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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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
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COMMISSION FILE NUMBER 0-23962
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
15, 1999 (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 $390,627,386. 35,901,621 shares of common stock were outstanding as of March
15, 1999, comprised of 33,965,021 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 28, 1999 are herein incorporated by reference
in Part III.
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TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 17
Item 3. Legal Proceedings........................................... 18
Item 4. Submission of Matters to a Vote of Security Holders......... 18
Item X. Executive Officers of the Registrant........................ 19
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 21
Item 6. Selected Financial Data..................................... 22
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 23
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 36
Item 8. Financial Statements and Supplementary Data................. 36
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 36
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 37
Item 11. Executive Compensation...................................... 37
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 37
Item 13. Certain Relationships and Related Transactions.............. 37
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 38
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PART I
In this Report, the terms "Budget Group," "the Company" and "we" refer to
Budget Group, Inc. and its subsidiaries as a consolidated entity, except where
it is clear that such terms mean only the parent company. "BRACC" refers to
Budget Rent a Car Corporation, a subsidiary of Budget Group. "Budget" and
"Budget Rent a Car" refer to the business of renting cars and trucks (as
applicable) under the "Budget" name, by BRACC and its franchisees. Budget Group,
Inc. is a Delaware corporation organized in 1992.
ITEM 1. BUSINESS
INDUSTRY OVERVIEW
CAR RENTAL
The car rental industry is comprised of two principal markets: general use
(including airport and local market facilities) and insurance replacement.
General use companies serving airport and local markets accounted for
approximately 78% of rental revenue in the United States in 1998, while the
insurance replacement segment accounted for approximately 22% of rental revenue.
General use locations rent vehicles primarily to business and leisure travelers,
while insurance replacement facilities rent primarily to individuals who have
lost the use of their vehicles because of accidents, theft or breakdowns. In
addition to vehicle rental revenue, the industry derives significant revenue
from the sale of related products such as liability insurance, loss damage
waivers and refueling services.
The domestic general use car rental market includes five major companies
which operate airport and local facilities: Alamo, Avis, Budget, Hertz and
National. The insurance replacement market is dominated by Enterprise, which
operates primarily non-airport locations. In addition, there are many smaller
companies that operate primarily through non-airport locations. Most of the
major car rental companies in the United States operate through a combination of
corporate-owned and franchised locations.
There have been significant changes in the ownership of domestic car rental
companies over the past three years, as ownership of these companies has shifted
in large part from the major automobile manufacturers to independent ownership.
General Motors sold its 25% stake in Avis to HFS in May 1996, and Avis completed
its initial public offering in September 1997. Republic Industries acquired
Alamo in November 1996 and National (which had previously been controlled by
General Motors) in January 1997. In April 1997, Ford sold approximately 20% of
its equity in Hertz in an initial public offering and sold its controlling
interest in BRACC to us. In December 1997, Chrysler sold Dollar and Thrifty
through an initial public offering.
While owned by the automobile manufacturers, car rental companies served as
important outlets through which the manufacturers disposed of their vehicles, in
a period when major labor contracts made it uneconomical for the manufacturers
to limit their production of vehicles, even if they could not be sold through
dealers. There was an oversupply of cars in the rental industry during this
period, with cars being available on favorable terms to many small local car
rental operators, and the manufacturers did not commit sufficient resources to
the development of the car rental systems. Following the recent ownership
changes, however, the car rental companies have increasingly focused on their
own profitability, although they continue to be parties to supply and repurchase
agreements with the manufacturers.
Since the late 1980's, vehicle rental companies have acquired their fleets
primarily pursuant to repurchase programs with automobile manufacturers. Under
such programs, a car rental company agrees to purchase a specified minimum
number of new vehicles at a specified price, and the manufacturer agrees to
repurchase those vehicles from the car rental company at a future date
(typically, six to nine months after the purchase). The repurchase price paid by
the manufacturer is based upon the capitalized cost of the vehicles less an
agreed-upon depreciation factor and, in certain cases, an adjustment for damage
and excess mileage. These programs limit a car rental company's residual risk
with respect to its fleet and enable the company to determine a substantial
portion of its depreciation expense in advance. We believe these "program"
vehicles constitute a substantial majority of the vehicles in the fleets of U.S.
car rental companies.
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The total number of rental vehicles in service in the U.S. has been
estimated at 1.6 million in 1998. The total revenue for the U.S. car rental
industry has been estimated by industry sources at $17.2 billion in 1998, an
increase of 10% over 1997 revenue of $15.6 billion. We believe the factors
driving this industry growth include increases in airline passenger traffic, the
trend toward shorter, more frequent vacations resulting from the number of
households with two wage earners, the demographic trend toward older, more
affluent Americans who travel more frequently and increased business travel. Car
rental companies have also been able to increase the revenue they earn on their
vehicles through the implementation of yield management systems similar to those
utilized by the major airlines.
The European car rental industry had revenue of $7.9 billion in 1997, with
Germany, the United Kingdom, France, Italy and Spain representing the largest
markets.
(Pie Chart)
Customers of the general use vehicle rental companies include (a) business
travelers renting under negotiated contractual agreements between their
employers and the rental company, (b) business and leisure travelers who make
their reservations and may receive discounts through travel, professional or
other organizations, (c) smaller corporate accounts that are provided with a
rate and benefit package that does not require a contractual commitment and (d)
leisure travelers with no organizational or corporate affiliation programs.
Business travelers tend to utilize mid-week rentals of shorter durations, while
leisure travelers have greater utilization over weekends and tend to rent cars
for longer periods.
Rental companies in the insurance replacement market enter into contracts
primarily with insurance companies and automobile dealers to provide cars to
their customers whose vehicles are damaged or stolen or are being repaired.
Compared with the general use market, the insurance replacement market is
characterized by longer rental periods, lower daily rates and the utilization of
older and less expensive vehicles.
TRUCK RENTAL
Two primary segments of the truck rental industry are the consumer market
and the light commercial market. The consumer market primarily serves
individuals who rent trucks to move household goods on either a one-way or local
basis. The light commercial market serves a wide range of businesses that rent
light- to medium-duty trucks, which are trucks having a gross vehicle weight of
less than 26,000 pounds, for a variety of commercial applications. Trucks tend
to be configured differently for these two markets, in terms of their size, rear
doors and loading height.
The Consumer Market. We estimate that the consumer truck rental market had
revenue of approximately $2 billion for 1998. Industry sources estimate that
truck rentals are used in approximately 30% of household moves, with full
service van lines and owned or borrowed trucks accounting for the balance. We
estimate that in 1998, approximately 67% of the consumer market was attributable
to one-way rentals, with the balance attributable to local rentals. Major
companies in the consumer market include U-Haul, Ryder/ Budget and Penske, which
together have a market share of approximately 95% of the one-way market and 91%
of the local market. Generally, one-way rentals generate higher daily revenue
and involve lower transaction costs than local rentals.
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The Commercial Market. We estimate that the light commercial truck rental
market had revenue of approximately $800 million in 1998. Customers in the light
commercial market range from small local businesses to large national companies,
which rent trucks primarily for the transportation and delivery of inventory and
packages. We estimate that the light commercial truck rental market is growing
at an annual run rate of approximately 15%. We believe that a large part of the
increase in this market has been attributable to growth in the number of small
businesses, a trend toward outsourcing and an emphasis on "just-in-time"
inventory management. Major companies in the light commercial truck rental
market include Ryder/Budget, RTR, Rollins, U-Haul and Penske.
BACKGROUND
During the last two years, we substantially increased the size of our
business through two major acquisitions. In April 1997, we purchased BRACC from
Ford Motor Company for approximately $381 million (and assumed or refinanced
approximately $1.4 billion of indebtedness), and in June 1998 we acquired Ryder
TRS for approximately $260 million (and assumed approximately $522 million of
indebtedness).
Prior to the BRACC acquisition, we were the largest Budget franchisee,
having grown our business to $357.4 million in revenue in 1996 (prior to pooling
for Cruise America) principally through the acquisition or opening of 133 Budget
locations from January 1994 to December 1996. The BRACC acquisition represented
a unique opportunity to combine one of the leading worldwide car rental
companies with its largest franchisee in order to increase the level of
corporate ownership in the Budget system. A high level of corporate ownership
enables us to: (i) provide more consistent service, which is important in
marketing to corporate accounts; (ii) exercise greater control over the
development and marketing of the Budget brand; and (iii) realize greater returns
from our investment in the Budget brand.
The Ryder TRS acquisition combined our Budget truck rental business, with
its strength in the light commercial market, with Ryder TRS, a leader in the
consumer one-way market. With three national operators in the consumer one-way
truck rental market (following the Ryder TRS acquisition) accounting for
approximately 95% of that market's total revenue, we believe the truck rental
market offers us an excellent opportunity to achieve attractive returns. In
addition, combining our Ryder TRS and Budget Truck Rental operations will allow
us to reduce costs significantly in the areas of fleet management, maintenance,
field operations and administrative overhead.
The BRACC and Ryder TRS acquisitions have positioned us to improve
substantially the performance of one of the world's leading car rental companies
and the nation's second largest consumer truck rental business. By improving our
service quality, investing in our infrastructure and capturing the benefits from
the full integration of our businesses, we intend to enhance our returns on the
significant investments we have made over the last two years.
1998 INITIATIVES
During 1998, we invested approximately $44 million in our Car Rental
business to improve our service quality, further develop brand identity and
upgrade our information systems. These investments have enabled us to compete
more effectively for corporate accounts and frequent travelers, while
maintaining our customers' perception of Budget as a value brand. In addition to
upgrading our facilities, we invested in technology that will provide management
with the tools necessary to improve the operating performance of the business.
Key initiatives we implemented in our Car Rental business during 1998 include
the following:
DEVELOPMENT OF NEW PROGRAMS FOR CORPORATE ACCOUNTS AND FREQUENT
RENTERS -- We introduced Fastbreak, our paperless rental program designed
for the business traveler, as well as Perfect Drive, a loyalty program
designed to promote more frequent rentals. Fastbreak is now available at
approximately 140 airports nationwide. Over 500,000 members have enrolled
in Perfect Drive and Fastbreak as of December 31, 1998 and we estimate that
approximately one-half of these new members had not been enrolled in
previous Budget programs.
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IMPLEMENTATION OF OUR YIELD MANAGEMENT SYSTEM -- We invested
approximately $10 million to implement a proprietary, state-of-the-art
yield management system to help optimize our rental pricing and fleet
utilization. The system is currently operational in approximately 90
airport markets. Our fleet utilization has increased to 82% during the
first two months of 1999 compared to 80% for the same period in 1998. We
believe this increase is largely attributable to our new yield management
system.
STRENGTHENING THE BUDGET BRAND -- We remodeled approximately 100 of
our Budget Rent a Car locations and reconfigured several facilities to roll
out our Fastbreak program. We improved our franchisees' participation in
corporate programs and acquired additional franchise territories, bringing
the level of corporate ownership to approximately 82% of U.S. Budget Rent a
Car revenue. We undertook new advertising and marketing campaigns,
emphasizing the unique vehicles in our fleet (such as Jaguars, Saabs and
Ranger pickups), and improved our brand image by promoting a consistent
appearance throughout the Budget system.
Since completing the Ryder TRS acquisition in June 1998, we devoted
considerable time and resources to evaluating our Truck Rental operations to
identify operating synergies between Budget Truck Rental and Ryder TRS, as well
as areas for strengthening Ryder TRS's operations. Key initiatives undertaken in
our Truck Rental business during 1998 include the following:
INTEGRATION OF BUDGET TRUCK RENTAL AND RYDER TRS -- Integration of our
one-way rental operations is substantially complete and a shared pricing
system is now being utilized. Budget Truck Rental maintenance facilities
began servicing the Ryder fleet, with projected annual savings of $2
million beginning in 1999. We also started to integrate the organizational
structures and reservations systems of the two operations.
IMPROVEMENT OF RYDER TRS OPERATIONS -- We took the initial steps in
fleet planning and procurement to reduce the average fleet age of our Ryder
trucks from over three years to 24 months. This should allow us to deliver
a higher quality product to our customers, enhance our image as a service
leader and improve our returns by reducing running costs and improving
utilization rates. We also began replacing lower volume dealers with
dealers who we believe will be able to drive revenue growth in our Ryder
business.
1999 INITIATIVES
Our principal goal for 1999 is to take advantage of the significant
investments we have made over the past two years to deliver both revenue growth
and significant cost savings. Key elements of our strategy for 1999 include the
following:
INCREASE CAR RENTAL REVENUE AND REVENUE PER UNIT -- We will seek to
attract new customers by continuing to develop our corporate account,
travel agent and tour programs and other marketing initiatives. We expect
to be able to increase our revenue per unit by utilizing our yield
management system and increasing our field staff's focus on maximizing
rental opportunities. We also expect to capitalize on recent and future
industry-wide price increases, while maintaining our position as a value
brand.
CAPITALIZE ON GROWTH OPPORTUNITIES IN EUROPE -- To capitalize on what
we believe to be a high-growth market going forward, we are expanding our
business in Europe. In keeping with our strategy in the United States, we
are seeking to gain corporate control of key origin markets, with
agreements to acquire key territories in the U.K. and France, and we plan
to expand our existing business in Spain. We are also aggressively pricing
to gain additional market share in the expanding tour and commercial
markets.
REDUCE CAR RENTAL COSTS -- Our 1998 results of operations were
adversely impacted by costs directly attributable to changes in our
guaranteed car repurchase contracts which extended the holding period for
those vehicles without increasing the allowable mileage. We are seeking to
improve the terms under which our vehicles are repurchased. We plan to
reduce our operating costs as a percentage of sales by approximately two
percentage points in 1999, principally in the area of fleet operating
costs. In addition,
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we also expect to reduce discretionary capital expenditures (such as new
store openings) and field overhead costs. We expect to improve the
efficiency of our reservations system by consolidating our current 30
reservations centers into five regional centers.
CONTINUE INTEGRATION AND IMPROVE PROFITABILITY OF TRUCK RENTAL
BUSINESSES -- We are integrating our two companies' reservations
capabilities and will incorporate Ryder's "CustomerFirst" counter system
and new "Marksman" maintenance tracking system into Budget Truck Rental's
operations. In addition, we are continuing to reduce Ryder TRS's
maintenance costs by utilizing BRACC maintenance facilities. We believe
that these actions will reduce costs going forward.
ELIMINATE LOSSES IN CAR SALES -- Approximately 8 of our 35 car sales
stores achieved pre-tax returns on their invested capital in excess of 20%
in 1998. A number of our newer stores have performed poorly. We have ceased
the roll-out of additional car sales stores and have closed three stores in
1999. Through improved inventory planning and replacing management at
underperforming stores, we will achieve our performance targets for each
store or find an alternative use within Budget Group for that facility.
REDUCE OVERHEAD AND ADMINISTRATIVE COSTS -- We have established a
shared services center for all Budget Group companies to centralize
administration of certain non-strategic functions. We expect utilization of
this center will reduce our costs by approximately $7 million over the next
three years. In the first half of 1999, we will begin to implement a
program to outsource administration of our information technology systems,
which we expect will reduce our related costs beginning in 2000. In
addition, we have identified opportunities for obtaining non-vehicle
purchasing savings, for example, by negotiating new contracts with our
communications providers.
In connection with these initiatives, we expect to achieve substantial cost
savings. Major areas in which we will seek to reduce our operating expenses, as
well as the major assumptions we have made in estimating our cost savings,
include: (i) reductions in administrative, personnel and overhead expenses; (ii)
improvement in operations and consolidations of our reservation centers; (iii)
improvement in our Car Rental field operations to increase vehicle utilization;
(iv) improvement in vehicle maintenance procedures; (v) increased efficiencies
in non-vehicle purchasing; and (vi) reduction of vehicle carrying costs through
renegotiation of manufacturers' vehicle repurchase agreements. Our ability to
achieve the cost savings mentioned above is uncertain. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Risk
Factors -- Our Recent Investments and Cost-Cutting Initiatives May not be
Successful."
CAR RENTAL
Our Car Rental segment is comprised of the following operations:
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CAR RENTAL
SEGMENT
OPERATING COMPANY BUSINESS 1998 REVENUE
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(IN MILLIONS)
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Budget Rent a Car Worldwide general use car rental $1,419.2
operator and franchisor
Premier Car Rental Nationwide car rental operator in the 61.4
insurance replacement market
Van Pool Services Nationwide provider of van pooling 46.9
services to individuals, corporations
and municipalities
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BUDGET RENT A CAR
Through Budget Rent a Car, we operate the third largest car and truck
rental system in the world. Budget is one of only three vehicle rental systems
that offer rental vehicles throughout the world under a single brand name. There
are approximately 2,900 Budget car rental locations. Approximately 25% are
corporate-owned and operated and 75% are operated by franchisees. 896 locations
primarily serve airport business and 1,975 are
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local market (downtown and suburban) locations. Approximately 50% of our U.S.
rentals are leisure related and 50% are business related.
We currently maintain more local market car rental locations throughout the
world than most of our competitors and are unique among major car rental systems
in that we also rent trucks in most of our major markets. The following charts
present the geographic distribution of Budget rental locations and 1998 Budget
revenue by operating regions, including the United States, Canada, Latin America
and the Caribbean ("LAC"), Europe, the Middle East and Africa ("EMEA") and Asia
and Pacific ("AP"):
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LOCATIONS REVENUE
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pie chart pie chart
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U.S. OPERATIONS
Budget Rent a Car revenue in the United States was approximately $1.5
billion in 1998. At December 31, 1998, there were 565 corporate-owned and 409
franchised Budget Rent a Car locations in the United States, which accounted for
approximately $1.2 billion and $339 million of revenue, respectively.
Of corporate-owned Budget U.S. car rental locations, 23% primarily serve
airport business and 77% are local market (downtown and suburban) facilities.
Approximately 74% of BRACC's U.S. revenue was attributable to the airport
segment and 26% to the local segment in 1998. Approximately 50% of our U.S.
rentals are leisure-related and approximately 50% are business-related.
A summary of certain of the principal operating statistics for our
corporate-owned Budget Rent a Car operations in the United States and Canada is
presented in the table below:
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1998 1997 1998 VS. 1997
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Revenue (in millions).................. $1,155.5 $783.1 47.6%
Rental days............................ 28,020,292 19,178,795 46.1
Daily dollar average................... $41.23 $40.83 0.1
Utilization............................ 80.4% 81.4% (1.2)
Monthly revenue per vehicle............ $1,009 $1,011 --
Fleet (average)........................ 95,425 64,554 47.8
Length of rental (average days)........ 3.9 3.9 --
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INTERNATIONAL OPERATIONS
Budget Rent a Car international revenue was approximately $1.4 billion in
1998. Budget operates in more than 120 countries and territories outside the
United States and is recognized as a market leader in Canada, Germany and many
Latin American and Caribbean countries. With our 1998 acquisitions of locations
in New Zealand, Spain and Austria, Budget's international car rental operations
included 143 corporate-owned locations and 1,754 franchised locations at
December 31, 1998.
Of corporate-owned international facilities, 26% primarily serve airport
business and 74% serve local markets. Our international revenue mix consists of
approximately 55% in the airport segment and 45% in the local segment.
Approximately 55% of our international rentals are leisure-related and
approximately 45% are
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business-related. We believe that Europe, which generates 75.6% of Budget's
international car rental revenue, is a growth market that will be a major growth
driver for the Budget system.
We believe that BRACC will grow in the six European markets that account
for more than 70% of the European car rental market by acquiring strategic
franchisees in France and the U.K., expanding operations in Spain, Switzerland
and Austria and reestablishing a German presence upon resolution of our dispute
with our German franchisee. To support our expanded business, we plan to
introduce a point of sale rental management system that is both Y2K compliant
and euro compatible. We expect pan-European customization of this system to be
completed by the second quarter of 1999.
A summary of certain of the principal operating statistics for our
corporate-owned international Budget Rent a Car operations in 1998 is presented
below:
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Revenue (in millions).................. $114.2
Rental days............................ 2,877,121
Daily dollar average................... $39.70
Utilization............................ 71.2%
Monthly revenue per vehicle............ $860
Fleet (average)........................ 11,068
Length of rental (average days)........ 4.8
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FLEET
Vehicle Purchasing. We participate in a variety of vehicle purchase
programs with major domestic and foreign vehicle manufacturers. On average
during 1998, 70% of our vehicle purchases consisted of Ford vehicles, 9% Nissan
and Toyota vehicles, 8% Hyundai vehicles, 6% Chrysler vehicles and the remaining
7% were from other manufacturers, including General Motors, Jaguar and Saab.
These percentages vary among our operations and will most likely change from
year to year. The average price for automobiles purchased by us in 1998 for our
BRACC car rental fleet was approximately $19,700.
Our principal vehicle supply relationship has historically been with Ford,
with an emphasis on products from the Lincoln-Mercury Division of Ford. We have
a 10-year Supply Agreement with Ford, which went into effect in April 1997.
Under the Supply Agreement, we agreed (i) to purchase or lease at least 70% of
the total number of vehicles leased or purchased by us 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. Ford and its affiliates are required to offer
to us and our franchisees, for each model year, vehicles and fleet programs at
prices that are competitive with the vehicles and fleet programs of other
automobile manufacturers.
Vehicle Disposition. Our strategy is to maintain our car rental fleet at
an average age of five months or less. Approximately 85% of the vehicles
purchased for the Budget fleet in model year 1998 were program vehicles. The
programs in which we participate currently require that the program vehicles be
maintained in our fleet for a minimum number of months (typically six to nine
months) and impose numerous return conditions, including those related to
mileage and condition. At the time of return to the manufacturer, we receive 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 our
fleet will be dependent on the availability and attractiveness of manufacturers'
repurchase programs, over which we have no control.
In addition to manufacturers' repurchase programs, we dispose of our rental
fleet through automobile auctions, sales to wholesalers and our own retail Car
Sales operations. While the disposal of rental vehicles through our retail Car
Sales operations has been limited to date, we believe that such dispositions may
increase as our Car Sales operation is able to absorb more vehicles and as
management evaluates the mix of program vehicles and vehicles not subject to
manufacturers' repurchase programs.
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Of the 138,800 rental vehicles we purchased in 1998, we sold 115,000 back
to manufacturers pursuant to repurchase programs, 22,800 through third-party
channels (such as public auctions) and approximately 1,000 through our Budget
Car Sales stores.
Utilization and Seasonality. Our Car Rental business is subject to
seasonal variations in customer demand, with the summer vacation period
representing the peak season. The general seasonal variation in demand, along
with more localized changes in demand at each of our locations, causes us to
vary our fleet size over the course of the year. For 1998, our average monthly
fleet size in North America (excluding Premier Car Rental and Van Pool Services)
ranged from a low of 84,697 vehicles in January to a high of 107,884 vehicles in
August. Fleet utilization for 1998, 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 72.9% in December to 85.1% in August and averaged 80.4%.
Yield Management. In 1998, we implemented a new yield management system
for our Car Rental business developed in conjunction with Talus, a leading
supplier of such systems. The system uses information from our reservations,
fleet management and other systems to optimize our rental pricing and fleet
utilization. Our yield management system is now operational in approximately 90
airport markets and we are beginning to see improvements in daily dollar average
and fleet utilization when compared to prior periods.
MARKETING
General. We rent a wide variety of vehicles. Our fleet consists primarily
of vehicles from the current and immediately preceding model year. 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. We also generally offer our customers the convenience of leaving a
rented vehicle at a 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. We facilitate one-way car rentals between
approximately 600 corporate-owned and franchised locations in the United States.
This program enables us to operate more fully as an integrated network of
locations.
Customer Service. Our commitment to delivering a consistently high level
of customer service is a critical element of our success and strategy. Each
month we randomly survey over 3,000 customers to measure service levels by
location. We identify specific areas of achievement and opportunity from these
surveys. We address areas of improvement on a system-wide level and develop
standard methods and measures. To drive improvement, the service standards are
audited routinely by management and service delivery standards assessors. The
major focus 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 our customer relations department. We prepare monthly reports of the
types and number of complaints received for use in conjunction with the customer
satisfaction reports by location management as feedback of customer service
delivery. Furthermore, we participate in the annual J.D. Power and Associates
survey process to ensure that competitive levels of performance are achieved.
Marketing Programs. During 1998, we implemented two new
programs -- Perfect Drive and Fastbreak. In April 1998, we launched Perfect
Drive, an innovative customer loyalty program. Perfect Drive allows members to
accumulate points for renting Budget vehicles, with the points being redeemable
for discounts on future rentals as well as select products offered through
vendors such as Calloway Golf, K2 and Bolle. In August 1998, we launched
Fastbreak, an express service program featuring paperless transactions that is
now available at approximately 140 airports nationwide.
Travel Agent Incentives. We estimate that approximately 38% of domestic
car rental revenue is attributable to reservations made through travel agents.
To develop business in this market we have implemented Unlimited Budget, a
loyalty incentive program for travel agents. In conjunction with Carlson
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<PAGE> 11
Marketing Group and MasterCard, we developed the Unlimited Budget MasterCard,
which is designed around a personal debit card. Travel agents earn reward points
for every eligible U.S. business and leisure rental completed by their clients,
which are deposited in a special debit card account in the travel agent's name
and can be used like cash. We have had great success with this program, having
enrolled over 42,000 travel agents since September 1997.
Sears Car and Truck Rental. In 1970, we 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.
FRANCHISING
Of the approximately 3,200 Budget worldwide car and truck locations at
December 31, 1998, more than 68% were owned and operated by franchisees, and
these locations accounted for 54% of Budget system-wide revenue for 1998.
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.
We consider our relationships with our franchisees to be excellent. We work
closely with franchise advisory councils in formulating and implementing sales,
advertising and promotional, and operating strategies and meet regularly with
these advisors and other franchisees at regional, national and international
meetings. As part of our growth strategy, we seek to add new franchises
worldwide when opportunities arise. Additional franchises provide us with a
source of high margin revenue as there are relatively few additional fixed costs
associated with fees paid by new franchisees to us.
Our relationships with Budget franchisees are governed by franchise
agreements that grant to the franchisees the right to operate Budget vehicle
rental businesses in certain exclusive territories. These franchise agreements
provide us 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. Each franchisee is required to operate each of
its franchises in accordance with certain standards contained in the Budget
operating manual. We have the right to monitor the operations of franchisees and
any default by a franchisee under a franchise agreement or the operating manual
may give us 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.
During 1998, we acquired 9 franchisees in North America, including those in
Montreal, Puerto Rico and Cleveland, and three franchisees abroad -- New
Zealand, Spain and Austria. We believe that acquisitions of select franchised
locations can ensure consistent quality, pricing and service and makes us more
attractive to our corporate customers who demand consistent rates among all
Budget locations.
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<PAGE> 12
VAN POOLING OPERATIONS
Our commuter van pooling subsidiary, VPSI, Inc. ("Van Pool Services"),
operates in 60 markets throughout the United States. In June 1998, we acquired
Vipre B.V., a Dutch provider of van pooling services, and intend to use this as
a launching point for further expansion in the European market. Van Pool
Services had 1998 revenue of $46.9 million and at December 31, 1998, operated a
fleet of approximately 4,200 passenger vans.
Founded in 1977, Van Pool Services provides van pooling services to
individuals, corporations and municipalities. Pursuant to van pool agreements
with either the volunteer driver, corporation or municipality, the contracting
party agrees to drive or arrange a van pool which travels a fixed route set by
us. We set the fees, which are collected by the driver and remitted to us. This
business is particularly attractive because it generates high returns on capital
and is primarily contract based.
PREMIER CAR RENTAL
We serve the insurance replacement market through Premier Car Rental LLC
("Premier Car Rental"). Premier Car Rental had 1998 revenue of $61.4 million and
operated a network of 207 locations across the United States at December 31,
1998. We are able to use relatively older vehicles in this market which helps
with the cascading of our rental fleet. Premier Car Rental's principal
competitors include Enterprise, Car Temps, Hertz Local Edition and a range of
regional insurance replacement companies.
OTHER
AIRPORT RENTAL CONCESSIONS
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 guarantee amounts. Concessions are typically awarded
by airport authorities every three to five years based upon competitive bids.
Our concession agreements 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.
INFORMATION TECHNOLOGY
Our information technology is designed to provide Budget with high quality,
cost-effective systems and services on a timely basis. In late 1995 we
implemented BRACC's 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.
Budget's rental counter and back-office system, BEST I, supports both
corporate-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. Our human resources,
benefits and payroll interface is supported by a client-server system that
automatically feeds to an outsourced payroll system. In March 1999 we entered
into a seven-year global technology agreement with Computer Sciences Corporation
("CSC") to outsource administration of all our information systems, which we
believe will result in substantial savings. See the section in this Item
entitled "-- Information Systems." We intend to continue to enhance and
consolidate our information technology systems in order to further facilitate
Budget's delivery of consistent customer service at all of its locations.
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<PAGE> 13
TRUCK RENTAL
Our Truck Rental segment is comprised of the following operations:
<TABLE>
<CAPTION>
TRUCK RENTAL
SEGMENT
1998
OPERATING COMPANY BUSINESS REVENUE
----------------- -------- -------------
(IN MILLIONS)
-------------
<S> <C> <C> <C> <C>
Budget Truck Rental Local and one-way consumer and light $174.8
commercial truck rental operator and
franchisor
Ryder TRS Local and one-way consumer truck rental 346.2*
operator, primarily through dealers
Cruise America Recreational vehicle rental operator and 92.7
retailer
</TABLE>
- ---------------
* June through December 1998. Ryder TRS had full-year 1998 revenue of $543
million.
In 1998, our Truck Rental revenue was $613.7 million. We operate a combined
truck rental fleet of over 49,000 Ryder and Budget trucks through a network of
over 4,100 corporate-owned, dealer and franchised locations. In June 1998, we
purchased Ryder TRS, the second largest provider of truck rentals and related
moving supplies to consumers in the United States. With its fleet of over 30,000
yellow trucks, Ryder has strong brand recognition and enjoys a high level of
satisfaction among consumers. Budget Truck Rental is the third largest truck
rental company in the U.S. and has traditionally been strong in the light
commercial market. Together, Budget Truck Rental and Ryder TRS comprise 27% of
the U.S. truck rental market, second only to U-Haul's 52% share. With our
acquisition of Ryder TRS, we have expanded our truck rental distribution points
from approximately 400 to approximately 4,100 combined locations and added new
Ryder distribution points to other Budget Group companies.
Information on the estimated system-wide fleet size and U.S. locations at
December 31, 1998 and business mix by revenue for the year for Ryder TRS and
Budget Truck Rental is set forth below:
<TABLE>
<CAPTION>
BUSINESS MIX
-----------------------
FLEET SIZE LOCATIONS CONSUMER COMMERCIAL
---------- --------- -------- ------------
<S> <C> <C> <C> <C>
Ryder TRS.................................... 32,000 3,500 75% 25%
Budget Truck Rental.......................... 17,000 625 50% 50%
------ -----
Totals............................. 49,000 4,125
</TABLE>
TRUCK RENTAL GROUP INTEGRATION
In an effort to generate maximum returns from our truck rental brands, we
intend to effect the full integration of the Budget and Ryder TRS truck systems,
including management, procurement, maintenance, fleeting, pricing and
reservations. In pursuing this goal, we expect to improve our image, fleet
quality and delivery system as we reduce costs and improve margins.
Management is now taking steps to consolidate our pricing structure,
implement Ryder's state-of-the-art information technology systems throughout our
truck rental network and expand our profitable conjunctive car and truck rental
locations. We intend to replace 10,000 of the oldest Ryder trucks with new
trucks to create a younger truck fleet. Our goal is to reduce the average life
of our truck rental fleet from over three years to 24 months. Utilization of
Budget truck facilities for maintenance of Ryder trucks, an activity previously
performed by third parties at high cost, together with other cost-cutting
initiatives, is expected to allow us to reduce Ryder's costs going forward. We
anticipate the resulting higher utilization and lower maintenance and other
costs to lead to higher profitability.
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<PAGE> 14
RYDER TRS
Ryder TRS is the second largest provider of truck rentals and related
moving supplies and services to consumers and light commercial users in the
United States, with a fleet of approximately 32,000 trucks operating through
3,500 dealers at December 31, 1998.
The table below presents certain operating statistics of Ryder TRS for the
period that we have owned the business in 1998:
<TABLE>
<CAPTION>
JUNE-DECEMBER 1998
------------------
<S> <C>
Transactions................................................ 1,293,183
Revenue per transaction..................................... $ 256
Monthly revenue per vehicle................................. $ 1,433
Utilization................................................. 46.2%
Daily dollar average........................................ $ 101.46
</TABLE>
The following chart sets forth the percentage of total revenue that each of
Ryder TRS's products and/or services represented for the year ended December 31,
1998:
pie chart
Ryder TRS's truck rental services are offered through a national network of
approximately 3,500 dealers and approximately 20 corporate-owned and operated
outlets at December 31, 1998. Dealers have access through their point-of-sale
systems to information concerning inventory levels at all dealers within their
market. Dealerships consist primarily of auto sales and service retailers,
rental centers, self storage centers, car rental locations and other
vehicle-related businesses that are owned by independent parties. In addition to
operating their principal lines of business, these dealers rent our trucks to
consumers, and we pay the dealers a commission on all truck rentals and other
sales and rentals. Dealership agreements generally can be terminated by either
party upon 30 to 90 days prior written notice, depending on dealer tenure.
BUDGET TRUCK RENTAL
Through Budget Truck Rental, we operate the third largest provider of truck
rentals and related moving supplies and services to consumers and light
commercial users in the United States, with a fleet of approximately 15,300
trucks at December 31, 1998. Budget Truck Rental had 62% growth in revenue and
25% growth in earnings in 1998. Rental facilities are typically operated in
conjunction with Budget Car Rental locations. At December 31, 1998, we rented
Budget trucks at approximately 400 corporate-owned locations and 225 franchised
locations.
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<PAGE> 15
The table below presents certain operating statistics of corporate-owned
Budget truck rental operations:
<TABLE>
<CAPTION>
1998
--------
<S> <C>
Transactions................................................ 656,178
Revenue per transaction..................................... $ 260
Monthly revenue per vehicle................................. $ 1,027
Utilization................................................. 56.7%
Daily dollar average........................................ $ 59.54
</TABLE>
The following chart sets forth the percentage of total revenue that each of
Budget Truck Rental's products and/or services represented for the year ended
December 31, 1998:
(Pie Chart)
VEHICLE ACQUISITION AND DISPOSITION
Ryder TRS purchases the chassis for its trucks primarily from Ford, General
Motors, Isuzu and Navistar, and purchases the "boxes" (the storage compartment
on the back of the truck) from several companies. Orders are generally placed in
the fall for delivery in time for the busy summer season. Ryder TRS and Budget
Truck Rental consolidated their vehicle purchasing functions in 1998. We have
leveraged our purchasing expertise to buy vehicles on terms more favorable than
either company would be capable of achieving independently. We anticipate these
savings will increase substantially in future years. Ryder TRS disposes of its
used vehicles through several outlets, including trade-ins through
manufacturers, sales through our truck sales operations and sales through Ryder
TRS's dealers. Ryder TRS disposes of its trucks throughout the year, with a
larger proportion being sold or traded during the first and fourth quarters.
FLEET UTILIZATION AND SEASONALITY
Truck rentals display some seasonality, with generally higher levels of
demand occurring during the summer months and the third quarter typically being
our strongest quarter. On average, approximately 50% of Ryder TRS's annual
revenue are earned from May through September, with August being the strongest
month. Budget Truck Rental experiences the same seasonality; however, its
emphasis on the light commercial market serves to dampen its magnitude.
SUPPLEMENTAL PRODUCTS AND SERVICES
We supplement our Truck Rental business with a range of other products and
services. We rent automobile towing equipment and other moving accessories such
as hand trucks and furniture pads and sell moving supplies such as boxes, tape
and packing materials. We also offer customers a range of liability-limiting
products such as physical damage waivers, personal accident and cargo protection
and supplemental liability protection. These accessory products enhance our
appeal to consumers by offering customers "one-
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<PAGE> 16
stop" moving services. Ryder TRS offers comprehensive household goods relocation
services to corporate employee relocation departments through Ryder Move
Management. However, we currently intend to sell Ryder Move Management in order
to concentrate our efforts on more profitable areas of our business.
CRUISE AMERICA
On January 28, 1998, we acquired Cruise America, which is the largest
company in North America specializing in the rental and sale of recreational
vehicles (RVs). Cruise America had 1998 revenue of $92.7 million.
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, 1998, Cruise America operated a total of 127 locations and
a rental fleet of approximately 3,200 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 December 31, 1998, RV sales represented approximately 41% of Cruise
America's total revenue.
AGREEMENT IN PRINCIPLE WITH STORAGE USA
In March 1999, we reached an agreement in principle to create a strategic
alliance with Storage USA, Inc. ("Storage USA") and Storage USA Franchise Corp.,
an affiliate of Storage USA. Under the proposed alliance, Storage USA, which
operates 485 self-storage facilities in 31 states and the District of Columbia,
and Budget would: (i) brand selected Storage USA facilities as "Budget Storage
USA" and market the new Budget Storage USA franchise to other independent
self-storage operators; (ii) grant Storage USA the right to offer Budget and
Ryder truck rentals at its facilities across the country; and (iii) share truck
rental and self-storage leads received from the companies' toll-free numbers.
CAR SALES
We sell cars, sport utility vehicles and trucks through our retail car
sales facilities and are one of the largest independent retailers of late model
vehicles in the United States. At December 31, 1998, we operated 38 retail car
sales facilities, including three new car dealerships, in 27 markets nationwide.
Our Car Sales operations had 1998 revenue of approximately $548 million ($438
million from used car sales and $110 million from new car sales) on sales of
26,102 vehicles.
We entered the retail car sales market in the early 1980s to capitalize on
what we believed was a profitable segment in the car industry that would lend
synergies to our vehicle rental business. We achieve an important synergy from
our ability to sell more seasoned, non-program Budget rental cars through the
retail car sales channel rather than through less profitable auctions. However,
opening multiple sites in a relatively short period of time strained our
resources and sales volume has not met expectations. We have now suspended
expansion of our Car Sales business in order to focus on profitability at the
store level.
Existing stores will be more closely monitored for compliance with our
original business model. We believe we can improve profitability by building
awareness, store traffic and potential long-term customers by placing car sales
and car rentals in high visibility, conjunctive use locations. We intend to
offer this attractive conjunctive use opportunity to select franchisees soon.
In further response to the lack of profitability of certain of our car
sales stores, we closed three of our car sales facilities in 1999. In 1999, we
are considering various alternatives relating to Budget Car Sales to improve
profitability. We are currently reviewing options to either franchise or close
certain other underperforming stores. Having prepared our Uniform Franchise
Offering Circular, we are able to sell Budget Car Sales
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<PAGE> 17
franchises in 48 states and have received indications of interest from a number
of potential franchisees. In addition, we are in negotiations with a strategic
partner who may assist us in managing underperforming stores. We expect these
and other strategic initiatives will be completed by the end of the second
quarter of 1999 in an effort to achieve break-even for full-year 1999.
The 1998 acquisitions of three successful new car dealerships provides us
with what we believe will be new profit opportunities and corporate-wide
synergies from our Car Sales business. We believe the stronger buying power we
now enjoy as a result of these recent acquisitions will improve profitability in
1999. We believe we will reduce rental fleet acquisition and related costs by
purchasing vehicles through our own new car dealerships, paying wholesale prices
for a projected $1 million worth of auto parts in 1999 and enhancing the
inventories of Budget Car Sales by obtaining access to formerly closed dealer
auctions.
REGULATORY AND ENVIRONMENTAL MATTERS
We are 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 our 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 our facilities contain petroleum products stored in
underground or aboveground tanks. We conduct environmental compliance programs
designed to maintain compliance with applicable technical and operational
requirements, including periodic integrity testing of underground storage tanks
and providing financial assurance for remediation of spills or releases. We
believe that our operations currently are in compliance, in all material
respects, with such regulatory requirements including Federal regulations
governing underground storage tanks that became effective in December 1998.
The historical and current uses of our 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.
We also may be subject to requirements related to remediation of Hazardous
Substances that have been released to the environment at properties we own or
operate, or owned or operated in the past, or at properties to which we 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.
We have been required to remediate certain of our locations because of
leaks or spills of Hazardous Substances. These locations may require further
remediation. Subject to certain deductibles, the availability of funds, the
compliance status of the tanks and the nature of the release, we may be eligible
for reimbursement or payment of remediation costs associated with releases from
registered underground storage tanks in states that have established funds for
this purpose.
Although we do not know the exact cost of any necessary remediation at our
facilities, we do not expect it to exceed $3.2 million over the next several
years.
Under the terms of the BRACC acquisition in April 1997, which included
approximately 130 BRACC rental facilities containing underground or aboveground
storage tanks, Ford has agreed to indemnify us for certain environmental losses
resulting from environmental conditions at the acquired facilities for a limited
time period and subject to substantial financial limitations.
Ford's indemnity obligation for environmental and certain other matters is
capped at $40.0 million. Ford is required to indemnify us for losses resulting
from breaches by BRACC of the representations and warranties in the BRACC
acquisition agreement (including those relating to environmental matters) to the
extent that such losses are not covered by reserves established by BRACC or any
insurance policies and exceed $15,000
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<PAGE> 18
individually and $2.0 million in the aggregate. Ford is not required to pay the
first $2.0 million of aggregate losses (including those relating to
environmental matters). Furthermore in order to be indemnified for such losses,
we must notify Ford of any breach of the representations or warranties in the
BRACC acquisition agreement by April 2000. While the indemnification may cover
certain environmental costs incurred in the future, to date, we have not
asserted any claims against Ford. In addition to the Ford indemnity, when we
bought certain franchise territories, the sellers indemnified us for certain
undisclosed environmental liabilities, including certain remediation costs.
Franchise Matters. As a franchisor, we are 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 our business. The financing activities of our Car Sales
business 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.
INFORMATION SYSTEMS
As our ownership of BRACC locations increases and the integration of our
Truck Rental business continues, in addition to an intensified effort to
integrate other core Budget Group companies, centralized control and uniform
administration of our information systems has become increasingly important.
Tight control of all of our information systems, from terminals at the rental
counters to workstations at our office facilities, is necessary to keep
redundancy low and quality consistently high. Accordingly, we have recently
centralized management of all information systems within our Information
Technology group. In March 1999, we entered into a seven-year global technology
agreement with CSC to outsource administration of all of our information
systems, which we believe will result in substantial savings. As part of the
agreement, our global information technology operations, including data centers,
networks, user support, applications and maintenance, will be run and managed by
CSC.
RESERVATIONS SYSTEMS
We operate a state-of-the-art computerized reservation system through
WizCom International, Inc. Our main reservations facility is located in the
Dallas metropolitan area, with 29 additional centers located in other cities,
collectively handling approximately 8.9 million incoming calls in 1998. A
consolidation effort is under way to rationalize smaller reservation centers and
realize benefits of scale. By year-end, we anticipate operating five
super-regional reservation centers, including the main facility in Dallas. In
addition to traditional call-in reservations and inquiries, our system handles
millions of inquiries and reservations through links to the major U.S. airline
global distributions systems and other travel agent and travel industry sources.
The system is also linked to the Internet, allowing customers to receive rate
quotes as well as book reservations online. The system currently handles
reservations for Budget Rent a Car in the U.S. as well as for our Budget Truck
Rental operations. Although Ryder TRS currently outsources its reservations
function to an outside vendor, we intend to consolidate its reservations with
the current truck rental reservations now being handled through our internal
reservations system.
ORLANDO SHARED SERVICES CENTER
In order to realize certain cost efficiencies as well as to ensure that we
are optimally leveraging our substantial resources, we are centralizing
back-office support at our shared services center based in Orlando. Functions
currently provided to Budget Group companies through the shared services center
include: payroll;
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<PAGE> 19
accounts payable and accounts receivable processing; fleet financing and
administration (titling, registration, etc.) support; and accounting and audit
functions.
TRADEMARKS
We own the Budget trademark and have registered it with the patent and
trademark office in the United States and in more than 100 countries,
territories and foreign jurisdictions worldwide. We consider the Budget name and
logo rights to be an important part of our business.
Budget Group, Inc. has the royalty-free right to use certain Ryder
trademarks, subject to certain restrictions, until October 2006. After October
2001, we must begin co-branding the Ryder brand name with another brand name. In
October 2006, we will no longer be permitted to use the Ryder name in any manner
and will transition the business to the brand name we choose. We also have the
royalty-free right to use the 1-800-GO-RYDER number, subject to certain
restrictions, for a period of up to 12 years and the right to use the Ryder
signature color scheme in perpetuity, subject to certain restrictions. Ryder's
material trademarks have been registered with the U.S. Patent and Trademark
Office. The unexpected loss of such trademarks prior to October 2006 could have
a material adverse effect on our business.
COMPETITION
There is intense competition in the vehicle rental industry particularly
with respect to price and service. We cannot assure you that we will be able to
compete successfully with either existing or new competitors. In any geographic
market, we may encounter competition from national, regional and local vehicle
rental companies. Our main competitors in the car rental market are Alamo, Avis,
Enterprise, Hertz and National. In our Truck Rental business, we face
competition primarily from Penske and U-Haul. Many of our competitors have
larger rental volumes, greater financial resources and a more stable customer
base than we have.
In the past, we have had to lower our rental prices in response to
industry-wide price cutting and have been unable to unilaterally raise our
prices. Moreover, when the car rental industry has experienced vehicle
oversupply competitive pressure has intensified.
The retail car sales industry is also characterized by intense competition,
consisting primarily of local new car dealerships selling new and late model
used cars. In addition to local dealerships, we may face competition from
retailers such as CarMax and AutoNation. These retailers compete on the basis of
large inventory size, no-haggle pricing and after-sale service. We cannot assure
you that we will be able to compete effectively in the retail care sales
industry.
EMPLOYEES
At December 31, 1998, we employed approximately 14,500 persons. At December
31, 1998, approximately 1,539 employees in various locations throughout the
United States were subject to collective bargaining agreements. We believe that
our employee relations are good.
ITEM 2. PROPERTIES
Budget Group'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, from which BRACC operates; a
69,300 square foot reservations center in Carrollton, Texas, which is owned by
us; a 61,168 square foot leased administrative center in Orlando, Florida; a
21,600 square foot leased international headquarters facility in Hemel
Hempstead, England, a suburb of London; a 66,306 square foot leased headquarters
facility in Denver, Colorado from which Ryder TRS operates; three leased Ryder
TRS administrative facilities located in Aurora, Colorado consisting of 21,163
square feet, Miami, Florida consisting of 117,461 square feet and Norcross,
Georgia consisting of 27,349 square feet; and a 12,585 square foot leased office
in Indianapolis,
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<PAGE> 20
Indiana from which Budget Car Sales and Premier Car Rental operate. Management
believes that these facilities are sufficient for our needs.
We operated a total of 656 Budget car and truck U.S. airport and local
market rental facilities at December 31, 1998, most of which are leased. The
leased properties are generally subject to fixed-term leases with renewal
options. Certain of these leases also have purchase options at the end of their
terms. 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.
ITEM 3. LEGAL PROCEEDINGS
We terminated the franchise agreement of our Budget franchisee for Germany
in June and September 1998 based on alleged violations of provisions in the
underlying franchise agreement and ceased to provide services, such as
reservations and credit card processing, effective as of October 23, 1998.
Reservations that would have been transmitted to and serviced by our franchisee
in Germany are now being handled, on an interim basis, by National Car Rental.
The franchise termination is being contested by the franchisee. We intend to
replace the current German franchisee with new franchisees and/or
corporate-owned locations. Until such time, we may experience an adverse effect
on business in, and originating from, Germany.
Jeffrey R. Mirkin, one of our directors, 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. We operate as a
subfranchisee of SoCal at many locations in Southern California. We are 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 SoCal Franchise Agreement, as to whether we can operate locations of
Premier Car Rental in Southern California. Also, SoCal is a party to a
shareholders' agreement dated as of October 20, 1995 among SoCal, Messrs.
Miller, Kennedy and Congdon and us (the "SoCal Shareholders' Agreement"). The
SoCal Shareholders' Agreement grants SoCal the right to designate one nominee to
our Board of Directors, which nominee shall be reasonably satisfactory to the
Nominating Committee of the Board of Directors. SoCal's nominee, Mr. Mirkin, was
not found to be reasonably satisfactory to the Nominating Committee, and Mr.
Mirkin was not nominated as a director for election at the 1999 Annual Meeting
of Stockholders. On March 1, 1999, Mr. Mirkin filed suit in the Superior Court
of Los Angeles against us and Messrs. Miller, Kennedy and Congdon seeking to
require us to accept Mr. Mirkin as a member of the Board of Directors. We
believe we have meritorious defenses in the foregoing actions and will defend
ourselves vigorously.
In addition to the foregoing matters, from time to time we are subject to
routine litigation incidental to our business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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<PAGE> 21
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning each of our
executive officers and directors:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
---- --- --------------------------------------------------------
<S> <C> <C>
Sanford Miller....................... 46 Chairman of the Board of Directors, Chief Executive
Officer and Director
Jeffrey D. Congdon................... 55 Vice Chairman of the Board of Directors and Director
Robert L. Aprati..................... 54 Executive Vice President, General Counsel and Secretary
Scott R. White....................... 35 Executive Vice President, Corporate Development
Michael B. Clauer.................... 42 Executive Vice President and Chief Financial Officer
Mark R. Sotir........................ 35 President, North America, Budget Rent a Car Corporation
</TABLE>
SANFORD MILLER has been Chairman of the Board of Directors, Chief Executive
Officer and a director since April 1994. From August 1991 to August 1994, he was
Vice President of Tranex Rentals of New York, Inc., which operated the Albany
and Rochester, New York Budget franchises, and from December 1991 to August
1994, was Vice President of Capital City Leasing, Inc., 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 Budget in 1989 and 1990. Mr. Miller is also a director of
Tranex Credit Corporation, which provides financing for purchases of previously
owned vehicles, AVTEAM, Inc., a global supplier of aftermarket aircraft engines,
engine parts and airframe components, and Peninsula Bank of Central Florida and
is the Chairman of the Board of College Foundation, Inc., Oswego State
University. Mr. Miller is the first cousin of Ronald D. Agronin, one of our
directors.
JEFFREY D. CONGDON has been Vice Chairman of the Board of Directors since
January 1991 and was elected as a director in April 1994. From January 1991 to
March 1998 he also served as Chief Financial Officer. Since December 1990, he
has been Secretary, Treasurer and a director of Tranex Credit Corporation. 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. Mr. Congdon is
currently a director of Smart Choice Automotive Group, Inc., which conducts a
retail used car sales business in Florida.
ROBERT L. APRATI has been Executive Vice President, General Counsel and
Secretary since August 1997, was Senior Vice President, General Counsel and
Secretary of BRACC from January 1988 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 is the immediate past President of
the American Car Rental Association.
SCOTT R. WHITE has been Executive Vice President, Corporate Development
since February 1997. From August 1992 to February 1997, he worked in the
Investment Banking Department of Credit Suisse First Boston Corporation, most
recently as a vice president. In addition, he was a financial analyst at The
First Boston Corporation from July 1986 to July 1989.
19
<PAGE> 22
MICHAEL B. CLAUER has been Chief Financial Officer since November 1997 and
an executive vice president since September 1998. From November 1997 to
September 1998 he was a senior vice president of Budget Group. 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.
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.
20
<PAGE> 23
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since April 17, 1997, Budget Group's Class A common stock has been listed
on the New York Stock Exchange under the symbol "BD." Prior to such date, the
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, 1998:
First Quarter............................................. $39.500 $30.000
Second Quarter............................................ 39.000 26.875
Third Quarter............................................. 33.125 17.000
Fourth Quarter............................................ 25.000 11.000
</TABLE>
On March 29, 1999 (i) the last sale price of the Class A common stock as
reported on the New York Stock Exchange was $12.50 per share and (ii) there were
295 holders of record of the Class A common stock and three holders of record of
the Class B common stock.
We have never paid any cash dividends on our common stock, and the Board of
Directors currently intends to retain all earnings for use in our business for
the foreseeable future. Any future payment of dividends will depend upon our
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
In December 1998, we issued an aggregate 271,416 unregistered shares of
Class A common stock to 18 of our senior officers for an aggregate $3,524,624
pursuant to our Executive Share Purchase Program. The sales were made in
reliance on the exemption from registration under Section 4(2) of the Securities
Act of 1933.
21
<PAGE> 24
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial information for each year
in the five-year period ended December 31, 1998. The information presented as of
and for the years ended December 31, 1995, 1996, 1997 and 1998 is derived from
the audited consolidated financial statements of Budget Group, which reflect the
pooled operations of Budget Group and Cruise America, acquired by Budget Group
on January 28, 1998. The information presented as of and for the year ended
December 31, 1994 is derived from Budget Group's unaudited consolidated
financial statements. In the opinion of management, all unaudited consolidated
financial statements used to derive the information have been prepared on the
same basis as the audited financial statements and include all adjustments
(consisting only of normal recurring accruals) necessary for the fair
presentation of the results for the period indicated. The following data should
be read in conjunction with the Consolidated Financial Statements and the notes
thereto and "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
YEAR ENDED AND AS OF DECEMBER 31,
--------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- ---------- ----------
(IN MILLIONS, EXCEPT OPERATING AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Vehicle rental revenue........................... $ 74.1 $ 151.7 $ 276.3 $ 1,070.4 $ 1,934.7
Retail vehicle sales revenue..................... 51.6 86.2 169.3 289.1 583.3
Total operating revenue.......................... 125.7 239.5 447.8 1,411.4 2,616.2
Depreciation -- vehicle.......................... 16.8 38.1 71.7 292.1 500.2(a)
Cost of vehicle sales............................ 46.0 76.8 146.5 251.1 524.9
Operating income................................. 8.8 23.2 47.6 171.0 206.3(a)
Income (loss) before income taxes................ (0.5) 3.2 12.9 55.6 6.6(a)
Net income (loss) (before extraordinary item).... (0.7) 1.7 7.8 29.8 (3.6)(a)
Weighted average common and common equivalent
shares outstanding:
Basic.......................................... 5.3 8.0 10.8 20.1 32.1
Diluted........................................ 5.3 8.0 11.1 27.9 32.1
Earnings per common and common equivalent share:
Basic (before extraordinary item).............. $ (0.12) $ 0.21 $ 0.72 $ 1.48 $ (0.12)
Diluted (before extraordinary item)............ (0.12) 0.21 0.70 1.25 (0.12)
Segment Revenue:
Car Rental(b).................................... 313.7(c) 1,014.8 1,527.5
Truck Rental(b).................................. n/a(c) 215.9 613.7
Car Sales........................................ 134.1 239.4 547.7
Operating Data:
Car rental data(d):
Average rental days per vehicle................ 250(c) 297 294
Average fleet.................................. 8,917(c) 64,554 95,425
Average monthly revenue per unit............... 1,350(c) 1,011 1,009
Truck rental data:
Average rental days per vehicle................ n/a(c) 205(e) 183(f)
Average fleet.................................. n/a(c) 11,148(e) 36,439(f)
Average monthly revenue per unit............... n/a(c) 1,212(e) 1,268(f)
Other Data:
EBITDA(g)........................................ 124.8 486.6 761.0
Depreciation -- vehicle.......................... 71.8 292.1 500.2
Interest-vehicle, net(h)......................... 31.6 95.3 176.8
Adjusted EBITDA(g)............................... 21.4 99.2 84.0
Total interest expense........................... 34.7 115.4 190.2
Non-vehicle capital expenditures................. 3.4 10.9 88.4
Ratio of Adjusted EBITDA to non-vehicle
interest....................................... 6.9x 4.9x 6.3x
Ratio of net non-vehicle debt to Adjusted
EBITDA(i)...................................... 1.4x 1.6x NM
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Restricted cash(j)............................... $ 32.7 $ 67.7 $ 66.3 $ 282.7 $ 421.5
Total cash....................................... 35.8 70.5 120.3 444.2 557.7
Manufacturer receivables(k)...................... 13.9 150.2 241.0
Rental fleet, net................................ 146.9 283.4 401.5 2,093.3 2,839.2
Retail vehicle inventory......................... 19.2 23.2 28.5 46.9 81.0
Total assets..................................... 250.6 486.3 700.4 3,689.9 5,134.1
Vehicle debt..................................... 178.9 361.5 447.5 2,367.9 3,508.9
Non-vehicle debt................................. 5.5 25.0 83.9 318.3 126.2
Total debt....................................... 184.4 386.5 531.4 2,686.2 3,635.1
Stockholders' equity............................. 49.9 64.7 120.4 458.9 650.6
</TABLE>
- ---------------
(a) Includes one-time and restructuring charges of $32.6 million consisting of
(i) $14.9 million of restructuring charges, largely related to severance and
related costs and location closing expenses, (ii) $1.6 million of pooling
expenses, (iii) $3.2 million of impairment loss related to goodwill at Car
Sales (recorded as amortization and non-vehicle depreciation) and (iv) $12.9
million of other charges (which includes $1.5 million recorded as
depreciation-vehicle), net of $12.4 million of taxes.
(b) Includes revenue from car or truck rentals, as appropriate, and related
products (such as insurance and loss damage waivers).
(c) Truck rental revenue data for the year ended December 31, 1996, cannot be
segregated from car rental revenue. Therefore, car rental revenue data for
the year ended December 31, 1996, include both car and truck rental data.
(d) Includes data for Budget Group's North American car rental operations,
excluding Van Pool Services and Premier Car Rental.
(e) Includes data for Budget Truck Rental and Cruise America.
(f) Includes data for Budget Truck Rental, Cruise America and Ryder TRS.
(g) EBITDA consists of income before income taxes plus (i) vehicle interest
expense, net, (ii) non-vehicle interest expense (including certain debt
extinguishment costs), (iii) vehicle depreciation expense and (iv)
amortization and non-vehicle depreciation expense. Adjusted EBITDA consists
of income before taxes plus (i) non-vehicle interest expense (including
certain debt extinguishment costs) and (ii) amortization and non-vehicle
depreciation expense. EBITDA and Adjusted EBITDA are not presented as, and
should not be considered alternative measures of operating results or cash
flows from operations (as determined in accordance with generally accepted
accounting principles), but are presented because they are widely accepted
financial indicators of a company's ability to incur and service debt.
EBITDA and Adjusted EBITDA reflect certain administrative expenses not
allocated to operating segments.
(h) Consists of vehicle interest, net of interest income on restricted cash.
(i) Net non-vehicle debt consists of non-vehicle debt less unrestricted cash.
(j) Restricted cash consists of funds borrowed under medium term note and
commercial paper programs not invested in rental fleet.
(k) Manufacturer receivables arise from the sale of vehicles to manufacturers
pursuant to guaranteed repurchase programs. These manufacturer receivables,
to the extent they related to vehicles pledged as collateral under our fleet
financing facilities, are also pledged as collateral under those facilities.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made in this Report, and other written or oral
statements made by or on behalf of Budget Group, may constitute "forward-looking
statements" within the meaning of the federal securities laws. Statements
regarding future events and developments and our future performance, as well as
our expectations, beliefs, plans, estimates or projections relating to the
future, are forward-looking statements within the meaning of these laws. All
forward-looking statements are subject to certain risks and uncertainties that
could cause actual events to differ materially from those projected. Such risks
and uncertainties include, among
23
<PAGE> 26
others, seasonality of our business, competitive factors, integration of
acquired businesses, whether our investments and cost-cutting initiatives will
be successful, our obligations to deliver a make-whole payment to the former
owners of Ryder TRS, the availability and terms of financing for our business,
our dependence on a principal vehicle supplier, our obligations under
manufacturers' vehicle repurchase programs, litigation with a former franchisee,
the impact of various types of regulations, additional risks of our
international operations, our ability to pay our debt service obligations and
our ability to address Year 2000 issues. Management believes that these
forward-looking statements are reasonable; however, you should not place undue
reliance on such statements. These statements are based on current expectations
and speak only as of the date of such statements. We undertake no obligations to
publicly update or revise any forward-looking statement, whether as a result of
future events, new information or otherwise. Additional information concerning
the risk and uncertainties listed above and other factors that you may wish to
consider are contained below in this Item under the sections entitled "Year 2000
Issue" and "Risk Factors."
GENERAL
Prior to the acquisition of BRACC, we were the largest Budget franchisee in
the United States and were one of the largest independent retailers of late
model automobiles in the United States. In 1994, we embarked on a strategy to
significantly expand our Budget franchise base and to develop a branded retail
car sales operation within our Budget franchise territories. Beginning in 1996,
we began acquiring and expanding into other rental related businesses. This
strategy both leveraged management's experience and created certain operating
efficiencies between these complementary businesses.
The accompanying consolidated financial statements have been restated to
reflect the pooling of interests with Cruise America, Inc. as if the companies
had combined at the beginning of the first period presented. 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. from their
respective acquisition dates. The results of operations of Budget Group 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. In connection with the BRACC acquisition, we changed our name from
Team Rental Group, Inc. to Budget Group, Inc. In June 1998, we acquired Ryder
TRS. The 1998 results of operations reported herein also include the acquired
operations of three new car dealerships effective in June 1998. For a further
discussion of these transactions, see Notes 1 and 3 to the Consolidated
Financial Statements contained herein.
We are engaged in the business of the daily rental of vehicles, including
cars, trucks, passenger vans and recreational vehicles (through both owned and
franchised operations) and the sale of new and late model used vehicles
including recreational vehicles.
Revenues primarily consist of:
Vehicle rental -- revenue generated from renting vehicles to customers
including revenue from loss or collision damage waivers, insurance sales
and other products provided at rental locations. Retail vehicle
sales -- revenue generated from the sales of new and late model used
vehicles including recreational vehicles. Royalty fees and other -- fees
generated from our licensees and other non-vehicle rental or sales items.
Expenses primarily consist of:
Direct vehicle and operating -- includes wages and related benefits,
rent and concessions paid to airport authorities and costs relating to the
operation and rental of revenue earning vehicles including insurance.
Depreciation, vehicle -- depreciation expenses relating to revenue earning
vehicles including net gains or losses on the disposal of such equipment.
Cost of retail vehicle sales -- cost of new and late model used vehicles
sold at retail or from retail lots including recreational vehicles.
Selling, general and administrative -- includes reservation, advertising,
marketing and other related expenses, net of third party reimbursements,
and commissions to travel agents and other third parties. Amortization and
non-vehicle depreciation -- includes amortization of goodwill and other
intangibles as well as depreciation of
24
<PAGE> 27
capitalized assets. Interest and interest income -- vehicle interest
relates to financing of revenue earning vehicles and vehicle inventory;
interest income is primarily earned on restricted cash.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the percentage of
operating revenues represented by certain items in Budget Group's consolidated
statements of operations:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Vehicle rental revenue...................................... 61.7% 75.8% 74.0%
Retail vehicle sales revenue................................ 37.8 20.5 22.2
Royalty fees and other revenue.............................. .5 3.7 3.8
----- ----- -----
Total operating revenue........................... 100.0 100.0 100.0
----- ----- -----
Direct vehicle and operating expenses....................... 29.1 32.9 31.2
Depreciation expense -- vehicle............................. 16.0 20.7 19.1
Cost of vehicle sales....................................... 32.7 17.8 20.1
Selling, general and administrative expenses................ 10.4 14.8 19.0
Amortization and non-vehicle depreciation expenses.......... 1.2 1.7 2.1
Restructuring and pooling expenses.......................... 0.0 0.0 0.6
----- ----- -----
Operating income............................................ 10.6 12.1 7.9
----- ----- -----
Vehicle interest expense.................................... 7.3 7.2 7.2
Non-vehicle interest expense................................ 0.7 1.4 0.5
Interest income............................................. (0.2) (0.4) (0.4)
Debt extinguishment costs................................... 0.0 0.0 0.3
----- ----- -----
Income before income taxes.................................. 2.8 3.9 0.3
Provision for income taxes.................................. 1.1 1.8 0.0
Distributions on trust preferred securities................. 0.0 0.0 0.4
----- ----- -----
Net income (loss) before extraordinary item................. 1.7% 2.1% (0.1)%
</TABLE>
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
General Operating Results. Income before extraordinary item for 1998
decreased $33.4 million to a loss of $3.6 million from income of $29.8 million
in 1997. The income before extraordinary item per share for 1998 decreased to a
loss of $.12 per diluted share from income of $1.25 per diluted share in 1997
due to the decrease in earnings partially offset by an increase in the average
number of shares outstanding. Income before income taxes decreased $49.0 million
in 1998 to $6.6 million from $55.6 million for 1997. Income before income taxes
reflects debt extinguishment costs of $9.5 million in 1998 largely for Class A
common stock issued to induce conversion of $80.0 million of convertible
subordinated notes. We also recognized an extraordinary loss of $45.3 million,
net of income tax benefits, in 1998 related to the early extinguishment of
guaranteed senior notes and Ryder TRS's 10% senior subordinated notes. See Note
8 to the Consolidated Financial Statements. Ryder TRS contributed approximately
$9.1 million in earnings before taxes for the seven months ended December 31,
1998.
Operating Revenues. Vehicle rental revenue increased $864.3 million in
1998 to $1,934.8 million from $1,070.4 million in 1997. This increase was
largely due to the full year impact of BRACC's operations, acquired in the
second quarter of 1997, and the Ryder TRS acquisition in the second quarter of
1998, which added a significant number of locations and vehicles to our
operations. Revenue from sales of vehicles increased $294.1 million in 1998 to
$583.3 million from $289.1 million in 1997. This increase was due to the
addition of BRACC's car sales operations, new stores opened by us, and the
acquisition of three new car dealerships in June 1998. Royalty fees and other
revenues increased $46.3 million in 1998 to $98.2 million from $51.9 million in
1997. These revenues largely represent royalty and other fees from our
franchisees as a
25
<PAGE> 28
result of the BRACC acquisition and revenue from Ryder TRS's move management
service. Ryder TRS contributed $346.2 million in total revenue and $15.5 million
of royalty fees and other revenues.
Operating Expenses. Total operating expenses increased $1,169.5 million in
1998 to $2,409.9 million from $1,240.4 million in 1997. This increase was also
largely due to the addition of BRACC's and Ryder TRS's operations to our
operations. Ryder TRS's operating expenses totaled $308.4 million in 1998.
Direct vehicle and operating expenses reflect a reduction in insurance reserves
of approximately $22.0 million in 1998. This reduction was due to changes in
actuarial estimates of losses based on continued favorable trends in the
frequency and severity of accidents as well as changes in claims handling
procedures implemented within the past 18 months. Excluding the insurance
adjustment and the impact of Ryder TRS, direct vehicle and operating expenses
increased slightly as a percent of vehicle rental revenue due to increases in
vehicle damage, reconditioning expenses and mileage related penalties of
approximately $23.4 million on an annualized basis. The increases in
reconditioning and mileage related penalties occurred largely in the latter part
of 1998 due to changes in terms of certain manufacturer's buyback programs. The
cost of retail vehicle sales increased $273.8 million in 1998 to $524.9 million
from $251.1 million in 1997. This increase is reflective of the vehicle sales
revenue growth with the addition of BRACC's car sales locations, the new car
dealership acquisitions and new locations opened by us. Due to weaknesses in
used car demand, gross margins from vehicle sales declined in 1998 compared to
1997. The decrease in margins along with startup costs for new locations largely
contributed to operating losses of $22.5 million in 1998 as compared to a loss
of $2.4 million in 1997 for the retail car sales segment. We expect to suspend
the expansion of car sales locations through mid-1999 to focus on improving the
results of under-performing stores. The retail car sales operating loss in 1998
includes an impairment loss of $3.8 million related to long term assets of which
$3.1 million represented goodwill. Selling, general and administrative expenses
increased $289.1 million in 1998 to $498.1 million from $209.0 million in 1997.
This increase was also largely due to the addition of BRACC's and Ryder TRS's
operations to our operations and also includes a provision of approximately $3.0
million for bad debts in 1998 related to collection inefficiencies brought about
by centralization efforts largely in international administrative functions.
Amortization and non-vehicle depreciation expense increased $31.0 million in
1998 to $54.5 million from $23.5 million in 1997. This increase was largely due
to intangibles, including goodwill, and property and equipment related to the
acquisitions of BRACC and Ryder TRS and the previously referred to impairment
loss. We recorded restructuring expenses in the fourth quarter of 1998 of $14.9
million largely related to severance and related costs and location closing
expenses and incurred $1.6 million in expenses related to our merger with Cruise
America. See Notes 1 and 4 to the Consolidated Financial Statements.
Other (Income) Expense. Other expense, net of interest income, increased
$84.3 million in 1998 to $199.7 million from $115.4 million in 1997. This
increase was due to the financing of fleet and other borrowings related to the
acquisitions of BRACC and Ryder TRS, net of investment income due to the
increase in restricted cash, and $9.5 million in debt extinguishment costs
related to the conversion of $80.0 million of convertible subordinated notes.
See Note 8 to the Consolidated Financial Statements.
Provision for Income Taxes. The tax provision differs from the statutory
rate largely due to the effect of the distributions on trust preferred
securities shown below the provision at its gross amount while the tax benefit
is included in the provision and changes in valuation allowances somewhat offset
by the effects of non-deductible intangible amortization and the impact of state
and local income taxes net of the federal benefit. See Note 12 to the
Consolidated Financial Statements.
Distributions on Trust Preferred Securities. The distributions on trust
preferred securities of $10.0 million represents dividend payments to holders of
these company obligated mandatorily redeemable securities issued by a subsidiary
of Budget Group. These distributions are reflected as a minority interest under
the above mentioned caption.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
General Operating Results. Net income for 1997 increased $22.0 million to
$29.8 million from $7.8 million in 1996. Diluted earnings per share for 1997
increased to $1.25 per share from $.70 per share in 1996. Income before income
taxes increased $42.7 million for 1997 to $55.6 million from $12.9 million for
1996.
26
<PAGE> 29
Operating Revenues. Vehicle rental revenue increased $794.1 million in
1997 to $1,070.4 million from $276.3 million in 1996. This increase was due
primarily to the acquisition of BRACC which added over 370 locations and over
67,000 vehicles to our operations in the U.S. Revenue from the sales of vehicles
increased $119.8 million in 1997 to $289.1 million from $169.3 million in 1996.
This increase was due primarily to the addition of BRACC's 11 car sales
locations as well as 4 new stores opened by us. Royalties and other revenues
totaled $51.9 million in 1997 and largely represent royalty and other fees due
from our franchisees as a result of the BRACC acquisition.
Operating Expenses. Total operating expenses increased $840.2 million in
1997 to $1,240.4 million from $400.2 million in 1996. This increase was largely
due to the addition of BRACC's operations to our operations. The cost of
vehicles sold increased $104.6 million in 1997 to $251.1 million from $146.5
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 us.
Selling, general and administrative expenses in 1997 includes a $10.0 million
one-time charge to establish an accrual for damages. See Note 14 to the
Consolidated Financial Statements. Amortization and non-vehicle depreciation
expense increased $18.1 million in 1997 to $23.5 million from $5.4 million in
1996. This increase was largely due to property and equipment and intangibles,
including goodwill, related to the acquisition of BRACC. Changes from 1996 to
1997 in the percent of revenue for expense categories are largely attributable
to the increase in vehicle rental operations resulting from the acquisition of
BRACC.
Other (Income) Expense. Interest expense, net of interest income,
increased $80.6 million in 1997 to $115.4 million from $34.7 million in 1996.
This increase was due to the financing of fleet and other borrowings related to
the BRACC acquisition, net of investment income due to the increase in
restricted cash.
Provision for Income Taxes. The provision for income taxes increased $20.7
million in 1997 to $25.8 million from $5.1 million for 1996. The tax provision
reflects a full year effective rate of 46% 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.
LIQUIDITY AND CAPITAL RESOURCES
Historically, our operations have been funded by cash provided from
operating activities and by financing provided by banks, automobile
manufacturers' captive finance companies, leasing companies and asset-backed
notes. Our primary use of cash is the acquisition of new vehicles for the rental
fleet. The indebtedness at December 31, 1998 has interest rates ranging from
4.05% to 11.20% and the material terms of the financing facilities are described
below. We intend to fund operations and debt maturities 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 equity and/or debt securities
which may include a substantial portion of unsecured indebtedness.
ANALYSIS OF CASH FLOWS
Net cash provided by operating activities increased 59.3% to $375.3 million
during 1998 from $235.6 million during 1997. Net cash provided by operating
activities during 1997 increased 205.3% from $77.2 million during 1996. In each
period, we 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 expense.
Net cash used in investing activities is primarily attributable 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 $2,456.9 million,
$1,747.3 million and $484.1 million during 1998, 1997 and 1996, respectively.
Cash paid to suppliers of revenue earning vehicles was $3,176.0 million,
$2,063.6 million and $569.1 million during 1998, 1997 and 1996, respectively.
The increase in cash paid to suppliers of revenue earning vehicles during 1998
was primarily the result of the increased number of vehicles in service during
1998 largely due to the acquisitions of BRACC and Ryder TRS. Payment for
acquisitions, net of assets acquired, amounted to $180.0 million, $143.2 million
and $5.1 million during 1998, 1997 and 1996,
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respectively. Capital expenditures, largely for new rental locations,
improvement in service levels and to upgrade computer hardware and software were
$88.4 million, $10.9 million and $3.4 million for 1998, 1997 and 1996,
respectively. We anticipate that capital expenditures for 1999 will be
approximately $85.0 million.
Net cash provided by financing activities for 1998 increased 31.4% to
$705.3 million during 1998 from $536.9 million during 1997, due primarily to the
proceeds received from the issuance of asset backed medium-term notes ("MTN's")
and the trust preferred securities, which was partially offset by the
utilization of these proceeds to repay existing vehicle and non-vehicle debt of
Budget Group and Ryder TRS, as described under "Recent Debt Placements and
Retirements" below. Net cash provided by financing activities during 1997
increased 711.5% to $536.9 million from $66.2 million in 1996, due primarily to
the proceeds received from the issuance of Class A common stock, unsecured notes
and MTN's in connection with the BRACC acquisition.
DEBT FACILITIES -- GENERAL
We borrow money directly and through our special purpose fleet financing
subsidiaries, Team Fleet Financing Corporation ("TFFC") and Budget Fleet
Financing Corporation ("BFFC"). Subsidiaries also have various working capital
facilities in place to finance operating activities. At December 31, 1998, we
had $3,635.1 million of indebtedness outstanding, $3,508.9 million of which
represented secured fleet financing and $126.2 million of which represented
non-vehicle indebtedness. At December 31, 1998, we had $454.9 million of
availability under various fleet financing facilities.
RECENT DEBT PLACEMENTS AND RETIREMENTS
Concurrent with the closing of the Ryder TRS acquisition, we implemented a
number of changes to our capital structure. These changes included (i) the
amendment and restatement of our existing $300.0 million secured revolving
credit facility to increase such facility to $550.0 million, (ii) the conversion
of $80.0 million of convertible subordinated notes to Class A common stock,
(iii) the redemption of $165.0 million of guaranteed senior notes, (iv) the
issuance, by a subsidiary, of 6,000,000 shares of trust preferred securities
which raised approximately $290.3 million, net of related fees, (v) the private
placement of $1.1 billion of TFFC-98 notes, (vi) the redemption of $175.0
million of Ryder TRS's outstanding 10% senior subordinated notes and (vii) the
repayment of approximately $340.0 million of Ryder TRS's outstanding commercial
paper. The redemptions (early extinguishments) resulted in charges totaling
$45.3 million, after income tax benefits, and the conversion of the convertible
subordinated notes resulted in charges of $9.5 million. See Notes 3 and 8 to the
Consolidated Financial Statements.
FLEET FINANCING FACILITIES
At December 31, 1998, we had borrowed $2.4 billion under asset-backed MTN's
and $840.5 million under a commercial paper ("CP") facility (collectively "Fleet
notes"). The MTN's are comprised of notes issued in August 1994 ("TFFC-94
notes"), notes issued in December 1996 ("TFFC-96 notes"), notes issued in April
1997 ("TFFC-97 notes"), notes assumed in the BRACC acquisition ("BFFC-94A
notes"), and notes issued in conjunction with the acquisition of Ryder TRS
("TFFC-98 notes"). The Fleet notes are utilized largely to finance vehicles
eligible for certain manufacturers' vehicle repurchase programs and other
allowable cars and trucks. Proceeds from the Fleet notes that are temporarily
unutilized for vehicle financing are maintained in restricted cash accounts with
the trustees. The Fleet notes are collateralized by the secured vehicles and the
restricted cash accounts. Interest rates on the Fleet notes at December 31,
1998, range from 5.45% to 7.80%.
Our other vehicle obligations consist of outstanding lines of credit to
purchase rental fleet and retail car sales inventory. Borrowings under
collateralized available lines of credit at December 31, 1998, consist of $227.9
million for rental vehicles and $58.9 million for retail car sales inventory
with maturity dates through May 2002. 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 that range from 4.05% to 11.20% at
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December 31, 1998. 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.
MEDIUM TERM NOTES
The $1.1 billion TFFC-98 notes were entered into concurrently with the
acquisition of Ryder TRS, require monthly interest payments and bear interest at
fixed rates ranging from 6.07% to 6.84%. The TFFC-98 notes mature in from three
to seven years. Proceeds from the notes were used to refinance Ryder TRS's
commercial paper and to finance certain BRACC vehicles.
The $500.0 million TFFC-97 notes and CP facility were entered into
concurrently with the BRACC acquisition. As of December 31, 1998, the CP has
various interest rates, which ranged between 5.45% and 5.75%. The TFFC-97 note
facility requires monthly interest payments at an annual rate ranging from 7.35%
to 7.80%.
The TFFC-94 notes and TFFC-96 notes totaled $281.7 million with interest
rates ranging from 6.38% to 7.10% at December 31, 1998. Monthly maturities on
the TFFC-94 notes of $16.7 million commence in June 1999, with the last payment
in November 1999, while subordinated TFFC-94 notes of $5.7 million are payable
in full in December 1999. We expect to fund these maturities through the
issuance of term notes, both secured and unsecured, beginning in early April
1999.
We have continued to utilize borrowings under the BFFC-94A notes to fund
our fleet. The BFFC-94A notes consist of $500.0 million of senior notes
requiring monthly interest payments at LIBOR plus 0.50% (6.15% at December 31,
1998). Monthly maturities of $83.3 million commence in April 1999, with the last
payment due in September 1999. We expect to fund these maturities through the
issuance of term notes, both secured and unsecured, beginning in early April
1999.
TRUST PREFERRED SECURITIES
In June 1998, Budget Group Capital Trust, one of our subsidiaries, issued
$300.0 million of trust preferred securities and received approximately $290.3
million in net proceeds. These funds were used to redeem the guaranteed senior
notes and to partially fund the redemption of Ryder TRS's 10% senior
subordinated notes which occurred in July 1998. The trust preferred securities
are subject to mandatory redemption upon the redemption of the underlying
debentures due on June 15, 2028. We have the right to defer interest payments
due on the subordinated debentures for up to 20 consecutive quarters which will
also cause a deferral of distributions under the trust preferred securities. See
Notes 8 and 9 to the Consolidated Financial Statements.
WORKING CAPITAL FACILITY
Concurrent with the acquisition of Ryder TRS, we entered into an amended
and restated secured credit facility to increase its size from $300.0 million to
$550.0 million. This facility requires monthly interest payments on the
outstanding balance at a rate based on LIBOR plus 1.75% or prime plus 0.75% (or
8.50% at December 31, 1998) and expires in 2003. The facility is secured
primarily by cash, accounts receivable and vehicles and is subject to certain
covenants, the most restrictive of which require us to maintain certain
financial ratios and minimum tangible net worth and restrict the payment of cash
dividends. At December 31, 1998, we had $378.9 million in letters of credit and
$50.0 million of debt outstanding under this facility.
The credit facility was amended in the first quarter of 1999 to, among
other things, modify certain financial covenants and permit the issuance of
additional unsecured term notes to fund the maturities of MTN's.
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CHANGE IN FINANCIAL CONDITION
Total assets increased $1,444.2 million to $5,134.1 million at December 31,
1998, from $3,689.9 million at December 31, 1997. This increase, largely revenue
earning vehicles of $745.9 million and intangibles of $290.3 million, resulted
primarily from the acquisition of Ryder TRS, which had $459.6 million in
vehicles and $288.9 million in intangibles at December 31, 1998, and increases
in revenue earning vehicles at BRACC reflecting new locations opened or acquired
as well as growth in truck rental volume. Restricted cash increased $138.8
million largely as a result of issuing the previously mentioned MTNs. Property
and equipment, net increased by $81.8 million due to investments in vehicle
rental and sales locations and the acquisition of Ryder TRS. This investment
activity is expected to slow in the first half of 1999.
Total liabilities increased by $961.4 million to $4,192.3 million at
December 31, 1998 from $3,231.0 million at December 31, 1997. This increase,
largely notes payable of $948.9 million, resulted primarily from the acquisition
of Ryder TRS and the issuance of the MTNs. Budget Group Capital Trust issued the
trust preferred securities, amounting to $291.2 million at December 31, 1998, in
June 1998 which partially funded the early redemptions of debt previously
mentioned.
INFLATION
The increased acquisition cost of vehicles is the primary inflationary
factor affecting our operations. Many of our 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 our
overall operating costs is not expected to be greater for us than for our
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. We increase the size of our fleet and workforce in the
spring and summer to accommodate increased rental activity during these periods
and decrease our fleet and workforce in the fall and winter. However, many of
our operating expenses (such as rent, insurance and administrative personnel)
are fixed and cannot be reduced during the fall and winter. As a result of these
patterns, for vehicle rental, the first quarter of each year is typically the
weakest and the third quarter is typically the strongest. The retail car sales
business is also subject to seasonal effects, with lower sales during the winter
months.
YEAR 2000 ISSUE
We have assessed and continue to assess the impact of the year 2000 ("Y2K")
on our 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 and 1998, we recognized approximately $2.2 million and $2.8
million, respectively, in expenses to modify existing computer systems and
applications and estimate that an aggregate of approximately $4.0 million will
be incurred in 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 our operating results and financial condition. We are using both internal
and external resources and expect to complete all major modification efforts by
mid-1999 with some projects extending into late 1999. These efforts have not
significantly hampered our ongoing system development or system upgrade
activities to date, however, all available resources will be diverted to Y2K
efforts in the event that modifications fall behind schedule.
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We are assessing the impact of the Y2K Issue on the ability of our
significant suppliers and vendors to maintain adequate service levels. Responses
have been received from approximately 50% of the significant vendors identified
by us with all respondents indicating expected readiness for Y2K. The most
critical suppliers and vendors are in the vehicle manufacturing,
telecommunications, fuel supply and banking/financing industries. A failure on
the part of these suppliers and vendors or their products could cause
significant disruption in operations and therefore materially impact our
operating results and financial condition. We believe that the computer
technology embedded in the vehicles we have in fleet, or expect to purchase, is
Y2K ready and expect to complete the entire assessment by mid-1999.
There can be no assurance that the critical third party suppliers upon
which we rely will be successful in taking corrective action in a timely manner.
We are developing contingency plans with respect to certain areas which are
intended to allow us to continue to operate in the event of a Y2K failure. The
contingency plans will include performing certain processes manually, repairing
affected systems and changing suppliers and vendors as necessary. These
contingency plans may not be successful in avoiding the disruption of service
particularly in the reservation and vehicle rental processes.
ENVIRONMENTAL MATTERS
We have assessed and continue to assess the impact of environmental
remediation efforts on our operations. Our exposure largely relates to the
clean-up and replacement of underground gasoline storage tanks.
During 1998, we recognized approximately $0.9 million in expenses related
to remediation efforts and estimate that an aggregate of approximately $3.2
million will be incurred in 1999 and 2000. 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.
RISK FACTORS
WE HAD A NET LOSS FOR 1998
We incurred a net loss of $48.9 million for 1998. This net loss included
(i) an extraordinary charge of $45.3 million (after tax) relating to retirements
of indebtedness and (ii) one-time restructuring and other non-recurring charges
of $20.2 million (after tax). We have experienced net losses in the first
quarters of the past two years, primarily as a result of seasonal factors, and
anticipate that we will have a net loss for the quarter ending March 31, 1999.
In 1998, we had a loss before income taxes of $23.2 million in our Car Sales
segment. We are evaluating various alternatives relating to Budget Car Sales to
restore its profitability, including franchising stores, closing stores, working
with a strategic partner to manage stores and other measures. We cannot assure
you that our losses will not continue in the future.
OUR BUSINESS IS HIGHLY SEASONAL
Our business is highly seasonal, particularly the leisure travel and
consumer truck rental segments, and our results of operations and cash flows
fluctuate significantly from quarter to quarter. Historically, revenues have
been stronger in the third quarter due to the overall increase in business and
leisure travel during the peak summer travel months and the increase in moving
activity during this period. The first quarter is generally weakest, when there
is limited leisure travel and a greater potential for adverse weather
conditions. The third quarter accounted for 37.2% of total revenue and 56.4% of
operating income for 1997 and 32.7% of total revenue and 76.1% of operating
income for 1998. Any occurrence that disrupts travel patterns during the summer,
or any adverse competitive conditions during this period, may materially
adversely impact our annual operating performance.
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Our business practice is to increase the size of our vehicle fleet and
workforce during the spring and summer months to accommodate increased activity
during these periods and to decrease our fleet and workforce in the fall and
winter months. However, many of our operating expenses (such as rent, insurance
and administrative personnel) are fixed and cannot be reduced during the fall
and winter months when there is decreased rental demand. If we are unable to
manage successfully the size of our vehicle fleet and workforce during periods
of decreased business activity, our annual operating performance may be
materially adversely affected.
OUR BUSINESS IS HIGHLY COMPETITIVE
There is intense competition in the vehicle rental industry particularly
with respect to price and service. We cannot assure you that we will be able to
compete successfully with either existing or new competitors. In any geographic
market, we may encounter competition from national, regional and local vehicle
rental companies. Our main competitors in the car rental market are Alamo, Avis,
Enterprise, Hertz and National. In our Truck Rental business, we face
competition primarily from Penske and U-Haul. Many of our competitors have
larger rental volumes, greater financial resources and a more stable customer
base than we have.
In the past, we have had to lower our rental prices in response to
industry-wide price cutting and have been unable to unilaterally raise our
prices. Moreover, when the car rental industry has experienced vehicle
oversupply competitive pressure has intensified.
The retail car sales industry is also characterized by intense competition,
consisting primarily of local new car dealerships selling new and late model
used cars. In addition to local dealerships, we may face competition from
retailers such as CarMax and AutoNation. These retailers compete on the basis of
large inventory size, no-haggle pricing and after-sale service. We cannot assure
you that we will be able to compete effectively in the retail care sales
industry.
WE HAVE NOT COMPLETED THE INTEGRATION OF OUR RECENT ACQUISITIONS
Our recent growth has been largely attributable to two major
acquisitions -- the BRACC acquisition in April 1997 and the Ryder TRS
acquisition in June 1998. We have devoted significant resources to the
combination and integration of our previously existing operations with BRACC and
our Budget Truck Rental business with Ryder TRS, and these efforts are ongoing.
Completing the integration of these acquisitions with our other businesses and
achieving the anticipated levels of cost savings involves a number of risks that
could affect our operating results. These risks include: (a) the difficulty of
managing a significantly larger organization; (b) the diversion of management's
attention from other business issues; (c) the difficulty of integrating
different distribution and marketing systems, which include independent dealers,
franchisees and corporate-owned operations; (d) the risk that the financial and
accounting systems utilized by the acquired businesses may not be efficiently
integrated into our own systems; (e) the difficulty of attracting and retaining
qualified personnel to manage the combined business; and (f) dealing with
potential liabilities associated with the acquired businesses, which liabilities
may not have been disclosed and may exceed the amount of indemnification
available from the sellers. Integration of these acquisitions has required
significant investments to build management and infrastructure to support our
combined business operations. We cannot assure you that we will be able to fully
realize the benefits that we anticipated from any acquired operations or to
manage effectively the combined business. An inability to do so could have a
significant negative effect on our financial condition and results of
operations.
WE MAY BE OBLIGATED TO DELIVER A MAKE-WHOLE PAYMENT
In connection with the Ryder TRS acquisition, we issued 3,455,206 shares of
Class A common stock, paid $125.0 million in cash, issued warrants to purchase
Class A common stock with a value of up to approximately $19 million and are
obligated to deliver a make-whole payment (with respect to the shares of Class A
common stock issued in the acquisition) to the extent, if any, that the Class A
common stock trades below approximately $33 per share over two 30-day
measurement periods ending, respectively, on June 19,
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1999 and February 19, 2000. This make-whole payment may be made in cash and/or
stock, at our option. This payment would, if made in cash, divert cash from
other business purposes.
WE ARE DEPENDENT ON THIRD PARTIES FOR FINANCING
We depend on third-party financing to fund our purchases of fleet vehicles.
Accordingly, the availability of financing on favorable terms is critical to our
business. We cannot assure you that we will be able to obtain financing on
favorable terms, if at all. A majority of our debt is incurred in connection
with manufacturers' vehicle repurchase programs. As a result, significant
changes in the credit programs of the vehicle manufacturers, particularly Ford
Motor Company, could significantly affect our ability to obtain this financing
on favorable terms. In addition, certain events, such as significant increases
in the damage to vehicles, could reduce the value of the collateral securing our
vehicle financing facilities and cause the acceleration of the repayment of such
debt. Our inability to obtain vehicle financing on favorable terms would have a
material adverse effect on our financial condition and operating results. We
cannot assure you that the sources of financing used in the past will remain or
that alternative financing will become available on terms acceptable to us.
WE ARE DEPENDENT ON A PRINCIPAL SUPPLIER
Ford Motor Company has been and continues to be our principal supplier of
vehicles. Under the terms of our supply agreement with Ford, we have agreed that
in the United States, Canada, and other countries outside the European Union our
leases and purchases of Ford vehicles will represent at least 70% of the total
new vehicle acquisitions by us, with a minimum purchase requirement of at least
80,000 vehicles in the United States in each model year. Shifting significant
portions of our fleet purchases to other manufacturers would require significant
advance notice and operational changes. Also, there can be no assurance that
vehicles would be available from other suppliers on competitive terms, if at
all. As a result, our financial condition and operating results could be
materially adversely affected if Ford is unable to supply our vehicles or if
there is any significant decline in the quality and customer satisfaction with
Ford vehicles.
CHANGES IN MANUFACTURERS' REPURCHASE PROGRAMS MAY AFFECT OUR BUSINESS
Our ability to resell our vehicles at a favorable price and fix our
depreciation expense in advance is dependent upon the terms of manufacturers'
repurchase programs. As of December 31, 1998, 73% of our vehicle fleet was
covered by these programs. Our ability to sell vehicles under manufacturers'
repurchase programs limits the risk of decline in residual value at the time of
disposition and enables us to fix a substantial portion of our depreciation
expense in advance. Vehicle depreciation is the largest expense in our vehicle
rental operations. In the past, automobile manufacturers have changed the terms
of these programs by, among other things, reducing the number of vehicles that
can be sold under their repurchase programs, reducing related incentives,
increasing guaranteed depreciation and reducing the mileage allowed on program
vehicles. We could be adversely affected if our vehicle suppliers make these or
other adverse changes in their repurchase programs.
WE MAY BE ADVERSELY IMPACTED BY LITIGATION WITH OUR FORMER GERMAN FRANCHISEE
In October 1998, we discontinued providing services to our German
franchisee (such as reservations and credit card processing services), after
having previously terminated the related franchise agreements for alleged
contract violations. This franchise termination is being contested by the
franchisee in the German courts and has not yet been resolved. As a result of
this development, we have experienced an adverse effect on our business in, and
originating from, Germany, and this adverse effect may continue. We intend to
replace the current franchisee with a new franchisee and/or corporate-owned
locations when these legal issues are resolved. However, there is no assurance
that the court's ruling will allow us to replace the current franchisee or that
such replacement will be commercially successful.
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OUR OPERATIONS AND FINANCIAL PERFORMANCE ARE AFFECTED BY VARIOUS TYPES OF
REGULATIONS
We are subject to various foreign, federal, state and local laws and
regulations that affect the conduct of our operations. These laws and
regulations cover matters such as 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 clean-up, particularly with regard to our
substantial on-site use and storage of petroleum products. We cannot assure you
that compliance with these laws and regulations or the adoption of modified or
additional laws and regulations will not require large expenditures by us or
otherwise have a significant effect on our financial condition or results of
operations.
OUR INTERNATIONAL OPERATIONS MAY BE SUBJECT TO ADDITIONAL RISKS
Our international operations are subject to 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. We cannot assure you
that these factors will not have a significant effect on our financial condition
or results of operations.
OUR RECENT INVESTMENTS AND COST-CUTTING INITIATIVES MAY NOT BE SUCCESSFUL
During 1998, we expended significant capital resources on several
initiatives designed to increase our revenue and reduce our costs, and these
initiatives will continue during 1999. We expect to realize certain cost savings
and other operating efficiencies during 1999 as a result of these and other
initiatives that will be implemented in 1999. Major areas in which we will seek
to reduce our operating expenses, as well as the major assumptions we have made
in estimating our cost savings include: (i) reductions in administrative,
personnel and overhead expenses; (ii) improvements in operations and
consolidations of our reservations centers; (iii) improvements in our Car Rental
field operations to increase vehicle utilization; (iv) improvements in vehicle
maintenance procedures; (v) increased efficiencies in non-vehicle purchasing;
and (vi) reduction of vehicle carrying costs through renegotiation of
manufacturers' vehicle repurchase agreements. Our ability to achieve the cost
savings mentioned above is inherently uncertain. We may not be able to
successfully implement these initiatives; cost increases in other areas may
offset the effect of these measures; implementation of these measures may
initially lead to additional costs; and events beyond our control may cause us
to otherwise fail to succeed in our cost cutting plans. In addition, it is
always possible that the implementation of our cost cutting initiatives could
adversely affect our ability to generate revenue. We cannot assure you that we
will be successful at growing our business or realizing the cost savings that
these initiatives were intended to achieve.
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY THE POTENTIAL FAILURE OF COMPUTER
SYSTEMS TO RECOGNIZE THE YEAR 2000
We are dependent on business systems that may be affected by Year 2000
problems. The Year 2000 issue exists because many computer systems and
applications and non-computer systems that utilize computer technology currently
use two-digit date fields to designate a year. As the Year 2000 approaches,
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 certain systems to process critical information
incorrectly, including our reservations and rental processing systems. A failure
in these systems could cause significant disruption in customer service levels
and therefore materially impact our financial condition and results of
operations. In addition, if we incur costs of upgrading these systems to be Year
2000 compliant that are significantly in excess of expectations, our operating
results will also be adversely affected. We are also assessing the impact of the
Year 2000 issue on the ability of our significant suppliers and vendors to also
maintain adequate service levels. We cannot assure you that we or the third
party suppliers on whom we rely will be successful in addressing Year 2000
problems in a timely manner, if at all, or that our contingency plan will be
successful in avoiding the disruption of service. For further discussion of the
Year 2000 issue, see the section above in this Item entitled "Year 2000 Issue."
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OUR FOUNDERS HAVE SUBSTANTIAL STOCKHOLDER VOTING POWER
A large portion of the voting power of our common stock is concentrated in
the hands of three individuals, Sanford Miller, John P. Kennedy and Jeffrey D.
Congdon. These individuals own all outstanding shares of Class B common stock.
Each share of Class B common stock entitles its holders to ten votes per share,
while our Class A common stock entitles holders to one vote per share. The Class
B common stock beneficially owned by Messrs. Miller, Kennedy and Congdon,
together with the Class A common stock owned by these individuals, represents
approximately 40% of the combined voting power of both classes of common stock.
As a result, these three individuals are able to exert substantial influence
over the election of our Board of Directors along with other matters put to a
stockholder vote. This increases the probability that members elected by them
will continue to direct our business, policies, and management.
WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS
We maintain a substantial amount of secured indebtedness to finance our
fleet purchases. At December 31, 1998, we had $3.64 billion of total outstanding
indebtedness, of which $3.59 billion was secured. We had $45.0 million of
unsecured indebtedness at December 31, 1998, and stockholders' equity of $650.6
million at that date. Notwithstanding our capacity to incur additional secured
and unsecured indebtedness, our substantial indebtedness could have negative
consequences for our business, including the following: (a) limiting our ability
to obtain additional financing in the future; (b) limiting our ability to use
operating cash flow in other areas of our business because we must dedicate a
substantial portion of these funds to debt service; (c) limiting our flexibility
in reacting to changes in our industry and changes in market conditions;
(d) increasing our vulnerability to a downturn in our business; and
(e) increasing our interest expense due to increases in prevailing interest
rates, because a substantial portion of our indebtedness bears interest at
floating rates. We cannot assure you that we will be able to generate sufficient
earnings or to borrow sufficient funds to cover our debt service obligations. If
for any reason we are in default under the terms of our indebtedness, the
holders of our indebtedness will be able to declare all this indebtedness
immediately due and payable and terminate their commitments, if any, with
respect to additional funding obligations. Such holders could also proceed
against their collateral, which, in the case of the vehicle financing
facilities, consists of substantially all our fleet vehicles.
35
<PAGE> 38
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN CURRENCY EXCHANGE RATE RISK
Our earnings are affected by fluctuations in the value of foreign currency
exchange rates. Approximately 7% of our revenue is generated outside the U.S.
The result of a uniform 10% change in the value of the U.S. dollar relative to
currencies of countries where we do business would not be material. We do not
typically hedge any foreign currency risk since the exposure is immaterial.
INTEREST RATE RISK
Our outstanding debt consists of vehicle debt, revolving credit facilities,
convertible subordinated debt and other debt which subjects us to the risk of
loss associated with movements in market interest rates.
At December 31, 1998, we had fixed-rate debt totalling $1,882 million or
51.8% of total outstanding debt. This debt is fixed-rate and, therefore, does
not expose us to the risk of earnings loss due to changes in market interest
rates.
Our floating-rate debt was $1,753 million or 48.2% of total outstanding
debt at December 31, 1998. The exposure of these obligations to increases in
short-term interest rates is partially limited by interest rate collar
agreements. The notional amount of these collar agreements is $125.0 million at
December 31, 1998. Under these agreements, we will receive payments in the event
that the LIBOR based interest rate exceeds 6.30% and will make payments in the
event that the LIBOR based interest rate falls below 5.45%. A fluctuation of the
interest rate by 100 basis points would change our interest expense by $17.5
million. For a discussion of the fair value of our indebtedness, see Note 15 to
the Consolidated Financial Statements.
RISK FROM CHANGES IN STOCK PRICES
We are subject to stock price risk arising from make-whole provisions in
connection with certain recent acquisitions. See Note 3 to the Consolidated
Financial Statements.
For a discussion of market risk involving our stock option plans, see Note
13 to the Consolidated Financial Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Budget Group'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.
36
<PAGE> 39
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 "Item 1 -- 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 28,
1999 and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information included under the heading "Executive Compensation" in the
subsections entitled "Executive Severance Agreements," "Executive Compensation
Summary Table," "Option Grants During 1998 and Year-End Option Values" and
"Aggregate Option Exercises During 1998 and Year-End Option Values" appearing
thereunder of the Proxy Statement for the Annual Meeting of Stockholders to be
held on April 28, 1999 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is included under the heading
"Security Ownership of Certain Beneficial Owners" of the Proxy Statement for the
Annual Meeting of Stockholders to be held on April 28, 1999 and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is included under the subheading
"Certain Relationships and Related Transactions" 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 28, 1999 and is incorporated herein
by reference.
37
<PAGE> 40
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.
Consolidated Balance Sheets at December 31, 1997 and 1998.
Consolidated Statements of Operations for Each of the Three Years
in the Period Ended December 31, 1998.
Consolidated Statements of Stockholders' Equity for Each of the
Three Years in the Period Ended December 31, 1998.
Consolidated Statements of Cash Flows for Each of the Three Years
in the Period Ended December 31, 1998.
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).
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).
2.6 -- Amendment No. 2 to Agreement and Plan of Merger dated as of
June 19, 1998, by and among Budget Group, Inc., BDG
Corporation, Ryder TRS, Inc., and certain other parties
(incorporated by reference to Exhibit 2.3 to the Company's
Current Report on Form 8-K filed on June 30, 1998).
2.7 -- Form of Warrant issued to former Ryder TRS shareholders and
optionholders (incorporated by reference to Exhibit 2.4 to
the Company's Current Report on Form 8-K filed on June 30,
1998).
</TABLE>
38
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
2.8 -- Preferred Stock Purchase Agreement, dated as of January 13,
1997, between Ford Motor Company and the Company
(incorporated by reference to Exhibit 2.9 to the Company's
Registration Statement on Form S-1, File No. 333-21691,
dated February 12, 1997).
2.9 -- Preferred Stockholders Agreement between Ford Motor Company
and the Company (incorporated by reference to Exhibit 2.10
to the Company's Registration Statement on Form S-1, File
No. 333-34799, dated September 26, 1997).
*3.1 -- Restated Certificate of Incorporation of the Registrant.
3.2 -- Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-3, as filed with the Commission on
August 13, 1998).
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).
4.7 -- 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).
4.8 -- 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. 333-41093, 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).
</TABLE>
39
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
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 -- 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).
4.14 -- 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).
4.15 -- 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).
4.16 -- 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).
4.17 -- 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).
4.18 -- Registrant's Series A Preferred Stock Certificate of
Designations (incorporated by reference to Exhibit 3.4 to
the Registrant's Registration Statement on Form S-1, File
No. 333-34799, dated September 26, 1997).
4.19 -- 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).
4.20 -- Amendment No. 1 to 1994 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).
4.21 -- 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).
4.22 -- Budget Rent a Car Corporation SavingsPlus Plan, as Amended
and Restated Effective January 1993 (incorporated by
reference to Exhibit 4.2 to Registrant's Registration
Statement on Form S-8, as filed with the Commission on July
14, 1998).
4.23 -- Amended and Restated Registration Rights Agreement, dated as
of April 29, 1997, between the Company and the holders of
the Convertible Subordinated Notes (incorporated by
reference to Exhibit 4.6 to the Registrant's Registration
Statement on Form S-3, as filed with the Commission on July
17, 1998).
</TABLE>
40
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.24 -- Certificate of Trust of Budget Group Capital Trust
(incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3, as filed
with the Commission on August 13, 1998).
4.25 -- Declaration of Trust of Budget Group Capital Trust dated as
of June 4, 1998, between Budget Group, Inc., The Bank of New
York and the Administrative Trustees named therein
(incorporated by reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form S-3, as filed
with the Commission on August 13, 1998).
4.26 -- Amended and Restated Declaration of Trust dated as of June
19, 1998, between Budget Group, Inc., The Bank of New York
(Delaware), The Bank of New York and the Administrative
Trustees named therein (incorporated by reference to Exhibit
4.3 to the Registrant's Registration Statement on Form S-3,
as filed with the Commission on August 13, 1998).
4.27 -- Indenture for HIGH TIDES Debentures Due 2028 dated as of
June 19, 1998 between Budget Group, Inc. and The Bank of New
York (incorporated by reference to Exhibit 4.4 to the
Registrant's Registration Statement on Form S-3, as filed
with the Commission on August 13, 1998).
4.28 -- Form of HIGH TIDES (incorporated by reference to Exhibit 4.6
to the Registrant's Registration Statement on Form S-3, as
filed with the Commission on August 13, 1998).
4.29 -- Form of HIGH TIDES Debentures Due 2028 (incorporated by
reference to Exhibit 4.7 to the Registrant's Registration
Statement on Form S-3, as filed with the Commission on
August 13, 1998).
4.30 -- Guarantee Agreement dated as of June 19, 1998 by Budget
Group, Inc. as Guarantor (incorporated by reference to
Exhibit 4.8 to the Registrant's Registration Statement on
Form S-3, as filed with the Commission on August 13, 1998).
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).
</TABLE>
41
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
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 -- 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).
10.9 -- 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).
10.10 -- 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).
10.11 -- 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).
10.12 -- 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).
10.13 -- 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).
10.14 -- 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).
10.15 -- 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).
10.16 -- 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).
10.17 -- 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).
10.18 -- 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).
10.19 -- Second Amendment 1994 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.24 to the
Registrant's Registration Statement on Form S-4, File No.
333-49679).
10.20 -- 1997 Amendment 1994 Directors' Stock Option Plan
(incorporated by reference to Exhibit 10.25 to the
Registrant's Registration Statement on Form S-4, File No.
333-49679).
10.21 -- Registration Rights Agreement dated as of June 19, 1998
between Budget Group Capital Trust, Budget Group, Inc. and
the several Purchasers named herein (incorporated by
reference to Exhibit 10.1 to the Registrant's Registration
Statement on Form S-3, as filed with the Commission on
August 13, 1998).
</TABLE>
42
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.22 -- Remarketing Agreement dated as of June 19, 1998 between
Budget Group, Inc., Budget Group Capital Trust, The Bank of
New York, the Administrative Trustees named therein and the
Remarketing Agent named therein (incorporated by reference
to Exhibit 10.2 to the Registrant's Registration Statement
on Form S-3, as filed with the Commission on August 13,
1998).
*10.23 -- Amended and Restated Credit Agreement dated as of June 19,
1998 among Budget Group, Inc., as the Borrower, Certain
Financial Institutions, as the Lenders, Credit Suisse First
Boston, as a Co-Syndication Agent and the Documentation
Agent.
*10.24 -- First Amendment to Amended and Restated Credit Agreement
dated September 11, 1998 among Budget Group, Inc., as
Borrower, the Lenders and Credit Suisse First Boston, as
Administrative Agent.
*10.25 -- Limited Waiver No. 1 to Amended and Restated Credit
Agreement dated as of December 31, 1998 among Budget Group,
Inc., as Borrower, the Lenders and Credit Suisse First
Boston.
*10.26 -- Assignment, Assumption and Amendment Agreement dated as of
June 19, 1998 among Budget Group, Inc., as New Borrower,
Budget Rent A Car Corporation, as Existing Borrower, the
Lenders, Credit Suisse First Boston, as Co-Syndication
Agent, Co-Arranger and Administrative Agent and Nationsbanc
Montgomery Securities LLC, as Co-Syndication Agent,
Co-Arranger and Documentation Agent.
*10.27 -- Form of Executive Severance Agreement dated October 1, 1998
between the Registrant and each of Messrs. Miller, Congdon,
Aprati and White.
*10.28 -- Form of Executive Severance Agreement between the Registrant
and each of Messrs. Clauer, Sotir and Zorn.
*10.29 -- Transaction Guaranty dated December 15, 1998 by Budget
Group, Inc. in favor of KeyBank National Association.
*10.30 -- Second Amendment to Amended and Restated Credit Agreement
dated March 18, 1999 among Budget Group, Inc., as Borrower,
the Lenders and Credit Suisse First Boston, as
Administrative Agent.
*21.1 -- Subsidiaries of the Registrant.
*23.1 -- Consent of Arthur Andersen LLP.
27.1 -- Financial Data Schedule (for SEC use only) (incorporated by
reference to Exhibit 27.1 to the Registrant's Current Report
on Form 8-K filed March 22, 1999).
</TABLE>
- ---------------
* Filed herewith.
43
<PAGE> 46
(b) Reports on Form 8-K
One report on Form 8-K/A was filed during the quarter ended December
31, 1998:
<TABLE>
<CAPTION>
FINANCIAL
STATEMENTS
ITEM REPORTED FILED DATE OF REPORT
------------- ---------- --------------
<S> <C> <C> <C>
(i) On November 23, 1998, Budget Group, Inc.
filed a Current Report on Form 8-K
reporting the issuance of a press release
announcing that its earnings for the fourth
quarter of fiscal year 1998 would fall
below expected levels and analysts'
consensus estimates. A copy of the press
release was filed as an exhibit to the
report on Form 8-K......................... No November 23, 1998
</TABLE>
(c) Exhibits
Exhibits are listed in Item 14(a).
(d) Financial Statement Schedules
Not applicable.
44
<PAGE> 47
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 31st day of
March, 1999.
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 31, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ SANFORD MILLER Chairman of the Board, Chief Executive
- -------------------------------------------- Officer and Director
Sanford Miller
/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/ F. PERKINS HIXON, JR. Director
- --------------------------------------------
F. Perkins Hixon, Jr.
/s/ MARTIN P. GREGOR Director
- --------------------------------------------
Martin P. Gregor
/s/ JOHN P. KENNEDY Director
- --------------------------------------------
John P. Kennedy
/s/ DR. STEPHEN L. WEBER Director
- --------------------------------------------
Dr. Stephen L. Weber
</TABLE>
45
<PAGE> 48
BUDGET GROUP, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets at December 31, 1997 and 1998... F-3
Consolidated Statements of Operations for Each of the Three
Years in the period ended December 31, 1998............... F-4
Consolidated Statements of Stockholders' Equity for each of
the Three Years in the period ended December 31, 1998..... F-5
Consolidated Statements of Cash Flows for each of the Three
Years in the period ended December 31, 1998............... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 49
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) and subsidiaries as of December 31, 1997
and 1998, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1998. 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.
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, 1997 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Orlando, Florida,
February 23, 1999
F-2
<PAGE> 50
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
1997 1998
-------------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 161,455 $ 136,184
Restricted cash............................................. 282,731 421,467
Trade and vehicle receivables, net.......................... 334,018 425,183
Vehicle inventory........................................... 46,944 81,028
Revenue earning vehicles, net............................... 2,093,304 2,839,183
Property and equipment, net................................. 147,547 229,318
Prepaid expenses and other assets........................... 91,681 179,218
Intangibles, including goodwill, less accumulated
amortization of $11,739 in 1997 and $35,054 in 1998....... 532,228 822,490
---------- ----------
$3,689,908 $5,134,071
========== ==========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES
Notes payable............................................... $2,686,199 $3,635,095
Accounts payable, accrued and other liabilities............. 434,291 517,107
Deferred income taxes....................................... 110,479 40,119
---------- ----------
Total liabilities................................. 3,230,969 4,192,321
---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTES 11, 13 AND 14).........
COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARY.................................. -- 291,160
---------- ----------
STOCKHOLDERS' EQUITY
Class A common stock, $0.01 par value, one vote per share,
70,000,000 shares authorized. Shares issued, 25,528,545 in
1997 and 34,064,812 in 1998............................... 255 341
Class B common stock, $0.01 par value, 10 votes per share,
2,500,000 shares authorized, 1,936,600 shares issued (in
1997 and 1998)............................................ 19 19
Additional paid-in capital.................................. 425,222 670,089
Foreign currency translation adjustment..................... (2,477) (5,169)
Retained earnings (deficit)................................. 36,250 (12,677)
Treasury stock, at cost (36,667 in 1997 and 176,867 in 1998
shares of Class A common stock)........................... (330) (2,013)
---------- ----------
Total stockholders' equity........................ 458,939 650,590
---------- ----------
Total liabilities and stockholders' equity........ $3,689,908 $5,134,071
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 51
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1997 1998
--------- ----------- -----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
OPERATING REVENUE:
Vehicle rental revenue.................................... $276,294 $1,070,436 $1,934,750
Retail vehicle sales revenue.............................. 169,336 289,111 583,252
Royalty fees and other.................................... 2,178 51,889 98,197
-------- ---------- ----------
Total operating revenue........................... 447,808 1,411,436 2,616,199
-------- ---------- ----------
OPERATING EXPENSES:
Direct vehicle and operating.............................. 130,259 464,756 815,748
Depreciation - vehicle.................................... 71,734 292,112 500,210
Cost of vehicle sales..................................... 146,513 251,068 524,907
Selling, general and administrative....................... 46,282 208,974 498,075
Amortization and non-vehicle depreciation................. 5,419 23,530 54,526
Restructuring and pooling expenses........................ -- -- 16,457
-------- ---------- ----------
Total operating expenses.......................... 400,207 1,240,440 2,409,923
-------- ---------- ----------
OPERATING INCOME............................................ 47,601 170,996 206,276
-------- ---------- ----------
OTHER (INCOME) EXPENSE:
Vehicle interest expense.................................. 32,405 101,066 188,165
Non-vehicle interest expense.............................. 3,125 20,075 13,422
Interest income........................................... (781) (5,744) (11,348)
Debt extinguishment costs................................. -- -- 9,454
-------- ---------- ----------
Total other expense, net.......................... 34,749 115,397 199,693
-------- ---------- ----------
INCOME BEFORE INCOME TAXES.................................. 12,852 55,599 6,583
Provision for income taxes................................ 5,101 25,825 257
Distributions on trust preferred securities............... -- -- 9,957
-------- ---------- ----------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM................. 7,751 29,774 (3,631)
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT
(Net of income taxes of $26,602).......................... -- -- (45,296)
-------- ---------- ----------
NET INCOME (LOSS)........................................... $ 7,751 $ 29,774 $ (48,927)
======== ========== ==========
Basic earnings per share:
Weighted average number of shares outstanding............... 10,836 20,112 32,067
Income (loss) before extraordinary item................... $ 0.72 $ 1.48 $ (0.12)
Extraordinary item........................................ 0.00 0.00 (1.41)
-------- ---------- ----------
Net income (loss)......................................... $ 0.72 $ 1.48 $ (1.53)
======== ========== ==========
Diluted earnings per share:
Weighted average number of shares outstanding............... 11,149 27,863 32,067
Income (loss) before extraordinary item................... $ 0.70 $ 1.25 $ (0.12)
Extraordinary item........................................ 0.00 0.00 (1.41)
-------- ---------- ----------
Net income (loss)......................................... $ 0.70 $ 1.25 $ (1.53)
======== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 52
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,
<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, December 31, 1995.......... $ -- $ 87 $ 66,931 $ (685) $ (1,275) $ (330) $ 64,728
Comprehensive income:
Net income........................ -- -- -- -- 7,751 --
Foreign currency translation...... -- -- -- (35) -- --
Total comprehensive income.......... 7,716
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......................... -- 1 147 -- -- -- 148
--------- ---- -------- ------- -------- -------- ------------
Balance, December 31, 1996.......... -- 128 114,891 (720) 6,476 (330) 120,445
Comprehensive income:
Net income........................ -- -- -- -- 29,774 --
Foreign currency translation...... -- -- -- (1,757) -- --
Total comprehensive income.......... 28,017
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 5,663 -- -- -- 5,669
Conversion of preferred stock..... (105,750) 45 105,705 -- -- -- --
Proceeds from exercise of
warrants........................ -- 2 2,036 -- -- -- 2,038
--------- ---- -------- ------- -------- -------- ------------
Balance, December 31, 1997.......... -- 274 425,222 (2,477) 36,250 (330) 458,939
Comprehensive income:
Net loss.......................... -- -- -- -- (48,927) --
Foreign currency translation...... -- -- -- (2,692) -- --
Total comprehensive income.......... (51,619)
Shares issued in business
combinations.................... -- 42 154,316 -- -- -- 154,358
Proceeds from exercise of stock
options......................... -- 1 1,740 -- -- -- 1,741
Conversion of debt................ -- 43 88,811 -- -- -- 88,854
Purchase of treasury shares....... -- -- -- -- -- (1,683) (1,683)
--------- ---- -------- ------- -------- -------- ------------
Balance, December 31, 1998.......... $ -- $360 $670,089 $(5,169) $(12,677) $ (2,013) $ 650,590
========= ==== ======== ======= ======== ======== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 53
BUDGET GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1997 1998
--------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................... $ 7,751 $ 29,774 $ (48,927)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary item, net................................ -- -- 45,296
Depreciation and amortization.......................... 76,491 312,087 554,736
Deferred income tax provision (benefit)................ 4,247 24,518 (4,502)
Warrants issued in connection with financing........... 686 -- --
Debt extinguishment cost............................... -- -- 9,454
Changes in operating assets and liabilities, net of
effects from acquisitions:
Trade and vehicle receivables, net.................. (2,988) (95,635) (60,326)
Vehicle inventory................................... (1,253) (3,284) (13,525)
Prepaid expenses and other assets................... (53) (7,359) (78,582)
Accounts payable, accrued and other liabilities..... (7,704) (24,456) (28,312)
--------- ----------- -----------
Net cash provided by operating activities...... 77,177 235,645 375,312
--------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in restricted cash balance...................... 1,395 (213,715) (130,086)
Proceeds from sale of revenue earning vehicles......... 484,084 1,747,286 2,456,931
Proceeds from sale of property and equipment........... 4 19,490 11,622
Purchases of revenue earning vehicles.................. (569,118) (2,063,627) (3,176,015)
Purchases of property and equipment.................... (3,362) (10,893) (88,358)
Payment for acquisitions, net of cash acquired......... (5,064) (143,164) (179,977)
--------- ----------- -----------
Net cash used in investing activities.......... (92,061) (664,623) (1,105,883)
--------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in commercial paper............ (4,900) 348,850 (30,955)
Proceeds from medium term notes........................ 176,000 500,000 1,100,000
Principal payments on medium term notes................ -- (9,624) (30,376)
Net increase (decrease) in other vehicle obligations... (208,920) (684,476) (269,270)
Net increase (decrease) in working capital
facilities.......................................... (9,500) -- 50,000
Proceeds from other notes payable...................... 80,000 210,000 24,379
Principal payments on other notes payable.............. (8,876) (24,099) (35,308)
Proceeds from trust preferred securities............... -- -- 291,000
Proceeds from equity transactions, net................. 44,588 196,204 1,741
Purchase of treasury stock............................. -- -- (1,683)
Early redemption of notes payable...................... -- -- (394,234)
Payment of financing fees.............................. (2,237) -- --
--------- ----------- -----------
Net cash provided by financing activities...... 66,155 536,855 705,294
Effect of exchange rate on cash.......................... (35) (431) 6
--------- ----------- -----------
Net increase (decrease) in cash and cash equivalents..... 51,236 107,446 (25,271)
Cash and cash equivalents, beginning of year............. 2,773 54,009 161,455
--------- ----------- -----------
Cash and cash equivalents, end of year................... $ 54,009 $ 161,455 $ 136,184
========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 54
BUDGET GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(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, passenger vans
and recreational vehicles (through both owned and franchised operations) and the
sale of late model used vehicles and new recreational 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. On January 28,
1998, the Company completed its acquisition of Cruise America, Inc. ("Cruise")
in a stock-for-stock merger accounted for as a pooling of interests. In
connection with the merger, the Company issued 1,623,478 shares of Class A
common stock in exchange for all the outstanding common stock of Cruise. In
addition, the Company issued 111,478 options to purchase Class A common stock in
exchange for all of the outstanding options to purchase stock of Cruise. On June
19, 1998, pursuant to an agreement and plan of merger, as amended, entered into
March 4, 1998, the Company completed its acquisition of Ryder TRS, Inc. ("Ryder
TRS").
The accompanying consolidated financial statements have been restated to
include the accounts of Cruise as if the companies had combined at the beginning
of the first period presented. Prior to the merger, Cruise's fiscal year ended
on April 30. In recording the business combination, Cruise's prior year
financial statements have been restated to conform with the Company's fiscal
year end.
There were no significant transactions between the Company and Cruise prior
to the combination and immaterial adjustments were recorded to conform Cruise's
accounting policies. The results of operations for the separate companies and
the combined amounts presented in the consolidated statements of operations are
as follows.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997
--------- -----------
<S> <C> <C>
Operating revenue
Budget Group, Inc......................................... $357,370 $1,303,762
Cruise America, Inc....................................... 90,438 107,674
-------- ----------
Combined............................................... $447,808 $1,411,436
======== ==========
Net Income (loss)
Budget Group, Inc......................................... $ 4,497 $ 36,926
Cruise America, Inc....................................... 3,254 (7,152)
-------- ----------
Combined............................................... $ 7,751 $ 29,774
======== ==========
</TABLE>
Company-owned vehicle rental operations are located primarily throughout
the United States and Western Europe. The largest concentration (approximately
13%) 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,
F-7
<PAGE> 55
under which the Company's share of operating results are 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.
Changes in Accounting Estimates
During 1998, the Company recorded adjustments related to actuarial
estimates of its self-insurance liability. The effect of these adjustments was
to increase income before extraordinary item and net income by $14,200 ($0.44
per diluted share).
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.
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 the years ended December 31,
<TABLE>
<CAPTION>
1996 1997 1998
------ ------- -------
<S> <C> <C> <C>
Balance at beginning of year................................ $2,451 $ 4,063 $49,072
Provision................................................... 453 8,415 26,529
Write-offs.................................................. (181) (9,035) (8,637)
Increase due to acquisitions................................ 1,340 45,629 3,737
------ ------- -------
Balance at end of year...................................... $4,063 $49,072 $70,701
====== ======= =======
</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
for adequacy 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.
F-8
<PAGE> 56
Property and Equipment
Property and equipment is recorded at cost or fair market value at the date
of acquisition, as appropriate. Depreciation is 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. In the fourth
quarter of 1998, assets of approximately $600 were written off by a charge to
direct vehicle expenses. Although no additional impairment is indicated at
December 31, 1998, 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.
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 in accordance with AICPA
Statement of Position 98-1 "Accounting for Costs of Computer Software Developed
or Obtained for Internal Use". 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>
1997 1998
-------- --------
<S> <C> <C>
Franchise agreements........................................ $118,000 $126,922
Trade name.................................................. 187,817 214,936
Goodwill.................................................... 226,411 480,632
-------- --------
$532,228 $822,490
======== ========
</TABLE>
Identifiable intangible assets primarily arose from the allocation of
purchase prices of businesses acquired. Franchise agreements and trade name
relate to the BRACC and Ryder Acquisitions. Goodwill represents the excess of
the purchase price over the estimated fair value of all identifiable assets
acquired. The intangible assets are amortized over the related estimated useful
lives, which range from 8 to 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. In the fourth quarter of
1998, intangible assets of approximately $3,170 were written off by a charge to
amortization and non-vehicle depreciation expense. Although no additional
impairment is indicated at December 31, 1998, 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 direct vehicle and operating 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
F-9
<PAGE> 57
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 $129,774 and $121,680 as of December 31, 1997 and 1998,
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 totaling $68,935 at
December 31, 1998, largely in support of its insurance liability in certain
states and supporting the reimbursement of claims paid by third-party claims
administrators.
Income Taxes
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. Deferred taxes are recognized to the extent
they are expected to be payable upon distribution of earnings of foreign and
unconsolidated subsidiaries.
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 resulting translation adjustments
reported as a separate component of stockholders' equity. Statement of
operations accounts are translated at average exchange rates for the period and
gains and losses from foreign currency transactions are included in net income
(loss).
Royalty Fees and Other Revenues
Royalty fees and other revenues largely consist of monthly royalty fees
from franchisees, fees generated from move management services, income before
interest and taxes for insurance products 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 $9,094, $36,636 and $66,118 in 1996, 1997 and 1998,
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, 1998.
F-10
<PAGE> 58
Interest rate collars are sometimes used to limit the exposure of the
Company to interest rate changes. The Company pays in the event interest rates
fall below the contractual floor level and receives payment in the event the
interest rate rises above the contractual ceiling level. Accounts payable and
accounts receivable under collar agreements are recorded with a corresponding
increase or decrease to interest expense, respectively. At December 31, 1998 the
Company has $250 related to interest rate collars included in accounts payable,
accrued and other liabilities.
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, 1998. The Company does not engage in
speculative derivatives.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", establishes accounting and reporting standards for derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities and is effective for the Company
beginning in July 1999. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The Company expects no material impact on its
financial condition or results of operations upon adoption of SFAS No. 133 in
the third quarter of 1999.
Stock Options
On April 25, 1994, the Company adopted the 1994 Incentive Stock Option Plan
and the 1994 Directors Stock Options Plan. The Company records compensation
expense for stock options under these plans in accordance with APB Opinion 25.
The Company has adopted the pro forma disclosure requirement provisions of SFAS
No. 123.
Earnings Per Share
Basic earnings per share was calculated by dividing net income (loss) by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share was calculated by dividing net income (loss)
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
income (loss) before extraordinary items and number of shares utilized in the
earnings per share calculations for each of the three years in the period ended
December 31, 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Income (loss) before extraordinary item..................... $ 7,751 $29,774 $(3,631)
Effect of interest, distributions, and loan fee amortization
on convertible securities -- net of income taxes.......... -- 4,983 --
------- ------- -------
Net income (loss) available to common stockholders after
assumed conversion of dilutive securities................. $ 7,751 $34,757 $(3,631)
======= ======= =======
(000's) (000's) (000's)
Weighted average number of common shares used in basic
EPS....................................................... 10,836 20,112 32,067
Effect of dilutive securities:
Stock options............................................. 313 704 --
Convertible debt.......................................... -- 7,047 --
------- ------- -------
Weighted average number of common shares and dilutive
potential common stock used in diluted EPS................ 11,149 27,863 32,067
======= ======= =======
</TABLE>
Options to purchase approximately 3,637,317 shares of Class A common stock
were outstanding at December 31, 1998, but were not included in the computation
of diluted EPS as any options included in the calculation would be antidilutive
due to the net loss.
F-11
<PAGE> 59
Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 established new standards for
reporting and presenting comprehensive income and its components in a full set
of general purpose financial statements. The Company's only adjustment to arrive
at comprehensive income is the foreign currency translation adjustment and is
presented in the accompanying Statement of Stockholders' Equity.
Reclassifications
Certain amounts in the 1996 and 1997 consolidated financial statements have
been reclassified to conform with the current year presentation.
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 acquisition of BRACC. The net proceeds of the
October offering were used for working capital purposes.
3. ACQUISITIONS
During 1996, 1997 and 1998, the Company acquired certain Budget franchise
operations, retail vehicle sales operations, a commuter van pooling operation,
BRACC, Ryder TRS, Cruise (a recreational vehicle rental and sales company), and
an insurance replacement car rental company. The acquisitions have been
accounted for under the purchase method of accounting, except for Cruise which
is accounted for as a pooling of interests, 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 operations and cash flow
reflect the operations of the acquired companies accounted for as purchases from
their respective acquisition dates.
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 provides 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.
Acquisition of ValCar Rental Car Sales, Inc. -- In August 1996, the Company
acquired all of the outstanding stock of ValCar Rental Car Sales, Inc., for $400
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
F-12
<PAGE> 60
(approximately $275,000) was partially funded through a stock offering. The
Company also issued to Ford Motor Company ("Ford"), 4,500 shares of Series A
convertible, non-voting preferred stock, each share of which was converted into
1,000 shares of Class A common stock in a public offering in October 1997. The
common shares underlying the preferred stock has a value of approximately
$105,800 for purposes of determining the purchase price (based on the three day
period beginning January 12) and $95,200 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 outstanding indebtedness.
Premier operates as its own brand and serves the insurance replacement market.
Acquisition of St. Louis Franchise -- In October 1997, the Company
purchased the St. Louis, Missouri Budget franchisee for approximately $9,000,
consisting of $1,000 in cash and 246,167 shares of Class A common stock.
1998 Acquisitions
Make Whole Provisions
The Company has entered into agreements in conjunction with the Ryder TRS
and other acquisitions to guarantee the market value of Class A common stock
issued in conjunction with the acquisitions. A make-whole payment will be
delivered if the price of the stock falls below a specified price during the
measurement periods. The make-whole payments may be made in cash or stock or a
combination of both at the Company's option.
Acquisitions
Acquisition of Ryder TRS -- On June 19, 1998, pursuant to the Agreement and
Plan of Merger, as amended, entered into on March 4, 1998, the Company acquired
all of the outstanding stock of Ryder TRS, based in Denver, Colorado. As
consideration for the Ryder TRS acquisition, the Company issued 3,455,206 shares
of Class A common stock, paid $125,000 in cash and issued warrants to purchase
Class A common stock, the value of which is capped at $19,000. In addition, the
Company agreed to pay Ryder TRS stockholders a make-whole payment, which
guarantees the market value of the Class A common stock at approximately $33.00
per share over two 30 day measurement periods in 1999 and 2000. The Company also
assumed approximately $522,000 of Ryder TRS's debt. The results of Ryder TRS are
included in the Company's results of operations from June 1, 1998, at which time
the Company effectively took control of Ryder TRS. Allocations of the purchase
price based on the fair value of Ryder TRS' tangible and intangible assets,
using various studies and valuations, have not been finalized. However, the
Company does not expect any material changes to the allocation of the purchase
price.
Acquisition of Car Dealerships -- Effective in June 1998, the Company
purchased three new car dealerships, two located in Florida and one in Indiana.
The dealerships were acquired for cash or a combination of cash and stock
aggregating $16,000 in cash and the issuance of 445,854 shares of Class A common
stock.
F-13
<PAGE> 61
If the acquisitions had occurred at the beginning of the periods presented,
the Company's results of operations would be as shown in the following table.
These 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 the respective periods.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1998
---------- ----------
(UNAUDITED)
<S> <C> <C>
Operating revenue........................................... $2,482,088 $2,883,023
Net income (loss) (before extraordinary item)............... (4,117) (15,445)
EPS -- basic................................................ (0.13) (0.47)
EPS -- diluted.............................................. (0.13) (0.47)
</TABLE>
Other 1998 Acquisitions
Other 1998 Acquisitions -- The Company completed several small acquisitions
of Budget franchises and other related businesses through December 31, 1998.
These acquisitions are not material either individually or in the aggregate and
the Company does not expect them to have a significant impact on its financial
position or full year results of operations. The franchises were primarily
located in Puerto Rico, Canada, Austria, Spain, New Zealand, Arkansas, Ohio, and
California.
4. RESTRUCTURING
The accompanying financial statements for 1998 include charges and accruals
of approximately $14,900 ($7,100 in personnel expense and $7,800 in general and
administrative expense) related to closings of vehicle rental and car sales
locations and the centralization of certain finance and administrative functions
of the Company (the "Restructuring"). In conjunction with the Restructuring,
approximately 375 employees were identified for termination, primarily in
operations, sales, and finance. As of December 31, 1998, approximately 60% of
the affected employees have been terminated.
At December 31, 1998, the remaining accruals relating to the Restructuring
totaled approximately $13,000. During 1998, amounts paid or utilized totaled
approximately $1,900.
5. REVENUE EARNING VEHICLES
Revenue earning vehicles consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Revenue earning vehicles.................................... $2,379,434 $3,212,289
Less-accumulated depreciation............................... (286,130) (373,106)
---------- ----------
$2,093,304 $2,839,183
========== ==========
</TABLE>
6. PROPERTY AND EQUIPMENT
Property and equipment, net, consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Land........................................................ $ 30,301 $ 50,069
Buildings and leasehold improvements........................ 101,427 133,332
Furniture, fixtures and office equipment.................... 54,225 108,468
-------- --------
185,953 291,869
Less -- accumulated depreciation and amortization........... (38,406) (62,551)
-------- --------
$147,547 $229,318
======== ========
</TABLE>
F-14
<PAGE> 62
7. 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 and $68,920 at December 31, 1997 and 1998,
respectively. In addition, prepaid expenses and other assets include the
Company's 20% investment in a foreign rental operation.
The revenue of the Company's investees amounts to less than 10% of
consolidated revenues and the amount of undistributed earnings included in
consolidated retained earnings is not significant.
8. NOTES PAYABLE
Notes payable consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Commercial paper............................................ $ 871,448 $ 840,493
Medium term notes:
Senior.................................................... 1,267,376 2,338,500
Subordinated.............................................. 44,682 43,182
Convertible subordinated notes.............................. 125,000 45,000
Vehicle obligations......................................... 86,400 185,296
Guaranteed senior notes..................................... 165,000 --
Senior term notes........................................... 14,171 --
Foreign notes............................................... 66,781 102,759
Working capital note........................................ -- 50,000
Note payable to vendor...................................... 15,677 --
Other....................................................... 29,664 29,865
---------- ----------
$2,686,199 $3,635,095
========== ==========
</TABLE>
Debt Covenants
Many of the Company's debt obligations contain restrictive covenants, the
most restrictive of which are contained in the working capital facility. The
Company was in compliance with all covenants as of December 31, 1998.
Recent Debt and Security Placements and Retirements
Concurrent with the closing of the Ryder TRS acquisition, the Company
implemented a number of changes to its capital structure. These changes included
(i) the amendment and restatement of its existing $300,000 secured revolving
credit facility to increase such facility to $550,000, (ii) the conversion of
$80,000 of convertible subordinated notes to Class A common stock, (iii) the
redemption of $165,000 of guaranteed senior notes, (iv) the issuance, by a
subsidiary of the Company, of 6,000,000 shares of remarketable term income
deferrable equity securities ("trust preferred securities" -- see note 9 to
consolidated financial statements) which raised approximately $290,300, net of
related fees, (v) the private placement of $1,100,000 of TFFC-98 notes, (vi)
tendered for the redemption of $175,000 of Ryder TRS's outstanding 10% senior
subordinated notes and (vii) repaid approximately $340,000 of Ryder TRS's
outstanding commercial paper. The early extinguishment of the guaranteed senior
notes and the Ryder TRS 10% senior subordinated notes resulted in $54,634
($33,790 net of tax) of prepayment premiums and the write-off of deferred
financing fees of $18,264 ($11,506 net of tax). This has been reflected as an
extraordinary item, net of tax benefits, in the accompanying statements of
operations. The 319,768 shares issued to induce conversion of the convertible
subordinated notes were recorded at their fair value of $8,854 and reflected in
debt extinguishment costs in the accompanying statements of operations.
F-15
<PAGE> 63
Commercial Paper
The $900,000 commercial paper facility (the "Paper") was established in
April 1997, has an outstanding principal balance of $840,493 and bears interest
at rates ranging from 5.45% to 5.75% at December 31, 1998, 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 ($90,000). 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 October 2002. No
amounts were drawn under the bank provided liquidity facility or related letter
of credit at December 31, 1998.
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") , notes issued in June 1998 ("TFFC-98") and notes
assumed in the BRACC Acquisition ("BFFC -- 94A notes") (collectively "MTN
notes"). MTN notes are secured by the underlying vehicles, manufacturer
receivables and restricted cash of $282,731 and $421,467 at December 31, 1997
and 1998, respectively. Under limited circumstances the MTN notes may be repaid
by draws under related letters of credit amounting to $220,000 at December 31,
1998. No amounts were drawn under the related letter of credit at December 31,
1998.
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,
1997 and 1998, bear interest at an average LIBOR rate, as defined, plus 0.75%
(6.38% per annum at December 31, 1998). 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, 1997 and 1998, bear interest at an average LIBOR rate, as defined, plus
1.30% (6.93% per annum at December 31, 1998) 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, 1998 and bear interest at an average LIBOR rate, as defined, plus
0.50% (6.15% per annum at December 31, 1998). 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 were repaid in full in 1998. These notes consisted of senior
notes and subordinated notes. The senior notes had an aggregate principal
balance of $28,876 and $0 in December 31, 1997 and 1998, respectively. The
subordinated notes had an aggregate principal balance of $1,500 and $0 at
December 31, 1997 and 1998, respectively.
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,
1997 and 1998, 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, 1997 and 1998, 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 and 1998, bear interest at 7.35% per annum. Monthly principal payments of
$39,375 commence in October 2001, with the last payment due in September 2002.
The subordinated notes, with an aggregate principal balance of $27,500 at
December 31, 1997 and 1998, bear interest at 7.80% per annum and are payable in
full in 2002. Interest on the TFFC-97 notes is payable monthly.
The TFFC-98 notes consist of an aggregate principal balance of $1,100,000
at December 31, 1998. The TFFC-98 notes were entered into concurrently with the
acquisition of Ryder TRS and bear interest at fixed
F-16
<PAGE> 64
rates ranging from 6.07% and 6.84% and mature within three to seven years.
Interest on the TFFC-98 notes is payable monthly.
Convertible Subordinated Notes
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 1,609,436 shares of Class A common stock.
Concurrent with the closing of Ryder TRS in June 1998, $80,000 of 7.00%
convertible subordinated notes was exchanged for 4,305,814 shares of Class A
common stock, including 319,768 shares issued in lieu of interest payments which
the holders of the convertible subordinated notes forfeited as a result of the
early conversion.
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, 1998, consist of $126,416 for rental vehicles and approximately
$58,880 for retail car sales inventory with maturity dates through May 2002.
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 6.9% to 8.0% at December 31, 1998.
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.
Foreign Notes
The foreign notes primarily provide financing for vehicle purchases and the
funding of working capital. At December 31, 1997 and 1998, approximately $64,885
and $101,471 respectively, relates to vehicle debt, while $1,896 and $1,288
respectively, 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 4.05% to 11.20% per annum and mature from 1999 through 2003.
Working Capital Facility
Concurrent with the acquisition of Ryder TRS, the Company entered into an
amended and restated secured credit facility to increase its size from $300,000
to $550,000. This facility requires monthly interest payments on the outstanding
balance at a rate based on either LIBOR plus 1.75% or prime plus 0.75% (8.50% at
December 31, 1998) and expires in 2003. The facility is secured primarily by
cash, accounts receivable and vehicles and is subject to certain covenants, 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, 1998, the Company had $378,935 in letters of credit
and $50,000 in working capital borrowings outstanding under this facility.
Note Payable to Vendor
The note payable to vendor related to the Company's license agreement for
the reservation system and associated applications and databases and was paid in
full in November 1998.
Other Notes
The Company and its subsidiaries have $29,865 of debt outstanding under
various other credit facilities which are used primarily to provide working
capital and finance operating activities.
F-17
<PAGE> 65
Schedule of aggregate maturities of notes payable at December 31, are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- ------------------------ ----------
<S> <C>
1999..................................................... $1,777,036
2000..................................................... 7,112
2001..................................................... 698,656
2002..................................................... 559,098
2003..................................................... 393,757
Thereafter............................................... 199,436
----------
$3,635,095
==========
</TABLE>
9. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY
Proceeds from the Company obligated mandatorily redeemable preferred
securities of subsidiary ("trust preferred securities"), which are convertible
preferred stock, were used by the Company's subsidiary to invest in subordinated
debentures of the Company, which represents substantially all of the
subsidiary's assets. The Company ultimately used the proceeds to fund the
redemption of certain of the Company's outstanding indebtedness. The Company has
issued a subordinated guarantee of the subsidiary's obligations under the trust
preferred securities. The 6,000,000 shares of trust preferred securities issued
and outstanding are reflected in the balance sheet as "Company Obligated
Mandatorily Redeemable Securities of Subsidiary", while dividends are reflected
in the statements of operations as a minority interest captioned as
"Distributions on trust preferred securities".
The trust preferred securities accrue distributions at a rate of 6.25% per
annum, have a liquidation value of $50 per share, are convertible into the
Company's Class A common stock at the rate of 1.5179 shares of Class A common
stock for each share of trust preferred securities and are subject to mandatory
redemption at 101% of the principal amount plus accrued interest upon the
redemption of the underlying debentures due on June 15, 2028. The Company has
the right to defer interest payments due on the subordinated debentures for up
to twenty consecutive quarters, which will also cause a deferral of
distributions under the trust preferred securities. During a deferral period,
the distributions will accumulate and the Company has agreed, among other
things, not to declare any dividends on its capital stock (subject to certain
exemptions).
10. RELATED PARTY TRANSACTIONS
The Company leases facilities from an entity owned by certain stockholders.
Operating lease payments for the years ended December 31, 1996, 1997, and 1998,
were $227, $1,414 and $1,766 respectively. The entity assigned lease payments
from the Company to a bank.
At December 31, 1997, the Company had a payable to a stockholder and
director in the amount of $1,500 which was included in notes payable in the
accompanying consolidated balance sheet. The outstanding balance was paid in
full in 1998.
Approximately $19,811 and $554 of cash and cash equivalents are on deposit
with or being held as agent for the Company by a bank at December 31, 1997 and
1998, respectively. A stockholder and director of the Company served on the
bank's board of directors.
A director of the Company is a managing director of Credit Suisse First
Boston Corporation ("CSFBC"), an investment banking firm which periodically
performs services for the Company for which it receives compensation. CSFBC and
its affiliates have provided extensive services to the Company in connection
with certain of the Company's debt facilities, acquisitions and public offerings
of securities. Most recently, during 1998 CSFBC acted as lead underwriter in
connection with the offering of 6.25% trust preferred securities of Budget Group
Capital Trust in June 1998 and served as the Company's financial advisor in
connection with the Company's acquisition of Ryder TRS in June 1998. Fees paid
to CSFBC in 1998 were approximately $25,000.
F-18
<PAGE> 66
In connection with BRAC-OPCO franchise acquisition, the Company entered
into a franchise agreement with the seller to pay a royalty of 5.00% 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 1997 and 1998, the Company paid the seller
approximately $6,213 and $7,437, respectively, in royalty fees in accordance
with these agreements.
In December 1998, the Company's executive officers participated in the
Company's Executive Share Purchase Program ("the Program"). Under the Program,
executive officers purchased Class A common stock with funds provided by Key
Bank N.A. ("Key Bank"). The Company purchased the Class A common stock on behalf
of the officers in December 1998, amounting to $3,525, prior to the finalization
of the loans and was repaid with the funding of the Key Bank loans in January
1999. Interest on the loans is due quarterly and paid by the Company to Key Bank
and is to be reimbursed by the officer to the Company from the officer's annual
incentive award. Reimbursement of interest by the officer to the Company will be
forgiven if the price of the Class A common stock or financial results reach
certain performance targets or under other specified circumstances. The Company
has guaranteed the repayment of principal and interest on the loans.
11. 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 consist of the
following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Revenue earning vehicles................................ $ 1,555 $ 15,914 $ 36,585
Facilities:
Minimum rentals....................................... 15,403 66,566 80,009
Contingent rentals.................................... 3,353 17,615 38,157
------- -------- --------
Total......................................... $20,311 $100,095 $154,751
======= ======== ========
</TABLE>
Future minimum payments under noncancellable leases and concession
agreements at December 31, 1998, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1999........................................................ $ 80,434
2000........................................................ 60,529
2001........................................................ 46,999
2002........................................................ 40,882
2003........................................................ 29,746
Thereafter.................................................. 132,765
--------
$391,355
========
</TABLE>
F-19
<PAGE> 67
12. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1997 1998
------ ------- -------
<S> <C> <C> <C>
Current:
Federal.................................................. $ 104 $ (11) $ --
State.................................................... 750 502 3,135
Foreign.................................................. -- 816 1,624
Deferred................................................... 4,247 24,518 (4,502)
------ ------- -------
$5,101 $25,825 $ 257
====== ======= =======
</TABLE>
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,
-------------------------
1996 1997 1998
------ ------- ------
<S> <C> <C> <C>
Income tax provision at federal statutory rate.............. $4,356 $19,536 $2,304
Effect of earnings of nontaxable (subchapter S) companies... (87) -- --
Distribution on trust preferred securities.................. -- -- (3,485)
Nondeductible portion of amortization of intangibles........ 306 2,116 2,931
Merger and acquisition costs................................ -- -- 558
State tax provision, net of federal benefit................. 624 876 179
Change in valuation allowance............................... -- 2,361 (2,375)
Other....................................................... (98) 936 145
------ ------- ------
$5,101 $25,825 $ 257
====== ======= ======
</TABLE>
F-20
<PAGE> 68
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>
1997 1998
-------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 60,778 $122,624
Estimated self insurance liability........................ 55,358 64,991
Accrued expenses-pension.................................. 8,549 8,953
Accounts receivable, principally due to allowance for
doubtful accounts...................................... 8,570 9,177
Business tax credit carryforwards......................... 7,654 7,654
Foreign tax credit carryforwards.......................... 1,930 3,306
Alternative minimum tax carryforwards..................... 3,907 3,907
Foreign tax assets and net operating loss carryforwards... 2,319 3,799
Non-deductible reserves, accrued expenses and other....... 15,683 5,993
-------- --------
Total gross deferred tax assets................... 164,748 230,404
Less-valuation allowance.......................... (57,186) (56,116)
-------- --------
107,562 174,288
Deferred tax liabilities:
Difference between book and tax bases of revenue earning
vehicles and property and equipment.................... 86,654 86,995
Intangibles............................................... 127,878 123,943
Other..................................................... 3,509 3,469
-------- --------
Total gross deferred tax liabilities.............. 218,041 214,407
-------- --------
Net deferred tax liability........................ $110,479 $ 40,119
======== ========
</TABLE>
The Company has federal and state net operating loss carryforwards
available to offset future taxable income. At December 31, 1998, the Company and
its subsidiaries have federal tax loss carryforwards of approximately $319,425
expiring through December 2013. 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.
13. PENSION AND OTHER BENEFIT PLANS
Substantially all employees of 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 and $604 in 1998.
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 and $262 in 1998.
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
F-21
<PAGE> 69
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 $4,025 and
$2,049 in 1997 and 1998, respectively.
Each of the Company's domestic defined benefit plan's accumulated benefits
exceed the plan's assets at December 31, 1998. 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 and 1998:
<TABLE>
<CAPTION>
1997 1998
------------------ ------------------
DOMESTIC FOREIGN DOMESTIC FOREIGN
PLANS PLAN PLANS PLAN
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year........ $ -- $ -- $ 30,389 $ 6,684
Acquisitions................................... 28,896 5,768 -- --
Service cost................................... 48 537 75 1,465
Interest cost.................................. 1,383 394 2,192 678
Benefits paid.................................. (1,274) (164) (1,477) (133)
Actuarial (gain)/loss.......................... 1,336 149 6,174 5,341
-------- ------ -------- -------
Benefit obligation at end of year................ 30,389 6,684 37,353 14,035
-------- ------ -------- -------
Change in plan assets:
Fair value of plan assets at beginning of
year........................................ -- -- 17,220 9,056
Acquisitions................................... 16,183 7,936 -- --
Actual return on plan assets................... 1,600 823 1,180 1,298
Employer contributions......................... 711 461 1,062 481
Benefits paid.................................. (1,274) (164) (1,477) (133)
-------- ------ -------- -------
Fair value of plan assets at end of year....... 17,220 9,056 17,985 10,702
-------- ------ -------- -------
Funded Status.................................... (13,168) 2,372 (19,368) (3,329)
Unrecognized prior service cost.................. 1,080 (3) 1,012 (3)
Unrecognized net (gain)/loss..................... (6,994) 423 (906) 4,983
-------- ------ -------- -------
Prepaid (accrued) pension cost................... $(19,082) $2,792 $(19,262) $ 1,651
======== ====== ======== =======
Components of net periodic pension cost:
Service cost................................... $ 48 $ 537 $ 75 $ 1,465
Interest cost.................................. 1,383 394 2,192 678
Expected return on assets...................... (1,020) (754) (1,442) (795)
Amortization of prior service cost............. 46 -- 68 306
Actuarial (gain)/loss.......................... 491 -- (30) --
-------- ------ -------- -------
Total expense.......................... $ 948 $ 177 $ 863 $ 1,654
======== ====== ======== =======
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation for 1997 and 1998 was 7.00%
and 5.75%, respectively. 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 for 1997 and 1998 was
5.00% and 6.00% respectively and 4.00% and 6.00% under the foreign plan. The
expected long-term rate of return on plan assets for 1997 and 1998 was 9.50% and
8.50% respectively.
F-22
<PAGE> 70
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 (loss) and EPS
would have been changed to the following pro forma amounts:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1996 1997 1998
------ ------- --------
<S> <C> <C> <C> <C>
Net income (loss) before extraordinary item... As Reported $7,751 $29,774 $ (3,631)
Pro Forma 6,596 25,189 (17,108)
EPS - Basic................................... As Reported 0.72 1.48 (0.12)
Pro Forma 0.61 1.25 (0.53)
EPS - Diluted................................. As Reported 0.70 1.25 (0.12)
Pro Forma 0.60 1.10 (0.53)
</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 4,500,000 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, vest between 12 and 48
months and expire ten years 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, vest six months following the
date of grant and expire ten years 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.
A summary of the status of the Company's two stock option plans at December
31, 1996, 1997 and 1998 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, 1995............................ 319,214 $ 9.88
Granted................................................... 572,916 12.05
Exercised................................................. (16,026) 10.23
Forfeited................................................. (8,600) 11.13
---------
Outstanding -- December 31, 1996............................ 867,504 11.29
Granted................................................... 1,674,480 22.87
Exercised................................................. (547,632) 10.66
Forfeited................................................. (86,290) 19.25
---------
Outstanding -- December 31, 1997............................ 1,908,062 21.27
Granted................................................... 2,090,700 25.99
Exercised................................................. (136,995) 12.68
Forfeited................................................. (224,450) 20.02
---------
Outstanding -- December 31, 1998............................ 3,637,317 24.38
=========
</TABLE>
F-23
<PAGE> 71
As of December 31, 1998, options for 3,092,317 shares and 545,000 shares of
Class A and Class B common stock, respectively, remained outstanding under the
Company's stock option plans.
<TABLE>
<CAPTION>
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Exercisable at end of year --
Shares............................................... 352,721 326,178 616,350
Weighted average exercise price...................... $ 10.36 $ 13.85 $ 22.51
Weighted average fair value of options granted during
the year............................................. $ 4.89 $ 10.07 $ 15.31
</TABLE>
At December 31, 1998, 644,800, 1,278,260 and 1,203,800 of the options
outstanding have an exercise price of $17.88, $22.38 and $30.88 respectively.
These options have remaining contractual lives of 9.7, 8.3 and 9.2 years,
respectively. Of these options, 0, 340,000 and 90,000 are exercisable,
respectively. The remaining 510,457 options have exercise prices between $9.50
and $36.44, with a weighted average exercise price of $22.30 and a weighted
average remaining contractual life of 8.8 years. Of these options, 186,350 are
exercisable with a weighted average exercise price of $18.71.
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 5.42% and an expected life of
three years were assumed for 1996 and 1997 and a life of five years was assumed
for 1998. For options granted under the Directors' Plan, a risk-free rate of
return of 5.50% and an expected life of five years were assumed for 1996 and
1997 and a life of seven years was assumed for 1998. Additionally, for each
option plan there was no expected dividend yield and an expected volatility of
62.9%.
14. COMMITMENTS AND CONTINGENCIES
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 1998, approximately 70% 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 a 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 represent 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 by 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 effect on the Company's financial condition and results of operations.
The Company agreed to pay Ford, on September 1, 1998, and on each
anniversary through September 1, 2004, an annual royalty equal to the greater of
(i) one percent of net vehicle revenue of BRACC locations prior to the Budget
Acquisition for the prior model year, or (ii) a specified minimum amount (equal
to $9,900 for the September 1, 1998, annual royalty payment and subject to
adjustment for each annual period thereafter, based upon changes in the consumer
price index). The minimum royalty payable with respect to each model year will
be reduced by a stated amount for each Ford vehicle purchased by the Company and
its affiliates and franchisees in excess of 123,000 Ford vehicles. The aggregate
of all royalties paid to Ford over the term of the agreement is subject to a
limit of $100,000. For the year ended September 1, 1998, no amounts were due to
Ford under this royalty agreement.
Litigation
The Company, through Cruise, was a party to litigation that arose out of a
claim for an alleged wrongful termination of a sublease agreement with one of
its former concession operators. During the fourth quarter of 1997, the Company
took a one-time charge of $10,000, which is included in selling, general and
administrative
F-24
<PAGE> 72
expenses in the accompanying consolidated statements of operations, to establish
an accrual for damages. During 1998, this litigation was settled for $7,800. No
further action is expected on this matter.
The Company terminated the franchise agreement of its franchisee for
Germany based on alleged violations of provisions in the underlying franchise
agreement and ceased to provide services, such as reservations and credit card
processing, effective as of October 23, 1998. Reservations that would have been
transmitted to and serviced by the Company's franchisee in Germany are now being
handled, on an interim basis, by National Car Rental locations in Germany,
pursuant to an agreement between the Company and National Car Rental. The
termination is being contested by the franchisee in the German courts, and a
hearing was held in January 1999. The results of the hearing are expected early
in the second quarter of 1999. The Company intends to replace the current German
franchisee with a new franchisee and/or company owned locations when the pending
legal issues are resolved. Until such time, the Company may experience an
adverse effect on business in, and originating from Germany.
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 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, 1998, the Company has accrued $3,232 for estimated environmental
remediation costs and expects to expend approximately $2,000 during 1999.
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.
15. 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 judgment 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.
The Company acquired existing interest rate collars in conjunction with the
Ryder TRS acquisition. Under these agreements, the Company will receive payments
in the event that the LIBOR based interest rate exceeds 6.30% and will make
payments in the event the LIBOR based interest rate falls below 5.45%. At
December 31, 1998, the Company had two interest rate collar agreements
outstanding in the notional amount of $125,000. The carrying value of these
agreements at December 31, 1998, approximated fair market value as the terms are
representative of those currently available to the Company.
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, 1997 and 1998, approximate fair value because of the short maturity of these
instruments.
F-25
<PAGE> 73
Notes Payable
The carrying amount of a portion of the Company's notes payable
approximates fair market value at December 31, 1997 and 1998, 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, 1997 and 1998, 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.
16. SUPPLEMENTAL CASH FLOW DISCLOSURES
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 preferred stock
into 4,500,000 shares of Class A common stock which were sold by the selling
stockholder in October 1997.
In 1998, the Company issued 5,716,800 shares of Class A common stock with a
value of $179,497 for the 1998 acquisitions.
The Company paid interest of $34,333, $109,476 and $199,349 in 1996, 1997
and 1998, respectively.
Income taxes of $1,017, $1,796 and $4,014 were paid in 1996, 1997 and 1998,
respectively.
On occasion, the Company acquires goods and services in exchange for
revenue earning vehicles. During 1997 and 1998, revenue earning vehicles in the
amount of $2,100 and $5,587, respectively, were exchanged for goods and
services.
The early extinguishment of the guaranteed senior notes and the Ryder TRS
10% senior subordinated notes resulted in the pretax write-off of deferred
financing fees of $18,264. This has been included in the extraordinary item, net
of tax benefits, in the accompanying statements of operations.
Concurrent with the closing of Ryder TRS, $80,000 of 7.00% convertible
subordinated notes were exchanged for 4,305,814 shares of Class A common stock,
including 319,768 shares issued in lieu of future interest payments which the
holders of the notes forfeited as a result of the early conversion. The 319,768
shares issued to induce conversion of the notes were recorded at their fair
value of $8,854 and reflected in debt extinguishment costs in the accompanying
statements of operations.
17. 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. Segments are determined by product line and business activity.
The Car Rental segment includes BRACC, Budget Rent a Car International Inc.
(BRACII), Premier and VPSI.
The Truck Rental and Sales segment includes BRACC, Ryder TRS and Cruise.
Retail Car Sales is comprised of Budget Car Sales and car sales locations
in Hawaii.
Segment information for the year ended December 31, 1996, is as follows:
<TABLE>
<CAPTION>
VEHICLE CORPORATE AND
RENTAL RETAIL CAR SALES ELIMINATIONS CONSOLIDATED
-------- ---------------- ------------- ------------
<S> <C> <C> <C> <C>
Operating revenue..................... $313,688 $134,120 $ -- $447,808
Depreciation and amortization......... 75,496 1,482 175 77,153
Operating income (loss)............... 47,877 1,857 (2,133) 47,601
Income (loss) before income taxes..... 15,452 409 (3,009) 12,852
</TABLE>
F-26
<PAGE> 74
<TABLE>
<CAPTION>
DOMESTIC FOREIGN CONSOLIDATED
-------- -------- ------------
<S> <C> <C> <C>
Operating revenue..................................... $447,808 $ -- $447,808
Long-lived assets..................................... 109,750 -- 109,750
</TABLE>
Segment information for the year ended December 31, 1997 is as follows:
<TABLE>
<CAPTION>
TRUCK CORPORATE
CAR RENTAL AND RETAIL CAR AND
RENTAL SALES SALES ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating revenue............... $1,014,797 $215,943 $239,355 $(58,659) $1,411,436
Depreciation and amortization... 263,747 43,986 283 7,626 315,642
Operating income (loss)......... 147,521 29,543 (2,405) (3,663) 170,996
Income (loss) before income
taxes......................... 54,812 11,555 (1,925) (8,843) 55,599
</TABLE>
<TABLE>
<CAPTION>
DOMESTIC FOREIGN CONSOLIDATED
---------- -------- ------------
<S> <C> <C> <C>
Operating revenue................................... $1,300,378 $111,058 $1,411,436
Long-lived assets................................... 684,691 8,569 693,260
</TABLE>
Segment information for the year ended December 31, 1998, is as follows:
<TABLE>
<CAPTION>
TRUCK CORPORATE
CAR RENTAL AND RETAIL CAR AND
RENTAL SALES SALES ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating revenue............... $1,527,471 $613,671 $547,690 $(72,633) $2,616,199
Depreciation and amortization... 416,474 116,248 5,213 16,801 554,736
Operating income (loss)......... 171,479 86,778 (22,459) (29,522) 206,276
Income (loss) before income
taxes......................... 31,405 32,627 (23,168) (34,281) 6,583
</TABLE>
<TABLE>
<CAPTION>
DOMESTIC FOREIGN CONSOLIDATED
---------- -------- ------------
<S> <C> <C> <C>
Operating revenue................................... $2,440,468 $175,731 $2,616,199
Long-lived assets................................... 1,110,067 19,775 1,129,842
</TABLE>
Truck rental and sales financial data for the year ended December 31, 1996
is not available.
The vehicle rental financial information for the year ended December 31,
1996 is comparable to combined Car Rental and Truck Rental and Sales for the
years ended December 31, 1997 and 1998.
Foreign operations include rental and royalty revenues primarily from
Europe, Australia and New Zealand.
F-27
<PAGE> 75
18. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table is a summary of quarterly information for the years
ended December 31, 1997 and 1998 (in thousands except per share data).
<TABLE>
<CAPTION>
1997 1998
----------------------------------------- -----------------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
------------------ ------------------
MARCH MARCH
31 JUNE 30 SEPT. 30 DEC. 31 31 JUNE 30 SEPT. 30 DEC. 31
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenue..................... $116,338 $332,144 $524,852 $438,102 $455,985 $614,352 $856,569 $689,293
Operating income (loss)............... 4,003 33,837 96,498 36,658 34,179 60,850 157,039 (45,792)
Net income (loss) before extraordinary
item................................ (3,301) 4,563 30,894 (2,382) (3,421) 4,751 61,276 (66,237)
Average shares outstanding -- basic... 12,875 18,765 21,579 27,023 27,445 29,499 35,942 35,928
Earnings (loss) per
share -- basic(1)................... (0.26) 0.24 1.43 (0.09) (0.12) 0.16 1.70 (1.84)
Average shares
outstanding -- diluted.............. 12,875 22,596 32,554 27,023 27,445 30,243 47,016 35,928
Earnings (loss) per share -- diluted
(1)................................. (0.26) 0.20 0.99 (0.09) (0.12) 0.16 1.38 (1.84)
Market price of stock(2)
High................................ 29.50 34.875 37.00 37.75 39.50 39.00 33.125 25.00
Low................................. 16.00 19.00 28.188 32.50 30.00 26.875 17.00 11.00
</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 16, 1999, (i) the closing sale price of the Class A common stock as
reported on the New York Stock exchange was $11.375 per share and (ii) there
were approximately 299 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". The 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.
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 and other factors deemed relevant by the Board of Directors.
F-28
<PAGE> 1
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
BUDGET GROUP, INC.
Budget Group, Inc., a corporation organized and existing under laws of
the State of Delaware (the "Corporation"), does hereby certify that (i) the
name of the Corporation is Budget Group, Inc., (ii) the Corporation was
originally incorporated under the name Team Holdings, Inc., and the original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of Delaware on December 31, 1992, (iii) the original Certificate of
Incorporation was amended and restated in its entirety and filed with the
Secretary of State of Delaware on April 21, 1994 and has since been amended on
June 24, 1996, April 28, 1997, April 23, 1998 and June 2, 1998 (the original
Certificate of Incorporation as so amended or restated being referred to herein
as the "Certificate of Incorporation"), and (iv) this Restated Certificate of
Incorporation (A) restates and integrates and does not further amend the
provisions of the Certificate of Incorporation of the Corporation as
theretofore amended or supplemented (B) does not create a discrepancy between
its provisions and the provisions of the Certificate of Incorporation of the
Corporation as theretofore amended or supplemented, and (C) has been duly
adopted by the Board of Directors without a vote of stockholders in accordance
with Section 245 of the Delaware General Corporation Law.
FIRST: Name. The name of the corporation is Budget Group, Inc.
SECOND: Registered Office and Agent. The address of the
registered office of the Corporation in the State of Delaware is 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The name of the
registered agent at such address is The Corporation Trust Company.
THIRD: Purposes. The purposes for which the Corporation is
formed are to engage in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law and to possess and exercise
all of the powers and privileges granted by such law and any other law of
Delaware.
FOURTH: A. Authorized Capital
The Corporation is authorized to issue 73,000,000 shares of
capital stock, consisting of 72,750,000 shares of common stock, par value $.01
per share (the "Common Stock"), and 250,000 shares of preferred stock, par
value $.01 per share (the "Preferred Stock"). Of the shares of Common Stock,
70,000,000 shares shall be designated "Budget Class A Common Stock" and
2,750,000 shares shall be designated "Budget Class B Common Stock." The rights,
preferences, privileges and restrictions granted and imposed upon the Preferred
Stock, Budget Class A Common Stock and Budget Class B Common Stock are set out
hereinbelow.
<PAGE> 2
B. Preferred Stock
The Preferred Stock may be issued from time to time in one or
more series with such designations, preferences, and relative participating,
optional or other special rights and qualifications, limitations or
restrictions adopted by the Board of Directors providing for the issuance of
such Preferred Stock or series thereof; and the Board of Directors is hereby
expressly granted the authority to fix by resolution or resolutions such
designations and powers, preferences and rights and such qualifications,
limitations or restrictions which are permitted by Section 151 of the General
Corporation Law of Delaware, as amended from time to time, in respect of any
class or classes of stock or any series of any class of stock of the
Corporation that may be desired, including, but not by way of limitation, the
number, distinctive name and serial designation of such class or series; any
dividends payable and the rate, time for and priority of payment thereof;
whether such dividends shall be cumulative or not; any participating or other
special rights with respect to the payment of dividends; any conversion,
exchange, purchase or other privilege to acquire shares of any other class or
series of the Preferred Stock or Common Stock of the Corporation; any voting
power; and any redemption and liquidation price or preference.
C. Class A Common Stock.
The shares of Class A Common Stock and shares of Class B
Common Stock shall be identical in all respects and shall have equal rights and
privileges except as expressly set forth in this paragraph C and in paragraph D
of this Article FOURTH. Upon dissolution of the Corporation, shares of Class A
Common Stock and Class B Common Stock are entitled to share ratably in the
assets thereof that may be available for distribution after satisfaction of
creditors and the payment of any liquidation preference of any outstanding
shares of Preferred Stock.
1. Dividends.
(a) Subject to the rights of the holders of the
Preferred Stock, if any, such dividends or distributions as may be determined
by the Board of Directors of the Corporation from time to time may be declared
and paid or made upon shares of Class A Common Stock out of any source at the
time lawfully available for the payment of dividends; provided that (subject to
subparagraphs (b) and (c) below of this paragraph C.1.) identical dividends or
distributions are declared and paid concurrently on shares of Class B Common
Stock. If dividends or distributions are declared and paid upon shares of Class
B Common Stock (subject to subparagraphs (b) and (c) below of this paragraph
C.1.), identical dividends or distributions shall be declared and paid
concurrently on shares of Class A Common Stock.
(b) No dividend may be declared and paid in
shares of Class A Common Stock unless (i) the dividend is payable only to
holders of shares of Class A Common Stock and (ii) a dividend payable to
holders of shares of Class B Common Stock is declared and paid
-2-
<PAGE> 3
concurrently in the same number of shares of Class B Common Stock per
outstanding share of Class B Common Stock as the number of shares of Class A
Common Stock declared and paid per outstanding share of Class A Common Stock.
(c) No dividend may be declared and paid in
Class B Common Stock unless (i) the dividend is payable only to holders of
Class B Common Stock and (ii) a dividend payable to holders of shares of Class
A Common Stock is declared and paid concurrently in the same number of shares
of Class A Common Stock per outstanding share of Class A Common Stock as the
number of shares of Class B Common Stock declared and paid per outstanding
share of Class B Common Stock.
2. Stock Combinations and Subdivisions. Shares of Class
A Common Stock shall not be combined or subdivided unless at the same time
there is a proportionate combination or subdivision of shares of Class B Common
Stock. If shares of Class B Common Stock are combined or subdivided, a
proportionate combination or subdivision of shares of Class A Common Stock
shall be made at the same time.
3. Voting. Except as may otherwise be required by law,
the holders of shares of Class A Common Stock shall vote together with the
holders of Class B Common Stock as a single class, provided that the holders of
Class A Common Stock will have one (1) vote per share and the holders of Class
B Common Stock shall have ten (10) votes per share.
D. Class B Common Stock.
1. Dividends and Distributions. Subject to the
provisions of paragraph C.1. of this Article FOURTH, dividends and
distributions may be declared and paid or made upon shares of Class B Common
Stock as may be permitted by applicable law.
2. Stock Combinations and Subdivisions. Subject to the
provisions of paragraph C.2. of this Article FOURTH, shares of Class B Common
Stock may be combined or subdivided in such manner as may be permitted by
applicable law.
3. Voting. Subject to the provisions of paragraph C.3.
of this Article FOURTH, shares of Class B Common Stock shall have ten (10)
votes per share on all matters that may be submitted to a vote or consent of
the shareholders.
4. Conversion.
(a) Each holder of record of shares of Class B
Common Stock may, in such holder's sole discretion, and at such holder's
option, convert any whole number or all of such holder's shares of Class B
Common Stock into fully paid and nonassessable shares of Class A Common Stock
at the rate of one (1) share of Class A Common Stock for each share of Class B
Common Stock surrendered for conversion. Any such conversion may be effected by
any holder
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of Class B Common Stock by surrendering such holder's certificate or
certificates for the shares of Class B Common Stock to be converted, duly
endorsed, at the office of the Corporation or any transfer agent for Class B
Common Stock, together with a written notice to the Corporation at such office
that such holder elects to convert all or a specified number of shares of Class
B Common Stock and stating the name or names in which such holder desires the
certificate or certificates for such shares of Class A Common Stock to be
issued. Promptly thereafter, unless otherwise prohibited by law, the
Corporation shall issue and deliver to such holder or such holder's nominee or
nominees, a certificate or certificates for the number of shares of Class A
Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made at the close of business on the
day of such surrender and the person or persons entitled to receive shares of
Class A Common Stock issuable on such conversion shall be treated for all
purposes as the record holder or holders of such shares of Class A Common Stock
on that date.
(b) Each share of Class B Common Stock shall
automatically be converted into one share of Class A Common Stock in the event
that the beneficial or record ownership of such share of Class B Common Stock
shall be transferred (including, without limitation, by way of gift,
settlement, will or intestacy) to any person or entity that is not then a
record or beneficial holder of shares of Class B Common Stock. A pledge of
shares of Class B Common Stock as security for an obligation of a holder of
such shares of Class B Common Stock shall not be considered a transfer for
purposes of this paragraph D.4(b), unless and until beneficial ownership of
such shares is transferred to the pledgeholder. The conversion into Class A
Common Stock shall be deemed to have occurred (whether or not certificates
representing such shares are surrendered) as of the close of business on the
date of transfer, and the person or persons entitled to receive shares of Class
A Common Stock issuable on such conversion shall be treated for all purposes as
the record holder or holders of such shares of Class A Common Stock on that
date.
(c) Before any shares of Class A Common Stock
shall be delivered upon conversion, the holder of shares of Class B Common
Stock whose shares have been converted into shares of Class A Common Stock
shall deliver the certificate(s) representing such shares to the Corporation or
its duly authorized agent (or if such certificates have been lost, stolen or
destroyed, such holder shall execute an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such conversion), specifying the place where the Common Stock
issued in conversion thereof shall be sent. The endorsement of the share
certificate shall be in form satisfactory to the Corporation or such agent, as
the case may be.
(d) The number of shares of Class A Common
Stock into which the shares of Class B Common Stock may be converted shall be
subject to adjustment from time to time in the event of any capital
reorganization, reclassification of stock of the Corporation, consolidation or
merger of the Corporation with or into another corporation, or sale or
conveyance of all or substantially all of the assets of the Corporation to
another corporation or other entity or person. Each share of Class B Common
Stock shall thereafter be convertible into such kind and amount
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of securities or other assets, or both, as are issuable or distributable in
respect of each share of Class A Common Stock. In any such case, appropriate
adjustments shall be made by the Board of Directors of the Corporation in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of Class B Common Stock to the end that the
provisions set forth herein shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or other assets thereafter
deliverable on conversion of shares of Class B Common Stock.
(e) The Corporation shall, at all times,
reserve and keep available out of the authorized and unissued shares of Class A
Common Stock, solely for the purpose of effecting the conversion of the
outstanding shares of Class B Common Stock, such number of shares of Class A
Common Stock as shall from time to time be sufficient to effect conversion of
all outstanding shares of Class B Common Stock and if, at any time, the number
of authorized and unissued shares of Class A Common Stock shall not be
sufficient to effect conversion of the then outstanding shares of Class B
Common Stock, the Corporation shall take such corporate action as may be
necessary to increase the number of authorized and unissued shares of Class A
Common Stock to such number as shall be sufficient for such purposes.
(f) The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue or delivery of
shares of Class A Common Stock on conversion of shares of Class B Common Stock
pursuant hereto. The Corporation shall not, however, be required to pay any tax
which may be payable in respect of the issue of any shares of Class A Common
Stock in a name other than that in which the shares of Class B Common Stock so
converted was registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of any such tax, or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(g) If any shares of capital stock to be
reserved for the purpose of conversion of shares of Class B Common Stock
require registration or listing with, or approval of, or inclusion in any
governmental authority, stock exchange or other regulatory body, or any
automated quotation system of a national securities association, under any
federal or state law or regulation or otherwise, before such shares may be
validly issued or delivered upon conversion, the Corporation will in good faith
and as expeditiously as possible endeavor to secure such registration, listing,
approval or inclusion, as the case may be.
(h) All shares of Class A Common Stock which
may be issued upon conversion of shares of Class B Common Stock will upon
issuance by the Corporation be validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issuance
thereof.
(i) All certificates representing shares of
Class B Common Stock surrendered for conversion shall be appropriately canceled
on the books of the Corporation, and the number
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of authorized shares of Class B Common Stock shall be reduced by the number of
shares so converted.
(j) In case the Corporation shall take a record
of the holders of its shares of Class A Common Stock for the purpose of:
(1) entitling them to receive a dividend,
or any other distribution, payable otherwise than in cash; or
(2) entitling them to receive rights to
acquire any security issued by the Corporation; or
(3) any proposed reclassification,
reorganization, consolidation, merger, conveyance or voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
holders of record of the outstanding shares of Class B Common Stock at least
ten (10) days prior to the date hereinafter specified, a notice stating the
date on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place and the day, if any is to be fixed, as of which record holders of
shares of Class A Common Stock shall be entitled to exchange their shares of
Class A Common Stock for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(k) So long as any shares of Class B Common
Stock are outstanding, the Corporation shall not, without first obtaining the
approval by vote or written consent, in the manner provided by law, of the
holders of (i) at least a majority of the total number of shares of Class A
Common Stock outstanding, voting separately as a class, and (ii) at least sixty
percent (60%) of the total number of shares of Class B Common Stock
outstanding, voting separately as a class, (A) alter or change the rights or
privileges of shares of the Common Stock; (B) amend any provision of Section C
or this Section D of this Article FOURTH; or (C) effect any reclassification or
recapitalization of the Corporation's outstanding Common Stock.
FIFTH: Additional Powers of Board of Directors. The Board of
Directors shall have power, without shareholder action, to make by-laws for the
Corporation and to amend, alter or repeal any by-laws.
SIXTH: Voting by Ballot. Elections of Directors need not be by
ballot unless the by- laws of the Corporation provide otherwise.
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SEVENTH: Limited Liability of Directors. The directors of the
Corporation shall be entitled to the full benefits of all limitations on the
liability of directors generally that are now or hereafter become available
under the Delaware General Corporation Law. Without limiting the generality of
the foregoing, no director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability: (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for any acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. Any repeal or modification of this Article SEVENTH
shall be prospective only, and shall not affect, to the detriment of any
director, any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
EIGHTH: Classified Board of Directors. The directors shall be divided
into three classes, designated Class I, Class II and Class III. Each Class
shall consist, as nearly as may be possible, of one-third of the total number
of directors constituting the entire Board of Directors. The term of the
initial Class I Directors shall terminate on the date of the 2001 Annual
Meeting of Stockholders; the term of the initial Class II Directors shall
terminate on the date of the 2000 Annual Meeting of Stockholders; and the term
of the initial Class III Directors shall terminate on the date of the 1999
Annual Meeting of Stockholders. At each Annual Meeting of Stockholders
beginning in 1999, successors to the Class of directors whose term expires at
that Annual Meeting of Stockholders shall be elected for a three-year term. If
the number of directors is changed, any increase or decrease in directorship
shall be apportioned among the Classes so as to maintain the number of
directors in each Class as nearly equal as possible, and any additional
directors of any Class elected to fill a vacancy resulting from an increase in
such class shall hold office only until the next election of directors of that
Class by the stockholders of the Corporation, but in no case will a decrease in
the number of directors shorten the term of any incumbent director. Directors
shall hold office until the Annual Meeting of Stockholders for the year in
which their terms expire and until their successors shall be duly elected and
qualified, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of Preferred Stock issued by the corporation shall have the right,
voting separately by class or series, to elect directors at an Annual or
Special Meeting of Stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation, or the resolution or resolutions
adopted by the board of directors creating such class or series, as the case
may be, applicable thereto, and such directors so elected shall not be divided
into classes pursuant to this Article EIGHTH unless expressly provided by such
terms.
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IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be executed on its behalf by the undersigned
officer, this 17 day of December, 1998, hereby declaring and
certifying that this is the act and deed of the Corporation and that the facts
stated herein are true.
BUDGET GROUP, INC.
By: /S/ Robert L. Aprati
-----------------------------------
Robert L. Aprati, Executive Vice
President, General Counsel and
Secretary
[CORPORATE SEAL]
STATE OF Illinois
COUNTY OF Cook
I, Carol A. Aden, a Notary Public, do hereby certify that on the 17th
day of December, 1998, personally appeared before me Robert L. Aprati,
Executive Vice President, General Counsel and Secretary, and, being first duly
sworn by me, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and
year before written.
/s/ Carol A. Aden
---------------------------
Notary Public
[Notarial Seal]
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<PAGE> 1
EXHIBIT 10.23
U.S. $550,000,000
AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of June 19, 1998
(amending and restating the Credit Agreement dated as of April 29, 1997),
among
BUDGET GROUP, INC.,
as the Borrower,
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
CREDIT SUISSE FIRST BOSTON,
as a Co-Syndication Agent and the Administrative Agent,
and
NATIONSBANC MONTGOMERY SECURITIES LLC,
as a Co-Syndication Agent and the Documentation Agent.
Arranged By
CREDIT SUISSE FIRST BOSTON
NATIONSBANC MONTGOMERY SECURITIES LLC
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms............................................................................................2
1.2. Use of Defined Terms....................................................................................46
1.3. Cross-References........................................................................................46
1.4. Accounting and Financial Determinations.................................................................46
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Commitments.............................................................................................47
2.1.1. Loan Commitment.........................................................................................47
2.1.2. Commitment to Issue Letters of Credit...................................................................47
2.1.3. Lenders Not Permitted or Required To Make Loans or Issue Letters of
Credit Under Certain Circumstances.............................................................47
2.2. Reduction of the Commitment Amount......................................................................48
2.2.1. Optional ...............................................................................................48
2.2.2. Mandatory...............................................................................................48
2.3. Borrowing Procedure.....................................................................................49
2.4. Continuation and Conversion Elections...................................................................49
2.5. Funding ...............................................................................................50
2.6. Loan Accounts...........................................................................................50
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments..............................................................................50
3.2. Interest Provisions.....................................................................................52
3.2.1. Rates ...............................................................................................52
3.2.2. Post-Maturity Rates.....................................................................................52
3.2.3. Payment Dates...........................................................................................53
3.2.4. Interest Rate Determination.............................................................................53
3.3. Fees ...............................................................................................54
3.3.1. Commitment Fees.........................................................................................54
3.3.2. Arrangement Fees........................................................................................54
3.3.3. Administrative Agent's Fee..............................................................................54
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3.3.4. Letter of Credit Face Amount Fee........................................................................54
3.3.5. Letter of Credit Issuing Fee............................................................................54
3.3.6. Letter of Credit Administrative Fee.....................................................................55
ARTICLE IV
LETTERS OF CREDIT
4.1. Issuance Requests.......................................................................................55
4.2. Issuances and Extensions................................................................................56
4.3. Expenses ...............................................................................................56
4.4. Other Lenders' Participation............................................................................56
4.5. Disbursements...........................................................................................57
4.6. Reimbursement...........................................................................................58
4.7. Deemed Disbursements....................................................................................58
4.8. Nature of Reimbursement Obligations.....................................................................59
4.9. Indemnity...............................................................................................60
4.10. Borrower's Guaranty of Reimbursement Obligations of its Subsidiaries....................................60
4.10.1. Guaranty ...............................................................................................60
4.10.2. Acceleration of Guaranty................................................................................61
4.10.3. Guaranty Absolute, etc..................................................................................61
4.10.4. Reinstatement, etc......................................................................................62
4.10.5. Waiver, etc.............................................................................................62
4.10.6. Postponement of Subrogation, etc........................................................................63
4.10.7. Successors, Transferees and Assigns; Transfers of Notes, etc............................................63
4.11. No Bankruptcy Petition Against TFFC and Budget Funding Corporation......................................64
4.12. Original Letters of Credit..............................................................................64
ARTICLE V
CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS
5.1. Eurocurrency Rate Lending Unlawful......................................................................65
5.2. Deposits Unavailable....................................................................................65
5.3. Increased Eurocurrency Loan Costs, etc..................................................................65
5.4. Funding Losses..........................................................................................66
5.5. Increased Capital Costs.................................................................................66
5.6. Taxes ...............................................................................................67
5.7. Payments, Computations, etc.............................................................................68
5.8. Sharing of Payments.....................................................................................68
5.9. Setoff ...............................................................................................69
</TABLE>
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5.10. Substitution of Lender..................................................................................69
ARTICLE VI
CONDITIONS PRECEDENT
6.1. [INTENTIONALLY OMITTED.]................................................................................70
6.2. All Credit Extensions...................................................................................70
6.2.1. Compliance with Warranties, No Default, etc.............................................................70
6.2.2. Credit Request..........................................................................................71
6.2.3. Satisfactory Legal Form.................................................................................71
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1. Organization, etc.......................................................................................72
7.2. Due Authorization, Non-Contravention, etc...............................................................72
7.3. Government Approval, Regulation, etc....................................................................73
7.4. Validity, etc...........................................................................................73
7.5. Financial Information; Absence of Undisclosed Liabilities...............................................73
7.6. No Material Adverse Change; Absence of Undisclosed Liabilities..........................................74
7.7. Litigation, Labor Controversies, etc....................................................................74
7.8. Subsidiaries............................................................................................74
7.9. Ownership of Properties.................................................................................74
7.10. Taxes ..................................................................................................74
7.11. Pension and Welfare Plans...............................................................................75
7.12. Environmental Warranties................................................................................75
7.13. Intellectual Property...................................................................................77
7.14. Regulations U and X.....................................................................................77
7.15. Accuracy of Information.................................................................................77
7.16. Stock Purchase Agreements and Senior Note Purchase Agreements...........................................77
7.17. Senior Indebtedness, etc................................................................................78
7.18. No Burdensome Restrictions..............................................................................78
7.19. Year 2000 Compatibility.................................................................................79
7.20. Solvency ...............................................................................................79
</TABLE>
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ARTICLE VIII
COVENANTS
8.1. Affirmative Covenants...................................................................................79
8.1.1. Financial Information, Reports, Notices, etc............................................................79
8.1.2. Compliance with Laws, Material Agreements, etc..........................................................82
8.1.3. Maintenance of Properties...............................................................................83
8.1.4. Insurance...............................................................................................83
8.1.5. Books and Records.......................................................................................83
8.1.6. Environmental Covenant..................................................................................83
8.1.7. Use of Proceeds.........................................................................................84
8.1.8. Debt Tender Offer and Consent Solicitation..............................................................84
8.1.9. Future Subsidiaries.....................................................................................84
8.2. Negative Covenants......................................................................................86
8.2.1. Business Activities.....................................................................................86
8.2.2. Indebtedness............................................................................................86
8.2.3. Liens ...............................................................................................89
8.2.4. Financial Condition.....................................................................................90
8.2.5. Investments.............................................................................................92
8.2.6. Restricted Payments, etc................................................................................93
8.2.7. Capital Expenditures, etc...............................................................................94
8.2.8. Take or Pay Contracts...................................................................................95
8.2.9. Consolidation, Merger, etc..............................................................................95
8.2.10. Asset Dispositions, etc.................................................................................96
8.2.11. Modification of Certain Agreements......................................................................96
8.2.12. Transactions with Affiliates............................................................................97
8.2.13. Negative Pledges, Restrictive Agreements, etc...........................................................97
8.2.14. Ability to Amend; Restrictive Agreements................................................................98
8.2.15. Accounting Changes......................................................................................98
8.2.16. Tax Sharing Arrangements................................................................................98
ARTICLE IX
EVENTS OF DEFAULT
9.1. Listing of Events of Default............................................................................98
9.1.1. Non-Payment of Obligations..............................................................................98
9.1.2. Breach of Warranty......................................................................................98
9.1.3. Non-Performance of Certain Covenants and Obligations....................................................98
9.1.4. Non-Performance of Other Covenants and Obligations......................................................98
9.1.5. Default on Other Indebtedness, etc......................................................................99
9.1.6. Judgments...............................................................................................99
9.1.7. Pension Plans...........................................................................................99
9.1.8. Change in Control......................................................................................100
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9.1.9. Bankruptcy, Insolvency, etc............................................................................100
9.1.10. Impairment of Security, etc............................................................................101
9.2. Action if Bankruptcy...................................................................................101
9.3. Action if Other Event of Default.......................................................................101
ARTICLE X
THE AGENTS
10.1. Actions ..............................................................................................102
10.2. Funding Reliance, etc..................................................................................102
10.3. Exculpation............................................................................................103
10.4. Successor..............................................................................................103
10.5. Credit Extensions by Agents............................................................................103
10.6. Credit Decisions.......................................................................................104
10.7. Copies, etc............................................................................................104
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Waivers, Amendments, etc...............................................................................104
11.2. Notices ..............................................................................................106
11.3. Payment of Costs and Expenses..........................................................................106
11.4. Indemnification........................................................................................106
11.5. Survival ..............................................................................................107
11.6. Severability...........................................................................................108
11.7. Headings ..............................................................................................108
11.8. Execution in Counterparts, Effectiveness, etc..........................................................108
11.9. Governing Law; Entire Agreement........................................................................108
11.10. Successors and Assigns.................................................................................108
11.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes................................108
11.11.1. Assignments............................................................................................109
11.11.2. Participations.........................................................................................110
11.12. Other Transactions.....................................................................................111
11.13. Independence of Covenants..............................................................................111
11.14. Forum Selection and Consent to Jurisdiction............................................................111
11.15. Waiver of Jury Trial...................................................................................112
</TABLE>
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 19, 1998
(amending and restating the Credit Agreement dated as of April 29, 1997, as
amended through the date hereof), among BUDGET GROUP, INC., a Delaware
corporation ("Budget" or the "Borrower"), the various financial institutions as
are or may become parties hereto (collectively, the "Lenders"), CREDIT SUISSE
FIRST BOSTON ("Credit Suisse First Boston"), as a co-syndication agent (in such
capacity, a "Co-Syndication Agent"), a co-arranger (in such capacity, a
"Co-Arranger") and the administrative agent (in such capacity, the
"Administrative Agent") for the Lenders, and NATIONSBANC MONTGOMERY SECURITIES
LLC, as a co-syndication agent (in such capacity, a "Co-Syndication Agent" and,
together with Credit Suisse First Boston, the "Co-Syndication Agents"), a
co-arranger (in such capacity, a "Co-Arranger" and, together with Credit Suisse
First Boston, the "Co-Arrangers") and the documentation agent (in such capacity,
the "Documentation Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, Budget Rent A Car Corporation, a Delaware corporation and a
direct Wholly Owned Subsidiary (capitalized terms used in these recitals to have
the meanings set forth in Section 1.1 below) of the Borrower ("BRACC") has,
pursuant to the Assignment and Amendment Agreement (as defined below),
transferred all of its rights and obligations under the Credit Agreement, dated
as of April 29, 1997, among BRACC (as borrower), Budget (as guarantor), the
lenders party thereto and the Agents (as in effect immediately prior to the
effectiveness of this Agreement, the "Original Credit Agreement") and the Notes
(as defined in the Original Credit Agreement and in effect immediately prior to
the effectiveness of this Agreement) to Budget;
WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries in the business of (a) renting worldwide for general use passenger
automobiles, motorcycles, sport utility vehicles, vans, buses, truck campers,
trucks and motor homes, (b) selling in the United States late model automobiles,
vans and trucks and (c) franchising the foregoing rental business to other
Persons;
WHEREAS, pursuant to (a) the Stock Purchase Agreement, dated as of
January 13, 1997, between BRACC and Budget (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
Budget (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 Budget (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"), Budget acquired the Capital Stock of BRACC and purchased certain
Indebtedness of BRACC 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 Budget (the "BRACC Acquisition");
<PAGE> 8
WHEREAS, in connection with the BRACC Acquisition, Budget arranged for
the refinancing of approximately $850,500,000 of indebtedness under various
vehicle financing facilities of BRACC and its Subsidiaries pursuant to, among
other things, a rental car asset-backed commercial paper program (the "CP
Program") through a special purpose, bankruptcy remote, Wholly Owned Subsidiary
of BRACC ("Budget Funding Corporation");
WHEREAS, 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 certain of its Subsidiaries 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 and Stated Amount for Letters of
Credit outstanding at any one time not to exceed in the aggregate $550,000,000;
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) (the "Enhancement Letters of
Credit") and
(ii) for other general corporate purposes (the
"General Letters of Credit");
NOW, THEREFORE, the parties hereto agree as follows:
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<PAGE> 9
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.
"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 Borrower 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.
"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.
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<PAGE> 10
"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 10.4.
"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 Amended and Restated Credit
Agreement as originally in effect on the Amendment 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%.
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.
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<PAGE> 11
"Amendment Effective Date" means the date this Agreement becomes
effective pursuant to the terms and conditions of the Assignment and Amendment
Agreement.
"Amendment Effective Date Certificate" means the certificate executed
and delivered by the Borrower pursuant to Section 4.12 of the Assignment and
Amendment Agreement, substantially in the form of Exhibit I hereto.
"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:
PRICING GRID
<TABLE>
<CAPTION>
APPLICABLE
ADJUSTED LEVERAGE RATIO COMMITMENT FEE
----------------------- --------------
<S> <C>
X >= 2.0 37.5
X >= 1.0, but < 2.0 30.0
X >= 0.75, but < 1.0 25.0
X < 0.75 20.0
</TABLE>
The Applicable Commitment Fee on the average daily unused portion of
the Commitment Amount, at any time from and including the Amendment Effective
Date to (but not including) the date on which the Administrative Agent receives
the Compliance Certificate for the Fiscal Quarter ending on or about December
31, 1998, shall be 37.5 basis points per annum at such time.
The Applicable Commitment Fee, at any time from and after the date on
which the Administrative Agent receives the Compliance Certificate for the
Fiscal Quarter ending on or about December 31, 1998, 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 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:
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<PAGE> 12
PRICING GRID
<TABLE>
<CAPTION>
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 >= 0.75, but < 1.0 125 25
X < 0.75 100 0
</TABLE>
The Applicable Margin, at any time from and including the Amendment
Effective Date until the date on which the Administrative Agent receives the
Compliance Certificate for the Fiscal Quarter ending on or about December 31,
1998, 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 on which the
Administrative Agent receives the Compliance Certificate for the Fiscal Quarter
ending on or about December 31, 1998, 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.
"Assignee Lender" is defined in Section 11.11.1.
"Assignment and Amendment Agreement" means the Assignment, Assumption
and Amendment Agreement, dated as of June 19, 1998, among BRACC, Budget, the
lenders under the Original Credit Agreement, the Lenders as of the Amendment
Effective Date and the Agents.
"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 incumbency shall have been certified to
the Administrative Agent and the Lenders pursuant to Section 6.1.1 of the
Original Credit Agreement or Section 4.2 of the Assignment and Amendment
Agreement; provided that, with respect to calculations relating to the financial
covenants or the Borrowing Base Amount or any component thereof or the delivery
of financial
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<PAGE> 13
statements and related financial reports, Compliance Certificates, Borrowing
Base Certificates or any certificates evidencing whether an adverse tax
consequence would arise as a result of the Borrower's or any other Obligor's
compliance with a provision hereof (including the proviso to clause (b) of
Section 8.1.9) or any other Loan Document, "Authorized Officer" means an
Authorized Officer that is the chief financial officer, chief accounting
officer, treasurer or controller of the Borrower or such other Obligor, as the
case may be, or any other Authorized Officer of Borrower or such other Obligor,
as the case may be, whose authority and responsibilities include substantially
the same authority and responsibilities as any of the foregoing.
"Base Indenture" means the Amended and Restated Base Indenture, dated
as of December 1, 1996, among TFFC, the Borrower and Bankers Trust Company, as
in effect on the date hereof.
"Borrower" is defined in the preamble.
"Borrower Pledge Agreement" means that certain Parent Pledge Agreement
(as defined in and executed and delivered pursuant to the Original Credit
Agreement and in effect immediately prior to effectiveness of this Agreement),
dated as of the Closing Date, as amended and restated in the form of the Amended
and Restated Borrower Pledge Agreement attached as Exhibit F-1 hereto and dated
as of the Amendment Effective Date, as the same may be amended, supplemented,
restated or otherwise modified from time to time.
"Borrower Security Agreement" means that certain Parent Security
Agreement (as defined in and executed and delivered pursuant to the Original
Credit Agreement and in effect immediately prior to effectiveness of this
Agreement), dated as of the Closing Date, as amended and restated in the form of
the Amended and Restated Borrower Security Agreement attached as Exhibit G-1
hereto and dated as of the Amendment Effective Date, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Borrowing" means the Loans of the same type and, in the case of
Eurocurrency Loans, 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;
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<PAGE> 14
plus
(c) the sum of (i) 90% of the Net Book Value of all Eligible
Repurchase Vehicles at such time and (ii) 85% of the Non-Repurchase
Value of all Eligible Non-Repurchase Vehicles at such time;
plus
(d) on or prior to the date financial statements with respect
to the second Fiscal Quarter of the 1998 Fiscal Year have been
delivered by the Borrower pursuant to Section 8.1.1, $221,500,000, and,
thereafter, 35% of the Net Worth of the Borrower 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 delivered by
the Borrower; provided that in no event shall the amount added to the
Borrowing Base Amount pursuant to this clause (d) exceed the sum of the
preceding clauses (a) through (c);
provided, however, that, at any time during an Investment Grade Period or on or
subsequent to the Collateral Release Date, the Borrowing Base Amount shall be
deemed to equal the Commitment Amount then in effect.
"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 4.16 of the
Assignment and Amendment Agreement 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 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.
"BRACC" is defined in the preamble.
"BRACC Acquisition" is defined in the third recital.
"Budget" is defined in the preamble.
"Budget Capital" means Budget Group Capital Trust, a Delaware business
trust.
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<PAGE> 15
"Budget Capital Trust Documents" means, collectively, the Amended and
Restated Declaration of Trust dated as of June 19, 1998, among the Borrower, The
Bank of New York, as Property Trustee, The Bank of New York (Delaware), as
Delaware Trustee, and the other trustees named therein, including the terms of
the Convertible Preferred Securities (and the Common Securities referred to
therein) annexed to such Amended and Restated Declaration of Trust, and the
certificates evidencing the Convertible Preferred Securities (and such Common
Securities).
"Budget Funding Corporation" is defined in the fourth 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 described in clause (a)
above on which dealings in Dollars are carried on in the London
interbank market.
"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,
trust certificates and member interests.
"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.
"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
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<PAGE> 16
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 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 or any of its 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 or any of its Subsidiaries in connection with such Casualty
Event (provided that, in the event the aggregate amount of such proceeds or
awards resulting from such Casualty Event do not exceed $1,000,000, such
proceeds or awards shall not constitute Casualty Proceeds), 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 Borrower shall own any Capital
Stock of BRACC or Ryder or otherwise have the ability to elect any
members of the board of directors of BRACC or Ryder;
(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, (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 Borrower 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 Borrower;
(c) during any period of twenty-four months, individuals who
at the beginning of such period constituted the board of directors of
the Borrower (together with any new directors whose election by such
board of directors, or whose nomination for election by the
shareholders of the Borrower, 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
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<PAGE> 17
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;
(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,
BRACC or Ryder; or
(e) a "Change of Control" under the Series A Notes, the Series
B Notes or any other Subordinated Debt shall have occurred.
"Closing Date" means April 29, 1997, the date on which Credit
Extensions were first made under the Original Credit Agreement.
"Co-Arranger" and "Co-Arrangers" are defined in the preamble.
"Co-Syndication Agent" and "Co-Syndication Agents" are defined in the
preamble.
"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.
"Collateral Agency Agreement" means that certain Collateral Agency
Agreement, dated as of March 13, 1998, among BRACC, 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 that
was executed and delivered pursuant to the Third Amendment (as defined in the
Original Credit Agreement), a conformed copy of which is attached as Exhibit L
hereto, as the same may be amended, supplemented, restated or otherwise modified
from time to time.
"Collateral Agent" means Bankers Trust Company, in its capacity as
collateral agent under the Collateral Agency Agreement, and its successors
thereunder.
"Collateral Release Date" means any date on which (a) the long-term
senior unsecured debt of the Borrower is rated BBB- (or better) by S&P and Baa3
(or better) by Moody's, (b) no Default has occurred and is then continuing, (c)
the Borrower has provided the Administrative Agent with evidence reasonably
satisfactory to the Administrative Agent of the existence of such ratings and
(d) the Borrower has provided written notice to the Administrative Agent that
the Collateral (as defined in any Loan Document) shall be released as a result
of such ratings.
"Commitment" means, as the context may require, a Lender's Loan
Commitment and/or Letter of Credit Commitment.
"Commitment Amount" means, on any date, $550,000,000, as such amount
may be reduced from time to time pursuant to Section 2.2.
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<PAGE> 18
"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 a certificate duly completed and
executed by an Authorized Officer of the Borrower, 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.
"Consent Solicitation" is defined in the Assignment and Amendment
Agreement.
"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 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
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Convertible Preferred Securities" is defined in the Assignment and
Amendment Agreement.
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<PAGE> 19
"CP Enhancement Letter of Credit" means the Letter of Credit, dated as
of the Closing Date, 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 Closing Date, among
BRACC, Budget Funding Corporation, the Issuer and the Lessees from time to time
designated thereunder.
"CP Program" is defined in the fourth 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 (including any increase in the Stated Amount
thereof).
"Credit Extension Request" means, as the context may require, any
Borrowing Request or Issuance Request.
"Credit Suisse First Boston" is defined in the preamble.
"Cruise America Acquisition" means the merger on February 27, 1998 of
CA Acquisition Corporation, a Wholly Owned Subsidiary of Budget, with and into
Cruise America, Inc., as a result of which Cruise America, Inc. became a Wholly
Owned Subsidiary of Budget, as more fully described in the Proxy
Statement/Prospectus of Cruise America, Inc. and Budget, dated December 29,
1997.
"Debt Tender Offer" is defined in the Assignment and Amendment
Agreement.
"Debt Tender Offer/Consent Solicitation Documents" is defined in the
Assignment and Amendment Agreement.
"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 I" means the promissory note dated as of
the Closing Date, issued by BRACC to TFFC.
"Demand Capitalization Note II" means the promissory note dated as of
the Amendment Effective Date, issued by the Borrower to TFFC in connection with
the Rental Car Asset Backed Notes, Series 1998-2, issued pursuant to the MTN
Issuance (as defined in the Assignment and Amendment Agreement).
"Demand Capitalization Note III" means the promissory note dated as of
the Amendment Effective Date, issued by the Borrower to TFFC in connection with
the Rental Car Asset Backed Notes, Series 1998-3, issued pursuant to the MTN
Issuance (as defined in the Assignment and Amendment Agreement).
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<PAGE> 20
"Demand Capitalization Note IV" means the promissory note dated as of
the Amendment Effective Date, issued by the Borrower to TFFC in connection with
the Rental Car Asset Backed Notes, Series 1998-4, issued pursuant to the MTN
Issuance (as defined in the Assignment and Amendment Agreement).
"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 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.
"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.
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"Documentation Agent" is defined in the preamble.
"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
or any of its 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 or any of its 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 Borrower or is
merged into or consolidated with the Borrower or any of its
Subsidiaries or the date that such other Person's assets are acquired
by the Borrower or any of its Subsidiaries and (v) the income of any
Subsidiary of the Borrower 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, 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.
"Effective Date" means the date the Original Agreement became effective
pursuant to Section 12.8 thereof.
"Eligible Assignee" means a lending institution at the time of any
proposed assignment having (a) 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 (b) unless the Administrative Agent and
the Issuer otherwise agree, long-term unsecured debt ratings of BBB- (or better)
from S&P and Baa3 (or
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<PAGE> 22
better) from Moody's; provided, however, that neither the Borrower nor any of
its 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);
(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 $5,000,000);
(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;
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<PAGE> 23
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 $15,000,000.
"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, Isuzu Motors
Ltd., Bavarian Motor Works, Mercedes Benz AG, Porsche AG and Volvo AB; 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 Non-Repurchase Vehicle" means any Non-Repurchase Vehicle (a)
that is a Pledged Vehicle, (b) the Manufacturer of which is an Eligible
Manufacturer and (c) 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.
"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):
(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 15% of the total amount of all
Eligible Receivables at the time of such determination (such
Receivables that do not exceed such 15% threshold being herein
referred to as "Canadian Eligible Receivables");
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<PAGE> 24
(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 5% 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 thereof (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;
(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
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<PAGE> 25
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 or any of its
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;
(m) if the Borrower or any of its 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 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
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<PAGE> 26
Eligible Receivables shall be reduced by an amount equal to the excess, if any,
of (x) the aggregate amount payable by the Borrower and its Subsidiaries to
Account Debtors that are franchisees of the Borrower or any of its 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 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.
"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 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.
"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
seventh recital.
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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.
"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, 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 Dollars (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
Dollars are offered by the Eurocurrency Office of 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.
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<PAGE> 28
"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, a rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined pursuant to the following formula:
Eurocurrency Rate Eurocurrency Rate
= --------------------------------------
(Reserve Adjusted) 1.00 - Eurocurrency Reserve Percentage
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.
"Excess Damage Charges" means, with respect to any Repurchase Vehicle,
the amount charged to the applicable Obligor or the Nominee, or deducted from
the Repurchase Price (as defined in the Subsidiary Security Agreement), by the
Manufacturer of such Repurchase Vehicle 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 applicable Obligor or 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.
"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,
(iv) an obligation of a Person in respect of the purchase price of a Vehicle
securing Vehicle Debt, (v) an obligation of a Person in
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<PAGE> 29
respect of the renting or leasing of a Vehicle securing Vehicle Debt assumed in
respect of a Permitted Business Acquisition, provided (A) such Vehicle Debt and
the security interest in such obligation securing such Vehicle Debt was not
created in anticipation of such Permitted Business Acquisition and (B) such
obligation shall no longer be an Excluded Receivable following the earliest to
occur of (1) the repayment of such Vehicle Debt, (2) the release of such
security interest and (3) the elapsing of 180 days from the initial closing with
respect to such Permitted Business Acquisition (or, in the case of the Cruise
America Acquisition, 270 days) or (vi) an obligation of a franchisee of the
Borrower or any of its Subsidiaries payable to the Borrower or such Subsidiary
(in each such case, such franchisee's "franchisor") in respect of the leasing by
such franchisee of Vehicles to be used in the ordinary course of its business to
the extent such franchisor has granted a security interest in such obligation to
the Person that provided the financing for the acquisition of such Vehicles,
provided (A) such financing constitutes Vehicle Debt, (B) the aggregate amount
of such financing does not exceed $100,000,000 and (c) such franchisor has
pledged the Receivables of such franchisee arising from such Vehicles to the
Administrative Agent for the benefit of the Secured Parties.
"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 National Automobile
Dealers' Association, Official Used Car Guide, Central Edition (the "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. Notwithstanding the foregoing, the "Fair Market Value" of
a motorhome, camper or van conversion means the market value of such vehicle as
specified in the most recently published version of the Kelly Blue Book.
"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.
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<PAGE> 30
"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 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 or any of its Subsidiaries on the
Effective Date, so long as the consideration paid in connection with such
Business Acquisition consisted solely of Capital Stock of the Borrower issued in
connection therewith and the assumption of Vehicle Debt (if any).
"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 seventh
recital.
"Guarantor" means, collectively, each Subsidiary Guarantor and each
other Person (if any) that guarantees the monetary obligations of the Borrower
under the Loan Documents.
"Guaranty" means, as the context may require, the Subsidiary Guaranty
or any other guaranty pursuant to which a Person other than a Subsidiary
Guarantor guarantees the monetary obligations of the Borrower under the Loan
Documents.
"Guaranteed Obligations" is defined in Section 4.10.1.
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"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.
"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
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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;
(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;
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(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 an Authorized Officer of the
Borrower to the Administrative Agent in a certificate in form
and substance satisfactory to the Administrative Agent); and
(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.
"High Tides Debentures" is defined in the Assignment and Amendment
Agreement.
"High Tides Debentures Indenture" means the Junior Subordinated
Indenture dated as of June 19, 1998, between the Borrower and The Bank of New
York, as trustee.
"High Tides Guaranty" means the Guarantee Agreement dated as of June
19, 1998, executed and delivered by the Borrower in connection with the offering
of the Convertible Preferred Securities.
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"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower 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 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;
(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
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(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 11.4.
"Indemnified Parties" is defined in Section 11.4.
"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.
"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;
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<PAGE> 36
(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 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.
"Investment Grade Period" means any period in which (a) the long-term
senior unsecured debt of the Borrower is rated BBB- (or better) by S&P or Baa3
(or better) by Moody's and (b) the Borrower has provided the Administrative
Agent with evidence reasonably satisfactory to the Administrative Agent of the
existence of such rating.
"Investment Grade Period Termination Date" means the date on which the
long-term senior unsecured debt of the Borrower is no longer rated BBB- (or
better) by S&P or Baa3 (or better) by Moody's.
"Issuance Request" means a request and certificate duly executed by an
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.
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"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 11.11.1.
"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.
"Letter of Credit Commitment Termination Date" means the earliest of
(a) the first Business Day prior to the Stated Maturity Date;
(b) the date on which the Commitment Amount is terminated in
full or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c) 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
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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
Effective Date, 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, extended, 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.
"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 Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Commitment Amount is terminated in
full or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c) 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, the Deposit Account Agreements (as defined in the Security
Agreements), the Assignment and Amendment Agreement 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.
"Manufacturer" means a manufacturer of Pledged Vehicles.
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"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 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 any of its
Subsidiaries, on the one hand, or the Manufacturer, on the other hand,
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.
"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 at such time and the amount of Unrestricted Cash as of the last
Business Day of each of the preceding two calendar months.
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"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.
"Net Disposition Proceeds" means the excess of
(a) the gross cash proceeds received by the Borrower or any of
its 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 or such Subsidiary in respect of any
permitted disposition (provided that, in the event the aggregate amount
of such proceeds resulting from any such permitted disposition
(including all related dispositions) does not exceed $1,000,000, such
proceeds shall not constitute Net Disposition Proceeds)
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
permitted disposition which have not been paid (other than in
the case of reasonable out-of-pocket expenses) to Affiliates
of the Borrower;
plus
(ii) all taxes and other governmental costs and
expenses actually paid or estimated by the Borrower or such
Subsidiary (in good faith) to be payable in cash in connection
with such permitted disposition;
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<PAGE> 41
plus
(iii) payments made by the Borrower or such
Subsidiary to retire Indebtedness (other than the Loans) of
the Borrower 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 or any of its Subsidiaries to any Person (other than the Borrower
or any of its Subsidiaries) of any Capital Stock, 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 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 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 Borrower and its Subsidiaries
for such period.
"Net Issuance Proceeds" means, as to any issuance of indebtedness for
borrowed money by the Borrower or any of its Subsidiaries, the excess of:
(a) the gross cash proceeds received by the Borrower 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
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with such issuance which have not (other than in the case of reasonable
out-of-pocket expenses) been paid to Affiliates of the Borrower 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 (it being acknowledged and agreed that for purposes of
this definition, Convertible Preferred Securities shall not constitute
capital stock);
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.
"Nominee" is defined in the Nominee Agreement.
"Nominee Agreement" means that certain Vehicle Title Nominee Agreement,
dated as of March 13, 1998, between BRACC and TFFC or another Affiliate of BRACC
that was executed and delivered pursuant to the Third Amendment (as defined in
the Original Credit Agreement), a conformed copy of which is attached as Exhibit
M hereto, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
"Non-Material Subsidiary" means any Subsidiary of the Borrower that
(a) accounted for no more than 1% of consolidated revenues of
the Borrower and its Subsidiaries or 1% of consolidated earnings of the
Borrower and its Subsidiaries before interest and taxes, in each case
for the four consecutive Fiscal Quarters of the Borrower 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 to the
Administrative Agent, and
(b) has assets which represent no more than 1% of the
consolidated assets of the Borrower 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 to the Administrative Agent,
to the extent that Non-Material Subsidiaries do not
(i) account in the aggregate for more than 5% of consolidated
revenues of the Borrower and its Subsidiaries or 5% of consolidated
earnings of the Borrower and its Subsidiaries before interest and
taxes, in each case for the four consecutive Fiscal Quarters of the
Borrower ending on the last day of the most recently completed Fiscal
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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 to the Administrative Agent, or
(ii) have assets which represent more than 5% of the
consolidated assets of the Borrower 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 to the Administrative Agent.
"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 Vehicle that is not an Eligible
Repurchase Vehicle.
"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 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, the Series 1998-2
Supplement to the Base Indenture, the Series 1998-3 Supplement to the
Base Indenture, the Series 1998-4 Supplement to the Base Indenture or
the Series 1994-A
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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 or any of its 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.
"Non-Vehicle Interest Expense" means, for any applicable period, the
excess of
(a) the aggregate consolidated gross interest expense of the
Borrower 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 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, (iv) Distributions made in respect of the Convertible
Preferred Securities and (v) the portion of any payments made in
respect of Capitalized Lease Liabilities of the Borrower 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
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, 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, limited liability agreement and all
shareholder agreements, voting trusts and similar
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arrangements applicable to any of such Obligor's partnership interests, limited
liability company interests or authorized shares of capital stock.
"Original Credit Agreement" is defined in the first recital.
"Original Letters of Credit" means the Letters of Credit (as defined in
the Original Credit Agreement) outstanding on the Amendment Effective Date.
"Original Loan Documents" means the Loan Documents (as defined in the
Original Credit Agreement and in effect immediately prior to the Amendment
Effective Date).
"Participant" is defined in Section 11.11.2.
"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 11.11.1.
"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 Borrower 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
Acquisitions (other than Franchisee Acquisitions, the Cruise America
Acquisition and the Ryder Acquisition) 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
$75,000,000), and
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(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 $50,000,000, the Administrative
Agent shall have received a Compliance Certificate executed by an
Authorized Officer of the Borrower 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, 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 Borrower
Pledge Agreement or the Subsidiary Pledge Agreement.
"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 Subsidiary Security
Agreement.
"Purchase Agreement" means the Purchase Agreement, dated as of June 16,
1998, among the Borrower, Budget Capital and the initial purchasers named
therein, pursuant to which the Convertible Preferred Securities were sold to
such purchasers.
"Quarterly Payment Date" means the last Business Day of each February,
May, August and November.
"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 or any
of its 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 Borrower) on or prior to
May 31, 2004, (ii) is redeemable at the option of the holder thereof (for
consideration other than shares of common stock of the Borrower) at any time
prior to such date or (iii) is convertible into or exchangeable for debt
securities of the Borrower or any of its Subsidiaries at any time prior to such
anniversary.
"Reference Date" means the 22nd day of each calendar month or, if such
day is not a Business Day, the next succeeding Business Day.
"Reference Lenders" means Credit Suisse First Boston, NationsBanc and
Toronto Dominion (Texas), Inc. 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 Budget 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 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 and including the 25th day of the calendar month
immediately preceding such date.
"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.
"Repurchase Program" means a program pursuant to which a Manufacturer
has agreed with BRACC or the Nominee (as defined in any Nominee Agreement) to
repurchase or guarantee the auction sale price of Vehicles manufactured by it or
one of its Affiliates.
"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.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended.
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"Ryder" is defined in the Assignment and Amendment Agreement.
"Ryder Acquisition" is defined in the Assignment and Amendment
Agreement.
"Ryder Subordinated Notes" is defined in the Assignment and Amendment
Agreement.
"Ryder Subordinated Note Indenture" is defined in the Assignment and
Amendment Agreement.
"S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc.
"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 or the Subsidiary Security Agreement.
"Senior Note Purchase Agreements" means the several Note Purchase
Agreements, dated as of April 25, 1997, in each case between BRACC 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
BRACC, 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 Budget 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 Budget 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 Budget, issued pursuant to the Series A Note Purchase Agreements,
as the same may be
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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 Budget, 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.
"Servicer" means Budget, or such other party as is appointed as
Servicer under the Security Agreements, and its permitted successors as Servicer
thereunder.
"Solvency Certificate" means, collectively, the certificates executed
and delivered by each of BRACC, Ryder, Cruise America, Inc. and Premier Car
Rental, LLC pursuant to Section 4.19 of the Assignment and Amendment Agreement,
substantially in the form of Exhibit N hereto.
"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 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.
"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.
"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 June 19, 2003.
"Stock Purchase Agreements" is defined in the third recital.
"Subordinated Debt" means all unsecured Indebtedness of 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 Borrower or such Subsidiary Guarantor, as
the case may be, including the Series A Notes, the Series B Notes and the High
Tides Debentures.
"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
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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 that certain Subsidiary Guaranty (as
defined in and executed and delivered pursuant to the Original Credit Agreement
and in effect immediately prior to effectiveness of this Agreement), dated as of
the Closing Date, as amended and restated in the form of the Amended and
Restated Subsidiary Guaranty attached as Exhibit H hereto and dated as of the
Amendment Effective Date, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
"Subsidiary Pledge Agreement" means that certain Borrower Pledge
Agreement and that certain Subsidiary Pledge Agreement (in each case as defined
in and executed and delivered pursuant to the Original Credit Agreement and in
effect immediately prior to effectiveness of this Agreement), each dated as of
the Closing Date, collectively as amended and restated in the form of the
Amended and Restated Subsidiary Pledge Agreement attached as Exhibit F-2 hereto
and dated as of the Amendment Effective Date, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Subsidiary Security Agreement" means that certain Amended Borrower
Security Agreement, dated as of March 13, 1998, and that certain Subsidiary
Security Agreement, dated as of the Closing Date (in each case as defined in and
executed and delivered pursuant to the Original Credit Agreement and in effect
immediately prior to effectiveness of this Agreement), collectively as amended
and restated in the form of the Amended and Restated Subsidiary Security
Agreement attached as Exhibit G-2 hereto and dated as of the Amendment Effective
Date, as the same may be amended, supplemented, restated or otherwise modified
from time to time.
"Supermajority Lenders" means, at any time, 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.
"Taxes" is defined in Section 5.6.
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"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 Borrower 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"; provided that Indebtedness in
respect of the High Tide Debentures shall be excluded from Total Debt solely to
the extent the High Tide Debentures are held by Budget Capital Trust.
"Transaction" is defined in the Assignment and Amendment Agreement.
"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.
"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.
"Unrestricted Cash" means, at any time, cash and Cash Equivalent
Investments of the Borrower and its Subsidiaries to the extent such cash and
Cash Equivalent Investments is not subject to any Lien (other than a Lien in
favor of the Administrative Agent pursuant to a Loan Document) or any
restriction as to its use and is included in "cash and cash equivalents" and not
"restricted cash" on the consolidated balance sheet of the Borrower; provided,
however, that Unrestricted Cash shall include the aggregate amount of Eligible
Cash and Cash Equivalents expressly included in the Borrowing Base Amount in
effect at such time.
"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
Pledged Vehicle financed hereunder; provided that any obligation included as
Non-Vehicle Debt pursuant to clause (c) of the definition thereof shall not be
deemed to be Vehicle Debt.
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"Vehicle Interest Expense" is defined in clause (b) of the definition
of "Non-Vehicle Interest Expense".
"Vehicle Schedule" has the meaning specified in the Subsidiary Security
Agreement.
"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.
"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.
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
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computed on a consolidated basis for the Borrower 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 Dollars 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
(i) 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, or
(ii) 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, together with
the aggregate outstanding principal amount of all Loans of all
Lenders would exceed the lesser of the Commitment Amount and
the then existing Borrowing Base Amount, or
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(ii) such Lender's Percentage of all Letter of Credit
Outstandings, together with the aggregate outstanding
principal amount of all Loans 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 the Commitment Amount. The Commitment Amount
is 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 Amendment Effective 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.
SECTION 2.2.2. Mandatory. The Commitment Amount shall 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 or any of its 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 (a)
any Net Disposition Proceeds or Casualty Proceeds received by the Borrower or
such Subsidiary under this Section so long as (i) (A) the Borrower informs the
Administrative Agent no later than 30 days following the occurrence of the
permitted disposition resulting in such Net Disposition Proceeds or the Casualty
Event resulting in such Casualty Proceeds, as the case may be, of its or such
Subsidiary's good faith intention to apply such Net Disposition Proceeds to the
acquisition or construction of property or capital assets to be used in the
business of the Borrower and its Subsidiaries or such Casualty Proceeds to the
rebuilding or replacement of the property which was the subject of such Casualty
Event, as the case may be, and (B) such Net Disposition Proceeds or Casualty
Proceeds, as the case may be, are in fact so applied within 180 days following
the receipt of such Net Disposition Proceeds or Casualty Proceeds, and (ii) no
Default shall have occurred and be continuing and (b) any Net Equity Proceeds
received by the Borrower or such Subsidiary under this Section so long as (i)
the Administrative Agent shall have received a Compliance Certificate executed
by an Authorized Officer of the Borrower 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 the sale or issuance giving rise to such Net Equity Proceeds and all other
transactions related thereto (including all Indebtedness that would be assumed
or incurred as a result of such other transactions)) 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, the Borrower would be in compliance with Section
8.2.4 as of the last day of such Fiscal Quarter and the Leverage Ratio as of
such date
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would be less than 3.25:1, and (ii) no Default shall have occurred and be
continuing. Each such reduction in the Commitment Amount shall be permanent and
automatic.
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, or
(b) on not less than three (but in any event not more than
five) Business Days' notice in the case of Eurocurrency Loans,
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 and an integral multiple of $100,000
or, in either case, the unused amount of the Commitment Amount. 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 specified in such
Borrowing Request. On or before 1:00 p.m. (New York City, New York time) on such
Business Day, each Lender shall deposit with the Administrative Agent same day
funds in Dollars 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, or
(b) on not less than three (but in any event not more than
five) Business Days' notice in the case of Eurocurrency Loans,
that all, or any portion in an aggregate minimum amount of $3,000,000 and an
integral multiple of $100,000, in the case of any Eurocurrency Loan, be
converted into an ABR Loan or, an aggregate minimum amount of $5,000,000 and an
integral multiple of $100,000, 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);
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provided, however, that (i) each such conversion or continuation shall be pro
rated among the applicable outstanding Loans of all Lenders and (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.
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 by
purchasing deposits in Dollars 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 Commitment
Amount as in effect on the Amendment Effective Date. 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. 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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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
(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, 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 time)
(A) on such Business Day in the case of ABR
Loans, or
(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; 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 and an integral multiple of $100,000;
(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 and
Letter of Credit Outstandings over the Commitment Amount in
effect on such date (following such reduction); or
(ii) the aggregate unpaid principal amount of all
Loans 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 and Letter of Credit
Outstandings over the lesser of
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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 Loans then outstanding equal to the
excess, if any, of the aggregate, outstanding principal amount
of all Loans 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;
(B) second, 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 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) third, 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
(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
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(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
(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 Amendment Effective 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
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(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 Article VI) commencing on the
Amendment 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
Amendment 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 May 7, 1998, the Borrower shall pay on the Amendment Effective Date an
arrangement fee to Credit Suisse First Boston in its capacity as Co-Arranger for
the account of the Lenders in such proportion as the Co- Arrangers shall
determine in their 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 Amendment Effective 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 Amendment Effective 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
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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.
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, the Borrower may request, from time to time prior
to the Letter of Credit 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 4.17 of the Assignment
and Amendment Agreement, 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. Any
Issuance Request not delivered on or before 1:00 p.m. (New York City, New York
time) on a Business Day shall be deemed to have been delivered on the
immediately succeeding Business Day. 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:
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(a) be issued in a Stated Amount denominated in Dollars which
(i) is at least $100,000; and
(ii) does not exceed (or would not exceed) 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; 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
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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.
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
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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 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
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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 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),
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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 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
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(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
(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.
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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
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;
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(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, 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,
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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.
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 11.11 and Article X.
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
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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.
SECTION 4.12. Original Letters of Credit. (a) Each Original Letter of
Credit shall be deemed to be a Letter of Credit issued hereunder.
(b) Not in limitation of the Borrower's obligation to pay all
Reimbursement Obligations in respect of each Original Letter of Credit, but in
addition thereto, the Borrower hereby agrees to be bound by all provisions in
this Agreement (including Article IV) and each other Loan Document relating to
the payment of all Reimbursement Obligations, fees, costs and indemnifications
in respect of such Original Letter of Credit as if such provisions (other than
those set forth in Section 4.10) were originally direct obligations of the
Borrower instead of BRACC.
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 upon
which interest shall be payable at the same time as the related Eurocurrency
Loans.
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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 Effective Date 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-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; or
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(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
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
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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 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
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to the Administrative Agent shall be made, without setoff, deduction or
counterclaim, not later than 12:00 noon (New York City, New York 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 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
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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,
(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
11.11.1, 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 11.11.1),
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 11.11.1
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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. [INTENTIONALLY OMITTED.]
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 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 or any of its Subsidiaries
which might materially adversely affect the Borrower'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 and its Subsidiaries; and
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(c) no Default shall have then occurred and be
continuing, and neither the Borrower nor any of its 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 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 or any of its
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,
the Borrower represents and warrants unto each Agent, the Issuer and each
Lender as set forth in this Article VII.
SECTION 7.1. Organization, etc. The Borrower and each of its
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,
(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
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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.
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 other Obligor of each Loan Document
executed or to be executed by it and the Borrower's and each such other
Obligor's participation in the consummation of the Transaction are within the
Borrower'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 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 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 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 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 and each such other Obligor's
participation in the consummation of the Transaction. Neither the Borrower nor
any of its 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
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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 each other Obligor will, on the due
execution and delivery thereof by such Obligor, as the case may be, be the
legal, valid and binding obligation of such Obligor, as the case may be,
enforceable in accordance with its 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. 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
furnished to each Agent and each Lender pursuant to clause (a) of Section 4.8
of the Assignment and Amendment Agreement 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 Borrower, the Borrower and its Subsidiaries did not have any material
liabilities (matured or unmatured, fixed or contingent) that were not fully
reflected or provided for on the financial statements delivered pursuant to
clauses (a) and (b) of Section 4.8 of the Assignment and Amendment Agreement,
whether or not required by GAAP to be shown on such financial statements. The
pro forma balance sheets delivered pursuant to clause (c) of Section 4.8 of the
Assignment and Amendment Agreement 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 the Borrower 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 Borrower and its Subsidiaries, taken as a whole, since
December 31, 1997.
SECTION 7.7. Litigation, Labor Controversies, etc. There is no
pending or, to the best knowledge of the Borrower, threatened litigation,
action, proceeding, or labor controversy affecting the Borrower or any of its
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 which
purports to affect the legality, validity or enforceability
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of this Agreement, the Notes or any other Loan Document, except as disclosed in
Item 7.7 ("Litigation") of the Disclosure Schedule.
SECTION 7.8. Subsidiaries. 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 and each of its
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 and each of its 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 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 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) and to the
best knowledge of the Borrower and its Subsidiaries,
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its
Subsidiaries have been, and continue to be, owned or leased
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and operated by the Borrower 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;
(b) there are no pending or threatened
(i) claims, complaints, notices or requests
for information received by the Borrower or any of its
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
(ii) complaints, notices or inquiries to the
Borrower or any of its 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;
(c) there have been no Releases of Hazardous Materials
at, on or under any property now or previously owned or leased by the
Borrower or any of its 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;
(d) the Borrower and each of its 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 or any of its 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;
(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 or any of its
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;
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(g) neither the Borrower nor any of its 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 or such
Subsidiary thereof for any remedial work, damage to natural resources
or personal injury, including claims under CERCLA;
(h) neither the Borrower nor any of its 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
or any of its 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;
(i) there are no polychlorinated biphenyls or friable
asbestos present at any property now or previously owned or leased by
the Borrower or any of its 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; 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.
SECTION 7.13. Intellectual Property. Each of the Borrower and its
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, service mark rights and copyrights as the Borrower
considers necessary for the conduct of the businesses of the Borrower and its
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, 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, except as may be
disclosed in Item 7.13 ("Intellectual Property") of the Disclosure Schedule.
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SECTION 7.14. Regulations U and X. Neither the Borrower nor any of
its 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
U or X. Terms for which meanings are provided in F.R.S. Board Regulation 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 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 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 as of the Effective Date. Each of the Stock
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. (a) 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 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.
(b) The subordination provisions applicable to the Ryder
Subordinated Notes will be enforceable against the holders of the Ryder
Subordinated Notes by the holder of any Senior Indebtedness (as defined in the
Ryder Subordinated Notes Indenture) which has not 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 and Designated Senior
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Indebtedness (as defined in the Ryder Subordinated Notes Indenture), and all
such Obligations are entitled to the benefits of the subordination created by
the Ryder Subordinated Note Indenture. The "Subordination Termination Date" as
defined in the Ryder Subordinated Note Indenture has not occurred.
(c) The subordination provisions applicable to the High Tides
Debentures and the High Tides Guaranty will be enforceable against the holders
of the High Tide Debentures and the Convertible Preferred Securities by the
holder of any Senior Debt (as defined in each of the High Tides Debentures
Indenture and the High Tides Guaranty) which has not 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
Debt and Designated Senior Debt (as defined in each of the High Tides
Debentures Indenture and the High Tides Guaranty) and all such Obligations are
entitled to the benefits of the subordination created by the High Tides
Debentures and the High Tides Guaranty.
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 nor any of its
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.
SECTION 7.19. Year 2000 Compatibility. The Borrower and its
Subsidiaries have taken, or will take, all steps reasonably necessary to ensure
that the software necessary for the operation of their business will not
experience abnormally ending, invalid or incorrect results with respect to
computations, calculations or operations involving dates on or subsequent to
January 1, 2000 as a result of any "year 2000" incompatibilities. Within 90
days following the Amendment Effective Date, the Borrower shall deliver to the
Lenders a detailed schedule of all steps that remain to be taken to ensure
complete "year 2000" compatibility, together with the expected date of
completion for such steps.
SECTION 7.20. Solvency. Each of the Borrower and each Subsidiary
Guarantor has (a) assets which have a present fair saleable value greater on a
going-concern basis that its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities), (b) has sufficient cash flow to enable
it to pay its debts as they mature and (c) does not have unreasonably small
capital (it being acknowledged and agreed that royalties payable by Budget Rent
A Car Systems, Inc. to the Borrower or any Subsidiary Guarantor shall be
excluded as a liability of Budget Rent A Car Systems, Inc. for purposes of this
Section).
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ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. The Borrower agrees 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 8.1.
SECTION 8.1.1. Financial Information, Reports, Notices, etc. The
Borrower 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 Borrower, consolidated and consolidating balance
sheets of the Borrower 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 Borrower 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 an Authorized Officer of the Borrower;
(b) as soon as available and in any event within 90 days
after the end of each Fiscal Year of the Borrower, a copy of the
annual audited report for such Fiscal Year for the Borrower and its
Subsidiaries, including therein consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal Year and
consolidated statements of earnings and cash flow of the Borrower 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 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 an Authorized Officer of the Borrower,
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;
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(d) as soon as possible and in any event within three
days after the occurrence of each Default, a statement of an
Authorized Officer of the Borrower setting forth details of such
Default and the action which 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) so long as the Collateral Release Date has not
occurred, (i) within 15 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 an Authorized Officer of the Borrower 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),
(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
an Authorized Officer of the Borrower; provided, however, that
Borrowing Base Certificates and Monthly Reports shall not be required
to be furnished on any date that they would otherwise be required to
be furnished pursuant to subclause (i) or (ii) above if such date
occurs during an Investment Grade Period, provided further, however,
that, in the event a Borrowing Base Certificate or Monthly Report is
not required to be furnished as a result of the occurrence of an
Investment Grade Period and such Investment Grade Period terminates,
the Borrower shall furnish, as soon as possible to each Lender, the
Issuer and each Agent a Borrowing Base Certificate calculated in
accordance with the preceding subclause (ii) (as if the relevant
Investment Grade Period Termination Date was the date of the
presentment for payment under an Enhancement Letter of Credit) and a
Monthly Report (with a copy to the Collateral Agent) for the then most
current Related Month;
(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 or any
of its Subsidiaries files with the Securities and Exchange Commission
or any national securities exchange;
(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
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which could result in the requirement that the Borrower or any of its
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 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
the earlier to occur of (i) 30 days after the approval thereof by the
Borrower's Board of Directors and (ii) 90 days after the first day of
each Fiscal Year of the Borrower, an annual budget, prepared on a
monthly basis for such Fiscal Year of the Borrower containing
consolidated and consolidating projected statements of earnings and
cash flow of 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 Borrower, of any material variance from the budget of
the Borrower 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 Borrower 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 or
the Ryder Subordinated Note Indenture and each other agreement for
borrowed money to which the Borrower or any of its Subsidiaries (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);
(l) so long as the Collateral Release Date has not
occurred, 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); provided, however, that such Independent
Accountant's Report shall not be required to be furnished if such
Determination Date occurs during an Investment Grade Period;
(m) on January 31, 2002, a certificate from an
Authorized Officer of the Borrower, dated as of such date, in which
certificate such Authorized Officer shall certify that all actions
necessary for the continued perfection of the Administrative Agent's
Liens on all Collateral (as defined in each Loan Document) for the
period from the fifth anniversary of the Closing Date until the Stated
Maturity Date have been taken (including all recordings, registerings,
filings, re-recordings, re-registerings and refilings of all
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financing statements, continuation statements or other instruments of
further assurance as is necessary to ensure such continued
perfection); and
(n) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
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 will, and will cause each of its 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;
(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 Effective Date, between Ford Motor Company and the
Borrower, and the Advertising Agreement dated as of the Effective
Date, 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 will, and
will cause each of its 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 will, and will cause each of
its 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
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Authorized Officer of the Borrower setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section.
SECTION 8.1.5. Books and Records. The Borrower will, and will cause
each of its 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 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 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 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 will, and will
cause each of its 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 or
any of its Subsidiaries;
(d) respond to past and ongoing releases of petroleum-
containing materials in a manner that, as prudent, minimizes any
likelihood that the Borrower or any of its 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;
(e) manage the disposition of residuals such as spent
petroleum-containing material in a manner that, as prudent, minimizes
any likelihood that the Borrower or any of its 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,
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operations, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower 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 seventh recital;
without limiting the foregoing, no proceeds of any 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. Debt Tender Offer and Consent Solicitation. The
Borrower shall cause the Debt Tender Offer and the Consent Solicitation to have
been consummated in accordance with their terms on or prior to July 16, 1998,
and after giving effect to such consummation no more than $87,000,000 in
principal amount of the Ryder Subordinated Notes shall be outstanding.
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
and if the Collateral Release Date has not occurred, shall execute and
deliver to the Administrative Agent within ten Business Days of
becoming a Subsidiary of the Borrower 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) if the Collateral Release Date has not occurred, the
Borrower and/or the Subsidiary of the Borrower that owns Capital Stock
of such Person (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
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within ten Business Days of such Person becoming a Subsidiary of the
Borrower 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, the Administrative
Agent shall have obtained "control" (as defined in the Uniform
Commercial Code in effect in the State of New York) over such Capital
Stock) and such other instruments and documents as the Administrative
Agent shall deem necessary or in the reasonable opinion of the
Administrative Agent desirable under applicable law to perfect the
first priority security interest of the Administrative Agent in such
Capital Stock 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 or the Person
the Capital Stock of which is being pledged to a significant adverse
tax consequence, as determined by the Borrower and evidenced by a
certificate of an Authorized Officer of the Borrower 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
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(d) if the Collateral Release Date has not occurred, the
Administrative Agent shall have received from each such Person within
ten days of such Person becoming a Subsidiary of the Borrower executed
copies of U.C.C. financing statements naming each such Person 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 Person,
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 agrees 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 will not, and will
not permit any of its 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 operation of public storage facilities, 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 will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise 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 the Amendment 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 Ryder in respect of the Ryder
Subordinated Notes in an aggregate principal amount not to exceed (i)
on or prior to July 16, 1998, $175,000,000 less the portion thereof
repaid, redeemed or repurchased and (ii) thereafter, $87,000,000 less
the portion thereof repaid, redeemed or repurchased;
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(e) Indebtedness of the Borrower in respect of the High
Tides Debentures in an aggregate principal amount not to exceed the
lesser of
(i) the quotient obtained by dividing (A) the
sum of $300,000,000 and the gross proceeds (not exceeding
$45,000,000) received by the Borrower pursuant to the
exercise of any "over-allotment option" under the Purchase
Agreement, less the portion thereof repaid, redeemed or
repurchased, by (B) 97% and
(ii) the quotient obtained by dividing (A) the
aggregate liquidation value of the Convertible Preferred
Securities (exclusive of any Convertible Preferred Securities
which have been exchanged for common stock of the Borrower),
by (B) 97%;
(f) Indebtedness of the Borrower 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 Borrower;
(g) Vehicle Debt;
(h) Indebtedness in respect of (i) Demand Capitalization
Note I to the extent the obligations of BRACC thereunder (whether
contingent or otherwise) do not exceed at any time $31,500,000, (ii)
Demand Capitalization Note II to the extent the obligations of the
Borrower thereunder (whether contingent or otherwise) do not exceed at
any time $54,000,000, (iii) Demand Capitalization Note III to the
extent the obligations of the Borrower thereunder (whether contingent
or otherwise) do not exceed at any time $60,000,000 and (iv) Demand
Capitalization Note IV to the extent the obligations of the Borrower
thereunder (whether contingent or otherwise) do not exceed at any time
$18,000,000;
(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 $55,000,000 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 of goods and services,
but excluding Indebtedness incurred through the borrowing of money or
Contingent Liabilities);
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(l) Indebtedness in respect of Capitalized Lease
Liabilities to the extent permitted by Section 8.2.7;
(m) Hedging Obligations of the Borrower or any of its
Subsidiaries pursuant to agreements designed to protect the Borrower
or any of its Subsidiaries against fluctuations in interest rates in
respect of Indebtedness of the Borrower or such Subsidiary and not
entered into for purposes of speculation;
(n) Hedging Obligations of the Borrower or any of its
Subsidiaries pursuant to agreements designed to protect the Borrower
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) [INTENTIONALLY OMITTED];
(p) Contingent Liabilities of the Borrower or a
Subsidiary Guarantor in respect of Vehicle Debt of the Borrower or a
Subsidiary Guarantor that is a Wholly-Owned Subsidiary of the
Borrower;
(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 Borrower in respect
of (i) the High Tides Guaranty and (ii) the guarantees of the Borrower
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 clause (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
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,
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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 at any time
outstanding $50,000,000;
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 will not, and will not permit
any of its 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;
(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
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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 $35,000,000 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
will not, and will not permit any of its 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 will not permit:
(a) the Net Worth of the Borrower to be at any time less
than the sum, at such time, of (i) $538,000,000 plus (ii) 50% of the
Net Income of the Borrower for each Fiscal Year, commencing with the
1998 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 1998
Fiscal Year, to be greater than the ratio set forth opposite such
Fiscal Quarter below:
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FISCAL QUARTER RATIO
The third Fiscal Quarter of the
1998 Fiscal Year 4.25:1.00
The fourth Fiscal Quarter of
the 1998 Fiscal Year and
the first, second and third
Fiscal Quarters of the 1999
Fiscal Year 4.00:1.00
The fourth Fiscal Quarter of
the 1999 Fiscal Year and
the first, second and third
Fiscal Quarters of the 2000
Fiscal Year 3.25:1.00
The fourth Fiscal Quarter of
the 2000 Fiscal Year and
the first, second and third
Fiscal Quarters of the 2001
Fiscal Year 3.00:1.00
The fourth Fiscal Quarter of
the 2001 Fiscal Year and
each Fiscal Quarter
thereafter 2.75:1.00
(c) the Interest Coverage Ratio, as of the last day of
each Fiscal Quarter, commencing with the third Fiscal Quarter of the
1998 Fiscal Year, to be less than the ratio set forth opposite such
Fiscal Quarter below:
FISCAL QUARTER RATIO
The third Fiscal Quarter of the
1998 Fiscal Year 3.50:1.00
The fourth Fiscal Quarter of the
1998 Fiscal Year and the
first, second and third Fiscal
Quarters of the 1999 Fiscal
Year 3.75:1.00
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FISCAL QUARTER RATIO
The fourth Fiscal Quarter of the
1999 Fiscal Year and each
Fiscal Quarter thereafter 4.00:1.00
SECTION 8.2.5. Investments. The Borrower will not, and will not
permit any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments existing on the Amendment 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) [INTENTIONALLY OMITTED];
(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 (other than Budget Capital)
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 (other than Contingent
Liabilities permitted pursuant to clause (t) of Section 8.2.2), to the
extent the aggregate amount of such Investments in any Fiscal Year
does not exceed $35,000,000 and the aggregate amount of such
Investments at any time outstanding does not exceed $75,000,000;
(h) the equity securities of Budget Capital held by the
Borrower on the Amendment Effective Date to the extent the aggregate
liquidation amount of such equity securities does not exceed 3% of the
total capital of Budget Capital;
(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
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(k) other Investments in an aggregate amount at any one
time not to exceed $35,000,000;
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 Amendment 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 declare, pay and make Distributions to
its stockholders in any Fiscal Year to the extent the aggregate amount
of such Distributions to be made by the Borrower pursuant to this
proviso, when added to the aggregate amount of all other such
Distributions made pursuant to this proviso during the Fiscal Year in
which such Distribution would be made, does not exceed 20% of the Net
Income of the Borrower for the immediately preceding Fiscal Year, so
long as
(i) both before and after giving effect to any
such Distribution pursuant to the preceding proviso, no
Default shall have occurred and be continuing, and
(ii) the Borrower 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 Section
8.1.1 (including Section 8.1.1 of the Original Credit
Agreement) and (B) a certificate of the Borrower executed by
an Authorized Officer of the Borrower demonstrating that the
financial results reflected in such
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financial statements would comply with the requirements of
Section 8.2.4 for the Fiscal Quarter in which such
Distribution is to be made;
(b) 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); provided, however, that Budget
Capital may declare, pay and make the quarterly distributions set
forth in the Budget Capital Trust Documents on the stated, scheduled
dates therefor;
(c) the Borrower will not, and will not permit any of
its Subsidiaries to
(i) make any payment or prepayment of principal of,
or make any payment of interest on, any Subordinated Debt
(other than Subordinated Debt held by the Borrower or any
Wholly Owned Subsidiary of the Borrower that is a Subsidiary
Guarantor), other than payments of interest on the stated,
scheduled date for such payments of interest as 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 (other than Subordinated Debt held by the Borrower or
any Wholly Owned Subsidiary of the Borrower that is a
Subsidiary Guarantor); and
(d) the Borrower will not, and will not permit any of its
Subsidiaries to, make any deposit for any of the foregoing purposes.
SECTION 8.2.7. Capital Expenditures, etc. (a) The Borrower will
not, and will not permit any of its Subsidiaries to, make or commit to make
Capital Expenditures in any Fiscal Year, except (i) Capital Expenditures for the
acquisition of Vehicles and (ii) other Capital Expenditures which do not
aggregate in excess of the amount set forth below opposite such Fiscal Year:
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1998 $86,000,000
1999 $65,000,000
2000 $70,000,000
2001 $73,000,000
2002 $77,000,000
2003 $40,000,000
(b) Notwithstanding anything to the contrary contained
in Section 8.2.7(a)(ii) above, to the extent that Capital Expenditures
made by the Borrower and its Subsidiaries during any Fiscal Year are
less than the maximum amount permitted to be made for such Fiscal Year
pursuant to Section 8.2.7(a)(ii) above, 50% of such unused amount
(each such amount, a "carry-forward amount") may be carried forward to
the immediately succeeding Fiscal Year and utilized to make Capital
Expenditures in such succeeding Fiscal Year in the event the amount
permitted pursuant to Section 8.2.7(a)(ii) in such succeeding Fiscal
Year has been used (it being understood and agreed that no
carry-forward amount may be carried forward beyond the Fiscal Year
immediately succeeding the Fiscal Year in which it arose and that no
portion of the carry-forward amount available for any Fiscal Year may
be used until the entire amount of Capital Expenditures permitted to
be made in such Fiscal Year (without giving effect to such
carry-forward amount) shall be made); provided, however, that in no
event shall the Capital Expenditures made by the Borrower and its
Subsidiaries during any Fiscal Year pursuant to Section 8.2.7(a)(ii)
and this Section 8.2.7(b) exceed 135% of the amount set forth for such
Fiscal Year in Section 8.2.7(a)(ii).
SECTION 8.2.8. Take or Pay Contracts. The Borrower will not, and
will not permit any of its 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 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 will not,
and will not permit any of its 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
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(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 will not, and
will not permit any of its 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 Borrower or any of its
Subsidiaries (including accounts receivable and Capital Stock) to any Person,
unless
(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 Borrower;
(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 Borrower 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 75% 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, and will not permit any of its Subsidiaries to 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, the
Ryder Merger Agreement, the Budget Capital Trust Documents or the Debt
Tender/Consent Solicitation Documents, other than any amendment, supplement or
other modification which would not have an adverse effect on the Lenders or (b)
the Liquidity Facility, the Series A Note Purchase Agreements, the Series A
Notes, the Series B Note Purchase Agreements, the Series B Notes, the High
Tides Debentures, the High Tides Debentures Indenture, the High Tides Guaranty
or any other document or instrument evidencing or applicable to any
Subordinated Debt, other than any amendment, supplement or other
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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 will not,
and will not permit any of its 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 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 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 Subsidiary of the Borrower at
the higher of the fair market value thereof and the net book value thereof (or,
in the case of Vehicles located in Texas or Hawaii, at the net 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 will not, and will not permit any of its 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 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;
(ii) as to any SPC, usual and customary restrictions
pursuant to the Organic Documents of such SPC;
(iii) 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,
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provided that such restrictions are agreed to in good faith and,
where applicable, based upon reasonable assumptions; or
(iv) as to Budget Capital, pursuant to the Budget
Capital Trust Documents.
SECTION 8.2.14. Ability to Amend; Restrictive Agreements. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into,
or accept obligations under, any agreement (a) prohibiting (including
subjecting to any condition) the ability of the Borrower or any of its
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.
SECTION 8.2.15. Accounting Changes. The Borrower 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 will not,
and will not permit any of its 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.
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.
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 or the Assignment and Amendment Agreement) is or shall be incorrect
when made in any material respect.
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SECTION 9.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower 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, etc. (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 or any of its
Subsidiaries or any other Obligor having a principal amount, individually or in
the aggregate, in excess of $15,000,000, 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.
(c) A default shall occur in the payment when due
(subject to any applicable grace period), whether by acceleration or otherwise,
of any amount payable by the Borrower or Budget Capital with respect to the
High Tides Debentures or the Convertible Preferred Securities, or a default
shall occur in the performance or observance of any obligation or condition
with respect to the High Tides Debentures or the Convertible Preferred
Securities if the effect of such default is to accelerate the maturity of the
High Tides Debentures or result in the mandatory redemption of the Convertible
Preferred Securities or such default shall continue unremedied for any
applicable period of time sufficient to permit the holder or holders of the
High Tides Debentures or the Convertible Preferred Securities, or any trustee
or agent for such holders, to cause the High Tides Debentures to become due and
payable prior to their expressed maturity or cause the Convertible Preferred
Securities to become mandatorily redeemable.
SECTION 9.1.6. Judgments. Any judgment or order for the payment of
money in excess of $15,000,000 shall be rendered against the Borrower or any of
its Subsidiaries or any other Obligor and either
(a) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order; or
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(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.
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, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower 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 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 or any
of its 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 or any of its 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 or any of
its 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, each of its 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
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insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Borrower or any of its Subsidiaries or
any other Obligor, and, if any such case or proceeding is not
commenced by the Borrower or such Subsidiary or such other Obligor,
such case or proceeding shall be consented to or acquiesced in by the
Borrower 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, 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, 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, the Series B Note Purchase Agreements, the
Ryder Subordinated Note Indenture, the High Tides Debentures Indenture
or the High Tides Guaranty 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, Series B
Notes, Ryder Subordinated Notes, High Tides Debentures or Convertible
Preferred Securities or of any party to the Series A Note Purchase
Agreements, the Series B Note Purchase Agreements, the Ryder
Subordinated Note Indenture, the High Tides Debenture Indenture or the
High Tides Guaranty; or any such holder, any such party or any party
to the Budget Capital Trust Documents shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability of such subordination provisions.
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
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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.
ARTICLE X
THE AGENTS
SECTION 10.1. 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 additional indemnification from the Lenders and cease to do the
acts indemnified against hereunder until such additional indemnity is given.
SECTION 10.2. 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. (New York City, New York
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
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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 10.3. 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 10.4. Successor. The Administrative Agent may resign as
such at any time upon at least 30 days' prior notice to the Borrower and all
Lenders. If the Administrative Agent at any time shall resign, the Required
Lenders may appoint another Lender as a successor Administrative Agent which
shall thereupon become the Administrative Agent hereunder in such capacity. If
no successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative 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 having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from
the retiring Administrative Agent such documents of transfer and assignment as
such successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be
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discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation hereunder as the Administrative
Agent, the provisions of
(a) this Article X shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to
inure to its benefit.
SECTION 10.5. 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 10.6. 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 10.7. 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.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. 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
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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 11.1, change the definition of
"Required Lenders" or "Supermajority Lenders", increase the 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.
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
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approval hereunder shall require any similar or dissimilar waiver or approval
thereafter to be granted hereunder.
Notwithstanding any provision to the contrary herein or in any other
Loan Document, as soon as practicable following the occurrence of the
Collateral Release Date all Collateral granted by the Borrower and each of its
Subsidiaries pursuant to a Loan Document shall be released from the Lien of
such Loan Document. Each of the Lenders authorizes the Administrative Agent to
take all actions and execute all documentation necessary to effect such
release, and the Administrative Agent, at the Borrower's and each such
Subsidiary's sole expense, shall execute and deliver to the Borrower and the
applicable Subsidiary such documents as the Borrower and the applicable
Subsidiary shall reasonably request to evidence such release.
SECTION 11.2. 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 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 11.3. 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
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(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other Loan
Document.
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 11.4. 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
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(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
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 11.5. Survival. The obligations of the Borrower under
Sections 4.9, 5.3, 5.4, 5.5, 5.6, 11.3 and 11.4, and the obligations of the
Lenders under Section 10.1, shall in each case survive any assignment from one
Lender to another (in the case of Sections 10.3 and 10.4) 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 11.6. 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 11.7. 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 11.8. 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 pursuant to the terms of the Assignment and
Amendment Agreement.
SECTION 11.9. 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.
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SECTION 11.10. 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:
(a) the Borrower may not assign or transfer any of its
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 11.11.
SECTION 11.11. 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 11.11.
SECTION 11.11.1. 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 (or
such lesser amount agreed to by the Borrower and the Administrative Agent);
provided, however, that following an assignment of less than all of such
assigning Lenders total Loans and Commitments, such assigning Lender shall
continue to have Commitments, participations in Letter of Credit Outstandings
and Loans aggregating at least $5,000,000 (or such lesser amount agreed to by
the Borrower and the Administrative Agent); 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
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(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,
(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 11.11.1 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 11.11.2. 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
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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
(a) no participation or sub-participation contemplated
in this Section 11.11 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 11.1, 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, 11.3 and 11.4, shall be considered a
Lender.
SECTION 11.12. 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 11.13. 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 11.14. 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
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CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER 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. THE BORROWER
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. THE BORROWER 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 BORROWER 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 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 SUCH PERSON OR THE PROPERTY OF SUCH PERSON, THE BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF THE OBLIGATIONS OF SUCH PERSON
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.15. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE
LENDERS AND THE BORROWER 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
OR THE BORROWER. THE BORROWER 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
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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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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 GROUP, INC.
By: /s/ Stephen G. Worthley
-----------------------------------
Name: Stephen G. Worthley
Title: Vice President and Treasurer
Address: 4225 Naperville Road
Lisle, IL 60532
Facsimile No.: (630) 955-7810
Attention: Scott R. White
Executive Vice President
CREDIT SUISSE FIRST BOSTON, as a Co-
Syndication Agent, a Co-Arranger,
the Issuer and the Administrative Agent
By: /s/ Julia P. Kingsbury
-----------------------------------
Name: Julia P. Kingsbury
Title: Assistant Vice President
By: /s/ Robert Hetu
-----------------------------------
Name: Robert Hetu
Title: Associate
Address: Eleven Madison Avenue
21st Floor
New York, NY 10010-3629
Facsimile No.: (212) 325-8304
Attention: Robert Hetu
S-1
<PAGE> 122
NATIONSBANC MONTGOMERY SECURITIES
LLC, as a Co-Syndication Agent, a
Co-Arranger and the Documentation Agent
By: /s/ Arrington H. Mixon
-----------------------------------
Name: Arrington H. Mixon
Title:
Address: 100 North Tryon Street
7th Floor
Charlotte, NC 28255
Facsimile No.: (704) 388-0209
Attention: Arrington H. Mixon
LENDERS:
CREDIT SUISSE FIRST BOSTON
By: /s/ Julia P. Kingsbury
-----------------------------------
Name: Julia P. Kingsbury
Title: Assistant Vice President
By: /s/ Robert Hetu
-----------------------------------
Name: Robert Hetu
Title: Associate
NATIONSBANK, N.A.
By: /s/
-----------------------------------
Name:
Title:
S-2
<PAGE> 123
BANK OF HAWAII
By: /s/ Donna R. Parker
-----------------------------------
Name: Donna R. Parker
Title: Vice President
BANK OF MONTREAL
By: /s/ Sheila C. Weimer
-----------------------------------
Name: Sheila C. Weimer
Title: Director
THE BANK OF NEW YORK
By: /s/ Steven Wilson
-----------------------------------
Name: Steven Wilson
Title: AVP
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-----------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By: /s/ Joseph P. Devoe
-----------------------------------
Name: Joseph P. Devoe
Title: Attorney-In-Fact
S-3
<PAGE> 124
BANK POLSKA KASA OPIEKI S.A. - PEKAO
S.A GROUP, NEW YORK BRANCH
By: /s/ Harvey Winter
-----------------------------------
Name: Harvey Winter
Title: Vice President
BANK UNITED
By: /s/ Phil Green
-----------------------------------
Name: Phil Green
Title: Director, Commercial Loan
Syndications
PARIBAS
By: /s/ Nicholas C. Mast
-----------------------------------
Name: Nicholas C. Mast
Title: Regional General Manager
By: /s/ Brian F. Hewett
-----------------------------------
Name: Brian F. Hewett
Title: Vice President
BANQUE WORMS CAPITAL CORPORATION
By: /s/
-----------------------------------
Name:
Title:
S-4
<PAGE> 125
BHF-BANK AKTIENGESELLSCHAFT
By: /s/
-----------------------------------
Name:
Title:
By: /s/ Anthony Heyman
-----------------------------------
Name: Anthony Heyman
Title: Assistant Vice President
CIBC, INC.
By: /s/ Stephanie E. Devane
-----------------------------------
Name: Stephanie E. Devane
Title: Executive Director
CIBC Oppenheimer Corp.,
as Agent
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/ Martha Skidmore
-----------------------------------
Name: Martha Skidmore
Title: Vice President
By: /s/ Marie-Rose Sensenbrenner
-----------------------------------
Name: Marie-Rose Sensenbrenner
Title: Vice President
S-5
<PAGE> 126
COMMERZBANK AKTIENGESELLSCHAFT,
CHICAGO BRANCH
By: /s/
-----------------------------------
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
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
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/ Sandra E. Horwitz
-----------------------------------
Name: Sandra E. Horwitz
Title: Senior Vice President
S-6
<PAGE> 127
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ Ken Hamilton
-----------------------------------
Name: Ken Hamilton
Title: Senior Vice President
By: /s/ Deborah Slusarczyk
-----------------------------------
Name: Deborah Slusarczyk
Title: Vice President
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By: /s/ John Fay
-----------------------------------
Name: John Fay
Title: AVP
FLEET BANK, N.A.
By: /s/ Andrea H. Lee
-----------------------------------
Name: Andrea H. Lee
Title: VP
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
-----------------------------------
Name: Peter L. Chinnici
Title: Joint General Manager
GREEN TREE FINANCIAL SERVICING CORP.
S-7
<PAGE> 128
By: /s/ Christopher A. Gouskos
-----------------------------------
Name: Christopher A. Gouskos
Title: Senior Vice President
General Manager
IMPERIAL BANK
By: /s/ Mark Campbell
-----------------------------------
Name: Mark Campbell
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By: /s/ Thomas N. Meyer
-----------------------------------
Name: Thomas N. Meyer
Title: Senior Vice President
NATEXIS BANQUE
By: /s/ Pieter J. van Tulder
-----------------------------------
Name: Pieter J. van Tulder
Title: Vice President and Manager
Multinational Group
PNC BANK, N.A.
By: /s/ Ralph M. Bowman
-----------------------------------
Name: Ralph M. Bowman
Title: Vice President
S-8
<PAGE> 129
SOUTHERN PACIFIC BANK
By: /s/ Cheryl A. Wasilewski
-----------------------------------
Name: Cheryl A. Wasilewski
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By: /s/ Kazuyoshi Ogawa
-----------------------------------
Name: Kazuyoshi Ogawa
Title: Joint General Manager
SUNTRUST BANK CENTRAL FLORIDA, N.A.
By: /s/ Janet P. Sammons
-----------------------------------
Name: Janet P. Sammons
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ J.R. Lents
-----------------------------------
Name: J.R. Lents
Title: Vice President
THE TOYO TRUST & BANKING CO., LTD.
By: /s/ T. Mikumo
-----------------------------------
Name: T. Mikumo
Title: Vice President
S-9
<PAGE> 1
EXHIBIT 10.24
[EXECUTION COPY]
FIRST AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT, dated as of September 11, 1998 (this "Amendment"), is made by and
among BUDGET GROUP, INC., a Delaware corporation (the "Borrower"), the Lenders
(such capitalized term and all other capitalized terms not otherwise defined
herein shall have the meanings provided for in Article I below) parties hereto
and CREDIT SUISSE FIRST BOSTON, as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agents have heretofore
entered into that certain Amended and Restated Credit Agreement, dated as of
June 19, 1998 (the "Credit Agreement");
WHEREAS, the Credit Agreement prohibits, inter alia, the purchase or
redemption of shares of the Capital Stock of the Borrower by the Borrower or
its Subsidiaries;
WHEREAS, the Borrower desires (subject to certain limitations) to
purchase or redeem certain outstanding shares of its Capital Stock; and
WHEREAS, the Required Lenders 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 and the Required Lenders hereby agree
as follows:
-1-
<PAGE> 2
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.
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.
SECTION 2.1. Amendment to Section 1.1 of the Credit Agreement.
Section 1.1 of the Credit Agreement ("Defined Terms") is hereby amended as
follows:
(a) by inserting in such Section the following
definition in the appropriate alphabetical order:
"First Amendment" means the First Amendment to
Amended and Restated Credit Agreement, dated as of September
11, 1998, among the Borrower, the Lenders parties thereto and
the Agents.
-2-
<PAGE> 3
(b) by deleting clause (b) of the definition of "EBITDA"
set forth in such Section in its entirety and substituting therefor
the following:
(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 plus (iv)
extraordinary and non-recurring expenses or charges resulting
from the Transaction in an amount not to exceed $56,000,000 in
the aggregate plus (v) other extraordinary and non-recurring
expenses or charges in an amount not to exceed $25,000,000 in
the aggregate since the Amendment Effective Date
minus
(c) to the extent included in arriving at such Net
Income, extraordinary and non-recurring gains in an amount
not to exceed $25,000,000 in the aggregate since the
Amendment Effective Date.
SECTION 2.2. Amendment to Section 8.2.6 of the Credit Agreement.
The proviso to clause (a) of Section 8.2.6 of the Credit Agreement ("Restricted
Payments, etc.") is hereby amended by deleting such proviso in its entirety and
substituting therefor the following:
provided, however, that the Borrower may (x) declare, pay and make
Distributions to its stockholders with respect to, and (y) purchase or
redeem, 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, in each case, in any Fiscal Year to the
extent the aggregate amount to be expended in respect of such
Distribution, purchase or redemption to be made by the Borrower
pursuant to this proviso, when added to the aggregate amount expended
in respect of all other such Distributions, purchases or redemptions
made pursuant to this proviso during the Fiscal Year in which such
Distribution, purchase or redemption would be made, does not exceed
20% of the Net Income of the Borrower for the immediately preceding
Fiscal Year, so long as
(i) both before and after giving effect to any
such Distribution, purchase or redemption pursuant to the
preceding proviso, no Default shall have occurred and be
continuing, and
(ii) in the case of any such Distribution, the
Borrower 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
-3-
<PAGE> 4
the Administrative Agent pursuant to Section 8.1.1 (including
Section 8.1.1 of the Original Credit Agreement) and (B) a
certificate of the Borrower executed by an Authorized Officer
of the Borrower 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;
ARTICLE III
CONDITIONS TO EFFECTIVENESS
This Amendment, and the amendments and modifications contained herein,
shall be and shall 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 and each of the Required Lenders.
SECTION 3.2. Execution of Affirmation and Consent. The
Administrative Agent shall have received an affirmation and consent in form and
substance satisfactory to it, duly executed and delivered by each Guarantor and
any other Obligor that has granted a Lien pursuant to any Loan Document.
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).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties. In order to induce
the Required Lenders and the Agents to enter into this Amendment, the Borrower
hereby represents and warrants to each Agent, the Issuer 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 earlier date, in which case such representations
and warranties are true and correct as of such earlier date);
-4-
<PAGE> 5
(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 or any of its Subsidiaries which might materially
adversely affect the Borrower'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 and its
Subsidiaries;
(c) no Default has occurred and is continuing, and
neither the Borrower nor any of its 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 the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, 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 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 estimates 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
-5-
<PAGE> 6
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 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. The Borrower 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.
-6-
<PAGE> 7
SECTION 5.6. 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 5.7. 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 5.8. 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 5.9. 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> 8
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 GROUP, INC.
By: /s/
--------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as a Lender,
the Issuer and the Administrative Agent
By: /s/ Robert Hetu
--------------------------------------
Name: Robert Hetu
Title: Vice President
By: /s/ Joel Gladowski
--------------------------------------
Name: Joel Gladowski
Title: Managing Director
NATIONSBANK, N.A.
By: /s/ Richard M. Starke
--------------------------------------
Name: Richard M. Starke
Title: Senior Vice President
-8-
<PAGE> 9
BANK OF HAWAII
By: /s/ Donna R. Parker
--------------------------------------
Name: Donna R. Parker
Title: Vice President
BANK OF MONTREAL
By: /s/ Sheila C. Weimer
---------------------------------------
Name: Sheila C. Weimer
Title: Director
THE BANK OF NEW YORK
By: /s/ Christine C. Bailey
--------------------------------------
Name: Christine C. Bailey
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
--------------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
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<PAGE> 10
BANK POLSKA KASA OPIEKI S.A. - PEKAO
S.A GROUP, NEW YORK BRANCH
By: /s/ William A. Shea
---------------------------------------
Name: William A. Shea
Title: Vice President
BANK UNITED
By:
---------------------------------------
Name:
Title:
PARIBAS
By: /s/
---------------------------------------
Name:
Title:
By: /s/
---------------------------------------
Name:
Title:
BANQUE WORMS CAPITAL CORPORATION
By: /s/
---------------------------------------
Name:
Title:
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<PAGE> 11
BHF-BANK AKTIENGESELLSCHAFT
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
CIBC, INC.
By: /s/ Stephanie E. Devane
--------------------------------------
Name: Stephanie E. Devane
Title: Executive Director
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/ Martha Skidmore
--------------------------------------
Name: Martha Skidmore
Title: Vice President
By: /s/ Eric Longuet
--------------------------------------
Name: Eric Longuet
Title: Vice President
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<PAGE> 12
COMMERZBANK AKTIENGESELLSCHAFT,
CHICAGO BRANCH
By:
--------------------------------------
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By: /s/ David Bouhl
--------------------------------------
Name: David Bouhl
Title: FVP
By: /s/ Dean Balice
--------------------------------------
Name: Dean Balice
Title: Senior Vice President
CREDIT LYONNAIS CHICAGO BRANCH
By:
--------------------------------------
Name:
Title:
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ Ken Hamilton
--------------------------------------
Name: Ken Hamilton
Title:
By: /s/ Deborah Slusarczyk
--------------------------------------
Name: Deborah Slusarczyk
Title: Vice President
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<PAGE> 13
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By: /s/ John S. Runnion
--------------------------------------
Name: John S. Runnion
Title: First Vice President
FLEET BANK, N.A.
By: /s/ Andrea H. Lee
--------------------------------------
Name: Andrea H. Lee
Title: Vice President
THE FUJI BANK, LIMITED
By:
--------------------------------------
Name:
Title:
GREEN TREE FINANCIAL SERVICING CORP.
By: /s/
--------------------------------------
Name:
Title:
IMPERIAL BANK
By: /s/ Mark Campbell
--------------------------------------
Name: Mark Campbell
Title: Senior Vice President
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<PAGE> 14
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By:
--------------------------------------
Name:
Title:
NATEXIS BANQUE
By: /s/ Pieter J. van Tulder
--------------------------------------
Name: Pieter J. van Tulder
Title: Vice President and Manager
PNC BANK, N.A.
By:
--------------------------------------
Name:
Title:
SOUTHERN PACIFIC BANK
By: /s/ Cheryl A. Wasilewski
--------------------------------------
Name: Cheryl A. Wasilewski
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By: /s/ John C. Kissinger
--------------------------------------
Name: John C. Kissinger
Title: General Manager
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<PAGE> 15
SUNTRUST BANK CENTRAL FLORIDA, N.A.
By: /s/
--------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By: /s/ Jimmy Simlen
--------------------------------------
Name: Jimmy Simlen
Title: Vice President
THE TOYO TRUST & BANKING CO., LTD.
By: /s/ Takashi Mikumo
--------------------------------------
Name: Takashi Mikumo
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Richard P. Degrey
--------------------------------------
Name: Richard P. Degrey
Title: Vice President
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<PAGE> 1
EXHIBIT 10.25
[EXECUTION COPY]
LIMITED WAIVER NO. 1 TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS LIMITED WAIVER NO. 1, dated as of December 31, 1998 (this
"Limited Waiver"), in reference to the AMENDED AND RESTATED CREDIT AGREEMENT
dated as of June 19, 1998 (amending and restating the Credit Agreement dated as
April 29, 1997) (as amended through the date hereof, the "Credit Agreement"),
among BUDGET GROUP, INC., a Delaware corporation (the "Borrower"), the Lenders
(such capitalized term and all other capitalized terms not otherwise defined
herein shall have the meanings provided for in Article I below) listed on the
signature pages hereto and CREDIT SUISSE FIRST BOSTON, as administrative agent
(in such capacity, the "Administrative Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agents have heretofore
entered into the Credit Agreement;
WHEREAS, the covenant in Section 8.2.7 of the Credit Agreement
prohibits the Borrower and its Subsidiaries from making or committing to make
Capital Expenditures in Fiscal Year 1998 (other than Capital Expenditures for
the acquisition of Vehicles) that exceed, in the aggregate, $86,000,000;
WHEREAS, the Borrower desires to have the Required Lenders, subject to
the conditions and on the terms set forth below, waive compliance by the
Borrower and its Subsidiaries with the covenant contained in Section 8.2.7 of
the Credit Agreement to the extent (and solely to the extent) the Capital
Expenditures made or committed to be made by the Borrower and its Subsidiaries
during Fiscal Year 1998 (other than Capital Expenditures for the acquisition of
Vehicles) do not exceed, in the aggregate, $89,500,000;
NOW, THEREFORE, the parties hereby agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Unless otherwise defined or the context otherwise requires, terms for
which meanings are provided in the Credit Agreement shall have such meanings
when used in this Limited Waiver.
ARTICLE II
LIMITED WAIVER
SECTION 2.1. Limited Waiver. Subject to the conditions and on the
terms set forth herein, and in reliance on the representations and warranties
of the Borrower contained herein, the Lenders hereby waive, as of the date
hereof, compliance by the Borrower and its Subsidiaries with the covenant
contained in Section 8.2.7 of the Credit Agreement to the extent (and solely to
the extent) the Capital Expenditures made or committed to be made by the
Borrower and its Subsidiaries during Fiscal Year 1998 (other than Capital
Expenditures for the acquisition of Vehicles) do not exceed, in the aggregate,
$89,500,000.
SECTION 2.2. Limitation of Waiver. Section 2.1 of this Limited
Waiver shall be limited precisely as written and nothing in this Limited Waiver
shall be deemed to:
(a) constitute a waiver of compliance by the Borrower
and its Subsidiaries with respect to any Capital Expenditures made in
any Fiscal Year other than the 1998 Fiscal Year or any other term,
provision or condition of the Credit Agreement or any other instrument
or agreement referred to therein or relating thereto; or
(b) prejudice any right or remedy that the
Administrative Agent or any Lender may now have or may have in the
future under or in connection with the Credit Agreement or any other
instrument or agreement referred to therein or relating thereto.
Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and are in all respects hereby ratified and confirmed.
ARTICLE III
CONDITIONS PRECEDENT
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<PAGE> 3
This Limited Waiver shall become effective, as of the date hereof,
upon satisfaction of each of the conditions precedent set forth in this Article
III.
SECTION 3.1. Execution of Counterparts. The Administrative Agent
shall have received counterparts of this Limited Waiver, duly executed and
delivered on behalf of the Borrower and each of the Required Lenders.
SECTION 3.2. Execution of Affirmation and Consent. The
Administrative Agent shall have received an affirmation and consent in form and
substance satisfactory to it, duly executed and delivered by each Guarantor and
each other Obligor that has granted a Lien pursuant to any Loan Document.
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 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 Required Lenders and the Administrative Agent to enter into this Limited
Waiver, the Borrower hereby represents and warrants to each Agent, the Issuer
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 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 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 or any of its Subsidiaries which might
materially adversely affect the Borrower's consolidated
business, operations, assets, revenues, properties or
prospects or which purports to affect the legality, validity
or enforceability of this Limited Waiver, the Credit
Agreement, the Notes or any other Loan Document; and
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<PAGE> 4
(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 and its
Subsidiaries;
(c) no Default has occurred and is continuing, and
neither the Borrower nor any of its Subsidiaries nor any other Obligor
is in material violation of any law or governmental regulation or
court order or decree; and
(d) this Limited Wavier has been duly authorized,
executed and delivered by the Borrower and constitutes a legal, valid
and binding obligation of the Borrower, 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 Administrative Agent and the Lenders reasonably
prior to the date on which this representation is made, all factual information
heretofore or contemporaneously furnished by the Borrower in writing to the
Administrative Agent, the Issuer or any Lender for purposes of or in connection
with this Limited Waiver 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.
SECTION 4.3. Compliance with Credit Agreement. As of the
execution and delivery of this Limited Waiver, 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 Waiver. Except as
expressly waived hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Credit Agreement and the
other Loan Documents shall remain unwaived and shall continue to be, and shall
remain, in full force and effect in accordance with their respective terms.
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<PAGE> 5
SECTION 5.2. Loan Document Pursuant to Credit Agreement. This
Limited Waiver 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 Limited Waiver shall be
deemed to be an Event of Default for all purposes of the Credit Agreement and
the other Loan Documents.
SECTION 5.3. Headings. The various headings of this Limited
Waiver are inserted for convenience only and shall not affect the meaning or
interpretation of this Limited Waiver or any provisions hereof.
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
Limited Waiver and the documents contemplated hereby, including the reasonable
fees and disbursements of Mayer, Brown & Platt, as counsel for the
Administrative Agent.
SECTION 5.5. Execution in Counterparts. This Limited Waiver 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 5.6. Cross-References. References in this Limited Waiver
to any Article or Section are, unless otherwise specified or otherwise required
by the context, to such Article or Section of this Limited Waiver.
SECTION 5.7. GOVERNING LAW; Entire Agreement. THIS LIMITED WAIVER
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. This Limited Waiver 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Limited Waiver
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 GROUP, INC.
By: /s/ Stephen G. Worthley
-----------------------------------
Name: Stephen G. Worthley
Title: Vice President and Treasurer
CREDIT SUISSE FIRST BOSTON, as a Lender,
as the Issuer and the Administrative
Agent
By: /s/ Robert Hetu
-----------------------------------
Name: Robert Hetu
Title: Vice President
By: /s/ Joel Glodowski
-----------------------------------
Name: Joel Glodowski
Title: Managing Director
NATIONSBANK, N.A.
By: /s/ Nelson D. Albrecht
-----------------------------------
Name: Nelson D. Albrecht
Title: Vice President
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<PAGE> 7
BANK OF HAWAII
By: /s/ Donna R. Parker
Name: Donna R. Parker
Title: Vice President
BANK OF MONTREAL
By: /s/ Sheila C. Weimer
Name: Sheila C. Weimer
Title: Director
THE BANK OF NEW YORK
By: /s/ John-Paul Marotta
Name: John-Paul Marotta
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By: /s/ Joseph P. Devoe
Name: Joseph P. Devoe
Title: Attorney-in-Fact
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<PAGE> 8
BANK POLSKA KASA OPIEKI S.A. - PEKAO
S.A GROUP, NEW YORK BRANCH
By: /s/ Harvey Winter
Name: Harvey Winter
Title: Vice President
BANK UNITED
By:
Name:
Title:
PARIBAS
By: /s/ Nicholas C. Mast
Name: Nicholas C. Mast
Title: Regional General Manager
By: /s/ Brian F. Hewett
Name: Brian F. Hewett
Title: Vice President
BANQUE WORMS CAPITAL CORPORATION
By:
Name:
Title:
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<PAGE> 9
BHF-BANK AKTIENGESELLSCHAFT
By: /s/
Name:
Title:
By: /s/ Dan Dobrjanskyj
Name: Dan Dobrjanskyj
Title: Assistant Vice President
CIBC, INC.
By: /s/
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/ Martha Skidmore
Name: Martha Skidmore
Title: Vice President
By: /s/ Albert Calo
Name: Albert Calo
Title: Vice President
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<PAGE> 10
COMMERZBANK AKTIENGESELLSCHAFT,
CHICAGO BRANCH
By: /s/
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By: /s/ Dennis M. Toolan
Name: Dennis M. Toolan
Title: Senior Vice President
By: /s/ David Bouhl
Name: David Bouhl
Title: First Vice President
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/ Lee E. Greve
Name: Lee E. Greve
Title: First Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ Ken Hamilton
Name: Ken Hamilton
Title: Senior Vice President
By: /s/ B. Craig Erickson
Name: B. Craig Erickson
Title: Vice President
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<PAGE> 11
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By: /s/ John Fay
Name: John Fay
Title: Assistant Vice President
FLEET BANK, N.A.
By:
Name:
Title:
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
Name: Peter L. Chinnici
Title: Joint General Manager
GREEN TREE FINANCIAL SERVICING CORP.
By: /s/
Name:
Title:
IMPERIAL BANK
By: /s/ Mark Campbell
Name: Mark Campbell
Title: Senior Vice President
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<PAGE> 12
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By:
Name:
Title:
NATEXIS BANQUE
By: /s/ Pieter J. van Tulder
Name: Pieter J. van Tulder
Title: Vice President and Manager
PNC BANK, N.A.
By:
Name:
Title:
SOUTHERN PACIFIC BANK
By: /s/
Name:
Title:
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By: /s/ Suresh S. Tata
Name: Suresh S. Tata
Title: Senior Vice President
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<PAGE> 13
SUNTRUST BANK CENTRAL FLORIDA, N.A.
By: /s/ Frank Coe
Name: Frank Coe
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ Mark A. Baird
Name: Mark A. Baird
Title: Vice President
THE TOYO TRUST & BANKING CO., LTD.
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Richard P. Degrey
Name: Richard P. Degrey
Title: Vice President
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<PAGE> 1
EXHIBIT 10.26
[EXECUTION COPY]
ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT, dated as of June
19, 1998 (this "Amendment Agreement"), is made by and among BUDGET GROUP, INC.,
a Delaware corporation ("Budget" or the "New Borrower"), BUDGET RENT A CAR
CORPORATION, a Delaware corporation and a Wholly Owned Subsidiary of Budget
("BRACC" or the "Existing Borrower"), the various financial institutions which
are identified as "Existing Lenders" on the signature pages hereof
(collectively, the "Existing Lenders"), the various financial institutions
which are identified as "Assignee Lenders" on the signature pages hereof
(collectively, the "Assignee Lenders", and, together with the Existing Lenders,
the "Lenders"), CREDIT SUISSE FIRST BOSTON ("Credit Suisse First Boston"), as a
co- syndication agent (in such capacity, a "Co-Syndication Agent"), a
co-arranger (in such capacity, a "Co-Arranger") and the administrative agent
(in such capacity, the "Administrative Agent") for the Lenders, and NATIONSBANC
MONTGOMERY SECURITIES LLC, as a co-syndication agent (in such capacity, a
"Co-Syndication Agent" and, together with Credit Suisse First Boston, the
"Co-Syndication Agents"), a co-arranger (in such capacity, a "Co-Arranger" and,
together with Credit Suisse First Boston, the "Co-Arrangers") and 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.
W I T N E S S E T H:
WHEREAS, the Existing Borrower, the Existing Lenders and the Agents
have heretofore entered into a Credit Agreement, dated as of April 29, 1997 (as
in effect immediately prior to the Amendment Effective Date, the "Original
Credit Agreement", and together with all of the Loan Documents (as defined
therein and in effect immediately prior to the Amendment Effective Date), the
"Original Loan Documents");
WHEREAS, the Existing Borrower desires to assign all of its rights and
Obligations (as defined in the Original Credit Agreement) under the Original
Credit Agreement and each Note (as defined in the Original Credit Agreement and
in effect immediately prior to the Amendment Effective Date) (collectively, the
"Rights and Obligations") to the New Borrower and the New Borrower desires to
assume from the Existing Borrower all of the Rights and Obligations of the
Existing Borrower (the "Assignment and Assumption");
WHEREAS, Budget desires to acquire all of the Capital Stock of Ryder
TRS, Inc. ("Ryder"), by merging BDG Corporation, a Delaware corporation and a
Wholly Owned Subsidiary of Budget ("Merger Co."), with and into Ryder (the
"Merger"), as a result of which
<PAGE> 2
Ryder will become a direct Wholly Owned Subsidiary of Budget, as more fully
described in the Merger Agreement, dated March 8, 1998 (as amended through May
7, 1998, the "Merger Agreement"), among Budget, Merger Co., Ryder Questor
Partners Fund, L.P., Questor Side-by- Side Partners, L.P. and Madison Dearborn
Capital Partners, L.P. (the "Ryder Acquisition");
WHEREAS, in connection with the Ryder Acquisition,
(a) the shareholders of Ryder will receive consideration
in respect of the Merger comprised of cash not exceeding $125,000,000,
approximately $119,000,000 of Budget's Class A Common Stock and, on a
contingent basis, up to an additional $20,000,000 in non-cash
consideration;
(b) Ryder will terminate, and repay all of the loans
(if any) outstanding under, that certain Credit Agreement, dated as of
October 17, 1996, among Ryder, the lenders party thereto and The Chase
Manhattan Bank, as administrative agent (as amended to the date
hereof, the "Existing Ryder Credit Agreement");
(c) Ryder will commence (i) a solicitation of consents
(the "Consent Solicitation") from the holders of Ryder's approximately
$175,000,000 of 10% Senior Subordinated Notes due 2007 (the "Ryder
Subordinated Notes") to delete or modify certain covenants and other
provisions governing the Ryder Subordinated Notes and (ii) an offer to
purchase (the "Debt Tender Offer") all of its Ryder Subordinated Notes
for cash at par plus a premium thereon not expected to exceed
$28,000,000 in the aggregate plus accrued and unpaid interest thereon
(inclusive of any fee paid in connection with the Consent Solicitation
not exceeding $20 per $1,000 principal amount of Ryder Subordinated
Notes);
(d) Budget will cause BRACC to prepay (the "Senior Note
Repayment") all of its $165,000,000 of Senior Notes at par plus the
premium thereon provided in Section 8.2 of the various Senior Note
Purchase Agreements relating to the Senior Notes plus accrued and
unpaid interest thereon;
(e) Budget will convert into shares of its Class A
Common Stock (the "Conversion") $80,000,000 of the aggregate principal
amount of its Series A Notes;
(f) Budget Group Capital Trust, a Delaware business
trust ("Budget Capital"), (i) will issue 6,000,000 shares of its
Remarketable Term Income Deferrable Equity Securities, convertible
into shares of Budget's Class A Common Stock (the "Convertible
Preferred Securities") for gross cash proceeds of not less than
$300,000,000 (the "Convertible Preferred Security Issuance") and (ii)
will apply such proceeds toward the purchase of $300,000,000 aggregate
principal amount of 61/4% Junior Subordinated Debentures due 2028 of
Budget (the "High Tides Debentures"); and
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<PAGE> 3
(g) cause TFFC to issue medium term notes resulting in
gross cash proceeds of not less than $800,000,000 (the "MTN Issuance",
and, together with the Merger, the Ryder Acquisition, the termination
of the Existing Ryder Credit Agreement, the Senior Note Repayment, the
Conversion, the Convertible Preferred Securities Issuance, the
issuance of the High Tides Debentures, the commencement of the Consent
Solicitation and the Debt Tender Offer and the transactions relating
thereto, the "Transaction");
WHEREAS, (a) each Existing Lender desires, concurrently with the
Assignment and Assumption, to sell and assign all of its rights and obligations
under the Original Credit Agreement and each other Original Loan Document to
the Administrative Agent, (b) the Administrative Agent desires concurrently
therewith (i) to purchase and assume from such Existing Lenders all such rights
and obligations, (ii) to increase the Commitment Amount to $550,000,000 and
(iii) to sell and assign a portion of its rights and obligations under the
Amended and Restated Credit Agreement and each other Loan Document to each
Assignee Lender and (c) each such Assignee Lender desires to purchase and
assume from the Administrative Agent such portion of such rights and
obligations in accordance with the terms hereof; and
WHEREAS, the New Borrower desires, inter alia, to make certain
modifications to the Original Credit Agreement and the other Original Loan
Documents concurrently with the consummation of the Assignment and Assumption,
all as provided in the Amended and Restated Credit Agreement attached hereto as
Annex I;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Definitions. The following terms (whether
or not underscored) when used in this Amendment Agreement 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.
"Agents" is defined in the preamble.
"Amended and Restated Credit Agreement" is defined in Article III.
"Amendment Agreement" is defined in the preamble.
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<PAGE> 4
"Amendment Effective Date" is defined in Section 4.1.
"Assignee Lenders" is defined in the preamble.
"Assignment and Assumption" is defined in the second recital.
"BRACC" is defined in the preamble.
"Budget" is defined in the preamble.
"Co-Arranger" and "Co-Arrangers" are defined in the preamble.
"Co-Syndication Agent" and "Co-Syndication Agents" are defined in the
preamble.
"Consent Solicitation" is defined in clause (c) of the fourth recital.
"Conversion" is defined in clause (e) of the fourth recital.
"Convertible Preferred Securities" is defined in clause (f) of the
fourth recital.
"Convertible Preferred Securities Issuance" is defined in clause (f)
of the fourth recital.
"Credit Suisse First Boston" is defined in the preamble.
"Debt Tender Offer" is defined in clause (c) of the fourth recital.
"Debt Tender Offer/Consent Solicitation Documents" means the Offer to
Purchase and Consent Solicitation Statement dated June 5, 1998, with respect to
the Debt Tender Offer and the Consent Solicitation.
"Documentation Agent" is defined in the preamble.
"Existing Borrower" is defined in the preamble.
"Existing Lenders" is defined in the preamble.
"Existing Ryder Credit Agreement" is defined in clause (b) of the
fourth recital.
"High Tides Debentures" is defined in clause (f) of the fourth
recital.
"Lenders" is defined in the preamble.
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"Merger" is defined in the third recital.
"Merger Agreement" is defined in the third recital.
"Merger Co." is defined in the third recital.
"MTN Issuance" is defined in clause (g) of the fourth recital.
"New Borrower" is defined in the preamble.
"Original Credit Agreement" is defined in the first recital.
"Original Loan Documents" is defined in the first recital.
"Original Security Documents" is defined in Section 5.5.
"Rights and Obligations" is defined in the second recital.
"Ryder" is defined in the third recital.
"Ryder Acquisition" is defined in the third recital.
"Ryder Subordinated Notes" is defined in clause (c) of the fourth
recital.
"Ryder Subordinated Note Indenture" means the Indenture, dated as of
November 25, 1996, between Ryder and The Bank of New York, as trustee, as the
same may be amended, supplemented, amended and restated or otherwise modified
from time to time in accordance with the terms of the Amended and Restated
Credit Agreement.
"Senior Note Repayment" is defined in clause (d) of the fourth
recital.
"Transaction" is defined in clause (g) of the fourth recital.
SECTION 1.2. Other Definitions. Unless otherwise defined or the
context otherwise requires, terms used in this Amendment Agreement, including
its preamble and recitals, have the meanings provided in the Amended and
Restated Credit Agreement.
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<PAGE> 6
ARTICLE II
ASSIGNMENTS AND ASSUMPTIONS
SECTION 2.1. Assignment by Existing Borrower and Assumption by
New Borrower. Effective on (and subject to the occurrence of) the Amendment
Effective Date and concurrently with the amendments to be effected pursuant to
Article III,
(a) the Existing Borrower hereby transfers and assigns
to New Borrower all of the Rights and Obligations of Existing Borrower
(it being understood and agreed that such transfer and assignment
shall not affect in any respect the primary nature of the Existing
Borrower's continuing obligations with respect to the Rights and
Obligations under the Subsidiary Guaranty) and
(b) the New Borrower hereby accepts and assumes all of
such Rights and Obligations.
SECTION 2.2. Assignments by each Existing Lender and Assumptions
by each Assignee Lender. Effective on (and subject to the occurrence of) the
Amendment Effective Date and concurrently with the amendments to be effected
pursuant to Article III,
(a) each Existing Lender hereby irrevocably sells,
transfers, conveys and assigns, without recourse, representation or
warranty (except as expressly set forth herein), to the Administrative
Agent and the Administrative Agent hereby irrevocably purchases and
assumes from such Existing Lender all of the rights and obligations of
such Existing Lender under the Original Credit Agreement and each
other Original Loan Document;
(b) the Administrative Agent (and the Assignee Lenders)
agree to the increase in the Commitment Amount to $550,000,000; and
(c) the Administrative Agent hereby irrevocably sells,
transfers, conveys and assigns, without recourse, representation or
warranty (except as expressly set forth herein), to each Assignee
Lender and each Assignee Lender hereby irrevocably purchases and
assumes from the Administrative Agent a portion of the rights and
obligations of the Administrative Agent under the Amended and Restated
Credit Agreement and each other Loan Document such that after giving
effect to the foregoing assignment and delegation, Credit Suisse First
Boston's and each other Assignee Lender's Percentages for the purposes
of the Amended and Restated Credit Agreement and each such other Loan
Document will be as set forth opposite such Person's name in Schedule
I hereto.
SECTION 2.3. Additional Provisions for Lender Assignments. (a)
Each Existing Lender hereby represents and warrants to the Administrative Agent
that, immediately before giving effect to the provisions of clause (a) of
Section 2.2, (i) such Existing Lender is the legal and beneficial owner of the
portion of its rights and obligations as a Lender under, and as defined in, the
Original Credit Agreement and each other Original Loan Document being assigned
to the Administrative Agent pursuant to Section 2.2 and (ii) such rights and
obligations being assigned
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<PAGE> 7
and sold by such Existing Lender are free and clear of any adverse claim or
encumbrance created by such Existing Lender and without recourse or
representation or warranty of any kind whatsoever except for the
representations and warranties set forth in this Section 2.3.
(b) The Administrative Agent hereby represents and warrants to
each Assignee Lender that, immediately before giving effect to the provisions
of clause (c) of Section 2.2, (i) the Administrative Agent is the legal and
beneficial owner of the portion of its rights and obligations as a Lender
under, and as defined in, the Amended and Restated Credit Agreement and each
other Loan Document being assigned to each Assignee Lender pursuant to Section
2.2 and (ii) such rights and obligations being assigned and sold by the
Administrative Agent are free and clear of any adverse claim or encumbrance
created by the Administrative Agent and without recourse or representation or
warranty of any kind whatsoever except for the representations and warranties
set forth in this Section 2.3.
(c) Each Assignee Lender hereby acknowledges and agrees that (i)
other than the representations and warranties contained in clause (a) and (b)
above, neither any Existing Lender nor any Agent has made any representations
or warranties or assumed any responsibility with respect to (x) any statements,
warranties or representations made in or in connection with this Amendment
Agreement or the execution, legality, validity, enforceability, genuineness or
sufficiency of this Amendment Agreement, the Original Credit Agreement or any
other Original Loan Document or (y) the financial condition of the New
Borrower, the Existing Borrower, any other Obligor or any of their respective
Subsidiaries or the performance by the New Borrower, the Existing Borrower or
such other Obligor of the Obligations; (ii) it has received such information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Amendment Agreement; and (iii) it has made and will continue to make
its own credit decisions in taking or not taking action under this Amendment
Agreement, the Amended and Restated Credit Agreement or any other Loan
Document, independently and without reliance upon any Agent or any Existing
Lender.
(d) In the event any Loans (as defined in the Original Credit
Agreement) are outstanding on the Amendment Effective Date immediately prior to
the effectiveness of the assignments set forth in Section 2.2, (i) each
Assignee Lender shall deliver to the Administrative Agent on the Amendment
Effective Date immediately available funds in the full amount of the purchase
made by it pursuant to Section 2.2 and (ii) the Administrative Agent shall, to
the extent of the funds so received, deliver to each Existing Lender on the
Amendment Effective Date immediately available funds in the full amount of the
purchase made by the Administrative Agent pursuant to Section 2.2. The Existing
Lenders and the Assignee Lenders authorize the Administrative Agent to net such
foregoing payments. From and after the Amendment Effective Date, the
Administrative Agent shall make all payments in respect of amounts which have
accrued to the Existing Lenders prior to the Amendment Effective Date in
accordance with the terms of the Original Credit Agreement and shall make all
payments in respect of amounts which have
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<PAGE> 8
accrued on or subsequent to the Amendment Effective Date to the Assignee
Lenders in accordance with the terms of the Amended and Restated Credit
Agreement.
SECTION 2.4. Waiver of Administrative Agent Processing Fee.
The Administrative Agent hereby agrees to waive receipt of the payment of the
processing fees set forth in Section 12.11.1 of the Original Credit Agreement.
ARTICLE III
AMENDMENTS
Effective on (and subject to the occurrence of) the Amendment
Effective Date and concurrently with the assignments and assumptions being
effected pursuant to Article II, the Original Credit Agreement (including all
exhibits and schedules thereto) shall be and is hereby amended and restated to
read in its entirety as set forth in Annex I hereto (as set forth in such Annex
I, the "Amended and Restated Credit Agreement"), and as so amended and restated
is hereby ratified, approved and confirmed in each and every respect. The
rights and obligations of the parties to the Original Credit Agreement with
respect to the period prior to the Amendment Effective Date shall not be
affected by such amendment and restatement.
ARTICLE IV
CONDITIONS TO EFFECTIVENESS
SECTION 4.1. Amendment Effective Date. This Amendment Agreement,
and the amendments, modifications and assignments set forth herein, shall be
and become effective on the date (the "Amendment Effective Date") when each of
the conditions set forth in this Article IV shall have been fulfilled to the
satisfaction of the Administrative Agent on or before June 30, 1998.
SECTION 4.2. Resolutions, etc. The Administrative Agent shall
have received from each of the New Borrower, BRACC and each other Obligor a
certificate, dated the 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 this Amendment Agreement, the Amended and Restated Credit
Agreement, the Notes and each other Loan Document to be executed by
it;
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<PAGE> 9
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Amendment Agreement,
the Amended and Restated Credit 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,
upon which certificate each Lender, the Issuer and the Administrative Agent may
conclusively rely until it shall have received a further certificate of the
Secretary of the New Borrower, BRACC or such other Obligor canceling or
amending such prior certificate.
SECTION 4.3. Execution of Counterparts. The Administrative Agent
shall have received counterparts of this Amendment Agreement, duly executed and
delivered on behalf of the New Borrower, the Existing Borrower, each Existing
Lender and each Assignee Lender.
SECTION 4.4. Execution of the Amended and Restated Credit
Agreement. The Administrative Agent shall have received counterparts of the
Amended and Restated Credit Agreement, duly executed and delivered on behalf of
the New Borrower and each Assignee Lender.
SECTION 4.5. 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 New Borrower.
SECTION 4.6. Ryder Acquisition and Transaction Consummated. (a)
The conditions to the obligations of Budget and Merger Co. to consummate the
Merger set forth in the Merger Agreement 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 Budget or Merger Co.), and the Merger shall have been consummated
concurrently with the effectiveness of this Amendment Agreement with the
shareholders of Ryder receiving aggregate cash consideration not exceeding
$125,000,000 and otherwise (including as to the amount and type of non-cash
consideration) in accordance with the other terms of the Merger Agreement.
(b) Ryder shall have commenced the Consent Solicitation and the
Debt Tender Offer on terms and conditions (including the terms and conditions
set forth in the Debt Tender Offer/Consent Solicitation Documents) reasonably
satisfactory in all respects to the Administrative Agent.
(c) Budget Capital Group shall have received gross cash proceeds
of not less than $300,000,000 pursuant to the Convertible Preferred Securities
Issuance on terms and conditions (including in respect of all documentation
related thereto) reasonably satisfactory in all respects
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<PAGE> 10
to the Administrative Agent, and such proceeds shall have been used to purchase
High Tides Debentures from the New Borrower in an aggregate principal amount of
$300,000,000 on terms and conditions (including in respect of all documentation
relating thereto) reasonably satisfactory in all respects to the Administrative
Agent. The New Borrower shall have used such proceeds to fund, in part, the
Senior Note Repayment and will use the remainder thereof to purchase all of the
Ryder Subordinated Notes tendered pursuant to the Debt Tender Offer.
(d) TFFC shall have received gross cash proceeds of not less than
$800,000,000 pursuant to the MTN Issuance on terms and conditions (including in
respect of all documentation related thereto) reasonably satisfactory in all
respects to the Administrative Agent, and such proceeds shall have been applied
in a manner reasonably satisfactory to the Administrative Agent (including to
the repayment of all commercial paper outstanding under Ryder's commercial
paper program).
(e) The $165,000,000 aggregate principal amount of the Senior
Notes shall have been prepaid in full at par plus the aggregate premium thereon
provided in Section 8.2 of the related Senior Note Purchase Agreements (plus
accrued and unpaid interest thereon) on terms and conditions (including in
respect of all documentation related thereto) reasonably satisfactory in all
respects to the Administrative Agent.
(f) The Administrative Agent shall have received satisfactory
evidence that the Conversion shall have occurred on terms and conditions
reasonably satisfactory in all respects to the Administrative Agent.
(g) The Administrative Agent shall be reasonably satisfied with
all other aspects of the Transaction, including the aggregate sources and uses
of proceeds utilized to consummate the Transaction and the terms of all
agreements and documents relating to the Transaction.
(h) The capital structure (including the terms and amount of each
component thereof) of each Obligor and its subsidiaries after the Transaction
shall be reasonably satisfactory in all respects to the Administrative Agent.
SECTION 4.7. Termination of Existing Ryder Credit Agreement,
Payment of Certain Indebtedness, etc. (a) All amounts outstanding under the
Existing Ryder Credit Agreement, including all principal, interest, prepayment
premiums and fees, shall have been paid in full (and all commitments to extend
credit thereunder shall have been terminated); all letters of credit thereunder
shall have been terminated; and all Liens securing payment of any such amounts
or obligations shall 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.
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(b) All Loans (as defined in the Original Credit Agreement), if
any, shall have been repaid in full in cash to each Existing Lender, together
with any interest thereon and all other amounts accrued but unpaid (whether or
not due on the date hereof) under the Original Credit Agreement.
SECTION 4.8. Delivery of Financial Statements. The
Administrative Agent shall have received
(a) audited consolidated financial statements for the
1996 Fiscal Year and the 1997 Fiscal Year of each of the New Borrower
and its Subsidiaries and Ryder and its Subsidiaries;
(b) unaudited interim consolidated financial statements
for each Fiscal Quarter ended subsequent to the date of the most
recent consolidated balance sheet delivered pursuant to clause (a)
above of each of the New Borrower and its Subsidiaries and Ryder and
its Subsidiaries; and
(c) unaudited pro forma consolidated balance sheet of
each of the New Borrower and its Subsidiaries and Ryder and its
Subsidiaries as at the date of the most recent consolidated balance
sheet delivered pursuant to clause (b) above after giving effect to
the Transaction (including any Credit Extensions to be made on the
Amendment Effective Date),
in each case satisfactory to the Administrative Agent and the Lenders.
SECTION 4.9. Consents, etc. The New Borrower shall have obtained,
and 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 Amendment Agreement, the Amended and Restated Credit 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 the
continuing operations of the New Borrower and its Subsidiaries (after giving
effect to the consummation of the Transaction) and each such approval and
consent shall 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 Ryder Acquisition or the financing thereof.
SECTION 4.10. 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.
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SECTION 4.11. Business Plan. The Administrative Agent and the
Lenders shall have received a business plan for the 1998 Fiscal Year
satisfactory to the Administrative Agent and the Lenders, financial projections
for the period from the Amendment 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 New Borrower and its Subsidiaries
(including Ryder and its Subsidiaries) for the period from the Amendment
Effective Date to the Stated Maturity Date satisfactory to the Administrative
Agent and the Lenders.
SECTION 4.12. Amendment Effective Date Certificate. The
Administrative Agent shall have received, with counterparts for each Lender,
the Amendment Effective Date Certificate, dated the date of the Amendment
Effective Date and duly executed and delivered by an Authorized Officer of the
New Borrower, in which certificate the New Borrower shall agree and acknowledge
that the statements made therein shall be deemed to be true and correct
representations and warranties of the New Borrower made as of such date, and,
at the time such certificate is delivered, such statements shall in fact be
true and correct. All documents and agreements required to be appended to the
Amendment Effective Date Certificate shall be in form and substance reasonably
satisfactory to the Administrative Agent.
SECTION 4.13. Amended and Restated Guaranty. The Administrative
Agent shall have received the Subsidiary Guaranty, dated the Amendment
Effective Date, duly executed by each Subsidiary of the New Borrower that is a
party thereto.
SECTION 4.14. Amended and Restated Pledge Agreements. The
Administrative Agent shall have received executed counterparts of the Borrower
Pledge Agreement and the Subsidiary Pledge Agreement, in each case dated as of
the Amendment Effective Date and duly executed and delivered by the New
Borrower and each Subsidiary of the New Borrower that is a party to the
Subsidiary Pledge Agreement, as the case may be, together with (to the extent
not previously delivered to the Administrative Agent) (i) 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 such
shares of Capital Stock pledged pursuant to any Pledge Agreement are
uncertificated securities, the Administrative Agent shall have obtained
"control" (as defined in the Uniform Commercial Code in effect in the State of
New York) over such shares of Capital Stock) and such other instruments and
documents as the Administrative Agent shall deem necessary or in the reasonable
opinion of the Administrative Agent desirable under applicable law to perfect
the first priority security interest of the Administrative Agent in such shares
of Capital Stock and (ii) executed copies of Uniform Commercial Code financing
statements naming the New 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
New Borrower or such Subsidiary in the collateral pledged pursuant to the
applicable Pledge Agreement.
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SECTION 4.15. Amended and Restated Security Agreements. The
Administrative Agent shall have received executed counterparts of the Borrower
Security Agreement and the Subsidiary Security Agreement, in each case dated as
of the Amendment Effective Date and duly executed and delivered by the New
Borrower and each Subsidiary of the New Borrower that is a party to the
Subsidiary Security Agreement, 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 New Borrower or such Subsidiary, as
applicable, 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 Borrower Security Agreement or the Subsidiary Security
Agreement, as applicable;
(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 Amended and Restated Credit Agreement)
(i) in any collateral described in the
Subsidiary Security Agreement previously granted by any
Person, and
(ii) securing any of the Indebtedness to be
repaid in connection with the Transaction on or prior to the
Amendment Effective Date,
together with such other Uniform Commercial Code Form UCC-3
termination statements as the Administrative Agent may reasonably
request from such Subsidiaries; 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 Amendment Effective Date, listing all
effective financing statements, tax liens and judgment liens which
name such Subsidiaries (under their respective present names and any
previous names) 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).
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<PAGE> 14
SECTION 4.16. Borrowing Base Certificate. The Administrative Agent
shall have received a Borrowing Base Certificate, executed and delivered by an
Authorized Officer of the New Borrower, setting forth, as of the Amendment
Effective Date, computations of the Borrowing Base Amount in respect of
Eligible Cash and Eligible Cash Equivalents on such date, and, as of May 31,
1998, computations of the Borrowing Base Amount in respect of Eligible
Receivables on such date.
SECTION 4.17. Issuance Request. The Administrative Agent and the
Issuer shall have received an Issuance Request for each Letter of Credit to be
issued on the Amendment Effective Date and an Enhancement Letter of Credit
Application and Agreement for each Enhancement Letter of Credit to be issued on
the Amendment Effective Date, in each case within the time periods applicable
thereto in the Amended and Restated Credit Agreement.
SECTION 4.18. Opinions of Counsel. The Administrative Agent shall
have received (a) opinions, dated the Amendment Effective Date and addressed to
the Agents, the Issuer and the Lenders, from King & Spalding, counsel to the
Obligors and the general counsel to Budget, substantially in the form of
Exhibits K-1 and K-2 to the Amended and Restated Credit Agreement,
respectively, and (b) such reliance letters as it may reasonably request with
respect to opinions delivered in connection with the Transaction dated the
Amendment Effective Date and addressed to the Agents, the Issuer and all of the
Lenders.
SECTION 4.19. Fees, Expenses, etc. (a) The Administrative Agent
shall have received for its own account or for the account of each other Agent
or each Lender, as the case may be, all fees, costs and expenses due and
payable pursuant to Sections 3.3 and 12.3 of the Amended and Restated Credit
Agreement, if then invoiced.
(b) The Administrative Agent shall have received for the account
of, and to the extent received, shall have paid to, each Existing Lender (i)
all interest, commitment fees and letter of credit fees accrued for the period
prior to the Amendment Effective Date and unpaid and (ii) all other outstanding
Obligations of the nature described in Article V of the Original Credit
Agreement then owing to each Existing Lender.
SECTION 4.20. Solvency Certificates. The Administrative Agent
shall have received, with copies for each Lender, Solvency Certificates, dated
as of the Amendment Effective Date and executed and delivered by the chief
financial or accounting Authorized Officer of each of Budget, BRACC, Ryder,
Cruise America, Inc. and Premier Car Rental, LLC.
SECTION 4.21. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the New Borrower, the Existing
Borrower or any of their respective Subsidiaries or any other Obligor shall be
satisfactory in form and substance to the Administrative Agent and its counsel;
and the Administrative Agent and such counsel shall have
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received all information, approvals, opinions, documents or instruments as the
Administrative Agent or such counsel may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuer and the Agents to enter
into this Amendment Agreement, to consent to the consummation of the Assignment
and Assumption and to amend and restate the Original Credit Agreement
(including all exhibits and schedules thereto) to read in its entirety as set
forth in Annex I hereto, each of the New Borrower and the Existing Borrower
represents and warrants unto each Agent, the Issuer and each Lender as set
forth in this Article V.
SECTION 5.1. Compliance with Representations and Warranties. The
representations and warranties set forth herein, in Article VIII of the Amended
and Restated Credit Agreement and in each other Loan Document delivered in
connection with this Amendment Agreement, the Amended and Restated Credit
Agreement or the Original Credit Agreement are true and correct with the same
effect as if made on and as of the Amendment Effective Date (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).
SECTION 5.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the New Borrower of this Amendment
Agreement, the Amended and Restated Credit Agreement, the Notes and each other
Loan Document executed or to be executed by it, and the execution, delivery and
performance by each other Obligor of each Loan Document executed or to be
executed by it and the New Borrower's and each such other Obligor's
participation in the consummation of the Transaction are within the New
Borrower's and each such Obligor's corporate powers, have been duly authorized
by all necessary corporate action, and do not
(a) contravene the New Borrower'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 New Borrower 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 New Borrower's or such other Obligor's
properties.
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SECTION 5.3. 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 New Borrower or
any other Obligor of this Amendment Agreement, the Amended and Restated Credit
Agreement, the Notes or any other Loan Document to which it is a party, or for
the New Borrower's and each such other Obligor's participation in the
consummation of the Transaction. Neither the New Borrower nor any of its
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 5.4. Validity, etc. This Amendment Agreement constitutes,
and the Amended and Restated Credit Agreement, the Notes and each other Loan
Document executed by the New Borrower will, on the due execution and delivery
thereof, constitute, the legal, valid and binding obligations of the New
Borrower, enforceable against the New 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 New
Borrower and each other Obligor will, on the due execution and delivery thereof
by the New Borrower or such Obligor, as the case may be, be the legal, valid
and binding obligation of the New Borrower or such Obligor, as the case may be,
enforceable in accordance with its 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.
SECTION 5.5. Non-Impairment, etc. After giving effect to this
Amendment Agreement, neither the modification of the Original Credit Agreement
or any other Original Loan Document effected pursuant to this Amendment
Agreement nor the execution, delivery, performance or effectiveness of this
Amendment Agreement impairs the validity, effectiveness or priority of the
Liens granted pursuant to the Pledge Agreements and the Security Agreements (as
such terms are defined in the Original Credit Agreement and as in effect
immediately prior to the Amendment Effective Date, the "Original Security
Documents"), and such Liens continue unimpaired with the same priority to
secure repayment of all Obligations, whether heretofore or hereafter incurred.
Neither the modification of the Original Credit Agreement or the other Original
Loan Documents effected pursuant to this Amendment Agreement nor the execution,
delivery, performance or effectiveness of this Amendment Agreement requires
that any new filings be
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<PAGE> 17
made or other action taken to perfect or to maintain the perfection of such
Liens other than the filing of UCC-1 financing statements described in Annex II
hereto for the purpose of perfecting the security interests in collateral
acquired by the applicable debtor after the Ryder Acquisition. Under the
foregoing circumstances, the position of the Lenders with respect to such
Liens, the Collateral (as defined in the Original Security Documents) in which
a security interest was granted pursuant to the Original Security Documents,
and the ability of the Administrative Agent to realize upon such Liens pursuant
to the terms of the Security Agreements and the Pledge Agreements have not been
adversely affected in any material respect by the modification of the Original
Credit Agreement or the other Original Loan Documents effected pursuant to this
Amendment Agreement or by the execution, delivery, performance or effectiveness
of this Amendment Agreement.
SECTION 5.6. Merger Agreement. Each of the representations and
warranties made in the Merger Agreement and the Purchase Agreement is true and
correct in all material respects. Each of the Merger Agreement and the Purchase
Agreement constitutes the legal, valid and binding obligations of each of the
parties thereto enforceable in accordance with its 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.
SECTION 5.7. Seniority of the Obligations. Budget acknowledges
that each Agent, the Issuer and each Lender is entering into this Amendment
Agreement in reliance upon the subordination provisions of the Ryder
Subordinated Note Indenture, the High Tides Debentures Indenture, the High
Tides Guaranty and Section 7.17 of the Amended and Restated Credit Agreement.
SECTION 5.8. Compliance With Original Credit Agreement. As of the
execution and delivery of this Amendment Agreement and up to the Amendment
Effective Date, each Obligor is in compliance in all material respects with all
the terms and conditions of the Original Credit Agreement and the other
Original Loan Documents to be observed or performed by it, and no Default has
occurred and is continuing.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. No Other Amendments; References to the Credit
Agreement. Other than as specifically provided herein or in the amendment of
terms and conditions of the Original Credit Agreement that are specifically
reflected in the Amended and Restated Credit Agreement, this Amendment
Agreement shall not operate as a waiver or amendment of any right, power or
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<PAGE> 18
privilege of any Existing Lender under the Original Credit Agreement or any
other Original Loan Document or of any other term or condition of the Original
Credit Agreement or any other Original Loan Document nor shall the entering
into of this Amendment Agreement preclude the Lenders from refusing to enter
into any further waivers or amendments with respect to the Amended and Restated
Credit Agreement. All references to the Original Credit Agreement in any
document, instrument, agreement, or writing shall from and after the Amendment
Effective Date be deemed to refer to the Amended and Restated Credit Agreement,
and, as used in the Amended and Restated Credit Agreement, the terms
"Agreement", "herein", "hereunder", "hereto", and words of similar import shall
mean, from and after the Amendment Effective Date, the Amended and Restated
Credit Agreement.
SECTION 6.2. Headings. The various headings of this Amendment
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this or any other provisions hereof.
SECTION 6.3. Governing Law. THIS AMENDMENT AGREEMENT, THE AMENDED
AND RESTATED CREDIT 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.
SECTION 6.4. Counterparts. This Amendment Agreement may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 6.5. Cross-References. References in this Amendment
Agreement to any Article or Section are, unless otherwise specified or
otherwise required by the context, to such Article or Section of this Amendment
Agreement.
SECTION 6.6. Successors and Assigns. This Amendment Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY OMITTED]
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<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be executed by their respective duly authorized officers 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 and Treasurer
BUDGET GROUP, INC.
By: /s/ Stephen G. Worthley
Name: Stephen G. Worthley
Title: Vice President and Treasurer
CREDIT SUISSE FIRST BOSTON, as an
Existing Lender, an Assignee Lender,
the Issuer, a Co-Syndication Agent,
a Co-Arranger and the Administrative
Agent
By: /s/ Julia P. Kingsbury
Name: Julia P. Kingsbury
Title: Assistant Vice President
By: /s/ Robert Hetu
Name: Robert Hetu
Title: Associate
S-1
<PAGE> 20
NATIONSBANC MONTGOMERY SECURITIES
LLC, as a Co-Syndication Agent, a Co-
Arranger and the Documentation Agent
By: /s/
Name:
Title:
BANK OF HAWAII, as an Existing Lender and
an Assignee Lender
By: /s/ Donna R. Parker
Name: Donna R. Parker
Title: Vice President
BANK OF MONTREAL, as an Assignee Lender
By: /s/ Sheila C. Weimer
Name: Sheila C. Weimer
Title: Director
THE BANK OF NEW YORK, as an Existing
Lender and an Assignee Lender
By: /s/ Steven Wilson
Name: Steven Wilson
Title: AVP
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<PAGE> 21
THE BANK OF NOVA SCOTIA, as an Assignee
Lender
By: /s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager Loan
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH, as an Assignee Lender
By: /s/ Joseph P. Devoe
Name: Joseph P. Devoe
Title: Attorney-In-Fact
BANK POLSKA KASA OPIEKI S.A. - PEKAO
S.A. GROUP, NEW YORK BRANCH, as an
Existing Lender and an Assignee Lender
By: /s/ Harvey Winter
Name: Harvery Winter
Title: Vice President
BANK UNITED, as an Existing Lender and
an Assignee Lender
By: /s/ Phil Green
Name: Phil Green
Title: Director, Commercial Loan
Syndications
S-3
<PAGE> 22
PARIBAS, as an Assignee Lender
By: /s/ Nicholas C. Mast
Name: Nicholas C. Mast
Title: Regional General Manager
By: /s/ Brian F. Hewett
Name: Brian F. Hewett
Title: Vice President
BANQUE WORMS CAPITAL CORPORATION,
as an Assignee Lender
By:
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT, as an
Existing Lender and an Assignee Lender
By: /s/
Name:
Title:
By: /s/ Anthony Heyman
Name: Anthony Heyman
Title: Assistant Vice President
S-4
<PAGE> 23
CIBC, INC., as an Existing Lender and an
Assignee Lender
By: /s/ Stephanie E. Devane
Name: Stephanie E. Devane
Title: Executive Director
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, as an Assignee
Lender
By: /s/ Martha Skidmore
Name: Martha Skidmore
Title: Vice President
By: /s/ Marie-Rose Sensenbrenner
Name: Marie-Rose Sensenbrenner
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT,
CHICAGO BRANCH, as an Assignee Lender
By: /s/
Name:
Title:
S-5
<PAGE> 24
CREDIT AGRICOLE INDOSUEZ, as an Existing
Lender and an Assignee Lender
By: /s/ Katherine L. Abbott
Name: Katherine L. Abbott
Title: First Vice President
By: /s/ David Bouhl
Name: David Bouhl
Title: FVP
CREDIT LYONNAIS CHICAGO BRANCH, as an
Existing Lender and an Assignee Lender
By: /s/ Sandra E. Horwitz
Name: Sandra E. Horwitz
Title: Senior Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, as an Assignee
Lender
By: /s/ Ken Hamilton
Name: Ken Hamilton
Title: Senior Vice President
By: /s/ Deborah Slusarczyk
Name: Deborah Slusarczyk
Title: Vice President
S-6
<PAGE> 25
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG, as an Assignee Lender
By: /s/ John Fay
Name: John Fay
Title: Junior Transactor
FLEET BANK, N.A., as an Assignee Lender
By: /s/ Andrea H. Lee
Name: Andrea H. Lee
Title: VP
THE FUJI BANK, LIMITED, as an Assignee
Lender
By: /s/ Peter L. Chinnici
Name: Peter L. Chinnici
Title: Joint General Manager
GREEN TREE FINANCIAL SERVICING CORP.,
as an Assignee Lender
By: /s/ Christopher A. Gouskos
Name: Christopher A. Gouskos
Title: Senior Vice President
General Manager
S-7
<PAGE> 26
IMPERIAL BANK, as an Existing Lender and
an Assignee Lender
By: /s/ Mark Campbell
Name: Mark Campbell
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as an Existing Lender and an
Assignee Lender
By: /s/ Thomas N. Meyer
Name: Thomas N. Meyer
Title: Senior Vice President
NATEXIS BANQUE, as an Assignee Lender
By: /s/
Name:
Title:
NATIONSBANK, N.A., as an Existing Lender
and an Assignee Lender
By: /s/
Name:
Title:
S-8
<PAGE> 27
PNC BANK, N.A., as an Existing Lender
and an Assignee Lender
By: /s/ Ralph M. Bowman
Name: Ralph M. Bowman
Title: Vice President
SOUTHERN PACIFIC BANK, as an Assignee
Lender
By: /s/ Cheryl A. Wasilewski
Name: Cheryl A. Wasilewski
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH, as an Assignee Lender
By: /s/ Kazuyoshi Ogawa
Name: Kazuyoshi Ogawa
Title: Joint General Manager
SUNTRUST BANK CENTRAL FLORIDA,
N.A. as an Assignee Lender
By: /s/ Janet P. Sammons
Name: Janet P. Sammons
Title: Vice President
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TORONTO DOMINION (TEXAS), INC., as an
Existing Lender and an Assignee Lender
By: /s/ J. R. Lents
Name: J. R. Lents
Title: Vice President
THE TOYO TRUST & BANKING CO., LTD., as
an Assignee Lender
By: /s/ T. Mikumo
Name: T. Mikumo
Title: Vice President
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By its signature below, each of the following Existing Lenders agrees solely to
the provisions of clause (a) of Section 2.2, Sections 2.3 and 2.4 and each
other provision of this Amendment Agreement necessary for the operation or
interpretation thereof.
ROYAL BANK OF CANADA, as an Existing
Lender
By: /s/
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as an
Existing Lender
By: /s/ Richard P. Degrey
Name: Richard P. Degrey
Title: Vice President
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<PAGE> 1
BUDGET GROUP, INC.
FORM OF EXECUTIVE AGREEMENT
BETWEEN BUDGET GROUP, INC. AND EACH OF
SANFORD MILLER, JEFFREY D. CONGDON, ROBERT L. APRATI AND SCOTT R. WHITE
EXHIBIT 10.27
This Executive Agreement ("Agreement") is dated as of October 1, 1998,
and is entered into by and between ____________ ("Executive") and Budget Group,
Inc. ("Budget" or "Company"). Executive and Budget hereby agree to the following
terms and conditions:
1. Purpose of Agreement. The purpose of this Agreement is to provide
Executive specified benefits in the event of Executive's 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 Executive's 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 Executive 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.
(b) Notwithstanding any other provision of this Agreement, unless
Executive executes a Release Agreement (acceptable to Budget and
substantially in the form set forth in Exhibit I) within 21 days after a
Qualifying Termination (and does not
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revoke the Release Agreement within 7 days after signing it), (1) no
benefits under Section 6 or Section 7(d), or (f) 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 30 days after a
Qualifying Termination , and (3) this Agreement shall be of no further
force and effect. Notwithstanding anything in this Agreement to the
contrary, if Executive fails or refuses to comply with the obligations
provided for in Sections 2 and 3 of the Release Agreement, or is in
violation of the representations and warranties 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.
(c) Executive terminates Executive's employment for any reason
whatsoever, including termination due to death or disability, provided that
the Termination Date occurs within one year after a Change in Control
occurs, and prior to an involuntary termination by the Company for Cause.
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) If a Change in Control occurs and 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, authority, duties and
responsibilities as they existed in their most significant form
immediately prior to a Change in Control or any other action by
Budget which results in a material diminution in such position,
authority, duties and responsibilities as they existed in their
most significant form immediately prior to a Change in Control,
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 assignment or action which is remedied by Budget
promptly after receipt of notice thereof given by Executive;
(2) Any reduction in (i) Executive's base salary as it existed
immediately prior to a Change in Control; (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 as they existed immediately prior to a Change in
Control, excluding changes by Budget with respect to any such
benefits which apply to all executives; or
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(iii) 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 paid to
Executive during the term of this Agreement); provided that, (x)
an isolated, insubstantial and inadvertent reduction in an
element of Executive's total compensation 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 simultaneously
occurs;
(b) Executive is involuntarily terminated without "Cause" during the
term of this Agreement. For purposes of this Section, "Cause" shall mean
(1) an act or acts of dishonesty by Executive in connection with
Executive's employment; (2) any conduct with or against another employee,
customer or other person, including conduct involving moral turpitude,
which causes or is likely to cause Budget embarrassment, liability or
damage; or (3) Executive's repeated failure to perform Executive's duties
or to perform in accordance with direction received from a senior ranking
officer of Budget; or
(c) Executive terminates Executive's employment for any reason
whatsoever, including termination due to death or disability, provided that
the Termination Date occurs within one year after a Change in Control
occurs, and prior to an involuntary termination by the Company for Cause.
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.
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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
October 1, 1998 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 years preceding the Termination Date
(provided that, if this Agreement has not been effect for three years, the
incentive payments and bonuses shall be based on the incentive payments and
bonuses paid to Executive since January 1, 1998); 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 (less
applicable payroll deductions) 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:
(a) Receive Executive's base salary and a pro rata portion of
Executive's 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 Executive's participation (and,
where applicable, participation of Executive's 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, Executive's 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
Executive's 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
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Executive (or Executive's 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
Executive's 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
Executive's 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.
(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, Executive's spouse, if any,
may continue to use one 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 Executive 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.
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(f) 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 Executive's estate if Executive has no surviving spouse.
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 affiliated 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
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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, 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 to be a Change in Control 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
Executive's 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 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.
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(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 September 30, 2002 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 within twelve (12) months prior to such
expiration 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
substantive laws of Florida, without regard to conflict of law provisions, 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 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 before a single
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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, along with a
statement of claim setting forth the specifics of the claim sought to be
arbitrated, 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, Executive's 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.
(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.
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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 /s/ Sanford Miller
----------------------------
EXECUTIVE
/s/ Jeffrey D. Congdon
------------------------------
/s/ Robert L. Aprati
------------------------------
/s/ Scott R. White
------------------------------
BUDGET GROUP, INC.
/s/ Robert L. Aprati
------------------------------
EXECUTIVE
/s/ Sanford Miller
------------------------------
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EXHIBIT I
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (hereinafter "Agreement") is made and entered into by
and between __________________ ("Executive") and Budget Group, Inc. ("Budget"),
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
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
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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 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
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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 documents and materials that relate to Budget,
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 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
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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 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
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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 not engaged in any conduct which may be reasonably
construed as "Cause" pursuant to the provisions of paragraph 4(b)
of the Executive Agreement.
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 substantive laws of the State of Florida, without regard to
conflict of law provisions.
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 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 Budget has breached this Agreement
Budget shall pay to Executive, his costs and expenses, including
attorney's fees, associated with any such arbitration proceedings,
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.
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.
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(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
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 Agrement) 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 not 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. Photograhic 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):
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(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 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:
---------------------------- ------------------------------
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EXHIBIT 10.28
BUDGET GROUP, INC.
FORM OF EXECUTIVE AGREEMENT BETWEEN BUDGET GROUP, INC. AND
EACH OF MICHAEL B. CLAUER, MARK R. SOTIR AND TOM ZORN
This Executive Agreement ("Agreement") is dated as of
__________, and is entered into by and between __________ ("Executive") and
Budget Group, Inc. ("Budget" or "Company"). Executive and Budget hereby agree to
the following terms and conditions:
1. Purpose of Agreement. The purpose of this Agreement
is to provide Executive specified benefits in the event of Executive's
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 Executive's 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 Executive 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.
(b) Notwithstanding any other provision of this
Agreement, unless Executive executes a Release Agreement (acceptable
to Budget and substantially in the form set forth in Exhibit I) within
21 days after a Qualifying Termination (and does not revoke the
Release Agreement within 7 days after signing it), (1)
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no benefits under Section 6 or Section 7(d), or (f) 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
30 days after a Qualifying Termination , and (3) this Agreement shall
be of no further force and effect. Notwithstanding anything in this
Agreement to the contrary, if Executive fails or refuses to comply
with the obligations provided for in Sections 2 and 3 of the Release
Agreement, or is in violation of the representations and warranties
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) If a Change in Control occurs and 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, authority, duties and
responsibilities as they existed in their most
significant form immediately prior to a Change in
Control or any other action by Budget which results
in a material diminution in such position,
authority, duties and responsibilities as they
existed in their most significant form immediately
prior to a Change in Control, 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 assignment or action
which is remedied by Budget promptly after receipt
of notice thereof given by Executive;
(2) Any reduction in (i) Executive's base
salary as it existed immediately prior to a Change
in Control; (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 as they existed
immediately prior to a Change in Control, excluding
changes by Budget with respect to any such benefits
which apply to all executives; or (iii) incentive
payments made pursuant to any
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incentive program (which shall be deemed to be
reduced if the annual incentive payments are less
than the average annual incentive paid to Executive
during the term of this Agreement); provided that,
(x) an isolated, insubstantial and inadvertent
reduction in an element of Executive's total
compensation 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 simultaneously
occurs;
(b) Executive is involuntarily terminated without
"Cause" during the term of this Agreement. For purposes of this
Section, "Cause" shall mean (1) an act or acts of dishonesty by
Executive in connection with Executive's employment; (2) any conduct
with or against another employee, customer or other person, including
conduct involving moral turpitude, which causes or is likely to cause
Budget embarrassment, liability or damage; or (3) Executive's repeated
failure to perform Executive's duties or to perform in accordance with
direction received from a senior ranking officer of Budget; or
(c) Executive terminates Executive's employment for any
reason whatsoever, including termination due to death or disability,
provided that the Termination Date occurs within one year after a
Change in Control occurs, and prior to an involuntary termination by
the Company for Cause.
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.
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6. Severance Payment. Subject to Section 3(b), in the
event of a Qualifying Termination, Budget shall pay Executive an amount equal
to 2 times the sum of (1) Executive's highest annual base salary rate in effect
since March 1, 1999 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 years preceding the
Termination Date (provided that, if this Agreement has not been in effect for
three years, the incentive payments and bonuses shall be based on the incentive
payments and bonuses paid to Executive since March 1, 1999); 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 (less applicable payroll deductions) 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:
(a) Receive Executive's base salary and a pro rata
portion of Executive's 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 Executive's participation (and, where
applicable, participation of Executive's 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 24 months after
the Termination Date ("Completion Date"); if Executive dies
prior to the Completion Date, Executive's 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 Executive's 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
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Executive (or Executive's 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 Executive's 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 Executive's 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.
(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 one (1) current model year luxury vehicle
(the "Vehicle") through the earlier of the Completion Date or
Executive's death; if Executive dies prior to the Completion Date,
Executive's spouse, if any, may continue to use 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 Executive has the Vehicle, 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 Vehicle, including but not limited to
periodic oil changes.
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(f) 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 Executive's estate if Executive has no surviving spouse.
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 affiliated 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
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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,
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 to be a Change in Control 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 Executive's 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 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.
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(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 September 30, 2002 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 within twelve (12) months prior to such expiration 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 substantive laws of Florida, without regard to conflict of law
provisions, 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 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 before a single
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<PAGE> 10
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, along with a
statement of claim setting forth the specifics of the claim sought to be
arbitrated, 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, Executive's 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.
(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.
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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 /s/ Sanford Miller
------------------------------------------
MICHAEL B. CLAUER
/s/ Michael B. Clauer (executed 10/1/98)
----------------------------------------------
MARK SOTIR
/s/ Mark Sotir (executed 3/1/99)
----------------------------------------------
TOM ZORN
/s/ Tom Zorn (executed 3/5/99)
----------------------------------------------
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EXHIBIT I
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (hereinafter "Agreement") is made and entered into by
and between __________________ ("Executive") and Budget Group, Inc. ("Budget"),
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
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
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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 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
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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 documents and materials that relate to Budget,
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 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
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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 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
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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 not engaged in any conduct which may be reasonably
construed as "Cause" pursuant to the provisions of paragraph 4(b)
of the Executive Agreement.
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 substantive laws of the State of Florida, without regard to
conflict of law provisions.
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 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 Budget has breached this Agreement
Budget shall pay to Executive, his costs and expenses, including
attorney's fees, associated with any such arbitration proceedings,
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.
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.
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(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
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 Agrement) 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 not 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. Photograhic 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):
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(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 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:
---------------------------- ------------------------------
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'
EXHIBIT 10.29
TRANSACTION GUARANTY
The undersigned BUDGET GROUP, INC., a Delaware corporation, whose
principal place of business is located at 4225 Naperville Road, Lisle, Illinois
60532 (the "Undersigned") in order to induce KEYBANK NATIONAL ASSOCIATION, a
national banking association having an office at 127 Public Square, Cleveland,
Ohio 44114 (herein called the "Bank"), to make loans in the total principal
amount of THREE MILLION FIVE HUNDRED TWENTY-FOUR THOUSAND SIX HUNDRED
TWENTY-FOUR AND 48/100 DOLLARS ($3,524,624.48) to the Borrowers, whose names,
addresses and the date are listed on Exhibit A attached hereto and incorporated
herein (herein individually called a "Debtor" and collectively the "Debtors"),
to be evidenced by the Debtors' individual Promissory Notes, each dated as set
forth on Exhibit A, payable to the order of the Bank (herein collectively
called the ("Notes"), and in consideration of other good and valuable
consideration, including without limitation, in consideration of the
Undersigned's desire to retain the Debtors as directors, officers, and/or
employees of the Undersigned or one of its subsidiary companies, the receipt
and sufficiency of which is hereby acknowledged, hereby unconditionally and
absolutely guarantees the punctual and full payment when due, by acceleration
or otherwise, of the unpaid principal and interest on the Notes. The
Undersigned expressly acknowledges that default on any one Note shall be
considered default with respect to each and every Note if the Undersigned shall
fail to pay all principal and interest due on such defaulted Note within ten
(10) days of notice to the Undersigned by the Bank. The Undersigned
acknowledges that this Guaranty shall apply with respect to the total unpaid
principal and interest under all of the Notes.
The Undersigned hereby agrees that:
1. The Notes may be renewed, replaced with new Notes, rearranged
or the maturity thereof extended, from time to time and at any rate of
interest, without notice to, without the consent of and without affecting the
liability of the Undersigned.
2. It shall not be necessary for the Bank to resort to or to
exhaust its remedies against the Debtors or against any other party liable on
the Notes or to resort to or marshal any property held as security therefor or
pertaining thereto before calling upon the Undersigned for payment of the
Notes.
3. Any property now or hereafter held as security for or
pertaining to the Notes may be sold, exchanged, surrendered or otherwise dealt
with by the Bank without notice to and without affecting the liability of the
Undersigned. The Undersigned shall not have any rights or claims against the
Bank by reason of any action the Bank may take or fail to take in connection
with perfecting its security interest in property held as collateral for the
Notes or enforcing its security interest in such property.
4. Default by the Undersigned in the payment of any indebtedness
due hereunder or under any other loan agreements with third-party financial
institutions shall cause this Guaranty to be due.
<PAGE> 2
5. Until the Notes shall have been paid in full, the
Undersigned:
(a) will maintain standard systems of accounting, established and
administered in accordance with generally accepted accounting principles
("GAAP") consistently followed throughout the periods involved, and will set
aside on its respective books for each fiscal quarter the proper amounts or
accruals for depreciation, obsolescence, amortization, bad debts, current and
deferred taxes, prepaid expenses, and for other purposes as shall be required
by GAAP. The Undersigned will further deliver to the Bank:
(i) As soon as practicable after the end of each fiscal quarter
in each fiscal year, except the last, and in any event within
forty-five (45) days thereafter, a balance sheet of the
Undersigned as of the end of such quarter, and statements of
income, changes in financial position, and shareholders'
equity of the Undersigned for such quarter, certified as
complete and correct by the principal financial officer of
the Undersigned, subject to changes resulting from year-end
adjustments;
(ii) As soon as practical after the end of each fiscal quarter, a
written statement that the Undersigned is in full compliance
with all provisions of any outstanding loan agreements,
including but not limited to the fact that it is not in
default thereunder, certified as complete and correct by the
principal financial officer of the Undersigned;
(iii) As soon as practicable after the end of each fiscal year, and
in any event within one hundred twenty (120) days thereafter,
a balance sheet of the Undersigned as of the end of such year,
and statements of income, changes in financial position, and
shareholders' equity of the Undersigned for such year,
setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and
accompanied by an audit report of independent certified
public accountants of recognized standing, selected by the
Undersigned, which report shall be prepared in accordance
with generally accepted auditing standards; and
(iv) With reasonable promptness, such other data and information
as from time to time may be reasonably requested by the Bank.
(b) shall make available for inspection to duly authorized
representatives of the Bank any of the Undersigned's books, records, and
properties when requested so to do, and shall furnish the Bank any such
reasonably requested information regarding its business affairs and financial
condition within a reasonable time after written request therefor.
(c) will cause to be done all things necessary to preserve and
keep in full force and effect its existence and rights, to conduct its business
in a prudent manner, to maintain in full force and effect, and renew from time
to time, its franchises, permits, licenses, patents, and trademarks that are
necessary to operate its respective businesses. The Undersigned will comply in
all material
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<PAGE> 3
respects with all valid laws and regulations now in effect or hereafter
promulgated by any properly constituted governmental authority having
jurisdiction; provided, however, the Undersigned shall not be required to
comply with any law or regulation which it is contesting in good faith by
appropriate proceedings as long as either the effect of such law or regulation
is stayed pending the resolution of such proceedings or the effect of not
complying with such law or regulation is not to jeopardize any franchise,
license, permit patent, or trademark necessary to conduct its business.
(d) will promptly notify the Bank in writing of (i) any future
event which, if it had existed on the date of this Agreement, would have
required qualification of the representations and warranties set forth in this
Section 5 and (ii) any material adverse change in the condition, business, or
prospects, financial or otherwise, of the Undersigned.
6. All settlements, compromises, compositions, accounts stated
and agreed balances with regard to the Notes made in good faith between the
Bank and the Debtors shall be binding upon the Undersigned.
7. The Bank, without notice to, without the consent of and
without affecting the liability of the Undersigned, may modify, waive,
supplement or otherwise change any of the terms, conditions, provisions or
restrictions contained in the Notes or in any agreement or other instrument
evidencing, securing or pertaining to the Notes.
8. This Guaranty is unconditional and absolute and the
Undersigned waives notice of the acceptance hereof, waives all notices to which
the Undersigned might otherwise be entitled by law, waives all defenses, legal
or equitable, otherwise available to the Undersigned and waives presentment,
demand for payment, notice of dishonor, protest and notice of protest and
non-payment and, except as otherwise provided herein, all other demands and
notices in connection with delivery, acceptance, performance, default or
enforcement relative to the Notes. Any request, demand, or notice by or on
behalf of the Bank, when delivered or deposited for delivery, postage prepaid,
by certified United States mail to the Undersigned at the Undersigned's address
set forth above shall constitute, but shall not preclude other means of, an
effective request, demand, or notice. Any request, demand, or notice by or on
behalf of the Undersigned must be in writing and shall not be effective until
delivered to the Bank at the Bank's address set forth above. If any term or
provision of this Guaranty shall be held to be invalid, illegal or
unenforceable, the remaining provisions hereof shall remain in full force and
effect.
9. The payment obligations of the Undersigned under this Guaranty
shall be absolute, unconditional and irrevocable and shall be satisfied strictly
in accordance with the terms of this Guaranty, under all circumstances
whatsoever, including, without limitation, the existence of any claim, setoff,
defense or right which the Undersigned or the Debtors, or any one of them, may
have at any time against the Bank or any other person or entity, whether in
connection with this Guaranty, the Notes or the transactions contemplated hereby
or any unrelated transaction.
10. The Notes shall continue to be effective, or be reinstated,
if any amount paid by or
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on behalf of the Debtors to the Bank with regard to such Notes is rescinded,
restored, or returned in connection with the insolvency, bankruptcy,
dissolution, liquidation or reorganization of any Debtor, or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Debtors or any part of their respective property, or
otherwise, all as though such payment had not been made.
11. Until all principal and interest due under the Notes shall
have been paid to the Bank, the Undersigned hereby waives all rights it may
have at law or in equity, including, without limitation, rights under any law
subrogating the Undersigned to the rights of the Bank, including, without
limitation, rights under any law subrogating the Undersigned to the rights of
the Bank, to seek contribution, indemnification, or any other form of
reimbursement from any Debtor, any other guarantor or any other person or
entity now or hereafter primarily or secondarily liable for any obligations of
Debtors to the Bank, for any payment or disbursement made by the Undersigned
under or in connection with this Guaranty or otherwise.
12. The Undersigned agrees to promptly reimburse the Bank for all
costs and expenses, including attorneys' fees, incurred by the Bank in
connection with any collection proceedings as a result of nonpayment of the
Notes, as and when due and payable. The Undersigned further agrees that an
aggregate fee of Ten Thousand Dollars ($10,000.00) shall be paid by the
Undersigned upon execution of the Notes and this Guaranty.
13. This Guaranty shall be construed in accordance with the laws
of the State of Ohio and shall inure to the benefit of the Bank, its successors
and assigns, and to any other holder who derives title to or an interest in
this Guaranty or the Notes.
14. In the event any Debtor ceases to be a director, officer or
employee of the Undersigned or one of its subsidiary companies ("Departing
Debtor"), then the Undersigned shall give written notice of such fact to the
Bank. In addition, the Undersigned shall give written notice to such Departing
Debtor that such Departing Debtor shall have 30 days within which to pay the
principal and interest owed under such Departing Debtor's Promissory Note. Upon
payment in full of such Departing Debtor's Promissory Note, that portion of the
guaranteed debt represented by such Departing Debtor's Promissory Note shall be
released from this Guaranty. Such release shall not affect the liability of the
Undersigned with respect to the remaining Notes under the provisions of this
Guaranty.
The Undersigned, to the extent permitted by law, waives any right to
have a jury participate in resolving any dispute, whether sounding in contract,
tort, or otherwise, between the Bank and the Undersigned arising out of, in
connection with, related to, or incidental to the relationship established
between the Undersigned and the Bank in connection with this Guaranty or any
other agreement, instrument or document executed or delivered in connection
therewith or the transactions related thereto.
4
<PAGE> 5
This Guaranty shall be binding upon the successors and assigns of the
Undersigned. Executed at Lisle, Illinois, on the 15th day of December, 1998.
BUDGET GROUP, INC., a Delaware corporation
By: /s/ Robert L. Aprati
---------------------------------------
Robert L. Aprati
Its: Executive Vice President
STATE OF ILLINOIS )
)SS:
COUNTY OF DU PAGE )
BE IT REMEMBERED, that on this 15th day of December, 1998, before me,
a Notary Public in and for said State, personally came Robert L. Aprati, the
Executive Vice President of BUDGET GROUP, INC., and acknowledged that he signed
the foregoing instrument on behalf of said corporation and that the signing
thereof is the voluntary act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunder subscribed my name and affixed
my notarial seal, on the day and year last aforesaid.
/s/ Gerri S. Copper
---------------------------
NOTARY PUBLIC
5
<PAGE> 6
EXHIBIT A
<TABLE>
<CAPTION>
DATE NOTE
---------
NAME STREET ADDRESS CITY, STATE, ZIP LOAN EXECUTED
- ---- -------------- ---------------- ----- ---------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
ROBERT APRATI 14600 Crystal Tree Drive Orland Park, IL 60462 249,968.69 12/15/98
- -----------------------------------------------------------------------------------------------------------------------------------
MICHAEL CLAUER 1060 Crabapple Lane St. Charles, IL 60174 199,972.34 12/15/98
- -----------------------------------------------------------------------------------------------------------------------------------
JEFFREY CONGDON 8835 Sargent Road Indianapolis, IN 46256 499,937.34 1/7/99
- -----------------------------------------------------------------------------------------------------------------------------------
JAMES DREESEN 909 Twelve Oaks Carmel, IN 46032 124,990.83 12/19/98
- -----------------------------------------------------------------------------------------------------------------------------------
JEFFREY HENDRICKSON 1982 Merwins Lane Fairfield, CT 06430 249,968.67 1/4/99
- -----------------------------------------------------------------------------------------------------------------------------------
R. JEFFREY HENNING 5761 Woodwind Drive Bloomfield Hills, MI 48301 124,990.83 12/17/98
- -----------------------------------------------------------------------------------------------------------------------------------
MICHAEL KATZIN 3708 Magenta Lane #3 Indianapolis, IN 46214 124,990.83 12/15/98
- -----------------------------------------------------------------------------------------------------------------------------------
WILLIAM LANIER 15 Lloyd Harbor Road Lloyd Neck, NY 11743 124,990.83 12/19/98
- -----------------------------------------------------------------------------------------------------------------------------------
ANA LEHMAN 1450 N. Astor Street #6A Chicago, IL 60610 124,990.83 12/29/98
- -----------------------------------------------------------------------------------------------------------------------------------
SANFORD MILLER 28 Broadriver Road Ormond Beach, FL 32174 499,937.34 12/14/98
- -----------------------------------------------------------------------------------------------------------------------------------
MARY MURCOTT 17331 Club Hill Drive Dallas, TX 75248 124,990.83 12/19/98
- -----------------------------------------------------------------------------------------------------------------------------------
VICKI PYNE 142 Hawkins Circle Wheaton, IL 60187 124,990.83 12/15/98
- -----------------------------------------------------------------------------------------------------------------------------------
RANDALL SMALLEY 8751 E. Sanna Street Paradise Valley, AZ 85253 124,990.83 12/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
ROBERT SMALLEY, JR. 12094 E. Gold Dust Avenue Scottsdale, AZ 85259 124,990.83 12/24/98
- -----------------------------------------------------------------------------------------------------------------------------------
MARK SOTIR 1216 Harmony Court #1134 Naperville, IL 60563 124,990.83 12/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
SCOTT WHITE 413 West 9th Street Hinsdale, IL 60521 199,972.34 12/21/98
- -----------------------------------------------------------------------------------------------------------------------------------
JEAN-CLAUDE GHIOTTI Hillsdale, Garrards Cross Buckinghamshire UK SL97PL 249,968.67 12/14/98
- -----------------------------------------------------------------------------------------------------------------------------------
SANDRA HUGHES 3924 Broadmoor Circle Naperville, IL 60564 124,990.83 12/18/98
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 1
EXHIBIT 10.30
SECOND AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of March 18, 1999 (this "Amendment"), is made by and among BUDGET GROUP,
INC., a Delaware corporation (the "Borrower"), the Lenders (such capitalized
term and all other capitalized terms not otherwise defined herein shall have the
meanings provided for in Article I below) parties hereto and CREDIT SUISSE FIRST
BOSTON, as administrative agent (in such capacity, the "Administrative Agent")
for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agents have heretofore
entered into that certain Amended and Restated Credit Agreement, dated as of
June 19, 1998 (as amended by the First Amendment to Amended and Restated Credit
Agreement dated as of September 11, 1998, and as further amended, supplemented,
amended and restated or otherwise modified, the "Credit Agreement");
WHEREAS, the Borrower desires to issue up to $400,000,000 aggregate
principal amount of its senior unsecured notes the proceeds of which would be
used to repay outstanding Indebtedness in respect of the Series 1994-A Medium
Term Notes issued by Budget Fleet Finance Corporation, a Delaware corporation
("BFFC"), or the Series 1994-1 Medium Term Notes issued by TFFC or other
Indebtedness of the Borrower and its Subsidiaries;
WHEREAS, the Borrower desires to eliminate the aggregate amount
limitation set forth in clause (c) of Section 8.2.10 of the Credit Agreement to
the extent such limitation would apply to the sale of assets comprising a
Non-Core Business (as defined below);
WHEREAS, the Borrower desires the ability to incur extraordinary and
non-recurring charges and expenses in an amount not to exceed $50,000,000 in the
aggregate and not have such charges and expenses comprise a deduction in
determining EBITDA;
WHEREAS, the Foreign Subsidiaries of the Borrower desire to obtain
financing for working capital and general corporate purposes in an aggregate
principal amount at any time outstanding of up to $100,000,000;
WHEREAS, the Borrower desires to make Capital Expenditures in Fiscal
Year 1999 in an aggregate amount of up to $85,000,000;
<PAGE> 2
WHEREAS, the Borrower desires the ability to pay and make a
Distribution to those of its stockholders that are entitled to receive
Contingent Additional Consideration (as defined in Section 3.4 of the Ryder
Merger Agreement (as defined below)) in an aggregate amount not to exceed the
sum of (i) $15,000,000 and (ii) the amount of certain Net Disposition Proceeds
resulting from the sale of assets comprising a Non-Core Business and not
exceeding $20,000,000 in the aggregate;
WHEREAS, the Borrower has requested that the Lenders amend certain
provisions of the Credit Agreement, including provisions relating to the
transactions and actions described in the preceding seven paragraphs; and
WHEREAS, the Required Lenders 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 and the Required Lenders 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 preamble.
"Amended Credit Agreement" is defined in the ninth recital.
"Amendment" is defined in the preamble.
"BFFC" is defined in the second recital.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
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.
-2-
<PAGE> 3
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.
SECTION 2.1. Amendment to Section 1.1 of the Credit Agreement. Section
1.1 of the Credit Agreement ("Defined Terms") is hereby amended as follows:
(a) by inserting in such Section the following definitions in
the appropriate alphabetical order:
"BFFC" means Budget Fleet Finance Corporation, a
Delaware corporation.
"Core Business" means the business of (a) renting
worldwide for general use passenger automobiles and trucks
under the Budget and Ryder brand names, (b) selling in the
United States late model automobiles and passenger vans under
the Budget brand name and (c) franchising the foregoing rental
business to other Persons.
"1999 Senior Note Debt" means Indebtedness in respect
of the 1999 Senior Notes.
"1999 Senior Note Indenture" means the Indenture or
Indentures pursuant to which the 1999 Senior Notes are issued,
in each case, between the Borrower and the applicable trustee
thereunder, having terms consistent with the terms set forth
in Schedule VI hereto, as such Indenture or Indentures may be
amended, supplemented, amended and restated or otherwise
modified in accordance with the terms hereunder.
"1999 Senior Notes" means the senior unsecured notes
of the Borrower having terms consistent with the terms set
forth in Schedule VI hereto.
"Non-Core Business" means any business other than a
Core Business.
"Ryder Merger Agreement" means the Agreement and Plan
of Merger, dated March 4, 1998 (as amended on March 16, 1998
and June 19, 1998), by and among the Borrower, BDG
Corporation, Ryder TRS, Inc., Ryder Questor Partners Fund,
L.P., Questor Side-by-Side Partners L.P. and Dearborn Capital
Partners, L.P.
-3-
<PAGE> 4
"Second Amendment" means the Second Amendment to
Amended and Restated Credit Agreement, dated as of March 18,
1999, among the Borrower, the Lenders parties thereto and the
Agents.
(b) by deleting the definition of "Adjusted EBITDA" set forth in such
Section in its entirety and substituting therefor the following:
"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 securing Vehicle Debt during such
period; provided that, in the event such period
includes a Fiscal Quarter in which 1999 Senior Notes
were issued, the aggregate amount of depreciation for
such period shall be determined on a pro forma basis
as if Vehicles having an aggregate net book value as
of the first day of such period equal to the net cash
proceeds of such 1999 Senior Notes were free and
clear of any Lien securing Vehicle Debt for such
period, but only to the extent Vehicles having such
aggregate net book value remain free and clear of
such Liens for the period commencing with the date
such 1999 Senior Notes were issued and ending on the
last day of such period (such determination to be set
forth in reasonable detail (including identification
of the Vehicles having an aggregate net book value
equal to such net cash proceeds) and with appropriate
calculations and computations in all respects
reasonably satisfactory to the Administrative Agent
in the applicable Compliance Certificate);
plus
(ii) Vehicle Interest Expense during such
period.
(c) by deleting the pricing grid in the definition of "Applicable
Commitment Fee" set forth in such Section in its entirety and substituting
therefor the following:
-4-
<PAGE> 5
PRICING GRID
<TABLE>
<CAPTION>
APPLICABLE
ADJUSTED LEVERAGE RATIO COMMITMENT FEE
----------------------- --------------
<S> <C>
X >= 4.50 50.0
X >= 2.0, but < 4.50 37.5
X >= 1.0, but < 2.0 30.0
X >= 0.75, but < 1.0 25.0
X < 0.75 20.0
</TABLE>
(d) by deleting the pricing grid in the definition of "Applicable
Margin" set forth in such Section in its entirety and substituting therefor the
following:
PRICING GRID
<TABLE>
<CAPTION>
EUROCURRENCY LOAN ABR LOAN
ADJUSTED LEVERAGE RATIO APPLICABLE MARGIN APPLICABLE MARGIN
- ----------------------- ----------------- -----------------
<S> <C> <C>
X >= 5.5 275 175
X >= 4.5, but < 5.5 250 150
X >= 3.5, but < 4.5 225 125
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 >= 0.75, but < 1.0 125 25
X < 0.75 100 0
</TABLE>
(e) by amending clause (e) of the definition of "Change of Control" set
forth in such Section by deleting the word "or" following the term "Series B
Notes" and substituting therefor ",", and by adding the phrase "or the 1999
Senior Note Debt" following the term "Subordinated Debt".
(f) by deleting clauses (b) and (c) of the definition of "EBITDA" set
forth in such Section in their entirety and substituting therefor the following:
"(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
-5-
<PAGE> 6
amortization of tangible and intangible assets plus (iv)
extraordinary and non-recurring expenses or charges resulting
from the Transaction in an amount not to exceed $56,000,000 in
the aggregate plus (v) other extraordinary and non-recurring
expenses or charges in an amount not to exceed $50,000,000 in
the aggregate since the date of the First Amendment
minus
(c) to the extent included in arriving at such Net
Income, extraordinary and non-recurring gains in an amount not
to exceed $50,000,000 in the aggregate since the date of the
First Amendment";
(g) by deleting in the definition of "Loan Document" the phrase "and
each other agreement, certificate, document or instrument delivered in
connection with this Agreement and such other agreements" and substituting
therefor the following:
"and each other agreement, certificate, document or instrument
delivered in connection with this Agreement or any such other agreement
and designated to be a 'Loan Document'".
SECTION 2.2. Amendment to Section 2.2.2 of the Credit Agreement.
Section 2.2.2 of the Credit Agreement is hereby amended as follows:
(a) by adding after the phrase "Subordinated Debt" in such Section the
phrase ", 1999 Senior Note Debt"; and
(b) by adding after the phrase "its or such Subsidiary's good faith
intention to apply such Net Disposition Proceeds to the acquisition or
construction of property or capital assets to be used in the business of the
Borrower and its Subsidiaries" the following parenthetical:
"(or to the payment of Contingent Additional Consideration (as
defined in Section 3.4 of the Ryder Merger Agreement) to the
extent permitted by clause (ii) of the proviso to clause (a)
of Section 8.2.6)".
SECTION 2.3. Amendment to Section 8.1 of the Credit Agreement. Section
8.1 of the Credit Agreement is hereby amended to add the following new Section
8.1.10 to read as follows:
"SECTION 8.1.10. Use of Proceeds of 1999 Senior Notes. The
Borrower shall apply the proceeds of the 1999 Senior Notes to repay
outstanding Indebtedness in respect of the Series 1994-A Medium Term
Notes issued by BFFC, or the Series 1994-1 Medium Term Notes issued by
TFFC or other Indebtedness of the Borrower and its Subsidiaries."
-6-
<PAGE> 7
SECTION 2.4. Amendments to Section 8.2.2 of the Credit Agreement.
Section 8.2.2 of the Credit Agreement is hereby amended as follows:
(a) by deleting the "and" in clause (h) of such Section and
substituting therefor "," and by adding at the end of such clause (h)
the following:
"and (v) any promissory note or notes issued by the
Borrower to an SPC or SPCs in connection with the
issuance by such SPCs of medium-term notes,
highly-rated commercial paper or other securities the
proceeds of which are used to finance Vehicles or
refinance Vehicle Debt so long as the Administrative
Agent is satisfied that such promissory note or notes
are structured in a manner similar to Demand
Capitalization Note I, Demand Capitalization Note II,
Demand Capitalization Note III and Demand
Capitalization Note IV";
(b) by deleting clause (i) of such Section in its entirety and
substituting therefor the following:
"(i) Indebtedness of Foreign Subsidiaries incurred
for working capital and general corporate purposes to the
extent the aggregate principal amount thereof does not exceed
at any time outstanding $100,000,000;";
(c) by deleting "[INTENTIONALLY OMITTED]" in clause (o) of
such Section and substituting therefor the following:
"(o) Indebtedness in respect of the 1999 Senior
Notes in an aggregate principal amount not to exceed
$400,000,000;";
(d) by adding the phrase "or (o)" immediately following the
reference to "clause (f)" in the first line of clause (u) of such
Section.
SECTION 2.5. Amendments to Section 8.2.4 of the Credit Agreement.
Section 8.2.4 of the Credit Agreement is hereby amended as follows:
(a) by deleting the table in clause (b) of such Section in its
entirety and substituting therefor the following:
-7-
<PAGE> 8
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
-------------- -----
<S> <C>
The third Fiscal Quarter of the
1998 Fiscal Year 4.25:1.00
The fourth Fiscal Quarter of
the 1998 Fiscal Year 4.00:1.00
The first Fiscal Quarter of the
1999 Fiscal Year 6.90:1.00
The second Fiscal Quarter of
the 1999 Fiscal Year 6.65:1.00
The third Fiscal Quarter of the
1999 Fiscal Year 6.45:1.00
The fourth Fiscal Quarter of the
1999 Fiscal Year and the first,
second and third Fiscal Quarters
of the 2000 Fiscal Year 4.25:1.00
The fourth Fiscal Quarter of
the 2000 Fiscal Year 3.25:1.00
The first, second, third and 3.00:1.00
fourth Fiscal Quarters of
the 2001 Fiscal Year and
each Fiscal Quarter
thereafter
</TABLE>
(b) by deleting the table in clause (c) of such Section in its entirety
and substituting therefor the following:
-8-
<PAGE> 9
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
-------------- -----
<S> <C>
The third Fiscal Quarter of the
1998 Fiscal Year 3.50:1.00
The fourth Fiscal Quarter of the
1998 Fiscal Year and the
first and second Fiscal
Quarters of the 1999 Fiscal
Year 3.75:1.00
The third Fiscal Quarter of the
1999 Fiscal Year 3.65:1.00
The fourth Fiscal Quarter of the
1999 Fiscal Year, and the
first, second and third Fiscal
Quarters of the 2000
Fiscal Year 3.75:1.00
The fourth Fiscal Quarter of the
2000 Fiscal Year and each
Fiscal Quarter thereafter 4.00:1.00
</TABLE>
SECTION 2.6. Amendments to Section 8.2.6 of the Credit Agreement.
Section 8.2.6 of the Credit Agreement is hereby amended as follows:
(a) by deleting the proviso to clause (a) of such Section in
its entirety and substituting therefor the following:
"provided, however, that
(i) the Borrower may (x) declare, pay and make
Distributions to its stockholders with respect to, and (y)
purchase or redeem, 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,
in each case, in any Fiscal Year to the extent the aggregate
amount to be expended in respect of such Distribution,
purchase or redemption to be made by the Borrower pursuant to
this clause (i), when added to the aggregate amount expended
in respect of all other such Distributions, purchases or
redemptions made pursuant to this clause (i) during the Fiscal
Year in which such Distribution, purchase or redemption would
be
-9-
<PAGE> 10
made, does not exceed 20% of the Net Income of the Borrower
for the immediately preceding Fiscal Year, so long as
(A) both before and after giving effect to
any such Distribution, purchase or redemption
pursuant to this clause (i), no Default shall have
occurred and be continuing, and
(B) in the case of any such Distribution,
the Borrower shall have delivered to the
Administrative Agent (1) 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
Section 8.1.1 (including Section 8.1.1 of the
Original Credit Agreement) and (2) a certificate of
the Borrower executed by an Authorized Officer of the
Borrower 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
(ii) the Borrower may pay and make a Distribution to
those of its stockholders that are entitled to receive
Contingent Additional Consideration (as defined in Section 3.4
of the Ryder Merger Agreement) from the Borrower to the extent
the aggregate amount to be expended in respect of such
Distribution, when added to the aggregate amount expended in
respect of all other such Distributions made pursuant to this
clause (ii), does not exceed the sum of (x) $15,000,000 plus
(y) the amount of Net Disposition Proceeds resulting from the
sale of the assets of a Non-Core Business (or of the Capital
Stock of a Subsidiary of the Borrower exclusively engaged in
the conduct of a Non-Core Business) and not exceeding
$20,000,000 in the aggregate to the extent such Net
Disposition Proceeds were not applied to the acquisition or
construction of property or capital assets to be used in the
business of the Borrower and its Subsidiaries, so long as
(A) such Distribution is made in accordance
with the provisions of Section 3.4 of the Ryder
Merger Agreement,
(B) both before and after giving effect to
any such Distribution, no Default shall have occurred
and be continuing, and
(C) in the case of any such Distribution,
the Borrower shall have delivered to the
Administrative Agent (1) 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
-10-
<PAGE> 11
Section 8.1.1 (including Section 8.1.1 of the
Original Credit Agreement) and (2) a certificate of
the Borrower executed by an Authorized Officer of the
Borrower 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";
(b) by deleting clause (c) of such Section in its entirety and
substituting therefor the following:
"(c) the Borrower will not, and will not permit any of its
Subsidiaries to
(i) make any payment or prepayment of principal of,
or make any payment of interest on, any Subordinated Debt or
1999 Senior Note Debt (other than Subordinated Debt held by
the Borrower or any Wholly Owned Subsidiary of the Borrower
that is a Subsidiary Guarantor), other than payments of
interest on the stated, scheduled date for such payments of
interest as set forth in the documents and instruments
memorializing such Subordinated Debt or 1999 Senior Note Debt,
as the case may be, or (in the case of Subordinated Debt)
which would violate the subordination provisions of such
Subordinated Debt; or
(ii) redeem, purchase or defease, any Subordinated
Debt or 1999 Senior Note Debt (other than Subordinated Debt
held by the Borrower or any Wholly Owned Subsidiary of the
Borrower that is a Subsidiary Guarantor); and".
SECTION 2.7. Amendment to Section 8.2.7 of the Credit Agreement.
Section 8.2.7 of the Credit Agreement is hereby amended by deleting the dollar
amount "$65,000,000" opposite Fiscal Year 1999 and substituting therefor
"$85,000,000".
SECTION 2.8. Amendment to Section 8.2.10 of the Credit Agreement.
Clause (c) of Section 8.2.10 of the Credit Agreement is hereby amended by
deleting such clause in its entirety and substituting therefor the following:
"(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
Borrower 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 75% cash or Cash
Equivalent Investments and (ii) in the case such assets relate to the
conduct of the Core Business, the fair market value of such assets,
together with the aggregate fair market value of all other such assets
sold, transferred or conveyed pursuant to this clause (c) in the Fiscal
Year such assets are sold, transferred or conveyed, does not exceed
$25,000,000; provided, however, that no such sale, transfer or
conveyance of any asset (whether or not relating to the conduct of a
Core
-11-
<PAGE> 12
Business) shall be permitted to be made if immediately before or after
giving effect thereto, any Default shall have occurred and be
continuing; or".
SECTION 2.9. Amendment to Section 8.2.11 of the Credit Agreement.
Section 8.2.11 of the Credit Agreement is hereby amended by inserting the phrase
"or 1999 Senior Note Debt" following the term "Subordinated Debt" in the tenth
line thereof.
SECTION 2.10. Amendment to Credit Agreement Schedules. The Credit
Agreement is hereby amended by adding a new Schedule VI ("Terms Relating to 1999
Senior Note Debt"), to read as set forth on Exhibit A hereto.
ARTICLE III
CONDITIONS TO EFFECTIVENESS
This Amendment, and the amendments and modifications contained herein,
shall be and shall 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 and each of the Required Lenders.
SECTION 3.2. Closing Date Certificate. The Administrative Agent shall
have received, with counterparts for each Lender, a certificate, dated the date
hereof, appropriately completed and duly executed and delivered by an Authorized
Officer of the Borrower in which certificate the Borrower shall agree and
acknowledge that the statements made therein shall be deemed to be true and
correct representations and warranties of the Borrower made as of such date and,
at the time such certificate is delivered, such statements shall in fact be true
and correct.
SECTION 3.3. Execution of Affirmation and Consent. The Administrative
Agent shall have received an affirmation and consent in form and substance
satisfactory to it, duly executed and delivered by each Guarantor and any other
Obligor that has granted a Lien pursuant to any Loan Document.
SECTION 3.4. Amendment Fee. The Administrative Agent shall have
received the amendment fees due and payable pursuant to Section 5.4.
SECTION 3.5. Fees and Expenses. The Administrative Agent shall have
received all fees and expenses due and payable pursuant to Section 5.5 (to the
extent then invoiced) and pursuant to the Credit Agreement (including all
previously invoiced fees and expenses).
-12-
<PAGE> 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties. In order to induce the
Required Lenders and the Administrative Agent to enter into this Amendment, the
Borrower hereby represents and warrants to the Administrative Agent, the Issuer
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 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 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 or any of its Subsidiaries which might materially
adversely affect the Borrower'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 and its
Subsidiaries;
(c) no Default has occurred and is continuing, and neither the
Borrower nor any of its 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 the Borrower and constitutes a legal, valid and binding
obligation of the Borrower, 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.
-13-
<PAGE> 14
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 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 estimates 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 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 or
any other Obligor which would require the consent of any 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. The Borrower hereby agrees that it
will take any action that from time to time may be reasonably necessary to
effectuate the amendments contemplated herein.
-14-
<PAGE> 15
SECTION 5.4. Amendment Fee. Upon satisfaction of the condition set
forth in Section 3.1, the Borrower shall pay, without setoff, deduction or
counterclaim, a non-refundable amendment fee for the account of each Lender that
has executed and delivered (including delivery by way of facsimile) a copy of
this Amendment to the attention of Ms. Shannon Hales at Mayer, Brown & Platt,
1675 Broadway, New York, New York 10019 (19th floor), telecopy number
212-262-1910 at or prior to 5:00 p.m., New York time, on March 18, 1999, in the
amount of 1/4 of 1% of such Lender's Commitment. The aggregate amount of such
amendment fee shall be paid at or prior to noon, New York time, on March 19,
1999 to the Administrative Agent for the pro rata account of the Lenders
entitled to receive such amendment fee.
SECTION 5.5. 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 5.6. 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 5.7. Execution in Counterparts. This Amendment may be executed
by the parties hereto in 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 PAGE INTENTIONALLY LEFT BLANK]
-15-
<PAGE> 16
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 GROUP, INC.
By: /s/ Stephen G. Worthley
-----------------------------------------
Name: Stephen G. Worthley
------------------------------------
Title: Vice President and Treasurer
-----------------------------------
CREDIT SUISSE FIRST BOSTON, as a Lender
and the Administrative Agent
By: /s/ Robert Hetu
-----------------------------------------
Name: Robert Hetu
------------------------------------
Title: Vice President
-----------------------------------
By: /s/ Chris T. Horgan
-----------------------------------------
Name: Chris T. Horgan
------------------------------------
Title: Vice President
-----------------------------------
NATIONSBANK, N.A.
By: /s/ Nelson Albrecht
-----------------------------------------
Name: Nelson Albrecht
------------------------------------
Title: Vice President
-----------------------------------
BANK OF HAWAII
By: /s/ Mark C. Joseph
-----------------------------------------
Name: Mark C. Joseph
------------------------------------
Title: Vice President
-----------------------------------
S-1
<PAGE> 17
BANK OF MONTREAL
By: /s/ L. A. Durning
-----------------------------------------
Name: L. A. Durning
------------------------------------
Title: Portfolio Manager
-----------------------------------
THE BANK OF NEW YORK
By: /s/ John Paul Marotta
-----------------------------------------
Name: John Paul Marotta
------------------------------------
Title: Vice President
-----------------------------------
THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. Ashby
-----------------------------------------
Name: F. C. H. Ashby
------------------------------------
Title: Senior Manager Loan Operations
-----------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BANK POLSKA KASA OPIEKI S.A. - PEKAO
S.A. GROUP, NEW YORK BRANCH
By: /s/
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
S-2
<PAGE> 18
BANK UNITED
By: /s/ Phil Green
-----------------------------------------
Name: Phil Green
------------------------------------
Title: Director
-----------------------------------
PARIBAS
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BANQUE WORMS CAPITAL CORPORATION
By: /s/
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BHF-BANK AKTIENGESELLSCHAFT
By: /s/
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By: /s/
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
S-3
<PAGE> 19
CIBC INC.
By: /s/ Cyd Petre
-----------------------------------------
Name: Cyd Petre
------------------------------------
Title: Executive Director
-----------------------------------
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/ Eric Longuet
-----------------------------------------
Name: Eric Longuet
------------------------------------
Title: Vice President
-----------------------------------
By: /s/ Albert M. Calo
-----------------------------------------
Name: Albert M. Calo
------------------------------------
Title: Vice President
-----------------------------------
COMMERZBANK AKTIENGESELLSCHAFT,
CHICAGO BRANCH
By: /s/
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
CREDIT AGRICOLE INDOSUEZ
By: /s/ David Bouhl
-----------------------------------------
Name: David Bouhl
------------------------------------
Title: First Vice President, Managing
-----------------------------------
Director
-----------------------------------
By: /s/ Katherine L. Abbott
-----------------------------------------
Name: Katherine L. Abbott
------------------------------------
Title: First Vice President
-----------------------------------
S-4
<PAGE> 20
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/ Lee E. Greve
-----------------------------------------
Name: Lee E. Greve
------------------------------------
Title: First Vice President
-----------------------------------
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG
By: /s/ John Fay
-----------------------------------------
Name: John Fay
------------------------------------
Title: Assistant Vice President
-----------------------------------
FLEET BANK, N.A.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
S-5
<PAGE> 21
THE FUJI BANK, LIMITED
By: /s/ Peter L. Chinnici
-----------------------------------------------
Name: Peter L. Chinnici
------------------------------------------
Title: Joint General Manager
------------------------------------------
GREEN TREE FINANCIAL SERVICING CORP.
By: /s/ Gary Wetherholt
-----------------------------------------------
Name: Gary Wetherholt
------------------------------------------
Title: Vice President and Chief Credit Officer
------------------------------------------
IMPERIAL BANK
By: /s/ Mark Campbell
----------------------------------------------
Name: Mark Campbell
------------------------------------------
Title: Senior Vice President
------------------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/
----------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
NATEXIS BANQUE
By: /s/ Pieter J. van Tulder
----------------------------------------------
Name: Pieter J. van Tulder
------------------------------------------
Title: Vice President and Manager
------------------------------------------
S-6
<PAGE> 22
PNC BANK, N.A.
By: /s/ Marc T. Kennedy
-----------------------------------------
Name: Marc T. Kennedy
------------------------------------
Title: Vice President
-----------------------------------
SOUTHERN PACIFIC BANK
By: /s/ Sean R. Walker
-----------------------------------------
Name: Sean R. Walker
------------------------------------
Title: Vice President
-----------------------------------
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SUNTRUST BANK CENTRAL FLORIDA, N.A.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
TORONTO DOMINION (TEXAS), INC.
By: /s/ Warren Finlay
-----------------------------------------
Name: Warren Finlay
------------------------------------
Title: President
-----------------------------------
S-7
<PAGE> 23
THE TOYO TRUST & BANKING CO., LTD.
By: /s/ K. Yamauchi
-----------------------------------------
Name: K. Yamauchi
------------------------------------
Title: Vice President
-----------------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Richard P. Degrey
-----------------------------------------
Name: Richard P. Degrey
------------------------------------
Title: Vice President
-----------------------------------
S-8
<PAGE> 24
EXHIBIT A
TO SECOND AMENDMENT
SCHEDULE VI
TO CREDIT AGREEMENT
TERMS RELATING TO 1999 SENIOR NOTE DEBT
1. Holders of 1999 Senior Note Debt may not have the benefit of any
guarantee from any Subsidiary of the Borrower.
2. Holders of 1999 Senior Note Debt may not have the benefit of a
cross-default to other Indebtedness, unless such other Indebtedness has
been accelerated or has otherwise matured.
3. Holders of 1999 Senior Note Debt may not have the benefit of any
negative pledge provision relating to Vehicles and other assets
securing Vehicle Debt.
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION OF NAMES UNDER WHICH
SUBSIDIARY INCORPORATION DOING 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 Holdings Corporation............................. Illinois
BRAC Reinsurance Company Ltd.......................... 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 Expana, 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
Premier Car Rental LLC................................ Georgia
Budget Rent a Car Company GmbH........................ Germany
Cruise America, Inc................................... Florida
BGI Airport Parking, Inc.............................. Delaware
Budget Deutschland GmbH............................... Germany
Budget Group Capital Trust............................ Delaware
Ritz Services, Inc.................................... Florida Granada Travel Agency
Ryder TRS, Inc........................................ Delaware
Ryder Truck Rental-One Way, Inc....................... Delaware
RCTR, Inc............................................. Delaware
Ryder Move Management, Inc............................ Oregon
Mastering the Move Realty, Inc........................ Florida
The Move Shop, Inc.................................... Florida
Ryder Relocation Services, Inc........................ Florida
Carson Chrysler Plymouth Dodge Jeep Eagle, Inc........ Indiana
Paul West Ford, Inc................................... Florida
Warren Wooten Ford, Inc............................... Florida
Directors Row Management Company, LLC................. Indiana
ValCar Rental Car Sales, Inc.......................... Indiana
Budget Rent-A-Car of the Midwest, Inc................. Missouri
BVM, Inc.............................................. Ohio
Vipre B.V............................................ The Netherlands
Budget Rent a Car Caribe Corporation.................. Delaware
Budget Leasing Ltd.................................... England
BRAC Limited (Scotland)............................... Scotland
Avenir Location S.A................................... France
Business Rent a Car GmbH.............................. Austria
Compact Rent a Car Ltd................................ Canada
American Land Cruiser, Inc............................ Florida
American Land Cruisers of California, Incorporated.... California
Cruise America Leasing, Inc........................... Florida
Cruise Canada, Inc.................................... Canada
Systems Management Group, Inc......................... Florida
Transportation and Storage Associates................. California
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into Budget Group,
Inc.'s previously filed Registration Statement File No.'s 333-41093, 333-42327,
333-47079, 333-49679, 333-49819, 333-58477, 333-59049, 333-59385 and 333-61429.
ARTHUR ANDERSEN LLP
March 30, 1999,
Orlando, Florida
