; provided further, however, that any modification of Section 6.3 or
this Section 11.1, any requirement hereunder that any particular action be taken
by all the Liquidity Lenders or by the Majority Banks or any change in the
definition of the term "Borrowing Base Deficiency", "Eligible Manufacturer",
"Eligible Manufacturer Program", "Event of Bankruptcy" or "Majority Banks" or
any defined term used for the purpose of any such definition shall require the
consent of each Liquidity Lender. Notwithstanding the foregoing, any amendment,
waiver or other modification that would
(a) increase the Liquidity Commitment or the Percentage of any
Liquidity Lender (other than by reason of a Limited Liquidity Agreement
Amortization Event) or reduce any fees described in Article IV payable
to any Liquidity Lender shall require the consent of such Liquidity
Lender;
(b) amend the definition of the "Scheduled Maturity Date", the
"Scheduled Liquidity Commitment Termination Date", or the "Liquidity
Commitment Termination Date" shall require the consent of each
Liquidity Lender affected thereby;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Liquidity Advance of any Liquidity Lender (or reduce the principal
amount of or rate of interest on any Liquidity Advance of any Liquidity
Lender) or any fees owing to any Liquidity Lender shall require the
consent of each Liquidity Lender affected thereby;
(d) modify or waive the conditions precedent to the
effectiveness of this Series 1997-1 Liquidity Agreement set forth in
Article VI or the conditions to Liquidity Advances under Section 6.3
shall require the consent of each Liquidity Lender;
(e) approve the assignment or transfer by RFC of any of its
rights or obligations hereunder or under any other Related Document to
which it is a party except pursuant to the express terms hereof or
thereof shall require the consent of each Liquidity Lender;
(f) release any of the Assigned Collateral from the Lien under
the Series 1997-1 Collateral Agreement or the Master Collateral Agency
Agreement, or release any obligor under any Related Document to which
it is a party except pursuant to the express terms of such Related
Document shall require the consent of each Liquidity Lender, provided,
however, that the Series 1997-1 Collateral Agent or the Master
Collateral Agent may release liens on Vehicles and Eligible Receivables
in accordance with the Master Collateral Agency Agreement or the Series
1997-1 Collateral Agreement;
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(g) affect adversely the interests, rights or RFC Obligations
of any Liquidity Lender individually in comparison to other Liquidity
Lenders shall require the consent of such Liquidity Lender;
(h) affect adversely the interests, rights or obligations of
either the Series 1997-1 Liquidity Agent or the Series 1997-1
Collateral Agent in its capacity as such shall require the consent of
the Series 1997-1 Liquidity Agent or the Series 1997-1 Collateral
Agent, as the case may be;
(i) amend or otherwise modify any Liquidity Agreement
Amortization Event shall require the consent of each Liquidity Lender;
or
(j) amend or waive any condition precedent to the issuance of
the Commercial Paper Notes set forth in Section 2.2 shall without
limiting any other provisions in this Section 11.1, require written
confirmation from each Rating Agency that such amendment or waiver will
not result in the downgrading or withdrawal of the then current ratings
of the Commercial Paper Notes.
Notwithstanding the foregoing provisions of this Section 11.1, RFC and
the Series 1997- 1 Liquidity Agent may, at any time and from time to time,
without the consent of the Liquidity Lenders, enter into any amendment,
supplement or other modification to this Series 1997-1 Liquidity Agreement or
any other CP Program Document to which RFC is a party to cure any apparent
ambiguity or to correct or supplement any provision in this Agreement or such
other CP Program Document that may be inconsistent with any other provision
herein; provided, however, that (i) any such action shall not have a materially
adverse effect on the interests of the Liquidity Lenders and (ii) a copy of such
amendment, supplement or other modification is furnished to each Liquidity
Lender and each Rating Agency in accordance with the notice provisions hereof
not later than ten (10) days prior to the execution thereof by RFC and the
Series 1997-1 Liquidity Agent.
No failure or delay on the part of RFC, the Series 1997-1 Liquidity
Agent, any Liquidity Lender or the holder of any Liquidity Advance Note in
exercising any power or right under this Series 1997-1 Liquidity Agreement or
any other Related Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on RFC, the Series 1997-1 Liquidity Agent, any Liquidity Lender or
the holder of any Liquidity Advance in any case shall entitle them to any notice
or demand in similar or other circumstances. No waiver or approval by RFC, the
Series 1997-1 Liquidity Agent, any Liquidity Lender or the holder of any
Liquidity Advance Note under this Series 1997-1 Liquidity Agreement or any other
Related Document shall, except as may be otherwise stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.
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SECTION 11.2. Notices. All notices, amendments, waivers, consents and
other communications provided to any party hereto under this Series 1997-1
Liquidity Agreement shall be in writing and addressed, delivered or transmitted
to such party at its address or facsimile number set forth below its signature
hereto or set forth in the Liquidity Lender Assignment Agreement or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted upon receipt of electronic confirmation of
transmission.
SECTION 11.3. Payment of Costs and Expenses. RFC agrees to pay on
demand all reasonable expenses of the Series 1997-1 Liquidity Agent (including
the reasonable fees and out-of-pocket expenses of counsel to the Series 1997-1
Liquidity Agent and of local counsel, if any, who may be retained by counsel to
the Series 1997-1 Liquidity Agent) in connection with
(a) the negotiation, preparation, execution, delivery and
administration of this Series 1997-1 Liquidity Agreement and of each
other Related Document, including schedules and exhibits, and any
amendments, waivers, consents, supplements or other modifications to
this Series 1997-1 Liquidity Agreement or any other Related Document as
may from time to time hereafter be proposed, whether or not the
transactions contemplated hereby or thereby are consummated,
(b) the consummation of the transactions contemplated by this
Series 1997-1 Liquidity Agreement and the other Related Documents, and
(c) the preparation and negotiation of the legal opinions of
counsel to each Liquidity Lender up to $1,500 per Liquidity Lender.
RFC further agrees to pay, and to save the Series 1997-1 Liquidity Agent and
each of the Liquidity Lenders harmless from all liability for, (i) any breach by
RFC of any of its RFC Obligations under this Series 1997-1 Liquidity Agreement,
(ii) all reasonable costs incurred by the Series 1997-1 Liquidity Agent or the
Liquidity Lenders in enforcing this Series 1997-1 Liquidity Agreement or any
Related Document and (iii) any stamp, documentary or other taxes which may be
payable in connection with the execution or delivery of this Series 1997-1
Liquidity Agreement, any Borrowing hereunder, or the issuance of the Liquidity
Advance Notes or any other Related Documents. RFC also agrees to reimburse the
Series 1997-1 Liquidity Agent and each such Liquidity Lender upon demand for all
reasonable out-of-pocket expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by the Series 1997-1 Liquidity Agent
or such Liquidity Lender in connection with (x) the negotiation of any
restructuring or "work-out", whether or not consummated, of any RFC Obligations
and (y) the enforcement of any RFC Obligations.
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SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Series 1997-1 Liquidity Agreement by each Liquidity Lender and
the extension of the Liquidity Commitments, RFC hereby indemnifies and holds the
Series 1997-1 Liquidity Agent and each Liquidity Lender and each of their
respective officers, directors, employees and agents (collectively, the
"Indemnified Parties") harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and reasonable expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought and
including, without limitation, any liability in connection with the offering and
sale of the Commercial Paper Notes), including reasonable attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them (whether in prosecuting or defending against
such actions, suits or claims) as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Liquidity
Advance; or
(b) the entering into and performance of this Series 1997-1
Liquidity Agreement and any other Related Document by any of the
Indemnified Parties,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party which are determined by a court of competent
jurisdiction in a final proceeding to have resulted from the relevant
Indemnified Party's gross negligence or wilful misconduct. If and to the extent
that the foregoing undertaking may be unenforceable for any reason, RFC hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
indemnity set forth in this Section 11.4 shall in no event include
indemnification for any Taxes (which indemnification is provided in Section
5.6). RFC shall give notice to the Rating Agencies of any claim for Indemnified
Liabilities made under this Section.
SECTION 11.5. Survival. The obligations of RFC under Sections 5.3, 5.4,
5.5, 5.6, 11.3 and 11.4, and the obligations of the Liquidity Lenders under
Sections 10.1 and 10.2, shall in each case survive any termination of this
Series 1997-1 Liquidity Agreement, the payment in full of all the RFC
Obligations and the termination of all Liquidity Commitments.
SECTION 11.6. Severability. Any provision of this Series 1997-1
Liquidity Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Series 1997-1 Liquidity Agreement or affecting the validity
or enforceability of such provision in any other jurisdiction.
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SECTION 11.7. Headings. The various headings of this Series 1997-1
Liquidity Agreement are inserted for convenience only and shall not affect the
meaning or interpretation of this Series 1997-1 Liquidity Agreement or any
provisions hereof.
SECTION 11.8. Execution in Counterparts. This Series 1997-1 Liquidity
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by RFC and the Series 1997-1 Liquidity Agent and be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 11.9. Governing Law; Entire Agreement. (a) THIS SERIES 1997-1
LIQUIDITY AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
(b) This Series 1997-1 Liquidity Agreement, the Liquidity Advance Notes
and the other Related Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 11.10. Successors and Assigns. This Series 1997-1 Liquidity
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, that:
(a) RFC may not assign or transfer its rights or obligations
hereunder, other than pursuant to the Series 1997-1 Collateral
Agreement, without (i) the prior written consent of the Series 1997-1
Liquidity Agent and all Liquidity Lenders and (ii) written confirmation
from each of the Rating Agencies that its then current rating of the
Commercial Paper Notes will not be reduced or withdrawn as a result
thereof; and
(b) the rights of sale, assignment and transfer of the
Liquidity Lenders are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Liquidity Advances and Notes;
Participations in Notes. Each Liquidity Lender may assign, or sell
participations in, its Liquidity Advances and Liquidity Commitment to one or
more other Persons in accordance with this Section 11.11.
SECTION 11.11.1. Assignments. (a) At any time after the Series 1997-1
Closing Date each Liquidity Lender may, by prior written notice to the Rating
Agencies and the Dealers and with the prior consent of , or (in the case of an
assignment to an Affiliate of such Liquidity Lender, if the short term
obligations of such Affiliate are rated at least A-1 by S&P and P-1 by Moody's)
prior notice to, the Series 1997-1 Liquidity Agent, which consent shall not be
unreasonably withheld, and so long as no Liquidity Agreement Amortization Event
exists or is
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continuing, with the prior consent of RFC, which consent shall not be
unreasonably withheld (it being understood that consent may be withheld by RFC
if such assignment would subject RFC to the payment of any additional amounts
pursuant to the provisions of Sections 5.3 through 5.6 hereof), assign to an
Eligible Liquidity Lender all or a portion of its Liquidity Advances and
Liquidity Commitment and its related rights and obligations under this Series
1997-1 Liquidity Agreement, provided, that (i) each such assignment shall be a
constant, and not a varying percentage of the assigning Liquidity Lender's
Liquidity Advances and Liquidity Commitment and its related rights and
obligations under this Series 1997-1 Liquidity Agreement, (ii) for each
assignment involving the issuance and transfer of a Liquidity Advance Note, the
assigning Liquidity Lender shall execute a Liquidity Lender Assignment Agreement
and RFC hereby consents to execute a replacement Liquidity Advance Note or Notes
to be exchanged for any surrendered Liquidity Advance Note or Notes of the
assigning Liquidity Lender to give effect to the assignment, (iii) except in the
case of an assignment to another Liquidity Lender or an assignment of all of a
Liquidity Lender's rights and obligations under this Series 1997-1 Liquidity
Agreement, the minimum Liquidity Commitment which shall be assigned is the
lesser of such assigning Liquidity Lender's Liquidity Commitment and
$10,000,000, (iv) such Eligible Liquidity Lender shall have an office located in
the United States, and (v) an assignment (other than an assignment of 100% of
its interest) by the Swing Line Lender shall not include any portion of its
obligations as the Swing Line Lender. Upon such execution, delivery, approval
and acceptance, from and after the effective date specified in each Liquidity
Lender Assignment Agreement, (x) the Eligible Liquidity Lender thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder or
under the related Liquidity Advance Note or Notes have been assigned or
negotiated to it pursuant to such Liquidity Lender Assignment Agreement, have
such rights and obligations hereunder or under such Liquidity Advance Notes and
(y) the Liquidity Lender making the assignment shall, to the extent that rights
and obligations hereunder or under such Liquidity Advance Notes have been
assigned or negotiated by it pursuant to such Liquidity Lender Assignment
Agreement, relinquish its rights and be released from that portion of its
Liquidity Commitment under this Series 1997-1 Liquidity Agreement applicable to
the rights so assigned; provided that the Liquidity Lender making the assignment
shall not be released from liability to RFC for any acts or omissions of such
assignor prior to such assignment. Any Liquidity Lender who makes an assignment
shall pay to the Series 1997-1 Liquidity Agent a one-time administrative fee of
$3,500.00 which fee shall not be reimbursed by RFC. Accrued interest on that
part of the predecessor Liquidity Advance Notes evidenced by the new Liquidity
Advance Notes, and accrued fees, shall be paid as provided in the Liquidity
Lender Assignment Agreement. Accrued interest on that part of the predecessor
Liquidity Advance Notes evidenced by the replacement Liquidity Advance Notes
shall be paid to the Liquidity Lender making the assignment. Accrued interest
and accrued fees shall be paid at the same time or times provided in the
predecessor Liquidity Lender Advance Notes and in this Series 1997-1 Liquidity
Agreement.
(b) By executing and delivering a Liquidity Lender Assignment
Agreement, the Liquidity Lender making the assignment thereunder and the
Eligible Liquidity Lender that is the
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assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) the assignment made under such Liquidity Lender
Assignment Agreement is made under such Liquidity Lender Assignment Agreement
without recourse; (ii) the Liquidity Lender making the assignment makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of RFC or any Affiliate thereof or the performance or
observance by RFC or any Affiliate thereof of any of its obligations under any
Related Document or any other instrument or document furnished pursuant hereto
or thereto; (iii) such Eligible Liquidity Lender confirms that it has received a
copy of this Series 1997-1 Liquidity Agreement, together with copies of any
financial statements delivered pursuant to Section 8.1.6(a) and such other
Related Documents and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Liquidity Lender Assignment Agreement; (iv) such Eligible Liquidity Lender will,
independently and without reliance upon the Series 1997-1 Liquidity Agent, the
Liquidity Lender making the assignment or any other Liquidity Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Series 1997-1 Liquidity Agreement; (v) such Eligible Liquidity Lender
appoints and authorizes the Series 1997-1 Liquidity Agent to take such action as
agent on its behalf and to exercise such powers under this Series 1997-1
Liquidity Agreement, the Liquidity Advance Notes and the other Related Documents
as are delegated to the Series 1997-1 Liquidity Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto; and
(vi) such Eligible Liquidity Lender agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this Series 1997-1
Liquidity Agreement are required to be performed by it as a Liquidity Lender and
a holder of such Liquidity Advance Notes.
(c) The Series 1997-1 Liquidity Agent shall maintain at its address
referred to herein a copy of each Liquidity Lender Assignment Agreement
delivered to and accepted by it.
(d) Upon its receipt of a Liquidity Lender Assignment Agreement
executed by an assigning Liquidity Lender, the Series 1997-1 Liquidity Agent
shall give prompt notice thereof to RFC.
(e) Nothing herein shall prohibit any Liquidity Lender from pledging or
assigning without notice to or consent of RFC and without the payment of the
administrative fee referred to in Section 11,11,1(a), any Liquidity Advance Note
to any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System and other applicable law.
SECTION 11.11.2. Participations. Each Liquidity Lender may sell
participations at its expense without the consent of RFC or the Series 1997-1
Liquidity Agent, to one or more commercial banks or other financial institutions
as to all or a portion of its Liquidity Advances, Liquidity Commitment or its
other rights and obligations under this Series 1997-1 Liquidity Agreement;
provided, that (i) such Liquidity Lender's Liquidity Commitment and other
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obligations under this Series 1997-1 Liquidity Agreement and the other Related
Documents to which it is a party shall remain unchanged, (ii) such Liquidity
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Liquidity Lender shall remain the
holder of any Liquidity Advance Notes issued to it for the purpose of this
Series 1997-1 Liquidity Agreement, (iv) such participations shall be in a
minimum amount of $5,000,000 or such smaller amount as may be agreed to by RFC
in its sole discretion, (v) RFC, the Series 1997-1 Liquidity Agent and the other
Liquidity Lenders shall continue to deal solely and directly with such Liquidity
Lender in connection with such Liquidity Lender's rights and obligations under
this Series 1997-1 Liquidity Agreement and the other Related Documents to which
such Liquidity Lender is a party and with regard to any and all payments to be
made under this Series 1997-1 Liquidity Agreement and (vi) no transferee of a
participation, unless such transferee is an Affiliate of the related Liquidity
Lender, or is itself a Liquidity Lender, shall be entitled to require such
Liquidity Lender to take or refrain from taking any action hereunder or under
any other Related Document, except that such Liquidity Lender may agree with any
such transferee that such Liquidity Lender will not, without such transferee's
consent, take any actions of the type described in the first proviso of Section
11.1 or clauses (a) through (g) and clauses (i) and (j) of Section 11.1;
provided, that the participation agreement between a Liquidity Lender and its
participants may provide that such Liquidity Lender will obtain the approval of
such participant prior to such Liquidity Lender's agreeing to any amendment or
waiver of any provisions of this Series 1997-1 Liquidity Agreement which would
(A) extend the maturity of any Liquidity Advance Note, (B) reduce the interest
rate under any Liquidity Advance Note, (C) change the amount of or the due date
of any scheduled payment of principal, or (D) increase the Liquidity Commitment
of the Liquidity Lender granting the participation other than as permitted by
Section 3.4, and (vi) the sale of any such participations which require RFC to
file a registration statement with the United States Securities and Exchange
Commission or under the securities regulations or laws of any state shall not be
permitted.
SECTION 11.12. Other Transactions. Nothing contained herein shall
preclude the Series 1997-1 Liquidity Agent or any other Liquidity Lender from
engaging in any transaction, in addition to those contemplated by this Series
1997-1 Liquidity Agreement or any other Related Document, with RFC or any of its
Affiliates in which RFC or such Affiliate is not restricted hereby from engaging
with any other Person.
SECTION 11.13. Bankruptcy Petition Against RFC. The Series 1997-1
Liquidity Agent and each Liquidity Lender hereby covenants and agrees that,
prior to the date which is one year and one day after the payment in full of all
Commercial Paper Notes Outstanding, it will not institute against, or join any
other Person in instituting against, RFC, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States. In the
event that any Liquidity Lender takes action in violation of this Section 11.13,
RFC agrees, for the benefit of the Holders, that it shall file an answer with
the bankruptcy court or otherwise properly contest
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the filing of such a petition by the Liquidity Lender against RFC or the
commencement of such action and raise the defense that such Liquidity Lender has
agreed in writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as its counsel advises that it may
assert; and such Liquidity Lender acting in violation of this Section 11.13
shall be liable for and pay the costs and expenses of RFC incurred in connection
therewith. The provisions of this Section 11.13 shall survive the termination of
this Series 1997-1 Liquidity Agreement, and, with respect to the Series 1997-1
Liquidity Agent, the resignation or removal of the Series 1997-1 Liquidity Agent
and, with respect to any Liquidity Lender, the replacement of such Liquidity
Lender.
SECTION 11.14. Limited Recourse to RFC; No Recourse. (a) The Series
1997-1 Liquidity Agent and each Liquidity Lender agree that the obligations of
RFC to the Series 1997- 1 Liquidity Agent and such Liquidity Lender hereunder
shall be payable in the order and priority set forth in Section 2.01 and
5.02(b), as applicable, of the Series 1997-1 Collateral Agreement. Such
obligations shall be due and payable only to the extent that RFC's assets are
sufficient to pay such obligations. No claims of the Series 1997-1 Liquidity
Agent or any Liquidity Lender arising under or in connection with the Series
1997-1 Collateral Agreement are intended to be impaired or waived by this
Section 11.14(a).
(b) Without limitation to the obligations of RFC hereunder, no recourse
shall be had for the payment of any amount owing in respect of Liquidity
Advances or for the payment of any fee hereunder or any other obligation or
claim arising out of or based upon this Series 1997-1 Liquidity Agreement, the
Liquidity Advance Notes or any other Related Document against any stockholder,
employee, officer, director, affiliate or incorporator of RFC based on their
status as such or their actions in connection therewith; provided, however,
nothing in this Section 11.14(b) shall relieve any of the foregoing Persons from
any liability which any such Person may otherwise have for its gross negligence
or willful misconduct. The provisions of this Section 11.14 shall survive the
termination of this Series 1997-1 Liquidity Agreement, and with respect to the
Series 1997-1 Liquidity Agent the resignation or removal of the Series 1997-1
Liquidity Agent and with respect to any Liquidity Lender the replacement of such
Liquidity Lender.
SECTION 11.15. Survival of Representations and Warranties. All
covenants, agreements, representations and warranties made by RFC herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Series 1997-1 Liquidity Agreement or any other Related
Document shall be considered to have been relied upon by the Liquidity Lenders
and shall survive the execution and delivery of this Series 1997-1 Liquidity
Agreement and the making by the Liquidity Lenders of the Liquidity Advances, and
the execution and delivery to the Liquidity Lenders of the Liquidity Advance
Notes evidencing such Liquidity Advances, regardless of any investigation made
by the Liquidity Lenders or on their behalf and shall continue so long as and
until such time as all RFC Obligations hereunder and all Indebtedness under the
Commercial Paper Notes shall have been paid in full and the Liquidity Lenders no
longer have any Liquidity Commitments hereunder.
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SECTION 11.16. Confidentiality. Each Liquidity Lender agrees that it
shall not disclose any Confidential Information to any Person without the prior
written consent of RFC, Republic and the applicable Lessee, other than (a) to
the Liquidity Lender's Affiliates and their officers, directors, employees,
agents and advisors and to actual or prospective assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process of which RFC, Republic or the applicable Lessee,
as the case may be, has knowledge; provided that a Liquidity Lender may disclose
Confidential Information as required by any law, rule or regulation or judicial
process of which RFC, Republic or the applicable Lessee, as the case may be,
does not have knowledge if such Liquidity Lender is prohibited by law from
disclosing such requirement to RFC, Republic or the applicable Lessee, as the
case may be, or (c) in the course of litigation with RFC, Republic or the
applicable Lessee, the Series 1997-1 Liquidity Agent or any other Liquidity
Lender.
"Confidential Information" means information that RFC, Republic or the
applicable Lessee furnishes to a Liquidity Lender on a confidential basis, but
does not include any such information that is or becomes generally available to
the public other than as a result of a disclosure by any Liquidity Lender or
other Person to which a Liquidity Lender delivered such information or that is
or becomes available to such Liquidity Lender from a source other than RFC,
Republic or applicable Lessee, provided that such source is not (1) known to
such Liquidity Lender to be bound by a confidentiality agreement with RFC,
Republic or the applicable Lessee, as the case may be, or (2) known to such
Liquidity Lender to be otherwise prohibited from transmitting the information by
a contractual, legal or fiduciary obligation.
SECTION 11.17. Jurisdiction; Consent to Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST RFC OR ANY LIQUIDITY LENDER WITH RESPECT TO
THIS SERIES 1997-1 LIQUIDITY AGREEMENT MAY BE BROUGHT IN ANY STATE OR (TO THE
EXTENT PERMITTED BY LAW) FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK AND BY EXECUTION AND DELIVERY OF THIS SERIES 1997-1 LIQUIDITY
AGREEMENT, RFC AND EACH LIQUIDITY LENDER ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS SERIES 1997-1 LIQUIDITY
AGREEMENT. RFC DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 1633 BROADWAY, NEW
YORK, NEW YORK 10019, AND EACH LIQUIDITY LENDER DESIGNATES AND APPOINTS ITS
UNITED STATES DOMESTIC OFFICE SPECIFIED ON THE SIGNATURE PAGES HEREOF, AND SUCH
OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY RFC OR SUCH LIQUIDITY LENDER
IRREVOCABLY AGREEING IN WRITING TO SERVE, AS ITS AGENT TO RECEIVE ON ITS BEHALF,
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY RFC
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AND EACH LIQUIDITY LENDER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO RFC OR
SUCH LIQUIDITY LENDER SO SERVED AT ITS ADDRESS PROVIDED IN THE APPLICABLE
SIGNATURE PAGE HERETO, EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW,
ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF
PROCESS. IF ANY AGENT APPOINTED BY RFC OR SUCH LIQUIDITY LENDER REFUSES TO
ACCEPT SERVICE, RFC AND EACH LIQUIDITY LENDER HEREBY AGREES THAT SERVICE UPON IT
BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF ANY LIQUIDITY LENDER OR THE AGENT TO BRING PROCEEDINGS AGAINST RFC IN
THE COURTS OF ANY OTHER JURISDICTION.
SECTION 11.18. Waiver of Jury Trial. THE SERIES 1997-1 LIQUIDITY AGENT,
THE LIQUIDITY LENDERS AND RFC HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SERIES
1997-1 LIQUIDITY AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LIQUIDITY
LENDERS OR RFC IN CONNECTION HEREWITH OR THEREWITH. RFC ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SERIES 1997-1 LIQUIDITY
AGENT AND THE LIQUIDITY LENDERS ENTERING INTO THIS SERIES 1997-1 LIQUIDITY
AGREEMENT.
SECTION 11.19. Waiver of Set-Off. Each Liquidity Lender hereby waives
and relinquishes any right that it has or may have to set-off or to exercise any
banker's lien or any right of attachment or garnishment with respect to any
funds at any time and from time to time on deposit in, or otherwise to the
credit of, any account and any claims of RFC therein or with respect to any
right to payment from RFC, it being understood, however, that nothing contained
in this Section 11.19 shall, or is intended to, derogate from the assignment and
security interest granted to the Series 1997-1 Collateral Agent under the Series
1997-1 Collateral Agreement or to the Master Collateral Agent under the Master
Collateral Agency Agreement or impair any rights of the Liquidity Lenders, the
Series 1997-1 Liquidity Agent, the Series 1997-1 Collateral Agent or the Master
Collateral Agent thereunder.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Series 1997-1
Liquidity Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
REPUBLIC INDUSTRIES FUNDING CORP.
By: /s/ Dwight Jenkins
-----------------------------------------
Name: Dwight Jenkins
Title: Vice President and
Assistant Secretary
Address: 7700 France Avenue South
Minneapolis, MN 55435
Attention: J. Benzian
Facsimile No.: (612) 830-2087
Telephone No.: (612) 830-2552
-65-
<PAGE> 74
CREDIT SUISSE FIRST BOSTON,
as Series 1997-1 Liquidity Agent
By: /s/ Robert N. Finney
---------------------------------
Name: Robert N. Finney
Title: Managing Director
By: /s/ Christian Bourqui
---------------------------------
Name: Christian Bourqui
Title: Associate
Address: Eleven Madison Avenue
New York, NY 10010
Attention: Asset Finance Department
Facsimile No.: (212) 325-9078
Telephone No.: (212) 325-6677
-66-
<PAGE> 75
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$160,000,000 CREDIT SUISSE FIRST BOSTON
By: /s/ Robert N. Finney
---------------------------------
Name: Robert N. Finney
Title: Managing Director
By: /s/ Elizabeth A. Whalen
---------------------------------
Name: Elizabeth A. Whalen
Title: Associate
Domestic 11 Madison Avenue
Office: New York, NY 10010
Attention: Rob Finney
Facsimile No.: (212) 325-9038
Telephone No.: (212) 325-8319
Eurodollar 11 Madison Avenue
Office: New York, NY 10010
Attention: Rob Finney
Facsimile No.: (212) 325-9038
Telephone No.: (212) 325-8319
-67-
<PAGE> 76
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 ABN AMRO BANK N.V.
By: /s/ Thomas J. Eldridge
---------------------------------
Name: Thomas J. Eldridge
Title: Vice President
By: /s/ W. Robert Poff
---------------------------------
Name: W. Robert Poff
Title: Vice President
Domestic 200 South Biscayne Blvd.,
Office: 22nd Floor
Miami, FL 33131
Attention: Rita M. Saco
Facsimile No.: (305) 372-2397
Telephone No.: (305) 372-1596
Eurodollar 200 South Biscayne Blvd.,
Office: 22nd Floor
Miami, FL 33131
Attention: Rita M. Saco
Facsimile No.: (305) 372-2397
Telephone No.: (305) 372-1596
-68-
<PAGE> 77
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$75,000,000 BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
By: /s/ John Kippax
---------------------------------
Name: John Kippax
Title: Vice President & Manager
By: /s/ Dominick H. J. Vangaever
---------------------------------
Name: Dominick H. J. Vangaever
Title: Senior Vice President
Credit
Domestic 630 Fifth Avenue, 6th Floor
Office: New York, NY 10111
Attention: John Kippax
Facsimile No.: (212) 333-5786
Telephone No.: (212) 632-5316
Eurodollar 630 Fifth Avenue, 6th Floor
Office: New York, NY 10111
Attention: John Kippax
Facsimile No.: (212) 333-5786
Telephone No.: (212) 632-5316
-69-
<PAGE> 78
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$115,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Rahul Arora
---------------------------------
Name: Rahul Arora
Title: as Attorney-in-Fact
Domestic 231 South LaSalle Street,
Office: Suite 1611
Chicago, IL 60697
Attention: Prakash Wadhwani
Facsimile No.: (312) 923-0273
Telephone No.: (312) 923-0603
Eurodollar 231 South LaSalle Street,
Office: Suite 1611
Chicago, IL 60697
Attention: Prakash Wadhwani
Facsimile No.: (312) 923-0273
Telephone No.: (312) 923-0603
-70-
<PAGE> 79
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 BANK OF MONTREAL
- CHICAGO BRANCH
By: /s/ Edward McGuire
---------------------------------
Name: Edward McGuire
Title: Director
Domestic 115 South LaSalle Street,
Office: 12th Floor
Chicago, IL 60603
Attention: Ilona Nickols
Facsimile No.: (312) 750-4314
Telephone No.: (312) 750-6041
Eurodollar 115 South LaSalle Street,
Office: 12th Floor
Chicago, IL 60603
Attention: Ilona Nickols
Facsimile No.: (312) 750-4314
Telephone No.: (312) 750-6041
-71-
<PAGE> 80
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$50,000,000 THE BANK OF NEW YORK
By: /s/ David Siegel
---------------------------------
Name: David Siegel
Title: Vice President
Domestic One Wall Street, 22nd Floor
Office: New York, NY 10166
Attention: David Siegel
Facsimile No.: (212) 635-6434
Telephone No.: (212) 635-1489
Eurodollar 101 Barclay Street
Office: New York, NY 10007
Attention: Commercial Loan Servicing
Department
Facsimile No.: (212) 635-6434
Telephone No.: (212) 635-1489
-72-
<PAGE> 81
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 THE BANK OF NOVA SCOTIA
By: /s/ W.J.G. Brown
---------------------------------
Name: W.J.G. Brown
Title: Vice President
Domestic 600 Peachtree Street, N.E.
Office: Suite 2700
Atlanta, GA 30308
Attention: Jeff Lents
Facsimile No.: (404) 888-8998
Telephone No.: (404) 877-1559
Eurodollar 600 Peachtree Street, N.E.
Office: Suite 2700
Atlanta, GA 30308
Attention: Jeff Lents
Facsimile No.: (404) 888-8998
Telephone No.: (404) 877-1559
-73-
<PAGE> 82
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 THE BANK OF TOKYO
- MITSUBISHI, LTD.,
NEW YORK BRANCH
By: /s/ Joseph Devoe
---------------------------------
Name: Joseph Devoe
Title: Attorney-In-Fact
Domestic 1251 Avenue of the Americas,
Office: 12th Floor
New York, NY 10020-1104
Attention: Mr. Rolando Uy
Facsimile No.: (212) 782-5635
Telephone No.: (212) 782-5637
Eurodollar 1251 Avenue of the Americas,
Office: 12th Floor
New York, NY 10020-1104
Attention: Mr. Rolando Uy
Facsimile No.: (212) 782-5635
Telephone No.: (212) 782-5637
-74-
<PAGE> 83
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$50,000,000 BANQUE NATIONALE DE PARIS
By: /s/ Mike Shryock
---------------------------------
Name: Mike Shryock
Title: Vice President
Domestic 333 Clay Street, Suite 34000
Office: Houston, Texas 77002
Attention: John Stacy
Facsimile No.: (713) 659-1414
Telephone No.: (713) 951-1222
Eurodollar 333 Clay Street, Suite 3400
Office: Houston, Texas 77002
Attention: John Stacy
Facsimile No.: (713) 659-1414
Telephone No.: (713) 951-1222
-75-
<PAGE> 84
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 BAYERISCHE VEREINSBANK AG,
New York Branch
By: /s/ Brian Campbell
---------------------------------
Name: Brian Campbell
Title: Vice President
By: /s/ Pamela Gillons
---------------------------------
Name: Pamela Gillons
Title: Assistant Treasurer
Domestic 335 Madison Avenue, 19th Floor
Office: New York, NY 10017-4679
Attention: Renee Dudley
Facsimile No.: (212) 880-6910
Telephone No.: (212) 880-9724
Eurodollar Bayerische Vereinsbank, Cayman
Office: Islands
In c/o Bayerische Vereinsbank
NY
335 Madison Avenue, 19th Floor
New York, NY 10017-4679
Attention: Renee Dudley
Facsimile No.: (212) 880-9780
Telephone No.: (212) 880-9724
-76-
<PAGE> 85
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$50,000,000 BHF - BANK AKTIENGESELLSCHAFT
By: /s/ Linda Pace
---------------------------------
Name: Linda Pace
Title: Vice President
By: /s/ Tom Seifo
---------------------------------
Name: Tom Seifo
Title: Assistant Vice President
Domestic 590 Madison Avenue, 30th Floor
Office: New York, NY 10017
Attention: Sharon Fong
Facsimile No.: (212) 756-5536
Telephone No.: (212) 756-5503
Eurodollar Grand Cayman Branch
Office: 590 Madison Avenue, 30th Floor
New York, NY 10017
Attention: Sharon Fong
Facsimile No.: (212) 756-5536
Telephone No.: (212) 756-5503
-77-
<PAGE> 86
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$115,000,000 THE CHASE MANHATTAN BANK
By: /s/ Peter M. Hayes
---------------------------------
Name: Peter M. Hayes
Title: Vice President
Domestic 270 Park Avenue, 48th Floor
Office: New York, NY 10017
Attention: Peter Hayes, Vice President
Facsimile No.: (212) 270-1629
Telephone No.: (212) 270-5698
Eurodollar 1 Chase Manhattan Plaza,
Office: 8th Floor
New York, NY 10018
Attention: Renee Pierre-Louis
- Loan Agency Group
Facsimile No.: (212) 552-7500
Telephone No.: (212) 552-7322
-78-
<PAGE> 87
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$115,000,000 CITIBANK, N.A.
By: /s/ John Schwarz
---------------------------------
Name: John Schwarz
Title: Attorney-in-Fact
Domestic 399 Park Avenue
Office: New York, NY 10022
Attention: John Schwarz
Facsimile No.: (212) 559-1451
Telephone No.: (212) 935-6220
Eurodollar 399 Park Avenue
Office: New York, NY 10022
Attention: John Schwarz
Facsimile No.: (212) 559-1451
Telephone No.: (212) 935-6220
-79-
<PAGE> 88
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$75,000,000 COMMERZBANK AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By: /s/ Harry P. Yergey
---------------------------------
Name: Harry P. Yergey
Title: SVP & Manager
By: /s/ Eric R. Kagerer
---------------------------------
Name: Eric R. Kagerer
Title: Vice President
Domestic 1230 Peachtree Street NE,
Office: Suite 3500
Atlanta, GA 30309
Attention: Petra Conroy
Facsimile No.: (404) 888-6539
Telephone No.: (404) 888-6531
Eurodollar 1230 Peachtree Street NE,
Office: Suite 3500
Atlanta, GA 30309
Attention: Mark Wortmann
Facsimile No.: (404) 888-6539
Telephone No.: (404) 888-6518
-80-
<PAGE> 89
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$75,000,000 DEN DANSKE BANK AKTIESELSKAB,
NEW YORK BRANCH
By: /s/ Mogens Sondergaard
---------------------------------
Name: Mogens Sondergaard
Title: Vice President
By: /s/ Henrik Ibsen
---------------------------------
Name: Henrik Ibsen
Title: Assistant Vice President
Domestic 280 Park Avenue
Office: New York, NY 10017
Attention: Loan Administrative
Department
Facsimile No.: (212) 490-0252
Telephone No.: (212) 984-8462
Eurodollar 280 Park Avenue
Office: New York, NY 10017
Attention: Loan Administrative
Department
Facsimile No.: (212) 490-0252
Telephone No.: (212) 984-8462
-81-
<PAGE> 90
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 DEUTSCHE BANK AG,
NEW YORK BRANCH,
A/O CAYMAN ISLANDS BRANCH
By: /s/ Belinda J. Wheeler
---------------------------------
Name: Belinda J. Wheeler
Title: Vice President
By: /s/ Hans-Josef Thiele
---------------------------------
Name: Hans-Josef Thiele
Title: Director
Domestic 31 W. 52nd Street
Office: New York, NY 10019
Attention: Richard Agnolet
Facsimile No.: (212) 469-4113
Telephone No.: (212) 469-4138
Eurodollar 31 W. 52nd Street
Office: New York, NY 10019
Attention: Richard Agnolet
Facsimile No.: (212) 469-4113
Telephone No.: (212) 469-4138
-82-
<PAGE> 91
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY
By: /s/ Kazuo Iida
---------------------------------
Name: Kazuo Iida
Title: General Manager
Domestic 191 Peachtree Street NE,
Office: Suite 3600
Atlanta, GA 30303
Attention: Mary Charles Hott
Facsimile No.: (404) 577-6818
Telephone No.: (404) 420-3308
Eurodollar 191 Peachtree Street NE,
Office: Suite 3600
Atlanta, GA 30303
Attention: Mary Charles Hott
Facsimile No.: (404) 577-6818
Telephone No.: (404) 420-3308
-83-
<PAGE> 92
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 ING (U.S.) CAPITAL CORPORATION
By: /s/ Michael G. Plunkett
---------------------------------
Name: Michael G. Plunkett
Title: Vice President
Domestic 135 East 57th Street
Office: New York, NY 10022
Attention: Jennifer Wikoff,
Senior Associate
Facsimile No.: (212) 593-3362
Telephone No.: (212) 409-0578
Eurodollar
Office: Foreign Exchange Desk
Attention: Robert Savino
Facsimile No.: (212) 409-6125
Telephone No.: (212) 409-6110
-84-
<PAGE> 93
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 MORAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Jeffrey Hwang
---------------------------------
Name: Jeffrey Hwang
Title: Vice President
Domestic 60 Wall Street, 22nd Floor
Office: New York, NY 10260-0060
Attention: Jeff Hwang
Facsimile No.: (212) 648-5014
Telephone No.: (212) 648-6503
Eurodollar Morgan Guaranty Trust
Office: Company of New York,
Nassau, Bahamas Office
c/o/ JP Morgan Services,
Inc. Loan Operations,
3rd Floor
500 Stanton Christiana Road
Newark, DE 19713
Attention: Robin Wood
Facsimile No.: (302) 634-1092
Telephone No.: (302) 634-6221
-85-
<PAGE> 94
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 COOPRATIEVE CENTRAL RAIFFEISEN-
BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND"
NEW YORK BRANCH
By: /s/ Dana W. Hemenway
---------------------------------
Name: Dana W. Hemenway
Title: Vice Presdent
By: /s/ W. Pieter C. Kodde
---------------------------------
Name: W. Pieter C. Kodde
Title: Vice President
Domestic 245 Park Avenue, 38th Floor
Office: New York, NY 10167
Attention: Corporate Services Department
Facsimile No.: (212) 916-7800
Telephone No.: (212) 818-0223
Eurodollar 245 Park Avenue, 38th Floor
Office: New York, NY 10167
Attention: Corporate Services Department
Facsimile No.: (212) 916-7800
Telephone No.: (212) 818-0223
-86-
<PAGE> 95
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 SOCIETE GENERALE
By: /s/ Ralph Saheb
---------------------------------
Name: Ralph Saheb
Title: Vice President and Manager
Domestic 2001 Ross Avenue, Suite 4800
Office: Dallas, TX 75201
Attention: Lia Guerra
Facsimile No.: (214) 754-0171
Telephone No.: (214) 979-2769
Eurodollar 2001 Ross Avenue, Suite 4800
Office: Dallas, TX 75201
Attention: Lia Guerra
Facsimile No.: (214) 754-0171
Telephone No.: (214) 979-2769
-87-
<PAGE> 96
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$95,000,000 WESTDEUTSCHE LANDSBANK
GIROZENTRALE,
NEW YORK BRANCH
By: /s/ Salvatore Battinelli
---------------------------------
Name: Salvatore Battinelli
Title: Vice President
Credit Department
By: /s/ Anne Lacombe
---------------------------------
Name: Anne Lacombe
Title: Vice President
Asset Securitization
Domestic 1211 Avenue of the Americas,
Office: 23rd Floor
New York , NY 10019
Attention: Securitization
Facsimile No.: (212) 852-6340
Telephone No.: (212) 768-4781
Eurodollar 1211 Avenue of the
Office: Americas, 23rd Floor
New York , NY 10019
Attention: Securitization
Facsimile No.: (212) 852-6340
Telephone No.: (212) 768-4781
-88-
<PAGE> 97
LIQUIDITY COMMITMENT LIQUIDITY LENDER
$50,000,000 FIRST UNION NATIONAL BANK
By: /s/ Ralph L. Kelly
---------------------------------
Name: Ralph L. Kelly
Title: Vice President
Domestic 225 Water Street, MC FL0060,
Office: Jacksonville, FL 32202
Attention: Missy Morgan
Facsimile No.: (305) 883-4198
Telephone No.: (305) 883-4165
Eurodollar 225 Water Street, MC FL0060,
Office: Jacksonville, FL 32202
Attention: Missy Morgan
Facsimile No.: (305) 883-4198
Telephone No.: (305) 883-4165
-89-
<PAGE> 1
EXHIBIT 4.10
SERIES 1997-1 COLLATERAL AGREEMENT
dated as of October 29, 1997
among
REPUBLIC INDUSTRIES FUNDING CORP.,
GENERAL MOTORS CORPORATION,
as the GM Series 1997-1 Support Provider
CERTAIN FINANCIAL INSTITUTIONS
identified herein as the Series 1997-1 Support Letter of Credit Providers
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
as the Series 1997-1 Letter of Credit Provider
CREDIT SUISSE FIRST BOSTON,
as the Series 1997-1 Liquidity Agent and Series 1997-1 Collateral Agent,
CREDIT SUISSE FIRST BOSTON CORPORATION,
BANCAMERICA ROBERTSON STEPHENS,
CHASE SECURITIES INC.,
CITICORP SECURITIES, INC.,
and
MERRILL LYNCH MONEY MARKETS INC.,
as the Dealers,
and
CITIBANK, N.A.,
as the Depositary
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I.
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II.
RFC OBLIGATIONS COLLATERALIZED
SECTION 2.01. RFC Obligations Collateralized Hereby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III.
RFC AND OTHER AGENTS; REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. RFC and Other Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02. Representations and Warranties of RFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.03. Additional Representations, Warranties and Covenants of RFC . . . . . . . . . . . . . . . . . 10
SECTION 3.04. Representations and Warranties of the
Series 1997-1 Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV.
ASSIGNMENT
SECTION 4.01. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02. Application of Assigned Collateral and Deposited Funds . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.03. Performance of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.04. Amendments; Waivers; Declaration of Default . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE V.
SERIES 1997-1 COLLATERAL ACCOUNT, SERIES 1997-1 LIQUIDITY LENDER
ACCOUNT, AND SERIES 1997-1 TERMINATION ADVANCE ACCOUNT
SECTION 5.01. Establishment of Accounts; Deposit of Funds . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.02. Assignment of Accounts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.03. Application of Deposited Funds and Assigned Collateral . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.04. Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.05. Liquidity Demand; Commitment Termination Demand . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI.
DEFAULT
SECTION 6.01. Rights of the Series 1997-1 Collateral Agent upon Liquidity
Agreement Amortization Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.02. Special Provisions Concerning Remedies Upon the Occurrence
of Liquidation Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.03. Certain Rights and Obligations Upon any Sales
of Assigned Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.04. Certain Rights of the Series 1997-1 Collateral Agent under
the Uniform Commercial Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII.
THE SERIES 1997-1 COLLATERAL AGENT, AND THE SECURED PARTIES
SECTION 7.01. Appointment and Powers of Series 1997-1 Collateral Agent . . . . . . . . . . . . . . . . . . . 29
SECTION 7.02. Indemnification; Agents and Employees of the Series 1997-1
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.03. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.04. Successor Series 1997-1 Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.05. Qualifications of Series 1997-1 Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.06. Instructions of the Required Liquidity Providers
and Other Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE VIII.
AMENDMENTS, MODIFICATIONS, WAIVERS AND CONSENTS
SECTION 8.01. Execution of Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.02. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.03. Notice of Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.04. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.05. Fee; Costs and Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.06. Series 1997-1 Collateral Agent Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . 41
SECTION 9.07. Termination; Assigned Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.08. Governing Law; Binding Character; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.09. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.10. No Bankruptcy Petition Against RFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.11. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.13. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.14. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.15. Limited Recourse to RFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.16. Waiver of Set-Off With Respect to RFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SCHEDULE 1 - Series 1997-1 Support Letter of Credit Providers
</TABLE>
- iii -
<PAGE> 5
SERIES 1997-1 COLLATERAL AGREEMENT
THIS SERIES 1997-1 COLLATERAL AGREEMENT, (as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms hereof, this "Series 1997-1 Collateral Agreement"), dated as of
October 29, 1997, is entered into by and among REPUBLIC INDUSTRIES FUNDING
CORP., a Delaware corporation ("RFC"), the parties identified on the signature
pages hereto as the Series 1997-1 Support Letter of Credit Providers (each a
"Series 1997-1 Support Letter of Credit Provider", and collectively the "Series
1997-1 Support Letter of Credit Providers"), GENERAL MOTORS CORPORATION, a
Delaware corporation ("GM"), as GM Series 1997-1 Support Provider (in such
capacity, the ("GM Series 1997-1 Support Provider"), WESTDEUTSCHE LANDESBANK
GIROZANTRALE, NEW YORK BRANCH, as Series 1997-1 Letter of Credit Provider (the
"Series 1997-1 Letter of Credit Provider"), CREDIT SUISSE FIRST BOSTON, a Swiss
banking corporation, as Series 1997-1 Liquidity Agent ("Credit Suisse First
Boston" and, in such capacity, the "Series 1997-1 Liquidity Agent") for the
financial institutions identified in the Series 1997-1 Liquidity Agreement as
the Series 1997-1 Liquidity Lenders (each a "Series 1997-1 Liquidity Lender"
and, collectively, the "Series 1997-1 Liquidity Lenders"), and as collateral
agent (in such capacity, the "Series 1997-1 Collateral Agent") for itself,
including in its capacity as the Series 1997-1 Liquidity Agent, and for the
Series 1997-1 Liquidity Lenders, the Depositary, the Holders of Commercial
Paper Notes and the Series 1997-1 Support Letter of Credit Providers, CREDIT
SUISSE FIRST BOSTON CORPORATION, a Massachusetts corporation ("Credit Suisse
First Boston Corporation"), as a dealer, BANCAMERICA ROBERTSON STEPHENS, a
Delaware corporation ("Bank of America"), as a dealer, CHASE SECURITIES INC., a
Delaware corporation ("Chase"), as a dealer, CITICORP SECURITIES, INC., a
Delaware corporation ("Citicorp"), as a dealer, and MERRILL LYNCH MONEY MARKETS
INC., a Delaware corporation ("Merrill Lynch"), as a dealer, (each of Credit
Suisse First Boston Corporation, Bank of America, Chase, Citicorp and Merrill
Lynch, each a "Dealer", and together with any other dealers for Commercial Paper
Notes engaged by RFC from time to time that agree to become parties to the
Dealer Agreement and this Agreement, collectively, the "Dealers"), and CITIBANK,
N.A., a national banking association, as depositary (the "Depositary") under the
Depositary Agreement, acting on its own behalf and on behalf of the Holders of
Commercial Paper Notes (the Series 1997-1 Support Letter of Credit Providers,
the GM Series 1997-1 Support Provider, the Series 1997-1 Liquidity Agent, the
Series 1997-1 Liquidity Lenders, the Series 1997-1 Collateral Agent, the
Depositary, the Dealers and the Holders of the Commercial Paper Notes being
hereinafter collectively referred to as the "Secured Parties").
BACKGROUND
1. RFC is issuing and selling its Commercial Paper Notes (such
capitalized term, together with each other capitalized term used herein and in
the preamble hereto, shall have the
<PAGE> 6
meaning assigned thereto in Section 1.01) in the commercial paper market and
has obtained the Liquidity Commitments of the Series 1997-1 Liquidity Lenders
to make Liquidity Advances to RFC.
2. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, National Car Rental Financing Limited
Partnership, a special purpose Delaware limited partnership ("NFLP"), as
issuer, The Bank of New York, a New York banking corporation, as trustee
(together with its successors in trust thereunder as provided in the Base
Indenture referred to below, the "Trustee"), and as Enhancement Agent, are
entering into the Series 1997-1 Supplement, of even date herewith (as the same
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms thereof, the "Series 1997-1 Supplement"), to the
Base Indenture, dated as of April 30, 1996 (as amended by the Supplement and
Amendment to Base Indenture, dated as of December 20, 1996, between NFLP and
the Trustee, and as the same may be further amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof, the
"Base Indenture"), between NFLP and the Trustee, pursuant to which NFLP will
issue the Variable Funding Rental Car Asset Backed Notes, Series 1997-1 (the
"Series 1997-1 Notes").
3. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, NFLP, RFC, as the Series 1997-1 Note
Purchaser, Republic Industries, Inc., a Delaware corporation ("Republic"), as
Master Servicer, and Credit Suisse First Boston, as Series 1997-1 Collateral
Agent, are entering into the Series 1997-1 Note Purchase Agreement, of even
date herewith (as the same may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof, the "Note Purchase
Agreement"), pursuant to which RFC will purchase the Series 1997-1 Notes and
make Advances (as defined therein) to NFLP from time to time, the Indebtedness
arising from which will be evidenced by the Series 1997-1 Notes, for the
purpose of financing NFLP's acquisition or financing of Vehicles for leasing
under the Series 1997 Lease.
4. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, NFLP as lessor, Republic as guarantor and
master servicer, and the parties identified therein as the Lessees and
Servicers, as lessees and servicers, are entering into the Series 1997 Lease,
pursuant to which NFLP will acquire Vehicles and will finance the acquisition
of Vehicles, in each case for lending or leasing to the Lessees for use in the
domestic daily rental businesses of such Lessees and certain Fleet Sharing
Parties.
5. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, NFLP has conveyed to the NFLP Receivables
Trustee, pursuant to the NFLP Receivables Trust Agreement and in exchange for
the NFLP Beneficial Interest, all of NFLP's right, title and interest in, to,
under and in respect of the Series 1997 Lease Payments, and the Manufacturer
Payment Rights.
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<PAGE> 7
6. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, to secure the NFLP Obligations with respect
to the Series 1997-1 Notes, under the Series 1997-1 Supplement, NFLP will grant
to the Trustee, for the benefit of the Series 1997 Variable Funding
Noteholders, a first priority perfected security interest in all of NFLP's
right, title and interest in, among other things, the Series 1997 Lease (other
than the Lease Payments and the Manufacturer Payment Rights) and the NFLP
Beneficial Interest.
7. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, Republic, the Lessees, NFLP, the Trustee
and Citibank, N.A., a national banking association, as Master Collateral Agent,
are entering into the Amended and Restated Master Collateral Agency Agreement,
of even date herewith (as the same may be further amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof, the "Master Collateral Agency Agreement"), pursuant to which (i) NFLP
has granted to the Master Collateral Agent a first priority security interest
in the NFLP Master Collateral (as defined therein) and (ii) the Lessees have
granted to the Master Collateral Agent a first priority security interest in
the Lessee Grantor Master Collateral (as defined therein), in each case as
master collateral agent for the benefit of the parties named from time to time
as the Financing Sources and the Beneficiaries thereunder.
8. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, RFC, the Series 1997-1 Liquidity Lenders
and the Series 1997-1 Liquidity Agent are entering into the Series 1997-1
Liquidity Agreement, of even date herewith, providing for, among other things,
the Liquidity Commitments of the Series 1997-1 Liquidity Lenders to make, on
the terms and subject to the conditions set forth therein, Revolving Advances
to RFC from time to time to enable RFC to make Series 1997-1 Advances to NFLP
from time to time and to make other Liquidity Advances to RFC from time to
time.
9. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, the Series 1997-1 Letter of Credit Provider
is issuing its Series 1997-1 Letter of Credit as partial credit support for
certain amounts owing by the Lessees under the Series 1997 Lease and as
liquidity support for maturing Commercial Paper Notes.
10. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, GM, RFC and the Lessees are entering into a
GM Series 1997-1 Support Reimbursement Agreement, of even date herewith, in
accordance with which GM will agree to enter into a Support Letter of Credit
Agreement pursuant to which GM will agree to reimburse the Series 1997-1 Letter
of Credit Provider for GM's pro rata allocation of amounts drawn under the
Series 1997-1 Letter of Credit and RFC and the Lessees, to the extent set forth
therein, will reimburse GM for amounts paid by GM to the Series 1997-1 Letter
of Credit Provider for reimbursement of draws made under the Series 1997-1
Letter of Credit.
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<PAGE> 8
11. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, RFC, the Lessees and the Series 1997-1
Support Letter of Credit Providers are entering into the Series 1997-1 Support
Reimbursement Agreement pursuant to which each Series 1997-1 Support Letter of
Credit Provider will issue its Series 1997-1 Support Letter to be drawn upon by
the Series 1997-1 Letter of Credit Provider to reimburse the Series 1997-1
Letter of Credit Provider for such Series 1997-1 Support Letter of Credit
Provider's pro rata allocation of amounts drawn under the Series 1997-1 Letter
of Credit and RFC and the Lessees, to the extent set forth therein, will
reimburse the Series 1997-1 Support Letter of Credit Providers for amounts paid
by any of them to the Series 1997-1 Letter of Credit Provider for reimbursement
of draws made under the Series 1997-1 Letter of Credit.
12. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, RFC and the Depositary are entering into
the Depositary Agreement, which provides for the issuance of Commercial Paper
Notes.
13. Contemporaneously with the execution and delivery of this
Series 1997-1 Collateral Agreement, RFC has conveyed to the RFC Receivables
Trustee, pursuant to the RFC Receivables Trust Agreement and in exchange for
the RFC Beneficial Interest, all of RFC's right, title and interest in, to,
under and in respect of the VFN Payment Rights.
14. RFC is entering into this Series 1997-1 Collateral Agreement
with the Series 1997-1 Support Letter of Credit Providers, GM, the Series
1997-1 Liquidity Agent, the Depositary, the Series 1997-1 Collateral Agent and
the Dealers for the purpose of, among other things, providing for the repayment
or payment of all amounts at any time and from time to time owing by RFC (a) to
the Series 1997-1 Liquidity Lenders or the Series 1997-1 Liquidity Agent under
or in connection with the Series 1997-1 Liquidity Agreement or this Series
1997-1 Collateral Agreement (b) to the Series 1997-1 Support Letter of Credit
Providers under or in connection with the Series 1997-1 Support Reimbursement
Agreement or this Series 1997-1 Collateral Agreement, (c) to the Holders of the
Commercial Paper Notes, (d) the Depositary under the Depositary Agreement or
this Series 1997-1 Collateral Agreement, (e) to the Series 1997-1 Collateral
Agent hereunder or (f) to the Dealers under the Dealer Agreement or this Series
1997-1 Collateral Agreement.
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, and for due and adequate consideration, which each of the parties
hereto hereby acknowledges, each of the parties hereto hereby agrees as
follows:
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<PAGE> 9
ARTICLE I.
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement and unless the
context requires a different meaning, capitalized terms used but not defined
herein (including the preamble and the recitals hereto) shall have the meanings
assigned to such terms in (i) the Definitions List attached as Annex A to the
Series 1997-1 Supplement, as such Definitions List may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof, (ii) the Definitions List attached as Annex A to the
Series 1997-1 Liquidity Agreement, dated as of even date herewith, among RFC,
the parties identified therein as the Liquidity Lenders, and CSFB, as the
Series 1997-1 Liquidity Agent (as such agreement may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof, the "Series 1997-1 Liquidity Agreement"), as such Definitions List may
be amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms of the Series 1997-1 Liquidity Agreement, and (iii)
the Definitions List attached as Schedule 1 to the Base Indenture as in effect
as of the date hereof, as such Definitions List may be further amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms of the Base Indenture, provided that to the extent, if any, that
any capitalized term used but not defined herein has a meaning assigned to such
term in more than one of the lists or agreements referred to in clauses (i)
through (iii), then (x) if a meaning is assigned to such term in the
Definitions List attached as Annex A to the Series 1997-1 Liquidity Agreement,
such meaning shall apply herein, and (y) if a meaning is not assigned to such
term in the Definitions List attached as Annex A to the Series 1997-1 Liquidity
Agreement, then the meaning assigned to such term in the Definitions List
attached as Annex A to the Series 1997-1 Supplement shall apply herein.
ARTICLE II.
RFC OBLIGATIONS COLLATERALIZED
SECTION 2.01. RFC Obligations Collateralized Hereby. This Series
1997-1 Collateral Agreement is made to provide for repayment and payment of the
following Indebtedness and liabilities of RFC set forth in clauses First
through Eleventh below (such Indebtedness and liabilities being herein called
the "RFC Obligations"). Upon the occurrence, and during the continuance, of a
Liquidity Agreement Amortization Event, the RFC Obligations will be paid in the
order of priority indicated below:
First, the repayment of all amounts advanced or expended by
the Series 1997-1 Collateral Agent, in its capacity as Series 1997-1
Collateral Agent, for the account of RFC hereunder and the payment of
all reasonable out-of-pocket costs and expenses at any time and from
time to time payable hereunder to the Series 1997-1 Collateral Agent,
in its capacity as such, in connection with the administration or
enforcement of this Series 1997-1 Collateral Agreement or any other CP
Program Document (including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel employed by the
- 5 -
<PAGE> 10
Series 1997-1 Collateral Agent in connection therewith) and the
payment of all indemnities at any time and from time to time due by
RFC hereunder to the Series 1997-1 Collateral Agent in its capacity as
such up to an aggregate amount equal to $25,000 per annum;
Second, subject to the last sentence of Section 5.02(f), the
payment of all Indebtedness, at any time and from time to time, due
from RFC on the Outstanding Commercial Paper Notes issued pursuant to
and in accordance with the Depositary Agreement;
Third, the payment, pro rata, of all (a) operating and
ordinary course expenses of RFC up to an aggregate amount equal to
$100,000 per annum and (b) fees and expenses at any time and from time
to time due to the Depositary pursuant to Section 8(a) of the
Depositary Agreement;
Fourth, the payment of all amounts at any time and from time
to time due to the Series 1997-1 Liquidity Agent as notified to the
Series 1997-1 Collateral Agent pursuant to Section 3.6.6 of the Series
1997-1 Liquidity Agreement;
Fifth, (i) first, the payment, pro rata, of all principal
Indebtedness (including Commitment Termination Date Liquidity
Advances), at any time and from time to time, due (in the case of a
Commitment Termination Date Liquidity Advance, such Advance will be
deemed to be due for purposes of this clause Fifth on the date such
Advance is made) from RFC (a) to the Series 1997-1 Liquidity Lenders
in connection with the Liquidity Advances made pursuant to the Series
1997-1 Liquidity Agreement, (b) to the Series 1997-1 Support Letter of
Credit Providers in connection with Support Liquidity Disbursements
and (c) if applicable, to the Series 1997-1 Cash Collateral Account in
connection with monies withdrawn from such account to fund any Series
1997-1 LOC Liquidity Disbursements, together with all amounts payable
in respect of interest on any of the foregoing; and (ii) second, the
payment, pro rata, of the RFC Reimbursement Share of any Support
Termination Disbursement together with all amounts payable in respect
of interest on any of the foregoing; provided, however, the amounts
payable to the Series 1997-1 Liquidity Lenders and the Series 1997-1
Support Letter of Credit Providers pursuant to subclauses (a) and (b)
of this clause Fifth shall be subject to the Series 1997-1 Collateral
Agent's right to set off and apply any and all amounts held by the
Series 1997-1 Collateral Agent for the benefit of the Series 1997-1
Liquidity Lenders or the Series 1997-1 Support Letter of Credit
Providers against any and all of their respective obligations to the
Series 1997-1 Collateral Agent under this Series 1997-1 Collateral
Agreement, as set forth in Section 7.02(a) of this Series 1997-1
Collateral Agreement;
Sixth, (i) first, the payment, pro rata, of all principal
Indebtedness (including Support Termination Disbursements), at any
time and from time to time, due (in the case
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<PAGE> 11
of a Support Termination Disbursement such Support Termination
Disbursement will be deemed to be due for purposes of this clause
Sixth on the date such Support Termination Disbursement is made) from
RFC to the GM Series 1997-1 Support Provider in connection with
Support Liquidity Disbursements, together with all amounts payable in
respect of interest on the foregoing; and (ii) second, the payment,
pro rata, of the RFC Reimbursement Share of any Support Termination
Disbursement or Support Event of Default Disbursement, together with
all amounts payable in respect of interest on any of the foregoing;
provided, however, the amounts payable to the GM Series 1997-1 Support
Provider pursuant to this clause Sixth shall be subject to the Series
1997-1 Collateral Agent's right to set off and apply any and all
amounts held by the Series 1997-1 Collateral Agent for the benefit of
the GM Series 1997-1 Support Provider against any and all of the
obligations of the GM Series 1997-1 Support Provider to the Series
1997-1 Collateral Agent under this Series 1997-1 Collateral Agreement,
as set forth in Section 7.02(a) of this Series 1997-1 Collateral
Agreement;
Seventh, the payment, pro rata, of (a) all other Indebtedness
(including, but not limited to fees, reimbursements, funding
indemnities, taxes and increased costs, but excluding amounts
referenced in clause Tenth below), at any time and from time to time,
due and owing to the Series 1997-1 Liquidity Lenders, the Series
1997-1 Liquidity Agent, the Series 1997-1 Letter of Credit Provider
(solely with respect to amounts due from RFC under the Series 1997-1
letter of Credit Agreement) and the Series 1997-1 Support Letter of
Credit Providers (solely with respect to amounts due from RFC under
the Series 1997-1 Support Reimbursement Agreement) from RFC under or
in respect of the Series 1997-1 Liquidity Agreement or the Series
1997-1 Support Reimbursement Agreement, as the case may be, together
with all amounts due from RFC in respect of interest thereon, and (b)
all indemnities at any time and from time to time due from RFC
hereunder to the Series 1997-1 Liquidity Lenders and the Series 1997-1
Support Letter of Credit Providers, it being understood that amounts
payable under this clause Seventh shall relate exclusively to costs
and expenses incurred in or in connection with the procurement and
handling of funds and the making of such funds available to or for the
account or benefit of RFC and shall not include amounts payable in
connection with general indemnity claims relating to the use by RFC or
the Series 1997-1 Letter of Credit Provider of the proceeds of such
financial accommodations (other than, in the event such actions give
rise to breakage costs, any action in the nature of a prepayment by
RFC) or actions taken or omitted to be taken by RFC under the CP
Program Documents and not directly related to the procurement of
funds, all of which shall be covered by clause Tenth below, and it
being further understood that amounts payable under this clause
Seventh shall be subject to the Series 1997-1 Collateral Agent's right
to set off and apply any and all amounts held by the Series 1997-1
Collateral Agent for the benefit of the Series 1997-1 Liquidity
Lenders or the Series 1997-1 Support Letter of Credit Providers
against any and all of the respective obligations of such parties to
the Series 1997-1 Collateral Agent under this
- 7 -
<PAGE> 12
Series 1997-1 Collateral Agreement, as set forth in Section 7.02(a) of
this Series 1997-1 Collateral Agreement.
Eighth, the payment, pro rata, of (a) all other Indebtedness
(including, but not limited to fees, reimbursements, funding
indemnities, taxes and increased costs, but excluding amounts
referenced in clause Tenth below), at any time and from time to time,
due and owing to the GM Series 1997-1 Support Provider (solely with
respect to amounts due from RFC under the GM Series 1997-1 Support
Reimbursement Agreement) from RFC under or in respect of the GM Series
1997-1 Support Reimbursement Agreement, as the case may be, together
with all amounts due from RFC in respect of interest thereon, and (b)
all indemnities at any time and from time to time due from RFC
hereunder to the GM Series 1997-1 Support Provider, it being
understood that amounts payable under this clause Eighth shall relate
exclusively to costs and expenses incurred in or in connection with
the procurement and handling of funds and the making of such funds
available to or for the account or benefit of RFC and shall not
include amounts payable in connection with general indemnity claims
relating to the use by RFC or the Series 1997-1 Letter of Credit
Provider of the proceeds of such financial accommodations (other than,
in the event such actions give rise to breakage costs, any action in
the nature of a prepayment by RFC) or actions taken or omitted to be
taken by RFC under the CP Program Documents and not directly related
to the procurement of funds, all of which shall be covered by clause
Tenth below, and it being further understood that amounts payable
under this clause Eighth shall be subject to the Series 1997-1
Collateral Agent's right to set off and apply any and all amounts held
by the Series 1997-1 Collateral Agent for the benefit of the GM Series
1997-1 Support Provider against any and all of the obligations of the
GM Series 1997-1 Support Provider to the Series 1997-1 Collateral
Agent under this Series 1997-1 Collateral Agreement, as set forth in
Section 7.02(a) of this Series 1997-1 Collateral Agreement.
Ninth, the repayment of reasonable amounts owing to the Series
1997-1 Collateral Agent referred to in clause First above in excess of
$25,000 per annum;
Tenth, the repayment, pro rata, of all reasonable amounts
advanced or expended by any Series 1997-1 Liquidity Lender, Series
1997-1 Support Letter of Credit Provider or the GM Series 1997-1
Support Provider under this Series 1997-1 Collateral Agreement, the
Series 1997-1 Liquidity Agreement, the Series 1997-1 Support
Reimbursement Agreement (solely with respect to amounts due from RFC
thereunder) or the GM Series 1997-1 Support Reimbursement Agreement
(solely with respect to amounts due from RFC thereunder), as the case
may be, and any other amounts and reasonable out-of-pocket costs and
expenses due from RFC to any Secured Party under or in connection with
the Series 1997-1 Liquidity Agreement, the Series 1997-1 Support
Reimbursement Agreement (solely with respect to amounts due from RFC
thereunder), or the GM Series 1997-1 Support Reimbursement Agreement
(solely with respect to
- 8 -
<PAGE> 13
amounts due from RFC thereunder), the Depositary Agreement, the Dealer
Agreement or any other RFC Agreement, whether in respect of
indemnities thereunder or otherwise, provided that amounts payable
under this clause Tenth shall be subject to the Series 1997-1
Collateral Agent's right to set off and apply any and all amounts held
by the Series 1997-1 Collateral Agent for the benefit of the Series
1997-1 Liquidity Lenders, the Series 1997-1 Support Letter of Credit
Providers or the GM Series 1997-1 Support Provider against any and all
of their respective obligations to the Series 1997-1 Collateral Agent
under this Series 1997-1 Collateral Agreement, as set forth in Section
7.02(a) of this Series 1997-1 Collateral Agreement; and
Eleventh, the payment of all other expenses of RFC referred to
in clause Third above in excess of the amounts paid under clause Third
above.
ARTICLE III.
RFC AND OTHER AGENTS; REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. RFC and Other Agents. (a) With the delivery of this
Series 1997-1 Collateral Agreement, RFC is furnishing to the Series 1997-1
Collateral Agent, and from time to time thereafter may furnish to the Series
1997-1 Collateral Agent, a certificate (the "RFC Incumbency Certificate")
certifying the incumbency and specimen signatures of officers, employees,
agents or representatives of RFC (the "RFC Agents") authorized to act, and to
give instructions and notices, on behalf of RFC hereunder. Until the Series
1997-1 Collateral Agent receives a subsequent RFC Incumbency Certificate, the
Series 1997-1 Collateral Agent shall be entitled to rely on the last such RFC
Incumbency Certificate delivered to it for purposes of determining the
authorized RFC Agents.
(b) With the delivery of this Series 1997-1 Collateral Agreement,
RFC shall cause the Depositary to furnish to the Series 1997-1 Collateral
Agent, and from time to time thereafter may cause the Depositary to furnish to
the Series 1997-1 Collateral Agent, a certificate (the "Depositary Incumbency
Certificate") certifying as to the incumbency and specimen signatures of
officers of the Depositary (the "Depositary Agents") authorized to act, and to
give instructions and notices, on behalf of the Depositary hereunder. Until
the Series 1997-1 Collateral Agent receives a subsequent Depositary Incumbency
Certificate, the Series 1997-1 Collateral Agent shall be entitled to rely on
the last such Depositary Incumbency Certificate delivered to it for purposes of
determining the authorized Depositary Agents.
(c) With the delivery of this Series 1997-1 Collateral Agreement
and from time to time thereafter, each Series 1997-1 Support Letter of Credit
Provider shall furnish to the Series 1997-1 Collateral Agent a certificate
(each, a "Series 1997-1 Support Letter of Credit Provider Incumbency
Certificate") certifying as to the incumbency and specimen signatures of
officers of
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<PAGE> 14
such Series 1997-1 Support Letter of Credit Provider (the "Series 1997-1
Support Letter of Credit Provider Agents" with respect to such Series 1997-1
Support Letter of Credit Provider) authorized to act, and to give instructions
and notices, on behalf of such Series 1997-1 Support Letter of Credit Provider
hereunder. Until the Series 1997-1 Collateral Agent receives a subsequent
Series 1997-1 Support Letter of Credit Provider Incumbency Certificate from a
Series 1997-1 Support Letter of Credit Provider, the Series 1997-1 Collateral
Agent shall be entitled to rely on the last such Series 1997-1 Support Letter
of Credit Provider Incumbency Certificate delivered to it for purposes of
determining the authorized Series 1997-1 Support Letter of Credit Provider
Agents with respect to such Series 1997-1 Support Letter of Credit Provider.
(d) With the delivery of this Series 1997-1 Collateral Agreement
and from time to time thereafter, the GM Series 1997-1 Support Provider shall
furnish to the Series 1997-1 Collateral Agent a certificate (each, a "GM Series
1997-1 Support Provider Incumbency Certificate") certifying as to the
incumbency and specimen signatures of officers of the GM Series 1997-1 Support
Provider (the "GM Series 1997-1 Support Provider Agents") authorized to act,
and to give instructions and notices, on behalf of the GM Series 1997-1 Support
Provider hereunder. Until the Series 1997-1 Collateral Agent receives a
subsequent GM Series 1997-1 Support Provider Incumbency Certificate from the GM
Series 1997-1 Support Provider, the Series 1997-1 Collateral Agent shall be
entitled to rely on the last such GM Series 1997-1 Support Provider Incumbency
Certificate delivered to it for purposes of determining the authorized GM
Series 1997-1 Support Provider Agents with respect to the GM Series 1997-1
Support Provider.
(e) With the delivery of this Series 1997-1 Collateral Agreement
and from time to time thereafter, the Series 1997-1 Liquidity Agent shall
furnish to the Series 1997-1 Collateral Agent a certificate (the "Series 1997-1
Liquidity Agent Incumbency Certificate") certifying as to the incumbency and
specimen signatures of officers of the Series 1997-1 Liquidity Agent (the
"Series 1997-1 L.A. Agents") authorized to act, and to give instructions and
notices, on behalf of the Series 1997-1 Liquidity Agent hereunder. Until the
Series 1997-1 Collateral Agent receives a subsequent Series 1997-1 Liquidity
Agent Incumbency Certificate, the Series 1997-1 Collateral Agent shall be
entitled to rely on the last such Series 1997-1 Liquidity Agent Incumbency
Certificate delivered to it for purposes of determining the authorized Series
1997-1 L.A. Agents.
SECTION 3.2. Representations and Warranties of RFC. RFC reaffirms
and repeats its representations and warranties contained in the Series 1997-1
Liquidity Agreement, the Series 1997-1 Support Reimbursement Agreement and the
GM Series 1997-1 Support Reimbursement Agreement and agrees that the Secured
Parties may rely on such representations and warranties as though set forth
herein in full.
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<PAGE> 15
SECTION 3.03. Additional Representations, Warranties and Covenants of
RFC. RFC hereby makes the following representations, warranties and covenants
to each of the Secured Parties:
(a) All action necessary (including, without limitation,
the filing of UCC-1 financing statements, and the delivery of the
Series 1997-1 Notes to the RFC Receivables Trustee) to protect and
perfect the Series 1997-1 Collateral Agent's security interest on
behalf of the Secured Parties in the Assigned Collateral now in
existence and hereafter acquired or created, the Series 1997-1 Cash
Collateral Account and the Deposited Funds has been duly and
effectively taken.
(b) No security agreement, financing statement,
equivalent security or lien instrument or continuation statement
listing RFC as debtor covering all or any part of the Assigned
Collateral is on file or of record in any jurisdiction, except such as
may have been filed, recorded or made by RFC (i) in favor of the
Series 1997-1 Collateral Agent pursuant to this Series 1997-1
Collateral Agreement or (ii) in favor of the RFC Receivables Trustee
pursuant to the RFC Receivables Trust Agreement.
(c) This Series 1997-1 Collateral Agreement creates a
valid and continuing security interest in the Assigned Collateral in
favor of the Series 1997-1 Collateral Agent on behalf of the Secured
Parties, which security interest is prior to all other Liens, except
for Permitted Liens, and is enforceable as such as against creditors
of and purchasers from RFC.
(d) RFC's principal place of business and chief executive
office shall be at: [ ] and the place where its
records concerning the Assigned Collateral are kept is at [
]. RFC will not change its name or such principal place of business
or chief executive office or remove such records without 60 days prior
written notice to the Series 1997-1 Collateral Agent.
(e) At any time and from time to time, upon the written
request of the Series 1997-1 Collateral Agent, and at the sole expense
of RFC, RFC will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as
the Series 1997-1 Collateral Agent may reasonably deem necessary in
obtaining the full benefits of this Series 1997-1 Collateral Agreement
and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements
under the Uniform Commercial Code in effect in any jurisdiction with
respect to the liens and security interests granted hereby. RFC also
hereby authorizes the Series 1997-1 Collateral Agent to file any such
financing or continuation statement without the signature of RFC to
the extent permitted by applicable law. If any amount payable under
or in connection with any of the Assigned Collateral shall be or
become evidenced by any promissory note, chattel paper or other
instrument, such note,
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chattel paper or instrument shall be deemed to be held in trust and
immediately pledged to the Series 1997-1 Collateral Agent hereunder,
and shall, subject to the rights of any Person in whose favor a prior
Lien has been perfected, be duly endorsed in a manner satisfactory to
the Series 1997-1 Collateral Agent and delivered to the Series 1997-1
Collateral Agent promptly.
(f) RFC will warrant and defend the Series 1997-1
Collateral Agent's right, title and interest in and to the Assigned
Collateral and the income, distributions and proceeds thereof, for the
benefit of the Secured Parties against the claims and demands of all
Persons whomsoever.
(g) All authorizations in this Series 1997-1 Collateral
Agreement for the Series 1997-1 Collateral Agent to endorse checks,
instruments and securities and to execute financing statements,
continuation statements, security agreements and other instruments
with respect to the Assigned Collateral are powers coupled with an
interest and are irrevocable.
SECTION 3.4. Representations and Warranties of the Series 1997-1
Collateral Agent. The Series 1997-1 Collateral Agent hereby represents,
warrants and covenants to the Secured Parties that this Series 1997-1
Collateral Agreement has been duly authorized, executed and delivered by the
Series 1997-1 Collateral Agent and constitutes a legal, valid and binding
obligation of the Series 1997-1 Collateral Agent, enforceable against the
Series 1997-1 Collateral Agent in accordance with its terms, except as such
enforceability may be subject to bankruptcy or insolvency laws, creditors'
rights generally and general principles of equity.
ARTICLE IV.
ASSIGNMENT
SECTION 4.01. Assignment. (a) In order to secure and provide for the
payment and repayment of the RFC Obligations, RFC hereby pledges, assigns,
conveys, delivers, transfers and sets over to the Series 1997-1 Collateral
Agent, for the ratable benefit of the Secured Parties as their respective
interests appear, and hereby grants to the Series 1997-1 Collateral Agent, for
the benefit of the Secured Parties, a security interest in all of RFC's right,
title and interest in and to all of the following property and interests in
property (other than as specified below) whether now owned or hereafter
acquired or created (all of the foregoing being referred to as the "Assigned
Collateral"):
(i) the RFC Agreements, including, without limitation, the
Series 1997-1 Notes (other than the VFN Payment Rights), all monies
due and to become due to RFC from NFLP under or in connection with the
RFC Agreements (other than in respect of the VFN
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<PAGE> 17
Payment Rights), whether payable as principal, interest, rents, fees,
expenses, costs, indemnities, insurance recoveries, damages for the
breach of any of the RFC Agreements or otherwise, and all rights,
remedies, powers, privileges and claims of RFC against any other party
under or with respect to the Series 1997-1 Notes (including RFC's
rights, other than the VFN Payment Rights, as a Series 1997-1
Noteholder under the Series 1997-1 Supplement) and the other RFC
Agreements (whether arising pursuant to the terms of such RFC
Agreements or otherwise available to RFC at law or in equity), the
right to enforce any of the RFC Agreements, including, without
limitation, the Series 1997-1 Notes and the rights of the Series
1997-1 Noteholders under the Series 1997-1 Supplement (other than the
VFN Payment Rights) as provided herein and to give or withhold any and
all consents, requests, notices, directions, approvals, extensions or
waivers under or with respect to the Series 1997-1 Notes, the Series
1997-1 Supplement or other RFC Agreements or the obligations of any
party thereunder to RFC; and
(ii) the RFC Receivables Trust Agreement, the RFC Beneficial
Interest and the right to receive all distributions and payments
pursuant thereto and in respect thereof; and
(iii) all additional property that may from time to time
hereafter be subjected to the grant and pledge hereof by RFC or by
anyone on its behalf; and
(iv) all property assigned to the Series 1997-1 Collateral
Agent pursuant to Section 5.02 hereof, including the Accounts
(including the Deposited Funds) and the Series 1997-1 Cash Collateral
Account; and
(v) all proceeds, products and profits of and from any and
all of the foregoing, including, without limitation, cash.
Notwithstanding the foregoing, upon the disbursement by the Series 1997-1
Collateral Agent of any amount distributable to RFC in accordance with the
terms of Section 2.01 or 5.02(b) for the payment of RFC's operating and
ordinary course expenses or otherwise, the security interest in such amount
granted in favor of the Series 1997-1 Collateral Agent shall be released.
(b) RFC hereby confirms the grant, pledge, hypothecation, assignment,
conveyance, delivery and transfer to the RFC Receivables Trustee under the RFC
Receivables Trust Agreement, in exchange for the RFC Beneficial Interest, of
all RFC's right, title and interest in, to, under and in respect of the VFN
Payment Rights.
(c) Notwithstanding the assignment and security interest so granted
to the Series 1997-1 Collateral Agent, RFC shall nevertheless be permitted,
subject to the Series 1997-1 Collateral Agent's right to revoke such permission
in the event of a Liquidity Agreement Amortization Event or a Liquidation Event
of Default and the provisions of Section 4.03 hereof, to give all consents,
requests, notices, directions, approvals, extensions or waivers, if any, which
are
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<PAGE> 18
required to be given in the normal course of business (which does not include
waivers of defaults under any of the RFC Agreements or revocation of powers of
attorney to NFLP) to NFLP by RFC by the specific terms of the RFC Agreements or
to any other obligor under the Assigned Collateral, and the assignment of the
Assigned Collateral to the Series 1997-1 Collateral Agent shall not (i) relieve
RFC from the performance of any term, covenant, condition or agreement on RFC's
part to be performed or observed under or in connection with any of the RFC
Agreements or from any liability to NFLP or any other party under the RFC
Agreements, or (ii) impose any obligation on any of the Secured Parties to
perform or observe any such term, covenant, condition or agreement on RFC's
part to be so performed or observed or impose any liability on any of the
Secured Parties for any act or omission on the part of RFC or from any breach
of any representation or warranty on the part of RFC. RFC hereby agrees to
indemnify and hold harmless each Secured Party from and against any and all
losses, liabilities (including liabilities for penalties), claims, demands,
actions, suits, judgments, reasonable out-of-pocket costs and expenses arising
out of or resulting from the assignment granted hereby by virtue of any act or
omission on the part of RFC including, without limitation, the reasonable
out-of-pocket costs, expenses, and disbursements (including reasonable
attorneys' fees and expenses) incurred by any of the Secured Parties in
enforcing this Series 1997-1 Collateral Agreement or preserving any of their
respective rights to, or realizing upon, any of the Assigned Collateral.
SECTION 4.02. Application of Assigned Collateral and Deposited Funds.
(a) RFC hereby acknowledges and agrees that, until this Series 1997-1
Collateral Agreement is terminated, RFC shall, and the Series 1997-1 Collateral
Agent is authorized to, cause all payments made to RFC or the RFC Receivables
Trust by or on behalf of NFLP or any other party under the Series 1997-1 Notes
or any other RFC Agreement to be deposited into the Series 1997-1 Collateral
Account or such other account as the Series 1997-1 Collateral Agent may from
time to time specify to the Person making such payments; and RFC represents to
the Secured Parties that it has instructed NFLP and the other parties under the
RFC Agreements, as applicable, to so remit such amounts.
(b) RFC agrees that if any such monies, instruments, cash or other
proceeds of the Assigned Collateral shall be received by RFC in an account
other than the Series 1997-1 Collateral Account or in any other manner, such
monies, instruments, cash and other proceeds will not be commingled by RFC 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 RFC for, and immediately paid over to,
but in any event within two (2) Business Days from identification thereof (but
in no event later than the eighth (8th) day following its receipt of such
payment, the Series 1997-1 Collateral Agent with any necessary endorsement.
(c) Provided that the Series 1997-1 Collateral Account or any funds
on deposit in, or otherwise to the credit of, the Series 1997-1 Collateral
Account are not then subject to any writ, order, judgment, warrant of
attachment, execution or similar process, all monies, instruments, cash and
other proceeds received by the Series 1997-1 Collateral Agent pursuant to this
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<PAGE> 19
Article IV shall be immediately deposited in the Series 1997-1 Collateral
Account, and, unless and until a Liquidity Agreement Amortization Event shall
have occurred and be continuing, shall be applied as provided in Section
5.02(b) hereof. All monies, instruments, cash and other proceeds held or
deposited in the Series 1997-1 Collateral Account after the occurrence and
during the continuance of a Liquidity Agreement Amortization Event, and all
monies, instruments, cash and other proceeds received by the Series 1997-1
Collateral Agent pursuant to this Article IV while the Series 1997-1 Collateral
Account or any funds on deposit in, or otherwise to the credit of, the Series
1997-1 Collateral Account are subject to any writ, order, judgment, warrant of
attachment, execution or similar process, shall be applied by the Series 1997-1
Collateral Agent (to the extent permitted by law) to the payment or repayment
in full of all outstanding RFC Obligations, in the appropriate order of
priority specified in Section 2.01 of this Series 1997-1 Collateral Agreement.
SECTION 4.03. Performance of Agreement. (a) Upon the occurrence of a
Liquidation Event of Default, (i) promptly following a request from the Series
1997-1 Collateral Agent to do so and at RFC's own expense, RFC agrees to take
all such lawful action and as permitted under this Series 1997-1 Collateral
Agreement as the Series 1997-1 Collateral Agent may reasonably request to
compel or secure the performance and observance by NFLP or by any other party
to any RFC Agreement or any other CP Program Document of its obligations to RFC
in accordance with the applicable terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to RFC to the extent
and in the manner reasonably directed by the Series 1997-1 Collateral Agent,
including, without limitation, the transmission of notices of default and the
giving of directions, or the institution of legal or administrative actions or
proceedings to compel or secure performance by NFLP (or such party to any RFC
Agreement or any other CP Program Document), of their respective obligations
thereunder; provided, however, that if RFC shall have failed, within fifteen
(15) Business Days of receiving the direction by the Series 1997-1 Collateral
Agent, to accomplish such directions of the Series 1997-1 Collateral Agent, the
Series 1997-1 Collateral Agent may, but shall not be obligated to, take such
previously directed action (and any related action as permitted under this
Series 1997-1 Collateral Agreement thereafter determined by the Series 1997-1
Collateral Agent to be appropriate without the need under this provision or any
other provision hereunder to direct RFC to take such action) on behalf of RFC
and the Secured Parties; and (ii) the Series 1997-1 Collateral Agent may, and
upon written direction from the Required Liquidity Providers shall, take all
lawful action at RFC's expense (for reasonable costs and expenses), to exercise
any and all rights, remedies, powers and privileges lawfully available to the
Series 1997-1 Collateral Agent to the extent and in the manner directed by the
Required Liquidity Providers or, in the absence of such direction, by the
Series 1997-1 Collateral Agent itself, 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 NFLP,
RFC or any obligor with respect to the Assigned Collateral including, without
limitation, the giving of directions to the Trustee to exercise or to cause the
Master Collateral Agent to exercise rights and remedies under the Master
Collateral Agency Agreement with respect to the Master Collateral for which the
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<PAGE> 20
Trustee (on behalf of the Series 1997-1 Noteholders), the Series 1997-1 Support
Letter of Credit Providers and the GM Series 1997-1 Support Provider are
designated as Beneficiaries and to exercise any other remedies available to a
secured party, and, to the extent that the direction of the Series 1997-1
Noteholders is required under the terms of the Series 1997-1 Supplement, the
Required Liquidity Providers shall be deemed to have directed that each Series
1997 Vehicle that is a Program Vehicle be returned to the related Manufacturer
under the related Manufacturer Program at the end of the minimum holding period
(if any) for such Program Vehicle under the related Manufacturer Program,
unless the Required VFN Noteholders specifically waive such direction in
writing.
SECTION 4.04. Amendments; Waivers; Declaration of Default. Without
intending in any manner to derogate from the absolute nature of the assignment
granted to the Series 1997-1 Collateral Agent by this Series 1997-1 Collateral
Agreement or the rights of the Series 1997-1 Collateral Agent hereunder, RFC
agrees that, subject to its right to take certain actions with respect to the
Assigned Collateral set forth in Section 4.01(c), it will not (i) amend,
modify, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination or surrender of, the terms of any
Assigned Collateral, or waive timely performance or observance by any obligor
of its obligations to RFC under the Assigned Collateral, or any default on the
part of any obligor under the Assigned Collateral without giving prior written
notice to the Rating Agencies and the Dealers and without the prior written
consent of the Required Liquidity Providers and the Series 1997-1 Collateral
Agent (to the extent the rights or duties of the Series 1997-1 Collateral Agent
are affected thereby), or (ii) exercise any right, remedy, power or privilege
available to it with respect to any obligor under the Assigned Collateral,
take any action to compel or secure performance or observance by any obligor of
its obligations to RFC or give any consent, request, notice, direction,
approval, extension or waiver with respect to any obligor without the prior
written consent of the Series 1997-1 Collateral Agent; provided, however, that
RFC may amend the terms of any Assigned Collateral if such amendment is
effected only to cure any ambiguity, to correct or supplement any provision
therein which may be inconsistent with any other provision therein or which is
otherwise defective, or to make any other provisions with respect to matters or
questions arising under such Assigned Collateral which shall not be
inconsistent with the provisions of such Assigned Collateral; provided, such
action pursuant to this clause shall not adversely affect the interests of a
Secured Party in any material respect. Subject to its right to take certain
actions with respect to the Assigned Collateral set forth in Section 4.01 (c),
RFC (in its capacity as a Series 1997-1 Noteholder) will not agree to any such
amendment, waiver or other change (with respect to a Manufacturer Program, only
to the extent any consent of RFC (in its capacity as a Series 1997-1
Noteholder) is solicited or required by the Manufacturer or any assignor of
such Manufacturer Program), (i) if such amendment, waiver or other change would
materially adversely affect the rights of the Holders of the Commercial Paper
Notes or (ii) if the Series 1997-1 Collateral Agent shall not have received
written confirmation of the Rating Agencies that such amendment, waiver or
other change will not result in the downgrading or withdrawal of the then
current ratings of the Commercial Paper Notes by the Rating Agencies. If any
such amendment,
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<PAGE> 21
modification, supplement or waiver shall be so consented to by the Series
1997-1 Collateral Agent (to the extent required) and the Required Liquidity
Providers, RFC agrees, promptly following a request by the Series 1997-1
Collateral Agent or the Series 1997-1 Liquidity Agent to do so, to execute and
deliver, in its own name and at its own expense, such agreements, instruments,
consents and other documents as any of them may deem necessary or appropriate
in the circumstances. No consent by the Series 1997-1 Collateral Agent or any
other Secured Party to any such amendment, modification, supplement or waiver
shall be deemed to be a determination by the Series 1997-1 Collateral Agent
that such amendment, modification, supplement or waiver will not adversely
affect the rights of any Holder of Commercial Paper Notes.
SECTION 4.05. Notice of Default. Promptly upon becoming aware
thereof, RFC agrees to give the Secured Parties (other than the Holders of the
Commercial Paper Notes), the Master Collateral Agent and each Rating Agency
prompt written notice (and in no case more than two (2) days after RFC has
actual knowledge thereof) of each Liquidity Agreement Amortization Event or
Potential Liquidity Agreement Amortization Event, and each Manufacturer Event
of Default that comes to RFC's attention.
ARTICLE V.
SERIES 1997-1 COLLATERAL ACCOUNT, SERIES 1997-1 LIQUIDITY LENDER
ACCOUNT, AND SERIES 1997-1 TERMINATION ADVANCE ACCOUNT
SECTION 5.01. Establishment of Accounts; Deposit of Funds. (a) For
purposes of the Series 1997-1 Liquidity Agreement, the Series 1997-1 Support
Reimbursement Agreement and the Depositary Agreement, the Series 1997-1
Collateral Agent shall at all times during the term of this Series 1997-1
Collateral Agreement maintain at a U.S. branch or agency of the Series 1997-1
Collateral Agent (i) a demand deposit account for the benefit of the Secured
Parties (said account being herein called the "Series 1997-1 Collateral
Account") and being identified as Account No. 93129201, (ii) a demand deposit
account for the benefit of the Secured Parties (said account being herein
called the "Series 1997-1 Termination Advance Account") and being identified as
Account No. 93129202, (iii) a demand deposit account for the Series 1997-1
Liquidity Lenders and the Series 1997-1 Liquidity Agent (said account being
herein called the "Series 1997-1 Liquidity Lender Account" and being identified
as Account No. 93129203), and (iv) a demand deposit account for the benefit of
the Secured Parties (said account being herein called the "Series 1997-1 Pledge
Account") and being identified as Account No. [ ], the operation of
each of which shall be governed by this Article V (the Series 1997-1 Collateral
Account, the Series 1997-1 Termination Advance Account, the Series 1997-1
Pledge Account and the Series 1997-1 Liquidity Lender Account are collectively
referred to herein as the "Accounts"); provided, however, if at any time the
short-term credit rating of the Series 1997-1 Collateral Agent from S&P and
Moody's shall be reduced below A-1 or P-1, respectively, the
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<PAGE> 22
Series 1997-1 Collateral Agent shall, within thirty (30) days of such
reduction, convert each of the Accounts to a segregated trust account in the
corporate trust department of a financial institution.
(b) It is understood and agreed by RFC and the Secured Parties that
on any Business Day there shall be deposited in the Series 1997-1 Collateral
Account the following monies, instruments, cash and proceeds received by the
Series 1997-1 Collateral Agent or RFC at any time and from time to time: (i)
from the Depositary, proceeds from the sale of Commercial Paper Notes to the
extent of maturing Commercial Paper Notes, (ii) from the Trustee or NFLP,
payments of principal or interest on the Series 1997-1 Notes, (iii) any other
proceeds of the Assigned Collateral, and (iv) any and all monies at any time
and from time to time received on behalf of RFC, and required by the terms of
this Series 1997-1 Collateral Agreement or any other CP Program Document to be
deposited in the Series 1997-1 Collateral Account.
(c) It is further understood and agreed by RFC and the Secured
Parties that there shall be deposited in the Series 1997-1 Termination Advance
Account the monies, instruments, cash and proceeds received by the Series
1997-1 Collateral Agent or RFC at any time and from time to time from any
Series 1997-1 Liquidity Lender pursuant to Section 3.6.4 of the Series 1997-1
Liquidity Agreement.
(d) It is further understood and agreed by RFC and the Secured
Parties that there shall be deposited in the Series 1997-1 Liquidity Lender
Account or the Commercial Paper Account the following monies, instruments, cash
and proceeds received by the Series 1997-1 Collateral Agent or RFC at any time
and from time to time: (i) amounts received from any Series 1997-1 Liquidity
Lender pursuant to Section 3.6.1, 3.6.2 or 3.6.3 of the Series 1997-1 Liquidity
Agreement, (ii) any and all monies at any time and from time to time received
on behalf of RFC, and required by the terms of this Series 1997-1 Collateral
Agreement, the Series 1997-1 Liquidity Agreement or any other CP Program
Document to be deposited in the Series 1997-1 Liquidity Lender Account or the
Commercial Paper Account and (iii) from the Enhancement Agent, proceeds from
Series 1997-1 LOC Liquidity Disbursements.
(e) All monies, instruments, cash and proceeds deposited at any time
and from time to time in any and all of the Accounts are referred to as
"Deposited Funds"; provided that (i) Deposited Funds in the Series 1997-1
Pledge Account may only be used for the purposes provided in Section 2.5 of the
Series 1997-1 Liquidity Agreement (A) to make payments pursuant to clause
Second of Section 2.01 and, to the extent a Borrowing Base Deficiency continues
to exist, to make payments pursuant to clause Fifth of Section 2.01 and (B) to
make payments pursuant to Section 5.02(b)(i) and, to the extent a Borrowing
Base Deficiency continues to exist, to make payments pursuant to Section
5.02(b)(v) and (ii) the Deposited Funds in the Series 1997-1 Termination
Advance Account may only be used to make payments pursuant to clause Second of
Section 2.01 or Section 5.02(b)(i) hereof. Deposited Funds may, at RFC's
discretion upon RFC's written direction and at RFC's expense, be invested in
Permitted
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<PAGE> 23
Investments; provided that if a Liquidity Agreement Amortization Event shall
have occurred and be continuing or any RFC Obligations then due shall be
unpaid, RFC's rights to invest such Deposited Funds shall terminate and the
Series 1997-1 Collateral Agent shall have the right (but not the obligation) to
invest funds at RFC's expense in Permitted Investments.
(f) In addition, RFC agrees that it will not, and will not permit any
Person on behalf of RFC to, issue Commercial Paper Notes after RFC has received
notice that any of the Accounts or the Commercial Paper Account is subject to
any stay, writ, judgment, warrant of attachment, execution or other similar
process; provided that if any such writ, order, judgment, warrant of
attachment, execution or other similar process is removed or dismissed, RFC may
recommence issuing, and permitting any Person on behalf of RFC to issue,
Commercial Paper Notes.
SECTION 5.02. Assignment of Accounts, etc. (a) (i) In order to secure
and provide for the repayment and payment of the RFC Obligations, RFC hereby
assigns, pledges, grants, transfers and sets over to the Series 1997-1
Collateral Agent, for the benefit of the Secured Parties, all of RFC's right,
title and interest in and to the following (whether now or hereafter existing
and whether now owned or hereafter acquired): (A) the Accounts and all claims
of RFC in and to the Accounts, (B) the Deposited Funds and all claims of RFC in
and to the Deposited Funds, (C) all certificates and instruments, if any,
representing or evidencing any or all of the Accounts, (D) all interest,
dividends, cash, instruments and other property from time to time, received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Accounts, the Deposited Funds or the Permitted Investments and all
claims of RFC therein and thereto, (E) all Permitted Investments made at any
time and from time to time with the monies in any and all of the Accounts and
all claims of RFC therein and thereto and (F) all proceeds of any and all of
the foregoing, including, without limitation, cash. (ii) To further secure the
RFC Obligations, RFC hereby pledges, assigns, conveys, delivers, transfers and
sets over to the Enhancement Agent, for the benefit of the Secured Parties, and
hereby grants to the Enhancement Agent for the benefit of the Secured Parties,
a security interest in all of RFC's right, title and interest (whether now
owned or hereafter acquired or created) in and to (x) the Series 1997-1 Letter
of Credit and (y) (i) any Series 1997-1 Cash Collateral Account; (ii) all funds
on deposit therein from time to time; (iii) all certificates and instruments,
if any, representing or evidencing any or all of any such Series 1997-1 Cash
Collateral Account or the funds on deposit therein from time to time; (iv) all
investments made at any time and from time to time with moneys in any such
Series 1997-1 Cash Collateral Account; and (v) all proceeds of any and all of
the foregoing, including, without limitation, cash. (iii) Throughout the term
of this Series 1997-1 Collateral Agreement, the Series 1997-1 Collateral Agent
shall be a pledgee in possession of the Deposited Funds and shall have the sole
and exclusive right to withdraw or order a transfer of Deposited Funds from the
Accounts or to direct the Enhancement Agent to order a withdrawal or transfer
of funds from the Series 1997-1 Cash Collateral Account for the purposes
specified in Section 5.5(b), in each case, subject to the provisions of the
next succeeding paragraph, and RFC hereby appoints the Series 1997-1 Collateral
Agent the true and lawful attorney of RFC, with full power of substitution, for
the purpose of making any such
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<PAGE> 24
withdrawal or ordering any such transfer of Deposited Funds from any of the
Accounts, which appointment is coupled with an interest and is irrevocable.
(b) So long as no Liquidity Agreement Amortization Event shall have
occurred and then be continuing, RFC, with respect to clause (ii) and clauses
(iv) through (xii) below, and the Depositary with respect to clause (i) below,
and the Series 1997-1 Liquidity Agent, on behalf of the Series 1997-1 Liquidity
Lenders, with respect to clause (iii) below, shall have the right to instruct
the Series 1997-1 Collateral Agent to withdraw or allocate and retain, or order
the transfer of, Deposited Funds from any of the Accounts (subject to Section
5.01(e) with respect to the Series 1997-1 Pledge Account and the Series 1997-1
Termination Advance Account), from time to time as necessary, for deposit into
the Series 1997-1 Collection Account or for the following purposes in the
following priority:
(i) the payment of all Indebtedness, at any time and from
time to time due from RFC to the Holders of the Outstanding Commercial
Paper Notes issued pursuant to and in accordance with the Depositary
Agreement;
(ii) the payment of all operating and ordinary course
expenses of RFC up to an aggregate amount equal to $100,000 per annum;
(iii) to the extent no Borrowing Base Deficiency results, the
payment of all fees and expenses at any time and from time to time due
to the Depositary pursuant to Section 8(a) of the Depositary Agreement
or due to the Series 1997-1 Collateral Agent hereunder;
(iv) the payment of all amounts at any time and from time to
time due to the Series 1997-1 Liquidity Agent, as notified to the
Series 1997-1 Collateral Agent pursuant to Section 3.6.6 of the Series
1997-1 Liquidity Agreement;
(v) first, the payment, pro rata, of all principal
Indebtedness (including Commitment Termination Date Liquidity
Advances) at any time and from time to time due (in the case of a
Commitment Termination Date Liquidity Advance, such Advance will be
deemed to be due for purposes of this Section 5.02(b)(v) on the date
such Advance is made) from RFC (a) to the Series 1997-1 Liquidity
Lenders in connection with the Liquidity Advances made pursuant to the
Series 1997-1 Liquidity Agreement, (b) to the Series 1997-1 Support
Letter of Credit Providers in connection with Support Liquidity
Disbursements, and (c) if applicable, to the Series 1997-1 Cash
Collateral Account in connection with monies withdrawn from such
Account to fund any Series 1997-1 LOC Liquidity Disbursements,
together with all amounts payable in respect of interest on any of the
foregoing; and second, the payment, pro rata, of the RFC Reimbursement
Share of any Support Termination Disbursement, together with all
amounts payable in respect of interest on any of the foregoing;
provided, however, the
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<PAGE> 25
amounts payable to the Series 1997-1 Liquidity Lenders and the Series
1997-1 Support Letter of Credit Providers pursuant to subclauses (a)
and (b) of this clause (v) shall be subject to the Series 1997-1
Collateral Agent's right to set off and apply any and all amounts held
by the Series 1997-1 Collateral Agent for the benefit of the Series
1997-1 Liquidity Lenders or the Series 1997-1 Support Letter of Credit
Providers against any and all of their respective obligations to the
Series 1997-1 Collateral Agent under this Series 1997-1 Collateral
Agreement, as set forth in Section 7.02(a) of this Series 1997-1
Collateral Agreement;
(vi) first, the payment, pro rata, of all principal
Indebtedness (including Support Termination Disbursements) at any time
and from time to time due (in the case of a Support Termination
Disbursement, such Support Termination Disbursement will be deemed to
be due for purposes of this Section 5.02(b)(vi) on the date such
Support Termination Disbursement is made) from RFC to the GM Series
1997-1 Support Provider in connection with Support Liquidity
Disbursements, together with all amounts payable in respect of
interest on any of the foregoing; and second, the payment, pro rata,
of the RFC Reimbursement Share of any Support Termination Disbursement
or Support Event of Default Disbursement, together with all amounts
payable in respect of interest on any of the foregoing; provided,
however, the amounts payable to the GM Series 1997-1 Support Provider
pursuant to this clause (vi) shall be subject to the Series 1997-1
Collateral Agent's right to set off and apply any and all amounts held
by the Series 1997-1 Collateral Agent for the benefit of the GM Series
1997-1 Support Provider against any and all of their respective
obligations to the Series 1997-1 Collateral Agent under this Series
1997-1 Collateral Agreement, as set forth in Section 7.02(a) of this
Series 1997-1 Collateral Agreement;
(vii) to the extent no Borrowing Base Deficiency results
therefrom, the payment, pro rata, of (a) all other Indebtedness
(including, but not limited to, fees, reimbursements, indemnities,
taxes and increased costs, but excluding amounts referenced in clause
(ix) below) at any time and from time to time due and owing from RFC
to the Series 1997-1 Liquidity Lenders, the Series 1997-1 Liquidity
Agent, the Series 1997-1 Letter of Credit Provider (solely with
respect to amounts due from RFC under the Series 1997-1 Letter of
Credit Agreement), the Series 1997-1 Support Letter of Credit
Providers (solely with respect to amounts due from RFC under the
Series 1997-1 Support Reimbursement Agreement), and the Series 1997-1
Collateral Agent under or in respect of the Series 1997-1 Liquidity
Agreement, the Series 1997-1 Support Reimbursement Agreement, and this
Series 1997-1 Collateral Agreement, together with all amounts due from
RFC in respect of interest thereon, and (b) all indemnities at any
time and from time to time due from RFC hereunder to the Series 1997-1
Liquidity Lenders and the Series 1997-1 Support Letter of Credit
Providers, it being understood that amounts payable under this clause
(vii) shall relate exclusively to costs and expenses incurred in or in
connection with this Series 1997-1 Collateral Agreement, the
procurement and handling of funds and
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<PAGE> 26
the making of such funds available to or for the account or benefit of
RFC and shall not include amounts payable in connection with general
indemnity claims relating to the use by RFC or the Series 1997-1
Letter of Credit Provider of the proceeds of such financial
accommodations (other than, in the event such actions give rise to
breakage costs, any action in the nature of a prepayment by RFC) or
actions taken or omitted to be taken by RFC under the Related
Documents and not directly related to the procurement of funds, all of
which shall be covered by clause (ix) below; provided, however, that
amounts payable under this clause (vii) shall be subject to the Series
1997-1 Collateral Agent's right to set off and apply any and all
amounts held by the Series 1997-1 Collateral Agent for the benefit of
the Series 1997-1 Liquidity Lenders or the Series 1997-1 Support
Letter of Credit Providers against any and all of the respective
obligations of such parties to the Series 1997-1 Collateral Agent
under this Series 1997-1 Collateral Agreement, as set forth in Section
7.02(a) of this Series 1997-1 Collateral Agreement;
(viii) to the extent no Borrowing Base Deficiency results
therefrom, the payment, pro rata, of all other Indebtedness
(including, but not limited to, fees, reimbursements, indemnities,
taxes and increased costs, but excluding amounts referenced in clause
(ix) below) at any time and from time to time due and owing from RFC
to the GM Series 1997-1 Support Provider (solely with respect to
amounts due from RFC under the Series 1997-1 Support Reimbursement
Agreement), under or in respect of the GM Series 1997-1 Support
Provider Series 1997-1 Support Reimbursement Agreement, and this
Series 1997-1 Collateral Agreement, together with all amounts due from
RFC in respect of interest thereon, and (b) all indemnities at any
time and from time to time due from RFC hereunder to the GM Series
1997-1 Support Provider, it being understood that amounts payable
under this clause (viii) shall relate exclusively to costs and
expenses incurred in or in connection with this Series 1997-1
Collateral Agreement, the procurement and handling of funds and the
making of such funds available to or for the account or benefit of RFC
and shall not include amounts payable in connection with general
indemnity claims relating to the use by RFC or the Series 1997-1
Letter of Credit Provider of the proceeds of such financial
accommodations (other than, in the event such actions give rise to
breakage costs, any action in the nature of a prepayment by RFC) or
actions taken or omitted to be taken by RFC under the Related
Documents and not directly related to the procurement of funds, all of
which shall be covered by clause (ix) below; provided, however, that
amounts payable under this clause (viii) shall be subject to the
Series 1997-1 Collateral Agent's right to set off and apply any and
all amounts held by the Series 1997-1 Collateral Agent for the benefit
of the GM Series 1997-1 Support Provider against any and all of the
obligations of the GM Series 1997-1 Support Provider to the Series
1997-1 Collateral Agent under this Series 1997-1 Collateral Agreement,
as set forth in Section 7.02(a) of this Series 1997-1 Collateral
Agreement;
(ix) to the extent no Borrowing Base Deficiency results
therefrom, the repayment, pro rata, of all reasonable amounts advanced
or expended by the Series 1997-1 Collateral
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<PAGE> 27
Agent, the Series 1997-1 Liquidity Agent, any Series 1997-1 Liquidity
Lender, the Series 1997-1 Support Letter of Credit Providers or the GM
Series 1997-1 Support Provider under this Series 1997-1 Collateral
Agreement or under or in connection with the Series 1997-1 Liquidity
Agreement, the Series 1997-1 Support Reimbursement Agreement (solely
with respect to amounts due from RFC thereunder) or the GM Series
1997-1 Support Provider Series 1997-1 Support Reimbursement Agreement
(solely with respect to amounts due from RFC thereunder), as the case
may be, and any other amounts and reasonable out-of-pocket costs and
expenses due from RFC to any Secured Party under or in connection with
this Series 1997-1 Collateral Agreement, the Series 1997-1 Liquidity
Agreement, the Series 1997-1 Support Reimbursement Agreement (solely
with respect to amounts due from RFC thereunder), the Depositary
Agreement or the Dealer Agreement whether in respect of indemnities
thereunder or otherwise;
(x) to the extent no Borrowing Base Deficiency results
therefrom, the payment of all other expenses of RFC in excess of the
amounts paid under clause (ii) above;
(xi) the making of further Advances by RFC under the Series
1997-1 Note Purchase Agreement for the purchase or financing by NFLP
of additional Series 1997 Vehicles for leasing under the Series 1997
Lease; and
(xii) the balance of such Deposited Funds shall be retained
in the appropriate Account and invested pursuant to Section 5.04 in
Permitted Investments.
(c) The Series 1997-1 Collateral Agent shall apply monies as provided
in Section 5.02(b) promptly upon receipt of written or telephonic instructions
from an RFC Agent or, with respect to clause (b)(i) above, a Depositary Agent,
or with respect to clause (b)(iii) above, a Series 1997-1 L.A. Agent. Any
telephonic instructions shall be promptly confirmed in writing. The Series
1997-1 Collateral Agent shall make the required withdrawals and transfers on
the same day provided that it shall have received instructions prior to 3:00
p.m. (New York City time) on such day. Absent manifest error, the Series
1997-1 Collateral Agent shall have no responsibility for verifying that monies
being transferred pursuant to this Section 5.02 are in the proper amounts or
that any conditions to such transfers are complied with. All instructions
furnished to the Series 1997-1 Collateral Agent pursuant to this Section
5.02(c) or 5.03 shall specify the account to which monies are to be
transferred; provided that monies payable to any Series 1997-1 Liquidity Lender
shall be transferred to the Series 1997-1 Liquidity Agent for distribution to
such Series 1997-1 Liquidity Lender.
(d) The Series 1997-1 Collateral Agent shall, with the cooperation of
the Depositary, the Series 1997-1 Liquidity Agent, the Series 1997-1 Support
Letter of Credit Providers and the GM Series 1997-1 Support Provider, monitor
the amount of Commercial Paper Notes Outstanding, Liquidity Advances
Outstanding, Support Series 1997-1 LOC Liquidity Disbursements Outstanding and
the current Borrowing Base, and determine whether or not a Borrowing Base
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<PAGE> 28
Deficiency exists on any Business Day. In this regard, RFC hereby agrees to
provide the Series 1997-1 Collateral Agent, on the [twentieth] day of each
month, a statement reflecting the Borrowing Base (as of the close of business
on the last day of the immediately preceding Related Month), which statement
shall be certified by a financial officer of RFC. Upon each occasion that RFC
delivers a Borrowing Base Certificate to the Series 1997-1 Liquidity Agent in
accordance with Section 2.2.5, 6.2.8 or 6.3.5, as the case may be, of the
Series 1997-1 Liquidity Agreement, RFC shall provide a copy of such Certificate
to the Series 1997-1 Collateral Agent hereunder. The Series 1997-1 Collateral
Agent may conclusively rely on such certified statement or certificate at all
times from and after the issuance thereof until issuance of a new such
certified statement or certificate, without any obligation on the part of the
Series 1997-1 Collateral Agent to confirm the truth, accuracy or completeness
of such certified statement or certificate and without any obligation on the
part of the Series 1997-1 Collateral Agent to undertake any other inquiry with
respect thereto. The Series 1997-1 Collateral Agent may at any time request
that RFC, and RFC thereafter shall, provide the Series 1997-1 Collateral Agent
with a statement as to the Borrowing Base upon each Series 1997-1 LOC Liquidity
Disbursement. Upon each occasion that RFC delivers information relating to the
Borrowing Base to the Depositary in accordance with Section 3(a) of the
Depositary Agreement, RFC shall provide a copy of the notice containing such
information to the Series 1997-1 Collateral Agent hereunder. RFC agrees to
notify the Series 1997-1 Collateral Agent promptly, and in any event within one
(1) Business Day, upon its obtaining knowledge of the existence of any
Borrowing Base Deficiency.
(e) The Series 1997-1 Collateral Agent shall from time to time, but
at least monthly, provide RFC with statements of account relating to the
Accounts and, upon receipt of a statement from the Trustee in respect thereof,
the Series 1997-1 Cash Collateral Account in accordance with the Series 1997-1
Collateral Agent's customary practices and in a form reasonably satisfactory to
the Series 1997-1 Collateral Agent and RFC.
(f) Upon the occurrence and during the continuance of a Liquidity
Agreement Amortization Event, all rights of RFC to request the Series 1997-1
Collateral Agent to (i) withdraw or order the transfer of Deposited Funds from
the Accounts or (ii) instruct the Enhancement Agent to withdraw or order the
transfer of Deposited Funds from the Series 1997-1 Cash Collateral Account
shall cease, and the Series 1997-1 Collateral Agent, at the direction (which
direction shall be in writing or by telephone (confirmed in writing promptly
thereafter)) of the Required Liquidity Providers shall (subject to Section 7.01
hereof), at any time and from time to time, be entitled to appropriate and
apply the Deposited Funds then, or at any time thereafter, on deposit in the
Accounts or the Series 1997-1 Cash Collateral Account to the payment or
prepayment in full of all outstanding RFC Obligations, whether or not then due,
in the order of priority specified in Section 2.01 hereof (or in the case of
the Series 1997-1 Cash Collateral Account, in accordance with Section 5.05).
The Series 1997-1 Collateral Agent shall make all payments with respect to
Commercial Paper Notes Outstanding pursuant to clause Second of Section 2.01 to
the Depositary for application to the pro rata payment, in accordance with
their terms and subject to the provisions of the Depositary Agreement, of the
face amount of
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<PAGE> 29
matured and unmatured Commercial Paper Notes, whether or not such Commercial
Paper Notes have been presented to the Depositary for payment.
SECTION 5.03. Application of Deposited Funds and Assigned Collateral.
For purposes of determining the payment to be made to any Person of any
Assigned Collateral and Deposited Funds pursuant to Sections 2.01 and 5.02
hereof, the Series 1997-1 Collateral Agent may rely on certificates or
statements furnished to or by it in accordance with the provisions of this
Section 5.03; provided, however, to the extent that the Series 1997-1
Collateral Agent has previously received telephonic or written instructions
with respect to determining the payment to be made to any Person of any
Assigned Collateral and Deposited Funds pursuant to Section 5.02(c), the Series
1997-1 Collateral Agent may conclusively rely on such previously received
instructions. For purposes of determining the application to be made of
Deposited Funds and any Assigned Collateral to any Holder pursuant to clause
Second of Section 2.01 and clause (i) of Section 5.02(b) or to the Depositary
pursuant to subclause (b) of clause Third of Section 2.01, clause Tenth of
Section 2.01 or Section 5.02(b)(iii), the Series 1997-1 Collateral Agent may
rely exclusively upon a certificate or other statement (a copy of which shall
at the same time also be provided to RFC) of the Depositary as to the amount
then owing to such Holder. For purposes of determining the application to be
made of Deposited Funds and any Assigned Collateral to any Series 1997-1
Liquidity Lender, the Series 1997-1 Liquidity Agent, any Series 1997-1 Support
Letter of Credit Provider or the GM Series 1997-1 Support Provider, as the case
may be, pursuant to clause Fourth, Fifth, Sixth, Seventh, Eighth or Tenth of
Section 2.01 hereof (and the corresponding provisions under Section 5.02(b)),
the Series 1997-1 Collateral Agent may rely exclusively upon a certificate or
other statement (a copy of which shall at the same time also be provided to
RFC) of the Series 1997-1 Liquidity Agent (with respect to amounts owing to it
or any Series 1997-1 Liquidity Lender), a Series 1997-1 Support Letter of
Credit Provider Agent (with respect to amounts owing to it) or a GM Series
1997-1 Support Provider Agent (with respect to amounts owing to it), as the
case may be, as to the amount then owing to any such Series 1997-1 Liquidity
Lender, the Series 1997-1 Liquidity Agent, a Series 1997-1 Support Letter of
Credit Provider or the GM Series 1997-1 Support Provider, as the case may be.
Any application to be made of Deposited Funds and Assigned Collateral to the
Series 1997-1 Collateral Agent pursuant to clause First or Ninth of Section
2.01 hereof (and the corresponding provisions under Section 5.02(b)) may be
made upon the Series 1997-1 Collateral Agent's own certificate or statement
delivered to RFC, the Series 1997-1 Liquidity Agent, the Series 1997-1 Support
Letter of Credit Providers and the GM Series 1997-1 Support Provider, setting
forth in reasonable detail the nature of the Series 1997-1 Collateral Agent's
claim and the amount owing to the Series 1997-1 Collateral Agent on account
thereof. For purposes of determining the application to be made of Deposited
Funds and Assigned Collateral to RFC pursuant to clause Third or Eleventh of
Section 2.01 or the corresponding provisions under Section 5.02(b) hereof or to
any Dealer or any other Person (other than any party hereto or any Series
1997-1 Liquidity Lender) pursuant to clause Tenth of Section 2.01 or the
corresponding provisions under Section 5.02(b) hereof, the Series 1997-1
Collateral Agent may rely conclusively upon a certificate or other statement of
RFC as to the amount then owing to RFC or such other party. The Series
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<PAGE> 30
1997-1 Collateral Agent shall not be liable for any application of the
Deposited Funds in accordance with any certificate or direction delivered
pursuant to this Section 5.03 or 5.02(c); provided, however, that no
application of the Deposited Funds and Assigned Collateral in accordance with
any certificate or statement delivered pursuant to this Section 5.03 or 5.02(c)
shall be deemed to restrict or limit the right of the Series 1997-1 Collateral
Agent, RFC, the Series 1997-1 Support Letter of Credit Providers, the GM Series
1997-1 Support Provider, the Series 1997-1 Liquidity Agent, the Depositary, any
Series 1997-1 Liquidity Lender or any Dealer to contest with the purported
obligee its respective rights in respect of the amount set forth in such
certificate or statement.
SECTION 5.04. Permitted Investments. So long as no Liquidity
Agreement Amortization Event shall have occurred and be continuing and all RFC
Obligations due and owing by RFC have been paid, monies held in the Accounts
shall be invested daily, and the proceeds of investments shall be reinvested
daily, by the Series 1997-1 Collateral Agent in overnight Permitted Investments
pursuant to the written direction of RFC and, in all other cases, such monies
and proceeds shall be invested daily and reinvested daily by the Series 1997-1
Collateral Agent in accordance with the direction of the Series 1997-1
Liquidity Agent. The Series 1997-1 Collateral Agent shall not be responsible
or liable for any loss resulting from the investment performance of any
investment or reinvestment of monies held in the Accounts or any other account
maintained by the Series 1997-1 Collateral Agent for the purposes of this
Series 1997-1 Collateral Agreement or in Permitted Investments or from the sale
or liquidation of any Permitted Investments in accordance with this Series
1997-1 Collateral Agreement. All Permitted Investments shall be made in the
name of, and shall be payable to, the Series 1997-1 Collateral Agent, and all
investment costs and expenses shall be reimbursed to the Series 1997-1
Collateral Agent by RFC.
SECTION 5.05. Liquidity Demand; Commitment Termination Demand. (a)
Upon receipt by the Series 1997-1 Collateral Agent on or prior to 11:15 a.m.
(New York City time) of a written notice from the Depositary notifying the
Series 1997-1 Collateral Agent of the existence and amount of a Commercial
Paper Deficit and instructing the Series 1997-1 Collateral Agent to deliver a
Borrowing Request, the Series 1997-1 Collateral Agent shall, by 11:30 a.m.
(New York City time) on the date of such notice (or, in the case of any notice
given to the Series 1997-1 Collateral Agent after 11:15 a.m. (New York City
time), by 11:30 a.m. (New York City time) on the next following Business Day),
deliver a Borrowing Request in the form of Exhibit C to the Liquidity Agreement
to the Series 1997-1 Liquidity Agent for a Borrowing in the aggregate in the
amount of such Commercial Paper Deficit; provided that if on the date any
Borrowing Request is to be delivered by the Series 1997-1 Collateral Agent,
Deposited Funds are available in the Series 1997-1 Termination Advance Account,
the Series 1997-1 Collateral Agent shall immediately transfer to the Commercial
Paper Account such Deposited Funds (up to the amount of the relevant Commercial
Paper Deficit) and reduce the amount demanded in the Borrowing Request by the
amount of the Deposited Funds so transferred.
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<PAGE> 31
(b) So long as the Series 1997-1 Letter of Credit shall not have been
terminated, upon receipt by the Series 1997-1 Collateral Agent on or prior to
11:30 a.m. (New York City time) on a Business Day of a written notice from the
Depositary notifying the Series 1997-1 Collateral Agent of the existence and
amount of a Liquidity Deficiency and directing the Series 1997-1 Collateral
Agent to direct the Enhancement Agent to make a draw under the Letter of
Credit, the Series 1997-1 Collateral Agent shall, by 12:00 noon (New York City
time) on the same Business Day (or, in the case of any notice given to the
Series 1997-1 Collateral Agent after 11:30 a.m. (New York City time), by 12:00
noon (New York City time) on the next following Business Day), direct the
Enhancement Agent to draw on the Series 1997-1 Letter of Credit in an amount
equal to the lesser of (i) such Liquidity Deficiency and (ii) the full amount
available to be drawn under the Series 1997-1 Letter of Credit on such Business
Day by presenting a draft accompanied by a Certificate of Liquidity Demand in
the form of Annex B to the Series 1997-1 Letter of Credit. No such draw under
the Series 1997-1 Letter of Credit shall be made unless as of the date of such
draw and after giving effect to all Liquidity Advances made on such date under
the Liquidity Agreement, the Series 1997-1 Liquidity Agent shall notify the
Series 1997-1 Collateral Agent by telephone (promptly confirmed in writing)
that the Aggregate Liquidity Commitment is fully drawn under the Liquidity
Agreement or is not available for reasons other than a failure to meet the
conditions precedent to such Liquidity Advances.
(c) Upon receipt by the Series 1997-1 Collateral Agent on or prior to
11:15 a.m. (New York City time) on a Business Day of a written notice from RFC
directing the Series 1997-1 Collateral Agent to request a Commitment
Termination Date Liquidity Advance from a particular Series 1997-1 Liquidity
Lender, the Series 1997-1 Collateral Agent shall by 11:30 a.m. (New York City
time) on such Business Day (or, in the case of any notice given to the Series
1997-1 Collateral Agent after 11:15 a.m. (New York City time), by 11:30 a.m.
(New York City time) on the next following Business Day), deliver a Borrowing
Request in the form of Exhibit C to the Liquidity Agreement to the Series
1997-1 Liquidity Agent for a Borrowing in the aggregate in the amount of such
Commitment Termination Date Liquidity Advance. RFC agrees to give the Series
1997-1 Collateral Agent notice of such direction so the Series 1997-1
Collateral Agent's Borrowing Request will be delivered to the Series 1997-1
Liquidity Agent not less than three nor more than five Business Days' before
such Series 1997-1 Liquidity Lender's Scheduled Liquidity Commitment
Termination Date.
ARTICLE VI.
DEFAULT
SECTION 6.01. Rights of the Series 1997-1 Collateral Agent upon
Liquidity Agreement Amortization Event. (a) (i) Only if a Liquidity Agreement
Amortization Event shall have occurred, the Series 1997-1 Collateral Agent, at
the direction (which direction shall be in writing or by telephone (confirmed
in writing promptly thereafter) specifying the action to be taken) of
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<PAGE> 32
the Required Liquidity Providers, shall direct RFC (A) not to make any further
Advances, and (B) if no Commercial Paper Notes are then outstanding, to
declare, or to direct the Trustee to declare, the Series 1997-1 Notes
immediately due and payable, (ii) only if and whenever a Liquidity Agreement
Amortization Event shall have occurred and be continuing, the Series 1997-1
Collateral Agent, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter) specifying the action to
be taken) of the Required Liquidity Providers shall, from time to time,
withdraw amounts in the Accounts or cause the Enhancement Agent to withdraw
from the Series 1997-1 Cash Collateral Account for application as provided in
Section 5.02(f) and (iii) only if and whenever a Liquidity Agreement
Amortization Event (other than a [Scheduled Liquidity Agreement Amortization
Event]) shall have occurred and be continuing, the Series 1997-1 Collateral
Agent, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter) specifying the action to be taken)
of the Required Liquidity Providers may also exercise from time to time any
rights and remedies available to it under applicable law or any Related
Document. RFC agrees to enforce any rights it may have under the Related
Documents at the direction of the Series 1997-1 Collateral Agent. Any amounts
obtained by the Series 1997-1 Collateral Agent on account of or as a result of
the exercise by the Series 1997-1 Collateral Agent of any right with respect to
any funds at any time and from time to time on deposit in, or otherwise to the
credit of, any of the Accounts, shall be held by the Series 1997-1 Collateral
Agent as additional collateral for the repayment of the RFC Obligations and
shall be applied as provided in Section 2.01 hereof. The Series 1997-1
Collateral Agent agrees to undertake the actions set forth with respect to the
Series 1997-1 Collateral Agent in Section 9.2 of the Series 1997-1 Liquidity
Agreement.
(b) If a Liquidation Event of Default shall have occurred and be
continuing, the Series 1997-1 Collateral Agent, at the direction (which
direction shall be in writing or by telephone (confirmed in writing promptly
thereafter) specifying the actions to be taken) of the Required VFN Noteholders
and upon receipt of indemnity from the Series 1997-1 Liquidity Lenders
reasonably satisfactory to it, shall exercise, or shall direct RFC to exercise
all rights, remedies, powers, privileges and claims of RFC (including, without
limitation, any rights of RFC as a Series 1997-1 Noteholder) against NFLP under
or in connection with the Series 1997-1 Supplement and any party to any RFC
Agreement or any other CP Program Document, including the right or power to
take any action to compel performance or observance by any such party of its
obligations to RFC, the right to direct the Trustee or the Master Collateral
Agent to take possession or direct disposition of any of the Series 1997
Vehicles, and to give any consent, request, notice, direction, approval,
extension or waiver in respect of the Series 1997-1 Supplement, and any right
of RFC to take such action shall be suspended; provided, however, if RFC shall
have failed, within fifteen (15) Business Days of receiving the directions of
the Series 1997-1 Collateral Agent, to accomplish such directed actions, the
Series 1997-1 Collateral Agent may, but shall not be obligated to, take such
previously directed actions (and any related action as it would be permitted to
direct RFC to take under this Series 1997-1 Collateral Agreement, thereafter
determined by the Series 1997-1 Collateral Agent to be appropriate without the
need
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<PAGE> 33
under this provision or any other provision hereunder to direct RFC to take
such action) on behalf of RFC and the Secured Parties.
(c) In the event of a Liquidation Event of Default, the Series 1997-1
Collateral Agent shall direct RFC (in its capacity as a Series 1997-1
Noteholder) to instruct the Trustee and the Master Collateral Agent to return
each Series 1997 Vehicle that is a Program Vehicle to the related Manufacturer
under the related Manufacturer Program at the end of the minimum holding period
(if any) for such Vehicle under the related Manufacturer Program, unless the
Required VFN Noteholders waive such direction in writing.
SECTION 6.02. Special Provisions Concerning Remedies Upon the
Occurrence of Liquidation Events of Default. Upon the occurrence of a
Liquidation Event of Default, the Series 1997-1 Collateral Agent shall have the
right to substitute itself or any nominee of the Series 1997-1 Collateral Agent
in lieu of RFC as party to any of the RFC Agreements.
SECTION 6.03. Certain Rights and Obligations Upon any Sales of
Assigned Collateral. Upon any sale of any of the Assigned Collateral directly
by the Series 1997-1 Collateral Agent or the Master Collateral Agent, whether
made under the power of sale given under Section 4.03(b) or 6.02 hereof, under
the Master Collateral Agency Agreement, or under judgment, order or decree in
any judicial proceeding for the foreclosure or involving the enforcement of
this Series 1997-1 Collateral Agreement or the Master Collateral Agency
Agreement: (i) the Series 1997-1 Collateral Agent, any Series 1997-1 Liquidity
Lender and/or any of the Series 1997-1 Support Letter of Credit Providers may
bid for and purchase the property being sold, and upon compliance with the
terms of sale may hold, retain and possess and dispose of such property in its
own absolute right without further accountability; (ii) the Series 1997-1
Collateral Agent or the Master Collateral Agent pursuant to the Master
Collateral Agency Agreement may make and deliver to the purchaser or purchasers
a good and sufficient deed, bill of sale and instrument of assignment and
transfer of the property sold; (iii) the Series 1997-1 Collateral Agent is
hereby irrevocably appointed the true and lawful attorney-in-fact of RFC in its
name and stead, to make all necessary deeds, bills of sale, releases and
instruments of assignment and transfer of the property thus sold and for such
other purposes as are necessary or desirable to effectuate the provisions
(including, without limitation, this Section 6.03) of this Series 1997-1
Collateral Agreement, and for that purpose it may execute and deliver all
necessary deeds, bills of sale, releases and instruments of assignment and
transfer, and may substitute one or more Persons with like power (including the
Master Collateral Agent), RFC hereby ratifying and confirming all that its said
attorney, or such substitute or substitutes, shall lawfully do by virtue
hereof; but if so requested by the Series 1997-1 Collateral Agent or by any
purchaser, RFC shall ratify and confirm any such sale or transfer by executing
and delivering to the Series 1997-1 Collateral Agent or to such purchaser all
property, deeds, bills of sale, instruments of assignment and transfer and
releases as may be designated in any such request; (iv) all right, title,
interest, claim and demand whatsoever, either at law or in equity or otherwise,
of RFC in and to the property so sold shall be divested; and such sale shall be
a perpetual bar both at law and in equity against
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<PAGE> 34
RFC, its successors and assigns, and against any and all Persons claiming or
who may claim the property sold or any part thereof from, through or under RFC,
its successors or assigns; (v) the receipt of the Series 1997-1 Collateral
Agent or of the officer thereof making such sale shall be a sufficient
discharge to the purchaser or purchasers at such sale for his or their purchase
money, and such purchaser or purchasers, and his or their assigns or personal
representatives, shall not, after paying such purchase money and receiving such
receipt of the Series 1997-1 Collateral Agent or of such officer therefor, be
obliged to see to the application of such purchase money or be in any way
answerable for any loss, misapplication or non-application thereof; and (vi) to
the extent that it may lawfully do so, RFC agrees 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 appraisal, valuation, stay, extension or redemption laws, or
any law permitting it to direct the order in which the Assigned Collateral
shall be sold, now or at any time hereafter in force, which may delay, prevent
or otherwise affect the performance or enforcement of this Series 1997-1
Collateral Agreement.
SECTION 6.04. Certain Rights of the Series 1997-1 Collateral Agent
under the Uniform Commercial Code. In addition to any rights and remedies now
or hereafter granted hereunder or under applicable law with respect to the
Assigned Collateral, the Series 1997-1 Collateral Agent shall have all of the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in any applicable jurisdiction.
ARTICLE VII.
THE SERIES 1997-1 COLLATERAL AGENT, AND THE SECURED PARTIES
SECTION 7.01. Appointment and Powers of Series 1997-1 Collateral
Agent. The Secured Parties hereby appoint the Series 1997-1 Collateral Agent
their agent hereunder, and hereby authorize the Series 1997-1 Collateral Agent
to take such action on their behalf and to exercise such rights, remedies,
powers and privileges hereunder as are specifically authorized to be exercised
by the Series 1997-1 Collateral Agent by the terms hereof, together with such
rights, remedies, powers and privileges as are reasonably incidental thereto.
The parties hereto agree that the Series 1997-1 Collateral Agent shall not be
required to exercise any discretion or take any action or refrain from taking
any action in its capacity as Series 1997-1 Collateral Agent for the Secured
Parties, but shall only be required to act or refrain from acting in such
capacity (and shall be fully protected in so acting or refraining from acting)
upon the instruction of the Required Liquidity Providers or RFC, as the case
may be, as provided herein. The Series 1997-1 Collateral Agent may execute any
of its duties as agent hereunder by or through agents or employees, and the
possession of the Assigned Collateral by such agents shall be deemed to be
possession by the Series 1997-1 Collateral Agent. The Series 1997-1 Collateral
Agent shall be entitled to retain experts and to act in reliance upon the
advice of such experts concerning all matters pertaining to the agencies hereby
created and its duties hereunder, and shall not be liable
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for any action taken or omitted to be taken by it in good faith in accordance
with the advice of such experts selected by it. The Series 1997-1 Collateral
Agent may also rely on the advice of counsel and shall be held harmless for
actions taken in reliance thereon. The relationship between the Series 1997-1
Collateral Agent, and each of the Secured Parties is that of agent and
principal only, and nothing herein shall be deemed to constitute the Series
1997-1 Collateral Agent a trustee for any of the Secured Parties or impose on
the Series 1997-1 Collateral Agent any RFC Obligations other than those for
which express provision is made herein.
If the Series 1997-1 Collateral Agent receives unclear or conflicting
instructions, it shall be entitled to refrain from taking action until clear or
non-conflicting instructions are received, but shall inform the instructing
party or parties promptly of its decision to refrain from taking such action.
Except as required by the specific terms of this Series 1997-1 Collateral
Agreement, the Series 1997-1 Collateral Agent shall have no duty to exercise
any rights, power, remedy or privilege granted to it hereby, or to take any
affirmative action hereunder or thereunder, unless directed to do so by the
Required Liquidity Providers, or if specified, the Required VFN Noteholders
(and shall be fully protected in acting or refraining from acting pursuant to
such directions which shall be binding on the Secured Parties), and shall not,
without the prior approval of the Required Liquidity Providers, or if
specified, the Required VFN Noteholders, or as expressly provided herein or in
any RFC Agreement, waive any default on the part of RFC, NFLP or the
Manufacturers with respect to the Assigned Collateral or amend, modify,
supplement or terminate, or agree to any surrender of, this Series 1997-1
Collateral Agreement or the Assigned Collateral. Notwithstanding anything
herein to the contrary, the Series 1997-1 Collateral Agent shall not be
required to take any action with respect to which the Series 1997-1 Collateral
Agent has reasonably determined that a reasonable likelihood exists that such
action will expose the Series 1997-1 Collateral Agent to personal or financial
liability, unless indemnified to its satisfaction, or which is contrary to this
Series 1997-1 Collateral Agreement, or any other agreement or instrument
relating to the Assigned Collateral or applicable law.
No Secured Party nor any of its directors, officers, employees or
agents, shall be liable to any other Secured Party or any other Person for any
action taken or omitted to be taken by it hereunder, or in connection herewith,
except for its own gross negligence or willful misconduct; nor (except for its
own due execution and delivery thereof) shall the Series 1997-1 Collateral
Agent be responsible to any Secured Party for the validity, effectiveness,
value, sufficiency or enforceability against NFLP or RFC of this Series 1997-1
Collateral Agreement or any other document furnished pursuant hereto or in
connection herewith (including the Master Collateral Agency Agreement), or of
the Assigned Collateral (or any part thereof), the Permitted Investments (or
any part thereof) or the Deposited Funds (or any part thereof). Without
limiting the generality of the foregoing, the Series 1997-1 Collateral Agent:
(i) makes no warranty or representation to any Secured Party or any other
Person and shall not be responsible to any Secured Party for any statements,
warranties or representations made by any other Person in or in connection
with, or for the validity or sufficiency of, this Series 1997-1 Collateral
Agreement, the Series 1997-1 Supplement, the Series 1997 Lease, the
Manufacturer Programs, the Series
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<PAGE> 36
1997-1 Liquidity Agreement, the Master Collateral Agency Agreement, the Series
1997-1 Support Reimbursement Agreement, or any other document or instrument
referred to in or otherwise relating to the Assigned Collateral or as to the
validity or collectibility of any obligation contemplated by this Series 1997-1
Collateral Agreement; and (ii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Series 1997-1 Collateral Agreement, the Series 1997-1
Support Reimbursement Agreement, the Series 1997-1 Supplement, the Series 1997
Lease, the Manufacturer Programs, the Series 1997-1 Liquidity Agreement, the
Master Collateral Agency Agreement or any other agreements or instruments
relating to the Assigned Collateral on the part of any party hereto or thereto
or to inspect any books and records relating to the Assigned Collateral other
than as it determines necessary in the fulfillment of its own obligations
hereunder.
The Series 1997-1 Collateral Agent shall be entitled to rely on any
communication, instrument, paper or other document reasonably believed by it to
be genuine and correct and to have been given, signed or sent by the proper
Person or Persons. The Series 1997-1 Collateral Agent shall be entitled to
assume that no Liquidity Agreement Amortization Event shall have occurred and
be continuing and that the Accounts, and any funds on deposit in or to the
credit of such Accounts, are not subject to any writ, order, judgment, warrant
of attachment, execution or similar process (collectively a "writ"), unless (i)
in the case of any writ, an officer in the asset finance department of the
Series 1997-1 Collateral Agent has actual knowledge thereof or (ii) the Series
1997-1 Collateral Agent has received written notice from the Series 1997-1
Liquidity Agent or NFLP under the Series 1997-1 Supplement that the Required
VFN Noteholders consider that such a Liquidity Agreement Amortization Event has
occurred or such writ has been issued and continues to be in effect, which
notice specifies the nature thereof. The Series 1997-1 Collateral Agent may
accept deposits from, lend money to and generally engage in any kind of
business with RFC, any Manufacturer, NFLP and their respective affiliates as if
it were not the Series 1997-1 Collateral Agent of the Series 1997-1 Liquidity
Lenders, the Series 1997-1 Support Letter of Credit Providers and the Holders
of Commercial Paper Notes. Notwithstanding anything in this Series 1997-1
Collateral Agreement to the contrary, the Series 1997-1 Collateral Agent shall
have the right to refrain from taking any action under Article VI hereof unless
it has received written directions from the appropriate parties to take such
action.
SECTION 7.2. Indemnification; Agents and Employees of the Series
1997-1 Collateral Agent. (a) Each Series 1997-1 Liquidity Lender hereby
agrees, in accordance with its pro rata percentage of the sum of the Aggregate
Liquidity Commitment under the Series 1997-1 Liquidity Agreement, and each
Series 1997-1 Support Letter of Credit Providers agrees, in accordance with its
Pro Rata Share, under the Series 1997-1 Support Reimbursement Agreement, and
the GM Series 1997-1 Support Provider agrees, in accordance with its Pro Rata
Share under the GM Series 1997-1 Support Provider Series 1997-1 Support
Reimbursement Agreement, subject to the limitations set forth in this clause
(a), to indemnify and hold harmless the Series 1997-1 Collateral Agent (to the
extent not reimbursed by RFC), from and against any and all losses
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<PAGE> 37
(other than the Series 1997-1 Collateral Agent's loss of profit), liabilities
(including, liabilities for penalties), actions, suits, judgments, demands,
damages, out-of-pocket costs and expenses of any kind whatsoever (including,
without limitation, reasonable fees and expenses of counsel and other experts)
incurred or suffered by the Series 1997-1 Collateral Agent in its capacity as
agent hereunder as a result of any action taken or omitted to be taken by the
Series 1997-1 Collateral Agent in such capacity or otherwise incurred or
suffered by, made upon, or assessed against the Series 1997-1 Collateral Agent
in such capacity to the extent not reimbursed by RFC or by application of the
Assigned Collateral; provided that none of the GM Series 1997-1 Support
Provider, the Series 1997-1 Support Letter of Credit Providers nor any Series
1997-1 Liquidity Lender shall be liable for any portion of any such losses,
liabilities, actions, suits, judgments, demands, costs or expenses resulting
from or attributable to gross negligence or willful misconduct on the part of
the Series 1997-1 Collateral Agent or its agents or employees. Without
limiting the generality of the foregoing, each Series 1997-1 Liquidity Lender
hereby agrees, in the ratio aforesaid, and each of the Series 1997-1 Support
Letter of Credit Providers and the GM Series 1997-1 Support Provider agrees, in
the ratio aforesaid, to reimburse the Series 1997-1 Collateral Agent promptly
following its demand for any out-of-pocket expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by the Series
1997-1 Collateral Agent hereunder and not promptly reimbursed to the Series
1997-1 Collateral Agent by RFC or by application of the Assigned Collateral.
The obligations of each Series 1997-1 Liquidity Lender, the GM Series 1997-1
Support Provider and the Series 1997-1 Support Letter of Credit Providers under
this paragraph shall survive the termination of this Series 1997-1 Collateral
Agreement, the Series 1997-1 Liquidity Agreement, the GM Series 1997-1 Support
Provider Series 1997-1 Support Reimbursement Agreement, the Series 1997-1
Support Reimbursement Agreement and the discharge of RFC's obligations
thereunder. The aggregate liability of the Series 1997-1 Liquidity Lenders
hereunder for any claim shall be limited to a percentage of the indemnity owing
equal to the percentage that the Aggregate Liquidity Commitment is of the
Program Size, and the liability of the GM Series 1997-1 Support Provider or any
Series 1997-1 Support Letter of Credit Provider shall be limited to a
percentage of the indemnity owing equal to the percentage that its Credit
Enhancer Commitment is of the Program Size. If at any time, following its
demand therefor, the Series 1997-1 Collateral Agent shall not be reimbursed by
RFC or by the Series 1997-1 Liquidity Lenders, the GM Series 1997-1 Support
Provider and the Series 1997-1 Support Letter of Credit Providers, the Series
1997-1 Collateral Agent 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
amounts at any time held by the Series 1997-1 Collateral Agent for the benefit
of the Series 1997-1 Liquidity Lenders, the GM Series 1997-1 Support Provider
or the Series 1997-1 Support Letter of Credit Providers, including without
limitation any such amounts designated for disbursement to the Series 1997-1
Liquidity Lenders, the GM Series 1997-1 Support Provider and/or the Series
1997-1 Support Letter of Credit Providers in accordance with Section 2.01 or
Section 5.02(b), against any and all of the obligations of the Series 1997-1
Liquidity Lenders, the GM Series 1997-1 Support Provider and the Series 1997-1
Support Letter of Credit Providers to the Series 1997-1 Collateral Agent now or
hereafter existing under this Series 1997-1 Collateral Agreement. The Series
1997-1 Collateral Agent
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<PAGE> 38
agrees promptly to notify each Series 1997-1 Liquidity Lender, the GM Series
1997-1 Support Provider and the Series 1997-1 Support Letter of Credit
Providers after any such set-off and application made by the Series 1997-1
Collateral Agent, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Series
1997-1 Collateral Agent under this Section are in addition to other rights and
remedies which the Series 1997-1 Collateral Agent may have. Any such set-off
against amounts owed to Series 1997-1 Liquidity Lenders, the GM Series 1997-1
Support Provider or any Series 1997-1 Support Letter of Credit Providers by the
Series 1997-1 Collateral Agent shall not cause a payment default of RFC on
amounts due to such Series 1997-1 Liquidity Lenders, the GM Series 1997-1
Support Provider or the Series 1997-1 Support Letter of Credit Providers to the
extent funds are available in the Accounts to be allocated to the payment of
all amounts due to the Series 1997-1 Liquidity Lenders, the GM Series 1997-1
Support Provider or the Series 1997-1 Support Letter of Credit Providers in
accordance with Section 2.01 or 5.02(b), as applicable.
(b) No provision of this Series 1997-1 Collateral Agreement shall
require the Series 1997-1 Collateral Agent in such capacity to expend or risk
its own funds or otherwise incur any financial or other liability in the
performance of any duties hereunder or in the exercise of any rights and powers
hereunder.
(c) Any action or proceeding alleging any breach by the Series 1997-1
Collateral Agent of duties under this Series 1997-1 Collateral Agreement shall
be prosecuted only in the courts of the State of New York or in the United
States District Court for the Southern District of New York. The Series 1997-1
Collateral Agent shall have the right at any time to seek instructions from any
court of competent jurisdiction.
(d) The Series 1997-1 Collateral Agent shall not be accountable for
the use or application by any person of disbursements properly made by the
Series 1997-1 Collateral Agent in conformity with the provisions of this Series
1997-1 Collateral Agreement.
(e) The provisions of this Section 7.02 shall survive the termination
of this Series 1997-1 Collateral Agreement or the resignation of the Series
1997-1 Collateral Agent hereunder.
SECTION 7.3. Waiver of Jury Trial. EACH OF THE PARTIES HERETO
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS SERIES 1997-1 COLLATERAL AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE PARTIES HERETO IN CONNECTION HEREWITH OR THEREWITH. EACH OF THE
PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS
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<PAGE> 39
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO ENTERING INTO THIS
SERIES 1997-1 COLLATERAL AGREEMENT.
SECTION 7.04. Successor Series 1997-1 Collateral Agent. The Series
1997-1 Collateral Agent acting hereunder at any time may resign by an
instrument in writing addressed and delivered, sixty (60) days prior to the
effectiveness of such resignation, to each Series 1997-1 Liquidity Lender, the
Series 1997-1 Liquidity Agent, the Series 1997-1 Support Letter of Credit
Providers, the GM Series 1997-1 Support Provider, the Dealers, RFC, each Rating
Agency and the Depositary, and may be removed at any time with or without cause
by an instrument in writing duly executed by or on behalf of the Required
Liquidity Providers with written notice to each of the Rating Agencies.
Subject to the provisions hereof, the Required Liquidity Providers shall
appoint, subject to the written consent of RFC (which consent shall not be
unreasonably withheld), a successor to the Series 1997-1 Collateral Agent upon
any such resignation or removal, by an instrument of substitution complying
with the requirements of applicable law, or, in the absence of any such
requirements, without any formality other than appointment and designation in
writing. Upon the making and acceptance of such appointment, the execution and
delivery by such successor Series 1997-1 Collateral Agent of a ratifying
instrument pursuant to which such successor Series 1997-1 Collateral Agent
agrees to assume the duties and obligations imposed on the Series 1997-1
Collateral Agent by the terms of this Series 1997-1 Collateral Agreement, and
the delivery to such successor Series 1997-1 Collateral Agent of the Assigned
Collateral, the Deposited Funds and documents and instruments then held by the
retiring Series 1997-1 Collateral Agent, such successor Series 1997-1
Collateral Agent shall thereupon succeed to and become vested with all the
estate, rights, powers, remedies, privileges, immunities, indemnities, duties
and obligations hereby granted to or conferred or imposed upon the retiring
Series 1997-1 Collateral Agent named herein, and one such appointment and
designation shall not exhaust the right to appoint and designate further
successor Series 1997-1 Collateral Agents hereunder. No removal or resignation
of the Series 1997-1 Collateral Agent shall be effective unless and until a
successor Series 1997-1 Collateral Agent has been duly appointed, and the
appointment of such successor Series 1997-1 Collateral Agent has been accepted
by such successor Series 1997-1 Collateral Agent. No Series 1997-1 Collateral
Agent shall be discharged from its duties or obligations hereunder until the
Assigned Collateral, the Deposited Funds and documents and instruments then
held by such retiring Series 1997-1 Collateral Agent shall have been
transferred or delivered to the successor Series 1997-1 Collateral Agent in its
capacity as bank or trust company, until all Deposited Funds held in the
Accounts and the Series 1997-1 Cash Collateral Account maintained with or in
the name of the retiring Series 1997-1 Collateral Agent shall have been
transferred to the new Series 1997-1 Collateral Account and until such retiring
Series 1997-1 Collateral Agent shall have executed and delivered to the
successor Series 1997-1 Collateral Agent appropriate instruments substituting
such successor Series 1997-1 Collateral Agent as Beneficiary of RFC for
purposes of the Master Collateral Agency Agreement and assigning the retiring
Series 1997-1 Collateral Agent's interest in the Assigned Collateral, the
Accounts, the Series 1997-1 Cash Collateral Account, the Deposited Funds and
Permitted Investments to the successor Series 1997-1 Collateral Agent. If no
successor Series 1997-1
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<PAGE> 40
Collateral Agent shall be appointed, as aforesaid, or, if appointed, shall not
have accepted its appointment, within 30 days after notice of resignation or
removal of the retiring Series 1997-1 Collateral Agent, then, subject to the
provisions hereof, the retiring Series 1997-1 Collateral Agent may appoint a
successor Series 1997-1 Collateral Agent with the written consent of the Series
1997-1 Liquidity Agent, the Series 1997-1 Support Letter of Credit Providers
and (so long as no Liquidity Agreement Amortization Event (other than a
Scheduled Liquidity Agreement Amortization Event) has occurred, RFC, which
consent shall not be unreasonably withheld. Each such successor Series 1997-1
Collateral Agent shall provide RFC, each Series 1997-1 Liquidity Lender, the
Series 1997-1 Liquidity Agent, the Depositary and the Series 1997-1 Support
Letter of Credit Providers with its address, and telephone, telecopy, telex,
E-Mail (if applicable) [and TWX numbers], to be used for purposes of Section
9.04 hereof, in a notice complying with the terms of said Section.
Notwithstanding the resignation or removal of any Series 1997-1 Collateral
Agent hereunder, the provisions of this Article VII shall continue to inure to
the benefit of such retiring Series 1997-1 Collateral Agent in respect of any
action taken or omitted to be taken by such retiring Series 1997-1 Collateral
Agent in its capacity as such while it was Series 1997-1 Collateral Agent under
this Series 1997-1 Collateral Agreement. RFC shall provide prompt notice to
each Rating Agency of the appointment of a successor Series 1997-1 Collateral
Agent.
SECTION 7.5. Qualifications of Series 1997-1 Collateral Agent. Any
Series 1997-1 Collateral Agent at any time acting hereunder must at all times
be (i) the corporate trust department of a bank or trust company having its
principal office in the District of Columbia or one of the states located in
the United States, or (ii) a bank or trust company having its principal office
in the District of Columbia or one of the states located in the United States,
authorized to accept deposits, or a branch office or agency of a foreign bank
located in the District of Columbia or one of the states of the United States,
in each case having short-term ratings from Moody's and S&P at least equal to
the rating such Rating Agency then assigns to the Commercial Paper Notes.
SECTION 7.6. Instructions of the Required Liquidity Providers and
Other Parties. In any instance in which the Series 1997-1 Collateral Agent is
permitted to take action hereunder, the Series 1997-1 Collateral Agent shall,
except as expressly provided herein or in the Series 1997-1 Liquidity
Agreement, act in accordance with the written instructions received, if any,
from the Required Liquidity Providers, or if specified the Required VFN
Noteholders. All instructions and notices from the Required Liquidity
Providers shall be submitted to the Series 1997-1 Collateral Agent through the
Series 1997-1 Liquidity Agent.
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<PAGE> 41
ARTICLE VIII.
AMENDMENTS, MODIFICATIONS, WAIVERS AND CONSENTS
SECTION 8.1. Execution of Amendments, etc. No amendment,
modification, supplement, termination or waiver of or to any provision of this
Series 1997-1 Collateral Agreement or the defined terms used herein, nor any
consent to any departure by RFC from any provision of this Series 1997-1
Collateral Agreement, shall be effective unless the same shall be in writing
and signed on behalf of the Series 1997-1 Collateral Agent, the Series 1997-1
Liquidity Agent on behalf of the Required Liquidity Providers, the Depositary,
the Series 1997-1 Majority Credit Enhancers and RFC; provided, however, that
(i) the written consent of all Series 1997-1 Liquidity Lenders, the GM Series
1997-1 Support Provider and the Series 1997-1 Support Letter of Credit
Providers shall be necessary to the extent that any such amendment,
modification, supplement, termination, waiver or consent (a) releases the
assignment given hereunder in respect of any of the Assigned Collateral or (b)
affects this Section 8.01 or Section 2.01 or 5.02 and (ii) such amendment,
modification, supplement, termination or waiver shall not result in the
downgrading or the withdrawal of the then current ratings of the Commercial
Paper Notes provided by the Rating Agencies as evidenced by written
confirmation from the Rating Agencies. Any waiver of any provision of this
Series 1997-1 Collateral Agreement, and any consent to any departure by RFC
from the terms of any provision of this Series 1997-1 Collateral Agreement,
shall be effective only in the specific instance and for the specific purpose
for which given. No notice to or demand upon RFC in any instance hereunder
shall entitle RFC to any other or further notice or demand in similar or other
circumstances.
Notwithstanding the foregoing provisions of this Section 8.01, RFC,
the Series 1997-1 Liquidity Agent, the Series 1997-1 Collateral Agent, the GM
Series 1997-1 Support Provider and the Series 1997-1 Support Letter of Credit
Providers may, at any time and from time to time, without the consent of the
other Secured Parties, enter into any amendment, supplement or other
modification to this Agreement to cure any apparent ambiguity or to correct or
supplement any provision in this Agreement that may be inconsistent with any
other provision herein; provided, however, that (i) any such action shall not
have a materially adverse effect on the interests of the Series 1997-1
Liquidity Lenders and (ii) a copy of any such amendment, supplement or other
modification is furnished the other Secured Parties, in accordance with the
notice provisions hereof not later than ten days prior to the execution
thereof.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. Further Assurances. RFC (i) from time to time, at its
expense, will promptly execute and deliver all further instruments and
documents, and take all further action,
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that may be necessary, as reasonably requested by the Series 1997-1 Collateral
Agent, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Series 1997-1 Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Assigned Collateral, including without limitation, the execution of financing
or continuation statements, or amendments thereto and (ii) hereby authorizes
the Series 1997-1 Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Assigned Collateral without the signature of RFC, where permitted by law.
A carbon photographic or other reproduction of this Series 1997-1 Collateral
Agreement or any financing statement covering the Assigned Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
SECTION 9.02. No Waiver; Cumulative Remedies. No failure on the part
of the Series 1997-1 Collateral Agent to exercise, and no delay on the part of
the Series 1997-1 Collateral Agent 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 by the Series 1997-1 Collateral
Agent preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies that may be available to the Series 1997-1
Collateral Agent, whether at law, in equity or otherwise.
SECTION 9.03. Notice of Amendments; Waivers. Notice of any amendment,
waiver or other change of the terms of the Assigned Collateral shall be sent by
RFC, promptly upon becoming aware thereof, to each Rating Agency which shall be
required to confirm their ratings on the Commercial Paper Notes prior to the
effectiveness thereof.
SECTION 9.04. Notices, etc. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, directions,
instructions and other communications required or permitted to be given to any
party hereto shall be in writing and addressed, delivered or transmitted to
such party at its address or facsimile number set forth below, or at any other
address or facsimile number, as the case may be, as such party may notify to
the other parties hereto in accordance with the provisions of this Section
9.04; provided, however, all monthly statements provided for in Section 5.02(c)
hereof shall be sent by first class mail. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if
transmitted by facsimile, shall be deemed given when transmitted upon receipt
of electronic confirmation of transmission.
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<PAGE> 43
If to Republic Funding:
Republic Industries Funding Corp.
7700 France Avenue South
Minneapolis, MN 55435
Attention: J. Benzian
Telephone No.: (612) 830-2552
Telecopy No.: (612) 830-2087
If to the Series 1997-1 Collateral Agent:
Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Agency Administration/Matthew Carter
Telephone No.: (212) 325-9942
Telecopy No.: (212) 325-8304
with a copy to: Asset Finance Department
Telephone No.: (212) 325-9078
Telecopy No.: (212) 325-6677
If to the Series 1997-1 Liquidity Agent:
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Attention: Asset Finance Department
Telephone No.: (212) 325-9078
Telecopy No.: (212) 325-6677
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<PAGE> 44
If to the Depositary:
Citibank, N.A.
111 Wall Street, 5th Floor
New York, NY 10043
Attention: Jenny Cheng
Telephone No.: (212) 657-5778
Telecopy No.: (212) 657-3872
If to the Dealers:
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Attention: Short Term Finance
Telephone No.: (212) 325-7198
Telecopy No.: (212) 325-8183
BancAmerica Robertson Stephens
555 California Street
12th Floor
San Francisco, CA 94104
Attention: Money Market Finance, Unit 8826
Telephone No.: (415) 953-7881
Facsimile No.: (415) 622-3429
Chase Securities, Inc.
270 Park Avenue
New York, NY 10017
Attention: Commercial Paper Division
Telephone No.: (212) 834-5070
Facsimile No.: (212) 834-6560
Citicorp Securities, Inc.
399 Park Avenue
New York, NY 10022
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<PAGE> 45
Attention: US Commercial Paper Business
Telephone No.: (212) 559-8617
Facsimile No.: (212) 935-6220
Merrill Lynch Money Markets Inc.
World Financial Center, North Tower
250 Vesey Street, 11th Floor
New York, NY 10281-1310
Attention: Product Management - Asset Backed CP
Telephone No.: (212) 449-0296
Facsimile No.: (212) 449-8939
If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Telephone No.: (212) 553-0300
Telecopy No.: (212) 553-4773
If to S&P:
Standard & Poor's Ratings Group
25 Broadway
New York, New York 10001
Attention: Asset-Backed Surveillance Group
Telephone No.:
Telecopy No.:
If to GM Series 1997-1 Support Provider:
General Motors Corporation
767 Fifth Avenue
New York, NY 10153
If to any of the Series 1997-1 Support Letter of Credit Providers:
the address set forth with respect to such Series 1997-1 Support Letter of
Credit Provider in Schedule 2 attached to the Series 1997-1 Support
Reimbursement Agreement or to such other address with respect to which such
Series 1997-1 Support Letter of Credit Provider notify each of the other
parties hereto in writing.
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<PAGE> 46
If to any of the Series 1997-1 Liquidity Lenders at the address set
forth below it's signature on the signature pages of the Series 1997-1
Liquidity Agreement, as such addresses may be revised from time to time by
written notice from such Series 1997-1 Liquidity Lenders.
SECTION 9.5. Fee; Costs and Expenses, etc. RFC shall pay to the
Series 1997-1 Collateral Agent as its fee for its services the amounts as set
forth in that certain fee letter between RFC and the Series 1997-1 Collateral
Agent dated as of October 29, 1997. RFC hereby agrees to reimburse the
Series 1997-1 Collateral Agent for all reasonable out-of-pocket costs and
expenses (including counsel fees and expenses, but excluding costs and expenses
solely attributable to administrative overhead) incurred by the Series 1997-1
Collateral Agent in connection with the administration and enforcement of this
Series 1997-1 Collateral Agreement and agrees to indemnify and hold harmless
the Series 1997-1 Collateral Agent, the Series 1997-1 Support Letter of Credit
Providers, the GM Series 1997-1 Support Provider, the Depositary, the Series
1997-1 Liquidity Agent and the Series 1997-1 Liquidity Lenders from and against
any and all losses (other than loss of profit), liabilities (including
liabilities for penalties), actions, suits, judgments, demands, reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses but excluding costs and expenses attributable
solely to administrative overhead) incurred by the Series 1997-1 Collateral
Agent (in its capacity as Series 1997-1 Collateral Agent), the Depositary, the
Series 1997-1 Liquidity Lenders, the Series 1997-1 Liquidity Agent, the GM
Series 1997-1 Support Provider, or the Series 1997-1 Support Letter of Credit
Providers in connection with the administration or enforcement of this Series
1997-1 Collateral Agreement or the Master Collateral Agency Agreement and also
agrees to pay, indemnify, and to hold each Series 1997-1 Liquidity Lender, the
Series 1997-1 Collateral Agent, the Series 1997-1 Liquidity Agent, the
Depositary, the GM Series 1997-1 Support Provider, and the Series 1997-1
Support Letter of Credit Providers harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Series 1997-1 Collateral Agreement or the Master Collateral Agency
Agreement; provided, however, that RFC shall not be required to indemnify any
Secured Party for any such loss, liability, action, suit, judgment, demand,
cost or expense due to willful misconduct or gross negligence on the part of
such Secured Party or its respective agents or employees. If RFC shall fail to
do any act or thing which it has covenanted to do hereunder or any
representation or warranty on the part of RFC contained herein or repeated and
reaffirmed herein shall be breached, the Series 1997-1 Collateral Agent may,
with the consent of the Required Liquidity Providers, but shall not be
required, to, do the same or cause it to be done or remedy any such breach, and
may expend its funds for such purpose. Any and all amounts so expended by the
Series 1997-1 Collateral Agent shall be repayable to it by RFC upon the Series
1997-1 Collateral Agent's demand therefor. The RFC Obligations under this
Section 9.05 shall survive the termination of this Series 1997-1 Collateral
Agreement and the discharge of the other RFC Obligations hereunder and shall
also survive the termination of the Aggregate Liquidity
- 42 -
<PAGE> 47
Commitment of the Series 1997-1 Liquidity Lenders and the termination of the
Series 1997-1 Letter of Credit in accordance with the provisions of the Series
1997-1 Liquidity Agreement and of the Series 1997-1 Letter of Credit,
respectively.
SECTION 9.06. Series 1997-1 Collateral Agent Appointed
Attorney-in-Fact. RFC hereby appoints the Series 1997-1 Collateral Agent its
attorney-in-fact, with full power of substitution, for the purpose of taking
such action (including, without limitation any action pursuant to Section 4.03
hereof) and executing agreements, instruments and other documents, in the name
of RFC, as the Series 1997-1 Collateral Agent or the Required Liquidity
Providers may deem necessary or advisable to accomplish the purposes hereof,
which appointment is coupled with an interest and is irrevocable.
SECTION 9.07. Termination; Assigned Collateral. This Series 1997-1
Collateral Agreement, and any grants, pledges and assignments hereunder, shall
terminate when (i) all RFC Obligations shall have been fully paid and
satisfied, (ii) the Aggregate Liquidity Commitment of the Series 1997-1
Liquidity Lenders under the Series 1997-1 Liquidity Agreement, the Series
1997-1 Letter of Credit Commitment, the Series 1997-1 Support Reimbursement
Agreement and CP Documents have terminated, and (iii) the Series 1997-1 Letter
of Credit shall have terminated, at which time the Series 1997-1 Collateral
Agent, at the request of RFC and upon receipt of a certificate from RFC to the
effect that the conditions in clauses (i), (ii) and (iii) above have been
complied with and upon receipt of a certificate from the Series 1997-1
Liquidity Agent, the Depositary, the GM Series 1997-1 Support Provider and the
Series 1997-1 Support Letter of Credit Providers, to the effect that the
conditions in clauses (i), (ii) and (iii) relating to RFC Obligations to the
Series 1997-1 Liquidity Lenders, the Holders of Commercial Paper Notes, the GM
Series 1997-1 Support Provider and the Series 1997-1 Support Letter of Credit
Providers have been complied with, shall reassign (without recourse upon, or
any warranty whatsoever by, the Series 1997-1 Collateral Agent), deliver at
RFC's expense all Assigned Collateral and documents then in the custody or
possession of the Series 1997-1 Collateral Agent promptly to RFC and execute
such documents and instruments as RFC may reasonably request in connection with
such reassignment. After termination of this Series 1997-1 Collateral
Agreement and the payment in full of the RFC Obligations, any proceeds of all
the Assigned Collateral received or held by the Series 1997-1 Collateral Agent
shall be turned over to RFC and the Assigned Collateral shall be reassigned to
RFC by the Series 1997-1 Collateral Agent without recourse to the Series 1997-1
Collateral Agent and without any representations, warranties or agreements of
any kind. The Series 1997-1 Collateral Agent shall execute such documents and
instruments as RFC may reasonably request in connection with such reassignment.
RFC and the Secured Parties hereby agree that, if any Deposited Funds
remain on deposit in the Series 1997-1 Collateral Account after the termination
of this Series 1997-1 Collateral Agreement, such amounts shall be released by
the Series 1997-1 Collateral Agent and paid to RFC.
- 43 -
<PAGE> 48
SECTION 9.08. Governing Law; Binding Character; Assignment. THIS
SERIES 1997-1 COLLATERAL AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW. This Series 1997-1 Collateral
Agreement shall be binding upon and shall inure to the benefit of RFC, the
Secured Parties and their respective successors and assigns; provided, however,
that RFC may not assign any of its right hereunder or in connection herewith or
any interest herein (voluntarily, by operation of law or otherwise) without the
prior written consent of all of the Series 1997-1 Liquidity Lenders, the GM
Series 1997-1 Support Provider and the Series 1997-1 Support Letter of Credit
Providers. This Series 1997-1 Collateral Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to
this Series 1997-1 Collateral Agreement, the Series 1997-1 Liquidity Lenders
and the Holders of the Commercial Paper Notes and each of their respective
successors and assigns.
SECTION 9.09. Severability of Provisions. Any provision of this
Series 1997-1 Collateral 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 or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION 9.10. No Bankruptcy Petition Against RFC. Each of the
Secured Parties hereby covenants and agrees that, prior to the date which is
one year and one day after the payment in full of the latest maturing
Commercial Paper Note, it will not institute against, or join with any other
Person in instituting against, RFC, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any Federal or state bankruptcy or similar law; provided, however, that nothing
in this Section 9.10 shall constitute a waiver of any right to indemnification,
reimbursement or other payment from RFC pursuant to this Series 1997-1
Collateral Agreement. In the event that any such Secured Party takes action in
violation of this Section 9.10, RFC agrees that it shall file an answer with
the bankruptcy court or otherwise properly contest the filing of such a
petition by any such Secured Party against RFC or the commencement of such
action and raise the defense that such Secured Party has agreed in writing not
to take such action and should be estopped and precluded therefrom and such
other defenses, if any, as its counsel advises that it may assert. The
provisions of this Section 9.10 shall survive the termination of this Series
1997-1 Collateral Agreement, and the resignation or removal of the Series
1997-1 Collateral Agent, the Series 1997-1 Liquidity Agent, the Depositary or
the Series 1997-1 Support Letter of Credit Providers. Nothing contained herein
shall preclude participation by any Secured Party in assertion or defense of
its claims in any such proceeding involving RFC.
SECTION 9.11. No Recourse. The RFC Obligations of RFC under this
Series 1997-1 Collateral Agreement are solely the corporate obligations of RFC.
No recourse shall be had for the payment of any amount owing in respect of
Section 9.05 hereof or for the payment of any fee
- 44 -
<PAGE> 49
hereunder or any other obligation or claim arising out of or based upon this
Series 1997-1 Collateral Agreement against any stockholder, employee, officer,
director, affiliate or incorporator of RFC; provided, however, that nothing in
this Section 9.11 shall relieve any of the foregoing Persons from any liability
which such Person may otherwise have for its gross negligence or willful
misconduct. The provisions of this Section 9.11 shall survive the termination
of this Series 1997-1 Collateral Agreement.
SECTION 9.12. Confidentiality. Each party hereto (other than RFC)
agrees that it shall not disclose any Confidential Information to any Person
without the prior written consent of Republic or RFC, other than (a) to any
Secured Party, and then only on a confidential basis, (b) as required by any
law, rule or regulation or any judicial process of which RFC or Republic, as
the case may be, has knowledge; provided that any party hereto may disclose
Confidential Information as required by law, rule or regulation or any judicial
process of which RFC or Republic, as the case may be, does not have knowledge
if such party is prohibited by law from disclosing such requirement to RFC or
Republic, as the case may be, and (c) in the course of litigation with RFC or
Republic or any Secured Party.
"Confidential Information" means information that Republic or RFC
furnishes to a Secured Party on a confidential basis, but does not include any
such information that is or becomes generally available to the public other
than as a result of a disclosure by such Secured Party or other person to which
Secured Party delivered such information or that is or becomes available to
such Secured Party from a source other than Republic or RFC, provided that such
source is not (1) known to such Secured Party to be bound by a confidentiality
agreement with RFC or Republic, as the case may be, or (2) known to such
Secured Party to be otherwise prohibited from transmitting the information by a
contractual, legal or fiduciary obligation.
SECTION 9.13. Headings. Article and Section headings used in this
Series 1997-1 Collateral Agreement are for convenience of reference only and
shall not affect the construction of this Series 1997-1 Collateral Agreement.
SECTION 9.14. Execution in Counterparts. This Series 1997-1
Collateral Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute one and the same Series
1997-1 Collateral Agreement.
SECTION 9.15. Limited Recourse to RFC. The Series 1997-1 Collateral
Agent agrees that the obligations of RFC to the Series 1997-1 Collateral Agent
hereunder shall be payable in the order and priority set forth in Section 2.01
and 5.02(b), as applicable, of this Series 1997-1 Collateral Agreement. Such
obligations shall be due and payable only to the extent that RFC's assets and
the Series 1997-1 Letter of Credit Amount are sufficient to pay such
obligations. No
- 45 -
<PAGE> 50
claims of the Series 1997-1 Collateral Agent arising under or in connection
with this Series 1997-1 Collateral Agreement are intended to be impaired or
waived by this Section 9.15.
SECTION 9.16. Waiver of Set-Off With Respect to RFC. Each of the
Secured Parties hereby waives and relinquishes any right that it has or may
have to set-off or to exercise any banker's lien or any right of attachment or
garnishment with respect to any funds at any time and from time to time on
deposit in, or otherwise to the credit of, any account and any claims of RFC
therein or with respect to any right to payment from RFC, it being understood,
however, that nothing contained in this Section 9.16 shall, or is intended to,
derogate from the assignment and security interest granted to the Series 1997-1
Collateral Agent or the Master Collateral Agent under this Series 1997-1
Collateral Agreement and the Master Collateral Agency Agreement or impair any
rights of the Secured Parties, the Series 1997-1 Collateral Agent or the Master
Collateral Agent hereunder or thereunder.
[Remainder of Page Intentionally Blank]
- 46 -
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers all as of the day and year first
above written.
REPUBLIC INDUSTRIES FUNDING CORP.
By: /s/ Dwight Jenkins
-------------------------------
Name: Dwight Jenkins
Title: Vice President and
Assistant Secretary
CREDIT SUISSE FIRST BOSTON, as Series
1997-1 Liquidity Agent and Series 1997-1
Collateral Agent
By: /s/ Robert N. Finney
-------------------------------
Name: Robert N. Finney
Title: Managing Director
By: /s/ Elizabeth A. Whalen
-------------------------------
Name: Elizabeth A. Whalen
Title: Associate
CITIBANK, N.A.,
as Depositary
By: /s/ Jenny Cheng
-------------------------------
Name: Jenny Cheng
Title: Assistant Vice President
CREDIT SUISSE FIRST BOSTON
CORPORATION, as Dealer
By: /s/ Helena M. Willner
-------------------------------
Name: Helena M. Willner
Title: Vice President
<PAGE> 52
BANCAMERICA ROBERTSON STEPHENS,
as Dealer
By: /s/ Robert J. Porter
-------------------------------
Name: Robert J. Porter
Title: Managing Director
CHASE SECURITIES INC.,
as Dealer
By: /s/ Ralph Esposito
-------------------------------
Name: Ralph Esposito
Title: Managing Director
CITICORP SECURITIES INC.,
as Dealer
By: /s/ J. Darrell Thomas
-------------------------------
Name: J. Darrell Thomas
Title: Managing Director
GENERAL MOTORS CORPORATION,
as GM Series 1997-1 Support Provider
By: /s/ Eric P. Plumb
-------------------------------
Name: Eric P. Plumb
Title: Attorney-in-Fact
<PAGE> 53
MERRILL LYNCH MONEY MARKETS INC.,
as Dealer
By:
-----------------------------
Name:
Title:
<PAGE> 54
CREDIT SUISSE FIRST BOSTON,
as Series 1997-1 Support Letter of Credit Provider
By: /s/ Robert N. Finney
----------------------------------------
Name: Robert N. Finney
Title: Managing Director
NATIONSBANK, N.A.,
as Series 1997-1 Support Letter of Credit Provider
By: /s/ Andrew M. Airheart
----------------------------------------
Name: Andrew M. Airheart
Title: Senior Vice President
CANADIAN IMPERIAL BANK OF
COMMERCE, ATLANTA BRANCH,
as Series 1997-1 Support Letter of Credit Provider
By: /s/ Roger Colden
----------------------------------------
Name: Roger Colden
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
THE FIRST NATIONAL BANK OF CHICAGO,
as Series 1997-1 Support Letter of Credit Provider
By: /s/ Brooks P. Crankshaw
----------------------------------------
Name: Brooks P. Crankshaw
Title: Authorized Agent
CAISSE NATIONALE DE CREDIT AGRICOLE,
as Series 1997-1 Support Letter of Credit Provider
By: /s/ Katherine L. Abbott
----------------------------------------
Name: Katherine L. Abbott
Title: First Vice President
<PAGE> 55
THE BANK OF NEW YORK,
as Series 1997-1 Support Letter of Credit Provider
By: /s/ David C. Siegel
----------------------------------------
Name: David C. Siegel
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH,
as the Series 1997-1 Letter of Credit Provider
By: /s/ Alan Bookspan
----------------------------------------
Name: Alan Bookspan
Title: Vice President
<PAGE> 1
Exhibit 10.19
[Certain portions of this Exhibit have been omitted pursuant to a request for
confidential treatment as indicated by an * and separately filed with the
Commission]
September 23, 1996
Mr. Jeff Parell
National Car Rental Systems, Inc.
7700 France Avenue South
Minneapolis, MN 55435
Dear Mr. Parell:
This letter will confirm the agreement ("Agreement") reached between National
Car Rental Systems, Inc., ("National") and General Motors ("GM") regarding
National's purchase or lease of GM vehicles for model year 1997.
The details of this Agreement are as follows:
1997 MODEL YEAR
1. National will purchase or lease from GM dealers of their choice * 1997
model GM vehicles under the terms and conditions of GM's 1997 Model Year
Daily Rental Fleet Program (refer Attachment 1). National has agreed to
purchase these GM vehicles in a mix which includes a considerable number of
GM's higher priced vehicles and which represents a higher percentage of
these units than National otherwise would purchase. The agreed mix of units
is as follows:
Metro * Park Avenue *
Prizm * Eighty Eight *
Cavalier * DeVille *
Cavalier Cvt. * Riviera *
Sunfire * Aurora *
Sunfire Cvt. * Camaro *
Malibu * Venture Minivan *
Grand Am * Trans Sport *
Skylark * Astro Van *
Acheiva * Safari Van *
Lumina * Blazer *
Monte Carlo * S10 Pickup *
Grand Prix * Jimmy *
Supreme * Chevy Full-size Van *
Bonneville * Tracker *
LaSabre * ------
Total Units: *
<PAGE> 2
Mr. Jeff Parell
September 23, 1996
Page 2
2. National agrees that in all advertising and promotional materials which
National undertakes for the 1997 Model Year (September 1, 1996 through
August 31, 1997), National will feature only General Motors products
where any vehicle is featured or promoted. During the term of this
Agreement, National agrees to allow such space and include such tag
lines as is in accordance with custom of the trade and industry.
3. In exchange for this Agreement to purchase, promote and service the
number of 1997 models and in a vehicle mix satisfactory to GM, as
described in Paragraph 1, GM will provide National * in addition to
any incentive due under terms and conditions of GM's 1997 Model Year
Daily Rental Fleet Program.
4. The pro rata portion of the sum described in Paragraph 3, will be paid
to National by the 25th of the month following vehicle delivery and
receipt of a diskette/electronic media transmission by GM provided GM
receives National=s diskette/electronic media transmission by the last
business day of the month. A diskette/electronic transmission received
after the last business day of the month will be paid by the 25th of
the following month. This diskette/electronic media transmission must
include VIN numbers on the portion * delivered in the preceding month
and not covered in previous payments. Attachment 2 details data
transmission and record format requirements and should be used when
reporting vehicle acquisitions. The report of vehicle acquisitions
should be transmitted by EDS Elite to the GM Consolidated Fleet
Redistribution Department or diskettes sent to the following address:
Attention: P.E. McCabe, Director-Finance
NAO Fleet Operations
MC 408-205-206
30007 Van Dyke Avenue
Warren, Michigan 48090
In the event that National does not purchase or lease the agreed number
of vehicles at the agreed mix, * to National as described in Paragraph
3 by General Motors will be reimbursed to GM on demand subject to
Paragraph 5.
<PAGE> 3
Mr. Jeff Parell
September 23, 1996
Page 3
5. All volume and mix requirements are subject to reasonable minor
adjustments based on mutual agreement between the parties when the
exact circumstances faced by both parties are known at the time of
vehicle delivery. It is understood that these adjustments may require
National to purchase a comparably priced mix of product. In the event
that either party cannot fulfill any terms of this Agreement due to
events beyond its control, such as acts of God, labor disputes, and
severe economic downturns, the parties will enter negotiations with the
intent of allowing both to continue business without substantial
penalty.
6. National agrees to provide to GM, at the beginning of each month, a
schedule of anticipated purchases of 1997 model year vehicles (model
year fleet plan) by division and car line, by month and model year.
National agrees to provide to GM, at the end of the each month, a
schedule of 1996 and 1997 model vehicle returns by vehicle size (e.g.,
economy, midsize, etc.) by month for the 1996 and 1997 calendar years.
*
7. National agrees to retain any documents or records relevant to vehicles
purchased under this Agreement or any GM program and/or claims
submitted for payment under this Agreement or any other GM program for
two years after the close of the program. National agrees to permit any
designated representative of GM to examine, audit and take copies of
any accounts and records National is to maintain under this Agreement.
National agrees to make such accounts and records readily available at
its facilities during regular business hours. GM agrees to furnish
National with a list of any reproduced records.
The Reclassification Program for the 1997 model year is under development and
will be mailed under a separate cover.
<PAGE> 4
Mr. Jeff Parell
September 23, 1996
Page 4
On behalf of the General Motors= Car and Truck Divisions, I would like to
express my appreciation for your business and hope this Agreement will continue
to strengthen our business relationship.
Please return a copy of this letter acknowledging your agreement to the above.
Very truly yours,
/s/ Richard M. Lee
----------------------------------
Richard M. Lee
Executive Director
Fleet Operations
/s/ Jeffrey Parell
- ----------------------------------
Acknowledged and Agreed
National Car Rental Systsems, Inc.
Date: 10/4/96
-----------------------------
<PAGE> 5
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
Attachment 1 - Part 1 of 2
GENERAL MOTORS CORPORATION
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
1. PROGRAM NAME AND NUMBER:
1997 Model Year Passenger Car and Light Duty Truck 100% Repurchase
Program for Daily Rental Operators - Program No. 97-02.
2. PROGRAM DESCRIPTION:
To provide General Motors dealers certain repurchase information on
selected 1997 model year passenger cars and light duty trucks sold and
delivered by GM dealers to qualified daily rental operators and
eligible for repurchase by General Motors in accordance with the
guidelines herein.
3. PROGRAM ALLOWANCES:
The repurchase amount shall be calculated as a percent of dealer
invoice including freight. The repurchase percentage varies month by
month and is determined by the month the vehicle is RETURNED TO AND
ACCEPTED BY GENERAL MOTORS in accordance with GM Auction Guidelines.
- Vehicles are assigned into one of the four tier groups. (Refer
Attachment "A" for tier composition and Attachment "B" for
respective tier monthly repurchase percentage)
- The daily repurchase rate equals the change in the monthly
rate divided by the number of calendar days for that month.
- Out-of-service date shall be the date the vehicle is returned
to an approved auction location provided the rental company
meets all program parameters and completes the sign-off
procedures.
Damage allowance varies by return and acceptance date. (Refer
Attachment "B")
Vehicles are not eligible for Preferred Equipment Group (P.E.G.)/Option
Group discounts.
The following models are not eligible: Cavalier Z24, Corvette, Astro
and Safari Cargo Vans, Suburban, Tahoe, Yukon, Van Conversions
(including Hi-Cube and Stepvan), and Full Size Cargo Vans.
Vehicles delivered from dealer inventory and NOT eligible for
enrollment in the 1997 Repurchase Program.
<PAGE> 6
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
Dealers will receive seven (7) additional days following the expiration
of transit time before the invoice is due for payment, in lieu of
interest credit days. Vehicle payment is due upon delivery to the fleet
customer (if prior to invoice interest commencement date). By providing
this additional allowance, interest reimbursements WILL NOT BE MADE for
vehicles arriving one (1) to seven (7) days after the expiration of
transit time. Vehicles arriving more than ten (10) days after the
interest commencement date are eligible for reimbursement under the GM
In-Transit Credit Program.
4. DELIVERY/ORDER/IN-SERVICE/PRODUCTION PERIOD:
Order-beginning with announcement of the 1997 model year program and
ending when dealers are notified that 1997 model year orders are no
longer being accepted.
Production, Delivery, In-Service - 1997 model year.
IMPORTANT - Acceptance of an order on any vehicle line does not
constitute a commitment to build or to build in a requested time frame.
Minimum In-Service Period - None.
Maximum In-Service Period - 24 months or July 31, 1999 (whichever
occurs first).
Repurchase Mileage Requirements:
- No maximum mileage limitations.
- Excess mileage penalty of $0.07 per mile over maximum free
mileage levels that vary by month. (Refer Attachment "B").
All units to be repurchased by General Motors Corporation under this
program must be returned and accepted by July 31, 1999. NON-RETURNED
VEHICLES PURCHASED UNDER THIS PROGRAM MUST REMAIN IN SERVICE A MINIMUM
OF SIX (6) MONTHS (180 DAYS). Documented frame, fire, and/or
water-damaged vehicles, which are ineligible for repurchase, have no
minimum in-service period.
5. ELIGIBLE MODELS/REQUIRED OPTIONS AND/OR ORDER TYPES:
All new and unused 1997 General Motors models, specified on Attachment
"A", with required minimum factory installed equipment levels specified
on Attachment "C" and processing options ordered for qualified daily
rental operators for use as daily rental vehicles and delivered by GM
dealers. (Refer to 10A).
<PAGE> 7
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDLINES
-------------------------------------------------
All qualified fleet orders for eligible models received from dealers
must contain a valid Fleet Order Type.
Ordering Instructions: All repurchase orders must contain fleet
processing option VN9 and your customer UPC processing code. Vehicles
must be ordered with minimum option requirements specified on
Attachment "C".
Dealer must take full responsibility for including the proper
processing option on all orders. Should errors occur in the ordering of
vehicles, resulting in diversions or reinvoicing, the dealer may be
charged an administrative fee.
All qualified fleet orders for eligible models received from the dealer
MUST contain the Fleet Account Number (FAN) of record and account name.
Dealer Order Acknowledgments must be checked to verify accuracy of
order submitted.
Dealer orders currently on hand or in the system that qualify under
this program, except that they do not contain the appropriate
processing options, can be amended or canceled and reordered if they
have not been released to production. THIS IS THE ORDERING DEALER'S
RESPONSIBILITY.
Fleet orders submitted with Fleet Processing Option VN9 and
incompatible retail incentive options will be rejected with an error
message.
Colors Not Eligible for Repurchase - Refer Mandatory Optional
Equipment.
Required Options - Processing Option VN9 and your customer assigned UPC
processing code must be ordered by the dealer on repurchase vehicles to
be enrolled in the 1997 Model Year Daily Rental 100% Repurchase
Program. PROCESSING OPTION VN9 WILL PROVIDE A NET INVOICE - LESS
HOLDBACK AND ADVERTISING.
6. COMPATIBLE INCENTIVE/ALLOWANCE PROGRAMS:
Vehicles enrolled in the 1997 Model Year 100% Repurchase Program are
NOT eligible for any other fleet/retail program, including, but not
limited to, the Dealer Fleet Ordering Assistance Program (VQ), Price
Assurance and Price Protection. Chevrolet GEO Dealer Rent A Car System
units (CGDRACS) and General Motors Dealer Rent A Car System units
(GMDRACS) are not eligible for the 1997 Model Year 100% Repurchase
Program.
7. METHOD OF APPLICATION: Not Applicable.
<PAGE> 8
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
8. METHOD OF PAYMENT:
Check to titleholder or financial institution upon receipt and
clearance of proper paperwork at auction site and General Motors
Corporation.
Repurchase payment is made in the form of a check to the titleholder or
financial institution at the address shown on the title, unless prior
arrangements are made.
The Payment Modification System (PMS) provides an effective method to
redirect repurchase checks to lending institutions as co-payee with the
titled owner.
If a lender and a daily rental operator desire co-payee/redirection,
please direct requests for additional information in writing to:
NAO Dealer Accounting
Mail Code 483-631-505
P.O. Box 436014
Pontiac, MI 48343-6014
9. FINAL DATE FOR SUBMISSION OF APPLICATIONS AND RESOLUTION OF ALL
APPLICABLE REJECTS: Not Applicable.
10. OTHER PROGRAM GUIDELINES:
A. This is the General Motors guideline regarding the definition
of a "rental" vehicle: "The bona fide rental of a vehicle
involving use and payment by a customer on an hourly, daily,
weekly or monthly basis. Usage of any such vehicle(s) by a
customer for a period of four (4) consecutive months or longer
shall be deemed to constitute leasing and not rental and will
make the vehicle ineligible for repurchase."
In the event a vehicle enrolled in the 100% Repurchase Daily
Rental Program is found to be on-rent (lease) to a customer in
excess of the above guideline, or if the customer
consecutively rents multiple enrolled vehicles for an
aggregate term of four (4) or more months, all vehicles
involved in such transactions will not be considered rental
and will be ineligible for repurchase. GENERAL MOTORS HAS THE
RIGHT TO AUDIT THE CUSTOMER TO ENSURE COMPLIANCE WITH THE
PROGRAM GUIDELINES.
B. All dealers are responsible for maintaining a copy of a
current General Motors dealer allowance incentive programs
administrative manual, and, as such, all guidelines and terms
contained therein will be applied to this program.
<PAGE> 9
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDLEINES
--------------------------------------------------
C. Unless otherwise specified, all eligible units must be
purchased from General Motors and delivered to the ultimate
customer through a General Motors dealership. Purchases or
deliveries made through any other entity or individual are
ineligible for payment.
D. All deliveries to customers with a valid Fleet Account Number
(FAN) must be reported as fleet deliveries regardless of order
type.
E. Failure to comply with these guidelines may result in the
dealer being disqualified for future participation in fleet
programs and termination of dealer sales and service
agreement.
F. Orders not produced during the 1997 model production period
will be canceled. There are no provisions for dealers to
receive any allowance for canceled orders.
G. Capitalized cost shall be calculated at dealer cost of base
vehicle and optional equipment, plus freight, less Hawaii
excise tax and tire weight tax, if applicable.
11. GENERAL POLICY GUIDELINES:
A. All General Motors general guidelines and definition of terms
relative to incentive programs (refer to General Motors Dealer
Sales Allowance and Incentive Manual Articles 2 and 3) that
were supplied to your dealership apply to this program.
B. General Motors reserves the right to cancel, amend, revise, or
revoke any program at any time based on its sole business
judgments. Final decisions in all matters relative to the
interpretation of any rule or phase of this activity rests
solely with General Motors.
<PAGE> 1
[CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AS INDICATED BY AN * AND SEPARATELY FILED WITH THE
COMMISSION]
Exhibit 10.20
October 8, 1996
Mr. D. Keith Cobb
Vice Chairman and CEO
Alamo Rent A Car, Inc.
110 S.E. 6th Street
Ft. Lauderdale, FL 33301
Dear Mr. Cobb:
This letter will confirm the agreement ("Agreement") reached between Alamo Rent
A Car, Inc., ("Alamo") and General Motors ("GM") regarding Alamo's purchase or
lease of GM vehicles for model year 1997 through model year 2000. The details of
this Agreement are as follows:
1997 MODEL YEAR
1. Alamo will purchase or lease from GM dealers of their choice * 1997 model
GM vehicles under the terms and conditions of GM's 1997 Model Year Daily
Rental Fleet Program (refer ATTACHMENT 1). Alamo has agreed to purchase
these GM vehicles in a mix which includes a considerable number of GM's
higher priced vehicles and which represents a higher percentage of these
units than Alamo otherwise would purchase. The agreed mix of units is as
follows:
Metro * Bonneville *
Prizm * LeSabre *
Cavalier * DeVille *
Cavalier Cvt. * Lumina Minivan *
Sunfire * Trans Sport *
Sunfire Cvt. * Astro Van *
Malibu * Safari Van *
Grand Am * Blazer *
Skylark * Jimmy *
Achieva * Chevy Full-size Van *
Lumina * GMC Full-size Van *
Monte Carlo * Tracker *
Grand Prix * -----
Supreme * Total Units: *
<PAGE> 2
Mr. D.K. Cobb
October 8, 1996
Page 2
2. Alamo agrees that in all advertising and promotional materials which Alamo
undertakes for the 1997 Model Year (September 1, 1996 through August 31,
1997), Alamo will feature only General Motors products where any vehicle is
featured or promoted. During the term of this Agreement, Alamo agrees to
allow such space and include such tag lines as is in accordance with custom
of the trade and industry. In exchange for this Agreement to advertise and
promote the number of 1997 models and in a vehicle mix satisfactory to GM,
as described in Paragraph 1, GM will provide Alamo * in addition to any
incentives due under terms and conditions of GM's 1997 Model Year Daily
Rental Fleet Program.
3. The pro rata portion of the sum described in Paragraph 2, will be paid to
Alamo by the 25th of the month following vehicle delivery and receipt of a
diskette/electronic media transmission by GM provided GM receives Alamo's
diskette/electronic media transmission by the last business day of the
month. A diskette/electronic transmission received after the last business
day of the month will be paid by the 25th of the following month. This
diskette/electronic media transmission must include VIN numbers on the
portion of the * delivered in the preceding month and not covered in
previous payments. Attachment 2 details data transmission and record format
requirements and should be used when reporting vehicle acquisitions. The
report of vehicle acquisitions should be transmitted by EDS Elite to the GM
Consolidated Fleet Redistribution Department or diskettes sent to the
following address:
Attention: P.E. McCabe, Director-Finance
NAO Fleet Operations
MC 408-205-206
30007 Van Dyke Avenue
Warren, Michigan 48090
In the event that Alamo does not purchase or lease the agreed number of
vehicles at the agreed mix, all payments made to Alamo as described in
Paragraph 3 by General Motors will be reimbursed to GM on demand subject to
Paragraph 5.
<PAGE> 3
Mr. D.K. Cobb
October 8, 1996
Page 3
4. GM agrees to make the sum earned, as described in paragraph 2, available to
Alamo through GM's Electronic Funds Transfer (EFT) Payment System;
otherwise GM will mail a paper check to Alamo on the due date stated in
Paragraph 3. The provisions of GM's EFT system will allow funds to be
available to Alamo three (3) calendar days from the time period specified
in paragraph 3. If the electronic fund payment date is a non- banking day,
the electronic fund transfer will occur the following banking day. For
example, if the payment date is Wednesday, the 25th of the month, the
electronic fund payment date would normally be scheduled for Saturday, the
28th. However, the electronic fund transfer will be made on Monday,
assuming Monday is a banking day. "Banking Day", for the purposes of this
Agreement, shall mean the day in which both GM's originating bank and
Alamo's Depository Institution shall be available to transmit and receive
electronic fund transfers.
5. All volume and mix requirements are subject to reasonable minor adjustments
based on mutual agreement between the parties when the exact circumstances
faced by both parties are known at the time of vehicle delivery. It is
understood that these adjustments may require Alamo to purchase a
comparably priced mix of product. In the event that either party cannot
fulfill any terms of this Agreement due to events beyond its control, such
as acts of God, labor disputes, and severe economic downturns, the parties
will enter negotiations with the intent of allowing both to continue
business without substantial penalty.
6. Alamo agrees to provide to GM, at the beginning of each month, a schedule
of anticipated purchases of 1997 model year vehicles (model year fleet
plan) by division and car line, by month and model year. Alamo agrees to
provide to GM, at the end of the each month, a schedule of 1996 and 1997
model vehicle returns by vehicle size (e.g., economy, midsize, etc.) by
month for the 1996 and 1997 calendar years. Receipt of the information
described in this paragraph is an additional condition of payment of the
amounts discussed in this Agreement.
7. Alamo agrees to retain any documents or records relevant to vehicles
purchased under this Agreement or any GM program and/or claims submitted
for payment under this Agreement or any other GM program for two years
after the close of the program. Alamo agrees to permit any designated
representative of GM to examine, audit and take copies of any accounts and
records Alamo is to maintain under this Agreement. Alamo agrees to make
such accounts and records readily available at its facilities during
regular business hours. GM agrees to furnish Alamo with a list of any
reproduced records.
<PAGE> 4
Mr. D.K. Cobb
October 8, 1996
Page 4
GM agrees to assist Alamo in vehicle financing by providing the following at the
request of Alamo:
a. *
b. GM agrees to execute an amendment to the General Motors Corporation
Repurchase Agreement dated August 22, 1994, as amended from time to
time, in order to clarify that GM's obligations thereunder will be
applicable to 1997 through 2000 model year vehicles. The terms of the
GM Daily Rental Repurchase Guidelines and the GM National Fleet
Purchase Program Guidelines for the 1997 model year will be
incorporated into the amendment.
The Reclassification Program for the 1997 model year is under development and
will be mailed under a separate cover.
MODEL YEAR 1998 THROUGH 2000
This letter will also confirm the Agreement reached between Alamo and GM
regarding Alamo's purchase or lease GM vehicles for model year 1998 through
model year 2000. The details of this Agreement are as follows:
8. GM agrees to commit to Alamo the availability of the 100% Repurchase
Program through model year 2000.
9. GM agrees to extend the terms and conditions of GM=s 1997 Model Year Daily
Rental Fleet Program (refer ATTACHMENT 1) for Model Year 1998 through Model
Year 2000.
GM reserves the right to place "new" models (as defined by GM) on any of
the four (4) 1997 MY repurchase percentage tiers or create a new tier.
Additionally, GM also reserves the right to shift vehicles on to higher
percentage tiers, (e.g. shift from repurchase tier 1 to tier 2, thus
lowering Alamo's vehicle depreciation cost).
Notwithstanding the above items, should GM alter the terms and conditions
of its repurchase program, then Alamo would be granted the option of
choosing which program is more beneficial to its business.
<PAGE> 5
10. GM agrees that Alamo may purchase or lease from GM dealers of its choice *
during each model year of this Agreement. GM and Alamo agree that mix
provided in the future model years must be mutually satisfactory to both
parties.
11. Alamo agrees to maintain a minimum GM share penetration of 51%. Further,
during the term of this Agreement, Alamo agrees that all advertising and
promotional materials which Alamo undertakes for the future model years,
Alamo will feature only General Motors products where any vehicle is
featured or promoted. Accordingly, Alamo agrees to allow such space and
include such tag lines as in accordance with the custom of the trade and
industry. In exchange, GM will provide Alamo with * during each year of
this Agreement. These sums are in addition to any incentives due under the
terms and conditions of GM's Model Year Daily Rental Fleet Programs, if any
are available.
On behalf of the General Motors' Car and Truck Divisions, I would like to
express my appreciation for your business and hope this Agreement will continue
to strengthen our business relationship.
Please return a copy of this letter acknowledging your agreement to the above.
Very truly yours,
/s/ Richard M. Lee
--------------------------------
Richard M. Lee
Executive Director
Fleet Operations
/s/ D. Keith Cobb 10/22/96
- ------------------------------ --------------------------------
Acknowledged and Agreed Date
Alamo Rent A Car, Inc.
<PAGE> 6
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
Attachment 1 - Part 1 of 2
GENERAL MOTORS CORPORATION
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
1. PROGRAM NAME AND NUMBER:
1997 Model Year Passenger Car and Light Duty Truck 100% Repurchase
Program for Daily Rental Operators - Program No. 97-02.
2. PROGRAM DESCRIPTION:
To provide General Motors dealers certain repurchase information on
selected 1997 model year passenger cars and light duty trucks sold and
delivered by GM dealers to qualified daily rental operators and
eligible for repurchase by General Motors in accordance with the
guidelines herein.
3. PROGRAM ALLOWANCES:
The repurchase amount shall be calculated as a percent of dealer
invoice including freight. The repurchase percentage varies month by
month and is determined by the month the vehicle is RETURNED TO AND
ACCEPTED BY GENERAL MOTORS in accordance with GM Auction Guidelines.
- Vehicles are assigned into one of the four tier groups. (Refer
Attachment "A" for tier composition and Attachment "B" for
respective tier monthly repurchase percentage)
- The daily repurchase rate equals the change in the monthly
rate divided by the number of calendar days for that month.
- Out-of-service date shall be the date the vehicle is returned
to an approved auction location provided the rental company
meets all program parameters and completes the sign-off
procedures.
Damage allowance varies by return and acceptance date. (Refer
Attachment "B")
Vehicles are not eligible for Preferred Equipment Group (P.E.G.)/Option
Group discounts.
The following models are not eligible: Cavalier Z24, Corvette, Astro
and Safari Cargo Vans, Suburban, Tahoe, Yukon, Van Conversions
(including Hi-Cube and Stepvan), and Full Size Cargo Vans.
Vehicles delivered from dealer inventory and NOT eligible for
enrollment in the 1997 Repurchase Program.
<PAGE> 7
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
Dealers will receive seven (7) additional days following the expiration
of transit time before the invoice is due for payment, in lieu of
interest credit days. Vehicle payment is due upon delivery to the fleet
customer (if prior to invoice interest commencement date). By providing
this additional allowance, interest reimbursements WILL NOT BE MADE for
vehicles arriving one (1) to seven (7) days after the expiration of
transit time. Vehicles arriving more than ten (10) days after the
interest commencement date are eligible for reimbursement under the GM
In-Transit Credit Program.
4. DELIVERY/ORDER/IN-SERVICE/PRODUCTION PERIOD:
Order-beginning with announcement of the 1997 model year program and
ending when dealers are notified that 1997 model year orders are no
longer being accepted.
Production, Delivery, In-Service - 1997 model year.
IMPORTANT - Acceptance of an order on any vehicle line does not
constitute a commitment to build or to build in a requested time frame.
Minimum In-Service Period - None.
Maximum In-Service Period - 24 months or July 31, 1999 (whichever
occurs first).
Repurchase Mileage Requirements:
- No maximum mileage limitations.
- Excess mileage penalty of $0.07 per mile over maximum free
mileage levels that vary by month. (Refer Attachment "B").
All units to be repurchased by General Motors Corporation under this
program must be returned and accepted by July 31, 1999. NON-RETURNED
VEHICLES PURCHASED UNDER THIS PROGRAM MUST REMAIN IN SERVICE A MINIMUM
OF SIX (6) MONTHS (180 DAYS). Documented frame, fire, and/or
water-damaged vehicles, which are ineligible for repurchase, have no
minimum in-service period.
5. ELIGIBLE MODELS/REQUIRED OPTIONS AND/OR ORDER TYPES:
All new and unused 1997 General Motors models, specified on Attachment
"A", with required minimum factory installed equipment levels specified
on Attachment "C" and processing options ordered for qualified daily
rental operators for use as daily rental vehicles and delivered by GM
dealers. (Refer to 10A).
<PAGE> 8
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDLINES
-------------------------------------------------
All qualified fleet orders for eligible models received from dealers
must contain a valid Fleet Order Type.
Ordering Instructions: All repurchase orders must contain fleet
processing option VN9 and your customer UPC processing code. Vehicles
must be ordered with minimum option requirements specified on
Attachment "C".
Dealer must take full responsibility for including the proper
processing option on all orders. Should errors occur in the ordering of
vehicles, resulting in diversions or reinvoicing, the dealer may be
charged an administrative fee.
All qualified fleet orders for eligible models received from the dealer
MUST contain the Fleet Account Number (FAN) of record and account name.
Dealer Order Acknowledgments must be checked to verify accuracy of
order submitted.
Dealer orders currently on hand or in the system that qualify under
this program, except that they do not contain the appropriate
processing options, can be amended or canceled and reordered if they
have not been released to production. THIS IS THE ORDERING DEALER'S
RESPONSIBILITY.
Fleet orders submitted with Fleet Processing Option VN9 and
incompatible retail incentive options will be rejected with an error
message.
Colors Not Eligible for Repurchase - Refer Mandatory Optional
Equipment.
Required Options - Processing Option VN9 and your customer assigned UPC
processing code must be ordered by the dealer on repurchase vehicles to
be enrolled in the 1997 Model Year Daily Rental 100% Repurchase
Program. PROCESSING OPTION VN9 WILL PROVIDE A NET INVOICE - LESS
HOLDBACK AND ADVERTISING.
6. COMPATIBLE INCENTIVE/ALLOWANCE PROGRAMS:
Vehicles enrolled in the 1997 Model Year 100% Repurchase Program are
NOT eligible for any other fleet/retail program, including, but not
limited to, the Dealer Fleet Ordering Assistance Program (VQ), Price
Assurance and Price Protection. Chevrolet GEO Dealer Rent A Car System
units (CGDRACS) and General Motors Dealer Rent A Car System units
(GMDRACS) are not eligible for the 1997 Model Year 100% Repurchase
Program.
7. METHOD OF APPLICATION: Not Applicable.
<PAGE> 9
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
8. METHOD OF PAYMENT:
Check to titleholder or financial institution upon receipt and
clearance of proper paperwork at auction site and General Motors
Corporation.
Repurchase payment is made in the form of a check to the titleholder or
financial institution at the address shown on the title, unless prior
arrangements are made.
The Payment Modification System (PMS) provides an effective method to
redirect repurchase checks to lending institutions as co-payee with the
titled owner.
If a lender and a daily rental operator desire co-payee/redirection,
please direct requests for additional information in writing to:
NAO Dealer Accounting
Mail Code 483-631-505
P.O. Box 436014
Pontiac, MI 48343-6014
9. FINAL DATE FOR SUBMISSION OF APPLICATIONS AND RESOLUTION OF ALL
APPLICABLE REJECTS: Not Applicable.
10. OTHER PROGRAM GUIDELINES:
A. This is the General Motors guideline regarding the definition
of a "rental" vehicle: "The bona fide rental of a vehicle
involving use and payment by a customer on an hourly, daily,
weekly or monthly basis. Usage of any such vehicle(s) by a
customer for a period of four (4) consecutive months or longer
shall be deemed to constitute leasing and not rental and will
make the vehicle ineligible for repurchase."
In the event a vehicle enrolled in the 100% Repurchase Daily
Rental Program is found to be on-rent (lease) to a customer in
excess of the above guideline, or if the customer
consecutively rents multiple enrolled vehicles for an
aggregate term of four (4) or more months, all vehicles
involved in such transactions will not be considered rental
and will be ineligible for repurchase. GENERAL MOTORS HAS THE
RIGHT TO AUDIT THE CUSTOMER TO ENSURE COMPLIANCE WITH THE
PROGRAM GUIDELINES.
B. All dealers are responsible for maintaining a copy of a
current General Motors dealer allowance incentive programs
administrative manual, and, as such, all guidelines and terms
contained therein will be applied to this program.
<PAGE> 10
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDLEINES
--------------------------------------------------
C. Unless otherwise specified, all eligible units must be
purchased from General Motors and delivered to the ultimate
customer through a General Motors dealership. Purchases or
deliveries made through any other entity or individual are
ineligible for payment.
D. All deliveries to customers with a valid Fleet Account Number
(FAN) must be reported as fleet deliveries regardless of order
type.
E. Failure to comply with these guidelines may result in the
dealer being disqualified for future participation in fleet
programs and termination of dealer sales and service
agreement.
F. Orders not produced during the 1997 model production period
will be canceled. There are no provisions for dealers to
receive any allowance for canceled orders.
G. Capitalized cost shall be calculated at dealer cost of base
vehicle and optional equipment, plus freight, less Hawaii
excise tax and tire weight tax, if applicable.
11. GENERAL POLICY GUIDELINES:
A. All General Motors general guidelines and definition of terms
relative to incentive programs (refer to General Motors Dealer
Sales Allowance and Incentive Manual Articles 2 and 3) that
were supplied to your dealership apply to this program.
B. General Motors reserves the right to cancel, amend, revise, or
revoke any program at any time based on its sole business
judgments. Final decisions in all matters relative to the
interpretation of any rule or phase of this activity rests
solely with General Motors.
<PAGE> 1
Exhibit 10.25
[Certain portions of this Exhibit have been omitted pursuant to a request for
confidential treatment as indicated by an * and separately filed with the
Commission]
General Motors
November 18, 1997
Mr. Terry Hardy
Senior Vice President - Strategic Services
Automotive Rental Group
Republic Industries, Inc.
110 S. E. 6th Street
Ft. Lauderdale, FL 33301
Dear Mr. Hardy:
This letter will confirm the agreement ("Agreement") reached between Alamo Rent
A Car, Inc. ("Alamo") and General Motors ("GM") regarding Alamo's purchase or
lease of GM vehicles for model year 1998 through model year 2000.
The details of this Agreement are as follows:
1998 MODEL YEAR
1. Alamo will purchase or lease from GM dealers of their choice a * model GM
vehicles under the terms and conditions of GM's 1998 Model Year Daily
Rental Purchase Program (refer ATTACHMENT 1). Alamo has agreed to purchase
these GM vehicles in a mix which includes a considerable number of GM's
higher priced models and which represents a higher percentage of these
units than Alamo otherwise would purchase. The agreed mix of units is as
follows:
Metro * Intrigue *
Cavalier * Bonneville *
Cavalier Cvt. * LeSabre *
Sunfire * DeVille *
Sunfire Cvt. * Venture *
Grand Am * Trans Sport *
Skylark * Astro van *
Achieva * Safari van *
Malibu * Blazer *
Century * Jimmy *
Lumina * Bravada *
Monte Carlo * Full Size Van *
Grand Prix * Prizm *
------
Total Units *
<PAGE> 2
Page 2
2. Alamo agrees that in all advertising and promotional materials which Alamo
undertakes for the 1998 Model Year (September 1, 1997 through August 31,
1998), Alamo will feature only General Motors products where any vehicle is
featured or promoted. During the term of this Agreement, Alamo agrees to
allow such space and include such tag lines as is in accordance with the
customer of the trade and industry.
3. In exchange for this Agreement to purchase, promote and service the number
of 1998 models and in a vehicle mix satisfactory to GM, as described in
Paragraph 1, GM will provide Alamo with * in addition to any incentives due
under the terms and conditions of GM's 1998 Model Year Daily Rental
Purchase Program.
Performance objectives (first time inspection, disposal loss targets,
mileage penalties, etc.) will be mutually agreed upon and discussed under
separate cover.
4. The pro rata portion of the sum described in Paragraph 3, will be paid to
Alamo by the 25th day of the month following vehicle delivery and receipt
of a diskette/electronic media transmission by GM provided GM receives
Alamo's diskette/electronic media transmission by the last business day of
the month. A diskette/electronic media transmission received after the last
business day of the month will be paid by the 25th of the following month.
This diskette/electronic media transmission must include VIN numbers on the
portion of * delivered in the preceding month and not covered in previous
payments. ATTACHMENT 2 details data transmission and record format
requirements and should be used when reporting vehicle acquisitions. The
report of vehicle acquisitions should be transmitted by EDS Elite to the GM
Auction Sales and Remarketing Department or diskettes sent to the following
address:
Attention: J.P. Larson, Director - Finance
NAO Fleet Operations
MC 480-205-206
30007 Van Dyke Avenue
Warren, Michigan 48090
In the event that Alamo does not purchase or lease the agreed number of
vehicles at the agreed mix, all payments made to Alamo as described in
Paragraph 4 by General Motors will be reimbursed to GM on demand subject to
Paragraph 6.
5. GM agrees to make the sum earned, as described in Paragraph 3, available to
Alamo through GM's Electronic Funds Transfer (EFT) Payment System;
otherwise GM will mail a paper check to Alamo on the due date stated in
Paragraph 4. The provisions of GM's EFT system will allow funds to be
available to Alamo three (3) calendar days from the time period specified
in Paragraph 4. If the electronic fund payment date is a non-banking day,
the electronic funds transfer will occur the following banking day. For
example, if the payment date is Wednesday, the 25th of the month, the
electronic fund payment date would normally be scheduled for Saturday, the
28th. However, the electronic fund transfer will be made on Monday,
assuming Monday is a banking day. "Banking Day", for the purposes of this
Agreement, shall mean the day in which both
<PAGE> 3
Page 3
GM's originating bank and Alamo's Depository Institution shall be available
to transmit and receive electronic fund transfers.
6. All volume and mix requirements are subject to reasonable minor adjustments
based upon mutual agreement between the parties when the exact
circumstances faced by both parties are known at the time of vehicle
delivery. It is understood that these adjustments may require Alamo to
purchase a comparably priced mix of product. In the event that either party
cannot fulfill any terms of this Agreement due to events beyond its
control, such as acts of God, labor disputes, and severe economic
downturns, the parties will enter negotiations with the intent of allowing
both to continue business without substantial penalty.
7. Alamo agrees to provide to GM, at the beginning of each month, a schedule
of anticipated purchases of 1998 model year vehicles (model year fleet
plan) by division and car line, by month and model year. Alamo also agrees
to provide to GM, at the end of each month, a schedule of 1997 and 1998
model vehicle returns by vehicle size (e.g., economy, midsize, etc.) by
month of the 1997 and 1998 calendar years. Receipt of the information
described in this paragraph is an additional condition of payment of the
amounts discussed in this Agreement.
8. Alamo agrees to retain any documents or records relevant to vehicles
purchased under this Agreement or any GM program and/or claims submitted
for payment under this Agreement or any other GM program for two years
after the close of the program. Alamo agrees to permit any designated
representative of GM to examine, audit and take copies of any accounts and
records Alamo is to maintain under this Agreement. Alamo agrees to make
such accounts and records readily available at its facilities during
regular business hours. GM agrees to furnish Alamo with a list of any
reproduced records.
GM agrees to assist Alamo in vehicle financing by providing the following at the
request of Alamo:
a. *
b. GM agrees to execute an amendment to the General Motors Corporation
Repurchase Agreement dated August 22, 1994, as amended from time to
time, in order to clarify that GM's obligations thereunder will be
applicable to 1998 through 2000 model year vehicles. The terms of the
GM Daily Rental Purchase Guidelines and the GM National Fleet Purchase
Program Guidelines for the 1998 model year will be incorporated into
the amendment.
<PAGE> 4
Page 4
MODEL YEARS 1999 THROUGH 2000
- -----------------------------
This letter will also confirm the Agreement reached between Alamo and GM
regarding Alamo's purchase or lease GM vehicles for model year 1999 through
model year 2000. The details of this Agreement are as follows:
9. GM agrees to commit to Alamo the availability of the 100% Vehicle Purchase
Program through model year 2000.
10. GM agrees to extend the terms and conditions of GM's 1998 Model Year Daily
Rental Fleet Program (refer ATTACHMENT 1) for model year 1999 through model
year 2000.
GM reserves the right to place "new" models (as defined by GM) on any of
the four (4) 1998 my repurchase percentage tiers or create a new tier.
Additionally, GM also reserves the right to shift vehicles only to higher
percentage tiers, (e.g. shift from repurchase tier 1 to tier 2, thus
lowering Alamo's vehicle depreciation cost).
Notwithstanding the above items, should GM alter the terms and conditions of its
vehicle purchase program, then Alamo would be granted the option of choosing
which program is more beneficial to its business.
11. GM agrees that Alamo may purchase or lease from GM dealers of its choice a
* during each model year of this Agreement. GM and Alamo agree that the
vehicle mix and production timing provided in future model years must be
mutually satisfactory to both parties.
12. Alamo agrees to maintain a minimum GM share penetration of 51%. The 51% GM
share penetration can be measured as a percent of acquisitions or as a
percent of fleet months. Further, during the term of this Agreement, Alamo
agrees that all advertising and promotional materials which Alamo
undertakes for future model years, Alamo will feature only General Motors
products where any vehicle is featured or promoted. Accordingly, Alamo
agrees to allow such space and include such tag lines as in accordance
the custom of the trade and industry. In exchange, GM will provide Alamo
* incentives due under the terms and conditions of GM's Model Year Daily
Rental Fleet Programs, if any are available.
13. This agreement is confidential and proprietary of General Motors and is
intended for the sole use by GM and Alamo. Failure to maintain
confidentiality of the terms of this agreement may result in loss of Fleet
Authorization privileges with regard to future purchases.
On behalf of the General Motors' Car and Truck Divisions, I would like to
express my appreciation for your business and hope this Agreement will continue
to strengthen our business relationship.
<PAGE> 5
Page 5
Please return a copy of this letter acknowledging your agreement to the above.
Very truly yours,
/s/ Richard M. Lee
----------------------------------
Richard M. Lee
Executive Director
Fleet Operations
/s/ Terry Hardy
- --------------------------------
Acknowledged and Agreed
National Car Rental System, Inc.
Date: 11/25/97
---------------------------
<PAGE> 6
Revised 9/11/97
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
Attachment 1 - Part 1 of 2
GENERAL MOTORS CORPORATION
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
1. PROGRAM NAME AND NUMBER:
1998 Model Year Daily Rental Purchase Program for Daily Rental
Operators - Program No. 98-02.
2. PROGRAM DESCRIPTION:
To provide General Motors dealers certain purchase information on
selected 1998 model year passenger cars and light duty trucks sold and
delivered by GM dealers to qualified daily rental operators and
eligible for purchase by General Motors in accordance with the
guidelines herein.
3. PROGRAM ALLOWANCES:
The purchase amount shall be calculated as a percent of dealer invoice
including freight. The purchase percentage varies month by month and is
determined by the month the vehicle is RETURNED TO AND ACCEPTED BY
GENERAL MOTORS in accordance with GM Auction Guidelines.
- Vehicles are assigned into one of the four tier groups. (Refer
Attachment "A" for tier composition and Attachment "B" for
respective tier monthly purchase percentage)
- The daily purchase rate equals the change in the monthly rate
divided by the number of calendar days for that month.
- Depreciation from capitalized cost will be based on specific
purchase percentages of dealer invoice, scaled by vehicle
assignment into one of four tier groups. Purchase percentages
vary by month of return to and acceptance by GM
(out-of-service date as described in Attachment "B").
- In-service date shall be five (5) days following the
expiration in-transit date as shown on the factory invoice.
- Out-of-service date shall be the date the vehicle is returned
to an approved GM turn-in site provided the rental company
meets all program parameters and completes the sign-off
procedures.
Damage allowance varies by return and acceptance date. (Refer
Attachment "B")
Vehicles are not eligible for Preferred Equipment Group (P.E.G.)/Option
Group discounts.
The following models are not eligible: Corvette, Astro and Safari
CargoVans, Van Conversions (including Hi-Cube and Stepvan), and Full
Size Cargo Vans.
Vehicles delivered from dealer inventory are NOT eligible for
enrollment in the 1998 Daily Rental Purchase Program.
1
<PAGE> 7
Revised 9/11/97
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
Dealers will receive seven (7) additional days following the expiration
of transit time before the invoice is due for payment, in lieu of
interest credit days. Vehicle payment is due upon delivery to the fleet
customer (if prior to invoice interest commencement date). By providing
this additional allowance, interest reimbursements WILL NOT BE MADE for
vehicles arriving one (1) to seven (7) days after the expiration of
transit time. Vehicles arriving more than ten (10) days after the
interest commencement date are eligible for reimbursement under the GM
In-Transit Credit Program.
4. DELIVERY/ORDER/IN-SERVICE/PRODUCTION PERIOD:
Order - beginning with announcement of the 1998 model year program and
ending when dealers are notified that 1998 model year orders are no
longer being accepted.
Production, Delivery, In-Service - 1998 model year.
IMPORTANT - Acceptance of an order on any vehicle line does not
constitute a commitment to build or to build in a requested time frame.
Minimum In-Service Period - None.
Maximum In-Service Period - 24 months or July 31, 2000 (which ever
occurs first).
Mileage Requirements:
- No maximum mileage limitations.
- Excess mileage penalty of $0.07 per mile over maximum free
mileage levels that vary by month. (Refer Attachment "B")
All units to be purchased by General Motors Corporation under this
program must be returned and accepted by July 31, 2000. NON-RETURNED
VEHICLES MUST REMAIN IN SERVICE A MINIMUM OF SIX (6) MONTHS (180 DAYS)
FROM IN-SERVICE DATE AS NOTED ON PAGE 1 OF THESE PROGRAM GUIDELINES. GM
reserves the right to audit the rental company to ensure compliance
with the minimum six (6) month in-service requirement. Frame, fire
and/or water damaged vehicles which are ineligible for purchase have no
minimum in-service period. Documentation on these vehicles must be
retained on file for audit purposes.
5. ELIGIBLE MODELS/REQUIRED OPTIONS AND/OR ORDER TYPES:
All new and unused 1998 General Motors models, specified on Attachment
"A", with required minimum factory installed equipment levels specified
on Attachment "C" and processing options ordered for qualified daily
rental operators for use as daily rental vehicles and delivered by GM
dealers. (Refer to 10A).
All qualified fleet orders for eligible models received from dealers
must contain a valid Fleet Order Type.
2
<PAGE> 8
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1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
Ordering Instructions: All purchase orders must contain fleet
processing option VN9 and your customer UPC processing code. Vehicles
must be ordered with minimum option requirements specified on
Attachment "C".
Dealer must take full responsibility for including the proper
processing option on all orders. Should errors occur in the ordering of
vehicles, resulting in diversions or reinvoicing, the dealer may be
charged an administrative fee.
All qualified fleet orders for eligible models received from the dealer
MUST contain the Fleet Account Number (FAN) of record and account name.
The ordering entity is responsible for checking dealer order
acknowledgements to verify accuracy of order submitted.
Dealer orders currently on hand or in the system that qualify under
this program, unless they do not contain the appropriate processing
options, can be amended or canceled and reordered if they have not been
released to production. THIS IS THE ORDERING DEALER'S RESPONSIBILITY.
Fleet orders submitted with Fleet Processing Option VN9 and
incompatible retail incentive options will be rejected with an error
message.
Colors Not Eligible for Purchase - Refer Mandatory Optional Equipment.
Required Options - Processing Option VN9 and your customer assigned UPC
processing code must be ordered by the dealer on purchase vehicles to
be enrolled in the 1998 Model Year Daily Rental Purchase Program.
PROCESSING OPTION VN9 WILL PROVIDE A NET INVOICE - LESS HOLDBACK AND
ADVERTISING.
6. COMPATIBLE INCENTIVE/ALLOWANCE PROGRAMS:
Vehicles enrolled in the 1998 Model Year Daily Rental Purchase Program
are NOT eligible for any other fleet/retail program, including, but not
limited to, the Dealer Fleet Ordering Assistance Program (VQ), and any
General Motors Dealer Rent A Car program.
7. METHOD OF APPLICATION: Not Applicable.
8. METHOD OF PAYMENT:
Check to title holder or financial institution upon receipt and
clearance of proper paperwork at an approved GM turn-in site and
General Motors Corporation.
Purchase payment is made in the form of a check to the title holder or
financial institution at the address shown on the title, unless prior
arrangements are made.
The Payment Modification System (PMS) provides an effective method to
redirect purchase checks to lending institutions as co-payee with the
titled owner.
3
<PAGE> 9
Revised 9/11/97
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
If a lender and a daily rental operator desire co-payee/redirection,
please direct requests for additional information in writing to:
NAO Dealer Accounting
Mail Code 483-631-505
P. O. Box 436014
Pontiac, MI 48343-6014
9. FINAL DATE FOR SUBMISSION OF APPLICATIONS AND RESOLUTION OF ALL
APPLICABLE REJECTS: Not Applicable
10. OTHER PROGRAM GUIDELINES:
A. This is the General Motors guideline regarding the definition
of a "rental" vehicle:
"The bona fide rental of a vehicle involving use and payment
by a customer on an hourly, daily, weekly or monthly basis.
Usage of any such vehicle(s) by a customer for a period of
four (4) consecutive months or longer shall be deemed to
constitute leasing and not rental and will make the vehicle
ineligible for purchase."
In the event a vehicle enrolled in the Daily Rental Purchase
Program is found to be on-rent (lease) to a customer in excess
of the above guideline, or if the customer consecutively rents
multiple enrolled vehicles for an aggregate term of four (4)
or more months, all vehicles involved in such transactions
will not be considered rental and will be ineligible for
purchase. IF NECESSARY, GENERAL MOTORS WILL AUDIT THE RENTAL
COMPANY TO ENSURE COMPLIANCE WITH THIS GUIDELINE.
B. All General Motors general guidelines and definition of terms
relative to incentive programs (refer to General Motors Dealer
Sales Allowance and Incentive Manual Articles 2 and 3) that
were supplied to your dealership apply to this program.
C. All eligible units must be delivered to the ultimate customer
through a General Motors dealership or a qualified drop-ship
location. Purchases or deliveries made through any other
entity or individual are ineligible for payment.
D. All deliveries to customers with a valid Fleet Account Number
(FAN) must be reported as fleet deliveries regardless of order
type.
E. Failure to comply with these guidelines may result in the
dealer being disqualified for future participation in fleet
programs and terminations of dealer sales and service
agreement.
F. Orders not produced during the 1998 model production period
will be canceled. There are no provisions for dealers and/or
rental customers to receive any allowance for canceled orders.
4
<PAGE> 10
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1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
G. Capitalized cost shall be calculated at dealer cost of base
vehicle and optional equipment, plus freight, less Hawaii
excise tax and tire weight tax, if applicable.
H. General Motors reserves the right to cancel, amend, revise, or
revoke any program at any time based on its sole business
judgements. Final decisions in all matters relative to the
interpretation of any rule or phase of this activity rests
solely with General Motors.
5
<PAGE> 1
[CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AS INDICATED BY AN * AND SEPARATELY FILED WITH THE
COMMISSION]
Exhibit 10.26
General Motors
November 18, 1997
Mr. Terry Hardy
Senior Vice President - Strategic Services
Automotive Rental Group
Republic Industries, Inc.
110 S. E. 6th Street
Ft. Lauderdale, FL 33301
Dear Mr. Hardy:
This letter will confirm the agreement ("Agreement") reached between National
Car Rental System, Inc.("National") and General Motors ("GM") regarding
National's purchase or lease of GM vehicles for model year 1998. The details of
this Agreement are as follows:
1998 MODEL YEAR
1. National will purchase or lease from GM dealers of their choice * 1998
MODEL GM VEHICLES under the terms and conditions of GM's 1998 Model Year
Daily Rental Purchase Program (refer ATTACHMENT 1). National has agreed to
purchase these GM vehicles in a mix which includes a considerable number of
GM's higher priced models and which represents a higher percentage of these
units than National otherwise would purchase. The agreed mix of units is as
follows:
Metro * Park Avenue *
Prizm * DeVille *
Cavalier * Catera *
Sunfire * Aurora *
Grand Am * Camaro/Firebird *
Skylark * Venture *
Achieva * Trans Sport *
Malibu * Silhouette *
Century * Astro van *
Lumina * Safari van *
Monte Carlo * S-10 pickup/Sonoma *
Grand Prix * Blazer *
Intrigue * Jimmy *
Regal * Bravada *
Bonneville * Full Size Van *
LeSabre * ------
Eighty Eight * Total Units *
<PAGE> 2
Page 2
2. National agrees that in all advertising and promotional materials which
National undertakes for the 1998 Model Year (September 1, 1997 through
August 31, 1998), National will feature only General Motors products where
any vehicle is featured or promoted. During the term of this Agreement,
National agrees to allow such space and include such tag lines as is in
accordance with the customer of the trade and industry.
3. In exchange for this Agreement to purchase, promote and service the number
of 1998 models and in a vehicle mix satisfactory to GM, as described in
Paragraph 1, GM will provide National with * in addition to any incentives
due under the terms and conditions of GM's 1998 Model Year Daily Rental
Purchase Program.
4. The pro rata portion of the sum described in Paragraph 3, will be paid to
National by the 25th day of the month following vehicle delivery and
receipt of a diskette/electronic media transmission by GM provided GM
receives National's diskette/electronic media transmission by the last
business day of the month. A diskette/electronic media transmission
received after the last business day of the month will be paid by the 25th
of the following month. This diskette/electronic media transmission must
include VIN numbers on the portion of * delivered in the preceding month
and not covered in previous payments. ATTACHMENT 2 details data
transmission and record format requirements and should be used when
reporting vehicle acquisitions. The report of vehicle acquisitions should
be transmitted by EDS Elite to the GM Auction Sales and Remarketing
Department or diskettes sent to the following address:
Attention: J. P. Larson, Director - Finance
NAO Fleet Operations
MC 480-205-206
30007 Van Dyke Avenue
Warren, Michigan 48090
In the event that National does not purchase or lease the agreed number of
vehicles at the agreed mix, all payments made to National as described in
Paragraph 4 by General Motors will be reimbursed to GM on demand subject to
Paragraph 5.
5. All volume and mix requirements are subject to reasonable minor adjustments
based upon mutual agreement between the parties when the exact
circumstances faced by both parties are known at the time of vehicle
delivery. It is understood that these adjustments may require National to
purchase a comparably priced mix of product.
In the event that either party cannot fulfill any terms of this Agreement
due to events beyond its control, such as acts of God, labor disputes, and
severe economic downturns, the parties will enter negotiations with the
intent of allowing both to continue business without substantial penalty.
6. National agrees to provide to GM, at the beginning of each month, a
schedule of anticipated purchases of 1998 model year vehicles (model year
fleet plan) by division and car line, by month and model year. National
also agrees to provide to GM, at the end of each month, a schedule of 1997
and 1998 model vehicle returns by vehicle size (e.g., economy, midsize,
<PAGE> 3
Page 3
etc.) by month of the 1997 and 1998 calendar years. Receipt of the
information described in this paragraph is an additional condition * in
this Agreement.
7. National agrees to retain any documents or records relevant to vehicles
purchased under this Agreement or any GM program and/or claims submitted
for payment under this Agreement or any other GM program for two years
after the close of the program. National agrees to permit any designated
representative of GM to examine, audit and take copies of any accounts and
records National is to maintain under this Agreement. National agrees to
make such accounts and records readily available at its facilities during
regular business hours. GM agrees to furnish National with a list of any
reproduced records.
8. This agreement is confidential and proprietary information of General
Motors and is intended for the sole use by GM and National. Failure to
maintain confidentiality of the terms of this agreement may result in loss
of Fleet Authorization privileges with regard to future purchases.
On behalf of the General Motors' Car and Truck Divisions, I would like to
express my appreciation for your business and hope this Agreement will continue
to strengthen our business relationship.
Please return a copy of this letter acknowledging your agreement to the above.
Very truly yours,
/s/ Richard M. Lee
- -----------------------------
Richard M. Lee
Executive Director
Fleet Operations
/s/ Terry Hardy
- --------------------------------
Acknowledged and Agreed
National Car Rental System, Inc.
Date: 11/25/97
-------------------------
<PAGE> 4
Revised 9/11/97
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
Attachment 1 - Part 1 of 2
GENERAL MOTORS CORPORATION
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
1. PROGRAM NAME AND NUMBER:
1998 Model Year Daily Rental Purchase Program for Daily Rental
Operators - Program No. 98-02.
2. PROGRAM DESCRIPTION:
To provide General Motors dealers certain purchase information on
selected 1998 model year passenger cars and light duty trucks sold and
delivered by GM dealers to qualified daily rental operators and
eligible for purchase by General Motors in accordance with the
guidelines herein.
3. PROGRAM ALLOWANCES:
The purchase amount shall be calculated as a percent of dealer invoice
including freight. The purchase percentage varies month by month and is
determined by the month the vehicle is RETURNED TO AND ACCEPTED BY
GENERAL MOTORS in accordance with GM Auction Guidelines.
- Vehicles are assigned into one of the four tier groups. (Refer
Attachment "A" for tier composition and Attachment "B" for
respective tier monthly purchase percentage)
- The daily purchase rate equals the change in the monthly rate
divided by the number of calendar days for that month.
- Depreciation from capitalized cost will be based on specific
purchase percentages of dealer invoice, scaled by vehicle
assignment into one of four tier groups. Purchase percentages
vary by month of return to and acceptance by GM
(out-of-service date as described in Attachment "B").
- In-service date shall be five (5) days following the
expiration in-transit date as shown on the factory invoice.
- Out-of-service date shall be the date the vehicle is returned
to an approved GM turn-in site provided the rental company
meets all program parameters and completes the sign-off
procedures.
Damage allowance varies by return and acceptance date. (Refer
Attachment "B")
Vehicles are not eligible for Preferred Equipment Group (P.E.G.)/Option
Group discounts.
The following models are not eligible: Corvette, Astro and Safari
CargoVans, Van Conversions (including Hi-Cube and Stepvan), and Full
Size Cargo Vans.
Vehicles delivered from dealer inventory are NOT eligible for
enrollment in the 1998 Daily Rental Purchase Program.
1
<PAGE> 5
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1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
Dealers will receive seven (7) additional days following the expiration
of transit time before the invoice is due for payment, in lieu of
interest credit days. Vehicle payment is due upon delivery to the fleet
customer (if prior to invoice interest commencement date). By providing
this additional allowance, interest reimbursements WILL NOT BE MADE for
vehicles arriving one (1) to seven (7) days after the expiration of
transit time. Vehicles arriving more than ten (10) days after the
interest commencement date are eligible for reimbursement under the GM
In-Transit Credit Program.
4. DELIVERY/ORDER/IN-SERVICE/PRODUCTION PERIOD:
Order - beginning with announcement of the 1998 model year program and
ending when dealers are notified that 1998 model year orders are no
longer being accepted.
Production, Delivery, In-Service - 1998 model year.
IMPORTANT - Acceptance of an order on any vehicle line does not
constitute a commitment to build or to build in a requested time frame.
Minimum In-Service Period - None.
Maximum In-Service Period - 24 months or July 31, 2000 (which ever
occurs first).
Mileage Requirements:
- No maximum mileage limitations.
- Excess mileage penalty of $0.07 per mile over maximum free
mileage levels that vary by month. (Refer Attachment "B")
All units to be purchased by General Motors Corporation under this
program must be returned and accepted by July 31, 2000. NON-RETURNED
VEHICLES MUST REMAIN IN SERVICE A MINIMUM OF SIX (6) MONTHS (180 DAYS)
FROM IN-SERVICE DATE AS NOTED ON PAGE 1 OF THESE PROGRAM GUIDELINES. GM
reserves the right to audit the rental company to ensure compliance
with the minimum six (6) month in-service requirement. Frame, fire
and/or water damaged vehicles which are ineligible for purchase have no
minimum in-service period. Documentation on these vehicles must be
retained on file for audit purposes.
5. ELIGIBLE MODELS/REQUIRED OPTIONS AND/OR ORDER TYPES:
All new and unused 1998 General Motors models, specified on Attachment
"A", with required minimum factory installed equipment levels specified
on Attachment "C" and processing options ordered for qualified daily
rental operators for use as daily rental vehicles and delivered by GM
dealers. (Refer to 10A).
All qualified fleet orders for eligible models received from dealers
must contain a valid Fleet Order Type.
2
<PAGE> 6
Revised 9/11/97
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
Ordering Instructions: All purchase orders must contain fleet
processing option VN9 and your customer UPC processing code. Vehicles
must be ordered with minimum option requirements specified on
Attachment "C".
Dealer must take full responsibility for including the proper
processing option on all orders. Should errors occur in the ordering of
vehicles, resulting in diversions or reinvoicing, the dealer may be
charged an administrative fee.
All qualified fleet orders for eligible models received from the dealer
MUST contain the Fleet Account Number (FAN) of record and account name.
The ordering entity is responsible for checking dealer order
acknowledgements to verify accuracy of order submitted.
Dealer orders currently on hand or in the system that qualify under
this program, unless they do not contain the appropriate processing
options, can be amended or canceled and reordered if they have not been
released to production. THIS IS THE ORDERING DEALER'S RESPONSIBILITY.
Fleet orders submitted with Fleet Processing Option VN9 and
incompatible retail incentive options will be rejected with an error
message.
Colors Not Eligible for Purchase - Refer Mandatory Optional Equipment.
Required Options - Processing Option VN9 and your customer assigned UPC
processing code must be ordered by the dealer on purchase vehicles to
be enrolled in the 1998 Model Year Daily Rental Purchase Program.
PROCESSING OPTION VN9 WILL PROVIDE A NET INVOICE - LESS HOLDBACK AND
ADVERTISING.
6. COMPATIBLE INCENTIVE/ALLOWANCE PROGRAMS:
Vehicles enrolled in the 1998 Model Year Daily Rental Purchase Program
are NOT eligible for any other fleet/retail program, including, but not
limited to, the Dealer Fleet Ordering Assistance Program (VQ), and any
General Motors Dealer Rent A Car program.
7. METHOD OF APPLICATION: Not Applicable.
8. METHOD OF PAYMENT:
Check to title holder or financial institution upon receipt and
clearance of proper paperwork at an approved GM turn-in site and
General Motors Corporation.
Purchase payment is made in the form of a check to the title holder or
financial institution at the address shown on the title, unless prior
arrangements are made.
The Payment Modification System (PMS) provides an effective method to
redirect purchase checks to lending institutions as co-payee with the
titled owner.
3
<PAGE> 7
Revised 9/11/97
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
If a lender and a daily rental operator desire co-payee/redirection,
please direct requests for additional information in writing to:
NAO Dealer Accounting
Mail Code 483-631-505
P. O. Box 436014
Pontiac, MI 48343-6014
9. FINAL DATE FOR SUBMISSION OF APPLICATIONS AND RESOLUTION OF ALL
APPLICABLE REJECTS: Not Applicable
10. OTHER PROGRAM GUIDELINES:
A. This is the General Motors guideline regarding the definition
of a "rental" vehicle:
"The bona fide rental of a vehicle involving use and payment
by a customer on an hourly, daily, weekly or monthly basis.
Usage of any such vehicle(s) by a customer for a period of
four (4) consecutive months or longer shall be deemed to
constitute leasing and not rental and will make the vehicle
ineligible for purchase."
In the event a vehicle enrolled in the Daily Rental Purchase
Program is found to be on-rent (lease) to a customer in excess
of the above guideline, or if the customer consecutively rents
multiple enrolled vehicles for an aggregate term of four (4)
or more months, all vehicles involved in such transactions
will not be considered rental and will be ineligible for
purchase. IF NECESSARY, GENERAL MOTORS WILL AUDIT THE RENTAL
COMPANY TO ENSURE COMPLIANCE WITH THIS GUIDELINE.
B. All General Motors general guidelines and definition of terms
relative to incentive programs (refer to General Motors Dealer
Sales Allowance and Incentive Manual Articles 2 and 3) that
were supplied to your dealership apply to this program.
C. All eligible units must be delivered to the ultimate customer
through a General Motors dealership or a qualified drop-ship
location. Purchases or deliveries made through any other
entity or individual are ineligible for payment.
D. All deliveries to customers with a valid Fleet Account Number
(FAN) must be reported as fleet deliveries regardless of order
type.
E. Failure to comply with these guidelines may result in the
dealer being disqualified for future participation in fleet
programs and terminations of dealer sales and service
agreement.
F. Orders not produced during the 1998 model production period
will be canceled. There are no provisions for dealers and/or
rental customers to receive any allowance for canceled orders.
4
<PAGE> 8
Revised 9/11/97
1998 MY DAILY RENTAL PURCHASE PROGRAM GUIDELINES
------------------------------------------------
G. Capitalized cost shall be calculated at dealer cost of base
vehicle and optional equipment, plus freight, less Hawaii
excise tax and tire weight tax, if applicable.
H. General Motors reserves the right to cancel, amend, revise, or
revoke any program at any time based on its sole business
judgements. Final decisions in all matters relative to the
interpretation of any rule or phase of this activity rests
solely with General Motors.
5
<PAGE> 1
Exhibit 10.27
REPUBLIC INDUSTRIES, INC.
AMENDED AND RESTATED 1997 EMPLOYEE STOCK OPTION PLAN
Republic Industries, Inc. ("Republic") hereby adopts this Republic
Industries, Inc. 1997 Employee Stock Option Plan (the "Plan") the terms of which
shall be as follows:
1. PURPOSE
The Plan is intended to advance the interests of Republic by providing
eligible individuals (as designated pursuant to Section 4 below) with an
opportunity to acquire or increase a proprietary interest in Republic, which
thereby will create a stronger incentive to expend maximum effort for the growth
and success of Republic and its subsidiaries, and will encourage such eligible
individuals to remain in the employ of Republic or one or more of its
subsidiaries. Each stock option granted under the Plan (an "Option") shall be an
option that is not intended to constitute an "incentive stock option"
("Incentive Stock Option") within the meaning of Section 422 of the Internal
Revenue Code of 1986, or the corresponding provision of any subsequently-enacted
tax statute, as amended from time to time (the "Code") unless such Option is
granted to an employee of Republic or a "subsidiary corporation" (a
"Subsidiary") thereof within the meaning of Section 424(f) of the Code and is
specifically designated at the time of grant as being an Incentive Stock Option.
Any Option so designated shall constitute an Incentive Stock Option only to the
extent that it does not exceed the limitations set forth in Section 7 below.
2. ADMINISTRATION
(a) Board. The Plan shall be administered by the Board of Directors of
Republic (the "Board"), which shall have the full power and authority to take
all actions, and to make all determinations required or provided for under the
Plan or any Option granted or Option Agreement (as defined in Section 8 below)
entered into under the Plan and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Option granted or Option Agreement entered into hereunder. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting at which any issue relating to the Plan is
properly raised for consideration or without a meeting by written consent of the
Board executed in accordance with Republic's Certificate of Incorporation and
Bylaws, and with applicable law. The interpretation and construction by the
Board of any provision of the Plan or of any Option granted or Option Agreement
entered into hereunder shall be final and conclusive.
(b) Committee. The Board may from time to time appoint a Stock Option
Committee (the "Committee") consisting of not less than two members of the
Board, none of whom shall be an officer or other salaried employee of Republic
or any Subsidiary, and each of whom shall qualify in all respects as a
"non-employee director" as defined in Rule 16b-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Exchange Act") and an
"outside director" for purposes of Section 162(m) of the Code. The Board, in its
sole discretion, may provide that the role of the Committee shall be limited to
making recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to or with respect to the Plan, or the
Board may delegate to the Committee such powers and authorities related to the
administration of the Plan, as set forth in Section 2(a) above, as the Board
shall determine, consistent with the Certificate of Incorporation and Bylaws of
Republic and applicable law. The Board may remove members, add members, and fill
vacancies on the Committee from time to time, all in accordance with Republic's
Certificate of Incorporation and Bylaws, and with applicable law. The majority
vote of the Committee, or acts reduced to or approved in writing by a majority
of the members of the Committee, shall be the valid acts of the Committee.
1
<PAGE> 2
(c) No Liability. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted or Option Agreement entered into hereunder.
(d) Delegation to the Committee. In the event that the Plan or any Option
granted or Option Agreement entered into hereunder provides for any action to be
taken by or determination to be made by the Board, such action may be taken by
or such determination may be made by the Committee if the power and authority to
do so has been delegated to the Committee by the Board as provided for in
Section 2(b) above. Unless otherwise expressly determined by the Board, any such
action or determination by the Committee shall be final and conclusive.
3. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, $.01 par value, of Republic (the "Stock"),
which shares may be treasury shares or authorized but unissued shares. The
number of shares of Stock that may be issued pursuant to Options granted under
the Plan shall not exceed in the aggregate 20,000,000 shares, subject to
adjustment as provided in Section 17 below. If any Option expires, terminates,
or is terminated or canceled for any reason prior to exercise in full, the
shares of Stock that were subject to the unexercised portion of such Option
shall be available for future Options granted under the Plan.
4. ELIGIBILITY
(a) Employees. Options may be granted under the Plan to any employee of
Republic, a Subsidiary or any other entity of which on the relevant date at
least a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions ("Voting Securities") are at the time owned
directly or indirectly by Republic or any Subsidiary (an "Affiliate"), including
any such employee who is an officer or director of Republic, a Subsidiary or an
Affiliate, as the Board shall determine and designate from time to time prior to
expiration or termination of the Plan. The maximum number of shares of Stock
subject to Options that may be granted during any calendar year under the Plan
to any executive officer or other employee of Republic or any Subsidiary or
Affiliate whose compensation is or may be subject to Code sec. 162(m) is
5,000,000 shares (subject to adjustment as provided in Section 17 hereof).
(b) Independent Contractors. Options may be granted to independent
contractors performing services for Republic or any Subsidiary or Affiliate as
determined by the Board from time to time on the basis of their importance to
the business of Republic or such Subsidiary or Affiliate. Independent
contractors shall not be eligible to receive options intended to constitute
Incentive Stock Options. Non-employee directors of Republic shall not be
eligible to receive options under the Plan.
(c) Multiple Grants. An individual may hold more than one Option, subject
to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of the date of adoption
by the Board, which date is set forth below, subject to approval of the Plan,
within one year of such effective date, by the stockholders of Republic by a
majority of the votes present and entitled to vote at a duly held meeting of the
stockholders at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy or by written consent in
accordance with Republic's Certificate of Incorporation and Bylaws; provided,
however, that upon approval of the Plan by the stockholders of Republic as set
forth above, all Options granted under the Plan on or after the effective date
shall be fully effective as if the stockholders of Republic had approved the
Plan on the effective date. If the stockholders fail to approve the Plan within
one year of such effective date, any options granted hereunder shall be null and
void and of no effect.
(b) Term. The Plan shall terminate on the date 10 years from the effective
date.
2
<PAGE> 3
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board may, at any time
and from time to time, prior to the date of termination of the Plan, grant to
such eligible individuals as the Board may determine ("Optionees"), Options to
purchase such number of shares of the Stock on such terms and conditions as the
Board may determine. The date on which the Board approves the grant of an Option
(or such later date as is specified by the Board) shall be considered the date
on which such Option is granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option intended to constitute an Incentive Stock Option (and so
designated at the time of grant) shall qualify as an Incentive Stock Option only
to the extent that the aggregate fair market value (determined at the time the
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under the Plan and all other plans of the Optionee's employer corporation and
its parent and subsidiary corporations within the meaning of Section 422(d) of
the Code) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by Republic and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option shall be
not less than 100 percent of the fair market value of a share of the Stock which
shall mean either the closing price of a share of the stock on the business day
prior to the date the option is granted as reported on The New York Stock
Exchange, absent manifest error, or at a price otherwise Fixed by the Board in
good faith as the fair market value and stated in an option agreement with the
optionee (the "Option Price"); provided, however, that in the event the Optionee
would otherwise be ineligible to receive an Incentive Stock Option by reason of
the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to stock
ownership of more than 10 percent), the Option Price of an Option that is
intended to be an Incentive Stock Option shall be not less than 110 percent of
the fair market value of a share of Stock at the time such Option is granted.
10. TERM AND EXERCISE OF OPTIONS
(a) Option Period. Each Option granted under the Plan shall terminate and
all rights to purchase shares thereunder shall cease upon the expiration of ten
years from the date such Option is granted, or on such date prior thereto as may
be fixed by the Board and stated in the Option Agreement relating to such
Option; provided, however, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), an Option granted to such Optionee that is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
(b) Vesting and Limitations on Exercise. Except as otherwise provided
herein, each Option shall become exercisable with respect to 25% of the total
number of shares subject to the Option on the date that is 12 months after the
date of its grant (the "Vesting Date") and with respect to an additional 25% of
the number of such shares on each of the next three succeeding anniversaries of
the Vesting Date; provided, however, that the Board may in its discretion
provide that an Option may be exercised, in whole or in part, at any time and
from time to time, over a period commencing on or after the date of grant and
ending upon the expiration or termination of the Option, as the Board shall
determine and set forth in the Option Agreement relating to such Option. Without
limiting the foregoing, the Board, subject to the terms and conditions of the
Plan, may in its sole discretion provide that an Option may be exercised
immediately upon grant or that it may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding;
3
<PAGE> 4
provided, however, that any vesting requirement or other such limitation on the
exercise of an Option may be rescinded, modified or waived by the Board, in its
sole discretion, at any time and from time to time after the date of grant of
such Option, so as to accelerate the time at which the Option may be exercised.
(c) Method of Exercise. An Option that is exercisable hereunder may be
exercised by delivery to Republic on any business day, at its principal office,
addressed to the attention of the Stock Option Administrator, of written notice
of exercise, which notice shall specify the number of shares with respect to
which the Option is being exercised, and shall be accompanied by payment in full
of the Option Price of the shares for which the Option is being exercised,
except as provided below. The minimum number of shares of Stock with respect to
which an Option may be exercised, in whole or in part, at any time shall be the
lesser of 100 shares or the maximum number of shares available for purchase
under the Option at the time of exercise. Payment of the Option Price for the
shares of Stock purchased pursuant to the exercise of an Option shall be made
(i) in cash or in cash equivalents; (ii) through the tender to Republic of
shares of Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their fair market
value (determined in the manner described in Section 9 above) on the date of
exercise; (iii) by delivering a written direction to Republic that the Option be
exercised pursuant to a "cashless" exercise/sale procedure (pursuant to which
funds to pay for exercise of the Option are delivered to Republic by a broker
upon receipt of stock certificates from Republic) or a cashless exercise/loan
procedure (pursuant to which the optionees would obtain a margin loan from a
broker to fund the exercise) through a licensed broker acceptable to Republic
whereby the stock certificate or certificates for the shares of Stock for which
the Option is exercised will be delivered to such broker as the agent for the
individual exercising the Option and the broker will deliver to Republic cash
(or cash equivalents acceptable to Republic) equal to the Option Price for the
shares of Stock purchased pursuant to the exercise of the Option plus the amount
(if any) of federal and other taxes that Republic, may, in its judgment, be
required to withhold with respect to the exercise of the Option; (iv) to the
extent permitted by applicable law and under the terms of the Option Agreement
with respect to such Option, by the delivery of a promissory note of the
Optionee to Republic on such terms as shall be set out in such Option Agreement;
or (v) by a combination of the methods described in (i), (ii), (iii) and (iv).
Payment in full of the Option Price need not accompany the written notice of
exercise if the Option is exercised pursuant to the cashless exercise/sale
procedure described above. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option, the individual exercising the Option
shall be entitled to the issuance of a Stock certificate or certificates
evidencing his ownership of such shares. A separate Stock certificate or
certificates shall be issued for any shares purchased pursuant to the exercise
of an Option that is intended to be an Incentive Stock Option, which certificate
or certificates shall not include any shares that were purchased pursuant to the
exercise of an Option that is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a shareholder
until the shares of Stock covered thereby are fully paid and issued to him and,
except as provided in Section 18 below, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
(d) Restrictions on Transfer of Stock. If an Option is exercised before
the date that is six months from the later of (i) the date of grant of the
Option or (ii) the date of shareholder approval of the Plan and the sale of
stock acquired pursuant to such exercise would subject the individual exercising
the Option to liability under Section 16 of the Exchange Act, then such
certificate or certificates shall bear a legend restricting the transfer of the
Stock covered thereby until the expiration of six months from the later of the
date specified in clause (i) above or the date specified in clause (ii) above.
(e) Change in Control. In the event of a Change in Control (as defined
below), except as the Board shall otherwise provide in an Option Agreement with
respect to an Option granted under the Plan, all outstanding Options shall
become immediately exercisable in full, without regard to any limitation on
exercise imposed pursuant to Section 10(b) above, and, unless waived in advance
of such Change in Control by the Board, each Optionee who is a director, an
employee or a consultant of Republic or a Subsidiary or Affiliate at the time of
such Change in Control shall have the right to require Republic to pay, in
cancellation of such Option, an amount equal to the product of (i) the excess of
(x) the fair market value per share of the Stock over (y) the Option Price times
(ii) the number of shares of Stock specified by the Optionee in a written
4
<PAGE> 5
notice to Republic (up to the full number of shares of Stock then subject to
such Option). For purposes of the Plan, a "Change in Control" shall be deemed to
occur if any person shall (a) acquire direct or indirect beneficial ownership of
more than 50% of the total combined voting power with respect to the election of
directors of the issued and outstanding stock of Republic (except that no Change
in Control shall be deemed to have occurred if the persons who were stockholders
of Republic immediately before such acquisition own all or substantially all of
the voting stock or other interests of such person immediately after such
transaction), or (b) have the power (whether as a result of stock ownership,
revocable or irrevocable proxies, contract or otherwise) or ability to elect or
cause the election of directors consisting at the time of such election of a
majority of the Board. A "person" for this purpose shall mean any person,
corporation, partnership, joint venture or other entity or any group (as such
term is defined for purposes of Section 13(d) of the Exchange Act) and a person
shall be deemed to be a beneficial owner as that term is used in Rule 13d-3
under the Exchange Act. The amount payable under this Section 10(e) shall be
remitted by Republic in cash or by certified or bank check, reduced by
applicable tax withholding.
(f) Notwithstanding any other provision of the Plan, no Option granted to
an Optionee under the Plan shall be exercisable in whole or in part prior to the
date the Plan is approved by the stockholders of Republic as provided in Section
5 above.
11. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom it is
granted, other than by will or the laws of descent and distribution, except
that, upon approval by the Board, the Optionee may transfer an Option that is
not intended to constitute an Incentive Stock Option (a) pursuant to a qualified
domestic relations order as defined for purposes of the Employee Retirement
Income Security Act of 1974, as amended, or (b) by gift: to a member of the
"Family" (as defined below) of the Optionee, to or for the benefit of one or
more organizations qualifying under Code sec.sec. 501(c)(3) and 170(c)(2) (a
"Charitable Organization") or to a trust for the exclusive benefit of the
Optionee, one or more members of the Optionee's Family, one or more Charitable
Organizations, or any combination of the foregoing, provided that any such
transferee shall enter into a written agreement to be bound by the terms of this
Agreement. For this purpose, "Family" shall mean the ancestors, spouse,
siblings, spouses of siblings, lineal descendants and spouses of lineal
descendants of the Optionee. During the lifetime of an Optionee to whom an
Incentive Stock Option is granted, only such Optionee (or, in the event of legal
incapacity or incompetence, the Optionee's guardian or legal representative) may
exercise the Incentive Stock Option.
12. TERMINATION OF EMPLOYMENT OR SERVICE
(a) General. Except as otherwise provided herein, upon the termination of
the employment or other service of an Optionee with Republic, a Subsidiary, a
Spin-off Corporation (as defined in Section 17) or an Affiliate, other than by
reason of a "Change in Ownership" (as defined below) or the death or "permanent
and total disability" (within the meaning of Section 22(e)(3) of the Code) of
such Optionee, any Option granted to an Optionee pursuant to the Plan shall
terminate upon the date of such termination of employment or service and such
Optionee shall have no further right to purchase shares of Stock pursuant to
such Option. Notwithstanding the foregoing provisions of this Section 12, the
Board may provide, in its discretion, that following the termination of
employment or service of an Optionee with Republic, a Subsidiary, a Spin-off
Corporation or Affiliate, an Optionee may exercise an Option, in whole or in
part, at any time subsequent to such termination of employment or service and
prior to termination of the Option pursuant to Section 10(a) above, either
subject to or without regard to any vesting or other limitation on exercise
imposed pursuant to Section 10(b) above.
(b) Change in Ownership of Subsidiary or Affiliate. If an Optionee ceases
to be an employee or an independent contractor of Republic or any Subsidiary,
Spin-off Corporation or Affiliate following a "Change in Ownership" (as defined
below)(whether because of the termination of employment or service of the
Optionee, because the corporation or other entity by which the Optionee was
employed or for which the Optionee was providing services as an independent
contractor, ceases to be a Subsidiary of Affiliate or otherwise) then such
options shall continue to vest according to the vesting schedule unless the
Board determines otherwise.
5
<PAGE> 6
A "Change in Ownership" shall be deemed to have occurred with respect to an
Optionee if (i) as a result of a merger, consolidation, reorganization, business
combination, sale, exchange or other disposition of Voting Securities (as
defined in Section 4(a)) or other transaction, the corporation or other entity
by which the Optionee is employed or for which the Optionee is providing
services as an independent contractor ceases to be a Subsidiary or Affiliate of
Republic and, immediately after such transaction, the persons who were
stockholders of Republic immediately before such transaction (the "Republic
Stockholders") do not own at least a majority of the Voting Securities of such
corporation or other entity or (ii) there is a sale or other disposition of all
or substantially all of the assets of the trade or business by which the
Optionee is employed or for which the Optionee is providing services as an
independent contractor and, immediately after such transaction, Republic or the
Republic Stockholders do not own at least a majority of the Voting Securities of
a corporation or other entity that acquires such assets and engages in such
trade or business.
(c) Whether a leave of absence or leave on military or government service
shall constitute a termination of employment of service for purposes of the Plan
shall be determined by the Board, which determination shall be final and
conclusive. For purposes of the Plan, a termination of employment or service
with Republic, a Subsidiary, a Spin-off Corporation or Affiliate shall not be
deemed to occur if the Optionee is immediately thereafter employed by or
otherwise providing services to Republic, any Subsidiary, any Spin-off
Corporation or Affiliate.
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death. If an Optionee dies while in the employ or service of Republic,
a Subsidiary, a Spin-off Corporation or Affiliate or within the period following
the termination of employment or service during which the Option is exercisable
under Section 12 above or Section 13(b) below, all Options held by such Optionee
prior to death shall become immediately exercisable in full and the executors or
administrators or legatees or distributees of such Optionee's estate shall have
the right, at any time within three years after the date of such Optionee's
death and prior to termination of the Option pursuant to Section 10(a) above, to
exercise any Option held by such Optionee at the date of such Optionee's death;
provided, however, that the Board may provide, in its discretion, that following
the death of an Optionee, the executors or administrators or legatees or
distributees of such Optionee's estate may exercise an Option, in whole or in
part, at any time subsequent to such Optionee's death and prior to termination
of the Option pursuant to Section 10(a) above, either subject to or without
regard to any vesting or other limitation on exercise imposed pursuant to
Section 10(b) above.
(b) Disability. If an Optionee terminates employment or service with
Republic, a Subsidiary, a Spin-off Corporation or Affiliate by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Optionee, then all Options held by such Optionee shall become
immediately exercisable in full and the Optionee shall have the right, at any
time within three years after such termination of employment or service and
prior to termination of the Option pursuant to Section 10(a) above, to exercise,
in whole or in part, any Option held by such Optionee at the date of such
termination of employment or service; provided, however,that the Board may
provide, in its discretion, that an Optionee may, in the event of the
termination of employment or service of the Optionee with Republic, a
Subsidiary, a Spin-off Corporation or Affiliate by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, exercise an Option in whole or in part, at any time subsequent to such
termination of employment or service and prior to termination of the Option
pursuant to Section 10(a) above, either subject to or without regard to any
vesting or other limitation on exercise imposed pursuant to Section 10(b) above.
Whether a termination of employment or service is to be considered by reason of
"permanent and total disability" for purposes of this Plan shall be determined
by the Board, which determination shall be final and conclusive.
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<PAGE> 7
14. USE OF PROCEEDS
The proceeds received by Republic from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of Republic.
15. REQUIREMENTS OF LAW
(a) Violations of Law. Republic shall not be required to sell or issue any
shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the individual exercising the Option or Republic of
any provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. Any
determination in this connection by the Board shall be final, binding, and
conclusive. Republic shall not be obligated to take any affirmative action in
order to cause the exercise of an Option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority. As
to any jurisdiction that expressly imposes the requirement that an Option shall
not be exercisable unless and until the shares of Stock covered by such Option
are registered or are subject to an available exemption from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The intent of this Plan is to qualify for
the exemption provided by Rule 16b-3 under the Exchange Act. To the extent any
provision of the Plan does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and deemed advisable
by the Board and shall not affect the validity of the Plan. In the event Rule
16b-3 is revised or replaced, the Board, or the Committee acting on behalf of
the Board, may exercise discretion to modify this Plan in any respect necessary
to satisfy the requirements of the revised exemption or its replacement.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by a majority of the votes present and entitled to vote at a duly held
meeting of the stockholders of Republic at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the amendment, or by written consent in accordance with
applicable state law and the Certificate of Incorporation and Bylaws of
Republic, change the requirements as to eligibility to receive Options that are
intended to qualify as Incentive Stock Options, increase the maximum number of
shares of Stock in the aggregate that may be sold pursuant to Options that are
intended to qualify as Incentive Stock Options granted under the Plan (except as
permitted under Section 17 hereof) or modify the Plan so that Options granted
under the Plan could not satisfy the applicable requirements of Code
sec. 162(m). Except as permitted under Section 17 hereof, no amendment,
suspension or termination of the Plan shall, without the consent of the holder
of the Option, alter or impair rights or obligations under any Option
theretofore granted under the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
(a) Recapitalization. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of Republic by reason of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
Republic, occurring after the effective date of the Plan, the number and kinds
of shares for the purchase of which Options may be granted under the Plan shall
be adjusted proportionately and accordingly by Republic. In addition, the number
and kind of shares for which Options are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the holder
of the Option immediately following such event shall, to the extent practicable,
be the same as immediately prior to such event. Any such adjustment in
outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a
7
<PAGE> 8
corresponding proportionate adjustment in the Option Price per share. If there
is a distribution payable in the capital stock of a subsidiary corporation (a
"Spin-off Corporation") of Republic ("Spin-off Shares"), to the extent
consistent with Treasury Regulation Section 1.425-1(a)(6) or the corresponding
provision of any subsequent regulation, each outstanding Option shall thereafter
additionally pertain to the number of Spin-off Shares that would have been
received in such distribution by a shareholder of Republic who owned a number of
shares of Common Stock equal to the number of shares that are subject to the
Option at the time of such distribution, the aggregate Option Price of the
Option shall be allocated between the Spin-off Shares and the Common Stock in
proportion to the relative fair market values of a Spin-off Share and a share of
Common Stock immediately after the distribution of Spin-off Shares, and the
Option shall be exercisable separately as to the shares of Common Stock and
Spin-off Shares covered thereby.
(b) Reorganization in Which Republic Is the Surviving Corporation. Subject
to Subsection (c) hereof, if Republic shall be the surviving corporation in any
reorganization, merger, or consolidation of Republic with one or more other
corporations, any Option theretofore granted pursuant to the Plan shall pertain
to and apply to the securities to which a holder of the number of shares of
Stock subject to such Option would have been entitled immediately following such
reorganization, merger, or consolidation, with a corresponding proportionate
adjustment of the Option Price per share so that the aggregate Option Price
thereafter shall be the same as the aggregate Option Price of the shares
remaining subject to the Option immediately prior to such reorganization,
merger, or consolidation.
(c) Dissolution or Liquidation; Reorganization in Which Republic Is Not the
Surviving Corporation or Sale of Assets or Stock. Upon the dissolution or
liquidation of Republic the Plan and all Options outstanding hereunder shall
terminate. In the event of any termination of the Plan under this Section 17(c),
each individual holding an Option shall have the right, immediately prior to the
occurrence of such termination and during such reasonable period as the Board in
its sole discretion shall determine and designate, to exercise such Option in
whole or in part, whether or not such Option was otherwise exercisable at the
time such termination occurs and without regard to any vesting or other
limitation on exercise imposed pursuant to Section 10(b) above. In connection
with a merger, consolidation, reorganization or other business combination of
Republic with one or more other entities in which Republic is not the surviving
entity, or upon a sale of all or substantially all of the assets of Republic to
another entity, or upon any transaction (including, without limitation, a merger
or reorganization in which Republic is the surviving corporation) that results
in any person or entity (or persons or entities acting as a group or otherwise
in concert) owning more than 50 percent of the combined voting power of all
classes of stock of Republic, Republic and the acquiring or surviving entity
shall provide for the continuation of the Plan and the assumption of the Options
theretofore granted, or for the substitution for such Options of new options
covering the stock of a successor entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares and exercise
prices. The Board shall send prior written notice of the occurrence of an event
described in this Section 17(c) to all individuals who hold Options not later
than the time at which Republic gives notice to its stockholders that such event
is proposed.
(d) Adjustments. Adjustments under this Section 17 related to stock or
securities of Republic shall be made by the Board, whose determination in that
respect shall be final, binding, and conclusive. No fractional shares of Stock
or units of other securities shall be issued pursuant to any such adjustment,
and any fractions resulting from any such adjustment shall be eliminated in each
case by rounding downward to the nearest whole share or unit.
(e) No Limitations on Corporation. The grant of an Option pursuant to the
Plan shall not affect or limit in any way the right or power of Republic to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve or liquidate, or to sell
or transfer all or any part of its business or assets.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of Republic, any Subsidiary,
8
<PAGE> 9
any Spin-off Corporation or Affiliate, or to interfere in any way with the right
and authority of Republic, any Subsidiary, any Spinoff Corporation or Affiliate
either to increase or decrease the compensation of any individual at any time,
or to terminate any employment or other relationship between any individual and
Republic, any Subsidiary, any Spin-off Corporation or Affiliate.
19. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of Republic for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.
This Plan was duly adopted and approved by the Board of Directors of
Republic effective as of the 2nd day of January, 1997, subject to approval and
adoption by the stockholders of Republic.
/s/ Richard L. Handley
--------------------------------------
Secretary of Republic
This Plan was duly approved and adopted by the stockholders of Republic at
a meeting held the 13th day of May, 1997.
/s/ Richard L. Handley
--------------------------------------
Secretary of Republic
9
<PAGE> 1
EXHIBIT 21.1
Name of State
Company of Inc.
- ------- -------
AAA Commercial, Inc. VA
AAA Disposal Service, Inc. VA
AAA Disposal of Tennessee, Inc. TN
AAA Land and Building Co., Inc. VA
AAA Maintenance, Inc. VA
AAA Recycling, Inc. VA
AFL Fleet Funding, Inc. NY
A.G. Disposal Service, Inc. NY
A.J. Panzarella & Co., Inc. FL
(d/b/a Larry O'Connor Sanitation Service)
ASA Leasing, Inc. CA
Abraham Chevrolet - Miami, Inc. DE
Abraham Chevrolet - Tampa, Inc. DE
Addington Resources, Inc. DE
KY
Addington Holding Company, Inc. DE
<PAGE> 2
Name of State
Company of Inc.
- ------- -------
Addington Environmental, Inc. KY
Al Maroone Ford, Inc. NY
Alamo Autovermietung GmbH Germany
(LLC)
Alamo Europe UK (ULC)
Alamo Funding, LP NY
Alamo Fuhrpark Leasing GmbH Germany
(LLC)
Alamo International Sales, Inc. FL
Alamo Rent A Car AG Switzerland
(LLC)
Alamo Rent-A-Car, Inc. FL
<PAGE> 3
Name of State
Company of Inc.
- ------- -------
Alamo Rent-A-Car (Belgium), Inc. FL
Alamo Rent A Car B.V. Netherlands
(LLC)
<PAGE> 4
Name of State
Company of Inc.
- ------- -------
Alamo Rent-A-Car (Canada), Inc. FL
Alamo Rent A Car Locadora Brazilian
de Automovels, Ltda.
Alamo Rent-A-Car (UK) Limited UK (LLC)
Alamo Rent-A-Car (Vienna) GmbH Austrian
(LLC)
All Refuse Services, Inc. NY
All Service Refuse Company, Inc. FL
Anastasia Advertising Art, Inc. FL
Anderson Automotive, Inc. CA
(f/k/a RI/A-HDM Merger Corp.)
Anderson Cadillac, Inc. CA
(f/k/a RI/A-HC Merger Corp.)
Anderson Chevrolet Los Gatos, Inc. CA
Anderson Chevrolet CA
Anderson Cupertino, Inc. CA
(f/k/a RI/AC Merger Corp.)
Anderson Dealership Realty Corp. DE
Anderson Refuse Co., Inc. IN
Anderson Solid Waste, Inc. CA
Antler Park, Inc. IN
<PAGE> 5
Name of State
Company of Inc.
- ------- -------
Anything on Wheels, Ltd. FL
Appleway Chevrolet, Inc. WA
ARC-TM Inc. DE
Arlington Disposal Company, Inc. TX
Area Container Services, Inc. VA
ASCO Sanitation, Inc. MS
Astro Waste Services, Inc. ME
Atrium Restaurants, Inc. FL
AutoMart Superstore, Inc. AZ
AutoNation DS Investments, Inc. TX
(f/k/a RI/DNAC Merger Corp.)
AutoNation Incorporated FL
(f/k/a SRAC Corporation)
AutoNation Financial Services Corp. DE
(f/k/a AutoNation Financial Corp. &
AutoNation Finance Corp.)
<PAGE> 6
Name of State
Company of Inc.
- -------- --------
AutoNation GM Holding Corporation DE
AutoNation Holding Corp. DE
<PAGE> 7
Name of State
Company of Inc.
- ------- -------
AutoNation Realty Corporation DE
AutoNation USA Corporation FL
(f/k/a SRAC Operating Corporation)
Bankston Auto, Inc. TX
Bankston Ford of Frisco, Ltd. Co. (LLC) TX
Bankston Nissan Lewisville, Inc. DE
Bankston Nissan of Dallas, Inc. TX
Bankston Nissan of Irving, Inc. TX
Bankston Paint and Body, Inc. TX
Barker Brothers, Inc. TN
<PAGE> 8
Name of State
Company of Inc.
- ------- -------
Barker Brothers Waste Incorporated TN
Beacon Motors, Inc. FL
Bel-Art Paper Stock Company CA
(d/b/a Bel-Art Environmental Systems, Inc.)
Bell Dodge, Inc. AZ
Bengal Motors, Inc. FL
(d/b/a Sunshine Honda)
Beran Cleaning Corporation NJ
(d/b/a Beran Services)
Berrien County Landfill, Inc. MI
Big Box Roll-Off Service CA
Bill Wallace Enterprises, Inc. FL
Bledsoe Dodge, Inc. DE
(f/k/a Dodge of Arlington, Inc.)
Bluegrass Recycling & Transfer KY
Company
Bontona Aviation, Inc. FL
BOSC Automotive Realty, Inc. DE
(f/k/a BOSC Automotive, Inc.)
<PAGE> 9
Name of State
Company of Inc.
- ------- -------
Briggeman Disposal Services, Inc. CA
Briggeman Industries, Inc. CA
Broadhurst Environmental, Inc. KY
B-S-P Automotive, Inc. TX
Bull Motors, Inc. FL
(d/b/a Sunshine Ford)
Burgess' Refuse Removal Service, Inc. NC
CC-Autohansa GmbH & CO.KG Germany (LLC)
CDS Environmental, Inc. of Florida FL
CDS Environmental of Atlanta, Inc. GA
CJM Trucking & Soils Company, Inc. TX
C.S.C. Disposal and Landfill, Inc. TX
Cal Waste Industries, Inc. CA
Capital Waste & Recycling, Inc. NY
(f/k/a New Options on Waste, Incorporated)
Carlisle Motors, Inc. FL
Cascade Pacific Engineering, Inc. OR
<PAGE> 10
Name of State
Company of Inc.
- ------- -------
Cate's Rubbish Removal Services, Inc. NH
Central Motors, Inc. FL
Champion Chevrolet, Inc. DE
Champion Ford, Inc. TX
(d/b/a Champion Ford Truck, Champion Value
Used Cars, Champion Ford Used Cars)
Champion Planning, Inc. TX
Charleston Disposal Systems, Inc. SC
Charlie Hillard, Inc. TX
(d/b/a Hillard Suzuki of Fort Worth, Hillard Kia of Fort Worth
King Charlie Hillard Ford, Hillard Auto Park Mazda,
Charlie Hillard Buick, Inc.)
Charlie Hillard Luxury Cars of Forth TX
Worth, Inc.
Charter Waste, Inc. TX
(f/k/a Charter Waste Management, Inc.)
Chesrown Auto, Inc. CO
(d/b/a Marshall Ford, Inc. and Marshall Kia, Inc.)
Chesrown Automotive Group, Inc. CO
Chesrown Chevrolet, Inc. CO
(d/b/a Chesrown Chevrolet Geo, Inc. and Chesrown Marine, Inc.)
Chesrown Collision Center, Inc. CO
(d/b/a Chesrown Glass, Inc. and CAG Rental Cars, Inc.)
Chesrown Ford, Inc. CO
(d/b/a Chesrown's Friendly Ford, Inc.)
<PAGE> 11
Name of State
Company of Inc.
- ------- -------
Circle Buick/GMC, Inc. NJ
(d/b/a Flemington Buick-Chevrolet-GEO-GMC Truck)
Claims Management Center, Inc. FL
Cleveland Container Service, Inc. NC
Coastal Cadillac, Inc. FL
Collection Service Company, Inc. NC
Collection Services, Inc. KY
(d/b/a M & M Sanitation, Inc., Epperson Collection Services,
CSI of Northern Kentucky, B & J Sanitation, Pennyrile Sanitation,
Bluegrass Waste Alliance & Trik-K Hauling)
Commercial Waste Disposal, Inc. KY
(d/b/a CWI of Kentucky)
Compactor Rental Systems of DE
Delaware, Inc.
<PAGE> 12
Name of State
Company of Inc.
- ------- -------
Consolidated Disposal Service, Inc. CA
Consumer Car Care Corporation TN
(The) Consulting Source, Inc. FL
Continental Waste Industries, Inc. DE
Continental Waste Industries NJ
Arizona, Inc. (f/k/a CWI Venture, Inc.)
Continental Waste Industries - Gary IN
Inc.
Courtesy Auto Group, Inc. FL
Courtesy Wholesale Corporation FL
Covington Waste, Inc. TN
Credit Management Acceptance Corp. FL
(f/k/a Carlisle Financing, Inc.)
CWI of Illinois, Inc. IL
CWI of Florida, Inc. FL
(d/b/a Southland Waste Systems)
<PAGE> 13
Name of State
Company of Inc.
- ------- -------
CWI of Missouri, Inc. MO
CWI of NJ, Inc. NJ
CWI of Northwest Indiana, Inc. IN
DBL, Inc. TN
(d/b/a Dobbs Bros. Lexus)
D/L Motor Company FL
(d/b/a Lokey Honda)
D&L Waste, Inc. NC
Daybreak Recycling Systems, Inc. CA
Desert Buick-GMC Trucks, Inc. NV
Desert Buick-GMC Management Group, NV
Inc.
Desert GMC, Inc. NV
Desert GMC-East, Inc. NV
Desert Lincoln-Mercury, Inc. NV
Design-Graphic, Inc. FL
Disposal Services, Inc. NY
(d/b/a Upstate Disposal Service & R & R Refuse)
Ditschman/Flemington Ford-Lincoln- NJ
Mercury, Inc. (f/k/a Frenchtown Motors, Inc.)
Ditschman/Flemington Property Rentals, NJ
Inc.
Dobbs Brothers Buick-Pontiac, Inc. TN
<PAGE> 14
Name of State
Company of Inc.
- ------- -------
(d/b/a Dobbs Bros. Pontiac-GMC, Dobbs Bros. Buick
& Dobbs Bros. Mitsubishi)
Dobbs Ford, Inc. FL
Dobbs Mobile Bay, Inc. AL
(d/b/a Treadwell Ford, Treadwell Collison Center)
Dobbs Motors of Arizona, Inc. AZ
(d/b/a Dobbs Honda)
Dozit Company, Inc. KY
Duncan Disposal, Inc. TX
ECO Services of S.C., Inc. SC
EETLI, Inc. TX
E.M.X. Leasing, Inc. OH
East Bay Sanitation Service, Inc. FL
East Carolina Environmental, Inc. KY
Ed Mullinax, Inc. DE
Ed Mullinax Ford Inc. DE
El Centro Sanitation Service, Co. CA
Elliott's Agri-Service, Inc. TX
Emich Chrysler-Plymouth, Inc. CO
<PAGE> 15
Name of State
Company of Inc.
- ------- -------
Emich Dodge, Inc. CO
Emich Lincoln-Mercury, Inc. DE
Emich Oldsmobile, Inc. CO
Emich Subaru West, Inc. CO
Emich Services Agency, Inc. FL
Empire Warranty Corporation FL
Empire Warranty Holding Co. FL
Enviro-Comp Services, Inc. FL
Envirocycle, Inc. FL
Environmental Hygiene Management, Inc. CA
Environmental Specialists, Inc. MO
<PAGE> 16
Name of State
Company of Inc.
- ------- -------
Epperson Waste Disposal, Inc. KY
Expert Disposal Services, Inc. CA
Fat Man, Inc. CA
Fennell Container Co., Inc. SC
Fennell Waste Systems, Inc. SC
Fenn-Vac, Inc. SC
Financial Services, Inc. TX
Fisk Sanitation Service, Inc. IN
Fisk Environmental Services, Inc. IN
FJE Management Services, Inc. FL
FLL, Inc. MI
Flemington Chrysler-Plymouth-Dodge- NJ
Jeep Eagle, Inc. (f/k/a Flemington Chrysler-Plymouth-Dodge, Inc.)
Flemington Equities, Inc. NJ
Flemington Infiniti, Inc. NJ
<PAGE> 17
Name of State
Company of Inc.
- ------- -------
Flemington Land Rover, Inc. NJ
Flemington Nissan/BMW, Inc. NJ
(f/k/a Flemington Datsun, Inc.)
Flemington Pontiac, Inc. NJ
Flemington Subaru, Inc. NJ
(f/k/a Subaru/Hunterdon, Inc.)
Florida Refuse Service, Inc. FL
G.E.M. Environmental Management, DE
Inc.
G.F.B. Enterprises, Inc. FL
GF/WFF, Inc. SC
Garbage Disposal Services, Inc. NC
Gene Evans Ford, Inc. DE
General Providers Reinsurance British
Company, Ltd. West Indies
George Sutherlin Chevrolet of Georgia,
Inc. GA
George Sutherlin Nissan, Inc. GA
Gilliam Transfer, Inc. MO
<PAGE> 18
Name of State
Company of Inc.
- ------- -------
Golden Communications, Inc. MI
Grand Prairie Disposal Company, Inc. TX
Green Corn, Inc. FL
Greenfield Environmental DE
Development Corp.
Green Valley Environmental Corp. KY
Gulf Coast Waste Service, Inc. FL
Gulf Management, Inc. FL
(d/b/a Lexus of Clearwater,
and Lexus of Tampa Bay)
Guy Salmon USA, Inc. FL
H.P. Disposal Company CA
Hank's Disposal, Inc. IN
Helper's Hand of America, Inc. IN
Hillard AutoGroup, Inc. TX
Hobbs Rubbish Service, Inc. CA
Holland Excavating, Inc. FL
Hollywood Imports Limited, Inc. FL
Hollywood Kia, Inc. FL
Hoover Toyota, Inc. AL
(d/b/a Hoover Toyota)
<PAGE> 19
Name of State
Company of Inc.
- ------- -------
Houston Organics, Inc. TX
Hudson Management Corporation FL
Hunterdon BMW, Inc. NJ
Hyder Waste Container, Inc. NC
Indiana Recycling LLC IN
JJSS, Inc. NJ
JMN, Inc. NC
Jack Sherman Chevrolet, Inc. TX
Jamax Corporation IN
J.C. Duncan Company, Inc. TX
Jerry's Outdoor Advertising, Inc. FL
Jiffy Billboards, Inc. FL
Jim Quinlan Chevrolet, Inc. DE
(d/b/a Florida Parts Express and
UD Trucks Nissan Diesel)
Jim Quinlan Ford Lincoln-Mercury, Inc. FL
<PAGE> 20
Name of State
Company of Inc.
- ------- -------
(f/k/a Quinlan Motors Co.)
John M. Lance Ford, Inc. OH
Karat Corp. NJ
Kelnat Advertising Ltd., Co. FL
Kenyon Dodge, Inc. FL
(f/k/a Thayer Motor Co., Inc.)
LGS Holding Company DE
LSW Environmental, Inc. GA
Lance Children, Inc. OH
Laughlin Environmental, Inc. TX
Libertyville Enterprises, Inc. IL
Living Earth Technology Company DE
(f/k/a Republic U.S., Inc.)
Lone Tree Rent-A-Car GmbH Germany
(LLC)
Lou Grubb Chevrolet, Inc. AZ
Lou Grubb Ford, Inc. AZ
Lovern, Inc. FL
<PAGE> 21
Name of State
Company of Inc.
- ------- -------
M.C.C. Recycling, Inc. NJ
M-G Disposal Service, Inc. CA
MLF Insurance Agency, Inc. OH
Magic Acquisition Corp. DE
Marshall Lincoln-Mercury, Inc. CO
(d/b/a Marshall Lincoln-Mercury
Mazda, Inc.)
Maroone Car & Truck Rental FL
Maroone Chevrolet, Inc. FL
Maroone Chevrolet Ft. Lauderdale, FL
Inc.
Maroone Dodge, Inc. FL
Maroone Dodge Pompano, Inc. FL
Maroone Ford, Inc. FL
(f/k/a Powell Motor Co.)
Maroone Isuzu, Inc. FL
Maroone Jeep-Eagle, Inc. FL
Maroone Management Services, Inc. FL
<PAGE> 22
Name of State
Company of Inc.
- ------- -------
Maroone Oldsmobile, Inc. FL
Maroone Oldsmobile II, Inc. DE
Maxmedia, Inc. FL
Mechanical Warranty Protection, Inc. FL
Medical Waste Services, Inc. FL
Meyer Waste Systems, Inc. IN
Meyer Mechanical Services, Inc. IN
Meyer Transportation, LLC IN
Middlesex Carting Co., Inc. NJ
(d/b/a Midco Waste Systems)
Mid-East Waste Services, Inc. NC
Mid-State Environmental KY
Midwest Material Management, Inc. IN
Mike Hall Chevrolet, Inc. DE
Mike Shad Chrysler Plymouth
Jeep Eagle, Inc. FL
<PAGE> 23
Name of State
Company of Inc.
- ------- -------
(d/b/a Mike Shad Chrysler Plymouth
Jeep Eagle)
Mike Shad Ford, Inc. FL
(d/b/a Mike Shad Ford)
Miller-Sutherlin Automotive, Inc. AL
Monarch Environmental, Inc. KY
Mullinax East, Inc. DE
Mullinax Ford North Canton, Inc. OH
Mullinax Ford South, Inc. FL
Mullinax Insurance Agency, Inc. OH
Mullinax Lincoln-Mercury, Inc. DE
Mullinax of Mayfield, Inc. OH
(f/k/a Hal Artz Lincoln-Mercury, Inc.)
(d/b/a Mullinax Lincoln-Mercury of Mayfield
and Mullinax Jeep Eagle of Mayfield)
Mullinax Used Cars, Inc. OH
(d/b/a AutoCredit)
NCR Affiliate Servicer, Inc. DE
NCRS-TM, Inc. DE
NCRS NR, Inc. DE
National Car Rental Asia-Pacific Pty. Australia
Limited
<PAGE> 24
Name of State
Company of Inc.
- ------- -------
National Car Rental de Brasil Brazil
Empreedimentos Ltda.
National Car Rental System New Zealand
(New Zealand) Limited
National Car Rental (Germany) GmbH Germany
National Car Rental Hong Kong Limited Hong Kong
National Car Rental Financing DE
Corporation
<PAGE> 25
Name of State
Company of Inc.
- ------- -------
<PAGE> 26
Name of State
Company of Inc.
- ------- -------
National Car Rental Licensing, Inc. DE
<PAGE> 27
Name of State
Company of Inc.
- ------- -------
National Car Rental System, Inc. DE
<PAGE> 28
Name of State
Company of Inc.
- ------- -------
National Serv-All, Inc. IN
National Tilden Operations, Inc. ONT
<PAGE> 29
Name of State
Company of Inc.
- ------- -------
National Tilden System, Inc. ONT
NationsWaste, Inc. DE
NationsWaste CATAWA Regional SC
Landfill
Nine Mile Road, Inc. FL
(f/k/a Southland Environmental
Systems, Inc.)
Northside Nissan, Inc. SC
(d/b/a Northside Nissan &
Motormax)
Northwest Financial Group, Inc. WA
Northwest Florida Sanitation, Inc. FL
Northwest Tennessee Disposal Corp. TN
NRL, Inc. (New River Line, Inc.) KY
Ohio County Balefill, Inc. KY
Ojai Rubbish Service, Inc. CA
Orange Park Toyota, Inc. FL
<PAGE> 30
Name of State
Company of Inc.
- ------- -------
Outdoor Communication, Inc. FL
Pantego I, Inc. TX
Pepperhill Develpmt. Co., Inc. SC
(The) Pierce Automotive Corporation AZ
(The) Pierce Corporation AZ
(The) Pierce Corporation II, Inc. AZ
Pine Ridge Recycling, Inc. GA
Pinellas Environmental, Inc. KY
Post Retirement Liability FL
Management, Inc. (f/k/a
Scott Alarm of
Gainesville, Inc.)
Princeton's Nassau/Conover Ford- NJ
Lincoln-Mercury, Inc.
Prichard Landfill Corp. WV
PSI Waste Systems, Inc. ID
Quantum Premium Finance Co. FL
Quinlan Motors, Inc. FL
(d/b/a Jim Quinlan Nissan)
R&B Holding Company, Inc. FL
RCLJ Construction, Inc. TX
RI/A-HL Merger Corp. CA
<PAGE> 31
Name of State
Company of Inc.
- ------- -------
RI/AHI Merger Corp. CA
RI/CC Acquisition Corp. DE
RI/CCI Merger Corp. DE
R.I./Triangle, Ltd. Bermuda
RITM, Inc. [Republic Trademark] DE
RIVT DE
(Business Trust)
RIVT Management, Inc. DE
<PAGE> 32
Name of State
Company of Inc.
- ------- -------
RIVT I LP DE
RIVT II LP DE
RIVT I LLC DE
RIVT II LLC DE
ROA Corp. FL
RRM Corporation DE
Rainbow Industries, Inc. VA
Raritan Valley Disposal Service Co., Inc. NJ
Raritan Valley Recycling, Inc. NJ
Real Estate Holdings, Inc. FL
(f/k/a RI/ST Merger Corp.)
Recycling Concepts, Inc. NC
Recycling Industries, Inc. NJ
Reliable Disposal, Inc. MI
Reliable Sanitation, Inc. FL
Rental Liability Management Holdings, DE
LLC
Rental Liability Management, Inc. FL
(f/k/a Absolute Systems, Inc.)
R.E. Wolfe Enterprises of Edinburg, TX
Inc.
<PAGE> 33
Name of State
Company of Inc.
- ------- -------
R.E Wolfe Enterprises of Texas, Inc. TX
Republic Acquisition Company DE
Republic Corporate Management Co. FL
Republic Dumpco, Inc. NV
Republic Environmental Technologies NV
Inc. (d/b/a Republic Environmental
Technologies of Nevada & Apex
Aggregates Company)
Republic Guy Salmon Partner, Inc. FL
Republic Imperial Acquisition Corp. OK
Republic Industries Funding Corp. DE
(f/k/a National Fleet Funding Corporation)
Republic Industries (UK) PLC UK
Republic/Maloy Landfill
& Sanitation,Inc. TX
Republic Media, Inc. FL
Republic Media Companies Holding DE
Co.
Republic Resources Company DE
<PAGE> 34
Name of State
Company of Inc.
- ------- -------
Republic Risk Management FL
Services, Inc.
Republic Security Companies DE
Holding Co.
Republic Silver State Disposal, NV
Inc. (d/b/a Republic Silver State
Disposal Services)
Republic Wabash Company DE
Republic Waste Companies DE
Holding Co.
Republic Waste Management DE
Company
Republic Waste Management I GA
Limited Partnership
Risk Management Reengineering Cayman Islands
Assurance Group
Robert A. Moor, Jr. Disposal PA
Services, Inc. (d/b/a Area
Container)
Rubbish Control, Inc. CA
SCM Enterprises, Inc. FL
SCM Reality, Inc. FL
SCM Realty II, Inc. FL
SNDK, Inc. NJ
<PAGE> 35
Name of State
Company of Inc.
- ------- -------
SGSCP Limited Partnership FL
SRAC-TM, Inc. FL
SaBek, Inc. NJ
Safety Lights, Inc. TN
Sandy Hollow Landfill Corp. WV
Sanifill, Inc. TN
SatTrak, Inc. DE
Schofield Corporation of Orlando FL
Seaboard Waste Systems, Inc. FL
(f/k/a Seaboard Sanitation, Inc.)
Seagull Sanitation Systems, Inc. CA
Smithton Sanitation Service, Inc. NC
Snappy Car Rental, Inc. OH
<PAGE> 36
Name of State
Company of Inc.
- ------- -------
Snappy Fleet Finance Corporation DE
<PAGE> 37
Name of State
Company of Inc.
- ------- -------
Snappy Funding Corporation DE
Snappy Funding Limited Partnership DE
<PAGE> 38
Name of State
Company of Inc.
- ------- -------
South Lease Cars, Inc. FL
Southern Illinois Regional Landfill, IL
Inc.
Southland Environmental Services, FL
Inc. (d/b/a Southland Environmental
Systems, Inc.)
Southland Maintenance Services, Inc. FL
Southland Recycling Services, Inc. FL
(f/d/a Covenant Recycling Services, Inc.)
<PAGE> 39
Name of State
Company of Inc.
- ------- -------
Southland Waste Systems, Inc. FL
Southland Waste Systems of Georgia GA
Inc.
Southland Waste Systems of Jax, Inc. FL
(f/k/a Southland Services, Inc.)
Southland Waste Systems of GA
Ware Co., Inc.
(f/k/a Sunbelt Waste Services, Inc.)
South Trans, Inc. NJ
Southwest Dodge, Inc. CO
(d/b/a Chesrown's Southwest Dodge, Inc.)
Space Coast Sanitation, Inc. FL
Spirit Leasing Inc. OH
(f/k/a Spirit Renting & Leasing, Inc.)
Spirit Rent-A-Car, Inc. OH
<PAGE> 40
Name of State
Company of Inc.
- ------- -------
Spitfire Properties, Inc. FL
(f/k/a Assured Security Company)
Springfield Environmental, Inc. DE
Springfield Environmental, Inc. IN
<PAGE> 41
Name of State
Company of Inc.
- ------- -------
Statewide Environmental Contractors, NJ
Inc.
Steve Moore Buy-Rite Auto Center, Inc. FL
Steve Moore Chevrolet, Inc. FL
Steve Moore Chevrolet Delray, Inc. FL
Steve Moore, Inc. FL
Stuart Lincoln-Mercury, Inc. FL
Sullivan Environmental Services, Inc. GA
Suburban Disposal Service, Inc. SC
Suburban Sanitation of California, Inc. CA
Suburban Sanitation Services, Inc. AZ
SunBurst Sanitation Corporation FL
Sunrise Disposal, Inc. IN
<PAGE> 42
Name of State
Company of Inc.
- ------- -------
Sutherlin Chrysler-Plymouth Jeep-
Eagle, Inc. GA
Sutherlin Nissan, Inc. GA
Sutherlin Nissan of Town Center, Inc. GA
Swift Creek Environmental, Inc. GA
(f/k/a Mullis Tree Service, Inc.)
T-Five, Inc. MI
Taylor Jeep Eagle, Inc. DE
Taormina Industies, Inc. CA
Tay-Ban Corporation MI
(d/b/a Taymouth Landfill)
Tennco Life Insurance Co. AZ
Terre Haute Recycling, Inc. IN
Territory Blue, Inc. FL
Texan Ford, Inc. TX
Texan Lincoln-Mercury, Inc. DE
(d/b/a Texan Lincoln-Mercury at Steeplechase
& Texan Isuzu at Steeplechase)
Total Care, Inc. CO
Tos-It Service Company, Inc. TX
Tower Advertising Group, Inc. FL
<PAGE> 43
Name of State
Company of Inc.
- ------- -------
Tower Food & Beverage, Inc. FL
Trashaway Services, Inc. TX
Treasure Coast Refuse Corp. FL
Triangle Corporation DE
Tri-K Landfill, Inc. KY
Tri-County Refuse Service, Inc. MI
Tri-State Ltd. IN
Triple C Disposal Service, Inc. TX
Triple G Landfills, Inc. IN
Tripperoo Wings, Inc. FL
United Refuse Co., Inc. IN
United Waste Service, Inc. GA
Upper Piedmont Environmental, Inc. KY
Uwharrie Environmental, Inc. KY
Valencia Lincoln-Mercury, Inc. DE
Victory Environmental Services, Inc. DE
Victory Waste Incorporated CA
<PAGE> 44
Name of State
Company of Inc.
- ------- -------
Village Motors, Inc. IL
(f/k/a Scott Motors, Inc)
(d/b/a Village Toyota and Village Volkswagon)
Wabash Valley Landfill Company, Ltd. PA
Wabash Valley Refuse IN
Removal Company, L.P.
Wallace Dodge, Inc. FL
Wallace Ford, Inc. FL
Wallace Imports, Inc. FL
Wallace Lincoln-Mercury, Inc. FL
Wallace Nissan, Inc. FL
Waste Collection Services Corp. FL
(d/b/a Seaside Sanitation)
Waste Handling Systems, Inc. NC
West Ashley Toyota, Inc. SC
<PAGE> 45
Name of State
Company of Inc.
- ------- -------
Westchester Investments, Inc. IN
West Tex Waste Services, Inc. TX
W.O. Bankston Enterprises, Inc. DE
W.O. Bankston Lincoln-Mercury, Inc. DE
Wood River Rubbish Company, Inc. ID
WPP Services, Inc. OH
WPP Continental de Costa Rica, S.A. Costa Rica
York Waste Disposal, Inc. PA
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into the previously
filed Registration Statements of Republic Industries, Inc. on Forms S-3
(Registration Nos. 33-61649, 33-62489, 33-63735, 33-65289, 333-01757, 333-04269,
333-08479, 333-18009, 333-20667, 333-23415, 333-29217, 333-35749 and 333-44611),
Forms S-4 (Registration Nos. 333-17915 and 333-41505) and Forms S-8
(Registration Nos. 33-93742, 333-07623, 333-19453, 333-20669, 333-29265 and
333-42891).
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
March 23, 1998.
<TABLE> <S> <C>
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 148,000
<SECURITIES> 0
<RECEIVABLES> 1,028,200
<ALLOWANCES> 50,900
<INVENTORY> 1,094,800
<CURRENT-ASSETS> 6,825,800
<PP&E> 2,742,300
<DEPRECIATION> 645,400
<TOTAL-ASSETS> 10,527,300
<CURRENT-LIABILITIES> 4,262,600
<BONDS> 2,333,600
0
0
<COMMON> 4,300
<OTHER-SE> 3,480,000
<TOTAL-LIABILITY-AND-EQUITY> 10,527,300
<SALES> 6,122,800
<TOTAL-REVENUES> 10,305,600
<CGS> 5,459,000
<TOTAL-COSTS> 8,645,100
<OTHER-EXPENSES> 179,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,800
<INCOME-PRETAX> 315,400
<INCOME-TAX> 115,200
<INCOME-CONTINUING> 200,200
<DISCONTINUED> 239,500
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