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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER 0-23962
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BUDGET GROUP, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 59-3227576
(State of incorporation) (IRS Employer Identification No.)
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125 BASIN STREET, SUITE 210, DAYTONA BEACH, FL 32114
(Address of Principal Executive Offices -- Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(904) 238-7035
SECURITIES REGISTERED PURSUANT TO SECTION 12(B)OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Class A Common Stock, par value $.01 New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the common equity held by non-affiliates of
the Registrant (assuming for these purposes, but without conceding, that all
executive officers and directors are "affiliates" of the Registrant) as of March
23, 1998 (based on the closing sale price of the Registrant's Class A Common
Stock, par value $.01, as reported on the New York Stock Exchange on such date)
was $974,511,708. 27,502,462 shares of common stock were outstanding as of March
23, 1998, comprised of 25,565,862 shares of the registrant's Class A Common
Stock, par value $0.01, and 1,936,600 shares of the registrant's Class B Common
Stock, par value $0.01.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 23, 1998 are herein incorporated by reference
in Part III.
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TABLE OF CONTENTS
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PART I
ITEM 1. BUSINESS.................................................... 1
ITEM 2. PROPERTIES.................................................. 12
ITEM 3. LEGAL PROCEEDINGS........................................... 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 12
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT........................ 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS......................................... 14
ITEM 6. SELECTED FINANCIAL DATA..................................... 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................... 16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK........................................................ 24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................. 24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.................................... 24
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 24
ITEM 11. EXECUTIVE COMPENSATION...................................... 24
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.................................................. 25
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 25
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K......................................................... 25
ANNEX
EXHIBIT 99.1 SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING
STATEMENTS.................................................. A-1
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THIS FORM 10-K AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
BUDGET GROUP, INC. OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY
CONSTITUTE "FORWARD LOOKING STATEMENTS" UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT,
BELIEF OR CURRENT EXPECTATIONS OF BUDGET GROUP, INC. AND MEMBERS OF ITS
MANAGEMENT TEAM, AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE
NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES AND
THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING
STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE STATEMENT FOR
FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 AND ANNEX A TO THIS FORM
10-K, AND ARE HEREBY INCORPORATED BY REFERENCE. THE COMPANY UNDERTAKES NO
OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED
ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE
OPERATING RESULTS OVER TIME.
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PART I
ITEM 1. BUSINESS
As used in this Report, unless the context otherwise requires: (i) "TEAM"
refers to Budget Group, Inc. and its subsidiaries prior to its acquisition of
Budget Rent a Car Corporation on April 29, 1997 (the "Budget Acquisition"); (ii)
"BRACC" refers to Budget Rent a Car Corporation and its subsidiaries; (iii) the
"Company" or "Budget Group" refers to TEAM (including BRACC) after giving effect
to the Budget Acquisition; and (iv) the "Budget System" or "Budget" refers to
the business of renting cars and trucks and retailing late model vehicles
conducted by the Company and its franchisees under the Budget name. In
connection with the Budget Acquisition, Team Rental Group, Inc. changed its name
to Budget Group, Inc. The Company was incorporated in 1992 under the laws of the
State of Delaware.
GENERAL
The Company, through subsidiary companies and franchisees, operates Budget
Car and Truck Rental, the third largest worldwide car and truck rental system
with over 3,200 locations and a peak fleet size during 1997 of 283,000 cars,
22,500 trucks and 5,100 pick-ups. The Budget System includes locations in both
the airport and local (downtown and suburban) markets in all major metropolitan
areas in the United States, in many other small and mid-size U.S. markets and in
more than 120 countries worldwide. The Budget System had approximately 509
Company-owned locations in the United States and 71 Company-owned locations
outside of the United States at December 31, 1997. In addition, Budget
franchisees operated approximately 455 royalty-paying franchise locations in the
United States and 2,171 locations internationally at December 31, 1997.
Giving effect to the Budget Acquisition as if it had been completed January
1, 1997, for the year ended December 31, 1997, Budget Group's Company-owned
locations in the United States accounted for approximately 80% of the Budget
System's U.S. vehicle rental revenues, while its Company-owned locations outside
the United States accounted for approximately 9% of the Budget System's
international vehicle rental revenues.
Budget is one of only three vehicle rental systems that offer rental
vehicles throughout the world under a single brand name, with locations in
Europe, Canada, Latin America, the Middle East, Asia/Pacific and Africa. The
Budget System currently maintains more local market rental locations throughout
the world than most of its major competitors and is unique among major car
rental systems in that it rents trucks in most major markets worldwide. The
Budget System's consumer truck rental fleet is the fourth largest in the United
States.
In addition, the Company owns Cruise America, Inc. ("Cruise America"), one
of the largest North American companies specializing primarily in the rental and
sale of recreational vehicles with 92 locations; Premier Car Rental LLC
("Premier Car Rental"), which serves the insurance replacement market through a
network of 150 locations in 16 major U.S. markets; and Budget Car Sales, Inc.,
one of the largest independent retailers of late model vehicles in the United
States, which operates 26 retail car sales facilities. Budget also owns VPSI,
Inc. ("Van Pool Services"), which leases vans for van pooling operations in 28
states; and Budget Airport Parking, which operates airport parking facilities at
certain locations.
The Company's principal executive offices are located at 125 Basin Street,
Suite 210, Daytona Beach, Florida 32114, and its telephone number at that
address is (904) 238-7035.
INDUSTRY SEGMENT INFORMATION
The Company's industry segments are vehicle rentals and retail vehicle
sales. The discussion of the Company's business contained herein should be read
in conjunction with Note 16 of the Notes to the Consolidated Financial
Statements of the Company included in this Report.
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THE BUDGET ACQUISITION
On April 29, 1997, pursuant to a series of stock purchase agreements (the
"Stock Purchase Agreements") among TEAM , Ford Motor Company ("Ford"), BRACC and
the common stockholder of BRACC, TEAM acquired all of the outstanding capital
stock of BRACC for approximately $275 million cash and the issuance to Ford of
4,500 shares of Series A Convertible Preferred Stock of the Company, which were
converted into 4,500,000 shares of the Company's Class A Common Stock and sold
in a public offering in October 1997.
BRACC. In 1960, BRACC began franchising car and truck rental operations
serving the downtown and suburban areas of cities in the United States and
Canada. Budget established its first major airport location in 1967, but
maintained a marketing strategy of offering good value to price-sensitive
personal renters. Historically, BRACC operated the broadest distribution system
in the industry, with more full-service local market locations in the United
States and worldwide than its major competitors and the largest integrated
system offering both cars and trucks in most markets worldwide. During the
1980s, BRACC undertook a strategic shift from being structured as a franchising
company to functioning as an operating company.
For the year ended December 31, 1996, BRACC's 304 company-owned locations
in the United States accounted for approximately 61% of the Budget System's
vehicle rental U.S. revenues, while its 70 company-owned locations outside the
United States accounted for approximately 8.5% of the Budget System's
international vehicle rental revenues. At December 31, 1996, Budget franchisees
(including TEAM) maintained 652 locations in the United States and 2,182
locations internationally.
TEAM. Prior to the Budget Acquisition, TEAM was the largest U.S. Budget
franchisee and was one of the largest independent retailers of late model
automobiles in the United States. TEAM became a publicly held corporation in
August 1994, with 23 locations in four franchise territories, and embarked on a
strategy to expand significantly its Budget franchise base by further
consolidating Budget franchise operations and to develop a branded retail car
sales operation within its Budget franchise territories. Since its initial
public offering, TEAM pursued an aggressive growth strategy in both its vehicle
rental and retail car sales operations. TEAM added an additional nine Budget
franchise territories in that period. With 152 locations as of December 31,
1996, TEAM accounted for approximately 14.8% of the Budget System's 1996 U.S.
revenues without giving effect to the Budget Acquisition. Concurrently with the
development of its Budget franchise business, TEAM developed or acquired 11
retail car sales facilities.
Budget Group. After completing the Budget Acquisition, TEAM changed its
name to Budget Group, Inc. At December 31, 1997, Budget Group consisted of 509
Company-owned locations in the United States, including 21 of the 25 largest
airport rental markets in the United States. Giving effect to the Budget
Acquisition as if it had been completed January 1, 1997, Budget Group accounted
for approximately 80% of the Budget System's 1997 U.S. vehicle rental revenues.
Accordingly, the Budget Acquisition marked a significant furtherance of the
initiative undertaken by BRACC approximately 10 years ago to make the transition
from being a franchising company to being an operating company, as well as
furtherance of TEAM's strategy of consolidating the Budget System. The Company
believes that its increased level of Company-owned operations will enable it to
improve the performance of the Budget System and to compete more effectively in
both the corporate and consumer segments of the vehicle rental industry. The
Company is managed by officers having significant experience with BRACC and
TEAM, who utilize operating strategies and systems that have proven most
effective for BRACC and TEAM.
OTHER DEVELOPMENTS SINCE JANUARY 1997
Possible Ryder TRS Acquisition. On March 4, 1998 the Company announced
that it had signed an agreement to acquire Ryder TRS Inc. ("Ryder TRS") by
merger (the "Ryder TRS Acquisition"). If the Ryder TRS Acquisition is
consummated, Ryder TRS stockholders will receive up to approximately $264
million comprised of $125.0 million in cash, approximately $119 million in
Budget Class A Common Stock and up to $20.0 million of contingent additional
consideration in return for 100% of the outstanding Ryder TRS stock, subject to
adjustment and the other terms and conditions of the related merger agreement.
Ryder TRS operates a fleet of approximately 29,000 trucks and vans available for
local and one-way rentals from approximately 4,000 locations across the United
States. If the Ryder TRS acquisition is completed, the
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Company's combined truck rental fleet will be comprised of approximately 44,000
vehicles. The closing of the Ryder TRS Acquisition is subject to the receipt of
the necessary government approvals. For additional information regarding the
Ryder TRS Acquisition, see "Possible 1998 Acquisition of Ryder TRS," below.
Cruise America. On January 28, 1998, the Company acquired Cruise America,
which is one of the largest companies in North America specializing in the
rental and sale of recreational vehicles (RVs). Cruise America began rental and
sales operations in Miami, Florida in 1972, with an initial strategy to locate
rental centers in metropolitan gateway cities which are destinations for large
numbers of domestic and international travelers. Since that time, Cruise America
has established rental and/or sales locations across the United States and
Canada. At December 31, 1997, Cruise America operated a total of 16 Hub offices,
76 Satellite offices and a rental fleet of 2,810 RVs. Besides rentals, Cruise
America sells new and used RVs (including vehicles retired from the rental
fleet) from its Hub offices. The sales effort is marketed under the name RV
DEPOT and for the year ended April 30, 1997, RV sales represented approximately
44% of total revenue.
Premier Car Rental. On July 31, 1997, the Company acquired the fleet and
certain assets of Premier Car Rental, Inc. for $2.0 million in cash and the
refinancing of approximately $85.2 million of Premier Car Rental, Inc.'s
outstanding fleet indebtedness. Premier Car Rental provides rental cars for the
insurance replacement market and at December 31, 1997 owned and operated
approximately 8,500 vehicles from 150 locations in 16 major U.S. markets and had
approximately 740 employees. Premier Car Rental has continued to operate under
its own trade name.
Alliance Agreement with HFS Incorporated. On August 19, 1997, Budget Truck
Rental entered into a four-year preferred alliance agreement with Cendant Corp.
making Budget the exclusive provider of truck rental services promoted to
customers of Coldwell Banker, ERA and Century 21 real estate brands, as well as
relocation customers of HFS Mobility Services, Inc.
Franchise Acquisitions. In July 1997, the Company acquired the Budget
franchise located in Chattanooga, Tennessee for $3.2 million, including
approximately $3 million in assets. In September 1997, the Company acquired the
St. Louis, Missouri Budget franchisee for approximately $9 million, consisting
of $1 million in cash and approximately $8 million in shares of Class A Common
Stock. In November 1997, the Company purchased substantially all of the assets
of RLB Industries Inc., the Syracuse Budget franchisee, for approximately $1.4
million in cash.
THE BUDGET SYSTEM
The Company provides consistent system-wide services, a state-of-the-art
reservation system and other opportunities to all vehicle rental locations
within the Budget System.
System Wide Services. The Company provides the Budget System with: (i)
national promotion, advertising and public relations; (ii) reservations and
information systems; (iii) data processing support; (iv) marketing programs with
hotels and airlines; (v) Sears Car and Truck Rental concessions; (vi) a sales
staff for marketing to corporate customers and the travel community; (vii)
credit card services for commercial customers; (viii) training in local
marketing techniques; (ix) operation, training and support; (x) fleet purchasing
programs; and (xi) a Company-owned fleet of cars and trucks for one-way rentals.
In general, pursuant to its agreements with its franchisees, the Company is
required to expend a certain percentage of franchise royalties that it receives
on advertising and promotion. In addition, the Company negotiates with
automobile manufacturers to develop vehicle acquisition and disposition programs
that are available to franchisees as well as to Company-owned locations.
The Company facilitates one-way car rentals between approximately 600
selected Company-owned and franchised locations in the United States. This
one-way program is also in place for truck rentals at approximately 375
locations. A limited fleet of vehicles owned by the Company is dedicated to
supplement the one-way vehicle rental capacity of the participating locations.
This program enables the Budget System to operate more fully as an integrated
network of locations.
Reservations System. The Company operates a state-of-the-art computerized
reservation system through WizCom International, Inc. Budget's main reservation
facility is located in the Dallas metropolitan
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area and has over 400 employees. Auxiliary centers are located in Toronto,
Canada, the United Kingdom, Australia and New Zealand. These centers are linked
with the major airline and travel industry reservation systems through the
worldwide Budget reservation network. The main reservation facility accepts
inquiries and reservations for Budget System locations worldwide on a 24-hour
basis, 365 days a year. The reservation centers utilize an extensive database
maintained on rates and vehicles available for nearly all Budget System
locations, a special database of pertinent information on frequent renters and
other information that facilitates the Budget System's business.
Sears Car and Truck Rental. In 1970, BRACC established a contractual
relationship with Sears which allows Budget operating locations to provide car
and truck rentals under the Sears name. Sears Car and Truck Rental customers may
use their Sears charge card for payment of rental charges. Sears Car and Truck
Rental is available at approximately 900 Budget locations in the United States.
MANAGEMENT INTEGRATION
The Company is managed by a combination of managers from TEAM and BRACC.
Sanford Miller, the Chairman of the Board and Chief Executive Officer of TEAM
prior to the Budget Acquisition, is the Chairman of the Board and Chief
Executive Officer of the Company. The prior managements of TEAM and BRACC have
been integrated to create an effective and experienced management team for the
Company which draws upon the knowledge and strengths of the two organizations.
The majority of the Company's corporate functions continue to be managed by
BRACC personnel. BRACC's primary corporate functions are being centralized in
its worldwide headquarters in Lisle, Illinois. TEAM previously maintained a
decentralized management structure for its day-to-day rental operations. As part
of the Budget Acquisition, TEAM's rental operations are being merged into
BRACC's and centralized to achieve cost savings.
RENTAL OPERATIONS
Budget rents a wide variety of automobiles and trucks, most of which
consist of the current and immediately preceding model years. Vehicle rentals
are generally made on a daily, weekly or monthly basis and generally include
unlimited mileage. Rental charges are computed on the basis of the length of the
rental or, in some cases, on the length of the rental plus a mileage charge.
Rates vary at different locations depending on the type of vehicle rented, the
local market and competitive and cost factors. Most rentals are made utilizing
rate plans under which the customer is responsible for gasoline used during the
rental. Budget also generally offers its customers the convenience of leaving a
rented vehicle at a Budget location in a city other than the one in which it was
rented, although, consistent with industry practices, a drop-off charge or
special intercity rate may be imposed.
The following table sets forth for the periods indicated the number of
owned and franchised locations of Budget in the United States and at
international locations and certain other data of Budget Group giving effect to
the Budget Acquisition as if it had been completed January 1, 1996 (excludes
Premier Car Rental and Van Pool Services):
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YEAR ENDED
DECEMBER 31,
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1996 1997
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Locations in operation:
United States:
Company................................................ 452 509
Franchisees............................................ 500 455
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Total U.S......................................... 956 964
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YEAR ENDED
DECEMBER 31,
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1996 1997
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International:
Company................................................... 70 71
Franchisees............................................... 2,182 2,171
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Total International............................... 2,252 2,242
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Budget System................................... 3,208 3,206
Average fleet size(a)....................................... 235,874 235,603
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(a) Average fleet size is the number of vehicles (both cars and trucks) owned or
leased by Budget each day of the period divided by the number of days in the
period.
North American Operations. At December 31, 1997, the Company owned and
operated 509 Budget locations in the United States, and franchisees owned and
operated 455 Budget locations in the United States and 388 Budget locations in
Canada. Of the U.S. facilities, 286 primarily serve airport business and 678
serve local market (downtown and suburban) locations. Budget's mix of business
consists of approximately 65% in the airport segment and 35% in the local
segment. In addition, at December 31, 1997, the Company rented trucks at 286 of
its Company-owned locations and 532 of its franchised locations.
Budget is in many cases one of five to seven vehicle concessionaires at the
airports in which it operates. In general, concession fees for airport locations
are based on a percentage of total commissionable revenues (as determined by
each airport authority), subject to minimum annual guaranteed amounts.
Concessions are typically awarded by airport authorities every three to five
years based upon competitive bids. Budget's concession arrangements with the
various airport authorities generally impose certain minimum operating
requirements, provide for relocation in the event of future construction and
provide for abatement of the minimum annual guarantee in the event of extended
low passenger volume.
International Operations. At December 31, 1997, the Company owned and
operated 71 international Budget locations, consisting of 39 European locations
(including the Middle East and Africa) and 32 locations in the Asia/Pacific
region, and franchisees owned and operated 1,783 international Budget locations,
consisting of 1,133 European locations (including the Middle East and Africa),
263 Latin American locations and 387 locations in the Asia/Pacific region.
Budget locations can be found in more than 120 countries outside the United
States. Budget is recognized as a market leader in Canada, Germany and many
Latin American and Caribbean countries.
RENTAL VEHICLE PURCHASING
Budget participates in a variety of vehicle purchase programs with major
domestic and foreign vehicle manufacturers. On average during 1997, 72% of the
Company's vehicle purchases consisted of Ford vehicles, 8% of Chrysler vehicles,
11% of Nissan and Toyota vehicles and the remaining 9% of General Motors, Saab
and Hyundai vehicles. These percentages vary among the Company's operations and
will most likely change from year to year. The average price for automobiles
purchased by the Company in 1997 for its rental fleet was approximately $18,675.
Budget's principal relationship has historically been with Ford, with an
emphasis on products from the Lincoln-Mercury Division of Ford. Concurrently
with the Budget Acquisition, the Company entered into a new 10-year Supply
Agreement with Ford. Under the new Supply Agreement, the Company agreed (i) to
purchase or lease at least 70% of the total number of vehicles leased or
purchased by it in each model year from Ford and (ii) to purchase or lease at
least 80,000 new Ford vehicles in each model year in the United States. Under
the Supply Agreement, Ford and its affiliates are required to offer to the
Company and its affiliates and franchisees, for each model year, vehicles and
fleet programs at prices that are competitive with the vehicles and fleet
programs of other automobile manufacturers.
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FLEET UTILIZATION AND SEASONALITY
Budget's business is subject to seasonal variations in customer demand,
with the summer vacation period representing the peak season for vehicle
rentals. The general seasonal variation in demand, along with more localized
changes in demand at each of the Company's locations, causes the Company to vary
its fleet size over the course of the year. For 1997, the Company's average
monthly fleet size (excluding Premier Car Rental and Van Pool Services) ranged
from a low of 81,400 vehicles in January to a high of 113,100 vehicles in
August. Fleet utilization, which is based on the average number of days vehicles
are rented compared to the total number of days vehicles are available for rent,
ranged from 70.5% in December to 86.5% in August and averaged 79.1% for 1997.
RENTAL RELATED PRODUCTS
Although the dominant source of the Company's total revenue is time and
mileage charges from the rental of vehicles and franchise payments from its
franchisees, the Company also generates revenue from intercity drop-off charges
and additional driver and airport concession fees and from rental related
products such as loss damage waivers, personal accident insurance, personal
effects coverage, supplemental liability insurance, other travel related
insurance coverages and travel related products. The travel related products
from which the Company generates revenue include vehicle upgrades, refueling
charges and miscellaneous items such as baby seats, ski racks and cellular
phones.
MARKETING
The Company's promotional and marketing activities are designed to promote
Budget as a value service provider and to promote brand loyalty. Budget Group
has a field sales force of approximately 60 employees worldwide. The Company's
national advertising program is implemented through a variety of media,
including national and local television, radio, newspapers, magazines, airline
ticket jackets, airline in-flight magazines and strategically located
billboards, an Internet site, counter and store collateral materials and
merchandise. Budget Group also has cooperative advertising arrangements with
airlines, hotels, travel agency consortia and others in the travel industry and
participates in a number of airline frequent flyer programs (including United
Airlines, Southwest Airlines, Alaska Airlines, Aeromexico and Lufthansa), as
well as certain hotel programs, theme park programs and credit card affinity
programs. Budget also has a frequent renter program, Awards Plus, which gives
renters a strong incentive to bring all of their car rental business to Budget.
In addition, the Company has contracts with a number of airlines, hotels and
other organizations pursuant to which such organizations agree to recommend
Budget's services during their reservation calls and to transfer interested
customers to a Budget reservation agent. In addition, in connection with the
Budget Acquisition, the Company has undertaken to carry out promotional programs
that feature and promote the rental of Ford vehicles.
CUSTOMER SERVICE
Budget's commitment to delivering a consistently high level of customer
service is a critical element of its success and strategy. Each month, over
3,000 Budget customers are randomly surveyed to measure service levels by
location. Budget identifies specific areas of achievement and opportunity from
these surveys. Areas of improvement are addressed on a system-wide level and
standard methods and measures are developed. To drive improvement, the service
standards are audited routinely by management and service delivery standards
assessors. The major areas of these assessments include: (i) speed of
rental/return process; (ii) vehicle condition and availability; (iii) customer
interaction including helpfulness and courtesy; and (iv) location image. In
addition, Budget utilizes a toll-free "800" number that allows customers to
report problems directly to the customer relations department. Monthly reports
of the types and number of complaints received are used in conjunction with the
customer satisfaction reports by location management as feedback of customer
service delivery. Furthermore, Budget participates in the annual J.D. Power and
Associates survey process to ensure that competitive levels of performance are
achieved.
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INFORMATION TECHNOLOGY
The Company's information technology is designed to provide Budget with
high quality, cost-effective systems and services on a timely basis. In late
1995, BRACC implemented its state-of-the-art reservation system, which consists
of a highly integrated mainframe system with an intelligent workstation
component for reservation agents, allowing them to access pertinent information
in a fast and user-friendly manner. The reservation system has direct interfaces
to the airline system and captures key corporate and customer information.
The Company's rental counter and back-office system, BEST I, supports both
Company-owned and franchisee operations and its fleet system supports the
financing, accounting and ordering for all brands of vehicles including direct
ordering lines to Ford, Toyota, Chrysler, GM and Isuzu. The Company's human
resources, benefits and payroll interface is supported by a client-server system
that automatically feeds to an outsourced payroll system. The Company intends to
continue to enhance and consolidate its information technology systems allowing
Budget to deliver consistent customer service at all of its locations.
FRANCHISING
Of the more than 3,200 Budget worldwide locations at December 31, 1997,
more than 2,600 were owned and operated by franchisees, and these locations
accounted for 5.8% of system-wide revenues for 1997. The Company has franchise
locations in more than 120 countries worldwide. Franchised locations range from
large operations in major airport markets with fleet sizes in excess of 4,000
vehicles and franchise territories within an entire country to operations in
small markets with fleets of fewer than 50 vehicles.
The Company considers its relationships with its franchisees to be
excellent. It works closely with franchise advisory councils in formulating and
implementing sales, advertising and promotion, and operating strategies and
meets regularly with these advisors and other franchisees at regional, national
and international meetings. The Company has an ongoing growth strategy of adding
new franchises worldwide when opportunities arise. Incremental franchises
provide the Company with a source of high margin revenue as there are relatively
few additional fixed costs associated with fees paid by new franchisees to the
Company.
The Company's relationship with each Budget franchisee is governed by
franchise agreements (the "Franchise Agreements"), which grant to the
franchisees certain exclusive territories in which to operate Budget vehicle
rental businesses. The Franchise Agreements provide the Company with rights
regarding the business and operations of each franchise and impose restrictions
on the transfer of the franchise and on the transfer of the franchisee's capital
stock without the consent of the Company. Each franchisee is required to operate
each of its franchises in accordance with certain standards contained in the
Budget operating manual (the "Operating Manual"). The Company has the right to
monitor the operations of franchisees and any default by a franchisee under a
Franchise Agreement or the Operating Manual may give the Company the right to
terminate the underlying franchise.
In general, the Franchise Agreements grant the franchisees the exclusive
right to operate a Budget Rent a Car and/or Budget Rent a Truck business in a
particular geographic area for a stated period. Franchise Agreements generally
provide for an unlimited number of renewal terms. Upon renewal, the terms and
conditions of Franchise Agreements (other than with respect to royalty fees) may
be amended from those contained in the existing Franchise Agreements. The
standard royalty fee payable under Franchise Agreements is 7.5% of gross rental
revenues in the United States and 5% of gross rental revenues in international
markets, but certain of the franchisees have franchise agreements with different
royalty fee structures.
Pursuant to each Franchise Agreement, the franchisee must meet certain
guidelines relating to the number of rental offices in the franchised territory,
the number of vehicles maintained for rental and the amount of advertising and
promotion expenditures. In general, each Franchise Agreement provides that the
franchisee shall not engage in any other vehicle rental business within the
franchise territory during the term of such agreement and for 12 months
thereafter. In addition, franchisees agree not to use the word "Budget" or any
other Budget trademark other than in their Budget vehicle rental businesses.
7
<PAGE> 10
RENTAL VEHICLE DISPOSITION
The Company's operating strategy is to maintain its Budget rental fleet at
an average age of five months or less. Approximately 87% of the vehicles
purchased for the Budget fleet in model year 1997 were Program Vehicles. These
programs currently require that the Program Vehicles be maintained in fleet for
a minimum number of months and impose numerous return conditions, including
those related to mileage and repair condition. At the time of return to the
manufacturer, the Company receives the price guaranteed at the time of purchase
and are thus protected from fluctuations in the prices of previously-owned
vehicles in the wholesale market at the time of disposition. The future
percentages of Program Vehicles in the Company's fleet will be dependent on the
availability and attractiveness of manufacturers' repurchase programs, over
which the Company has no control.
In addition to manufacturers' repurchase programs, the Company disposes of
its rental fleet through automobile auctions, sales to wholesalers and internal
retail car sales operations. While the disposal of rental vehicles through
internal retail car sales operations has been limited to date, management
believes that such dispositions may increase as Budget retail car sales
operations continue to grow and as management evaluates the mix of Program
Vehicles and vehicles not subject to manufacturers' repurchase programs.
RETAIL CAR SALES OPERATIONS
The Company sells cars, sport utility vehicles and trucks through its
retail car sales facilities and is one of the largest independent retailers of
late model vehicles in the United States. At December 31, 1997, the Company
operated 26 retail car sales facilities in more than 16 markets nationwide.
Retail Car Sales Inventory. In 1997, the vehicles sold at Budget retail
car sales facilities consisted primarily of 1997 model year automobiles and
passenger vans, with some 1996 model year vehicles and very few 1995 model year
vehicles. The Company historically has acquired most of its retail car sales
inventory at auctions, although it has acquired some cars from its rental fleet.
In the future, the Company expects to increase its acquisitions of cars from the
disposition of cars used in its rental fleet and to purchase a smaller portion
from auctions.
Vehicle Pricing and Financing. While many cars display stickers indicating
their "blue book" value, customers are permitted to negotiate pricing terms with
the sales managers. Various local enterprises provide financing to customers of
the Company on a non-exclusive basis. To supplement its sale of vehicles, the
Company sells extended service contracts and related consumer products to their
customers.
Retail Car Sales/Service Facilities. Each of the retail car sales
facilities originally operated by TEAM consists of a showroom and an outdoor
display area, which together accommodate the on-site display of at least 100
cars and a service area. The service departments operated at each retail car
sales facility are responsible for inspecting a car's condition and for
providing necessary reconditioning and maintenance services before sale. These
services are provided uniformly for its retail car sales facilities in
accordance with an inspection checklist developed by the Company. Service
departments also provide after-sale service for the Company's customers. The
retail car sales facilities originally operated by BRACC are typically smaller
than TEAM's car sales facilities and do not include service departments.
REGULATORY AND ENVIRONMENTAL MATTERS
The Company is subject to foreign, federal, state and local laws and
regulations, including those relating to taxing and licensing of vehicles,
franchising, consumer credit, environmental protection, retail vehicle sales and
labor matters.
Environmental Matters. The principal environmental regulatory requirements
applicable to the Company's operations relate to the ownership or use of tanks
for the storage of petroleum products, such as gasoline, diesel fuel and waste
oils; the treatment or discharge of waste waters; and the generation, storage,
transportation and off-site treatment or disposal of waste materials.
Approximately 170 of the Company's locations contain petroleum products stored
in underground or aboveground tanks. The Company conducts environmental
compliance programs designed to maintain compliance with applicable technical
and opera-
8
<PAGE> 11
tional requirements, including periodic integrity testing of underground storage
tanks and providing financial assurance for remediation of spills or releases.
The Company believes that its operations currently are in compliance, in all
material respects, with such regulatory requirements. However, the Company, as
well as those competing entities which own or operate underground storage tanks,
must achieve compliance with certain Federal underground storage tank
requirements by 1998. The Company believes that the remaining costs of complying
with these requirements will be approximately $3 million.
The historical and current uses of the Company's facilities may have
resulted in spills or releases of various hazardous materials, wastes or
petroleum products ("Hazardous Substances") which now, or in the future, could
require remediation. The Company also may be subject to requirements related to
remediation of Hazardous Substances that have been released to the environment
at properties they own or operate, or owned or operated in the past, or at
properties to which they send, or have sent, Hazardous Substances for treatment
or disposal. Such remediation requirements generally are imposed without regard
to fault, and liability for any required environmental remediation can be
substantial. The Company may be eligible for reimbursement or payment of
remediation costs associated with releases from registered underground storage
tanks in states that have established funds to assist in the payment of such
remediation costs. Subject to certain deductibles, the availability of funds,
the compliance status of the tanks and the nature of the release, these tank
funds may be available to the Company for use in remediating releases from their
tank systems.
Certain of the Company's locations have been the subject of environmental
remediation as a consequence of leaks or spills and continue to have some level
of environmental impairment that may require further remediation. In connection
with the acquisition of certain franchise territories, the sellers of such
franchise territories have agreed to pay certain amounts for undisclosed
liabilities which would include certain payments for remediation activities at
an affected site.
In connection with the Budget Acquisition it was determined that
approximately 140 BRACC rental facilities contained underground storage tanks.
Ford has agreed, subject to certain limitations, to indemnify the Company
against losses incurred by the Company arising out of or resulting from breaches
by BRACC of BRACC representations and warranties in its Stock Purchase Agreement
(including those relating to environmental matters), to the extent such losses
are not covered by an insurance policy or a reserve established by BRACC,
relating to any action by a third party in connection with environmental
matters. Ford's indemnity obligation for environmental and certain other matters
is capped at $40.0 million. Ford is not required, however, to indemnify the
Company unless such loss exceeds $15,000 and the breach of all representations
and warranties (including those relating to environmental matters) has resulted
in aggregate losses in excess of $2.0 million, nor is Ford required to pay the
first $2.0 million of such aggregate losses (including those relating to
environmental matters).
Although the potential cost of any necessary remediation at the Company's
facilities is not precisely known, it is not expected to exceed $5.0 million
over the next three to five years.
Franchise Matters. As a franchisor, the Company is subject to federal,
state and foreign laws regulating various aspects of franchise operations and
sales. These laws impose registration and disclosure requirements on franchisors
in the offer and sale of franchises and, in certain states, also apply
substantive standards to the relationship between the franchisor and the
franchisee, including those pertaining to default, termination and nonrenewal of
franchises.
Other Matters. Regulations enacted by various federal and state
authorities affect the Company's business. The financing activities of the
Company's retail car sales operations are subject to federal truth in lending,
consumer leasing and equal credit opportunity regulations, as well as state and
local motor vehicle finance laws, installment finance laws, insurance laws,
usury laws, installment sales laws and other consumer protection regulations.
9
<PAGE> 12
TRADEMARKS
The Company owns the Budget trademark which has been registered with the
patent and trademark office in the United States and in more than 100 countries,
territories and foreign jurisdictions worldwide. The Company considers its name
and logo rights to be an important part of its business.
EMPLOYEES
At December 31, 1997, the Company employed approximately 12,000 persons. At
December 31, 1997, approximately 1,350 employees in various locations throughout
the United States and approximately three employees outside the United States
were subject to collective bargaining agreements. The Company believes that its
employee relations are good.
COMPETITION
The vehicle rental industry is characterized by intense competition,
particularly with respect to price and service. In any geographic market, the
Company may encounter competition from national, regional and local vehicle
rental companies. Budget's main competitors in the rental market are The Hertz
Corporation, Avis, Inc., Alamo Rent-A-Car, Inc., National Car Rental System,
Inc. and Enterprise Rent-A-Car Company. Premier Car Rental's principal
competitors include Enterprise Rent-A-Car Company, Car Temps, Inc., Hertz Local
Edition and a range of regional insurance replacement companies. In consumer
truck rentals, Budget faces competition from U-Haul International, Inc., Ryder
TRS and Penske Truck Rental. There have been occasions when the major vehicle
rental companies have been adversely affected by industry-wide price cutting,
and TEAM and BRACC have on such occasions lowered their prices in response. The
Company will not generally be able to unilaterally raise its prices or to
maintain its prices in times of industry price cutting.
The retail car sales business is also characterized by intense competition
from a range of regional and local car dealerships and other retailers of
previously-owned vehicles. Management believes that the Company competes
primarily against new car dealers retailing previously-owned cars. The Company's
retail car sales facilities are located among similar facilities and, in some
instances, together with the Company's rental operations. The entry of large,
well-capitalized retailers of late model previously-owned cars may provide
Budget Group with significant additional competition.
VAN POOLING OPERATIONS
Van Pool Services, the Company's commuter van pooling subsidiary, was
acquired in February 1996 and maintains offices in 28 cities located in 18
states and the District of Columbia. Founded in 1977, Van Pool Services provides
van pooling services to individuals, corporations and municipalities. Pursuant
to van pool agreements between the Company and either the volunteer driver,
corporation or municipality (the "contracting party"), the contracting party
agrees to drive or arrange a van pool which travels a fixed route set by the
Company. The Company sets the fees, which are collected by the driver and
remitted to the Company. At December 31, 1997, Van Pool Services operated a
fleet of approximately 3,700 passenger vans and employed approximately 110
employees. Van Pool Services' principal competitors are Enterprise Rent-A-Car
Company and a number of regional and local companies.
POSSIBLE 1998 ACQUISITION OF RYDER TRS
On March 4, 1998, the Company, Ryder TRS, BDG Corporation, a wholly owned
subsidiary of Budget Group ("Sub"), and Questor Partners Fund, L.P., Questor
Side-by-Side Partners, L.P. (together with Questor Partners Fund, L.P.,
"Questor") and Madison Dearborn Capital Partners, L.P. ("Madison", and together
with Questor, the "Significant Stockholders") entered into an Agreement and Plan
of Merger (as amended, the "Merger Agreement") pursuant to which Sub will merge
(the "Merger") with and into Ryder TRS, with Ryder TRS as the surviving
corporation. As a result of the Merger, Ryder TRS will become a wholly owned
subsidiary of the Company. The Merger Agreement was amended by the parties on
March 16, 1998.
10
<PAGE> 13
Pursuant to the terms of the Merger Agreement, Ryder TRS stockholders will
receive up to approximately $264 million, comprised of cash, stock and warrants.
The number of shares of the Company's Class A Common Stock to be issued in the
Merger and the amount of cash to be paid at the closing will depend on whether
the Company obtains stockholder approval for the authorization of additional
shares of Class A Common Stock and will be subject to adjustment in certain
instances. If such approval is obtained, the merger consideration will consist
of 3,605,946 shares of Class A Common Stock (the "Maximum Merger Shares") valued
at $32.9955 per share, plus $125.0 million in cash (less any cash payable to
holders of options). If such approval is not obtained, the merger consideration
will consist of 1,332,909 shares of Class A Common Stock (the "Minimum Merger
Shares") plus $200.0 million in cash (less any cash payable to holders of
options).
In addition, at the closing, the Company will issue warrants ("Warrants")
to Ryder TRS stockholders to purchase initially an aggregate of 1,000,000 shares
of Class A Common Stock. The Warrants will become exercisable for a period of
five years beginning on the thirtieth day (the "Warrant Measurement Date")
following the 20-month anniversary of the closing (the "Final Measurement
Date"), and the exercise price of the Warrants will be 125% of the Market Value
(as defined below) of the Class A Common Stock on the Final Measurement Date.
The "Market Value" of the Class A Common Stock as of any date means the
volume-weighted average closing prices of the Budget Class A Common Stock for
the 30 consecutive trading days prior to and including such date.
The Merger Agreement provides that, prior to the Final Measurement Date, a
nationally recognized investment banking firm will determine the revised number
of shares of Class A Common Stock issuable upon exercise of the Warrants such
that the Warrants would have an aggregate value equal to the lesser of (i) $20.0
million and (ii) (x) (A) the aggregate market value of the shares issued in the
Merger (computed by multiplying $32.9955 by the number of shares issued in the
Merger) (the "Aggregate Share Value") plus (B) $20.0 million minus (y) the
Market Value of the shares issued in the Merger on the Final Measurement Date
(the "Fill Amount"). The Company will have the right to purchase the Warrants on
the Warrant Measurement Date for the Fill Amount, which purchase price may be
paid in either Class A Common Stock or cash. The aggregate Fill Amount will be
reduced to the extent Ryder TRS stockholders sell shares acquired in the Merger
other than to certain specified permitted transferees.
In addition to the amount described above, Budget has agreed in the Merger
Agreement to make to the Ryder TRS stockholders a payment (the "Make-Whole
Payment"), if any, equal to (i) the Aggregate Share Value, minus (ii) the
greater of (x) the Market Value of the shares issued in the Merger on the
relevant measurement date or (y) the price at which any such shares issued in
the Merger were sold prior to the relevant measurement date. The measurement
dates will be the 12-month anniversary of the closing with respect to 50% of the
shares issued in the Merger and the 20-month anniversary of the closing with
respect to the other 50% of the shares issued in the Merger. Budget has the
option to make any Make-Whole Payment in cash or shares of Class A Common Stock.
Consummation of the Merger is subject to the following conditions: (i)
receipt of all necessary governmental approvals; (ii) the granting of early
termination or the expiration of applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; and (iii) the absence of
governmental actions prohibiting, or seeking to prohibit, the Merger.
If the Merger Agreement is terminated in certain circumstances, the Company
will be required to pay a fee (the "Termination Fee") to Ryder TRS as follows:
(i) if the Merger Agreement is terminated because of the failure to satisfy the
closing conditions by November 30, 1998 (as such date may be extended) or
because of a final injunction relating to antitrust matters, the Company will be
required to pay $7.5 million to Ryder TRS; or (ii) if the Merger Agreement is
terminated for any other reason, other than as described in clause (i) above or
by the Company if Ryder TRS or any Significant Stockholder has breached any of
its representations, warranties or covenants causing damages in excess of $75.0
million and, as a result of such damages, the Company is unable, through good
faith efforts, to obtain the financing necessary to fund the cash portion of the
merger consideration, the Company will pay at least $20.0 million to Ryder TRS
plus any additional damages suffered by Ryder Corporation, not to exceed in the
aggregate $75.0 million. To secure the Termination Fee, Credit Suisse First
Boston, at the request of the Company and concurrently with the
11
<PAGE> 14
execution of the Merger Agreement, issued a letter of credit in the amount of
$20.0 million in favor of Ryder TRS, drawable by Ryder TRS in the amounts and
under the circumstances described in clauses (i) and (ii) above.
The foregoing description is qualified in its entirety by the Merger
Agreement, as amended, which is incorporated by reference as Exhibits 2.2 and
2.3 to this Report.
ITEM 2. PROPERTIES
The Company's headquarters facility consists of a 2,500 square foot leased
office in Daytona Beach, Florida. Other significant properties include 149,088
square feet of leased office space plus 11,400 square feet of space for a data
center in Lisle, Illinois, a suburb of Chicago, a 69,300 square foot
reservations center in Carrollton, Texas, which is owned by the Company, a
61,168 square foot leased administrative center in Orlando, Florida, and a
21,600 square foot leased international headquarters facility in Hemel
Hempstead, England, a suburb of London. Management believes that these
facilities are sufficient for the needs of the Company.
BRACC leases substantially all of its U.S. airport and local market rental
facilities and operated from 509 rental locations at December 31, 1997. The
airport facilities are located on airport property owned by airport authorities
or located near the airport in locations convenient for bus transport of
customers to the airport. Most airport facilities include vehicle storage areas,
a vehicle maintenance facility, a car wash, a refueling station and rental and
return facilities. Local market rental facilities generally consist of a limited
parking facility and a rental and return desk and are generally subject to
fixed-term leases with renewal options. Certain of these leases also have
purchase options at the end of their terms.
ITEM 3. LEGAL PROCEEDINGS
Mr. Mirkin, a director of the Company, has been the President and Chief
Executive Officer and a general partner of Budget Rent a Car of Southern
California, a general partnership ("SoCal"), since 1985. SoCal has a Budget car
rental franchise from BRACC for all of Southern California. The Company operates
as a subfranchisee of SoCal at many locations in Southern California and pays
royalty fees to SoCal based on rental revenues for vehicles other than trucks.
The Company pays royalty fees for truck rentals in the Southern California
market to Transportation and Storage Associates ("TSA") pursuant to a
subfranchise agreement with TSA. TSA and BRACC are named defendants in an action
for declaratory relief filed by SoCal on October 14, 1997 in the Superior Court
of Los Angeles in which SoCal is seeking a determination as to whether the
Company must pay royalties on the rentals of pick-up vehicles to SoCal or to
TSA. Additionally, the Company is a named defendant in an action for declaratory
relief filed by SoCal on March 23, 1998 in the Superior Court of Los Angeles in
which SoCal is seeking a determination, given the existing franchise agreements
between SoCal and the Company, as to whether the Company can operate Premier Car
Rental locations in Southern California.
From time to time, the Company is subject to routine litigation incidental
to its business. Recently, the Company terminated the franchise arrangement of
its franchisee for Germany based on alleged violations of the terms of the
underlying franchise agreement. Such termination is being contested by the
franchisee. The Company intends to seek to replace such franchisee with a new
franchisee and/or Company-owned locations. The Company is not currently involved
in any legal proceeding which it believes would have a material adverse effect
upon its financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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<PAGE> 15
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the Company's
executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
- ---- --- ----------------------------
<S> <C> <C>
Sanford Miller......................... 45 Chairman of the Board of Directors, Chief
Executive Officer and Director
Jeffrey D. Congdon..................... 55 Vice Chairman of the Board of Directors
and Director
John P. Kennedy........................ 53 Vice Chairman of the Board of Directors
and Director
Robert L. Aprati....................... 53 Executive Vice President, General Counsel
and Secretary
Scott R. White......................... 34 Executive Vice President, Corporate
Development
Michael B. Clauer...................... 41 Senior Vice President and Chief Financial
Officer
Jeffrey T. Hendrickson................. 53 Senior Vice President
</TABLE>
Each of the above executive officers was elected by the Board of Directors
to hold office until the next annual election of officers and until his
successor is elected and qualified or until his earlier resignation or removal.
Sanford Miller has been the Chairman of the Board of Directors and Chief
Executive Officer of the Company since April 1994. From August 1991 to August
1994, he was Vice President of Tranex Rentals of New York, Inc. ("Tranex"),
which operated the Albany and Rochester Budget franchises, and from December
1991 to August 1994, was Vice President of Capital City Leasing, Inc. ("Capital
City"), which operated the Richmond, Virginia Budget franchise. From 1989 to
1991, Mr. Miller served as Director of Marketing, Special Accounts, for BRACC.
From 1981 to 1989, Mr. Miller was an executive officer and principal stockholder
of corporations that owned and operated 30 Budget franchises that were sold to
BRACC in 1989. From 1979 to 1981, he was North East Regional Field Operation
Manager for BRACC. Mr. Miller served as President of the American Car Rental
Association, a nationwide industry trade association, in 1993 and Chairman of
the Licensee Local Market Advisory Board of the Budget System in 1989 and 1990.
Mr. Miller is also a director of MoneyGram Payment Systems, Inc. ("MoneyGram"),
a provider of electronic money transfer services, and Tranex Credit Corporation
("Tranex Credit"), a company that provides financing for purchasers of
previously owned vehicles. Mr. Miller is the first cousin of Mr. Agronin.
Jeffrey D. Congdon was elected as a director in April 1994 and has been
Vice Chairman of the Board of Directors since January 1991. From January 1991 to
November 1997 he also served as the Company's Chief Financial Officer. Since
December 1990, he has been Secretary, Treasurer and a director of Tranex Credit.
From 1980 to 1989, he was an executive officer and principal stockholder of
corporations that owned and operated 30 Budget franchises that were sold to
BRACC in 1989. From 1982 to 1996, Mr. Congdon owned and operated retail new
and/or used vehicle sales operations in Indianapolis, Indiana.
John P. Kennedy was elected as a director in April 1994 and has been the
Vice Chairman of the Board of Directors since May 1997. From August 1994 to May
1997 he was the Company's President and Chief Operating Officer. From November
1991 to August 1994, he was Chairman and President of Metro West, Inc., whose
wholly-owned subsidiary previously owned the Company's San Diego airport
operations. From November 1990 to November 1991, he was an independent
consultant to the vehicle rental industry. From July 1985 to August 1989, he
served as President of NYRAC, Inc. d/b/a Budget Rent a Car of Kennedy and La
Guardia Airports. From 1968 to 1984, he served in various capacities with Avis,
Inc., including Vice President of Operations.
Robert L. Aprati has been Executive Vice President, General Counsel and
Secretary of the Company since August 1997, was Senior Vice President, General
Counsel and Secretary of BRACC from January 1988
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<PAGE> 16
to July 1997 and was Vice President, General Counsel and Secretary of BRACC from
September 1978 to January 1988. Mr. Aprati has been a long-standing director and
currently is President of the American Car Rental Association.
Scott R. White has been Executive Vice President, Corporate Development of
the Company since February 1997. From August 1992 to February 1997, he worked in
the Investment Banking Department of CSFBC, most recently as a vice president.
Mr. White received his J.D. degree from the University of Texas School of Law in
May 1992 and is a member of the State Bar of Texas. In addition, he was a
financial analyst at The First Boston Corporation from July 1986 to July 1989.
Michael B. Clauer has been Senior Vice President and Chief Financial
Officer of the Company since November 1997. From April 1996 to November 1997, he
served as Senior Director of Finance, Strategy & Planning for the North America
National Franchise Business Units of the Pepsi-Cola Company. From September 1994
to April 1996, Mr. Clauer was the Senior Director -- Field Finance for Pepsico
International Restaurants, Inc. From June 1992 to September 1994, he served as
Senior Director -- Finance, Central Division for Pizza Hut, Inc.
Jeffrey T. Hendrickson has been Senior Vice President of the Company since
May 1997 and his responsibilities include managing the Company's U.S. vehicle
rental operations. From 1994 to 1997, Mr. Hendrickson was Senior Vice President
of Brink's Incorporated ("Brink's") responsible for Brink's worldwide air
courier services and nationwide ATM services. From 1987 to 1994, Mr. Hendrickson
was Executive Vice President of National Car Rental Systems, Inc., from 1985 to
1987 he was Senior Vice President of Basix Corporation and from 1982 to 1985 he
served as Vice President of the Chase Manhattan Corporation and President and
Director of Chase T/C Service Corp. Prior to joining the Chase Manhattan
Corporation Mr. Hendrickson served in various capacities for The Hertz
Corporation from 1971 to 1982, including Managing Director of Hertz United
Kingdom and Ireland, Vice President -- Operations, Rent-A-Car Division and
Corporate Vice President and General Manager, Truck Division. Mr. Hendrickson is
a director of Bernard C. Harris Publishing Company, Inc.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since April 17, 1997, the Company's Class A Common Stock has been listed on
the New York Stock Exchange under the symbol "BD." Prior to such date, the
Company's Class A Common Stock was traded in the Nasdaq National Market under
the symbol "TBUD." The following table details the high and low bid information
for the Class A Common Stock as reported by the Nasdaq National Market or the
high and low sales prices for the Class A Common Stock as reported by the New
York Stock Exchange, as the case may be, for the periods indicated:
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997:
First Quarter............................................. $29.500 $16.000
Second Quarter............................................ 34.875 19.000
Third Quarter............................................. 37.000 28.188
Fourth Quarter............................................ 37.750 32.500
YEAR ENDED DECEMBER 31, 1996:
First Quarter............................................. $10.500 $ 8.250
Second Quarter............................................ 17.500 9.250
Third Quarter............................................. 20.250 12.375
Fourth Quarter............................................ 20.250 15.250
</TABLE>
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<PAGE> 17
On March 23, 1998 (i) the last sale price of the Class A Common Stock as
reported on the New York Stock Exchange was $38.9375 per share and (ii) there
were 185 holders of record of the Class A Common Stock and three holders of
record of the Class B Common Stock.
The Company has never paid any cash dividends on its Common Stock, and the
Board of Directors currently intends to retain all earnings for use in the
Company's business for the foreseeable future. Any future payment of dividends
will depend upon the Company's results of operations, financial condition, cash
requirements, restrictions contained in credit and other agreements and other
factors deemed relevant by the Board of Directors.
RECENT SALES OF UNREGISTERED SECURITIES
On November 6, 1998, the Company issued 246,167 shares of Class A Common
Stock to stockholders of Budget Rent a Car of St. Louis, Inc. ("BRAC St. Louis")
to acquire all of the outstanding stock of BRAC St. Louis. The Company relied on
Section 4(2) of the Securities Act of 1933 (the "1933 Act") as its exemption
from the registration requirements of the 1933 Act.
In 1997, the Company issued options to certain employees and non-employee
directors under its stock option plans to purchase an aggregate of 1,432,375
shares of Class A Common Stock and 240,000 shares of Class B Common Stock at
exercise prices equal to the fair market values of underlying shares on the date
of grant. Such options were issued in reliance on the exemption contained in
Rule 701 under the 1933 Act.
In 1997, pursuant to the exercise of certain outstanding stock options
granted under the Company's stock option plans, the Company issued (i) 96,550
shares of Class A Common Stock for an aggregate purchase price of $1,086,188 and
(ii) 164,000 shares of Class B Common Stock for an aggregate purchase price of
$1,845,000. These issuances were made in reliance on the exemption contained in
Rule 701 under the 1933 Act.
15
<PAGE> 18
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected financial data for the Company for
the five years ended December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1993 1994 1995 1996 1997
------- -------- -------- -------- ----------
(IN THOUSANDS EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Vehicle rental revenue(a)................. $22,321 $ 38,642 $107,067 $223,250 $1,014,105
Retail car sales revenue.................. -- -- 42,662 134,120 239,992
Total operating revenue................... 22,321 38,642 149,729 357,370 1,303,762
Depreciation -- vehicle................... 4,358 7,382 27,476 60,735 278,495
Cost of vehicle sales..................... -- -- 38,021 113,747 205,791
Operating income.......................... 2,450 4,196 14,180 35,267 171,286
Income before income taxes................ 610 426 1,022 7,818 63,301
Net income................................ $ 428 $ 250 $ 337 $ 4,497 $ 36,926
Weighted average common and common
equivalent shares outstanding:
Basic.................................. (b) 3,704 6,369 9,224 18,494
Diluted................................ (b) 3,704 6,369 9,488 26,245
Earnings per common and common equivalent
share:
Basic.................................. (b) $ 0.07 $ 0.05 $ 0.49 $ 2.00
Diluted................................ (b) $ 0.07 $ 0.05 $ 0.47 $ 1.60
Operating Data:
Rental Data (U.S. only)(c):
Locations in operation at period end... 19 63 133 152 509
Rental transactions(d)................. 163,000 276,000 689,000 1,166,000 5,255,000
Retail Car Sales Data:
Locations in operation at period end... -- -- 7 11 26
Average monthly vehicles sold.......... -- -- 351 752 1,790
Balance Sheet Data:
Revenue earning vehicles, net............. $23,577 $ 97,127 $219,927 $319,257 $2,010,926
Vehicle inventory......................... -- 943 8,938 16,413 34,721
Total assets.............................. 33,325 162,991 386,323 587,223 3,574,815
Fleet debt................................ 23,857 123,779 295,647 360,120 2,291,755
Total debt................................ 28,533 127,187 319,017 455,609 2,610,009
Redeemable preferred stock................ 2,747 -- -- -- --
Common stock warrant...................... -- 2,000 2,000 2,000 --
Stockholders' equity (deficit)............ (1,251) 26,748 39,592 92,001 437,990
</TABLE>
- ---------------
(a) Includes revenue from vehicle rentals and related products (such as
insurance and loss damage waivers).
(b) This information is not meaningful as no shares were publicly held prior to
August 1994.
(c) Does not include data for Van Pool Services or Premier Car Rental.
(d) Rounded to the nearest thousand.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Prior to the Budget Acquisition, TEAM was the largest Budget franchisee in
the United States and was one of the largest independent retailers of late model
automobiles in the United States. In 1994, the Company embarked on a strategy to
significantly expand its Budget franchise base and to develop a branded retail
car
16
<PAGE> 19
sales operation within its Budget franchise territories. This strategy both
leveraged management's experience and created certain operating efficiencies
between these complementary businesses.
The Company's retail car sales business has grown significantly since the
opening of the Company's first retail car sales facility in November 1994. The
Company added six retail car sales facilities during 1995, with the retail car
sales business producing $42.7 million of revenue for 1995 (representing 28.5%
of the Company's total historical revenue for the year), and added four
facilities during 1996. The retail car sales business produced $134.1 million of
revenue in 1996 (representing 37.5% of the Company's total historical revenue
for the year). The Company's retail car sales business produced $1.3 million of
operating income in 1995 (representing 8.8% of the Company's total operating
income) and $1.9 million of operating income in 1996 (representing 5.3% of the
Company's total operating income). The Company added 15 retail car sales
facilities during 1997, for a total of 26 retail car sales facilities operated
by the Company at December 31, 1997. In 1997, the Company's retail car sales
business had revenue of $240.0 million (representing 18.4% of the Company's
total historical revenue for the year) and an operating loss of $2.4 million
reflecting significant costs to upgrade BRACC locations and to open several new
locations. At December 31, 1996 and 1997, the retail car sales business
represented 8.3% and 2.8% of the Company's total identifiable assets,
respectively. See Note 16 of the Notes to the Consolidated Financial Statements
of the Company.
The 1995 results of operations reported herein include the consolidated
operations of the entities comprising the Company at December 31, 1994 and the
acquired operations of the Dayton, Ohio, Charlotte, North Carolina, Hartford,
Connecticut, and Los Angeles, California Budget franchises from their respective
acquisition dates through December 31, 1995. The 1996 results of operations
reported herein include the acquired operations of the Phoenix Budget franchise,
Van Pool Services and ValCar Rental Car Sales, Inc. ("ValCar") from their
respective acquisition dates.
On April 29, 1997, the Company acquired the stock of BRACC. The
consideration paid by TEAM pursuant to the Stock Purchase Agreements consisted
of (i) approximately $275 million in cash and (ii) the issuance to Ford of 4,500
shares of newly created Series A Convertible Preferred Stock of the Company,
which were converted into 4,500,000 shares of Class A Common Stock and sold in a
public offering on October 1, 1997. The results of operations of the Company for
1997 include the operations of BRACC from April 29, 1997. The 1997 results of
operations reported herein also include the acquired operations of Premier Car
Rental from July 31, 1997 and the Budget franchise in St. Louis from September
30, 1997.
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<PAGE> 20
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the percentage of
operating revenues represented by certain items in the Company's consolidated
statements of operations:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Vehicle rental revenue...................................... 71.5% 62.5% 77.8%
Retail car sales revenue.................................... 28.5 37.5 18.4
Royalties and other revenue................................. -- -- 3.8
----- ----- -----
Total operating revenue........................... 100.0 100.0 100.0
Direct vehicle and operating expenses....................... 9.2 9.8 9.8
Cost of car sales........................................... 25.4 31.9 15.8
Vehicle depreciation expense................................ 18.4 17.0 21.4
Non-vehicle depreciation expense............................ 0.9 0.7 1.1
Advertising, promotion and selling.......................... 7.9 6.4 7.2
Facilities.................................................. 7.4 5.7 7.3
Personnel................................................... 16.3 14.9 19.0
General and administrative expenses......................... 4.5 3.2 4.6
Amortization of franchise rights............................ 0.5 0.5 0.7
----- ----- -----
Operating income............................................ 9.5 9.9 13.1
Vehicle interest expense.................................... 9.3 7.1 7.2
Non-vehicle interest expense (income), net.................. (0.5) 0.2 1.1
Nonrecurring expense........................................ -- 0.4 --
----- ----- -----
Income before income taxes.................................. 0.7 2.2 4.8
Provision for income taxes.................................. 0.5 0.9 2.0
----- ----- -----
Net income.................................................. 0.2% 1.3% 2.8%
===== ===== =====
</TABLE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
General Operating Results. Net income for 1997 increased $32.4 million to
$36.9 million from $4.5 million in 1996. Diluted earnings per share for 1997
increased to $1.60 per share from $.47 per share in 1996. Income before income
taxes increased $55.5 million for 1997 to $63.3 million from $7.8 million for
1996.
Operating Revenues. Vehicle rental revenue increased $790.9 million in
1997 to $1,014.1 million from $223.3 million in 1996. This increase was due
primarily to the Budget Acquisition which added over 370 locations and over
67,000 vehicles to the Company's operations in the U.S. Revenue from the sales
of vehicles increased $105.9 million in 1997 to $240.0 million from $134.1
million in 1996. This increase was due primarily to the addition of 11 car sales
operations of BRACC as well as 4 new stores opened by the Company. Royalties and
other revenues totaled $49.7 million in 1997 and largely represent royalty and
other fees due from the Company's franchisees.
Operating Expenses. Total operating expenses increased $810.4 million in
1997 to $1,132.5 million from $322.1 million in 1996. This increase was due to
the addition of BRACC's operations to the Company's operations. The cost of
vehicles sold increased $92.0 million in 1997 to $205.8 million from $113.7
million in 1996. This increase is reflective of the car sales revenue growth
with the addition of BRACC car sales locations and new locations opened by the
Company. Amortization expense increased $6.6 million in 1997 to $8.5 million
from $1.8 million in 1996. This increase was largely due to intangibles,
including goodwill, related to the Budget Acquisition. Changes from 1996 to 1997
in the percent of revenue for expense categories are largely attributable to the
increase in vehicle rental operations in relation to car sales operations
resulting from the Budget Acquisition.
18
<PAGE> 21
Other (Income) Expense. Interest expense, net of interest income,
increased $80.5 million in 1997 to $108.0 million from $27.5 million in 1996.
This increase was due to the financing of fleet and other borrowings related to
the Budget Acquisition, net of investment income due to the increase in cash.
Provision for Income Taxes. The provision for income taxes increased $23.1
million in 1997 to $26.4 million from $3.3 million for 1996. The tax provision
reflects a full year effective rate of 42% which is higher than the statutory
rate largely due to the effects of non-deductible intangible amortization and
the impact of state and local income taxes net of the federal benefit.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
General Operating Results. Net income for 1996 increased $4.2 million, or
1,234.4%, to $4.5 million from $337,000 for 1995. Income before provision for
income taxes increased over seven times from $1.0 million in 1995 to $7.8
million for 1996. This increase was due to the Company's acquisition activity
and the growth of the Company's car sales operations from seven locations at
December 31, 1995 to 11 locations at December 31, 1996. Operating income for
1996 increased $21.1 million, or 148.7%, from $14.2 million for 1995 to $35.3
million for 1996, due primarily to an increase in the vehicle fleet resulting
from the acquisitions of the Budget franchises in Arizona and Southern
California and Van Pool Services. The daily average rental rate increased
slightly to $41.19 in 1996 from $40.75 in 1995.
Operating Revenues. Vehicle rental revenues for 1996 increased $116.2
million, or 108.5%, from $107.1 million in 1995 to $223.3 million in 1996. The
increase in rental revenues was due primarily to the increase in the size of the
Company from operating 133 rental locations in 12 franchise areas at December
31, 1995 to operating 152 locations in 13 franchise territories at December 31,
1996, and to the acquisition of Van Pool Services in February 1996. Revenues
from the Company's retail car sales operations increased $91.5 million from
$42.7 million in 1995 to $134.1 million in 1996 due to the expansion of the
Company's car sales facilities from seven locations at December 31, 1995 to 11
locations at December 31, 1996.
Operating Expenses. Operating expenses increased approximately $186.6
million, or 137.6%, to $322.1 million for 1996 as compared to $135.5 million for
1995. The growth of the Company's vehicle rental operations through the
acquisitions discussed above was the principal cause of all the increases in the
Company's operating expenses. Vehicle depreciation increased approximately $33.3
million, or 121%, in 1996 due to an increase in fleet of 7,800 vehicles.
Advertising expenses increased from $11.8 million in 1995 to $23.0 million for
1996 due to the increase in the size of the rental operations and due to the
growth of the retail car sales operations from five markets at December 31, 1995
to 11 markets at December 31, 1996. The retail car sales business typically
incurs greater advertising expense than the car rental business. Facilities
expense increased $9.3 million, or 83.5%, in 1996 as compared to 1995 due to the
addition of 19 locations since December 31, 1995. Personnel costs increased
approximately 116.6% in 1996 as compared to 1995 due to an increase of
approximately 800 employees since December 31, 1995. Other operating expenses
increased due to a greater volume of rental business resulting from the 1995 and
1996 acquisitions.
Other (Income) Expense, Net. Interest expense, net of interest income,
increased from $13.2 million for 1995 to $27.4 million for 1996. Vehicle
interest expense increased approximately $11.5 million in 1996 due to the
increase in the size of the Company's rental fleet from approximately 7,800
vehicles at December 31, 1995 to approximately 15,600 vehicles at December 31,
1996. Non-vehicle interest (income) expense changed from income of $716,000 in
1995 to $838,000 of expense in 1996. This increase was primarily due to
non-vehicle interest paid on financing for the acquisition of the Phoenix Budget
franchise.
Provision for Income Taxes. The provision for income taxes increased $2.6
million from $685,000 for 1995 to $3.3 million for 1996. The tax provision is
calculated at a rate of approximately 42.5%. The increase in provision is due to
the enhanced profitability of the Company in 1996 as compared to 1995.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's operations have been funded by cash provided
from operating activities and by financing provided by banks, automobile
manufacturers' captive finance companies and leasing companies.
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<PAGE> 22
The material terms of the Company's financing facilities are described below.
The Company's existing indebtedness at December 31, 1997 has interest rates
ranging from 5.8% to 10.0%. The Company intends to fund its operations through
asset-backed notes and revolving credit facilities with financial institutions
for fleet financing and working capital, as well as through other similar
facilities and through placements or offerings of additional debt and/or equity
securities.
At December 31, 1997, the Company had borrowed $2.2 billion under
asset-backed notes and a commercial paper facility, which are utilized largely
to finance vehicles eligible for certain manufacturers' vehicle repurchase
programs. Proceeds from the asset-backed notes that are temporarily unutilized
for vehicle financing are maintained in restricted cash accounts with the
trustees. The notes are collateralized by the secured vehicles and the
restricted cash accounts. Rates on asset-backed notes and the commercial paper
facility at December 31, 1997 range from 5.8% to 7.8%.
The Company's other vehicle obligations consist of outstanding lines of
credit to purchase rental fleet and retail car sales inventory. Collateralized
available lines of credit at December 31, 1997 consist of $13.0 million for
rental vehicles and $27.0 million for retail car sales inventory with maturity
dates through May 1998. Vehicle obligations are collateralized by revenue
earning vehicles financed under these credit facilities and proceeds from the
sale, lease or rental of rental vehicles and retail car sales inventory.
Interest payments for rental fleet facilities are due monthly at annual interest
rates ranging from 7.0% to 8.5% at December 31, 1997. Management expects that
vehicle obligations will generally be repaid within one year from the balance
sheet date with proceeds received from either the repurchase of the vehicles by
the manufacturers in accordance with the terms of the manufacturers' vehicle
repurchase programs or from the sales of the vehicles.
Net cash provided by operating activities for the twelve months ended
December 31, 1997 increased 317.2% to $226.9 million from $54.4 million for the
twelve months ended December 31, 1996. Net cash provided by operating activities
for 1996 increased 236.8% to $54.4 million from $16.1 million in 1995. In each
period, the Company experienced increases in cash received from rentals which
were offset to some extent by increases in cash paid to vendors and employees
and in interest expenses.
Net cash used in investing activities for the twelve months ended December
31, 1997 increased 945.6% to $656.7 million from $62.8 million for the twelve
months ended December 31, 1996. Net cash used in investing activities is
primarily attributed to cash paid to suppliers of revenue earning vehicles and,
to a lesser extent, capital expenditures. This cash use is mainly offset by cash
received from the sale of vehicles (most of which sales were pursuant to
manufacturers' vehicle repurchase programs). Cash received from the sale of
vehicles was $1,707.5 million, $460.6 million and $293.9 million for 1997, 1996
and 1995, respectively. Cash paid to suppliers of revenue earning vehicles was
$2,012.0 million, $517.1 million and $315.9 million for 1997, 1996 and 1995,
respectively. The increase in cash paid to suppliers of revenue earning vehicles
during 1997 was a result of the increased number of locations due to the Budget
Acquisition. The increase in cash paid to suppliers of revenue earning vehicles
during 1996 was a result of the increased number of operating locations
throughout 1996. Payment for acquisitions, net of cash acquired, amounted to
$143.2 million, $5.1 million and $6.5 million for 1997, 1996 and 1995,
respectively.
Net cash provided by financing activities for the twelve months ended
December 31, 1997 increased 815.9% to $536.4 million from $58.6 million for the
twelve months ended December 31, 1996, due primarily to proceeds received from
the issuance of Class A Common Stock and various notes payable, which was
partially offset by the utilization of a portion of these proceeds to purchase
BRACC and repay vehicle and non-vehicle debt. Net cash provided by financing
activities for 1996 increased 97.6% to $58.6 million from $29.6 million in 1995,
due primarily to proceeds received from the issuance of Class A Common Stock and
the Series A Convertible Notes, which was partially offset by the utilization of
a portion of these proceeds to repay existing vehicle and non-vehicle debt.
Fleet Financing Facilities
Historically, the Company's operations were partially funded by cash
provided from operating activities and by financing provided under asset-backed
notes issued under the First, Second and Third Fleet Financing Facilities
(collectively, the "Fleet Financing Facilities"). At December 31, 1997, amounts
outstanding under
20
<PAGE> 23
the Fleet Financing Facilities were comprised of $105.7 million of asset-backed
notes issued by the Company's special purpose finance subsidiary, Team Fleet
Financing Corporation ("TFFC"), in August 1994 (the "First Fleet Financing
Facility"), $30.4 million of asset-backed notes assumed by the Company in
connection with the acquisition of the Los Angeles, California Budget franchise
in October 1995 (the "Second Fleet Financing Facility") and $176.0 million of
asset-backed notes issued by TFFC in December 1996 (the "Third Fleet Financing
Facility"). These facilities have been principally utilized to finance Program
Vehicles. Proceeds from these facilities that are temporarily unutilized for
vehicle financing are maintained in restricted cash accounts with the trustee
and are not available for other purposes. The notes issued under these
facilities are collateralized by the financed vehicles and the restricted cash
accounts, with the vehicles being leased to the Company's operating
subsidiaries.
The First Fleet Financing Facility is comprised of senior and subordinated
notes. The senior notes require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 0.75% (6.86% at December 31, 1997). Monthly
principal payments of $16.7 million commence in June 1999 with the last payment
due in November 1999. The subordinated notes included in the First Fleet
Financing Facility require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 1.30% (7.41% at December 31, 1997) and are
payable in full in December 1999.
The Second Fleet Financing Facility is comprised of senior and subordinated
notes. The senior notes require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 0.60% (6.71% at December 31, 1997). Monthly
principal payments of $4.8 million commence in November 1997 with the last
payment due in June 1998. The subordinated notes included in the Second Fleet
Financing Facility require monthly interest payments at an annual rate of
average LIBOR, as defined, plus 1.0% (7.11% at December 31, 1997) and are
payable in full in July 1998.
The Third Fleet Financing Facility is comprised of senior and subordinated
notes. The senior notes require monthly interest payments at an annual rate of
6.65%. Monthly principal payments of $13.8 million commence in 2001 with the
last payment due in 2002. The subordinated notes included in the Third Fleet
Financing Facility require monthly interest payments at an annual rate of 7.10%
and are payable in full in June 2002. Up to $100 million of the Third Fleet
Financing may be used to finance vehicles that are not Program Vehicles.
April 1997 Fleet Financings
The April 1997 Fleet Financings entered into concurrently with the Budget
Acquisition provide financing for $1.4 billion of vehicles. The April 1997 Fleet
Financings consist of a $900.0 million commercial paper facility and an
additional $500.0 million asset-backed note facility. As of December 31, 1997,
the Commercial Paper Facility has various interest rates, which range between
5.75% and 6.15%. The asset-backed note facility consists of senior and
subordinated notes. The senior notes require monthly interest payments at an
annual rate of 7.35%. Monthly principal payments of $39.4 million commence
November 2001 with a final payment due in October 2002. The subordinated notes
require monthly interest payments at an annual rate of 7.80% and are payable in
full in November 2002.
Budget Fleet Financing Facility
Historically, BRACC's operations were partially funded with cash provided
by notes issued by Budget Fleet Finance Corporation (the "BFFC Facility"), which
is a special purpose bankruptcy remote corporation. The Company has continued to
utilize borrowings under the BFFC Facility to fund its operations. The BFFC
Facility consists of $500.0 million of senior notes requiring monthly interest
payments at LIBOR plus 0.50% (6.36% at December 31, 1997). Six monthly principal
payments of $83.3 million commence in April 1999 with the last payment due in
September 1999.
The Debt Placements
Concurrently with the Budget Acquisition, the Company issued $45.0 million
aggregate principal amounts of Series B Convertible Notes, and BRACC issued
$165.0 million aggregate principal amount of
21
<PAGE> 24
Guaranteed Senior Notes, which are guaranteed by the Company and certain
subsidiaries of the Company. The Guaranteed Senior Notes bear interest at a rate
of 9.57% and mature in 2007. In addition, the note purchase agreements relating
to the Series A Convertible Notes, which had been issued in December 1996, were
amended to extend the maturity of the Series A Convertible Notes to April 2007
and conform other terms to the terms of the Series B Convertible Notes. At a
conversion price of $20.07 per share, the Series A Convertible Notes are
convertible into an aggregate of 3,986,049 shares of Class A Common Stock, bear
interest at a rate of 7% and mature in 2007. At a conversion price of $27.96 per
share, the Series B Convertible Notes are convertible into 1,609,442 shares of
Class A Common Stock, bear interest at a rate of 6.85% and mature in 2007.
April 1997 Working Capital Facility
Concurrently with the Budget Acquisition, BRACC entered into a $300.0
million, five-year secured credit facility (the "April 1997 Working Capital
Facility"), which is guaranteed by the Company. At December 31, 1997, the
Company had $238.1 million in letters of credit outstanding under this facility.
The following is a summary of the material terms and conditions of the April
1997 Working Capital Facility.
The April 1997 Working Capital Facility consists of a five-year senior,
secured revolving credit facility in the amount of $300.0 million. The April
1997 Working Capital Facility provides that (i) up to $100.0 million is
available for loans, (ii) up to $40.0 million (or equivalent thereof in certain
foreign currencies) of such $100.0 million is available under a multi-currency
subfacility, (iii) up to $300.0 million is available for letters of credit and
(iv) up to $225.0 million of such $300.0 million is available for letters of
credits for credit enhancement of commercial paper or similar fleet financing
programs. In addition, aggregate letter of credit and loans outstanding under
the April 1997 Working Capital Facility are subject to a borrowing base
limitation and may not at any time exceed the sum of 85% of eligible receivables
(as defined therein), 100% of eligible repurchase vehicles (as defined therein),
85% of eligible non-repurchase vehicles (as defined therein), and 100% eligible
cash and cash equivalents (as defined therein). All letters of credit and loans
under the April 1997 Working Capital Facility mature on or by the fifth
anniversary of the date of the loan agreement.
Interest accrues on borrowings outstanding under the April 1997 Working
Capital Facility, at the Company's option, at a rate equal to (i) either the
higher of (A) the interest rate established by Credit Suisse as its base or
prime rate in effect at its principal office in New York City and (B) the
federal funds effective rate from time to time plus 0.5% (the higher of these
being known as the "ABR") plus the applicable margin for ABR loans (which margin
shall range from approximately 0.25% to 1.25%) or (ii) the rate at which
Eurocurrency deposits in the relevant denomination currency for one, two, three
or six months (as selected by the Company) are offered by Credit Suisse in the
relevant interbank Eurocurrency market plus the applicable margin for the
Eurocurrency rate (which margin shall range from 1.25% to 2.25%). The April 1997
Working Capital Facility requires the Company to pay the following fees: (i) a
commitment fee based on the ratio of adjusted debt to adjusted EBITDA of the
Company and ranging from 0.25% to 0.375% per annum; (ii) a letter of credit fee
on the aggregate amount available under outstanding letters of credit equal to a
rate per annum which is the same as the applicable margin for Eurocurrency loans
from time to time in effect; and (iii) a letter of credit fronting fee equal to
a rate per annum of 0.125% of the aggregate amount available under each letter
of credit issued.
The April 1997 Working Capital Facility is secured by (a) a first-priority
lien on: (i) the capital stock of BRACC and each direct and indirect subsidiary
of BRACC (with respect to the international subsidiaries, no more than 65% of
the stock of each subsidiary will be required to be pledged in the event that a
pledge of a greater percentage would result in material increased tax or similar
liabilities for Budget Group and its subsidiaries on a consolidated basis); (ii)
cash and other working capital such as receivables and related contract rights
of BRACC and its subsidiaries (other than assets pledged as security in respect
of a vehicle financing program); and (iii) all assets included in the borrowing
base and (b) as to letters of credit issued as credit and/or liquidity
enhancement for the Company's commercial paper program, perfected liens on the
assets surrounding the commercial paper issued pursuant to the commercial paper
program (which, in the case of credit enhancement, will generally be
subordinated).
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<PAGE> 25
The April 1997 Working Capital Facility contains a number of customary
affirmative covenants, including covenants which require BRACC and the Company
to: deliver financial statements and other reports; pay other obligations;
maintain corporate existence; comply with laws and contracts; maintain
properties and insurance; maintain books and records; grant the lenders certain
inspection rights; provide notices of defaults, litigation and material events;
and comply with environmental matters. The April 1997 Working Capital Facility
also contains a number of customary negative covenants, including limitations on
indebtedness (including preferred stock), liens, guarantee obligations, mergers,
consolidations, liquidations and dissolutions, sales of assets, leases,
dividends and other payments in respect of capital stock, capital expenditures,
investments, loans and advances; payments and modifications of subordinated and
other debt instruments, transactions with affiliates, changes in fiscal year;
negative pledge clauses; and changes in lines of business.
BRACC and the Company are required to meet certain financial covenants,
consisting of: (a) a minimum net worth (as defined) of the Company equal to the
sum of (i) $294,500 plus 50% of the net income of the Company of each fiscal
year commencing with 1997 as shall have been completed on or prior to the time
of computation plus 50% of the net equity proceeds (as defined); (b) a maximum
leverage ratio (as defined) of 5.60 to 1.00 for the quarter ending December 31,
1997, declining to 3.25 to 1.00 for the quarter ending December 31, 1999 and
each fiscal quarter thereafter; and (c) a minimum interest coverage ratio (as
defined) of 2.50 to 1.00 for the quarter ending December 31, 1997, increasing to
3.25 to 1.00 for the quarter ending September 30, 1999 and each fiscal quarter
thereafter.
CHANGE IN FINANCIAL CONDITION
Total assets increased $3.0 billion from $587.2 million at December 31,
1996 to $3.6 billion at December 31, 1997. This increase resulted primarily from
increases in revenue-earning vehicles of $2.0 billion and intangibles of $460.7
million resulting from the Budget Acquisition. Total liabilities increased $2.6
billion from $493.2 million at December 31, 1996 to $3.1 billion at December 31,
1997 due primarily to an additional $2.3 billion of net borrowings largely to
finance the vehicles of BRACC. The increase in stockholders' equity of
approximately $346.0 million was largely due to the April 1997 Public Offering
and issuance of Series A Convertible Preferred Stock in connection with the
Budget Acquisition.
INFLATION
The increased acquisition cost of vehicles is the primary inflationary
factor affecting the Company's operations. Many of the Company's other operating
expenses are inflation sensitive, with increases in inflation generally
resulting in increased costs of operations. The effect of inflation-driven cost
increases on the Company's overall operating costs is not expected to be greater
for the Company than for its competitors.
SEASONALITY
Generally, in the vehicle rental industry, revenues increase in the spring
and summer months due to the overall increase in business and leisure travel
during this season. The Company increases the size of its fleet and work force
in the spring and summer to accommodate increased rental activity during these
periods and decreases its fleet and work force in the fall and winter. However,
many of the Company's operating expenses (such as rent, insurance and
administrative personnel) are fixed and cannot be reduced during the fall and
winter. The retail car sales business is subject to seasonal effects, with lower
sales during the winter months.
YEAR 2000 ISSUE
The Company has assessed and continues to assess the impact of the year
2000 ("Y2K") on its reporting systems and operations (the "Y2K Issue"). The Y2K
Issue exists because many computer systems and applications currently use
two-digit date fields to designate a year. As the century date occurs, certain
date sensitive systems will recognize the year 2000 as the year 1900 or may not
recognize the date at all. This inability to properly treat or recognize the
year 2000 may cause computer systems and applications to process critical
information incorrectly.
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<PAGE> 26
During 1997, the Company recognized approximately $2.2 million in expenses
to modify existing computer systems and applications and estimates that an
aggregate of approximately $6.7 million will be incurred in 1998 and 1999
specifically for Y2K modification. The most significant systems undergoing or to
undergo modifications are the reservation and rental transaction processing
systems. A failure in these systems could cause significant disruption in
customer service levels and therefore materially impact the Company's operating
results and financial condition. The Company expects to complete all major
modification efforts by mid-1999.
ENVIRONMENTAL MATTERS
The Company has assessed and continues to asses the impact of environmental
remediation efforts on its operations. The Company's exposure largely relates to
the clean-up and replacement of underground gasoline storage tanks.
During 1997, the Company recognized approximately $.7 million in expenses
related to remediation efforts and estimates that an aggregate of approximately
$3.3 million will be incurred in 1998 and 1999. Based on past experience,
management expects these estimates will be sufficient to satisfy anticipated
costs of known remediation requirements. However, due to factors such as
continuing changes in the environmental laws and regulatory requirements, the
availability and application of technology, the identification of presently
unknown remediation sites and changes in the extent of expected remediation
efforts, estimated costs for future environmental compliance and remediation are
subject to uncertainty and it is difficult to predict the amount or timing of
future remediation requirements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements appear beginning at page
F-1 in Part IV of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item with respect to directors and
executive officers of the Registrant, except certain information regarding
executive officers which is contained in Part I of this Report pursuant to
General Instruction G, is included under the headings "Election of Directors"
and "Section 16(a) Beneficial Ownership Reporting Compliance" of the Proxy
Statement for the Annual Meeting of Stockholders to be held on April 23, 1998
and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information included under the heading "Executive Compensation,"
including, but not limited to, the subsections entitled "Stock Performance
Graph" and "Compensation Committee Report on Executive Compensation" appearing
thereunder, of the Proxy Statement for the Annual Meeting of Stockholders to be
held on April 23, 1998 is incorporated herein by reference.
24
<PAGE> 27
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is included under the heading
"Beneficial Ownership of Common Stock" of the Proxy Statement for the Annual
Meeting of Stockholders to be held on April 23, 1998 and is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is included under the heading
"Certain Transactions and Relationships" and under the heading "Executive
Compensation" in the subsection entitled "Compensation Committee Interlocks and
Insider Participation," of the Proxy Statement for the Annual Meeting of
Stockholders to be held on April 23, 1998 and is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) FINANCIAL STATEMENTS AND SCHEDULES
1. Financial Statements
Report of Independent Certified Public Accountants.
Independent Auditors' Report.
Consolidated Balance Sheets December 31, 1996 and 1997.
Consolidated Statements of Income for Each of the Three Years in the
Period Ended December 31, 1997.
Consolidated Statements of Stockholders' Equity for Each of the Three
Years in the Period Ended December 31, 1997.
Consolidated Statements of Cash Flows for Each of the Three Years in
the Period Ended December 31, 1997.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
Not applicable.
3. Exhibits
The following list of exhibits includes both exhibits submitted with
this Report as filed with the Securities and Exchange Commission and those
incorporated by reference to other filings:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2.1 -- Plan and Agreement of Merger dated as of November 25, 1997
among Budget Group, Inc., Cruise America, Inc. and CA
Acquisition Corporation (incorporated by reference to
Exhibit 2.1 of Registration Statement on Form S-4, File No.
333-42327, dated December 16, 1997, as amended by Amendment
No. 1 to Form S-4 dated December 29, 1997).
2.2 -- Agreement and Plan of Merger dated as of March 4, 1998 by
and among Budget Group, Inc., BDG Corporation, Ryder TRS
Inc., and certain other parties (incorporated herein by
reference to Exhibit 2.1 to the Company's Form 8-K dated
March 4, 1998).
</TABLE>
25
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2.3 -- Amendment No. 1 to Agreement and Plan of Merger dated as of
March 16, 1998 by and among Budget Group, Inc., BDG
Corporation, Ryder TRS Inc., and certain other parties
(incorporated herein by reference to Exhibit 2.2 to the
Company's Form 8-K dated March 4, 1998).
2.4 -- Common Stock Purchase Agreement, dated as of January 13,
1997, between John J. Nevin and the Registrant (incorporated
by reference to Exhibit 2.7 to the Registrant's Registration
Statement on Form S-1, File No. 333-21691, dated February
12, 1997).
2.5 -- Budget Stock Purchase Agreement, dated as of January 13,
1997, between Budget Rent-a-Car Corporation and Team Rental
Group, Inc. (currently known as Budget Group, Inc.)
(incorporated by reference to Exhibit 2.8 to the
Registrant's Registration Statement on Form S-1, File No.
333-21691, dated February 12, 1997).
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to
Registrant's Registration Statement on Form S-1, File No.
33-78274, dated April 28, 1994).
3.2 -- Amendment to Amended and Restated Certificate of
Incorporation of the Registrant (incorporated by reference
to Exhibit 3.2 to Amendment No. 2 to the Registrant's
Registration Statement on Form S-1, File No. 333-4507, dated
June 28, 1996).
3.3 -- Amendment to Amended and Restated Certificate of
Incorporation of the Registrant (incorporated by reference
to Exhibit 3.3 to the Registrant's Registration Statement on
Form S-1, File No. 333-34799, dated September 26, 1997).
3.4 -- By-Laws of the Registrant (incorporated by reference to
Exhibit 3.2 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
4.1 -- Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement on
Form S-1, File No. 333-34799, dated September 26, 1997).
4.2 -- Base Indenture between Team Fleet Financing Corporation, as
Issuer, Team Rental Group, Inc., as Servicer and Team
Interestholder, and Bankers Trust Company, as Trustee,
relating to Rental Car Asset Backed Notes (incorporated by
reference to Exhibit 4.1 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994).
4.3 -- Supplemental Indenture relating to Rental Car Asset Backed
Notes (incorporated by reference to Exhibit 4.2 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
4.4 -- Base Indenture among BRAC SOCAL Funding Corporation, as
Issuer, BRAC-OPCO, Inc., as Servicer and Retained
Interestholder, and Bankers Trust Company, as Trustee
(incorporated by reference to Exhibit 4.5 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
4.5 -- Series 1995-1 Supplement to Base Indenture among BRAC SOCAL
Funding Corporation, as Issuer, BRAC-OPCO, Inc., as Servicer
and Retained Interestholder, and Bankers Trust Company, as
Trustee (incorporated by reference to Exhibit 4.6 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
4.6 -- Supplement No. 1 to Indenture, dated as of October 20, 1995,
among BRAC SOCAL Funding Corporation, BRAC-OPCO, Inc., Team
Rental of Southern California, Inc. and Bankers Trust
Company, as Trustee (incorporated by reference to Exhibit
4.7 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
4.8 -- Registration Rights Agreement, dated as of August 25, 1994,
among the Registrant, Brian Britton, Jeffrey Congdon,
Richard Hinkle, John Kennedy, Sanford Miller and Richard
Sapia (incorporated by reference to Exhibit 10.23 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.8 -- Indenture dated as of December, 1997 between the Company and
the Chase Manhattan Bank, as Trustee (incorporated herein by
reference from the Company's Registration Statement on Form
S-3, File No. 33341093, dated November 26, 1997, as amended
by Amendment No. 1 to Form S-3 dated January 7, 1998).
4.8 -- Form of Indenture dated as of January 8, 1998 between the
Company and The Chase Manhattan Bank, as Trustee
(incorporated herein by reference from the Company's
Registration Statement on Form S-3, File No. 33341093, dated
November 26, 1997, as amended by Amendment No. 1 to Form S-3
dated January 7, 1998).
4.9 -- First Amendment to Registration Rights Agreement, dated as
of November 1, 1994, among the Registrant, Brian Britton,
Jeffrey Congdon, Richard Hinkle, John Kennedy, Sanford
Miller and Richard Sapia (incorporated by reference to
Exhibit 10.24 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994).
4.10 -- Letter Agreement, dated as of November 1, 1994, between
Andrew Klein and the Registrant acknowledging that Andrew
Klein is a party to the Registration Rights Agreement, dated
as of August 25, 1994, as amended (incorporated by reference
to Exhibit 10.25 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994).
4.11 -- Registration Rights Agreement, dated as of October 20, 1995,
between Team Rental Group, Inc. and Budget Rent-a-Car of
Southern California (incorporated by reference to Exhibit
4.12 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
4.12 -- Registration Rights Agreement, dated as of December 1, 1996,
between Team Rental Group, Inc. and the holders of the
Convertible Subordinated Notes (incorporated by reference to
Exhibit 4.12 to the Registrant's Registration Statement on
Form S-1, File No. 333-21691, dated February 12, 1997).
4.13 -- Warrant No. 1-1994, dated as of August 24, 1994, to purchase
175,000 shares of Class A Common Stock, par value $.01 per
share, of the Registrant, issued to Budget Rent-a-Car
Corporation (incorporated by reference to Exhibit 10.26 to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994).
4.14 -- NationsBank Warrant dated as of April 26, 1996 (incorporated
by reference to Exhibit 4.14 to the Registrant's
Registration Statement on Form S-1, File No. 333-21691,
dated February 12, 1997).
4.15 -- Amended and Restated Base Indenture dated as of December 1,
1996 among Team Fleet Financing Corporation, as Issuer, Team
Rental Group, Inc., as Servicer and Team Interestholder, and
Bankers Trust Registrant, as Trustee (incorporated by
reference to Exhibit 4.15 to the Registrant's Registration
Statement on Form S-1, File No. 333-21691, dated February
12, 1997).
4.16 -- Series 1996-1 Supplement to the Amended and Restated Base
Indenture dated as of December 1, 1996 among Team Fleet
Financing Corporation, as Issuer, Team Rental Group, Inc.,
as Servicer and Team Interestholder, and Bankers Trust
Company, as Trustee (incorporated by reference to Exhibit
4.16 to the Registrant's Registration Statement on Form S-1,
File No. 333-21691, dated February 12, 1997).
4.17 -- Amended and Restated Master Motor Vehicle Lease Agreement
dated as of December 1, 1996 among Team Fleet Financing
Corporation, as Lessor, Team Rental Group, Inc., as
Guarantor, and certain subsidiaries of Team Rental Group,
Inc., as lessees (incorporated by reference to Exhibit 4.17
to the Registrant's Registration Statement on Form S-1, File
No. 333-21691, dated February 12, 1997).
</TABLE>
27
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.18 -- Motor Vehicle Lease Agreement Series 1996-1 dated as of
December 1, 1996 among Team Fleet Financing Corporation, as
Lessor, Team Rental Group, Inc., as Guarantor, and certain
subsidiaries of Team Rental Group, Inc., as lessees
(incorporated by reference to Exhibit 4.18 to the
Registrant's Registration Statement on Form S-1, File No.
333-21691, dated February 12, 1997).
4.19 -- Registration Rights Agreement, dated as of November 6, 1997,
among the Registrant and the Stockholders of Budget Rent a
Car of St. Louis, Inc. (incorporated by reference to Exhibit
4.7 of the Registrant's Registration Statement on Form S-3,
File No. 333-41093, dated November 26, 1997).
10.1 -- Amended and Restated Sublicense Agreement, dated as of
October 20, 1995, between Budget Rent-a-Car of Southern
California and Team Rental of Southern California, Inc.,
along with Corporate Guaranty of Team Rental Group, dated as
of October 20, 1995 (incorporated by reference to Exhibit
10.11 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
10.2 -- Lease Agreement dated September 1, 1993 between Miller and
Hinkle, a Florida general partnership, and Capital City
Leasing, Inc., as amended by First Amendment dated as of
July 1, 1994 (Henrico County, Virginia) (incorporated by
reference to Exhibit 10.41 to Amendment No. 3 to the
Registrant's Registration Statement on Form S-1, File No.
33-78274, dated August 12, 1994).
10.3 -- Lease Agreement dated June 1, 1994 between Miller and
Hinkle, a Florida general partnership, and Capital City
Leasing, Inc. (Chesterfield County, Virginia) (incorporated
by reference to Exhibit 10.25 to Amendment No. 1 to the
Registrant's Registration Statement on Form S-1, File No.
333-4507, dated June 13, 1996).
10.4 -- Lease Agreement dated as of September 12, 1995 between MCK
Real Estate Corporation, Team Car Sales of Richmond, Inc.
and Team Rental Group, Inc. (incorporated by reference to
Exhibit 10.24 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.5 -- Agreement of Lease dated as of August 31, 1995 between MCK
Real Estate Corporation and Team Rental of Philadelphia,
Inc. (incorporated by reference to Exhibit 10.25 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.6 -- Supply Agreement among Ford Motor Company, Team Rental
Group, Inc. and Budget Rent-a-Car Corporation (incorporated
by reference to Exhibit 10.6 to the Registrant's
Registration Statement on Form S-1, File No. 333-21691,
dated February 12, 1997).
10.7 -- Advertising Agreement between Ford Motor Company and Budget
Rent-a-Car Corporation (incorporated by reference to Exhibit
10.7 to the Registrant's Registration Statement on Form S-1,
File No. 333-21691, dated February 12, 1997).
10.8 -- Promissory Note, dated October 20, 1995, from Team Rental of
Southern California, Inc. to Budget Rent-a-Car of Southern
California in the principal amount of approximately
$4,775,000 (incorporated by reference to Exhibit 10.46 to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995).
10.9 -- Subordinated Notes Purchase Agreement, dated as of December
1, 1996, by and between the Registrant and the investors
listed therein (incorporated by reference to Exhibit 10.20
of the Registrant's Registration Statement on Form S-1, File
No. 333-21691, dated February 12, 1997).
10.10 -- Subordination Agreement, dated as of October 20, 1995, among
Budget Rent-a-Car of Southern California, BRAC-OPCO, Inc.,
Team Rental Group, Inc. and Team Rental of Southern
California (incorporated by reference to Exhibit 10.49 to
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995).
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.11 -- Shareholders' Agreement, dated as of October 20, 1995, by
and among Team Rental Group, Inc., the holders of the
Company's Class B Common Stock, and Budget Rent-a-Car of
Southern California (incorporated by reference to Exhibit
10.50 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
10.12 -- 1994 Incentive Stock Option Plan (incorporated by reference
to Exhibit 10.27 to the Registrant's Registration Statement
on Form S-1, File No. 33-78274, dated April 28, 1994).
10.13 -- Amendment No. 1 to 1994 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.54 to Amendment No.
2 to the Registrant's Registration Statement on Form S-1,
File No. 333-4507, dated June 28, 1996).
10.14 -- 1994 Director's Plan (incorporated by reference to Exhibit
10.28 to the Registrant's Registration Statement on Form
S-1, File No. 33-78274, dated April 28, 1994).
10.15 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Sanford Miller (incorporated by reference to
Exhibit 10.29 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.16 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and John Kennedy (incorporated by reference to
Exhibit 10.30 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.17 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Jeffrey Congdon (incorporated by reference to
Exhibit 10.31 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.18 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Ronald Agronin (incorporated by reference to
Exhibit 10.32 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
10.19 -- Indemnification Agreement dated April 25, 1994 between the
Registrant and Stephen Weber (incorporated by reference to
Exhibit 10.33 to the Registrant's Registration Statement on
Form S-1, File No. 33-78274, dated April 28, 1994).
*10.20 -- Form of Forbearance Agreement dated as of January 1, 1998
between the Company and each of Messrs. Miller, Congdon and
Kennedy.
*10.21 -- Form of Executive Agreement dated as of January 1, 1998
between the Company and each of Messrs. Miller, Congdon and
Kennedy.
*10.22 -- Senior Note Purchase Agreement dated as of April 23, 1997
between Budget Rent a Car Corporation, as Issuer, and the
Registrant, as Guarantor.
*10.23 -- Credit Agreement dated as of April 29, 1997 among Budget
Rent a Car Corporation, as the Borrower, Budget Group, Inc.,
as a Guarantor, and Certain Financial Institutions, as the
Lenders, Credit Suisse First Boston, as a Co-Syndication
Agent and the Administrative Agent and NationsBanc Capital
Markets, Inc., as a Co-Syndication Agent and the
Documentation Agent, as amended by First Amendment to Credit
Agreement dated as of October 24, 1997, Amendment and Waiver
No. 2 to Credit Agreement dated as of January 28, 1998 and
Amendment No. 3 to Credit Agreement dated as of March 13,
1998.
16.1 -- Letter re: Change in Certifying Accountant (incorporated by
reference to Exhibit 16 to the Registrant's Current Report
on Form 8-K dated November 26, 1996, as amended).
*21.1 -- Subsidiaries of the Registrant.
*23.1 -- Consent of Arthur Andersen LLP.
*23.2 -- Consent of Deloitte & Touche LLP.
*27.1 -- Financial Data Schedule -- December 31, 1997 (for SEC use
only).
*27.2 -- Restated Financial Data. Schedules -- September 30, 1997
(for SEC use only).
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
*27.3 -- Restated Financial Data Schedule -- June 30, 1997 (for SEC
use only).
*27.4 -- Restated Financial Data Schedule -- March 31, 1997 (for SEC
use only).
*27.5 -- Restated Financial Data Schedule -- December 31, 1996 (for
SEC use only).
*27.6 -- Restated Financial Data Schedule -- September 30, 1996 (for
SEC use only).
*27.7 -- Restated Financial Data Schedule -- June 30, 1996 (for SEC
use only).
*27.8 -- Restated Financial Data Schedule -- March 31, 1996 (for SEC
use only).
*27.9 -- Restated Financial Data Schedule -- December 31, 1995 (for
SEC use only).
*99.1 -- Safe Harbor Compliance Statement for Forward-Looking
Statements.
</TABLE>
- ---------------
* Filed Herewith
(B) REPORTS ON FORM 8-K
One report on Form 8-K/A was filed during the quarter ended December 31,
1997:
<TABLE>
<CAPTION>
FINANCIAL
ITEM REPORTED STATEMENTS FILED DATE OF REPORT
------------- ---------------- ----------------
<S> <C> <C>
(i) Update of the report of the independent certified
public accountants with respect to the
Consolidated Financial Statements that had
previously been filed with the Company's Annual
Report on Form 10-K for the year ended December
31, 1996 and (ii) update the Pro Forma Financial
Statements of the Company that were previously
filed as an exhibit to Current Report on Form 8-K
dated May 13, 1997............................... Yes(1) December 1, 1997
</TABLE>
- ---------------
(1) The Company filed Consolidated Financial Statements of Budget Group, Inc.
(together with the report of the Independent Certified Public Accountants)
as of December 31, 1995 and 1996 and for each of the three years in the
period ended December 31, 1996 (incorporated by reference to pages F-10
through F-33 of the Company's Registration Statement on Form S-1 (File No.
333-34799) dated October 1, 1997) and Pro Forma Consolidated Statements of
Operations of Budget Group, Inc. for the year ended December 31, 1996 and
the six months ended June 30, 1997 (incorporated by reference to pages 20
through 28 of the Company's Registration Statement on Form S-1 (File No.
333-34799) dated October 1, 1997).
(C) EXHIBITS
Exhibits are listed in Item 14(a).
(D) FINANCIAL STATEMENT SCHEDULES
Not applicable.
30
<PAGE> 33
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized on the 30th day of
March, 1998.
BUDGET GROUP, INC.
(Registrant)
By: /s/ SANFORD MILLER
------------------------------------
Sanford Miller
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant and
in the capacities indicated on March 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ SANFORD MILLER Chairman of the Board, Chief Executive Officer
- ----------------------------------------------------- and Director
Sanford Miller
/s/ JOHN P. KENNEDY Vice Chairman of the Board and Director
- -----------------------------------------------------
John P. Kennedy
/s/ JEFFREY D. CONGDON Vice Chairman of the Board and Director
- -----------------------------------------------------
Jeffrey D. Congdon
/s/ MICHAEL B. CLAUER Senior Vice President and Chief Financial
- ----------------------------------------------------- Officer (Principal Financial Officer)
Michael B. Clauer
/s/ THOMAS L. KRAM Vice President, Controller (Principal
- ----------------------------------------------------- Accounting Officer)
Thomas L. Kram
/s/ RONALD D. AGRONIN Director
- -----------------------------------------------------
Ronald D. Agronin
/s/ JAMES F. CALVANO Director
- -----------------------------------------------------
James F. Calvano
/s/ MARTIN P. GREGOR Director
- -----------------------------------------------------
Martin P. Gregor
/s/ JEFFREY R. MIRKIN Director
- -----------------------------------------------------
Jeffrey R. Mirkin
/s/ DR. STEPHEN L. WEBER Director
- -----------------------------------------------------
Dr. Stephen L. Weber
</TABLE>
31
<PAGE> 34
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.......... F-2
Independent Auditors' Report................................ F-3
Consolidated Balance Sheets December 31, 1996 and 1997...... F-4
Consolidated Statements of Income for Each of the Three
Years in the Period Ended December 31, 1997............... F-5
Consolidated Statements of Stockholders' Equity for Each of
the Three Years in the Period Ended December 31, 1997..... F-6
Consolidated Statements of Cash Flows for Each of the Three
Years in the Period Ended December 31, 1997............... F-7
Notes to Consolidated Financial Statements.................. F-8
</TABLE>
F-1
<PAGE> 35
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Budget Group, Inc.:
We have audited the accompanying consolidated balance sheets of Budget
Group, Inc. (a Delaware corporation formerly known as Team Rental Group, Inc.)
and subsidiaries as of December 31, 1996 and 1997, and the related consolidated
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated statements of income,
stockholders' equity and cash flows of Budget Group, Inc. for the year ended
December 31, 1995, were audited by other auditors whose report dated April 12,
1996, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Budget Group, Inc. and
subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Orlando, Florida
February 24, 1998
(except with respect to a certain
matter discussed in Note 17,
as to which the date is March 4, 1998)
F-2
<PAGE> 36
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of
Budget Group, Inc.:
We have audited the consolidated statements of income, stockholders' equity
and cash flows of Budget Group, Inc. (formerly known as Team Rental Group, Inc.)
for the year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of operations and cash flows of Budget Group,
Inc. for the year ended December 31, 1995 in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
April 12, 1996
F-3
<PAGE> 37
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
---------- ------------
(IN THOUSANDS EXCEPT SHARE
AND PER SHARE DATA)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 50,490 $ 157,007
Restricted cash............................................. 66,336 282,731
Trade and vehicle receivables, net.......................... 31,302 329,356
Vehicle inventory........................................... 16,413 34,721
Revenue earning vehicles, net............................... 319,257 2,010,926
Property and equipment, net................................. 18,502 140,165
Prepaid expenses and other assets........................... 14,030 87,681
Intangibles, including goodwill, less accumulated
amortization of $3,285 in 1996 and $11,739 in 1997........ 70,893 532,228
-------- ----------
$587,223 $3,574,815
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes payable............................................... $455,609 $2,610,009
Accounts payable, accrued and other liabilities............. 30,207 418,438
Deferred income taxes....................................... 7,406 108,378
-------- ----------
Total liabilities................................. 493,222 3,136,825
-------- ----------
COMMITMENTS AND CONTINGENCIES (NOTES 9, 11, 13 AND 17)
COMMON STOCK WARRANT........................................ 2,000 --
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 250,000 shares authorized,
no shares issued or outstanding........................... -- --
Series A convertible preferred stock, $0.01 par value,
10,000 shares authorized, no shares issued or
outstanding............................................... -- --
Class A common stock, $0.01 par value, one vote per share,
17,500,000 (in 1996) and 35,000,000 (in 1997) shares
authorized, 9,357,050 (in 1996) and 23,905,070 (in 1997)
shares issued............................................. 93 239
Class B common stock, $0.01 par value, 10 votes per share,
2,500,000 shares authorized, 1,936,600 shares issued (in
1996 and 1997)............................................ 19 19
Additional paid-in capital.................................. 89,856 400,099
Foreign currency translation adjustment..................... -- (1,326)
Retained earnings........................................... 2,363 39,289
Treasury stock, at cost (36,667 shares of Class A common
stock).................................................... (330) (330)
-------- ----------
Total stockholders' equity........................ 92,001 437,990
-------- ----------
Total liabilities and stockholders' equity........ $587,223 $3,574,815
======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 38
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- ----------
(IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Operating revenue:
Vehicle rental revenue.................................. $107,067 $223,250 $1,014,105
Retail car sales revenue................................ 42,662 134,120 239,992
Royalty fees and other.................................. -- -- 49,665
-------- -------- ----------
Total operating revenue......................... 149,729 357,370 1,303,762
-------- -------- ----------
Operating costs and expenses:
Direct vehicle and operating............................ 13,704 35,098 128,408
Depreciation -- vehicle................................. 27,476 60,735 278,495
Depreciation -- non-vehicle............................. 1,341 2,589 14,192
Cost of vehicle sales................................... 38,021 113,747 205,791
Advertising, promotion and selling...................... 11,826 22,983 93,265
Facilities.............................................. 11,121 20,406 95,558
Personnel............................................... 24,515 53,097 247,862
General and administrative.............................. 6,686 11,605 60,451
Amortization............................................ 859 1,843 8,454
-------- -------- ----------
Total operating costs and expenses.............. 135,549 322,103 1,132,476
-------- -------- ----------
Operating income.......................................... 14,180 35,267 171,286
-------- -------- ----------
Other (income) expense:
Vehicle interest expense................................ 13,874 25,336 93,796
Non-vehicle interest expense............................ 473 1,501 19,933
Interest income -- restricted cash...................... (1,348) (781) (5,744)
Non-recurring bank fees................................. -- 1,275 --
Related party interest expense.......................... 159 118 --
-------- -------- ----------
Total other expense............................. 13,158 27,449 107,985
-------- -------- ----------
Income before income taxes................................ 1,022 7,818 63,301
Provision for income taxes................................ 685 3,321 26,375
-------- -------- ----------
Net income................................................ $ 337 $ 4,497 $ 36,926
======== ======== ==========
Weighted average number of shares outstanding -- basic.... 6,369 9,224 18,494
======== ======== ==========
Basic earnings per share.................................. $ 0.05 $ 0.49 $ 2.00
======== ======== ==========
Weighted average number of shares outstanding --diluted... 6,369 9,488 26,245
======== ======== ==========
Diluted earnings per share................................ $ 0.05 $ 0.47 $ 1.60
======== ======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 39
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FOREIGN
CONVERTIBLE ADDITIONAL CURRENCY RETAINED TOTAL
PREFERRED COMMON PAID-IN TRANSLATION EARNINGS TREASURY STOCKHOLDERS'
STOCK STOCK CAPITAL ADJUSTMENT (DEFICIT) STOCK EQUITY
----------- ------ ---------- ----------- --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995... $ -- $ 60 $ 29,159 $ -- $(2,471) $ -- $ 26,748
Net income............... -- -- -- -- 337 -- 337
Shares issued in business
combinations.......... -- 12 12,825 -- -- -- 12,837
Class A common stock
acquired for
treasury.............. -- -- -- -- -- (330) (330)
--------- ---- -------- ------- ------- ----- --------
BALANCE, DECEMBER 31,
1995..................... -- 72 41,984 -- (2,134) (330) 39,592
Net income............... -- -- -- -- 4,497 -- 4,497
Shares issued in business
combinations.......... -- 2 2,725 -- -- -- 2,727
Warrants issued in
conjunction with
financing............. -- -- 686 -- -- -- 686
Net proceeds from stock
offering.............. -- 38 44,402 -- -- -- 44,440
Proceeds from exercise of
stock options......... -- -- 59 -- -- -- 59
--------- ---- -------- ------- ------- ----- --------
BALANCE, DECEMBER 31,
1996..................... -- 112 89,856 -- 2,363 (330) 92,001
Net income............... -- -- -- -- 36,926 -- 36,926
Shares issued in business
combinations.......... 105,750 2 8,521 -- -- -- 114,273
Net proceeds from stock
offerings............. -- 91 188,406 -- -- -- 188,497
Proceeds from exercise of
stock options......... -- 6 5,575 -- -- -- 5,581
Foreign currency
translation........... -- -- -- (1,326) -- -- (1,326)
Conversion of preferred
stock................. (105,750) 45 105,705 -- -- -- --
Proceeds from exercise of
warrants.............. -- 2 2,036 -- -- -- 2,038
========= ==== ======== ======= ======= ===== ========
BALANCE, DECEMBER 31,
1997..................... $ -- $258 $400,099 $(1,326) $39,289 $(330) $437,990
========= ==== ======== ======= ======= ===== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 40
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................... $ 337 $ 4,497 $ 36,926
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 30,578 65,720 301,141
Deferred income tax provision..................... 540 2,479 26,375
Warrants issued in connection with financing...... -- 686 --
Changes in operating assets and liabilities, net of
effects from acquisitions:
Trade and vehicle receivables, net................ (9,393) (5,910) (91,863)
Prepaid expenses and other assets................. 387 (1,350) (7,271)
Vehicle inventory................................. (7,995) (3,463) (3,138)
Accounts payable, accrued and other liabilities... 1,694 (8,280) (35,319)
--------- --------- -----------
Net cash provided by operating activities.... 16,148 54,379 226,851
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash balance.................... (13,271) 1,395 (213,715)
Proceeds from sale of revenue earning vehicles....... 293,905 460,550 1,707,500
Proceeds from sale of property and equipment......... -- -- 14,523
Purchases of revenue earning vehicles................ (315,863) (517,079) (2,011,954)
Purchases of property and equipment.................. (4,562) (2,608) (9,888)
Payment for acquisitions, net of cash acquired....... (6,507) (5,064) (143,164)
--------- --------- -----------
Net cash used in investing activities........ (46,298) (62,806) (656,698)
--------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from equity transactions, net............... -- 44,499 196,116
Net increase (decrease) in vehicle obligations....... 20,947 (220,901) (700,241)
Net increase (decrease) in working capital
facilities........................................ 6,890 (9,500) --
Net increase (decrease) in commercial paper.......... (276) (4,900) 348,850
Proceeds from other notes payable.................... 3,399 256,000 710,000
Principal payments on other notes payable............ (925) (4,401) (18,361)
Payment of financing fees............................ (76) (2,237) --
Purchase of treasury stock........................... (330) -- --
--------- --------- -----------
Net cash provided by financing activities.... 29,629 58,560 536,364
--------- --------- -----------
Net increase (decrease) in cash and cash equivalents... (521) 50,133 106,517
Cash and cash equivalents, beginning of year........... 878 357 50,490
--------- --------- -----------
Cash and cash equivalents, end of year................. $ 357 $ 50,490 $ 157,007
========= ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 41
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
(1) SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Budget Group, Inc. and subsidiaries (the "Company") are engaged in the
business of the daily rental of vehicles, including cars, trucks and passenger
vans (through both owned and franchised operations) and the sale of late model
used vehicles. On April 29, 1997, pursuant to stock purchase agreements entered
into on January 13, 1997, the Company completed its acquisition of Budget Rent a
Car Corporation ("BRACC") in a purchase transaction and changed its name
(formerly Team Rental Group, Inc.) to Budget Group, Inc. Prior to the
acquisition (the "BRACC Acquisition"), the Company was the largest United States
franchisee of BRACC.
Company owned vehicle rental operations are located primarily throughout
the United States and Western Europe. The largest concentration (approximately
20%) of vehicle rental assets is located in the highly competitive Florida
market. Franchised vehicle operations are located worldwide. Customers are
mainly business and leisure travelers. No customer accounts for more than 10% of
the Company's revenues.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts and operations
of the Company and its majority-owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated in consolidation. Investments in
less than majority-owned entities are accounted for using the equity method,
under which the Company's share of operating results is reflected in income as
earned and dividends are credited against the investment when received.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments including money market
funds, commercial paper and time deposits purchased with an original maturity of
three months or less to be cash equivalents.
RESTRICTED CASH
Restricted cash consists of funds borrowed under medium term note and
commercial paper programs not invested in revenue earning vehicles. Under the
terms of these agreements, any unused funds are required to be maintained in
restricted accounts and are invested in qualified short-term instruments.
F-8
<PAGE> 42
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TRADE AND VEHICLE RECEIVABLES, NET
Trade and vehicle receivables are stated net of the related allowance for
doubtful accounts. The following table reflects the activity in the allowance
for doubtful accounts for each of the three years in the period ended December
31, 1997:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------ -------
<S> <C> <C> <C>
Balance at beginning of year............................... $ 501 $2,297 $ 4,008
Provision.................................................. 802 552 8,345
Writeoffs.................................................. (1,350) (181) (9,035)
Increase due to acquisitions............................... 2,344 1,340 45,629
------- ------ -------
Balance at end of year..................................... $ 2,297 $4,008 $48,947
======= ====== =======
</TABLE>
VEHICLE INVENTORY
Vehicle inventory is stated at the lower of cost (determined based on
specific identification) or market.
REVENUE EARNING VEHICLES
Revenue earning vehicles are stated at cost less related discounts and
manufacturers' incentives or fair market value at the date of acquisition, as
appropriate, and are depreciated over their estimated economic lives or at rates
corresponding to manufacturers' repurchase program guidelines, where applicable.
Repurchase programs typically require the manufacturers to repurchase the
vehicles after varying time frames at agreed upon prices (subject to defined
condition and mileage standards). Depreciation rates generally range from 1.0%
to 2.5% per month. Management periodically reviews depreciable lives and rates
based on a variety of factors including general economic conditions and
estimated holding period of the vehicles. Gains and losses upon the sale of
revenue earning vehicles are recorded as an adjustment to depreciation expense.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost or fair market value at the date
of acquisition, as appropriate. Depreciation is being provided on the
straight-line method over the following estimated useful lives:
<TABLE>
<S> <C>
Buildings................................................... 10-25 years
Equipment, furniture and fixtures........................... 3-10 years
</TABLE>
The carrying value of property and equipment is reviewed whenever events or
changes in circumstances indicate that the carrying value may not be recoverable
through projected undiscounted future operating cash flows. Although no
impairment is indicated at December 31, 1997, the assessment of recoverability
will be impacted if estimated projected undiscounted operating cash flows are
not achieved.
DEFERRED FINANCING FEES
Direct costs incurred in connection with the Company's borrowings have been
recorded as a prepaid expense and are being amortized over the terms of the
related loan agreements to interest expense on the straight-line method, which
approximates the effective interest method.
On July 9, 1996, the Company utilized proceeds from its public offering of
Class A common stock to repay a $10,000 bridge financing facility it had
obtained from a bank in the second quarter of 1996. In conjunction with this
bank financing, the Company issued warrants valued at $700, which are included
in additional paid-in capital, and paid additional fees of approximately $1,000.
As a result of this repayment, the Company wrote off all unamortized fees
related to this financing, totaling $1,275.
F-9
<PAGE> 43
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMPUTER SOFTWARE SYSTEMS
The Company's purchased reservation system and associated applications and
databases have been recorded at fair market value at the date of acquisition.
Costs associated with the internal development of other computer software
systems and system enhancements are capitalized. Amortization is being provided
on the straight-line method over two to eight years.
INTANGIBLES, INCLUDING GOODWILL
Intangible assets, net, consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Franchise agreements........................................ $ -- $118,000
Trade name.................................................. -- 187,817
Goodwill.................................................... 70,893 226,411
------- --------
$70,893 $532,228
======= ========
</TABLE>
Identifiable intangible assets primarily arose from the allocation of
purchase prices of businesses acquired. Franchise agreements and trade name
relate to the BRACC Acquisition. Goodwill represents the excess of the purchase
price over the estimated fair value of all identifiable assets acquired. The
intangible assets are amortized over 40 years using the straight-line method.
The carrying value of intangibles is reviewed whenever events or changes in
circumstances indicate that the carrying value may not be recoverable through
projected undiscounted future operating cash flows. Although no impairment is
indicated at December 31, 1997, the assessment of recoverability will be
impacted if estimated projected undiscounted operating cash flows are not
achieved.
ENVIRONMENTAL COSTS
Environmental remediation costs are recorded in accounts payable, accrued
and other liabilities and in facilities expense in the accompanying consolidated
financial statements based on estimates of known environmental remediation
exposures when it becomes probable that a liability has been incurred.
Environmental exposures are largely related to underground storage tanks.
Expenditures are expected to be made over the next three years. A
receivable is recorded for amounts recoverable from third-parties when
collection becomes probable.
SELF INSURANCE LIABILITY
The Company is largely self-insured with respect to personal and property
liability claims up to specified limits. Third-party insurance is maintained in
limited areas and for claims in excess of those specified limits. A liability in
the amount of approximately $5,000 and $129,644 as of December 31, 1996 and
1997, respectively, which is included in accounts payable, accrued and other
liabilities, is recorded for known claims and for incurred but not reported
incidents based on actuarially computed estimates of expected loss. The
liability recorded as a result of these actuarially computed estimates may
experience material changes from year to year as incurred but not reported
incidents become known and known claims are settled.
The Company maintained unused letters of credit amounting to $58,156 at
December 31, 1997, largely in support of its insurance liability in certain
states and supporting the reimbursement of claims paid by third-party claims
administrators.
F-10
<PAGE> 44
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES
Deferred taxes are recognized to the extent they are expected to be payable
upon distribution of earnings of foreign and unconsolidated subsidiaries.
The Company uses the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets
and liabilities, as measured by the enacted tax rates which will be in effect
when those temporary differences are expected to be recovered or settled.
Deferred tax expense is the result of changes in the net deferred tax assets and
liabilities. The effect of a change in tax rates is recognized in the period
that includes the enactment date.
TRANSLATION OF FOREIGN FINANCIAL STATEMENTS
The financial statements of the Company's foreign affiliates have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation".
Accordingly, assets and liabilities of foreign operations are translated at
period-end rates of exchange, with any resultant translation adjustments
reported as a separate component of stockholders' equity. Income statement
accounts are translated at average exchange rates for the period and gains and
losses from foreign currency transactions are included in net income.
ROYALTY FEES AND OTHER REVENUES
Royalty fees and other revenues largely consist of monthly royalty fees
from franchisees, income before interest and taxes for insurance product and
credit card processing operations, the Company's share of operating results of
equity investees' and revenues generated from miscellaneous services provided to
the Company's franchisees.
ADVERTISING, PROMOTION AND SELLING
Advertising, promotion and selling expense, other than direct response
advertising, are charged to expense as incurred. The Company incurred
advertising expense of $2,347, $6,912 and $34,096 in 1995, 1996 and 1997,
respectively.
DERIVATIVES
Premiums paid for purchased interest rate cap agreements are amortized to
interest expense over the terms of the cap. Unamortized premiums are included in
prepaid expenses and other assets in the accompanying consolidated balance
sheets. Accounts receivable under cap agreements are accrued with a
corresponding reduction of interest expense. There were no such agreements
outstanding at December 31, 1997.
Gains and losses on foreign exchange contracts and futures related to
qualifying hedges of firm commitments or anticipated transactions are deferred
and are recognized in income when the hedged transaction occurs. There were no
such contracts outstanding at December 31, 1997. The Company does not engage in
speculative derivatives.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share". SFAS No. 128 established new standards for computing
and presenting earnings per share ("EPS"). Specifically, SFAS No. 128 replaces
the presentation of primary EPS with a presentation of basic EPS, requires dual
presentation of basic and diluted EPS on the face of the income statement for
all entities with
F-11
<PAGE> 45
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
complex capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation.
Basic EPS was calculated by dividing net income by the weighted average
number of common shares outstanding during the period. Diluted EPS was
calculated by dividing net income available to common stockholders after assumed
conversion of dilutive securities by the sum of the weighted average number of
common shares outstanding plus all additional common shares that would have been
outstanding if potentially dilutive common shares had been issued. The following
table reconciles the net income and number of shares utilized in the EPS
calculations for each of the three years in the period ended December 31, 1997
(share information in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Net income.................................................. $ 337 $4,497 $36,926
Effect of interest and loan fee amortization on convertible
securities -- net of income taxes......................... -- -- 4,983
------ ------ -------
Net income available to common stockholders after assumed
conversion of dilutive securities......................... $ 337 $4,497 $41,909
====== ====== =======
Weighted average number of common shares used in basic
EPS....................................................... 6,369 9,224 18,494
Effect of dilutive securities:
Stock options............................................. -- 264 704
Convertible securities.................................... -- -- 7,047
------ ------ -------
Weighted average number of common shares and dilutive
potential common stock used in diluted EPS................ 6,369 9,488 26,245
====== ====== =======
</TABLE>
Options to purchase approximately 77,000 shares of Class A common stock
were outstanding at December 31, 1997, but were not included in the computation
of diluted EPS because the options' exercise price was greater than the average
market price of the stock for the period.
STOCK OPTIONS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation", which encourages, but does not
require, companies to adopt the fair value based method of accounting for
stock-based employee compensation plans. Under the fair value based method,
compensation cost is measured at the grant date based on the fair value of the
award and is recognized over the service period, which is usually the vesting
period. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board ("APB") Opinion No. 25, but are
required to disclose, on a pro forma basis, net income and earnings per share,
as if the fair value based method of accounting had been applied.
Effective January 1, 1996, the Company elected to adopt only the disclosure
requirements of SFAS No. 123. Accordingly, the Company will continue to account
for stock-based employee compensation under APB Opinion No. 25.
RECLASSIFICATIONS
Certain amounts in the 1995 and 1996 consolidated financial statements have
been reclassified to conform with the current year presentation.
F-12
<PAGE> 46
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) PUBLIC STOCK OFFERINGS
The Company sold 3,821,007 shares of Class A common stock on July 2, 1996,
at $13.00 per share to investors in a public offering resulting in gross
proceeds of $49,673 to the Company. Net proceeds to the Company after offering
expenses were $44,440. The net proceeds were used to repay certain outstanding
indebtedness and for general corporate purposes.
The Company sold 8,625,000 shares of Class A common stock on April 29, 1997
(at a price of $21.625 per share) raising proceeds of $174,489, net of
applicable offering costs. An additional 450,000 shares of Class A common stock
were sold on October 1, 1997 (at a price of $33.00 per share) raising net
proceeds of $14,008. The net proceeds of the April offering were used to provide
a portion of the financing for the BRACC Acquisition. The net proceeds of the
October offering were used for working capital purposes.
(3) ACQUISITIONS
During 1995, 1996 and 1997, the Company acquired certain Budget franchise
operations, retail vehicle sales operations, a commuter van pooling operation,
BRACC and an insurance replacement car rental business. The acquisitions have
been accounted for under the purchase method of accounting and, accordingly, the
Company has allocated the cost of the acquisitions on the basis of the estimated
fair value of the tangible and identifiable intangible assets acquired and
liabilities assumed. The accompanying consolidated statements of income and cash
flow reflect the operations of the acquired companies from their respective
acquisition dates.
1995 ACQUISITIONS
Acquisition of Dayton Franchise -- In January 1995, the Company purchased
all of the outstanding stock of Don Kremer, Inc. located in Dayton, Ohio, for
$1,300. The acquisition funding consisted of $650 cash and two notes totaling
$650.
Acquisition of Charlotte Franchise -- In January 1995, the Company
purchased all of the outstanding stock of MacKay Car & Truck Rentals, Inc.,
located in Charlotte, North Carolina, for approximately $8,405, consisting of
cash of $8,277 and 13,483 shares of Class A common stock.
Acquisition of Hartford Franchise -- In March 1995, the Company purchased
all of the outstanding stock of Rental Car Resources, Inc., located in Hartford,
Connecticut, for approximately $1,475 by issuing 157,333 shares of Class A
common stock.
Acquisition of BRAC-OPCO Franchise -- In October 1995, the Company
purchased all of the outstanding stock of BRAC-OPCO, Inc., which operated Budget
franchises in the greater Los Angeles area, excluding the vehicle rental
operations at Los Angeles International Airport, for approximately $11,234 by
issuing 1,050,000 shares of Class A common stock.
1996 ACQUISITIONS
Acquisition of VPSI, Inc. ("VPSI") Van Pool Operations -- In February 1996,
the Company purchased for a nominal amount all of the outstanding stock of VPSI
located in Detroit, Michigan. VPSI provided commuter van pooling services to
business commuters in 22 states, and operated a rental fleet of approximately
3,300 vans as of the acquisition date.
Acquisition of Phoenix Franchise -- In February 1996, the Company purchased
all of the outstanding stock of Arizona Rent-A-Car Systems, Inc., located in
Phoenix, Arizona, for approximately $18,000, consisting of cash of approximately
$5,000, promissory notes of $10,000 and 272,727 shares of Class A common stock.
F-13
<PAGE> 47
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Acquisition of ValCar Rental Car Sales, Inc. ("ValCar") -- In August 1996,
the Company acquired all of the outstanding stock of ValCar for $400 in cash.
ValCar owned and operated four retail vehicle sales facilities in Indianapolis,
Indiana, and was formerly owned by a director and officer of the Company.
1997 ACQUISITIONS
BRACC Acquisition -- On January 13, 1997, the Company entered into an
agreement to purchase all of the outstanding shares of BRACC in a purchase
transaction. The cash portion of the purchase price (approximately $275,000) was
partially funded through the April stock offering (see Note 2 to consolidated
financial statements). The Company also issued to Ford Motor Company 4,500
shares of Series A convertible, non-voting preferred stock, each share of which
was converted into 1,000 shares of the Company's Class A common stock. The
common shares underlying the preferred stock had a value of approximately
$105,800 for purposes of determining the purchase price (based on the three day
period beginning on January 12) and $95,175 at the time of issuance. The Company
also entered into the following debt financing transactions concurrently with
the BRACC Acquisition: (i) $165,000 of guaranteed senior notes at a rate of
9.57% maturing in 2007; (ii) $45,000 of convertible subordinated notes at a rate
of 6.85% maturing in 2007; (iii) a variable-rate commercial paper vehicle
financing facility in the amount of $900,000; (iv) a $500,000 asset-backed note
vehicle financing facility maturing in 2001 and 2002, composed of a senior note
in the amount of $472,500 bearing interest at a rate of 7.35% and a subordinated
note in the amount of $27,500 bearing interest at a rate of 7.80%; and (v) a
$300,000 five-year secured working capital facility bearing interest at an
initial rate of 1.75% over LIBOR and secured primarily by accounts receivable,
cash and unencumbered vehicles.
Acquisition of Premier Car Rental -- On July 31, 1997, the Company
acquired, through its wholly owned subsidiary, Premier Car Rental LLC
("Premier"), the fleet and certain other assets and assumed certain liabilities
of Premier Car Rental, Inc. for approximately $87,200, consisting of $2,000 in
cash and the refinancing of approximately $85,200 of Premier Car Rental, Inc.'s
outstanding fleet indebtedness. Premier operates as its own brand and serves the
insurance replacement market.
Acquisition of St. Louis Franchise -- On October 1, 1997, the Company
purchased all of the outstanding stock of Budget Rent a Car of St. Louis, Inc.,
located in St. Louis, Missouri, for approximately $9,524, consisting of cash of
$1,000 and 246,167 shares of Class A common stock.
If the 1996 and 1997 acquisitions had occurred at the beginning of 1996,
the Company's results of operations would have been as shown in the following
table. The unaudited pro forma results are not necessarily indicative of the
actual results of operations that would have occurred had the acquisitions
actually been made at the beginning of 1996.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
Operating revenue........................................... $1,527,431 $1,676,766
Net income.................................................. 20,676 23,024
EPS -- basic................................................ 1.14 1.07
EPS -- diluted.............................................. 0.90 0.90
</TABLE>
F-14
<PAGE> 48
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) REVENUE EARNING VEHICLES
Revenue earning vehicles consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
-------- ----------
<S> <C> <C>
Revenue earning vehicles.................................... $335,461 $2,276,582
Less -- accumulated depreciation............................ (16,204) (265,656)
-------- ----------
$319,257 $2,010,926
======== ==========
</TABLE>
(5) PROPERTY AND EQUIPMENT
Property and equipment, net, consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Land........................................................ $ 2,601 $ 26,328
Buildings and leasehold improvements........................ 18,507 97,552
Furniture, fixtures and office equipment.................... 13,167 49,202
-------- --------
34,275 173,082
Less -- accumulated depreciation and amortization........... (15,773) (32,917)
-------- --------
$ 18,502 $140,165
======== ========
</TABLE>
(6) PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets include purchased software and
capitalized software systems development costs, net of accumulated amortization,
which amounts to approximately $6,806 at December 31, 1997. In addition, prepaid
expenses and other assets include the Company's 20% investment in a foreign
rental operation.
The revenue of the Company's investee amounts to less than 10% of
consolidated revenues and the amount of undistributed earnings included in
consolidated retained earnings is not significant.
(7) NOTES PAYABLE
Notes payable consist of the following at December 31:
<TABLE>
<CAPTION>
1996 1997
-------- ----------
<S> <C> <C>
Commercial paper............................................ $ -- $ 871,448
Medium term notes:
Senior.................................................... 304,500 1,267,376
Subordinated.............................................. 17,182 44,682
Convertible subordinated notes.............................. 80,000 125,000
Vehicle obligations......................................... 38,438 26,808
Guaranteed senior notes..................................... -- 165,000
Foreign notes............................................... -- 66,781
Note payable to vendor...................................... -- 15,677
Other....................................................... 15,489 27,237
-------- ----------
$455,609 $2,610,009
======== ==========
</TABLE>
F-15
<PAGE> 49
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMMERCIAL PAPER
The $900,000 commercial paper facility (the "Paper") was established in
April 1997, bears interest at rates ranging from 5.75% to 6.15% at December 31,
1997, and is secured by the applicable vehicles and vehicle program receivables.
Under limited circumstances the Paper may be repaid by draws under a related,
bank provided liquidity facility ($825,000) or a related letter of credit
($95,000). The Paper is issued periodically with maturities of up to 58 days. It
is the Company's intention and ability to renew the liquidity facility or to
obtain financing under similar terms when the present agreement expires in April
1998. No amounts were drawn under the bank provided liquidity facility or
related letter of credit at December 31, 1997.
MEDIUM TERM NOTES
Medium term notes are comprised of notes issued in August 1994 ("TFFC-94
notes"), notes assumed in the acquisition of BRAC-OPCO, Inc. in October 1995
("OPCO notes"), notes issued in December 1996 ("TFFC-96 notes"), notes issued in
April 1997 ("TFFC-97 notes") and notes assumed in the BRACC Acquisition
("BFFC -- 94A notes") (collectively "MTN notes"). MTN notes are secured by the
underlying vehicles and restricted cash of $66,336 and $282,731 at December 31,
1996 and 1997, respectively. Under limited circumstances the MTN notes may be
repaid by draws under related letters of credit amounting to $85,000 at December
31, 1997. No amounts were drawn under the related letter of credit at December
31, 1997.
The TFFC-94 notes consist of senior notes and subordinated notes. The
senior notes, with an aggregate principal balance of $100,000 at December 31,
1996 and 1997, bear interest at an average LIBOR rate, as defined, plus 0.75%
(6.86% per annum at December 31, 1997). Monthly principal payments of $16,667
commence in June 1999 with the last payment due in November 1999. The
subordinated notes, with an aggregate principal balance of $5,682 at December
31, 1996 and 1997, bear interest at an average LIBOR rate, as defined, plus
1.30% (7.41% per annum at December 31, 1997) and are payable in full in December
1999. Interest on the TFFC-94 notes is payable monthly.
The BFFC-94A notes consist of an aggregate principal balance of $500,000 at
December 31, 1997 and bear interest at an average LIBOR rate, as defined, plus
0.50% (6.36% per annum at December 31, 1997). Interest on the BFFC-94A notes is
payable monthly. Monthly principal payments of $83,333 commence in April 1999,
with the last payment due in September 1999.
The OPCO notes consist of senior notes and subordinated notes. The senior
notes, with an aggregate principal balance of $38,500 and $28,876 at December
31, 1996 and 1997, bear interest at an average LIBOR rate, as defined, plus
0.60% (6.71% per annum at December 31, 1997). Monthly principal payments of
$4,812 commenced in November 1997 with the last payment due in June 1998. The
subordinated notes, with an aggregate principal balance of $1,500 at December
31, 1996 and 1997, bear interest at an average LIBOR rate, as defined, plus 1.0%
(7.11% per annum at December 31, 1997) and are payable in full in December 1998.
Interest on the OPCO notes is payable monthly.
The TFFC-96 notes consist of senior notes and subordinated notes. The
senior notes, with an aggregate principal balance of $166,000 at December 31,
1996 and 1997, bear interest at 6.65% per annum. Monthly principal payments of
$13,833 commence in May 2001 with the last payment due in April 2002. The
subordinated notes, with an aggregate principal balance of $10,000 at December
31, 1996 and 1997, bear interest at 7.10% per annum and are payable in full in
2002. Interest on the TFFC-96 notes is payable monthly.
The TFFC-97 notes consist of senior notes and subordinated notes. The
senior notes, with an aggregate principal balance of $472,500 at December 31,
1997, bear interest at 7.35% per annum. Monthly principal payments of $39,375
commence in November 2001, with the last payment due in October 2002. The
F-16
<PAGE> 50
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
subordinated notes, with an aggregate principal balance of $27,500 at December
31, 1997, bear interest at 7.80% per annum and are payable in full in 2002.
Interest on the TFFC-97 notes is payable monthly.
CONVERTIBLE SUBORDINATED NOTES
In December 1996, the Company issued convertible subordinated notes with an
aggregate principal amount of $80,000 bearing interest at 7.0% per annum due
2003. The term of the notes was extended to 2007 in conjunction with the BRACC
Acquisition. At a conversion price of $20.07 per share, the convertible
subordinated notes are convertible into 3,986,049 shares of Class A common
stock.
In April 1997, the Company issued convertible subordinated notes with an
aggregate principal amount of $45,000 bearing interest at 6.85% per annum due
2007. At a conversion price of $27.96 per share, the convertible subordinated
notes are convertible into 1,609,442 shares of Class A common stock.
VEHICLE OBLIGATIONS
Vehicle obligations consist of outstanding lines of credit to purchase
rental vehicles and retail car sales inventory. Collateralized lines of credit
at December 31, 1997, consist of $13,000 for rental vehicles and approximately
$27,000 for retail car sales inventory with maturity dates through May 1998.
Vehicle obligations are collateralized by revenue earning vehicles financed
under these credit facilities and proceeds from the sale, lease or rental of
rental vehicles and retail car sales inventory.
Vehicle obligations relating to the rental fleet are generally amortized
over 5 to 15 months with monthly principal payments ranging from 2.0% to 3.0% of
the capitalized vehicle cost. When rental vehicles are sold, the related unpaid
obligation is due. Interest payments for rental fleet facilities are due monthly
at annual interest rates ranging from 7.0% to 8.5% at December 31, 1997.
Management expects vehicle obligations will generally be repaid within one year
with proceeds received from either the repurchase of the vehicles by the
manufacturers in accordance with the terms of the repurchase programs or from
the sale of the vehicles.
GUARANTEED SENIOR NOTES
Concurrent with the BRACC Acquisition, the Company issued $165,000 of
guaranteed senior notes. The guaranteed senior notes bear interest at 9.57% per
annum, mature in 2007 and are unsecured. The agreement under which the notes
were issued includes certain covenants, the most restrictive of which require
the Company to maintain certain financial ratios and minimum net worth. At
December 31, 1997, the Company was in compliance with all covenants.
FOREIGN NOTES
The foreign notes primarily provide financing for vehicle purchases and the
funding of working capital. At December 31, 1997, approximately $64,885 relates
to vehicle debt while $1,896 relates to the funding of working capital and
various other debt. The foreign notes are largely secured by vehicles, bear
interest at rates ranging from 6.55% to 9.0% per annum, and mature from 1998
through 2003.
NOTE PAYABLE TO VENDOR
The note payable to vendor relates to the Company's license agreement for
the reservation system and associated applications and databases. The note bears
interest at 6.20% per annum and is due in November 1998.
F-17
<PAGE> 51
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
WORKING CAPITAL FACILITIES
The Company has a $300,000 five-year senior, secured revolving credit
facility, bearing interest at an initial rate of 1.75% over LIBOR. At December
31, 1997, the Company had $238,156 in letters of credit outstanding under this
facility. The working capital facility is secured by eligible cash, eligible
receivables and unencumbered vehicles. The agreement governing the credit
facility includes certain convenants, the most restrictive of which require the
Company to maintain certain financial ratios and minimum tangible net worth and
restrict the payment of cash dividends. At December 31, 1997, the Company was in
compliance with all convenants. No amounts were drawn on this facility at
December 31, 1997.
Scheduled aggregate maturities of notes payable at December 31, 1997, are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ ----------
<S> <C>
1998........................................................ $1,032,589
1999........................................................ 607,003
2000........................................................ 2,241
2001........................................................ 189,709
2002........................................................ 487,526
Thereafter.................................................. 290,941
----------
$2,610,009
==========
</TABLE>
(8) RELATED PARTY TRANSACTIONS
The Company leases facilities from an entity owned by certain stockholders.
Operating lease payments for the years ended December 31, 1995, 1996 and 1997,
were $220, $227 and $586, respectively. The entity assigned lease payments from
the Company to a bank.
At December 31, 1996 and 1997, the Company had a payable to a stockholder
and director in the amount of $1,500 which is included in notes payable in the
accompanying consolidated balance sheet. The outstanding balance bears interest
at prime plus 2.0% (10.50% per annum at December 31, 1997), is unsecured and is
payable on demand.
Approximately $4,013 and $19,811 of cash and cash equivalents are on
deposit with or are being held as agent for the Company by a bank at December
31, 1996 and 1997, respectively. A stockholder and director of the Company
served on the bank's board of directors.
In connection with the BRAC-OPCO franchise acquisition, the Company entered
into a franchise agreement with the seller to pay a royalty of 5% of the monthly
gross revenues derived from those operations, as well as the Company's San Diego
operations. BRACC had a similar agreement related to the Los Angeles airport. A
director of the Company is the Chief Executive Officer and a general partner of
the seller. In 1996 and 1997, the Company paid the seller approximately $3,700
and $6,213, respectively, in royalty fees in accordance with these agreements.
For many years, Ford has been BRACC's principal supplier of vehicles and
held an equity interest in the Company from the time of the BRACC Acquisition
through October 6, 1997. The number of vehicles purchased from Ford has varied
from year to year. In model year 1997, approximately 73% of BRACC's U.S. vehicle
purchases were comprised of Ford vehicles. Under the terms of the supply
agreement that was entered into concurrently with the BRACC Acquisition, the
Company agreed to purchase or lease Ford vehicles in such quantity that the
percentage of new Ford vehicles purchased or leased by the Company in the United
States, Canada, and other countries outside the European Union represents at
least 70% of the total new vehicle acquisitions by the Company, with a minimum
quantity of at least 80,000 vehicles in the United States in each model year.
Given the volume of vehicles purchased from Ford by the Company, shifting
F-18
<PAGE> 52
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
significant portions of the fleet purchases to other manufacturers would require
lead time and certain operational changes. As a result, any inability of Ford to
supply the Company with the planned number and types of vehicles, any
significant decline in the quality and customer satisfaction with respect to
Ford vehicles or any failure of the parties to reach an agreement on the terms
of any purchases could have a material adverse effect on the Company's financial
condition and results of operations.
(9) LEASES
The Company leases certain revenue earning vehicles and facilities under
operating leases that expire at various dates. Generally, the facility leases
are subject to payment increases based on cost of living indices and require the
Company to pay taxes, maintenance, insurance and certain other operating
expenses. Certain facility leases require the Company to pay fixed amounts plus
contingent rentals based on gross rental revenues, as defined, and gasoline
sales. In addition, the Company guarantees airport commission fees on behalf of
certain licensees.
Expense for operating leases and airport concession fees consists of the
following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Revenue earning vehicles.............................. $ 1,518 $ 1,555 $15,914
Facilities:
Minimum rentals..................................... 5,914 14,422 65,320
Contingent rentals.................................. 3,502 3,353 17,615
------- ------- -------
$10,934 $19,330 $98,849
======= ======= =======
</TABLE>
Future minimum payments under noncancellable leases and concession
agreements at December 31, 1997, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1998................................................... $ 49,865
1999................................................... 34,006
2000................................................... 26,635
2001................................................... 20,695
2002................................................... 17,059
Thereafter............................................. 41,406
--------
$189,666
========
</TABLE>
(10) INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
---- ------ -------
<S> <C> <C> <C>
Current:
Federal................................................. $ -- $ 92 $ --
State................................................... 145 750 502
Foreign................................................. -- -- 816
Deferred.................................................. 540 2,479 25,057
---- ------ -------
$685 $3,321 $26,375
==== ====== =======
</TABLE>
F-19
<PAGE> 53
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes differs from the amount computed using the
statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997
---- ------ -------
<S> <C> <C> <C>
Income tax provision at federal statutory rate.............. $348 $2,658 $22,155
Effect of earnings of nontaxable (subchapter S) companies... -- (87) --
Nondeductible portion of amortization of intangibles........ 94 306 2,466
State tax provision, net of federal benefit................. 215 391 1,235
Other....................................................... 28 53 519
---- ------ -------
$685 $3,321 $26,375
==== ====== =======
</TABLE>
The tax effects of temporary differences that give rise to the deferred tax
assets and liabilities at December 31, relate to the following:
<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $16,846 $ 75,772
Estimated self insurance liability........................ 1,998 51,488
Accrued expenses -- pension............................... -- 8,549
Accounts receivable, principally due to allowance for
doubtful accounts...................................... -- 8,570
Business tax credit carryforwards......................... -- 7,114
Foreign tax credit carryforwards.......................... -- 1,930
Alternative minimum tax carryforwards..................... 966 3,759
Foreign tax assets and net operating loss carryforwards... -- 2,319
Non-deductible reserves, accrued expenses and other....... 3,461 14,683
------- --------
Total gross deferred tax assets................... 23,271 174,184
Less -- valuation allowance....................... (9,515) (72,198)
------- --------
13,756 101,986
Deferred tax liabilities:
Difference between book and tax bases of revenue earning
vehicles and property and equipment.................... 19,327 78,977
Intangibles............................................... 1,835 127,878
Other..................................................... -- 3,509
------- --------
Total gross deferred tax liabilities.............. 21,162 210,364
------- --------
Net deferred tax liability........................ $ 7,406 $108,378
======= ========
</TABLE>
At December 31, 1997, the Company and its subsidiaries have federal tax
loss carryforwards of approximately $205,000 expiring between December 2005 and
December 2011. The Company has recorded a valuation allowance for a portion of
the acquired net operating loss carryforwards and other credit carryforwards due
to the uncertainty of their ultimate realization. Any subsequently recognized
tax benefits attributed to the change in the valuation allowance will reduce
intangibles. The increase in the valuation allowance during 1996 resulted from
an increase related to net operating loss carryforwards and uncertainty
regarding their ultimate realization. The increase in the valuation allowance
during 1997 resulted from the net operating loss carryforwards and other credit
carryforwards acquired in the BRACC Acquisition that will be limited in their
use.
F-20
<PAGE> 54
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) PENSION AND OTHER BENEFIT PLANS
Substantially all employees in the United Kingdom and certain employees in
the U.S. are covered under noncontributory pension plans. Plan benefits are
based on final average compensation. The Company's funding policy for the
domestic plan is to contribute the minimum ERISA contribution required under the
projected unit credit actuarial cost method. The domestic defined benefit
pension plan has been suspended. As a result of this suspension, employees earn
no additional benefits under the plan. The domestic plan is supplemented by an
unfunded, nonqualified plan providing benefits (as computed under the benefit
formula) in excess of limits imposed by Federal tax law. The cost of the
supplemental plan was approximately $695 in 1997.
The Company maintains an unfunded, nonqualified plan providing benefits to
certain of its officers, (the "Executive Protection Plan") based on percentage
of final compensation. The cost of the Executive Protection Plan was
approximately $161 in 1997.
The Company also maintains a Savings Plus Plan. Under this plan, an
eligible employee of the Company, or its participating subsidiaries, who has
completed one year of continuous service and enrolls in the plan may elect to
defer from 1% to 15% of specified compensation under a "cash or deferred
arrangement" under Section 401(k) of the Internal Revenue Code, subject to
certain limitations. The Company contributes varying amounts (25% to 75%) on the
first 6% of each participating employee's eligible salary deferrals to various
funds established by the plan, plus an additional contribution at the discretion
of the Board of Directors, based on a percentage of an employee's total cash
compensation. The cost of the plan was approximately $147 and $4,025 in 1996 and
1997, respectively.
Each of the Company's domestic defined benefit plan's accumulated benefits
exceed the plan's assets at December 31, 1997. The following table sets forth
the domestic and foreign pension plans' funded status and amounts recognized in
the Company's consolidated financial statements at December 31, 1997:
<TABLE>
<CAPTION>
DOMESTIC FOREIGN
PLANS PLAN
-------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits........................................... $ 29,303 $5,464
Nonvested benefits........................................ 1,033 147
-------- ------
Accumulated benefit obligation.............................. $ 30,336 $5,611
======== ======
Projected benefit obligation for service rendered to date... $ 30,388 $6,684
Plan assets at fair value, primarily participation in common
trust funds............................................... 17,220 9,056
-------- ------
Excess (deficiency) of plan assets over projected benefit
obligation................................................ (13,168) 2,372
Unrecognized net asset at transition........................ 1,080 (3)
Unrecognized net loss (gain)................................ (6,994) 423
-------- ------
Prepaid (accrued) pension cost.............................. $(19,082) $2,792
======== ======
Service cost for benefits earned during the period.......... $ 48 $ 537
Interest cost on projected benefit obligation............... 1,383 394
Return on plan assets....................................... (1,213) (754)
Net amortization and deferral............................... 730 --
-------- ------
Pension expense............................................. $ 948 $ 177
======== ======
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation for 1997 was 7%. No
compensation increase has been assumed as no additional benefits will be earned
under the domestic plans. The assumed compensation increase under the Executive
Protection Plan and foreign plan was 5% and 4%, respectively. The expected
long-term rate of return on plan assets for 1997 was 9.5%.
F-21
<PAGE> 55
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK OPTIONS
On April 25, 1994, the Company adopted the 1994 Incentive Stock Option Plan
(the "ISO Plan") and the 1994 Directors' Stock Option Plan (the "Directors'
Plan"). The Company accounts for these plans under APB Opinion No. 25 under
which no compensation cost has been recognized. Had compensation cost been
determined consistent with SFAS No. 123, the Company's net income and EPS would
have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
------ ------ -------
<S> <C> <C> <C> <C>
Net income................................... As Reported $ 377 $4,497 $36,926
Pro Forma (36) 3,375 32,381
EPS -- basic................................. As Reported 0.05 0.49 2.00
Pro Forma (0.01) 0.37 1.75
EPS -- diluted............................... As Reported 0.05 0.47 1.60
Pro Forma (0.01) 0.37 1.46
</TABLE>
The calculated pro forma compensation cost may not be representative of
that to be expected in future years.
The ISO Plan provides for the issuance of up to 1,750,000 shares of Class A
or Class B common stock to key employees. The ISO Plan stock options may be
either incentive stock options or nonqualified options and are exercisable not
less than six months nor more than 10 years after the date of grant. Options
granted under the ISO Plan in 1997 become exercisable between 18 and 24 months
after the date of grant. The exercise price of incentive stock options may not
be less than the fair market value of the underlying shares at the date of
grant. The exercise price for nonqualified options may not be less than 85% of
the fair market value of the underlying shares or, if greater, the book value of
the underlying shares at the date of grant.
The Directors' Plan provides for the issuance of shares of Class A common
stock to directors of the Company who are not employees of the Company. The
Directors' Plan stock options are nonqualified and are exercisable not less than
six months nor more than 10 years after the date of grant. Options granted under
the Directors' Plan in 1997 become exercisable six months after the date of
grant. The exercise price of the nonqualified options under the Directors' Plan
is the fair market value of the underlying shares at the date of grant.
F-22
<PAGE> 56
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the status of the Company's two stock option plans at December
31, 1995, 1996 and 1997 and activity during the years then ended is presented in
the table and narrative below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding -- December 31, 1994............................ 15,000 $ 9.50
Granted................................................... 202,000 9.50
---------
Outstanding -- December 31, 1995............................ 217,000 9.50
Granted................................................... 547,650 11.70
Exercised................................................. (6,200) 9.50
Forfeited................................................. (8,600) 11.13
---------
Outstanding -- December 31, 1996............................ 749,850 11.09
Granted................................................... 1,672,375 22.87
Exercised................................................. (539,350) 10.66
Forfeited................................................. (86,290) 19.25
---------
Outstanding -- December 31, 1997............................ 1,796,585 21.79
=========
</TABLE>
As of December 31, 1997, options for 1,556,585 shares and 240,000 shares of
Class A and Class B common stock, respectively, remained outstanding under the
Company's stock option plans.
<TABLE>
<CAPTION>
1995 1996 1997
------ ------- -------
<S> <C> <C> <C>
Exercisable at end of year --
Shares.................................................... 15,000 247,700 214,700
Weighted average exercise price........................... $9.50 $9.76 $14.36
Weighted average fair value of options granted during the
year...................................................... $4.52 $5.48 $10.11
</TABLE>
At December 31, 1997, 1,413,285 of the 1,796,585 options outstanding have
an exercise price of $22.38 and a remaining contractual life of 9.3 years. Of
these options, 60,000 are exercisable. The remaining 383,300 options have
exercise prices between $9.50 and $36.44, with a weighted average exercise price
of $19.64 and a weighted average remaining contractual life of 8.9 years. Of
these options, 154,700 are exercisable with a weighted average exercise price of
$11.25.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model. For options granted under the ISO Plan,
a weighted average risk-free rate of return of 5.89% and an expected life of
three years were assumed. For options granted under the Directors' Plan, a
risk-free rate of return of 6.63% and an expected life of five years were
assumed. Additionally, for each option plan there was no expected dividend yield
and an expected volatility of 58%.
(12) COMMON STOCK WARRANT
Concurrent with the acquisition of the Budget franchise in Philadelphia and
in consideration of the abatement of certain future royalty fees to BRACC with
respect to the Philadelphia vehicle rental operation and other consideration
received from BRACC, the Company issued a warrant to BRACC (the "Common Stock
Warrant") to purchase 175,000 shares of Class A common stock. This warrant has
been retired in 1997 following the Company's acquisition of BRACC.
(13) COMMITMENTS AND CONTINGENCIES
Litigation arising in the normal course of business is pending against the
Company. Management believes that the Company has meritorious defenses to all
significant litigation and that the ultimate outcome of the
F-23
<PAGE> 57
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
litigation will not have a material adverse effect on the Company's consolidated
financial position or results of operations.
ENVIRONMENTAL MATTERS
The Company has recorded amounts which, in management's best estimate, will
be sufficient to satisfy anticipated costs of known remediation requirements. At
December 31, 1997, the Company has accrued $3,301 for estimated environmental
remediation costs and expects to expend approximately $2,600 during 1998.
Amounts receivable from third parties for reimbursement of remediation
expenditures are not significant.
Due to factors such as continuing changes in the environmental laws and
regulatory requirements, the availability and application of technology, the
identification of presently unknown remediation sites and changes in the extent
of expected remediation efforts, estimated costs for future environmental
compliance and remediation are subject to uncertainty and it is difficult to
predict the amount or timing of future remediation requirements. The Company
does not expect such future costs to have a material adverse effect on the
Company's consolidated financial position or results of operations.
(14) FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosure about Fair Value of Financial Instruments". The estimated fair value
amounts are determined by the Company using available market information and
appropriate valuation methodologies. However, considerable judgement is required
in interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts the
Company could realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amount.
CASH AND CASH EQUIVALENTS, RESTRICTED CASH, TRADE AND VEHICLE RECEIVABLES AND
ACCOUNTS PAYABLE, ACCRUED AND OTHER LIABILITIES
The carrying amounts of these financial assets and liabilities at December
31, 1996 and 1997, approximate fair value because of the short maturity of these
instruments.
NOTES PAYABLE
The carrying amount of a portion of the Company's notes payable
approximates fair market value at December 31, 1996 and 1997, since the debt is
at floating interest rates. The carrying amount of the Company's fixed-rate
notes payable approximates fair value at December 31, 1996 and 1997, due to the
recent issuance of such debt or because such notes do not have terms that differ
materially from those currently available to the Company.
(15) SUPPLEMENTAL CASH FLOW DISCLOSURES
In 1995, the Company issued 1,220,816 shares of Class A common stock with a
value of $12,837 and notes payable of $650 for the 1995 acquisitions.
In 1996, the Company issued 272,727 shares of Class A common stock with a
value of $2,727 and notes payable of $10,000 for the 1996 acquisitions.
In 1997, the Company issued 4,746,167 shares of Class A common stock with a
value of $114,274 for the 1997 acquisitions. These amounts reflect the
conversion of 4,500 shares of Series A convertible, non-voting
F-24
<PAGE> 58
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
preferred stock into 4,500,000 shares of Class A common stock which were sold by
the selling stockholder in October 1997.
The Company paid interest of $13,764, $26,955 and $101,992 in 1995, 1996
and 1997, respectively.
Income taxes of $346, $1,017, and $1,796 were paid in 1995, 1996 and 1997,
respectively.
On occasion, the Company acquires goods and services in exchange for
revenue earning vehicles. During 1997, revenue earning vehicles in the amount of
$2,100 were exchanged for goods and services.
(16) SEGMENT INFORMATION
The Company is engaged in the business of the daily rental of vehicles,
principally cars, trucks, and passenger vans, and the retail sale of used
vehicles.
Segment information for the year ended December 31, 1995, is as follows:
<TABLE>
<CAPTION>
RETAIL VEHICLE
SALES VEHICLE RENTAL CONSOLIDATED
-------------- -------------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers.................. $ 42,662 $ 107,067 $ 149,729
Depreciation and amortization.................... 193 29,483 29,676
Operating income................................. 1,254 12,926 14,180
Income (loss) before income taxes................ 1,869 (847) 1,022
Identifiable assets.............................. 30,195 356,128 386,323
Capital expenditures -- revenue earning
vehicles....................................... -- 315,863 315,863
</TABLE>
Segment information for the year ended December 31, 1996, is as follows:
<TABLE>
<CAPTION>
RETAIL VEHICLE
SALES VEHICLE RENTAL CONSOLIDATED
-------------- -------------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers.................. $134,120 $ 223,250 $ 357,370
Depreciation and amortization.................... 1,482 63,685 65,167
Operating income................................. 1,857 33,410 35,267
Income before income taxes....................... 409 7,409 7,818
Identifiable assets.............................. 48,885 538,338 587,223
Capital expenditures -- revenue earning
vehicles....................................... -- 517,079 517,079
</TABLE>
Segment information for the year ended December 31, 1997, is as follows:
<TABLE>
<CAPTION>
RETAIL VEHICLE
SALES VEHICLE RENTAL CONSOLIDATED
-------------- -------------- ------------
<S> <C> <C> <C>
Sales to unaffiliated customers.................. $239,992 $1,063,770 $1,303,762
Depreciation and amortization.................... 283 300,858 301,141
Operating income (loss).......................... (2,431) 173,717 171,286
Income (loss) before income taxes................ (1,925) 65,226 63,301
Identifiable assets.............................. 101,213 3,473,602 3,574,815
Capital expenditures -- revenue earning
vehicles....................................... -- 2,011,954 2,011,954
</TABLE>
(17) SUBSEQUENT EVENTS
On January 28, 1998, the Company completed its acquisition of Mesa, Arizona
based Cruise America, Inc. ("Cruise") in a stock for stock merger that will be
accounted for as a pooling of interests. As a result of the merger, Cruise
shareholders received 0.28073 of a share of the Company's Class A common stock
for each share of Cruise common stock or a total of approximately 1.77 million
shares worth approximately $62,000 as of the acquisition date. In addition, the
Company assumed approximately $76,000 of vehicle debt.
F-25
<PAGE> 59
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
If the acquisition had occurred at the beginning of 1995, the Company's
results of operations would have been as shown in the following table. The
unaudited pro forma results are not necessarily indicative of the actual results
that would have occurred had the acquisition been made at the beginning of 1995.
The 1997 amounts include the impact on Cruise of a one-time charge for
jury-awarded damages of approximately $8,500, net of income taxes.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1996 1997
-------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Operating revenue........................................... $239,482 $447,808 $1,411,436
Net income.................................................. 1,712 7,751 29,774
EPS -- basic................................................ 0.21 0.72 1.48
EPS -- diluted.............................................. 0.21 0.70 1.25
</TABLE>
On March 4, 1998, the Company entered into an Agreement and Plan of Merger,
as amended (the "Merger Agreement"), to acquire all of the outstanding stock of
Ryder TRS Inc. ("Ryder TRS"), based in Denver, Colorado, for approximately
$264,000 of cash, Class A common stock and warrants, subject to adjustment and
the other terms and conditions of the Merger Agreement. In addition, the Company
will assume approximately $266,000 of fleet debt and $175,000 of other debt. The
acquisition will be accounted for under the purchase method of accounting.
(18) SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table is a summary of quarterly information for the years
ended December 31, 1996 and 1997 (in thousands except per share data):
<TABLE>
<CAPTION>
1996 1997
--------------------------------------- -----------------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
--------------------------------------- -----------------------------------------
MARCH 31 JUNE 30 SEPT 30 DEC 31 MARCH 31 JUNE 30 SEPT 30 DEC 31
-------- ------- -------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenue........... $65,794 $93,734 $101,492 $96,350 $102,448 $306,321 $482,446 $412,547
Operating income............ 7,254 10,842 15,162 2,009 8,160 29,100 90,614 43,412
Net income (loss)........... 1,277 2,246 4,640 (3,666) 848 2,653 28,953 4,472
Average shares
outstanding -- basic...... 7,256 7,430 10,919 11,253 11,257 17,147 19,961 25,405
Earnings (loss) per share --
basic(1).................. 0.18 0.30 0.42 (0.33) 0.08 0.15 1.45 0.18
Average shares
outstanding -- diluted
.......................... 7,256 7,569 11,175 11,253 11,257 20,832 30,936 26,420
Earnings (loss) per share --
diluted(1)................ 0.18 0.30 0.42 (0.33) 0.08 0.13 0.98 0.17
Market price of stock(2)
High...................... 10.50 17.50 20.25 20.25 29.50 34.875 37.00 37.75
Low....................... 8.25 9.25 12.375 15.25 16.00 19.00 28.188 32.50
</TABLE>
- ---------------
(1) Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share do not
equal the total for the year.
(2) On March 23, 1998, (i) the closing sale price of the Class A common stock as
reported on the New York Stock Exchange was $38.938 per share and (ii) there
were approximately 185 holders of record of the Class A common stock and
three holders of record of the Class B common stock.
As of April 17, 1997, the Company's Class A common stock has been listed on
the New York Stock Exchange under the symbol "BD". Prior to such date, the
Company's Class A common stock was traded in the Nasdaq National Market under
the symbol "TBUD". Market price data in the above table is based on
F-26
<PAGE> 60
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
high and low bid information for the Class A common stock as reported by the
Nasdaq National Market or the high and low sales prices for the Class A common
stock as reported by the New York Stock Exchange, as the case may be, for the
periods indicated.
The Company has never paid any cash dividends on its common stock, and the
Board of Directors currently intends to retain all earnings for use in the
Company's business for the foreseeable future. Any future payment of dividends
will depend upon the Company's results of operations, financial condition, cash
requirements, restrictions in credit and other agreements and other factors
deemed relevant by the Board of Directors.
F-27
<PAGE> 61
ANNEX A
EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
As used herein, unless the context otherwise requires, (i) "TEAM" refers to
Budget Group, Inc. and its subsidiaries prior to its acquisition of Budget Rent
a Car Corporation on April 29, 1997 (the "Budget Acquisition"); (ii) "BRACC"
refers to Budget Rent a Car Corporation and its subsidiaries; (iii) the
"Company" or "Budget Group" refers to TEAM (including BRACC) after giving effect
to the Budget Acquisition; and (iv) "Budget" refers to the business of renting
cars and trucks and retailing late model vehicles conducted by the Company and
its franchisees under the Budget name.
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), Congress encouraged public companies to make "forward-looking
statements" by creating a safe harbor to protect companies from securities law
liability in connection with forward-looking statements. The Company intends to
qualify both its written and oral forward-looking statements for protection
under the Reform Act and any other similar safe harbor provisions.
"Forward-looking statements" are defined under the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of the Company. The
Company undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, the Company undertakes no obligation
to update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results
over time.
The Company provides the following risk factor disclosure in connection
with its continuing effort to qualify its written and oral forward-looking
statements for the safe harbor protection of the Reform Act and any other
similar safe harbor provisions. Important factors currently known to management
that could cause actual results to differ materially from those in
forward-looking statements include the following:
ACQUISITIONS; ABILITY TO IMPLEMENT GROWTH STRATEGY
The Company's recent growth is largely attributable to acquisitions and the
Company intends to continue to pursue the acquisition of businesses that the
Company believes would complement or expand its existing businesses.
Acquisitions involve a number of risks that could adversely affect the Company's
operating results, including (i) the diversion of management's attention; (ii)
the assimilation of the operations and personnel of acquired businesses; (iii)
the amortization of acquired intangible assets; (iv) the assumption of potential
liabilities, disclosed or undisclosed, associated with the businesses acquired,
which liabilities may exceed the amount of indemnification available from the
seller; (v) the risk that the financial and accounting systems utilized by the
businesses acquired will not meet the Company's standards; (vi) the risk that
the businesses acquired will not maintain the quality of services that the
Company has historically provided; (vii) the dilutive effect of the use of the
Company's capital stock as consideration for acquisitions; and (viii) the
inability to attract and retain qualified management. There can be no assurance
that the Company will consummate future acquisitions, including the acquisition
of Ryder TRS Inc. ("Ryder TRS"), on satisfactory terms, if at all, that adequate
financing will be available on terms acceptable to the Company, if at all, or
that any acquired operations will be successfully integrated or that such
operations will ultimately have a positive impact on the Company, its financial
condition or results of operations.
A-1
<PAGE> 62
In addition to pursuing growth through acquisitions, management is
undertaking internal growth initiatives to increase the Company's revenues and
improve its profitability by, among other things enhancing its operations
outside the United States, expanding its retail car sales operations, adding car
rental locations in its existing markets, adding truck rental locations and
expanding its truck rental fleet, and increasing its marketing efforts to
corporate accounts. Management expects the Company to realize certain cost
savings and other operating efficiencies as a result of the implementation of
its business strategy. Increasing the revenues of the Company, and realizing
cost savings and other operating efficiencies, could be affected by a number of
factors beyond the Company's control, such as general economic conditions,
increased operating costs of vehicles and regulatory developments. Each of these
initiatives will involve risks to the Company, and there can be no assurance
that the Company will be successful in growing its business or that the Company
will achieve the expected cost savings and other operating efficiencies. In
addition, the Company's substantial leverage could affect its success in growing
its business.
INTEGRATION OF BUDGET ACQUISITION
The Budget Acquisition was significantly larger than any of TEAM's previous
acquisitions and the combination and integration of the respective operations of
TEAM and BRACC are of a substantially greater scale than previously undertaken
by either company. The difficulties of managing such combination and integration
are increased by the necessity of coordinating the operations of geographically
diverse organizations, of integrating different strategies and operating
systems, of integrating management and operating personnel from both companies
and of managing a worldwide franchise system. The success of the Company
following the Budget Acquisition depends on the ability of the Company's
management team to: (i) manage a significantly larger organization; (ii)
maintain and further develop relationships with Budget franchisees; and (iii)
conduct operations on a worldwide basis. There can be no assurance that the
Company's management team will be able to successfully manage the combined
operations of TEAM and BRACC. An inability to successfully manage the
integration of TEAM and BRACC would have a material adverse effect on the
Company's results of operations and financial condition.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT; INTEREST RATE RISK
The Company has substantial indebtedness and significant debt service
requirements. As of December 31, 1997, the Company's total indebtedness was
approximately $2,600 million (representing approximately 73% of its total
capitalization), of which approximately $2,300 million represented senior
secured indebtedness for the purchase of vehicles and approximately $300 million
represented non-vehicle indebtedness (representing 8.9% of its total
capitalization, excluding fleet debt). As of December 31, 1997, the Company had
$346.8 million of incremental availability under its vehicle financing
facilities to finance the purchase of fleet vehicles. The degree to which the
Company is leveraged has important consequences for holders of the Company's
Class A Common Stock, including the following: (i) the ability of the Company to
obtain additional financing in the future, whether for working capital, fleet
purchases, acquisitions or other purposes, may be impaired; (ii) a substantial
portion of the Company's cash flow from operations is required to be dedicated
to the payment of principal and interest on its indebtedness, thereby reducing
funds available to the Company for other purposes; (iii) the Company's
flexibility in planning for or reacting to changes in market conditions may be
limited; (iv) the Company may be more vulnerable in the event of a downturn in
its business; and (v) because a substantial portion of its indebtedness bears
interest at floating rates, any increase in prevailing interest rates will
result in an increase in interest expense incurred by the Company, which could
have an adverse effect on its results of operations.
The ability of the Company to meet its debt service obligations will depend
on its future operating performance and financial results, which will be subject
in part to factors beyond the control of the Company. Although management
believes that the Company's cash flow will be adequate to meet its interest and
principal payments, there can be no assurance that the Company will continue to
generate earnings in the future sufficient to cover its fixed charges. If the
Company is unable to generate earnings in the future sufficient to cover its
fixed charges and is unable to borrow sufficient funds under its existing credit
lines or from other sources, it may be required to refinance all or a portion of
its existing indebtedness or to sell all or a
A-2
<PAGE> 63
portion of its assets. There can be no assurance that refinancing would be
possible, nor can there be any assurance as to the timing of any asset sales or
the proceeds which the Company could realize therefrom. In addition, the terms
of certain indebtedness of the Company restrict the ability of the Company to
sell assets and the use of the proceeds therefrom.
If for any reason, including a shortfall in anticipated operating results
or proceeds from asset sales, the Company were unable to meet its debt service
obligations, it would be in default under the terms of its indebtedness. In the
event of such default, the holders of such indebtedness could elect to declare
all such indebtedness immediately due and payable, including accrued and unpaid
interest, and to terminate their commitments (if any) with respect to funding
obligations under such indebtedness. In addition, such holders could proceed
against their collateral, which, in the case of the fleet financing facilities,
consists of substantially all the Company's fleet.
The Company's results of operations depend significantly on prevailing
levels of interest rates because of the large amount of debt it incurs to
purchase vehicles. In addition, the Company is exposed to increases in interest
rates because a substantial portion of its debt bears interest at floating
rates. At December 31, 1997, approximately 62.4% of the Company's average debt
bore interest at floating rates. The amount of the Company's financing costs
affects the amount the Company and Budget franchisees must charge their
customers to be profitable.
AVAILABILITY OF FINANCING
The Company depends on third-party financing to purchase its fleet
vehicles. Continued availability of such financing on favorable terms is
critical to the Company's operations. A majority of the Company's indebtedness
is incurred in connection with major vehicle manufacturers' vehicle repurchase
programs. As a result, a significant change in the credit quality of the vehicle
manufacturers, particularly Ford Motor Company ("Ford"), would significantly
affect the Company's ability to obtain such financing on favorable terms. In
addition, certain events, such as a material increase in damage to vehicles,
could reduce the value of the collateral securing the Company's fleet financing
facilities and cause the acceleration of the repayment of such facilities. An
inability of the Company to obtain vehicle financing on favorable terms would
have a material adverse effect on the Company's financial condition and results
of operations. There can be no assurance that the sources of financing utilized
by the Company or alternative financing will remain or become available to the
Company or that such financing will be available on terms acceptable to the
Company.
COMPETITION
The vehicle rental industry is characterized by intense competition,
particularly with respect to price and service. In any geographic market, the
Company may encounter competition from national, regional and local vehicle
rental companies. Budget's main competitors in the car rental market are The
Hertz Corporation, Avis, Inc., Alamo Rent-A-Car, Inc., National Car Rental
System, Inc. and Enterprise Rent-A-Car Company. In consumer truck rentals,
Budget faces competition primarily from U-Haul International, Inc., Penske Truck
Rental and Ryder TRS. Premier Car Rental LLC's principal competitors include
Enterprise Rent-A-Car Company, Car Temps, Inc., Hertz Local Edition and a range
of regional insurance replacement companies. There have been occasions when the
major vehicle rental companies have been adversely affected by industry-wide
price cutting, and the Company has on such occasions lowered its prices in
response. The Company will not generally be able to unilaterally raise its
prices or to maintain its prices in times of industry-wide price cutting.
The retail car sales industry also is characterized by intense competition,
consisting primarily of local new car dealerships selling new and late model
used cars. In addition to local dealerships, the Company may face competition
from retailers such as CarMax and AutoNation that compete on the basis of large
inventory size, no-haggle pricing and after-sale service.
A-3
<PAGE> 64
RESTRICTIONS IMPOSED BY INDEBTEDNESS
The terms of the Company's indebtedness include a number of significant
covenants that, among other things, restrict the ability of the Company to
dispose of assets, incur additional indebtedness, create liens, repay other
indebtedness, pay dividends, make certain investments or acquisitions,
repurchase or redeem capital stock, engage in mergers or consolidations, or
engage in certain transactions with affiliates, and otherwise restrict corporate
activities. There can be no assurance that such restrictions will not adversely
affect the Company's ability to finance its future operations or capital needs
or to engage in other business activities that may be in the interest of the
Company. In addition, the terms of certain of such indebtedness also require the
Company to comply with certain financial tests. The ability of the Company to
comply with such covenants may be affected by events beyond the Company's
control. A breach of any of these covenants or the inability of the Company to
comply with the required financial ratios could result in a default under such
indebtedness. In the event of any such default, the lenders under such
indebtedness could elect to declare all borrowings outstanding under such
indebtedness, together with accrued interest and other fees, to be due and
payable, to require the Company to apply all of its available cash to repay such
borrowings or to prevent the Company from making scheduled debt service
payments. If the Company were unable to repay any such borrowings when due, the
lenders could proceed against their collateral. If the indebtedness of the
Company under such collateralized indebtedness or other indebtedness were to be
accelerated, there can be no assurance that the assets of the Company wold be
sufficient to repay such indebtedness in full. There can be no assurance that
the Company will be able to comply with the covenants included in its debt
agreements in the future or that it would be able to obtain any necessary
waivers of those covenants.
POTENTIAL CHANGES IN MANUFACTURERS' REPURCHASE PROGRAMS
Approximately 87% of the vehicles purchased by the Company in model year
1997 were eligible for repurchase by specified automobile manufacturers at fixed
prices on designated dates pursuant to such manufacturers' vehicle repurchase
programs ("Program Vehicles"). The availability of Program Vehicles limits a car
rental company's risk of a decline in residual value at the time of disposition
and enables it to fix its depreciation expense in advance. Vehicle depreciation
is the largest cost factor in the Company's vehicle rental operations.
Management believes that manufacturers' repurchase programs enable the
manufacturers to stimulate fleet sales in times of weak consumer demand for new
automobiles. In response to strong U.S. consumer demand for passenger vehicles
in 1993 and 1994, the major U.S. automobile manufacturers reduced the number of
vehicles subject to repurchase programs and the financial incentives associated
with these programs. U.S. consumer demand for passenger vehicles began to weaken
during the second quarter of 1995, and this weakness continued through 1996. In
response to these market conditions, there was an increase in the availability
of repurchase programs with respect to 1996 model year vehicles, particularly
repurchase programs for imported vehicles, and these programs have continued for
1997 model year vehicles. However, the Company could be adversely affected if
automobile manufacturers reduce the availability of Program Vehicles, related
incentives or increase the guaranteed depreciation.
DEPENDENCE ON PRINCIPAL SUPPLIER
Ford has been and continues to be the Company's principal supplier of
vehicles. The Company has agreed to purchase or lease Ford vehicles in such
quantity that the percentage of new Ford vehicles purchased or leased by the
Company in the United States, Canada, and other countries outside the European
Union represents at least 70% of the total new vehicle acquisitions by the
Company, with a minimum quantity of at least 80,000 vehicles in the United
States in each model year. Given the volume of vehicles purchased from Ford by
the Company, shifting significant portions of the fleet purchases to other
manufacturers would require lead time and certain operational changes. As a
result, any inability of Ford to supply the Company with the planned number and
types of vehicles, any significant decline in the quality and customer
satisfaction with respect to Ford vehicles or any failure of the parties to
reach an agreement on the terms of any purchases, could have a material adverse
effect on the Company's financial condition and results of operations.
A-4
<PAGE> 65
SEASONALITY
The third quarter, during the peak summer travel months, has historically
been the strongest quarter of the year for the Company. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the Company's annual performance.
COSTS OF REGULATORY AND ENVIRONMENTAL COMPLIANCE
The Company is subject to various foreign, federal, state and local laws
and regulations that affect the conduct of its operations, including those
relating to the sale of loss damage waivers, vicarious liability of vehicle
owners, consumer protection, advertising, used vehicle sales, the taxing and
licensing of vehicles, franchising operations and sales, and environmental
compliance and remediation. There can be no assurance that compliance with these
laws and regulations or the adoption of modified or additional laws and
regulations will not require material expenditures by the Company or otherwise
have a material adverse effect on its results of operations or financial
condition.
RISKS OF INTERNATIONAL OPERATIONS
The Company's international vehicle rental operations are subject to
certain risks, including adverse developments in the foreign political and
economic environment, varying governmental regulations, foreign currency
fluctuations, potential difficulties in staffing and managing foreign operations
and potential adverse tax consequences. There can be no assurance that any of
these factors will not have a material adverse effect on the Company's results
of operations or financial condition.
DEPENDENCE ON PRINCIPAL EXECUTIVE OFFICERS
The Company's existing operations and continued future development are
dependent in part on the active participation of Messrs. Miller, Kennedy and
Congdon. The loss of the services of one or more of these individuals could have
a material adverse effect on the Company. The Company has no employment
agreements or covenants not to compete with any of its executive officers or
significant employees.
SUBSTANTIAL VOTING POWER BY PRINCIPAL EXECUTIVE OFFICERS
The Company has two classes of Common Stock: Class A Common Stock, holders
of which are entitled to one vote per share, and Class B Common Stock, holders
of which are entitled to ten votes per share. Messrs. Miller, Kennedy and
Congdon own all outstanding shares of Class B Common Stock, which together with
the Class A Common Stock owned by such individuals, represents over 45% of the
combined voting power of both classes of Common Stock. As a result, such
officers are able to exert substantial influence over the election of the
Company's Board of Directors, thereby increasing the probability that members
elected by them will continue to direct the business, policies and management of
the Company.
POTENTIAL ANTI-TAKEOVER EFFECTS OF CHARTER AND BYLAW PROVISIONS; POSSIBLE
ISSUANCE OF PREFERRED STOCK
Certain provisions of Delaware law, the Company's Amended and Restated
Certificate of Incorporation and the Company's Bylaws could delay or impede the
removal of incumbent directors and could make it more difficult for a third
party to acquire, or could discourage a third party from attempting to acquire,
control of the Company. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of the Class A Common
Stock. In addition, shares of preferred stock may be issued by the Board of
Directors without stockholder approval on such terms and conditions, and having
such rights, privileges and preferences, as the Board of Directors may
determine. The rights of the holders of the Class A Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any preferred
stock that may be issued in the future. The Company has no current plans to
issue any shares of preferred stock.
A-5
<PAGE> 66
YEAR 2000
The Company has assessed and continues to assess the impact of the year
2000 ("Y2K") on its reporting systems and operations (the "Y2K Issue"). The Y2K
Issue exists because many computer systems and applications currently use
two-digit date fields to designate a year. As the century date occurs, certain
date sensitive systems will recognize the year 2000 as the year 1900 or may not
recognize the date at all. This inability to properly treat or recognize the
year 2000 may cause computer systems and applications to process critical
information incorrectly.
During 1997, the Company has recognized approximately $2.2 million to
modify existing computer systems and applications and estimates that
approximately $6.7 million will be incurred in 1998 and 1999 specifically for
Y2K modification. The most significant systems undergoing or to undergo
modifications are the reservation and rental transaction processing systems. A
failure in these systems could cause significant disruption in customer service
levels and therefore materially impact the Company's operating results and
financial condition. The Company expects to complete all major modification
efforts in mid-1999.
A-6
<PAGE> 1
EXHIBIT 10.20
BUDGET GROUP, INC.
4225 Naperville Road
Lisle, Illinois 60532-3662
January 14, 1998
Budget Group, Inc.
4225 Naperville Road
Lisle, Illinois 60532-3662
Attention: Robert L. Aprati
Executive Vice President,
General Counsel and Secretary
Re: Class B Common Stock
Dear Bob:
The undersigned, Sanford Miller, Jeffrey Congdon and John Kennedy
(collectively, the "Class B Stockholders"), are the beneficial and
record owners of an aggregate of 1,936,600 shares of Class B common
stock, par value $.01 per share ("Class B Common Stock"), of Budget
Group, Inc. ("Budget"), which shares of Class B Common Stock represent
all of the issued and outstanding shares of Class B Common Stock. The
Class B Stockholders are also the holders of options to purchase an
aggregate of 240,000 shares of Class B Common Stock. Each share of
Class B Common Stock is convertible at any time, at the option of the
holder, into one share of Class A common stock, par value $.01 per
share ("Class A Common Stock"), of Budget, and the shares of Class B
Common Stock shall automatically convert into shares of Class A Common
Stock in the event the beneficial or record ownership of such Class B
Common Stock is transferred to any person or entity that is not then a
record or beneficial holder of shares of Class B Common Stock.
The Board of Directors of Budget has determined that it is advisable
and in the best interests of Budget to enter into an agreement with the
Class B Stockholders regarding the conversion of the Class B Common
Stock into shares of Class A Common Stock. In consideration of the
mutual promises and agreements contained herein, the Class B
Stockholders hereby covenant and agree with Budget that the Class B
Stockholders will not (i) convert the shares of Class B Common Stock
held by them (or any shares of Class B Common Stock issuable to the
Class B Stockholders upon the exercise of options or otherwise) into
shares of Class A Common Stock or (ii) take any action that would
result in the automatic conversion of shares of Class B Common Stock
into shares of Class A Common Stock until the earlier to occur of (x)
the effective date of an amendment to Budget's Amended and Restated
Certificate of Incorporation to increase the number of shares of Class
A Common Stock that Budget is authorized to issue and (y) May 31, 1998.
<PAGE> 2
This letter agreement will be governed by and construed and enforced in
accordance with the laws of the State of Illinois, without giving effect to the
conflicts of law principles thereof.
This letter agreement may be executed in one or more counterparts, each of which
shall for purposes be deemed to be an original and all of which shall constitute
one and the same instrument.
If the foregoing is in accordance with your understanding of our agreements,
please sign and return to us a counterpart hereof, whereupon this letter and
your acceptance shall represent binding agreement among you and ourselves.
Very truly yours,
/s/ Sanford Miller
- ------------------------------------
Sanford Miller
/s/ Jeffrey Congdon
- ------------------------------------
Jeffrey Congdon
/s/ John Kennedy
- ------------------------------------
John Kennedy
Accepted and agreed as of the
1st day of January, 1998:
BUDGET GROUP, INC.
By: /s/ Robert L. Aprati
---------------------------------
Robert L. Aprati
Executive Vice President,
General Counsel and Secretary
<PAGE> 1
EXHIBIT 10.21
BUDGET GROUP, INC.
EXECUTIVE AGREEMENT
This Executive Agreement ("Agreement") is dated as of January 1,
1998, and is entered into by and between ______________ ("Executive") and Budget
Group, Inc.("Budget"). Executive and Budget hereby agree to the following terms
and conditions:
1. Purpose of Agreement. The purpose of this Agreement is to
provide that Executive may become entitled to receive additional benefits in the
event of his termination under certain circumstances. It is believed that the
existence of these potential benefits will benefit Budget by discouraging
turnover among executives with Agreements, as well as causing such executives to
be more able to respond to the possibility of a "Change in Control" (as defined
in Section 9) without being influenced by the potential effect of a Change in
Control on their job security.
2. Other Rights and Obligations. The rights and obligations of
Executive with respect to his employment by Budget shall be whatever rights and
obligations are negotiated between Budget and Executive from time to time. The
existence of this Agreement, which deals only with certain rights and
obligations subsequent to a termination, shall not be treated as raising any
inference with respect to what rights and obligations exist prior to a
termination, or, except as specifically addressed in this Agreement, what rights
and obligations may exist after termination. Further, Executive shall not, at
any time after termination, be obligated to seek other employment in mitigation
of the amounts payable or other benefits provided for under any provision of
this Agreement and the obtaining of any such other employment shall in no event
effect any reduction of Budget's obligation to make the payments and to provide
the benefits required to be made and provided under this Agreement, except to
the extent provided for in Paragraph 7(c)(4).
3. Benefits Payable Upon Qualifying Termination and Execution
of a Release Agreement.
(a) Subject to Section 3(b), if a Qualifying Termination (as
defined in Section 4 below) occurs, the benefits described in Sections
6 and 7, shall become payable to Executive. In that event, and
notwithstanding Section 11, this Agreement shall remain in effect until
Executive receives the various benefits to which he has become entitled
under the terms of this Agreement. If Executive's employment terminates
and such termination is not a Qualifying Termination, then this
Agreement shall be of no further force or effect.
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(b) Notwithstanding any other provision of this Agreement,
unless Executive executes a Release Agreement (prepared by Budget, and
substantially in the form set forth in Exhibit I) within 21 days after
a Qualifying Termination and receipt of the Release Agreement (and does
not revoke the Release Agreement within 7 days after signing it), (1)
no benefits under Section 6 or Section 7(d), (e), (f) or (g) of this
Agreement shall be paid or provided under any circumstances, (2) the
benefits described in Section 7(c) and (e) shall only be paid or
provided for 35 days after the Release Agreement is provided to
Executive or until the Release Agreement is signed and subsequently
revoked (if earlier), and (3) this Agreement shall be of no further
force and effect. Notwithstanding anything in this Agreement to the
contrary, if Executive executes the Release Agreement and then fails or
refuses to comply with his obligations as provided for in Sections 2
and 3 of the Release Agreement, or violates any of his representations
and warranties as provided for in Sections 4, 5 and 6 of the Release
Agreement, Budget's obligations as provided for in this Agreement shall
immediately cease and terminate.
4. Qualifying Termination. If, during the term of this
Agreement, Executive's employment terminates, such termination shall be
considered a Qualifying Termination if any of the following events occurs:
(a) Whether or not a Change in Control occurs, Executive
voluntarily terminates employment, for Good Reason, within one year
after the event giving rise to Good Reason or Executive's employment
terminates due to death or disability during such one year period. For
purposes of this Agreement, "Disability" shall be defined in accordance
with Budget's long term disability plan and "Good Reason" shall mean
the occurrence of one of the following events without Executive's prior
written consent:
(1) The assignment to Executive of any duties
inconsistent in any material respect with Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
they existed in their most significant form immediately
prior to the above-referenced assignment or any other
action by Budget which results in a material diminution in
such position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as they existed in their most significant
form immediately prior to the above-
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referenced action, excluding for purposes of this paragraph
(1), (x) an assignment of substantially equivalent position,
authority, duties and responsibilities; or (y) an isolated,
insubstantial and inadvertent action not taken in bad faith
and which is remedied by Budget promptly after receipt of
notice thereof given by Executive;
(2) Any reduction in (i) Executive's base salary, (ii)
Executive's ability to participate in or to receive benefits
from (without any incremental cost to Executive) incentive
plans, employee benefit plans, expense reimbursement policies,
or other fringe benefits, including office and support staff,
or paid vacations (excluding changes by Budget with respect to
any such benefits which both (A) apply to all executives and
(B) provide Executive with other benefits which are
substantially equivalent in the aggregate to the prior benefit
package), or (iii) if a Change in Control occurs, incentive
payments made pursuant to any incentive program (which shall
be deemed to be reduced if the annual incentive payments are
less than the average annual incentive payments for the three
fiscal years preceding the Change in Control); provided that,
(x) an isolated, insubstantial, and inadvertent reduction in
an element of Executive's total compensation not occurring in
bad faith and which is promptly remedied after notice by
Executive shall not be deemed a violation of this paragraph
(2), and (y) a reduction in one element of Executive's total
compensation shall not be deemed a violation of this paragraph
(2) if a counterbalancing increase in another element of
Executive's total compensation occurs (the determination of
whether the increase is counterbalancing shall be determined
by Executive in good faith); and
(b) Whether or not a Change in Control occurs, Executive is
involuntarily terminated without "Cause" during the term of this Agreement. For
purposes of this Section, "Cause" shall mean (1) a material act or acts of
dishonesty by Executive in connection with his employment; (2) conviction of a
felony or other crime involving moral turpitude; or (3) Executive's willful or
gross negligent failure to perform Executive's duties if such failure results in
demonstrable injury or damage to Budget.
(c) Executive terminates his employment for any reason
whatsoever, including termination due to death or disability,
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provided that the Termination Date occurs within one year after a
Change in Control occurs.
5. Notice of Termination. Any termination by Executive for
Good Reason, by Budget for Cause, or by Executive without any reason following a
Change in Control (other than termination due to Executive's death or
disability) shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 16. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) if the date of termination ("Termination Date") is other
than the date of receipt of such notice, specifies the Termination Date. The
Termination Date shall be the date of receipt of the Notice or such later date
specified in the Notice, which shall not be later than 90 days after the giving
of such Notice. The failure by Executive or Budget to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of Executive or Budget hereunder or
preclude Executive or Budget from asserting such fact or circumstance in
enforcing Executive's or Budget's rights hereunder.
6. Severance Payment. Subject to Section 3(b), in the event of
a Qualifying Termination, Budget shall pay Executive an amount equal to 3 times
the sum of (1) Executive's highest annual base salary rate in effect since
September 1, 1997 plus (2) the greater of i) annual average incentive payments
and bonuses (including those that are performance based, discretionary or
otherwise, but excluding those paid under any long-term incentive and stock
option plans) paid to Executive during the three full fiscal years preceding the
Termination Date (provided that, if Executive was not employed for three full
fiscal years, the incentive payments and bonuses shall be based on the number of
full fiscal years during which Executive was employed); and ii) the Executive's
annual target bonus or incentive opportunity established for the year in which
the Executive's Termination Date occurs. The amounts due hereunder ("Severance
Payment") shall be paid in cash to Executive in a single lump sum within 30 days
of the Termination Date and shall be in lieu of any other severance payment that
Executive might otherwise be entitled to from Budget under the terms of any
other severance pay arrangement or employment agreement.
7. Other Benefits. Subject to Section 3(b), in the event of a
Qualifying Termination, Executive shall be entitled to:
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(a) Receive his base salary and a pro rata portion of his
target bonus through the Termination Date, less applicable payroll deductions.
(b) Receive any unused vacation and holiday pay through the
Termination Date, less applicable payroll deductions.
(c) (1) Except as provided by law (including any
nondiscrimination rules) or by the relevant insurance carrier (after reasonable
efforts by the Company to provide coverage), continue his participation (and,
where applicable, participation of his eligible dependents) in the medical,
dental, life and disability insurance benefit programs of Budget which had been
made available to Executive before the Qualifying Termination. This ability to
participate shall continue for a period of 36 months after the Termination Date
("Completion Date"); if Executive dies prior to the Completion Date, his
dependents, where applicable, may continue participation until the Completion
Date. In order to so participate, Executive (or dependents, where applicable)
shall pay to Budget (with grace periods analogous to COBRA) the employee portion
of the cost of such benefits (such portion to be determined in the same manner
as for any other executive participants). Thereafter, Executive (or his
dependents, where applicable) shall be entitled to elect COBRA coverage.
(2) If the law or the insurance carrier prevents Executive from
participating in a program described in this clause (c), Budget
shall make monthly cash payments to Executive (or his dependents,
where applicable) equal to 102% of the entire monthly premium
(excluding the employee portion) applicable to such program until
the Completion Date. Executive (or his dependents, where applicable)
shall be permitted to elect COBRA coverage for such program (if
allowed under the program).
(3) When coverage under each applicable plan expires, Executive
(or his dependents, where applicable) shall retain the right to
purchase individual conversion policies with respect to any or all
of the benefits provided under said benefit plans to the maximum
extent permitted by law or by the group insurance policies
providing such benefits.
(4) Notwithstanding anything contained herein to the contrary,
the benefits provided for in this subparagraph (c), shall cease
prior to the Completion Date in the event Executive has available
substantially similar benefits at a comparable cost from a
subsequent employer.
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(d) Receive contributions under the Budget Defined Contribution
Retirement Plan and Budget SavingsPlus (401(k)) Plan (the "Retirement
Plans") if required by the terms for the year in which the Qualifying
Termination occurs. In addition, to the extent any contributions to the
Retirement Plans are not made on behalf of Executive, but would have
been made had Executive remained employed until and including the
Completion Date and made the maximum Section 401(k) contributions under
the Plan, Budget shall pay directly to Executive cash in an amount and
at the times consistent with contributions made for other employees of
Budget and in accordance with the guidelines of the Retirement Plans.
Other than the foregoing, Executive is entitled to no other
contribution on Executive's behalf by Budget to any Budget pension or
other retirement plan.
(e) Use of two (2) current model year luxury vehicles (the
"Vehicles") through the earlier of the Completion Date or Executive's
death; if Executive dies prior to the Completion Date, his spouse, if
any, may continue to use one (1)such Vehicle through the Completion
Date. During such period, Budget shall (1) provide Executive with
collision (with no deductible if the accident is not the fault of
Executive and with a $250 deductible if the accident is the fault of
Executive) and comprehensive automobile coverage during the time he has
the Vehicles, as well as primary automobile liability coverage in the
amount of $50,000 bodily injury per person, $100,000 bodily injury per
accident and $25,000 property damage per accident, and (2) pay for
reasonable maintenance costs incurred by Executive with respect to the
Vehicles, including but not limited to periodic oil changes.
(f) Receive tax preparation and financial planning services
through the Completion Date, which services shall be provided by a
vendor of Budget's choice.
(g) Receive professional outplacement services, which services
shall be provided by a vendor of Budget's choice.
In the event of Executive's death, any cash payments due hereunder shall be made
to the beneficiary or beneficiaries so designated by Executive in a writing
delivered to the Secretary of Budget. If no such beneficiary has been so
designated, or if no designated beneficiary is in existence at the date of
Executive's death, payment shall be made to Executive's surviving spouse, if
any, or to his estate if he has no surviving spouse.
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8. Gross Up Provision.
(a) If any payment or benefit received or to be received by
Executive in connection with a Change in Control of Budget or the
termination of Executive's employment (whether payable pursuant to the
terms of this Agreement, a stock option plan or any other plan or
arrangement with Budget or with any person whose actions result in a
Change in Control of Budget or with any person affiliate with Budget or
such person (together with the Severance Payment, the "total payments")
will be subject to the excise tax imposed by Section 4999 of the Code,
Budget will pay to Executive, within 30 days of any payments giving
rise to the excise tax, an additional amount (the "gross up payment")
such that the net amount retained by Executive, after deduction of any
excise tax on the total payments and any federal and state and local
income and employment tax and excise tax on the gross up payment
provided for in this section, will equal the total payments.
(b) For purposes of determining the amount of the gross-up
payment, Executive will be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year
that the payment is to be made, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of
Executive's residence on the date of termination or the date that
excise tax is withheld by Budget, net of the maximum reduction in
federal income taxes that could be obtained by deducting such state and
local taxes.
(c) For purposes of determining whether any of the total
payments would not be deductible by Budget and would be subject to the
excise tax, and the amount of such excise tax, (1) total payments will
be treated as "parachute payments" within the meaning of Section
380G(b)(2) of the Code, and all parachute payments in excess of the
base amount within the meaning of Section 280G(b)(3) will be treated as
subject to the excise tax unless, in the opinion of tax counsel
selected by Budget's independent auditors prior to the Change in
Control and acceptable to Executive, such total payments (in whole or
in part) are not parachute payments, or such parachute payments in
excess of the base amount (in whole or in part) are otherwise not
subject to the excise tax, and (2) the value of any non-cash benefits
or any deferred payment will be determined by Budget's independent
auditors in accordance with Sections 280B(d)(3) and (4) of the Code.
(d) If the excise tax is subsequently determined to be less
than the amount originally taken into account hereunder,
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<PAGE> 8
Executive will repay to Budget, when such reduction in excise tax is
finally determined, the portion of the gross-up payment attributable to
such reduction plus interest on the repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. If the excise tax is determined to
exceed the amount originally taken into account hereunder (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the gross-up payment), Budget will make an
additional gross-up payment in respect of such excess (plus any
interest payable with respect to such excess) when such excess is
finally determined.
9. Change in Control. For the purpose of this Agreement, a
"Change in Control" shall mean:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange of Act 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of either (1) the then
outstanding shares of common stock of Budget (the "Outstanding Budget
Common Stock") or (2) the combined voting power of then outstanding
voting securities of Budget entitled to vote generally in the election
of directors (the "Outstanding Budget Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change
in Control: (1) any acquisition directly from Budget or a corporation
controlled by Budget (the "Budget Group"), except that an acquisition
by virtue of the exercise of a conversion privilege shall not be
considered within this paragraph unless the converted security was
itself acquired directly from the Budget Group, (2) any acquisition by
the Budget Group, (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Budget Group or (4) any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in paragraphs (1) and (2) of
subsection (c) of this Section 9 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the
Board of Budget (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual who becomes a director subsequent to the date hereof
whose election, or nomination for election by Budget's shareholders,
was approved by a vote of at least a majority of the directors of the
Incumbent Board (including Board members previously elected pursuant to
this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but excluding, for this purpose, any
such individual whose
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initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consent by or on behalf of a
Person other than the Board; or
(c) Approval by the shareholders of Budget of a
reorganization, merger or consolidation (a "transaction"), unless,
following such transaction in each case, (1) more than 80% of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such transaction and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Budget Common Stock and Outstanding
Budget Voting Securities immediately prior to such transaction and (2)
no Person (excluding the Budget Group, any employee benefit plan (or
related trust) of Budget Group and any Person beneficially owning,
immediately prior to such transaction, directly or indirectly, 20% or
more of the Outstanding Budget Common Stock or Outstanding Budget
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares
of common stock of the corporation resulting from such transaction or
the combining voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors; or
(d) Approval by the shareholders of Budget of (1) a
complete liquidation or dissolution of Budget or (2) the sale or other
disposition of all or substantially all of the assets of Budget, unless
such assets are sold to a corporation and following such sale or other
disposition, the conditions described in paragraphs (1) and (2) of
subsection (C) of this Section 9 are satisfied.
10. Waiver of Invalidity; No Offset.
(a) Inasmuch as the injury caused to Executive in the
event his employment is terminated is difficult or incapable of
accurate estimation at the date of this Agreement, the amounts provided
to be paid hereunder are intended to be severance compensation and not
a penalty, and therefore constitute a good faith forecast of the harm
which might be expected to be caused to Executive. Accordingly, Budget
waives any right to assert against Executive the invalidity of any
payment hereunder by reason of Executive's failure to seek other
employment or
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otherwise, and to reduce the amount of any payment hereunder by reason
of any compensation earned by Executive as the result of employment by
another employer after the Termination Date or otherwise.
(b) Budget's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense
or other claim, right or action which Budget may have against Executive
or others.
11. Term of Agreement. This Agreement shall be effective
from the date hereof through December 31, 2000 and may not be amended or
terminated during such period except pursuant to an instrument in writing
executed by all of the parties hereto. The Board of Directors of Budget may, in
its sole discretion and for any reason, provide written notice of termination
(or amendment), effective as of the then applicable expiration date, to
Executive no later than six (6) months before the expiration date of this
Agreement. If written notice is not so provided, this Agreement shall be
automatically extended for an additional twelve months past the applicable
expiration date. This Agreement shall continue to be automatically extended for
an additional twelve months at the end of such twelve month period and each
subsequent twelve month period unless notice is given in the manner described in
this Section. Notwithstanding the preceding sentences of this Agreement, this
Agreement shall automatically be extended past an otherwise applicable
expiration date if a Change in Control, or an event giving rise to Good Reason
has occurred prior to that date. The extension referred to in the preceding
sentence shall be for one year after the Change in Control, or an event giving
rise to Good Reason. For purposes hereof, the "expiration date" shall be the
last effective date of this Agreement, after having given effect to all of the
extension provisions of this Section.
12. Successors. The rights and obligations of Budget
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Budget.
13. Governing Law. Except to the extent that federal law
is applicable, this Agreement is made and entered into in the State of Florida,
and the laws of Florida shall govern its validity and interpretation in the
performance by the parties hereto of their respective duties and obligations
hereunder.
14. Entire Agreement. Except as provided in a written
benefit plan of Budget, this Agreement (and the Release Agreement) constitute
the entire agreement between the parties respecting the benefits due Executive
(and the obligations of Executive) in the event
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of a Qualifying Termination, and there are no representations, warranties or
commitments, other than those set forth herein, which relate to such benefits.
This is an integrated agreement. No provision of this Agreement may be amended
or waived except by written agreement signed by the parties.
15. Arbitration. Any and all controversies, claims or
disputes arising out of or in any way relating to this Agreement shall be
resolved by final and binding arbitration in ______________________ before a
single arbitrator licensed to practice law and in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"). The
arbitration shall be commenced by filing a demand for arbitration with the AAA
within sixty (60) days after the occurrence of the facts giving rise to any such
controversy, claim or dispute. The arbitrator shall decide all issues relating
to arbitrability. If the arbitrator determines that (x) Budget has breached this
Agreement or (y) Budget was unjustified in failing to make the payments required
under this Agreement to Executive, Budget shall pay to Executive, his costs and
expenses, including attorneys' fees, associated with any such arbitration
proceeding and, as liquidated damages and not as a penalty, an additional amount
equal to 10% of the amount involved in the arbitration with respect to this
Agreement.
16. Notices. Any notice or communications required or
permitted to be given to the parties hereto shall be delivered personally or be
sent by United States registered or certified mail, postage prepaid and return
receipt requested, and addressed or delivered to the last known address of
Budget or Executive, as appropriate, or to such other address as either party
may direct by notice to the other pursuant to this section.
17. Captions. The captions of this Agreement are inserted
for convenience and do not constitute a part hereof.
18. Severability.
(a) The parties agree that Section 3(b) of this Agreement
and Sections 2 through 6 of the Release Agreement are a material part
of this Agreement. The parties believe that all provisions of this
Agreement (including Section 3(b)) and the Release Agreement (if
executed and not revoked within 7 days after execution) are legal,
binding and fully enforceable.
(b) If Section 3(b) of this Agreement or Section 2, 3, 4,
5 or 6 of the Release Agreement (or any material part thereof) is
invalid, then this Agreement and the Release Agreement shall be null
and void.
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(c) Subject to subsection (b) above, in case any one or
more of the provisions contained in this Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been
contained herein and there shall be deemed substituted such other
provision as will most nearly accomplish the intent of the parties to
the extent permitted by the applicable law.
19. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.
IN WITNESS HEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first written above.
BUDGET GROUP, INC.
By
--------------------------------
EXECUTIVE
---------------------------------
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EXHIBIT I
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (hereinafter "Agreement") is made and entered into by and
between Budget Group, Inc. and its parent and subsidiaries (hereinafter
"Budget") and the undersigned (hereinafter "Executive"), and shall be effective
as of the date of its execution.
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. That Budget shall, in full discharge of any and all of its
obligations to Executive, pay to Executive the benefits set
forth in the executive agreement between Budget and Executive
("Executive Agreement").
2. That in consideration for entering into this Agreement, and
for the monies and benefits described in Section 1 above,
Executive:
(a) Except as specifically provided in Sections 7(b) and
7(d) of the Executive Agreement, waives any right to
vacation and/or holiday pay and, in addition, waives
any right to incentive compensation, including
without limitation incentive compensation under the
Annual and the Long Term Incentive Plans.
(b) Agrees to cooperate fully with Budget to assure a
smooth transition of responsibilities and projects
and to otherwise provide Budget with his full and
complete cooperation and assistance for one year
after the Termination Date. Such cooperation and
assistance shall be provided by Executive at his
reasonable convenience and shall not require more
than three (3) consecutive days, or more than ten
(10) cumulative days, without payment by Budget of
some form of reasonable compensation to Executive
and/or Executive's future employer for such excess
time; provided, however, that such cooperation and
assistance may be obtained by subpoena served upon
Executive if such a subpoena is required or deemed
necessary by Budget as a result of the actions of any
future employer of Executive. Executive shall
cooperate and assist Budget by providing and
communicating to, or for the benefit of, the
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senior management of Budget or their designated
representatives, any and all knowledge or information
acquired by Executive during, or as a result of, his
employment with Budget. Such cooperation and
assistance shall include, without limitation, the
provision of any such information or knowledge to
Budget's accountants or attorneys in preparation of
or during the course of any audit process or legal
procedure in which Budget may be, or may become,
involved. Any travel, lodging and out-of-pocket
expenses incurred by Executive in fulfilling this
obligation shall be reimbursed to Executive by Budget
upon Executive's submission to Budget of an expense
report and receipts, as appropriate.
(c) Agrees that, during the period from the date of this
Agreement through the Completion Date, he will not,
without the prior written consent of Budget, make or
cause to be made any oral or written statements to
any person, firm, corporation, or governmental or
other entity which reflect negatively on Budget or on
its directors, officers, employees, affiliates and
related companies, or which could reasonably be
understood to be detrimental to the business
interests of Budget or to its directors, officers,
employees, affiliates and related companies.
(d) Agrees to make the Vehicles available for periodic
inspection and/or replacement as Budget may request
from time to time and to return such Vehicles or any
replacement Vehicles to Budget on or before the
Completion Date; provided, however, that if Executive
relocates to another city, Budget will reasonably
cooperate with Executive in allowing the inspection,
replacement, and/or return of the Vehicles to take
place at the nearest Budget owned and operated rental
location.
(e) Agrees that all other perquisites that had been
available to him as a member of Budget senior
management, including but not limited to social and
professional memberships and gasoline and parking
reimbursement, shall terminate as of the Termination
Date. Notwithstanding the foregoing, Executive may
continue to use, at his sole cost
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<PAGE> 15
and expense, the mobile phones currently in the
Vehicles.
(f) Agrees to refrain, at any time and in any manner,
from disclosing any trade secret of Budget or other
confidential and proprietary business information and
material respecting Budget's business of which
Executive has knowledge, where such trade secret or
other confidential and proprietary business
information and material was gained from the files or
business operations of Budget or from Executive
otherwise giving assistance to another, where such
disclosure or assistance could be prejudicial to
Budget or its business, or is in any way related to
any controversy and/or litigation in which Budget is
or may become involved. Notwithstanding the
foregoing, Executive may comply with a court order or
subpoena compelling such disclosure or assistance.
(g) Agrees to deliver to Budget, at the time of the
execution of this Agreement, all non-public documents
and materials that relate to Budget, if any, in
Executive's possession, custody, or control;
provided, however, that Executive may keep all
documents concerning Budget's insurance plans, all
documents concerning his receipt of wages and
benefits while employed at Budget, and any documents
Budget agrees at its discretion he may keep.
(h) Agrees that the terms and conditions of this
Agreement are, collectively and individually, totally
confidential and shall forever be kept totally
confidential and shall not in any manner or for any
reason be disclosed by Executive without the express
prior written consent of Budget, except (x) to
members of his family, his attorneys, and his
accountants on a "need to know" basis, (y) to the
Internal Revenue Service, and (z) to anyone pursuant
to a court order or subpoena compelling such
disclosure. This Agreement may be introduced in any
proceeding to enforce the Agreement. Such
introduction shall be pursuant to an appropriate
order of confidentiality consistent with the terms of
this Section 2(h). If disclosure of this Agreement is
compelled pursuant to service of a subpoena on
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<PAGE> 16
Executive, then Executive shall immediately provide
written notice to Budget and shall not make any such
disclosure for ten (10) business days in order to
give Budget an opportunity to seek an appropriate
protective order, unless disclosure is required
sooner than ten (10) business days by court order,
rule, or regulation, in which case disclosure will
not be made by Executive before the time required by
such court order, rule, or regulation.
3. In further consideration of the payments and benefits
provided in this Agreement, and for other valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, Executive hereby knowingly, voluntarily, and
willingly releases, discharges, and covenants not to sue
Budget and its affiliated and related companies, past and
present, as well as each of their directors, officers,
employees, shareholders, representatives, attorneys, agents,
insurers, assigns, and successors, past and present
(collectively hereinafter referred to as the "RELEASEES"),
from and with respect to any and all accounts, actions,
contracts, agreements, obligations, causes of action and
claims whatsoever, whether known or unknown, suspected or
unsuspected, in law or in equity, which Executive, and his
heirs, executors, administrators, successors, assigns,
dependents, descendants, and attorneys ever had, now have, or
hereafter can, shall, or may have against the RELEASEES, for,
upon, or by reason of any matter, cause, or thing whatsoever
from the beginning of the world to the date of this Agreement,
including without limitation any and all claims (a) arising
out of or in any way related to Executive's employment with
Budget or his separation from Budget; (b) arising out of or in
any way related to any claims for race, national origin, age,
sex, religious, disability, or other form of employment
discrimination, including without limitation any claims under
Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, as amended, the Americans
with Disabilities Act of 1990, the Employee Retirement Income
Security Act of 1974, as amended, the Family and Medical Leave
Act of 1993, the National Labor Relations Act, as amended, and
the Illinois Human Rights Act, or any other federal, state or
local law, statute, ordinance, or administrative regulation;
or (c) for severance pay, bonus, commission, sick leave,
holiday pay, vacation
I-4
<PAGE> 17
pay, life insurance, disability, health or medical insurance,
or any other fringe benefits; provided, however, that nothing
in this Section will affect any rights provided for in this
Agreement.
4. Executive represents and warrants that he has not filed or
caused to be filed any complaints, charges or lawsuits with
any court or government agency relating to his employment with
Budget or his separation from Budget or to any claims being
released by him in this Agreement, and that he will not file
or authorize or cause to be filed on his behalf any such
complaints, charges, or lawsuits at any time hereafter
relating to his employment with Budget or his separation from
Budget or to any claims being released by him in this
Agreement.
5. Executive represents and warrants that he has not assigned or
transferred to any person not a party to this Agreement any
claim being released by this Agreement, or any part or portion
of such claim, and that he shall defend, indemnify, and hold
harmless Budget from and against any claim (including the
payment of attorneys' fees and costs actually incurred whether
or not litigation is commenced) based on or in connection with
or arising out of any such assignment or transfer.
6. Executive represents and warrants that during his employment
with Budget, he has at all times and in all respects conformed
to and complied with the policies and procedures of Budget and
has not engaged in any conduct which may be reasonably
construed as materially detrimental or embarrassing to Budget,
including without limitation gross neglect or willful
misconduct in the performance of his duties, fraud,
misappropriation, theft, or dishonesty.
7. Notwithstanding anything in this Agreement to the contrary,
if Executive fails or refuses to comply with his obligations
as provided for in Sections 2 and 3 of this Agreement, or
violates any of his representations and warranties as provided
for in Sections 4, 5, and 6 of this Agreement, Budget's
obligations as provided for in this Agreement and the
Executive Agreement shall immediately cease and terminate.
8. This Agreement shall be interpreted, construed, and enforced
under the laws of the State of Florida.
I-5
<PAGE> 18
9. Executive and Budget expressly agree that, except to the
extent this Agreement imposes obligations upon the parties,
this Agreement shall never, at any time, for any purpose
whatsoever, be considered as an admission of liability or
responsibility of the parties.
10. Any and all controversies, claims or disputes arising out of
or in any way relating to this Agreement shall be resolved by
final and binding arbitration in Daytona Beach, Florida before
a single arbitrator licensed to practice law and in accordance
with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"). The arbitration shall be
commenced by filing a demand for arbitration with the AAA
within sixty (60) days after the occurrence of the facts
giving rise to any such controversy, claim or dispute. The
arbitrator shall decide all issues relating to arbitrability.
The arbitrator shall award the prevailing party costs and
expenses, including attorneys' fees, associated with any such
arbitration. If the arbitrator determines that (x) Budget has
breached this Agreement and (y) Budget was unjustified in
failing to make the payments required under this Agreement to
Executive, Budget shall pay to Executive, as liquidated
damages and not as a penalty, an additional amount equal to
10% of the amount involved in the arbitration with respect to
this Agreement (and the Executive Agreement).
11. (a) The parties agree that Section 3(b) of the Executive
Agreement and Sections 2 through 6 of the Release
Agreement are a material part of this Agreement. The
parties believe that all provisions of the Executive
Agreement (including Section 3(b)) and the Release
Agreement are legal, binding and fully enforceable.
(b) If Section 3(b) of the Executive Agreement or
Section 2, 3, 4, 5 or 6 of the Release Agreement (or
any material part thereof) is invalid, then this
Release Agreement and the Executive Agreement shall
be null and void.
(c) Subject to subsection (b) above, in case any one or
more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal
or enforceable in other respect, such invalidity,
illegality or unenforceability
I-6
<PAGE> 19
shall not affect any other provision of this
Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision
had never been contained herein and there shall be
deemed substituted for such other provision as will
most nearly accomplish the intent of the parties to
the extent permitted by the applicable law.
12. Except as provided in a written benefit plan of Budget, this
Agreement (and the Executive Agreement) constitute the entire
agreement between the parties respecting the benefits due
Executive, and obligations of Executive, in the event of a
Qualifying Termination, and there are no representations,
warranties or commitments, other than those set forth herein,
which relate to such benefits. This is an integrated
agreement. No provision of this Agreement may be amended or
waived except by written agreement signed by the parties.
13. This Agreement may be executed in counterparts, and each
counterpart, when executed, shall have the effect of a signed
original. Photographic copies of such signed counterparts may
be used in lieu of the original for any purpose.
14. EXECUTIVE EXPRESSLY AGREES THAT HE HAS CAREFULLY READ THIS
AGREEMENT, HAS BEEN PROVIDED WITH THE OPPORTUNITY TO CONSULT
WITH AN ATTORNEY BEFORE ENTERING INTO THIS AGREEMENT, AND
FULLY UNDERSTANDS THE FINAL AND BINDING EFFECT OF THE TERMS
AND PROVISIONS CONTAINED IN THIS AGREEMENT. FURTHER, EXECUTIVE
REPRESENTS AND AGREES THAT THE ONLY PROMISES MADE TO HIM ARE
THOSE STATED ABOVE AND THAT EXECUTIVE IS SIGNING THIS
AGREEMENT VOLUNTARILY AND WITHOUT PRESSURE OR COERCION BY
BUDGET OR ITS OFFICERS, AGENTS, EXECUTIVES, DIRECTORS, OR
ANYONE ELSE ACTING ON THEIR BEHALF.
15. SPECIAL NOTICE TO EXECUTIVE (AS REQUIRED BY LAW FOR
EXECUTIVES AGED 40 AND OLDER):
(a) You should consult with an attorney prior to signing
this Agreement and regarding your release of claims
as provided in this Agreement.
(b) You were given a copy of this Agreement and you
represent that you have been given a period of
twenty-one (21) days (or forty-five (45) days if
I-7
<PAGE> 20
part of a group termination) after receipt of the
initial copy of this Agreement to consider the terms
of this Agreement before you sign it, and that you
elect to execute this Agreement on this date.
(c) You are entitled, within 7 days after you sign this
Agreement, to revoke the release and discharge
provided for in Section 3 above as it relates to any
claim you may have under the Age Discrimination in
Employment Act, as amended and the Agreement will not
become effective or enforceable until the revocation
period has expired; provided, however, that such
revocation will cancel this Agreement and the
Executive Agreement in their entirety.
16. Capitalized terms not defined herein shall be defined in
accordance with the Executive Agreement.
IN WITNESS WHEREOF, the parties, intending to be legally
bound, have executed this Agreement as of the date set forth herein.
BUDGET GROUP, INC. EXECUTIVE
- ------------------------------------ ---------------------------------
Date: Date:
------------------------------- -----------------------------
I-8
<PAGE> 1
EXHIBIT 10.22
===============================================================================
BUDGET RENT A CAR CORPORATION, as Issuer
TEAM RENTAL GROUP, INC., as Guarantor
(to be renamed BUDGET GROUP, INC.)
9.57% Guaranteed Senior Notes due 2007
-------------------------------------------------
SENIOR NOTE PURCHASE AGREEMENT
-------------------------------------------------
Dated as of April 25, 1997
===============================================================================
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<C> <C>
1. THE NOTES AND GUARANTEES; THE ACQUISITION, ETC.................................................................1
1.1. The Notes...........................................................................................1
1.2. The Guarantees......................................................................................1
1.3. The Acquisition and the Transactions................................................................2
2. SALE AND PURCHASE OF NOTES.....................................................................................3
3. CLOSING........................................................................................................3
4. CONDITIONS TO CLOSING..........................................................................................4
4.1. Representations and Warranties......................................................................4
4.2. Performance; No Default.............................................................................4
4.3. Compliance Certificates.............................................................................4
4.4. Opinions of Counsel.................................................................................5
4.5. Subsidiary Guarantees...............................................................................5
4.6. Purchase Permitted by Applicable Law, etc...........................................................5
4.7. Sale of Notes to Other Purchasers...................................................................6
4.8. Payment of Special Counsel Fees.....................................................................6
4.9. Private Placement Number............................................................................6
4.10. Changes in Corporate Structure.....................................................................6
4.11. Contemporaneous Transactions.......................................................................6
4.12. Proceedings and Documents..........................................................................7
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.................................................................8
5.1. Organization; Power and Authority...................................................................8
5.2. Authorization, etc..................................................................................8
5.3. Disclosure..........................................................................................9
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates....................................9
5.5. Financial Statements...............................................................................10
5.6. Compliance with Laws, Other Instruments, etc.......................................................11
5.7. Governmental Authorizations, etc...................................................................11
5.8. Litigation; Observance of Agreements, Statutes and Orders..........................................12
5.9. Taxes..............................................................................................12
5.10. Title to Property; Leases.........................................................................13
5.11. Licenses, Permits, etc............................................................................13
5.12. Compliance with ERISA.............................................................................13
5.13. Private Offering by the Obligors..................................................................15
5.14. Use of Proceeds; Margin Regulations...............................................................15
</TABLE>
<PAGE> 3
<TABLE>
<C> <C>
5.15. Existing Debt; Future Liens.......................................................................16
5.16. Foreign Assets Control Regulations, etc...........................................................16
5.17. Status Under Certain Statutes.....................................................................16
5.18. Environmental Matters.............................................................................16
5.19. Solvency..........................................................................................18
5.20. Other Transaction Documents.......................................................................18
6. REPRESENTATIONS OF THE PURCHASER..............................................................................19
6.1. Purchase of Notes..................................................................................19
6.2. Source of Funds....................................................................................19
7. INFORMATION AS TO OBLIGORS....................................................................................21
7.1. Financial and Business Information.................................................................21
7.2. Officer's Certificate..............................................................................25
7.3. Inspection.........................................................................................26
8. PREPAYMENT OF THE NOTES.......................................................................................27
8.1. Required Prepayments...............................................................................27
8.2. Optional Prepayments...............................................................................27
8.3. Prepayment in Connection with a Change of Control..................................................28
8.4. Allocation of Partial Prepayments..................................................................29
8.5. Maturity; Surrender, etc...........................................................................29
8.6. Purchase of Notes..................................................................................29
8.7. Make-Whole Amount..................................................................................29
9. AFFIRMATIVE COVENANTS.........................................................................................31
9.1. Compliance with Law................................................................................31
9.2. Insurance..........................................................................................32
9.3. Maintenance of Properties..........................................................................32
9.4. Payment of Taxes and Claims........................................................................32
9.5. Corporate Existence, etc...........................................................................33
9.6. Lines of Business..................................................................................33
9.7. Additional Subsidiary Guarantees...................................................................34
10. NEGATIVE COVENANTS...........................................................................................34
10.1. Incurrence of Non-Vehicle Debt; Subsidiary Debt...................................................34
10.2. Liens............................................................................................ 36
10.3. Limitation on Sale and Leaseback Transactions.....................................................39
10.4. Maintenance of Consolidated Shareholders' Equity..................................................40
10.5. Asset Sales.......................................................................................40
10.6. Merger, Consolidation, Amalgamation, etc..........................................................41
10.7. Restricted Payments...............................................................................43
10.8. Transactions with Affiliates......................................................................43
11. EVENTS OF DEFAULT............................................................................................44
</TABLE>
ii
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<TABLE>
<C> <C>
12. REMEDIES ON DEFAULT, ETC.....................................................................................47
12.1. Acceleration......................................................................................47
12.2. Other Remedies....................................................................................48
12.3. Rescission........................................................................................48
12.4. No Waivers or Election of Remedies, Expenses, etc.................................................49
13. PARENT GUARANTEE.............................................................................................49
13.1. Guarantee.........................................................................................49
13.2. Subrogation and Contribution......................................................................52
13.3. Continuing Guarantee..............................................................................52
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES................................................................52
14.1. Registration of Notes.............................................................................52
14.2. Transfer and Exchange of Notes....................................................................53
14.3. Replacement of Notes..............................................................................53
15. PAYMENTS ON NOTES............................................................................................54
15.1. Place of Payment..................................................................................54
15.2. Home Office Payment...............................................................................54
16. EXPENSES, ETC................................................................................................55
16.1. Transaction Expenses..............................................................................55
16.2. Survival..........................................................................................56
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.................................................56
18. AMENDMENT AND WAIVER.........................................................................................56
18.1. Requirements......................................................................................56
18.2. Solicitation of Holders of Notes..................................................................57
18.3. Binding Effect, etc...............................................................................58
18.4. Notes held by Obligors, etc.......................................................................58
19. NOTICES......................................................................................................58
20. REPRODUCTION OF DOCUMENTS....................................................................................59
21. CONFIDENTIAL INFORMATION.....................................................................................59
22. SUBSTITUTION OF PURCHASER....................................................................................61
23. MISCELLANEOUS................................................................................................61
23.1. Successors and Assigns............................................................................61
23.2. Construction......................................................................................61
23.3. Jurisdiction and Process; Waiver of Jury Trial....................................................62
</TABLE>
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<TABLE>
<S> <C>
23.4. Indemnification...................................................................................63
23.5. Payments Due on Non-Business Days.................................................................63
23.6. Severability......................................................................................64
23.7. Accounting Terms; Pro Forma Computations..........................................................64
23.8. Counterparts......................................................................................64
23.9. Governing Law.....................................................................................64
</TABLE>
<TABLE>
<S> <C> <C>
Exhibit 1.1 -- Form of 9.57% Guaranteed Senior Note due
2007
Exhibit 1.2 -- Form of Subsidiary Guarantee
Exhibit 4.4(a) -- Form of Opinion of Special Counsel for the
Parent
Exhibit 4.4(b) -- Form of Opinion of Counsel for the Parent
Exhibit 4.4(c) -- Form of Opinion of Counsel for the Company
Exhibit 4.4(d) -- Form of Opinion of Special Counsel for the
Purchasers
Schedule A -- Names and Addresses of Purchasers
Schedule B -- Defined Terms
Schedule 5.3 -- Disclosure Documents
Schedule 5.4 -- Subsidiaries
Schedule 5.5 -- Financial Statements
Schedule 5.8 -- Litigation
Schedule 5.11 -- Licenses, etc.
Schedule 5.15 -- Existing Debt
</TABLE>
iv
<PAGE> 6
BUDGET RENT A CAR CORPORATION
TEAM RENTAL GROUP, INC.
9.57% Guaranteed Senior Notes due 2007
As of April 25, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
BUDGET RENT A CAR CORPORATION, a Delaware corporation (the "COMPANY"),
and TEAM RENTAL GROUP, INC. (to be renamed BUDGET GROUP, INC.), a Delaware
corporation (the "PARENT" and, together with the Company, individually an
"OBLIGOR" and collectively the "OBLIGORS"), jointly and severally agree with
you as follows:
1. THE NOTES AND GUARANTEES; THE ACQUISITION, ETC.
1.1. THE NOTES.
The Company has duly authorized the issue and sale of $165,000,000
aggregate principal amount of its 9.57% Guaranteed Senior Notes due 2007 (the
"NOTES"), each such note to be in the form set out in Exhibit 1.1. As used
herein, the term "NOTES" shall mean all notes originally delivered pursuant to
this Agreement and the Other Agreements referred to below and all notes
delivered in substitution or exchange for any such note and, where applicable,
shall include the singular number as well as the plural. Certain capitalized
and other terms used in this Agreement are defined in Schedule B; references to
a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or
an Exhibit attached to this Agreement.
1.2. THE GUARANTEES.
(a) After giving effect to the consummation of the Acquisition
described below, the Parent will own beneficially and of record all of the
issued and outstanding capital stock of the Company. The Notes and the
obligations of the Company under this
<PAGE> 7
Agreement and under the Other Agreements will be unconditionally guaranteed by
the Parent pursuant to a parent guarantee contained in Section 13 of this
Agreement and the Other Agreements (the "PARENT GUARANTEE").
(b) The obligations of the Obligors hereunder and under the Other
Agreements (including without limitation under the Parent Guarantee) and the
Notes will be unconditionally guaranteed by certain of the Parent's
Subsidiaries pursuant to subsidiary guarantees substantially in the form of
Exhibit 1.2 (individually a "SUBSIDIARY GUARANTEE" and collectively the
"SUBSIDIARY GUARANTEES", which terms shall include after the date of the
Closing all additional Subsidiary Guarantees from time to time executed and
delivered pursuant to Section 9.7).
1.3. THE ACQUISITION AND THE TRANSACTIONS.
Pursuant to the Common Stock Purchase Agreement, dated as of January
13, 1997, between the Parent and John J. Nevin, the Budget Stock Purchase
Agreement, dated as of January 13, 1997, between the Company and the Parent and
the Preferred Stock Purchase Agreement, dated as of January 13, 1997, between
Ford Motor Company ("FORD") and the Parent (as each such Agreement as
supplemented and amended to and including the date of this Agreement,
collectively, the "STOCK PURCHASE AGREEMENTS"), the Parent agreed to acquire
all of the capital stock of the Company and purchase certain Debt of the
Company for approximately $275,000,000 in cash and the issuance of shares of a
new series of convertible Preferred Stock of the Parent (the "ACQUISITION").
In connection with the Acquisition, (a) the Parent intends to issue
Class A Shares pursuant to a registered public offering for gross cash proceeds
of at least $150,000,000, (b) the Parent intends to issue $45,000,000 aggregate
principal amount of its Series B Convertible Notes pursuant to the Series B
Note Purchase Agreements, (c) the Parent intends to amend the terms of its 7.0%
Convertible Subordinated Notes due 2003 pursuant to a Supplemental Agreement to
the Series A Note Purchase Agreements and to amend and restate the Registration
Rights Agreement dated as of December 18, 1996 between the Parent and the
holders of the Series A Convertible Notes and to include the holders of the
Series B Convertible Notes as parties thereto, (d) the Parent intends to
arrange for the refinancing of Debt under various vehicle financing facilities
of the Company and its Subsidiaries including, among others, the Liquidity
Facility and
2
<PAGE> 8
a rental car asset-backed commercial paper program through a special purpose,
bankruptcy remote, Wholly Owned Subsidiary of the Company, and (e) the Company,
as borrower, and the Parent, as guarantor, intend to enter into a $300,000,000
Revolving Credit Facility (the issuance of the Notes and the transactions
described in clauses (a) through (e) above are collectively the
"TRANSACTIONS").
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the aggregate principal amount
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Company and the Parent are entering into separate senior note purchase
agreements (the "OTHER AGREEMENTS") identical with this Agreement (except for
the principal amounts of Notes to be purchased) with each of the other
purchasers named in Schedule A (the "OTHER PURCHASERS"), providing for the sale
at such Closing to each of the Other Purchasers of Notes in the principal
amount specified opposite its name in Schedule A. Your obligation hereunder and
the obligations of the Other Purchasers under the Other Agreements are several
and not joint obligations and you shall have no obligation under any Other
Agreement and no liability to any Person for the performance or non-performance
by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Mayer, Brown & Platt, 1675
Broadway, New York, NY 10019, at 10:00 a.m., New York time, at a closing (the
"CLOSING") on April 29, 1997 or on such other Business Day thereafter on or
prior to May 15, 1997 as may be agreed upon by the Obligors and you and the
Other Purchasers. At the Closing the Company will deliver to you the Notes to
be purchased by you in the form of a single Note (or such greater number of
Notes in denominations of at least $500,000 as you may request) dated the date
of the Closing and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately available
funds in the amount of
3
<PAGE> 9
the purchase price therefor by wire transfer of immediately available funds for
the account of Budget Rent A Car Corporation to account number 39293601 at
Credit Suisse First Boston, New York, New York, ABA number 026009179.
If at the Closing the Company shall fail to tender such Notes to you
as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you shall, at
your election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights you may have by reason of such failure or
such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Obligors in this Agreement
shall (except as affected by the transactions contemplated hereby) be correct
when made and at the time of the Closing (including without limitation at the
time of the Closing after giving effect to the consummation of the Acquisition
and the Transactions).
4.2. PERFORMANCE; NO DEFAULT.
Each Obligor shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied
with by it prior to or at the Closing and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Section 5.14) and the consummation of the Acquisition and the Transactions,
no Default or Event of Default shall have occurred and be continuing.
4.3. COMPLIANCE CERTIFICATES.
(a) Officer's Certificates. Each Obligor shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2, 4.10 and 4.11 have been fulfilled.
4
<PAGE> 10
(b) Secretary's Certificates. Each Obligor and Subsidiary Guarantor
shall have delivered to you a certificate of its Secretary or an Assistant
Secretary certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of this
Agreement, the Other Agreements, the Notes and the respective Subsidiary
Guarantees, as applicable.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing (a) from King & Spalding, special counsel
for the Parent, and Kenneth M. Lipowitz, counsel to the Parent, and Robert L.
Aprati, Senior Vice President and General Counsel of the Company, substantially
in the respective forms set forth in Exhibits 4.4(a), 4.4(b) and 4.4(c) and
covering such other matters incident to the transactions contemplated hereby as
you or your counsel may reasonably request (and the Obligors hereby instruct
their counsel to deliver such opinions to you) and (b) from Willkie Farr &
Gallagher, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(d) and covering such other
matters incident to such transactions as you may reasonably request.
4.5. SUBSIDIARY GUARANTEES.
A Subsidiary Guarantee, dated as of a date on or before the date of
the Closing, shall have been executed and delivered by each Subsidiary
identified as a Subsidiary Guarantor in Schedule 5.4 (individually a
"SUBSIDIARY GUARANTOR" and collectively the "SUBSIDIARY GUARANTORS") in the
form hereinabove recited and shall be in full force and effect.
4.6. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing, your purchase of Notes shall (a)
be permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including without limitation
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (c) not subject you to any tax, penalty or liability under or pursuant to
any
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applicable law or regulation, which law or regulation was not in effect on the
date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
4.7. SALE OF NOTES TO OTHER PURCHASERS.
The Company shall sell to the Other Purchasers and the Other
Purchasers shall purchase the Notes to be purchased by them at the Closing as
specified in Schedule A.
4.8. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 16.1, the Obligors shall
have paid the reasonable fees, charges and disbursements of your special
counsel referred to in Section 4.4 to the extent reflected in a statement of
such counsel rendered to the Company at least one Business Day prior to the
Closing.
4.9. PRIVATE PLACEMENT NUMBER.
A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.10. CHANGES IN CORPORATE STRUCTURE.
Neither Obligor shall have changed its jurisdiction of incorporation
or, except for the Acquisition, been a party to any merger or consolidation or
succeeded to all or any substantial part of the liabilities of any other entity
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.
4.11. CONTEMPORANEOUS TRANSACTIONS.
Each of the Transaction Documents shall be in full force and effect
and none of the Transaction Documents shall have been supplemented, amended or
modified (by waiver or otherwise) to any substantial extent without your prior
written consent; and the following additional conditions shall have been
satisfied:
(a) the Parent shall have acquired the outstanding capital stock of
the Company to be acquired by it and issued
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to Ford shares of Preferred Stock initially convertible into not more
than 4,500,000 Class A Shares, all pursuant to the Stock Purchase
Agreements;
(b) the Parent shall have issued Class A Shares in a registered public
offering and shall have received at least $150,000,000 aggregate gross
cash proceeds in respect of such offering;
(c) the terms of the Parent's 7.0% Convertible Subordinated Notes due
2003 shall have been amended pursuant to a Supplemental Agreement to the
Series A Note Purchase Agreements and the Parent shall have issued
$45,000,000 aggregate principal amount of the Series B Convertible Notes
pursuant to the Series B Note Purchase Agreements, such documents to be
substantially in the respective forms heretofore furnished to you;
(d) the Parent and the Company and the other parties thereto shall
have entered into the Revolving Credit Facility, in form and substance
satisfactory to you, and the Company shall have satisfied the conditions
precedent to the initial credit extension thereunder; and
(e) the Company and one or more of its Subsidiaries shall have entered
into the Liquidity Facility and other arrangements providing for the
refinancing of Vehicle Debt as hereinabove described.
You shall have received a true and complete copy of each certificate, opinion
or other writing then or theretofore delivered to any party to the Transaction
Documents pursuant thereto.
4.12. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
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5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
The Obligors jointly and severally represent and warrant to you as
hereinafter set forth. Unless the context otherwise requires all
representations and warranties set forth herein shall be deemed to be given
with respect to the Parent and its Subsidiaries or Significant Subsidiaries, as
the case may be, after giving effect to the consummation of the Acquisition and
the Transactions on the date of the Closing.
5.1. ORGANIZATION; POWER AND AUTHORITY.
Each Obligor is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each Obligor has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Other Agreements and (in the case of the
Company) the Notes and to perform the provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). This Agreement has been duly
authorized by all necessary corporate action on the part of the Parent and this
Agreement constitutes a legal, valid and binding obligation of the Parent
enforceable against the Parent in accordance with its terms, except as such
enforceability may be limited as aforesaid.
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5.3. DISCLOSURE.
The Parent, through its agent, Credit Suisse First Boston Corporation,
has delivered to you a copy of a Preliminary Prospectus (subject to completion)
dated April 18, 1997 (the "PROSPECTUS") relating to the issue and sale of
6,500,000 Class A Shares in connection with the Acquisition pursuant to a
registration statement under the Securities Act. The Prospectus fairly
describes, in all material respects, the business and principal properties of
the Parent and its Subsidiaries, the Acquisition and the Transactions. This
Agreement, the Prospectus, the documents, certificates or other writings
delivered to you by or on behalf of the Obligors in connection with the
transactions contemplated hereby and described in Schedule 5.3 (together with
the Prospectus, the "DISCLOSURE DOCUMENTS"), and the financial statements
listed in Schedule 5.5, taken as a whole, do not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Since December 31, 1996, there has been no change in
the financial condition, operations, business, properties or prospects of the
Obligors and their respective Subsidiaries, each taken as a whole, except
changes disclosed in the Disclosure Documents or in the financial statements
listed in Schedule 5.5 and other changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists of the Parent's (i) Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, the percentage
of shares of each class of its capital stock or similar equity interests
outstanding owned by the Parent and each other Subsidiary and whether it is a
Subsidiary Guarantor or a Significant Subsidiary, (ii) Affiliates, other than
Subsidiaries, and (iii) directors and senior officers, in each case after
giving effect to the Acquisition. All Subsidiaries that are not designated as
Significant Subsidiaries in Schedule 5.4, if combined into a single Subsidiary,
would not constitute a Significant Subsidiary.
(b) All of the outstanding shares of capital stock or
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<PAGE> 15
similar equity interests of each Significant Subsidiary shown in Schedule 5.4
as being owned by the Parent and its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Parent or another Subsidiary
free and clear of any Lien, other than as listed on Schedule 5.4.
(c) Each Significant Subsidiary identified in Schedule 5.4 is a
corporation duly organized, validly existing and in good standing (to the
extent such concepts are recognized in such jurisdictions) under the laws of
its jurisdiction of organization, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
Each such Significant Subsidiary has the corporate power and authority to own
or hold under lease the properties it purports to own or hold under lease and
to transact the business it transacts and proposes to transact and, as to each
Subsidiary Guarantor, to execute and deliver and perform its obligations under
its respective Subsidiary Guarantee.
(d) No Significant Subsidiary is a party to, or otherwise subject to
any legal restriction or any agreement (other than this Agreement, the
agreements listed in Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Significant Subsidiary
to pay dividends out of profits or make any other similar distributions of
profits to the Parent or any of its Subsidiaries that owns outstanding shares
of capital stock or similar equity interests of such Significant Subsidiary.
5.5. FINANCIAL STATEMENTS.
Each Obligor has delivered to you copies of the financial statements
of each Obligor and its respective Subsidiaries listed in Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of each Obligor and its respective Subsidiaries before giving effect
to the Acquisition and the Transactions or the pro forma consolidated financial
position of the Parent and its Subsidiaries after giving effect to the
Acquisition and the Transactions, as the case may be, as of the
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respective dates specified in such Schedule and the consolidated results or pro
forma consolidated results, as the case may be, of their operations and cash
flows, as applicable, for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto.
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement and the Notes, by the Parent of this Agreement, by the Subsidiary
Guarantors of their respective Subsidiary Guarantees and by the Parent, the
Company or any Subsidiary of any Transaction Document to which it is a party,
will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company, the Parent or any other Significant Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease or any other
material agreement or instrument to which the Company, the Parent or any other
Significant Subsidiary is bound or by which the Company, the Parent or any
other Significant Subsidiary or any of their respective properties may be bound
or affected, (ii) contravene the charter or bylaws of the Company, the Parent
or any other Significant Subsidiary, (iii) conflict with or result in a breach
of any of the terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority applicable to the
Company, the Parent or any other Significant Subsidiary or (iv) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company, the Parent or any other Significant
Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Notes, by the Parent of this Agreement or by the Subsidiary Guarantors of their
respective Subsidiary Guarantees.
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5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of the Obligors, threatened against
or affecting the Parent or any Significant Subsidiary or any property of the
Parent or any Significant Subsidiary in any court or before any arbitrator of
any kind or before or by any Governmental Authority except actions, suits or
proceedings (none of which directly or indirectly involves the Acquisition or
the Transactions) that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Parent nor any Significant Subsidiary is in default
under any term of any agreement or instrument to which it is a party or by
which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation Environmental Laws)
of any Governmental Authority, which default or violation, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9. TAXES.
The Parent and its Significant Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the
amount of which is not individually or in the aggregate Material or (b) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Parent or a
Significant Subsidiary, as the case may be, has established adequate reserves
in accordance with GAAP. The Parent believes that the charges, accruals and
reserves on the books of the Parent and its Subsidiaries in respect of Federal,
state or other taxes for all fiscal periods are adequate.
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5.10. TITLE TO PROPERTY; LEASES.
The Parent and its Significant Subsidiaries have good and marketable
title to their respective real properties and own sufficient title to their
respective other properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance
sheet listed on Schedule 5.5 or purported to have been acquired by the Parent
or any Significant Subsidiary after the date of said balance sheet (except as
sold or otherwise disposed of in the ordinary course of business), either
before or after giving effect to the Acquisition, in each case free and clear
of Liens not permitted by this Agreement. All leases that individually or in
the aggregate are Material are valid and subsisting and are in full force and
effect in all Material respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Parent and its Significant Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
proprietary software, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are Material,
without known conflict with the rights of others;
(b) to the best knowledge of the Obligors, no product of the Parent
infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark,
trademark, trade name or other right owned by any other Person; and
(c) to the best knowledge of the Obligors, there is no Material
violation by any Person of any right of the Parent or any of its
Significant Subsidiaries with respect to any patent, copyright,
proprietary software, service mark, trademark, trade name or other right
owned or used by the Parent or any of its Subsidiaries.
5.12. COMPLIANCE WITH ERISA.
(a) The Obligors and each of their ERISA Affiliates have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to
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result in a Material Adverse Effect. Neither of the Obligors nor any of their
ERISA Affiliates has incurred any liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to any Plan other
than such liabilities as would not be individually or in the aggregate
Material, and to the Obligors' knowledge, no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by an Obligor or any of its ERISA Affiliates,
or in the imposition of any Lien on any of the rights, properties or assets of
either Obligor or any of its ERISA Affiliates, in either case pursuant to Title
I or IV of ERISA or to such penalty or excise tax provisions or to section
401(a)(29) or 412 of the Code, other than such liabilities or Liens as would
not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities, except as described in the financial
statements included in the Prospectus. The term "BENEFIT LIABILITIES" has the
meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and
"PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Obligors and their ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of
the last day of the Parent's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Parent and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the Parent
Guarantee and the issuance and sale of the Notes at the Closing hereunder will
not involve any transaction that is
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subject to the prohibitions of section 406 fof ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
The representation by the Obligors in the first sentence of this Section
5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by you.
5.13. PRIVATE OFFERING BY THE OBLIGORS.
Neither Obligor nor anyone acting on its behalf has offered the Notes,
the Parent Guarantee, the Subsidiary Guarantees or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you,
the Other Purchasers and not more than six other Institutional Investors, each
of which has been offered the Notes at a private sale for investment. Neither
Obligor nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Notes or the issuance of the
Parent Guarantee or the Subsidiary Guarantees to the registration requirements
of Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will use the net proceeds of the sale of the Notes to
repay Debt of the Company and for general corporate purposes of the Company. No
part of the proceeds from the sale of the Notes hereunder will be used, and no
part of the proceeds of such Debt was used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation
G of the Board of Governors of the Federal Reserve System (12 CFR 207), or for
the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company or the Parent in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute any of the consolidated assets of the Parent and its Subsidiaries
and the Parent does not have any present intention that margin stock will
constitute more than 20% of the value of such assets. As used in this Section,
the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the
meanings assigned to them in said Regulation G.
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5.15. EXISTING DEBT; FUTURE LIENS.
(a) Schedule 5.15 sets forth a complete and correct list of all
outstanding Debt of the Parent and its Subsidiaries as of March 31, 1997, and
all Debt of the Parent and its Subsidiaries to be outstanding as of the date of
the Closing after giving effect to the Acquisition and the Transactions.
Neither the Parent nor any Subsidiary is in default, and no waiver of default
is currently in effect, in the payment of any principal or interest on any such
Debt, and no event or condition exists with respect to any such Debt exceeding
$1,000,000 in unpaid principal amount that would permit (or that with the
giving of notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated maturity
or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Parent nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.2.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Parent nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or
the Federal Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS.
The operations of the Parent and its Subsidiaries comply with all
Environmental Laws and all other applicable Requirements of Law concerning
environmental health and safety, except where the failure so to comply
individually and in the
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aggregate could not reasonably be expected to have a Material Adverse Effect.
In addition to and without limiting the foregoing, except for matters
that individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect:
(a) neither the Parent nor any Significant Subsidiary, nor any
property or operations currently owned or leased by the Parent or any
Significant Subsidiary, is subject to, and no property or operations
formerly owned or leased by the Parent or any Significant Subsidiary
during such period of ownership or lease were to either Obligor's
knowledge subject to, any Order from or agreement with any court,
arbitrator or Governmental Authority of competent jurisdiction or subject
to any judicial or docketed administrative proceeding respecting (x) any
Environmental Law or any other environmental or health or safety
Requirement of Law, (y) any action required to clean up, remove, treat or
in any other way address Hazardous Materials in the environment or (z)
any written claim under any Environmental Law arising from the release or
threatened release of Hazardous Materials into the environment;
(b) all necessary authorizations, consents, permissions, licenses and
agreements required by Environmental Laws (collectively "ENVIRONMENTAL
CONSENTS") have been lawfully obtained by the Parent and its
Subsidiaries, and all Environmental Consents are valid and subsisting and
are in full force and effect;
(c) the Parent and its Significant Subsidiaries have complied in all
material respects with all conditions attaching to Environmental Consents
(whether such conditions are expressly imposed or implied by statute) and
neither Obligor is aware of any circumstances which would render it
impossible for the Parent or any Significant Subsidiary to comply with
such conditions in the future;
(d) neither the Parent nor any Significant Subsidiary has received any
written notice, Order, correspondence or communication from any
Governmental Authority in respect of any Environmental Consent revoking,
suspending, modifying or varying the same, or threatening to do so, and
neither
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Obligor knows of any reason for any Environmental Consent to be revoked,
suspended, modified or varied;
(e) neither the Parent nor any Significant Subsidiary has received any
written communication in any form from any Governmental Authority in
respect of any violation of any Environmental Law; and neither Obligor is
aware of any circumstances which would be reasonably expected to give
rise to such a communication being received, or of any intention on the
part of any competent authority to deliver any such communication;
(f) to either Obligor's knowledge, no site owned or occupied by the
Parent or any Subsidiary has been used for the deposit of waste during
the ownership or occupation of the Parent or any Subsidiary except for
such usage in accordance with Environmental Law or pursuant to all
requisite material consents thereunder;
(g) to either Obligor's knowledge, all Hazardous Materials produced in
the course of the businesses of the Parent and its Subsidiaries have been
lawfully disposed of; and
(h) to either Obligor's knowledge, the Parent and its Subsidiaries
have at all times supplied to the competent authorities such information
as is required by Environmental Laws, and all such information given was
correct at the time such information was supplied.
5.19. SOLVENCY.
Each Obligor is, and after giving effect to the issuance of the Notes
and the consummation of the Acquisition and the Transactions on the date of the
Closing will be, a "solvent institution", as said term is used in Section
1405(c) of the New York Insurance Law, whose "obligations . . . are not in
default as to principal or interest", as said terms are used in said Section
1405(c).
5.20. OTHER TRANSACTION DOCUMENTS.
The Parent has furnished or otherwise made available to you true and
correct copies of the Stock Purchase Agreements and other Transaction Documents
to which you are not a party, in each case, in the form of the most recent
drafts (which are
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substantially final) or as originally executed, as the case may be, and there
have been no amendments or waivers to any such originally executed Transaction
Documents or the exhibits or schedules thereto and there will be no substantial
changes before execution of any such Transaction Documents not yet executed, or
amendments or waivers in respect thereof, in any such case other than those as
to which you shall have been advised in writing prior to the Closing.
The representations and warranties of the Parent and its Subsidiaries
contained in such other Transaction Documents (executed and to be executed) are
(or upon execution thereof will be) true and correct.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE OF NOTES.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of
one or more pension or trust funds and not with a view to the distribution
thereof, provided that the disposition of your or their property shall at all
times be within your or their control. You understand that the Notes have not
been registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account", as such term
is defined in Prohibited Transaction Exemption ("PTE") 95-60 (issued July
12, 1995), and there is no plan with respect to which the aggregate
amount of such general account's reserves and liabilities for the
contracts held by or on behalf of such plan and all other plans
maintained by the same employer (and affiliates thereof as defined in
section V(a)(1) of PTE 95-60) or by the same
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employee organization (in each case determined in accordance with PTE
95-60) exceeds or will exceed 10% of the total of all reserves and
liabilities of such general account (determined in accordance with PTE
95-60, exclusive of separate account liabilities, plus any applicabl
surplus) as of the date of the Closing; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as you have disclosed to the
Obligors in writing pursuant to this paragraph (b) at least one Business
Day prior to the Closing, no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially
owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund and the general conditions in
Section III of PTE 90-1 and PTE 91-38 have been satisfied; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Parent and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the
Obligors in writing pursuant to this paragraph (c) at least one Business
Day prior to the Closing; or
(d) the Source is a governmental plan; or
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(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Obligors in writing pursuant to
this paragraph (e) at least one Business Day prior to the Closing; or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to
such terms in section 3 of ERISA.
7. INFORMATION AS TO OBLIGORS.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Obligors shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- as soon as available and in any event
within 60 days after the end of each quarterly fiscal period in each
fiscal year of the Parent (other than the last quarterly fiscal period of
each such fiscal year), duplicate copies of
(i) consolidating and consolidated balance sheets of the
Parent and its Subsidiaries as at the end of such quarter,
(ii) consolidating and consolidated statements of income of
the Parent and its Subsidiaries for such quarter, and
(iii) in the case of the first quarter, consolidated
statements of cash flows and changes in shareholders' equity of the
Parent and its Subsidiaries for such quarter and, in the case of the
second and third quarters, consolidated and consolidating statements
of income and consolidated statements of cash flows and changes in
shareholders' equity for the portion of the fiscal year ending with
such quarter,
setting forth in each case (for consolidated statements) in comparative
form the consolidated figures for the
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corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer of the Parent as fairly presenting, in all material respects, the
financial position of the companies being reported on and their results
of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified
above of copies of the Parent's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities
and Exchange Commission shall be deemed to satisfy the requirements of
this Section 7.1(a);
(b) Annual Statements -- as soon as available and in any event within
105 days after the end of each fiscal year of the Parent, duplicate
copies of
(i) consolidating and consolidated balance sheets of the
Parent and its Subsidiaries as at the end of such year, and
(ii) consolidating and consolidated statements of income and
consolidated statements of cash flows and changes in shareholders'
equity of the Parent and its Subsidiaries for such year,
setting forth in each case (for consolidated statements) in comparative
form the consolidated figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP, and such
consolidated statements to be accompanied by
(A) a report thereon of independent public accountants of
recognized national standing, which report shall include an opinion
that such consolidated financial statements present fairly, in all
material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion in the
circumstances, and
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(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or did
not make such an audit),
provided that the delivery within the time period specified above of the
Parent's Annual Report on Form 10-K for such fiscal year (together with
the Parent's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission, together with the accountant's certificate described in
clause (B) above, shall be deemed to satisfy the requirements of this
Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy
statement sent by the Parent or any Subsidiary generally to its
shareholders or to its creditors (other than the Parent or another
Subsidiary), and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by the
Parent or any Subsidiary with the Securities and Exchange Commission and
of all press releases and other statements made available generally by
the Parent or any Subsidiary to the public concerning developments that
are Material;
(d) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer of either Obligor
becoming aware of the existence of any Default or Event of Default or
that any Person has given any notice or taken any action with respect to
a claimed default hereunder or that any Person has given any notice or
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taken any action with respect to a claimed default of the type referred
to in Section 11(g), a written notice specifying the nature and period of
existence thereof and what action the Obligors are taking or propose to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days after
a Responsible Officer of either Obligor becoming aware of any of the
following, a written notice setting forth the nature thereof and the
action, if any, that the Obligors or an ERISA Affiliate propose to take
with respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by an Obligor or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by an Obligor or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, or in
the imposition of any Lien on any of the rights, properties or assets
of an Obligor or any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse
Effect;
(f) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Parent or
any Subsidiary from any federal or state Governmental Authority relating
to any
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order, ruling, statute or other law or regulation that could reasonably
be expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Parent or any of its
Subsidiaries or relating to the ability of the Parent to perform its
obligations hereunder, the ability of the Company to perform its
obligations hereunder and under the Notes or the ability of a Subsidiary
Guarantor to perform its obligations under its respective Subsidiary
Guarantee, in each case as from time to time may be reasonably requested
by any such holder of Notes.
Unless at the time the Obligors are subject to Section 13 or 15(d) of
the Exchange Act, the Parent shall deliver, with reasonable promptness after a
written request therefor by any holder of a Note or a prospective transferee of
a Note, information satisfying the requirements of subsection (d)(4)(i) of Rule
144A of the Securities and Exchange Commission under the Securities Act or any
similar rule then in effect.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer of the Parent setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Obligors were in
compliance with the requirements of Sections 10.1 through 10.7,
inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Default -- a statement that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review
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of the transactions and conditions of the Parent and its Subsidiaries
from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that
such review shall not have disclosed the existence during such period of
any condition or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Parent or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action the
Obligors shall have taken or propose to take with respect thereto.
7.3. INSPECTION.
The Parent shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Parent, to visit the principal executive offices of the Parent and the
Company, to discuss the affairs, finances and accounts of the Parent and
its Subsidiaries with the officers of the Parent and the Company, and
(with the consent of the Parent, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of
the Parent, which consent will not be unreasonably withheld) to visit the
other offices and properties of the Parent and each Subsidiary, all at
such reasonable times and as often as may be reasonably requested in
writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Obligors, to visit and inspect any of the offices or
properties of the Parent or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers, employees and
independent public accountants (and by this provision the Parent
authorizes said accountants to discuss the affairs, finances and accounts
of the Parent and its Subsidiaries), all at such times and as often as
may be requested.
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8. PREPAYMENT OF THE NOTES.
In addition to the payment of the entire unpaid principal amount of
the Notes at the final maturity thereof, the Company will make required, and
may make optional, prepayments in respect of the Notes as hereinafter provided.
8.1. REQUIRED PREPAYMENTS.
On April 29, 2001 and on each April 29 thereafter to and including
April 29, 2006 the Company will prepay $23,575,000 principal amount (or such
lesser principal amount as shall then be outstanding) of the Notes, together
with accrued interest thereon to the date of such prepayment, without premium
and allocated as provided in Section 8.4, provided that upon any partial
prepayment of the Notes pursuant to Section 8.2 or 8.3, the principal amount of
each required prepayment of the Notes becoming due under this Section 8.1 on
and after the date of such prepayment shall be reduced in the same proportion
as the aggregate unpaid principal amount of the Notes is reduced as a result of
such prepayment.
8.2. OPTIONAL PREPAYMENTS.
The Company may, at its option and upon notice as provided below,
prepay at any time all (subject to the last paragraph of this Section 8.2), or
from time to time any part of, the Notes (in a minimum amount of $10,000,000
and otherwise in integral multiples of $1,000,000), at the principal amount so
prepaid, together with interest accrued thereon to the date of such prepayment,
plus the Make-Whole Amount determined for the prepayment date with respect to
such principal amount. The Company will give each holder of Notes written
notice of each optional prepayment under this Section 8.2 not less than 30 days
and not more than 60 days prior to the date fixed for such prepayment. Each
such notice shall specify the date fixed for such prepayment (which shall be a
Business Day), the aggregate principal amount of the Notes to be prepaid on
such date, the principal amount of Notes held by such holder to be prepaid
(determined in accordance with Section 8.4) and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid.
Each such notice of prepayment shall be accompanied by a certificate
of a Senior Financial Officer of an Obligor as to the estimated Make-Whole
Amount due in connection with such
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prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment of Notes, the Company shall deliver to each holder of
the Notes a certificate of a Senior Financial Officer of an Obligor specifying
the calculation of such Make-Whole Amount as of the specified prepayment date.
Notwithstanding the foregoing, until the earlier of (i) a public
offering and sale of the Exchange Parent Convertible Notes pursuant to a demand
registration under the Registration Rights Agreement and (ii) the prepayment or
conversion of all outstanding Parent Convertible Notes, the Company may not
make any prepayment of Notes pursuant to this Section 8.2 if, after giving
effect thereto, the aggregate unpaid principal amount of the Notes at the time
outstanding would be less than $23,000,000.
8.3. PREPAYMENT IN CONNECTION WITH A CHANGE OF CONTROL.
Promptly and in any event within five Business Days after the
occurrence of a Change of Control, either Obligor will give written notice
thereof to the holders of all outstanding Notes, which notice shall (a) refer
specifically to this Section 8.3, (b) describe the Change of Control in
reasonable detail and specify the Change of Control Prepayment Date and the
Response Date (as respectively defined below) in respect thereof and (c) offer
to prepay all Notes at the price specified below on the date therein specified
(the "CHANGE OF CONTROL PREPAYMENT DATE"), which shall be a Business Day not
less than 30 nor more than 60 days after the date of such notice. Each holder
of a Note will notify the Company of such holder's acceptance (indicating the
aggregate principal amount of Notes to be prepaid) or rejection of such offer
by giving written notice of such acceptance or rejection to the Company at
least five Business Days prior to the Change of Control Prepayment Date (the
"RESPONSE DATE"). The failure by any such holder to respond in writing to such
offer on or before the Response Date shall be deemed to be a rejection of such
offer by such holder in respect of such Change of Control.
On the Change of Control Prepayment Date the Company will prepay all
of the Notes held by the holders as to which such offer has been accepted, at
the principal amount of each such Note, together with interest accrued thereon
to the Change of Control Prepayment Date, plus a premium equal to 1% of such
principal amount.
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If any holder of Notes shall reject such offer, such holder shall be
deemed to have waived its rights under this Section 8.3 to require prepayment
of all Notes held by such holder in respect of such Change of Control but not
in respect of any subsequent Change of Control.
8.4. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes pursuant to
Section 8.1 or 8.2, the principal amount of the Notes to be prepaid shall be
allocated among all the Notes at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof.
8.5. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount or
premium, if any. From and after such date, unless the Company shall fail to pay
such principal amount when so due and payable, together with the interest and
Make-Whole Amount or premium, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company upon request and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal amount
of any Note.
8.6. PURCHASE OF NOTES.
Neither Obligor will, nor will either Obligor permit any Affiliate to,
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes.
8.7. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be
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less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2
or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date with
respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable)
equal to the Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, 0.75% over the yield to maturity implied by (i)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page 500" on the
Telerate Access Service (or such other display as may replace Page 500
on Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (ii) if such
yields are not reported as of such time or the yields reported as of
such time are not ascertainable by interpolation as provided below,
the Treasury Constant Maturity Series Yields reported, for the latest
day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield will be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between (1)
the actively traded U.S. Treasury security with a maturity
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closest to and greater than the Remaining Average Life and (2) the
actively traded U.S. Treasury security with a maturity closest to and
less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Note, all payments of such Called Principal
and interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Obligors jointly and severally covenant that so long as any of the
Notes are outstanding:
9.1. COMPLIANCE WITH LAW.
The Parent will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including without limitation Environmental Laws, and will obtain
and maintain in
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effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2. INSURANCE.
The Parent will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
9.3. MAINTENANCE OF PROPERTIES.
The Parent will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear),
so that the business carried on in connection therewith may be properly
conducted at all times, provided that this Section shall not prevent the Parent
or any Subsidiary from discontinuing the operation and the maintenance of any
of its properties if such discontinuance is desirable in the conduct of its
business and the Parent has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Parent will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
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assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Parent or any Subsidiary, provided
that neither the Parent nor any Subsidiary need pay any such tax or assessment
or claim if (i) the amount, applicability or validity thereof is contested by
the Parent or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Parent or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Parent
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
9.5. CORPORATE EXISTENCE, ETC.
Subject to Section 10.6, each Obligor will at all times preserve and
keep in full force and effect its corporate existence. Subject to Sections 10.5
and 10.6, the Parent will at all times preserve and keep in full force and
effect the corporate existence of each of its Subsidiaries (unless merged into
the Parent or a Subsidiary) and all rights and franchises (as franchisee) of
the Parent and its Subsidiaries unless, in the good faith judgment of the
Parent, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise could not, individually or
in the aggregate, have a Material Adverse Effect.
9.6. LINES OF BUSINESS.
The Parent and its Subsidiaries will at all times continue to be
engaged solely in the business of (a) renting worldwide for general use
passenger automobiles, vans and light trucks, (b) selling in the United States
late model automobiles and (c) franchising the foregoing business to other
Persons, and other business activities as may be incidental or related to the
foregoing (including without limitation the ownership and operation of parking
lots, the ownership and rental of recreational vehicles and the ownership and
operation of limousine services, taxi fleets or car dealerships). Without
limiting the foregoing, the Parent will not engage in any business activity
other than its continuing ownership of all of the shares of capital stock of
the Company and its compliance with its obligations under this Agreement and
the other Transaction Documents.
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9.7. ADDITIONAL SUBSIDIARY GUARANTEES.
Concurrently with the initial incurrence of any Debt by any Subsidiary
of the Parent (as a direct obligor or guarantor) under the Revolving Credit
Facility or under any extension, renewal or replacement of the Revolving Credit
Facility (including without limitation by such Subsidiary becoming a guarantor
under the Revolving Credit Facility or any such extension, renewal or
replacement), the Company will cause such Subsidiary to execute and deliver to
the holders of the Notes a Subsidiary Guarantee in the form hereinabove recited
and will furnish each such holder with a counterpart of such executed
Subsidiary Guarantee, together with an opinion of King & Spalding or other
counsel reasonably satisfactory to the Required Holders (which opinion shall be
reasonably satisfactory to the Required Holders and may be subject to customary
exceptions, qualifications and limitations under the circumstances) to the
effect that such Subsidiary Guarantee has been duly authorized, executed and
delivered by such Subsidiary and is valid, binding and enforceable in
accordance with its terms; provided, however, that the Company will not permit
any Subsidiary to incur such Debt (as a direct obligor or guarantor) unless the
holders of the Notes shall have received assurances reasonably satisfactory to
the Required Holders that, as between the lenders under the Revolving Credit
Facility or such extension, renewal or replacement and the holders from time to
time of the Notes, all Debt of such Subsidiary under the Revolving Credit
Facility or such extension, renewal or replacement and under its respective
Subsidiary Guarantee is and shall be (except to the extent such Debt is
secured) pari passu with the Debt of such Subsidiary under its Subsidiary
Guarantee.
10. NEGATIVE COVENANTS.
The Obligors jointly and severally covenant that so long as any of the
Notes are outstanding:
10.1. INCURRENCE OF NON-VEHICLE DEBT; SUBSIDIARY DEBT.
(a) The Parent will not and will not permit any Subsidiary to create,
assume, incur, guarantee or otherwise become liable in respect of any
Non-Vehicle Debt unless immediately after giving effect thereto and to the
application of the proceeds of such Non-Vehicle Debt
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(i) the Pro Forma Non-Vehicle Interest Coverage Ratio is at
least (A) 2.0 to 1 on any date of determination to and including
December 31, 1999 and (B) 3.0 to 1 on any date thereafter, and
(ii) the Non-Vehicle Leverage Ratio does not exceed (A) 6.3
to 1 on any date of determination to and including December 31, 1998,
(B) 5.0 to 1 on any date thereafter to and including December 31, 1999
(C) 4.0 to 1 on any date thereafter to and including December 31,
2000, (D) 3.5 to 1 on any date thereafter to and including December
31, 2001 and (E) 3.0 to 1 on any date thereafter.
(b) The Parent will not permit any Subsidiary (other than the
Company) to create, assume, incur, guarantee or otherwise become liable in
respect of any Non-Vehicle Debt except
(i) Debt secured by Liens permitted by clauses (a) through
(m) of Section 10.2,
(ii) Debt owing to the Company or another Wholly-Owned
Subsidiary,
(iii) Debt of a Subsidiary outstanding as of the date such
Subsidiary was acquired or otherwise becomes a Subsidiary (and not
created in anticipation thereof), and
(iv) other Debt, provided that immediately after giving
effect to the incurrence of such other Debt the sum (without
duplication) of (A) the aggregate amount of Debt (including
Capitalized Lease Obligations) of the Parent and its Subsidiaries
secured by Liens permitted by Section 10.2(n) plus (B) the aggregate
amount of Non-Vehicle Debt of all Subsidiaries (other than the Debt of
the Company and Debt permitted by subclause (i), (ii) or (iii) above)
plus (C) the aggregate Attributable Debt in connection with all sale
and leaseback transactions of the Parent and its Subsidiaries entered
into after the date of the Closing in accordance with the provisions
of Section 10.3(d), does not exceed 15% of Consolidated Adjusted
Assets.
For purposes of this Section 10.1(b), a Subsidiary shall be deemed to have
incurred Debt in respect of any obligation previously owed to the Parent or to
a Wholly-Owned Subsidiary on the date the obligee ceases for any reason to be
the Parent or a Wholly-Owned Subsidiary.
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10.2. LIENS.
The Parent will not and will not permit any Subsidiary to create,
assume, incur or suffer to exist any Lien upon or with respect to any property
other than Vehicles and Excluded Receivables (as such term is defined in the
Revolving Credit Facility as in effect on the date of the Closing) relating to
the financing of Vehicles, whether now owned or hereafter acquired, provided
that nothing in this Section 10.2 shall prohibit
(a) Liens on any airport concession agreements or permits to secure
Debt incurred in the ordinary course of business to finance tenant
improvements used in connection with concession agreements or permits
subject to such Lien;
(b) Liens on claims against persons renting vehicles, persons damaging
vehicles or persons issuing applicable insurance coverage for such
persons arising under insurance policies entered into in the ordinary
course of business consistent with past practice;
(c) Liens securing the Revolving Credit Facility (including any Swaps
entered into thereunder), provided that such Liens shall not cover any
property or assets other than as described in Schedule 5.15;
(d) other Liens in respect of property of the Parent or a Subsidiary
existing on the date of the Closing or arising under an agreement in
effect on the date of the Closing, in each case as described in Schedule
5.15;
(e) Liens in respect of property (including Capital Lease Obligations)
acquired by the Parent or a Subsidiary after the date of the Closing,
which are existing at the time of acquisition of such property or created
at the time of or within 180 days after the acquisition of such property
to secure Non-Vehicle Debt assumed or incurred to finance all or any part
of the purchase price or the completion of construction of such property,
provided that in any such case
(i) no such Lien shall extend to or cover any other property
of the Parent or such Subsidiary, as the case may be, and
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(ii) the aggregate principal amount of Debt secured by all
such Liens in respect of any such property shall not exceed the cost
of such property and any improvements then being financed;
(f) in the case of any Person that after the date of the Closing
becomes a Subsidiary or is consolidated with or merged with or into the
Parent or a Subsidiary or sells, leases or otherwise disposes of all or
substantially all of its property to the Parent or a Subsidiary, Liens
existing at the time such Person becomes a Subsidiary or is so
consolidated or merged or effects such sale, lease or other disposition
of property (and not created in anticipation thereof), provided that in
any such case no such Lien shall extend to or cover any other property of
the Parent or such Subsidiary, as the case may be;
(g) Liens securing Non-Vehicle Debt owed by a Subsidiary to the
Company or to a Wholly-Owned Subsidiary;
(h) any Lien relating to any extension, renewal or replacement of any
Non-Vehicle Debt secured by a Lien permitted by clauses (a) through (g)
above, provided in each case that the outstanding principal amount (or
then accreted value) of Non-Vehicle Debt secured thereby is not increased
and such Lien does not extend to or cover any other property except as
otherwise permitted by this Section 10.2;
(i) Liens arising in favor of the United States government or any
state thereof or any foreign government or any political subdivision of
any of the foregoing to secure partial, progress, advance or other
payments pursuant to any contract or statute;
(j) Liens incurred or deposits made in the ordinary course of business
(and not created in connection with the incurrence of Debt) in connection
with workers' compensation, unemployment insurance and other types of
social security or to secure the performance of tenders, statutory
obligations, bids, leases, government contracts, performances and return
of money bonds and similar obligations;
(k) Liens incidental to the normal conduct of the business of the
Parent or any Subsidiary or the ownership of its property (including
without limitation minor survey
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exceptions, title defects, minor encumbrances, easements,
reservations, rights of others for rights-of-way, zoning or other
restrictions as to the use of real property), which are not created in
connection with the incurrence of Debt and which do not individually or
in the aggregate materially adversely affect the value or usefulness of
such property in the operation of the business of the Parent and its
Subsidiaries taken as a whole;
(l) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time
required by Section 9.4;
(m) Liens of or resulting from any judgment rendered by a court of
competent jurisdiction properly reserved (other than judgments and awards
which if not discharged would result in a Default under Section 11(j)),
the appeal of which the Parent or a Subsidiary is prosecuting in good
faith and by appropriate proceedings; and
(n) Liens which would otherwise not be permitted by clauses (a)
through (h) of this Section 10.2, securing additional Non-Vehicle Debt of
the Company or another Subsidiary, provided that after giving effect
thereto the sum (without duplication) of (i) the aggregate amount of Debt
(including Capitalized Lease Obligations) of the Parent and its
Subsidiaries secured by such Liens permitted by this Section 10.2(n) plus
(ii) the aggregate amount of Non-Vehicle Debt of Subsidiaries (other than
the Company and Debt permitted by subclauses (i), (ii) and (iii) of
Section 10.1(b)) plus (iii) the aggregate Attributable Debt in connection
with all sale and leaseback transactions of the Parent and its
Subsidiaries entered into after the date of the Closing in accordance
with the provisions of Section 10.3(d), does not exceed 15% of
Consolidated Adjusted Assets.
For purposes of this Section 10.2 any Lien existing in respect of property at
the time such property is acquired or in respect of property of a Person at the
time such Person is acquired, consolidated or merged with or into the Parent or
a Subsidiary shall be deemed to have been created at that time.
Notwithstanding the foregoing, the Parent will not and will not permit
any Subsidiary to create, assume or suffer to
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exist any Lien upon or with respect to any trademarks, software systems,
reservations systems or other intellectual property (or rights in respect of
any thereof), whether now owned or hereafter acquired.
10.3. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Parent will not and will not permit any Subsidiary to sell, lease,
transfer or otherwise dispose of (collectively, a "TRANSFER") any asset (other
than Vehicles) on terms whereby the asset or a substantially similar asset is
or may be leased or reacquired by the Parent or any Subsidiary, unless either
(a) the lease is between the Company and another Wholly-Owned
Subsidiary or between such other Wholly-Owned Subsidiaries, or
(b) the Company or a Subsidiary could create a Lien under clauses (c)
through (h) of Section 10.2 on such asset to secure Non-Vehicle Debt in
an amount at least equal to the Attributable Debt in respect of such
transaction, or
(c) the net proceeds realized from the transfer are applied by the
Company within 180 days after the receipt thereof to (i) the repayment of
unsubordinated Non-Vehicle Debt of the Company or the Parent (which
repayment may, but need not, include prepayment of Notes pursuant to
Section 8.2 and shall, in case of a prepayment of the Revolving Credit
Facility, result in the permanent reduction of the commitments of the
lenders thereunder by an amount at least equal to the principal amount
repaid) or (ii) the purchase of non-current assets for use in the
business of the Company, or
(d) after giving effect to such transaction and the incurrence of
Attributable Debt in respect thereof, the sum (without duplication) of
(i) the aggregate amount of Debt (including Capitalized Lease
Obligations) of the Parent and its Subsidiaries secured by such Liens
permitted by Section 10.2(n) plus (ii) the aggregate amount of
Non-Vehicle Debt of Subsidiaries (other than Debt of the Company and Debt
permitted by subclauses (i), (ii) and (iii) of Section 10.1(b)) plus
(iii) the aggregate Attributable Debt in connection with all sale and
leaseback transactions of the Parent and its Subsidiaries entered into
after the date of the Closing (other than transactions permitted by
clauses
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(a), (b) and (c) above), does not exceed 15% of Consolidated Adjusted
Assets.
Notwithstanding the foregoing, the Parent will not and will not permit
any Subsidiary to enter into any transaction covered by this Section involving
any trademarks, software systems, reservations systems or other intellectual
property (or rights in respect of any thereof), whether now owned or hereafter
acquired.
10.4. MAINTENANCE OF CONSOLIDATED SHAREHOLDERS' EQUITY.
The Parent will not at any time permit Consolidated Shareholders'
Equity to be less than the sum of (a) $294,500,000 plus (b) 50% of Consolidated
Net Income for each fiscal year (beginning with the fiscal year ending on
December 31, 1997) for which Consolidated Net Income is positive.
10.5. ASSET SALES.
The Parent will not and will not permit any Subsidiary to, directly or
indirectly, sell, transfer, lease (as lessor), otherwise dispose of any
property or assets (an "ASSET SALE") other than
(a) Asset Sales in the ordinary course of business; or
(b) other Asset Sales, provided that in each case
(i) immediately before and after giving effect thereto, (A)
no Default or Event of Default shall have occurred and be continuing,
and (B) the Company would be permitted to incur at least $1 of
additional Non-Vehicle Debt under Section 10.1(a), and
(ii) the aggregate net book value of property or assets
disposed of in such Asset Sale and all other Asset Sales by the Parent
and its Subsidiaries during the immediately preceding twelve months
does not exceed 15% of Consolidated Adjusted Assets (as of the last
day of the quarterly accounting period ending on or most recently
prior to the last day of such twelve month period),
and provided further that for purposes of clause (ii) above there
shall be excluded the net book value of property or
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assets disposed of in an Asset Sale if and to the extent such Asset
Sale is made for cash, payable in full upon the completion of such Asset
Sale, and an amount equal to the net proceeds realized upon such Asset
Sale is applied by the Parent or such Subsidiary, as the case may be,
within 180 days after the effective date of such Asset Sale (x) to
reinvest (through capital expenditures or acquisitions) in property or
assets for use in the business of the Parent and its Subsidiaries or (y)
to repay unsubordinated Non-Vehicle Debt of the Company or the Parent
(which repayment may, but need not, include prepayment of Notes pursuant
to Section 8.2 and shall, in case of a repayment of the Revolving Credit
Facility, result in the permanent reduction of the commitments of the
lenders thereunder by an amount at least equal to the principal amount
repaid) or, in the case of Asset Sales of Vehicles, to repay Vehicle
Debt.
Nothing in this Section 10.5 shall limit the ability of the Parent to
distribute shares of capital stock of any Subsidiary to the shareholders of the
Parent, provided that such distribution is permitted by Section 10.7 and after
giving effect of such action the Parent owns beneficially at least 80% of the
capital stock of such Subsidiary.
10.6. MERGER, CONSOLIDATION, AMALGAMATION, ETC.
The Parent will not and will not permit the Company or any Subsidiary
Guarantor to consolidate, amalgamate or merge with any other corporation or
convey, transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person except:
(a) a Subsidiary Guarantor may consolidate, amalgamate or merge with
any other corporation or convey or transfer all or substantially all of
its assets to
(i) a solvent corporation organized and existing under the
laws of the United States or any State thereof, provided that
(x) the continuing, surviving, successor or
acquiring corporation (the "SURVIVING CORPORATION"), shall
have (A) executed and delivered to each holder of a Note its
assumption of the due and punctual performance and observance
of the all obligations of such Subsidiary
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Guarantor under its Subsidiary Guarantee and (B)
caused to be delivered to each holder of a Note an opinion of
counsel reasonably satisfactory to the Required Holders to
the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and
comply with the terms hereof, and
(y) immediately before and after giving effect to
such transaction, no Default or Event of Default shall have
occurred and be continuing and the Company would be permitted
to incur at least $1 of additional Non-Vehicle Debt under
Section 10.1(a), or
(ii) any Person in an Asset Sale involving all of the
outstanding stock or all or substantially all of the assets of such
Subsidiary, in either case subject to the limitations of Section 10.5;
(b) the Company may consolidate, amalgamate or merge with any other
corporation or convey or transfer all or substantially all of its assets
to a solvent corporation organized and existing under the laws of the
United States or any State thereof, provided that
(i) the surviving corporation (if not the Company) shall have
(A) executed and delivered to each holder of a Note its assumption of
the due and punctual performance and observance of all obligations of
the Company under this Agreement, the Other Agreements and the Notes
and (B) caused to be delivered to each holder of a Note an opinion of
counsel reasonably satisfactory to the Required Holders to the effect
that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms
hereof, and
(ii) immediately before and after giving effect to such
transaction, (A) no Default or Event of Default shall have occurred
and be continuing and (B) the Company would be permitted to incur at
least $1 of additional Non-Vehicle Debt under Section 10.1(a); and
(c) the Parent may consolidate, amalgamate or merge with any other
corporation or convey or transfer all or
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substantially all of its assets to a solvent corporation organized and
existing under the laws of the United States or any State thereof,
provided that
(i) the surviving corporation (if not the Parent) shall have
(A) executed and delivered to each holder of a Note its assumption of
the due and punctual performance and observance of all obligations of
the Parent under this Agreement and the Other Agreements (including
without limitation the Parent Guarantee) and (B) caused to be
delivered to each holder of a Note an opinion of counsel reasonably
satisfactory to the Required Holders to the effect that all agreements
or instruments effecting such assumption are enforceable in accordance
with their terms and comply with the terms hereof, and
(ii) immediately before and after giving effect to such
transaction, (A) no Default or Event of Default shall have occurred
and be continuing and (B) the Company would be permitted to incur at
least $1 of Non-Vehicle Debt under Section 10.1(a).
Notwithstanding the foregoing, any Subsidiary may consolidate,
amalgamate or merge with the Company (provided the Company is the surviving
corporation) or any other Wholly-Owned Subsidiary or convey, transfer or lease
all or substantially all of its assets in a single transaction or series of
transactions to the Company or any other Wholly-Owned Subsidiary.
10.7. RESTRICTED PAYMENTS.
The Parent will not, directly or indirectly, make or declare any
Restricted Payment unless after giving effect to any such action, (a) no
Default or Event or Default shall have occurred and be continuing, and (b) the
Company would be permitted to incur at least $1 of additional Non-Vehicle Debt
under Section 10.1(a).
10.8. TRANSACTIONS WITH AFFILIATES.
The Parent will not and will not permit any Subsidiary to enter into
directly or indirectly any Material transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate
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(other than the Parent or the Company or a Wholly-Owned Subsidiary), except
upon fair and reasonable terms no less favorable to the Parent or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate. As used in this Section, "MATERIAL" means
material to (i) the Parent, (ii) the Company or (iii) the Parent and its
Subsidiaries taken as a whole.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) default in the payment of any principal or Make-Whole Amount or
premium, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration
or otherwise; or
(b) default in the payment of any interest on any Note, and such
default shall have continued for more than 10 days after such payment
becomes due and payable; or
(c) default in the performance of or compliance with any term
contained in Section 7.1(d), 10.1, 10.2, 10.3, 10.5, 10.6, 10.7 or 10.8;
or
(d) default in the performance of or compliance with any term
contained in Section 10.4, and such default shall have continued for a
period of 30 days after a Responsible Officer of either Obligor obtains
knowledge thereof (if and so long as the Parent is proceeding diligently
and in good faith, by issuing equity securities or otherwise, to remedy
such default during such 30-day period); or
(e) default in the performance of or compliance with any term
contained in this Agreement (other than those referred to in paragraphs
(a), (b), (c) and (d) of this Section 11) and such default is not
remedied within 30 days after a Responsible Officer of either Obligor
obtains knowledge of such default; or
(f) any representation or warranty made in writing by or on behalf of
either Obligor or any Subsidiary Guarantor or by any officer of either
Obligor or any Subsidiary Guarantor in this Agreement or any Subsidiary
Guarantee or in any writing furnished in connection herewith or therewith
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proves to have been false or incorrect in any material respect on the
date as of which made; or
(g) (i) the Parent or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium
or interest on any Debt (other than the Notes) that is outstanding in an
aggregate principal amount of at least $10,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Parent or any Subsidiary
is in default in the performance of or compliance with any term of any
evidence of any Debt in an aggregate outstanding principal amount of at
least $10,000,000 or of any mortgage, indenture or other agreement
relating thereto or any other condition exists, and as a consequence of
such default or condition such Debt has become, or has been declared (or
one or more Persons are entitled to declare such Debt to be), due and
payable before its stated maturity or before its regularly scheduled
dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or
the right of the holder of Debt to convert such Debt into equity
interests), (x) the Parent or any Subsidiary has become obligated to
purchase or repay Debt before its regular maturity or before its
regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $10,000,000, or (y) one or more Persons have
the right to require the Parent or any Subsidiary to purchase or repay
such Debt; or
(h) the Parent or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it
of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law
of any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
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(i) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Parent or any Subsidiary, a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or
to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of
the Parent or any such Subsidiary, or any such petition shall be filed
against the Parent or any such Subsidiary and such petition shall not be
dismissed within 60 days; or
(j) a final judgment or judgments for the payment of money aggregating
in excess of $10,000,000 are rendered against one or more of the Parent
and its Subsidiaries which judgments are not, within 60 days after entry
thereof, bonded, paid, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or
(k) the Parent Guarantee or any Subsidiary Guarantee shall cease to be
in full force and effect as an enforceable instrument or the Parent or
any Subsidiary Guarantor (or any Person at its authorized direction or on
its behalf) shall assert in writing that the Parent Guarantee or the
Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, is
unenforceable in any material respect; or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of intent
to terminate any Plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Parent or any ERISA Affiliate
that a Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance
with Title IV of ERISA, shall exceed $10,000,000, (iv) the Parent or any
ERISA
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Affiliate shall have incurred or is reasonably expected to incur
any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, or (v) the
Parent or any ERISA Affiliate withdraws from any Multiemployer Plan; and
any such event or events described in clauses (i) through (v) above,
either individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse Effect; or
(m) the Company shall cease to be a Wholly-Owned Subsidiary of the
Parent.
As used in Section 11(l), the terms "EMPLOYEE BENEFIT PLAN" and
"EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective meanings
assigned to such terms in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Parent or the Company
described in paragraph (h) or (i) of Section 11 has occurred, all the
Notes then outstanding shall automatically become immediately due and
payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or
notices to the Company, declare all the Notes at the time outstanding to
be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of
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which are hereby waived. The Obligors acknowledge, and the parties hereto
agree, that each holder of a Note has the right to maintain its investment in
the Notes free from repayment by the Company (except as herein specifically
provided) and that the provision for payment of a Make-Whole Amount by the
Company in the event that the Notes are prepaid or are accelerated as a result
of an Event of Default, is intended to provide compensation for the deprivation
of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law or
otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount or premium, if any, on any Notes that
are due and payable and are unpaid other than by reason of such declaration,
and all interest on such overdue principal and Make-Whole Amount and premium,
if any, and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes, at the Default Rate, (b) all Events of Default and
Defaults, other than the non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 18, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of
Default or Default or impair any right consequent thereon.
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12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Obligors under Section
16, the Company will pay to the holder of each Note on demand such further
amount as shall be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection under this Section 12, including
without limitation reasonable attorneys' fees, expenses and disbursements.
13. PARENT GUARANTEE.
13.1. GUARANTEE.
(a) Guaranteed Obligations. The Parent hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety,
(i) the punctual payment when due, whether at stated
maturity, by prepayment, by acceleration or otherwise, of all
obligations of the Company arising under this Agreement, the Other
Agreements and the Notes, whether for principal, interest (including
without limitation interest on any overdue principal, Make-Whole
Amount and premium, if any, and interest at the rate specified in the
Notes and interest accruing or becoming owing both prior to and
subsequent to the commencement of any bankruptcy, reorganization or
similar proceeding involving either Obligor), Make-Whole Amount and
premium, if any, fees, expenses, indemnification or otherwise, and
(ii) the due and punctual performance and observance by the
Company of all covenants, agreements and conditions on its part to be
performed and observed under this Agreement, the Other Agreements and
the Notes.
The obligations guaranteed by this Parent Guarantee are sometimes called the
"GUARANTEED OBLIGATIONS".
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Without limiting the generality of the foregoing, this Parent
Guarantee guarantees, to the extent provided herein, the payment of all amounts
which constitute part of the Guaranteed Obligations and would be owed by any
other Person to any holder of a Note but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Person.
(b) Guarantee Absolute. This Parent Guarantee constitutes a present
and continuing guarantee of payment and not of collectibility and the
Parent guarantees that the Guaranteed Obligations will be paid strictly
in accordance with the terms of this Agreement, the Other Agreements and
the Notes, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of
any holder of a Note with respect thereto. The obligations of the Parent
under this Parent Guarantee are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and
prosecuted against the Parent to enforce this Parent Guarantee,
irrespective of whether any action is brought against the Company or any
other Person liable for the Guaranteed Obligations or whether the Company
or any other such Person is joined in any such action or actions. The
liability of the Parent under this Parent Guarantee shall be primary,
absolute, irrevocable, and unconditional irrespective of:
(i) any lack of validity or enforceability of any Guaranteed
Obligation, this Agreement, the Other Agreements, the Notes, any
Subsidiary Guarantee or any agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Guaranteed Obligations, or
any other amendment or waiver of or any consent to departure from this
Agreement, the Other Agreements, the Notes, any Subsidiary Guarantee
or this Parent Guarantee;
(iii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or
consent to departure by the Parent or other Person liable, or any
other guarantee, for all or any of the Guaranteed Obligations;
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(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral or any other assets of the
Company or any other Subsidiary;
(v) any change, restructuring or termination of the corporate
structure or existence of the Company or any other Subsidiary; or
(vi) any other circumstance (including without limitation any
statute of limitations) that might otherwise constitute a defense,
offset or counterclaim available to, or a discharge of, the Company or
the Parent.
This Parent Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by any holder
of a Note, or any other Person upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, all as though such payment had not been made.
(c) Waivers by the Parent. The Parent hereby irrevocably
waives, to the extent permitted by applicable law:
(i) promptness, diligence, presentment, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Parent Guarantee;
(ii) any requirement that any holder of a Note or any
other Person protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action
against the Company or any other Person or any collateral;
(iii) any defense, offset or counterclaim arising by
reason of any claim or defense based upon any action by any holder of a
Note;
(iv) any duty on the part of any holder of a Note to
disclose to the Parent any matter, fact or thing relating to the
business, operation or condition of any Person and its assets now known
or hereafter known by such holder; and
(v) any rights by which it might be entitled to require
suit on an accrued right of action in respect of any
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of the Guaranteed Obligations or require suit against the Company or
the Parent or any other Person.
13.2. SUBROGATION AND CONTRIBUTION
The Parent shall not assert, enforce, or otherwise exercise (a) any
right of subrogation to any of the rights, remedies, powers, privileges or
liens of any holder of a Note or any other beneficiary against the Company or
any other obligor on the Guaranteed Obligations or any collateral or other
security, or (b) any right of recourse, reimbursement, contribution,
indemnification, or similar right against the Company, and the Parent hereby
waives any and all of the foregoing rights, remedies, powers, privileges and
the benefit of, and any right to participate in, any collateral or other
security given to any holder of a Note or any other beneficiary to secure
payment of the Guaranteed Obligations, until such time as the Guaranteed
Obligations have been paid in full.
13.3. CONTINUING GUARANTEE
This Parent Guarantee is a continuing guarantee of payment and
performance and shall (a) remain in full force and effect until payment in full
of the Guaranteed Obligations and all other amounts payable under this Parent
Guarantee, (b) be binding upon the Parent, its successors and assigns and (c)
inure to the benefit of and be enforceable by any holder of a Note and its
successors, transferees and assigns.
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
14.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
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14.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), within five
Business Days thereafter the Company shall execute and deliver, at the
Company's expense (except as provided below), one or more new Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Note.
Each such new Note shall be payable to such Person as such holder may request.
Each such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, such Note may be in a denomination of less than $500,000.
You agree that the Company shall not be required to register the
transfer of any Note to any Person (other than your nominee) or to any separate
account maintained by you unless the Obligors receive from the transferee a
representation to the Obligors (and appropriate information as to any separate
accounts or other matters) to the same or similar effect with respect to the
transferee as is contained in Section 6.2 or other assurances reasonably
satisfactory to the Obligors that such transfer does not involve a prohibited
transaction (as such term is used in Section 5.12(e). You shall not be liable
for any damages in connection with any such representations or assurances
provided to the Obligors by any transferee.
14.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such
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Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a
nominee for, an original Purchaser or any other Institutional Investor,
such Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof, within five Business Days thereafter the Company at its own
expense shall execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been paid on
such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been
paid thereon.
15. PAYMENTS ON NOTES.
15.1. PLACE OF PAYMENT.
Subject to Section 15.2, payments of principal, Make-Whole Amount and
premium, if any, and interest becoming due and payable on the Notes shall be
made at the principal office of Citibank, N.A. in New York City. The Company
may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either the
principal office of the Company in New York City or the principal office of a
bank or trust company in New York City.
15.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount and premium, if any, and interest by the method
and at the address specified for such purpose below your name in Schedule A, or
by such other method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, you shall
surrender such Note for cancellation, reasonably
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promptly after any such request, to the Company at the principal executive
office of the Parent or at the place of payment most recently designated by the
Company pursuant to Section 15.1. Prior to any sale or other disposition of any
Note held by you or your nominee you will, at your election, either endorse
thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to Section 14.2. The Company will
afford the benefits of this Section 15.2 to any Institutional Investor that is
the direct or indirect transferee of any Note purchased by you under this
Agreement and that has made the same agreement relating to such Note as you
have made in this Section 15.2.
16. EXPENSES, ETC.
16.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Obligors jointly and severally agree to pay all reasonable costs and
expenses (including reasonable attorneys' fees of your special counsel and, if
reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes or any Subsidiary Guarantee (whether or not such
amendment, waiver or consent becomes effective), including without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Notes or any Subsidiary Guarantee, or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the Notes or any Subsidiary Guarantee, or by reason of being a
holder of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of the
Parent, the Company or any other Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated hereby and by the Notes. The
Obligors will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
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In furtherance of the foregoing, on the date of the Closing the
Obligors will pay or cause to be paid the reasonable fees and disbursements and
other charges (including estimated unposted disbursements and other charges as
of the date of the Closing) of your special counsel which are reflected in the
statement of such special counsel submitted to either Obligor on or prior to
the date of the Closing. The Obligors will also pay, promptly upon receipt of
supplemental statements therefor, reasonable additional fees, if any, and
disbursements and other charges of such special counsel in connection with the
transactions hereby contemplated (including disbursements and other charges
unposted as of the date of the Closing to the extent such disbursements and
other charges exceed estimated amounts paid as aforesaid).
16.2. SURVIVAL.
The obligations of the Obligors under this Section 16 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this
Agreement.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of either Obligor pursuant to this
Agreement shall be deemed representations and warranties of the Obligors under
this Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Obligors and
supersede all prior agreements and understandings relating to the subject
matter hereof.
18. AMENDMENT AND WAIVER.
18.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived
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(either retroactively or prospectively), with (and only with) the written
consent of the Obligors and the Required Holders, except that (a) no amendment
or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 22, or any
defined term (as it is used therein), will be effective as to you unless
consented to by you in writing, (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration
or rescission, change the amount or time of any prepayment or payment of
principal of, or change the rate or the time of payment or method of
computation of interest or of the Make-Whole Amount or premium, if any, on, the
Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 9.7, 11(a), 11(b), 12, 13, 18 or 21 and (c) no
amendment of the third paragraph of Section 8.2 shall be effective without the
written consent of the holders of all Parent Convertible Notes at the time
outstanding.
18.2. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Obligors will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Obligors
will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this Section 18
to each holder of outstanding Notes promptly following the date on which
it is executed and delivered by, or receives the consent or approval of,
the requisite holders of Notes.
(b) Payment. Neither of the Obligors will directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes of any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is concurrently
paid, or security is concurrently granted, on the same terms, ratably to
each holder of Notes then outstanding even if such holder did not consent
to such waiver or amendment.
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18.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 18
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Obligors without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Obligors and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used herein,
the term "THIS AGREEMENT" and references thereto shall mean this Agreement as
it may from time to time be amended or supplemented.
18.4. NOTES HELD BY OBLIGORS, ETC.
Solely for the purpose of determining whether the holders of
the requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company, the Parent
or any of their respective Affiliates shall be deemed not to be outstanding.
19. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Obligors in writing,
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(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Obligors
in writing,
(iii) if to the Company, to the Company at 4225 Naperville
Road, Lisle, Illinois 60532, to the attention of Steven Worthley, or
at such other address as the Company shall have specified to the
holder of each Note in writing, or
(iv) if to the Parent, to the Parent at 125 Basin Street,
Suite 210, Daytona Beach, Florida 32114, to the attention of Steven
Worthley, or at such other address as the Parent shall have specified
to the holder of each Note in writing.
Notices under this Section 19 will be deemed given only when actually received.
20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and you may destroy any original document so reproduced.
Each Obligor agrees and stipulates that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you
in the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
This Section 20 shall not prohibit either Obligor or any other holder of Notes
from contesting any such reproduction to the same extent that it could contest
the original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
21. CONFIDENTIAL INFORMATION.
For the purposes of this Section 21, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf
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of the Parent or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary in
nature and that was clearly marked or labeled or otherwise adequately
identified when received by you as being confidential information of the Parent
or such Subsidiary, provided that such term does not include information that
(a) was publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by you or any person acting on your behalf, (c) otherwise becomes known to you
other than through disclosure by the Parent or any Subsidiary or (d)
constitutes financial statements delivered to you under Section 7.1 that are
otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, officers, trustees, employees, agents, attorneys and affiliates (to
the extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other
professional advisors whose duties require them to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 21, (iii) any other holder of any Note, (iv) any Institutional Investor
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 21), (v) any Person from which you offer to purchase any security of
the Parent (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 21),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access
to information about your investment portfolio or (viii) any other Person to
which such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the
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rights and remedies under your Notes and this Agreement. Each holder of a Note,
by its acceptance of a Note, will be deemed to have agreed to be bound by and
to be entitled to the benefits of this Section 21 as though it were a party to
this Agreement. On reasonable request by the Obligors in connection with the
delivery to any holder of a Note of information required to be delivered to
such holder under this Agreement or requested by such holder (other than a
holder that is a party to this Agreement or its nominee), such holder will
enter into an agreement with the Obligors embodying the provisions of this
Section 21.
22. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Obligors, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than
in this Section 22), such word shall be deemed to refer to such Affiliate in
lieu of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Obligors of notice of such
transfer, wherever the word "you" is used in this Agreement, such word shall no
longer be deemed to refer to such Affiliate, but shall refer to you, and you
shall have all the rights of an original holder of the Notes under this
Agreement.
23. MISCELLANEOUS.
23.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including without limitation any subsequent
holder of a Note) whether so expressed or not.
23.2. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent
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of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
23.3. JURISDICTION AND PROCESS; WAIVER OF JURY TRIAL.
(a) Each Obligor irrevocably submits to the non-exclusive in personam
jurisdiction of any New York State or federal court sitting in the Borough of
Manhattan, The City of New York, over any suit, action or proceeding arising out
of or relating to this Agreement or the Notes. To the fullest extent permitted
by applicable law, each Obligor irrevocably waives and agrees not to assert, by
way of motion, as a defense or otherwise, any claim that it is not subject to
the in personam jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(b) Each Obligor consents to process being served in any suit, action
or proceeding of the nature referred to in Section 23.3(a) by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Obligor at its address specified in Section 19 or at such
other address of which you shall then have been notified pursuant to said
Section. Each Obligor agrees that such service upon receipt (i) shall be deemed
in every respect effective service of process upon it in any such suit, action
or proceeding and (ii) shall, to the fullest extent permitted by applicable law,
be taken and held to be valid personal service upon and personal delivery to
such Obligor. Notices hereunder shall be conclusively presumed received as
evidenced by a delivery receipt furnished by the United States Postal Service or
any reputable commercial delivery service.
(c) Nothing in this Section 23.3 shall affect the right of any holder
of a Note to serve process in any manner permitted by law, or limit any right
that the holders of any of the Notes may have to bring proceedings against an
Obligor in the courts of any appropriate jurisdiction or to enforce in any
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lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
(D) EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, THE OTHER AGREEMENTS, THE NOTES OR ANY OTHER
DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.
23.4. INDEMNIFICATION.
Each of the Obligors agrees, to the fullest extent permitted by
applicable law, to indemnify, exonerate and hold you and each of your officers,
directors, employees and agents (collectively the "INDEMNITEES" and
individually an "INDEMNITEE") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation reasonable counsel fees
and disbursements (collectively the "INDEMNIFIED LIABILITIES") incurred by the
Indemnitees or any of them as a result of, or arising out of, or relating to,
any transaction financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any of the Notes or the execution,
delivery, performance or enforcement of this Agreement, any other Transaction
Document or any instrument contemplated hereby by any of the Indemnitees,
except as to any Indemnitee for any such Indemnified Liabilities arising on
account of such Indemnitee's gross negligence or willful misconduct; and if and
to the extent the foregoing undertaking may be unenforceable for any reason,
each of the Obligors agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The obligations of each of the Obligors under this Section
shall survive payment or conversion of the Notes.
23.5. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding (but without limiting the requirement in Section 8.2 that
notice of any optional prepayment specify a Business Day as the date fixed for
such prepayment), any payment of principal of or Make-Whole Amount or premium,
if any, or interest on any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable on such next
succeeding Business Day.
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23.6. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the fullest extent permitted by applicable law) not
invalidate or render unenforceable such provision in any other jurisdiction.
23.7. ACCOUNTING TERMS; PRO FORMA COMPUTATIONS.
All accounting terms used herein which are not expressly defined in
this Agreement have the meanings respectively given to them in accordance with
GAAP. Except as otherwise specifically provided herein, all computations made
pursuant to this Agreement shall be made in accordance with GAAP and all
balance sheets and other financial statements with respect thereto shall be
prepared in accordance with GAAP. Except as otherwise specifically provided
herein, any consolidated financial statement or financial computation shall be
done in accordance with GAAP.
23.8. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
23.9. GOVERNING LAW.
This Agreement and the Notes shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws
of the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.
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If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By /s/ Gary A. Poliner
------------------------
Title:
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If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By /s/ Kevin R. Lorenz
----------------------------------
Title: Director-Private Placements
65
<PAGE> 72
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
NEW YORK LIFE INSURANCE COMPANY
By /s/ [unreadable]
-------------------------
Title: Investment Manager
65
<PAGE> 73
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
NEW YORK LIFE INSURANCE COMPANY AND ANNUITY CORPORATION
By /s/ [unreadable]
-------------------------
Title: Investment Manager
65
<PAGE> 74
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By /s/ [unreadable]
------------------------
Title: Vice President
65
<PAGE> 75
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY
By /s/ Julia S. Tucker
-------------------------
Title: Investment Officer
65
<PAGE> 76
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By /s/ Julia S. Tucker
--------------------------
Title: Investement Officer
65
<PAGE> 77
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
THE FRANKLIN LIFE INSURANCE COMPANY
By /s/ Julia S. Tucker
--------------------------
Title: Investment Officer
65
<PAGE> 78
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By /s/ [unreadable]
------------------------
Title: Vice President
65
<PAGE> 79
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
AMERICAN LIFE AND CASUALTY INSURANCE COMPANY
By /s/ [unreadable]
------------------------
Title: AVP
65
<PAGE> 80
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
WESTERN MUTUAL LIFE INSURANCE COMPANY
By /s/ [unreadable]
------------------------
Title: AVP
65
<PAGE> 81
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
BENEFICIAL STANDARD LIFE INSURANCE COMPANY
By /s/ [unreadable]
------------------------
Title: AVP
65
<PAGE> 82
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By Lincoln Investment Management, Inc., Its Attorney-In-Fact
By /s/ David C. Patch
------------------------
Title: Vice President
<PAGE> 83
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
By Lincoln Investment Management, Inc., Its Attorney-In-Fact
By /s/ David C. Patch
------------------------
Title: Vice President
<PAGE> 84
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
THE LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY
By Lincoln Investment Management, Inc., Its Attorney-In-Fact
By /s/ David C. Patch
------------------------
Title: Vice President
<PAGE> 85
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
THE TRAVELERS INSURANCE COMPANY
By /s/ Pamela Westmoreland
-----------------------------------
Title: Assistant Investment Officer
<PAGE> 86
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By /s/ John B. Joyce
------------------------
Title: Managing Director
<PAGE> 87
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
THE AETNA CASUALTY AND SURETY COMPANY
By /s/ Jordan M. Stitzer
------------------------
Title: Vice President
<PAGE> 88
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement and
return it to the Parent, whereupon the foregoing shall become a binding
agreement between you and the Parent. On or before the date of the Closing the
Parent will cause the Company to execute counterparts of this Agreement,
whereupon the foregoing shall also become a binding agreement between you and
the Company.
Very truly yours,
TEAM RENTAL GROUP, INC.
By /s/ [unreadable]
------------------------------------
Title: President
BUDGET RENT A CAR CORPORATION
By /s/ Stephen G. Worthley
-----------------------------------
Title: Vice President & Treasurer
The foregoing is hereby
agreed to as of the
date first above written.
METROPOLITAN LIFE INSURANCE
By /s/ [unreadable]
-------------------------------
Title: Assistant Vice President
<PAGE> 89
SCHEDULE A
This Schedule A shows the names and addresses of the
Purchasers under the foregoing Senior Note Purchase Agreement and the Other
Agreements referred to therein and the respective principal amounts of Notes to
be purchased by each.
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
NEW YORK LIFE INSURANCE COMPANY $20,000,000
(1) All payments on account of the Notes shall be made by wire or
intrabank transfer of immediately available funds prior to 12:00
noon (New York time) on the due date to Morgan Guaranty Trust
Company of New York, New York, NY 10015, ABA No. 021-000-238,
for credit to the account of New York Life Insurance Company,
General Account No. 810-00-000 with sufficient information
(including issuer, interest rate, maturity, PPN and whether
payment is of principal, premium or interest) to identify the
source and application of such funds.
(2) Address for advice of any unscheduled
or optional payments:
New York Life Insurance Company
51 Madison Avenue
New York, NY 10010-1603
Attention: Treasury Department, Securities Income
Section, Room 209
Telecopy No.: (212) 576-4296
(3) Address for all other communications:
New York Life Insurance Company
51 Madison Avenue
New York, NY 10010-1603
Attention: Investment Department, Private
Finance Group, Room 206
Telecopy No.: (212) 447-4122
with a copy of any notice
of Default or Event of Default to:
New York Life Insurance Company
51 Madison Avenue
New York, NY 10010-1603
Attention: Office of the General Counsel,
Investment Section, Room 1104
Telecopy No.: (212) 576-8340
(4) Tax Identification Number: 13-5582869
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
NEW YORK LIFE INSURANCE AND ANNUITY $10,000,000
CORPORATION
(1) All payments on account of the Notes shall be made by wire or
intrabank transfer of immediately available funds prior to 12:00 noon
(New York time) on the due date to Chase Manhattan Bank, New York,
New York, ABA No. 021-000-021, for credit to the account of New York
Life Insurance and Annuity Corporation General Account No.
008-0-57001, with sufficient information (including issuer, interest
rate, maturity, PPN and whether payment is of principal, premium or
interest) to identify the source and application of such funds.
(2) Address for advice of any unscheduled or
optional payments:
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, NY 10010-1603
Attention: Treasury Department,
Securities Income
Section, Room 209
Telecopy No.: (212) 447-4160
(3) Address for all other communications:
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, NY 10010-1603
Attention: Investment Department,
Private Finance Group,
Room 206
Telecopy No.: (212) 447-4122
(4) Tax Identification Number: 13-3044743
</TABLE>
A-2
<PAGE> 91
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
TEACHERS INSURANCE AND ANNUITY ASSOCIATION $30,000,000
OF AMERICA
(1) All payments on account of the Notes shall be made in immediately
available funds prior to 12:00 noon (New York time) on the due date by
electronic funds transfer through the Automated Clearing House System
(identifying each payment as "Budget Group, Inc., PPN 119008A*1, 9.57%
Guaranteed Senior Notes due 2007 (principal or interest or premium)")
to:
The Chase Manhattan Bank
ABA No. 021-000-021
New York, New York
Account of: Teachers Insurance and Annuity Association of America
Account Number: 910-2-766475
On Order of: Budget Group, Inc.
(2) Contemporaneous with the above electronic funds transfer payment,
written confirmation of each such payment setting forth: (a) the full
name, private placement number, interest rate and maturity date of the
Notes; (b) allocation of payment between principal, interest, premium
and any special payment; and (c) the name and address of the bank from
which such electronic funds transfer was sent shall be delivered,
mailed or faxed to:
Teachers Insurance and Annuity Association
of America
730 Third Avenue
New York, NY 10017
Attention: Securities Accounting Division
Telephone Number: (212) 916-6004
Facsimile Number: (212) 916-6955
</TABLE>
A-3
<PAGE> 92
(3) All other communications shall be
delivered or mailed to:
Teachers Insurance and Annuity Association
of America
730 Third Avenue
New York, NY 10017
Attention: Securities Division, Private Placements
Kevin Lorenz
Telephone Number: (212) 916-4337
General Telephone Number: (212) 490-9000
Facsimile Number: (212) 916-6581
(4) Taxpayer I.D. Number: 13-1624203
A-4
<PAGE> 93
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
THE NORTHWESTERN MUTUAL LIFE $22,500,000
INSURANCE COMPANY
(1) All payments on account of the Notes shall be made by wire
transfer of immediately available funds to the account of The
Northwestern Mutual Life Insurance Company, at Account No.
00-000-027 at Bankers Trust Company, 16 Wall Street, Insurance
Unit - 4th Floor, New York, NY 10005, ABA #021-001-033 with
sufficient information to identify the source and application
of such funds including the PPN: 119008A*1 for the Notes.
(2) Address for all notices in respect
of payments:
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Investment Operations
Fax: 414-299-5714
(3) Address for all other communications:
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Securities Department
Fax: 414-299-7124
(4) Tax Identification No.: 39-0509570
</TABLE>
A-5
<PAGE> 94
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
JOHN HANCOCK MUTUAL LIFE INSURANCE $8,500,000
COMPANY 5,000,000
(1) All payments on account of the Series B Notes or other obligations in
accordance with the provisions thereof shall be made by bank wire
transfer of immediately available funds for credit not later than 12
noon, Boston time, to:
The First National Bank of Boston,
ABA No. 011000390
Boston, MA 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number: 541-55417
On Order of: Budget Rent a Car Corporation
PPN: 119008A*1
(2) Contemporaneous with the above wire
transfer, advice setting forth:
(a) the full name, interest rate and maturity date of the Notes or
other obligations,
(b) allocation of payment between principal and interest and any
special payment, and
(c) name and address of the bank (or trustee) from which such wire
transfer was sent shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Securities Accounting
Division T-10
</TABLE>
A-6
<PAGE> 95
(3) All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of maturity shall
be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Securities Accounting Division T-10
(4) All other communications which shall include, but not be limited to,
financial statements and certificates of compliance with financial
covenants, shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Bond and Corporate Finance Department T-57
(5) A copy of foregoing notices relating to change in issuer's name,
address or principal place of business or location of collateral and a
copy of any legal opinions shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Investment Law Division, T-50
(6) Tax Identification No.: 041414660
A-7
<PAGE> 96
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
JOHN HANCOCK VARIABLE LIFE INSURANCE $1,500,000
COMPANY
(1) All payments on account of the Series B Notes or other obligations in
accordance with the provisions thereof shall be made by bank wire
transfer of immediately available funds for credit not later than 12
noon, Boston time, to:
The First National Bank of Boston,
ABA No. 011000390
Boston, MA 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number: 541-55417
On Order of: Budget Rent a Car Corporation
PPN: 119008A*1
(2) Contemporaneous with the above wire
transfer, advice setting forth:
(a) the full name, interest rate and maturity date of the Notes or
other obligations,
(b) allocation of payment between principal and interest and any
special payment, and
(c) name and address of the bank (or trustee) from which such wire
transfer was sent shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Securities Accounting
Division T-10
</TABLE>
A-8
<PAGE> 97
(3) All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of maturity shall
be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Securities Accounting
Division T-10
(4) All other communications which shall include, but not be limited to,
financial statements and certificates of compliance with financial
covenants, shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Bond and Corporate
Finance Department T-57
(5) A copy of foregoing notices relating to change in issuer's name,
address or principal place of business or location of collateral and a
copy of any legal opinions shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Investment Law Division, T-50
(6) Tax Identification No.: 04-2664016
A-9
<PAGE> 98
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
AMERICAN GENERAL LIFE AND ACCIDENT $5,000,000
INSURANCE COMPANY
(1) All payments by wire transfer of immediately available funds, with
sufficient information (including PPN 119008A*1, interest rate,
maturity date, interest amount, principal amount and premium amount, if
applicable) to identify the source and application of such funds, to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Life and
Accident Insurance Company
AC-0125-934-0
OBI = 119008A*1 and description of payment
Fund Number PA 10
(2) All notices of payments and written confirmations of such wire
transfers, to:
American General Life and Accident
Insurance Company and PA 10
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
</TABLE>
A-10
<PAGE> 99
(3) All communications (including
payment notices), to:
American General Life and Accident Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address:
2929 Allen Parkway
Houston, TX 77019-2155
Facsimile Number: (713) 831-1366
(4) Tax I.D. Number: 62-0306330
A-11
<PAGE> 100
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
THE VARIABLE ANNUITY LIFE INSURANCE $5,000,000
COMPANY
(1) All payments by wire transfer of immediately available funds, with
sufficient information (including PPN 119008A*1, interest rate,
maturity date, interest amount, principal amount and premium amount, if
applicable) to identify the source and application of such funds, to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Variable Annuity Life
Insurance Company
AC-0125-821-9
OBI = 119008A*1 and description of payment
Fund Number PA 54
(2) All notices of payments and written confirmations of such wire
transfers, to:
The Variable Annuity Life Insurance Company and PA 54
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
</TABLE>
A-12
<PAGE> 101
(3) All communications (including
payment notices), to:
The Variable Annuity Life Insurance Company
c/o American General Corporation
Attn: Investment Research
Department, A37-01
P.O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address:
2929 Allen Parkway
Houston, TX 77019-2155
Facsimile Number: (713) 831-1366
(4) Tax I.D. Number: 74-1625348
A-13
<PAGE> 102
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
THE FRANKLIN LIFE INSURANCE COMPANY $5,000,000
(1) All payments by wire transfer of immediately available funds, with
sufficient information (including PPN 119008A*1, interest rate,
maturity date, interest amount, principal amount and premium amount, if
applicable) to identify the source and application of such funds, to:
ABA#011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Franklin Life Insurance
Company
AC-2492-440-9
OBI = 119008A*1 and description of payment
Fund Number PA 37
(2) All notices of payments and written
confirmations of such wire
transfers, to:
The Franklin Life Insurance Company and PA 37
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Facsimile Number: (617) 985-4923
(3) All communications (including
payment notices), to:
The Franklin Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, TX 77253-3247
</TABLE>
A-14
<PAGE> 103
Overnight Mail Address:
2929 Allen Parkway
Houston, TX 77019-2155
Facsimile Number: (713) 831-1366
(4) Tax I.D. Number: 37-0281650
A-15
<PAGE> 104
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
AMERICAN LIFE AND CASUALTY INSURANCE COMPANY $5,000,000
(1) All payments by wire transfer of immediately available funds
to:
Bankers Trust Company
New York, NY
ABA #: 021-001-033
DDA #: 00314421
Account #: 99911145
FFC: American Life & Casualty
Insurance Company, Account #: 99810
with sufficient information to identify the source and
application of such funds, including the PPN:
119008A*1 of the Notes.
(2) Address for delivery of securities:
Bankers Trust Company
16 Wall Street
Fourth Floor, Window 62
Account #: 99911145
FFC: American Life & Casualty
Insurance Company, Account #: 99810
(3) Address for all notices:
Conseco Capital Management, Inc.
c/o American Life & Casualty Insurance Company
P.O. Box 1925
Carmel, IN 46032
Attn: Account Documentation Dept.
with a copy to:
Conseco, Inc.
c/o American Life & Casualty Insurance Company
P.O. Box 1911
Carmel, IN 46032
Attn: Investment Accounting
(4) Tax Identification No.: 45-0103436
</TABLE>
A-16
<PAGE> 105
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
BENEFICIAL STANDARD LIFE INSURANCE COMPANY $5,000,000
(1) All payments by wire transfer of immediately available funds
to:
Bankers Trust Company
New York, NY
ABA #: 021-001-033
DDA #: 00220919
Account #: 99911145
FFC: Beneficial Standard Life
Insurance Company, Account #: 99820
with sufficient information to identify the source and
application of such funds, including the PPN: 119008A*1 of
the Notes.
(2) Address for delivery of securities:
Bankers Trust Company
16 Wall Street
Fourth Floor, Window 62
Account #: 99911145
FFC: Beneficial Standard Life Insurance Company, Account #:
99820
(3) Address for all notices:
Conseco Capital Management, Inc.
c/o Beneficial Standard Life Insurance Company
P.O. Box 1925
Carmel, IN 46032
Attn: Account Documentation Dept.
with a copy to:
Conseco, Inc.
c/o Beneficial Standard Life Insurance Company
P.O. Box 1911
Carmel, IN 46032
Attn: Investment Accounting
(4) Tax Identification No.: 95-0540891
</TABLE>
A-17
<PAGE> 106
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
WESTERN NATIONAL LIFE INSURANCE COMPANY $5,000,000
(1) All payments by wire transfer of immediately available funds
to:
State Street
ABA #: 011-000-028
DDA #: 00220919
Account #: 7215-132-7
FFC: Alert # 15 Western National Life,
Account #: WE1B
with sufficient information to identify the source and
application of such funds, including the PPN: 119008A*1 of
the Notes.
(2) Address for delivery of securities:
Chase Bank
Acct: State Street Bank & Trust Company
4 New York Plaza
Ground Floor/Receive Window
New York, NY 10004
Attn: WE1B
(3) Address for all notices:
Conseco Capital Management, Inc.
c/o Alert # 15 Western National Life
P.O. Box 1925
Carmel, IN 46032
Attn: Account Documentation Dept.
with a copy to:
Conseco, Inc.
c/o Alert # 15 Western National Life
P.O. Box 1911
Carmel, IN 46032
Attn: Investment Accounting
and
</TABLE>
A-18
<PAGE> 107
Western National Life
c/o Alert # 15 Western National Life
555 San Felipe, Suite 900
Houston, TX 77056
Attn: Betsy Taylor
(4) Tax Identification No.: 75-0770838
A-19
<PAGE> 108
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
THE LINCOLN NATIONAL LIFE INSURANCE $7,350,000
COMPANY
(1) All payments by wire transfer of immediately available funds
to:
Bankers Trust Company
New York, New York
ABA #021001033
Private Placement Processing
Account No.: 99-911-145
For the Accounts of:
- The Lincoln National Life Insurance
Company (UIN)
Custody Account No. 98127 - Note in
original principal amount of
$1,650,000
- The Lincoln National Life Insurance Company (IOB)
Custody Account No. 98201 - Note in
original principal amount of $800,000
- The Lincoln National Life Insurance Company (IAL)
Custody Account No. 98194 - Note in original principal
amount of $2,300,000
- The Lincoln National Life Insurance Company (IAD)
Custody Account No. 98195 - Note in original
principal amount of $800,000
- The Lincoln National Life Insurance Company (GAI)
Custody Account No. 98208 - Note in original principal
amount of $1,800,000
with sufficient information to identify the source and
application of such funds, including the PPN: 119008A*1 of
the Notes.
</TABLE>
A-20
<PAGE> 109
(2) Address for delivery of securities:
Bankers Trust Company
14 Wall Street, 4th Floor, Window #44
New York, NY 10005
Attn: Lorraine Squires, Mail Stop 4049
(3) Address for all notices in respect
of payment:
Bankers Trust Company
Attn: Private Placement Unit
P.O. Box 998, Bowling Green Station
New York, NY 10274
(4) Address for all other communications:
Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
(5) Tax Identification No.: 35-0472300
A-21
<PAGE> 110
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY $1,650,000
(I/N/O CUDD & CO)
(1) All payments by wire transfer of immediately available funds
to:
The Chase Manhattan Bank N.A.
New York, NY
ABA #: 021 00 0021
Chase NYC/CTR/BNF
A/C #900-9-000200
For the Account of: First Penn-Pacific
Life Insurance Company
with sufficient information to identify the source and application of
such funds, including the PPN: 119008A*1 of the Notes.
(2) Address for delivery of securities:
The Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
New York, NY 10004
For Acct: G05996 First Penn-Pacific
Life Insurance Company
Attn: Larry Zimmer
(3) Address for all notices in respect of payment and all other
communications:
Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
(4) Tax Identification No.: 23-2044248
</TABLE>
A-22
<PAGE> 111
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
LINCOLN NATIONAL HEALTH & CASUALTY $1,000,000
INSURANCE COMPANY
(1) All payments by wire transfer of immediately available funds
to:
The Chase Manhattan Bank N.A.
New York, NY
ABA #: 021 00 0021
Chase NYC/CTR/BNF
A/C #900-9-000200
For the Account of: Lincoln Natl
Health & Casualty Ins Company
Custody Account No. G06323
with sufficient information to identify the source and application of
such funds, including the PPN: 119008A*1 of the Notes.
(2) Address for delivery of securities:
The Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
New York, NY 10004
For Acct: G06323 Lincoln Natl Health & Casualty Ins Co
Attn: Larry Zimmer
(3) Address for all notices in respect of payment and all other
communications:
Lincoln Investment Management, Inc.
200 East Berry Street
Renaissance Square
Fort Wayne, IN 46802
Attn: Investments/Private Placements
(4) Tax Identification No.: 35-1495207
</TABLE>
A-23
<PAGE> 112
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
MASSACHUSETTS MUTUAL LIFE INSURANCE $8,750,000
COMPANY
(1) All payments on account of the Notes shall be made by crediting in the
form of bank wire transfer of Federal or other immediately available
funds (identifying each payment as Budget Rent a Car Corporation, 9.57%
Guaranteed Senior Notes due 2007, interest and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Long Term Pool
Account No. 4067-3488
Each with telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3878
(2) All notices and communications to be addressed to:
Massachusetts Mutual Life
Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Securities Investment Division
(3) Notices with respect to payments and corporate actions to be addressed
as provided in clause (2) above:
Attention: Securities Custody and Collection Department F 381
(4) Tax Identification Number: 04-1590850
</TABLE>
A-24
<PAGE> 113
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
THE TRAVELERS INSURANCE COMPANY $6,250,000
(I/N/O TRAL & CO.)
(1) All payments on account of the Notes shall be made by wire
transfer of federal or other immediately available funds prior
to 12:00 noon (New York time) on the due date to The Travelers
Insurance Company--Consolidated Private Placement Account No.
910-2-587434 at The Chase Manhattan Bank, One Chase Plaza, New
York, New York 10081, ABA# 021-000021, with sufficient
information (including interest rate and maturity) to identify
the source and application of such funds, including the PPN:
119008A*1 of the Notes.
(2) Address for all notices in respect of payment:
One Tower Square
Hartford, CT 06183-2030
Attn: Securities Department-
Cashier
(3) Address for all other communications:
One Tower Square
Hartford, CT 06183-2030
Attention: Securities Department-
Private Placements
Telecopy: (203) 954-5243
(4) Tax Identification No.: 06-0566090
</TABLE>
A-25
<PAGE> 114
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
THE AETNA CASUALTY AND SURETY COMPANY $5,000,000
(I/N/O TRAL & CO.)
(1) All payments on account of the Notes shall be made by wire
transfer of federal or other immediately available funds prior
to 12:00 noon (New York time) on the due date to The Travelers
Insurance Company--Consolidated Private Placement Account No.
910-2-587434 at The Chase Manhattan Bank, One Chase Plaza, New
York, New York 10081, ABA# 021-000021, with sufficient
information (including interest rate and maturity) to identify
the source and application of such funds, including the PPN:
119008A*1 of the Notes.
(2) Address for all notices in respect of payment:
The Aetna Casualty and Surety Company
One Tower Square
Hartford, CT 06183-2030
Attn: Securities Department-
Cashier - 10PB
(3) Address for all other communications:
The Aetna Casualty and Surety Company
One Tower Square
Hartford, CT 06183-2030
Attention: Securities Department-
Private Placements-9PB
Telecopy: (203) 954-5243
(4) Tax Identification No.: 06-6033504
</TABLE>
A-26
<PAGE> 115
<TABLE>
<CAPTION>
Name and Address of Purchaser Principal Amount
- ----------------------------- ----------------
<S> <C>
METROPOLITAN LIFE INSURANCE COMPANY $7,500,000
(1) All payments on account of the Notes shall be made by wire transfer of
Federal or other immediately available funds to its Account No.
002-2-410591 at The Chase Manhattan Bank, Metropolitan Branch, 33 East
23rd Street, New York, NY 10010, ABA #021000021, with sufficient
information setting forth (i) the name of the Company, (ii) the
maturity date, (iii) the PPN: 119008A*1 of the Notes, (iv) the amount
of principal, interest and premium, if any, and (v) the due date of the
payment being made.
(2) Address for all notices:
Metropolitan Life Insurance Company
334 Madison Avenue
P.O. Box 633
Convent Station, NJ 07961-0633
Attn: Vice President-Private Placement Unit
Telecopy: (201) 254-3050
(3) Tax Identification Number: 13-5581829
</TABLE>
A-27
<PAGE> 116
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"ACQUISITION" is defined in Section 1.3.
"ADJUSTED EBIT" for any period means Consolidated Net Income
plus all amounts deducted in the computation thereof on account of (a)
Consolidated Non-Vehicle Interest Charges and (b) income taxes.
"ADJUSTED EBITDA" for any period means Adjusted EBIT plus all
amounts deducted in the computation of Consolidated Net Income for such period
on account of depreciation and amortization expenses not relating to Vehicles.
"AFFILIATE" means, at any time, (a) with respect to any
Person, any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person, and (b) with respect to the Parent, any Person
beneficially owning or holding, directly or indirectly, 10% or more of any class
of voting or equity interests of the Parent or any Subsidiary or any corporation
of which the Parent and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, "CONTROL" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Parent.
"ATTRIBUTABLE DEBT" means, as to any particular lease relating
to a sale and leaseback transaction, the total amount of rent (discounted
semiannually from the respective due dates thereof at the interest rate implicit
in such lease) required to be paid by the lessee under such lease during the
remaining term thereof. The amount of rent required to be paid under any such
lease for any such period shall be (a) the total amount of the rent payable by
the lessee with respect to such period after excluding amounts required to be
paid on account of maintenance
Schedule B
<PAGE> 117
-2-
and repairs, insurance, taxes, assessments, utilities, operating and labor costs
and similar charges plus (b) without duplication, any guaranteed residual value
in respect of such lease to the extent such guarantee would be included in
indebtedness in accordance with GAAP.
"BASE INDENTURE" is defined in the Revolving Credit Facility
as in effect on the date of the Closing.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or authorized
to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" means with respect to any
Person, all outstanding obligations of such Person in respect of Capital Leases,
taken at the capitalized amount thereof accounted for as a liability in
accordance with GAAP.
"CHANGE OF CONTROL" means such time as
(i) a "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act), excluding any "person" or
"group" of which Sanford Miller, John D. Kennedy or Jeffrey D. Congdon,
or their controlled Affiliates, are a substantial part (and for such
purpose Messrs. Miller, Kennedy and Congdon, and their controlled
Affiliates, shall not be deemed to be a substantial part of such person
or group unless in the aggregate they own beneficially at least 15% of
the total then outstanding voting power of the Voting Stock of the
Parent), (A) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 50% of the total then outstanding
voting power of the Voting Stock of the Parent or (B) has the right or
the ability by voting right, contract or otherwise to elect or
designate for election a majority of the entire board of directors of
the Parent;
(ii) (A) the Parent consolidates with or merges into any other
Person or conveys, transfers, sells or leases all or substantially all
of its assets as an entirety to any Person or (B) any Person merges
into the Parent, in either event pursuant to a transaction in which
Voting Stock of the
Schedule B
<PAGE> 118
-3-
Parent representing more than 50% of the total voting power of the
Parent outstanding immediately prior to the effectiveness thereof is
reclassified or changed into or exchanged for cash, securities or other
property; provided that any consolidation, merger, conveyance,
transfer, sale or lease between the Parent and any of its Subsidiaries
(including without limitation the reincorporation of the Parent in
another jurisdiction) shall be excluded from the operation of this
clause (ii);
(iii) during any period of two consecutive years, (A)
individuals who at the beginning of such period constituted the board
of directors of the Parent (together with any new directors whose
election by such board of directors, or whose nomination for election
by the shareholders of the Parent, as the case may be, was approved by
a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of the Parent
then in office, and (B) Sanford Miller, John D. Kennedy or Jeffrey D.
Congdon, or their controlled Affiliates, cease to beneficially own at
least 15% of the outstanding voting power of the Voting Stock of the
Parent; or
(iv) a "Change of Control" under the Convertible Note
Agreements or the Revolving Credit Facility shall have occurred.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred by virtue of the Parent's or any of its employee benefit or stock
plan's filing (or being required to file after the lapse of time) a Schedule 13D
or 14D-1 (or any successor or similar schedule, form or report under the
Exchange Act) as a result of the Parent or any such plan becoming the beneficial
owner of shares of capital stock of the Parent entitling such person to exercise
a majority of the total voting power of the Voting Stock of the Parent.
"CLASS A SHARES" means the Class A Common Stock, $.01 par
value per share, of the Parent.
"CLOSING" is defined in Section 3.
Schedule B
<PAGE> 119
-4-
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"COMPANY" means Budget Rent a Car Corporation, a Delaware
corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 21.
"CONSOLIDATED ADJUSTED ASSETS" means, at any date,
Consolidated Assets minus assets of the Parent and its Subsidiaries that secure
Vehicle Debt (including without limitation cash, short-term investments and
receivables relating to Vehicle Debt), and assets that secure the Revolving
Credit Facility (including without limitation all assets of the type that could
secure the Revolving Credit Facility whether or not actually securing the
Revolving Credit Facility on such date).
"CONSOLIDATED ASSETS" means, at any date, the total assets of
the Parent and its Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Parent and its Subsidiaries as of such date prepared in
accordance with GAAP, after eliminating all amounts properly attributed to
Vehicles and to minority interests, if any, in the stock and surplus of
Subsidiaries.
"CONSOLIDATED NET INCOME" for any period means the net income
(or loss) of the Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, excluding
(a) the proceeds of any life insurance policy,
(b) any gains arising during such period from (i) the sale or
other disposition of any assets (other than current assets), (ii) any
write-up of assets, (iii) the acquisition of outstanding securities of
the Parent or any Subsidiary, or (iv) any other extraordinary item,
(c) any amount representing any interest in the undistributed
earnings of any other Person (other than a Subsidiary),
(d) any earnings, prior to the date of acquisition, of any
Person acquired in any manner, and any earnings of any Subsidiary prior
to its becoming a Subsidiary,
Schedule B
<PAGE> 120
-5-
(e) any earnings of a successor to or transferee of the assets
of the Parent or a Subsidiary prior to its becoming such successor or
transferee,
(f) any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any Person, and
(g) any losses during such period from any sales,
dispositions, write-downs, acquisitions or extraordinary items of the
types described in clause (b) above (but only to the extent of any
gains of such types during such period).
"CONSOLIDATED NON-VEHICLE DEBT" means, at any date, all
Non-Vehicle Debt of the Parent and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED NON-VEHICLE INTEREST CHARGES" means for any
period the sum for the Parent and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, of all amounts on account of interest on
Non-Vehicle Debt which would be deducted in computing Consolidated Net Income or
capitalized (including imputed interest in respect of Capitalized Lease
Obligations and amortization of Debt discount and expense).
"CONSOLIDATED SHAREHOLDERS' EQUITY" means the total
shareholders' equity of the Parent and its Subsidiaries as determined on a
consolidated basis in accordance with GAAP minus (a) any amounts included in
shareholders' equity attributable to treasury stock, capital stock subscribed
for and unissued and other contra-equity accounts and (b) minority interests, if
any, in the stock and surplus of Subsidiaries.
"CONSOLIDATED VEHICLE DEBT" means, at any date, all Vehicle
Debt of the Parent and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"CONVERTIBLE NOTE AGREEMENTS" means collectively the Series A
Note Purchase Agreements and the Series B Note Purchase Agreements and, after an
indenture has been executed and delivered by the Parent pursuant to the Series A
Note Purchase Agreements and the Series B Note Purchase Agreements, such term
shall then include such indenture as supplemented and amended from time to time.
"DEBT" with respect to any Person means, at any time, without
duplication,
Schedule B
<PAGE> 121
-6-
(a) its liabilities for borrowed money or its mandatory
purchase, redemption or other retirement obligations in respect of
mandatorily redeemable Preferred Stock,
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business and not overdue but including all
liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property),
(c) its Capitalized Lease Obligations,
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities),
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money),
(f) Swaps of such Person, and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) above.
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (g) above to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"DEFAULT" means an event or condition the occurrence or
existence of which would, with the giving of notice or the lapse of time, or
both, become an Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater
of (i) 11.57% per annum and (ii) 2% above the rate of interest publicly
announced by Citibank, N.A. from time to time at its principal office in New
York City as its prime rate.
Schedule B
<PAGE> 122
-7-
"ENVIRONMENTAL LAWS" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Parent
(both before and after giving effect to the Acquisition) under section 414 of
the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"EXCHANGE PARENT CONVERTIBLE NOTES" means the Exchange Notes
as defined in the Convertible Note Agreements.
"FORD" is defined in Section 1.3.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or any
other political subdivision of any thereof, or
(ii) any jurisdiction in which the Parent or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Parent or any
Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
any such government.
Schedule B
<PAGE> 123
-8-
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Debt, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including without limitation obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Debt or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such Debt or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such Debt or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of any other Person to make payment of the
Debt or obligation; or
(d) otherwise to assure the owner of such Debt or obligation
against loss in respect thereof.
In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including without limitation asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 14.1.
Schedule B
<PAGE> 124
-9-
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note, (b) any holder of a Note holding (together with one or more of its
Affiliates) more than $1,000,000 aggregate principal amount of the Notes then
outstanding, or (c) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"LIQUIDITY FACILITY" means the Liquidity Agreement dated as of
April 29, 1997 between Budget Funding Corporation, a special purpose, bankruptcy
remote Delaware corporation and a Wholly-Owned Subsidiary of the Company, and
Credit Suisse First Boston, as Administrative Agent, and the other lenders named
therein, as supplemented and amended from time to time.
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets, properties or prospects of the
Parent and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or properties
of the Parent and its Subsidiaries taken as a whole after giving effect to the
Acquisition and the Transactions, (b) the ability of the Company to perform its
obligations under this Agreement and the Notes or the ability of the Parent to
perform its obligations under this Agreement or (c) the validity or
enforceability of this Agreement, the Notes, the Parent Guarantee or any
Subsidiary Guarantee.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
Schedule B
<PAGE> 125
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"NON-VEHICLE DEBT" means with respect to any Person all Debt
of such Person other than Vehicle Debt (but in any event shall include all Debt
of such Person in respect of letters of credit or other instruments relating to
the issuance of Vehicle Debt); provided that Non-Vehicle Debt shall also include
the following obligations (to the extent the same would otherwise be included as
Vehicle Debt): the sum of (a) with respect to each Vehicle owned by TFFC or any
other SPC and leased to the Company or any Subsidiary of the Company, the amount
by which all obligations of the Company or such Subsidiary with respect to such
Vehicle, when added to all rental payments previously made by the Company or
such Subsidiary and the next regularly scheduled rental payment to be made by
the Company or such Subsidiary with respect to such Vehicle, exceeds the
aggregate Depreciation Charges (as defined in the Base Indenture) with respect
to such Vehicle plus any fair market value adjustment with respect to such
Vehicle provided for in the documents relating to the lease of such Vehicle plus
(b) with respect to each Vehicle owned by the Company or any Subsidiary of the
Company (other than TFFC or another SPC), the amount by which all obligations of
the Company or said Subsidiary with respect to such Vehicle exceeds the amount
by which (i) the aggregate Capitalized Cost (as defined in the Base Indenture)
of such Vehicle exceeds (ii) the aggregate Depreciation Charges (as so defined)
accrued with respect to such Vehicle plus any fair market value adjustment with
respect to such Vehicle provided for the documents relating to the financing
arrangements applicable to such Vehicle.
"NON-VEHICLE LEVERAGE RATIO" means as of any date the ratio of
(i) Consolidated Non-Vehicle Debt as of such date to (ii) Adjusted EBITDA for
the period of four consecutive fiscal quarters ending on or immediately prior to
such date.
"NOTES" is defined in Section 1.1.
"OBLIGORS" is defined in the first paragraph of this Agreement.
"OFFICER'S CERTIFICATE" means a certificate of a Senior
Financial Officer of an Obligor or of any other officer of an Obligor whose
responsibilities extend to the subject matter of such certificate.
Schedule B
<PAGE> 126
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"ORDER" means any written order, writ, injunction, decree,
judgment, award, penalty, determination, direction or demand.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"PARENT" means Team Rental Group, Inc. (to be renamed Budget
Group, Inc. on or about the date of the Closing), a Delaware corporation.
"PARENT CONVERTIBLE NOTES" means collectively the Series A
Convertible Notes and the Series B Convertible Notes, and such term shall also
include the Exchange Parent Convertible Notes under an indenture.
"PARENT GUARANTEE" is defined in Section 1.2.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Parent or any ERISA
Affiliate or with respect to which the Parent or any ERISA Affiliate may have
any liability.
"PREFERRED STOCK", as applied to any corporation, means shares
of such corporation that shall be entitled to preference or priority over any
other shares of such corporation in respect of either the payment of dividends
or the distribution of assets upon liquidation, or both.
"PRO FORMA NON-VEHICLE INTEREST COVERAGE RATIO" means as of
any date the ratio of (i) pro forma Adjusted EBIT for the period of four fiscal
quarters ending on or immediately prior to such date to (ii) pro forma
Consolidated Non-Vehicle Interest Charges for such period; and for purposes of
this definition each
Schedule B
<PAGE> 127
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pro forma computation shall include adjustments (without limitation as to other
appropriate pro forma adjustments in accordance with generally accepted
financial practice, such as adjustments in actual interest costs to give effect
to borrowing costs of the acquiring person) giving effect to all acquisitions
and dispositions, and all incurrences and refinancings of Debt, made during the
period with respect to which such computation is being made as if such
acquisitions, dispositions, incurrences or refinancings, as the case may be,
were made on the first day of such period , and any such adjustment for earnings
with respect to an acquisition shall be based solely upon the amount of reported
earnings in accordance with GAAP attributable to the Person or the assets so
acquired.
"PROPERTY" or "PROPERTIES" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, inchoate or otherwise.
"PROSPECTUS" is defined in Section 5.3.
"PTE" is defined in Section 6.2.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued on March 13, 1984 by the United States Department of Labor.
"REGISTRATION RIGHTS AGREEMENT" means the Amended and Restated
Registration Rights Agreement dated as of April 29, 1997 between the Parent and
the holders of the Parent Convertible Notes.
"REQUIRED HOLDERS" means, at any time, the holders of at least
66 2/3% in unpaid principal amount of the Notes at the time outstanding.
"REQUIREMENT OF LAW" means, as to any Person, each law, rule
or regulation, including Environmental Laws and ERISA, or Order, decree or other
determination of an arbitrator or a court or other Governmental Authority
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"RESPONSIBLE OFFICER" means any Senior Financial Officer of an
Obligor and any other officer of an Obligor with responsibility for the
administration of the relevant portion of this Agreement.
Schedule B
<PAGE> 128
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"RESTRICTED PAYMENT" means
(a) the declaration of any dividend on, or the incurrence of
any liability to make any other payment or distribution in respect of,
any shares or equity interests of any class of the Parent (other than
one payable solely in shares of its common stock),
(b) any payment or distribution on account of the purchase,
redemption or other retirement of any shares or equity interests of any
class of the Parent, or of any warrant, option or other right to
acquire such shares or equity interests, and
(c) any payment or distribution on account of the principal of
or premium, if any, with respect to Debt of the Company, the Parent or
any Subsidiary Guarantor that is subordinated to the Notes, the Parent
Guarantee or a Subsidiary Guarantee other than mandatory sinking fund
or other retirement payments required by the terms thereof.
The amount of any Restricted Payment in property shall be deemed to be the
greater of its fair value (as determined by the board of directors of the
Parent) and its net book value.
"REVOLVING CREDIT FACILITY" means the $300,000,000 Credit
Agreement dated as of April 29, 1997 among the Company, as borrower, the Parent,
as guarantor, the financial institutions listed thereon, as lenders, Credit
Suisse First Boston, as co-syndication agent and administrative agent, and
NationsBanc Capital Markets, Inc., as co-syndication agent and documentation
agent, as supplemented and amended from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SENIOR FINANCIAL OFFICER" of an Obligor means the chief
financial officer, principal accounting officer, treasurer or comptroller of
such Obligor.
"SERIES A CONVERTIBLE NOTES" means the 7.0% Convertible
Subordinated Notes, Series A, due 2007 (originally issued as 7.0% Convertible
Subordinated Notes due 2003) of the Parent.
"SERIES A NOTE PURCHASE AGREEMENTS" means the several Note
Purchase Agreements dated as of December 1, 1996 between the
Schedule B
<PAGE> 129
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Parent and the purchasers named in Schedule I thereto, as supplemented and
amended from time to time, relating to the issue and sale of $80,000,000
aggregate principal amount of the Series A Convertible Notes.
"SERIES B CONVERTIBLE NOTES" means the 6.85% Convertible
Subordinated Notes, Series B, due 2007 of the Parent.
"SERIES B NOTE PURCHASE AGREEMENTS" means the several Note
Purchase Agreements dated as of April 25, 1997 between the Parent and the
Purchasers name in Schedule I thereto, as supplemented and amended from time to
time, relating to the issue and sale of $45,000,000 aggregate principal amount
of the Series B Convertible Notes.
"SIGNIFICANT SUBSIDIARY" means, at any date, any Subsidiary
that constitutes a "Significant Subsidiary" of the Parent (after giving effect
to the Acquisition), as such term is defined in Rule 1-02(w) of Regulation S-X
promulgated under the Securities Act, and in any event shall include the Company
and each Subsidiary Guarantor.
"SPC" means Budget Funding Corporation, TFFC and any other
bankruptcy-remote Subsidiary of the Company formed for the specific purpose of
issuing highly-rated commercial paper, medium-term notes or other securities in
connection with the financing of Vehicles or for the specific purpose of owning
such Vehicles and leasing such Vehicles to the Company and its other
Subsidiaries, in each case pursuant to a structured financing or securitization
program.
"STOCK PURCHASE AGREEMENTS" is defined in Section 1.3.
"SUBSIDIARY" means, as to any Person, any corporation or other
business entity a majority of the combined voting power of all Voting Stock of
which is owned by such Person or one or more of its Subsidiaries or such Person
and one or more of its Subsidiaries. Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the
Parent, including the Company.
"SUBSIDIARY GUARANTEE" is defined in Section 1.2.
"SUBSIDIARY GUARANTOR" is defined in Section 4.5.
Schedule B
<PAGE> 130
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"SWAPS" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"TFFC" means Team Fleet Financing Corporation, a Delaware
corporation and Wholly-Owned Subsidiary of the Company.
"TRANSACTIONS" is defined in Section 1.3.
"TRANSACTION DOCUMENTS" means this Agreement, the Other
Agreements, the Subsidiary Guarantees, the Stock Purchase Agreements, the Series
A Note Purchase Agreements, the Series B Note Purchase Agreements, the
Registration Rights Agreement, the Underwriting Agreement, the Liquidity
Facility and the Revolving Credit Facility.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement
dated April 23, 1997 between the Company and Credit Suisse First Boston
Corporation, ABN AMRO Chicago Corporation, Alex. Brown & Sons Incorporated and
McDonald & Company Securities, Inc., as representatives of the several
underwriters named in Schedule A thereto, relating to the issuance and sale of
Class A Shares pursuant to the public offering described in the Prospectus.
"VEHICLE DEBT" means with respect to any Person all Debt
relating solely to the financing of any Vehicle and secured thereby (and by
related collateral). Any Debt in respect of a Vehicle financed under the
Revolving Credit Facility and any obligation included as Non-Vehicle Debt
pursuant to the proviso to the definition of the term "Non-Vehicle Debt" shall
not be deemed to be Vehicle Debt.
Schedule B
<PAGE> 131
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"VEHICLES" means all existing and hereafter acquired motor
vehicle inventory of the Company and its Subsidiaries, consisting of passenger
automobiles, light trucks and vans, whether held for sale, lease or rental
purposes.
"VOTING STOCK" means, with respect to any Person, any shares
of stock or other equity interests of any class or classes of such Person whose
holders are entitled under ordinary circumstances (irrespective of whether at
the time stock or other equity interests of any other class or classes shall
have or might have voting power by reason of the happening of any contingency)
to vote for the election of a majority of the directors, managers, trustees or
other governing body of such Person.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary
all of the equity interests (except directors' qualifying shares) and voting
interests of which are owned by any one or more of the Parent and the Parent's
other Wholly-Owned Subsidiaries at such time.
Schedule B
<PAGE> 132
EXHIBIT 1.1
[FORM OF NOTE]
BUDGET RENT A CAR CORPORATION
9.57% GUARANTEED SENIOR NOTE DUE 2007
No. [_____] New York, New York
$[_______] [Date]
PPN: 119008A*1
FOR VALUE RECEIVED, the undersigned, BUDGET RENT A CAR
CORPORATION (the "COMPANY"), a Delaware corporation, hereby promises to pay to
[_____________________], or registered assigns, the principal sum of [ ] DOLLARS
on April 29, 2007, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) from the date hereof on the unpaid balance thereof at
the rate of 9.57% per annum, payable semiannually on April 29 and October 29 in
each year, until the principal hereof shall have become due and payable, and (b)
on any overdue payment of principal, any overdue payment of interest (to the
extent permitted by applicable law) and any overdue payment of any premium or
Make-Whole Amount (as defined in the Note Agreements referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand) at a rate per annum from time to time equal to the greater of (i) 11.57%
and (ii) 2% above the rate of interest publicly announced by Citibank, N.A. from
time to time at its principal office in New York City as its prime rate.
Payments of principal of, interest on and any premium or
Make-Whole Amount with respect to this Note are to be made in lawful money of
the United States of America at said principal office of Citibank, N.A. in New
York City or at such other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note Agreements referred to
below.
This Note is one of an issue of Senior Notes issued pursuant
to separate Senior Note Purchase Agreements dated as of April 25, 1997 (as from
time to time amended, the "NOTE AGREEMENTS") between the Company and Team Rental
Group, Inc. (to be renamed Budget Group, Inc.) and the respective Purchasers
<PAGE> 133
named therein and is entitled to the benefits thereof. This Note is also
entitled to the benefits of a Parent Guarantee included in the Note Agreements
and certain Subsidiary Guarantees executed and delivered from time to time
pursuant to the Note Agreements. Each holder of this Note will be deemed, by its
acceptance hereof, to have agreed to the confidentiality provisions set forth in
Section 21 of the Note Agreements.
This Note is a registered Note and, as provided in the Note
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Agreements, but not otherwise.
If an Event of Default, as defined in the Note Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable premium or Make-Whole Amount) and with the effect provided in the
Note Agreements.
This Note shall be construed and enforced in accordance with,
and the rights of the Company and the holder hereof shall be governed by, the
laws of the State of New York, excluding choice-of-law principles of the law of
such State that would require the application of the laws of a jurisdiction
other than such State.
BUDGET RENT A CAR CORPORATION
By
---------------------------
Title:
<PAGE> 134
EXHIBIT 1.2
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of ______________ made by
________________________, a _________________ corporation (the "GUARANTOR"), in
favor of the holders from time to time of the Notes referred to below
(collectively the "OBLIGEES").
WHEREAS, Budget Rent a Car Corporation, a Delaware corporation
(the "COMPANY"), and Team Rental Group, Inc. (to be renamed Budget Group, Inc.),
a Delaware corporation (the "PARENT" and, together with the Company,
individually an "OBLIGOR" and collectively the "OBLIGORS"), have entered into
several Senior Note Purchase Agreements dated as of April 25, 1997 (as amended
or otherwise modified from time to time, collectively the "NOTE AGREEMENTS" and
terms defined therein and not otherwise defined herein are being used herein as
so defined) with the institutional purchasers listed in Schedule A thereto,
providing for the issuance and sale of $165,000,000 aggregate principal amount
of the Company's 9.57% Guaranteed Senior Notes due 2007 (the "NOTES");
WHEREAS, the Parent has unconditionally guaranteed the Notes
and the obligations of the Company under the Note Agreements pursuant to a
parent guarantee (the "PARENT GUARANTEE") contained in Section 13 of the Note
Agreements; and
WHEREAS, it is a [condition precedent to the purchase of the
Notes by such purchasers under/requirement of] the Note Agreements that the
Guarantor shall execute and deliver this Guarantee Agreement;
NOW, THEREFORE, in consideration of the premises the Guarantor
hereby agrees as follows:
SECTION 1. Guarantee. The Guarantor unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety,
A. the punctual payment when due, whether at stated maturity,
by prepayment, by acceleration or otherwise, of all obligations of the
Obligors arising under the Note Agreements (including without
limitation the Parent Guarantee) and the Notes, including all
extensions,
GUARANTEE AGREEMENT
<PAGE> 135
2
modifications, substitutions, amendments and renewals thereof, whether
for principal, interest (including without limitation interest on any
overdue principal, premium, Make-Whole Amount, and interest at the rate
specified in the Notes and interest accruing or becoming owing both
prior to and subsequent to the commencement of any proceeding against
or with respect to either Obligor under any applicable Debtor Relief
Laws as defined below), Make-Whole Amount or premium, if any, fees,
expenses, indemnification or otherwise, and
B. the due and punctual performance and observance by the
Obligors of all covenants, agreements and conditions on their part to
be performed and observed under the Note Agreements and the Notes;
(all such obligations are called the "GUARANTEED OBLIGATIONS"); provided that
the aggregate liability of the Guarantor hereunder in respect of the Guaranteed
Obligations shall not exceed at any time the lesser of (1) the amount of the
Guaranteed Obligations and (2) the maximum amount for which the Guarantor is
liable under this Guarantee Agreement without such liability being deemed a
fraudulent transfer under applicable Debtor Relief Laws (as hereinafter
defined), as determined by a court of competent jurisdiction. As used herein,
the term "DEBTOR RELIEF LAWS" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief laws affecting the rights of creditors generally from time to time
in effect.
The Guarantor also agrees to pay, in addition to the amount
stated above, any and all reasonable expenses (including reasonable counsel fees
and expenses) incurred by any Obligee in enforcing any rights under this
Guarantee Agreement or in connection with any amendment of this Guarantee
Agreement.
Without limiting the generality of the foregoing, this
Guarantee Agreement guarantees, to the extent provided herein, the payment of
all amounts which constitute part of the Guaranteed Obligations and would be
owed by any other Person to any Obligee but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Person.
GUARANTEE AGREEMENT
<PAGE> 136
3
SECTION 2. Guarantee Absolute. The obligations of the
Guarantor under Section 1 of this Guarantee Agreement constitute a present and
continuing guaranty of payment and not of collectibility and the Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Note Agreements and the Notes, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of any Obligee with respect thereto. The obligations
of the Guarantor under this Guarantee Agreement are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guarantee Agreement,
irrespective of whether any action is brought against either Obligor or any
other Person liable for the Guaranteed Obligations or whether an Obligor or any
other such Person is joined in any such action or actions. The liability of the
Guarantor under this Guarantee Agreement shall be primary, absolute,
irrevocable, and unconditional irrespective of:
A. any lack of validity or enforceability of any Guaranteed
Obligation, the Note Agreements, the Parent Guarantee, any Note or any agreement
or instrument relating thereto;
B. any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from the Note
Agreements, the Parent Guarantee, any Note or this Guarantee Agreement;
C. any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure by the Guarantor or other Person liable, or any other guarantee, for
all or any of the Guaranteed Obligations;
D. any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any collateral or any other assets of the Parent or any
other Subsidiary;
E. any change, restructuring or termination of the corporate
structure or existence of the Parent, the Company or any other Subsidiary; or
GUARANTEE AGREEMENT
<PAGE> 137
4
F. any other circumstance (including without limitation any
statute of limitations) that might otherwise constitute a defense, offset or
counterclaim available to, or a discharge of, the Parent, the Company or the
Guarantor.
This Guarantee Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by any
Obligee, or any other Person upon the insolvency, bankruptcy or reorganization
of an Obligor or otherwise, all as though such payment had not been made.
SECTION 3. Waivers. The Guarantor hereby irrevocably
waives, to the extent permitted by applicable law:
A. promptness, diligence, presentment, notice of acceptance
and any other notice with respect to any of the Guaranteed Obligations and this
Guarantee Agreement;
B. any requirement that any Obligee or any other Person
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against either Obligor or any other Person
or any collateral;
C. any defense, offset or counterclaim arising by reason of
any claim or defense based upon any action by any Obligee;
D. any duty on the part of any Obligee to disclose to the
Guarantor any matter, fact or thing relating to the business, operation or
condition of any Person and its assets now known or hereafter known by such
Obligee; and
E. any rights by which it might be entitled to require suit on
an accrued right of action in respect of any of the Guaranteed Obligations or
require suit against the Obligors or the Guarantor or any other Person.
SECTION 4. Waiver of Subrogation and Contribution. The
Guarantor shall not assert, enforce, or otherwise exercise (A) any right of
subrogation to any of the rights, remedies, powers, privileges or liens of any
Obligee or any other beneficiary against the Company, the Parent or any other
obligor on the Guaranteed Obligations or any collateral or other security, or
(B) any right of recourse, reimbursement,
GUARANTEE AGREEMENT
<PAGE> 138
5
contribution, indemnification, or similar right against the Company or the
Parent, and the Guarantor hereby waives any and all of the foregoing rights,
remedies, powers, privileges and the benefit of, and any right to participate
in, any collateral or other security given to any Obligee or any other
beneficiary to secure payment of the Guaranteed Obligations, until such time as
the Guaranteed Obligations have been paid in full.
SECTION 5. Representations and Warranties. The Guarantor
hereby represents and warrants as follows:
A. The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. The execution, delivery and performance of this
Guarantee Agreement have been duly authorized by all necessary action
on the part of the Guarantor.
B. The execution, delivery and performance by the Guarantor of
this Guarantee Agreement will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any
Lien in respect of any property of the Guarantor or any Subsidiary of
the Guarantor under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or
any other material agreement or instrument to which the Guarantor or
any Subsidiary of the Guarantor is bound or by which the Guarantor or
any Subsidiary of the Guarantor or any of their respective properties
may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Guarantor or any Subsidiary of the Guarantor or (iii)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Guarantor or any Subsidiary of
the Guarantor.
C. The Guarantor and the Obligors are members of the same
consolidated group of companies and are engaged in related businesses
and the Guarantor will derive substantial direct and indirect benefit
from the execution and delivery of this Guarantee Agreement.
GUARANTEE AGREEMENT
<PAGE> 139
6
SECTION 6. Amendments, Etc. No amendment or waiver of any
provision of this Guarantee Agreement and no consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided that no amendment, waiver or consent shall, unless in
writing and signed by all Obligees, (i) limit the liability of or release the
Guarantor hereunder, (ii) postpone any date fixed for, or change the amount of,
any payment hereunder or (iii) change the percentage of Notes the holders of
which are, or the number of Obligees, required to take any action hereunder.
SECTION 7. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and (A) by telecopy if
the sender on the same day sends a confirming copy of such notice by a
recognized overnight delivery service (charges prepaid), or (B) by a recognized
overnight delivery service (with charges prepaid). Such notice if sent to the
Guarantor shall be addressed to the Parent at the address of the Parent set
forth in the Note Agreements or at such other address as the Guarantor may
hereafter designate by notice to each holder of Notes, or if sent to any holder
of Notes, shall be addressed to it as set forth in the Note Agreements. Any
notice or other communication herein provided to be given to the holders of all
outstanding Notes shall be deemed to have been duly given if sent as aforesaid
to each of the registered holders of the Notes at the time outstanding at the
address for such purpose of such holder as it appears on the Note register
maintained by the Company in accordance with the provisions of Section 14.1 of
the Note Agreements. Notices under this Section 7 will be deemed given only when
actually received.
SECTION 8. No Waiver; Remedies. No failure on the part of
any Obligee to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9. Continuing Guarantee. This Guarantee Agreement
is a continuing guarantee of payment and performance and shall (A) remain in
full force and effect until payment in
GUARANTEE AGREEMENT
<PAGE> 140
7
full of the Guaranteed Obligations and all other amounts payable under this
Guarantee Agreement, (B) be binding upon the Guarantor, its successors and
assigns and (C) inure to the benefit of and be enforceable by the Obligees and
their successors, transferees and assigns.
SECTION 10. Jurisdiction and Process; Waiver of Jury Trial.
The Guarantor irrevocably submits to the non-exclusive in personam jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Guarantee Agreement. To the fullest extent permitted by applicable law,
the Guarantor irrevocably waives and agrees not to assert, by way of motion, as
a defense or otherwise, any claim that it is not subject to the in personam
jurisdiction of any such court, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
The Guarantor consents to process being served in any suit,
action or proceeding of the nature referred to in this Section by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to the Guarantor at its address specified in Section 7 or at such
other address of which you shall then have been notified pursuant to said
Section. The Guarantor agrees that such service upon receipt (i) shall be deemed
in every respect effective service of process upon it in any such suit, action
or proceeding and (ii) shall, to the fullest extent permitted by applicable law,
be taken and held to be valid personal service upon and personal delivery to the
Guarantor. Notices hereunder shall be conclusively presumed received as
evidenced by a delivery receipt furnished by the United States Postal Service or
any recognized courier or overnight delivery service.
Nothing in this Section 10 shall affect the right of any
holder of a Note to serve process in any manner permitted by law, or limit any
right that the holders of any of the Notes may have to bring proceedings against
the Guarantor in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
GUARANTEE AGREEMENT
<PAGE> 141
8
THE GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON
OR WITH RESPECT TO THIS GUARANTEE AGREEMENT OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH.
SECTION 11. Governing Law. This Guarantee Agreement shall be
construed and enforced in accordance with, and the rights of the Guarantor and
the Obligees shall be governed by, the laws of the State of New York excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee
Agreement to be duly executed and delivered as of the date first above written.
[GUARANTOR]
By
----------------------------
Title:
GUARANTEE AGREEMENT
<PAGE> 142
EXHIBIT 4.4(a), 4.4(b) and 4.4(c)
OPINIONS OF COUNSEL FOR THE OBLIGORS
The following opinions are to be provided by counsel for the
Obligors (allocated among such counsel as appropriate), subject to customary
assumptions, limitations and qualifications. All capitalized terms used herein
without definition shall have the meanings ascribed thereto in the Agreements.
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware and has all requisite power and
authority to own or hold under lease the property it purports to own or hold
under lease, to carry on its business as now being conducted and to execute and
deliver the Agreements and to perform the provisions thereof. The Company has
duly qualified and is authorized to do business in each jurisdiction where such
qualification and authorization is necessary.
2. The Parent is a corporation duly organized and validly
existing under the laws of the State of Delaware and has all requisite power and
authority to own or hold under lease the property it purports to own or hold
under lease, to carry on its business as now being conducted and to execute and
deliver the Agreements and the Notes and to perform the provisions thereof. The
Parent has duly qualified and is authorized to do business in each jurisdiction
where such qualification and authorization is necessary.
3. Each Significant Subsidiary so designated in Schedule 5.4
of the Agreements (other than the Company) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and is duly qualified as a foreign corporation and
is in good standing in each jurisdiction in which such qualification is required
by law, except where the failure to be so qualified or in good standing could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Significant Subsidiary has all requisite corporate
power and authority to own or hold under lease the property it purports to own
or hold under lease and to carry on its business as now being conducted and, in
the case of the
<PAGE> 143
2
Subsidiary Guarantors, to execute and deliver its respective Subsidiary
Guarantee and perform the provisions thereof.
4. The Agreements have been duly authorized, executed and
delivered by the Obligors and constitute legal, valid and binding agreements of
the Obligors, enforceable against the Obligors in accordance with their terms.
5. The Notes being purchased by you today have been duly
authorized, executed and delivered by the Company and constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
6. The Subsidiary Guarantees have been duly authorized,
executed and delivered by the respective Subsidiary Guarantors and constitute
legal, valid and binding obligations of such Subsidiary Guarantors, enforceable
against such Subsidiary Guarantors in accordance with their respective terms.
7. No consent, approval or authorization of, or declaration,
registration or filing with, any Governmental Authority is required to be
obtained or made as a condition to the validity of the execution and delivery by
the Obligors of the Agreements, by the Company of said Notes or by the
Subsidiary Guarantors of said Subsidiary Guarantees or for the performance by
the Obligors or the Subsidiary Guarantors of their respective obligations
thereunder.
8. It was not necessary in connection with the offering, sale
and delivery of said Notes, the Parent Guarantee or said Subsidiary Guarantees,
under the circumstances contemplated by the Agreements, to register said Notes,
the Parent Guarantee or said Subsidiary Guarantees under the Securities Act or
to qualify an indenture in respect of the Notes under the Trust Indenture Act of
1939, as amended.
9. The execution, delivery and performance by the Parent of
the Agreements, by the Company of the Agreements and the Notes and by the
Subsidiary Guarantors of their respective Subsidiary Guarantees will not (i)
contravene, result in any breach of, or constitute a default under, or result in
the creation of any Lien in respect of any property of the Company or any
Significant Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
agreement or instrument known to
<PAGE> 144
3
such counsel to which the Parent or any Significant Subsidiary is bound or by
which the Parent or any Significant Subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree or
ruling of any court, arbitrator or Governmental Authority applicable to the
Parent or any Significant Subsidiary or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to
the Parent or any Significant Subsidiary.
10. Neither the Parent nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as
amended.
11. None of the transactions contemplated by the Agreements
(including without limitation the use of the proceeds from the sale of the
Notes) will violate or result in a violation of Section 7 of the Exchange Act,
or any regulations issued pursuant thereto, including without limitation
Regulations G, T and X of the Board of Governors of the Federal Reserve System
(12 CFR, Part 207, Part 220 and Part 224, respectively).
12. There are no actions, suits or proceedings pending, or to
the knowledge of such counsel threatened, against or affecting the Parent or any
Subsidiary or any property of the Parent or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority,
except actions, suits or proceedings which (a) individually do not in any manner
draw into question the Acquisition or the Transaction Documents or the validity
of the Agreements, the Subsidiary Guarantees or the Notes and (b) in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
* * * *
This opinion is given solely for your benefit, and for the
benefit of the institutional investor holders from time to time of the Notes
purchased by you today, in connection with the closing held today of the
transactions contemplated by the Agreements, and may not be relied upon by any
other person for any purpose without our prior written consent.
<PAGE> 145
EXHIBIT 4.4(d)
FORM OF OPINION OF WF&G
April __, 1997
Re: Budget Rent a Car Corporation
9.57% Guaranteed Senior Notes due 2007
To the several Purchasers listed
in Schedule A to the within-
mentioned Note Agreements
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
issuance by Budget Rent a Car Corporation (the "Company") of its 9.57%
Guaranteed Senior Notes due 2007 in an aggregate principal amount of
$165,000,000 (the "Notes") and the purchases by you pursuant to the several
Senior Note Purchase Agreements made by you with the Company and Team Rental
Group, Inc. (the "Parent") under date of April 25, 1997 (the "Note Agreements")
of Notes in the respective aggregate principal amounts specified in Schedule A
to the Note Agreements. All capitalized terms used herein without definition
shall have the meanings ascribed thereto in the Note Agreements.
We have examined such corporate records of the Obligors and
the Subsidiary Guarantors, agreements and other instruments, certificates of
officers and representatives of the Obligors and the Subsidiary Guarantors,
certificates of public officials, and such other documents, as we have deemed
necessary in connection with the opinions hereinafter expressed. In such
examination we have assumed the genuineness of all signatures, the authenticity
of documents submitted to us as originals and the conformity with the authentic
originals of all documents submitted to us as copies. As to questions of fact
material to such opinions we have, when relevant facts were not independently
established, relied upon the representations set forth in the Note Agreements
<PAGE> 146
-2-
and upon certifications by officers or other representatives of the Obligors and
the Subsidiary Guarantors.
In addition, we attended the closing held today at the office
of Mayer, Brown & Platt at which you purchased and made payment for Notes in the
respective aggregate principal amounts to be purchased by you, all in accordance
with the Note Agreements.
Based upon the foregoing and having regard for legal
considerations that we deem relevant, we render our opinion to you pursuant to
Section 4.4(b) of the Note Agreements as follows:
1. Each of the Obligors is a validly existing corporation in
good standing under the laws of the State of Delaware and has the corporate
power to execute and deliver the Note Agreements, the Parent Guarantee (in the
case of the Parent) and the Notes (in the case of the Company) and to perform
its respective obligations thereunder.
2. Each of the Subsidiary Guarantors identified as such in
Schedule 5.4 to the Note Agreements is a validly existing corporation in good
standing under the laws of its respective jurisdiction of incorporation and has
the corporate power to execute and deliver its respective Subsidiary Guarantee
and to perform its respective obligations thereunder. [DELAWARE INCORPORATION IS
ASSUMED]
3. The Note Agreements have been duly authorized, executed and
delivered by the Obligors and the Note Agreements constitute legal, valid and
binding agreements of the Obligors, enforceable against the Obligors in
accordance with their terms.
4. The Notes being purchased by you today have been duly
authorized, executed and delivered by the Company and constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms.
5. The Subsidiary Guarantees have been duly authorized,
executed and delivered by the respective Subsidiary Guarantors and constitute
legal, valid and binding agreements of the respective Subsidiary Guarantors.
6. No consent, approval or authorization of, or declaration,
registration or filing with, any New York or Federal Governmental Authority is
required to be obtained or made as a
<PAGE> 147
-3-
condition to the validity of the execution and delivery by the Obligors of the
Note Agreements, by the Company of said Notes or by the Subsidiary Guarantors of
their respective Subsidiary Guarantees delivered today pursuant to Section 4.5
of the Note Agreements or for the performance by the Company, the Parent or said
Subsidiary Guarantors of their respective obligations thereunder.
7. It was not necessary in connection with the offering, sale
and delivery of said Notes, the Parent Guarantee or said Subsidiary Guarantees,
under the circumstances contemplated by the Note Agreements, to register said
Notes, the Parent Guarantee or said Subsidiary Guarantees under the Securities
Act of 1933, as amended, or to qualify an indenture in respect of the Notes
under the Trust Indenture Act of 1939, as amended.
8. The opinions of even date herewith of King & Spalding,
special counsel for the Parent, Kenneth M. Lipowitz, counsel to the Parent, and
Robert L. Aprati, Senior Vice President and General Counsel of the Company,
delivered to you pursuant to Section 4.4(a) of the Note Agreements, are
satisfactory to us in form and scope with respect to the matters specified
therein and we believe that you are justified in relying thereon.
The opinions expressed above are subject to the exception
that (a) the enforceability of any agreement or instrument in accordance with
its terms may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and (ii) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and (b) the enforceability of indemnity provisions contained in the Note
Agreements may be subject to limitations based upon public policy
considerations.
We express no opinion as to Section 23.3 of the Note
Agreements insofar as said Section relates to (a) the subject matter
jurisdiction of the United States District Court for the Southern District of
New York to adjudicate any controversy relating to the Note Agreements, the
Notes or any other document related thereto, (b) the waiver of inconvenient
forum with respect to proceedings in such United States District Court or (c)
the waiver of the right to jury trial.
<PAGE> 148
-4-
We are members of the bar of the State of New York and do
not herein intend to express any opinion as to any matters governed by any laws
other than Federal laws, the laws of the State of New York and the General
Corporation Law of the State of Delaware.
This opinion is given solely for your benefit and for the
benefit of institutional investor holders from time to time of the Notes
purchased by you today, in connection with the closing held today of the
transactions contemplated by the Note Agreements, and may not be relied upon by
any other person for any purpose without our prior written consent.
Very truly yours,
<PAGE> 149
SENIOR NOTE PURCHASE AGREEMENT
SCHEDULE 5.4
EXISTING SUBSIDIARIES OF THE COMPANY
See attached schedules.
Significant Subsidiaries:
Budget Car Sales, Inc.
Budget Rent a Car Systems, Inc.
Budget Funding Corporation
Budget Fleet Finance Corporation
Budget Rent a Car International, Inc.
BTI (U.K.) plc
Team Fleet Financing Corporation
Directors and Officers of the Company:
See attachment.
Subsidiary Guarantors:
See attachment.
<PAGE> 150
Existing Subsidiaries of the Company
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Budget Rent a Car Corporation Delaware
Budget Car Sales, Inc. (formerly "Team Car Sales") Indiana
Team Car Sales of Charlotte, Inc. Delaware
Team Car Sales of Dayton, Inc. Delaware
Team Car Sales of Philadelphia, Inc. Delaware
Team Car Sales of Richmond, Inc. Delaware
Team Car Sales of San Diego, Inc. Delaware
Team Car Sales of Southern California, Inc. Delaware
ValCar Rental Car Sales, Inc. Indiana
IN Motors VI, LLC(1) Indiana
TCS Properties, LLC Indiana
Budget Rent a Car Systems, Inc. Delaware
Budget Funding Corporation Delaware
Budget Fleet Finance Corporation Delaware
BRAC of New York, Inc. Delaware
Long Island Car & Truck Rental, Inc.(2) Delaware
NYRAC, Inc. New York
Rebound Services, Inc. Delaware
Diversified Services, Inc. Delaware
Automated Transportation, Inc. California
Expert Leasing, Inc. Florida
Rapid Rentals, Inc. District of Columbia
Moisant Car Sales, Inc. Louisiana
</TABLE>
<PAGE> 151
Existing Subsidiaries of the Company (Cont'd)
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Budget Rent a Car of New Orleans, Inc. Louisiana
Westeam Enterprises, Inc. California
MacKay Car & Truck Rentals, Inc. North Carolina
Metro West, Inc. Delaware
Lee-Al, Inc. California
Dayton Auto Lease Company, Inc. Ohio
Don Kremer, Inc. Ohio
Arizona Rent a Car Systems, Inc. Delaware
Capital City Leasing, Inc. Florida
Team Rental of Connecticut, Inc. Delaware
Team Rental of Cincinnati, Inc. Delaware
Team Rental of Ft. Wayne, Inc. Delaware
Fort Wayne Rental Group, Inc. Delaware
Team Rental of Philadelphia, Inc. Delaware
Team Rental of Pittsburgh, Inc. Delaware
Team Rental of Rochester, Inc. Delaware
Team Rental of Southern California, Inc. Delaware
BRAC SOCAL Funding Corporation Delaware
Team Rental of New York, Inc. New York
VPSI, Inc. Delaware
Team Claims Services, Inc. Florida
Budget Rent a Car International, Inc. Delaware
Budget Rent a Car Espana, S.A. Spain
</TABLE>
<PAGE> 152
Existing Subsidiaries of the Company (Cont'd)
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Budget Rent a Car Ltd., Ireland London, England
BRACELET, S.A. Spain
Societe Financiere et de Participation Tours, France
Budget France, S.A. Tours, France
BTI (U.K.) plc London, England
BTI (Gatwick) Limited London, England
BTI (Stansted) Limited London, England
BTI (London) Limited London, England
BTI (Marble Arch) Limited London, England
BTI (Slough) Limited London, England
BTI (Heathrow) Limited London, England
Budget Rent a Car Australia Pty. Ltd. Victoria, Australia
Budget Rent a Car Pty. Ltd. Victoria, Australia
Budget Rent a Car Limited Auckland, New Zealand
Budget Rent a Car Operations Pty. Ltd. Victoria, Australia
Target Rent a Car Limited Wellington, New Zealand
Budget Lease Mgmt (Car Sales) Limited Auckland, New Zealand
Budget Locacao de Veiculos Ltda. Sao Paulo, Brazil
Budget Rent a Car Asia-Pacific, Inc. Delaware
Budget Rent a Car of Japan, Inc. Delaware
Budget Rent a Car of Canada Limited Ottawa, Ontario
Control Risk Corporation Illinois
Philip Jacobs Insurance Agency, Inc. California
</TABLE>
<PAGE> 153
Existing Subsidiaries of the Company (Cont'd)
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Reservation Services, Inc. Texas
200-214 N. Michigan Ave, Inc. Illinois
BRAC Reinsurance Company, Ltd. Bermuda
BBAC Credit Corporation Delaware
Compass Computer Services, Inc.(3) Delaware
Budget Sales Corporation Delaware
Team Fleet Financing Corporation Delaware
Team Realty Services, Inc. Delaware
Team Fleet Services Corporation Delaware
</TABLE>
- -----------------------
(1) 1% owned by Budget Car Sales, Inc.; 1% owned by Budget Rent a Car
Corporation, and 98% owned by ValCar Rental Car Sales, Inc.
(2) A 72% owned subsidiary of BRAC of New York, Inc.
(3) A 50% owned subsidiary of Budget Rent a Car Corporation.
<PAGE> 154
SUBSIDIARY GUARANTORS
Capital City Leasing, Inc.
Dayton Auto Lease Company, Inc.
Don Kremer,, Inc.
Ft. Wayne Rental Group, Inc.
Lee-Al, Inc.
Mackay Car & Truck Rentals, Inc.
Metro West, Inc.
Team Car Sales of Charlotte, Inc.
Team Car Sales of Dayton, Inc.
Team Car Sales of Philadelphia, Inc.
Team Car Sales of Richmond. Inc.
Team Car Sales of San Diego, Inc.
Team Fleet Services Corporation
Team Realty Services, Inc.
Team Rental of Cincinnati, Inc.
Team Rental of Connecticut, Inc.
Team Rental of Philadelphia, Inc.
Team Rental of Pittsburgh, Inc.
Team Rental of Southern California, Inc.
Tranex Rentals of New York, Inc.
Westeam Enterprises, Inc.
Team Car Sales of Southern California, Inc.
Team Rental of Ft. Wayne, Inc.
Team Rental of Rochester, Inc.
VPSI, Inc.
Arizona Rent-A-Car Systems, Inc.
IN Motors VI, LLC
TCS Properties, LLC
Budget Car Sales, Inc. (formerly Team Car Sales, Inc.)
ValCar Rental Car Sales, Inc.
Budget Rent a Car Systems, Inc.
NYRAC, Inc.
Diversified Services, Inc.
Rapid Rentals, Inc.
Budget Rent a Car of New Orleans, Inc.
Budget Rent a Car International, Inc.
Control Risk Corporation
Philip Jacobs Insurance Agency, Inc.
Reservation Services, Inc.
BRAC Credit Corporation
BRAC of New York, Inc.
Automated Transportation, Inc.
<PAGE> 155
Moisant Car Sales, Inc.
Budget Sales Corporation
Budget Rent a Car Corporation of Canada Limited
<PAGE> 1
EXHIBIT 10.23
U.S. $300,000,000
CREDIT AGREEMENT,
dated as of April 29, 1997,
among
BUDGET RENT A CAR CORPORATION,
as the Borrower,
BUDGET GROUP, INC.
(formerly known as TEAM RENTAL GROUP, INC.),
as a Guarantor,
and
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
CREDIT SUISSE FIRST BOSTON,
as a Co-Syndication Agent and the Administrative Agent,
and
NATIONSBANC CAPITAL MARKETS, INC.,
as a Co-Syndication Agent and the Documentation Agent.
Arranged By
CREDIT SUISSE FIRST BOSTON
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
1.1. Defined Terms.....................................................................3
1.2. Use of Defined Terms.............................................................41
1.3. Cross-References.................................................................41
1.4. Accounting and Financial Determinations..........................................42
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Commitments......................................................................42
2.1.1. Loan Commitment..................................................................42
2.1.2. Commitment to Issue Letters of Credit............................................42
2.1.3. Lenders Not Permitted or Required To Make Loans or Issue Letters of
Credit Under Certain Circumstances............................................42
2.2. Reduction of Commitment Amounts..................................................43
2.2.1. Optional.........................................................................43
2.2.2. Mandatory........................................................................44
2.2.3. Corresponding Reductions.........................................................44
2.3. Borrowing Procedure..............................................................44
2.4. Continuation and Conversion Elections............................................45
2.5. Funding..........................................................................46
2.6. Loan Accounts....................................................................46
2.7. Special Provisions for Loans Denominated in Foreign Currencies...................47
2.7.1. Notification of Request..........................................................47
2.7.2. Availability.....................................................................47
2.7.3. Notification of Availability.....................................................47
2.7.4. Consequences of Non-Availability.................................................47
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments.......................................................47
3.2. Interest Provisions..............................................................50
3.2.1. Rates............................................................................50
3.2.2. Post-Maturity Rates..............................................................50
3.2.3. Payment Dates....................................................................51
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
3.2.4. Interest Rate Determination......................................................51
3.3. Fees.............................................................................51
3.3.1. Commitment Fees..................................................................51
3.3.2. Arrangement Fees.................................................................52
3.3.3. Administrative Agent's Fee.......................................................52
3.3.4. Letter of Credit Face Amount Fee.................................................52
3.3.5. Letter of Credit Issuing Fee.....................................................52
3.3.6. Letter of Credit Administrative Fee..............................................52
ARTICLE IV
LETTERS OF CREDIT
4.1. Issuance Requests................................................................53
4.2. Issuances and Extensions.........................................................54
4.3. Expenses.........................................................................55
4.4. Other Lenders' Participation.....................................................55
4.5. Disbursements....................................................................56
4.6. Reimbursement....................................................................56
4.7. Deemed Disbursements.............................................................57
4.8. Nature of Reimbursement Obligations..............................................57
4.9. Indemnity........................................................................58
4.10. Borrower's Guaranty of Reimbursement Obligations of its Subsidiaries.............58
4.10.1. Guaranty.........................................................................58
4.10.2. Acceleration of Guaranty.........................................................59
4.10.3. Guaranty Absolute, etc...........................................................59
4.10.4. Reinstatement, etc...............................................................60
4.10.5. Waiver, etc......................................................................61
4.10.6. Postponement of Subrogation, etc.................................................61
4.10.7. Successors, Transferees and Assigns; Transfers of Notes, etc.....................62
4.11. No Bankruptcy Petition Against TFFC..............................................62
ARTICLE V
CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS
5.1. Eurocurrency Rate Lending Unlawful...............................................63
5.2. Deposits Unavailable.............................................................63
5.3. Increased Eurocurrency Loan Costs, etc...........................................63
5.4. Funding Losses...................................................................64
5.5. Increased Capital Costs..........................................................64
5.6. Taxes............................................................................65
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
5.7. Payments, Computations, etc......................................................66
5.8. Sharing of Payments..............................................................66
5.9. Setoff...........................................................................67
5.10. Substitution of Lender...........................................................67
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Initial Credit Extension.........................................................68
6.1.1. Resolutions, etc.................................................................68
6.1.2. Delivery of Notes................................................................69
6.1.3. Acquisition and Transaction Consummated..........................................69
6.1.4. Payment of Outstanding Indebtedness, etc.........................................69
6.1.5. Delivery of Financial Statements.................................................69
6.1.6. Consents, etc....................................................................70
6.1.7. No Material Adverse Change.......................................................70
6.1.8. Availability Under the Borrowing Base............................................70
6.1.9. Fees and Expenses of the Transaction.............................................70
6.1.10. Business Plan....................................................................70
6.1.11. Closing Date Certificates........................................................71
6.1.12. Guaranty.........................................................................71
6.1.13. Pledge Agreements................................................................71
6.1.14. Security Agreements..............................................................71
6.1.15. Borrowing Base Certificate.......................................................72
6.1.16. Issuance Request.................................................................72
6.1.17. Opinions of Counsel..............................................................72
6.1.18. Closing Fees, Expenses, etc......................................................73
6.2. All Credit Extensions............................................................73
6.2.1. Compliance with Warranties, No Default, etc......................................73
6.2.2. Credit Request...................................................................73
6.2.3. Satisfactory Legal Form..........................................................74
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1. Organization, etc................................................................74
7.2. Due Authorization, Non-Contravention, etc........................................75
7.3. Government Approval, Regulation, etc.............................................75
7.4. Validity, etc....................................................................75
7.5. Financial Information; Absence of Undisclosed Liabilities........................76
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
7.6. No Material Adverse Change; Absence of Undisclosed Liabilities...................76
7.7. Litigation, Labor Controversies, etc.............................................76
7.8. Subsidiaries.....................................................................77
7.9. Ownership of Properties..........................................................77
7.10. Taxes............................................................................77
7.11. Pension and Welfare Plans........................................................77
7.12. Environmental Warranties.........................................................77
7.13. Intellectual Property............................................................79
7.14. Regulations G, U and X...........................................................80
7.15. Accuracy of Information..........................................................80
7.16. Stock Purchase Agreements and Senior Note Purchase Agreements....................80
7.17. Senior Indebtedness, etc.........................................................80
ARTICLE VIII
COVENANTS
8.1. Affirmative Covenants............................................................81
8.1.1. Financial Information, Reports, Notices, etc.....................................81
8.1.2. Compliance with Laws, Material Agreements, etc...................................83
8.1.3. Maintenance of Properties........................................................84
8.1.4. Insurance........................................................................84
8.1.5. Books and Records................................................................84
8.1.6. Environmental Covenant...........................................................85
8.1.7. Use of Proceeds..................................................................85
8.1.8. Foreign Subsidiaries as of the Closing Date......................................86
8.1.9. Future Subsidiaries..............................................................87
8.2. Negative Covenants...............................................................88
8.2.1. Business Activities..............................................................88
8.2.2. Indebtedness.....................................................................88
8.2.3. Liens............................................................................91
8.2.4. Financial Condition..............................................................92
8.2.5. Investments......................................................................94
8.2.6. Restricted Payments, etc.........................................................95
8.2.7. Capital Expenditures, etc........................................................98
8.2.8. Take or Pay Contracts............................................................98
8.2.9. Consolidation, Merger, etc.......................................................98
8.2.10. Asset Dispositions, etc..........................................................98
8.2.11. Modification of Certain Agreements...............................................99
8.2.12. Transactions with Affiliates.....................................................99
8.2.13. Negative Pledges, Restrictive Agreements, etc...................................100
8.2.14. Ability to Amend; Restrictive Agreements........................................100
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
8.2.15. Accounting Changes..............................................................101
8.2.16. Tax Sharing Arrangements........................................................101
8.2.17. Activities of the Parent........................................................101
ARTICLE IX
EVENTS OF DEFAULT
9.1. Listing of Events of Default....................................................101
9.1.1. Non-Payment of Obligations......................................................101
9.1.2. Breach of Warranty..............................................................102
9.1.3. Non-Performance of Certain Covenants and Obligations............................102
9.1.4. Non-Performance of Other Covenants and Obligations..............................102
9.1.5. Default on Other Indebtedness...................................................102
9.1.6. Judgments.......................................................................102
9.1.7. Pension Plans...................................................................103
9.1.8. Change in Control...............................................................103
9.1.9. Bankruptcy, Insolvency, etc.....................................................103
9.1.10. Impairment of Security, etc.....................................................104
9.2. Action if Bankruptcy............................................................104
9.3. Action if Other Event of Default................................................104
ARTICLE X
PARENT GUARANTY
10.1. Guaranty........................................................................105
10.2. Acceleration of Parent Guaranty.................................................105
10.3. Guaranty Absolute, etc..........................................................105
10.4. Reinstatement, etc..............................................................107
10.5. Waiver, etc.....................................................................107
10.6. Postponement of Subrogation, etc................................................107
10.7. Successors, Transferees and Assigns; Transfers of Notes, etc....................108
ARTICLE XI
THE AGENTS
11.1. Actions.........................................................................108
11.2. Funding Reliance, etc...........................................................109
11.3. Exculpation.....................................................................109
11.4. Successor.......................................................................109
</TABLE>
-v-
<PAGE> 7
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
11.5. Credit Extensions by Agents.....................................................110
11.6. Credit Decisions................................................................110
11.7. Copies, etc.....................................................................110
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Waivers, Amendments, etc........................................................111
12.2. Notices.........................................................................112
12.3. Payment of Costs and Expenses...................................................112
12.4. Indemnification.................................................................113
12.5. Survival........................................................................114
12.6. Severability....................................................................114
12.7. Headings........................................................................114
12.8. Execution in Counterparts, Effectiveness, etc...................................114
12.9. Governing Law; Entire Agreement.................................................114
12.10. Successors and Assigns..........................................................114
12.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes.........115
12.11.1. Assignments.....................................................................115
12.11.2. Participations..................................................................116
12.12. Other Transactions..............................................................117
12.13. Independence of Covenants.......................................................117
12.14. Judgment Currency...............................................................117
12.15. Forum Selection and Consent to Jurisdiction.....................................118
12.16. Waiver of Jury Trial............................................................119
</TABLE>
-vi-
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C> <C>
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Lender Information
SCHEDULE III - Deposit Banks
SCHEDULE IV - Subordinated Intercompany Note Terms
SCHEDULE V - Scheduled Letters of Credit
EXHIBIT A - Form of Revolving Note
EXHIBIT B-1 - Form of Borrowing Request
EXHIBIT B-2 - Form of Issuance Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Compliance Certificate
EXHIBIT E - Form of Borrowing Base Certificate
EXHIBIT F-1 - Form of Parent Pledge Agreement
EXHIBIT F-2 - Form of Borrower Pledge Agreement
EXHIBIT F-3 - Form of Subsidiary Pledge Agreement
EXHIBIT G-1 - Form of Borrower Security Agreement
EXHIBIT G-2 - Form of Subsidiary Security Agreement
EXHIBIT G-3 - Form of Parent Security Agreement
EXHIBIT H - Form of Subsidiary Guaranty
EXHIBIT I-1 - Form of Borrower Closing Date Certificate
EXHIBIT I-2 - Form of Parent Closing Date Certificate
EXHIBIT J - Form of Lender Assignment Agreement
EXHIBIT K-1 - Form of Opinion of Special Counsel to the Obligors
EXHIBIT K-2 - Form of Opinion of Counsel to the Borrower
EXHIBIT K-3 - Form of Opinion of Counsel to the Parent
</TABLE>
-vii-
<PAGE> 9
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 29, 1997, among BUDGET RENT A
CAR CORPORATION, a Delaware corporation (the "Borrower"), BUDGET GROUP, INC.
(formerly known as Team Rental Group, Inc.), a Delaware corporation (the
"Parent"), the various financial institutions as are or may become parties
hereto (collectively, the "Lenders"), NATIONSBANC CAPITAL MARKETS, INC.
("NationsBanc"), as a co-syndication agent (in such capacity, a "Co-Syndication
Agent") for the Lenders and as the documentation agent (in such capacity, the
"Documentation Agent") for the Lenders, and CREDIT SUISSE FIRST BOSTON ("Credit
Suisse First Boston"), as a co-syndication agent (in such capacity, a "Co-
Syndication Agent" and, together with NationsBanc, collectively, the
"Co-Syndication Agents") for the Lenders, as administrative agent (in such
capacity, the "Administrative Agent") for the Lenders and as the arranger (in
such capacity, the "Arranger").
W I T N E S S E T H:
WHEREAS, the Borrower and the Parent are engaged directly and through
their various Subsidiaries (capitalized terms used in these recitals to have the
meanings set forth in Section 1.1 below) in the business of (a) renting
worldwide for general use passenger automobiles, vans and light trucks, (b)
selling in the United States late model automobiles and (c) franchising the
foregoing business to other Persons;
WHEREAS, pursuant to (a) the Stock Purchase Agreement, dated as of
January 13, 1997, between the Borrower and the Parent (as so originally executed
and delivered, the "Budget Stock Purchase Agreement"), (b) the Preferred Stock
Purchase Agreement, dated as of January 13, 1997, between Ford Motor Company and
the Parent (as so originally executed and delivered, the "Preferred Stock
Purchase Agreement") and (c) the Stock Purchase Agreement, dated as of January
13, 1997, between John J. Nevin and the Parent (as so originally executed and
delivered, the "Common Stock Purchase Agreement", and, together with the Budget
Stock Purchase Agreement and the Preferred Stock Purchase Agreement, the "Stock
Purchase Agreements"), the Parent intends to acquire the Capital Stock of the
Borrower and purchase certain Indebtedness of the Borrower for approximately
$275,000,000 in cash and the issuance of shares of a new series of non-dividend
paying, non-voting convertible preferred stock of the Parent (the
"Acquisition");
WHEREAS, in connection with the Acquisition, (a) the Parent intends to
issue shares of its Class A Common Stock pursuant to a registered public
offering for gross cash proceeds of at least $150,000,000, which proceeds it
intends to use to fund, in part, the Acquisition (the "Equity Offering"), (b)
the Parent intends to issue its Series B Notes pursuant to a private offering
for gross cash proceeds of not greater than $50,000,000, which proceeds it
intends to use to fund, in part, the Acquisition (the "Convertible Subordinated
Debt Offering"), (c) the Borrower intends to issue its Senior Notes pursuant to
a private offering for gross cash proceeds of not greater than $170,000,000 (the
"Senior Debt Offering", and, together with the Convertible Subordinated Debt
Offering, the "Debt Offerings"), (d) the Parent intends to arrange for the
refinancing of approximately $850,500,000 of indebtedness under various vehicle
financing facilities of the Borrower and its Subsidiaries pursuant to, among
other things, a rental car asset-backed
<PAGE> 10
commercial paper program (the "CP Program") through a special purpose,
bankruptcy remote, Wholly Owned Subsidiary of the Borrower ("Budget Funding
Corporation") and (e) the Parent intends, pursuant to capital contributions,
stock transfers, mergers or otherwise, to cause its existing businesses to be
conducted after the Acquisition by the Borrower or through Subsidiaries of the
Borrower (including existing Subsidiaries of the Parent that become Subsidiaries
of the Borrower) (the "Corporate Restructuring", and, together with the Equity
Offering, the Debt Offerings, the CP Program and the transactions relating
thereto (including transactions relating to the Corporate Restructuring), the
"Transaction");
WHEREAS, in connection with the Transaction, the Borrower desires to
obtain Commitments from the Lenders pursuant to which
(a) Loans will be made to the Borrower from time to time prior
to the Loan Commitment Termination Date; and
(b) Letters of Credit will be issued by the Issuer for the
account of the Borrower and under the several responsibilities of the
Lenders from time to time prior to the Letter of Credit Commitment
Termination Date;
in maximum aggregate principal amount for Loans (after converting all Foreign
Currency Loans to the Equivalent thereof in Dollars) at any one time outstanding
not to exceed in the aggregate $100,000,000 (provided, however, that the maximum
aggregate principal amount for Loans denominated in Foreign Currencies at any
one time outstanding shall not exceed in the aggregate the Equivalent of
$40,000,000) and in a maximum aggregate Stated Amount for Letters of Credit
outstanding, together with the aggregate of all Loans (after converting all
Foreign Currency Loans to the Equivalent thereof in Dollars) outstanding at any
one time not to exceed in the aggregate $300,000,000;
WHEREAS, the Lenders and the Issuer are willing, on the terms and
subject to the conditions hereinafter set forth (including Article VI), to
extend such Commitments, make such Loans to the Borrower and issue and
participate in such Letters of Credit; and
WHEREAS, the proceeds
(a) of such Loans will be used for general corporate purposes
of the Borrower and its Subsidiaries; and
(b) of such Letters of Credit will be used by the Borrower and
its Subsidiaries
(i) as credit and/or liquidity enhancement for
commercial paper or similar fleet financing programs
(including the CP Program), so long as the aggregate Stated
Amount of all Letters of Credit issued for such purpose (the
"Enhancement Letters of Credit") and outstanding at one time
does not exceed $225,000,000 and
(ii) for other general corporate purposes (the
"General Letters of Credit");
-2-
<PAGE> 11
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"ABR Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Account Debtor" is defined in clause (d) of the definition of
"Eligible Receivable".
"Account Party" means (a) the Borrower, (b) in the case of the CP
Enhancement Letter of Credit, Budget Funding Corporation, and (c) any Subsidiary
Guarantor or SPC for the account of which a Letter of Credit is issued in
accordance with Article IV.
"Acquisition" is defined in the second recital.
"Acquisition Date" means the date that the Acquisition is consummated.
"Adjusted Debt" means, at any time, the sum of (a) Non-Vehicle Debt at
such time plus (b) the maximum amount available for drawing under each letter of
credit constituting Indebtedness of the Parent or any of its Subsidiaries and
which provides credit enhancement or liquidity enhancement to a commercial paper
or other fleet financing program (including Enhancement Letters of Credit),
whether or not drawn and whether or not any conditions to drawing can then be
met at such time.
"Adjusted EBITDA" means, for any applicable period, the excess of
(a) EBITDA for such period over
(b) to the extent added in arriving at such EBITDA, the sum of
(i) the aggregate amount of depreciation in respect of Vehicles during
such period plus (ii) Vehicle Interest Expense during such period;
provided, however, that, in the event any such period would include a
Pre-Acquisition Period, Adjusted EBITDA for such Pre-Acquisition Period would
equal the sum of (i) in the event such Pre-Acquisition Period would include the
Fiscal Quarter ending December 31, 1996, $13,164,000 plus (ii) Adjusted EBITDA
for the remainder of such Pre-Acquisition Period (or, if
-3-
<PAGE> 12
the preceding clause (i) is not applicable, for the entirety of such
Pre-Acquisition Period) determined on a pro forma basis after giving effect to
consummation of the Transaction in a manner consistent with the pro forma
financial statements set forth in the Registration Statement.
"Adjusted Leverage Ratio" means, at the end of any Fiscal Quarter, the
ratio of
(a) Net Adjusted Debt as at the last day of such Fiscal
Quarter;
to
(b) Adjusted EBITDA for the four consecutive Fiscal Quarters
ending on the last day of such Fiscal Quarter.
"Administrative Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to Section 11.4.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agents" means the Co-Syndication Agents, the Documentation Agent and
the Administrative Agent.
"Aggregate Interest Expense" is defined in clause (a) of the definition
of "Non-Vehicle Interest Expense".
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Base Rate" means, on any date and with respect to all ABR
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently established by Credit
Suisse First Boston at its principal office in New York, New York as
its prime rate for Dollar loans; and
(b) the Federal Funds Rate most recently determined by the
Administrative Agent plus 1/2%.
-4-
<PAGE> 13
If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Rate for any reason, including the inability of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition of "Federal Funds Rate", the Alternate Base Rate shall
be determined without regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. The Alternate Base Rate is not necessarily intended to be the lowest rate
of interest determined by the Credit Suisse First Boston in connection with
extensions of credit. Changes in the rate of interest on that portion of any
Loans maintained as ABR Loans will take effect simultaneously with each change
in the Alternate Base Rate. The Administrative Agent will give notice promptly
to the Borrower and the Lenders of changes in the Alternate Base Rate.
"Alternate Currency" means, collectively, Australian Dollars and New
Zealand Dollars; provided, however, that neither Australian Dollars nor New
Zealand Dollars shall constitute an Alternate Currency if any Lender is unable
to make Foreign Currency Loans in such currency without suffering any economic,
legal or regulatory burden in its sole and absolute discretion.
"Applicable Commitment Fee" means, as of any date, a per annum fee on
the average daily unused portion of the Commitment Amount determined pursuant to
the following pricing grid (expressed in basis points), subject to the
provisions of this definition set forth below:
<TABLE>
<CAPTION>
PRICING GRID
APPLICABLE
ADJUSTED LEVERAGE RATIO COMMITMENT FEE
----------------------- --------------
<S> <C>
X >= 2.0 37.5
X >= 1.0, but < 2.0 30.0
X < 1.0 25.0
</TABLE>
The Applicable Commitment Fee on the average daily unused portion of
the Commitment Amount, at any time from and including the Effective Date to (but
not including) the date which is 180 days after the Effective Date, shall be
37.5 basis points per annum at such time.
The Applicable Commitment Fee, at any time from and after the date
which is 180 days after the Effective Date, on the average daily unused portion
of the Commitment Amount, shall be determined pursuant to the Pricing Grid above
at such time. At all times that the Applicable Commitment Fee is determined by
reference to the Pricing Grid, "X" refers to the Adjusted Leverage Ratio, which
ratio shall be determined based upon the Compliance Certificate delivered
pursuant to clause (c) of Section 8.1.1 and shall remain in effect until such
time as the next Compliance Certificate shall be delivered (and, at such time,
the Applicable Commitment Fee shall change based on such next Compliance
Certificate); provided, however, that, if any such Compliance Certificate is not
delivered to the Administrative Agent on or prior to the date required pursuant
to clause (c) of Section 8.1.1, the Applicable Commitment Fee from and
-5-
<PAGE> 14
including the date on which such Compliance Certificate was required to be
delivered to but not including the actual date of delivery of such Compliance
Certificate shall conclusively equal the highest Applicable Commitment Fee.
"Applicable Margin" means, with respect to any Loan of any type, as of
any date, the rate per annum determined pursuant to the following pricing grid
(expressed in basis points), subject to the provisions of this definition set
forth below:
<TABLE>
<CAPTION>
PRICING GRID
EUROCURRENCY LOAN ABR LOAN
ADJUSTED LEVERAGE RATIO APPLICABLE MARGIN APPLICABLE MARGIN
----------------------- ----------------- -----------------
<S> <C> <C>
X >= 3.5 225 125
X >= 3.0, but < 3.5 200 100
X >= 2.0, but < 3.0 175 75
X >= 1.0, but < 2.0 150 50
X < 1.0 125 25
</TABLE>
The Applicable Margin, at any time from and including the Effective
Date until the date which is 180 days after the Effective Date, for the Loans
shall be 175 basis points as to Eurocurrency Loans and 75 basis points as to ABR
Loans at such time.
The Applicable Margin, at any time from and after the date which is 180
days after the Effective Date, for Loans, shall be determined pursuant to the
Pricing Grid above at such time. At all times that the Applicable Margin is
determined by reference to the Pricing Grid, "X" refers to the Adjusted Leverage
Ratio, which ratio shall be determined based upon the Compliance Certificate
delivered pursuant to clause (c) of Section 8.1.1 and shall remain in effect
until such time as the next Compliance Certificate shall be delivered (and, at
such time, the Applicable Margin shall change based on such next Compliance
Certificate); provided, however, that, if any such Compliance Certificate is not
delivered to the Administrative Agent on or prior to the date required pursuant
to clause (c) of Section 8.1.1, the Applicable Margin for Loans from and
including the date on which such Compliance Certificate was required to be
delivered to but not including the actual date of delivery of such Compliance
Certificate shall conclusively equal the highest Applicable Margin for Loans set
forth above.
"Arranger" is defined in the preamble.
"Assignee Lender" is defined in Section 12.11.1.
"Australian Dollars" and the symbol "A$" means the lawful currency of
Australia.
"Authorized Officer" means, relative to the Borrower and any other
Obligor, those of its officers or managing members (in the case of a limited
liability company) whose signatures and
-6-
<PAGE> 15
incumbency shall have been certified to the Administrative Agent and the Lenders
pursuant to Section 6.1.1.
"Available" means, in respect of any Foreign Currency and any Lender,
that such Foreign Currency is, at the relevant time, readily available to such
Lender as deposits in the London or other applicable interbank market in the
relevant amount and for the relevant term, is freely convertible into Dollars
and is freely transferable for the purposes of this Agreement, but if,
notwithstanding that each of the foregoing tests is satisfied
(a) such Foreign Currency is, under the then current
legislation or regulations of the country of such Foreign Currency (or
under the policy of the central bank of such country) or of the Bank of
England or the F.R.S. Board, not permitted to be used for the purposes
of this Agreement; or
(b) there is no, or only insignificant, investor demand for
the making of advances having an interest period equivalent to that for
the Eurocurrency Loan denominated in an Foreign Currency which the
Borrower has requested be made; or
(c) there are no policy or other reasons which make it
undesirable or impractical for a Lender to make a Eurocurrency Loan
denominated in such Foreign Currency available as determined by such
Lender in its reasonable discretion;
then such Foreign Currency may be treated by any Lender as not being Available.
"Available Currency" means, collectively, Dollars, French Francs,
Sterling, Swiss Francs and each Alternate Currency.
"Base Indenture" means the Amended and Restated Base Indenture, dated
as of December 1, 1996, among TFFC, the Parent and Bankers Trust Company, as in
effect on the date hereof, subject to such modifications thereto as may be
agreed to in the Base Indenture Supplement or by the Required Lenders.
"Base Indenture Supplement" means any supplement to the Base Indenture,
which supplement is (a) entered into for the purpose of providing Vehicle
financing to TFFC pursuant to the issuance by TFFC of a series of Variable
Funding Rental Car Asset Backed Notes to the Borrower, which series of notes the
Borrower would purchase with proceeds of Loans under this Agreement and which
would constitute a "Segregated Series of Notes" (as more fully described
in the Base Indenture) and would be pledged (together with all security
therefor) to the Administrative Agent for the benefit of the Lenders and (b)
together with such documents as the Administrative Agent and the Supermajority
Lenders deem appropriate, approved in writing by the Supermajority Lenders.
"Borrower" is defined in the preamble.
-7-
<PAGE> 16
"Borrower Closing Date Certificate" means the closing date certificate
executed and delivered by the Borrower pursuant to Section 6.1.11, substantially
in the form of Exhibit I-1 hereto.
"Borrower Pledge Agreement" means the Pledge Agreement executed and
delivered by the Borrower pursuant to Section 6.1.13, substantially in the form
of Exhibit F-2 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Borrower Security Agreement" means the Security Agreement executed and
delivered by the Borrower pursuant to Section 6.1.14, substantially in the form
of Exhibit G-1 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Borrowing" means the Loans of the same type and, in the case of
Eurocurrency Loans, denominated in the same Available Currency and having the
same Interest Period made by all Lenders on the same Business Day and pursuant
to the same Borrowing Request in accordance with Section 2.1.
"Borrowing Base Amount" means, at any time, an amount equal to the sum
of:
(a) 85% of Eligible Receivables at such time;
plus
(b) 100% of Eligible Cash and Cash Equivalent Investments at
such time;
plus
(c) 100% of Eligible Repurchase Vehicles at such time;
plus
(d) 85% of Eligible Non-Repurchase Vehicles at such time.
"Borrowing Base Certificate" means a certificate duly completed and
executed by an Authorized Signatory of the Borrower, substantially in the form
of Exhibit E hereto; provided, however, that the Administrative Agent may
(a) at any time specify changes to such form for the purpose
of monitoring or clarifying the Borrower's compliance with the
Borrowing Base Amount; and
(b) from time to time review computations of the Borrowing
Base Amount submitted by the Borrower pursuant to Section 6.1.15 and
clause (f) of Section 8.1.1 and, if in the Administrative Agent's
reasonable opinion, the computation in any Borrowing Base Certificate
of the Borrowing Base Amount shall not have been computed in accordance
with its definition, the Administrative Agent shall have the right to
adjust
-8-
<PAGE> 17
such computation so long as written notice of such adjustment is
provided to the Borrower.
"Borrowing Request" means a Loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
B-1 hereto.
"Budget Funding Corporation" is defined in the third recital.
"Business Acquisition" means the acquisition, by purchase or otherwise,
of all or substantially all of the assets (or any part of the assets
constituting all or substantially all of a business or line of business) of any
Person, whether such acquisition is direct or indirect, including through the
acquisition of the business of, or Capital Stock of, such Person.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, converting, prepaying
or repaying of any Eurocurrency Loans, any day (i) on which dealings in
the relevant currency are carried on in the London interbank market and
(ii) in the case of Eurocurrency Loans denominated in an Available
Currency other than Dollars or Sterling, on which banks in the country
for which such Available Currency is the lawful currency are not
authorized or required to be closed.
"Canadian Dollars" and the symbol "Cdn$" means the lawful currency of
Canada.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the Borrower
and its Subsidiaries for fixed or capital assets made during such
period which, in accordance with GAAP, would be classified as capital
expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"Capital Stock" means with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or equity, whether now outstanding or issued after the
date hereof, including all common stock, preferred stock, partnership interests
and member interests.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and, with respect to any such leasing or similar
-9-
<PAGE> 18
arrangement, the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a premium or
a penalty.
"Cash Equivalent Investment" means, at any time, High Quality
Investments maturing not more than 270 days after such time.
"Casualty Event" means the damage, destruction or condemnation, as the
case may be, of property of the Borrower, the Parent or any of their respective
Subsidiaries.
"Casualty Proceeds" means, with respect to any Casualty Event, the
amount of any insurance proceeds or condemnation awards received by or on behalf
of the Borrower, the Parent or any of their respective Subsidiaries in
connection with such Casualty Event, but excluding any proceeds or awards
required to be paid to a creditor (other than the Lenders) which holds a first-
priority Lien permitted by Section 8.2.3 on the property which is the subject of
such Casualty Event (including Vehicles securing Vehicle Debt).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means
(a) any Person other than the Parent shall own any Capital
Stock of the Borrower or otherwise have the ability to elect any
members of the board of directors of the Borrower;
(b) a "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act), excluding Sanford Miller, John
D. Kennedy, Jeffrey D. Congdon or any Wholly Owned Subsidiary or
Related Person of any one or more of them or Ford Motor Company or any
Wholly Owned Subsidiary of Ford Motor Company, (i) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 30% of the total then outstanding voting power of the Voting
Stock of the Parent or (ii) has the right or the ability by voting
right, contract or otherwise to elect or designate for election a
majority of the board of directors of the Parent;
(c) during any period of twenty-four months, individuals who
at the beginning of such period constituted the board of directors of
the Parent (together with any new directors whose election by such
board of directors, or whose nomination for election by the
shareholders of the Parent, as the case may be, was approved by a vote
of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute 50% or more of the board of directors then in
office;
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<PAGE> 19
(d) any Person or two or more Persons acting in concert (in
any such case, excluding Sanford Miller, John D. Kennedy, Jeffrey D.
Congdon or any Wholly Owned Subsidiary of any one or more of them)
shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation thereof, will
result in its or their acquisition of the power to direct or control,
directly or indirectly, the management or policies of the Borrower or
the Parent; or
(e) a "Change of Control" under the Senior Notes, the Series A
Notes or the Series B Notes shall have occurred.
"Closing Date" means the date on which Credit Extensions are first made
hereunder.
"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, in each case as amended, reformed or otherwise modified from time to
time.
"Commitment" means, as the context may require, a Lender's Loan
Commitment and/or Letter of Credit Commitment.
"Commitment Amount" means, on any date, $300,000,000, as such amount
may be reduced from time to time pursuant to Section 2.2.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a)
through (d) of Section 9.1.9; or
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of all or any portion of the
Loans to be due and payable pursuant to Section 9.3, or
(ii) the giving of notice by the Administrative
Agent, acting at the direction of the Required Lenders, to the
Borrower that the Commitments have been terminated.
"Compliance Certificate" means, as the context may require, a
certificate duly completed and executed by an Authorized Officer of the Parent
or the Borrower, as the case may be, substantially in the form of Exhibit D
hereto, together with such changes thereto as the Administrative Agent may from
time to time reasonably request for the purpose of monitoring the Borrower's
compliance with the financial covenants contained herein.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments
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<PAGE> 20
in the course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to any limitation set
forth therein) be deemed to be the outstanding principal amount (or maximum
principal amount, if larger) of the debt, obligation or other liability
guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Parent, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Convertible Subordinated Debt Offering" is defined in the third
recital.
"Corporate Restructuring" is defined in the third recital.
"Co-Syndication Agent" and "Co-Syndication Agents" are defined in the
preamble and includes each other Person as shall have subsequently been
appointed as a successor Co- Syndication Agent pursuant to Section 11.4.
"CP Enhancement Letter of Credit" means the Letter of Credit, dated as
of the date hereof, of Credit Suisse First Boston, issued pursuant to the terms
hereof and of the CP Enhancement Letter of Credit Application and Agreement.
"CP Enhancement Letter of Credit Application and Agreement" means the
Letter of Credit Reimbursement Agreement, dated as of the date hereof, among the
Borrower, Budget Funding Corporation, the Issuer and the Lessees from time to
time designated thereunder.
"CP Program" is defined in the third recital.
"Credit Extension" means and includes
(a) the advancing of any Loans by the Lenders in connection
with a Borrowing, and
(b) any issuance or extension by the Issuer of a Letter of
Credit.
"Credit Extension Request" means, as the context may require, any
Borrowing Request or Issuance Request.
"Credit Suisse First Boston" is defined in the preamble.
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<PAGE> 21
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Demand Capitalization Note" means the promissory note dated as of the
date hereof, issued by the Borrower to TFFC.
"Disbursement Date" is defined in Section 4.5.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Administrative Agent and
the Required Lenders.
"Distribution" means, with respect to any Person, any dividend or
distribution (in cash, property or obligations) on any shares of any class of
Capital Stock (now or hereafter outstanding) of such Person or on any warrants,
options or other rights with respect to any shares of any class of Capital Stock
(now or hereafter outstanding) of such Person, other than dividends or
distributions payable in the common stock (other than Redeemable Capital Stock)
of such Person or warrants or options to purchase such common stock or split-ups
or reclassifications of its Capital Stock into additional or other shares of
such common stock.
"Dollar" and the symbol "$" mean the lawful currency of the United
States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such opposite its name in Schedule II hereto or designated
in the Lender Assignment Agreement or such other office of a Lender (or any
successor or assign of such Lender) within the United States as may be
designated from time to time by notice from such Lender, as the case may be, to
each other Person party hereto. A Lender may have separate Domestic Offices for
purposes of making, maintaining or continuing ABR Loans.
"EBITDA" means, for any applicable period, the sum for such period of
(a) Net Income (excluding therefrom (i) the effect of any
non-cash gains (or non-cash losses), (ii) any write-up in the value of
any asset, (iii) the income (or losses) of any Person (other than the
Borrower or any other Subsidiary of the Borrower) in which the
Borrower, the Parent or any of their respective Subsidiaries has an
ownership interest, except to the extent of the amount of dividends or
other distributions actually paid in cash to (or the amount of
contributions to capital actually made in cash by) the Borrower, the
Parent or any of their respective Subsidiaries by (or in) such Person
during such period, (iv) except where the provisions hereof expressly
require a pro forma determination, the income (or loss) of any Person
accrued prior to the date it becomes a Subsidiary of the Parent or is
merged into or consolidated with the Parent or any of its Subsidiaries
or the date that such other Person's assets are acquired by the Parent
or any of its Subsidiaries and (v) the income of any Subsidiary of the
Parent to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary of that income is not at the
time permitted by operation of the terms of its charter or any
agreement, instrument,
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<PAGE> 22
judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary)
plus
(b) to the extent deducted in arriving at such Net Income, the
sum, without duplication, of (i) Aggregate Interest Expense, plus (ii)
taxes computed on the basis of income plus (iii) the aggregate amount
of depreciation and amortization of tangible and intangible assets;
provided, however, that in the event any such period would include a
Pre-Acquisition Period, EBITDA for such Pre-Acquisition Period would equal the
sum of (i) in the event such Pre-Acquisition Period would include the Fiscal
Quarter ending December 31, 1996, $120,617,000 plus (ii) EBITDA for the
remainder of such Pre-Acquisition Period (or, if the preceding clause (i) is not
applicable, for the entirety of such Pre-Acquisition Period) determined on a pro
forma basis after giving effect to consummation of the Transaction in a manner
consistent with the pro forma financial statements set forth in the Registration
Statement.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 12.8.
"Eligible Assignee" means a lending institution at the time of any
proposed assignment having total assets in excess of $1,000,000,000 which is
organized under the laws of the United States, or any state thereof or any other
country which is a member of the OECD, or a political subdivision of any such
country (provided that such bank is acting through a branch or agency located in
the country in which it is organized, another country which is also a member of
the OECD or in the Cayman Islands) and long-term unsecured debt ratings of BBB-
(or better) from S&P and Baa3 (or better) from Moody's; provided, however, that
neither the Borrower, the Parent nor any of their respective Affiliates shall
qualify as an Eligible Assignee.
"Eligible Cash and Cash Equivalent Investments" means, at any time of
determination thereof, cash or Cash Equivalent Investments of the Borrower or
any Subsidiary of the Borrower that is a Subsidiary Guarantor as to which each
of the following requirements has been fulfilled to the reasonable satisfaction
of the Administrative Agent (which requirements shall be deemed to have been
fulfilled to the reasonable satisfaction of the Administrative Agent unless the
Administrative Agent shall have otherwise notified the Borrower in writing):
(a) such cash or Cash Equivalent Investments are held free and
clear of all Liens, other than the Liens in favor of the Administrative
Agent for the benefit of the Lenders, by the Administrative Agent or a
third party acting solely as agent for the Administrative Agent
pursuant to a written agreement (provided that such third party is (i)
a Federal Reserve bank, (ii) a bank which is a member of the Federal
Deposit Insurance Corporation and which has combined capital, surplus
and undivided profits of not less than $250,000,000 or (iii) a bank
approved in writing for such purposes by the Required Lenders);
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<PAGE> 23
(b) the Administrative Agent has a security interest in such
cash or Cash Equivalent Investments, which security interest is, under
applicable law, (i) legal, valid and binding and (ii) perfected and
first priority (or, if such applicable law would not characterize
security interests in any deposit account in which the holder of such
security interest has rights senior to any other Person that obtains a
judicial lien on, or execution against, such deposit account or obtains
a lien thereon granted by the holder of such deposit account as
"perfected" or "first priority", the Administrative Agent has rights
with respect to such cash or Cash Equivalent Investments that is senior
to any such Person);
(c) the Borrower or such Subsidiary has the full and
unqualified right to assign and grant a Lien in such cash or Cash
Equivalent Investments to the Administrative Agent;
(d) such cash or Cash Equivalent Investment is in Dollars (or
in Canadian Dollars, to the extent such cash or Cash Equivalent
Investments in Canadian Dollars does not exceed Cdn $3,000,000);
(e) such cash or Cash Equivalent Investments is held in an
account subject to a Deposit Account Agreement (as defined in the
Borrower Security Agreement); and
(f) if such cash or Cash Equivalent Investment is subject to
any dispute, setoff, counterclaim or other claim or defense on the part
of the obligor thereunder or the party holding such asset, the portion
of such cash or Cash Equivalent Investment so subject shall be excluded
from Eligible Cash and Cash Equivalent Investments;
provided, however, that cash or Cash Equivalent Investments that would otherwise
be Eligible Cash and Cash Equivalent Investments but for the requirement in
clause (b)(ii) above or the requirement in clause (e) above shall be deemed to
be Eligible Cash and Cash Equivalent Investments to the extent such cash or Cash
Equivalent Investments does not exceed in the aggregate $10,000,000; provided
further, however, an additional $3,000,000 of such cash or Cash Equivalent
Investments shall be deemed to be Eligible Cash and Cash Equivalent Investments
until May 30, 1997, to the extent such cash or Cash Equivalent Investments are
held in a bank listed in Schedule III hereto and such bank and the Borrower (or
the applicable Subsidiary) are exercising their best efforts to provide the
Administrative Agent with such perfected and first priority security interest.
"Eligible Non-Repurchase Vehicles" means the aggregate Non-Repurchase
Vehicle Value (as defined in the Base Indenture) of Non-Repurchase Vehicles (as
defined in the Base Indenture) that are financed pursuant to the Base Indenture
Supplement.
"Eligible Receivable" means, at any time of determination thereof, any
Receivable of the Borrower or any Subsidiary of the Borrower that is a
Subsidiary Guarantor (other than an Excluded Receivable) as to which each of the
following requirements has been fulfilled to the reasonable satisfaction of the
Administrative Agent (which requirements shall be deemed to have been fulfilled
to the reasonable satisfaction of the Administrative Agent unless the
Administrative Agent shall have otherwise notified the Borrower in writing):
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<PAGE> 24
(a) the Borrower or such Subsidiary has lawful and absolute
title to such Receivable, free and clear of all Liens other than the
Liens in favor of the Administrative Agent for the benefit of the
Lenders;
(b) the Administrative Agent has a security interest in such
Receivable, which security interest is legal, valid, binding, perfected
and first priority under the U.C.C. or under the analogous secured
transactions law of any Canadian province; provided, however, that
(i) the aggregate amount of such Receivables as to
which the Administrative Agent has a security interest under
Canadian law may not exceed 3% of the total amount of all
Eligible Receivables at the time of such determination (such
Receivables that do not exceed such 3% threshold being herein
referred to as "Canadian Eligible Receivables");
(ii) no Receivable as to which any United States
federal or state governmental agency or instrumentality is the
Account Debtor may be an Eligible Receivable, except (A) to
the extent the Borrower or such Subsidiary has complied with
the Assignment of Claims Act of 1940, as amended (31 U.S.C.
ss. 3727; 41 U.S.C. ss. 15), by delivering to the
Administrative Agent a notice of assignment in favor of the
Administrative Agent under such Act and in compliance with
applicable provisions of 31 C.F.R. ss. 7-103.8 and 41 C.F.R.
ss. 1-30.7, or with similar state law (collectively, for
purposes of this definition, the "Registration Requirements")
or (B) unless the Administrative Agent requests the Borrower
or such Subsidiary to comply with the Registration
Requirements with respect to the Receivables described in this
subclause (B) and the Borrower or such Subsidiary does not
exercise their best efforts to so comply, to the extent the
aggregate amount of such Receivables would not exceed 3% of
the total amount of all Eligible Receivables at the time of
such determination; and
(iii) no Receivable as to which any other government
or agency of such government (including any foreign
governmental authority or agency) is the Account Debtor may be
an Eligible Receivable;
(c) the Borrower or such Subsidiary has the full and
unqualified right to assign and grant a Lien in such Receivable to the
Administrative Agent for the benefit of the Lenders;
(d) such Receivable is payable in Dollars (or, in the case of
Canadian Eligible Receivables, Dollars or Canadian Dollars) and is a
legal, valid, binding and enforceable obligation of the Person who is
obligated under such Receivable (the "Account Debtor");
(e) without limiting the effect of the preceding clause (d),
such Receivable complies with all requirements of applicable law,
including the Federal Consumer Credit Protection Act, the Federal Truth
in Lending Act and Regulation Z of the F.R.S. Board;
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<PAGE> 25
(f) if such Account is subject to any dispute, setoff,
counterclaim or other claim or defense on the part of the Account
Debtor denying liability under such Receivable, the portion of such
Account so subject shall be excluded from Eligible Receivables;
(g) such Receivable (i) evidences monetary obligations and
(ii) is evidenced by (A) an invoice or statement rendered to the
Account Debtor or (B) an obligation of the Account Debtor to make
royalty payments to the Borrower or such Subsidiary pursuant to a
franchise agreement that is in full force and effect;
(h) such Receivable is a bona fide Receivable which arose in
the ordinary course of business, and with respect to which,
(i) in the case of a Receivable arising from the
sale of goods, such goods have been shipped or delivered to
and not rejected by the Account Debtor, such Receivable was
created as a result of a sale on an absolute basis and not on
a consignment, approval or sale-and-return basis and all other
actions necessary to create a binding obligation on the part
of the Account Debtor for such Receivable have been taken, and
(ii) in the case of a Receivable relating to the
rental of a Vehicle or the sale of services, such rental or
services have been completed or performed and not rejected by
the Account Debtor and all other actions necessary to create a
binding obligation on the part of the Account Debtor have been
taken;
(i) with respect to such Receivable, the Account Debtor is not
(i) an Affiliate of the Borrower, the Parent or any
of their respective Subsidiaries,
(ii) organized or located in a jurisdiction other
than the United States (except to the extent an Account Debtor
with respect to a Canadian Eligible Receivable is located in
Canada), or
(iii) the subject of any reorganization, bankruptcy,
receivership, custodianship or insolvency or any other
condition of the type described in clauses (b) through (d) of
Section 9.1.9;
(j) such Receivable is not outstanding more than 90 days past
the due date with respect thereto;
(k) no payment with respect to such Receivable made by check
has been returned for insufficient funds;
(l) such Receivable has not been placed with a lawyer or other
agent for collection;
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<PAGE> 26
(m) if the Borrower, the Parent or any of their respective
Subsidiaries is indebted to such Account Debtor and such Account Debtor
has a contractual right of setoff with respect to such indebtedness,
unless the Borrower, the Parent or the relevant Subsidiary (as the case
may be), on the one hand, and such Account Debtor, on the other hand,
have entered into an agreement whereby the Account Debtor is prohibited
from exercising any right of setoff with respect to the Receivables of
the Borrower and its Subsidiaries, Eligible Receivables shall exclude
an amount equal to the amount of such indebtedness; and
(n) such Receivable has such other characteristics or criteria
as the Administrative Agent, in its reasonable discretion, may specify
in writing to the Borrower from time to time.
Notwithstanding the foregoing, (i) all Receivables of any single Account Debtor
(unless otherwise agreed to by the Required Lenders) and its Affiliates which,
in the aggregate, exceed 5% of the total amount of all Eligible Receivables at
the time of such determination, shall be deemed not to be Eligible Receivables
to the extent of such excess, (ii) the total amount of Eligible Receivables
shall be reduced by an amount equal to the excess, if any, of (x) the aggregate
amount payable by the Borrower, the Parent and their respective Subsidiaries to
Account Debtors that are franchisees of the Borrower, the Parent or any of their
respective Subsidiaries at the time of such determination over (y) 5% of such
total amount of Eligible Receivables, and (iii) in determining the amount of
Receivables to be included as Eligible Receivables, the face amount of
Receivables shall be reduced by (A) the amount of all accrued and actual
returns, discounts, claims, credits or credits pending, charges, price
adjustments, commissions or other amounts due to any Person engaged by the
Borrower or the applicable Subsidiary of the Borrower in the rental or sale of
Vehicles, freight or finance charges or other allowances (including any amount
that the Borrower or such Subsidiary, as applicable, may be obligated to rebate
to a customer pursuant to the terms of any agreement or understanding (written
or oral) or that the Borrower or such Subsidiary, as applicable, established as
a reserve therefor (and the Borrower agrees that any such reserve will in no
event be less than the reserve that would be so established consistent with past
practice or in accordance with GAAP)) and (B) the aggregate amount of all cash
received in respect of Receivables but not yet applied by the Borrower or such
Subsidiary to reduce the amount of the Receivables.
"Eligible Repurchase Vehicles" means the Net Book Value (as defined in
the Base Indenture) of Repurchase Vehicles (as defined in the Base Indenture)
that are financed pursuant to the Base Indenture Supplement.
"Enhancement Letter of Credit Application and Agreement" means, with
respect to each Enhancement Letter of Credit, the application and agreement
therefor completed by the account party or parties in respect of such
Enhancement Letter of Credit and accepted by the Issuer.
"Enhancement Letters of Credit" is defined in clause (b)(i) of the
sixth recital.
"Enhancement Letters of Credit Commitment Amount" means, on any date,
$225,000,000, as such amount may be reduced from time to time pursuant to
Section 2.2.
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<PAGE> 27
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"Equity Offering" is defined in the third recital.
"Equivalent" means, on any date of determination, (a) in Dollars of any
currency, the equivalent in Dollars of such currency determined by using the
quoted spot rate at which Credit Suisse First Boston's principal office in New
York City, New York, offers to exchange Dollars for such currency in New York
City, New York, at the open of business on such date and (b) in any currency of
Dollars, the equivalent in such currency of Dollars determined by using the
quoted spot rate at which Credit Suisse First Boston's principal office in New
York City, New York, offers to exchange such currency for Dollars in New York
City, New York, at the open of business on such date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections thereto.
"Eurocurrency Loan" means a Loan bearing interest, at all times during
an Interest Period applicable to such Loan, at a fixed rate of interest
determined by reference to the Eurocurrency Rate (Reserve Adjusted).
"Eurocurrency Office" means, relative to any Lender, the office of such
Lender designated as such opposite its name in Schedule II hereto or designated
in the Lender Assignment Agreement or such other office of a Lender (or any
successor or assign of such Lender) as designated from time to time by notice
from such Lender to the Borrower and the Administrative Agent, whether or not
outside the United States, which shall be making or maintaining Eurocurrency
Loans of such Lender hereunder.
"Eurocurrency Rate" means, relative to any Interest Period, with
respect to Eurocurrency Loans denominated in any Available Currency, an interest
rate per annum equal to:
(a) the rate determined by the Administrative Agent at
approximately 11:00 a.m. (London, England time) two Business Days prior
to the beginning of such Interest Period for delivery on the first day
of such Interest Period by reference to the British Bankers'
Association Interest Settlement Rates for deposits in such Available
Currency (as set forth by any service selected by the Administrative
Agent which has been nominated by the British Bankers' Association as
an authorized information vendor for the purpose of displaying such
rates) for a period equal to such Interest Period; or
(b) if such rate cannot be determined by the Administrative
Agent in accordance with clause (a) above, the average (rounded upward
to the nearest whole multiple of 1/100 of 1% per annum, if such average
is not such a multiple) of the rates per annum at which deposits in
such Available Currency are offered by the Eurocurrency Office of
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<PAGE> 28
each of the Reference Lenders in London, England to prime banks in the
London interbank market at or about 11:00 a.m. (London, England time)
two Business Days before the first day of such Interest Period in an
amount substantially equal to such Reference Lender's Eurocurrency Loan
comprising part of such Borrowing to be outstanding during such
Interest Period and for a period equal to such Interest Period;
provided that any determination of the Eurocurrency Rate for any
Interest Period pursuant to this clause (b) shall be determined by the
Administrative Agent on the basis of applicable rates furnished to and
received by the Administrative Agent from the Reference Lenders two
Business Days before the first day of such Interest Period, subject,
however, to the provisions of Section 3.2.4.
"Eurocurrency Rate (Reserve Adjusted)" means, relative to any Loan to
be made, continued or maintained as, or converted into, a Eurocurrency Loan for
any Interest Period, arate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined pursuant to the following formula:
<TABLE>
<CAPTION>
<S> <C> <C>
Eurocurrency Rate = Eurocurrency Rate
(Reserve Adjusted) 1.00 - Eurocurrency Reserve Percentage
</TABLE>
The Eurocurrency Rate (Reserve Adjusted) for any Interest Period for
Eurocurrency Loans will be determined by the Administrative Agent on the basis
of the Eurocurrency Reserve Percentage in effect two Business Days before the
first day of such Interest Period.
"Eurocurrency Reserve Percentage" means, relative to any Interest
Period for Eurocurrency Loans, the reserve percentage (expressed as a decimal)
equal to the maximum aggregate reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
"Event of Default" is defined in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Receivable" means any Receivable of the Borrower or any
Subsidiary of the Borrower that is (a) subject to a Lien which is not a Lien in
favor of the Administrative Agent for the benefit of the Lenders and (b) (i) an
obligation payable to TFFC in respect of Vehicles leased or financed pursuant to
a Lease (as defined in the Base Indenture), (ii) an obligation of a manufacturer
of a Vehicle securing Vehicle Debt pursuant to a Repurchase Program (as defined
in the Base Indenture), (iii) an obligation of an insurer or governmental entity
with respect to a Casualty Event in respect of a Vehicle securing Vehicle Debt
or (iv) an obligation of a Person in respect of the purchase price of a Vehicle
securing Vehicle Debt.
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<PAGE> 29
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by Credit Suisse First Boston from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" is defined in Section 3.3.2.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1997 Fiscal Year") refer to the Fiscal Year
ending on the December 31 occurring during such calendar year.
"Foreign Currency" means, collectively, French Francs, Sterling, Swiss
Francs and each Alternate Currency.
"Foreign Currency Loan" means any Loan made in a Foreign Currency.
"Foreign Currency Loan Commitment Amount" means, on any date,
$40,000,000, as such amount may be reduced from time to time pursuant to Section
2.2.
"Foreign Pledge Agreement" means any supplemental pledge agreement
governed by the laws of a jurisdiction other than the United States or a state
thereof executed and delivered by the Borrower or any of its Subsidiaries
pursuant to the terms of this Agreement, in form and substance satisfactory to
the Administrative Agent, as may be necessary or desirable under the laws of
organization or incorporation of a Subsidiary to further protect or perfect the
Lien on and security interest in any Pledged Shares and/or Pledged Notes (as
such terms are defined in the Pledge Agreements).
"Foreign Subsidiary" means any Subsidiary of the Borrower (a) which is
organized under the laws of any jurisdiction outside of the United States of
America, (b) which conducts the major portion of its business outside of the
United States of America and (c) all or substantially all of the property and
assets of which are located outside of the United States of America.
"Franchisee Acquisition" means any Business Acquisition in respect of a
Person that was a franchisee of the Borrower, the Parent or any of their
respective Subsidiaries on the Effective Date, so long as the consideration paid
in connection with such Business Acquisition consisted
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solely of Capital Stock of the Parent issued in connection therewith and the
assumption of Vehicle Debt (if any).
"French Franc" and the symbol "Fr" means the lawful currency of the
Republic of France.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"General Letters of Credit" is defined in clause (b)(ii) of the sixth
recital.
"Guarantor" means, collectively, the Parent and each Subsidiary
Guarantor.
"Guaranty" means, as the context may require, the Parent Guaranty or
the Subsidiary Guaranty.
"Guaranteed Obligations" is defined in Section 4.10.1.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended; or
(c) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance (including any petroleum product)
within the meaning of any other applicable federal, state or local law,
regulation, ordinance or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards
of conduct concerning any hazardous, toxic or dangerous waste,
substance or material, all as amended.
"Hedging Agreements" means, collectively, currency exchange agreements,
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements, and all other agreements or arrangements designed to protect
a Person against fluctuations in interest rates or currency exchange rates.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under Hedging Agreements.
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
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"High Quality Investments" means
(a) U.S. Government Obligations;
(b) participation certificates (excluding strip mortgage
securities that are purchased at prices exceeding their principal
amounts) and senior debt obligations of the Federal Home Loan Mortgage
Corporation, consolidated system wide bonds and notes of the Farm
Credit System, senior debt obligations and mortgage-backed securities
(excluding stripped mortgage securities which are purchased at prices
exceeding their principal amounts) of the Federal Mortgage Association
which, in the case of mortgage-backed securities, are rated at least AA
by S&P and Aa by Moody's, senior debt obligations (excluding securities
that have no fixed value and/or whose terms do not promise a fixed
dollar amount at maturity or call date) of the Student Loan Marketing
Association and debt obligations of the Resolution Funding Corp.
(collectively, "Agency Obligations");
(c) direct obligations of any state of the United States or
any subdivision or agency thereof whose short-term unsecured general
obligation debt has ratings from S&P of at least A-1 and Moody's of at
least P-1 or any obligation that has ratings from S&P and Moody's at
least equivalent to A-1 and P-1, respectively, and which is fully and
unconditionally guaranteed by any state, subdivision or agency whose
short term, unsecured general obligation debt has ratings from S&P and
Moody's at least equivalent to A-1 and P-1, respectively;
(d) commercial paper maturing in not more than 270 days which
is issued by a corporation (other than an Affiliate of any Obligor) and
having ratings from S&P and Moody's at least equivalent to A-1 and P-1,
respectively;
(e) deposits, federal funds or bankers acceptances (maturing
in not more than 365 days) of any domestic bank (including a branch
office of a foreign bank which branch office is located in the United
States, provided that the Administrative Agent shall have received a
legal opinion or opinions to the effect that full and timely payment of
such deposit or similar obligation is enforceable against the principal
office or any branch of such bank), which:
(i) has an unsecured, uninsured and unguaranteed
obligation which has ratings from S&P and Moody's at least
equivalent to A-1 and P-1, respectively, or
(ii) is the lead bank of a parent bank holding
company with an uninsured, unsecured and unguaranteed
obligation meeting the rating requirements in the preceding
clause (i);
(f) deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of not less than
$100 million, provided such deposits are fully insured by the Federal
Deposit Insurance Corporation, the Banking Insurance Fund or the
Savings Association Insurance Fund;
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(g) investments in a money-market fund which may be a 12b-1
fund as registered under the Investment Company Act of 1940 and is
rated at least the equivalent of AAm or AAm-G by S&P and P-1 by
Moody's;
(h) repurchase agreements with a term of six months or less
with any institution having short-term, unsecured debt rated at least
the equivalent of A-1 by S&P and P-1 by Moody's;
(i) repurchase agreements collateralized by U.S. Government
Obligations or Agency Obligations (the "Collateral Securities") with
any registered broker-dealer which is under the jurisdiction of the
Securities Investors Protection Corp. or any commercial bank, if such
broker-dealer or bank has uninsured, unsecured and unguaranteed debt
rated at least the equivalent of A-1 by S&P and P-1 by Moody's,
provided that:
(A) a master repurchase agreement or other specific
written repurchase agreement governs the transaction;
(B) the Collateral Securities are held free and clear
of any other Lien by the Administrative Agent or an
independent third party acting solely as agent for the
Administrative Agent, provided that any such third party (1)
is (x) a Federal Reserve bank, (y) a bank which is a member of
the Federal Deposit Insurance Corporation and which has
combined capital, surplus and undivided profits of not less
that $250 million, or (z) a bank approved in writing for such
purpose by the Required Lenders, and (2) certifies in writing
to the Administrative Agent (or delivers to the Administrative
Agent a written opinion of counsel to such third party) that
such third party holds the Collateral Securities free and
clear of any Lien, as agent for the Administrative Agent;
(C) a perfected first security interest under the
Uniform Commercial Code is created in, or book entry
procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R.
350.0 et seq. are followed with respect to, the Collateral
Securities for the benefit of the Administrative Agent;
(D) such repurchase agreement has a term of 30 days
or less;
(E) such repurchase agreement matures (or permits the
Administrative Agent to withdraw all or any portion of the
invested funds) at least ten (10) days (or other appropriate
liquidation period) prior to each Quarterly Payment Date;
(F) the fair market value of the Collateral
Securities in relation to the amount of the repurchase
obligation, including principal and interest, is equal to at
least one hundred and three percent (103%) (as determined by
the Borrower and certified by the chief financial or
accounting Authorized Officer of the Borrower to the
Administrative Agent in a certificate in form and substance
satisfactory to the Administrative Agent); and
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(G) the Administrative Agent obtains an opinion of
counsel to such broker-dealer or bank to the effect that such
repurchase agreement is a legal, valid, binding and
enforceable agreement of such broker-dealer or bank (and, in
the case of a bank which is a branch of a foreign bank, of
such foreign bank) in accordance with its terms; and
(j) any other similar investments that are requested by the
Borrower to be classified as "High Quality Investments" and consented
to by the Administrative Agent in its sole and absolute discretion.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, the Parent or any other Obligor, any qualification or exception
to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause the Borrower, the Parent or such other Obligor to be
in default of any of its obligations under Section 8.2.4.
"including" and "include" means including without limiting the
generality of any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree that the rule
of ejusdem generis shall not be applicable to limit a general statement, which
is followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
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(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse;
(g) Redeemable Capital Stock; and
(h) all Contingent Liabilities of such Person in respect of
any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent there is recourse to such
Person with respect to such Indebtedness.
"Indemnified Liabilities" is defined in Section 12.4.
"Indemnified Parties" is defined in Section 12.4.
"Interest Coverage Ratio" means, at the end of any Fiscal Quarter, the
ratio of
(a) Adjusted EBITDA for the four consecutive Fiscal Quarters
ending on the last day of such Fiscal Quarter
to
(b) Non-Vehicle Interest Expense for the four consecutive
Fiscal Quarters ending on the last day of such Fiscal Quarter.
"Interest Period" means, relative to any Eurocurrency Loan, the period
beginning on (and including) the date on which such Eurocurrency Loan is made or
continued as, or converted into, a Eurocurrency Loan pursuant to Section 2.3 or
2.4 and ending on (but excluding) the day which numerically corresponds to such
date one, two, three or six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month) as the
Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than seven different dates;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless, if such
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Interest Period applies to Eurocurrency Loans, such next following
Business Day is the first Business Day of a calendar month, in which
case such Interest Period shall end on the Business Day next preceding
such numerically corresponding day); and
(d) no Interest Period may end later than the Stated Maturity
Date.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in
any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Issuance Request" means a request and certificate duly executed by the
chief executive, accounting or financial Authorized Officer of the Borrower, in
substantially the form of Exhibit B-2 attached hereto (with such changes thereto
as may be agreed upon from time to time by the Administrative Agent and the
Borrower).
"Issuer" means Credit Suisse First Boston or any of its affiliates,
and/or any other Lender having short-term credit ratings of A-1 (or better) from
S&P and P-1 from Moody's which has agreed to issue one or more Letters of Credit
at the request of the Administrative Agent (which shall, at the Borrower's
request, notify the Borrower from time to time of the identity of such other
Lender).
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit J hereto.
"Lenders" is defined in the preamble and, in addition, shall include
any commercial bank or other financial institution that becomes a Lender
pursuant to Section 12.11.1.
"Letter of Credit" means, collectively, Enhancement Letters of Credit
and General Letters of Credit, which letters of credit, in each case, shall be
irrevocable standby letters of credit in such form as may be requested by the
Borrower and approved by the Issuer.
"Letter of Credit Commitment" means, relative to any Lender, such
Lender's obligation to issue (in the case of the Issuer) or participate in (in
the case of all Lenders) Letters of Credit pursuant to Section 2.1.2.
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"Letter of Credit Commitment Termination Date" means the earliest of
(a) May 30, 1997 (if the initial Credit Extension has not
occurred on or prior to such date);
(b) the first Business Day prior to the Stated Maturity Date;
(c) the date on which the Commitment Amount is terminated in
full or reduced to zero pursuant to Section 2.2; and
(d) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (c) or (d) above, the
Letter of Credit Commitments shall terminate automatically and without any
further action.
"Letter of Credit Outstandings" means, at any time, an amount equal to
the sum of
(a) the aggregate Stated Amount at such time of all Letters of
Credit then outstanding and undrawn (as such aggregate Stated Amount
shall be adjusted, from time to time, as a result of drawings, the
issuance of Letters of Credit, or otherwise);
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"Leverage Ratio" means, at the end of any Fiscal Quarter, the ratio of
(a) Adjusted Debt as at the last day of such Fiscal Quarter
to
(b) Adjusted EBITDA for the four consecutive Fiscal Quarters
ending on the last day of such Fiscal Quarter.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or other priority or preferential
arrangement of any kind or nature whatsoever, to secure payment of a debt or
performance of an obligation.
"Liquidity Facility" means the Liquidity Agreement, dated as of the
date hereof, among Budget Funding Corporation, the lenders party thereto and
Credit Suisse First Boston, as the Liquidity Agent for such lenders, as the same
may be amended, supplemented, amended and restated, replaced or otherwise
modified from time to time in accordance with the terms hereof.
"Liquidity Obligation" is defined in Section 4.5.
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"Loan" is defined in Section 2.1.1.
"Loan Commitment" means, relative to any Lender, such Lender's
obligation to make Loans pursuant to Section 2.1.1.
"Loan Commitment Amount" means, on any date, $100,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2.
"Loan Commitment Termination Date" means the earliest of
(a) May 30, 1997 (if the initial Credit Extension has not
occurred on or prior to such date);
(b) the Stated Maturity Date;
(c) the date on which the Loan Commitment Amount is terminated
in full or reduced to zero pursuant to Section 2.2; and
(d) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (c) or (d) above, the Loan
Commitments shall terminate automatically and without any further action.
"Loan Document" means this Agreement, the Notes, the Pledge Agreements,
the Security Agreements, the Subsidiary Guaranty, the Letters of Credit, the
Enhancement Letter of Credit Application and Agreements, the Foreign Pledge
Agreements, Deposit Account Agreements (as defined in the Security Agreements)
and each other agreement, certificate, document or instrument delivered in
connection with this Agreement and such other agreements, whether or not
specifically mentioned herein or therein.
"LOC Liquidity Disbursement" means, with respect to any Enhancement
Letter of Credit, any drawing thereunder to the extent such drawing is for the
purpose of providing liquidity support to Budget Funding Corporation or another
SPC which has issued highly-rated commercial paper in connection with the
financing of Vehicles, including any LOC Liquidity Disbursement (as defined in
the CP Enhancement Letter of Credit Application and Agreement) under the CP
Enhancement Letter of Credit and the portion of any LOC Termination Disbursement
(as defined in the CP Enhancement Letter of Credit Application and Agreement)
allocable to Budget Funding Corporation.
"local time" means
(a) relative to matters in respect of Foreign Currency Loans
denominated in Australian Dollars, Sydney, Australia time;
(b) relative to matters in respect of Foreign Currency Loans
denominated in New Zealand Dollars, Wellington, New Zealand time;
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(c) relative to matters in respect of Foreign Currency Loans
denominated in French Francs, Paris, France time;
(d) relative to matters in respect of Foreign Currency Loans
denominated in Swiss Francs, Zurich, Switzerland time;
(e) relative to matters in respect of Foreign Currency Loans
denominated in Sterling, London, England time; and
(f) relative to any matter not set forth in clauses (a)
through (e) above, New York City, New York time.
"Moody's" means Moody's Investors Service, Inc.
"NationsBanc" is defined in the preamble.
"Net Adjusted Debt" means, at any time, the excess of
(a) Adjusted Debt at such time
over
(b) the amount obtained by taking the average of unrestricted
cash of the Borrower at such time (including the aggregate amount of
Eligible Cash and Cash Equivalents of the Borrower that is included in
the Borrowing Base Amount at such time) and the amount of such
unrestricted cash as of the last Business Day of each of the preceding
two calendar months.
"Net Disposition Proceeds" means the excess of
(a) the gross cash proceeds received by the Borrower, the
Parent or any of their respective Subsidiaries from any sale, transfer
or conveyance of assets permitted pursuant to clause (c) of Section
8.2.10 excluding any such sale, transfer or conveyance permitted
pursuant to clause (a) of Section 8.2.10 (collectively referred to
herein for purposes of this definition as a "permitted disposition")
and any cash payments received in respect of promissory notes or other
non-cash consideration delivered to the Borrower, the Parent or such
Subsidiary in respect of any permitted disposition.
over
(b) the sum of
(i) all reasonable and customary fees and expenses
with respect to legal, investment banking, brokerage and
accounting and other professional fees, sales commissions and
disbursements actually incurred in connection with such
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<PAGE> 39
permitted disposition which have not been paid (other than in
the case of reasonable out-of-pocket expenses) to Affiliates
of the Borrower or the Parent;
plus
(ii) all taxes and other governmental costs and
expenses actually paid or estimated by the Borrower, the
Parent or such Subsidiary (in good faith) to be payable in
cash in connection with such permitted disposition;
plus
(iii) payments made by the Borrower, the Parent or
such Subsidiary to retire Indebtedness (other than the Loans)
of the Borrower, the Parent or such Subsidiary where payment
of such Indebtedness is required in connection with such
permitted disposition;
provided, however, that if, after the payment of all taxes with respect to such
permitted disposition, the amount of estimated taxes, if any, pursuant to clause
(b)(ii) above exceeded the tax amount actually paid in respect of such permitted
disposition, the Commitment Amount shall be immediately and automatically
reduced by an amount equal to the aggregate amount of such excess.
"Net Equity Proceeds" means, with respect to the sale or issuance by
the Borrower, the Parent or any of their respective Subsidiaries to any Person
(other than the Parent, the Borrower or any of their respective Subsidiaries) of
any Capital Stock, other than pursuant to the Equity Offering, or any warrants
or options with respect to such Capital Stock or the exercise of any such
warrants or options, the excess of:
(a) the gross cash proceeds received by the Borrower, the
Parent or such Subsidiary from such sale, exercise or issuance (other
than proceeds received with respect to employee incentive stock options
or deferred stock purchase plans),
over
(b) all reasonable and customary fees and expenses with
respect to underwriting commissions and legal, investment banking,
brokerage and accounting and other professional fees, sales commissions
and disbursements actually incurred in connection with such sale or
issuance or exercise which have not (other than in the case of
reasonable out-of-pocket expenses) been paid to Affiliates of the
Borrower or the Parent in connection therewith.
"Net Income" means, for any applicable period, the aggregate of all
amounts which, in accordance with GAAP, would be included as net income (or net
loss) on a consolidated statement of income of the Parent and its Subsidiaries
for such period; provided, however, that, in the event any such period would
include a Pre-Acquisition Period, Net Income for such Pre-Acquisition Period
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would equal the sum of (i) in the event such Pre-Acquisition Period would
include the Fiscal Quarter ending December 31, 1996, ($1,682,000) plus (ii) Net
Income for the remainder of such Pre-Acquisition Period (or, if the preceding
clause (i) is not applicable, for the entirety of such Pre-Acquisition Period)
determined on a pro forma basis after giving effect to consummation of the
Transaction in a manner consistent with the pro forma financial statements set
forth in the Registration Statement.
"Net Issuance Proceeds" means, as to any issuance of indebtedness for
borrowed money by the Borrower, the Parent or any of their respective
Subsidiaries, the excess of:
(a) the gross cash proceeds received by the Borrower, the
Parent or such Subsidiary from such issuance,
over
(b) all reasonable and customary fees and expenses with
respect to underwriting commissions and legal, investment banking,
brokerage and accounting and other professional fees, sales commissions
and disbursements actually incurred in connection with such issuance
which have not (other than in the case of reasonable out-of-pocket
expenses) been paid to Affiliates of the Borrower or the Parent in
connection therewith.
"Net Worth" means, with respect to any Person at any date, on a
consolidated basis for such Person and its Subsidiaries, the excess of:
(a) the sum of capital stock taken at par value, capital
surplus and retained earnings (or accumulated deficit) of such Person
at such date;
over
(b) treasury stock of such Person and, to the extent included
in the preceding clause (a), minority interests in Subsidiaries of such
Person at such date.
"New Zealand Dollars" and the symbol "NZ$" mean the lawful currency of
New Zealand.
"Non-Material Subsidiary" means any Subsidiary of the Borrower that
(a) accounted for no more than 1/2 of 1% of consolidated
revenues of the Parent and its Subsidiaries or 1/2 of 1% of
consolidated earnings of the Parent and its Subsidiaries before
interest and taxes, in each case for the four consecutive Fiscal
Quarters of the Parent ending on the last day of the most recently
completed Fiscal Quarter with respect to which, pursuant to Section
8.1.1, financial statements have been, or are required to have been,
delivered by the Borrower or the Parent to the Administrative Agent,
and
(b) has assets which represent no more than 1/2 of 1% of the
consolidated assets of the Parent and its Subsidiaries as of the last
day of the last Fiscal Quarter of the most recently completed Fiscal
Quarter with respect to which, pursuant to Section 8.1.1,
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financial statements have been, or are required to have been, delivered
by the Borrower or the Parent to the Administrative Agent,
to the extent that Non-Material Subsidiaries do not
(i) account in the aggregate for more than 2 1/2% of
consolidated revenues of the Parent and its Subsidiaries or 2 1/2% of
consolidated earnings of the Parent and its Subsidiaries before
interest and taxes, in each case for the four consecutive Fiscal
Quarters of the Parent ending on the last day of the most recently
completed Fiscal Quarter with respect to which, pursuant to Section
8.1.1, financial statements have been, or are required to have been,
delivered by the Borrower or the Parent to the Administrative Agent, or
(ii) have assets which represent more than 2 1/2% of the
consolidated assets of the Parent and its Subsidiaries as of the last
day of the last Fiscal Quarter of the most recently completed Fiscal
Quarter with respect to which, pursuant to Section 8.1.1, financial
statements have been, or are required to have been, delivered by the
Borrower or the Parent to the Administrative Agent.
"Non-Vehicle Debt" means
(a) Total Debt
minus
(b) to the extent included in such Total Debt, Vehicle Debt
plus
(c) to the extent included in such Vehicle Debt, the sum of
(i) with respect to Vehicles owned by TFFC or any other SPC and leased
to the Borrower or any Subsidiary of the Borrower, any obligation of
the Borrower or such Subsidiary with respect to such Vehicles which,
when added to all rental payments previously made by the Borrower or
such Subsidiary and the next regularly scheduled rental payment to be
made by the Borrower or such Subsidiary with respect to such Vehicles,
exceeds the sum of the aggregate Depreciation Charges (as defined in
the Base Indenture) with respect to such Vehicles plus any fair market
value adjustment with respect to such Vehicles provided for in the
documents relating to the lease applicable to such Vehicles plus (ii)
with respect to Vehicles owned by the Borrower or any Subsidiary of the
Borrower (other than TFFC or another SPC), any obligation of the
Borrower or such Subsidiary with respect to such Vehicles which exceeds
the excess of (x) the aggregate Capitalized Cost (as defined in the
Base Indenture) of such Vehicles over (y) the sum of the aggregate
Depreciation Charges (as defined in the Base Indenture) accrued with
respect to such Vehicles plus any fair market value adjustment with
respect to such Vehicles provided for in the documents relating to the
financing arrangements applicable to such Vehicles.
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"Non-Vehicle Interest Expense" means, for any applicable period, the
excess of
(a) the aggregate consolidated gross interest expense of the
Parent and its Subsidiaries for such period, as determined in
accordance with GAAP ("Aggregate Interest Expense"), including (i)
commitment fees paid or owed with respect to the then unutilized
portion of the Loan Commitment Amount, (ii) all other fees paid or owed
with respect to the issuance or maintenance of Contingent Liabilities
(including letters of credit), which, in accordance with GAAP, would be
included as interest expense, (iii) net costs or benefits under Hedging
Arrangements and (iv) the portion of any payments made in respect of
Capitalized Lease Liabilities of the Parent and its Subsidiaries
allocable to interest expense, but excluding the amortization of debt
issuance costs and other financing expenses incurred in connection with
the Transaction (provided that, in the event any such period would
include a Pre-Acquisition Period, such gross interest expense for such
Pre-Acquisition Period would equal the sum of (A) in the event such
Pre-Acquisition Period would include the Fiscal Quarter ending December
31, 1996, $31,053,000 (of which $24,753,000 is on account of Vehicle
Debt) plus (B) gross interest expense for the remainder of such
Pre-Acquisition Period (or, if the preceding clause (A) is not
applicable, for the entirety of such Pre-Acquisition Period) determined
on a pro forma basis after giving effect to consummation of the
Transaction in a manner consistent with the pro forma financial
statements set forth in the Registration Statement)
over
(b) to the extent included in the preceding clause (a), gross
interest expense in respect of Vehicle Debt.
"Note" means a promissory note of the Borrower payable to the order of
any Lender, in the form of Exhibit A hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise, whether
absolute or contingent, matured or unmatured, direct or indirect, choate or
inchoate, sole, joint, several or joint and several, due or to become due,
heretofore or hereafter contracted or acquired) of the Borrower and each other
Obligor arising under or in connection with this Agreement, the Notes, the
Letters of Credit and each other Loan Document.
"Obligor" means, as the context may require, the Borrower, the Parent
and any other Person (other than any Agent, the Issuer or any Lender) to the
extent such Person is obligated under, or otherwise a party to, this Agreement
or any other Loan Document.
"OECD" means the Organization for Economic Cooperation and Development.
"Organic Document" means, relative to any Obligor, as applicable, its
certificate of incorporation, by-laws, certificate of partnership, partnership
agreement, certificate of formation,
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limited liability agreement and all shareholder agreements, voting trusts and
similar arrangements applicable to any of such Obligor's partnership interests,
limited liability company interests or authorized shares of capital stock.
"Parent" is defined in the preamble.
"Parent Closing Date Certificate" means the closing date certificate
executed and delivered by the Parent pursuant to Section 6.1.11, substantially
in the form of Exhibit I-2 hereto.
"Parent Guaranty" means the Obligations of the Parent undertaken
pursuant to Article X.
"Parent Pledge Agreement" means the Pledge Agreement executed and
delivered by the Parent pursuant to Section 6.1.13, substantially in the form of
Exhibit F-1 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Parent Security Agreement" means the Security Agreement executed and
delivered by the Parent pursuant to Section 6.1.14, substantially in the form of
Exhibit G-3 hereto, as amended, supplemented, amended and restated or otherwise
modified from time to time.
"Participant" is defined in Section 12.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of Section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under Section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its name in Schedule II hereto or set forth in the Lender Assignment
Agreement, as such percentage may be adjusted from time to time pursuant to
Lender Assignment Agreement(s) executed by such Lender and its Assignee
Lender(s) and delivered pursuant to Section 12.11.1.
"Permitted Business Acquisition" means any Business Acquisition, so
long as
(a) (i) such Business Acquisition is a Franchisee Acquisition;
or
(ii) in the case of a Business Acquisition other than a
Franchisee Acquisition, the aggregate amount of expenditures of the
Borrower and its Subsidiaries (excluding Vehicle Debt but including the
aggregate amount of any and all other Indebtedness assumed in
connection therewith and including the fair market value of any shares
of Capital Stock of the Parent issued in connection therewith) in
respect of such Business Acquisition (such amount, the "Subject
Amount"), when added to the aggregate amount of all such expenditures
of the Borrower and its Subsidiaries in respect of Business
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Acquisitions (other than Franchisee Acquisitions) during the Fiscal
Year in which such Subject Amount would be expended, does not exceed
$150,000,000 (provided that the portion thereof payable in cash does
not exceed $50,000,000), and
(b) in the event the Subject Amount (which amount shall
include, in the event such Business Acquisition is to be consummated in
a series of related transactions, the aggregate amount of all such
expenditures of the Borrower and its Subsidiaries in respect of such
related transactions) would exceed $10,000,000 or in the event any
portion of the consideration in respect of such Business Acquisition is
in Capital Stock of the Parent, the Administrative Agent shall have
received a Compliance Certificate executed by the chief financial or
accounting Authorized Officer of the Parent certifying and, if
reasonably requested by the Administrative Agent, showing (in
reasonable detail and with appropriate calculations and computations in
all respects reasonably satisfactory to the Administrative Agent) that
on a historical pro forma basis (after giving effect to such Business
Acquisition and all transactions related thereto (including all
Indebtedness that would be assumed or incurred as a result of such
acquisition) and all Business Acquisitions consummated prior thereto
during the applicable periods thereunder) as of the last day of the
most recently completed Fiscal Quarter with respect to which, pursuant
to Section 8.1.1, financial statements have been, or are required to
have been, delivered by the Borrower or the Parent and the Borrower
would be in compliance with Section 8.2.4 as of the last day of such
Fiscal Quarter and would not suffer an increase in the Leverage Ratio
as of such date.
"Person" means any natural person, corporation, limited liability
company, partnership, joint venture, joint stock company, firm, association,
trust or unincorporated organization, government, governmental agency, court or
any other legal entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreement" means, as the context may require, the Parent Pledge
Agreement, the Borrower Pledge Agreement or the Subsidiary Pledge Agreement.
"Pre-Acquisition Period" means the period prior to the Acquisition
Date.
"Quarterly Payment Date" means the last Business Day of each March,
June, September, and December.
"Rating Agencies" means S&P and Moody's.
"Receivable" means any right to payment for goods sold or leased or for
services rendered, whether or not earned by performance, including any right to
payment under any franchise agreement.
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"Redeemable Capital Stock" means Capital Stock of the Borrower, the
Parent or any of their respective Subsidiaries that, either by its terms, by the
terms of any security into which it is convertible or exchangeable or otherwise,
(i) is or upon the happening of an event or passage of time would be required to
be redeemed (for consideration other than shares of common stock of the Parent)
on or prior to April 30, 2003, (ii) is redeemable at the option of the holder
thereof (for consideration other than shares of common stock of the Parent) at
any time prior to such date or (iii) is convertible into or exchangeable for
debt securities of the Parent, the Borrower or any of their respective
Subsidiaries at any time prior to such anniversary.
"Reference Lenders" means Credit Suisse First Boston, NationsBanc and
Caisse Nationale de Credit Agricole or, in the event that any one of such banks
ceases to be a Lender hereunder at any time, any other commercial bank
designated by the Borrower and approved by the Administrative Agent as
constituting a "Reference Lender" hereunder.
"Registration Statement" means the Registration Statement of the Parent
on Form S-1, filed with the SEC under the Securities Act on February 12, 1997
(File No. 333-21691), as last amended on April 18, 1997.
"Reimbursement Obligation" is defined in Section 4.6.
"Related Person" means, with respect to any natural person, (a) any
lineal descendant or antecedent, father, mother, spouse, brother, sister or
executor of such person or (b) a partnership, corporation, limited liability
company, trust or other entity formed solely for the benefit of any of the
foregoing.
"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, Lenders holding at least 51% of
the sum of the aggregate principal amount of the Loans then outstanding plus the
Letter of Credit Outstandings, or if no Loans and Letters of Credit are then
outstanding, Lenders having at least 51% of the Commitment Amount; provided,
however, that, in the event that at any such time the Co- Syndication Agents
(and their Affiliates) hold at least 40% of the sum of the aggregate principal
amount of the Loans then outstanding plus the Letter of Credit Outstandings, or
if no Loans and Letters of Credit are then outstanding, have at least 40% of the
Commitment Amount, then "Required Lenders" shall mean (other than for purposes
of determining the Lenders necessary to declare all or any portion of the Loans
to be due and payable, to terminate any Commitment or to demand compliance with
Section 4.7) Lenders holding at least 662/3% of the sum of the aggregate
principal amount of the Loans then outstanding plus the Letter of Credit
Outstandings, or if no Loans and Letters of Credit are then outstanding, Lenders
having at least 662/3% of the Commitment Amount.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended.
"S&P" means Standard & Poor's Rating Services.
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"SEC" means the Securities and Exchange Commission.
"Secured Parties" means the Lenders, the Issuer, the Agents and each of
their respective successors, transferees and assigns.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means, as the context may require, the Borrower
Security Agreement, the Subsidiary Security Agreement or the Parent Security
Agreement.
"Senior Debt Offering" is defined in the third recital.
"Senior Note Purchase Agreements" means the several Note Purchase
Agreements, dated as of April 25, 1997, in each case between the Borrower and
the purchaser named therein, as the same may be amended, supplemented, amended
and restated or otherwise modified from time to time in accordance with the
terms hereof.
"Senior Notes" means the 9.57% Guaranteed Senior Notes due 2007 of the
Borrower, issued pursuant to the Senior Note Purchase Agreements, as the same
may be amended, supplemented, amended and restated or otherwise modified from
time to time in accordance with the terms hereof.
"Series A Note Purchase Agreements" means the several Note Purchase
Agreements, dated as of December 1, 1996, in each case between the Parent and
the purchaser named therein, as supplemented and amended by the Series B Note
Purchase Agreements and as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time in accordance with the terms
hereof.
"Series B Note Purchase Agreements" means the several Note Purchase
Agreements, dated as of April 25, 1997, in each case between the Parent and the
purchaser named therein, as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time in accordance with the terms
hereof.
"Series A Notes" means the 7.0% Convertible Subordinated Notes, Series
A, due 2007 of the Parent, issued pursuant to the Series A Note Purchase
Agreements, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with the terms hereof.
"Series B Notes" means the 6.85% Convertible Subordinated Notes, Series
B, due 2007 of the Parent, issued pursuant to the Series B Note Purchase
Agreements, as the same may be
amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with the terms hereof.
"SPC" means Budget Funding Corporation, TFFC and any other
bankruptcy-remote Subsidiary of the Borrower formed for the specific purpose of
issuing highly-rated commercial paper, medium-term notes or other securities in
connection with the financing of Vehicles or for
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the specific purpose of owning such Vehicles and leasing such Vehicles to the
Borrower and its other Subsidiaries, in each case pursuant to a structured
financing or securitization program.
"Stated Amount" of each Letter of Credit means the maximum amount
available for drawing thereunder (whether or not any conditions to drawing can
then be met).
"Stated Expiry Date" is defined in Section 4.1.
"Stated Maturity Date" means April 29, 2002.
"Sterling" and the symbol "(pound)" mean the lawful currency of the
United Kingdom of Great Britain and Northern Ireland.
"Stock Purchase Agreements" is defined in the second recital.
"Subordinated Debt" means all unsecured Indebtedness of the Parent, the
Borrower or any Subsidiary Guarantor for money borrowed which is subordinated,
upon terms satisfactory to the Administrative Agent, in right of payment to the
payment in full in cash of all Obligations of the Parent, the Borrower or such
Subsidiary Guarantor, as the case may be, including the Series A Notes and the
Series B Notes.
"Subordinated Intercompany Debt" means unsecured Indebtedness (a)
subordinated to the Obligations by provisions substantially in the form set
forth in Schedule IV hereto and (b) the terms of which (including interest rate)
are not more burdensome to the obligor or obligors thereunder than those terms
generally available from independent third parties to obligors similarly
situated as such obligor or obligors.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity of which more than 50% of the outstanding
capital stock (or other ownership interest) having ordinary voting power to
elect a majority of the board of directors, managers or other voting members of
the governing body of such entity (irrespective of whether at the time capital
stock (or other ownership interest) of any other class or classes of such entity
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by such Person, by such Person and one or
more other Subsidiaries of such Person, or by one or more other Subsidiaries of
such Person.
"Subsidiary Guarantor" means any Subsidiary of the Borrower that is a
party to the Subsidiary Guaranty.
"Subsidiary Guaranty" means the Guaranty executed and delivered by each
Subsidiary that is a party thereto pursuant to Section 6.1.12, substantially in
the form of Exhibit H hereto, as amended, supplemented, restated or otherwise
modified from time to time.
"Subsidiary Pledge Agreement" means, collectively, the Pledge Agreement
executed and delivered by each Subsidiary party thereto pursuant to Section
6.1.13, substantially in the form
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of Exhibit F-3 hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Subsidiary Security Agreement" means, collectively, the Security
Agreement executed and delivered by each Subsidiary pursuant to Section 6.1.14,
substantially in the form of Exhibit G-2 hereto, as amended, supplemented,
amended and restated or otherwise modified from time to time.
"Supermajority Lenders" means, at any time, Lenders holding at least
66 2/3% of the sum of the aggregate principal amount of the Loans then
outstanding plus the Letter of Credit Outstandings, or if no Loans and Letters
of Credit are then outstanding, Lenders having at least 66 2/3% of the
Commitment Amount; provided, however, that, in the event that at any such time
the Co-Syndication Agents (and their Affiliates) hold at least 40% of the sum of
the aggregate principal amount of the Loans then outstanding plus the Letter of
Credit Outstandings, or if no Loans and Letters of Credit are then outstanding,
have at least 40% of the Commitment Amount, then "Supermajority Lenders" shall
mean Lenders holding at least 75% of the sum of the aggregate principal amount
of the Loans then outstanding plus the Letter of Credit Outstandings, or if no
Loans and Letters of Credit are then outstanding, Lenders having at least 75% of
the Commitment Amount.
"Swiss Francs" and the symbol "SFr" mean the lawful currency of The
Swiss Confederation.
"Taxes" is defined in Section 5.6.
"TFFC" means Team Fleet Financing Corporation, a Delaware corporation
and Wholly Owned Subsidiary of the Borrower.
"Total Debt" means, without duplication, the aggregate amount of all
Indebtedness of the Parent and its Subsidiaries, other than Indebtedness of the
type described in clause (b) (except to the extent such Indebtedness consists of
unreimbursed drawings under letters of credit), (d) or (e) of the definition of
"Indebtedness" or, to the extent in respect of such Indebtedness, clause (h) of
the definition of "Indebtedness".
"Transaction" is defined in the third recital.
"type" means, relative to any Loan, the portion thereof, if any, being
maintained as an ABR Loan or a Eurocurrency Loan.
"U.C.C." means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"United States" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
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"U.S. Government Obligations" means direct obligations of, or
obligations the timely payment of principal of and interest on which is fully
and unconditionally guaranteed by, the United States.
"Vehicle Debt" means Indebtedness relating solely to the financing of
any Vehicle and secured thereby (and by related collateral), other than any such
Vehicle financed hereunder pursuant to the Base Indenture Supplement; provided
that any obligation included as Non-Vehicle Debt pursuant to clause (iii) of
the definition thereof shall not be deemed to be Vehicle Debt.
"Vehicle Interest Expense" is defined in clause (b) of the definition
of "Non-Vehicle Interest Expense".
"Vehicles" means all existing and hereafter acquired motor vehicle
inventory of the Borrower and the Borrower's Subsidiaries, consisting of
passenger automobiles, light trucks and vans, whether held for sale, lease or
rental purposes.
"Voting Stock" means, with respect to any Person, Capital Stock in
respect of the class or classes pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers, trustees or other similar governing body of
such Person (irrespective of whether or not at the time the Capital Stock of any
other class or classes shall have or might have voting power by reason of the
occurrence of any contingency).
"Welfare Plan" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA.
"Wholly Owned Subsidiary" means, with respect to any Person, a
Subsidiary all the Capital Stock (other than directors' qualifying shares that
are required under applicable law) of which is owned by such Person or another
Wholly Owned Subsidiary of such Person.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Issuance Request,
Loan Document, notice and other communication delivered from time to time in
connection with this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
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.
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SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 8.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in Section 7.5.
Unless otherwise expressly provided, all financial covenants and defined
financial terms shall be computed on a consolidated basis for the Parent and its
Subsidiaries, in each case without duplication.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article VI), each Lender severally agrees as follows:
SECTION 2.1.1. Loan Commitment. From time to time on any Business Day
occurring prior to the Loan Commitment Termination Date, each Lender will make
Loans (relative to such Lender, its "Loans") denominated in any Available
Currency to the Borrower equal to such Lender's Percentage of the aggregate
amount of the Borrowing of Loans requested by the Borrower to be made on such
day. On the terms and subject to the conditions hereof, the Borrower may from
time to time borrow, prepay and reborrow Loans.
SECTION 2.1.2. Commitment to Issue Letters of Credit. From time to time
on any Business Day, the Issuer will issue, and each Lender will participate in,
the Letters of Credit, in accordance with Article IV.
SECTION 2.1.3. Lenders Not Permitted or Required To Make Loans or Issue
Letters of Credit Under Certain Circumstances. No Lender shall be permitted or
required to
(a) make any Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all Loans (after converting
all Foreign Currency Loans to the Equivalent thereof in Dollars)
(i) denominated in Foreign Currencies of all
Lenders would exceed the Foreign Currency Loan Commitment
Amount,
(ii) of all Lenders would exceed the Loan Commitment
Amount,
(iii) of all Lenders, together with all Letter of
Credit Outstandings, would exceed the lesser of the Commitment
Amount and the then existing Borrowing Base Amount,
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(iv) denominated in Foreign Currencies of such
Lender would exceed such Lender's Percentage of the Foreign
Currency Loan Commitment Amount,
(v) of such Lender would exceed such Lender's
Percentage of the Loan Commitment Amount, or
(vi) of such Lender, together with its Percentage of
all Letter of Credit Outstandings, would exceed such Lender's
Percentage of the lesser of the Commitment Amount and the then
existing Borrowing Base Amount; or
(b) issue (in the case of the Issuer) any Letter of Credit if,
after giving effect thereto
(i) all Letter of Credit Outstandings in respect of
Enhancement Letters of Credit would exceed the Enhancement
Letters of Credit Commitment Amount,
(ii) all Letter of Credit Outstandings, together
with the aggregate outstanding principal amount of all Loans
(after converting all Foreign Currency Loans to the Equivalent
thereof in Dollars) of all Lenders would exceed the lesser of
the Commitment Amount and the then existing Borrowing Base
Amount,
(iii) such Lender's Percentage of all Letter of
Credit Outstandings in respect of Enhancement Letters of
Credit would exceed such Lender's Percentage of the
Enhancement Letters of Credit Commitment Amount, or
(iv) such Lender's Percentage of all Letter of
Credit Outstandings, together with the aggregate outstanding
principal amount of all Loans (after converting all Foreign
Currency Loans to the Equivalent thereof in Dollars) of such
Lender would exceed such Lender's Percentage of the lesser of
the Commitment Amount and the then existing Borrowing Base
Amount.
SECTION 2.2. Reduction of Commitment Amounts. The Commitment Amount,
the Enhancement Letters of Credit Commitment Amount, the Loan Commitment Amount
and the Foreign Currency Loan Commitment Amount are subject to reduction from
time to time pursuant to this Section 2.2.
SECTION 2.2.1. Optional. The Borrower may, from time to time on any
Business Day occurring after the Closing Date, voluntarily reduce the unused
amount of the Commitment Amount; provided, however, that all such reductions
shall require at least three Business Days' prior notice to the Administrative
Agent and be permanent, and any partial reduction of the Commitment Amount shall
be in a minimum amount of $5,000,000 and in an integral multiple of $1,000,000.
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SECTION 2.2.2. Mandatory. The Commitment Amount shall,
(a) on the first Business Day prior to the Stated Maturity
Date, be reduced to the then existing Loan Commitment Amount; and
(b) to the extent not applied to the permanent repayment of
other Indebtedness that is not Subordinated Debt or Subordinated
Intercompany Debt, concurrently with the receipt by the Borrower, the
Parent or any of their respective Subsidiaries of any Net Disposition
Proceeds, Net Equity Proceeds, Net Issuance Proceeds or Casualty
Proceeds, as the case may be, be reduced by an aggregate amount equal
to 100% of such Net Disposition Proceeds, 50% of such Net Equity
Proceeds, 100% of such Net Issuance Proceeds or 100% of such Casualty
Proceeds, as the case may be; provided, however, that the Commitment
Amount shall not be reduced by the amount of any Casualty Proceeds
received by the Borrower, the Parent or such Subsidiary under this
clause (b) so long as (i) (A) the Borrower informs the Administrative
Agent no later than 30 days following the occurrence of the Casualty
Event resulting in such Casualty Proceeds of its, the Parent's or such
Subsidiary's good faith intention to apply such Casualty Proceeds to
the rebuilding or replacement of the property which was the subject of
such Casualty Event, and (B) such Casualty Proceeds are in fact applied
to rebuild or replace such damaged, destroyed or condemned property
within 180 days following the receipt of such Casualty Proceeds, and
(ii) no Default shall have occurred and be continuing.
Each such reduction in the Commitment Amount shall be permanent and automatic.
SECTION 2.2.3. Corresponding Reductions. Any reduction of the
Commitment Amount which reduces the Commitment Amount below the then current
amount of the Enhancement Letters of Credit Commitment Amount, the Loan
Commitment Amount or the Foreign Currency Loan Commitment Amount, as the case
may be, shall result in an automatic and corresponding reduction of the
Enhancement Letters of Credit Commitment Amount, the Loan Commitment Amount or
the Foreign Currency Commitment Amount, as the case may be, to the amount of the
Commitment Amount, as so reduced, without any further action on the part of the
Administrative Agent, the Lenders or otherwise.
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request
to the Administrative Agent on or before 11:00 a.m. (New York City, New York
time) on a Business Day, the Borrower may from time to time irrevocably request,
(a) on such Business Day (but in any event not more than five
Business Days' notice) in the case of ABR Loans denominated in Dollars,
(b) on not less than three (but in any event not more than
five) Business Days' notice in the case of Eurocurrency Loans
denominated in Dollars, or
(c) on not less than four (but in any event not more than six)
Business Days' notice in the case of Eurocurrency Loans denominated in
any Foreign Currency,
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that a Borrowing be made, in the case of ABR Loans, in a minimum amount of
$3,000,000 and an integral multiple of $100,000, in the case of Eurocurrency
Loans, in a minimum amount of $5,000,000 (or the Equivalent thereof in any
Foreign Currency) and an integral multiple of $100,000 (or the Equivalent
thereof in such Foreign Currency) or, in either case, in the unused amount of
the Commitment (subject to the Foreign Currency Loan Commitment Amount if such
Loan is a Eurocurrency Loan denominated in a Foreign Currency) and rounded to
the nearest one hundred thousand units of such Foreign Currency in the case of
Eurocurrency Loans denominated in a Foreign Currency. On the terms and subject
to the conditions of this Agreement, each Borrowing shall be comprised of the
type of Loans, and shall be made on the Business Day, in the Available Currency
specified in such Borrowing Request. On or before 1:00 p.m. (local time) on such
Business Day, each Lender shall deposit with the Administrative Agent same day
funds in the applicable Available Currency an amount equal to such Lender's
Percentage of the requested Borrowing. Such deposit will be made to an account
which the Administrative Agent shall specify from time to time by notice to the
Lenders. To the extent funds are received from the Lenders, the Administrative
Agent shall make such funds available to the Borrower by wire transfer to the
accounts the Borrower shall have specified in its Borrowing Request. No Lender's
obligation to make any Loan shall be affected by any other Lender's failure to
make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 11:00
a.m. (New York City, New York time) on a Business Day, the Borrower may from
time to time irrevocably elect,
(a) on such Business Day in the case of ABR Loans,
(b) on not less than three (but in any event not more than
five) Business Days' notice in the case of Eurocurrency Loans
denominated in Dollars, or
(c) on not less than four (but in any event not more than six)
Business Days' notice in the case of Eurocurrency Loans denominated in
any Foreign Currency,
that all, or any portion in an aggregate minimum amount of $3,000,000 (or the
Equivalent thereof in any Foreign Currency) and an integral multiple of $100,000
(or the Equivalent thereof in such Foreign Currency), in the case of any
Eurocurrency Loan, be converted into an ABR Loan denominated in Dollars, or an
aggregate minimum amount of $5,000,000 (or the Equivalent thereof in any Foreign
Currency) and an integral multiple of $100,000 (or the Equivalent thereof in
such Foreign Currency), in the case of any ABR Loan or Eurocurrency Loan, as the
case may be, be converted into or continued as, as the case may be, a
Eurocurrency Loan (in the absence of delivery of a Continuation/ Conversion
Notice with respect to any Eurocurrency Loan at least three Business Days (but
not more than five Business Days) before the last day of the then current
Interest Period with respect thereto, such Eurocurrency Loan shall, on such last
day, automatically convert to an ABR Loan); provided, however, that (i) each
such conversion or continuation shall be pro rated among the applicable
outstanding Loans of all Lenders, (ii) no portion of the outstanding principal
amount of any Loans may be continued as, or be converted into, Eurocurrency
Loans when any Default has occurred and is continuing and
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(iii) no Loan or portion of the outstanding principal amount of any Loan may be
continued as or converted into a Loan denominated in an Available Currency other
than the one in which it was originally issued, except that Eurocurrency Loans
denominated in a Foreign Currency that are to be converted into ABR Loans shall
only be converted into ABR Loans denominated in Dollars.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurocurrency Loans hereunder by causing
one of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such Eurocurrency Loan; provided,
however, that such Eurocurrency Loan shall nonetheless be deemed to have been
made and to be held by such Lender, and the obligation of the Borrower to repay
such Eurocurrency Loan shall nevertheless be to such Lender for the account of
such foreign branch, Affiliate or international banking facility. In addition,
the Borrower hereby consents and agrees that, for purposes of any determination
to be made for purposes of Section 5.1, 5.2, 5.3 or 5.4, it shall be
conclusively assumed that each Lender elected to fund all Eurocurrency Loans in
an Available Currency by purchasing deposits in such Available Currency in its
Eurocurrency Office's interbank eurodollar market.
SECTION 2.6. Loan Accounts. (a) The Loans and participations in the
Letter of Credit Outstandings made by each Lender and the Letters of Credit
issued by the Issuer shall be evidenced by one or more loan accounts or records
maintained by such Lender or the Issuer, as the case may be, in the ordinary
course of business. The loan accounts or records maintained by the
Administrative Agent, the Issuer and each Lender shall be conclusive absent
manifest error of the amount of the Loans, the participations in Letter of
Credit Outstandings and the Letters of Credit made by the Lenders and the
Issuer, as the case may be, and the interest and payments thereon. Any failure
so to record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with
respect to the Loans and Letters of Credit, as the case may be, or of the
Lenders with respect to participations in Letter of Credit Outstandings.
(b) If requested by any Lender, such Lender's Loans under the Loan
Commitment shall be evidenced by a Note payable to the order of such Lender in a
maximum principal amount equal to such Lender's Percentage of the sum of (a) the
difference of the original Loan Commitment Amount minus the original Foreign
Currency Loan Commitment Amount plus (b) 103% of the original Foreign Currency
Loan Commitment Amount. The Borrower hereby irrevocably authorizes each Lender
having a Note to make (or cause to be made) appropriate notations on the grid
attached to such Lender's Note (or on any continuation of such grid), which
notations, if made, shall evidence, inter alia, the date of, the outstanding
principal of, and the interest rate and Interest Period applicable to the Loans
evidenced thereby, and whether such Loans are denominated in Dollars or a
Foreign Currency. Such notations shall be conclusive and binding on the Borrower
absent manifest error; provided, however, that the failure of any Lender having
a Note to make any such notations shall not limit or otherwise affect any
Obligations of the Borrower or any other Obligor.
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SECTION 2.7. Special Provisions for Loans Denominated in Foreign
Currencies.
SECTION 2.7.1. Notification of Request. If any Borrowing Request
requests a Borrowing in a Foreign Currency, or if pursuant to any
Continuation/Conversion Notice the Borrower elects to continue any Eurocurrency
Loan denominated in a Foreign Currency, the Administrative Agent shall in the
notice given to the Lenders pursuant to Section 2.3 or Section 2.4, as the case
may be, give details of such request or election including, as the case may be,
the aggregate principal amount of the Borrowing in such Foreign Currency to be
made by each Lender pursuant to the terms of this Agreement or the aggregate
principal amount of such Eurocurrency Loans to be continued by each Lender
pursuant to the terms of this Agreement.
SECTION 2.7.2. Availability. Each Lender shall be treated as having
confirmed that the Foreign Currency requested, or elected by the Borrower to be
continued, is Available to it unless no later than 10:00 a.m. (New York City,
New York time) two Business Days prior to the day of the requested Borrowing, or
the proposed continuation, it shall have notified the Administrative Agent that
such Foreign Currency is not Available.
SECTION 2.7.3. Notification of Availability. In the event the
Administrative Agent has received notification from any of the Lenders that the
Foreign Currency requested or elected by the Borrower to be continued is not
available, then the Administrative Agent shall notify the Borrower and the
Lenders no later than 12:00 noon (New York City, New York time) two Business
Days prior to the day of the proposed Borrowing or proposed continuation.
SECTION 2.7.4. Consequences of Non-Availability. If the Administrative
Agent notifies the Borrower pursuant to Section 2.7.3 that any of the Lenders
has notified the Administrative Agent that the Foreign Currency requested or
elected by the Borrower to be continued is not Available, such notification
shall (a) in the case of any Borrowing Request, revoke such Borrowing Request
and (b) in the case of any Continuation/Conversion Notice, result in the
Eurocurrency Loans denominated in such Foreign Currency being automatically
converted into Eurocurrency Loans denominated in Dollars for a one month
Interest Period on the last day of the then current Interest Period with respect
to such Eurocurrency Loans denominated in such Foreign Currency.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
Prior thereto, the Borrower
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(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Loans; provided, however, that
(i) any such prepayment shall be made pro rata
among Loans of the same type and denominated in the same
Available Currency, and, if applicable, having the same
Interest Period of all Lenders;
(ii) all such voluntary prepayments shall require
prior irrevocable written notice to the Administrative Agent
received by the Administrative Agent no later than 11:00 a.m.
(New York City, New York)
(A) on such Business Day in the case of ABR
Loans,
(B) on not less than three (but in any event
not more than five) Business Days' notice in the case
of Eurocurrency Loans denominated in Dollars, or
(C) on not less than four (but in any event
not more than six) Business Days' notice in the case
of Eurocurrency Loans denominated in any Foreign
Currency; and
(iii) all such voluntary partial prepayments shall
be, in the case of ABR Loans, in an aggregate minimum amount
of $3,000,000 and an integral multiple of $100,000 and, in the
case of Eurocurrency Loans, in an aggregate minimum amount of
$5,000,000 (or the Equivalent thereof in any Foreign Currency)
and an integral multiple of $100,000 (or the Equivalent
thereof in such Foreign Currency), in the case of Eurocurrency
Loans denominated in a Foreign Currency, rounded to the
nearest one hundred thousand unit of such Foreign Currency;
(b) shall, on each date when
(i) any reduction in the Commitment Amount shall
become effective (including pursuant to Section 2.2), make a
mandatory prepayment equal to the excess, if any, of the
aggregate, outstanding principal amount of all Loans (after
converting all Foreign Currency Loans to the Equivalent
thereof in Dollars) and Letter of Credit Outstandings over the
Commitment Amount in effect on such date (following such
reduction);
(ii) the aggregate unpaid principal amount of all
Foreign Currency Loans (after converting all such Foreign
Currency Loans to the Equivalent thereof in Dollars and
multiplying such resulting amount by 97.08737864%) then
outstanding exceeds the Foreign Currency Loan Commitment
Amount in effect on such date, make a mandatory prepayment
equal to the excess, if any, of the aggregate, outstanding
principal amount of all Foreign Currency Loans (after
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converting all such Foreign Currency Loans to the Equivalent
thereof in Dollars) over the Foreign Loan Commitment Amount
in effect on such date; or
(iii) the aggregate unpaid principal amount of all
Loans (after converting all Foreign Currency Loans to the
Equivalent thereof in Dollars and multiplying such resulting
amount by 97.08737864%) and Letter of Credit Outstandings
exceeds the lesser of the Commitment Amount in effect on such
date and the Borrowing Base Amount in effect on such date,
make a mandatory prepayment equal to the excess, if any, of
the aggregate, outstanding principal amount of all Loans
(after converting all Foreign Currency Loans to the Equivalent
thereof in Dollars) and Letter of Credit Outstandings over the
lesser of the Commitment Amount in effect on such date and the
Borrowing Base Amount in effect on such date,
which mandatory prepayment shall be applied (or held for application,
as the case may be) by the Lenders
(A) first, to the payment of the aggregate unpaid
principal amount of those Foreign Currency Loans then
outstanding equal to the excess, if any, of the aggregate,
outstanding principal amount of all Foreign Currency Loans
(after converting all such Foreign Currency Loans to the
Equivalent thereof in Dollars) over the Foreign Currency Loan
Commitment Amount in effect on such date (following such
reduction, if applicable);
(B) second, to the payment of the aggregate unpaid
principal amount of those Loans then outstanding equal to the
excess, if any, of the aggregate, outstanding principal amount
of all Loans (after converting all Foreign Currency Loans to
the Equivalent thereof in Dollars) over the Loan Commitment
Amount in effect on such date (following such reduction, if
applicable);
(C) third, to the payment and/or cash
collateralization of the then outstanding Letter of Credit
Outstandings in respect of Enhancement Letters of Credit equal
to the excess, if any, of the Letter of Credit Outstandings in
respect of the Enhancement Letters of Credit over the
Enhancement Letters of Credit Commitment Amount in effect on
such date (following such reduction, if applicable);
(D) fourth, to the payment and/or cash
collateralization of the then outstanding Letter of Credit
Outstandings equal to the excess, if any, of the Letter of
Credit Outstandings over the lesser of the Commitment Amount
in effect on such date (following such reduction, if
applicable) and the Borrowing Base Amount in effect on such
date; and
(E) fifth, to the payment of the aggregate unpaid
principal amount of the Loans denominated in Dollars then
outstanding, then to the payment of the
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aggregate unpaid principal amount of all Foreign Currency
Loans then outstanding, and then to the payment and/or cash
collateralization of the then outstanding Letter of Credit
Outstandings equal to the excess, if any, of the aggregate,
outstanding principal amount of all Loans (after converting
all Foreign Currency Loans to the Equivalent thereof in
Dollars) and Letter of Credit Outstandings over the lesser of
the Commitment Amount in effect on such date (following such
reduction, if applicable) and the Borrowing Base Amount in
effect on such date; and
(c) shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans pursuant to Section 9.2 or Section 9.3,
repay all Loans, unless, pursuant to Section 9.3, only a portion of all
Loans is so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty (except as may be required by Section 5.4).
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as an ABR
Loan, equal to the sum of the Alternate Base Rate from time to time in
effect plus the Applicable Margin for such Loan; and
(b) on that portion maintained as a Eurocurrency Loan, during
each Interest Period applicable thereto, equal to the sum of the
Eurocurrency Rate (Reserve Adjusted) for such Interest Period plus the
Applicable Margin for such Loan.
All Eurocurrency Loans shall bear interest from and including the first
day of the applicable Interest Period to (but not including) the last day of
such Interest Period at the interest rate determined as applicable to such
Eurocurrency Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount
of any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower or any other Obligor, as the case may be, shall have become due and
payable, the Borrower or such other Obligor, as the case may be, shall pay, but
only to the extent permitted by law and not otherwise provided for in any
Enhancement Letter of Credit in respect of a Liquidity Obligation, interest
(after as well as before judgment) on such amounts at a rate per annum equal
(a) in the case of such amounts that are comprised of the
principal amount of any Loan, to 2.0% above the rate otherwise
applicable thereto; and
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(b) in the case of such amounts that are comprised of any
monetary obligation of the Borrower or such other Obligor (other than
such obligations comprised of the principal amount of any Loan), to the
Alternate Base Rate from time to time in effect plus a margin of 2.0%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any optional or required payment or
prepayment, in whole or in part, of principal outstanding on such Loan;
(c) with respect to ABR Loans, on each Quarterly Payment Date
occurring after the Closing Date;
(d) with respect to Eurocurrency Loans, on the last day of
each applicable Interest Period (and, if such Interest Period shall
exceed three months, on the same calendar day of every third month of
such Interest Period as the day on which such Interest Period
commenced);
(e) with respect to any ABR Loans converted into Eurocurrency
Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 9.2 or Section 9.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.2.4. Interest Rate Determination. Each Reference Lender
agrees to furnish to the Administrative Agent timely information for the purpose
of determining each Eurocurrency Rate. If any one or more of the Reference
Lenders shall fail timely to furnish such information to the Administrative
Agent for any such interest rate, the Administrative Agent shall determine such
interest rate on the basis of the information furnished by the remaining
Reference Lenders.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender, for the period (including
any portion thereof when any of its Commitment is suspended by reason of the
Borrower's inability to satisfy any condition of
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Article VI) commencing on the Effective Date and continuing through the Loan
Commitment Termination Date, a commitment fee equal to the Applicable Commitment
Fee on such Lender's Percentage of the sum of the average daily unused portion
of the Commitment Amount. Such commitment fee shall be payable by the Borrower
in arrears on each Quarterly Payment Date, commencing with the first such day
following the Effective Date, and on the Loan Commitment Termination Date.
SECTION 3.3.2. Arrangement Fees. In accordance with the letter
agreement (the "Fee Letter") among the Borrower and Credit Suisse First Boston
dated March 24, 1997, the Borrower shall pay on the Closing Date an arrangement
fee to the Arranger for the account of the Lenders in such proportion as the
Arranger shall determine in its sole discretion.
SECTION 3.3.3. Administrative Agent's Fee. The Borrower agrees to pay
to the Administrative Agent for its own account, a non-refundable initial fee in
the amount set forth in the Fee Letter, payable on the Closing Date and,
thereafter, a non-refundable annual fee in the amount set forth in the Fee
Letter, payable in advance on each anniversary of the Closing Date.
SECTION 3.3.4. Letter of Credit Face Amount Fee. The Borrower agrees to
pay to the Administrative Agent, for the account of the Lenders, a fee for each
Letter of Credit for the period from and including the date of the issuance of
such Letter of Credit to (but not including) the date upon which such Letter of
Credit expires, calculated at a per annum rate equal to the Applicable Margin
with respect to Eurocurrency Loans on the Stated Amount of such Letter of
Credit. Such fee shall be payable by the Borrower in arrears each Quarterly
Payment Date, and on the Letter of Credit Commitment Termination Date for any
period then ending for which such fee shall not theretofore have been paid,
commencing on the first such date after the issuance of such Letter of Credit.
SECTION 3.3.5. Letter of Credit Issuing Fee. The Borrower agrees to pay
to the Administrative Agent, for the account of the Issuer, an issuing fee for
each Letter of Credit for the period from and including the date of issuance of
such Letter of Credit to (but not including) the date upon which such Letter of
Credit expires, of 1/8% per annum on the Stated Amount of such Letter of Credit.
Such fee shall be payable by the Borrower in arrears on each Quarterly Payment
Date and on the Letter of Credit Commitment Termination Date for any period then
ending for which such fee shall not theretofore have been paid, commencing on
the first such date after the issuance of such Letter of Credit.
SECTION 3.3.6. Letter of Credit Administrative Fee. The Borrower agrees
to pay to the Administrative Agent, for the account of the Issuer, the amounts
set forth in Section 4.3.
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ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. Issuance Requests. By delivering to the Administrative
Agent and the Issuer an Issuance Request, together with an Enhancement Letter of
Credit Application and Agreement if such Issuance Request is in respect of an
Enhancement Letter of Credit on or before 1:00 p.m. (New York City, New York
time), the Borrower may request, from time to time prior to the Loan Commitment
Termination Date and, except in the case of the Letters of Credit which are
described in the Issuance Request and applicable Enhancement Letter of Credit
Application and Agreement(s) delivered by the Borrower to the Administrative
Agent pursuant to Section 6.1.16, on not less than two nor more than ten
Business Days' notice, in the case of General Letters of Credit, and on not less
than 15 nor more than 21 Business Days' notice, in the case of Enhancement
Letters of Credit, that the Issuer issue Letters of Credit in support of
financial obligations of the Borrower or any other Account Party incurred in the
ordinary course of business of the Borrower or such Account Party, as the case
may be, and which are described in such Issuance Request; provided that, in the
case of an Issuance Request that requests an increase in the Stated Amount of an
Enhancement Letter of Credit then outstanding, such Issuance Request shall be so
delivered on not less than five nor more than ten Business Days notice. Upon
receipt of an Issuance Request and, if applicable, an Enhancement Letter of
Credit Application and Agreement, the Administrative Agent shall promptly notify
the Lenders thereof. Each Letter of Credit shall by its terms:
(a) be issued in a Stated Amount denominated in Dollars which
(i) is at least $100,000;
(ii) does not exceed (or would not exceed)
(A) in the case of General Letters of
Credit, an amount equal to the excess, if any, of the
lesser of the Commitment Amount and the then existing
Borrowing Base Amount over all Letter of Credit
Outstandings, together with the aggregate outstanding
principal amount of all Loans (after converting all
Foreign Currency Loans to the Equivalent thereof in
Dollars), and
(B) in the case of the Enhancement Letters
of Credit, an amount equal to the lesser of
(1) the excess, if any, of the
lesser of the Enhancement Letters of Credit
Commitment Amount over all Letter of Credit
Outstandings in respect of Enhancement
Letters of Credit and
(2) the excess, if any, of the
lesser of the Commitment Amount and the then
existing Borrowing Base Amount over all
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Letter of Credit Outstandings, together with
the aggregate outstanding principal amount
of all Loans (after converting all Foreign
Currency Loans to the Equivalent thereof in
Dollars); and
(b) except in the case of the Letters of Credit set forth on
Schedule V hereto, be stated to expire on a date (its "Stated Expiry
Date") no later than the earlier of (i) (A) one year from its date of
issuance, in the case of a General Letter of Credit, and (B) three
years from its date of issuance, in the case of an Enhancement Letter
of Credit, and (ii) the Letter of Credit Commitment Termination Date in
effect at the time of such issuance.
So long as no Default has occurred and is continuing, by delivery to the Issuer
and the Administrative Agent of an Issuance Request, at least two but not more
than ten Business Days prior to the Stated Expiry Date of any issued General
Letter of Credit or prior to the date any issued General Letter of Credit
containing an "evergreen" or similar automatic extension feature is scheduled to
automatically be extended unless the beneficiary thereof shall have received
notice to the contrary from the Issuer, the Borrower may request the Issuer to
extend the Stated Expiry Date of such issued General Letter of Credit for an
additional period not to exceed the earlier of (A) one year from its date of
extension and (B) the Letter of Credit Commitment Termination Date in effect at
the time of such extension. So long as no Default has occurred and is
continuing, the Borrower (or the applicable Account Party) may request the
Issuer to extend the Stated Expiry Date of any issued Enhancement Letter of
Credit for an additional period not to exceed the earlier of (A) one year from
its date of extension and (B) the Letter of Credit Commitment Termination Date
in effect at the time of such extension; provided such request is made in
accordance with the terms of the Enhancement Letter of Credit Application and
Agreement relating thereto and is accompanied by delivery to the Issuer and the
Administrative Agent of an Issuance Request.
Notwithstanding any provision to the contrary, the Issuer may not issue
any Enhancement Letter of Credit or enter into any Enhancement Letter of Credit
Application and Agreement that provides for LOC Liquidity Disbursements (other
than the CP Enhancement Letter of Credit or the CP Enhancement Letter of Credit
Application and Agreement), unless each Lender has consented to the terms
thereof.
SECTION 4.2. Issuances and Extensions. On the terms and subject to the
conditions of this Agreement (including Article VI), the Issuer shall issue
Letters of Credit, and extend the Stated Expiry Dates of outstanding Letters of
Credit, in accordance with the Issuance Requests made therefor and, if
applicable, the Enhancement Letter of Credit Application and Agreement relating
thereto. The Issuer shall promptly confirm any such issuance or extension
(including the date of such issuance or extension), as the case may be, to the
Administrative Agent. The Issuer will make available the original of each Letter
of Credit which it issues in accordance with the Issuance Request and the
Enhancement Letter of Credit Application and Agreement, if applicable, therefor
to the beneficiary thereof (and will promptly provide each of the Lenders with a
copy of such Letter of Credit) and will notify the beneficiary under any Letter
of Credit of any extension of the Stated Expiry Date thereof.
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SECTION 4.3. Expenses. The Borrower agrees to pay to the Administrative
Agent for the account of the Issuer all administrative expenses of the Issuer in
connection with the issuance, maintenance, modification (if any) and
administration of each Letter of Credit issued by the Issuer upon demand from
time to time.
SECTION 4.4. Other Lenders' Participation. Each Letter of Credit issued
pursuant to Section 4.2 shall, effective upon its issuance and without further
action, be issued on behalf of all Lenders (including the Issuer thereof) pro
rata according to their respective Percentages. Each Lender shall, to the extent
of its Percentage, be deemed irrevocably to have participated in the issuance of
such Letter of Credit and (x) shall be responsible to reimburse promptly the
Issuer thereof for Reimbursement Obligations which have not been reimbursed by
the Borrower in accordance with Section 4.5, or which have been reimbursed by
the Borrower but must be returned, restored or disgorged by the Issuer for any
reason, or (y) in the case of an LOC Liquidity Disbursement, shall participate
in such LOC Liquidity Disbursement in accordance with the terms of the
Enhancement Letter of Credit Application and Agreement relating thereto. Each
Lender shall, to the extent of its Percentage, be entitled to receive from the
Administrative Agent a ratable portion of the letter of credit fees received by
the Administrative Agent pursuant to Section 3.3.4 with respect to each Letter
of Credit. In the event that (a) the Borrower shall fail to reimburse the
Issuer, or if for any reason Loans shall not be made to fund any Reimbursement
Obligation, all as provided in Section 4.5 and in an amount equal to the amount
of any drawing honored by the Issuer under a Letter of Credit issued by it, (b)
the Issuer must for any reason return or disgorge such reimbursement or (c) an
LOC Liquidity Disbursement has occurred, the Issuer shall promptly notify the
Administrative Agent of the unreimbursed amount of such drawing and of such
Lender's respective participation therein. Each Lender shall make available to
the Administrative Agent for the account of the Issuer, whether or not any
Default shall have occurred and be continuing, an amount equal to its respective
participation in same day or immediately available funds at the office of the
Issuer specified in such notice not later than 11:00 a.m. (New York City, New
York time) on the Business Day (under the laws of the jurisdiction of the
Issuer) after the date notified by the Issuer. In the event that any Lender
fails to make available to the Administrative Agent for the account of the
Issuer the amount of such Lender's participation in such Letter of Credit as
provided herein, the Issuer shall be entitled to recover such amount on demand
from such Lender together with interest at the daily average Federal Funds Rate
for three Business Days (together with such other compensatory amounts as may be
required to be paid by such Lender to the Administrative Agent and/or the
Issuer, as the case may be, pursuant to the Rules for Interbank Compensation of
the council on International Banking or the Clearinghouse Compensation
Committee, as the case may be, as in effect from time to time) and thereafter at
the Alternate Base Rate plus 2.0%. Nothing in this Section shall be deemed to
prejudice the right of any Lender to recover from the Issuer any amounts made
available by such Lender to the Issuer pursuant to this Section in the event
that it is determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit by the Issuer in respect of which payment was made
by such Lender constituted gross negligence or wilful misconduct on the part of
the Issuer. The Issuer shall distribute to the Administrative Agent for the
account of each other Lender which has paid all amounts payable by it under this
Section with respect to any Letter of Credit issued by the Issuer such other
Lender's Percentage
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of all payments received by the Issuer from the Borrower in reimbursement of
drawings honored by the Issuer under such Letter of Credit when such payments
are received.
SECTION 4.5. Disbursements. The Issuer will notify the Borrower and the
Administrative Agent promptly of the presentment for payment of any Letter of
Credit, together with notice of the date (a "Disbursement Date") such payment
shall be made. Subject to the terms and provisions of such Letter of Credit, the
Issuer shall make such payment to the beneficiary (or its designee) of such
Letter of Credit. Prior to 11:00 a.m. (New York City, New York time) on the
Disbursement Date, the Borrower will reimburse the Issuer for all amounts which
it has disbursed under such Letter of Credit, except to the extent such amounts
are in respect of an LOC Liquidity Disbursement (in which case such amounts
shall be reimbursed to the Issuer or the Lenders by the applicable SPC in
accordance with the provisions of the Enhancement Letter of Credit Application
and Agreement relating thereto (the obligation of such SPC to reimburse the
Issuer or the Lenders for such amounts in accordance with such terms being
herein referred to as a "Liquidity Obligation")). To the extent the Issuer is
not reimbursed in full in respect of any Reimbursement Obligation payable by the
Borrower in accordance with the immediately preceding sentence, such
Reimbursement Obligation shall accrue interest at a fluctuating rate determined
by reference to the Alternate Base Rate, plus a margin of 2.0% per annum,
payable on demand. In the event the Issuer is not reimbursed by the Borrower on
the Disbursement Date for any Reimbursement Obligation in respect of any General
Letter of Credit due and owing on such Disbursement Date, or if the Issuer must
for any reason return or disgorge such reimbursement, the Lenders (including the
Issuer) shall, on the terms and subject to the conditions of this Agreement
(including the conditions set forth in Article VI), fund such Reimbursement
Obligation by making, on the next Business Day, Loans which are ABR Loans as
provided in Section 2.3 (the Borrower being deemed to have given a timely
Borrowing Request therefor for such amount); provided, however, for the purpose
of determining the availability of the Commitments to make Loans immediately
prior to giving effect to the application of the proceeds of such Loans, such
Reimbursement Obligation shall be deemed not to be outstanding at such time.
SECTION 4.6. Reimbursement. The obligation (a "Reimbursement
Obligation") of an Obligor under Section 4.5 or under the applicable Enhancement
Letter of Credit Application and Agreement to reimburse the Issuer with respect
to each disbursement (including interest thereon), and each Lender's obligation
to make participation payments in each drawing which has not been reimbursed by
the Borrower or the applicable Account Party, shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim, or defense to payment which the Borrower may have or have had
against any Lender or any beneficiary of a Letter of Credit, including any
defense based upon the occurrence of any Default, any draft, demand or
certificate or other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient, the failure of any disbursement to
conform to the terms of the applicable Letter of Credit (if, in the Issuer's
good faith opinion, such disbursement is determined to be appropriate) or any
non-application or misapplication by the beneficiary of the proceeds of such
disbursement, or the legality, validity, form, regularity, or enforceability of
such Letter of Credit; provided, however, that nothing herein shall adversely
affect the right of the Borrower to commence any proceeding against the Issuer
for any wrongful
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disbursement made by the Issuer under a Letter of Credit as a result of acts or
omissions constituting gross negligence or wilful misconduct on the part of the
Issuer.
SECTION 4.7. Deemed Disbursements. Upon the occurrence and during the
continuation of any Event of Default or the occurrence of the Letter of Credit
Commitment Termination Date, an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit shall, at
the election of the Issuer acting on instructions from the Required Lenders, and
without demand upon or notice to the Borrower, be deemed to have been paid or
disbursed by the Issuer under such Letters of Credit (notwithstanding that such
amount may not in fact have been so paid or disbursed), and, upon notification
by the Issuer to the Administrative Agent and the Borrower of its obligations
under this Section, the Borrower shall be immediately obligated to reimburse the
Issuer the amount deemed to have been so paid or disbursed by the Issuer. Any
amounts so received by the Issuer from the Borrower pursuant to this Section
shall be held as collateral security for the repayment of the Borrower's
obligations in connection with the Letters of Credit issued by the Issuer. At
any time when such Letters of Credit shall terminate and all Obligations of the
Issuer are either terminated or paid or reimbursed to the Issuer in full, the
Obligations of the Borrower under this Section shall be reduced accordingly
(subject, however, to reinstatement in the event any payment in respect of such
Letters of Credit is recovered in any manner from the Issuer), and the Issuer
will return to the Borrower the excess, if any, of
(a) the aggregate amount deposited by the Borrower with the
Issuer and not theretofore applied by the Issuer to any Reimbursement
Obligation
over
(b) the aggregate amount of all Reimbursement Obligations to
the Issuer pursuant to this Section, as so adjusted.
At such time when all Events of Default shall have been cured or waived, the
Issuer shall return to the Borrower all amounts then on deposit with the Issuer
pursuant to this Section. All amounts on deposit pursuant to this Section shall,
until their application to any Reimbursement Obligation or their return to the
Borrower, as the case may be, bear interest at the daily average Federal Funds
Rate from time to time in effect (net of the costs of any reserve requirements,
in respect of amounts on deposit pursuant to this Section, pursuant to F.R.S.
Board Regulation D), which interest shall be held by the Issuer as additional
collateral security for the repayment of the Borrower's Obligations in
connection with the Letters of Credit issued by the Issuer.
SECTION 4.8. Nature of Reimbursement Obligations. The Borrower shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither the Issuer nor any Lender (except to the extent
of its own gross negligence or wilful misconduct) shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any Letter of Credit or any document submitted by any
party in connection with the
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application for and issuance of a Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which may prove to
be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex, or otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a disbursement under a
Letter of Credit or of the proceeds thereof.
None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted the Issuer or any Lender hereunder. In furtherance and
extension, and not in limitation or derogation, of any of the foregoing, any
action taken or omitted to be taken by the Issuer in good faith shall be binding
upon the Borrower and shall not put the Issuer under any resulting liability to
the Borrower.
SECTION 4.9. Indemnity. In addition to amounts payable as elsewhere
provided herein, the Borrower hereby agrees to protect, indemnify, pay and save
the Issuer harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees and allocated costs of internal counsel) which the Issuer may incur or be
subject to as a consequence, direct or indirect, of
(a) the issuance of the Letters of Credit, other than as a
result of the gross negligence or wilful misconduct of the Issuer as
determined by a court of competent jurisdiction, or
(b) the failure of the Issuer to honor a drawing under any
Letter of Credit as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government or
governmental authority.
SECTION 4.10. Borrower's Guaranty of Reimbursement Obligations of its
Subsidiaries. The Borrower agrees as follows in respect of the Reimbursement
Obligations of its Subsidiaries (other than SPCs):
SECTION 4.10.1. Guaranty. The Borrower hereby absolutely,
unconditionally and irrevocably
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(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Reimbursement Obligations (other than
Liquidity Obligations) now or hereafter existing, of each of its
Subsidiaries that is an Account Party which arise out of, or are
incurred in connection with, such Letters of Credit, whether for
principal, interest, fees, expenses or otherwise (including all such
amounts which would become due but for the operation of the automatic
stay under Section 362(a) of the United States Bankruptcy Code, 11
U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of
the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)),
and
(b) indemnifies and holds harmless each Secured Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Secured Party
or such holder, as the case may be, in enforcing any rights under the
guaranty contained in this Section 4.10.
The guaranty contained in this Section 4.10 constitutes a guaranty of payment
when due and not of collection, and the Borrower specifically agrees that it
shall not be necessary or required that any Secured Party or any holder of any
Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against any Account Party or any other Obligor (or any other
Person) before or as a condition to the obligations of the Borrower under the
guaranty contained in this Section 4.10 (such obligations hereinafter referred
to as the "Guaranteed Obligations").
SECTION 4.10.2. Acceleration of Guaranty. The Borrower agrees that, in
the event of the dissolution or insolvency of any Account Party, any other
Obligor or the Borrower, or the inability or failure of any Account Party, any
other Obligor or the Borrower to pay debts as they become due, or an assignment
by any Account Party, any other Obligor or the Borrower for the benefit of
creditors, or the commencement of any case or proceeding in respect of any
Account Party, any other Obligor or the Borrower under any bankruptcy,
insolvency or similar laws, and if such event shall occur at a time when any of
the Guaranteed Obligations of any Account Party may not then be due and payable,
the Borrower agrees that it will pay to the Administrative Agent for the account
of the Secured Parties forthwith the full amount which would be payable under
the guaranty contained in this Section 4.10 by the Borrower if all such
Guaranteed Obligations were then due and payable.
SECTION 4.10.3. Guaranty Absolute, etc. The guaranty contained in this
Section 4.10 shall in all respects be a continuing, absolute, unconditional and
irrevocable guaranty of payment, and shall remain in full force and effect until
all Guaranteed Obligations of the Account Parties have been paid in full in
cash, all Obligations of the Borrower and each other Obligor hereunder have been
paid in full in cash, all Letters of Credit have been terminated or expired and
all Commitments shall have terminated. The Borrower guarantees that the
Guaranteed Obligations of the Account Parties will be paid strictly in
accordance with the terms of this Agreement and each other Loan Document under
which they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party or any holder of any Note with respect thereto. The liability of
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the Borrower under the guaranty contained in this Section 4.10 shall be
absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of this
Agreement, any Note or any other Loan Document;
(b) the failure of any Secured Party or any holder of any Note
(i) to assert any claim or demand or to enforce any
right or remedy against any Account Party, any other Obligor
or any other Person (including any other guarantor (including
the Borrower)) under the provisions of this Agreement, any
Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor (including the Borrower) of, or collateral
securing, any Guaranteed Obligations of any Account Party;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations of any
Account Party, or any other extension, compromise or renewal of any
Guaranteed Obligation of any Account Party;
(d) any reduction, limitation, impairment or termination of
any Guaranteed Obligations of any Account Party for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and the Borrower hereby waives
any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Guaranteed
Obligations of any Account Party or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
this Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Secured Party or any holder of any Note securing
any of the Guaranteed Obligations of any Account Party; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any Account
Party any surety or any guarantor.
SECTION 4.10.4. Reinstatement, etc. The Borrower agrees that the
guaranty contained in this Section 4.10 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment (in whole or in part)
of any of the Guaranteed Obligations is rescinded or must otherwise be restored
by any Secured Party or any holder of any Note, upon the insolvency,
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bankruptcy or reorganization of any Account Party or otherwise, all as though
such payment had not been made.
SECTION 4.10.5. Waiver, etc. The Borrower hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations of any Account Party or any other Obligor and the
guaranty contained in this Section 4.10 and any requirement that the
Administrative Agent, any other Secured Party or any holder of any Note protect,
secure, perfect or insure any security interest or Lien, or any property subject
thereto, or exhaust any right or take any action against any Account Party, any
other Obligor or any other Person (including any other guarantor) or entity or
any collateral securing the Guaranteed Obligations of any Account Party.
SECTION 4.10.6. Postponement of Subrogation, etc. The Borrower agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under the guaranty contained in this Section 4.10, by any payment
made under the guaranty contained in this Section 4.10 or otherwise, until the
prior payment in full in cash of all Guaranteed Obligations of each Account
Party, the prior payment in full in cash of all Obligations of the Borrower, the
termination or expiration of all Letters of Credit and the termination of all
Commitments. Any amount paid to the Borrower on account of any such subrogation
rights prior to the payment in full in cash of all Guaranteed Obligations of
each Account Party shall be held in trust for the benefit of the Secured Parties
and each holder of a Note and shall immediately be paid to the Administrative
Agent for the benefit of the Secured Parties and each holder of a Note and
credited and applied against the Guaranteed Obligations of each Account Party,
whether matured or unmatured, in accordance with the terms of this Agreement;
provided, however, that if
(a) the Borrower has made payment to the Secured Parties and
each holder of a Note of all or any part of the Guaranteed Obligations
of any Account Party, and
(b) all Guaranteed Obligations of each Account Party have been
paid in full in cash, all Obligations of the Borrower have been paid in
full in cash, all Letters of Credit have been terminated or expired and
all Commitments have been permanently terminated,
each Secured Party and each holder of a Note agrees that, at the Borrower's
request, the Administrative Agent, on behalf of the Secured Parties and the
holders of the Notes, will execute and deliver to the Borrower appropriate
documents (without recourse and without representation or warranty) necessary to
evidence the transfer by subrogation to the Borrower of an interest in the
Guaranteed Obligations of each Account Party resulting from such payment by the
Borrower. In furtherance of the foregoing, for so long as any Obligations
(including Guaranteed Obligations) or Commitments remain outstanding, the
Borrower shall refrain from taking any action or commencing any proceeding
against any Account Party(or its successors or assigns, whether in connection
with a bankruptcy proceeding or otherwise) to recover any amounts in the respect
of payments made under the guaranty contained in this Section 4.10 to any
Secured Party or any holder of a Note.
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SECTION 4.10.7. Successors, Transferees and Assigns; Transfers of
Notes, etc. The guaranty contained in this Section 4.10 shall:
(a) be binding upon the Borrower, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Administrative Agent and each other Secured Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including the guaranty contained in this
Section 4.10) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 12.11 and Article XI.
SECTION 4.11. No Bankruptcy Petition Against TFFC and Budget Funding
Corporation. With respect to each Enhancement Letter of Credit issued hereunder
relating to TFFC or Budget Funding Corporation, each of the Lenders hereby
covenants and agrees that,
(a) prior to the date which is one year and one day after the
payment in full of the latest maturing note issued under the Base
Indenture, it will not institute against, or join with any other Person
in instituting against, TFFC, and
(b) prior to the date which is one year and one day after the
payment in full of the latest maturing commercial paper note issued by
Budget Funding Corporation, it will not institute against, or join with
any other Person in instituting against, Budget Funding Corporation,
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 4.11 shall
constitute a waiver of any right to indemnification, reimbursement or other
payment from any Obligor pursuant to this Agreement or any other Loan Document.
In the event that any Lender takes action in violation of this Section 4.11, the
Borrower agrees, for the benefit of the holders of the notes issued under the
Base Indenture and the commercial paper notes issued by Budget Funding
Corporation, that it shall cause TFFC or Budget Funding Corporation, as the case
may be, to file an answer with the bankruptcy court or otherwise properly
contest the filing of such a petition by such Lender against TFFC or Budget
Funding Corporation, as the case may be, or the commencement of such action and
raise the defense that such Lender has agreed in writing not to take such action
and should be estopped and precluded therefrom and such other defenses, if any,
as its counsel advises that it may assert; and such Lender shall be liable for
and pay any costs and expenses incurred by TFFC or Budget Funding Corporation,
as the case may be, in connection therewith. The provisions of this Section 4.11
shall survive the termination of the Agreement.
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ARTICLE V
CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS
SECTION 5.1. Eurocurrency Rate Lending Unlawful. If any Lender shall
determine (which determination shall, upon notice thereof to the Borrower, the
Administrative Agent and the Lenders, be conclusive and binding on the Borrower)
that the introduction of or any change in or in the interpretation of any law
makes it unlawful, or any central bank or other governmental authority asserts
that it is unlawful, for such Lender to make, continue or maintain any Loan as,
or to convert any Loan into, a Eurocurrency Loan of a certain type, the
obligations of such Lender to make, continue, maintain or convert into any such
Loans shall, upon such determination, forthwith be suspended until such Lender
shall notify the Administrative Agent that the circumstances causing such
suspension no longer exist, and all outstanding Eurocurrency Loans of such type
of such Lender shall automatically convert into ABR Loans denominated in
Dollars at the end of the then current Interest Periods with respect thereto or
sooner, if required by such law or assertion, and all Loans of such Lender that
would otherwise have been made or continued as, or converted into, Eurocurrency
Loans shall instead be made as or converted into, or continued as, ABR Loans
denominated in Dollars upon which interest shall be payable at the same time as
the related Eurocurrency Loans.
SECTION 5.2. Deposits Unavailable. If the Administrative Agent shall
have determined that by reason of circumstances affecting the Reference Lenders'
relevant market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurocurrency Loans of such type, then, upon notice from
the Administrative Agent to the Borrower and the Lenders, the obligations of all
Lenders under Section 2.3 and Section 2.4 to make or continue any Loans as, or
to convert any Loans into, Eurocurrency Loans of such type shall forthwith be
suspended until the Administrative Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.
SECTION 5.3. Increased Eurocurrency Loan Costs, etc. The Borrower
agrees to reimburse each Lender for any increase in the cost to such Lender of,
or any reduction in the amount of any sum receivable by such Lender in respect
of, making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, Eurocurrency Loans that arise in connection with any change in, or
the introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in after the date hereof of, any law or regulation, directive, guideline,
decision or request (whether or not having the force of law) of any court,
central bank, regulator or other governmental authority, except for such changes
with respect to increased capital costs and taxes which are governed by Sections
5.5 and 5.6, respectively; provided, however, that the Borrower shall have no
obligation to pay any such additional amount under this Section 5.3 with respect
to any day or days unless such Lender shall have notified the Borrower of its
demand therefor within 45 days of the date upon which such Lender has obtained
audited information with respect to the fiscal year of such lender in which such
day or days occurred. Each such demand shall be provided to the Administrative
Agent and the Borrower in writing and shall state, in reasonable detail, the
reasons therefor and the additional amount required fully to compensate such
Lender on an after-
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tax basis for such increased cost or reduced amount. Such additional amounts
shall be payable by the Borrower directly to such Lender within five Business
Days of its receipt of such notice, and such notice shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
SECTION 5.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurocurrency Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any Eurocurrency Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as Eurocurrency Loans in
accordance with the Borrowing Request therefor, whether pursuant to
Section 2.7.4 or otherwise; or
(c) any Loans not being continued as, or converted into,
Eurocurrency Loans in accordance with the Continuation/ Conversion
Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five Business Days of its
receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower.
SECTION 5.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments, issuance of or participation in Letters of
Credit or the Loans made by such Lender is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Borrower, the Borrower shall pay directly to
such Lender within five Business Days additional amounts sufficient to
compensate such Lender or such controlling Person on an after-tax basis for such
reduction in rate of return; provided, however, that the Borrower shall have no
obligation to pay any such additional amount under this Section 5.5 with respect
to any day or days unless such Lender shall have notified the Borrower of its
demand therefor within 45 days of the date upon which such Lender has obtained
audited information with respect to the fiscal year of such lender in which such
day or days occurred. A statement of such Lender as to any
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such additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. In determining such amount, such Lender may use any method of
averaging and attribution that it (in its sole and absolute discretion) shall
deem applicable.
SECTION 5.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Credit Extensions and all other amounts payable hereunder
(including fees) shall be made free and clear of and without deduction for any
present or future income, excise, stamp or franchise taxes and other taxes,
fees, duties, withholdings or other charges of any nature whatsoever imposed by
any taxing authority, but excluding in the case of each Lender and the
Administrative Agent, taxes imposed on or measured by its overall net income,
overall receipts or overall assets and franchise taxes imposed on it by the
jurisdiction under the laws of which such Lender or the Administrative Agent, as
the case may be, is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on or measured by its overall net income,
overall receipts and overall assets and franchise taxes imposed on it by the
jurisdiction of such Lender's Domestic Office or Eurocurrency Office, as the
case may be, or any political subdivision thereof (such non-excluded items being
called "Taxes"). In the event that any withholding or deduction from any payment
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative Agent
evidencing such payment to such authority; and
(c) pay to the Administrative Agent for the account of the
Lenders such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Lender will equal the
full amount such Lender would have received had no such withholding or
deduction been required.
Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender hereunder, the Administrative Agent or such Lender may pay such
Taxes and the Borrower will promptly pay such additional amounts (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by such person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such person would have received
had no such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result
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of any such failure. For purposes of this Section 5.6, a distribution hereunder
by the Administrative Agent or any Lender to or for the account of any Lender
shall be deemed a payment by the Borrower.
Upon the request of the Borrower or the Administrative Agent, each
Lender that is organized under the laws of a jurisdiction other than the United
States shall, prior to the due date of any payments under the Notes, execute and
deliver to the Borrower and the Administrative Agent, on or about the first
scheduled payment date in each Fiscal Year, one or more (as the Borrower or the
Administrative Agent may reasonably request) United States Internal Revenue
Service Forms 4224 or Forms 1001 or such other forms or documents (or successor
forms or documents), appropriately completed, as may be applicable to establish
the extent, if any, to which a payment to such Lender is exempt from withholding
or deduction of Taxes.
SECTION 5.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes,
each Letter of Credit or any other Loan Document shall be made by the Borrower
to the Administrative Agent for the pro rata account of the Lenders entitled to
receive such payment. All such payments required to be made to the
Administrative Agent shall be made, without setoff, deduction or counterclaim,
not later than 12:00 noon (local time) on the date due, in same day or
immediately available funds, to such account as the Administrative Agent shall
specify from time to time by notice to the Borrower. Funds received after that
time shall be deemed to have been received by the Administrative Agent on the
next succeeding Business Day. The Administrative Agent shall promptly remit in
same day funds to each Lender its share, if any, of such payments received by
the Administrative Agent for the account of such Lender. All interest (including
interest on Eurocurrency Loans) and fees shall be computed on the basis of the
actual number of days (including the first day but excluding the last day)
occurring during the period for which such interest or fee is payable over a
year comprised of 360 days (or, in the case of interest on an ABR Loan (other
than when calculated with respect to the Federal Funds Rate), 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as otherwise
required by clause (c) of the definition of the term "Interest Period" with
respect to Eurocurrency Loans) be made on the next succeeding Business Day and
such extension of time shall be included in computing interest and fees, if any,
in connection with such payment.
SECTION 5.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms of
Sections 5.3, 5.4, 5.5 and 5.6) or Letter of Credit in excess of its pro rata
share of payments then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Loans made by them and/or
Letters of Credit as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such
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recovery together with an amount equal to such selling Lender's ratable share
(according to the proportion of
(a) the amount of such selling Lender's required repayment to
the purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 5.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim.
SECTION 5.9. Setoff. Each Lender shall, upon the occurrence of any
Default described in clauses (a) through (d) of Section 9.1.9 or, with the
consent of the Required Lenders, upon the occurrence of any other Event of
Default, have the right to appropriate and apply to the payment of the
Obligations (other than Liquidity Obligations) owing to it (whether or not then
due), and (as security for such Obligations) the Borrower hereby grants to each
Lender a continuing security interest in, any and all balances, credits,
deposits, accounts or moneys of the Borrower then or thereafter maintained with
or otherwise held by such Lender; provided, however, that any such appropriation
and application shall be subject to the provisions of Section 5.8. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such setoff and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff under applicable law
or otherwise) which such Lender may have.
SECTION 5.10. Substitution of Lender. If any Lender has demanded to be
paid additional amounts pursuant to Section 5.3, 5.5 or 5.6 and the payment of
such additional amounts are, and are likely to continue to be, more onerous in
the reasonable judgment of the Borrower than with respect to the other Lenders,
the Borrower shall have the right to seek one or more Eligible Assignees (each,
a "Substitute Lender") to purchase the outstanding Loans of such Lender (the
"Affected Lender"), and if the Borrower locates a Substitute Lender, the
Affected Lender shall, upon
(a) prior written notice to the Administrative Agent,
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(b) payment to the Affected Lender of the purchase price
agreed between it and the Substitute Lender (or, failing such
agreement, a purchase price in the amount of the outstanding principal
amount of the Affected Lender's Loans and accrued interest thereon to
the date of payment) plus any amount (other than principal and
interest) then due to it or accrued for its account hereunder or under
any other Loan Document,
(c) satisfaction of the provisions set forth in Section
12.11.1, and
(d) payment by the Borrower to the Affected Lender and the
Administrative Agent of all reasonable out-of-pocket expenses in
connection with such assignment and assumption (including the
processing fees described in Section 12.11.1),
assign and delegate all its rights and obligations under this Agreement and any
other Loan Document to which it is a party (including its outstanding Loans and
participations in Letter of Credit Outstandings) to the Substitute Lender, and
the Substitute Lender shall assume such rights and obligations, whereupon the
Substitute Lender shall in accordance with Section 12.11.1 become a party to
each Loan Document to which the Affected Lender is a party and shall have the
rights and obligations of a Lender thereunder and the Affected Lender shall be
released from its obligations hereunder and each other Loan Document to the
extent of such assignment and delegation.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Initial Credit Extension. The obligations of the Lenders
and the Issuer to make the initial Credit Extension shall be subject to the
prior or concurrent satisfaction of each of the conditions precedent set forth
in this Section 6.1.
SECTION 6.1.1. Resolutions, etc. The Administrative Agent shall have
received from each of the Borrower, the Parent and each other Obligor a
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
such Person as to
(a) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each
other Loan Document executed by it; and
(c) the full force and validity of each Organic Document of
such Person and true and complete copies thereof,
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upon which certificate each Lender, the Issuer and each Agent may conclusively
rely until it shall have received a further certificate of the Secretary of the
Borrower, the Parent or such other Obligor canceling or amending such prior
certificate.
SECTION 6.1.2. Delivery of Notes. The Administrative Agent shall have
received, for the account of each Lender that requests that its Loans be
evidenced by a Note, its Note duly executed and delivered by the Borrower.
SECTION 6.1.3. Acquisition and Transaction Consummated. (a) The
conditions set forth in each of the Stock Purchase Agreements to the obligations
of the Parent to consummate the Acquisition shall have been satisfied in full
(without amendment or waiver of, or other forbearance to exercise any rights
with respect to, any of the terms or provisions thereof by the Parent), and the
Acquisition shall have been consummated in accordance with the terms thereof.
(b) The Parent shall have received gross cash proceeds of at least
$150,000,000 pursuant to the Equity Offering and such proceeds shall have been
used to fund, in part, the Acquisition.
(c) The Parent shall have received gross cash proceeds of not greater
than $50,000,000 pursuant to the Convertible Subordinated Debt Offering and such
proceeds shall have been used to fund, in part, the Acquisition, and the
Borrower shall have received gross cash proceeds of not greater than
$170,000,000 pursuant to the Senior Debt Offering. The terms of the Series B
Notes and the Senior Notes shall be satisfactory in all respects to the
Administrative Agent.
(d) The CP Program shall have been established, and the Liquidity
Facility shall have become effective.
(e) The Administrative Agent shall have received satisfactory evidence
that the Corporate Restructuring shall have occurred on terms and conditions
satisfactory in all respects to the Administrative Agent.
SECTION 6.1.4. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 8.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the initial Credit
Extensions); and all Liens securing payment of any such Indebtedness have been
released and the Administrative Agent shall have received all Uniform Commercial
Code Form UCC-3 termination statements or other instruments as may be suitable
or appropriate in connection therewith.
SECTION 6.1.5. Delivery of Financial Statements. The Administrative
Agent shall have received
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(a) audited consolidated financial statements for the 1995
Fiscal Year and the 1996 Fiscal Year of the Borrower and its
Subsidiaries and Parent and its Subsidiaries; and
(b) unaudited pro forma consolidated balance sheet of the
Parent as at the date of the most recent consolidated balance sheet
delivered pursuant to clause (a) above after giving effect to the
Transaction (including the initial Credit Extension), in each case
satisfactory to the Administrative Agent and the Lenders.
SECTION 6.1.6. Consents, etc. The Administrative Agent shall have
received true and correct copies of all governmental and third party approvals
and consents necessary or advisable in connection with the Transaction
(including the execution and delivery of this Agreement and each other Loan
Document by each Obligor or party hereto and thereto and their performance of
their respective Obligations hereunder and thereunder) and continuing operations
of the Parent and its Subsidiaries (after giving effect to the consummation of
the Transaction) shall have been obtained and be in full force and effect and
all applicable waiting periods shall have expired without any action being taken
or threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the Acquisition or the financing thereof.
SECTION 6.1.7. No Material Adverse Change. There shall not have
occurred a material adverse change in the business, property, operations,
assets, liabilities, condition (financial or otherwise) or prospects of the
Parent and its Subsidiaries, taken as a whole, or the Borrower and its
Subsidiaries, taken as a whole, since December 31, 1996.
SECTION 6.1.8. Availability Under the Borrowing Base. The
Administrative Agent shall have received, with counterparts for each Lender, a
certificate of the chief financial or accounting Authorized Officer of the
Borrower or the Parent, in form and substance satisfactory to the Administrative
Agent, certifying that as of the Closing Date, after giving effect to the
Transaction, the sum of (a) the excess of (i) the Borrowing Base Amount over
(ii) the sum of (A) all Letter of Credit Outstandings plus (B) the aggregate
principal amount of all outstanding Loans (if any) plus (b) unrestricted cash
and Cash Equivalent Investment of the Borrower and its Subsidiaries (exclusive
of any Eligible Cash and Cash Equivalents included in the Borrowing Base Amount)
is not less than $35,000,000.
SECTION 6.1.9. Fees and Expenses of the Transaction. The
Administrative Agent shall have received evidence satisfactory to it that the
fees and expenses to be incurred in connection with the Transaction and the
financing thereof will not exceed $25,000,000 in the aggregate.
SECTION 6.1.10. Business Plan. The Administrative Agent and the Lenders
shall have received a business plan for the 1997 Fiscal Year satisfactory to the
Administrative Agent and the Lenders, financial projections for the period from
the Effective Date to the Stated Maturity Date satisfactory to the
Administrative Agent and the Lenders and a written analysis of the business and
prospects of the Parent and its Subsidiaries (including the Borrower and its
Subsidiaries) for the period from the Effective Date to the Stated Maturity Date
satisfactory to the Administrative Agent and the Lenders.
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SECTION 6.1.11. Closing Date Certificates. The Administrative Agent
shall have received, with counterparts for each Lender, the Borrower Closing
Date Certificate and the Parent Closing Date Certificate, in each case dated the
date of the Closing Date and duly executed and delivered by an Authorized
Officer of the Borrower and Parent, as the case may be, in which certificates
the Borrower and Parent, as the case may be, shall agree and acknowledge that
the statements made therein shall be deemed to be true and correct
representations and warranties of the Borrower and Parent, as the case may be,
made as of such date, and, at the time each such certificate is delivered, such
statements shall in fact be true and correct. All documents and agreements
required to be appended to the Borrower Closing Date Certificate and Parent
Closing Date Certificate, in each case shall be in form and substance
satisfactory to the Administrative Agent.
SECTION 6.1.12. Guaranty. The Administrative Agent shall have received
the Subsidiary Guaranty, dated the Closing Date, duly executed by each
Subsidiary of the Borrower that is a party thereto.
SECTION 6.1.13. Pledge Agreements. The Administrative Agent shall have
received executed counterparts of the Borrower Pledge Agreement, the Parent
Pledge Agreement and the Subsidiary Pledge Agreement, in each case dated as of
the Closing Date and duly executed and delivered by the Borrower, the Parent and
each Subsidiary that is a party to the Subsidiary Pledge Agreement, as the case
may be, together with the certificates, evidencing all of the issued and
outstanding shares of Capital Stock pledged pursuant to each Pledge Agreement,
which certificates shall in each case be accompanied by undated stock powers
duly executed in blank, or, if any securities pledged pursuant to any Pledge
Agreement are uncertificated securities, confirmation and evidence satisfactory
to the Administrative Agent that the security interest in such uncertificated
securities has been transferred to and perfected by the Administrative Agent for
the benefit of the Lenders in accordance with Section 8-313 and Section 8-321 of
the U.C.C. or any similar or local law which may be applicable.
SECTION 6.1.14. Security Agreements. The Administrative Agent shall
have received executed counterparts of the Borrower Security Agreement, the
Subsidiary Security Agreement and the Parent Security Agreement, in each case
dated as of the Closing Date and duly executed and delivered by the Borrower,
each Subsidiary of the Borrower that is a party to the Subsidiary Security
Agreement and the Parent, as the case may be, together with
(a) acknowledgment copies of properly filed Uniform Commercial
Code financing statements (Form UCC-1) or such other evidence of filing
as may be acceptable to the Administrative Agent, or in the discretion
of the Administrative Agent copies suitable for filing, naming in each
case the Borrower, such Subsidiary or the Parent, as the case may be,
as the debtor and the Administrative Agent as the secured party, or
other similar instruments or documents, filed or suitable for filing
under the Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the security interest of the Administrative Agent pursuant to
each Security Agreement;
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(b) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
and other rights of any Person (other than Liens permitted under
Section 8.2.3)
(i) in any collateral described in each Security
Agreement previously granted by any Person, and
(ii) securing any of the Indebtedness identified in
Item 8.2.2(b) ("Indebtedness to be Paid") of the Disclosure
Schedule,
together with such other Uniform Commercial Code Form UCC-3 termination
statements as the Administrative Agent may reasonably request from such
Obligors; and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Administrative Agent, dated a
date reasonably near to the Closing Date, listing all effective
financing statements, tax liens and judgment liens which name the
Borrower, such Subsidiaries and the Parent (under their respective
present names and any previous names thereof) as the debtor and which
are filed in the jurisdictions in which filings were made pursuant to
clause (a) above, together with copies of such financing statements
(none of which (other than those described in clause (a), if such Form
UCC-11 or search report, as the case may be, is current enough to list
such financing statements described in clause (a)) shall cover any
collateral described in each Security Agreement).
SECTION 6.1.15. Borrowing Base Certificate. The Administrative Agent
shall have received an initial Borrowing Base Certificate, executed and
delivered by an Authorized Officer of the Borrower, setting forth, as of the
Closing Date, computations of the Borrowing Base Amount in respect of Eligible
Cash and Eligible Cash Equivalents on such date, and, as of March 31, 1997,
computations of the Borrowing Base Amount in respect of Eligible Receivables on
such date.
SECTION 6.1.16. Issuance Request. The Administrative Agent and the
Issuer shall have received an Issuance Request for each Letter of Credit to be
issued on the Closing Date and an Enhancement Letter of Credit Application and
Agreement for each Enhancement Letter of Credit to be issued on the Closing
Date.
SECTION 6.1.17. Opinions of Counsel. The Administrative Agent shall
have received (a) opinions, dated the Closing Date and addressed to the
Administrative Agent and the Lenders, from King & Spalding, counsel to the
Obligors, Robert L. Aprati, General Counsel of the Borrower, and Kenneth M.
Lipowitz, counsel to the Parent, substantially in the form of Exhibits K-1, K-2
and K-3 hereto, respectively, and (b) such reliance letters as it may reasonably
request with respect to opinions delivered in connection with the Transaction
dated the Closing Date and addressed to the Agents, the Issuer and all of the
Lenders.
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SECTION 6.1.18. Closing Fees, Expenses, etc. The Administrative Agent
shall have received for its own account or for the account of each Lender, as
the case may be, all fees, costs and expenses due and payable pursuant to
Sections 3.3 and 12.3, if then invoiced.
SECTION 6.2. All Credit Extensions. The obligation of each Lender
and the Issuer to make any Credit Extension (including the initial Credit
Extension) shall be subject to the satisfaction of each of the conditions
precedent set forth in this Section 6.2.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to any Credit Extension (but, if any Default of
the nature referred to in Section 9.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of any Credit Extension) the following statements
shall be true and correct
(a) the representations and warranties set forth in Article
VII (excluding, however, those contained in Section 7.7) and in each
other Loan Document shall, in each case, be true and correct with the
same effect as if then made (unless stated to relate solely to an early
date, in which case such representations and warranties shall be true
and correct as of such earlier date);
(b) except as disclosed by the Borrower or the Parent to the
Agents, the Issuer and the Lenders pursuant to Section 7.7
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or,
to the best knowledge of the Borrower, threatened against the
Borrower, the Parent or any of their respective Subsidiaries
which might materially adversely affect the Parent's
consolidated business, operations, assets, revenues,
properties or prospects or which purports to affect the
legality, validity or enforceability of this Agreement, the
Notes or any other Loan Document; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 7.7
which might materially adversely affect the consolidated
businesses, operations, assets, revenues, properties or
prospects of the Borrower, the Parent and their respective
Subsidiaries; and
(c) no Default shall have then occurred and be continuing, and
neither the Borrower, the Parent nor any of their respective
Subsidiaries nor any other Obligor is in material violation of any law
or governmental regulation or court order or decree.
SECTION 6.2.2. Credit Request. The Administrative Agent shall have
received a Borrowing Request or Issuance Request, as the case may be, for such
Credit Extension. Each of the delivery of a Borrowing Request or an Issuance
Request and the acceptance by the Borrower of the proceeds of the Borrowing or
the issuance of the Letter of Credit, as applicable, shall
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constitute a representation and warranty by the Borrower that on the date of
such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof) or the issuance of the
Letter of Credit, as applicable, the statements made in Section 6.2.1 are true
and correct.
SECTION 6.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower, the Parent or any of
their respective Subsidiaries or any other Obligor shall be satisfactory in form
and substance to the Administrative Agent and its counsel; the Administrative
Agent and its counsel shall have received all information, approvals, opinions,
documents or instruments as the Administrative Agent or its counsel may
reasonably request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuer and the Agents to enter into
this Agreement and to make Loans and issue Letters of Credit hereunder, each of
the Borrower and the Parent represents and warrants unto each Agent, the Issuer
and each Lender as set forth in this Article VII.
SECTION 7.1. Organization, etc. Each of the Borrower, the Parent and
each of their respective Subsidiaries
(a) is a corporation validly organized and existing and in
good standing under the laws of the jurisdiction of its incorporation,
(b) is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the nature of its
business requires such qualification, except to the extent that the
failure to so qualify has not had, and could not reasonably be expected
to have, a material adverse effect on the business, property,
operations, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries, taken as a whole, or
the Parent and its Subsidiaries, taken as a whole,
(c) has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Agreement, the Notes and each other
Loan Document to which it is a party and to own and hold under lease
its property and to conduct its business substantially as currently
conducted by it, and
(d) subject to Section 7.12, has complied in all material
respects with all laws, rules, regulations and orders applicable to it.
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SECTION 7.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each of the Parent and each other Obligor of each
Loan Document executed or to be executed by it and the Borrower's, the Parent's
and each such other Obligor's participation in the consummation of the
Transaction are within the Borrower's, the Parent's and each such Obligor's
corporate powers, have been duly authorized by all necessary corporate action,
and do not
(a) contravene the Borrower's, the Parent's or such other
Obligor's Organic Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower, the Parent or such other Obligor; or
(c) result in, or require the creation or imposition of, any
Lien (other than the Liens created under the Loan Documents in favor of
the Administrative Agent for the benefit of the Secured Parties) on any
of the Borrower's, the Parent's or such other Obligor's properties.
SECTION 7.3. Government Approval, Regulation, etc. Other than those
authorizations, approvals or other actions by, and notices to or filings with,
any governmental authority or regulatory body, if any, which have been duly
obtained or made and are in full force and effect, no additional authorization
or approval or other action by, and no additional notice to or filing with, any
governmental authority or regulatory body or other Person is required for the
due execution, delivery or performance by the Borrower, the Parent or any other
Obligor of this Agreement, the Notes or any other Loan Document to which it is a
party, or for the Borrower's, the Parent's and each such other Obligor's
participation in the consummation of the Transaction. Neither the Borrower, the
Parent nor any of their respective Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 7.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms, except to the extent the enforceability thereof may be limited
by (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors generally and (ii) the effect of general principles of
equity, whether enforcement is considered in a proceeding in equity or at law;
and each Loan Document executed pursuant hereto by the Parent and each other
Obligor will, on the due execution and delivery thereof by the Parent or such
Obligor, as the case may be, be the legal, valid and binding obligation of the
Parent or such Obligor, as the case may be, enforceable in accordance with its
terms, except to
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the extent the enforceability thereof may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors generally and (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law. Each of the Loan
Documents which purports to create a security interest creates a valid first
priority security interest in the Collateral (as defined in such Loan Document)
subject thereto, subject only to Liens permitted by Section 8.2.3, securing the
payment of the Obligations described therein.
SECTION 7.5. Financial Information; Absence of Undisclosed Liabilities.
The financial statements of the Borrower and its Subsidiaries and the Parent and
its Subsidiaries furnished to each Agent and each Lender pursuant to clause (a)
of Section 6.1.5 have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended. To the best knowledge of the Parent and
the Borrower, neither the Parent and its Subsidiaries nor the Borrower and its
Subsidiaries had any material liabilities (matured or unmatured, fixed or
contingent) that were not fully reflected or provided for on the financial
statements delivered pursuant to clause (a) of Section 6.1.5, whether or not
required by GAAP to be shown on such financial statements. The pro forma balance
sheet delivered pursuant to clause (b) of Section 6.1.5 have been prepared in
accordance with the requirements of GAAP for the preparation of pro forma
financial statements. All balance sheets, all statements of operations,
shareholders' equity and cash flow and all other financial information of each
of the Borrower and its Subsidiaries and the Parent and its Subsidiaries
furnished pursuant to Section 8.1.1 have been and will for periods following the
Effective Date be prepared in accordance with GAAP consistently applied, and do
or will present fairly the consolidated financial condition of the corporations
covered thereby as at the dates thereof and the results of their operations for
the periods then ended.
SECTION 7.6. No Material Adverse Change; Absence of Undisclosed
Liabilities. There has been no material adverse change in the business,
property, operations, assets, liabilities, condition (financial or otherwise) or
prospects of the Parent and its Subsidiaries, taken as a whole, or the Borrower
and its Subsidiaries, taken as a whole, since December 31, 1996.
SECTION 7.7. Litigation, Labor Controversies, etc. There is no pending
or, to the best knowledge of the Borrower or the Parent, threatened litigation,
action, proceeding, or labor controversy affecting the Borrower, the Parent or
any of their respective Subsidiaries, or any of their respective properties,
businesses, assets or revenues, which may materially adversely affect the
business, property, operations, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole,
or the Parent and its Subsidiaries, taken as a whole, or which purports to
affect the legality, validity or enforceability of this Agreement, the Notes or
any other Loan Document, except as disclosed in Item 7.7 ("Litigation") of the
Disclosure Schedule.
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SECTION 7.8. Subsidiaries. (a) The Parent has no direct Subsidiaries,
except for the Borrower.
(b) The Borrower has no Subsidiaries, except those Subsidiaries (i)
which are identified in Item 7.8(b) ("Existing Subsidiaries of the Borrower") of
the Disclosure Schedule by their correct legal name, their jurisdiction of
organization and the holders (and their respective percentage ownership of) the
Capital Stock thereof or (ii) which are permitted to have been acquired in
accordance with Section 8.2.5 or 8.2.10.
SECTION 7.9. Ownership of Properties. Except as permitted pursuant to
Section 7.13 or Section 8.2.3, the Borrower, the Parent and each of their
respective Subsidiaries owns (i) in the case of owned real property, good and
marketable fee title to, and (ii) in the case of owned personal property, good
and valid title to, or, in the case of leased real or personal property, valid
and enforceable leasehold interests (as the case may be) in, all of its
properties and assets, real and personal, tangible and intangible, of any nature
whatsoever, free and clear in each case of all Liens or claims, except for Liens
permitted pursuant to Section 8.2.3.
SECTION 7.10. Taxes. The Borrower, the Parent and each of their
respective Subsidiaries has filed all tax returns and reports required by law to
have been filed by it and has paid all taxes and governmental charges thereby
shown to be due and owing, except any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 7.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Credit Extension hereunder, no
steps have been taken to terminate any Pension Plan, and no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower, the Parent or any member of the Controlled Group of any
material liability, fine or penalty. Except as disclosed in Item 7.11 ("Employee
Benefit Plans") of the Disclosure Schedule, neither the Borrower, the Parent nor
any member of the Controlled Group has any contingent liability with respect to
any post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 7.12. Environmental Warranties. Except as set forth in Item
7.12 ("Environmental Matters") of the Disclosure Schedule (none of which items
disclosed therein, singly or in the aggregate, have, or may reasonably be
expected to have, a material adverse effect on the business, property,
operations, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries, taken as a whole, or the Parent and its
Subsidiaries, taken as a whole) and to the best knowledge of the Borrower, the
Parent and their respective Subsidiaries,
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(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower, the Parent or any of
their respective Subsidiaries have been, and continue to be, owned or
leased and operated by the Borrower, the Parent and such Subsidiary, as
the case may be, in compliance with all Environmental Laws and in
accordance with industry practices, except to the extent any such
failure to comply would, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
business, property, operations, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries, taken as a whole, or the Parent and its Subsidiaries,
taken as a whole;
(b) there are no pending or threatened
(i) claims, complaints, notices or requests for
information received by the Borrower, the Parent or any of
their respective Subsidiaries with respect to any alleged
violation of any Environmental Law, which, if true, would,
singly or in the aggregate, have, or would reasonably be
expected to have, a material adverse effect on the business,
property, operations, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries, taken as a whole, or the Parent and its
Subsidiaries, taken as a whole, or
(ii) complaints, notices or inquiries to the
Borrower, the Parent or any of their respective Subsidiaries
regarding potential liability under any Environmental Law,
which, if true, would, singly or in the aggregate, have, or
would reasonably be expected to have, a material adverse
effect on the business, property, operations, assets,
liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries, taken as a whole, or the
Parent and its Subsidiaries, taken as a whole;
(c) there have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by the
Borrower, the Parent or any of their respective Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to
have, a material adverse effect on the business, property, operations,
assets, liabilities, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries, taken as a whole, or the Parent and
its Subsidiaries, taken as a whole;
(d) the Borrower, the Parent and each of their respective
Subsidiaries have been issued and are in material compliance with all
permits, certificates, approvals, licenses and other authorizations
relating to environmental matters and necessary or desirable for their
businesses;
(e) no property now or previously owned or leased by the
Borrower, the Parent or any of their respective Subsidiaries is listed
or proposed for listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean-up;
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(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower, the Parent or any of
their respective Subsidiaries that, singly or in the aggregate, have,
or may reasonably be expected to have, a material adverse effect on the
business, property, operations, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries, taken as a whole, or the Parent and its Subsidiaries,
taken as a whole;
(g) neither the Borrower, the Parent nor any of their
respective Subsidiaries has directly transported or directly arranged
for the transportation of any Hazardous Material to any location which
is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list or
which is the subject of federal, state or local enforcement actions or
other investigations which may lead to material claims against the
Borrower, the Parent or such Subsidiary thereof for any remedial work,
damage to natural resources or personal injury, including claims under
CERCLA;
(h) neither the Borrower, the Parent nor any of their
respective Subsidiaries has entered into any agreements or engaged in
any activities that, singly or in the aggregate, would give rise to
liability under any Environmental Law with regard to acts, omissions or
conditions of property of any third party, including any franchisee of
the Borrower, the Parent or any of their respective Subsidiaries, which
liability, singly or in the aggregate, has, or may reasonably be
expected to have, a material adverse effect on the business, property,
operations, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries, taken as a whole, or
the Parent and its Subsidiaries, taken as a whole;
(i) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the
Borrower, the Parent or any of their respective Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to
have, a material adverse effect on the business, property, operations,
assets, liabilities, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries, taken as a whole, or the Parent and
its Subsidiaries, taken as a whole; and
(j) no conditions exist at, on or under any property now or
previously owned or leased by the Borrower and its Subsidiaries, which,
with the passage of time, or the giving of notice or both, would give
rise to liability under any Environmental Law that, singly or in the
aggregate, has, or may reasonably be expected to have, a material
adverse effect on the business, property, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries, taken as a whole, or the Parent and its
Subsidiaries, taken as a whole.
SECTION 7.13. Intellectual Property. Each of the Borrower, the Parent
and their respective Subsidiaries owns and possesses or licenses (as the case
may be) all such patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks,
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service mark rights and copyrights as the Borrower and the Parent considers
necessary for the conduct of the businesses of the Borrower, the Parent and
their respective Subsidiaries as now conducted without, individually or in the
aggregate, any infringement upon rights of other Persons, in each case except as
could not reasonably be expected to result in a material adverse effect on the
business, property, operations, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole,
or the Parent and its Subsidiaries, taken as a whole, and there is no individual
patent, patent right, trademark, trademark right, trade name, trade name right,
service mark, service mark right or copyright the loss of which would result in
a material adverse change in the business, property, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries, taken as a whole, or the Parent and its Subsidiaries, taken as
a whole, except as may be disclosed in Item 7.13 ("Intellectual Property") of
the Disclosure Schedule.
SECTION 7.14. Regulations G, U and X. Neither the Borrower, the Parent
nor any of their respective Subsidiaries is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock, and no proceeds
of any Credit Extensions will be used to purchase or carry margin stock or
otherwise for a purpose which violates, or would be inconsistent with, F.R.S.
Board Regulation G, U or X. Terms for which meanings are provided in F.R.S.
Board Regulation G, U or X or any regulations substituted therefor, as from time
to time in effect, are used in this Section with such meanings.
SECTION 7.15. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by the Borrower or the Parent in
writing to any Agent, the Issuer or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby (including the
Transaction, true and complete copies of which were furnished to the each Agent,
the Issuer and each Lender in connection with its execution and delivery hereof)
was true and accurate in every material respect on the date as of which such
information was dated or certified and was not incomplete by omitting to state
any material fact necessary to make such information not misleading. All other
such factual information hereafter furnished by or on behalf of the Borrower or
the Parent to any Agent, the Issuer or any Lender will be true and accurate in
every material respect on the date as of which it is dated or certified and such
information will not be incomplete by omitting to state any material fact
necessary to make such information not misleading.
SECTION 7.16. Stock Purchase Agreements and Senior Note Purchase
Agreements. Each of the representations and warranties made in each of the Stock
Purchase Agreements and the Senior Note Purchase Agreements is true and correct
in all material respects. Each of the Stock Purchase Agreements and the Senior
Note Purchase Agreements constitutes the legal, valid and binding obligations of
each of the parties thereto enforceable in accordance with its terms.
SECTION 7.17. Senior Indebtedness, etc. The subordination provisions
applicable to the Series A Notes and the Series B Notes will be enforceable
against the holders of the Series A Notes and Series B Notes by the holder of
any Senior Indebtedness (as defined in the Series A Note Purchase Agreements and
the Series B Note Purchase Agreements) which has not
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effectively waived the benefits thereof. All Obligations, including those to pay
principal of and interest (including post-petition interest) on the Loans and
Reimbursement Obligations, and fees and expenses in connection therewith,
constitute Senior Indebtedness (as defined in the Series A Note Purchase
Agreements and the Series B Note Purchase Agreements) and all such Obligations
are entitled to the benefits of the subordination created by the Series A Notes
and Series B Notes.
SECTION 7.18. No Burdensome Restrictions. Except as disclosed in the
prospectus filed pursuant to Rule 424(b) under the Securities Act in connection
with the Registration Statement, neither the Borrower or the Parent, nor any of
their respective Subsidiaries, is subject to any law, rule, regulation, order or
agreement which could reasonably be expected to have a material adverse effect
on the currently existing business, property, operations, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries, taken as a whole, or the Parent and its Subsidiaries, taken as a
whole.
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. The Borrower and the Parent agree
with each Agent, the Issuer and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower and the Parent will perform the obligations set forth in this Section
8.1.
SECTION 8.1.1. Financial Information, Reports, Notices, etc. The
Borrower and the Parent will furnish, or will cause to be furnished, to each
Lender, the Issuer and each Agent copies of the following financial statements,
reports, notices and information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
of the Parent, consolidated and consolidating balance sheets of the
Parent and its Subsidiaries as of the end of such Fiscal Quarter and
consolidated and consolidating statements of earnings and consolidated
statements of cash flow of the Parent and its Subsidiaries, in each
case other than the consolidated statements of cash flow, for such
Fiscal Quarter and, in each case (including the consolidated statements
of cash flow), for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter, certified
by the chief financial or accounting Authorized Officer of the Parent;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of the Parent, a copy of the annual audited
report for such Fiscal Year for the Parent and its Subsidiaries,
including therein consolidated balance sheets of the Parent and its
Subsidiaries as of the end of such Fiscal Year and consolidated
statements of earnings and cash flow of the Parent and its Subsidiaries
for such Fiscal Year, in each case certified (without any Impermissible
Qualification) in a manner acceptable to the Administrative Agent and
the Required Lenders by independent public accountants acceptable to
the
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Administrative Agent and the Required Lenders, together with a report
from such accountants containing a computation of, and showing
compliance with, each of the financial ratios and restrictions
contained in Section 8.2.4 and to the effect that, in making the
examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default that has
occurred and is continuing, or, if they have become aware of such
Default, describing such Default and the steps, if any, being taken to
cure it;
(c) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b) above, a Compliance Certificate,
executed by the chief financial or accounting Authorized Officer of the
Parent, showing (in reasonable detail and with appropriate calculations
and computations in all respects satisfactory to the Administrative
Agent) compliance with the financial covenants set forth in Section
8.2.4;
(d) as soon as possible and in any event within three days
after the occurrence of each Default, a statement of the chief
financial or accounting Authorized Officer of the Parent or the
Borrower setting forth details of such Default and the action which the
Parent or the Borrower has taken and proposes to take with respect
thereto;
(e) as soon as possible and in any event within five days
after (x) the occurrence of any adverse development with respect to any
litigation, action, proceeding or labor controversy described in
Section 7.7 or (y) the commencement of any labor controversy,
litigation, action or proceeding of the type described in Section 7.7,
notice thereof and copies of all documentation relating thereto;
(f) (i) within 12 Business Days following the last day of each
calendar month, a Borrowing Base Certificate for the preceding calendar
month that is calculated as of the last day of such preceding calendar
month, certified by the chief financial or accounting Authorized
Officer of the Borrower or the Parent and (ii) as soon as possible
following the presentment for payment under any Enhancement Letter of
Credit, a Borrowing Base Certificate for the date of such presentment
that is calculated as of the last day of the calendar month immediately
preceding the month in which such presentment is made, in the case of
the calculation of clauses (a), (c) and (d) of the definition of
"Borrowing Base Amount", and as of the date of such presentment (after
giving effect to any reimbursement made in connection therewith), in
the case of the calculation of clause (b) of the definition of
"Borrowing Base Amount", certified by the chief financial or accounting
Authorized Officer of the Borrower or the Parent;
(g) promptly after the sending or filing thereof, copies of
all reports which the Borrower sends to any of its securityholders, and
all reports and registration statements which the Borrower, the Parent
or any of their respective Subsidiaries files with the Securities and
Exchange Commission or any national securities exchange;
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(h) immediately upon becoming aware of the institution of any
steps by the Borrower or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under section
302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Borrower, the
Parent or any of their respective Subsidiaries furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of any
event with respect to any Pension Plan which could result in the
incurrence by the Borrower or the Parent of any material liability,
fine or penalty, or any material increase in the contingent liability
of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating
thereto;
(i) as soon as available and in any event no later than 31
days after the first day of each Fiscal Year of the Parent, an annual
budget, prepared on a monthly basis for such Fiscal Year of the Parent
containing consolidated and consolidating projected statements of
earnings and cash flow of the Parent and its Subsidiaries and the
Borrower and its Subsidiaries;
(j) concurrently with the delivery of the financial statements
described in clause (b) of this Section 8.1.1, a narrative explanation,
in the form customarily provided to the Board of Directors of the
Parent, of any material variance from the budget of the Parent for such
Fiscal Year that is reflected in such financial statements; provided,
however, if the foregoing is not provided to the Board of Directors of
the Parent the same shall, at the request of the Administrative Agent,
be delivered to the Administrative Agent;
(k) as soon as possible and in any event within three days
after the delivery thereof, copies of all notices, agreements or
documents delivered pursuant to the Senior Note Purchase Agreements and
each other agreement for borrowed money to which the Parent or any
Subsidiary of the Parent (other than Vehicle Debt) is a party and with
a commitment or outstandings exceeding $10,000,000, except for such
notices, agreements or documents (i) delivered pursuant to the terms
hereof or (ii) which are delivered in the ordinary course of each such
agreement (such as borrowing requests, letter of credit requests and
the like); and
(l) such other information respecting the condition or
operations, financial or otherwise, of the Borrower, the Parent or any
of their respective Subsidiaries as any Lender through the
Administrative Agent may from time to time reasonably request.
SECTION 8.1.2. Compliance with Laws, Material Agreements, etc. The
Borrower and the Parent will, and will cause each of their respective
Subsidiaries to, comply in all material respects with all applicable laws,
rules, regulations, orders and material agreements, such compliance to include:
(a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation;
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(b) the maintenance and preservation of all governmental
licenses, permits and other approvals necessary for it to perform its
obligations under this Agreement, the Notes and each other Loan
Document to which it is a party and to own and hold under lease its
property and to conduct its business substantially as currently
conducted by it;
(c) the maintenance, preservation and renewal of all material
agreements necessary to conduct its business substantially as currently
conducted by it (or the substitution for any such material agreement
with a similar agreement), including the Supply Agreement dated as of
the date hereof, between Ford Motor Company and the Borrower, and the
Advertising Agreement dated as of the date hereof, between Ford Motor
Company and the Borrower; and
(d) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 8.1.3. Maintenance of Properties. The Borrower and the Parent
will, and will cause each of their respective Subsidiaries to, maintain,
preserve, protect and keep its properties in good repair, working order and
condition, and make necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be properly conducted
at all times unless the Borrower determines in good faith that the continued
maintenance of any of its properties is no longer economically desirable.
SECTION 8.1.4. Insurance. The Borrower and the Parent will, and will
cause each of their respective Subsidiaries to, maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
properties and business (including business interruption insurance) against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses of established reputation and will,
upon request of the Administrative Agent, furnish to each Lender at reasonable
intervals a certificate of an Authorized Officer of the Borrower or the Parent
setting forth the nature and extent of all insurance maintained by the Borrower,
the Parent and their respective Subsidiaries in accordance with this Section.
SECTION 8.1.5. Books and Records. The Borrower and the Parent will, and
will cause each of their respective Subsidiaries to, keep books and records
which accurately reflect all of their respective business affairs and
transactions and permit each Agent and each Lender or any of their respective
representatives, at reasonable times and intervals, to visit all of their
respective offices, to discuss their respective financial matters with their
respective officers and independent public accountant (and the Borrower and the
Parent each hereby authorizes such independent public accountants to discuss
such financial matters with each Lender or its representatives whether or not
any representative of the Borrower, the Parent or such Subsidiary is present)
and to examine (and, at the expense of the Borrower, photocopy extracts from)
any of their respective books or other corporate records. The Borrower shall pay
any fees of such
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independent public accountant incurred in connection with the either Agent's or
any Lender's exercise of its rights pursuant to this Section.
SECTION 8.1.6. Environmental Covenant. The Borrower and the Parent
will, and will cause each of their respective Subsidiaries to,
(a) use and operate all of their respective facilities and
properties in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain
in material compliance therewith, and handle all Hazardous Materials in
material compliance with all applicable Environmental Laws;
(b) follow practices that are at least as effective as
industry practices to minimize and respond to spills and overfills of
petroleum products;
(c) respond to past and ongoing releases of
petroleum-containing materials in a manner that, as prudent, minimizes
potential liability to third parties for off-site contamination from
facilities owned or leased or otherwise operated by the Borrower, the
Parent or any of their respective Subsidiaries;
(d) respond to past and ongoing releases of
petroleum-containing materials in a manner that, as prudent, minimizes
any likelihood that the Borrower, the Parent or any of their respective
Subsidiaries would incur costs or damages that, singly or in the
aggregate, have, or may reasonably be expected to have, a material
adverse effect on the business, property, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries, taken as a whole or the Parent and its
Subsidiaries, taken as a whole;
(e) manage the disposition of residuals such as spent
petroleum-containing material in a manner that, as prudent, minimizes
any likelihood that the Borrower, the Parent or any of their respective
Subsidiaries would incur costs or damages that, singly or in the
aggregate, have, or may reasonably be expected to have, a material
adverse effect on the business, property, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries, taken as a whole or the Parent and its
Subsidiaries, taken as a whole;
(f) immediately notify the Administrative Agent and provide
copies upon receipt of all written claims, complaints, notices or
inquiries relating to the condition of their facilities and properties
or compliance with Environmental Laws; and
(g) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to
evidence compliance with this Section 8.1.6.
SECTION 8.1.7. Use of Proceeds. The Borrower shall apply the proceeds
of each Credit Extension in accordance with the sixth recital; without limiting
the foregoing, no proceeds of any
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Loan will be used to acquire any equity security of a class which is registered
pursuant to Section 12 of the Exchange Act or any "margin stock", as defined in
F.R.S. Board Regulation U.
SECTION 8.1.8. Foreign Subsidiaries as of the Closing Date. Unless
otherwise agreed to by the Required Lenders, the Borrower or its applicable
Subsidiary (which Subsidiary, if not theretofore a party to the Subsidiary
Pledge Agreement, shall execute and deliver to the Administrative Agent a
supplement to the Subsidiary Pledge Agreement for the purpose of becoming a
pledgor thereunder, which supplement shall be in form and substance reasonably
satisfactory to the Administrative Agent) shall no later than 180 days following
the Closing Date, pursuant to a Pledge Agreement (as further supplemented, if
necessary, by a Foreign Pledge Agreement) to which the Borrower or such pledgor
Subsidiary is a party,
(a) pledge to the Administrative Agent all of the outstanding
shares of the Capital Stock of each Foreign Subsidiary owned by the
Borrower or such pledgor Subsidiary on the Closing Date, together with
undated stock powers or equivalent instruments of transfer satisfactory
to the Administrative Agent for such certificates or such other
evidence of beneficial ownership, executed in blank or otherwise, so as
to perfect the security interest of the Administrative Agent therein in
accordance with applicable law (or, if any such shares of Capital Stock
are uncertificated, confirmation and evidence satisfactory to the
Administrative Agent that the security interest in such uncertificated
securities has been perfected by the Administrative Agent in accordance
with applicable law); provided, however, that the Borrower or such
Subsidiary shall not be required to pledge the shares of Capital Stock
of a Foreign Subsidiary required to be pledged hereunder to the extent
such pledge would (x) constitute an investment in earnings in United
States property under Section 956 (or any successor provision thereto)
of the Code that would increase the amount of income of the applicable
pledgor that would otherwise be subject to United States income tax and
(y) subject the Borrower, the Parent or the Person the Capital Stock of
which is being pledged to a significant adverse tax consequence, as
determined by the Parent and evidenced by a certificate of the chief
financial or accounting Authorized Officer of the Parent that is
accepted in writing by the Administrative Agent (such acceptance not to
be unreasonably withheld); and
(b) the Borrower or such pledgor Subsidiary shall take all
such actions and execute any such documents, certificates or
instruments as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to perfect the first priority security
interest of the Administrative Agent in the interests of the Borrower
or such Subsidiary in such Foreign Subsidiary pledged pursuant to such
Pledge Agreement (and such Foreign Pledge Agreement, if applicable);
together with such opinions of legal counsel as the Administrative Agent may
reasonably request, which legal opinions shall be in form and substance
reasonably satisfactory to the Administrative Agent.
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SECTION 8.1.9. Future Subsidiaries. Without limiting the effect of any
provision contained herein (including Section 8.2.5), upon any Person becoming
either a direct or indirect Subsidiary of the Borrower (other than an SPC or a
Non-Material Subsidiary),
(a) in the event such Person is a Subsidiary which is not a
Foreign Subsidiary, such Person (i) if not theretofore a party to the
Subsidiary Guaranty, shall execute and deliver to the Administrative
Agent a supplement to the Subsidiary Guaranty for the purpose of
becoming a guarantor thereunder, which supplement shall be
substantially in the form attached to the Subsidiary Guaranty, and (ii)
if not theretofore a party to the Subsidiary Security Agreement, shall
execute and deliver to the Administrative Agent a supplement to the
Subsidiary Security Agreement for the purpose of becoming a grantor
thereunder, which supplement shall be substantially in the form
attached to the Subsidiary Security Agreement;
(b) the Borrower or such Subsidiary (which Subsidiary, if not
theretofore a party to the Subsidiary Pledge Agreement, shall execute
and deliver to the Administrative Agent a supplement to the Subsidiary
Pledge Agreement for the purpose of becoming a pledgor thereunder,
which supplement shall be substantially in the form attached to the
Subsidiary Pledge Agreement) shall, pursuant to the Pledge Agreement
(as further supplemented, if necessary, by a Foreign Pledge Agreement)
to which the Borrower or such Subsidiary is a party, pledge to the
Administrative Agent all of the outstanding shares of the Capital Stock
of such Person owned by the Borrower or such Subsidiary, together with
(A) undated stock powers or equivalent instruments of transfer
satisfactory to the Administrative Agent for such certificates or such
other evidence of beneficial ownership, executed in blank (or, if any
such shares of Capital Stock are uncertificated, confirmation and
evidence satisfactory to the Administrative Agent that the security
interest in such uncertificated securities has been perfected by the
Administrative Agent in accordance with Section 8-313 and Section 8-321
of the U.C.C. or any similar or local law which may be applicable) and
(B) executed copies of Uniform Commercial Code financing statements
naming the Borrower or such Subsidiary as the debtor and the
Administrative Agent as the secured party, suitable for filing under
the Uniform Commercial Code of all jurisdictions as may be necessary
or, in the reasonable opinion of the Administrative Agent, desirable to
perfect the first priority security interest of the Administrative
Agent in the interests of the Borrower or such Subsidiary in such
Person pledged pursuant to such Pledge Agreement (and such Foreign
Pledge Agreement, if applicable); provided, however, that the Borrower
or such Subsidiary shall not be required to pledge the shares of
Capital Stock of a Foreign Subsidiary required to be pledged hereunder
(1) if the Required Lenders have otherwise agreed or (2) to the extent
such pledge would (x) constitute an investment in earnings in United
States property under Section 956 (or any successor provision thereto)
of the Code that would increase the amount of income of the applicable
pledgor that would otherwise be subject to United States income tax and
(y) subject the Borrower, the Parent or the Person the Capital Stock of
which is being pledged to a significant adverse tax consequence, as
determined by the Parent and evidenced by a certificate of the chief
financial or accounting
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<PAGE> 96
Authorized Officer of the Parent that is accepted in writing by the
Administrative Agent (such acceptance not to be unreasonably withheld);
(c) the Administrative Agent shall have received from each
such Subsidiary certified copies of Uniform Commercial Code Requests
for Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Administrative Agent, dated a
date reasonably near (but prior to) the date of any such Person
becoming a direct or indirect Subsidiary of the Borrower, listing all
effective financing statements, tax liens and judgment liens which name
such Person as the debtor and which are filed in the jurisdictions in
which filings are to be made pursuant to this Agreement and the other
Loan Documents, and in such other jurisdictions as the Administrative
Agent may reasonably request, together with copies of such financing
statements (none of which (other than financing statements (i) filed
pursuant to the terms hereof in favor of the Administrative Agent, if
such Form UCC-11 or search report, as the case may be, is current
enough to list such financing statements, (ii) being terminated
pursuant to termination statements that are to be delivered on or prior
to the date such Person becomes such Subsidiary or (iii) in respect of
Liens permitted under Section 8.2.3) shall cover any of the collateral
described in the Subsidiary Security Agreement); and
(d) the Administrative Agent shall have received from each
such Subsidiary executed copies of U.C.C. financing statements naming
each such Subsidiary as the debtor and the Administrative Agent as the
secured party, suitable for filing under the U.C.C. of all
jurisdictions as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to perfect the first priority security
interest of the Administrative Agent pursuant to the Subsidiary
Security Agreement entered into by such Subsidiary,
together, in each case, with such opinions of legal counsel as the
Administrative Agent may reasonably request, which legal opinions shall be in
form and substance reasonably satisfactory to the Administrative Agent.
SECTION 8.2. Negative Covenants. The Borrower and the Parent agree
with each Agent, the Issuer and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 8.2.
SECTION 8.2.1. Business Activities. The Borrower and the Parent will
not, and will not permit any of their respective Subsidiaries to, engage in any
business activity, except those described in the first recital and such
activities as may be incidental or related thereto, including, the ownership and
operation of parking lots, the ownership and rental of recreation vehicles and
the ownership and operation of limousine services, taxi fleets or car
dealerships.
SECTION 8.2.2. Indebtedness. The Borrower and the Parent will not, and
will not permit any of their respective Subsidiaries to, create, incur, assume
or suffer to exist or otherwise
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<PAGE> 97
become or be liable in respect of any Indebtedness, other than, without
duplication, the following:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) until the Closing Date, Indebtedness and identified in
Item 8.2.2(b) ("Indebtedness to be Paid") of the Disclosure Schedule;
(c) Indebtedness existing as of a date not more than 30 days
prior to the Effective Date which is identified in Item 8.2.2(c)
("Ongoing Indebtedness") of the Disclosure Schedule (provided that any
item of Indebtedness existing as of the Effective Date having a
principal amount not exceeding $500,000 that is not identified in such
Item 8.2.2(c) shall be permitted hereunder to the extent the aggregate
principal amount of all such Indebtedness does not exceed $2,500,000);
(d) Indebtedness of the Borrower in respect of the Senior
Notes in an aggregate principal amount not to exceed $170,000,000 less
the portion thereof repaid or prepaid, and guaranties thereof of the
Subsidiary Guarantors;
(e) Indebtedness of the Parent in respect of the Series A
Notes in an aggregate principal amount not to exceed $80,000,000 less
the portion thereof represented by Series A Notes which have been
exchanged for common stock of the Parent;
(f) Indebtedness of the Parent in respect of the Series B
Notes in an aggregate principal amount not to exceed $50,000,000 less
the portion thereof represented by Series B Notes which have been
exchanged for common stock of the Parent;
(g) Vehicle Debt;
(h) Indebtedness in respect of the Demand Capitalization Note
to the extent the obligations of the Borrower thereunder (whether
contingent or otherwise) do not exceed at any time $31,500,000;
(i) Indebtedness of Foreign Subsidiaries incurred for working
capital purposes to the extent the aggregate principal amount thereof
does not exceed at any time outstanding $30,000,000;
(j) Indebtedness in an aggregate principal amount not to
exceed $40,000,000 at any time outstanding which is incurred by the
Borrower or any of its Subsidiaries to a vendor of any assets permitted
to be acquired pursuant to Section 8.2.7 to finance its acquisition of
such assets;
(k) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases
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of goods and services, but excluding Indebtedness incurred through the
borrowing of money or Contingent Liabilities);
(l) Indebtedness in respect of Capitalized Lease Liabilities
to the extent permitted by Section 8.2.7;
(m) Hedging Obligations of the Parent or any of its
Subsidiaries pursuant to agreements designed to protect the Parent or
any of its Subsidiaries against fluctuations in interest rates in
respect of Indebtedness of the Parent or such Subsidiary and not
entered into for purposes of speculation;
(n) Hedging Obligations of the Parent or any of its
Subsidiaries pursuant to agreements designed to protect the Parent or
any of its Subsidiaries against fluctuations in currency values and
entered into in the ordinary course of business and not for purposes of
speculation;
(o) Indebtedness of the Parent owing to the Borrower pursuant
to an Investment of the Borrower permitted pursuant to clause (e) of
Section 8.2.5;
(p) Indebtedness of the Borrower or any Subsidiary Guarantor
owing to the Parent;
(q) Indebtedness of the Borrower or any Subsidiary of the
Borrower owing to a Subsidiary of the Borrower (other than a Subsidiary
Guarantor); provided that any such Indebtedness of the Borrower (other
than Indebtedness of the Borrower owing to TFFC in respect of amounts
advanced by TFFC to the Borrower based upon TFFC's Profits (as defined
in the Base Indenture or any supplement thereto)) constitutes
Subordinated Intercompany Debt;
(r) Indebtedness of Subsidiary Guarantors that are Wholly
Owned Subsidiaries of the Borrower owing to the Borrower or a
Subsidiary Guarantor;
(s) Indebtedness of Subsidiaries of the Borrower owing to the
Borrower or a Subsidiary Guarantor to the extent permitted by clause
(g) of Section 8.2.5;
(t) Contingent Liabilities of the Parent in respect of
guarantees of the Parent in respect of Indebtedness of a Foreign
Subsidiary of the type permitted and described in clause (g) or (i)
above;
(u) Indebtedness which refinances Indebtedness permitted by
clauses (d), (e) and (f) above; provided, however, that after giving
effect to such refinancing, (i) the principal amount of outstanding
Indebtedness is not increased, (ii) neither the tenor nor the average
life thereof is reduced, (iii) the respective obligor or obligors shall
be the same on the refinancing Indebtedness as on the Indebtedness
being refinanced, (iv) the security, if any, for the refinancing
Indebtedness shall be the same as that for the Indebtedness being
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<PAGE> 99
refinanced (except to the extent that less security is granted to
holders of refinancing Indebtedness), (v) the holders of refinancing
Indebtedness are not afforded covenants, defaults, rights or remedies
more burdensome to the obligor or obligors than those contained in the
Indebtedness being refinanced and (vi) the refinancing Indebtedness is
subordinated to the same degree, if any, as the Indebtedness being
refinanced; and
(v) other Indebtedness of the Borrower and its Subsidiaries in
an aggregate amount not to exceed (i) during the 1997 Fiscal Year or
the 1998 Fiscal Year, $25,000,000 and (ii) during the 1999 Fiscal Year
or any Fiscal Year thereafter, $35,000,000;
provided, however, that no Indebtedness otherwise permitted by clauses (i), (j),
(l), (m), (n), (s) or (v) shall be permitted if, after giving effect to the
incurrence thereof, any Default shall have occurred and be continuing.
SECTION 8.2.3. Liens. The Borrower and the Parent will not, and will
not permit any of their respective Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its property, revenues or assets, whether
now owned or hereafter acquired, except:
(a) Liens securing payment of the Obligations, granted
pursuant to any Loan Document;
(b) Liens securing payment of Indebtedness of the type
permitted and described in clause (b) of Section 8.2.2;
(c) Liens granted prior to the Effective Date to secure
payment of Indebtedness of the type permitted and described in clause
(c) of Section 8.2.2;
(d) Liens granted to secure payment of Vehicle Debt and
covering only Vehicles financed by such Vehicle Debt, Excluded
Receivables relating to such Vehicles, rights under the Demand
Capitalization Note, cash (and investments thereof in High Quality
Investments) of an SPC arising from the operations of such SPC and all
proceeds of the foregoing;
(e) Liens granted to secure payment of Indebtedness of the
type permitted and described in clause (i) of Section 8.2.2 and
covering only assets of the Foreign Subsidiary obligated under such
Indebtedness;
(f) Liens granted to secure payment of Indebtedness of the
type permitted and described in clause (j) of Section 8.2.2 and
covering only those assets acquired with the proceeds of such
Indebtedness;
(g) Liens granted to secure payment of Indebtedness (other
than Subordinated Intercompany Debt) of the type permitted and
described in clause (q), (r) or (s) of Section 8.2.2;
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(h) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(i) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(j) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(k) judgment Liens in existence less than 30 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies; and
(l) other Liens securing Indebtedness in an aggregate amount
not to exceed $25,000,000 at any time outstanding (it being
acknowledged that any such Liens shall not cover any property, revenues
or assets constituting Collateral (as such term is defined in any Loan
Document)).
Notwithstanding the foregoing clauses (b) through (l), the Borrower and
the Parent will not, and will not permit any of their respective Subsidiaries
to, create, incur, assume or suffer to exist any Lien upon or with respect to
any trademarks, software systems, reservations systems or other intellectual
property (or rights in respect of any thereof), whether now owned or hereafter
acquired.
SECTION 8.2.4. Financial Condition. The Borrower and the Parent will
not permit:
(a) the Net Worth of the Parent to be at any time less than
the sum, at such time, of (i) $294,500,000, plus (ii) 50% of the Net
Income of the Parent for each Fiscal Year, commencing with the 1997
Fiscal Year, as shall have been completed on or prior to such time (in
each case with no reduction for net losses) plus 50% of Net Equity
Proceeds;
(b) the Leverage Ratio, as of the last day of each Fiscal
Quarter, commencing with the third Fiscal Quarter of the 1997 Fiscal
Year, to be greater than the ratio set forth opposite such Fiscal
Quarter below:
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<PAGE> 101
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
-------------- -----
<S> <C>
The third Fiscal Quarter of the
1997 Fiscal Year 5.60:1.00
The fourth Fiscal Quarter of
the 1997 Fiscal Year 5.60:1.00
The first Fiscal Quarter of the
1998 Fiscal Year 5.25:1.00
The second Fiscal Quarter of
the 1998 Fiscal Year 5.00:1.00
The third Fiscal Quarter of the
1998 Fiscal Year 4.75:1.00
The fourth Fiscal Quarter of
the 1998 Fiscal Year 4.25:1.00
The first Fiscal Quarter of the
1999 Fiscal Year 4.00:1.00
The second Fiscal Quarter of
the 1999 Fiscal Year 3.75:1.00
The third Fiscal Quarter of the
1999 Fiscal Year 3.50:1.00
The fourth Fiscal Quarter of 3.25:1.00
the 1999 Fiscal Year and
each Fiscal Quarter
thereafter
</TABLE>
(c) the Interest Coverage Ratio, as of the last day of each Fiscal
Quarter, commencing with the third Fiscal Quarter of the 1997 Fiscal Year,
to be less than the ratio set forth opposite such Fiscal Quarter below:
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
-------------- -----
<S> <C>
The third Fiscal Quarter of the
1997 Fiscal Year 2.50:1.00
</TABLE>
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<PAGE> 102
<TABLE>
<S> <C>
The fourth Fiscal Quarter of the
1997 Fiscal Year 2.50:1.00
The first Fiscal Quarter of the
1998 Fiscal Year 2.50:1.00
The second Fiscal Quarter of
the 1998 Fiscal Year 2.75:1.00
The third Fiscal Quarter of the
1998 Fiscal Year 2.75:1.00
The fourth Fiscal Quarter of the
1998 Fiscal Year 3.00:1.00
The first Fiscal Quarter of the
1999 Fiscal Year 3.00:1.00
The second Fiscal Quarter of
the 1999 Fiscal Year 3.00:1.00
The third Fiscal Quarter of the
1999 Fiscal Year and each
Fiscal Quarter thereafter 3.25:1.00
</TABLE>
SECTION 8.2.5. Investments. The Borrower and the Parent will not, and
will not permit any of their respective Subsidiaries to, make, incur, assume or
suffer to exist any Investment in any other Person, except:
(a) Investments existing on the Effective Date and identified
in Item 8.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments and High Quality Investments;
(c) Investments which are Permitted Business Acquisitions;
(d) without duplication, Investments permitted as Capital
Expenditures pursuant to Section 8.2.7;
(e) Investments by the Borrower in the Parent, by way of
contributions to capital or the making of loans or advances, to the
extent the amount of such Investment would be permitted as a dividend
pursuant to clause (a) of Section 8.2.6 at the time of such Investment;
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<PAGE> 103
(f) Investments by the Borrower and Subsidiary Guarantors in
Subsidiary Guarantors that are Wholly Owned Subsidiaries of the
Borrower;
(g) Investments by the Borrower and Subsidiary Guarantors in
Subsidiaries of the Borrower that are not permitted by the preceding
clause (f), by way of contributions to capital, the making of loans or
advances or the incurrence of Contingent Liabilities, to the extent the
aggregate amount of such Investments in any Fiscal Year does not exceed
$15,000,000 and the aggregate amount of such Investments at any time
outstanding does not exceed $50,000,000;
(h) Investments by the Parent in the Borrower or any
Subsidiary Guarantor;
(i) Investments by a Subsidiary of the Borrower (other than a
Subsidiary Guarantor) in the Borrower or a Subsidiary of the Borrower;
(j) without duplication, Investments permitted as Contingent
Liabilities pursuant to Section 8.2.2; and
(k) other Investments in an aggregate amount at any one time
not to exceed $25,000,000;
provided, however, that
(i) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
or "High Quality Investment" may continue to be held notwithstanding
that such Investment if made thereafter would not comply with such
requirements; and
(ii) no Investment otherwise permitted by clause (c), (e), (g)
or (k) shall be permitted to be made if, immediately before or after
giving effect thereto, any Default shall have occurred and be
continuing.
SECTION 8.2.6. Restricted Payments, etc. On and at all times after the
Effective Date:
(a) the Borrower will not declare, pay or make any
Distribution with respect to any shares of its Capital Stock (now or
hereafter outstanding) or on any warrants, options or other rights with
respect to any such shares of Capital Stock (now or hereafter
outstanding) or apply, or permit any of its Subsidiaries to apply, any
of its funds, property or assets to the purchase, redemption, sinking
fund or other retirement of, or agree or permit any of its Subsidiaries
to purchase or redeem, any shares of any class of Capital Stock (now or
hereafter outstanding) of the Borrower, or warrants, options or other
rights with respect to any such shares of Capital Stock (now or
hereafter outstanding) of the Borrower; provided, however, that the
Borrower may
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(i) make Distributions to the Parent to the extent
that it is necessary to permit the Parent to pay taxes based
on income and franchise taxes and other similar licensure
expenses and other actual and reasonable general
administrative costs and expenses attributable to the
operations of the Parent;
(ii) make Distributions to the Parent to the extent
it is necessary to make payments of interest on the Series A
Notes and Series B Notes on the regular scheduled dates
therefor, so long as, immediately before and after giving
effect thereto, no Default shall have occurred and be
continuing; and
(iii) make a Distribution to the Parent to the extent
necessary to make a Distribution declared by the Parent (but
in no event exceeding the amount of such Distribution
permitted to be made by the Parent pursuant to the succeeding
clause (b)) , so long as, immediately before and after giving
effect thereto, no Default shall have occurred and be
continuing and the Distribution by the Parent is so made at
such time;
(b) the Parent will not declare, pay or make any Distribution
with respect to any shares of its Capital Stock (now or hereafter
outstanding) or on any warrants, options or other rights with respect
to any such shares of Capital Stock (now or hereafter outstanding) or
apply, or permit any of its Subsidiaries to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other
retirement of, or agree or permit any of its Subsidiaries to purchase
or redeem, any shares of any class of Capital Stock (now or hereafter
outstanding) of the Parent, or warrants, options or other rights with
respect to any such shares of Capital Stock (now or hereafter
outstanding) of the Parent; provided, however, that the Parent may
declare, pay and make cash Distributions to its stockholders in any
Fiscal Year, so long as
(i) both before and after giving effect to any such
payment, no Default shall have occurred and be continuing,
(ii) the Parent shall have delivered to the
Administrative Agent (A) financial statements prepared on a
pro forma basis to give effect to such Distribution for the
period of four consecutive Fiscal Quarters ending with the
Fiscal Quarter then last ended for which financial statements
and the Compliance Certificate relating thereto have been
delivered to the Administrative Agent pursuant to Sections
8.1.1 and (B) a certificate of the Parent executed by its
chief financial or accounting Authorized Officer demonstrating
that the financial results reflected in such financial
statements would comply with the requirements of Section 8.2.4
for the Fiscal Quarter in which such Distribution is to be
made, and
(iii) the aggregate amount of such Distribution to be
made by the Parent pursuant to this clause (b), when added to
the aggregate amount of all such Distributions during the
Fiscal Year in which such Distribution would be made, does not
exceed the amount set forth below opposite such Fiscal Year
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<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
----------- ------
<C> <C>
1997 Fiscal Year $3,000,000
1998 Fiscal Year The lesser of (i) 15% of
Net Income of the
Parent for the 1997
Fiscal Year and
(ii) $6,000,000
1999 Fiscal Year 15% of Net Income of the
Parent for the 1998
Fiscal Year
2000 Fiscal Year and each 20% of Net Income of the
Fiscal Year thereafter Parent for the
immediately prior
Fiscal Year
</TABLE>
(c) the Borrower will not permit any of its Subsidiaries to
declare, pay or make any Distribution with respect to any shares of
Capital Stock (now or hereafter outstanding) of any such Subsidiary
(other than (x) with respect to any such shares held by the Borrower or
any of its Wholly Owned Subsidiaries and (y) with respect to such
shares which are shares of common stock, so long as such Distribution
is made on a pro rata basis, consistent with the ownership interests in
such shares of common stock, to the owners of such shares of common
stock) or apply any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of, or agree to purchase
or redeem, any shares of any class of Capital Stock (now or hereafter
outstanding) of any such Subsidiary, or warrants, options or other
rights with respect to any such shares of Capital Stock (now or
hereafter outstanding) of any such Subsidiary (other than any such
shares, warrants, options or other rights held by the Borrower or any
of its Wholly Owned Subsidiaries);
(d) the Borrower and the Parent will not, and will not permit
any of their respective Subsidiaries to
(i) make any payment or prepayment of principal of,
or make any payment of interest on, any Subordinated Debt on
any day other than the stated, scheduled date for such payment
or prepayment set forth in the documents and instruments
memorializing such Subordinated Debt, or which would violate
the subordination provisions of such Subordinated Debt; or
(ii) redeem, purchase or defease, any Subordinated
Debt; and
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<PAGE> 106
(e) the Borrower and the Parent will not, and will not permit
any of their respective Subsidiaries to, make any deposit for any of
the foregoing purposes.
SECTION 8.2.7. Capital Expenditures, etc. The Borrower and the Parent
will not, and will not permit any of their respective Subsidiaries to, make or
commit to make Capital Expenditures in any Fiscal Year, except (a) Capital
Expenditures for the acquisition of Vehicles and (b) other Capital Expenditures
which do not aggregate in excess of the amount set forth below opposite such
Fiscal Year:
<TABLE>
<CAPTION>
<S> <C>
1997 $35,000,000
1998 $37,000,000
1999 $40,000,000
2000 $42,000,000
2001 $43,000,000
2002 $44,000,000
</TABLE>
SECTION 8.2.8. Take or Pay Contracts. The Borrower and the Parent
will not, and will not permit any of their respective Subsidiaries to, enter
into or be a party to any arrangement for the purchase of materials, supplies,
other property or services if such arrangement by its express terms requires
that payment be made by the Borrower, the Parent or such Subsidiary regardless
of whether such materials, supplies, other property or services are delivered or
furnished to it (it being understood and agreed that motor vehicle supply
agreements containing customary and reasonable provisions that provide price and
other incentives to purchase motor vehicles from the manufacturer thereunder
shall not violate this Section 8.2.8).
SECTION 8.2.9. Consolidation, Merger, etc. The Borrower and the
Parent will not, and will not permit any of their respective Subsidiaries to,
liquidate or dissolve, consolidate with, or merge into or with, any other
Person, or otherwise enter into or consummate any Business Acquisition not
constituting an Investment, except
(a) any Subsidiary of the Borrower may liquidate or dissolve
voluntarily into, and may merge with and into, the Borrower or any
Wholly Owned Subsidiary of the Borrower, and the assets or stock of
any Subsidiary of the Borrower may be purchased or otherwise acquired
by the Borrower or any Wholly Owned Subsidiary of the Borrower; and
(b) so long as no Default has occurred and is continuing or
would occur after giving effect thereto, the Borrower or any of its
Subsidiaries may enter into or consummate any Permitted Business
Acquisition.
SECTION 8.2.10. Asset Dispositions, etc. The Borrower and the Parent
will not, and will not permit any of their respective Subsidiaries to, sell,
issue, transfer, lease, contribute or otherwise convey, or grant options,
warrants or other rights with respect to, any property, business or assets of
the Parent, the Borrower or any of their respective Subsidiaries (including
accounts receivable and Capital Stock) to any Person, unless
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<PAGE> 107
(a) any such sale, transfer, lease, contribution or conveyance
is in the ordinary course of its business or is permitted by Section
8.2.9;
(b) any such issuance is an issuance of Capital Stock of the
Parent;
(c) (i) any such sale, transfer or conveyance is for not less
than the fair market value of the assets so sold, transferred or
conveyed (as determined in good faith by the Board of Directors of the
Parent or a committee thereof, whose determination shall be evidenced
by a certified written resolution of such Board or committee) and the
consideration received by the Borrower or the relevant Subsidiary of
the Borrower in respect thereof consists of at least 80% cash or Cash
Equivalent Investments and (ii) the fair market value of such assets,
together with the aggregate fair market value of all other assets sold,
transferred or conveyed pursuant to this clause (c) in the Fiscal Year
such assets are sold, transferred or conveyed, does not exceed
$35,000,000; provided, however, that no such sale, transfer or
conveyance shall be permitted to be made if immediately before or after
giving effect thereto, any Default shall have occurred and be
continuing; or
(d) without limiting the effect in any manner of the
provisions of Article IX, any such sale, transfer or conveyance of
Vehicles is in connection with a Liquidation Event of Default (as
defined in the Liquidity Facility) or similar event of default with
respect to Budget Funding Corporation, TFFC or any other SPC under any
other agreement relating to Vehicle Debt.
SECTION 8.2.11. Modification of Certain Agreements. The Borrower will
not consent to any amendment, supplement or other modification of (a) any of the
terms or provisions contained in, or applicable to, a Stock Purchase Agreement,
other than any amendment, supplement or other modification which would not have
an adverse effect on the Lenders or (b) the Liquidity Facility, the Senior Note
Purchase Agreements, the Senior Notes, the Series A Note Purchase Agreements,
the Series A Notes, the Series B Note Purchase Agreements, the Series B Notes or
any document or instrument evidencing or applicable to any Subordinated Debt,
other than any amendment, supplement or other modification which satisfies each
of the requirements set forth in the proviso to clause (u) of Section 8.2.2 or
which would not have an adverse effect on the Lenders.
SECTION 8.2.12. Transactions with Affiliates. The Borrower and the
Parent will not, and will not permit any of their respective Subsidiaries to,
enter into, or cause, suffer or permit to exist any arrangement or contract with
any of its other Affiliates unless such arrangement or contract is fair and
equitable to the Borrower, the Parent or such Subsidiary and is an arrangement
or contract of the kind which would be entered into by a prudent Person in the
position of the Borrower, the Parent or such Subsidiary with a Person which is
not one of its Affiliates; provided, however, that the foregoing restriction
shall not apply to (a) any agreement or arrangement between or among the
Borrower and any Subsidiary Guarantor that is a Wholly Owned Subsidiary of the
Borrower that is not otherwise prohibited hereunder, (b) any agreement or
arrangement that provides for the sale of Vehicles from TFFC to the Borrower or
any other
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<PAGE> 108
Subsidiary of the Borrower at the higher of the fair market value thereof and
the book value thereof, to the extent such agreement or arrangement is entered
into in connection with a structured financing or securitization program and (c)
the rate of interest on any Indebtedness permitted pursuant to clause (s) of
Section 8.2.2.
SECTION 8.2.13. Negative Pledges, Restrictive Agreements, etc. The
Borrower and the Parent will not, and will not permit any of their respective
Subsidiaries to, enter into any agreement (excluding this Agreement and any
other Loan Document) prohibiting
(a) the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired; or
(b) the ability of any Subsidiary of the Borrower to make any
payments, directly or indirectly, to the Borrower by way of dividends,
advances, repayments of loans or advances, reimbursements of management
and other intercompany charges, expenses and accruals or other returns
on investments, or any other agreement or arrangement which restricts
the ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrower;
except
(i) any indenture or agreement governing Indebtedness
permitted by clause (d) of Section 8.2.2 as in effect on the Closing
Date and any refinancings thereof permitted by clause (u) of Section
8.2.2;
(ii) any agreement governing any Indebtedness permitted by
clause (g), (j) or (l) of Section 8.2.2 as to the assets financed with
the proceeds of such Indebtedness;
(iii) as to any SPC, usual and customary restrictions pursuant
to the Organic Documents of such SPC; or
(iv) usual and customary restrictions pursuant to any
agreement relating to any Indebtedness of any Foreign Subsidiary
permitted pursuant to clause (i) of Section 8.2.2, such as maintenance
of net worth or other balance sheet conditions, provided that such
restrictions are agreed to in good faith and, where applicable, based
upon reasonable assumptions.
SECTION 8.2.14. Ability to Amend; Restrictive Agreements. The Borrower
and the Parent will not, and will not permit any of their respective
Subsidiaries to, enter into, or accept obligations under, any agreement (a)
prohibiting (including subjecting to any condition) the ability of the Borrower,
the Parent or any of their respective Subsidiaries to amend, supplement or
otherwise modify this Agreement or any other Loan Document or (b) containing any
provision that would contravene any provision of this Agreement or any other
Loan Document.
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SECTION 8.2.15. Accounting Changes. The Parent will not, and will not
permit any of its Subsidiaries to, change its Fiscal Year from twelve
consecutive calendar months ending on December 31.
SECTION 8.2.16. Tax Sharing Arrangements. The Borrower and the Parent
will not, and will not permit any of their respective Subsidiaries to, enter
into or permit to exist any tax sharing agreement or similar arrangement unless
the same shall have been reviewed by, and consented to, by the Administrative
Agent.
SECTION 8.2.17. Activities of the Parent. Without limiting the effect
of any provision contained in this Article VIII, the Parent will not engage in
any business activity other than its continuing ownership of all the shares of
Capital Stock of the Borrower and its compliance with the obligations applicable
to it under the Loan Documents and the Base Indenture. Without limiting the
generality of the immediately preceding sentence, the Parent will not (a)
create, incur, assume or suffer to exist any Indebtedness (other than (i)
Indebtedness in respect of the guaranty contained in Article X, (ii)
Indebtedness evidenced by the Series A Notes or the Series B Notes and (iii)
Indebtedness of the Parent consisting of the Contingent Liabilities described in
clause (t) of Section 8.2.2), (b) create, assume, or suffer to exist any Lien
upon, or grant any options or other rights with respect to, any of its revenues,
property or other assets, whether now owned or hereafter acquired (other than
pursuant to the Loan Documents), (c) wind-up, liquidate or dissolve itself (or
suffer to exist any of the foregoing), consolidate or amalgamate with or merge
into or with any other Person, or convey, sell, transfer, lease or otherwise
dispose of all or any part of its assets, in one transaction or a series of
transactions, to any Person or Persons, (d) create, incur, assume or suffer to
exist any Investment in any Person other than (i) as provided in clause (a) of
Section 8.2.5 and (ii) in respect of any additional equity Investments in the
Borrower or any Subsidiary Guarantor or (e) permit to be taken any action that
would result in a Change in Control. The Parent agrees not to commence or cause
the commencement of any of the actions described in clause (b), (c) or (d) of
Section 9.1.9 of this Agreement with respect to any of its Subsidiaries.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 9.1 shall constitute an "Event of
Default".
SECTION 9.1.1. Non-Payment of Obligations. The Borrower or any other
Obligor shall (a) default in the payment or prepayment when due of any principal
of any Loan, (b) default in the payment when due of any Reimbursement
Obligation, or (c) default (and such default shall continue unremedied for a
period of three Business Days) in the payment when due of any interest on any
Loan, any fee or of any other Obligation.
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SECTION 9.1.2. Breach of Warranty. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to either Agent or any
Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article
VI) is or shall be incorrect when made in any material respect.
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations.
The Borrower or the Parent shall default in the due performance and observance
of any of its obligations under Section 8.2 or Section 8.1.1, 8.1.2 (except to
the extent such Section relates to a Non-Material Subsidiary), 8.1.8, or 8.1.9.
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Borrower by the Administrative Agent or any
Lender.
SECTION 9.1.5. Default on Other Indebtedness. (a) A default shall occur
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 9.1.1) of the Borrower, the Parent or any of their
respective Subsidiaries or any other Obligor having a principal amount,
individually or in the aggregate, in excess of $10,000,000, or a default shall
occur in the performance or observance of any obligation or condition with
respect to such Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or such default shall continue unremedied for
any applicable period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity.
(b) A Liquidity Agreement Amortization Event (as defined in the
Liquidity Facility) shall have occurred or TFFC is unable to finance the
purchase of Vehicles pursuant to the CP Program or any similar event shall have
occurred with respect to TFFC or any other SPC.
SECTION 9.1.6. Judgments. Any judgment or order for the payment of
money in excess of $10,000,000 shall be rendered against the Borrower, the
Parent or any of their respective Subsidiaries or any other Obligor and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
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SECTION 9.1.7. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by the Borrower, the Parent,
any member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower, the
Parent or any such member could be required to make a contribution to
such Pension Plan, or could reasonably expect to incur a liability or
obligation to such Pension Plan, in excess of $1,000,000 (provided,
however, that the Borrower may terminate its domestic defined benefit
pension plan which it suspended effective December 31, 1991, so long as
such termination does not result in the Borrower, the Parent or any
member of its Controlled Group incurring a liability in respect of such
Pension Plan in excess of $10,000,000); or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 9.1.8. Change in Control. Any Change in Control shall occur.
SECTION 9.1.9. Bankruptcy, Insolvency, etc. The Borrower, the Parent or
any of their respective Subsidiaries (other than a Non-Material Subsidiary) or
any other Obligor shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Borrower,
the Parent or any of their respective Subsidiaries or any other Obligor
or any property of any thereof, or make a general assignment for the
benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower, the Parent
or any of their respective Subsidiaries or any other Obligor or for a
substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged
within 60 days, provided that the Borrower, the Parent, each of their
respective Subsidiaries and each other Obligor hereby expressly
authorizes the Administrative Agent and each Lender to appear in any
court conducting any relevant proceeding during such 60- day period to
preserve, protect and defend their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Borrower, the
Parent or any of their respective Subsidiaries or any other Obligor,
and, if any such case or proceeding is not commenced by the Borrower,
the Parent or such Subsidiary or such other Obligor, such case or
proceeding shall be consented to or
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acquiesced in by the Borrower, the Parent or such Subsidiary or such
other Obligor or shall result in the entry of an order for relief or
shall remain for 60 days undismissed, provided that the Borrower, the
Parent, such Subsidiary and each other Obligor hereby expressly
authorizes each Agent and each Lender to appear in any court conducting
any such case or proceeding during such 60-day period to preserve,
protect and defend their rights under the Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of
the foregoing.
SECTION 9.1.10. Impairment of Security, etc. (a) Any Loan Document, or
any Lien granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of any Obligor party thereto; the
Borrower, the Parent, any other Obligor or any other party shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding nature
or enforceability; or any Lien securing any Obligation shall, in whole or in
part, cease to be a perfected first priority Lien, subject only to those
exceptions expressly permitted by such Loan Document.
(b) The subordination provisions contained in the Series A
Note Purchase Agreements and the Series B Note Purchase Agreements shall, in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of any holder of Series A Notes or
Series B Notes or of any party to the Series A Note Purchase Agreements or the
Series B Note Purchase Agreements.
SECTION 9.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 9.1.9 shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable and the Borrower shall
immediately comply with its obligations under Section 4.7, in each case, without
notice or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
9.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loans and other Obligations to be due and
payable and/or the Commitments (if not theretofore terminated) to be terminated
and/or demand immediate compliance of the Borrower with its obligations under
Section 4.7, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment, the
Commitments shall terminate and/or, as the case may be, the Borrower shall be
obligated to comply immediately with its obligations under Section 4.7.
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ARTICLE X
PARENT GUARANTY
SECTION 10.1. Guaranty. The Parent hereby absolutely,
unconditionally and irrevocably
(a) guarantees the full and punctual payment when due,
whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, of all Obligations of the Borrower
now or hereafter existing, whether for principal, interest, fees,
expenses or otherwise (including all such amounts which would become
due but for the operation of the automatic stay under Section 362(a)
of the United States Bankruptcy Code, 11 U.S.C. ss.362(a), and the
operation of Sections 502(b) and 506(b) of the United States
Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)), and
(b) indemnifies and holds harmless each Secured Party and
each holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Secured
Party or such holder, as the case may be, in enforcing any rights
under the guaranty set forth in this Article X.
The guaranty set forth in this Article X constitutes a guaranty of payment when
due and not of collection, and the Parent specifically agrees that it shall not
be necessary or required that any Secured Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Borrower or any other Obligor (or any other Person) before or as a
condition to the obligations of the Parent under the guaranty set forth in this
Article X.
SECTION 10.2. Acceleration of Parent Guaranty. The Parent agrees
that, in the event of the dissolution or insolvency of the Borrower, any other
Obligor or the Parent, or the inability or failure of the Borrower, any other
Obligor or the Parent to pay debts as they become due, or an assignment by the
Borrower, any other Obligor or the Parent for the benefit of creditors, or the
commencement of any case or proceeding in respect of the Borrower, any other
Obligor or the Parent under any bankruptcy, insolvency or similar laws, and if
such event shall occur at a time when any of the Obligations of the Borrower and
each other Obligor may not then be due and payable, the Parent agrees that it
will pay to the Administrative Agent for the account of the Secured Parties
forthwith the full amount which would be payable under the guaranty set forth in
this Article X by the Parent if all such Obligations were then due and payable.
SECTION 10.3. Guaranty Absolute, etc. The guaranty set forth in this
Article X shall in all respects be a continuing, absolute, unconditional and
irrevocable guaranty of payment, and shall remain in full force and effect until
all Obligations of the Borrower and each other Obligor have been paid in full in
cash, all obligations of the Parent under the guaranty set forth in this Article
X shall have been paid in full in cash, all Letters of Credit have been
terminated or expired and all Commitments shall have terminated. The Parent
guarantees that the Obligations of the Borrower will be paid strictly in
accordance with the terms of this Agreement and each
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other Loan Document under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of any Secured Party or any holder of any Note with respect
thereto. The liability of the Parent under the guaranty set forth in this
Article X shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of this
Agreement, any Note or any other Loan Document;
(b) the failure of any Secured Party or any holder of any
Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person (including any other guarantor (including the
Parent)) under the provisions of this Agreement, any Note, any
other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor (including the Parent) of, or collateral
securing, any Obligations of the Borrower;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower, or
any other extension, compromise or renewal of any Obligation of the
Borrower;
(d) any reduction, limitation, impairment or termination of
any Obligations of the Borrower for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be
subject to (and the Parent hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Obligations of the Borrower or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
this Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Secured Party or any holder of any Note securing
any of the Obligations of the Borrower; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any surety or any guarantor.
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SECTION 10.4. Reinstatement, etc. The Parent agrees that the guaranty
set forth in this Article X shall continue to be effective or be reinstated, as
the case may be, if at any time any payment (in whole or in part) of any of the
Obligations is rescinded or must otherwise be restored by any Secured Party or
any holder of any Note, upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been made.
SECTION 10.5. Waiver, etc. The Parent hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower and the guaranty set forth in this Article X and any
requirement that the Administrative Agent, any other Secured Party or any holder
of any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower.
SECTION 10.6. Postponement of Subrogation, etc. The Parent agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under the guaranty set forth in this Article X, by any payment made
under the guaranty set forth in this Article X or otherwise, until the prior
payment in full in cash of all Obligations of the Borrower and each other
Obligor, the termination or expiration of all Letters of Credit and the
termination of all Commitments. Any amount paid to the Parent on account of any
such subrogation rights prior to the payment in full in cash of all Obligations
of the Borrower and each other Obligor shall be held in trust for the benefit of
the Secured Parties and each holder of a Note and shall immediately be paid to
the Administrative Agent for the benefit of the Secured Parties and each holder
of a Note and credited and applied against the Obligations of the Borrower and
each other Obligor, whether matured or unmatured, in accordance with the terms
of this Agreement; provided, however, that if
(a) the Parent has made payment to the Secured Parties and
each holder of a Note of all or any part of the Obligations of the
Borrower, and
(b) all Obligations of the Borrower and each other Obligor
have been paid in full in cash, all Letters of Credit have been
terminated or expired and all Commitments have been permanently
terminated,
each Secured Party and each holder of a Note agrees that, at the Parent's
request, the Administrative Agent, on behalf of the Secured Parties and the
holders of the Notes, will execute and deliver to the Parent appropriate
documents (without recourse and without representation or warranty) necessary to
evidence the transfer by subrogation to the Parent of an interest in the
Obligations of the Borrower resulting from such payment by the Parent. In
furtherance of the foregoing, for so long as any Obligations or Commitments
remain outstanding, the Parent shall refrain from taking any action or
commencing any proceeding against the Borrower (or its successors or assigns,
whether in connection with a bankruptcy proceeding or otherwise) to recover any
amounts in the respect of payments made under the guaranty set forth in this
Article X to any Secured Party or any holder of a Note.
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SECTION 10.7. Successors, Transferees and Assigns; Transfers of
Notes, etc. The guaranty set forth in this Article X shall:
(a) be binding upon the Parent, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Administrative Agent and each other Secured Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including the guaranty set forth in this
Article X) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 12.11 and Article XI.
ARTICLE XI
THE AGENTS
SECTION 11.1. Actions. Each Lender hereby appoints Credit Suisse
First Boston as its Administrative Agent and NationsBanc as its Documentation
Agent under and for purposes of this Agreement, the Notes and each other Loan
Document. Each Lender authorizes the Administrative Agent to act on behalf of
such Lender under this Agreement, the Notes and each other Loan Document and, in
the absence of other written instructions from the Required Lenders received
from time to time by the Administrative Agent (with respect to which the
Administrative Agent agrees that it will comply, except as otherwise provided in
this Section or as otherwise advised by counsel in order to avoid contravention
of applicable law), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Administrative Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto. Each Lender hereby indemnifies (which indemnity shall survive any
termination of this Agreement) each Agent pro rata according to such Lender's
Percentage, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against, such Agent in any way
relating to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which such Agent is
not reimbursed by the Borrower; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from such Agent's
gross negligence or wilful misconduct. No Agent shall be required to take any
action hereunder, under the Notes or under any other Loan Document, or to
prosecute or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless such Agent is indemnified hereunder to its
satisfaction. If any indemnity in favor of either Agent shall be or become, in
such Agent's determination, inadequate, such Agent may call for
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additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
SECTION 11.2. Funding Reliance, etc. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
12:00 noon (New York City, New York time) on the Business Day of a Borrowing,
with respect to ABR Loans, and by 5:00 p.m. (local time) on the Business Day
prior to a Borrowing, with respect to Eurocurrency Loans, that such Lender will
not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date the
Administrative Agent made such amount available to the Borrower to the date such
amount is repaid to the Administrative Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing (in the case of the Borrower) and
(in the case of the Lender), at the Federal Funds Rate for the first two
Business Days after which such amount has not been repaid, and thereafter at the
interest rate applicable to Loans comprising such Borrowing.
SECTION 11.3. Exculpation. Neither Agent nor any of their respective
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor for the creation,
perfection or priority of any Liens purported to be created by any of the Loan
Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by the Borrower of its obligations hereunder or under any other Loan
Document. Any such inquiry which may be made by either Agent shall not obligate
it to make any further inquiry or to take any action. Each Agent shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which such Agent believes to
be genuine and to have been presented by a proper Person.
SECTION 11.4. Successor. Each Agent may resign as such at any time
upon at least 30 days' prior notice to the Borrower and all Lenders. If either
Agent at any time shall resign, the Required Lenders may appoint another Lender
as a successor Agent which shall thereupon become an Agent hereunder in such
capacity as held by the resigning Agent. If no successor Agent shall have been
so appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be one of the Lenders or a commercial banking institution organized under
the laws of the U.S. (or any State thereof) or a U.S. branch or agency of a
commercial banking institution, and, in the case where the successor Agent is to
be the Administrative Agent, having a combined capital and
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surplus of at least $500,000,000. Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent, such successor Agent shall be entitled to
receive from the retiring Agent such documents of transfer and assignment as
such successor Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as an Agent, the provisions of
(a) this Article XI shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent
under this Agreement; and
(b) Section 11.3 and Section 11.4 shall continue to inure
to its benefit.
SECTION 11.5. Credit Extensions by Agents. Each Agent shall have the
same rights and powers with respect to (x) the Loans made by it in its capacity
as a Lender or any of its Affiliates, (y) the Notes held by it or any of its
Affiliates, and (z) its participating interests in the Letters of Credit as any
other Lender and may exercise the same as if it were not an Agent. Each Agent
and its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if Credit Suisse First Boston and NationsBanc were not Agents
hereunder.
SECTION 11.6. Credit Decisions. Each Lender acknowledges that it has,
independently of each Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of each Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 11.7. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement or any other
Loan Document.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Required Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders, by the Required Lenders or by the
Supermajority Lenders shall be effective unless consented to by each
Lender;
(b) modify this Section 12.1, change the definition of
"Required Lenders" or "Supermajority Lenders", increase the Commitment
Amount, the Enhancement Letters of Credit Commitment Amount, the
Foreign Loan Commitment Amount, the Loan Commitment Amount or the
Percentage of any Lender, reduce any fees described in Article III,
release all or substantially all collateral security which is a
component in the Borrowing Base Amount, except as otherwise
specifically provided in any Loan Document, release any Guarantor from
its obligations under its Guaranty, or extend the Loan Commitment
Termination Date or the Letter of Credit Commitment Termination Date
shall be made without the consent of each Lender;
(c) release all or substantially all collateral security which
is not a component in the Borrowing Base Amount, except as otherwise
specifically provided in any Loan Document shall be made without the
consent of the Supermajority Lenders;
(d) extend the due date for, or reduce the amount of, (i) any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any
Loan) or (ii) any repayment of a Reimbursement Obligation (or reduce
the amount of or rate of interest on any Reimbursement Obligation)
shall be made without the consent of each Lender;
(e) modify the definition of Borrowing Base Amount or any
definition related thereto shall be made without the consent of the
Supermajority Lenders;
(f) affect adversely the interests, rights or obligations of
the Issuer qua the Issuer shall be made without the consent of the
Issuer; or
(g) affect adversely the interests, rights or obligations of
the Administrative Agent qua the Administrative Agent shall be made
without consent of the Administrative Agent.
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No failure or delay on the part of either Agent, the Issuer, any Lender or the
holder of any Note in exercising any power or right under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by either Agent, the
Issuer, any Lender or the holder of any Note under this Agreement or any other
Loan Document shall, except as may be otherwise stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.
SECTION 12.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth in the case of the Borrower, the
Parent or any Agent, below its signature hereto or in the case of any Lender, in
Schedule II hereto or in a Lender Assignment Agreement or at such other address
or facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when the confirmation thereof is received by the transmitter.
SECTION 12.3. Payment of Costs and Expenses. The Borrower agrees to pay
on demand all expenses of each Agent (including the fees and out-of-pocket
expenses of counsel to the Agents and of local counsel, if any, who may be
retained by counsel to the Agents) in connection with
(a) the negotiation, preparation, execution and delivery of
this Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated (other than the fees and expenses
of the Agents in the event that the transactions contemplated hereby
are not consummated and such non-consummation results from the failure
of the Agents to negotiate and deal with the Borrower in good faith);
(b) the filing, recording, refiling or rerecording of any Loan
Document and/or any Uniform Commercial Code financing statements
relating thereto and all amendments, supplements, amendments and
restatements and other modifications to any thereof and any and all
other documents or instruments of further assurance required to be
filed or recorded or refiled or rerecorded by the terms hereof or the
terms of any Loan Document; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
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The Borrower further agrees to pay, and to save the Agents, the Issuer and the
Lenders harmless from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this Agreement, the
Credit Extensions hereunder, the issuance of the Notes, Letters of Credit or any
other Loan Documents. The Borrower also agrees to reimburse each Agent, the
Issuer and each Lender upon demand for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses) incurred by such Agent or such
Lender in connection with (x) the negotiation of any restructuring or
"work-out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations.
SECTION 12.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds each Agent, the Issuer and
each Lender and each of their respective officers, directors, employees and
agents (collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs, liabilities
and damages, and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable attorneys' fees and
disbursements whether incurred in connection with actions between or among the
parties hereto or the parties hereto and third parties (collectively, the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of,
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit
Extension, including all Indemnified Liabilities arising in connection
with the Transaction or the use of any Letter of Credit;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties (including
any action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article VI not to
fund any Credit Extension) provided that any such action is resolved in
favor of such Indemnified Party;
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any
Person, whether or not such Agent, the Issuer or such Lender is party
thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by the Borrower or any
of its Subsidiaries of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under
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any Environmental Law), regardless of whether caused by, or within the control
of, the Borrower or such Subsidiary, except for any such Indemnified Liabilities
arising for the account of a particular Indemnified Party by reason of the
relevant Indemnified Party's gross negligence or wilful misconduct. If and to
the extent that the foregoing undertaking may be unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 12.5. Survival. The obligations of the Borrower under Sections
4.9, 5.3, 5.4, 5.5, 5.6, 12.3 and 12.4, and the obligations of the Lenders under
Section 11.1, shall in each case survive any assignment from one Lender to
another (in the case of Sections 11.3 and 11.4) and any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 12.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 12.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 12.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall constitute together but one and the same agreement. This Agreement
shall become effective when counterparts hereof executed on behalf of the
Borrower, each Lender and the Adminsitrative Agent (or notice thereof
satisfactory to the Administrative Agent) shall have been received by the
Administrative Agent.
SECTION 12.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. This Agreement, the Fee
Letter, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 12.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
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(a) each of the Borrower and the Parent may not assign or
transfer either of their respective rights or obligations hereunder
without the prior written consent of the Administrative Agent and all
of the Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 12.11.
SECTION 12.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans,
Letters of Credit and Commitments to one or more other Persons in accordance
with this Section 12.11.
SECTION 12.11.1. Assignments. Any Lender,
(a) with the written consents of the Borrower, the Issuer and
the Administrative Agent (which consents shall not be unreasonably
delayed or withheld and which consent, in the case of the Borrower,
shall be deemed to have been given in the absence of a written notice
delivered by the Borrower to the Administrative Agent, on or before the
fifth Business Day after receipt by the Borrower of such Lender's
request for consent, stating, in reasonable detail, the reasons why the
Borrower proposes to withhold such consent) may at any time assign and
delegate to one or more Eligible Assignees, and
(b) with notice to the Borrower, the Issuer and the
Administrative Agent, but without the consent of the Borrower, the
Issuer or the Administrative Agent, may assign and delegate to any of
its Affiliates which is an Eligible Assignee or to any other Lender
(each Eligible Assignee to whom such assignment and delegation is to be made,
being hereinafter referred to as an "Assignee Lender"), all or any fraction of
such Lender's total Loans and Commitments (which assignment and delegation shall
be of a constant, and not a varying, percentage of all the assigning Lender's
Loans and Commitments) in a minimum aggregate amount of $5,000,000; provided,
however, that the assigning Lender shall have Commitments, participations in
Letter of Credit Outstandings and Loans aggregating at least $5,000,000;
provided further, however, that any such Assignee Lender will comply, if
applicable, with the provisions contained in the last sentence of Section 5.6;
provided further, however, that, the Borrower, the Issuer and the Administrative
Agent shall be entitled to continue to deal solely and directly with such Lender
in connection with the interests so assigned and delegated to an Assignee Lender
until
(i) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower,
the Issuer and the Administrative Agent by such assigning Lender and
such Assignee Lender,
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(ii) such Assignee Lender shall have executed and delivered
to the Borrower, the Issuer and the Administrative Agent a Lender
Assignment Agreement, accepted by the Administrative Agent, and
(iii) the processing fees described below shall have been
paid.
From and after the date that the Administrative Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and
(y) the assigning Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of notice that the
Administrative Agent has received an executed Lender Assignment Agreement, the
Borrower shall, to the extent requested, execute and deliver to the
Administrative Agent (for delivery to the relevant Assignee Lender) new Notes
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assigning Lender has retained Loans and Commitments hereunder which are
evidenced by any Notes, replacement Notes in the principal amount of the Loans
and Commitments retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, those Notes then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Notes. The
assignor Lender shall mark the predecessor Notes "exchanged" and deliver them to
the Borrower. Accrued interest on that part of the principal comprising any
assigned Loans, and accrued fees, shall be paid as provided in the Lender
Assignment Agreement. Accrued interest on that part of the principal of any
Loans not assigned shall be paid to the assignor Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in this Agreement.
Such assigning Lender must also pay a processing fee to the Administrative Agent
upon delivery of any Lender Assignment Agreement in the amount of $3,500. Any
attempted assignment and delegation not made in accordance with this Section
12.11.1 shall be null and void.
Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including the Loans owing to it and the Notes held
by it) in favor of any Federal Reserve Bank in accordance with Regulation A of
the F.R.S. Board.
SECTION 12.11.2. Participations. Upon prior written notice to the
Borrower and the Administrative Agent, any Lender may at any time sell to one or
more commercial banks or other financial institutions (each of such commercial
banks and other financial institutions being herein called a "Participant")
participating interests (or a sub-participating interest, in the case of a
Lender's participating interest in a Letter of Credit) in any of the Loans,
Commitments, or other interests of such Lender hereunder; provided, however,
that
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(a) no participation or sub-participation contemplated in
this Section 12.11 shall relieve such Lender from its Commitments or
its other obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Borrower and each other Obligor and the
Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations
under this Agreement and each of the other Loan Documents,
(d) no Participant, unless such Participant is an Affiliate
of such Lender, or is itself a Lender, shall be entitled to require
such Lender to take or refrain from taking any action hereunder or
under any other Loan Document, except that such Lender may agree with
any Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b), (c) or
(d) of Section 12.1, and
(e) the Borrower shall not be required to pay any amount
under Section 5.6 that is greater than the amount which it would have
been required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 12.3 and 12.4, shall be considered a
Lender.
SECTION 12.12. Other Transactions. Nothing contained herein shall
preclude either Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 12.13. Independence of Covenants. All covenants contained in
this Agreement and each other Loan Document shall be given independent effect
such that, in the event a particular action or condition is not permitted by any
of such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not, unless
expressly so provided in such first covenant, avoid the occurrence of a Default
or an Event of Default if such action is taken or such condition exists.
SECTION 12.14. Judgment Currency. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due hereunder
(including under Section 10.1), under any Note or under any other Loan Document
in another currency into Dollars or into a Foreign Currency, as the case may be,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which, in accordance with normal
banking procedures, the applicable Secured Party could purchase such other
currency with Dollars or with such Foreign Currency, as the case may be, in New
York City, New York at the close of business on the Business Day immediately
preceding the day on which final
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judgment is given, together with any premiums and costs of exchange payable in
connection with such purchase.
(b) The obligation of each of the Borrower and the Parent in respect of
any sum due from it to either Agent, any Lender or any other Secured Party
hereunder, under any Note or under any other Loan Document shall,
notwithstanding any judgment in a currency other than Dollars or a Foreign
Currency, as the case may be, be discharged only to the extent that on the
Business Day next succeeding receipt by such Agent, such Lender or such other
Secured Party of any sum adjudged to be so due in such other currency, such
Agent, such Lender or such other Secured Party may, in accordance with normal
banking procedures, purchase Dollars or such Foreign Currency, as the case may
be, with such other currency. If the Dollars or such Foreign Currency so
purchased are less than the sum originally due to such Agent, such Lender or
such other Secured Party in Dollars or in such Foreign Currency, each of the
Borrower and the Parent agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such Agent, such Lender or such other Secured Party
against such loss.
SECTION 12.15. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE
AGENT, THE LENDERS, THE BORROWER OR THE PARENT 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 COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE BORROWER AND
THE PARENT HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT 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. EACH OF THE BORROWER AND THE PARENT FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH OF
THE BORROWER AND THE PARENT HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH SUCH PERSON 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 BORROWER OR THE PARENT,
AS THE CASE MAY BE, HAS OR HEREAFTER MAY ACQUIRE ANY
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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 SUCH PERSON OR THE PROPERTY OF SUCH
PERSON, EACH OF THE BORROWER AND THE PARENT HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF THE OBLIGATIONS OF SUCH PERSON UNDER THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
SECTION 12.16. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE
LENDERS, THE BORROWER AND THE PARENT HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE
AGENT, THE LENDERS, THE BORROWER OR THE PARENT. EACH OF THE BORROWER AND THE
PARENT ACKNOWLEDGES AND AGREES THAT EACH SUCH PERSON HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH SUCH PERSON IS A PARTY) AND THAT THIS PROVISION IS
A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND THE LENDERS ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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<PAGE> 128
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BUDGET RENT A CAR CORPORATION
By: /s/ Stephen G. Worthley
----------------------------------
Name: Stephen G. Worthley
Title: Vice President/Treasurer
Address: 4225 Naperville Road
Lisle, IL 60532
Facsimile No.: (630) 955-7810
Attention: Robert L. Aprati
Senior Vice President and
General Counsel
BUDGET GROUP INC. (formerly known as Team
Rental Group, Inc.), as a Guarantor
By: /s/ Sanford Miller
-----------------------------------
Name: Sanford Miller
Title: Chief Executive Officer
Address: 4225 Naperville Road
Lisle, IL 60532
Facsimile No.: (630) 955-7810
- -
Attention: Scott R. White
Executive Vice President
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<PAGE> 129
CREDIT SUISSE FIRST BOSTON, as a Co-
Syndication Agent and the Administrative
Agent
By: /s/ Roger W. Saylor
-----------------------------------
Name: Roger W. Saylor
Title: Associate
By: /s/ Edward E. Barr
-----------------------------------
Name: Edward E. Barr
Title: Associate
Address: Eleven Madison Avenue
21st Floor
New York, NY 10010-3629
Facsimile No.: (212) 325-8304
Attention: Diane Albanese
CREDIT SUISSE FIRST BOSTON, as Issuer
By: /s/ Roger W. Saylor
-----------------------------------
Name: Roger W. Saylor
Title: Associate
By: /s/ Edward E. Barr
-----------------------------------
Name: Edward E. Barr
Title: Associate
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<PAGE> 130
NATIONSBANC CAPITAL MARKETS, INC., as
a Co-Syndication Agent and the
Documentation Agent
By: /s/ Arrington H. Mixon
-----------------------------------
Name: Arrington H. Mixon
Title: M.D.
Address: 100 North Tryon Street
7th Floor
Charlotte, NC 28255
Facsimile No.: (704) 388-0209
Attention: Arrington H. Mixon
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<PAGE> 131
LENDERS:
CREDIT SUISSE FIRST BOSTON
By: /s/ Edward E. Barr
-----------------------------------
Name: Edward E. Barr
Title: Associate
By: /s/ Roger W. Saylor
-----------------------------------
Name: Roger W. Saylor
Title: Associate
NATIONSBANK, N.A. (SOUTH)
By: /s/ Andrew M. Airheart
-----------------------------------
Name: Andrew M. Airheart
Title: Senior Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ Dean Balice
-----------------------------------
Name: Dean Balice
Title: Senior Vice President
Branch Manager
BHF BANK AKTIENGESELLSCHAFT
By: /s/ Paul Travers
-----------------------------------
Name: Paul Travers
Title: Vice President
By: /s/ Linda Pace
-----------------------------------
Name: Linda Pace
Title: Vice President
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<PAGE> 132
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Stephanie E. Johnson
-----------------------------------
Name: Stephanie E. Johnson
Title: Authorized Signatory
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/ Michel Buysschaert
-----------------------------------
Name: Michel Buysschaert
Title: Vice President
PNC BANK, KENTUCKY, INC.
By: /s/ James D. Neil
-----------------------------------
Name: James D. Neil
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Patrick K. Shields
-----------------------------------
Name: Patrick K. Shields
Title: Manager
THE TORONTO-DOMINION BANK
By: /s/ Jorge A. Garcia
-----------------------------------
Name: Jorge A. Garcia
Title: Mgr. Cr. Admin.
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<PAGE> 133
BANK OF HAWAII
By: /s/ Donna R. Parker
-----------------------------------
Name: Donna R. Parker
Title: Vice President
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<PAGE> 134
SCHEDULE I
to Credit Agreement
$300,000,000 Credit Agreement
DISCLOSURE SCHEDULES
ITEM 7.7.
Litigation.
None.
<PAGE> 135
$300,000,000 Credit Agreement
DISCLOSURE SCHEDULES
ITEM 7.8.(b)
Existing Subsidiaries.
See list beginning next page.
<PAGE> 136
Existing Subsidiaries of the. Borrower
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
---- -----------------------------
<S> <C>
Budget Car Sales, Inc. (formerly "Team Car Sales") Indiana
Team Car Sales of Charlotte, Inc. Delaware
Team Car Sales of Dayton, Inc. Delaware
Team Car Sales of Philadelphia, Inc. Delaware
Team Car Sales of Richmond, Inc. Delaware
Team Car Sales of San Diego, Inc. Delaware
Team Car Sales of Southern California, Inc. Delaware
ValCar Rental Car Sales, Inc. Indiana
IN Motors VI, LLC (1) Indiana
TCS Properties, LLC Indiana
Budget Rent a Car Systems, Inc. Delaware
Budget Funding Corporation Delaware
Budget Fleet Finance Corporation Delaware
BRAC of New York, Inc. Delaware
Long Island Car & Truck Rental, Inc. (2) Delaware
NYRAC, Inc. New York
Rebound Services, Inc. Delaware
Diversified Services, Inc. Delaware
Automated Transportation, Inc. California
Expert Leasing, Inc. Florida
Rapid Rentals, Inc. District of Columbia
Moisant Car Sales, Inc. Louisiana
Budget Rent a Car of New Orleans, Inc. Louisiana
Westeam Enterprises, Inc. California
</TABLE>
<PAGE> 137
Existing Subsidiaries of the. Borrower
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
---- -----------------------------
<S> <C>
MacKay Car & Truck Rentals, Inc. North Carolina
Metro West, Inc. Delaware
Lee-Al, Inc. California
Dayton Auto Lease Company, Inc. Ohio
Don Kremer, Inc. Ohio
Arizona Rent a Car Systems, Inc, Delaware
Capital City Leasing, Inc. Florida
Team Rental of Connecticut, Inc. Delaware
Team Rental of Cincinnati, Inc. Delaware
Team Rental of Ft. Wayne, Inc. Delaware
Fort Wayne Rental Group, Inc. Delaware
Team Rental of Philadelphia, Inc. Delaware
Team Rental of Pittsburgh, Inc, Delaware
Team Rental of Rochester, Inc. Delaware
Team Rental of Southern California, Inc. Delaware
BRAC SOCAL Funding Corporation Delaware
Tranex Rentals of New York, Inc. New York
VPSI, Inc. Delaware
Team Claims Services, Inc. Florida
Budget Rent a Car International, Inc. Delaware
Budget Rent a Car Espana, S.A. Spain
Budget Rent a Car Ltd., Ireland London, England
BRACRENT, S.A. Spain
</TABLE>
<PAGE> 138
Existing Subsidiaries of the Borrower
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
---- -----------------------------
<S> <C>
Societe Financiere et de Participation Tours, France
Budget France, S.A. Tours, France
BTI (U.K.) pie London, England
BTI (Gatwick) Limited London, England
BTI (Stansted) Limited London, England
BTI (London) Limited London, England
BTI (Marble Arch) Limited London, England
BTI (Slough) Limited London, England
BTI (Heathrow) Limited London, England
Budget Rent a Car Australia Pty. Ltd. Victoria, Australia
Budget Rent a Car Pty. Limited Victoria, Australia
Budget Rent a Car Limited Auckland, New Zealand
Budget Rent a Car Operations Pty. Ltd. Victoria, Australia
Target Rent a Car Limited Wellington New Zealand
Budget Lease Mgmt (Car Sales) Limited Auckland, New Zealand
Budget Locacao de Veiculos Ltda. Sao Paulo, Brazil
Budget Rent a Car Asia-Pacific, Inc. Delaware
Budget Rent a Car of Japan, Inc. Delaware
Budget Rent a Car of Canada Limited Ottawa, Ontario
Control Risk Corporation Illinois
Philip Jacobs Insurance Agency, Inc. California
Reservation Services, Inc. Texas
200-214 N. Michigan Avenue, Inc. Illinois
BRAC Reinsurance Company, Ltd. Bermuda
</TABLE>
<PAGE> 139
Existing Subsidiaries of the Borrower (Cont'd)
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
BRAC Credit Corporation Delaware
Compass Computer Services, Inc. (3) Delaware
Budget Sales Corporation Delaware
Team Fleet Financing Corporation Delaware
Team Realty Services, Inc. Delaware
Team Fleet Services Corporation Delaware
</TABLE>
- --------------------------
(1) 1% owned by Budget Car Sales, Inc.; 1% owned by the Borrower, and 98% owned
by ValCar Rental Car Sales, Inc.
(2) A 72% owned subsidiary of BRAC of New York, Inc.
(3) A 50% owned subsidiary of the Borrower.
<PAGE> 140
$300,000,000 Credit Agreement
Disclosure Schedules
ITEM 7.11.
Emplovee Benefit Plans
None.
<PAGE> 141
$300,000,000 Credit Agreement
Disclosure Schedules
ITEM 7.12.
Environmental Matters
None.
<PAGE> 142
$300,000,000 Credit Agreement
Disclosure Schedules
ITEM 7.13.
Intellectual Property
Each service mark/trade name including the name "Budget" in the following
countries:
Argentina
Australia
Austria
Belgium
Brazil
Canada
Chile
China
Colombia
Denmark
Finland
France
Germany
Italy
Israel
Japan
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Russia
South Africa
Spain
Sweden
Switzerland
United Kingdom
United States
Venezuela
<PAGE> 143
$300,000,000 Credit Agreement
Disclosure Schedules
ITEM 8.2.2(b)
Indebtedness to be Paid
See attachment.
<PAGE> 144
$300,000,000 Credit Agreement
Budget Group, Inc.
Indebtedness to be Paid
[as of 4/28/97]
<TABLE>
<CAPTION>
Payee BUDGET Payee TEAM
- -------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Budget Funding Corporation 260,190,000 NationsBank $37,948,000
Ford - Ford Vehicles 220,806,617
Ford - Non-Ford Vehicles 390,469,902
Ford - Working Capital 443,517,915
-------------- -----------
TOTAL BUDGET 1,314,984,434 TOTAL TEAM $37,948,000
============== ===========
TOTAL TEAM & BUDGET $1,352,932,434
==============
</TABLE>
<PAGE> 145
$300,000,000 Credit Agreement
Disclosure Schedules
ITEM 8.2.2(c)
Ongoing Indebtedness
See attachment.
<PAGE> 146
S300,000,000 Credit Agreement
Budget Group, Inc.
Existing Debt
[as of 4/19/97]
<TABLE>
<CAPTION>
Payee BUDGET Maturity Payee TEAM Maturity
----- ---------- -------- -------------------------------------- ------------ --------
<S> <C> <C> <C> <C> <C>
EAST REGION: (B)
(1)Truckers Bank 456,303 1997 (1)TFFC Class A (B) $100,000,000 1999
(9)LT Note Payable - Secured 613,407 2002 (1)TFFC Class B (B) 5,682,000 2000
(1)So. Cal. Class A (B) 38,500,000 1998
FLORIDA:(B) (1)So. Cal. Class B(B) 1,500,000 1998
(4)Stephen Mogg 400,042 1998 (1)TFFC Series 1996-1 Class A (B) 166,000,000 2002
(1)TFFC Series 1996-1 Class B (B) 10,000,000 2002
RESERVATIONS:(B) (2)Convertible Subordinated (C) 80,000,000 2007
(3)Wizcom Note 29,874,995 1998 (10)Bank One (B) 8,054,000 1998**
(1) Truckers Bank (B) 3,355,000 Demand Note
CORPORATE: (A) (10) World Omni (B) 17,079,000 Demand Note
(1)Budget Fleet Finance (B) 500,000,000 1999 (1) National City Bank of Dayton (B) 3,618,000 1997
(6)Nashville Franchise Note 42,476 1997 (4) Core States - Meridian Bank (B) 1,892,000 1997
(6)Rodenburg - Charleston A 176,161 1999 (8) Other Dcbt - Secured & Unsecured (B) 1,891,000
(6)Rodcnburg - Charleston B 483,976 1998 ------------
(6)Rodenburg - Charleston C 334,615 1999 $437,571,000
(5)IRBS - Orlando 550,000 1998 ============
(5)IRBS - Fort Lauderdale 389,772 1998
(4)Sea First Mortgage 400,000 1998
(7)AFCO Primary 279,445 1997
(7)AFCO Property 2,387,863 1997
(7)AFCO Umbrella 914,098 1997
(7)AFCO Exec 189,154 1997
FRANCE: (B)
(1)Credit Ford 3,398,000 1997
(1)Foum Imobilization 2,470,000 1997
(1)Disc 1,227,000 1997
(2)Credit Lyonnais 1,520,000 2001
(2)Credit Lyonnais 618,000 2000
(2)Societe Generale 266,000 1999
(2)UFB 1,000 1997
(2)Overdrafts 3,536,000
BTI: (B)
(1)Forward Trust 25,114,000 1997
(1)UDT 17,521,000 1997
(4)Notingham 104,000 2002
(2)Overdrafts 17,294,538
AUSTRALIA: (B)
(1)Societe Generale 14,329,491 1997
(2)Westpac - Commercial Bills 393,000 1997
(1)Westpac - Fleet 5,179,037 1997
--------------
TOTAL BUDGET $ 630,463,373*
==============
TOTAL TEAM & BUDGET $1,068,034,373
==============
</TABLE>
* Not including other items of indebtedness having an unpaid principal amount
not exceeding $1,000,000
**Debt carried for 90 days and is not subject to refinance provision
(1)Fleet Debt - secured by vehicles
(2)Working Capital Debt - unsecured
(3)Reservation - Wizcom Debt - unsecured
(4)Mortgages with Liens on Property - secured by property
(5)Industrial Revenue Bonds - unsecured
(6)Franchise Acquisition Notes @ unsecured
(7)Insurance Notes - unsecured
(8)Other Debt
(9)Note payable to Corporate secured by franchise
(10)Fleet Debt - secured by vehicles and related receivables
(A)Obligor is BRACC
(B)Obligor is a Subsidiary
(C)Obligor is Team
<PAGE> 147
$300,000,000 Credit Agreement
Disclosure Schedules
ITEM 8.2.5(a)
Ongoing Investments
See attachment.
<PAGE> 148
Budget Rent a Car Corporation
Investment Accounts
As of 4/28/97
<TABLE>
<CAPTION>
Description Account 1997 Balance
- ------------------------------------- ------- -------------
<S> <C> <C>
Invest-Systems 25100 * 786,040.17
Invest-Budget Leasing 25130 * 10,000.00
Invest-BRAC Reinsurance 25140 * 1,613,938.00
Invest-Control Risk Group 25170 * 940,061.00
Invest-BRAC International 25180 * 35,634,479.43
Invest-BRAC International - Australia 25180 * 3,375,203.00
Invest-Budget Funding Corp 25220 * 25,000.00
Invest-JV Long Island 25230 * 225,000.00
Invest-Budget Fleet Financing 25240 * 25,000.00
Invest-Thailand 25999 801,055.85
Invest-Oth 25999 580,739.35
Balance per General Ledger 44,016,516.60
* Investment Account Eliminated 634,721.60
Balance Per Consideration 1,381,795.00
</TABLE>
<PAGE> 149
SCHEDULE II
to Credit Agreement
LENDER INFORMATION
<TABLE>
<CAPTION>
LENDER PERCENTAGE DOMESTIC OFFICE EUROCURRENCY OFFICE
- ------ ---------- --------------- -------------------
<S> <C> <C> <C>
CREDIT SUISSE FIRST BOSTON 33.3333333333% Credit Suisse First Boston Credit Suisse First Boston
Eleven Madison Avenue Eleven Madison Avenue
New York, NY 10010-3629 New York, NY 10010-3629
Attn: Roger Saylor Attn: Roger Saylor
Fax: (212) 325-6677 Fax: (212) 325-6677
NATIONSBANK, N.A. (SOUTH) 25.0000000000% NationsBank, N.A. (South) NationsBank, N.A. (South)
101 North Tryon Street 101 North Tryon Street
N01-001-15-06 N01-001-15-06
Charlotte, NC 28255 Charlotte, NC 28255
Attn: Barbara Pollack Attn: Barbara Pollack
Fax: (704) 386-8694 Fax: (704) 386-8694
CAISSE NATIONALE DE CREDIT 8.3333333333% Caisse Nationale de Credit Caisse Nationale de Credit
Agricole Agricole
55 East Monroe Street 55 East Monroe Street
Chicago, IL 60603 Chicago, IL 60603
Attn: Laurence Grant Attn: Laurence Grant
Fax: (312) 372-3455 Fax: (312) 372-3455
BHF BANK 5.0000000000% BHF Bank Aktiengesellschaft BHF Bank Aktiengesellschaft
AKTIENGESELLSCHAFT New York Branch New York Branch
590 Madison Avenue 590 Madison Avenue
New York, NY 10022 New York, NY 10022
Attn: Sharon Fong Attn: Sharon Fong
Fax: (212) 756-5536 Fax: (212) 756-5536
</TABLE>
<PAGE> 150
<TABLE>
<CAPTION>
LENDER PERCENTAGE DOMESTIC OFFICE EUROCURRENCY OFFICE
- ------ ---------- --------------- -------------------
<S> <C> <C> <C>
CANADIAN IMPERIAL BANK OF 5.0000000000% Canadian Imperial Bank of Canadian Imperial Bank of
COMMERCE Commerce Commerce
2 Paces Ferry Road 2 Paces Ferry Road
Suite 1200 Suite 1200
Atlanta, GA 30339 Atlanta, GA 30339
Attn: Clare Coyne/Kelli Jones Attn: Clare Coyne/Kelli Jones
Fax: (770) 319-4950 Fax: (770) 319-4950
CREDIT LYONNAIS CHICAGO 5.0000000000% Credit Lyonnais Chicago Branch Credit Lyonnais Chicago Branch
BRANCH 227 West Monroe Street 227 West Monroe Street
Suite 3300 Suite 3300
Chicago, IL 60606 Chicago, IL 60606
Attn: Joce Cote Attn: Joce Cote
Fax: (502) 581-2302 Fax: (502) 581-2302
PNC BANK, KENTUCKY, INC. 5.0000000000% PNC Bank, Kentucky, Inc. PNC Bank, Kentucky, Inc.
500 W. Jefferson Street 500 W. Jefferson Street
Louisville, KY 40202 Louisville, KY 40202
Attn: Jamie Argenbright Attn: Jamie Argenbright
Fax: (502) 581-2302 Fax: (502) 581-2302
ROYAL BANK OF CANADA 5.0000000000% Royal Bank of Canada Royal Bank of Canada
Grand Cayman Branch Grand Cayman Branch
32 Old Slip, One Financial Square 32 Old Slip, One Financial Square
23rd Floor 23rd Floor
New York, NY 10005-3531 New York, NY 10005-3531
Attn: Linda Smith Attn: Linda Smith
Fax: (212) 428-2372 Fax: (212) 428-2372
</TABLE>
-2-
<PAGE> 151
<TABLE>
<CAPTION>
LENDER PERCENTAGE DOMESTIC OFFICE EUROCURRENCY OFFICE
- ------ ---------- --------------- -------------------
<S> <C> <C> <C>
THE TORONTO- DOMINION BANK 5.0000000000% The Toronto-Dominion Bank The Toronto-Dominion Bank
909 Fannin, Suite 1700 909 Fannin, Suite 1700
Houston, TX 77010 Houston, TX 77010
Attn: Jorge A. Garcia Attn: Jorge A. Garcia
Fax: (713) 951-9921 Fax: (713) 951-9921
BANK OF HAWAII 3.3333333333% Bank of Hawaii Bank of Hawaii
130 Merchant Street 130 Merchant Street
20th Floor 20th Floor
Honolulu, Hawaii 96813 Honolulu, Hawaii 96813
Attn: Iwalani Sabarre-Kapika Attn: Iwalani Sabarre-Kapika
Fax: (808) 484-3584 Fax: (808) 484-3584
</TABLE>
-3-
<PAGE> 152
SCHEDULE III
to Credit Agreement
DEPOSIT BANKS
NBD Bank, N.A.
Indianapolis, Indiana
Norwest Bank Colorado, N.A.
Denver, Colorado
Texas Commerce Bank
Arlington, Texas
<PAGE> 153
SCHEDULE IV
to the Credit Agreement
SUBORDINATION PROVISIONS TO BE CONTAINED IN
SUBORDINATED INTERCOMPANY DEBT
The following provisions and conditions shall be made a part of each
instrument evidencing or pursuant to which Subordinated Intercompany Debt may be
incurred by any Person (a "Debtor") to another Person (a "Subordinated
Creditor") in accordance with the Credit Agreement referred to below.
SECTION 1. Definitions. Terms used but not defined herein have the
meanings given to them in the Credit Agreement. As used in these provisions, the
following terms shall have the meanings specified below:
"Administrative Agent" means Credit Suisse First Boston, in its
capacity as Administrative Agent under the Credit Agreement.
"Credit Agreement" means the Credit Agreement, dated as of April 29,
1997, among Budget Rent a Car Corporation, Budget Group, Inc. (formerly known as
Team Rental Group, Inc.), the various financial institutions as are, or may from
time to time become, parties thereto (each individually a "Lender" and
collectively the "Lenders") and the Administrative Agent, including all
amendments, renewals, extensions, restructurings, supplements or modifications
thereto and all refundings, refinancings and replacements thereof (and of any
such refunding, refinancing or replacement), including any agreement (i)
extending or shortening the maturity of any indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder
or (iii) increasing the amount of indebtedness incurred thereunder or available
to be borrowed thereunder.
"Hedging Arrangements" means any and all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements and currency
exchange agreements, and all other agreements or arrangements designed to
protect against fluctuations in interest rates or currency values, entered into
by the Debtor with any Secured Party (or any Affiliate of a Secured Party).
"Intercompany Subordinated Debt" means all indebtedness and other
obligations of the Debtor from time to time owing to the Subordinated Creditor
in respect of indebtedness related to or resulting from intercompany loans,
advances or other indebtedness from a Subordinated Creditor (whether created
directly or acquired by assignment or otherwise), and interest, premiums and
fees, if any, thereon and other amounts payable in respect thereof and all
rights and remedies of the Subordinated Creditor with respect thereto.
"Secured Parties" is defined in the Credit Agreement.
<PAGE> 154
"Senior Indebtedness" is defined in clause (a) of Section 2.
SECTION 2. Agreement to Subordinate.
(a) The Debtor and the Subordinated Creditor agree that the
Intercompany Subordinated Debt is and shall be subject, subordinate and rendered
junior, to the extent and in the manner hereinafter set forth, in right of
payment, to the prior payment in cash in full of all obligations of the Debtor
now existing or hereafter arising in connection with the Credit Agreement or any
Hedging Arrangement, whether for (i) principal, (ii) reimbursement obligations
in respect of letters of credit, (iii) interest (including, without limitation,
interest accruing after the filing of a petition initiating any proceeding
referred to in clause (a) of Section 3, whether or not allowed as a claim in
such proceeding), (iv) costs, fees (including, without limitation, attorneys'
fees and disbursements) and reasonable expenses or (v) otherwise (the
obligations specified in clauses(a)(i) through (a)(v) above are referred to
collectively as the "Senior Indebtedness"). For purposes of these provisions,
the Senior Indebtedness shall not be deemed to have been paid in cash in full
until the Secured Parties shall have received full payment of the Senior
Indebtedness in cash and all letters of credit issued under the Credit Agreement
have expired or been terminated or have been cash collateralized in full, which
payment and/or cash collateralization shall have been retained by the Secured
Parties for a period of time in excess of all applicable preference or other
similar periods under applicable bankruptcy, insolvency or creditors' rights
laws. Each of the Debtor and the Subordinated Creditor waives notice of
acceptance of these provisions by the Secured Parties, and the Subordinated
Creditor waives notice of and consent to the making, amount and terms of the
Senior Indebtedness which may exist or be created from time to time and any
renewal, extension, amendment or modification thereof, and any other lawful
action which any Secured Party in its and their sole and absolute discretion may
take or omit to take with respect thereto. The provisions of this Section shall
constitute a continuing offer made for the benefit of and to all Secured Parties
and each Secured Party is hereby irrevocably authorized to enforce such
provisions.
(b) In the event that the Debtor shall make, and/or any Subordinated
Creditor shall receive, any payment on Intercompany Subordinated Debt in
contravention of these provisions or the terms of the Credit Agreement, then and
in any such event such payment shall be deemed to be the property of,
segregated, received and held in trust for the benefit of, and shall be promptly
paid over and delivered to, the Administrative Agent for the pro rata benefit of
the Secured Parties.
(c) The Debtor shall not make, and the Subordinated Creditor shall
receive or accept, any payment in respect of any Intercompany Subordinated Debt
if a Default of the nature set forth in Section 9.1.9 of the Credit Agreement or
any Event of Default has occurred and is continuing or would result therefrom,
unless and until (i) the Senior Indebtedness has been paid in cash in full, (ii)
in the case of an Event of
-2-
<PAGE> 155
Default referred to above other than a Default of the nature set forth in
Section 8.1.9 of the Credit Agreement, such Event of Default has been cured or
waived or (iii) the Administrative Agent has otherwise consented in writing. For
purposes of these provisions, "payment" in respect of any Intercompany
Subordinated Debt shall include any direct or indirect payment or distribution
from any source, whether in cash, property or securities, by set-off or
otherwise, in respect of principal, premium, interest or otherwise, including in
connection with any redemption or purchase of such Intercompany Debt or any
recovery on any claim for rescission or damages.
SECTION 3. In Furtherance of Subordination.
(a) Upon any distribution of all or any of the assets of the Debtor or
the Subordinated Creditor in the event of
(i) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Debtor or the Subordinated Creditor, or to
its creditors, as such, or to its assets,
(ii) any liquidation, dissolution or other winding up of the
Debtor or the Subordinated Creditor, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or
(iii) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Debtor or the Subordinated
Creditor,
then, and in any such event, unless the Administrative Agent shall otherwise
agree in writing, the Secured Parties shall receive payment in cash in full of
all amounts due or to become due (whether or not the Senior Indebtedness has
been declared due and payable prior to the date on which the Senior Indebtedness
would otherwise have become due and payable) on or in respect of all Senior
Indebtedness (including postpetition interest) before the Subordinated Creditor
or anyone claiming through or on its behalf (including any receiver, trustee, or
otherwise) is entitled to receive any payment on account of principal of (or
premium, if any) or interest on or other amounts payable in respect of the
Intercompany Subordinated Debt, and to that end, any payment or distribution
which may be payable or deliverable in respect of the Intercompany Subordinated
Debt in any such case, proceeding, dissolution, liquidation or other winding up
or event, shall be paid or delivered directly to the Administrative Agent for
the application (in the case of cash) to, or as collateral (in the case of
noncash property or securities) for, the payment or prepayment of the Senior
Indebtedness until the Senior Indebtedness shall have been paid in cash in full.
(b) If any proceedings, liquidation, dissolution or winding up referred
to in clause (a) above is commenced by or against the Debtor or the Subordinated
Creditor,
-3-
<PAGE> 156
(i) the Administrative Agent is hereby irrevocably authorized and
empowered (in its own name or in the name of the Debtor, the
Subordinated Creditor or otherwise), but shall have no obligation, to
demand, sue for, collect and receive every payment or distribution in
respect of the Intercompany Subordinated Debt above and give
acquittance therefor and to file claims and proofs of claim and take
such other action (including, without limitation, voting the
Intercompany Subordinated Debt or enforcing any security interest or
other lien securing payment of the Intercompany Subordinated Debt) as
the Administrative Agent may reasonably deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the
Secured Parties or the Administrative Agent hereunder; provided that in
the event the Administrative Agent takes such action, the
Administrative Agent shall apply all proceeds first, to the payment of
the costs of enforcement of these provisions, and second, to the pro
rata payment of the Senior Indebtedness; and
(ii) the Subordinated Creditor shall duly and promptly take such
action as the Administrative Agent may request (A) to collect the
Intercompany Subordinated Debt for the account of the Secured Parties
and the Administrative Agent and to file appropriate claims or proofs
of claim in respect of the Intercompany Subordinated Debt, (B) to
execute and deliver to the Administrative Agent such powers of
attorney, assignments, or other instruments as the Administrative Agent
may reasonably request in order to enable it to enforce any and all
claims with respect to, and any security interests and other liens
securing payment of, the Intercompany Subordinated Debt and (C) to
collect and receive any and all payments or distributions which may be
payable or deliverable upon or with respect to the Intercompany
Subordinated Debt.
(c) All payments or distributions of assets of the Debtor, whether in
cash, property or securities upon or with respect to the Intercompany
Subordinated Debt which are received by the Subordinated Creditor contrary to
these provisions shall be received in trust for the pro rata benefit of the
Secured Parties, shall be segregated from other funds and property held by the
Subordinated Creditor and shall be forthwith paid over to the Administrative
Agent in the same form as so received (with any necessary indorsement) to be
applied, pro rata (in the case of cash) to, or held as collateral (in the case
of noncash property or securities) for, the payment or prepayment of the Senior
Indebtedness, whether matured or unmatured, in accordance with the terms of
these provisions.
(d) The Secured Parties and the Administrative Agent are hereby
authorized to demand specific performance of these provisions, whether or not
the Debtor or the Subordinated Creditor shall have complied with any of the
provisions hereof applicable to it, at any time when the Subordinated Creditor
shall have failed
-4-
<PAGE> 157
to comply with any of these provisions applicable to it. The
Subordinated Creditor hereby irrevocably waives any defense (other than
the defense of payment in full of the Senior Indebtedness) based on the
adequacy of a remedy at law which might be asserted as a bar to such
remedy of specific performance.
SECTION 4. No Enforcement or Commencement of Any Proceedings. The
Subordinated Creditor agrees that, so long as any Senior Indebtedness shall
remain unpaid (including any Letter of Credit remaining outstanding), or any
Commitment shall be in effect, it will not accelerate the maturity of the
Intercompany Subordinated Debt or commence, or join with any creditor other than
the Secured Parties in commencing any proceeding referred to in clause (a) of
Section 3.
SECTION 5. Rights of Subordination. The Subordinated Creditor agrees
that no payment or distribution to the Secured Parties or the Administrative
Agent pursuant to these provisions shall entitle the Subordinated Creditor to
exercise any rights of subrogation in respect thereof until all Senior
Indebtedness has been paid in cash in full and the Commitments have been
terminated. The Subordinated Creditor agrees that these provisions shall not be
affected by any action, or failure to act, by the Administrative Agent or the
Secured Parties which results, or may result, in affecting, impairing or
extinguishing any right of reimbursement or subrogation or other right or remedy
of the Subordinated Creditor against the Debtor.
SECTION 6. Subordination Legend: Further Assurances. The Subordinated
Creditor and the Debtor will cause each note and instrument (if any) evidencing
the Intercompany Subordinated Debt to be endorsed with the following legend:
"The indebtedness evidenced by this instrument is subordinated to
the prior payment in cash in full of the Senior Indebtedness (as
defined in the Intercompany Subordination Agreement, dated as of__ ,__)
pursuant to, and to the extent provided in, the Intercompany
Subordination Agreement by the maker hereof and payee named herein in
favor of the Secured Parties referred to therein and any person now or
hereafter designated as their agent."
Each of the Subordinated Creditor and the Debtor hereby agrees to mark its books
of account in such a manner as shall be effective to give proper notice of the
effect of these provisions and will, in the case of any Intercompany
Subordinated Debt which is not evidenced by any note or instrument, following
the occurrence and subject to the continuation of an Event of Default, upon the
Administrative Agent's request, cause such Intercompany Subordinated Debt to be
evidenced by an appropriate note or instrument or instruments endorsed with the
above legend. Each of the Subordinated Creditor and the Debtor will at its
expense and at any time and from time to time promptly execute and deliver all
further instruments and documents and take all further action that may be
necessary or that the Secured Parties or the Administrative Agent may reasonably
request in order to protect any right or interest granted
-5-
<PAGE> 158
or purported to be granted hereunder or to enable the Secured Parties or the
Administrative Agent to exercise and enforce their rights and remedies
hereunder.
SECTION 7. No Disposition of Intercompany Subordinated Debt. The
Subordinated Creditor will not, without the prior written consent of the
Administrative Agent, upon the occurrence and during the continuation of any
Default of the nature set forth in Section 9.1.9 of the Credit Agreement or an
Event of Default, take, or permit to be taken, any action to assert, collect or
enforce the Intercompany Subordinated Debt or any part thereof.
SECTION 8. Agreement by the Debtor. The Debtor agrees that it will not
make any payment on any of the Intercompany Subordinated Debt, or take any other
action, in contravention of these provisions.
SECTION 9. Obligations Hereunder Not Affected. All rights and interest
of the Secured Parties and the Administrative Agent hereunder, and all
agreements and obligations of the Subordinated Creditor and the Debtor
hereunder, shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of any document
evidencing Senior Indebtedness;
(b) any change in the time, manner or place of payment of, or
any other term of, all or any of the Senior Indebtedness, or any other
amendment or waiver of or any consent to departure from any of the
documents evidencing or relating to the Senior Indebtedness;
(c) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any guaranty or Loan Document, for all or any of the Senior
Indebtedness;
(d) any failure of any Secured Party or the Administrative Agent
to assert any claim or to enforce any right or remedy against any other
party hereto under these provisions, the Credit Agreement or any other
Loan Document;
(e) any reduction, limitation, impairment or termination of the
Senior Indebtedness for any reason (other than the defense of payment
in full of the Senior Indebtedness), including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to (and the Debtor and the Subordinated Creditor hereby waive any right
to or claim of) any defense (other than the defense of payment in full
of the Senior Indebtedness) or setoff, counterclaim, recoupment or
termination whatsoever by reason of invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any
other event or occurrence affecting, any Senior Indebtedness; and
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<PAGE> 159
(f) any other circumstance which might otherwise constitute a
defense (other than the defense of payment in full of the Senior
Indebtedness) available to, or a discharge of, the Debtor in respect of
the Senior Indebtedness or the Subordinated Creditor in respect of
these provisions.
These provisions shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by any Secured Party or the
Administrative Agent upon the insolvency, bankruptcy or reorganization of the
Debtor or otherwise, all as though such payment had not been made. The
Subordinated Creditor acknowledges and agrees that the Secured Parties and the
Administrative Agent may in accordance with the terms of the Credit Agreement,
without notice or demand and without affecting or impairing the Subordinated
Creditor's obligations hereunder, from time to time (i) renew, compromise,
extend, increase, accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Senior Indebtedness or any part thereof,
including, without limitation, to increase or decrease the rate of interest
thereon or the principal amount thereof; (ii) take or hold security for the
payment of the Senior Indebtedness and exchange, enforce, foreclose upon, waive
and release any such security; (iii) apply such security and direct the order or
manner of sale thereof as the Administrative Agent and the Secured Parties, in
their sole discretion, may determine; (iv) release and substitute one or more
endorsers, warrantors, borrowers or other obligers; and (v) exercise or refrain
from exercising any rights against the Debtor or any other Person.
SECTION 10. Representations and Warranties. The Subordinated Creditor, in
respect of itself and the Intercompany Subordinated Debt owing to it, as the
Debtor, as the case may be, hereby represents and warrants as follows:
(a) the Subordinated Creditor owns the Intercompany Subordinated
Debt now outstanding free and clear of any Lien;
(b) these provisions constitute a legal, valid and binding
obligation of the Subordinated Creditor and the Debtor, enforceable in
accordance with its terms.
SECTION 11. Amendments. Waivers. No amendment or waiver of these
provisions nor consent or any departure by the Subordinated Creditor or the
Debtor herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent, and then such waiver, amendment
or consent shall be effective only in the specific instance and for the specific
purpose for which given. Any waiver, forbearance, failure or delay by the
Administrative Agent or the Secured Parties in exercising, or the exercise or
beginning of exercise by the Administrative Agent or the Secured Parties of, any
right, power or remedy, simultaneous or later shall not preclude the further,
simultaneous or later exercise thereof, and every right, power or remedy of the
Administrative Agent and the Secured Parties shall continue in full force and
effect until such right, power or remedy is specifically waived in a writing
executed or authorized by such Secured Parties.
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<PAGE> 160
SECTION 12. Expenses. The Subordinated Creditor and the Debtor jointly
and severally agree to pay, upon demand, to the Administrative Agent or the
Secured Parties, as applicable, any and all reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements
which the Secured Parties or the Administrative Agent may incur in connection
with the exercise or enforcement of any of the rights or interest of the Secured
Parties or the Administrative Agent hereunder.
SECTION 13. Severability. If any of these provisions shall be held
invalid or unenforceable, these provisions shall be construed as if not
containing those provisions, and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
SECTION 14. Cumulative Rights. The rights, powers and remedies of the
Secured Parties and the Administrative Agent under these provisions shall be in
addition to all rights, powers and remedies given to the Secured Parties and the
Administrative Agent by virtue of any contract, statute or rule of law, all of
which rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently. The parties hereto expressly acknowledge and agree
that the Secured Parties and the Administrative Agent are intended, and by this
reference expressly made, third party beneficiaries of these provisions.
SECTION 15. Governing Law. THESE PROVISIONS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 18. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THESE PROVISIONS,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY OF THE SECURED PARTIES OR
THE SUBORDINATED CREDITOR OR THE DEBTOR 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. THE DEBTOR AND THE
SUBORDINATED CREDITOR EACH HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL,
NON-APPEALABLE JUDGEMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION OR
BY A FINAL, NON-APPEALABLE JUDGMENT OF ANY APPLICABLE APPELLATE COURT. THE
DEBTOR AND THE SUBORDINATED CREDITOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK. THE DEBTOR AND THE SUBORDINATED CREDITOR EACH
HEREBY EXPRESSLY AND IRREVOCABLY
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<PAGE> 161
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT 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 DEBTOR OR THE
SUBORDINATED CREDITOR 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, EACH OF THE DEBTOR AND THE
SUBORDINATED CREDITOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THESE PROVISIONS.
SECTION 19. Waiver of Jury Trial. THE DEBTOR AND THE SUBORDINATED
CREDITOR AND, BY ACCEPTING THESE PROVISIONS AND THE BENEFITS THEREOF, THE
ADMINISTRATIVE AGENT, ANY ISSUER AND ANY LENDER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THESE PROVISIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE DEBTOR OR THE SUBORDINATED CREDITOR
AND EACH SUCH PERSON ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE SECURED PARTIES CONTINUING TO MAKE CREDIT EXTENSIONS
UNDER THE CREDIT AGREEMENT.
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<PAGE> 162
SCHEDULE V
to Credit Agreement
SCHEDULED LETTERS OF CREDIT
1. Applicant: Budget Rent A Car Corporation
Beneficiary: Ford Motor Credit Company
Amount: $24,750,000.00
L/C No.: TS-06000863
Issuance Date: April 29, 1997
Stated Expiry Date: August 2, 1998
2. Applicant: Budget Rent A Car Corporation
Beneficiary: Ford Motor Credit Company
Amount: $7,400,000.00
L/C No.: TS-06000865
Issuance Date: April 29, 1997
Stated Expiry Date: October 16, 1999
3 Applicant: Budget Rent A Car Corporation
Beneficiary: Ford Motor Credit Company
Amount: $25,000,000.00
L/C No.: TS-06000866
Issuance Date: April 29, 1997
Stated Expiry Date: August 24, 2000
<PAGE> 163
FIRST AMENDMENT
TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of October 24,
1997 (this "Amendment"), is made by and among BUDGET RENT A CAR CORPORATION, a
Delaware corporation (the "Borrower"), BUDGET GROUP, INC. (formerly known as
Team Rental Group, Inc.), a Delaware corporation (the "Parent"), the various
financial institutions parties hereto (collectively, the "Lenders"),
NATIONSBANC CAPITAL MARKETS, INC., as a Co-Syndication Agent and as the
Documentation Agent, and CREDIT SUISSE FIRST BOSTON, as a Co-Syndication Agent,
as administrative agent (in such capacity, the "Administrative Agent") for the
Lenders and as the arranger.
W I T N E S S E T H:
WHEREAS, the Borrower, the Parent, the Lenders and the Agents have
heretofore entered into that certain Credit Agreement, dated as of April 29,
1997 (the "Credit Agreement");
WHEREAS, the Credit Agreement provides for the pledge to the
Administrative Agent of all (subject to certain limitations) of the outstanding
shares of the Capital Stock of each existing Foreign Subsidiary of the Borrower
within 180 days of the Closing Date, together with undated stock powers or
equivalent instruments of transfer satisfactory to the Administrative Agent for
such certificates or such other evidence of beneficial ownership, executed in
blank or otherwise, so as to perfect the security interest of the
Administrative Agent therein in accordance with applicable law;
WHEREAS, the Borrower desires to limit such pledge to all (subject
to certain limitations) of the outstanding shares of the Capital Stock of each
Foreign Subsidiary that is not a Non-Material Subsidiary of the Borrower; and
WHEREAS, the Lenders and the Agents are willing, on and subject to
the terms and conditions set forth below, to amend the Credit Agreement as
provided below (the Credit Agreement, as amended pursuant to the terms of this
Amendment, being referred to as the "Amended Credit Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower, the Parent, the Lenders and the
Agents hereby agree as follows:
<PAGE> 164
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Administrative Agent" is defined in the preamble.
"Amended Credit Agreement" is defined in the fourth recital.
"Amendment" is defined in the preamble.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"First Amendment to Borrower Pledge Agreement" means the First
Amendment to Borrower Pledge Agreement, substantially in the form of Annex I
hereto, to be entered into by and between the Borrower and the Administrative
Agent.
"First Amendment to Subsidiary Pledge Agreement" means the First
Amendment to Subsidiary Pledge Agreement, substantially in the form of Annex II
hereto, to be entered into by and among the Subsidiaries of the Borrower
parties thereto and the Administrative Agent.
"Lenders" is defined in the preamble.
"Parent" is defined in the preamble.
SECTION 1.2. Other Definitions. Terms for which meanings are
provided in the Amended Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this Amendment with such meanings.
ARTICLE II
AMENDMENTS TO CREDIT AGREEMENT
Subject to the satisfaction of the conditions set forth in Article
III, effective as of the date hereof, the Credit Agreement is hereby amended in
accordance with this Article II; except expressly as so amended by this
Amendment, the Credit Agreement shall continue in full force and effect in
accordance with its terms.
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<PAGE> 165
SECTION 2.1. Amendment to Section 1.1 of the Credit Agreement.
Section 1.1 of the Credit Agreement ("Defined Terms") is hereby amended by
inserting in such Section the following definition in the appropriate
alphabetical order:
"First Amendment" means the First Amendment to Credit
Agreement, dated as of October 24, 1997, among the Borrower, the
Parent, the Lenders parties thereto and the Agents.
SECTION 2.2. Amendment to Section 8.1.8 of the Credit Agreement.
Section 8.1.8 of the Credit Agreement ("Foreign Subsidiaries as of the Closing
Date") is hereby amended by (a) deleting the number "180" from the sixth line
of such Section and inserting the number "210" in lieu thereof and (b)
inserting in the second line of clause (a) of such Section, the words "(other
than a Non-Material Subsidiary)" immediately following the words "Stock of each
Foreign Subsidiary" and immediately preceding the words "owned by the Borrower"
in such line.
ARTICLE III
CONDITIONS TO EFFECTIVENESS
This Amendment, and the amendments and modifications contained
herein, shall be and become effective as of the date hereof subject to the
satisfaction of each of the conditions set forth in this Article III to the
satisfaction of the Administrative Agent.
SECTION 3.1. Execution of Counterparts. The Administrative Agent
shall have received counterparts of this Amendment, duly executed and delivered
on behalf of the Borrower, the Parent and each of the Required Lenders.
SECTION 3.2. Execution of Amendments to Pledge Agreements. The
Administrative Agent shall have received counterparts of each of the First
Amendment to Borrower Pledge Agreement, duly executed and delivered on behalf
of the Borrower, and the First Amendment to Subsidiary Pledge Agreement, duly
executed and delivered on behalf of each Subsidiary of the Borrower that is a
party thereto.
SECTION 3.3. Fees and Expenses. The Administrative Agent shall have
received all fees and expenses due and payable pursuant to Section 5.4 (to the
extent then invoiced) and pursuant to the Credit Agreement (including all
previously invoiced fees and expenses).
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<PAGE> 166
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties. In order to induce the
Lenders and the Agents to enter into this Amendment, each of the Borrower and
the Parent hereby represents and warrants to each Agent and each Lender, as of
the date hereof, as follows:
(a) the representations and warranties set forth in
Article VII of the Credit Agreement (excluding, however, those
contained in Section 7.7 of the Credit Agreement) and in each other
Loan Document are, in each case, true and correct (unless stated to
relate solely to an early date, in which case such representations
and warranties are true and correct as of such earlier date);
(b) except as disclosed by the Borrower or the Parent to
the Agents, the Issuer and the Lenders pursuant to Section 7.7 of
the Credit Agreement
(i) no labor controversy, litigation,
arbitration or governmental investigation or proceeding is
pending or, to the best knowledge of the Borrower,
threatened against the Borrower, the Parent or any of
their respective Subsidiaries which might materially
adversely affect the Parent's consolidated business,
operations, assets, revenues, properties or prospects or
which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other
Loan Document; and
(ii) no development has occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section
7.7 of the Credit Agreement which might materially
adversely affect the consolidated businesses, operations,
assets, revenues, properties or prospects of the Borrower,
the Parent and their respective Subsidiaries;
(c) all of the Foreign Subsidiaries (other than those that
are Non-Material Subsidiaries) of the Borrower are set forth on
Schedule I hereto;
(d) no Default has occurred and is continuing, and neither
the Borrower, the Parent nor any of their respective Subsidiaries
nor any other Obligor is in material violation of any law or
governmental regulation or court order or decree; and
(e) this Amendment has been duly authorized, executed and
delivered by each of the Borrower and the Parent and constitutes a
legal, valid and binding obligation of each such Person, enforceable
against it in accordance with its terms, except to the extent the
enforceability hereof may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights
and remedies of creditors generally and (ii) the effect of general
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<PAGE> 167
principles of equity, whether enforcement is considered in a
proceeding in equity or at law.
SECTION 4.2. Full Disclosure. Except as corrected by written
information delivered to the Agents and the Lenders reasonably prior to the
date on which this representation is made, all factual information heretofore
or contemporaneously furnished by the Borrower or the Parent in writing to any
Agent, the Issuer or any Lender for purposes of or in connection with this
Amendment or any transaction contemplated hereby is true and accurate in every
material respect and such information is not incomplete by omitting to state
any material fact necessary to make such information not misleading. All
projections delivered to any Agent or any Lender by or on behalf of any
Borrower have been prepared in good faith by the Borrowers and represent the
best estimates of the Borrowers, as of the date hereof, of the reasonably
expected future performance of the businesses reflected in such projections.
SECTION 4.3. Compliance with Credit Agreement. As of the execution
and delivery of this Amendment, each Obligor is in compliance with all the
terms and conditions of the Credit Agreement and the other Loan Documents to be
observed or performed by it thereunder, and no Default has occurred and is
continuing.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Credit Agreement and the
other Loan Documents shall remain unamended and unwaived and shall continue to
be, and shall remain, in full force and effect in accordance with their
respective terms. The amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein and shall not be
deemed to be an amendment to, consent to or modification of any other term or
provision of the Credit Agreement, any other Loan Document referred to therein
or herein or of any transaction or further or future action on the part of the
Borrower, the Parent or any other Obligor which would require the consent of
the Lenders under the Credit Agreement or any of the other Loan Documents.
SECTION 5.2. Loan Document Pursuant to Credit Agreement. This
Amendment is a Loan Document executed pursuant to the Credit Agreement and
shall be construed, administered and applied in accordance with all of the
terms and provisions of the Credit Agreement (and, following the date hereof,
the Amended Credit Agreement). Any breach of any representation or warranty or
covenant or agreement contained in this Amendment shall be deemed to be an
Event of Default for all purposes of the Credit Agreement and the other Loan
Documents.
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<PAGE> 168
SECTION 5.3. Further Assurances. Each of the Borrower and the
Parent hereby agrees that it will take any action that from time to time may be
reasonably necessary to effectuate the amendments contemplated herein.
SECTION 5.4. Fees and Expenses. The Borrower shall pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation, negotiation, execution and delivery of this
Amendment and the documents and transactions contemplated hereby, including the
reasonable fees and disbursements of Mayer, Brown, and Platt, as counsel for
the Administrative Agent.
SECTION 5.5. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof.
SECTION 5.6. Execution of Amendments to Pledge Agreements. By their
signatures below, the Required Lenders acknowledge that the Administrative
Agent will be executing each of the First Amendment to Borrower Pledge
Agreement and the First Amendment to Subsidiary Pledge Agreement.
SECTION 5.7. Execution in Counterparts. This Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 5.8. Cross-References. References in this Amendment to any
Article or Section are, unless otherwise specified or otherwise required by the
context, to such Article or Section of this Amendment.
SECTION 5.9. Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION 5.10. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
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<PAGE> 169
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers or general partners (or their
respective officers) thereunto duly authorized as of the day and year first
above written.
BUDGET RENT A CAR CORPORATION
By: /s/ Robert L. Aprati
------------------------------------------
Name: Robert L. Aprati
Title: Executive Vice President
BUDGET GROUP INC. (formerly known as Team
Rental Group, Inc.), as a Guarantor
By: /s/ Robert L. Aprati
------------------------------------------
Name: Robert L. Aprati
Title: Executive Vice President
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<PAGE> 170
CREDIT SUISSE FIRST BOSTON, as a Lender, a
Co-Syndication Agent and the Administrative
Agent
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
NATIONSBANC CAPITAL MARKETS, INC., as
a Co-Syndication Agent and the Documentation
Agent
By: /s/ Richard M. Starke
--------------------------------------------
Name: Richard M. Starke
Title: V.P.
CREDIT SUISSE FIRST BOSTON, as the Issuer
By:
--------------------------------------------
Name:
Title:
BANK OF HAWAII, as a Lender
By: /s/ Donna R. Parker
--------------------------------------------
Name: Donna R. Parker
Title: Vice President
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<PAGE> 171
THE BANK OF NEW YORK, as a Lender
By: /s/ John R. Ciulla
------------------------------------------
Name: John R. Ciulla
Title: Assistant Vice President
BANK POLSKA KASA OPIEKI, as a Lender
By: /s/ Harvey Winter
------------------------------------------
Name: Harvey Winter
Title: Vice President
BANK UNITED, as a Lender
By /s/ Mario Chiodetti
------------------------------------------
Name: Mario Chiodetti
Title: Director
BHF BANK AKTIENGESELLSCHAFT, as a
Lender
By: /s/ Linda Pace
------------------------------------------
Name: Linda Pace
Title: V.P.
By: /s/ Heidimarie Skor
------------------------------------------
Name: Heidimarie Skor
Title: Vice President
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<PAGE> 172
CAISSE NATIONALE DE CREDIT AGRICOLE,
as a Lender
By: /s/ Katherine L. Abbott
-------------------------------------------
Name: Katherine L. Abbott
Title: First Vice President
CANADIAN IMPERIAL BANK OF
COMMERCE, as a Lender
By: /s/ Stephanie E. Johnson
-------------------------------------------
Name: Stephanie E. Johnson
Title: Director, CIB Wood Gundy Securities
Corp., as Agent
CREDIT LYONNAIS CHICAGO BRANCH, as a
Lender
By: /s/ Kent J. Davis
-------------------------------------------
Name: Kent J. Davis
Title: Vice President
IMPERIAL BANK, as a Lender
By: /s/ Ray Vadalma
-------------------------------------------
Name: Ray Vadalma
Title: Senior Vice President
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<PAGE> 173
LONG TERM CREDIT BANK OF JAPAN, as a
Lender
By:
-------------------------------------------
Name:
Title:
NATIONSBANK, N.A. (SOUTH), as a Lender
By: /s/ Richard M. Starke
-------------------------------------------
Name: Richard M. Starke
Title: Vice President
PNC BANK, KENTUCKY, INC., as a Lender
By: /s/ Ralph M. Bowman
-------------------------------------------
Name: Ralph M. Bowman
Title: Vice President
ROYAL BANK OF CANADA, as a Lender
By:
-------------------------------------------
Name:
Title:
THE TORONTO-DOMINION BANK, as a Lender
By: /s/ Jorge A. Garcia
-------------------------------------------
Name: Jorge A. Garcia
Title: Mgr. Cr. Admin.
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<PAGE> 174
SCHEDULE I
LIST OF FOREIGN SUBSIDIARIES OF THE BORROWER
THAT ARE NOT NON-MATERIAL SUBSIDIARIES
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Budget Rent a Car Canada Limited Ottawa, Ontario
Budget Rent a Car Limited Auckland, New Zealand
Budget Rent a Car Operations Pty. Ltd. Victoria, Australia
Budget Rent a Car Australia Pty. Ltd. Victoria, Australia
BTI (U.K.) plc London, England
Societe Financiere et de Participation Tours, France
Budget France, S.A. Tours, France
</TABLE>
<PAGE> 175
ANNEX I
to First Amendment
to Credit Agreement
FIRST AMENDMENT
TO BORROWER PLEDGE AGREEMENT
THIS FIRST AMENDMENT TO BORROWER PLEDGE AGREEMENT, dated as of
October 24, 1997 (this "Amendment"), is made by and between BUDGET RENT A CAR
CORPORATION, a Delaware corporation (the "Borrower"), and CREDIT SUISSE FIRST
BOSTON, as administrative agent (in such capacity, the "Administrative Agent")
for the Secured Parties.
W I T N E S S E T H:
WHEREAS, the Borrower, Budget Group, Inc. (formerly known as Team
Rental Group, Inc.), a Delaware corporation (the "Parent"), various financial
institutions (collectively, the "Lenders"), Nationsbanc Capital Markets, Inc.,
as a Co-Syndication Agent and as the Documentation Agent, and the
Administrative Agent have heretofore entered into that certain First Amendment
to Credit Agreement, dated as of the date hereof (the "First Amendment to
Credit Agreement"), which amends that certain Credit Agreement, dated as of
April 29, 1997 (the "Credit Agreement"), among the Borrower, the Parent, the
Lenders parties thereto, Nationsbanc Capital Markets, Inc., as a Co-Syndication
Agent and as the Documentation Agent, and the Administrative Agent;
WHEREAS, the Borrower and the Administrative Agent have heretofore
entered into that certain Borrower Pledge Agreement, dated as of April 29, 1997
(the "Borrower Pledge Agreement");
WHEREAS, the Credit Agreement provides for the pledge to the
Administrative Agent of, among other things, all (subject to certain
limitations) of the outstanding shares of the Capital Stock of each Foreign
Subsidiary owned, directly or indirectly, by the Borrower on, and subsequent
to, the Closing Date, together with undated stock powers or equivalent
instruments of transfer satisfactory to the Administrative Agent for such
certificates or such other evidence of beneficial ownership, executed in blank
or otherwise, so as to perfect the security interest of the Administrative
Agent therein in accordance with applicable law;
WHEREAS, the Borrower desires to limit such pledge to all (subject
to certain limitations) of the outstanding shares of the Capital Stock of each
Foreign Subsidiary that is not a Non-Material Subsidiary of the Borrower on,
and subsequent to, the Closing Date and to amend the Borrower Pledge Agreement
as set forth below; and
<PAGE> 176
WHEREAS, the Administrative Agent is willing, on and subject to the
terms and conditions set forth below, to amend the Borrower Pledge Agreement,
in each case as provided below (the Borrower Pledge Agreement, as amended
pursuant to the terms of this Amendment, being referred to as the "Amended
Borrower Pledge Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower and the Administrative Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Amended Borrower Pledge Agreement" is defined in the fifth recital.
"Amendment" is defined in the preamble.
"Borrower" is defined in the preamble.
"Borrower Pledge Agreement" is defined in the second recital.
"Credit Agreement" is defined in the first recital.
"First Amendment to Credit Agreement" is defined in the first
recital.
"Lenders" is defined in the first recital.
"Parent" is defined in the first recital.
SECTION 1.2. Other Definitions. Terms for which meanings are
provided for, or incorporated by reference, in the First Amendment to Credit
Agreement are, unless otherwise defined herein or the context otherwise
requires, used in this Amendment with such meanings.
ARTICLE II
AMENDMENTS TO BORROWER PLEDGE AGREEMENT
Subject to the satisfaction of the conditions set forth in Article
III of the First Amendment to Credit Agreement, effective as of the date
hereof, the Borrower Pledge
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<PAGE> 177
Agreement is hereby amended in accordance with this Article II; except
expressly as so amended by this Amendment, the Borrower Pledge Agreement shall
continue in full force and effect in accordance with its terms.
SECTION 2.1. Amendment to Section 2.1 of the Borrower Pledge
Agreement. Clause (a) of Section 2.1 of the Borrower Pledge Agreement ("Grant
of Security Interest") is hereby amended by inserting the words "provided,
that, in the case of each Pledged Share Issuer that is a Foreign Subsidiary of
the Borrower, the pledge of the shares of Capital Stock of such Pledged Share
Issuer shall be limited to the extent such pledge would not (x) constitute an
investment in earnings in United States property under Section 956 (or any
successor provision thereto) of the Code that would increase the amount of
income of the applicable pledgor that would otherwise be subject to United
States income tax and (y) subject the Borrower, the Parent or such Pledged
Share Issuer to a significant adverse tax consequence;" after the semicolon
(";") at the end thereof.
SECTION 2.2. Amendments to Article III of the Borrower Pledge
Agreement. Article III of the Borrower Pledge Agreement ("Representations and
Warranties") is hereby amended in accordance with Sections 2.2.1 and 2.2.2
below.
SECTION 2.2.1. Amendment to Section 3.1 of the Borrower Pledge
Agreement. Section 3.1 of the Borrower Pledge Agreement ("Representations and
Warranties, etc.") is hereby amended by inserting the words ", and except as
set forth or may be otherwise provided in the applicable Foreign Pledge
Agreement with respect to a Pledged Share Issuer that is a Foreign Subsidiary
of the Borrower" immediately prior to the period (".") at the end thereof.
SECTION 2.2.2. Amendment to Section 3.4 of the Borrower Pledge
Agreement. Section 3.4 of the Borrower Pledge Agreement ("As to Pledged
Shares") is hereby amended in its entirety to read as follows:
SECTION 3.4. As to Pledged Shares. In the case of any
Pledged Shares constituting such Collateral, all of such Pledged
Shares are duly authorized and validly issued, fully paid, and
non-assessable, and constitute all of the issued and outstanding
shares of Capital Stock of each Pledged Share Issuer (except in the
case of each Pledged Share Issuer that is a Foreign Subsidiary of
the Borrower, in which case, such Pledged Shares constitute all of
the shares of Capital Stock of such Pledged Share Issuer that may be
pledged such that after giving effect to such pledge, such pledge
would not (a) constitute an investment in earnings in United States
property under Section 956 (or any successor provision thereto) of
the Code that would increase the amount of income of the applicable
pledgor that would otherwise be subject to United States income tax
and (b) subject the Borrower, the Parent or such Pledged Share
Issuer to a significant adverse tax consequence). The Pledgor has no
direct Subsidiaries other than (i) the Pledged Share Issuers and
(ii) Subsidiaries of the Borrower that are Non-Material Subsidiaries
or SPCs, except as set forth in Item C of Attachment 1 hereto.
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<PAGE> 178
SECTION 2.3. Amendment to Section 4.1 of the Borrower Pledge
Agreement. Section 4.1 of the Borrower Pledge Agreement ("Protect Collateral;
Further Assurances, etc.") is hereby amended by inserting the parenthetical
"(including in the event that the Pledged Share Issuer is a Foreign Subsidiary
of the Borrower, by entering into a Foreign Pledge Agreement)" between the
words "all further instruments" on the seventh line thereof and the comma (",")
following such words.
SECTION 2.4. Amendment to Article VII of the Borrower Pledge
Agreement. Article VII of the Borrower Pledge Agreement ("Miscellaneous
Provisions") is hereby amended by inserting a new Section 7.9 at the end
thereof to read in its entirety as follows:
SECTION 7.9 Foreign Pledge Agreements. Without limiting
any of the rights, remedies, privileges or benefits provided
hereunder to the Administrative Agent for its benefit and the
ratable benefit of the other Secured Parties, the Pledgor and the
Administrative Agent hereby agree that the terms and provisions of
this Pledge Agreement in respect of any Collateral subject to the
pledge or other lien of a Foreign Pledge Agreement are, and shall be
deemed to be, supplemental and in addition to the rights, remedies,
privileges and benefits provided to the Administrative Agent and the
other Secured Parties under such Foreign Pledge Agreement and under
applicable law to the extent consistent with applicable law;
provided, that, in the event that the terms of this Pledge Agreement
conflict or are inconsistent with the applicable Foreign Pledge
Agreement or applicable law governing such Foreign Pledge Agreement,
the terms of such Foreign Pledge Agreement or such applicable law
shall be controlling.
SECTION 2.5. Amendment to Attachment 1 to the Borrower Pledge
Agreement. Attachment 1 to the Borrower Pledge Agreement is hereby amended to
read in its entirety as Attachment 1 hereto.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Borrower Pledge Agreement
shall remain unamended and unwaived and shall continue to be, and shall remain,
in full force and effect in accordance with their respective terms. The
amendments set forth herein shall be limited precisely as provided for herein
to the provisions expressly amended herein and shall not be deemed to be an
amendment to, consent to or modification of any other term or provision of the
Credit Agreement, any other Loan Document referred to therein or herein or of
any transaction or further or future action on the part of any Borrower, the
Parent or any other Obligor which would require the consent of the Lenders
under the Credit Agreement or any of the other Loan Documents.
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<PAGE> 179
SECTION 3.2. Loan Document Pursuant to Credit Agreement. This
Amendment is a Loan Document executed pursuant to the Credit Agreement and
shall be construed, administered and applied in accordance with all of the
terms and provisions of the Credit Agreement (and, following the date hereof,
the Amended Credit Agreement). Any breach of any representation or warranty or
covenant or agreement contained in this Amendment shall be deemed to be an
Event of Default for all purposes of the Credit Agreement and the other Loan
Documents.
SECTION 3.3. Further Assurances. The Borrower agrees that it will
take any action that from time to time may be reasonably necessary to
effectuate the amendments contemplated herein.
SECTION 3.4. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof.
SECTION 3.5. Execution in Counterparts. This Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 3.6. Cross-References. References in this Amendment to any
Article or Section are, unless otherwise specified or otherwise required by the
context, to such Article or Section of this Amendment.
SECTION 3.7. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 3.8. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 180
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers or general partners (or their
respective officers) thereunto duly authorized as of the day and year first
above written.
BUDGET RENT A CAR CORPORATION
By:
-----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as the
Administrative Agent
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
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<PAGE> 181
ANNEX II
to First Amendment
to Credit Agreement
FIRST AMENDMENT
TO SUBSIDIARY PLEDGE AGREEMENT
THIS FIRST AMENDMENT TO SUBSIDIARY PLEDGE AGREEMENT, dated as of
October 24, 1997 (this "Amendment"), is made by and among each Subsidiary of
Budget Rent A Car Corporation, a Delaware corporation (the "Borrower") a
signatory hereto (each a "Pledgor") and CREDIT SUISSE FIRST BOSTON, as
administrative agent (in such capacity, the "Administrative Agent") for the
Secured Parties.
W I T N E S S E T H:
WHEREAS, the Borrower, Budget Group, Inc. (formerly known as Team
Rental Group, Inc.), a Delaware corporation (the "Parent"), various financial
institutions (collectively, the "Lenders"), Nationsbanc Capital Markets, Inc.,
as a Co-Syndication Agent and as the Documentation Agent, and the
Administrative Agent have heretofore entered into that certain First Amendment
to Credit Agreement, dated as of the date hereof (the "First Amendment to
Credit Agreement"), which amends that certain Credit Agreement, dated as of
April 29, 1997 (the "Credit Agreement"), among the Borrower, the Parent, the
Lenders parties thereto, Nationsbanc Capital Markets, Inc., as a Co-Syndication
Agent and as the Documentation Agent, and the Administrative Agent;
WHEREAS, the Pledgors and the Administrative Agent have heretofore
entered into that certain Subsidiary Pledge Agreement, dated as of April 29,
1997 (the "Subsidiary Pledge Agreement");
WHEREAS, the Pledgors desire to amend the Subsidiary Pledge
Agreement as set forth below; and
WHEREAS, the Administrative Agent is willing, on and subject to the
terms and conditions set forth below, to amend the Subsidiary Pledge Agreement,
in each case as provided below (the Subsidiary Pledge Agreement, as amended
pursuant to the terms of this Amendment, being referred to as the "Amended
Subsidiary Pledge Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, each Pledgor and the Administrative Agent hereby
agree as follows:
<PAGE> 182
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Administrative Agent" is defined in the preamble.
"Amendment" is defined in the preamble.
"Amended Subsidiary Pledge Agreement" is defined in the fourth
recital.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"First Amendment to Credit Agreement" is defined in the first
recital.
"Lenders" is defined in the first recital.
"Parent" is defined in the first recital.
"Pledgor" is defined in the preamble.
"Subsidiary Pledge Agreement" is defined in the second recital.
SECTION 1.2. Other Definitions. Terms for which meanings are
provided for, or incorporated by reference, in the First Amendment to Credit
Agreement are, unless otherwise defined herein or the context otherwise
requires, used in this Amendment with such meanings.
ARTICLE II
AMENDMENTS TO SUBSIDIARY PLEDGE AGREEMENT
Subject to the satisfaction of the conditions set forth in Article
III of the First Amendment to Credit Agreement, effective as of the date
hereof, the Subsidiary Pledge Agreement is hereby amended in accordance with
this Article II; except expressly as so amended by this Amendment, the
Subsidiary Pledge Agreement shall continue in full force and effect in
accordance with its terms.
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<PAGE> 183
SECTION 2.1. Amendment to Section 2.1 of the Subsidiary Pledge
Agreement. Clause (a) of Section 2.1 of the Subsidiary Pledge Agreement ("Grant
of Security Interest") is hereby amended by inserting the words "provided,
that, in the case of each Pledged Share Issuer that is a Foreign Subsidiary of
such Pledgor, the pledge of the shares of Capital Stock of such Pledged Share
Issuer shall be limited to the extent such pledge would not (x) constitute an
investment in earnings in United States property under Section 956 (or any
successor provision thereto) of the Code that would increase the amount of
income of the applicable pledgor that would otherwise be subject to United
States income tax and (y) subject the Borrower, the Parent or such Pledged
Share Issuer to a significant adverse tax consequence;" after the semicolon
(";") at the end thereof.
SECTION 2.2. Amendments to Article III of the Subsidiary Pledge
Agreement. Article III of the Subsidiary Pledge Agreement ("Representations and
Warranties") is hereby amended in accordance with Sections 2.2.1 and 2.2.2
below.
SECTION 2.2.1. Amendment to Section 3.1 of the Subsidiary Pledge
Agreement. Section 3.1 of the Subsidiary Pledge Agreement ("Representations and
Warranties, etc.") is hereby amended by inserting the words ", and except as
set forth or may be otherwise provided in the applicable Foreign Pledge
Agreement with respect to a Pledged Share Issuer that is a Foreign Subsidiary
of such Pledgor" immediately prior to the period (".") at the end thereof.
SECTION 2.2.2. Amendment to Section 3.4 of the Subsidiary Pledge
Agreement. Section 3.4 of the Subsidiary Pledge Agreement ("As to Pledged
Shares") is hereby amended in its entirety to read as follows:
SECTION 3.4. As to Pledged Shares. In the case of any
Pledged Shares constituting such Collateral, all of such Pledged
Shares are duly authorized and validly issued, fully paid, and
non-assessable, and constitute all of the issued and outstanding
shares of Capital Stock of each Pledged Share Issuer (except in the
case of each Pledged Share Issuer that is a Foreign Subsidiary of
such Pledgor, in which case, such Pledged Shares constitute all of
the shares of Capital Stock of such Pledged Share Issuer that may be
pledged such that after giving effect to such pledge, such pledge
would not (a) constitute an investment in earnings in United States
property under Section 956 (or any successor provision thereto) of
the Code that would increase the amount of income of the applicable
pledgor that would otherwise be subject to United States income tax
and (b) subject the Borrower, the Parent or such Pledged Share
Issuer to a significant adverse tax consequence). Such Pledgor has
no direct Subsidiaries other than (i) the Pledged Share Issuers and
(ii) Subsidiaries of such Pledgor that are Non-Material Subsidiaries
or SPCs, except as set forth in Item C of Attachment 1 hereto.
SECTION 2.3. Amendment to Section 4.1 of the Subsidiary Pledge
Agreement. Section 4.1 of the Subsidiary Pledge Agreement ("Protect Collateral;
Further Assurances, etc.") is hereby amended by inserting the parenthetical
"(including in the event that the Pledged Share Issuer is a Foreign Subsidiary
of the Borrower, by entering into a Foreign Pledge Agreement)"
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<PAGE> 184
between the words "all further instruments" on the seventh line thereof and the
comma (",") following such words.
SECTION 2.4. Amendment to Article VII of the Subsidiary Pledge
Agreement. Article VII of the Subsidiary Pledge Agreement ("Miscellaneous
Provisions") is hereby amended by inserting a new Section 7.9 at the end
thereof to read in its entirety as follows:
SECTION 7.9 Foreign Pledge Agreements. Without limiting
any of the rights, remedies, privileges or benefits provided
hereunder to the Administrative Agent for its benefit and the
ratable benefit of the other Secured Parties, each Pledgor and the
Administrative Agent hereby agree that the terms and provisions of
this Pledge Agreement in respect of any Collateral subject to the
pledge or other lien of a Foreign Pledge Agreement are, and shall be
deemed to be, supplemental and in addition to the rights, remedies,
privileges and benefits provided to the Administrative Agent and the
other Secured Parties under such Foreign Pledge Agreement and under
applicable law to the extent consistent with applicable law;
provided, that, in the event that the terms of this Pledge Agreement
conflict or are inconsistent with the applicable Foreign Pledge
Agreement or applicable law governing such Foreign Pledge Agreement,
the terms of such Foreign Pledge Agreement or such applicable law
shall be controlling.
SECTION 2.5. Amendment to Attachment 1 to the Subsidiary Pledge
Agreement. Attachment 1 to the Subsidiary Pledge Agreement relating to each
Pledgor for whom a corresponding Attachment 1 is attached hereto shall be
amended in its entirety to read as set forth in such corresponding Attachment 1
hereto.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Subsidiary Pledge Agreement
shall remain unamended and unwaived and shall continue to be, and shall remain,
in full force and effect in accordance with their respective terms. The
amendments set forth herein shall be limited precisely as provided for herein
to the provisions expressly amended herein and shall not be deemed to be an
amendment to, consent to or modification of any other term or provision of the
Credit Agreement, any other Loan Document referred to therein or herein or of
any transaction or further or future action on the part of any Pledgor, the
Borrower, the Parent or any other Obligor which would require the consent of
the Lenders under the Credit Agreement or any of the other Loan Documents.
SECTION 3.2. Loan Document Pursuant to Credit Agreement. This
Amendment is a Loan Document executed pursuant to the Credit Agreement and
shall be construed, administered and applied in accordance with all of the
terms and provisions of the Credit Agreement (and,
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<PAGE> 185
following the date hereof, the Amended Credit Agreement). Any breach of any
representation or warranty or covenant or agreement contained in this Amendment
shall be deemed to be an Event of Default for all purposes of the Credit
Agreement and the other Loan Documents.
SECTION 3.3. Further Assurances. Each Pledgor agrees that it will
take any action that from time to time may be reasonably necessary to
effectuate the amendments contemplated herein.
SECTION 3.4. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof.
SECTION 3.5. Execution in Counterparts. This Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 3.6. Cross-References. References in this Amendment to any
Article or Section are, unless otherwise specified or otherwise required by the
context, to such Article or Section of this Amendment.
SECTION 3.7. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 3.8. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 186
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers or general partners (or their
respective officers) thereunto duly authorized as of the day and year first
above written.
BUDGET RENT-A-CAR SYSTEMS, INC.
NYRAC, INC.
DIVERSIFIED SERVICES, INC.
RAPID RENTALS, INC.
BUDGET RENT-A-CAR OF NEW
ORLEANS, INC.
BUDGET RENT-A-CAR
INTERNATIONAL, INC.
CONTROL RISK CORPORATION
PHILIP JACOBS INSURANCE AGENCY,
INC.
RESERVATION SERVICES, INC.
BRAC CREDIT CORPORATION
BRAC OF NEW YORK, INC.
AUTOMATED TRANSPORTATION, INC.
MOISANT CAR SALES, INC.
BUDGET SALES CORPORATION
BUDGET RENT-A-CAR OF CANADA
LIMITED
By
-------------------------------
Name:
Title:
FT. WAYNE RENTAL GROUP, INC.
LEE-AL, INC.
METRO WEST, INC.
WESTEAM ENTERPRISES, INC.
TEAM CAR SALES OF SAN DIEGO,
INC.
VAN POOL SERVICES, INC.
By
-------------------------------
Name:
Title:
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<PAGE> 187
CAPITAL CITY LEASING, INC.
DON KREMER, INC.
MACKAY CAR & TRUCK RENTALS,
INC.
TEAM REALTY SERVICES, INC.
TEAM RENTAL OF CINCINNATI, INC.
TEAM RENTAL OF CONNECTICUT,
INC.
TEAM RENTAL OF PHILADELPHIA,
INC.
TEAM RENTAL OF PITTSBURGH, INC.
TEAM RENTAL OF SOUTHERN
CALIFORNIA, INC.
TRANEX RENTALS OF NEW YORK,
INC.
TEAM RENTAL OF FT. WAYNE, INC.
TEAM RENTAL OF ROCHESTER, INC.
By
---------------------------------
Name:
Title:
DAYTON AUTO LEASE COMPANY,
INC.
By
---------------------------------
Name:
Title:
TEAM FLEET SERVICES
CORPORATION
By
---------------------------------
Name:
Title:
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<PAGE> 188
TEAM CAR SALES OF CHARLOTTE,
INC.
TEAM CAR SALES OF DAYTON, INC.
TEAM CAR SALES OF RICHMOND,
INC.
BUDGET CAR SALES, INC. (formerly
known as Team Car Sales, Inc.)
VALCAR RENTAL CAR SALES, INC.
TEAM CAR SALES OF PHILADELPHIA,
INC.
ARIZONA RENT-A-CAR SYSTEMS, INC.
By
------------------------------------
Name:
Title:
TEAM CAR SALES OF SOUTHERN
CALIFORNIA, INC.
By
------------------------------------
Name:
Title:
IN MOTORS VI, LLC
By ValCar Rental Car Sales, Inc., as a
Member
By
------------------------------------
Name:
Title:
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<PAGE> 189
TCS PROPERTIES, LLC
By Budget Car Sales, Inc. (formerly known
as Team Car Sales, Inc.), as a Member
By
---------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent
By
------------------------------------------
Name:
Title:
By
------------------------------------------
Name:
Title:
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<PAGE> 190
AMENDMENT AND WAIVER NO. 2
TO CREDIT AGREEMENT
THIS AMENDMENT AND WAIVER NO. 2 TO CREDIT AGREEMENT, dated as of
January 28, 1998 (this "Amendment"), is made by and among BUDGET RENT A CAR
CORPORATION, a Delaware corporation (the "Borrower"), BUDGET GROUP, INC., a
Delaware corporation (the "Parent"), the Lenders (as defined below) parties
hereto and the Administrative Agent (as defined below).
W I T N E S S E T H:
WHEREAS, the Borrower, the Parent, the various financial
institutions parties thereto (collectively, the "Lenders"), Nationsbanc Capital
Markets, Inc., ("NationsBanc"), as a co-syndication agent (in such capacity, a
"Co-Syndication Agent") for the Lenders and as the documentation agent (in such
capacity, the "Documentation Agent") for the Lenders, and Credit Suisse First
Boston, as a co-syndication agent (in such capacity, a "Co-Syndication Agent"
and, together with NationsBanc, collectively, the "Co-Syndication Agents") for
the Lenders, as administrative agent (in such capacity, the "Administrative
Agent", and together with, the Co-Syndication Agents and the Documentation
Agent, the "Agents") for the Lenders and as the arranger have heretofore entered
into that certain Credit Agreement, dated as of April 29, 1997 (as amended by
the First Amendment to Credit Agreement, dated as of October 24, 1997, the
"Credit Agreement");
WHEREAS, the Parent desires to acquire all of the Capital Stock of
Cruise America, Inc., a Florida corporation ("Cruise America"), by merging CA
Acquisition Corporation, a Florida corporation and a Wholly Owned Subsidiary of
the Parent ("Acquisition Corp."), with and into Cruise America (the "Merger"),
as a result of which Cruise America will become a Wholly Owned Subsidiary of
the Parent, as more fully described in the Proxy Statement/Prospectus of Cruise
America and the Parent, dated December 29, 1997 (the "Proxy Statement");
WHEREAS, the Parent has requested that the Lenders and the
Administrative Agent (a) grant a limited waiver and consent with respect to
Sections 8.2.1, 8.2.9 and 8.2.17 of the Credit Agreement in order to permit, on
the terms and subject to the conditions hereof, the Merger and (b) in
connection with the Merger, amend the definitions of "Non-Vehicle Debt" and
"Vehicles"; and
WHEREAS, the Lenders and the Administrative Agent are willing, on
and subject to the terms and conditions set forth below, to grant such limited
waiver and consent to permit the Merger and amend the Credit Agreement as
provided below (the Credit Agreement, as amended
<PAGE> 191
pursuant to the terms of this Amendment, being referred to as the "Amended
Credit Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower, the Parent, the Lenders and the
Administrative Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether or
not underscored) when used in this Amendment shall have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acquisition Corp." is defined in the second recital.
"Administrative Agent" is defined in the first recital.
"Agents" is defined in the first recital.
"Amended Credit Agreement" is defined in the fourth recital.
"Amendment" is defined in the preamble.
"Borrower" is defined in the preamble.
"Amendment Effective Date Certificate" means the amendment effective
date certificate executed and delivered by the Borrower and the Parent pursuant
to Section 3.7, substantially in the form of Annex I hereto.
"Credit Agreement" is defined in the first recital.
"Cruise America" is defined in the second recital.
"First Amendment to Subsidiary Security Agreement" means the First
Amendment to Subsidiary Security Agreement, substantially in the form of Annex
II hereto, to be entered into by the Subsidiaries of the Borrower parties
thereto and the Administrative Agent.
"Lenders" is defined in the first recital.
"Merger" is defined in the second recital.
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<PAGE> 192
"Merger Agreement" is defined in Section 3.4.
"Parent" is defined in the preamble.
"Proxy Statement" is defined in the second recital.
"Second Amendment Effective Date" is defined in Section 3.1.
"Supplement to Parent Pledge Agreement" means Supplement No. 1 to
Parent Pledge Agreement, substantially in the form of Annex III hereto, to be
made by the Parent and consented to by the Administrative Agent.
"Third Amendment to Subsidiary Pledge Agreement" means the Third
Amendment to Subsidiary Pledge Agreement, substantially in the form of Annex IV
hereto, to be entered into by the Subsidiaries of the Borrower parties thereto
and the Administrative Agent.
SECTION 1.2. Other Definitions. Terms for which meanings are
provided in the Amended Credit Agreement are, unless otherwise defined herein
or the context otherwise requires, used in this Amendment with such meanings.
ARTICLE II
AMENDMENTS AND LIMITED WAIVER
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, certain provisions of the Credit Agreement are hereby amended
or waived in accordance with this Article II; except expressly as so amended or
waived by this Amendment, the Credit Agreement shall continue in full force and
effect in accordance with its terms.
SECTION 2.1. Amendments to Credit Agreement. Section 1.1 of the
Credit Agreement ("Defined Terms") is amended in accordance with Sections 2.1.1
and 2.1.2.
SECTION 2.1.1. Section 1.1 of the Credit Agreement is amended by
inserting in such Section the following definition in the appropriate
alphabetical order:
"Second Amendment" means the Amendment and Waiver No. 2 to
Credit Agreement, dated as of January __, 1998, among the Borrower,
the Parent, the Lenders parties thereto and the Administrative
Agent.
SECTION 2.1.2. The following definitions in Section 1.1 of the
Credit Agreement are amended as follows:
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<PAGE> 193
(a) "Non-Vehicle Debt" is amended by inserting immediately
prior to the period (".") at the end thereof the following:
"plus (iii) with respect to any Vehicle not financed
pursuant to the Series 1994-1 Supplement to the Base
Indenture, the Series 1996-1 Supplement to the Base
Indenture, the Series 1997-1 Supplement to the Base
Indenture, the Series 1997-2 Supplement to the Base
Indenture or the Series 1994-A Supplement to the Base
Indenture dated as of June 1, 1994, among Budget Fleet
Finance Corporation, the Borrower and The Bank of New York
(as Trustee), any obligation of the Borrower, the Parent
or any of their respective Subsidiaries (other than TFFC
or another SPC) payable to the source of such financing to
the extent such obligation exceeds the fair market value
of such Vehicle"; and
(b) "Vehicles" is amended in its entirety to read as
follows:
"'Vehicles' means all existing and hereafter
acquired motor vehicle inventory of the Borrower and the
Borrower's Subsidiaries, consisting of (i) passenger
automobiles, light-duty and medium-duty trucks and vans
and (ii) motorcycles, sport utility vehicles, buses, truck
campers and motor homes, in each case, whether held for
sale, lease or rental purposes.".
SECTION 2.2. Limited Waiver. On the terms and subject to the
conditions set forth herein and in reliance on the representations and
warranties of each of the Borrower and the Parent herein contained, the
Required Lenders (a) waive the restrictions set forth in Sections 8.2.9 and
8.2.17 of the Credit Agreement to the extent necessary to permit the Merger and
(b) waive the restrictions set forth in Section 8.2.1 of the Credit Agreement
to the extent necessary to permit Cruise America to engage in the businesses
conducted by it on the date hereof and described in the Proxy Statement and
such activities as may be incidental or related thereto. The foregoing waiver
shall be limited precisely as written and in no event shall be deemed to
constitute a waiver of compliance by the Parent or the Borrower with respect to
any other term, provision or condition of the Credit Agreement or any other
Loan Document or prejudice any right or remedy that any Agent or any Lender may
now have or may have in the future under or in connection with the Credit
Agreement, any other Loan Document or any other instrument or agreement
referred to therein.
ARTICLE III
CONDITIONS TO EFFECTIVENESS
SECTION 3.1. Second Amendment Effective Date. This Amendment, and
the amendments and modifications and limited waiver contained herein, shall be
and become effective on the date (the "Second Amendment Effective Date") when
each of the conditions set forth in this Article III shall have been fulfilled
to the satisfaction of the Administrative Agent.
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SECTION 3.2. Execution of Counterparts. The Administrative Agent
shall have received counterparts of this Amendment, duly executed and delivered
on behalf of the Borrower, the Parent and each of the Required Lenders.
SECTION 3.3. Resolutions, etc. The Administrative Agent shall have
received from Cruise America and each of its Subsidiaries (other than a Foreign
Subsidiary, an SPC or a Non-Material Subsidiary) a certificate, dated the Second
Amendment Effective Date, of the Secretary or Assistant Secretary of such Person
as to
(a) resolutions of its Board of Directors then in full
force and effect authorizing the execution, delivery and performance
of Supplement No. 1 to Subsidiary Guaranty, Supplement No. 1 to
Subsidiary Security Agreement and each other Loan Document to be
executed by it;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to Supplement No. 1 to Subsidiary
Guaranty, Supplement No. 1 to Subsidiary Security Agreement and each
other Loan Document to be executed by it; and
(c) the full force and validity of each Organic Document
of such Person and true and complete copies thereof,
upon which certificate each Lender, the Issuer and each Agent may conclusively
rely until it shall have received a further certificate of the Secretary of
such Person canceling or amending such prior certificate.
SECTION 3.4. Merger Consummated. The conditions to the obligations
of the Parent and Acquisition Corp. to consummate the Merger set forth in the
Plan and Agreement of Merger, dated as of November 25, 1997 (the "Merger
Agreement"), among Cruise America, the Parent and Acquisition Corp. shall have
been satisfied in all material respects (without amendment or waiver of, or
other forbearance to exercise any rights with respect to, any of the material
terms or provisions thereof by the Parent or Acquisition Corp.), and the Merger
shall have been consummated in accordance with the terms thereof.
SECTION 3.5. Consents, etc. The Administrative Agent shall have
received true and correct copies of all governmental and third party approvals
and consents necessary or advisable in connection with the Merger (including
this Amendment and each other amendment/waiver relating to any material
agreement for borrowed money to which the Parent or any Subsidiary of the
Parent is a party) and continuing operations of the Parent and its Subsidiaries
(after giving effect to the consummation of the Merger) shall have been
obtained and be in full force and effect and all applicable waiting periods
shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose adverse
conditions on the Merger or the financing thereof.
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<PAGE> 195
SECTION 3.6. No Material Adverse Change. There shall not have
occurred a material adverse change in the business, property, operations,
assets, liabilities, condition (financial or otherwise) or prospects of the
Parent and its Subsidiaries, taken as a whole, or the Borrower and its
Subsidiaries, taken as a whole, since December 31, 1996.
SECTION 3.7. Amendment Effective Date Certificate. The
Administrative Agent shall have received, with counterparts for each Lender,
the Amendment Effective Date Certificate, dated the Second Amendment Effective
Date and duly executed and delivered by an Authorized Officer of each of the
Borrower and Parent, in which certificate each of the Borrower and Parent shall
agree and acknowledge that the statements made therein shall be deemed to be
true and correct representations and warranties of each of the Borrower and
Parent made as of such date, and, at the time each such certificate is
delivered, such statements shall in fact be true and correct.
SECTION 3.8. Supplement to Parent Pledge Agreement. The
Administrative Agent shall have received a Supplement to Parent Pledge
Agreement, dated the Second Amendment Effective Date, duly executed and
delivered by the Parent, together with the certificate(s), evidencing all of
the issued and outstanding shares of Capital Stock of Cruise America pledged
pursuant to the Parent Pledge Agreement, which certificate(s) shall be
accompanied by undated stock powers duly executed in blank.
SECTION 3.9. Supplement to Subsidiary Guaranty. The Administrative
Agent shall have received a Supplement to Subsidiary Guaranty, substantially in
the form of Annex I to the Subsidiary Guaranty and dated the Second Amendment
Effective Date, duly executed and delivered by each of Cruise America and each
of its Subsidiaries (other than a Foreign Subsidiary, an SPC or a Non-Material
Subsidiary).
SECTION 3.10. Amendment to Subsidiary Pledge Agreement. The
Administrative Agent shall have received counterparts of the Third Amendment to
Subsidiary Pledge Agreement, dated as of the Second Amendment Effective Date
and duly executed and delivered on behalf of each Subsidiary of the Borrower
that is a party thereto.
SECTION 3.11. Supplement to Subsidiary Pledge Agreement. The
Administrative Agent shall have received a Supplement to Subsidiary Pledge
Agreement, substantially in the form of Annex I to the Subsidiary Pledge
Agreement (after giving effect to the amendments set forth in the Third
Amendment to Subsidiary Pledge Agreement), dated as of the Second Amendment
Effective Date and duly executed and delivered by Cruise America, together with
the certificate(s), evidencing all of the issued and outstanding shares of
Capital Stock of each Subsidiary of Cruise America (other than an SPC or a
Non-Material Subsidiary) pledged pursuant to the Subsidiary Pledge Agreement,
which certificate(s) shall be accompanied by undated stock powers duly executed
in blank.
SECTION 3.12. Amendment to Subsidiary Security Agreement. The
Administrative Agent shall have received a counterpart of the First Amendment
to Subsidiary Security
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<PAGE> 196
Agreement, dated as of the Second Amendment Effective Date and duly executed
and delivered on behalf of each Subsidiary of the Borrower that is a party
thereto.
SECTION 3.13. Supplement to Subsidiary Security Agreement. The
Administrative Agent shall have received a Supplement to Subsidiary Security
Agreement, substantially in the form of Annex I to the Subsidiary Security
Agreement (after giving effect to the amendments set forth in the First
Amendment to Subsidiary Security Agreement), dated as of the Second Amendment
Effective Date and duly executed and delivered by each of Cruise America and
each of its Subsidiaries (other than a Foreign Subsidiary, an SPC or a
Non-Material Subsidiary), together with
(a) acknowledgment copies of properly filed Uniform
Commercial Code financing statements (Form UCC-1) or such other
evidence of filing as may be acceptable to the Administrative Agent,
or in the discretion of the Administrative Agent copies suitable for
filing, naming such Obligor, as the debtor and the Administrative
Agent as the secured party, or other similar instruments or
documents, filed or suitable for filing under the Uniform Commercial
Code of all jurisdictions as may be necessary or, in the opinion of
the Administrative Agent, desirable to perfect the security interest
of the Administrative Agent pursuant to the Subsidiary Security
Agreement;
(b) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
and other rights of any Person (other than Liens permitted under
Section 8.2.3 of the Credit Agreement) in any collateral described
in the Subsidiary Security Agreement previously granted by such
Obligor, together with such other Uniform Commercial Code Form UCC-3
termination statements as the Administrative Agent may reasonably
request from such Obligor; and
(c) certified copies of Uniform Commercial Code Requests
for Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Administrative Agent, dated a
date reasonably near to the Second Amendment Effective Date, listing
all effective financing statements, tax liens and judgment liens
which name such Obligor (under its present names and any previous
names thereof) as the debtor and which are filed in the
jurisdictions in which filings were made pursuant to clause (a)
above, together with copies of such financing statements (none of
which (other than those described in clause (a), if such Form UCC-11
or search report, as the case may be, is current enough to list such
financing statements described in clause (a)) shall cover any
collateral described in the Subsidiary Security Agreement).
SECTION 3.14. Pro Forma Compliance Certificate. The Administrative
Agent shall have received, with counterparts for each Lender, a Compliance
Certificate executed by the chief financial or accounting Authorized Officer of
the Parent certifying and showing (in reasonable detail and with appropriate
calculations and computations in all respects reasonably satisfactory to the
Administrative Agent) that on a historical pro forma basis (after giving effect
to the Merger and all transactions related thereto (including all Indebtedness
that would be assumed or
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<PAGE> 197
incurred as a result of such acquisition) and all Business Acquisitions
consummated prior thereto during the applicable periods thereunder) as of the
last day of the most recently completed Fiscal Quarter with respect to which,
pursuant to Section 8.1.1 of the Credit Agreement, financial statements have
been, or are required to have been, delivered by the Borrower or the Parent and
the Borrower would be in compliance with Section 8.2.4 of the Credit Agreement
as of the last day of such Fiscal Quarter and would not suffer an increase in
the Leverage Ratio as of such date.
SECTION 3.15. Opinions of Counsel. The Administrative Agent shall
have received (a) opinions, dated the Second Amendment Effective Date and
addressed to the Administrative Agent and the Lenders, from counsel to the
Obligors, in form and substance satisfactory to the Administrative Agent, and
(b) such reliance letters as it may reasonably request with respect to opinions
delivered in connection with the Merger dated the Second Amendment Effective
Date and addressed to the Agents and all of the Lenders.
SECTION 3.16. Fees and Expenses. The Administrative Agent shall have
received all fees and expenses due and payable pursuant to Section 5.4 (to the
extent then invoiced) and pursuant to the Credit Agreement (including all
previously invoiced fees and expenses).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties. In order to induce the
Lenders and the Administrative Agent to enter into this Amendment, each of the
Borrower and the Parent hereby represents and warrants to each Agent and each
Lender, as of the date hereof, as follows:
(a) the representations and warranties set forth in
Article VII of the Credit Agreement (excluding, however, those
contained in (i) Section 7.7 of the Credit Agreement and (ii)
Section 7.8 of the Credit Agreement as such Section relates to the
ownership by the Parent of Acquisition Corp. prior to the Merger and
Cruise America immediately following the Merger) and in each other
Loan Document are, in each case, true and correct (unless stated to
relate solely to an earlier date, in which case such representations
and warranties are true and correct as of such earlier date);
(b) except as disclosed by the Borrower or the Parent to
the Agents, the Issuer and the Lenders pursuant to Section 7.7 of
the Credit Agreement
(i) no labor controversy, litigation,
arbitration or governmental investigation or proceeding is
pending or, to the best knowledge of the Borrower,
threatened against the Borrower, the Parent or any of
their respective Subsidiaries which might materially
adversely affect the Parent's consolidated business,
operations, assets, revenues, properties or prospects or
which purports to affect
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<PAGE> 198
the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document; and
(ii) no development has occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section
7.7 of the Credit Agreement which might materially
adversely affect the consolidated businesses, operations,
assets, revenues, properties or prospects of the Borrower,
the Parent and their respective Subsidiaries;
(c) no Default has occurred and is continuing, and neither
the Borrower, the Parent nor any of their respective Subsidiaries
nor any other Obligor is in material violation of any law or
governmental regulation or court order or decree; and
(d) this Amendment has been duly authorized, executed and
delivered by each of the Borrower and the Parent and constitutes a
legal, valid and binding obligation of each such Person, enforceable
against it in accordance with its terms, except to the extent the
enforceability hereof may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights
and remedies of creditors generally and (ii) the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or at law.
SECTION 4.2. Full Disclosure. Except as corrected by written
information delivered to the Agents and the Lenders reasonably prior to the
date on which this representation is made, all factual information heretofore
or contemporaneously furnished by the Borrower or the Parent in writing to any
Agent, the Issuer or any Lender for purposes of or in connection with this
Amendment or any transaction contemplated hereby is true and accurate in every
material respect and such information is not incomplete by omitting to state
any material fact necessary to make such information not misleading. All
projections delivered to any Agent or any Lender by or on behalf of any
Borrower have been prepared in good faith by the Borrowers and represent the
best estimates of the Borrowers, as of the date hereof, of the reasonably
expected future performance of the businesses reflected in such projections.
SECTION 4.3. Compliance with Credit Agreement. As of the execution
and delivery of this Amendment, each Obligor is in compliance with all the
terms and conditions of the Credit Agreement and the other Loan Documents to be
observed or performed by it thereunder, and no Default has occurred and is
continuing.
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<PAGE> 199
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Credit Agreement and the
other Loan Documents shall remain unamended and unwaived and shall continue to
be, and shall remain, in full force and effect in accordance with their
respective terms. The amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein and shall not be
deemed to be an amendment to, consent to or modification of any other term or
provision of the Credit Agreement, any other Loan Document referred to therein
or herein or of any transaction or further or future action on the part of the
Borrower, the Parent or any other Obligor which would require the consent of
the Lenders under the Credit Agreement or any of the other Loan Documents.
SECTION 5.2. Loan Document Pursuant to Credit Agreement. This
Amendment is a Loan Document executed pursuant to the Credit Agreement and
shall be construed, administered and applied in accordance with all of the
terms and provisions of the Credit Agreement (and, following the date hereof,
the Amended Credit Agreement). Any breach of any representation or warranty or
covenant or agreement contained in this Amendment shall be deemed to be an
Event of Default for all purposes of the Credit Agreement and the other Loan
Documents.
SECTION 5.3. Further Assurances. Each of the Borrower and the Parent
hereby agrees that it will take any action that from time to time may be
reasonably necessary to effectuate the amendments contemplated herein.
SECTION 5.4. Fees and Expenses. The Borrower shall pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation, negotiation, execution and delivery of this
Amendment and the documents and transactions contemplated hereby, including the
reasonable fees and disbursements of Mayer, Brown, and Platt, as counsel for
the Administrative Agent.
SECTION 5.5. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof.
SECTION 5.6. Execution of Amendment to Subsidiary Security Agreement
and Amendment to Subsidiary Pledge Agreement. By their signatures below, the
Required Lenders acknowledge that the Administrative Agent will be executing
each of the First Amendment to Subsidiary Security Agreement and the Third
Amendment to the Subsidiary Pledge Agreement.
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<PAGE> 200
SECTION 5.7. Execution in Counterparts. This Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 5.8. Cross-References. References in this Amendment to any
Article or Section are, unless otherwise specified or otherwise required by the
context, to such Article or Section of this Amendment.
SECTION 5.9. Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
SECTION 5.10. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
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<PAGE> 201
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
BUDGET RENT A CAR CORPORATION
By: /s/ Robert L. Carpenter
-------------------------------
Name:
Title:
BUDGET GROUP INC., as a Guarantor
By: /s/ Robert L. Carpenter
-------------------------------
Name:
Title:
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<PAGE> 202
CREDIT SUISSE FIRST BOSTON, as a Lender,
and the Administrative Agent
By: /s/ Joel Glodowski
----------------------------------------
Name: Joel Glodowski
Title: Managing Director
By: /s/ Daniel R. Wenger
----------------------------------------
Name: Daniel R. Wemger
Title: Associate
CREDIT SUISSE FIRST BOSTON, as the Issuer
By: /s/ Joel Glodowski
----------------------------------------
Name: Joel Glodowski
Title: Managing Director
By: /s/ Daniel R. Wenger
----------------------------------------
Name: Daniel R. Wemger
Title: Associate
BANK OF HAWAII, as a Lender
By:
----------------------------------------
Name:
Title:
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<PAGE> 203
THE BANK OF NEW YORK, as a Lender
By: /s/ John R. Ciulla
-------------------------------------
Name: John R. Ciulla
Title: Assistant Vice President
BANK POLSKA KASA OPIEKI, as a Lender
By: /s/ Harvey Winter
-------------------------------------
Name: Harvey Winter
Title: Vice President
BANK UNITED, as a Lender
By: /s/ Mario Chiodetti
-------------------------------------
Name: Mario Chiodetti
Title: Director
BHF BANK AKTIENGESELLSCHAFT, as a Lender
By: /s/ Paul Travers
-------------------------------------
Name: Paul Travers
Title: V.P.
By: /s/ Linda Pace
-------------------------------------
Name: Linda Pace
Title: Vice President
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<PAGE> 204
CREDIT AGRICOLE INDOSUEZ, as a Lender
By: /s/ Katherine L. Abbott
----------------------------------------
Name: Katherine L. Abbott
Title: First Vice President
By: /s/ David Bouhl
----------------------------------------
Name: David Bouhl, F.V.P.
Title: Head of Corporate Banking Chicago
CANADIAN IMPERIAL BANK OF COMMERCE,
as a Lender
By: /s/ Stephanie Johnson-DeVane
----------------------------------------
Name: Stephanie Johnson-DeVane
Title: Executive Director
CIBC Oppenheimer Corp., As Agent
CREDIT LYONNAIS CHICAGO BRANCH, as a Lender
By:
----------------------------------------
Name:
Title:
IMPERIAL BANK, as a Lender
By: /s/ Ray Vadalma
----------------------------------------
Name: Ray Vadalma
Title: Senior Vice President
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<PAGE> 205
LONG TERM CREDIT BANK OF JAPAN, as a Lender
By:
----------------------------------------
Name:
Title:
NATIONSBANK, N.A. (SOUTH), as a Lender
By: /s/ Richard M. Starke
----------------------------------------
Name: Richard M. Starke
Title: Vice President
PNC BANK, KENTUCKY, INC., as a Lender
By: /s/ James D. Neil
----------------------------------------
Name: James D. Neil
Title: Vice President
ROYAL BANK OF CANADA, as a Lender
By: /s/ Monica Stettler
----------------------------------------
Name: Monica Stettler
Title: Manager - Automotive Group
THE TORONTO-DOMINION BANK, as a Lender
By: /s/ Jorge A. Garcia
----------------------------------------
Name: Jorge A. Garcia
Title: Mgr. Cr. Admin.
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<PAGE> 206
ANNEX I
to Second Amendment
to Credit Agreement
AMENDMENT EFFECTIVE DATE CERTIFICATE
BUDGET GROUP, INC.
BUDGET RENT A CAR CORPORATION
This Amendment Effective Date Certificate (this "Certificate") is
delivered pursuant to Section 3.8 of the Amendment and Waiver No. 2 to Credit
Agreement, dated as of January 28, 1998 (the "Second Amendment"), among Budget
Rent a Car Corporation, a Delaware corporation (the "Borrower"), Budget Group,
Inc. (formerly known as Team Rental Group, Inc.), a Delaware corporation (the
"Parent"), the various financial institutions as are, or may from time to time
become, parties thereto (each, individually, a "Lender", and collectively, the
"Lenders"), and Credit Suisse First Boston, as the administrative agent (in such
capacity, the "Administrative Agent"). Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided for, or
incorporated by reference, in the Credit Agreement.
Each of the undersigned hereby certifies, represents and warrants, for
and on behalf of the Parent and the Borrower, as the case may be, as of the
Second Amendment Effective Date, as follows:
1. Merger Consummated. The conditions to the obligations of the Parent
and CA Acquisition Corporation, a Florida corporation and a Wholly Owned
Subsidiary of the Parent ("Acquisition Corp."), to consummate the Merger set
forth in the Plan and Agreement of Merger, dated as of November 25, 1997 (the
"Merger Agreement", a true and complete copy of which, together with all
agreements delivered in connection therewith, is attached hereto as Annex I),
among Cruise America, the Parent and Acquisition Corp. have been satisfied in
all material respects (without amendment or waiver of, or other forbearance to
exercise any rights with respect to, any of the material terms or provisions
thereof by the Parent or Acquisition Corp.), and the Merger has been consummated
in accordance with the terms thereof.
2. Consents, etc. All governmental and third party approvals and
consents necessary or advisable in connection with the Merger (including this
Amendment and each other amendment/waiver relating to any material agreement for
borrowed money to which the Parent or any Subsidiary of the Parent is a party)
and continuing operations of the Parent and its Subsidiaries (after giving
effect to the consummation of the Merger) have been obtained and are in full
force and effect and all applicable waiting periods have expired without any
action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the Merger or the
financing thereof. True and complete copies of all such governmental and third
party approvals and consents are attached hereto as Annex II.
<PAGE> 207
3. No Material Adverse Change. There has not occurred a material
adverse change in the business, property, operations, assets, liabilities,
condition (financial or otherwise) or prospects of the Parent and its
Subsidiaries, taken as a whole, or the Borrower and its Subsidiaries, taken as a
whole, since December 31, 1996.
4. Warranties, No Default, etc. Both before and after giving effect to
the Second Amendment Effective Date, the following statements are true and
correct
(a) the representations and warranties set forth in Article
VII of the Credit Agreement (excluding, however, those contained in (i)
Section 7.7 thereof and (ii) Section 7.8 thereof as such Section
relates to the ownership by the Parent of Acquisition Corp. prior to
the Merger and Cruise America immediately following the Merger) and in
each other Loan Document are, in each case, true and correct with the
same effect as if then made (unless stated to relate solely to an early
date, in which case such representations and warranties are true and
correct as of such earlier date);
(b) except as disclosed by the Borrower to the Agents, the
Issuer and the Lenders pursuant to Section 7.7 of the Credit Agreement
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding is pending or, to the
best knowledge of the Borrower, threatened against the
Borrower, the Parent or any of their respective Subsidiaries
which might materially adversely affect the Parent's
consolidated business, operations, assets, revenues,
properties or prospects or which purports to affect the
legality, validity or enforceability of this Agreement, the
Notes or any other Loan Document; and
(ii) no development has occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 7.7
of the Credit Agreement which might materially adversely
affect the consolidated businesses, operations, assets,
revenues, properties or prospects of the Borrower, the Parent
and their respective Subsidiaries; and
(c) no Default has occurred and be continuing, and neither the
Borrower, the Parent nor any of their respective Subsidiaries nor any
other Obligor is in material violation of any law or governmental
regulation or court order or degree.
5. Material Subsidiaries. As of the Second Amendment Effective Date,
all of the Subsidiaries of the Borrower which are not Non-material Subsidiaries
or SPCs are, collectively, parties to the First Amendment to Subsidiary Security
Agreement and the Third Amendment to Subsidiary Pledge Agreement and attached
hereto as Annex III is a summary of such mergers.
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<PAGE> 208
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed and delivered, and the certification, representations and warranties
contained herein to be duly made, by an Authorized Officer this ____ day of
_________, 1998.
BUDGET GROUP, INC.
By
----------------------------------------
Title:
BUDGET RENT A CAR CORPORATION
By
----------------------------------------
Title:
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<PAGE> 209
ANNEX I
[MERGER AGREEMENT]
<PAGE> 210
ANNEX II
[APPROVALS AND CONSENTS]
<PAGE> 211
ANNEX III
SUBSIDIARY MERGERS
<PAGE> 212
ANNEX II
to Second Amendment to
Credit Agreement
FIRST AMENDMENT
TO SUBSIDIARY SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SUBSIDIARY SECURITY AGREEMENT, dated as of
January 28, 1998 (this "Amendment"), is made by and among each Subsidiary (as
defined in the Credit Agreement referred to below) of Budget Rent A Car
Corporation, a Delaware corporation (the "Borrower"), a signatory hereto (each a
"Grantor" and collectively, the "Grantors") and the Administrative Agent (as
defined below).
W I T N E S S E T H:
WHEREAS, the Borrower, Budget Group, Inc. (formerly known as Team
Rental Group, Inc.), a Delaware corporation (the "Parent"), the various
financial institutions parties thereto (collectively, the "Lenders"),
Nationsbanc Capital Markets, Inc., ("NationsBanc"), as a co-syndication agent
(in such capacity, a "Co-Syndication Agent") for the Lenders and as the
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders, and Credit Suisse First Boston, as a co-syndication agent (in such
capacity, a "Co-Syndication Agent" and, together with NationsBanc, collectively,
the "Co-Syndication Agents") for the Lenders, as administrative agent (in such
capacity, the "Administrative Agent", and together with, the Co-Syndication
Agents and the Documentation Agent, the "Agents") for the Lenders and as the
arranger have heretofore entered into that certain Second Amendment to Credit
Agreement, dated as of the date hereof (the "Second Amendment to Credit
Agreement"), which amends that certain Credit Agreement, dated as of April 29,
1997 (as amended by the First Amendment to Credit Agreement, dated as of October
24, 1997, the "Credit Agreement") among such parties;
WHEREAS, the Grantors and the Administrative Agent have heretofore
entered into that certain Subsidiary Security Agreement, dated as of April 29,
1997 (the "Subsidiary Security Agreement");
WHEREAS, the Grantors desire to amend the Subsidiary Security Agreement
as set forth below; and
WHEREAS, the Administrative Agent is willing, on and subject to the
terms and conditions set forth below, to amend the Subsidiary Security
Agreement, in each case as provided below (the Subsidiary Security Agreement, as
amended pursuant to the terms of this Amendment, being referred to as the
"Amended Subsidiary Security Agreement");
<PAGE> 213
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, each Grantor and the Administrative Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendment shall have the following meanings (such
meanings to be equally applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the first recital.
"Amendment" is defined in the preamble.
"Amended Subsidiary Security Agreement" is defined in the fourth
recital.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Grantor" and "Grantors" are defined in the preamble.
"Lenders" is defined in the first recital.
"Parent" is defined in the first recital.
"Second Amendment to Credit Agreement" is defined in the first recital.
"Subsidiary Security Agreement" is defined in the second recital.
SECTION 1.2. Other Definitions. Terms for which meanings are provided
for, or incorporated by reference, in the Second Amendment to Credit Agreement
are, unless otherwise defined herein or the context otherwise requires, used in
this Amendment with such meanings.
ARTICLE II
AMENDMENTS TO SUBSIDIARY SECURITY AGREEMENT
SECTION 2.1. Amendment to Article I of the Subsidiary Security
Agreement. Section 1.1 of the Subsidiary Security Agreement ("Defined Terms") is
hereby amended by inserting in such Section the following definition in the
appropriate alphabetical order:
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<PAGE> 214
"Grantor" and "Grantors" are defined in the preamble and shall
include each other Person which may from time to time hereafter become
a party hereto pursuant to Section 7.8.
SECTION 2.2. Amendment to Article VII of the Subsidiary Security
Agreement. Article VII of the Subsidiary Security Agreement ("Miscellaneous
Provisions") is hereby amended by inserting a new Section 7.8 at the end thereof
to read in its entirety as follows:
SECTION 7.8 Additional Grantors. Upon the execution and
delivery by any other Person of an instrument in the form of Annex I
hereto, such Person shall become a "Grantor" hereunder with the same
force and effect as if originally named as a Grantor herein. The
execution and delivery of any such instrument shall not require the
consent of any other Grantor hereunder. The rights and obligations of
each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a party to this
Security Agreement.
SECTION 2.3. Amendment to Schedules to the Subsidiary Security
Agreement. The Schedules to the Subsidiary Security Agreement relating to each
Grantor for whom corresponding Schedules are attached hereto shall be amended in
their entirety to read as set forth in such corresponding Schedules hereto.
SECTION 2.4. Addition of Annex I. The Subsidiary Security Agreement is
hereby amended by inserting a new Annex I at the end thereof in the form of
Annex I hereto.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Subsidiary Security Agreement
shall remain unamended and unwaived and shall continue to be, and shall remain,
in full force and effect in accordance with their respective terms. The
amendments set forth herein shall be limited precisely as provided for herein to
the provisions expressly amended herein and shall not be deemed to be an
amendment to, consent to or modification of any other term or provision of the
Credit Agreement, any other Loan Document referred to therein or herein or of
any transaction or further or future action on the part of any Grantor, the
Borrower, the Parent or any other Obligor which would require the consent of the
Lenders under the Credit Agreement or any of the other Loan Documents.
SECTION 3.2. Loan Document Pursuant to Credit Agreement. This Amendment
is a Loan Document executed pursuant to the Credit Agreement and shall be
construed, administered and applied in accordance with all of the terms and
provisions of the Credit Agreement. Any breach of any representation or warranty
or covenant or agreement contained in this Amendment
-3-
<PAGE> 215
shall be deemed to be an Event of Default for all purposes of the Credit
Agreement and the other Loan Documents.
SECTION 3.3. Further Assurances. Each Grantor agrees that it will take
any action that from time to time may be reasonably necessary to effectuate the
amendments contemplated herein.
SECTION 3.4. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provisions hereof.
SECTION 3.5. Execution in Counterparts. This Amendment may be executed
by the parties hereto in several counterparts, each of which shall be deemed to
be an original and all of which shall constitute together but one and the same
agreement.
SECTION 3.6. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 3.7. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-4-
<PAGE> 216
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers or general partners (or their respective
officers) thereunto duly authorized as of the day and year first above written.
BUDGET RENT-A-CAR SYSTEMS, INC.
NYRAC, INC.
BUDGET RENT-A-CAR
INTERNATIONAL, INC.
CONTROL RISK CORPORATION
PHILIP JACOBS INSURANCE AGENCY,
INC.
RESERVATION SERVICES, INC.
BRAC CREDIT CORPORATION
AUTOMATED TRANSPORTATION, INC.
MOISANT CAR SALES, INC.
BUDGET SALES CORPORATION
By
---------------------------------------
Name:
Title:
TEAM CAR SALES OF SAN DIEGO,
INC.
VAN POOL SERVICES, INC.
By
---------------------------------------
Name:
Title:
TEAM REALTY SERVICES, INC.
By
---------------------------------------
Name:
Title:
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<PAGE> 217
DAYTON AUTO LEASE COMPANY,
INC.
By
---------------------------------------
Name:
Title:
TEAM FLEET SERVICES
CORPORATION
By
---------------------------------------
Name:
Title:
TEAM CAR SALES OF CHARLOTTE,
INC.
TEAM CAR SALES OF DAYTON, INC.
TEAM CAR SALES OF RICHMOND,
INC.
BUDGET CAR SALES, INC. (formerly
known as Team Car Sales, Inc.)
VALCAR RENTAL CAR SALES, INC.
TEAM CAR SALES OF PHILADELPHIA,
INC.
By
---------------------------------------
Name:
Title:
-6-
<PAGE> 218
TEAM CAR SALES OF SOUTHERN
CALIFORNIA, INC.
By
---------------------------------------
Name:
Title:
IN MOTORS VI, LLC
By ValCar Rental Car Sales, Inc., as a
Member
By
---------------------------------------
Name:
Title:
TCS PROPERTIES, LLC
By Budget Car Sales, Inc. (formerly known
as Team Car Sales, Inc.), as a Member
By
---------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent
By
---------------------------------------
Name:
Title:
By
---------------------------------------
Name:
Title:
-7-
<PAGE> 219
ANNEX I
to First Amendment to
Subsidiary Security Agreement
SUPPLEMENT TO SUBSIDIARY SECURITY AGREEMENT
This SUPPLEMENT NO. ___, dated as of ___________ __, ____ (this
"Supplement"), to the Subsidiary Security Agreement, dated as of April 29, 1997
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Security Agreement"), among the initial signatories thereto and
each other Person which from time to time thereafter became a party thereto
pursuant to Section 7.8 thereof (each, individually, a "Grantor", and,
collectively, the "Grantors"), in favor of the Administrative Agent (as defined
below) for the benefit of the Secured Parties (such and other capitalized terms
being used herein with the meanings provided, or incorporated by reference, in
the Security Agreement), is made by the undersigned.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of April
29, 1997 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement") among Budget Rent A Car Corporation,
a Delaware corporation (the "Borrower"), Budget Group, Inc. (formerly known as
Team Rental Group, Inc.), a Delaware corporation (the "Parent"), the various
financial institutions parties thereto (collectively, the "Lenders"),
Nationsbanc Capital Markets, Inc., ("NationsBanc"), as a co-syndication agent
(in such capacity, a "Co-Syndication Agent") for the Lenders and as the
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders, and Credit Suisse First Boston, as a co-syndication agent (in such
capacity, a "Co-Syndication Agent" and, together with NationsBanc, collectively,
the "Co-Syndication Agents") for the Lenders, as administrative agent (in such
capacity, the "Administrative Agent", and together with, the Co-Syndication
Agents and the Documentation Agent, the "Agents") for the Lenders and as the
arranger, the Lenders and the Issuer have extended Commitments to make, and have
made, Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the continued making and
maintenance of the Credit Extensions under the Credit Agreement, the undersigned
is required to execute and deliver this Supplement;
WHEREAS, the undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Security Agreement;
<PAGE> 220
WHEREAS, the Security Agreement provides that additional parties may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement;
WHEREAS, pursuant to the provisions of Section 7.8 of the Security
Agreement, the undersigned is becoming a Grantor under the Security Agreement;
and
WHEREAS, the undersigned desires to become a Grantor under the Security
Agreement in order to induce the Secured Parties to continue to make and
maintain Credit Extensions under the Credit Agreement as consideration therefor;
NOW, THEREFORE, the undersigned agrees, for the benefit of each Secured
Party, as follows:
SECTION 1. In accordance with the Security Agreement, the undersigned
by its signature below becomes a Grantor under the Security Agreement with the
same force and effect as if it were an original signatory thereto as a Grantor
and the undersigned hereby:
(a) agrees to all the terms and provisions of the Security
Agreement applicable to it as a Grantor thereunder;
(b) assigns and pledges to the Administrative Agent for its
benefit and the ratable benefit of each of the Secured Parties, and
hereby grants to the Administrative Agent for its benefit and the
ratable benefit of each of the Secured Parties, a security interest in
all of the following, whether now or hereafter existing or acquired by
the undersigned (the "Collateral"):
(i) all Subject Assets and Related Contracts of the
undersigned;
(ii) all Deposit Accounts of such Grantor and all
cash, checks, drafts, notes, bills of exchange, money orders,
and other like instruments, if any, now owned or hereafter
acquired, held therein (or in sub-accounts thereof) and all
certificates and instruments, if any, from time to time
representing or evidencing such investments, and all interest,
earnings and proceeds in respect thereof;
(iii) all certificates of deposit, securities, and
other investments, if any, now owned or hereafter acquired, of
the Grantor and all certificates and instruments, if any;
(iv) all books, records, writings, data bases,
information and other property relating to, used or useful in
connection with, evidencing, embodying, incorporating or
referring to, any of the foregoing in this clause (b); and
-2-
<PAGE> 221
(v) all products, offspring, rents, issues, profits,
returns, income and proceeds of and from any and all of the
foregoing Collateral (including proceeds which constitute
property of the types described in subclauses (i) through
(iv), proceeds deposited from time to time in any Deposit
Account of such Grantor, and to the extent not otherwise
included, all payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral);
(c) agrees that the Schedule attached hereto shall be deemed
to be a Schedule thereto; and
(d) represents and warrants that the representations and
warranties made by it as a Grantor thereunder are true and correct on
and as of the date hereof.
In furtherance of the foregoing, each reference to a "Grantor" in the
Security Agreement shall be deemed to include the undersigned.
SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms.
SECTION 3. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 4. In the event any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired.
SECTION 5. Without limiting the provisions of the Credit Agreement (or
any other Loan Document, including the Security Agreement), the undersigned
agrees to reimburse the Administrative Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including reasonable attorneys'
fees and expenses of the Administrative Agent.
SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THIS SUPPLEMENT, THE SECURITY
AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND
SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
-3-
<PAGE> 222
SECTION 7. This Supplement hereby incorporates by reference the
provisions of the Security Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Security
Agreement.
SECTION 8. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
-4-
<PAGE> 223
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF ADDITIONAL GRANTOR]
By
---------------------------------------
Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
-5-
<PAGE> 224
SCHEDULE I
to Supplement No. __
Subsidiary Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Location of Deposit Accounts
<TABLE>
<CAPTION>
Contact
Bank Name and Address Account Number Person
--------------------- -------------- ------
<S> <C> <C>
1.
2.
3.
</TABLE>
Item B. Place(s) of Business and Chief Executive Office
Item C. Trade Names
Item D. Merger or Other Corporate Reorganization
Item E. Government Contracts
<PAGE> 225
ANNEX III
to Second Amendment to
Credit Agreement
SUPPLEMENT TO PARENT PLEDGE AGREEMENT
This SUPPLEMENT NO. 1, dated as of January 28, 1998 (this
"Supplement"), to the Parent Pledge Agreement, dated as of April 29, 1997 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Pledge Agreement"), made by Budget Group, Inc. (formerly known as
Team Rental Group, Inc.), a Delaware corporation (the "Parent"), in favor of the
Administrative Agent (as defined below) for the benefit of the Secured Parties
(such and other capitalized terms being used herein with the meanings provided,
or incorporated by reference, in the Pledge Agreement), is made by the Parent.
W I T N E S S E T H:
WHEREAS, Budget Rent A Car Corporation, a Delaware corporation (the
"Borrower"),Budget Group, Inc. (formerly known as Team Rental Group, Inc.), a
Delaware corporation (the "Parent"), the various financial institutions parties
thereto (collectively, the "Lenders"), Nationsbanc Capital Markets, Inc.,
("NationsBanc"), as a co-syndication agent (in such capacity, a "Co-Syndication
Agent") for the Lenders and as the documentation agent (in such capacity, the
"Documentation Agent") for the Lenders, and Credit Suisse First Boston, as a
co-syndication agent (in such capacity, a "Co-Syndication Agent" and, together
with NationsBanc, collectively, the "Co-Syndication Agents") for the Lenders, as
administrative agent (in such capacity, the "Administrative Agent", and together
with, the Co-Syndication Agents and the Documentation Agent, the "Agents") for
the Lenders and as the arranger have heretofore entered into that certain Second
Amendment to Credit Agreement, dated as of the date hereof (the "Second
Amendment to Credit Agreement"), which amends that certain Credit Agreement,
dated as of April 29, 1997 (as amended by the First Amendment to Credit
Agreement, dated as of October 24, 1997, the "Credit Agreement") among such
parties; and
WHEREAS, in connection with the Second Amendment, the Parent desires to
Supplement the Attachment to the Pledge Agreement;
NOW, THEREFORE, the Parent agrees, for the benefit of each Secured
Party, as follows:
SECTION 1. In accordance with the Pledge Agreement, the Parent by its
signature desires to assign and pledge its shares of Cruise America, Inc., a
Florida corporation to the Administrative Agent for the benefit of the Secured
Parties and the Pledgor hereby:
<PAGE> 226
(a) acknowledes and reaffirms all of the terms and provisions
of the Pledge Agreement applicable to it as a Pledgor thereunder
(including as such terms and provisions relate to its pledge and
assignment of its shares of the Borrower);
(b) not in limitation of clause (a) but in furtherance
thereof, pledges, hypothecates, assigns, charges, mortgages, delivers,
and transfers to the Administrative Agent, for its benefit and the
ratable benefit of each of the Secured Parties, and hereby grants to
the Administrative Agent, for its benefit and the ratable benefit of
the Secured Parties, a continuing security interest in, all of the
following property of the Pledgor (the "Collateral"):
(i) all issued and outstanding shares of Capital
Stock of each Pledged Share Issuer identified in Item A of
Attachment 1 hereto (as such Attachment may be further
supplemented by the Pledgor and accepted by the Administrative
Agent);
(ii) all other Pledged Shares issued from time to
time;
(iii) all promissory notes of each Pledged Note
Issuer identified in Item B of Attachment 1 hereto (as such
Attachment may be further supplemented by the Pledgor and
accepted by the Administrative Agent);
(iv) all other Pledged Notes issued from time to
time;
(v) all other Pledged Property, whether now or
hereafter delivered to the Administrative Agent in connection
with this Pledge Agreement;
(vi) all Dividends, Distributions, interest, and
other payments and rights with respect to any Pledged
Property; and
(vii) all proceeds of any of the foregoing;
(c) agrees that the Attachment attached hereto shall be deemed
to be an Attachment thereto; and
(d) represents and warrants that the representations and
warranties made by it as a Pledgor thereunder are true and correct on
and as of the date hereof.
In furtherance of the foregoing, each reference to a "Pledgor" in the
Pledge Agreement shall be deemed to include the Pledgor.
SECTION 2. The Pledgor hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the Pledgor and
constitutes a legal, valid and binding obligation of the Pledgor, enforceable
against it in accordance with its terms.
-2-
<PAGE> 227
SECTION 3. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 4. In the event any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
SECTION 5. Without limiting the provisions of the Credit Agreement (or
any other Loan Document, including the Pledge Agreement), the Pledgor agrees to
reimburse the Administrative Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including reasonable attorneys' fees and
expenses of the Administrative Agent.
SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THIS SUPPLEMENT, THE PLEDGE
AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND
SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7. This Supplement hereby incorporates by reference the
provisions of the Pledge Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Pledge
Agreement.
SECTION 8. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
-3-
<PAGE> 228
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BUDGET GROUP INC.
By:
--------------------------------------
Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
-4-
<PAGE> 229
SCHEDULE I
to Supplement No. __
Parent Pledge Agreement
(Budget Group, Inc.)
Item A. Pledged Shares
<TABLE>
<CAPTION>
Capital Stock
-------------
Authorized Outstanding % of Shares
Pledged Share Issuer Shares Shares Pledged
- -------------------- ---------- ----------- -----------
<S> <C> <C> <C>
Budget Rent A Car Corporation 4,250,000 2,740,000 100%
Cruise America, Inc.
</TABLE>
Item B. Pledged Notes
<TABLE>
<CAPTION>
Pledged Note Issuer Description
- ------------------- -----------
<S> <C>
None.
</TABLE>
Item C. Additional Subsidiaries
None.
<PAGE> 230
ANNEX IV
to Second Amendment to
Credit Agreement
THIRD AMENDMENT
TO SUBSIDIARY PLEDGE AGREEMENT
THIS THIRD AMENDMENT TO SUBSIDIARY PLEDGE AGREEMENT, dated as of
January 28, 1998 (this "Amendment"), is made by and among each Subsidiary (as
defined in the Credit Agreement referred to below) of Budget Rent A Car
Corporation, a Delaware corporation (the "Borrower"), a signatory hereto (each a
"Pledgor" and collectively, the "Pledgors") and the Administrative Agent (as
defined below).
W I T N E S S E T H:
WHEREAS, the Borrower, Budget Group, Inc. (formerly known as Team
Rental Group, Inc.), a Delaware corporation (the "Parent"), the various
financial institutions parties thereto (collectively, the "Lenders"),
Nationsbanc Capital Markets, Inc., ("NationsBanc"), as a co-syndication agent
(in such capacity, a "Co-Syndication Agent") for the Lenders and as the
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders, and Credit Suisse First Boston, as a co-syndication agent (in such
capacity, a "Co-Syndication Agent" and, together with NationsBanc, collectively,
the "Co-Syndication Agents") for the Lenders, as administrative agent (in such
capacity, the "Administrative Agent", and together with, the Co-Syndication
Agents and the Documentation Agent, the "Agents") for the Lenders and as the
arranger have heretofore entered into that certain Second Amendment to Credit
Agreement, dated as of the date hereof (the "Second Amendment to Credit
Agreement"), which amends that certain Credit Agreement, dated as of April 29,
1997 (as amended by the First Amendment to Credit Agreement, dated as of October
24, 1997, the "Credit Agreement") among such parties;
WHEREAS, the Pledgors and the Administrative Agent have heretofore
entered into that certain Subsidiary Pledge Agreement, dated as of April 29,
1997 (as amended by the First Amendment to Subsidiary Pledge Agreement, dated as
of October 24, 1997 and the Second Amendment to Subsidiary Pledge Agreement,
dated as of November 26, 1997, the "Subsidiary Pledge Agreement");
WHEREAS, the Pledgors desire to amend the Subsidiary Pledge Agreement
as set forth below; and
WHEREAS, the Administrative Agent is willing, on and subject to the
terms and conditions set forth below, to amend the Subsidiary Pledge Agreement,
in each case as provided below (the Subsidiary Pledge Agreement, as amended
pursuant to the terms of this Amendment, being referred to as the "Amended
Subsidiary Pledge Agreement");
<PAGE> 231
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, each Pledgor and the Administrative Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendment shall have the following meanings (such
meanings to be equally applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the first recital.
"Amendment" is defined in the preamble.
"Amended Subsidiary Pledge Agreement" is defined in the fourth recital.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Lenders" is defined in the first recital.
"Parent" is defined in the first recital.
"Pledgor" and "Pledgors" are defined in the preamble.
"Second Amendment to Credit Agreement" is defined in the first recital.
"Subsidiary Pledge Agreement" is defined in the second recital.
SECTION 1.2. Other Definitions. Terms for which meanings are provided
for, or incorporated by reference, in the Second Amendment to Credit Agreement
are, unless otherwise defined herein or the context otherwise requires, used in
this Amendment with such meanings.
ARTICLE II
AMENDMENTS TO SUBSIDIARY PLEDGE AGREEMENT
SECTION 2.1. Amendment to Article I of the Subsidiary Pledge Agreement.
Section 1.1 of the Subsidiary Pledge Agreement ("Defined Terms") is hereby
amended by inserting in such Section the following definition in the appropriate
alphabetical order:
-2-
<PAGE> 232
"Pledgor" and "Pledgors" are defined in the preamble and shall
include each other Person which may from time to time hereafter become
a party hereto pursuant to Section 7.9.
SECTION 2.2. Amendment to Article VII of the Subsidiary Pledge
Agreement. Article VII of the Subsidiary Pledge Agreement ("Miscellaneous
Provisions") is hereby amended by inserting a new Section 7.9 at the end thereof
to read in its entirety as follows:
SECTION 7.9 Additional Pledgors. Upon the execution and
delivery by any other Person of an instrument in the form of Annex I
hereto, such Person shall become a "Pledgor" hereunder with the same
force and effect as if originally named as a Pledgor herein. The
execution and delivery of any such instrument shall not require the
consent of any other Pledgor hereunder. The rights and obligations of
each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this
Pledge Agreement.
SECTION 2.3. Amendment to Attachment 1 to the Subsidiary Pledge
Agreement. Attachment 1 to the Subsidiary Pledge Agreement relating to each
Pledgor for whom a corresponding Attachment 1 is attached hereto shall be
amended in its entirety to read as set forth in such corresponding Attachment 1
hereto.
SECTION 2.4. Addition of Annex I. The Subsidiary Pledge Agreement is
hereby amended by inserting a new Annex I at the end thereof in the form of
Annex I hereto.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Subsidiary Pledge Agreement
shall remain unamended and unwaived and shall continue to be, and shall remain,
in full force and effect in accordance with their respective terms. The
amendments set forth herein shall be limited precisely as provided for herein to
the provisions expressly amended herein and shall not be deemed to be an
amendment to, consent to or modification of any other term or provision of the
Credit Agreement, any other Loan Document referred to therein or herein or of
any transaction or further or future action on the part of any Pledgor, the
Borrower, the Parent or any other Obligor which would require the consent of the
Lenders under the Credit Agreement or any of the other Loan Documents.
SECTION 3.2. Loan Document Pursuant to Credit Agreement. This Amendment
is a Loan Document executed pursuant to the Credit Agreement and shall be
construed, administered and applied in accordance with all of the terms and
provisions of the Credit Agreement. Any breach of any representation or warranty
or covenant or agreement contained in this Amendment
-3-
<PAGE> 233
shall be deemed to be an Event of Default for all purposes of the Credit
Agreement and the other Loan Documents.
SECTION 3.3. Further Assurances. Each Pledgor agrees that it will take
any action that from time to time may be reasonably necessary to effectuate the
amendments contemplated herein.
SECTION 3.4. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provisions hereof.
SECTION 3.5. Execution in Counterparts. This Amendment may be executed
by the parties hereto in several counterparts, each of which shall be deemed to
be an original and all of which shall constitute together but one and the same
agreement.
SECTION 3.6. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 3.7. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-4-
<PAGE> 234
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers or general partners (or their respective
officers) thereunto duly authorized as of the day and year first above written.
BUDGET RENT-A-CAR SYSTEMS, INC.
NYRAC, INC.
BUDGET RENT-A-CAR
INTERNATIONAL, INC.
CONTROL RISK CORPORATION
PHILIP JACOBS INSURANCE AGENCY,
INC.
RESERVATION SERVICES, INC.
BRAC CREDIT CORPORATION
AUTOMATED TRANSPORTATION, INC.
MOISANT CAR SALES, INC.
BUDGET SALES CORPORATION
By
----------------------------------------
Name:
Title:
LEE-AL, INC.
WESTEAM ENTERPRISES, INC.
TEAM CAR SALES OF SAN DIEGO,
INC.
VAN POOL SERVICES, INC.
By
----------------------------------------
Name:
Title:
TEAM REALTY SERVICES, INC.
By
----------------------------------------
Name:
Title:
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<PAGE> 235
DAYTON AUTO LEASE COMPANY,
INC.
By
----------------------------------------
Name:
Title:
TEAM FLEET SERVICES
CORPORATION
By
----------------------------------------
Name:
Title:
TEAM CAR SALES OF CHARLOTTE,
INC.
TEAM CAR SALES OF DAYTON, INC.
TEAM CAR SALES OF RICHMOND,
INC.
BUDGET CAR SALES, INC. (formerly
known as Team Car Sales, Inc.)
VALCAR RENTAL CAR SALES, INC.
TEAM CAR SALES OF PHILADELPHIA,
INC.
By
----------------------------------------
Name:
Title:
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<PAGE> 236
TEAM CAR SALES OF SOUTHERN
CALIFORNIA, INC.
By
----------------------------------------
Name:
Title:
IN MOTORS VI, LLC
By ValCar Rental Car Sales, Inc., as a
Member
By
----------------------------------------
Name:
Title:
TCS PROPERTIES, LLC
By Budget Car Sales, Inc. (formerly known
as Team Car Sales, Inc.), as a Member
By
----------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent
By
----------------------------------------
Name:
Title:
By
----------------------------------------
Name:
Title:
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<PAGE> 237
ANNEX I
to Third Amendment to
Subsidiary Pledge Agreement
SUPPLEMENT TO SUBSIDIARY PLEDGE AGREEMENT
This SUPPLEMENT NO. ___, dated as of ___________ __, ____ (this
"Supplement"), to the Subsidiary Pledge Agreement, dated as of April 29, 1997
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Pledge Agreement"), among the initial signatories thereto and each
other Person which from time to time thereafter became a party thereto pursuant
to Section 7.9 thereof (each, individually, a "Pledgor", and, collectively, the
"Pledgors"), in favor of the Administrative Agent (as defined below) for the
benefit of the Secured Parties (such and other capitalized terms being used
herein with the meanings provided, or incorporated by reference, in the Pledge
Agreement), is made by the undersigned.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of April
29, 1997 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement") among Budget Rent A Car Corporation,
a Delaware corporation (the "Borrower"), Budget Group, Inc. (formerly known as
Team Rental Group, Inc.), a Delaware corporation (the "Parent"), the various
financial institutions parties thereto (collectively, the "Lenders"),
Nationsbanc Capital Markets, Inc., ("NationsBanc"), as a co-syndication agent
(in such capacity, a "Co-Syndication Agent") for the Lenders and as the
documentation agent (in such capacity, the "Documentation Agent") for the
Lenders, and Credit Suisse First Boston, as a co-syndication agent (in such
capacity, a "Co-Syndication Agent" and, together with NationsBanc, collectively,
the "Co-Syndication Agents") for the Lenders, as administrative agent (in such
capacity, the "Administrative Agent", and together with, the Co-Syndication
Agents and the Documentation Agent, the "Agents") for the Lenders and as the
arranger, the Lenders and the Issuer have extended Commitments to make, and have
made, Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the continued making and
maintenance of the Credit Extensions under the Credit Agreement, the undersigned
is required to execute and deliver this Supplement;
WHEREAS, the undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Pledge Agreement;
WHEREAS, the Pledge Agreement provides that additional parties may
become Pledgors under the Pledge Agreement by execution and delivery of an
instrument in the form of this Supplement;
<PAGE> 238
WHEREAS, pursuant to the provisions of Section 7.9 of the Pledge
Agreement, the undersigned is becoming a Pledgor under the Pledge Agreement; and
WHEREAS, the undersigned desires to become a Pledgor under the Pledge
Agreement in order to induce the Secured Parties to continue to make and
maintain Credit Extensions under the Credit Agreement as consideration therefor;
NOW, THEREFORE, the undersigned agrees, for the benefit of each Secured
Party, as follows:
SECTION 1. In accordance with the Pledge Agreement, the undersigned by
its signature below becomes a Pledgor under the Pledge Agreement with the same
force and effect as if it were an original signatory thereto as a Pledgor and
the undersigned hereby:
(a) agrees to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder;
(b) pledges, hypothecates, assigns, charges, mortgages,
delivers, and transfers to the Administrative Agent, for its benefit
and the ratable benefit of each of the Secured Parties, and hereby
grants to the Administrative Agent, for its benefit and the ratable
benefit of the Secured Parties, a continuing security interest in, all
of the following property of the undersigned (the "Collateral"):
(i) all issued and outstanding shares of Capital
Stock of each Pledged Share Issuer identified in Item A of
Attachment 1 hereto (as such Attachment may be further
supplemented by the undersigned and accepted by the
Administrative Agent);
(ii) all other Pledged Shares issued from time to
time;
(iii) all promissory notes of each Pledged Note
Issuer identified in Item B of Attachment 1 hereto (as such
Attachment may be further supplemented by the undersigned and
accepted by the Administrative Agent);
(iv) all other Pledged Notes issued from time to
time;
(v) all other Pledged Property, whether now or
hereafter delivered to the Administrative Agent in connection
with this Pledge Agreement;
(vi) all Dividends, Distributions, interest, and
other payments and rights with respect to any Pledged
Property; and
(vii) all proceeds of any of the foregoing;
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<PAGE> 239
(c) agrees that the Attachment attached hereto shall be deemed
to be an Attachment thereto; and
(d) represents and warrants that the representations and
warranties made by it as a Pledgor thereunder are true and correct on
and as of the date hereof.
In furtherance of the foregoing, each reference to a "Pledgor" in the
Pledge Agreement shall be deemed to include the undersigned.
SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms.
SECTION 3. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 4. In the event any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
SECTION 5. Without limiting the provisions of the Credit Agreement (or
any other Loan Document, including the Pledge Agreement), the undersigned agrees
to reimburse the Administrative Agent for its reasonable out-of-pocket expenses
in connection with this Supplement, including reasonable attorneys' fees and
expenses of the Administrative Agent.
SECTION 6. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THIS SUPPLEMENT, THE PLEDGE
AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND
SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7. This Supplement hereby incorporates by reference the
provisions of the Pledge Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Pledge
Agreement.
SECTION 8. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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<PAGE> 240
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF ADDITIONAL PLEDGOR]
By:
----------------------------------------
Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
-4-
<PAGE> 241
SCHEDULE I
to Supplement No. __
Subsidiary Pledge Agreement
([NAME OF ADDITIONAL PLEDGOR])
Item A. Pledged Shares
<TABLE>
<CAPTION>
Capital Stock
-------------
Authorized Outstanding % of Shares
Pledged Share Issuer Shares Shares Pledged
- -------------------- ---------- ----------- -----------
<S> <C> <C> <C>
</TABLE>
Item B. Pledged Notes
<TABLE>
<CAPTION>
Pledged Note Issuer Description
- ------------------- -----------
<S> <C>
</TABLE>
Item C. Additional Subsidiaries
<PAGE> 242
AMENDMENT NO. 3
TO CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of March 13, 1998
(this "Amendment"), is made by and among BUDGET RENT A CAR CORPORATION, a
Delaware corporation (the "Borrower"), BUDGET GROUP, INC., a Delaware
corporation (the "Parent"), the Lenders (as defined below) parties hereto and
the Administrative Agent (as defined below).
W I T N E S S E T H:
WHEREAS, the Borrower, the Parent, the various financial institutions
parties thereto (collectively, the "Lenders"), Credit Suisse First Boston, as a
co-syndication agent (in such capacity, a "Co-Syndication Agent") for the
Lenders ("CSFB"), as administrative agent (in such capacity, the "Administrative
Agent") for the Lenders and as the arranger, and Nationsbanc Capital Markets,
Inc., ("NationsBanc"), as a co-syndication agent (in such capacity, a
"Co-Syndication Agent" and, together with CSFB, collectively, the
"Co-Syndication Agents") for the Lenders and as the documentation agent (in such
capacity, the "Documentation Agent", and, together with the Co-Syndication
Agents and the Administrative Agent, the "Agents") for the Lenders, have
heretofore entered into that certain Credit Agreement, dated as of April 29,
1997 (as amended by the First Amendment to Credit Agreement, dated as of October
24, 1997, and Amendment and Waiver No. 2 to Credit Agreement, dated as of
January 28, 1998, the "Credit Agreement");
WHEREAS, the Borrower has requested that the Lenders and the
Administrative Agent amend the Credit Agreement, on the terms and subject to the
conditions hereof, in order to provide, among other things, the specific
provisions pursuant to which the Borrower may pledge Eligible Repurchase
Vehicles and Eligible Non-Repurchase Vehicles as collateral under the Credit
Agreement; and
WHEREAS, the Lenders and the Administrative Agent are willing, on the
terms and subject to the conditions set forth below, to amend the Credit
Agreement as provided below (the Credit Agreement, as amended pursuant to the
terms of this Amendment, being referred to as the "Amended Credit Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower, the Parent, the Lenders and the
Administrative Agent hereby agree as follows:
<PAGE> 243
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendment shall have the following meanings (such
meanings to be equally applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the first recital.
"Agents" is defined in the first recital.
"Amended Credit Agreement" is defined in the third recital.
"Amendment" is defined in the preamble.
"Amendment Effective Date Certificate" means the certificate executed
and delivered by the Borrower and the Parent pursuant to Section 3.6,
substantially in the form of Annex I hereto.
"Borrower" is defined in the preamble.
"Consent" means a consent under the Letter of Credit Reimbursement
Agreement substantially in the form attached hereto as Exhibit A.
"Credit Agreement" is defined in the first recital.
"Lenders" is defined in the first recital.
"Letter of Credit Reimbursement Agreement" means the Letter of Credit
Reimbursement Agreement dated as of April 29, 1997, among Budget Funding
Corporation, Budget Systems, certain subsidiaries, affiliates and non-affiliates
of Budget Group, Inc., TFFC, the Borrower and Credit Suisse First Boston, as
credit enhancer, as heretofore or hereafter amended or otherwise modified in
accordance with its terms.
"Parent" is defined in the preamble.
"Third Amendment Effective Date" is defined in Section 3.1.
SECTION 1.2. Other Definitions. Terms for which meanings are provided
in the Amended Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendment with such meanings.
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<PAGE> 244
ARTICLE II
AMENDMENTS
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, certain provisions of the Credit Agreement are hereby amended in
accordance with this Article II; except expressly as so amended by this
Amendment, the Credit Agreement shall continue in full force and effect in
accordance with its terms.
SECTION 2.1. Amendments to Section 1.1 of the Credit Agreement. Section
1.1 of the Credit Agreement ("Defined Terms") is amended in accordance with
Sections 2.1.1 and 2.1.2.
SECTION 2.1.1. Section 1.1 of the Credit Agreement is amended by
inserting in such Section the following definitions in the appropriate
alphabetical order:
"Amended Borrower Security Agreement" means the Amended and Restated
Borrower Security Agreement dated as of March 13, 1998 by the Borrower in favor
of the Administrative Agent.
"Capitalized Cost" of a Pledged Vehicle means the costs and expenses
incurred by the Borrower in connection with the acquisition of such Pledged
Vehicle as established by the invoice delivered in connection with such Pledged
Vehicle.
"Collateral Agency Agreement" means the Collateral Agency Agreement,
dated as of March 13, 1998 among the Borrower, as grantor, TFFC, as nominee
titleholder, the Collateral Agent, not in its individual capacity but solely as
collateral agent for the Administrative Agent, and the Administrative Agent
under the Credit Agreement, substantially in the form attached to the Third
Amendment as Exhibit B, as heretofore or hereafter amended or otherwise modified
in accordance with its terms.
"Collateral Agent" means Bankers Trust Company, in its capacity as
collateral agent under the Collateral Agency Agreement, and its successors
thereunder.
"Depreciation Charges" means, (a) with respect to any Pledged Vehicle
that is an Eligible Repurchase Vehicle, the scheduled monthly depreciation
charge set forth by the Manufacturer in its Repurchase Program for such Pledged
Vehicle calculated on a daily basis and (b) with respect to any Pledged Vehicle
that is a Non-Repurchase Vehicle, the monthly depreciation charge set forth in
the related Depreciation Schedule. If such charge is expressed as a percentage,
the Depreciation Charges for such Pledged Vehicle shall be such percentage
multiplied by the Capitalized Cost for such Vehicle, calculated on a daily
basis. For any Pledged Vehicle not held for a full Related Month in the month of
acquisition or disposition, the Depreciation Charges shall be prorated by
multiplying the otherwise applicable Depreciation Charges by a fraction, the
numerator of which is the number of days from the date depreciation commences
(in accordance with the applicable Repurchase Program, if such Pledged Vehicle
is an Eligible Repurchase
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<PAGE> 245
Vehicle) with respect to such Pledged Vehicle 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 an Eligible Repurchase Vehicle is turned back to the
applicable Manufacturer, the Depreciation Charges shall be prorated by
multiplying the otherwise applicable Depreciation Charges 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 Pledged Vehicle and the denominator of which is the
number of days in such month. In the event a Pledged Vehicle is sold to a third
party, the Depreciation Charges shall be prorated by multiplying the otherwise
applicable Depreciation Charges 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 on the sale of such Pledged Vehicle and the denominator of which is the
number of days in such month.
"Depreciation Schedule" means, with respect to a Non-Repurchase
Vehicle, a schedule of estimated monthly depreciation prepared by the Servicer
in accordance with GAAP and revised from time to time in the Servicer's sole
discretion.
"Determination Date" means the second Business Day prior to each
Reference Date.
"Eligible Manufacturer" means any of the following: Chrysler
Corporation, Ford Motor Company/Jaguar, General Motors Corporation, Mazda Motors
of America, Inc., Nissan Motors Corporation in U.S.A., Inc., Toyota Motor Sales,
U.S.A., Inc., Volkswagen of America, Honda Motor Company, Hyundai Motor Company
Ltd., Subaru of America, SAAB Automobile, Navistar International, and Isuzu
Motors Ltd.; provided that no Manufacturer will be deemed an Eligible
Manufacturer if a Manufacturer Event of Default has occurred and is continuing
with respect to such Manufacturer.
"Eligible Repurchase Program" means a repurchase program or guaranteed
depreciation program (a) of an Eligible Manufacturer, (b) pursuant to which the
repurchase price (or the price guaranteed to be received at auction) is at least
equal to 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, Excess Damage
Charges and any other charges specified in such program, (c) that cannot be
amended or terminated with respect to any vehicle after the purchase of that
vehicle, (d) with respect to which a Manufacturer Event of Default has not
occurred which is continuing, (e) the terms of which are otherwise acceptable to
the Administrative Agent, and (f) the benefits of which have been collaterally
assigned to the Collateral Agent by an agreement acknowledged in writing by the
related Manufacturer and TFFC and the Collateral Agent have been provided with
an opinion of counsel or, if agreed by the Administrative Agent, a certificate
of an officer of the Manufacturer, in form and substance reasonably satisfactory
to such parties, that TFFC and the Collateral Agent can enforce the applicable
Manufacturer's obligations thereunder.
"Excess Damage Charges" means, with respect to any Repurchase Vehicle,
the amount charged to the Borrower or the Nominee, or deducted from the
Repurchase Price (as defined in the Amended Borrower Security Agreement), by the
Manufacturer of such Repurchase Vehicle
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<PAGE> 246
due to damage over a prescribed limit to the Repurchase Vehicle at the time that
the Repurchase Vehicle is turned in to such Manufacturer or its agent for
repurchase pursuant to the applicable Repurchase Program.
"Excess Mileage Charges" means, with respect to any Repurchase Vehicle,
the amount charged to the Grantor or the Nominee, or deducted from the
Repurchase Price, by the Manufacturer of such Repurchase Vehicle due to the fact
that such Vehicle has mileage over a prescribed limit at the time that such
Vehicle is turned in to such Manufacturer or its agent for repurchase pursuant
to the applicable Repurchase Program.
"Fair Market Value" means with respect to a Pledged Vehicle that is a
Non-Repurchase Vehicle on any date of determination, the market value of such
Pledged Vehicle as specified in the most recently published NADA Guide for the
model class and model year of such Pledged Vehicle based on the average
equipment and the average mileage of each Non-Repurchase Vehicle of such model
class and model year then currently pledged under the Credit Agreement. If such
Non-Repurchase Vehicle is not listed in the most recently published NADA Guide,
then the Black Book Official Finance/Lease Guide (the "Lease Guide") shall be
used to estimate the wholesale price of the Non-Repurchase Vehicle, based on the
Non-Repurchase Vehicle's model class and model year for which the wholesale
price of such vehicle is not so published in the NADA Guide; provided, however,
that if the Lease Guide is unavailable, the Fair Market Value of such
Non-Repurchase Vehicle shall be based on an independent third-party data source
approved by the Supermajority Lenders based on the average mileage of each
Non-Repurchase Vehicle of such model class and model year then pledged under the
Credit Agreement or based upon such other methodology approved by the
Supermajority Lenders.
"Independent Accountant's Report" means the report of a firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer) to the effect that they have performed certain agreed
upon procedures with respect to (a) the calculation of disposition proceeds
obtained from the sale or other disposition of all Non-Repurchase Vehicles
(other than casualties) sold or otherwise disposed of during each Related Month
in such period and compared such calculations of disposition proceeds with the
corresponding amounts set forth in the Monthly Reports prepared by the Borrower
and the Servicer, (b) the calculation of the Net Book Value of all Pledged
Vehicles and the Non-Repurchase Value of all Non-Repurchase Vehicles for the
Related Month and compared such amounts with the corresponding amounts set forth
in the Monthly Reports, and that on the basis of such comparison such
accountants are of the opinion that such amounts are in agreement, except for
such exceptions as they do not believe to be material and such other exceptions
as shall be set forth in such report and acceptable to the Administrative Agent.
"Manufacturer" means a manufacturer of Pledged Vehicles.
"Manufacturer Event of Default" means, with respect to any
Manufacturer, (a) the failure of such Manufacturer to pay any amount when due
pursuant to the related Repurchase Program with respect to a Pledged Vehicle
turned in to such Manufacturer or delivered to an authorized
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<PAGE> 247
auction site pursuant to the related Repurchase Program; provided, however, that
such failure continues for more than sixty (60) days following the Turnback Date
such that the aggregate of any such amounts not paid for more than sixty (60)
days are in the aggregate in excess of $3,500,000 net of amounts that are the
subject of a good faith dispute as evidenced in writing by either the Borrower
or the Manufacturer questioning the accuracy of the amounts paid or payable in
respect of certain Pledged Vehicles tendered for repurchase, or delivered to an
authorized auction site, under a Repurchase Program, (b) the termination of such
Manufacturer's Repurchase Program, (c) the occurrence of an event described in
any of clauses (a) through (e) of Section 9.1.9 with respect to such
Manufacturer, (d) such Manufacturer is no longer an Eligible Manufacturer or (e)
the Repurchase Program of a Manufacturer shall no longer be an Eligible
Repurchase Program.
"Monthly Report" means a report specifying (a) the vehicle
identification numbers for all Pledged Vehicles pledged under the Credit
Agreement during the Related Month, (b) the Net Book Value of all Eligible
Repurchase Vehicles as of the end of the Related Month, (c) the Non-Repurchase
Value of all Eligible Non-Repurchase Vehicles as of the end of the Related
Month, (d) the vehicle identification numbers for all Eligible Repurchase
Vehicles that have been turned back to the Manufacturer for repurchase or
auction during the Related Month and the repurchase prices therefor, (e) the
vehicle identification numbers and Net Book Value or Non-Repurchase Value, as
applicable, of all Pledged Vehicles that became casualties during the Related
Month, (f) the aggregate disposition proceeds received in respect of Pledged
Vehicles during the Related Month and (g) the aggregate Depreciation Charges
with respect to all Pledged Vehicles during the Related Month.
"Net Book Value" means, with respect to a Pledged Vehicle, (a) as of
any date of determination during the period from the Pledge Date for such
Pledged Vehicle to but excluding the Determination Date with respect to the
Related Month in which such Pledge Date occurs (such Determination Date, the
"Initial Determination Date" for such Pledged Vehicle), the Starting Net Book
Value of such Pledged Vehicle, (b) as of the Initial Determination Date for such
Pledged Vehicle, (i) the Starting Net Book Value for such Pledged Vehicle minus
(ii) the aggregate Depreciation Charges accrued with respect to such Pledged
Vehicle through the last day of the Related Month in which the Pledge Date for
such Pledged Vehicle occurred, (c) as of any Determination Date after the
Initial Determination Date, (i) the Net Book Value of such Pledged Vehicle as
calculated on the immediately preceding Determination Date minus (ii) the
aggregate Depreciation Charges accrued with respect to such Pledged Vehicle
during the Related Month (through the last day thereof). After the Initial
Determination Date, on any day which is not a Determination Date, the Net Book
Value of a Pledged Vehicle shall be the Net Book Value calculated for such
Pledged Vehicle on the most recent Determination Date.
"Nominee Agreement" means a Vehicle Title Nominee Agreement dated as of
March 13, 1998 between the Borrower and TFFC or another Affiliate of the
Borrower, substantially in the form attached to the Third Amendment as Exhibit
C, as any such Vehicle Title Nominee Agreement may heretofore or hereafter be
amended or otherwise modified in accordance with its terms.
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<PAGE> 248
"Non-Repurchase Value" means, with respect to any Pledged Vehicle that
is a Non-Repurchase Vehicle, the lesser of (a) the Net Book Value of such
Pledged Vehicle and (b) the Fair Market Value of such Pledged Vehicle.
"Non-Repurchase Vehicle" means a passenger automobile, van or light
duty truck that is not an Eligible Repurchase Vehicle.
"Pledge Date" means, with respect to a Pledged Vehicle, the date such
Pledged Vehicle is pledged as collateral under the Credit Agreement.
"Pledged Vehicle" has the meaning specified in the Amended Borrower
Security Agreement.
"Reference Date" means the 22nd day of each calendar month or, if such
day is not a Business Day, the next succeeding Business Day.
"Related Month" means, with respect to any date of determination, the
period from and including the 26th day of the calendar month second preceding
such date of determination to an including the 25th day of the calendar month
immediately preceding such date.
"Repurchase Program" means a program pursuant to which a Manufacturer
has agreed with the Borrower or the Nominee to repurchase or guarantee the
auction sale price of Vehicles manufactured by it or one of its Affiliates.
"Servicer" means Budget Group, Inc., a Delaware corporation, or such
other party as is appointed as Servicer under the Amended Borrower Security
Agreement, and its permitted successors as Servicer thereunder.
"Starting Net Book Value" means, with respect to any Pledged Vehicle,
an amount equal to the lesser of (a) the Capitalized Cost of such Pledged
Vehicle reduced by the aggregate Depreciation Charges accrued with respect to
such Pledged Vehicle prior to the Pledge Date for such Pledged Vehicle and (b)
the Fair Market Value of such Pledged Vehicle as of the Pledge Date for such
Pledged Vehicle.
"Third Amendment" means Amendment No. 3 to Credit Agreement, dated as
of March 13, 1998, among the Borrower, the Parent, the Lenders parties thereto
and the Administrative Agent.
"Turnback Date" means, with respect to a Pledged Vehicle that is an
Eligible Repurchase Vehicle, the date on which such Pledged Vehicle is accepted
for return by a Manufacturer or its agent pursuant to its Repurchase Program and
the Depreciation Charges with respect to such Vehicle cease to accrue pursuant
to its Repurchase Program.
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<PAGE> 249
"Vehicle Borrowing Base Amount" means on any date of determination the
lesser of (a) $100,000,000 and (b) an amount equal to the sum of (i) 90% of the
Net Book Value of all Eligible Repurchase Vehicles on such date and (ii) 85% of
the Non-Repurchase Value of all Eligible Non-Repurchase Vehicles on such date.
"Vehicle Schedule" has the meaning specified in the Amended Borrower
Security Agreement.
SECTION 2.1.2. The following definitions in Section 1.1 of the Credit
Agreement are amended as follows:
(a) "Base Indenture" is amended by deleting the phrase ", subject to
such modifications thereto as may be agreed to in the Base Indenture Supplement
or by the Required Lenders".
(b) "Base Indenture Supplement" is deleted in its entirety.
(c) "Borrowing Base Amount" is amended by deleting clauses (c) and (d)
of such definition and replacing them with the following:
"(c) the Vehicle Borrowing Base Amount at such time."
(d) "Eligible Non-Repurchase Vehicle" is amended to read in its
entirety as follows:
"'Eligible Non-Repurchase Vehicle' means any Non-Repurchase
Vehicle (a) that is a Pledged Vehicle, (b) the Manufacturer of which is
an Eligible Manufacturer and (b) with respect to which (i) the
Collateral Agent is noted as the first priority lienholder on the
certificate of title therefor or (ii) the certificate of title has been
submitted to the appropriate state authorities for such notation;
provided, however, if the actions provided in clause (i) or (ii) are
not sufficient in any state to cause the lien of the Collateral Agent
upon such vehicle to be a perfected first priority lien, then in order
for a Non-Repurchase Vehicle titled in such state to be an "Eligible
Non-Repurchase Vehicle", such action as is required to cause the lien
or the Collateral Agent to be a perfected first priority lien shall
have been taken by the Borrower."
(e) "Eligible Repurchase Vehicle" is amended to read in its entirety as
follows:
"'Eligible Repurchase Vehicle' means any Pledged Vehicle (a)
which is eligible under an Eligible Repurchase Program, and (b) with
respect to which (i) the Collateral Agent is noted as the first
lienholder on the certificate of title therefor or (ii) the certificate
of title has been submitted to the appropriate state authorities for
such notation; provided, however, if the actions provided in clause (i)
or (ii) are not sufficient in any state to cause the lien of the
Collateral Agent upon such vehicle to be a perfected first priority
lien, then in order for a vehicle titled in such state to be an
"Eligible
-8-
<PAGE> 250
Repurchase Vehicle", such action as is required to cause the lien of
the Collateral Agent to be a perfected first priority lien shall have
been taken by the Borrower."
(f) "Enhancement Letters of Credit Commitment Amount" is amended by
deleting the amount "$225,000,000" and substituting therefor the amount
"$260,000,000".
(g) "Permitted Business Acquisition" is amended by adding the following
proviso at the end thereof:
"provided that the Parent may consummate any such Business Acquisition,
so long as (x) the Parent acquires all of the Capital Stock of the
Person being acquired, whether directly or pursuant to a merger between
such Person and a Wholly Owned Subsidiary of the Parent, (y) the
consideration in respect of such Business Acquisition is comprised
entirely of Capital Stock of the Parent and (z) concurrently with the
consummation of such Business Acquisition, the Capital Stock of such
Person (which Person may be the surviving entity of the merger referred
to in the preceding clause (x)) is contributed to the Borrower such
that such Person becomes a Wholly Owned Subsidiary of the Borrower
subject to the terms of the Credit Agreement, including Section 8.1.9".
(h) "Vehicle Debt" is amended by deleting the phrase "other than any
such Vehicle financed hereunder pursuant to the Base Indenture Supplement;"
appearing therein and replacing it with the following: "other than any Pledged
Vehicle financed hereunder;".
SECTION 2.2. Amendment to Section 8.1.1. Section 8.1.1 of the Credit
Agreement ("Financial Information, Reports, Notices, etc.") is amended by:
(a) deleting clause (f) thereof in its entirety and replacing it with
the following:
"(f) (i) within 12 Business Days following the last day of each
calendar month, (x) a Borrowing Base Certificate for the preceding
calendar month that is calculated as of the last day of such preceding
calendar month, certified by the chief financial or accounting
Authorized Officer of the Borrower or the Parent and (y) the Monthly
Report (with a copy to the Collateral Agent) and (ii) as soon as
possible following the presentment for payment under any Enhancement
Letter of Credit, a Borrowing Base Certificate for the date of such
presentment that is calculated as of the last day of the calendar month
immediately preceding the month in which such presentment is made, in
the case of the calculation of clauses (a) and (c) of the definition of
"Borrowing Base Amount", and as of the date of such presentment (after
giving effect to any reimbursement made in connection therewith), in
the case of the calculation of clause (b) of the definition of
"Borrowing Base Amount", certified by the chief financial or accounting
Authorized Officer of the Borrower or the Parent;"
(b) deleting the word "and" at the end of clause (k) thereof;
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<PAGE> 251
(c) redesignating clause (l) thereof as clause (m); and
(d) adding the following new clause (l):
"(l) on or before the second Determination Date immediately
following March 31, June 30, September 30 and December 31 of each year,
an Independent Accountant's Report (with a copy to the Collateral
Agent); and"
SECTION 2.3. Amendment to Section 8.2.9. Section 8.2.9 of the Credit
Agreement ("Consolidation, Merger, etc.") is amended by deleting the reference
to "Borrower" in clause (b) thereof and substituting therefor a reference to
"Parent".
SECTION 2.4. Amendment to Section 8.2.17. Section 8.2.17 of the Credit
Agreement ("Activities of the Parent") is amended by (a) adding the phrase ",
the consummation of Permitted Business Acquisitions" in the first sentence
thereof after the word "Borrower" and (b) deleting the word "equity" in clause
(d)(ii) of the second sentence thereof.
SECTION 2.5. Amendment to Exhibit E to the Credit Agreements. Exhibit E
to the Credit Agreement ("Form of Borrowing Base Certificate") shall be deemed
to have been amended in a manner consistent with the amendments set forth in
this Article II, and, in preparing the Compliance Certificate, the Parent shall
make such changes (which shall be subject to the approval of the Administrative
Agent) to such Exhibit E as may be necessary to give effect to such amendments.
ARTICLE III
CONDITIONS TO EFFECTIVENESS
SECTION 3.1. Third Amendment Effective Date. This Amendment, and the
amendments and modifications contained herein, shall be and become effective on
the date (the "Third Amendment Effective Date") when each of the conditions set
forth in this Article III shall have been fulfilled to the satisfaction of the
Administrative Agent.
SECTION 3.2. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendment, duly executed and delivered by the
Borrower, the Parent, the Servicer and the Supermajority Lenders; provided that
the amendment set forth in clause (f) of Section 2.1.2 with respect to the
Enhancement Letters of Credit Commitment Amount shall not become effective
unless the Administrative Agent shall have received counterparts of this
Amendment duly executed and delivered by each of the Lenders.
SECTION 3.3. Resolutions, etc. The Administrative Agent shall have
received from the Borrower and the Parent a certificate, dated the Third
Amendment Effective Date, of the Secretary or Assistant Secretary of such Person
as to
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<PAGE> 252
(a) resolutions of its Board of Directors then in full force
and effect authorizing the execution, delivery and performance of this
Amendment, the Amended Borrower Security Agreement, the Collateral
Agency Agreement and each other Loan Document to be executed by it;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Amendment, the Amended Borrower
Security Agreement, the Collateral Agency Agreement and each other Loan
Document to be executed by it; and
(c) the full force and validity of each Organic Document of
such Person and true and complete copies thereof,
upon which certificate each Lender, each Issuer and each Agent may conclusively
rely until it shall have received a further certificate of the Secretary of such
Person canceling or amending such prior certificate.
SECTION 3.4. Consents, etc. The Administrative Agent shall have
received true and correct copies of all governmental and third party approvals
and consents necessary or advisable in connection with this Amendment and each
other document to be delivered in connection with this Amendment.
SECTION 3.5. No Material Adverse Change. There shall not have occurred
a material adverse change in the business, property, operations, assets,
liabilities, condition (financial or otherwise) or prospects of the Parent and
its Subsidiaries, taken as a whole, or the Borrower and its Subsidiaries, taken
as a whole, since December 31, 1996.
SECTION 3.6. Amendment Effective Date Certificate. The Administrative
Agent shall have received, with counterparts for each Lender, the Amendment
Effective Date Certificate, dated the Third Amendment Effective Date and duly
executed and delivered by an Authorized Officer of each of the Borrower and
Parent, in which certificate each of the Borrower and Parent shall agree and
acknowledge that the statements made therein shall be deemed to be true and
correct representations and warranties of each of the Borrower and Parent made
as of such date, and, at the time each such certificate is delivered, such
statements shall in fact be true and correct.
SECTION 3.7. Financing Statements. The Borrower shall have filed an
executed, proper financing statement on Form UCC-1 naming the Borrower as debtor
and the Administrative Agent as secured party for filing with the Illinois
Secretary of State, or other similar instruments or documents as may be
necessary or, in the reasonable opinion of the Administrative Agent or the
Collateral Agent, desirable under the UCC of all applicable jurisdictions to
perfect the interest of the Collateral Agent in the Collateral (as defined in
the Borrower Security Agreement) as agent for the Administrative Agent (on
behalf of the Lenders).
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<PAGE> 253
SECTION 3.8. Other Agreements. The Administrative Agent shall have
received executed copies of each of the following documents and all conditions
to the effectiveness of each such agreement or document shall have been
satisfied in all respects:
(i) the Collateral Agency Agreement;
(ii) the Amended Borrower Security Agreement;
(iii) the Nominee Agreement;
(iv) the Consent; and
(v) such other documents as the Administrative Agent or the
Collateral Agent may reasonably request.
SECTION 3.9. No Event of Default. No Event of Default or Default shall
have occurred and be continuing on such date or would result from the entry into
this Amendment.
SECTION 3.10. Opinions of Counsel. The Administrative Agent shall have
received opinions, dated the Third Amendment Effective Date and addressed to the
Administrative Agent and the Lenders, from counsel to the Obligors, in form and
substance satisfactory to the Administrative Agent.
SECTION 3.11. Fees and Expenses. The Administrative Agent shall have
received all fees and expenses due and payable pursuant to Section 5.4 (to the
extent then invoiced) and pursuant to the Credit Agreement (including all
previously invoiced fees and expenses).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties. In order to induce the
Lenders and the Administrative Agent to enter into this Amendment, each of the
Borrower and the Parent hereby represents and warrants to each Agent and each
Lender, as of the date hereof, as follows:
(a) the representations and warranties set forth in Article
VII of the Credit Agreement and in each other Loan Document are, in
each case, true and correct (unless stated to relate solely to an
earlier date, in which case such representations and warranties are
true and correct as of such earlier date);
(b) no Default has occurred and is continuing, and neither the
Borrower, the Parent nor any of their respective Subsidiaries nor any
other Obligor is in material violation of any law or governmental
regulation or court order or decree; and
-12-
<PAGE> 254
(c) this Amendment has been duly authorized, executed and
delivered by each of the Borrower and the Parent and constitutes a
legal, valid and binding obligation of each such Person, enforceable
against it in accordance with its terms, except to the extent the
enforceability hereof may be limited by (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors generally and (ii) the effect of general principles of
equity, whether enforcement is considered in a proceeding in equity or
at law.
SECTION 4.2. Full Disclosure. Except as corrected by written
information delivered to the Agents and the Lenders reasonably prior to the date
on which this representation is made, all factual information heretofore or
contemporaneously furnished by the Borrower or the Parent in writing to any
Agent, the Issuer or any Lender for purposes of or in connection with this
Amendment or any transaction contemplated hereby is true and accurate in every
material respect and such information is not incomplete by omitting to state any
material fact necessary to make such information not misleading. All projections
delivered to any Agent or any Lender by or on behalf of the Borrower have been
prepared in good faith by the Borrower and represent the best estimate of the
Borrower, as of the date hereof, of the reasonably expected future performance
of the businesses reflected in such projections.
SECTION 4.3. Compliance with Credit Agreement. As of the execution and
delivery of this Amendment, each Obligor is in compliance with all the terms and
conditions of the Credit Agreement and the other Loan Documents to be observed
or performed by it thereunder, and no Default or Event of Default has occurred
and is continuing.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Credit Agreement and the other
Loan Documents shall remain unamended and unwaived and shall continue to be, and
shall remain, in full force and effect in accordance with their respective
terms. The amendments set forth herein shall be limited precisely as provided
for herein to the provisions expressly amended herein and shall not be deemed to
be an amendment to, consent to or modification of any other term or provision of
the Credit Agreement, any other Loan Document referred to therein or herein or
of any transaction or further or future action on the part of the Borrower, the
Parent or any other Obligor which would require the consent of the Lenders under
the Credit Agreement or any of the other Loan Documents.
SECTION 5.2. Loan Document Pursuant to Credit Agreement. This Amendment
is a Loan Document executed pursuant to the Credit Agreement and shall be
construed, administered
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<PAGE> 255
and applied in accordance with all of the terms and provisions of the Credit
Agreement (and, following the date hereof, the Amended Credit Agreement). Any
breach of any representation or warranty or covenant or agreement contained in
this Amendment shall be deemed to be an Event of Default for all purposes of the
Credit Agreement and the other Loan Documents.
SECTION 5.3. Further Assurances. Each of the Borrower and the Parent
hereby agrees that it will take any action that from time to time may be
reasonably necessary to effectuate the amendments contemplated herein.
SECTION 5.4. Fees and Expenses. The Borrower shall pay all reasonable
out-of-pocket expenses incurred by the Administrative Agent in connection with
the preparation, negotiation, execution and delivery of this Amendment and the
documents and transactions contemplated hereby, including the reasonable fees
and disbursements of Mayer, Brown, and Platt, as counsel for the Administrative
Agent.
SECTION 5.5. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provisions hereof.
SECTION 5.6. Execution of Additional Agreements. By their signatures
below, the Supermajority Lenders acknowledge that (i) the Administrative Agent
will be executing the Amended Borrower Security Agreement and the Collateral
Agency Agreement and (ii) the Issuer will be executing the Consent.
SECTION 5.7. Execution in Counterparts. This Amendment may be executed
by the parties hereto in several counterparts, each of which shall be deemed to
be an original and all of which shall constitute together but one and the same
agreement.
SECTION 5.8. Cross-References. References in this Amendment to any
Article or Section are, unless otherwise specified or otherwise required by the
context, to such Article or Section of this Amendment.
SECTION 5.9. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 5.10. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE> 256
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BUDGET RENT A CAR CORPORATION
By: /s/ Stephen G. Worthley
--------------------------------------
Name: Stephen G. Worthley
Title: Vice President
BUDGET GROUP INC., as a Guarantor
By: /s/ Stephen G. Worthley
--------------------------------------
Name: Stephen G.Worthley
Title: Vice President
CREDIT SUISSE FIRST BOSTON, as a Lender,
and the Administrative Agent
By: /s/ Robert Hetu
--------------------------------------
Name: Robert Hetu
Title: Associate
By: /s/ Chris T. Horgan
--------------------------------------
Name: Chris T. Horgan
Title: Vice President
CREDIT SUISSE FIRST BOSTON, as the Issuer
By: /s/ Robert Hetu
--------------------------------------
Name: Robert Hetu
Title: Associate
By: /s/ Chris T. Horgan
--------------------------------------
Name: Chris T. Horgan
Title: Vice President
<PAGE> 257
BANK OF HAWAII, as a Lender
By: /s/ Joseph T. Donalson
--------------------------------------
Name: Joseph T. Donalson
Title: Vice President
THE BANK OF NEW YORK, as a Lender
By: /s/ John R. Ciulla
--------------------------------------
Name: John R. Ciulla
Title: Assistant Vice President
BANK POLSKA KASA OPIEKI, as a Lender
By: /s/ Harvey Winter
--------------------------------------
Name: Harvey Winter
Title: Vice President
BANK UNITED, as a Lender
By: /s/ Mario Chiodetti
--------------------------------------
Name: Mario Chiodetti
Title: Director
BHF BANK AKTIENGESELLSCHAFT,
as a Lender
By: /s/ Linda Pace
--------------------------------------
Name: Linda Pace
Title: Vice President
By: /s/ Hans J. Scholz
--------------------------------------
Name: Hans J. Scholz
Title: Assistant Vice President
<PAGE> 258
CREDIT AGRICOLE INDOSUEZ, as a Lender
By: /s/ Dean Balice
--------------------------------------
Name: Dean Balice
Title: Senior Vice President
Branch Manager
By: /s/ David Bouhl
--------------------------------------
Name: David Bouhl F.V.P.
Title: Head of Corporate Banking
Chicago
CANADIAN IMPERIAL BANK OF
COMMERCE, as a Lender
By: /s/ Stephanie Johnson Devane
--------------------------------------
Name: Stephanie Johnson Devane
Title: Executive Director
CIBC Oppenheimer Corp, As Agent
CREDIT LYONNAIS CHICAGO BRANCH,
as a Lender
By: /s/ Lee E. Greve
--------------------------------------
Name: Lee E. Greve
Title: First Vice President
IMPERIAL BANK, as a Lender
By: /s/ Ray Vadalma
--------------------------------------
Name: Ray Vadalma
Title: Senior Vice President
LONG TERM CREDIT BANK OF JAPAN,
as a Lender
By: /s/ Philip A. Marsden
--------------------------------------
Name: Philip A. Marsden
Title: Senior Vice President
<PAGE> 259
NATIONSBANK, N.A. (SOUTH), as a Lender
By: /s/ Richard M. Starke
--------------------------------------
Name: Richard M. Starke
Title: SVP
PNC BANK, KENTUCKY, INC., as a Lender
By: /s/ Ralph M. Bowman
--------------------------------------
Name: Ralph M. Bowman
Title: Vice President
ROYAL BANK OF CANADA, as a Lender
By: /s/ Monica Stettler
--------------------------------------
Name: Monica Stettler
Title: Manager - Automotive Group
THE TORONTO-DOMINION BANK, as a Lender
By: /s/ Jorge A. Garcia
--------------------------------------
Name: Jorge A. Garcia
Title: Mgr. Cr. Admin.
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By: /s/ Richard P. DeGrey
--------------------------------------
Name: Richard P. DeGrey
Title: Vice President
<PAGE> 260
ANNEX I
[Amendment Effective Date Certificate]
<PAGE> 261
ANNEX I
to Amendment No. 3
to Credit Agreement
AMENDMENT EFFECTIVE DATE CERTIFICATE
BUDGET GROUP, INC.
BUDGET RENT A CAR CORPORATION
This Amendment Effective Date Certificate (this "Certificate") is
delivered pursuant to Section 3.8 of the Amendment No. 3 to Credit Agreement,
dated as of March 13, 1998 (the "Third Amendment"), among Budget Rent a Car
Corporation, a Delaware corporation (the "Borrower"), Budget Group, Inc.
(formerly known as Team Rental Group, Inc.), a Delaware corporation (the
"Parent"), the various financial institutions as are, or may from time to time
become, parties thereto (each, individually, a "Lender", and collectively, the
"Lenders"), and Credit Suisse First Boston, as the administrative agent (in such
capacity, the "Administrative Agent"). Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided for, or
incorporated by reference, in the Credit Agreement.
Each of the undersigned hereby certifies, represents and warrants, for
and on behalf of the Parent and the Borrower, as the case may be, as of the
Third Amendment Effective Date, as follows:
1. Consents, etc. All governmental and third party approvals and
consents necessary or advisable in connection with the Third Amendment and each
other amendment/waiver relating to any material agreement for borrowed money to
which the Parent or any Subsidiary of the Parent is a party and continuing
operations of the Parent and its Subsidiaries (after giving effect to the
consummation of the Third Amendment) have been obtained and are in full force
and effect. True and complete copies of all such governmental and third party
approvals and consents are attached hereto as Annex I.
2. No Material Adverse Change. There has not occurred a material
adverse change in the business, property, operations, assets, liabilities,
condition (financial or otherwise) or prospects of the Parent and its
Subsidiaries, taken as a whole, or the Borrower and its Subsidiaries, taken as a
whole, since December 31, 1996.
3. Warranties, No Default, etc. Both before and after giving effect to
the Third Amendment, no Default has occurred which is continuing, and neither
the Borrower, the Parent nor any of their respective Subsidiaries nor any other
Obligor is in material violation of any law or governmental regulation or court
order or decree.
<PAGE> 262
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed and delivered, and the certification, representations and warranties
contained herein to be duly made, by an Authorized Officer as of the 13th day of
March, 1998.
BUDGET GROUP, INC.
By
----------------------------------------
Title:
BUDGET RENT A CAR CORPORATION
By
----------------------------------------
Title:
-2-
<PAGE> 263
ANNEX I
[APPROVALS AND CONSENTS]
-3-
<PAGE> 264
EXHIBIT A
[Form of Consent]
<PAGE> 265
ACKNOWLEDGMENT AND CONSENT UNDER
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
THIS ACKNOWLEDGMENT AND CONSENT UNDER LETTER OF CREDIT REIMBURSEMENT
AGREEMENT (this "Acknowledgment") is dated as of March 13, 1998 among BUDGET
RENT A CAR SYSTEMS, INC., a Delaware corporation ("BRACS"), and those direct or
indirect Subsidiaries and other Affiliates and certain non-Affiliates of Budget
Group, Inc., a Delaware corporation formerly known as Team Rental Group, Inc.
("Budget Group"), identified on the signature pages hereto (BRACS and such
additional parties hereto each a "Lessee" and, collectively, the "Lessees"),
TEAM FLEET FINANCING CORPORATION, a Delaware corporation ("TFFC"), BUDGET RENT A
CAR CORPORATION, a Delaware corporation ("BRACC" or the "Guarantor"),and CREDIT
SUISSE FIRST BOSTON, a Swiss banking corporation (the "Credit Enhancer").
W I T N E S S E T H :
WHEREAS, the parties hereto have previously entered into that certain
Letter of Credit Reimbursement Agreement, dated as of April 29, 1997 (the
"Letter of Credit Reimbursement Agreement");
WHEREAS, the parties desire to correct the provisions relating to the
Credit Enhancer's waiver of set-off rights set forth in Section 4.17 of the
Letter of Credit Reimbursement Agreement;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
Section 1. Defined Terms. All capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth for such terms in the
Letter of Credit Reimbursement Agreement, as such agreement may be further
amended, supplemented, restated or otherwise modified from time to time.
Section 2. Set-off Rights Under the Letter of Credit Reimbursement
Agreement. Each Lessee and the Credit Enhancer hereby confirm and agree that,
notwithstanding anything to the contrary set forth in Section 4.17 of the Letter
of Credit Reimbursement Agreement, it was their mutual intent, and it is their
mutual intent, that:
<PAGE> 266
(a) the Credit Enhancer may exercise 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 a Lessee therein or with respect to any right
to payment from such Lessee; and
(b) the Credit Enhancer 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 TFFC therein or with respect to any
right to payment from TFFC, it being understood, however, that nothing
contained herein shall, or is intended to, derogate from the assignment
and security interest granted to the Trustee or to impair any rights of
the Credit Enhancer with respect to such assignment and security
interest.
Section 3. Reference to and Effect on the Related Documents;
Ratification.
(a) Except as specifically corrected above, the Letter of Credit
Reimbursement Agreement is and shall continue to be in full force and effect and
is hereby ratified and confirmed in all respects.
(b) The execution, delivery and effectiveness of this Acknowledgment
and Consent shall not operate as a waiver of any right, power or remedy of any
party hereto under the Letter of Credit Reimbursement Agreement, nor constitute
a waiver of any provision of any of the Related Documents.
Section 4. Execution in Counterparts. This Acknowledgment and Consent
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Acknowledgment and Consent by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Acknowledgment
and Consent.
Section 5. Governing Law. THIS ACKNOWLEDGMENT AND CONSENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
-2-
<PAGE> 267
IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgment
and Consent to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
BUDGET RENT A CAR CORPORATION
By:
----------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
TEAM FLEET FINANCING CORPORATION
By:
----------------------------------------
Name:
Title:
LESSEES:
BUDGET RENT A CAR SYSTEMS, INC.
By:
----------------------------------------
Name:
Title:
<PAGE> 268
TRANEX RENTALS OF NEW YORK, INC.
By:
----------------------------------------
Name:
Title:
CAPITAL CITY LEASING, INC.
By:
----------------------------------------
Name:
Title:
LEE-AL, INC.
By:
----------------------------------------
Name:
Title:
WESTEAM ENTERPRISES, INC.
By:
----------------------------------------
Name:
Title:
TEAM RENTAL OF PHILADELPHIA, INC.
By:
----------------------------------------
Name:
Title:
<PAGE> 269
TEAM RENTAL OF PITTSBURGH, INC.
By:
----------------------------------------
Name:
Title:
TEAM RENTAL OF CINCINNATI, INC.
By:
----------------------------------------
Name:
Title:
MacKAY CAR AND TRUCK RENTALS, INC.
By:
----------------------------------------
Name:
Title:
DON KREMER, INC.
By:
----------------------------------------
Name:
Title:
TEAM RENTAL OF FT. WAYNE, INC.
By:
----------------------------------------
Name:
Title:
<PAGE> 270
TEAM RENTAL OF CONNECTICUT, INC.
By:
----------------------------------------
Name:
Title:
TEAM RENTAL OF SOUTHERN
CALIFORNIA, INC.
By:
----------------------------------------
Name:
Title:
ARIZONA RENT-A-CAR SYSTEMS, INC.
By:
----------------------------------------
Name:
Title:
TEAM RENTAL OF ROCHESTER, INC.
By:
----------------------------------------
Name:
Title:
NYRAC, INC.
By:
----------------------------------------
Name:
Title:
<PAGE> 271
AUTOMATED TRANSPORTATION, INC.
By:
----------------------------------------
Name:
Title:
RAPID RENTALS, INC.
By:
----------------------------------------
Name:
Title:
BUDGET RENT-A-CAR OF NEW ORLEANS,
INC.
By:
----------------------------------------
Name:
Title:
TEAM RENTAL OF SOUTHERN
CALIFORNIA, INC.
By:
----------------------------------------
Name:
Title:
<PAGE> 272
EXHIBIT B
[Form of Collateral Agency Agreement]
<PAGE> 273
EXHIBIT C
[Form of Nominee Agreement]
<PAGE> 274
VEHICLE TITLE NOMINEE AGREEMENT
THIS VEHICLE TITLE NOMINEE AGREEMENT (this "Nominee Agreement") is made
as of March 13, 1998, by and between BUDGET RENT A CAR CORPORATION, a Delaware
corporation ("Owner"), and TEAM FLEET FINANCING CORPORATION, a Delaware
corporation ("Nominee").
WHEREAS, Owner has acquired, and from time to time in the future will
acquire, certain vehicles identified in a schedule to this Nominee Agreement
from time to time (such vehicles, the "Vehicles");
WHEREAS, for administrative convenience in the management of the rental
fleet financing programs of Owner and its affiliates, the certificates of title
for the Vehicles will list Nominee as the titleholder rather than Owner;
WHEREAS, notwithstanding that the certificates of title to the Vehicles
show Nominee as the titleholder, Owner and Nominee intend that Owner shall be
entitled to all incidents, benefits and risks of ownership of the Vehicles and
that Nominee shall have no ownership interest in the Vehicles but shall act
solely as Owner's nominee owner of the Vehicles pursuant to the terms hereof;
and
WHEREAS, Nominee and Owner desire to confirm their respective interests
in and obligations with respect to the Vehicles and to provide for certain other
matters relating to the use and disposition of the Vehicles;
NOW THEREFORE, in consideration of the mutual promises herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Nominee and Owner, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Capitalized terms used herein and not otherwise defined
herein shall have the meanings specified therefor in the Credit
Agreement.
(b) In addition, the following capitalized terms shall have
following meanings when used in this Nominee Agreement:
"Administrative Agent" means Credit Suisse First Boston, as
syndication and administrative agent under the Credit
Agreement.
<PAGE> 275
"Collateral Agent" means Bankers Trust Company, as collateral
agent under the Collateral Agreement, and any successor
Collateral Agent thereunder.
"Collateral Agreement" means the Collateral Agency Agreement
dated as of March 13, 1998, among the Collateral Agent, Owner
and the Administrative Agent (on behalf the Lenders), as
heretofore or hereafter amended or otherwise modified in
accordance with its terms.
"Credit Agreement" means the Revolving Credit Agreement dated
as of April 29, 1997 among Owner, as borrower, Budget Group,
Inc., as guarantor, the Administrative Agent, as syndication
and administrative agent, and the Lenders, as heretofore or
hereafter amended or otherwise modified in accordance with its
terms.
"Lenders" means the institutions parties to the Credit
Agreement and identified as such therein.
2. Appointment of Nominee as Nominee Owner; Power of Attorney;
Compensation.
(a) Owner hereby appoints Nominee as nominee owner of the
Vehicles and Nominee hereby agrees to serve as Owner's designated agent
in such capacity as described herein.
(b) Nominee hereby grants Owner a power of attorney
substantially in the form of Exhibit A attached hereto to (i) transfer
the title to any Vehicle from the name of Nominee to the name of Owner
or the name of a third party, (ii) reflect on the certificate of title
of any Vehicle the interest of any lienholder and (iii) execute such
other documents and instruments as may be necessary to effect any such
transfer or reflect any such interest.
(c) In consideration of Nominee's agreement to act as Nominee
hereunder, Owner will pay to Nominee an annual fee as agreed by Owner
and Nominee
3. Identification of Vehicles. The Vehicles as of the date hereof are
identified on the schedule attached hereto as Exhibit B (the "Nominee Vehicle
Schedule"). Owner shall at all times maintain a listing (which may be
electronic) of the Vehicles, which listing shall be deemed conclusive in
identifying the Vehicles. From time to time, upon request by the Collateral
Agent, the Administrative Agent or Nominee, Owner shall deliver to the
Collateral Agent, the Administrative Agent and Nominee an updated Nominee
Vehicle Schedule listing the Vehicles as of the date of delivery of such revised
Nominee Vehicle Schedule.
4. Interests in the Vehicles. Notwithstanding the fact that title to
the Vehicles will remain in the name of Nominee, Nominee and Owner hereby
acknowledge that:
-2-
<PAGE> 276
(a) except as set forth in subsection (b) below, Owner is
entitled to all incidents, benefits and risks of ownership of the
Vehicles, including, without limitation, the sole right to operate,
rent, sell and otherwise transfer and dispose of the Vehicles; and
(b) Nominee has no direct or indirect ownership or other
interest in the Vehicles, except such rights and obligations with
respect to the Vehicles as are required by Owner's appointment of
Nominee as nominee owner of the Vehicles as set forth herein.
5. Transfer of Vehicle Titles.
(a) General. Nominee and Owner agree that Owner may (i) change
the titleholder's name on the Certificate of title for any Vehicle from
the name of Nominee to the name of Owner or a third party or (ii)
reflect on the certificate of title of any Vehicle the interest in such
Vehicle of any lienholder. Nominee may require Owner to change the
titleholder's name on the Certificate of Title for any Vehicle(s) from
the name of Nominee to the name of Owner by delivering written notice
of such request to Owner. Within 15 business days of receipt of such
written notice, Owner agrees to use its reasonable efforts to transfer
title to any such Vehicle from the name of Nominee to the name of
Owner.
(b) Expenses. Owner will be responsible for the payment of any
transfer fees, taxes, license fees, registration fees or other similar
governmental fees and taxes (including the cost of any recording or
registration fees or other similar governmental charges payable with
respect to the notation on the certificate of title of the interest of
a lienholder) and all costs and expenses in connection with the
transfer of title of, or reflection of the interest of any lienholder
interest in, any Vehicle (collectively, "Title Fees and Costs").
6. Indemnification.
(a) Owner hereby agrees to indemnify and hold harmless Nominee
from and against any damage, loss, liability, expense and tax
(including, without limitation, reasonable costs of investigation and
attorney's fees and expenses) (collectively, "Losses") (other than any
expense incurred by Nominee pursuant to Section 6(b)) arising out of or
related to the Vehicles, whether due to Nominee's holding legal title
to any Vehicle, Nominee's appointment as nominee owner of the Vehicles
or Nominee's performance under this Nominee Agreement, including,
without limitation, Losses arising out of or related to (i) Nominee's
grant of power of attorney to Owner pursuant to Section 2(b), (ii)
Owner's failure to pay all Title Fees and Costs pursuant to Section
5(b), (iii) claims for personal injury or property damage involving any
Vehicle, (iv) any personal property taxes payable with respect to the
Vehicles.
(b) Nominee hereby agrees to indemnify and hold harmless Owner
from and against any Losses arising out of or relating to any claim
made on a Vehicle or any proceeds thereof by a creditor of or purchaser
from Nominee as a result of Nominee's retention of legal title to any
Vehicle, Nominee's appointment as nominee owner of the Vehicles or
-3-
<PAGE> 277
Nominee's performance under this Nominee Agreement, whether direct or
indirect, and whether any such Losses are incurred by the Owner, the
Collateral Agent or the Master Collateral Agent; provided, however,
that such indemnity shall not extend to any Losses arising out of or
relating to any claim made on a Vehicle by a purchaser purchasing such
Vehicle from or at the direction of Owner, the Collateral Agent or the
Master Collateral Agent; provided, further, that such indemnity shall
not extend to any Title Fees and Costs incurred.
7. Acknowledgments by Nominee. Nominee hereby acknowledges and
consents to the following:
(a) pursuant to the Collateral Agreement, Owner will assign,
pledge and grant to the Collateral Agent, for the benefit of the
Lenders, a first priority, perfected security interest in all of
Owner's right, title and interest in and to, among other things, (i)
the Vehicles, (ii) any manufacturer repurchase program or guaranteed
depreciation program (collectively, "Manufacturer Programs") associated
with the Vehicles and (iii) this Nominee Agreement.
(b) the Collateral Agent, as assignee of Owner's rights
hereunder, shall be entitled to enforce the indemnity set forth in
Section 6(b) above against Nominee and Nominee agrees to pay any
amounts due with respect to such indemnity directly to the Collateral
Agent.
8. Further Assurances. Each of Nominee and Owner will, from time to
time, execute and deliver such further instruments and render such further
assistance as the other party may reasonably request in order to carry out the
transactions contemplated herein; provided, however, that such instruments will
be prepared by Owner, and all costs and expenses in connection with such
execution and delivery or other assistance will be allocated in accordance with
Section 5.
9. Remittance of Proceeds. In the event that Nominee receives any (a)
payments in respect of Vehicles representing repurchase prices from vehicle
manufacturers or auction dealers under Manufacturer Programs, (b) proceeds from
the sale of Vehicles (other than pursuant to a Manufacturer Programs), (c)
insurance proceeds in respect of Vehicles, or (d) any other payments or proceeds
in respect of Vehicles, in each case, other than any payments received pursuant
to Section 6(a), it shall, promptly upon receipt, but in no event later than 2
business days from receipt, deposit such payments or proceeds into the
Collateral Account (as defined in the Collateral Agreement).
10. No Third Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than Nominee, Owner, the Collateral
Agent and their respective successors and permitted assigns.
11. Entire Agreement. This Agreement and the other agreements
specifically referenced herein constitute the entire agreement between Nominee
and Owner and supersede any prior
-4-
<PAGE> 278
understandings, agreements, or representations by or among Nominee and Owner,
written or oral, to the extent they related in any way to the subject matter
hereof.
12. Succession and Assignment. This Agreement will be binding upon and
inure to the benefit of Nominee, Owner and their respective successors and
permitted assigns. Except as otherwise provided in Section 7 hereof, neither
Nominee nor Owner may assign either this Nominee Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other.
13. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
14. Headings. The section headings contained in this Nominee Agreement
are inserted for convenience only and will not affect in any way the meaning or
interpretation of this Nominee Agreement.
15. Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder will be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Nominee:
Team Fleet Financing Corporation
5851 Lewis Road
Sandston, Virginia 23150
Attention: Donald J. Norwalk
Telephone: (804) 222-5310
Telecopier: (804) 222-8998
-5-
<PAGE> 279
If to Owner:
Budget Rent A Car Corporation
4225 Naperville Road
Lisle, Illinois 60532
Attention: Robert L. Aprati
Senior V.P. and General Counsel
Telephone: (630) 955-7571
Telecopier: (630) 955-7810
Any party hereto may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication will be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party hereto may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
16. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
17. Amendments and Waivers. No amendment of any provision of this
Nominee Agreement will be valid unless the same will be in writing and signed by
each of Nominee and Owner. No waiver by either Nominee or Owner of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, will be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.
18. Severability. Any term or provision of this Nominee Agreement that
is invalid or unenforceable in any situation in any jurisdiction will not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
-6-
<PAGE> 280
19. Construction.
(a) General. The language used in this Nominee Agreement will
be deemed to be the language chosen by Nominee and Owner to express
their mutual intent, and no rule of strict construction will be applied
against either Nominee or Owner.
(b) Title; Titling. As used in this Nominee Agreement, the
term "title" refers to a certificate of title or other similar form of
vehicle title and is intended by Nominee and Owner to include the terms
"vehicle registration" and "vehicle license plate," unless specified
otherwise. Similarly, unless specified otherwise, "titling" will be
deemed to include the acts of registering a vehicle, including the
registering of the license plates of a vehicle.
20. No Petition. Owner 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 rental car asset backed note issued by Nominee under the Amended and
Restated Base Indenture dated as of December 1, 1996 among Nominee, as issuer,
Budget Group, Inc. (formerly known as Team Rental Group, Inc.), as servicer, and
Bankers Trust Company, as trustee, it will not institute against, or join with
any other party in instituting against, Nominee, 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 19 shall constitute a waiver of any right to indemnification,
reimbursement or other payment from Nominee pursuant to this Nominee Agreement.
In the event that Owner takes action in violation of this Section 19, Nominee
agrees that it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such a petition by Owner or the commencement of
such action and raise the defense that Owner 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 19 shall survive the termination of this Nominee Agreement, and the
resignation or removal of Nominee hereunder. Nothing contained herein shall
preclude participation by Owner in assertion or defense of its claims in any
such proceeding involving Nominee.
* * * * *
-7-
<PAGE> 281
IN WITNESS WHEREOF, the parties hereto have duly executed this Vehicle
Title Nominee Agreement as of the date first above written.
BUDGET RENT A CAR CORPORATION
By:
----------------------------------
Name:
Title:
TEAM FLEET FINANCING CORPORATION
By:
----------------------------------
Name:
Title:
<PAGE> 282
EXHIBIT A
FORM OF POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Team Fleet Financing Corporation
does hereby make, constitute and appoint _________________________ its true and
lawful Attorney(s)-in-fact for it and in its name, stead and behalf, to execute
any and all documents pertaining to the titling of motor vehicles in the name of
Team Fleet Financing Corporation, the noting of the lien of Bankers Trust
Company, as collateral agent, as the first lienholder on certificates of title,
the correction of any such certificate of title, the licensing and registration
of motor vehicles and the transfer of title to the manufacturer pursuant to its
repurchase program, to a third party through an auction conducted by or through
or arranged by the manufacturer pursuant to its guaranteed depreciation program
or repurchase program or to any affiliate of Team Fleet Financing Corporation.
This power is limited to the foregoing and specifically does not authorize the
creation of any liens or encumbrances on any of said motor vehicles.
The powers and authority granted hereunder shall, unless sooner
terminated, revoked or extended, cease five years from the date of execution as
set forth below.
IN WITNESS WHEREOF, Team Fleet Financing Corporation has caused this
instrument to be executed on its behalf by its [ ] this _____ day of
March, 1998.
TEAM FLEET FINANCING CORPORATION
By:
----------------------------------
Name:
Title:
State of ___________________ )
)
County of __________________ )
Subscribed and sworn before me, a notary public, in and for said county
and state, this __________ day of March, 1998.
------------------------------------------
Notary Public
My Commission Expires:____________________
<PAGE> 283
EXHIBIT B
NOMINEE VEHICLE SCHEDULE
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF BUDGET GROUP, INC.
<TABLE>
<CAPTION>
SUBSIDIARY JURISDICTION OF INCORPORATION NAME UNDER WHICH IT DOES BUSINESS
- ---------- ----------------------------- ---------------------------------
<S> <C> <C>
Budget Rent A Car Corporation....... Delaware
Reservation Services, Inc........... Texas
Team Realty Services, Inc........... Delaware
Budget Rent a Car of Canada Limited Canada
Team Fleet Services Corporation..... Delaware
Team Fleet Financing Corporation.... Delaware
Budget Rent A Car Systems, Inc...... Delaware
BRAC SOCAL Funding Corporation...... Delaware
VPSI, Inc........................... Delaware
Budget Fleet Finance Corporation.... Delaware
Budget Funding Corporation.......... Delaware
NYRAC, Inc.......................... New York
Dayton Auto Lease Company, Inc...... Delaware
Mosiant Car Sales, Inc.............. Louisiana
Team Rental of Arkansas, Inc........ Delaware
Team Holdings Corporation........... Illinois
BRAC Reinsurance Company............ Bermuda
Control Risk Corporation............ Illinois
Philip Jacobs Insurance Agency,
Inc............................... California
BRAC Credit Corporation............. Delaware
Budget Car Sales, Inc. (formally
known
as Team Car Sales, Inc.).......... Indiana
IN Motors VI, LLC................... Indiana Budget Car Sales
TSC Properties, LLC................. Indiana
Team Car Sales of Philadelphia,
Inc............................... Delaware Budget Car Sales
Team Car Sales of Richmond, Inc..... Delaware Budget Car Sales
Team Car Sales of San Diego, Inc.... Delaware
Team Car Sales of Dayton, Inc....... Delaware Budget Car Sales
Team Car Sales of Charlotte, Inc.... Delaware Budget Car Sales
Team Car Sales of Southern
California, Inc................... Delaware
Budget Sales Corporation............ Delaware
Budget Rent a Car International,
Inc............................... Delaware
Budget Rent a Car Espana, S.A....... Spain
Budget Rent a Car, Ltd., Ireland.... England
BRACRENT, S.A....................... Spain
BTI (U.K.) plc...................... England
Budget Locacao de Veiculos Ltda..... Brazil
Budget Rent a Car Limited........... New Zealand
Target Rent a Car Limited........... New Zealand
Budget Lease Management
(Car Sales) Limited............... New Zealand
Budget Rent a Car of Japan, Inc.
(formerly BRAC of Japan, Inc.).... Delaware
Budget Rent a Car Asia-Pacific, Inc.
(formally BRAC RPS, Inc., formally
Budget Leasing Corporation)....... Delaware
Budget Rent a Car Australia Pty.
Ltd............................... Australia
Budget Rent a Car Operations
Pty. Limited...................... Australia
Societe Financiere et de
Participation..................... France
Budget France, S.A.................. France
Budget Rent a Car of St. Louis,
Inc............................... Missouri
Peer Group Resources, Inc........... Delaware
Premier Car Rental LLC.............. Georgia
Budget Rent a Car Company GmbH...... Germany
Cruise America, Inc................. Florida
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference of our report included in this Form 10-K into Budget
Group, Inc.'s (formerly known as Team Rental Group, Inc.) previously filed
Registration Statement File No.'s 333-41093, 333-47079 and 333-04757.
March 30, 1998 /s/ Arthur Andersen LLP
Orlando, Florida
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-04757 and 333-47079 of Budget Group, Inc. (formerly known as Team Rental
Group, Inc.) on Form S-8 and Registration Statement No. 333-41093 of Budget
Group, Inc. on Form S-3 of our report dated April 12, 1996, appearing in the
Annual Report on Form 10-K of Budget Group, Inc. for the year ended December
31, 1997.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
March 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN RESTATED
FOR SFAS 128.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 439,738
<SECURITIES> 0
<RECEIVABLES> 329,356
<ALLOWANCES> 0<F1>
<INVENTORY> 2,045,647
<CURRENT-ASSETS> 2,814,741
<PP&E> 140,165
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 3,574,815
<CURRENT-LIABILITIES> 526,816
<BONDS> 2,610,009
0
0
<COMMON> 258
<OTHER-SE> 437,732
<TOTAL-LIABILITY-AND-EQUITY> 3,574,815
<SALES> 1,303,762
<TOTAL-REVENUES> 1,303,762
<CGS> 205,791
<TOTAL-COSTS> 926,685
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,985
<INCOME-PRETAX> 63,301
<INCOME-TAX> 26,375
<INCOME-CONTINUING> 36,926
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,926
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 1.60
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN RESTATED
FOR SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 526,663
<SECURITIES> 0
<RECEIVABLES> 276,030
<ALLOWANCES> 0<F1>
<INVENTORY> 2,024,133
<CURRENT-ASSETS> 2,826,826
<PP&E> 131,340
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 3,481,801
<CURRENT-LIABILITIES> 493,568
<BONDS> 2,583,585
0
105,750
<COMMON> 200
<OTHER-SE> 298,698
<TOTAL-LIABILITY-AND-EQUITY> 3,481,801
<SALES> 891,216
<TOTAL-REVENUES> 891,216
<CGS> 147,376
<TOTAL-COSTS> 615,966
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,966
<INCOME-PRETAX> 55,908
<INCOME-TAX> 23,454
<INCOME-CONTINUING> 32,454
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,454
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 1.49
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN RESTATED FOR
SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 335,044
<SECURITIES> 0
<RECEIVABLES> 233,840
<ALLOWANCES> 0<F1>
<INVENTORY> 2,370,425
<CURRENT-ASSETS> 2,939,309
<PP&E> 135,363
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 3,599,975
<CURRENT-LIABILITIES> 467,265
<BONDS> 2,756,084
0
105,750
<COMMON> 199
<OTHER-SE> 270,677
<TOTAL-LIABILITY-AND-EQUITY> 3,599,975
<SALES> 408,769
<TOTAL-REVENUES> 408,769
<CGS> 86,068
<TOTAL-COSTS> 285,441
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,272
<INCOME-PRETAX> 5,988
<INCOME-TAX> 2,487
<INCOME-CONTINUING> 3,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,501
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.21
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE
BALANCE SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION
ON THE BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN RESTATED
FOR SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 84,610
<SECURITIES> 0
<RECEIVABLES> 31,876
<ALLOWANCES> 0<F1>
<INVENTORY> 391,260
<CURRENT-ASSETS> 507,746
<PP&E> 18,624
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 612,521
<CURRENT-LIABILITIES> 40,431
<BONDS> 477,241
0
0
<COMMON> 112
<OTHER-SE> 92,737
<TOTAL-LIABILITY-AND-EQUITY> 612,521
<SALES> 102,448
<TOTAL-REVENUES> 102,448
<CGS> 36,575
<TOTAL-COSTS> 57,713
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,747
<INCOME-PRETAX> 1,413
<INCOME-TAX> 565
<INCOME-CONTINUING> 848
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 848
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE YEAR PERIOD ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN RESTATED
FOR SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 116,826
<SECURITIES> 0
<RECEIVABLES> 31,302
<ALLOWANCES> 0<F1>
<INVENTORY> 335,670
<CURRENT-ASSETS> 483,798
<PP&E> 18,502
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 587,223
<CURRENT-LIABILITIES> 37,613
<BONDS> 455,609
0
0
<COMMON> 112
<OTHER-SE> 91,889
<TOTAL-LIABILITY-AND-EQUITY> 587,223
<SALES> 357,370
<TOTAL-REVENUES> 357,370
<CGS> 113,747
<TOTAL-COSTS> 208,356
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,449
<INCOME-PRETAX> 7,818
<INCOME-TAX> 3,321
<INCOME-CONTINUING> 4,497
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,497
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.47
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS
BEEN RESTATED FOR SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 24,656
<SECURITIES> 0
<RECEIVABLES> 38,143
<ALLOWANCES> 0<F1>
<INVENTORY> 349,959
<CURRENT-ASSETS> 412,758
<PP&E> 22,098
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 509,213
<CURRENT-LIABILITIES> 39,305
<BONDS> 372,300
0
0
<COMMON> 112
<OTHER-SE> 95,496
<TOTAL-LIABILITY-AND-EQUITY> 509,213
<SALES> 261,020
<TOTAL-REVENUES> 261,020
<CGS> 77,727
<TOTAL-COSTS> 150,035
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,700
<INCOME-PRETAX> 12,558
<INCOME-TAX> 4,395
<INCOME-CONTINUING> 8,163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,163
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.94
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN RESTATED FOR
SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 13,848
<SECURITIES> 0
<RECEIVABLES> 24,310
<ALLOWANCES> 0<F1>
<INVENTORY> 353,523
<CURRENT-ASSETS> 391,681
<PP&E> 20,217
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 482,791
<CURRENT-LIABILITIES> 31,925
<BONDS> 402,338
0
0
<COMMON> 74
<OTHER-SE> 46,454
<TOTAL-LIABILITY-AND-EQUITY> 482,791
<SALES> 159,528
<TOTAL-REVENUES> 159,528
<CGS> 47,295
<TOTAL-COSTS> 94,137
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,225
<INCOME-PRETAX> 5,871
<INCOME-TAX> 2,348
<INCOME-CONTINUING> 3,523
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,523
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN RESTATED
FOR SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 28,871
<SECURITIES> 0
<RECEIVABLES> 29,378
<ALLOWANCES> 0<F1>
<INVENTORY> 328,423
<CURRENT-ASSETS> 386,672
<PP&E> 15,438
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 475,227
<CURRENT-LIABILITIES> 32,852
<BONDS> 396,779
0
0
<COMMON> 74
<OTHER-SE> 43,522
<TOTAL-LIABILITY-AND-EQUITY> 475,227
<SALES> 65,794
<TOTAL-REVENUES> 65,794
<CGS> 17,840
<TOTAL-COSTS> 40,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,126
<INCOME-PRETAX> 2,128
<INCOME-TAX> 851
<INCOME-CONTINUING> 1,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,277
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EPS HAS BEEN
RESTATED FOR SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 68,088
<SECURITIES> 0
<RECEIVABLES> 20,989
<ALLOWANCES> 0<F1>
<INVENTORY> 228,865
<CURRENT-ASSETS> 317,942
<PP&E> 12,503
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 386,323
<CURRENT-LIABILITIES> 26,498
<BONDS> 318,233
0
0
<COMMON> 72
<OTHER-SE> 39,520
<TOTAL-LIABILITY-AND-EQUITY> 386,323
<SALES> 149,729
<TOTAL-REVENUES> 149,729
<CGS> 38,021
<TOTAL-COSTS> 97,528
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,158
<INCOME-PRETAX> 1,022
<INCOME-TAX> 685
<INCOME-CONTINUING> 337
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 337
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
<FN>
<F1>RECEIVABLES ARE REPORTED NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS ON THE BALANCE
SHEET
<F2>PROPERTY, PLANT & EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE
BALANCE SHEET
</FN>
</TABLE>
