<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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
AUTONATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-1105145
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
110 S.E. 6TH STREET
FT. LAUDERDALE, FLORIDA 33301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 769-6000
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[ ]
On May 7, 1999 the registrant had 467,305,418 outstanding shares of
common stock, par value $.01 per share, including 20,284,500 shares of common
stock held in treasury.
<PAGE> 2
AUTONATION, INC.
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets as
of March 31, 1999 and December 31, 1998................................. 3
Unaudited Condensed Consolidated Statements of Operations
for the Three Months Ended March 31, 1999 and 1998...................... 4
Unaudited Condensed Consolidated Statement of Shareholders'
Equity for the Three Months Ended March 31, 1999........................ 5
Unaudited Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1999 and 1998...................... 6
Notes to Unaudited Condensed Consolidated Financial Statements............. 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS............................................... 15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................. 24
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................... 25
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................... $ 361.7 $ 217.3
Receivables, net.................................................... 1,732.4 1,605.3
Revenue earning vehicles, net....................................... 4,708.4 4,588.7
Inventory........................................................... 2,130.6 1,853.5
Other current assets................................................ 160.8 141.5
--------- ---------
Total Current Assets.......................................... 9,093.9 8,406.3
INVESTMENTS ..................................................... 163.3 172.3
PROPERTY AND EQUIPMENT, NET............................................ 2,187.7 2,043.6
INTANGIBLE AND OTHER ASSETS, NET....................................... 2,864.9 2,473.4
NET ASSETS OF DISCONTINUED OPERATIONS.................................. 859.1 830.2
--------- ---------
$15,168.9 $13,925.8
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................... $ 315.7 $ 307.4
Accrued liabilities................................................. 724.1 697.9
Revenue earning vehicle debt........................................ 2,152.0 2,618.2
Notes payable and current maturities of
long-term debt.................................................... 1,853.4 1,441.8
Other current liabilities........................................... 425.5 475.1
--------- ---------
Total Current Liabilities..................................... 5,470.7 5,540.4
LONG-TERM DEBT, NET OF CURRENT MATURITIES.............................. 977.5 555.9
LONG-TERM REVENUE EARNING VEHICLE DEBT................................. 2,615.5 1,759.7
DEFERRED INCOME TAXES.................................................. 233.7 227.1
OTHER LIABILITIES ..................................................... 477.7 418.5
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 shares authorized;
467,284,930 and 467,240,307 shares
issued and outstanding including shares
held in treasury, respectively................................... 4.7 4.7
Additional paid-in capital.......................................... 4,630.3 4,628.9
Retained earnings................................................... 1,011.0 930.9
Accumulated other comprehensive loss................................ (2.9) (4.3)
Treasury stock, at cost; 17,682,500 and
9,110,400 shares held, respectively.............................. (249.3) (136.0)
--------- ---------
Total Shareholders' Equity.................................... 5,393.8 5,424.2
--------- ---------
$15,168.9 $13,925.8
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1999 1998
-------- ----------
<S> <C> <C>
REVENUE:
Automotive retail sales...................................................... $ 4,562.7 $ 2,343.4
Automotive rental revenue.................................................... 791.0 775.7
--------- ---------
5,353.7 3,119.1
EXPENSES:
Cost of automotive retail sales.............................................. 3,952.5 2,026.1
Cost of automotive rental operations......................................... 633.4 605.4
Selling, general and administrative.......................................... 683.9 426.3
--------- ---------
OPERATING INCOME................................................................ 83.9 61.3
INTEREST INCOME................................................................. 4.2 .5
INTEREST EXPENSE................................................................ (10.0) (2.0)
OTHER INCOME (EXPENSE), NET..................................................... 1.1 (2.3)
--------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES.......................................................... 79.2 57.5
PROVISION FOR INCOME TAXES...................................................... 28.5 20.7
--------- ---------
INCOME FROM CONTINUING OPERATIONS............................................... 50.7 36.8
INCOME FROM DISCONTINUED OPERATIONS,
NET OF MINORITY INTEREST AND INCOME TAXES.................................... 29.4 40.3
--------- ---------
NET INCOME...................................................................... $ 80.1 $ 77.1
========= =========
BASIC EARNINGS PER SHARE:
Continuing operations........................................................ $ .11 $ .08
Discontinued operations...................................................... .07 .10
--------- ---------
Net income................................................................... $ .18 $ .18
========= =========
DILUTED EARNINGS PER SHARE:
Continuing operations........................................................ $ .11 $ .08
Discontinued operations...................................................... .06 .09
--------- ---------
Net income................................................................... $ .17 $ .17
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON PAID-IN RETAINED COMPREHENSIVE TREASURY
STOCK CAPITAL EARNINGS INCOME (LOSS) STOCK
----- ------- -------- ------------- -----
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998.............. $4.7 $4,628.9 $ 930.9 $ (4.3) $(136.0)
Purchases of treasury stock............ -- -- -- -- (113.3)
Exercise of stock options
and warrants........................ -- .2 -- -- --
Other comprehensive income............. -- -- -- 1.4 --
Other.................................. -- 1.2 -- -- --
Net income............................. -- -- 80.1 -- --
----- --------- -------- ------- --------
BALANCE AT MARCH 31, 1999................. $4.7 $4,630.3 $1,011.0 $ (2.9) $(249.3)
===== ========= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE> 6
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1999 1998
---------- -----------
<S> <C> <C>
CASH USED IN OPERATING ACTIVITIES:
Net income.............................................................. $ 80.1 $ 77.1
Adjustments to reconcile net income to net cash
used in operating activities:
Purchases of revenue earning vehicles................................ (1,950.7) (1,460.7)
Sales of revenue earning vehicles.................................... 1,588.6 1,094.4
Depreciation of revenue earning vehicles............................. 222.1 199.7
Depreciation and amortization........................................ 42.4 31.1
Income from discontinued operations.................................. (29.4) (40.3)
Changes in assets and liabilities, net of effects from business
combinations:
Receivables.................................................... (69.5) (67.0)
Inventory...................................................... (75.5) 80.7
Other assets................................................... (21.1) (3.9)
Accounts payable and accrued liabilities....................... (31.8) 7.1
Other liabilities.............................................. (16.6) (91.7)
--------- ---------
(261.4) (173.5)
--------- ---------
CASH USED IN INVESTING ACTIVITIES:
Purchases of property and equipment..................................... (120.6) (89.9)
Purchases of marketable securities...................................... (17.2) --
Sales of marketable securities.......................................... 23.7 --
Cash used in business acquisitions, net of
cash acquired ...................................................... (432.2) (298.5)
Other .................................................................. 13.2 (20.6)
--------- ---------
(533.1) (409.0)
--------- ---------
CASH PROVIDED BY FINANCING ACTIVITIES:
Proceeds from revenue earning vehicle financing......................... 27,876.7 11,164.5
Payments of revenue earning vehicle financing........................... (27,463.9) (10,779.7)
Payments of notes payable and long-term debt............................ (79.6) (78.4)
Net proceeds from revolving credit and
vehicle inventory financing facilities............................... 693.0 424.9
Purchases of treasury stock............................................. (99.3) --
Other .................................................................. (4.9) (.7)
--------- ---------
922.0 730.6
--------- ---------
CASH USED IN DISCONTINUED OPERATIONS....................................... (524.4) (22.6)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................... (396.9) 125.5
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD,
INCLUDING CASH AND CASH EQUIVALENTS OF
DISCONTINUED OPERATIONS OF $556.6 MILLION AND
$0, RESPECTIVELY ...................................................... 773.9 148.0
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD,
INCLUDING CASH AND CASH EQUIVALENTS OF
DISCONTINUED OPERATIONS OF $15.3 MILLION AND
$0, RESPECTIVELY ...................................................... $ 377.0 $ 273.5
========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(TABLES IN MILLIONS, EXCEPT PER SHARE DATA)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
include the accounts of AutoNation, Inc. and its subsidiaries (the "Company",
formerly Republic Industries, Inc.) and have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
All significant intercompany accounts and transactions have been eliminated.
Certain information related to the Company's organization, significant
accounting policies and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These unaudited condensed consolidated financial
statements reflect, in the opinion of management, all material adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and the results of operations for the periods presented and
the disclosures herein are adequate to make the information presented not
misleading.
Operating results for interim periods are not necessarily indicative of
the results that can be expected for a full year. These interim financial
statements should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto included in the Company's most recent
Annual Report on Form 10-K.
In March 1999, following receipt of written notice from the Internal
Revenue Service ("IRS") that the IRS would not rule as requested, the Company
decided not to complete the planned tax-free distribution of the Company's
remaining interest in its solid waste subsidiary, Republic Services, Inc.
("RSG"). Rather, the Company decided to sell its entire interest in RSG,
comprising 112.1 million shares of RSG class A common stock. In April 1999, the
Company agreed to sell 100.0 million shares of RSG class A common stock in a
public offering at a price of $16.875 per share. Excluded from the sale were
12.1 million shares of RSG class A common stock subject to underwriters'
over-allotment options. On May 3, 1999, the Company received the proceeds from
the sale totaling approximately $1.63 billion, net of underwriting fees. As
discussed in Note 16, Discontinued Operations, the Company's solid waste
services segment has been accounted for as discontinued operations and,
accordingly, the net assets and results of operations have been classified as
discontinued operations for all periods presented in the accompanying unaudited
condensed consolidated financial statements.
2. BUSINESS COMBINATIONS
Businesses acquired through March 31, 1999 and accounted for under the
purchase method of accounting are included in the unaudited condensed
consolidated financial statements from the date of acquisition.
During the three months ended March 31, 1999, the Company acquired
various businesses in the automotive retail industry. The Company paid
approximately $432.2 million of cash for these acquisitions which have been
accounted for under the purchase method of accounting.
7
<PAGE> 8
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The following summarizes the preliminary purchase price allocations for
business combinations accounted for under the purchase method of accounting
consummated during the three months ended March 31 related to continuing
operations:
<TABLE>
<CAPTION>
1999 1998
-------- ---------
<S> <C> <C>
Property and equipment................................................... $ 56.0 $ 146.0
Intangible and other assets.............................................. 406.8 574.5
Working capital.......................................................... 206.9 328.1
Debt assumed............................................................. (222.5) (415.1)
Other liabilities........................................................ (15.0) (10.2)
Common stock issued...................................................... -- (324.8)
------- -------
Cash used in acquisitions, net of cash acquired.......................... $ 432.2 $ 298.5
======= =======
</TABLE>
As discussed in Note 16, Discontinued Operations, the Company's solid
waste services segment has been accounted for as discontinued operations.
Accordingly, the financial position and results of operations of businesses
acquired in the solid waste services segment have been accounted for as
discontinued operations in the accompanying condensed consolidated financial
statements.
The Company's unaudited pro forma consolidated results of continuing
operations assuming acquisitions accounted for under the purchase method of
accounting had occurred as of the beginning of each period presented are as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 1998
-------- ---------
<S> <C> <C>
Revenue......................................................... $5,476.0 $3,659.5
Income from continuing operations............................... 52.2 45.5
Diluted earnings per share from continuing
operations.................................................... .11 .10
</TABLE>
The unaudited pro forma consolidated results of continuing 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 the beginning of each period presented.
8
<PAGE> 9
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3. RECEIVABLES
The components of receivables, net of allowance for doubtful accounts
are as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- -----------
<S> <C> <C>
Automotive retail trade receivables............................................. $ 571.2 $ 493.6
Automotive rental trade receivables............................................. 219.8 264.7
Vehicle manufacturer receivables................................................ 498.8 458.2
Automotive finance receivables.................................................. 402.2 354.0
Other........................................................................... 101.1 97.1
-------- --------
1,793.1 1,667.6
Less: allowance for doubtful accounts........................................... (60.7) (62.3)
-------- --------
$1,732.4 $1,605.3
======== ========
</TABLE>
The Company securitizes installment loan receivables generated by its
automotive finance subsidiary through a $1.0 billion commercial paper warehouse
facility with certain financial institutions. During the three months ended
March 31, 1999, the Company securitized approximately $289.2 million of
receivables under this program. At March 31, 1999, aggregate receivables
totaling $910.9 million were securitized under this program.
4. REVENUE EARNING VEHICLES
Revenue earning vehicles consist of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- ---------
<S> <C> <C>
Revenue earning vehicles........................................................ $5,216.4 $5,062.8
Less: accumulated depreciation.................................................. (508.0) (474.1)
-------- --------
$4,708.4 $4,588.7
======== ========
</TABLE>
5. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- ---------
<S> <C> <C>
New vehicles.................................................................... $1,501.7 $1,274.3
Used vehicles................................................................... 493.1 457.3
Parts, accessories and other.................................................... 135.8 121.9
-------- --------
$2,130.6 $1,853.5
======== ========
</TABLE>
9
<PAGE> 10
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- ---------
<S> <C> <C>
Land............................................................................ $ 717.6 $ 687.0
Buildings and improvements...................................................... 1,165.9 1,116.9
Furniture, fixtures and equipment............................................... 618.3 530.6
-------- --------
2,501.8 2,334.5
Less: accumulated depreciation and amortization................................. (314.1) (290.9)
-------- --------
$2,187.7 $2,043.6
======== ========
</TABLE>
7. INTANGIBLE AND OTHER ASSETS
Intangible and other assets consist primarily of the cost of acquired
businesses in excess of the fair value of net assets acquired. The cost in
excess of the fair value of net assets acquired is amortized over 40 years on a
straight-line basis. Accumulated amortization of intangible assets at March 31,
1999 and December 31, 1998 was $103.3 million and $85.6 million, respectively.
8. REVENUE EARNING VEHICLE DEBT
Revenue earning vehicle debt consists of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- --------
<S> <C> <C>
Amounts under various commercial paper programs secured by eligible vehicle
collateral; interest at market based commercial paper rates;
maturities through October 2000............................................... $2,094.6 $3,363.2
Amounts under various medium-term note programs
secured by eligible vehicle collateral:
Fixed rate component; maturities through 2005............................... 1,834.1 655.9
Floating rate component based on 3 month LIBOR;
maturities through 2003..................................................... 621.9 143.7
Other financings secured by eligible vehicle
collateral; interest at LIBOR based rates;
amounts due on demand......................................................... 216.9 215.1
-------- --------
4,767.5 4,377.9
Less: long-term portion......................................................... (2,615.5) (1,759.7)
-------- --------
$2,152.0 $2,618.2
======== ========
</TABLE>
In February 1999, the Company issued $1.8 billion of rental vehicle
asset-backed medium-term notes consisting of $550.0 million floating rate notes
maturing through 2003 (effective rate fixed at 5.73% through the use of certain
derivative transactions); $750.0 million 5.88% fixed rate notes maturing through
2003; and $500.0 million 6.02% fixed rate notes maturing through 2005.
10
<PAGE> 11
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consists of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- --------
<S> <C> <C>
Vehicle inventory credit facilities; secured
by the Company's vehicle inventory................................... $1,642.9 $1,339.2
Revolving credit facilities; interest payable
using LIBOR based rates; unsecured;
maturities through 2002.............................................. 1,052.0 500.0
Other notes; maturities through 2009..................................... 136.0 158.5
-------- --------
2,830.9 1,997.7
Less: current portion................................................... (1,853.4) (1,441.8)
-------- --------
$ 977.5 $ 555.9
======== ========
</TABLE>
In March 1999, the Company entered into a $500.0 million, 364-day
unsecured bank revolving credit facility to supplement its existing $1.0 billion
revolving credit facility maturing 2002.
10. SHAREHOLDERS' EQUITY
In August 1998, the Company's Board of Directors authorized the
repurchase of up to $500.0 million of shares of the Company's common stock, par
value $.01 per share ("Common Stock") over the following 12 months. Repurchases
are made either pursuant to Rule 10b-18 of the Securities Exchange Act of 1934,
as amended, or in privately negotiated transactions. During the three months
ended March 31, 1999, the Company repurchased 8.6 million shares of Common Stock
for an aggregate purchase price of $113.3 million. Through March 31, 1999, an
aggregate of 17.7 million shares of Common Stock have been acquired under this
program for an aggregate purchase price of $249.3 million.
11. COMPREHENSIVE INCOME
The components of the Company's comprehensive income are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1999 1998
------ ------
<S> <C> <C>
Net income................................................................................... $ 80.1 $ 77.1
------ ------
Other comprehensive income (loss):
Unrealized loss on marketable
securities, net of income taxes........................................................ (.1) --
Unrealized gain on interest-only strip
receivables, net of income taxes....................................................... 2.6 --
Reclassification of realized gains, net
of income taxes........................................................................ (.7) --
Foreign currency translation
adjustments, net of income taxes....................................................... (.4) (.9)
------ ------
1.4 (.9)
------ ------
Comprehensive income......................................................................... $ 81.5 $ 76.2
====== ======
</TABLE>
11
<PAGE> 12
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12. INCOME TAXES
Income taxes have been provided for based upon the Company's
anticipated annual effective income tax rate.
13. STOCK OPTIONS AND WARRANTS
The Company has various stock option plans under which shares of Common
Stock are granted to 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 have a term of ten years from the date of grant, and vest in increments
of 25% per year over a four year period on the yearly anniversary of the grant
date.
A summary of stock option and warrant transactions for the three months
ended March 31, 1999 is as follows:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
EXERCISE
OPTIONS WARRANTS TOTAL PRICE
------- -------- ----- ---------
<S> <C> <C> <C> <C>
Options and warrants outstanding
at beginning of year............................ 47.3 7.3 54.6 $ 12.52
Granted.............................................. 14.8 -- 14.8 15.92
Exercised............................................ (.1) -- (.1) 5.18
Canceled............................................. (8.6) -- (8.6) 12.52
---- ---- ----
Options and warrants outstanding
at March 31, 1999............................... 53.4 7.3 60.7 13.35
==== ==== ====
Options and warrants exercisable
at March 31, 1999............................... 11.6 7.3 18.9 11.74
Options and warrants available
for future grants at
at March 31, 1999............................... 22.0
</TABLE>
In March 1999, approximately 8.5 million options held by employees of
RSG were canceled.
14. LEGAL MATTERS
The Company is a party to various general corporate legal proceedings
which have arisen in the ordinary course of business. While the results of these
matters 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.
12
<PAGE> 13
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
15. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
earnings 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 options and warrants.
The computation of weighted average common and common equivalent shares
used in the calculation of basic and diluted earnings per share is shown below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Weighted average common shares outstanding
used in calculating basic
earnings per share...................................................................... 456.2 440.0
Gross common equivalent shares............................................................ 48.9 46.1
Weighted average treasury
shares purchased........................................................................ (37.0) (26.7)
Effect of using weighted average
common equivalent shares
outstanding............................................................................. (3.1) (1.0)
----- -----
Weighted average common and common
equivalent shares used in
calculating diluted earnings per
share ................................................................................. 465.0 458.4
===== =====
</TABLE>
At March 31, 1999 and 1998, the Company had approximately 20.5 million
and 16.7 million stock options outstanding, respectively, which have been
excluded from the computation of diluted earnings per share since they are
anti-dilutive.
16. DISCONTINUED OPERATIONS
As a result of the Company's decision in March 1999 to sell its
remaining interest in RSG, the net assets and operating results of the Company's
solid waste services segment have been classified as discontinued operations for
all periods presented in the accompanying unaudited condensed consolidated
financial statements. The minority shareholders' interest in the equity of RSG
as of March 31, 1999 and December 31, 1998 and the net earnings of RSG have been
included as a reduction of the net assets and income from discontinued
operations, respectively.
A summary of the net assets of discontinued operations for the
Company's solid waste services segment is as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------- --------
<S> <C> <C>
Current assets.................................................................. $ 273.6 $ 784.0
Non-current assets.............................................................. 2,514.7 2,028.1
-------- --------
Total assets.................................................................. 2,788.3 2,812.1
-------- --------
Current liabilities............................................................. 693.6 783.8
Non-current liabilities......................................................... 750.2 729.2
-------- --------
Total liabilities............................................................. 1,443.8 1,513.0
-------- --------
Minority interest............................................................... 485.4 468.9
-------- --------
Net assets of discontinued operations........................................... $ 859.1 $ 830.2
======== ========
</TABLE>
13
<PAGE> 14
AUTONATION, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Selected statement of operations data for the Company's solid waste
services segment is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1999 1998
---- ----
<S> <C> <C>
Revenue ............................................................................... $403.5 $300.8
Operating income........................................................................ 82.1 62.8
Provision for income taxes.............................................................. 28.2 22.6
Minority interest....................................................................... 15.7 --
Income from discontinued operations..................................................... 29.4 40.3
</TABLE>
17. OPERATIONS BY INDUSTRY SEGMENT
The Company operates subsidiaries in the automotive retail and
automotive rental industries. The Company's reportable segments are strategic
business units that offer different products and services. There is no material
intersegment revenue.
The following table presents financial information regarding the
Company's different industry segments:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1999 1998
---- ----
<S> <C> <C>
Revenue:
Automotive retail..................................................................... $4,562.7 $2,343.4
Automotive rental..................................................................... 791.0 775.7
-------- --------
$5,353.7 $3,119.1
======== ========
Operating income (loss):
Automotive retail..................................................................... $ 106.7 $ 56.4
Automotive rental..................................................................... (5.0) 19.1
-------- --------
Sub-total............................................................................. 101.7 75.5
Corporate............................................................................. (17.8) (14.2)
-------- --------
$ 83.9 $ 61.3
======== ========
</TABLE>
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited condensed consolidated financial statements and notes thereto included
under Item 1. In addition, reference should be made to the Company's audited
consolidated financial statements and notes thereto and related Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Company's most recent Annual Report on Form 10-K.
In March 1999, following receipt of written notice from the Internal
Revenue Service ("IRS") that the IRS would not rule as requested, the Company
decided not to complete the planned tax-free distribution of the Company's
remaining interest in its solid waste subsidiary, Republic Services, Inc.
("RSG"). Rather, the Company decided to sell its entire interest in RSG,
comprising 112.1 million shares of RSG class A common stock. In April 1999, the
Company agreed to sell 100.0 million shares of RSG class A common stock in a
public offering at a price of $16.875 per share. Excluded from the sale were
12.1 million shares of RSG class A common stock subject to underwriters'
over-allotment options. On May 3, 1999, the Company received the proceeds from
the sale totaling approximately $1.63 billion, net of underwriting fees. As
discussed in Note 16, Discontinued Operations, the Company's solid waste
services segment has been accounted for as discontinued operations and,
accordingly, the net assets and results of operations have been classified as
discontinued operations for all periods presented in the accompanying unaudited
condensed consolidated financial statements.
BUSINESS COMBINATIONS
The Company makes its decisions to acquire or invest in businesses
based on financial and strategic considerations.
Businesses acquired through March 31, 1999 and accounted for under the
purchase method of accounting are included in the unaudited condensed
consolidated financial statements from the date of acquisition.
During the three months ended March 31, 1999, the Company acquired
various businesses in the automotive retail industry. The Company paid
approximately $432.2 million of cash for these acquisitions which have been
accounted for under the purchase method of accounting.
CONSOLIDATED RESULTS OF OPERATIONS
The following is a summary of the Company's consolidated results of
operations both in gross dollars and on a diluted per share basis for the
periods indicated (in millions, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------
1999 1998
------------------ -----------------
Diluted Diluted
Gross Per Gross Per
Amount Share Amount Share
------ ----- ------ -----
<S> <C> <C> <C> <C>
Income from continuing operations.................................... $50.7 $.11 $36.8 $.08
Income from discontinued operations.................................. 29.4 .06 40.3 .09
----- ---- ----- ----
Net income........................................................... $80.1 $.17 $77.1 $.17
===== ==== ===== ====
</TABLE>
The operating results for the Company's business segments are discussed
below.
15
<PAGE> 16
BUSINESS SEGMENT INFORMATION
The following table sets forth revenue, with percentages of total
revenue, and cost of operations, selling, general and administrative expenses
and operating income with percentages of the applicable segment revenue for the
Company's business segments for the periods indicated (in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------
1999 % 1998 %
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Revenue:
Automotive retail....................................... $4,562.7 85.2 $2,343.4 75.1
Automotive rental....................................... 791.0 14.8 775.7 24.9
-------- ------ -------- ------
5,353.7 100.0 3,119.1 100.0
Cost of Operations:
Automotive retail....................................... 3,952.5 86.6 2,026.1 86.5
Automotive rental....................................... 633.4 80.1 605.4 78.1
-------- --------
4,585.9 2,631.5
Selling, General and
Administrative:
Automotive retail....................................... 503.5 11.1 260.9 11.1
Automotive rental....................................... 162.6 20.5 151.2 19.4
Corporate expenses...................................... 17.8 -- 14.2 --
-------- --------
683.9 426.3
Operating Income (Loss):
Automotive retail....................................... 106.7 2.3 56.4 2.4
Automotive rental....................................... (5.0) (.6) 19.1 2.5
Corporate expenses...................................... (17.8) -- (14.2) --
-------- --------
$ 83.9 $ 61.3
======== ========
</TABLE>
AUTOMOTIVE RETAIL
The following table sets forth the components of automotive retail
revenue, with percentages of total automotive retail revenue, for the periods
indicated (in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------
1999 % 1998 %
-------- ----- -------- -----
<S> <C> <C> <C> <C>
New vehicle sales......................................... $2,548.9 55.9 $1,203.9 51.4
Used vehicle sales........................................ 1,122.9 24.6 704.8 30.1
Parts, service and other.................................. 890.9 19.5 434.7 18.5
-------- ----- -------- -----
$4,562.7 100.0 $2,343.4 100.0
======== ===== ======== =====
</TABLE>
Automotive retail revenue was $4.56 billion for the three months ended
March 31, 1999 versus $2.34 billion for the comparable 1998 period, an increase
of 94.7%. The increase in automotive retail revenue is primarily attributed to
acquisitions.
Overall, same store automotive retail sales increased 8.7% during the
three months ended March 31, 1999 versus the comparable 1998 period. Same store
new vehicle sales increased 15.8%, same store used vehicle sales decreased 6.1%
and same store parts, service and other sales increased 13.1% during the period.
16
<PAGE> 17
Cost of automotive retail operations was $3.95 billion for the three
months ended March 31, 1999 versus $2.03 billion for the comparable 1998 period.
The increase in aggregate dollars is primarily due to acquisitions. Cost of
automotive retail operations as a percentage of automotive retail revenue was
86.6% for the three months ended March 31, 1999, versus 86.5% for the comparable
1998 period. The increase in such costs as a percentage of automotive retail
revenue is primarily due to product mix.
Selling, general and administrative expenses were $503.5 million for
the three months ended March 31, 1999 versus $260.9 million for the comparable
1998 period. The increase in aggregate dollars is primarily due to acquisitions.
Selling, general and administrative expenses as a percentage of automotive
retail revenue were 11.1% for both the three months ended March 31, 1999 and
1998. Decreases in store level selling, general and administrative expenses as a
percentage of revenue were offset by investments in the Company's automotive
retail business including e-commerce and brand development.
AUTOMOTIVE RENTAL
Automotive rental revenue was $791.0 million for the three months ended
March 31, 1999 versus $775.7 million for the comparable 1998 period, an increase
of 2.0%. The increase is primarily attributed to price increases. Volume at the
Company's National Car Rental System, Inc. ("National") operations during the
three months ended March 31, 1999 was adversely impacted by issues associated
with launching the Company's Global Odyssey operating system ("Global Odyssey").
Volume at National is expected to continue to be adversely impacted by these
systems issues. However, the Company believes most of these systems issues will
be resolved by the end of the second quarter of 1999.
Cost of automotive rental operations was $633.4 million for the three
months ended March 31, 1999 versus $605.4 million for the comparable 1998
period. Cost of automotive rental operations as a percentage of automotive
rental revenue was 80.1% for the three months ended March 31, 1999 versus 78.1%
for the comparable 1998 period. The increase in such costs in aggregate dollars
and as a percentage of revenue is primarily due to higher fleet costs and costs
associated with implementing Global Odyssey at National.
Selling, general and administrative expenses were $162.6 million for
the three months ended March 31, 1999 versus $151.2 million for the comparable
1998 period. Selling, general and administrative expenses as a percentage of
revenue were 20.5% for the three months ended March 31, 1999 versus 19.4% for
the comparable 1998 period. The increase in such costs in aggregate dollars and
as a percentage of revenue is primarily due to costs associated with
implementing Global Odyssey at National.
CORPORATE
Corporate expenses were $17.8 million for the three months ended March
31, 1999 versus $14.2 million for the comparable 1998 period. Such increase is a
result of the overall growth experienced by the Company.
INTEREST INCOME
Interest income was $4.2 million for the three months ended March 31,
1999 versus $.5 million for the comparable 1998 period. The increase is
primarily due to higher cash balances on hand during the period.
17
<PAGE> 18
INTEREST EXPENSE
Interest expense was incurred primarily on borrowings under the
Company's revolving credit facilities for acquisitions. Interest expense was
$10.0 million for the three months ended March 31, 1999 versus $2.0 million for
the comparable 1998 period. Such increase is primarily due to borrowings for
acquisitions. Interest expense related to vehicle inventory financing and
revenue earning vehicle financing is included in cost of operations for
automotive retail and automotive rental, respectively.
INCOME TAXES
The provision for income taxes was $28.5 million for the three months
ended March 31, 1999 versus $20.7 million for the comparable 1998 period. Income
taxes have been provided based upon the Company's anticipated annual effective
income tax rate.
RESTRUCTURING ACTIVITIES
During the year ended December 31, 1997, the Company recorded pre-tax
restructuring and other charges totaling 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. At March 31, 1999, approximately $40.6
million remained in accrued liabilities associated with these charges consisting
of $22.4 million of automotive retail reserves and $18.2 million of automotive
rental reserves.
During the three months ended March 31, 1999, the Company spent
approximately $1.7 million of its automotive retail reserves related to closed
operations. The remaining automotive retail reserves at March 31, 1999 relate
primarily to closed reconditioning centers which the Company is actively
marketing for sale. During the three months ended March 31, 1999, the Company
spent approximately $3.8 million of its automotive rental reserves related
primarily to the closure of certain duplicate rental facilities. The remaining
automotive rental reserves at March 31, 1999 relate primarily to costs
associated with closing duplicate rental facilities. The Company expects the
majority of these reserves to be utilized during the remainder of 1999, however,
certain contractual obligations for closed locations extend through 2002.
DISCONTINUED OPERATIONS
As a result of the Company's decision to sell its remaining interest in
RSG, the net assets and operating results of the Company's solid waste services
segment have been classified as discontinued operations for all periods
presented in the accompanying condensed consolidated financial statements.
Revenue from these discontinued operations was $403.5 million and $300.8 million
during the three months ended March 31, 1999 and 1998, respectively. Income from
discontinued operations was $29.4 million and $40.3 million during the three
months ended March 31, 1999 and 1998, respectively. Income from discontinued
operations is presented net of minority interest of $15.7 million during the
three months ended March 31, 1999 and income taxes of $28.2 million and $22.6
million, during the three months ended March 31, 1999 and 1998, respectively.
18
<PAGE> 19
FINANCIAL CONDITION
At March 31, 1999, the Company had $361.7 million in cash and
approximately $377.0 million of availability under its $1.5 billion unsecured
revolving credit facilities which may be used for general corporate purposes. In
April 1999, the Company agreed to sell 100.0 million shares of RSG class A
common stock in a public offering. Excluded from the sale were 12.1 million
shares of RSG class A common stock subject to underwriters' over-allotment
options. On May 3, 1999, the Company received the proceeds from the sale
totaling approximately $1.63 billion, net of underwriting fees. Proceeds from
the sale will be used to repay non-vehicle debt, to finance acquisitions, to
acquire shares under the Company's share repurchase program and to invest in the
Company's existing businesses.
The Company finances vehicle purchases for its domestic automotive
rental operations primarily through commercial paper and medium-term note
financings. The Company's $3.24 billion commercial paper program is comprised of
a $1.99 billion single-seller program and three bank-sponsored multi-seller
commercial paper conduit facilities totaling $1.25 billion. Borrowings under
this program are secured by eligible vehicle collateral and bear interest at
market based commercial paper rates. As of March 31, 1999, the Company had
approximately $1.2 billion of availability under this program. In February 1999,
the Company issued $1.8 billion of rental vehicle asset-backed medium-term notes
consisting of $550.0 million floating rate notes maturing through 2003; $750.0
million 5.88% fixed rate notes maturing through 2003; and $500.0 million 6.02%
fixed rate notes maturing through 2005. The Company fixed the effective interest
rate on the $550.0 million floating rate notes at 5.73% through the use of
certain derivative transactions. The Company expects to continue to fund its
revenue earning vehicle purchases with secured vehicle financings.
The Company finances its automotive retail vehicle inventory through
secured financings including floor plan facilities with manufacturer captive
finance companies as well as a $500.0 million bank-sponsored multi-seller
commercial paper conduit facility. At March 31, 1999, the Company had
approximately $311.2 million of availability under the commercial paper conduit
facility. 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 $431.1 million at March 31, 1999.
The Company securitizes installment loan receivables generated by its
automotive finance subsidiary through a $1.0 billion commercial paper warehouse
facility with certain financial institutions. During the three months ended
March 31, 1999, the Company securitized approximately $289.2 million of loan
receivables under this program, net of retained interests. At March 31, 1999,
aggregate receivables totaling $910.9 million were securitized under this
program. Installment loans sold under this program are nonrecourse beyond the
Company's retained interests. Proceeds from the securitization were primarily
used to repay borrowings under the Company's revolving credit facilities. The
Company expects to continue to securitize receivables under this facility and/or
other programs. The Company has entered into certain interest rate derivative
transactions with certain financial institutions to manage the impact of
interest rate changes on securitized installment loan receivables.
In August 1998, the Company's Board of Directors authorized the
repurchase of up to $500.0 million of shares of the Company's common stock, par
value $.01 per share ("Common Stock") over the following 12 months. Repurchases
are made either pursuant to Rule 10b-18 of the Securities Exchange Act of 1934,
as amended, or in privately negotiated transactions. During the three months
ended March 31, 1999, the Company repurchased 8.6 million shares of Common Stock
for an aggregate purchase price of $113.3 million. Through March 31, 1999, an
aggregate of 17.7 million shares of Common Stock have been acquired under this
program for an aggregate purchase price of $249.3 million.
19
<PAGE> 20
The Company believes that it has sufficient financial resources
available to meet its anticipated capital requirements and obligations as they
come due.
CASH FLOWS
Cash and cash equivalents decreased by $396.9 million and increased by
$125.5 million during the three months ended March 31, 1999 and 1998,
respectively. The major components of these changes are discussed below.
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operating activities was $261.4 million and $173.5 million
during the three months ended March 31, 1999 and 1998, respectively.
Cash flows from operating activities include net purchases of revenue
earning vehicles and purchases of retail vehicle inventory which are separately
financed through secured vehicle financings. Accordingly, the Company measures
its operating cash flow including net proceeds from these secured vehicle
financings which totaled $553.8 million and $344.7 million during the three
months ended March 31, 1999 and 1998, respectively. Including net proceeds from
these secured vehicle financings, the Company generated positive operating cash
flow of $292.4 million and $171.2 million during the three months ended March
31, 1999 and 1998, respectively.
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from investing activities consist primarily of cash used for
business acquisitions, capital additions and other transactions as further
described below.
Cash used in business acquisitions was $432.2 million and $298.5
million for the three months ended March 31, 1999 and 1998, respectively. In
addition, as discussed under "Cash Flows from Financing Activities," the Company
repaid debt assumed in acquisitions. See "Business Combinations" of Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Note 2, "Business Combinations" of Notes to Unaudited Condensed Consolidated
Financial Statements for a further discussion of businesses acquired.
Capital additions were $120.6 million and $89.9 million during the
three months ended March 31, 1999 and 1998, respectively.
The Company expects capital expenditures and cash used in business
acquisitions to increase during the remainder of 1999 due to expansion of the
Company's existing businesses. The Company intends to finance capital
expenditures and business acquisitions through cash on hand, revolving credit
facilities and other financings.
CASH FLOWS FROM FINANCING ACTIVITIES
Cash flows from financing activities during the three months ended
March 31, 1999 and 1998 consisted of revenue earning vehicle and vehicle
floorplan financings, commercial bank borrowings, repayments of debt and
treasury stock purchases.
Payments of notes payable and long-term debt were $79.6 million and
$78.4 million during the three months ended March 31, 1999 and 1998,
respectively. These amounts consist primarily of the repayment of debt assumed
in acquisitions.
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 consumer buying trends and the introduction of new vehicle models.
20
<PAGE> 21
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
The Company utilizes software and related technologies throughout its
businesses that will be affected by the date change in the year 2000 ("Y2K").The
Company is addressing the issue of computer programs, embedded chips and third
party suppliers that may be impacted by Y2K. The Company has developed a
dedicated Y2K Project Office to coordinate compliance efforts and ensure that
the project status is monitored and reported throughout the organization.
The Company has identified four core phases in preparing for Y2K:
Assessment -- In the assessment phase, an inventory is performed of
software, hardware, telecommunications equipment and embedded chip technology.
Also, critical systems and vendors are identified and prioritized.
Analysis -- In the analysis phase, each system or item assessed as
critical is reviewed to determine Y2K compliance. Key vendors are also evaluated
at this time to determine their compliance status.
Remediation -- In the remediation phase, modifications or replacements
are made to critical systems and equipment to make them Y2K-compliant or the
systems and/or vendors are replaced with compliant systems or vendors. Decisions
are also made as to whether changes are necessary or feasible for key
third-party suppliers.
Testing and Validation -- In this phase, the Company prepares, executes
and verifies the testing of critical systems.
Both divisions of the Company have developed plans to correct Y2K
issues and, to date, have made progress as follows:
Automotive Retail Division:
The Company's franchised automotive dealerships and AutoNation USA
megastores use one of six Dealer Management Systems ("DMS"), which perform the
core functions of a dealership's operations. The Company has determined, subject
to verification and testing, that the DMS systems provided by these vendors are
Y2K compliant or will be Y2K compliant with an upgrade. Approximately 50% of the
Company's franchised automotive dealerships using these DMS systems have been
upgraded to a compliant version; approximately 40% are scheduled to complete
such upgrades by the end of the second quarter of 1999; and the remaining 10%
are using a DMS system that the vendor represents is or will be compliant with
an upgrade. The Company intends to obtain further documentation to support such
compliance, as well as conduct testing to verify compliance.
The Company is substantially complete with its assessment, analysis,
remediation and testing of its other software applications that are in use at
its AutoNation USA megastores as well as some of its franchised automotive
dealerships.
21
<PAGE> 22
The Company has completed an inventory of its franchised automotive
dealerships and megastores to identify other business systems, products,
suppliers and embedded chips. Those issues identified are expected to be
remediated or replaced by the end of the third quarter of 1999.
Automotive Rental Division:
For over a year, the Company, in conjunction with external consultants,
has been developing the Global Odyssey system, which will replace substantially
all rental systems, as well as the applicable hardware and operating systems.
This system was designed to be Y2K compliant and Y2K testing was completed prior
to the recent implementation of the Global Odyssey reservation, operations and
financial systems at National's domestic operations prior to the end of 1998.
The Global Odyssey fleet system was implemented at National's North American
locations during the first quarter of 1999.
Alamo has remediated 100% of its existing systems and 80% has been
tested and put into production. The remaining 20% will be put into production by
the end of the second quarter of 1999. Full integration testing is expected to
be completed during the third quarter of 1999.
The Automotive Rental Division has surveyed the majority of its North
American rental locations to identify other critical business systems, products
and vendors, including embedded chip issues. Work is ongoing to remediate or
replace business systems, products and vendors that are not Y2K compliant.
Completion of remediation or replacement is expected by the end of the second
quarter of 1999. The Company has also developed a plan for its European
locations, some of which are supported by the Alamo mainframe, which is
discussed above. The remaining European locations are supported by systems
developed and supported by the United Kingdom headquarters which are currently
scheduled to be Y2K compliant by the end of the third quarter of 1999.
Costs To Address Y2K
To date, the Company's automotive retail and rental divisions have
spent approximately $8.9 million on Y2K efforts across all areas. The Company
currently expects to spend a total of approximately $22.0 million when complete;
$4.2 million of which has or is expected to be incurred as capital expenditures
and depreciated accordingly. Such amounts exclude costs associated with
replacing the Company's automotive rental systems with Global Odyssey since the
Global Odyssey implementation was planned in advance and not accelerated as a
result of Y2K. The Company expects to fund Y2K costs through operating cash
flow. All system modification costs associated with Y2K will be expensed as
incurred. Y2K expenditures vary significantly in project phases and vary
depending on remedial methods used. Past expenditures in relation to total
estimated costs should not be considered or relied on as a basis for estimating
progress to completion for any element of the Y2K project.
Risks and Contingency Plans
The Company presently believes, that upon remediation of its business
software applications, as well as other equipment with embedded technology, the
Y2K issue will not present a materially adverse risk to the Company's future
consolidated results of operations, liquidity and capital resources. However, if
such remediation is not completed in a timely manner or the level of timely
compliance by key suppliers or vendors is not sufficient, the Company believes
that the most likely worst case scenario would be the delay or disruption in the
delivery of products which could have a material adverse impact on the Company's
operations including, but not limited to, loss of revenue, increased operating
costs, loss of customers or suppliers, or other significant disruptions to the
Company's business. The Company has initiated comprehensive contingency and
business continuation plans, which are expected to be in place by the end of the
second quarter of 1999 in order to ensure enough time for implementation of such
plans, if necessary and thus possibly avoid such risks.
22
<PAGE> 23
Determining the Y2K readiness of third party products and business
dependencies requires pursuit, collection and appraisal of voluntary statements
made or provided by those parties, if available, together with independent
factual research. The Company has identified its material third-party
relationships and has surveyed these parties. The results are being analyzed as
surveys are received. Although the Company has taken, and will continue to take,
reasonable efforts to gather information to determine and verify the readiness
of products and dependencies, there can be no assurances that reliable
information will be offered or otherwise available. In addition, verification
methods (including testing methods) may not be reliable or fully implemented.
Accordingly, notwithstanding the foregoing efforts, there are no assurances that
the Company is correct in its determination or belief that a product
(information technology and other computerized equipment) or a business
dependency (including a supplier, distributor or ancillary industry group) is
Y2K ready.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. SFAS 133 is effective for fiscal years beginning after June 15, 1999. SFAS
133 cannot be applied retroactively. The Company will adopt SFAS 133 beginning
January 1, 2000. The Company has not yet quantified the impact of adopting SFAS
133 on the Company's consolidated financial statements. However, SFAS 133 could
increase volatility in earnings and other comprehensive income.
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, 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 dependence on vehicle manufacturers to approve franchised
automotive dealership acquisitions and the restrictions imposed by vehicle
manufacturers on franchised automotive dealership acquisitions and operations;
the risk of unfavorable economic conditions on the Company's operations; 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 risks and cost associated
with complying with the date change in the year 2000; the ability to develop and
implement operational and financing systems to manage rapidly growing
operations; and other factors contained in the Company's filings with the
Securities and Exchange Commission.
23
<PAGE> 24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following information about the Company's market sensitive
financial instruments constitutes a "forward-looking statement." The Company's
major market risk exposure is changing interest rates, primarily in the United
States. Due to its limited foreign operations, the Company does not have
material market risk exposures relative to changes in foreign exchange rates.
The Company's policy is to manage interest rates through use of a combination of
fixed and floating rate debt. Interest rate derivatives may be used to adjust
interest rate exposures when appropriate, based upon market conditions. These
derivatives consist of interest rate swaps, caps and floors which are entered
into with a group of financial institutions with investment grade credit
ratings, thereby minimizing the risk of credit loss. The Company uses variable
to fixed interest rate swaps and interest rate caps/floors to manage the impact
of interest rate changes on the Company's variable rate debt. The Company also
uses interest rate caps and floors to manage the impact of interest rate changes
on securitized installment loan receivables.
Reference is made to the Company's quantitative disclosures about
market risk as of December 31, 1998 included under Item 7 of the Company's most
recent Annual Report on Form 10-K.
At March 31, 1999, notional principal amounts related to interest rate
swaps (variable to fixed rate) were $2.35 billion maturing as follows: $650.0
million in the remainder of 1999; $800.0 million in 2000; $250.0 million in
2001; $150.0 million in 2002; and $500.0 million in 2003. As of March 31, 1999,
the weighted average fixed rate payment on variable to fixed rate swaps was
5.87%. Variable rates received are indexed to the Commercial Paper Nonfinancial
rate ($2.25 billion notional principal amount) and LIBOR ($.1 billion notional
principal amount). In connection with the February 1999 issuance of the $1.8
billion rental vehicle asset-backed medium term notes, the Company entered into
certain derivative transactions to manage the impact of interest rate changes on
the $550.0 million variable rate notes. These derivatives consist of an interest
rate cap and floor with a notional amount of $550.0 million maturing through
2003 which fix the effective rate on the underlying debt at 5.73%. Variable
rates are indexed to LIBOR. Including the Company's interest rate derivatives,
the Company's ratio of fixed interest rate debt to total debt outstanding was
62% as of March 31, 1999.
The Company has entered into certain interest rate derivative
transactions with certain financial institutions to manage the impact of
interest rate changes on securitized installment loan receivables. These
derivative transactions consist of a series of interest rate caps and floors
with an aggregate notional amount of $945.4 million contractually maturing
through 2005 which effectuate a variable to fixed rate swap at a weighted
average rate of 4.99% at March 31, 1999. Variable rates on the underlying
portfolio are indexed to the Commercial Paper Nonfinancial rate.
24
<PAGE> 25
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
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
Registrants's Annual Report on Form 10-K for the year
ended December 31, 1995).
4.1 Master Motor Vehicle Lease and Servicing Agreement dated
as of February 26, 1999 among National Car Rental
System, Inc. as lessee, National Car Rental Financing
Limited Partnership as lessor, and AutoNation, Inc. as
guarantor.
4.2 Series 1999-1 Supplement dated as of February 26, 1999
between National Car Rental Financing Limited Partnership
("NFLP"), and The Bank of New York, as Trustee (the
"Trustee") 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.
4.3 Base Indenture dated as of February 26, 1999 between ARG
Funding Corp. and The Bank of New York, as Trustee.
4.4 Series 1999-1 Supplement dated as of February 26, 1999
between ARG Funding Corp, and The Bank of New York as
Trustee to the ARG Base Indenture.
4.5 Third Amended and Restated Master Collateral Agency
Agreement dated as of February 26, 1999 among National
Car Rental System, Inc., Alamo Rent-Car, Inc. and Spirit
Rent-A-Car, Inc. d/b/a/ CarTemps USA, Alamo Financing,
L.P., National Car Rental Financing Limited Partnership
and CarTemps Financing, L.P., as lessor grantors,
AutoNation, Inc., as master servicer, and Citibank, N.A.,
as master collateral agent.
27.1 Financial Data Schedule for the Three Months Ended March
31, 1999 (for SEC use only)
27.2 Financial Data Schedule for the Three Months Ended March
31, 1998 (restated for discontinued operations) (for SEC
use only)
(b) Reports on Form 8-K:
Form 8-K, filed and dated March 3, 1999, Item 5, reporting that
the Company would not complete the tax-free distribution of its
shares of the common stock of Republic Services, Inc., as
originally anticipated, and rather, will sell its entire interest
in Republic Services, Inc., comprising 112,162,500 shares of
Class A common stock.
25
<PAGE> 26
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant, AutoNation, Inc., has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AUTONATION, INC.
By: /s/ Mary E. Wood
---------------------------------
Mary E. Wood
VICE PRESIDENT AND
CORPORATE CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
Date: May 12, 1999
26
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
dated as of February 26, 1999
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee,
and those subsidiaries
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and 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
COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT
THEREFOR EXECUTED BY THE TRUSTEE ON THE SIGNATURE PAGE THEREOF.
THIS IS NOT THE ORIGINAL EXECUTED COUNTERPART NO. 1
<PAGE> 2
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 "Group I
Lease"), dated as of February 26, 1999, is by and among NATIONAL CAR RENTAL
FINANCING LIMITED PARTNERSHIP, a special purpose Delaware limited partnership
(the "Lessor"), NATIONAL CAR RENTAL SYSTEM, INC., a Delaware corporation
(together with its successors including any successor by merger and permitted
assigns, "National"), as a lessee, and those subsidiaries of Republic
Industries, Inc., from time to time becoming lessees hereunder pursuant to
Section 29 hereof (each, an "Additional Lessee"), as lessees (National and each
of the Additional Lessees, in its respective capacity as lessee, a "Lessee" and,
collectively, the "Lessees") and REPUBLIC INDUSTRIES, INC. a Delaware
corporation ("Republic"), as servicer (in such capacity, the "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, having 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 1999-1 Notes and, if any, each other Series of Notes secured by the
Collateral (collectively, the "Group I Notes") issued pursuant to the Indenture
and the increase from time to time in the Invested Amounts thereof 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;
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
Section 1.1. Certain Definitions. As used in this 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 the Lessor 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 Group I Notes, supplemented by
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the Series Supplement relating to the Series 1999-1 Notes (the "Series 1999-1
Supplement" and, together with other Series Supplements relating to Group I
Notes, the "Group I 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"). Capitalized terms not defined herein and
defined in both Schedule 1 to the Base Indenture and in an applicable Group I
Supplement shall, unless context otherwise requires, have the meanings assigned
to such terms in such Series Supplement.
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 Lessor shall have consented to such election.
Upon a change in GAAP which becomes effective after the Initial 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, as
applicable, 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 Initial Closing Date. If such an amendment, if
applicable, 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 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:
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<PAGE> 4
(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;
and
(h) with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding."
SECTION 2. GENERAL AGREEMENT. (a) As specified in the Lease Annexes,
the Lessees and the Lessor intend that this Lease be (i) a true lease with
respect to the Acquired Vehicles and (ii) a financing arrangement with respect
to the Financed Vehicles.
(b) It is the intention of the parties that this Lease together with
the Master Collateral Agency Agreement, as such agreements apply to the Acquired
Vehicles, shall constitute a true lease for commercial law and bankruptcy
purposes. 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 Eligible Receivables financed hereunder, 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 Holders of the Group I Notes (the "Group I Noteholders") and the Additional
Permitted 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 such
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
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<PAGE> 5
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 such 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 or Financed Vehicle identified in Vehicle
Orders (as defined below) produced from time to time by such Lessee, listing
Vehicles ordered by such Lessee from 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 make available to the
Lessees under this Lease financing for Financed Vehicles and Eligible
Receivables, and Acquired Vehicles for lease to the Lessees hereunder, in each
case subject to and in accordance with the terms hereof (including Sections 2.3
and 4 hereof) and of the Indenture. Notwithstanding anything to the contrary
contained in this Lease, the Lessor shall lease to the Lessees, and the Lessees
shall lease from the Lessor pursuant to this Lease, only Vehicles that are
Eligible Vehicles.
(b) Refinanced Vehicles and Eligible Receivables. On or prior to the
applicable Vehicle Funding Date, each of the Lessor, if it desires to lease
Refinanced Vehicles to a Lessee under this Lease, and any Lessee, if it desires
to refinance Refinanced Vehicles and Eligible Receivables under this Lease,
shall prepare or, as applicable, cause the Lessee to 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 the Lessor to be leased to such Lessee under this Lease on such Vehicle
Funding Date or the Refinanced Vehicles of such Lessee and the Eligible
Receivables to be refinanced by such Lessee under this Lease on such Vehicle
Funding Date (each such schedule, a "Refinanced Vehicle Schedule").
(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 such additional Program Vehicle to
be leased hereunder by such Lessee (including, in the case of each such Program
Vehicle subject to the GM Repurchase 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 the related Vehicle
order summaries as is set forth in Attachment A-2 hereto, or in such form as is
otherwise requested by the Lessor (each such Vehicle order summary and each
Refinanced Vehicle Schedule, a "Vehicle Order"), and (iii) the Manufacturer's
invoice. In addition, the applicable Lessee shall provide such other information
regarding Program Vehicles as the Lessor may reasonably require from time to
time. This Lease, together with the Manufacturer Programs and other incentive
programs relating to such Vehicles 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.
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<PAGE> 6
(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 Used Vehicles) under this Lease shall prepare and, upon request of
the Lessor, make available to the Lessor (i) a summary of each such additional
Non-Program Vehicle to be leased hereunder by such Lessee and the Capitalized
Cost thereof, (ii) a Vehicle Order for such Non-Program 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 Non-Program
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 such
Non-Program Vehicles by the Lessor to the Lessees.
(e) Used 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 used Non-Program Vehicle (other than a
Refinanced Vehicle) from a licensed independent automobile dealer, through an
auction, from a manufacturer or pursuant to another vehicle sale (a "Used
Vehicle") for a purchase price equal to the Capitalized Cost of such Used
Vehicle, in which event such Lessee shall, immediately upon the consummation of
such sale, lease such Used Vehicle from the Lessor pursuant to this Lease (each
such transaction is referred to as a "Used Vehicle Transaction"). In connection
with each Used Vehicle Transaction, to evidence the conveyance of the Used
Vehicles from the applicable seller to the Lessor (in the case of Acquired
Vehicles and Company Vehicles) or the applicable Lessee (in the case of Financed
Vehicles other than Company Vehicles), the applicable Lessee shall have obtained
the original Certificate of Title for each Used 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 Used Vehicles covered
by such Used Vehicle Transaction; and
(ii) a bill of sale or other instrument of transfer
customarily used in the wholesale motor vehicle resale market,
conveying title to the Used Vehicles, and copies of any certificate
given by the related auction house regarding the absence of liens
and/or the ownership of each such Used Vehicle.
After any purchase of Used 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 Used Vehicle Transaction, the applicable
Lessee shall complete and deliver an application to retitle such Used Vehicle in
the name of the Lessor (in the case of Acquired Vehicles and Company Vehicles)
or such Lessee (in the case of Financed Vehicles other than Company Vehicles)
and to have noted thereon the Master Collateral Agent's security interest in
such Used Vehicle pursuant to the Master Collateral Agency Agreement.
Section 2.2. Right of Lessee to Act as Lessor's Agent; Titling of
Vehicles in the Name of
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Nominees. (a) The Lessor agrees that each Lessee and the Servicer may act as the
Lessor's agent in placing Vehicle Orders on behalf of the Lessor, conducting
pre-delivery inspection, titling and liening of Vehicles, filing claims on
behalf of the Lessor for damage in transit, and other delivery claims related to
the Vehicles leased hereunder, facilitating payment for Vehicles leased
hereunder and performing any other duties of the Servicer hereunder; provided,
however, that the Lessor may hold the applicable Lessee or the Servicer liable
for losses due to such Lessee's or the Servicer'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 such Lessee at such Lessee's expense to the extent that any
such expense has not been included in the Capitalized Cost of such Vehicle. Each
Lessee agrees to accept Vehicles leased by such Lessee as produced and
delivered, except that each Lessee will have the option to reject upon delivery
any such Program Vehicle that may be rejected pursuant to the terms of the
applicable Manufacturer Program, or any such Non-Program Vehicle in accordance
with the Lessee's customary business practices, and any such 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. Each Lessee or the Servicer (as applicable), acting
as agent for the Lessor, shall be responsible for pursuing any rights of the
Lessor with respect to the return of any such related Vehicle to the
Manufacturer, dealer or other seller thereof pursuant to the preceding sentence.
Each Lessee and the Servicer agrees that all Program Vehicles ordered as
provided herein shall be ordered utilizing the procedures consistent with the
applicable Manufacturer Program.
(b) Notwithstanding any provision in this Lease to the contrary, any
Vehicle titled in the name of a nominee for the Lessor or any Lessee pursuant to
a vehicle title nominee agreement with respect to which the Rating Agency
Confirmation Condition has been satisfied with respect to each Series of Group I
Notes 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 being
refinanced on the Lease Commencement Date, subject to satisfaction of the
requirements of Section 4, the Lessor shall, on the Lease Commencement Date, pay
to the party specified in the Payoff Letter an amount equal to the sum of (x)
the aggregate Net Book Value as of the Lease Commencement Date of the Refinanced
Vehicles which are designated in the Payoff Letter as being refinanced hereunder
on the Lease Commencement Date and (y) the face amount of the Eligible
Receivables being refinanced hereunder on the Lease Commencement Date.
(b) Other Refinanced Vehicles and Eligible Receivables. On any Vehicle
Funding Date after the Lease Commencement Date on which the Lessor or a Lessee
(including any Additional Lessee) desires to refinance Refinanced Vehicles and,
in the case of such Lessee, 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 the related Beneficiary (in the case of a
refinancing of Acquired Vehicles by the Lessor) or pay to or as directed by such
Lessee (in the case of a
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refinancing by such Lessee) an amount equal to (x) the
aggregate Net Book Value as of such Vehicle Funding Date of such Refinanced
Vehicles and, as applicable, (y) the face amount of the Eligible Receivables
being refinanced by such Lessee on such 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
Vehicle Funding Date proposed in the related Vehicle Order 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 to a Manufacturer, dealer or other seller shall be
made in accordance with the payment terms of such Manufacturer, dealer or other
seller, as applicable. The Servicer or the applicable Lessee, as agent of the
Lessor, shall be authorized to transfer funds of the 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, and sales and use tax (if any), 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 Lessee or the Servicer with respect to Vehicles
acquired, financed or refinanced pursuant to this Lease or as incentive payments
(other than incentive payments for selling Program Vehicles outside the related
Manufacturer Program) shall inure to the benefit of such Lessee or the 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 Lessee or the
Servicer, subject in each case to Section 24.10 hereof and Section 2.5(c) of the
Master Collateral Agency Agreement.
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 LEASED BY SUCH LESSEE SHALL CONSTITUTE THE LESSEE'S ACKNOWLEDGMENT AND
AGREEMENT THAT SUCH LESSEE HAS FULLY INSPECTED SUCH VEHICLES, THAT SUCH VEHICLES
ARE IN GOOD ORDER AND CONDITION AND ARE OF THE MANUFACTURE, DESIGN,
SPECIFICATIONS AND CAPACITY SELECTED BY SUCH LESSEE, THAT SUCH LESSEE IS
SATISFIED THAT THE SAME ARE SUITABLE FOR THIS USE AND THAT THE LESSOR IS NOT A
MANUFACTURER, 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
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REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED, WITH RESPECT TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONDITION, QUALITY,
CAPABILITY, WORKMANSHIP, DURABILITY OR SUITABILITY OF SUCH VEHICLES IN ANY
RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES OR USES OF SUCH LESSEE, OR ANY
WARRANTY THAT SUCH 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 SUCH LESSEE, SUCH 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 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 OR OTHER AMOUNTS PAYABLE
HEREUNDER 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 leased under this Lease as
of the Initial Closing Date, the Initial 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
that are not in an Initial Fleet, the date referenced in the Vehicle Order with
respect to such Vehicle, but in no event later than the date that funds are
expended by the Lessor to acquire, finance the acquisition of or refinance such
Vehicle (such date, 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 Initial Closing Date. The "Lease Expiration Date" shall mean the
later of (i) the date of the final payment in full of the last Group I Note
outstanding, and all outstanding Carrying Charges, and (ii) the Vehicle Lease
Expiration Date for the last Vehicle subject to lease by any Lessee
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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:
(a) All conditions to the effectiveness of the Series 1999-1
Supplement and the issuance of the Series 1999-1 Notes thereunder and
the Master Collateral Agency 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
those other documents and matters required of it, in its
capacity as Guarantor, Lessee, 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
Lessee certifying the names of the individual or individuals
authorized to sign this Lease and the other Related Documents
to which it is party, together with a sample of the true
signature of each such individual (the Lessor, the Master
Collateral Agent and the Trustee may conclusively rely on each
such certificate until formally advised by a like certificate
of any changes therein);
(iv) Opinions of Counsel. The opinions of Mayer,
Brown & Platt, special New York counsel for the Lessees and
the Guarantor, and Tripp Scott, P.A., counsel to the Lessees
and the Guarantor, in each case addressed to the Lessor, the
Trustee, the Master Collateral Agent and the Rating Agencies
and satisfactory in form and substance to the addressees
thereof;
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(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;
(vi) Search Reports. A written search report or
reports (which may include reports previously delivered by a
Lessee) 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 Collateral or any Master Collateral for which the Trustee
(on behalf of the Group I Noteholders) is designated as a
Beneficiary (other than liens filed in connection with any
Related Documents);
(vii) Financing Statements. Executed, proper
financing statements on Form UCC-1 with respect to each Lessee
as of the Lease Commencement Date (which financing statements
may include previously filed financing statements), (i) naming
such 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 (as applicable)
perfect and maintain the perfection of the Master Collateral
Agent's interest in the Master Collateral with respect to
which the Trustee (for the benefit of the Group I Noteholders)
is designated as the Beneficiary and (ii) naming such 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 (as
applicable) perfect and maintain the perfection of the
security interest of the Lessor hereunder and the assignment
of the same to the Master Collateral Agent;
(viii) The Series 1999-1 Supplement. An executed copy
of the Series 1999-1 Supplement;
(ix) Indenture. An executed copy of the Indenture;
(x) Master Collateral Agency Agreement. An executed
copy of the 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 Initial Closing Date;
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<PAGE> 12
(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 Initial Closing Date and, from each Lessee, an Officer's
Certificate, dated as of the Initial Closing Date, and duly
executed by an Authorized Officer of such Lessee, certifying
that each such copy is true, correct and complete as of the
Initial Closing Date; and
(xiii) Other. Such other documents as the Master
Collateral Agent, the Trustee or the Lessor may reasonably
request to be delivered on or prior to the Initial Closing
Date.
Section 4.2. Conditions to Each Lease of Vehicles. The agreement of the
Lessor to make available any Acquired Vehicles for lease to a Lessee as
described in a Vehicle Order, to make available financing for the acquisition or
refinancing of any Financed Vehicles for lease to a Lessee as described in a
Vehicle Order, and/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 Vehicles, and each Lessee hereby agrees that each
acceptance of Refinanced Vehicles for leasing hereunder and each acceptance of
funds for the acquisition of Acquired Vehicles, or the financing or refinancing
of Financed Vehicles or Eligible Receivables, in respect of any applicable
Vehicle Orders, 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, financing or refinancing and leasing of
the Vehicles and Eligible Receivables identified in such Vehicle Order will have
been satisfied as of such Vehicle Funding Date.
(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 acquisition, financing or refinancing and leasing
of such Vehicles and Eligible Receivables.
(c) Funding. The aggregate amount of funds to be expended by
the Lessor on any one date to acquire, finance the acquisition of or
refinance such Vehicles and Eligible Receivables 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 Vehicles shall not
be prohibited by
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the provisions of this Lease, and sufficient proceeds shall be
available therefor under the Group I Supplements.
(e) Title. On or prior to the applicable Vehicle Funding Date,
the Lessor or, with respect to Financed Vehicles (other than the
Company Vehicles), the applicable Lessee, as the case may be, shall
have good and marketable title to each such Vehicle, free and clear of
all Liens and encumbrances, other than any Permitted Liens.
(f) Master Collateral Agent. Each Lessee and the Lessor shall
have granted to the Master Collateral Agent, for the benefit of the
Trustee on behalf of the Group I Noteholders, a first priority security
interest in all Vehicles and Eligible Receivables now or hereafter
purchased, financed or refinanced by the Lessor.
(g) Assignment Agreements. On or prior to the applicable
Vehicle Funding Date, the Trustee shall have received executed
counterparts of the Assignment Agreements related to the assignment of
rights under each Manufacturer Program under which such Vehicles will
be or have been purchased and are proposed to be leased under this
Lease, dated as of the Initial Closing Date (or, if later, on or prior
to such Vehicle Funding Date), duly executed by the applicable Lessee
and/or the Lessor, as assignor, and the Master Collateral Agent, as
assignee.
(h) Manufacturer Programs. On or prior to the applicable
Vehicle Funding Date, the Trustee shall have received a copy of each
Manufacturer Program under which such Vehicles will be or have been
purchased and are proposed to be leased under this Lease and an
Officer's Certificate, dated the Initial Closing Date (or, if later, on
or prior to such Vehicle Funding Date), and duly executed by an
Authorized Officer of the Lessor, certifying that each such copy is
true, correct and complete as of the Initial Closing Date (or, if
later, on or prior to such Vehicle Funding Date). Each Manufacturer
Program covering Program Vehicles identified in such Vehicle Order
shall be in full force and effect, and shall be enforceable against the
related Manufacturer in accordance with its terms.
(i) Eligible Vehicle. Each Vehicle identified in such Vehicle
Order shall be an Eligible Vehicle.
Section 4.3. Additional Conditions to Leases of Refinanced Vehicles and
Eligible Receivables. In addition to the conditions set forth in Section 4.2
above, in connection with the leasing of Refinanced Vehicles and refinancing of
related Eligible Receivables (including the refinancing of Eligible Receivables
owned by the Lessor under the Indenture), 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 Lessor and/or the applicable Lessees shall have prepared or caused to
be prepared and, as applicable, made available to the Lessor on or prior to the
applicable Vehicle Funding Date the following:
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(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 the Lessor and/or each Lessee holding
title to such Refinanced Vehicles does business and the county and
state in which, as applicable, the Lessor's and/or each such 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 (or the agent or assignee
thereof) holding a security interest in any such Refinanced Vehicle
and/or Eligible Receivable stating unconditionally (A) that, if any
sums are to be paid to such lender (or such agent or assignee) in
connection with the lease of such Refinanced Vehicle and the
refinancing of the related Eligible Receivables, such lender (or such
agent or assignee) 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 (or any such agent or assignee) in such
Refinanced Vehicle and/or 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 Eligible Receivables, the related Manufacturer
Programs, if any, and any other Master Collateral relating to such
Refinanced Vehicles and Eligible Receivables;
(e) with respect to any of such Refinanced Vehicles which are
in an Initial Fleet, each Lessee thereof shall have delivered to the
Master Collateral Agent a duly executed Vehicle Assignment and Nominee
Agreement in form reasonably satisfactory to the Lessor and the
Trustee;
(f) fully executed UCC-1 Financing Statements as 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 (as applicable) a representation that each such
receivable is an Eligible Receivable.
SECTION 5. RENT AND CHARGES. Each Lessee will pay Rent and certain
other
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charges on a monthly basis as set forth in this Section 5.
Section 5.1. Payment of Rent. On each Payment Date, and on each other
date on which interest is due and payable under the terms of a Group I
Supplement, each Lessee shall pay to the Lessor the aggregate of all Rent
payable on such Payment Date or other date, as the case may be, with respect to
the Vehicles leased by such Lessee, as provided in the related Lease Annexes.
Section 5.2. Reserved
Section 5.3. Payment of Monthly Supplemental Payments. On each Payment
Date, each Lessee shall pay to the Lessor the portion of the Monthly
Supplemental Payment that has accrued during the Related Month with respect to
the Financed Vehicles and Eligible Receivables previously leased or financed by
such Lessee under the Financing Lease, as provided in Sections 6 and 7 of Annex
B.
Section 5.4. 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 Vehicles leased
hereunder by such Lessee, as provided in, respectively, Sections 7 and 12.3 of
this Lease.
Section 5.5. Late Payment. In the event any Lessee fails to remit
payment of any amount due under this 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 on each Payment
Date with respect to the related 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 during such Interest 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 times (c)
the actual number of days elapsed during such Interest Period or such relevant
portion thereof divided by 360.
Section 5.6. 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
Group I Collection Account or, in the case of payments made pursuant to Section
24.10(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 pursuant to Section 15 to, or for the account
of, any Indemnified Person other than the Lessor, 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
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under the Manufacturer Programs, (ii) amounts representing the proceeds from
sales of Program Vehicles and Non-Program Vehicles (including amounts paid to a
Lessee or the Lessor by a Manufacturer as a result of the sale of any such
Vehicle outside such Manufacturer's Manufacturer Program) to third parties
(other than under any related Manufacturer Program) and (iii) payments with
respect to any other Master Collateral for the Group I Notes (other than certain
amounts as and to the extent described in Section 2.3(d)), shall be deposited in
the Master Collateral Account for the benefit of the Trustee (on behalf of the
Group I Noteholders) and the Additional Permitted 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 Vehicle suffers a
Casualty or ceases to be an Eligible Vehicle, then the Lessee thereof shall (a)
cause the Servicer to include notice of such occurrence in the next related
Monthly Certificate required to be delivered by the Servicer under Section
24.6(vi), and (b) on the Payment Date next succeeding the last day of the
Related Month in which such Lessee obtained actual knowledge that such Vehicle
has suffered 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 such Lessee
obtained actual knowledge that such Vehicle suffered a Casualty or ceased to be
an Eligible Vehicle (net of Monthly Base Rent and Monthly Supplemental Payments
made in respect of such Vehicle during such Related Month). Upon payment by the
applicable Lessee to the Lessor in accordance herewith of the Casualty Payment
for any Vehicle that has suffered a Casualty or ceased to be an Eligible
Vehicle, (i) the Lessor, if requested by such Lessee, shall cause title to any
such Vehicle that is an Acquired Vehicle to be transferred to such Lessee to
facilitate liquidation of such Vehicle by the Lessee, (ii) such Lessee shall be
entitled to any physical damage insurance proceeds applicable to such Vehicle
(if at such time such 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 or a lessee under any other Leasing Company Lease to
use Vehicles leased by the Named Lessee hereunder in the ordinary course of the
domestic daily rental car operations of such other Lessee or lessee (but the
Named Lessee shall remain fully liable for its obligations under this Lease and
the other Related Documents); provided further that 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
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rental car operations; provided further, however, that the aggregate Net Book
Value of all Vehicles subject to Fleet Sharing Agreements on any day plus the
aggregate Net Book Value (as defined in the applicable Leasing Company Lease) of
all Vehicles (as defined in the applicable Leasing Company Lease) leased under
all other Leasing Company Leases subject to Fleet Sharing Agreements (as defined
in the applicable Leasing Company Lease) on such day shall not exceed an amount
equal to the greater of (a) 10% of the sum of the aggregate Net Book Value of
all Vehicles leased under this Lease and the aggregate Net Book Value (as
defined in the applicable Leasing Company Lease) of all Vehicles (as defined in
the applicable Leasing Company Lease) leased under all such other Leasing
Company Leases on such day, and (b) such greater amount in respect of which the
Rating Agency Confirmation Condition with respect to each Series of Group I
Notes shall have been satisfied; provided, however, any such Rating Agency
Confirmation Condition in respect of Moody's shall be satisfied if Moody's is
given prior written notice of the intention to increase the preceding 10%
limitation to a greater amount pursuant to clause (b). Notwithstanding any such
Lessee Agreement, each 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 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
Company 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 Vehicles as noted
(other than in respect of any 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 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 any 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 in connection with, or as a result of, such change
of location. 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 each applicable Fleet Sharing Party to perform, at
its own expense, such vehicle preparation and conditioning services with respect
to Vehicles leased by it as are customary.
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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 Vehicles reflecting the name of the Lessor (in the case of Acquired
Vehicles and Company Vehicles) or such Lessee (in the case of all other Financed
Vehicles), in each case (other than with respect to Vehicles in an Initial
Fleet) with the Lien of the Master Collateral Agent noted thereon as first
lienholder, and where required, such Lessee shall or shall cause the related
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 or an Affiliate thereof (including the related
Sub-Servicer) unless a Liquidation Event of Default or 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 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 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 such Lessee, will be reimbursed within thirty (30) days of the Lessor
notifying such 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 such 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 Lessees to title, register and dispose of the Acquired
Vehicles and the Company Vehicles leased hereunder; 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 related 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 such Fleet Sharing Parties to take reasonable steps to maintain
such Vehicles as required in order to keep the Manufacturer's warranty in force.
Each Lessee shall or shall cause the related 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
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work. Each Lessee shall or shall cause the related Fleet Sharing Parties to take
reasonable steps to comply with any Manufacturer's recall of any Vehicle. Each
Lessee shall or shall cause the related Fleet Sharing Parties to pay, or cause
to be paid, all usual and routine expenses incurred in the use and operation of
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), 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 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 or sale under
the applicable Manufacturer Program or (ii) any 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 a Lessee shall remain the property of
such 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 leased hereunder 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 "Vehicle
Turn-In Condition" with respect to each Program Vehicle leased hereunder shall
mean a set of criteria for evaluating such Vehicle upon its delivery at the end
of its 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 (or will otherwise be the subject of a Casualty Payment) 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 Manufacturer under 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
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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; provided,
that the timing of such delivery by the Lessee will be at its option so long as
such delivery is made in accordance with Section 24.5 hereof. 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 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, on behalf of the Lessor in
the case of Non-Program Acquired Vehicles, each 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;
provided that Lessee may commence such efforts, at its option, any time prior to
the expiration of the Non-Program Maximum Term.
Section 12.3. Termination Payments for Acquired Vehicles. (a) Program
Vehicle Termination Payments. On the first Payment Date on or after the earlier
of (i) the last day of the Related Month in which the Repurchase Price with
respect to any Program Vehicle that is an Acquired Vehicle that has been
accepted for repurchase or sale pursuant to the applicable Manufacturer Program
is received by the applicable Lessee, the Lessor, the Master Collateral Agent or
the Trustee by deposit into the Master Collateral Account or the Group I
Collection Account (provided that, if for any reason the Repurchase Price has
been received directly by a Lessee, then such Repurchase Price shall be deemed
"received" for purposes of this Section 12.3 on the earlier of (a) the date on
which such Repurchase Price has been deposited into the Group I Collection
Account or Master Collateral Account, in accordance with the Master Collateral
Agency Agreement and (b) the second Business Day after receipt by such Lessee)
and (ii) the thirtieth (30th) day after the expiration of the Repurchase Period
for such Acquired Vehicle, the applicable Lessee shall pay to the Lessor in
respect of such Acquired Vehicle any Excess Damage Charges, Excess Mileage
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.
(b) Non-Program Vehicle Termination Payments. On the first Payment Date
on or after the earlier of (i) the last day of the Related Month in which the
Disposition Proceeds from the sale or other disposition of an Acquired Vehicle
that is a Non-Program Vehicle (other than a Casualty or a Vehicle that has
ceased (prior to such sale or disposition) to be an Eligible Vehicle or that has
been repurchased by the Lessee thereof in accordance with this Lease) are
received by
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the applicable Lessee, the Lessor, the Master Collateral Agent or the Trustee
by deposit into the Master Collateral Account or the Group I Collection Account
(provided that, if for any reason the Disposition Proceeds have been received
directly by a Lessee, then, such Disposition Proceeds shall be deemed "received"
for purposes of this Section 12.3 on the earlier of (a) the date on which such
Disposition Proceeds have been deposited into the Group I Collection Account or
the Master Collateral Account, in accordance with the Master Collateral Agency
Agreement and (b) the second Business Day after receipt by such Lessee) and (ii)
the thirtieth (30th) day after the Disposition Date for such Acquired Vehicle,
the applicable Lessee shall pay to the Lessor in respect of such Acquired
Vehicle an amount (a "Non-Program Vehicle Termination Payment") equal to (A) the
sum of all Program Vehicle Termination Payments due on the Payment Date that
occurred in the second preceding calendar month to the calendar month during
which the Vehicle Lease Commencement Date with respect to such Acquired Vehicle
occurred, divided by (B) the number of Acquired Vehicles previously leased under
this Lease in respect of which such Program Vehicle Termination Payments were
payable (or, if there are no Acquired Vehicles in respect of which Program
Vehicle Termination Payments were payable on such Payment Date, an amount equal
to (A) the sum of all "Program Vehicle Termination Payments" paid or payable
under (and as defined in) each other Leasing Company Lease with respect to the
Payment Date (as defined in such other Leasing Company Lease) that occurred in
the second preceding calendar month to the calendar month during which the
Vehicle Lease Commencement Date with respect to such Acquired Vehicle occurred,
divided by (B) the number of Acquired Vehicles (as defined in such other Leasing
Company Lease) previously leased under (and as defined in) each such other
Leasing Company Lease in respect of which such Program Vehicle Termination
Payments were paid or were payable) (Program Vehicle Termination Payments and
Non-Program Vehicle Termination Payments being referred to collectively as
"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 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 of this Lease.
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 any such 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 (or the related Sub-Servicer)
may designate the related Vehicle as a Non-Program Vehicle; provided that no
Amortization Event or Potential Amortization Event
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with respect to any Series of Group I Notes has occurred and is continuing or
would be caused by such redesignation; and provided further, in each case, that
any additional Monthly Base Rent due with respect to 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. Subsequent to the occurrence of a Manufacturer Event of Default pursuant
to clause (ii) of the definition thereof with respect to the Manufacturer of any
Program Vehicle, the Servicer (or the related Sub-Servicer) shall promptly
notify the Rating Agencies with respect to each Series of Group I Notes of any
redesignation of Program Vehicles of such Manufacturer as Non-Program Vehicles
pursuant to this Section 14.
(b) At any time, the Servicer (or the related Sub-Servicer) may
designate a Non-Program Vehicle as a Program Vehicle if the related Manufacturer
has acknowledged that such Vehicle is entitled to the benefits of its
Manufacturer Program; provided further, in each case, that any additional
Monthly Base Rent due with respect to such Vehicle, relating to the decrease, if
any, of the Net Book Value of such Vehicle under the newly applicable
depreciation schedule specified under such Manufacturer Program, shall be paid
on the next succeeding Payment Date.
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, 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 Vehicle or the acquisition, purchase, sale, lease,
rental, use, operation, control, ownership or disposition of any Vehicle by any
Person or measured in any way by the value thereof or by the business of,
investment by, or ownership by
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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 any Lessee that files any tax
returns on a consolidated or combined basis, and (iii) documentary, stamp,
filing, recording, mortgage or other taxes, if any, which may be payable by the
Lessor, 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 Vehicles hereunder and any penalties or interest
with respect thereto; provided, however, that the following taxes are excluded
from the indemnity provided in clauses (i) through (iii) above:
(A) any franchise tax or tax on, based on, with
respect to, or measured by the net income of such Indemnified
Person (including federal alternative minimum tax) other than
any taxes or other charges which may be imposed as a result of
any determination by a taxing authority that the Lessor is not
the owner for tax purposes of the Acquired Vehicles leased
hereunder or that the Operating Lease is not a "true lease"
for tax purposes or that depreciation deductions that would be
available to the owner of such Acquired Vehicles are
disallowed, or that the Lessor is not entitled to include the
full purchase price for any such Vehicle in basis including
any amounts payable in respect of interest charges, additions
to tax and penalties that may be imposed, and all attorneys'
and accountants' fees and expenses and all other fees and
expenses that may be incurred in defending against or
contesting any such determination; and
(B) any tax with respect to any Acquired Vehicle
leased by a Lessee hereunder or any transaction relating to
such Acquired Vehicle to the extent it covers any period
beginning after the earlier of (A) the discharge in full of
such Lessee's obligation to pay Monthly Base Rent, Monthly
Variable Rent and any other amount payable hereunder with
respect to such Acquired Vehicle or (B) the expiration or
other termination of this Agreement with respect to such
Acquired Vehicle, unless such tax accrues in respect of any
period during which such Lessee holds over such Acquired
Vehicle;
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 Vehicle or any action or
transaction by a Lessee with respect thereto or pursuant to this Lease;
Section 15.1.4. 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, in
connection with any audit or investigation conducted by a Manufacturer
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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 Lessees 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. Reimbursement Obligation by the Lessees. Each Lessee
shall forthwith upon demand reimburse each Indemnified Person 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; provided, however, that, if
so requested by a Lessee, such Indemnified Person shall submit to such Lessee a
statement documenting in reasonable detail any such demand for reimbursement or
payment. To the extent that a Lessee in fact indemnifies any Indemnified Person
under the indemnity provisions of this Lease, such Lessee shall be subrogated to
the rights of such Indemnified Person, 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 15.3. Notice to Lessee of Claims. Each applicable Indemnified
Person, 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 15.4. 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 any applicable Lessee, be conducted by such Lessee. Following receipt
of any Notice of Claim, such 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 such Lessee's
reasonable opinion, does not interfere with such Lessee's defense. Each Lessee
agrees that no Indemnified Person will be liable to the Lessees 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
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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 a Lessee may have against any Manufacturer.
SECTION 16. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Lease shall be
binding upon the Lessor, the Lessees, the Servicer, the Guarantor and their
respective successors and assigns, and shall inure to the benefit of the
Lessees, the Lessor, the Servicer, the Guarantor and the Trustee (for the
benefit of the Group I Noteholders), the Master Collateral Agent (for the
benefit of the Trustee on behalf of the Group I Noteholders) and the Additional
Permitted Beneficiaries, any other Indemnified Person, and their respective
successors and assigns; provided, however, that neither the Guarantor nor any
Lessee shall have the right to assign its rights or delegate its duties under
this Lease without (i) the prior written consent of the Lessor and the Trustee
and (ii) the Rating Agency Confirmation Condition, if any, with respect to each
Series of Group I Notes having been satisfied prior thereto; provided, further,
however, that nothing herein contained shall be deemed to restrict (w) the right
of any Lessee to rent Vehicles to customers in the ordinary course of its
domestic daily rental businesses, (x) the right of any Named Lessee to permit
another Lessee or a lessee under any other Leasing Company Lease to use Vehicles
leased by the Named Lessee hereunder in the ordinary course of the domestic
daily rental car operations of such other Lessee or 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 the
Servicer to perform its obligations as Servicer through a Sub-Servicer, subject
to the limitations specified in Section 26 and provided that the 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 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
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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
(other than amounts described in clause (i) above) and the continuance thereof
for five (5) Business Days;
Section 17.1.2. Unauthorized Assignment. Any unauthorized assignment or
transfer of this Lease by a Lessee occurs;
Section 17.1.3. Non-Performance of Covenants and Obligations. Any
Lessee, the 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, the Trustee or any Group I
Noteholder delivers written notice thereof to such Lessee, the Servicer or the
Guarantor and (y) the date such Lessee, the Servicer or the Guarantor obtains
actual knowledge thereof;
Section 17.1.4. Breach of Representation or Warranty. Any
representation or warranty made by a Lessee, the 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 (and otherwise, is incorrect in any respect)) 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 (and otherwise, continues
to be incorrect in any 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
such Lessee, the Servicer or the Guarantor by the Lessor, the Master Collateral
Agent, any Group I Noteholder or the Trustee, and (ii) the date on which such
Lessee, the Servicer or the Guarantor obtains actual knowledge thereof; or any
schedule, certificate, financial statement, report, notice, or other material
writing furnished by a Lessee, the Servicer or the Guarantor to the Lessor or
the Trustee is false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified and 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, the Servicer or the Guarantor by the Lessor, the Master Collateral
Agent, the Trustee or any Group I Noteholder, and (b) the date on which such
Lessee, the Servicer or the Guarantor obtains actual knowledge thereof;
Section 17.1.5. Event of Bankruptcy. 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
this Lease 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 the Guarantor, as applicable, seeking to establish the
invalidity or unenforceability thereof (exclusive of questions of interpretation
of any provision
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thereof);
Section 17.1.7. Certain Amortization Events. The occurrence of an
Amortization Event under Section 9.1(d) or (g) of the Base Indenture or Section
7.1(b) of the applicable Group I Supplement or a Liquidation Event of Default
which in any such case continues beyond any applicable cure period specified in
the Indenture;
Section 17.2. Effect of Lease Event of Default; 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 or 17.1.7 shall occur,
then the Monthly Base Rent, Additional Base Rent, Monthly Supplemental Payments,
Casualty Payments (in each case calculated as if all Financed Vehicles had
suffered 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 Group I 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 Limited Liquidation Event of Default shall occur with respect
to any Series of Group I Notes, then, the Monthly Base Rent, Additional Base
Rent, the Monthly Supplemental Payments and Casualty Payments (in each case,
calculated as if each Financed Vehicle with respect to which the Lessor has
terminated the applicable Lessee's right to possession pursuant to Section
17.3(ii) or (iii) had suffered 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 such Group I 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 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 Limited Liquidation Event of Default. If a Lease
Event of Default, Liquidation Event of Default or 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, 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
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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
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, shall have all the rights
against the Lessees and the Collateral provided in the Indenture upon
such a Liquidation Event of Default or a Limited Liquidation Event of
Default, as the case may be, including the right to take (under the
specified circumstances) possession of 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, terminate this Lease in its entirety and/or the right
of possession hereunder of the Lessees as to the Vehicles, and the
Lessor may direct delivery by the Lessees of documents of title to the
Vehicles, whereupon all rights and interests of the Lessees to the
Vehicles (except as otherwise provided 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
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 Group I Notes or to
pay such lesser amount as is required to be paid pursuant to the
applicable Group I Supplement, 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 such 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 such 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 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 applicable 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
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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) (a) If a Lessee shall default in the due performance and
observance of any of its obligations under Section 10, 24.4, 24.5,
24.6(iv), 24.6(viii), 24.7 (only to the extent such Lessee defaults in
the performance of its obligation to pay titling fees and registration
fees with respect to Vehicles under such Section 24.7) 24.8, 25.3 or
25.4 hereof, and such default shall continue unremedied for a period of
30 days (other than in the case of a default under Section 24.5, for
which the period will be 10 days) after notice thereof shall have been
given to such Lessee by the Lessor or the Master Collateral Agent or
(b) an Affiliate Issuer Liquidation Event of Default relating to an
"Enhancement Deficiency" with respect to any series of ARG Notes shall
have occurred, 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) Vehicles such Lessee has determined to turn back to
the Manufacturers under such Manufacturer Programs and (2) whether or
not such Lessee shall then have determined to turn back such Vehicles,
any 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 24.15 hereof with respect to any
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 such Lessee or the Lessor, as
applicable;
(vi) Upon the occurrence of a Liquidation Event of Default,
the Servicer will return or cause to be returned all Vehicles which are
Program Vehicles to the related Manufacturer and will otherwise dispose
of Non-Program Vehicles, in each case in accordance with the
instructions of the Lessor. Upon the occurrence of a Limited
Liquidation Event of Default, the Servicer will return or cause to be
returned Vehicles
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which are Program Vehicles to the related Manufacturer and will
otherwise dispose of Non-Program Vehicles, in each case 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 Group I Notes or to pay such lesser amount as is
required to be paid pursuant to the applicable Group I Supplement, 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 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 Sections 7.2 and 7.3 of the applicable Group I
Supplement and the Guarantor 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
(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 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 reasonable 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
5.5, 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
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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 clauses (i) through (iii) above have been paid to the
Lessor, the Master Collateral Agent or the Trustee from the liquidation of the
Financed 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 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 under this Lease (such proceeds to be applied first, to outstanding
Monthly Variable Rent and Monthly Finance Rent pro rata, second, to outstanding
Monthly Base Rent, Monthly Supplemental Payments and Additional Base Rent, pro
rata, third, to outstanding Termination Payments and Casualty Payments pro rata
and fourth, to outstanding late charges pursuant to Sections 5.5 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. Upon the occurrence of a
Manufacturer Event of Default set forth in clauses (i) or (ii) of the definition
thereof 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"), 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). Notwithstanding the foregoing , upon the occurrence of
a Manufacturer Event of Default set forth in clause (iii) of the definition
thereof with respect to a Manufacturer (each, a "Defaulted Manufacturer"), the
Lessees on behalf of the Lessor (a) shall no longer place Vehicle Orders for
additional Program Vehicles from such Defaulted Manufacturer, and (b) shall
cancel any Vehicle Order for Program Vehicles of such Defaulted 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 the Lessees shall not be
required to cancel Vehicle Orders for Non-Program Vehicles of such Defaulted
Manufacturer.
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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 such 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 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 such 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 and the Guarantor 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 Group I Noteholders), in all of its right, title and interest in,
to and under the Vehicles, the related Manufacturer Programs, the Master
Collateral Account and all other related Master Collateral specified in the
Master Collateral Agency Agreement as being pledged by any Lessee or the Lessor,
and each Lessee and the Guarantor further acknowledges that the Lessor, pursuant
to the Receivables Trust Agreement has conveyed to the Receivables Trustee, all
the Lessor's right, title and interest in respect of the Lease Payment Rights
and the Manufacturer Payment Rights and that, pursuant to the Group I
Supplements and the Indenture, the Lessor has granted a security interest to the
Trustee (for the benefit of the Group I Noteholders) in all of its right, title
and interest in, to and under the Collateral Agreements (other than the Lease
Payment Rights, and the Manufacturer Payment Rights), the Receivables Trust
Agreement, the Beneficial Interest, the Group I Collection Account and the other
Collateral described in the Group I 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
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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 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 (or such designee), 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;
(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 Group I Collection Account
established by the Trustee for receipt of such payments pursuant to the
Indenture and the Group I 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 9.2(c)
of the Base Indenture (including, without limitation, any Financed
Vehicles), and for such other purposes as are necessary or desirable to
effectuate the provisions of the Indenture and for that purpose the
Trustee may execute and deliver all necessary deeds, bills of sale and
instruments of assignment and transfer, and may substitute one or more
Persons with like power, 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(d) of the Base Indenture, the
Trustee may, without notice to the Lessor (unless such notice is
required by applicable state law), the 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 Vehicles
pending the sale thereof and in
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any such event the Trustee shall be entitled to the appointment of a
receiver for the Vehicles, and none of the Lessor, the 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 such 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.
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 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.
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 Group I Noteholders, enter into any
amendment, supplement or other modification to this Lease to cure any apparent
mistake, ambiguity or defect or to correct or supplement any provision in this
Lease that may be inconsistent with any other provision herein or to make any
other provisions with respect to matters or questions arising under this Lease;
provided, however, that (i) any such action shall not have a materially adverse
effect on the interests of any Group I 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 and (as applicable) 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
the Servicer represents and warrants to the Lessor, as to itself and the
Vehicles leased by it, and the Guarantor represents and warrants to the Lessor
as to itself and as to each Lessee and the Servicer and as to all Vehicles,
that, as of the Initial 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
subsequent Series of Group I Notes:
Section 23.1. Organization; Power; Qualification. The Guarantor and
each Lessee (i) is a corporation, limited liability company or partnership, as
applicable, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, as applicable, (ii)
has the requisite power and authority to own its properties and to
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carry on its business as now being and hereafter proposed to be conducted, and
(iii) is duly qualified, in good standing and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
businesses requires such qualification or authorization, except where the
failure to so qualify is not reasonably likely to have a Material Adverse
Effect.
Section 23.2. Authorization; Enforceability. The Guarantor (in its
capacities as Guarantor and as Servicer) and each Lessee has the requisite 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 and the Guarantor (in its
capacities as Guarantor and as Servicer) 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, the 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 or other organizational documents, if applicable, of any Lessee, the
Servicer or the Guarantor, or under any indenture, agreement, or other
instrument to which any Lessee (in its capacities as Lessee or otherwise) or the
Guarantor (in its capacities as Guarantor or as Servicer), 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 24.6 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 (i) the
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audited consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as of December 31, 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, and (ii) the unaudited consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries as of September 30, 1998 and the
related statements of income, changes in stockholders equity and cash flow as of
and for the nine months ended September 30, 1998, which (in the case of clause
(i) and (ii) above) 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 claim,
litigation (including, without limitation, derivative actions), arbitration,
governmental investigation or proceeding or inquiry is pending or, to the best
of the Guarantor's and each 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 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 Vehicles and all the other Master Collateral with respect to
which the Trustee (for the benefit of the Group I Noteholders) and any
Additional Permitted Beneficiary is designated as the Beneficiary under the
Master Collateral Agency Agreement. All Vehicle Perfection and Documentation
Requirements with respect to all Vehicles (other than Vehicles in any Initial
Fleet) on or after the date hereof have been 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 Group I 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 Initial
Closing Date and the Closing Date for each other Series of Group I Notes, no
steps have been taken by the Guarantor, any Lessee, or any member of their
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 their 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 is a company "controlled" by an "investment company",
within the meaning of the
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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 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 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 Vehicles to violate Regulation 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 Initial Closing Date; and Schedule 23.10 also lists
as of the Initial Closing Date the legal name of each Lessee and the Guarantor
and each name under or by which each Lessee conducts its business and each state
in which such Lessee 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
Initial 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. 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 a Lessee (other than another
Lessee or a lessee under any other Leasing Company
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Lease using, pursuant to Section 8, Vehicles leased by such Named Lessee) 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 23.14. 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 or such Lessee, as applicable, 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 23.15. 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 23.16. 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 23.17. Necessary Actions. Upon the Servicer causing the Lien of
the Master Collateral Agent to be noted on the Certificates of Title with
respect to the Vehicles (other than Vehicles in any Initial Fleet) 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 23.18. 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 as of the date of such Vehicle Order or
other Supplemental Document, true, correct and complete in all material
respects.
Section 23.19. Year 2000. The Servicer and each of the Lessees has
reviewed the areas
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within their business and operations which could be adversely affected by, and
have developed programs to address on a timely basis, the "Year 2000 Problem"
(that is, the risk that computer applications used by the Servicer or the
Lessees may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999). Based on
such review and programs, the Servicer and each such Lessee reasonably believes
that the "Year 2000 Problem" will not result in a Material Adverse Effect, with
respect to the Servicer or such Lessee, as applicable.
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS. Each Lessee and, as
applicable, the Servicer and the Guarantor, covenants and agrees that, until the
expiration or termination of this Lease, and thereafter until the obligations of
such Lessee, the Servicer and the Guarantor 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 and 24.3 (as it relates to
keeping adequate books and records of account in which complete entries will be
made), 24.5, clauses (iii) through (viii) of Section 24.6 and Sections 24.7,
24.10, 24.11, 24.12 and 24.15) 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
(a) existence as a corporation, limited liability company or partnership, as
applicable, and (b) 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 such
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 (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 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 such
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Lessee or the 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 such Lessee's (or the Servicer's) performance under this
Lease with such Lessee's or Servicer's independent public accountants or with
any of the officers or employees of such Lessee or the 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 such Lessees' or the Fleet
Sharing Parties' business and subject to applicable law, to inspect Vehicles and
registration certificates, Certificates of Title and related documents covering
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 on any date shall perform such
examination at the same time as the other such parties performing such
examination of such material on such date.
Section 24.3. Accounting Methods; Financial Records. Maintain, and
cause its material Subsidiaries to maintain, a system of accounting established
and administered in accordance with GAAP, keep, and cause its material
Subsidiaries to keep, adequate records and books of account in which complete
entries will be made in accordance with such accounting principles and
reflecting all transactions required to be reflected by such accounting
principles and keep, and cause its material Subsidiaries to keep, accurate and
complete records of their respective properties and assets.
Section 24.4. Insurance. (a) Maintain or cause to be maintained, with
financially sound and reputable insurers 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, in each case, 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 such 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 which relative to Vehicles registered,
licensed, rented or to be used in the state
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of Florida shall be in an amount which contains limits of not less than $100,000
per claim and $300,000 per occurrence for bodily injury liability and $50,000
property damage liability and bodily injury liability; provided, further,
however, that the Lessees shall obtain excess insurance coverage in an amount
not less than $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 24.5. 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 or Section 8 of Annex A hereto 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 applicable 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 Group I Collection Account the
purchase price therefor in cash in the amount so required, (iii) in the case of
any Vehicle that suffers a Casualty or ceases to be an Eligible Vehicle,
deposits to the Group I 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 24.6. Reporting Requirements. Except as otherwise specified below,
furnish, or cause to be furnished to the Lessor, the Master Collateral Agent and
the Trustee:
(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 Consolidated Subsidiaries as at
the end of such fiscal year and statements of income, stockholders'
equity and cash flows of the Guarantor and its Consolidated
Subsidiaries for such fiscal year, setting forth in comparative form
the corresponding figures for the preceding fiscal year (if
applicable), certified by and containing an opinion, unqualified as to
scope, of a firm of 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 an
Authorized Officer of the Guarantor, 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 Consolidated
Subsidiaries, and certifying that
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no Potential Lease Event of Default or Lease Event of Default has
occurred which was continuing at 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 Consolidated Subsidiaries as at the end of such quarter and
statements of income, stockholders' equity and cash flows of the
Guarantor and its Consolidated Subsidiaries for each such quarter,
setting forth in comparative form the corresponding figures for the
corresponding periods of the preceding fiscal year (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 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 Vehicle
leased hereunder during the Related Month by each Lessee, (ii) whether
such Vehicle is leased under Annex A or Annex B hereto, (iii) the
Capitalized Cost for each such Vehicle and (iv) the aggregate Net Book
Value of such Vehicles as of the end of the Related Month;
(v) Daily Reports. The Servicer shall deliver to the Master
Collateral Agent, on each Business Day, a copy of the most recent
Daily Report (as defined below). On each Business Day commencing on
the Lease Commencement Date, the Servicer shall prepare or cause to be
prepared and maintain at its office a record (each, a "Daily Report")
setting forth the aggregate of the amounts deposited in the Group I
Collection Account on the immediately preceding Business Day, which
shall consist of: (A) the aggregate amount of payments received from
Manufacturers and/or auction dealers under Manufacturer Programs
related to the Vehicles and deposited in the Group I Collection
Account from the Master Collateral Account or otherwise, plus (B) the
aggregate amount of proceeds received from third parties (other than
Manufacturers and auction dealers under Manufacturer
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Programs) with respect to the sale of Vehicles and deposited in the
Group I Collection Account from the Master Collateral Account or
otherwise, plus (C) the aggregate amount of other Collections
deposited in the Group I Collection Account;
(vi) Monthly Noteholder's Statement. (a) On or before each
Determination Date, an Officer's Certificate of the Servicer (each, a
"Monthly Noteholder's Statement"), and (b) no later than 4:00 p.m.
(New York City time) on the day preceding each Payment Date (provided,
however, that if such day preceding a Payment Date is not a Business
Day, then no later than 10:00 a.m. (New York City time) on such
Payment Date), a supplementary Officer's Certificate of the Servicer
(each, a "Supplementary Noteholder's Statement"), in each case, with
respect to each Group I Supplement in such form and setting forth such
information as such Group I Supplement requires with respect thereto;
(vii) Non-Program Vehicle Report. On June 30, 1999 and December
31, 1999, and on an annual basis thereafter on December 31 of each
year, or as otherwise agreed by Standard & Poor's, the 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 with respect to
each Group I Supplement (each, a "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
as are specified in such Group I Supplement;
(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. With respect to any Pension Plan maintained by any
member of the Guarantor's or any Lessee's Controlled Group, promptly
after becoming aware thereof, notice of (x) the termination of any
such Pension Plan; (y) the failure to make a contribution to any such
Pension Plan 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 such 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;
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(xi) Notice of Final Judgment. Promptly upon becoming aware
thereof, provide to Moody's notice of any final judgment rendered
against the Lessor; and
(xii) Other. Promptly, from time to time, such other information,
documents, or reports respecting the Vehicles or the other Master
Collateral or the condition, financial or otherwise, or operations of
the Guarantor, the Lessees or the Servicer as the Lessor, the Master
Collateral Agent or the Trustee may from time to time reasonably
request in order to protect the interests of the Lessor, the Master
Collateral Agent or the Trustee under or as contemplated by this Lease
or any other Related Document.
Section 24.7. 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 24.8. Maintenance of the Vehicles. (i) Maintain and cause to be
maintained in good repair, working order, and condition all of the Vehicles in
accordance with its ordinary business practices with respect to all other
vehicles owned 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, the Group I Noteholders or the Trustee in, to and under this
Lease, the Master Collateral Agency Agreement and its supplements and addenda,
the Indenture and the Group I Supplements then in effect or the likelihood of
the Lessee's payment of its obligations hereunder and (ii) perform (subject to
any applicable grace periods) all of its obligations as Servicer as set forth in
the Master Collateral Agency Agreement.
Section 24.9. 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 those certain opinion letters
issued by Mayer, Brown & Platt, in each case dated February 26, 1999 addressing,
respectively, the issue of substantive consolidation as it may relate to the
Guarantor, the Lessees and the Lessor and the treatment of the Operating Lease
as a true lease for bankruptcy purposes (a copy of which opinion letters 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 24.9.
Section 24.10. 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
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Persons (including payments contemplated by Section 12.2) with respect to any
Master Collateral to be made (subject to the proviso to this Section) directly
to the Master Collateral Account; (iii) in the case of any such payments with
respect to any Master Collateral received directly by a 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 a 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 such Lessee
by a Manufacturer as a result of such Lessee's sale of such Vehicle outside such
Manufacturer's Manufacturer Program) of Vehicles by a 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 24.11. 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 Vehicles in any
Initial Fleet) to the appropriate state authority for notation of the Master
Collateral Agent's lien thereon (it being understood and agreed that pursuant
and subject to the Master Collateral Agency Agreement, the original Certificates
of Title relating to the Vehicles and reflecting such lien notation by the
appropriate state authority shall be held by the applicable Sub- Servicer
thereof or by the Servicer or by an Affiliate thereof, in trust for the benefit
of the Master Collateral Agent and the Trustee as 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 annually upon 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 statistical sample of titles (such
statistical sample to be compiled taking into account the multiple locations at
which the Certificates of Title with respect to the Vehicles are held by the
Sub-Servicers and/or the Servicer or such Affiliates thereof) by the Servicer's
primary certified public accountants or another independent nationally
recognized firm of certified public accountants acceptable to the Group I
Noteholders, the Lessor, the Trustee and the Master Collateral Agent designed to
provide a 95% confidence level that no more than 5% of the Certificates of
Titles (other than titles of such Vehicles in any Initial Fleet or any
Refinanced Vehicles) do 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 the Financed Vehicles other than Company Vehicles,
the applicable Lessee) be listed as registered owner on such titles and cause
such accountants to deliver a report stating, with the confidence level of at
least 95%, that no more than five percent (5%) of the Certificates of Title do
not correctly reference the lienholder or owner of the Vehicles described in the
immediately preceding clause; 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 Vehicles.
Section 24.12. Master Collateral Agency Agreement. Concurrently with
each leasing of a Vehicle under this Lease or financing of an Eligible
Receivable under this Lease, indicate on its
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computer records that the Master Collateral Agent as assignee of the Lessor or
the applicable Lessee, as the case may be, is the holder of a Lien on such
Vehicle or Eligible Receivable, as the case may be, for the benefit of the
Trustee (on behalf of the Group I Noteholders) and the Additional Permitted
Beneficiaries pursuant to the terms of the Master Collateral Agency Agreement.
No Lessee shall utilize selection procedures which it believes are adverse to
the Lessor or the Trustee in selecting the Vehicles or Eligible Receivables, as
the case may be, to be designated to the Lessor, as a Financing Source, and the
Trustee (on behalf of the Group I Noteholders), as a Beneficiary, under the
Master Collateral Agreement or to the Additional Permitted Beneficiaries.
Section 24.13. 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 24.14. Delivery of Information. Provide the Lessor with any
information or materials reasonably necessary for the Lessor to comply with its
obligations under the Indenture, and provide any other party to the Related
Documents with any information or materials reasonably necessary for such Person
to comply with its obligations under the Related Documents.
Section 24.15. 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 Group I Noteholders), or the
Trustee (for the benefit of the Group I Noteholders) and any Additional
Permitted Beneficiary, is designated as the Beneficiary (it being understood
that the Certificates of Title shall be held by the Servicer or an Affiliate
thereof (including the Sub-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 Additional Permitted 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
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Group I Noteholders), or the Trustee (for the benefit of the Group I
Noteholders), and any Additional Permitted Beneficiary, is designated as the
Beneficiary now or hereafter existing or acquired.
Section 24.16. Additional Actions. The Servicer shall:
(a) instruct the Trustee or the Paying Agent, as applicable,
to make withdrawals and payments from the Group I Collection Account,
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 Group I
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 as an exhibit to the series
supplement for each applicable series of ARG Notes; and
(d) supervise the servicing of the 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 24.17. Fleet Sharing Agreements. Each Lessee agrees that each
Fleet Sharing Agreement will include provisions consistent with those contained
in Section 31 of this Lease 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 24.18. Minimum Depreciation Rate. The Servicer agrees 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 the Non-Program Vehicles during each Related Month
shall be at least equal to the lesser of (a) 1.25% and (b) such lower percentage
in respect of which the Rating Agency Confirmation and Consent Condition with
respect to each Series of Group I Notes shall have been satisfied.
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:
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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 entity or,
if such Affiliate is also a Lessee or is a lessee under another Leasing Company
Lease, a Lessee or such lessee is the surviving entity).
Section 25.2. Regulations T, U and X. Use or permit any amounts funded
by the Lessor pursuant to the Financing Lease to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying margin stock" within the meaning of Regulations 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
Group I Noteholders), or any Additional Permitted 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 Vehicles
to be used in any manner (i) that would make such Vehicles which are Program
Vehicles ineligible for repurchase or auction under the related 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, the Rating Agencies and the
Lessor at least fifteen (15) days' advance written notice thereof and having
taken any and all action required to maintain and preserve the first priority
perfected Lien of the Master Collateral Agent in the Master Collateral and of
the Trustee in the 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; EXPENSES OF SERVICER;
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, the Servicer
shall be entitled to receive from the Lessor a monthly servicing fee (the
"Monthly Servicing Fee"), payable in arrears on each Payment Date prior to the
termination of this Lease, the Indenture and the Master Collateral Agency
Agreement. Except as otherwise specified in the related Group I Supplement, the
Monthly Servicing Fee for each Series of Group I Notes (each, a "Series Monthly
Servicing Fee") on each Payment Date shall be equal to one-twelfth of the
product of (i) the Servicing Fee
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Percentage for such Series and (ii) 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 Group I
Supplement.
Section 26.2. The expenses of the Servicer include, and the Servicer
agrees to pay, the reasonable fees and disbursements of independent accountants
in connection with reports furnished pursuant to Sections 24.6(i) and (ii), plus
all other fees, expenses and indemnities by the Servicer 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.
Section 26.3. The Servicer may delegate to a Lessee or another
Affiliate of the Servicer (each such delegate, in such capacity, a
"Sub-Servicer") the performance of the Servicer's obligations as Servicer in
respect of Vehicles leased under this Lease (but the Servicer shall remain fully
liable for its obligations in respect of such Vehicles under this 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 Vehicles and the
Certificates of Title therefor or Eligible Receivables financed hereunder 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, and, in any case, in
accordance with Section 8 of Annex A, if applicable; 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 Servicer and
the applicable Lessee under this Lease with respect to a Financed
Vehicle or an Eligible Receivable (in the case of any Eligible
Receivables, pursuant to Section 12 of Annex B hereto),
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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 or such
Eligible Receivable, as applicable, shall be deemed to be released; provided,
however, that no Lien for the benefit of the Lessor (including the Lien of the
Trustee as assignee of the Lessor and as Beneficiary under the Master Collateral
Agency Agreement) on the Vehicles and the Certificates of Title therefor shall
be released or deemed to be released if the release of such Lien would cause an
"Amortization Event" or "Potential Amortization Event" to occur with respect to
any series of ARG Notes. Subject to the Servicer's and the applicable
Sub-Servicer's right to redesignate Program Vehicles as Non-Program Vehicles in
accordance with Section 14, the Lessor or the Servicer or applicable
Sub-Servicer, acting as the agent of the Lessor, may sell any Program Vehicle
subject to this Lease that is an Acquired Vehicle or direct a Lessee to sell any
Program Vehicle leased by it hereunder that is a Financed 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. The Lessor and each Lessee
agree 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 an
Acquired Vehicle, in the case of a sale by the Lessor, or Program Vehicle that
is a Financed Vehicle, in the case of a sale by any Lessee, the Lessor or such
Lessee, as the case may be, 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 and
other similar charges payable by the Lessor or such Lessee, as applicable, to
such Manufacturer as a result of the Lessor's or Lessee's sale of such Program
Vehicle. In the case of a sale or turn back of a Financed Vehicle by a Lessee,
the Lessor shall, and shall cause the Trustee and the Master Collateral Agent
to, execute such documents and instruments as such 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 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 perform and
observe duly and punctually all of the terms, conditions, covenants, agreements
and indemnities of the Lessees under this Lease, and (iii) agrees that, if for
any reason whatsoever,
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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 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 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, 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, notwithstanding any limitations on the liability of any
Lessee or the Servicer to the Lessor contained in any of the Related Documents
or elsewhere. The Lessor's rights hereunder shall not be exhausted by any action
taken by the Lessor until all Guaranteed Obligations have been fully paid and
performed.
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,
subject to the proviso to Section 28.4(a)(ii), without affecting the liability
of the Guarantor hereunder, to: (a) alter the terms of all or any part of the
Guaranteed Obligations and any security and guaranties therefor including
without limitation modification of times for payment and rates of interest; (b)
accept new or additional instruments, documents, agreements, security or
guaranties in connection with all or any part of the Guaranteed Obligations; (c)
accept partial payments on the Guaranteed Obligations; (d) waive, release,
reconvey, terminate, abandon, subordinate, exchange, substitute, transfer,
compound, compromise, liquidate and enforce all or any part of the Guaranteed
Obligations and any security or guaranties therefor, and apply any such security
and direct the order or manner of sale thereof (and bid and purchase at any such
sale), as the Lessor in its discretion may determine; (e) release any Lessee,
any 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:
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(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;
(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 in respect of
the Guaranteed Obligations.
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
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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 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.
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(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 reasonable costs and
expenses, including attorneys' 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, and the rights of the Lessor
shall continue, 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, the Guarantor, any other guarantor or any other
Person 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.
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.
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Section 28.9. Third-Party Beneficiaries. The Guarantor acknowledges
that the Trustee (on behalf of the Group I Noteholders) has accepted the
assignment of the Lessor's rights under this Lease as collateral for the Group I
Notes in reliance on the Guaranty and that the Trustee (for the benefit of the
Group I Noteholders) shall be a third-party beneficiary hereunder.
SECTION 29. ADDITIONAL LESSEES.
Section 29.1. Additional 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 (or, as applicable, such Guarantor
Subsidiary's managing member, general partner or other Person charged
with the management 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;
(f) 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 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, the Master Collateral Agent
and the Trustee showing no evidence of liens filed
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against such Guarantor Subsidiary that purport to affect any Vehicles
leased hereunder or any other Master Collateral or Collateral under the
Indenture;
(g) evidence of the filing of proper financing statements on
Form UCC-1 (i) naming such Guarantor Subsidiary as debtor and the
Master Collateral Agent as secured party, and (ii) naming such
Guarantor Subsidiary as debtor, the Lessor as secured party and the
Master Collateral Agent as assignee, in each case covering the
collateral described in Section 2(b) hereof;
(h) an Officer's 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) as applicable, 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
Confirmation Condition with respect to each Series of Group I Notes;
and
(j) any additional documentation that the Lessor, the Master
Collateral Agent 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 outstanding Group I 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 Group I
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 defenses, if any, as
its counsel advises that it may assert. The provisions of this Section 30 shall
survive the termination of this Lease.
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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, THE LESSEES OR THE
SERVICER 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
(IN SUCH CAPACITIES AND IN ALL OTHER APPLICABLE CAPACITIES) HEREBY EXPRESSLY AND
IRREVOCABLY SUBMIT 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 (IN SUCH
CAPACITIES AND IN ALL OTHER APPLICABLE CAPACITIES) FURTHER IRREVOCABLY CONSENT
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE GUARANTOR, 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 (IN SUCH CAPACITIES AND IN
ALL OTHER APPLICABLE CAPACITIES) 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.
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
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prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Lease. 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; provided that such counterparts taken
together shall constitute the original executed Counterpart No. 1 only as
specified on, and in accordance with, the legend appearing on the cover page of
this Lease (and
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only if bearing original signatures).
[Remainder of Page Intentionally Blank]
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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.
LESSEE:
NATIONAL CAR RENTAL SYSTEM, INC.
By: /s/ Leland F. Wilson
--------------------------------------
Name: Leland F. Wilson
Title: Authorized Signatory
Address: 7700 France Avenue South
Minneapolis, Minnesota 55435
Attention: John M. Benzian
Facsimile: (612) 830-2552
Telephone: (612) 830-2087
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
Attention: John M. Benzian
Facsimile: (612) 830-2552
Telephone: (612) 830-2087
60
<PAGE> 61
GUARANTOR AND SERVICER:
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
Attn: Kathleen W. Hyle
Facsimile: (954) 769-7297
Telephone: (954) 769-4138
with a copy to:
Address: 110 S.E. 6th Street
20th Floor
Attn: General Counsel
Facsimile: (954) 769-
Telephone: (954) 769-
Acknowledged by:
MASTER COLLATERAL AGENT:
CITIBANK, N.A.
By: /s/
-------------------------------
Name:
Title:
Address: 111 Wall Street
5th Floor
New York, NY 10043
Attention: Global Agency and Trust Department
Telephone: (212) 657-5933
Facsimile: (212) 657-3866
61
<PAGE> 62
ANNEX A
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of February 26, 1999
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee,
and those subsidiaries
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Servicer
62
<PAGE> 63
1. Scope of Annex. This Annex A shall apply only to the acquisition,
leasing and servicing of the Acquired Vehicles by the Lessor 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
Group I 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 or refinance (as applicable) from time to time on or
after the Lease Commencement Date and prior to the Lease Expiration Date, (i)
all Refinanced Vehicles to be leased under this Operating Lease and identified
in Refinanced Vehicle Schedules for a purchase price or refinancing payment
amount equal to the aggregate Net Book Value thereof, and (ii) all other
Acquired Vehicles identified in Vehicle Orders placed under this Operating 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.
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 thirty-six (36)
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 Operating Lease and in accordance with any instructions of the Lessor for
such disposition,
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which instructions shall not be inconsistent with the terms of this Operating
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 Operating Lease,
any other amounts unpaid and owing from the Lessee under the Group I 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 Operating Lease at the Vehicle Purchase
Price, in which event the Lessee will pay the Vehicle Purchase Price, plus all
accrued and unpaid Monthly Base Rent, Monthly Variable Rent and other unpaid
charges, payments and amounts due and payable with respect to such Vehicle
through the date of such purchase, to the Master Collateral Agent or deposit
such Vehicle Purchase Price directly into the Group I Collection Account on or
before the Payment Date next succeeding such purchase by the Lessee. 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 Operating 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 or deposit such amount into the Group I Collection Account on
or before the Payment Date next succeeding such purchase by the Lessee. Upon
receipt of such funds by the Master Collateral Agent or the deposit of such
funds in the Group I Collection Account, as the case may be, the Lessor, at the
request of such Lessee, shall cause title to any such Vehicle or Manufacturer
Receivable, as applicable, to be transferred to such 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 (or the Sub-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, as applicable.
7. Vehicle Disposition. Subject to the Servicer's (and the applicable
Sub-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 24.5 of the Base Lease (unless not
required by such Section) deliver each Program 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, the Lessee fails to
deliver such a Program Vehicle to the applicable Manufacturer for repurchase by
the Manufacturer or to an auction for sale, in each case in accordance with the
applicable Manufacturer Program, during the Repurchase Period, and such Lessee
does not or is not entitled to redesignate such Program Vehicle as a Non-Program
Vehicle
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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 Turnback Date,
plus the equivalent of the Monthly Base Rent for the remainder of the minimum
holding period under the applicable Manufacturer Program for Program Vehicles
returned before the expiration of such minimum holding period, regardless of
actual usage, unless such minimum holding period is waived by the Manufacturer
or such a 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,
(b) within forty-two (42) months after the date of the original dealer invoice
for such Vehicle sold as a new vehicle and (c) prior to the expiration of the
maximum Vehicle lease term for such 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 Operating Lease (subject to the
Servicer's (and the applicable Sub-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 such 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 such Program Vehicle to a third
party is arranged by such Lessee prior to the expiration of such Repurchase
Period, then the Lessee shall deliver such Program Vehicle to the purchaser
thereof, the Lien of the Master Collateral Agent in such Program Vehicle will
automatically be released upon the receipt of the purchase price by the Lessor
or the Trustee and the Servicer (or the Sub-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 Program Vehicle, and such Lessee shall cause to be
delivered to the Lessor the funds paid for such Program Vehicle by the
purchaser. If the Lessor shall have directed such Lessee, and such Lessee shall
be unable, to arrange for a sale of such Program Vehicle at such a price prior
to the expiration of its Repurchase Period, then such Lessee shall, if a
Manufacturer Event of Default has not occurred with respect to the applicable
Manufacturer, cease attempting to arrange for such a sale and shall return such
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Program Vehicle to such Manufacturer or tender such Program Vehicle for auction
or purchase such Vehicle as herein provided; provided, however, that if a
Manufacturer Event of Default has occurred and is continuing with respect to
such Manufacturer, such Program Vehicle may be sold or otherwise disposed of in
accordance with the requirements applicable to Non-Program Vehicles leased under
the Operating Lease, including Section 12.2(b) of the Base Lease. 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 Section 9:
"Monthly Base Rent", with respect to each Payment Date and
each Acquired Vehicle leased under the Operating 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 Operating 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
interest accruing on all Group I Notes during the applicable interest
period relating to such Payment Date plus (ii) all Carrying Charges for
the Related Month, and (b) the quotient obtained by dividing the Net
Book Value as of the last day of the Related Month (or, if earlier, the
Disposition Date) of such Acquired Vehicle by the Net Book Value as of
the last day of the Related Month (or, if earlier, the Disposition
Date) of all Vehicles leased under the Group I Lease on any day during
the Related Month plus (II) if such Acquired Vehicle is a Non-Program
Vehicle, an amount equal to 1.5% of the Net Book Value of such Acquired
Vehicle as of the first day of the Related Month (or, if later, as of
the Vehicle Lease Commencement Date of such Vehicle) plus (III) an
amount equal to one twelfth of the Additional Spread Percentage of the
Net Book Value of such Acquired Vehicle as of the first day of the
Related Month (or, if later, as of the Vehicle Lease Commencement Date
of such Vehicle); provided, however, that if an Event of Bankruptcy
with respect to any Lessee or the Guarantor has occurred during or
prior to the Related Month, Monthly Variable Rent, with respect to each
Payment Date and each Acquired Vehicle leased under the Operating Lease
on any day during the Related Month, shall equal the sum of (I) the
product of (a) the aggregate amount of interest accruing during the
applicable interest period relating to such Payment Date with respect
to all Group I Notes that is allocated to the Acquired Vehicles (as
specified in the Monthly Noteholder's Statement with respect to each
Series of Group I Notes delivered with respect to the related
Determination Date and the Supplementary Noteholder's Statement with
respect to each Series of Group I Notes, if any, delivered with respect
to the related Payment Date) and (b) the quotient obtained by dividing
the Net Book Value as of the last day of the Related Month (or, if
earlier, the Disposition Date) of such Acquired Vehicle by the Net Book
Value as of the last day of the Related Month (or, if earlier, the
Disposition Date) of all Acquired Vehicles leased under the Operating
Lease on any day during the Related Month, plus (II) the product of (a)
the sum of all Carrying Charges for the Related Month and (b) the
quotient obtained by dividing the Net Book Value as of the last day of
the Related Month (or, if
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earlier, the Disposition Date) of such Acquired Vehicle by the Net Book
Value as of the last day of the Related Month (or, if earlier, the
Disposition Date) of all Vehicles leased under the Group I Lease on any
day during the Related Month, plus (III) if such Acquired Vehicle is a
Non-Program Vehicle, an amount equal to 1.5% of the Net Book Value of
such Acquired Vehicle as of the first day of the Related Month (or, if
later, as of the Vehicle Lease Commencement Date of such Vehicle) plus
(IV) an amount equal to one twelfth of the Additional Spread Percentage
of the Net Book Value of such Acquired Vehicle as of the first day of
the Related Month (or, if later, as of the Vehicle Lease Commencement
Date of such Vehicle).
"Rent" means Monthly Base Rent plus Monthly Variable 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 (e) 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;
(b) Monthly Variable Rent. On each Payment Date, after giving
credit for all prepayments on account thereof pursuant to (e) below and
to payments previously made pursuant to the next following sentence,
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 interest is due and
payable under the terms of a Group I Supplement, each Lessee shall pay
to the Lessor, as Monthly Variable Rent, an amount equal to the product
of (x) the quotient obtained by dividing the aggregate Net Book Value
of all Vehicles leased by such Lessee under the Operating Lease as of
the last day of the calendar month preceding the month in which such
date occurs by the aggregate Net Book Value of all Vehicles leased
under the Operating Lease and the Financing Lease as of the last day of
the calendar month preceding the month in which such date occurs and
(y) the amount of interest due and payable on such date in respect of
the Group I Notes.
(c) Termination Payments and Casualty Payments. On each
Payment Date, after giving credit for all prepayments on account
thereof pursuant to (e) below, each Lessee shall pay to the Lessor all
Termination Payments and Casualty Payments payable by such Lessee as
provided in Section 5.4 of the Base Lease; and
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(d) Certain Other Payments. After giving credit for all
prepayments on account thereof pursuant to (e) 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. The Servicer and
each Lessee agree that in the event that the Servicer or any such
Lessee shall receive directly any such payment, including cash,
securities, obligations or other property, the Servicer or 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 24.10 of the Base
Lease, into the Master Collateral Account in the same form received,
with the endorsement of the Servicer or Lessee, as the case may be,
when necessary or appropriate.
(e) 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 such 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 any Lessee or the Lessor; (vi) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to any 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 any Lessee has or
might have against any Person, including without limitation the Lessor; (viii)
any failure on the part of the Lessor to perform or comply with any of the terms
hereof or of any other agreement; (ix) any invalidity or unenforceability or
disaffirmance of the Operating Lease or any provision hereof or any of the other
Related Documents or any provision thereof, in each case whether against or by
any Lessee or otherwise; (x) any insurance premiums payable by any Lessee with
respect to the Vehicles; or (xi) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not any Lessee shall have
notice or knowledge of any of the foregoing and whether or not foreseen or
foreseeable, in each case subject to applicable law.
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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 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 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 of this
Operating Lease. 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
Operating Lease and the other Collateral to the Trustee, in accordance with the
Master Collateral Agency Agreement and the Indenture, and each Group I
Noteholder may grant security interests in its Group I Notes, the related Series
Supplements and other Collateral to certain of its creditors and their
respective designees, 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
Lessees 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 of this Operating Lease subject, however, to Section 8
of this Annex A and Section 17 of the Base Lease 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 such Lessee, such
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 death and property damage, arising with respect to
any Vehicle or the manufacture, purchase, acceptance, rejection, delivery,
leasing, possession, use, inspection, registration, operation, condition,
maintenance, repair or storage of such Vehicle, howsoever arising.
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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 Operating 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 Lessees have 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 such Lessee may have in respect to any
Manufacturer Programs as they relate to the Acquired Vehicles leased hereunder.
* * *
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ANNEX B
TO THE
MASTER MOTOR VEHICLE LEASE AND SERVICING AGREEMENT
Dated as of February 26, 1999
among
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as Lessor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as Lessee,
and those subsidiaries
of Republic Industries, Inc.
from time to time
becoming Lessees hereunder
and
REPUBLIC INDUSTRIES, INC.,
as Guarantor and Servicer
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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. (a) 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), (A) the
Financing Lease with regard to Financed Vehicles and Eligible Receivables 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 Values of Financed Vehicles and
the face amount of Eligible Receivables, which loans are secured by the Financed
Vehicles and Eligible Receivables, (C) the Lessees will be treated as making
payments of principal and interest (denominated as Monthly Base Rent, Additional
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 the Eligible Receivables acquired by it
and will be entitled to all tax benefits ordinarily available to an owner of
property similar to the Financed Vehicles and Eligible Receivables for such tax
purposes.
(b) It is the intention of the parties that the Financing Lease
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 from time to time on or after the Lease Commencement Date and prior
to the Lease Expiration Date (i) refinance all Refinanced Vehicles and Eligible
Receivables to be leased under this Financing Lease and identified in Refinanced
Vehicle Schedules for a refinancing payment amount equal to the sum of (x) the
aggregate Net Book Value of such Refinanced Vehicles and (y) the aggregate face
amount of such Eligible Receivables, and (ii) 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 such Refinanced Vehicles and other Financed Vehicles, as
the case may be.
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 thereof shall pay to the Master Collateral Agent or the Trustee, in
accordance with this Financing Lease, any amounts unpaid and owing under the
Financing Lease in respect of such Vehicle.
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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 under the Financing Lease, 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 the
Financing 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 Financing 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 Financing 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
interest accruing on all Group I Notes during the applicable interest
period relating to such Payment Date plus (ii) all Carrying Charges for
the Related Month, and (b) the quotient obtained by dividing the Net
Book Value as of the last day of the Related Month (or, if earlier, the
Disposition Date) of such Financed Vehicle by the Net Book Value as of
the last day of the Related Month (or, if earlier, the Disposition
Date) of all Vehicles leased under the Group I Lease on any day during
the Related Month plus (II) an amount equal to one twelfth of the
Additional Spread Percentage of the Net Book Value of such Financed
Vehicle as of the first day of the Related Month (or, if later, as of
the Vehicle Lease Commencement Date of such Vehicle); provided,
however, that if an Event of Bankruptcy with respect to any Lessee or
the Guarantor has occurred during or prior to the Related Month,
Monthly Finance Rent, with respect to each Payment Date and each
Financed Vehicle leased under the Financing Lease on any day during the
Related Month, shall equal the sum of (I) the product of (a) the
aggregate amount of interest accruing during the applicable interest
period relating to such Payment Date with respect to all Group I Notes
that is allocated to the Financed Vehicles (as specified in the Monthly
Noteholder's Statement with respect to each Series of Group I Notes
delivered with respect to the related Determination Date and the
Supplementary Monthly Noteholder's Statement with respect to each
Series of Group I Notes, if any, delivered with respect to the related
Payment Date), and (b) the quotient obtained by dividing the Net Book
Value as of the last day of the Related Month (or, if earlier, the
Disposition Date) of such Financed Vehicle by the Net Book Value as of
the last day of the Related Month (or, if earlier, the Disposition
Date) of all Financed Vehicles leased under the Financing Lease on any
day during the Related Month, plus (II) the product of (a) the sum of
all Carrying Charges for the Related Month and (b) the quotient
obtained by dividing the Net Book Value as of the last day of the
Related Month (or, if earlier, the
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Disposition Date) of such Financed Vehicle by the Net Book Value as of
the last day of the Related Month (or, if earlier, the Disposition
Date) of all Vehicles leased under the Group I Lease on any day during
the Related Month, plus (III) an amount equal to one twelfth of the
Additional Spread Percentage of the Net Book Value of such Financed
Vehicle as of the first day of the Related Month (or if later, as of
the Vehicle Lease Commencement Date of such Vehicle).
"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 first date on
which such Financed Vehicle is no longer an Eligible Vehicle or suffers
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 thereof)
of all the Financed Vehicles financed under the Financing Lease at any
time during such Related Month that, without double counting, are sold
or returned by the Lessees during the Related Month (it being
understood that each 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 any 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
financed under this Financing Lease that while so financed were
returned to (a) a Manufacturer whose Manufacturer Program is a
Guaranteed Depreciation Program by the Lessee thereof with respect to
which, during the Related Month, (x) the Repurchase Price has been
deposited in the Master Collateral 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 Master
Collateral Account, the two Business Day period referred to in Section
24.10 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 thereof with respect to which, during the
Related Month, (1) such Repurchase Price has been deposited in the
Master Collateral 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 Master
Collateral Account, the two Business Day period referred to in Section
24.10 of the Base Lease has expired during the Related Month or (2) a
Manufacturer Event of Default has occurred or (3) 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)
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payment from the obligor thereon has been deposited in the Master
Collateral 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 Master Collateral Account, the two
Business Day period referred to in Section 24.10 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 Group I 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 Financing 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 Financing Lease on any day during the Related Month.
(ii) Monthly Finance Rent. After giving credit for all
prepayments on account thereof pursuant to (c) below and to any
payments previously made pursuant to the next following sentence, 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 Financing Lease on any day during the
Related Month. On each other date on which interest is due and payable
under the terms of a Group I Supplement, each Lessee shall pay to the
Lessor, as Monthly Finance Rent, an amount equal to the product of (x)
the quotient obtained by dividing the aggregate Net Book Value of all
Vehicles leased by such Lessee under the Financing Lease as of the last
day of the calendar month preceding the month in which such date occurs
by the aggregate Net Book Value of all Vehicles leased under the
Operating Lease and the Financing Lease as of the last day of the
calendar month preceding the month in which such date occurs and (y)
the amount of interest due and payable on such date in respect of the
Group I 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 the monthly Additional
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<PAGE> 76
Base Rent that has accrued during the Related Month with respect to the
Non-Program Vehicles leased under the Financing Lease by such Lessee;
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 portion of the Monthly Supplemental Payment that
has accrued during the Related Month with respect to the Financed
Vehicles and Eligible Receivables previously leased or financed by such
Lessee under this Financing Lease.
(b) On the expiration of the term of the Financing Lease with respect
to a Financed Vehicle, any remaining Base Amount, plus all other amounts payable
by the Lessee thereof under the Financing Lease with respect to such Vehicle,
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. In addition, a Lessee may from
time to time prepay the Base Amount allocable to any Financed Vehicle, in whole
or in part, on any date, provided that such Lessee shall give the Lessor and the
Trustee not less than three (3) Business Days' prior notice of any such
prepayment, specifying the date and amount of such prepayment, and the Financed
Vehicle or Vehicles to which such prepayment relates.
8. Risk of Loss Borne by Lessees. Upon delivery of each Vehicle to the
applicable Lessee, as between the Lessor and such Lessee, such Lessee assumes
and bears the risk of loss, damage, theft, taking, destruction, attachment,
seizure, confiscation or requisition with respect to such Vehicle, however
caused or occasioned, and all other risks and liabilities, including personal
injury or death and property damage, arising with respect to 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 suffered 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 Payments accruing in respect of such
Vehicle during the Related Month in which such Vehicle suffered 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, each of which shall be payable in accordance with the Financing Lease)
on or prior to the Payment Date next succeeding such purchase by such Lessee.
Upon receipt of such purchase price by the
76
<PAGE> 77
Lessor or the Master Collateral Agent, the Lessor shall, at the request of such
Lessee, cause title to such Company Vehicle to be transferred to such 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 such Lessee to the Master Collateral Agent or the Trustee, as
applicable. Notwithstanding anything to the contrary in this Financing 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 thereof pursuant to and in accordance with this Section 9.
10. Net Lease. THE FINANCING 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 such
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 any Lessee or the Lessor; (vi) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to any Lessee, the Lessor or any other Person, or any action taken with
respect to the Financing Lease by any trustee or receiver of any Person
mentioned above, or by any court; (vii) any claim that any 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 Financing Lease or any provision hereof or any of the other
Related Documents or any provision thereof, in each case whether against or by
any Lessee or otherwise; (x) any insurance premiums payable by any Lessee with
respect to the Vehicles; or (xi) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not any Lessee shall have
notice or knowledge of any of the foregoing and whether or not foreseen or
foreseeable, in each case subject to applicable law. The Financing 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 Financing
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
77
<PAGE> 78
or any part thereof for any reason whatsoever, absent manifest error. If for any
reason whatsoever the Financing 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 Financing 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.
11. Non-Disturbance. Subject to Section 17 of the Base Lease, 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 of this Financing Lease, 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.
12. Liens. Except for Permitted Liens, each Lessee shall keep all
Vehicles leased by it free of all Liens arising during the Term of this
Financing Lease. The Lessor may grant security interests in the Master
Collateral to the Master Collateral Agent, and in this Financing Lease and the
other Collateral to the Trustee, in accordance with the Master Collateral Agency
Agreement and the Indenture, and each Group I Noteholder may grant security
interests in its Group I Notes, the related Series Supplements and other
Collateral to certain of its creditors and their respective designees 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 Lessees under the Financing Lease.
13. Lessee's Rights to Pay Off Financing of 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 Financing Lease, to repay or refinance such Manufacturer
Receivable upon payment of an amount equal to the amount due from the
Manufacturer under such Manufacturer Receivable, in which event such Lessee will
pay such amount to the Master Collateral Agent on or before the Payment Date
next succeeding such repayment by such Lessee. Upon receipt of such funds by the
Master Collateral Agent, the Lessor, at the request of such Lessee, shall cause
title to any such Manufacturer Receivable to be transferred to such Lessee, and
the lien of the Master Collateral Agent in such Manufacturer Receivable will
automatically be released concurrently with or promptly after the payment for
such Manufacturer Receivable (and any unpaid Monthly Base Rent, unpaid Monthly
Variable Rent and other unpaid charges, payments and amounts) is made by the
Lessee to the Master Collateral Agent or the Trustee, as applicable.
* * *
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<PAGE> 79
Lessee for all purposes under the Group I Lease. By its execution and delivery
of this Joinder, Lessor acknowledges that the Joining Party is a Lessee for all
purposes under the Group I Lease.
IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be
duly executed as of the day and year first above written.
[Name of Joining Party]
By: /s/
----------------------------
Name:
Title:
Accepted and Acknowledged by:
NATIONAL CAR RENTAL FINANCING
LIMITED PARTNERSHIP
By: NATIONAL CAR RENTAL FINANCING
CORPORATION, its general partner
By: /s/
-------------------------------------
Name:
Title:
REPUBLIC INDUSTRIES, INC.
as Guarantor
By: /s/
-------------------------------------
Name:
Title:
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TABLE OF CONTENTS
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SECTION 1. CERTAIN DEFINITIONS................................................................................... 1
Section 1.1. Certain Definitions................................................................. 1
Section 1.2. Accounting and Financial Determinations............................................. 2
Section 1.3. Cross References; Headings.......................................................... 2
Section 1.4. Interpretation...................................................................... 2
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 Vehicles in
the Name of Nominees................................................................ 5
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............................................................. 8
SECTION 4. CONDITIONS PRECEDENT.................................................................................. 8
Section 4.1. Conditions to Effectiveness of this Lease........................................... 8
Section 4.2. Conditions to Each Lease of Vehicles................................................ 11
Section 4.3. Additional Conditions to Leases of Refinanced Vehicles and
Eligible Receivables................................................................ 12
SECTION 5. RENT AND CHARGES...................................................................................... 13
Section 5.1. Payment of Rent..................................................................... 13
Section 5.2. Reserved............................................................................ 13
Section 5.3. Payment of Monthly Supplemental Payments............................................ 13
Section 5.4. Payment of Termination Payments and Casualty Payments............................... 14
Section 5.5. Late Payment........................................................................ 14
Section 5.6. Making of Payments.................................................................. 14
SECTION 6. RESERVED.............................................................................................. 14
SECTION 7. CASUALTY AND INELIGIBLE VEHICLES...................................................................... 14
SECTION 8. VEHICLE USE........................................................................................... 15
SECTION 9. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES......................................... 16
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SECTION 10. MAINTENANCE AND REPAIRS.............................................................................. 17
SECTION 11. MANUFACTURER WARRANTIES.............................................................................. 17
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 for Acquired Vehicles.......................................... 18
SECTION 13. [RESERVED]........................................................................................... 20
SECTION 14. REDESIGNATION OF VEHICLES............................................................................ 20
SECTION 15. GENERAL INDEMNITY AND PAYMENT OF EXPENSES............................................................ 20
Section 15.1. Indemnity and Payment of Expenses by the Lessees.................................... 20
Section 15.2. Reimbursement Obligation by the Lessees............................................. 22
Section 15.3. Notice to Lessee of Claims.......................................................... 22
Section 15.4. Defense of Claims................................................................... 22
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; Limited Liquidation Event of
Default or Liquidation Event of Default............................................. 25
Section 17.3. Rights of Lessor and Trustee Upon Lease Event of Default, Liquidation Event of
Default or Limited Liquidation Event of Default..................................... 26
Section 17.4. Measure of Damages.................................................................. 28
Section 17.5. Application of Proceeds............................................................. 29
SECTION 18. MANUFACTURER EVENTS OF DEFAULT....................................................................... 29
SECTION 19. CERTIFICATION OF TRADE OR BUSINESS USE............................................................... 30
SECTION 20. SURVIVAL............................................................................................. 30
SECTION 21. RIGHTS OF LESSOR PLEDGED TO MASTER COLLATERAL AGENT AND TRUSTEE...................................... 30
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(continued)
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SECTION 22. MODIFICATION AND SEVERABILITY........................................................................ 32
SECTION 23. CERTAIN REPRESENTATIONS AND WARRANTIES............................................................... 32
Section 23.1. Organization; Power; Qualification.................................................. 32
Section 23.2. Authorization; Enforceability....................................................... 33
Section 23.3. Compliance.......................................................................... 33
Section 23.4. Financial Information; Financial Condition.......................................... 33
Section 23.5. Litigation.......................................................................... 34
Section 23.6. Liens............................................................................... 34
Section 23.7. Employee Benefit Plans.............................................................. 34
Section 23.8. Securities Laws..................................................................... 34
Section 23.9. Regulations T, U and X.............................................................. 34
Section 23.10. Business Locations; Trade Names..................................................... 35
Section 23.11. Taxes............................................................................... 35
Section 23.12. Governmental Authorizations......................................................... 35
Section 23.13. Eligible Vehicles; Fleet Sharing Parties............................................ 35
Section 23.14. Accuracy of Information............................................................. 35
Section 23.15. Solvency............................................................................ 36
Section 23.16. Ownership........................................................................... 36
Section 23.17. Necessary Actions................................................................... 36
Section 23.18. Supplemental Documents True and Correct............................................. 36
Section 23.19. Year 2000........................................................................... 36
SECTION 24. CERTAIN AFFIRMATIVE COVENANTS........................................................................ 36
Section 24.1. Corporate Existence; Foreign Qualification.......................................... 37
Section 24.2. Books, Records and Inspections...................................................... 37
Section 24.3. Accounting Methods; Financial Records............................................... 38
Section 24.4. Insurance........................................................................... 38
Section 24.5. Manufacturer Programs............................................................... 38
Section 24.6. Reporting Requirements.............................................................. 39
Section 24.7. Taxes and Liabilities............................................................... 41
Section 24.8. Maintenance of the Vehicles......................................................... 41
Section 24.9. Maintenance of Separate Existence................................................... 42
Section 24.10. Repurchase Payments; Sales Proceeds................................................. 42
Section 24.11. Certificates of Title: Verification of Titles....................................... 42
Section 24.12. Master Collateral Agency Agreement.................................................. 43
Section 24.13. Compliance with Laws................................................................ 43
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Section 24.14. Delivery of Information............................................................. 43
Section 24.15. Deliveries: Further Assurances...................................................... 44
Section 24.16. Additional Actions.................................................................. 44
Section 24.17. Fleet Sharing Agreements............................................................ 44
Section 24.18. Minimum Depreciation Rate........................................................... 45
SECTION 25. CERTAIN NEGATIVE COVENANTS........................................................................... 45
Section 25.1. Mergers, Consolidations............................................................. 45
Section 25.2. Regulations T, U and X.............................................................. 45
Section 25.3. Liens............................................................................... 45
Section 25.4. Use of Vehicles..................................................................... 45
Section 25.5. Change of Location or Name.......................................................... 45
SECTION 26. SERVICING COMPENSATION; EXPENSES OF SERVICER; DELEGATION OF SERVICING DUTIES......................... 46
Section 26.1............................................................................................ 46
Section 26.2............................................................................................ 46
Section 26.3............................................................................................ 46
SECTION 27. RELEASE OF COLLATERAL................................................................................ 46
SECTION 28. GUARANTY............................................................................................. 48
Section 28.1. Guaranty............................................................................ 48
Section 28.2. Scope of Guarantor's Liability...................................................... 48
Section 28.3. Lessor's Right to Amend this Lease.................................................. 48
Section 28.4. Waiver of Certain Rights by Guarantor............................................... 49
Section 28.5. Lessees' Obligations to Guarantor and Guarantor's Obligations
to Lessees Subordinated............................................................. 50
Section 28.6. Guarantor to Pay Lessor's Expenses.................................................. 51
Section 28.7. Reinstatement....................................................................... 51
Section 28.8. Pari Passu Indebtedness............................................................. 51
Section 28.9. Third-Party Beneficiaries........................................................... 52
SECTION 29. ADDITIONAL LESSEES................................................................................... 52
Section 29.1. Additional Subsidiary Lessees....................................................... 52
SECTION 30. BANKRUPTCY PETITION AGAINST LESSOR................................................................... 53
SECTION 31. FORUM SELECTION AND CONSENT TO JURISDICTION.......................................................... 54
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SECTION 32. GOVERNING LAW................................... 54
SECTION 33. JURY TRIAL...................................... 55
SECTION 34. NOTICES......................................... 55
SECTION 35. HEADINGS........................................ 55
SECTION 36. EXECUTION IN COUNTERPARTS....................... 55
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EXHIBITS
ANNEX A - Operating Lease Annex
ANNEX B - Financing 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
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EXHIBIT 4.2
EXECUTION COPY
SERIES 1999-1 SUPPLEMENT
dated as of February 26, 1999
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
<PAGE> 2
SERIES 1999-1 SUPPLEMENT, dated as of February 26, 1999 (as the same
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with the terms hereof, this "Supplement"), between NATIONAL CAR
RENTAL FINANCING LIMITED PARTNERSHIP, a special purpose Delaware limited
partnership ("NFLP"), and THE BANK OF NEW YORK, a New York banking corporation,
as trustee (together with its successors in trust under the Base Indenture
referred to below as provided thereunder, the "Trustee"), 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 1999-1 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 shall be designated
generally as Variable Funding Rental Car Asset Backed Notes, Series 1999-1.
The proceeds from the sale of the Series 1999-1 Notes (as defined
herein) and the proceeds from any Increase (as defined herein) shall be
deposited in the Series 1999-1 Collection
-2-
<PAGE> 3
Account and shall be available to NFLP and used to (i) acquire, finance or
refinance Eligible Vehicles for leasing under the Group I Lease, (ii) finance or
refinance Eligible Receivables and (iii) make payments in reduction of the
Invested Amount of other Group I Notes.
As described herein, the Series 1999-1 Notes will share an undivided
interest in certain collateral which may also secure other Group I Notes, if
any. The Series 1999-1 Notes will not share in the collateral securing the
Series 1996-1 Notes or the Series 1997-2 Notes, the Series 1997-3 Notes or the
Series 1997-4 Notes, and none of the Series 1996-1 Notes, the Series 1997-2
Notes, the Series 1997-3 Notes or the Series 1997-4 Notes or any other Series of
Notes that are not Group I Notes will share in the collateral securing the
Series 1999-1 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
Group I Notes and not any other 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, and (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, provided that to the extent, if
any, that any capitalized term used but not defined herein has a meaning
assigned to such term in both of the lists referred to above, then, for purposes
of this Supplement and the Base Indenture as it relates to the Series 1999-1
Notes, the meaning assigned to such term in the Definitions List attached hereto
as Annex A as in effect shall apply.
(b) For purposes of the Series 1999-1 Notes, any reference in the Base
Indenture to (i) the term "Required Asset Amount" shall be deemed to be a
reference to the Group I Required Asset Amount, (ii) the term "Collateral" shall
be deemed to be a reference to the Group I Collateral, (iii) the term "NFLP
Agreements" shall be deemed to be a reference to the Collateral Agreements, (iv)
the term "Lease" shall be deemed to be a reference to the Group I Lease and (v)
the term "Aggregate Invested Amount" shall be deemed to be a reference to the
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Aggregate Group I Invested Amount, (vi) the term "Eligible Manufacturer" shall
be deemed to be a reference to a Manufacturer and (vii) the term "Eligible
Manufacturer Program" shall be deemed to be a reference to a Manufacturer
Program.
(c) Unless otherwise stated herein, each capitalized term used or
defined herein shall relate only to the Series 1999-1 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
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 Group I Noteholders (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,
together with the portion of the Master Collateral with respect to which the
Trustee is named as a Beneficiary (all of such right, title and interest being
referred to as the "Group I Collateral"):
(i) the Collateral Agreements, including, without limitation,
all monies due and to become due to NFLP from any Lessee or the
Servicer under or in connection with the Collateral Agreements, whether
payable as fees, expenses, costs, indemnities, insurance recoveries,
damages for the breach of any of the Collateral Agreements or
otherwise, all security for amounts payable thereunder and all rights,
remedies, powers, privileges and claims of NFLP against any other party
under or with respect to the Collateral Agreements (whether arising
pursuant to the terms of such Collateral Agreements or otherwise
available to NFLP at law or in equity), the right to enforce any of the
Collateral Agreements as provided herein and to give or withhold any
and all consents, requests, notices, directions, approvals, extensions
or waivers under or with respect to the Collateral Agreements or the
obligations of any party thereunder; and
(ii) all right, title and interest of NFLP in, to and
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under the Receivables Trust Agreement, the Beneficial Interest and the
right to receive all distributions and payments pursuant thereto and in
respect thereof; and
(iii) (a) the Group I 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 Group
I Collection Account 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 Group I Collection Account or any
administrative subaccount thereof (including income thereon); and
(iv) 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 (on behalf of the Secured Parties) is designated
as a Beneficiary thereunder; and
(v) all right, title and interest of NFLP in, to and under all
Eligible Receivables from time to time financed by NFLP hereunder;
(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 excluding
Excluded Payments and payments under rental agreements with customers
of any Lessee.
The Group I Collateral shall secure the Group I 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 Group I Collateral.
(b) To secure the NFLP Obligations with respect to the Group I Notes,
NFLP hereby confirms the grant, pledge, hypothecation, assignment, conveyance,
delivery and transfer to the Receivables Trustee under the Receivables Trust
Agreement, in exchange for the Beneficial Interest, of all NFLP's right, title
and interest in, to, under and in respect of the Lease Payment Rights and the
Manufacturer Payment Rights (other than Excluded Payments).
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(c) To secure the NFLP Obligations with respect to the Group I 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 (on behalf of the Secured
Parties) of a continuing first priority perfected Lien on all right, title and
interest of NFLP in, to and under all the Master Collateral.
(d) The foregoing grant is made in trust to secure the NFLP Obligations
and to secure compliance with the provisions of the Base Indenture and this
Supplement, all as provided in the Base Indenture and this Supplement. The
Trustee, as trustee on behalf of the Secured Parties, acknowledges such grant,
accepts the trusts under the Base Indenture and this Supplement in accordance
with the provisions of the Base Indenture and this Supplement and agrees to
perform its duties required in the Base Indenture and this Supplement to the
best of its abilities to the end that the interests of the Secured Parties may
be adequately and effectively protected.
ARTICLE 4
INITIAL ISSUANCE AND INCREASES AND DECREASES OF
SERIES 1999-1 INVESTED AMOUNT OF SERIES 1999-1 NOTES
Section 4.1 Issuance in Definitive Form. The Series 1999-1 Notes will
be issued in fully registered form without interest coupons, substantially in
the form set forth in Exhibit A hereto, and will be sold to ARG and shall be
duly executed by NFLP and authenticated by the Trustee in the manner set forth
in Section 2.4 of the Base Indenture. Other than in accordance with the ARG
Indenture, the Series 1999-1 Notes will not be permitted to be transferred,
assigned, exchanged or otherwise pledged or conveyed by ARG. The Series 1999-1
Note shall bear a face amount equal to the Series 1999-1 Maximum Invested
Amount, and shall be initially issued in a principal amount equal to the Series
1999-1 Initial Invested Amount. The Trustee shall, or shall cause the Note
Registrar to, record any Increases or Decreases with respect to the Series
1999-1 Invested Amount such that the principal amount of the Series 1999-1 Notes
Outstanding accurately reflects all such Increases and Decreases.
Section 4.2 Procedure for Increasing the Invested Amount.
(a) Subject to satisfaction of the conditions precedent set forth in
subsection (b) of this Section 4.2, (i) on the Series 1999-1 Closing Date, NFLP
may issue Series 1999-1 Notes in the initial principal amount equal to the
Series 1999-1 Initial Invested Amount and (ii) on any Business Day during the
Series 1999-1 Revolving Period, NFLP may increase the Series 1999-1
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Invested Amount (each such increase referred to as an "Increase") in order to,
upon request by a Lessee (or the Servicer, on its behalf), acquire, finance the
acquisition of or refinance Eligible Vehicles for leasing under the Group I
Lease or finance Eligible Receivables hereunder or under the Group I Lease. NFLP
may effect an Increase, upon receipt of confirmation from ARG of the
availability of funds under the ARG Indenture in an amount equal to such
Increase, by issuing, at par, additional principal amounts of the Series 1999-1
Notes. Proceeds from the initial issuance of the Series 1999-1 Notes and from
any Increase shall be deposited into the Group I Collection Account and
allocated in accordance with Article 5 hereof. Upon each Increase, the Trustee
shall, or shall cause the Registrar to, indicate in the Note Register such
Increase.
(b) The initial Series 1999-1 Notes will be issued on the Series 1999-1
Closing Date and the Series 1999-1 Invested Amount may be increased on any
Business Day during the Series 1999-1 Revolving Period, in each case pursuant to
subsection (a) 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 such initial issuance and each proposed Increase:
(i) the amount of such issuance or Increase shall be equal to
or greater than $100,000;
(ii) after giving effect to such issuance or Increase, the
Series 1999-1 Invested Amount shall not exceed the Series 1999-1
Maximum Invested Amount;
(iii) after giving effect to such issuance or Increase and the
application of the proceeds thereof, no Series 1999-1 Enhancement
Deficiency shall exist;
(iv) after giving effect to such issuance or Increase and the
application of the proceeds thereof, the amount of the Series 1999-1
Demand Note shall not be less than the amount referred to in Section
8.9 of this Supplement at such time;
(v) No Amortization Event or Potential Amortization Event with
respect to the Series 1999-1 Notes, Liquidation Event of Default or
Series 1999-1 Limited Liquidation Event of Default with respect to the
Series 1999-1 Notes shall have occurred or be continuing;
(vi) such issuance or Increase or application of the proceeds
thereof shall not result in the occurrence of (a) an Amortization
Event, a Liquidation Event of Default or a Series 1999-1 Limited
Liquidation Event of Default or (b) an event or occurrence, which, with
the passing of time
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or the giving of notice thereof, or both, would become an Amortization
Event, a Liquidation Event of Default or a Series 1999-1 Limited
Liquidation Event of Default;
(vii) such issuance or Increase and the application of the
proceeds thereof shall not result in the occurrence of an ARG
Amortization Event with respect to any series of ARG Notes or an event
or occurrence, which, with the passing of time or the giving of notice
thereof, or both, would become an ARG Amortization Event with respect
to any series of ARG Notes;
(viii) all conditions precedent to the acquisition of
additional Vehicles or refinancing of Eligible Receivables under the
Group I Lease or the refinancing of Eligible Receivables hereunder
shall have been satisfied;
(ix) the Master Collateral Agent shall have previously
received executed counterparts of the Assignment Agreements related to
the assignment of rights under each Manufacturer Program under which
Program Vehicles designated in the applicable Vehicle Order will be or
have been purchased and are proposed to be included in the Aggregate
Asset Amount, duly executed by the applicable Lessee, NFLP, the Master
Collateral Agent and each applicable Manufacturer;
(x) the Master Collateral Agent shall have previously received
a copy of each Manufacturer Program under which Program Vehicles
designated in the applicable Vehicle Order will be or have been
purchased and are proposed to be included in the Aggregate Asset Amount
and an Officer's Certificate duly executed by an Authorized Officer of
the applicable Lessee certifying that each such copy is true, correct
and complete as of such date;
(xi) notice of such Increase shall have been delivered to ARG
and the Trustee;
(xii) all representations and warranties set forth in Article
7 of the Base Indenture and in Section 23 of the Group I Lease shall be
true and correct (in all material respects to the extent any such
representations and warranties do not incorporate a materiality
limitation in their terms) on such date (except to the extent such
representations and warranties relate to an earlier date, in which
case, such representations and warranties shall be true and correct as
of such earlier date);
(xiii) (a) on the Series 1999-1 Closing Date, the Lessees
shall have delivered to the Trustee the original
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Counterpart No. 1 of the Group I Lease (as set forth on the cover page
and signature page of the Group I Lease) and (b) on the date of any
Increase the Trustee shall have in its possession the original of
Counterpart No. 1 of the Group I Lease (as set forth on the cover page
and signature page of the Group I Lease); and
(xiv) if any portion of the proceeds thereof are to be applied
to refinance Eligible Receivables owned by NFLP, NFLP or a Lessee shall
have prepared or shall have caused to be prepared a Refinanced Vehicle
Schedule concerning such Eligible Receivables and delivered such
Refinanced Vehicle Schedule to the Master Collateral Agent and the
Trustee.
Section 4.3 Procedure for Decreasing the Series 1999-1 Invested Amount.
On any Business Day, NFLP may decrease the Series 1999-1 Invested Amount (each
such decrease referred to as a "Decrease") by withdrawing from the Series 1999-1
Excess Collection Account and distributing to the Series 1999-1 Noteholder in
respect of principal on the Series 1999-1 Notes, an amount equal to the amount
of such Decrease in accordance with Section 5.4(b). Upon each Decrease, the
Trustee shall, or shall cause the Registrar to indicate in the Note Register
such Decrease. The amount of any Decrease shall not exceed the amount on deposit
in the Series 1999-1 Excess Collection Account and available for distribution to
Series 1999-1 Noteholder in respect of principal on the Series 1999-1 Notes.
ARTICLE 5
SERIES 1999-1 ALLOCATIONS
Section 5.1 Establishment of Group I Collection Account and Subaccounts
Thereof; Collections.
(a) The Trustee will establish and maintain a segregated trust account
for the benefit of the Group I Noteholders (the "Group I Collection Account").
The Trustee shall possess all right, title and interest in all moneys,
instruments, securities and other property on deposit from time to time in the
Group I Collection Account and the proceeds thereof for the benefit of the
Secured Parties. The Group I Collection Account shall be under the sole dominion
and control of the Trustee for the benefit of the Secured Parties. The Group I
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 Group I Collection Account; provided that,
if at any time such Qualified Institution is no longer a Qualified Institution
or the credit
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rating of any securities issued by such depository institution or trust company
shall be reduced to below BBB- by S&P or Baa3 by Moody's, then the Trustee
shall, within 30 days of such reduction, establish a new Group I Collection
Account with a new Qualified Institution or a new 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
Group I Collection Account. If the Group I 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 Group I
Collection Account which complies with such sentence and transfer into the new
Group I Collection Account all cash and investments from the non-qualifying
Group I Collection Account. Initially, the Group I Collection Account will be
established with The Bank of New York. All Collections allocable to the Group I
Notes shall be allocated to the Group I Collection Account.
(b) The Trustee will establish and maintain three Administrative
Subaccounts within the Group I Collection Account for the benefit of the Series
1999-1 Noteholder: the Series 1999-1 Collection Account (such Administrative
Subaccount, the "Series 1999-1 Collection Account"), the Series 1999-1 Accrued
Interest Account (such Administrative Subaccount, the "Series 1999-1 Accrued
Interest Account") and the Series 1999-1 Excess Collection Account (such
Administrative Subaccount, the "Series 1999-1 Excess Collection Account"). NFLP
shall instruct the institution maintaining the Group I Collection Account to
invest funds on deposit in the Group I Collection Account (including any
administrative subaccounts thereof) at all times in Permitted Investments
selected by NFLP (by standing instructions or otherwise); provided, however,
that investments of amounts allocated to the Series 1999-1 Excess Collection
Account shall mature no later than the Business Day following the date on which
such funds were invested and investments of all other amounts on deposit in the
Group I Collection Account 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 Group I Collection Account
(including any administrative subaccounts thereof) which is in an investment
made by the Trustee, in which event such investment may mature on such
Distribution Date so long as such funds shall be available for withdrawal on or
prior to such Distribution Date. All such Permitted Investments will be credited
to the Group I Collection Account and any such Permitted Investments that
constitute (i) Physical Property (and that is not either a United States
Security Entitlement or a Security Entitlement) shall be delivered to the
Trustee in accordance with paragraph (a) of the definition of "Delivery" and
shall be held by the Trustee pending maturity or disposition; (ii) United States
Security Entitlements or Security Entitlements shall be Controlled by the
Trustee pending maturity or disposition; and
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(iii) Uncertificated Securities (and not United States Security Entitlements)
shall be delivered to the Trustee in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Trustee pending maturity
or disposition. The Trustee shall, at the expense of NFLP, take such action as
is required to maintain the Trustee's security interest in the Permitted
Investments credited to the Group I Collection Account. In the absence of
written investment instructions hereunder, funds on deposit in the Group I
Collection Account shall remain uninvested. Neither NFLP nor the Trustee shall
dispose of (or permit the disposal of) any Permitted Investments prior to the
maturity thereof to the extent such disposal would result in a loss of principal
of such Permitted Investment.
(c) Until this Supplement is terminated, 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 and related
auction houses under their Manufacturer Programs with respect to Vehicles other
than Exchanged Vehicles but excluding amounts representing the proceeds from
sales of Vehicles by any 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 any Lessee or the Lessor to third parties other than
the Manufacturers to be deposited by such Lessee or the Lessor, as the case may
be, within two Business Days of its receipt thereof into the Master Collateral
Account or the Group I Collection Account; (iii) under the Group I Lease to be
paid directly to the Trustee for deposit into the Group I Collection Account;
and (iv) from any other source (other than Collections excluded under clause (i)
above) to be paid either (a) directly into the Group I Collection Account at
such times as such amounts are due or (b) by any Lessee or the Lessor, as the
case may be, into the Group I Collection Account within two Business Days of its
receipt thereof (and, in each case, NFLP represents to the Secured Parties that
it has instructed the Lessees, the Servicer, the Manufacturers, and any other
source of Collections, as applicable, to so remit such amounts). Upon the
occurrence and during the continuance of an Amortization Event, Potential
Amortization Event or Affiliate Issuer Liquidation Event, insurance proceeds and
warranty payments (with respect to Vehicles other than Exchanged Vehicles) will
be deposited in the Master Collateral Account within two Business Days of their
receipt by any Lessee, the Lessor or the Servicer, as applicable; provided,
however, upon the delivery of an Officer's Certificate of the Servicer to the
Trustee (upon which it may conclusively
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rely) certifying (i) that a Vehicle for which insurance proceeds or warranty
payments (which are not Excluded Payments), as the case may be, have been
received in the Group I Collection Account has been repaired and (ii) as to the
dollar amount of such repairs, the Trustee shall release to the Lessee thereof
insurance proceeds or warranty payments, as the case may be, in such dollar
amount (to the extent not previously applied hereunder). 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 and the Group I 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
Supplement (including amounts received from the Master Collateral Agent) shall
be immediately deposited in the Group I 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 Group I 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 thereof 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.
Section 5.2 Allocations with Respect to the Series 1999-1 Notes. The
proceeds from the issuance of the Series 1999-1 Notes will be deposited into the
Group I Collection Account. On the Series 1999-1 Closing Date and each Business
Day on which proceeds from any Increase or Collections are deposited into the
Group I Collection Account (each such date, a "Series 1999-1 Deposit Date"), the
Servicer will direct the Trustee in writing to allocate all amounts deposited
into the Group I Collection Account in accordance with the provisions of this
Section 5.2:
(a) Allocations of Collections During the Series 1999-1
Revolving Period. During the Series 1999-1 Revolving Period, the
Servicer will direct the Trustee in writing to allocate, prior to 12:00
noon (New York City time) on each Series 1999-1 Deposit Date, all
amounts deposited into the Group I Collection Account as set forth
below:
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(i) allocate to the Series 1999-1 Collection Account
an amount equal to the Series 1999-1 Invested Percentage (as
of such day) of the aggregate amount of Interest Collections
on such day. All such amounts allocated to the Series 1999-1
Collection Account shall be further allocated to the Series
1999-1 Accrued Interest Account; and
(ii) allocate to the Series 1999-1 Excess Collection
Account an amount equal to the sum of (A) the Series 1999-1
Invested Percentage (as of such day) of the aggregate amount
of Principal Collections on such day (for any such day, the
"Series 1999-1 Principal Allocation") plus (B) the proceeds
from the issuance of the Series 1999-1 Notes and from any
Increase, which amounts may be applied to make a Decrease in
accordance with Sections 4.3 and 5.4(b).
(b) Allocations During the Series 1999-1 Rapid Amortization
Period. With respect to the Series 1999-1 Rapid Amortization Period,
the Servicer will direct the Trustee in writing to allocate, prior to
12:00 noon (New York City time) on any Series 1999-1 Deposit Date, all
amounts deposited into the Group I Collection Account as set forth
below:
(i) allocate to the Series 1999-1 Collection Account
an amount determined as set forth in Section 5.2(a)(i) above
for such day, which amount shall be further allocated to the
Series 1999-1 Accrued Interest Account; and
(ii) allocate to the Series 1999-1 Collection Account
an amount equal to the Series 1999-1 Principal Allocation for
such day, which amount shall be used to make principal
payments in respect of the Series 1999-1 Notes until the
Series 1999-1 Invested Amount has been reduced to zero.
(c) Series 1999-1 Excess Collection Account. Amounts allocated
to the Series 1999-1 Excess Collection Account on any Series 1999-1
Deposit Date will be first, used to pay the ARG Mandatory Prepayment
Amount pursuant to Section 5.4(c) of this Supplement, second, used to
pay the principal amount of any other Series of Group I Notes that are
then required to be paid under the Base Indenture, as supplemented by
the Supplement relating to such Series of Group I Notes, third, used,
at the option of NFLP, to make a Decrease in accordance with Section
4.3 and 5.4(b) of this Supplement, and fourth, any remaining funds may
be released to NFLP and used by NFLP to finance Eligible Receivables
hereunder or to acquire, refinance or finance the acquisition of
Eligible Vehicles or finance Eligible
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Receivables under, and in accordance with the terms of, the Group I
Lease or for any other purpose, in each case, only to the extent that
no Series 1999-1 Enhancement Deficiency would result from, or exist
after, the release of such funds to NFLP. NFLP may transfer funds to
the Trustee for deposit in the Series 1999-1 Excess Collection Account
on any Business Day. Upon receipt of any such funds, the Trustee shall
deposit them in the Series 1999-1 Excess Collection Account. Upon the
occurrence of a Termination Event, funds allocated to the Series 1999-1
Excess Collection Account will be allocated as Principal Collections by
the Trustee to the Series 1999-1 Collection Account and applied to
reduce the Series 1999-1 Invested Amount on the immediately succeeding
Distribution Date. Prior to financing Eligible Receivables with funds
released from the Series 1999-1 Excess Collection Account, NFLP shall
prepare or cause to be prepared a Refinanced Vehicle Schedule
concerning such Eligible Receivables and deliver or cause to be
delivered such Refinanced Vehicle Schedule to the Master Collateral
Agent and the Trustee.
Section 5.3. Payments To Series 1999-1 Noteholder.
On each Determination Date, as provided below, the Servicer
shall instruct the Trustee in writing to withdraw, and on the following
Distribution Date the Trustee, acting in accordance with such instructions,
shall withdraw the amounts required to be withdrawn from the Group I Collection
Account pursuant to Sections 5.3(a) and (b) below in respect of all funds
available from Interest Collections processed since the preceding Distribution
Date and allocated to the Series 1999-1 Noteholder (less any portion thereof
paid to the Series 1999-1 Noteholder during such period pursuant to Section
5.3(c) below).
(a) Note Interest with respect to the Series 1999-1 Notes. On
each Determination Date, the Servicer shall instruct the Trustee in writing as
to the amount to be withdrawn and paid pursuant to this Section 5.3(a) from
amounts allocated to the Series 1999-1 Accrued Interest Account to the extent
funds are anticipated to be available from Interest Collections allocable to the
Series 1999-1 Notes processed from but not including the preceding Distribution
Date through and including the succeeding Distribution Date in respect of (x)
first, an amount equal to interest accrued on the Series 1999-1 Notes during the
Series 1999-1 Interest Period ending on the day preceding such succeeding
Distribution Date which will be equal to the product of (i) the Series 1999-1
Note Rate for such Series 1999-1 Interest Period and (ii) the average daily
Series 1999-1 Invested Amount during such Series 1999-1 Interest Period, and (y)
then, an amount equal to the amount of any unpaid Deficiency Amounts, as of the
preceding Distribution Date (together with any accrued interest on such
Deficiency Amounts). If the amount available to
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pay the amounts described in clauses (x) and (y) of the preceding sentence of
this Section 5.3(a) is insufficient to pay such amounts on any Distribution
Date, payments of interest to the Series 1999-1 Noteholder will be reduced by
the amount of such deficiency. The amount, if any, of such deficiency on any
Distribution Date shall be referred to as the "Deficiency Amount." Interest
shall accrue on the Deficiency Amount for each Series 1999-1 Interest Period at
the Series 1999-1 Note Rate for such Series 1999-1 Interest Period. On the
following Distribution Date, the Trustee shall, as instructed above, withdraw an
amount equal to the accrued interest on the Series 1999-1 Notes (as determined
above) and the Deficiency Amount, if any (together with accrued interest
thereon), from the Series 1999-1 Accrued Interest Account and pay such amounts
to the Series 1999-1 Noteholder in accordance with Section 6.1 of the Base
Indenture. If the Deficiency Amount (together with interest thereon) is not paid
in full within five (5) days, an Amortization Event with respect to the Series
1999-1 Notes shall occur in accordance with clause (a) of Section 9.1 of the
Base Indenture.
(b) Balance. On each Distribution Date, the Servicer shall
instruct the Trustee in writing to pay the balance (after making the payments
required in Section 5.3(a) of this Supplement), if any, of the Interest
Collections allocated to the Series 1999-1 Noteholder since the preceding
Distribution Date (less any portion thereof paid to the Series 1999-1 Noteholder
during such period pursuant to Section 5.3(c) below) as follows:
(i) on each Distribution Date during the Series
1999-1 Revolving Period, (1) first, to the Servicer, in an
amount equal to the Series Monthly Servicing Fee with respect
to the Series 1999-1 Notes payable by NFLP pursuant to Section
26.1 of the Group I Lease on such Distribution Date, (2)
second, to the Trustee, in an amount equal to the Group I
Percentage with respect to the Series 1999-1 Notes as of the
immediately preceding Distribution Date of the Trustee's fees
for the Series 1999-1 Interest Period ending on such current
Distribution Date, (3) third, to pay any Carrying Charges
(other than Carrying Charges provided for above) to the
Persons to whom such amounts are owed, in an amount equal to
the Group I Percentage with respect to the Series 1999-1 Notes
as of the immediately preceding Distribution Date of such
Carrying Charges (other than Carrying Charges provided for
above) for such Series 1999-1 Interest Period and (4) fourth,
the balance, if any, shall be withdrawn by the Trustee from
the Series 1999-1 Collection Account and paid to NFLP; and
(ii) on each Distribution Date during
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the Series 1999-1 Rapid Amortization Period, (1) first, to the
Trustee, in an amount equal to the Group I Percentage with
respect to the Series 1999-1 Notes as of the immediately
preceding Distribution Date of the Trustee's fees for the
Series 1999-1 Interest Period ending on such current
Distribution Date, (2) second, to the Servicer, in an amount
equal to the Series Monthly Servicing Fee with respect to the
Series 1999-1 Notes payable by NFLP pursuant to Section 26.1
of the Group I Lease on such Distribution Date, (3) third, to
pay any Carrying Charges (other than Carrying Charges provided
for above) to the Persons to whom such amounts are owed, in an
amount equal to the Group I Percentage with respect to the
Series 1999-1 Notes as of the immediately preceding
Distribution Date of such Carrying Charges (other than
Carrying Charges provided for above) for such Series 1999-1
Interest Period and (4) fourth, the balance, if any, shall be
applied to reduce the Series 1999-1 Invested Amount on such
current Distribution Date in accordance with Section 5.4 of
this Supplement.
(c) Interest Payments during Series 1999-1 Interest Period. On
any Business Day during a Series 1999-1 Interest Period, the Servicer may
instruct the Trustee in writing to withdraw, and on such Business Day the
Trustee, acting in accordance with such instructions, shall withdraw, an amount
equal to the lesser of (i) the product of the Issuer's Share on such Business
Day and the amount of interest payable on such Business Day in respect of
interest on the ARG Notes of any series and (ii) the aggregate amount of
Interest Collections processed since the preceding Distribution Date and
allocated to the Series 1999-1 Noteholder (less any portion thereof previously
paid to the Series 1999-1 Noteholder during such period pursuant to this Section
5.3(c)) and shall pay such amounts to the Series 1999-1 Noteholder in accordance
with Section 6.1 of the Base Indenture.
Section 5.4. Payment of Note Principal.
(a) Commencing on the first Determination Date after the
commencement of the Series 1999-1 Rapid Amortization Period and on each
Determination Date thereafter, the Servicer shall instruct the Trustee in
writing as to the amount allocated to the Series 1999-1 Notes during the Related
Month pursuant to Section 5.2(b)(ii) of this Supplement and, as applicable,
allocated pursuant to the last sentence of Section 5.2(c) of this Supplement. On
the Distribution Date following each such Determination Date, the Trustee shall
withdraw the amount allocated to the Series 1999-1 Notes during the Related
Month pursuant to Section 5.2 (b)(ii) of this Supplement and, as applicable,
allocated pursuant to the last sentence of Section
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5.2(c) of this Supplement, from the Group I Collection Account and, in
accordance with Section 6.1 of the Base Indenture, pay such amount to the Series
1999-1 Noteholder, to the extent necessary to pay the Series 1999-1 Invested
Amount during the Series 1999-1 Rapid Amortization Period. The entire principal
amount of all Outstanding Series 1999-1 Notes shall be due and payable on the
Series 1999-1 Termination Date.
(b) On any Business Day during the Series 1999-1 Revolving
Period on which a Decrease pursuant to Section 4.3 of this Supplement shall be
declared, the Trustee shall withdraw from the Group I Collection Account in
accordance with the written instructions of the Servicer an amount equal to the
lesser of (i) the funds then allocated to the Series 1999-1 Excess Collection
Account (including proceeds from any Increase and any amounts allocated to the
Series 1999-1 Excess Collection Account pursuant to Section 5.2(c) of this
Supplement), after giving effect to any payment of the ARG Mandatory Prepayment
Amount on such Business Day, and (ii) the amount of such Decrease, and pay such
amount to the Series 1999-1 Noteholder.
(c) On any Business Day on which funds are available pursuant
to Section 5.2(c) of this Supplement to pay any ARG Mandatory Prepayment Amount,
the Trustee shall withdraw from the Group I Collection Account in accordance
with the written instructions of the Servicer an amount equal to the lesser of
(i) the funds then allocated to the Series 1999-1 Excess Collection Account
(including proceeds from any Increase and any amounts deposited by NFLP in the
Series 1999-1 Excess Collection Account pursuant to Section 5.2(c) of this
Supplement) and (ii) the amount of such ARG Mandatory Prepayment Amount, and pay
such amount to the Series 1999-1 Noteholder.
Section 5.5. The Servicer's Failure to Instruct the Trustee to Make a
Deposit or Payment. If the Servicer fails to give notice or instructions to make
any payment from or deposit into the Group I Collection Account required to be
given by the Servicer, at the time specified herein or in any other Related
Document (including applicable grace periods), the Trustee shall make such
payment or deposit into or from the Group I Collection Account without such
notice or instruction from the Servicer, provided that the Servicer, upon
request of the Trustee, promptly provides the Trustee with all information
necessary to allow the Trustee to make such a payment or deposit. When any
payment or deposit hereunder or under any other Related Document is required to
be made by the Trustee at or prior to a specified time, the Servicer shall
deliver any applicable written instructions with respect thereto reasonably in
advance of such specified time.
Section 5.6. Payments by Wire Transfer. All amounts distributable to
the Series 1999-1 Noteholders pursuant to this Supplement shall be payable by
wire transfer of immediately
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available funds released by the Trustee.
ARTICLE 6
WAIVER AND SUBSTITUTION OF
CERTAIN PROVISIONS OF BASE INDENTURE
Section 6.1. Waiver of Certain Provisions of Base Indenture. By
acquiring a Series 1999-1 Note, each Series 1999-1 Noteholder agrees to waive
compliance by NFLP with the following provisions of the Base Indenture as such
provisions apply to the Series 1999-1 Notes: Section 6.4, Section 7.4, the first
sentence of Section 7.8, Section 8.3, Section 8.14 and Section 8.27.
Section 6.2. Information. NFLP will deliver or cause to be delivered to
the Trustee:
(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 the Group I Lease
(delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including NFLP's compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates));
(b) from time to time such additional information regarding
the financial position, results of operations or business of any Lessee or
Republic as the Trustee may reasonably request to the extent that such Lessee or
Republic, as the case may be, delivers such information to NFLP pursuant to the
Group I Lease (delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including NFLP's compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates));
(c) at the time of delivery of the items described in clause
(a) above, a certificate of an officer of NFLP that, except as provided in any
certificate delivered in accordance with Section 8.10 of the Base Indenture, 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 the applicable fiscal quarter;
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(d) on or prior to June 30 of each year, a certificate of the
chief financial officer of NFLP certifying 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 Group I Lease or any other Related Document, and NFLP has apprised
the Rating Agencies of all material changes in the Manufacturer Programs
occurring since the date of this Supplement;
(e) 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 Group I Collateral as of the last
Business Day of the immediately preceding month received by NFLP from the
Servicer pursuant to the Group I Lease; and
(f) 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 any Lessee
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 6.3. Manufacturer Programs.
(a) Prior to acquiring or financing the acquisition of any
Program Vehicles under the Group I Lease for any model year or years after the
1999 model year, NFLP will have received (i) an executed Assignment Agreement
with respect to such Manufacturer Program for such model year or years, (ii) if
any Series of Outstanding Group I Notes is held by an Affiliate Issuer and any
series of securities issued by an Affiliate Issuer is then being rated by a
Rating Agency and if so required by any such Rating Agency, a written
confirmation from such Rating Agency that the acquisition of Vehicles pursuant
to such Manufacturer Program satisfies the Rating Agency Confirmation Condition
with respect to such Series of Group I Notes and (iii) if there is a material
change to a Manufacturer Program during a model year, written confirmation from
each such Rating Agency that the acquisition of Program Vehicles pursuant to
such Manufacturer Program satisfies the Rating Agency Confirmation Condition
with respect to each Outstanding Series of Group I Notes. A copy of the rating
confirmations set forth in clauses (ii) and (iii) will promptly be delivered to
the Trustee for delivery to the Noteholders of any Outstanding Series of Group I
Notes.
(b) NFLP will (i) provide the Trustee and the Rating
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Agencies with at least 15 days' prior written notice of its intention to finance
Program Vehicles from any new Manufacturer and (ii) provide the Trustee with a
copy of the draft Manufacturer Program of such Manufacturer as it exists at the
time of such notice and a copy of the final Manufacturer Program promptly upon
its being available. 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 Program Vehicle previously purchased or financed
under such Manufacturer Program.
Section 6.4. True Lease Opinion. 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 Group I
Notes addressing the characterization of the Operating Lease as a "true lease".
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, commencing on February 26, 2000, 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 6.4.
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 1999-1 Notes and shall constitute
the Amortization Events set forth in Section 9.1(j) of the Base Indenture with
respect to the Series 1999-1 Notes:
(a) a Series 1999-1 Enhancement Deficiency shall occur and
continue for at least two (2) Business Days;
(b) the occurrence of an Event of Bankruptcy with respect to
Republic or any Lessee;
(c) the Group I Lease is terminated for any reason;
(d) all principal and interest of the Series 1999-1 Notes is
not paid in full on or before the Series 1999-1 Termination Date;
(e) NFLP fails to comply with any of its other
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<PAGE> 21
agreements or covenants in, or provisions of, the Series 1999-1 Notes or the
Indenture and the failure to so comply materially and adversely affects the
interests of the Series 1999-1 Noteholder and continues to materially and
adversely affect the interests of the Series 1999-1 Noteholder for a period of
forty-five (45) days after the earlier of (i) the date on which 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 and the Trustee by the ARG Trustee or the Required Noteholders;
(f) any representation made by NFLP in the Indenture or any
Related Document is false and such false representation materially and adversely
affects the interests of the Series 1999-1 Noteholder and such false
representation is not cured for a period of forty-five (45) days after the
earlier of (i) the date on which NFLP obtains knowledge thereof or (ii) the date
that written notice thereof is given to NFLP by the Trustee or to NFLP and the
Trustee by the ARG Trustee or the Required Noteholders; or
(g) any of the Related Documents or any material portion
thereof shall not be in full force and effect, enforceable in accordance with
its terms or NFLP, any Lessee or the Servicer shall so assert in writing.
In the case of (i) any event described in clause (a), (b), (c) or (d) above, an
Amortization Event with respect to the Series 1999-1 Notes shall immediately
occur without any notice or other action on the part of the Trustee or any
Series 1999-1 Noteholder or (ii) any event described in clause (e), (f) or (g)
above, either the Trustee, by written notice to NFLP, or the Required
Noteholders, by written notice to NFLP and the Trustee, may declare that an
Amortization Event has occurred with respect to the Series 1999-1 Notes as of
the date of the notice. An Amortization Event described in clause (a), (b), (c)
or (d) above shall not be subject to waiver. An Amortization Event described in
clause (e), (f) or (g) above shall be subject to waiver in accordance with
Section 9.5 of the Base Indenture.
Notwithstanding anything to the contrary contained in the Base Indenture, 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) and the Lease dated October 29, 1997, shall not in and of itself
constitute an Amortization Event with respect to the Series 1999-1 Notes.
Section 7.2. Rights of the Trustee upon Amortization Event or Certain
Other Events of Default. (a) If and whenever an Amortization Event shall have
occurred and be continuing with respect to less than all Outstanding Series of
Group I Notes, the
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Trustee's rights and remedies with respect to the Group I Collateral pursuant to
the provisions of Section 9.2 of the Base Indenture shall, to the extent not
detrimental to the rights of the holders of the Series of Group I Notes with
respect to which no Amortization Event shall have occurred, be limited to rights
and remedies pertaining only to those Series of Group I Notes with respect to
which such Amortization Event has occurred and the Trustee shall exercise such
rights and remedies at the written direction of Group I Noteholders holding in
excess of 50% of the aggregate Invested Amount of all Series of Group I Notes
with respect to which such Amortization Event has occurred.
(b) In addition to, and not in limitation of, the remedies and
duties of the Trustee with respect to the Group I Collateral set forth in the
Base Indenture, if a Liquidation Event of Default or a Series 1999-1 Limited
Liquidation Event of Default shall have occurred and be continuing, the Trustee
may, and at the written 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 Series 1999-1 Limited Liquidation Event of Default) shall
direct the Master Collateral Agent to exercise, or cause NFLP or the Lessees to
exercise all rights, remedies, powers, privileges and claims of NFLP, the
Lessees or the Master Collateral Agent, as the case may be, against the
Manufacturers under or in connection with the Manufacturer Programs.
(c) If and whenever the Master Collateral Agent, the Trustee
or NFLP shall exercise their respective rights with respect to the Group I
Collateral pursuant to Section 9.2(c) of the Base Indenture upon the occurrence
of a Series 1999-1 Limited Liquidation Event of Default, each of the Master
Collateral Agent, the Trustee and NFLP shall select the Program Vehicles to be
returned to the related Manufacturers and the Non-Program Vehicles to be sold to
third parties in a manner that does not adversely affect in any material respect
the interests of the Noteholders of any Series of Group I Notes or any
Enhancement Provider with respect thereto.
Section 7.3. Rights of the Trustee upon Affiliate Issuer Liquidation
Event. Upon the occurrence of an Affiliate Issuer Liquidation Event, the Trustee
shall promptly instruct the Master Collateral Agent to return or to cause NFLP
or the Lessees to return Program Vehicles to the related Manufacturers (so long
as a Manufacturer Event of Default has not occurred with respect to the related
Manufacturer) and to sell Non-Program Vehicles or cause Non-Program Vehicles to
be sold to third parties in an amount sufficient to pay the ARG Mandatory
Prepayment Amount, taking into account the availability of proceeds of Vehicles
being disposed of under the Leasing Company Leases, other than the Group I
Lease, plus any interest on the Series 1999-1 Notes relating thereto, and to the
extent that any Manufacturer fails
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<PAGE> 23
to accept any such Program Vehicles under the terms of the applicable
Manufacturer Program (or if a Manufacturer Event of Default has occurred with
respect to the related Manufacturer), to direct the Master Collateral Agent to
liquidate or to cause NFLP or the Lessees to liquidate such Program Vehicles in
accordance with the rights of NFLP under the Group I Lease; provided, however,
that the Master Collateral Agent, the Trustee and NFLP shall select the Program
Vehicles to be returned to the related Manufacturers and the Non-Program
Vehicles to be sold to third parties in a manner that does not adversely affect
in any material respect the interests of the Noteholders of any Series of Group
I Notes or any Enhancement Provider with respect thereto.
ARTICLE 8
GENERAL
Section 8.1. Optional Repurchase. The Series 1999-1 Notes shall be
subject to repurchase by NFLP at its option in accordance with Section 6.3 of
the Base Indenture, with no less than two Business Days' prior written notice to
the Series 1999-1 Noteholder on any Business Day (the "Repurchase Date"). The
repurchase price for the Series 1999-1 Notes shall equal the Repurchase Amount
on the Repurchase Date.
Section 8.2. Information. NFLP shall cause the Servicer to prepare or
cause to be prepared all reports and statements required to be prepared and
delivered by ARG pursuant to the ARG Non-Segregated Series Supplements and shall
cause the Servicer to furnish or cause to be furnished all such reports and
statements at the times and to the Persons specified in the ARG Non-Segregated
Series Supplements.
Section 8.3. Exhibits. The following exhibits attached
hereto supplement the exhibits included in the Indenture.
Exhibit A: Form of Variable Funding Note
Exhibit B: Form of Series 1999-1 Demand Note
Section 8.4. 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 Supplement shall be read, taken, and
construed as one and the same instrument.
Section 8.5. 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.
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Section 8.6. Governing Law. This Supplement shall be construed in
accordance with the law of the State of New York, and the obligations, rights
and remedies of the parties hereto shall be determined in accordance with such
law.
Section 8.7. Amendments. This Supplement may be modified or amended
from time to time in accordance with the terms of the Base Indenture, provided
that no consent of the Required Noteholders shall be required for any change in
the Series 1999-1 Maximum Invested Amount. Any Related Document may be modified
or amended from time to time in accordance with the terms of Section 12.1 of the
Base Indenture, provided that no consent of Group I Noteholders shall be
required to any amendment, modification or waiver of or to any Related Document
if such amendment, modification or waiver does not adversely affect in any
material respect the Group I Noteholders of any Series of Group I 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) and provided further that
the Rating Agency Confirmation Condition is satisfied with respect to each
affected Series of Group I Notes.
Section 8.8. Notice to Rating Agencies. The Trustee shall provide to
each Rating Agency a copy of each notice delivered to, or required to be
provided by, the Trustee pursuant to this Supplement or any other Related
Document.
Section 8.9. Series 1999-1 Demand Note. Other than pursuant to a demand
thereon, NFLP may acquire the Series 1999-1 Demand Note and shall not reduce the
amount of the Series 1999-1 Demand Note or forgive amounts payable thereunder so
that the outstanding principal amount of the Series 1999-1 Demand Note after
such reduction or forgiveness is less than an amount equal to 5.0% of the Series
1999-1 Invested Amount; provided, however, that if NFLP has first delivered to
the Trustee an Opinion of Counsel that reduction or forgiveness of amounts owing
under the Series 1999-1 Demand Note to an amount less than 5.0% of the Series
1999-1 Invested Amount will not have an adverse effect on the tax
characterization of the Series 1999-1 Notes or any series of ARG Notes, NFLP may
reduce the amount of the Series 1999-1 Demand Note or forgive amounts payable
thereunder to an amount less than 5.0% of the Series 1999-1 Invested Amount.
NFLP shall not distribute the proceeds of any payment made in respect of the
principal amount of the Series 1999-1 Demand Note to the owners of its
partnership interests, nor shall NFLP lend any of such proceeds to Republic or
any Affiliate of Republic under the Subordinated Note or otherwise unless, after
giving effect to such distribution or loan, the outstanding principal amount of
the Series 1999-1 Demand Note is at least equal to 5.0% of the Series 1999-1
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<PAGE> 25
Invested Amount (or such lesser percentage permitted under the immediately
preceding sentence). NFLP may enter into that certain Receivables Trust
Agreement dated as of the date hereof with The Bank of New York (Delaware) with
respect to the Series 1999-1 Demand Note and the Subordinated Note.
Section 8.10. Subordinated Note. Subject to Section 8.9, NFLP may
advance funds to Republic pursuant to the Subordinated Note from time to time;
provided, however that upon the occurrence and during the continuance of an
Amortization Event, NFLP shall not advance any additional amounts under the
Subordinated Note.
Section 8.11. Additional Series of Group I Notes. NFLP shall not issue
any additional Series of Group I Notes unless the Trustee shall have received
written confirmation that the Rating Agency Confirmation and Consent Condition
with respect to each Outstanding Series of Group I Notes shall have been
satisfied with respect to such issuance.
Section 8.12. Year 2000. The Trustee hereby represents and warrants
that it has established a Year 2000 compliance program consisting of, among
other things, updating major proprietary application systems and evaluating the
Year 2000 compliance efforts of vendors of major vendor-supplied systems and
certain other business partners. The Trustee believes that its Year 2000
compliance program is currently on schedule to meet the needs of its customers
and the compliance deadlines defined by its regulators. As of December 31, 1998,
testing and renovation of the proprietary application systems that the Trustee
deems "mission critical" were substantially completed and these systems are
currently being used by the Trustee. In addition, all vendor supplied software
systems that the Trustee deems mission critical have been tested and, based upon
such testing, the Trustee believes that such systems will not be adversely
affected in a material way as a result of the date change to the Year 2000. Due
to the general uncertainty inherent in the Year 2000 problem, resulting in part
from the uncertainty of the Year 2000 readiness of suppliers, customers and
other business partners, the Trustee is unable to determine at this time whether
the consequences of Year 2000 failures will have a material impact on the
Trustee and its ability to perform its obligations under this Supplement and the
Base Indenture. The Year 2000 compliance program is intended to reduce
significantly the Trustee's level of uncertainty about the Year 2000 problem
and, in particular, the Year 2000 compliance and readiness of the Trustee and
its material business partners. The Trustee believes that, with completion of
its Year 2000 compliance program as scheduled, the possibility of significant
interruptions of normal operations should be reduced. However, because of the
unprecedented nature of the Year 2000 problem, there can be no certainty as to
its impact.
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[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, NFLP and the Trustee 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:
------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:
------------------------------------
Name:
Title:
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ANNEX A TO THE
SERIES 1999-1 SUPPLEMENT
Definitions List
Dated as of February 26, 1999
"Accrued Amounts" means, with respect to any Series of Group I Notes
(or any class of such Series of Notes), on any date of determination, the sum of
(i) accrued and unpaid interest on such Series of Group I Notes as of such date,
(ii) the accrued and unpaid Series Monthly Servicing Fee with respect to such
Series of Group I Notes payable by NFLP pursuant to Section 26.1 of the Group I
Lease on such date and (iii) the product of (A) the Carrying Charges payable on
such date times (B) the Group I Percentage with respect to such Series of Group
I Notes as of the immediately preceding Distribution 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
Group I Lease on or after the Lease Commencement Date.
"Additional Base Rent" is defined in Section 6 of Annex B to the Group
I Lease.
"Additional Lessee Closing Date" means the initial Vehicle Funding Date
with respect to Vehicles (including Refinanced Vehicles) leased by an Additional
Lessee.
"Additional Lessees" means those Subsidiaries of Republic from time to
time becoming Lessees under the Group I Lease in accordance with the
requirements of Section 29 of the Group I Lease.
"Additional Permitted Beneficiaries" means, on any date, the
Subordinated Creditors under (and as defined in) the Intercreditor Agreement
that are named on such date as Beneficiaries under the Master Collateral Agency
Agreement in respect of Lessee Grantor Master Collateral.
"Additional Spread Percentage" means, as of any date of determination,
the greater of 2.00% or such other percentage as the Lessor and the Lessees may
from time to time agree in writing shall be the Additional Spread Percentage, as
evidenced by and in effect from the date of delivery of a copy of such writing
duly executed by the Lessor and the Lessees to the Trustee and the Servicer.
"Administrative Subaccount" means an internal administrative account
established by the Trustee for record keeping purposes to facilitate the proper
allocation of Collections within the
<PAGE> 29
Group I Collection Account.
"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 Group I Lease,
the Lessor shall not be considered to be an Affiliate of any Lessee.
"Affiliate Issuer" means ARG and any other special purpose entity that
is an Affiliate of Republic that has entered into financing arrangements secured
by one or more Series of Notes.
"Affiliate Issuer Liquidation Event" means, with respect to (i) the
Series 1999-1 Notes, any one of the events with respect to any series of the ARG
Notes defined as a "Series ARG Liquidation Event" with respect to such series in
the related ARG Non-Segregated Series Supplement, and (ii) any other Series of
Group I Notes, any event specified as a Series Affiliate Issuer Liquidation
Event in the related Supplement.
"Affiliate Joinder in Lease" is defined in Section 29.1 of the Group I
Lease.
"Aggregate Asset Amount" means, for any date of determination, the sum,
rounded to the nearest $100,000, of (i) the Net Book Value of all Vehicles that
are Eligible Vehicles leased under the Group I Lease as of such date and not
turned in to the Manufacturer thereof pursuant to its Manufacturer Program, not
delivered for Auction pursuant to any Manufacturer Program or not otherwise sold
or deemed to be sold under the Related Documents, plus (ii) all amounts
receivable by the Lessor or a Lessee under the Group I Lease as of such date
(other than Excluded Payments) from Manufacturers under Manufacturer Programs
with respect to Eligible Vehicles (other than Exchanged Vehicles) turned in to
such Manufacturers pursuant to any such Manufacturer Program or delivered for
Auction pursuant to any Manufacturer Program and the aggregate of all Eligible
Receivables owned by a Lessee or the Lessor financed under the Group I Lease or
the Indenture, as applicable, plus (iii) with regard to Eligible Vehicles leased
under the Group I Lease that have been delivered for Auction pursuant to a
Manufacturer Program with a Manufacturer, all amounts receivable (other than
amounts specified in clause (ii)) from any person or entity in connection with
the Auction of such Eligible Vehicles as of such date, plus (iv) with regard to
Eligible Vehicles that have been turned in to the Manufacturer, delivered for
Auction or otherwise sold, any Casualty Payments or Termination Payments with
respect to such Eligible Vehicles due and payable as of such date under the
Group I Lease, plus (v) with regard to Eligible Vehicles that have been turned
in to the Manufacturer, delivered for Auction or otherwise sold, any accrued and
unpaid Monthly Base Rent, Monthly Supplemental Payments and Additional Base Rent
under the Group I Lease with respect to such Eligible Vehicles (net of amounts
set forth in clauses (ii), (iii) and (iv) above), plus (vi) cash and Permitted
Investments on deposit in the Series 1999-1 Collection Account, minus (vii) any
Ineligible Asset Amount on
<PAGE> 30
such date.
"Aggregate Group I Invested Amount" means the sum of the Invested
Amounts of all Series of Group I Notes.
"Alamo" means Alamo Rent-A-Car, Inc., a Florida corporation, and any
successor thereto.
"Alamo Lease" means the Master Motor Vehicle Lease and Servicing
Agreement, dated as of the date hereof, executed in connection with the issuance
by Alamo Leasing of the Variable Funding Rental Car Asset Backed Notes, Series
1999-1, among Alamo Leasing, as lessor, Alamo, as lessee, and Republic, as
guarantor and servicer, as the same may be amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof.
"Alamo Leasing" means Alamo Financing L.P., a special purpose Delaware
limited partnership, and any successor thereto.
"ARG" means ARG Funding Corp., a special purpose Delaware corporation,
and its successors or assigns.
"ARG Agreements" means the ARG Indenture and any other agreements
relating to the issuance of any series of ARG Notes to which ARG is a party.
"ARG Amortization Event" means any one of the events with respect to
any series of the ARG Notes described in Section 9.1 of the ARG Indenture.
"ARG Base Indenture" means the Base Indenture, dated as of February 26,
1999, between ARG and The Bank of New York, as trustee, as amended, modified,
restated or supplemented from time to time, exclusive of supplements thereto
creating new series of ARG Notes.
"ARG Committed Purchaser" means a special purpose company that has
committed to purchase a series of ARG Notes from ARG from time to time and that
finances such purchases with, among other things, the proceeds of commercial
paper notes issued by such special purpose company.
"ARG Indenture" means the ARG Base Indenture, as supplemented by the
ARG Non-Segregated Series Supplements.
"ARG Mandatory Prepayment Amount" means, on any Business Day, the
aggregate outstanding principal amount of the ARG Notes of any series with
respect to which an ARG Amortization Event shall have occurred and is
continuing.
<PAGE> 31
"ARG Non-Segregated Series Supplement" means a Supplement to the ARG
Base Indenture between ARG and the ARG Trustee pursuant to which a series of ARG
Notes were issued and are outstanding.
"ARG Noteholder" means a Person in whose name an ARG Note is registered
in accordance with the ARG Indenture.
"ARG Notes" means any one of the series of Rental Car Asset Backed
Notes issued by ARG pursuant to the ARG Base Indenture that are secured by
collateral that includes, among other things, a security interest in all of
ARG's right, title and interest in the Group I Notes.
"ARG Revolving Period Termination Date" means the first day on which
the principal amount of each series of ARG Notes outstanding is amortizing in
accordance with the applicable ARG Non-Segregated Series Supplement and no ARG
Noteholder is obligated to make further investments in its ARG Notes under the
applicable ARG Non-Segregated Series Supplement or otherwise.
"ARG Trustee" means the party named as such in the ARG Base Indenture
until a successor replaces it in accordance with the applicable provisions of
the ARG Base Indenture and thereafter means the successor serving thereunder.
"Assignment Agreement" means the agreement with respect to each
Manufacturer and its Manufacturer Program, entered into or to be entered into
among Lessor and/or one or more Lessees, as assignor, and the Master Collateral
Agent, as assignee, and acknowledged by such Manufacturer, assigning to the
Master Collateral Agent certain of Lessor's and/or such Lessees' right, title
and interest in such Manufacturer's Manufacturer Program as it relates to
Vehicles purchased from such Manufacturer.
"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 Group I Lease and any instruments, certificates, notices and other
documents in connection therewith 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 the Servicer 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 the Servicer or such Lessee whose signatures and incumbency shall have been
certified to NFLP in such certificates as may be delivered by the Servicer or
such Lessee to NFLP from time to time as duly authorized to execute and deliver
the Group I Lease and any instruments, certificates, notices and other documents
in connection therewith on behalf of the Servicer or such Lessee and to take,
from time to time, all other actions on behalf of the Servicer or such
<PAGE> 32
Lessee in connection therewith.
"Base Amount" means, as of any date of determination, 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.
"Base Indenture" is defined in the preamble.
"Beneficial Interest" means the 100% beneficial interest owned by NFLP
in the Receivables Trust.
"Beneficiary" is defined in the preamble to the Master Collateral
Agency Agreement.
"Board of Directors" means the Board of Directors of Republic, the
General Partner or any of the Lessees, as applicable, or any authorized
committee of such Board of Directors.
"Business Day" means 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.
"Capitalized Cost" means, (i) with respect to each Vehicle (other than
a Refinanced Vehicles) the amount payable to the Manufacturer, dealer or other
seller selling such Vehicle in order to purchase such Vehicle, as established by
the invoice delivered in connection with such Vehicle, and (ii) with respect to
each 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 Vehicle, "Capitalized Cost" may include dealer profit to the
extent consistent with reasonable industry standards and delivery charges but
shall not include any taxes, registration fees or titling fees with respect to
such Vehicle.
"Car Temps" means Spirit Rent-A-Car, Inc. d/b/a Car Temps USA, an Ohio
corporation, and any successor thereto.
"Car Temps Lease" means the Master Motor Vehicle Lease and Servicing
Agreement, dated as of the date hereof, executed in connection with the issuance
by Car Temps Leasing of the Variable Funding Rental Car Asset Backed Notes,
Series 1999-1, among Car Temps Leasing, as lessor, Car Temps, as lessee, and
Republic, as guarantor and servicer, as the same may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof.
"Car Temps Leasing" means Car Temps Financing L.P., a special purpose
Delaware
<PAGE> 33
limited partnership, and any successor thereto.
"Carrying Charges" means, as of any day, without duplication, the
aggregate of all Trustee fees, Monthly Servicing Fees and other fees and
expenses and indemnity amounts, if any, payable by NFLP under the Indenture (and
not allocated by NFLP to any Series of Notes other than the Group I Notes) or
the other Related Documents (including all fees payable in connection with any
Enhancement), out-of-pocket expenses of NFLP incurred in connection with the
execution, delivery and performance of the Related Documents and all other
operating expenses of NFLP or the General Partner (including independent
director fees and management fees, any fees payable to the Rating Agencies in
connection with their rating of any Series of Group I Notes and any fees or
commissions payable in connection with the sale of any Series of Group I Notes),
in each case, which have accrued since the most recent Distribution Date and any
such amounts which had accrued as of the most recent Distribution Date and
remain unpaid.
"Casualty" means, with respect to any Vehicle, that (i) such Vehicle is
lost, converted or stolen for a period of at least 90 days, (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 Group I
Lease) or (iii) in the case of a Program Vehicle not redesignated under Section
14 of the Group I Lease, the return of such Vehicle cannot be, or is not,
effected for any reason or the Manufacturer thereof did not accept such 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" is defined in Section 7 of the Group I Lease.
"Certificated Security" means a "certificated security" within the
meaning of the applicable UCC.
"Collateral Agreements" means the Assignment Agreements, the Group I
Lease, the Master Collateral Agency Agreement, the Receivables Trust Agreement
and any other agreements relating to the Group I Lease or the Vehicles to which
NFLP is a party.
"Collections" means (i) all payments by, or on behalf of, any Lessee
under the Group I Lease, (ii) all payments on the Master Collateral allocable to
the Trustee as a Beneficiary, including payments made by or on behalf of any
Manufacturer or auction dealer, under the related Manufacturer Program with
respect to Vehicles, but excluding Excluded Payments and payments made
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 and warranty payments
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 and (iv) all amounts earned on Permitted Investments of
funds
<PAGE> 34
in the Group I Collection Account.
"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 or any other state determined by the
applicable Lessee, the lease of which shall be pursuant to Annex B to the Group
I 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, any of the Lessees or NFLP, as applicable.
"Consolidated Subsidiary" means, at any time, with respect to any
Lessee or the Guarantor, any Subsidiary or other entity the accounts of which
would be consolidated with those of such Lessee or the Guarantor, as the case
may be, in its consolidated financial statements as of such time.
"Control" means (a) with respect to a Security Entitlement, the Trustee
(i) is identified in the records of the Securities Intermediary for such
Security Entitlement as the person having such Security Entitlement against such
Security Intermediary or (ii) has obtained the agreement, in writing, of the
Securities Intermediary for such Security Entitlement that it will comply with
orders of the Trustee regarding the transfer or redemption of such Security
Entitlement without further consent of any other person; or (b) with respect to
a United States Security Entitlement, (i) the Trustee is a participant in the
book entry system maintained by the Federal Reserve Bank that is acting as a
fiscal agent for the issuer of such United States Security Entitlement and such
Federal Reserve Bank has indicated by book entry that such United States
Securities Entitlement has been credited to the Trustee's securities account in
such book entry system or (ii) (A) the Trustee (x) is identified in the records
of the Securities Intermediary for such United States Security Entitlement as
the person having such Security Entitlement against such Securities Intermediary
or (y) has obtained the agreement, in writing, of the Securities Intermediary
for such Security Entitlement that it will comply with orders of the Trustee
regarding the transfer or redemption of such Security Entitlement without
further consent of any other person, (B) the Securities Intermediary for such
United States Securities Entitlement is a participant in the book entry system
maintained by the Federal Reserve Bank that is acting as fiscal agent for the
issuer of such United States Securities Entitlement and (C) such Federal Reserve
Bank has indicated by book entry that such United States Securities Entitlement
has been credited to such Securities Intermediary's securities account in such
book entry system.
"Controlled Group" means, with respect to any Person, such Person,
whether or not incorporated, and any corporation, trade or business that is
required to be treated, along with such Person, as a single controlled group of
corporations or a controlled group of trades or businesses as described in
Section 414(b) of the Code.
"Daily Report" is defined in Section 24.6(v) of the Group I Lease.
<PAGE> 35
"Decrease" is defined in Section 4.3 of this Supplement.
"Defaulting Manufacturer" is defined in Section 18 of the Group I
Lease.
"Deficiency Amount" is defined in Section 5.3(a) of this Supplement.
"Delivery" means (a) with respect to any Physical Property (that is not
either a United States Security Entitlement or a Security Entitlement), physical
delivery thereof to the Trustee or its nominee or custodian by an effective
endorsement, or registered in the name of, the Trustee or its nominee or
custodian endorsed in blank and (b) with respect to any Uncertificated Security,
the issuer thereof registers the Trustee as the registered owner thereof or the
Trustee otherwise satisfies the requirements of Revised Article 8.
"Depreciation Charge" means, with respect to (a) any Program Vehicle
subject to the GM Repurchase Program, the rate determined by dividing (x) 100%
minus the repurchase price percentage specified in respect of such Vehicle
pursuant to the terms of the GM Repurchase 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 Vehicle
Order relating to such Vehicle, the applicable depreciation charge set forth in
the GM Repurchase Program for such Vehicle calculated on a daily basis), (b) any
Program Vehicle subject to a Manufacturer Program other than the GM Repurchase
Program (but including any other Manufacturer Program provided by GM), 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)
any Non-Program Vehicle, the scheduled daily depreciation charge for such
Vehicle set forth by or on behalf of the Servicer in the Depreciation Schedule
for such Vehicle. If such charge is expressed as a percentage, the daily
Depreciation Charge for such Vehicle shall be such percentage multiplied by the
Capitalized Cost for such Vehicle calculated on a daily basis. For Vehicles not
held for a full month in the month of acquisition, the Depreciation Charges
shall be prorated by multiplying the applicable depreciation amount by a
fraction, the numerator of which is the number of days from the date
depreciation related to such Vehicle begins to the first day of the next month
and the denominator of which is the number of days in such month. For the month
in which a Program Vehicle is turned back to the applicable Manufacturer, the
Depreciation Charge shall be prorated by multiplying the applicable depreciation
amount by a fraction, the numerator of which is the number of days from the
first day of such month to the Turnback Date for such Vehicle and the
denominator of which is the number of days in such month. In the event a Vehicle
is sold (other than pursuant to the Manufacturer Program of a Manufacturer), the
Depreciation Charge for the month in which such Vehicle is sold shall be
prorated by multiplying the applicable depreciation amount by a fraction, the
numerator of which is the number of days from the first day of such month to the
date proceeds were received by the Trustee from the sale of such Vehicle and the
denominator of which is the number of days in such month.
"Depreciation Schedule " means the initial schedule of estimated daily
depreciation
<PAGE> 36
prepared by the Servicer with respect to each type of Non-Program Vehicle that
is an Eligible Vehicle, as revised from time to time by the Servicer thereof in
its sole discretion, subject to Section 24.18 of the Group I Lease.
"Designated Period" means, with respect to any Program Vehicle subject
to the GM Repurchase Program, the period designated by or on behalf of the
Servicer in the applicable Vehicle Order relating to such Vehicle as the period
of time for which the Servicer expects such Vehicle to be subject to the Group I
Lease.
"Designated Vehicle " means a Vehicle owned by NFLP or a Financed
Vehicle owned by any Lessee with respect to which the Servicer, the Lessee
thereof 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 three Business Days prior to each
Distribution Date.
"Disposition Date" means with respect to any Program Vehicle or
Non-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, the Turnback Date, (ii) if such Vehicle is an
Exchanged Vehicle, the date on which such Vehicle became an Exchanged Vehicle,
(iii) 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 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 or
(iv) if such Vehicle becomes a Casualty or otherwise ceases to be an Eligible
Vehicle (except as a result of a sale thereof), the date on which a Casualty
Payment is received by the Lessor or the Trustee.
"Distribution Date" means, with respect to the Series 1999-1 Notes, the
20th day of each calendar month or, if such day is not a Business Day, the next
succeeding Business Day, commencing March 22, 1999.
"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 Franchisee" means a franchisee of a Lessee having rental
offices located in the
<PAGE> 37
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 Receivable" means a legal, valid and binding receivable (a)
due from a Manufacturer under a Manufacturer Program (other than Excluded
Payments) to the Lessor or any Lessee or a creditor of such Lessee, (b) in
respect of a Program Vehicle purchased by such Manufacturer, or sold at auction
pursuant to such Manufacturer's Manufacturer Program, and 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, (c) owned by the Lessor or such
Lessee or such creditor free and clear of all Liens other than Permitted Liens
and (d) the right to payments in respect of which has been assigned by the payee
thereof to the Master Collateral Agent and with respect to which the Trustee is
designated as the Beneficiary pursuant to the Master Collateral Agency
Agreement; provided that no amount receivable from a Manufacturer under a
Manufacturer Program shall be an Eligible Receivable at the time of being
financed or refinanced if such amount remains unpaid more than ten (10) days
after the Due Date in respect of such payment.
"Eligible Vehicle" means, on any date of determination, a Vehicle (i)
that either is a Program Vehicle or a Non-Program Vehicle, in each case at the
time of leasing under the Group I Lease, (ii) that is not older than forty-eight
(48) months from the date of the original manufacturer invoice therefor, (iii)
that is owned by NFLP or the Lessee thereof free and clear of all Liens other
than Permitted Liens, (iv) other than, to the extent permitted under the Group I
Lease, 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) that is a Related Vehicle with the
Trustee designated as the Beneficiary pursuant to the Master Collateral Agency
Agreement.
"Excess Damage Charges" means, with respect to any Program Vehicle, the
amount charged to NFLP (or any Lessee), or deducted from the Repurchase Price,
by the Manufacturer of such Vehicle due to (i) damage over a prescribed limit,
(ii) if applicable, damage not subject to a prescribed limit and (iii) missing
equipment, in each case with respect to such Vehicle at the time such Vehicle is
turned in to such Manufacturer or its agent or designee 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 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 or designee for repurchase or Auction pursuant to
the applicable Manufacturer Program.
"Exchange Agreement" means an agreement among NFLP, any Lessee and a
Qualified
<PAGE> 38
Intermediary which provides for the assignment by NFLP and such Lessee,
respectively, to such Qualified Intermediary of (a) Exchanged Vehicles, (b) all
Exchanged Vehicle Repurchase Rights, (c) all right, title and interest of NFLP
or such Lessee, as applicable, in, to and under any contracts for the sale of
any Exchanged Vehicles and (d) all right, title and interest of NFLP or such
Lessee, 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 Group I Lease until (i)
satisfaction of the Rating Agency Confirmation and Consent Condition with
respect to each Outstanding Series of Group I Notes and (ii) NFLP and such
Lessee shall have received opinions of counsel with respect to perfection,
priority and non-consolidation in substantially the same form as those delivered
on the Series 1999-1 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 any Lessee, as assignor, and the Manufacturer, permitting NFLP
and/or such Lessee to assign to the Qualified Intermediary NFLP's and/or such
Lessee's right, title and interest in Exchanged Vehicle Repurchase Rights
arising under such Manufacturer Program, which agreement will (i) not become
effective until satisfaction of the Rating Agency Confirmation and Consent
Condition with respect to each Outstanding Series of Group I 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 or a Lessee 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 Financing Agreement
will not become effective with respect to Vehicles subject to the Group I Lease
until (i) satisfaction of the Rating Agency Confirmation and Consent Condition
with respect to each Outstanding Series of Group I Notes and (ii) NFLP obtains
opinions of counsel with respect to perfection, priority and non-consolidation
in substantially the same form as those delivered as of the Series 1999-1
Closing Date.
"Exchanged Vehicle" means a Designated Vehicle that (a) (i) if subject
to a Manufacturer 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
any Lessee 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 Amortization Event or Potential Amortization Event with respect to any Series
of Group I Notes 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.
<PAGE> 39
"Exchanged Vehicle Repurchase Rights" means, with respect to each
Exchanged Vehicle that is a Program Vehicle, all right, title and interest of
NFLP or any Lessee 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 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 any Lessee
or Lessor (whether payable under the Manufacturer Programs or otherwise): (i)
all incentive payments payable to such Lessee or Lessor to purchase vehicles
(but not any amounts payable to such Lessee or Lessor by a Manufacturer as an
incentive for selling Program Vehicles outside of the related Manufacturer
Program), (ii) all amounts payable to such Lessee or Lessor as compensation for
the preparation by such Lessee or Lessor of newly delivered vehicles and (iii)
all amounts payable to such Lessee or Lessor in reimbursement for warranty work
performed by such Lessee or Lessor on the vehicles.
"Existing Indebtedness" means, with respect to a specified Person,
Indebtedness of such Person issued and outstanding on the date such Person
becomes a party to any Related Document, 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 Vehicle as of any date
of determination, the wholesale market value of such Vehicle as specified in the
Related Month's published Lease 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; provided, that if the Lease Guide is not
being published or the Lease Guide is being published but such Vehicle is not
included therein, the Finance Guide at the beginning of the model year shall be
used to estimate the wholesale market value of the Vehicle, based on the
Vehicle's model class and model year or the closest model class and model year
thereto and a vehicle condition of "average" (as defined in the Finance Guide);
provided, further, that if the Finance Guide is not being published or the
Finance Guide is being published but such Vehicle is not included therein, the
wholesale market value of such Vehicle shall be based on an independent
third-party data source, and determined in accordance with a methodology, with
respect to which the Rating Agency Confirmation Condition with respect to each
Outstanding Series of Group I Notes shall have been satisfied; provided,
further, that if no such third-party data source or methodology shall have been
so approved or any such third-party source or methodology is not available, the
wholesale market value of such Vehicle shall be the Capitalized Cost of such
Vehicle less depreciation charges at a
<PAGE> 40
rate equal to the Republic Historical Depreciation Rate as of such date of the
Capitalized Cost of such Vehicle since the date of such Vehicle's purchase.
"Finance Guide" means the Black Book Official Finance/Lease Guide.
"Financed Vehicle" means an Eligible Vehicle subject to the Financing
Lease.
"Financing Lease" means the Group I Lease as supplemented by Annex B
thereto.
"Fleet Purchase Amount" means, on any date of determination with
respect to (i) the Series 1999-1 Notes, an amount equal to 15% of the aggregate
purchase commitments of all ARG Committed Purchasers on such date, and (ii) any
other Series of Group I Notes, the amount set forth in the applicable
Supplement.
"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 an Initial Fleet) of all vehicles leased under the Group I
Lease during the preceding 12 calendar months which were acquired by a Lessee in
a Fleet Purchase Transaction, is less than the aggregate of the Fleet Purchase
Amounts with respect to each Outstanding Series of Group I Notes, (b) all the
vehicles in such pool are titled in the name of the same wholly owned Subsidiary
of Republic, (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 with
respect to each outstanding Series of Notes.
"Fleet Sharing Agreement" means, with respect to the Group I Lease, an
agreement pursuant to which a Lessee agrees to let a Fleet Sharing Party use
Vehicles leased by such Lessee under the Group I Lease.
"Fleet Sharing Party" means an Eligible Affiliate or Eligible
Franchisee that is using 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 Repurchase Program" means the Manufacturer Program titled "General
Motors Corporation Passenger Car and Light Duty Truck 100% Repurchase Program
for Daily Rental Operators - Program No. 99-02," and any substantially similar
Manufacturer Program of GM for any other model years, 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
<PAGE> 41
and the month of return as set forth in such Manufacturer Program.
"Group I Collateral" is defined in Section 3.1(a) of this Supplement.
"Group I Collection Account" is defined in Section 5.1(a) of this
Supplement.
"Group I Lease" means the Master Motor Vehicle Lease and Servicing
Agreement, dated as of February 26, 1999, among the Lessor, National and the
Additional Lessees, if any, as the lessees thereunder, and Republic, as
guarantor and servicer, as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms, exclusive of Lease
Annexes.
"Group I Noteholders" means the Holders of the Group I Notes.
"Group I Notes" means, collectively, the Series 1999-1 Notes and any
other Series of Notes issued pursuant to a Supplement which provides that the
NFLP Obligations with respect to such Series are secured by the Group I Lease,
the Vehicles leased thereunder and any other Group I Collateral.
"Group I Percentage" means, with respect to any Series of Group I
Notes, as of any date of determination, a fraction, expressed as a percentage,
the numerator of which is the Invested Amount of such Series of Group I Notes as
of such date and the denominator of which is the Aggregate Group I Invested
Amount as of such date.
"Group I Required Asset Amount" means the sum of the Invested Amounts
and any required overcollateralization with respect to each Outstanding Series
of Group I Notes.
"Guaranteed Depreciation Program" means, with respect to the Series
1999-1 Notes, a guaranteed depreciation program pursuant to which a Manufacturer
has agreed with the Lessor or any Lessee to (a) cause Vehicles manufactured by
it or one of its Affiliates that are turned back during the specified Repurchase
Period to be sold by an auction dealer, (b) cause the proceeds of any such sale
to be paid to the Lessor or such Lessee by such auction dealer after such sale
and (c) pay to the Lessor or such Lessee the excess, if any, of the guaranteed
payment amount with respect to any such Vehicle calculated as of the Turnback
Date in accordance with the provisions of such guaranteed depreciation program
over the amount paid to the Lessor or such Lessee by an auction dealer pursuant
to clause (b) above.
"Guarantor" means Republic, in its capacity as guarantor of each
Lessee's obligations under the Group I Lease.
"Guaranty" is defined in Section 28.1 of the Group I Lease.
"Increase" is defined in Section 4.2(a) of this Supplement.
<PAGE> 42
"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 receivable (other than Excluded Payments and amounts receivable in
respect of Exchanged Vehicles) as of such date by any Lessee or the Lessor under
and in accordance with a Manufacturer Program with respect to Program Vehicles
leased under the Group I Lease from a Manufacturer with respect to which a
Manufacturer Event of Default specified in clause (i) or (ii) of the definition
of "Manufacturer Event of Default" has occurred, plus (b) the aggregate of all
Eligible Receivables financed under the Group I Lease or the Indenture owed by a
Manufacturer under and in accordance with a Manufacturer Program with respect to
which a Manufacturer Event of Default specified in clause (i) or (ii) of the
definition of "Manufacturer Event of Default" has occurred, plus (c) the
aggregate of all amounts receivable (other than Excluded Payments and amounts
receivable in respect of Exchanged Vehicles) as of such date by any Lessee or
the Lessor from a Manufacturer under and in accordance with a Manufacturer
Program with respect to Program Vehicles leased under the Group I Lease which
amounts are unpaid more than one hundred (100) days past the applicable Due
Date, plus (d) the aggregate of all Eligible Receivables financed under the
Group I Lease or the Indenture as of such date owed by a Manufacturer under and
in accordance with a Manufacturer Program which amounts are unpaid more than one
hundred (100) days past the applicable Due Date, plus (e) the aggregate of all
amounts specified in clauses (iii) and (iv) of the definition of "Aggregate
Asset Amount" which are unpaid more than 30 days past the applicable disposition
date, plus (f) the aggregate of all amounts specified in clause (v) of the
definition of "Aggregate Asset Amount" which are past due as of such date and in
respect of which any grace period provided for in the applicable Lease for the
making of such payments has expired.
"Initial Determination Date" means, with respect to any 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) on the date any Additional Lessee is added
pursuant to Section 29 of the Group I 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 the Lessor under the Group I Lease
pursuant to the initial Vehicle Order of such Additional Lessee, and (b) on any
other Vehicle Funding Date, the Refinanced Vehicles included in a Fleet Purchase
Transaction.
"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement, dated as of February 26, 1999, by and among Republic, Alamo,
National, Car Temps, 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, modified or supplemented from time to
time in accordance with its terms.
"Interest Collections" means on any date of determination, all
Collections which, pursuant to the Group I Lease, represent payments of Monthly
Variable Rent or Monthly Finance Rent plus any amounts earned on Permitted
Investments in the Series 1999-1 Collection Account which are available for
distribution on such date.
<PAGE> 43
"Issuer's Share" is defined in the ARG Base Indenture.
"Lease Annex" means Annex A or Annex B to the Group I Lease, as the
same may be amended, supplemented, restated or modified from time to time in
accordance with its terms.
"Lease Commencement Date" is defined in Section 3.2 of the Group I
Lease.
"Lease Event of Default" is defined in Section 17.1 of the Group I
Lease.
"Lease Expiration Date" is defined in Section 3.2 of the Group I Lease.
"Lease Guide" means the National Automobile Dealers Association,
Official Used Car Guide, Central Edition.
"Lease Payment Deficit" means, for any Related Month, an amount equal
to the excess, if any, of (a) the aggregate amount of payments required to be
made under the Group I Lease with respect to the Related Month, over (b) the
aggregate amount of payments actually made under the Group I Lease with respect
to the Related Month.
"Lease Payment Rights" 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 and Monthly Supplemental Payments
under the Group I Lease, whether payable by any Lessee or the Guarantor.
"Leasing Company Lease" means, collectively, the Alamo Lease, the Car
Temps Lease and any other vehicle lease to which Republic or an Affiliate of
Republic is a party that together with the Alamo Lease, the Group I Lease and
the Car Temps Lease secures the obligations of an Affiliate Issuer.
"Lessee" means each of National and each Additional Lessee, in its
capacity as a lessee under the Group I Lease, or any successor by merger to any
such Person, in accordance with Section 25.1 of the Group I Lease, or any other
permitted successor or assignee of such Person, in its capacity as a lessee,
pursuant to Section 16 of the Group I 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 Group I 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" is defined in the Master Collateral
Agency Agreement.
<PAGE> 44
"Lessor" means NFLP, in its capacity as the lessor under the Group I
Lease.
"Liabilities" means all obligations to the Lessor of the Lessees or the
Guarantor arising under or in connection with the Group I Lease, howsoever
created, arising or evidenced, whether direct or indirect, joint or several,
absolute or contingent, or now or hereafter existing, or 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, so long as such event or
condition continues, any of the following: (a) an event specified in Section
9.1(e)(i) of the Base Indenture, (b) an Event of Bankruptcy with respect to
Republic, Alamo, Car Temps, National or any other lessee under a Leasing Company
Lease, (c) an Event of Bankruptcy with respect to Alamo Leasing, Car Temps
Leasing, NFLP, any other lessor under a Leasing Company Lease, the General
Partner, the general partner of Alamo Leasing or of Car Temps Leasing or the
general partner of any other lessor under a Leasing Company Lease or (d) a
payment default under any Leasing Company Lease (after giving effect to any
grace period therefor set forth therein).
"Manufacturer" means a manufacturer or distributor of passenger
automobiles and/or light trucks.
"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 owing to any of the
Lessees, any other lessee under a Leasing Company Lease, the Lessor or any other
lessor under a Leasing Company Lease from such Manufacturer are equal to or in
excess of the lesser of (x) $25 million and (y) 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, (A) that are the subject of a good faith
dispute as evidenced in a writing by any of the Lessees, any other lessee under
a Leasing Company Lease, the Lessor or any other lessor under a Leasing Company
Lease, 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 such Lessee, such other lessee, the Lessor or such other lessor
has provided adequate reserves as reasonably determined by such Person, (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 Repurchase Program or Guaranteed Depreciation Program to
meet the requirements of an Eligible Manufacturer Program.
<PAGE> 45
"Manufacturer Payment Rights" means all rights of NFLP under any
Manufacturer Program to receive payments on account of Repurchase Prices of
Program Vehicles.
"Manufacturer Program" means, at any time, any Repurchase Program or
Guaranteed Depreciation Program that is in full force and effect with a
Manufacturer (i) pursuant to which the repurchase price or guaranteed auction
sale price is at least equal to (a) with respect to the GM Repurchase 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 other similar charges,
or (b) with respect to any Manufacturer Program other than the GM Repurchase
Program (but including any other Manufacturer Program provided by 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 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, Lessor is an
Authorized Fleet Purchaser or, with respect to Financed Vehicles (other than
Company 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 (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 officer's
certificate or 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.
"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 Agency Agreement" means the Third Amended and
Restated Master Collateral Agency Agreement, dated as of February 26, 1999,
among NFLP, Alamo Leasing, Car Temps Leasing, National, Alamo and Car Temps, as
grantors, Republic, as master servicer, 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, restated, 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 or permitted assign in such capacity thereunder.
<PAGE> 46
"Material Adverse Effect" means (A) with respect to any Lessee, Lessor
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 such Lessee, Lessor or Republic, as the case may be, and
its Consolidated Subsidiaries taken as a whole, that materially adversely
affects the ability of such Lessee, Lessor or Republic to perform its respective
obligations under any of the Related Documents; or
(ii) a material adverse effect on the ability of such Lessee, Lessor 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 1999-1 Notes, an adverse effect on (a)
the enforceability of the Group I Lease or (b) the priority or perfection of the
Trustee's or the Master Collateral Agents' Lien on a material portion of the
Group I Collateral or Master Collateral applicable thereto, respectively.
"Monthly Base Rent" with respect to the Acquired Vehicles and the
Financed Vehicles, respectively, is defined in the related Lease Annex.
"Monthly Finance Rent" is defined in Section 6 of Annex B of the Group
I Lease.
"Monthly Servicing Fee" is defined in Section 26.1 of the Group I
Lease.
"Monthly Supplemental Payment" is defined in Section 6 of Annex B of
the Group I Lease.
"Monthly Total Principal Allocation" means for any Related Month the
sum of all Series 1999-1 Principal Allocations with respect to such Related
Month.
"Monthly Variable Rent" is defined in Section 9 of Annex A of the Group
I Lease.
"Monthly Vehicle Statement" is defined in Section 24.6 of the Group I
Lease.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Pension Plan defined in Section 4001 of
ERISA.
"Multiple Employer Plan" means a Pension Plan maintained by members of
more than one Controlled Group.
"Named Lessee" is defined in Section 8 of the Group I Lease.
"Named Servicer" is defined in Section 26.3 of the Group I Lease.
<PAGE> 47
"Net Book Value" means, with respect to any Vehicle being leased under
the Group I 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 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 Financing 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 Financing 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.
"NFLP Agreements" means the Group I Lease, the Assignment Agreements,
the Base Indenture, as supplemented by this Supplement, the Receivables Trust
Agreement and 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 Group I Notes and all costs, fees and
expenses payable by, or obligations of, NFLP under the Base Indenture, the
Series 1999-1 Supplement and the other Related Documents with respect to the
Group I Notes.
"Non-Program Maximum Term" means, with respect to a Non-Program
Vehicle, the earlier of (x) the last day of the forty-second (42nd) month after
the date of the original new dealer invoice for such Non-Program Vehicle and (y)
the last day of the maximum Vehicle Lease term for such Non-Program Vehicle
under the Group I Lease.
"Non-Program Vehicle" means a Vehicle which is not subject to a
Manufacturer Program at the time of its leasing under the Group I Lease or which
is redesignated as a Non-Program Vehicle pursuant to Section 14 of the Group I
Lease.
"Non-Program Vehicle Report" is defined in Section 24.6 of the Group I
Lease.
"Officer's Certificate" means a certificate signed by an Authorized
Officer of the Guarantor, Lessor or the applicable Lessee, as the case may be.
"Operating Lease" means the Group I Lease as supplemented by Annex A
thereto.
<PAGE> 48
"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 any Lessee. An Opinion of Counsel may, to the extent same is based on any
factual matter, rely on an Officer's Certificate as to the truth of such factual
matter.
"Payment Date" means the 20th day of each month, or if such date is not
a Business Day, the next succeeding Business Day, commencing March 22, 1999.
"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 any Lessee or any Subsidiaries; (e) a Lien
constituting a lease or sublease granted by any Lessee 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 any
Lessee or (ii) any asset prior to the acquisition thereof by any of any Lessee
or a Consolidated Subsidiary, but only, in the case of either clause (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 any Lessee or such property is acquired and to fixed
improvements thereafter erected on such property; (g) a Lien in existence on the
Series 1999-1 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 Lessee 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
<PAGE> 49
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 (j) 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. For this purpose
"Purchase Money Indebtedness" means Indebtedness of any Lessee or any
Consolidated Subsidiary that, 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 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.
"Permitted Investments" means negotiable instruments or securities
maturing on or before the Distribution Date next occurring after the investment
therein, payable in Dollars, issued by an entity organized under the laws of the
United States of America and 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 other than financial contracts whose value depends on the values or
indices of asset values; (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
whose short-term debt is rated P-1 by Moody's and A-1 or higher by Standard &
Poor's 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+", in the case of certificates of
deposit or short-term deposits, or a rating from Standard & Poor's not lower
than "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+"; (iv) bankers' acceptances issued by any depositary institution or
trust company described in clause (ii) above; (v) investments in money market
funds rated "AAm" by Standard & Poor's or otherwise approved in writing by
Standard & Poor's; (vi) Eurodollar time deposits having a credit rating from
Standard & Poor's of "A-1+"; (vii) repurchase agreements involving any of the
Permitted Investments described in clauses (i) and (vi) 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 P-1
by Moody's or which otherwise is approved as to collateralization by the Rating
Agencies; and (viii) 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
<PAGE> 50
any Series of Notes.
"Physical Property" means banker's acceptances, commercial paper,
negotiable certificates of deposits and other obligations that constitute
"instruments" within the meaning of Section 9-105(l)(i) of the applicable UCC
and are susceptible to physical delivery and Certificated Securities.
"Potential Lease Event of Default" means any occurrence or event which,
with the giving of notice, passage of time or both, would constitute a Lease
Event of Default.
"Program Vehicle" means a Vehicle eligible, and subject to, a
Manufacturer Program.
"Qualified Intermediary" means a party, rated not less than A by
Standard & Poor's and A2 by Moody's and designated in an Exchange Agreement as
an intermediary for exchanges of Vehicles by NFLP or any Lessee pursuant to such
Exchange Agreement.
"Rating Agencies" means, with respect to (i) the Series 1999-1 Notes,
Standard & Poor's, Moody's and any other nationally recognized rating agency
rating any series of ARG Notes at the request of ARG or rating any commercial
paper notes issued by a special purpose company at the request of ARG in order
to finance such special purpose company's purchase of any series of ARG Notes
from ARG and (ii) any other Series of Group I Notes, any rating agency or
agencies then issuing a rating for (x) such Series of Group I Notes or any class
thereof, (y) a series of notes issued by an Affiliate Issuer secured by such
outstanding Series of Group I Notes or (z) commercial paper notes issued to fund
the purchase of a series of notes issued by an Affiliate Issuer secured by such
outstanding Series of Group I Notes, in each case, at the request of NFLP or any
Lessee.
"Rating Agency Confirmation and Consent Condition" means with respect
to (i) the Series 1999-1 Notes and any action, that (i) each Rating Agency shall
have notified the Trustee, ARG and the ARG Trustee in writing that such action
will not result in a reduction or withdrawal of the rating of any series of ARG
Notes (without regard to the presence of any insurance policy guaranteeing the
payment of principal of, or interest on, any such series of ARG Notes) or the
rating of any commercial paper notes issued by an ARG Committed Purchaser and
(ii) ARG shall have consented in writing to such action and (ii) any other
Series of Group I Notes, the actions and consents described in the applicable
Supplement.
"Rating Agency Confirmation Condition" means, with respect to (i) the
Series 1999-1 Notes and any action, that each Rating Agency shall have notified
the Trustee, ARG and the ARG Trustee in writing that such action will not result
in a reduction or withdrawal of the rating of any series of ARG Notes (without
regard to the presence of any insurance policy guaranteeing the payment of
principal of, or interest on, any such series of ARG Notes) or the rating of any
commercial paper notes issued by a special purpose company at the request of ARG
in order to finance such special purpose company's purchase of any series of ARG
Notes from ARG and (ii)
<PAGE> 51
any other Series of Group I Notes, the actions described in applicable
Supplement.
"Receivables Trust" means the trust created under and pursuant to the
Receivables Trust Agreement.
"Receivables Trust Agreement" means the trust agreement dated as of
February 26, 1999 between NFLP, as grantor, and The Bank of New York (Delaware),
as trustee.
"Receivables Trustee" means The Bank of New York (Delaware), in its
capacity as trustee under the Receivables Trust Agreement.
"Record Date" means, with respect to each Distribution Date, the
Business Day immediately preceding such Distribution Date.
"Refinanced Vehicle Schedule" is defined in Section 2.1(b) of the Group
I Lease.
"Refinanced Vehicles" means Eligible Vehicles (a) owned by Lessor or
any Lessee prior to the Lease Commencement Date under the Group I Lease (i)
which are (A) subject to the lien of the Master Collateral Agent or (B) listed
on Schedule II to the Supplement and a first priority lien on which has been
assigned to the Master Collateral Agent and (ii) are refinanced by Lessor under
the Group I Lease on the Series 1999-1 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 Lessor under the
Financing Lease on the Additional Lessee Closing Date with respect to such
Additional Lessee, (c) owned by Lessor 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 Lessor under the Group I Lease on any date after
the Lease Commencement Date under the Group I Lease or (d) acquired by a Lessee
in a Fleet Purchase Transaction (i) a first priority lien in which has been
assigned to the Master Collateral Agent and (ii) which are refinanced by Lessor
under the Financing Lease.
"Related Documents" means, collectively, the Collateral Agreements, the
Indenture, the Series 1999-1 Notes, any other Series of Group I Notes, any
Enhancement Agreement, any Swap Agreement and any agreements relating to the
issuance or the purchase of any of the Series of Group I Notes or the Group I
Lease.
"Related Month" means, (i) with respect to any Payment Date,
Determination Date or Distribution Date, the most recently ended calendar month
and (ii) with respect to a Series 1999-1 Interest Period, the month in which
such Series 1999-1 Interest Period commences; provided, however, that with
respect to the above clause (i), 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.
<PAGE> 52
"Rent", with respect to each Acquired Vehicle and each Financed
Vehicle, is defined in Section 9 of Annex A to the Group I Lease and in Section
6 of Annex B to the Group I Lease, respectively.
"Replacement Vehicle" means an Eligible Vehicle (i) which is owned by
NFLP or any Lessee, (ii) which is in the possession of NFLP or any Lessee, (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.
"Republic" means Republic Industries, Inc., a Delaware corporation, and
any successor thereto.
"Republic Historical Depreciation Rate" means, as of any date of
determination, the weighted average Depreciation Charge accruing with respect to
Non-Program Vehicles during the six calendar months preceding such date.
"Repurchase Amount" means, on the Repurchase Date, an amount equal to
the Series 1999-1 Invested Amount, plus (i) all accrued and unpaid interest on
the Series 1999-1 Notes for the period from and including the immediately
preceding Distribution Date to and excluding the Repurchase Date calculated at
the Series 1999-1 Note Rate, (ii) the Series Monthly Servicing Fee with respect
to the Series 1999-1 Notes calculated for the period from and including the
immediately preceding Distribution Date to and excluding the Repurchase Date and
(iii) without duplication, any other Accrued Amounts with respect to the Series
1999-1 Notes then due and payable.
"Repurchase Date" is defined in Section 8.1 of this Supplement.
"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
<PAGE> 53
with a Lessee or NFLP to repurchase Vehicles manufactured by such Manufacturer
or one of its Affiliates during the specified Repurchase Period.
"Required Noteholders" means, with respect to the Series 1999-1 Notes,
the ARG Trustee acting at the direction of the requisite percentage of the ARG
Noteholders in accordance with the ARG Indenture.
"Requisite Investors" means Noteholders holding in excess of 50% of the
aggregate Invested Amount of all outstanding Series of Group I Notes (excluding,
for the purposes of making the foregoing calculation, any Notes held by (i) NFLP
or any Affiliate of NFLP (other than an Affiliate Issuer) or (ii) any Lessee or
any Affiliate of any Lessee (other than an Affiliate Issuer)).
"Revised Article 8" means Revised Article 8 (1994 Version) (and
corresponding amendments to Article 9) as promulgated by the National Conference
of Commissioners on Uniform State Laws.
"Securities Intermediary" means a "securities intermediary" within the
meaning of Section 8-102(a)(14) of Revised Article 8.
"Security Entitlement" means a "security entitlement" within the
meaning of Section 8-102(a)(17) of Revised Article 8.
"Secured Parties" is defined in Section 3.1(a) of this Supplement.
"Series Monthly Servicing Fee" means, on each Payment Date with respect
to any Series of Group I Notes, an amount equal to the product of (a)
one-twelfth of the Servicing Fee Percentage with respect to such Series of Notes
and (b) the Invested Amount of such Series of Notes on the immediately preceding
Payment Date (after giving effect to any payments of principal on such date).
"Series 1996-1 Notes" means the Rental Car Asset Backed Notes, Series
1996-1, issued by NFLP pursuant to the related Supplement.
"Series 1997-2 Notes," "Series 1997-3 Notes" and "Series 1997-4 Notes"
means the Variable Funding Rental Car Note Asset Backed Notes, Series 1997-2,
Series 1997-3 and Series 1997-4, issued by NFLP pursuant to the related
Supplements.
"Series 1999-1 Accrued Interest Account" is defined in Section 5.1(b)
of this Supplement.
"Series 1999-1 Aggregate Asset Amount" means, as of any date of
determination, the product of (a) the Group I Percentage with respect to the
Series 1999-1 Notes as of such date and (b) the Aggregate Asset Amount as of
such date.
<PAGE> 54
"Series 1999-1 Closing Date" means February 26, 1999.
"Series 1999-1 Collection Account" is defined in Section 5.1(b) of this
Supplement.
"Series 1999-1 Demand Note" means the demand note made by Republic to
National and assigned by National to NFLP which is payable by Republic upon
NFLP's demand, substantially in the form of Exhibit B.
"Series 1999-1 Deposit Date" is defined in Section 5.2 of this
Supplement.
"Series 1999-1 Enhancement Amount" means, as of any date of
determination, the Series 1999-1 Overcollateralization Amount as of such date.
"Series 1999-1 Enhancement Deficiency" means, on any date of
determination, the amount by which the Series 1999-1 Enhancement Amount is less
than the Series 1999-1 Required Enhancement Amount as of such date.
"Series 1999-1 Excess Collection Account" is defined in Section 5.1(b)
of this Supplement.
"Series 1999-1 Initial Invested Amount" means $1,206,663,350.
"Series 1999-1 Interest Period" means a period commencing on and
including a Distribution Date and ending on and including the day preceding the
next succeeding Distribution Date; provided, however, that the initial Series
1999-1 Interest Period shall commence on and include the Series 1999-1 Closing
Date and end on and include March 21, 1999.
"Series 1999-1 Invested Amount" means, when used with respect to any
date, an amount equal to (a) the Series 1999-1 Initial Invested Amount minus (b)
the amount of principal payments made pursuant to Section 5.4 of this Supplement
to the Series 1999-1 Noteholder on or prior to such date plus (c) any Increases
in the Series 1999-1 Invested Amount pursuant to Section 4.2 of this Supplement
on or prior to such date.
"Series 1999-1 Invested Percentage" means on any date of determination:
(a) when used with respect to Principal Collections, the
percentage equivalent (which percentage shall never exceed 100%) of a
fraction the numerator of which shall be equal to the sum of the Series
1999-1 Invested Amount and the Series 1999-1 Overcollateralization
Amount, determined during the Series 1999-1 Revolving Period at the
close of business on the immediately preceding Business Day, or, during
the Series 1999-1 Rapid Amortization Period, at the close of business
on the last day of the Series 1999-1 Revolving Period, and the
denominator of which shall be the greater of (I) the
<PAGE> 55
Aggregate Asset Amount determined during the Series 1999-1 Revolving
Period as of such date of determination or, during the Series 1999-1
Rapid Amortization Period, at the close of business on the last day of
the Series 1999-1 Revolving Period, and (II) as of the same date as in
clause (I), the sum of the numerators used to determine invested
percentages for allocations with respect to Principal Collections (for
all Series of Group I Notes and all classes of such Series of Group I
Notes); and
(b) when used with respect to Interest Collections, the
percentage equivalent (which percentage shall never exceed 100%) of a
fraction the numerator of which shall be the Accrued Amounts with
respect to the Series 1999-1 Notes on such date of determination, and
the denominator of which shall be the aggregate Accrued Amounts with
respect to all Series of Group I Notes on such date of determination.
"Series 1999-1 Limited Liquidation Event of Default" means, so long as
such event or condition continues, any Series 1999-1 Affiliate Issuer
Liquidation Event or any event or condition of the type specified in clause (a),
(b), (c) or (d) of Article 7 of this Supplement that continues for thirty (30)
days (without double counting the cure period, if any, provided therein);
provided however, that any Series 1999-1 Affiliate Issuer Liquidation Event or
event or condition of the type specified in clause (a), (b), (c) or (d) of
Section 7.1 of this Supplement shall not constitute a Series 1999-1 Limited
Liquidation Event of Default if within such thirty (30) day period, such Series
1999-1 Affiliate Issuer Liquidation Event, Series 1999-1 Enhancement Deficiency
or payment default, as the case may be, shall have been cured, and, after such
cure is provided for, the Rating Agency Confirmation Condition with respect to
the Series 1999-1 Notes shall have been satisfied with respect to such cure.
"Series 1999-1 Maximum Invested Amount" means $2,000,000,000, as such
amount may be increased or reduced from time to time pursuant to a written
agreement between NFLP and ARG.
"Series 1999-1 Noteholder" means ARG, as registered holder of the
Series 1999-1 Notes.
"Series 1999-1 Note Rate" means, with respect to any Series 1999-1
Interest Period, the interest rate equal to the sum of (a) 1/12 of the
Additional Spread Percentage as of the first day of such Series 1999-1 Interest
Period and (b) the percentage equivalent of a fraction, the numerator of which
is equal to (i) the sum of (x) the product of (A) the sum of (1) the aggregate
amount of interest payable by ARG on the ARG Notes in respect of such Series
1999-1 Interest Period on the next succeeding Distribution Date (excluding any
amounts previously paid pursuant to Section 5.3(c) of this Supplement), (2) all
unpaid fees, costs, expenses and indemnities payable by ARG on or prior to such
Distribution Date pursuant to the ARG Indenture and any of the other ARG
Agreements (including any amounts payable by ARG to any Person providing credit
enhancement for any ARG Notes), (3) all unreimbursed out-of-pocket costs and
expenses (including reasonable attorneys' fees and legal expenses) incurred by
ARG in connection with the administration, enforcement, waiver or amendment of
the ARG Indenture and any of the
<PAGE> 56
other ARG Agreements on or prior to such Distribution Date and (4) all other
operating expenses of ARG (including any management fees) and (B) the Issuer's
Share as of the first day of such Series 1999-1 Interest Period and (y) all
unreimbursed out-of-pocket costs and expenses (including reasonable attorneys'
fees and legal expenses) incurred by ARG in connection with the administration,
enforcement, waiver or amendment of any Related Document prior to such
Distribution Date and (ii) the denominator of which is equal to the average
daily Series 1999-1 Invested Amount during such Series 1999-1 Interest Period;
provided, however, that the Series 1999-1 Note Rate will in no event be higher
than the maximum rate permitted by applicable law.
"Series 1999-1 Notes" means any one of the Series 1999-1 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.
"Series 1999-1 Overcollateralization Amount" means, as of any date of
determination, the excess, if any, of the Series 1999-1 Aggregate Asset Amount
over the Series 1999-1 Invested Amount as of such date.
"Series 1999-1 Principal Allocation" is defined in Section 5.2(a)(ii)
of this Supplement.
"Series 1999-1 Rapid Amortization Period" means the period beginning at
the close of business on the Business Day immediately preceding the day on which
a Termination Event is deemed to have occurred and ending upon the earliest to
occur of (i) the date on which the Series 1999-1 Notes are fully paid, (ii) the
Series 1999-1 Termination Date and (iii) the termination of the Indenture.
"Series 1999-1 Required Enhancement Amount" means, as of any date of
determination, the Series 1999-1 Required Overcollateralization Amount on such
date.
"Series 1999-1 Required Overcollateralization Amount" means, as of any
date of determination, the product of (x)0.50% and (y) the Series 1999-1
Invested Amount as of such date.
"Series 1999-1 Revolving Period" means the period from and including
the Series 1999-1 Closing Date to the commencement of the Series 1999-1 Rapid
Amortization Period.
"Series 1999-1 Servicing Fee Percentage" means 0.50% per annum.
"Series 1999-1 Termination Date" means the first Distribution Date that
is 60 or more months after the ARG Revolving Period Termination Date.
"Servicer" means Republic, in its capacity as servicer of Vehicles
under the Group I Lease and as master servicer under 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"
<PAGE> 57
shall, to such extent, include the Master Collateral Agent.
"Subordinated Note" means the subordinated note made by Republic to
National and assigned to NFLP which is payable by Republic upon NFLP's demand.
"Sub-Servicer" is defined in Section 26.3 of the Group I Lease.
"Supplement" is defined in the preamble.
"Supplemental Documents" is defined in Section 2.1(c) of the Group I
Lease.
"Term" is defined in Section 3.2 of the Group I Lease.
"Termination Event" means the earlier to occur of (a) the day on which
an Amortization Event is deemed to have occurred with respect to the Series
1999-1 Notes and (b) the ARG Revolving Period Termination Date.
"Termination Payment" is defined in Section 12.3(b) of the Group I
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) unless
otherwise deducted in the calculation of "Capitalized Cost", all Depreciation
Charges for such vehicle accrued prior to such date.
"Turnback Date" means, with respect to any Program Vehicle, the date on
which such Vehicle is accepted for return by a Manufacturer or its agent
pursuant to its Manufacturer Program and the Depreciation Charges cease to
accrue pursuant to its Manufacturer Program.
"Uncertificated Security" means an "uncertificated security" within the
meaning of the applicable UCC.
"United States Security Entitlement" means a "Security Entitlement" as
defined in 31 C.F.R. Section 357.2, 24 C.F.R. Section 1.2, 12 C.F.R. Section
912.1, 12 C.F.R. Section 1511.1, 12 C.F.R. Section 615.5450 or 31 C.F.R. Section
354.1.
"Used Vehicle" is defined in Section 2.1(e) of the Group I Lease.
"Used Vehicle Transaction" is defined in Section 2.1(e) of the Group I
Lease.
"Vehicle" means a passenger automobile or light truck purchased,
financed or refinanced by NFLP under the Group I Lease and pledged under the
Master Collateral Agency Agreement for the benefit of the Trustee (on behalf of
the Group I Noteholders), but solely during the Vehicle Term for such Vehicle.
<PAGE> 58
"Vehicle Assignment and Nominee Agreement" means, with respect to any
Vehicles in an Initial Fleet leased by a Lessee, the vehicle assignment and
nominee agreement among such Lessee, the Master Collateral Agent and the other
parties thereto, pursuant to which the then existing liens in such Vehicles are
assigned to the Master Collateral Agent.
"Vehicle Funding Date" is defined in Section 3.1 of the Group I Lease.
"Vehicle Lease Commencement Date" is defined in Section 3.1 of the
Group I Lease.
"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 or ceases to be an Eligible Vehicle, 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 thereof in accordance with the
Group I 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 Group I Lease.
"Vehicle Order" is defined in Section 2.1(c) of the Group I Lease.
"Vehicle Perfection and Documentation Requirements" means, (i) with
respect to a Vehicle (other than, to the extent permitted under the Group I
Lease, Vehicles in an Initial Fleet), 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: Lessor or any Lessee, as the registered owner and the Master
Collateral Agent as the first lienholder or (ii) in the case of such Vehicles in
such Initial Fleet, the assignment to the Master Collateral Agent of the
lienholder's lien with respect to such Vehicles in such Initial Fleet.
"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 such
Vehicle.
"Vehicle Term" is defined in Section 3.1 of the Group I Lease.
"VFR" 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 Group I Notes, divided by (ii) the average
daily aggregate Invested Amounts of all Series of Group I Notes during such
period.
<PAGE> 59
"VIN" means vehicle identification number.
<PAGE> 60
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PRELIMINARY STATEMENT .............................................................. 1
ARTICLE 1
DESIGNATION ........................................................................ 1
ARTICLE 2
DEFINITIONS ........................................................................ 2
Section 2.1 Definitions ....................................................... 2
Section 2.2 Cross References .................................................. 3
ARTICLE 3
SECURITY ........................................................................... 3
Section 3.1 Grant of Security Interest ........................................ 3
ARTICLE 4
INITIAL ISSUANCE AND INCREASES AND DECREASES OF SERIES 1999-1 INVESTED AMOUNT OF
SERIES 1999-1 NOTES ................................................................ 5
Section 4.1 Issuance in Definitive Form ....................................... 5
Section 4.2 Procedure for Increasing the Invested Amount ...................... 5
Section 4.3 Procedure for Decreasing the Series 1999-1 Invested Amount ........ 7
ARTICLE 5
SERIES 1999-1 ALLOCATIONS .......................................................... 8
Section 5.1 Establishment of Group I Collection Account and Subaccounts
Thereof; Collections ..................................................... 8
Section 5.2 Allocations with Respect to the Series 1999-1 Notes .............. 10
Section 5.3. Payments To Series 1999-1 Noteholder ............................. 12
Section 5.4. Payment of Note Principal ........................................ 14
Section 5.5. The Servicer's Failure to Instruct the Trustee to Make a
Deposit or Payment ....................................................... 14
Section 5.6. Payments by Wire Transfer ........................................ 15
Section 6.1. Waiver of Certain Provisions of Base Indenture ................... 15
Section 6.2. Information ...................................................... 15
Section 6.3. Manufacturer Programs ............................................ 16
Section 6.4. True Lease Opinion ............................................... 17
ARTICLE 7
AMORTIZATION EVENTS ................................................................ 17
Section 7.1. Amortization Events .............................................. 17
Section 7.2. Rights of the Trustee upon Amortization Event or Certain Other
Events of Default ........................................................ 18
Section 7.3. Rights of the Trustee upon Affiliate Issuer Liquidation Event .... 19
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 8
GENERAL ............................................................................ 20
Section 8.1. Optional Repurchase ............................................. 20
Section 8.2. Information ..................................................... 20
Section 8.3. Exhibits ........................................................ 20
Section 8.4. Ratification of Base Indenture .................................. 20
Section 8.5. Counterparts .................................................... 20
Section 8.6. Governing Law ................................................... 20
Section 8.7. Amendments ...................................................... 20
Section 8.8. Notice to Rating Agencies ....................................... 21
Section 8.9. Series 1999-1 Demand Note ....................................... 21
Section 8.10. Subordinated Note ............................................... 21
Section 8.11. Additional Series of Group I Notes .............................. 21
Section 8.12. Year 2000 ....................................................... 21
</TABLE>
<PAGE> 62
ANNEX A - Definitions List
EXHIBIT A - Form of Series 1999-1 Note
EXHIBIT B - Form of Series 1999-1 Demand Note
<PAGE> 1
EXHIBIT 4.3
BASE INDENTURE, dated as of February 26, 1999, between ARG FUNDING
CORP., a special purpose corporation established under the laws of Delaware, as
issuer ("ARG"), 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, ARG 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
Rental Car Asset Backed Notes (the "Notes"), issuable as provided in this
Indenture; and
WHEREAS, all things necessary to make this Indenture a legal, valid
and binding agreement of ARG, enforceable in accordance with its terms, have
been done, and ARG proposes to do all the things necessary to make the Notes,
when executed by ARG and authenticated and delivered by the Trustee hereunder
and duly issued by ARG, the legal, valid and binding obligations of ARG 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 I (the "Definitions List"), as such
Definitions List may be amended, restated 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.
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 applied on a consistent
<PAGE> 2
2
basis. 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".
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 Series Supplement and shall bear, upon its face, the designation
for such Series to which it belongs so selected by ARG. All Notes of any Series
shall, except as specified in the related Series Supplement, be equally and
ratably entitled as provided herein to the benefits hereof without preference,
priority or distinction on account of the actual time or times of authentication
and delivery, all in accordance with the terms and provisions of this Indenture
and the applicable Series Supplement. The aggregate principal amount of Notes
which may be authenticated and delivered under this Indenture is unlimited. Each
Series of Notes shall be issued in
<PAGE> 3
3
the minimum denominations set forth in the related Series Supplement.
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 Series Supplement. Notes of a new Series may from time to
time be executed by ARG and delivered to the Trustee for authentication and
thereupon the same shall be authenticated and delivered by the Trustee upon the
receipt by a Trust Officer of the Trustee of a Company Request at least two (2)
Business Days (or such shorter time as is acceptable to the Trustee) in advance
of the related Series Closing Date and upon delivery by ARG to the Trustee, and
receipt by a Trust Officer of 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 Series Supplement in form satisfactory to the Trustee executed
by ARG 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 Confirmation
Condition with respect to each Outstanding Series of Notes shall have been
satisfied with respect to such issuance;
(e) an Officer's Certificate of ARG dated as of the applicable
Series Closing Date to the effect that (i) no Amortization Event with
respect to any Outstanding Series of Notes, Enhancement Agreement Event of
Default with respect to any Outstanding Series of Notes, Enhancement
Deficiency with respect to any Outstanding Series of Notes, Potential
Amortization Event with respect to any Outstanding Series of Notes or
Potential Enhancement Agreement Event of Default with respect to any
Outstanding Series of Notes, is continuing or will occur as a result of
the issuance of the new Series of Notes, (ii) the issuance of the new
Series of Notes will not result in any breach of any of the terms,
<PAGE> 4
4
conditions or provisions of or constitute a default under any indenture,
mortgage, deed of trust or other agreement or instrument to which ARG 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 ARG is a party or by which it or its
property may be bound or to which it or its property may be subject, (iii)
all representations and warranties of ARG set forth in the Indenture and
each Related Document with respect to each Outstanding Series of Notes are
true and correct, without giving effect to any limitations contained
therein excluding Related Documents relating solely to a Segregated
Series, in all material respects (to the extent any such representations
and warranties do not incorporate a materiality limitation in their terms)
as of the Series Closing Date, (iv) all instruments furnished to the
Trustee conform in all material respects to the requirements of this Base
Indenture and the related Series 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, (v) all
conditions precedent provided in this Base Indenture and the related
Series Supplement with respect to the authentication and delivery of the
new Series of Notes have been complied with and (vi) 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 Series 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 Series Closing Date, substantially to the effect that:
(i) (x) the new Series of Notes will be treated as
indebtedness for Federal income tax purposes and (y) the issuance of
such Series will not adversely affect the Federal income tax
characterization of the Outstanding Notes of any Series;
(ii) all conditions precedent provided for in this Base
Indenture and the related Series Supplement with respect to the
authentication and delivery of the new Series of Notes have been
complied with in all material respects;
(iii) (v) ARG is duly incorporated under the jurisdiction of
its incorporation and has, or at
<PAGE> 5
5
the time of execution and delivery had, the power and authority to
execute and deliver the related Series Supplement, this Base
Indenture and each other Related Document to which it is a party
(other than any Series Supplement, Enhancement Agreement or other
Related Document relating solely to another Series of Notes) and to
issue the new Series of Notes; (w) each of the Leasing Companies is
duly formed in the jurisdiction of its formation and had the limited
partnership power and authority to execute and deliver each of the
Leasing Company Related Documents to which it is a party; (x) each
of the Lessees is duly incorporated or formed, as the case may be,
in the jurisdiction of its incorporation or formation, as the case
may be, and had the corporate, limited partnership or limited
liability company, as the case may be, power and authority to
execute and deliver each of the Leasing Company Related Documents to
which it is a party; (y) the general partner of each Leasing Company
is duly organized under the jurisdiction of its organization and
has, or at the time of execution and delivery, had the power and
authority to execute and deliver each of the Leasing Company Related
Documents to which it is a party; and (z) Republic, in its capacity
as guarantor and servicer under each of the Leases, is duly
incorporated in the jurisdiction of its incorporation and had the
power and authority to execute and deliver the Leases and each other
Leasing Company Related Document to which it is a party;
(iv) the related Series Supplement, this Base Indenture and
each of the other Related Documents to which ARG is a party (other
than any Series Supplement, Enhancement Agreement or other Related
Document relating solely to another Series of Notes) have been duly
authorized, executed and delivered by ARG;
(v) each of the Leasing Company Related Documents have
been duly authorized, executed and delivered by the Leasing
Companies, the Lessees and Republic, as applicable;
(vi) 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 Series
Supplement, will constitute valid, binding and enforceable
obligations of ARG entitled to the benefits of this Base Indenture
and the related Series Supplement, subject, in the case of
enforcement, to bankruptcy, insolvency, reorganization, moratorium
and other similar laws
<PAGE> 6
6
affecting creditors' rights generally and to general principles of
equity and by an implied covenant of good faith and fair dealing;
(vii) this Base Indenture, the related Series Supplement and
each of the other Related Documents to which ARG is a party (other
than any Series Supplement, Enhancement Agreement or other Related
Document relating solely to another Series of Notes) are legal,
valid and binding agreements of ARG, 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 and
by an implied covenant of good faith and fair dealing;
(viii) the Leasing Company Related Documents are legal, valid
and binding agreements of the Leasing Companies, Lessees and
Republic, 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 and by an implied
covenant of good faith and fair dealing;
(ix) none of ARG and the Leasing Companies is, or is
controlled by, an "investment company" within the meaning of, or is
required to register as an "investment company" under, the
Investment Company Act, and neither this Base Indenture and the
related Series Supplement nor the Leasing Company Indentures are
required to be registered under the Trust Indenture Act;
(x) the offer and sale of the new Series of Notes is not
required to be registered under the Securities Act;
(xi) the Indenture and the related Series Supplement are
effective to create a legal, valid and enforceable security interest
in the Collateral and that such security interest constitutes a
first, perfected security interest in the Collateral;
(xii) the assets of ARG will not be substantively
consolidated with the assets of Republic or any Lessee in the event
of the insolvency of
<PAGE> 7
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Republic or such Lessee;
(xiii) there does not exist any pending or threatened
litigation which, if adversely determined, would materially and
adversely affect the ability of ARG to perform its obligations under
any of the Related Documents;
(xiv) there is no conflict with or violation of any court
decree, injunction, writ or order applicable to ARG or any breach or
default of any indenture, agreement or other instrument as a result
of the issuance of such Series of Notes by ARG; and
(xv) such other matters as the Trustee may reasonably
require.
(g) executed counterparts of each of the Leasing Company Indentures
and the other Leasing Company Related Documents, duly executed by the
parties thereto;
(h) evidence that each of the parties to the Related Documents
(other than any Series Supplement, Enhancement Agreement or other Related
Document relating solely to another Series of Notes) has covenanted and
agreed 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 ARG, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings, under any Federal or state bankruptcy
or similar law;
(i) evidence of the grant by ARG to the Trustee of a first priority,
perfected security interest in and to the Collateral;
(j) evidence (which, in the case of the filing of financing
statements on form UCC-1, may be telephonic, followed by prompt written
confirmation) that ARG has delivered the Leasing Company Notes, registered
in the name of the Trustee, to the Trustee and has caused all filings
(including filing of financing statements on form UCC-1) and recordings to
be accomplished as may be reasonably required by law to establish,
perfect, protect and preserve the rights, titles, interests, remedies,
powers, privileges, licenses and security interest of the Trustee in the
Collateral for the benefit of the Secured Parties; and
(k) such other documents, instruments, certifications, agreements or
other items as the Trustee may reasonably require.
<PAGE> 8
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Upon satisfaction of such conditions, the Trustee shall authenticate and
deliver, as provided above, such Series of Notes upon execution thereof by ARG.
Section 2.3. Series Supplement for Each Series.
(a) In conjunction with the issuance of a new Series, the parties
hereto shall execute a Series 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 terms of any Enhancement, (viii) the Enhancement
Provider, if any, (ix) whether the Notes may be issued in bearer form and any
limitations imposed thereon, (x) the Series Termination Date, (xi) whether the
Notes will be issued in multiple classes and, if so, the method of allocating
Collections among such classes, (xii) whether such Series of Notes shall have
the benefit of Series-Specific Collateral and (xiii) 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 Confirmation Condition with
respect to each Outstanding Series of Notes with respect to the issuance of such
new Series (all such terms, the "Principal Terms" of such Series);
(b) (i) A Series 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 and any
other Segregated Series of Notes specified in such Series Supplement (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 Confirmation Condition with respect to each Outstanding Series of
Notes is met with respect to the issuance of such Segregated Series of Notes,
(y) ARG 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
<PAGE> 9
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issuance of the Segregated Series of Notes, and (z) the applicable Series
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 Series Supplement will provide that (A) 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 so that the Noteholders with
respect to the Segregated Series of Notes will be entitled to allocations and
distributions arising solely 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 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 applicable Segregated Series
of Notes), (D) the Noteholders of the Segregated Series of Notes will, subject
to the limitations contained in this Base Indenture and the applicable Series
Supplement, be entitled to direct the Trustee in writing to exercise the
remedies under the Indenture solely on behalf of such Segregated Series of
Notes, (E) separate monthly reports and other information will be furnished
under the Indenture 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, (F) separate notes secured by separate leases
pertaining solely to the Series-Specific Collateral will be issued by the
Leasing Companies and such separate leases will be executed and delivered by the
Lessees and, if applicable, Republic, to the extent specified in the Series
Supplement for such Segregated Series of Notes, (G) ARG will take such actions
as are necessary to perfect the Trustee's interest on behalf of the Noteholders
of such Series in the Series-Specific Collateral, (H) amendments will be made to
this Indenture and the other Related Documents, if necessary, to reflect the
foregoing, which amendments will,
<PAGE> 10
10
among other things, provide for revisions to the terms "Aggregate Asset Amount",
"Collateral", "Leasing Company Related Documents", "Collection Account", "ARG
Obligations", "Related Documents", "Secured Parties", "Aggregate Invested
Amount", "Operating Lease Asset Amount", "Required Operating Lease Asset 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 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 conclusively rely on
an Officer's Certificate of ARG as sufficient evidence of such lack of a
material adverse effect), (I) for purposes of the Segregated Series, terms that
are defined both in the applicable Series Supplement and in Schedule I to the
Base Indenture, shall for purposes of such Series Supplement and the Base
Indenture as it relates to such Segregated Series, have the meanings assigned to
them in such Series Supplement and (J) references herein to "all" or "each"
Series of Notes or words of similar import (other than as specifically stated
herein) shall be modified to refer to all or each Series of Notes other than any
Segregated Series of Notes which may hereafter be issued.
Section 2.4. Execution and Authentication.
(a) An Authorized Officer shall sign the Notes for ARG 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, ARG may deliver Notes of any particular Series
executed by ARG 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 ARG to
authenticate Notes. Unless limited by the term of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee
<PAGE> 11
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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 ARG or an Affiliate of ARG. 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
Dated:
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 ARG, and ARG
shall deliver such Note to the Trustee for cancellation as provided in Section
2.14 together with a 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 ARG, 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.
(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 (i) to qualified
institutional buyers within the meaning of, and in reliance on, Rule 144A under
the Securities Act ("Rule 144A"), (ii) outside the United States to a non-U.S.
Person (as such term is defined in Regulation S of the Securities Act) in a
transaction in compliance with Regulation S of the Securities Act, (iii)
pursuant to an effective registration statement under the Securities Act or (iv)
in reliance on another exemption under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United States
and any other applicable jurisdiction, and as provided in the applicable Series
Supplement, and prior to any such initial sale, each such institutional
accredited investor shall be deemed to have represented and agreed as follows:
<PAGE> 12
12
(1) It is an institutional accredited investor within the meaning of
Regulation D under the Securities Act and is acquiring the Notes for its
own institutional account or for the account of an institutional
accredited investor;
(2) It understands that the Notes purchased by it will be offered,
and may be transferred, only in a transaction not involving any public
offering within the meaning of the Securities Act, and that, if in the
future it decides to resell, pledge or otherwise transfer any Notes, such
Notes may be resold, pledged or transferred only (a) to a person who the
seller reasonably believes is a qualified institutional buyer (as defined
in Rule 144A under the Securities Act) that purchases for its own account
or for the account of a qualified institutional buyer to whom notice is
given that the resale, pledge or transfer is being made in reliance on
Rule 144A, (b) outside the United States to a non-U.S. Person (as such
term is defined in Regulation S of the Securities Act) in a transaction in
compliance with Regulation S of the Securities Act, (c) pursuant to an
effective registration statement under the Securities Act or (d) in
reliance on another exemption under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States and any other applicable jurisdiction;
(3) It understands that the Notes will bear a legend substantially
as set forth in Section 2.10; and
(4) It acknowledges that the Trustee, ARG, any underwriter or
placement agent for such Series of Notes, and their affiliates, and others
will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements. If it is acquiring any Notes for the
account of one or more institutional accredited investors, it represents
that it has sole investment discretion with respect to each such account
and that it has full power to make the foregoing acknowledgements,
representations and agreements on behalf of each such account.
In addition, such purchaser shall be responsible for providing
additional information or certification, as shall be reasonably requested by the
Trustee or ARG, 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. Such Series of Notes shall, unless otherwise provided in
the applicable Series Supplement, be issued
<PAGE> 13
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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 Series 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 ARG 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, unless otherwise provided in the applicable
Series Supplement, 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 Series
Supplement with such legends as may be applicable thereto, registered in the
name of DTC or a nominee of DTC, duly executed by ARG 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, or its successor, as
operator of Euroclear, or at 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 Series 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 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) ARG shall (i) maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
appoint a paying agent ("Paying Agent") at whose office or agency Notes may be
presented for payment. The Registrar shall keep a register of the Notes and of
their transfer and exchange (the "Note Register"). ARG may appoint one or more
co-registrars and one or more additional
<PAGE> 14
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paying agents. The term "Paying Agent" includes any additional paying agent and
the term "Registrar" includes any co-registrars. ARG may change any Paying Agent
or Registrar without prior notice to any Noteholder. ARG 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) ARG 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. ARG shall notify the
Trustee in writing of the name and address of any such Agent. If ARG fails to
maintain a Registrar or Paying Agent and a Trust Officer has actual knowledge of
such failure, or if ARG 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 ARG shall appoint a replacement Registrar and Paying
Agent.
Section 2.7. Paying Agent to Hold Money in Trust.
(a) ARG 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;
(ii) give the Trustee written notice of any default by ARG
(or any other obligor under the Notes) of which it (or, in the case of the
Trustee, a Trust Officer) 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
<PAGE> 15
15
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) ARG 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, any Paying Agent or any 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 ARG on Company Request; and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to ARG for
payment thereof (but only to the extent of the amounts so paid to ARG), and all
liability of the Trustee, such Paying Agent or such Clearing Agency with respect
to such trust money shall thereupon cease; provided, however, that the Trustee,
such Paying Agent or such Clearing Agency, before being required to make any
such repayment, may at the expense of ARG 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 from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to ARG. The Trustee may also adopt and employ, at the expense of ARG, any other
reasonable means of notification of such repayment.
Section 2.8. Noteholder List.
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, ARG
shall furnish to the
<PAGE> 16
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Trustee at least seven Business Days before each Distribution Date and at such
other time 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) When 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 ARG 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
(B) if such Note is being transferred to a qualified
institutional buyer (as defined in Rule 144A) in accordance with
Rule 144A, (i) a certification to that effect (in substantially the
form of Exhibit A-1 hereto) and (ii) each such transferee of such
Note shall be deemed to have represented and agreed as follows:
(1) It is a qualified institutional buyer as defined in
Rule 144A and is acquiring the Notes for its own institutional
account or for the account of a qualified institutional buyer;
(2) It understands that the Notes purchased by it will
be offered, and may be transferred, only in a transaction not
involving any public offering within the meaning of the
Securities Act, and that, if in the future it decides to
resell, pledge or otherwise transfer any Notes, such Notes may
be resold, pledged or transferred only (a) to a person who the
seller reasonably believes is a qualified institutional buyer
(as defined in Rule 144A under the Securities Act) that
purchases for its own account or for the account of a
qualified
<PAGE> 17
17
institutional buyer to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (b)
outside the United States to a non-U.S. Person (as such term
is defined in Regulation S of the Securities Act) in a
transaction in compliance with Regulation S of the Securities
Act, (c) pursuant to an effective registration statement under
the Securities Act or (d) in reliance on another exemption
under the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States
and any other applicable jurisdiction;
(3) It understands that the Notes will bear a legend
substantially as set forth in Section 2.10; and
(4) It acknowledges that the Registrar, ARG, each
underwriter or dealer for such Series of Notes, and their
affiliates, and others will rely upon the truth and accuracy
of the foregoing acknowledgements, representations and
agreements. If it is acquiring any Notes for the account of
one or more qualified institutional buyers, it represents that
it has sole investment discretion with respect to each such
account and that it has full power to make the foregoing
acknowledgements, representations and agreements on behalf of
each such account.
In addition, such transferee shall be responsible for providing
additional information or certification, as shall be reasonably
requested by the Registrar, ARG or any underwriter or dealer for
such Series of Notes, 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; or
(C) if such Note is being transferred 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
(D) 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
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an opinion of counsel in form and substance acceptable to ARG 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 ARG shall execute and
the Trustee shall authenticate and deliver to Euroclear or Cedel, as
applicable, 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 ARG 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 ARG 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 During
the Restricted Period. If, prior to 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 exchange its interest in such
Restricted Global Note for an interest in the 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 the
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)
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instructions given in accordance with DTC's procedures from an agent
member directing the 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-2 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 exchange its interest in such Restricted
Global Note for an interest in the Permanent 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 the 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 the Permanent Global Note. Upon receipt by the
Registrar of (1) instructions given in accordance with DTC's procedures
from an agent member directing the Registrar to credit or cause to be
credited a beneficial interest in the Permanent 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 participant account
of DTC and, in the case of a transfer pursuant to and in
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accordance with Regulation S, the Euroclear or Cedel account to be
credited with such increase 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 or Rule 144A, 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 Permanent 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 a beneficial interest in the
Permanent Global Note equal to the reduction in the principal amount of
the Restricted Global Note.
(v) Temporary Global Note to Restricted Global Note. If a
holder of a beneficial interest in the 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 the 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
the 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 the 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 the Restricted Global Note equal to the beneficial
interest in the 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 the 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 the Temporary Global Note for an interest in
the Restricted Global Note prior to the Exchange Date, a certificate in
the form of Exhibit A-4 attached hereto given by the holder of such
beneficial interest and stating that the Person transferring such interest
in the Temporary Global Note reasonably believes that the Person acquiring
such interest in the Restricted Global Note is a qualified institutional
buyer (as defined in Rule 144A) and is
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obtaining such beneficial interest in a transaction meeting the
requirements of Rule 144A, Euroclear or Cedel or the Registrar, as the
case may be, shall instruct DTC to reduce the Temporary Global Note by the
aggregate principal amount of the beneficial interest in the Temporary
Global Note to be exchanged or transferred, and the Registrar shall
instruct DTC, concurrently with such reduction, to increase the principal
amount of the Restricted Global Note by the aggregate principal amount of
the beneficial interest in the 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 the
Restricted Global Note equal to the reduction in the principal amount of
the Temporary Global Note.
(vi) Permanent Global Note to Restricted Global Note.
Interests in the Permanent Global Note may not be transferred for
interests in the 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, or Definitive Notes are
otherwise issued pursuant to the related Series Supplement, 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 ARG and the Trustee.
(b) Except as otherwise provided in Section 2.16(d), the Trustee or
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) ARG or the Trustee may require payment of a sum sufficient to
cover any transfer tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Notes (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). No service charge shall be made for any such
transaction.
(d) To permit registrations of transfers and exchanges, ARG shall
execute and the Trustee shall authenticate Notes, subject to such rules as the
Trustee may reasonably
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require.
(e) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of ARG, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(f) Prior to due presentment for registration of transfer of any
Note, the Trustee, any Agent and ARG 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 ARG shall be affected by notice
to the contrary.
(g) 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 ARG or to a nominee of such successor Clearing Agency,
only if in accordance with this Section 2.9.
(h) If the Notes are listed on the Luxembourg Stock Exchange, the
Trustee or the Luxembourg Agent, as the case may be, shall send to ARG 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.
(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 Code.
Section 2.10. Legending of Notes.
Unless otherwise provided for in a Series 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 NOTE, AGREES FOR THE BENEFIT OF ARG
FUNDING CORP. (THE "ISSUER") THAT THIS NOTE IS BEING ACQUIRED FOR ITS OWN
ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR
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OTHERWISE TRANSFERRED 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 UNDER THE SECURITIES
ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER 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 ARG 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 ARG 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 ARG, 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 ARG and the Trustee harmless and
provided that the requirements of Section 8-405 of the UCC (which generally
permit ARG to impose reasonable requirements) are met, ARG 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, ARG 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 purchaser for value of the
original Note in lieu of which such replacement Note was issued presents for
payment such original
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Note, ARG 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 replacement Note was delivered or
any assignee of such Person, except a purchaser for value, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by ARG or the Trustee in connection
therewith.
(b) Upon the issuance of any replacement Note under this Section
2.11, the Registrar, the Trustee or ARG 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 2.11 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 2.11 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 ARG or any Affiliate of ARG (other than as set forth in the related Series
Supplement) 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 a Trust Officer of
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, ARG 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.
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(b) If temporary Notes are issued pursuant to Section 2.13(a) above,
ARG will cause Definitive Notes to be prepared without unreasonable delay. After
the 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 ARG 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,
ARG 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.
ARG may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which ARG 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. ARG 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 and received by a
Trust Officer of the Trustee in a timely fashion, ARG 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 amounts set forth in the related Series Supplement and in
accordance with Section 6.1.
(b) Each Series of Notes shall accrue interest as provided in the
related Series Supplement and such interest shall be payable at the times and in
the amounts set forth in the related Series Supplement and in accordance with
Section 6.1.
(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
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Date. Any interest payable at maturity shall be paid to the Person to whom the
principal of such Note is payable.
(d) If ARG 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 the applicable due date, shall, at the option of ARG, cease
to be payable to the Persons who were Noteholders of such Series at the
applicable Record Date and ARG 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.
ARG shall fix or cause to be fixed each such special record date and payment
date, and at least 15 days before the special record date, ARG (or the Trustee,
in the name of and at the expense of ARG) 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, ARG
shall duly execute, and the Trustee shall, in accordance with Section 2.4
hereof, authenticate and deliver initially, unless otherwise provided in the
applicable Series Supplement, one or more Global Notes that shall be registered
on the Note Register in the name of a Clearing Agency or such Clearing Agency's
nominee. Each Global Note registered in the name of DTC or its nominee shall
bear a legend 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 ARG FUNDING
CORP. 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 the Clearing Agency or its nominee is the registered
owner or holder of a Global Note, the Clearing Agency or its nominee, as the
case may be, will be considered the sole
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owner or holder of the Notes represented by such Global Note for purposes of
this Indenture and such Notes. Members of, or participants in, the Clearing
Agency shall have no rights under this Indenture with respect to any Global Note
held on their behalf by the Clearing Agency, and the Clearing Agency may be
treated by ARG, the Trustee, any 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 ARG, the Trustee, any Agent and any
agent of such entities from giving effect to any written certification, proxy or
other authorization furnished by the Clearing Agency or impair, as between the
Clearing Agency and its agent members, the operation of customary practices
governing the exercise of the rights of a holder of any Note.
(b) Subject to Section 2.9(g), 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 ARG, the Trustee, any Agent and any
agent of ARG or the Trustee 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(b). 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 ARG 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.
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(e) Unless and until definitive, fully registered Notes ("Definitive
Notes") have been issued to Note Owners with respect to any Series of Notes
pursuant to Section 2.18 or the applicable Series Supplement:
(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 Notes
and the giving of instructions or directions hereunder) as the authorized
representatives of such 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 such Series
of Notes evidencing a specified percentage of the Outstanding principal
amount of such Series of 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 such Series of Notes and
has delivered such instructions to the Trustee; and
(v) the rights of such 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 such Series
of 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 or the applicable Series
Supplement, the Trustee
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and ARG shall give all such notices and communications specified herein to be
given to Noteholders to the applicable Clearing Agency for distribution to the
Note Owners.
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 ARG that it is 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 ARG within 90
days of such notice or (y) ARG determines that the Restricted Global Note or
Permanent Global Note 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
Noteholder, 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 ARG, in its sole discretion, consents to such request (in
which case a Definitive Note shall be issuable or transferable only to such Note
Owner, Noteholder, purchaser or transferee), ARG 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 (y) or (z) above, in exchange for the
applicable beneficial interest in one or more Global Notes. Definitive
registered Notes shall be issued without coupons in minimum denominations of
U.S. $200,000 and integral multiples of U.S. $1,000 in excess thereof, 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 the custodian for DTC 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 the
custodian for DTC to the Registrar or its agent
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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 (i) delivery of a certificate substantially in the form of Exhibit
A-1 hereto and (ii) compliance with the conditions set forth in Section 2.9. 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 Series 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 by Section
2.10, bear, and be subject to, the legend regarding transfer restrictions set
forth in Section 2.10. ARG will promptly make available to the Registrar a
reasonable supply of Definitive Notes. ARG 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 ARG 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, ARG
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, ARG 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 Holder at such office. Neither ARG nor the Trustee shall be liable for any
delay in delivery of transfer instructions and each may
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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.
ARG 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 ARG 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 ARG. 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.
Section 2.20. CUSIP Numbers.
ARG may use "CUSIP" numbers in respect of any Series of Notes (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption in respect of such Series of Notes as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Notes of such
Series or as contained in any notice of a redemption and that reliance may be
placed only on the other identification numbers printed on the Notes of such
Series, and any such redemption shall not be affected by any defect in or
omission of such numbers. ARG will promptly notify the Trustee of any change in
any such "CUSIP" numbers.
ARTICLE 3. SECURITY
Section 3.1. Grant of Security Interest.
(a) To secure the ARG Obligations, ARG hereby pledges, assigns,
conveys, delivers, transfers and sets over to the Trustee, for the benefit of
the Noteholders (the "Secured Parties"), and hereby grants to the Trustee, for
the benefit of the Secured Parties, a security interest in all of ARG's right,
title and interest in and to all of the following assets, property and interests
in property, whether now or hereafter existing, acquired or created (all of such
right, title and
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interest being referred to as the "Collateral"):
(i) the Leasing Company Notes and the Leasing Company
Indentures, including, without limitation, all monies due and to become
due to ARG from any Leasing Company under or in connection with the
Leasing Company Notes or the Leasing Company Indentures, whether payable
as fees, expenses, costs, indemnities, insurance recoveries, damages for
the breach of any of the provisions of the Leasing Company Indentures or
otherwise, all security for amounts payable thereunder and all rights,
remedies, powers, privileges and claims of ARG against any other party
under or with respect to the Leasing Company Notes or the Leasing Company
Indentures (whether arising pursuant to the terms of such Leasing Company
Notes or the Leasing Company Indentures or otherwise available to ARG at
law or in equity), the right to enforce any of the Leasing Company
Indentures 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 Leasing Company Indentures or the obligations
of any party thereunder;
(ii) the Leasing Company Related Documents, including,
without limitation, all monies due and to become due to ARG thereunder or
in connection therewith, whether payable as fees, expenses, costs,
indemnities, insurance recoveries, damages for the breach of any of the
Leasing Company Related Documents or otherwise, and all rights, remedies,
powers, privileges and claims of ARG against any other party under or with
respect to the Leasing Company Related Documents (whether arising pursuant
to the terms of such Leasing Company Related Document or otherwise
available to ARG at law or in equity), the right to enforce any of the
Leasing Company Related Documents 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 Leasing Company Related
Documents or the obligations of any party thereunder;
(iii) all right, title and interest of ARG in, to and under
the Receivables Trust Agreement, the Beneficial Interest and the right to
receive all distributions and payments pursuant thereto and in respect
thereof;
(iv) (a) the 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 Collection Account 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
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moneys in the Collection Account or any subaccount thereof (including
income thereon);
(v) all additional property that may from time to time
hereafter (pursuant to the terms of any Series Supplement or otherwise) be
subjected to the grant and pledge hereof by ARG or by anyone on its
behalf; and
(vi) all proceeds, products, rents or profits of any and
all of the foregoing.
(b) To secure the ARG Obligations, ARG hereby confirms the grant,
pledge, hypothecation, assignment, conveyance, delivery and transfer to the
Receivables Trustee under the Receivables Trust Agreement, in exchange for the
Beneficial Interest, of all ARG's right, title and interest in, to the Note
Payment Rights.
(c) The foregoing grant is made in trust to secure the ARG
Obligations and to secure compliance with the provisions of this Indenture and
any Series 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 subject to Section 10.1 and 10.2, agrees to perform its duties required in
this Indenture to the best of its abilities to the end that the interests of the
Secured Parties 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
Series Supplement) or distinction.
Section 3.2. Certain Rights and Obligations of ARG Unaffected.
(a) Notwithstanding the assignment and security interest so granted
to the Trustee on behalf of the Secured Parties, ARG 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, to give
all consents, requests, notices, directions, approvals, extensions or waivers,
if any, which are required or permitted to be given in the normal course of
business (which does not include waivers of defaults under, or consent to
amendments or modifications of, any of the Leasing Company Related Documents) to
any Person by the specific terms of the Leasing Company Related Documents.
(b) The grant of the security interest in the Collateral to the
Trustee on behalf of the Secured Parties shall not (i) relieve ARG from the
performance of any term, covenant, condition or agreement on ARG's part to be
performed or observed
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under or in connection with any of the Leasing Company Related Documents or from
any liability to any Person thereunder 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 ARG'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 ARG or from any breach of any representation or warranty
on the part of ARG. ARG hereby agrees to indemnify and hold harmless the Trustee
and each Noteholder (including, in each case, their respective assigns,
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, whether arising by virtue of any act
or omission on the part of ARG or otherwise, including, without limitation, the
reasonable out-of-pocket costs, expenses, and disbursements (including
reasonable attorneys' fees and expenses) incurred by the Trustee and any of the
Noteholders 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 or a
Noteholder which constitutes negligence or willful misconduct by the Trustee,
such Noteholder 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 or any
Series Supplement.
Section 3.3. Performance of Leasing Company Related Documents.
Upon the occurrence of a Leasing Company Amortization Event,
promptly following a request from the Trustee to do so and at ARG's expense, ARG
agrees to take all such lawful action as permitted under this Indenture as is
reasonably necessary or as the Trustee may request to compel or secure the
performance and observance by the related Leasing Company or any other party to
any of the Leasing Company Related Documents to which such Leasing Company is a
party of its obligations to ARG, in accordance with the applicable terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to ARG to the extent and in the manner as is reasonably
necessary or as directed by the Trustee, 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 such
Leasing Company (or such other party to any such Leasing Company Related
Document) of their respective obligations thereunder. If (i) ARG shall have
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failed, within 30 days of receiving the direction of the Trustee, to take
commercially reasonable action to accomplish such directions of the Trustee,
(ii) ARG refuses to take any such action or (iii) the Trustee reasonably
determines that such action must be taken immediately, the Trustee may take such
previously directed action and any related action permitted under this Indenture
which the Trustee thereafter determines is appropriate (without the need under
this provision or any other provision under the Indenture to direct ARG to take
such action), on behalf of ARG and the Secured Parties.
Section 3.4. Stamp, Other Similar Taxes and Filing Fees.
ARG shall indemnify and hold harmless the Trustee 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. ARG 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
reasonably 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 ARG to Provide Reports and Instructions.
(a) Daily Reports. On each Business Day commencing on the Initial
Closing Date, ARG shall prepare and maintain, or cause to be prepared and
maintained, at the office of ARG a record (each, a "Daily Report") setting forth
the aggregate of the amounts deposited in the Collection Account on the
immediately preceding Business Day.
(b) Monthly Noteholders' Statement. On or before each Distribution
Date, ARG shall furnish to the Trustee and the Paying Agent a monthly statement
(a "Monthly Noteholders' Statement") with respect to each Series of Notes,
substantially in the form provided in the Series Supplement with respect to such
Series.
(c) Instructions as to Withdrawals and Payments. ARG will furnish,
or cause to be furnished, to the Trustee or the Paying Agent, as applicable,
written instructions to make withdrawals and payments from the Collection
Account and any other accounts specified in a Series Supplement and to make
drawings under any Enhancement, as contemplated herein and in any Series
Supplement. The Trustee and the Paying Agent shall
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promptly follow any such written instructions.
(d) Pursuant to the Lease and the Master Collateral Agency
Agreement, the Servicer may act on behalf of ARG hereunder. The Noteholders by
their acceptance of the Notes consent to such actions by the Servicer.
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 Trustee shall
possess all right, title and interest in all moneys, instruments, securities and
other property on deposit from time to time in the Collection Account and the
proceeds thereof for the benefit of the Secured Parties. The Collection Account
shall be under the sole dominion and control of the Trustee 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; provided that, if at any time such Qualified Institution is no longer a
Qualified Institution or the credit rating of any securities issued by such
depository institution or trust company shall be reduced to below BBB- by S&P or
Baa3 by Moody's, then the Trustee shall, within 30 days of such reduction,
establish a new Collection Account with a new Qualified Institution or a new
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 Account all cash and investments from the non-qualifying Collection
Account. Initially, the Collection Account will be established with The Bank of
New York.
(b) Establishment of Additional Accounts. To the extent specified in
the Series Supplement with respect to any Series of Notes, the Trustee may
establish and maintain one or more additional accounts and/or Administrative
Subaccounts to
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facilitate the proper allocation of Collections in accordance with the terms of
such Series Supplement.
(c) Administration of the Collection Account. ARG shall instruct the
institution maintaining the Collection Account in writing to invest funds on
deposit in the Collection Account (including any administrative subaccounts
thereof) at all times in Permitted Investments selected by ARG (by standing
instructions or otherwise); provided, however, that except as provided in any
Series Supplement, 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
(including any administrative subaccounts thereof) which is in an investment
made by the Paying Agent institution, in which event such investment may mature
on such Distribution Date so long as such funds shall be available for
withdrawal on or prior to such Distribution Date. All such Permitted Investments
will be credited to the Collection Account and any such Permitted Investments
that constitute (i) Physical Property (and that is not either a United States
Security Entitlement or a Security Entitlement) shall be delivered to the
Trustee in accordance with paragraph (a) of the definition of "Delivery" and
shall be held by the Trustee pending maturity or disposition; (ii) United States
Security Entitlements or Security Entitlements shall be Controlled by the
Trustee pending maturity or disposition; and (iii) Uncertificated Securities
(and not United States Security Entitlements) shall be delivered to the Trustee
in accordance with paragraph (b) of the definition of "Delivery" and shall be
maintained by the Trustee pending maturity or disposition. The Trustee shall, at
the expense of ARG, take such action as is required to maintain the Trustee's
security interest in the Permitted Investments credited to the Collection
Account. In the absence of written investment instructions hereunder, funds on
deposit in the Collection Account shall remain uninvested. Neither ARG nor the
Trustee shall dispose of (or permit the disposal of) any Permitted Investments
prior to the maturity thereof to the extent such disposal would result in a loss
of principal of such Permitted Investment.
(d) Earnings from Collection Account. Subject to the restrictions
set forth above, ARG shall 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.
Section 5.2. Collections and Allocations.
(a) Collections in General. Until this Indenture is
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terminated pursuant to Section 11.1, ARG shall, and the Trustee is authorized
to, cause all Collections due and to become due to ARG or the Trustee, as the
case may be, to be paid directly into the Collection Account at such times as
such amounts are due. ARG agrees that if any such monies, instruments, cash or
other proceeds shall be received by ARG in an account other than the Collection
Account or in any other manner, such monies, instruments, cash and other
proceeds will not be commingled by ARG 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 ARG for, and immediately paid over to, but in any event within two Business
Days from receipt, the Trustee with any necessary endorsement. All monies,
instruments, cash and other proceeds received by the Trustee pursuant to this
Indenture shall be immediately deposited in the Collection Account and shall be
applied as provided in this Article 5.
(b) Disqualification of Institution Maintaining Collection Account.
Upon and after the establishment of a new Collection Account with a Qualified
Institution or qualified corporate trust department pursuant to Section 5.1(a),
ARG 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 maintaining the Collection Account).
(c) Sharing Collections. In the manner described in the related
Series Supplement, to the extent that Principal Collections that are allocated
to any Series are not needed to make payments to Noteholders of such Series or
required to be deposited in a reserve account or a Distribution Account for such
Series, such Principal Collections may, at the direction of ARG, 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 in the Invested
Amount of the Series to which such Principal Collections were initially
allocated.
(d) Unallocated Principal Collections. If, after giving effect to
Section 5.2(c), Principal Collections allocated to any Series are in excess of
the amount required to be paid in respect of such Series, then any such excess
Principal Collections shall be allocated to ARG or such other party as may be
entitled thereto as set forth in any Series Supplement.
Section 5.3. Determination of Monthly Interest.
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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 Series 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 Series 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 Series 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 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 of the Series paired to the Paired Series, 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 prefunded Paired Series will be released and
paid to ARG 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 ARG 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 Series Supplement.
[THE REMAINDER OF ARTICLE 5 IS RESERVED AND MAY BE SPECIFIED IN ANY SERIES
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 Series Supplement,
on each Distribution Date with respect to each Outstanding Series, (i) the
Trustee or the Paying Agent shall
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deposit (in accordance with the Monthly Noteholders' Statement delivered 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 Series Supplement, the Trustee 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 Series Supplement,
on each Distribution Date, the Trustee or 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 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 Series 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 Trustee or the Paying Agent from the Distribution Account no
later than 10:00 a.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 Series 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
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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 ARG 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. Optional Repurchase of Notes.
On any Distribution Date occurring on or after the date on which the
Invested Amount of any Series or class of such Series is equal to or less than
the Repurchase Amount (if any) for such Series or class set forth in the Series
Supplement related to such Series, or at such other time or in such other manner
otherwise provided for in the Series Supplement relating to such Series, ARG
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 Series Supplement) the Invested Amount of
such Series on such Distribution Date, plus accrued and unpaid interest on the
unpaid principal balance of the Notes of such Series (calculated at the Note
Rate of such Series) through the day immediately prior to the date of such
purchase plus, if provided for in the related Series Supplement, any premium
payable at such time. Unless otherwise specified in the related Series
Supplement, ARG shall give the Trustee at least 30 days' prior written notice of
the date on which ARG intends to exercise such option to purchase. Not later
than 12:00 noon, New York City time, on such Distribution Date or other date, an
amount of the purchase price equal to the Invested Amount of all Notes of such
Series on such Distribution Date or other 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
Trustee or the Paying Agent will be passed through in full to the Noteholders of
such Series on such Distribution Date or other date.
Section 6.3. Monthly Noteholders' Statement.
Unless otherwise specified in the related Series Supplement, on each
Distribution Date, the Trustee or the Paying Agent shall forward to each
Noteholder of record of each Outstanding Series the Monthly Noteholders'
Statement with respect to such Series, with a copy to the Rating Agencies and
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each Enhancement Provider with respect to such Series.
Section 6.4. Annual Noteholders' Tax Statement.
Unless otherwise specified in the related Series Supplement, on or
before January 31 of each calendar year, beginning with calendar year 2000, the
Trustee or the Paying Agent shall furnish to each Person who at any time during
the preceding calendar year was a Noteholder a statement prepared by or on
behalf of ARG containing the information which is required to be contained in
the Monthly Noteholders' Statements with respect to each Series of Notes
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Noteholder, together with such other customary information
(consistent with the treatment of the Notes as debt) as ARG deems necessary or
desirable to enable the Noteholders to prepare their tax returns (each such
statement, an "Annual Noteholders' Tax Statement"). Such obligations of ARG to
prepare and the Trustee or the Paying Agent to distribute the Annual
Noteholders' Tax Statement shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Trustee or
the Paying Agent pursuant to any requirements of the Code as from time to time
in effect.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
ARG hereby represents and warrants, for the benefit of the Trustee
and the Secured Parties, as follows as of each Series Closing Date:
Section 7.1. Existence and Power.
ARG (i) is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, (ii) 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 (iii)
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. Corporate and Governmental Authorization.
The execution, delivery and performance by ARG of this Indenture,
the related Series Supplement and the other Related Documents to which it is a
party (other than any Related Document relating solely to a Segregated Series)
(a) are within ARG's corporate powers, have been duly authorized by all
necessary
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corporate action and (b) do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or by-laws of ARG or of any law or governmental regulation, rule, contract,
agreement, judgment, injunction, order, decree or other instrument binding upon
ARG or any of its Assets or result in the creation or imposition of any Lien on
any Asset of ARG, except for Liens created by this Indenture or the other
Related Documents. This Indenture and each of the other Related Documents to
which ARG is a party (other than any Related Document relating solely to a
Segregated Series) have been executed and delivered by a duly authorized officer
of ARG.
Section 7.3. Binding Effect.
This Indenture and each other Related Document (other than any
Related Document relating solely to a Segregated Series) are legal, valid and
binding obligations of ARG enforceable against ARG in accordance with their
respective 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) which
have been or shall hereafter be furnished by ARG to the Trustee pursuant to
Section 8.3 have been and will be prepared in accordance with GAAP applied on a
consistent basis (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 ARG, threatened against ARG 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 ARG or which in any manner
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draws into question the validity or enforceability of this Indenture, any Series
Supplement or any other Related Document (other than any Related Document
relating solely to a Segregated Series) or the ability of ARG to perform its
obligations hereunder or thereunder.
Section 7.6. No ERISA Plan.
ARG has not established and does not maintain or contribute to any
Pension Plan that is covered by Title IV of ERISA.
Section 7.7. Tax Filings and Expenses.
ARG has filed all federal, state and local tax returns and all other
tax returns which, to the knowledge of ARG, 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 ARG, except such taxes,
if any, as are being contested in good faith and for which adequate reserves
have been set aside on its books. ARG has paid all fees and expenses required to
be paid by it in connection with the conduct of its business, the maintenance of
its existence and its qualification as a foreign corporation 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.
All certificates, reports, statements, documents and other
information furnished to the Trustee by or on behalf of ARG pursuant to any
provision of this Indenture or any Related Document (other than any Related
Document relating solely to a Segregated Series), or in connection with or
pursuant to any amendment or modification of, or waiver under, this Indenture or
any Related Document (other than any Related Document relating solely to a
Segregated Series), 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 ARG made on the date the same are furnished to the Trustee to the
effect specified herein.
Section 7.9. Investment Company Act; Securities Act.
ARG 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. It is not necessary in connection with the
issuance and sale of the Notes under the circumstances contemplated in the
related Series
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Supplement to register any security under the Securities Act or to qualify any
indenture under the Trust Indenture Act.
Section 7.10. Regulations 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 T, U and X thereof). ARG 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 valid execution and delivery of
this Indenture or any Supplement or for the performance of any of ARG's
obligations hereunder or thereunder or under any other Related Document (other
than any Related Document relating solely to a Segregated Series) other than
such consents, approvals, authorizations, registrations, declarations or filings
as shall have been obtained by ARG prior to the Initial Closing Date or as
contemplated in Section 7.14.
Section 7.12. Solvency.
Both before and after giving effect to the transactions contemplated
by this Indenture and the other Related Documents, ARG is solvent within the
meaning of the Bankruptcy Code and ARG 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 ARG.
Section 7.13. Ownership; Subsidiary.
All of the issued and outstanding shares of capital stock of ARG is
owned by Republic, all of which capital stock has been validly issued, is fully
paid and non-assessable and is owned of record by such corporation. ARG has no
subsidiaries and owns no capital stock of, or other interest in, any other
Person.
Section 7.14. Security Interests.
(a) Each of the Leasing Company Notes is registered in the name of
the Trustee and has been delivered to the Trustee.
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All other action necessary (including the filing of UCC-1 financing statements)
to protect and perfect the Trustee's security interest in the Collateral now in
existence and hereafter acquired or created has been duly and effectively taken.
(b) No security agreement, financing statement, equivalent security
or lien instrument or continuation statement listing ARG 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 ARG in favor of the
Trustee in connection with this Indenture.
(c) This Indenture constitutes a valid and continuing Lien on the
Collateral in favor of the Trustee on behalf of the Secured Parties, which Lien
will be prior to all other Liens (other than Permitted Liens), and will be
enforceable as such as against creditors of and purchasers from ARG in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally or by general equitable
principles, whether considered in a proceeding at law or in equity and by an
implied covenant of good faith and fair dealing. All action necessary to perfect
such prior security interest has been duly taken.
(d) Except for a change made pursuant to Section 8.20, ARG's
principal place of business and chief executive office shall be at, and the
place where its records concerning the Collateral are kept is at: 7700 France
Avenue South, Minneapolis, Minnesota. ARG 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 and other instruments with respect
to the Collateral are powers coupled with an interest and are irrevocable.
Section 7.15. Leasing Company Related Documents.
Each of the Leasing Company Indentures, Leasing Company Notes and
Leases is in full force and effect and there are no outstanding Leasing Company
Amortization Events or Potential Leasing Company Amortization Events thereunder.
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 8.23 and Section 8.25 hereof (i) ARG is not a party
to any contract or agreement of any kind or nature and (ii) ARG is not subject
to any obligations or
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liabilities of any kind or nature in favor of any third party, including,
without limitation, Contingent Obligations.
Section 7.17. Other Representations.
All representations and warranties of ARG made in each Related
Document (other than any Related Document relating solely to a Segregated
Series) 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 (except to the extent such representations and warranties
relate to an earlier date, in which event, such representations and warranties
are repeated herein as of such earlier date).
ARTICLE 8. COVENANTS
Section 8.1. Payment of Notes.
ARG shall pay the principal of (and premium, if any) and interest on
the Notes pursuant to the provisions of this Indenture and any applicable Series
Supplement. Principal and interest shall be considered paid on the date due if
the Trustee or 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.
ARG 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 ARG
in respect of the Notes and this Indenture may be served, and where, at any time
when ARG is obligated to make a payment of principal and premium upon the Notes,
the Notes may be surrendered for payment. ARG 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 ARG 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.
ARG 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. ARG will give
prompt written notice to the Trustee of any such designation or rescission and
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of any change in the location of any such other office or agency.
ARG hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of ARG.
Section 8.3. Information.
ARG will deliver or cause to be delivered to the Trustee:
(a) promptly upon receipt by ARG, a copy of any notice, financial
information, certificates, statements, reports and other materials
delivered by any Leasing Company to ARG pursuant to the related Leasing
Company Indenture;
(b) from time to time such additional information regarding the
financial position, results of operations or business of any Leasing
Company, any Lessee or Republic as the Trustee may reasonably request to
the extent that such Leasing Company, Lessee or Republic, as the case may
be, delivers such information to ARG pursuant to any Leasing Company
Indenture; and
(c) on the Distribution Date occurring in March, June, September and
December, commencing on the Distribution Date in March 1999, a certificate
of an officer of ARG that, except as provided in any certificate delivered
in accordance with Section 8.10, no Amortization Event, Leasing Company
Amortization Event, Lease Event of Default or (to the best of such
officer's knowledge) Potential Amortization Event, Potential Leasing
Company Amortization Event or Potential Lease Event of Default has
occurred or is continuing.
Section 8.4. Payment of Obligations.
ARG will pay and discharge, at or before maturity, all of its
respective material obligations and liabilities, including, without limitation,
tax liabilities and other governmental claims, except where the same may be
contested in good faith by appropriate proceedings, and will maintain, in
accordance with GAAP applied on a consistent basis, reserves as appropriate for
the accrual of any of the same.
Section 8.5. 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, ARG 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
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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 8.6. Conduct of Business and Maintenance of Existence.
ARG will maintain its 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 ARG.
Section 8.7. Compliance with Laws.
ARG will comply in all respects with all Requirements of Law and all
applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA and the rules and
regulations thereunder) except where such noncompliance would not materially and
adversely affect the condition, financial or otherwise, operations, performance
or properties of ARG 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 ARG.
Section 8.8. Inspection of Property, Books and Records.
ARG 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 applied on a
consistent basis; and will permit the Trustee, and/or any Person designated by
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.
ARG 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
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would permit any Leasing Company to have the right to refuse to perform any of
its obligations under the Leasing Company Related Documents to which it is a
party or any Lessee or, if applicable, Republic to have the right to refuse to
perform any of its obligations under the Leasing Company Related Documents to
which it is a party.
Section 8.10. Notice of Defaults.
(a) Promptly (and in any event within five Business Days) upon
becoming aware of any Potential Amortization Event, Amortization Event, Leasing
Company Amortization Event, Potential Leasing Company Amortization Event, Lease
Event of Default or Potential Lease Event of Default, ARG shall give the Trustee
and the Rating Agencies written notice thereof, together with a certificate of
an Authorized Officer of ARG setting forth the details thereof and any action
with respect thereto taken or contemplated to be taken by ARG; and
(b) Promptly upon becoming aware of any default under any Related
Document, ARG shall give the Trustee and the Rating Agencies written notice
thereof.
Section 8.11. Notice of Material Proceedings.
Promptly upon becoming aware thereof, ARG shall give the Trustee and
Moody's written notice of the commencement or existence of any proceeding by or
before any Governmental Authority against or affecting ARG which is reasonably
likely to have a material adverse effect on the business, condition (financial
or otherwise), results of operations, properties or performance of ARG or the
ability of ARG to perform its obligations under this Indenture or under any
other Related Document to which it is a party.
Section 8.12. Further Requests.
ARG will promptly furnish to the Trustee such other information as,
and in such form as, the Trustee may reasonably request in connection with the
transactions contemplated hereby.
Section 8.13. Further Assurances.
(a) ARG shall do such further acts and things, and execute and
deliver to the Trustee such additional assignments, agreements, powers and
instruments, as is required or as the Trustee or the Required Noteholders of any
Outstanding Series of Notes reasonably determines 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
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statements under the Uniform Commercial Code in effect in any jurisdiction with
respect to the liens and security interests granted hereby. If any amount
payable under or in connection with any of the Collateral (other than the
Leasing Company Notes) 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
physically delivered to the Trustee promptly. Without limiting the generality of
the foregoing provisions of this Section 8.13(a), ARG shall take all actions
that are required to maintain the security interest of the Trustee in the
Collateral as a perfected security interest subject to no prior Liens,
including, without limitation, filing all Uniform Commercial Code financing
statements, continuation statements and amendments thereto necessary to achieve
the foregoing. If ARG fails to perform any of its agreements or obligations
under this Section 8.13(a), the Trustee may (but shall not be required to)
itself perform such agreement or obligation, and the expenses of the Trustee
incurred in connection therewith shall be payable by ARG upon the Trustee's
demand therefor; provided, however, prior to taking any such action, the Trustee
shall give notice of such intention to ARG and provide ARG with a reasonable
opportunity to take such action itself. ARG 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 ARG to the extent
permitted by applicable law.
(b) ARG 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 Trustee on behalf of the Secured Parties,
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 Republic or any
Affiliate of Republic (other than an Affiliate Issuer)), ARG will provide, no
more frequently than annually and, without the request of Noteholders, six
months prior to 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.
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Section 8.14. Liens.
ARG 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 and (ii) Permitted Liens.
Section 8.15. Other Indebtedness.
ARG will not create, assume, incur, suffer to exist or otherwise
become or remain liable in respect of any Indebtedness other than (i)
Indebtedness hereunder and (ii) Indebtedness permitted under any other Related
Document.
Section 8.16. Mergers.
ARG will not merge or consolidate with or into any other Person.
Section 8.17. Sales of Assets.
ARG will not sell, lease, transfer, liquidate or otherwise dispose
of any Assets, except as contemplated by the Related Documents and provided that
if such Assets constitute Collateral the proceeds received by ARG are paid
directly to the Collection Account or deposited by ARG into the Collection
Account within two Business Days after receipt thereof by ARG.
Section 8.18. Acquisition of Assets.
ARG will not acquire, by long-term or operating lease or otherwise,
any Assets except in accordance with the terms of the Related Documents.
Section 8.19. Dividends, Officers' Compensation, etc.
ARG will not (i) declare or pay any distributions on any of its
shares of capital stock or make any purchase, redemption or other acquisition
of, any of its shares of capital stock; provided, however, that so long as no
Amortization Event or Potential Amortization Event has occurred and is
continuing or would result therefrom, ARG may declare and pay distributions out
of earnings or capital surplus computed in accordance with GAAP applied on a
consistent basis or (ii) pay any wages or salaries or other compensation to
officers, directors, employees or others except out of earnings or capital
surplus computed in accordance with GAAP applied on a consistent basis.
Section 8.20. Name; Principal Office.
ARG will neither (a) change the location of its chief executive
office or principal place of business (within the
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meaning of the applicable UCC) without thirty (30) days' prior written notice to
the Trustee nor (b) change its name without prior written notice to the Trustee
sufficient to allow the Trustee 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. In the event that ARG desires to so change its office or change its
name, ARG will make any required filings and prior to actually changing its
office or its name ARG will deliver to the Trustee (i) an Officers' Certificate
and (except with respect to a change of the location of ARG'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 in respect of
the new office or new name of ARG 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 8.21. Organizational Documents.
ARG will not amend any of its organizational documents, including
its certificate of incorporation or by-laws, unless, prior to such amendment,
each Rating Agency confirms that after such amendment the Rating Agency
Confirmation and Consent Condition with respect to each Outstanding Series of
Notes will be met.
Section 8.22. Investments.
ARG will not make, incur, or suffer to exist any loan, advance,
extension of credit or other investment in any Person other than pursuant to the
Subordinated Note or as permitted by the Related Documents and with respect to
Permitted Investments; provided, however that upon the occurrence and during the
continuance of an Amortization Event, ARG shall not advance any additional
amounts under the Subordinated Note. In addition, without limiting the
generality of the foregoing, ARG will not cause the Trustee to make any
Permitted Investments on ARG's behalf that would have the effect of causing ARG
to be an "investment company" within the meaning of the Investment Company Act.
Section 8.23. No Other Agreements; Approvals under Leasing Company
Related Documents.
(a) ARG will not (i) enter into or be a party to any agreement or
instrument other than any Related Document or any documents related to any
Enhancement or documents and agreements
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incidental thereto or entered into as contemplated in Section 8.25 or 8.28 or
(ii) except as provided for in Section 8.23(b), 12.1 or 12.2, amend, modify or
waive any provision of any Related Document to which it is a party.
(b) ARG will not give any approval or consent or permission provided
for in any Leasing Company Related Document without the consent of the Requisite
Investors, except as permitted in Section 3.2(a); provided that,
notwithstanding the foregoing, without the consent of the Required Noteholders
of each Outstanding Series of Notes, ARG will not consent to (i) any amendment,
modification or waiver of any provision of any Leasing Company Related Document
(other than any amendment permitted under Section 12.1 of any Leasing Company
Base Indenture), (ii) any modification of the minimum depreciation rate
specified under Section 24.18 of each Lease or (iii) the grant of any waivers of
an Amortization Event with respect to any Leasing Company Note under Section 9.4
of the related Leasing Company Base Indenture; provided further that, ARG will
take such action under Section 9.6 (a), (b), (c), or (d) of any Leasing Company
Indenture at the direction of the Required Noteholders of any Outstanding Series
of Notes.
Section 8.24. Other Business.
ARG will not engage in any business or enterprise or enter into any
transaction other than the acquisition and funding of the Leasing Company Notes,
the related exercise of its rights under the Leasing Company Related Documents,
the making of loans to [Republic] pursuant to the Subordinated Note in
accordance with Section 8.22, 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 8.23 and 8.25).
Section 8.25. Use of Proceeds of Notes.
ARG shall use the proceeds of Notes solely for one or more of the
following purposes: (a) to acquire and fund the Leasing Company Notes in
accordance with the Leasing Company Indentures; (b) to pay amortizing Notes when
due or to prepay Notes, in accordance with this Indenture; or (c) to make loans
pursuant to the Subordinated Note in accordance with Section 8.22.
Section 8.26. Maintenance of Separate Existence.
ARG will do all things necessary to maintain its corporate existence
separate and apart from that of Republic or any Affiliate of Republic including,
without limitation, (i) practicing and adhering to corporate formalities, such
as
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maintaining appropriate books and records; (ii) owning or leasing (including
through shared arrangements with Affiliates) all office furniture and equipment
necessary to operate its business; (iii) 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; (iv) 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; (v) maintaining its financial records
and books of account separate and apart from those of any other Person; (vi)
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 employees, officers, consultants and agents of
such Affiliate, out of its own funds; (vii) 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; (viii)
accounting for and managing all of its liabilities separately from those of any
of its Affiliates; (ix) allocating, on an arm's-length basis, all shared
corporate operating services, leases and expenses, including, without
limitation, those associated with the services of shared consultants and agents
and shared computer and other office equipment and software; (x) refraining from
filing or otherwise initiating or supporting the filing of a motion in any
bankruptcy or other insolvency proceeding involving ARG, Republic or any
Affiliate of Republic, to substantively consolidate ARG with Republic or such
Affiliate of Republic; (xi) remaining solvent and (xii) conducting all of its
business (whether written or oral) solely in its own name. ARG acknowledges its
receipt of a copy of those certain opinion letters 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 Republic, the Lessees and
ARG and the characterization of the Operating Leases as "true leases". ARG
hereby agrees to maintain in place all policies and procedures, and take and
continue to take all action, described in the factual assumptions set forth in
such opinion letters and relating to ARG. On an annual basis, commencing
February 26, 2000, ARG will provide to the Rating Agencies and the Trustee an
Officer's Certificate certifying that it is in compliance with its obligations
under this Section 8.25.
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Section 8.27. No ERISA Plan.
ARG will not establish or maintain or contribute to any Pension Plan
that is covered by Title IV of ERISA.
Section 8.28. Additional Leasing Companies.
ARG will not acquire an Additional Leasing Company Note issued under
an Additional Leasing Company Indenture, as supplemented by an Additional
Leasing Company Series Supplement, from an Additional Leasing Company without
complying with the provisions of this Section 8.28. If ARG desires to acquire an
Additional Leasing Company Note issued under an Additional Leasing Company
Indenture, as supplemented by an Additional Leasing Company Supplement, from an
Additional Leasing Company, ARG shall deliver the following to the Trustee:
(a) such Additional Leasing Company Indenture and Additional Leasing
Company Supplement, in substantially the form of the existing Leasing
Company Indentures or otherwise in form and substance satisfactory to the
Required Noteholders of each Outstanding Series of Notes, duly executed by
such Additional Leasing Company and the Additional Leasing Company
Trustee;
(b) the original Counterpart No. 1 of the Additional Leasing Company
Lease securing such Additional Leasing Company Indenture, as supplemented
by such Additional Leasing Company Supplement, in substantially the form
of the existing Leases or otherwise in form and substance satisfactory to
the Required Noteholders of each Outstanding Series of Notes, duly
executed by such Additional Leasing Company, the Additional Leasing
Company Lessee and Republic, as guarantor and servicer;
(c) such Additional Leasing Company Note, in substantially the form
of the existing Leasing Company Notes or otherwise in form and substance
satisfactory to the Required Noteholders of each Outstanding Series of
Notes, duly executed by such Additional Leasing Company and duly
authenticated by the Additional Leasing Company Trustee and registered in
the name of the Trustee;
(d) an Additional Leasing Company Receivables Trust Agreement, in
substantially the form of the existing Leasing Company Receivable Trust
Agreements or otherwise in form and substance satisfactory to the Required
Noteholders of each Outstanding Series of Notes, duly executed by such
Additional Leasing Company and duly authenticated by the Additional
Leasing Company Trustee and registered in the name of the Trustee;
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(e) evidence to the effect that such Additional Leasing Company and
the Additional Leasing Company Lessee shall have become parties to the
Master Collateral Agency Agreement in accordance with the Master
Collateral Agency Agreement;
(f) evidence that the Master Collateral Agent shall have received
executed counterparts of the Assignment Agreements related to the
assignment of rights under each Manufacturer Program under which Program
Vehicles will be purchased or financed by such Additional Leasing Company,
duly executed by the Additional Leasing Company Lessee, the Additional
Leasing Company, the Master Collateral Agent and each applicable
Manufacturer;
(g) evidence that the Master Collateral Agent shall have received a
copy of each Manufacturer Program under which Program Vehicles are
proposed to be financed or purchased by such Additional Leasing Company
and an Officer's Certificate duly executed by an officer of the Additional
Leasing Company certifying that each such copy is true, correct and
complete as of such date;
(h) written confirmation that the Rating Agency Confirmation
Condition with respect to each Outstanding Series of Notes shall have been
satisfied with respect to ARG's acquisition of such Additional Leasing
Company Note;
(i) an Officer's Certificate of ARG dated as of the date of ARG's
acquisition of such Additional Leasing Company Note to the effect that (i)
no Amortization Event with respect to any Outstanding Series of Notes,
Enhancement Agreement Event of Default with respect to any Outstanding
Series of Notes, Enhancement Deficiency with respect to any Outstanding
Series of Notes, Potential Amortization Event with respect to any
Outstanding Series of Notes or Potential Enhancement Agreement Event of
Default with respect to any Outstanding Series of Notes, is continuing or
will occur as a result of its acquisition of such Additional Leasing
Company Note, (ii) the acquisition of such Additional Leasing Company Note
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 ARG 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 ARG is a party or by which it or its
property may be bound or to which it or its property may be subject and
(iii) all conditions precedent provided in this Base Indenture and any
Series Supplement with respect to any Outstanding Series of
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Notes with respect to acquisition of such Additional Leasing Company Note
have been complied with;
(j) an Opinion of Counsel, subject to the assumptions and
qualifications stated therein, and in a form substantially acceptable to
the Trustee, dated the date of ARG's acquisition of such Additional
Leasing Company Note, substantially to the effect that:
(i) all instruments furnished to the Trustee conform in
all material respects to the requirements of this Base Indenture and
any Series Supplement with respect to any Outstanding Series of
Notes with respect to acquisition of such Additional Leasing Company
Note, and all conditions precedent provided for in this Base
Indenture and any such Series Supplement have been complied with in
all material respects;
(ii) (x) the Additional Leasing Company is duly formed in
the jurisdiction of its formation and had the power and authority to
execute and deliver each of the Additional Leasing Company Related
Documents to which it is a party; (y) the Additional Leasing Company
Lessee is duly incorporated or formed, as the case may be, in the
jurisdiction of its incorporation or formation, as the case may be,
and had the corporate, limited partnership or limited liability
company, as the case may be, power and authority to execute and
deliver each of the Additional Leasing Company Related Documents to
which it is a party; and (z) Republic, in its capacity as guarantor
and servicer under the Additional Leasing Company Lease, is duly
incorporated in the jurisdiction of its incorporation and had the
power and authority to execute and deliver the Additional Leasing
Company Lease and each other Additional Leasing Company Related
Document to which it is a party;
(iii) each of the Additional Leasing Company Related
Documents has been duly authorized, executed and delivered by the
Additional Leasing Company, the Additional Leasing Company Lessee
and Republic, as applicable;
(iv) the Additional Leasing Company Note has been duly
authorized and executed and, when authenticated and delivered in
accordance with the provisions of the Additional Leasing Company
Indenture and the related Additional Leasing Company Supplement,
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will constitute valid, binding and enforceable obligations of the
Additional Leasing Company entitled to the benefits of the
Additional Leasing Company Indenture and the related Additional
Leasing Company Supplement, subject, in the case of enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and to general principles
of equity and by an implied covenant of good faith and fair dealing;
(v) the Additional Leasing Company Related Documents are
legal, valid and binding agreements of the Additional Leasing
Company, the Additional Leasing Company Lessee or Republic, 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 and by an implied covenant of good
faith and fair dealing;
(vi) none of the Additional Leasing Companies is, or is
controlled by, an "investment company" within the meaning of, or is
required to register as an "investment company" under, the
Investment Company Act, and the Additional Leasing Company Indenture
is not required to be registered under the Trust Indenture Act;
(vii) the Additional Leasing Company Indenture and the
related Additional Leasing Company Supplement are effective to
create a legal, valid and enforceable security interest in the
collateral pledged thereunder and that such security interest
constitutes a first priority, perfected security interest in such
collateral;
(viii) the assets of the Additional Leasing Company would not
be substantively consolidated with the assets of Republic or the
Additional Leasing Company Lessee in the event of the insolvency of
Republic or such Additional Leasing Company Lessee;
(ix) there being no pending or threatened litigation which,
if adversely determined, would materially and adversely affect the
ability of the Additional Leasing Company or the Additional Leasing
Company Lessee to perform its obligations under any of the
Additional Leasing Company Related Documents;
(x) the absence of any conflict with or violation of any
court decree, injunction, writ or order applicable to the Additional
Leasing Company or
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the Additional Leasing Company Lessee or any breach or default of
any indenture, agreement or other instrument as a result of the
issuance of the Additional Leasing Company Note or the execution,
delivery or performance of the Additional Leasing Company Related
Documents by the Additional Leasing Company or the Additional
Leasing Company Lessee;
(xi) the offer and sale of the Additional Leasing Company
Note is not required to be registered under the Securities Act; and
(xii) such other matters as the Trustee may reasonably
require.
(k) evidence (which, in the case of the filing of financing
statements on form UCC-1, may be telephonic, followed by prompt written
confirmation) that ARG has caused all filings (including filing of
financing statements on form UCC-1) and recordings to be accomplished as
may be reasonably required by law to establish, perfect, protect and
preserve the rights, titles, interests, remedies, powers, privileges,
licenses and security interest of the Trustee in the Additional Leasing
Company Note and the Additional Leasing Company Indenture, as supplemented
by the Additional Leasing Company Supplement for the benefit of the
Secured Parties; and
(l) such other documents, instruments, certifications, agreements or
other items as the Trustee may reasonably require.
Upon satisfaction of such conditions, the Additional Leasing Company Note and
the Additional Leasing Company Indenture, as supplemented by the Additional
Leasing Company Supplement, shall be part of the Collateral.
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 (each, an "Amortization Event"):
(a) The occurrence of an Event of Bankruptcy with respect to ARG,
any Leasing Company, the general partner of any Leasing Company, any
Lessee or Republic;
(b) ARG 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;
(c) Any of the Related Documents (other than any Related Document
relating
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solely to another Series of Notes) or any material portion thereof shall
not be in full force and effect, enforceable in accordance with its terms
(other than any Related Document that has been terminated in accordance
with its terms) or ARG shall so assert in writing;
(d) a Leasing Company Amortization Event shall have occurred and be
continuing with respect to all Leasing Company Notes; and
(e) Any other event shall occur which may be specified in any Series
Supplement as an "Amortization Event";
then (i) in the case of any event described in clause (c) or (e) above (with
respect to clause (e) above, only to the extent such Amortization Event is
subject to waiver as set forth in the applicable Series Supplement), either the
Trustee, by written notice to ARG, or the Required Noteholders of the applicable
Series of Notes, by written notice to ARG and the Trustee, may declare that an
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 (a), (b) or (d)
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 or (iii) in the case of any event
described in clause (e) above (only to the extent such Amortization Event is not
subject to waiver as set forth in the applicable Series Supplement), an
Amortization Event with respect to the related Series of Notes 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 a Trust Officer has actual knowledge
of such Amortization Event; and provided, further 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 shall have
occurred and be continuing, the Trustee may and, at the written direction of the
Requisite Investors shall, 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 with respect to less than all Outstanding
Series of Notes, 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 Series of Notes with respect to which no
Amortization Event shall have occurred, be limited to rights and remedies
pertaining only to those Series of Notes with respect to which such Amortization
Event has occurred and the Trustee shall exercise such rights and remedies at
the written direction of Noteholders holding in excess of 50% of the aggregate
Invested Amount of all such Series of Notes with respect to which such
Amortization Event has occurred (excluding
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any Notes held by ARG or any Affiliate of ARG (other than an Affiliate Issuer)).
Any amounts obtained by 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 ARG Obligations and shall be applied as provided
in Article 5 hereof. If so specified in the applicable Series Supplement, the
Trustee may agree to limit its exercise of rights and remedies available to it
as a result of the occurrence of an Amortization Event to the extent set forth
therein.
(b) Leasing Company Related Documents. If an Amortization Event
shall have occurred and be continuing, the Trustee, at the written direction of
the Requisite Investors (in the case of an Amortization Event with respect to
all Series of Notes) or the Required Noteholders (in the case of an Amortization
Event with respect to a particular Series of Notes), shall exercise, to the
extent necessary, all rights, remedies, powers, privileges and claims of ARG
against any party under or in connection with the Leasing Company Related
Documents, including the right or power to take any action to compel performance
or observance by any such party of its obligations to ARG, and to give any
consent, request, notice, direction, approval, extension or waiver in respect of
the Leasing Company Related Documents.
(c) ARG Liquidation Events. If and whenever an ARG Liquidation Event
with respect to any Outstanding Series of Notes shall have occurred and be
continuing, the Trustee may and, at the written direction of the Required
Noteholders of such Series shall, exercise from time to time any rights and
remedies available to it as the result of such occurrence under the Leasing
Company Related Documents. Any amounts obtained by the Trustee on account of or
as a result of the exercise by the Trustee of any such rights shall be applied
as provided in Article 5 hereof.
(d) Additional Remedies. In addition to any rights and remedies now
or hereafter granted hereunder or under applicable law with respect to the
Collateral, the Trustee shall have all of the rights and remedies of a secured
party under the UCC as enacted in any applicable jurisdiction.
(e) Non-Segregated Series. Upon the occurrence of an Amortization
Event relating to one or more, but not all, Outstanding Series of Notes (not
including any Segregated Series of Notes), the Trustee shall exercise all
remedies hereunder to the extent necessary to pay all interest and principal on
the related Series of Notes up to the Invested Amount of each Series.
(f) Certain Other Non-Segregated Series. Certain Series of Notes
(not including any Segregated Series of Notes) may provide for allocations of
Collections to such Series of Notes only in respect of specified items of
Collateral upon the occurrence of certain Amortization Events. Upon the
occurrence of such an Amortization Event relating to such a Series of Notes, the
Trustee shall, to the extent specified in the applicable Series Supplement,
limit any recourse hereunder to the related specified items of Collateral to
satisfy the payment of all interest and principal on such Series of Notes up to
the Invested Amount of such Series.
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(g) Segregated Series. Upon the occurrence of an Amortization Event
relating to any Outstanding Segregated Series of Notes, the Trustee shall limit
any recourse hereunder to the related Series-Specific Collateral in satisfying
the payment of interest and principal due on such Segregated Series of Notes.
Section 9.3. 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 or more particular Series of Notes) or
to enforce the performance of any provision of the Notes, this Indenture or any
Series Supplement with respect to that Series of Notes. In addition, the Trustee
may, or shall at the written direction of the Requisite Investors (or the
Required Noteholders of one or more Series of Notes, in the case of an
Amortization Event that affects only such Series of Notes), direct ARG to
exercise any rights or remedies available under any Related Document or under
applicable law or in equity with respect to that Series of Notes.
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.
Section 9.4. Waiver of Past Events.
Subject to Section 12.2 hereof, the Supermajority Noteholders of a
Series, by written notice to the Trustee, may waive any existing Potential
Amortization Event or Amortization Event related to clause (c) or (e) of Section
9.1 (with respect to clause (e), only to the extent subject to waiver as
provided in the applicable Series Supplement) 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 clause (a), (b), (d) or
(e) of Section 9.1 (with respect to clause (e), only to the extent not subject
to waiver as set forth in the applicable Series Supplement) shall not be subject
to waiver.
Section 9.5. Control by Requisite Investors or Required
Noteholders.
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
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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 9.6. 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
(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 9.7. Unconditional Rights of Holders to Receive Payment;
Withholding Taxes.
(a) 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.
(b) The Paying Agent shall (or if the Trustee is not the Paying
Agent, the Trustee shall cause the Paying Agent to execute and deliver to the
Trustee an instrument in which
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such Paying Agent shall agree with the Trustee that such Paying Agent shall)
comply with all requirements of the Code regarding the withholding of payments
in respect of Federal income taxes due from Noteholders and otherwise comply
with the provisions of this Indenture applicable to it.
Section 9.8. Collection Suit by the Trustee.
If any Amortization Event consisting of a payment default under a
Series of Notes occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against ARG for the
whole amount of principal and interest remaining unpaid on such Series of 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 9.9. 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 ARG (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 claim 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 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 9.10. Priorities.
If the Trustee collects any money pursuant to this Article, the
Trustee shall pay
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out the money in accordance with the provisions of Article 5 of this Indenture.
Section 9.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as 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 and expenses, 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 9.6, or a suit by Noteholders of more than 10% in
principal amount of all then outstanding Notes.
Section 9.12. 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 9.13. 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.
Section 9.14. Reassignment of Surplus.
Promptly after termination of this Indenture and the payment in full
of the ARG Obligations, any proceeds of all the Collateral received or held by
the Trustee shall be turned over to ARG and the Collateral shall be reassigned
to ARG by the Trustee without recourse to the Trustee and without any
representations, warranties or agreements of any kind.
ARTICLE 10. THE TRUSTEE
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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 written notice; and provided, further 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, in the case of any such certificates or
opinions which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform
to the requirements of this Indenture (but need not confirm or
investigate the accuracy of any mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(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 9.3.
(iv) The Trustee shall not be charged with knowledge of any
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default by any Leasing Company or other Person in the performance of
its obligations under any Collateral Agreement, unless a Trust
Officer of the Trustee receives written notice of such failure from
ARG, any Leasing Company Trustee, any Leasing Company 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
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 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 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 ARG interest agreed upon by ARG and the Trustee from
time to time as may be permitted by law.
Section 10.2. Rights of the Trustee.
Except as otherwise provided by Section 10.1:
(a) The Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting based upon any document (whether in
its original or facsimile form) believed by it to be genuine and to have
been signed by or presented by the proper person.
(b) The Trustee may consult with counsel of its selection and the
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 and
shall
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not be liable for any misconduct or negligence on the part of, or for the
supervision of, any such agent, custodian or nominee so long as such
agent, custodian or nominee is appointed with due care.
(d) The 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 Series 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 Series Supplement,
unless such Noteholders shall have offered to the Trustee 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 any Leasing Company or ARG (which has not been
cured), to exercise such of the rights and powers vested in it by this
Indenture or any Series 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, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of ARG, personally or by agent or attorney at
the sole cost of ARG and shall incur no liability or additional liability
of any kind by reason of such inquiry or investigation.
(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 or negligence.
(h) The Trustee shall not be liable for the acts or omissions of any
successor to the Trustee so long as such acts or omissions were not the
result of the negligence, bad faith or willful misconduct of the
predecessor Trustee.
(i) the rights, privileges, protections, immunities and benefits
given to the
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Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its
capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
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 ARG or an Affiliate of ARG
with the same rights it would have if it were not Trustee. Any 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
or has actual knowledge thereof, the Trustee shall promptly provide the
Noteholders and each Rating Agency with notice of such Amortization Event or the
Potential Amortization Event, to the extent such Notes are represented by a
Global Note, by telephone and facsimile, and, otherwise, by first class mail.
Section 10.5. Compensation.
(a) ARG shall promptly pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as set
forth in the letter agreement dated February 26, 1999 between ARG 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. ARG
shall 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) ARG 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 or negligence.
(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.
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(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 10.6.
(b) The Trustee may, after giving sixty (60) days prior written
notice to ARG, each Noteholder and each Rating Agency, resign at any time and be
discharged from the trust hereby created by so notifying ARG; 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 and ARG. ARG 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 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.
If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason, ARG shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Requisite
Investors may appoint a successor Trustee to replace the successor Trustee
appointed by ARG.
(c) If a successor Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee, ARG or any
Secured Party may petition at the expense of ARG 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 or removed Trustee and to ARG. 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 Series Supplement. The successor Trustee shall mail
a notice of its succession to Noteholders. The retiring Trustee shall promptly
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transfer all property held by it as Trustee to the successor Trustee; provided,
however, that all sums owing to the retiring Trustee hereunder (and its agents
and counsel) have been paid. Notwithstanding replacement of the Trustee pursuant
to this Section 10.6, ARG'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 (i)
be 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) have an unsecured long-term debt rating of at
least A2 from Moody's, (iii) be 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 (iv) 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.
Section 10.9. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture or any
Series 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 Secured Parties, 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 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 10.6. No co-trustee shall be appointed without the
consent of ARG 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,
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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;
(iv) The Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee; and
(v) The Trustee shall remain primarily liable for the
actions of any co-trustee.
(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 Series Supplement, specifically including every
provision of this Indenture or any Series 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 ARG.
(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 Series 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
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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 Series
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 to ARG and the Secured Parties
that:
(i) The Trustee is a banking corporation duly organized,
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 Series
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 Series Supplement issued concurrently with this
Indenture and to authenticate the Notes;
(iii) This Indenture has been duly executed and delivered by
the Trustee; and
(iv) The Trustee meets the requirements of eligibility as a
trustee hereunder set forth in Section 10.8 hereof.
Section 10.11. ARG Indemnification of the Trustee.
ARG shall fully indemnify and hold harmless the Trustee (and any
predecessor Trustee) and its directors, officers, agents and employees from and
against any and all loss, liability, claim, expense, damage or injury suffered
or sustained by reason of any acts, omissions or alleged acts or omissions
arising out of the activities of the Trustee pursuant to this Indenture or any
Series Supplement, including but not limited to any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided, however, that ARG shall not indemnify the Trustee or its directors,
officers, employees or agents if such acts, omissions or alleged acts or
omissions constitute negligence or willful misconduct by the Trustee. The
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indemnity provided herein shall survive the termination of this Indenture and
the resignation and removal of the Trustee.
Section 10.12. Trustee's Application for Instructions from ARG.
Any application by the Trustee for written instructions from ARG or
the Servicer may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. Subject to Section 10.1, the Trustee shall not be liable for any
action taken by, or omission of, the Trustee in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than five Business Days after the date any
Authorized Officer of ARG or the Servicer actually receives such application,
unless any such officer shall have consented in writing to any earlier date)
unless prior to taking any such action (or the effective date in the case of an
omission), the Trustee shall have received written instructions in response to
such application specifying the action to be taken or omitted.
ARTICLE 11. DISCHARGE OF INDENTURE
Section 11.1. Termination of ARG's Obligations.
(a) This Indenture shall cease to be of further effect (except that
ARG's obligations under Section 10.5 and Section 10.11 and 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 ARG has paid all sums payable hereunder.
(b) In addition, except as may be provided to the contrary in any
Series Supplement, ARG may terminate all of its obligations under this Indenture
if:
(i) ARG irrevocably deposits in trust with the Trustee or
at the option of the Trustee, with a trustee reasonably satisfactory
to the Trustee and ARG under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, money
or U.S. Government Obligations in an amount sufficient, in the
opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof
delivered to the Trustee, 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.
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Government Obligations to the payment of said principal and interest
with respect to the Notes;
(ii) ARG 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
to the same effect;
(iii) ARG 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(c) shall have occurred and
be continuing on the date of such deposit; and
(iv) the Rating Agency Confirmation and Consent Condition
is satisfied with respect to each Outstanding Series of Notes.
Then, this Indenture shall cease to be of further effect (except as provided in
this Section 11.1), and the Trustee, on demand of ARG, 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 promptly
upon request shall acknowledge in writing the discharge of ARG'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 ARG's option.
Section 11.2. Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and ARG 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 in accordance with this Indenture to the payment of
principal and interest on the Notes.
The provisions of this Section 11.2 shall survive the expiration or
earlier termination of this Indenture.
Section 11.3. Repayment to ARG.
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The Trustee and the Paying Agent shall promptly pay to ARG upon
written request any excess money or, pursuant to Sections 2.11 and 2.14, return
any Notes held by them at any time.
Subject to Section 2.7(c), the Trustee and the Paying Agent shall
pay to ARG 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 11.3 shall survive the expiration or
earlier termination of this Indenture.
ARTICLE 12. AMENDMENTS
Section 12.1. Without Consent of the Noteholders.
Without the consent of any Noteholder, ARG, 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, provided that the Rating Agency Confirmation
Condition with respect to each Outstanding Series of Notes is met with respect
to such Supplement:
(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 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 ARG for the benefit of any Secured
Parties (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 ARG (provided, however, that ARG will not pursuant
to this subsection 12.1(b) surrender any right or power it has under the
Leasing Company Related Documents);
(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 ARG 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;
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(d) to cure any mistake, ambiguity, defect, or inconsistency or to
correct or supplement any provision contained herein or in any Series
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 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 ARG and upon receipt by the Trustee of the
documents described in Section 2.2 hereof, the Trustee shall join with ARG in
the execution of any Series 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 Series 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 8.23, 9.4 and 12.1, the provisions of
this Indenture and any Series Supplement (unless otherwise provided in such
Series Supplement) and each other Related Document to which ARG 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 ARG, the
Trustee, any applicable Enhancement Provider and the Required Noteholders of
each Outstanding Series of Notes; provided that, if such amendment, modification
or waiver of or to this Indenture, the Series Supplement with respect to a
Series of Notes or any Related Document does not affect the Noteholders of a
particular Series of Notes (as substantiated by an Opinion of Counsel to such
effect), then the consent of the Noteholders of such Series shall not be
required to such amendment, modification or waiver; provided further, that no
consent of Noteholders shall be required to any amendment, modification or
waiver of or to any Related Document if such amendment, modification or waiver
does not adversely affect in any material respect the Noteholders of any Series
of Notes (as substantiated by an Opinion of Counsel to
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such effect) and provided further that the Rating Agency Confirmation Condition
is satisfied with respect to each affected Series of Notes. Notwithstanding the
foregoing:
(i) any modification of this Section 12.2, any change in
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", "Operating Lease Asset Amount", "Invested Amount",
"Invested Percentage", "Manufacturer Program", "Required
Noteholders", "Supermajority Noteholders" or "Requisite Investors"
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 ARG 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 affected 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 affected Noteholder; (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. The initial effectiveness of each Supplement
shall be subject to the satisfaction of the Rating Agency Confirmation Condition
with respect to such Supplement. In addition to the manner provided in Sections
12.1 and 12.2, each Series Supplement may be amended as provided in such Series
Supplement.
Section 12.4. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Noteholder
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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 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. ARG 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. ARG 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 an 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 ARG in accordance with its
terms.
ARTICLE 13. MISCELLANEOUS
Section 13.1. Notices.
(a) Any notice or communication by ARG or the Trustee to the other
shall be in writing and delivered in person or mailed by first-class mail
(registered or certified, return receipt requested), telecopier or overnight air
courier guaranteeing next day delivery, to the other's address:
If to ARG:
ARG Funding Corp.
7700 France Avenue South
Minneapolis, MN 55435
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Attn: John M. Benzian
Phone: (612) 830-2552
Fax: (612) 830-2087
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 12 East
New York, NY 10286
Attn: Corporate Trust Administration
Phone: (212) 815-8195
Fax: (212) 815-5544
ARG or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications; provided,
however, ARG 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.
If ARG mails a notice or communication to Noteholders, it shall mail
a copy to the Trustee 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
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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 and Opinion as to Conditions Precedent.
Upon any request or application by ARG to the Trustee to take any
action under this Indenture, ARG 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;
(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.
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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 ARG, as
such, shall not have any liability for any obligations of ARG 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.
Except as set forth in a Series Supplement, 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 payment 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
payment date, redemption date, or maturity date; provided, however, that no
interest shall accrue for the period from and after such payment date,
redemption date, or maturity date, as the case may be.
Section 13.10. Governing Law.
The laws of the State of New York shall govern and be used to
construe this Indenture and the Notes and the rights and duties of ARG, the
Trustee, Registrar, Paying Agent, Noteholders and Note Owners.
Section 13.11. Successors.
All agreements of ARG in this Indenture and the Notes shall bind its
successor;
<PAGE> 84
84
provided, however, ARG 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 13.12. 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 13.13. 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 13.14. 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 13.15. 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 ARG Obligations shall have been fully
paid and satisfied, (b) the obligations of each Enhancement Provider under any
Enhancement and related documents have terminated, and (c) any Enhancement shall
have terminated, at which time the Trustee, at the request of ARG and upon
receipt of an Officer's Certificate from ARG 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 ARG 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 ARG.
ARG and the Secured Parties hereby agree that, if any 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 ARG.
Section 13.16. No Bankruptcy Petition Against ARG.
Each of the Secured Parties and the Trustee hereby covenants and
agrees that,
<PAGE> 85
85
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, ARG 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 13.16 shall constitute a waiver of any right to indemnification,
reimbursement or other payment from ARG pursuant to this Indenture. In the event
that any such Secured Party or the Trustee takes action in violation of this
Section 13.16, ARG shall file an answer with the bankruptcy court or otherwise
properly contesting the filing of such a petition by any such Secured Party or
the Trustee against ARG or the commencement of such action and raising the
defense that such Secured Party 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 13.16 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 or the Trustee in the assertion or defense of
its claims in any such proceeding involving ARG.
Section 13.17. No Recourse.
The obligations of ARG under this Indenture are solely the
obligations of ARG. 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 stockholder, employee, officer,
director or incorporator of ARG. Fees, expenses or costs payable by ARG
hereunder shall be payable by ARG to the extent and only to the extent that ARG
is reimbursed therefor pursuant to the Leasing Company Indentures or the Related
Documents, or funds are then available or thereafter become available for such
purpose pursuant to Article 5. Nothing in this Section 13.17 shall be construed
to limit the Trustee from exercising its rights hereunder with respect to the
Collateral.
<PAGE> 86
IN WITNESS WHEREOF, the Trustee and ARG have caused this Base
Indenture to be duly executed by their respective duly authorized officers as of
the day and year first written above.
ARG FUNDING CORP.,
as Issuer
By: /s/ Dwight Jenkins
--------------------------------------
Name: Dwight Jenkins
Title: Vice President and Assistant
Secretary
THE BANK OF NEW YORK,
as Trustee
By: /s/ Erwin Soriano
--------------------------------------
Name: Erwin Soriano
Title: Assistant Treasurer
<PAGE> 87
EXECUTION COPY
ARG FUNDING CORP.,
as Issuer
and
THE BANK OF NEW YORK,
as Trustee
BASE INDENTURE
Dated as of February 26, 1999
Rental Car Asset Backed Notes
(Issuable in Series)
<PAGE> 88
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE......................1
Section 1.1. Definitions..............................................1
Section 1.2. Cross-References.........................................1
Section 1.3. Accounting and Financial Determinations; No Duplication..1
Section 1.4. Rules of Construction....................................2
ARTICLE 2. THE NOTES ......................................................2
Section 2.1. Designation and Terms of Notes...........................2
Section 2.2. Notes Issuable in Series.................................3
Section 2.3. Series Supplement for Each Series........................7
Section 2.4. Execution and Authentication.............................8
Section 2.5. Form of Notes............................................9
Section 2.6. Registrar and Paying Agent..............................11
Section 2.7. Paying Agent to Hold Money in Trust.....................12
Section 2.8. Noteholder List.........................................13
Section 2.9. Transfer and Exchange...................................13
Section 2.10. Legending of Notes.....................................19
Section 2.11. Replacement Notes......................................19
Section 2.12. Treasury Notes.........................................20
Section 2.13. Temporary Notes........................................20
Section 2.14. Cancellation...........................................21
Section 2.15. Principal and Interest.................................21
Section 2.16. Book-Entry Notes.......................................22
Section 2.17. Notices to Clearing Agency.............................24
Section 2.18. Definitive Notes.......................................24
Section 2.19. Tax Treatment..........................................25
Section 2.20. CUSIP Numbers...........................................26
ARTICLE 3. SECURITY.......................................................26
Section 3.1. Grant of Security Interest..............................26
Section 3.2. Certain Rights and Obligations of ARG Unaffected........28
Section 3.3. Performance of Leasing Company Related Documents........28
Section 3.4. Stamp, Other Similar Taxes and Filing Fees..............29
ARTICLE 4. REPORTS .......................................................29
Section 4.1. Agreement of ARG to Provide Reports and Instructions....29
ARTICLE 5. ALLOCATION AND APPLICATION OF COLLECTIONS......................30
Section 5.1. Collection Account......................................30
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
Section Page
<S> <C>
Section 5.2. Collections and Allocations.............................31
Section 5.3. Determination of Monthly Interest.......................32
Section 5.4. Determination of Monthly Principal......................32
Section 5.5. Paired Series...........................................32
ARTICLE 6. DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS.......................33
Section 6.1. Distributions in General................................33
Section 6.2. Optional Repurchase of Notes............................34
Section 6.3. Monthly Noteholders' Statement..........................34
Section 6.4. Annual Noteholders' Tax Statement.......................34
ARTICLE 7. REPRESENTATIONS AND WARRANTIES.................................35
Section 7.1. Existence and Power.....................................35
Section 7.2. Corporate and Governmental Authorization................35
Section 7.3. Binding Effect..........................................35
Section 7.4. Financial Information; Financial Condition..............36
Section 7.5. Litigation..............................................36
Section 7.6. No ERISA Plan...........................................36
Section 7.7. Tax Filings and Expenses................................36
Section 7.8. Disclosure..............................................36
Section 7.9. Investment Company Act; Securities Act..................37
Section 7.10. Regulations T, U and X.................................37
Section 7.11. No Consent.............................................37
Section 7.12. Solvency...............................................37
Section 7.13. Ownership; Subsidiary..................................37
Section 7.14. Security Interests.....................................38
Section 7.15. Leasing Company Related Documents .....................38
Section 7.16. Non-Existence of Other Agreements......................38
Section 7.17. Other Representations..................................39
ARTICLE 8. COVENANTS......................................................39
Section 8.1. Payment of Notes........................................39
Section 8.2. Maintenance of Office or Agency.........................39
Section 8.3. Information.............................................40
Section 8.4. Payment of Obligations..................................40
Section 8.5. Rule 144A Information Requirement.......................40
Section 8.6. Conduct of Business and Maintenance of Existence........40
Section 8.7. Compliance with Laws....................................41
Section 8.8. Inspection of Property, Books and Records...............41
Section 8.9. Compliance with Related Documents.......................41
Section 8.10. Notice of Defaults.....................................41
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
Section Page
<S> <C>
Section 8.11. Notice of Material Proceedings.........................42
Section 8.12. Further Requests.......................................42
Section 8.13. Further Assurances.....................................42
Section 8.14. Liens..................................................43
Section 8.15. Other Indebtedness.....................................43
Section 8.16. Mergers................................................43
Section 8.17. Sales of Assets........................................43
Section 8.18. Acquisition of Assets..................................43
Section 8.19. Dividends, Officers' Compensation, etc. ...............43
Section 8.20. Name; Principal Office.................................44
Section 8.21. Organizational Documents...............................44
Section 8.22. Investments............................................44
Section 8.23. No Other Agreements; Approvals under Leasing Company
Related Documents......................................44
Section 8.24. Other Business.........................................45
Section 8.25. Use of Proceeds of Notes...............................45
Section 8.26. Maintenance of Separate Existence......................45
Section 8.27. No ERISA Plan..........................................46
Section 8.28. Additional Leasing Companies...........................46
ARTICLE 9. AMORTIZATION EVENTS AND REMEDIES...............................50
Section 9.1. Amortization Events.....................................50
Section 9.2. Rights of the Trustee upon Amortization Event or
Certain Other Events of Default.........................51
Section 9.3. Other Remedies..........................................52
Section 9.4. Waiver of Past Events...................................53
Section 9.5. Control by Requisite Investors or Required Noteholders..53
Section 9.6. Limitation on Suits.....................................53
Section 9.7. Unconditional Rights of Holders to Receive Payment;
Withholding Taxes.......................................54
Section 9.8. Collection Suit by the Trustee..........................54
Section 9.9. The Trustee May File Proofs of Claim....................54
Section 9.10. Priorities.............................................55
Section 9.11. Undertaking for Costs..................................55
Section 9.12. Rights and Remedies Cumulative.........................55
Section 9.13. Delay or Omission Not Waiver...........................55
Section 9.14. Reassignment of Surplus................................56
ARTICLE 10. THE TRUSTEE....................................................56
Section 10.1. Duties of the Trustee..................................56
Section 10.2. Rights of the Trustee..................................57
Section 10.3. Individual Rights of the Trustee.......................59
Section 10.4. Notice of Amortization Events and Potential
Amortization Events....................................59
Section 10.5. Compensation...........................................59
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
Section Page
<S> <C>
Section 10.6. Replacement of the Trustee.............................60
Section 10.7. Successor Trustee by Merger, etc. .....................61
Section 10.8. Eligibility Disqualification...........................61
Section 10.9. Appointment of Co-Trustee or Separate Trustee..........61
Section 10.10. Representations and Warranties of Trustee..............63
Section 10.11. ARG Indemnification of the Trustee.....................63
Section 10.12. Trustee's Application for Instructions from ARG........63
ARTICLE 11. DISCHARGE OF INDENTURE.........................................64
Section 11.1. Termination of ARG's Obligations.......................64
Section 11.2. Application of Trust Money.............................65
Section 11.3. Repayment to ARG.......................................65
ARTICLE 12. AMENDMENTS.....................................................65
Section 12.1. Without Consent of the Noteholders.....................65
Section 12.2. With Consent of the Noteholders........................67
Section 12.3. Supplements............................................68
Section 12.4. Revocation and Effect of Consents......................68
Section 12.5. Notation on or Exchange of Notes.......................68
Section 12.6. The Trustee to Sign Amendments, etc. ..................68
ARTICLE 13. MISCELLANEOUS..................................................69
Section 13.1. Notices................................................69
Section 13.2. Communication by Noteholders With Other Noteholders....70
Section 13.3. Certificate and Opinion as to Conditions Precedent.....70
Section 13.4. Statements Required in Certificate.....................70
Section 13.5. Rules by the Trustee...................................71
Section 13.6. No Recourse Against Others.............................71
Section 13.7. Duplicate Originals....................................71
Section 13.8. Benefits of Indenture..................................71
Section 13.9. Payment on Business Day................................71
Section 13.10. Governing Law.........................................71
Section 13.11. Successors............................................72
Section 13.12. Severability..........................................72
Section 13.13. Counterpart Originals.................................72
Section 13.14. Table of Contents, Headings, etc. ....................72
Section 13.15. Termination; Collateral...............................72
Section 13.16. No Bankruptcy Petition Against ARG....................73
Section 13.17. No Recourse...........................................73
</TABLE>
Exhibits:
Exhibit A-1: Form of Transfer Certificate
<PAGE> 92
<TABLE>
<CAPTION>
Section Page
<S> <C>
Exhibit A-2: Form of Transfer Certificate for Exchange or Transfer from
Restricted Global Note to Temporary Global Note
Exhibit A-3: Form of Transfer Certificate for Exchange or Transfer from
Restricted Global Note to Permanent Global Note
Exhibit A-4: Form of Transfer Certificate for Transfer or Exchange from
Temporary Global Note to Restricted Global Note
Exhibit B: Form of Clearing System Certificate
Exhibit C: Form of Certificate of Beneficial Ownership
</TABLE>
<PAGE> 93
DEFINITIONS TO ARG BASE INDENTURE
SCHEDULE I
TO THE
BASE INDENTURE
DEFINITIONS LIST
"Accrued Amounts" means, with respect to any Series of Notes
(or any class of such Series of Notes), the amount, if any, specified in the
applicable Series Supplement.
"Accumulation Period" means, with respect to any Series of
Notes, the period, if any, specified in the applicable Series Supplement.
"Acquired Vehicle" means an Eligible Vehicle that is acquired
or owned by, and titled in the name of, a Leasing Company and leased to a Lessee
under an Operating Lease on or after the Lease Commencement Date.
"Additional Base Rent" is defined in Section 6 of Annex B to
each of the Leases.
"Additional Leasing Company" means a special purpose
wholly-owned Subsidiary of Republic which is engaged in the business of
acquiring, financing, refinancing and leasing Vehicles pursuant to an Additional
Leasing Company Lease and which has issued an Additional Leasing Company Note to
ARG pursuant to an Additional Leasing Company Indenture, as supplemented by an
Additional Leasing Company Supplement, that has been included in the Collateral
in accordance with the requirements of Section 8.28 of the Base Indenture.
"Additional Leasing Company Indenture" means a Base Indenture
between an Additional Leasing Company and the Additional Leasing Company Trustee
party thereto pursuant to which such Additional Leasing Company has issued an
Additional Leasing Company Note to ARG, that has been included in the Collateral
in accordance with the requirements of Section 8.28 of the Base Indenture, as
the same may be amended, restated, modified or supplemented from time to time in
accordance with its terms (exclusive of any supplement thereto creating a series
of notes that is not an Additional Leasing Company Note).
"Additional Leasing Company Lease" means a Master Motor
Vehicle Lease and Servicing Agreement (inclusive of any annexes thereto) among
an Additional Leasing Company, one or more Additional Leasing Company Lessees
and Republic, as servicer and guarantor, that is security for the obligations of
such Additional Leasing Company under an Additional Leasing Company Note that
has been issued to ARG and included in the Collateral in accordance with the
requirements of Section 8.28 of the Base Indenture, as the same may be amended,
restated, modified or supplemented from time to time in accordance with its
terms.
<PAGE> 94
2
"Additional Leasing Company Lessee" means a wholly-owned
Subsidiary of Republic which regularly operates a United States domestic daily
car rental business and which has entered into an Additional Leasing Company
Lease with an Additional Leasing Company.
"Additional Leasing Company Note" means a Variable Funding
Rental Car Asset Backed Note issued to ARG pursuant to an Additional Leasing
Company Indenture, as supplemented by an Additional Leasing Company Supplement,
that has been included in the Collateral in accordance with the requirements of
Section 8.28 of the Base Indenture, as the same may be amended, restated,
modified or supplemented from time to time in accordance with the terms of such
Additional Leasing Company Indenture..
"Additional Leasing Company Receivables Trust Agreement" means
a trust agreement between an Additional Leasing Company, as grantor, and the
trustee party thereto, that is security for the obligations of such Additional
Leasing Company under an Additional Leasing Company Note that has been issued to
ARG and included in the Collateral in accordance with the requirements of
Section 8.28 of the Base Indenture, as the same may be amended, restated,
modified or supplemented from time to time in accordance with its terms.
"Additional Leasing Company Related Documents" means, with
respect to any Additional Leasing Company, the Additional Leasing Company Note
issued by such Additional Leasing Company, the Additional Leasing Company
Indenture, as supplemented by the Additional Leasing Company Supplement,
pursuant to which such Additional Leasing Company Note was issued, the
Assignment Agreements to which such Additional Leasing Company is a party and
the Additional Leasing Company Lease and the Additional Leasing Company
Receivables Trust Agreement securing such Additional Leasing Company Note.
"Additional Leasing Company Supplement" means a Series
Supplement to an Additional Leasing Company Indenture pursuant to which an
Additional Leasing Company Note has been issued to ARG that has been included in
the Collateral in accordance with the requirements of Section 8.28 of the Base
Indenture, as the same may be amended, restated, modified or supplemented from
time to time in accordance with its terms.
"Additional Leasing Company Trustee" means the party named as
the trustee in an Additional Leasing Company Indenture until a successor
replaces it in accordance with the applicable provisions of such Additional
Leasing Company Indenture and thereafter means the successor serving thereunder.
<PAGE> 95
3
"Additional Lessee Closing Date" means the initial Vehicle
Funding Date with respect to Vehicles (including Refinanced Vehicles) leased by
an Additional Lessee.
"Additional Lessees" means those Subsidiaries of Republic from
time to time becoming lessees under a Lease in accordance with the requirements
of such Lease.
"Administrative Subaccount" means an internal administrative
account established by the Trustee for record keeping purposes to facilitate the
proper allocation of Collections within the Collection Account.
"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.
"Affiliate Issuer" means any special purpose entity that is an
Affiliate of Republic that has entered into financing arrangements secured by
one or more Series of Notes.
"Agent" means any Registrar or Paying Agent.
"Aggregate Asset Amount" means, for any date of determination,
the sum, rounded to the nearest $100,000, of (i) the Net Book Value of all
Program Vehicles that are Eligible Vehicles leased under the Leases as of such
date and not turned in to the Manufacturer thereof pursuant to its Manufacturer
Program, not delivered for Auction pursuant to any such Manufacturer Program or
not otherwise sold or deemed to be sold under the related Leasing Company
Related Documents, plus (ii) the Net Book Value of all Non-Program Vehicles that
are Eligible Vehicles leased under the Leases as of such date, plus (iii) all
amounts receivable by any Lessee or any Leasing Company as of such date from
Manufacturers which are Eligible Program Manufacturers under Manufacturer
Programs with such Manufacturers (other than Excluded Payments) with respect to
Eligible Vehicles (other than Exchanged Vehicles) turned in to such
Manufacturers pursuant to any such Manufacturer Program or delivered for Auction
pursuant to any such Manufacturer Program and the aggregate of all Eligible
Receivables owned by a Leasing Company or a Lessee financed under the related
Leasing Company Indenture or Lease, as applicable, and owed by Manufacturers
which are Eligible Program Manufacturers, plus (iv) with regard to Eligible
<PAGE> 96
4
Vehicles leased under the Leases that have been delivered for Auction pursuant
to a Manufacturer Program with a Manufacturer which is an Eligible Program
Manufacturer, all amounts receivable (other than amounts specified in clause
(iii) above) from any person or entity in connection with the Auction of such
Eligible Vehicles as of such date, plus (v) with regard to Eligible Vehicles
leased under the Leases that have been turned in to the Manufacturer, delivered
for Auction or otherwise sold, any Casualty Payments or Termination Payments
with respect to such Eligible Vehicles due and payable as of such date under the
Leases, plus (vi) with regard to Eligible Vehicles leased under the Leases that
have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, any accrued and unpaid Monthly Base Rent, Monthly Supplemental Payments
and Additional Base Rent under the Leases with respect to such Eligible Vehicles
(net of amounts set forth in clauses (iii), (iv) and (v) above), plus (vii) cash
and Permitted Investments on deposit in the Leasing Company Collection Accounts,
minus (viii) any Ineligible Asset Amount on such date.
"Aggregate Invested Amount" means the sum of the Invested
Amounts with respect to all Series of Notes then outstanding.
"Alamo" means Alamo Rent-A-Car, Inc., a Florida corporation,
and any successor thereto.
"Alamo Lease" means the Master Motor Vehicle Lease and
Servicing Agreement, dated as of February 26, 1999 (inclusive of any annexes
thereto), among Alamo Leasing, Alamo and the Additional Lessees, if any, as the
lessees thereunder, and Republic, as guarantor and servicer, as the same may be
amended, restated, modified or supplemented from time to time in accordance with
its terms.
"Alamo Leasing" means Alamo Financing L.P., a special purpose
Delaware limited partnership, and any successor thereto.
"Alamo Leasing Indenture" means the Base Indenture, dated as
of February 26, 1999, between Alamo Leasing and the Leasing Company Trustee
party thereto, as supplemented by the Series Supplement, dated as of February
26, 1999, as each may be amended, restated, modified or supplemented from time
to time in accordance with its terms (exclusive of any supplement thereto
creating a series of notes that is not a Leasing Company Note).
"Alamo Leasing Note" means the Variable Funding Rental Car
Asset Backed Note issued to ARG pursuant to the Alamo Leasing
<PAGE> 97
5
Indenture, as the same may be amended, restated, modified or supplemented from
time to time in accordance with the terms of the Alamo Leasing Indenture.
"Alamo Receivables Trust Agreement" means a trust agreement,
dated as of February 26, 1999, between Alamo Leasing, as grantor, and The Bank
of New York (Delaware), as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms.
"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
Series Supplement) which shall be the Accumulation Period, the Controlled
Amortization Period, or the Rapid Amortization Period, each as defined in the
applicable Series Supplement.
"Annex" means one of the annexes to the Leases.
"Annual Noteholders' Tax Statement" is defined in Section 6.4
of the Base Indenture.
"ARG" is defined in the preamble to the Base Indenture.
"ARG Committed Purchaser" means a special purpose company that
has committed to purchase a Series of Notes from ARG from time to time and that
finances such purchases with, among other things, the proceeds of commercial
paper notes issued by such special purpose company.
"ARG Liquidation Event" means, with respect to any Series of
Notes, one of the events specified in the applicable Series Supplement.
"ARG Obligations" means all principal and interest, at any
time and from time to time, owing by ARG on the Notes and all costs, fees and
expenses payable by, or obligations of, ARG under the Indenture and/or the
Related Documents.
"Assets" means any interest of any kind in any assets or
property of any kind, tangible or intangible, real, personal or mixed, now owned
or hereafter acquired by ARG.
<PAGE> 98
6
"Assignment Agreement" means an agreement with respect to each
Manufacturer and its Manufacturer Program, entered into or to be entered into
among a Leasing Company and/or one or more Lessees, as assignor, and the Master
Collateral Agent, as assignee, and acknowledged by such Manufacturer, assigning
to the Master Collateral Agent certain of such Leasing Company's and/or such
Lessees' rights, 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 Vehicles pursuant to, and to enforce such Manufacturer's
obligations under, the Manufacturer Program of such Manufacturer.
"Authorized Officer" means (a) as to ARG, any of the
President, any Vice-President, the Secretary or any Assistant Secretary or the
Treasurer or any Assistant Treasurer and those officers, employees and agents
whose signatures and incumbency shall have been certified to the Trustee in such
certificates as may be delivered by ARG to the Trustee from time to time as duly
authorized to execute and deliver any instruments, certificates, notices and
other documents in connection herewith on behalf of ARG and to take, from time
to time, all other actions on behalf of ARG in connection therewith and (b) as
to any Leasing Company, any of the President, any Vice President, the Secretary
or any Assistant Secretary, the Treasurer or any Assistant Treasurer thereof or
of any general partner, managing member or manager thereof, and those officers,
employees and agents of any such general partner, managing member or manager
whose signatures and incumbency shall have been certified to ARG in such
certificates as may be delivered by such general partner, managing member or
manager to ARG from time to time as duly authorized to execute and deliver the
related Leasing Company Base Indentures and any instruments, certificates,
notices and other documents in connection therewith on behalf of such Leasing
Company and to take, from time to time, all other actions on behalf of such
Leasing Company in connection therewith.
"Bankruptcy Code" means The Bankruptcy Reform Act of 1978, as
amended from time to time, and as codified as 11 U.S.C.
<PAGE> 99
7
Section 101 et seq.
"Base Indenture" means the Base Indenture, dated as of
February 26, 1999, between ARG and the Trustee, as amended, restated, modified
or supplemented from time to time, exclusive of Series Supplements.
"Beneficial Interest" means the 100% beneficial interest owned
by ARG in the Receivables Trust.
"Beneficiary" is defined in the preamble of the Master
Collateral Agency Agreement.
"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 or required by law to be closed in New
York City, New York or Chicago, Illinois.
"Capitalized Cost" means, (i) with respect to each Vehicle
(other than Refinanced Vehicles) the amount payable to the Manufacturer, dealer
or other seller selling such Vehicle in order to purchase such Vehicle, as
established by the invoice delivered in connection with such Vehicle, and (ii)
with respect to each 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 Vehicle, "Capitalized Cost" may include dealer
profit to the extent consistent with reasonable industry standards and delivery
charges but shall not include any taxes, registration fees or titling fees with
respect to such Vehicle.
"CarTemps" means Spirit Rent-A-Car, Inc. d/b/a CarTemps USA,
an Ohio corporation, and any successor thereto.
"CarTemps Lease" means the Master Motor Vehicle Lease and
Servicing Agreement, dated as of February 26, 1999 (inclusive of any annexes
thereto), among CarTemps Leasing, CarTemps and the Additional Lessees, if any,
as the lessees thereunder, and Republic, as guarantor and servicer, as the same
may be amended, restated, modified or supplemented from time to time in
accordance with its terms.
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"CarTemps Leasing" means CarTemps Financing L.P., a special
purpose Delaware limited partnership, and any successor thereto.
"CarTemps Leasing Indenture" means the Base Indenture, dated
as of February 26, 1999, between CarTemps Leasing and the Leasing Company
Trustee party thereto, as supplemented by the Series Supplement, dated as of
February 26, 1999, as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms (exclusive of any
supplement thereto creating a series of notes that is not a Leasing Company
Note).
"CarTemps Leasing Note" means the Variable Funding Rental Car
Asset Backed Note issued to ARG pursuant to the CarTemps Leasing Indenture, as
the same may be amended, restated, modified or supplemented from time to time in
accordance with the terms of the CarTemps Leasing Indenture.
"CarTemps Receivables Trust Agreement" means a trust
agreement, dated as of February 26, 1999, between CarTemps Leasing, as grantor,
and The Bank of New York (Delaware), as the same may be amended, restated,
modified or supplemented from time to time in accordance with its terms.
"Carrying Charges" means, as of any day, without duplication,
the aggregate of all Trustee fees and other fees and expenses and indemnity
amounts, if any, payable by ARG under the Indenture or the other Related
Documents and all other operating expenses of ARG (including any management
fees), in each case, which have accrued since the most recent Distribution Date
and any such amounts which had accrued as of the most recent Distribution Date
and remain unpaid.
"Casualty Payment" is defined in Section 7 of each of the
Leases.
"Cedel" means Cedel Bank, societe anonyme.
"Certificated Security" means a "certificated security" within
the meaning of the applicable UCC.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act or any successor
provision thereto or 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.
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"Closing Date" means the Initial Closing Date or any Series
Closing Date.
"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 sec tions.
"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 by, or on behalf of, any
Leasing Company under any Leasing Company Note or Leasing Company Indenture and
(ii) all amounts earned on Permitted Investments of funds in the Collection
Account (including any subaccount thereof). To the extent so specified in a
Series Supplement, Collections shall also include all proceeds from the sale of
the Notes issued under such Series Supplement.
"Company Order" and "Company Request" means a written order or
request signed in the name of ARG by any one of its Authorized Officers and
delivered to the Trustee.
"Consolidated Subsidiary" means, at any time, with respect to
ARG or any Leasing Company, any Subsidiary or other entity the accounts of which
would be consolidated with those of ARG or such Leasing Company, as the case may
be, 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
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(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.
"Control" means (a) with respect to a Security Entitlement,
the Trustee (i) is identified in the records of the Securities Intermediary for
such Security Entitlement as the person having such Security Entitlement against
such Security Intermediary or (ii) has obtained the agreement, in writing, of
the Securities Intermediary for such Security Entitlement that it will comply
with orders of the Trustee regarding the transfer or redemption of such Security
Entitlement without further consent of any other person; or (b) with respect to
a United States Security Entitlement, (i) the Trustee is a participant in the
book entry system maintained by the Federal Reserve Bank that is acting as a
fiscal agent for the issuer of such United States Security Entitlement and such
Federal Reserve Bank has indicated by book entry that such United States
Securities Entitlement has been credited to the Trustee's securities account in
such book entry system or (ii) (A) the Trustee (x) is identified in the records
of the Securities Intermediary for such United States Security Entitlement as
the person having such Security Entitlement against such Securities Intermediary
or (y) has obtained the agreement, in writing, of the Securities Intermediary
for such Security Entitlement that it will comply with orders of the Trustee
regarding the transfer or redemption of such Security Entitlement without
further consent of any other person, (B) the Securities Intermediary for such
United States Securities Entitlement is a participant in the book entry system
maintained by the Federal Reserve Bank that is acting as fiscal
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agent for the issuer of such United States Securities Entitlement and (C) such
Federal Reserve Bank has indicated by book entry that such United States
Securities Entitlement has been credited to such Securities Intermediary's
securities account in such book entry system.
"Controlled Amortization Period" means, with respect to any
Series of Notes, the period specified, if any, in the applicable Series
Supplement.
"Controlled Distribution Amount" means, with respect to any
Series of Notes, the amount (or amounts), if any, specified in the applicable
Series Supplement.
"Controlled Group" means, with respect to any Person, such
Person, whether or not incorporated, and any corporation, trade or business that
is required to be treated, along with such Person, as a single controlled group
of corporations or a controlled group of trades or businesses as described in
Section 414(b) of the Code.
"Corporate Trust Office" means 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 Administration, or at any other time at such other
address as the Trustee may designate from time to time by notice to the
Noteholders and ARG.
"Daily Report" is defined in Section 4.1(a) of the Base
Indenture.
"Definitions List" means this Definitions List, as amended,
restated, supplemented 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.
"Delivery" means (a) with respect to any Physical Property
(that is not either a United States Security Entitlement or a Security
Entitlement), physical delivery thereof to the Trustee or its nominee or
custodian by an effective endorsement, or registered in the name of, the Trustee
or its nominee or custodian endorsed in blank and (b) with respect to any
Uncertificated Security, the issuer thereof registers the Trustee as the
registered owner thereof or the Trustee otherwise satisfies the requirements of
Revised Article 8.
"Depreciation Charge" means, with respect to (a) any
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Program Vehicle subject to the GM Repurchase Program, the rate determined by
dividing (x) 100% minus the repurchase price percentage specified in respect of
such Vehicle pursuant to the terms of the GM Repurchase 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 Vehicle Order relating to such Vehicle, the applicable depreciation
charge set forth in the GM Repurchase Program for such Vehicle calculated on a
daily basis), (b) any Program Vehicle subject to a Manufacturer Program other
than the GM Repurchase Program (but including any other Manufacturer Program
provided by GM), 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) any Non-Program Vehicle, the scheduled daily depreciation
charge for such Vehicle set forth by or on behalf of the Servicer in the
Depreciation Schedule for such Vehicle. If such charge is expressed as a
percentage, the daily Depreciation Charge for such Vehicle shall be such
percentage multiplied by the Capitalized Cost for such Vehicle calculated on a
daily basis. For Vehicles not held for a full month in the month of acquisition,
the Depreciation Charges shall be prorated by multiplying the applicable
depreciation amount by a fraction, the numerator of which is the number of days
from the date depreciation related to such Vehicle begins to the first day of
the next month and the denominator of which is the number of days in such month.
For the month in which a Program Vehicle is turned back to the applicable
Manufacturer, the Depreciation Charge shall be prorated by multiplying the
applicable depreciation amount by a fraction, the numerator of which is the
number of days from the first day of such month to the Turnback Date for such
Vehicle and the denominator of which is the number of days in such month. In the
event a Vehicle is sold (other than pursuant to the Manufacturer Program of a
Manufacturer), the Depreciation Charge for the month in which such Vehicle is
sold shall be prorated by multiplying the applicable depreciation amount by a
fraction, the numerator of which is the number of days from the first day of
such month to the date proceeds were received by the Trustee from the sale of
such Vehicle and the denominator of which is the number of days in such month.
"Depreciation Schedule" means the initial schedule of
estimated daily depreciation prepared by the Servicer with respect to each type
of Non-Program Vehicle that is an Eligible Vehicle, as revised from time to time
by the Servicer thereof in its sole discretion, subject to the terms of the
applicable Lease.
"Designated Period" means, with respect to any Program Vehicle
subject to the GM Repurchase Program, the period designated by or on behalf of
the Servicer in the applicable
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Vehicle Order relating to such Vehicle as the period of time for which the
Servicer expects such Vehicle to be subject to the applicable Lease.
"Designated Vehicle" means a Vehicle with respect to which the
Master Collateral Agent has been notified 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 three Business Days prior
to each Distribution Date.
"Disposition Date" means with respect to any Program Vehicle
or Non-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, the Turnback Date, (ii) if such Vehicle is an
Exchanged Vehicle, the date on which such Vehicle became an Exchanged Vehicle,
(iii) 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 to
its Guaranteed Depreciation Program), the date on which the proceeds of such
sale are received by the applicable Leasing Company, the Master Collateral Agent
or the Trustee or (iv) if such Vehicle becomes a Casualty or otherwise ceases to
be an Eligible Vehicle (except as a result of a sale thereof), the date on which
a Casualty Payment is received by the applicable Leasing Company or the Trustee.
"Distribution Account" means, with respect to any Series of
Notes, an account established as such pursuant to the applicable Series
Supplement.
"Distribution Date" means, unless otherwise specified in any
Series Supplement for the related Series of Notes, the 20th day of each calendar
month, or, if such day is not a Business Day, the next succeeding Business Day,
commencing March 22, 1999.
"Dollar" and the symbol "$" mean the lawful currency of the
United States.
"DTC" means The Depository Trust Company.
"Due Date" means, with respect to any payment due from a
Manufacturer or auction dealer in respect of a Program Vehicle
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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 Program Manufacturer" means, as of any date of
determination, a Manufacturer who is an "Eligible Program Manufacturer" under
the Series Supplement with respect to each Outstanding Series of Notes as of
such date.
"Eligible Receivable" means a legal, valid and binding
receivable (a) due from a Manufacturer under a Manufacturer Program (other than
Excluded Payments) to any Leasing Company or any Lessee or a creditor of such
Lessee, (b) in respect of a Program Vehicle purchased by such Manufacturer or
sold at auction pursuant to such Manufacturer's Manufacturer Program, and 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 an
Initial Fleet of a Lessee seeking to refinance such receivable, (c) owned by the
Lessor or such Lessee or such creditor free and clear of all Liens other than
Permitted Liens and (d) the right to payments in respect of which has been
assigned by the payee thereof to the Master Collateral Agent and with respect to
which the applicable Leasing Company Trustee is designated as the Beneficiary
pursuant to the Master Collateral Agency Agreement; provided that no amount
receivable from a Manufacturer under a Manufacturer Program shall be an Eligible
Receivable at the time of being financed or refinanced if such amount remains
unpaid more than ten (10) days after the Due Date in respect of such payment.
"Eligible Vehicle" means, on any date of determination, a
Vehicle (i) that either is a Program Vehicle or a Non-Program Vehicle, in each
case at the time of leasing under the related Lease, (ii) that is not older than
forty-eight (48) months from the date of the original manufacturer invoice
therefor, (iii) that is owned by the related Leasing Company or the related
Lessee free and clear of all Liens other than Permitted Liens, (iv) other than
to the extent permitted under the related Lease, 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) that is a Related
Vehicle with the Leasing Company 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
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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 applicable Series Supplement, after giving effect to any
applicable cure periods.
"Enhancement Amount" is defined, with respect to any Series of
Notes, in the applicable Series Supplement.
"Enhancement Deficiency" is defined, with respect to any
Series of Notes, in the applicable Series Supplement.
"Enhancement Percentage" means, with respect to any Series of
Notes or class of Notes, the percentage, if any, specified in the applicable
Series Supplement.
"Enhancement Provider" means the Person providing any
Enhancement as designated in the applicable Series Supplement, other than any
Noteholders the Notes of which are subordinated to any class or Series of Notes.
"Enhancement Provider Account" is defined, with respect to any
Series of Notes, in the applicable Series Supplement.
"Enhancement Provider's Office" is defined, with respect to
any Series of Notes, in the applicable Series Supplement.
"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
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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 or other similar governing body 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 the related Leasing Company (or any Lessee) or
deducted from the Repurchase Price, by the Manufacturer of such Vehicle due to
(i) damage over a prescribed limit, (ii) if applicable, damage not subject to a
prescribed limit and (iii) missing equipment, in each case with respect to such
Vehicle at the time that such Vehicle is turned in to such Manufacturer or its
agent or designee for repurchase or auction pursuant to the applicable
Manufacturer Program.
"Excess Mileage Charges" means, with respect to any Program
Vehicle, the amount charged to the related Leasing Company (or any 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 or designee for
repurchase or auction pursuant to the applicable Manufacturer Program.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agreement" means an agreement among any Leasing
Company, any Lessee and a Qualified Intermediary which
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provides for the assignment by such Leasing Company and such Lessee,
respectively, to such Qualified Intermediary of (a) Exchanged Vehicles, (b) all
Exchanged Vehicle Repurchase Rights, (c) all right, title and interest of such
Leasing Company or such Lessee, as applicable, in, to and under any contracts
for the sale of any Exchanged Vehicles and (d) all right, title and interest of
such Leasing Company or such Lessee, 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 Leases until (i) satisfaction of the Rating Agency Confirmation and Consent
Condition with respect to each Outstanding Series of Notes with respect thereto
and (ii) ARG shall have received opinions of counsel with respect to perfection,
priority and nonconsolidation in substantially the same form as those delivered
on the Initial Closing Date.
"Exchange Date" is defined in Section 2.9(a)(ii) of the Base
Indenture.
"Exchanged Vehicle" means a Designated Vehicle that (a) (i) if
subject to a Manufacturer 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 any Leasing Company or Lessee 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 a Leasing Company Amortization Event or a
Potential Leasing Company Amortization Event with respect to any series of
Leasing Company Notes or an Amortization Event or Potential Amortization Event
with respect to any Series of Notes to exist and (c) with respect to which the
Lien of the Master Collateral Agent has been released in accordance with the
Master Collateral Agency Agreement.
"Exchanged Vehicle Repurchase Rights" means, with respect to
each Exchanged Vehicle that is a Program Vehicle, all right, title and interest
of any Leasing Company or any Lessee 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 Manufacturer Program, whether payable as Vehicle
repurchase prices, auction sales proceeds, fees, expenses, costs, indemnities,
insurance
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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 any
Lessee or Leasing Company (whether payable under the Manufacturer Programs or
otherwise): (i) all incentive payments payable to such Lessee or Leasing Company
to purchase vehicles (but not any amounts payable to such Lessee or Leasing
Company by a Manufacturer as an incentive for selling Program Vehicles outside
of the related Manufacturer Program), (ii) all amounts payable to such Lessee or
Leasing Company as compensation for the preparation by such Lessee or Leasing
Company of newly delivered vehicles and (iii) all amounts payable to such Lessee
or Leasing Company in reimbursement for warranty work performed by such Lessee
or Leasing Company on the vehicles.
"Expected Final Distribution Date" means, with respect to any
Series of Notes, the date, if any, stated in the applicable Series Supplement as
the date on which such Series of Notes is expected to be paid in full.
"Finance Guide" means the Black Book Official Finance/Lease
Guide.
"Financed Vehicle" means an Eligible Vehicle subject to a
Financing Lease.
"Financing Lease" means each of the Leases as supplemented by
Annex B to such Lease.
"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 an Initial Fleet) of all vehicles leased under such
Lease during the preceding 12 calendar months which were acquired by a Lessee in
a Fleet Purchase Transaction, is less than an amount equal to 15% of the
aggregate purchase commitments of all ARG Committed Purchasers, (b) all the
vehicles in such pool are titled in the name of the same wholly owned Subsidiary
of Republic, (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 with
respect to each outstanding Series of Notes.
"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
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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.
"Global Note" means a Restricted Global Note, a Temporary
Global Note or a Permanent Global Note.
"GM" means General Motors Corporation, a Delaware corporation,
or its successor.
"GM Repurchase Program" means the Manufacturer Program titled
"General Motors Corporation Passenger Car and Light Duty Truck 100% Repurchase
Program for Daily Rental Operators - Program No. 99-02," and any substantially
similar Manufacturer Program of GM for any other model years, 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.
"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 a Leasing
Company or a Lessee to (a) cause Vehicles manufactured by it or one of its
Affiliates that are turned back during a specified period to be sold by an
auction dealer, (b) cause the proceeds of any such sale to be paid to such
Leasing Company or Lessee by such auction dealer after such sale and (c) pay to
such Leasing Company or such Lessee the excess, if any, of the guaranteed
payment amount with respect to any such Vehicle calculated as of the date such
vehicle was accepted by such Manufacturer in accordance with the provisions of
such guaranteed depreciation program over the amount paid to such Leasing
Company or such Lessee by an auction dealer pursuant to clause (b) above.
"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
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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.
"Indenture" means the Base Indenture, together with all Series
Supplements, as the same may be amended, restated, 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 the following
amounts to the extent that such amounts are included in clauses (i) through (vi)
of the definition of "Aggregate Asset Amount" for such date: (a) the aggregate
of all amounts receivable (other than Excluded Payments and amounts receivable
in respect of Exchanged Vehicles) as of such date by a Leasing Company or a
Lessee under a Manufacturer Program with respect to Eligible Vehicles turned in
pursuant to such Manufacturer Program or delivered for Auction pursuant to such
Manufacturer Program from a Manufacturer which was an Eligible Program
Manufacturer with respect to which a Manufacturer Event of Default specified in
clause (i) or (ii) of the definition of "Manufacturer Event of Default" has
occurred, plus (b) the aggregate of all Eligible Receivables as of such date
owned by a Leasing Company or a Lessee financed under the related Leasing
Company Indenture or Lease, as applicable, and owed by a Manufacturer which was
an Eligible Program Manufacturer with respect to which a Manufacturer Event of
Default specified in clause (i) or (ii) of the definition of "Manufacturer Event
of Default" has occurred, plus (c) the aggregate of all amounts receivable
(other than Excluded Payments and amounts receivable in respect of Exchanged
Vehicles) as of such date by a Leasing Company or a Lessee under a Manufacturer
Program with respect to Eligible Vehicles turned in pursuant to such
Manufacturer Program or delivered for Auction pursuant to such Manufacturer
Program from a Manufacturer which is an Eligible Program Manufacturer which
amounts are unpaid more than one hundred (100) days past the applicable Due
Date, plus (d) the aggregate of all Eligible Receivables as of such date owned
by a Leasing Company or a Lessee financed under the related Leasing Company
Indenture or Lease, as applicable, and owed by a Manufacturer which is an
Eligible Program Manufacturer which amounts are unpaid more than one hundred
(100) days past the applicable Due Date, plus (e) the aggregate of all amounts
specified in clauses (iv) and (v) of the definition of "Aggregate Asset Amount"
which are past due as of such date and in respect of which any grace period
provided for in the applicable Lease for the making of such payments has
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expired.
"Ineligible Operating Lease Asset Amount" means, as of any
date of determination, an amount equal to the sum (without duplication) of the
following amounts to the extent that such amounts are included in clauses (i)
through (vi) of the definition of "Operating Lease Asset Amount" for such date:
(a) the aggregate of all amounts receivable (other than Excluded Payments and
amounts receivable in respect of Exchanged Vehicles) as of such date by a
Leasing Company under a Manufacturer Program with respect to Eligible Vehicles
that were leased under the Operating Leases (as of the applicable Disposition
Date) and turned in pursuant to such Manufacturer Program or delivered for
Auction pursuant to such Manufacturer Program from a Manufacturer which was an
Eligible Program Manufacturer with respect to which a Manufacturer Event of
Default specified in clause (i) or (ii) of the definition of "Manufacturer Event
of Default" has occurred, plus (b) the aggregate of all Eligible Receivables as
of such date owned by a Leasing Company financed under the related Leasing
Company Indenture and owed by a Manufacturer which was an Eligible Program
Manufacturer with respect to which a Manufacturer Event of Default specified in
clause (i) or (ii) of the definition of "Manufacturer Event of Default" has
occurred, plus (c) the aggregate of all amounts receivable (other than Excluded
Payments and amounts receivable in respect of Exchanged Vehicles) as of such
date by a Leasing Company under a Manufacturer Program with respect to Eligible
Vehicles that were leased under the Operating Leases (as of the applicable
Disposition Date) and turned in pursuant to such Manufacturer Program or
delivered for Auction pursuant to such Manufacturer Program from a Manufacturer
which is an Eligible Program Manufacturer which amounts are unpaid more than one
hundred (100) days past the applicable Due Date, plus (d) the aggregate of all
Eligible Receivables as of such date owned by a Leasing Company financed under
the related Leasing Company Indenture and owed by a Manufacturer which is an
Eligible Program Manufacturer which amounts are unpaid more than one hundred
(100) days past the applicable Due Date, plus (e) the aggregate of all amounts
specified in clauses (iv) and (v) of the definition of "Operating Lease Asset
Amount" which are unpaid more than 30 days past the applicable disposition date,
plus (h) the aggregate of all amounts specified in clause (vi) of the definition
of "Operating Lease Asset Amount" which are past due as of such date and in
respect of which any grace period provided for in the applicable Operating Lease
for the making of such payments has expired.
"Initial Closing Date" means the date on which the
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Notes are first issued and authenticated.
"Initial Determination Date" means, with respect to any
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) on the date any Additional Lessee is
added pursuant to a 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 the applicable Leasing Company under such Lease, and (b)
on any other date, the Refinanced Vehicles included in a Fleet Purchase
Transaction.
"Interest Collections" means on any date of determination, all
Collections which represent interest payments on the Leasing Company Notes 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 applicable Series Supplement.
"Invested Amount" means, with respect to each Series of Notes,
the amount specified in the applicable Series Supplement.
"Invested Percentage" means, with respect to any Series of
Notes, the percentage specified in the applicable Series Supplement.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Issuer's Share" means, with respect to each Leasing Company
Note on any date of determination, a fraction expressed as a percentage, the
numerator of which is equal to the outstanding principal amount of such Leasing
Company Note and the denominator of which is equal to the aggregate principal
amount of the Leasing Company Notes, each as of such date of determination.
"Lease" means each of the Alamo Lease, the CarTemps Lease, the
National Lease and any Additional Leasing Company Lease.
"Lease Commencement Date" is defined in each of the Leases.
"Lease Event of Default" means a "Lease Event of Default" as
defined in any Lease.
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"Lease Guide" means the National Automobile Dealers
Association, Official Used Car Guide, Central Edition.
"Leasing Company" means each of Alamo Leasing, CarTemps
Leasing, NFLP and any Additional Leasing Company.
"Leasing Company Amortization Event" means an "Amortization
Event" as defined in any Leasing Company Indenture.
"Leasing Company Collection Account" means each of the
"Collection Accounts" established under the Leasing Company Indentures.
"Leasing Company Indenture" means each of the Alamo Leasing
Indenture, the CarTemps Leasing Indenture, the NFLP Indenture and any Additional
Leasing Company Indenture.
"Leasing Company Note" means each of the Alamo Leasing Note,
the CarTemps Leasing Note, the NFLP Note and any Additional Leasing Company
Note.
"Leasing Company Receivables Trust Agreements" means each of
the Alamo Receivables Trust Agreement, the CarTemps Receivables Trust Agreement,
the NFLP Receivables Trust Agreement and any Additional Leasing Company
Receivables Trust Agreement.
"Leasing Company Related Documents" means, collectively, the
Leasing Company Notes, the Leasing Company Indentures, the Leasing Company
Receivables Trust Agreements, the Assignment Agreements to which the Lessees
and/or the Leasing Companies are a party, the Leases and the Master Collateral
Agency Agreement.
"Leasing Company Trustee" means each of the parties named as
the trustee in the Leasing Company Indentures until a successor replaces it in
accordance with the applicable provisions of such Leasing Company Indenture and
thereafter means the successor serving thereunder.
"Lessee" means each of Alamo, CarTemps, National, any
Additional Leasing Company Lessee and each Additional Lessee.
"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
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24
similar statement, or notice or arising as a matter of law, judicial process or
otherwise.
"Luxembourg Agent" is defined in Section 2.4(c) of the Base
Indenture.
"Manufacturer" means a manufacturer or distributor of
passenger automobiles and/or light trucks.
"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
owing from such Manufacturer are equal to or in excess of the lesser of (x) $25
million and (y) 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, (A) that are the subject of a good faith dispute as evidenced in a
writing by any of the Lessees or the Leasing Companies, 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 Leasing Company has provided adequate reserves as reasonably
determined by such Lessee or Leasing Company, (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
Repurchase Program or Guaranteed Depreciation Program to meet the requirements
of a Manufacturer Program.
"Manufacturer Program" means, at any time, any Repurchase
Program or Guaranteed Depreciation Program that is in full force and effect with
a Manufacturer (i) pursuant to which the repurchase price or guaranteed auction
sale price is at least equal to (a) with respect to the GM Repurchase 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
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25
Vehicle is returned to the Manufacturer, minus Excess Mileage Charges, minus
Excess Damage Charges minus other similar charges, or (b) with respect to any
Manufacturer Program other than the GM Repurchase Program (but including any
other Manufacturer Program provided by GM), the Capitalized Cost of each
Vehicle, minus all depreciation charges accrued with respect to such Vehicle
under such Manufacturer Program prior to the date that the Vehicle is submitted
for repurchase or auction, minus Excess Mileage Charges, minus Excess Damage
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 the related Leasing Company or the related Lessee 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 the related Leasing
Company, the Master Collateral Agent and the related Leasing Company Trustee
have been provided with an officer's certificate or opinion of counsel
reasonably satisfactory to them that such Leasing Company (and the Master
Collateral Agent on behalf of such Leasing Company and such Leasing Company
Trustee) can enforce the applicable Manufacturer's obligations thereunder with
respect to Program Vehicles.
"Master Collateral Agency Agreement" means the Third Amended
and Restated Master Collateral Agency Agreement, dated as of February 26, 1999,
among NFLP, Alamo Leasing, CarTemps Leasing, National, Alamo and CarTemps, as
grantors, Republic, as master servicer, the various other parties from time to
time parties thereto and the Master Collateral Agent, as further amended,
restated, 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 or permitted assign in such capacity thereunder.
"Material Adverse Effect" means (A) with respect to ARG or any
Leasing Company, 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 ARG or such Leasing Company, as the
case may be, and its Consolidated Subsidiaries taken as a whole, that
materially adversely affects the ability of ARG or such Leasing Company
to perform its respective obligations under any of the Related
Documents; or
(ii) a material adverse effect on the ability of ARG, such
Leasing Company or Republic, as the case may be, to
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26
perform its material obligations under any of the Related Documents;
and
(B) with respect to any Series of Notes, an adverse effect on (a) the
enforceability of any portion of the Collateral or (b) the priority or
perfection of the Trustee's Lien on a material portion of the Collateral.
"Monthly Base Rent" is defined in the Annexes to each of the
Leases.
"Monthly Noteholders' Statement" means, with respect to each
Series of Notes, a statement substantially in the form of an Exhibit to the
applicable Series Supplement.
"Monthly Supplemental Payment" is defined in Section 6 of
Annex B to each of the Leases.
"Moody's" means Moody's Investors Service, Inc.
"National" means National Car Rental System, Inc., a Delaware
corporation, and any successor thereto.
"National Lease" means the Master Motor Vehicle Lease and
Servicing Agreement, dated as of February 26, 1999 (inclusive of any annexes
thereto), among NFLP, National and the Additional Lessees, if any, as the
lessees thereunder, and Republic, as guarantor and servicer, as the same may be
amended, restated, modified or supplemented from time to time in accordance with
its terms.
"Net Book Value" means, with respect to any Vehicle being
leased under the Leases (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 for such Vehicle, 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 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 a Financing Lease
on the last day of the Related Month, an amount equal to (i) the amount of
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27
Additional Base Rent, if any, paid (or, prior to the applicable Distribution
Date, payable) on the Distribution Date immediately following such Related Month
divided by (ii) the number of Non-Program Vehicles leased under such Financing
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.
"NFLP" means National Car Rental Financing Limited
Partnership, a special purpose Delaware limited partnership, and any successor
thereto.
"NFLP Indenture" means the Base Indenture, dated as of April
30, 1996, as amended, between NFLP and the Leasing Company Trustee party
thereto, as supplemented by the Series Supplement, dated as of February 26,
1999, as the same may be amended, restated, modified or supplemented from time
to time in accordance with its terms (exclusive of any supplement thereto
creating a series of notes that is not a Leasing Company Note).
"NFLP Note" means the Variable Funding Rental Car Asset Backed
Note issued to ARG pursuant to the NFLP Indenture, as the same may be amended,
restated, modified or supplemented from time to time in accordance with the
terms of the NFLP Indenture.
"NFLP Receivables Trust Agreement" means a trust agreement,
dated as of February 26, 1999, between NFLP, as grantor, and The Bank of New
York (Delaware), as the same may be amended, restated, modified or supplemented
from time to time in accordance with its terms.
"Non-Program Vehicle" means a Vehicle which is not subject to
a Manufacturer Program at the time of its leasing under the related Lease or
which is redesignated as a Non- Program Vehicle pursuant to the related 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 Payment Rights" means all rights of ARG under any
Leasing Company Note or Leasing Company Indenture to receive payments.
"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 Series Supplement.
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28
"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" means the Person in whose name a
Note is registered in the Note Register.
"Notes" is defined in the recitals to the Base Indenture.
"Officer's Certificate" means a certificate signed by an
Authorized Officer of ARG or the applicable Leasing Company, as the case may be.
"Operating Lease" means each of the Leases as supplemented by
Annex A to such Lease.
"Operating Lease Asset Amount" means, for any date of
determination, the sum, rounded to the nearest $100,000, of (i) the Net Book
Value of all Program Vehicles that are Eligible Vehicles leased under the
Operating Leases as of such date and not turned in to the Manufacturer thereof
pursuant to its Manufacturer Program, not delivered for Auction pursuant to any
such Manufacturer Program or not otherwise sold or deemed to be sold under the
related Leasing Company Related Documents, plus (ii) the Net Book Value of all
Non-Program Vehicles that are Eligible Vehicles leased under the Operating
Leases as of such date, plus (iii) all amounts receivable by a Leasing Company
as of such date from Manufacturers which are Eligible Program Manufacturers
under Manufacturer Programs with such Manufacturers (other than Excluded
Payments) with respect to Eligible Vehicles (other than Exchanged Vehicles)
leased under the Operating Leases (as of the applicable Disposition Date) and
turned in to such Manufacturers pursuant to any such Manufacturer Program or
delivered for Auction pursuant to any such Manufacturer Program and the
aggregate of all Eligible Receivables owned by a Leasing Company financed under
the related Leasing Company Indenture and owed by Manufacturers which are
Eligible Program Manufacturers, plus (iv) with regard to Eligible Vehicles
leased under the Operating Leases that have been delivered for Auction pursuant
to a Manufacturer Program with a Manufacturer which is an Eligible Program
Manufacturer, all amounts receivable (other than amounts specified in clause
(iii) above) from any person or entity in connection with the Auction of such
Eligible Vehicles as of such date, plus (v) with regard to Eligible Vehicles
leased under the Operating Leases that have been turned in to the Manufacturer,
delivered for Auction or otherwise sold, any Casualty Payments or
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Termination Payments with respect to such Eligible Vehicles due and payable as
of such date under the Operating Leases, (vi) with regard to Eligible Vehicles
leased under the Operating Leases that have been turned in to the Manufacturer,
delivered for Auction or otherwise sold, any accrued and unpaid Monthly Base
Rent under the Operating Leases with respect to such Eligible Vehicles (net of
amounts set forth in clauses (iii), (iv) and (v) above), plus (vii) an amount
equal to the product of (x) the Operating Lease Ratio as of such date and (y)
the amount of cash and Permitted Investments on deposit in the Leasing Company
Collection Accounts, minus (viii) any Ineligible Operating Lease Asset Amount on
such date.
"Operating Lease Ratio" means, on any date of determination,
the percentage equivalent of a fraction, the numerator of which is the Operating
Lease Asset Amount on the immediately preceding Business Day and the denominator
of which is the Aggregate Asset Amount on the immediately preceding Business
Day.
"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 ARG or any Leasing Company, as the case may be. An Opinion of Counsel
may, to the extent same is based on any factual matter, rely on an Officer's
Certificate as to the truth of such factual matter.
"Outstanding" is defined, with respect to any Series of Notes,
in the applicable Series Supplement.
"Paired Series" is defined in Section 5.5 of the Base
Indenture.
"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, commencing March
22, 1999.
"Pension Plan" means any "employee pension benefit plan", as
such term is defined in ERISA, which is subject to Title IV of ERISA and to
which any company in the Controlled Group of which such Person is a member 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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30
"Permitted Investments" means negotiable instruments or
securities maturing on or before the Distribution Date next occurring after the
investment therein, payable in Dollars, issued by an entity organized under the
laws of the United States of America and 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 other than financial contracts whose value depends on the
values or indices of asset values; (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
whose short-term debt is rated P-1 by Moody's and A-1 or higher by Standard &
Poor's 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+", in the case of certificates of
deposit or short-term deposits, or a rating from Standard & Poor's not lower
than "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+"; (iv) bankers' acceptances issued by any depositary institution or
trust company described in clause (ii) above; (v) investments in money market
funds rated "AAm" by Standard & Poor's or otherwise approved in writing by
Standard & Poor's; (vi) Eurodollar time deposits having a credit rating from
Standard & Poor's of "A-1+"; (vii) repurchase agreements involving any of the
Permitted Investments described in clauses (i) and (vi) 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 P-1
by Moody's or which otherwise is approved as to collateralization by the Rating
Agencies; and (viii) 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',
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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 permitted under
the Leasing Company Indentures, (iv) Liens in favor of the Leasing Company
Trustees pursuant to the Leasing Company Indentures and (v) the Liens in favor
of the Trustee pursuant to the Indenture.
"Person" means any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership, joint stock company, corporation, trust, unincorporated
organization or Government Authority.
"Physical Property" means banker's acceptances, commercial
paper, negotiable certificates of deposits and other obligations that constitute
"instruments" within the meaning of Section 9-105(l)(i) of the applicable UCC
and are susceptible to physical delivery and Certificated Securities.
"Potential Amortization Events" means, with respect to any
Series of Notes, any occurrence or event which, with the giving of notice, the
passage of time or both, would constitute an Amortization Event with respect to
such Series of Notes.
"Potential Enhancement Agreement Event of Default" means an
event which, with the giving of notice, the passage of time or both, would
constitute an Enhancement Agreement Event of Default under any Enhancement
Agreement.
"Potential Lease Event of Default" means any occurrence or
event which, with the giving of notice, the passage of time or both, would
constitute a Lease Event of Default.
"Potential Leasing Company Amortization Event " means any
occurrence or event which, with the giving of notice, the passage of time or
both, would constitute a Leasing Company Amortization Event.
"Principal Collections" means any Collections other than
Interest Collections.
"Principal Terms" is defined in Section 2.3 of the Base
Indenture.
"Program Vehicle" means a Vehicle eligible under, and subject
to, a Manufacturer Program.
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"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 from Moody's a long-term indebtedness rating not lower than
A-2 and a short-term indebtedness rating of P-1, or (ii) such other rating with
respect to which the Rating Agency Confirmation Condition with respect to each
Outstanding Series of Notes has been satisfied.
"Qualified Intermediary" means a party, rated not less than A
by Standard & Poor's and A2 by Moody's, designated in an Exchange Agreement as
an intermediary for exchanges of Vehicles by any Leasing Company or any Lessee
pursuant to such Exchange Agreement.
"Rapid Amortization Period" means , with respect to any Series
of Notes, the period specified, if any, in the applicable Series Supplement.
"Rating Agency" means, with respect to each Outstanding Series
of Notes, any rating agency or agencies then issuing a rating for (x) such
Series of Notes or any class thereof or (y) commercial paper notes issued by an
ARG Committed Purchaser to fund the purchase of such Series of Notes, in each
case, at the request of ARG.
"Rating Agency Confirmation and Consent Condition" with
respect to any Series of Notes, has the meaning set forth in the applicable
Series Supplement.
"Rating Agency Confirmation Condition" with respect to any
Series of Notes, has the meaning set forth in the applicable Series Supplement.
"Receivables Trust" means the trust created under and pursuant
to the Receivables Trust Agreement.
"Receivables Trust Agreement" means the trust agreement dated
as of February 26, 1999 between ARG, as grantor, and The Bank of New York
(Delaware), as trustee.
"Receivables Trustee" means The Bank of New York (Delaware),
in its capacity as trustee under the Receivables Trust Agreement.
"Record Date" means, with respect to any Series of Notes and
any Distribution Date, the date specified in the applicable Series Supplement.
"Refinanced Vehicles" means Eligible Vehicles (a) owned by any
Leasing Company or Lessee prior to the Lease Commencement Date under the related
Lease (i) which are (A) subject to the lien of the Master Collateral Agent or
(B) listed on Schedule II to any Leasing
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33
Company Indenture and a first priority lien on which has been assigned to the
Master Collateral Agent and (ii) are refinanced by such Leasing Company under
the Lease to which it is a party on the Initial 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 such Leasing
Company under the Financing Lease to which it is a party on the Additional
Lessee Closing Date with respect to such Additional Lessee, (c) owned by such
Leasing Company or 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 such Leasing Company under the Lease to which it is a party on any
date after the Lease Commencement Date under such Lease or (d) acquired by a
Lessee in a Fleet Purchase Transaction (i) a first priority lien in which has
been assigned to the Master Collateral Agent and (ii) which are refinanced by
the related Leasing Company under the Financing Lease to which it is a party.
"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 Leasing Company
Related Documents, the Base Indenture, the Notes, any Enhancement Agreement, any
Swap Agreement, the Receivables Trust Agreement and any agreements relating to
the issuance or the purchase of any of the Notes or the Leasing Company Related
Documents.
"Related Month" means, (i) with respect to any Payment Date,
Determination Date or Distribution Date, the most recently ended calendar month
and (ii) with respect to an Interest Period, the month in which such Interest
Period commences; provided, however, that with respect to the above clause (i),
the initial Related Month shall be the period from and in cluding 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.
"Replacement Vehicle" means an Eligible Vehicle (i) which is
owned by any Leasing Company or any Lessee, (ii) which is in the possession of
any Leasing Company or any Lessee, (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
<PAGE> 126
34
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.
"Republic" means Republic Industries, Inc., a Delaware
corporation, and any successor thereto.
"Republic Historical Depreciation Rate" means, as of any date
of determination, the weighted average Depreciation Charge accruing with respect
to Non-Program Vehicles during the six calendar months preceding such date.
"Repurchase Amount" means, with respect to any Series of
Notes, the amount specified in the applicable Series 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 any of the Lessees or the Leasing Companies
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 the related Leasing Company to
repurchase Vehicles manufactured by such Manufacturer or one of its Affiliates
during a specified period.
"Required Enhancement Amount" is defined, with respect to any
Series of Notes, in the applicable Series Supplement.
"Required Financing Lease Asset Amount" means, with respect to
any Series of Notes, the amount specified in the applicable Series Supplement.
"Required Noteholders" with respect to each Series of Notes,
has the meaning set forth in the applicable Series Supplement.
"Required Aggregate Asset Amount" means, on any date of
determination, the sum of the Invested Amounts and Required
Overcollateralization Amounts for all Series of Notes on such date.
<PAGE> 127
35
"Required Operating Lease Asset Amount" means, with respect to
any Series of Notes, the amount specified in the applicable Series Supplement.
"Required Overcollateralization Amount" means, with respect to
each Series of Notes, the amount specified in the applicable Series Supplement.
"Required Secured Parties" is defined, with respect to any
Series of Notes in the applicable Series Supplement.
"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, treaty,
rule or regulation, 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 sum of (a) the aggregate Invested Amount of all outstanding Series of
Notes and (b) the sum of the unutilized purchase commitments of the ARG
Committed Purchasers (excluding, for the purposes of making the foregoing
calculation, any Notes held by any Affiliate of any Leasing Company (other than
an ARG Committed Purchaser or other Affiliate Issuer)); provided, however that,
upon the occurrence and during the continuance of an Amortization Event with
respect to any Series of Notes held by an ARG Committed Purchaser, the purchase
commitment of such ARG Committed Purchaser shall be deemed to be zero.
"Restricted Global Note" is defined in Section 2.5(a) of the
Base Indenture.
"Revised Article 8" means Revised Article 8 (1994 Version)
(and corresponding amendments to Article 9) as promulgated by the National
Conference of Commissioners on Uniform State Laws.
"Revolving Period" means, with respect to any Series of Notes,
the period specified in the applicable Series Supplement.
"Rule 144A" is defined in Section 2.5(a) of the Base
Indenture.
"S&P" or "Standard & Poor's" means Standard & Poor's Ratings
Service, a division of The McGraw-Hill Companies, Inc.
"Secured Parties" is defined in Section 3.1 of the Base
Indenture.
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36
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Intermediary" means a "securities intermediary"
within the meaning of Section 8-102(a)(14) of Revised Article 8.
"Security Entitlement" means a "security entitlement" within
the meaning of Section 8-102(a)(17) of Revised Article 8.
"Segregated Series" is defined in Section 2.3(b) of the Base
Indenture.
"Series Closing Date" means, with respect to any Series of
Notes, the date of issuance of such Series of Notes, as specified in the
applicable Series Supplement.
"Series of Notes" or "Series" means each Series of Notes
issued and authenticated pursuant to the Base Indenture and a related Series
Supplement.
"Series-Specific Collateral" is defined in Section 2.3(b) of
the Base Indenture.
"Series Supplement" means a supplement to the Base Indenture
complying with the terms of Section 2.3 of the Base Indenture.
"Series Termination Date" means, with respect to any Series of
Notes, the date stated in the applicable Series Supplement as the termination
date.
"Servicer" means Republic, in its capacity as servicer of
Vehicles under the Leases and as master servicer under 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.
"Subordinated Note" means the subordinated note made by
Republic to ARG which is payable by Republic upon ARG's demand.
"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 with the
<PAGE> 129
37
terms of Article 12 of the Base Indenture.
"Supermajority Noteholders" with respect to each Series of
Notes, has the meaning set forth in the applicable Series Supplement.
"Swap Agreement" means one or more interest rate swap
contracts, interest rate cap agreements or similar contracts entered into by ARG
in connection with the issuance of a Series of Notes, as specified in the
related Series Supplement, providing limited protection against interest rate
risks.
"Temporary Global Note" is defined in Section 2.5(b) of the
Base Indenture.
"Termination Payment" is defined in Section 12.3(b) of each of
the Leases.
"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.
"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.
"Turnback Date" means, with respect to any Program Vehicle,
the date on which such Vehicle is accepted for return by a Manufacturer or its
agent pursuant to its Manufacturer Program and the Depreciation Charges cease to
accrue pursuant to its Manufacturer Program.
"UCC" means the Uniform Commercial Code as in effect from time
to time in the specified jurisdiction.
"Uncertificated Security" means an "uncertificated security"
within the meaning of the applicable UCC.
"United States" or "U.S." means the United States of America,
its fifty States and the District of Columbia.
<PAGE> 130
38
"United States Security Entitlement" means a "Security
Entitlement" as defined in 31 C.F.R. Section 357.2, 24 C.F.R. Section 1.2, 12
C.F.R. Section 912.1, 12 C.F.R. Section 1511.1, 12 C.F.R. Section 615.5450 or 31
C.F.R. Section 354.1.
"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 as to full and timely payment of such obligations.
"Vehicle" means a passenger automobile or light truck
purchased, financed or refinanced by a Leasing Company under a Lease and pledged
under the Master Collateral Agency Agreement for the benefit of the related
Leasing Company Trustee, but solely during the Vehicle Term for such Vehicle.
"Vehicle Funding Date" is defined in Section 3.1 of each of
the Leases.
"Vehicle Lease Commencement Date" is defined in Section 3.1 of
each of the Leases.
"Vehicle Order" is defined in Section 2.1(c) of each of the
Leases.
"Vehicle Perfection and Documentation Requirements" means, (i)
with respect to a Vehicle (other than, to the extent permitted under a Lease,
Vehicles in an Initial Fleet), 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: any Leasing Company or any Lessee, as the registered owner and the
Master Collateral Agent as the first lienholder or (ii) in the case of such
Vehicles in such Initial Fleet, the assignment to the Master Collateral Agent of
the lienholder's lien with respect to such Vehicles in such Initial Fleet.
"Vehicle Term" is defined in respect of any Vehicle in the
related Lease.
"written" or "in writing" means any form of written
communication, including, without limitation, by means of telex, telecopier
device, telegraph or cable.
<PAGE> 1
EXHIBIT 4.4
SERIES 1999-1 SUPPLEMENT, dated as of February 26, 1999 (as amended,
modified, restated or supplemented from time to time in accordance with the
terms hereof, this "Series Supplement") between ARG Funding Corp., a special
purpose corporation established under the laws of Delaware ("ARG") and The Bank
of New York, a New York banking corporation, as trustee (together with its
successors in trust under the Base Indenture referred to below, the "Trustee"),
to the Base Indenture, dated as of February 26, 1999, between ARG and the
Trustee (as amended, modified, restated or supplemented from time to time,
exclusive of Series Supplements, the "Base Indenture").
PRELIMINARY STATEMENT
WHEREAS, Sections 2.2 and 12.1 of the Base Indenture provide, among
other things, that ARG 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.
NOW, THEREFORE, the parties hereto agree as follows:
DESIGNATION
There is hereby created a Series of Notes to be issued pursuant to
the Base Indenture and this Series Supplement and such Series of Notes shall be
designated generally Rental Car Asset Backed Notes, Series 1999-1. The Series
1999-1 Notes shall be issued in three classes: (i) Series 1999-1 Floating Rate
Rental Car Asset Backed Notes, Class A-1, which shall be designated generally as
the Class A-1 Notes, (ii) the Series 1999-1 5.88% Rental Car Asset Backed Notes,
Class A-2, which shall be designated generally as the Class A-2 Notes and (iii)
the Series 1999-1 6.02% Rental Car Asset Backed Notes, Class A-3, which shall be
designated generally as the Class A-3 Notes. The Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes are referred to collectively as the "Series 1999-1
Notes." The Series 1999-1 Notes shall be issued in minimum denominations of
$200,000 and integral multiples of $1,000 in excess thereof.
The proceeds from the sale of the Series 1999-1 Notes (as defined
herein) shall be deposited in the Collection Account and used to fund the
acquisition of Leasing Company Notes and increases in the principal amounts
thereof to the extent that the Leasing Companies have requested funding
thereunder and to make payments in reduction of the Invested Amount of other
Series of Notes.
The Series 1999-1 Notes are a non-Segregated Series of Notes (as
more fully described in the Base Indenture). Accordingly, all references in this
Series Supplement to "all"
<PAGE> 2
2
Series of Notes (and all references in this Series 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 I
DEFINITIONS
(a) All capitalized terms not otherwise defined herein are defined
in the Definitions List attached to the Base Indenture as Schedule 1 thereto, as
amended, modified, restated or supplemented from time to time in accordance with
the terms of the Base Indenture (exclusive of any Series Supplements). All
Article, Section or Subsection references herein shall refer to Articles,
Sections or Subsections of the Base Indenture, except as otherwise provided
herein. Unless otherwise stated herein, as the context otherwise requires or if
such term is otherwise defined in the Base Indenture, each capitalized term used
or defined herein shall relate only to the Series 1999-1 Notes and not to any
other Series of Notes issued by ARG. All references herein to the "Series 1999-1
Supplement" shall mean the Base Indenture, as supplemented hereby.
(b) The following words and phrases shall have the following
meanings with respect to the Series 1999-1 Notes and the definitions of such
terms are applicable to the singular as well as the plural form of such terms
and to the masculine as well as the feminine and neuter genders of such terms:
"Aggregate Asset Amount Deficiency" means, as of any date of
determination, the amount by which the Required Aggregate Asset Amount as of
such date exceeds the Aggregate Asset Amount as of such date.
"Bankrupt Manufacturer Series 1999-1 Market Value Adjustment
Percentage" means, as of any date of determination, the lower of (i) the lowest
Bankrupt Manufacturer Series 1999-1 Non-Program Vehicle Measurement Month
Average with respect to any Measurement Month ending within the twelve (12)
calendar months preceding such date and (ii) the lowest Bankrupt Manufacturer
Series 1999-1 Non-Program Vehicle Fair Market Value Average as of any
Determination Date within the twelve (12) calendar months preceding such date.
"Bankrupt Manufacturer Series 1999-1 Non-Program Vehicle Fair Market
Value Average" means, as of any date on or after the third Determination Date,
the lesser of (a) the percentage equivalent of a fraction, the numerator of
which is the aggregate of the respective Fair Market Values of each Bankrupt
Manufacturer Series 1999-1 Non-Program Vehicle subject to the Operating Leases
as of the immediately preceding Determination Date and the denominator of which
is the aggregate of the Net Book Values of each Bankrupt Manufacturer Series
1999-1 Non-Program Vehicle subject to the Operating Leases as of such
immediately preceding Determination Date and (b) 100%.
<PAGE> 3
3
"Bankrupt Manufacturer Series 1999-1 Non-Program Vehicle Measurement
Month Average" means, with respect to any Measurement Month, the lesser of (a)
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Disposition Proceeds and Termination Payments paid or payable in
respect of all Bankrupt Manufacturer Series 1999-1 Non-Program Vehicles leased
under the Operating Leases (excluding salvage sales) that are sold at auction or
otherwise during such Measurement Month and the denominator of which is the
aggregate Net Book Values of such Vehicles on the dates of their respective
sales and (b) 100%; provided, however, that, until the completion of the initial
three Measurement Months, the Bankrupt Manufacturer Series 1999-1 Non-Program
Vehicle Measurement Month Average will be deemed to be 100%.
"Bankrupt Manufacturer Series 1999-1 Non-Program Vehicle Percentage"
means, as of any date of determination, the percentage equivalent of a fraction,
the numerator of which is the aggregate Net Book Value of all Bankrupt
Manufacturer Series 1999-1 Non-Program Vehicles leased under the Operating
Leases and the denominator of which is the aggregate Net Book Value of all
Series 1999-1 Non-Program Vehicles leased under the Operating Leases as of such
date.
"Bankrupt Manufacturer Series 1999-1 Non-Program Vehicles" means
each Series 1999-1 Non-Program Vehicle that was manufactured by a Manufacturer
who experienced an Event of Bankruptcy on or after the date on which such Series
1999-1 Non-Program Vehicle became subject to an Operating Lease.
"Certificate of Lease Deficit Demand" means a certificate in the
form of Annex A to the Series 1999-1 Letters of Credit.
"Certificate of Termination Date Demand" means a certificate in the
form of Annex D to the Series 1999-1 Letters of Credit.
"Certificate of Termination Demand" means a certificate in the form
of Annex C to the Series 1999-1 Letters of Credit.
"Certificate of Unpaid Demand Note Demand" means a certificate in
the form of Annex B to the Series 1999-1 Letters of Credit.
"Class A-1/A-2 Carryover Controlled Amortization Amount" means, with
respect to the Class A-1 Notes or the Class A-2 Notes for any Related Month
during the Class A-1/A-2 Controlled Amortization Period, the amount, if any, by
which the portion of the Monthly Total Principal Allocation allocable to the
Class A-1 Notes and the Class A-2 Notes for the previous Related Month was less
than the Class A-1/A-2 Controlled Distribution Amount for the previous Related
Month; provided, however, that for the first Related Month in the Class A-1/A-2
Controlled Amortization Period, the Class A-1/A-2 Carryover Controlled
Amortization Amount shall be zero.
<PAGE> 4
4
"Class A-1/A-2 Controlled Amortization Amount" means (i) with
respect to any Related Month other than the last Related Month during the Class
A-1/A-2 Controlled Amortization Period, $216,666,666.66 and (ii) with respect to
the last Related Month during the Class A-1/A-2 Controlled Amortization Period,
$216,666,666.70.
"Class A-1/A-2 Controlled Amortization Period" means the period
commencing at the close of business on November 1, 2001 (or, if such day is not
a Business Day, the Business Day immediately preceding such day) and continuing
to the earliest of (i) the commencement of the Series 1999-1 Rapid Amortization
Period, (ii) the date on which the Class A-1 Notes and the Class A-2 Notes are
fully paid, (iii) the Series 1999-1 Termination Date, and (iv) the termination
of the Indenture.
"Class A-1/A-2 Controlled Distribution Amount" means, with respect
to any Related Month during the Class A-1/A-2 Controlled Amortization Period, an
amount equal to the sum of the Class A-1/A-2 Controlled Amortization Amount and
any Class A-1/A-2 Carryover Controlled Amortization Amount for such Related
Month.
"Class A-1 Deficiency Amount" has the meaning specified in Section
2.3(g) of this Series Supplement.
"Class A-1 Expected Final Distribution Date" means the May 2002
Distribution Date.
"Class A-1 Final Distribution Date" means the May 2003 Distribution
Date.
"Class A-1 Initial Invested Amount" means the aggregate initial
principal amount of the Class A-1 Notes, which is $550,000,000.
"Class A-1 Invested Amount" means when used with respect to any
date, an amount equal to the Class A-1 Outstanding Principal Amount plus the sum
of (a) the amount of any principal payments made to Class A-1 Noteholders on or
prior to such date with the proceeds of a demand on the Surety Bond and (b) the
amount of any principal payments made to Class A-1 Noteholders that have been
rescinded or otherwise returned by the Class A-1 Noteholders for any reason.
"Class A-1 Monthly Interest" means, with respect to any Series
1999-1 Interest Period, an amount equal to the product of (i) the Class A-1 Note
Rate for such Series 1999-1 Interest Period, (ii) the Class A-1 Invested Amount
on the first day of such Series 1999-1 Interest Period, after giving effect to
any principal payments made on such date, or, in the case of the initial Series
1999-1 Interest Period, the Class A-1 Initial Invested Amount and (iii) a
fraction, the numerator of which is the number of days in such Series 1999-1
Interest Period and the
<PAGE> 5
5
denominator of which is 360.
"Class A-1 Note Rate" means, (i) with respect to the initial Series
1999-1 Interest Period, 5.19938% per annum and (ii) with respect to each Series
1999-1 Interest Period thereafter, a rate per annum equal to LIBOR for such
Series 1999-1 Interest Period plus 0.26% per annum.
"Class A-1 Noteholder" means the person in whose name a Class A-1
Note is registered in the Note Register.
"Class A-1 Notes" means any one of the Series 1999-1 Floating Rate
Rental Car Asset Backed Notes, Class A-1, executed by ARG and authenticated by
or on behalf of the Trustee, substantially in the form of Exhibit A-1-1, Exhibit
A-1-2 or Exhibit A-1-3. Definitive Class A-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.
"Class A-1 Outstanding Principal Amount" means, when used with
respect to any date, an amount equal to (a) the Class A-1 Initial Invested
Amount minus (b) the amount of principal payments made to Class A-1 Noteholders
on or prior to such date.
"Class A-2 Deficiency Amount" has the meaning specified in Section
2.3 (g) of this Series Supplement.
"Class A-2 Expected Final Distribution Date" means the May 2002
Distribution Date.
"Class A-2 Final Distribution Date" means the May 2003 Distribution
Date.
"Class A-2 Initial Invested Amount" means the aggregate initial
principal amount of the Class A-2 Notes, which is $750,000,000.
"Class A-2 Invested Amount" means when used with respect to any
date, an amount equal to the Class A-2 Outstanding Principal Amount plus the sum
of (a) the amount of any principal payments made to Class A-2 Noteholders on or
prior to such date with the proceeds of a demand on the Surety Bond and (b) the
amount of any principal payments made to Class A-2 Noteholders that have been
rescinded or otherwise returned by the Class A-2 Noteholders for any reason.
"Class A-2 Monthly Interest" means, (a) with respect to the initial
Series 1999-1 Interest Period, an amount equal to the product of (i) the Class
A-2 Note Rate, (ii) the Class A-2 Initial Invested Amount and (iii) 26/360, and
(b) with respect to any other Series 1999-1 Interest Period, an amount equal to
the product of (i) one-twelfth of the Class A-2 Note Rate and (ii) the Class A-2
Invested Amount on the first day of such Series 1999-1 Interest Period, after
giving effect to any principal payments made on such date.
<PAGE> 6
6
"Class A-2 Note Rate" means 5.88% per annum.
"Class A-2 Noteholder" means the Person in whose name a Class A-2
Note is registered in the Note Register.
"Class A-2 Notes" means any one of the Series 1999-1 Fixed Rate
Rental Car Asset Backed Notes, Class A-2, executed by ARG and authenticated by
or on behalf of the Trustee, substantially in the form of Exhibit A-2-1, Exhibit
A-2-2 or Exhibit A-2-3. Definitive Class A-2 Notes shall have such insertions
and deletions as are necessary to give effect to the provisions of Section 2.18
of the Base Indenture.
"Class A-2 Outstanding Principal Amount" means, when used with
respect to any date, an amount equal to (a) the Class A-2 Initial Invested
Amount minus (b) the amount of principal payments made to Class A-2 Noteholders
on or prior to such date.
"Class A-3 Carryover Controlled Amortization Amount" means, with
respect to the Class A-3 Notes for any Related Month during the Class A-3
Controlled Amortization Period, the amount, if any, by which the portion of the
Monthly Total Principal Allocation allocable to the Class A-3 Notes for the
previous Related Month was less than the Class A-3 Controlled Distribution
Amount for the previous Related Month; provided, however, that for the first
Related Month in the Class A-3 Controlled Amortization Period, the Class A-3
Carryover Controlled Amortization Amount shall be zero.
"Class A-3 Controlled Amortization Amount" means (i) with respect to
any Related Month other than the last Related Month during the Class A-3
Controlled Amortization Period, $83,333,333.33 and (ii) with respect to the last
Related Month during the Class A-3 Controlled Amortization Period,
$83,333,333.35.
"Class A-3 Controlled Amortization Period" means the period
commencing at the close of business November 1, 2003 (or, if such day is not a
Business Day, the Business Day immediately preceding such day) and continuing to
the earliest of (i) the commencement of the Series 1999-1 Rapid Amortization
Period, (ii) the date on which the Class A-3 Notes are fully paid and the Surety
Provider has been paid all Surety Provider Fees and all other Surety Provider
Reimbursement Amounts then due, (iii) the Series 1999-1 Termination Date, and
(iv) the termination of the Indenture.
"Class A-3 Controlled Distribution Amount" means, with respect to
any Related Month during the Class A-3 Controlled Amortization Period, an amount
equal to the sum of the Class A-3 Controlled Amortization Amount and any Class
A-3 Carryover Controlled Amortization Amount for such Related Month.
"Class A-3 Deficiency Amount" has the meaning specified in Section
2.3(g) of this Series Supplement.
<PAGE> 7
7
"Class A-3 Expected Final Distribution Date" means the May 2004
Distribution Date.
"Class A-3 Final Distribution Date" means the May 2005 Distribution
Date.
"Class A-3 Initial Invested Amount" means the aggregate initial
principal amount of the Class A-3 Notes, which is $500,000,000.
"Class A-3 Invested Amount" means when used with respect to any
date, an amount equal to the Class A-3 Outstanding Principal Amount plus the sum
of (a) the amount of any principal payments made to Class A-3 Noteholders on or
prior to such date with the proceeds of a demand on the Surety Bond and (b) the
amount of any principal payments made to Class A-3 Noteholders that have been
rescinded or otherwise returned by the Class A-3 Noteholders for any reason.
"Class A-3 Monthly Interest" means, (a) with respect to the initial
Series 1999-1 Interest Period, an amount equal to the product of (i) the Class
A-3 Note Rate, (ii) the Class A-3 Initial Invested Amount and (iii) 26/360, and
(b) with respect to any other Series 1999-1 Interest Period, an amount equal to
the product of (i) one-twelfth of the Class A-3 Note Rate and (ii) the Class A-3
Invested Amount on the first day of such Series 1999-1 Interest Period, after
giving effect to any principal payments made on such date.
"Class A-3 Note Rate" means 6.02% per annum.
"Class A-3 Noteholder" means the Person in whose name a Class A-3
Note is registered in the Note Register.
"Class A-3 Notes" means any one of the Series 1999-1 Fixed Rate
Rental Car Asset Backed Notes, Class A-3, executed by ARG and authenticated by
or on behalf of the Trustee, substantially in the form of Exhibit A-3-1, Exhibit
A-3-2 or Exhibit A-3-3. Definitive Class A-3 Notes shall have such insertions
and deletions as are necessary to give effect to the provisions of Section 2.18
of the Base Indenture.
"Class A-3 Outstanding Principal Amount" means, when used with
respect to any date, an amount equal to (a) the Class A-3 Initial Invested
Amount minus (b) the amount of principal payments made to Class A-3 Noteholders
on or prior to such date.
"Consent" has the meaning set forth in Article IV of this Series
Supplement.
"Consent Period Expiration Date" has the meaning set forth in
Article IV of this Series Supplement.
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8
"Designated Amounts" has the meaning set forth in Article IV of this
Series Supplement.
"Disbursement" shall mean any Lease Deficit Disbursement, any Unpaid
Demand Note Disbursement, any Termination Disbursement or any Termination Date
Disbursement under the Series 1999-1 Letters of Credit, or any combination
thereof, as the context may require.
"Disposition Proceeds" means the net proceeds (other than (i) the
portion of the Repurchase Price payable by the Manufacturer pursuant to a
Manufacturer Program or (ii) with respect to Series 1999-1 Non-Program Vehicles,
the portion of the net proceeds payable by any Lessee pursuant to the applicable
Lease) from the sale or disposition of a Vehicle to any Person, whether at an
auction or otherwise.
"Fair Market Value" means, with respect to any Vehicle as of any
date of determination, the wholesale market value of such Vehicle as specified
in the Related Month's Lease 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; provided, that if the Lease Guide is not
being published or the Lease Guide is being published but such Vehicle is not
included therein, the Finance Guide at the beginning of the model year shall be
used to estimate the wholesale market value of the Vehicle, based on the
Vehicle's model class and model year or the closest model class and model year
thereto and a vehicle condition of "average" (as defined in the Finance Guide);
provided, further, that if the Finance Guide is not being published or the
Finance Guide is being published but such Vehicle is not included therein, the
wholesale market value of such Vehicle shall be based on an independent
third-party data source, and determined in accordance with a methodology, with
respect to which the Series 1999-1 Rating Agency Confirmation and Consent
Condition shall have been satisfied; provided, further, that if no such
third-party data source or methodology shall have been so approved or any such
third-party source or methodology is not available, the wholesale market value
of such Vehicle shall be the Capitalized Cost of such Vehicle less depreciation
charges at a rate equal to the Republic Historical Depreciation Rate as of such
date of the Capitalized Cost of such Vehicle since the date of such Vehicle's
purchase.
"Final Distribution Date" means the Class A-1 Final Distribution
Date, the Class A-2 Final Distribution Date or the Class A-3 Final Distribution
Date.
"Hyundai" means Hyundai Motor Company Ltd.
"Insurance Agreement" means the Insurance Agreement, dated as
February 26, 1999, among the Surety Provider, the Trustee and ARG, which shall
constitute an "Enhancement Agreement" with respect the Series 1999-1 Notes for
all purposes under the Indenture.
"Insured Principal Deficit Amount" means, with respect to any
Distribution Date, (a) prior to the Transition Date, the excess, if any, of (i)
the Series 1999-1 Outstanding Principal
<PAGE> 9
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Amount on such Distribution Date (after giving effect to the distribution of the
Monthly Total Principal Allocation for the Related Month) over (ii) the sum on
such Distribution Date of (A) the product of (x) the percentage equivalent of a
fraction, the numerator of which is equal to the sum of the Series 1999-1
Invested Amount and the Series 1999-1 Overcollateralization Amount as of such
Distribution Date and the denominator of which is equal to the Required
Aggregate Asset Amount and (y) the Aggregate Asset Amount on such Distribution
Date, (B) the Series 1999-1 Available Reserve Account Amount and (C) the Series
1999-1 Letter of Credit Amount and (b) on or after the Transition Date, the
excess, if any, of (i) the Series 1999-1 Outstanding Principal Amount on such
Distribution Date (after giving effect to the distribution of the Monthly Total
Principal Allocation for the Related Month) over (ii) the sum on such
Distribution Date of (A) the Series 1999-1 Operating Lease Asset Amount, (B) the
Series 1999-1 Available Reserve Account Amount and (C) the Series 1999-1 Letter
of Credit Amount.
"Isuzu" means American Isuzu Motors, Inc., a California corporation.
"Lease Deficit Disbursement" means an amount drawn under a Series
1999-1 Letter of Credit pursuant to a Certificate of Lease Deficit Demand.
"Lease Payment Deficit Notice" has the meaning specified in Section
2.3(c) of this Series Supplement.
"LIBOR" means, with respect to each Series 1999-1 Interest Period, a
rate per annum to be determined by the Trustee as follows:
(i) On each LIBOR Determination Date until the Class A-1
Invested Amount is paid in full, the Trustee will determine the London
interbank offered rate for U.S. dollar deposits for one month that
appears on Telerate Page 3750 as it relates to U.S. dollars as of 11:00
a.m., London time, on such LIBOR Determination Date;
(ii) If, on any LIBOR Determination Date, such rate does not
appear on Telerate Page 3750, the Trustee will request the principal
London offices of each of four major banks in the London interbank
market selected by the Trustee to provide the Trustee with offered
quotations for deposits in U.S. dollars for a period of one month,
commencing on the first day of such Series 1999-1 Interest Period, to
prime banks in the London interbank market at approximately 11:00 a.m.,
London time, on such LIBOR Determination Date and in a principal amount
equal to an amount of not less than $250,000 that is representative of
a single transaction in such market at such time. If at least two such
quotations are provided, "LIBOR" for such Series 1999-1 Interest Period
will be the arithmetic mean of such quotations (rounded upwards to the
nearest one sixty-fourth of one percent (1/64%)); or
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(iii) If fewer than two such quotations are provided, "LIBOR"
for such Series 1999-1 Interest Period will be the arithmetic mean of
rates quoted by three major banks in The City of New York selected by
the Trustee at approximately 11:00 a.m., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European
banks, for a period of one month, commencing on the first day of such
Series 1999-1 Interest Period, and in a principal amount equal to an
amount of not less than $250,000 that is representative of a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by such Trustee are not quoting rates as
mentioned in this sentence, "LIBOR" for such Series 1999-1 Interest
Period will be the same as "LIBOR" for the immediately preceding Series
1999-1 Interest Period.
"LIBOR Determination Date" means, with respect to any Series 1999-1
Interest Period, the second London Banking Day preceding the first day of such
Series 1999-1 Interest Period.
"London Banking Day" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"Mazda" means Mazda Motor of America, Inc.
"Measurement Month" on any date, means each calendar month, or the
smallest number of consecutive calendar months, preceding such date in which at
least the lesser of the following (a) and (b) were sold at auction (excluding
salvage sales): (a) the greater of (x) one-twelfth of the number of Series
1999-1 Non-Program Vehicles leased under the Operating Leases as of the last day
of such calendar month or consecutive calendar months and (y) 750 and (b) 2,000
Series 1999-1 Non-Program Vehicles leased under the Operating Leases were sold
at auction; provided, however, that no calendar month included in a single
Measurement Month shall be included in any other Measurement Month.
"Mitsubishi" means Mitsubishi Motors Corp.
"Monthly Total Principal Allocation" means for any Related Month the
sum of all Series 1999-1 Principal Allocations with respect to such Related
Month.
"Newer Series 1999-1 Non-Program Vehicle Fair Market Value Average"
means, as of any date on or after the third Determination Date, the lesser of
(a) the percentage equivalent of a fraction, the numerator of which is the
aggregate of the respective Fair Market Values of each Newer Series 1999-1
Non-Program Vehicle subject to the Operating Leases as of such preceding
Determination Date and the two Determination Dates precedent thereto and the
denominator of which is the aggregate of the Net Book Values of each Newer
Series 1999-1 Non-Program Vehicle subject to the Operating Leases as of such
preceding Determination Date and the two Determination Dates precedent thereto
and (b) 100%.
"Newer Series 1999-1 Non-Program Vehicle Market Value Adjustment
<PAGE> 11
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Percentage" means, as of any date of determination, the lower of (i) the lowest
Newer Series 1999-1 Non-Program Vehicle Measurement Month Average with respect
to any Measurement Month ending within the twelve (12) calendar months preceding
such date and (ii) the lowest Newer Series 1999-1 Non-Program Vehicle Fair
Market Value Average as of any Determination Date within the twelve (12)
calendar months preceding such date.
"Newer Series 1999-1 Non-Program Vehicle Measurement Month Average"
means, with respect to any Measurement Month, the lesser of (a) the percentage
equivalent of a fraction, the numerator of which is the aggregate amounts of
Disposition Proceeds and Termination Payments paid or payable in respect of all
Newer Series 1999-1 Non-Program Vehicles leased under the Operating Leases
(excluding salvage sales) that are sold at auction or otherwise during such
Measurement Month and the two Measurement Months preceding such Measurement
Month and the denominator of which is the aggregate Net Book Values of such
Vehicles on the dates of their respective sales and (b) 100%; provided, however,
that, until the completion of the initial three Measurement Months, the Newer
Series 1999-1 Non-Program Vehicle Measurement Month Average will be deemed to be
100%.
"Newer Series 1999-1 Non-Program Vehicle Percentage" means, as of
any date of determination, the percentage equivalent of a fraction, the
numerator of which is the aggregate Net Book Value of all Newer Series 1999-1
Non-Program Vehicles leased under the Operating Leases and the denominator of
which is the aggregate Net Book Value of all Series 1999-1 Non-Program Vehicles
leased under the Operating Leases as of such date.
"Newer Series 1999-1 Non-Program Vehicles" means each Series 1999-1
Non-Program Vehicle that is not a Bankrupt Manufacturer Series 1999-1
Non-Program Vehicle and that is not older than twenty-four (24) months from the
date of the original manufacturer invoice therefor.
"Nissan" means, collectively, Nissan North America, Inc., a
California corporation, and Nissan Motor Corporation in Hawaii, Ltd, a Hawaii
corporation.
"Older Series 1999-1 Non-Program Vehicle Fair Market Value Average"
means, as of any date on or after the third Determination Date, the lesser of
(a) the percentage equivalent of a fraction, the numerator of which is the
aggregate of the respective Fair Market Values of each Older Series 1999-1
Non-Program Vehicle subject to the Operating Leases as of the immediately
preceding Determination Date and the denominator of which is the aggregate of
the Net Book Values of each Older Series 1999-1 Non-Program Vehicle subject to
the Operating Leases as of such immediately preceding Determination Date and (b)
100%.
"Older Series 1999-1 Non-Program Vehicle Market Value Adjustment
Percentage" means, as of any date of determination, the lower of (i) the lowest
Older Series 1999-1 Non-Program Vehicle Measurement Month Average with respect
to any Measurement Month ending within the twelve (12) calendar months preceding
such date and (ii) the lowest Older Series 1999-1 Non-Program Vehicle Fair
Market Value Average as of any Determination
<PAGE> 12
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Date within the twelve (12) calendar months preceding such date.
"Older Series 1999-1 Non-Program Vehicle Measurement Month Average"
means, with respect to any Measurement Month, the lesser of (a) the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Disposition Proceeds and Termination Payments paid or payable in respect of all
Older Series 1999-1 Non-Program Vehicles leased under the Operating Leases
(excluding salvage sales) that are sold at auction or otherwise during such
Measurement Month and the denominator of which is the aggregate Net Book Values
of such Vehicles on the dates of their respective sales and (b) 100%; provided,
however, that, until the completion of the initial three Measurement Months, the
Older Series 1999-1 Non-Program Vehicle Measurement Month Average will be deemed
to be 100%.
"Older Series 1999-1 Non-Program Vehicle Percentage" means, as of
any date of determination, the percentage equivalent of a fraction, the
numerator of which is the aggregate Net Book Value of all Older Series 1999-1
Non-Program Vehicles leased under the Operating Leases and the denominator of
which is the aggregate Net Book Value of all Series 1999-1 Non-Program Vehicles
leased under the Operating Leases as of such date.
"Older Series 1999-1 Non-Program Vehicles" means each Series 1999-1
Non-Program Vehicle that is neither a Bankrupt Manufacturer Series 1999-1
Non-Program Vehicle nor a Newer Series 1999-1 Non-Program Vehicle.
"Operating Lease Asset Amount Deficiency" means, on any date of
determination, the amount by which the aggregate Required Operating Lease Asset
Amount with respect to all Series of Notes exceeds the Operating Lease Asset
Amount on such date.
"Outstanding" means with respect to the Series 1999-1 Notes, all
Series 1999-1 Notes theretofore authenticated and delivered under the Indenture,
except (a) Series 1999-1 Notes theretofore cancelled or delivered to the
Registrar for cancellation, (b) Series 1999-1 Notes which have not been
presented for payment but funds for the payment of which are on deposit in the
Series 1999-1 Distribution Account and are available for payment of such Series
1999-1 Notes, and Series 1999-1 Notes which are considered paid pursuant to
Section 8.1 of the Base Indenture, or (c) Series 1999-1 Notes in exchange for or
in lieu of other Series 1999-1 Notes which have been authenticated and delivered
pursuant to the Indenture unless proof satisfactory to the Trustee is presented
that any such Series 1999-1 Notes are held by a purchaser for value.
"Permanent Global Class A-1 Note" has the meaning specified in
Section 5.2 of this Series Supplement.
"Permanent Global Class A-2 Note" has the meaning specified in
Section 5.2 of this Series Supplement.
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"Permanent Global Class A-3 Note" has the meaning specified in
Section 5.2 of this Series Supplement.
"Pre-Preference Period Demand Note Payments" means, as of any date
of determination, the aggregate amount of all proceeds of demands made on the
Series 1999-1 Demand Note included in the Series 1999-1 Demand Note Payment
Amount as of the Series 1999-1 Letter of Credit Termination Date that were paid
by Republic more than one year before such date of determination; provided,
however that if an Event of Bankruptcy (or the occurrence of an event described
in clause (a) of the definition thereof, without the lapse of a period of 60
consecutive days) with respect to Republic occurs during such one year period,
(x) the Pre-Preference Period Demand Note Payments as of any date during the
period from and including the date of the occurrence of such Event of Bankruptcy
to and including the conclusion or dismissal of the proceedings giving rise to
such Event of Bankruptcy without continuing jurisdiction by the court in such
proceedings shall equal the Pre-Preference Period Demand Note Payments as of the
date of such occurrence and (y) the Pre-Preference Period Demand Note Payments
as of any date after the conclusion or dismissal of such proceedings shall equal
the Series 1999-1 Demand Note Payment Amount as of the date of the conclusion or
dismissal of such proceedings.
"Principal Deficit Amount" means, with respect to any Distribution
Date, (a) prior to the Transition Date, the excess, if any, of (i) the Series
1999-1 Invested Amount on such Distribution Date (after giving effect to the
distribution of the Monthly Total Principal Allocation for the Related Month)
over (ii) the product on such Distribution Date of (x) the percentage equivalent
of a fraction, the numerator of which is equal to the sum of the Series 1999-1
Invested Amount and the Series 1999-1 Overcollateralization Amount and the
denominator of which is equal to the Required Aggregate Asset Amount and (y) the
Aggregate Asset Amount and (b) on or after the Transition Date, the excess, if
any, of (i) the Series 1999-1 Invested Amount on such Distribution Date (after
giving effect to the distribution of the Monthly Total Principal Allocation for
the Related Month) over (ii) the Series 1999-1 Operating Lease Asset Amount on
such Distribution Date.
"Pro Rata Share" means, with respect to any Series 1999-1 Letter of
Credit Provider as of any date, the fraction (expressed as a percentage)
obtained by dividing (A) the available amount under such Series 1999-1 Letter of
Credit Provider's Series 1999-1 Letter of Credit as of such date by (B) an
amount equal to the aggregate available amount under all Series 1999-1 Letters
of Credit as of such date; provided, that only for purposes of calculating the
Pro Rata Share with respect to any Series 1999-1 Letter of Credit Provider as of
any date, if such Series 1999-1 Letter of Credit Provider has not complied with
its obligation to pay the Trustee the amount of any draw under its Series 1999-1
Letter of Credit made prior to such date, the available amount under such Series
1999-1 Letter of Credit Provider's Series 1999-1 Letter of Credit as of such
date shall be treated as reduced (for calculation purposes only) by the amount
of such unpaid demand and shall not be reinstated for purposes of such
calculation unless and until the date as of which such Series 1999-1 Letter of
Credit Provider has paid such amount to the
<PAGE> 14
14
Trustee and been reimbursed by any of the Lessees or Republic, as the case may
be, for such amount (provided that the foregoing calculation shall not in any
manner reduce the undersigned's actual liability in respect of any failure to
pay any demand under its Series 1999-1 Letter of Credit).
"Rating Agencies" means, with respect to the Series 1999-1 Notes,
Standard & Poor's, Moody's and any other nationally recognized rating agency
rating the Series 1999-1 Notes at the request of ARG.
"Record Date" means, with respect to any Distribution Date, the last
day of the Related Month.
"Required Noteholders" means with respect to the Series 1999-1 Notes
subject to Section 7.7 of this Series Supplement, Series 1999-1 Noteholders
holding 50% or more of the Series 1999-1 Invested Amount (excluding any Series
1999-1 Notes held by ARG or any Affiliate of ARG).
"Restricted Global Class A-1 Note" has the meaning specified in
Section 5.1 of this Series Supplement.
"Restricted Global Class A-2 Note" has the meaning specified in
Section 5.1 of this Series Supplement.
"Restricted Global Class A-3 Note" has the meaning specified in
Section 5.1 of this Series Supplement.
"Series 1999-1 Accrued Amounts" means, on any date of determination,
the sum of (i) accrued and unpaid interest on the Series 1999-1 Notes as of such
date, (ii) the Surety Provider Fee, if any, payable by ARG on such date, (iii)
any other amounts due as of such date to the Surety Provider pursuant to the
Insurance Agreement (other than any amounts due in respect of unreimbursed draws
under the Surety Bond) and (iv) the product of (A) the Carrying Charges payable
on such date times (B) the Series 1999-1 Percentage as of the immediately
preceding Distribution Date.
"Series 1999-1 Accrued Interest Account" has the meaning specified
in Section 2.1(b) of this Series Supplement.
"Series 1999-1 Adjusted Monthly Interest" means, (a) for the initial
Distribution Date, $7,265,328.22 and (b) for any other Distribution Date, the
sum of (i) with respect to the Series 1999-1 Interest Period ending on the day
preceding such Distribution Date, the sum of (A) an amount equal to the product
of (1) the Class A-1 Note Rate for such Series 1999-1 Interest Period, (2) the
Class A-1 Outstanding Principal Amount on the first day of such Series 1999-1
Interest Period, after giving effect to any principal payments made on such
date, and (3) a fraction, the numerator of which is the number of days in such
Series 1999-1 Interest Period and
<PAGE> 15
15
the denominator of which is 360, (B) an amount equal to the product of (1)
one-twelfth of the Class A-2 Note Rate and (2) the Class A-2 Outstanding
Principal Amount on the first day of such Series 1999-1 Interest Period, after
giving effect to any principal payments made on such date, and (C) an amount
equal to the product of (1) one-twelfth of the Class A-3 Note Rate and (2) the
Class A-3 Outstanding Principal Amount on the first day of such Series 1999-1
Interest Period, after giving effect to any principal payments made on such
date, and (ii) an amount equal to the amount of any unpaid Deficiency Amounts,
as of the preceding Distribution Date (together with any accrued interest on
such Deficiency Amounts).
"Series 1999-1 Aggregate Hyundai/Isuzu/Subaru/Suzuki Amount" means,
as of any date of determination, an amount equal to the sum, rounded to the
nearest $100,000, of the following amounts to the extent that such amounts are
included in the definition of "Operating Lease Asset Amount" for such date: (i)
the Net Book Value of all Vehicles that are Eligible Vehicles leased under the
Operating Leases as of such date that were manufactured by Hyundai, Isuzu,
Subaru or Suzuki and not turned in to Hyundai, Isuzu, Subaru or Suzuki, as the
case may be, pursuant to its Manufacturer Program, if any, not delivered for
Auction pursuant to its Manufacturer Program, if any, or not otherwise sold or
deemed to be sold under the related Leasing Company Related Documents, plus (ii)
all amounts receivable by a Leasing Company as of such date (other than Excluded
Payments) from Hyundai, Isuzu, Subaru or Suzuki under Manufacturer Programs with
respect to Eligible Vehicles (other than Exchanged Vehicles) leased under the
Operating Leases (as of the applicable disposition date) that were manufactured
by Hyundai, Isuzu, Subaru or Suzuki, as the case may be, and turned in to such
Manufacturers pursuant to any such Manufacturer Program or delivered for Auction
pursuant to any such Manufacturer Program and the aggregate of all Eligible
Receivables owned by a Leasing Company, financed under the related Leasing
Company Indenture and owed by Hyundai, Isuzu, Subaru or Suzuki under and in
accordance with a Manufacturer Program, plus (iii) with regard to Eligible
Vehicles leased under the Operating Leases (as of the applicable disposition
date) that were manufactured by Hyundai, Isuzu, Subaru or Suzuki that have been
delivered for Auction pursuant to a Manufacturer Program with Hyundai, Isuzu,
Subaru or Suzuki, as the case may be, all amounts receivable (other than amounts
specified in clause (ii) above) from any person or entity in connection with the
Auction of such Eligible Vehicles as of such date plus (iv) with regard to
Eligible Vehicles leased under the Operating Leases (as of the applicable
disposition date) that were manufactured by Hyundai, Isuzu, Subaru or Suzuki
that have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, any Casualty Payments or Termination Payments with respect to such
Eligible Vehicles due and payable as of such date under the Operating Leases,
plus (v) with regard to Eligible Vehicles leased under the Operating Leases (as
of the applicable disposition date) that were manufactured by Hyundai, Isuzu,
Subaru or Suzuki that have been turned in to the Manufacturer, delivered for
Auction or otherwise sold, any accrued and unpaid Monthly Base Rent under the
Operating Leases (and, prior to the Transition Date, all accrued and unpaid
Monthly Supplemental Payments and Additional Base Rent under the Financing
Leases) with respect to such Eligible Vehicles (net of amounts set forth
<PAGE> 16
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in clauses (ii), (iii) and (iv) above); provided, however, that as of any date
of determination prior to the Transition Date, the "Series 1999-1 Aggregate
Hyundai/Isuzu/Subaru/Suzuki Amount" shall be calculated based on the foregoing
amounts that are included in the definition of "Aggregate Asset Amount" for such
date and on the Eligible Receivables that were financed under all of the Leases
and the Leasing Company Indentures as of the date of determination and the
Eligible Vehicles that are leased, and were leased as of the applicable
disposition date, under all of the Leases and not only those Eligible
Receivables that were financed under the Leasing Company Indentures and those
Eligible Vehicles that are and were leased under the Operating Leases.
"Series 1999-1 ARG Liquidation Event" means, so long as such event
or condition continues, (i) the occurrence of an Event of Bankruptcy with
respect to ARG, any Leasing Company, the general partner of any Leasing Company,
any Lessee or Republic or (ii) any event or condition of the type specified in
clauses (a) through (n) of Article III of this Series Supplement that continues
for thirty (30) days (without double counting the cure period, if any, provided
therein); provided however, that any event or condition of the type specified in
clauses (a) through (j) or (m) or (n) of Article III of this Series Supplement
shall not constitute a Series 1999-1 ARG Liquidation Event if within such thirty
(30) day period, such Amortization Event shall have been cured, and, after such
cure is provided for, the Trustee shall have received the written consent of the
Surety Provider waiving the occurrence of such Series 1999-1 ARG Liquidation
Event.
"Series 1999-1 Available Cash Collateral Account Amount" means, as
of any date of determination, the amount on deposit in the Series 1999-1 Cash
Collateral Account (after giving effect to any deposits thereto and withdrawals
and releases therefrom on such date).
"Series 1999-1 Available Reserve Account Amount" means, as of any
date of determination, the amount on deposit in the Series 1999-1 Reserve
Account (after giving effect to any deposits thereto and withdrawals and
releases therefrom on such date).
"Series 1999-1 Cash Collateral Account" has the meaning specified in
Section 2.8(d) of this Series Supplement.
"Series 1999-1 Cash Collateral Account Collateral" has the meaning
specified in Section 2.8(a) of this Series Supplement.
"Series 1999-1 Cash Collateral Account Surplus" means, with respect
to any Distribution Date, the lesser of (a) the Series 1999-1 Available Cash
Collateral Account Amount and (b) the lesser of (A) the excess, if any, of the
Series 1999-1 Liquidity Amount over the Series 1999-1 Required Liquidity Amount
on such Distribution Date (after giving effect to any withdrawal from the Series
1999-1 Reserve Account on such Distribution Date) and (B) the excess, if any, of
the Series 1999-1 Required Enhancement Amount over the Series 1999-1 Enhancement
Amount on such Distribution Date (after giving effect to any withdrawal from the
Series 1999-1 Reserve Account on such Distribution Date); provided, however
that, on any date
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after the Series 1999-1 Letter of Credit Termination Date, the Series 1999-1
Cash Collateral Account Surplus shall mean the excess, if any, of (x) the Series
1999-1 Available Cash Collateral Account Amount over (y) the Series 1999-1
Demand Note Payment Amount minus the Pre-Preference Period Demand Note Payments
as of such date.
"Series 1999-1 Cash Collateral Percentage" means, as of any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the Series 1999- 1 Available Cash Collateral Amount as of such date and the
denominator of which is the Series 1999-1 Letter of Credit Liquidity Amount as
of such date.
"Series 1999-1 Closing Date" means February 26, 1999.
"Series 1999-1 Collateral" means the Collateral, the Series 1999-1
Letter of Credit, the Series 1999-1 Demand Note, the Series 1999-1 Interest Rate
Cap, the Series 1999-1 Cash Collateral Account Collateral, the Series 1999-1
Distribution Account Collateral and the Series 1999-1 Reserve Account
Collateral.
"Series 1999-1 Collection Account" has the meaning specified in
Section 2.1(b) of this Series Supplement.
"Series 1999-1 Controlled Amortization Period" means the Class
A-1/A-2 Controlled Amortization Period or the Class A-3 Controlled Amortization
Period.
"Series 1999-1 Demand Note" means the demand note made by Republic
to ARG in the principal amount of $150,000,000, substantially in the form of
Exhibit B to this Series Supplement, as amended, modified or restated from time
to time.
"Series 1999-1 Demand Note Payment Amount" means, as of the Series
1999-1 Letter of Credit Termination Date, the aggregate amount of all proceeds
of demands made on the Series 1999-1 Demand Note pursuant to Section 2.5(b) or
(c) of this Series Supplement that were deposited into the Series 1999-1
Distribution Account and paid to the Series 1999-1 Noteholders during the one
year period ending on the Series 1999-1 Letter of Credit Termination Date;
provided, however that if an Event of Bankruptcy (or the occurrence of an event
described in clause (a) of the definition thereof, without the lapse of a period
of 60 consecutive days) with respect to Republic shall have occurred during such
one year period, the Series 1999-1 Demand Note Payment Amount as of the Series
1999-1 Letter of Credit Termination Date shall equal the Series 1999-1 Demand
Note Payment Amount as if it were calculated as of the date of such occurrence.
"Series 1999-1 Deposit Date" has the meaning specified in Section
2.2 of this Series Supplement.
"Series 1999-1 Distribution Account" has the meaning specified in
Section 2.9(a) of this Series Supplement.
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"Series 1999-1 Distribution Account Collateral" has the meaning
specified in Section 2.9(d) of this Series Supplement.
"Series 1999-1 Eligible Letter of Credit Provider" 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 issues letters of credit and has total assets in excess of
$200,000,000 or (c) any other financial institution, in each case, satisfactory
to ARG and the Surety Provider and having, at the time of the issuance of the
related Series 1999-1 Letter of Credit, a long-term debt rating of at least "A+"
from S&P and at least "A1" from Moody's.
"Series 1999-1 Eligible Manufacturer Program" means, at any time, a
Manufacturer Program that is in full force and effect with a Series 1999-1
Eligible Program Manufacturer; provided that with respect to any new
Manufacturer Program (including a new model year Manufacturer Program of a
Series 1999-1 Eligible Program Manufacturer and a Manufacturer Program of a new
Manufacturer) that is proposed for consideration after the date hereof as a
Series 1999-1 Eligible Manufacturer Program, prior to such new Manufacturer
Program constituting a "Series 1999-1 Eligible Manufacturer Program" hereunder,
ARG shall have satisfied the Series 1999-1 Rating Agency Confirmation and
Consent Condition with respect to such Series 1999-1 Eligible Manufacturer
Program; and provided further that, if there is a material change to a
Manufacturer Program during a model year, ARG shall have satisfied the Series
1999-1 Rating Agency Confirmation and Consent Condition with respect to such
change prior to such Manufacturer Program, as changed, constituting a "Series
1999-1 Eligible Manufacturer Program."
"Series 1999-1 Eligible Non-Program Manufacturer" means (a) each
Manufacturer listed on Exhibit C-1 to this Series Supplement, and (b) any other
Manufacturer with respect to which ARG has satisfied the Series 1999-1 Rating
Agency Confirmation and Consent Condition, unless, in each case, (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.
"Series 1999-1 Eligible Program Manufacturer" means (a) each
Manufacturer (i) (1) who is listed on Exhibit C-2 to this Series Supplement, (2)
who, at the time that the Manufacturer Program to which such Manufacturer is a
party is proposed for consideration as a Series 1999-1 Eligible Manufacturer
Program, is rated or whose parent is rated at least "BBB-" by S&P and "Baa3" by
Moody's and who is then acceptable to the Surety Provider (who has agreed not to
unreasonably withhold its acceptance of any such Manufacturer) or (3) with
respect to which ARG has satisfied the Series 1999-1 Rating Agency Confirmation
and Consent Condition, (ii) who has a Manufacturer Program and (iii) who has not
experienced a Manufacturer Event of Default which is continuing and (b) Nissan
so long as it (i) is rated at least "BBB-" by S&P and "Baa3" by Moody's, (ii)
has a Manufacturer Program and (iii) has not
<PAGE> 19
19
experienced a Manufacturer Event of Default which is continuing.
"Series 1999-1 Enhancement" means the Series 1999-1 Cash Collateral
Account Collateral, the Series 1999-1 Letters of Credit, the Series 1999-1
Overcollateralization Amount and the Series 1999-1 Reserve Account.
"Series 1999-1 Enhancement Amount" means, as of any date of
determination, the sum of (i) the Series 1999-1 Overcollateralization Amount,
(ii) the Series 1999-1 Letter of Credit Amount and (iii) the Series 1999-1
Available Reserve Account Amount as of such date.
"Series 1999-1 Enhancement Deficiency" means, as of any date of
determination, the amount by which the Series 1999-1 Enhancement Amount is less
than the Series 1999-1 Required Enhancement Amount as of such date.
"Series 1999-1 Excess Collection Account" has the meaning specified
in Section 2.1(b) of this Series Supplement.
"Series 1999-1 Hyundai Amount" means, as of any date of
determination, an amount equal to the sum, rounded to the nearest $100,000, of
the following amounts to the extent that such amounts are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Vehicles that are Eligible Vehicles leased under the Operating
Leases as of such date that were manufactured by Hyundai and not turned in to
Hyundai pursuant to its Manufacturer Program, if any, not delivered for Auction
pursuant to its Manufacturer Program, if any, or not otherwise sold or deemed to
be sold under the related Leasing Company Related Documents, plus (ii) all
amounts receivable by a Leasing Company as of such date (other than Excluded
Payments) from Hyundai under Manufacturer Programs with respect to Eligible
Vehicles (other than Exchanged Vehicles) leased under the Operating Leases (as
of the applicable disposition date) that were manufactured by Hyundai and turned
in to Hyundai pursuant to any such Manufacturer Program or delivered for Auction
pursuant to any such Manufacturer Program and the aggregate of all Eligible
Receivables owned by a Leasing Company, financed under the related Leasing
Company Indenture and owed by Hyundai under and accordance with a Manufacturer
Program, plus (iii) with regard to Eligible Vehicles leased under the Operating
Leases (as of the applicable disposition date) that were manufactured by Hyundai
that have been delivered for Auction pursuant to a Manufacturer Program with
Hyundai, all amounts receivable (other than amounts specified in clause (ii)
above) from any person or entity in connection with the Auction of such Eligible
Vehicles as of such date, plus (iv) with regard to Eligible Vehicles leased
under the Operating Leases (as of the applicable disposition date) that were
manufactured by Hyundai that have been turned in to the Manufacturer, delivered
for Auction or otherwise sold, any Casualty Payments or Termination Payments
with respect to such Eligible Vehicles due and payable as of such date under the
Operating Leases, plus (v) with regard to Eligible Vehicles leased under the
Operating Leases (as of the applicable disposition date) that were manufactured
by Hyundai that have been turned in to the Manufacturer, delivered for Auction
or otherwise sold, any accrued and unpaid Monthly Base Rent under the Operating
Leases (and, prior to the Transition Date, all accrued and unpaid
<PAGE> 20
20
Monthly Supplemental Payments and Additional Base Rent under the Financing
Leases) with respect to such Eligible Vehicles (net of amounts set forth in
clauses (ii), (iii) and (iv) above); provided, however, that as of any date of
determination prior to the Transition Date, the "Series 1999-1 Hyundai Amount"
shall be calculated based on the foregoing amounts that are included in the
definition of "Aggregate Asset Amount" for such date and on the Eligible
Receivables that were financed under all of the Leases and the Leasing Company
Indentures as of the date of determination and the Eligible Vehicles that are
leased, and were leased as of the applicable disposition date, under all of the
Leases and not only those Eligible Receivables that were financed under the
Leasing Company Indentures and those Eligible Vehicles that are and were leased
under the Operating Leases.
"Series 1999-1 Initial Invested Amount" means the sum of the Class
A-1 Initial Invested Amount, the Class A-2 Initial Invested Amount and the Class
A-3 Initial Invested Amount.
"Series 1999-1 Interest Period" means a period commencing on and
including a Distribution Date and ending on and including the day preceding the
next succeeding Distribution Date; provided, however, that the initial Series
1999-1 Interest Period shall commence on and include the Series 1999-1 Closing
Date and end on and include March 21, 1999.
"Series 1999-1 Interest Rate Cap" means Rate Cap Transaction
Agreement, dated as of February 23, 1999, between ARG and ABN AMRO Bank N.V.,
Chicago Branch, substantially in the form of Exhibit D to this Series
Supplement.
"Series 1999-1 Invested Amount" means, as of any date of
determination, the sum of the Class A-1 Invested Amount, the Class A-2 Invested
Amount and the Class A-3 Invested Amount as of such date.
"Series 1999-1 Invested Percentage" means as of any date of
determination:
(a) when used with respect to Principal Collections, the
percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is equal to the sum of the Series
1999-1 Invested Amount and the Series 1999-1 Overcollateralization
Amount, determined during the Series 1999-1 Revolving Period as of the
end of the Related Month (or, until the end of the initial Related
Month, on the Series 1999-1 Closing Date), or, during the Series 1999-1
Controlled Amortization Period and the Series 1999-1 Rapid Amortization
Period, as of the end of the Series 1999-1 Revolving Period, and the
denominator of which is the greater of (I) the Aggregate Asset Amount
as of the end of the Related Month or, until the end of the initial
Related Month, as of the Series 1999-1 Closing Date, and (II) as of the
same date as in clause (I), the Required Aggregate Asset Amount; and
(b) when used with respect to Interest Collections, the
percentage equivalent
<PAGE> 21
21
(which percentage shall never exceed 100%) of a fraction, the numerator
of which is the Series 1999-1 Accrued Amounts on such date of
determination, and the denominator of which is the aggregate Accrued
Amounts with respect to all Series of Notes on such date of
determination.
"Series 1999-1 Isuzu Amount" means, as of any date of determination,
an amount equal to the sum, rounded to the nearest $100,000, of the following
amounts to the extent that such amounts are included in the definition of
"Operating Lease Asset Amount" for such date: (i) the Net Book Value of all
Vehicles that are Eligible Vehicles leased under the Operating Leases as of such
date that were manufactured by Isuzu and not turned in to Isuzu pursuant to its
Manufacturer Program, if any, not delivered for Auction pursuant to pursuant to
its Manufacturer Program, if any, or not otherwise sold or deemed to be sold
under the related Leasing Company Related Documents, plus (ii) all amounts
receivable by a Leasing Company as of such date (other than Excluded Payments)
from Isuzu under Manufacturer Programs with respect to Eligible Vehicles (other
than Exchanged Vehicles) leased under the Operating Leases (as of the applicable
disposition date) that were manufactured by Isuzu and turned in to Isuzu
pursuant to any such Manufacturer Program or delivered for Auction pursuant to
any such Manufacturer Program and the aggregate of all Eligible Receivables
owned by a Leasing Company, financed under the related Leasing Company Indenture
and owed by Isuzu under and accordance with a Manufacturer Program, plus (iii)
with regard to Eligible Vehicles leased under the Operating Leases (as of the
applicable disposition date) that were manufactured by Isuzu that have been
turned in to the Manufacturer, delivered for Auction or otherwise sold, all
amounts receivable (other than amounts specified in clause (ii) above) from any
person or entity in connection with the Auction of such Eligible Vehicles as of
such date, plus (iv) with regard to Eligible Vehicles leased under the Operating
Leases (as of the applicable disposition date) that were manufactured by Isuzu
that have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, any Casualty Payments or Termination Payments with respect to such
Eligible Vehicles due and payable as of such date under the Operating Leases,
plus (v) with regard to Eligible Vehicles leased under the Operating Leases (as
of the applicable disposition date) that were manufactured by Isuzu that have
been turned in to the Manufacturer, delivered for Auction or otherwise sold, any
accrued and unpaid Monthly Base Rent under the Operating Leases (and, prior to
the Transition Date, all accrued and unpaid Monthly Supplemental Payments and
Additional Base Rent under the Financing Leases) with respect to such Eligible
Vehicles (net of amounts set forth in clauses (ii), (iii) and (iv) above);
provided, however, that as of any date of determination prior to the Transition
Date, the "Series 1999-1 Isuzu Amount" shall be calculated based on the
foregoing amounts that are included in the definition of "Aggregate Asset
Amount" for such date and on the Eligible Receivables that were financed under
all of the Leases and the Leasing Company Indentures as of the date of
determination and the Eligible Vehicles that are leased, and were leased as of
the applicable disposition date, under all of the Leases and not only those
Eligible Receivables that were financed under the Leasing Company Indentures and
those Eligible Vehicles that are and were leased under the Operating Leases.
"Series 1999-1 Lease Payment Deficit" means on any Distribution Date
an amount equal to the excess, if any, of the aggregate amount of Interest
Collections and Principal
<PAGE> 22
22
Collections which pursuant to Section 2.2(a), (b), (c), (d) or (e) of this
Series Supplement would have been allocated to the Series 1999-1 Noteholders if
all payments required under the Leases to have been made during the period from
and excluding the immediately preceding Distribution Date to and including such
Distribution Date were made in full, over the aggregate amount of Interest
Collections and Principal Collections which pursuant to Section 2.2(a), (b),
(c), (d) or (e) of this Series Supplement have been allocated to the Series
1999-1 Noteholders during such period. For this purpose, amounts paid or
determined pursuant to Section 2.2(a)(ii), (b)(ii), (c)(ii), (d)(ii) and (e)(ii)
of this Series Supplement shall be deemed allocated to the Series 1999-1
Noteholders.
"Series 1999-1 Letter of Credit" means an irrevocable letter of
credit, substantially in the form of Exhibit E to this Series Supplement issued
by a Series 1999-1 Eligible Letter of Credit Provider in favor of the Trustee
for the benefit of the Series 1999-1 Noteholders.
"Series 1999-1 Letter of Credit Amount" means, as of any date of
determination, the lesser of (a) the sum of (i) the aggregate amount available
to be drawn on such date under the Series 1999-1 Letters of Credit, as specified
therein, and (ii) if the Series 1999-1 Cash Collateral Account has been
established and funded pursuant to Section 2.8 of this Series Supplement, the
Series 1999-1 Available Cash Collateral Account Amount on such date and (b) the
outstanding principal amount of the Series 1999-1 Demand Note on such date.
"Series 1999-1 Letter of Credit Expiration Date" means, with respect
to any Series 1999-1 Letter of Credit, the expiration date set forth in such
Series 1999-1 Letter of Credit, as such date may be extended in accordance with
the terms of such Series 1999-1 Letter of Credit.
"Series 1999-1 Letter of Credit Liquidity Amount" means, as of any
date of determination, (a) the amount available to be drawn on such date under
the Series 1999-1 Letters of Credit, as specified therein, and (b) if the Series
1999-1 Cash Collateral Account has been established and funded pursuant to
Section 2.8 of this Series Supplement, the Series 1999-1 Available Cash
Collateral Account Amount on such date.
"Series 1999-1 Letter of Credit Provider" means the issuer of a
Series 1999-1 Letter of Credit.
"Series 1999-1 Letter of Credit Termination Date" means the first to
occur of (a) the date on which the Series 1999-1 Notes are fully paid and the
Surety Provider has been paid all Surety Provider Fees and all other Surety
Provider Reimbursement Amounts then due and (b) the Series 1999-1 Termination
Date.
"Series 1999-1 Liquidity Amount" means, as of any date of
determination, the sum of (a) the amount available to be drawn on such date
under the Series 1999-1 Letters of Credit, as specified therein, (b) if the
Series 1999-1 Cash Collateral Account has been established
<PAGE> 23
23
and funded pursuant to Section 2.8 of this Series Supplement, the Series 1999-1
Available Cash Collateral Account Amount on such date and (c) the Series 1999-1
Available Reserve Account Amount on such date.
"Series 1999-1 Maximum Aggregate Hyundai/Isuzu/Subaru/Suzuki Amount"
means, as of any day, with respect to Hyundai, Isuzu, Subaru and Suzuki, in the
aggregate, an amount equal to 15% of the Operating Lease Asset Amount on such
day; provided, however, that as of any day prior to the Transition Date, the
"Series 1999-1 Maximum Aggregate Hyundai/Isuzu/Subaru/Suzuki Amount" shall equal
15% of the Aggregate Asset Amount.
"Series 1999-1 Maximum Amount" means any of the Series 1999-1
Maximum Aggregate Hyundai/Isuzu/Subaru/Suzuki Amount, the Series 1999-1 Maximum
Individual Hyundai/Isuzu/Subaru/Suzuki Amount, the Series 1999-1 Maximum Mazda
Amount, the Series 1999-1 Maximum Mazda Program Vehicle Amount, the Series
1999-1 Maximum Mitsubishi Amount, the Series 1999-1 Maximum Nissan Amount, the
Series 1999-1 Maximum Non-Eligible Manufacturer Amount or the Series 1999-1
Maximum Non-Program Vehicle Amount.
"Series 1999-1 Maximum Individual Hyundai/Isuzu/Subaru/Suzuki
Amount" means, as of any day, with respect to Hyundai, Isuzu, Subaru or Suzuki,
individually, an amount equal to 5% of the Operating Lease Asset Amount on such
day; provided, however, that as of any day prior to the Transition Date, the
"Series 1999-1 Maximum Individual Hyundai/Isuzu/Subaru/Suzuki Amount" shall
equal 5% of the Aggregate Asset Amount.
"Series 1999-1 Maximum Mazda Amount" means, as of any day, an amount
equal to 20% of the Operating Lease Asset Amount on such day; provided, however,
that as of any day prior to the Transition Date, the "Series 1999-1 Maximum
Mazda Amount" shall equal 20% of the Aggregate Asset Amount..
"Series 1999-1 Maximum Mazda Program Vehicle Amount" means, as of
any day, an amount equal to (a) if Mazda is rated at least "BBB-" by Standard &
Poor's and "Baa3" by Moody's, 20%of the Operating Lease Asset Amount on such day
and (b) if Mazda is not rated at least "BBB-" by Standard & Poor's and "Baa3" by
Moody's, 2% of the Operating Lease Asset Amount on such day; provided, however,
that as of any day prior to the Transition Date, the "Series 1999-1 Maximum
Mazda Program Vehicle Amount" shall be calculated based on either 20% or 2%, as
the case may be, of the Aggregate Asset Amount.
"Series 1999-1 Maximum Mitsubishi Amount" means, as of any day, an
amount equal to 20% of the Operating Lease Asset Amount on such day; provided,
however, that as of any day prior to the Transition Date, the "Series 1999-1
Maximum Mitsubishi Amount" shall equal 20% of the Aggregate Asset Amount..
<PAGE> 24
24
"Series 1999-1 Maximum Nissan Amount" means, as of any day, an
amount equal to 20% of the Operating Lease Asset Amount on such day; provided,
however, that as of any day prior to the Transition Date, the "Series 1999-1
Maximum Nissan Amount" shall equal 20% of the Aggregate Asset Amount..
"Series 1999-1 Maximum Non-Eligible Manufacturer Amount" means, as
of any day, an amount equal to 3% of the Operating Lease Asset Amount on such
day; provided, however, that as of any day prior to the Transition Date, the
"Series 1999-1 Maximum Non-Eligible Manufacturer Amount" shall equal 3% of the
Aggregate Asset Amount.
"Series 1999-1 Maximum Non-Program Vehicle Amount" means, as of any
day, an amount equal to the Series 1999-1 Maximum Non-Program Vehicle Percentage
of the Operating Lease Asset Amount on such day; provided, however, that as of
any day prior to the Transition Date, the "Series 1999-1 Maximum Non-Program
Vehicle Amount" shall equal the Series 1999-1 Maximum Non-Program Vehicle
Percentage of the Aggregate Asset Amount.
"Series 1999-1 Maximum Non-Program Vehicle Percentage" means 50% or
such lesser percentage as may be agreed to in writing by ARG and the Surety
Provider (initially 30%) on or after the Series 1999-1 Closing Date, with prompt
written notice thereof delivered by ARG to the Trustee.
"Series 1999-1 Mazda Amount" means, as of any date of determination,
an amount equal to the sum, rounded to the nearest $100,000, of the following
amounts to the extent that such amounts are included in the definition of
"Operating Lease Asset Amount" for such date: (i) the Net Book Value of all
Vehicles that are Eligible Vehicles leased under the Operating Leases as of such
date that were manufactured by Mazda and not turned in to Mazda pursuant to its
Manufacturer Program, if any, not delivered for Auction pursuant to its
Manufacturer Program, if any, or not otherwise sold or deemed to be sold under
the related Leasing Company Related Documents, plus (ii) all amounts receivable
by a Leasing Company as of such date (other than Excluded Payments) from Mazda
under Manufacturer Programs with respect to Eligible Vehicles (other than
Exchanged Vehicles) leased under the Operating Leases (as of the applicable
disposition date) that were manufactured by Mazda and turned in to Mazda
pursuant to any such Manufacturer Program or delivered for Auction pursuant to
any such Manufacturer Program and the aggregate of all Eligible Receivables
owned by a Leasing Company, financed under the related Leasing Company Indenture
and owed by Mazda under and accordance with a Manufacturer Program, plus (iii)
with regard to Eligible Vehicles leased under the Operating Leases (as of the
applicable disposition date) that were manufactured by Mazda that have been
turned in to the Manufacturer, delivered for Auction or otherwise sold, all
amounts receivable (other than amounts specified in clause (ii) above) from any
person or entity in connection with the Auction of such Eligible Vehicles as of
such date, plus (iv) with regard to Eligible Vehicles leased under the Operating
Leases (as of the applicable disposition date) that were manufactured by Mazda
that have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, any Casualty Payments or Termination Payments with respect to such
Eligible Vehicles due and payable as of such date under the Operating Leases,
plus (v) with regard to Eligible Vehicles
<PAGE> 25
25
leased under the Operating Leases (as of the applicable disposition date) that
were manufactured by Mazda that have been turned in to the Manufacturer,
delivered for Auction or otherwise sold, any accrued and unpaid Monthly Base
Rent under the Operating Leases (and, prior to the Transition Date, all accrued
and unpaid Monthly Supplemental Payments and Additional Base Rent under the
Financing Leases) with respect to such Eligible Vehicles (net of amounts set
forth in clauses (ii), (iii) and (iv) above); provided, however, that as of any
date of determination prior to the Transition Date, the "Series 1999-1 Mazda
Amount" shall be calculated based on the foregoing amounts that are included in
the definition of "Aggregate Asset Amount" for such date and on the Eligible
Receivables that were financed under all of the Leases and the Leasing Company
Indentures as of the date of determination and the Eligible Vehicles that are
leased, and were leased as of the applicable disposition date, under all of the
Leases and not only those Eligible Receivables that were financed under the
Leasing Company Indentures and those Eligible Vehicles that are and were leased
under the Operating Leases.
"Series 1999-1 Mazda Program Vehicle Amount" means, as of any date
of determination, an amount equal to the sum, rounded to the nearest $100,000,
of the following amounts to the extent that such amounts are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Series 1999-1 Program Vehicles that are Eligible Vehicles leased
under the Operating Leases as of such date that were manufactured by Mazda and
not turned in to Mazda pursuant to its Manufacturer Program, if any, or
delivered for Auction pursuant to its Manufacturer Program, if any, or not
otherwise sold or deemed to be sold under the related Leasing Company Related
Documents, plus (ii) all amounts receivable by a Leasing Company as of such date
(other than Excluded Payments) from Mazda under Manufacturer Programs with
respect to Eligible Vehicles (other than Exchanged Vehicles) leased under the
Operating Leases (as of the applicable disposition date) that were manufactured
by Mazda and turned in to Mazda pursuant to any such Manufacturer Program or
delivered for Auction pursuant to any Manufacturer Program and the aggregate of
all Eligible Receivables owned by a Leasing Company, financed under the related
Leasing Company Indenture and owed by Mazda under and accordance with a
Manufacturer Program, plus (iii) with regard to Eligible Vehicles that were
Series 1999-1 Program Vehicles leased under the Operating Leases (as of the
applicable disposition date) that were manufactured by Mazda that have been
delivered for Auction, all amounts receivable (other than amounts specified in
clause (ii) above) from any person or entity in connection with the Auction of
such Eligible Vehicles as of such date, plus (iv) with regard to Eligible
Vehicles that were Series 1999-1 Program Vehicles leased under the Operating
Leases (as of the applicable disposition date) that were manufactured by Mazda
that have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, any Casualty Payments or Termination Payments with respect to such
Eligible Vehicles due an payable as of such date under the Operating Leases,
plus (v) with regard to Eligible Vehicles that were Series 1999-1 Program
Vehicles leased under the Operating Leases (as of the applicable disposition
date) that were manufactured by Mazda that have been turned in to the
Manufacturer, delivered for Auction or otherwise sold, any accrued and unpaid
Monthly Base Rent under the Operating
<PAGE> 26
26
Leases (and, prior to the Transition Date, all accrued and unpaid Monthly
Supplemental Payments and Additional Base Rent under the Financing Leases) with
respect to such Eligible Vehicles (net of amounts set forth in clauses (ii),
(iii) and (iv) above); provided, however, that as of any date of determination
prior to the Transition Date, the "Series 1999-1 Mazda Program Vehicle Amount"
shall be calculated based on the foregoing amounts that are included in the
definition of "Aggregate Asset Amount" for such date and on the Eligible
Receivables that were financed under all of the Leases and the Leasing Company
Indentures as of the date of determination and the Eligible Vehicles that are
leased, and were leased as of the applicable disposition date, under all of the
Leases and not only those Eligible Receivables that were financed under the
Leasing Company Indentures and those Eligible Vehicles that are and were leased
under the Operating Leases.
"Series 1999-1 Mitsubishi Amount" means, as of any date of
determination, an amount equal to the sum, rounded to the nearest $100,000, of
the following amounts to the extent that such amounts are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Vehicles that are Eligible Vehicles leased under the Operating
Leases as of such date that were manufactured by Mitsubishi and not turned in to
Mitsubishi pursuant to its Manufacturer Program, if any, not delivered for
Auction pursuant to its Manufacturer Program, if any, or not otherwise sold or
deemed to be sold under the related Leasing Company Related Documents, plus (ii)
all amounts receivable by a Leasing Company as of such date (other than Excluded
Payments) from Mitsubishi under Manufacturer Programs with respect to Eligible
Vehicles (other than Exchanged Vehicles) leased under the Operating Leases (as
of the applicable disposition date) that were manufactured by Mitsubishi and
turned in to Mitsubishi pursuant to any such Manufacturer Program or delivered
for Auction pursuant to any such Manufacturer Program and the aggregate of all
Eligible Receivables owned by a Leasing Company, financed under the related
Leasing Company Indenture and owed by Mitsubishi under and accordance with a
Manufacturer Program, plus (iii) with regard to Eligible Vehicles leased under
the Operating Leases (as of the applicable disposition date) that were
manufactured by Mitsubishi that have been turned in to the Manufacturer,
delivered for Auction or otherwise sold, all amounts receivable (other than
amounts specified in clause (ii) above) from any person or entity in connection
with the Auction of such Eligible Vehicles as of such date, plus (iv) with
regard to Eligible Vehicles leased under the Operating Leases (as of the
applicable disposition date) that were manufactured by Mitsubishi that have been
turned in to the Manufacturer, delivered for Auction or otherwise sold, any
Casualty Payments or Termination Payments with respect to such Eligible Vehicles
due and payable as of such date under the Operating Leases, plus (v) with regard
to Eligible Vehicles leased under the Operating Leases (as of the applicable
disposition date) that were manufactured by Mitsubishi that have been turned in
to the Manufacturer, delivered for Auction or otherwise sold, any accrued and
unpaid Monthly Base Rent under the Operating Leases (and, prior to the
Transition Date, all accrued and unpaid Monthly Supplemental Payments and
Additional Base Rent under the Financing Leases) with respect to such Eligible
Vehicles (net of amounts set forth in clauses (ii), (iii) and (iv) above);
provided, however, that as of any date of determination prior to the Transition
Date, the "Series 1999-1 Mitsubishi Amount" shall be calculated based on the
foregoing amounts that are included in the definition of "Aggregate Asset
Amount" for such date and on the Eligible Receivables that
<PAGE> 27
27
were financed under all of the Leases and the Leasing Company Indentures as of
the date of determination and the Eligible Vehicles that are leased, and were
leased as of the applicable disposition date, under all of the Leases and not
only those Eligible Receivables that were financed under the Leasing Company
Indentures and those Eligible Vehicles that are and were leased under the
Operating Leases.
"Series 1999-1 Monthly Interest" means, with respect to any Series
1999-1 Interest Period, the sum of Class A-1 Monthly Interest, Class A-2 Monthly
Interest and Class A-3 Monthly Interest for such Series 1999-1 Interest Period.
"Series 1999-1 Nissan Amount" means, as of any date of
determination, an amount equal to the sum, rounded to the nearest $100,000, of
the following amounts to the extent that such amounts are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Vehicles that are Eligible Vehicles leased under the Operating
Leases as of such date that were manufactured by Nissan and not turned in to
Nissan pursuant to its Manufacturer Program, if any, not delivered for Auction
pursuant to its Manufacturer Program, if any, or not otherwise sold or deemed to
be sold under the related Leasing Company Related Documents, plus (ii) all
amounts receivable by a Leasing Company as of such date (other than Excluded
Payments) from Nissan under Manufacturer Programs with respect to Eligible
Vehicles (other than Exchanged Vehicles) leased under the Operating Leases (as
of the applicable disposition date) that were manufactured by Nissan and turned
in to Nissan pursuant to any such Manufacturer Program or delivered for Auction
pursuant to any such Manufacturer Program and the aggregate of all Eligible
Receivables owned by a Leasing Company, financed under the related Leasing
Company Indenture and owed by Nissan under and accordance with a Manufacturer
Program, plus (iii) with regard to Eligible Vehicles leased under the Operating
Leases (as of the applicable disposition date) that were manufactured by Nissan
that have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, all amounts receivable (other than amounts specified in clause (ii) above)
from any person or entity in connection with the Auction of such Eligible
Vehicles as of such date, plus (iv) with regard to Eligible Vehicles leased
under the Operating Leases (as of the applicable disposition date) that were
manufactured by Nissan that have been turned in to the Manufacturer, delivered
for Auction or otherwise sold, any Casualty Payments or Termination Payments
with respect to such Eligible Vehicles due and payable as of such date under the
Operating Leases, plus (v) with regard to Eligible Vehicles leased under the
Operating Leases (as of the applicable disposition date) that were manufactured
by Nissan that have been turned in to the Manufacturer, delivered for Auction or
otherwise sold, any accrued and unpaid Monthly Base Rent under the Operating
Leases (and, prior to the Transition Date, all accrued and unpaid Monthly
Supplemental Payments and Additional Base Rent under the Financing Leases) with
respect to such Eligible Vehicles (net of amounts set forth in clauses (ii),
(iii) and (iv) above); provided, however, that as of any date of determination
prior to the Transition Date, the "Series 1999-1 Nissan Amount" shall be
calculated based on the foregoing amounts that are included in the definition of
"Aggregate Asset Amount" for such date
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and on the Eligible Receivables that were financed under all of the Leases and
the Leasing Company Indentures as of the date of determination and the Eligible
Vehicles that are leased, and were leased as of the applicable disposition date,
under all of the Leases and not only those Eligible Receivables that were
financed under the Leasing Company Indentures and those Eligible Vehicles that
are and were leased under the Operating Leases.
"Series 1999-1 Non-Eligible Manufacturer Amount" means, as of any
date of determination, an amount equal to the sum, rounded to the nearest
$100,000, of the following amounts to the extent that such amounts are included
in the definition of "Operating Lease Asset Amount" for such date: (i) the Net
Book Value of all Vehicles that are Eligible Vehicles leased under the Operating
Leases as of such date that were manufactured by Manufacturers other than Series
1999-1 Eligible Program Manufacturers or Series 1999-1 Eligible Non-Program
Manufacturers and not turned in to the Manufacturer thereof pursuant to its
Manufacturer Program, if any, not delivered for Auction pursuant to its
Manufacturer Program, if any, or not otherwise sold or deemed to be sold under
the related Leasing Company Related Documents, plus (ii) with regard to Eligible
Vehicles leased under the Operating Leases (as of the applicable disposition
date) that were manufactured by Manufacturers other than Series 1999-1 Eligible
Program Manufacturers or Series 1999-1 Eligible Non-Program Manufacturers that
have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, any Casualty Payments or Termination Payments with respect to such
Eligible Vehicles due and payable on such date under the Operating Leases, plus
(iii) with regard to Eligible Vehicles leased under the Operating Leases (as of
the applicable disposition date) that were manufactured by Manufacturers other
than Series 1999-1 Eligible Program Manufacturers or Series 1999-1 Eligible
Non-Program Manufacturers that have been turned in to the Manufacturer,
delivered for Auction or otherwise sold, any accrued and unpaid Monthly Base
Rent under the Operating Leases (and, prior to the Transition Date, all accrued
and unpaid Monthly Supplemental Payments and Additional Base Rent under the
Financing Leases) with respect to such Eligible Vehicles (net of amounts set
forth in clause (ii) above); provided, however, that as of any date of
determination prior to the Transition Date, the "Series 1999-1 Non-Eligible
Manufacturer Amount" shall be calculated based on the foregoing amounts that are
included in the definition of "Aggregate Asset Amount" for such date and on the
Eligible Vehicles that are leased and were leased as of the applicable
disposition date under all of the Leases and not only those Eligible Vehicles
that are and were leased under the Operating Leases.
"Series 1999-1 Non-Program Vehicle" means a Vehicle that is not
subject to a Series 1999-1 Eligible Manufacturer Program.
"Series 1999-1 Non-Program Vehicle Amount" means, as of any date of
determination, an amount equal to the sum, rounded to the nearest $100,000, of
the following amounts to the extent that such amounts are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Series 1999-1 Non-Program Vehicles that are Eligible Vehicles
leased under the Operating Leases as of such date and not turned in to the
Manufacturer thereof pursuant to its Manufacturer Program, if any, not delivered
for Auction pursuant to its Manufacturer Program, if any, or not otherwise sold
or deemed to be sold under
<PAGE> 29
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the related Leasing Company Related Documents, plus (ii) with regard to Eligible
Vehicles that were Series 1999-1 Non-Program Vehicles leased under the Operating
Leases (as of the applicable disposition date) that have been turned in to the
Manufacturer, delivered for Auction or otherwise sold, any Casualty Payments or
Termination Payments with respect to such Eligible Vehicles due and payable as
of such date under the Operating Leases, plus (iii) with regard to Eligible
Vehicles that were Series 1999-1 Non-Program Vehicles leased under the Operating
Leases (as of the applicable disposition date) that have been turned in to the
Manufacturer, delivered for Auction or otherwise sold, any accrued and unpaid
Monthly Base Rent under the Operating Leases (and, prior to the Transition Date,
all accrued and unpaid Monthly Supplemental Payments and Additional Base Rent
under the Financing Leases) with respect to such Eligible Vehicles (net of
amounts set forth in clause (ii) above); provided, however, that as of any date
of determination prior to the Transition Date, the "Series 1999-1 Non-Program
Vehicle Amount" shall be calculated based on the foregoing amount that are
included in the definition of "Aggregate Asset Amount" for such date and on the
Eligible Vehicles that are leased and were leased as of the applicable
disposition date under all of the Leases and not only those Eligible Vehicles
that are and were leased under the Operating Leases.
"Series 1999-1 Non-Program Vehicle Market Value Adjustment
Percentage" means, as of any date of determination, the sum of (a) the product
of (i) the Newer Series 1999-1 Non-Program Vehicle Market Value Adjustment
Percentage as of such date and (ii) the Newer Series 1999-1 Non-Program Vehicle
Percentage as of such date, (b) the product of (i) the Older Series 1999-1
Non-Program Vehicle Market Value Adjustment Percentage as of such date and (ii)
the Older Series 1999-1 Non-Program Vehicle Percentage as of such date and (c)
the product of (i) the Bankrupt Manufacturer Series 1999-1 Market Value
Adjustment Percentage as of such date and (ii) the Bankrupt Manufacturer Series
1999-1 Non-Program Vehicle Percentage as of such date.
"Series 1999-1 Non-Program Vehicle Percentage" means, as of any date
of determination, the percentage equivalent of a fraction, the numerator of
which is the Series 1999-1 Non-Program Vehicle Amount as of such date and the
denominator of which is the Operating Lease Asset Amount as of such date;
provided, however, that as of any day prior to the Transition Date, the "Series
1999-1 Non-Program Vehicle Percentage" will equal the percentage equivalent of a
fraction, the numerator of which is the Series 1999-1 Non-Program Vehicle Amount
and the denominator of which is the Aggregate Asset Amount.
"Series 1999-1 Note Rate" means the Class A-1 Note Rate, the Class
A-2 Note Rate or the Class A-3 Note Rate, as the context may require.
"Series 1999-1 Noteholders" means, collectively, the Class A-1
Noteholders, the Class A-2 Noteholders and the Class A-3 Noteholders.
"Series 1999-1 Notes" means, collectively, the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes.
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30
"Series 1999-1 Operating Lease Asset Amount" means, as of any date
of determination, the product of (a) the Series 1999-1 Operating Lease
Percentage as of such date and (b) the Operating Lease Asset Amount as of such
date.
"Series 1999-1 Operating Lease Percentage" means, as of any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the Series 1999-1 Required Operating Lease Asset Amount as of such date and
the denominator of which is the sum of the Required Operating Lease Asset
Amounts for all Series of Notes as of such date.
"Series 1999-1 Outstanding Principal Amount" means, as of any date
of determination, the sum of the Class A-1 Outstanding Principal Amount, the
Class A-2 Outstanding Principal Amount and the Class A-3 Outstanding Principal
Amount as of such date.
"Series 1999-1 Overcollateralization Amount" means (i) as of any
date prior to the Transition Date (A) on which no Aggregate Asset Amount
Deficiency exists, the Series 1999-1 Required Overcollateralization Amount as of
such date or (B) on which an Aggregate Asset Amount Deficiency exists, the
excess, if any, of (1) the product of the Aggregate Asset Amount and the
percentage equivalent of a fraction, the numerator of which is the sum of the
Series 1999-1 Invested Amount and the Series 1999-1 Required
Overcollateralization as of such date and the denominator of which is the
Required Aggregate Asset Amount as of such date over (2) the Series 1999-1
Invested Amount as of such date and (ii) as of the Transition Date or any date
thereafter (A) on which no Operating Lease Asset Amount Deficiency exists, the
Series 1999-1 Required Overcollateralization Amount as of such date or (B) on
which an Operating Lease Asset Amount Deficiency exists, the excess, if any, of
the Series 1999-1 Operating Lease Asset Amount over the Series 1999-1 Invested
Amount as of such date.
"Series 1999-1 Percentage" means, as of any date of determination,
the percentage equivalent of a fraction, the numerator of which is the Series
1999-1 Invested Amount as of such date and the denominator of which is the sum
of the Invested Amounts for all Series of Notes as of such date.
"Series 1999-1 Principal Allocation" has the meaning specified in
Section 2.2(a)(ii) of this Series Supplement.
"Series 1999-1 Program Vehicle" means a Vehicle subject to a Series
1999-1 Eligible Manufacturer Program.
"Series 1999-1 Program Vehicle Amount" means, as of any date of
determination, an amount equal to the sum, rounded to the nearest $100,000, of
the following amounts to the extent that such amount are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Series 1999-1 Program Vehicles that are Eligible
<PAGE> 31
31
Vehicles leased under the Operating Leases as of such date and not turned in to
the Manufacturer thereof pursuant to its Manufacturer Program, if any, not
delivered for Auction pursuant to its Manufacturer Program, if any, or not
otherwise sold or deemed to be sold under the related Leasing Company Related
Documents, plus (ii) all amounts receivable by a Leasing Company as of such date
(other than Excluded Payments) from Manufacturers under Manufacturer Programs
with respect to Eligible Vehicles that were Series 1999-1 Program Vehicles
(other than Exchanged Vehicles) leased under the Operating Leases (as of the
applicable Disposition Date) and turned in to such Manufacturers pursuant to any
such Manufacturer Program or delivered for Auction pursuant to any Manufacturer
Program and the aggregate of all Eligible Receivables owned by a Leasing
Company, financed under the related Leasing Company Indenture and owed by Series
1999-1 Eligible Program Manufacturers under and accordance with a Manufacturer
Program, plus (iii) with regard to Eligible Vehicles that were Series 1999-1
Program Vehicles leased under the Operating Leases (as of the applicable
Disposition Date) that have been turned in to the Manufacturer, delivered for
Auction or otherwise sold, all amounts receivable (other than amounts specified
in clause (ii) above) from any person or entity in connection with the Auction
of such Eligible Vehicles as of such date, plus (iv) with regard to Eligible
Vehicles that were Series 1999-1 Program Vehicles leased under the Operating
Leases (as of the applicable Disposition Date) that have been turned in to the
Manufacturer, delivered for Auction or otherwise sold, any Casualty Payments or
Termination Payments with respect to such Eligible Vehicles due and payable as
of such date under the Operating Leases, plus (v) with regard to Eligible
Vehicles that were Series 1999-1 Program Vehicles leased under the Operating
Leases (as of the applicable Disposition Date) that have been turned in to the
Manufacturer, delivered for Auction or otherwise sold, any accrued and unpaid
Monthly Base Rent under the Operating Leases (and, prior to the Transition Date,
all accrued and unpaid Monthly Supplemental Payments and Additional Base Rent
under the Financing Leases) with respect to such Eligible Vehicles (net of
amounts set forth in clauses (ii), (iii) and (iv) above); provided, however,
that as of any date of determination prior to the Transition Date, the "Series
1999-1 Program Vehicle Amount" shall be calculated based on the foregoing
amounts that are included in the definition of "Aggregate Asset Amount" for such
date and on the Eligible Receivables that were financed under all of the Leases
and the Leasing Company Indentures as of the date of determination and the
Eligible Vehicles that are leased, and were leased as of the applicable
Disposition Date, under all of the Leases and not only those Eligible
Receivables that were financed under the Leasing Company Indentures and those
Eligible Vehicles that are and were leased under the Operating Leases.
"Series 1999-1 Program Vehicle Percentage" means, as of any date of
determination, the percentage equivalent of a fraction, the numerator of which
is the Series 1999- 1 Program Vehicle Amount as of such date and the denominator
of which is the Operating Lease Asset Amount as of such date; provided, however,
that as of any day prior to the Transition Date, the "Series 1999-1 Program
Vehicle Percentage" will equal the percentage equivalent of a fraction, the
numerator of which is the Series 1999-1 Program Vehicle Amount and the
denominator of which is the Aggregate Asset Amount.
"Series 1999-1 Rapid Amortization Period" means the period beginning
at the
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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 1999-1 Notes and ending upon the earliest to occur of (i) the date on
which the Series 1999-1 Notes are fully paid and the Surety Provider has been
paid all Surety Provider Fees and all other Surety Provider Reimbursement
Amounts then due, (ii) the Series 1999-1 Termination Date and (iii) the
termination of the Indenture.
"Series 1999-1 Rating Agency Confirmation and Consent Condition"
means, with respect to the Series 1999-1 Notes and any action, that (i) each
Rating Agency shall have notified ARG, the Surety Provider and the Trustee in
writing that such action will not result in a reduction or withdrawal of the
rating (without regard to the presence of the Surety Bond in effect immediately
before the taking of such action) of the Series 1999-1 Notes and (ii) the Surety
Provider shall have consented in writing to such action.
"Series 1999-1 Rating Agency Confirmation Condition" means, with
respect to the Series 1999-1 Notes and any action, including the issuance of an
additional Series of Notes, that each Rating Agency shall have notified ARG, the
Surety Provider and the Trustee in writing that such action will not result in a
reduction or withdrawal of the rating (without regard to the presence of the
Surety Bond in effect immediately before the taking of such action) of the
Series 1999-1 Notes.
"Series 1999-1 Reimbursement Agreement" means the Series 1999-1
Letter of Credit Reimbursement Agreement, dated as of February 26, 1999, among
Republic, the Lessees, ARG and the Series 1999-1 Letter of Credit Providers, as
such agreement may be amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms thereof.
"Series 1999-1 Repurchase Amount" has the meaning specified in
Section 7.1 of this Series Supplement.
"Series 1999-1 Required Asset Amount" means, as of any date of
determination prior to the Transition Date, the sum of the Series 1999-1
Invested Amount and the Series 1999-1 Required Overcollateralization Amount as
of such date.
"Series 1999-1 Required Enhancement Amount" means, as of any date of
determination, the sum of (i) the product of the Series 1999-1 Required
Enhancement Percentage as of such date and the Series 1999-1 Invested Amount as
of such date and (ii) the Series 1999-1 Required Enhancement Incremental Amount
as of such date; provided, however that, as of any date of determination after
the occurrence of a Series 1999-1 ARG Liquidation Event, the Series 1999-1
Required Enhancement Amount shall equal the lesser of (x) the Series 1999-1
Invested Amount and (y) the sum of (1) the product of the Series 1999-1 Required
Enhancement Percentage as of such date of determination and the Series 1999-1
Invested Amount as of the date of the occurrence of such Series 1999-1 ARG
Liquidation Event and (2) the Series 1999-1 Required Enhancement Incremental
Amount as of such date of determination.
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"Series 1999-1 Required Enhancement Incremental Amount" means
(i) as of the Series 1999-1 Closing Date, $0;
(ii) as of any date after the Series 1999-1 Closing Date and
prior to the Transition Date, the product of (A) the Series 1999-1
Transitional Percentage as of the immediately preceding Business Day
and (B) the sum of (1) the excess, if any, of the Series 1999-1
Non-Program Vehicle Amount over the Series 1999-1 Maximum Non-Program
Vehicle Amount as of such immediately preceding Business Day, (2) the
excess, if any, of the Series 1999-1 Hyundai Amount over the Series
1999-1 Maximum Individual Hyundai/Isuzu/Subaru/Suzuki Amount as of such
immediately preceding Business Day, (3) the excess, if any, of the
Series 1999-1 Isuzu Amount over the Series 1999-1 Maximum Individual
Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately preceding
Business Day, (4) the excess, if any, of the Series 1999-1 Mazda Amount
over the Series 1999-1 Maximum Mazda Amount as of such immediately
preceding Business Day, (5) the excess, if any, of the Series 1999-1
Mazda Program Vehicle Amount over the Series 1999-1 Maximum Mazda
Program Vehicle Amount as of such immediately preceding Business Day,
(6) the excess, if any, of the Series 1999-1 Mitsubishi Amount over the
Series 1999-1 Maximum Mitsubishi Amount as of such immediately
preceding Business Day, (7) the excess, if any, of the Series 1999-1
Nissan Amount over the Series 1999-1 Maximum Nissan Amount as of such
immediately preceding Business Day, (8) the excess, if any, of the
Series 1999-1 Subaru Amount over the Series 1999-1 Maximum Individual
Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately preceding
Business Day, (9) the excess, if any, of the Series 1999-1 Suzuki
Amount over the Series 1999-1 Maximum Individual
Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately preceding
Business Day, (10) the excess, if any, of the Series 1999-1 Aggregate
Hyundai/Isuzu/Subaru/Suzuki Amount over the Series 1999-1 Maximum
Aggregate Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately
preceding Business Day and (11) the excess, if any, of the Series
1999-1 Non-Eligible Manufacturer Amount over the Series 1999-1 Maximum
Non-Eligible Manufacturer Amount as of such immediately preceding
Business Day; and
(iii) as of the Transition Date and any date thereafter, the
product of (A) the Series 1999-1 Operating Lease Percentage as of the
immediately preceding Business Day and (B) the sum of (1) the excess,
if any, of the Series 1999-1 Non-Program Vehicle Amount over the Series
1999-1 Maximum Non-Program Vehicle Amount as of such immediately
preceding Business Day, (2) the excess, if any, of the Series 1999-1
Hyundai Amount over the Series 1999-1 Maximum Individual
Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately preceding
Business Day, (3) the excess, if any, of the Series 1999-1 Isuzu Amount
over the Series 1999-1 Maximum Individual
<PAGE> 34
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Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately preceding
Business Day, (4) the excess, if any, of the Series 1999-1 Mazda Amount
over the Series 1999-1 Maximum Mazda Amount as of such immediately
preceding Business Day, (5) the excess, if any, of the Series 1999-1
Mazda Program Vehicle Amount over the Series 1999-1 Maximum Mazda
Program Vehicle Amount as of such immediately preceding Business Day,
(6) the excess, if any, of the Series 1999-1 Mitsubishi Amount over the
Series 1999-1 Maximum Mitsubishi Amount as of such immediately
preceding Business Day, (7) the excess, if any, of the Series 1999-1
Nissan Amount over the Series 1999-1 Maximum Nissan Amount as of such
immediately preceding Business Day, (8) the excess, if any, of the
Series 1999-1 Subaru Amount over the Series 1999-1 Maximum Individual
Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately preceding
Business Day, (9) the excess, if any, of the Series 1999-1 Suzuki
Amount over the Series 1999-1 Maximum Individual
Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately preceding
Business Day, (10) the excess, if any, of the Series 1999-1 Aggregate
Hyundai/Isuzu/Subaru/Suzuki Amount over the Series 1999-1 Maximum
Aggregate Hyundai/Isuzu/Subaru/Suzuki Amount as of such immediately
preceding Business Day and (11) the excess, if any, of the Series
1999-1 Non-Eligible Manufacturer Amount over the Series 1999-1 Maximum
Non-Eligible Manufacturer Amount as of such immediately preceding
Business Day.
"Series 1999-1 Required Enhancement Percentage" means, as of any
date of determination, the sum of (i) the product of (A) 11.5% times (B) the
Series 1999-1 Program Vehicle Percentage as of such date and (ii) the product of
(A) the Series 1999-1 Required Non-Program Enhancement Percentage as of such
date times (B) the Series 1999-1 Non-Program Vehicle Percentage as of such date.
"Series 1999-1 Required Financing Lease Asset Amount" means as of
the date of the occurrence of an Event of Bankruptcy with respect to Republic or
any Lessee, the excess, if any, of the Series 1999-1 Required Operating Lease
Asset Amount over the Series 1999-1 Operating Lease Asset Amount.
"Series 1999-1 Required Liquidity Amount" means, with respect to any
Distribution Date, an amount equal to 4.0% of the Series 1999-1 Invested Amount
on such Distribution Date (after giving effect to any payments of principal to
be made on the Series 1999-1 Notes on such Distribution Date).
"Series 1999-1 Required Non-Program Enhancement Percentage" means,
as of any date of determination, the sum of (i) 15% and (ii) an amount equal to
100% minus the Series 1999-1 Non-Program Vehicle Market Value Adjustment
Percentage as of such date.
"Series 1999-1 Required Operating Lease Asset Amount" means, as of
any date of determination, the sum of the Series 1999-1 Invested Amount and the
Series 1999-1 Required Overcollateralization Amount as of such date.
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35
"Series 1999-1 Required Overcollateralization Amount" means, as of
any date of determination, the excess, if any, of (a) the Series 1999-1 Required
Enhancement Amount over (b) the sum of (i) the Series 1999-1 Available Reserve
Account Amount as of such date, (ii) the Series 1999-1 Letter of Credit Amount
as of such date and (iii) the amount of cash and Permitted Investments on
deposit in the Series 1999-1 Collection Account (other than the Series 1999-1
Accrued Interest Account) on such date.
"Series 1999-1 Required Reserve Account Amount" means, with respect
to any Distribution Date, an amount equal to the greater of (a) the excess, if
any, of the Series 1999-1 Required Liquidity Amount on such Distribution Date
over the Series 1999-1 Liquidity Amount on such Distribution Date and (b) the
excess, if any, of the Series 1999-1 Required Enhancement Amount over the Series
1999-1 Enhancement Amount.
"Series 1999-1 Reserve Account" has the meaning specified in Section
2.7(a) of this Series Supplement.
"Series 1999-1 Reserve Account Collateral" has the meaning specified
in Section 2.7(d) of this Series Supplement.
"Series 1999-1 Reserve Account Surplus" means, with respect to any
Distribution Date, the excess, if any, of the Series 1999-1 Available Reserve
Account Amount over the Series 1999-1 Required Reserve Account Amount on such
Distribution Date.
"Series 1999-1 Revolving Period" means the period from and including
the Series 1999-1 Closing Date to the earlier of (i) the commencement of the
Series 1999-1 Controlled Amortization Period and (ii) the commencement of any
Series 1999-1 Rapid Amortization Period.
"Series 1999-1 Subaru Amount" means, as of any date of
determination, an amount equal to the sum, rounded to the nearest $100,000, of
the following amounts to the extent that such amounts are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Vehicles that are Eligible Vehicles leased under the Operating
Leases as of such date that were manufactured by Subaru and not turned in to
Subaru pursuant to its Manufacturer Program, if any, not delivered for Auction
pursuant to its Manufacturer Program, if any, or not otherwise sold or deemed to
be sold under the related Leasing Company Related Documents, plus (ii) all
amounts receivable by a Leasing Company as of such date (other than Excluded
Payments) from Subaru under Manufacturer Programs with respect to Eligible
Vehicles (other than Exchanged Vehicles) leased under the Operating Leases (as
of the applicable disposition date) that were manufactured by Subaru and turned
in to Subaru pursuant to any such Manufacturer Program or delivered for Auction
pursuant to any such Manufacturer Program and the aggregate of all Eligible
Receivables owned by a Leasing Company, financed
<PAGE> 36
36
under the related Leasing Company Indenture and owed by Subaru under and
accordance with a Manufacturer Program, plus (iii) with regard to Eligible
Vehicles leased under the Operating Leases (as of the applicable disposition
date) that were manufactured by Subaru that have been turned in to the
Manufacturer, delivered for Auction or otherwise sold, all amounts receivable
(other than amounts specified in clause (ii) above) from any person or entity in
connection with the Auction of such Eligible Vehicles as of such date, plus (iv)
with regard to Eligible Vehicles leased under the Operating Leases (as of the
applicable disposition date) that were manufactured by Subaru that have been
turned in to the Manufacturer, delivered for Auction or otherwise sold, any
Casualty Payments or Termination Payments with respect to such Eligible Vehicles
due and payable as of such date under the Operating Leases, plus (v) with regard
to Eligible Vehicles leased under the Operating Leases (as of the applicable
disposition date) that were manufactured by Subaru that have been turned in to
the Manufacturer, delivered for Auction or otherwise sold, any accrued and
unpaid Monthly Base Rent under the Operating Leases (and, prior to the
Transition Date, all accrued and unpaid Monthly Supplemental Payments and
Additional Base Rent under the Financing Leases) with respect to such Eligible
Vehicles (net of amounts set forth in clauses (ii), (iii) and (iv) above);
provided, however, that as of any date of determination prior to the Transition
Date, the "Series 1999-1 Subaru Amount" shall be calculated based on the
foregoing amounts that are included in the definition of "Aggregate Asset
Amount" for such date and on the Eligible Receivables that were financed under
all of the Leases and the Leasing Company Indentures as of the date of
determination and the Eligible Vehicles that are leased, and were leased as of
the applicable disposition date, under all of the Leases and not only those
Eligible Receivables that were financed under the Leasing Company Indentures and
those Eligible Vehicles that are and were leased under the Operating Leases.
"Series 1999-1 Suzuki Amount" means, as of any date of
determination, an amount equal to the sum, rounded to the nearest $100,000, of
the following amounts to the extent that such amounts are included in the
definition of "Operating Lease Asset Amount" for such date: (i) the Net Book
Value of all Vehicles that are Eligible Vehicles leased under the Operating
Leases as of such date that were manufactured by Suzuki and not turned in to
Suzuki pursuant to its Manufacturer Program, if any, not delivered for Auction
pursuant to its Manufacturer Program, if any, or not otherwise sold or deemed to
be sold under the related Leasing Company Related Documents, plus (ii) all
amounts receivable by a Leasing Company as of such date (other than Excluded
Payments) from Suzuki under Manufacturer Programs with respect to Eligible
Vehicles (other than Exchanged Vehicles) leased under the Operating Leases (as
of the applicable disposition date) that were manufactured by Suzuki and turned
in to Suzuki pursuant to any such Manufacturer Program or delivered for Auction
pursuant to any such Manufacturer Program and the aggregate of all Eligible
Receivables owned by a Leasing Company, financed under the related Leasing
Company Indenture and owed by Suzuki under and accordance with a Manufacturer
Program, plus (iii) with regard to Eligible Vehicles leased under the Operating
Leases (as of the applicable disposition date) that were manufactured by Suzuki
that have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, all amounts receivable (other than amounts specified in clause (ii) above)
from any person or entity in connection with the Auction of such Eligible
Vehicles as of such date, plus (iv) with regard to Eligible Vehicles leased
under the Operating Leases (as of the applicable disposition date) that were
manufactured
<PAGE> 37
37
by Suzuki that have been turned in to the Manufacturer, delivered for Auction or
otherwise sold, any Casualty Payments or Termination Payments with respect to
such Eligible Vehicles due and payable as of such date under the Operating
Leases, plus (v) with regard to Eligible Vehicles leased under the Operating
Leases (as of the applicable disposition date) that were manufactured by Suzuki
that have been turned in to the Manufacturer, delivered for Auction or otherwise
sold, any accrued and unpaid Monthly Base Rent under the Operating Leases (and,
prior to the Transition Date, all accrued and unpaid Monthly Supplemental
Payments and Additional Base Rent under the Financing Leases) with respect to
such Eligible Vehicles (net of amounts set forth in clauses (ii), (iii) and (iv)
above); provided, however, that as of any date of determination prior to the
Transition Date, the "Series 1999-1 Suzuki Amount" shall be calculated based on
the foregoing amounts that are included in the definition of "Aggregate Asset
Amount" for such date and on the Eligible Receivables that were financed under
all of the Leases and the Leasing Company Indentures as of the date of
determination and the Eligible Vehicles that are leased, and were leased as of
the applicable disposition date, under all of the Leases and not only those
Eligible Receivables that were financed under the Leasing Company Indentures and
those Eligible Vehicles that are and were leased under the Operating Leases.
"Series 1999-1 Termination Date" means the May 2006 Distribution
Date.
"Series 1999-1 Transitional Bankruptcy Percentage" means, as of the
date of the occurrence of an Event of Bankruptcy with respect to Republic or any
Lessee, the percentage equivalent of a fraction, the numerator of which is the
Series 1999-1 Required Financing Lease Asset Amount as of such date and the
denominator of which is equal to the sum of the Required Financing Lease Asset
Amounts with respect to each outstanding Series of Notes as of such date.
"Series 1999-1 Transitional Percentage" means, as of any date prior
to the Transition Date, the percentage equivalent of a fraction, the numerator
of which is equal to the sum of the Series 1999-1 Invested Amount and the Series
1999-1 Required Overcollateralization Amount as of such date and the denominator
of which is the Required Aggregate Asset Amount as of such date.
"Series Supplement" has the meaning set forth in the preamble.
"Subaru" means Subaru of America, Inc., a Hawaii corporation.
"Supermajority Noteholders" means, with respect to the Series 1999-1
Notes, subject to Section 7.7 of this Series Supplement, Series 1999-1
Noteholders holding 662/3% or more of the Series 1999-1 Invested Amount
(excluding any Series 1999-1 Notes held by ARG or any Affiliate of ARG).
"Surety Bond" means the Note Guaranty Insurance Policy No. 28638,
dated
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38
February 26, 1999, issued by the Surety Provider.
"Surety Default" means (i) any failure by the Surety Provider to pay
a demand for payment in accordance with the requirements of the Surety Bond and
such failure shall not have been cured or (ii) the occurrence of an Event of
Bankruptcy with respect to the Surety Provider.
"Surety Provider" means MBIA Insurance Corporation, a New York stock
insurance company. The Surety Provider shall constitute an "Enhancement
Provider" with respect to the Series 1999-1 Notes for all purposes under the
Indenture and the other Related Documents.
"Surety Provider Fee" has the meaning set forth in the Insurance
Agreement.
"Surety Provider Reimbursement Amounts" means, as of any date of
determination, (i) an amount equal to the aggregate of any amounts due as of
such date to the Surety Provider pursuant to the Insurance Agreement in respect
of unreimbursed draws under the Surety Bond, including interest thereon
determined in accordance with the Insurance Agreement, and (ii) an amount equal
to the aggregate of any other amounts due as of such date to the Surety Provider
pursuant to the Insurance Agreement (other than the Surety Provider Fee).
"Suzuki" means American Suzuki Motor Corporation, a California
corporation.
"Telerate Page 3750" has the meaning set forth in the International
Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange
Definitions.
"Temporary Global Class A-1 Note" has the meaning specified in
Section 5.2 of this Series Supplement.
"Temporary Global Class A-2 Note" has the meaning specified in
Section 5.2 of this Series Supplement.
"Temporary Global Class A-3 Note" has the meaning specified in
Section 5.2 of this Series Supplement.
"Termination Date Disbursement" means an amount drawn under a Series
1999-1 Letter of Credit pursuant to a Certificate of Termination Date Demand.
"Termination Disbursement" means an amount drawn under a Series
1999-1 Letter of Credit pursuant to a Certificate of Termination Demand.
"Transition Date" means the June 1999 Distribution Date.
"Unpaid Demand Note Disbursement" means an amount drawn under a
Series 1999-1 Letter of Credit pursuant to a Certificate of Unpaid Demand Note
Demand.
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39
"Waiver Event" means the occurrence of the delivery of a Waiver
Request and the subsequent waiver of any Series 1999-1 Maximum Amount.
"Waiver Request" has the meaning set forth in Article IV of this
Series Supplement.
ARTICLE II
SERIES 1999-1 ALLOCATIONS
With respect to the Series 1999-1 Notes only, the following shall
apply:
Section 2.1 Establishment of Series 1999-1 Collection Account,
Series 1999-1 Accrued Interest Account and Series 1999-1 Excess Collection
Account.
(a) All Collections allocable to the Series 1999-1 Notes pursuant to
Section 2.2 of this Series Supplement shall be allocated to the Collection
Account.
(b) The Trustee will create three Administrative Subaccounts within
the Collection Account for the benefit of the Series 1999-1 Noteholders: the
Series 1999-1 Collection Account (such Administrative Subaccount, the "Series
1999-1 Collection Account"), the Series 1999-1 Excess Collection Account (such
Administrative Subaccount, the "Series 1999-1 Excess Collection Account") and
the Series 1999-1 Accrued Interest Account (such Administrative Subaccount, the
"Series 1999-1 Accrued Interest Account").
Section 2.2 Allocations with Respect to the Series 1999-1 Notes.
The proceeds from the issuance of the Series 1999-1 Notes will be
deposited into the Collection Account. On the Series 1999-1 Closing Date and
each Business Day on which Collections are deposited into the Collection Account
(each such date, a "Series 1999-1 Deposit Date"), the Servicer will direct the
Trustee in writing to allocate all amounts deposited into the Collection Account
in accordance with the provisions of this Section 2.2:
(a) Allocations of Collections During the Series 1999-1 Revolving
Period. During the Series 1999-1 Revolving Period, the Servicer will direct the
Trustee in writing to allocate, prior to 12:00 noon (New York City time) on each
Series 1999-1 Deposit Date, all amounts deposited into the Collection Account as
set forth below:
(i) allocate to the Series 1999-1 Collection Account
an amount equal to
<PAGE> 40
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the sum of (A) the Series 1999-1 Invested Percentage (as of such day)
of the aggregate amount of Interest Collections on such day and (B) any
amounts received by the Trustee in respect of the Series 1999-1
Interest Rate Cap. All such amounts allocated to the Series 1999-1
Collection Account shall be further allocated to the Series 1999-1
Accrued Interest Account; and
(ii) allocate to the Series 1999-1 Excess Collection
Account an amount equal to the Series 1999-1 Invested Percentage (as of
such day) of the aggregate amount of Principal Collections on such day
and, on the Series 1999-1 Closing Date, the proceeds from the issuance
of the Series 1999-1 Notes (for any such day, the "Series 1999-1
Principal Allocation"); provided however, if a Waiver Event shall have
occurred, then such allocation shall be modified as provided in Article
IV of this Series Supplement.
(b) Allocations of Collections During any Series 1999-1 Controlled
Amortization Period. With respect to any Series 1999-1 Controlled Amortization
Period, the Servicer will direct the Trustee in writing to allocate, prior to
12:00 noon (New York City time) on any Series 1999-1 Deposit Date, all amounts
deposited into the Collection Account as set forth below:
(i) allocate to the Series 1999-1 Collection Account
an amount determined as set forth in Section 2.2(a)(i) above for such
day, which amount shall be further allocated to the Series 1999-1
Accrued Interest Account; and
(ii) (A) with respect to the Class A-1/A-2 Controlled
Amortization Period, allocate to the Series 1999-1 Collection Account
an amount equal to the Series 1999-1 Principal Allocation for such day,
which amount shall be used to make principal payments in respect of the
Class A-1 Notes and the Class A-2 Notes; provided, however, that if the
Monthly Total Principal Allocation exceeds the Class A-1/A-2 Controlled
Distribution Amount, then the amount of such excess shall be allocated
to the Series 1999-1 Excess Collection Account; and provided further
that if a Waiver Event shall have occurred, then such allocation shall
be modified as provided in Article IV of this Series Supplement; and
(B) with respect to the Class A-3 Controlled Amortization Period,
allocate to the Series 1999-1 Collection Account an amount equal to the
Series 1999-1 Principal Allocation for such day, which amount shall be
used to make principal payments in respect of the Class A-3 Notes;
provided, however, that if the Monthly Total Principal Allocation
exceeds the Class A-3 Controlled Distribution Amount, then the amount
of such excess shall be allocated to the Series 1999-1 Excess
Collection Account; and provided further that if a Waiver Event shall
have occurred, then such allocation shall be modified as provided in
Article IV of this Series Supplement.
(c) Allocations of Collections During the Series 1999-1 Rapid
Amortization Period. With respect to the Series 1999-1 Rapid Amortization
Period, other than after the occurrence of an Event of Bankruptcy with respect
to Republic or any Lessee, the Servicer will direct the Trustee in writing to
allocate, prior to 12:00 noon (New York City time) on any Series
<PAGE> 41
41
1999-1 Deposit Date, all amounts deposited into the Collection Account as set
forth below:
(i) allocate to the Series 1999-1 Collection Account
an amount determined as set forth in Section 2.2(a)(i) above for such
day, which amount shall be further allocated to the Series 1999-1
Accrued Interest Account; and
(ii) allocate to the Series 1999-1 Collection Account
an amount equal to the Series 1999-1 Principal Allocation for such day,
which amount shall be used to make principal payments in respect of the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, ratably,
without preference or priority of any kind, until the Series 1999-1
Invested Amount is paid in full.
(d) Allocations of Collections after the Occurrence of an Event of
Bankruptcy - Post-Transition Date. After the occurrence of an Event of
Bankruptcy with respect to Republic or any Lessee either (x) on or after the
Transition Date or (y) prior to the Transition Date if no Operating Lease Asset
Amount Deficiency existed (calculated as of such date as if such date were on or
after the Transition Date) as of the date of the occurrence of such Event of
Bankruptcy, the Servicer will direct the Trustee in writing to allocate, prior
to 12:00 noon (New York City time) on any Series 1999-1 Deposit Date, all
payments on the Series 1999-1 Interest Rate Cap and all Collections that are
attributable to payments under the Operating Leases, the proceeds of Vehicles
leased under the Operating Vehicles (as of the applicable Disposition Date) or
the proceeds of Eligible Receivables owned by the Leasing Companies and
refinanced under the Leasing Company Indentures that are deposited into the
Collection Account as set forth below:
(i) allocate to the Series 1999-1 Collection Account
an amount equal to the sum of (A) the Series 1999-1 Operating Lease
Percentage as of the date of the occurrence of such Event of Bankruptcy
of the aggregate amount of Interest Collections attributable to
payments under the Operating Leases and (B) any amounts received by the
Trustee in respect of the Series 1999-1 Interest Rate Cap. All such
amounts allocated to the Series 1999-1 Collection Account shall be
further allocated to the Series 1999-1 Accrued Interest Account; and
(ii) allocate to the Series 1999-1 Collection Account
an amount equal to the Series 1999-1 Operating Lease Percentage as of
the date of the occurrence of such Event of Bankruptcy of the aggregate
amount of Principal Collections attributable to payments under the
Operating Leases, the proceeds of Vehicles leased under the Operating
Leases (as of the applicable Disposition Date) or the proceeds of
Eligible Receivables owned by the Leasing Companies and refinanced
under the Leasing Company Indentures, which amount shall be used to
make principal payments in respect of the Class A-1 Notes, the Class
A-2 Notes and the Class A-3 Notes, ratably, without preference or
priority of any kind, until the Series 1999-1 Invested Amount is paid
in full.
After the occurrence of an Event of Bankruptcy with respect to Republic or any
Lessee on or
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after the Transition Date or prior to the Transition Date if no Operating Lease
Asset Amount Deficiency existed as of such date, the Servicer will direct the
Trustee in writing to allocate all Collections attributable to payments under
the Financing Leases or the proceeds of Vehicles leased under the Financing
Leases (as of the applicable Disposition Date) or Eligible Receivables owned by
the Lessees and refinanced under the Financing Leases in accordance with the
provisions of the Indenture.
(e) Allocations of Collections after the Occurrence of an Event of
Bankruptcy-Pre-Transition Date. After the occurrence of an Event of Bankruptcy
with respect to Republic or any Lessee on any date prior to the Transition Date
if an Operating Lease Asset Amount Deficiency existed (calculated as of such
date as if such date were on or after the Transition Date) as of the date of the
occurrence of such Event of Bankruptcy, the Servicer will direct the Trustee in
writing to allocate, prior to 12:00 noon (New York City time) on any Series
1999-1 Deposit Date, all amounts deposited into the Collection Account as set
forth below:
(i) allocate to the Series 1999-1 Collection Account
an amount equal to the sum of (x) the Series 1999-1 Operating Lease
Percentage as of the date of the occurrence of such Event of Bankruptcy
of the aggregate amount of Interest Collections attributable to
payments under the Operating Leases, (y) the Series 1999-1 Transitional
Bankruptcy Percentage of the aggregate amount of Interest Collections
attributable to payments under the Financing Leases and (z) any amounts
received by the Trustee in respect of the Series 1999-1 Interest Rate
Cap. All such amounts allocated to the Series 1999-1 Collection Account
shall be further allocated to the Series 1999-1 Accrued Interest
Account; and
(ii) allocate to the Series 1999-1 Collection Account
an amount equal to the sum of (x) the Series 1999-1 Operating Lease
Percentage as of the date of the occurrence of such Event of Bankruptcy
of the aggregate amount of Principal Collections attributable to
payments under the Operating Leases, the proceeds of Vehicles leased
under the Operating Leases (as of the applicable Disposition Date) or
the proceeds of Eligible Receivables owned by the Leasing Companies and
refinanced under the Leasing Company Indentures and (y) the Series
1999-1 Transitional Bankruptcy Percentage of the aggregate amount of
Principal Collections attributable to payments under the Financing
Leases or the proceeds of Vehicles leased under the Financing Leases
(as of the applicable Disposition Date) or Eligible Receivables owned
by the Lessees and refinanced under the Financing Leases, which amount
shall be used to make principal payments in respect of the Class A-1
Notes, the Class A-2 Notes and the Class A-3 Notes, ratably, without
preference or priority of any kind, until the Series 1999-1 Invested
Amount is paid in full.
(f) Series 1999-1 Excess Collection Account. Amounts allocated
to the Series
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1999-1 Excess Collection Account on any Series 1999-1 Deposit Date will be (w)
first, deposited in the Series 1999-1 Reserve Account in an amount up to the
excess, if any, of the Series 1999-1 Required Reserve Account Amount for such
date over the Series 1999-1 Available Reserve Account Amount for such date, (x)
second, used to pay the principal amount of other Series of Notes that are then
required to be paid or, at the option of ARG, to pay the principal amount of
other Series of Notes that may be paid under the Indenture, in each case, only
to the extent that no Series 1999-1 Enhancement Deficiency or other Amortization
Event would result therefrom and (y) third, any remaining funds may be released
to ARG and used to acquire Leasing Company Notes or to fund increases in the
principal amount of the Leasing Company Notes to the extent the Leasing
Companies have requested increases thereof or for any other purpose, in each
case, only to the extent that no Series 1999-1 Enhancement Deficiency or other
Amortization Event would result therefrom. Notwithstanding the foregoing, upon
the occurrence of an Amortization Event, all funds allocated to the Series
1999-1 Excess Collection Account will be allocated as Principal Collections by
the Trustee to the Series 1999-1 Collection Account and applied to reduce the
Series 1999-1 Invested Amount on the immediately succeeding Distribution Date.
Section 2.3 Distribution Dates.
(a) Determination Dates. On each Determination Date, as provided in
Section 2.3(b) below, the Servicer shall instruct the Trustee in writing to
withdraw, and on the following Distribution Date the Trustee, acting in
accordance with such instructions, shall withdraw the amounts required to be
withdrawn from the Series 1999-1 Accrued Interest Account pursuant to Sections
2.3(b), and (h) below in respect of all funds available from Interest
Collections processed since the preceding Distribution Date and allocated to the
Series 1999-1 Noteholders.
(b) Note Interest with respect to the Series 1999-1 Notes and Surety
Provider Fee. On each Determination Date, the Servicer shall instruct the
Trustee and the Paying Agent in writing as to the amount to be withdrawn and
paid pursuant to Section 2.4 of this Series Supplement from the Series 1999-1
Accrued Interest Account to the extent funds are anticipated to be available
from Interest Collections allocable to the Series 1999-1 Notes processed from
but not including the preceding Distribution Date through the succeeding
Distribution Date in respect of (x) first, an amount equal to the Series 1999-1
Monthly Interest for the Series 1999-1 Interest Period ending on the day
preceding such succeeding Distribution Date, (y) second, an amount equal to the
amount of any unpaid Deficiency Amounts, as of the preceding Distribution Date
(together with any accrued interest on such Deficiency Amounts) and (z) third,
an amount equal to the Surety Provider Fee for such Series 1999-1 Interest
Period plus any Surety Provider Reimbursement Amounts then due and owing. On the
following Distribution Date, the Trustee shall withdraw the amounts described in
the first sentence of this Section 2.3(b) from the Series 1999-1 Accrued
Interest Account and deposit such amounts in the Series 1999-1 Distribution
Account.
(c) Lease Payment Deficit Notice. On or before 10:00 a.m. (New York
City time) on each Distribution Date, the Servicer shall notify the Trustee of
the amount of any Series
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1999-1 Lease Payment Deficit, such notification to be in the form of Exhibit F
to this Series Supplement (each a "Lease Payment Deficit Notice").
(d) Withdrawals from Series 1999-1 Reserve Account. If the Servicer
determines on any Distribution Date that the amounts available from the Series
1999-1 Accrued Interest Account are insufficient to pay the sum of the amounts
described in clauses (x), (y) and (z) of Section 2.3(b) above on such
Distribution Date, the Servicer shall instruct the Trustee in writing to
withdraw from the Series 1999-1 Reserve Account and deposit in the Series 1999-1
Distribution Account on such Distribution Date an amount equal to the lesser of
the Series 1999-1 Available Reserve Account Amount and such insufficiency. The
Trustee shall withdraw such amount from the Series 1999-1 Reserve Account and
deposit such amount in the Series 1999-1 Distribution Account.
(e) Draws on Series 1999-1 Letter of Credit Prior to a Series 1999-1
Rapid Amortization Period. If the Servicer determines on any Distribution Date
prior to the commencement of the Series 1999-1 Rapid Amortization Period that
the sum of the amounts available from the Series 1999-1 Accrued Interest Account
plus the amount, if any, to be withdrawn from the Series 1999-1 Reserve Account
pursuant to Section 2.3(d) above is insufficient to pay the sum of the amounts
described in clauses (x), (y) and (z) of Section 2.3(b) above on such
Distribution Date, the Servicer shall instruct the Trustee in writing to draw on
the Series 1999-1 Letter of Credit and, upon receipt of such notice by the
Trustee on or prior to 11:00 a.m. (New York City time) on such Distribution
Date, the Trustee shall, by 12:00 noon (New York City time) on such Distribution
Date draw an amount equal to the least of (i) such insufficiency, (ii) the
Series 1999-1 Lease Payment Deficit on such Distribution Date and (iii) the
Series 1999-1 Letter of Credit Liquidity Amount on the Series 1999-1 Letters of
Credit by presenting to each Series 1999-1 Letter of Credit Provider a draft
accompanied by a Certificate of Lease Deficit Demand and shall cause the Lease
Deficit Disbursement to be deposited in the Series 1999-1 Distribution Account
on such Distribution Date; provided, however that if the Series 1999-1 Cash
Collateral Account has been established and funded, the Trustee shall withdraw
from the Series 1999-1 Cash Collateral Account and deposit in the Series 1999-1
Distribution Account an amount equal to the lesser of (x) the Series 1999-1 Cash
Collateral Percentage on such Distribution Date of the lesser of such
insufficiency and the Series 1999-1 Lease Payment Deficit and (y) the Series
1999-1 Available Cash Collateral Account Amount on such Distribution Date and
draw an amount equal to the remainder of such amount on the Series 1999-1
Letters of Credit.
(f) Draws on Series 1999-1 Letter of Credit During a Series 1999-1
Rapid Amortization Period. If the Servicer determines on any Distribution Date
during the Series 1999-1 Rapid Amortization Period that there exists a Series
1999-1 Lease Payment Deficit, the Servicer shall instruct the Trustee in writing
to draw on the Series 1999-1 Letters of Credit and, upon receipt of such notice
by the Trustee on or prior to 11:00 a.m. (New York City time) on such
Distribution Date, the Trustee shall, by 12:00 noon (New York City time) on such
Distribution Date draw an amount equal to the lesser of (i) such Series 1999-1
Lease Payment Deficit and (ii) the Series 1999-1 Letter of Credit Liquidity
Amount on the Series 1999-1 Letters
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of Credit by presenting to each Series 1999-1 Letter of Credit Provider a draft
accompanied by a Certificate of Lease Deficit Demand and shall cause the Lease
Deficit Disbursement to be deposited in the Series 1999-1 Collection Account
such Distribution Date; provided, however that if the Series 1999-1 Cash
Collateral Account has been established and funded, the Trustee shall withdraw
from the Series 1999-1 Cash Collateral Account and deposit in the Series 1999-1
Collection Account an amount equal to the lesser of (x) the Series 1999-1 Cash
Collateral Percentage on such Distribution Date of the Series 1999-1 Lease
Payment Deficit and (y) the Series 1999-1 Available Cash Collateral Account
Amount on such Distribution Date and draw an amount equal to the remainder of
such amount on the Series 1999-1 Letters of Credit.
(g) Surety Bond. If the Servicer determines on any Distribution Date
that the sum of the amounts available from the Series 1999-1 Accrued Interest
Account plus the amount, if any, to be withdrawn from the Series 1999-1 Reserve
Account pursuant to Section 2.3(d) above plus the amount, if any, to be drawn
under the Series 1999-1 Letters of Credit pursuant to a 2.3(e) or (f) above is
insufficient to pay the Series 1999-1 Adjusted Monthly Interest for such
Distribution Date, the Servicer shall instruct the Trustee in writing to make a
demand on the Surety Bond and, upon receipt of such notice by the Trustee on or
prior to 11:00 a.m. (New York City time) on such Distribution Date, the Trustee
shall, by 12:00 noon (New York City time) on such Distribution Date, make a
demand on the Surety Bond in an amount equal to such insufficiency in accordance
with the terms thereof and shall cause the proceeds thereof to be deposited in
the Series 1999-1 Distribution Account. If the amounts described in this Section
2.3(g) are insufficient to pay Series 1999-1 Adjusted Monthly Interest for any
Distribution Date, payments of interest to the Series 1999-1 Noteholders will be
reduced on a pro rata basis by the amount of such deficiency. The aggregate
amount, if any, of such deficiency on any Distribution Date shall be referred to
as the "Deficiency Amount" and the portion thereof allocable to each Class of
Series 1999-1 Notes shall be referred to as the "Class A-1 Deficiency Amount",
the "Class A-2 Deficiency Amount" and the "Class A-3 Deficiency Amount",
respectively. Interest shall accrue on the Deficiency Amount for each Class of
Series 1999-1 Notes at the applicable Series 1999-1 Note Rate. If the Deficiency
Amount (together with interest thereon) is not paid in full within five (5)
Business Days, an Amortization Event with respect to the Series 1999-1 Notes
shall occur in accordance with clause (a) of Article III.
(h) Balance. On each Distribution Date, the Servicer shall instruct
the Trustee and the Paying Agent in writing to pay the balance in the Series
1999-1 Distribution Account (after making the payments required in Section
2.3(b) above), if any, of amounts received by the Trustee in respect of the
Series 1999-1 Interest Rate Cap, the Interest Collections allocated to the
Series 1999-1 Noteholder since the preceding Distribution Date and amounts
withdrawn from the Series 1999-1 Reserve Account pursuant to Section 2.3(d)
above as follows: (i) first, to the Surety Provider, in an amount equal to (x)
the Surety Provider Fee for the related Series 1999-1 Interest Period and,
without duplication, (y) any Surety Provider Reimbursement Amounts then
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due and owing, (ii) second, to the Trustee, in an amount equal to the Series
1999-1 Percentage as of the immediately preceding Distribution Date of the
Trustee's fees for the Series 1999-1 Interest Period ending on such Distribution
Date, (iii) third, to pay any Carrying Charges (other than Carrying Charges
provided for above) to the Persons to whom such amounts are owed, in an amount
equal to the Series 1999-1 Percentage as of the immediately preceding
Distribution Date of such Carrying Charges (other than Carrying Charges provided
for above) for such Series 1999-1 Interest Period and (iv) fourth, the balance,
if any, shall be withdrawn by the Trustee from the Series 1999-1 Collection
Account and deposited in the Series 1999-1 Excess Collection Account.
Section 2.4 Payment of Note Interest.
On each Distribution Date, the Paying Agent shall, in accordance
with Section 6.1 of the Base Indenture, pay to the Series 1999-1 Noteholders
from the Series 1999-1 Distribution Account the amount deposited in the Series
1999-1 Distribution Account for the payment of interest pursuant to Section
2.3(b) of this Series Supplement.
Section 2.5 Payment of Note Principal.
(a) Monthly Payments During Controlled Amortization Period or Rapid
Amortization Period. Commencing on the second Determination Date during the
Class A-1/A-2 Controlled Amortization Period or the Class A-3 Controlled
Amortization Period, as the case may be, or the first Determination Date after
the commencement of the Series 1999-1 Rapid Amortization Period and on each
Determination Date thereafter, the Servicer shall instruct the Trustee and the
Paying Agent in writing as to the amount allocated to the Series 1999-1 Notes
during the Related Month pursuant to Section 2.2(b)(ii), (c)(ii), (d)(ii) or
(e)(ii), as the case may be, of this Series Supplement and, as applicable,
allocated pursuant to the last sentence of Section 2.2(f) of this Series
Supplement. On the Distribution Date following each such Determination Date, the
Trustee shall withdraw the amount allocated to the Series 1999-1 Notes during
the Related Month pursuant to Section 2.2 (b) (ii), (c)(ii), (d)(ii) or (e)(ii),
as the case may be, of this Series Supplement from the Series 1999-1 Collection
Account and, as applicable, withdraw the amount allocated pursuant to the last
sentence of Section 2.2(f) of this Series Supplement from the Series 1999-1
Excess Collection Account and deposit such amounts in the Series 1999-1
Distribution Account, to be paid to the holders of the Series 1999-1 Notes.
(b) Final Distribution Dates. If the amount to be deposited in the
Series 1999-1 Distribution Account in accordance with Section 2.5(a) of this
Series Supplement with respect to the Final Distribution Date with respect to
any Class of Series 1999-1 Notes is less than the Class A-1 Outstanding
Principal Amount, the Class A-2 Outstanding Principal Amount or the Class A-3
Outstanding Principal Amount, as the case may be, prior to 10:00 a.m. (New York
City time) on the second Business Day prior to such Final Distribution Date, the
Servicer shall instruct the Trustee to withdraw from the Series 1999-1 Reserve
Account, an amount equal to the lesser of the Series 1999-1 Available Reserve
Account Amount and such insufficiency and deposit it in the Series 1999-1
Distribution Account on such Final Distribution Date. The Trustee shall
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withdraw such amount from the Series 1999-1 Reserve Account and deposit such
amount in the Series 1999-1 Distribution Account on or prior to such Final
Distribution Date. If the Series 1999-1 Available Reserve Account Amount is less
than such insufficiency, prior to 10:00 a.m. (New York City time) on the second
Business Day prior to such Final Distribution Date, the Servicer shall instruct
the Trustee in writing to make a demand (a "Demand Notice") on Republic for
payment under the Series 1999-1 Demand Note in an amount equal to the lesser of
(i) the outstanding principal amount of the Series 1999-1 Demand Note and (ii)
such remaining insufficiency. The Trustee shall, prior to 12:00 noon (New York
City time) on the second day preceding such Final Distribution Date, deliver
such Demand Notice to Republic; provided, however that if an Event of Bankruptcy
(or the occurrence of an event described in clause (a) of the definition
thereof, without the lapse of a period of 60 consecutive days) with respect to
Republic shall have occurred and be continuing, the Trustee shall not be
required to deliver such Demand Notice to Republic. The Trustee shall cause the
proceeds of any demand on the Series 1999-1 Demand Note to be deposited into the
Series 1999-1 Distribution Account. In the event that either (x) on or prior to
10:00 a.m. (New York City time) on the Business Day immediately preceding any
Distribution Date next succeeding any date on which a Demand Notice has been
transmitted by the Trustee to Republic pursuant to this Section 2.5(b), Republic
shall have failed to pay to the Trustee or deposit into the Series 1999-1
Distribution Account the amount specified in such Demand Notice in whole or in
part or (y) due to the occurrence of an Event of Bankruptcy (or the occurrence
of an event described in clause (a) of the definition thereof, without the lapse
of a period of 60 consecutive days) with respect to Republic, the Trustee shall
not have delivered such Demand Notice to Republic on the second Business Day
preceding a Final Distribution Date, the Trustee shall draw on the Series 1999-1
Letters of Credit by 12:00 noon (New York City time) on such Business Day an
amount equal to the lesser of (a) the amount that Republic failed to pay under
the Series 1999-1 Demand Note (or, the amount that the Trustee failed to demand
for payment thereunder) and (b) the Series 1999-1 Letter of Credit Amount on
such Business Day by presenting to each Series 1999-1 Letter of Credit Provider
a draft accompanied by a Certificate of Unpaid Demand Note Demand; provided,
however that if the Series 1999-1 Cash Collateral Account has been established
and funded, the Trustee shall withdraw from the Series 1999-1 Cash Collateral
Account and deposit in the Series 1999-1 Distribution Account an amount equal to
the lesser of (x) the Series 1999-1 Cash Collateral Percentage on such Business
Day of the amount that Republic failed to pay under the Series 1999-1 Demand
Note (or, the amount that the Trustee failed to demand for payment thereunder)
and (y) the Series 1999-1 Available Cash Collateral Account Amount on such
Business Day and draw an amount equal to the remainder of the amount that
Republic failed to pay under the Series 1999-1 Demand Note (or, the amount that
the Trustee failed to demand for payment thereunder) on the Series 1999-1
Letters of Credit. The Trustee shall deposit into, or cause the deposit of the
proceeds of any draw on the Series 1999-1 Letters of Credit and the proceeds of
any withdrawal from the Series 1999-1 Cash Collateral Account to be deposited
in, the Series 1999-1 Distribution Account. If, after giving effect to the
deposit into the Series 1999-1 Distribution Account of the amount to be
deposited in accordance with Section 2.5(a) of this Series Supplement and the
amounts described in the preceding three sentences, the amount
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to be deposited in the Series 1999-1 Distribution Account with respect to the
Final Distribution Date with respect to any Class of Series 1999-1 Notes is or
will be less than the Class A-1 Outstanding Principal Amount, the Class A-2
Outstanding Principal Amount or the Class A-3 Outstanding Principal Amount, as
the case may be, the Trustee shall make a demand on the Surety Bond by 12:00
p.m. (New York City time) on the second Business Day preceding such Distribution
Date in an amount equal to such insufficiency in accordance with the terms
thereof and shall cause the proceeds thereof to be deposited in the Series
1999-1 Distribution Account. The entire principal amount of all Outstanding
Class A-1 Notes shall be due and payable on the Class A-1 Final Distribution
Date. The entire principal amount of all Outstanding Class A-2 Notes shall be
due and payable on the Class A-2 Final Distribution Date. The entire principal
amount of all Outstanding Class A-3 Notes shall be due and payable on the Class
A-3 Final Distribution Date.
(c) Principal Deficit Amount. If, on any Determination Date, the
Servicer determines that the Principal Deficit Amount with respect to the next
succeeding Distribution Date will be greater than zero, prior to 10:00 a.m. (New
York City time) on the second Business Day prior to such Distribution Date, the
Servicer shall instruct the Trustee in writing to withdraw from the Series
1999-1 Reserve Account and deposit in the Series 1999-1 Distribution Account on
the following Distribution Date an amount equal to the lesser of (i) the Series
1999-1 Available Reserve Account Amount and (ii) the Principal Deficit Amount.
The Trustee shall withdraw such amount from the Series 1999-1 Reserve Account
and deposit such amount in the Series 1999-1 Distribution Account on or prior to
such Distribution Date. If the Series 1999-1 Available Reserve Account Amount is
less than the Principal Deficit Amount, prior to 10:00 a.m. (New York City time)
on the second Business Day prior to such Distribution Date, the Servicer shall
instruct the Trustee in writing to deliver a Demand Notice to Republic demanding
payment of an amount equal to the lesser of (A) the outstanding principal amount
of the Series 1999-1 Demand Note and (B) the remaining Principal Deficit Amount.
The Trustee shall, prior to 12:00 noon (New York City time) on the second
Business Day preceding such Distribution Date, deliver such Demand Notice to
Republic; provided, however that if an Event of Bankruptcy (or the occurrence of
an event described in clause (a) of the definition thereof, without the lapse of
a period of 60 consecutive days) with respect to Republic shall have occurred
and be continuing, the Trustee shall not be required to deliver such Demand
Notice to Republic. The Trustee shall cause the proceeds of any demand on the
Series 1999-1 Demand Note to be deposited into the Series 1999-1 Distribution
Account. In the event that either (x) on or prior to 10:00 a.m. (New York City
time) on the Business Day prior to such Distribution Date, Republic shall have
failed to pay to the Trustee or deposit in the Series 1999-1 Distribution
Account the amount specified in such Demand Notice in whole or in part or (y)
due to the occurrence of an Event of Bankruptcy (or the occurrence of an event
described in clause (a) of the definition thereof, without the lapse of a period
of 60 consecutive days) with respect to Republic, the Trustee shall not have
delivered such Demand Notice to Republic on the second Business Day preceding
such Distribution Date, the Trustee shall draw on the Series 1999-1 Letters of
Credit
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an amount equal to the lesser of (i) Series 1999-1 Letter of Credit Amount and
(ii) the amount that Republic failed to pay under the Series 1999-1 Demand Note
(or, the amount that the Trustee failed to demand for payment thereunder) by
presenting to each Series 1999-1 Letter of Credit Provider a draft accompanied
by a Certificate of Unpaid Demand Note Demand; provided, however that if the
Series 1999-1 Cash Collateral Account has been established and funded, the
Trustee shall withdraw from the Series 1999-1 Cash Collateral Account and
deposit in the Series 1999-1 Distribution Account an amount equal to the lesser
of (x) the Series 1999-1 Cash Collateral Percentage on such Business Day of the
amount that Republic failed to pay under the Series 1999-1 Demand Note (or, the
amount that the Trustee failed to demand for payment thereunder) and (y) the
Series 1999-1 Available Cash Collateral Account Amount on such Business Day and
draw an amount equal to the remainder of the amount that Republic failed to pay
under the Series 1999-1 Demand Note (or, the amount that the Trustee failed to
demand for payment thereunder) on the Series 1999-1 Letters of Credit. The
Trustee shall deposit into, or cause the deposit of the proceeds of any draw on
the Series 1999-1 Letters of Credit and the proceeds of any withdrawal from the
Series 1999-1 Cash Collateral Account to be deposited in, the Series 1999-1
Distribution Account. If the amount of the Series 1999-1 Demand Note or the
Series 1999-1 Letter of Credit Amount is less than the remaining Principal
Deficit Amount, the Trustee shall make a demand on the Surety Bond by 12:00 noon
(New York City time) on the second Business Day preceding such Distribution Date
in an amount equal to the Insured Principal Deficit Amount, if any, in
accordance with the terms thereof and shall cause the proceeds thereof to be
deposited in the Series 1999-1 Distribution Account.
(d) Distribution. On each Distribution Date occurring on or after
the date a withdrawal is made from the Series 1999-1 Collection Account pursuant
to Section 2.5(a) of this Series Supplement or amounts are deposited in the
Series 1999-1 Distribution Account pursuant to Section 2.5(b) or (c) above, the
Paying Agent shall, in accordance with Section 6.1 of the Base Indenture, pay
pro rata to each Class A-1 Noteholder, Class A-2 Noteholder or Class A-3
Noteholder, as applicable, from the Series 1999-1 Distribution Account the
amount deposited therein pursuant to Section 2.5(a), (b) or (c) of this Series
Supplement, to the extent necessary to pay the Class A-1/A-2 Controlled
Amortization Amount or the Class A-3 Controlled Amortization Amount during the
Class A-1/A-2 Controlled Amortization Period or the Class A-3 Controlled
Amortization Period, respectively, or to the extent necessary to pay the Class
A-1 Invested Amount, the Class A-2 Invested Amount and the Class A-3 Invested
Amount during the Series 1999-1 Rapid Amortization Period.
Section 2.6 Servicer's Failure to Instruct the Trustee to Make a
Deposit or Payment.
If the Servicer fails to give notice or instructions to make any
payment from or deposit into the Collection Account required to be given by the
Servicer, at the time specified in the Indenture or any other Related Document
(including applicable grace periods), the Trustee shall make such payment or
deposit into or from the Collection Account without such notice or instruction
from the Servicer, provided that the Servicer, upon request of the Trustee,
promptly
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provides the Trustee with all information necessary to allow the Trustee to make
such a payment or deposit. When any payment or deposit hereunder or under any
other Related Document is required to be made by the Trustee at or prior to a
specified time, the Servicer shall deliver any applicable written instructions
with respect thereto reasonably in advance of such specified time.
Section 2.7 Series 1999-1 Reserve Account.
(a) Establishment of Series 1999-1 Reserve Account. ARG shall
establish and maintain in the name of the Trustee for the benefit of the Series
1999-1 Noteholders and the Surety Provider, or cause to be established and
maintained, an account (the "Series 1999-1 Reserve Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 1999-1 Noteholders and the Surety Provider. The Series
1999-1 Reserve 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 1999-1 Reserve Account; provided
that, if at any time such Qualified Institution is no longer a Qualified
Institution or the credit rating of any securities issued by such depositary
institution or trust company shall be reduced to below BBB- by S&P or Baa3 by
Moody's, then ARG shall, within 30 days of such reduction, establish a new
Series 1999-1 Reserve Account with a new Qualified Institution or a new
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 1999-1 Reserve Account. If a new Series 1999-1
Reserve Account is established, ARG shall instruct the Trustee in writing to
transfer all cash and investments from the non-qualifying Series 1999-1 Reserve
Account into the new Series 1999-1 Reserve Account. Initially, the Series 1999-1
Reserve Account will be established with The Bank of New York.
(b) Administration of the Series 1999-1 Reserve Account. ARG may
instruct (by standing instructions or otherwise) the institution maintaining the
Series 1999-1 Reserve Account to invest funds on deposit in the Series 1999-1
Reserve Account from time to time 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 1999-1 Reserve Account is
held with the Paying Agent, then such investment may mature on such Distribution
Date so long as such funds shall be available for withdrawal on or prior to such
Distribution Date. All such Permitted Investments will be credited to the Series
1999-1 Reserve Account and any such Permitted Investments that constitute (i)
Physical Property (and that is not either a United States Security Entitlement
or a Security Entitlement) shall be delivered to the Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held by the Trustee
pending maturity or disposition; (ii) United States Security Entitlements or
Security Entitlements shall be Controlled by the Trustee pending maturity or
disposition; and (iii) Uncertificated Securities (and not United States Security
Entitlements) shall be delivered to the Trustee in accordance with paragraph (b)
of the definition of "Delivery" and shall be maintained by the Trustee pending
maturity or disposition. The Trustee shall, at the expense of ARG, take such
action as is required to maintain the Trustee's security interest in the
Permitted Investments credited to the Series
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51
1999-1 Reserve Account. ARG shall not direct the Trustee to dispose of (or
permit the disposal of) any Permitted Investments prior to the maturity thereof
to the extent such disposal would result in a loss of principal of such
Permitted Investment. In the absence of written investment instructions
hereunder, funds on deposit in the Series 1999-1 Reserve Account shall remain
uninvested.
(c) Earnings from Series 1999-1 Reserve Account. All interest and
earnings (net of losses and investment expenses) paid on funds on deposit in the
Series 1999-1 Reserve Account shall be deemed to be on deposit therein and
available for distribution.
(d) Series 1999-1 Reserve Account Constitutes Additional Collateral
for Series 1999-1 Notes. In order to secure and provide for the repayment and
payment of the ARG Obligations with respect to the Series 1999-1 Notes, ARG
hereby grants a security interest in and assigns, pledges, grants, transfers and
sets over to the Trustee, for the benefit of the Series 1999-1 Noteholders and
the Surety Provider, all of ARG's right, title and interest in and to the
following (whether now or hereafter existing or acquired): (i) the Series 1999-1
Reserve Account, including any security entitlement thereto; (ii) all funds on
deposit therein from time to time; (iii) all certificates and instruments, if
any, representing or evidencing any or all of the Series 1999-1 Reserve Account
or the funds on deposit therein from time to time; (iv) all investments made at
any time and from time to time with monies in the Series 1999-1 Reserve Account,
whether constituting securities, instruments, general intangibles, investment
property, financial assets or other property; (v) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for the Series 1999-1 Reserve
Account, the funds on deposit therein from time to time or the investments made
with such funds; and (vi) all proceeds of any and all of the foregoing,
including, without limitation, cash (the items in the foregoing clauses (i)
through (vi) are referred to, collectively, as the "Series 1999-1 Reserve
Account Collateral"). The Trustee, for the benefit of the Series 1999-1
Noteholders and the Surety Provider, shall possess all right, title and interest
in all funds on deposit from time to time in the Series 1999-1 Reserve Account
and in all proceeds thereof, and shall be the only person authorized to
originate entitlement orders in respect of the Series 1999-1 Reserve Account.
The Series 1999-1 Reserve Account Collateral shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1999-1 Noteholders and
the Surety Provider.
(e) Series 1999-1 Reserve Account Surplus. In the event that the
Series 1999-1 Reserve Account Surplus on any Distribution Date is greater than
zero, the Trustee, acting in accordance with the written instructions of the
Servicer, shall withdraw from the Series 1999-1 Reserve Account an amount equal
to the Series 1999-1 Reserve Account Surplus and shall pay such amount to ARG.
(f) Termination of Series 1999-1 Reserve Account. Upon the
termination of this
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52
Series Supplement in accordance with its terms, the Trustee, acting in
accordance with the written instructions of the Servicer, after the prior
payment of all amounts owing to the Series 1999-1 Noteholders and to the Surety
Provider and payable from the Series 1999-1 Reserve Account as provided herein,
shall withdraw from the Series 1999-1 Reserve Account all amounts on deposit
therein for payment to ARG.
Section 2.8 Series 1999-1 Letters of Credit and Series 1999-1 Cash
Collateral Account.
(a) Series 1999-1 Letters of Credit and Series 1999-1 Cash
Collateral Account Constitutes Additional Collateral for Series 1999-1 Notes. In
order to secure and provide for the repayment and payment of the ARG Obligations
with respect to the Series 1999-1 Notes, ARG hereby grants a security interest
in and assigns, pledges, grants, transfers and sets over to the Trustee, for the
benefit of the Series 1999-1 Noteholders and the Surety Provider, all of ARG's
right, title and interest in and to the following (whether now or hereafter
existing or acquired): (i) each Series 1999-1 Letter of Credit; (ii) the Series
1999-1 Cash Collateral Account, including any security entitlement thereto;
(iii) all funds on deposit in the Series 1999-1 Cash Collateral Account from
time to time; (iv) all certificates and instruments, if any, representing or
evidencing any or all of the Series 1999-1 Cash Collateral Account or the funds
on deposit therein from time to time; (v) all investments made at any time and
from time to time with monies in the Series 1999-1 Cash Collateral Account,
whether constituting securities, instruments, general intangibles, investment
property, financial assets or other property; (vi) all interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for the Series 1999-1 Cash
Collateral Account, the funds on deposit therein from time to time or the
investments made with such funds; and (vii) all proceeds of any and all of the
foregoing, including, without limitation, cash (the items in the foregoing
clauses (ii) through (vii) are referred to, collectively, as the "Series 1999-1
Cash Collateral Account Collateral"). The Trustee shall, for the benefit of the
Series 1999-1 Noteholders and the Surety Provider, possess all right, title and
interest in all funds on deposit from time to time in the Series 1999-1 Cash
Collateral Account and in all proceeds thereof, and shall be the only person
authorized to originate entitlement orders in respect of the Series 1999-1 Cash
Collateral Account. The Series 1999-1 Cash Collateral Account shall be under the
sole dominion and control of the Trustee for the benefit of the Series 1999-1
Noteholders and the Surety Provider.
(b) Series 1999-1 Letter of Credit Expiration Date. If prior to the
date which is ten (10) days prior to the then scheduled Series 1999-1 Letter of
Credit Expiration Date with respect to any Series 1999-1 Letter of Credit,
(i) there shall not have been obtained a substitute Series
1999-1 Letter of Credit from a Series 1999-1 Eligible Letter of Credit
Provider, and
(ii) on such date the Series 1999-1 Enhancement Amount,
excluding the available amount under such Series 1999-1 Letter of Credit,
would be less than the Series 1999-1 Required Enhancement Amount or the
Series
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1999-1 Liquidity Amount, excluding the available amount under such
Series 1999-1 Letter of Credit, would be less than the Series 1999-1
Required Liquidity Amount;
then the Servicer shall notify the Trustee in writing no later than two Business
Days prior to such Series 1999-1 Letter of Credit Expiration Date of (x) the
greater of (A) the excess, if any, of the Series 1999-1 Required Enhancement
Amount over the Series 1999-1 Enhancement Amount, excluding the available amount
under such expiring Series 1999-1 Letter of Credit, on such date, and (B) the
excess, if any, of the Series 1999-1 Required Liquidity Amount over the Series
1999-1 Liquidity Amount, excluding the available amount under such expiring
Series 1999-1 Letter of Credit, on such date, and (y) the amount available to be
drawn on such expiring Series 1999-1 Letter of Credit on such date. Upon receipt
of such notice by the Trustee on or prior to 10:00 a.m. (New York City time) on
any Business Day, the Trustee 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 such Series 1999-1 Letter of Credit by presenting a draft
accompanied by a Certificate of Termination Demand and shall cause the
Termination Disbursement to be deposited in the Series 1999-1 Cash Collateral
Account.
(c) Series 1999-1 Letter of Credit Providers. The Servicer shall
notify the Trustee and the Surety Provider in writing within one Business Day of
becoming aware that the long-term debt credit rating of any Series 1999-1 Letter
of Credit Provider has fallen below "A+" as determined by Standard & Poor's or
"A1" as determined by Moody's. At such time the Servicer shall also notify the
Trustee of (i) the greater of (A) the excess, if any, of the Series 1999-1
Required Enhancement Amount over the Series 1999-1 Enhancement Amount, excluding
the available amount under the Series 1999-1 Letter of Credit issued by such
Series 1999-1 Letter of Credit Provider, on such date, and (B) the excess, if
any, of the Series 1999-1 Required Liquidity Amount over the Series 1999-1
Liquidity Amount, excluding the available amount under such Series 1999-1 Letter
of Credit, on such date, and (ii) the amount available to be drawn on such
Series 1999-1 Letter of Credit on such date. Upon receipt of such notice by the
Trustee on or prior to 10:00 a.m. (New York City time) on any Business Day, the
Trustee 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 on such Series 1999-1 Letter of Credit in an amount equal to the lesser of
the amount in clause (i) or clause (ii) of the immediately preceding sentence on
such Business Day by presenting a draft accompanied by a Certificate of
Termination Demand and shall cause the Termination Disbursement to be deposited
in the Series 1999-1 Cash Collateral Account.
(d) Termination Date Demands on the Series 1999-1 Letters of Credit.
Prior to 10:00 a.m. (New York City time) on the second Business Day prior to the
Series 1999-1 Letter of Credit Termination Date, the Servicer shall determine
the Series 1999-1 Demand Note Payment Amount, if any, as of the Series 1999-1
Letter of Credit Termination Date and, if the Series
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1999-1 Demand Note Payment Amount is greater than zero, instruct the Trustee in
writing to draw on the Series 1999-1 Letters of Credit. Upon receipt of any such
notice by the Trustee on or prior to 11:00 a.m. (New York City time) on a
Business Day, the Trustee shall, by 12:00 noon (New York City time) on such
Business Day draw an amount equal to the lesser of (i) the Series 1999-1 Demand
Note Payment Amount and (ii) the Series 1999-1 Letter of Credit Liquidity Amount
on the Series 1999-1 Letters of Credit by presenting to each Series 1999-1
Letter of Credit Provider a draft accompanied by a Certificate of Termination
Date Demand and shall cause the Termination Date Disbursement to be deposited in
the Series 1999-1 Cash Collateral Account; provided, however that if the Series
1999-1 Cash Collateral Account has been established and funded, the Trustee
shall draw an amount equal to the product of 100% minus the Series 1999-1 Cash
Collateral Percentage on such Business Day on the Series 1999-1 Letters of
Credit.
(e) Draws on the Series 1999-1 Letters of Credit. If there is more
than one Series 1999-1 Letter of Credit on the date of any draw on the Series
1999-1 Letters of Credit pursuant to the terms of this Series Supplement, the
Servicer shall instruct the Trustee, in writing, to draw on each Series 1999-1
Letter of Credit in an amount equal to the Pro Rata Share of the Series 1999-1
Letter of Credit Provider issuing such Series 1999-1 Letter of Credit of the
amount of such draw on the Series 1999-1 Letters of Credit.
(f) Establishment of Series 1999-1 Cash Collateral Account. On or
prior to the date of any drawing under a Series 1999-1 Letter of Credit pursuant
to Section 2.8(b), (c) or (d) above, ARG shall establish and maintain in the
name of the Trustee for the benefit of the Series 1999-1 Noteholders and the
Surety Provider, or cause to be established and maintained, an account (the
"Series 1999-1 Cash Collateral Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1999-1 Noteholders and the Surety Provider. The Series 1999-1 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 1999-1 Cash Collateral Account;
provided that, if at any time such Qualified Institution is no longer a
Qualified Institution or the credit rating of any securities issued by such
depositary institution or trust company shall be reduced to below BBB- by S&P or
Baa3 by Moody's, then ARG shall, within 30 days of such reduction, establish a
new Series 1999-1 Cash Collateral Account with a new Qualified Institution or a
new 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 1999-1 Cash Collateral Account. If a new
Series 1999-1 Cash Collateral Account is established, ARG shall instruct the
Trustee in writing to transfer all cash and investments from the non-qualifying
Series 1999-1 Cash Collateral Account into the new Series 1999-1 Cash Collateral
Account.
(g) Administration of the Series 1999-1 Cash Collateral Account. ARG
may
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instruct (by standing instructions or otherwise) the institution maintaining
the Series 1999-1 Cash Collateral Account to invest funds on deposit in the
Series 1999-1 Cash Collateral Account from time to time 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
1999-1 Cash Collateral Account is held with the Paying Agent, in which case such
investment may mature on such Distribution Date so long as such funds shall be
available for withdrawal on or prior to such Distribution Date. All such
Permitted Investments will be credited to the Series 1999-1 Cash Collateral
Account and any such Permitted Investments that constitute (i) Physical Property
(and that is not either a United States Security Entitlement or a Security
Entitlement) shall be delivered to the Trustee in accordance with paragraph (a)
of the definition of "Delivery" and shall be held by the Trustee pending
maturity or disposition; (ii) United States Security Entitlements or Security
Entitlements shall be Controlled by the Trustee pending maturity or disposition;
and (iii) Uncertificated Securities (and not United States Security
Entitlements) shall be delivered to the Trustee in accordance with paragraph (b)
of the definition of "Delivery" and shall be maintained by the Trustee pending
maturity or disposition. The Trustee shall, at the expense of ARG, take such
action as is required to maintain the Trustee's security interest in the
Permitted Investments credited to the Series 1999-1 Cash Collateral Account. ARG
shall not direct the Trustee to dispose of (or permit the disposal of) any
Permitted Investments prior to the maturity thereof to the extent such disposal
would result in a loss of principal of such Permitted Investment. In the absence
of written investment instructions hereunder, funds on deposit in the Series
1999-1 Cash Collateral Account shall remain uninvested.
(h) Earnings from Series 1999-1 Cash Collateral Account. All
interest and earnings (net of losses and investment expenses) paid on funds on
deposit in the Series 1999-1 Cash Collateral Account shall be deemed to be on
deposit therein and available for distribution.
(i) Series 1999-1 Cash Collateral Account Surplus. In the event that
the Series 1999-1 Cash Collateral Account Surplus on any Distribution Date (or,
after the Series 1999-1 Letter of Credit Termination Date, on any date) is
greater than zero, the Trustee, acting in accordance with the written
instructions of the Servicer, shall withdraw from the Series 1999-1 Cash
Collateral Account an amount equal to the Series 1999-1 Cash Collateral Account
Surplus and shall pay such amount: first, to the Series 1999-1 Letter of Credit
Providers for application in accordance with the provisions of the Series 1999-1
Reimbursement Agreement and, second, to ARG any remaining amount.
(j) Post-Series 1999-1 Letter of Credit Termination Date Withdrawals
from the Series 1999-1 Cash Collateral Account. If the Surety Provider notifies
the Trustee in writing that the Surety Provider shall have paid a Preference
Amount (as defined in the Surety Bond) under the Surety Bond, subject to the
satisfaction of the conditions set forth in the next succeeding sentence, the
Trustee shall withdraw from the Series 1999-1 Cash Collateral Account and pay to
the Surety Provider an amount equal to the lesser of (i) the Series 1999-1
Available Cash Collateral Account Amount on such date and (ii) such Preference
Amount. Prior to any withdrawal from the Series 1999-1 Cash Collateral Account
pursuant to this Section 2.8(j), the
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Trustee shall have received a certified copy of the order requiring the return
of such Preference Amount.
(k) Termination of Series 1999-1 Cash Collateral Account. Upon the
termination of this Series Supplement in accordance with its terms, the Trustee,
acting in accordance with the written instructions of the Servicer, after the
prior payment of all amounts owing to the Series 1999-1 Noteholders and to the
Surety Provider and payable from the Series 1999-1 Cash Collateral Account as
provided herein, shall withdraw from the Series 1999-1 Cash Collateral Account
all amounts on deposit therein (to the extent not withdrawn pursuant to Section
2.8(i) above) and shall pay such amounts: first, to the Series 1999-1 Letter of
Credit Providers for application in accordance with the provisions of the Series
1999-1 Reimbursement Agreement and, second, to ARG any remaining amount.
Section 2.9 Series 1999-1 Distribution Account.
(a) Establishment of Series 1999-1 Distribution Account. The Trustee
shall establish and maintain in the name of the Trustee for the benefit of the
Series 1999-1 Noteholders and the Surety Provider, or cause to be established
and maintained, an account (the "Series 1999-1 Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Series 1999-1 Noteholders and the Surety Provider. The Series
1999-1 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 1999-1
Distribution Account; provided that, if at any time such Qualified Institution
is no longer a Qualified Institution or the credit rating of any securities
issued by such depositary institution or trust company shall be reduced to below
BBB- by S&P or Baa3 by Moody's, then ARG shall, within 30 days of such
reduction, establish a new Series 1999-1 Distribution Account with a new
Qualified Institution or a new 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 1999-1
Distribution Account. If a new Series 1999-1 Distribution Account is
established, ARG shall instruct the Trustee in writing to transfer all cash and
investments from the non-qualifying Series 1999-1 Distribution Account into the
new Series 1999-1 Distribution Account. Initially, the Series 1999-1
Distribution Account will be established with The Bank of New York.
(b) Administration of the Series 1999-1 Distribution Account. ARG
may instruct (by standing instructions or otherwise) the institution maintaining
the Series 1999-1 Distribution Account to invest funds on deposit in the Series
1999-1 Distribution Account from time to time 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 1999-1
Distribution Account is held with the Paying Agent, in which case such
investment may mature on such Distribution Date so long as such funds shall be
available for withdrawal on or prior to such Distribution Date. All such
Permitted Investments will be credited to the Series 1999-1 Distribution Account
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and any such Permitted Investments that constitute (i) Physical Property (and
that is not either a United States Security Entitlement or a Security
Entitlement) shall be delivered to the Trustee in accordance with paragraph (a)
of the definition of "Delivery" and shall be held by the Trustee pending
maturity or disposition; (ii) United States Security Entitlements or Security
Entitlements shall be Controlled by the Trustee pending maturity or disposition;
and (iii) Uncertificated Securities (and not United States Security
Entitlements) shall be delivered to the Trustee in accordance with paragraph (b)
of the definition of "Delivery" and shall be maintained by the Trustee pending
maturity or disposition. The Trustee shall, at the expense of ARG, take such
action as is required to maintain the Trustee's security interest in the
Permitted Investments credited to the Series 1999-1 Distribution Account. ARG
shall not direct the Trustee to dispose of (or permit the disposal of) any
Permitted Investments prior to the maturity thereof to the extent such disposal
would result in a loss of principal of such Permitted Investment. In the absence
of written investment instructions hereunder, funds on deposit in the Series
1999-1 Distribution Account shall remain uninvested.
(c) Earnings from Series 1999-1 Distribution Account. On each
Distribution Date, all interest and earnings (net of losses and investment
expenses) paid on funds on deposit in the Series 1999-1 Distribution Account
shall be distributed to ARG.
(d) Series 1999-1 Distribution Account Constitutes Additional
Collateral for Series 1999-1 Notes. In order to secure and provide for the
repayment and payment of the ARG Obligations with respect to the Series 1999-1
Notes, ARG hereby grants a security interest in and assigns, pledges, grants,
transfers and sets over to the Trustee, for the benefit of the Series 1999-1
Noteholders and the Surety Provider, all of ARG's right, title and interest in
and to the following (whether now or hereafter existing or acquired): (i) the
Series 1999-1 Distribution Account, including any security entitlement thereto;
(ii) all funds on deposit in the Series 1999-1 Distribution Account from time to
time; (iii) all certificates and instruments, if any, representing or evidencing
any or all of the Series 1999-1 Distribution Account or the funds on deposit
therein from time to time; (iv) all investments made at any time and from time
to time with monies in the Series 1999-1 Distribution Account, whether
constituting securities, instruments, general intangibles, investment property,
financial assets or other property; (v) all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for the Series 1999-1
Distribution Account, the funds on deposit therein from time to time or the
investments made with such funds; and (vi) all proceeds of any and all of the
foregoing, including, without limitation, cash (the items in the foregoing
clauses (i) through (vii) are referred to, collectively, as the "Series 1999-1
Distribution Account Collateral"). The Trustee shall, for the benefit of the
Series 1999-1 Noteholders and the Surety Provider, possess all right, title and
interest in all funds on deposit from time to time in the Series 1999-1
Distribution Account and in all proceeds thereof, and shall be the only person
authorized to originate entitlement orders in respect of the Series 1999-1
Distribution Account. The Series 1999-1 Distribution Account shall be under the
sole dominion and control of the Trustee for the benefit of the Series 1999-1
Noteholders and the Surety Provider.
Section 2.10 Series 1999-1 Demand Note and Series 1999-1 Interest
Rate Cap.
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In order to secure and provide for the repayment and payment of the
ARG Obligations with respect to the Series 1999-1 Notes, ARG hereby grants a
security interest in and assigns, pledges, grants, transfers and sets over to
the Trustee, for the benefit of the Series 1999-1 Noteholders and the Surety
Provider, all of ARG's right, title and interest in and to the following
(whether now or hereafter existing or acquired): (i) the Series 1999-1 Demand
Note; (ii) all certificates and instruments, if any, representing or evidencing
the Series 1999-1 Demand Note; (iii) the Series 1999-1 Interest Rate Cap and
(iv) all proceeds of any and all of the foregoing, including, without
limitation, cash. On the Series 1999-1 Closing Date, ARG shall deliver to the
Trustee, for the benefit of the Series 1999-1 Noteholders and the Surety
Provider, the Series 1999-1 Demand Note, endorsed in blank, and an executed copy
of the Series 1999-1 Interest Rate Cap. The Trustee, for the benefit of the
Series 1999-1 Noteholders and the Surety Provider, shall be the only Person
authorized to make a demand for payment on the Series 1999-1 Demand Note.
ARTICLE III
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 1999-1 Notes and shall constitute the Amortization Events set forth
in Section 9.1(d) of the Base Indenture with respect to the Series 1999-1 Notes:
(a) ARG defaults in the payment of any interest on, or other amount
payable in respect of, the Series 1999-1 Notes when the same becomes due and
payable and such default continues for a period of five (5) Business Days;
(b) ARG defaults in the payment of any principal on the Series
1999-1 Notes when the same becomes due and payable and such default continues
for a period of one (1) Business Day;
(c) a Series 1999-1 Enhancement Deficiency shall occur and continue
for at least two (2) Business Days;
(d) the Series 1999-1 Liquidity Amount shall be less than the Series
1999-1 Required Liquidity Amount for at least two (2) Business Days;
(e) the Series 1999-1 Overcollateralization Amount shall be less
than the Series 1999-1 Required Overcollateralization Amount for at least two
(2) Business Days;
(f) prior to the Transition Date, an Aggregate Asset Amount
Deficiency shall occur and continue for at least two (2) Business Days, or, on
or after the Transition Date, an Operating
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Lease Asset Amount Deficiency shall occur and continue for at least two (2)
Business Days;
(g) the Series 1999-1 Reserve Account shall be subject to an
injunction, estoppel or other stay or a Lien (other than Liens permitted under
the Related Documents) for at least two (2) Business Days and either (x) a
Series 1999-1 Enhancement Deficiency would result from excluding the Series
1999-1 Available Reserve Account Amount from the Series 1999-1 Enhancement
Amount or (y) the Series 1999-1 Liquidity Amount, excluding therefrom the Series
1999-1 Available Reserve Account Amount, would be less than the Series 1999-1
Required Liquidity Amount;
(h) any Series 1999-1 Letter of Credit shall not be in full force
and effect for at least two (2) Business Days and (x) either a Series 1999-1
Enhancement Deficiency would result from excluding such Series 1999-1 Letter of
Credit from the Series 1999-1 Enhancement Amount or (y) the Series 1999-1
Liquidity Amount, excluding therefrom the available amount under such Series
1999-1 Letter of Credit, would be less than the Series 1999-1 Required Liquidity
Amount;
(i) from and after the funding of the Series 1999-1 Cash Collateral
Account, the Series 1999-1 Cash Collateral Account shall be subject to an
injunction, estoppel or other stay or a Lien (other than Liens permitted under
the Related Documents) for at least two (2) Business Days and either (x) a
Series 1999-1 Enhancement Deficiency would result from excluding the Series
1999-1 Available Cash Collateral Account Amount from the Series 1999-1
Enhancement Amount or (y) the Series 1999-1 Liquidity Amount, excluding
therefrom the Series 1999-1 Available Cash Collateral Amount, would be less than
the Series 1999-1 Required Liquidity Amount;
(j) an Event of Bankruptcy shall have occurred with respect to any
Series 1999-1 Letter of Credit Provider or any Series 1999-1 Letter of Credit
Provider repudiates its Series 1999-1 Letter of Credit or refuses to honor a
proper draw thereon and either (x) a Series 1999-1 Enhancement Deficiency would
result from excluding such Series 1999-1 Letter of Credit from the Series 1999-1
Enhancement Amount or (y) the Series 1999-1 Liquidity Amount, excluding
therefrom the available amount under such Series 1999-1 Letter of Credit, would
be less than the Series 1999-1 Required Liquidity Amount;
(k) the Trustee shall make a demand for payment under the Surety
Bond;
(l) the occurrence of an Event of Bankruptcy with respect to the
Surety Provider;
(m) the Surety Provider fails to pay a demand for payment in
accordance with the requirements of the Surety Bond;
(n) all principal and interest of the Class A-1 Notes is not paid in
full on or before
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the Class A-1 Expected Final Distribution Date, all principal and interest of
the Class A-2 Notes is not paid in full on or before the Class A-2 Expected
Final Distribution Date or all principal and interest of the Class A-3 Notes is
not paid in full on or before the Class A-3 Expected Final Distribution Date;
(o) ARG fails to comply with any of its other agreements or
covenants in, or provisions of, the Series 1999-1 Notes or the Indenture and the
failure to so comply materially and adversely affects the interests of the
Series 1999-1 Noteholders and continues to materially and adversely affect the
interests of the Series 1999-1 Noteholders for a period of forty-five (45) days
after the earlier of (i) the date on which ARG 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 ARG by the Trustee or to ARG and the Trustee
by the Required Noteholders; or
(p) any representation made by ARG in the Indenture or any Related
Document is false and such false representation materially and adversely affects
the interests of the Series 1999-1 Noteholders and such false representation is
not cured for a period of forty-five (45) days after the earlier of (i) the date
on which ARG obtains knowledge thereof or (ii) the date that written notice
thereof is given to ARG by the Trustee or to ARG and the Trustee by the Required
Noteholders;
In the case of (i) any event described in clauses (a) through (n) above, an
Amortization Event with respect to the Series 1999-1 Notes shall immediately
occur without any notice or other action on the part of the Trustee or any
Series 1999-1 Noteholder or (ii) any event described in clause (o) or (p) above,
either the Trustee, by written notice to ARG, or the Required Noteholders, by
written notice to ARG and the Trustee, may declare that an Amortization Event
has occurred with respect to the Series 1999-1 Notes as of the date of the
notice. Amortization Events described in clauses (a) through (n) above shall not
be subject to waiver. An Amortization Event described in clause (o) or (p) above
shall be subject to waiver in accordance with Section 9.4 of the Base Indenture.
ARTICLE IV
RIGHT TO WAIVE PURCHASE RESTRICTIONS
Notwithstanding any provision to the contrary in the Indenture or
the Related Documents, upon the Trustee's receipt of notice from any Lessee, any
Leasing Company or ARG (i) to the effect that a Manufacturer Program is no
longer a Series 1999-1 Eligible Manufacturer Program and that, as a result, the
Series 1999-1 Maximum Non-Program Vehicle Amount is or will be exceeded or (ii)
that ARG has determined to increase any Series 1999-1 Maximum Amount, (such
notice, a "Waiver Request"), each Series 1999-1 Noteholder may, at its option,
waive the Series 1999-1 Maximum Non-Program Vehicle Amount, or any other Series
1999-1 Maximum Amount if (i) no Amortization Event exists, (ii) the Required
Noteholders and the Surety Provider consent to such waiver and (iii) 60 days'
prior, written notice of such proposed waiver is provided to the Rating Agencies
by the Trustee.
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Upon receipt by the Trustee of a Waiver Request (a copy of which the
Trustee shall promptly provide to the Surety Provider and the Rating Agencies),
all amounts which would otherwise be allocated to the Series 1999-1 Excess
Collection Account (collectively, the "Designated Amounts") from the date the
Trustee receives a Waiver Request through the Consent Period Expiration Date
will be held by the Trustee in the Series 1999-1 Collection Account for ratable
distribution as described below.
Within ten (10) Business Days after the Trustee receives a Waiver
Request, the Trustee shall furnish notice thereof to the Series 1999-1
Noteholders and the Surety Provider, which notice shall be accompanied by a form
of consent (each a "Consent") in the form of Exhibit G to this Series Supplement
by which the Series 1999-1 Noteholders may, on or before the Consent Period
Expiration Date, consent to waiver of the applicable Series 1999-1 Maximum
Amount. If the Trustee receives the consent of the Surety Provider and Consents
from the Required Noteholders agreeing to waiver of the applicable Series 1999-1
Maximum Amount within forty-five (45) days after the Trustee notifies the Series
1999-1 Noteholders of a Waiver Request (the day on which such forty-five (45)
day period expires, the "Consent Period Expiration Date"), (i) the applicable
Series 1999-1 Maximum Amount shall be deemed waived by the consenting Series
1999-1 Noteholders, (ii) the Trustee will distribute the Designated Amounts as
set forth below and (iii) the Trustee shall promptly (but in any event within
two days) provide the Rating Agency with notice of such waiver. Any Series
1999-1 Noteholder from whom the Trustee has not received a Consent on or before
the Consent Period Expiration Date will be deemed not to have consented to such
waiver.
If the Trustee receives Consents from the Required Noteholders on or
before the Consent Period Expiration Date, then on the immediately following
Distribution Date, the Trustee will pay the Designated Amounts as follows:
(i) to the non-consenting Series 1999-1 Noteholders, if
any, pro rata up to the amount required to pay all Series 1999-1 Notes held
by such non-consenting Series 1999-1 Noteholders in full; and
(ii) any remaining Designated Amounts to the Series 1999-1
Excess Collection Account.
If the amount to be paid pursuant to clause (i) of the preceding
paragraph is not paid in full on the date specified therein, then on each day
following such Distribution Date, the Administrator will allocate to the Series
1999-1 Collection Account on a daily basis all Designated Amounts collected on
such day. On each following Distribution Date, the Trustee will withdraw such
Designated Amounts from the Series 1999-1 Collection Account and deposit same in
the Series 1999-1 Distribution Account for distribution as follows:
(a) to the non-consenting Series 1999-1 Noteholders, if any, pro
rata an amount equal to the Designated Amounts in the Series 1999-1 Collection
Account as of the applicable
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Determination Date up to the aggregate outstanding principal balance of the
Series 1999-1 Notes held by the non-consenting Series 1999-1 Noteholders; and
(b) any remaining Designated Amounts to the Series 1999-1 Excess
Collection Account.
If the Required Noteholders do not timely consent to such waiver,
the Designated Amounts will be re-allocated to the Series 1999-1 Excess
Collection Account for allocation and distribution in accordance with the terms
of the Indenture and the Related Documents.
In the event that the Series 1999-1 Rapid Amortization Period shall
commence after receipt by the Trustee of a Waiver Request, all such Designated
Amounts will thereafter be considered Principal Collections allocated to the
Series 1999-1 Noteholders.
ARTICLE V
FORM OF SERIES 1999-1 NOTES
Section 5.1 Restricted Global Series 1999-1 Notes.
The Series 1999-1 Notes to be issued in the United States will be
issued in book-entry form of and represented by one or more permanent global
Notes in fully registered form without interest coupons (each, a "Restricted
Global Class A-1 Note," a "Restricted Global Class A-2 Note" or a "Restricted
Global Class A-3 Note",, as the case may be), substantially in the forms set
forth in Exhibits A-1-1, A-2-1 and A-3-1 hereto, with such legends as may be
applicable thereto as set forth in the Base Indenture, and will be sold only in
the United States (1) 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 (2) thereafter to
qualified institutional buyers within the meaning of, and in reliance on, Rule
144A under the Securities Act and shall be deposited on behalf of the purchasers
of the Series 1999-1 Notes represented thereby, with a custodian for DTC, and
registered in the name of Cede as DTC's nominee, duly executed by ARG and
authenticated by the Trustee in the manner set forth in Section 2.4 of the Base
Indenture. Interests in a Restricted Global Class A-1 Note, a Restricted Global
Class A-2 Note or a Restricted Global Class A-3 Note will be exchangeable for
definitive Class A-1 Notes, definitive Class A-2 Notes or definitive Class A-3
Notes, as the case may be, in accordance with the provisions of the Base
Indenture (as modified by this Series Supplement).
Section 5.2 Temporary Global Series 1999-1 Notes; Permanent Global
Series 1999-1 Notes.
The Series 1999-1 Notes to be issued outside the United States will
be issued and sold in transactions outside the United States in reliance on
Regulation S under the Securities Act, as provided in the applicable note
purchase agreement, and shall initially be issued in the form of one or more
temporary notes in registered form without interest coupons (each, a "Temporary
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Global Class A-1 Note," a "Temporary Global Class A-2 Note" or a "Temporary
Global Class A-3 Note," as the case may be), substantially in the forms set
forth in Exhibits A-1-2, A-2-2 and A-3-2 hereto, which shall be deposited on
behalf of the purchasers of the Series 1999-1 Notes represented thereby with a
custodian for, and registered in the name of a nominee of DTC, for the accounts
of Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear and for Cedel, duly executed by ARG and authenticated by the Trustee
in the manner set forth in Section 2.4 of the Base Indenture. Interests in a
Temporary Global Class A-1 Note, a Temporary Global Class A-2 Note or a
Temporary Global Class A-3 Note will be exchangeable, in whole or in part, for
interests in one or more permanent global notes in registered form without
interest coupons (each, a "Permanent Global Class A-1 Note," a "Permanent Global
Class A-2 Note" or a "Permanent Global Class A-3 Note," as the case may be),
substantially in the form of Exhibits A-1-3, A-2-3 and A-3-3 hereto, in
accordance with the provisions of such Temporary Global Class A Note and the
Base Indenture (as modified by this Series Supplement). Interests in a Permanent
Global Class A-1 Note, a Permanent Global Class A-2 Note or a Permanent Class
A-3 Note will be exchangeable for definitive Class A-1 Notes, definitive Class
A-2 Notes or definitive Class A-3 Notes, as the case may be, in accordance with
the provisions of such Permanent Global Class A-1 Note, Permanent Global Class
A-2 Note or Permanent Global Class A-3 Note and the Base Indenture (as modified
by this Series Supplement).
ARTICLE VI
TERMINATION OF SERIES SUPPLEMENT
Section 6.1 Termination of Series Supplement.
(a) This Series Supplement shall cease to be of further effect when
all Outstanding Series 1999-1 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, ARG has paid all sums payable
hereunder, the Surety Provider has been paid all Surety Provider Fees and all
other Surety Provider Reimbursement Amounts due under the Insurance Agreement
and, if the Series 1999-1 Demand Note Payment on the Series 1999-1 Letter of
Credit Termination Date was greater than zero, all amounts have been withdrawn
from the Series 1999-1 Cash Collateral Account in accordance with Section 2.8(i)
of this Series Supplement.
(b) In addition, ARG may terminate all of its obligations under this
Series Supplement if:
(i) ARG irrevocably deposits in trust with the Trustee or
at the option of the Trustee, with a trustee reasonably satisfactory to the
Trustee and ARG under the terms of an irrevocable trust agreement in form
and substance satisfactory to the Trustee, money or U.S. Government
Obligations in an amount sufficient, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, to pay, when due,
principal and interest on the
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Series 1999-1 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 Series 1999-1
Notes;
(ii) ARG delivers to the Trustee an Officer's Certificate
stating that all conditions precedent to satisfaction and discharge of this
Series Supplement have been complied with, and an Opinion of Counsel to the
same effect;
(iii) ARG delivers to the Trustee an Officer's Certificate
stating that no Potential Amortization Event or Amortization Event, in
either case, shall have occurred and be continuing with respect to the
Series 1999-1 Notes on the date of such deposit;
(iv) ARG delivers to the Trustee an Opinion of Counsel to
the effect that the termination of ARG's obligations under this Series
Supplement in accordance with the provisions of this Article VI shall not
result in the recognition of gain by the Series 1999-1 Noteholders at the
time of such termination; and
(v) the Series 1999-1 Rating Agency Confirmation and
Consent Condition is satisfied.
Then, this Series Supplement shall cease to be of further effect.
(c) After such irrevocable deposit made pursuant to Section 6.1(b)
of this Series Supplement and satisfaction of the other conditions set forth
herein, the Trustee promptly upon request shall acknowledge in writing the
discharge of ARG's obligations under this Series Supplement.
In order to have money available on a payment date to pay principal
or interest on the Series 1999-1 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.
Section 6.2 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and ARG shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 6.1 of this Series Supplement. The Trustee shall apply the deposited
money and the money from U.S. Government Obligations in accordance with the
Indenture to the payment of principal and
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interest on the Series 1999-1 Notes.
The provisions of this Section 6.2 shall survive the expiration or
earlier termination of this Series Supplement.
ARTICLE VII
GENERAL
Section 7.1 Optional Repurchase.
Each Class of the Series 1999-1 Notes shall be subject to repurchase
by ARG at its option in accordance with Section 6.2 of the Base Indenture on any
Distribution Date after the Class A-1 Invested Amount, the Class A-2 Invested
Amount or the Class A-3 Invested Amount, as the case may be, is reduced to an
amount less than or equal to 10% of the Class A-1 Initial Invested Amount, the
Class A-2 Initial Invested Amount or the Class A-3 Initial Invested Amount, as
the case may be (the "Series 1999-1 Repurchase Amount"); provided, however,
that, as a condition precedent to any repurchase, on or prior to the
Distribution Date on which any Series 1999-1 Note is repurchased by ARG pursuant
to this Section 7.1, ARG shall pay the Surety Bond Provider all Surety Provider
Fees and all other Surety Provider Reimbursement Amounts due and unpaid as of
such Distribution Date. The repurchase price for any Series 1999-1 Note shall
equal the aggregate outstanding principal balance of such Series 1999-1 Note
(determined after giving effect to any payments of principal and interest on
such Distribution Date), plus accrued and unpaid interest on such outstanding
principal balance.
Section 7.2 Information.
(a) On or before each Distribution Date, ARG shall furnish to the
Trustee and the Paying Agent a Monthly Noteholders' Statement with respect to
the Series 1999-1 Notes, substantially in the form of Exhibit H, setting forth,
inter alia, the following information (which, in the cases of clauses (ii),
(iii) and (iv) below, will be expressed as a dollar amount per $1,000 of the
initial Invested Amount of the Series 1999-1 Notes and as a percentage of the
Series 1999-1 Invested Amount as of such date):
(i) the Series 1999-1 Invested Percentage with
respect to Interest Collections and with respect
to Principal Collections on the last day of the
Related Month;
(ii) the total amount to be distributed to Series
1999-1 Noteholders on the next succeeding
Distribution Date;
(iii) the amount of such distribution allocable to
principal on each class of the Series 1999-1
Notes;
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(iv) the amount of such distribution allocable to
interest on each class of the Series 1999-1
Notes;
(v) the amount of Monthly Base Rent, Monthly
Supplemental Payments and Additional Base Rent
due under each Lease on such Distribution Date;
(vi) the amount of any withdrawal from the Series
1999-1 Reserve Account or Series 1999-1 Cash
Collateral Account, any demand on the Series
1999-1 Demand Note, any drawing on the Series
1999-1 Letter of Credit or any demand on the
Surety Bond anticipated to be made on such
Distribution Date;
(vii) the Series 1999-1 Enhancement Amount and the
Series 1999-1 Liquidity Amount, in each case, as
of the close of business on such Distribution
Date after giving effect to any withdrawals,
drawings or demands on the Series 1999-1
Enhancement Amount on such Distribution Date;
(viii) the Class A-1/Class A-2 Carryover Controlled
Amortization Amount or Class A-3 Carryover
Controlled Amortization Amount, if any, for the
Related Month;
(ix) whether, to the knowledge of the Servicer, any
Lien exists on any of the Collateral (other than
Liens granted pursuant to the Indenture and the
other Related Documents or permitted thereunder);
(x) whether, to the knowledge of the Servicer, any
Leasing Company Amortization Event or Lease Event
of Default has occurred;
(xi) whether, to the knowledge of the Servicer, any
Amortization Event or Potential Amortization
Event with respect to the Series 1999-1 Notes has
occurred;
(xii) the Operating Lease Asset Amount (or, the
Aggregate Asset Amount on any Distribution prior
to the Transition Date) and the amount of the
Operating Lease Asset Amount Deficiency (or, the
Aggregate Asset Amount Deficiency on any
Distribution Date prior to the Transition Date),
if any, at the close of business on the last day
of the Related Month;
(xiii) the Series 1999-1 Non-Program Vehicle Amount and
the Series 1999-1 Non-Program Vehicle Percentage
as of the last day of the Related Month;
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(xiv) the Series 1999-1 Non-Program Vehicle Market
Value Adjustment Percentage as of the related
Determination Date (including, as of such date,
the Newer Series 1999-1 Non-Program Vehicle
Market Value Adjustment Percentage, the Newer
Series 1999-1 Non-Program Vehicle Percentage,
the Older Series 1999-1 Non-Program Vehicle
Market Value Adjustment Percentage, the Older
Series 1999-1 Non-Program Vehicle Percentage,
the Bankrupt Manufacturer Series 1999-1 Market
Value Adjustment Percentage and the Bankrupt
Manufacturer Series 1999-1 Vehicle Percentage);
(xv) the Series 1999-1 Required Enhancement
Incremental Amount, if any, as of the last day of
the Related Month;
(xvi) the Series 1999-1 Required Liquidity Amount as of
the last day of the Related Month and whether the
Series 1999-1 Liquidity Amount is less than the
Series 1999-1 Required Liquidity Amount as of the
last day of the Related Month;
(xvii) the Series 1999-1 Required Enhancement Amount and
whether a Series 1999-1 Enhancement Deficiency
exists and the amount thereof;
(xviii) with respect to each Manufacturer, the
percentage of all Vehicles as of the end of
the Related Month which were Series 1999-1
Program Vehicles manufactured by such
Manufacturer;
(xix) with respect to each Manufacturer, the percentage
of all Vehicles as of the end of the Related
Month which were Series 1999-1 Non-Program
Vehicles manufactured by such Manufacturer; and
(xx) a list of each Additional Lessee that became a
party to any of the Leases during the Related
Month.
The Trustee shall provide to the Series 1999-1 Noteholders, or their
designated agent, and the Surety Provider copies of each Monthly Noteholders'
Statement.
(b) On an annual basis, commencing March 31, 2000, ARG shall furnish
to the Trustee, with copies to the Surety Provider and the Rating Agencies, a
report (the "Non-Program Vehicle Report") of a firm of nationally recognized
independent public accountants (who may also render other services to Republic
and its affiliates and which is acceptable to the Rating Agencies) to the effect
that they have performed certain agreed upon procedures, specifically (i)
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compared the procedures related to the calculation of Disposition Proceeds and
Termination Payments obtained from the sale or other disposition of Series
1999-1 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 Monthly Noteholders' Statement with respect to the
Series 1999-1 Notes, (ii) compared the procedures related to the calculation of
the Series 1999-1 Non-Program Vehicle Market Value Adjustment Percentage for
each month in such period to those procedures outlined in the Related Documents
and compared the results of such procedures with the corresponding amounts set
forth in the Monthly Noteholders' Statement with respect to the Series 1999-1
Notes and (iii) compared the procedures related to the calculation of the Net
Book Value of the Series 1999-1 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 Noteholders' Statement
with respect to the Series 1999-1 Notes, and that on the basis of such
comparisons referenced in (i), (ii) and (iii) (which comparisons shall be
provided as part of the Non-Program Vehicle Report) such accountants are
reporting that the procedures are in compliance with the requirements of the
Related Documents and the results of such procedures are in agreement with the
amounts set forth in the Monthly Noteholders' Statement with respect to the
Series 1999-1 Notes, in each case except for such exception as shall be set
forth in such Non-Program Vehicle Report.
(c) Promptly upon becoming aware of any Potential Amortization
Event, Amortization Event, Leasing Company Amortization Event, Potential Leasing
Company Amortization Event, Lease Event of Default or Potential Lease Event of
Default, ARG shall give the Surety Provider notice thereof, together with a
certificate of an Authorized Officer of ARG setting forth the details thereof
and any action with respect thereto taken or contemplated to be taken by ARG.
Promptly upon becoming aware of any claim by any Person that any payment
received by ARG under the Series 1999-1 Demand Note was a voidable preference
under the United States Bankruptcy Code, ARG shall give the Surety Provider and
the Series 1999-1 Letter of Credit Providers notice thereof.
(d) Promptly upon becoming aware of any default under any Related
Document, ARG shall give the Surety Provider notice thereof.
(e) ARG shall promptly furnish to the Surety Provider such other
information as, and in such form as, the Surety Provider may reasonably request
in connection with the transactions contemplated hereby.
Section 7.3 Series 1999-1 Demand Note.
Other than pursuant to a demand thereon pursuant to Section 2.5(b)
or (c) of this Series Supplement, ARG shall not reduce the amount of the Series
1999-1 Demand Note or forgive amounts payable thereunder so that the outstanding
principal amount of the Series
<PAGE> 69
69
1999-1 Demand Note after such reduction or forgiveness is less than the greater
of the aggregate available amount under the Series 1999-1 Letters of Credit and
an amount equal to 0.50% of the Series 1999-1 Invested Amount; provided, however
that if ARG has first delivered to the Trustee an Opinion of Counsel that
reduction or forgiveness of amounts owing under the Series 1999-1 Demand Note to
an amount less than 0.50% of the Series 1999-1 Invested Amount will not have an
adverse effect on the tax characterization of the Series 1999-1 Notes, ARG may
reduce the amount of the Series 1999- 1 Demand Note or forgive amounts payable
thereunder to an amount less than 0.50% of the Series 1999-1 Invested Amount but
equal to or greater than the Series 1999-1 Letter of Credit Amount. ARG shall
not agree to any amendment of the Series 1999-1 Demand Note without first
satisfying the Series 1999-1 Rating Agency Confirmation and Consent Condition.
Section 7.4 Exhibits.
The following exhibits attached hereto supplement the exhibits
included in the Indenture:
Exhibit A-1-1: Form of Restricted Global Class A-1 Note
Exhibit A-1-2: Form of Temporary Global Class A-1 Note
Exhibit A-1-3: Form of Permanent Global Class A-1 Note
Exhibit A-2-1: Form of Restricted Global Class A-2 Note
Exhibit A-2-2: Form of Temporary Global Class A-2 Note
Exhibit A-2-3: Form of Permanent Global Class A-2 Note
Exhibit A-3-1: Form of Restricted Global Class A-3 Note
Exhibit A-3-2: Form of Temporary Global Class A-3 Note
Exhibit A-3-3: Form of Permanent Global Class A-3 Note
Exhibit B: Form of Series 1999-1 Demand Note
Exhibit C-1: Series 1999-1 Eligible Non-Program Manufacturers
Exhibit C-2: Series 1999-1 Eligible Program Manufacturers
Exhibit D: Form of Series 1999-1 Interest Rate Cap
Exhibit E: Form of Series 1999-1 Letter of Credit
Exhibit F: Form of Lease Payment Deficit Notice
Exhibit G: Form of Consent
Exhibit H: Form of Monthly Noteholders' Statements
Section 7.5 Ratification of Base Indenture.
As supplemented by this Series 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.
Section 7.6 Notice to Surety Provider and Rating Agencies.
<PAGE> 70
70
The Trustee shall provide to the Surety Provider and each Rating
Agency a copy of each notice, opinion of counsel, certificate or other item
delivered to, or required to be provided by, the Trustee pursuant to this Series
Supplement or any other Related Document. Each such opinion of counsel shall be
addressed to the Surety Provider, shall be from counsel reasonably acceptable to
the Surety Provider and shall be in form and substance reasonably acceptable to
the Surety Provider. The Trustee shall provide to the Surety Provider and each
Rating Agency a copy of each notice, opinion of counsel, certificate or other
item delivered to the Trustee, as the registered holder of the Leasing Company
Notes, pursuant to the Leasing Company Related Documents. All such notices,
opinions, certificates or other items to be delivered to the Surety Provider
shall be forwarded to MBIA Insurance Corporation, 113 King Street, Armonk, New
York 10504, Attention: Insured Portfolio Management - SF, telecopy: (914)
765-3810: confirmation: (914) 765-3781.
Section 7.7 Surety Provider Deemed Noteholder and Secured Party.
Except for any period during which a Surety Default is continuing,
the Surety Provider shall be deemed to be the holder of 100% of the Series
1999-1 Notes for the purposes of giving any consents, waivers, approvals,
instructions, directions, declarations, notices and/or taking any other action
pursuant to the Base Indenture, this Series Supplement and the other Related
Documents. Any reference in the Base Indenture or the Related Documents to
materially, adversely, or detrimentally affecting the rights or interests of the
Noteholders, or words of similar meaning, shall be deemed, for purposes of the
Series 1999-1 Notes, to refer to the rights or interests of the Surety Provider.
Furthermore, the Surety Provider shall be deemed to be a "Secured Party" under
the Base Indenture and the Related Documents to the extent of amounts payable to
the Surety Provider pursuant to this Series Supplement.
Section 7.8 Third Party Beneficiary.
The Surety Provider is an express third party beneficiary of (i) the
Base Indenture to the extent of provisions relating to any Enhancement Provider
and (ii) this Series Supplement.
Section 7.9 Prior Notice by Trustee to Surety Provider.
Subject to Section 10.1 of the Base Indenture, the Trustee agrees
that so long as no Amortization Event shall have occurred and be continuing with
respect to any Series of Notes, other than the Series 1999-1 Notes, it shall not
exercise any rights or remedies available to it as a result of the occurrence of
an Amortization Event with respect to the Series 1999-1 Notes (except those set
forth in clauses (l) and (m) of Article III of this Series Supplement) until
after the Trustee has given prior written notice thereof to the Surety Provider
and obtained the direction of the Required Noteholders. The Trustee agrees to
notify the Surety Provider promptly following any exercise of rights or remedies
available to it as a result of the occurrence of an Amortization
<PAGE> 71
71
Event with respect to the Series 1999-1 Notes.
Section 7.10 Subrogation.
(a) In furtherance of and not in limitation of the Surety Provider's
equitable right of subrogation, each of the Trustee and ARG acknowledge that, to
the extent of any payment made by the Surety Provider under the Surety Bond with
respect to interest on or principal of the Series 1999- 1 Notes, the Surety
Provider is to be fully subrogated to the extent of such payment and any
additional interest due on any late payment, to the rights of the Series 1999-1
Noteholders under the Indenture. Each of ARG and the Trustee agree to such
subrogation and, further, agree to take such actions as the Surety Provider may
reasonably request to evidence such subrogation.
(b) In the event that (x) amounts are withdrawn from the Series
1999-1 Cash Collateral Account pursuant to Section 2.8(j) and paid to the Surety
Provider with respect to a Preference Amount (as defined in the Surety Bond)
paid by the Surety Provider under the Surety Bond and (y) the Surety Provider
has been paid all Surety Provider Fees and all other Surety Provider
Reimbursement Amounts payable under the Insurance Agreement and the Surety
Provider has no further obligations in respect of the Surety Bond, the Surety
Provider acknowledges that, to the extent of such withdrawal from the Series
1999-1 Cash Collateral Account and payment to the Surety Provider, the Series
1999-1 Letter of Credit Providers are to be fully subrogated to the extent of
such payment to the Surety Provider, to the Surety Provider's equitable
subrogation rights described in Section 7.10(a). By accepting payment of amounts
withdrawn from the Series 1999-1 Cash Collateral Account, the Surety Provider
agrees to such subrogation and, further, agrees to take such actions as the
Series 1999-1 Letter of Credit Providers may reasonably request to evidence such
subrogation.
Section 7.11 Counterparts.
This Series 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.
Section 7.12 Governing Law.
This Series Supplement shall be construed in accordance with the law
of the State of New York, and the obligations, rights and remedies of the
parties hereto shall be determined in accordance with such law.
Section 7.13 Amendments.
This Series Supplement may be modified or amended from time to time
in accordance with the terms of the Base Indenture and, accordingly, any such
modification or amendment shall require the prior written consent of the Surety
Provider..
<PAGE> 72
72
IN WITNESS WHEREOF, ARG and the Trustee have caused this Series
Supplement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
ARG FUNDING CORP.
By: /s/ Dwight Jenkins
--------------------------------------
Name: Dwight Jenkins
Title: Vice President and Assistant
Secretary
THE BANK OF NEW YORK,
as Trustee
By: /s/ Erwin Soriano
--------------------------------------
Name: Erwin Soriano
Title: Assistant Treasurer
<PAGE> 73
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PRELIMINARY STATEMENT ........................................................................................ 1
DESIGNATION .................................................................................................. 1
ARTICLE I DEFINITIONS .................................................................................. 2
ARTICLE II SERIES 1999-1 ALLOCATIONS .................................................................... 36
Section 2.1 Establishment of Series 1999-1 Collection Account, Series 1999-1
Accrued Interest Account and Series 1999-1 Excess Collection Account ................... 36
Section 2.2 Allocations with Respect to the Series 1999-1 Notes .................. 37
Section 2.3 Distribution Dates ................................................... 40
Section 2.4 Payment of Note Interest ............................................. 43
Section 2.5 Payment of Note Principal ............................................ 43
Section 2.6 Servicer's Failure to Instruct the Trustee to Make a Deposit or
Payment ................................................................................ 46
Section 2.7 Series 1999-1 Reserve Account ........................................ 46
Section 2.8 Series 1999-1 Letters of Credit and Series 1999-1 Cash Collateral
Account ................................................................................ 48
Section 2.9 Series 1999-1 Distribution Account ................................... 52
Section 2.10 Series 1999-1 Demand Note and Series 1999-1 Interest Rate
Cap .................................................................................... 54
ARTICLE III AMORTIZATION EVENTS .......................................................................... 54
ARTICLE IV RIGHT TO WAIVE PURCHASE RESTRICTIONS ......................................................... 56
ARTICLE V FORM OF SERIES 1999-1 NOTES .................................................................. 58
</TABLE>
<PAGE> 74
<TABLE>
<S> <C>
Section 5.1 Restricted Global Series 1999-1 Notes ................................ 58
Section 5.2 Temporary Global Series 1999-1 Notes; Permanent Global Series
1999-1 Notes ........................................................................... 58
ARTICLE VI TERMINATION OF SERIES SUPPLEMENT ............................................................. 59
Section 6.1 Termination of Series Supplement ..................................... 59
Section 6.2 Application of Trust Money ........................................... 60
ARTICLE VII GENERAL ...................................................................................... 60
Section 7.1 Optional Repurchase .................................................. 60
Section 7.2 Information .......................................................... 61
Section 7.3 Series 1999-1 Demand Note ............................................ 63
Section 7.4 Exhibits ............................................................. 64
Section 7.5 Ratification of Base Indenture ....................................... 64
Section 7.6 Notice to Surety Provider and Rating Agencies ........................ 64
Section 7.7 Surety Provider Deemed Noteholder and Secured Party .................. 65
Section 7.8 Third Party Beneficiary .............................................. 65
Section 7.9 Prior Notice by Trustee to Surety Provider ........................... 65
Section 7.10 Subrogation .......................................................... 65
Section 7.11 Counterparts ......................................................... 66
Section 7.12 Governing Law ........................................................ 66
Section 7.13 Amendments ........................................................... 66
</TABLE>
EXHIBITS
Exhibit A-1-1: Form of Restricted Global Class A-1 Note
<PAGE> 75
Exhibit A-1-2: Form of Temporary Global Class A-1 Note
Exhibit A-1-3: Form of Permanent Global Class A-1 Note
Exhibit A-2-1: Form of Restricted Global Class A-2 Note
Exhibit A-2-2: Form of Temporary Global Class A-2 Note
Exhibit A-2-3: Form of Permanent Global Class A-2 Note
Exhibit A-3-1: Form of Restricted Global Class A-3 Note
Exhibit A-3-2: Form of Temporary Global Class A-3 Note
Exhibit A-3-3: Form of Permanent Global Class A-3 Note
Exhibit B: Form of Series 1999-1 Demand Note
Exhibit C-1: Series 1999-1 Eligible Non-Program Manufacturers
Exhibit C-2: Series 1999-1 Eligible Program Manufacturers
Exhibit D: Form of Series 1999-1 Interest Rate Cap
Exhibit E: Form of Series 1999-1 Letter of Credit
Exhibit F: Form of Lease Payment Deficit Notice
Exhibit G Form of Consent
Exhibit H Form of Monthly Noteholders' Statement
<PAGE> 76
EXECUTION COPY
ARG FUNDING CORP.,
as Issuer
and
THE BANK OF NEW YORK,
as Trustee
SERIES 1999-1 SUPPLEMENT
dated as of February 26, 1999
to
BASE INDENTURE
dated as of February 26, 1999
$550,000,000 Series 1999-1 Floating Rate Rental Car Asset Backed Notes,Class A-1
$750,000,000 Series 1999-1 5.88% Rental Car Asset Backed Notes, Class A-2
$500,000,000 Series 1999-1 6.02% Rental Car Asset Backed Notes, Class A-3
<PAGE> 1
EXHIBIT 4.5
EXECUTION COPY
THIRD AMENDED AND RESTATED
MASTER COLLATERAL AGENCY AGREEMENT
among
REPUBLIC INDUSTRIES, INC.,
as Master Servicer,
NATIONAL CAR RENTAL FINANCING LIMITED PARTNERSHIP,
as a grantor,
ALAMO FINANCING L.P.,
as a grantor,
CARTEMPS FINANCING L.P.,
as a grantor,
ALAMO RENT-A-CAR, INC.,
as a grantor,
NATIONAL CAR RENTAL SYSTEM, INC.,
as a grantor,
SPIRIT RENT-A-CAR, INC. d/b/a
CARTEMPS USA,
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 February 26, 1999
<PAGE> 2
THIRD AMENDED AND RESTATED
MASTER COLLATERAL AGENCY AGREEMENT
THIS THIRD AMENDED AND RESTATED MASTER COLLATERAL AGENCY AGREEMENT,
dated as of February 26, 1999 (as the same may be further amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms
hereof, this "Agreement") (amending and restating the Second Amended and
Restated Master Collateral Agency Agreement, dated as of October 29, 1997, as
supplemented by the Supplements to the Second Amended and Restated Master
Collateral Agency Agreement, dated as of October 29, 1997 (the "Second Amended
and Restated Agreement"), such Second Amended and Restated Agreement having
previously amended and restated the Amended and Restated Master Collateral
Agency Agreement, dated as of April 30, 1996, as supplemented by the Supplements
to the Amended and Restated Master Collateral Agency Agreement, dated as of May
20, 1996, and supplemented and amended by the Supplement and Amendment to the
Amended and Restated Master Collateral Agency Agreement, dated as of December
20, 1996 (the "Original Amended and Restated Agreement"), in each case among
National Car Rental System, Inc., a Delaware corporation, and the other parties
named therein), 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 FINANCING L.P., a Delaware limited
partnership ("Alamo Leasing"), as a grantor, CARTEMPS FINANCING L.P., a Delaware
limited partnership ("CarTemps Leasing"), as grantor, such other grantors as are
added as grantors and identified as "Lessor Grantors" pursuant to a Grantor
Supplement substantially in the form of Exhibit B hereto (such additional
grantors, together with NFLP, Alamo Leasing and CarTemps Leasing, the "Lessor
Grantors"), 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. ("Spirit") d/b/a
CARTEMPS USA, an Ohio corporation ("CarTemps"), as a grantor, such other
grantors as are added as grantors and identified as "Lessee Grantors" pursuant
to a Grantor Supplement substantially in the form of Exhibit B hereto (such
additional grantors, together with Alamo, National and CarTemps, 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
<PAGE> 3
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 Second 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 Second Amended and Restated Agreement in its entirety to provide
for, among other things, the addition of Alamo Leasing and CarTemps Leasing as
grantors hereunder in connection with the financing to be provided by Alamo
Leasing to Alamo and other Lessee Grantors and the acquisition of Vehicles by
Alamo Leasing to be leased to Alamo and such other Lessee Grantors and the
financing to be provided by CarTemps Leasing to CarTemps and other Lessee
Grantors and the acquisition of Vehicles by CarTemps Leasing to be leased to
CarTemps and such other Lessee Grantors and to provide for the addition of other
Lessor Grantors from time to time.
2. National, Alamo and CarTemps 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, Alamo Leasing
and CarTemps Leasing will from time to time acquire and lease to one or more of
the Lessee Grantors, certain Vehicles for use in their respective daily domestic
rental operations.
3. Pursuant to the Financing Documents executed by NFLP, (i) NFLP has
extended financing to National, Alamo and CarTemps secured by, among other
things, certain Vehicles and related rights, (ii) NFLP has assigned to the
Trustee under the NFLP Base Indenture, 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 and related security, and (iii) NFLP has
assigned to such Trustee, on behalf of the holders of the Series 1997 Variable
Funding Notes issued under the Series 1997 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.
4. Simultaneously herewith, (i) NFLP shall redeem the Series 1997-1
Variable Funding Note and cancel the Series 1997-1 Supplement, and (ii) each of
the Lessor Grantors shall execute, as applicable, the Alamo Base Indenture, the
CarTemps Base Indenture and Group I Supplements related to its Base Indenture,
and shall issue to ARG the Group I Notes to be issued under the
-3-
<PAGE> 4
Group I Supplements.
5. Pursuant to the Financing Documents executed, or to be executed, by
the Lessor Grantors, (i) each of NFLP, Alamo Leasing and CarTemps Leasing may
from time to time extend financing to, respectively, National, Alamo and
CarTemps and to other Lessee Grantors secured by, among other things, certain
Vehicles and related rights, (ii) each of the Lessor Grantors has assigned to
the applicable Trustee, on behalf of the holders of the Group I Notes issued
under its Base Indenture and related Group I Supplements, the rights of such
Lessor Grantor as lessor and the obligations of the applicable Lessee Grantors
as lessees under the related Group I Lease and related security and (iii) from
time to time any Lessor Grantor may assign to the applicable Trustee, on behalf
of the holders of additional Series of Notes issued under the related Base
Indenture, additional rights of such Lessor Grantor and obligations of the
applicable Lessee Grantors under additional Financing Documents.
6. Pursuant to the Financing Documents executed, or to be executed, by
the Lessor Grantors, (i) each of the Lessor Grantors may from time to time
acquire Vehicles and lease such Vehicles to each of the applicable Lessee
Grantors, and (ii) each of the Lessor Grantors is granting a security interest
in the Vehicles acquired by it and related security to the Master Collateral
Agent hereunder for the benefit of the applicable Trustee on behalf of the
holders of the applicable Group I Notes issued under the related Base Indenture.
7. Each of the Lessee Grantors and the Lessor Grantors may from time to
time obtain financing with respect to Vehicles owned by it or obtain credit
enhancement to support such financing from other Persons (which Persons
providing financing to any of the Lessee Grantors may include any of the Lessor
Grantors) 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 owned by it to which such financing relates to the Master
Collateral Agent hereunder for the benefit of the applicable Trustee on behalf
of the holders of the applicable Group I 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
-4-
<PAGE> 5
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) if defined in the Base Indenture pursuant to
which a Series of Notes shall have been issued, shall (except as otherwise
provided in (ii) below), with respect to such Series of Notes, have the meanings
assigned to such terms in the Definitions List attached as Schedule 1 to such
Base Indenture, as such Base Indenture or Schedule 1 may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms of such Base Indenture, (ii) if defined in the Series Supplement
pursuant to which a Series of Notes shall have been issued, shall, with respect
to such Series of Notes, have the meaning specified in such Series Supplement,
as such Series Supplement may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms of such Base Indenture,
or (iii) if not defined in any Base Indenture or Series Supplement, shall, with
respect to any Financing Source, have the meaning assigned to such term in the
Financing Documents for such Financing Source.
"Aggregate Asset Amount" shall, with respect to any Financing Source,
have the meaning, if any, specified in the Financing Documents of such Financing
Source.
"Agreement" has the meaning set forth in the preamble hereto.
"Alamo" means Alamo Rent-A-Car, Inc., a Florida corporation (including
in its capacity as successor by merger to Value Rent-A-Car, Inc.), or upon and
after the merger of Alamo Rent-A-Car, Inc. into a newly-formed limited liability
company, such newly-formed limited liability company, as successor by merger to
Alamo Rent-A-Car, Inc. and its successors and assigns in accordance with the
terms hereof.
"Alamo Base Indenture" means the Base Indenture dated as of February
26, 1999, between Alamo Leasing and The Bank of New York, as trustee, as the
same may be 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.
-5-
<PAGE> 6
"Alamo Leasing" means Alamo Financing L.P., a Delaware limited
partnership, and its successors and assigns in accordance with the terms hereof.
"Amortization Event" shall, with respect to any applicable Financing
Source, have the meaning, if any, specified in the Financing Documents of such
Financing Source.
"ARG" means ARG Funding Corp., a Delaware corporation.
"Asset Amount Deficiency" shall, with respect to any applicable
Financing Source, have the meaning, if any, specified in the Financing Documents
of such Financing Source.
"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, National as successor by merger to
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 a Lessor Grantor 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 such Lessor Grantor's and/or such
Lessee Grantor's right, title and interest in such Manufacturer Program as it
relates to Vehicles purchased from such Manufacturer or from such Manufacturer's
dealers.
"Authorized Agents" has the meaning set forth on Section 3.5.
"Authorized Employee" has the meaning set forth in Section 2.5(c).
"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 Indenture" means, as applicable, the NFLP Base Indenture, the
Alamo Base Indenture, the CarTemps Base Indenture or any other Lessor Grantor
Base Indenture.
"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, Chicago, Illinois or the
city in which the Corporate
-6-
<PAGE> 7
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.
"CarTemps" means Spirit Rent-A-Car, Inc. d/b/a CarTemps USA, an Ohio
corporation, and its successors and assigns in accordance with the terms hereof.
"CarTemps Base Indenture" means the Base Indenture dated as of February
26, 1999, between CarTemps Leasing and The Bank of New York, as trustee, as the
same may be 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.
"CarTemps Leasing" means CarTemps Financing L.P., a Delaware limited
partnership, and its successors and assigns in accordance with the terms hereof.
"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.
"Closing Date" shall, with respect to the Financing Documents of any
applicable Financing Source, have the meaning specified in such Financing
Documents.
"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: Global Agency and Trust Department, 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 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, (a) with
respect to any Vehicle covered by a Manufacturer Program, the
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scheduled daily depreciation charge set forth by the Manufacturer in its
Manufacturer Program for such Vehicle calculated as set forth in such
Manufacturer Program and (b) with respect to any Vehicle not covered by an
Eligible Manufacturer Program, the scheduled daily depreciation charge for such
Vehicle set forth by the Servicer in the schedule of estimated daily
depreciation prepared by the Servicer for such Vehicle.
"Designated Vehicle" means a Vehicle owned by a Lessor Grantor or a
Lessee Grantor with respect to which the applicable Servicer, such Lessee
Grantor or Lessor Grantor 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 Manufacturer Program", with respect to the Series 1996-1
Notes, has the meaning set forth in Schedule 1 to the NFLP Base Indenture, with
respect to the Series 1997 Variable Funding Notes, has the meaning set forth in
the applicable Series 1997 Supplement, and, with respect to all other Series of
Notes, means a Manufacturer Program.
"Eligible Receivables" has the meaning set forth in the related
Financing Documents.
"Exchange Agreement" means an agreement among a Lessor Grantor, a
Lessee Grantor and the related Qualified Intermediary which provides for the
assignment by such Lessor Grantor 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 a Lessor Grantor 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 such Lessor Grantor or Lessee Grantor 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 such Lessor Grantor 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, (ii) such other consents as may be required under any Financing
Documents, and (iii) 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
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Manufacturer Program or sold to a third party or (b) if not subject to a
Manufacturer Program, has been sold to a third party, (ii) (a) with respect to
which the applicable Lessor Grantor 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 or, with respect to any Series of Notes other than the
Series 1996-1 Notes, an Amortization Event to occur under such Financing
Documents 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 applicable Trustee provides written notice to the
contrary to the Master Collateral Agent, no Vehicle that is a Related Vehicle
with respect to such Trustee shall be an 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 the applicable Lessor Grantor 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 any of the
Lessor Grantors or Lessee Grantors pursuant to the Manufacturer Programs: (i)
all incentive payments payable to any of the Lessor Grantors or 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 Lessor Grantors by a Manufacturer as an incentive for selling Program
Vehicles outside of the related Manufacturer Program), (ii) all amounts payable
to any of the Lessor Grantors or Lessee Grantors as compensation for the
preparation by any of the Lessor Grantors or Lessee Grantors of newly delivered
vehicles under the Manufacturer Programs, (iii) all amounts payable to any of
the Lessor Grantors or Lessee Grantors in reimbursement for warranty work
performed by any of the Lessor Grantors or 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.
"Financing Documents" means, with respect to a Financing
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Source, any and all agreements, instruments and contracts evidencing or related
to any financing arrangement between any of the Lessor Grantors and/or any of
the Lessee Grantors and a Financing Source (and/or a Beneficiary) or providing
for the making or credit enhancing of loans or advances to or at the direction
of any of the Lessor Grantors and/or any of the Lessee Grantors, the purchase of
assets, or undivided interests therein, from any of the Lessor Grantors 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;
provided that for the purposes of any definition herein which is specified as
having the meaning "specified in the Financing Documents of such Financing
Source," such reference shall mean, with respect to the Series 1996-1 Notes, the
Financing Documents of NFLP for the Series 1996-1 Notes; with respect to the
Series 1997-2 Notes, Series 1997-3 Notes and Series 1997-4 Notes, the Financing
Documents of NFLP for such Notes; with respect to the Series 1999-1 NFLP Notes,
the Financing Documents of NFLP for such Notes; with respect to the Series
1999-1 Alamo Notes, the Financing Documents of Alamo Leasing for such Notes;
with respect to the Series 1999-1 CarTemps Notes, the Financing Documents of
CarTemps Leasing for such Notes; and with respect to any other Series of Notes,
the Financing Documents of the issuer for such Notes.
"Financing Source and Beneficiary Supplement" means a supplement to
this Agreement, substantially in the form of Exhibit A hereto.
"Fleet Finance Agreement", with respect to the Series 1996-1 Notes,
means the Fleet Financing Agreement and the NFLP Fleet Financing Agreement as
such terms are defined in Schedule 1 to the NFLP Base Indenture and, with
respect to all other Series of Notes, means any Fleet Financing Support
Agreement between General Motors Corporation and the Master Collateral Agent
and/or one or more Financing Sources, pursuant to which General Motors
Corporation provides a limited guaranty to the Master Collateral Agent or such
Financing Sources with respect to shortfalls in the proceeds realized from the
sale of certain Related Vehicles manufactured by General Motors Corporation
subject to the terms and conditions specified therein, as such Fleet Financing
Support Agreements may be amended, restated, modified or supplemented
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from time to time.
"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" means any Lessee Grantor or Lessor Grantor.
"Grantor Supplement" means a supplement to this Agreement,
substantially in the form of Exhibit B hereto.
"Group I Leases" means, collectively, the Master Motor Vehicle Lease
and Servicing Agreements, each dated as of February 26, 1999, among NFLP, Alamo
Leasing or CarTemps Leasing, as applicable, as lessor, National, Alamo or
CarTemps, as applicable, as lessees, and Republic, as guarantor and servicer, as
the same may be amended, supplemented, restated or otherwise modified from time
to time in accordance with the terms thereof and any other Lease entered into by
an additional Lessor Grantor and identified as a Group I Lease in such Group I
Lease.
"Group I Notes" means, collectively, the Series 1999-1 NFLP Notes, the
Series 1999-1 Alamo Notes, the Series 1999-1 CarTemps Notes and any other Series
of Notes issued pursuant to a Base Indenture and as to which the obligations of
NFLP, Alamo Leasing, CarTemps Leasing or another related Lessor Grantor, as
applicable, with respect to such Series of Notes are secured by all or part of
the collateral securing the other Group I Notes issued under the same Base
Indenture.
"Group I Supplements" means, collectively, the Series 1999-1 NFLP
Supplement, the Series 1999-1 Alamo Supplement, the Series 1999-1 CarTemps
Supplement and each other Series Supplement pursuant to which Group I Notes are
issued by, respectively, NFLP, Alamo Leasing, CarTemps Leasing and each other
applicable Lessor Grantor.
"Guaranteed Depreciation Program" means a guaranteed depreciation
program pursuant to which a Manufacturer has agreed with any of the Lessee
Grantors or Lessor Grantors 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 Lessor Grantors, as applicable, by such
auction dealer after such sale and (c) pay to any of the Lessee Grantors or
Lessor Grantors, as applicable, the excess, if any, of the guaranteed payment
amount with respect to any such Vehicle calculated as of the disposition date or
turnback date thereof (as defined or otherwise specified in the Financing
Documents of the related Financing Source) in
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accordance with the provisions of such guaranteed depreciation program over the
amount paid to any such Lessee Grantor or Lessor Grantor, as applicable, by an
auction dealer pursuant to clause (b) above.
"Incumbency Certificate" has the meaning set forth in Section 3.5.
"Ineligible Asset Amount" shall, with respect to any applicable
Financing Source, have the meaning specified in the Financing Documents of such
Financing Source.
"Initial Fleet" shall, with respect to any applicable Financing Source,
have the meaning specified in the Financing Documents of such Financing Source.
"Investment Letter" has the meaning set forth in Section 2.5(f) hereof.
"Lease" means a Master Motor Vehicle Lease and Servicing Agreement
(inclusive of any annexes thereto), under which a Lessor Grantor is the lessor
and/or one or more Lessee Grantors is the lessee, that constitutes security for
the obligations owing to a Financing Source, as the same may be amended,
supplemented, or otherwise modified from time to time in accordance with the
terms thereof.
"Lessor Grantor Base Indenture" means any base indenture between a
Lessor Grantor and a trustee, as the same may be amended from time to time in
accordance with its terms, exclusive of Series Supplements creating a new series
of Rental Car Asset Backed Notes.
"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.
"Lessor Grantor Master Collateral" has the meaning set forth in Section
2.1(b).
"Lessor 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, Alamo Leasing, CarTemps
Leasing, any other Lessor Grantor and any Affiliate of Republic that is a
special purpose entity that has entered into a financing arrangement secured by
one or more Series of Notes), if applicable) that hold or represent or act on
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behalf of Financing Sources (other than Republic and any of its Affiliates
(excluding NFLP, Alamo Leasing, CarTemps Leasing, any other Lessor Grantor and
any Affiliate of Republic that is a special purpose entity that has entered into
a financing arrangement secured by one or more Series of Notes), if applicable)
that hold (including by way of pledge or assignment) (a) more than 66-2/3% (in
the case of Series 1996-1 Notes) or (b) more than 50% (in the case of the Series
1997 Variable Funding Notes) or (c) more than 50% (in the case of any other
Series of Group I Notes or any other shared collateral Series of Notes other
than the Series 1996-1 Notes and the Series 1997 Variable Funding Notes) of the
outstanding principal amount of indebtedness of any of the Lessee Grantors or
any of the Lessor Grantors 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 any of the Lessor Grantors); the intent of
the foregoing provisions is that to the extent any action is required to taken
by the Master Collateral Agent at the direction of the Majority Beneficiaries
pursuant hereto, the Majority Beneficiaries shall mean the Majority
Beneficiaries of (i) the Series 1996-1 Notes, (ii) the Series 1997 Variable
Funding Notes, and (iii) any Series of Group I Notes and any other shared
collateral Series of Notes, as applicable, in each case with respect to such
Beneficiaries' Related Master Collateral.
"Manufacturer" means a manufacturer of passenger automobiles and/or
light trucks.
"Manufacturer Program" shall (i) with respect to the Group I Notes
issued by NFLP, have the meaning specified in the Series 1999-1 NFLP Supplement,
(ii) with respect to any Group I Notes other than the Group I Notes issued by
NFLP, have the meaning specified in the related Base Indenture, and (ii) with
respect to any other Series of Notes, mean 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, in its capacity as master servicer
hereunder, and any successor thereto in such capacity, and, to the extent that
the Master Collateral Agent shall have assumed any duties and obligations of the
Master Servicer
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pursuant to this Agreement, "Master Servicer" shall, to such extent, include the
Master Collateral Agent.
"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 Base Indenture" means the Base Indenture dated as of April 30,
1996, as amended by the Supplement and Amendment to the Base Indenture, dated as
of December 20, 1996, each between NFLP and The Bank of New York, as 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.
"Notes" means any of the Rental Car Asset Backed Notes issued by NFLP,
Alamo Leasing, CarTemps Leasing or another Lessor Grantor pursuant to its Base
Indenture and the related 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
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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 if the
Rating Agency Confirmation Condition with respect to each Series of Group I
Notes (as defined in the applicable Group I Supplements) is otherwise satisfied.
"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 each of
the Lessor Grantors, as applicable, then owing to the Financing Source and
relating to such Beneficiary as specified in a Financing Source and Beneficiary
Supplement and the denominator of which is the then aggregate indebtedness and
other obligations of each of the Lessee Grantors and each of the Lessor
Grantors, 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
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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 Standard &
Poor's and P-1 by Moody's.
"Qualified Intermediary" means, with respect to a Financing Source, a
party, rated by the applicable Rating Agencies not less than the rating
specified in the Financing Documents of such Financing Source, designated in an
Exchange Agreement as an intermediary for exchanges of Vehicles by the related
Lessor Grantor or Lessee Grantor pursuant to such Exchange Agreement.
"Rating Agencies" means any rating agency, to the extent such agency,
at the request of any of the Lessee Grantors or any of the Lessor Grantors
pursuant to the applicable Financing Documents, is then rating the outstanding
securities or indebtedness of any Financing Source.
"Redesignation" has the meaning set forth in Section 2.2.
"Refinanced Vehicles" shall, with respect to any applicable Financing
Source, have the meaning specified in the Financing Documents of such Financing
Source.
"Republic" means Republic Industries, Inc., a Delaware corporation, and
its successors and assigns in accordance with the terms hereof.
"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 a
Lessor Grantor or Lessee Grantor, (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
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Designated Vehicle or Vehicles equal to or greater than the Termination Value
for such Designated Vehicle or Vehicles 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.
"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 or its agent or designee for repurchase or sale at
Auction 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 any of the Lessor Grantors to
repurchase Vehicles manufactured by it or one of its Affiliates during the
specified Repurchase Period.
"Required Asset Amount" shall, with respect to any applicable Financing
Source, have the meaning, if any, specified in the Financing Documents of such
Financing Source.
"Required Enhancement Amount" shall, with respect to any applicable
Financing Source, have the meaning, if any, specified in the Financing Documents
of such Financing Source.
"Second Amended and Restated Agreement" has the meaning set forth in
the preamble hereto.
"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 Series 1996-1 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 under the NFLP Base Indenture, 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 NFLP Base Indenture.
"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.
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"Series 1997 Supplements" means, collectively, the Series 1997-1
Supplement, the Series 1997-2 Supplement, the Series 1997-3 Supplement and the
Series 1997-4 Supplement, pursuant to which the Series 1997 Variable Funding
Notes were issued by NFLP.
"Series 1997 Variable Funding 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 under the NFLP Base Indenture,
substantially in the form of Exhibit A to the Series 1997 Supplements.
"Series 1997-1 Variable Funding Note" means 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 NFLP Base Indenture, among NFLP, as issuer, The Bank
of New York, as trustee and the enhancement agent.
"Series 1997-2 Supplement" means the Series 1997-2 Supplement, dated as
of October 29, 1997, to the NFLP Base Indenture, among NFLP, as issuer, The Bank
of New York, as trustee and the enhancement agent.
"Series 1997-3 Supplement" means the Series 1997-3 Supplement, dated as
of October 29, 1997, to the NFLP Base Indenture, among NFLP, as issuer, The Bank
of New York, as trustee and the enhancement agent.
"Series 1997-4 Supplement" means the Series 1997-4 Supplement, dated as
of October 29, 1997, to the NFLP Base Indenture, among NFLP, as issuer, The Bank
of New York, as trustee and the enhancement agent.
"Series 1999-1 Alamo Notes" the Variable Funding Rental Car Asset
Backed Notes, Series 1999-1, executed by Alamo Leasing and authenticated and
delivered by or on behalf of the Trustee under the Alamo Base Indenture and the
Series 1999-1 Alamo Supplement, substantially in the form of Exhibit A to the
Series 1999-1 Alamo Supplement.
"Series 1999-1 Alamo Supplement" means the Series 1999-1 Supplement,
dated as of February 26, 1999, to the Alamo Base Indenture, between Alamo
Leasing, as issuer, and The Bank of New York, as trustee.
"Series 1999-1 CarTemps Notes" the Variable Funding Rental Car Asset
Backed Notes, Series 1999-1, executed by CarTemps
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Leasing and authenticated and delivered by or on behalf of the Trustee under the
CarTemps Base Indenture and the Series 1999-1 CarTemps Supplement, substantially
in the form of Exhibit A to the Series 1999-1 CarTemps Supplement.
"Series 1999-1 CarTemps Supplement" means the Series 1999-1 Supplement,
dated as of February 26, 1999, to the CarTemps Base Indenture, between CarTemps
Leasing, as issuer, and The Bank of New York, as trustee.
"Series 1999-1 NFLP Notes" the Variable Funding Rental Car Asset Backed
Notes, Series 1999-1, executed by NFLP and authenticated and delivered by or on
behalf of the Trustee under the NFLP Base Indenture and the Series 1999-1 NFLP
Supplement, substantially in the form of Exhibit A to the Series 1999-1 NFLP
Supplement.
"Series 1999-1 NFLP Supplement" means the Series 1999-1 Supplement,
dated as of February 26, 1999, to the NFLP Base Indenture, between NFLP, as
issuer, and The Bank of New York, as trustee.
"Series of Notes" means any of the series of Rental Car Asset Backed
Notes issued by NFLP, Alamo Leasing, CarTemps Leasing or another Lessor Grantor
pursuant to its Base Indenture and the related Series Supplement.
"Series Supplement" means a supplement to any of the Base Indentures
complying (to the extent applicable) with the terms of such Base Indenture.
"Spirit" means Spirit Rent-A-Car, Inc. d/b/a CarTemps USA, an Ohio
corporation, and its successors and assigns in accordance with the terms hereof.
"Standard & Poor's" means Standard & Poor's Structured Ratings, a
division of The McGraw Hill Companies, Inc.
"Sub-Servicer" has the meaning set forth in Section 3.6 hereof.
"Trustee" means, initially, The Bank of New York, as trustee under the
applicable Base Indenture and any related Series Supplement, or any successor
trustee thereunder.
"Value" means Value Rent-A-Car, Inc., as predecessor by merger to
Alamo.
"Vehicle" means each passenger automobile or light truck owned by any
of the Lessee Grantors or any of the Lessor Grantors and purchased, financed or
refinanced by any of the Lessee
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Grantors or any of the Lessor Grantors with proceeds obtained from a Financing
Source (i) which is in an Initial Fleet, (ii) which is a Refinanced Vehicle or
(iii) with respect to which the Lien of the Master Collateral Agent is or is
required to be noted on the Certificate of Title, together with any replacement
parts and repairs thereto.
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, Alamo and CarTemps, confirms its grant, pledge and assignment
pursuant to the Second Amended and Restated Agreement and, in the case of
National, pursuant to the Original Amended and Restated Agreement and (ii) to
the extent not covered under clause (i) above, 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"):
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(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 other Vehicles owned by such Lessee
Grantor and leased under a Lease 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 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) Eligible Receivables refinanced by a Lessee Grantor under
a Lease;
(vi) 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 or from other Vehicles owned by such Lessee Grantor
and leased under a Lease, including, without limitation, auction
proceeds;
(vii) 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
(viii) 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 or in any
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
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of the pledge and security interest granted under the Original Amended and
Restated Agreement and the Second Amended and Restated Agreement.
(b) Grant by the Lessor Grantors. As security for the payment of the
respective obligations from time to time owing by the Lessor Grantors to each
Financing Source (and any Beneficiary as assignee thereof) under the related
Financing Documents, (i) NFLP hereby confirms its grant, pledge and assignment
pursuant to the Original Amended and Restated Agreement and the Second Amended
and Restated Agreement and (ii) to the extent not covered by clause (i) above,
each of the Lessor Grantors hereby 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 Lessor
Grantor in, to and under the following, whether now or hereafter existing or
acquired (the "Lessor Grantor Master Collateral" and together with the Lessee
Grantor Master Collateral, the "Master Collateral"):
(i) all Vehicles owned by such Lessor Grantor and purchased,
financed or refinanced by such Lessor Grantor with proceeds obtained
from a Financing Source and all other Vehicles owned by such Lessor
Grantor and leased under a Lease 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 any Lessor 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) Eligible Receivables refinanced by a Lessor Grantor with
proceeds obtained from a Financing Source;
(vi) all sale or other disposition proceeds payable by any
Person in respect of the disposition of Vehicles
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purchased, financed or refinanced by such Lessor Grantor with proceeds
obtained from a Financing Source or from other Vehicles owned by such
Lessor Grantor and leased under a Lease, including, without limitation,
auction proceeds;
(vii) 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 Lessor Grantor; and
(viii) 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 or in any
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 and the Second Amended and Restated Agreement.
Each of Republic, the Lessee Grantors, the Lessor Grantors, 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 an Initial Fleet, as applicable,
to be 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 Lessor Grantors.
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
(together with the Related Vehicles, the "Related Master Collateral"). The
designation of Related Vehicles with respect to each Beneficiary
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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, the Lessor Grantors, 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, (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.
SECTION 2.3. Redesignation of Beneficiaries. Each of the Lessee
Grantors and the Lessor Grantors 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
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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 Source with respect to refinanced Vehicles,
any such redesignation shall automatically constitute a release by such
Beneficiary of any interest therein.
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SECTION 2.4. Master Servicer's Fleet Report. Within twenty (20) days
after the end of each calendar month, the Master Servicer shall furnish or cause
to be furnished 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, CarTemps, any other Lessee Grantor, NFLP,
Alamo Leasing, CarTemps Leasing or any other Lessor Grantor, (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 a Lessor Grantor 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
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Grantor or a Lessor Grantor 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 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, as applicable, (a)
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) or (b) a Limited Liquidation Event of
Default or an event which, with the giving of notice, the passage of time or
both, would constitute a Limited Liquidation Event of Default with respect to
the related Series of Notes, 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, and, subject to the
right, if any, of a Lessor Grantor or Lessee Grantor, as set forth in the
applicable Group I Lease, to deposit certain funds directly into the applicable
Collection Account, the Master Servicer, the Lessee Grantors and the Lessor
Grantors, as applicable, shall cause payments (i) representing amounts payable
under Manufacturer Programs (including payments under any Guaranteed
Depreciation Program) 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 into the Master Collateral
Account). Subject to the right, if any, of a Lessor Grantor or Lessee Grantor,
as set forth in the applicable Group I Lease, to deposit certain funds directly
into the applicable Collection Account, by the second Business Day following its
receipt thereof in available funds, each of the Lessee Grantors or Lessor
Grantors will deposit into the Master Collateral Account proceeds received by
any of the Lessee Grantors or Lessor Grantors from (i) sales of Vehicles other
than to or through a Manufacturer under its Manufacturer Program, (ii) sales of
Vehicles at Auction, and
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(iii) insurance proceeds and warranty payments received by any of the Lessee
Grantors or Lessor Grantors during the continuance of a default or amortization
event with respect to any related Financing Source under its Financing
Documents. Each of the Lessee Grantors and the Lessor Grantors 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 an 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 clause (d) below, the dollar amount thereof that is derived
from the Lessee Grantor Master Collateral and the Lessor Grantor 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
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 Lessor Grantor 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 the Lessor Grantors,
respectively.
(d) At such time as no further distribution from any of the Lessee
Grantors or Lessor Grantors (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 the Lessor Grantors, 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
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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 any of
the Lessor Grantors and leased by such Lessor Grantor 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 the Lessor Grantors 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 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 any of the
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Lessor Grantors to show such Lessor Grantor, 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 and the
related Lessor Grantor to be used exclusively as the Master Collateral Agent's
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
Sub-Servicer, if any, 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 Sub-Servicer, if any, establish a
post office box in New York City for each of the Lessee Grantors and the related
Lessor Grantor thereafter to be used exclusively thereafter as the Master
Collateral Agent's 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 the Master Servicer or, if
directed by the Master Servicer, the applicable Sub-Servicer, if any, 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 related Lessee Grantor or
in the name of any related Lessor Grantor, 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 under (and as such terms are defined in)
the Financing Documents of the related Financing Source, 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 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
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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 (to the extent so permitted under the Financing Documents of the
related Financing Source) Certificate of Title relating to Vehicles in an
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 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
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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.
SECTION 3.2. Master Servicer Functions. The Master Servicer shall
(together with the related Sub-Servicers, if any) 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 (to the extent so permitted under the Financing Documents of the related
Financing Source) Certificates of Title relating to an 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
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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 the Lessor Grantors 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 or
cause to be furnished 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(c), 2.5(d), and 2.5(e), (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
(including, without limitation, the related Sub-Servicers, if any), 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
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 or any Sub-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
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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, each of
the Lessor Grantors 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, the Lessor Grantors 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, the Lessor Grantors 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.
SECTION 3.6. Sub-Servicers. The Master Servicer may delegate to a
Lessee or another Affiliate of the Master Servicer (each such delegee, in such
capacity, a "Sub-Servicer") the performance of the Master Servicer's obligations
as Master Servicer in respect of Master Collateral (but the Master Servicer
shall remain fully liable for its obligations in respect of such Master
Collateral under this Agreement).
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 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
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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, the Lessor Grantors, 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
the appropriate Lessor Grantor 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
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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, remedies, powers or privileges of a
Beneficiary with respect to its Related 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.
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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 any of the Lessor Grantors 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 (except enforceability against itself), 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
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, the Lessor Grantors 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
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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 C.
(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 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 (b) which
might or would in its reasonable opinion subject it or any of its directors,
officers, employees or agents to personal or financial liability 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 Sections 4.8(a)(ii) and (b)(ii), the Master Collateral
Agent may, in its sole discretion, retain counsel, independent accountants and
other experts selected by it and may
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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 Lessor Grantors), 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.
(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
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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 Lessor Grantors, 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, any of the Lessor Grantors, 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 or
other Persons, satisfactory to the Master Collateral Agent in its sole
discretion.
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, each of the Lessor
Grantors, each of the Lessee Grantors and the Beneficiaries, resign and be
discharged of its responsibilities hereunder created, such resignation to
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become effective upon the appointment by the Master Servicer and the Lessor
Grantors 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 any of the Lessor Grantors at any time (with or without cause) upon
thirty (30) days' written notice by the Master Servicer or any of the Lessor
Grantors, as the case may be, to the Master Collateral Agent and each of the
Rating Agencies, and the approval by the Majority Beneficiaries of the successor
Master Collateral Agent appointed by the Master Servicer and the Lessor
Grantors, which approval will not be unreasonably withheld; provided, however,
that if either the Master Servicer or any of the Lessor Grantors 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 such Lessor Grantor, as applicable, to remove the Master Collateral
Agent shall cease and the non-defaulting grantors shall have, or if the Master
Servicer and all of the Lessor Grantors 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,
each of the Lessor Grantors, 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, each of the Lessor Grantors, 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 upon its
acceptance of such appointment without further act supersede any predecessor
Master Collateral Agent.
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Upon the appointment of a successor Master Collateral Agent hereunder and its
acceptance of such appointment, 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, designation and acceptance 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 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, any of the Lessor Grantors,
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
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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, each of the Lessor Grantors, 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 (including
reasonable fees and expenses of counsel) (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.
(b) The Lessee Grantors, severally (and to the extent not paid by a
Lessee Grantor, Republic), with respect to any Series of Notes other than the
Series 1996-1 Notes as 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 (including reasonable fees and expenses of counsel) (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
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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 any Series of Notes other than the
Series 1996-1 Notes as 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 any Series of Notes other than the Series 1996-1 Notes as 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 (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
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<PAGE> 45
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 NFLP
Base Indenture Trustee's obligation to indemnify the Master Collateral Agent
shall be limited to actions taken by the Master Collateral Agent at the
direction of such Trustee under the NFLP Base Indenture, it being understood
that the indemnification obligation of such Trustee shall be paid solely out of
funds constituting servicing fees under the Series 1996-1 Supplement.
(b) The Lessee Grantors, severally (and to the extent not paid by a
Lessee Grantor, Republic), with respect to any 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 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
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<PAGE> 46
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 (other than Beneficiaries in respect of
Series 1996-1) 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 applicable Trustee's obligation to indemnify the Master Collateral Agent
shall be limited to actions taken by the Master Collateral Agent at the
direction of such Trustee under the related Base Indenture, it being understood
that the indemnification obligation of such Trustee shall be paid solely out of
funds constituting servicing fees under such Base Indenture and the related
Series Supplements.
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, each of the Lessor Grantors, 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 applicable Financing Document of such Financing
Source; 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
-46-
<PAGE> 47
Supplement by such additional Financing Source or Beneficiary, the Master
Collateral Agent, the Master Servicer, each of the Lessor Grantors and each of
the Lessee Grantors. Additional Lessee Grantors and additional Lessor Grantors
may from time to time become parties hereto by the execution and delivery of a
Grantor Supplement by such additional Lessee Grantor or Lessor Grantor, as the
case may be, the Master Collateral Agent, the Master Servicer and each of the
Lessor Grantors. 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), (b) or (c) 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, any of the Lessor Grantors, any
of the Lessee Grantors (as of the date hereof) or the Master Collateral
Agent, at the address specified for such party on the signature pages
hereto;
(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;
or
(c) if to any additional Lessee Grantor or Lessor Grantor
specified in a Grantor Supplement, at the address specified for such
Lessee Grantor or Lessor Grantor in such Grantor 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
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<PAGE> 48
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 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, the Lessor Grantors, 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 Section 4.1(e) and (ii) such Beneficiary has elected to
terminate this Agreement, this Agreement shall terminate as to such Beneficiary.
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<PAGE> 49
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.
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
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<PAGE> 50
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 LORD
SECURITIES, 2 WALL STREET, NEW YORK, NEW YORK 10005, AND EACH FINANCING SOURCE
AND EACH BENEFICIARY DESIGNATES AND APPOINTS LORD SECURITIES, 2 WALL STREET, NEW
YORK, NEW YORK 10005, 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. 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
LESSOR GRANTOR, 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
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<PAGE> 51
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 LESSOR GRANTOR, 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, EACH LESSOR GRANTOR 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 the Lessor Grantors,
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 the Lessor Grantors, the Lessee
Grantors and Republic therein or with respect to any right to payment from the
Lessor Grantors, 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 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,
the Lessor Grantors and the Lessee Grantors) agrees that it shall not disclose
any Confidential Information to any Person without the prior written consent of
Republic, the applicable Lessor Grantor 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, the applicable Lessor Grantor 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, the applicable Lessor Grantor or the applicable
Lessee Grantor, as the case may be, does not have knowledge if such party is
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<PAGE> 52
prohibited by law from disclosing such requirement to Republic, the applicable
Lessor Grantor or the applicable Lessee Grantor, as the case may be, and (c) in
the course of litigation with Republic, any of the Lessor Grantors or any of the
Lessee Grantors, as the case may be, or any Beneficiary.
"Confidential Information" means information that Republic, any of the
Lessor Grantors 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, any of the Lessor Grantors 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,
any of the Lessor Grantors or any of the Lessee Grantors, 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]
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<PAGE> 53
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 Treasurer
Address: 200 South Andrews Avenue
11th Floor
Ft. Lauderdale, FL 33301
Attention: Kathleen W. Hyle
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: Dwight Jenkins
---------------------------------------
Name: Dwight Jenkins
Title: Vice President and Assistant
Secretary
Address: 7700 France Avenue South
Minneapolis, MN
Attention: John M. Benzian
Telephone: (612) 830-2552
Facsimile: (612) 830-2087
ALAMO FINANCING LP,
as grantor
By: ALAMO FINANCING L.L.C., its General Partner
By: /s/ Dwight Jenkins
---------------------------------------
Name: Dwight Jenkins
Title: Vice President and Assistant
Secretary
Third Amendment and Restated Master
Collateral Agency Agreement
<PAGE> 54
Name: Dwight Jenkins
Title: Vice President and Assistant
Secretary
Address: 7700 France Avenue South
Minneapolis, MN
Attention: John M. Benzian
Telephone: (612) 830-2552
Facsimile: (612) 830-2087
CARTEMPS FINANCING LP,
as grantor
By: CARTEMPS FINANCING L.L.C., its General
Partner
By: /s/ Dwight Jenkins
---------------------------------------
Name: Dwight Jenkins
Title: Vice President and Assistant
Secretary
Address: 7700 France Avenue South
Minneapolis, MN
Attention: John M. Benzian
Telephone: (612) 830-2552
Facsimile: (612) 830-2087
ALAMO RENT-A-CAR, INC.,
as grantor
By: /s/ Leland F. Wilson
-------------------------------------------
Name: Leland F. Wilson
Title: Assistant Treasurer
Address: 200 South Andrews Avenue
11th Floor
Ft. Lauderdale, FL 33301
Attention: Kathleen W. Hyle
Telephone: (954) 769-7297
Facsimile: (954) 769-4135
Third Amendment and Restated Master
Collateral Agency Agreement
<PAGE> 55
NATIONAL CAR RENTAL SYSTEM, INC.,
as grantor
By: /s/ Leland F. Wilson
-------------------------------------------
Name: Leland F. Wilson
Title: Authorized Signatory
Address: 7700 France Avenue South
Minneapolis, MN
Attention: John M. Benzian
Telephone: (612) 860-2552
Facsimile: (612) 830-2087
Third Amendment and Restated Master
Collateral Agency Agreement
<PAGE> 56
SPIRIT RENT-A-CAR, INC. d/b/a CARTEMPS USA,
as grantor
By: /s/ Kathleen W. Hyle
-------------------------------------------
Name: Kathleen W. Hyle
Title: Treasurer
Address: 29100 Aurora Road, Suite 400
Solon, OH 44139
Attention: Jack Zeman
Telephone: (440) 711-1000
Facsimile: (440) 711-1130
CITIBANK, N.A.,
not in its individual capacity but solely
as Master Collateral Agent
By: /s/ Louis Picitelli
-------------------------------------------
Name: Louis Picitelli
Title: Assistant Vice President
Address: 111 Wall Street
5th Floor
New York, NY 10043
Attention: Global Agency and Trust Department
Telephone: (212) 657-5933
Facsimile: (212) 657-3866
Third Amendment and Restated Master
Collateral Agency Agreement
<PAGE> 57
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
ARTICLE I CERTAIN DEFINITIONS.................................................. 3
1.1. Certain Definitions.................................................. 3
1.2. Interpretation and Construction...................................... 16
ARTICLE II MASTER COLLATERAL AGENT AS LIENHOLDER
FOR THE BENEFICIARIES................................................ 17
2.1. Security Interest.................................................... 17
2.2. Designation of Beneficiaries......................................... 19
2.3. Redesignation of Beneficiaries....................................... 20
2.4. Master Servicer's Fleet Report....................................... 21
2.5. Master Collateral Account............................................ 22
2.6. Certificates of Title................................................ 24
2.7. Release of Collateral................................................ 25
2.8. Power of Attorney.................................................... 26
ARTICLE III THE MASTER SERVICER.................................................. 26
3.1. Acceptance of Appointment............................................ 26
3.2. Master Servicer Functions............................................ 26
3.3. The Master Servicer Not to Resign.................................... 27
3.4. Servicing Rights of Master Collateral Agent.......................... 27
3.5. Incumbency Certificate............................................... 28
3.6. Sub-Servicers........................................................ 28
ARTICLE IV THE MASTER COLLATERAL AGENT.......................................... 28
4.1. Appointment.......................................................... 28
4.2. Representations...................................................... 30
4.3. Exculpatory Provisions............................................... 30
4.4. Limitations on Duties of the Master Collateral Agent................. 31
4.5. Resignation and Removal of Master Collateral Agent................... 33
4.6. Qualification of Successors to Master Collateral Agent............... 35
4.7. Merger of the Master Collateral Agent................................ 35
4.8. Compensation and Expenses............................................ 35
4.9. Stamp, Other Similar Taxes and Filing Fees........................... 36
4.10. Indemnification...................................................... 36
ARTICLE V MISCELLANEOUS........................................................ 38
5.1. Amendments, Supplements and Waivers.................................. 38
5.2. Notices.............................................................. 38
5.3. Headings............................................................. 39
5.4. Severability......................................................... 39
5.5. Counterparts......................................................... 39
5.6. Conflicts with Financing Documents; Reservation of Rights............ 39
5.7. Binding Effect....................................................... 39
</TABLE>
-77-
<PAGE> 58
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
5.8. Governing Law........................................................ 39
5.9. Effectiveness........................................................ 40
5.10. Termination of Beneficiary........................................... 40
5.11. Termination of this Agreement........................................ 40
5.12. Assignment by Financing Sources...................................... 40
5.13. No Bankruptcy Petition Against Financing Sources..................... 40
5.14. Jurisdiction; Consent to Service of Process.......................... 41
5.15. Waiver of Jury Trial................................................. 42
5.16. Insurance Notification............................................... 42
5.17. Waiver of Set-Off With Respect to the Lessor Grantors, the Lessee
Grantors and Republic................................................ 42
5.18. Confidentiality...................................................... 42
EXHIBITS
Exhibit A Financing Source and Beneficiary Supplement
Exhibit B Grantor Supplement
Exhibit C Master Servicer's Fleet Report
Exhibit D Certificate of Title Locations
Exhibit E Power of Attorney
</TABLE>
-78-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 361,700
<SECURITIES> 0
<RECEIVABLES> 1,793,100
<ALLOWANCES> 60,700
<INVENTORY> 2,130,600
<CURRENT-ASSETS> 9,093,900
<PP&E> 2,501,800
<DEPRECIATION> 314,100
<TOTAL-ASSETS> 15,168,900
<CURRENT-LIABILITIES> 5,470,700
<BONDS> 3,593,000
0
0
<COMMON> 4,700
<OTHER-SE> 5,389,100
<TOTAL-LIABILITY-AND-EQUITY> 15,168,900
<SALES> 4,562,700
<TOTAL-REVENUES> 5,353,700
<CGS> 3,952,500
<TOTAL-COSTS> 4,585,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,000
<INCOME-PRETAX> 79,200
<INCOME-TAX> 28,500
<INCOME-CONTINUING> 50,700
<DISCONTINUED> 29,400
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,100
<EPS-PRIMARY> .18
<EPS-DILUTED> .17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 217,300
<SECURITIES> 0
<RECEIVABLES> 1,667,600
<ALLOWANCES> 62,300
<INVENTORY> 1,853,500
<CURRENT-ASSETS> 8,406,300
<PP&E> 2,334,500
<DEPRECIATION> 290,900
<TOTAL-ASSETS> 13,925,800
<CURRENT-LIABILITIES> 5,540,400
<BONDS> 2,315,600
0
0
<COMMON> 4,700
<OTHER-SE> 5,419,500
<TOTAL-LIABILITY-AND-EQUITY> 13,925,800
<SALES> 2,343,400
<TOTAL-REVENUES> 3,119,100
<CGS> 2,026,100
<TOTAL-COSTS> 2,631,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,000
<INCOME-PRETAX> 57,500
<INCOME-TAX> 20,700
<INCOME-CONTINUING> 36,800
<DISCONTINUED> 40,300
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,100
<EPS-PRIMARY> .18
<EPS-DILUTED> .17
</TABLE>
