Avis 2006 Annual Report Download

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AVIS BUDGET GROUP, INC.
FORM 10-K
(Annual Report)
Filed 03/01/07 for the Period Ending 12/31/06
Telephone 973-496-2579
CIK 0000723612
Symbol CAR
SIC Code 7510 - Automotive Rental And Leasing, Without Drivers
Industry Rental & Leasing
Sector Services
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    AVIS BUDGET GROUP, INC. FORM 10-K (Annual Report) Filed 03/01/07 for the Period Ending 12/31/06 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 973-496-2579 0000723612 CAR 7510 - Automotive Rental And Leasing, Without Drivers Rental & Leasing Services 12/31 http://www.edgar-online.com...

  • Page 2
    ... UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2006 OR 3 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE...

  • Page 3
    ... Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 4
    ... depreciation programs and/or dispose of vehicles through sales of vehicles in the used car market; a decline in the results of operations or financial condition of the manufacturers of our cars; a downturn in airline passenger traffic in the United States or in the other international locations in...

  • Page 5
    ..., pricing or services; risks inherent in the restructuring of the operations of Budget Truck Rental; risks inherent in the separation and related transactions, including risks related to our new borrowings, and costs of the separation; and the terms of agreements among the separated companies...

  • Page 6
    ... Avis, Budget and Budget Truck brands accounted for approximately 61%, 31% and 8% of our vehicle rental revenue, respectively, in 2006. Our operations have an extended global reach that includes approximately 6,700 car and truck rental locations in the United States, Canada, Australia, New Zealand...

  • Page 7
    ...U.S. rental car reservations through our own websites than any other company. Budget entered into marketing alliances with USAA and AARP, which are long-time Avis marketing partners, and grew its award-winning small business program. We opened approximately 200 new off-airport locations in 2006, and...

  • Page 8
    ... LLC, Budget Rent A Car System, Inc. and Budget Truck Rental, LLC. Founded in 1946, Avis is believed to be the first company to rent cars from airport locations. Avis expanded its geographic reach throughout the United States in the 1950s and 1960s. In 1963, Avis introduced its award winning "We try...

  • Page 9
    ... Avis car rental system (the "Avis System"), which represents one of the largest car rental systems in the world, based on total revenue and number of locations, and encompasses locations at most of the largest airports and cities in the United States and internationally. The Avis System in Europe...

  • Page 10
    ... 800 additional company operated and sub-licensee locations. We own and operate approximately 700 Budget car rental locations in the United States, Canada, Puerto Rico, Australia and New Zealand. For the year ending December 31, 2006, our Budget car rental operations generated total revenue...

  • Page 11
    ... calling a location directly. Travel agents can access our reservation systems through all major global distribution systems and can obtain information with respect to rental locations, vehicle availability and applicable rate structures through these systems. Marketing Avis and Budget support their...

  • Page 12
    .../or Budget car and truck rental business in a particular geographic area. Under agreements that predate our ownership of Avis or Budget, a limited number of franchisees in the United States are also separately franchised exclusively to sell used cars under the Avis and/or Budget brand. Our current...

  • Page 13
    ..., rental rates and vehicle availability, as well as the ability to place or modify reservations. Additionally, the Wizard System is linked to all major travel distribution networks worldwide and provides real-time processing for travel agents, travel industry partners (such as airlines), corporate...

  • Page 14
    ...manage their travel budgets and monitor employee compliance with applicable travel policies; "Direct Connect", a service offered to business to business partners that allows them to easily connect their electronic systems to the Wizard System, for either brand, and to obtain rate, location and fleet...

  • Page 15
    ... 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 corporate-owned and franchised locations in the United States that...

  • Page 16
    ... courtesy; and (iii) location image. In addition, we utilize a toll-free "800" number and a dedicated customer service email address to allow customers of both Avis and Budget to report problems directly to our customer relations department. Location associates and managers also receive training and...

  • Page 17
    ... fleet of approximately 30,500 trucks, with a median truck age of less than two years old, which are rented through a network of approximately 2,400 dealers, 210 company operated and 100 licensee operated locations throughout the continental United States. The Budget truck rental business serves...

  • Page 18
    ... ancillary products enhance our appeal to consumers by offering customers "onestop" moving services. Insurance coverage We generally assume the risk of our liability to third parties arising from vehicle rental services in the United States, Canada, Puerto Rico and the U.S. Virgin Islands, for up to...

  • Page 19
    ... to travel agencies, and it owns and operates several industry-leading online travel agencies. On August 23, 2006, we completed the sale of Travelport. FINANCIAL DATA OF SEGMENTS AND GEOGRAPHIC AREAS Financial data for our segments and geographic areas are reported in Note 21-Segment Information to...

  • Page 20
    ... requires disclosure to each customer at the time of rental that damage to the rented vehicle may be covered by the customer's personal automobile insurance and that loss damage waivers may not be necessary. In addition, New York permits the sale of loss damage waivers at a capped rate per day based...

  • Page 21
    ... face risks of increased fleet costs, both generally and due to the possibility that automobile manufacturers could change or cease their repurchase or guaranteed depreciation programs. Fleet costs represented approximately 27% of our aggregate expenses for 2006 and can vary from year to year based...

  • Page 22
    ... trade-in agreements. We currently sell these used vehicles through auctions, third party resellers and other channels. These markets may not produce stable used vehicle pricing in the future. Based on the number of used trucks and non-program cars produced by our rental operations annually, and our...

  • Page 23
    ... to lower revenue, increased costs and other material adverse effects on our results of operations. We face risks related to liability and insurance. Our businesses expose us to claims for personal injury, death and property damage related to the use of our vehicles and for workers' compensation...

  • Page 24
    ... operator of the premises from which our vehicle is rented. Our long standing business practice has been to separately state these additional surcharges in our rental agreements and invoices and disclose the existence of these surcharges to consumers together with an estimated total price, inclusive...

  • Page 25
    ... supplies or significant increases in fuel prices could have a material adverse effect on our financial condition and results of operations, either by directly discouraging consumers from renting cars and trucks or by causing a decline in airline passenger traffic. Risks related to our indebtedness...

  • Page 26
    ... sell our assets, it may negatively affect our ability to generate revenue. Risks related to the separation We have little recent operating history as a stand-alone vehicle rental company. The financial information included in this annual report on Form 10-K does not reflect the financial condition...

  • Page 27
    .... The loss of these benefits could have an adverse effect on our business, results of operations and financial condition. Other significant changes may occur in our cost structure, management, financing and business operations as a result of our operating as a company separate from Realogy, Wyndham...

  • Page 28
    ... or dispositions; changes in earnings estimates by securities analysts or our ability to meet those estimates; the operating and stock price performance of other comparable companies; overall market fluctuations; and general economic conditions. Stock markets in general have experienced volatility...

  • Page 29
    ... 2011. In addition, there are approximately 20 other leased office locations in the United States for administrative activities, regional sales and operations activities. We lease or have vehicle rental concessions for both the Avis and Budget brands at locations throughout the world. Avis operates...

  • Page 30
    ...the California Civil Code establishes the additional daily rates which a rental car company may charge for the optional loss damage waiver product based on the manufacturer suggested retail price (MSRP) of the vehicle in 2002 with Consumer Price Index increases to the MSRP commencing January 1, 2003...

  • Page 31
    ...the former CUC International, Inc. ("CUC") business units, and prior to the filing of this annual report on Form 10-K, approximately 70 lawsuits claiming to be class actions and other proceedings were commenced against the Company and other defendants, of which a number of lawsuits have been settled...

  • Page 32
    ... SECURITIES Market Price of Common Stock Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "CAR". At January 31, 2007, the number of stockholders of record was approximately 3,298. The following table sets forth the quarterly high and low sales prices per share...

  • Page 33
    ...ii) the share price at the beginning of the periods presented) with (b) (i) the Standard & Poor's 500 Index, (ii) the Standard & Poor's MidCap 400 Index and (iii) the Standard & Poor's Diversified Commercial Services Index. Comparison of Five Year Cumulative Total Return Among Avis Budget Group, Inc...

  • Page 34
    ... (a) Financial Position Total assets Assets of discontinued operations Assets under vehicle programs Long-term debt, including current portion Debt under vehicle programs (b) Stockholders' equity (a) At or For the Year Ended December 31, 2005 2004 2003 (In millions, except per share data) $ 5,400...

  • Page 35
    ...See Note 3 to our Consolidated Financial Statements for more detailed information regarding these discontinued operations. During 2006, we recorded $10 million of restructuring charges related to restructuring initiatives within our Truck Rental and Domestic Car Rental segments. In 2005, we recorded...

  • Page 36
    ... primarily of our Avis Budget Car Rental, LLC subsidiary, the parent company of the companies that comprise our vehicle rental operations, which provide car and truck rentals and ancillary services to businesses and consumers in the United States and internationally. We operate in the following...

  • Page 37
    ... continue with model-year 2007 vehicles; Pricing increases, which we instituted throughout 2006 in response to rising fleet costs and intend to continue to pursue, where appropriate; and Our continued expansion in off-airport, or local market segments, including insurance replacement rentals. In...

  • Page 38
    ... in our name from Cendant Corporation to Avis Budget Group, Inc. and a 1-for-10 reverse stock split of our common stock, each of which became effective on the New York Stock Exchange at the opening of the market on September 5, 2006 and, at that time, our ticker symbol changed to ''CAR''. RESULTS OF...

  • Page 39
    ...-over-year increase in total expenses also reflects (i) increases in operating costs associated with increased car rental volume and fleet size, including vehicle maintenance and damage costs, commissions and shuttling costs, and (ii) incremental expenses representing inflationary increases in rent...

  • Page 40
    ...of 2005. Fleet depreciation and lease charges increased $122 million (12%) in 2006 primarily due to (i) an increase of 1% in the average size of our domestic rental fleet and (ii) increased per unit fleet costs for model year 2007 and 2006 vehicles compared, respectively, to model year 2006 and 2005...

  • Page 41
    ... in rent, salaries and wages and other costs, (iii) $28 million of incremental agency-operator and credit card commission expense associated with increased T&M revenue and (iv) $19 million of separation-related charges we incurred during 2006 primarily related to accelerated vesting of stock-based...

  • Page 42
    ... (i) $306 million of additional vehicle related operating expenses primarily associated with increased car rental volume and fleet size, including vehicle maintenance and damage costs, commissions and shuttling costs and (ii) $250 million of additional vehicle depreciation and lease charges, as well...

  • Page 43
    ... (76) 391 115 269 $ 7 % Change (15)% 14 (2) (6) Domestic Car Rental International Car Rental Truck Rental Total Reportable Segments Corporate and Other (a) Total Company Less: Non-vehicle related depreciation and amortization Interest expense related to corporate debt, net (b) Income (loss) before...

  • Page 44
    ...our international rental fleet to support increased demand. We also incurred $48 million of additional expenses primarily associated with increased car rental volume and fleet size, including vehicle maintenance and damage costs, commissions and shuttling costs. The $41 million increase in ancillary...

  • Page 45
    ... rental locations. These increases were partially offset by (i) a $13 million credit relating to a refinement made during 2005 in how we estimate repair and refurbishment costs of our truck fleet and (ii) a $7 million decrease in our self-insurance reserve for public liability and property damage...

  • Page 46
    ... and completion of an $875 million term loan by Avis Budget Car Rental in April 2006 (see "Liquidity and Capital Resources - Debt and Financing Arrangements" for a detailed account of the change in our long-term debt). Assets under vehicle programs decreased $800 million primarily due to (i) a $460...

  • Page 47
    ... and $964 million in proceeds related to the disposition of our former Marketing Services division and the initial public offering of Wright Express in 2005, respectively. These increases were partially offset by a $95 million payment made during 2006 associated with a litigation matter. During 2007...

  • Page 48
    ... from the termination of interest rate hedges. As discussed above, we repaid all of the outstanding debt associated with these derivatives and retired all such derivatives during third quarter 2006. In connection with the execution of our separation plan, Avis Budget Car Rental borrowed $1,875...

  • Page 49
    ... of Credit Issued $ 284 295 Available Capacity $ 1,216 8 $1.5 billion revolving credit facility (a) Letter of credit facility (b) (a) (b) This secured revolving credit facility was entered into by Avis Budget Car Rental in April 2006, has a five year term and currently bears interest at one month...

  • Page 50
    ... rental subsidiaries if General Motors Corporation or Ford Motor Company is not able to honor its obligations to repurchase or guarantee the depreciation on the related vehicles. Access to our credit facilities may be limited if we were to fail to meet certain financial ratios or other requirements...

  • Page 51
    ... (b) (c) (d) Represents debt under vehicle programs (including related party debt due to Avis Budget Rental Car Funding), which was issued to support the purchase of vehicles. Primarily represents commitments to purchase vehicles from either General Motors Corporation or Ford Motor Company. These...

  • Page 52
    ... additional liability insurance, personal effects protection insurance, public liability, property damage and personal accident insurance claims for which we are self insured. We estimate the required liability of such claims on an undiscounted basis utilizing an actuarial method that is based...

  • Page 53
    ... MARKET RISK We use various financial instruments, particularly swap contracts, futures and options contracts to manage and reduce the interest rate risk related specifically to our debt. Foreign currency forwards are also used to manage and reduce the foreign currency exchange rate risk associated...

  • Page 54
    ...of December 31, 2006, our internal control over financial reporting is effective. Our independent registered public accounting firm has issued an attestation report on our management's assessment of the company's internal control over financial reporting, which is included below. Changes in Internal...

  • Page 55
    ...included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting, that Avis Budget Group, Inc. and subsidiaries (the "Company") (formerly Cendant Corporation) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria...

  • Page 56
    ... OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information contained in the Company's Annual Proxy Statement under the section titled "Security Ownership of Certain Beneficial Owners and Management" and "Executive Compensation-Equity Compensation Plan Information" is incorporated...

  • Page 57
    ... Accounting Officer Date: March 1, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ RONALD L. NELSON (Ronald...

  • Page 58
    Table of Contents INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004 Consolidated Balance Sheets as of December 31, 2006 and 2005 Consolidated Statements of Cash Flows ...

  • Page 59
    ... the Company has adopted a new segment reporting structure. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of December 31, 2006, based on criteria...

  • Page 60
    Table of Contents Avis Budget Group, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Year Ended December 31, 2006 2005 2004 Revenues Vehicle rental Other Net revenues Expenses Operating Vehicle depreciation and lease charges, net Selling, general and administrative ...

  • Page 61
    ...long-term debt Liabilities of discontinued operations Total current liabilities Long-term debt Other non-current liabilities Total liabilities exclusive of liabilities under vehicle programs Liabilities under vehicle programs: Debt Debt due to Avis Budget Rental Car Funding (AESOP) LLC-related party...

  • Page 62
    ... Income taxes Accounts payable and other current liabilities Other, net Net cash used in operating activities exclusive of vehicle programs Vehicle programs: Vehicle depreciation Net cash provided by operating activities Investing activities Property and equipment additions Net assets acquired...

  • Page 63
    ... revolving credit agreement Issuances of common stock Repurchases of common stock Payment of dividends Other, net Net cash used in financing activities exclusive of vehicle programs Vehicle programs: Proceeds from borrowings Principal payments on borrowings Net change in short-term borrowings Other...

  • Page 64
    ...liability adjustment, net of tax of $(6) Total comprehensive income Conversion of zero coupon senior convertible contingent notes Settlement of forward purchase contracts-Upper DECS securities Net activity related to restricted stock units Exercise of stock options Tax benefit from exercise of stock...

  • Page 65
    ...gains on available-for- sale securities, net of tax of $(10) Minimum pension liability adjustment, net of tax of $(12) Total comprehensive income Net activity related to restricted stock units Exercise of stock options Tax benefit from exercise of stock options Repurchases of common stock Payment of...

  • Page 66
    ...CONSOLIDATED FINANCIAL STATEMENTS (Unless otherwise noted, all amounts are in millions, except per share amounts) 1. Basis of Presentation Avis Budget Group, Inc. (formerly Cendant Corporation) provides car and truck rentals and ancillary services to businesses and consumers in the United States and...

  • Page 67
    ...initial public offering of Wright Express Corporation ("Wright Express"), its former fuel card subsidiary, and in October 2005, the Company sold its former Marketing Services division, which was comprised of its individual membership and loyalty/insurance marketing businesses. Also, on July 31, 2006...

  • Page 68
    ...including services relating to payroll, accounts payable, telecommunications services and information technology services in exchange for fees based on the estimated cost of the services provided. Also, in connection with its execution of the separation plan, the Company repaid certain corporate and...

  • Page 69
    ... and financial policies of an investee in accordance with APB Opinion No. 18, "The Equity Method of Accounting for Investments in Common Stock." REVENUE RECOGNITION The Company operates and franchises the Avis and Budget rental systems, providing vehicle rentals to business and leisure travelers and...

  • Page 70
    ... INSTRUMENTS The Company uses derivative instruments as part of its overall strategy to manage its exposure to market risks associated with fluctuations in foreign currency exchange rates, interest rates and gasoline costs. As a matter of policy, the Company does not use derivatives for trading...

  • Page 71
    ... utilizing the straight-line method over the estimated benefit period of the related assets, which may not exceed 20 years, or the lease term, if shorter. Useful lives are generally 30 years for buildings, three to seven years for capitalized software, three to seven years for furniture, fixtures...

  • Page 72
    ... 2005, as required. Accordingly, the Company recorded a $14 million ($8 million after tax, or $0.08 per diluted share) non-cash charge to reflect the cumulative effect of accounting change during 2005 relating to the Company's obligation to remove assets at certain leased properties. IMPAIRMENT OF...

  • Page 73
    ... required for such benefits based on actual claims outstanding and the estimated cost of claims incurred as of the balance sheet date. These amounts are included within accounts payable and other current liabilities on the Company's Consolidated Balance Sheets. CHANGES IN ACCOUNTING POLICIES...

  • Page 74
    ... a cumulative effect of an accounting change, which represents the Company's estimate of total future forfeitures of stock-based awards outstanding as of January 1, 2006 (see Note 18-Stock-Based Compensation for further information). RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Fair Value Measurements...

  • Page 75
    ...October 17, 2005, the Company completed the sale of its Marketing Services division for approximately $1.8 billion. The purchase price consisted of approximately $1.7 billion of cash, net of closing adjustments, plus $125 million face value of newly issued preferred stock of Affinion and warrants to...

  • Page 76
    ... from Wright Express in connection with the tax receivable agreement discussed above. Represents payments in connection with a guarantee obligation made to the Company's former Marketing Services division and a tax charge primarily related to state taxes prior to the date of disposition. Results are...

  • Page 77
    ... of disposition. Gain on disposal includes payments received from Wright Express in connection with the tax receivable agreement discussed above. The provision for income taxes reflects a $24 million charge associated with separating the appraisal business from the Company in connection with the PHH...

  • Page 78
    ... sheet data for discontinued operations as of December 31, 2005 are as follows: Travelport Realogy Assets of discontinued operations: Current assets Property and equipment, net Goodwill Other assets Total assets of discontinued operations Liabilities of discontinued operations: Current liabilities...

  • Page 79
    ...17.13 1.86 $19.66 (b) (c) Because the Company incurred a loss from continuing operations in 2006 and 2005, outstanding stock options, restricted stock units and stock warrants are anti-dilutive. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods. For 2004...

  • Page 80
    ... was greater than the average price of Avis Budget common stock). 5. Acquisitions Assets acquired and liabilities assumed in business combinations were recorded on the Company's Consolidated Balance Sheets as of the respective acquisition dates based upon their estimated fair values at such dates...

  • Page 81
    ... expense Lease charges Gain on sales of vehicles, net During 2006, vehicle interest, net on the accompanying Consolidated Statement of Operations excludes $101 million of interest expense related to $1,875 million of fixed and floating rate borrowings of the Company's Avis Budget Car Rental, LLC...

  • Page 82
    .... The number of Company-owned and franchised outlets in operation (excluding independent commissioned dealer locations for the Budget truck rental business and Avis and Budget locations operated under an arrangement with Avis Europe Holdings, Limited, an independent third party) is as follows: 2006...

  • Page 83
    ... of a truck rental facility in first quarter 2005. The remaining liability relating to these actions was $3 million at December 31, 2006 and primarily relates to obligations under terminated leases. 10. Income Taxes The benefit from income taxes consists of the following: 2006 Current Federal State...

  • Page 84
    ..., 2006 2005 Current deferred income tax assets: Litigation settlement and related liabilities Net operating loss carryforwards State net operating loss carryforwards Accrued liabilities and deferred income Provision for doubtful accounts Acquisition and integration-related liabilities Other Current...

  • Page 85
    ... for all non-Avis Budget Car Rental tax contingencies. The company believes that its accruals for tax liabilities, including the indemnified liabilities outlined in the Tax Sharing and Separation and Distribution Agreements, are adequate for all remaining open years, based on its assessment...

  • Page 86
    ... on demand upon the Company's settlement of the related liability. At December 31, 2006, there are corresponding liabilities recorded within accounts payable and other current liabilities (see Note 13-Accounts Payable and Other Current Liabilities). 12. Property and Equipment, net Property and...

  • Page 87
    ... and related Accounts payable Accrued disposition costs Public liability and property damage insurance liabilities (a) Accrued legal settlements Other (a) The non-current liability related to public liability and property damage insurance was $260 million and $297 million at December 31, 2006 and...

  • Page 88
    ... more information on the forward purchase contract). AVIS BUDGET CAR RENTAL CORPORATE DEBT Floating Rate Term Loan The Company's floating rate term loan was entered into in April 2006, has a six year term and bears interest at three month LIBOR plus 125 basis points. Quarterly installment payments...

  • Page 89
    ... of Credit Issued $ 284 295 Available Capacity $ 1,216 8 $1.5 billion revolving credit facility (a) Letter of credit facility (b) (a) (b) This secured revolving credit facility was entered into by Avis Budget Car Rental in April 2006, has a five year term and currently bears interest at one month...

  • Page 90
    ...31, 2006, collateralize the debt issued by Avis Budget Rental Car Funding and are not available to pay the obligations of the Company. The business activities of Avis Budget Rental Car Funding are limited primarily to issuing indebtedness and using the proceeds thereof to make loans to AESOP Leasing...

  • Page 91
    ... 590 1,036 600 303 $5,270 COMMITTED CREDIT FACILITIES AND AVAILABLE FUNDING ARRANGEMENTS As of December 31, 2006, available funding under the Company's vehicle programs (including related party debt due to Avis Budget Rental Car Funding) consisted of: Total Capacity (a) $ 6,286 200 257 1,104 7,847...

  • Page 92
    ... its rental vehicles from a small number of vehicle manufacturers and its primary suppliers for the Avis and Budget brands are General Motors Corporation and Ford Motor Company, respectively. The purchase of such vehicles is financed through the issuance of debt under vehicle programs in addition to...

  • Page 93
    ...or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) access to credit facilities and use of derivatives and (v) issuances of debt or equity securities. The guarantees or indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase...

  • Page 94
    ... and Wyndham have agreed to assume responsibility for the Company's liabilities relating to PHH and the former Marketing Services division. 17. Stockholders' Equity Dividend Payments On July 31, 2006, the Company distributed all of the common stock of Realogy and Wyndham to its stockholders and...

  • Page 95
    ...to redeem these notes to repurchase shares in the open market. On August 17, 2004, the forward purchase contracts that formed a portion of the Company's Upper DECS securities settled pursuant to the terms of such contracts. Accordingly, the Company issued approximately 3.8 million shares in exchange...

  • Page 96
    ... stock plans and at December 31, 2006, approximately 13 million shares were available for future grants under the terms of these plans. The Company may settle employee stock option exercises with treasury shares. The Company issues shares related to vested RSUs from treasury shares. Stock Options...

  • Page 97
    ... assumptions for common stock options granted in 2005 and 2004: Dividend yield Expected volatility Risk-free interest rate Expected holding period (years) Restricted Stock Units RSUs currently granted by the Company entitle the employee to receive one share of Avis Budget common stock upon vesting...

  • Page 98
    ... assumptions for SARs granted during 2006: dividend yield-0%; expected volatility-32.9%; risk-free interest rate-4.9% and holding period-4.9 years. Compensation Expense The Company records compensation expense for all outstanding employee stock awards. The Company's policy is to record compensation...

  • Page 99
    ...based on an employee's years of credited service and a percentage of final average compensation. However, the majority of such plans are frozen and no longer accruing benefits. As discussed in Note 2-Summary of Significant Accounting Policies, the Company adopted SFAS No. 158 as of December 31, 2006...

  • Page 100
    ... Company's defined benefit pension plans as of December 31, 2006 and 2005 was as follows: Change in Benefit Obligation Benefit obligation at end of prior year Service cost Interest cost Plan amendments Actuarial loss Net benefits paid Benefit obligation at end of current year Change in Plan Assets...

  • Page 101
    ... rate based on historic plan asset returns over varying long term periods combined with current market conditions and broad asset mix considerations. The expected rate of return is a long term assumption and generally does not change annually. As of December 31, 2006 substantially all of the Company...

  • Page 102
    ... impact on the Company's results of operations in 2006. Credit Risk and Exposure . The Company is exposed to counterparty credit risks in the event of nonperformance by counterparties to various agreements and sales transactions. The Company manages such risk by evaluating the financial position and...

  • Page 103
    ...2006 or 2005 other than (i) risks related to the Company's repurchase and guaranteed depreciation agreements with General Motors Corporation and Ford Motor Company with respect to program cars that were sold and returned to the car manufacturers but for which the Company has not yet received payment...

  • Page 104
    ... used by other companies. Year Ended December 31, 2006 Corporate International Domestic Car Rental $ 4,395 1,145 272 214 78 3,096 6,400 63 Car Rental $ 761 178 22 111 6 919 798 18 Truck Rental $ 472 93 26 45 2 314 502 2 and Other (c) Net revenues Vehicle depreciation and lease charges, net Vehicle...

  • Page 105
    ... income taxes The geographic segment information provided below is classified based on the geographic location of the Company's subsidiaries. United States 2006 Net revenues Segment assets exclusive of assets under vehicle programs* Assets under vehicle programs Net property and equipment 2005 Net...

  • Page 106
    ... income levels, market prices and share repurchases. Therefore, the sum of the quarters' per share information may not equal the total year amounts presented on the Consolidated Statements of Operations. 2006 First Net revenues Domestic Car Rental International Car Rental Truck Rental Corporate and...

  • Page 107
    ... Diluted Income (loss) from continuing operations Income (loss) from discontinued operations Gain (loss) on disposal of discontinued operations Cumulative effect of accounting change, net of tax Net income Weighted average shares Avis Budget common stock market prices: High Low F-50 $ 914 148 104...

  • Page 108
    ..., paying commissions, processing refunds, providing membership services and benefits and maintaining specified service level standards) for TRL Group's members in exchange for a servicing fee. TRL Group no longer had the ability to market to new members; rather, the Company marketed to new members...

  • Page 109
    ...) to discontinued operations. 24. Subsequent Event During January 2007, 76% of the Company's preferred stock investment in Affinion was redeemed at Affinion's option, for face value plus accrued dividends. As a result, the Company received cash proceeds of $106 million representing the investment...

  • Page 110
    ... Preferred Stock. (Incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form 8-A dated September 5, 2006.) Amended and Restated Rights Agreement, dated as of September 1, 2006, by and between Avis Budget Group, Inc. and Mellon Investor Services LLC as Rights Agent...

  • Page 111
    ... by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated November 20, 2006). Agreement between Avis Budget Group, Inc. and Mark Servodidio. Agreement between Avis Budget Group, Inc. and John T. McClain. 1987 Stock Option Plan, as amended (Incorporated by reference to Exhibit...

  • Page 112
    ... the Amended and Restated 1993 Stock Option Plan dated May 27, 1997 (Incorporated by reference to Exhibit 10.17(h) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 dated March 31, 1998, File No. 1-10308). 1997 Employee Stock Plan (Incorporated by reference to Exhibit...

  • Page 113
    ... Equity-Based Plans (Incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 2005 dated March 1, 2006). Form of Award Agreement-Restricted Stock Units (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form...

  • Page 114
    ... Truck Rental, LLC as Administrator, Deutsche Bank Securities, Inc., as Administrative Agent, certain commercial paper conduit purchasers, certain funding agents, certain APA banks and The Bank of New York Trust Company, N.A., as Trustee, Series 2006-1 Agent and securities intermediary, to the Base...

  • Page 115
    ... 10.3 to the Company's Current Report on Form 8-K dated January 20, 2006). Master Motor Vehicle Operating Lease Agreement, dated as of May 11, 2006, among Budget Truck Funding, LLC, as Lessor, Budget Truck Rental, LLC, as administrator and as Lessee and Avis Budget Car Rental, LLC, as guarantor...

  • Page 116
    ...-2 Agent, to the Second Amended and Restated Base Indenture dated as of June 3, 2004, between Cendant Rental Car Funding (AESOP) LLC***, as Issuer, and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 4.24 to Avis Group Holdings, Inc.'s Annual Report on Form 10-K for the year...

  • Page 117
    ...-2 Agent, to the Second Amended and Restated Base Indenture dated as of June 3, 2004, between Cendant Rental Car Funding (AESOP) LLC***, as Issuer, and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 10.6 to Avis Group Holdings, Inc.'s Annual Report on Form 10-K for the year...

  • Page 118
    ...-3 Agent, to the Second Amended and Restated Base Indenture dated as of June 3, 2004, between Cendant Rental Car Funding (AESOP) LLC***, as Issuer, and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 10.14 to Avis Group Holdings, Inc.'s Annual Report on Form 10-K for the year...

  • Page 119
    ....44(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 2005 dated March 1, 2006). Series 2004-2 Supplement dated as of February 18, 2004, among Cendant Rental Car Funding (AESOP) LLC***, as Issuer and The Bank of New York, as Trustee and Series 2004-2 Agent, to the Second...

  • Page 120
    ... between Cendant Rental Car Funding (AESOP) LLC***, as Issuer, and The Bank of New York, as Trustee (Incorporated by reference to Exhibit 10.46(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 2005 dated March 1, 2006). 10.46(a) Asset and Stock Purchase Agreement by and...

  • Page 121
    ..., National Association, as Co-Documentation Agent (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated April 21, 2006). Guarantee and Collateral Agreement, dated as of April 19, 2006, made by Avis Budget Holdings, LLC, Avis Budget Car Rental, LLC and certain...

  • Page 122
    ... 4, 2006 between Avis Budget Car Rental, LLC and General Motors**** (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated October 11, 2006). Purchase Agreement by and among Cendant Corporation*, Affinity Acquisition, Inc. and Affinity Acquisition Holdings, Inc...

  • Page 123
    ... severance payment equal to 200% of your base salary plus your target incentive (bonus) and perquisites to include car usage, financial planning and health coverage (Company-paid COBRA) for a period of 24 months (excluding group life insurance and AD&D insurance). All other programs and perquisites...

  • Page 124
    ... applicable law. This severance pay as set forth in this letter is in lieu of and supersedes any other severance benefits otherwise payable to you under any other agreement or severance plan of ABCR or its affiliates. Regards, /s/ Ronald L. Nelson Ronald L. Nelson Chairman & Chief Executive Officer...

  • Page 125
    ... a form acceptable to the Company, Avis Budget Group shall pay to you enhanced severance as follows A lump-sum payment of two times current Base Salary plus the pro-rated portion of the annual target incentive award, net of applicable withholding. Post-termination exercisability of stock options to...

  • Page 126
    ... it will be at the then prevailing COBRA rates for terminated employees and be available for an additional 6 months as per company policy • These payments will be in addition to the normal RSU and option vesting afforded generally to all employees of Avis Budget Group and shall be in lieu of any...

  • Page 127
    Exhibit 10.25(a) CENDANT RENTAL CAR FUNDING (AESOP) LLC, as Issuer and THE BANK OF NEW YORK, as Trustee and Series 2005-2 Agent SERIES 2005-2 SUPPLEMENT dated as of March 22, 2005 to SECOND AMENDED AND RESTATED BASE INDENTURE dated as of June 3, 2004

  • Page 128
    ..., dated as of March 22, 2005 (this " Supplement "), among CENDANT RENTAL CAR FUNDING (AESOP) LLC, a special purpose limited liability company established under the laws of Delaware (" CRCF "), THE BANK OF NEW YORK, a New York banking corporation, as trustee (in such capacity, and together with its...

  • Page 129
    ...Europe). " Business Day " means any day other than (a) a Saturday or a Sunday or (b) a day on which the Surety Provider or banking institutions in New York City or in the city in which the corporate trust office of the Trustee is located are authorized or obligated by law or executive order to close...

  • Page 130
    ... Monthly Total Principal Allocation for the Related Month) over (b) the sum of the Series 2005-2 Available Reserve Account Amount on such Distribution Date, the Series 2005-2 Letter of Credit Amount on such Distribution Date and the Series 2005-2 AESOP I Operating Lease Loan Agreement Borrowing Base...

  • Page 131
    ... Series 2005-2 Interest Period. " London Banking Day " means any business day on which dealings in deposits in United States dollars are transacted in the London interbank market. " Monthly Total Principal Allocation " means for any Related Month the sum of all Series 2005-2 Principal Allocations...

  • Page 132
    ...is a bank or other financial institution, which is acceptable to each Rating Agency or which has, or which has all of its obligations under its Series 2005-2 Interest Rate Swap guaranteed by a Person that has, (i) a short-term senior, unsecured debt, deposit, claims paying or credit (as the case may...

  • Page 133
    ...-2 Adjusted Monthly Interest " means (a) for the initial Distribution Date, an amount equal to $614,236.11 and (b) for any other Distribution Date, the sum of (i) an amount equal to the product of (A) the Series 2005-2 Note Rate for the Series 2005-2 Interest Period ending on the day preceding such...

  • Page 134
    ... the sum of the Required AESOP I Operating Lease Vehicle Amounts for all Series of Notes as of such date. " Series 2005-2 Agent " is defined in the recitals hereto. " Series 2005-2 Available Cash Collateral Account Amount " means, as of any date of determination, the amount on deposit in the Series...

  • Page 135
    ...such Related Month. " Series 2005-2 Demand Note " means each demand note made by a Demand Note Issuer, substantially in the form of Exhibit C , as amended, modified or restated from time to time. " Series 2005-2 Demand Note Payment Amount " means, as of the Series 2005-2 Letter of Credit Termination...

  • Page 136
    ... rating of at least "A-1" from Standard & Poor's and "P-1" from Moody's that is (a) a commercial bank having total assets in excess of $500,000,000, (b) a finance company, insurance company or other financial institution that in the ordinary course of business issues letters of credit and has total...

  • Page 137
    ...until the end of the initial Related Month, as of the Series 2005-2 Closing Date, and (II) as of the same date as in clause (I), the sum of the numerators used to determine (i) invested percentages for allocations with respect to Principal Collections (for all Series of Notes and all classes of such...

  • Page 138
    ... amount equal to the excess, if any, of (a) the aggregate amount of Interest Collections which pursuant to Section 2.2(a), (b), (c) or (d) would have been allocated to the Series 2005-2 Accrued Interest Account if all payments of Monthly Base Rent required to have been made under the Leases from and...

  • Page 139
    ...-2 Available Reserve Account Amount on such date. " Series 2005-2 Maximum Aggregate Kia/Isuzu/Subaru/Hyundai/Suzuki Amount " means, as of any day, with respect to Kia, Isuzu, Subaru, Hyundai and Suzuki, in the aggregate, an amount equal to 15% of the aggregate Net Book Value of all Vehicles leased...

  • Page 140
    ...-2 Closing Date, with prompt written notice thereof delivered by CRCF to the Trustee. " Series 2005-2 Maximum Specified States Amount " means, as of any day, an amount equal to 7.5% of the aggregate Net Book Value of all Vehicles leased under the Leases on such day. " Series 2005-2 Monthly Interest...

  • Page 141
    ...-2 Non-Program Vehicle Percentage. " Series 2005-2 Rapid Amortization Period " means the period beginning at the close of business on the Business Day immediately preceding the day on which an Amortization Event is deemed to have occurred with respect to the Series 2005-2 Notes and ending upon the...

  • Page 142
    ...-2 Maximum Non-Program Vehicle Amount as of such date, (iii) the Series 2005-2 AESOP I Operating Lease Vehicle Percentage as of the immediately preceding Business Day of the excess, if any, of the aggregate Net Book Value of all Vehicles manufactured by Mitsubishi and leased under the Leases as of...

  • Page 143
    ...aggregate for all Distribution Dates shall not exceed 1.1% of the Series 2005-2 Required AESOP I Operating Lease Vehicle Amount as of the last day of the Series 2005-2 Revolving Period. " Series 2005-2 Unpaid Demand Amount " means, with respect to any single draw pursuant to Section 2.5(c) or (d) on...

  • Page 144
    ...Surety Provider to pay upon a demand for payment in accordance with the requirements of the Surety Bond or (ii) the occurrence of an Event of Bankruptcy with respect to the Surety Provider. " Surety Provider " means Financial Guaranty Insurance Company, a New York stock insurance company. The Surety...

  • Page 145
    ...-2 Revolving Period, the Administrator will direct the Trustee in writing pursuant to the Administration Agreement to allocate on each day, prior to 11:00 a.m. (New York City time) on each Series 2005-2 Deposit Date, all amounts deposited into the Collection Account as set forth below: (i) allocate...

  • Page 146
    ... to the Series 2005-2 Controlled Amortization Period, the Administrator will direct the Trustee in writing pursuant to the Administration Agreement to allocate, prior to 11:00 a.m. (New York City time) on any Series 2005-2 Deposit Date, all amounts deposited into the Collection Account as set forth...

  • Page 147
    ..., the Administrator will direct the Trustee in writing pursuant to the Administration Agreement to allocate, prior to 11:00 a.m. (New York City time) on any Series 2005-2 Deposit Date, all amounts attributable to the AESOP I Operating Lease Loan Agreement deposited into the Collection Account as set...

  • Page 148
    ...-2 Available Reserve Account Amount for such date, (x) second, used to pay the principal amount of other Series of Notes that are then in amortization, (y) third, released to AESOP Leasing in an amount equal to the product of (A) the Loan Agreement's Share with respect to the AESOP I Operating Lease...

  • Page 149
    ..., of the Series 2005-2 Required Reserve Account Amount over the Series 2005-2 Available Reserve Account Amount on such day; (iv) allocate to the Series 2005-2 Accrued Interest Account the amount, if any, by which the Series 2005-2 Lease Interest Payment Deficit, if any, relating to such Series 2005...

  • Page 150
    ...exists a Series 2005-2 Lease Interest Payment Deficit, the Administrator shall instruct the Trustee in writing to draw on the Series 2005-2 Letters of Credit, if any, and, the Trustee shall, by 12:00 noon (New York City time) on such Distribution Date draw an amount as set forth in such notice equal...

  • Page 151
    ... 2005-2 Distribution Account. (f) Balance . On or prior to the second Business Day preceding each Distribution Date, the Administrator shall instruct the Trustee and the Paying Agent in writing pursuant to the Administration Agreement to pay the balance (after making the payments required in Section...

  • Page 152
    ... to be (A) communicated to DTC, Euroclear, Clearstream, the Paying Agent in Luxembourg and the Luxembourg Stock Exchange no later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date and (B) if the rules of the Luxembourg Stock Exchange so require, as...

  • Page 153
    ...all payments of the portion of Monthly Base Rent relating to Loan Interest required to be made under the AESOP I Operating Lease. Upon receipt of a notice by the Trustee from the Administrator in respect of a Series 2005-2 Lease Principal Payment Deficit on or prior to 11:00 a.m. (New York City time...

  • Page 154
    ... 2005-2 Letters of Credit by 12:00 noon (New York City time) on such Business Day an amount equal to the lesser of (a) the amount that the Demand Note Issuers failed to pay under the Series 2005-2 Demand Notes (or, the amount that the Trustee failed to demand for payment thereunder) and (b) the...

  • Page 155
    ... to 10:00 a.m. (New York City time) on the second Business Day prior to such Distribution Date, the Administrator shall instruct the Trustee in writing (with a copy to the Surety Provider) to deliver a Demand Notice to the Demand Note Issuers demanding payment of an amount equal to the lesser of...

  • Page 156
    ... Series 2005-2 Demand Note to be deposited into the Series 2005-2 Distribution Account. (ii) Letter of Credit Draw . In the event that either (x) on or prior to 10:00 a.m. (New York City time) on the Business Day prior to such Distribution Date, any Demand Note Issuer shall have failed to pay to the...

  • Page 157
    ... institution or trust company having corporate trust powers and acting as trustee for funds deposited in the Series 2005-2 Reserve Account; provided that, if at any time such Qualified Institution is no longer a Qualified Institution or the credit rating of any securities issued by such depositary...

  • Page 158
    ... on deposit therein from time to time; (iv) all investments made at any time and from time to time with monies in the Series 2005-2 Reserve Account, whether constituting securities, instruments, general intangibles, investment property, financial assets or other property; (v) all interest, dividends...

  • Page 159
    ..., financial asset, security, instrument or cash) credited to the Series 2005-2 Reserve Account shall be treated as a financial asset (as defined in Section 8-102(a)(9) of the New York UCC) and (iv) to comply with any entitlement order (as defined in Section 8-102(a) (8) of the New York UCC) issued...

  • Page 160
    ... dominion and control of the Trustee for the benefit of the Series 2005-2 Noteholders, each Series 2005-2 Interest Rate Swap Counterparty and the Surety Provider. The Series 2005-2 Agent hereby agrees (i) to act as the securities intermediary (as defined in Section 8-102(a)(14) of the New York UCC...

  • Page 161
    ...a Certificate of Termination Demand and shall cause the Termination Disbursement to be deposited in the Series 2005-2 Cash Collateral Account. (d) Termination Date Demands on the Series 2005-2 Letters of Credit . Prior to 10:00 a.m. (New York City time) on the Business Day immediately succeeding the...

  • Page 162
    ... or trust company having corporate trust powers and acting as trustee for funds deposited in the Series 2005-2 Cash Collateral Account; provided , however , that if at any time such Qualified Institution is no longer a Qualified Institution or the credit rating of any securities issued by such...

  • Page 163
    ... the order requiring the return of such Preference Amount. (k) Termination of Series 2005-2 Cash Collateral Account . Upon the termination of this Supplement in accordance with its terms, the Trustee, acting in accordance with the written instructions of the Administrator, after the prior payment of...

  • Page 164
    ... or trust company having corporate trust powers and acting as trustee for funds deposited in the Series 2005-2 Distribution Account; provided , however , that if at any time such Qualified Institution is no longer a Qualified Institution or the credit rating of any securities issued by such...

  • Page 165
    ... Account, whether constituting securities, instruments, general intangibles, investment property, financial assets or other property; (v) all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange...

  • Page 166
    (b) Replacement of Any Series 2005-2 Interest Rate Swap . If, at any time, a Series 2005-2 Interest Rate Swap Counterparty does not have (i) a long-term senior, unsecured debt, deposit, claims paying or credit (as the case may be) rating above "A-" from Standard & Poor's and above "A3" from Moody's,...

  • Page 167
    ...(iii) commercial paper which is not rated "P-1" by Moody's; (iv) money market funds or eurodollar time deposits which are not rated at least "AAA" by Standard & Poor's; (v) eurodollar deposits that are not rated "P-1" by Moody's or that are with financial institutions not organized under the laws of...

  • Page 168
    ... of an Event of Bankruptcy with respect to the Surety Provider; (g) the Surety Provider fails to pay a demand for payment in accordance with the requirements of the Surety Bond; (h) any Series 2005-2 Letter of Credit shall not be in full force and effect for at least two (2) Business Days and...

  • Page 169
    ... Date "), (i) the applicable Waivable Amount shall be deemed waived by the consenting Series 2005-2 Noteholders, (ii) the Trustee will distribute the Designated Amounts as set forth below and (iii) the Trustee shall promptly (but in any event within two days) provide the Rating Agency with notice of...

  • Page 170
    ... as set forth in the Base Indenture, and will be sold only in the United States (1) initially to institutional accredited investors within the meaning of Regulation D under the Securities Act in reliance on an exemption from the registration requirements of the Securities Act and (2) thereafter to...

  • Page 171
    ...Series 2005-2 Notes to be issued outside the United States will be issued and sold in transactions outside the United States in reliance on Regulation S under the Securities Act, as provided in the applicable note purchase agreement, and shall initially be issued in the form of one or more temporary...

  • Page 172
    ... and each Series 2005-2 Interest Rate Swap Counterparty. All such notices, opinions, certificates or other items delivered to the Surety Provider shall be forwarded to Financial Guaranty Insurance Company, 125 Park Avenue, New York, New York 10017, Attention: General Counsel, Telephone: (212) 312...

  • Page 173
    ... Confirmation Condition." In addition, the Surety Provider shall be deemed to be an Enhancement Provider entitled to exercise the consent rights described in clause (ii) of the definition of "Rating Agency Consent Condition." Section 6.11 Surety Provider Deemed Noteholder and Secured Party . Except...

  • Page 174
    ...-2 Letter of Credit Liquidity Amount. CRCF shall not agree to any amendment of the Series 2005-2 Demand Notes without first satisfying the Rating Agency Confirmation Condition and the Rating Agency Consent Condition. Section 6.18 Subrogation . In furtherance of and not in limitation of the Surety...

  • Page 175
    ...vi) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about the investment portfolio of such Person, (vii) any reinsurers or liquidity or credit providers that agree to hold confidential the...

  • Page 176
    ... by applicable law, rule, order or decree or other requirement having the force of law), (C) in connection with any litigation to which such Person is a party upon prior notice to CRCF (unless prohibited by applicable law, rule, order or decree or other requirement having the force of law) or...

  • Page 177
    ...respective officers thereunto duly authorized as of the day and year first above written. CENDANT RENTAL CAR FUNDING (AESOP) LLC By: /s/ Lori Gebron Title: Vice President THE BANK OF NEW YORK, as Trustee By: /s/: John Bobko Title: Assistant Vice President THE BANK OF NEW YORK, as Series 2005-2 Agent...

  • Page 178
    ... Series 2005-2 Interest Rate Swaps Section 2.11 Series 2005-2 Accounts Permitted Investments Section 2.12 Series 2005-2 Demand Notes Constitute Additional Collateral for Series 2005-2 Notes ARTICLE III AMORTIZATION EVENTS ARTICLE IV RIGHT TO WAIVE PURCHASE RESTRICTIONS ARTICLE V FORM OF SERIES 2005...

  • Page 179
    ...and Secured Party Capitalization of CRCF Series 2005-2 Required Non-Program Enhancement Percentage Third Party Beneficiary Prior Notice by Trustee to Surety Provider Effect of Payments by the Surety Provider Series 2005-2 Demand Notes Subrogation Termination of Supplement Condition to Termination of...

  • Page 180
    ...RENTAL CAR FUNDING (AESOP) LLC (formerly known as AESOP Funding II L.L.C.), a special purpose limited liability company established under the laws of Delaware (" CRCF "), THE BANK OF NEW YORK, a New York banking corporation, as trustee (in such capacity, the " Trustee ") and as agent for the benefit...

  • Page 181
    ...to Kia, Isuzu, Subaru, Hyundai and Suzuki, in the aggregate, an amount equal to 20% of the aggregate Net Book Value of all Vehicles leased under the Leases on such day. " Series 2005-2 Maximum Non-Program Vehicle Percentage " means, as of any date of determination, 40%; provided that the Series 2005...

  • Page 182
    ... Hyundai/Suzuki Amount " means, as of any day, with respect to Hyundai or Suzuki, individually, an amount equal to 7.5% of the aggregate Net Book Value of all Vehicles leased under the Leases on such day. 4. This Amendment is limited as specified and, except as expressly stated herein, shall not...

  • Page 183
    ... of the parties hereto shall have executed and delivered this Amendment to the Trustee, (ii) the Rating Agency Consent Condition shall have been satisfied with respect to this Amendment, (iii) all certificates and opinions of counsel required under the Base Indenture shall have been delivered to the...

  • Page 184
    ...duly executed by their respective duly authorized officers as of the date above first written. CENDANT RENTAL CAR FUNDING (AESOP) LLC, as Issuer By: /s/ Lori Gebron Name: Lori Gebron Title: Vice President THE BANK OF NEW YORK, as Trustee and as Series 2005-2 Agent By: /s/ John Bobko Name: John Bobko...

  • Page 185
    Exhibit 10.29(a) [AESOP I Finance Lease Loan Agreement] AMENDED AND RESTATED LOAN AGREEMENT dated as of June 3, 2004 between AESOP LEASING L.P., as Borrower, and CENDANT RENTAL CAR FUNDING (AESOP) LLC, as Lender

  • Page 186
    ... liability company (" CRCF " or the " Lender "). WITNESSETH: WHEREAS, AESOP Leasing, Avis Rent A Car System, Inc. (" ARAC "), as lessee and as administrator, and Avis Group Holdings Inc. (" AGH "), as guarantor, are parties to an Amended and Restated Master Motor Vehicle Finance Lease Agreement...

  • Page 187
    ... terms and conditions hereof, the parties hereto agree to amend and restate the Prior AESOP I Finance Lease Loan Agreement as follows: SECTION 1. CERTAIN DEFINITIONS. SECTION 1.1. Certain Definitions . As used in this Agreement and unless the context requires a different meaning, capitalized terms...

  • Page 188
    ... presentment, demand for payment, notice of dishonor and protest, notice of the creation of any of its Liabilities and all other notices whatsoever to AESOP Leasing with respect to such Liabilities except notices required under Section 12.1 . The obligations of AESOP Leasing under this Agreement and...

  • Page 189
    ... to the conditions of this Agreement, on or before 2:00 p.m., New York City time, on the Borrowing Date specified in the Loan Request, the Lender shall transfer same day or immediately available funds to AESOP Leasing's account specified in such Loan Request (including, without limitation, any such...

  • Page 190
    ... Request Response, Loan Interest payable shall be determined using the higher rate. SECTION 4.2. Supplemental Interest . AESOP Leasing agrees to pay to the Lender, as an additional interest payment, an amount equal to the product of (A) the applicable Loan Agreement's Share as of the beginning of...

  • Page 191
    ... amount equal to the sum of (1) any amounts deposited into the Collection Account or a Joint Collection Account during the Related Month representing (a) Repurchase Prices for repurchases of Program Vehicles (including Relinquished Vehicles) leased under the Finance Lease at the applicable Turnback...

  • Page 192
    ...), not later than 11:00 a.m., New York City time, on the date due, and funds received after that hour shall be deemed to have been received by the Lender on the next following Business Day. The Lender hereby specifies that (i) all (A) payments with respect to Program Vehicles (including Relinquished...

  • Page 193
    ...the Finance Lease (other than Relinquished Property Proceeds), whether payable as Vehicle Repurchase Prices, auction sales proceeds, fees, expenses, costs, indemnities, insurance recoveries, damages for breach of the Manufacturer Programs or otherwise (but excluding all incentive payments payable in...

  • Page 194
    ... the Finance Lease, whether payable as the purchase price of such Vehicles, auction sales proceeds, or as fees, expenses, costs, indemnities, insurance recoveries, or otherwise (including all upfront incentive payments payable by Manufacturers in respect of purchases of Non-Program Vehicles, but...

  • Page 195
    ... Period with respect to a Program Vehicle, AESOP Leasing shall only sell or permit a sale of such Program Vehicle for a purchase price, together with any amounts payable by a Manufacturer as a result of or in connection with such sale, equal to or greater than the Repurchase Price that it would have...

  • Page 196
    ... Secured Parties) security interest in such AESOP I Finance Lease Loan Collateral, and (ii) execute and deliver, or cause to be executed and delivered, to the Lender or the Trustee in due form for filing or recording (and pay the cost of filing or recording the same in all public offices reasonably...

  • Page 197
    ... Account from time to time (i) are property of AESOP Leasing, (ii) are not being pledged to secure any obligation to, or otherwise held in trust for, the Lender or any of the persons specified in this Section 7.8 and (iii) are available to satisfy the claims of creditors of AESOP Leasing generally...

  • Page 198
    ...materially adversely affect the financial position, results of operations, business, properties, performance or condition (financial or otherwise) of AESOP Leasing or which in any manner draws into question the validity or enforceability of this Agreement or any other Related Document or the ability...

  • Page 199
    ... with Laws . AESOP Leasing: (i) is not in violation of any law, ordinance, rule, regulation or order of any Governmental Authority applicable to it or its property, which violation would have a material adverse effect on its financial condition, business, prospects or properties or a Material...

  • Page 200
    ... any Requirement of Law, except where failure to retain such records would not have a material adverse effect on its financial condition, business, prospects or properties or a Material Adverse Effect (as set forth in clauses (ii) and (iii) of the definition thereof). SECTION 8.15. Eligible Vehicles...

  • Page 201
    ... debtor or which covers or purports to cover any of the assets of AESOP Leasing is on file in any state or other jurisdiction, and AESOP Leasing has not signed any such financing statement, application or instrument authorizing any secured party or creditor of such Person thereunder to file any such...

  • Page 202
    ... Lease (i) vehicle liability insurance to the full extent required by law and in any event not less than $500,000 per Person and $1,000,000 per occurrence, (ii) property damage insurance with a limit of $1,000,000 per occurrence and (iii) excess coverage public liability insurance with a limit...

  • Page 203
    ... Event of Default or termination or replacement of a Manufacturer Program; (iv) Notice of Liens and Vicarious Liability Claims . On each Determination Date, AESOP Leasing shall forward to CRCF, the Trustee and the Paying Agent, the Rating Agencies and each Enhancement Provider, (A) an Officer...

  • Page 204
    ...its limited partner(s) for its actions; (viii) requiring its general partner to maintain at least two corporate directors who are Independent Directors; (ix) owning or leasing (including through shared arrangements with Affiliates) all office furniture and equipment necessary to operate its business...

  • Page 205
    ...clearly in its financial statements its separate assets and liabilities and the fact that the Vehicles leased under the AESOP I Operating Lease are owned by AESOP Leasing; (xv) not suggesting in any way, within its financial statements, that its assets are available to pay the claims of creditors of...

  • Page 206
    ... Program Vehicles, including all payments with respect to Relinquished Vehicles, directly to the Collection Account or a Joint Collection Account, as applicable. Any such payments from Manufacturers or related auction dealers received directly by AESOP Leasing, will be, within two (2) Business Days...

  • Page 207
    ...order and condition (reasonable wear and tear excepted) all properties, including, without limitation, vehicles necessary for the operation of its businesses (whether owned or held under lease), and from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements...

  • Page 208
    ...21. [RESERVED] . SECTION 9.22. Non-Program Vehicle Report . On or before the second Determination Date immediately following June 30 and December 31 of each calendar year, AESOP Leasing shall cause a firm of nationally recognized independent public accountants (who may also render other services to...

  • Page 209
    ... Returned to AESOP Leasing . In the event that any Non-Program Vehicle leased under the Finance Lease is returned to AESOP Leasing in accordance with Section 2.6(b) of the Finance Lease, AESOP Leasing shall use commercially reasonable efforts to arrange for the sale of such Vehicle, either directly...

  • Page 210
    ...of Assets . Acquire, by long-term or operating lease or otherwise, any Assets except pursuant to the terms of the Related Documents. SECTION 10.6. Dividends, Officers' Compensation, etc. (i) Declare or pay any distributions on any of its partnership interests or capital stock, as the case may be, or...

  • Page 211
    ... Book Value of all Vehicles leased under the Leases and manufactured by a particular Manufacturer or group of Manufacturers as of any Payment Date to exceed any applicable Maximum Manufacturer Amount. SECTION 10.14. Maximum Vehicle Age . Permit at any time the age of any Non-Program Vehicle leased...

  • Page 212
    ... documents required to be delivered by each Lessee to the Lessor pursuant thereto, and all conditions to the effectiveness thereof shall have been satisfied; (k) Assignment Agreement . An executed copy of an Assignment Agreement with respect to each Manufacturer Program to which any Vehicle leased...

  • Page 213
    ...Exchange Agreement shall have occurred and be continuing at the time of such transfer; (b) in connection with the transfer of any Program Vehicle to the Intermediary, AESOP Leasing shall have contracted to sell such Program Vehicle pursuant to an Eligible Manufacturer Program (the Manufacturer party...

  • Page 214
    ...obligations or liabilities, if any, secured by such Relinquished Vehicle are the Loans and/or any other obligations or liabilities arising under the Related Documents; (d) on the date of any such transfer, no QI Parent Downgrade Event has occurred (unless the Rating Agency Consent Condition has been...

  • Page 215
    ... or order for the payment of money in excess of $100,000 which is not fully covered by insurance shall be rendered against AESOP Leasing and such judgment or order shall continue unsatisfied and unstayed for a period of thirty (30) days. SECTION 12.2. Effect of AESOP I Finance Lease Loan Event of...

  • Page 216
    ... Requirements on behalf of AESOP Leasing or the Lender, as applicable. (d) Upon the occurrence of a Liquidation Event of Default, AESOP Leasing will return all Program Vehicles leased under the Finance Lease to the related Manufacturer and shall sell all Non-Program Vehicles leased under...

  • Page 217
    ... Bank of New York c/o BNY Midwest Trust Company 2 North La Salle Street 10 th Floor Chicago, Illinois 60602 Attention: Corporate Trust Office Telephone: (312) 827-8569 Fax: (312) 869-8562 Cendant Rental Car Funding (AESOP) LLC c/o Lord Securities Corporation 48 Wall Street New York, New York 10005...

  • Page 218
    ... its officers, directors, stockholders, employees, and agents (herein collectively called " Lender Parties " and individually called a " Lender Party ") free and harmless from and against any and all claims, demands, actions, causes of action, suits, losses, costs, charges, liabilities, damages, and...

  • Page 219
    ... contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law; and (b) indemnify and hold harmless the Trustee (and its officers, directors, employees and agents) from and against any loss, liability, expense, damage or injury suffered...

  • Page 220
    ... located in New York, New York and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. SECTION 13.8. Governing Law . THIS AGREEMENT AND THE LOAN NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK...

  • Page 221
    ... of CRCF and AESOP Leasing under this Agreement are solely the corporate obligations of CRCF and AESOP Leasing, respectively. No recourse shall be had for the payment of any obligation or claim arising out of or based upon this Agreement against any shareholder, employee, officer, director or...

  • Page 222
    ... executed by their respective officers thereunto duly authorized as of the day and year first above written. AESOP LEASING L.P. By: AESOP LEASING CORP., its general partner By: /s/: Orlando Figueroa Name: Orlando Figueroa Title: President CENDANT RENTAL CAR FUNDING (AESOP) LLC By: /s/: Lori Gebron...

  • Page 223
    EXHIBIT A TO THE LOAN AGREEMENT COPY OF LOAN NOTE A-1

  • Page 224
    ...from time to time, the " Loan Agreement "), between AESOP Leasing L.P., a Delaware limited partnership (" AESOP Leasing "), and Cendant Rental Car Funding (AESOP) LLC, a Delaware limited liability company (the " Lender "). Unless otherwise defined herein or the context otherwise requires, terms used...

  • Page 225
    ... Name Person to be Paid Account No. Name, Address, etc. $ _____ _____ Attention AESOP Leasing has caused this Loan Request to be executed and delivered, and the certification and warranties contained herein to be day of , 20 . made, by its duly Authorized Officer this AESOP LEASING L.P. By...

  • Page 226
    ... of proposed Loan Vehicle Identification Number (VIN) Summary of Vehicles being financed (including, for Program Vehicles subject to the GM Repurchase Program, the Designated Period for such Program Vehicles) Program or Non-Program Vehicles Capitalized Cost (New Vehicles) Net Book Value (Franchisee...

  • Page 227
    ... time to time, the (" Loan Agreement "), between AESOP Leasing L.P., a Delaware limited partnership (" AESOP Leasing "), and Cendant Rental Car Funding (AESOP) LLC, a Delaware limited liability company (the " Lender "). Unless otherwise defined herein or the context otherwise requires, terms used...

  • Page 228
    ...Cendant Rental Car Funding (AESOP) LLC, a Delaware limited liability company, as Lender, and AESOP Leasing L.P. (" AESOP Leasing "), a Delaware limited partnership, as Borrower. Terms used herein have the meanings provided in the Loan Agreement. AESOP Leasing hereby notifies the Trustee and [Related...

  • Page 229
    SCHEDULE 8.11 Legal Name; Records Locations, Jurisdiction of Organization Records Location Jurisdiction of Organization AESOP Leasing L.P. c/o Lord Securities Corporation 48 Wall Street, New York, NY 10005 Delaware

  • Page 230
    ... Voluntary Prepayments of Loan Principal Amount Making of Payments Due Date Extension Application of Sale Proceeds Payment Deficits Grant of Security Interest Certificates of Title Release of AESOP I Finance Lease Loan Collateral Change of Location or Name Deliveries; Further Assurances [RESERVED...

  • Page 231
    ... Insurance Manufacturer Programs Reporting Requirements Payment of Taxes; Removal of Liens Business Maintenance of the Vehicles Maintenance of Separate Existence Manufacturer Payments; Sales Proceeds Maintenance of Properties Verification of Title [RESERVED] Delivery of Information Master Exchange...

  • Page 232
    ...Sales of Assets Acquisition of Assets Dividends, Officers' Compensation, etc. Organizational Documents Investments Regulations T, U and X Other Agreements Use of Vehicles Use of Proceeds Limitations on the Acquisition or Redesignation of Certain Vehicles Maximum Vehicle Age Master Exchange Agreement...

  • Page 233
    .... Governing Law JURY TRIAL Successors and Assigns Tax Treatment of Loans No Recourse Effect of Amendment 35 35 35 36 36 36 EXHIBITS AND SCHEDULES EXHIBIT A EXHIBIT B-1 EXHIBIT B-2 EXHIBIT C SCHEDULE 8.11 FORM OF LOAN NOTE FORM OF LOAN REQUEST FORM OF LOAN REQUEST RESPONSE FORM OF PAYMENT DEFICIT...

  • Page 234
    ... Lease Loan Agreement "), between AESOP LEASING L.P., a Delaware limited partnership (" AESOP Leasing " or the " Borrower "), and CENDANT RENTAL CAR FUNDING (AESOP) LLC, a Delaware limited liability company (" CRCF " or the " Lender "). Unless otherwise specified herein, capitalized terms used...

  • Page 235
    ...have executed and delivered this Amendment to the Trustee, (ii) the Rating Agency Consent Condition shall have been satisfied with respect to this Amendment and (iii) the Requisite Investors, the Trustee, the Lender and, for any applicable Series of Notes, each applicable Enhancement Provider, shall...

  • Page 236
    ... written. AESOP LEASING L.P. By: AESOP LEASING CORP., its general partner By: /s/ Lori Gebron Name: Lori Gebron Title: Vice President CENDANT RENTAL CAR FUNDING (AESOP) LLC By: /s/ Lori Gebron Name: Lori Gebron Title: Vice President Acknowledged and consented to: THE BANK OF NEW YORK, as Trustee...

  • Page 237
    ... AND RESTATED MASTER MOTOR VEHICLE FINANCE LEASE AGREEMENT dated as of June 3, 2004 among AESOP LEASING L.P., as Lessor, CENDANT CAR RENTAL GROUP, INC., as a Lessee, as Administrator and as Finance Lease Guarantor, AVIS RENT A CAR SYSTEM, INC., as a Lessee, and BUDGET RENT A CAR SYSTEM, INC., as...

  • Page 238
    ... Respecting the Master Exchange Agreement. TERM. 3.1. Vehicle Term. 3.2. Term. RENT AND CHARGES. 4.1. Payment of Rent. 4.2. Special Service Charges. 4.3. Net Lease. INSURANCE. 5.1. Personal Injury and Damage. 5.2. Delivery of Certificate of Insurance. 5.3. Changes in Insurance Coverage. RISK OF LOSS...

  • Page 239
    ... Event of Default, Limited Liquidation Event of Default and Non-Performance of Certain Covenants. 18.5. Measure of Damages. 18.6. Vehicle Return Default. 18.7. Application of Proceeds. 19. MANUFACTURER EVENTS OF DEFAULT. 20. [RESERVED] 21. [RESERVED] 22. CERTIFICATION OF TRADE OR BUSINESS USE...

  • Page 240
    ... Financial Information; Financial Condition. 30.5. Litigation. 30.6. Liens. 30.7. Employee Benefit Plans. 30.8. Investment Company Act. 30.9. Regulations T, U and X. 30.10. Records Locations; Jurisdiction of Organization. 30.11. Taxes. 30.12. Governmental Authorization. 30.13. Compliance with Laws...

  • Page 241
    ... Programs. 31.5. Reporting Requirements. 31.6. Payment of Taxes; Removal of Liens. 31.7. Business. 31.8. Maintenance of Separate Existence. 31.9. Trustee as Lienholder. 31.10. Maintenance of the Vehicles. 31.11. Enhancement. 31.12. Manufacturer Payments. 31.13. Accounting Methods; Financial...

  • Page 242
    ....5 Schedule 30.10 Schedule 30.13 NO RECOURSE. LIABILITY. SCHEDULES AND ATTACHMENTS Litigation Jurisdiction of Organization; Records and Business Locations Compliance with Law 55 55 ATTACHMENT A Vehicle Acquisition Schedule and Related Information ATTACHMENT B Form of Power of Attorney ATTACHMENT...

  • Page 243
    ... and as administrator, and Avis Group Holdings Inc. (" AGH "), as guarantor, are parties to a Master Motor Vehicle Finance Lease Agreement, dated as of July 30, 1997 (the " Prior AESOP Finance Lease "), pursuant to which the Lessor leases Program Vehicles and Non-Program Vehicles of one or more...

  • Page 244
    ... limitation, (a) all monies, if any, due and to become due to such Lessee from the Finance Lease Guarantor or any other person under or in connection with any of the Lessee Agreements, whether payable as rent, guaranty payments, fees, expenses, costs, indemnities, insurance recoveries, damages...

  • Page 245
    ... such obligations or liabilities and (d) all guarantees, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such obligations and liabilities of such Lessee pursuant to the Lessee Agreements; (ii) all Vehicles leased by such Lessee...

  • Page 246
    ..., and any documents or agreements describing any collateral securing such obligations or liabilities and (d) all guarantees, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such obligations and liabilities of such Permitted...

  • Page 247
    ...from time to time, and on the related Vehicle Finance Lease Commencement Date, in the case of any Franchisee Vehicle leased hereunder, such information as may be required to determine the monthly Depreciation Charges applicable to such Vehicle. This Agreement, together with the Manufacturer Programs...

  • Page 248
    ... in such form and to such address as the Lessor may from time to time specify and in accordance with the terms of the Master Exchange Agreement, of each acceptance and of any rejection of any Program Vehicle identified by the Lessor as Replacement Property. 2.3. Payment of Capitalized Cost by Lessor...

  • Page 249
    ... Price for such Vehicle (and any such unpaid Monthly Base Rent and Supplemental Rent) is deposited in the Collection Account. (b) Each Lessee shall have the option on the Vehicle Finance Lease Expiration Date (excluding the date set forth in subclause (iv) of the definition of such term) to purchase...

  • Page 250
    ..., each Lessee shall use commercially reasonable efforts to arrange for the sale of each Non-Program Vehicle leased by such Lessee hereunder to a third party for the Vehicle Purchase Price with respect to such Vehicle on or prior to the date that is the last Business Day of the month that is eighteen...

  • Page 251
    ... such Lessee shall pay an amount equal to the Residual Value Payment plus all accrued but unpaid Monthly Base Rent and all Supplemental Rent payable with respect to such Vehicles through the Payment Date on which such Non-Program Vehicle was returned or with respect to the Related Month during which...

  • Page 252
    ... Account, the Vehicle Purchase Surplus Amount with respect to the Vehicles leased hereunder for such Payment Date. The Lessees shall have no right to demand, counterclaim, setoff, deduct, abate, defer, decrease or in any other way reduce any payment of Monthly Base Rent or Supplemental Rent...

  • Page 253
    ...providing such information to the applicable Lessee or to other persons as the applicable Lessee may from time to time reasonably request. 3. TERM . 3.1. Vehicle Term . (a) The " Vehicle Finance Lease Commencement Date " (x) for each Franchisee Vehicle shall mean the day as referenced in the Officer...

  • Page 254
    ... immediately available funds to the Lessor not later than 11:00 a.m., New York City time, on such Payment Date such Lessee's allocable portion of (i) all Monthly Base Rent that has accrued during the Related Month with respect to each Vehicle leased hereunder during or prior to the Related Month and...

  • Page 255
    ... . On each Payment Date, or on such other Business Day as the Lessor shall request, each Lessee shall pay in immediately available funds to, or at the direction of, the Lessor, not later than 11:00 a.m., New York City time, on such date, such Lessee's allocable portion of the Special Service Charges...

  • Page 256
    ...at its cost, expense and risk unless expressly otherwise stated. 5. INSURANCE . Each Lessee represents that it shall at all times maintain or cause to be maintained insurance coverage in force as follows: 5.1. Personal Injury and Damage . Insurance coverage as set forth in Section 31.3 . In addition...

  • Page 257
    ..., including personal injury or death and property damage, arising with respect to such Vehicle or the manufacture, purchase, acceptance, rejection, ownership, delivery, leasing, subleasing, possession, use, inspection, registration, operation, condition, maintenance, repair, storage, sale, return or...

  • Page 258
    ...'s business, subject to applicable law, inspect Vehicles and registration certificates, Certificates of Title and related documents covering Vehicles wherever the same be located. No Lessee shall sublease any Vehicles to any Person other than a Permitted Sublessee pursuant to a Sublease, and, except...

  • Page 259
    ... the location, mileage and condition of each Vehicle leased by such Lessee hereunder and to make available for the Lessor's, the Lender's or the Trustee's inspection within a reasonable time period, not to exceed fortyfive (45) days, such Vehicles at the location where such Vehicles are normally...

  • Page 260
    ... Lessee shall pay for all maintenance and repairs to keep the Vehicles leased by such Lessee hereunder in good working order and condition, and such Lessee will maintain such Vehicles as required in order to keep the Manufacturer's warranty in force. Each Lessee will return Vehicles leased by such...

  • Page 261
    ... equal to the Residual Value Payment for all such non-purchased Vehicles leased by such Lessee hereunder as of the Vehicle Finance Lease Expiration Date for each such Vehicle plus all accrued but unpaid Monthly Base Rent and all Supplemental Rent payable at such time and (y) return each such Vehicle...

  • Page 262
    ...design and quality; II. in accordance with the specifications of the Manufacturer of the Vehicle; III. part of a matching set of four, plus spare (which may be a "donut" if a "donut" spare is initially delivered with such Vehicle); IV. no less than 1/8 inch in tread remaining at its shallowest point...

  • Page 263
    ... such Lessee shall pay to the Lessor within five (5) days after the end of the Term of this Agreement the aggregate amount of the Termination Value of all the Vehicles leased by such Lessee hereunder immediately prior to such end of Term (rather than the Residual Value Payment required by subclause...

  • Page 264
    ..., and any Special Default Payments made by such Lessee in respect of such Vehicle pursuant to Section 13.3 , plus (ii) any unpaid Monthly Base Rent for the Minimum Term with respect to such Vehicle plus any early turn back charges payable or deductible from the Repurchase Price of such Vehicle in...

  • Page 265
    ... or public body or authority and all other requirements having the force of law applicable at any time to any Vehicle leased hereunder or any action or transaction by any Lessee or the Finance Lease Guarantor with respect thereto or pursuant to this Agreement; 16.1.4. all out of pocket costs of...

  • Page 266
    ... of, any claim made by any third party against the Lessor for any reason (including, without limitation, in connection with any audit or investigation conducted by a Manufacturer under its Manufacturer Program). If the Lessor shall actually receive any tax benefit (whether by way of offset, credit...

  • Page 267
    ... without having satisfied the Rating Agency Consent Condition, assign this Agreement or any of its rights hereunder to any other party; provided , however , that each Lessee may rent the Vehicles leased by such Lessee hereunder under the terms of its normal daily rental programs and/or sublease such...

  • Page 268
    ... of the portion of Monthly Base Rent that relates to the Loan Principal Amount, the Special Default Payments, the Early Termination Payments, Vehicle Purchase Price or Termination Value upon a Standard Casualty or when a Vehicle becomes an Ineligible Vehicle or upon a Vehicle Return Default or any...

  • Page 269
    ... terminate and any accrued and unpaid Monthly Base Rent, Supplemental Rent and all other payments accrued but unpaid under this Agreement (calculated as if all Vehicles had become a Standard Casualty for the Related Month and the full amount of interest on such Loan Note was then due and payable...

  • Page 270
    ... the terms of this Section 18.3 (as limited by Section 18.5 of this Agreement) as may be then due. The Lessor will provide the applicable Lessee(s) with written notice of the place and time of the sale at least five (5) days prior to the proposed sale, which shall be deemed commercially reasonable...

  • Page 271
    ... Guarantor or such Lessee, as applicable. (iv) Upon the occurrence of a Liquidation Event of Default or a Limited Liquidation Event of Default, each Lessee shall return or cause to be returned any Program Vehicles leased by such Lessee hereunder to the related Manufacturer in accordance with the...

  • Page 272
    ... due and unpaid under this Agreement at the applicable Lender's Carrying Cost Interest Rate plus 1.0% from time to time computed from the date of the Finance Lease Event of Default, Limited Liquidation Event of Default or Liquidation Event of Default or the date payments were originally due to the...

  • Page 273
    ...written notice of the place and time of the sale of such Vehicle at least five (5) days prior to the proposed sale, which sale shall be deemed commercially reasonable and such Lessee may purchase the Vehicle at such sale; or (iii) hold, keep idle or lease to others such Vehicle, as the Lessor in its...

  • Page 274
    ... sale or disposition, including any reasonable costs associated with repairing any Vehicles, and reasonable attorneys' fees in connection with the enforcement of this Agreement, (ii) to the payment of outstanding Monthly Base Rent, (iii) to the payment of any Supplemental Rent, (iv) to the payment...

  • Page 275
    ... or by selling such Program Vehicles to a third party; provided , however , that the funds received by the Lessor with respect to such Vehicle shall equal the Termination Value for such Vehicle, together with all Monthly Base Rent and Supplemental Rent with respect to such Vehicle. 20. [RESERVED] 21...

  • Page 276
    ... this Agreement or any security or other guaranty therefor. Without limiting the generality of the foregoing, the Lessor may bring a separate action against the Finance Lease Guarantor without first proceeding against a Guaranteed Lessee, any other guarantor or any other Person, or any security held...

  • Page 277
    ...Lease Guarantor hereunder, to: (a) alter the terms of all or any part of the Guaranteed Obligations and any security and guaranties therefor including without limitation modification of times for payment and rates of interest; (b) accept new or additional instruments, documents, agreements, security...

  • Page 278
    ..., if at any time payment of any of the amounts payable by a Guaranteed Lessee under this Agreement is rescinded or must otherwise be restored or returned by the Lessor, upon an event of bankruptcy, dissolution, liquidation or reorganization of such Guaranteed Lessee or the Finance Lease Guarantor or...

  • Page 279
    ... be paid to the AESOP I Segregated Account) and the Finance Lease Guarantor's and the Lessees' obligations hereunder (including with respect to the payment of Monthly Base Rent, Supplemental Rent and all other amounts payable hereunder) shall not be subject to any claim or defense which the Finance...

  • Page 280
    ... of all Monthly Base Rent and Supplemental Rent (and any other payments hereunder) (other than Excluded Payments, which shall be paid to the AESOP I Segregated Account) to the party specified in such notice; (iv) upon request made by the Trustee at any time, each of the Lessees and the Finance Lease...

  • Page 281
    ... to any property now owned or hereafter acquired by the Finance Lease Guarantor or each such Lessee except Permitted Liens. 30.4. Financial Information; Financial Condition . All balance sheets, all statements of operations, of shareholders' equity and of cash flow, and other financial data (other...

  • Page 282
    ... for the three months ended March 31, 2004. 30.5. Litigation . Except as set forth in Schedule 30.5 hereto and except for claims as to which the insurer has admitted coverage in writing and which are fully covered by insurance, no claims, litigation (including, without limitation, derivative actions...

  • Page 283
    ..., in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System). None of the Finance Lease Guarantor, the Lessees, any Affiliates of any of them or any Person acting on...

  • Page 284
    ... of any law, ordinance, rule, regulation or order of any Governmental Authority applicable to it or its property, which violation would have a Material Adverse Effect, and no such violation has been alleged, (ii) has filed in a timely manner all reports, documents and other materials required to be...

  • Page 285
    ... Effect. 30.20. No Adverse Change . Since December 31, 2003, (x) no material adverse change in the business, assets, liabilities, financial condition, results of operations or business prospects of the Finance Lease Guarantor or any Lessee has occurred, and (y) no event has occurred or failed to...

  • Page 286
    ... (ii) permit any Person designated by the Lessor, the Lender or the Trustee in writing to visit and inspect any of the properties, corporate books and financial records of the Finance Lease Guarantor and its Subsidiaries and to discuss its affairs, finances and accounts with officers of the Finance...

  • Page 287
    ...this Agreement (a) vehicle liability insurance to the full extent required by law and in any event not less than $500,000 per Person and $1,000,000 per occurrence, (b) property damage insurance with a limit of $1,000,000 per occurrence, and (c) excess coverage public liability insurance with a limit...

  • Page 288
    ... Program; (v) Interim Financial Statements . Promptly following the Finance Lease Guarantor's receipt thereof, copies of all other financial reports submitted to the Finance Lease Guarantor by independent public accountants relating to any annual or interim audit of the books of the Finance Lease...

  • Page 289
    ... may require to satisfy its reporting obligations to the Lender pursuant to Section 9.5 of the AESOP I Finance Lease Loan Agreement; and (vii) Other . Promptly, from time to time, such other information, documents, or reports respecting the Vehicles leased hereunder or the condition or operations...

  • Page 290
    ... Manufacturer Programs with respect to Vehicles leased hereunder directly to the Collection Account or a Joint Collection Account. Any such payments from Manufacturers or related auction dealers received directly by the Finance Lease Guarantor or a Lessee, will be, within three (3) Business Days of...

  • Page 291
    ...Non-Program Vehicles . Dispose of the Non-Program Vehicles leased by such Lessee hereunder in accordance with Section 2.6 (unless such Lessee purchases such Non-Program Vehicle in accordance with the terms hereof). 31.16. Security Interest; Additional Subleases . Do and cause to be done at all times...

  • Page 292
    ... pay to the Administrator on each Payment Date (i) the portion of the Monthly Administration Fee payable by the Lessor pursuant to the Administration Agreement and (ii) the reasonable costs and expenses of the Administrator incurred by it as a result of arranging for the sale of Vehicles returned...

  • Page 293
    ... termination of this Agreement. 35. SUBMISSION TO JURISDICTION . The Lessor and the Trustee may enforce any claim arising out of this Agreement in any state or federal court having subject matter jurisdiction, including, without limitation, any state or federal court located in the State of New York...

  • Page 294
    ...and/or the Lessor pursuant to the foregoing sentence shall be sent to the following addresses: TRUSTEE : The Bank of New York c/o BNY Midwest Trust Company 2 North La Salle Street 10th Floor Chicago, Illinois 60602 Attention: Telephone: Fax: Corporate Trust Officer (312) 827-8569 (312) 869-8562 -52-

  • Page 295
    LENDER : Cendant Rental Car Funding (AESOP) LLC c/o Lord Securities Corporation 48 Wall Street New York, New York 10005 Attention: Telephone: Fax: Benjamin B. Abedine (212) 346-9019 (212) 346-9012 LESSOR : AESOP Leasing L.P. c/o Lord Securities Corporation 48 Wall Street New York, New York 10005 ...

  • Page 296
    FINANCE LEASE GUARANTOR : Cendant Car Rental Group, Inc. 6 Sylvan Way Parsippany, NJ 07054 Telephone: Fax: (973) 496-5000 (973) 496-5852 Each such notice, request or communication shall be effective when received at the address specified below. Copies of all notices must be sent by first class mail...

  • Page 297
    .... No recourse shall be had for the payment of any obligation or claim arising out of or based upon this Agreement against any shareholder, partner, employee, officer or director of AESOP Leasing. 44. LIABILITY . Each Lessee and the Finance Lease Guarantor shall be held jointly and severally liable...

  • Page 298
    IN WITNESS WHEREOF, the parties have executed this Agreement or caused it to be executed by their respective officers thereunto duly authorized as of the day and year first above written. LESSOR : AESOP LEASING L.P. By: AESOP LEASING CORP., its general partner By: /s/: Orlando Figueroa Name: ...

  • Page 299
    LESSEE : BUDGET RENT A CAR SYSTEM, INC. By: /s/: David Blaskey Name: David Blaskey Title: President Acknowledged and Consented LENDER : CENDANT RENTAL CAR FUNDING (AESOP) LLC By: Name: Title: /s/: Lori Gebron Lori Gebron Vice President TRUSTEE : THE BANK OF NEW YORK, as Trustee By: /s/: Mary L. ...

  • Page 300
    COUNTERPART NO. OF TEN (10) SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN ...

  • Page 301
    Schedule 30.5 Litigation [NONE]

  • Page 302
    ... Lessee Jurisdiction of Organization Records Locations States in which Conducts Business Cendant Car Rental Group, Inc. Delaware 300 Centre Pointe Dr. Virginia Beach, VA 23462 6 Sylvan Way Parsippany, NJ 07054 AZ, AR, CA, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, KS, KY, LA, ME, MD, MA, MI, MN...

  • Page 303
    Schedule 30.13 Compliance with Law [NONE]

  • Page 304
    ... the Vehicle Vehicle Finance Lease Commencement Date Vehicle Identification Number (VIN) Summary of Vehicles being financed (including, for Vehicles subject to the GM Repurchase Program, the Designated Period for such Vehicles) Program or Non-Program Vehicle Capitalized Cost (if applicable) Net Book...

  • Page 305
    ...) upon the sale of any such motor vehicle in accordance with the terms and conditions of the Amended and Restated Master Motor Vehicle Finance Lease Agreement, dated as of June 3, 2004, among AESOP Leasing L.P., CCRG as Lessee, as Administrator and as Finance Lease Guarantor, Avis Rent A Car System...

  • Page 306
    ... this instrument to be executed on its behalf by its duly authorized officer this 3 rd day of June, 2004. AESOP LEASING L.P. By: State of County of ) ) day of , 20 . Subscribed and sworn before me, a notary public, in and for said county and state, this Notary Public My Commission Expires: B-2

  • Page 307
    ... Indenture "), between Cendant Rental Car Funding (AESOP) LLC (" CRCF "), as Issuer, and The Bank of New York, as Trustee, as such Definitions List may from time to time be amended in accordance with the terms of the Base Indenture or the Finance Lease, as applicable. WITNESSETH: WHEREAS, pursuant...

  • Page 308
    ... of which when so executed and delivered shall be an original but all of which shall together constitute one and the same instrument. 6. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. -2-

  • Page 309
    ... CORP., its general partner By: /s/ Lori Gebron Name: Lori Gebron Title: Vice President CENDANT CAR RENTAL GROUP, INC, as Lessee, Administrator and Finance Lease Guarantor By: /s/ Elizabeth R. Cohen Name: Elizabeth R. Cohen Title: Vice President and Assistant Treasurer AVIS RENT A CAR SYSTEM, INC...

  • Page 310
    Acknowledged and Consented CENDANT RENTAL CAR FUNDING (AESOP) LLC, as Lender By: /s/ Lori Gebron Name: Lori Gebron Title: Vice President THE BANK OF NEW YORK, as Trustee By: /s/ John Bobko Name: John Bobko Title: Vice President -2-

  • Page 311
    ... of deferred financing costs) and the portion of operating lease rental expense that is representative of the interest factor. Interest expense on all indebtedness is detailed as follows: Year Ended December 31, 2006 2005 2004 2003 2002 Related to the debt under vehicle programs $361 $313 $263...

  • Page 312
    ...A Car de Puerto Rico Inc. Avis Rent A Car Limited Avis Rent A Car Sdn. Bhd. Avis Rent A Car Sdn. Bhd. Avis Rent A Car System, LLC Avis Service, Inc. Avis Services Canada, Inc. Aviscar Inc. Baker Car and Truck Rental, Inc. BGI Leasing Inc. Budget Funding Corporation Budget Lease Management (Car Sales...

  • Page 313
    ... Rico Constellation Reinsurance Company Limited Global Excess & Reinsurance Ltd. HFS Truck Funding Corporation Mansions Auto Garage Ltd Motorent Inc. Pathfinder Insurance Company PF Claims Management Ltd. PV Holding Corp. Quartz Fleet Management, Inc. Rent-A-Car Company, Incorporated Servicios Avis...

  • Page 314
    ... the Company's new segment reporting structure) and management's annual report on the effectiveness of internal control over financial reporting appearing in this Annual Report on Form 10-K of Avis Budget Group, Inc. for the year ended December 31, 2006. /s/ DELOITTE & TOUCHE LLP New York, New York...

  • Page 315
    Exhibit 31.1 CERTIFICATIONS I, Ronald L. Nelson, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Avis Budget Group, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the ...

  • Page 316
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who...

  • Page 317
    ... Annual Report of Avis Budget Group, Inc. (the "Company") on Form 10-K for the period ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Ronald L. Nelson, as Chief Executive Officer of the Company, and David B. Wyshner, as Chief Financial...