-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RGKCtSoThLzLq5WhUOgmmr8TiWYi5SYoNyD5JJyAN3rIb+sduhq0fQQFL7L9ghxr mXn0zPrm11jNRRefcpHBhQ== 0000950144-02-003677.txt : 20020416 0000950144-02-003677.hdr.sgml : 20020416 ACCESSION NUMBER: 0000950144-02-003677 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020410 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUDGET GROUP INC CENTRAL INDEX KEY: 0000922471 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTO RENTAL & LEASING (NO DRIVERS) [7510] IRS NUMBER: 593227576 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23962 FILM NUMBER: 02606210 BUSINESS ADDRESS: STREET 1: 125 BASIN ST STE 210 CITY: DAYTONA BEACH STATE: FL ZIP: 32114 BUSINESS PHONE: 9042387035 MAIL ADDRESS: STREET 1: 125 BASIN STREET CITY: DAYTONA BEACH STATE: FL ZIP: 32114 FORMER COMPANY: FORMER CONFORMED NAME: TEAM RENTAL GROUP INC DATE OF NAME CHANGE: 19940429 10-K 1 g74374e10-k.txt BUDGET GROUP, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________TO ____________
COMMISSION FILE NUMBER 0-23962 BUDGET GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 59-3227576 (State of incorporation) (IRS Employer Identification No.)
125 BASIN STREET, SUITE 210, DAYTONA BEACH, FL 32114 (Address of Principal Executive Offices -- Zip Code) Registrant's telephone number, including area code: (386) 238-7035 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Class A Common Stock, par value $0.01 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the common equity held by non-affiliates of the Registrant (assuming for these purposes, but without conceding, that all executive officers and directors are "affiliates" of the Registrant) as of April 5, 2002 (based on the closing sale price of the Registrant's Class A common stock, par value $0.01, as reported on the National Association of Securities Dealers Over-the-Counter Bulletin Board on such date) was $0.17. 37,255,016 shares of common stock were outstanding as of April 5, 2002, comprised of 35,318,466 shares of the Registrant's Class A common stock, par value $0.01, and 1,936,550 shares of the Registrant's Class B common stock, par value $0.01. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Proxy Statement for the 2002 Annual Meeting of Stockholders to be held on May 16, 2002 are herein incorporated by reference in Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ---- PART I Item 1. Business.................................................... 1 Item 2. Properties.................................................. 14 Item 3. Legal Proceedings........................................... 15 Item 4. Submission of Matters to a Vote of Security Holders......... 15 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters....................................... 16 Item 6. Selected Financial Data..................................... 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk...................................................... 37 Item 8. Financial Statements and Supplementary Data................. 38 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................. 38 PART III Item 10. Directors and Executive Officers of the Registrant.......... 38 Item 11. Executive Compensation...................................... 38 Item 12. Security Ownership of Certain Beneficial Owners and Management................................................ 38 Item 13. Certain Relationships and Related Transactions.............. 38 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K....................................................... 38
i PART I In this Report, the terms "Budget Group," "the Company" and "we" refer to Budget Group, Inc. and its subsidiaries as a consolidated entity, except where it is clear that such terms mean only the parent company. "BRACC" refers to Budget Rent a Car Corporation, a subsidiary of Budget Group. "Budget" and "Budget Rent a Car" refer to the business of renting cars and trucks (as applicable) under the "Budget" name, by BRACC and its franchisees. Budget Group, Inc. is a Delaware corporation organized in 1992. ITEM 1. BUSINESS INDUSTRY OVERVIEW CAR RENTAL The car rental industry is comprised of two principal markets: general use (including airport and local market facilities) and insurance replacement. General use companies serving airport and local markets accounted for approximately 73% of rental revenue in the United States in 2001, while the insurance replacement segment accounted for approximately 27% of rental revenue. General use locations rent vehicles primarily to business and leisure travelers, while insurance replacement facilities rent primarily to individuals who have lost the use of their vehicles because of accidents, theft or breakdowns. In addition to vehicle rental revenue, the industry derives significant revenue from the sale of related products such as liability insurance and loss damage waivers. The domestic general use car rental market includes several major companies which operate airport and local market facilities. The insurance replacement market is dominated by Enterprise, which operates primarily non-airport locations. In addition, there are many smaller companies that operate primarily through non-airport locations. Most of the major car rental companies in the United States operate through a combination of corporate-owned and franchised locations. There were significant changes in the ownership of domestic car rental companies in 1996 and 1997, as ownership of these companies has shifted in large part from the major automobile manufacturers to independent ownership. General Motors sold its 25% stake in Avis to HFS, Inc. in May 1996, and Avis completed its initial public offering in September 1997. Republic Industries acquired Alamo in November 1996 and National (which had previously been controlled by General Motors) in January 1997. In April 1997, Ford sold approximately 20% of its equity in Hertz in an initial public offering and sold its controlling interest in BRACC to us. In December 1997, Chrysler sold Dollar and Thrifty through an initial public offering. The industry saw further changes in 2000 and 2001, as Ford repurchased the 20% of Hertz previously sold to the public, AutoNation, Inc. spun off Alamo, National and Car Temp USA to ANC Rental Corporation and Cendant acquired all the publicly held equity interests in Avis. While owned by the automobile manufacturers, car rental companies served as important outlets through which the manufacturers disposed of their vehicles, in a period when major labor contracts made it uneconomical for the manufacturers to limit their production of vehicles, even if they could not be sold through dealers. There was an oversupply of cars in the rental industry during this period, with cars being available on favorable terms to many small local car rental operators, and the manufacturers did not commit sufficient resources to the development of the car rental systems. Following the ownership changes, however, the car rental companies have increasingly focused on their own profitability, although they continue to be parties to supply and repurchase agreements with the manufacturers. Since the late 1980s, vehicle rental companies have acquired their fleet primarily pursuant to repurchase programs with automobile manufacturers. Under such programs, a car rental company agrees to purchase a specified minimum number of new vehicles at a specified price, and the manufacturer agrees to repurchase those vehicles from the car rental company at a future date (typically, six to nine months after the purchase). The repurchase price paid by the manufacturer is based upon the capitalized cost of the vehicles less an agreed-upon depreciation factor and, in certain cases, an adjustment for damage and excess mileage. These programs limit a car rental company's residual risk with respect to its fleet and enable the company to 1 determine a substantial portion of its depreciation expense in advance. We believe these "program" vehicles constitute a substantial majority of the vehicles in the fleet of U.S. car rental companies. The total number of rental vehicles in service in the U.S. has been estimated at 1.7 million in 2001. The total revenue for the U.S. car rental industry has been estimated by industry sources at $18.7 billion in 2001, a decrease of 3.6% over 2000 revenue of $19.4 billion. We believe the factors driving historical industry growth include increases in airline passenger traffic, the trend toward shorter, more frequent vacations resulting from the number of households with two wage earners, the demographic trend toward older, more affluent Americans who travel more frequently and increased business travel. Car rental companies have also been able to increase the revenue they earn on their vehicles through the implementation of yield management systems similar to those utilized by the major airlines. Customers of the general use vehicle rental companies include (a) business travelers renting under negotiated contractual agreements between their employers and the rental company, (b) business and leisure travelers who make their reservations and may receive discounts through travel, professional or other organizations, (c) smaller corporate accounts that are provided with a rate and benefit package that does not require a contractual commitment and (d) leisure or business travelers with no organizational or corporate affiliation programs. Business travelers tend to utilize mid-week rentals of shorter duration, while leisure travelers have greater utilization over weekends and tend to rent cars for longer periods. Rental companies in the insurance replacement market enter into contracts primarily with insurance companies, automobile dealers and repair shops to provide cars to their customers whose vehicles are damaged or stolen or are being repaired. Compared with the general use market, the insurance replacement market is characterized by longer rental periods, lower daily rates and the utilization of older and less expensive vehicles. TRUCK RENTAL Two primary segments of the truck rental industry are the consumer market and the light commercial market. The consumer market primarily serves individuals who rent trucks to move household goods on either a one-way or local basis. The light commercial market serves a wide range of businesses that rent light- to medium-duty trucks, which are trucks having a gross vehicle weight of less than 26,000 pounds, for a variety of commercial applications. Trucks tend to be configured differently for these two markets, in terms of their size, rear doors and loading height. BACKGROUND Since 1996, we substantially increased the size of our business through two major acquisitions. In April 1997, we purchased BRACC from Ford Motor Company for approximately $381 million (and assumed or refinanced approximately $1.4 billion of indebtedness), and in June 1998 we acquired Ryder TRS or ("Ryder") for approximately $260 million (and assumed approximately $522 million of indebtedness). Prior to the BRACC acquisition, we were the largest Budget franchisee, having grown our business to $193.1 million in revenue in 1996 principally through the acquisition or opening of 133 Budget locations from January 1994 to December 1996. The BRACC acquisition represented a unique opportunity to combine one of the leading worldwide car rental companies with its largest franchisee in order to increase the level of corporate ownership in the Budget system. A high level of corporate ownership enables us to: (i) provide more consistent service, which is important in marketing to corporate accounts; (ii) exercise greater control over the development and marketing of the Budget brand; and (iii) realize greater returns from our investment in the Budget brand. The Ryder TRS acquisition combined our Budget truck rental business, with its strength in the light commercial market, with Ryder TRS, a leader in the consumer one-way market. With three national operators in the consumer one-way truck rental market (following the Ryder TRS acquisition) accounting for the majority of that market's total revenue, we believe the truck rental market offers us an excellent opportunity to achieve attractive returns. In addition, combining our Ryder TRS and Budget Truck Rental 2 operations allows us to reduce costs significantly in the areas of fleet management, maintenance, field operations and administrative overhead. RECENT DEVELOPMENTS 2001 was a difficult year for the car and truck rental industry. Due to overall economic conditions, the pricing and business travel environment for the North America car rental segment continues to be substantially weaker than the prior year. In addition, following the events of September 11, 2001, there has been a significant decline in air travel and related car rentals at airports worldwide, particularly in the U.S. Approximately one-half of our U.S. revenue is derived from airport locations and therefore a continued decline in air travel may continue to have an adverse effect on our financial position and results of operations. We cannot accurately predict the extent or duration of the decline in air travel. We have been unable to meet certain requirements under our working capital facility and we did not make a required interest payment on our Senior Notes due on April 1, 2002. You should carefully read the sections of this report titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" for a more detailed discussion of our current financial position and steps being taken to address these issues. 2001 INITIATIVES During 2001, we undertook a number of initiatives to increase cash flow and liquidity while continuing to decrease operating expenses. These initiatives were designed to improve the financial performance of Budget Group. Key elements of this program included: IMPROVED LIQUIDITY. In recent years, investments to build necessary operations infrastructure and technology upgrades have impacted our liquidity. During 2001, we undertook the following initiatives designed to improve our liquidity and cash management: - we entered into several amendments to our working capital facility in 2001, which allowed us to increase fleet for the peak 2001 travel season. - we secured a seasonal fleet line for $350.0 million in March 2001. - we secured a seasonal fleet line for $100.0 million in November 2001. - we issued asset-backed medium term notes ("MTN's") of $475.0 million in April 2001 and $240.0 million in November 2001. - we renewed our commercial paper liquidity facility in June 2001 in the amount of $485.0 million. - we sold approximately 1.6 million Homestore.com ("Homestore") shares. - we sold real estate and non-core assets. EUROPEAN REFRANCHISING. We made significant progress in our European refranchising efforts in 2001. The change in operating model to franchises instead of corporate owned locations is expected to reduce our financial exposure and improve cash flows from our European operations. The refranchising effort will continue in 2002. ACHIEVED CONSOLIDATION OF BUSINESS SYSTEMS. Our reorganization efforts during 2001 reflect the reshaping of Budget Group to a singular core car and truck rental business. We expect to further integrate the truck business by migrating all truck rental locations to a single counter and reservation system in the first half of 2002. In the future, we will continue to evaluate other systems and key business processes to determine additional areas of cost reduction and improve overall financial performance. TRUCK MARGIN INITIATIVES. In 2001, we made significant adjustments to reduce our truck fleet and the related carrying costs. Additionally, we have adopted improved truck fleet management procedures. As a result of these initiatives, we expect to improve truck operating margins through improved utilization and reduced maintenance costs. 3 2002 INITIATIVES Our focus during 2002 will be on four critical areas: financial position, operations, employees, and customers. Key components of this plan include: FINANCIAL POSITION -- CREATE AN AFFORDABLE AND FLEXIBLE CAPITAL STRUCTURE. In addition to credit facility amendments, we will take steps to continue to improve our liquidity and cash management and our asset allocation. Among other initiatives, we intend to enter into new, or modify existing, fleet financing arrangements, restructure our non-fleet indebtedness and more effectively match our cash flow to the seasonality of our business. We have engaged Lazard Freres & Co. LLC ("Lazard") to assist us in reviewing and evaluating a number of strategic alternatives, including recapitalization structures that will provide a more affordable and flexible capital structure. OPERATIONS -- DEVELOP PROFITABLE INFRASTRUCTURE. We intend to focus on increasing our productivity by developing and maintaining a more efficient business infrastructure which more fully utilizes all of our assets. We intend to achieve this objective by focusing on an efficient business mix that fully utilizes all assets; pursuing low-cost distribution channels; developing standards in all business functions; and delivering consistent service at all customer contact points. We also intend to enhance our standardized information processing to further provide internal efficiency gains. CUSTOMERS -- STRENGTHEN OUR BRAND NAME. We intend to position the Company as a leader in the value rental car and truck market. In 2001, we began transitioning our truck fleet to a new blue truck. Over time these trucks will replace the white Budget trucks and the yellow Ryder TRS trucks. Our strategy targets growth in the core car and truck rental business through use of low-cost sales channels and improved customer service. We believe that this combination of value and service will strengthen the Budget brand name. Additionally, we expect to target certain growth opportunities in the insurance replacement and commercial truck rental markets. EMPLOYEES -- CONTINUED FOCUS ON IMPROVED SERVICE. We intend to focus on providing enhanced training and better communication among employees and management. As part of this initiative, we will create a sales and service-oriented workforce, where employees are empowered to turn strategy into action. We believe that these steps will encourage more open and effective communications among Budget team members and will result in the development and retention of top performing employees at all levels. CAR RENTAL Car Rental is comprised of the following operations:
2001 WORLDWIDE CAR RENTAL OPERATING COMPANY BUSINESS REVENUE - ----------------- -------- -------------- (IN MILLIONS) Budget Rent a Car operator and Worldwide general use car $1,611.5 franchisor rental
BUDGET RENT A CAR Through Budget Rent a Car, we operate the third largest car and truck rental system in the world. Budget is one of only three vehicle rental systems that offer rental vehicles throughout the world under a single brand name. There are approximately 3,200 Budget car rental locations. Approximately 25% are corporate-owned and operated and 75% are operated by franchisees. Approximately 900 locations primarily serve airport business and approximately 2,300 are local market (downtown and suburban) locations. 4 We currently maintain more local market car rental locations throughout the world than most of our competitors and are unique among major car rental systems in that we also rent trucks in most of our major markets. The following charts present the geographic distribution of Budget rental locations by operating regions, including the United States, Canada, Latin America and the Caribbean ("LAC"), Europe, the Middle East and Africa ("EMEA") and Asia and Pacific ("AP"): LOCATIONS (PIE CHART) U.S. OPERATIONS At December 31, 2001, there were approximately 580 corporate-owned and 430 franchised Budget Rent a Car locations in the United States, which accounted for approximately $1.3 billion and $367.7 million of revenue, respectively. Of corporate-owned Budget U.S. car rental locations, 25% primarily serve airport business and 75% are local market (downtown and suburban) facilities. Approximately 75% of BRACC's U.S. car revenue was attributable to the airport segment and 25% to the local segment in 2001. Approximately 55% of our U.S. rentals are leisure-related and approximately 45% are business-related. A summary of certain of the principal operating statistics for our corporate-owned Budget Rent a Car operations is presented in the table below:
2000 2001 2001 VS. 2000 ----------- ----------- ------------- Revenue (in millions)..................... $ 1,434.0 $ 1,312.4 -8.5% Rental days............................... 36,071,753 34,939,224 -3.1% Revenue per day........................... $ 39.75 $ 37.56 -5.5% Utilization............................... 82.7% 83.5% 80bps Monthly revenue per vehicle............... $ 1,003 $ 954 -4.9% Fleet (average)........................... 119,119 114,638 -3.8% Length of rental (average days)........... 4.31 4.41 2.3%
INTERNATIONAL OPERATIONS In the fourth quarter of 2000, we embarked on a plan to change our European operating model to scale back the number of corporate owned locations and focus on increasing franchised locations in key territories. During 2001, we continued this initiative, achieving substantial consolidation and efficiency gains as a result. At December 31, 2001, Budget's international car rental operations included approximately 220 corporate 5 owned locations and 1,970 franchised locations. Of the corporate-owned international facilities, 28% primarily serve airport businesses and 72% serve local markets. During 2002, we will continue our effort to refranchise our owned locations in Europe. A summary of certain of the principal operating statistics for our corporate-owned international Budget Rent a Car operations is presented below:
2000 2001 2001 VS. 2000 ---------- ---------- ------------- Revenue (in millions)......................... $ 296.6 $ 183.2 -38.2% Rental days................................... 7,670,478 4,086,850 -46.7% Revenue per day............................... $ 29.42 $ 30.94 5.2% Utilization................................... 71.5% 72.9% 140bps Monthly revenue per vehicle................... $ 641 $ 686 7.0% Fleet (average)............................... 29,329 15,351 -47.7% Length of rental (average days)............... 5.82 5.58 -4.1%
FLEET General. We rent a wide variety of vehicles, including luxury and specialty vehicles. Our fleet consists primarily of vehicles from the current and immediately preceding model year. Rentals are generally made on a daily, weekly or monthly basis. Rental charges are computed on the basis of the length of the rental or, in some cases, on the length of the rental plus a mileage charge. Rates vary at different locations depending on the type of vehicle rented, the local market and competitive and cost factors. Most rentals are made utilizing rate plans under which the customer is responsible for gasoline used during the rental. We also generally offer our customers the convenience of leaving a rented vehicle at a location in a city other than the one in which it was rented, although, consistent with industry practices, a drop-off charge or special intercity rate may be imposed. We facilitate one-way car rentals between corporate-owned and franchised locations in the United States that enable us to operate more fully as an integrated network of locations. Vehicle Purchasing. We participate in a variety of vehicle purchase programs with major domestic and foreign vehicle manufacturers. During 2001, approximately 64% of our vehicle purchases consisted of Ford vehicles, 15% Nissan and Toyota vehicles, 9% Hyundai vehicles, 6% Kia vehicles and the remaining 6% were from other manufacturers, including Chrysler/Dodge and Subaru. These percentages vary among our operations and will most likely change from year to year. The average price for automobiles purchased in 2001 for our BRACC car rental fleet was approximately $19,900. Our principal vehicle supply relationship has historically been with Ford. We have a 10-year Supply Agreement with Ford, which went into effect in April 1997. Under the Supply Agreement, we agreed (i) to purchase or lease at least 70% of the total number of vehicles leased or purchased by us in each model year from Ford or (ii) to purchase or lease at least 80,000 new Ford vehicles in each model year in the United States. In model year 2001, we purchased approximately 120,500 Ford vehicles. Ford and its affiliates are required to offer to us and our franchisees, for each model year, vehicles and fleet programs competitive with the vehicles and fleet programs of other automobile manufacturers. Vehicle Disposition. Our strategy is to maintain our car rental fleet at an average age of six to nine months. Approximately 81% of the vehicles purchased for the BRACC fleet in model year 2001 were program vehicles. The programs in which we participate currently require that the program vehicles be maintained in our fleet for a minimum number of months (typically six to nine months) and impose numerous return conditions, including those related to mileage and condition. At the time of return to the manufacturer, we receive the price guaranteed at the time of purchase and are thus protected from fluctuations in the prices of previously-owned vehicles in the wholesale market at the time of disposition. The future percentages of program vehicles in our fleet will be dependent on the availability and attractiveness of manufacturers' repurchase programs, over which we have no control. In addition to manufacturers' repurchase programs, we dispose of our rental fleet largely through automobile auctions and sales to wholesalers. 6 Of the 186,500 rental cars we sold in 2001, we sold approximately 135,500 back to manufacturers pursuant to repurchase programs, 48,500 through third-party channels (such as public auctions) and 2,500 were sold directly to consumers. Utilization and Seasonality. Our car rental business is subject to seasonal variations in customer demand, with the summer vacation period representing the peak season. The general seasonal variation in demand, along with more localized changes in demand at each of our locations, causes us to vary our fleet size over the course of the year. For 2001, BRACC's average monthly fleet size in North America ranged from a low of 97,078 vehicles in December to a high of 131,412 vehicles in July. Fleet utilization for 2001, which is based on the average number of days vehicles are rented compared to the total number of days vehicles are available for rent, ranged from 74% in December to 88% in August and averaged 84% for 2001. Customer Service. Our commitment to delivering a consistently high level of customer service is a critical element of our success and strategy. Each week internal assessors review three major airports to measure service levels by location. We identify specific areas of achievement and opportunity from these assessments. We address areas of improvement on a system-wide level and develop standard methods and measures. The major focus areas of these assessments include: (i) vehicle condition and availability; (ii) customer interaction, including helpfulness and courtesy; and (iii) location image. In addition, Budget utilizes a toll-free "800" number that allows customers to report problems directly to our customer relations department. We prepare monthly reports of the types and number of complaints received for use in conjunction with the customer satisfaction reports by location management as feedback of customer service delivery. MARKETING Marketing Programs. In 2001, we continued our Perfect Drive and Fastbreak programs. Perfect Drive is an innovative customer loyalty program launched by BRACC in April 1998, that allows members to accumulate points for renting Budget vehicles, with the points being redeemable for discounts on future rentals as well as select products offered through vendors such as Calloway Golf, Serengeti, Bushnell, Tumi, Roots and Bolle. Fastbreak, launched in August 1998, is an express service program featuring paperless transactions that is now available at major airports nationwide. Truck Rebranding. In 2001, we added 500 new blue Budget trucks that will replace the white Budget and yellow Ryder TRS trucks as these older trucks are disposed of and new trucks are purchased for the fleet. We have agreed with Ryder Systems, Inc. that this transition to Budget branded trucks will be completed by December 31, 2004. We expect to meet this requirement in the ordinary course of our truck disposal and purchase activity. In the event we were unable to replace the yellow trucks by December 31, 2004 we would be required to rebrand the trucks at a cost of approximately $400 per truck. See Item 3 "Legal Proceedings". Internet Initiatives. In 2000, we launched an improved booking engine for Budget.com and made changes to Yellowtruck.com that improved the speed and service capabilities of these web-sites. These changes, along with our marketing programs have lead to significant volume growth through this low cost channel increasing from approximately 9% of total reservations in January 2001 to over 16% in December 2001. We have agreements to promote our car rental service with major Internet portals, including America Online, priceline.com, Southwest Airlines and Yahoo, and in 2000 announced a strategic alliance with Homestore.com to offer Budget Truck Rental and Ryder TRS reservations to visitors of the Homestore.com web site. Travel Agent Incentives. We estimate that approximately 40% of domestic car rental revenue is attributable to reservations made through travel agents. To develop business in this market we have implemented Unlimited Budget, a loyalty incentive program for travel agents. In conjunction with Carlson Marketing Group and MasterCard, we developed the Unlimited Budget MasterCard, which is designed around a personal debit card. Travel agents earn reward points for every eligible U.S. business and leisure rental completed by their clients, which are deposited in a special debit card account in the travel agent's name and can be used like cash. We have enrolled over 71,000 travel agents since September 1997 in this program. 7 Sears Car and Truck Rental. In 1970, we established a contractual relationship with Sears which allows Budget operating locations to provide car and truck rentals under the Sears name. Sears Car and Truck Rental customers may use their Sears charge card for payment of rental charges. The contract expires in May 2003 and will not be renewed. In 2001, we realized approximately $131.0 million in Sears Car and Truck rental revenue. FRANCHISING Of the approximately 3,200 Budget worldwide car and truck locations at December 31, 2001, approximately 75% were owned and operated by franchisees. Franchised locations range from large operations in major airport markets with fleet sizes in excess of 3,000 vehicles and franchise territories within an entire country to operations in small markets with fleets of fewer than 50 vehicles. We consider our relationships with our franchisees to be excellent. We work closely with franchise advisory councils in formulating and implementing sales, advertising and promotional, and operating strategies and meet regularly with these advisors and other franchisees at regional, national and international meetings. As part of our growth strategy, we seek to add new franchises worldwide when opportunities arise. Additional franchises provide us with a source of high margin revenue as there are relatively few additional fixed costs associated with fees paid by new franchisees to us. Our relationships with Budget franchisees are governed by franchise agreements that grant to the franchisees the right to operate Budget vehicle rental businesses in certain exclusive territories. These franchise agreements provide us with rights regarding the business and operations of each franchise and impose restrictions on the transfer of the franchise and on the transfer of the franchisee's capital stock. Each franchisee is required to operate each of its franchises in accordance with certain standards contained in the Budget operating manual. We have the right to monitor the operations of franchisees and any default by a franchisee under a franchise agreement or the operating manual may give us the right to terminate the underlying franchise. In general, the franchise agreements grant the franchisees the exclusive right to operate a Budget Rent a Car and/or Budget Rent a Truck business in a particular geographic area for a stated period. Franchise agreements generally provide for an unlimited number of renewal terms for no additional fee. Upon renewal, the terms and conditions of franchise agreements (other than with respect to royalty fees) may be amended from those contained in the existing franchise agreements. The standard royalty fee payable under franchise agreements is 7.5% of gross rental revenues in the United States and 5% of gross rental revenues in international markets, but certain of the franchisees have franchise agreements with different royalty fee structures. Pursuant to each franchise agreement, the franchisee must meet certain guidelines relating to the number of rental offices in the franchised territory, the number of vehicles maintained for rental and the amount of advertising and promotion expenditures. In general, each franchise agreement provides that the franchisee shall not engage in any other vehicle rental business within the franchise territory during the term of such agreement and for 12 months thereafter. In addition, franchisees agree not to use the word "Budget" or any other Budget trademark other than in their Budget vehicle rental businesses. As part of the effort to transition the Ryder brand to Budget we have entered into agreements with our licensees allowing current Ryder dealers within licensee territories (approximately 625) to rent trucks under the Budget brand ("the Integration Agreement"). We will pay varying commission rates to our licensees for Budget truck rentals at Ryder dealer locations within their territories as follows (as a percent of revenue); 1% in 2002 and 2003, 2% in 2004 and 4% in 2005 and thereafter. Only 7 of the licensees have not signed the Integration Agreement as of March 18, 2002. 8 OTHER AIRPORT RENTAL CONCESSIONS In general, concession fees for airport locations are based on a percentage of total commissionable revenues (as determined by each airport authority), subject to minimum annual guarantee amounts. Concessions are typically awarded by airport authorities every three to five years based upon competitive bids. Our concession agreements with the various airport authorities generally impose certain minimum operating requirements, provide for relocation in the event of future construction and provide for abatement of the minimum annual guarantee in the event of extended low passenger volume. INFORMATION TECHNOLOGY Our information technology is designed to provide us with high quality, cost-effective systems and services on a timely basis. BRACC's reservation system, which consists of a highly integrated mainframe system with an intelligent workstation component for reservation agents, allows them to access pertinent information in a fast and user-friendly manner. The reservation system has direct interfaces to the airline reservation systems and captures key corporate and customer information. BRACC's rental counter system, BEST I, supports both corporate-owned and franchisee operations, and its fleet system supports the financing, accounting and ordering for all brands of vehicles including direct ordering lines to Ford, Toyota, Chrysler, GM and Isuzu. Our human resources, benefits and payroll interface is supported by a client-server system that automatically feeds to an outsourced payroll system. In March 1999, we entered into a seven-year technology agreement with Computer Sciences Corporation ("CSC") to outsource administration of BRACC's information systems. See the section in this Item entitled "Information Systems." We intend to continue to enhance and consolidate our information technology systems in order to further facilitate Budget's delivery of consistent customer service at all of its locations. TRUCK RENTAL Our Truck Rental segment is comprised of the following operations:
TRUCK RENTAL SEGMENT 2001 OPERATING COMPANY BUSINESS REVENUE - ----------------- -------- ------------- (IN MILLIONS) Ryder TRS Local and one-way consumer and $482.3 light commercial truck rental operator, primarily through dealers Budget Truck Rental Local and one-way consumer and $164.9 light commercial truck rental operator and franchisor
In 2001, our Truck Rental revenue was $647.2 million. We operate a combined truck rental fleet of approximately 35,100 Ryder and Budget trucks through a network of approximately 3,250 corporate-owned, dealer and franchised locations. In June 1998, we purchased Ryder TRS, the second largest provider of truck rentals and related moving supplies to consumers and light commercial businesses in the United States. With its fleet of approximately 23,600 yellow trucks, Ryder has strong brand recognition and enjoys a high level of satisfaction among consumers. Budget Truck Rental has traditionally been strong in the light commercial market. Together, Budget Truck Rental and Ryder TRS comprise approximately 22% of the U.S. truck rental market, second only to U-Haul's 49% share. The average age of our truck rental fleet was 28 months at December 31, 2001. 9 Information on the estimated system-wide fleet size and U.S. locations at December 31, 2001 and business mix by revenue for the year for Ryder TRS and Budget Truck Rental is set forth below:
BUSINESS MIX --------------------- FLEET SIZE LOCATION CONSUMER COMMERCIAL ---------- -------- -------- ---------- Ryder TRS....................................... 23,600 2,630 65% 35% Budget Truck Rental............................. 11,500 620 52% 48% ------ ----- Totals................................ 35,100 3,250
TRUCK RENTAL GROUP INTEGRATION In an effort to generate maximum returns from our truck rental brands, we undertook a multiple-year process to attain the full integration of the Budget and Ryder TRS truck systems, including management, procurement, maintenance, fleeting, pricing and reservations. In 1999 and 2000, we transitioned the marketing, human resources and certain other administrative functions to BRACC's offices in Lisle, Illinois. In 2001, we proceeded to integrate our information technology systems and we anticipate the integration will be completed in 2002. This integration should improve our fleet quality and delivery systems and reduce overall costs, resulting in improved operating margins. See "Trademarks" in this Item. RYDER TRS Ryder TRS is the second largest provider of truck rentals and related moving supplies and services to consumers and light commercial users in the United States, with a fleet of approximately 23,600 trucks operating through dealers and corporate owned operations at December 31, 2001. The table below presents certain operating statistics of Ryder TRS:
2000 2001 2001 VS. 2000 ---------- ---------- ------------- Transactions...................................... 1,948,196 1,824,069 -6.4% Revenue per transaction........................... $ 264 $ 263 -0.4% Monthly revenue per vehicle....................... $ 1,406 $ 1,506 7.1% Utilization....................................... 47.8% 52.1% 430bps Revenue per day................................... $ 96.37 $ 94.97 -1.5%
Ryder TRS's truck rental services are offered through a national network of approximately 2,575 dealers and 55 corporate-owned and operated outlets at December 31, 2001. Dealers have access through their point-of-sale systems to information concerning inventory levels at all dealers within their market. Dealerships consist primarily of auto sales and service retailers, rental centers, self storage centers, car rental locations and other vehicle-related businesses that are owned by independent parties. In addition to operating their principal lines of business, these dealers rent our trucks to consumers, and we pay the dealers a commission on all truck rentals and other sales and rentals. Dealership agreements generally can be terminated by either party upon 30 to 90 days prior written notice, depending on dealer tenure. BUDGET TRUCK RENTAL Through Budget Truck Rental, we provide trucks and related moving supplies and services to consumers and light commercial users in the United States, with a fleet of approximately 11,500 trucks at December 31, 2001. Rental facilities are typically operated in conjunction with Budget Car Rental locations. At December 31, 2001, we rented Budget trucks at approximately 400 corporate-owned locations and 220 franchised locations. 10 The table below presents certain operating statistics of corporate-owned Budget truck rental operations:
2000 2001 2001 VS. 2000 -------- -------- ------------- Transactions......................................... 686,498 634,069 -7.6% Revenue per transaction.............................. $ 279 $ 255 -8.6% Monthly revenue per vehicle.......................... $ 1,019 $ 1,057 3.7% Utilization.......................................... 56.9% 56.5% -40bps Revenue per day...................................... $ 58.68 $ 61.52 4.8%
VEHICLE ACQUISITION AND DISPOSITION Budget Truck Group purchases the chassis for its trucks primarily from Ford, General Motors, Isuzu and Navistar, and purchases the "boxes" (the storage compartment on the back of the truck) from several companies. Orders are generally placed in the fall for delivery in time for the busy summer season. Budget Truck Rental and Ryder TRS consolidated their vehicle purchasing functions in 1998. We have leveraged our purchasing expertise to buy vehicles on terms more favorable than either company would be capable of achieving independently. Budget Truck Group disposes of its used vehicles through several outlets, including trade-ins through manufacturers, the wholesale market and sales through Ryder TRS's dealers. Budget Truck Group disposes of its trucks throughout the year, with a larger proportion being sold or traded during the first and fourth quarters. FLEET UTILIZATION AND SEASONALITY Truck rentals display seasonality, with generally higher levels of demand occurring during the summer months and the third quarter typically being our strongest quarter. On average, approximately 51% of Ryder TRS's annual revenue is earned from May through September, with August being the strongest month. Budget Truck Rental experiences the same seasonality; however, its emphasis on the light commercial market serves to dampen its magnitude. SUPPLEMENTAL PRODUCTS AND SERVICES We supplement our Truck Rental business with a range of other products and services. We rent automobile towing equipment and other moving accessories such as hand trucks and furniture pads and sell moving supplies such as boxes, tape and packing materials. We also offer customers a range of liability-limiting products such as physical damage waivers, personal accident and cargo protection and supplemental liability protection. These accessory products enhance our appeal to consumers by offering customers "one-stop" moving services. Ryder TRS offers comprehensive household goods relocation services to corporate employee relocation departments through Ryder Move Management. STRATEGIC ALLIANCE WITH HOMESTORE In March 2000, we entered into a strategic ten-year alliance between the Budget Truck Division and Homestore. Homestore provides one of the leading network of sites on the Internet for home and real estate-related information. Homestore's family of web sites enables consumers to shop for existing homes, look for new home construction, find an apartment, research home improvement matters and find comprehensive moving and relocation information on the Internet. As a result of this alliance, visitors to the Homestore web-site now have access to online truck rental quotes, online reservations and online purchase of boxes and moving supplies from Ryder TRS and Budget Truck Rental. Homestore participates in online and off-line Budget media commitments, including national yellow page advertising, print, television and radio advertising, and in-store promotions. In addition, the Budget Truck Group rental fleet displays the Homestore.com logo. In return for marketing and exclusive branding services, Homestore issued 1,085,271 shares of its common stock with certain put option rights to Budget in March 2000 at which time the market value of the shares was $70.0 million. In October 2001, we entered into an amended marketing agreement with Homestore, canceling the put options contained in the original agreement in exchange for 4,804,560 unregistered shares of Homestore common stock which were subsequently registered. Also, the term of the original marketing 11 agreement with Homestore and its requirements was extended one year to March 2011. As of March 18, 2002, we had sold 4,804,560 shares of Homestore common stock for aggregate proceeds to Budget of approximately $9.7 million. In addition, we hold the original 1,085,271 shares of Homestore stock which secure a derivative contract under which we are no longer subject to any changes in market value of these shares. See Note 7 to the Company's Consolidated Financial Statements herein. The deferred income amount related to the marketing agreement is approximately $57.4 million at December 31, 2001 and we have received all consideration due under the agreement with Homestore. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" herein. DISCONTINUED OPERATIONS In December 1999, we adopted plans to sell or dispose of our car sales segment, Cruise America and VPSI. In 2000, Budget sold substantially all of its retail car sales locations as well as certain other non-core assets and subsidiaries. In April 2000, Budget completed the sales of the Warren Wooten Ford, Inc. dealership and the Paul West Ford, Inc. dealership for $15.0 million and $17.7 million, respectively. On June 26, 2001, we sold our remaining new car dealership for approximately $2.3 million, which approximated book value. The dealership represents the final disposition related to our car sales segment. Budget completed its sale of VPSI in September 2000 for approximately $26.2 million and assumption of approximately $51.1 million of fleet debt by VPSI. The sale of 80.1% of Cruise America was completed in October 2000 for an initial sales price of approximately $27.5 million in cash and notes receivable and assumption of approximately $22.7 million of debt by the purchaser of Cruise America. In January 2002, we sold our remaining 19.9% interest in Cruise America and settled the remaining contingency related to the notes receivable through receipt of a discounted payment for certain outstanding notes. See Note 4 and Note 10 to the Company's Consolidated Financial Statements herein. In October 2001, we agreed to split the remaining $9.8 million note receivable due from the purchaser of VPSI into separate $4.8 million and $5.0 million notes. In addition, we accepted $3.5 million in cash as full payment on the $4.8 million note in October 2001 and agreed to accept a similarly discounted amount in the event the purchaser repaid the remaining note (maturing September 30, 2005) on or before December 31, 2003. REGULATORY AND ENVIRONMENTAL MATTERS We are subject to foreign, federal, state and local laws and regulations, including those relating to taxing and licensing of vehicles, franchising, consumer credit, environmental protection, and labor matters. Environmental Matters. The principal environmental regulatory requirements applicable to our operations relate to the ownership or use of tanks for the storage of petroleum products, such as gasoline, diesel fuel and waste oils; the treatment or discharge of waste waters; and the generation, storage, transportation and off-site treatment or disposal of waste materials. Approximately 170 of our facilities contain petroleum products stored in underground or aboveground tanks. We conduct environmental compliance programs designed to maintain compliance with applicable technical and operational requirements, including periodic integrity testing of underground storage tanks and providing financial assurance for remediation of spills or releases. We believe that our operations currently are in compliance, in all material respects, with such regulatory requirements including Federal regulations governing underground storage tanks that were in effect in December 2001. The historical and current uses of our facilities may have resulted in spills or releases of various hazardous materials, wastes or petroleum products ("Hazardous Substances") which now, or in the future, could require remediation. We also may be subject to requirements related to remediation of Hazardous Substances that have been released to the environment at properties we own or operate, or owned or operated in the past, or at properties to which we send, or have sent, Hazardous Substances for treatment or disposal. Such remediation requirements generally are imposed without regard to fault, and liability for any required environmental remediation can be substantial. 12 We have been required to remediate certain of our locations because of leaks or spills of Hazardous Substances. These locations may require further remediation. Subject to certain deductibles, the availability of funds, the compliance status of the tanks and the nature of the release, we may be eligible for reimbursement or payment of remediation costs associated with releases from registered underground storage tanks in states that have established funds for this purpose. Although we do not know the exact cost of any necessary remediation at our facilities, we do not expect it to exceed our reserve of $2.1 million over the next several years. Franchise Matters. As a franchisor, we are subject to federal, state and foreign laws regulating various aspects of franchise operations and sales. These laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises and, in certain states, also apply substantive standards to the relationship between the franchisor and the franchisee, including those pertaining to default, termination and non-renewal of franchises. Other Matters. Regulations enacted by various federal and state authorities affect our business. The financing activities of our discontinued car sales business are subject to federal truth in lending, consumer leasing and equal credit opportunity regulations, as well as state and local motor vehicle finance laws, installment finance laws, insurance laws, usury laws, installment sales laws and other consumer protection regulations. INFORMATION SYSTEMS As our ownership of BRACC locations increased and the integration of our Truck Rental business continues, centralized control and uniform administration of our information systems has become increasingly important. Tight control of all of our information systems, from terminals at the rental counters to workstations at our office facilities, is necessary to keep redundancy low and quality consistently high. Accordingly, we have centralized management of all information systems within our Information Technology group. In March 1999, we entered into a seven-year technology agreement with CSC to outsource administration of all of BRACC's information systems, which we believe has resulted in efficiencies. As part of the agreement, BRACC's information technology operations, including data centers, networks, user support, applications and maintenance, are run and managed by CSC. In addition, similar administrative functions related to certain Ryder TRS and truck specific systems is outsourced to Perot Systems under an agreement expiring in January 2003. RESERVATIONS SYSTEMS We operate a computerized reservation system through WizCom International, Inc. In 2000, we completed a consolidation effort to rationalize smaller reservation centers and realize benefits of scale. At December 31, 2001 we operated five virtual networked reservation centers throughout North America. Our main reservations facility is located in the Dallas metropolitan area and, along with additional centers located in other cities, collectively handled approximately 23.0 million incoming calls in 2001. In addition to traditional call-in reservations and inquiries, our system handles millions of inquiries and reservations through links to the major U.S. airline global distribution systems and other travel agent and travel industry sources. The system is also linked to the Internet, allowing customers to receive rate quotes as well as book reservations online. The system currently handles reservations for Budget Rent a Car, as well as for our Budget Truck Rental operations. In December 2000, we opened a new truck reservations center in Redding, California that receives truck reservations that overflow from Ryder dealerships throughout the United States. Prior to the opening of this center, these reservations were handled through an outsourcing arrangement. ORLANDO SHARED SERVICES CENTER In order to realize certain cost efficiencies as well as to ensure that we are optimally leveraging our substantial resources, we have centralized key U.S. back-office support at our shared services center based in Orlando, Florida. Functions currently provided to Budget Group companies through the shared services center 13 include: payroll; accounts payable and accounts receivable processing; fleet financing and administration (titling, registration, etc.) support; and other accounting functions. TRADEMARKS We own the Budget trademark and have registered it with the patent and trademark office in the United States and in more than 100 countries, territories and foreign jurisdictions worldwide. We consider the Budget name and logo rights to be an important part of our business. Budget Group, Inc. has the royalty-free right to use certain Ryder trademarks, subject to certain restrictions. The original agreement which allows us to use the trademark until October 2006 was amended in April 2001 to allow us to use the trademark until December 31, 2004. After October 2001, we began co- branding the Ryder brand name with Budget. In January 2005, we will no longer be permitted to use the Ryder name in any manner and will transition the business to the Budget brand name. We also have the royalty-free right to use the 1-800-GO-RYDER number, subject to certain restrictions, until December 2007 and the right to use the Ryder signature color scheme in perpetuity, subject to certain restrictions. Ryder's material trademarks have been registered with the U.S. Patent and Trademark Office. The unexpected loss of such trademarks prior to January 2005 could have a material adverse effect on our business. See Item 3 and Note 14 to the Company's Consolidated Financial Statements herein. COMPETITION There is intense competition in the vehicle rental industry particularly with respect to price and service. We cannot assure you that we will be able to compete successfully with either existing or new competitors. In any geographic market, we may encounter competition from national, regional and local vehicle rental companies. Our main competitors in the car rental market are Alamo, Avis, Dollar, Enterprise, Hertz and National. In our Truck Rental business, we face competition primarily from Penske and U-Haul. Many of our competitors have larger rental volumes, greater financial resources and a more stable customer base than we have. In the past, we have had to lower our rental prices in response to industry-wide price cutting and have been unable to unilaterally raise our prices. Moreover, when the car rental industry has experienced vehicle over-supply, competitive pressure has intensified. EMPLOYEES At December 31, 2001, we employed approximately 11,400 persons. At December 31, 2001, approximately 1,600 employees in various locations throughout the United States were subject to collective bargaining agreements. We believe that our employee relations are good. ITEM 2. PROPERTIES Budget Group's facilities include a 2,500 square foot leased office in Daytona Beach, Florida. Other significant properties include 149,088 square feet of leased office space plus 11,400 square feet of space for a data center in Lisle, Illinois, a suburb of Chicago, from which BRACC operates, of which 27,500 square feet are sub-leased; five leased reservation centers located in Carrollton, Texas consisting of 69,300 square feet, in Wichita Falls, Texas consisting of 37,500 square feet, in Redding, California consisting of 38,400 square feet, in Lemoore, California consisting of 23,700 square feet, and in Toronto, Ontario consisting of 23,000 square feet; a 61,168 square foot leased administrative center in Orlando, Florida; a 21,600 square foot leased international headquarters facility in Hemel Hempstead, England, a suburb of London; a 66,306 square foot leased headquarters facility in Denver, Colorado from which Ryder TRS operates, of which 23,000 square feet are on the market to be sub-leased; and a leased Ryder TRS administrative facility located in Norcross, Georgia consisting of 10,800 square feet which is on the market to be sub-leased. We believe that these facilities are sufficient for our needs. 14 We operated a total of approximately 580 Budget car and truck U.S. airport and local market rental facilities at December 31, 2001, most of which are leased. The leased properties are generally subject to fixed-term leases with renewal options. Certain of these leases also have purchase options at the end of their terms. The airport facilities are located on airport property owned by airport authorities or located near the airport in locations convenient for bus transport of customers to the airport. Most airport facilities include vehicle storage areas, a vehicle maintenance facility, a car wash, a refueling station and rental and return facilities. Local market rental facilities generally consist of a limited parking facility and a rental and return desk. ITEM 3. LEGAL PROCEEDINGS We terminated the franchise agreement of its franchisee in Germany ("Sixt") effective May 1997 based on violations of provisions in the underlying franchise agreement. Sixt challenged the franchise termination and on May 14, 1998 the Court of Munich held that the termination was invalid due to technical deficiencies. We appealed and on April 15, 1999 the Munich appellate court held that our termination was valid. Sixt appealed and on January 18, 2001 the German Supreme Court rejected Sixt's appeal thereby affirming the validity of the May 1997 termination. No further appeals can be taken against the ruling and we are now proceeding to claim damages before the Court of Munich, including damages related to Sixt's continued use of the Budget name and logo after the termination of the franchise agreement. We have a trademark license with Ryder Systems, Inc. ("RSI") to use the "Ryder TRS" trademark in the conduct of the Ryder TRS truck rental business until December 2004. In the process of transitioning the Ryder TRS consumer truck rental business to the Budget brand, we aired a television commercial, ran a print ad and engaged in other marketing activities which had not been approved by RSI. As a result, RSI filed an action in the U.S. District Court in New York seeking a Temporary Restraining Order ("TRO") and provided us with notification of the termination of the License Agreement. Just prior to the hearing on RSI's request for a TRO, which was scheduled for March 5, 2002, we agreed to discontinue the advertising and marketing activities objected to by RSI. RSI agreed to withdraw its request for a TRO and both parties agreed to meet in search of an amicable resolution of the dispute. The meeting is presently scheduled for early April 2002. In addition to the foregoing matters, from time to time we are subject to routine litigation incidental to our business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 15 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS During 2000 and 2001, our Class A common stock was listed on the New York Stock Exchange (the "NYSE"). On December 10, 2001, we were notified by the NYSE that we were not in compliance with the NYSE's continued listing criteria because our market capitalization was less than $50.0 million over a consecutive 30 trading-day period, our stockholders' equity was less than $50.0 million and the average closing price of our common stock was less than $1.00 per share over a consecutive 30 trading-day period. Starting December 10, 2001, we were engaged in discussions with the NYSE regarding these continued listing criteria and our ability to bring the company back into compliance through one or more of the strategic initiatives described above. On March 20, 2002 the NYSE announced that our Class A common stock would be de-listed prior to opening on March 28, 2002. Beginning March 28, 2002, our Class A common stock has been traded on the National Association of Securities Dealers Over-the-Counter Bulletin Board (the "OTC Bulletin Board") under the symbol "BDGPA." The following table sets forth the high and low sales prices for the Class A common stock as reported by the New York Stock Exchange for the periods indicated:
HIGH LOW ------- ------ YEAR ENDED DECEMBER 31, 2001: First Quarter............................................. $ 3.250 $1.330 Second Quarter............................................ 3.880 1.810 Third Quarter............................................. 3.640 1.250 Fourth Quarter............................................ 1.600 0.5900 YEAR ENDED DECEMBER 31, 2000: First Quarter............................................. $10.438 $4.063 Second Quarter............................................ 5.313 3.188 Third Quarter............................................. 4.750 3.438 Fourth Quarter............................................ 3.938 1.188
On April 5, 2002 (i) the last sale price of the Class A common stock as reported on the Over-the-Counter Bulletin Board was $0.17 per share and (ii) there were 390 holders of record of the Class A common stock and three holders of record of the Class B common stock. There is no established public trading market for the Class B common stock. We have never paid any cash dividends on our common stock, and the Board of Directors currently intends to retain all earnings for use in our business for the foreseeable future. Any future payment of dividends will depend upon our results of operations, financial condition, cash requirements, restrictions contained in credit and other agreements and other factors deemed relevant by the Board of Directors. In addition, our working capital facility and the terms of our senior notes contain restrictions on our ability to pay dividends on our capital stock. See Note 8 to the Company's Consolidated Financial Statements. RECENT SALES OF UNREGISTERED SECURITIES There were no unregistered sales of equity securities in the fourth quarter of 2001. ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected financial information for each year in the five-year period ended December 31, 2001. The information presented as of and for the years ended December 31, 1997, 1998, 1999, 2000 and 2001 is derived from the audited consolidated financial statements of Budget Group, which reflect the discontinued operations of the car sales segment, VPSI, Inc. and Cruise America. The following data 16 should be read in conjunction with the Consolidated Financial Statements and the notes thereto and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."
YEAR ENDED AND AS OF DECEMBER 31, ----------------------------------------------------------- 1997 1998 1999 2000 2001 ------- -------- -------- -------- -------- Vehicle rental revenue....................... $ 979.2 $1,834.8 $2,237.3 $2,354.4 $2,083.7 Total operating revenue...................... 1,029.9 1,916.7 2,325.7 2,436.4 2,160.7 Depreciation -- vehicle...................... 265.8 467.5 557.9 594.3 589.5 Operating income (loss)...................... 165.0 209.1 153.9 (284.9) 123.2 Income (loss) from continuing operations before income taxes........................ 59.4 19.7 (55.0) (547.8) (115.6) Net income (loss) before extraordinary item....................................... 29.8 (3.6) (64.5) (604.6) (138.6) Weighted average number of shares outstanding: Basic...................................... 20.1 32.1 36.4 37.3 37.2 Diluted.................................... 27.9 32.1 36.4 37.3 37.2 Earnings (loss) per common and common equivalent share: Basic (before extraordinary item).......... $ 1.48 $ (0.12) $ (1.77) $ (16.23) $ (3.72) Diluted (before extraordinary item)........ 1.25 (0.12) (1.77) (16.23) (3.72) Segment Revenue(a) Car Rental -- Domestic....................... 869.2 1,304.8 1,442.8 1,551.0 1,428.3 Truck Rental................................. 108.3 508.8 711.1 713.0 647.2 Car Rental-International..................... 111.1 175.7 260.0 296.6 183.2 Operating Data: Car rental data(b): Average rental days per vehicle............ 296 294 302 303 305 Average fleet.............................. 67,914 104,423 112,429 119,119 114,638 Average monthly revenue per unit........... 1,038 970 966 1,003 954 Truck rental data: Average rental days per vehicle............ 205(c) 183(d) 186(d) 186(d) 195(d) Average fleet.............................. 11,148(c) 36,439(d) 45,391(d) 46,082(d) 39,263(d) Average monthly revenue per unit........... 1,212(c) 1,268(d) 1,286(d) 1,274(d) 1,360(d) Other Data: EBITDA(e).................................... $ 452.9 $ 726.6 $ 781.2 $ 437.8 $ 794.6 Depreciation -- vehicle...................... 265.8 467.5 557.9 594.3 589.5 Interest-vehicle, net(f)..................... 83.0 163.5 182.1 226.1 202.0 Adjusted EBITDA(e)........................... 104.1 95.6 41.2 (382.6) 3.1 Total interest expense and distributions on trust preferred securities.......... 105.6 189.9 227.6 281.7 267.6 Non-vehicle capital expenditures............. 4.8 78.5 104.4 43.7 21.5 Ratio of Adjusted EBITDA to non-vehicle interest................................... 4.6x 3.6x 0.9x (6.9x) 0.0x Ratio of net non-vehicle debt to Adjusted EBITDA(g).................................. 1.9x 0.0x 9.8x (1.0x) 143.5x
1997 1998 1999 2000 2001 -------- -------- -------- -------- -------- Balance Sheet Data: Restricted cash(h)................................. $ 282.7 $ 421.5 $ 1.1 $ 4.1 $ 310.0 Total cash......................................... 399.8 545.5 58.0 74.8 352.8 Manufacturer receivables(i)........................ 109.1 188.7 105.5 106.8 136.2 Rental fleet, net.................................. 2,006.4 2,747.7 3,179.6 2,876.1 2,709.7 Total assets....................................... 3,550.9 4,983.3 5,082.5 4,519.9 4,469.5 Vehicle debt....................................... 2,264.9 3,389.5 3,176.8 3,003.0 2,997.0 Non-vehicle debt................................... 313.1 123.6 460.9 453.6 487.6 Total debt......................................... 2,578.0 3,513.1 3,637.7 3,456.6 3,484.6 Stockholders' equity (deficit)..................... 460.1 652.3 567.5 (90.4) (230.3)
- --------------- (a) Includes revenue from domestic and international car or truck rentals, as appropriate, and related products (such as insurance and loss damage waivers). (b) Includes data for Budget Group's North American car rental operations. (c) Includes data for Budget Truck Rental. 17 (d) Includes data for Budget Truck Rental and Ryder TRS. (e) EBITDA from continuing operations consists of income (loss) before income taxes plus (i) vehicle interest expense, net, (ii) non-vehicle interest expense (including certain debt extinguishment costs), (iii) vehicle depreciation expense, (iv) amortization and non-vehicle depreciation expense and (v) gains from asset dispositions. Adjusted EBITDA from continuing operations consists of income (loss) before taxes plus (i) non-vehicle interest expense (including certain debt extinguishment costs), (ii) amortization and non-vehicle depreciation expense and (iii) gains from asset dispositions. EBITDA from continuing operations and Adjusted EBITDA from continuing operations are not presented as, and should not be considered alternative measures of operating results or cash flows from operations (as determined in accordance with generally accepted accounting principles), but are presented because they are widely accepted financial indicators of a company's ability to incur and service debt. EBITDA from continuing operations and Adjusted EBITDA from continuing operations reflect certain administrative expenses not allocated to operating segments. (f) Consists of vehicle interest, net of interest income on restricted cash. (g) Net non-vehicle debt consists of non-vehicle debt less unrestricted cash. (h) Restricted cash consists of funds borrowed under medium term note and commercial paper programs not invested in rental fleet. (i) Manufacturer receivables arise from the sale of vehicles to manufacturers pursuant to guaranteed repurchase programs. These manufacturer receivables, to the extent they related to vehicles pledged as collateral under our fleet financing facilities, are also pledged as collateral under those facilities. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Form 10-K and other statements issued or made from time to time by Budget Group, Inc. or its representatives contain statements which may constitute "forward looking statements" under the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of Budget Group, Inc. and members of its management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include additional risk of losses from international operations, travel patterns subsequent to September 11, 2001 and general economic conditions as well as the risks set forth in this Form 10-K under the section entitled "Risk Factors" and in our filings from time to time made pursuant to the Securities Exchange Act of 1934, as amended. We believe that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. GENERAL We are engaged in the business of the daily rental of vehicles, including cars, trucks and passenger vans (through owned, franchised and agency operations). All amounts relate to continuing operations unless noted otherwise. During 2001, as part of a continuing effort to refranchise Europe, we franchised 14 locations in England, 178 locations in France, closed 19 locations and franchised 5 locations in Spain and terminated 11 agency agreements in Germany. The refranchising effort represents our strategy to reduce our financial and operating risk in Europe. We are continuing to identify buyers for our remaining corporate-owned operations throughout Europe. In addition, during 2001, we sold two airport locations one in Wilmington, North Carolina and the other in Vail, Colorado. The amounts realized through the sale of these locations approximates the book value of these assets. Additionally, in 2001, we sold our remaining new car dealership for $2.3 million, which 18 approximated its carrying value. This dealership represents the final disposition related to our retail car sales segment, which was recorded as a discontinued operation in late 1999. In 1999, we adopted plans to dispose of our non-core assets, primarily our car sales segment, Cruise America and VPSI, in order to focus on car and truck rental. During 2000 and 2001, we sold 80.1% of Cruise America, VPSI, all of our Budget Car Sales facilities and our ownership in a car sales joint venture. The net income (loss) and net assets to be disposed of for these non-core assets are included in the accompanying consolidated financial statements under the headings discontinued operations on the consolidated statements of operations and net assets (liabilities) of discontinued operations on the consolidated balance sheets. For further discussion of these dispositions, see Note 4 to the Company's Consolidated Financial Statements herein. Revenues primarily consist of: - Vehicle rental -- revenue generated from renting vehicles to customers including revenue from loss or collision damage waivers, insurance sales and other products provided at rental locations. - Royalty fees and other -- royalty and other fees generated from the Company's franchisees, fees generated from move management services and other non-vehicle rental or sales items. Expenses primarily consist of: - Direct vehicle and operating -- includes wages and related benefits, rent and concessions paid to airport authorities and costs relating to the operation and rental of revenue earning vehicles including insurance. - Depreciation, vehicle -- depreciation expenses relating to revenue earning vehicles including net gains or losses on the disposal of such equipment. - Selling, general and administrative -- includes reservation, advertising, marketing and other related expenses, net of third party reimbursements, and commissions to dealers, travel agents and other third parties. - Amortization and non-vehicle depreciation -- includes amortization of goodwill and other intangibles as well as depreciation of capitalized assets. - Total other expense, net -- interest expense, net of interest earned on restricted cash, relating primarily to revenue earning vehicle financing and gains and losses on asset dispositions. CRITICAL ACCOUNTING POLICIES GENERAL Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to areas that require a significant level of judgement or are otherwise subject to an inherent degree of uncertainty. These areas include allowances for doubtful accounts, revenue earning vehicles, intangible and long-lived assets, self-insured liabilities, income taxes and commitments and contingencies. We base our estimates on historical experience, our observance of trends in particular areas, information and/or valuations available from outside sources and various other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgements about the carrying value of assets and liabilities that may not be readily apparent from other sources. Actual amounts could differ significantly from amounts previously estimated. We believe that of our significant accounting policies (see Note 1 to the Company's Consolidated Financial Statements herein), the following may involve a higher degree of judgement and complexity. 19 Allowance for doubtful accounts. We maintain allowances for doubtful accounts for estimated losses from the inability or failure of our customers to make payments for rental activity, damage reimbursement or sales of vehicles. The allowances are based on current trends and historical collection experience and a percentage of our accounts receivables by aging category. In determining these percentages, we look to historical write-offs, current trends in the credit quality of our customer base and in billing dispute resolution as well as changes in credit policy. Revenue earning vehicles. We recognize depreciation on non-program vehicles in amounts expected to result in the recovery of estimated residual values upon disposal (i.e. no gains or losses). A majority of our trucks and 20% or less of our cars are non-program vehicles. In determining these depreciation rates, we look at historical disposal experience and holding periods, trends in the wholesale and retail market for vehicles and model specific factors where warranted. Due to longer holding periods on trucks and the resulting increased possibility of changes in the economic environment and market conditions, particularly as compared to cars, these estimates are subject to a greater degree of risk. Vehicles held for disposal are evaluated as a group and recorded at the lower of cost or market (less estimated selling costs). Intangible and long-lived assets. The carrying value of intangibles and long-lived assets is reviewed whenever events or changes in circumstances indicate that the carrying values may not be recoverable through projected undiscounted future cash flows. Fair value is calculated as the present value of estimated future cash flows excluding interest. Factors we consider important which could trigger an impairment review include the following: - Significant under-performance relative to expected, historical or projected future operating results; - Significant changes in the manner of using the assets or the strategy of our overall business; - Significant negative industry or economic trends; and - Current or expected non-compliance with significant or critical debt agreements. Self-insured liabilities. We are largely self-insured with respect to personal and property liability claims up to specified limits. Third party insurance is maintained in limited areas and for claims in excess of those specified limits. The liability recorded as a result of these actuarially computed estimates may experience material changes from year to year as incurred but not reported incidents become known and known claims are settled. Income taxes. We record a valuation allowance to reduce our deferred tax assets to the amount which, we estimate, is more likely than not to be realized. While we have considered future taxable income and ongoing tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize deferred tax assets in the future in excess of the net recorded amount, the resulting adjustment to deferred tax assets would increase income in the period such determination was made. Similarly, should we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to deferred tax assets would decrease income in the period such determination was made. RECENT DEVELOPMENTS Effect of Adverse Economic Conditions; September 11. Due to general economic conditions existing in 2001, the pricing and business environment, particularly for the North America car rental segment, experienced weakness for much of 2001. In addition, following the events of September 11, 2001, there was a significant decline in air travel and related car rentals at airports worldwide, particularly in the U.S. Approximately one-half of our U.S. revenue is derived from airport locations and the resultant decline in air travel adversely affected our operating results in the fourth quarter of 2001 and will impact the first quarter and perhaps subsequent quarters of 2002. Shortfall in Borrowing Base; Failure to Meet Adjusted EBITDA Requirements. Under our working capital facility, outstanding advances, including letters of credit, must be supported by a borrowing base consisting of certain percentages of the various types of collateral pledged to the working capital lenders. The 20 availability of letters of credit under the working capital facility is essential for maintaining and issuing MTN's, Commercial Paper or similar fleet financings and increasing fleet for the busy summer travel season. Under the working capital facility, we also must meet certain minimum levels of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). The significant decline in air travel and related car rentals at airports following September 11, 2001 and the effect of weak economic conditions on the pricing and business travel environment for the North America car rental segment contributed to borrowing base shortfalls and to our inability to achieve Adjusted EBITDA requirements. The borrowing base shortfalls and failure to meet Adjusted EBITDA requirements continued throughout the first quarter of 2002. In July 2001, December 2001, February 2002, March and April 2002, we obtained waivers or amendments under our working capital facility to permit the then existing borrowing base shortfalls. In December of 2001, February, March and April of 2002, we obtained waivers of the Adjusted EBITDA requirement. However, in conjunction with the waivers, our working capital facility was reduced to $430.0 million from $500.0 million, and our ability to issue new letters of credit was limited. The most recent of such waivers, which covers both a borrowing base shortfall and our failure to meet the Adjusted EBITDA covenant, expires on April 30, 2002. It is our intention to seek an extension of the waiver. Nonpayment of Senior Notes. On April 1, 2002, we did not make a required $18.3 million interest payment to holders of our Senior Notes although we have made all interest and principal payments due on the MTN's. As of that date, the aggregate principal amount of the Senior Notes outstanding was $400.0 million. The applicable grace period for the non-payment will expire on May 1, 2002. If we do not make the required interest payment on or prior to May 1, 2002, a default will exist under the indenture for the Senior Notes and, upon the request of holders of 25% or more of the Senior Notes outstanding, the trustee for the Senior Notes may declare the Senior Notes immediately due and payable. Such a payment default under the Senior Notes has the potential to trigger defaults under the working capital facility and the agreements related to our MTN's and Commercial Paper facility. In the case of the working capital facility, the lenders holding at least 51% of the outstanding letters of credit may cause the acceleration of the outstanding debt under that facility. In the case of the agreements related to our MTN's and CP facility, the indenture trustees could proceed against the collateral, which consists of substantially all of our revenue earning vehicles. Engagement of Financial Advisor. In December 2001, we engaged Lazard as financial advisor to assist us in exploring recapitalization and other strategic alternatives. Since its retention, Lazard has assisted us in two primary areas; negotiating with our working capital facility lenders in obtaining the previously mentioned waivers and exploring recapitalization alternatives. Lazard, at our request, has contacted a number of potential financial investors to determine their interest in supporting a recapitalization through possible new investment in the company. Certain of the parties contacted have executed confidentiality agreements and commenced due diligence. We believe the Company will ultimately be able to achieve a desirable recapitalization or other strategic alternatives. However, no assurance can be given that we will be successful in attracting new investment in the company. Furthermore, it is expected that any such investment would be conditioned upon a successful restructuring of all or a significant portion of our outstanding non-fleet indebtedness. Debt Restructuring. In the first quarter of 2002, certain holders of our Senior Notes formed an ad-hoc bondholders committee (the "Ad-Hoc Bondholders Committee") to evaluate restructuring alternatives with respect to our outstanding Senior Notes. We have agreed with the Ad-Hoc Bondholders Committee to pay for the retention of certain professionals on their behalf. The Ad-Hoc Bondholders Committee has retained financial and legal advisors and these advisors have commenced due diligence with respect to the company. We have entered into preliminary discussions with the Ad-Hoc Bondholders Committee regarding certain restructuring alternatives, which could include exchanging all or a significant portion of our outstanding Senior Notes for equity, new notes or cash. We believe the Company will ultimately be able to achieve a desirable debt restructuring. However, no assurance can be given that any of these discussions will result in a restructuring of outstanding indebtedness. De-listing by NYSE of Common Stock. On December 10, 2001, we were notified by the New York Stock Exchange ("NYSE") that we were not in compliance with the NYSE's continued listing criteria because our market capitalization was less than $50.0 million over a consecutive 30 trading-day period, our stockholders' equity was less than $50.0 million and the average closing price of our common stock was less 21 than $1.00 per share over a consecutive 30 trading-day period. Since December 10, 2001, we were engaged in discussions with the NYSE regarding these continued listing criteria and our ability to bring us back into compliance through one or more of the strategic or debt restructuring alternatives described above. On March 20, 2002 the NYSE announced that our common stock would be de-listed prior to the NYSE opening on March 28, 2002. On March 28, 2002 our common stock commenced trading on the Over-the-Counter Bulletin Board. Current Financial Condition. Our shortfall in borrowing base and Adjusted EBITDA and our substantial indebtedness have various negative consequences for our business, including: (a) limiting our ability to obtain additional financing including fleet financing to reach peak fleet level requirements; (b) limiting our ability to refinance the $885.8 million in medium term notes maturing in 2002, the $485.0 million commercial paper facility expiring in 2002 and the $70.6 million in other fleet facilities expiring in 2002; (c) limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to debt service; (d) limiting our flexibility to react to changes in our industry and changes in market conditions; and (e) increasing our vulnerability to a downturn in our business. During 2001 and the first quarter of 2002, we were unable to generate sufficient liquidity to enable us to make our April 1, 2002 interest payments on our Senior Notes. Our ability to make these interest payments or otherwise avoid a default prior to the expiration of the 30-day grace period provided under the indenture for the Senior Notes is dependent on the successful completion of one or more of the strategic or debt restructuring alternatives previously described. We believe the Company will ultimately be able to achieve a desirable strategic or debt restructuring alternative. However, no assurance can be given that we will be successful in these efforts. If we are unsuccessful in completing strategic alternatives or restructuring our obligations, we will likely need to pursue a reorganization under the federal bankruptcy code. Even if we are successful in implementing a specific strategic alternative or debt restructuring transaction, it is possible that the completion of any such transaction could involve our reorganization under the federal bankruptcy code. Any such strategic alternative or debt restructuring transaction, whether effectuated outside of bankruptcy proceedings or under the federal bankruptcy code, will likely result in our existing common stock being substantially diluted and our indebtedness and trust preferred securities being worth substantially less than their face value. Presentation of Financial Information. Remaining parts of Management's Discussion and Analysis and the accompanying financial statements have been prepared under the assumption that the Company will continue to realize its assets and settle its liabilities through the normal course of business. Recent Trends. In March 2002, the industry pricing environment for North America car rental appears to be strengthening at levels about 3% to 4% greater than prior year. Although air travel continues to be negatively impacted by the events of September 11, 2001, the decline is less severe than past months and is down 12% to 14% versus the prior year. 22 RESULTS OF OPERATIONS The following table sets forth for the periods indicated, the percentage of operating revenues represented by certain items in our consolidated statements of operations:
YEAR ENDED DECEMBER 31, ----------------------- 1999 2000 2001 ----- ----- ----- Vehicle rental revenue...................................... 96.2% 96.6% 96.4% Royalties and other revenue................................. 3.8 3.4 3.6 ----- ----- ----- Total operating revenue........................... 100.0 100.0 100.0 ----- ----- ----- Direct vehicle and operating expense........................ 41.0 48.0 41.7 Depreciation expense -- vehicle............................. 24.0 24.4 27.3 Selling, general and administrative expenses................ 25.4 34.0 21.9 Amortization and non-vehicle depreciation expenses.......... 3.0 5.3 3.4 ----- ----- ----- Operating income (loss)..................................... 6.6 (11.7) 5.7 Vehicle interest expense.................................... 8.2 9.4 9.6 Non-vehicle interest expense................................ 1.1 1.5 2.1 Interest income............................................. (0.3) (0.1) (0.3) Gains on asset dispositions................................. -- -- (0.4) ----- ----- ----- Loss from continuing operations before income taxes......... (2.4) (22.5) (5.3) Provision for income taxes.................................. 1.0 0.1 0.2 Distribution on trust preferred securities.................. 0.8 0.8 0.9 ----- ----- ----- Loss from continuing operations............................. (2.2)% (23.4)% (6.4)%
Loss before income taxes in 2000 includes a $399.0 million charge, of which $199.8 million was related to the decision in late 2000 to refranchise a majority of our European operations, $55.6 million related to asset valuations, including an adjustment to corporate equity investments, $45.0 million of adjustments related to truck inventory disposal valuations resulting from a weak truck resale market and $48.2 million of charges related to uncollectible accounts receivable balances resulting from system issues. The 1999 results include $105.4 million in charges for one-time and other non-recurring items which consist of work force reductions, consolidation costs to merge the majority of Premier rental locations into Budget locations and the write-off of systems development costs and uncollectible accounts receivables largely associated with the conversion of systems in 1999. For a further discussion of these charges, see Note 1 to the Company's Consolidated Financial Statements herein. YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000 General Operating Results. Loss from continuing operations for 2001 improved $431.7 million to $138.6 million compared to a loss of $570.3 million in 2000. Loss before income taxes in 2000 include $399.0 million in charges as previously mentioned. Loss per share from continuing operations for 2001 improved $11.59 to $3.72 per diluted share compared to a loss of $15.31 per diluted share in 2000. These decreases in losses were primarily due to one-time and non-recurring items recorded in 2000, improvements in international and truck operations, offset somewhat by lower margins in the North America car rental segment due to lower business and leisure travel. The decrease in margins in the car segment occurred primarily in the fourth quarter, due to the events of September 11, 2001 resulting in lower transactions and a more competitive pricing environment which lowered average revenue per day. As previously mentioned, in the fourth quarter of 2000 we recorded charges of $399.0 million of which approximately 84% were non-cash items. Based on more complete information received, or settlement, we ultimately determined certain reserves were no longer needed in 2001. Therefore, we reversed approximately $21.0 million related primarily to accounts receivable allowances, dealer commissions and executive separation costs. Additionally, during 2001, we had gains on sales of properties and equipment and sales of equity securities of $7.5 million and $1.7 million, respectively. 23 Operating Revenues. Vehicle rental revenue decreased $270.7 million, or 11.5%, in 2001 to $2,083.7 million from $2,354.4 million in 2000. This decrease was due primarily to a reduction of volume of 3.1%, 10.7% and 46.7% in domestic car, truck and international rental segments respectively, with a total volume decrease of 10.8%, or approximately $229.8 million. In addition, revenue per day was down 5.5% in North America car operations, largely due to the events of September 11, 2001, which contributed to an already competitive pricing environment, with fourth quarter 2001 revenue per day 9.8% below the fourth quarter 2000 level. Revenue per day in the truck and international segments were up 1.8% and 5.2%, respectively, in 2001. The international volume decrease was largely due to the franchising of a majority of the European operations during 2001. Royalty fees and other revenues decreased $4.9 million, or 6.0%, in 2001 to $77.1 million from $82.0 million in 2000 largely due to a decrease of $3.1 million primarily in international operations licensee lease programs and $1.5 million in move management service revenue. These revenues largely represent royalty and other fees from our franchisees and net revenue from Ryder TRS's move management service. Operating Expenses. Total operating expenses decreased $683.7 million, or 25.1%, in 2001 to $2,037.5 million from $2,721.2 million in 2000. The previously mentioned 2000 charges represent $385.1 million of the decrease. The remainder of the decrease reflects the overall volume decrease of 10.8%, improvements in bad debt expense and reversal of executive separation costs due to a favorable settlement, partially offset by a $27.0 million charge in 2001 to trucks marshaled for sale. Direct vehicle and operating expenses decreased $268.0 million, or 22.9%, in 2001 to $900.8 million from $1,168.9 million in 2000. This reflects a decrease due to the previously mentioned charges of $129.7 million in 2000. Excluding charges, direct vehicle and operating expenses decreased at a slightly higher rate than volume. This improvement was largely related to decreases in outside repairs and preventative maintenance expense of $8.2 million, theft and conversion costs of $8.0 million, and a reduction in direct personnel and operating expenses of $17.2 million reflecting lower revenue based occupancy costs at airports (due to pricing) and increased pass through of airport fees to customers of $6.8 million in North America car and improvements in International due to the refranchising efforts of $9.3 million. These amounts were somewhat offset by increased vehicle insurance costs of $9.9 million due to increases in self-insured retention levels and increased costs to self-insure trucks, increased truck reconditioning costs of $12.5 million and an increase in vehicle leasing costs due to a shift from owned to leased vehicles, primarily in Europe, of $3.4 million. Vehicle depreciation expense for 2001 decreased $4.8 million, or 0.8%, to $589.5 million from $594.3 million in 2000. Included is a decrease of $11.4 million in 2001 due to the 2000 charges previously mentioned. Excluding 2000 charges, depreciation increased at a rate higher than volume primarily due to a softening in the used car and particularly truck resale markets resulting in lower wholesale margins and increased depreciation rates, and to a lesser extent, a higher average cost of vehicles. We recorded a $27.0 million charge in the fourth quarter of 2001 to adjust its trucks marshaled for sale to estimated market value due to the truck resale market conditions. Selling, general and administrative expenses decreased by $355.3 million, or 42.8%, in 2001 to $474.5 million from $829.7 million in 2000. Included is a decrease of $202.0 million for the 2000 charges previously mentioned. Without charges, these expenses reflect lower costs due to decreases in bad debt expense of $34.8 million largely related to billing system issues in 2000, decreases in selling expenses of $8.1 million reflecting shifts in sales channels, and decreases in discretionary advertising and promotion expenses of $5.7 million. General and administrative personnel costs have been reduced by $13.1 million versus 2000 largely due to lower incentive compensation costs and severance and executive separation costs of $8.5 million and $6.5 million, respectively, offset slightly by increases in employee benefits and other personnel costs. Other general and administrative costs have improved by $19.3 million largely due to lower professional and data processing fees of $12.4 million, and lower telecommunication expense of $2.5 million. We expect the recovery of bad debt expense will not continue at the 2001 levels and bad debt expense should return to normalized levels in calendar year 2002. We estimate normalized bad debt expense to be in the range of 0.4% of net revenues. 24 Amortization and non-vehicle depreciation expense decreased $55.7 million, or 43.3%, in 2001 to $72.7 million from $128.4 million in 2000. This decrease was largely due to the write-off of intangibles related to the refranchising of European operations of $42.0 million, which is included in the previously mentioned 2000 charge. The remaining decrease reflects the impact of lower software and other capital expenditures during 2000 and 2001 and the reduced expense due to the write-off of assets included in the 2000 charge previously mentioned. Other Expense, Net. Other expense, net of interest income, decreased $24.2 million, or 9.2% in 2001 to $238.8 million from $263.0 million in 2000. This decrease was largely due to lower vehicle interest costs of $24.1 million, of which $15.0 million was related to lower interest rates and $9.1 million was related to lower fleet borrowings and related fees and gains on asset dispositions of $9.2 million in 2001. Non-vehicle interest costs increased $9.1 million largely due to $6.6 million in interest previously absorbed by discontinued operations and $2.5 million due to fees primarily related to the working capital facility. Provision (Benefit) for Income Taxes. The 2001 tax provision reflects an effective rate that differs from the statutory rate due to increases in valuation allowances to reflect the estimated amount of deferred taxes that may not be realized due to the potential expiration of net operating losses and tax credit carryovers, the effects of non-deductible intangible amortization and the impact of state and local income taxes net of the federal benefit. Also impacting the rate is the effect of the distributions on trust preferred securities shown below the provision at its gross amount while the tax effect is included in the provision. See Note 12 to the Company's Consolidated Financial Statements. Distributions on Trust Preferred Securities. The distributions on trust preferred securities of $19.6 million in 2001 which remain unpaid, increased by $0.8 million from $18.8 million in 2000. We issued a deferral notice with respect to the interest payments due in 2001 (and intend to issue a deferral for the next quarter) and has accrued additional interest expense on the deferrals. These distributions represent dividend payments to holders of these Company obligated mandatorily redeemable securities issued by a subsidiary of Budget Group, Inc. Discontinued Operations. On December 10, 1999 we adopted plans to sell or dispose of our car sales segment, as well as certain non-core assets and subsidiaries, primarily Cruise America and VPSI. We sold VPSI and 80.1% of Cruise America effective September 30, 2000 and October 1, 2000, respectively, and have franchised all of our remaining retail car sales locations and sold our ownership in our car sales joint venture. We completed the sale of our final new car dealership in Indiana in June 2001. We sold our remaining 19.9% interest in Cruise America in January 2002. The assets of the operations sold consisted primarily of vehicles, accounts receivable and property and equipment. See Note 4 to the Company's Consolidated Financial Statements. We do not expect any other significant negative impact on our financial condition or results of operations related to the discontinued operations, however, the ultimate impact is somewhat dependent upon the future payments of warranty and lease obligations. YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999 General Operating Results. Loss from continuing operations for 2000 increased $520.4 million to $570.3 million compared to a loss of $49.9 million in 1999. Loss before income taxes in 1999 and 2000 includes $105.4 million and $399.0 million, respectively, in charges as previously mentioned. Loss per share from continuing operations for 2000 increased $13.94 to $15.31 per diluted share compared to a loss of $1.37 per diluted share in 1999. These increases were primarily due to one-time and non-recurring items, lower earnings from international operations and increases in bad debt expense largely due to system conversion issues. In addition, margins in the North America car rental and truck rental segments were down slightly compared with 1999 due to a more competitive pricing environment. Operating Revenues. Vehicle rental revenue increased $117.1 million, or 5.2%, in 2000 to $2,354.4 million from $2,237.3 million in 1999. This increase was due primarily to volume growth of 6.1% and 41.9% in North America and international car rental, respectively, with a total volume increase of 9.4%. International same market volume grew approximately 29.1% with the remainder due to acquisitions. Vehicle rental revenue increased at a lower rate than volume in 2000 primarily due to lower revenue per day in international car rental 25 reflecting a shift in business mix, mainly to the tour market. In addition, revenue per day was up slightly on an annual basis in North America; however, due to a competitive pricing environment in car rental in the second half of 2000 compared to 1999, revenue per day was below 1999 during the second half of the year. Royalty fees and other revenues decreased $6.4 million, or 7.3%, in 2000 to $82.0 million from $88.4 million in 1999 due to a decrease of $3.6 million in international royalty and other fees from franchisees primarily resulting from franchise acquisitions and $2.6 million in leasing income due to the disposal of our licensee leasing program. These revenues largely represent royalty and other fees from our franchisees and net revenue from Ryder TRS's move management service. Operating Expenses. Total operating expenses increased $549.4 million, or 25.3%, in 2000 to $2,721.2 million from $2,171.8 million in 1999. The previously mentioned charges increased operating expenses by $280.3 million to $385.1 million in 2000 from $104.8 million in 1999. The remainder of the increase was generally reflective of the volume increases previously mentioned. Direct vehicle and operating expenses increased $215.8 million, or 22.6%, in 2000 to $1,169.9 million from $953.1 million in 1999. This reflects an increase due to the previously mentioned charges of $109.2 million to $129.7 million in 2000 from $20.5 million in 1999. Excluding charges, direct vehicle and operating expenses increased at a slightly higher rate than volume, largely due to a shift from owned vehicles to leased vehicles of $23.2 million, particularly in Europe, an increase in net repairs, maintenance and vehicle reconditioning expenses of $18.0 million, particularly in the first quarter of 2000, increases in emergency roadside assistance of approximately $5.2 million and truck theft and salvage expense of $3.2 million. These amounts were somewhat offset by an improvement in direct personnel productivity of approximately $17.0 million and lower vehicle movement costs of approximately $3.4 million. Vehicle depreciation expense for 2000 increased $36.3 million, or 6.5%, to $594.3 million from $557.9 million in 1999. Included is an increase of $4.6 million to $11.4 million in 2000 from $6.8 million in 1999 for the charges previously mentioned. This expense classification without charges for the year 2000 increased at a rate lower than volume primarily due to a shift in the mix of owned to leased vehicles in international operations resulting in higher leasing costs and lower depreciation costs compared to 1999. Selling, general and administrative expenses increased by $238.4 million, or 40.3%, in 2000 to $829.7 million from $591.3 million in 1999. Included is an increase of $124.5 million to $202.0 million in 2000 from $77.5 million in 1999 for the charges previously mentioned. Without charges, these expenses reflect increases in bad debt expense of $27.3 million (excluding an increase of $48.3 million due to the charges) largely related to system issues, incentive compensation costs of $12.8 million, telecommunication expense of $12.9 million, primarily in Europe, due to installation of a new network and employee benefits and separation costs of $12.1 million. These increases were somewhat offset by a gain on sale of property of $6.1 million and lower truck administrative personnel expense of approximately $5.5 million. We have continued to increase our allowance for doubtful accounts to reflect the aging of customer receivables. System caused billing inaccuracies and delays in applying cash received to invoices billed continued to impair our ability to collect amounts due and we undertook manual and technology based actions to correct this situation. Amortization and non-vehicle depreciation expense increased $58.9 million, or 84.8%, in 2000 to $128.4 million from $69.5 million in 1999. This increase was largely due to write-off of intangibles related to the refranchising of European operations of $42.0 million, which is included in the previously mentioned charge. The remaining increase reflects the impact of software and other capital expenditures during 1999 and 2000. Other Expense, Net. Other expense, net of interest income, increased $54.1 million, or 25.9% in 2000 to $263.0 million from $208.8 million in 1999. This increase was largely due to higher average borrowing levels reflecting larger average fleet size and an increase in average interest rates. The rate increase resulted from a general rise in interest rates over the prior year and the issuance of the senior notes in April 1999 and MTN's in June 1999, both of which replaced maturing debt that had lower interest rates. Provision (Benefit) for Income Taxes. The year to date tax benefit reflects an effective rate that differs from the statutory rate due to increases in valuation allowances to reflect the estimated amount of deferred 26 taxes that may not be realized due to the potential expiration of net operating losses and tax credit carryovers, the effects of non-deductible intangible amortization and the impact of state and local income taxes net of the federal benefit. Also impacting the rate is the effect of the distributions on trust preferred securities shown below the provision at its gross amount while the tax effect is included in the provision. See Note 12 to the Company's Consolidated Financial Statements. Distributions on Trust Preferred Securities. The distributions on trust preferred securities of $18.8 million 2000, approximated the amount in 1999. These distributions represent dividend payments to holders of these Company obligated mandatorily redeemable securities issued by a subsidiary of Budget Group, Inc. Discontinued Operations. On December 10, 1999 we adopted plans to sell or dispose of our car sales segment, as well as certain non-core assets and subsidiaries, primarily Cruise America and VPSI. We disposed of VPSI and 80.1% of Cruise America effective September 30, 2000 and October 1, 2000, respectively, and have franchised all of our remaining retail car sales locations and sold our ownership in our car sales joint venture. We continued to operate one new car dealership in Indiana which was sold in June 2001. The assets of the operations sold consist primarily of vehicles, accounts receivable and property and equipment. See Note 4 to the Company's Consolidated Financial Statements. During 2000 we recorded additional charges of $34.4 million, largely for losses greater than expected on disposition of the new and used car dealerships, additional phase out costs on the car sales segment and the expected settlement of a contingent financing arrangement contained in the original sale agreement for Cruise America. The contingency was settled in January 2002 at an amount approximating that recorded in 2000. See Note 4 to the Company's Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES Historically, our operations have been funded by cash provided from operating activities and by financing provided by banks, automobile manufacturers' captive finance companies, leasing companies and asset-backed notes. Our primary use of cash is the acquisition of new vehicles for the rental fleet. The indebtedness outstanding at December 31, 2001, has interest rates ranging from 1.95% to 10.0% and the material terms of the financing facilities are described below. We intend to fund our fleet financing requirements and debt maturities through issuances of asset-backed notes and other credit facilities with financial institutions. There is no assurance that such funding will be available. See "Recent Developments" for important details related to our liquidity and capital resources. ANALYSIS OF CASH FLOWS Net cash provided by continuing operating activities increased $134.1 million or 27.6% to $620.3 million during 2001, primarily resulting from the reduction in net loss generated from operations of $431.7 million to $138.6 million in 2001 from $570.3 million during 2000. Net cash provided by continuing operating activities during 2000 decreased 18.8% to $486.2 million from $598.6 million during 1999 primarily resulting from the net loss generated from operations. During 2001, we experienced an increase in cash provided due to an increase of $53.8 million in accounts payable, accrued and other liabilities, reflecting timing on payments to vendors and fleet manufacturers. This increase was offset by decreases of $60.4 million in the non-cash expense component of our losses related to depreciation and amortization, prepaid expenses and other assets of $12.6 million and a decrease in trade and vehicle receivables, net of $30.3 million. The decrease of $12.6 million in prepaid expenses and other assets is primarily due to prepaid license and registration fees. Net cash used in investing activities is primarily attributable to cash paid to suppliers of revenue earning vehicles and to a lesser extent, capital expenditures. This cash use is mainly offset by cash received from the sale of vehicles (most of which sales were pursuant to manufacturers' vehicle repurchase programs). Cash received from the sale of vehicles was $3,448.3 million, $3,450.1 million and $2,670.1 million during 2001, 2000 and 1999, respectively. Cash paid to suppliers of revenue earning vehicles was $3,879.2 million, $3,766.2 million and $3,713.5 million during 2001, 2000 and 1999, respectively. Payment for acquisitions, net of cash acquired, amounted to $5.7 million and $1.0 million during 2000 and 1999, respectively. There were no acquisitions in 2001. Capital expenditures, largely for new rental locations, improvement in service levels and 27 to upgrade computer hardware and software were $21.5 million, $43.7 million and $104.4 million for 2001, 2000 and 1999, respectively. We anticipate that capital expenditures for 2002 will be approximately $18.0 million. Net cash provided by financing activities for 2001 increased $257.3 million to $28.0 million from cash used during 2000 of $229.4 million largely due to an increase in the utilization of commercial paper to fund vehicle purchases of $444.5 million to $327.6 million partially offset by a net decrease in medium term notes to fund vehicle purchases of and to $310.6 million. Net proceeds from other notes payable increased by $41.2 million to $33.9 million. See Note 7 to the Company's Consolidated Financial Statements. In addition, payments of make-whole and warrant repurchase commitments of $30.5 million and $17.8 million, respectively, were made in 2000. Net cash used by financing activities during 2000 decreased $330.1 million to $229.4 million from cash provided of $100.7 million in 1999, due largely to a smaller increase in the utilization of commercial paper to fund vehicle purchases, the payment of make-whole and warrant repurchase commitments mentioned above and no new issuance of financing. CONTRACTUAL OBLIGATIONS AND COMMITMENTS The following table aggregates our contractual obligations and commitments with definitive payment terms which require significant cash outlays in the future. Details related to these items are discussed in various sections of Management's Discussion and Analysis and the Notes to the Consolidated Financial Statements.
CONTRACTUAL OBLIGATION TOTAL %1 YEAR 2-3 YEARS 4-5 YEARS *5 YEARS - ---------------------- -------- -------- --------- --------- --------- Notes Payable................................... $3,484.6 $1,505.2 $1,379.4 $551.3 $ 48.7 Mandatory Redeemable Preferred Securities....... $ 300.0 -- -- -- $300.0 Noncancellable leases and concession agreements.................................... $ 142.6 $ 40.6 $ 39.8 $ 34.3 $ 27.9 -------- -------- -------- ------ ------ Total................................. $3,927.2 $1,545.8 $1,419.2 $585.6 $376.6 ======== ======== ======== ====== ======
OTHER COMMITMENTS We execute letters of credit, performance bonds and other guarantees in the normal course of business that ensure our performance or payment to third parties. The aggregate notional value of these instruments was $ 463.7 million at December 31, 2001 of which 78.9% served as credit enhancement for fleet financing agreements. In the past, no significant claims have been made against these types of financial instruments. In addition, we have committed to purchase a minimum number of Ford vehicles annually. See Note 14 to the Company's Consolidated Financial Statements herein. DEBT FACILITIES -- GENERAL We borrow money directly and through our special purpose fleet financing subsidiary, Team Fleet Financing Corporation ("TFFC") and Budget Funding Corporation. Subsidiaries also have various working capital facilities in place to finance operating activities. At December 31, 2001, we had $3,484.6 million of indebtedness outstanding, $2,997.0 million of which represented secured fleet financing and $487.6 million of which represented non-vehicle indebtedness. At December 31, 2001, we had $427.9 million of availability under various fleet-financing facilities. RECENT DEBT PLACEMENTS On March 30, 2001, we entered into a $350.0 million seasonal funding facility ("Seasonal Facility") that expired on October 31, 2001. The Seasonal Facility was used exclusively to purchase vehicles during the peak rental season. The Seasonal Facility was fully repaid on October 31, 2001. On April 16, 2001, we entered into a $100.0 million seasonal funding facility ("Seasonal Facility-2") that bears a variable rate of interest of prime less 0.50% (or 4.25% at December 31, 2001). The Seasonal Facility-2 was renewed for a principal amount of $80.0 million and matures in November 2002. On December 31, 2001 28 the outstanding principal amount on the Seasonal Facility-2 was $70.6 million. The Seasonal Facility-2 is used to purchase revenue-earning vehicles and is secured by those vehicles. On April 18, 2001, we issued $475.0 million in medium term notes ("TFFC-2001-2"). The TFFC-2001-2 notes consist of senior notes and subordinated notes with monthly principal payments commencing in October 2003 with the final payment due in December 2003. The notes bear interest rates ranging from LIBOR plus 0.49% (or 2.42% at December 31, 2001) to LIBOR plus 1.94% (or 3.87% at December 31, 2001). On November 13, 2001, we entered into a $100.0 million seasonal funding facility ("Seasonal Facility-3") that expired on November 30, 2001. The Seasonal Facility-3 was used exclusively as bridge financing to purchase vehicles and was fully repaid on November 30, 2001. On November 21, 2001, we issued $240.0 million in medium term notes ("TFFC-2001-3"). The TFFC-2001-3 notes consist of senior notes and subordinated notes with monthly principal payments commencing in January 2004 with the final payment due in March 2004. The notes bear interest rates ranging from LIBOR plus 0.90% (or 2.83% at December 31, 2001) to LIBOR plus 2.93% (or 4.86% at December 31, 2001). FLEET FINANCING FACILITIES At December 31, 2001, we had borrowed $2,415.4 million under asset-backed MTN's and $484.5 million under a commercial paper ("CP") facility (collectively "Fleet notes"). The MTN's are comprised of notes issued in December 1996 ("TFFC-96 notes"), notes issued in April 1997 ("TFFC-97 notes"), notes issued in conjunction with the acquisition of Ryder TRS ("TFFC-98 notes"), TFFC-99 notes issued in June 1999, TFFC-2001-2 notes issued in April 2001 and TFFC-2001-3 notes issued in November 2001. The Fleet notes are utilized largely to finance vehicles eligible for certain manufacturers' vehicle repurchase programs and other allowable cars and trucks. Proceeds from the Fleet notes that are temporarily unutilized for vehicle financing are maintained in restricted cash accounts with the trustees ($310.0 million at December 31, 2001). The Fleet notes are collateralized by the secured vehicles, manufacturer receivables and the restricted cash accounts. Interest rates on the Fleet notes at December 31, 2001, range from 1.95% to 7.85%. Our other vehicle obligations consist of outstanding lines of credit to purchase rental fleet. Borrowings under collateralized available lines of credit at December 31, 2001 consist of $97.1 million with maturity dates through 2004. Vehicle obligations are collateralized by revenue earning vehicles financed under these credit facilities and proceeds from the sale, lease or rental of rental vehicles. Interest payments for rental fleet facilities are due monthly at annual interest rates that range from 4.25% to 8.50% at December 31, 2001. We expect that vehicle obligations will generally be repaid within one year from the balance sheet date with proceeds received from either the repurchase of the vehicles by the manufacturers in accordance with the terms of the manufacturers' vehicle repurchase programs or from the sales of the vehicles. COMMERCIAL PAPER FACILITY The CP facility that was established in April 1997 was renewed in June 2001 for $485.0 million, had an outstanding principal balance of $484.5 million at December 31, 2001, bears interest rates ranging from 1.95% to 2.25% at December 31, 2001, and is secured by the applicable vehicles and vehicle program receivables. The CP facility expires in October 2002. Under limited circumstances, the CP may be repaid by draws under a related bank liquidity facility ($400.0 million), which expires in June 2002, or a related letter of credit ($85.0 million). The CP is issued periodically with maturities of up to 58 days. It is our intention to renew the liquidity facility or to obtain financing under similar terms when the present agreement expires. No amounts were drawn under the bank provided liquidity facility or related letter of credit at December 31, 2001. MEDIUM TERM NOTES (MTN'S) The TFFC-96 notes consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $69.2 million at December 31, 2001 and $166.0 million at December 31, 2000, bear 29 interest at 6.65% per annum. Monthly principal payments commenced in June 2001, with the last payment due in May 2002. The subordinated notes, with an aggregate principal balance of $10.0 million at December 31, 2001 and 2000, bear interest at 7.10% per annum and are payable in full in June 2002. Interest on the TFFC-96 notes is payable monthly. The TFFC-97 notes consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $393.8 million at December 31, 2001 and $472.5 million at December 31, 2000, bear interest at 7.35% per annum. Monthly principal payments commenced in November 2001, with the last payment due in September 2002. The subordinated notes, with an aggregate principal balance of $27.5 million at December 30, 2001 and 2000, bear interest at 7.80% per annum and are payable in full in November 2002. Interest on the TFFC-97 notes is payable monthly. The TFFC-98 notes consist of senior notes and subordinated notes and have an aggregate principal balance of $650.0 million and $1,100.0 million at December 31, 2001 and 2000, respectively. The TFFC-98 notes bear interest at fixed rates ranging from 6.13% to 6.84% and have maturity dates from November 2002 to March 2006. These notes were issued in three different series. Principal payments on TFFC-98-2 commenced on March 2001 and were fully repaid on October 31, 2001. TFFC-98-3 has a senior principal amount of $425.0 million bearing a fixed interest rate of 6.13% and a subordinated amount of $75.0 million bearing fixed interest rates from 6.24% to 6.63% on December 31, 2001. Principal payments of $35.4 million on a monthly basis for TFFC-98-3 commence in November 2002 with the final principal payment due in March 2004. TFFC-98-4 has a senior principal amount of $127.5 million bearing a fixed interest rates of 6.28% and a subordinated amount of $22.5 million bearing fixed interest rates from 6.48% to 6.84% on December 31, 2001. Principal payments for TFFC-98-4 commence in November 2004 with the final principal payment due in March 2006. Interest on the TFFC-98 notes is payable monthly. The TFFC-99 notes consist of senior notes and subordinated notes and have an aggregate principal balance of $550.0 million and $950.0 million at December 31, 2001 and 2000, respectively and bear interest rates ranging from 6.70% to 7.85% and have maturity dates through July 2004. These notes were issued in three different series. TFFC-99-2 has been paid in full. TFFC-99-3 has a senior principal amount of $248.5 million bearing fixed interest rates from 6.70% and a subordinated amount of $101.5 million bearing fixed interest rates from 6.90% to 7.05% December 31, 2001. Principal payments for TFFC-99-3 commence in June 2002 of $248.5 million with the final payment of $101.5 million due in July 2002. TFFC-99-4 has a senior principal amount of $142.0 million with fixed interest rates of 6.90% and a subordinated amount of $58.0 million bearing fixed interest rates from 7.00% to 7.85% on December 31, 2001. Principal payments for TFFC-99-4 commence on May 2004 with the final payment due in July 2004. Interest on the TFFC-99 notes is payable monthly. The TFFC-2001-2 notes issued in April 2001 for $475.0 million consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $362.2 million bear interest at LIBOR plus 0.49% (or 2.42% at December 31, 2001) with principal payments commencing in October 2003 and the last payment due in November 2003. The subordinated notes, with an aggregate principal balance of $112.8 million bear interest at LIBOR plus 0.94% (or 2.87% at December 31, 2001) to LIBOR plus 1.94% (or 3.87% at December 31, 2001) with the full principal payment due in December 2003. Interest on the TFFC-2001-2 notes is payable monthly. The TFFC-2001-3 notes issued in November 2001 for $240.0 million consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $182.5 million bear interest at LIBOR plus 0.90% (or 2.83% at December 31, 2001) with principal payments commencing in January 2004 and the last payment due in March 2004. The subordinated notes, with an aggregate principal balance of $57.5 million bear interest at LIBOR plus 1.18% (or 3.11% at December 31, 2001) to LIBOR plus 2.93% (or 4.86% at December 31, 2001) with the full principal payment due in March 2004. Interest on the TFFC-2001-3 notes is payable monthly. 30 CONVERTIBLE SUBORDINATED NOTES In April 1997, we issued convertible subordinated notes with an aggregate principal amount of $45.0 million bearing interest at 6.85% per annum due 2007. At a conversion price of $27.96 per share, the convertible subordinated notes are convertible into 1,609,436 shares of Class A common stock upon demand. SENIOR NOTES In April 1999, we issued unsecured senior notes with an aggregate principal amount of $400.0 million bearing interest at 9.125% due in 2006 (the "Senior Notes"). The net proceeds from this transaction were primarily used to repay the outstanding indebtedness under maturing medium-term notes used to finance revenue earning vehicles and certain other secured indebtedness. The indenture governing the Senior Notes contains certain covenants which, among other things, restrict us from incurring certain additional indebtedness, paying dividends or redeeming or repurchasing our capital stock, consolidating, merging or transferring assets and engaging in sale/leaseback transactions. In June 1999, we exchanged all of the unregistered initial Senior Notes for registered Senior Notes with identical terms The Senior Notes bear interest at 9.125% and mature in 2006. See "Recent Developments". TRUST PREFERRED SECURITIES In June 1998, we issued $300.0 million of 6.25% trust preferred securities and received approximately $291.0 million in net proceeds. These funds were used to redeem the guaranteed senior notes and to partially fund the redemption of Ryder TRS's 10% senior subordinated notes which occurred in July 1998. The trust preferred securities are subject to mandatory redemption upon the redemption of the underlying debentures due on June 15, 2028. We have the right to defer interest payments due on the subordinated debentures for up to 20 consecutive quarters, which will also cause a deferral of distributions under the trust preferred securities. As required under the working capital facility, in January 2001, we issued a deferral notice for five quarters with respect to the interest payment due on the subordinated indebtedness commencing March 15, 2001. See Note 8 and Note 9 to the Company's Consolidated Financial Statements herein. WORKING CAPITAL FACILITY In early 2001, we reached agreement with our lenders on amendments to the working capital facility. In addition to being secured by cash, accounts receivable and vehicles and the restricting of the payment of dividends, the amendments required us to provide additional collateral in the form of trademarks, liens on certain real estate and furniture and equipment, limited future cash investments in international operations and, modified or waived certain financial covenants. The amendment required us to maintain certain minimal levels of Adjusted EBITDA and deferred interest payments on the trust preferred securities for five quarters commencing with the payment due on March 15, 2001. The facility, which allowed up to $550.0 million in letters of credit and a $25.0 million line of credit, may not have been fully utilized unless a seasonal debt facility for no less than $350.0 million was in place prior to April 30, 2001 and the CP liquidity facility or a similar facility, was renewed in the amount of at least $400.0 million. The seasonal facility was secured in March 2001 and the CP facility was renewed in June 2001. In July of 2001, we experienced a shortfall in our borrowing base. The borrowing base supports outstanding letters of credit under the our working capital facility and requires us to provide collateral in the form of liens on cash, accounts receivables, owned fleet, trademarks, certain real estate and furniture and equipment. We obtained a waiver to cure the shortfall. In conjunction with the waiver, our working capital facility was reduced to $500.0 million from $550.0 million. On December 20, 2001 we reached an agreement with our lenders on an amendment to the working capital facility. This amendment waived the requirement for the minimal levels for Adjusted EBITDA until February 8, 2002. The agreement also allowed for the reduction of the required collateral for the credit facility for November 30 and December 31, 2001 and reduced the working capital facility amount from $500.0 million to $430.0 million. In 2002, we entered into agreements with our lenders extending the waiver period for Adjusted EBITDA until April 30, 2002 and allowing for the reduction of the required collateral for the credit 31 facility. This facility requires monthly interest payments on the outstanding balance at a rate based on either LIBOR plus 3.00% or prime plus 0.75% (4.87% at December 31, 2001) and expires in 2003. At December 31, 2001, we had $427.9 million in letters of credit and $0 in working capital borrowings outstanding under this facility. See "Recent Developments". CHANGE IN FINANCIAL CONDITION Total assets decreased $50.4 million to $4,469.5 million at December 31, 2001 from $4,519.9 million at December 31, 2000. Restricted cash increased by $306.0 million to $310.0 million, reflecting lower fleet levels, while fleet debt levels remained relatively constant. In addition, revenue earning vehicles decreased $166.4 million due to lower fleet levels in all segments. There were decreases in cash of $28.0 million, trade and vehicle receivables, net of $30.3 million, property and equipment, net of $36.5 million and prepaid expenses and other assets of $31.1 million. The decrease in trade and vehicle receivables, net was largely due to reductions of $56.4 million in international due to the refranchising of much of our European operations, offset by an increase in accounts and notes receivables formerly classified as discontinued operations of $31.7 million. The decrease in property and equipment was largely due to the sale of real property and depreciation of assets. The decrease in prepaid expenses and other assets was largely due to a reduction of capitalized software of $18.9 million due to depreciation and the reduction in prepaid expenses, inventories and deposits of $12.3 million was primarily related to prepaid taxes and licenses. Additionally, intangible assets decreased $25.8 million, due to amortization of goodwill and net assets of discontinued operations decreased $38.3 million. See Note 4 to the Company's Consolidated Financial Statements herein. Total liabilities increased by $89.2 million to $4,407.8 million at December 31, 2001 from $4,318.6 million at December 31, 2000. This increase was due to an increase in accounts payable, accrued and other liabilities of $53.8 million, largely due to an increase in fleet payables due manufacturers of $243.0 million and an increase in trade payables of $27.0 million, offset by a reduction in outstanding checks of $77.0 million and a $139.2 million decrease in accrued liabilities for amounts largely related to the one-time items recorded in 2000. FUTURE LIQUIDITY AND BORROWING NEEDS The availability of letters of credit under the working capital facility is essential in maintaining and issuing MTN's, CP or similar fleet financings. If this availability remains limited, we would be unable to increase fleet financing during the peak summer travel season and the adverse impact on our financial position and results of operations could be material. A complete description of steps that we are undertaking to address liquidity and borrowing needs is contained in "Recent Developments". INFLATION The increased acquisition cost of vehicles is the primary inflationary factor affecting our operations. Many of our other operating expenses are inflation sensitive with increases in inflation generally resulting in increased costs of operations. The effect of inflation-driven cost increases on our overall operating costs is not expected to be greater for us than for our competitors. SEASONALITY Generally, in the vehicle rental industry, revenues increase in the spring and summer months due to the overall increase in business and leisure travel during this season. We increase the size of our fleet and workforce in the spring and summer to accommodate increased rental activity during these periods and decrease our fleet and workforce in the fall and winter. However, many of our operating expenses (such as rent, insurance and administrative personnel) are fixed and cannot be reduced during the fall and winter. As a result of these patterns, for vehicle rental, the first quarter of each year is typically the weakest and the third quarter is typically the strongest. 32 ENVIRONMENTAL MATTERS We have assessed and continue to assess the impact of environmental remediation efforts on our operations. Our exposure largely relates to the clean-up and replacement of underground gasoline storage tanks. During 2001, we recognized approximately $0.5 million in expenses related to remediation efforts and estimate that an aggregate of approximately $1.4 million will be incurred in 2002. Based on past experience, we expect these estimates will be sufficient to satisfy anticipated costs of known remediation requirements. However, due to factors such as continuing changes in the environmental laws and regulatory requirements, the availability and application of technology, the identification of presently unknown remediation sites and changes in the extent of expected remediation efforts, estimated costs for future environmental compliance and remediation are subject to uncertainty and it is difficult to predict the amount or timing of future remediation requirements. RISK FACTORS THE SIGNIFICANT DECLINE IN AIR TRAVEL DUE TO RECENT WORLD EVENTS HAS HARMED AND MAY CONTINUE TO HARM OUR OPERATING RESULTS We are dependent on the perceived and actual safety of domestic air travel in the United States. The recent terrorist attacks of September 11, 2001 highlight this factor. After the terrorist attacks on September 11th, air travel within the United States came to a virtual halt and we experienced numerous cancellations from both business and leisure travelers. Approximately one-half of our revenues are derived from our airport locations. Following the events of September 11, 2001, there has been a significant decline in air travel by both business and leisure travelers. We cannot predict when this decline in air travel will abate, if at all. Further, the safety of air travel and the impact of terrorist attacks and other factors are beyond our control. Further terrorist attacks or protracted worldwide hostilities could have a significant adverse impact on travel and thereby materially harm our business, financial condition and results of operations. WE HAD NET LOSSES FOR 2001 AND 2000 We incurred net losses from continuing operations of $138.6 million and $570.3 million, respectively, for 2001 and 2000. These net losses included fourth-quarter charges of $399.0 million for 2000. We have historically experienced net losses in the first quarter, primarily as a result of seasonal factors. In addition, we anticipate that we will have a net loss for the three month period ended March 31, 2002. We cannot assure you that losses will not continue in the future. WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS We maintain a substantial amount of secured indebtedness to finance our fleet purchases. At December 31, 2001, we had $3.5 billion of total outstanding indebtedness, of which $3.0 billion was secured. We had $0.5 billion of unsecured indebtedness at December 31, 2001, and stockholders' deficit of $231.4 million at that date. Approximately $1.5 billion of indebtedness matures in 2002. Notwithstanding our capacity to incur additional secured and unsecured indebtedness, our substantial indebtedness could have negative consequences for our business, including the following: (a) limiting our ability to obtain additional financing in the future; (b) limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to debt service; (c) limiting our flexibility in reacting to changes in our industry and changes in market conditions; (d) increasing our vulnerability to a downturn in our business; and (e) increasing our interest expense due to increases in prevailing interest rates, because a substantial portion of our indebtedness bears interest at floating rates. We cannot assure you that we will be able to generate sufficient earnings, cash flow or Adjusted EBITDA to comply to our working capital facility requirements or to borrow sufficient funds to cover our debt service obligations. On April 1, 2002, we did not make a required $18.3 million interest payment to holders of our Senior Notes. The applicable grace period for the non-payment will expire on May 1, 2002. In addition, we are not in compliance with the borrowing base and Adjusted EBITDA covenants under our working capital facility. Although we have obtained a waiver 33 from the working capital lenders, the waiver will expire on April 30, 2002. If we are unable to avoid defaults under our Senior Notes and our working capital facility or for any reason we are in default under the terms of any other of our indebtedness, the holders of our indebtedness will be able to declare all this indebtedness immediately due and payable and terminate their commitments, if any, with respect to additional funding obligations. Such holders could also proceed against their collateral, which, in the case of the vehicle financing facilities, consists of substantially all our fleet vehicles and, in the case of our working capital facility and other indebtedness, consists of substantially all tangible non-fleet assets of the Company. WE HAVE CONTINUED WORKING CAPITAL NEEDS In order to meet our peak financing needs during the second and third quarters of 2002, we need to refinance existing fleet debt and increase the capacity of our working capital facilities or replace such facilities. Recent and continued operating losses, the credit quality of our debt, and capital market conditions may adversely affect our ability to refinance our debt or obtain additional working capital on acceptable terms, if at all. WE MAY BE UNABLE TO RESTRUCTURE OUR CAPITAL STRUCTURE We have engaged Lazard to assist us in exploring recapitalization and other strategic alternatives with a view to creating a more affordable and flexible capital structure for Budget. We cannot assure you that we will be able to effect a recapitalization, attract additional equity investors, or refinance our existing indebtedness. If we are not able to restructure our capital structure, we will not have sufficient liquidity to operate our business as currently conducted. TRADING IN OUR COMMON STOCK WAS RECENTLY SUSPENDED BY THE NYSE, WHICH COULD MAKE IT MORE DIFFICULT TO SELL OUR COMMON STOCK On March 20, 2002, we were informed by the NYSE that it would suspend trading in our common stock before the market opened on March 28, 2002. This suspension resulted because our common stock did not meet the continued listing criteria of the exchange, which required a minimum closing share price of $1.00 per share, as well as minimum market capitalization and stockholders' equity. On March 28, 2002, our stock commenced trading on the National Association of Securities Dealers' Electronic Bulletin Board, which is covered by Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend our common stock to persons other than established customers and accredited investors must make special written suitability determination for the purchaser and receive the purchaser's written agreement to a transaction prior to sale. Securities are exempt from this rule if the market price is at least $5.00 per share. Further, pursuant to SEC regulations, our common stock is defined as a "penny stock," as it has a market price of less than $5.00 per share. While traded on the NYSE, our stock was not considered a penny stock. The penny stock regulations require the delivery, prior to any transaction involving our common stock, of a disclosure schedule explaining the penny stock market and the risks associated with it. Furthermore, the ability of broker/dealers to sell our common stock will be limited, which will likely severely and adversely affect the market liquidity for our common stock. We cannot predict when our common stock will no longer be subject to these regulations. OUR INTERNATIONAL OPERATIONS MAY BE SUBJECT TO ADDITIONAL RISKS We experienced significant losses from our European operations in both 2000 and 2001. In late 2000, we revised our European operating model to decrease the number of corporate-owned locations and expand the number of franchised locations in strategic territories. During 2002, we will continue our effort to refranchise our owned locations in Europe. We expect to incur additional losses from our European operations for the three-month period ended March 31, 2002. We cannot assure you that our refranchising efforts will be effective in improving our financial results of operations in Europe or that continued losses from our European operations will not have a significant effect on our financial condition or results of operations. 34 SUBSTANTIALLY ALL OF OUR ASSETS HAVE LIENS Substantially all of our revenue-producing assets, including fleet, intellectual property and receivables, is secured by liens. The presence of these liens will limit our ability to raise additional incremental senior secured financing in the future. In addition, in the event of a default under our indebtedness, the lenders or indenture trustees, as applicable, could proceed against the collateral. OUR BUSINESS IS HIGHLY SEASONAL Our business is highly seasonal, particularly the leisure travel and consumer truck rental segments, and our results of operations and cash flows fluctuate significantly from quarter to quarter. Historically, revenues have been stronger in the third quarter due to the overall increase in business and leisure travel during the peak summer travel months and the increase in moving activity during this period. The first quarter is generally weakest, when there is limited leisure travel and a greater potential for adverse weather conditions. The third quarter accounted for 28.8% of total revenue for 2000 and 28.2% of total revenue for 2001. Any occurrence that disrupts travel patterns during the summer, or any adverse competitive conditions during this period, may materially adversely impact our annual operating performance. Our business practice is to increase the size of our vehicle fleet and workforce during the spring and summer months to accommodate increased activity during these periods and to decrease our fleet and workforce in the fall and winter months. However, many of our operating expenses (such as rent, insurance and administrative personnel) are fixed and cannot be reduced during the fall and winter months when there is decreased rental demand. If we are unable to manage successfully the size of our vehicle fleet and workforce during periods of decreased business activity, our annual operating performance may be materially adversely affected. OUR BUSINESS IS HIGHLY COMPETITIVE There is intense competition in the vehicle rental industry particularly with respect to price and service. We cannot assure you that we will be able to compete successfully with either existing or new competitors. In any geographic market, we may encounter competition from national, regional and local vehicle rental companies. Our main competitors in the car rental market are Alamo, Avis, Dollar, Enterprise, Hertz and National. In our Truck Rental business, we face competition primarily from Penske and U-Haul. Many of our competitors have larger rental volumes, greater financial resources and a more stable customer base than we have. In the past, we have had to lower our rental prices in response to industry-wide price cutting and have been unable to unilaterally raise our prices. Moreover, when the car rental industry has experienced vehicle oversupply competitive pressure has intensified. WE MAY NOT SUCCESSFULLY INTEGRATE OUR OPERATIONS During 2001, we devoted significant resources to the consolidation and integration of our Budget Truck Rental business with Ryder TRS and the vertical integration of our Truck Rental Group with our North American Vehicle Rental Operations. Completing the integration of this business and achieving the anticipated levels of cost savings involves a number of risks that could affect our operating results. We cannot assure you that we will be able to fully realize the benefits that we anticipated from the consolidation of our car and truck rental operations, which could have a significant negative effect on our financial condition and results of operations. 35 OUR RECENT INVESTMENTS AND COST-CUTTING INITIATIVES MAY NOT BE SUCCESSFUL During 2000 and 2001, we expended significant resources on several initiatives designed to increase our revenue and reduce our costs, and these initiatives will continue during 2002. We expect to realize certain cost savings and other operating efficiencies during 2002 as a result of these and other initiatives that will be implemented in 2002. Major areas in which we will seek to reduce our operating expenses include: (i) improvements in vehicle maintenance procedures; (ii) improvements in vehicle transfer costs; and (iii) reduction of vehicle carrying costs through changes in vehicle mix, increased utilization and improved asset control. Our ability to achieve the cost savings and efficiencies mentioned above is inherently uncertain. We may not be able to successfully implement these initiatives; cost increases in other areas may offset the effect of these measures; implementation of these measures may initially lead to additional costs; and events beyond our control may cause us to otherwise fail to succeed in our cost cutting plans. In addition, it is always possible that the implementation of our cost cutting initiatives could adversely affect our ability to generate revenue. We cannot assure you that we will be successful at growing our business or realizing the cost savings that these initiatives were intended to achieve. WE ARE DEPENDENT ON THIRD PARTIES FOR FINANCING We depend on third-party financing to fund our purchases of fleet vehicles. Accordingly, the availability of financing on favorable terms is critical to our business. We cannot assure you that we will be able to obtain financing on favorable terms, if at all. A majority of our debt is incurred in connection with manufacturers' vehicle repurchase programs. As a result, significant changes in the credit programs of the vehicle manufacturers, particularly Ford Motor Company, could significantly affect our ability to obtain this financing on favorable terms. In addition, certain events, such as significant increases in the damage to vehicles, could reduce the value of the collateral securing our vehicle financing facilities and cause the acceleration of the repayment of such debt. Our inability to obtain vehicle financing on favorable terms would have a material adverse effect on our financial condition and operating results. We cannot assure you that the sources of financing used in the past will remain or that alternative financing will become available on terms acceptable to us. WE ARE DEPENDENT ON A PRINCIPAL SUPPLIER Ford Motor Company has been and continues to be our principal supplier of vehicles. Under the terms of our supply agreement with Ford, we have agreed that in the United States, Canada, and other countries outside the European Union our leases and purchases of Ford vehicles will represent at least 70% of the total new vehicle acquisitions by us, with a minimum purchase requirement of at least 80,000 vehicles in the United States in each model year. Shifting significant portions of our fleet purchases to other manufacturers would require significant advance notice and operational changes. Also, there can be no assurance that vehicles would be available from other suppliers on competitive terms, if at all. As a result, our financial condition and operating results could be materially adversely affected if Ford is unable to supply our vehicles or if there is any significant decline in the quality and customer satisfaction with Ford vehicles. CHANGES IN MANUFACTURERS' REPURCHASE PROGRAMS MAY AFFECT OUR BUSINESS Our ability to resell our vehicles at a favorable price and fix our depreciation expense in advance is dependent upon the terms of manufacturers' repurchase programs. As of December 31, 2001, 80.7% of BRACC's car fleet was covered by these programs. Our ability to sell vehicles under manufacturers' repurchase programs limits the risk of decline in residual value at the time of disposition and enables us to fix a substantial portion of our depreciation expense in advance. Vehicle depreciation is the largest individual expense in our vehicle rental operations. In the past, automobile manufacturers have changed the terms of these programs by, among other things, reducing the number of vehicles that can be sold under their repurchase programs, reducing related incentives, increasing guaranteed depreciation and reducing the mileage allowed on program vehicles. We could be adversely affected if our vehicle suppliers make these or other adverse changes in their repurchase programs. 36 OUR OPERATIONS AND FINANCIAL PERFORMANCE ARE AFFECTED BY VARIOUS TYPES OF REGULATIONS We are subject to various foreign, federal, state and local laws and regulations that affect the conduct of our operations. These laws and regulations cover matters such as the sale of loss damage waivers, vicarious liability of vehicle owners, consumer protection, advertising, used vehicle sales, the taxing and licensing of vehicles, franchising operations and sales, and environmental compliance and clean-up, particularly with regard to our substantial on-site use and storage of petroleum products. We cannot assure you that compliance with these laws and regulations or the adoption of modified or additional laws and regulations will not require large expenditures by us or otherwise have a significant effect on our financial condition or results of operations. OUR FOUNDERS HAVE SUBSTANTIAL STOCKHOLDER VOTING POWER A large portion of the voting power of our common stock is concentrated in the hands of three individuals, Sanford Miller, John P. Kennedy and Jeffrey D. Congdon. These individuals own all outstanding shares of Class B common stock. Each share of Class B common stock entitles its holders to ten votes per share, while our Class A common stock entitles holders to one vote per share. The Class B common stock owned by Messrs. Miller, Kennedy and Congdon, together with the Class A common stock owned by these individuals, represents approximately 36.2% of the combined actual voting power (38.5% beneficially) of both classes of common stock. As a result, these three individuals are able to exert substantial influence over the election of our Board of Directors along with other matters put to a stockholder vote. This increases the probability that members elected by them will continue to direct our business, policies, and management. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FOREIGN CURRENCY EXCHANGE RATE RISK Our earnings are affected by fluctuations in the value of foreign currency exchange rates. Approximately 8% of our revenue is generated outside the U.S. The result of a uniform 10% change in the value of the U.S. dollar relative to currencies of countries where we do business would not be material. We do not typically hedge any foreign currency risk since the exposure is not significant. INTEREST RATE RISK Our exposure to market risk is primarily due to floating rate interest associated with fleet debt. We manage interest rates through use of a combination of fixed and floating rate debt and interest hedging instruments. Our outstanding debt consists of vehicle debt, revolving credit facilities, convertible subordinated debt and other debt which subjects us to the risk of loss associated with movements in market interest rates. At December 31, 2001, we had fixed-rate debt totaling $2.2 billion or 61.6% of total outstanding debt. This debt is fixed-rate and therefore does not expose us to the risk of earnings loss due to changes in market interest rates. Our floating-rate debt was $1.3 billion or 38.4% of total outstanding debt at December 31, 2001. A fluctuation of the interest rate by 100 basis points would change our interest expense by $13.0 million. For a discussion of the fair value of our indebtedness, see Note 15 to the Company's Consolidated Financial Statements herein. As disclosed in Note 1 to the Company's Consolidated Financial Statements, we use hedging instruments to manage market risk related to interest rates and an equity investment. The effect of market changes on these instruments in the year ended December 31, 2001 is not material when aggregated with changes in value of the hedged item. RISK FROM CHANGES IN STOCK PRICES For a discussion of market risk involving our stock option plans, see Note 13 to the Company's Consolidated Financial Statements herein. 37 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Budget Group's Consolidated Financial Statements appear beginning at page F-1 in Part IV of this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item with respect to directors and executive officers of the Registrant is included under the headings "Item 1 -- Election of Directors" and "-- Executive Officers", and "Section 16(a) Beneficial Ownership Reporting Compliance" of the Proxy Statement for the 2002 Annual Meeting of Stockholders to be held on May 16, 2002 and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item included under the heading "Executive Compensation" in the subsections entitled "Executive Severance Agreements," "Executive Compensation Summary Table," "Option Cancellations/Grants During 2000 and Year-End Option Values" and "Aggregate Option Exercises During 2001 and Year-End Option Values" appearing thereunder of the Proxy Statement for the 2002 Annual Meeting of Stockholders to be held on May 16, 2002 and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is included under the heading "Security Ownership of Certain Beneficial Owners" of the Proxy Statement for the 2002 Annual Meeting of Stockholders to be held on May 16, 2002 and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is included under the subheading "Certain Relationships and Related Transactions" and under the heading "Executive Compensation" in the subsection entitled "Compensation Committee Interlocks and Insider Participation," of the Proxy Statement for the 2002 Annual Meeting of Stockholders to be held on May 16, 2002 and is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Financial Statements and Schedules 1. Financial Statements Report of Independent Certified Public Accountants. Consolidated Balance Sheets at December 31, 2000 and 2001. Consolidated Statements of Operations for each of the Three Years in the Period Ended December 31, 2001. Consolidated Statements of Stockholders' Equity (Deficit) for each of the Three Years in the Period Ended December 31, 2001. 38 Consolidated Statements of Cash Flows for each of the Three Years in the Period Ended December 31, 2001. Notes to Consolidated Financial Statements. 2. Financial Statement Schedules Not applicable. 3. Exhibits The following list of exhibits includes both exhibits submitted with this Report as filed with the Securities and Exchange Commission and those incorporated by reference to other filings:
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 3.1 -- Restated Certificate of Incorporation of the Registrant. (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-4 as filed with the Commission on May 11, 1999). 3.2 -- Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000). 4.1 -- Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-1, File No. 333-34799, dated September 26, 1997). 4.2 -- Base Indenture between Team Fleet Financing Corporation, as Issuer, Team Rental Group, Inc., as Servicer and Team Interestholder, and Bankers Trust Company, as Trustee, relating to Rental Car Asset Backed Notes (incorporated by reference to Exhibit 4.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 4.3 -- Supplemental Indenture relating to Rental Car Asset Backed Notes (incorporated by reference to Exhibit 4.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 4.4 -- Base Indenture among BRAC SOCAL Funding Corporation, as Issuer, BRAC-OPCO, Inc., as Servicer and Retained Interestholder, and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.5 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 4.5 -- Series 1995-1 Supplement to Base Indenture among BRAC SOCAL Funding Corporation, as Issuer, BRAC-OPCO, Inc., as Servicer and Retained Interestholder, and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.6 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 4.6 -- Supplement No. 1 to Indenture, dated as of October 20, 1995, among BRAC SOCAL Funding Corporation, BRAC-OPCO, Inc., Team Rental of Southern California, Inc. and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.7 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 4.7 -- Registration Rights Agreement, dated as of August 25, 1994, among the Registrant, Brian Britton, Jeffrey Congdon, Richard Hinkle, John Kennedy, Sanford Miller and Richard Sapia (incorporated by reference to Exhibit 10.23 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 4.8 -- Indenture dated as of January 8, 1998 between the Company and the Chase Manhattan Bank, as Trustee (incorporated herein by reference from the Company's Registration Statement on Form S-3, File No. 333-41093, dated November 26, 1997, as amended by Amendment No. 1 to Form S-3 dated January 7, 1998). 4.9 -- First Amendment to Registration Rights Agreement, dated as of November 1, 1994, among the Registrant, Brian Britton, Jeffrey Congdon, Richard Hinkle, John Kennedy, Sanford Miller and Richard Sapia (incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994).
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EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.10 -- Letter Agreement, dated as of November 1, 1994, between Andrew Klein and the Registrant acknowledging that Andrew Klein is a party to the Registration Rights Agreement, dated as of August 25, 1994, as amended (incorporated by reference to Exhibit 10.25 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994). 4.11 -- Registration Rights Agreement, dated as of October 20, 1995, between Team Rental Group, Inc. and Budget Rent-a-Car of Southern California (incorporated by reference to Exhibit 4.12 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 4.12 -- Amended and Restated Base Indenture dated as of December 1, 1996 among Team Fleet Financing Corporation, as Issuer, Team Rental Group, Inc., as Servicer and Team Interestholder, and Bankers Trust Registrant, as Trustee (incorporated by reference to Exhibit 4.15 to the Registrant's Registration Statement on Form S-1, File No. 333-21691, dated February 12, 1997). 4.13 -- Series 1996-1 Supplement to the Amended and Restated Base Indenture dated as of December 1, 1996 among Team Fleet Financing Corporation, as Issuer, Team Rental Group, Inc., as Servicer and Team Interestholder, and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.16 to the Registrant's Registration Statement on Form S-1, File No. 333-21691, dated February 12, 1997). 4.14 -- Amended and Restated Master Motor Vehicle Lease Agreement dated as of December 1, 1996 among Team Fleet Financing Corporation, as Lessor, Team Rental Group, Inc., as Guarantor, and certain subsidiaries of Team Rental Group, Inc., as lessees (incorporated by reference to Exhibit 4.17 to the Registrant's Registration Statement on Form S-1, File No. 333-21691, dated February 12, 1997). 4.15 -- Motor Vehicle Lease Agreement Series 1996-1 dated as of December 1, 1996 among Team Fleet Financing Corporation, as Lessor, Team Rental Group, Inc., as Guarantor, and certain subsidiaries of Team Rental Group, Inc., as lessees (incorporated by reference to Exhibit 4.18 to the Registrant's Registration Statement on Form S-1, File No. 333-21691, dated February 12, 1997). 4.16 -- Registrant's Series A Preferred Stock Certificate of Designations (incorporated by reference to Exhibit 3.4 to the Registrant's Registration Statement on Form S-1, File No. 333-34799, dated September 26, 1997). 4.17 -- 1994 Incentive Stock Option Plan (incorporated by reference to Exhibit 10.27 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 4.18 -- Amendment No. 1 to 1994 Stock Option Plan (incorporated by reference to Exhibit 10.54 to Amendment No. 2 to the Registrant's Registration Statement on Form S-1, File No. 333-4507, dated June 28, 1996). 4.19 -- 1994 Director's Plan (incorporated by reference to Exhibit 10.28 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 4.20 -- Amended and Restated Registration Rights Agreement, dated as of April 29, 1997, between the Company and the holders of the Convertible Subordinated Notes (incorporated by reference to Exhibit 4.6 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on July 17, 1998). 4.21 -- Certificate of Trust of Budget Group Capital Trust (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998). 4.22 -- Declaration of Trust of Budget Group Capital Trust dated as of June 4, 1998, between Budget Group, Inc., The Bank of New York and the Administrative Trustees named therein (incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998). 4.23 -- Amended and Restated Declaration of Trust dated as of June 19, 1998, between Budget Group, Inc., The Bank of New York (Delaware), The Bank of New York and the Administrative Trustees named therein (incorporated by reference to Exhibit 4.3 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998).
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EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.24 -- Indenture for HIGH TIDES Debentures Due 2028 dated as of June 19, 1998 between Budget Group, Inc. and The Bank of New York (incorporated by reference to Exhibit 4.4 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998). 4.25 -- Form of HIGH TIDES (incorporated by reference to Exhibit 4.6 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998). 4.26 -- Form of HIGH TIDES Debentures Due 2028 (incorporated by reference to Exhibit 4.7 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998). 4.27 -- Guarantee Agreement dated as of June 19, 1998 by Budget Group, Inc. as Guarantor (incorporated by reference to Exhibit 4.8 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998). 4.28 -- Indenture, dated as of April 13, 1999, between Budget Group Inc., as Issuer, the Bank of New York, as trustee (incorporated by reference to Exhibit 4.31 to the Registrant's Registration Statement on Form S-4, File No. 333-78257, filed with the Commission on May 11, 1999.) 4.29 -- Series 2000-1 Supplement dated as of February 25, 2000 to the Amended and Restated Base Indenture dated as of December 1, 1996 among Team Fleet Financing Corporation, as Issuer, Budget Group, Inc., as the Servicer and the Budget Interestholder, and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.31 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1999). 4.30 -- Master Motor Vehicle Lease Agreement Group II dated as of February 25, 2000 by an among Team Fleet Financing Corporation, as Lessor; Budget Rent a Car Systems, Inc.; and those subsidiaries, affiliates and non-affiliates of Budget Group, Inc. named on Schedule 1 thereto, as Lessees (incorporated by reference to Exhibit 4.32 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1999). 4.31 -- Fifth Amendment to Budget Rent a Car Corporation SavingsPlus Plan (as amended and restated effective January 1, 1993), dated December 10, 1997 (incorporated by reference to Exhibit 4.5 to the Registrant's Registration Statement on Form S-8, File No. 333-82749, filed with the Commission on July 13, 1999). 4.32 -- Budget Rent a Car Corporation SavingsPlus Plan, as Amended and Restated Effective January 1993 (incorporated by reference to Exhibit 4.2 to Registrant's Registration Statement on Form S-8, as filed with the Commission on July 14, 1998). 4.33 -- Sixth Amendment to Budget Rent a Car Corporation SavingsPlus Plan (as amended and restated effective January 1, 1993), dated June 30, 1998 (incorporated by reference to Exhibit 4.6 to the Registrant's Registration Statement on Form S-8, File No. 333-82749, filed with the Commission on July 13, 1999). 4.34 -- Seventh Amendment to Budget Rent a Car Corporation SavingsPlus Plan (as amended and restated effective January 1, 1993), dated July 26, 1999 (incorporated by reference to Exhibit 4.7 to the Registrant's Registration Statement on Form S-8, File No. 333-50086, filed with the Commission on November 16, 2000). 4.35 -- Eighth Amendment to Budget Rent a Car Corporation SavingsPlus Plan (as amended and restated effective January 1, 1993), dated March 8, 2000 (incorporated by reference to Exhibit 4.8 to the Registrant's Registration Statement on Form S-8, File No. 333-50086, filed with the Commission on November 16, 2000). 4.36 -- Budget Rent a Car Corporation Employee Retirement Plan for Collectively Bargained Employees (as amended and restated effective July 1, 1990) (incorporated by reference to Exhibit 4.4 to the Registrant's Registration Statement on Form S-8, File No. 333-50080, filed with the Commission on November 16, 2000).
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EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.37 -- Series 2001-2 Supplement dated as of April 18, 2001 to the Amended and Restated Base Indenture dated as of December 1, 1996 among Team Fleet Financing Corporation, as Issuer, Budget Group, Inc., as Servicer and Budget Interest Holder, and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001). 4.38 -- Series 1997-2 Supplement dated June 20, 2001 to the Amended and Restated Base Indenture dated as of December 1, 1996 among Team Fleet Financing Corporation, the Issuer, Budget Group, Inc., the Servicer and Team Interestholder and Bankers Trust as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001). 4.39 -- Series 2001-1 Supplement dated as of March 30, 2001 to the Amended and Restated Base Indenture dated as of December 1, 1996 among Team Fleet Financing Corporation, as Issuer, Budget Group, Inc., as Servicer and Budget Interest Holder, and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001). 4.40 -- Series 2000-2 Supplement to the Amended and Restated Base Indenture, dated as of June 29, 2000, among Team Fleet Financing Corporation, as the Issuer, Budget Group, Inc., as the Servicer, Budget Group, Inc., as the Budget Interestholder and Bankers Trust Company, as the Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report on 10-Q, for the quarter ended June 30, 2000). *4.41 -- Series 2001-3 Supplement, dated as of November 29, 2001, to the Amended and Restated base Indenture, dated as of December 1, 1996, among Team Fleet Financing Corporation, as Issuer, Budget Group, Inc., as Servicer and Budget Interest Holder, and Bankers Trust Company, as Trustee. *4.42 -- Series 2001-4 Supplement, dated as of November 13, 2001, to the Amended and Restated base Indenture, dated as of December 1, 1996, among Team Fleet Financing Corporation, as Issuer, Budget Group, Inc., as Servicer and Budget Interest Holder, and Bankers Trust Company, as Trustee. 10.1 -- Amended and Restated Sublicense Agreement, dated as of October 20, 1995, between Budget Rent-a-Car of Southern California and Team Rental of Southern California, Inc., along with Corporate Guaranty of Team Rental Group, dated as of October 20, 1995 (incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 10.2 -- Lease Agreement dated September 1, 1993 between Miller and Hinkle, a Florida general partnership, and Capital City Leasing, Inc., as amended by First Amendment dated as of July 1, 1994 (Henrico County, Virginia) (incorporated by reference to Exhibit 10.41 to Amendment No. 3 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated August 12, 1994). 10.3 -- Lease Agreement dated June 1, 1994 between Miller and Hinkle, a Florida general partnership, and Capital City Leasing, Inc. (Chesterfield County, Virginia) (incorporated by reference to Exhibit 10.25 to Amendment No. 1 to the Registrant's Registration Statement on Form S-1, File No. 333-4507, dated June 13, 1996). 10.4 -- Lease Agreement dated as of September 12, 1995 between MCK Real Estate Corporation, Team Car Sales of Richmond, Inc. and Team Rental Group, Inc. (incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 10.5 -- Agreement of Lease dated as of August 31, 1995 between MCK Real Estate Corporation and Team Rental of Philadelphia, Inc. (incorporated by reference to Exhibit 10.25 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 10.6 -- Supply Agreement among Ford Motor Company, Team Rental Group, Inc. and Budget Rent-a-Car Corporation (incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form S-1, File No. 333-21691, dated February 12, 1997).
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EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.7 -- Advertising Agreement between Ford Motor Company and Budget Rent-a-Car Corporation (incorporated by reference to Exhibit 10.7 to the Registrant's Registration Statement on Form S-1, File No. 333-21691, dated February 12, 1997). 10.8 -- Subordinated Notes Purchase Agreement, dated as of December 1, 1996, by and between the Registrant and the investors listed therein (incorporated by reference to Exhibit 10.20 of the Registrant's Registration Statement on Form S-1, File No. 333-21691, dated February 12, 1997). 10.9 -- Subordination Agreement, dated as of October 20, 1995, among Budget Rent-a-Car of Southern California, BRAC-OPCO, Inc., Team Rental Group, Inc. and Team Rental of Southern California (incorporated by reference to Exhibit 10.49 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 10.10 -- Shareholders' Agreement, dated as of October 20, 1995, by and among Team Rental Group, Inc., the holders of the Company's Class B Common Stock, and Budget Rent-a-Car of Southern California (incorporated by reference to Exhibit 10.50 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 10.11 -- 1994 Incentive Stock Option Plan (incorporated by reference to Exhibit 10.27 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 10.12 -- Amendment No. 1 to 1994 Incentive Stock Option Plan (incorporated by reference to Exhibit 10.54 to Amendment No. 2 to the Registrant's Registration Statement on Form S-1, File No. 333-4507, dated June 28, 1996). 10.13 -- 1994 Director's Plan (incorporated by reference to Exhibit 10.28 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 10.14 -- Indemnification Agreement dated April 25, 1994 between the Registrant and Sanford Miller (incorporated by reference to Exhibit 10.29 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 10.15 -- Indemnification Agreement dated April 25, 1994 between the Registrant and John Kennedy (incorporated by reference to Exhibit 10.30 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 10.16 -- Indemnification Agreement dated April 25, 1994 between the Registrant and Jeffrey Congdon (incorporated by reference to Exhibit 10.31 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 10.17 -- Indemnification Agreement dated April 25, 1994 between the Registrant and Ronald Agronin (incorporated by reference to Exhibit 10.32 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 10.18 -- Indemnification Agreement dated April 25, 1994 between the Registrant and Stephen Weber (incorporated by reference to Exhibit 10.33 to the Registrant's Registration Statement on Form S-1, File No. 33-78274, dated April 28, 1994). 10.19 -- Second Amendment to 1994 Incentive Stock Option Plan (incorporated by reference to Exhibit 10.24 to the Registrant's Registration Statement on Form S-4, File No. 333-49679, dated April 8, 1998). 10.20 -- 1997 Amendment to 1994 Directors' Stock Option Plan (incorporated by reference to Exhibit 10.25 to the Registrant's Registration Statement on Form S-4, File No. 333-49679, dated April 8, 1998). 10.21 -- Registration Rights Agreement dated as of June 19, 1998 between Budget Group Capital Trust, Budget Group, Inc. and the several Purchasers named herein (incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998). 10.22 -- Remarketing Agreement dated as of June 19, 1998 between Budget Group, Inc., Budget Group Capital Trust, The Bank of New York, the Administrative Trustees named therein and the Remarketing Agent named therein (incorporated by reference to Exhibit 10.2 to the Registrant's Registration Statement on Form S-3, as filed with the Commission on August 13, 1998).
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EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.23 -- Amended and Restated Credit Agreement dated as of June 19, 1998 among Budget Group, Inc., as the Borrower, Certain Financial Institutions, as the Lenders, Credit Suisse First Boston, as a Co-Syndication Agent and the Documentation Agent (incorporated by reference to Exhibit 10.23 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.24 -- First Amendment to Amended and Restated Credit Agreement dated September 11, 1998 among Budget Group, Inc., as Borrower, the Lenders and Credit Suisse First Boston, as Administrative Agent (incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.25 -- Limited Waiver No. 1 to Amended and Restated Credit Agreement dated as of December 31, 1998 among Budget Group, Inc., as Borrower, the Lenders and Credit Suisse First Boston (incorporated by reference to Exhibit 10.25 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.26 -- Assignment, Assumption and Amendment Agreement dated as of June 19, 1998 among Budget Group, Inc., as New Borrower, Budget Rent A Car Corporation, as Existing Borrower, the Lenders, Credit Suisse First Boston, as Co-Syndication Agent, Co-Arranger and Administrative Agent and Nationsbanc Montgomery Securities LLC, as Co-Syndication Agent, Co-Arranger and Documentation Agent (incorporated by reference to Exhibit 10.26 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.27 -- Form of Executive Severance Agreement dated October 1, 1998 between the Registrant and each of Messrs. Miller, Congdon, Aprati and White (incorporated by reference to Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.28 -- Form of Executive Severance Agreement between the Registrant and Mr. Sotir (incorporated by reference to Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.29 -- Transaction Guaranty dated December 15, 1998 by Budget Group, Inc. in favor of KeyBank National Association (incorporated by reference to Exhibit 10.29 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.30 -- Second Amendment to Amended and Restated Credit Agreement dated March 18, 1999 among Budget Group, Inc., as Borrower, the Lenders and Credit Suisse First Boston, as Administrative Agent (incorporated by reference to Exhibit 10.30 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998). 10.31 -- Form of Executive Severance Agreement dated January 1, 2000 between the Registrant and each of Messrs. Siegel and Cohen (incorporated by reference to Exhibit 10.31 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1999). 10.32 -- Third Amendment to Amended and Restated Credit Agreement dated December 22, 1999, among Budget Group, Inc., as Borrower, the Lenders and Credit Suisse First Boston, as Administrative Agent. (incorporated by reference to Exhibit 10.34 to the Registrant's Annual Report on Form 10-K the year ended December 31, 1999). 10.33 -- Master Motor Vehicle Lease Agreement, dated as of June 29, 2000, by and among Team Fleet Financing Corporation, as Lessor, Budget Group, Inc., as Guarantor, Budget Rent A Car Systems, Inc., and those Subsidiaries, Affiliates and Non-Affiliates of Budget Group, Inc. named on Schedule 1 thereto, as Lessees (incorporated by reference to Exhibit 4.2 to the Registrant's Quarterly Report on 10-Q, for the quarter ended June 30, 2000). 10.34 -- Series 2000-2 Note Purchase Agreement, dated as of June 29, 2000, among Team Fleet Financing Corporation, Budget Group, Inc., as Servicer, Twin Towers, Inc., Deutsche Bank AG, New York Branch, as The Committed Note Purchaser, and Deutsche Bank AG, New York Branch, as Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on 10-Q, for the quarter ended June 30, 2000). 10.35 -- Budget Group, Inc. 2000 Stock Plan (incorporated by reference to Annex A to the Registrant's Proxy Statement for the 2000 Annual Meeting of Stockholders held May 18, 2000).
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EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.36 -- Fourth Amendment and Waiver to Amended and Restated Credit Agreement, dated as of September 30, 2000, among Budget Group, Inc., as borrower, the Lenders and Credit Suisse First Boston, as administrative agent for the Lenders (incorporated by reference to Exhibit 10.41 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000). 10.37 -- Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001 among Budget Group, Inc., as borrower, the Lenders and Credit Suisse First Boston, as administrative agent for the Lenders (incorporated by reference to Exhibit 10.42 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000). 10.38 -- Sixth Amendment to Amended and Restated Credit Agreement, dated as of February 9, 2001, among Budget Group, Inc., as borrower, the Lenders and Credit Suisse First Boston, as administrative agent for the Lenders (incorporated by reference to Exhibit 10.43 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000). *10.39 -- Seventh Amendment to Amended and Restated Credit Agreement, dated as of June 19, 2001, by and among Budget Group, Inc., the Lenders and Credit Suisse First Boston, as administrative agent for the Lenders *10.40 -- Eighth Amendment and Consent to Amended and Restated Credit Agreement, dated as of July 31, 2001, by and among Budget Group, Inc., as borrower, the Lenders, and Credit Suisse First Boston, as administrative agent for the Lenders. *10.41 -- Ninth Amendment, Waiver And Consent to Amended and Restated Credit Agreement, dated as of December 20, 2001, by and among Budget Group, Inc., as borrower, the Lenders and Credit Suisse First Boston, as administrative agent for the Lenders. *10.42 -- Tenth Amendment, Waiver And Consent to Amended and Restated Credit Agreement, dated as of February 7, 2002, by and among Budget Group, Inc., as borrower, the Lenders and Credit Suisse First Boston, as administrative agent for the Lenders. *10.43 -- Eleventh Amendment, Waiver And Consent to Amended and Restated Credit Agreement, dated as of March 7, 2002, by and among Budget Group, Inc., as borrower, the Lenders and Credit Suisse First Boston, as administrative agent for the Lenders. 10.44 -- Vehicle Finance and Security Agreement dated as of April 16, 2001 among Nissan Motor Acceptance Corporation and Budget Rent a Car Systems, Inc., as Borrower (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001). *21.1 -- Subsidiaries of the Registrant. *23.1 -- Consent of Arthur Andersen LLP. *99.1 -- Letter from the Registrant to the Commission pursuant to Release No. 34-45590 (March 18, 2002).
- --------------- * Filed herewith. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended December 31, 2001. (c) Exhibits Exhibits are listed in Item 14(a). (d) Financial Statement Schedules Not applicable. 45 BUDGET GROUP, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Report of Independent Certified Public Accountants.......... F-2 Consolidated Balance Sheets at December 31, 2000 and 2001... F-3 Consolidated Statements of Operations for each of the Three Years in the period ended December 31, 2001............... F-4 Consolidated Statements of Stockholders' Equity (Deficit) for each of the Three Years in the period ended December 31, 2001.................................................. F-5 Consolidated Statements of Cash Flows for each of the Three Years in the period ended December 31, 2001............... F-6 Notes to Consolidated Financial Statements.................. F-7
F-1 BUDGET GROUP, INC. AND SUBSIDIARIES REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To Budget Group, Inc.: We have audited the accompanying consolidated balance sheets of Budget Group, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2000 and 2001, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Budget Group, Inc. and subsidiaries as of December 31, 2000 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements, the Company has had recurring net losses, has a stockholders' deficit of $230.3 million at December 31, 2001, did not make the required April 1, 2002 interest payment to holders of their senior notes, has been unable to comply with the working capital facility covenant and has limited additional non-vehicle financing alternatives. The Company has engaged a financial advisor to explore a recapitalization and other strategic alternatives, which may result in a reorganization of the Company under the federal bankruptcy code. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are further described in Note 8. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts (including, but not limited to, property and equipment, intangibles and goodwill aggregating to $935.3 million) or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. ARTHUR ANDERSEN LLP Orlando, Florida April 8, 2002 F-2 BUDGET GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31,
2000 2001 ---------- ---------- (IN THOUSANDS) ASSETS Cash and cash equivalents................................... $ 70,757 $ 42,777 Restricted cash............................................. 4,074 310,046 Trade and vehicle receivables, net.......................... 360,595 330,246 Revenue earning vehicles, net............................... 2,876,108 2,709,728 Property and equipment, net................................. 169,031 132,547 Prepaid expenses and other assets........................... 206,554 175,420 Intangibles, including goodwill, less accumulated amortization of $129,296 in 2000 and $152,740 in 2001..... 794,531 768,741 Net assets of discontinued operations....................... 38,280 -- ---------- ---------- Total assets...................................... $4,519,930 $4,469,505 ========== ========== LIABILITIES AND STOCKHOLDERS' DEFICIT Notes payable............................................... $3,456,597 $3,484,564 Accounts payable, accrued and other liabilities............. 861,968 915,757 Net liabilities of discontinued operations.................. -- 7,457 ---------- ---------- Total liabilities................................. 4,318,565 4,407,778 ---------- ---------- COMMITMENTS AND CONTINGENCIES (NOTES 11, 13 AND 14) COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY (LIQUIDATION PREFERENCE $300,000)................................................. 291,760 292,060 ---------- ---------- STOCKHOLDERS' DEFICIT Class A common stock, $0.01 par value, one vote per share, 70,000,000 shares authorized. Shares issued, 35,474,072 in 2000 and 2001............................................. 355 355 Class B common stock, $0.01 par value, 10 votes per share, 2,500,000 shares authorized, 1,936,600 shares issued (in 2000 and 2001)............................................ 19 19 Additional paid-in capital.................................. 598,323 598,323 Foreign currency translation adjustment..................... (5,493) (6,870) Accumulated deficit......................................... (681,828) (820,389) Treasury stock, at cost (155,606 in 2000 and 2001 shares of Class A common stock)..................................... (1,771) (1,771) ---------- ---------- Total stockholders' deficit....................... (90,395) (230,333) ---------- ---------- Total liabilities and stockholders' deficit....... $4,519,930 $4,469,505 ========== ==========
See accompanying notes to consolidated financial statements. F-3 BUDGET GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31,
1999 2000 2001 ---------- ---------- ---------- (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS) OPERATING REVENUE: Vehicle rental revenue.................................... $2,237,254 $2,354,378 $2,083,675 Royalty fees and other.................................... 88,400 81,994 77,055 ---------- ---------- ---------- Total operating revenue............................ 2,325,654 2,436,372 2,160,730 ---------- ---------- ---------- OPERATING EXPENSES: Direct vehicle and operating.............................. 953,091 1,168,863 900,825 Depreciation -- vehicle................................... 557,928 594,259 589,479 Selling, general and administrative....................... 591,299 829,735 474,482 Amortization and non-vehicle depreciation................. 69,479 128,381 72,730 ---------- ---------- ---------- Total operating expenses........................... 2,171,797 2,721,238 2,037,516 ---------- ---------- ---------- OPERATING INCOME (LOSS)..................................... 153,857 (284,866) 123,214 ---------- ---------- ---------- OTHER (INCOME) EXPENSE: Vehicle interest expense.................................. 189,539 227,698 207,633 Non-vehicle interest expense.............................. 26,679 36,823 45,961 Interest income........................................... (7,397) (1,567) (5,624) Gains on asset dispositions............................... -- -- (9,205) ---------- ---------- ---------- Total other expense, net........................... 208,821 262,954 238,765 ---------- ---------- ---------- LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES......................................... (54,964) (547,820) (115,551) Provision (benefit) for income taxes...................... (23,826) 3,688 3,429 Distributions on trust preferred securities............... 18,750 18,750 19,581 ---------- ---------- ---------- LOSS FROM CONTINUING OPERATIONS............................. (49,888) (570,258) (138,561) ---------- ---------- ---------- DISCONTINUED OPERATIONS: LOSS FROM OPERATIONS OF DISCONTINUED BUSINESS SEGMENTS (net of benefit for income taxes of $200 in 1999)................................................... (327) -- -- ESTIMATED LOSS FROM DISPOSAL OF BUSINESS SEGMENTS, INCLUDING PROVISION FOR OPERATING LOSSES OF $12,160 AND $30,067 DURING PHASE OUT PERIOD (net of benefit for income taxes of $8,780 in 1999 and $0 in 2000).......... (14,325) (34,353) -- ---------- ---------- ---------- Net loss from discontinued operations.............. (14,652) (34,353) -- ---------- ---------- ---------- NET LOSS.................................................... $ (64,540) $ (604,611) $ (138,561) ========== ========== ========== Basic and diluted loss per share: Loss from continuing operations........................... $ (1.37) $ (15.31) $ (3.72) Loss from operations of discontinued business segments (net of income taxes)................................... (0.01) -- -- Estimated loss from disposal of business segments, including provision for operating losses during phase out period (net of income taxes)........................ (0.39) (0.92) -- ---------- ---------- ---------- Net loss.................................................. $ (1.77) $ (16.23) $ (3.72) ========== ========== ========== Weighted average number of shares outstanding............... 36,430 37,255 37,255 ========== ========== ==========
See accompanying notes to consolidated financial statements. F-4 BUDGET GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31,
FOREIGN TOTAL ADDITIONAL CURRENCY STOCKHOLDERS' COMMON PAID-IN TRANSLATION ACCUMULATED TREASURY EQUITY STOCK CAPITAL ADJUSTMENT DEFICIT STOCK (DEFICIT) ------ ---------- ----------- ----------- -------- ------------- (IN THOUSANDS) Balance, December 31, 1998...................... $360 $670,089 $(3,412) $ (12,677) $(2,013) $ 652,347 Comprehensive loss: Net loss.................. -- -- -- (64,540) -- Foreign currency translation............ -- -- 2,966 -- -- Total comprehensive loss.... (61,574) Shares issued in business combinations........... -- 1,017 -- -- -- 1,017 Proceeds from exercise of stock options.......... -- 7 -- -- -- 7 Make-whole payments....... 13 (24,691) -- -- 185 (24,493) Stock compensation expense................ -- 219 -- -- -- 219 ---- -------- ------- --------- ------- --------- Balance, December 31, 1999...................... 373 646,641 (446) (77,217) (1,828) 567,523 Comprehensive loss: Net loss.................. -- -- -- (604,611) -- Foreign currency translation............ -- -- (5,047) -- -- Total comprehensive loss.... -- -- -- -- -- (609,658) Make-whole payments....... 1 (30,509) -- -- 57 (30,451) Warrant repurchase........ -- (17,809) -- -- -- (17,809) ---- -------- ------- --------- ------- --------- Balance, December 31, 2000...................... 374 598,323 (5,493) (681,828) (1,771) (90,395) Comprehensive loss: Net loss.................. -- -- -- (138,561) -- Foreign currency translation............ -- -- (1,377) -- -- Total comprehensive loss.... -- -- -- -- -- (139,938) ---- -------- ------- --------- ------- --------- Balance, December 31, 2001...................... $374 $598,323 $(6,870) $(820,389) $(1,771) $(230,333) ==== ======== ======= ========= ======= =========
See accompanying notes to consolidated financial statements. F-5 BUDGET GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
1999 2000 2001 ----------- ----------- ----------- (IN THOUSANDS) CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES: Net loss............................................ $ (64,540) $ (604,611) $ (138,561) Loss from discontinued operations (net)............. 14,652 34,353 -- ----------- ----------- ----------- Loss from continuing operations..................... (49,888) (570,258) (138,561) Adjustments to reconcile loss to net cash provided by operating activities: Depreciation and amortization.................... 627,407 722,640 662,208 Provision (benefit) for doubtful accounts........ 32,547 116,107 (5,538) Deferred income tax benefit...................... (35,267) (757) -- Stock compensation expense....................... 219 -- -- Changes in operating assets and liabilities, net of effects from acquisitions: Trade and vehicle receivables, net............. (51,262) (30,403) 35,887 Prepaid expenses and other assets.............. (19,531) 46,234 12,564 Accounts payable, accrued and other liabilities................................. 94,421 202,650 53,789 ----------- ----------- ----------- Net cash provided by continuing operating activities................................ 598,646 486,213 620,349 ----------- ----------- ----------- CASH FLOWS FROM CONTINUING INVESTING ACTIVITIES: Change in restricted cash........................... 420,393 (3,000) (305,972) Proceeds from sale of revenue earning vehicles...... 2,670,140 3,450,122 3,448,348 Proceeds from sale of property and equipment........ 8,754 30,342 36,159 Purchases of revenue earning vehicles............... (3,713,530) (3,766,202) (3,879,211) Purchases of property and equipment................. (104,430) (43,722) (21,530) Payments for acquisitions, net of cash acquired..... (1,018) (5,714) -- ----------- ----------- ----------- Net cash used in continuing investing activities................................ (719,691) (338,174) (722,206) ----------- ----------- ----------- CASH FLOWS FROM CONTINUING FINANCING ACTIVITIES: Net increase (decrease) in commercial paper......... (566,681) (116,874) 327,606 Proceeds from medium term notes..................... 950,000 -- 715,000 Principal payments on medium term notes............. (605,682) -- (1,025,583) Net increase (decrease) in other vehicle obligations...................................... 9,720 (56,962) (22,996) Net decrease in working capital facilities.......... (50,000) -- -- Proceeds from other notes payable................... 411,902 1,024 40,508 Principal payments on other notes payable........... (24,632) (8,301) (6,568) Proceeds from equity transactions, net.............. 7 -- -- Warrant repurchase.................................. -- (17,809) -- Make-whole payments................................. (23,932) (30,451) -- ----------- ----------- ----------- Net cash provided (used) by continuing financing activities...................... 100,702 (229,373) 27,967 ----------- ----------- ----------- Net cash provided (used) by discontinued operations....................................... (46,380) 95,948 45,737 ----------- ----------- ----------- Effect of exchange rate on cash....................... (402) (743) 173 ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents......................................... (67,125) 13,871 (27,980) Cash and cash equivalents, beginning of year.......... 124,011 56,886 70,757 ----------- ----------- ----------- Cash and cash equivalents, end of year................ $ 56,886 $ 70,757 $ 42,777 =========== =========== ===========
See accompanying notes to consolidated financial statements. F-6 BUDGET GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001 (DOLLAR AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) 1. SIGNIFICANT ACCOUNTING POLICIES Description of Business Budget Group, Inc. and subsidiaries (the "Company") are engaged in the business of the daily rental of vehicles, including cars, trucks and passenger vans (through both owned and franchised operations.) In December 1999, the Company adopted plans to dispose of its non-core assets, primarily the retail car sales segment, VPSI, Inc. ("VPSI") and Cruise America, Inc. ("Cruise") in order to focus on car and truck rental. The net loss and net assets to be disposed of for these non-core assets are included in the accompanying consolidated financial statements under the headings discontinued operations in the consolidated statements of operations for 1999 and 2000 and net assets (liabilities) of discontinued operations in the consolidated balance sheets for 2000. In December 2000, the Company adopted plans to re-franchise and/or close the majority of its operations in Europe. The related operating assets have been written down to their estimated net realizable value. Long-lived assets, primarily capitalized software and goodwill, have been reviewed for impairment and written down accordingly. No additional impairment has been recorded in 2001. (See Intangibles, Including Goodwill, Computer Software Systems and Note 7) Company-owned vehicle rental operations are located primarily throughout the United States and Western Europe. The largest concentration, approximately 19%, of vehicle rental assets are located in the highly competitive Florida market and approximately 17% of vehicle rental assets are located in California. Franchised vehicle operations are located worldwide. Customers are mainly business and leisure travelers. No customer accounts for more than 10% of the Company's revenues. Principles of Consolidation The accompanying consolidated financial statements include the accounts and operations of the Company and its majority owned subsidiaries including Team Fleet Financing Corporation ("TFFC"), which owns substantially all of the Company's fleet and BRAC (Bermuda) Holding Limited ("Bermuda"). All significant intercompany transactions and accounts have been eliminated in consolidation. TFFC and Bermuda are separate special purpose corporate entities and as such their assets are not available to pay the claims of any non-special purpose corporate entity creditors of Budget Group, Inc. or its other affiliates. The Company believes that the accompanying consolidated financial statements contain all adjustments (consisting of normal, recurring adjustments) that, in the opinion of management, are necessary to present fairly the Company's consolidated financial condition, results of operations and cash flows for the periods presented. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include self insurance liabilities, costs to close or dispose of operations, impairment of long-lived assets, allowance for doubtful accounts, allowance for deferred tax assets and realization of intangible assets. F-7 Changes in Accounting Estimates As previously mentioned, in the fourth quarter of 2000 the Company recorded charges of approximately $399,000 of which approximately 84% were non-cash items. Based on more complete information received, or settlement, the Company ultimately determined certain reserves were no longer needed in 2001. Therefore, the Company reversed approximately $21,000 related primarily to accounts receivable allowances, dealer commissions and executive separation costs. The Company occasionally records adjustments related to changes in actuarial estimates of its self-insurance liability (See Self Insurance Liability). The effect of these adjustments on income from continuing operations and net income was a decrease of $16,100 ($0.43 loss per basic and diluted share) for 2000. In the fourth quarter of 2000 and 2001, the Company recorded a charge of approximately $50,300 and $27,000, respectively ($1.35 and $0.72 loss per basic and diluted share, respectively) to adjust vehicle inventory disposal valuations resulting from a weakness in the vehicle resale market, largely related to trucks. As a result, the Company has increased its depreciation rates for revenue earning vehicles. Cash and Cash Equivalents The Company considers all highly liquid investments including money market funds, commercial paper and time deposits purchased with an original maturity of three months or less to be cash equivalents. Restricted Cash Restricted cash consists of funds borrowed under medium term notes and commercial paper programs not invested in revenue earning vehicles. Under the terms of these agreements, any unused funds are required to be maintained in restricted accounts and are invested in qualified short-term instruments. Trade and Vehicle Receivables, Net Trade and vehicle receivables are stated net of the related allowance for doubtful accounts. The following table reflects the activity in the allowance for doubtful accounts for the years ended December 31,
1999 2000 2001 -------- -------- -------- Balance at beginning of year................................ $ 69,040 $ 99,488 $228,180 Provision/(benefit)......................................... 32,547 116,107 (5,538) Write-offs.................................................. (12,557) (12,089) (60,968) Net change in subrogation (vehicle damage) receivables...... 10,007 24,674 29,552 Increase due to acquisitions................................ 451 -- -- -------- -------- -------- Balance at end of year...................................... $ 99,488 $228,180 $191,226 ======== ======== ========
In 2001 a significant amount of receivables were written off as collection efforts were exhausted. Revenue Earning Vehicles, Net Revenue earning vehicles are stated at cost less related discounts and manufacturers' incentives or fair market value at the date of acquisition, as appropriate, and are depreciated over their estimated economic lives or at rates corresponding to manufacturers' repurchase program guidelines, where applicable. Repurchase programs typically require the manufacturers to repurchase the vehicles after varying time frames at agreed upon prices (subject to defined condition and mileage standards). Depreciation rates generally range from 0.6% to 2.8% per month. Management periodically reviews depreciable lives and rates for adequacy based on a variety of factors including general economic conditions and estimated holding period of the vehicles. Gains and losses upon the sale of revenue earning vehicles are recorded as an adjustment to depreciation expense. Maintenance and repair are charged to operations currently. F-8 Property and Equipment, Net Property and equipment is recorded at cost or fair market value at the date of acquisition, as appropriate. Maintenance and repairs are charged to operations currently. Depreciation and amortization are provided on the straight-line method over the following estimated useful lives: Buildings and leasehold improvements........................ 5-25 years Furniture, fixtures and office equipment.................... 3-10 years
The carrying value of property and equipment is reviewed whenever events or changes in circumstances indicate that the carrying value may not be recoverable through projected undiscounted future operating cash flows or expected sales proceeds. In the fourth quarter of 1999 and 2000, assets were written down by approximately $12,900 and $8,100 charge in selling, general and administrative, respectively. The 2000 charge to selling, general and administrative was due to an impairment resulting from the plan to refranchise the majority of our European operations. Although no additional impairment is indicated at December 31, 2001, the assessment of recoverability will be impacted if estimated projected undiscounted operating cash flows are not achieved. See "Intangibles, Including Goodwill." Investments Investments in less than majority-owned entities, where the Company demonstrates significant influence (generally ownership of 20% to 50%), are accounted for using the equity method, under which the Company's share of operating results is reflected in income as earned and dividends are credited against the investment when received. (See Note 7) Deferred Financing Fees Direct costs incurred in connection with the Company's borrowings have been recorded as a prepaid expense and are being amortized over the terms of the related loan agreements to interest expense on the straight-line method, which approximates the effective interest method. Computer Software Systems The Company's purchased reservation system and associated applications and databases have been recorded at fair market value at the date of acquisition. Costs associated with the internal development of other computer software systems and system enhancements are capitalized in accordance with AICPA Statement of Position 98-1 "Accounting for Costs of Computer Software Developed or Obtained for Internal Use". Amortization is being provided on the straight-line method over two to eight years. In 1999, computer software of approximately $11,700 was written off and in the fourth quarter of 2000, computer software of approximately $34,138 was written off to selling, general and administrative primarily due to an impairment resulting from the plan to refranchise the majority of our European operations. (See "Description of Business" and Note 7) The carrying value of computer software systems is reviewed whenever events or changes in circumstances indicate that the carrying value may not be recoverable through projected undiscounted future operating cash flows or expected sales proceeds. Intangibles, Including Goodwill Intangible assets, including goodwill, consist of the following at December 31:
2000 2001 -------- -------- Franchise agreements........................................ $128,641 $123,348 Trade names................................................. 170,822 164,323 Goodwill.................................................... 495,068 481,070 -------- -------- $794,531 $768,741 ======== ========
F-9 Identifiable intangible assets primarily arose from the allocation of purchase prices of businesses acquired. Franchise agreements and trade names relate to the Budget Rent a Car Corporation and Ryder TRS. Goodwill represents the excess of the purchase price over the estimated fair value of all identifiable net assets acquired. The intangible assets are amortized over the related estimated useful lives, which range from 7 to 40 years, using the straight-line method. The carrying value of intangibles is reviewed whenever events or changes in circumstances indicate that the carrying value may not be recoverable through projected undiscounted future operating cash flows. The Company measures impairment loss as the amount by which the carrying value of the assets exceed the fair value of the assets. Fair value is calculated as the present value of estimated future cash flows excluding interest. In the fourth quarter of 2000, intangible assets of approximately $42,100, resulting from the plan to refranchise the majority of our European operations, were written off and charged to amortization and non-vehicle depreciation. Although no additional impairment is indicated at December 31, 2001, the assessment of recoverability will be impacted if estimated projected undiscounted operating cash flows are not achieved. (See Description of Business) In July 2001, the Financial Accounting Standards Board issued Statements of Accounting Standards No. 141, Business Combinations ("SFAS 141") and No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). SFAS 141 requires business combinations initiated after June 30, 2001 to be treated using the purchase method and modifies the criteria for recording intangible assets separate from goodwill. Under SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized, but are reviewed at least annually for impairment. The periodic review of impairment would be charged to results of operations in periods that the recorded value of intangibles, including goodwill, exceeds the fair value. Identifiable intangible assets that are not deemed to have indefinite lives will continue to be amortized and are no longer subject to a 40 year maximum life. The Company is required to adopt SFAS 142 beginning January 1, 2002 and is evaluating the effect of its adoption on its results of operations and financial position although an impairment charge is possible upon adoption. However, a majority of the Company's intangibles have indefinite lives and the Company expects annual amortization expense to decrease by approximately $20,000. The Company's assessment under the provisions of SFAS 121 and SFAS 142 as to the recoverability of its long-lived assets including intangibles may be materially impacted in the near-term by several factors including the outcome of its recapitalization and debt restructuring efforts as described in Note 8 under "2002 Liquidity and Borrowing Requirements". Net Assets (Liabilities) of Discontinued Operations Net assets (liabilities) of discontinued operations to be disposed of, are separately classified on the accompanying consolidated balance sheets at December 31, 2000 and 2001, at their estimated net realizable values. Environmental Costs Environmental remediation costs are recorded in accounts payable, accrued and other liabilities and in direct vehicle and operating expense in the accompanying consolidated financial statements based on estimates of known environmental remediation exposures when it becomes probable that a liability has been incurred. Environmental exposures are largely related to underground storage tanks. Expenditures are expected to be made over the next two years. A receivable is recorded for amounts recoverable from third parties when collection becomes probable. Self Insurance Liability The Company is largely self insured with respect to personal and property liability claims up to specified limits. Third-party insurance is maintained in limited areas and for claims in excess of those specified limits. A liability in the amount of $99,673 and $98,192 at December 31, 2000 and 2001, respectively, which is included in accounts payable, accrued and other liabilities, is recorded for known claims and for incurred but not reported incidents based on actuarially computed estimates of expected loss. The liability recorded as a result F-10 of these actuarially computed estimates may experience material changes from year to year as incurred but not reported incidents become known and known claims are settled. The Company maintained letters of credit totaling $61,991 at December 31, 2001, largely in support of its insurance liability in certain states and supporting the reimbursement of claims paid by third-party claims administrators. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, as measured by the enacted tax rates currently in effect. Deferred tax expense is the result of changes in the net deferred tax assets and liabilities. The effect of a change in tax rates is recognized in the period that includes the enactment date. Deferred tax liabilities are recognized to the extent they are expected to be payable upon distribution of earnings of foreign and unconsolidated subsidiaries. Translation of Foreign Financial Statements The financial statements of the Company's foreign affiliates have been translated into U.S. dollars in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation". Accordingly, assets and liabilities of foreign operations are translated at period-end rates of exchange, with any resulting translation adjustments reported as a separate component of stockholders' equity (deficit) and included in comprehensive net loss. Statement of operations accounts are translated at average exchange rates for the period and gains and losses from foreign currency transactions are included in net loss. Revenue Recognition Revenue consists primarily of fees from vehicle rentals, including revenue from loss or collision damage waivers, insurance sales and other products provided at rental locations. The Company recognizes revenue over the period in which vehicles are rented. Revenues also include monthly royalty fees from franchisees, fees generated from miscellaneous services provided to the Company's franchisees and fees generated from move management services. Most available territory has been franchised and the Company's ongoing Budget Rent a Car franchising activity is not considered material. Royalty fees are recognized in the period in which the fee is earned from the franchisee, while remaining revenues are recognized once the product is delivered or the service is performed. In December 1999, the United States Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin 101, "Revenue Recognition" (SAB 101), which provides guidance on the recognition, presentation and disclosure of revenue. SAB 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. The Company believes its revenue recognition practices conform to the guidelines prescribed in SAB 101. Advertising, Promotion and Selling Advertising, promotion and selling expense, other than direct response advertising, is charged to expense as incurred. The Company incurred advertising expense of $43,443, $50,136 and $37,189 in 1999, 2000 and 2001, respectively. Derivatives On January 1, 2001, the Company adopted the Statements of Financial Accounting Standards No. 133, ("SFAS 133") "Accounting for Derivative Instruments and Hedging Activities" subsequently amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities Deferral of the Effective Date of FASB Statement No. 133" ("SFAS 137"), and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities" ("SFAS 138"). SFAS 133 requires the Company to record all derivatives on the balance sheet at fair value. Changes in derivative fair values will either be recognized in F-11 earnings as offsets to the changes in fair value of related hedged assets, liabilities and firm commitments or, for forecasted transactions, deferred and recorded as a component of other accumulated comprehensive loss until the hedged transactions occur and are recognized in earnings. The ineffective portion of a hedging derivative's change in fair value will be immediately recognized in earnings. Based on its current limited use of derivatives, the adoption of SFAS 133 did not have a significant impact on the Consolidated Balance Sheets or Consolidated Statements of Operations. The Company uses interest rate swap agreements and other instruments, which currently do not qualify as hedges as defined under SFAS 133. The purpose of these agreements is to manage the fluctuation of interest rates on the Company's floating debt portfolio. The Company also maintained an agreement that included provisions that limits the Company's market risk on an equity investment, and those provisions now qualify as derivatives under SFAS 133. The Company does not currently hedge its currency risks. The hedges entered into by the Company can be categorized as fair value, cash flow, or net investment hedges. For derivatives designated as fair value hedges, the change in the fair value of both the derivative instrument and the hedged items are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in other comprehensive income on the Consolidated Balance Sheet and are subsequently reclassified into earnings when the hedged item affects earnings. Stock Options On April 25, 1994, the Company adopted the 1994 Incentive Stock Option Plan ("ISO Plan") and the 1994 Director's Stock Options Plan ("Director's Plan") and on July 27, 2000, the Company adopted the Budget Group, Inc. 2000 Stock Plan ("2000 Stock Plan"). The Company records compensation expense for stock options under these plans in accordance with Accounting Principles Board ("APB") Opinion 25. The Company has adopted the pro forma disclosure requirement provisions of SFAS No. 123, "Accounting for Stock Based Compensation." Loss Per Share Basic loss per share was calculated by dividing net loss from continuing operations by the weighted average number of common shares outstanding during the period. Diluted earnings per share are calculated by dividing net loss available to common stockholders after assumed conversion of dilutive securities by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if potentially dilutive common shares had been issued. The following table reconciles the loss and number of shares utilized in the earnings per share ("EPS") calculations for each of the three years in the period ended December 31, 2001.
YEAR ENDED DECEMBER 31, -------------------------------- 1999 2000 2001 -------- --------- --------- Loss from continuing operations............................ $(49,888) $(570,258) $(138,561) Effect of interest, distributions, and loan fee amortization on convertible securities -- net of income taxes.................................................... -- -- -- -------- --------- --------- Loss from continuing operations available to common stockholders after assumed conversion of dilutive securities............................................... $(49,888) $(570,258) $(138,561) ======== ========= ========= (000's) (000's) (000's) Weighted average number of common shares used in basic EPS...................................................... 36,430 37,255 37,255 Effect of dilutive securities: Stock options............................................ -- -- -- Convertible debt......................................... -- -- -- -------- --------- --------- Weighted average number of common shares and dilutive securities used in diluted EPS........................... 36,430 37,255 37,255 ======== ========= =========
F-12 Options to purchase 4,043,371, 4,056,094 and 4,052,685 shares of Class A and Class B common stock were outstanding at December 31, 1999, 2000 and 2001, respectively, but were not included in the computation of diluted EPS as any options would be antidilutive. In addition, the effect of the Company's convertible securities was antidilutive and, accordingly, not included in the computation of diluted EPS. Comprehensive Loss Net loss is adjusted for the foreign currency translation adjustment to arrive at comprehensive loss in the accompanying consolidated statements of stockholders' equity (deficit). Reclassifications Certain amounts in the 1999 and 2000 consolidated financial statements have been reclassified to conform to the current year presentation. Recent Pronouncements In August, 2001, the FASB issued SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 supercedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of" and Accounting Principles Board Opinion ("APB") No. 30, "Reporting the Results of Operations -- Reporting the Effects of the Disposal of a Segment Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS 144 establishes a single accounting model for assets to be disposed of by sale whether previously held and used or newly acquired. SFAS No. 144 retains the provisions of APB No. 30 for presentation of discontinued operations in the income statement, but broadens the presentation to include a component of an entity. SFAS 144 is effective for fiscal years beginning after December 15, 2001 and the interim periods within. The Company does not believe that the adoption of SFAS 144 will have a material impact on its consolidated results of operations. 2. ACQUISITIONS During 1999 and 2000, the Company acquired certain Budget franchise operations. The acquisitions have been accounted for under the purchase method of accounting and, accordingly, the Company has allocated the cost of the acquisitions on the basis of the estimated fair value of the tangible and identifiable intangible assets acquired and liabilities assumed. The accompanying consolidated statements of operations and cash flows reflect the operations of the acquired companies accounted for as purchases from their respective acquisition dates. 1999 Acquisitions The Company completed several small acquisitions of Budget franchises and other related businesses through December 31, 1999. These acquisitions are not material either individually or in the aggregate and the Company does not expect them to have a significant impact on its financial position or full year results of operations. The acquisitions were primarily located in Florida, Virginia, Ohio, England and France. 2000 Acquisitions The Company completed several small acquisitions of Budget franchises and a local market car rental company. These acquisitions are not material either individually or in the aggregate and the Company does not expect them to have a significant impact on its consolidated financial position or results of operations. The acquired properties are located in Kentucky, England and Australia. 3. DISPOSITIONS On March 17, 2000, the Company completed the sale of a program to lease vehicles to licensees for approximately $37,700. The sales price approximated the Company's net investment. F-13 During 2001, as part of a continuing effort to refranchise the Company's owned locations in Europe, the Company franchised 14 locations in England, 178 locations in France, closed 19 locations in Spain, refranchised 5 locations in Spain and terminated 11 agency agreements in Germany. The refranchising effort represents the Company's strategy to reduce its financial and operating risk in Europe. In addition, the Company sold one airport location in North Carolina and one airport location in Colorado. The amounts realized through the sale of these locations approximates the book value of these assets. 4. DISCONTINUED OPERATIONS In December, 1999, the Company adopted plans to sell or dispose of its car sales segment, as well as certain non-core assets and subsidiaries, primarily Cruise and VPSI. The assets of the operations sold consisted primarily of vehicles, accounts receivable and property and equipment. During 2000, the Company sold all of its corporate owned Budget Car Sales retail facilities, two new car dealerships and its ownership interest in its car sales joint venture. On June 26, 2001, the Company sold its remaining new car dealership for $2,300, which approximated its net book value. This dealership represents the final disposition related to the Company's retail car sales segment. At December 31, 2001 amounts included in net liabilities of discontinued operations largely relate to warranty liabilities and reserves for lease commitments related to Budget Car Sales. Car Sales Segment Net losses for the Car Sales segment of $10,066 (net of income tax benefits of $6,169) for the 11 months ended November 30, 1999, which was before the phase-out period began, are included in the accompanying consolidated statements of operations under the heading "Discontinued Operations". In 1999, the Company estimated losses on the disposal of the car sales segment of $10,569 (net of income taxes of $6,478) which included a provision of $5,522 (net of income tax benefits of $3,385) for expected losses during the phase out period and $5,047 (net of income tax benefit of $3,093) for losses on the disposal of assets. Actual operating losses during 2000 exceeded the original estimate by $12,108 largely due to increased warranty and financing cost estimates and interest expense. Actual disposal costs increased $6,453 due to lower than planned proceeds from the sale of new and used car dealerships. The car sales segment had retail vehicle sales revenue of $574,989 and $209,473 for the years 1999 and 2000, respectively. Operating losses were $9,756 and $5,908 for the years 1999 and 2000, respectively. These amounts are not included in the revenue or operating income (loss) from continuing operations of the accompanying consolidated statements of operations. Cruise and VPSI The Company sold VPSI and 80.1% of Cruise ("Non-core Subsidiaries") effective September 30, 2000 and October 1, 2000, respectively. The initial sales price for Cruise and VPSI was approximately $27,500 and $26,200, respectively. The purchaser of Cruise America also assumed approximately $22,700 of debt. Prior to the beginning of the phase-out period for discontinued operations, net income for the Non-core Subsidiaries of $9,739 (net of income taxes of $5,969) for the 11 months ended November 30, 1999, is included in the accompanying consolidated statements of operations under the heading "Discontinued Operations". In 1999, the Company estimated losses on the disposal of the Non-core Subsidiaries of $3,756 (net of income taxes of $2,302) which included a provision of $2,018 (net of income tax benefits of $1,237) for expected losses during the phase out period and $1,738 (net of income tax benefit of $1,066) for losses on the disposal of assets. Actual operating losses during 2000 exceeded the original estimate by approximately $17,959, largely due to the expected settlement of a contingency included in the original sale agreement resulting in a charge of $20,318, partially offset by lower than anticipated operating losses during 2000. Actual disposal costs were approximately $2,167 lower than originally estimated. F-14 The Non-core Subsidiaries had revenue of $148,781 and $105,776 and operating income of $27,605 and $11,967 for the years 1999 and 2000, respectively. These amounts are not included in the revenue or operating income (loss) of the accompanying consolidated statements of operations. In January 2002, the Company sold its remaining 19.9% interest in Cruise and settled the remaining contingency related to the disposition for an amount approximating the carrying value. In October 2001, the Company agreed to split an existing $9,800 note receivable due from the purchaser of VPSI into separate $4,800 and $5,000 notes. In addition, the Company accepted $3,500 in cash as full payment on the $4,800 note in October 2001 and agreed to accept a similar discounted amount in the event the purchaser repaid the remaining note on or before December 31, 2003. 5. REVENUE EARNING VEHICLES, NET Revenue earning vehicles, net consist of the following at December 31:
2000 2001 ---------- ---------- Revenue earning vehicles.................................... $3,387,440 $3,289,715 Less -- accumulated depreciation............................ (511,332) (579,987) ---------- ---------- $2,876,108 $2,709,728 ========== ==========
6. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consist of the following at December 31:
2000 2001 --------- --------- Land........................................................ $ 36,301 $ 28,300 Buildings and leasehold improvements........................ 131,242 129,917 Furniture, fixtures and office equipment.................... 115,483 110,084 --------- --------- 283,026 268,301 Less -- accumulated depreciation and amortization........... (113,995) (135,754) --------- --------- $ 169,031 $ 132,547 ========= =========
7. PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets include purchased software and capitalized software systems development costs, net of accumulated amortization, which amounts to approximately $53,005 and $34,061 at December 31, 2000 and 2001, respectively. In addition, prepaid expenses and other assets include the Company's 20% investment in a foreign rental operation, and a 50% investment in a truck rental joint venture operating out of Budget Storage USA locations. On March 6, 2000, the Company entered into a ten-year marketing agreement with Homestore.com ("Homestore") whereby the Company received stock with a fair market value of approximately $70,000. The marketing agreement provides for various services including marketing, exclusive branding and online reservations. During the first 30 months of the agreement, the Homestore stock was subject to certain put provisions that guaranteed the minimum value of the stock received by the Company to be no less than approximately $70,000. In addition, the maximum value was subject to certain limitations during the first 24 months. In December 2000, the Company evaluated its Homestore stock taking into consideration the market value of the Homestore shares, the restriction on the sale of shares, the ultimate value of the put provision, given the effect it may have on the earnings of Homestore, and the resulting impact on the market value of the equity securities. As a result, the Company recorded a $30,000 charge, in the fourth quarter of 2000, included in selling, general and administrative, to recognize a decrease in market value that is considered to be other than temporary. F-15 In May and June 2001, the Company entered into a series of financing transactions aggregating $36,600 ($34,700 of cash, net of fees and interest), secured by an equity investment held by the Company (the "Equity Secured Transaction"). The transaction contains an embedded derivative (the "Embedded Equity Transaction Derivative"), which the Company recorded as a derivative financial instrument in accordance with the requirements of SFAS 133. The change in fair value of the Embedded Equity Transaction Derivative is recognized through earnings, and its changes in fair value are recorded in Prepaid Expenses and Other Assets. The changes in fair value of this instrument are approximately offset by changes in fair value of the related equity investment and has been designated as a fair value hedge of that investment. The Equity Secured Transaction matures on November 30, 2002 with certain specified optional termination dates, subject to certain terms and conditions, and requires payment equal to the fair value of the underlying equity securities at the maturity or optional termination dates. At December 31, 2001, the Company has an outstanding non-hedge interest rate swap with a notional amount of approximately $5,104 and a fair value of approximately $100. The change in value of this interest rate swap was not material (less than $100). The Embedded Equity Transaction Derivative was designated as a fair value hedge of the related equity investment. The change in the fair value of the Embedded Equity Transaction Derivative was a gain of approximately $35,200 for the twelve months ended December 31, 2001 and was offset by the change in value of the related equity investment. Both of these changes were recorded in Selling, General and Administrative expenses in the Consolidated Statements of Operations. The ineffectiveness of this fair value hedging relationship for the year ended December 31, 2001 was not material. In October 2001, the Company entered into an amended marketing agreement with Homestore canceling the put options contained in the original agreement in exchange for 4,804,560 unregistered shares of Homestore common stock which were subsequently registered with the Securities and Exchange Commission. The term of the original marketing agreement with Homestore and its requirements were extended one year to March 2011. The Company sold 1,611,644 shares in the fourth quarter of 2001 for approximately $4,570 (net of fees) and has recorded the remaining 3,192,916 shares in prepaid expenses and other assets at their estimated fair value of $4,800. The Company recorded a gain of approximately $1,724 in the fourth quarter of 2001 related to the shares received in settlement of the put option (net of fees and other consideration paid to Homestore). Deferred income amounts related to the marketing agreement is approximately $57,353 at December 31, 2001. The revenue from the Company's investees amounts to less than 10% of consolidated revenues and the amount of undistributed earnings included in consolidated accumulated deficit is not significant. Due to changes in operating strategy, several computer software projects with costs of approximately $19,743 and $34,138 were determined not to provide future benefits and were consequently written off by the Company in the fourth quarter of 1999 and 2000, respectively, and the related charges are included in selling, general and administrative in the consolidated statements of operations. 8. NOTES PAYABLE 2002 Liquidity and Borrowing Requirements The Company has had recurring net losses for the three-year period ended December 31, 2001 and has a stockholders' deficit of $230,333 at December 31, 2001. On April 1, 2002, the Company did not make a required $18,250 interest payment to holders of our Senior Notes. As of that date, the aggregate principal amount of the Senior Notes outstanding was $400,000. The applicable grace period for the non-payment will expire on May 1, 2002. If the Company does not make the required payment on or prior to May 1, 2002, a default will exist under the indenture for the Senior Notes and, upon the request of holders of 25% or more of the Senior Notes outstanding, the trustee for the Senior Notes may declare the Senior Notes immediately due and payable. Such a payment default under the Senior Notes will, unless waived by a sufficient number of holders of the Senior Notes, trigger defaults under the working capital facility and the agreements related to our MTN's. In the case of the working capital facility, the lenders holding at least 51% of the outstanding principal amount of the loans and letters of credit may F-16 cause the acceleration of the outstanding debt under that facility. In the case of the agreements related to our MTN's and CP facility, the indenture trustees could proceed against the collateral, which consists of substantially all of our fleet vehicles. The Company has engaged Lazard Freres & Co. LLC ("Lazard") as financial advisor to assist it in exploring and evaluating strategic alternatives, restructuring its operations, and analyzing available capital restructuring and financial alternatives. Since its retention, Lazard has assisted us in pursuing a recapitalization of the Company, coupled with an equity or debt investment by a new financial investor. Lazard, at the Company's request, has contacted a number of potential financial investors to determine their interest in supporting a recapitalization through possible new equity or debt investment in the Company. Certain of the parties contacted have executed confidentiality agreements and commenced preliminary due diligence. The Company believes it will ultimately be able to achieve a desirable recapitalization or other strategic alternatives. However, no assurance can be given that we will be successful in attracting new investment in the Company. Furthermore, it is expected that any such investment would be conditioned upon a successful restructuring of all or a significant portion of our outstanding non-fleet indebtedness. On December 20, 2001 the Company reached an agreement with its lenders on amendments to the working capital facility. This amendment waives the requirement for the minimum levels for Adjusted EBITDA until February 8, 2002. The agreement also allowed for the reduction of the required collateral for the credit facility as of December 31, 2001 and reduced the working capital facility amount from $500,000 to $430,000. In 2002 the Company entered into agreements with its lenders extending the waiver period for Adjusted EBITDA requirements until April 30, 2002 and reducing the required collateral for the credit facility. It is the Company's intention to seek and believes it will be able to obtain extensions of the agreement, however, no assurances can be given that such attempt will be successful. If the Company was unable to obtain extensions of the waivers, its ability to maintain letters of credit, including those related to it fleet financing, would be limited. The inability to maintain letters of credit could have a material adverse impact on the Company's operations. This facility requires monthly interest payments on the outstanding balance at a rate based on either LIBOR plus 3.00% or prime plus 0.75% (4.87% at December 31, 2001) and expires in 2003. At December 31, 2001, the Company had $427,879 in letters of credit and $0 in working capital borrowings outstanding under this facility. See "2002 Liquidity and Borrowing Requirements". A substantial amount of the Company's fleet financings mature, or the facilities expire, during 2002 including $885,817 in MTN's, the $485,000 CP facility and $70,553 in other fleet facilities. The Company's ability to refinance such obligations in order to maintain peak season fleet levels is likely dependent on successful completion of its recapitalization and related efforts and a failure to refinance such obligations may have a material adverse effect on the Company's operations. In the first quarter of 2002, certain holders of our Senior Notes formed an ad-hoc bondholders committee (the "Ad-Hoc Bondholders Committee") to evaluate restructuring alternatives with respect to the Company's outstanding non-fleet debt. The Company has agreed with the Ad-Hoc Bondholders Committee to pay for the retention of certain professionals on their behalf. The Ad-Hoc Bondholders Committee has retained financial and legal advisors and these advisors have commenced due diligence with respect to the Company. The Company has entered into preliminary discussions with the Ad-Hoc Bondholders Committee regarding certain restructuring alternatives, which could include exchanging all or a portion of our outstanding non-fleet debt for equity, new notes or cash. The Company believes that it will ultimately be able to achieve a desirable debt restructuring. However, no assurance can be given that any of these discussions will result in a restructuring of outstanding indebtedness. The previously mentioned circumstances and the Company's substantial indebtedness have various negative consequences for the business, including: (a) limiting the Company's ability to obtain additional financing including fleet financing; (b) limiting the Company's ability to refinance the MTN's maturing in 2002, and the CP facility and other fleet financings expiring in 2002; (c) limiting the Company's ability to use operating cash flow in other areas of its business because it must dedicate a substantial portion of these funds to debt service; (d) limiting the Company's flexibility to react to changes in our industry and changes in market conditions; and (e) increasing the Company's vulnerability to a downturn in its business. During 2001 F-17 and the first quarter of 2002, the Company was unable to generate sufficient earnings, cash flow or Adjusted EBITDA, or to borrow additional funds, to enable it to make its April 1, 2002 interest payments on the Senior Notes. The Company's ability to make these interest payments prior to the expiration of the 30-day grace period provided under the indenture for the Senior Notes is dependent on the successful completion of one or more of the strategic or debt restructuring alternatives described above. The Company believes that it will ultimately be able to achieve a desirable strategic or debt restructuring alternative. However, no assurance can be given that the Company will be successful in these efforts. If the Company is unsuccessful in completing strategic alternatives or restructuring its obligations, the Company will likely need to pursue a reorganization of the Company under the federal bankruptcy code. Even if the Company is successful in arranging for a strategic alternative or debt restructuring transaction, it is possible that the completion of any such transaction could involve the Company's reorganization under the federal bankruptcy code. Any such strategic alternative or debt restructuring transaction, whether effectuated outside of bankruptcy proceedings or under the federal bankruptcy code, will likely result in the Company's existing common stock being substantially diluted or having little or no value and its indebtedness being worth substantially less than its face value. In addition, the outcome of the recapitalization and debt restructuring efforts may have a material impact on the Company's ability to recover the carrying value of its long-lived assets, including intangibles. See Note 1 under the heading "Intangibles Including Goodwill". Notes payable consist of the following at December 31:
2000 2001 ---------- ---------- Commercial paper............................................ $ 156,938 $ 484,544 Medium term notes: Senior.................................................... 2,244,000 1,950,605 Subordinated.............................................. 482,000 464,812 Convertible subordinated notes.............................. 45,000 45,000 Vehicle obligations......................................... 8,733 74,364 Senior notes................................................ 400,000 400,000 Foreign notes............................................... 113,481 24,101 Other....................................................... 6,445 41,138 ---------- ---------- $3,456,597 $3,484,564 ========== ==========
Debt Covenants Many of the Company's debt obligations contain restrictive covenants; the most restrictive of which are contained in the working capital facility. The Company was in compliance with, or had obtained amendments or waivers for events of non-compliance with all covenants as of December 31, 2001. (See "Working Capital Facility") In early 2001, the Company reached an agreement with its lenders on amendments to the working capital facility. In addition to being secured by cash, accounts receivable and vehicles and restricting of the payments of dividends, the amendments required the Company to provide additional collateral in the form of trademarks, liens on certain real estate and furniture and equipment, limits future cash investments in international operations and, modifies or waives certain financial covenants. The amendment requires the Company to maintain certain minimal levels of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and defer interest payments on the trust preferred securities for five quarters which commenced with the payment due on March 15, 2001. On December 20, 2001 the Company reached an agreement with its lenders on further amendments to the working capital facility. This amendment waives the requirement for the minimal levels for Adjusted EBITDA until February 8, 2002. The agreement also allowed for the reduction of the required collateral, due to a borrowing base deficiency, for the credit facility for November 30, and December 31, 2001 and reduced the working capital facility amount from $500,000 to $430,000. On February 7, 2002 the Company entered into an agreement with its lenders extending the waiver period for Adjusted EBITDA until March 8, 2002 and F-18 also allowing for the reduction of the required collateral for the borrowing base requirements for January 31, 2002. On March 7, 2002 and April 8, 2002 the Company reached an agreement with its lenders to the working capital facility extending the waiver for the Adjusted EBITDA requirements through April 8, 2002 and April 30, 2002, respectively, and allowing for the reduction of the required collateral for the borrowing base requirements. See "2002 Liquidity and Borrowing Requirements" for further discussion. 2001 Debt and Security Placements and Retirements On March 30, 2001, the Company entered into a $350,000 seasonal funding facility ("Seasonal Facility") that expired on October 31, 2001. The Seasonal Facility was used exclusively to purchase vehicles during the peak rental season. The Seasonal Facility was fully repaid on October 31, 2001. On April 16, 2001, the Company entered into a $100,000 seasonal funding facility ("Seasonal Facility-2") that bears a variable rate of interest of prime less 0.50% (or 4.25% at December 31, 2001) and matured in December 2001. In December 2001, this facility was renewed for a principal amount of $80,000 due in November 2002. On December 31, 2001 the outstanding principal amount on the Seasonal Facility-2 was $70,553. The Seasonal Facility-2 is used to purchase revenue-earning vehicles and is secured by these vehicles. On April 18, 2001, the Company issued $475,000 in medium term notes ("TFFC-2001-2"). The TFFC-2001-2 notes consist of senior notes and subordinated notes with monthly principal payments commencing in October 2003 with the final payment due in December 2003. The notes bear interest rates ranging from LIBOR plus 0.49% (or 2.42% at December 31, 2001) to LIBOR plus 1.94% (or 3.87% at December 31, 2001). On November 13, 2001, the Company entered into a $100,000 seasonal funding facility ("Seasonal Facility-3) that expired on November 30, 2001. The Seasonal Facility-3 was used exclusively to purchase vehicles and was fully repaid on November 30, 2001. On November 21, 2001, the Company issued $240,000 in medium term notes ("TFFC-2001-3"). The TFFC-2001-3 notes consist of senior notes and subordinated notes with monthly principal payments commencing in January 2004 with the final payment due in March 2004. The notes bear interest rates ranging from LIBOR plus 0.90% (or 2.83% at December 31, 2001) to LIBOR plus 2.93% (or 4.86% at December 31, 2001). Commercial Paper The commercial paper facility (the "CP") was renewed in June 2001 for $485,000, had an outstanding principal balance of $156,938 and $484,544 at December 31, 2000 and 2001, respectively, bears interest rates ranging from 1.95% to 2.25% at December 31, 2001, and is secured by the applicable vehicles and vehicle program receivables. The CP facility expires in June 2002. Under limited circumstances, the CP may be repaid by draws under a related bank provided liquidity facility ($400,000), or a related letter of credit ($85,000). The CP is issued periodically with maturities of up to 58 days. It is the Company's intention to renew the liquidity facility or to obtain financing under similar terms when the present agreement expires. No amounts were drawn under the bank provided liquidity facility or related letter of credit at December 31, 2001. Medium Term Notes Medium term notes are comprised of the notes issued in December 1996 ("TFFC-96 notes"), notes issued in April 1997 ("TFFC-97 notes"), notes issued in June 1998 ("TFFC-98 notes"), notes issued in June 1999 ("TFFC-99 notes), notes issued in April 2001 ("TFFC-2001-2") and notes issued in November 2001 ("TFFC-2001-3") collectively "MTN notes". MTN notes are secured by the underlying vehicles, manufacturer receivables and restricted cash of $4,074 and $310,046 at December 31, 2000 and 2001, respectively. Under limited circumstances the MTN notes may be repaid by draws under related letters of credit amounting to $365,888 at December 31, 2001. No amounts were drawn under the related letters of credit at December 31, 2001. F-19 The TFFC-96 notes consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $69,167 at December 31, 2001 and $166,000 at December 31, 2000, bear interest at 6.65% per annum. Monthly principal payments commenced in June 2001, with the last payment due in May 2002. The subordinated notes, with an aggregate principal balance of $10,000 at December 31, 2001 and 2000, bear interest at 7.10% per annum and are payable in full in June 2002. Interest on the TFFC-96 notes is payable monthly. The TFFC-97 notes consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $393,750 at December 31, 2001 and $472,500 at December 31, 2000, bear interest at 7.35% per annum. Monthly principal payments commenced in November 2001, with the last payment due in September 2002. The subordinated notes, with an aggregate principal balance of $27,500 at December 30, 2001 and 2000, bear interest at 7.80% per annum and are payable in full in November 2002. Interest on the TFFC-97 notes is payable monthly. The TFFC-98 notes consist of senior notes and subordinated notes and have an aggregate principal balance of $650,000 and $1,100,000 at December 31, 2001 and 2000, respectively. The TFFC-98 notes bear interest at fixed rates ranging from 6.13% to 6.84% and have maturity dates from November 2002 to March 2006. These notes were issued in three different series. Principal payments on TFFC-98-2 commenced on March 2001 and were fully repaid on October 31, 2001. TFFC-98-3 has a senior principal amount of $425,000 bearing a fixed interest rate of 6.13% and a subordinated amount of $75,000 bearing fixed interest rates from 6.24% to 6.63% on December 31, 2001. Principal payments of $35.4 million on a monthly basis for TFFC-98-3 commence in November 2002 with the final principal payment due in March 2004. TFFC-98-4 has a senior principal amount of $127,500 bearing a fixed interest rates of 6.28% and a subordinated amount of $22,500 bearing fixed interest rates from 6.48% to 6.84% on December 31, 2001. Principal payments for TFFC-98-4 commence in November 2004 with the final principal payment due in March 2006. Interest on the TFFC-98 notes is payable monthly. The TFFC-99 notes consist of senior notes and subordinated notes and have an aggregate principal balance of $550,000 and $950,000 at December 31, 2001 and 2000, respectively and bear interest rates ranging from 6.70 to 7.85% and have maturity dates through July 2004. These notes were issued in three different series. TFFC-99-2 has been paid in full. TFFC-99-3 has a senior principal amount of $248,500 bearing fixed interest rates from 6.70% and a subordinated amount of $101,500 bearing fixed interest rates from 6.90% to 7.05% December 31, 2001. Principal payments for TFFC-99-3 commence in June 2002 of $248.5 million with the final payment of $101.5 million due in July 2002. TFFC-99-4 has a senior principal amount of $142,000 with fixed interest rates of 6.90% and a subordinated amount of $58,000 bearing fixed interest rates from 7.00% to 7.85% on December 31, 2001. Principal payments for TFFC-99-4 commence on May 2004 with the final payment due in July 2004. Interest on the TFFC-99 notes is payable monthly. The TFFC-2001-2 notes issued in April 2001 for $475,000 consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $362,188 bear interest at LIBOR plus 0.49% (or 2.42% at December 31, 2001) with principal payments commencing in October 2003 and the last payment due in November 2003. The subordinated notes, with an aggregate principal balance of $112,812 bear interest at LIBOR plus 0.94% (or 2.87% at December 31, 2001) to LIBOR plus 1.94% (or 3.87% at December 31, 2001) with the full principal payment due in December 2003. Interest on the TFFC-2001-2 notes is payable monthly. The TFFC-2001-3 notes issued in November 2001 for $240,000 consist of senior notes and subordinated notes. The senior notes, with an aggregate principal balance of $182,500 bear interest at LIBOR plus 0.90% (or 2.83% at December 31, 2001) with principal payments commencing in January 2004 and the last payment due in March 2004. The subordinated notes, with an aggregate principal balance of $57,500 bear interest at LIBOR plus 1.18% (or 3.11% at December 31, 2001) to LIBOR plus 2.93% (or 4.86% at December 31, 2001) with the full principal payment due in March 2004. Interest on the TFFC-2001-3 notes is payable monthly. F-20 Convertible Subordinated Notes In April 1997, the Company issued convertible subordinated notes with an aggregate principal amount of $45,000 bearing interest at 6.85% per annum due 2007. Upon demand, at a conversion price of $27.96 per share, the convertible subordinated notes are convertible into 1,609,436 shares of Class A common stock. Vehicle Obligations Vehicle obligations consist of outstanding lines of credit to purchase rental vehicles. Collateralized lines of credit consist of $8,733 and $74,364 at December 31, 2000 and 2001, respectively, for rental vehicles and mature in various months throughout 2002. Vehicle obligations are collateralized by revenue earning vehicles financed under these credit facilities and proceeds from the sale, lease or rental of these vehicles. Vehicle obligations relating to the rental fleet are generally amortized over 4 to 36 months with monthly principal payments ranging from 1.5% to 2.5% of the capitalized vehicle cost. When rental vehicles are sold, the related unpaid obligation is due. Interest payments for rental fleet facilities are due monthly at interest rates ranging from 4.25% to 7.25% at December 31, 2001. Management expects vehicle obligations will generally be repaid within one year with proceeds received from either the repurchase of the vehicles by the manufacturers in accordance with the terms of the repurchase programs or from the sale of the vehicles. Senior Notes The Senior Notes consist of an aggregate principal amount of $400,000 at December 31, 2000 and 2001. The Senior Notes bear interest at 9.125% and mature in 2006. Foreign Notes The foreign notes primarily provide financing for vehicle purchases and the funding of working capital. At December 31, 2000 and 2001, approximately $111,340 and $22,713, respectively, relates to vehicle debt, while $2,141 and $1,388, respectively, relates to the funding of working capital and various other debt. The foreign notes are largely secured by vehicles, bear interest at rates ranging from 4.20% to 8.50% per annum and mature from January 2002 through 2011. Other Notes The Company and its subsidiaries had $6,445 and $41,138 of debt outstanding at December 31, 2000 and 2001, respectively, under various other credit facilities which are used primarily to provide working capital, finance operating activities and related to the Equity Secured Transaction. See Note 7. Working Capital Facility In early 2001, the Company reached agreement with its lenders on amendments to the working capital facility. In addition to being secured by cash, accounts receivable and vehicles and the restricting of the payment of dividends, the amendments required the Company to provide additional collateral in the form of trademarks, liens on certain real estate and furniture and equipment, limited future cash investments in international operations and, modified or waived certain financial covenants. The amendment required the Company to maintain certain minimal levels of adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and deferred interest payments on the trust preferred securities for five quarters commencing with the payment due on March 15, 2001. The facility, which allowed up to $550,000 in letters of credit and a $25,000 line of credit, may not have been fully utilized unless a seasonal debt facility for no less than $350,000 was in place prior to April 30, 2001 and the CP liquidity facility or a similar facility, was renewed in the amount of at least $400,000. The seasonal facility was secured in March 2001. In July of 2001, the Company experienced a shortfall in its borrowing base. The borrowing base supports outstanding letters of credit under the Company's working capital facility and requires the Company to provide collateral in the form of liens on cash, accounts receivables, owned fleet, trademarks, certain real F-21 estate and furniture and equipment. The Company obtained a waiver to cure the shortfall. In conjunction with the waiver, the Company's working capital facility was reduced to $500,000 from $550,000. Maturities schedule of aggregate notes payable at December 31, is as follows:
YEAR ENDING DECEMBER 31, AMOUNT - ------------------------ ---------- 2002........................................................ $1,505,206 2003........................................................ 956,685 2004........................................................ 422,746 2005........................................................ 135,520 2006........................................................ 415,770 Thereafter.................................................. 48,637 ---------- $3,484,564 ==========
The above table does not reflect any acceleration of scheduled maturities. 9. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY Proceeds from the Company obligated mandatorily redeemable preferred securities ("trust preferred securities") were used by a subsidiary to invest in subordinated debentures of the parent Company, which represents substantially all of the subsidiary's assets. The Company ultimately used the proceeds to fund the redemption of certain of the Company's outstanding indebtedness. The Company has issued a subordinated guarantee of the subsidiary's obligations under the trust preferred securities. The 6,000,000 shares of trust preferred securities issued and outstanding are reflected in the balance sheet as "Company Obligated Mandatorily Redeemable Securities of Subsidiary", while dividends are reflected in the consolidated statements of operations as a minority interest captioned as "Distributions on trust preferred securities". The trust preferred securities accrue distributions at a rate of 6.25% per annum, have a liquidation value of $50 per share, are convertible into the Company's Class A common stock at the rate of 1.5179 shares of Class A common stock for each share of trust preferred securities and are subject to mandatory redemption at 101% of the principal amount plus accrued interest upon the redemption of the underlying debentures due on June 15, 2028. The Company has the right to defer interest payments due on the subordinated debentures for up to twenty consecutive quarters, which will also cause a deferral of distributions under the trust preferred securities. During a deferral period, the distributions will accumulate and the Company has agreed, among other things, not to declare any dividends on its capital stock (subject to certain exemptions). In February 2001, the Company exercised its option to defer the interest payments due on March 15, June 15, September 15 and December 15, 2001. The Company is required to defer the interest payment due on March 15, 2002 on the trust preferred securities under the working capital amendment. 10. RELATED PARTY TRANSACTIONS The Company leases facilities from an entity owned by certain stockholders. Operating lease payments for the years ended December 31, 1999, 2000 and 2001, were $2,044, $1,813 and $1,789, respectively. The entity assigned lease payments from the Company to a bank. Approximately $4,736, $76 and $21 cash and cash equivalents are on deposit with or being held as agent for the Company by a bank at December 31, 1999, 2000 and 2001, respectively. A stockholder and director of the Company served on the bank's board of directors. A director of the Company is a managing director of Credit Suisse First Boston Corporation ("CSFBC"), an investment banking firm which periodically performs services for the Company for which it receives compensation and is the lead bank in the Company's working capital facility. CSFBC and its affiliates have provided extensive services to the Company in connection with certain of the Company's debt facilities, acquisitions and public offerings of securities. Most recently, during 1998 CSFBC acted as lead underwriter in connection with the offering of 6.25% trust preferred securities of Budget Group Capital Trust in June 1998 F-22 and served as the Company's financial advisor in connection with the Company's acquisition of Ryder TRS in June 1998, and acted as underwriters for both the Senior Notes in April 1999 and the TFFC-99 notes issued in June 1999 and acted as intermediary in the Equity Secured Transaction. Fees paid to CSFBC were approximately $20,000, $1,252 and $2,249 in 1999, 2000 and 2001, respectively. A director of the Company is a managing director of McDonald Investments Inc. ("McDonald") which performs financial advisory services related to the Company's 401(k) and pension plan. In 2001, the Company paid McDonald $290 in advisory fees. The Company also paid McDonald approximately $48 in transaction fees for the sale of equity securities. In December 1998, the Company's executive officers participated in the Company's Executive Share Purchase Program ("the Program"). Under the Program, executive officers purchased Class A common stock with funds provided by Key Bank N.A. ("Key Bank"). The Company purchased the Class A common stock on behalf of the officers in December 1998, prior to the finalization of the loans and was repaid with the funding of the Key Bank loans in January 1999. Interest on the loans is due quarterly and paid by the Company to Key Bank and is to be reimbursed by the officer to the Company from the officer's annual incentive award. Reimbursement of interest by the officers to the Company will be forgiven if the price of the Class A common stock or financial results reach certain performance targets or under other specified circumstances. In August 2000, the Company paid Key Bank approximately $3,564 for the outstanding loans and interest of the Program. The Company recorded a charge of approximately $3,097 in 2000 to reduce the loan balance to the value of the underlying collateral and in April 2001 the officers surrendered the Class A common stock in exchange for note forgiveness resulting in a charge of approximately $8. On September 30, 2000, the Company sold VPSI to a group of investors that includes a director of the Company for $26,200 (See Note 4). In October 2001, the Company agreed to split an existing $9,800 note receivable due from the purchaser of VPSI into separate $4,800 and $5,000 notes. In addition, the Company accepted $3,500 in cash as full payment on the $4,800 note and agreed to accept a similar discounted amount in the event the purchaser repaid the remaining note on or before December 31, 2003. The note originally had payments due through September 2005. In June 2000, the Company entered into an agreement to sell vehicles and personal property of three retail car sales locations in Colorado for approximately $3,800 and lease the real property of these locations to a group of investors, that includes two directors of the Company. In June 2001, the Company sold a franchise location in North Carolina to a group of investors that includes a director of the Company. The sales price was approximately $131 and included assets with a net book value of approximately $31. The Company paid one of its board of director members approximately $46 for consulting services during 2001. 11. LEASES The Company leases certain revenue earning vehicles and facilities under operating leases that expire at various dates. Generally, the facility leases are subject to payment increases based on cost of living indices and require the Company to pay taxes, maintenance, insurance and certain other operating expenses. Certain facility leases require the Company to pay fixed amounts plus contingent rentals based on gross rental revenues, as defined, and gasoline sales. In addition, the Company guarantees airport concession fees on behalf of certain licensees. F-23 Expense for operating leases and airport concession fees, which are included in direct vehicle and operating in the Consolidated Statements of Operations, consist of the following:
YEAR ENDED DECEMBER 31, ------------------------------ 1999 2000 2001 -------- -------- -------- Revenue earning vehicles............................. $ 56,461 $ 96,859 $ 60,994 Facilities: Minimum rentals.................................... 77,463 74,024 66,324 Contingent rentals................................. 43,194 52,533 45,502 -------- -------- -------- Total...................................... $177,118 $223,416 $172,820 ======== ======== ========
Future minimum payments under noncancellable leases and concession agreements at December 31, 2001, are as follows:
YEAR ENDING DECEMBER 31, - ------------------------ 2002........................................................ $ 40,630 2003........................................................ 21,502 2004........................................................ 18,263 2005........................................................ 17,618 2006........................................................ 16,663 Thereafter.................................................. 27,942 -------- $142,618 ========
12. INCOME TAXES The provision (benefit) for income taxes consists of the following:
YEAR ENDED DECEMBER 31, -------------------------- 1999 2000 2001 -------- ------ ------ Continuing operations Current: Federal............................................. $ 193 $ -- $ -- State............................................... 2,773 2,774 1,660 Foreign............................................. 1,734 1,671 1,768 Deferred............................................ (28,526) (757) -- -------- ------ ------ Total continuing operations.................... (23,826) 3,688 3,428 -------- ------ ------ Discontinued operations Loss from operations................................... (200) -- -- Estimated loss from disposal........................... (8,780) -- -- -------- ------ ------ Total discontinued operations.................. (8,980) -- -- -------- ------ ------ $(32,806) $3,688 $3,428 ======== ====== ======
The provision (benefit) for income taxes for income (loss) from continuing operations differs from the amount computed using the statutory federal income tax rate as follows:
YEAR ENDED DECEMBER 31, ------------------------------- 1999 2000 2001 -------- --------- -------- Income tax benefit at federal statutory rate.......... $(19,237) $(203,761) $(40,443) Distributions on trust preferred securities........... (6,563) (6,563) (6,853) Nondeductible portion of amortization of intangibles......................................... 3,446 4,368 3,867 State tax provision (benefit), net of federal benefit............................................. (1,881) (13,929) (271) Change in valuation allowance......................... -- 223,097 46,855 Other................................................. 409 476 273 -------- --------- -------- $(23,826) $ 3,688 $ 3,428 ======== ========= ========
F-24 The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, relate to the following:
2000 2001 -------- -------- Deferred tax assets: Net operating loss carryforwards.......................... $294,325 $366,110 Estimated self insurance liability........................ 42,497 43,142 Accrued expenses -- pension............................... 6,351 6,276 Accounts receivable, principally due to allowance for doubtful accounts...................................... 29,319 25,716 Business tax credit carryforwards......................... 6,792 6,792 Foreign tax credit carryforwards.......................... 2,632 2,632 Alternative minimum tax carryforwards..................... 2,970 2,970 Foreign tax assets and net operating loss carryforwards... 56,927 59,973 Non-deductible reserves, accrued expenses, investments and other.................................................. 55,633 36,033 -------- -------- Total gross deferred tax assets................... 497,446 549,644 Less -- valuation allowance....................... (279,213) (319,511) -------- -------- 218,233 230,133 Deferred tax liabilities: Difference between book and tax bases of revenue earning vehicles and property and equipment.................... 101,634 115,369 Intangibles............................................... 111,624 109,789 Other..................................................... 4,975 4,975 -------- -------- Total gross deferred tax liabilities.............. 218,233 230,133 -------- -------- Net deferred tax liability........................ $ -- $ -- ======== ========
The Company has federal and state net operating loss carryforwards available to offset future taxable income. At December 31, 2001, the Company and its subsidiaries have federal tax loss carryforwards of approximately $963,449 expiring through December 2021 and foreign tax loss carryforwards of $157,824. The Company has recorded a valuation allowance for a portion of the acquired net operating loss carryforwards and other credit carryforwards due to the uncertainty of their ultimate realization. Any subsequently recognized tax benefits attributed to the change in the valuation allowance related to acquisitions will reduce intangibles. The Company has also recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized due to the expiration of federal net operating losses, tax credit carry forwards and foreign net operating losses whose realization is uncertain. The increase in the valuation allowance primarily relates to 2000 and 2001 federal and foreign net operating losses and certain expenses not currently deductible for tax purposes. Any subsequently recognized tax benefits related to the change in the valuation allowance related to the federal net operating losses ($192,475) or the foreign net operating losses ($59,973) will reduce income tax expenses as taxable income is earned or will reduce tax expenses or increase income tax benefits when the realization of these tax benefits is otherwise deemed to be more likely than not. 13. PENSION AND OTHER BENEFIT PLANS Substantially all employees of the United Kingdom and certain employees in the U.S. are covered under noncontributory pension plans. Plan benefits are based on final average compensation. The Company's funding policy for the domestic plan is to contribute the minimum ERISA contribution required under the projected unit credit actuarial cost method. The domestic defined benefit pension plan has been suspended. As a result of this suspension, employees earn no additional benefits under the plan. The domestic plan is supplemented by an unfunded, nonqualified plan providing benefits (as computed under the benefit formula) in excess of certain limits. The cost of the supplemental plan was approximately $594 in 1999, $583 in 2000 and $563 in 2001. F-25 The Company maintains an unfunded, nonqualified plan providing benefits to certain of its officers, (the "Executive Protection Plan") based on percentage of final compensation. The cost of the Executive Protection Plan was approximately, $420 in 1999, $364 in 2000 and $418 in 2001. The Company also maintains a Savings Plus Plan. Under this plan, an eligible employee of the Company, or its participating subsidiaries, who has completed one year of continuous service and enrolls in the plan may elect to defer from 1% to 15% of specified compensation under a "cash or deferred arrangement" under Section 401(k) of the Internal Revenue Code, subject to certain limitations. The Company contributes 60% on the first 6% of each participating employee's eligible salary deferrals to various funds established by the plan, plus an additional contribution at the discretion of the Board of Directors, based on a percentage of an employee's total cash compensation. The cost of the plan was approximately $1,670, $1,236 and $2,857 in 1999, 2000 and 2001, respectively. Each of the Company's defined benefit plan's accumulated benefit obligation exceeds the plan's assets at December 31, 2000 and 2001. The following table sets forth the domestic and foreign pension plans funded status and amounts recognized in the Company's consolidated financial statements at December 31, 2000 and 2001:
2000 2001 ------------------ ------------------ DOMESTIC FOREIGN DOMESTIC FOREIGN PLANS PLAN PLANS PLAN -------- ------- -------- ------- Change in benefit obligation: Benefit obligation at beginning of year............... $ 37,745 $16,515 $ 35,363 $18,904 Service cost.......................................... 90 1,852 90 1,294 Interest cost......................................... 2,267 852 2,127 1,083 Benefits paid......................................... (1,633) (266) (1,673) (208) Settlement gain and payments.......................... -- -- (2,489) -- -------- ------- -------- ------- Actuarial (gain)/loss................................. (3,106) (49) (4,207) (6,398) -------- ------- -------- ------- Benefit obligation at end of year....................... 35,363 18,904 29,211 14,675 -------- ------- -------- ------- Change in plan assets: Fair value of plan assets at beginning of year........ 22,295 13,063 18,788 12,300 Actual return on plan assets.......................... (3,006) (1,401) (2,862) (1,931) Employer contributions................................ 1,132 904 1,174 440 Settlement payments................................... -- -- (1,482) -- -------- ------- -------- ------- Benefits paid......................................... (1,633) (266) (1,673) (208) -------- ------- -------- ------- Fair value of plan assets at end of year................ 18,788 12,300 13,945 10,601 -------- ------- -------- ------- Funded Status........................................... (16,575) (6,604) (15,265) (4,074) Unrecognized prior service cost......................... 876 -- 104 -- Unrecognized net (gain)/loss............................ (471) 5,896 (1,368) 2,202 -------- ------- -------- ------- Prepaid (accrued) pension cost.......................... $(16,170) $ (708) $(16,529) $(1,872) ======== ======= ======== ======= Components of net periodic pension cost: Service cost.......................................... $ 90 $ 1,852 $ 90 $ 1,294 Interest cost......................................... 2,267 852 2,127 1,083 Expected return on assets............................. (1,872) (1,073) (1,574) (1,021) Amortization of prior service cost.................... 68 102 68 257 Actuarial loss........................................ (30) -- (390) -- -------- ------- -------- ------- Total expense................................. $ 523 $ 1,733 $ 321 $ 1,613 ======== ======= ======== ======= Weighted-average discount rate.......................... 6.25% 5.75% 7.25% 6.25%
No compensation increase has been assumed, as no additional benefits will be earned under the domestic plans other than the Executive Protection Plan. The assumed compensation increase under the Executive F-26 Protection Plan for 2000 and 2001 was 5.00% and was 6.00% for 2000 and 2001 under the foreign plan. The expected long-term rate of return on plan assets for 2000 and 2001 was 8.50%. Stock Options On April 25, 1994, the Company adopted the ISO Plan and the Director's Plan. On May 18, 2000, the stockholders approved the 2000 Stock Plan. The Company accounts for these plans under APB Opinion No. 25 under which no compensation cost has been recognized. Had compensation cost been determined consistent with SFAS No. 123, the Company's net loss and EPS would have been changed to the following pro forma amounts:
YEAR ENDED DECEMBER 31, -------------------------------- 1999 2000 2001 -------- --------- --------- Net loss from continuing operations As Reported........................................ $(49,888) $(570,258) $(138,561) Pro Forma.......................................... (60,373) (582,123) (149,323) EPS -- Basic and diluted As Reported........................................ (1.37) (15.31) (3.72) Pro Forma.......................................... (1.66) (15.63) (4.01)
The calculated pro forma compensation cost may not be representative of that to be expected in future years. The 2000 Stock Plan provides for the issuance of up to 5,935,117 shares of Class A or Class B common stock to key employees and Board of Director members. The 2000 Stock Plan may issue incentive stock options, nonqualified options, stock appreciation rights or stock grants, of which options vest between 12 and 48 months after the date of the grant and expire ten years after the date of the grant (five years for a ten percent stockholder receiving incentive stock options). The exercise price of the incentive stock options may not be less than the fair market value of the underlying stock at the date of the grant. In 2000, the Company agreed to issue up to 481,176 stock grants to key individuals contingent on improvement in the market value of the Company stock in the future. The stock will be issued in 25 percent increments each time the fair market value of the Company stock increases in ten percent increments above the price on the date of the grant ($4.0625) for 20 consecutive trading days. In 2001, the Company agreed to issue up to 709,250 stock grants to key individuals. These stock grants will be awarded to the key individuals provided that they remain an employee of the Company through December 31, 2002. The ISO Plan provides for the issuance of up to 4,500,000 shares of Class A or Class B common stock to key employees. The ISO Plan stock options may be either incentive stock options or nonqualified options, vest between 12 and 48 months and expire ten years after the date of grant. The exercise price of incentive stock options may not be less than the fair market value of the underlying shares at the date of grant. The exercise price for nonqualified options may not be less than 85% of the fair market value of the underlying shares or, if greater, the book value of the underlying shares at the date of grant. The Directors' Plan provides for the issuance of shares of Class A common stock to directors of the Company who are not employees of the Company. The Directors' Plan stock options are nonqualified, vest six months following the date of grant and expire ten years after the date of grant. The exercise price of the nonqualified options under the Directors' Plan is the fair market value of the underlying shares at the date of grant. F-27 A summary of the status of the Company's stock option plans at December 31, 1999, 2000 and 2001, and activity during the years then ended is presented in the table and narrative below:
WEIGHTED AVERAGE SHARES EXERCISE PRICE ---------- -------------- Outstanding -- December 31, 1998............................ 3,637,317 24.38 Granted................................................... 1,774,700 9.86 Exercised................................................. (702) 10.68 Forfeited/Cancelled....................................... (1,367,944) 23.48 ---------- Outstanding -- December 31, 1999............................ 4,043,371 18.34 Granted................................................... 3,014,760 4.62 Exercised................................................. -- -- Forfeited/Cancelled....................................... (3,002,037) 18.34 ---------- Outstanding -- December 31, 2000............................ 4,056,094 8.14 Granted................................................... 824,000 2.28 Exercised................................................. -- -- Forfeited/Cancelled....................................... (827,409) 12.63 ---------- Outstanding -- December 31, 2001............................ 4,052,685 6.03 ========== =====
As of December 31, 2001, options for 3,730,425 shares and 322,260 shares of Class A and Class B common stock, respectively, remained outstanding under the Company's stock option plans. At December 31, the options exercisable, weighted average exercise price and the weighted average fair value of options granted are as follows:
1999 2000 2001 ---------- -------- ---------- Exercisable at end of year -- Shares............................................ 1,419,584 767,858 1,416,186 Weighted average exercise price................... $ 22.82 $ 15.43 $ 8.68 Weighted average fair value of options granted during the year................................... $ 5.90 $ 3.02 $ 1.63
At December 31, 2001, the options outstanding have exercise prices and contractual lives as follows:
CONTRACTUAL EXERCISE LIFE NUMBER OF SHARES PRICE REMAINING - ---------------- -------- ----------- 1,812,010................................................. 4.06 8.4 537,600.................................................. 11.00 7.2 531,000.................................................. 2.30 9.5 200,000.................................................. 3.63 8.6 150,000.................................................. 4.00 8.8 145,125.................................................. 22.38 5.3 120,000.................................................. 8.31 8.1 105,000.................................................. 2.30 9.5 85,750................................................. 17.88 6.7 50,000................................................. 7.75 8.0 50,000................................................. 2.30 9.5
The remaining 266,200 options have exercise prices between $1.33 and $19.75, with a weighted average exercise price of $7.86 and a weighted average remaining contractual life of 7.8 years. Of these options, 102,446 are exercisable with a weighted average exercise price of $11.96. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. For options granted under the ISO Plan and the 2000 Stock Plan a weighted average risk-free rate of return of 5.05%, 6.52% and 4.65% and expected lives of five years were assumed for 1999, 2000 and 2001, respectively. For options granted under the Directors' Plan, a risk-free rate of return of 4.75%, 6.75% and 4.63% and expected lives of seven years were assumed for 1999, 2000 and 2001, respectively. Additionally, for F-28 each option plan there was no expected dividend yield and an expected volatility of 65.7%, 73.4% and 86.9% for 1999, 2000 and 2001, respectively. 14. COMMITMENTS AND CONTINGENCIES For many years, Ford Motor Company ("Ford") has been BRACC's principal supplier of vehicles and held an equity interest in the Company from the time of the acquisition of BRACC through October 6, 1997. In model year 1999 and 2000, approximately 70% of BRACC's U.S. vehicle purchases were comprised of Ford vehicles. Under the terms of the supply agreement that was entered into concurrently with the BRACC Acquisition, the Company agreed to purchase or lease Ford vehicles in such a quantity that the percentage of new Ford vehicles purchased or leased by the Company in the United States, Canada, and other countries outside the European Union represent 70% of the total new vehicle acquisitions by the Company, or a minimum quantity of at least 80,000 vehicles in the United States in each model year. In model year 2001, the Company purchased approximately 120,500 Ford vehicles. Given the volume of vehicles purchased from Ford by the Company, shifting significant portions of the fleet purchases to other manufacturers would require lead time and certain operational changes. As a result, any inability by Ford to supply the Company with the planned number and types of vehicles, any significant decline in the quality and customer satisfaction with respect to Ford vehicles or any failure of the parties to reach an agreement on the terms of any purchases could have a material effect on the Company's financial condition and results of operations. The Company agreed to pay Ford, on September 1, 1998, and on each anniversary through September 1, 2004, an annual royalty equal to the greater of (i) one percent of net vehicle revenue of BRACC locations owned prior to the Budget Acquisition for the prior model year, or (ii) a specified minimum amount (equal to $9,900 for the September 1, 1998, annual royalty payment and subject to adjustment for each annual period thereafter, based upon changes in the consumer price index). The minimum royalty payable with respect to each model year will be reduced by a stated amount for each Ford vehicle purchased by the Company and its affiliates and franchisees in excess of 123,000 Ford vehicles. The aggregate of all royalties paid to Ford over the term of the agreement is subject to a limit of $100,000. For the years ended September 1, 1999, 2000 and 2001, no amounts were due to Ford under this royalty agreement. Litigation The Company terminated the franchise agreement of its franchisee in Germany ("Sixt") effective May 1997 based on violations of provisions in the underlying franchise agreement. Sixt challenged the franchise termination and on May 14, 1998 the Court of Munich held that the termination was invalid due to technical deficiencies. The Company appealed and on April 15, 1999 the Munich appellate court held that the Company's termination was valid. Sixt appealed and on January 18, 2001 the German Supreme Court rejected Sixt's appeal thereby affirming the validity of the May 1997 termination. No further appeals can be taken against the ruling and the Company is now proceeding to claim damages before the Court of Munich, including damages related to Sixt's continued use of the Budget name and logo after the termination of the franchise agreement. The Company has a trademark license with Ryder Systems, Inc. ("RSI") to use the "Ryder TRS" trademark in the conduct of the Ryder TRS truck rental business until December 2004. In the process of transitioning the Ryder TRS consumer truck rental business to the Budget brand, the Company aired a television commercial, ran a print ad and engaged in other marketing activities which had not been approved by RSI. As a result, RSI filed an action in the U.S. District Court in New York seeking a Temporary Restraining Order ("TRO") and provided the Company with notification of the termination of the License Agreement. Just prior to the hearing on RSI's request for a TRO, which was scheduled for March 5, 2002, the Company agreed to discontinue the advertising and marketing activities objected to by RSI. RSI agreed to withdraw its request for a TRO and both parties agreed to meet in search of an amicable resolution of the dispute. The meeting is presently scheduled for early April 2002. Litigation arising in the normal course of business is pending against the Company. Management believes that the Company has meritorious defenses to all significant litigation and that the ultimate outcome of the F-29 litigation will not have a material adverse effect on the Company's consolidated financial position or results of operations. Environmental Matters The Company has recorded amounts, which in management's best estimate will be sufficient to satisfy anticipated costs of known remediation requirements. At December 31, 2001, the Company has accrued $2,023 for estimated environmental remediation costs and expects to expend approximately $1,369 during 2002. Amounts receivable from third parties for reimbursement of remediation expenditures are not significant. Due to factors such as continuing changes in the environmental laws and regulatory requirements, the availability and application of technology, the identification of presently unknown remediation sites and changes in the extent of expected remediation efforts, estimated costs for future environmental compliance and remediation are subject to uncertainty and it is difficult to predict the amount or timing of future remediation requirements. The Company does not expect such future costs to have a material adverse effect on the Company's consolidated financial position or results of operations. 15. FINANCIAL INSTRUMENTS The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, "Disclosure about Fair Value of Financial Instruments". The estimated fair value amounts are determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amount. Cash and Cash Equivalents, Restricted Cash, Trade and Vehicle Receivables and Accounts Payable, Accrued and Other Liabilities The carrying amounts of these financial assets and liabilities at December 31, 2000 and 2001 approximate fair value because of the short maturity of these instruments. Notes Payable The carrying amount of a portion of the Company's notes payable approximates fair market value at December 31, 2000 and 2001, since the debt is at floating interest rates. The carrying amount of the Company's fixed-rate notes payable, other than Senior Notes and Trust Preferred Securities, approximates fair value at December 31, 2000 and 2001, because such notes do not have terms that differ materially from those currently available to the Company. The Company's Senior Notes and Trust Preferred Securities have recently been traded at significant discounts to face value. 16. SUPPLEMENTAL CASH FLOW DISCLOSURES In 1999, the Company issued 77,076 shares of Class A common stock with a value of $1,017 for the 1999 acquisitions. In 2000 the Company issued 56,740 new shares of Class A common stock and 5,007 treasury shares with a value of approximately $500 to Wooten Ford in order to satisfy make-whole requirements. A make-whole payment was delivered when the price of the stock issued in certain purchases fell below a specified price during the measurement periods. During 1999, make-whole payments were made in conjunction with Ryder TRS, Compact Rent a Car Limited, United Leasing, Inc., Auto Rental Systems, Inc., Carson Chrysler Plymouth Dodge Eagle Jeep, Inc. and Warren Wooten Ford, Inc. for $23,932 in cash and 1,348,266 shares of Class A common stock with a value of approximately $17,651. F-30 During 2000, make-whole payments were made in conjunction with Ryder TRS for approximately $30,400 in cash. Also, the Company repurchased warrants to purchase common stock from the former shareholders of Ryder TRS for approximately $17,800. The Company paid interest of $201,877, $261,406 and $229,205 in 1999, 2000 and 2001, respectively. Income taxes of $4,507, $5,962 and $2,332 were paid in 1999, 2000 and 2001, respectively. On occasion, the Company acquires goods and services in exchange for revenue earning vehicles. During 1999, 2000 and 2001, revenue earning vehicles in the amount of $2,725, $2,521 and $1,965 respectively, were exchanged for goods and services. 17. SEGMENT INFORMATION The Company is engaged in the business of the daily rental of vehicles, principally cars, trucks, and passenger vans. Segments are determined by product line and business activity. Assets are recorded and reviewed at the entity level and not segregated between car and truck segments. The Car Rental Domestic segment includes operations in North America. The Car Rental International segment includes Budget Rent a Car International, Inc. The Truck Rental segment includes truck operations of BRACC and Ryder TRS. Segment information for the year ended December 31, 1999 is as follows:
CORPORATE CAR RENTAL CAR RENTAL TRUCK AND DOMESTIC INTERNATIONAL RENTAL ELIMINATIONS CONSOLIDATED ---------- ------------- -------- ------------ ------------ Operating revenue.............. $1,442,826 $259,960 $711,074 $(88,206) $2,325,654 Depreciation and amortization................. 433,141 31,362 162,843 61 627,407 Operating income (loss)........ 140,175 (20,707) 57,512 (23,123) 153,857 Income (loss) from continuing operations before income taxes........................ (36,829) (29,374) (30,134) 41,373 (54,964)
DOMESTIC FOREIGN CONSOLIDATED ---------- -------- ------------ Operating revenue................................... $2,065,694 $259,960 $2,325,654 Long-lived assets................................... 1,104,574 72,870 1,177,444
Segment information for the year ended December 31, 2000 is as follows:
CORPORATE CAR RENTAL CAR RENTAL TRUCK AND DOMESTIC INTERNATIONAL RENTAL ELIMINATIONS CONSOLIDATED ---------- ------------- --------- ------------ ------------ Operating revenue............. $1,551,068 $ 296,587 $ 712,982 $(124,265) $2,436,372 Depreciation and amortization................ 459,076 79,086 183,739 739 722,640 Operating income (loss)....... 105,229 (286,642) (26,134) (77,319) (284,866) Loss from continuing operations before income taxes....................... (77,790) (307,333) (132,653) (30,044) (547,820)
DOMESTIC FOREIGN CONSOLIDATED ---------- -------- ------------ Operating revenue................................... $2,139,785 $296,587 $2,436,372 Long-lived assets................................... 1,057,669 10,320 1,067,989
F-31 Segment information for the year ended December 31, 2001 is as follows:
CORPORATE CAR RENTAL CAR RENTAL TRUCK AND DOMESTIC INTERNATIONAL RENTAL ELIMINATIONS CONSOLIDATED ---------- ------------- -------- ------------ ------------ Operating revenue.............. $1,428,336 $183,180 $647,156 $(97,942) $2,160,730 Depreciation and amortization................. 455,677 16,180 189,450 902 662,209 Operating income (loss)........ 139,650 (46,988) 43,719 (13,167) 123,214 Income (loss) from continuing operations before income taxes........................ (17,429) (58,953) (51,822) 12,653 (115,551)
DOMESTIC FOREIGN CONSOLIDATED ---------- -------- ------------ Operating revenue................................... $1,977,550 $183,180 $2,160,730 Long-lived assets................................... 981,428 5,407 986,835
Foreign operations include rental and royalty revenues primarily from Europe, Australia and New Zealand. 18. SIGNIFICANT NON-CASH TRANSACTIONS In March 2000, approximately $70,000 of deferred income, resulting from the Homestore marketing agreement, has been recorded and included in accounts payable and accrued and other liabilities. The deferred income is being recognized on a straight-line basis over the life of the agreement (initially 10 years and extended by one year). Under the terms of the agreement, the Homestore website offers free online truck rental quotes and reservations and the Budget Truck Group rental fleet will display the Homestore logo. In addition, Homestore is or will be included in yellow page advertisements and various promotional materials. (See Note 7). As a result of this alliance, the Company and Homestore have been actively involved in developing these and other joint promotional programs and activities. F-32 SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table is a summary of quarterly information for the years ended December 31, 2000 and 2001 (in thousands except per share data).
2000 2001 ------------------------------------------ ------------------------------------------ THREE MONTHS ENDED THREE MONTHS ENDED ------------------------------------------ ------------------------------------------ MARCH 31 JUNE 30 SEPT 30 DEC 31(3) MARCH 31 JUNE 30 SEPT 30 DEC 31 -------- -------- -------- --------- -------- -------- -------- --------- Operating revenue................... $560,766 $640,314 $702,244 $ 533,048 $529,484 $577,568 $610,166 $ 443,512 Operating income (loss)............. 3,526 91,019 97,240 (476,651) (22,458) 81,944 114,939 (51,211) Income (loss) from continuing operations........................ (29,945) 9,936 11,251 (561,500) (95,062) 11,264 48,238 (103,001) Average shares outstanding -- basic.............. 37,248 37,250 37,250 37,255 37,255 37,255 37,255 37,255 Income (loss) from continuing operations per share -- basic (1)............................... (0.80) 0.27 0.30 (15.07) (2.55) 0.30 1.29 (2.76) Average shares outstanding -- diluted............ 37,248 37,274 37,308 37,255 37,255 37,278 48,025 37,255 Income (loss) from continuing operations per share -- diluted (1)............................... (0.80) 0.27 0.30 (15.07) (2.55) 0.30 1.12 (2.76) Market price of stock (2) High............................ 10.4375 5.3125 4.75 3.9375 3.25 3.88 3.64 1.60 Low............................. 4.0625 3.25 3.50 1.19 1.33 1.81 1.25 0.59
- --------------- (1) Earnings per share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings per share does not equal the total for the year. (2) On April 5, 2002 (i) the closing sale price of the Class A common stock as reported on the Over-the Counter Bulletin Board was $0.17 and (ii) there were approximately 390 holders of record of the Class A common stock and three holders of record of the Class B common stock. (3) In the quarter ended December 31, 2000, the Company recorded a $399,000 charge for one-time and other items, which consist primarily of costs associated with the refranchising of the European operations, charges related to asset valuations, adjustments related to truck inventory disposal valuations, and charges related to uncollectible accounts receivable. On December 10, 2001 the Company was notified by the NYSE that it was not in compliance with the NYSE's continued listing criteria because it's market capitalization was less than $50,000 over a consecutive 30 trading-day period, its stockholders equity was less than $50,000 and the average closing price of its common stock was less than $1.00 per share over a consecutive 30 trading-day period. On March 20, 2002 the NYSE announced that our common stock would be de-listed prior to the NYSE opening on March 28, 2002. Beginning March 28, 2002 the Company's Class A common stock has been traded on the National Association of Security Dealers Over-the-Counter Bulletin Board under symbol BDGPA. The Company has never paid any cash dividends on its common stock, and the Board of Directors currently intends to retain all earnings for use in the Company's business for the foreseeable future. Any future payment of dividends will depend upon the Company's results of operations, financial condition, cash requirements and other factors deemed relevant by the Board of Directors. F-33 SIGNATURES Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 9th day of April, 2002. BUDGET GROUP, INC. (Registrant) By: /s/ SANFORD MILLER ------------------------------------ Sanford Miller Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on April 9, 2002.
SIGNATURE TITLE --------- ----- /s/ SANFORD MILLER Chairman of the Board, Chief Executive - -------------------------------------------- Officer and Director Sanford Miller /s/ WILLIAM JOHNSON Chief Financial Officer (Principal Financial - -------------------------------------------- Officer) William Johnson /s/ THOMAS L. KRAM Vice President, Controller (Principal - -------------------------------------------- Accounting Officer) Thomas L. Kram /s/ RONALD D. AGRONIN Director - -------------------------------------------- Ronald D. Agronin /s/ MORRIS BELZBERG Director - -------------------------------------------- Morris Belzberg /s/ JEFFREY D. CONGDON Director - -------------------------------------------- Jeffrey D. Congdon /s/ F. PERKINS HIXON, JR Director - -------------------------------------------- F. Perkins Hixon, Jr. /s/ MARK R. SOTIR Director - -------------------------------------------- Mark R. Sotir /s/ JOHN P. KENNEDY Director - -------------------------------------------- John P. Kennedy /s/ DR. STEPHEN L. WEBER Director - -------------------------------------------- Dr. Stephen L. Weber Director - -------------------------------------------- Martin P. Gregor
EX-4.41 3 g74374ex4-41.txt SERIES 2001-3 SUPPLEMENT EXHIBIT 4.41 - -------------------------------------------------------------------------------- SERIES 2001-3 SUPPLEMENT dated as of November 29, 2001 to the AMENDED AND RESTATED BASE INDENTURE dated as of December 1, 1996 among TEAM FLEET FINANCING CORPORATION the Issuer BUDGET GROUP, INC. the Servicer BUDGET GROUP, INC. the Budget Interestholder and BANKERS TRUST COMPANY the Trustee - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ---- ARTICLE 1 DESIGNATION........................................................ 1 ARTICLE 2 DEFINITIONS........................................................ 3 Section 2.1 Incorporation of Schedule 1, Etc.......................... 3 Section 2.2 Defined Terms............................................. 3 ARTICLE 3 SECURITY; REPORTS; COVENANTS....................................... 32 Section 3.1 Grant of Security Interest................................ 32 Section 3.2 Reports; Copies of Letter of Credit....................... 34 Section 3.3 Auction Acquired Vehicles................................. 35 Section 3.4 Capitalization Demand Note................................ 35 ARTICLE 4 SERIES 2001-3 ALLOCATIONS.......................................... 35 Section 4.1 Establishment of Group V Collection Account, Series 2001-3 Collection Account, Series 2001-3 Excess Funding Account and Series 2001-3 Accrued Interest Account........ 35 Section 4.2 Allocations with respect to the Series 2001-3 Notes....... 37 Section 4.3 Monthly Payments from the Series 2001-3 Accrued Interest Account.......................................... 43 Section 4.4 Payment of Note Interest.................................. 48 Section 4.5 Payment of Note Principal................................. 50 Section 4.6 Servicer's or Budget's Failure to Make a Deposit or Payment................................................... 53 Section 4.7 Budget Distribution Account............................... 53 Section 4.8 Series 2001-3 Distribution Account........................ 53 Section 4.9 Subordination of Class B Notes and Class C Notes.......... 54 Section 4.10 Application of Cash Liquidity Amount; Allocation of Certain Amounts to Interest............................... 55 Section 4.11 Draw on Letter of Credit.................................. 56 Section 4.12 Draw on the Demand Note................................... 57 Section 4.13 Series 2001-3 Cash Collateral Account..................... 57 Section 4.14 [RESERVED]................................................ 59 Section 4.15 Deficiencies in Payments.................................. 59 ARTICLE 5 [RESERVED]......................................................... 59 ARTICLE 6 AMORTIZATION EVENTS................................................ 59 ARTICLE 7 FORM OF SERIES 2001-3 NOTES........................................ 61 Section 7.1 Class A Notes.............................................. 61 Section 7.2 Class B Notes.............................................. 62 Section 7.3 Class C Notes.............................................. 63 Section 7.4 Issuances of Additional Notes.............................. 63 Section 7.5 Denominations.............................................. 63 Section 7.6 Transfer and Exchange...................................... 63 ARTICLE 8 GENERAL............................................................ 65
i Schedule 1 Maximum Manufacturer Percentages EXHIBIT A-1 Form of Restricted Global Class A Note EXHIBIT A-2 Form of Temporary Global Class A Note EXHIBIT A-3 Form of Permanent Global Class A Note EXHIBIT B-1 Form of Restricted Global Class B Note EXHIBIT B-2 Form of Temporary Global Class B Note EXHIBIT B-3 Form of Permanent Global Class B Note EXHIBIT C-1 Form of Restricted Global Class C Note EXHIBIT C-2 Form of Temporary Global Class C Note EXHIBIT C-3 Form of Permanent Global Class C Note EXHIBIT D Form of Consent EXHIBIT E Exhibit A-6 to Base Indenture: Form of Transfer Certificate (Permanent Global Note to Restricted Global Note)
ii Series 2001-3 Supplement, dated as of November 29, 2001 (this "Supplement"), among Team Fleet Financing Corporation, a Delaware corporation ("TFFC" or the "Issuer"), Budget Group, Inc., a Delaware corporation ("Budget"), as the Servicer (in such capacity, the "Servicer"), Budget, as the holder of the Budget Interest (in such capacity, the "Budget Interestholder"), and Bankers Trust Company, a banking corporation organized and existing under the laws of the State of New York, as Trustee (the "Trustee") under the Amended and Restated Base Indenture, dated as of December 1, 1996, among TFFC, Budget, as Servicer and as the Budget Interestholder, and the Trustee (as amended, supplemented or otherwise modified from time to time, exclusive of Supplements creating a new Series of Notes, the "Base Indenture"). PRELIMINARY STATEMENT WHEREAS, Sections 2.2 and 12.1 of the Base Indenture provide, among other things, that TFFC, the Servicer and the Trustee may at any time and from time to time enter into a supplement to the Base Indenture for the purpose of authorizing the issuance of one or more Series of Notes; and WHEREAS, all conditions precedent set forth in such Sections with respect to entering into a supplement to the Base Indenture have been satisfied. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE 1 DESIGNATION (a) There is hereby created a Series of Notes to be issued pursuant to the Base Indenture and this Supplement and such Series of Notes (as defined below) shall be designated generally as Series 2001-3 Floating Rate Rental Car Asset Backed Notes, Class A, Series 2001-3 Floating Rate Rental Car Asset Backed Notes, Class B and Series 2001-3 Floating Rate Rental Car Asset Backed Notes, Class C. The Series 2001-3 Notes shall be issued in three classes. The Class A Rental Car Asset Backed Notes shall be designated generally as the Class A Notes, the Class B Rental Car Asset Backed Notes shall be designated generally as the Class B Notes and the Class C Rental Car Asset Backed Notes shall be designated generally as the Class C Notes. The Class A Notes, the Class B Notes and the Class C Notes are referred to herein collectively as the "Series 2001-3 Notes." The Series 2001-3 Notes are a Group V Series of Notes. Subsequent to the Series 2001-3 Issuance Date, additional principal amounts of each Class of Series 2001-3 Notes may be issued in accordance with the provisions of Section 7.4 hereof. (b) The Class B Notes and the Class C Notes are subordinated in right of payment to the Class A Notes and the Class C Notes are subordinated in right of payment to the Class B Notes, in each case to the extent set forth herein. (c) The proceeds from the sale of the Series 2001-3 Notes shall be deposited in the Group V Collection Account and applied in part to pay certain amounts as set forth in Section 4.2 and any remaining amounts shall be deposited on the Series 2001-3 Issuance Date to the Series 2001-3 Collection Account and, concurrently with such deposit, allocated by the Trustee to the Series 2001-3 Excess Funding Account and shall be paid to TFFC and used to purchase, finance or refinance Eligible Vehicles for leasing to the Lessees under the Group V Lease or refinance Eligible Receivables. Any proceeds not so used shall be deemed to be Principal Collections. (d) The Series 2001-3 Notes are a Segregated Series of Notes (as more fully described in the Base Indenture) and are hereby designated as a "Group V Series of Notes." Accordingly, by such designation, the Series 2001-3 Notes (and each other Group V Series of Notes) shall be secured solely by the Group V Collateral and any other collateral designated as security for the Series 2001-3 Notes (and, as applicable, any other Series of Group V Notes) under this Supplement or any other Supplement and will not be secured by any other collateral. TFFC may from time to time issue additional Segregated Series of Notes that the related Series Supplements will indicate are entitled to share, together with the Series 2001-3 Notes, the Group V Collateral and any other collateral designated as security for the Group V Series of Notes under this Supplement or any other related Series Supplement (the Series 2001-3 Notes and any such additional Segregated Series, each, a "Group V Series of Notes" and, collectively, the "Group V Series of Notes"). TFFC may in the future issue additional Group V Series of Notes which will be entitled to share in the Group V Collateral. Any future Group V Series of Notes may have terms different from the terms of the Series 2001-3 Notes. All references in this Supplement to "all" Series of Notes (and all references in this Supplement to terms defined in the Base Indenture that contain references to "all" Series of Notes) shall, unless the context otherwise requires, refer solely to all Group V Series of Notes. If, notwithstanding the foregoing provisions of this clause (d), the Series 2001-3 Notes are deemed by any court to be secured by collateral other than the Group V Collateral and any other collateral designated as security for the Series 2001-3 Notes (and, as applicable, any other Series of Group V Notes) under this Supplement or any other Supplement ("Non-Group V Collateral") or by Group V Collateral allocated to other Group V Series of Notes pursuant to the related Supplement ("Other Group V Collateral"), then the interest of the Series 2001-3 Noteholders in such Non-Group V Collateral and Other Group V Collateral, consistent with the foregoing provisions of this clause (d), shall be subordinate in all respects to the interest of the Noteholders of the Series to which such Non-Group V Collateral and Other Group V Collateral was pledged by the terms of the Indenture, such subordination to have been effective from the date hereof. (e) In all events, the following shall govern the interpretation and construction of the provisions of this Supplement: (i) this Supplement (including, without limitation, the provisions (including the allocation provisions) of Article 4 hereof) is intended to constitute a subordination agreement under New York law and for purposes of Section 510(a) of the Bankruptcy Code, (ii) the subordination provided for in this Supplement is intended to and shall be deemed to constitute a "complete subordination" under New York law, and, as such, shall be applicable whether or not TFFC or any Series 2001-3 Noteholder is a debtor in a case (a "bankruptcy case") under the Bankruptcy Code (or any amended or successor version thereof), (iii) (A) any reference to the Series 2001-3 Notes shall include all obligations of TFFC now or hereafter existing under each of such Series 2001-3 Notes, whether for principal, interest, fees, expenses or otherwise, and (B) without limiting the generality of the foregoing, "interest" owing on the Series 2001-3 Notes shall expressly include any and all interest accruing after the commencement of any bankruptcy case or other insolvency proceeding where TFFC is the 2 debtor, notwithstanding any provision or rule of law (including, without limitation, 11 U.S.C. ss.ss. 502, 506(b) (1994) (or any amended or successor version thereof)) that might restrict the rights of any holder of an interest in the Series 2001-3 Notes, as against TFFC or any one else, to collect such interest, (iv) "payments" prohibited under the subordination provisions of this Supplement shall include any distributions of any type, whether cash, other debt instruments, or any equity instruments, regardless of the source thereof, and (v) the holder of any interest in the Series 2001-3 Notes retains such holder's right, under 11 U.S.C. Section 1126 (1994) (or any amended or successor version thereof), to vote to accept or reject any plan of reorganization proposed for TFFC in any subsequent bankruptcy of TFFC; provided, however, that, regardless of any such vote or of the exercise of any other rights such holder (or its agents) may have under the Bankruptcy Code, and without limiting the generality of the other clauses of this clause (e), any distributions that such holder is to receive on account of such holder's interest in the Series 2001-3 Notes under any such plan of reorganization, from TFFC, from any collateral, from any guarantor, or from any other source shall be subordinated in right of payment as set forth herein and shall instead be distributed in the order of priority set forth herein. ARTICLE 2 DEFINITIONS Section 2.1 Incorporation of Schedule 1, Etc(a) . (a) All capitalized terms not otherwise defined herein are defined in Schedule 1 to the Base Indenture. All Article, Section or Subsection references herein shall refer to Articles, Sections or Subsections of the Base Indenture, except as otherwise provided herein. Unless otherwise stated herein, as the context otherwise requires or if such term is otherwise defined in the Base Indenture, each capitalized term used or defined herein shall relate only to the Series 2001-3 Notes and not to any other Series of Notes issued by TFFC. (b) For purposes of the Series 2001-3 Notes, any reference in the Base Indenture to (i) the term "Collection Account" shall be deemed to be a reference to the Group V Collection Account, (ii) the term "Collateral" shall be deemed to be a reference to the Group V Collateral, (iii) the term "Team Interest" shall be deemed to be a reference to the Budget Interest, (iv) the term "Team Interestholder" shall be deemed to be a reference to the Budget Interestholder, (v) the term "Team Interest Amount" shall be deemed to be a reference to the Budget Interest Amount, (vi) the term "Team Distribution Account" shall be deemed to be a reference to the Budget Distribution Account, (vii) the term "Lease" shall be deemed to include the Group V Lease and (viii) the term "Lease Event of Default" shall be deemed to include a Lease Event of Default under and as defined in the Group V Lease. Section 2.2 Defined Terms. The following words and phrases shall have the following meanings with respect to the Series 2001-3 Notes and the definitions of such terms are applicable to the singular as well as the plural form of such terms and to the masculine as well as the feminine and neuter genders of such terms: "Accounts" means the Collection Account, the Group V Collection Account, the Series 2001-3 Collection Account, the Series 2001-3 Excess Funding Account and each collection 3 account for each other Group V Series of Notes, the Series 2001-3 Distribution Account and, if established, the Series 2001-3 Cash Collateral Account. "Accrued Amounts" means, with respect to any Group V Series of Notes (or any class of such Series of Notes), on any date of determination, the sum of (i) accrued and unpaid interest on the Notes of such Series of Notes (or the applicable class thereof) as of such date, (ii) the portion of the accrued and unpaid Monthly Servicing Fee (and any Supplemental Servicing Fee) allocated to such Series of Notes (or the applicable class thereof) pursuant to the Indenture on such date, and (iii) the product of (A) all other accrued and unpaid fees and expenses of the Issuer on such date, and (B) a fraction, the numerator of which is the Invested Amount of such Series of Notes (or the applicable class thereof) on such date and the denominator of which is the aggregate Invested Amount of all Series of Notes (including non-segregated Series of Notes) on such date. "Accumulated Principal Draw Amount" means, with respect to draws made under the Series 2001-3 Letter of Credit during any Insolvency Period or after the occurrence of any other Liquidity Event, the sum of the draws made and applied pursuant to Sections 4.5(a)(i), (b)(i) and (c)(i) during such Insolvency Period or after the occurrence of such other Liquidity Event. "Additional Base Rent" has the meaning set forth in Section 9 of Annex A to the Group V Lease and in Section 6 of Annex B to the Group V Lease. "Additional Notes" means additional Series 2001-3 Notes issued pursuant to Section 7.4 of this Supplement. "Additional Overcollateralization Amount" means, as of any date of determination, an amount equal to (a) the Overcollateralization Portion on such date divided by 81% (or a higher percentage upon confirmation from the Rating Agencies that such higher percentage will not result in the reduction or withdrawal of the then current ratings on the Series 2001-3 Notes) minus (b) the Overcollateralization Portion as of such date. "Additional Series 2001-3 Collateral" has the meaning set forth in Section 3.1(b) of this Supplement. "Aggregate Invested Amount" means the sum of the Invested Amounts with respect to all Group V Series of Notes then Outstanding. "Aggregate Principal Balance" of the Series 2001-3 Notes, or a class thereof, means an amount equal to the initial Invested Amount of such Series or class, as applicable, plus the Invested Amount of any Additional Notes issued as Series 2001-3 Notes or Notes of such class, as applicable, minus the aggregate amount of payments in respect of principal distributed to the Noteholders of such Series or class, as applicable. "Asset Amount Deficiency" with respect to the Series 2001-3 Notes will occur if, at any time, the Group V Required Asset Amount exceeds the Group V Aggregate Asset Amount. "Available Draw Amount" means (a) with respect to the payment of principal on the Series 2001-3 Notes and all other obligations of the Issuer other than the payment of interest on 4 the Series 2001-3 Notes and servicing fees (i) on any Distribution Date prior to the Series 2001-3 Termination Date, the Series 2001-3 Letter of Credit Amount on such day, less the difference, if positive, between the Minimum Liquidity Amount on such day and the Cash Liquidity Amount, if any, on such day, and (ii) on the Series 2001-3 Termination Date, the Series 2001-3 Letter of Credit Amount on such day, and (b) with respect to the payment of interest on the Series 2001-3 Notes and servicing fees on any Distribution Date, the Series 2001-3 Letter of Credit Amount on such day. "Available Funds Shortfall" means, as of any Distribution Date, the aggregate amount of any Class A Note Interest Shortfall, Class B Note Interest Shortfall, Class C Note Interest Shortfall, Class A Principal Shortfall, Class B Principal Shortfall and Class C Principal Shortfall remaining on such Distribution Date after application pursuant to Sections 4.4 and 4.5 of this Supplement of amounts on deposit in the Series 2001-3 Excess Funding Account and shared Principal Collections with respect to other Series of Notes to pay such shortfalls. "Base Amount" means, as of any date of determination, the sum of the Net Book Values of all Financed Vehicles leased under the Finance Lease as of such date, each such Net Book Value calculated as of the first day contained within both the calendar month in which such date of determination occurs and the Vehicle Term for the related Financed Vehicle, plus all accrued and unpaid Monthly Base Rent thereunder as of such date. "Base Indenture" has the meaning set forth in the preamble. "Budget Distribution Account" means the account established as the "Team Distribution Account" pursuant to Section 5.1(b) of the Base Indenture. "Budget Interest" means the right to receive all payments in respect of the Budget Interest Amount. "Budget Interest Amount" means, on any date of determination, the amount, if any, by which the Group V Aggregate Asset Amount at the end of the day immediately prior to such date of determination, exceeds the Group V Invested Amount at the end of such day. "Budget Percentage" means on any date of determination, when used with respect to Group V Collections which are Principal Collections (including Recoveries), and Losses, an amount equal to one hundred percent minus the sum of (i) the invested percentages on such date (for all outstanding Group V Series of Notes and all classes of such Series of Notes) and (ii) without duplication, the available subordinated amount percentages on such date (for all Group V Series of Notes that provide for credit enhancement in the form of overcollateralization), in each case as such percentages are calculated on such date with respect to Principal Collections, Recoveries or Losses, as applicable. "Cash Liquidity Amount" means, at any time, the amount of funds, if any, set aside by the Issuer in the Series 2001-3 Excess Funding Account as all or a portion of the Minimum Liquidity Amount at such time. 5 "Cash Liquidity Amount Deficiency" means, with respect to any Deposit Date, the difference, if any, between the Cash Liquidity Amount on such date and the amount then on deposit in the Series 2001-3 Cash Liquidity Account. "Casualty Payment" has the meaning specified in Section 6.1 of the Group V Lease. "Class A Carryover Controlled Amortization Amount" means, with respect to the Class A Notes for any Related Month during the Class A Controlled Amortization Period, the amount, if any, by which the portion of the Monthly Total Principal Allocation allocable to the Class A Notes for the previous Related Month plus any amounts paid under the Demand Note, drawn under the Letter of Credit (or withdrawn from the Series 2001-3 Cash Collateral Account, as applicable) or withdrawn from the Series 2001-3 Excess Funding Account on account of the related Class A Controlled Distribution Amount was less than the Class A Controlled Distribution Amount for such previous Related Month; provided, however, that for the first Related Month in the Class A Controlled Amortization Period, the Class A Carryover Controlled Amortization Amount shall be zero. "Class A Controlled Amortization Amount" means, with respect to any Related Month during the Class A Controlled Amortization Period, $91,250,000. "Class A Controlled Amortization Period" means the period commencing on December 1, 2003 (or, if such day is not a Business Day, the Business Day last preceding such day) and ending on the earliest to occur of (i) the commencement of the Series 2001-3 Rapid Amortization Period, (ii) the date on which the Class A Notes are fully paid, (iii) the Series 2001-3 Termination Date, and (iv) the termination of the Indenture. "Class A Controlled Distribution Amount" means, with respect to any Related Month during the Class A Controlled Amortization Period, an amount equal to the sum of the Class A Controlled Amortization Amount and any Class A Carryover Controlled Amortization Amount for such Related Month. "Class A Deficiency Amount" has the meaning specified in Section 4.3(c) of this Supplement. "Class A Expected Final Distribution Date" means the February 25, 2004 Distribution Date. "Class A Initial Invested Amount" means the aggregate initial principal amount of the Class A Notes, which is $182,500,000. "Class A Invested Amount" means, when used with respect to any date, an amount equal to (a) the Class A Initial Invested Amount plus (b) the initial principal amount of any Additional Notes issued as Class A Notes on or prior to such date, minus (c) the amount of principal payments made to Class A Noteholders on or prior to such date minus (d) all Losses allocated to the Class A Noteholders plus (e) all Recoveries allocated to the Class A Noteholders on or prior to such date. 6 "Class A Investor Monthly Servicing Fee" means, on any Distribution Date, 1/12th of 1% of the Class A Invested Amount as of the preceding Distribution Date (or the Series 2001-3 Issuance Date, in the case of the initial Distribution Date). "Class A Monthly Supplemental Servicing Fee" means, on any Distribution Date, the product of the Group V Supplemental Servicing Fee accrued on such date and a fraction, the numerator of which shall be the Class A Invested Amount on such Distribution Date and the denominator of which is the sum of (x) the aggregate of the invested amounts for all outstanding Group V Series of Notes on such Distribution Date plus (y) the Budget Interest (including available subordinated amounts, if any, for all Group V Series of Notes on such Distribution Date). "Class A Note Interest Shortfall" has the meaning specified in Section 4.4(a) of this Supplement. "Class A Note Rate" means, for any Interest Period, a rate per annum equal to LIBOR for such Interest Period plus 0.90%. "Class A Noteholder" means the Person in whose name a Class A Note is registered in the Note Register. "Class A Notes" means any one of the Series 2001-3 Floating Rate Rental Car Asset Backed Notes, Class A, executed by TFFC and authenticated and delivered by or on behalf of the Trustee, substantially in the form of Exhibit A-1, Exhibit A-2 or Exhibit A-3. Definitive Class A Notes shall have such insertions and deletions as are necessary to give effect to the provisions of Section 2.18 of the Base Indenture. "Class A Prepayment Premium" has the meaning specified in Section 8(a)(i) of this Supplement. "Class A Principal Shortfall" has the meaning assigned thereto in Section 4.5(a)(i) of this Supplement. "Class B Carryover Controlled Amortization Amount" means, with respect to the Class B Notes for any Related Month during the Class B Controlled Amortization Period, the amount, if any, by which the portion of the Monthly Total Principal Allocation allocable to the Class B Notes for the previous Related Month plus any amounts paid under the Demand Note, drawn under the Letter of Credit (or withdrawn from the Series 2001-3 Cash Collateral Account, as applicable) or withdrawn from the Series 2001-3 Excess Funding Account on account of the related Class B Controlled Distribution Amount was less than the Class B Controlled Distribution Amount for such previous Related Month; provided, however, that for the first Related Month in the Class B Controlled Amortization Period, the Class B Carryover Controlled Amortization Amount shall be zero. "Class B Controlled Amortization Amount" means, with respect to any Related Month during the Class B Controlled Amortization Period, $25,875,000. 7 "Class B Controlled Amortization Period" means the period commencing on February 1, 2004 (or, if such day is not a Business Day, the Business Day last preceding such day) and ending on the earliest to occur of (i) the commencement of the Series 2001-3 Rapid Amortization Period, (ii) the date on which the Class B Notes are fully paid, (iii) the Series 2001-3 Termination Date, and (iv) the termination of the Indenture in accordance with its terms. "Class B Controlled Distribution Amount" means, with respect to any Related Month during the Class B Controlled Amortization Period, an amount equal to the sum of the Class B Controlled Amortization Amount and any Class B Carryover Controlled Amortization Amount for such Related Month. "Class B Deficiency Amount" has the meaning specified in Section 4.3(d) of this Supplement. "Class B Expected Final Distribution Date" means the March 25, 2004 Distribution Date. "Class B Initial Invested Amount" means the aggregate initial principal amount of the Class B Notes, which is $25,875,000. "Class B Invested Amount" means, when used with respect to any date, an amount equal to (a) the Class B Initial Invested Amount plus (b) the initial principal amount of any Additional Notes issued as Class B Notes on or prior to such date, minus (c) the amount of principal payments made to Class B Noteholders on or prior to such date minus (d) all Losses allocated to the Class B Noteholders plus (e) all Recoveries allocated to the Class B Noteholders on or prior to such date. "Class B Investor Monthly Servicing Fee" means, on any Distribution Date, 1/12 of 1% of the Class B Invested Amount as of the preceding Distribution Date (or the Series 2001-3 Issuance Date, in the case of the initial Distribution Date). "Class B Monthly Supplemental Servicing Fee" means, on any Distribution Date, the product of the Group V Supplemental Servicing Fee accrued on such date and a fraction, the numerator of which shall be the Class B Invested Amount on such Distribution Date and the denominator of which shall be the sum of (x) the aggregate of the invested amounts for all outstanding Group V Series of Notes on such Distribution Date plus (y) the Budget Interest (including available subordinated amounts, if any, for all Group V Series of Notes on such Distribution Date). "Class B Note Interest Shortfall" has the meaning specified in Section 4.4(b) of this Supplement. "Class B Note Rate" means, for any Interest Period, a rate per annum equal to LIBOR for such Interest Period plus 1.18%. "Class B Noteholder" means the Person in whose name a Class B Note is registered in the Note Register. 8 "Class B Notes" means any one of the Series 2001-3 Floating Rate Rental Car Asset Backed Notes, Class B, executed by TFFC and authenticated and delivered by or on behalf of the Trustee, substantially in the form of Exhibit B-1, Exhibit B-2 or Exhibit B-3. Definitive Class B Notes shall have such insertions and deletions as are necessary to give effect to the provisions of Section 2.18 of the Base Indenture. "Class B Prepayment Premium" has the meaning specified in Section 8(a)(ii) of this Supplement. "Class B Principal Shortfall" has the meaning assigned thereto in Section 4.5(b)(i) of this Supplement. "Class C Carryover Controlled Amortization Amount" means, with respect to the Class C Notes for any Related Month during the Class C Controlled Amortization Period, the amount, if any, by which the portion of the Monthly Total Principal Allocation allocable to the Class C Notes for the previous Related Month plus any amounts paid under the Demand Note, drawn under the Letter of Credit (or withdrawn from the Series 2001-3 Cash Collateral Account, as applicable) or withdrawn from the Series 2001-3 Excess Funding Account on account of the related Class C Controlled Distribution Amount was less than the Class C Controlled Distribution Amount for such previous Related Month; provided, however, that for the first Related Month in the Class C Controlled Amortization Period, the Class C Carryover Controlled Amortization Amount shall be zero. "Class C Controlled Amortization Amount" means, with respect to any Related Month during the Class C Controlled Amortization Period, $31,625,000. "Class C Controlled Amortization Period" means the period commencing on January 31, 2004 (or, if such day is not a Business Day, the Business Day last preceding such day) and ending on the earliest to occur of (i) the commencement of the Series 2001-3 Rapid Amortization Period, (ii) the date on which the Class C Notes are fully paid, (iii) the Series 2001-3 Termination Date, and (iv) the termination of the Indenture in accordance with its terms. "Class C Controlled Distribution Amount" means, with respect to any Related Month during the Class C Controlled Amortization Period, an amount equal to the sum of the Class C Controlled Amortization Amount and any Class C Carryover Controlled Amortization Amount for such Related Month. "Class C Deficiency Amount" has the meaning specified in Section 4.3(e) of this Supplement. "Class C Expected Final Distribution Date" means the March 25, 2004 Distribution Date. "Class C Initial Invested Amount" means the aggregate initial principal amount of the Class C Notes, which is $31,625,000. "Class C Invested Amount" means, when used with respect to any date, an amount equal to (a) the Class C Initial Invested Amount plus (b) the initial principal amount of any Additional Notes issued as Class C Notes on or prior to such date, minus (c) the amount of principal 9 payments made to Class C Noteholders on or prior to such date minus (d) all Losses allocated to the Class C Noteholders plus (e) all Recoveries allocated to the Class C Noteholders on or prior to such date. "Class C Investor Monthly Servicing Fee" means, on any Distribution Date, 1/12 of 1% of the Class C Invested Amount as of the preceding Distribution Date (or the Series 2001-3 Issuance Date, in the case of the initial Distribution Date). "Class C Monthly Supplemental Servicing Fee" means, on any Distribution Date, the product of the Group V Supplemental Servicing Fee accrued on such date and a fraction, the numerator of which shall be the Class C Invested Amount on such Distribution Date and the denominator of which shall be the sum of (x) the aggregate of the invested amounts for all outstanding Group V Series of Notes on such Distribution Date plus (y) the Budget Interest (including available subordinated amounts, if any, for all Group V Series of Notes on such Distribution Date). "Class C Note Interest Shortfall" has the meaning specified in Section 4.4(c) of this Supplement. "Class C Note Rate" means, for any Interest Period, a rate per annum equal to LIBOR for such Interest Period plus 2.93%. "Class C Noteholder" means the Person in whose name a Class C Note is registered in the Note Register. "Class C Notes" means any one of the Series 2001-3 Floating Rate Rental Car Asset Backed Notes, Class C, executed by TFFC and authenticated and delivered by or on behalf of the Trustee, substantially in the form of Exhibit C-1, Exhibit C-2 or Exhibit C-3. Definitive Class C Notes shall have such insertions and deletions as are necessary to give effect to the provisions of Section 2.18 of the Base Indenture. "Class C Prepayment Premium" has the meaning specified in Section 8(a)(iii) of this Supplement. "Class C Principal Shortfall" has the meaning assigned thereto in Section 4.5(c)(i) of this Supplement. "Clearstream" means Clearstream Banking, societe anonyme, a corporation organized under the laws of the Grand Duchy of Luxembourg. "Credit Agreement" means, the Amended and Restated Credit Agreement, dated as of June 19, 1998, as amended by the First Amendment to Amended and Restated Credit Agreement, dated as of September 11, 1998, as amended by the Second Amendment to Amended and Restated Credit Agreement, dated as of March 19, 1999, as amended by the Third Amendment to Amended and Restated Credit Agreement, dated as of December 22, 1999, as amended by the Fourth Amendment to Amended and Restated Credit Agreement, dated as of September 30, 2000, as amended by the Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001, as amended by the Sixth Amendment to Amended and 10 Restated Credit Agreement, dated as of February 9, 2001, as modified by the Waiver and Consent to Amended and Restated Credit Agreement, dated as of March 29, 2001, as amended by the Seventh Amendment to Amended and Restated Credit Agreement, dated as of June 19, 2001, and as amended by the Eighth Amendment to Amended and Restated Credit Agreement, dated as of July 31, 2001, among Budget, as borrower, the lenders named therein, Credit Suisse First Boston, as co-syndication and administrative agent, as such agreement may be amended, supplemented, amended and restated or otherwise modified from time to time in accordance with the terms thereof. "Demand Note" means an intercompany demand note made on or after the Series 2001-3 Issuance Date by Budget in favor of the Issuer and pledged by the Issuer to the Trustee. "Deposit Date" is defined in Section 4.2 of this Supplement. "Depreciation Charges" means, for purposes of the Group V Lease (a) with respect to any Group V Type I Repurchase Vehicle, the scheduled monthly depreciation charge set forth by the Manufacturer in its Repurchase Program for such Vehicle with respect to such Vehicle calculated on a daily basis and (b) with respect to any Group V Type II Repurchase Vehicle, the monthly depreciation charge set forth in the related Depreciation Schedule; provided, however, that for purposes of Group V Type II Repurchase Vehicles, Depreciation Charges shall be a rate that is at least equal to 1.50% per month. If such charge is expressed as a percentage, the Depreciation Charge for such Vehicle shall be such percentage multiplied by the Capitalized Cost for such Vehicle calculated on a daily basis. For any Vehicle not held for a full Related Month in the month of acquisition or disposition, the Depreciation Charge shall be prorated by multiplying the applicable Depreciation Charge by a fraction, the numerator of which is the number of days from the date depreciation commences (in accordance with the applicable Repurchase Program or Depreciation Schedule) with respect to such Vehicle to the first day of the next month and the denominator of which is the number of days in such month. For the month in which a Repurchase Vehicle is turned back to the applicable Manufacturer, the Depreciation Charge shall be prorated by multiplying the applicable depreciation amount by a fraction, the numerator of which is the number of days from the first day of such month to the Turnback Date for such Vehicle and the denominator of which is the number of days in such month. In the event a Vehicle is sold to a third party, the Depreciation Charge shall be prorated by multiplying the applicable Depreciation Charge by a fraction, the numerator of which is the number of days from the first day of such month to the date proceeds were received on the sale of such Vehicle and the denominator of which is the number of days in such month. "Determination Date" means the second Business Day prior to each Distribution Date. "Disposition Date" means, with respect to any Group V Repurchase Vehicle, (i) if such Group V Repurchase Vehicle was sold at auction or returned to a Manufacturer for repurchase, pursuant to the applicable Repurchase Program, the date on which such Group V Repurchase Vehicle is sold at auction or accepted for return by such Manufacturer or its agent and, in each case, the Depreciation Charges ceased to accrue pursuant to such Repurchase Program, or (ii) if such Group V Repurchase Vehicle was sold to any Person (other than to a Manufacturer pursuant to such Manufacturer's Repurchase Program or to a third party through an auction conducted by or through or arranged by the Manufacturer pursuant to its Repurchase Program), 11 the date on which title to the Group V Repurchase Vehicle is transferred in connection with such sale. "Disposition Losses" means the aggregate of (a) all Losses as defined in clause (ii), (iii) and (iv) of the definition of "Group V Type II Repurchase Losses" and (b) all Losses as defined in clauses (i), (ii) and (iv) of the definition of "Group V Type I Repurchase Losses" with respect to Group V Vehicles which are Lessor-Owned Vehicles. "Disposition Proceeds" means the net proceeds (other than the portion of the Repurchase Price payable by the related Manufacturer or Guaranteed Payments) from the sale or disposition of a Vehicle to any Person, whether at auction or otherwise; provided, however, that Disposition Proceeds shall not include Termination Payments. "Distribution Date" means, with respect to the Series 2001-3 Notes, the 25th day of each calendar month or, if such day is not a Business Day, the next succeeding Business Day, commencing December 26, 2001. "DTC" means The Depository Trust Company, a New York corporation. "Eligible Credit Enhancer" means (a) a commercial bank having total assets in excess of $500,000,000, (b) a finance company, insurance company or other financial institution that in the ordinary course of business enters into transactions of a type similar to that entered into by the Letter of Credit Provider under the Letter of Credit Reimbursement Agreement and has total assets in excess of $200,000,000, and with respect to which providing or becoming an assignee of the obligations of the Letter of Credit Provider would not constitute a prohibited transaction under Section 4975 of the Code or Section 406 of ERISA and (c) any other financial institution, in each case reasonably satisfactory to Budget and TFFC having a short-term rating of at least "A-1" or its equivalent by a Rating Agency; provided, however, that any Person who does not have either a short-term rating from a Rating Agency shall be deemed to have the required rating set forth above if such Rating Agency confirms in writing that such Person, if its short-term debt obligations were rated, would be assigned such required rating. "Eligible Receivable" means a legal, valid and binding receivable (a) due from any Eligible Repurchase Manufacturer or Eligible Type II Repurchase Manufacturer or auction dealer under an Eligible Repurchase Program to TFFC or a creditor of TFFC, (b) in respect of a Group V Repurchase Vehicle purchased by such Eligible Repurchase Manufacturer or Eligible Type II Repurchase Manufacturer or sold at an auction pursuant to an Eligible Repurchase Program, which absent such purchase, would have constituted an Eligible Repurchase Vehicle with respect to which the Lien of the Trustee was noted on the Certificate of Title at the time of purchase or refinancing by TFFC under the Group V Lease and (c) the right to payments in respect of which has been assigned by the payee thereof to the Trustee for the benefit of the Secured Parties; provided that no amount receivable from an Eligible Repurchase Manufacturer or Eligible Type II Repurchase Manufacturer or auction dealer under an Eligible Repurchase Program shall be an Eligible Receivable if such amount remains unpaid more than ten (10) days after the Repurchase Program Payment Due Date in respect of such Group V Vehicle. 12 "Eligible Repurchase Manufacturer" means Ford Motor Company, DaimlerChrysler and Toyota Motor Sales, U.S.A., Inc. and each Manufacturer that (a) has an Eligible Repurchase Program, (b) has been approved as an Eligible Repurchase Manufacturer by the Rating Agencies or with respect to the addition of which as an Eligible Repurchase Manufacturer Rating Agency Confirmation has been obtained, (c) if such Manufacturer has an unsecured long-term debt rating of less than "A-" from Standard & Poor's or "A3" from Moody's or "A-" from Fitch, has been approved by the Required Beneficiaries, and (d) has been approved by the Enhancement Provider for the Series 2001-3 Notes; provided, however, that upon the occurrence of a Manufacturer Event of Default with respect to such Manufacturer, such Manufacturer shall no longer qualify as an Eligible Repurchase Manufacturer; and, provided, further, that Vehicles manufactured by each Manufacturer listed on Schedule 1 hereto may not comprise more than the percentage of the Group V Aggregate Asset Amount specified on such schedule for such Manufacturer. "Eligible Repurchase Program" means, at any time, a Repurchase Program offered by an Eligible Repurchase Manufacturer or Eligible Type II Repurchase Manufacturer (a) pursuant to which the Repurchase Price (or the price guaranteed to be received at an auction conducted by or within the requirements established by the Manufacturer) is at least equal to the Capitalized Cost of each Group V Vehicle, minus all Depreciation Charges accrued with respect to such Group V Vehicle prior to the date that the Group V Vehicle is submitted for repurchase, minus Excess Mileage Charges, minus Excess Damage Charges and minus any other charges specified in such Repurchase Program, (b) that cannot be amended or terminated with respect to any Group V Vehicle after the purchase of that Group V Vehicle, and (c) the collateral assignment of the benefits of which to the Trustee has been on or prior to the 30th day after the date hereof acknowledged in writing by the related Manufacturer pursuant to an Assignment Agreement, and TFFC (and the Trustee on behalf of TFFC) has been provided on or prior to the 30th day after the date hereof with an officer's certificate or opinion of counsel reasonably satisfactory to the Trustee and each Rating Agency that TFFC (and the Trustee on behalf of TFFC) can enforce the applicable Manufacturer's obligations thereunder; provided, however, that with respect to a Repurchase Program for any model year beginning with 2002 and thereafter, (i) TFFC shall have obtained (and delivered to the Trustee) Rating Agency Confirmation with respect to the acquisition of Group V Vehicles of such model year pursuant to such Repurchase Program and (ii) in the event there is a major change to a Repurchase Program during a model year, Rating Agency Confirmation with respect to the acquisition of Group V Vehicles pursuant to such Repurchase Program. "Eligible Repurchase Vehicle" means any automobile or light truck (including vans), (a) which at the time of purchase or financing by TFFC is eligible under an Eligible Repurchase Program, (b) which is owned by TFFC (or is a Hawaii Vehicle or a Texas Vehicle, in either case, titled in TFFC's name) free and clear of all Liens other than Permitted Liens, and (c) with respect to which either (i) the Trustee is noted as the first lienholder on the Certificate of Title therefor, (ii) such Certificate of Title has been submitted to the appropriate state authorities for such notation or (iii) for which the Lessee has commenced the process to note the lien of the Trustee on such Certificate of Title within the time period specified in the Group V Lease; provided, however, if the actions provided in clause (i) or (ii) are not sufficient in any state to cause the Trustee's Lien upon such Group V Vehicles to be a perfected first Lien, then in order for a Group V Vehicle titled in such state to be an "Eligible Repurchase Vehicle", such action as is 13 required to cause the Trustee's Lien to be a perfected first Lien shall have been taken by the Servicer. "Eligible Type I Repurchase Vehicle" means an Eligible Repurchase Vehicle manufactured by an Eligible Repurchase Manufacturer. "Eligible Type II Repurchase Manufacturer" means each Manufacturer that has an Eligible Repurchase Program and has been approved as an Eligible Type II Repurchase Manufacturer by the Rating Agencies or with respect to the addition of which as an Eligible Type II Repurchase Manufacturer Rating Agency Confirmation has been obtained; provided, however, that upon the occurrence of a Manufacturer Event of Default with respect to such Manufacturer, such Manufacturer shall no longer qualify as an Eligible Type II Repurchase Manufacturer. "Eligible Type II Repurchase Vehicle" means an Eligible Repurchase Vehicle manufactured by an Eligible Type II Repurchase Manufacturer. "Eligible Vehicle" means, as of any date of determination, (a) any Eligible Type I Repurchase Vehicle that is entitled to the benefits of its applicable Repurchase Program as of such date and (b) any Eligible Type II Repurchase Vehicle (i) the Type II Repurchase Vehicle Value of which if added to the Group V Aggregate Type II Repurchase Asset Amount would not cause such Group V Aggregate Type II Repurchase Asset Amount as of such date to exceed 30% of the Group V Aggregate Asset Amount as of such date, (ii) the Type II Repurchase Vehicle Value of which if added to the sum of (x) the aggregate Type II Repurchase Vehicle Values of all Eligible Type II Repurchase Vehicles manufactured by the same Manufacturer and leased under the Group V Lease as of such date plus (y) all Eligible Receivables of such Manufacturer included in the Group V Aggregate Type II Repurchase Aggregate Asset Amount as of such date, would not cause such aggregate Type II Repurchase Asset Amount plus such Eligible Receivables to exceed the Maximum Manufacturer Percentage applicable to such Manufacturer, if any, of the Group V Aggregate Asset Amount as of such date, (iii) that is entitled to the benefits of its applicable Repurchase Program as of such date and (c) any Finance Vehicle, satisfying the conditions set forth in the preceding clauses (a) or (b), as applicable, and the Net Book Value of which, if such Finance Vehicle is an Eligible Type I Repurchase Vehicle, or the Type II Repurchase Vehicle Value of which, if such Finance Vehicle is an Eligible Type II Repurchase Vehicle, when added to sum of (1) the aggregate Net Book Values of all Group V Type I Repurchase Vehicles that are Finance Vehicles as of such date plus (2) the aggregate Type II Repurchase Vehicle Values of all Group V Type II Repurchase Vehicles that are Finance Vehicles as of such date plus (3) all Eligible Receivables related to such Finance Vehicles included in the Group V Aggregate Asset Amount as of such date, would not cause such sum to exceed the Maximum Finance Vehicle Percentage of the Group V Aggregate Asset Amount as of such date. "Enhancement Percentage" means (for purposes of determining the Group V Required Asset Amount) on any day, a percentage equal to the sum of (A) 21.75% times the Group V Type II Repurchase Percentage on such day plus (B) 20% times the Group V Type I Repurchase Percentage on such day. 14 "Euroclear" means Euroclear Bank, S.A./N.V. "Excess Budget Collections" has the meaning specified in Section 4.3(g) of this Supplement. "Excluded Payments" means the following amounts payable to TFFC pursuant to the Repurchase Programs: (i) all incentive payments payable to TFFC to purchase Group V Vehicles under the Repurchase Programs, (ii) all amounts payable to TFFC as compensation for the preparation by TFFC of newly delivered Group V Vehicles under the Repurchase Programs and (iii) all amounts payable to TFFC in reimbursement for warranty work performed by TFFC on the Group V Vehicles under the Repurchase Programs. "Finance Lease" has the meaning specified in Annex B to the Group V Lease. "Financed Vehicle" means an Eligible Vehicle that is (a) a Texas Vehicle or (b) a Hawaii Vehicle. "Fitch" means Fitch, Inc. "Group V Aggregate Asset Amount" means, for any date of determination, the sum, rounded to the nearest $100,000, of (i) the Group V Aggregate Type I Repurchase Asset Amount, (ii) the Group V Aggregate Type II Repurchase Asset Amount and (iii) cash and Permitted Investments on deposit in the Accounts and allocable to the Group V Series of Notes. "Group V Aggregate Principal Balance" means, as of any date of determination, an amount equal to the aggregate of the Aggregate Principal Balances of all Group V Series of Notes. "Group V Aggregate Type I Repurchase Asset Amount" means, for any date of determination, the sum, rounded to the nearest $100,000, of (i) the Net Book Value of all Group V Type I Repurchase Vehicles that are Eligible Vehicles leased as of such date under the Group V Lease and not turned in to the Manufacturer thereof pursuant to its Repurchase Program or not otherwise sold or deemed to be sold under the Related Documents, plus (ii) all amounts (with certain limited exceptions) receivable as of such date from Eligible Manufacturers under Eligible Repurchase Programs with respect to Group V Type I Repurchase Vehicles turned in to such Manufacturers pursuant to any such Repurchase Program or delivered to an authorized auction pursuant to any Eligible Repurchase Program, other than any such amounts which have become Losses, plus (iii) all amounts receivable with respect to the disposition of Group V Type I Repurchase Vehicles as of such date from any other Person with respect to Group V Type I Repurchase Vehicles including, without limitation, from the sale of any Group V Repurchase Vehicles other than pursuant to the related Repurchase Program, other than any such amounts which have been described in this clause (iii) but have become Losses prior to such date, plus (iv) with respect to any Group V Type I Repurchase Vehicles that have been turned in to the Manufacturer or otherwise sold, any accrued and unpaid Monthly Base Rent and Monthly Supplemental Payments under the Group V Lease with respect to such Group V Type I Repurchase Vehicles (net of amounts set forth in clauses (ii) and (iii) above), other than any such amounts which have become Losses. 15 "Group V Aggregate Type II Repurchase Asset Amount" means, for any date of determination, the sum, rounded to the nearest $100,000, of (i) the lesser of (a) the Net Book Value of all Group V Type II Repurchase Vehicles that are Eligible Vehicles leased as of such date under the Group V Lease and (b) the Group V Type II Repurchase Fleet Market Value for Group V Vehicles (taking into account only those Eligible Type II Repurchase Vehicles that are Eligible Vehicles) as of such date, plus (ii) all amounts receivable as of such date with respect to any Group V Type II Repurchase Vehicles which have been turned in to the Manufacturer or otherwise sold or deemed to be sold under the Related Documents, other than any such amounts which have been described in this clause (iii) but have become Losses prior to such date, plus (iii) with respect to any Group V Type II Repurchase Vehicles that have been turned in to the Manufacturer or otherwise sold, any accrued and unpaid payments of Monthly Base Rent, Monthly Supplemental Payments and Additional Base Rent under the Group V Lease with respect to such Group V Type II Repurchase Vehicles (net of amounts set forth in clause (ii) above), other than any such amounts which have become Losses. "Group V Carrying Charges" means, as of any day, (i) the aggregate of all Trustee fees, servicing fees (other than Group V Supplemental Servicing Fees) and other fees and expenses and indemnity amounts, if any, payable with respect to the Group V Series of Notes by the Lessor or the Servicer under the Indenture or the Related Documents, which have accrued during the Related Month, plus (ii) without duplication, all amounts payable by the Lessees pursuant to Section 15 of the Group V Lease which have accrued during the Related Month. "Group V Collateral" has the meaning specified in Section 3.1(a) of this Supplement. "Group V Collection Account" has the meaning specified in Section 4.1 of this Supplement. "Group V Collections" means all Group V Type I Repurchase Collections, Group V Type II Repurchase Collections and all amounts earned on Permitted Investments made with funds in the Group V Collection Account allocable to Group V Collections. "Group V Invested Amount" means, as of any date of determination, an amount equal to the aggregate of the Invested Amounts of all Group V Series of Notes. "Group V Lease" means the Master Motor Vehicle Lease Agreement Group V, dated as of April 18, 2001, among the Issuer, as the Lessor thereunder, certain subsidiaries, affiliates and non-affiliates of Budget, as the Lessees thereunder, and Budget, as the Guarantor thereunder, as amended, modified or supplemented from time to time in accordance with the terms thereof, providing for the lease of Group V Vehicles. "Group V Letter of Credit Amount" means as of any date of determination, the aggregate amount available to be drawn on such date under each letter of credit (or available to be withdrawn from the related cash collateral account) issued by an Eligible Credit Enhancer for the benefit of the Trustee and providing credit enhancement for the obligations of the Lessees under the Group V Lease. 16 "Group V Repurchase Vehicles" means Group V Type I Repurchase Vehicles and Group V Type II Repurchase Vehicles. "Group V Required Asset Amount" at any time equals the sum of (a) the Group V Aggregate Principal Balance at such time and (b) an amount equal to the excess of (i) the aggregate of the minimum credit support amounts for all Group V Series of Notes at such time over (ii) the Group V Letter of Credit Amount at such time. "Group V Series of Notes" has the meaning set forth in the recitals hereto. "Group V Supplemental Servicing Fee" for any period, means the total Group V Carrying Charges for such period. "Group V TFFC Agreements" has the meaning specified in Section 3.1(a)(i) of this Supplement. "Group V Type I Repurchase Collections" means (i) all payments by or on behalf of the Lessee Group in respect of Group V Type I Repurchase Vehicles under the Group V Lease, (ii) all payments by or on behalf of any Manufacturer, under its Repurchase Program, any incentive program or otherwise in respect of Group V Type I Repurchase Vehicles and (iii) all payments by or on behalf of any other person as proceeds from the sale of Group V Type I Repurchase Vehicles or payment of insurance proceeds, whether such payments are in the form of cash, checks or wire transfers and whether in respect of principal, interest, purchase price, fees, expenses or otherwise. "Group V Type I Repurchase Losses" means, with respect to any Related Month, the sum (without duplication) of (i) with respect to Group V Type I Repurchase Vehicles any payment required to be made by a Manufacturer or auction dealer under such Manufacturer's Repurchase Program which is not made within 90 days after the applicable Turnback Date, but only to the extent that such 90 day period expires during such Related Month, (ii) in the event that a Manufacturer Event of Default occurs with respect to any Manufacturer, all payments that are required to be made (and have not yet been made) by such Manufacturer to the Issuer with respect to Group V Type I Repurchase Vehicles that are Lessor-Owned Vehicles returned to such Manufacturer under such Manufacturer's Repurchase Program, but only to the extent that the grace or other similar period for the determination of such Manufacturer Event of Default expires during such Related Month, (iii) any payment in respect of Monthly Base Rent, Monthly Supplemental Payments and Termination Payments that becomes due to the Issuer under the Group V Lease in respect of Group V Type I Repurchase Vehicles that is not paid to the Issuer prior to the expiration of any grace period provided for in the Group V Lease for the making of such payment, but only to the extent that such grace period expires during such Related Month and (iv) the excess, if any, of (a) the Net Book Values of all Group V Type I Repurchase Vehicles which are Lessor-Owned Vehicles sold or disposed of during the Related Month (other than pursuant to a Repurchase Program), calculated on the dates of the respective sales or final dispositions thereof, over (b) the aggregate amount of Disposition Proceeds received during the Related Month in respect thereof by the Issuer or the Trustee (including by deposit into the Group V Collection Account). 17 "Group V Type I Repurchase Percentage" means, on any date of determination, the percentage equivalent of a fraction, the numerator of which will be the Group V Aggregate Type I Repurchase Asset Amount as of such date and the denominator of which will be the sum of the Group V Aggregate Asset Amount as of such date. "Group V Type I Repurchase Recoveries" means with respect to any Related Month the sum (without duplication) of all amounts received by the Issuer and the Trustee (including by deposit into the Group V Collection Account) from any Person during such Related Month in respect of amounts that previously had been treated as Group V Type I Repurchase Losses; provided, however, that amounts drawn on the Letter of Credit, any other Enhancement for the Series 2001-3 Notes or the Demand Note will not be deemed to be Group V Type I Repurchase Recoveries. "Group V Type I Repurchase Vehicles" means the Eligible Type I Repurchase Vehicles leased under the Group V Lease. "Group V Type II Repurchase Collections" means (i) all payments by or on behalf of the Lessee Group in respect of Group V Type II Repurchase Vehicles under the Group V Lease, (ii) all payments by or on behalf of any Manufacturer, under its Repurchase Program, any incentive program or otherwise in respect of Group V Type II Repurchase Vehicles and (iii) all payments by or on behalf of any person as proceeds from the sale of Group V Type II Repurchase Vehicles or payment of insurance proceeds, whether such payments are in the form of cash, checks or wire transfers and whether in respect of principal, interest, purchase price, fees, expenses or otherwise. "Group V Type II Repurchase Fleet Market Value" means, as of any date of determination, with respect to Group V Type II Repurchase Vehicles, the sum as of such date of the respective Fair Market Values (determined as if such Group V Type II Repurchase Vehicles were Non-Repurchase Vehicles) of all such Group V Type II Repurchase Vehicles. "Group V Type II Repurchase Losses" means, with respect to any Related Month, the sum (without duplication) of (i) any payment in respect of Monthly Base Rent, Monthly Supplemental Payments, Additional Base Rent and Termination Payments that becomes due to the Issuer under the Group V Lease in respect of Group V Type II Repurchase Vehicles that is not paid to the Issuer prior to the expiration of any grace period provided for in the Group V Lease for the making of such payment, but only to the extent that such grace period expires during such Related Month, (ii) the excess, if any, of (x) the Net Book Values of all Group V Type II Repurchase Vehicles which are Lessor-Owned Vehicles sold or disposed of during the Related Month, calculated on the dates of the respective sales or final dispositions thereof, over (y) the aggregate amount of Disposition Proceeds and Termination Payments received during the Related Month in respect thereof by the Issuer or the Trustee (including by deposit into the Group V Collection Account), (iii) with respect to Group V Type II Repurchase Vehicles any payment required to be made by a Manufacturer or auction dealer under such Manufacturer's Repurchase Program which is not made within 75 days after the applicable Turnback Date, but only to the extent that such 75 day period expires during such Related Month, and (iv) in the event that a Manufacturer Event of Default occurs with respect to any Manufacturer, all payments that are required to be made (and have not yet been made) by such Manufacturer to the 18 Issuer with respect to Group V Type II Repurchase Vehicles that are Lessor-Owned Vehicles returned to such Manufacturer under such Manufacturer's Repurchase Program, but only to the extent that the grace or other similar period for the determination of such Manufacturer Event of Default expires during such Related Month. "Group V Type II Repurchase Percentage" means, on any date of determination, the percentage equivalent of a fraction, the numerator of which will be the Group V Aggregate Type II Repurchase Asset Amount as of such date and the denominator of which will be the sum of the Group V Aggregate Asset Amount as of such date. "Group V Type II Repurchase Recoveries" means, with respect to any Related Month, the sum (without duplication) of all amounts received by the Issuer and the Trustee (including by deposit into the Group V Collection Account) from any Person during such Related Month in respect of amounts that previously had been treated as Group V Type II Repurchase Losses; provided, however, that amounts drawn on the Letter of Credit, any other credit enhancement for the Series 2001-3 Notes or the Demand Note will not be deemed to be Group V Type II Repurchase Recoveries. "Group V Type II Repurchase Vehicles" means the Eligible Type II Repurchase Vehicles leased under the Group V Lease. "Group V Vehicles" means the Vehicles leased under the Group V Lease. "Hawaii Vehicle" means a Group V Type I Repurchase Vehicle or Group V Type II Repurchase Vehicle financed by TFFC on or after the Lease Commencement Date for lease in the State of Hawaii. "Insolvency Period" has the meaning specified in Section 4.10(b) hereof. "Insolvency Period Commencement Date" means with respect to any Insolvency Period, the date on which the related Event of Bankruptcy shall have occurred (without giving effect to any grace period set forth in the definition of "Event of Bankruptcy" set forth in the Base Indenture). "Interest Collections" means on any date of determination the aggregate amount of Group V Collections in the Group V Collection Account which represent (i) Monthly Variable Rent, Monthly Finance Rent or Monthly Supplemental Rent accrued under the Group V Lease, or (ii) any amounts earned on Permitted Investments in the Group V Collection Account which constitute Group V Collateral or in the Series 2001-3 Collection Account which, in the case of clause (ii), are available for distribution on such date. "Interest Rate Cap Provider" means each of Deutsche Bank AG New York Branch and BNP Paribas and any other provider of an Interest Rate Cap from time to time. "Interest Rate Cap" means the interest rate caps, dated as of November 29, 2001, entered into between the Issuer and each Interest Rate Cap Provider, as the same may be amended, modified or replaced from time to time. 19 "Lease Commencement Date" has the meaning specified in Section 3.3 of the Group V Lease. "Lease Event of Default" has the meaning specified in Section 17.1 of the Group V Lease. "Lease Expiration Date" has the meaning specified in Section 3.3 of the Group V Lease. "Lessee Agreements" has the meaning specified in Section 2 of the Group V Lease. "Lessor-Owned Vehicle" means a Vehicle that is (a) owned by TFFC and (b) leased under the Operating Lease. "Letter of Credit" means the irrevocable letter of credit issued by the Letter of Credit Provider pursuant to the Letter of Credit Reimbursement Agreement for the benefit of the Trustee to provide support for the Lessees' payment obligations under the Group V Lease and for the obligations of Budget under the Demand Note. "Letter of Credit Provider" means Credit Suisse First Boston and any permitted successors or assigns. "Letter of Credit Reimbursement Agreement" means the Enhancement Letter of Credit Application and Agreement, dated as of November 29, 2001, among the Lessees under the Group V Lease, TFFC, Budget, as guarantor, and the Letter of Credit Provider, as such agreement may be amended, supplemented, amended and restated or otherwise modified from time to time in accordance with the terms thereof. "Letter of Credit Reimbursement Obligations" means any and all obligations of the parties to the Letter of Credit Reimbursement Agreement to reimburse the Letter of Credit Provider for credit disbursements under the Letter of Credit. "LIBOR" means the rate for each Interest Period determined by the Trustee as follows: (a) On the second London Banking Day prior to each Interest Period (a "LIBOR Determination Date"), until the Series 2001-3 Invested Amount is paid in full, the Trustee will determine the London interbank offered rate for U.S. dollar deposits for one month that appears on Telerate Page 3750 as it relates to U.S. dollars as of 11:00 a.m., London time, on such LIBOR Determination Date. "Telerate Page 3750" will have the meaning set forth in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions. For purposes of calculating "LIBOR," "London Banking Day" means any business day on which dealings in deposits in United States dollars are transacted in the London interbank market. (b) If, on any LIBOR Determination Date, such rate does not appear on Telerate Page 3750, the Trustee will request the principal London offices of each of four major banks in the London interbank market selected by the Trustee to provide the Trustee with offered quotations for deposits in U.S. dollars for a period of one month, commencing on the first day of such Interest Period, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Determination Date and in a principal amount equal to an amount 20 of not less than $250,000 that is representative of a single transaction in such market at such time. If at least two such quotations are provided, "LIBOR" for such Interest Period will be the arithmetic mean of such quotations (rounded upwards to the nearest one one-hundredth of one percent (1/100%) If fewer than two such quotations are provided, "LIBOR" for such Interest Period will be the arithmetic mean of rates quoted by three major banks in The City of New York selected by the Trustee at approximately 11:00 a.m., New York City time, on such LIBOR Determination Date for loans in U.S. dollars to leading European banks, for a period of one month, commencing on the first day of such Interest Period, and in a principal amount equal to an amount of not less than $250,000 that is representative of a single transaction in such market at such time; provided, however, that, if the banks selected as aforesaid by such Trustee are not quoting rates as mentioned in this sentence, "LIBOR" for such Interest Period will be the same as "LIBOR" for the immediately preceding Interest Period. "Liquidity Event" means any of the following: (i) a failure by Budget to make a payment under the Demand Note, (ii) a failure by Budget or a Lessee to make a payment under the Group V Lease or (iii) an Event of Bankruptcy occurs with respect to Budget or any Substantial Lessee. "Liquidity Event Reallocated Amount" means with respect to any Insolvency Period or after the occurrence of another Liquidity Event, the difference between (a) the Minimum Liquidity Amount as of the related Insolvency Period Commencement Date or the date on which such other Liquidity Event occurs, as the case may be, and (b) the sum of (1) the Series 2001-3 Letter of Credit Amount as of the related Insolvency Period Commencement Date or the date on which such other Liquidity Event occurs, and (2) the amount on deposit in the Series 2001-3 Cash Collateral Account as of the related Insolvency Period Commencement Date or the date on which such other Liquidity Event occurs; provided, however, that at no time may the Liquidity Event Reallocated Amount be less than zero. "Losses" with respect to the Group V Series of Notes means, on any date of determination, the sum of all Group V Type II Repurchase Losses and Group V Type I Repurchase Losses. "Majority Group V Noteholders" has the meaning specified in Section 3.2 of the Group V Lease. "Manufacturer Receivable" means an amount due from a Manufacturer or auction dealer under a Repurchase Program in respect of or in connection with a Group V Repurchase Vehicle being turned back to such Manufacturer. "Market Value Adjustment Percentage" means, with respect to Group V Type II Repurchase Vehicles, as of any Determination Date following the Series 2001-3 Issuance Date, the lower of (i) the lowest Measurement Month Average with respect to Group V Type II Repurchase Vehicles of any full Measurement Month within the preceding 12 calendar months and (ii) a fraction expressed as a percentage, the numerator of which equals the average of the aggregate Fair Market Value (calculated as if such Group V Type II Repurchase Vehicles were Non-Repurchase Vehicles) of Group V Type II Repurchase Vehicles leased under the Group V Lease calculated as of the last day of the Related Month and as of the last day of the two Related 21 Months precedent thereto and the denominator of which equals the average of the aggregate Net Book Values of such Group V Type II Repurchase Vehicles calculated as of each such date. "Master Lease Advance" has the meaning specified in Section 2.1 of the Group V Lease. "Maximum Finance Vehicle Percentage" means, with respect to Group V Vehicles and Eligible Receivables related thereto, fifteen percent (15%) or such higher percentage upon confirmation from Fitch that such lower percentage will not result in a downgrade or withdrawal of its then current ratings of the Notes. "Maximum Lease Commitment" means, on any date of determination, the sum of (i) the Group V Invested Amount, plus (ii) the aggregate of the available subordinated amounts on such date for all Group V Series of Notes, plus (iii) the aggregate Net Book Values of all Group V Type I Repurchase Vehicles that are Eligible Vehicles leased under the Group V Lease as of such date which were acquired, financed, or refinanced with funds other than proceeds of any Group V Series of Notes or the available subordinated amounts for any Group V Series of Notes, plus (iv) the aggregate Type II Repurchase Vehicle Values of all Group V Type II Repurchase Vehicles that are Eligible Vehicles leased under the Group V Lease as of such date which were acquired, financed, or refinanced with funds other than proceeds of any Group V Series of Notes or the available subordinated amounts for any Group V Series of Notes, plus (v) any amounts held in the Budget Distribution Account that TFFC commits on or prior to such date to invest in new Group V Vehicles (as evidenced by an Officers' Certificate of TFFC) in accordance with the terms of the Group V Lease and the Indenture. "Maximum Manufacturer Percentage" means, with respect to any Eligible Repurchase Manufacturer or Eligible Type II Repurchase Manufacturer, the percentage amount, if any, set forth in Schedule 1 to this Supplement specified for each Eligible Repurchase Manufacturer or Eligible Type II Repurchase Manufacturer with respect to Group V Type I Repurchase Vehicles, Group V Type II Repurchase Vehicles and Eligible Receivables from such Manufacturers, as applicable, which percentage amount represents the maximum percentage of Group V Type I Repurchase Vehicles and Group Type II Repurchase Vehicles which are Eligible Vehicles permitted under the Group V Lease to be Group V Type I Repurchase Vehicles or Group V Type II Repurchase Vehicles, as the case may be, manufactured by such Manufacturer; provided that such percentages may be changed from time to time solely upon the receipt by the Issuer of confirmation from Moody's that such change will not result in the downgrade or withdrawal of any of its then current ratings of the Notes. "Maximum Type II Repurchase Vehicle Percentage" means, with respect to the Series 2001-3 Notes, 30%. "Measurement Month" with respect to any date, means, with respect to Group V Type II Repurchase Vehicles, each calendar month, or the smallest number of consecutive calendar months, preceding such date in which (a) at least 250 Group V Type II Repurchase Vehicles were sold (whether at auction, in connection with Repurchase Programs, or through other channels at market prices) and (b) at least one-twelfth of the aggregate Net Book Value of the Group V Type II Repurchase Vehicles as of the last day of such calendar month or consecutive calendar months were sold (whether at auction, in connection with Repurchase Programs, or 22 through other channels at market prices); provided, however, that no calendar month included in a Measurement Month for Group V Type II Repurchase Vehicles shall be included in any other Measurement Month for such Group V Type II Repurchase Vehicles. "Measurement Month Average" means, in the case of Group V Type II Repurchase Vehicles, with respect to any Measurement Month, the percentage equivalent of a fraction, the numerator of which is the aggregate amount of Disposition Proceeds in respect of all Group V Type II Repurchase Vehicles sold (whether at auction, in connection with Repurchase Programs, or otherwise) during such Measurement Month and the denominator of which is the aggregate Net Book Value of such Vehicles on the dates of their respective sales. "Minimum Liquidity Amount" means, (a) as of any date of determination prior to the Series 2001-3 Termination Date, an amount equal to 6.25% of the Series 2001-3 Invested Amount as of such date and (b) on the Series 2001-3 Termination Date, zero. "Minimum Type I Repurchase Credit Support Amount" means, with respect to the Series 2001-3 Notes on any day, the product of (x) the Series 2001-3 Minimum Type I Repurchase Credit Support Percentage times (y) a dollar amount equal to the product of (1) the Aggregate Principal Balance of the Series 2001-3 Notes as of such date, minus the aggregate amount of cash and Permitted Investments in the Series 2001-3 Collection Account on such date and (2) the Group V Type I Repurchase Percentage as of such date. "Minimum Type II Repurchase Credit Support Amount" means, with respect to the Series 2001-3 Notes on any day, the product of (x) the Series 2001-3 Minimum Type II Repurchase Credit Support Percentage and (y) a dollar amount equal to the product of (1) the Aggregate Principal Balance of the Series 2001-3 Notes as of such date, minus the aggregate amount of cash and Permitted Investments in the Series 2001-3 Collection Account on such date and (2) the Group V Type II Repurchase Percentage as of such date. "Monthly Base Rent" has the meaning set forth in Section 9 of Annex A and Section 6 of Annex B to the Group V Lease. "Monthly Finance Rent" has the meaning set forth in Section 6 of Annex B to the Group V Lease. "Monthly Principal Allocation" has the meaning specified in Section 4.5(a) of this Supplement. "Monthly Supplemental Payment" has the meaning set forth in Section 6 of Annex B to the Group V Lease. "Monthly Supplemental Rent" with respect to the Group V Lease, has the meaning specified in Section 4.3 of the Group V Lease. "Monthly Total Principal Allocation" means the sum of all Series 2001-3 Principal Allocations with respect to a Related Month. "Moody's" means Moody's Investors Service. 23 "Net Disposition Losses" has the meaning set forth in Section 4.12 of this Supplement. "Officer's Certificate" means, with respect to the Series 2001-3 Notes, a certificate signed by one or more Authorized Officer's of TFFC, Budget or a Lessee, as the case may be/ "Operating Lease" has the meaning specified in Annex A to the Group V Lease. "Overcollateralization Portion" means, as of any date of determination, an amount equal to the sum of the amounts determined pursuant to clauses (a) and (b) of the definition of Series 2001-3 Minimum Credit Support Amount minus the Series 2001-3 Letter of Credit Amount as of such date. "Permanent Global Class A Note" has the meaning specified in Section 7.1(b) of this Supplement. "Permanent Global Class B Note" has the meaning specified in Section 7.2(b) of this Supplement. "Permanent Global Class C Note" has the meaning specified in Section 7.3(b) of this Supplement. "Permitted Investments" means negotiable instruments or securities maturing on or before the related Distribution Date represented by instruments in bearer or registered or in book-entry form which evidence (i) obligations the full and timely payment of which is to be made by or is fully guaranteed by the United States of America; (ii) demand deposits, time deposits in, or certificates of deposit issued by, any depositary institution or trust company incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by Federal or State banking or depositary institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the certificates of deposit or short-term deposits, if any, or long-term unsecured debt obligations (other than such obligation whose rating is based on collateral or on the credit of a Person other than such institution or trust company) of such depositary institution or trust company shall have a credit rating from Standard & Poor's of A-1+, from Moody's of P-1, and from Fitch of at least F-1+, in the case of certificates of deposit or short-term deposits, or a rating from Standard & Poor's of at least AAA, from Moody's of at least Aaal and from Fitch of at least AAA, in the case of long-term unsecured debt obligations; (iii) commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from Standard & Poor's of at least A-1+, from Moody's of at least P-1 and from Fitch of at least F-1+; (iv) demand deposits or time deposits which are fully insured by the Federal Deposit Insurance Corporation; (v) bankers' acceptances issued by any depositary institution or trust company described in clause (ii) above; (vi) investments in money market funds rated AAm by Standard & Poor's or otherwise approved in writing by Standard & Poor's and Aaa from Moody's and a comparable rating from Fitch or for which Moody's shall have confirmed in writing that such investment shall not adversely affect any ratings with respect to any Group V Series of Notes; (vii) Eurodollar time deposits having a credit rating from Standard & Poor's of A-1+, from Moody's of P-1 and from Fitch of at least F-1+; (viii) repurchase agreements involving any of the Permitted Investments described in clauses (i) and (vii) above and the certificates of deposit described in clause (ii) above which 24 are entered into with a depository institution or trust company having a commercial paper or short-term certificate of deposit rating of A-1+ by Standard & Poor's, of P-1 by Moody's and at least F-1+ by Fitch or for which Moody's shall have confirmed in writing that such investment shall not adversely affect any ratings with respect to any Group V Series of Notes or otherwise is approved as to collateralization by the Rating Agencies; and (ix) any other instruments or securities, if the Rating Agencies confirm in writing that such investment in such instruments or securities will not adversely affect any ratings with respect to any Group V Series of Notes. "Permitted Liens" has the meaning set forth in Section 30.3 of the Group V Lease. "Permitted Principal Draw Amount" means, with respect to any date during an Insolvency Period or after occurrence of another Liquidity Event, the excess, if any of (i) the Available Draw Amount (with respect to the payment of principal on the Series 2001-3 Notes and all other obligations of the Issuer other than payment of Interest on the Series 2001-3 Notes and servicing fees) as of the related Insolvency Period Commencement Date or the date of such other Liquidity Event, as the case may be, over (ii) the sum of (x) Accumulated Principal Draw Amount as of such date during the Insolvency Period or after occurrence of such other Liquidity Event plus (y) the sum of amounts paid to Noteholders on account of interest pursuant to Sections 4.4(a)(c)(x), 4.4(b)(c)(x) and 4.4(c)(c)(x). "Purchase Agreement" means that certain Purchase Agreement, dated as of November 21, 2001, among Deutsche Banc Alex. Brown, Budget and TFFC. "Rating Agencies" means, with respect to the Series 2001-3 Notes, Standard & Poor's, Moody's and Fitch. "Rating Agency Confirmation" means written confirmation by each Rating Agency that the proposed action, amendment, waiver or modification will not result in a downgrading or withdrawal of the then current rating on the Series 2001-3 Notes (or any class thereof). "Recoveries" with respect to the Group V Series of Notes, means, on any date of determination, the sum of all Group V Type I Repurchase Recoveries and Group V Type II Repurchase Recoveries. "Refinanced Vehicles" has the meaning specified in Section 2.1 of the Group V Lease. "Refinancing Schedule" has the meaning specified in Section 2.1 of the Group V Lease. "Related Documents" means, with respect to the Series 2001-3 Notes, the Indenture, the Series 2001-3 Notes, the Assignment Agreements, the Group V Lease and the Letter of Credit Reimbursement Agreement. "Rent" with respect to: (a) Lessor-Owned Vehicles has the meaning specified in Paragraph 9(a) of Annex A to the Group V Lease and (b) Financed Vehicles has the meaning specified in Paragraph 6(a) of Annex B to the Group V Lease. "Repurchase Price Interest" has the meaning specified in Section 11.4 of the Group V Lease. 25 "Repurchase Program Payment Due Date" means, with respect to any payment due from a Manufacturer or auction dealer in respect of a Group V Repurchase Vehicle disposed of pursuant to the terms of the related Repurchase Program, the thirtieth (30th) day after the Disposition Date for such Group V Vehicle. "Required Letter of Credit Amount" means, with respect to any date of determination, the greater of (i) the Series 2001-3 Minimum Credit Support Amount less the Series 2001-3 Available Subordinated Amount on such date of determination and (ii) the Minimum Liquidity Amount less the Cash Liquidity Amount on such date of determination. "Required Beneficiaries" means, with respect to the Group V Series of Notes, Noteholders holding in excess of 50% of the aggregate Invested Amount of all outstanding Group V Series of Notes, excluding, for purposes such calculation, any such Notes (or beneficial interests therein) held by Budget or any Affiliate thereof. "Required Noteholders" means Noteholders holding in excess of 50% of the Aggregate Invested Amount of all outstanding Series 2001-3 Notes (excluding, for the purposes of making the foregoing calculation, any Notes held by Budget or any Affiliate of Budget). "Restricted Global Class A Note" has the meaning specified in Section 7.1(a) of this Supplement. "Restricted Global Class B Note" has the meaning specified in Section 7.2(a) of this Supplement. "Restricted Global Class C Note" has the meaning specified in Section 7.3(a) of this Supplement. "Secured Parties" has the meaning specified in Section 3.1(a) of this Supplement. "Series 2001-3 Accrued Interest Account" has the meaning specified in Section 4.1 of this Supplement. "Series 2001-3 Available Subordinated Amount" means for any date of determination, the excess of (a) the sum of (i) the Series 2001-3 Available Subordinated Amount for the preceding Determination Date, (ii) the Series 2001-3 Available Subordinated Amount Incremental Recoveries for the Related Month and (iii) any other additional amounts contributed by the Issuer to the Series 2001-3 Excess Funding Account or otherwise for allocation to the Series 2001-3 Available Subordinated Amount since the preceding Determination Date (or, in the case of the first Determination Date, since the Series 2001-3 Issuance Date) over (b) the sum of (i) the Series 2001-3 Available Subordinated Amount Incremental Losses for the Related Month and (ii) any amounts withdrawn from the Series 2001-3 Excess Funding Account and allocated to the Budget Distribution Account; provided, however, that the Series 2001-3 Available Subordinated Amount for the period from the Series 2001-3 Issuance Date to the first Determination Date shall be $0. 26 "Series 2001-3 Available Subordinated Amount Incremental Losses" means for any Related Month, the sum of all Losses that became Losses during such Related Month and which were allocated to reduce the Series 2001-3 Available Subordinated Amount. "Series 2001-3 Available Subordinated Amount Incremental Recoveries" means, for any Related Month, the sum of all Recoveries that became Recoveries during such Related Month and which were allocated to reinstate the Series 2001-3 Available Subordinated Amount. "Series 2001-3 Available Subordinated Amount Maximum Increase" means 1.1% of the sum of (x) the initial Series 2001-3 Invested Amount and (y) the initial principal amount of any Additional Notes; provided, however, if (i) a Series 2001-3 Credit Support Deficiency arises out of any Losses and (ii) each Rating Agency shall have notified TFFC, Budget and the Trustee in writing that after the cure of such Series 2001-3 Credit Support Deficiency is provided for, the Class A Notes, the Class B Notes and the Class C Notes will each receive the same rating from such Rating Agency as they received prior to the occurrence of such Series 2001-3 Credit Support Deficiency, then the Series 2001-3 Available Subordinated Amount Maximum Increase shall not be limited in amount. "Series 2001-3 Cap Allocation" means, with respect to any Determination Date, the product of (a) any amounts deposited in the Group V Collection Account under the Interest Rate Cap with respect to the then current Series 2001-3 Interest Period and (b) a fraction (i) the numerator of which is the Aggregate Principal Balance of the Series 2001-3 Notes as of the close of the previous Distribution Date and (ii) the denominator of which is the sum of (x) the Aggregate Principal Balance of the Series 2001-3 Notes on the Series 2001-3 Issuance Date and (y) the Aggregate Principal Balance of any Additional Notes on the date of issuance thereof. "Series 2001-3 Cash Collateral Account" means the special deposit account established by the Trustee pursuant to Section 4.13 hereof for the purpose of depositing amounts drawn under the Letter of Credit. "Series 2001-3 Cash Liquidity Account" has the meaning specified in Section 4.1(a) of this Supplement. "Series 2001-3 Collateral" means the Group V Collateral and, in addition, (i) the Series 2001-3 Distribution Account Collateral, the Series 2001-3 Cash Collateral Account, if established, and all funds, certificates and instruments on deposit therein, and investments, if any, made with moneys therein, (ii) the Letter of Credit, (iii) the Demand Note and (iv) the Interest Rate Cap. "Series 2001-3 Collection Account" is defined in Section 4.1 of this Supplement. "Series 2001-3 Controlled Amortization Period" means the Class A Controlled Amortization Period, the Class B Controlled Amortization Period or the Class C Controlled Amortization Period or all of such periods, as the context requires. "Series 2001-3 Credit Support Amount" means, for any date of determination, the sum of the Series 2001-3 Available Subordinated Amount and the Series 2001-3 Letter of Credit Amount. 27 "Series 2001-3 Credit Support Deficiency" means, with respect to any date of determination, the amount, if any, by which the Series 2001-3 Minimum Credit Support Amount exceeds the Series 2001-3 Credit Support Amount. "Series 2001-3 Disposition Losses" means, as of any Determination Date, the Series 2001-3 Invested Percentage (for allocations with respect to Losses) of Net Disposition Losses that have occurred during the Related Month. "Series 2001-3 Distribution Account" has the meaning specified in Section 4.8 of this Supplement. "Series 2001-3 Distribution Account Collateral" has the meaning specified in Section 4.8(d) of this Supplement. "Series 2001-3 Excess Funding Account" is defined in Section 4.1 of this Supplement. "Series 2001-3 Interest Allocation" has the meaning specified in Section 4.2(a)(s)(i) of this Supplement. "Series 2001-3 Interest Collections" means on any date of determination the sum of (a) the Series 2001-3 Invested Percentage (as of such date) of the aggregate amount of Interest Collections on such date and (b) amounts earned on Permitted Investments in the Series 2001-3 Collection Account, which are available for distribution on such date. "Series 2001-3 Interest Period" means a period commencing on a Distribution Date and ending on the day preceding the next succeeding Distribution Date; provided, however, that the initial Series 2001-3 Interest Period shall commence on the Series 2001-3 Issuance Date and end on the day preceding the next Distribution Date. "Series 2001-3 Invested Amount" means, on any date of determination, the sum of the Class A Invested Amount, the Class B Invested Amount and the Class C Invested Amount. "Series 2001-3 Invested Percentage" means, on any date of determination: (i) when used with respect to Principal Collections during the Series 2001-3 Revolving Period and when used with respect to Losses, Recoveries and other amounts at all times, the percentage equivalent of a fraction, the numerator of which shall be an amount equal to the sum of (x) the Series 2001-3 Invested Amount and (y) the Series 2001-3 Available Subordinated Amount, in each case as of the end of the second preceding Related Month or, until the end of the second Related Month, as of the Series 2001-3 Closing Date, and the denominator of which shall be the greater of (A) the Group V Aggregate Asset Amount as of the end of the second preceding Related Month or, until the end of the second Related Month, as of the Series 2001-3 Closing Date, and (B) as of the same date as in clause (A), the sum of the numerators used to determine (i) invested percentages for allocations with respect to Principal Collections (for all Group V Series of Notes and all classes of such Series of Notes) and (ii) without duplication, available subordinated amount percentages for allocations with respect to Principal Collections (for 28 all Group V Series of Notes that provide for credit enhancement in the form of overcollateralization); (ii) when used with respect to Principal Collections during the Series 2001-3 Controlled Amortization Period and the Series 2001-3 Rapid Amortization Period, the percentage equivalent of a fraction, the numerator of which shall be an amount equal to the sum of (x) the Series 2001-3 Invested Amount and (y) the Series 2001-3 Available Subordinated Amount, in each case as of the end of the Series 2001-3 Revolving Period, and the denominator of which shall be the greater of (A) the Group V Aggregate Asset Amount as of the end of the second preceding Related Month and (B) as of the same date as in clause (A), the sum of the numerators used to determine (i) invested percentages for allocations with respect to Principal Collections (for all Group V Series of Notes and all classes of such Series of Notes) and (ii) without duplication, available subordinated amount percentages for allocations with respect to Principal Collections (for all Group V Series of Notes that provide for credit enhancement in the form of overcollateralization); and (iii) when used with respect to Interest Collections, the percentage equivalent of a fraction the numerator of which shall be the Accrued Amounts with respect to the Series 2001-3 Notes on such date of determination and the denominator of which shall be the aggregate Accrued Amounts with respect to all the Group V Series of Notes on such date of determination. "Series 2001-3 Investor Monthly Servicing Fee" means, on any Distribution Date, 1/12th of 1% of the Series 2001-3 Invested Amount as of the preceding Distribution Date (or the Series 2001-3 Issuance Date, in the case of the first Distribution Date). "Series 2001-3 Issuance Date" means November 29, 2001. "Series 2001-3 Lease Payment Deficit" means, on any Distribution Date, an amount equal to the excess, if any, of (a) the aggregate amount of Principal Collections and Interest Collections relating to payments under the Group V Lease that would have been allocated with respect to the Related Month in respect of the Series 2001-3 Notes if all payments required to be made by the Lessee Group under the Group V Lease with respect to the Related Month were paid in full, over (b) the aggregate amount of Principal Collections and Interest Collections relating to payments under the Group V Lease with respect to the Related Month which were actually allocated in respect of the Series 2001-3 Notes. "Series 2001-3 Letter of Credit Amount" means, as of any date, the amount (a) available to be drawn on such date under the Letter of Credit, as specified therein, or (b) if the Series 2001-3 Cash Collateral Account has been established and funded, the amount on deposit in the Series 2001-3 Cash Collateral Account on such date. "Series 2001-3 Letter of Credit Expiration Date" means June 18 , 2003 (or if such date is not a Business Day (as defined in the Credit Agreement), the immediately preceding Business Day). 29 "Series 2001-3 Limited Liquidation Event of Default" means, so long as such event or condition continues, any event or condition of the type specified in Section 6(a) of this Supplement that continues for thirty (30) days (without double counting the one (1) Business Day cure period provided for in said Section 6(a); provided, however, that such event or condition shall not constitute a Series 2001-3 Limited Liquidation Event of Default if (i) within such thirty (30) day period, TFFC shall have contributed a portion of the Budget Interest to the Series 2001-3 Available Subordinated Amount sufficient to cure the Series 2001-3 Credit Support Deficiency and (ii) the Rating Agencies shall have notified TFFC, Budget and the Trustee in writing that after such cure of such Series 2001-3 Credit Support Deficiency is provided for, the Class A Notes, the Class B Notes and the Class C Notes will each receive the same rating from the Rating Agencies as they received prior to the occurrence of such Series 2001-3 Credit Support-Deficiency. "Series 2001-3 Minimum Credit Support Amount" means, as of any date, the sum of (a) the Minimum Type II Repurchase Credit Support Amount on such date plus (b) the Minimum Type I Repurchase Credit Support Amount on such date plus (c) the Additional Overcollateralization Amount on such date. "Series 2001-3 Minimum Type I Repurchase Credit Support Percentage" means, with respect to any date of determination, the greater of (a) an amount equal to (i) 43.958% minus (ii) the percentage equivalent of a fraction, the numerator of which shall be the sum of the Class B Invested Amount and the Class C Invested Amount as of such date and the denominator of which shall be the Series 2001-3 Invested Amount as of such date, and (b) 20%. "Series 2001-3 Minimum Type II Repurchase Credit Support Percentage" means, with respect to any date of determination, the greatest of (a) an amount equal to (i) 45.708% minus (ii) the percentage equivalent of a fraction, the numerator of which shall be the sum of the Class B Invested Amount and the Class C Invested Amount as of such date and the denominator of which shall be the Series 2001-3 Invested Amount as of such date, (b) an amount equal to (i) 100% minus (ii) an amount equal to (x) the Market Value Adjustment Percentage as of the most recent Determination Date minus (y) 45.708% minus (iii) the percentage equivalent of a fraction, the numerator of which shall be the sum of the Class B Invested Amount and the Class C Invested Amount as of such date and the denominator of which shall be the Series 2001-3 Invested Amount as of such date, and (c) 21.75%. "Series 2001-3 Monthly Supplemental Servicing Fee" means, on any Distribution Date, the product of the Group V Supplemental Servicing Fee accrued on such date and a fraction, the numerator of which shall be the Series 2001-3 Invested Amount on such Distribution Date and the denominator of which is the sum of (x) the aggregate of the invested amounts for all outstanding Group V Series of Notes on such Distribution Date plus (y) the Budget Interest (including available subordinated amounts, if any, for all Group V Series of Notes on such Distribution Date). "Series 2001-3 Note Prepayment Premium" has the meaning specified in paragraph (a) of Article 8. 30 "Series 2001-3 Noteholders" means the Class A Noteholders, the Class B Noteholders and the Class C Noteholders. "Series 2001-3 Principal Allocation" has the meaning specified in Section 4.2(a)(s)(ii) of this Supplement. "Series 2001-3 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 2001-3 Notes and ending upon the earliest to occur of (i) the date on which the Series 2001-3 Notes are fully paid and (ii) the termination of the Indenture in accordance with its terms. "Series 2001-3 Revolving Period" means the period from and including the Series 2001-3 Issuance Date to the earlier of (i) the scheduled commencement of the Class A Controlled Amortization Period and (ii) the commencement of the Series 2001-3 Rapid Amortization Period. "Series 2001-3 Termination Date" means the March 25, 2005 Distribution Date. "Subordinated Debt" has the meaning specified in Section 24.5 of the Group V Lease. "Substantial Lessee" means any Lessee who, at the time of determination, is leasing in excess of 60% of the aggregate Net Book Value of Group V Vehicles then subject to the Group V Lease. "Temporary Global Class A Note" has the meaning specified in Section 7.1(b) of this Supplement. "Temporary Global Class B Note" has the meaning specified in Section 7.2(b) of this Supplement. "Temporary Global Class C Note" has the meaning specified in Section 7.3(b) of this Supplement. "Term" has the meaning specified in Section 3.3 of the Group V Lease. "Termination Payment" has the meaning specified in Section 11.3 of the Group V Lease. "Termination Value" means, with respect to any Group V Vehicle, as of any date, an amount equal to (i) the Capitalized Cost of such Group V Vehicle minus (ii) all Depreciation Charges accrued with respect to such Group V Vehicle prior to such date. "Texas Vehicle" means a Group V Repurchase Vehicle financed by TFFC on or after the Lease Commencement Date for lease in the State of Texas. "TFFC Agreements" means the collective reference to the documents referred to in clause (i) of the definition of TFFC Agreements in Schedule 1 to the Indenture and the Group V TFFC Agreements. 31 "Turnback Date" means, with respect to any Group V Repurchase Vehicle, the date on which such Group V Vehicle is accepted for return by a Manufacturer or its agent pursuant to its Repurchase Program and the Depreciation Charges cease to accrue pursuant to its Repurchase Program. "Type II Repurchase Vehicle Value" means, with respect to any Group V Type II Repurchase Vehicle, the lesser of (a) the Net Book Value of such Group V Type II Repurchase Vehicle and (b) the Fair Market Value (as defined in the Base Indenture) of such Group V Type II Repurchase Vehicle (calculated as if such Group V Type II Repurchase Vehicle were a Non-Repurchase Vehicle (as defined in the Base Indenture)). "Vehicle" means a passenger automobile, van, light-duty truck (including vans) or other type of vehicle approved by each Rating Agency and the Letter of Credit Provider purchased or financed by TFFC and leased to a Lessee pursuant to the Group V Lease. ARTICLE 3 SECURITY; REPORTS; COVENANTS Section 3.1 Grant of Security Interest. (a) To secure the Group V Series of Notes, TFFC hereby reaffirms its pledge of, and pledges, assigns, conveys, delivers, transfers and sets over to the Trustee, for the benefit of the Group V Noteholders and the holder of the Budget Interest (the Group V Noteholders and the holder of the Budget Interest being referred to in this Section 3.1 as the "Secured Parties"), and hereby grants to the Trustee, for the benefit of the Secured Parties, a security interest in all of TFFC's right, title and interest in and to all of the following assets, property and interests of TFFC (other than as specified below) whether now owned or hereafter acquired or created (all of the foregoing, other than with respect to clause (v) below, being referred to as the "Group V Collateral"): (i) the rights of TFFC under the Group V Lease (including rights against any guarantor of obligations of the Lessees thereunder) and any other agreements relating to the Group V Vehicles to which TFFC is a party other than the Repurchase Programs (collectively, the "Group V TFFC Agreements"), including, without limitation, all monies due and to become due to TFFC from Budget and the Lessees under or in connection with the Group V TFFC Agreements, whether payable as rent, guaranty payments, fees, expenses, costs, indemnities, insurance recoveries, damages for the breach of any of the Group V TFFC Agreements or otherwise, and all rights, remedies, powers, privileges and claims of TFFC against any other party under or with respect to the Group V TFFC Agreements (whether arising pursuant to the terms of such Group V TFFC Agreements or otherwise available to TFFC at law or in equity), including the right to enforce any of the Group V TFFC Agreements as provided in the Indenture and to give or withhold any and all consents, requests, notices, directions, approvals, extensions or waivers under or with respect to the Group V TFFC Agreements or the obligations of any party thereunder; (ii) (a) all Group V Repurchase Vehicles owned by TFFC or the Lessees as of the Series 2001-3 Issuance Date and all Group V Repurchase Vehicles acquired or 32 financed by TFFC during the term of the Indenture, and all Certificates of Title with respect to such Group V Vehicles, (b) all Liens and property from time to time purporting to secure payment of any of the obligations or liabilities of the Lessees or Budget arising under or in connection with the Group V Lease, together with all financing statements filed in favor of, or assigned to, TFFC describing any collateral securing such obligations or liabilities, and (c) 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 the Lessees or Budget pursuant to the Group V Lease; (iii) all right, title and interest of TFFC in, to and under any Repurchase Programs relating to, and all monies due and to become due in respect of, the Group V Repurchase Vehicles purchased from the Manufacturers under or in connection with the Repurchase Programs, whether payable as Group V Repurchase Vehicle repurchase prices, Eligible Receivables, fees, expenses, costs, indemnities, insurance recoveries, damages for breach of the Repurchase Programs or otherwise; (iv) (A) the Collection Account and the Group V Collection Account, (B) all funds on deposit therein allocable to Group V Vehicles from time to time, (C) all certificates and instruments, if any, representing or evidencing any or all of the Collection Account and the Group V Collection Account or the funds on deposit therein allocable to Group V Vehicles from time to time, and (D) all Permitted Investments made at any time and from time to time with the moneys allocable to Group V Vehicles in the Collection Account or the Group V Collection Account (including in each case income thereon), including, without limitation, any and all accounts, certificates, instruments and investments constituting "investment property" as defined in the UCC as in effect from time to time in the State of New York; and (v) all proceeds of any and all of the foregoing including, without limitation, payments under insurance (whether or not the Trustee is the loss payee thereof) and cash, but not including (for the avoidance of doubt) payments under consumer rental agreements; provided, however, the Group V Collateral shall not include any Excluded Payments or (y) the Budget Distribution Account, any funds on deposit therein from time to time, any certificates or instruments, if any, representing or evidencing any or all of the Budget Distribution Account or the funds on deposit therein from time to time, or any Permitted Investments made at any time and from time to time with the moneys in the Budget Distribution Account (including the income thereon). (b) To further secure the TFFC Obligations with respect to the Series 2001-3 Notes (but not any other Series of Notes), TFFC hereby pledges, assigns, conveys, delivers, transfers and sets over to the Trustee for the benefit of the Series 2001-3 Noteholders (but not any other Series of Notes), and hereby grants to the Trustee for the benefit of the Series 2001-3 Noteholders, a security interest in all of TFFC's right, title and interest in and to all of the following assets, property and interests in property, whether now owned or hereafter acquired or created (all of the foregoing being referred to as the "Additional Series 2001-3 Collateral"): 33 (i) (A) the Series 2001-3 Collection Account and the Series 2001-3 Distribution Account; (B) all funds on deposit in the Series 2001-3 Collection Account and the Series 2001-3 Distribution Accounts from time to time; (C) all certificates and instruments, if any, representing or evidencing any or all of the Series 2001-3 Collection Account and the Series 2001-3 Distribution Accounts or the funds on deposit therein from time to time; (D) all Permitted Investments made at any time and from time to time with moneys in the Series 2001-3 Collection Account or the Series 2001-3 Distribution Accounts; and (E) all proceeds of any and all of the foregoing, including, without limitation, cash; (ii) the Letter of Credit; (iii) the Demand Note; (iv) the Interest Rate Cap; (v) (A) the Series 2001-3 Cash Collateral Account; (B) all funds on deposit therein from time to time; (C) all certificates and instruments, if any, representing or evidencing any or all of the Series 2001-3 Cash Collateral Account or the funds on deposit therein from time to time; and (D) all investments made at any time and from time to time with moneys in the Series 2001-3 Cash Collateral Account; and (vi) all proceeds of any and all of the foregoing, including, without limitation, cash. (c) The Trustee, on behalf of the Group V Noteholders, and the Series 2001-3 Noteholders, as applicable, acknowledges the foregoing grant, accepts the trusts under this Supplement in accordance with the provisions of the Indenture and this Supplement and agrees to perform its duties required in this Supplement to the best of its abilities. The Group V Collateral shall secure the Notes included in the Group V Series of Notes. The Additional Series 2001-3 Collateral shall secure the Series 2001-3 Notes. The Trustee shall possess all right, title and interest in the Demand Note, all rights to make claims thereunder and all payments thereon and all proceeds thereof. Section 3.2 Reports; Copies of Letter of Credit. (a) Not later than (i) the second Business Day immediately preceding each Distribution Date, the Servicer shall furnish to the Trustee a Monthly Servicer's Certificate (which shall include the Minimum Liquidity Amount as of the last Business Day of the Related Month) and a Fleet Report with respect to the Group V Collateral and (ii) on or after 60 days after the end of each fiscal year, the Servicer shall, upon request, provide the Rating Agencies with an Officer's Certificate confirming compliance with the separateness procedures described in the opinion letter of Latham & Watkins dated November 29, 2001 and addressing the issue of substantive consolidation as it may relate to the Guarantor, each Lessee and TFFC. (b) The Servicer shall provide each of the Rating Agencies with a copy of any replacement Letter of Credit with a copy to the Trustee. 34 Section 3.3 Auction Acquired Vehicles. TFFC agrees it shall not acquire for leasing under the Group V Lease any Auction Acquired Vehicle for which TFFC or the Servicer does not have a Certificate of Title showing TFFC as the owner and the Trustee as the holder of a first lien thereon if after giving effect to such acquisition the aggregate Net Book Value of all Auction Acquired Vehicles for which TFFC or the Servicer does not have such a new Certificate of Title exceeds 5% of the Group V Aggregate Asset Amount. In the event that TFFC acquires for leasing under the Group V Lease any Auction Acquired Vehicle for which it has not received a new Certificate of Title showing TFFC as the owner and the Trustee as the holder of a first lien thereon, TFFC and the Servicer shall promptly and diligently take such steps as are necessary to cause the related Certificate of Title to be changed so that, within 90 days after TFFC's acquisition of such Auction Acquired Vehicle, TFFC receives a new Certificate of Title showing TFFC as the owner of such Auction Acquired Vehicle and the Trustee as the holder of a first lien thereon (and to cause such lien to be perfected). Section 3.4 Capitalization Demand Note. TFFC has been capitalized in part by a Demand Note on the Closing Date. At all times, TFFC shall maintain the Demand Note in an amount at least equal to the Series 2001-3 Letter of Credit Amount. ARTICLE 4 SERIES 2001-3 ALLOCATIONS Section 4.1 Establishment of Group V Collection Account, Series 2001-3 Collection Account, Series 2001-3 Excess Funding Account and Series 2001-3 Accrued Interest Account. (a) Any provisions of Article 5 of the Base Indenture which allocate and apply Collections shall continue to apply irrespective of the issuance of the Series 2001-3 Notes. Sections 5.1 through 5.5 of the Base Indenture shall be read in their entirety as provided in the Base Indenture, provided that for purposes of the Series 2001-3 Notes, clause (d) of Section 5.2 of the Base Indenture shall be modified, as it applies to the Series 2001-3 Notes, as permitted by Section 12.1(f) of the Base Indenture and shall read as follows: (d) Sharing Collections. To the extent that Principal Collections that are allocated to the Series 2001-3 Notes on a Distribution Date are not needed to make payments of principal to Series 2001-3 Noteholders or required to be deposited in the Series 2001-3 Distribution Account on such Distribution Date, such Principal Collections may, at the written direction of the Servicer, be applied to cover principal payments due to or for the benefit of Noteholders of other Group V Series of Notes. Any such reallocation shall not result in a reduction of the Aggregate Principal Balance or in the Invested Amount of the Series 2001-3 Notes. In addition, for purposes of Section 5.2(a) of the Base Indenture, the Servicer, in its capacity as such under the Group V Lease, shall (to the extent practicable) cause all Collections allocable to Group V Collateral in accordance with the Indenture to be paid directly into the Group V Collection Account and all Collections allocable to the Additional Series 2001-3 Collateral to be paid directly into the Series 2001-3 Collection Account. 35 Article 5 of the Base Indenture (except for Sections 5.1 through 5.5, thereof, subject to the proviso in the first paragraph of this Article 5 and subject to the immediately preceding sentence) shall read in its entirety as follows and shall be applicable only to the Series 2001-3 Notes: "Section 5.1 Establishment of the Group V Collection Account, Series 2001-3 Collection Account, Series 2001-3 Accrued Interest Account and Series 2001-3 Excess Funding Account. With respect to the Series 2001-3 Notes only, the following shall apply: (a) The Trustee has established and maintains a segregated trust account for the benefit of holders of Notes from the Group V Series of Notes (the "Group V Collection Account"). The Trustee will also establish and maintain a segregated trust account for the benefit of the Series 2001-3 Noteholders (the "Series 2001-3 Collection Account"). Amounts on deposit in the Group V Collection Account and the Series 2001-3 Collection Account shall be invested in accordance with Sections 5.1(d) and (f) of the Base Indenture. (b) The Trustee will establish and maintain an administrative sub-account within the Series 2001-3 Collection Account (such sub-account, the "Series 2001-3 Accrued Interest Account"). (c) The Trustee will establish a sub-account of the Group V Collection Account for the benefit of the Series 2001-3 Noteholders, and the Budget Interestholder (the "Series 2001-3 Excess Funding Account"). The Trustee will further divide the Series 2001-3 Excess Funding Account by creating an additional administrative sub-account for the benefit of the Series 2001-3 Noteholders and the Budget Interestholder (such sub-account, the "Series 2001-3 Cash Liquidity Account"). (d) All Group V Collections shall initially be deposited into the Collection Account and, on each Business Day, shall be allocated to and deposited in the Group V Collection Account. (e) All Group V Collections that are deposited on any Business Day in the Group V Collection Account and that are allocable to the Series 2001-3 Notes shall on each such Business Day be allocated to and deposited in the Series 2001-3 Collection Account. All amounts received in respect of the Additional Series 2001-3 Collateral shall be allocated to and deposited in the Series 2001-3 Collection Account. (f) Any amounts in the Group V Collection Account not allocated to the Series 2001-3 Collection Account or another series-specific collection account under the supplements for the other Group V Series of Notes shall be allocated by the Trustee at the written direction of the Servicer to the Budget Distribution Account in an amount equal to (x) the applicable Budget Interest Percentage (as of such date) of the aggregate amount of Group V Collections that are Principal Collections received on such date, minus (y) any amounts other than servicing fees which have been withheld by the Master 36 Servicer pursuant to Section 5.2(c) of the Base Indenture to the extent such amounts withheld under Section 5.2(c) of the Base Indenture represent all or part of the Budget Interest Amount." Section 4.2 Allocations with respect to the Series 2001-3 Notes. The proceeds from the sale of the Series 2001-3 Notes, together with any funds deposited with TFFC by Budget as additional capitalization will initially be deposited by the Trustee in the Group V Collection Account to be distributed by the Trustee as provided herein pursuant to the written instructions of the Servicer, and a portion thereof shall be used by the Issuer to refinance Eligible Receivables and to finance, refinance or purchase Eligible Vehicles for leasing under the Group V Lease. The Series 2001-3 Invested Percentage (for allocations with respect to Principal Collections) of the funds remaining in the Group V Collection Account after payment of such indebtedness will be deposited on the Series 2001-3 Issuance Date to the Series 2001-3 Collection Account and, concurrently with such deposit, allocated by the Trustee to the Series 2001-3 Excess Funding Account; provided, however, the Trustee also shall deposit all amounts required to be deposited in the Series 2001-3 Cash Liquidity Account as provided hereinbelow and such amounts on deposit in the Series 2001-3 Cash Liquidity Account shall only be available for application as provided in Sections 4.3(f), 4.4(a), (b) and (c), and shall not be available to be withdrawn in respect of amounts otherwise to be withdrawn from the Series 2001-3 Excess Funding Account pursuant to the Base Indenture, this Supplement or any other Series Supplement. On each Business Day on which Collections are deposited into the Group V Collection Account and allocated to the Series 2001-3 Collection Account or deposited in the Series 2001-3 Collection Account (each such date, a "Deposit Date"), the Servicer will direct the Trustee in writing to allocate all amounts allocated to or deposited into the Series 2001-3 Collection Account in accordance with the provisions of this Section 4.2. (a) Allocations of Collections During the Revolving Period. During the Series 2001-3 Revolving Period, the Servicer will direct the Trustee in writing to allocate, prior to 1:00 p.m. (New York City time) on each Deposit Date, the following amounts: (s) with respect to all Group V Collections (including Recoveries, which shall be treated as Principal Collections): (i) allocate to the Series 2001-3 Collection Account, an amount equal to the sum of (A) the Series 2001-3 Invested Percentage (as of such day) of the aggregate amount of Group V Collections which are Interest Collections on such day and (B) all amounts earned on Permitted Investments in the Series 2001-3 Collection Account which are available for distribution on such Deposit Date, which amounts will be further allocated to the Series 2001-3 Accrued Interest Account (for any such day, such amounts, the "Series 2001-3 Interest Allocation"); provided, however, that if with respect to any Related Month the aggregate of all such amounts allocated to the Series 2001-3 Accrued Interest Account during such Related Month exceeds the amount of interest and fees due and payable in respect of the Series 2001-3 Notes on the Distribution Date next succeeding such Related Month pursuant to the Indenture, then the amount of such excess will be allocated first, to the Series 2001-3 Cash Liquidity Account, to the extent of any Cash Liquidity Amount Deficiency on such Deposit Date, and 37 thereafter, the remainder of such amount shall be allocated to the Series 2001-3 Excess Funding Account; (ii) allocate an amount equal to the Series 2001-3 Invested Percentage (as of such day) of the aggregate amount of such Group V Collections which are Principal Collections on such day (for any such day, such amount, the "Series 2001-3 Principal Allocation") first, to the Series 2001-3 Cash Liquidity Account, to the extent of any Cash Liquidity Amount Deficiency on such date after giving effect to any deposit to the Series 2001-3 Cash Liquidity Account pursuant to Section 4.2(a)(s)(i), and thereafter, allocate the remainder of such amount to the Series 2001-3 Excess Funding Account; and (iii) allocate to the Budget Distribution Account an amount equal to the Budget Percentage (as of such day) of the aggregate amount of Group V Collections which are Principal Collections on such date minus any amounts other than servicing fees which have been withheld by the Servicer pursuant to Section 5.2(c) of the Base Indenture, to the extent that such amounts withheld under Section 5.2(c) of the Base Indenture represent all or part of the Budget Interest Amount. (b) Allocations During the Series 2001-3 Controlled Amortization Period. During the Series 2001-3 Controlled Amortization Period, the Servicer will direct the Trustee in writing to allocate, prior to 1:00 p.m. (New York City time) on each Deposit Date, the following amounts: (s) with respect to all Group V Collections (including Recoveries, all of which Recoveries shall be treated as Principal Collections): (i) allocate to the Series 2001-3 Collection Account an amount equal to the Series 2001-3 Interest Allocation for such day as set forth in Section 4.2(a)(s)(i) above, which amount shall be further allocated to the Series 2001-3 Accrued Interest Account or, as and to the extent provided in clause (a)(s)(i) above, allocated to the Series 2001-3 Cash Liquidity Account (following the establishment thereof pursuant to Section 4.10(d) of this Supplement) and the Series 2001-3 Excess Funding Account in the priority set forth therein; (ii) (A) during the Class A Controlled Amortization Period, allocate to the Series 2001-3 Collection Account an amount equal to the Series 2001-3 Principal Allocation for such day, which amount shall be used to make principal payments in respect of the Class A Notes; provided, however, that if the Monthly Total Principal Allocation exceeds the Class A Controlled Distribution Amount, then the amount of such excess shall be allocated first, to the Series 2001-3 Cash Liquidity Account to the extent of any Cash Liquidity Amount Deficiency on such date after giving effect to any deposit to the Series 2001-3 Cash Liquidity Account pursuant to Section 4.2(b)(s)(i), and thereafter, the remainder of such excess shall be allocated to the Series 2001-3 Excess Funding Account; (B) during the Class B Controlled Amortization Period, allocate to the Series 2001-3 Collection Account an amount equal to the Series 2001-3 Principal 38 Allocation for such day, which amount shall be used to make principal payments in respect of the Class B Notes; provided, however, that if the Monthly Total Principal Allocation exceeds the Class B Controlled Distribution Amount, then such excess will be allocated first, to the Series 2001-3 Cash Liquidity Account to the extent of any Cash Liquidity Amount Deficiency on such date after giving effect to any deposit to the Series 2001-3 Cash Liquidity Account pursuant to Section 4.2(b)(s)(i), and thereafter, the remainder of such excess shall be allocated to the Series 2001-3 Excess Funding Account; and (C) during the Class C Controlled Amortization Period, allocate to the Series 2001-3 Collection Account an amount equal to the Series 2001-3 Principal Allocation for such day, which amount shall be used to make principal payments in respect of the Class C Notes; provided, however, that if the Monthly Total Principal Allocation exceeds the Class C Controlled Distribution Amount, then such excess will be allocated first, to the Series 2001-3 Cash Liquidity Account to the extent of any Cash Liquidity Amount Deficiency on such date after giving effect to any deposit to the Series 2001-3 Cash Liquidity Account pursuant to Section 4.2(b)(s)(i), and thereafter, the remainder of such excess shall be allocated to the Series 2001-3 Excess Funding Account; and (iii) allocate to the Budget Distribution Account an amount determined as set forth in Section 4.2(a)(s)(iii) above for such day. (c) Allocations During the Series 2001-3 Rapid Amortization Period. With respect to the Series 2001-3 Rapid Amortization Period, the Servicer will direct the Trustee in writing to allocate, prior to 1:00 p.m. (New York City time) on each Deposit Date, the following amounts: (s) with respect to all Group V Collections (including Recoveries, all of which Recoveries shall be treated as Principal Collections): (i) allocate to the Series 2001-3 Collection Account an amount equal to the sum of (x) the Series 2001-3 Interest Allocation for such day as set forth in Section 4.2(a)(s)(i) above for such day, plus (y) an amount which, together with all prior allocations pursuant to this clause (y), shall not exceed $500,000 to be applied on a pro rata basis to the payment of legal fees and expenses for the benefit of the Group V Noteholders (including the reasonable fees and disbursements of counsel to the Trustee), if any, plus (z) if Budget is no longer the Servicer, an amount equal to the sum of the Series 2001-3 Investor Monthly Servicing Fee and Series 2001-3 Monthly Supplemental Servicing Fee, which amounts will be deposited in the Series 2001-3 Accrued Interest Amount; provided, however, that if with respect to any Related Month the aggregate of all such amounts allocated to the Series 2001-3 Accrued Interest Account during such Related Month exceeds the sum of (A) interest and fees due and payable in respect of the Series 2001-3 Notes on the Distribution Date next succeeding such Related Month and (B) the amounts required to be allocated in respect of legal fees and expenses, servicing fees and supplemental servicing fees, then the amount of such excess will be allocated to the Series 2001-3 Excess Funding Account, to the extent provided in clause (a)(s)(i) above, allocated to the Series 39 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account in the priority set forth therein; (ii) allocate to the Series 2001-3 Collection Account an amount equal to the sum of (x) the Series 2001-3 Principal Allocation for such day an amount equal to the Budget Percentage (as of such day) of the aggregate amount of Group V Collections which are Principal Collections on such date (minus any amounts other than servicing fees which have been withheld by the Servicer pursuant to Section 5.2(c) of the Base Indenture, to the extent that such amounts withheld under Section 5.2(c) of the Base Indenture represent all or part of the Budget Interest Amount), which amount shall be used to make principal payments in respect of the Class A Notes and, after the Class A Notes have been paid in full, shall be used to make principal payments in respect of the Class B Notes and, after the Class B Notes have been paid in full, shall be used to make principal payments in respect of the Class C Notes. (d) Allocations of Recoveries. On each Deposit Date, the Servicer will direct the Trustee in writing to allocate, prior to 1:00 p.m. (New York City time), Recoveries as follows: (i) allocate to the Class A Invested Amount, the Class B Invested Amount, the Class C Invested Amount, the Series 2001-3 Cash Collateral Account and the Series 2001-3 Available Subordinated Amount an amount equal to the Series 2001-3 Invested Percentage (as of such day) of the aggregate amount of Recoveries on such day, which Recoveries shall be used first to reinstate the Class A Invested Amount (to the extent that the Class A Invested Amount has theretofore been reduced as a result of any Losses allocated thereto as described in clause (e) below and has not been subsequently replenished); second to reinstate the Class B Invested Amount (to the extent the Class B Invested Amount has theretofore been reduced as a result of any Losses allocated thereto as described in clause (e) below and has not been subsequently replenished); third to reinstate the Class C Invested Amount (to the extent that the Class C Invested Amount has theretofore been reduced as a result of any Losses allocated thereto as described in clause (e) below and has not been subsequently replenished); fourth to reinstate the Series 2001-3 Cash Collateral Account to the extent of any unreimbursed draws thereon; fifth to reinstate the Series 2001-3 Available Subordinated Amount (to the extent that the Series 2001-3 Available Subordinated Amount has theretofore been reduced as a result of any Losses allocated thereto as described in clause (e) below and has not been subsequently replenished); and sixth, any remaining Recoveries not so allocated shall be released to the Issuer; and (ii) provided that no Amortization Event has occurred and is continuing, allocate to the Budget Interest Amount any amount equal to the Budget Percentage (as of such day) of the aggregate amount of Recoveries on such day to reinstate the Budget Interest Amount (to the extent that the Budget Interest Amount has theretofore been reduced as a result of any Losses allocated thereto as described in clause (e) below and has not been subsequently replenished). 40 (e) Allocations of Losses. On each Deposit Date, the Servicer will direct the Trustee in writing to allocate, prior to 1:00 p.m. (New York City time), Losses as follows: (i) allocate an amount equal to the Series 2001-3 Invested Percentage (as of such day) of the aggregate amount of Losses on such day to reduce the Series 2001-3 Available Subordinated Amount until the Series 2001-3 Available Subordinated Amount has been reduced to zero, then (to the extent of any Series 2001-3 Disposition Losses) to making a claim under the Demand Note pursuant to Section 4.12 of this Supplement until such claim would reduce the Demand Note to zero, then to reduce the Class C Invested Amount on a pro rata basis among all Class C Notes, until the Class C Invested Amount has been reduced to zero, then to reduce the Class B Invested Amount on a pro rata basis among all Class B Notes, until the Class B Invested Amount has been reduced to zero, then to reduce the Class A Invested Amount, on a pro rata basis among all Class A Notes; and (ii) allocate to the Budget Interest Amount, an amount equal to the Budget Percentage (as of such day) of the aggregate amount of Losses on such day, which shall reduce the Budget Interest Amount. (f) Allocation Adjustments. Notwithstanding the foregoing provisions of this Section 4.2: (A) provided that no Amortization Event has occurred and is continuing, amounts in excess of the Cash Liquidity Amount allocated to the Series 2001-3 Excess Funding Account, if any, that are not required to make payments with respect to the Series 2001-3 Notes may be used to pay the principal amount of other Group V Series of Notes that are then in amortization and, after such payment, any remaining funds in excess of the Cash Liquidity Amount, if any, may, at TFFC's option, be (i) used to finance, refinance or acquire Group V Vehicles or Eligible Receivables, to the extent such Eligible Vehicles have been requested by the Lessees under the Group V Lease or (ii) loaned to Budget under the Demand Note or (iii) transferred on any Distribution Date to the Budget Distribution Account, to the extent that the Budget Interest Amount equals or exceeds zero after giving effect to such payment and so long as no Series 2001-3 Credit Support Deficiency or Asset Amount Deficiency would result therefrom as indicated in the related Monthly Servicer's Certificate; provided, however, that funds in excess of the Cash Liquidity Amount, if any, may be transferred to the Budget Distribution Account on a day other than a Distribution Date if the Servicer furnishes to the Trustee an Officers' Certificate to the effect that such transfer will not cause any of the foregoing deficiencies to occur either on the date that such transfer is made or, in the reasonable anticipation of the Servicer, on the next Distribution Date. Funds in the Budget Distribution Account shall, at the option of TFFC, be available to finance, refinance or acquire Group V Vehicles or Eligible Receivables, to the extent such Eligible Vehicles have been requested by the Lessees under the Group V Lease, or for distribution to the Budget Interestholder; (B) in the event that the Servicer is not Budget or an Affiliate of Budget or if a Servicer Default has occurred and is continuing, the Servicer shall not be entitled to 41 withhold any amounts pursuant to Section 5.2(c) of the Base Indenture and the Trustee shall deposit amounts payable to Budget in the Collection Account pursuant to the provisions of Section 5.2 of the Base Indenture on each Deposit Date; (C) any amounts withheld by the Servicer and not deposited in the Series 2001-3 Collection Account pursuant to Section 5.2(c) of the Base Indenture shall be deemed to be deposited in the Collection Account and allocated to the Group V Collection Account and the Series 2001-3 Collection Account, as applicable, on the date such amounts are withheld for purposes of determining the amounts to be allocated pursuant to this Section 4.2; (D) if there is more than one Series of Group V Series of Notes outstanding, then Sections 4.2(a)(s)(iii), 4.2(b)(s)(iii) and 4.2(c)(s)(iii) above shall not be duplicated with any similar provisions contained in any other Supplement and Budget shall only be paid such amount once with respect to any Distribution Date; (E) TFFC may, from time to time in its sole discretion, increase the Series 2001-3 Available Subordinated Amount by (i) transferring funds to the Series 2001-3 Excess Funding Account and (ii) delivering to the Servicer and the Trustee an Officers' Certificate setting forth the amount of such transferred funds and stating that such transferred funds shall be allocated to the Series 2001-3 Available Subordinated Amount; provided, however, (a) TFFC shall have no obligation to so increase the Series 2001-3 Available Subordinated Amount and (b) TFFC may not increase the Series 2001-3 Available Subordinated Amount pursuant to this paragraph if the amount of such increase, together with the sum of the amounts of all prior increases, if any, of the Series 2001-3 Available Subordinated Amount, would exceed the Series 2001-3 Available Subordinated Amount Maximum Increase, excluding from such calculation any increase in the Series 2001-3 Available Subordinated Amount described in clause (F)(1) or (2) below; (F) in the event that the Series 2001-3 Credit Support Amount is reduced to less than the Series 2001-3 Minimum Credit Support Amount, an Amortization Event and a Series 2001-3 Limited Liquidation Event of Default shall be deemed to have occurred with respect to the Series 2001-3 Notes only if, after any applicable grace period, either the Trustee or the Servicer, by written notice to the Issuer, or the Required Noteholders, by written notice to the Issuer and the Trustee, declare that an Amortization Event has occurred; provided, however, (i) the Issuer may prevent an Amortization Event from occurring if, within one (1) Business Day after the occurrence of such Series 2001-3 Credit Support Deficiency, Budget increases the Group V Letter of Credit Amount and/or the Issuer contributes a portion of the Budget Interest in an amount sufficient, in the aggregate, to eliminate such Series 2001-3 Credit Support Deficiency; provided, however, the amount of such contribution (together with the sum of the amounts of all prior contributions) shall not exceed the Series 2001-3 Available Subordinated Amount Maximum Increase, excluding from such calculation any increase in the Series 2001-3 Available Subordinated Amount (1) through Recoveries or from funds constituting repayments of principal under any intercompany demand note made by the Issuer in favor of Budget, or (2) relating to an increase in the Series 2001-3 Minimum Credit 42 Support Amount that results from (a) an increase in the ratio of Group V Type II Repurchase Vehicles to all Group V Vehicles, (b) a reduction in the aggregate amount of cash and Permitted Investments allocable to Group V Vehicles in the Collection Account, (c) a decline in the resale performance of Group V Type II Repurchase Vehicles within the twelve calendar months preceding the applicable determination date or (d) the Type II Repurchase Fleet Market Value being less than the aggregate Net Book Value of the Group V Type II Repurchase Vehicles, and (ii) the Issuer may prevent a Series 2001-3 Limited Liquidation Event of Default from occurring if within the thirty (30) day period after the occurrence of such Series 2001-3 Credit Support Deficiency (x) Budget increases the Letter of Credit and/or the Issuer contributes a portion of the Budget Interest sufficient to eliminate such Series 2001-3 Credit Support Deficiency and (y) obtains written notice from the Rating Agencies to the Issuer, Budget and the Trustee that after such cure of such Series 2001-3 Credit Support Deficiency is provided for, the Class A Notes, the Class B Notes and the Class C Notes will each receive the same rating from the Rating Agencies as they received prior to the occurrence of such Series 2001-3 Credit Support Deficiency; (G) provided that the Insolvency Period has not commenced and no other Liquidity Event has occurred, amounts on deposit in the Series 2001-3 Cash Liquidity Account in excess of the Cash Liquidity Amount on any Deposit Date may on such Deposit Date be withdrawn from the Series 2001-3 Cash Liquidity Account and deposited into the Series 2001-3 Excess Funding Account; (H) if the Insolvency Period has commenced or another Liquidity Event has occurred, amounts on deposit in the Series 2001-3 Cash Liquidity Account representing the Cash Liquidity Amount will be available to be transferred by the Trustee to the distribution accounts for application pursuant to Section 4.3(f), 4.4(a), (b) or (c), as applicable; and (I) on each Determination Date, the Trustee shall, in accordance with the written direction of the Servicer, withdraw from the Group V Collection Account, the Series 2001-3 Cap Allocation, if any, with respect to such Determination Date and shall deposit the same into the Series 2001-3 Accrued Interest Account. Section 4.3 Monthly Payments from the Series 2001-3 Accrued Interest Account. On each Determination Date, as provided below, the Servicer shall instruct the Trustee or the Paying Agent in writing to withdraw, and on the following Distribution Date the Trustee or the Paying Agent, acting in accordance with such written instructions, shall withdraw the amounts required to be withdrawn from the Series 2001-3 Collection Account pursuant to Sections 4.3(a), (b), (c), (d), (e) and (f) below in respect of all funds available from Group V Collections and Series 2001-3 Cap Allocations processed since the preceding Distribution Date and allocated to the holders of the Series 2001-3 Notes. (a) Noteholder Counsel Fees and Disbursements. On each Determination Date after the occurrence and during the continuance of an Event of Bankruptcy with respect to Budget, and before any deposits required to be made on such date to the Series 2001-3 Distribution Account have been made, the Servicer shall instruct the Trustee in writing to withdraw from the 43 Series 2001-3 Accrued Interest Account, to the extent funds are available from Interest Collections allocable to the Series 2001-3 Notes, for payment on a pro rata basis to counsel to the Series 2001-3 Noteholders (including the reasonable fees and disbursements of counsel to the Trustee), up to $500,000 in the aggregate in respect of legal fees and disbursements of such counsel, and remit such amount to such counsel. If sufficient funds are not available in the Series 2001-3 Accrued Interest Account, then the Trustee may withdraw funds pursuant to Section 4.13(a) for such purpose. (b) Successor Servicer Fees. On each Determination Date on which Budget is not the Servicer, and after the deposit (if applicable) described in Section 4.3(a), and before any deposits required to be made on the related Distribution Date to the Series 2001-3 Distribution Account have been made, the successor Servicer shall instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn from the Series 2001-3 Accrued Interest Account to the extent funds are available from Interest Collections and Series 2001-3 Cap Allocations allocable to the Series 2001-3 Notes processed since the preceding Distribution Date in respect of an amount equal to (i) the Class A Investor Monthly Servicing Fee (and any Class A Monthly Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (ii) the Class B Investor Monthly Servicing Fee (and any Class B Monthly Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (iii) the Class C Investor Monthly Servicing Fee (and any Class C Monthly Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (iv) all accrued and unpaid Class A Investor Monthly Servicing Fees (and any Class A Monthly Supplemental Servicing Fees), Class B Investor Monthly Servicing Fees (and any Class B Monthly Supplemental Servicing Fees) and Class C Investor Monthly Servicing Fees (and any Class C Monthly Supplemental Servicing Fees) in respect of previous periods, minus (v) the amount of any Class A Investor Monthly Servicing Fees, Class B Investor Monthly Servicing Fees and Class C Investor Monthly Servicing Fees (and Class A Monthly Supplemental Servicing Fees, Class B Monthly Supplemental Servicing Fees and Class C Monthly Supplemental Servicing Fees) withheld by the Servicer since the preceding Distribution Date pursuant to Section 5.2(c) of the Base Indenture. On the following Distribution Date, the Trustee shall withdraw such amount from the Series 2001-3 Accrued Interest Account and remit such amount to the Servicer. The fees of any successor Servicer that assumes the obligations of the Servicer shall be paid on a pro rata basis consistent with the terms herein from the $500,000 reserve as provided in Section 4.10(a). Under no circumstances shall the Trustee be liable for the fees and expenses of the successor Servicer. (c) Note Interest with respect to the Class A Notes. On each Determination Date, the Servicer shall, after making all distributions required to be made pursuant to Sections 4.3(a) and (b), instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn from the Series 2001-3 Accrued Interest Account to the extent funds will be available from Interest Collections and Series 2001-3 Cap Allocations allocable to the Series 2001-3 Notes processed from but not including the preceding Distribution Date through the succeeding Distribution Date in respect of (x) first, an amount equal to interest accrued for the related Series 2001-3 Interest Period which will be equal to the product of (i) the Class A Note Rate, and (ii) the Aggregate Principal Balance of the Class A Notes as of the previous Distribution Date after giving effect to any principal payments made (or in the case of the initial Distribution Date, the Class A Initial Invested Amount), divided by a fraction (A) the numerator of which is the actual number of days in such Series 2001-3 Interest Period and (B) the denominator of which is 360 and (y) then, an 44 amount equal to the amount of any unpaid Class A Deficiency Amounts, as defined below, as of the preceding Distribution Date (together with any accrued interest on such class A Deficiency Amounts). If the amounts described in this Section 4.3(c) are insufficient, after taking into account the amount, if any, to be drawn under the Letter of Credit and the amount on deposit in the Series 2001-3 Excess Funding Account in excess of the Cash Liquidity Amount, if any, or in the Series 2001-3 Cash Liquidity Account to be applied as described in Section 4.4(a), to pay such interest on any Distribution Date, payments of interest to the Class A Noteholders will be reduced by the amount of such deficiency. The amount, if any, of such deficiency on any Distribution Date shall be referred to as the "Class A Deficiency Amount." Interest shall accrue on the Class A Deficiency Amount at the Class A Note Rate. On the following Distribution Date, the Trustee shall withdraw in accordance with the written direction of the Servicer the accrued interest on the Class A Notes (as determined above) and the Class A Deficiency Amount (together with accrued interest thereon) from the Series 2001-3 Accrued Interest Account and, to the extent provided in Section 4.4(a) of this Supplement, amounts withdrawn from the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account and any applied portion of the Series 2001-3 Letter of Credit Amount, and shall deposit such amount in the Series 2001-3 Distribution Account, provided that the sum of the amounts to be withdrawn from the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account pursuant to this Section 4.3(c) and Sections 4.3(d) and (e) of this Supplement shall not exceed for any Distribution Date the Series 2001-3 Available Subordinated Amount at such time. (d) Note Interest with respect to the Class B Notes. On each Determination Date, subject to Section 4.9 of this Supplement, provided that all payments on account of interest that are required to be made to the Class A Noteholders are available in the Series 2001-3 Distribution Account, and no payments on account of principal are then required to be made to the Class A Noteholders (including, without limitation, all accrued interest, all interest accrued on such accrued interest and any Class A Deficiency Amounts), the Servicer shall, after making all distributions required to be made pursuant to Sections 4.3(a), (b) and (c), instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn from the Series 2001-3 Accrued Interest Account to the extent funds will be available from Interest Collections and Series 2001-3 Cap Allocations allocable to the Series 2001-3 Notes which will have been processed from but not including the preceding Distribution Date through the succeeding Distribution Date, which amount shall be withdrawn in respect of (x) first, an amount equal to interest accrued for the related Series 2001-3 Interest Period which will be equal to the product of (i) the Class B Note Rate for the related Series 2001-3 Interest Period, and (ii) the Aggregate Principal Balance of the Class B Notes as of the previous Distribution Date after giving effect to any principal payments made (or in the case of the initial Distribution Date, the Class B Initial Invested Amount), divided by a fraction (A) the numerator of which is the actual number of days in such Series 2001-3 Interest Period and (B) the denominator of which is 360, and (y) then, an amount equal to the amount of any unpaid Class B Deficiency Amounts, as defined below, as of the preceding Distribution Date (together with any accrued interest on such Class B Deficiency Amounts). If the amounts described in this Section 4.3(d) are insufficient, after taking into account any funds available for application in the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account and applied as described in Section 4.4(b) of this Supplement and any portion of the Series 2001-3 Letter of Credit Amount applied as described in Section 4.4(b) of this Supplement (subject to the provisions of Section 4.9 of this Supplement), to pay such interest on any Distribution Date, payments of interest to the Class B 45 Noteholders will be reduced by the amount of such deficiency. The amount, if any, of such deficiency on any Distribution Date shall be referred to as the "Class B Deficiency Amount." Interest shall accrue on the Class B Deficiency Amount at the Class B Note Rate. On the following Distribution Date, the Trustee shall withdraw the accrued interest on the Class B Notes (as determined above) and the Class B Deficiency Amount (together with accrued interest thereon) from the Series 2001-3 Accrued Interest Account and, to the extent provided in Section 4.4(b) of this Supplement, amounts withdrawn from the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account and any applied portion of the Series 2001-3 Letter of Credit Amount, and shall deposit such amount in the Series 2001-3 Distribution Account; provided that the sum of the amounts to be withdrawn from the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account pursuant to this Section 4.3(d) and Sections 4.3(c) and (e) of this Supplement shall not exceed for any Distribution Date the Series 2001-3 Available Subordinated Amount at such time. (e) Note Interest with Respect to the Class C Notes. On each Determination Date, subject to Section 4.9 of this Supplement, provided that all payments on account of interest that are required to be made to the Class A Noteholders and the Class B Noteholders are available in the Series 2001-3 Distribution Account, and no payments on account of principal are then required to be made to the Class A Noteholders and the Class B Noteholders (including, without limitation, all accrued interest, all interest accrued on such accrued interest and any Class A Deficiency Amounts or Class B Deficiency Amounts, as applicable), the Servicer shall, after making all distributions required to be made pursuant to Sections 4.3(a), (b), (c) and (d), instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn from the Series 2001-3 Accrued Interest Account to the extent funds will be available from Interest Collections and Series 2001-3 Cap Allocations allocable to the Series 2001-3 Notes which will have been processed from but not including the preceding Distribution Date through the succeeding Distribution Date, which amount shall be withdrawn in respect of (x) first, an amount equal to interest accrued for the related Series 2001-3 Interest Period which will be equal to the product of (i) the Class C Note Rate for the related Series 2001-3 Interest Period, and (ii) the Aggregate Principal Balance of the Class C Notes as of the previous Distribution Date after giving effect to any principal payments made on such Distribution Date (or in the case of the initial Distribution Date, the Class C Initial Invested Amount), divided by a fraction (A) the numerator of which is the actual number of days in such Series 2001-3 Interest Period and (B) the denominator of which is 360, and (y) then, an amount equal to the amount of any unpaid Class C Deficiency Amounts, as defined below, as of the preceding Distribution Date (together with any accrued interest on such Class C Deficiency Amounts). If the amounts described in this Section 4.3(e) are insufficient, after taking into account any funds available for application in the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account and applied as described in Section 4.4(c) of this Supplement and any portion of the Series 2001-3 Letter of Credit Amount applied as described in Section 4.4(c) of this Supplement (subject to the provisions of Section 4.9 of this Supplement) to pay such interest on any Distribution Date, payments of interest to the Class C Noteholders will be reduced by the amount of such deficiency. The amount, if any, of such deficiency on any Distribution Date shall be referred to as the "Class C Deficiency Amount." Interest shall accrue on the Class C Deficiency Amount at the Class C Note Rate. On the following Distribution Date, the Trustee shall withdraw the accrued interest on the Class C Notes in accordance with the written direction of the Servicer and the Class C Deficiency Amount (together with accrued interest thereon) from the Series 2001-3 Accrued 46 Interest Account and, to the extent provided in Section 4.4(c) of this Supplement, amounts withdrawn from the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account and any applied portion of the Series 2001-3 Letter of Credit Amount, and shall deposit such amount in the Series 2001-3 Distribution Account; provided that the sum of the amounts to be withdrawn from the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Excess Funding Account pursuant to this Section 4.3(e) and Sections 4.3(c) and (d) of this Supplement shall not exceed for any Distribution Date the Series 2001-3 Available Subordinated Amount at such time. (f) Servicing Fee. On each Determination Date on which Budget is the Servicer, the Servicer shall, after giving effect to all distributions required to be made on the related Distribution Date pursuant to Sections 4.3(a), (c), (d) and (e) of this Supplement, instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn on such Distribution Date from the Series 2001-3 Accrued Interest Account to the extent funds are available from Interest Collections and Series 2001-3 Cap Allocations allocable to the Series 2001-3 Notes processed since the preceding Distribution Date in respect of an amount equal to (i) the Class A Investor Monthly Servicing Fee (and any Class A Monthly Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (ii) the Class B Investor Monthly Servicing Fee (and any Class B Monthly Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (iii) the Class C Investor Monthly Servicing Fee (and any Class C Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (iv) all accrued and unpaid Class A Investor Monthly Servicing Fees (and any Class A Monthly Supplemental Servicing Fees), Class B Investor Monthly Servicing Fees (and any Class B Monthly Supplemental Servicing Fees) and Class C Investor Monthly Servicing Fees (and any Class C Monthly Supplemental Servicing Fees) in respect of previous periods, minus (v) the amount of any Class A Investor Monthly Servicing Fees, Class B Investor Monthly Servicing Fees and Class C Investor Monthly Servicing Fees (and Class A Monthly Supplemental Servicing Fees, Class B Monthly Supplemental Servicing Fees and Class C Monthly Supplemental Servicing Fees) withheld by the Servicer since the preceding Distribution Date pursuant to Section 5.2(c) of the Base Indenture. On such Distribution Date, the Trustee shall withdraw such amount from the Series 2001-3 Accrued Interest Account and remit such amount to the Servicer. (g) Balance. On each Distribution Date, the Servicer shall instruct the Trustee and the Paying Agent in writing as to the balance (after making the payments required in Sections 4.3(a), (b), (c), (d), (e) and (f) of this Supplement and any required payments in respect of any other Series of Notes), if any, of the Interest Collections allocated to holders of the Series 2001-3 Notes and Series 2001-3 Cap Allocations since the preceding Distribution Date ("Excess Budget Collections"). On such Distribution Date (or, subject to compliance with the requirements of Section 4.2(d)(ii) of this Supplement on any other day), the Paying Agent shall withdraw such balance from the Series 2001-3 Accrued Interest Account and pay such balance to the Budget Distribution Account, to the extent that, after giving effect to such transfer, the Budget Interest Amount equals or exceeds zero and provided that such payment will not cause an Asset Amount Deficiency or a Series 2001-3 Credit Support Deficiency to exist, as indicated on the Monthly Servicer's Certificate. 47 Section 4.4 Payment of Note Interest. (a) Class A Notes. On each Distribution Date, the Paying Agent shall, in accordance with the written instruction of the Servicer received pursuant to Section 4.3(c) hereof, pay to the Class A Noteholders from the Series 2001-3 Distribution Account the amount deposited in the Series 2001-3 Distribution Account for the payment of interest pursuant to Section 4.3(c) of this Supplement and, to the extent that such amount is insufficient to pay all interest payable to the Class A Noteholders on such Distribution Date (the amount of such insufficiency, a "Class A Note Interest Shortfall"), the Servicer shall instruct the Trustee in writing (a)(x) if an Insolvency Period is continuing, to withdraw from the Series 2001-3 Cash Liquidity Account the lesser of (i) the amount on deposit in the Series 2001-3 Cash Liquidity Account and (ii) the amount of such Class A Note Interest Shortfall and pay such amount to the Class A Noteholders and (y) to the extent of any remaining Class A Note Interest Shortfall, to withdraw from the Series 2001-3 Excess Funding Account (other than the Series 2001-3 Cash Liquidity Account sub-account thereof) the lesser of (i) the amount on deposit in the Series 2001-3 Excess Funding Account (other than the Series 2001-3 Cash Liquidity Account sub-account thereof) and (ii) the amount of such remaining Class A Note Interest Shortfall and pay such amount to the Class A Noteholders, (b) to the extent of any remaining Class A Note Interest Shortfall, to pay to the Class A Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a claim under the Demand Note in an amount up to the lesser of (i) the remaining Class A Note Interest Shortfall and (ii) the proceeds of such payment under the Demand Note and (c) if a Liquidity Event has occurred (x) to the extent of any remaining Class A Note Interest Shortfall, to pay the Class A Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a Letter of Credit disbursement in an amount equal to the lesser of (i) the remaining Class A Note Interest Shortfall and (ii) the proceeds of such Letter of Credit disbursement in an amount equal to the excess of (1) the Series 2001-3 Letter of Credit Amount as of the date of such Liquidity Event over (2) the excess of Minimum Liquidity Amount as of such date over the Cash Liquidity Amount as of such date and (y) to the extent of any remaining Class A Note Interest Shortfall, to (in either order as set forth in the written instructions of the Servicer) (i) pay the Class A Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds from a Letter of Credit disbursement in an amount equal to the lesser (1) the remaining Class A Note Interest Shortfall or (2) the proceeds of such Letter of Credit disbursement (which may be the entire remaining Series 2001-3 Letter of Credit Amount) and/or (as necessary) (ii) withdraw from the Series 2001-3 Cash Liquidity Account the lesser of (1) the amount on deposit in the Series 2001-3 Cash Liquidity Account and (2) the amount of such Class A Note Interest Shortfall and pay such amount to the Class A Noteholders. (b) Class B Notes. On each Distribution Date, the Paying Agent shall, in accordance with the written instruction of the Servicer received pursuant to Section 4.3(d) hereof, but subject to Section 4.9 of this Supplement, pay to the Class B Noteholders from the Series 2001-3 Distribution Account the amount deposited in the Series 2001-3 Distribution Account for the payment of interest pursuant to Section 4.3(d) of this Supplement and, to the extent such amount is insufficient to pay all interest payable to the Class B Noteholders on such Distribution Date (the amount of such insufficiency, a "Class B Note Interest Shortfall"), the Servicer shall instruct the Trustee in writing (a)(x) if an Insolvency Period is continuing, to withdraw from the Series 2001-3 Cash Liquidity Account the lesser of (i) the amount on deposit in the Series 2001-3 Cash 48 Liquidity Account and (ii) the amount of such Class B Note Interest Shortfall and pay such amount to the Class B Noteholders and (y) to the extent of any remaining Class B Note Interest Shortfall, to withdraw from the Series 2001-3 Excess Funding Account (other than the Series 2001-3 Cash Liquidity Account sub-account thereof) the lesser of (i) the amount on deposit in the Series 2001-3 Excess Funding Account (other than the Series 2001-3 Cash Liquidity Account sub-account thereof) and (ii) the amount of such remaining Class B Note Interest Shortfall and pay such amount to the Class B Noteholders, (b) to the extent of any remaining Class B Note Interest Shortfall, to pay to the Class B Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a claim under the Demand Note in an amount up to the lesser of (i) the remaining Class B Note Interest Shortfall and (ii) the proceeds of such payment under the Demand Note and (c) if a Liquidity Event has occurred (x) to the extent of any remaining Class B Note Interest Shortfall, to pay the Class B Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a Letter of Credit disbursement in an amount equal to the lesser of (i) the remaining Class B Note Interest Shortfall and (ii) the proceeds of such Letter of Credit disbursement in an amount equal to the excess of (1) the Series 2001-3 Letter of Credit Amount as of the date of such Liquidity Event over (2) the excess of Minimum Liquidity Amount as of such date over the Cash Liquidity Amount as of such date and (y) to the extent of any remaining Class B Note Interest Shortfall, to (in either order as set forth in the written instructions of the Servicer) (i) pay the Class B Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds from a Letter of Credit disbursement in an amount equal to the lesser (1) the remaining Class B Note Interest Shortfall or (2) the proceeds of such Letter of Credit disbursement (which may be the entire remaining Series 2001-3 Letter of Credit Amount) and/or (as necessary) (ii) withdraw from the Series 2001-3 Cash Liquidity Account the lesser of (1) the amount on deposit in the Series 2001-3 Cash Liquidity Account and (2) the amount of such Class B Note Interest Shortfall and pay such amount to the Class B Noteholders. (c) Class C Notes. On each Distribution Date, the Paying Agent shall, in accordance with the written instruction of the Servicer received pursuant to Section 4.3(e) hereof, but subject to Section 4.9 of this Supplement, pay to the Class C Noteholders from the Series 2001-3 Distribution Account the amount deposited in the Series 2001-3 Distribution Account for the payment of interest pursuant to Section 4.3(e) of this Supplement and, to the extent such amount is insufficient to pay all interest payable to the Class C Noteholders on such Distribution Date (the amount of such insufficiency, a "Class C Note Interest Shortfall"), the Servicer shall instruct the Trustee in writing (a)(x) if an Insolvency Period is continuing, to withdraw from the Series 2001-3 Cash Liquidity Account the lesser of (i) the amount on deposit in the Series 2001-3 Cash Liquidity Account and (ii) the amount of such Class C Note Interest Shortfall and pay such amount to the Class C Noteholders and (y) to the extent of any remaining Class C Note Interest Shortfall, to withdraw from the Series 2001-3 Excess Funding Account (other than the Series 2001-3 Cash Liquidity Account sub-account thereof) the lesser of (i) the amount on deposit in the Series 2001-3 Excess Funding Account (other than the Series 2001-3 Cash Liquidity Account sub-account thereof) and (ii) the amount of such remaining Class C Note Interest Shortfall and pay such amount to the Class C Noteholders, (b) to the extent of any remaining Class C Note Interest Shortfall, to pay to the Class C Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a claim under the Demand Note in an amount up to the lesser of (i) the remaining Class C Note Interest Shortfall and (ii) the proceeds of such payment under the Demand Note and (c) if a Liquidity Event has occurred (x) to the 49 extent of any remaining Class C Note Interest Shortfall, to pay the Class C Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a Letter of Credit disbursement in an amount equal to the lesser of (i) the remaining Class C Note Interest Shortfall and (ii) the proceeds of such Letter of Credit disbursement in an amount equal to the excess of (1) the Series 2001-3 Letter of Credit Amount as of the date of such Liquidity Event over (2) the excess of Minimum Liquidity Amount as of such date over the Cash Liquidity Amount as of such date and (y) to the extent of any remaining Class C Note Interest Shortfall, to (in either order as set forth in the written instructions of the Servicer) (i) pay the Class C Noteholders from amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds from a Letter of Credit disbursement in an amount equal to the lesser (1) the remaining Class C Note Interest Shortfall or (2) the proceeds of such Letter of Credit disbursement (which may be the entire remaining Series 2001-3 Letter of Credit Amount) and/or (as necessary) (ii) withdraw from the Series 2001-3 Cash Liquidity Account the lesser of (1) the amount on deposit in the Series 2001-3 Cash Liquidity Account and (2) the amount of such Class C Note Interest Shortfall and pay such amount to the Class C Noteholders. Section 4.5 Payment of Note Principal. (a) Class A Notes. (i) Commencing on the second Determination Date after the commencement of the Class A Controlled Amortization Period or the first Determination Date after the commencement of the Series 2001-3 Rapid Amortization Period, the Servicer shall instruct the Trustee and the Paying Agent in writing as to the amount of Principal Collections allocated to the Class A Notes during the Related Month pursuant to Section 4.2(b)(s)(ii) or 4.2(c)(s)(ii) of this Supplement (such amount, the "Monthly Principal Allocation"). Commencing on the second Distribution Date after the commencement of the Series 2001-3 Controlled Amortization Period or the first Distribution Date after the commencement of the Series 2001-3 Rapid Amortization Period the Trustee shall withdraw at the written direction of the Servicer such amount from the Series 2001-3 Collection Account and deposit such amount in the Series 2001-3 Distribution Account, to be paid pro rata to the holders of the Class A Notes on account of payment of principal and, to the extent that the Monthly Principal Allocation is insufficient to pay all principal due in respect of the Class A Notes on such Distribution Date (the amount of such insufficiency, a "Class A Principal Shortfall"), the Servicer shall instruct the Paying Agent in writing (a) to withdraw from the Series 2001-3 Excess Funding Account the lesser of (i) the amount on deposit in the Series 2001-3 Excess Funding Account in excess of the Cash Liquidity Amount (after giving effect to any reduction thereof pursuant to Section 4.4) and (ii) the amount of such Class A Principal Shortfall, (b) to the extent of any remaining Class A Principal Shortfall, to apply to the payment thereof Principal Collections with respect to any other Series of Notes which pursuant to Section 5.2(d) of the Base Indenture are available on such Distribution Date to pay principal of the Series 2001-3 Notes (up to the amount of such Class A Principal Shortfall remaining) and (c) to the extent of any remaining Class A Principal Shortfall, to apply amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a claim made under the Demand Note pursuant to Section 4.12 of this Supplement or Letter of Credit disbursement pursuant to Section 4.11 of this Supplement up to the least of (i) the 50 remaining Class A Principal Shortfall, (ii) the Permitted Principal Draw Amount and (iii) the proceeds of such claim under the Demand Note or Letter of Credit disbursement remaining after any application thereof pursuant to Section 4.4; provided, however, that with respect to the Series 2001-3 Termination Date, the Trustee shall, in accordance with the written instructions of the Servicer, withdraw from the Series 2001-3 Collection Account an amount which (in the aggregate) is no greater than the sum of the Class A Invested Amount as of the end of the day on the preceding Record Date and the amounts described in Section 4.15 of this Supplement. The Invested Amount of all Outstanding Class A Notes and the amounts described in Section 4.15 of this Supplement shall be due and payable on the Series 2001-3 Termination Date. (ii) On each Distribution Date occurring on or after the date a withdrawal is made pursuant to Section 4.5(a)(i) of this Supplement, the Paying Agent shall, in accordance with Section 6.1 of the Base Indenture and the written instruction of the Servicer received pursuant to Section 4.5(a)(i) hereof, pay to the Class A Noteholders the amount deposited in the Series 2001-3 Distribution Account for the payment of principal pursuant to Section 4.5(a)(i) of this Supplement. (b) Class B Notes. (i) Commencing on the second Determination Date after the commencement of the Class B Controlled Amortization Period or the first Determination Date after the commencement of the Series 2001-3 Rapid Amortization Period, provided that the Class A Notes have been paid in full, the Servicer shall instruct the Trustee and the Paying Agent in writing as to the amount allocated to the Class B Notes during the Related Month pursuant to Sections 4.2(b)(s)(ii) and 4.2(c)(s)(ii) of this Supplement. Commencing on the second Distribution Date after the commencement of the Series 2001-3 Controlled Amortization Period or the first Distribution Date after the commencement of the Series 2001-3 Rapid Amortization Period, the Trustee shall at the written direction of the Servicer, subject to Section 4.9 of this Supplement, withdraw such amount from the Series 2001-3 Collection Account and deposit such amount in the Series 2001-3 Distribution Account, to be paid pro rata to the holders of the Class B Notes on account of payment of principal and, to the extent that the Monthly Principal Allocation is insufficient to pay all principal due in respect of the Class B Notes on such Distribution Date (the amount of such insufficiency a "Class B Principal Shortfall"), the Servicer shall instruct the Paying Agent in writing (a) to withdraw from the Series 2001-3 Excess Funding Account the lesser of (i) the amount on deposit in the Series 2001-3 Excess Funding Account in excess of the Cash Liquidity Amount (after giving effect to any reduction thereof pursuant to Section 4.4 and 4.5(a)) and (ii) the amount of such Class B Principal Shortfall, (b) to the extent of any remaining Class B Principal Shortfall, to apply to the payment thereof Principal Collections with respect to any other Series of Notes which pursuant to Section 5.2(d) of the Base Indenture are available on such Distribution Date to pay principal of the Series 2001-3 Notes (up to the amount of such Class B Principal Shortfall remaining) and (c) to the extent of any remaining Class B Principal Shortfall, to apply amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a claim made under the Demand Note pursuant to Section 4.12 of this Supplement or Letter of Credit disbursement pursuant to Section 4.11 51 of this Supplement up to the least of (i) the remaining Class B Principal Shortfall, (ii) the Permitted Principal Draw Amount and (iii) the proceeds of such claim under the Demand Note or Letter of Credit disbursement remaining after any application thereof pursuant to Section 4.4 or 4.5(a); provided, however, that with respect to the Series 2001-3 Termination Date, the Trustee shall withdraw from the Series 2001-3 Collection Account an amount which (in the aggregate) is no greater than the sum of the Class B Invested Amount as of the end of the day on the preceding Record Date and the amounts described in Section 4.15 of this Supplement. Subject to Section 4.9 of this Supplement, the Invested Amount of all Outstanding Class B Notes and the amounts described in Section 4.15 of this Supplement shall be due and payable on the Series 2001-3 Termination Date. (ii) On each Distribution Date occurring on or after the date a withdrawal is made pursuant to Section 4.5(b)(i) of this Supplement, the Paying Agent shall, in accordance with the written instruction of the Servicer pursuant to Section 4.5(b)(i) hereof, and the written instruction of the Servicer pursuant to Section 4.5(b)(i) hereof, pay to the Class B Noteholders the amount deposited in the Series 2001-3 Distribution Account for the payment of principal pursuant to Section 4.5(b)(i) of this Supplement. (c) Class C Notes. (i) Commencing on the second Determination Date after the commencement of the Class C Controlled Amortization Period or the first Determination Date after the commencement of the Series 2001-3 Rapid Amortization Period, provided that the Class A Notes and the Class B Notes have been paid in full, the Servicer shall instruct the Trustee and the Paying Agent in writing as to the amount allocated to the Class C Notes during the Related Month pursuant to Sections 4.2(b)(s)(ii) and 4.2(c)(s)(ii) of this Supplement. Commencing on the second Distribution Date after the commencement of the Series 2001-3 Controlled Amortization Period or the first Distribution Date after the commencement of the Series 2001-3 Rapid Amortization period, the Trustee shall, at the written direction of the Servicer, subject to Section 4.9 of this Supplement, withdraw such amount from the Series 2001-3 Collection Account and deposit such amount in the Series 2001-3 Distribution Account, to be paid pro rata to the holders of the Class C Notes on account of payment of principal and, to the extent that the Monthly Principal Allocation is insufficient to pay all principal due in respect of the Class C Notes on such Distribution Date (the amount of such insufficiency a "Class C Principal Shortfall"), the Servicer shall instruct the Paying Agent in writing (a) to withdraw from the Series 2001-3 Excess Funding Account the lesser of (i) the amount on deposit in the Series 2001-3 Excess Funding Account in excess of the Cash Liquidity Amount (after giving effect to any reduction thereof pursuant to Section 4.4, 4.5(a) and 4.5(b)) and (ii) the amount of such Class C Principal Shortfall, (b) to the extent of any remaining Class C Principal Shortfall, to apply to the payment thereof Principal Collections with respect to any other Series of Notes which pursuant to Section 5.2(d) of the Base Indenture are available on such Distribution Date to pay principal of the Series 2001-3 Notes (up to the amount of such Class C Principal Shortfall remaining) and (c) to the extent of any remaining Class C Principal Shortfall, to apply amounts on deposit in the Series 2001-3 Distribution Account representing the proceeds of a claim made under the Demand Note pursuant to Section 4.12 of this Supplement or Letter of Credit disbursement pursuant to Section 4.11 52 of this Supplement up to the least of (i) the remaining Class C Principal Shortfall, (ii) the Permitted Principal Draw Amount and (iii) the proceeds of such claim under the Demand Note or Letter of Credit disbursement remaining after any application thereof pursuant to Section 4.4 or 4.5(a) or 4.5(b) hereof; provided, however, that with respect to the Series 2001-3 Termination Date, the Trustee shall withdraw from the Series 2001-3 Collection Account an amount which (in the aggregate) is no greater than the sum of the Class C Invested Amount as of the end of the day on the preceding Record Date and the amounts described in Section 4.15 of this Supplement. Subject to Section 4.9 of this Supplement, the Invested Amount of all Outstanding Class C Notes and the amounts described in Section 4.15 of this Supplement shall be due and payable on the Series 2001-3 Termination Date. (ii) on each Distribution Date occurring on or after the date a withdrawal is made pursuant to Section 4.5(c)(i) of this Supplement, the Paying Agent shall, in accordance with the written instructions of the Servicer received pursuant to Section 4.5(c)(i) hereof, pay to the Class C Noteholders the amount deposited in the Series 2001-3 Distribution Account for the payment of principal pursuant to Section 4.5(c)(i) of this Supplement. Section 4.6 Servicer's or Budget's Failure to Make a Deposit or Payment. If the Servicer or Budget fails to make, or give notice or instructions to make, any payment from or deposit to the Collection Account, the Series 2001-3 Collection Account, the Series 2001-3 Excess Funding Account or the Series 2001-3 Accrued Interest Account required to be made or given by the Servicer or Budget, respectively, at the time specified in the Indenture (including applicable grace periods), the Servicer shall, upon request of the Trustee, promptly provide the Trustee with all information (including the account(s) from which withdrawals are to be made) necessary to allow the Trustee, in the event it elects to do so, to make such a payment. Such funds shall be applied by the Trustee in the manner in which such payment or deposit should have been made by the Servicer. Section 4.7 Budget Distribution Account. On each Distribution Date, the Servicer shall instruct the Trustee and Paying Agent to transfer to the Budget Distribution Account (i) all funds in the Collection Account allocable to Group V Vehicles that have been allocated to the Budget Distribution Account as of such Distribution Date and (ii) all funds that were previously allocated to the Budget Distribution Account but not transferred to the Budget Distribution Account. Section 4.8 Series 2001-3 Distribution Account. (a) Establishment of Series 2001-3 Distribution Account. The Trustee shall establish and maintain in the name of the Trustee for the benefit of the Series 2001-3 Noteholders, or cause to be established and maintained, an account (the "Series 2001-3 Distribution Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Series 2001-3 Noteholders. The Series 2001-3 Distribution Account shall be maintained (i) with a Qualified Institution, or (ii) as a segregated trust account with the corporate trust department of a depository institution or trust company having corporate trust powers and acting as trustee for funds deposited in the Series 2001-3 Distribution Account. If the Series 2001-3 53 Distribution Account is not maintained in accordance with the previous sentence, the Servicer shall establish a new Series 2001-3 Distribution Account, within ten (10) Business Days after obtaining knowledge of such fact, which complies with such sentence, and transfer all cash and investments from the non-qualifying Series 2001-3 Distribution Account into the new Series 2001-3 Distribution Account. Initially, the Series 2001-3 Distribution Account will be established with the Trustee. (b) Administration of the Series 2001-3 Distribution Account. The Servicer shall instruct in writing the institution maintaining the Series 2001-3 Distribution Account to invest funds on deposit in the Series 2001-3 Distribution Account at all times in Permitted Investments; provided, however, that any such investment shall mature not later than the Business Day prior to the Distribution Date following the date on which such funds were received, unless any Permitted Investment held in the Series 2001-3 Distribution Account is held with the Paying Agent, then such investment may mature on such Distribution Date and such funds shall be available for withdrawal on or prior to such Distribution Date. The Trustee shall hold, for the benefit of the Series 2001-3 Noteholders and the Servicer, possession of the negotiable instruments or securities evidencing the Permitted Investments described in clause (i) of the definition thereof from the time of purchase thereof until the time of maturity. (c) Earnings from Series 2001-3 Distribution Account. Subject to the restrictions set forth above, the Servicer shall have the authority to instruct the Trustee in writing with respect to the investment of funds on deposit in the Series 2001-3 Distribution Account. All interest and earnings (net of losses and investment expenses) on funds on deposit in the Series 2001-3 Distribution Account shall be deemed to be available and on deposit for distribution. (d) Series 2001-3 Distribution Account Constitutes Additional Collateral for Series 2001-3 Notes. In order to secure and provide for the repayment and payment of the TFFC Obligations with respect to the Series 2001-3 Notes, TFFC hereby assigns, pledges, grants, transfers and sets over to the Trustee, for the benefit of the Series 2001-3 Noteholders, all of TFFC's right, title and interest in and to the following (whether now or hereafter existing and whether now owned or hereafter acquired): (i) the Series 2001-3 Distribution Account; (ii) all funds on deposit therein from time to time; (iii) all certificates and instruments, if any, representing or evidencing any or all of the Series 2001-3 Distribution Account or the funds on deposit therein from time to time; (iv) all Permitted Investments made at any time and from time to time with moneys in the Series 2001-3 Distribution Account; and (v) all proceeds of any and all of the foregoing, including, without limitation, cash (the items in the foregoing clauses (i) through (v) are referred to, collectively, as the "Series 2001-3 Distribution Account Collateral"). The Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Series 2001-3 Distribution Account and in all proceeds thereof. The Series 2001-3 Distribution Account Collateral shall be under the sole dominion and control of the Trustee for the benefit of the Series 2001-3 Noteholders. Section 4.9 Subordination of Class B Notes and Class C Notes. Notwithstanding anything to the contrary contained herein or in any other Related Document, the Class B Notes and the Class C Notes will be subordinate in all respects to the Class A Notes and the Class C Notes will be subordinate in all respects to the Class B Notes. No payments on account of principal shall be made with respect to the Class B Notes or the Class C Notes until the Class A 54 Notes have been paid in full and no payments on account of interest shall be made with respect to the Class B Notes or Class C Notes until all payments of interest then due and payable with respect to the Class A Notes (including, without limitation, all accrued interest, all interest accrued on such accrued interest, and all Class A Deficiency Amounts) have been paid in full. No payments on account of principal shall be made with respect to the Class C Notes until the Class A and Class B Notes have been paid in full and no payments on account of interest shall be made with respect to the Class C Notes until all payments of interest then due and payable with respect to the Class A and Class B Notes (including, without limitation, all accrued interest, all interest accrued on such accrued interest, and all Class A and Class B Deficiency Amounts) have been paid in full. Section 4.10 Application of Cash Liquidity Amount; Allocation of Certain Amounts to Interest. (a) Application of Cash Liquidity Amount. Notwithstanding anything to the contrary contained herein or in any other Related Document, funds in an amount not less than the Cash Liquidity Amount shall at all times, except as specified in this Section 4.10, be retained in the Series 2001-3 Cash Liquidity Account, and such retained funds (i) shall not be used to pay the principal amount of other Series or to finance or acquire Vehicles pursuant to Section 4.2(f)(A) or otherwise, (ii) shall not be transferred to the Budget Interest Account, and (iii) shall not be used to pay interest or principal on the Series 2001-3 Notes pursuant to Sections 4.3 through 4.6. Except as specified in this Section, upon the occurrence and during the continuance of an Event of Bankruptcy (without giving effect to any grace period granted in the definition thereof set forth in the Base Indenture) with respect to Budget or a Substantial Lessee, upon the commencement of and during the related Insolvency Period or after the occurrence of another Liquidity Event, funds that have been retained in the Series 2001-3 Cash Liquidity Account pursuant to this Section 4.10 may be used to pay the following amounts in the following priority: interest in respect of the Class A Notes, interest in respect of the Class B Notes, interest in respect of the Class C Notes, the payment of up to $500,000 in legal fees and disbursements provided for in Section 4.3(a) of this Supplement and the fees of any successor Servicer provided for in Section 4.3(b) of this Supplement then currently due and payable, pursuant to the Base Indenture as supplemented by this Supplement, in respect of the Series 2001-3 Notes; provided, however, upon a Liquidity Event (other than a Liquidity Event related to a Bankruptcy Event of Budget or a Substantial Lessee) the use of the Cash Liquidity Amount to pay such amounts shall be limited as set forth Sections 4.4(a), (b) and (c). (b) Allocation of Certain Amounts to Interest. Notwithstanding anything to the contrary set forth in the Indenture, for (i) the period beginning on the date of the occurrence of any Event of Bankruptcy (without giving effect to any grace period granted in the definition thereof set forth in the Base Indenture) and ending on the earlier of (x) the date that is nine months after the occurrence of an Event of Bankruptcy (without giving effect to any grace period granted in the definition thereof set forth in the Base Indenture) with respect to Budget or a Substantial Lessee and (y) the date on which the underlying case, application or petition with respect to such Event of Bankruptcy is withdrawn or dismissed or any stay thereunder in respect of the Trustee is lifted (any such period, an "Insolvency Period") or (ii) the period beginning on the date of the occurrence of another Liquidity Event and continuing while such Liquidity Event remains uncured, all Disposition Proceeds, Guaranteed Payments and Repurchase Prices 55 received by the Issuer or the Trustee (including by deposit into the Series 2001-3 Collection Account) during the period from and including the date of such occurrence to but excluding the 30th day thereafter, in an amount not to exceed the Liquidity Event Reallocated Amount, shall be deposited into the Series 2001-3 Cash Liquidity Account and shall be allocated and distributed solely as amounts on deposit in the Series 2001-3 Cash Liquidity Account are allocated pursuant to this Supplement. Upon the expiration of the period described in clauses (i) and (ii) of this Section 4.10(b), Disposition Proceeds, Guaranteed Payments and Repurchase Prices shall be allocated and distributed in accordance with this Article 4 (exclusive of this Section 4.10(b)). (c) Calculation of Permitted Principal Draw Amount and Accumulated Principal Draw Amount. Upon the occurrence of any Event of Bankruptcy (without giving effect to any grace period granted in the definition thereof set forth in the Base Indenture) with respect to Budget or any other Liquidity Event, the Servicer shall calculate the Available Draw Amount as of the date of the occurrence of such Event of Bankruptcy or such other Liquidity Event, as the case may be, and thereafter, on each Business Day, and following each draw under the Series 2001-3 Letter of Credit pursuant to Section 4.11 of this Supplement, until the termination of the related Insolvency Period or cure of the related Liquidity Event, as applicable, the Servicer shall calculate the Permitted Principal Draw Amount then in effect, and shall inform the Trustee of such amount. Following each draw on the Series 2001-3 Letter of Credit after a Liquidity Event, the Servicer shall calculate the Accumulated Principal Draw Amount after giving effect to such draw, and shall promptly inform the Trustee in writing of such amount. (d) Funding of Cash Liquidity Account. If at any time the Trustee shall determine that, for the first time since the Series 2001-3 Closing Date, (i) the Cash Liquidity Amount has become greater than $0, or (ii) an Insolvency Period Commencement Date or another Liquidity Event shall have occurred, the Trustee shall deposit into the Series 2001-3 Cash Liquidity Account any Group V Collections that are required to be deposited therein pursuant to Article 4 of this Supplement, and shall at all times when required by this Supplement make withdrawals from the Series 2001-3 Cash Liquidity Account in the amounts and at times required under Article 4 of this Supplement. Section 4.11 Draw on Letter of Credit. (a) (a) On or before the second Business Day prior to each Distribution Date, the Servicer shall notify the Trustee pursuant to the Group V Lease of the amount of the Series 2001-3 Lease Payment Deficit. (b) So long as the Letter of Credit shall not have been terminated, on any Distribution Date on which a Series 2001-3 Lease Payment Deficit exists as indicated in a notice delivered to the Trustee in accordance with subsection (a) above or on the Monthly Servicer's Report, the Trustee shall, by 1:00 p.m. (New York City time) on such Distribution Date, draw on the Letter of Credit by presenting a draft in the amount equal to the least of (i) the Series 2001-3 Lease Payment Deficit, (ii) the Available Funds Shortfall and (iii) the Series 2001-3 Letter of Credit Amount on such Business Day accompanied by a Certificate of Credit Demand in the form of Annex A to the Letter of Credit. The proceeds of such draw shall be deposited in the Series 2001-3 Distribution Account to the extent of the sum of any Class A Note Interest Shortfall and (subject to Section 4.5(a)(i)) any Class A Note Principal Shortfall and any remaining proceeds of such draw shall be deposited in the Series 2001-3 Distribution Account to the extent of the sum of any Class B Note Interest Shortfall and (subject to Section 4.5(b)(i)) any Class B Principal 56 Shortfall and any remaining proceeds of such draw shall be deposited in the Series 2001-3 Distribution Account to the extent of the sum of any Class C Note Interest Shortfall and (subject to Section 4.5(c)(i)) any Class C Principal Shortfall and any remaining proceeds of such draw shall be deposited in the Series 2001-3 Cash Liquidity Account. (c) So long as the Letter of Credit shall not have been terminated, on any Distribution Date on which (x) Budget fails to make full and timely payment under the Demand Note after receipt of a demand for payment thereunder pursuant to Section 4.12 hereof, (y) a demand for payment by Budget under the Demand Note could be made pursuant to Section 4.12 hereof but is prevented from being made as a result of the operation of any bankruptcy or insolvency law or (z) a payment made by Budget under the Demand Note pursuant to Section 4.12 hereof has been avoided and recovered pursuant to Sections 547 and 550 of Title 11 of the United States Code on or before such date, the Trustee may, by 1:00 p.m. (New York City time) on such Distribution Date, draw on the Letter of Credit by presenting a draft in the amount equal to the lesser of (i) the unpaid amount in the case of clause (x) above, the amount of the stayed demand for payment in the case of clause (y) above or the amount avoided and recovered in the case of clause (z) above and (ii) the Series 2001-3 Letter of Credit Amount on such Business Day accompanied by a Certificate of Credit Demand in the form of Annex A to the Letter of Credit. The proceeds of such draw shall be deposited in the Series 2001-3 Distribution Account. Section 4.12 Draw on the Demand Note. On each Determination Date, the Servicer shall determine the aggregate amount, if any, of Disposition Losses that have occurred during the Related Month. In the event that all Disposition Losses occurring during such Related Month exceed the amount of all Recoveries received during such Related Month, the Servicer shall, at or before 12:30 p.m. (New York City time) on such Determination Date, notify the Trustee of the aggregate amount of such net Disposition Losses (the "Net Disposition Losses") and the portion thereof constituting Series 2001-3 Disposition Losses, and the Trustee shall, prior to 5:00 p.m. (New York City time) on such date, as specified in such notice from the Servicer, transmit to Budget a demand for payment (each, a "Demand Notice") under the Demand Note in the amount of the lesser of (x) the outstanding amount of such Demand Note and (y) the portion of such Series 2001-3 Disposition Losses for the Related Month which, pursuant to Section 4.2(e), are allocated to a draw on the Demand Note, in each case such payment to be made prior to the next succeeding Distribution Date by deposit of funds into the Series 2001-3 Distribution Account in the specified amount for application pursuant to Section 4.4(a), (b) and (c) and Section 4.5(a),(b) and (c), as necessary. Section 4.13 Series 2001-3 Cash Collateral Account. (a) Establishment of Series 2001-3 Cash Collateral Account. In the event that (i) prior to the date which is 30 days prior to the Series 2001-3 Letter of Credit Expiration Date there shall not have been appointed a successor Letter of Credit Provider or, in the alternative, credit enhancement for the Lease payments to be made by the Lessees and for Budget's obligations under the Demand Note shall not have otherwise been provided, in each case, as permitted under the Indenture, or (ii) the Trustee receives notice from Budget informing the Trustee of the pending termination of the Letter of Credit or upon the downgrade of the Letter of Credit Provider's short-term debt credit rating below "A-1" by Standard & Poor's, "P-1" by Moody's or "F-1" by Fitch then the Trustee shall establish and maintain in the name of the 57 Trustee for the benefit of the Secured Parties, or cause to be established and maintained, an account (the "Series 2001-3 Cash Collateral Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Series 2001-3 Noteholders. The Series 2001-3 Cash Collateral Account shall be maintained (i) with a Qualified Institution, or (ii) as a segregated trust account with the corporate trust department of a depository institution or trust company having corporate trust powers and acting as trustee for funds deposited in the Series 2001-3 Cash Collateral Account. (b) Deposits into the Series 2001-3 Cash Collateral Account. (i) Upon the establishment of the Series 2001-3 Cash Collateral Account, the Trustee shall draw on the Letter of Credit, and deposit in the Series 2001-3 Cash Collateral Account, an amount equal to the lesser of (x) the Letter of Credit Amount immediately prior to such draw and (y) the outstanding principal amount of the Series 2001-3 Notes. Once established, the Series 2001-3 Cash Collateral Account will serve in all respects as a replacement for and equivalent of the Letter of Credit. Following the establishment of the Series 2001-3 Cash Collateral Account, references herein to draws on the Letter of Credit shall be construed to refer to withdrawals from the Series 2001-3 Cash Collateral Account. When required to make a draw under the Letter of Credit, the Trustee shall make such draw from the Series 2001-3 Cash Collateral Account in the amount and at such time as a draw would have been made under the Letter of Credit. (ii) Subject to Section 2.3 of the Letter of Credit Reimbursement Agreement, funds on deposit in the Series 2001-3 Cash Collateral Account may be invested in Permitted Investments by the Trustee at the written direction of Budget (and Budget hereby (A) appoints the Letter of Credit Provider to act as its agent and give such written directions to the Trustee and (B) authorizes the Trustee to accept and act upon such written directions as if they were provided to the Trustee directly from Budget (provided that the Letter of Credit Provider shall not incur any liability in giving or failing to give any such written directions)); provided, however, that for purposes of determining the availability of funds or balances in the Series 2001-3 Cash Collateral Account under the Base Indenture such investment earnings shall be excluded to the extent that the aggregate funds or balances in the Series 2001-3 Cash Collateral Account exceed the Required Letter of Credit Amount. Funds on deposit in the Series 2001-3 Cash Collateral Account (other than certain earnings on Permitted Investments as specified in the preceding sentence) shall be available to be applied against the Series 2001-3 Lease Payment Deficits until the Series 2001-3 Notes have been paid in full. After all distributions required to be made on a Distribution Date have been made, the Trustee shall withdraw from the Series 2001-3 Cash Collateral Account an amount equal to the lesser of (a) the amount of investment earnings during the Related Month with respect to funds or balances on deposit in the Series 2001-3 Cash Collateral Account and (b) the amount by which the funds or balances on deposit in the Series 2001-3 Cash Collateral Account exceed the Required Letter of Credit Amount and deposit such funds and balances so withdrawn into the Budget Distribution Account unless the Trustee has received written notice from the Letter of Credit Provider stating that Budget and/or the Lessees have not reimbursed the Letter of Credit Provider in full in respect of the draw made by the Trustee under the Letter of Credit to fund the Series 2001-3 Cash Collateral 58 Account, in which case, the Trustee shall (and Budget on behalf of itself and the other Lessees hereby directs the Trustee to) pay over, on behalf of Budget and/or the Lessees, such funds and balances so withdrawn to the Letter of Credit Provider in an amount not to exceed such unreimbursed amount as specified by the Letter of Credit Provider in such written notice and the Trustee shall place any funds and balances so withdrawn in excess of such unreimbursed amount into the Budget Distribution Account. Section 4.14 [RESERVED]. Section 4.15 Deficiencies in Payments. Notwithstanding anything in this Supplement or the Base Indenture to the contrary, and notwithstanding the prior distribution to the Class A Noteholders, the Class B Noteholders or the Class C Noteholders of the Class A Invested Amount, the Class B Invested Amount and the Class C Invested Amount of any such Class, any deficiency in payment to the Noteholders of such Class of the full principal amount of the Notes of such Class and any accrued and unpaid interest thereon (i) shall remain due and shall be payable on each Distribution Date to the Noteholders, first to the Class A Noteholders, then to the Class B Noteholders, and then to the Class C Noteholders, to the extent of the sufficiency of recoveries, proceeds, or other assets of the Issuer allocable at any time to the Series 2001-3 Notes, and (ii) any deficiency in such full principal amount and accrued unpaid interest thereon shall be paid before any distribution in any period of any amounts in respect of the Budget Interest. ARTICLE 5 [RESERVED] ARTICLE 6 AMORTIZATION EVENTS In addition to the Amortization Events set forth in Section 9.1 of the Base Indenture, the following shall be Amortization Events with respect to the Series 2001-3 Notes: (a) a Series 2001-3 Credit Support Deficiency shall occur and exist for more than one (1) Business Day unless during such one (1) Business Day period the Issuer or the Servicer shall have cured the Series 2001-3 Credit Support Deficiency in accordance with the terms and conditions of this Supplement; (b) if (i) interest is not paid on any outstanding Series 2001-3 Note on any Distribution Date, and remains unpaid for five (5) days or (ii) all principal and interest of the Class A Notes, the Class B Notes or the Class C Notes is not paid in full on or before the Class A Expected Final Distribution Date, the Class B Expected Final Distribution Date or the Class C Expected Final Distribution Date, as applicable; 59 (c) unless (i) the inclusion of the Series 2001-3 Letter of Credit Amount in the Series 2001-3 Credit Support Amount is not necessary for the Series 2001-3 Credit Support Amount to equal or exceed the Series 2001-3 Minimum Credit Support Amount, or (ii) the Series 2001-3 Cash Collateral Account shall theretofore have been funded to the full extent required, the Letter of Credit shall not be in full force and effect and no substitute credit enhancement shall have been obtained; (d) from and after the funding of the Series 2001-3 Cash Collateral Account, the Series 2001-3 Cash Collateral Account shall be subject to an injunction, estoppel or other stay or a Lien (other than the Lien of the Trustee under the Indenture); (e) unless (i) the inclusion of the Series 2001-3 Letter of Credit Amount in the Series 2001-3 Credit Support Amount is not necessary for the Series 2001-3 Credit Support Amount to equal or exceed the Series 2001-3 Minimum Credit Support Amount, or (ii) the Series 2001-3 Cash Collateral Account shall theretofore have been funded to the full extent required, an Event of Bankruptcy shall have occurred with respect to the Letter of Credit Provider or the Letter of Credit Provider shall repudiate the Letter of Credit or refuse to honor a proper draw thereon; (f) the Minimum Liquidity Amount shall exceed the sum of the Cash Liquidity Amount on deposit in the Series 2001-3 Cash Liquidity Account and the Series 2001-3 Letter of Credit Amount for a period of 14 days; (g) any Related Document is not in full force and effect, or the Issuer, Budget or the Servicer so asserts in writing; (h) one or more Lessee Partial Wind-Down Events occur and are continuing under the Group V Lease with respect to Lessees which, in the aggregate, lease Group V Vehicles having an aggregate Net Book Value exceeding 10 % of the Net Book Value of all Group V Vehicles at the time of such occurrence; or (i) during any Interest Period after a LIBOR Determination Date on which LIBOR equals or exceeds 7.50%, the Issuer shall fail to maintain the Interest Rate Cap in full force and effect or obtain a replacement therefor under the provisions of the Interest Rate Cap and such failure to maintain the Interest Rate Cap or obtain a replacement therefor continues for a period of 30 days. In the case of any event described in clauses (a) through (f) and (i) above, an Amortization Event will be deemed to have occurred with respect to the Series 2001-3 Notes without notice or other action on the part of the Trustee or any holders of the Series 2001-3 Notes. In the case of any event described in clauses (g) and (h) above, an Amortization Event shall be deemed to have occurred with respect to the Series 2001-3 Notes only if, after any applicable grace period described in such clauses, either the Trustee, by written notice to the Issuer, or the Required Noteholders with respect to the Series 2001-3 Notes, by written notice to the Issuer and the Trustee, declare that, as of the date of such notice, an Amortization Event has occurred. 60 The occurrence of the event described in clause (a) or (f) above shall also be a Series 2001-3 Limited Liquidation Event of Default unless (x) during the thirty (30) day period after the occurrence thereof the Issuer or the Servicer shall have cured such event and (y) the Rating Agencies shall have notified the Issuer, Budget and the Trustee in writing that after the cure of such event is provided for, the Series 2001-3 Notes will receive the same ratings from the Rating Agencies as they received prior to the occurrence of such event. ARTICLE 7 FORM OF SERIES 2001-3 NOTES Section 7.1 Class A Notes. (a) Restricted Global Class A Note. Class A Notes to be issued in the United States will be issued in book-entry form of and represented by a permanent global Class A Note in fully registered form without interest coupons (the "Restricted Global Class A Note"), substantially in the form set forth in Exhibit A-l hereto, with such legends as may be applicable thereto as set forth in the Base Indenture, and will be sold initially to institutional accredited investors within the meaning of Regulation D under the Securities Act in reliance on an exemption from the registration requirements of the Securities Act and thereafter to qualified institutional buyers within the meaning of, and in reliance on, Rule 144A under the Securities Act and shall be deposited on behalf of the purchasers of the Class A Notes represented thereby, with a custodian for DTC, and registered in the name of Cede as DTC's nominee, duly executed by TFFC and authenticated by the Trustee in the manner set forth in Section 2.4 of the Base Indenture. (b) Temporary Global Class A Note; Permanent Global Class A Note. Class A 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 placement agreement, and shall initially be issued in the form of a temporary global Class A Note in registered form without interest coupons, substantially in the form of Exhibit A-2 hereto (the "Temporary Global Class A Note"), which shall be deposited on behalf of the purchasers of the Class A Notes represented thereby with a custodian for, and registered in the name of a nominee of DTC, for the accounts of Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear and for Clearstream, duly executed by TFFC and authenticated by the Trustee in the manner set forth in Section 2.4 of the Base Indenture. Interests in a Temporary Global Class A Note will be exchangeable, in whole or in part, for interests in a permanent global Class A Note in registered form without interest coupons, substantially in the form of Exhibit A-3 hereto (the "Permanent Global Class A Note"), in accordance with the provisions of such Temporary Global Class A Note and the Base Indenture (as modified by this Supplement). Interests in a Permanent Global Class A Note will be exchangeable for definitive Class A Notes in accordance with the provisions of such Permanent Global Class A Note and the Base Indenture (as modified by this Supplement). Section 7.2 Class B Notes. (a) Restricted Global Class B Note. Class B Notes to be issued in the United States will be issued in book-entry form of and represented by a permanent global Class B Note in fully 61 registered form without interest coupons (the "Restricted Global Class B Note"), substantially in the form set forth in Exhibit B-1 hereto, with such legends as may be applicable thereto as set forth in the Base Indenture, and will be sold initially to institutional accredited investors within the meaning of Regulation D under the Securities Act in reliance on an exemption from the registration requirements of the Securities Act and thereafter to qualified institutional buyers within the meaning of, and in reliance on, Rule 144A under the Securities Act and shall be deposited on behalf of the purchasers of the Class B Notes represented thereby, with a custodian for DTC, and registered in the name of Cede as DTC's nominee, duly executed by TFFC and authenticated by the Trustee in the manner set forth in Section 2.4 of the Base Indenture. (b) Temporary Global Class B Note; Permanent Global Class B Note. Class B 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 United States Securities Act, as provided in the applicable placement agreement, and shall initially be issued in the form of a temporary global Class B Note in registered form without interest coupons, substantially in the form of Exhibit B-2 hereto (the "Temporary Global Class B Note"), which shall be deposited on behalf of the purchasers of the Class B Notes represented thereby with a custodian for, and registered in the name of a nominee of, DTC, for the accounts of Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear and for Clearstream, duly executed by TFFC and authenticated by the Trustee in the manner set forth in Section 2.4 of the Base Indenture. Interests in a Temporary Global Class A Note will be exchangeable, in whole or in part, for interests in a permanent global Class B Note in registered form without interest coupons, substantially in the form of Exhibit B-3 hereto (the "Permanent Global Class B Note"), in accordance with the provisions of such Temporary Global Class B Note and the Base Indenture (as modified by this Supplement). Interests in a Permanent Global Class B Note will be exchangeable for definitive Class B Notes in accordance with the provisions of such Permanent Global Class B Note and the Base Indenture. Section 7.3 Class C Notes. (a) Restricted Global Class C Note. Class C Notes to be issued in the United States will be issued in book-entry form of and represented by a permanent global Class C Note in fully registered form without interest coupons (the "Restricted Global Class C Note"), substantially in the form set forth in Exhibit C-1 hereto, with such legends as may be applicable thereto as set forth in the Base Indenture, and will be sold initially to institutional accredited investors within the meaning of Regulation D under the Securities Act in reliance on an exemption from the registration requirements of the Securities Act and thereafter to qualified institutional buyers within the meaning of, and in reliance on, Rule 144A under the Securities Act and shall be deposited on behalf of the purchasers of the Class C Notes represented thereby, with a custodian for DTC, and registered in the name of Cede as DTC's nominee, duly executed by TFFC and authenticated by the Trustee in the manner set forth in Section 2.4 of the Base Indenture. (b) Temporary Global Class C Note; Permanent Global Class C Note. Class C 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 United States Securities Act, as provided in the applicable placement agreement, and shall initially be issued in the form of a temporary global Class C Note in registered form without interest coupons, substantially in the form of 62 Exhibit C-2 hereto (the "Temporary Global Class C Note"), which shall be deposited on behalf of the purchasers of the Class C Notes represented thereby with a custodian for, and registered in the name of a nominee of, DTC, for the accounts of Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear and for Clearstream, duly executed by TFFC and authenticated by the Trustee in the manner set forth in Section 2.4 of the Base Indenture. Interests in a Temporary Global Class C Note will be exchangeable, in whole or in part, for interests in a permanent global Class C Note in registered form without interest coupons, substantially in the form of Exhibit C-3 hereto (the "Permanent Global Class C Note"), in accordance with the provisions of such Temporary Global Class C Note and the Base Indenture (as modified by this Supplement). Interests in a Permanent Global Class C Note will be exchangeable for definitive Class C Notes in accordance with the provisions of such Permanent Global Class C Note and the Base Indenture. Section 7.4 Issuances of Additional Notes. (a) From time to time during the Series 2001-3 Revolving Period, TFFC may, subject to the conditions set forth in clause (b) below, issue Additional Notes which will be identical in all respects to the other Series 2001-3 Notes of the corresponding Class and will be equally and ratably entitled to the benefits of the Indenture without preference, priority or distinction. The initial principal amount of all Additional Notes shall be allocated pro rata among the Class A Notes, the Class B Notes and the Class C Notes (based on the outstanding Invested Amount of each such Class) and the Class A Invested Amount (and Aggregate Principal Balance), the Class B Invested Amount (and Aggregate Principal Balance) and the Class C Invested Amount (and Aggregate Principal Balance) will be increased accordingly. (b) Additional Notes may be issued only upon satisfaction of the following conditions: (i) after giving effect to the issuance of such Additional Notes, no Series 2001-3 Credit Support Deficiency or Asset Amount Deficiency will exist, (ii) the Trustee shall have received confirmation from each Rating Agency rating the Series 2001-3 Notes that the issuance of such Additional Notes will not result in the reduction or withdrawal of the rating of any class of Series 2001-3 Notes, (iii) the excess of the principal amount of the Additional Notes over their issue price will not exceed the maximum amount permitted under the Code without the creation of original issue discount; (iv) the Trustee shall have received an opinion of counsel to the effect that (A) the Additional Notes will be characterized as indebtedness of the Issuer for federal income tax purposes, (B) subject to the considerations applicable to each Class A Noteholder, Class B Noteholder and Class C Noteholder, the Class A Notes, the Class B Notes and the Class C Notes will not be subject to the Florida intangible personal property tax and (C) the issuance of the Additional Notes will not adversely affect the characterization of the Series 2001-3 Notes (or any class thereof) as debt and (v) no Amortization Event (or event which, with the passage of time, the giving of notice, or both, would become an Amortization Event) shall have occurred, which is continuing or would result from the issuance of such Additional Notes. Section 7.5 Denominations. The Class A Notes, Class B Notes and Class C Notes shall be in denominations of $100,000 and integral multiples of $1,000 in excess thereof. Section 7.6 Transfer and Exchange. The provisions of Article 2 of the Base Indenture regarding the Notes shall continue to apply irrespective of the issuance of the Series 2001-3 Notes. Section 2.9 of the Base Indenture shall be read in its entirety as provided in the Base 63 Indenture, provided that for purposes of the Series 2001-3 Notes, clauses (a)(vii) and (a)(viii) of Section 2.9 of the Base Indenture shall be modified, as they apply to the Series 2001-3 Notes, as permitted by Section 12.1(f) of the Base Indenture and shall read as follows: (vii) Temporary Global Note to Restricted Global Note. If, on or after the Exchange Date, a holder of a beneficial interest in the Temporary Global Note registered in the name of DTC or its nominee wishes to exchange its interest in such Temporary Global Note for an interest in the Restricted Global Note, or to transfer its interest in such Temporary Global Note to a Person who wishes to take delivery thereof in the form of an interest in the Restricted Global Note, such holder may, subject to the rules and procedures of Euroclear or Clearstream and DTC, as the case may be, exchange or cause the exchange or transfer of such interest for an equivalent beneficial interest in the Restricted Global Note. Upon receipt by the Transfer Agent of (1) instructions from Euroclear or Clearstream or DTC, as the case may be, directing the Trustee to credit or cause to be credited a beneficial interest in the Restricted Global Note equal to the beneficial interest in the Temporary Global Note to be exchanged or transferred, such instructions to contain information regarding the agent member's account with DTC to be credited with such increase and information regarding the agent member's account with DTC to be debited with such decrease, and (2) a certificate in the form of Exhibit A-5 attached to the Base Indenture given by the holder of such beneficial interest and stating that the Person transferring such interest in the Temporary Global Note reasonably believes that the Person acquiring such interest in the Restricted Global Note is a Qualified Institutional Buyer and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A, Euroclear or Clearstream or the Trustee, as the case may be, shall instruct DTC to reduce the Temporary Global Note by the aggregate principal amount of the beneficial interest in the Temporary Global Note to be exchanged or transferred, and the Transfer Agent shall instruct DTC, concurrently with such reduction, to increase the principal amount of the Restricted Global Note by the aggregate principal amount of the beneficial interest in the Temporary Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Restricted Global Note equal to the reduction in the principal amount of the Temporary Global Note. Prior to the Exchange Date, an interest in the Temporary Global Note may not be transferred for an interest in the Restricted Global Note. (viii) Permanent Global Note to Restricted Global Note. If, on or after the Exchange Date, a holder of a beneficial interest in the Permanent Global Note registered in the name of DTC or its nominee wishes to exchange its interest in such Permanent Global Note for an interest in the Restricted Global Note, or to transfer its interest in such Permanent Global Note to a Person who wishes to take delivery thereof in the form of an interest in the Restricted Global Note, such holder may, subject to the rules and procedures of Euroclear or Clearstream and DTC, as the case may be, exchange or cause the exchange or transfer of such interest for an equivalent beneficial interest in the Restricted Global Note. Upon receipt by the Transfer Agent of (1) instructions from Euroclear or Clearstream or DTC, as the case may be, directing the Trustee to credit or cause to be credited a beneficial interest in the Restricted Global Note equal to the 64 beneficial interest in the Permanent Global Note to be exchanged or transferred, such instructions to contain information regarding the agent member's account with DTC to be credited with such increase and information regarding the agent member's account with DTC to be debited with such decrease, and (2) a certificate in the form of Exhibit A-6 attached to the Base Indenture given by the holder of such beneficial interest and stating that the Person transferring such interest in the Permanent Global Note reasonably believes that the Person acquiring such interest in the Restricted Global Note is a Qualified Institutional Buyer and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A, Euroclear or Clearstream or the Trustee, as the case may be, shall instruct DTC to reduce the Permanent Global Note by the aggregate principal amount of the beneficial interest in the Permanent Global Note to be exchanged or transferred, and the Transfer Agent shall instruct DTC, concurrently with such reduction, to increase the principal amount of the Restricted Global Note by the aggregate principal amount of the beneficial interest in the Permanent Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Restricted Global Note equal to the reduction in the principal amount of the Permanent Global Note. (b) "Exhibit A-6" shall be added to the Base Indenture, as it applies to the Series 2001-3 Notes, as permitted by Section 12.1(f) of the Base Indenture and shall read as set forth on Exhibit E hereto. ARTICLE 8 GENERAL (a) Repurchase. The Class A Notes are subject to repurchase by the Issuer in whole, but not in part, on any Distribution Date. The Class B Notes are subject to repurchase by the Issuer in whole, but not in part, on any Distribution Date on or after which the Class A Notes have been paid in full. The Class C Notes are subject to repurchase by the Issuer in whole, but not in part, on any Distribution Date on or after which the Class B Notes have been paid in full. The purchase price for any such repurchase of Series 2001-3 Notes shall equal the Aggregate Principal Balance of such Notes (determined after giving effect to any payment of principal and interest on such Distribution Date), plus accrued and unpaid interest on such Aggregate Principal Balance, plus, if applicable, a prepayment premium pursuant to Section 8(a)(i), (ii) or (iii). (i) Class A Prepayment Premium. A prepayment premium (the "Class A Prepayment Premium") shall be payable to the holders of the Class A Notes upon any repurchase of the Class A Notes by the Issuer when the Aggregate Principal Balance of such Class A Notes on the date of such repurchase is greater than 10% of the Class A Initial Invested Amount. The Class A Prepayment Premium shall equal the amount of interest that would have accrued on the Aggregate Principal Balance of the Class A Notes so prepaid (assuming that (i) no Amortization Event occurs with respect to the Class A Notes, (ii) the Class A Noteholders are paid the Class A Controlled Distribution Amount on each of the scheduled Distribution Dates for the period commencing with the 65 Distribution Date on which such repurchase is effected and ending on the Class A Expected Final Distribution Date, and (iii) interest accrues on such Class A Notes at a rate equal to 0.90%), discounted to present value to such Distribution Date at a rate equal to LIBOR in effect on such Distribution Date plus 0.90%. (ii) Class B Prepayment Premium. A prepayment premium (the "Class B Prepayment Premium") shall be payable to the holders of the Class B Notes upon any repurchase of the Class B Notes by the Issuer when the Aggregate Principal Balance of such Class B Notes on the date of such repurchase is greater than 10% of the Class A Initial Invested Amount. The Class B Prepayment Premium shall equal the amount of interest that would have accrued on the Aggregate Principal Balance of the Class B Notes so prepaid (assuming that (i) no Amortization Event occurs with respect to the Class B Notes, (ii) the Class B Noteholders are paid the Class B Controlled Distribution Amount on each of the scheduled Distribution Dates for the period commencing with the Distribution Date on which such repurchase is effected and ending on the Class B Expected Final Distribution Date, and (iii) interest accrues on such Class B Notes at a rate equal to 1.18%), discounted to present value to such Distribution Date at a rate equal to LIBOR in effect on such Distribution Date plus 1.18%. (iii) Class C Prepayment Premium. A prepayment premium (the "Class C Prepayment Premium") shall be payable to the holders of the Class C Notes upon any repurchase of the Class C Notes by the Issuer when the Aggregate Principal Balance of such Class C Notes on the date of such repurchase is greater than 10% of the Class C Initial Invested Amount. The Class C Prepayment Premium shall equal the amount of interest that would have accrued on the Aggregate Principal Balance of the Class C Notes so prepaid (assuming that (i) no Amortization Event occurs with respect to the Class C Notes, (ii) the Class C Noteholders are paid the Class C Controlled Distribution Amount on each of the scheduled Distribution Dates for the period commencing with the Distribution Date on which such repurchase is effected and ending on the Class C Expected Final Distribution Date, and (iii) interest accrues on such Class C Notes at a rate equal to 2.93%), discounted to present value to such Distribution Date at a rate equal to LIBOR in effect on such Distribution Date plus 2.93%. (b) Payment of Rating Agency Fees. TFFC agrees and covenants with the Servicer to pay all reasonable fees and expenses of the Rating Agencies and to promptly provide all documents and other information that the Rating Agencies may reasonably request. (c) Exhibits. The following exhibits attached hereto supplement the exhibits included in the Indenture. Exhibit A-1: Form of Restricted Global Class A Note Exhibit A-2: Form of Temporary Global Class A Note Exhibit A-3: Form of Permanent Global Class A Note Exhibit B-1: Form of Restricted Global Class B Note Exhibit B-2: Form of Temporary Global Class B Note Exhibit B-3: Form of Permanent Global Class B Note Exhibit C-1: Form of Restricted Global Class C Note Exhibit C-2: Form of Temporary Global Class C Note Exhibit C-3: Form of Permanent Global Class C Note Exhibit D: Form of Consent Exhibit E: Exhibit A-6 to Base Indenture: Form of Transfer Certificate (Permanent Global Note to Restricted Global Note)
66 (d) Ratification of Base Indenture. As supplemented by this Supplement, the Base Indenture is in all respects ratified and confirmed and the Base Indenture as so supplemented by this Series Supplement shall be read, taken, and construed as one and the same instrument. (e) Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. (f) GOVERNING LAW. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PROVISIONS THEREOF REGARDING CONFLICTS OF LAWS), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAW. (g) Amendments. (i) This Supplement may be modified or amended from time to time in accordance with the terms of the Base Indenture; provided, however, that if, pursuant to the terms of the Base Indenture or this Supplement, the consent of the Required Noteholders is required for an amendment or modification of this Supplement, such requirement shall be satisfied if such amendment or modification is consented to by Noteholders representing more than 50% of the Aggregate Principal Balance of the Series 2001-3 Notes affected thereby (including for purposes of determining such aggregate principal amount, the Aggregate Principal Balances of the Class A Notes, the Class B Notes and the Class C Notes, but excluding for purposes of such calculation any Series 2001-3 Notes held by Budget or any Affiliate thereof); and, provided, further, that if the consent of the Required Noteholders is required for a proposed amendment or modification of this Supplement that affects only one class (or group of classes) of Notes (and does not affect in any material respect, as evidenced by an opinion of Counsel to such effect, the other classes, as applicable), then such requirement shall be satisfied if such amendment or modification is consented to by the Noteholders representing more than 50% of the aggregate outstanding principal amount of the affected class (or group of classes), but excluding for purposes of such calculation any Series 2001-3 Notes held by Budget or any Affiliate thereof, without the necessity of obtaining the consent of the Required Noteholders in respect of the other classes, as applicable. In addition, the Series 2001-3 Supplement may be amended or modified from time to time, without the consent of any Noteholder but with the consent of the Issuer, Budget and the Trustee and written confirmation of the then current ratings on the Series 2001-3 Notes from the Rating Agencies to amend the following definitions: "Measurement Month," "Measurement Month Average" and "Market Value Adjustment Percentage" and to make changes related to such amendments. TFFC shall deliver to each Rating Agency notice of any such amendment to this Supplement. 67 (ii) Notwithstanding the foregoing and anything to the contrary in the Base Indenture, this Supplement and the Group V Lease may be amended without the consent of the Series 2001-3 Noteholders to provide for the leasing of vehicles under the Group V Lease of a type not provided for as of the Series 2001-3 Issuance Date; provided that (A) TFFC shall have delivered to the Trustee Rating Agency Confirmation with respect to such amendments, (B) no Amortization Event then exists or will result from such amendment or from the leasing of such vehicles under the Group V Lease and (C) the Letter of Credit Provider shall have consented in writing to such amendments and to the leasing of such vehicles under the Group V Lease. (iii) Discharge of Indenture. Notwithstanding anything to the contrary contained in the Base Indenture, (x) no discharge of the Indenture pursuant to Section 11.1(b) of the Base Indenture will be effective as to the Series 2001-3 Notes without the consent of the Required Noteholders and (y) the Indenture shall terminate no earlier than the date that is one year and one day after the latest date on which Budget pays a demand under the Demand Note. (h) Servicer. The Servicer represents and warrants that it will perform all of its servicing functions as set forth in Section 4 of the Base Indenture. (i) Tax Opinion. No State of Virginia tax opinion is required to be rendered in connection with the issuance of the Series 2001-3 Notes. 68 IN WITNESS WHEREOF, TFFC, the Servicer, Budget, as Budget Interestholder, and the Trustee have caused this Supplement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. TEAM FLEET FINANCING CORPORATION By:_________________________________________ Name: Title: BUDGET GROUP, INC., as Servicer By:_________________________________________ Name: Title: BUDGET GROUP, INC., as Budget Interestholder By:_________________________________________ Name: Title: BANKERS TRUST COMPANY, as Trustee By:_________________________________________ Name: Title: 69 Schedule 1 Maximum Manufacturer Percentages
Eligible Eligible Type II Repurchase Manufacturers Repurchase Manufacturers Maximum Percentage - ------------------------ ------------------------ ------------------ Ford 100% Toyota 100% DaimlerChrysler 100% Nissan 30% Hyundai 10%
Schedule 1 -- 1 EXHIBIT A-1 TO SERIES 2001-3 SUPPLEMENT FORM OF RESTRICTED GLOBAL CLASS A NOTE REGISTERED $[ ]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS A NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS A NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY - -------- * Denominations of $1,000,000 and integral multiples of $1,000. A-1-1 THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS A NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS A NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS A NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS A NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS A Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [_________________________ DOLLARS], which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class A Note shall be due on the Series 2001-3 Termination Date, which is the [__________, 2005] Distribution Date. However, principal with respect to the Class A Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class A Note, at the Class A A-1-2 Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class A Note is paid or made available for payment, on the principal amount of this Class A Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class A Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from _____________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class A Note shall be paid in the manner specified on the reverse hereof. The principal of, and interest on this Class A Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class A Note shall be applied first to interest due and payable on this Class A Note as provided above and then to the unpaid principal of this Class A Note. This Class A Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note , or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class A Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class A Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. A-1-3 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By:______________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class A Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By:______________________________________ Authorized Signature A-1-4 [REVERSE OF CLASS A NOTE] This Class A Note is one of a duly authorized issue of Class A Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class A (herein called the "Class A Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer"), and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of _____________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture." The Class A Notes are subject to all terms of the Indenture. All terms used in this Class A Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class A Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class A Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing _______________, 2001. As described above, the entire unpaid principal amount of this Class A Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class A Notes may be paid earlier, as described in the Indenture. All principal payments on the Class A Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class A Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class A Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class A Note (or one or more predecessor Class A Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class A Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class A Note be submitted for notation of payment. Any reduction in the principal amount of this Class A Note (or any one or more predecessor Class A Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class A Note and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not A-1-5 noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class A Note at the Trustee's principal Corporate Trust Office. The Company shall pay interest on overdue installments of interest at the Class A Note Rate to the extent lawful. As provided in the Indenture, the Class A Notes are subject to repurchase by the Issuer in whole but not in part on any Distribution Date. If on any such Distribution Date, the Aggregate Principal Balance of the Class A Notes is greater than $[____________], a prepayment premium shall be paid as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class A Note may be registered on the Note Register upon surrender of this Class A Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class A Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class A Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class A Note or, in the case of a Note Owner, a beneficial interest in a Class A Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class A Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class A Note, subject to Section 13.18 of the Base Indenture. A-1-6 Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class A Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class A Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class A Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class A Note, agree to treat this Class A Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A Note (or any one or more predecessor Class A Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Class A Note and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class A Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. The term "Company" as used in this Class A Note includes any successor to the Company under the Indenture. The Class A Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class A Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, rights A-1-7 and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class A Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class A Note at the times, place, and rate, and in the coin or currency herein prescribed. Interests in this Restricted Global Note may be exchanged for Definitive Notes, subject to the provisions of the Indenture. A-1-8 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee ________________________________ FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (name and address of assignee) the within Class A Note and all rights thereunder, and hereby irrevocably constitutes and appoints _______________, attorney, to transfer said Class A Note on the books kept for registration thereof, with full power of substitution in the premises. Dated:________________________________ _____________________________________* Signature Guaranteed: _____________________________________ ______________________________________ - ---------- * NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever. A-1-9 EXHIBIT A-2 TO SERIES 2001-3 SUPPLEMENT FORM OF TEMPORARY GLOBAL CLASS A NOTE REGISTERED $[ ]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS NOTE IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR A PERMANENT GLOBAL NOTE WHICH IS, UNDER CERTAIN CIRCUMSTANCES, IN TURN, EXCHANGEABLE FOR DEFINITIVE NOTES WITHOUT COUPONS. THE RIGHTS ATTACHING TO THIS TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES ACT OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS A NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS A NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. A-2-1 EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS A NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS A NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS A NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS A NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. INTERESTS IN THIS TEMPORARY GLOBAL NOTE MAY ONLY BE HELD BY NON U.S. PERSONS AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT OF 1933 AS AMENDED, AND MAY ONLY BE HELD IN BOOK-ENTRY FORM THROUGH EUROCLEAR OR CLEARSTREAM. A-2-2 TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS A Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [___________________________DOLLARS] (or such lesser amount as shall be the outstanding principal amount of this Temporary Global Note shown in Schedule A hereto), which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class A Note shall be due on the Series 2001-3 Termination Date, which is the [_______________, 2005] Distribution Date. However, principal with respect to the Class A Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class A Note at the Class A Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class A Note is paid or made available for payment, on the principal amount of this Class A Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class A Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from ______________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class A Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Class A Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class A Note shall be applied first to interest due and payable on this Class A Note as provided above and then to the unpaid principal of this Class A Note. This Class A Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note, or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duty executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class A Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class A Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: A-2-3 Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. A-2-4 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class A Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature A-2-5 [REVERSE OF CLASS A NOTE) This Class A Note is one of a duly authorized issue of Class A Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class A (herein called the "Class A Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of ____________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class A Notes are subject to all terms of the Indenture. All terms used in this Class A Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class A Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class A Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing ______________, 2001. As described above, the entire unpaid principal amount of this Class A Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class A Notes may be paid earlier, as described in the Indenture. All principal payments on the Class A Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class A Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class A Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class A Note (or one or more predecessor Class A Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class A Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class A Note be submitted for notation of payment. Any reduction in the principal amount of this Class A Note (or any one or more predecessor Class A Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class A Note and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not A-2-6 noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class A Note at the Trustee's principal Corporate Trust Office. The Company shall pay interest on overdue installments of interest at the Class A Note Rate to the extent lawful. As provided in the Indenture, the Class A Notes are subject to repurchase by the Issuer in whole but not in part on any Distribution Date. If on any such Distribution Date, the Aggregate Principal Balance of the Class A Notes is greater than $[__________], a prepayment premium shall be paid as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class A Note may be registered on the Note Register upon surrender of this Class A Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class A Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class A Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class A Note or, in the case of a Note Owner, a beneficial interest in a Class A Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class A Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Servicer in its individual capacity, except (a) as any such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class A Note, subject to Section 13.18 of the Base Indenture. A-2-7 Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class A Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class A Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class A Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class A Note, agree to treat this Class A Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. Each Holder of this Note shall provide to the Trustee at least annually an appropriate statement (on Internal Revenue Service Form W-8BEN or suitable substitute) with respect to United States federal income tax and withholding tax, signed under penalties of perjury, certifying that the beneficial owner of this Note is a non U.S. person and providing the Noteholder's name and address. If the information provided in the statement changes, the Noteholder shall so inform the Trustee within 30 days of such change. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A Note (or any one or more predecessor Class A Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Class A Note and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation off such consent or waiver is made upon this Class A Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. The term "Company" as used in this Class A Note includes any successor to the Company under the Indenture. A-2-8 The Class A Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class A Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class A Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class A Note at the times, place, and rate, and in the coin or currency herein prescribed. Prior to the Exchange Date (as defined below), payments (if any) on this Temporary Global Note will only be paid to the extent that there is presented by Clearstream Banking, societe anonyme ("Clearstream") or Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") to the Trustee at its office in London a certificate, substantially in the form set out in Exhibit F to the Base Indenture, to the effect that it has received from or in respect of a person entitled to a Note (as shown by its records) a certificate from such person in or substantially in the form of Exhibit G to the Base Indenture. After the Exchange Date the holder of this Temporary Global Note will not be entitled to receive any payment hereon, until this Temporary Global Note is exchanged in full for a Permanent Global Note. This Temporary Global Note shall in all other respects be entitled to the same benefits as the Permanent Global Notes under the Indenture. On or after the date (the "Exchange Date") which is the date that is the 40th day after the completion of the distribution of the relevant Series, interests in this Temporary Global Note may be exchanged (free of charge) for interests in a Permanent Global Note in the form of Exhibit A-3 to the Series 2001-3 Supplement upon presentation of this Temporary Global Note at the office in London of the Trustee (or at such other place outside the United States of America, its territories and possessions as the Trustee may agree). The Permanent Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Global Note in respect of which there shall have been presented to the Trustee by Euroclear or Clearstream a certificate, substantially in the form set out in Exhibit F to the Base Indenture, to the effect that it has received from or in respect of a person entitled to a Note (as shown by its records) a certificate from such person in or substantially in the form of Exhibit G to the Base Indenture. On an exchange of the whole of this Temporary Global Note, this Temporary Global Note shall be surrendered to the Trustee at its office in London. On an exchange of part only of this Temporary Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule A hereto and the relevant space in Schedule A hereto recording such exchange shall be signed by or on behalf of the Issuer. If, following the issue of a Permanent Global Note in exchange for some of the Notes represented by this Temporary Global Note, further Notes of this Series are to be exchanged pursuant to this paragraph, such exchange may be effected, without the issue of a new Permanent Global Note, by the Issuer or its agent endorsing Part I of Schedule A of the Permanent Global Note previously issued to reflect an A-2-9 increase in the aggregate principal amount of such Permanent Global Note by an amount equal to the aggregate principal amount of the additional Notes of this Series to be exchanged. Interests in this Temporary Global Note will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream. Each person who is shown in the records of Euroclear and Clearstream as entitled to a particular number of Notes by way of an interest in this Temporary Global Note will be treated by the Issuer, the Trustee and any paying agent as the holder of such number of Notes. For purposes of this Temporary Global Note, the securities account records of Euroclear or Clearstream shall, in the absence of manifest error, be conclusive evidence of the identity of the holders of Notes and of the principal amount of Notes represented by this Temporary Global Note credited to the securities accounts of such holders of Notes. Any statement issued by Euroclear or Clearstream to any holder relating to a specified Note or Notes credited to the securities account of such holder and stating the principal amount of such Note or Notes and certified by Euroclear or Clearstream to be a true record of such securities account shall, in the absence of manifest error, be conclusive evidence of the records of Euroclear or Clearstream for the purposes of the next preceding sentence (but without prejudice to any other means of producing such records in evidence). Notwithstanding any provision to the contrary contained in this Temporary Global Note, the Issuer irrevocably agrees, for the benefit of such holder and its successors and assigns, that, subject to the provisions of the Indenture, each holder or its successors or assigns may file any claim, take any action or institute any proceeding to enforce, directly against the Issuers the obligation of the Issuer hereunder to pay any amount due in respect of each Note represented by this Temporary Global Note which is credited to such holder's securities account with Euroclear or Clearstream without the production of this Temporary Global Note. A-2-10 SCHEDULE A SCHEDULE OF EXCHANGES FOR NOTES REPRESENTED BY A PERMANENT GLOBAL NOTE The following exchanges of a part of this Temporary Global Note for Notes represented by a Permanent Global Note have been made:
Part of principal amount of this Remaining Temporary Global Principal amount Note exchanged for of this Temporary Notes represented Global Note Notation made by by a Permanent following such or on behalf of Date exchange made Global Note exchange the Issuer - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================
A-2-11 EXHIBIT A-3 TO SERIES 2001-3 SUPPLEMENT FORM OF PERMANENT GLOBAL CLASS A NOTE REGISTERED $[ ]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS A NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS A NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. A-3-1 THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS A NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS A NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS A NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS A NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS A Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [__________________________DOLLARS], which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class A Note shall be due on the Series 2001-3 Termination Date, which is the [_______________, 2005] Distribution Date. However, principal with respect to the Class A Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class A Note at the Class A A-3-2 Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class A Note is paid or made available for payment, on the principal amount of this Class A Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class A Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from _____________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class A Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Class A Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class A Note shall be applied first to interest due and payable on this Class A Note as provided above and then to the unpaid principal of this Class A Note. This Class A Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note , or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class A Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class A Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. A-3-3 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class A Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature A-3-4 [REVERSE OF CLASS A NOTE) This Class A Note is one of a duly authorized issue of Class A Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class A (herein called the "Class A Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of _____________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class A Notes are subject to all terms of the Indenture. All terms used in this Class A Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class A Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class A Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing _____________, 2001. As described above, the entire unpaid principal amount of this Class A Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class A Notes may be paid earlier, as described in the Indenture. All principal payments on the Class A Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class A Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class A Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class A Note (or one or more predecessor Class A Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class A Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class A Note be submitted for notation of payment. Any reduction in the principal amount of this Class A Note (or any one or more predecessor Class A Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class A Note and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not A-3-5 noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class A Note at the Trustee's principal Corporate Trust Office. The Company shall pay interest on overdue installments of interest at the Class A Note Rate to the extent lawful. As provided in the Indenture, the Class A Notes are subject to repurchase by the Issuer in whole but not in part on any Distribution Date. If on any such Distribution Date, the Aggregate Principal Balance of the Class A Notes is greater than $[___________], a prepayment premium shall be paid as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class A Note may be registered on the Note Register upon surrender of this Class A Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class A Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class A Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class A Note or, in the case of a Note Owner, a beneficial interest in a Class A Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class A Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class A Note, subject to Section 13.18 of the Base Indenture. A-3-6 Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class A Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class A Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class A Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class A Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class A Note, agree to treat this Class A Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. In the event a Noteholder or Note Owner is a nonresident alien, foreign corporation or other non-United States person (a "Foreign Person"), such Foreign Person shall provide to the Trustee at least annually an appropriate statement (on Internal Revenue Service Form W-8BEN or suitable substitute) with respect to United States federal income tax and withholding tax, signed under penalties of perjury, certifying that the beneficial owner of this Note is a Foreign Person and providing the Noteholder's name and address. If the information provided in the statement changes, the Foreign Person shall so inform the Trustee within 30 days of such change. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A Note (or any one or more predecessor Class A Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Class A Note and of any Class A Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class A Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. A-3-7 The term "Company" as used in this Class A Note includes any successor to the Company under the Indenture. The Class A Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class A Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class A Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class A Note at the times, place, and rate, and in the coin or currency herein prescribed. Interests in this Permanent Global Note will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream. Each person who is shown in the records of Euroclear and Clearstream as entitled to a particular number of Notes by way of an interest in this Permanent Global Note will be treated by the Trustee and any paying agent as the holder of such number of Notes. For purposes of this Permanent Global Note, the securities account records of Euroclear or Clearstream shall, in the absence of manifest error, be conclusive evidence of the identity of the holders of Notes and of the principal amount of Notes represented by this Permanent Global Note credited to the securities accounts of such holders of Notes. Any statement issued by Euroclear or Clearstream to any holder relating to a specified Note or Notes credited to the securities account of such holder and stating the principal amount of such Note or Notes and certified by Euroclear or Clearstream to be a true record of such securities account shall, in the absence of manifest error, be conclusive evidence of the records of Euroclear or Clearstream for the purposes of the next preceding sentence (but without prejudice to any other means of producing such records in evidence). Notwithstanding any provision to the contrary contained in this Permanent Global Note, the Issuer irrevocably agrees, for the benefit of such holder and its successors and assigns, that, subject to the provisions of the Indenture, each holder or its successors or assigns may file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay any amount due in respect of each Note represented by this Permanent Global Note which is credited to such holder's securities account with Euroclear or Clearstream without the production of this Permanent Global Note. Interests in this Permanent Global Note may be exchanged for Definitive Notes subject to the provisions of the Indenture. A-3-8 EXHIBIT B-1 TO SERIES 2001-3 SUPPLEMENT FORM OF RESTRICTED GLOBAL CLASS B NOTE REGISTERED $[ ]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS B NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS B NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. B-1-1 THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS B NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS B NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS B NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS B NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS B Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of [__________________________DOLLARS], which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class B Note shall be due on the Series 2001-3 Termination Date, which is the [______________, 2005] Distribution Date. However, principal with request to the Class B Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class B Note, at the Class B B-1-2 Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class B Note is paid or made available for payment, on the principal amount of this Class B Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class B Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from _____________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class B Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Class B Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class B Note shall be applied first to interest due and payable on this Class B Note as provided above and then to the unpaid principal of this Class B Note. This Class B Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note, or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class B Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class B Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class B Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class B Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. B-1-3 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class B Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature B-1-4 [REVERSE OF CLASS B NOTE] This Class B Note is one of a duly authorized issue of Class B Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class B (herein called the "Class B Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of _____________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class B Notes are subject to all terms of the Indenture. All terms used in this Class B Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class B Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class B Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing _____________, 2001. As described above, the entire unpaid principal amount of this Class B Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class B Notes may be paid earlier, as described in the Indenture. All principal payments on the Class B Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class B Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class B Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class B Note (or one or more predecessor Class B Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class B Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class B Note be submitted for notation of payment. Any reduction in the principal amount of this Class B Note (or any one or more predecessor Class B Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class B Note and of any Class B Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not B-1-5 noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class B Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class B Note at the Trustee's principal Corporate Trust Office. As provided in the Indenture, the Class B Notes are subordinate to the Class A Notes and, accordingly, (i) no payments of principal will be made with respect to this Class B Note until all of the Class A Notes have been paid in full and (ii) no payments of interest will be made with respect to this Class B Note on any given date until all payments of interest under any of the Class A Notes that are due and payable on such date have been paid in full. The Company shall pay interest on overdue installments of interest at the Class B Note Rate to the extent lawful. As provided in the Indenture, the Class B Notes are subject to repurchase by the Issuer in whole, but not in part on any Distribution Date after which the Class A Notes have been paid in full. If on any such Distribution Date, the Aggregate Principal Balance of the Class B Notes is greater than $[___________], a prepayment premium shall be payable in respect of such Notes as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class B Note may be registered on the Note Register upon surrender of this Class B Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class B Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class B Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class B Note or, in the case of a Note Owner, a beneficial interest in a Class B Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class B Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any B-1-6 such Person may have expressly agreed and (b) any such Partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class B Note, subject to Section 13.18 of the Base Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class B Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class B Note (as of the date of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class B Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class B Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class B Note, agree to treat this Class B Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class B Note (or any one or more predecessor Class B Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Class B Note and of any Class B Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class B Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. B-1-7 The term "Company" as used in this Class B Note includes any successor to the Company under the Indenture. The Class B Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class B Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, fights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class B Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class B Note at the times, place, and rate, and in the coin or currency herein prescribed. Interests in this Restricted Global Note may be exchanged for Definitive Notes, subject to the provisions of the Indenture. B-1-8 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee _____________________________ FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (name and address of assignee) the within Class B Note and all rights thereunder, and hereby irrevocably constitutes and appoints _______________, attorney, to transfer said Class B Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: ________________________________ _____________________________________* Signature Guaranteed: _____________________________________ _______________________________________ - ---------- * NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever. B-1-9 EXHIBIT B-2 TO SERIES 2001-3 SUPPLEMENT FORM OF TEMPORARY GLOBAL CLASS B NOTE REGISTERED $[ ]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS NOTE IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR A PERMANENT GLOBAL NOTE WHICH IS, UNDER CERTAIN CIRCUMSTANCES, IN TURN, EXCHANGEABLE FOR DEFINITIVE NOTES WITHOUT COUPONS. THE RIGHTS ATTACHING TO THIS TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS B NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS B NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS TN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. B-2-1 EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS B NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS B NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS B NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS B NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. INTERESTS IN THIS TEMPORARY GLOBAL NOTE MAY ONLY BE HELD BY NON U.S. PERSONS AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY ONLY BE HELD IN BOOK-ENTRY FORM THROUGH EUROCLEAR OR CLEARSTREAM. B-2-2 TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS B Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [__________________________DOLLARS], (or such lesser amount as shall be the outstanding principal amount of this Temporary Global Note shown in Schedule A hereto) which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class B Note shall be due on the Series 2001-3 Termination Date, which is the [__________, 2005] Distribution Date. However, principal with request to the Class B Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class B Note at the Class B Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class B Note is paid or made available for payment, on the principal amount of this Class Note outstanding on the preceding Distribution Date (after giving effect to a payments of principal made on the preceding Distribution Date). Interest on this Class B Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from _____________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class B Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Class B Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class B Note shall be applied first to interest due and payable on this Class B Note as provided above and then to the unpaid principal of this B Note. This Class B Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note, or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class B Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class B Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class B Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: B-2-3 Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class B Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. B-2-4 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class B Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature B-2-5 [REVERSE OF CLASS B NOTE) This Class B Note is one of a duly authorized issue of Class B Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class B (herein called the "Class B Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of _____________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class B Notes are subject to all terms of the Indenture. All terms used in this Class B Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class B Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class B Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing ________, 2001. As described above, the entire unpaid principal amount of this Class B Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class B Notes may be paid earlier, as described in the Indenture. All principal payments on the Class B Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class B Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class B Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class B Note (or one or more predecessor Class B Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class B Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class B Note be submitted for notation of payment. Any reduction in the principal amount of this Class B Note (or any one or more predecessor Class B Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class B Note and of any Class B Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in B-2-6 full of the then remaining unpaid principal amount of this Class B Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class B Note at the Trustee's principal Corporate Trust Office. As provided in the Indenture, the Class B Notes are subordinate to the Class A Notes and, accordingly, (i) no payments of principal will be made with respect to this Class B Note until all of the Class A Notes have been paid in full and (ii) no payments of interest will be made with respect to this Class B Note on any given date until all payments of interest under any of the Class A Notes that are due and payable on such date have been paid in full. The Company shall pay interest on overdue installments of interest at the Class B Note Rate to the extent lawful. As provided in the Indenture, the Class B Notes are subject to repurchase by the Issuer in whole, but not in part on any Distribution Date after which the Class A Notes have been paid in full. If on any such Distribution Date, the Aggregate Principal Balance of the Class B Notes is greater than $[_________], a prepayment premium shall be payable in respect of such Notes as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class B Note may be registered on the Note Register upon surrender of this Class B Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class B Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class B Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class B Note or, in the case of a Note Owner, a beneficial interest in a Class B Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class B Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be B-2-7 fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class B Note, subject to Section 13.18 of the Base Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class B Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class B Note (as of the date of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class B Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class B Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class B Note, agree to treat this Class B Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. Each Holder of this Note shall provide to the Trustee at least annually an appropriate statement (on Internal Revenue Service Form W-8BEN or suitable substitute) with respect to United States federal income tax and withholding tax, signed under penalties of perjury, certifying that a beneficial owner of this Note is a non U.S. person and providing the Noteholders' name and address. If the information provided in the statement changes, the Noteholder shall so inform the Trustee within 30 days of such change. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class B Note (or any one of more predecessor Class B Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Class B Note and of Class B Note issued upon the registration of transfer hereof or in B-2-8 exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class B Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. The term "Company" as used in this Class B Note includes any successor to the Company under the Indenture. The Class B Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class B Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class B Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class B Note at the times, place, and rate, and in the coin or currency herein prescribed. Prior to the Exchange Date (as defined below), payments (if any) on this Temporary Global Note will only be paid to the extent that there is presented by Clearstream Banking, societe anonyme ("Clearstream") or Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") to the Trustee at its office in London a certificate, substantially in the form set out in Exhibit F to the Base Indenture, to the effect that it has received from or in respect of a person entitled to a Note (as shown by its records) a certificate from such person in or substantially in the form of Exhibit G to the Base Indenture. After the Exchange Date the holder of this Temporary Global Note will not be entitled to receive any payment hereon, until this Temporary Global Note is exchanged in full for a Permanent Global Note. This Temporary Global Note shall in all other respects be entitled to the same benefits as the Permanent Global Notes under the Indenture. On or after the date (the "Exchange Date") which is the date that is the 40th Day after the completion of the distribution of the relevant Series, interests in this Temporary Global Note may be exchanged (free of charge) for interests in a Permanent Global Note in the form of Exhibit B-3 to the Series 2001-3 Supplement upon presentation of this Temporary Global Note at the office in London of the Trustee (or at such other place outside the United States of America, its territories and possessions as the Trustee may agree). The Permanent Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Global Note in respect of which there shall have been presented to the Trustee by Euroclear or Clearstream a certificate, substantially in the form set out in Exhibit F to the Base Indenture, to the effect that it has received from or in respect of a person entitled to a Note (as shown by its records) a certificate from such person in or substantially in the form of Exhibit G to the Base Indenture. On an exchange of the whole of this Temporary Global Note, this Temporary Global Note shall be surrendered to the Trustee at its office in London. On an exchange of part only of B-2-9 this Temporary Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule A hereto and the relevant space in Schedule A hereto recording such exchange shall be signed by or on behalf of the Issuer. If, following the issue of a Permanent Global Note in exchange for some of the Notes represented by this Temporary Global Note, further Notes of this Series are to be exchanged pursuant to this paragraph, such exchange may be effected, without the issue of a new Permanent Global Note, by the issuer or its agent endorsing Part I of Schedule A of the Permanent Global Note previously issued to reflect an increase in the aggregate principal amount of such Permanent Global Note by an amount equal to the aggregate principal amount of the additional Notes of this Series to be exchanged, Interests in this Temporary Global Note will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream. Each person who is shown in the records of Euroclear and Clearstream as entitled to a particular number of Notes by way of an interest in this Temporary Global Note will be treated by the Issuer, the Trustee and any paying agent as the holder of such number of Notes. For purposes of this Temporary Global Note, the securities account records of Euroclear or Clearstream shall, in the absence of manifest effort be conclusive evidence of the identity of the holders of Notes and of the principal amount of Notes represented by this Temporary Global Note credited to the securities accounts of such holders of Notes. Any statement issued by Euroclear or Clearstream to any holder relating to a specified Note or Notes credited to the securities account of such holder and stating the principal amount of such Note or Notes and certified by Euroclear or Clearstream to be a true record of such securities account shall, in the absence of manifest error, be conclusive evidence of the records of Euroclear or Clearstream for the purposes of the next preceding sentence (but without prejudice to any other means of producing such records in evidence). Notwithstanding any provision to the contrary contained in this Temporary Global Note, the Issuer irrevocably agrees, for the benefit of such holder and its successors and assigns, that, subject to the provisions of the Indenture, each holder or its successors or assigns may file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay any amount due in respect of each Note represented by this Temporary Global Note which is credited to such holder's securities account. B-2-10 SCHEDULE A SCHEDULE OF EXCHANGES FOR NOTES REPRESENTED BY A PERMANENT GLOBAL NOTE The following exchanges of a part of this Temporary Global Note for Notes represented by a Permanent Global Note have been made:
================================================================================= Part of principal amount of this Remaining Temporary Global Principal amount Note exchanged for of this Temporary Notes represented Global Note Notation made by by a Permanent following such or on behalf of Date exchange made Global Note exchange the Issuer - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================
B-2-11 EXHIBIT B-3 TO SERIES 2001-3 SUPPLEMENT FORM OF PERMANENT GLOBAL CLASS B NOTE REGISTERED $[ ]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS B NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS B NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) TN A TRANSACTION TN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OR THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. B-3-1 THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS B NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS B NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS B NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS B NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS B Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [__________________________DOLLARS], which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class B Note shall be due on the Series 2001-3 Termination Date, which is the [__________, 2005] Distribution Date. However, principal with request to the Class B Note may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class B Note at the Class B B-3-2 Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class B Note is paid or made available for payment, on the principal amount of this Class Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class B Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from __________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class B Note shall be paid in the manner specified on the reverse hereof The principal of and interest on this Class B Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class B Note shall be applied first to interest due and payable on this Class B Note as provided above and then to the unpaid principal of this B Note. This Class B Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note , or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class B Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class B Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class B Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, fights, benefits, obligations, proceeds and duties evidenced hereby and the fights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class B Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. B-3-3 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class B Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature B-3-4 [REVERSE OF CLASS B NOTE] This Class B Note is one of a duly authorized issue of Class B Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class B (herein called the "Class B Note"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of __________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class B Notes are subject to all terms of the Indenture. All terms used in this Class B Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class B Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class B Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing __________, 2001. As described above, the entire unpaid principal amount of this Class B Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class B Notes may be paid earlier, as described in the Indenture. All principal payments on the Class B Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class B Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class B Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class B Note (or one or more predecessor Class B Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class B Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments, will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class B Note be submitted for notation of payment. Any reduction in the principal amount of this Class B Note (or any one or more predecessor Class B Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class B Note and of any Class B Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in B-3-5 fall of the then remaining unpaid principal amount of this Class B Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class B Note at the Trustee's principal Corporate Trust and Agency Group. As provided in the Indenture, the Class B Notes are subordinate to the Class A Notes and, accordingly, (i) no payments of principal will be made with respect to this Class B Note until all of the Class A Notes have been paid in full and (ii) no payments of interest will be made with respect to this Class B Note on any given date until all payments of interest under any of the Class A Notes that are due and payable on such date have been paid in full. The Company shall pay interest on overdue installments of interest at the Class B Note Rate to the extent lawful. As provided in the Indenture, the Class B Notes are subject to repurchase by the Issuer in whole, but not in part, on any Distribution Date after which the Class A Notes have been paid in full. If on any such Distribution Date, the Aggregate Principal Balance of the Class B Notes is greater than $[_________], a prepayment premium shall be payable in respect of such Notes as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class B Note may be registered on the Note Register upon surrender of this Class B Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class B Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class B Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class B Note or, in the case of a Note Owner, a beneficial interest in a Class B Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class B Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be B-3-6 fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class B Note, subject to Section 13.18 of the Base Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, Insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class B Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class B Note (as of the date of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class B Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class B Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral, The Noteholders, by the acceptance of this Class B Note, agree to treat this Class B Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. In the event a Noteholder or Note Owner is a nonresident alien, foreign corporation or other non-United States person (a "Foreign Person"), such Foreign Person shall provide to the Trustee at least annually an appropriate statement (on Internal Revenue Service Form W-8BEN or suitable substitute) with respect to United States federal income tax and withholding tax, signed under penalties of perjury, certifying that a beneficial owner of this Note is a Foreign Person and providing the Noteholder's name and address. If the information provided in the statement changes, the Foreign Person shall so inform the Trustee within 30 days of such change. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class B Note (or any one of more predecessor Class B Notes) shall be conclusive and binding upon such Holder and upon all future Holders of B-3-7 this Class B Note and of Class B Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class B Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. The term "Company" as used in this Class B Note includes any successor to the Company under the Indenture. The Class B Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class B Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, fights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class B Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class B Note at the times, place, and rate, and in the coin or currency herein prescribed. Interests in this Permanent Global Note will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream. Each person who is shown in the records of Euroclear and Clearstream as entitled to a particular number of Notes by way of an interest in this Permanent Global Note will be treated by the Trustee and any paying agent as the holder of such number of Notes. For purposes of this Permanent Global Note, the securities account records of Euroclear or Clearstream shall in the absence of manifest error, be conclusive evidence of the identity of the holders of Notes and of the principal amount of Notes represented by this Permanent Global Note credited to the securities accounts of such holders of Notes. Any statement issued by Euroclear or Clearstream to any holder relating to a specified Note or Notes credited to the securities account of such holder and stating the principal amount of such Note or Notes and certified by Euroclear or Clearstream to be a true record of such securities account shall, in the absence of manifest error, be conclusive evidence of the records of Euroclear or Clearstream for the purposes of the next preceding sentence (but without prejudice to any other means of producing such records in evidence). Notwithstanding any provision to the contrary contained in this Permanent Global Note, the Issuer irrevocably agrees, for the benefit of such holder and its successors and assigns, that, subject to the provisions of the Indenture, each holder or its successors or assigns may file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay any amount due in respect of each Note represented by this Permanent Global Note which is credited to such holder's securities account with Euroclear or Clearstream without the production of this Permanent Global Note. Interests in this Permanent Global Note may be exchanged for Definitive Notes subject to the provisions of the Indenture. B-3-8 EXHIBIT C-1 TO SERIES 2001-3 SUPPLEMENT FORM OF RESTRICTED GLOBAL CLASS C NOTE REGISTERED $[__________]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS C NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS C NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OR THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. C-1-1 THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS C NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS C NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS C NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS C NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS C NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS C Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of [__________________________DOLLARS], which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class C Note shall be due on the Series 2001-3 Termination Date, which is the [__________, 2005] Distribution Date. However, principal with request to the Class C Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class C Note, at the Class C C-1-2 Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class C Note is paid or made available for payment, on the principal amount of this Class Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class C Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from __________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class C Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Class C Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class C Note shall be applied first to interest due and payable on this Class C Note as provided above and then to the unpaid principal of this C Note. This Class C Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note, or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class C Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class C Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class C Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class C Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. C-1-3 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class C Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature C-1-4 [REVERSE OF CLASS C NOTE] This Class C Note is one of a duly authorized issue of Class C Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class C (herein called the "Class C Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of _________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class C Notes are subject to all terms of the Indenture. All terms used in this Class C Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class C Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class C Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing ___________, 2001. As described above, the entire unpaid principal amount of this Class C Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class C Notes may be paid earlier, as described in the Indenture. All principal payments on the Class C Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class C Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class C Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class C Note (or one or more predecessor Class C Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class C Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments, will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class C Note be submitted for notation of payment. Any reduction in the principal amount of this Class C Note (or any one or more predecessor Class C Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class C Note and of any Class C Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in C-1-5 full of the then remaining unpaid principal amount of this Class C Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class C Note at the Trustee's principal Corporate Trust Office. As provided in the Indenture, the Class C Notes are subordinate to the Class A Notes and the Class B Notes and, accordingly, (i) no payments of principal will be made with respect to this Class C Note until all of the Class A Notes and the Class B Notes have been paid in full and (ii) no payments of interest will be made with respect to this Class C Note on any given date until all payments of interest under any of the Class A Notes and the Class B Notes that are due and payable on such date have been paid in full. The Company shall pay interest on overdue installments of interest at the Class C Note Rate to the extent lawful. As provided in the Indenture, the Class C Notes are subject to repurchase by the Issuer in whole, but not in part on any Distribution Date on or which the Class A and Class B Notes have been paid in full. If on any such Distribution Date, the Aggregate Principal Balance is greater than $[__________], a prepayment premium shall be payable as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class C Note may be registered on the Note Register upon surrender of this Class C Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class C Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class C Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class C Note or, in the case of a Note Owner, a beneficial interest in a Class C Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class C Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any C-1-6 such Person may have expressly agreed and (b) any such Partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class C Note, subject to Section 13.18 of the Base Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class C Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class C Note (as of the date of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class C Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class C Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class C Note, agree to treat this Class C Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class C Note (or any one of more predecessor Class C Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Class C Note and of any Class C Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class C Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. C-1-7 The term "Company" as used in this Class C Note includes any successor to the Company under the Indenture. The Class C Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class C Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class C Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class C Note at the times, place, and rate, and in the coin or currency herein prescribed. Interests in this Restricted Global Note may be exchanged for Definitive Notes, subject to the provisions of the Indenture. C-1-8 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee _____________________ FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (name and address of assignee) the within Class C Note and all rights thereunder, and hereby irrevocably constitutes and appoints _______________, attorney, to transfer said Class C Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: ____________________________ _______________________________________* Signature Guaranteed: _______________________________________ ___________________________________ - ---------- * NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatsoever. C-1-9 EXHIBIT C-2 TO SERIES 2001-3 SUPPLEMENT FORM OF TEMPORARY GLOBAL CLASS C NOTE REGISTERED $[__________]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] THIS NOTE IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR A PERMANENT GLOBAL NOTE WHICH IS, UNDER CERTAIN CIRCUMSTANCES, IN TURN, EXCHANGEABLE FOR DEFINITIVE NOTES WITHOUT COUPONS. THE RIGHTS ATTACHING TO THIS TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS C NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS C NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OR THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. C-2-1 EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS C NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS C NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS C NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS C NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS C NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. INTERESTS IN THIS TEMPORARY GLOBAL NOTE MAY ONLY BE HELD BY NON U.S. PERSONS AS SUCH TERM IS DEFINED IN REGULATION S OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY ONLY BE HELD IN BOOK-ENTRY FORM THROUGH EUROCLEAR OR CLEARSTREAM. C-2-2 TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS C Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [__________________________DOLLARS], (or such lesser amount as shall be the outstanding principal amount of this Temporary Global Note shown in Schedule A hereto) which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class C Note shall be due on the Series 2001-3 Termination Date, which is the [__________, 2005] Distribution Date. However, principal with request to the Class C Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class C Note at the Class C Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class C Note is paid or made available for payment, on the principal amount of this Class Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class C Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from _________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class C Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Class C Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class C Note shall be applied first to interest due and payable on this Class C Note as provided above and then to the unpaid principal of this Class C Note. This Class C Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note, or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class C Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class C Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class C Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: C-2-3 Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class C Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. C-2-4 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class C Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature C-2-5 [REVERSE OF CLASS C NOTE] This Class C Note is one of a duly authorized issue of Class C Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class C (herein called the "Class C Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of _________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class C Notes are subject to all terms of the Indenture. All terms used in this Class C Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class C Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class C Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing _________, 2001. As described above, the entire unpaid principal amount of this Class C Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class C Notes may be paid earlier, as described in the Indenture. All principal payments on the Class C Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class C Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class C Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class C Note (or one or more predecessor Class C Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class C Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class C Note be submitted for notation of payment. Any reduction in the principal amount of this Class C Note (or any one or more predecessor Class C Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Class C Note and of any Class C Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in C-2-6 full of the then remaining unpaid principal amount of this Class C Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class C Note at the Trustee's principal Corporate Trust Office. As provided in the Indenture, the Class C Notes are subordinate to the Class A Notes and Class B Notes and, accordingly, (i) no payments of principal will be made with respect to this Class C Note until all of the Class A Notes and Class B Notes have been paid in full and (ii) no payments of interest will be made with respect to this Class C Note on any given date until all payments of interest under any of the Class A Notes and Class B Notes that are due and payable on such date have been paid in full. The Company shall pay interest on overdue installments of interest at the Class C Note Rate to the extent lawful. As provided in the Indenture, the Class C Notes are subject to repurchase by the Issuer in whole, but not in part on any Distribution Date on or after which the Class A and Class B Notes have been paid in full. If on any such Distribution Date, the Aggregate Principal Balance is greater than $[_________], a prepayment premium shall be payable as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class C Note may be registered on the Note Register upon surrender of this Class C Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class C Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class C Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class C Note or, in the case of a Note Owner, a beneficial interest in a Class C Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class C Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any C-2-7 such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class C Note, subject to Section 13.18 of the Base Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in full of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class C Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class C Note (as of the date of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class C Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class C Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class C Note, agree to treat this Class C Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. Each Holder of this Note shall provide to the Trustee at least annually an appropriate statement (on Internal Revenue Service Form W-8BEN or suitable substitute) with respect to United States federal income tax and withholding tax, signed under penalties of perjury, certifying that a beneficial owner of this Note is a non U.S. person and providing the Noteholders' name and address. If the information provided in the statement changes, the Noteholder shall so inform the Trustee within 30 days of such change. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class C Note (or any one of more predecessor Class C Notes) shall be conclusive and binding upon such Holder and upon all future Holders of C-2-8 this Class C Note and of Class C Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class C Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. The term "Company" as used in this Class C Note includes any successor to the Company under the Indenture. The Class C Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class C Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, fights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class C Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class C Note at the times, place, and rate, and in the coin or currency herein prescribed. Prior to the Exchange Date (as defined below), payments (if any) on this Temporary Global Note will only be paid to the extent that there is presented by Clearstream Banking, societe anonyme ("Clearstream") or Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") to the Trustee at its office in London a certificate, substantially in the form set out in Exhibit F to the Base Indenture, to the effect that it has received from or in respect of a person entitled to a Note (as shown by its records) a certificate from such person in or substantially in the form of Exhibit G to the Base Indenture. After the Exchange Date the holder of this Temporary Global Note will not be entitled to receive any payment hereon, until this will not be entitled to receive any payment hereon, until this Temporary Global Note is exchanged in full for a Permanent Global Note. This Temporary Global Note shall in all other respects be entitled to the same benefits as the Permanent Global Notes under the Indenture. On or after the date (the "Exchange Date") which is the date that is the 40th Day after the completion of the distribution of the relevant Series, interests in this Temporary Global Note may be exchanged (free of charge) for interests in a Permanent Global Note in the form of Exhibit C-3 to the Series 2001-3 Supplement upon presentation of this Temporary Global Note at the office in London of the Trustee (or at such other place outside the United States of America, its territories and possessions as the Trustee may agree). The permanent Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Global Note at the office in London of the Trustee (or at such other place outside the United States of America, its territories and possessions as the Trustee may agree). The Permanent Global Note shall be so issued and delivered in exchange for only that portion of this Temporary Global Note in respect of which there shall have been presented to the Trustee by Euroclear or Clearstream a certificate, substantially in the form set out in Exhibit F to the Base Indenture, to the effect that it has C-2-9 received from or in respect of a person entitled to a Note (as shown by its records) a certificate from such person in or substantially in the form of Exhibit G to the Base Indenture. On an exchange of the whole of this Temporary Global Note, this Temporary Global Note shall be surrendered to the Trustee at its office in London. On an exchange of part only of this Temporary Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule A hereto and the relevant space in Schedule A hereto recording such exchange shall be signed by or on behalf of the Issuer. If, following the issue of a Permanent Global Note in exchange for some of the Notes represented by this Temporary Global Note, further Notes of this Series are to be exchanged pursuant to this paragraph, such exchange may be effected, without the issue of a new Permanent Global Note, by the issuer or its agent endorsing Part I of Schedule A of the Permanent Global Note previously issued to reflect an increase in the aggregate principal amount of such Permanent Global Note by an amount equal to the aggregate principal amount of the additional Notes of this Series to be exchanged. Interests in this Temporary Global Note will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream. Each person who is shown in the records of Euroclear and Clearstream as entitled to a particular number of Notes by way of an interest in this Temporary Global Note will be treated by the Issuer, the Trustee and any paying agent as the holder of such number of Notes. For purposes of this Temporary Global Note, the securities account records of Euroclear or Clearstream shall in the absence of manifest error, be conclusive evidence of the identity of the holders of Notes and of the principal amount of Notes represented by this Temporary Global Note credited to the securities accounts of such holders of Notes. Any statement issued by Euroclear or Clearstream to any holder relating to a specified Note or Notes credited to the securities account of such holder and stating the principal amount of such Note or Notes and certified by Euroclear or Clearstream to be a true record of such securities account shall, in the absence of manifest error, be conclusive evidence of the records of Euroclear or Clearstream for the purposes of the next preceding sentence (but without prejudice to any other means of producing such records in evidence). Notwithstanding any provision to the contrary contained in this Temporary Global Note, the Issuer irrevocably agrees, for the benefit of such holder and its successors and assigns, that, subject to the provisions of the Indenture, each holder or its successors or assigns may file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay any amount due in respect of each Note represented by this Temporary Global Note which is credited to such holder's securities account. C-2-10 SCHEDULE A SCHEDULE OF EXCHANGES FOR NOTES REPRESENTED BY A PERMANENT GLOBAL NOTE The following exchanges of a part of this Temporary Global Note for Notes represented by a Permanent Global Note have been made:
================================================================================= Part of principal amount of this Remaining Temporary Global Principal amount Note exchanged for of this Temporary Notes represented Global Note Notation made by by a Permanent following such or on behalf of Date exchange made Global Note exchange the Issuer - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================
C-2-11 EXHIBIT C-3 TO SERIES 2001-3 SUPPLEMENT FORM OF PERMANENT GLOBAL CLASS C NOTE REGISTERED $[__________]* No. R-[ ] SEE REVERSE FOR CERTAIN CONDITIONS CUSIP (CINS) NO. [ ] ISIN NO. [ ] TIES SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT-2") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CLASS C NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION (THE "COMPANY") THAT THIS CLASS C NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO THE COMPANY (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A NON U.S. PERSON (AS SUCH TERM IS DEFINED TN REGULATION S OF THE SECURITIES ACT) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S OF THE SECURITIES ACT, OR (4) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OR THE UNITED STATES OR ANY OTHER JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS SET FORTH ABOVE. EACH NOTEHOLDER OR NOTE OWNER, BY ACCEPTANCE OF A NOTE OR, IN THE CASE OF A NOTE OWNER, A BENEFICIAL INTEREST IN A NOTE, REPRESENTS AND WARRANTS THAT EITHER (I) IT IS NOT, AND IS NOT ACQUIRING SUCH NOTE WITH THE ASSETS OF, A PENSION, PROFIT SHARING, OR OTHER RETIREMENT PLAN OR ACCOUNT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR AN ENTITY - ---------- * Denominations of $1,000,000 and integral multiples of $1,000. C-3-1 THAT IS DEEMED TO HOLD ASSETS OF ANY OF THE FOREGOING, OR A GOVERNMENTAL, FOREIGN, OR CHURCH PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE, OR (II) ITS PURCHASE AND HOLDING OF THESE NOTES WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A GOVERNMENTAL, FOREIGN OR CHURCH PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW) BECAUSE SUCH PURCHASE AND HOLDING OF SUCH NOTE EITHER (A) IS NOT, AND WILL NOT BECOME, SUBJECT TO SUCH LAWS OR (B) IS COVERED BY AN EXEMPTION FROM ALL APPLICABLE PROHIBITED TRANSACTIONS, ALL OF THE CONDITIONS OF WHICH ARE AND WILL BE SATISFIED UPON ITS ACQUISITION OF AND THROUGHOUT THE TERM THAT IT HOLDS SUCH NOTE. EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.18 OF THE BASE INDENTURE, THIS CLASS C NOTE MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE CLEARING AGENCY OR TO A SUCCESSOR CLEARING AGENCY OR TO A NOMINEE OF SUCH SUCCESSOR CLEARING AGENCY. UNLESS THIS CLASS C NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS C NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PRINCIPAL OF THIS CLASS C NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS C NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TEAM FLEET FINANCING CORPORATION FLOATING RATE RENTAL CAR ASSET BACKED NOTES, CLASS C Team Fleet Financing Corporation, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of [__________________________DOLLARS], which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Class C Note shall be due on the Series 2001-3 Termination Date, which is the [__________, 2005] Distribution Date. However, principal with request to the Class C Notes may be paid earlier or later under certain limited circumstances described in the Indenture. The Company will pay interest on this Class C Note at the Class C C-3-2 Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Class C Note is paid or made available for payment, on the principal amount of this Class Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date). Interest on this Class C Note will accrue for each Distribution Date from the most recent Distribution Date on which interest has been paid to but excluding such Distribution Date or, if no interest has yet been paid, from _________, 2001. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Class C Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Class C Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Company with respect to this Class C Note shall be applied first to interest due and payable on this Class C Note as provided above and then to the unpaid principal of this Class C Note. This Class C Note does not represent an interest in, or an obligation of, the Servicer, or any affiliate of the Servicer other than the Company. Interests in this Note are exchangeable or transferable in whole or in part for interests in a Restricted Global Note if this Note is a Temporary Global Note or a Permanent Global Note , or for interests in a Temporary Global Note or a Permanent Global Note if this Note is a Restricted Global Note (each as defined in the Base Indenture), in each case of the same Series and class, provided that such transfer or exchange complies with Article 2 of the Base Indenture. Interests in this Note may be exchangeable in whole or in part for duly executed and issued definitive registered Notes if so provided in Article 2 of the Base Indenture, with the applicable legends as marked therein, subject to the provisions of the Base Indenture. Reference is made to the further provisions of this Class C Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class C Note. Although a summary of certain provisions of the Indenture are set forth below and on the reverse hereof and made a part hereof, this Class C Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at 4 Albany Street, New York, New York 10006, Attn: Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class C Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. C-3-3 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: _________________, 2001 TEAM FLEET FINANCING CORPORATION By: _____________________________________ Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Class C Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: _____________________________________ Authorized Signature C-3-4 [REVERSE OF CLASS C NOTE] This Class C Note is one of a duly authorized issue of Class C Notes of the Company, designated as its Floating Rate Rental Car Asset Backed Notes, Class C (herein called the "Class C Notes"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as amended or modified, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., as servicer (the "Servicer") and as Budget Interestholder (in such capacity, the "Budget Interestholder") and Bankers Trust Company, as trustee (the "Trustee", which term includes any successor Trustee under the Base Indenture), and (ii) a Series 2001-3 Supplement, dated as of _________, 2001 (the "Series 2001-3 Supplement"), among the Company, the Servicer, the Budget Interestholder and the Trustee. The Base Indenture and the Series 2001-3 Supplement are referred to herein as the "Indenture". The Class C Notes are subject to all terms of the Indenture. All terms used in this Class C Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so supplemented or amended. The Class C Notes are and will be secured by the Series 2001-3 Collateral pledged as security therefor as provided in the Indenture and the Series 2001-3 Supplement. Principal of the Class C Notes will be payable on each Distribution Date in an amount described in the Indenture. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing _________, 2001. As described above, the entire unpaid principal amount of this Class C Note shall be due and payable on the Series 2001-3 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default, Waiver Event or Series 2001-3 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Class C Notes may be paid earlier, as described in the Indenture. All principal payments on the Class C Notes shall be made pro rata to the Noteholders entitled thereto. Payments of interest on this Class C Note due and payable on each Distribution Date, together with the installment of principal then due, if any, to the extent not in full payment of this Class C Note, shall be made by check mailed first class to the Person whose name appears as the Holder of record of this Class C Note (or one or more predecessor Class C Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Class C Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Class C Note be submitted for notation of payment. Any reduction in the principal amount of this Class C Note (or any one or more predecessor Class C Notes) effected. by any payments made on any Distribution Date shall be binding upon all future Holders of this Class C Note and of any Class C Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted thereon. If funds are expected to be available, as provided in the Indenture, for payment in C-3-5 full of the then remaining unpaid principal amount of this Class C Note on a Distribution Date, then the Trustee, in the name of and on behalf of the Company, will notify the Person who was the registered Holder hereof as of the Record Date preceding such Distribution Date by notice mailed within five days of such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Class C Note at the Trustee's principal Corporate Trust and Agency Group. As provided in the Indenture, the Class C Notes are subordinate to the Class A Notes and Class B Notes and, accordingly, (i) no payments of principal will be made with respect to this Class C Note until all of the Class A Notes and Class B Notes have been paid in full and (ii) no payments of interest will be made with respect to this Class C Note on any given date until all payments of interest under any of the Class A Notes and Class B Notes that are due and payable on such date have been paid in full. The Company shall pay interest on overdue installments of interest at the Class C Note Rate to the extent lawful. As provided in the Indenture, the Class C Notes are subject to repurchase by the Issuer in whole, but not in part on any Distribution Date on or after which the Class A Notes and Class B Notes have been paid in full. If on any such Distribution Date, the Aggregate Principal Balance is greater than $[_________], a prepayment premium shall be payable as set forth in the Series 2001-3 Supplement. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class C Note may be registered on the Note Register upon surrender of this Class C Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by, the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in The City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Trustee may reasonably require, and thereupon one or more new Class C Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class C Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Class C Note or, in the case of a Note Owner, a beneficial interest in a Class C Note covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Company, the Servicer or the Trustee on the Class C Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee or the Servicer in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee or the Servicer in its individual capacity, any holder of a beneficial interest in the Company, the Servicer or the Trustee or of any successor or assign of the Trustee or the Servicer in its individual capacity, except (a) as any C-3-6 such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Class C Note, subject to Section 13.18 of the Base Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note covenants and agrees that by accepting the benefits of the Indenture that such Noteholder will not for a period of one year and one day following payment in fall of all Notes institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Class C Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Class C Note (as of the date of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Class C Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and the Noteholders that, for Federal, state and local income and franchise tax purposes, the Class C Notes will evidence indebtedness of the Company secured by the Series 2001-3 Collateral. The Noteholders, by the acceptance of this Class C Note, agree to treat this Class C Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. In the event a Noteholder or Note Owner is a nonresident alien, foreign corporation or other non-United States person (a "Foreign Person"), such Foreign Person shall provide to the Trustee at least annually an appropriate statement (on Internal Revenue Service Form W-8BEN or suitable substitute) with respect to United States federal income tax and withholding tax, signed under penalties of perjury, certifying that a beneficial owner of this Note is a Foreign Person and providing the Noteholder's name and address. If the information provided in the statement changes, the Foreign Person shall so inform the Trustee within 30 days of such change. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-3 Notes under the Indenture at any time by the Company with the consent of the Holders of Series 2001-3 Notes representing more than 50% in principal amount of the Outstanding Series 2001-3 Notes which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-3 Notes representing specified percentages of the Outstanding Series 2001-3 Notes, on behalf of the Holders of all the Series 2001-3 Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class C Note (or any one of more predecessor C-3-7 Class C Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Class C Note and of Class C Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class C Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-3 Notes issued thereunder. The term "Company" as used in this Class C Note includes any successor to the Company under the Indenture. The Class C Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. This Class C Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. No reference herein to the Indenture and no provision of this Class C Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Class C Note at the times, place, and rate, and in the coin or currency herein prescribed Interests in this Permanent Global Note will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream. Each person who is shown in the records of Euroclear and Clearstream as entitled to a particular number of Notes by way of an interest in this Permanent Global Note will be treated by the Trustee and any paying agent as the holder of such number of Notes. For purposes of this Permanent Global Note, the securities account records of Euroclear or Clearstream shall in the absence of manifest error, be conclusive evidence of the identity of the holders of Notes and of the principal amount of Notes represented by this Permanent Global Note credited to the securities accounts of such holders of Notes. Any statement issued by Euroclear or Clearstream to any holder relating to a specified Note or Notes credited to the securities account of such holder and stating the principal amount of such Note or Notes and certified by Euroclear or Clearstream to be a true record of such securities account shall, in the absence of manifest error, be conclusive evidence of the records of Euroclear or Clearstream for the purposes of the next preceding sentence (but without prejudice to any other means of producing such records in evidence). Notwithstanding any provision to the contrary contained in this Permanent Global Note, the Issuer irrevocably agrees, for the benefit of such holder and its successors and assigns, that, subject to the provisions of the Indenture, each holder or its successors or assigns may file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay any amount due in respect of each Note represented by this Permanent Global Note which is credited to such holder's securities account with Euroclear or Clearstream without the production of this Permanent Global Note. Interests in this Permanent Global Note may be exchanged for Definitive Notes subject to the provisions of the Indenture. C-3-8 EXHIBIT D TO SERIES 2001-3 SUPPLEMENT FORM OF CONSENT Bankers Trust Company, as Trustee 4 Albany Street New York, NY 10006 Attn: Corporate Trust and Agency Group Team Fleet Financing Corporation 4225 Naperville Road Lisle, Illinois 60532 Attn: Treasurer This Consent is delivered pursuant to the Change of Percentage Notice, dated _______________, 20__ (the "Notice") and the Series 2001-3 Supplement, dated as of _________, 2001 (as amended, modified or supplemented from time to time, the "Series 2001-3 Supplement") among Team Fleet Financing Corporation, a Delaware corporation, Budget Group, Inc. and Bankers Trust Company, a New York banking corporation ("Trustee"). Terms used herein have the meaning provided in the Series 2001-3 Supplement. Pursuant to Article 5 of the Series 2001-3 Supplement, the Trustee has delivered a Notice indicating that there be an adjustment of either the Maximum Manufacturer Percentage with respect to any Eligible Manufacturer or the Maximum Type II Repurchase Percentage with respect to Group V Type II Repurchase Vehicles. The undersigned understands that this consent will only be effective if the Trustee receives Consents from Noteholders representing not less than 25% of the aggregate unpaid principal amount of the Class A Notes on or before _______________, 20__. The undersigned hereby represents and warrants that it is the beneficial owner of $______________ in the principal amount of Class [A][B][C] Notes. [Name] By:_______________________________________ D-1 EXHIBIT E TO SERIES 2001-3 SUPPLEMENT EXHIBIT A-6 TO BASE INDENTURE FORM OF TRANSFER CERTIFICATE FOR TRANSFER OR EXCHANGE FROM PERMANENT GLOBAL NOTE TO RESTRICTED GLOBAL NOTE (exchanges or transfers pursuant to Section 2.9 of the Base Indenture) BANKERS TRUST COMPANY, as Trustee 4 Albany Street New York, New York 10006 Re: Team Fleet Financing Corporation ("TFFC") Rental Car Asset Backed Medium Term Notes Reference is hereby made to the Amended and Restated Base Indenture, dated as of December 1, 1996 (the "Base Indenture"), among TFFC, Team Rental Group, Inc., as Servicer, and Bankers Trust Company, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. This letter relates to _________________ principal amount of Series ___ Notes which are held in the form of the Permanent Global Series ___ Note (CUSIP (CINS) No. __) with Euroclear/Cedel* (ISIN Code | |) (Common Code (| |) through DTC by or on behalf of [transferor] as beneficial owner (the "Transferor"). The Transferor has requested an exchange or transfer of its beneficial interest in the Series ___ Notes for an interest in the Restricted Global Series ___ Note (CUSIP No. [| |). In connection with such request, and in respect of such Series ____ Notes, the Transferor does hereby certify that such Series ____ Notes are being transferred in accordance with Rule l44A under the United States Securities Act of 1933, as amended (the "Securities Act") to a transferee that the Transferor reasonably believes is purchasing the Series ___ Notes for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a "qualified institutional buyer" within the meaning of Rule 144A, in each case in a transaction meeting the requirements of Rule l44A and in accordance with any applicable securities laws of any state of the United States or any other Jurisdiction. - ---------- * Select appropriate depositary. E-1 This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer and the Dealers. [Insert Name of Transferor] By: _______________________________________ Name: Title: Dated: E-2 EX-4.42 4 g74374ex4-42.txt SERIES 2001-4 SUPPLEMENT EXHIBIT 4.42 SERIES 2001-4 SUPPLEMENT dated as of November 13, 2001 to the AMENDED AND RESTATED BASE INDENTURE dated as of December 1, 1996 among TEAM FLEET FINANCING CORPORATION, the Issuer BUDGET GROUP, INC. the Servicer BUDGET GROUP, INC., the Budget Interestholder and BANKERS TRUST COMPANY, the Trustee TABLE OF CONTENTS
PAGE PRELIMINARY STATEMENT .......................................................... 1 Article 1 DESIGNATION .......................................................... 1 Section 2.1 Incorporation of Schedule 1, etc ............................. 3 Section 2.2 Defined Terms ................................................ 3 Article 3 SECURITY; REPORTS; COVENANT .......................................... 22 Section 3.1 Grant of Security Interest ................................... 22 Section 3.2 Reports ...................................................... 24 Article 4 INITIAL ISSUANCE AND INCREASES AND DECREASES OF SERIES 2001-4 INVESTED AMOUNT OF SERIES 2001-4 NOTE ......................... 24 Section 4.1 Issuance in Definitive Form .................................. 24 Section 4.2 Procedure for Increasing the Invested Amount ................. 25 Section 4.3 Decreases .................................................... 26 Article 5 SERIES 2001-4 ALLOCATIONS ............................................ 27 Section 5.1 Establishment of the Group IV Collection Account, Series 2001-4 Collection Account and Series 2001-4 Accrued Interest Account ............................................. 28 Section 5.2 Allocations with Respect to the Series 2001-4 Note ........... 28 Section 5.3 Withdrawals from the Series 2001-4 Accrued Interest Account ...................................................... 33 Section 5.4 Payment of Note Interest and Carrying Charges ................ 34 Section 5.5 Payment of Note Principal; Transfers to Budget Distribution Account ......................................... 35 Section 5.6 Servicer's or Budget's Failure to Make a Deposit or Payment .. 36 Section 5.7 Series 2001-4 Distribution Account ........................... 36 Article 6 AMORTIZATION EVENTS .................................................. 37 Section 6.1 Amortization Events .......................................... 37 Section 6.2 Special Limitation on Exercise of Remedies ................... 38 Article 7 GENERAL .............................................................. 38
Exhibit A - Form of Series 2001-4 Note Exhibit B - List of Approved Manufacturers i TABLE OF CONTENTS (CONTINUED)
PAGE
ii Series 2001-4 Supplement, dated as of November 13, 2001 (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and of the Base Indenture referred to below, this "Supplement"), among Team Fleet Financing Corporation, a Delaware corporation ("TFFC" or the "Issuer"), Budget Group, Inc. ("Budget"), a Delaware corporation formerly known as Team Rental Group, Inc. ("Team"), as the Servicer (in such capacity, the "Servicer"), Budget, as the holder of the Budget Interest (in such capacity, the "Budget Interestholder") and Bankers Trust Company, a banking corporation organized and existing under the laws of the State of New York, as Trustee (the "Trustee") under the Amended and Restated Base Indenture, dated as of December 1, 1996, among TFFC, Team and the Trustee (as amended, supplemented or otherwise modified from time to time, exclusive of Supplements creating a new Series of Notes, the "Base Indenture"). PRELIMINARY STATEMENT WHEREAS, Sections 2.2 and 12.1 of the Base Indenture provide, among other things, that TFFC, the Servicer and the Trustee may at any time and from time to time enter into a supplement to the Base Indenture for the purpose of authorizing the issuance of one or more Series of Notes. WHEREAS, all conditions precedent as set forth in such Sections with respect to entering into a supplement to the Base Indenture have been satisfied. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE 1 DESIGNATION (a) There is hereby created a Series of Notes to be issued in one class pursuant to the Base Indenture and this Supplement and such Series of Notes (as defined below) shall be designated generally as the Variable Funding Rental Car Asset Backed Note, Series 2001-4 and is referred to as the "Series 2001-4 Note." (b) The proceeds from the sale of and Increases in respect of the Series 2001-4 Note shall be deposited in the Series 2001-4 Collection Account, and such proceeds shall be available to TFFC and used (i) on and after the Series 2001-4 Issuance Date, to finance the acquisition by the Issuer and the Lessees of, or to refinance, Financed Vehicles manufactured by certain Eligible Manufacturers and Eligible Receivables and (ii) on and after the Series 2001-4 Issuance Date, to acquire or refinance Lessor-Owned Vehicles manufactured by certain Eligible Manufacturers. (c) The Series 2001-4 Note is a Segregated Series of Notes (as more fully described in the Base Indenture) and is hereby designated as a "Group IV Series of Notes". Accordingly, the Series 2001-4 Note (and each other Group IV Series of Notes) shall be secured solely by the Group IV Collateral and any other collateral designated as security for the Series 2001-4 Note (and, as applicable, any other Group IV Series of Notes) under this Supplement or any other Supplement and will not be secured by any other collateral. The Issuer may from time to time issue additional Segregated Series of Notes that the related Series Supplements will indicate are entitled to share, together with the Series 2001-4 Note, the Group IV Collateral and any other collateral designated as security for the Group IV Series of Notes under this Supplement or any other related Series Supplement (the Series 2001-4 Note and any such additional Segregated Series, each, a "Group IV Series of Notes" and, collectively, the "Group IV Series of Notes"). Accordingly, all references in this Supplement to "all" Series of Notes (and all references in this Supplement to terms defined in the Base Indenture that contain references to "all" Series of Notes) shall, unless the context otherwise requires, refer solely to all Group IV Series of Notes. (d) If, notwithstanding the provisions of clause (c) above, the Series 2001-4 Note is deemed by any court to be secured by collateral other than the Group IV Collateral and any other collateral designated as security for the Series 2001-4 Note (and, as applicable, any other Series of Group IV Notes) under this Supplement or any other Supplement ("Non-Group IV Collateral"), then the interest of the Series 2001-4 Noteholders in such Non-Group IV Collateral shall be subordinate in all respects to the interest of the Noteholders of the Series to which such Non-Group IV Collateral was pledged by the terms of the Indenture. The following shall govern the interpretation and construction of the provisions of this Supplement: (i) this Supplement is intended to constitute a subordination agreement under New York law and for purposes of Section 510(a) of the Bankruptcy Code, (ii) the subordination provided for in this Supplement is intended to and shall be deemed to constitute a "complete subordination" under New York law, and, as such, shall be applicable whether or not the Issuer or any Series 2001-4 Noteholder is a debtor in a case (a "bankruptcy case") under the Bankruptcy Code (or any amended or successor version thereof), (iii) (A) any reference to the Series 2001-4 Note shall include all obligations of the Issuer now or hereafter existing under each such Series 2001-4 Note, whether for principal, interest, fees, expenses or otherwise, and (B) without limiting the generality of the foregoing, "interest" owing on the Series 2001-4 Note shall expressly include any and all interest accruing after the commencement of any bankruptcy case or other insolvency proceeding where the Issuer is the debtor, notwithstanding any provision or rule of law (including, without limitation, 11 U.S.C. Sections 502, 506(b) (1994) (or any amended or successor version thereof)) that might restrict the rights of any holder of an interest in the Series 2001-4 Note, as against the Issuer or any one else, to collect such interest, (iv) "payments" prohibited under the subordination provisions of this Supplement shall include any distributions of any type, whether cash, other debt instruments, or any equity instruments, regardless of the source thereof, and (v) the holder of any interest in the Series 2001-4 Note retains such holder's right, under 11 U.S.C. Section 1126 (1994) (or any amended or successor version thereof), to vote to accept or reject any plan of reorganization proposed for the Issuer in any subsequent bankruptcy of the Issuer; provided, however, that, regardless of any such vote or of the exercise of any other rights such holder (or its agents) may have under the Bankruptcy Code, and without limiting the generality of the other clauses of this clause (d), any distributions 2 that such holder is to receive on account of such holder's interest in the Series 2001-4 Note under any such plan of reorganization, from the Issuer, from any collateral, from any guarantor, or from any other source shall be subordinated in right of payment as set forth herein and shall instead be distributed in the order of priority set forth herein. ARTICLE 2 DEFINITIONS Section 2.1 Incorporation of Schedule 1, etc. All capitalized terms not otherwise defined herein shall have the meaning set forth therefor in Schedule 1 to the Base Indenture, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Base Indenture. All Article, Section or Subsection references herein shall refer to Articles, Sections or Subsections of the Base Indenture, except as otherwise provided herein. Unless otherwise stated herein, as the context otherwise requires or if such term is otherwise defined in the Base Indenture, each capitalized term used or defined herein shall relate only to the Series 2001-4 Note and not to any other Series of Notes issued by TFFC. Section 2.2 Defined Terms. The following words and phrases, unless otherwise defined in the Series 2001-4 Note Purchase Agreement, shall have the following meanings with respect to the Series 2001-4 Note and the definitions of such terms are applicable to the singular as well as the plural form of such terms and to the masculine as well as the feminine and neuter genders of such terms: "Accounts" means the Collection Account, the Group IV Collection Account, the Series 2001-4 Collection Account, the Series 2001-4 Distribution Account and each collection account for each other Group IV Series of Notes. "Accrued Amounts" means, with respect to any Group IV Series of Notes (or any class of such Series of Notes), on any date of determination, the sum of (i) accrued and unpaid interest on the Notes of such Series of Notes (or the applicable class thereof), (ii) the portion of the accrued and unpaid Monthly Servicing Fee (and any Supplemental Servicing Fee) allocated to such Series of Notes (or the applicable class thereof) pursuant to the Indenture on such date, and (iii) the product of (A) all other accrued and unpaid fees and expenses of the Issuer on such date, and (B) a fraction, the numerator of which is the Invested Amount of such Series of Notes (or the applicable class thereof) on such date and the denominator of which is the aggregate Invested Amount of all Series of Notes including non-segregated Series of Notes) on such date. "Additional Distribution Date" has the meaning specified in Section 5.3(b)(ii). "Additional Fees" means, with respect to any Series 2001-4 Interest Period, the aggregate amount of fees, if any, under the Note Purchase Agreement then in effect which have accrued during such Series 2001-4 Interest Period and which are payable by TFFC in respect of the Series 2001-4 Note, in each case solely to the extent such fees are 3 not included in the calculation of the Series 2001-4 Note Rate for any Series 2001-4 Interest Period. "Advance" has the meaning specified in the Series 2001-4 Note Purchase Agreement. "Agent" means Deutsche Bank AG, New York Branch and its permitted successors and/or assigns. "Aggregate Asset Amount" means, with respect to the Group IV Series of Notes, for any date of determination, the sum, rounded to the nearest $100,000, of (i) the Aggregate Group IV Repurchase Asset Amount and (ii) cash and Permitted Investments on deposit in the Collection Account and Group IV Collection Account allocable to the Group IV Series of Notes. "Aggregate Group IV Repurchase Asset Amount" means, for any date of determination, the sum (without duplication), rounded to the nearest $100,000, of (i) the Net Book Value of all Group IV Repurchase Vehicles that are Eligible Vehicles leased under the Group IV Master Lease as of such date and not turned in to the Manufacturer thereof pursuant to its Repurchase Program or not otherwise sold or deemed to be sold under the Related Documents, plus (ii) all amounts receivable as of such date from Manufacturers under Repurchase Programs with respect to Group IV Repurchase Vehicles turned in to such Manufacturers pursuant to any such Repurchase Program or delivered to an authorized auction, pursuant to any Repurchase Program, other than any such amounts which have become Losses, plus (iii) all Auction Receivables due with respect to the disposition of Group IV Repurchase Vehicles as of such date from any Auction Dealer with respect to Group IV Repurchase Vehicles, other than any such amounts which have become Losses, plus (iv) the aggregate amount of Eligible Receivables as of such date, other than any such amounts which have become Losses, plus (v) with regard to Group IV Repurchase Vehicles that have been turned in to the Manufacturer or otherwise sold, any accrued and unpaid Base Rent under the Group IV Master Lease with respect to such Group IV Repurchase Vehicles (net of amounts set forth in clauses (ii), (iii) and (iv) above), other than any such amounts which have become Losses. "Aggregate Principal Balance" means, for any date of determination, with respect to any Group IV Series of Notes, the aggregate unpaid principal amount of such Group IV Series of Notes as of such date (without giving effect to any reduction thereof ordered by a court in any insolvency or other similar proceeding, including, without limitation, by reason of any cram-down, rejection or other action). "Asset Amount Deficiency" with respect to the Series 2001-4 Note shall mean a Series 2001-4 Asset Amount Deficiency and with respect to any other Group IV Series of Notes, shall have the meaning specified in the related Series Supplement. 4 "Auction Dealer" means a Manufacturer-approved auction dealer under an Eligible Repurchase Program which is a guaranteed depreciation program. "Auction Receivable" means a legal, valid and binding receivable due from an Auction Dealer to TFFC or a Lessee in respect of Group IV Vehicles sold at an auction conducted by or through or arranged by the Manufacturer pursuant to its Eligible Repurchase Program which is a guaranteed depreciation program. "Base Amount" means, as of any date of determination, the sum of the Net Book Values of all Financed Vehicles leased under the Finance Lease as of such date, each such Net Book Value calculated as of the first day contained within both the calendar month in which such date of determination occurs and the Vehicle Term for the related Financed Vehicle, plus all accrued and unpaid Monthly Base Rent thereunder as of such date. "Base Indenture" has the meaning set forth in the preamble. "BRACC" means Budget Rent A Car Corporation, a Delaware corporation. "Budget" has the meaning set forth in the preamble. "Budget Interest" means the transferable indirect interest in TFFC's assets held by the Budget Interestholder to the extent relating to the Group IV Collateral, including the right to receive payments with respect to such collateral in respect of the Budget Interest Amount. "Budget Interest Amount" means, on any date of determination, the amount, if any, by which the Aggregate Asset Amount at the end of the day immediately prior to such date of determination exceeds the Required Asset Amount at the end of such day. "Budget Interest Percentage" means, on any date of determination, when used with respect to Group IV Collections that are Principal Collections, Recoveries, Losses and other amounts, an amount equal to one hundred percent (100%) minus the sum of (i) the invested percentages for all outstanding Group IV Series of Notes including all classes of such Series of Notes and (ii) the available subordinated amount percentages for all Group IV Series of Notes that provide for credit enhancement in the form of overcollateralization, in each case as such percentages are calculated on such date with respect to Group IV Collections that are Principal Collections, Recoveries, Losses and other amounts, as applicable. "Budget Interestholder" means Budget, as owner of all outstanding capital stock of TFFC, or any permitted successor or assign. "Casualty Payment" has the meaning specified in Section 6 of the Group IV Master Lease. "Closing Date" means November 13, 2001. 5 "Collateral" means the Group IV Collateral and the Series 2001-4 Collateral. "Collections" means Group IV Collections and all other Series 2001-4 Collections. "Committed Note Purchaser" means Deutsche Bank AG, New York Branch and its permitted successors and/or assigns. "Conduit" has the meaning specified in the Series 2001-4 Note Purchase Agreement. "Consolidated Subsidiary" means, at any time, with respect to Budget, any Subsidiary or other entity the accounts of which would be consolidated with those of Budget, in its consolidated financial statements as of such time. "Credit Agreement" means, the Amended and Restated Credit Agreement among Budget, as borrower, certain financial institutions, as the lenders, Credit Suisse First Boston, as administrative agent, dated as of June 19, 1998, as amended by the First Amendment to Amended and Restated Credit Agreement, dated as of September 11, 1998, as amended by the Second Amendment to Amended and Restated Credit Agreement, dated as of March 19, 1999, as amended by the Third Amendment to Amended and Restated Credit Agreement, dated as of December 22, 1999, as amended by the Fourth Amendment to Amended and Restated Credit Agreement, dated as of September 30, 2000, as amended by the Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001, as amended by the Sixth Amendment to Amended and Restated Credit Agreement, dated as of February 9, 2001, as modified by the Waiver and Consent to Amended and Restated Credit Agreement, dated as of March 29, 2001, as amended by the Seventh Amendment to Amended and Restated Credit Agreement, dated as of June 19, 2001, and as amended by the Eighth Amendment to Amended and Restated Credit Agreement, dated as of July 31, 2001. "Daily Interest Amount" means, for any day in a Series 2001-4 Interest Period, an amount equal to (a) the product of (i) the Series 2001-4 Note Rate for such Series 2001-4 Interest Period and (ii) the Aggregate Principal Balance of the Series 2001-4 Note as of the close of business on such date, divided by (b) 360. "DaimlerChrysler" means DaimlerChrysler Corporation. "Decrease" means a Voluntary Decrease or a Mandatory Decrease, as applicable. "Demand Note" means an intercompany demand note made on or after the Series 2001-4 Issuance Date by Budget in favor of the Issuer with respect to the Series 2001-4 Note. "Deposit Date" has the meaning specified in Section 5.2 of this Supplement. "Determination Date" means the second Business Day prior to each Distribution Date. 6 "Disposition Date" means, with respect to any Group IV Repurchase Vehicle, (i) if such Group IV Vehicle was sold at auction or returned to a Manufacturer for repurchase, pursuant to the applicable Repurchase Program, the date on which such Group IV Vehicle was sold at auction or accepted for return by such Manufacturer or its agent and, in each case, the Depreciation Charges ceased to accrue pursuant to such Repurchase Program, or (ii) if such Group IV Vehicle was sold to any Person (other than to a Manufacturer pursuant to such Manufacturer's Repurchase Program or to a third party through an auction conducted by or through or arranged by the Manufacturer pursuant to its Repurchase Program), the date on which title to the Group IV Repurchase Vehicle was transferred in connection with such sale or other disposition. "Disposition Losses" means the aggregate of all Series 2001-4 Repurchase Losses defined in clauses (b) and (c) of the definition thereof. "Disposition Proceeds" means the net proceeds (other than the Repurchase Price or Guaranteed Payments payable by the related Manufacturer pursuant to an Eligible Repurchase Program) from the sale or disposition of Group IV Vehicles to any Person, whether at auction or otherwise; provided, however, that Disposition Proceeds shall not include Termination Payments. "Distribution Date" means, with respect to the Series 2001-4 Note, the 25th day of each calendar month or, if such day is not a Business Day, the next succeeding Business Day, commencing November 26, 2001. "Distributions" means (i) contributions, loans or other distributions made by Budget to a profit sharing or pension plan not made in the ordinary course of the operation of such Plan and (ii) all fees, rents and other compensation or payments paid or made by Budget or its Subsidiaries to any stockholder of Budget except for such fees, rents or other compensation or payments paid or made in exchange for actual services rendered to Budget on an arm's length basis by such stockholder. "Eligible Manufacturer" means an Eligible Repurchase Manufacturer. "Eligible Receivable" means a legal, valid and binding receivable (a) due from any Eligible Repurchase Manufacturer or Auction Dealer under an Eligible Repurchase Program to TFFC or a creditor of TFFC or (with respect to Texas Vehicles and Hawaii Vehicles) a Lessee or a creditor or such Lessee, (b) in respect of a Group IV Repurchase Vehicle purchased by such Eligible Repurchase Manufacturer or sold at an auction pursuant to an Eligible Repurchase Program, which absent such purchase or sale, would have constituted an Eligible Repurchase Vehicle with respect to which the Lien of the Trustee was noted on the Certificate of Title at the time of purchase or refinancing, and (c) the right to payments in respect of which has been assigned by TFFC thereof to the Trustee for the benefit of the Secured Parties; provided that no amount receivable from an Eligible Repurchase Manufacturer or Auction Dealer under an Eligible Repurchase Program shall be an Eligible Receivable if such amount remains unpaid more than ten (10) days after (i) the Repurchase Program Payment Due Date in respect of such Group 7 IV Vehicle, in the case of amounts receivable from an Eligible Repurchase Manufacturer or (ii) the Disposition Date in respect of such Group IV Vehicle, in the case of amounts due from an Auction Dealer. "Eligible Repurchase Manufacturer" means each Manufacturer listed on Exhibit B to this Supplement and any other Manufacturer (a) that has an Eligible Repurchase Program, (b) has been approved by each Enhancement Provider, if any, for the Group IV Series of Notes and by the Committed Note Purchaser and (c) with respect to which Rating Agency Confirmation (for all Group IV Series of Notes) has been obtained regarding the addition of such Manufacturer as an Eligible Repurchase Manufacturer; provided, however, that upon the occurrence of a Manufacturer Event of Default with respect to such Manufacturer, such Manufacturer shall no longer qualify as an Eligible Repurchase Manufacturer. "Eligible Repurchase Program" means, at any time, a Repurchase Program (as defined in this Supplement) offered by an Eligible Repurchase Manufacturer (a) pursuant to which the Repurchase Price (or the price guaranteed to be received at an auction conducted by or within the requirements established by such Manufacturer) is at least equal to the Capitalized Cost of each Group IV Vehicle, minus all Depreciation Charges accrued with respect to such Group IV Vehicle prior to the date that the Group IV Vehicle is submitted for repurchase or auction, minus Excess Mileage Charges, minus Excess Damage Charges and minus any other charges specified in such Repurchase Program, (b) that cannot be amended or terminated with respect to any Group IV Vehicle after the purchase of that Group IV Vehicle, and (c) with respect to any Group IV Repurchase Vehicle of such Manufacturer that is leased or proposed to be leased under the Group IV Master Lease, the benefits of which Repurchase Program have been collaterally assigned to the Trustee pursuant to an Assignment Agreement acknowledged in writing by such Manufacturer and applicable to the model year of such Group IV Repurchase Vehicle, and TFFC (and the Trustee on behalf of TFFC) has been provided with an opinion of counsel or officer's certificate reasonably satisfactory to the Trustee that the Trustee and TFFC can enforce the applicable Manufacturer's obligations thereunder; provided, however, that with respect to a Repurchase Program for any model year beginning with 2001 and thereafter, if any Group IV Series of Notes is then being rated by Standard & Poor's or Moody's, TFFC shall have received (i) confirmation by Standard & Poor's or Moody's, as the case may be, that the acquisition of Group IV Vehicles pursuant to such Repurchase Program will not result in the reduction or withdrawal of any rating issued by Standard & Poor's or Moody's in respect of such Series of Notes, and (ii) if there is a major change to a Repurchase Program during a model year, Rating Agency Confirmation that the acquisition of Group IV Vehicles pursuant to such Repurchase Program will not result in a reduction or withdrawal of any rating issued by each Rating Agency in respect of such Series of Notes. "Eligible Repurchase Vehicle" means any automobile, van or light truck (a) which at the time of purchase or financing by TFFC is eligible under an Eligible Repurchase Program, (b) which is owned by TFFC or is a Texas Vehicle or Hawaii Vehicle, and (c) with respect to which (i) TFFC is noted as the owner on the Certificate of Title 8 therefor and (ii) either (x) the Trustee is noted as the first lienholder on the Certificate of Title therefor or (y) the Certificate of Title has been submitted to the appropriate state authorities for such notation as lienholder; provided, however, if the actions provided in clause (i) or (ii) are not sufficient in any state to cause the Trustee's Lien upon such Group IV Vehicle to be a perfected first Lien, then in order for a Group IV Vehicle titled in such state to be an "Eligible Repurchase Vehicle," such action as is required to cause the Trustee's Lien to be a perfected first Lien shall have been taken by the Servicer. "Eligible Vehicle" means a Eligible Repurchase Vehicle under the Group IV Lease. "Enhancement Percentage" means (as calculated by the Servicer) (for purposes of determining the Series 2001-4 Required Asset Amount) on any day, 25%. "Excess Amounts" has the meaning specified in Section 5.2(d)(vi) of this Supplement. "Excess Hyundai Amount" means a dollar amount equal to the amount by which the Net Book Value of all Hyundai Vehicles on such date exceeds 10% of the Net Book Value of all Vehicles leased under the Group IV Master Lease as of such date. "Excluded Payments" means the following amounts payable to TFFC or a Lessee pursuant to the Repurchase Programs: (i) all incentive payments payable to TFFC or a Lessee to purchase Group IV Vehicles under the Repurchase Programs, (ii) all amounts payable to TFFC or a Lessee as compensation for the preparation by TFFC or a Lessee of newly delivered Group IV Vehicles under the Repurchase Programs and (iii) all amounts payable to TFFC or a Lessee in reimbursement for warranty work performed by TFFC or a Lessee on the Group IV Vehicles under the Repurchase Programs. "Finance Lease" has the meaning specified in Annex B to the Group IV Master Lease. "Financed Vehicle" means an Group IV Vehicle that is a Texas Vehicle or Hawaii Vehicle financed by TFFC on or after the Lease Commencement Date under the Finance Lease. "Ford" means Ford Motor Company. "Group IV Collateral" has the meaning specified in Section 3.1(a) of this Supplement. "Group IV Collection Account" has the meaning specified in Section 5.1(a) of this Supplement. "Group IV Collections" means (a) all payments made under the Group IV Master Lease, (b) all Disposition Proceeds, Repurchase Prices and Guaranteed Payments on Group IV Vehicles, (c) any insurance proceeds or other payments with respect to the 9 Group IV Vehicles and (d) all amounts earned on Permitted Investments allocable to or arising out of investment of funds on deposit in the Group IV Collection Account; provided that, in the case of amounts in clauses (b) and (c), such amounts shall be allocated to the Group IV Vehicles in accordance with the terms hereof and the Servicer's normal practices and procedures for determining and allocating vehicle proceeds. "Group IV Interest Collections" means on any date of determination (a) the aggregate amount of Group IV Collections in the Group IV Collection Account which represent (i) Monthly Variable Rent, Monthly Finance Rent or Monthly Supplemental Rent accrued under the Group IV Master Lease, or (ii) any amounts earned on Permitted Investments in the Collection Account and the Group IV Collection Account which constitute Group IV Collateral, and (b) amounts earned on Permitted Investments in the Group IV Collection Account (or any subaccount thereof), which, in the case of clauses (a)(ii) and (b) above, are available for distribution on such date. "Group IV Invested Amount" means, as of any date of determination, an amount equal to the aggregate of the Invested Amounts of all Group IV Series of Notes. "Group IV Master Lease" means the Master Motor Vehicle Lease Agreement, Group IV, as amended and restated as of July 24, 2001 among TFFC, as lessor, certain subsidiaries and affiliates of Budget and certain non-affiliates of Budget, as lessees, and Budget, as guarantor, as amended, supplemented or otherwise modified from time to time. "Group IV Noteholder" means a Person in whose name a Group IV Note is registered in the Note Register. "Group IV Principal Collections" means all Group IV Collections other than Group IV Interest Collections. "Group IV Repurchase Vehicle" means a passenger automobile, van or light truck that is leased under the Group IV Master Lease and is subject to an Eligible Repurchase Program at the time of its leasing under the Group IV Master Lease. "Group IV Series of Notes" has the meaning specified in Article 1 of this Supplement. "Group IV TFFC Agreements" has the meaning specified in Section 3.1(a)(i) of this Supplement. "Group IV Vehicles" means the Vehicles leased under the Group IV Master Lease. "Hawaii Vehicle" means a Group IV Vehicle financed by TFFC on or after the Lease Commencement Date for lease in the State of Hawaii. "Hyundai" means Hyundai Motors America. 10 "Hyundai Percentage" means, on any date of determination, the lesser of (i) the percentage equivalent of a fraction, the numerator of which is the aggregate Net Book Value of all Hyundai Vehicles as of such date and the denominator of which is the aggregate Net Book Value of all Vehicles leased under the Group IV Master Lease as of such date and (ii) 10%. "Hyundai Vehicles" means Vehicles leased under the Group IV Master Lease manufactured by Hyundai. "Increase" has the meaning specified in Section 4.2(a) of this Supplement. "Increase Date" means the date on which an Increase occurs. "Initial Invested Amount" means the aggregate initial principal amount of the Series 2001-4 Note, which is $0. "Interest Reset Date" means the first day of the applicable Series 2001-4 Interest Period. "Invested Amount" means, with respect to each Series of Notes, the amount specified in the applicable supplement. "Late Return Payment" has the meaning specified in Section 12 of the Group IV Master Lease. "Lease Collateral" has the meaning specified in Section 2(b) of the Group IV Master Lease. "Lessor-Owned Vehicle" means any Eligible Repurchase Vehicle other than a Financed Vehicle, that is acquired by TFFC and leased by TFFC to any of the Lessees under Annex A to the Group IV Master Lease. "Losses" means, on any date of determination, the sum of all Series 2001-4 Repurchase Losses. "Mandatory Decrease" has the meaning specified in Section 4.3(a). "Manufacturer Receivable" means an amount due from a Manufacturer under a Repurchase Program in respect of or in connection with a Group IV Repurchase Vehicle being turned back to such Manufacturer. "Master Lease Advance" has the meaning specified in Section 2.1(a) of the Group IV Master Lease. "Maximum Lease Commitment" means, on any date of determination, the sum of (i) the Series 2001-4 Maximum Invested Amount on such date, plus (ii) the Series 2001-4 Available Subordinated Amount on such date, plus the aggregate Net Book Values of all 11 Group IV Vehicles leased under the Group IV Master Lease as of such date which were acquired, financed, or refinanced with funds other than proceeds of the Series 2001-4 Note or the Series 2001-4 Available Subordinated Amount, plus (iv) any amounts held in the Budget Distribution Account allocable to Group IV Collateral that TFFC commits on or prior to such date to invest in new Group IV Vehicles (as evidenced by an Officer's Certificate of TFFC) in accordance with the terms of the Group IV Master Lease and the Indenture. "Minimum Hyundai Credit Support Amount" means, with respect to the Series 2001-4 Note on any day (as calculated by the Servicer), the excess of (i) the quotient of (x) a dollar amount equal to the product of (a) the Aggregate Principal Balance of the Series 2001-4 Note as of such date minus the aggregate amount of cash and Permitted Investments in the Series 2000-1 Collection Account on such date and (b) the Hyundai Percentage as of such date divided by (y) 100% minus the Series 2001-4 Minimum Hyundai Credit Support Percentage as of such day over (ii) the dollar amount specified in clause (x) above. "Minimum Non-Hyundai Credit Support Amount" means, with respect to the Series 2001-4 Note on any day (as calculated by the Servicer), the excess of (i) the quotient of (x) a dollar amount equal to the product of (a) the Aggregate Principal Balance of the Series 2001-4 Note as of such date minus the aggregate amount of cash and Permitted Investments in the Series 2001-4 Collection Account on such date and (b) the Non-Hyundai Percentage as of such date divided by (y) 100% minus the Series 2001-4 Minimum Non-Hyundai Credit Support Percentage as of such day over (ii) the dollar amount specified in clause (x) above. "Monthly Base Rent" has the meaning specified in Section 9(a) of Annex A and in Section 6(a) of Annex B to the Group IV Master Lease. "Monthly Principal Allocation" has the meaning specified in Section 5.5(a). "Monthly Supplemental Payment" has the meaning specified in Section 6(b) of Annex B to the Group IV Master Lease. "Moody's" means Moody's Investors Service, Inc. "Net Book Value" means, with respect to any Group IV Vehicle being leased under the Group IV Master Lease (a) as of any date of determination during the period from the Vehicle Lease Commencement Date for such Group IV Vehicle to but excluding the Determination Date with respect to the Related Month in which such Vehicle Lease Commencement Date occurs (such Determination Date, the "Initial Determination Date" for such Group IV Vehicle), the Capitalized Cost of such Group IV Vehicle, (b) as of the Initial Determination Date for such Group IV Vehicle, (i) the Capitalized Cost for such Group IV Vehicle minus (ii) the aggregate Depreciation Charges accrued with respect to such Group IV Vehicle through the last day of the Related Month in which the Vehicle Lease Commencement Date for such Group IV 12 Vehicle occurred, or (c) as of any Determination Date after the Initial Determination Date, (i) the Net Book Value of such Group IV Vehicle as calculated on the immediately preceding Determination Date minus (ii) the aggregate Depreciation Charges accrued with respect to such Group IV Vehicle during the Related Month (through the last day thereof). After the Initial Determination Date, on any day which is not a Determination Date, the Net Book Value of a Group IV Vehicle shall be the Net Book Value calculated for such Group IV Vehicle on the most recent Determination Date. "Nissan" means Nissan Motors Corporation in the U.S.A., Inc. "Non-Hyundai Percentage" means, on any date of determination, the percentage equivalent of a fraction, the numerator of which is the aggregate Net Book Value of all Non-Hyundai Vehicles as of such date and the denominator of which is the aggregate Net Book Value of all Group IV Vehicles as of such date. "Non-Hyundai Vehicles" means Group IV Vehicles manufactured by Ford, Toyota, Nissan and DaimlerChrysler leased under the Group IV Master Lease. "Note Interest Shortfall" with respect to the Series 2001-4 Note, has the meaning specified in Section 5.4. "Officer's Certificate" with respect to the Series 2001-4 Note, means a certificate signed by two Authorized Officers of TFFC, Budget or a Lessee, as the case may be. "Operating Lease" has the meaning specified in Annex A to the Group IV Master Lease. "Permitted Investments" means negotiable instruments or securities maturing on or before the related Distribution Date represented by instruments in bearer or registered or in book entry form which evidence (i) obligations the full and timely payment of which is to be made by or is fully guaranteed by the United States of America; (ii) demand deposits, time deposits in, or certificates of deposit issued by, any depositary institution or trust company incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by Federal or State banking or depositary institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the certificates of deposit or short-term deposits, if any, or long-term unsecured debt obligations (other than such obligation whose rating is based on collateral or on the credit of a Person other than such institution or trust company) of such depositary institution or trust company shall have a credit rating from Standard & Poor's of A-1 and from Moody's of at least P-1, in the case of certificates of deposit or short-term deposits, or a rating from Standard & Poor's not lower than AA or from Moody's not lower than Aa3, in the case of long-term unsecured debt obligations; (iii) commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from Standard & Poor's of at least A-1 and from Moody's of at least P-1; (iv) demand deposits or time deposits which are fully insured by the Federal Deposit Insurance Corporation; (v) bankers, acceptances issued by 13 any depositary institution or trust company described in clause (ii) above; (vi) investments in money market funds rated AAm or AAmG by Standard & Poor's or otherwise approved in writing by Standard & Poor's and a comparable rating from Moody's or otherwise approved in writing by Moody's; (vii) Eurodollar time deposits having a credit rating from Standard & Poor's of A-1 and from Moody's of at least P-1; (viii) repurchase agreements involving any of the Permitted Investments described in clauses (i) and (vii) above and the certificates of deposit described in clause (ii) above which are entered into with a depository institution or trust company, having a commercial paper or short-term certificate of deposit rating of A-1 by Standard & Poor's and at least P-1 by Moody's; and (ix) any other instruments or securities approved in writing by the Required Noteholders or, if any Group IV Series of Notes is then being rated by one or more Rating Agencies, with respect to which the Rating Agencies confirm in writing that such investment in such instruments or securities will not adversely affect any ratings with respect to any Group IV Series of Notes or the Commercial Paper Notes (if any). "Permitted Liens" is defined in Section 30.3 of the Group IV Master Lease. "Principal Shortfall" has the meaning specified in Section 5.5(a) of this Supplement. "Pro Rata Share" means, with respect to a Lessee, the ratio (expressed as a percentage) of (i) the aggregate Net Book Value of Group IV Vehicles leased by such Lessee divided by (ii) the aggregate Net Book Value of all Group IV Vehicles leased under the Group IV Master Lease. "Rating Agencies" means, each nationally-recognized rating agency then currently requested to rate the Series 2001-4 Note or, as the context requires, any Group IV Series of Notes or class thereof. "Rating Agency Confirmation" means, with respect to the Series 2001-4 Note, written confirmation by (i) the Conduit and the Committed Note Purchaser that it has consented to the proposed action, amendment, waiver or modification and (ii) each Rating Agency then rating the commercial paper notes issued by the Series 2001-4 Note Purchaser that the proposed action, amendment, waiver or modification will not result in the reduction or withdrawal of its rating of such commercial paper notes. "Recoveries" means, for any Related Month, the Series 2001-4 Repurchase Recoveries. "Refinanced Vehicles" has the meaning specified in Section 2.1(b) of the Group IV Master Lease. "Refinancing Schedule" has the meaning set forth in Section 2.1(b) of the Group IV Master Lease. 14 "Related Documents" means the collective reference to the documents referred to in clause (i) of the definition of Related Documents in Schedule 1 to the Base Indenture (giving effect to the definitional changes set forth in Section 7.1(i) hereof), the Group IV Master Lease and the Series 2001-4 Note Purchase Agreement. "Repurchase Program" means a program pursuant to which a Manufacturer has agreed with a Lessee, Budget or TFFC to repurchase or guarantee the auction sale price of Group IV Vehicles manufactured by it or one of its Affiliates during a specified time period. "Repurchase Program Payment Due Date" means, with respect to any payment due from a Manufacturer or auction dealer in respect of a Group IV Repurchase Vehicle disposed of pursuant to the terms of the related Repurchase Program, the thirtieth (30th) day after the Disposition Date for such Group IV Vehicle. "Required Asset Amount" means with respect to the Series 2001-4 Note, at any date of determination, the sum of (i) the Aggregate Principal Balance of all Group IV Series of Notes that do not provide for Enhancement in the form of overcollateralization plus (ii) with respect to all Group IV Series of Notes that provide for Enhancement in the form of overcollateralization, the sum of (a) the Aggregate Principal Balance of all such Series of Notes, plus (b) the available subordinated amounts required to be maintained as part of the minimum enhancement amount for all such Series of Notes. "Required Noteholders" means Series 2001-4 Noteholders holding more than 50% of the Series 2001-4 Invested Amount and the Committed Note Purchaser. "Series 2001-4 Accrued Interest Account" has the meaning specified in Section 5.1(b) of this Supplement. "Series 2001-4 Aggregate Asset Amount" means, with respect to the Series 2001-4 Note, for any date of determination, an amount, rounded to the nearest $100,000, equal to the sum of (a) the Series 2001-4 Invested Percentage of the Aggregate Group IV Repurchase Asset Amount, plus (b) cash and Permitted Investments on deposit in the Series 2001-4 Collection Account and on deposit in the Collection Account and Group IV Collection Account allocable to Series 2001-4. "Series 2001-4 Asset Amount Deficiency" with respect to the Series 2001-4 Note will occur if, at any time, the Series 2001-4 Required Asset Amount exceeds the Series 2001-4 Aggregate Asset Amount. "Series 2001-4 Available Subordinated Amount" means for any date of determination, the excess of (a) the sum of (i) the Series 2001-4 Available Subordinated Amount for the preceding Determination Date (or, in the case of the initial Determination Date, as of the Series 2001-4 Issuance Date), (ii) the Series 2001-4 Available Subordinated Amount Incremental Recoveries for the Related Month and (iii) any other additional amounts contributed by TFFC or Budget to the Series 2001-4 Collection 15 Account or otherwise for allocation to the Series 2001-4 Available Subordinated Amount since the preceding Determination Date (or, in the case of the first Determination Date, since the Series 2001-4 Issuance Date) pursuant to Section 5.2(d)(iv), over (b) the sum of (i) the Series 2001-4 Available Subordinated Amount Incremental Losses for the Related Month and (ii) any amounts withdrawn from the Series 2001-4 Collection Account and allocated to the Budget Distribution Account; provided, however, that the Series 2001-4 Available Subordinated Amount upon the issuance of the Series 2001-4 Note shall be $12,500,000. "Series 2001-4 Available Subordinated Amount Incremental Losses" means for any Related Month, the sum of all Losses that became Losses during such Related Month and which were allocated to the Series 2001-4 Available Subordinated Amount pursuant to Section 5.2(c) hereof. "Series 2001-4 Available Subordinated Amount Incremental Recoveries" means, for any Related Month, the sum of all Recoveries that became Recoveries during such Related Month and which were allocated to the Series 2001-4 Available Subordinated Amount pursuant to Section 5.2(c) hereof. "Series 2001-4 Carrying Charges" means, as of any day, (i) the aggregate of all Trustee fees, servicing fees (other than supplemental servicing fees) and other fees and expenses and indemnity amounts, if any, payable by TFFC or the Servicer under the Indenture, the Series 2001-4 Note Purchase Agreement or the other Related Documents which have accrued with respect to the Series 2001-4 Note during the Related Month or, in the case of such servicing fees and in the case of any commitment fees or other fees and expenses that are calculated in respect of the related Series 2001-4 Interest Period (however denominated) and arise under the Series 2001-4 Note Purchase Agreement, that have accrued during the related Series 2001-4 Interest Period, plus (ii) without duplication, all amounts payable by the Lessees pursuant to Section 15 of the Group IV Master Lease which have accrued during the Related Month. "Series 2001-4 Collateral" has the meaning specified in Section 3.1(b) of this Supplement. "Series 2001-4 Collection Account" is defined in Section 5.1(a) of this Supplement. "Series 2001-4 Collections" means the sum of (a) the Series 2001-4 Invested Percentage of all Group IV Collections constituting Group IV Principal Collections and Recoveries and (b) all Series 2001-4 Interest Collections. "Series 2001-4 Credit Support Amount" means, for any date of determination (as calculated by the Servicer), the Series 2001-4 Available Subordinated Amount on such date plus the amount of such other form of credit enhancement as shall have been agreed to by the Required Noteholders (in their sole and absolute discretion). 16 "Series 2001-4 Credit Support Deficiency" means, with respect to any date of determination, either (a) the amount, if any, by which the Series 2001-4 Minimum Credit Support Amount exceeds the Series 2001-4 Credit Support Amount or (b) as the context requires, that the Series 2001-4 Minimum Credit Support Amount exceeds the Series 2001-4 Credit Support Amount. "Series 2001-4 Distribution Account" has the meaning specified in Section 5.7(a) of this Supplement. "Series 2001-4 Event of Default" means the occurrence and continuation beyond any applicable grace and cure periods set forth therein of any event which, with the giving of notice, the passage of time, or both, would constitute (a) an "event of default" set forth in the Credit Agreement without giving effect to any amendment or other modification to such agreement or any waiver of any such event of default in each case on or subsequent to the date hereof not approved in an instrument in writing signed by the Required Noteholders; provided, however, that for the purposes of this Series Supplement, the "events of default" section set forth in the Credit Agreement shall survive the termination of the Commitments (as defined in the Credit Agreement) of the Lenders (as defined in the Credit Agreement) under the Credit Agreement, the payment in full of all Obligations (as defined in the Credit Agreement) under the Credit Agreement and the termination of such agreement pursuant to the terms thereof; or (b) an "amortization event" pursuant to any other Series issued by TFFC or guaranteed by Budget without giving effect to any amendment or other modification to such agreement or any waiver of such event of default, in each case on or subsequent to the date hereof not approved in an instrument in writing by the Required Noteholders; provided, however, that for the purposes of this Series Supplement, the "amortization events" pursuant to any other Series shall survive the termination of such other Series pursuant to the terms thereof. "Series 2001-4 Interest Allocation" has the meaning specified in Section 5.2(a)(i) of this Supplement. "Series 2001-4 Interest Collections" means on any date of determination, the Series 2001-4 Invested Percentage (as of such date) of the Group IV Interest Collections. "Series 2001-4 Interest Period" means a period from and including a Distribution Date to but excluding the next succeeding Distribution Date; provided, however, that the initial Series 2001-4 Interest Period shall be from the Series 2001-4 Issuance Date to but excluding the initial Distribution Date with respect to the Series 2001-4 Note. "Series 2001-4 Invested Amount" means, when used with respect to any date, an amount equal to (a) the Initial Invested Amount minus (b) the amount of principal payments made to Series 2001-4 Noteholders and Decreases on or prior to such date minus (c) all Losses allocated to the Series 2001-4 Invested Amount on or prior to such date plus (d) all Recoveries allocated to the Series 2001-4 Invested Amount on or prior to such date plus (e) all Increases on or prior to such date. 17 "Series 2001-4 Invested Percentage" means, on any date of determination: (i) when used with respect to Principal Collections during the Series 2001-4 Revolving Period and when used with respect to Losses, Recoveries, cash on deposit in the Collection Account or the Group IV Collection Account and other amounts at all times, the percentage equivalent of a fraction, the numerator of which shall be an amount equal to the sum of (x) the Series 2001-4 Invested Amount and (y) the Series 2001-4 Available Subordinated Amount, in each case as of the end of the second preceding Related Month or, until the end of the second Related Month, as of the Series 2001-4 Issuance Date, and the denominator of which shall be the greater of (A) the Aggregate Asset Amount as of the end of the second preceding Related Month or, until the end of the second Related Month, as of the Series 2001-4 Issuance Date, and (B) as of the same date as in clause (A), the sum of the numerators used to determine (i) invested percentages for allocations with respect to Principal Collections (for all Group IV Series of Notes including all classes of such Series of Notes) and (ii) available subordinated amount percentages for allocations with respect to Principal Collections (for all Group IV Series of Notes that provide for credit enhancement in the form of overcollateralization); and (ii) when used with respect to Principal Collections, during the Series 2001-4 Rapid Amortization Period, the percentage equivalent of a fraction, the numerator of which shall be an amount equal to the sum of (x) the Series 2001-4 Invested Amount and (y) the Series 2001-4 Available Subordinated Amount, in each case as of the end of the Series 2001-4 Revolving Period, and the denominator of which shall be the greater of (A) the Aggregate Asset Amount as of the end of the second preceding Related Month and (B) as of the same date as in clause (A), the sum of the numerators used to determine (i) invested percentages for allocations with respect to Principal Collections (for all Group IV Series of Notes including all classes of such Series of Notes) and (ii) available subordinated amount percentages for allocations with respect to Principal Collections (for all Group IV Series of Notes that provide for credit enhancement in the form of overcollateralization). (iii) when used with respect to Group IV Interest Collections, the percentage equivalent of a fraction the numerator of which shall be the Accrued Amounts with respect to the Series 2001-4 Note on such date of determination and the denominator of which shall be the aggregate Accrued Amounts with respect to the Group IV Series of Notes on such date of determination. "Series 2001-4 Investor Monthly Servicing Fee" means, on any Distribution Date, one-twelfth of 1.0% of the Series 2001-4 Invested Amount as of the preceding Distribution Date (or, in the case of the initial Distribution Date, the Series 2001-4 Issuance Date). "Series 2001-4 Issuance Date" means November 13, 2001. 18 "Series 2001-4 Limited Liquidation Event of Default" means, so long as such event or condition continues, any event or condition of the type specified in Sections 6.1(b), 6.1(i), 6.1(j), 6.1(k) or 6.1(l) of this Supplement that continues for one (1) Business Day (without double counting the one (1) Business Day cure period provided for in Section 6.1(b) or 6.1(l)). "Series 2001-4 Maximum Invested Amount" means $100 million; however, if pricing of the Series 2001-3 Transaction has not occurred by November 16, 2001, then (A) on and including November 16, 2001 to but excluding November 23, 2001, $75 million; (B) on and including November 23, 2001 to but excluding November 30, 2001, $50 million and (C) on and after November 30, 2001, $0. "Series 2001-4 Minimum Credit Support Amount" means, as of any date, (i) the sum of (a) the Minimum Non-Hyundai Credit Support Amount on such date, (b) the Minimum Hyundai Credit Support Amount on such date and (c) the Excess Hyundai Amount. "Series 2001-4 Minimum Hyundai Credit Support Percentage" means, with respect to any date of determination, 25%. "Series 2001-4 Minimum Non-Hyundai Credit Support Percentage" means, with respect to any date of determination, 25%. "Series 2001-4 Monthly Supplemental Servicing Fee" means, on any Distribution Date, the product of (a) the Supplemental Servicing Fee accrued on such date and (b) a fraction, the numerator of which shall be the Series 2001-4 Invested Amount on such Distribution Date and the denominator of which shall be the sum (without duplication) of (i) the aggregate of the invested amounts for all outstanding Series of Notes (including non-segregated Series) on such Distribution Date plus (ii) the aggregate of all Budget Interest Amounts (including available subordinated amounts, if any) for all outstanding Series of Notes (including non-segregated Series). "Series 2001-4 Note" means the Variable Funding Rental Car Asset Backed Note executed by TFFC and authenticated and delivered by or on behalf of the Trustee, substantially in the form of Exhibit A. "Series 2001-4 Note Interest" means, with respect to any Distribution Date, the sum of the Daily Interest Amounts for each day in the related Series 2001-4 Interest Period, plus all previously accrued and unpaid Series 2001-4 Note Interest (together with interest on such unpaid amounts, to the extent permitted by law, at the Series 2001-4 Note Rate), plus all accrued Series 2001-4 Carrying Charges due to the Series 2001-4 Noteholders in respect of such Series 2001-4 Interest Period (or any prior Series 2001-4 Interest Period) and unpaid as of such Distribution Date. "Series 2001-4 Note Purchase Agreement" means the Series 2001-4 Note Purchase Agreement, dated as of November 13, 2001, among TFFC, as borrower, Budget, as 19 servicer, the Conduit, the Committed Note Purchaser and the Agent, as such agreement may be amended, supplemented, amended and restated or otherwise modified from time in accordance with the terms thereof. "Series 2001-4 Note Purchaser" has the meaning specified in the Series 2001-4 Note Purchase Agreement. "Series 2001-4 Note Rate" means, for any Series 2001-4 Interest Period, the weighted average of the CP Rates for the portion of the Series 2001-4 Invested Amount comprised of the CP Tranche and the weighted average of the Eurodollar Rates applicable to the portion of the Series 2001-4 Invested Amount comprised of the Eurodollar Tranche and the weighted average of the Base Rates applicable to the portion of the Series 2001-4 Invested Amount comprised of the Base Rate Tranche; provided, however, that the Series 2001-4 Note Rate will in no event be higher than the maximum rate permitted by applicable law. "Series 2001-4 Noteholder" means a Person in whose name the Series 2001-4 Note is registered in the Note Register. "Series 2001-4 Principal Allocation" shall mean, on any date, the amount allocated to Series 2001-4 Collections pursuant to clause (a) of the definition thereof. "Series 2001-4 Rapid Amortization Period" means the period beginning on the earliest of (x) November 16, 2001, if pricing of the Series 2001-3 Transaction has not occurred by such date, (y) 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 2001-4 Note and (z) November 30, 2001 and ending upon the earlier to occur of (i) the date on which the Series 2001-4 Note is fully paid and (ii) the termination of the Indenture. "Series 2001-4 Repurchase Losses" means, with respect to any Related Month, the sum of (without duplication) (a) the aggregate amount of payments in respect of Monthly Base Rent and Monthly Supplemental Payments that have become due to the Lessor under the Group IV Master Lease in respect of Group IV Repurchase Vehicles that are not paid to TFFC or the Trustee prior to the expiration of the respective grace periods, if any, provided for in the Group IV Master Lease for the making of such payments, but only if such grace periods, if any, expire (or, with respect to any payment for which there is no grace period, only if such payment is due) during such Related Month, (b) the amounts owed by each Manufacturer under an Eligible Repurchase Program with respect to Group IV Repurchase Vehicles that are Lessor-Owned Vehicles or with respect to Eligible Receivables, to the extent, in either case, that any such amount remains unpaid after 90 days from the Turnback Date for the related Group IV Vehicle, but only if such 90-day period expires during such Related Month and (c) the amounts owed by each Auction Dealer in connection with an Eligible Repurchase Program with respect to Group IV Repurchase Vehicles that are Lessor-Owned Vehicles, to the extent that any such 20 amount remains unpaid more than 10 days after the sale of the related Vehicle, but only if such 10-day period expires during such Related Month. "Series 2001-4 Repurchase Recoveries" means, with respect to any Related Month, the sum of (without duplication) all amounts received during such Related Month by TFFC or the Trustee (including deposits into the Collection Account) from any source (other than Enhancement) in respect of Series 2001-4 Repurchase Losses, as determined by the Servicer consistent with its methods of tracking and allocating to vehicles and Series, Disposition Proceeds, Guaranteed Payments, Repurchase Prices, insurance proceeds and other proceeds of such Group IV Vehicles. "Series 2001-4 Required Asset Amount" means, at any time, the sum of (x) the quotient of (a) the Aggregate Principal Balance of the Series 2001-4 Note at such time divided by (b) an amount equal to (i) one hundred percent minus (ii) the Enhancement Percentage at such time and (y) the Excess Hyundai Amount. "Series 2001-4 Revolving Period" means the period from and including the Series 2001-4 Issuance Date to the commencement of the Series 2001-4 Rapid Amortization Period. "Series 2001-4 Termination Date" means the earlier of (i) the date on which all Advances are repaid and (ii) November 30, 2001. "Series 2001-3 Transaction" means the issuance by TFFC of the Series 2001-3 medium term notes in an aggregate principal amount of at least $100,000,000, plus all accrued and unpaid interest on the Series 2001-4 Note. "Servicer" means Budget Group, Inc. or any successor servicer hereunder. "Termination Payments" has the meaning specified in Section 11.3 of the Group IV Master Lease. "Termination Value" means, with respect to any Group IV Vehicle, as of any date, an amount equal to (i) the Capitalized Cost of such Group IV Vehicle minus (ii) all Depreciation Charges accrued with respect to such Group IV Vehicle prior to such date. "Texas Vehicle" means a Group IV Vehicle financed by TFFC on or after the Lease Commencement Date for lease in the State of Texas. "TFFC Agreements" means the collective reference to the documents referred to in clause (i) of the definition of TFFC Agreements in Schedule 1 to the Indenture and the Group IV TFFC Agreements. "TFFC Obligations" means all principal and interest, at any time and from time to time, owing by TFFC on the Series 2001-4 Note and all costs, fees and expenses payable by, or obligations of, TFFC under the Indenture and the Related Documents. 21 "Toyota" means Toyota Motor Sales, U.S.A., Inc. "Turnback Date" means, with respect to any Group IV Repurchase Vehicle, the date on which such Group IV Vehicle is accepted for return by a Manufacturer or its agent pursuant to its Repurchase Program and the Depreciation Charges cease to accrue pursuant to its Repurchase Program. "Vehicle Lease Commencement Date" has the meaning specified in Section 3.2 of the Group IV Master Lease. "VFR" with respect to the Group IV Master Lease, is defined in Paragraph 9 of Annex A to the Group IV Master Lease and in Paragraph 6 of Annex B to the Group IV Master Lease. "Voluntary Decrease" has the meaning specified in Section 4.3(b). ARTICLE 3 SECURITY; REPORTS; COVENANT Section 3.1 Grant of Security Interest. To secure the Group IV Series of Notes and the TFFC Obligations, TFFC hereby pledges, assigns, conveys, delivers, transfers and sets over to the Trustee, for the benefit of the Group IV Noteholders and the holder of the Budget Interest (the Group IV Noteholders and the holder of the Budget Interest being referred to in this Section 3.1 as the "Secured Parties"), and hereby grants to the Trustee, for the benefit of the Secured Parties, a security interest in all of TFFC's right, title and interest in and to all of the following assets, property and interests of TFFC (other than as specified below) whether now owned or hereafter acquired or created (all of the foregoing being referred to as the "Group IV Collateral"): (i) the rights of TFFC under the Group IV Master Lease (including rights against any guarantor of obligations of the Lessees thereunder) and any other agreements relating to the Group IV Vehicles to which TFFC is a party other than the Repurchase Programs (collectively, the "Group IV TFFC Agreements"), including, without limitation, all monies due and to become due to TFFC from Budget and the Lessees under or in connection with the Group IV TFFC Agreements, whether payable as rent, guaranty payments, fees, expenses, costs, indemnities, insurance recoveries, damages for the breach of any of the Group IV TFFC Agreements or otherwise, and all rights, remedies, powers, privileges and claims of TFFC against any other party under or with respect to the Group IV TFFC Agreements (whether arising pursuant to the terms of such Group IV TFFC Agreements or otherwise available to TFFC at law or in equity), including the right to enforce any of the Group IV TFFC Agreements as provided in the Indenture and to give or withhold any and all consents, requests, notices, 22 directions, approvals, extensions or waivers under or with respect to the Group IV TFFC Agreements or the obligations of any party thereunder; (ii) (A) all Group IV Vehicles owned by TFFC or the Lessees as of the Series 2001-4 Issuance Date and all Group IV Vehicles acquired by TFFC or the Lessees or refinanced by TFFC during the term of the Indenture, and all Certificates of Title with respect to such Group IV Vehicles, (B) all Liens and property from time to time purporting to secure payment of any of the obligations or liabilities of the Lessees or Budget arising under or in connection with the Group IV Master Lease, together with all financing statements filed in favor of, or assigned to, TFFC describing any collateral securing such obligations or liabilities, and (C) 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 the Lessees or Budget pursuant to the Group IV Master Lease; (iii) all right, title and interest of TFFC in, to and under any Repurchase Programs relating to, and all monies due and to become due in respect of, the Group IV Repurchase Vehicles purchased from the Manufacturers under or in connection with the Repurchase Programs whether payable as Group IV Repurchase Vehicle repurchase prices or guaranteed payments, auction sale prices, fees, expenses, costs, indemnities, insurance recoveries, damages for breach of the Repurchase Programs or otherwise; (iv) (A) the Collection Account and the Group IV Collection Account, (B) all funds on deposit therein allocable to Group IV Vehicles from time to time, (C) all certificates and instruments, if any, representing or evidencing any or all of the Collection Account and the Group IV Collection Account or the funds on deposit therein allocable to Group IV Vehicles from time to time, and (D) all Permitted Investments made at any time and from time to time with the moneys allocable to Group IV Vehicles in the Collection Account or the Group IV Collection Account (including in each case income thereon), including, without limitation, any and all accounts, certificates, instruments and investments constituting "investment property" as defined in the UCC as in effect from time to time in the State of New York; and (v) all proceeds of any and all of the foregoing including, without limitation, payments under insurance (whether or not-the Trustee is the loss payee thereof) and cash, but not including (for the avoidance of doubt) payments under consumer rental agreements; provided, however, the Group IV Collateral shall not include (x) any Excluded Payments or (y) the Budget Distribution Account, any funds on deposit therein from time to time, any certificates or instruments, if any, representing or evidencing any or all of the Budget Distribution Account or the funds on deposit therein from time to time, or any Permitted 23 Investments made at any time and from time to time with the moneys in the Budget Distribution Account (including the income thereon). (b) To further secure the TFFC Obligations with respect to the Series 2001-4 Note (but not any other Series of Notes), TFFC hereby pledges, assigns, conveys, delivers, transfers and sets over to the Trustee for the benefit of the Series 2001-4 Noteholders (but not any other Series of Notes), and hereby grants to the Trustee for the benefit of the Series 2001-4 Noteholders, a security interest in all of TFFC's right, title and interest in and to all of the following assets, property and interests in property, whether now owned or hereafter acquired or created (all of the foregoing being referred to as the "Series 2001-4 Collateral"): (i) the Series 2001-4 Collection Account and the Series 2001-4 Distribution Account; (ii) all funds on deposit in the Series 2001-4 Collection Account and the Series 2001-4 Distribution Account from time to time; (iii) all certificates and instruments, if any, representing or evidencing any or all of the Series 2001-4 Collection Account and the Series 2001-4 Distribution Account or the funds on deposit therein from time to time; (iv) all Permitted Investments made at any time and from time to time with moneys in the Series 2001-4 Collection Account or the Series 2001-4 Distribution Account; (v) the Demand Note; and (vi) all proceeds of any and all of the foregoing, including, without limitation, cash. (c) The Trustee, on behalf of the Group IV Noteholders or the Series 2001-4 Noteholders, as applicable, acknowledges the foregoing grant, accepts the trusts under this Supplement in accordance with the provisions of the Indenture and this Supplement and agrees to perform its duties required in this Supplement to the best of its abilities to the end that the interests of the Series 2001-4 Noteholders or, as applicable, the Group IV Noteholders may be adequately and effectively protected. The Group IV Collateral shall secure the Notes included in the Group IV Series of Notes. The Series 2001-4 Collateral shall secure the Series 2001-4 Note. Section 3.2 Reports. Not later than the second business Day immediately preceding each Distribution Date, the Servicer shall furnish to the Trustee and each Series 2001-4 Noteholder a Monthly Servicer's Certificate and a Fleet Report with respect to the Group IV Collateral. 24 ARTICLE 4 INITIAL ISSUANCE AND INCREASES AND DECREASES OF SERIES 2001-4 INVESTED AMOUNT OF SERIES 2001-4 NOTE Section 4.1 Issuance in Definitive Form. Pursuant to Section 2.18 of the Base Indenture, TFFC hereby consents to the issuance of the Series 2001-4 Note in the form of a Definitive Note. The Series 2001-4 Note shall be sold pursuant to the Series 2001-4 Note Purchase Agreement in reliance on an exemption from the registration requirements of the Securities Act, and shall be issued in the form of one or more Definitive Notes, in fully registered form without interest coupons, substantially in the form attached hereto as Exhibit A, with such legends as may be applicable thereto, duly executed by TFFC and authenticated by the Trustee as provided in Section 2.4 of the Base Indenture, in an aggregate stated principal amount of up to $100,000,000. Section 4.2 Procedure for Increasing the Invested Amount. (a) Subject to satisfaction of the conditions precedent set forth in subsection (b) of this Section 4.2 (as evidenced by an Officer's Certificate of the Servicer delivered to the Trustee), on the Series 2001-4 Issuance Date, TFFC may issue the Series 2001-4 Note in the stated amount described in Section 4.1, the initial aggregate principal amounts of which will be equal to the Initial Invested Amount. Such Series 2001-4 Note shall be issued to the Agent, as agent for the Series 2001-4 Note Purchaser and the Committed Note Purchaser. On the Series 2001-4 Issuance Date and thereafter on each Increase Date during the Revolving Period, TFFC may, upon request by Budget under the Group IV Master Lease and upon not less than two Business Days' prior written notice by TFFC to the Agent (such notice specifying the applicable Increase Date), increase the Series 2001-4 Invested Amount (each such increase referred to as an "Increase") by issuing, at par, additional Series 2001-4 Invested Amount of the Series 2001-4 Note in amounts that satisfy the following requirements: (i) the portion of the Increase represented by additional Series 2001-4 Invested Amount shall be such that the Series 2001-4 Credit Support Amount shall at least equal the Series 2001-4 Minimum Credit Support Amount after giving effect to such Increase in the Series 2001-4 Invested Amount and the application of the proceeds thereof to leasing Group IV Vehicles; and (ii) no Series 2001-4 Asset Amount Deficiency will result from such Increase. Satisfaction of the above conditions shall be evidenced by the delivery of a certificate from the Servicer to such effect. Proceeds from any Increase shall be deposited into the Series 2001-4 Collection Account and allocated in accordance with Article 5 hereof. Upon each Increase, the Trustee shall, or shall cause the Note Registrar to, indicate in the Note Register such Increase. (b) The Series 2001-4 Invested Amount may be increased pursuant to subsection (a) above only upon satisfaction of each of the following conditions (as evidenced by an Officers' Certificate delivered by TFFC to the Trustee) with respect to each proposed Increase: 25 (i) The amount of such Increase shall be equal to or greater than $50,000; (ii) After giving effect to such Increase, the Series 2001-4 Invested Amount shall not exceed the Series 2001-4 Maximum Invested Amount; (iii) There shall not then exist, nor shall such Increase result in the occurrence of, (x) an Amortization Event, a Liquidation Event of Default or a Series 2001-4 Limited Liquidation Event of Default, or (y) an event or occurrence, which, with the passing of time or the giving of notice thereof, or both, would become an Amortization Event, a Liquidation Event of Default or a Series 2001-4 Limited Liquidation Event of Default; (iv) All conditions precedent (1) to the acquisition of additional Group IV Vehicles under the Group IV Master Lease and (2) to the making of Advances under the Series 2001-4 Note Purchase Agreement shall have, in each case, been satisfied; (v) TFFC (with respect to Lessor-Owned Vehicles) or the applicable Lessee (with respect to Financed Vehicles) shall have good and marketable title to each Group IV Vehicle purchased by it with the proceeds of the Series 2001-4 Note, free and clear of all Liens and encumbrances, other than any Permitted Liens. Each Repurchase Program shall be in full force and effect, and shall be enforceable against the related Manufacturer in accordance with its terms; (vi) Each Lessee shall have granted to TFFC, for the benefit of the Trustee, and TFFC shall have granted to the Trustee, in each case for the benefit of the Series 2001-4 Noteholders, a first priority security interest in all Group IV Vehicles now or hereafter purchased, financed or refinanced by TFFC with the proceeds of the Series 2001-4 Note or with any contributions of capital made by Budget in favor of TFFC; (vii) TFFC shall have granted to the Trustee a first priority security interest in its right, title and interest in and to the Group IV Master Lease, the Group IV Collateral and the Series 2001-4 Collateral; (viii) The Trustee shall have received a copy of each Repurchase Program under which Group IV Vehicles will be or have been purchased and are proposed to be included in the Aggregate Asset Amount and an Officer's Certificate, dated the Series 2001-4 Issuance Date, and duly executed by an Authorized Officer of TFFC, certifying that each such copy is true, correct and complete as of the Series 2001-4 Issuance Date; (ix) All representations and warranties set forth in Article 7 of the Base Indenture and in Section 28 of the Group IV Master Lease shall be true and 26 correct on and as of the date of such Increase as if made on and with respect to the date of such Increase; and (x) With respect to the initial Increase only, the Servicer shall have calculated the Series 2001-4 Available Subordinated Amount and the Trustee shall have confirmed receipt of such written calculation. Section 4.3 Decreases. (a) Mandatory Decreases. Whenever (i) the Series 2001-4 Credit Support Amount is less than the Series 2001-4 Minimum Credit Support Amount, (ii) a Series 2001-4 Asset Amount Deficiency exists, or (iii) the Aggregate Principal Balance of the Series 2001-4 Note exceeds the Series 2001-4 Maximum Invested Amount, TFFC shall pay down the Series 2001-4 Invested Amount of the Series 2001-4 Note by the amount necessary, so that after giving effect to all Decreases of the Series 2001-4 Invested Amount on such date, no such deficiency or excess (as applicable) shall exist (each reduction of the Series 2001-4 Invested Amount pursuant to this Section 4.3(a), a "Mandatory Decrease"). Upon such discovery, TFFC shall deliver notice of any such Mandatory Decreases to the Trustee. (b) Voluntary Decreases. Upon at least one Business Day's prior irrevocable notice to the Lender and the Trustee in writing, TFFC may voluntarily prepay all or a portion of the Series 2001-4 Invested Amount in accordance with the procedures set forth herein (including, without limitation, in Section 5.5(c) hereof) and, as applicable, in the Series 2001-4 Note Purchase Agreement (each reduction of the Series 2001-4 Invested Amount pursuant to this Section 4.3(b), a "Voluntary Decrease"); provided, that all Voluntary Decreases pursuant to this Section 4.3(b) shall be allocated such that (1) the Series 2001-4 Credit Support Amount after giving effect to such Decrease is not less than the Series 2001-4 Minimum Credit Support Amount. Each such Decrease shall be in a minimum principal amount of $100,000. (c) Upon receipt by a Responsible Officer of the Trustee of written notice that a Decrease has been completed, the Trustee shall, or shall cause the Note Registrar to, indicate in the Note Register such Decrease. The amount of any Decrease shall not exceed the amount on deposit in the Series 2001-4 Collection Account and available for distribution to Series 2001-4 Noteholders in respect of principal on the Series 2001-4 Note on the date specified in the related notice of Decrease referred to in clauses (a) and (b) above, as applicable. ARTICLE 5 SERIES 2001-4 ALLOCATIONS Any provisions of Article 5 of the Base Indenture which allocate and apply Collections shall continue to apply irrespective of the issuance of the Series 2001-4 Note. Sections 5.1 through 5.5 of the Base Indenture shall be read in their entirety as provided 27 in the Base Indenture, provided that for purposes of the Series 2001-4 Note, clause (d) of Section 5.2 of the Base Indenture shall be modified, as it applies to the Series 2001-4 Note, as permitted by Section 12.1(f) of the Base Indenture and shall read as follows: (d) Sharing Collections. To the extent that Principal Collections that are allocated to the Series 2001-4 Invested Percentage on a Distribution Date are not needed to make payments of principal to Series 2001-4 Noteholders or required to be deposited in the Series 2001-4 Distribution Account on such Distribution Date, such Principal Collections may, at the written direction of the Servicer, be applied to cover principal payments due to or for the benefit of Noteholders of other Group IV Series of Notes. Any such reallocation will not result in a reduction of the Aggregate Principal Balance or Invested Amount of the Series 2001-4 Note. In addition, for purposes of Section 5.2(a) of the Base Indenture, the Servicer, in its capacity as such under the Group IV Master Lease, shall (to the extent practicable) cause all Collections allocable to Group IV Collateral in accordance with the Indenture to be paid directly into the Collection Account and all Collections allocable to the Series 2001-4 Collateral to be paid directly into the Series 2001-4 Collection Account. Article 5 of the Base Indenture (except for Sections 5.1 through 5.5 thereof, subject to the proviso in the first paragraph of this Article 5 and subject to the immediately preceding sentence) shall read in its entirety as follows and shall be applicable only to the Series 2001-4 Note: Section 5.1 Establishment of the Group IV Collection Account, Series 2001-4 Collection Account and Series 2001-4 Accrued Interest Account. (a) The Trustee acknowledges that it has established and maintains a segregated trust account for the benefit of holders of Notes from the Group IV Series of Notes (the "Group IV Collection Account"). The Trustee will also establish and maintain a segregated trust account for the benefit of the Series 2001-4 Noteholders (the "Series 2001-4 Collection Account"). Amounts on deposit in the Group IV Collection Account and the Series 2001-4 Collection Account shall be invested in accordance with Sections 5.1(d) and (f) of the Base Indenture. (b) The Trustee will establish and maintain an administrative sub-account within the Series 2001-4 Collection Account (such sub-account, the "Series 2001-4 Accrued Interest Account"). (c) All Group IV Collections shall initially be deposited into the Collection Account and, on each Business Day, shall be allocated to and deposited in the Group IV Collection Account. (d) All Group IV Collections that are deposited on any Business Day in the Group IV Collection Account and that are Series 2001-4 Collections shall on each such Business Day be allocated to and deposited in the Series 2001-4 Collection Account. All 28 amounts received in respect of the Series 2001-4 Collateral shall be allocated to and deposited in the Series 2001-4 Collection Account. (e) Any amounts in the Group IV Collection Account not allocated to the Series 2001-4 Collection Account or another series-specific collection account under the supplements for the other Group IV Series of Notes shall be allocated by the Trustee at the written direction of the Servicer to the Budget Distribution Account in an amount equal to (x) the applicable Budget Interest Percentage (as of such date) of the aggregate amount of Group IV Collections that are Principal Collections received on such date, minus (y) any amounts, other than Servicing Fees, which have been withheld by the Master Servicer pursuant to Section 5.2(c) of the Base Indenture to the extent such amounts withheld under Section 5.2(c) of the Base Indenture represent all or part of the Budget Interest Amount; and Section 5.2 Allocations with Respect to the Series 2001-4 Note. The proceeds from the sale of the Series 2001-4 Note, together with any funds deposited with TFFC by Budget, in its capacity as the Budget Interestholder, will initially be delivered by or on behalf of TFFC to the Trustee in the Series 2001-4 Collection Account. On each Business Day on which Collections or the proceeds of any Increase are deposited into the Group IV Collection Account and allocated to the Series 2001-4 Collection Account or deposited in the Series 2001-4 Collection Account (each such date, a "Deposit Date"), the Servicer will direct the Trustee in writing to allocate all amounts allocated to or deposited in the Series 2001-4 Collection Account in accordance with the provisions of this Section 5.2. (a) Allocations During the Revolving Period. During the Series 2001-4 Revolving Period, the Servicer will direct the Trustee in writing to allocate, prior to 1:00 p.m. (New York City time) on each Deposit Date, all amounts deposited into the Series 2001-4 Collection Account as set forth below: (i) allocate to the Series 2001-4 Accrued Interest Account, from the Series 2001-4 Interest Collections received on such date, an amount, as stated in such Servicer direction, equal to the Series 2001-4 Note Interest and all other Series 2001-4 Carrying Charges accrued and unpaid as of such date less any funds on deposit on such date in the Series 2001-4 Accrued Interest Account (the "Series 2001-4 Interest Allocation"); provided, however, that if on any Deposit Date the Series 2001-4 Interest Collections allocated to the Series 2001-4 Collection Account on such date exceed the Series 2001-4 Interest Allocation as of such date, then the amount of such excess shall be retained on deposit in the Series 2001-4 Collection Account and shall be available on such Deposit Date for application in accordance with clauses (ii) through (v) below; (ii) to the extent a Mandatory Decrease is required under Section 4.3(a), allocate to the Series 2001-4 Distribution Account for the payment of the Series 2001-4 Invested Amount, the amount, as stated in such Servicer direction, necessary for such Mandatory Decrease; 29 (iii) make available to TFFC an amount, as stated in such Servicer direction, equal to any Master Lease Advances that are in accordance with the requirements of and conditions precedent under the Group IV Master Lease; (iv) allocate to the Series 2001-4 Distribution Account the amount, as stated in such Servicer direction, of any Voluntary Decreases in the Series 2001-4 Invested Amount to be made in accordance with Section 4.3(b) hereof; (v) the amounts remaining in the Series 2001-4 Collection Account on such Deposit Date after application pursuant to clauses (i), (ii), (iii) and (iv) above shall be retained on deposit and shall be available on such Deposit Date and/or on future Deposit Dates for application in accordance with this Section 5.2 or otherwise in accordance with this Article 5. (b) Allocations During the Series 2001-4 Rapid Amortization Period. During the Series 2001-4 Rapid Amortization Period, the Servicer will direct the Trustee in writing to allocate all Series 2001-4 Collections prior to 1:00 p.m. (New York City time) on any Deposit Date, as set forth below: (i) allocate to the Series 2001-4 Accrued Interest Account the Series 2001-4 Interest Allocation as of such date; provided, however, that if on any Deposit Date the Series 2001-4 Interest Collections allocated to the Series 2001-4 Collection Account on such date exceed the Series 2001-4 Interest Allocation as of such date, then the amount of such excess shall be retained on deposit in the Series 2001-4 Collection Account and shall be available on such Deposit Date for application in accordance with clause (ii) below; and (ii) allocate to the Series 2001-4 Collection Account an amount equal to the Series 2001-4 Principal Allocation for such day, which amount, plus any excess allocated to the Series 2001-4 Collection Account pursuant to clause (i) above, shall be used to make principal payments in respect of the Series 2001-4 Note. (c) Additional Allocations for All Periods. The Servicer will direct the Trustee in writing to allocate the amounts set forth below as follows: (x) Monthly, for each Distribution Date, allocate to the Series 2001-4 Note an amount, as stated in such Servicer direction, equal to the Series 2001-4 Invested Percentage (as of such date) of the aggregate amount of Series 2001-4 Repurchase Losses for the Related Month in the following manner: (i) First, reduce the Series 2001-4 Available Subordinated Amount by the amount of such Losses until the Series 2001-4 Available Subordinated Amount has been reduced to zero; 30 (ii) Second, to the extent of any such Losses remaining after making the allocations, withdrawals and claims under clause (i) above that constitute Disposition Losses the Trustee shall make a claim under the Demand Note pursuant to Section 5.8 of this Supplement in an amount equal to the lesser of (A) the remaining amount of such Disposition Losses and (B) the outstanding principal amount of the Demand Note; and (iii) Third, any such Losses remaining after making the allocations, withdrawals and claims under clauses (i) and (ii) above will be allocated, as stated in such Servicer direction, to reduce the Series 2001-4 Invested Amount. (y) Monthly, for each Distribution Date, allocate to the Series 2001-4 Note an amount, as stated in such Servicer direction, equal to the Series 2001-4 Invested Percentage (as of such date) of the aggregate amount of Series 2001-4 Repurchase Recoveries for the Related Month in the following manner: (i) First, allocate all such Recoveries to reinstate the Series 2001-4 Invested Amount, to the extent the Series 2001-4 Invested Amount has been reduced pursuant to Section 5.2(c)(x)(ii) above; (ii) Second, allocate all remaining Recoveries after making the allocations in clause (i) above up to the amount, as stated in such Servicer direction, necessary to reinstate the Series 2001-4 Available Subordinated Amount to the Series 2001-4 Minimum Credit Support Amount; and (iii) Third, the amounts remaining in the Series 2001-4 Collection Account on such Deposit Date after application pursuant to clauses (i) and (ii) above shall be available on such Deposit Date and/or on future Deposit Dates for application in accordance with this Section 5.2 (including 5.2(d) below) or otherwise in accordance with this Article 5. (d) Allocation Adjustments. Notwithstanding the foregoing provisions of this Section 5.2: (i) provided the Series 2001-4 Rapid Amortization Period has not commenced, amounts retained in the Series 2001-4 Collection Account that are not required to make payments under the Series 2001-4 Note pursuant hereto may, as and to the extent permitted in the related Supplements, be used to pay the principal amount of other Group IV Series of Notes that are then in amortization and, after such payment, any remaining funds may, at TFFC's option, be (A) used to finance, refinance or acquire Group IV Vehicles, to the extent requested by any of the Lessees under the Group IV Master Lease, (B) loaned to Budget under the Demand Note or (C) transferred, on any Distribution Date, to the Budget Distribution Account, to the extent that the Budget Interest Amount equals or exceeds zero after giving effect to such payment and so long as no Series 2001-4 31 Credit Support Deficiency or Series 2001-4 Asset Amount Deficiency exists or would result from such transfer; provided, however, that funds remaining after the application of such funds to the payment of the principal amount of other Group IV Series of Notes that are in amortization and to the financing, refinancing or acquisition of Group IV Vehicles may be transferred to the Budget Distribution Account on a day other than a Distribution Date if the Servicer furnishes to the Trustee an Officer's Certificate to the effect that such transfer will not cause any of the foregoing deficiencies to occur either on the date that such transfer is made or, in the reasonable anticipation of the Servicer, on the next Distribution Date. Funds in the Budget Distribution Account shall, at the option of TFFC, be available to finance, refinance or acquire Group IV Vehicles, to the extent requested by any of the Lessees under the Group IV Master Lease, or for distribution to the Budget Interestholder; (ii) in the event that the Servicer is not Budget or an Affiliate of Budget or if a Servicer Default has occurred and is continuing, the Servicer shall not be entitled to withhold any amounts pursuant to Section 5.2(c) of the Base Indenture and the Trustee shall deposit amounts payable to Budget in the Collection Account pursuant to the provisions of Section 5.2 of the Base Indenture on each Deposit Date; (iii) any amounts withheld by the Servicer and not deposited in the Collection Account pursuant to Section 5.2(c) of the Base Indenture shall be deemed to be deposited in the Collection Account and allocated to the Group IV Collection Account and the Series 2001-4 Collection Account, as applicable, on the date such amounts are withheld for purposes of determining the amounts to be allocated pursuant to this Section 5.2; (iv) TFFC may, from time to time in its sole discretion, increase the Series 2001-4 Available Subordinated Amount by (A) (x) transferring funds to the Series 2001-4 Collection Account or (y) allocating to the Series 2001-4 Available Subordinated Amount Eligible Vehicles theretofore allocated to the Budget Interest, if any, and (B) delivering to the Servicer and the Trustee an Officers' Certificate setting forth the amount of such transferred funds or the Net Book Value of such Eligible Vehicles, as the case may be, stating that such transferred funds or Eligible Vehicles, as applicable, shall be allocated to the Series 2001-4 Available Subordinated Amount and, in the case of Eligible Vehicles, affirming with respect to such Eligible Vehicles the representations and warranties set forth in Section 7.14 of the Base Indenture (and an Opinion of Counsel to the same effect); provided, however, TFFC shall have no obligation to so increase the Series 2001-4 Available Subordinated Amount; (v) in the event that the Series 2001-4 Credit Support Amount is reduced to less than the Series 2001-4 Minimum Credit Support Amount, an Amortization Event and a Series 2001-4 Limited Liquidation Event of Default shall be deemed to have occurred with respect to the Series 2001-4 Note only if, 32 after any applicable grace period, either the Trustee, by written notice to the Issuer, or the Required Noteholders, by written notice to the Issuer and the Trustee, declare that an Amortization Event has occurred; provided, however, the Issuer may prevent an Amortization Event from occurring if, within one (1) Business Day after the occurrence of such Series 2001-4 Credit Support Deficiency, the Series 2001-4 Available Subordinated Amount is increased by an amount sufficient, in the aggregate, to eliminate such Series 2001-4 Credit Support Deficiency; (vi) if, on any Distribution Date during the Series 2001-4 Revolving Period, a Mandatory Decrease shall be required under Section 4.3(a) of this Supplement and the amounts allocated to the Series 2001-4 Distribution Account under Section 5.2(a)(ii) are less than the amount of such required Decrease, then, in such event, any funds on deposit in the collection accounts or excess funding accounts for other Group IV Series of Notes issued and outstanding under the Indenture which amounts are not allocable to the Budget Interest and are in excess of the amounts necessary to be on deposit in each such account in order that (x) no Asset Amount Deficiency occur with respect to any such Series, (y) no shortfall in the required level of enhancement occur with respect to any such Series, including any portion of such enhancement that is required to be in liquid funds, and (z) no Amortization Event for any such Series or event that with the giving of notice or passage of time would become an Amortization Event occur with respect to any such Group IV Series of Notes (such excess funds being referred to herein as "Excess Amounts") shall, in each such case, be deposited into the Series 2001-4 Distribution Account as Principal Collections in an aggregate amount up to the amount of any such deficiency and shall be used, in accordance with Section 5.5, to reduce the Series 2001-4 Invested Amount; and (vii) if, on any Distribution Date during the Series 2001-4 Rapid Amortization Period, the Monthly Principal Allocation under Section 5.2(b)(ii) is insufficient to reduce the Series 2001-4 Invested Amount to zero, then, in such event, any funds constituting Excess Amounts shall, in each such case, be deposited into the Series 2001-4 Distribution Account as Principal Collections in an aggregate amount up to the amount of any such deficiency and shall be used, in accordance with Section 5.5, to reduce the Series 2001-4 Invested Amount. Section 5.3 Withdrawals from the Series 2001-4 Accrued Interest Account. On each Determination Date or Additional Distribution Date, as provided below, the Servicer shall instruct the Trustee or the Paying Agent in writing to withdraw, and on such Distribution Date or Additional Distribution Date, as applicable, the Trustee or the Paying Agent, acting in accordance with such written instructions, shall withdraw the amounts required to be withdrawn from the Series 2001-4 Accrued Interest Account pursuant to Sections 5.3(a), (b) and (c) below (after giving effect to the allocations on such date pursuant to Section 5.2) in respect of all funds available from Collections processed since the preceding Distribution Date and allocated to the holders of the Series 2001-4 Note. 33 (a) Successor Servicer Fees. On each Determination Date on which Budget is not the Servicer, and before any deposits required to be made on the related Distribution Date to the Series 2001-4 Distribution Account have been made, the Servicer shall instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn from the Series 2001-4 Accrued Interest Account to the extent funds are available and processed since the preceding Distribution Date in respect of an amount equal to (i) the Series 2001-4 Investor Monthly Servicing Fee (and any Series 2001-4 Monthly Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (ii) all accrued and unpaid Series 2001-4 Investor Monthly Servicing Fees (and any Series 2001-4 Monthly Supplemental Servicing Fees) in respect of previous periods, minus (iii) the amount of any Series 2001-4 Investor Monthly Servicing Fees (and Series 2001-4 Monthly Supplemental Servicing Fees) withheld by the Servicer since the preceding Distribution Date pursuant to Section 5.2(c) of the Base Indenture. On such Distribution Date, the Trustee shall withdraw such amount from the Series 2001-4 Accrued Interest Account and remit such amount to the Servicer. (b) Note Interest with respect to the Series 2001-4 Note. (i) On each Determination Date, the Servicer shall instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn from the Series 2001-4 Accrued Interest Account, after making all distributions required to be made pursuant to Section 5.3(a), to the extent funds will be available and processed from but not including the preceding Distribution Date through the succeeding Distribution Date in respect of Series 2001-4 Note Interest and Series 2001-4 Carrying Charges. On the Distribution Date related to such Determination Date, the Trustee shall withdraw from the Series 2001-4 Accrued Interest Account the amount on deposit therein available for the payment of Series 2001-4 Note Interest and Series 2001-4 Carrying Charges and deposit such amount in the Series 2001-4 Distribution Account. (ii) On any Business Day during a Series 2001-4 Interest Period (each such day, an "Additional Distribution Date"), the Servicer may instruct the Trustee in writing to withdraw from the Series 2001-4 Accrued Interest Account, and on such Additional Distribution Date the Trustee, acting in accordance with such instructions, shall withdraw from the Series 2001-4 Accrued Interest Account, as directed in writing by the Servicer, all or a portion of the Series 2001-4 Note Interest that will be due on the first Distribution Date following such Additional Distribution Date to the extent that such amount does not exceed the aggregate amount of Series 2001-4 Interest Collections processed since the preceding Distribution Date and allocated to the Series 2001-4 Noteholders (less any portion thereof previously paid to the Series 2001-4 Noteholders during such period pursuant to this Section 5.3(b)) and shall deposit such amounts in the Series 2001-4 Distribution Account. (c) Servicing Fee. On each Determination Date on which Budget is the Servicer, the Servicer shall, after giving effect to all distributions required to be made on the related Distribution Date pursuant to Sections 5.3(a) and (b) of this Supplement, instruct the Trustee and the Paying Agent in writing as to the amount to be withdrawn on 34 such Distribution Date from the Series 2001-4 Collection Account to the extent funds are available and processed since the preceding Distribution Date in respect of an amount equal to (i) the Series 2001-4 Investor Monthly Servicing Fee (and any Series 2001-4 Monthly Supplemental Servicing Fee) accrued since the preceding Distribution Date, plus (ii) all accrued and unpaid Series 2001-4 Investor Monthly Servicing Fees (and any Series 2001-4 Monthly Supplemental Servicing Fees) in respect of previous periods, minus (iii) the amount of any Series 2001-4 Investor Monthly Servicing Fees (and Series 2001-4 Monthly Supplemental Servicing Fees) withheld by the Servicer since the preceding Distribution Date pursuant to Section 5.2(c) of the Base Indenture. On such Distribution Date, the Trustee shall withdraw such amount from the Series 2001-4 Collection Account and remit such amount to the Servicer. Section 5.4 Payment of Note Interest and Carrying Charges. On each Distribution Date and Additional Distribution Date, the Paying Agent shall, in accordance with Section 6.1 of the Base Indenture and the written instruction of the Servicer received pursuant to Section 5.3(b) hereof, pay to the Series 2001-4 Noteholders from the Series 2001-4 Distribution Account the amount deposited in the Series 2001-4 Distribution Account for the payment of Series 2001-4 Note Interest pursuant to Section 5.3(b) of this Supplement and, to the extent that such amount is insufficient to pay all Series 2001-4 Note Interest and Series 2001-4 Carrying Charges payable on such Distribution Date (the amount of such insufficiency, a "Note Interest Shortfall"), the Servicer shall instruct the Trustee in writing to withdraw from the Series 2001-4 Collection Account the lesser of (i) the amount on deposit in the Series 2001-4 Collection Account and (ii) the amount of such Note Interest Shortfall. Subject to Sections 2.15(c) and 6.1(b) of the Base Indenture, all payments of interest and Series 2001-4 Carrying Charges, and all payments of principal pursuant to Section 5.5 hereof, made to the Series 2001-4 Noteholder shall be made by wire transfer to such account as the Series 2001-4 Noteholder of record on the preceding Record Date shall specify from time to time by notice to the Issuer and the Paying Agent. Section 5.5 Payment of Note Principal; Transfers to Budget Distribution Account. (a) Commencing on the first Determination Date after the commencement of the Series 2001-4 Rapid Amortization Period, the Servicer shall instruct the Trustee and the Paying Agent in writing as to the amount of Collections allocated to the Series 2001-4 Note during the Related Month pursuant to Section 5.2(b)(ii) of this Supplement (such amount, the "Monthly Principal Allocation"). Commencing on the first Distribution Date after the commencement of the Series 2001-4 Rapid Amortization Period, to the extent that the Monthly Principal Allocation is insufficient to pay all principal due in respect of the Series 2001-4 Note on such Distribution Date (the amount of such insufficiency, a "Principal Shortfall"), the Servicer shall instruct the Trustee in writing (a) to withdraw from the Series 2001-4 Collection Account the lesser of (i) the amount on deposit in the Series 2001-4 Collection Account and (ii) the amount of such Principal Shortfall, (b) to the extent of any remaining Principal Shortfall, to apply to the payment thereof Principal Collections with respect to any other Group IV Series of Notes which pursuant to Section 35 5.2(d) of the Base Indenture (as modified herein) are available on such Distribution Date to pay principal of the Series 2001-4 Note (up to the amount of such Principal Shortfall remaining) and (c) to the extent of any remaining Principal Shortfall, to apply amounts on deposit in the Series 2001-4 Distribution Account representing the proceeds of a claim made under the Demand Note pursuant to Section 5.8 of this Supplement up to the lesser of (i) the remaining Principal Shortfall and (ii) the proceeds of such claim under the Demand Note. The entire principal amount of the Series 2001-4 Note shall be due and payable on the Series 2001-4 Termination Date. (b) On each Distribution Date occurring on or after the date a withdrawal or application is made pursuant to Section 5.5(a) of this Supplement, the Paying Agent shall, in accordance with Section 6.1 of the Base Indenture and the written instruction of the Servicer received pursuant to Section 5.5(a) hereof, pay to the Series 2001-4 Noteholders the amount deposited in the Series 2001-4 Distribution Account for the payment of principal pursuant to Section 5.5(a) of this Supplement. (c) On (x) the Distribution Date on which, or immediately following the date on which, an allocation is made pursuant to Section 5.2(a)(ii), or (y) the Business Day specified in the notice of Decrease delivered pursuant to Section 4.3(b), occurring on or after the date an allocation is made pursuant to Section 5.2(a)(iv), the Paying Agent shall pay to the Series 2001-4 Noteholders pursuant to the written instruction of the Servicer the amount deposited in the Series 2001-4 Distribution Account for the payment of principal pursuant to such Section 5.2(a)(ii) or 5.2(a)(iv), as applicable. (d) On each Distribution Date, the Servicer shall, as applicable, instruct the Trustee in writing to instruct the Paying Agent to transfer to the Budget Distribution Account (i) all funds which are in the Group IV Collection Account that have been allocated to the Budget Distribution Account as of such Distribution Date and (ii) all funds that were previously allocated to the Budget Distribution Account but not transferred to the Budget Distribution Account. On the related Distribution Date, the Trustee or Paying Agent shall, in accordance with the Servicer's instructions, withdraw such funds from the Group IV Collection Account, as applicable, and deposit them into the Budget Distribution Account. Section 5.6 Servicer's or Budget's Failure to Make a Deposit or Payment. If the Servicer or Budget fails to make, or give notice or instructions to make, any payment from or deposit to the Collection Account, the Group IV Collection Account, the Series 2001-4 Collection Account or the Series 2001-4 Accrued Interest Account required to be made or given by the Servicer or Budget, respectively, at the time specified in the Indenture (including applicable grace periods), the Servicer shall, upon request of the Trustee, promptly provide the Trustee with all information necessary to allow the Trustee, in the event it elects to do so, to make such a payment. Such funds shall be applied by the Trustee in the manner in which such payment or deposit should have been made by the Servicer. Section 5.7 Series 2001-4 Distribution Account. 36 (a) Establishment of the Series 2001-4 Distribution Account. The Trustee shall establish and maintain in the name of the Trustee for the benefit of the Series 2001-4 Noteholders, or cause to be established and maintained, an account (the "Series 2001-4 Distribution Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Series 2001-4 Noteholders. The Series 2001-4 Distribution Account shall be maintained (i) with a Qualified Institution, or (ii) as a segregated trust account with the corporate trust department of a depository institution or trust company having corporate trust powers and acting as trustee for funds deposited in the Series 2001-4 Distribution Account. If the Series 2001-4 Distribution Account is not maintained in accordance with the previous sentence, the Servicer shall establish a new Series 2001-4 Distribution Account, within ten (10) Business Days after obtaining knowledge of such fact, which complies with such sentence, and transfer all cash and investments from the non-qualifying Series 2001-4 Distribution Account into the new Series 2001-4 Distribution Account. Initially, the Series 2001-4 Distribution Account will be established with the Trustee. The Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Series 2001-4 Distribution Account and in all proceeds thereof. The Series 2001-4 Distribution Account Collateral shall be under the sole dominion and control of the Trustee for the benefit of the Series 2001-4 Noteholders. (b) Administration of the Series 2001-4 Distribution Account. The Servicer shall instruct the institution maintaining the Series 2001-4 Distribution Account in writing to invest funds on deposit in the Series 2001-4 Distribution Account at all times in Permitted Investments; provided, however, that any such investment shall mature not later than the Business Day prior to the Distribution Date following the date on which such funds were received, unless any Permitted Investment held in the Series 2001-4 Distribution Account is held with the Paying Agent, then such investment may mature on such Distribution Date and such funds shall be available for withdrawal on or prior to such Distribution Date. The Trustee shall hold, for the benefit of the Series 2001-4 Noteholders and the Servicer, possession of the negotiable instruments or securities evidencing the Permitted Investments described in clause (i) of the definition thereof from the time of purchase thereof until the time of maturity. (c) Earnings from Series 2001-4 Distribution Account. Subject to the restrictions set forth above, the Servicer shall have the authority to instruct the Trustee in writing with respect to the investment of funds on deposit in the Series 2001-4 Distribution Account. All interest and earnings (net of losses and investment expenses) on funds on deposit in the Series 2001-4 Distribution Account shall be deemed to be on deposit and available for distribution. Section 5.8 Draw on the Demand Note. On each Determination Date, the Servicer shall determine the aggregate amount, if any, of Disposition Losses that have occurred during the Related Month. In the event that all Disposition Losses occurring during such Related Month exceed the amount of all Recoveries received during such Related Month that relate to prior Disposition Losses, the Servicer shall, at or before 12:30 p.m. (New York City time) on such Determination Date, notify the Trustee in 37 writing of the aggregate amount of such net Disposition Losses (the "Net Disposition Losses") and the portion thereof constituting Disposition Losses, and the Trustee shall, prior to 5:00 p.m. (New York City time) on such date, as specified in such notice from the Servicer, transmit to Budget a demand for payment (each, a "Demand Notice") under the Demand Note in the amount of the lesser of (x) the outstanding amount of such Demand Note and (y) the portion of such Disposition Losses for the Related Month which, pursuant to Section 5.2(c)(x)(ii), are allocated to a draw on the Demand Note, in each case such payment to be made on or prior to the next succeeding Distribution Date by deposit of funds into the Series 2001-4 Distribution Account in the specified amount for application pursuant to Section 5.5(a) as necessary. ARTICLE 6 AMORTIZATION EVENTS Section 6.1 Amortization Events. In addition to the Amortization Events set forth in Section 9.1 of the Base Indenture, subject to Section 5.2(a)(v) hereof, the following shall be Amortization Events with respect to the Series 2001-4 Note (without notice or other action on the part of the Trustee or any holders of the Series 2001-4 Note unless so specified; provided, however, that the Trustee shall have no liability in connection with any action or inaction taken upon the occurrence of an Amortization Event unless the Trustee has actual knowledge or has received written notice of such Amortization Event): (a) TFFC defaults in the payment of any interest on any Series 2001-4 Note (or in any other payment on any Series 2001-4 Note (other than any payment required pursuant to Section 4.3(a)(iii) hereof or as specified in Section 9.1(b) of the Base Indenture)) when the same becomes due and payable and such default continues for a period of 3 Business Days. (b) a Series 2001-4 Credit Support Deficiency shall occur and exist for more than one (1) Business Day unless during such one (1) Business Day period the Issuer or the Servicer shall have cured the Series 2001-4 Credit Support Deficiency in accordance with the terms and conditions of this Supplement; (c) any Related Document is not in full force and effect, or TFFC, Budget or the Servicer so asserts in writing; (d) a "Lease Event of Default" shall have occurred and be continuing under and as defined in the Group IV Master Lease; (e) TFFC or Budget shall have failed in any material respect to timely and duly perform, or shall have breached any of its obligations, representations, warranties or covenants under the Series 2001-4 Note Purchase Agreement; 38 (f) TFFC fails to have at least one independent director on its Board of Directors at any time; (g) any judgment or order for the payment of money in excess of $100,000 shall be rendered against TFFC that is not being contested and for which adequate reserves have not been set aside; (h) [RESERVED] (i) a Series 2001-4 Event of Default shall have occurred and be continuing; (j) the Servicer shall fail to provide notice within two Business Days after the occurrence of a Series 2001-4 Event of Default as set forth in Section 8.01(f) of the Series 2001-4 Note Purchase Agreement; (k) all principal and interest in respect of the Series 2001-4 Note has not been paid in full as of the Series 2001-4 Termination Date and the Committed Note Purchaser declares by notice to the Trustee and TFFC that an Amortization Event has occurred; or (l) on any day, the Series 2001-4 Invested Amount exceeds the Series 2001-4 Maximum Invested Amount and such condition is not cured by the close of business on the first Business Day thereafter and the Committed Note Purchaser declares by notice to the Trustee and TFFC that an Amortization Event has occurred. Section 6.2 Special Limitation on Exercise of Remedies. Notwithstanding anything to the contrary contained in any Related Document (but without otherwise affecting or limiting the rights and remedies of the Trustee, the Series 2001-4 Noteholder and the Committed Note Purchaser under the Related Documents in respect of any Series 2001-4 Limited Liquidation Event), the Trustee will exercise its remedies in respect of a Series 2001-4 Limited Liquidation Event of Default resulting from an event described in Section 6.1(l) solely with respect to such number of Group IV Vehicles that will generate proceeds sufficient to reduce the Series 2001-4 Invested Amount to an amount equal to the Series 2001-4 Maximum Invested Amount as of such day and pay all accrued interest on the Series 2001-4 Note which is unpaid as of such day. ARTICLE 7 GENERAL (a) Repurchase. The Series 2001-4 Note shall be subject to repurchase by TFFC at its option in accordance with Section 6.3 of the Base Indenture on any Distribution Date. The repurchase price for the Series 2001-4 Note shall equal the Aggregate Principal Balance of the Series 2001-4 Note (determined after giving effect to any payments of principal and interest and any Increases or Decreases as of such Distribution Date), plus all accrued and unpaid interest on such Aggregate Principal Balance through the date of purchase under this Section 7(a) plus any other amounts then 39 due and payable to the holders of such Series 2001-4 Note pursuant to this Supplement, the Series 2001-4 Note Purchase Agreement and the Series 2001-4 Note. (b) Payment of Rating Agency Fees. TFFC agrees and covenants with the Servicer to pay all reasonable fees and expenses of the Rating Agencies and to promptly provide all documents and other information that the Rating Agencies may reasonably request. (c) Exhibits. The following exhibits attached hereto supplement the exhibits included in the Indenture. Exhibit A: Form of Series 2001-4 Note Exhibit B: List of Approved Manufacturers (d) Ratification of Base Indenture. As supplemented by this Supplement, the Base Indenture is in all respects ratified and confirmed and the Base Indenture as so supplemented by this Series Supplement shall be read, taken, and construed as one and the same instrument. (e) Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. (f) GOVERNING LAW. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PROVISIONS THEREOF REGARDING CONFLICTS OF LAWS), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAW. (g) Amendments. This Supplement may be modified or amended from time to time by written agreement of the parties hereto, but only with the written consent of the Required Noteholders. (h) Discharge of Indenture. Notwithstanding anything to the contrary contained in the Base Indenture, no discharge of the Indenture pursuant to Section 11.1(b) of the Base Indenture will be effective as to the Series 2001-4 Note without the consent of the Required Noteholders. (i) Base Indenture Defined Terms. With respect to the Series 2001-4 Note and each other Group IV Series of Notes, references in the Base Indenture (including Schedule I thereto) or in any Related Document to (a) the "Lease" shall be deemed to include the Group IV Master Lease and (b) a "Lease Event of Default" shall be deemed to include a Lease Event of Default under and as defined in the Group IV Master Lease. In addition, each of the capitalized terms listed in the first column below is defined in 40 Schedule 1 to the Base Indenture, as such term applies to any Segregated Series (including Series 2001-4), by reference to the related Supplement. Such terms are defined in this Series 2001-4 Supplement using the corresponding capitalized terms set forth in the second column below opposite such Base Indenture terms.
CORRESPONDING SERIES BASE INDENTURE TERMS 2001-4 SUPPLEMENT TERMS -------------------- ----------------------- Aggregate Segregated Repurchase Asset Aggregate Group IV Repurchase Asset Amount Amount Monthly Servicing Fee Series 2001-4 Monthly Servicing Fee Repurchase Vehicle Group IV Repurchase Vehicle Segregated Repurchase Vehicle Group IV Repurchase Vehicle Vehicle Group IV Vehicle
(j) Group IV Lease Terms. The terms listed below are not applicable to the Series 2001-4 Note and shall be disregarded in interpreting the Group IV Lease. "Aggregate Group IV Non-Repurchase Asset Amount" "Aggregate Group IV Truck Asset Amount" "Eligible Non-Repurchase Vehicle" "Group IV Truck" "Group IV Non-Repurchase Vehicle" "Maximum Non-Repurchase Percentage" "Non-Repurchase Maximum Term" "Non-Repurchase Vehicle" "Non-Repurchase Vehicle Value" "Truck Value" (k) Servicer. The Servicer represents and warrants that it will perform all of its servicing functions as set forth pursuant to Section 4 of the Base Indenture. (l) Tax Opinion. No State of Virginia tax opinion is required to be rendered in connection with the issuance of the Series 2001-4 Note. 41 (m) Independent Director. TFFC represents and warrants that it has two "independent directors" on its board of directors and shall have two "independent directors" at all times while the Series 2001-4 Note is outstanding. 42 IN WITNESS WHEREOF, TFFC, the Servicer, Budget, as Budget Interestholder and the Trustee have caused this Supplement to be duly executed and BRACC has caused this Supplement to be duly acknowledged and agreed to by their respective officers thereunto duly authorized as of the day and year first above written. TEAM FLEET FINANCING CORPORATION, as Issuer By: --------------------------------------- Name: Robert L. Aprati Title: Secretary BUDGET GROUP, INC., as Servicer By: --------------------------------------- Name: Robert L. Aprati Title: Secretary BUDGET GROUP, INC., as Budget Interestholder By: --------------------------------------- Name: Robert L. Aprati Title: Secretary BANKERS TRUST COMPANY, as Trustee By: --------------------------------------- Name: Title: EXHIBIT A TO SERIES 2001-4 SUPPLEMENT VARIABLE FUNDING NOTE REGISTERED up to $100,000,000 No. A- SEE REVERSE FOR CERTAIN CONDITIONS THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF TEAM FLEET FINANCING CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"), THAT THIS NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION. THIS NOTE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE INDENTURE REFERRED TO HEREIN. THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AND SUBJECT TO INCREASES AND DECREASES AS SET FORTH HEREIN AND IN THE INDENTURE. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. TEAM FLEET FINANCING CORPORATION VARIABLE FUNDING RENTAL CAR ASSET BACKED NOTE, Series 2001-4 TEAM FLEET FINANCING CORPORATION, a Delaware corporation (herein referred to as the "Company"), for value received, hereby promises to pay to Deutsche Bank AG, New York Branch, as Agent, a Delaware corporation (the "Noteholder"), or its registered assigns, the principal sum of up to ONE HUNDRED MILLION DOLLARS ($100,000,000) or, if less the aggregate unpaid principal amount outstanding hereunder (whether or not shown on the schedule attached hereto, which amount shall be payable in the amounts and at the times set forth in the Indenture, provided, however, that the entire unpaid principal amount of this Note shall be due on the Series 2001-4 Termination Date, which is November 30, 2001 (unless extended in writing by the parties to the Indenture and the Noteholder). The Company will pay interest on this Note at the Series 2001-4 Note Rate. Such interest shall be payable on each Distribution Date until the principal of this Note is paid or made available for payment, to the extent funds will be available from Series 2001-4 Collections processed from and including the preceding Distribution Date to but excluding each such Distribution Date in respect of (a) an amount equal to interest accrued for the related Series 2001-4 Interest Period, which will be equal to the sum of the products, for each day during the related Series 2001-4 Interest Period, of (i) the Series 2001-4 Note Rate for such Series 2001-4 Interest Period and (ii) the Series 2001-4 Aggregate Principal Balance as of the close of business on such date divided by 360, plus (b) an amount equal to the amount of any accrued and unpaid Note Interest Shortfall with respect to prior Series 2001-4 Interest Periods, with interest on the amount of such Note Interest Shortfall at the Series 2001-4 Note Rate for the related Series 2001-4 Interest Period. The principal amount of this Note shall be subject to Increases and Decreases from time to time, and accordingly, such principal amount is subject to prepayment at any time. Notwithstanding the foregoing, prior to the Series 2001-4 Termination Date and unless an Amortization Event shall have occurred, only interest payments on the outstanding principal amount of the Note are required to be made to the holder hereof. Beginning on the first Distribution Date following the occurrence of an Amortization Event, subject to Decreases on any Business Day, the principal of this Note shall be paid in installments on each subsequent Distribution Date to the extent of funds available for payment therefor pursuant to the Indenture. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. This Note does not represent an interest in, or an obligation of, the Servicer or any affiliate of the Servicer other than the Company. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. Although a summary of certain provisions of the Indenture are set forth below A-2 and on the reverse hereof and made a part hereof, this Note does not purport to summarize the Indenture and reference is made to the Indenture for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Servicer and the Trustee. A copy of the Indenture may be requested from the Trustee by writing to the Trustee at: Bankers Trust Company, 4 Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency Group. To the extent not defined herein, the capitalized terms used herein have the meanings ascribed to them in the Indenture. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. A-3 IN WITNESS WHEREOF, the Company has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: November __, 2001 TEAM FLEET FINANCING CORPORATION By: ------------------------------------- Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes of a series issued under the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By: ------------------------------------- Authorized Signature A-4 REVERSE OF SERIES 2001-4 NOTE This Note is one of a duly authorized issue of Notes of the Company, designated as its Variable Funding Rental Car Asset Backed Note, Series 2001-4 (herein called the "Series 2001-4 Note"), all issued under (i) an Amended and Restated Base Indenture, dated as of December 1, 1996 (such Base Indenture, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, is herein called the "Base Indenture"), among the Company, Budget Group, Inc., a Delaware corporation formerly known as Team Rental Group, Inc. ("Budget"), as servicer and as holder of the Budget Interest, and Bankers Trust Company, a New York banking corporation, as trustee (the "Trustee"), and (ii) a Series 2001-4 Supplement, dated as of November __, 2001 (the "Series 2001-4 Supplement"), among the Company, Budget and the Trustee. The Base Indenture and the Series 2001-4 Supplement are referred to herein as the "Indenture". The Series 2001-4 Note is subject to all terms of the Indenture. All terms used in this Series 2001-4 Note that are defined in the Indenture, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, shall have the meanings assigned to them in or pursuant to the Indenture, as so amended, supplemented or otherwise modified. The Series 2001-4 Note, and all other Notes included in a Group IV Series of Notes, are and will be equally and ratably secured by the Group IV Collateral, and the Series 2001-4 Note is and will be equally and ratably secured by the Series 2001-4 Collateral, in each case pledged as security therefor as provided in the Indenture and the Series 2001-4 Supplement. "Distribution Date" means the 25th day of each month, or, if any such date is not a Business Day, the next succeeding Business Day, commencing November 26, 2001. As described above, the entire unpaid principal amount of this Series 2001-4 Note shall be due and payable on the Series 2001-4 Termination Date. Notwithstanding the foregoing, if an Amortization Event, Liquidation Event of Default or Series 2001-4 Limited Liquidation Event of Default shall have occurred and be continuing then, in certain circumstances, principal on the Series 2001-4 Note may be paid earlier, as described in the Indenture. All principal payments on the Series 2001-4 Note shall be made pro rata to the Series 2001-4 Noteholders entitled thereto. Payments of interest on this Series 2001-4 Note due and payable on each Distribution Date, together with the installment of principal then due, if any, and any payments of principal made on any Business Day in respect of any Decreases, to the extent not in full payment of this Series 2001-4 Note, shall be made by wire transfer to the Holder of record of this Series 2001-4 Note (or any predecessor Series 2001-4 Note) on the Note Register as of the close of business on each Record Date. Any reduction in the principal amount of this Series 2001-4 Note (or any predecessor Series 2001-4 Note) effected by any payments made on any date shall be binding upon all future Holders of A-5 this Series 2001-4 Note and of any Series 2001-4 Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted thereon. Final payment of principal (together with any accrued and unpaid interest) on this Series 2001-4 Note will be paid to the Series 2001-4 Noteholder only upon presentation and surrender of this Series 2001-4 Note at the Corporate Trust Office for cancellation by the Trustee. The Company shall pay interest on overdue installments of interest at the Series 2001-4 Note Rate to the extent lawful. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Series 2001-4 Note may be registered on the Note Register upon surrender of this Series 2001-4 Note for registration of transfer at the office or agency designated by the Company pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Series 2001-4 Note of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Series 2001-4 Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Series 2001-4 Noteholder, by acceptance of the Series 2001-4 Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Trustee, the Company or Budget on the Series 2001-4 Note or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Trustee, the Company or Budget in its individual capacity, (ii) any owner of a beneficial interest in the Company or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Trustee, the Company or Budget in its individual capacity, any holder of a beneficial interest in the Company, Budget or the Trustee or of any successor or assign of the Trustee or Budget in its individual capacity, except (a) as any such Person may have expressly agreed and (b) any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Company for any and all liabilities, obligations and undertakings contained in the Indenture or in this Series 2001-4 Note, subject to Section 13.17 of the Base Indenture. Each Series 2001-4 Noteholder, by acceptance of the Series 2001-4 Note, covenants and agrees that by accepting the benefits of the Indenture that such Series 2001-4 Noteholder will not for a period of one year and one day following payment in full of the Series 2001-4 Note institute against the Company, or join in any institution against the Company of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any United States Federal or state bankruptcy or similar A-6 law in connection with any obligations relating to the Series 2001-4 Note, the Indenture or the Related Documents. Prior to the due presentment for registration of transfer of this Series 2001-4 Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name the Series 2001-4 Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not the Series 2001-4 Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. It is the intent of the Company and each Series 2001-4 Noteholder that, for Federal, state and local income and franchise tax purposes, the Series 2001-4 Note will evidence indebtedness of the Company secured by the Collateral. Each Series 2001-4 Noteholder, by the acceptance of the Series 2001-4 Note, agrees to treat the Series 2001-4 Note for Federal, state and local income and franchise tax purposes as indebtedness of the Company. The Indenture permits in certain circumstances, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Series 2001-4 Note under the Indenture at any time by the Company with the consent of the Holders of the Series 2001-4 Note representing more than 50% in principal amount of the Outstanding Series 2001-4 Note which are affected by such amendment or modification. The Indenture also contains provisions permitting the Holders of Series 2001-4 Note representing specified percentages of the Outstanding Series 2001-4 Note, on behalf of the Holders of the Series 2001-4 Note, to waive compliance by the Company with certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of the Series 2001-4 Note (or any predecessor Series 2001-4 Note) shall be conclusive and binding upon such Holder and upon all future Holders of the Series 2001-4 Note and of the Series 2001-4 Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon the Series 2001-4 Note. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Series 2001-4 Note. The term "Company" as used in this Series 2001-4 Note includes any successor to the Company under the Indenture. The Series 2001-4 Note is issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations set forth therein. The Series 2001-4 Note and the Indenture shall be construed in accordance with the law of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such law. A-7 No reference herein to the Indenture and no provision of the Series 2001-4 Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on the Series 2001-4 Note at the times, place, and rate, and in the coin or currency herein prescribed, subject to any duty of the Company to deduct or withhold any amounts as required by law, including any applicable U.S. withholding taxes. A-8
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A-9 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee - ----------------------- FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ------------------------------------------------------------------------- (name and address of assignee) the within Series 2001-4 Note and all rights thereunder, and hereby irrevocably constitutes and appoints , attorney, to transfer said Series 2001-4 Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: * ---------------- ----------------------------- Signature Guaranteed: ----------------------------- - ------------------------ - -------- */ NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Series 2001-4 Note in every particular, without alteration, enlargement or any change whatsoever. A-10 EXHIBIT B TO SERIES 2001-4 SUPPLEMENT List of Approved Manufacturers Ford Motor Company Toyota Motor Sales, U.S.A., Inc. Daimler Chrysler Corporation Nissan Motors Corporation in the U.S.A., Inc. Hyundai Motor America EX-10.39 5 g74374ex10-39.txt SEVENTH AMENDMENT TO AMENDED CREDIT AGREEMENT Exhibit 10.39 SEVENTH AMENDMENT AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS SEVENTH AMENDMENT AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 19, 2001 (this "Amendment"), is made by and among BUDGET GROUP, INC., a Delaware corporation (the "Borrower"), the Lenders (such capitalized term and all other capitalized terms not otherwise defined herein shall have the meanings provided for in Article I below) parties hereto and CREDIT SUISSE FIRST BOSTON, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders and the Agents have heretofore entered into that certain Amended and Restated Credit Agreement, dated as of June 19, 1998 (as amended by the First Amendment to Amended and Restated Credit Agreement dated as of September 11, 1998, the Second Amendment to Amended and Restated Credit Agreement dated as of March 18, 1999, the Third Amendment to Amended and Restated Credit Agreement dated as of December 22, 1999, the Fourth Amendment and Waiver to Amended and Restated Credit Agreement dated as of September 30, 2000, the Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001, the Sixth Amendment to Amended and Restated Credit Agreement, dated as of February 9, 2001, the Waiver and Consent to Amended and Restated Credit Agreement, dated as of May 7, 2001, and as further amended, supplemented, amended and restated or otherwise modified, the "Credit Agreement"); WHEREAS, the Borrower desires to sell all of the Capital Stock of its indirect, Wholly-Owned Subsidiary, Compact Rent A Car Ltd., a corporation organized under the laws of the province of Quebec and engaged in the renting of passenger automobiles and trucks in Quebec ("Compact"); WHEREAS, such sale is expected to be for a purchase price of approximately $7,000,000, comprised of approximately $1,000,000 in cash and $6,000,000 in a promissory note maturing in approximately five years, and condition precedents to such sale (among other conditions precedent) will be (i) the repayment in cash of all obligations of Compact to the Borrower and its Subsidiaries (other than Compact) (which intercompany obligations relate to the transfer of passenger automobile and truck fleet and cash advances from Budget and such Subsidiaries to Compact and which intercompany obligations, as of May 31, 2001, approximated $30,000,000, but which, at the closing of such sale, may be greater or less than $30,000,000) and (ii) the entry by Compact into a franchise agreement with Budget Rent-A-Car Corporation having terms similar to other franchise agreements entered into by Budget Rent-A-Car Corporation with other franchisees (collectively, the "Compact Sale"); WHEREAS, the Borrower desires to have the Lenders consent to the Compact Sale; and WHEREAS, the Required Lenders are willing, on and subject to the terms and conditions set forth below (including, but not limited to, the reduction of the Commitment Amount), to consent to the Compact Sale (the Credit Agreement, as modified pursuant to the terms of this Waiver and Consent, being referred to as the "Amended Credit Agreement"); NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Borrower and the Required Lenders hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. Certain Definitions. The following terms (whether or not underscored) when used in this Waiver and Consent shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the preamble. "Amended Credit Agreement" is defined in the fifth recital. "Amendment" is defined in the preamble. "Borrower" is defined in the preamble. "Compact" is defined in the second recital. "Compact Sale" is defined in the third recital. "Credit Agreement" is defined in the first recital. SECTION 1.2. Other Definitions. Terms for which meanings are provided in the Amended Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings. ARTICLE II AMENDMENT AND CONSENT SECTION 2.1. Amendments. Subject to the satisfaction of the conditions set forth in Article III, effective as of the date hereof, the Credit Agreement is hereby amended in accordance with this Section 2.1. SECTION 2.1.1. Amendment to Section 1.1 of the Credit Agreement. Concurrently with the closing of the Compact Sale (consummation of which the Borrower shall promptly notify the Administrative Agent), the Commitment Amount shall be reduced from $550,000,000 to $525,000,000 (with the reference in the definition of "Commitment Amount" to "$550,000,000" being amended to be a reference to "$525,000,000"), which reduction shall be allocated pro rata among the Lenders at the time of such reduction. SECTION 2.1.2. Amendment to Section 3.2.2 of the Credit Agreement. Clause (b) of Section 3.2.2 of the Credit Agreement ("Post-Maturity Rates") is hereby amended by inserting the phrase "plus the Applicable Margin" immediately prior to the phrase "plus a margin of 2.0%". SECTION 2.1.3. Amendment to Section 4.5 of the Credit Agreement. The third sentence of Section 4.5 of the Credit Agreement ("Disbursements") is hereby amended by inserting the phrase "plus the Applicable Margin" immediately prior to the phrase ", plus a margin of 2.0%". SECTION 2.2. Consents. Subject to the satisfaction of the conditions set forth in this Section 2.2 and in Article III, the Lenders hereby: (i) waive to the extent necessary to permit the Compact Sale, the restrictions set forth in Section 8.2.10 of the Credit Agreement ("Asset Dispositions, etc.") and (B) subject to the reduction of the Commitment Amount as provided in Section 2.1.1 above, the requirements of Section 2.2.2 of the Credit Agreement ("Reduction of the Commitment Amount - Mandatory") with respect to the proceeds of the Compact Sale (it being understood and agreed that proceeds of the Compact Sale may be used by the Borrower and its Subsidiaries for general corporate purposes), and consent and agree that no portion of the fair market value of Compact shall be counted for purposes of computing the aggregate amount set forth in clause (c)(ii) of Section 8.2.10 of the Credit Agreement; provided that the Administrative Agent, for the benefit of the Secured Parties, shall have, upon consummation of the Compact Sale, a perfected, first-priority security interest in all non-cash consideration received by the Borrower and its Subsidiaries in respect of the Compact Sale. -3- Subject to the satisfaction of the conditions set forth in Article III, the Lenders hereby consent to any amendment or modification to the Enhancement Letter of Credit Application and Agreement with respect to the CP Program's Enhancement Letter of Credit that the Issuer deems necessary or desirable in order to conform such Enhancement Letter of Credit Application and Agreement to the terms of the CP Program (including, without limitation, the Liquidity Facility) or the terms of the Credit Agreement; provided that such amendments and modifications, taken as a whole, could not reasonably be expected to have an adverse effect on the Lenders. Limitation. Section 2.2 shall be limited precisely as written and shall not be deemed to constitute a waiver or consent with respect to any other term, provision or condition of the Credit Agreement or any other instrument or agreement referred to therein or relating thereto or prejudice any right or remedy that the Administrative Agent or any Lender may now have or may have in the future under or in connection with the Credit Agreement or any other instrument or agreement referred to therein or relating thereto. CONDITIONS TO EFFECTIVENESS This Amendment, and the waivers, amendments, consents and modifications contained herein, shall be and shall become effective as of the date hereof subject to the satisfaction of each of the conditions set forth in this Article III to the satisfaction of the Administrative Agent (such date, the "Effective Date"). Execution of Counterparts. The Administrative Agent shall have received counterparts of this Waiver and Consent, duly executed and delivered on behalf of the Borrower and each of the Required Lenders. Closing Date Certificate. The Administrative Agent shall have received, with counterparts for each Lender, a certificate, dated the Effective Date, appropriately completed and duly executed and delivered by an Authorized Officer of the Borrower in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower made as of such date and, at the time such certificate is delivered, such statements shall in fact be true and correct. Execution of Affirmation and Acknowledgment. The Administrative Agent shall have received an affirmation and acknowledgment, dated the Effective Date and in form and substance satisfactory to it, duly executed and delivered by each Guarantor and any other Obligor that has granted a Lien pursuant to any Loan Document. -4- REPRESENTATIONS AND WARRANTIES Representations and Warranties. In order to induce the requisite Lenders and the Administrative Agent to enter into this Waiver and Consent, the Borrower hereby represents and warrants to the Administrative Agent, the Issuer and each Lender, as of the date hereof, as follows: the representations and warranties set forth in Article VII of the Credit Agreement (excluding, however, those contained in Section 7.7 of the Credit Agreement) and in each other Loan Document are, in each case, true and correct (unless stated to relate solely to an earlier date, in which case such representations and warranties are true and correct as of such earlier date); except as disclosed by the Borrower to the Agents, the Issuer and the Lenders pursuant to Section 7.7 of the Credit Agreement no labor controversy, litigation, arbitration or governmental investigation or proceeding is pending or, to the best knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries which might materially adversely affect the Borrower's consolidated business, operations, assets, revenues, properties or prospects or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document; and no development has occurred in any labor controversy, litigation, arbitration or governmental investigation or proceeding disclosed pursuant to Section 7.7 of the Credit Agreement which might materially adversely affect the consolidated businesses, operations, assets, revenues, properties or prospects of the Borrower and its Subsidiaries; no Default has occurred and is continuing, and neither the Borrower nor any of its Subsidiaries nor any other Obligor is in material violation of any law or governmental regulation or court order or decree; this Waiver and Consent has been duly authorized, executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except to the extent the enforceability hereof may be limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors generally and (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law; and -5- the execution, delivery and performance by the Borrower and its Subsidiaries of this Waiver and Consent and each other Loan Document executed or to be executed by any of them in connection therewith and the consummation of the transactions permitted or contemplated hereby are within the Borrower's and each such Subsidiary's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower's or such Subsidiary's Organic Documents, (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower or such Subsidiary or (iii) result in, or require the creation or imposition of, any Lien (other than the Liens created under the Loan Documents in favor of the Administrative Agent for the benefit of the Secured Parties) on any of the Borrower's or such Subsidiary's properties. Full Disclosure. Except as corrected by written information delivered to the Agents and the Lenders reasonably prior to the date on which this representation is made, all factual information heretofore or contemporaneously furnished by the Borrower in writing to any Agent, the Issuer or any Lender for purposes of or in connection with this Waiver and Consent or any transaction contemplated hereby is true and accurate in every material respect and such information is not incomplete by omitting to state any material fact necessary to make such information not misleading. Compliance with Credit Agreement. Each Obligor is in compliance with all the terms and conditions of the Credit Agreement and the other Loan Documents to be observed or performed by it thereunder, and no Default has occurred and is continuing. Borrowing Base. No asset of Compact, including, without limitation, passenger automobiles and trucks utilized by Compact in the conduct of its business, was included in the Borrowing Base Certificate most recently furnished to the Lenders prior to the date hereof. MISCELLANEOUS Full Force and Effect; Limited Waiver and Consent. Except as expressly provided herein, all of the representations, warranties, terms, covenants, conditions and other provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are in all respects hereby ratified and confirmed. The waiver and consents set forth herein shall be limited precisely as provided for herein to the provisions expressly waived hereby or consented to hereby and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other term or provision of the Credit Agreement, any other Loan Document referred to therein or herein or of any transaction or further or future action on the part of the Borrower or any other Obligor which would require the consent of any of the Lenders under the Credit Agreement or any of the other Loan Documents. -6- Loan Document Pursuant to Credit Agreement. This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall be construed, administered and applied in accordance with all of the terms and provisions of the Credit Agreement (and, following the date hereof, the Amended Credit Agreement). Any breach of any representation or warranty or covenant or agreement contained in this Amendment shall be deemed to be an Event of Default for all purposes of the Credit Agreement and the other Loan Documents. Further Assurances. The Borrower hereby agrees that it will take any action that from time to time may be reasonably necessary to effectuate the amendments, waivers and consents contemplated herein. The Lenders authorize the Administrative Agent to execute and deliver such documents as may be reasonably necessary to effectuate the amendments, waivers and consents contemplated herein (including, without limitation, releases of Liens with respect to the Capital Stock of Compact). Fees and Expenses. The Borrower shall pay all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment and the documents and transactions contemplated hereby, including the reasonable fees and disbursements of Mayer, Brown, and Platt, as counsel for the Administrative Agent. Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. Execution in Counterparts. This Amendment may be executed by the parties hereto in counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Cross-References. References in this Amendment to any Article or Section are, unless otherwise specified or otherwise required by the context, to such Article or Section of this Amendment. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -7- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers or general partners (or their respective officers) thereunto duly authorized as of the day and year first above written. BUDGET GROUP, INC. By -------------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON, as a Lender and the Administrative Agent By -------------------------------------- Name: Title: By -------------------------------------- Name: Title: BANK OF AMERICA, N.A. By -------------------------------------- Name: Title: BANK OF MONTREAL By -------------------------------------- Name: Title: S-8 THE BANK OF NEW YORK By -------------------------------------- Name: Title: THE BANK OF NOVA SCOTIA By -------------------------------------- Name: Title: THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH By -------------------------------------- Name: Title: BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A. GROUP, NEW YORK BRANCH By -------------------------------------- Name: Title: WASHINGTON MUTUAL BANK, F.A. (as successor in interest to BANK UNITED) By -------------------------------------- Name: Title: S-9 BANKERS TRUST COMPANY By ------------------------------------- Name: Title: BNP PARIBAS By ------------------------------------- Name: Title: By ------------------------------------- Name: Title: BANQUE WORMS CAPITAL CORPORATION By ------------------------------------- Name: Title: BHF (USA) CAPITAL CORPORATION By ------------------------------------- Name: Title: By ------------------------------------- Name: Title: S-10 CERBERUS PARTNERS L.P. By -------------------------------------- Name: Title: CREDIT INDUSTRIEL ET COMMERCIAL By -------------------------------------- Name: Title: By -------------------------------------- Name: Title: COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH By -------------------------------------- Name: Title: By -------------------------------------- Name: Title: S-11 CREDIT AGRICOLE INDOSUEZ By -------------------------------------- Name: Title: By -------------------------------------- Name: Title: CREDIT LYONNAIS CHICAGO BRANCH By -------------------------------------- Name: Title: DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By -------------------------------------- Name: Title: By -------------------------------------- Name: Title: S-12 ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG By -------------------------------------- Name: Title: By -------------------------------------- Name: Title: FLEET BANK, N.A. By -------------------------------------- Name: Title: THE FUJI BANK, LIMITED By -------------------------------------- Name: Title: IMPERIAL BANK By -------------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION By -------------------------------------- Name: Title: S-13 GOLDMAN SACHS CREDIT PARTNERS L.P. By -------------------------------------- Name: Title: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By -------------------------------------- Name: Title: NATEXIS BANQUE By -------------------------------------- Name: Title: By -------------------------------------- Name: Title: SATELLITE DISTRESSED CREDITS FUND, LLC By: Satellite Asset Management, L.P., its Investment Manager By --------------------------------- Name: Title: SOUTHERN PACIFIC BANK By -------------------------------------- Name: Title: S-14 SUMITOMO MITSUI BANKING CORPORATION By -------------------------------------- Name: Title: SUNTRUST BANK By -------------------------------------- Name: Title: DK ACQUISITION PARTNERS LP By -------------------------------------- Name: Title: S-15 EX-10.40 6 g74374ex10-40.txt EIGHTH AMENDMENT TO AMENDED CREDIT AGREEMENT EXHIBIT 10.40 EIGHTH AMENDMENT AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS EIGHTH AMENDMENT AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 31, 2001 (this "Amendment"), is made by and among BUDGET GROUP, INC., a Delaware corporation (the "Borrower"), the Lenders (such capitalized term and all other capitalized terms not otherwise defined herein shall have the meanings provided for in Article I below) parties hereto and CREDIT SUISSE FIRST BOSTON, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders and the Agents have heretofore entered into that certain Amended and Restated Credit Agreement, dated as of June 19, 1998 (as amended by the First Amendment to Amended and Restated Credit Agreement dated as of September 11, 1998, the Second Amendment to Amended and Restated Credit Agreement dated as of March 18, 1999, the Third Amendment to Amended and Restated Credit Agreement dated as of December 22, 1999, the Fourth Amendment and Waiver to Amended and Restated Credit Agreement dated as of September 30, 2000, the Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001, the Sixth Amendment to Amended and Restated Credit Agreement, dated as of February 9, 2001, the Seventh Amendment and Consent to Amended and Restated Credit Agreement, dated as of June 19, 2001, and as further amended, supplemented, amended and restated or otherwise modified prior to the date hereof, the "Credit Agreement"); WHEREAS, effective with the calculation of the Borrowing Base Amount as of the last day of July 2001, the Borrower will only be permitted to include in the Borrowing Base Amount (as provided in the definition thereof) (i) 50% of the Appraised Value of Eligible Trademarks (as opposed to 60% previously), (ii) 30% of the Net Book Value of Eligible Real Estate (as opposed to 50% previously) and (iii) the sum of the applicable percentages of Eligible Trademarks, Eligible FF&E and Eligible Real Estate solely to the extent such sum does not exceed the sum of the applicable permitted percentages of Eligible Receivables, Eligible Cash and Cash Equivalents, Eligible Repurchase Vehicles and Eligible Non-Repurchase Vehicles; WHEREAS, as a result of the operation of these provisions in the definition of Borrowing Base Amount that become effective with the determination of the Borrowing Base Amount as of the last day of July 2001, the aggregate unpaid principal amount of all loans and Letter of Credit Outstandings may exceed the Borrowing Base Amount; WHEREAS, the Borrower may wish to redeem, purchase or acquire, or cause the redemption, purchase or acquisition of, Convertible Preferred Securities (and the related principal amount of High Tides Debentures) and/or 1999 Senior Notes by issuing shares of its common stock as sole consideration therefor; WHEREAS, the Seventh Amendment provided the Borrower with the ability to sell all of the Capital Stock of its indirect, Wholly-Owned Subsidiary, Compact Rent A Car Ltd., a corporation organized under the laws of the province of Quebec and engaged in the renting of passenger automobiles and trucks in Quebec ("Compact"), so long as, among other things, the Commitment Amount would be reduced to $525,000,000 upon the closing of such sale; WHEREAS, the Compact Sale (as specifically defined in the Seventh Amendment) has not yet occurred and is not likely to occur, but the Borrower desires to retain the flexibility to sell the Compact business in the future; WHEREAS, the Borrower desires certain consents from the requisite Lenders in connection with the foregoing; and WHEREAS, the requisite Lenders are willing, on and subject to the terms and conditions set forth below (including, without limitation, an amendment to the Commitment Amount), to grant the consents provided below (the Credit Agreement, as amended and otherwise modified pursuant to the terms of this Amendment, being referred to as the "Amended Credit Agreement"); NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Borrower and the requisite Lenders hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. Certain Definitions. The following terms (whether or not underscored) when used in this Amendment shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the preamble. "Amended Credit Agreement" is defined in the eighth recital. "Amendment" is defined in the preamble. "Borrower" is defined in the preamble. "Credit Agreement" is defined in the first recital. -2- SECTION 1.2. Other Definitions. Terms for which meanings are provided in the Amended Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings. ARTICLE II AMENDMENTS AND CONSENTS SECTION 2.1. Amendments. Subject to the satisfaction of the conditions set forth in Article III, the Credit Agreement is hereby amended in accordance with this Section 2.1. SECTION 2.1.1. Amendment to Section 1.1 of the Credit Agreement. (a) In the event the closing of the Compact Sale (as defined in the Seventh Amendment) has not occurred prior to the effectiveness of this Amendment, the Commitment Amount shall be reduced from $550,000,000 to $500,000,000 (with the reference in the definition of "Commitment Amount" to "$550,000,000" being amended to be a reference to "$500,000,000"), which reduction shall be allocated pro rata among the Lenders at the time of such reduction. (a) In the event the closing of the Compact Sale (as defined in the Seventh Amendment) has occurred prior to the effectiveness of this Amendment, the Commitment Amount shall be reduced from $525,000,000 to $500,000,000 (with the reference in the definition of "Commitment Amount" to "$525,000,000" being amended to be a reference to "$500,000,000"), which reduction shall be allocated pro rata among the Lenders at the time of such reduction. SECTION 2.1.2. Additional Amendments to Section 1.1 ("Defined Terms") of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended by inserting in such Section the following definitions in the appropriate alphabetical order: "'Eighth Amendment' means the Eighth Amendment and Consent to Amended and Restated Credit Agreement, dated as of July 31, 2001 among the Borrower, the Lenders parties thereto and the Administrative Agent." "'Permitted Compact Sale' means the sale of all of the Capital Stock of the Borrower's indirect, Wholly-Owned Subsidiary, Compact Rent A Car Ltd., a corporation organized under the laws of the province of Quebec and engaged in the renting of passenger automobiles and trucks in Quebec ("Compact"), or the sale of all or substantially all of the assets of Compact, so long as the following conditions are satisfied on or prior to the closing of such sale: (i) the repayment in cash of all obligations of Compact to the Borrower and its Subsidiaries (other than Compact), (ii) the repayment of all Indebtedness incurred by Compact with respect to which the provider or providers of such Indebtedness have recourse against the Borrower or any of its Subsidiaries (other than Compact), whether pursuant to a guaranty or otherwise, and (iii) the entry by Compact (or, in the case -3- of an asset sale, the acquirer of the assets of Compact) into a franchise agreement with Budget Rent-A-Car Corporation having terms similar to other franchise agreements entered into by Budget Rent-A-Car Corporation with other franchisees." "'Seventh Amendment' means the Seventh Amendment and Consent to Amended and Restated Credit Agreement, dated as of June 19, 2001, among the Borrower, the Lenders parties thereto and the Administrative Agent." SECTION 2.2. Consents. Subject to the satisfaction of the conditions set forth in Article III, the Lenders, as of the date hereof, hereby: (a) consent to the Borrowing Base Amount calculated as of the last day of July 2001 and as of the last day of August 2001 to be less than the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings outstanding during the period in which such Borrowing Base Amount is in effect under the terms of the Credit Agreement, without requiring any mandatory prepayments and/or cash collateralization under clause (b) of Section 3.1.1 of the Credit Agreement; provided that such Borrowing Base Amount is not less than $426,000,000 as of the last day of July 2001 and not less than $452,000,000 as of the last day of August 2001; (b) (i) waive (i) to the extent necessary to permit a Permitted Compact Sale, the restrictions set forth in Section 8.2.10 of the Credit Agreement ("Asset Dispositions, etc.") and (ii) the requirements of Section 2.2.2 of the Credit Agreement ("Reduction of the Commitment Amount - Mandatory") with respect to such proceeds of such Permitted Compact Sale (it being understood and agreed that proceeds of such Permitted Compact Sale may be used by the Borrower and its Subsidiaries for general corporate purposes), and (ii) consent and agree that no portion of the fair market value of Compact shall be counted for purposes of computing the aggregate amount set forth in clause (c)(ii) of Section 8.2.10 of the Credit Agreement; provided that the Administrative Agent, for the benefit of the Secured Parties, shall have, upon consummation of the Permitted Compact Sale, a perfected, first-priority security interest in all non-cash consideration received by the Borrower and its Subsidiaries in respect of the Permitted Compact Sale; and (c) waive the restrictions set forth in clause (c) of Section 8.2.6 and in Section 8.2.5 of the Credit Agreement to the extent necessary to permit the Borrower to redeem, purchase or otherwise acquire, or cause the redemption, purchase or other acquisition of, Convertible Preferred Securities (and the related principal amount of High Tides Debentures) and/or 1999 Senior Notes; provided that (i) the sole consideration in any such redemption, purchase or acquisition are shares of the common stock of the Borrower and (ii)(A) in the case of the Convertible Preferred Securities (and the related principal amount of High Tides Debentures), Indebtedness of the Borrower in respect of the High Tides Debentures and any guaranty issued -4- with respect to the same shall be cancelled to the extent necessary so that the aggregate amount of such Indebtedness (without duplication) does not exceed the amount of Indebtedness permitted by clause (c) of Section 8.2.2 of the Credit Agreement and (B) in the case of the 1999 Senior Notes, Indebtedness of the Borrower in respect of the 1999 Senior Notes so redeemed, purchased or otherwise acquired shall be cancelled and the aggregate principal amount of Indebtedness permitted to be outstanding under clause (o) of Section 8.2.2 of the Credit Agreement shall be reduced accordingly. ARTICLE III CONDITIONS TO EFFECTIVENESS This Amendment, and the amendments and modifications contained herein, shall be and shall become effective as of the date hereof subject to the satisfaction of each of the conditions set forth in this Article III to the satisfaction of the Administrative Agent. SECTION 3.1. Execution of Counterparts. The Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered on behalf of the Borrower and each of the requisite Lenders. SECTION 3.2. Closing Date Certificate. The Administrative Agent shall have received, with counterparts for each Lender, a certificate, dated the effective date of this Amendment, appropriately completed and duly executed and delivered by an Authorized Officer of the Borrower in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower made as of such date and, at the time such certificate is delivered, such statements shall in fact be true and correct. SECTION 3.3. Execution of Affirmation and Acknowledgment. The Administrative Agent shall have received an affirmation and acknowledgment, dated the effective date of this Amendment and in form and substance satisfactory to it, duly executed and delivered by each Guarantor and any other Obligor that has granted a Lien pursuant to any Loan Document. SECTION 3.4. Amendment Fee. The Administrative Agent shall have received the amendment fees due and payable pursuant to Section 5.4. SECTION 3.5. Fees and Expenses. The Administrative Agent shall have received all fees and expenses due and payable pursuant to Section 5.5 (to the extent then invoiced) and pursuant to the Credit Agreement (including all previously invoiced fees and expenses). ARTICLE IV -5- REPRESENTATIONS AND WARRANTIES SECTION 4.1. Representations and Warranties. In order to induce the requisite Lenders and the Administrative Agent to enter into this Amendment, the Borrower hereby represents and warrants to the Administrative Agent, the Issuer and each Lender, as of the date hereof, as follows: (a) the representations and warranties set forth in Article VII of the Credit Agreement (excluding, however, those contained in Section 7.7 of the Credit Agreement) and in each other Loan Document are, in each case, true and correct (unless stated to relate solely to an earlier date, in which case such representations and warranties are true and correct as of such earlier date); (b) except as disclosed by the Borrower to the Agents, the Issuer and the Lenders pursuant to Section 7.7 of the Credit Agreement (i) no labor controversy, litigation, arbitration or governmental investigation or proceeding is pending or, to the best knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries which might materially adversely affect the Borrower's consolidated business, operations, assets, revenues, properties or prospects or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document; and (ii) no development has occurred in any labor controversy, litigation, arbitration or governmental investigation or proceeding disclosed pursuant to Section 7.7 of the Credit Agreement which might materially adversely affect the consolidated businesses, operations, assets, revenues, properties or prospects of the Borrower and its Subsidiaries; (c) after giving effect to this Amendment, no Default has occurred and is continuing, and neither the Borrower nor any of its Subsidiaries nor any other Obligor is in material violation of any law or governmental regulation or court order or decree; (d) this Amendment has been duly authorized, executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except to the extent the enforceability hereof may be limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors generally and (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law; and (e) the execution, delivery and performance by the Borrower and its Subsidiaries of this Amendment and each other Loan Document executed or to be executed by any of them in connection therewith are within the Borrower's and each such Subsidiary's corporate powers, -6- have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower's or such Subsidiary's Organic Documents, (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower or such Subsidiary or (iii) result in, or require the creation or imposition of, any Lien (other than the Liens created under the Loan Documents in favor of the Administrative Agent for the benefit of the Secured Parties) on any of the Borrower's or such Subsidiary's properties. SECTION 4.2. Full Disclosure. Except as corrected by written information delivered to the Agents and the Lenders reasonably prior to the date on which this representation is made, all factual information heretofore or contemporaneously furnished by the Borrower in writing to any Agent, the Issuer or any Lender for purposes of or in connection with this Amendment or any transaction contemplated hereby is true and accurate in every material respect and such information is not incomplete by omitting to state any material fact necessary to make such information not misleading. All projections delivered to any Agent or any Lender by or on behalf of the Borrower have been prepared in good faith by the Borrower and represent the best estimates of the Borrower, as of the date hereof, of the reasonably expected future performance of the businesses reflected in such projections. SECTION 4.3. Compliance with Credit Agreement. After giving effect to this Amendment, each Obligor is in compliance with all the terms and conditions of the Credit Agreement and the other Loan Documents to be observed or performed by it thereunder, and no Default has occurred and is continuing. ARTICLE V MISCELLANEOUS SECTION 5.1. Full Force and Effect; Limited Amendment. Except as expressly provided herein, all of the representations, warranties, terms, covenants, conditions and other provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are in all respects hereby ratified and confirmed. The amendments and consents set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein, waived hereby or consented to hereby and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other term or provision of the Credit Agreement, any other Loan Document referred to therein or herein or of any transaction or further or future action on the part of the Borrower or any other Obligor which would require the consent of any of the Lenders under the Credit Agreement or any of the other Loan Documents. SECTION 5.2. Loan Document Pursuant to Credit Agreement. This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall be construed, administered and applied in accordance with all of the terms and provisions of the Credit Agreement (and, following the date hereof, the Amended Credit Agreement). Any breach of any representation or -7- warranty or covenant or agreement contained in this Amendment shall be deemed to be an Event of Default for all purposes of the Credit Agreement and the other Loan Documents. SECTION 5.3. Further Assurances. The Borrower hereby agrees that it will take any action that from time to time may be reasonably necessary to effectuate the amendments contemplated herein. SECTION 5.4. Amendment Fee. Upon satisfaction of the condition set forth in Section 3.1, the Borrower shall pay, without setoff, deduction or counterclaim, a non-refundable amendment fee for the account of each Lender that has executed and delivered (including delivery by way of facsimile) a copy of this Amendment to the attention of Sal Guerrera at Mayer, Brown & Platt, 1675 Broadway, New York, New York 10019 (19th floor), telecopy number 212-262-1910 at or prior to 5:00 p.m., New York time, on September 5, 2001 (as such time may be extended by the Borrower), in the amount of 15 basis points of such Lender's Commitment as of the date hereof. The aggregate amount of such amendment fee shall be paid at or prior to noon, New York time, on September 6, 2001 (or, in the event the date in the immediately preceding sentence has been extended, the Business Day that immediately succeeds such extended date) to the Administrative Agent for the pro rata account of the Lenders entitled to receive such amendment fee. SECTION 5.5. Fees and Expenses. The Borrower shall pay all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment and the documents and transactions contemplated hereby, including the reasonable fees and disbursements of Mayer, Brown, and Platt, as counsel for the Administrative Agent. SECTION 5.6. Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. SECTION 5.7. Execution in Counterparts. This Amendment may be executed by the parties hereto in counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. SECTION 5.8. Cross-References. References in this Amendment to any Article or Section are, unless otherwise specified or otherwise required by the context, to such Article or Section of this Amendment. SECTION 5.9. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction. -8- SECTION 5.10. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 5.11. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -9- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers or general partners (or their respective officers) thereunto duly authorized as of the day and year first above written. BUDGET GROUP, INC. By --------------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON, as a Lender and the Administrative Agent By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: BANK OF AMERICA, N.A. By --------------------------------------- Name: Title: BANK OF MONTREAL By --------------------------------------- Name: Title: S-10 THE BANK OF NEW YORK By --------------------------------------- Name: Title: THE BANK OF NOVA SCOTIA By --------------------------------------- Name: Title: THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH By --------------------------------------- Name: Title: BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A. GROUP, NEW YORK BRANCH By --------------------------------------- Name: Title: WASHINGTON MUTUAL BANK, F.A. (as successor in interest to BANK UNITED) By --------------------------------------- Name: Title: S-11 BANKERS TRUST COMPANY By --------------------------------------- Name: Title: BNP PARIBAS By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: BANQUE WORMS CAPITAL CORPORATION By --------------------------------------- Name: Title: BHF (USA) CAPITAL CORPORATION By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: S-12 CERBERUS PARTNERS L.P. By --------------------------------------- Name: Title: CREDIT INDUSTRIEL ET COMMERCIAL By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: S-13 CREDIT AGRICOLE INDOSUEZ By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: CREDIT LYONNAIS CHICAGO BRANCH By --------------------------------------- Name: Title: DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: S-14 ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: FLEET BANK, N.A. By --------------------------------------- Name: Title: THE FUJI BANK, LIMITED By --------------------------------------- Name: Title: IMPERIAL BANK By --------------------------------------- Name: Title: S-15 GENERAL ELECTRIC CAPITAL CORPORATION By --------------------------------------- Name: Title: GOLDMAN SACHS CREDIT PARTNERS L.P. By --------------------------------------- Name: Title: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By --------------------------------------- Name: Title: NATEXIS BANQUE By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: S-16 SATELLITE DISTRESSED CREDITS FUND, LLC By: Satellite Asset Management, L.P., its Investment Manager By ------------------------------------ Name: Title: SOUTHERN PACIFIC BANK By --------------------------------------- Name: Title: SUMITOMO MITSUI BANKING CORPORATION By --------------------------------------- Name: Title: SUNTRUST BANK By --------------------------------------- Name: Title: DK ACQUISITION PARTNERS LP By --------------------------------------- Name: Title: S-17 EX-10.41 7 g74374ex10-41.txt NINTH AMENDMENT TO AMENDED CREDIT AGREEMENT Exhibit 10.41 NINTH AMENDMENT, WAIVER AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS NINTH AMENDMENT, WAIVER AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 20, 2001 (this "Amendment"), is made by and among BUDGET GROUP, INC., a Delaware corporation (the "Borrower"), the Lenders (such capitalized term and all other capitalized terms not otherwise defined herein shall have the meanings provided for in Article I below) parties hereto and CREDIT SUISSE FIRST BOSTON, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders and the Agents have heretofore entered into that certain Amended and Restated Credit Agreement, dated as of June 19, 1998 (as amended by the First Amendment to Amended and Restated Credit Agreement dated as of September 11, 1998, the Second Amendment to Amended and Restated Credit Agreement dated as of March 18, 1999, the Third Amendment to Amended and Restated Credit Agreement dated as of December 22, 1999, the Fourth Amendment and Waiver to Amended and Restated Credit Agreement dated as of September 30, 2000, the Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001, the Sixth Amendment to Amended and Restated Credit Agreement, dated as of February 9, 2001, the Seventh Amendment and Consent to Amended and Restated Credit Agreement, dated as of June 19, 2001, the Eighth Amendment and Consent to Amended and Restated Credit Agreement, dated as of July 31, 2001, and as further amended, supplemented, amended and restated or otherwise modified prior to the date hereof, the "Credit Agreement"); WHEREAS, the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings may exceed the Borrowing Base Amount; WHEREAS, the Borrower desires to consummate certain asset sales; WHEREAS, the Borrower desires certain waivers and consents from the requisite Lenders in connection with the foregoing and with respect to certain related matters; and WHEREAS, the requisite Lenders are willing, on and subject to the terms and conditions set forth below (including, without limitation, the amendments to the Credit Agreement provided for herein), to grant the waivers and consents provided below (the Credit Agreement, as amended and otherwise modified pursuant to the terms of this Amendment, being referred to as the "Amended Credit Agreement"); NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Borrower and the requisite Lenders hereby agree as follows: ARTICLE I DEFINITIONS SECTION I.1. Certain Definitions. The following terms (whether or not underscored) when used in this Amendment shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the preamble. "Amended Credit Agreement" is defined in the fifth recital. "Amendment" is defined in the preamble. "Borrower" is defined in the preamble. "Credit Agreement" is defined in the first recital. SECTION I.2. Other Definitions. Terms for which meanings are provided in the Amended Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings. ARTICLE II AMENDMENTS, WAIVERS AND CONSENTS; REDUCTION IN COMMITMENT AMOUNT SECTION II.1. Amendments. Subject to the satisfaction of the conditions set forth in Article III, the Credit Agreement is hereby amended in accordance with this Section 2.1. SECTION II.0.1. Amendment to Section 1.1 ("Defined Terms") of the Credit Agreement. The definition of "Loan Availability Amount" set forth in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows: "'Loan Availability Amount" means $0.'" SECTION II.0.2. Additional Amendments to Section 1.1 ("Defined Terms") of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended by inserting in such Section the following definitions in the appropriate alphabetical order: "Lease" means a Lease, as defined in the Base Indenture, including (i) the Amended and Restated Master Motor Vehicle Lease Agreement, dated as of December 1, 1996, as subsequently amended or modified, among TFFC, Budget and the lessees party thereto; (ii) the Motor Vehicle Lease Agreement - Series 1997-1, dated as of April 1, 1997, as subsequently amended or modified, among TFFC, Budget and the lessees party thereto; (iii) the Motor Vehicle Lease Agreement - Series 1997-2, dated as of April 29, 1997, as subsequently amended or modified, among TFFC, Budget and the lessees party thereto; (iv) the Amended and Restated Master Motor Vehicle Lease Agreement - Group I, dated as of June 19, 1998, as subsequently amended or modified, among TFFC, Budget and the lessees party thereto; and (v) the Master Motor Vehicle Lease Agreement - Group V, dated as of April 18, 2001 as subsequently amended or modified, among TFFC, Budget and the lessees party thereto. "'Ninth Amendment' means the Ninth Amendment, Waiver and Consent to Amended and Restated Credit Agreement, dated as of December 20, 2001, among the Borrower, the Lenders parties thereto and the Administrative Agent." "Ninth Amendment Effective Date" means the date the Ninth Amendment became effective in accordance with its terms. SECTION II.0.3. Amendment to Section 4.2 ("Issuances and Extensions") of the Credit Agreement. Section 4.2 of the Credit Agreement is hereby amended by amending and restating the final two sentences thereof in their entirety as follows: "Notwithstanding anything to the contrary herein, on and after the Ninth Amendment Effective Date, no Letter of Credit may be issued and the Stated Amount of any Letter of Credit then existing may not be increased, other than (i) the issuance of Enhancement Letters of Credit or the increase in the Stated Amount of existing Enhancement Letters of Credit, provided that (x) the aggregate Stated Amount of such newly issued Enhancement Letters of Credit, together with the aggregate increases in the Stated Amount of such existing Enhancement Letters of Credit, does not exceed $8,000,000 and (y) concurrently with any such issuance or increase, the aggregate Stated Amount of all other Enhancement Letters of Credit is reduced dollar-for-dollar in an amount equal to the Stated Amount of such newly issued Enhancement Letter of Credit or such increase in the Stated Amount of an existing Enhancement Letter of Credit, and (ii) the issuance of General Letters of Credit or the increase in the Stated Amount of existing General Letters of Credit, in each case for the purpose of supporting the insurance requirements of the Borrower and its Subsidiaries, provided that the aggregate Stated Amount of such newly issued General Letters of Credit, together with the aggregate increases in the Stated Amount of such existing General Letters of Credit, does not exceed $3,500,000." -3- SECTION II.0.4. Amendment of Section 8.1.9 ("Future Subsidiaries") of the Credit Agreement. Section 8.1.9 of the Credit Agreement is hereby amended by (a) deleting in clause (a) thereof the phrase "in the event such Person is a Subsidiary which is not a Foreign Subsidiary," and (b) deleting in clause (b) thereof the proviso set forth in such clause. SECTION II.0.5. Additional Amendments to Section 8.1 ("Affirmative Covenants") of the Credit Agreement. Section 8.1 of the Credit Agreement is hereby further amended by adding the following Sections 8.1.15, 8.1.16, 8.1.17, 8.1.18 and 8.1.19 thereto: "SECTION 8.1.15. Lease Agreements. The Borrower shall cause each of its Subsidiaries that is a lessee under a Lease (i) to make all payments required to be made by it thereunder on the date such payments are required to be made thereunder and (ii) to comply in all respects with each of its other obligations thereunder. SECTION 8.1.16 Additional Collateral. The Borrower shall (a) as soon as practicable following the effectiveness of the Ninth Amendment, (i) cause its relevant Subsidiary (or itself) to cause the Administrative Agent, for the benefit of the Secured Parties, to have a first priority perfected security interest in the property described on Schedule I to the Ninth Amendment (subject to Liens permitted hereunder), (ii) cause each Foreign Subsidiary (including each Foreign Subsidiary acquired or formed following the effectiveness of the Ninth Amendment), subject to exceptions agreed to by the Administrative Agent based on the value to the Secured Parties of any such guaranty and the cost to the Borrower and its Subsidiaries of providing such guaranty, to execute and deliver to the Administrative Agent a supplement to the Subsidiary Guaranty for the purpose of becoming a guarantor thereunder, which supplement shall be substantially in the form of Annex I attached to the Subsidiary Guaranty (with such modifications thereto as are necessary, in the reasonable judgment of the Administrative Agent, to cause the Subsidiary Guaranty to be the legal, valid, binding and enforceable obligation of such Subsidiary under all applicable laws), and (iii) cause each such Subsidiary to cause the Administrative Agent, for the benefit of the Secured Parties, to have a first priority perfected security interest in all the property (real and personal, tangible and intangible) owned on the date of such effectiveness by such Subsidiary and (except to the extent theretofore provided to the Administrative Agent for the benefit of the Secured Parties) in all Capital Stock of such Subsidiary, in each case subject to Liens permitted hereunder and exceptions agreed to by the Administrative Agent based on the value to the Secured Parties of any such security interest and the cost to the Borrower and its Subsidiaries of providing such security interest, and (b) cause each such Subsidiary to cause the Administrative Agent, for the benefit of the Secured Parties, to have a first priority security interest (subject to Liens permitted hereunder and exceptions agreed to by the Administrative Agent based on the value to the Secured Parties of any such security interest and the cost to the Borrower and its Subsidiaries of providing such security interest) in all the property (real and personal, tangible and intangible) owned from time -4- to time after the date of such effectiveness by each such Subsidiary upon the acquisition of such property. The Borrower agrees to use its best efforts to fulfill its obligations under clause (a) of the immediately preceding sentence no later than December 31, 2001. In order to effect the terms of the first sentence of this Section, the Borrower and its Subsidiaries shall execute and deliver to the Administrative Agent such agreements, instruments and documents as it may reasonably request, including amendments and/or supplements to the Subsidiary Guaranty, the Subsidiary Security Agreement, the Subsidiary Pledge Agreement, mortgages and/or deeds of trust, title insurance reports, financing statements and, in the Administrative Agent's reasonable discretion, legal opinions (including legal opinions with respect to collateral provided to the Administrative Agent pursuant to the terms of Sections 3.5 and 3.6 of the Ninth Amendment), in each case in form and substance reasonably satisfactory to the Administrative Agent. SECTION 8.1.17. Preliminary Plan. The Borrower shall furnish, or shall cause to be furnished, to each Lender on or prior to January 25, 2002, its preliminary plan (i) for restructuring the Indebtedness of it and its Subsidiaries, (ii) for obtaining financing for the acquisition (or refinancing) of Vehicles necessary to meet its business plan, and (iii) for meeting its liquidity needs, such plan to be in form and scope reasonably satisfactory to the Lender Committee Members holding a majority of the Commitment Amount held in the aggregate by them; provided that, if such plan is initially not reasonably satisfactory in form and scope to such Lender Committee Members, the Borrower shall have three Business Days from its receipt of notice from such Lender Committee Members that such plan is not in form and scope reasonably satisfactory to such Lender Committee Members (which notice shall set forth the reasons such plan is not satisfactory) to furnish a revised plan that is in form and scope reasonably satisfactory to such Lender Committee Members. SECTION 8.1.18. Amendment Fee. The Borrower shall pay, without setoff, deduction or counterclaim, a non-refundable amendment fee with respect to the Ninth Amendment for the account of each Lender that executed and delivered the Ninth Amendment on or prior to December 20, 2001 (as such time may be extended by the Borrower), in the amount of 50 basis points of such Lender's Commitment as of such date. The aggregate amount of such amendment fee shall be paid to the Administrative Agent for the pro rata account of the Lenders entitled to receive such amendment fee on or prior to the earlier of (x) September 12, 2002 and (y) the occurrence of a Commitment Termination Event. SECTION 8.1.19. Proceeds Cash Collateral Account. The Borrower shall, as soon as possible following each withdrawal (if any) from the Proceeds Cash Collateral Account (as defined in Section 2.2 of the Ninth Amendment) that is made pursuant to a certification described in subclause (2)(y) of the proviso to clause (d) of Section 2.2 of -5- the Ninth Amendment, deposit all unrestricted cash held by it or any of its Subsidiaries into the Proceeds Cash Collateral Account until the aggregate amount of such deposits equals the aggregate amount of such withdrawals. SECTION II.0.6. Amendment to Section 8.2.10 ("Asset Dispositions, etc.") of the Credit Agreement. Clause (c) of Section 8.2.10 of the Credit Agreement is hereby amended by amending and restating the proviso thereto in its entirety to read as follows: "provided, however, that, following the Ninth Amendment Effective Date, the aggregate fair market value of all such assets (whether or not relating to the conduct of a Core Business) sold, transferred or conveyed pursuant to this clause (c) following the Ninth Amendment Effective Date shall not exceed $2,500,000; provided further, however, that no such sale, transfer or conveyance of any asset (whether or not relating to the conduct of a Core Business) shall be permitted to be made if immediately before or after giving effect thereto, any Default shall have occurred and be continuing;" SECTION II.0.7. Additional Amendments to Section 8.2 ("Negative Covenants") of the Credit Agreement. Section 8.2 of the Credit Agreement is hereby further amended by adding a new Section 8.2.19 thereto: "SECTION 8.2.19 Employment and Other Arrangements. (a) The Borrower will not (i) amend, supplement or modify, or permit any of its Subsidiaries to amend, supplement or modify, any agreement with an officer or employee of the Borrower or any of its Subsidiaries who was, as of November 1, 2001, one of the four most highly compensated officers and employees of the Borrower and its Subsidiaries (exclusive of all compensation payable in the Borrower's common stock, but otherwise as would be determined pursuant to Regulation S-K under the Securities Act), or (ii) enter into, or permit any of its Subsidiaries to enter into, any new agreement or arrangement with any such officer or employee (including with respect to severance), in any capacity (including as a consultant), except to the extent the aggregate cash cost to the Borrower and its Subsidiaries with respect to any such officer or employee as a result of any such amendments, supplements, modifications and new agreements and arrangements would not be increased. (b) The Borrower will not (i) amend, modify or supplement, or permit any of its Subsidiaries to amend, supplement or modify, any Lease or Supplement to the Base Indenture, or (ii) enter into, or permit any of its Subsidiaries to enter into, any new Lease or new Supplement to the Base Indenture, except to the extent such amendment, modification or supplement or new Lease or Supplement could not reasonably be expected to have an adverse effect on the Lenders. -6- SECTION II.0.8. Amendment to Section 9.1.3 ("Non-Performance of Certain Covenants and Obligations") of the Credit Agreement. Section 9.1.3 of the Credit Agreement is hereby amended by adding the phrase " , 8.1.15, 8.1.16, 8.1.17, 8.1.18 or 8.1.19" at the end thereof. SECTION II.0.9. Amendment to Section 11.3 ("Payment of Costs and Expenses") of the Credit Agreement. Section 11.3 of the Credit Agreement is hereby amended by adding the following sentence at the end thereof: "In addition to, and without limiting the effect of, the foregoing provisions of this Section 11.3, the Borrower also agrees to pay (i) the out-of-pocket expenses of each Lender Committee Member and (ii) the fees and out-of-pocket expenses of (A) any special restructuring counsel engaged by the Administrative Agent and (B) Conway, Del Genio, Gries & Co., LLC, consultants to the Lenders (and the Borrower agrees that it will, and will cause each of its Subsidiaries to, permit such consultants to have access to their respective books, records, officers and accountants for the purpose of completing their engagement and otherwise cooperate with such consultants in completing their engagement)." SECTION II.1. Waivers and Consents. Subject to the satisfaction of the conditions set forth in Article III, the Lenders, as of the date hereof, hereby: (a) waive, until (and including) February 8, 2002, compliance by the Borrower with the provisions of clause (d) of Section 8.2.4 of the Credit Agreement with respect to the fourth Fiscal Quarter of the 2001 Fiscal Year; (b) consent to the Borrowing Base Amount calculated as of the last day of November 2001 to be less than the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings outstanding during the period in which such Borrowing Base Amount is in effect under the terms of the Credit Agreement, without requiring any mandatory prepayments and/or cash collateralization under clause (b) of Section 3.1.1 of the Credit Agreement; provided that such Borrowing Base Amount is not less than $350,000,000 as of the last day of November 2001; (c) consent, until (and including) February 8, 2002, to the Borrowing Base Amount calculated as of the last day of December 2001 to be less than the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings outstanding during the period in which such Borrowing Base Amount is in effect under the terms of the Credit Agreement, without requiring any mandatory prepayments and/or cash collateralization under clause (b) of Section 3.1.1 of the Credit Agreement; provided that such Borrowing Base Amount is not less than $267,000,000 as of the last day of December 2001; -7- (d)(i) waive the requirements of Section 2.2.2 of the Credit Agreement ("Reduction of the Commitment Amount - Mandatory") with respect to the proceeds of the sale of the Specified Real Estate Assets located in San Francisco, California and Seattle, Washington; and (ii) consent and agree that no portion of the fair market value of such assets shall be counted for purposes of computing the aggregate amount set forth in clause (c)(ii) of Section 8.2.10 of the Credit Agreement or in the proviso to such clause; provided that (A) the proceeds of such sale are immediately deposited in a cash collateral account maintained with the Administrative Agent (the "Proceeds Cash Collateral Account") as security for the Secured Obligations (as defined in the Borrower Security Agreement), and the Borrower and its Subsidiaries shall have no right to withdraw any funds from such account except to the extent that it has provided to the Administrative Agent a certificate, executed by the chief financial or chief accounting officer of the Borrower, certifying that (1) no Default then exists and (2) (x) the amount being requested to be withdrawn is to be transferred to the relevant collection account for the payment of lease payments or other obligations of the lessees under a Lease or the payment of demands made under a promissory note of the type described in clause (h) of Section 8.2.2 of the Credit Agreement (each such promissory note, a "Demand Capitalization Note", and, collectively, "Demand Capitalization Notes"), (y) all demands (if any) theretofore made under the Demand Capitalization Notes have been satisfied by the Borrower and all lease payments and other obligations of lessees under all Leases that are payable in December 2001 (whether or not then due) have been paid to the relevant collection accounts and the amount being requested to be withdrawn is being withdrawn on or prior to January 4, 2002, will be used for general corporate purposes not inconsistent with the terms of the Loan Documents and does not exceed, when taken together with all other withdrawals made pursuant to the certification described in this clause (y), $4,000,000, or (z) all demands (if any) theretofore made under the Demand Capitalization Notes have been satisfied by the Borrower and all lease payments and other obligations of lessees under all Leases that are payable in December 2001 or January 2002 (whether or not then due) have been paid to the relevant collection accounts and the amount being requested to be withdrawn will be used for general corporate purposes not inconsistent with the terms of the Loan Documents and (B) the Administrative Agent, for the benefit of the Secured Parties, shall have, upon consummation of any such sale, a perfected, first-priority security interest in all non-cash consideration received by the Borrower and its Subsidiaries in respect of any such sale; and (e)(i) waive the requirements of Section 2.2.2 of the Credit Agreement ("Reduction of the Commitment Amount - Mandatory") with respect to the proceeds received from the sale, discount or restructuring of (A) that certain Promissory Note dated as of October 20, 2000, executed by Cruise America, Inc. in favor of Budget Rent A Car -8- Corporation in the original principal amount of $22,739,232.92; (B) that certain Subordinate Promissory Note dated as of September 29, 2000, executed by VPSI, Inc. in favor of Budget Rent a Car Corporation in the original principal amount of $10,050,000.00; (C) that certain Promissory Note dated as of October 20, 2000, executed by RVR, Inc. in favor of Budget Rent A Car Corporation in the original principal amount of $27,531,000.00; and (D) the Borrower's 19% interest in the Capital Stock of Cruise America, Inc.; (ii) waive any provision in the Loan Documents that restricts the amendment or other modificaation of such promissory notes to the extent necessary to permit any such sale, discount or restructuring; and (iii) consent and agree that no portion of the fair market value of such promissory notes or Capital Stock shall be counted for purposes of computing the aggregate amount set forth in clause (c)(ii) of Section 8.2.10 of the Credit Agreement or in the proviso to such clause; provided that (A) the proceeds of such sale, discount or restructuring are immediately deposited in the Proceeds Cash Collateral Account subject to the withdrawal restrictions described in clause (d) of this Section 2.2 and (B) the Administrative Agent, for the benefit of the Secured Parties, shall have, upon consummation of any such sale, a perfected, first-priority security interest in all non-cash consideration received by the Borrower and its Subsidiaries in respect of any such sale; and (f)(i) waive the requirements of Section 2.2.2 of the Credit Agreement ("Reduction of the Commitment Amount - Mandatory") with respect to the proceeds of the sale of up to 4,804,560 shares of common stock of Homestore.com Inc.; and (ii) consent and agree that no portion of the fair market value of such shares shall be counted for purposes of computing the aggregate amount set forth in clause (c)(ii) of Section 8.2.10 of the Credit Agreement or in the proviso to such clause; provided that (A) the proceeds of such sale are immediately deposited in the Proceeds Cash Collateral Account subject to the withdrawal restrictions described in clause (d) of this Section 2.2 and (B) the Administrative Agent, for the benefit of the Secured Parties, shall have, upon consummation of any such sale, a perfected, first-priority security interest in all non-cash consideration received by the Borrower and its Subsidiaries in respect of any such sale. SECTION II.2. Reduction of Commitment Amount. The Borrower hereby reduces the Commitment Amount from $500,000,000 to $430,000,000 effective as of the Ninth Amendment Effective Date (with the reference in the definition of "Commitment Amount" to "$500,000,000" -9- being amended to be a reference to "$430,000,000"), and the Borrower, the Administrative Agent and the Lenders waive any requirement of three Business Days' prior notice thereof. Such reduction shall be allocated pro rata among the Lenders as of the Ninth Amendment Effective Date. ARTICLE III CONDITIONS TO EFFECTIVENESS This Amendment, and the amendments and modifications contained herein, shall be and shall become effective as of the date hereof subject to the satisfaction of each of the conditions set forth in this Article III to the satisfaction of the Administrative Agent. SECTION III.1. Execution of Counterparts. The Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered on behalf of the Borrower and each of the requisite Lenders. SECTION III.2. Effective Date Certificate. The Administrative Agent shall have received, with counterparts for each Lender, a certificate, dated the effective date of this Amendment (the "Ninth Amendment Effective Date"), appropriately completed and duly executed and delivered by an Authorized Officer of the Borrower in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower made as of such date and, at the time such certificate is delivered, such statements shall in fact be true and correct. SECTION III.3. Execution of Affirmation and Acknowledgment. The Administrative Agent shall have received an affirmation and acknowledgment, dated the effective date of this Amendment and in form and substance satisfactory to it, duly executed and delivered by each Guarantor and any other Obligor that has granted a Lien pursuant to any Loan Document. SECTION III.4. December Payments. All lease payments and other obligations of the lessees under all Leases that are payable in December 2001 (whether or not due prior to the Ninth Amendment Effective Date) shall have been paid to the relevant collection accounts and all demands (if any) made under the Demand Capitalization Notes prior to the Ninth Amendments Effective Date shall have been satisfied by the Borrower. SECTION III.5. Amendment to Subsidiary Pledge Agreements. The Administrative Agent shall have received executed counterparts of the First Amendment to the Amended and Restated Subsidiary Pledge Agreement substantially in the form attached hereto as Exhibit A, dated as of the Ninth Amendment Effective Date and duly executed and delivered by each of the parties thereto, together with (to the extent not previously delivered to the Administrative Agent) (i) the certificates evidencing all of the issued and outstanding shares of Capital Stock pledged pursuant to such amendment, which certificates shall in each case be accompanied by undated -10- stock powers duly executed in blank, or, if any such shares of Capital Stock so pledged are uncertificated securities, the Administrative Agent shall have obtained "control" (as defined in the Uniform Commercial Code in effect in the State of New York) over such shares of Capital Stock) and such other instruments and documents as the Administrative Agent shall deem necessary or in the reasonable opinion of the Administrative Agent desirable under applicable law to perfect the first priority security interest of the Administrative Agent in such shares of Capital Stock and (ii) executed copies of Uniform Commercial Code financing statements naming the pledgor thereof as the debtor and the Administrative Agent as the secured party, suitable for filing under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect the first priority security interest of the Administrative Agent in such Capital Stock. SECTION III.6. Supplement and Amendment to Subsidiary Security Agreement. The Administrative Agent shall have received executed counterparts of a supplement and an amendment to the Subsidiary Security Agreement substantially in the forms of Exhibit B-1 and Exhibit B-2 hereto, in each case, dated as of the Ninth Amendment Effective Date and duly executed and delivered by Budget Rent-A-Car International, Inc. and the Obligors parties thereto, respectively, together with all Uniform Commercial Code financing statement amendments suitable for filing under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the security interest of the Administrative Agent pursuant to the Subsidiary Security Agreement. SECTION III.7. Annual Budget. The Administrative Agent shall have received a preliminary annual budget for the 2002 Fiscal Year for the Borrower and its Subsidiaries, which budget shall be in form and scope reasonably satisfactory to the Administrative Agent. SECTION III.8. Fees and Expenses. The Administrative Agent (and all other Persons entitled thereto) shall have received all fees and expenses due and payable pursuant to Section 5.5 (to the extent then invoiced) and pursuant to the Credit Agreement (including all previously invoiced fees and expenses). ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION IV.1. Representations and Warranties. In order to induce the requisite Lenders and the Administrative Agent to enter into this Amendment, the Borrower hereby represents and warrants to the Administrative Agent, the Issuer and each Lender, as of the date hereof, as follows: -11- (a) the representations and warranties set forth in Article VII of the Credit Agreement (excluding, however, those contained in Section 7.6 and Section 7.7 of the Credit Agreement) and in each other Loan Document are, in each case, true and correct (unless stated to relate solely to an earlier date, in which case such representations and warranties are true and correct as of such earlier date); (b) except as disclosed by the Borrower pursuant to reports on Form 10-Q and Form 10-K filed with the Securities and Exchange Commission prior to the date hereof, there has been no material adverse change in the business, property, operations, assets, liabilities, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, since December 31, 1997; (c) except as disclosed by the Borrower to the Agents, the Issuer and the Lenders pursuant to Section 7.7 of the Credit Agreement (i) no labor controversy, litigation, arbitration or governmental investigation or proceeding is pending or, to the best knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries which might materially adversely affect the Borrower's consolidated business, operations, assets, revenues, properties or prospects or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document; and (ii) no development has occurred in any labor controversy, litigation, arbitration or governmental investigation or proceeding disclosed pursuant to Section 7.7 of the Credit Agreement which might materially adversely affect the consolidated businesses, operations, assets, revenues, properties or prospects of the Borrower and its Subsidiaries; (d) after giving effect to this Amendment, no Default has occurred and is continuing, and neither the Borrower nor any of its Subsidiaries nor any other Obligor is in material violation of any law or governmental regulation or court order or decree; (e) this Amendment has been duly authorized, executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except to the extent the enforceability hereof may be limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors generally and (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law; and (f) the execution, delivery and performance by the Borrower and its Subsidiaries of this Amendment and each other Loan Document executed or to be executed by any of -12- them in connection therewith are within the Borrower's and each such Subsidiary's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower's or such Subsidiary's Organic Documents, (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower or such Subsidiary or (iii) result in, or require the creation or imposition of, any Lien (other than the Liens created under the Loan Documents in favor of the Administrative Agent for the benefit of the Secured Parties) on any of the Borrower's or such Subsidiary's properties. SECTION IV.2. Full Disclosure. Except as corrected by written information delivered to the Agents and the Lenders reasonably prior to the date on which this representation is made, all factual information heretofore or contemporaneously furnished by the Borrower in writing to any Agent, the Issuer or any Lender for purposes of or in connection with this Amendment or any transaction contemplated hereby is true and accurate in every material respect and such information is not incomplete by omitting to state any material fact necessary to make such information not misleading. All projections delivered to any Agent or any Lender by or on behalf of the Borrower have been prepared in good faith by the Borrower and represent the best estimates of the Borrower, as of the date hereof, of the reasonably expected future performance of the businesses reflected in such projections. SECTION IV.3. Compliance with Credit Agreement. After giving effect to this Amendment, each Obligor is in compliance with all the terms and conditions of the Credit Agreement and the other Loan Documents to be observed or performed by it thereunder, and no Default has occurred and is continuing. ARTICLE V MISCELLANEOUS SECTION V.1. Full Force and Effect; Limited Amendment. Except as expressly provided herein, all of the representations, warranties, terms, covenants, conditions and other provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are in all respects hereby ratified and confirmed. The amendments, waivers and consents set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein, waived hereby or consented to hereby and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other term or provision of the Credit Agreement, any other Loan Document referred to therein or herein or of any transaction or further or future action on the part of the Borrower or any other Obligor which would require the consent of any of the Lenders under the Credit Agreement or any of the other Loan Documents. -13- SECTION V.2. Loan Document Pursuant to Credit Agreement. This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall be construed, administered and applied in accordance with all of the terms and provisions of the Credit Agreement (and, following the date hereof, the Amended Credit Agreement). Any breach of any representation or warranty or covenant or agreement contained in this Amendment shall be deemed to be an immediate Event of Default for all purposes of the Credit Agreement and the other Loan Documents. SECTION V.3. Further Assurances. The Borrower hereby agrees that it will take any action that from time to time may be reasonably necessary to effectuate the amendments contemplated herein. SECTION V.4. Fees and Expenses. The Borrower shall pay all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment and the documents and transactions contemplated hereby, including the reasonable fees and disbursements of Mayer, Brown and Platt, counsel for the Administrative Agent, and Wachtell, Lipton, Rosen & Katz, special restructuring counsel for the Administrative Agent. SECTION V.5. Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. SECTION V.6. Execution in Counterparts. This Amendment may be executed by the parties hereto in counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. SECTION V.7. Cross-References. References in this Amendment to any Article or Section are, unless otherwise specified or otherwise required by the context, to such Article or Section of this Amendment. SECTION V.8. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION V.9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION V.10. Acknowledgments of the Borrower. The Borrower hereby acknowledges that (a) each of the provisions of this Amendment has been entered into by the Borrower and the Lenders in consideration of, among other things, all of the other provisions of -14- this Amendment, and (b) the value of such consideration to, and the timing of the receipt of such value by, the Borrower and its Subsidiaries has been and should be determined by reference to the provisions of this Amendment (and the transactions contemplated hereby) taken as a whole. SECTION V.11. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -15- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers or general partners (or their respective officers) thereunto duly authorized as of the day and year first above written. BUDGET GROUP, INC. By ----------------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON, as a Lender and the Administrative Agent By ----------------------------------------- Name: Title: By ----------------------------------------- Name: Title: BANK OF AMERICA, N.A. By ----------------------------------------- Name: Title: BANK OF MONTREAL By ----------------------------------------- Name: Title: S-1 THE BANK OF NEW YORK By ----------------------------------------- Name: Title: THE BANK OF NOVA SCOTIA By ---------------------------------------- Name: Title: THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH By ---------------------------------------- Name: Title: BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A. GROUP, NEW YORK BRANCH By ---------------------------------------- Name: Title: WASHINGTON MUTUAL BANK, F.A. (as successor in interest to BANK UNITED) By ---------------------------------------- Name: Title: S-2 BANKERS TRUST COMPANY By ---------------------------------------- Name: Title: BNP PARIBAS By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: BANQUE WORMS CAPITAL CORPORATION By ---------------------------------------- Name: Title: BHF (USA) CAPITAL CORPORATION By ----------------------------------------- Name: Title: By ----------------------------------------- Name: Title: S-3 CERBERUS PARTNERS L.P. By ----------------------------------------- Name: Title: CREDIT INDUSTRIEL ET COMMERCIAL By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: S-4 CREDIT AGRICOLE INDOSUEZ By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: CREDIT LYONNAIS CHICAGO BRANCH By ---------------------------------------- Name: Title: DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: S-5 ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: FLEET BANK, N.A. By ---------------------------------------- Name: Title: THE FUJI BANK, LIMITED By ----------------------------------------- Name: Title: IMPERIAL BANK By ----------------------------------------- Name: Title: S-6 GENERAL ELECTRIC CAPITAL CORPORATION By ---------------------------------------- Name: Title: GOLDMAN SACHS CREDIT PARTNERS L.P. By ---------------------------------------- Name: Title: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By ---------------------------------------- Name: Title: NATEXIS BANQUE By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: SATELLITE DISTRESSED CREDITS FUND, LLC By: Satellite Asset Management, L.P., its Investment Manager By ---------------------------------------- Name: Title: SOUTHERN PACIFIC BANK By ----------------------------------------- Name: Title: SUMITOMO MITSUI BANKING CORPORATION By ----------------------------------------- Name: Title: SUNTRUST BANK By ----------------------------------------- Name: Title: DK ACQUISITION PARTNERS LP By ---------------------------------------- Name: Title: S-8 EX-10.42 8 g74374ex10-42.txt TENTH AMENDMENT TO AMENDED CREDIT AGREEMENT EXHIBIT 10.42 TENTH AMENDMENT, WAIVER AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS TENTH AMENDMENT, WAIVER AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 7, 2002 (this "Amendment"), is made by and among BUDGET GROUP, INC., a Delaware corporation (the "Borrower"), the Lenders (such capitalized term and all other capitalized terms not otherwise defined herein shall have the meanings provided for in Article I below) parties hereto and CREDIT SUISSE FIRST BOSTON, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders and the Agents have heretofore entered into that certain Amended and Restated Credit Agreement, dated as of June 19, 1998 (as amended by the First Amendment to Amended and Restated Credit Agreement dated as of September 11, 1998, the Second Amendment to Amended and Restated Credit Agreement dated as of March 18, 1999, the Third Amendment to Amended and Restated Credit Agreement dated as of December 22, 1999, the Fourth Amendment and Waiver to Amended and Restated Credit Agreement dated as of September 30, 2000, the Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001, the Sixth Amendment to Amended and Restated Credit Agreement, dated as of February 9, 2001, the Seventh Amendment and Consent to Amended and Restated Credit Agreement, dated as of June 19, 2001, the Eighth Amendment and Consent to Amended and Restated Credit Agreement, dated as of July 31, 2001, the Ninth Amendment, Waiver and Consent to Amended and Restated Credit Agreement dated as of December 20, 2001, and as further amended, supplemented, amended and restated or otherwise modified prior to the date hereof, the "Credit Agreement"); WHEREAS, the Borrower desires to extend certain waivers and consents obtained in the Ninth Amendment and to obtain certain related additional waivers and consents from the requisite Lenders; and WHEREAS, the requisite Lenders are willing, on and subject to the terms and conditions set forth below (including, without limitation, the amendments to the Credit Agreement provided for herein), to grant the waivers and consents provided below (the Credit Agreement, as amended and otherwise modified pursuant to the terms of this Amendment, being referred to as the "Amended Credit Agreement"); NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Borrower and the requisite Lenders hereby agree as follows: DEFINITIONS SECTION 1.1. Certain Definitions. The following terms (whether or not underscored) when used in this Amendment shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the preamble. "Amended Credit Agreement" is defined in the third recital. "Amendment" is defined in the preamble. "Borrower" is defined in the preamble. "Credit Agreement" is defined in the first recital. SECTION 1.2. Other Definitions. Terms for which meanings are provided in the Amended Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings. ARTICLE II AMENDMENTS, WAIVERS AND CONSENTS SECTION 2.1. Amendments. Subject to the satisfaction of the conditions set forth in Article III, the Credit Agreement is hereby amended in accordance with this Section 2.1. SECTION 2.1.1. Amendments to Section 1.1 ("Defined Terms") of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended by inserting in such Section the following definitions in the appropriate alphabetical order: "'Tenth Amendment' means the Tenth Amendment, Waiver and Consent to Amended and Restated Credit Agreement, dated as of February 7, 2002, among the Borrower, the Lenders parties thereto and the Administrative Agent." "Tenth Amendment Effective Date" means the date the Tenth Amendment became effective in accordance with its terms. SECTION 2.1.2. Amendment to Section 4.2 ("Issuances and Extensions") of the Credit Agreement. Section 4.2 of the Credit Agreement is hereby amended by: -2- (i) deleting the reference to $8,000,000 in the last sentence thereof (which sentence was added pursuant to Section 2.1.3 of the Ninth Amendment) and substituting therefor $16,000,000, and (ii) deleting the reference to "$3,500,000" in the last sentence thereof and substituting therefor the following: "(A) prior to the Tenth Amendment Effective Date, $3,500,000 or (B) on or following the Tenth Amendment Effective Date, $5,250,000 (so long as, concurrently with each increase of the aggregate Stated Amount of such General Letters of Credit in excess of such $3,500,000, the aggregate Stated Amount of all other Letters of Credit is reduced dollar-for-dollar in an amount equal to such increase)". SECTION 2.1.3. Amendment to Section 8.1.17 ("Preliminary Plan") of the Credit Agreement. Section 8.1.17 of the Credit Agreement is hereby amended by amending and restating such Section in its entirety as follows: SECTION 8.1.17. Restructuring Plan. The Borrower shall furnish, or shall cause to be furnished, to each Lender on or prior to February 25, 2002, its plan (i) for restructuring the Indebtedness of it and its Subsidiaries, (ii) for obtaining financing for the acquisition (or refinancing) of Vehicles necessary to meet its business plan, and (iii) for meeting its liquidity needs, such plan to be in form and scope reasonably satisfactory to the Lender Committee Members holding a majority of the Commitment Amount held in the aggregate by them; provided that, if such plan is initially not reasonably satisfactory in form and scope to such Lender Committee Members, the Borrower shall have three Business Days from its receipt of notice from such Lender Committee Members that such plan is not in form and scope reasonably satisfactory to such Lender Committee Members (which notice shall set forth the reasons such plan is not satisfactory) to furnish a revised plan that is in form and scope reasonably satisfactory to such Lender Committee Members. SECTION 2.2. Waivers and Consents. Subject to the satisfaction of the conditions set forth in Article III, the Lenders, as of the date hereof, hereby: (a) waive, until (and including) March 8, 2002, compliance by the Borrower with the provisions of clause (d) of Section 8.2.4 of the Credit Agreement with respect to the fourth Fiscal Quarter of the 2001 Fiscal Year; (b) consent to the Borrowing Base Amount calculated as of the last day of December 2001 to be less than the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings outstanding during the period in which such Borrowing Base Amount is in effect under the terms of the Credit Agreement, without requiring any mandatory prepayments and/or cash collateralization under clause (b) of Section 3.1.1 of the Credit Agreement; -3- (c) consent, until (and including) March 8, 2002, to the Borrowing Base Amount calculated as of the last day of January 2002 to be less than the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings outstanding during the period in which such Borrowing Base Amount is in effect under the terms of the Credit Agreement, without requiring any mandatory prepayments and/or cash collateralization under clause (b) of Section 3.1.1 of the Credit Agreement; provided that the Borrowing Base Amount is not less than $260,000,000 as of the last day of January 2002; and (d) consent that the 13-Week Consolidated Cash Flow Projections for the period commencing with the week ending February 1, 2002, as furnished to the Lenders on February 7, 2002, shall satisfy the requirement in clause (p) of Section 8.1.1 of the Credit Agreement to provide a 13-Week Consolidated Cash Flow Projection on or prior to February 8, 2002. ARTICLE III CONDITIONS TO EFFECTIVENESS This Amendment, and the amendments and modifications contained herein, shall be and shall become effective as of the date hereof subject to the satisfaction of each of the conditions set forth in this Article III to the satisfaction of the Administrative Agent. SECTION 3.1. Execution of Counterparts. The Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered on behalf of the Borrower and each of the requisite Lenders. SECTION 3.2. Effective Date Certificate. The Administrative Agent shall have received, with counterparts for each Lender, a certificate, dated the effective date of this Amendment (the "Tenth Amendment Effective Date"), appropriately completed and duly executed and delivered by an Authorized Officer of the Borrower in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower made as of such date and, at the time such certificate is delivered, such statements shall in fact be true and correct. SECTION 3.3. Execution of Affirmation and Acknowledgment. The Administrative Agent shall have received an affirmation and acknowledgment, dated the effective date of this Amendment and in form and substance satisfactory to it, duly executed and delivered by each Guarantor and any other Obligor that has granted a Lien pursuant to any Loan Document. SECTION 3.4. Fees and Expenses. The Administrative Agent (and all other Persons entitled thereto) shall have received all fees and expenses due and payable pursuant to Section 5.5 (to the extent then invoiced) and pursuant to the Credit Agreement (including all previously invoiced fees and expenses). -4- ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1. Representations and Warranties. In order to induce the requisite Lenders and the Administrative Agent to enter into this Amendment, the Borrower hereby represents and warrants to the Administrative Agent, the Issuer and each Lender, as of the date hereof, as follows: (a) the representations and warranties set forth in Article VII of the Credit Agreement (excluding, however, those contained in Section 7.6 and Section 7.7 of the Credit Agreement) and in each other Loan Document are, in each case, true and correct (unless stated to relate solely to an earlier date, in which case such representations and warranties are true and correct as of such earlier date); (b) except as disclosed by the Borrower pursuant to reports on Form 10-Q and Form 10-K filed with the Securities and Exchange Commission prior to the date hereof, there has been no material adverse change in the business, property, operations, assets, liabilities, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, since December 31, 1997; (c) except as disclosed by the Borrower to the Agents, the Issuer and the Lenders pursuant to Section 7.7 of the Credit Agreement (i) no labor controversy, litigation, arbitration or governmental investigation or proceeding is pending or, to the best knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries which might materially adversely affect the Borrower's consolidated business, operations, assets, revenues, properties or prospects or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document; and (ii) no development has occurred in any labor controversy, litigation, arbitration or governmental investigation or proceeding disclosed pursuant to Section 7.7 of the Credit Agreement which might materially adversely affect the consolidated businesses, operations, assets, revenues, properties or prospects of the Borrower and its Subsidiaries; (d) after giving effect to this Amendment, no Default has occurred and is continuing, and neither the Borrower nor any of its Subsidiaries nor any other Obligor is in material violation of any law or governmental regulation or court order or decree; (e) this Amendment has been duly authorized, executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except to the extent the enforceability hereof may be limited by (i) the effect of bankruptcy, insolvency, reorganization, -5- moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors generally and (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law; and (f) the execution, delivery and performance by the Borrower and its Subsidiaries of this Amendment and each other Loan Document executed or to be executed by any of them in connection therewith are within the Borrower's and each such Subsidiary's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower's or such Subsidiary's Organic Documents, (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower or such Subsidiary or (iii) result in, or require the creation or imposition of, any Lien (other than the Liens created under the Loan Documents in favor of the Administrative Agent for the benefit of the Secured Parties) on any of the Borrower's or such Subsidiary's properties. SECTION 4.2. Full Disclosure. Except as corrected by written information delivered to the Agents and the Lenders reasonably prior to the date on which this representation is made, all factual information heretofore or contemporaneously furnished by the Borrower in writing to any Agent, the Issuer or any Lender for purposes of or in connection with this Amendment or any transaction contemplated hereby is true and accurate in every material respect and such information is not incomplete by omitting to state any material fact necessary to make such information not misleading. All projections delivered to any Agent or any Lender by or on behalf of the Borrower have been prepared in good faith by the Borrower and represent the best estimates of the Borrower, as of the date hereof, of the reasonably expected future performance of the businesses reflected in such projections. SECTION 4.3. Compliance with Credit Agreement. After giving effect to this Amendment, each Obligor is in compliance with all the terms and conditions of the Credit Agreement and the other Loan Documents to be observed or performed by it thereunder, and no Default has occurred and is continuing. Without limiting the effect of any of the representations and warranties of this Article IV, the Borrower has no reason to believe that it and its Subsidiaries will not be in compliance with all the terms and conditions of the Credit Agreement and the other Loan Documents during the period from the Tenth Amendment Effective Date through and including March 8, 2002, including the covenant that each lessee under a Lease will make all payments required to be made by it thereunder on the date such payments are required to be made thereunder and that each such lessee will comply in all respects with each of its other obligations thereunder. ARTICLE V MISCELLANEOUS SECTION 5.1. Full Force and Effect; Limited Amendment. Except as expressly provided herein, all of the representations, warranties, terms, covenants, conditions and other provisions of -6- the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are in all respects hereby ratified and confirmed. The amendments, waivers and consents set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein, waived hereby or consented to hereby and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other term or provision of the Credit Agreement, any other Loan Document referred to therein or herein or of any transaction or further or future action on the part of the Borrower or any other Obligor which would require the consent of any of the Lenders under the Credit Agreement or any of the other Loan Documents. SECTION 5.2. Loan Document Pursuant to Credit Agreement. This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall be construed, administered and applied in accordance with all of the terms and provisions of the Credit Agreement (and, following the date hereof, the Amended Credit Agreement). Any breach of any representation or warranty or covenant or agreement contained in this Amendment shall be deemed to be an immediate Event of Default for all purposes of the Credit Agreement and the other Loan Documents. SECTION 5.3. Further Assurances. The Borrower hereby agrees that it will take any action that from time to time may be reasonably necessary to effectuate the amendments contemplated herein. SECTION 5.4. Fees and Expenses. The Borrower shall pay all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment and the documents and transactions contemplated hereby, including the reasonable fees and disbursements of Mayer, Brown, Rowe & Maw, counsel for the Administrative Agent, and Wachtell, Lipton, Rosen & Katz, special restructuring counsel for the Administrative Agent. SECTION 5.5. Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. SECTION 5.6. Execution in Counterparts. This Amendment may be executed by the parties hereto in counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. SECTION 5.7. Cross-References. References in this Amendment to any Article or Section are, unless otherwise specified or otherwise required by the context, to such Article or Section of this Amendment. SECTION 5.8. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions -7- of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 5.9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 5.10. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -8- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers or general partners (or their respective officers) thereunto duly authorized as of the day and year first above written. BUDGET GROUP, INC. By ---------------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON, as a Lender and the Administrative Agent By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: BANK OF AMERICA, N.A. By ---------------------------------------- Name: Title: BANK OF MONTREAL By ---------------------------------------- Name: Title: S-1 THE BANK OF NEW YORK By ---------------------------------------- Name: Title: THE BANK OF NOVA SCOTIA By ---------------------------------------- Name: Title: THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH By ---------------------------------------- Name: Title: BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A. GROUP, NEW YORK BRANCH By ---------------------------------------- Name: Title: WASHINGTON MUTUAL BANK, F.A. (as successor in interest to BANK UNITED) By ---------------------------------------- Name: Title: S-2 BANKERS TRUST COMPANY By ---------------------------------------- Name: Title: BNP PARIBAS By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: PB CAPITAL CORPORATION By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: CERBERUS PARTNERS L.P. By ---------------------------------------- Name: Title: S-3 CREDIT INDUSTRIEL ET COMMERCIAL By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: CREDIT AGRICOLE INDOSUEZ By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: CREDIT LYONNAIS CHICAGO BRANCH By ---------------------------------------- Name: Title: S-4 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: FLEET BANK, N.A. By ---------------------------------------- Name: Title: THE FUJI BANK, LIMITED By ---------------------------------------- Name: Title: S-5 IMPERIAL BANK By ---------------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION By ---------------------------------------- Name: Title: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By ---------------------------------------- Name: Title: NATEXIS BANQUE By ---------------------------------------- Name: Title: By ---------------------------------------- Name: Title: S-6 PAM CAPITAL FUNDING L.P. By: Highland Capital Management, L.P., as Collateral Manager By ------------------------------------- Name: Title: SATELLITE DISTRESSED CREDITS FUND, LLC By: Satellite Asset Management, L.P., its Investment Manager By ------------------------------------- Name: Title: SOUTHERN PACIFIC BANK By ---------------------------------------- Name: Title: SUMITOMO MITSUI BANKING CORPORATION By ---------------------------------------- Name: Title: S-7 SUNTRUST BANK By ---------------------------------------- Name: Title: DK ACQUISITION PARTNERS LP By ---------------------------------------- Name: Title: S-8 EX-10.43 9 g74374ex10-43.txt ELEVENTH AMENDMENT TO AMENDED CREDIT AGREEMENT EXHIBIT 10.43 ELEVENTH AMENDMENT, WAIVER AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS ELEVENTH AMENDMENT, WAIVER AND CONSENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 7, 2002 (this "Amendment"), is made by and among BUDGET GROUP, INC., a Delaware corporation (the "Borrower"), the Lenders (such capitalized term and all other capitalized terms not otherwise defined herein shall have the meanings provided for in Article I below) parties hereto and CREDIT SUISSE FIRST BOSTON, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders and the Agents have heretofore entered into that certain Amended and Restated Credit Agreement, dated as of June 19, 1998 (as amended by the First Amendment to Amended and Restated Credit Agreement dated as of September 11, 1998, the Second Amendment to Amended and Restated Credit Agreement dated as of March 18, 1999, the Third Amendment to Amended and Restated Credit Agreement dated as of December 22, 1999, the Fourth Amendment and Waiver to Amended and Restated Credit Agreement dated as of September 30, 2000, the Fifth Amendment to Amended and Restated Credit Agreement, dated as of January 10, 2001, the Sixth Amendment to Amended and Restated Credit Agreement, dated as of February 9, 2001, the Seventh Amendment and Consent to Amended and Restated Credit Agreement, dated as of June 19, 2001, the Eighth Amendment and Consent to Amended and Restated Credit Agreement, dated as of July 31, 2001, the Ninth Amendment, Waiver and Consent to Amended and Restated Credit Agreement dated as of December 20, 2001, and the Tenth Amendment, Waiver and Consent to Amended and Restated Credit Agreement dated as of February 7, 2002, and as further amended, supplemented, amended and restated or otherwise modified prior to the date hereof, the "Credit Agreement"); WHEREAS, the Borrower desires to extend certain waivers and consents obtained in the Tenth Amendment and to obtain certain related additional waivers and consents from the requisite Lenders; and WHEREAS, the requisite Lenders are willing, on and subject to the terms and conditions set forth below (including, without limitation, the amendments to the Credit Agreement provided for herein), to grant the waivers and consents provided below (the Credit Agreement, as amended and otherwise modified pursuant to the terms of this Amendment, being referred to as the "Amended Credit Agreement"); NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Borrower and the requisite Lenders hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. Certain Definitions. The following terms (whether or not underscored) when used in this Amendment shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the preamble. "Amended Credit Agreement" is defined in the third recital. "Amendment" is defined in the preamble. "Borrower" is defined in the preamble. "Credit Agreement" is defined in the first recital. SECTION 1.2. Other Definitions. Terms for which meanings are provided in the Amended Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings. ARTICLE II AMENDMENTS, WAIVERS AND CONSENTS SECTION 2.1. Amendments. Subject to the satisfaction of the conditions set forth in Article III, the Credit Agreement is hereby amended in accordance with this Section 2.1. SECTION 2.1.1. Amendments to Section 1.1 ("Defined Terms") of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended by inserting in such Section the following definitions in the appropriate alphabetical order: "'Eleventh Amendment' means the Eleventh Amendment, Waiver and Consent to Amended and Restated Credit Agreement, dated as of March 7, 2002, among the Borrower, the Lenders parties thereto and the Administrative Agent." "'Eleventh Amendment Effective Date' means the date the Eleventh Amendment became effective in accordance with its terms." SECTION 2.1.2. Amendment to Section 4.2 ("Issuances and Extensions") of the Credit Agreement. Section 4.2 of the Credit Agreement is hereby amended by amending and restating the last sentence thereof in its entirety as follows: -2- "Notwithstanding anything to the contrary herein, on and after the Ninth Amendment Effective Date, no Letter of Credit may be issued and the Stated Amount of any Letter of Credit then existing may not be increased, other than (i) the issuance of Enhancement Letters of Credit or the increase in the Stated Amount of existing Enhancement Letters of Credit, provided that (x) the aggregate Stated Amount of such newly issued Enhancement Letters of Credit, together with the aggregate increases in the Stated Amount of such existing Enhancement Letters of Credit, does not exceed $44,250,000, (y) concurrently with any such issuance or increase, the aggregate Stated Amount of all other Enhancement Letters of Credit is reduced dollar-for-dollar in an amount equal to the Stated Amount of such newly issued Enhancement Letter of Credit or such increase in the Stated Amount of an existing Enhancement Letter of Credit and (z) in the case of issuances of Enhancement Letters of Credit, or increases in the Stated Amount of existing Enhancement Letters of Credit, on or after the Ninth Amendment Effective Date, where the sum of (1) the aggregate Stated Amount of all such newly issued Enhancement Letters of Credit and (2) the aggregate amount of all such increases to such existing Enhancement Letters of Credit exceeds $14,250,000, the terms and conditions (including the collateral being provided therefor) of the obligations being credit enhanced by such Enhancement Letters of Credit are satisfactory in all respects to the Lender Committee Members holding a majority of the Commitment Amount held in the aggregate by them, and (ii) the issuance of General Letters of Credit or the increase in the Stated Amount of existing General Letters of Credit, in each case for the purpose of supporting the insurance requirements of the Borrower and its Subsidiaries, provided that the aggregate Stated Amount of such newly issued General Letters of Credit, together with the aggregate increases in the Stated Amount of such existing General Letters of Credit, does not exceed (A) prior to the Tenth Amendment Effective Date, $3,500,000, (B) on or following the Tenth Amendment Effective Date and prior to the Eleventh Amendment Effective Date, $5,250,000 or (C) on or following the Eleventh Amendment Effective Date, $7,000,000 (so long as, concurrently with each increase of the aggregate Stated Amount of such General Letters of Credit in excess of such $3,500,000, the aggregate Stated Amount of all other Letters of Credit is reduced dollar-for-dollar in an amount equal to such increase)." SECTION 2.1.3. Amendment to Section 8.1.17 ("Preliminary Plan") of the Credit Agreement. Section 8.1.17 of the Credit Agreement is hereby amended by amending and restating such Section in its entirety as follows: "SECTION 8.1.17. Restructuring Plan, etc. (a) The Borrower shall furnish, or shall cause to be furnished, to each Lender on or prior to March 22, 2002: (i) its plan (the "Restructuring Plan") (A) for restructuring the Indebtedness of it and its Subsidiaries, (B) for obtaining financing for the acquisition (or refinancing) of Vehicles necessary to meet its business plan, and (C) for meeting its liquidity needs, and -3- (ii) a business plan, including cash flow projections, for the Borrower and its Subsidiaries in the event the new equity contemplated by the preliminary Restructuring Plan delivered to the Lenders on February 25, 2002 is not raised and the Borrower and its Subsidiaries are not able to acquire the increased number of Vehicles that they have customarily acquired to satisfy seasonal customer rental activity and assuming (including details with respect to whether such assumptions are reasonable at such time) agreements are entered into that permit the Borrower and its Subsidiaries to continue using their Vehicles for retail rental operations on and after April 30, 2002, without any claim of any creditor that would prevent (or have the effect of preventing) such continued usage, each such plan to be in form and scope reasonably satisfactory to the Lender Committee Members holding a majority of the Commitment Amount held in the aggregate by them; provided that, if any such plan is initially not reasonably satisfactory in form and scope to such Lender Committee Members, the Borrower shall have three Business Days from its receipt of notice from such Lender Committee Members that such plan is not in form and scope reasonably satisfactory to such Lender Committee Members (which notice shall set forth the reasons such plan is not satisfactory) to furnish a revised plan that is in form and scope reasonably satisfactory to such Lender Committee Members. (b) In addition, prior to April 5, 2002, the Borrower shall provide to the Lender Committee Members, the Administrative Agent and its consultants and counsel all information (including all current Vehicle information) relevant for the development of a plan that would be applicable in the event neither of the plans described in the preceding paragraph (a) are implemented and that would provide for an orderly wind down of the business of the Borrower and its Subsidiaries (which wind down may include the franchising of the 'Budget' name), and the Borrower shall cause, and shall cause each of its Subsidiaries, to permit such consultants to have access to their respective books, records, officers, employees, consultants, accountants and counsel for the purpose of developing such plan." SECTION 2.1.4. Additional Amendment to Section 8.1 ("Affirmative Covenants") of the Credit Agreement. Section 8.1 of the Credit Agreement is hereby further amended by adding the following Section 8.1.20 thereto: "SECTION 8.1.20. Interest Payment Notice. The Borrower shall provide written notice to the Administrative Agent at least five Business Days' prior to the payment of interest on any Senior Note or any Series B Note by (or on behalf of) the Borrower (each such notice, an "Interest Payment Notice") notifying the Administrative Agent of its intention to pay all or a portion of any such interest." -4- SECTION 2.1.5. Amendment to Section 9.1.3 ("Non-Performance of Certain Covenants and Obligations") of the Credit Agreement. Section 9.1.3 of the Credit Agreement is hereby amended by adding the phrase "or 8.1.20" at the end thereof. SECTION 2.2. Waivers and Consents. Subject to the satisfaction of the conditions set forth in Article III, the Lenders, as of the date hereof, hereby: (a) so long as an Interest Payment Notice has not been given, waive, until (and including) April 1, 2002 (and so long as (i) an Interest Payment Notice has not been given and (ii) the Borrower has not failed to pay in full in cash the extension fees set forth in Section 5.4 of the Eleventh Amendment when due, waive, until (and including) April 8, 2002), compliance by the Borrower with the provisions of clause (d) of Section 8.2.4 of the Credit Agreement with respect to the fourth Fiscal Quarter of the 2001 Fiscal Year; (b) consent to the Borrowing Base Amount calculated as of the last day of January 2002 to be less than the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings outstanding during the period in which such Borrowing Base Amount is in effect under the terms of the Credit Agreement, without requiring any mandatory prepayments and/or cash collateralization under clause (b) of Section 3.1.1 of the Credit Agreement; (c) so long as an Interest Payment Notice has not been given, consent, until (and including) April 1, 2002 (and so long as (i) an Interest Payment Notice has not been given and (ii) the Borrower has not failed to pay in full in cash the extension fees set forth in Section 5.4 of the Eleventh Amendment when due, consent, until (and including) April 8, 2002), to the Borrowing Base Amount calculated as of the last day of February 2002 to be less than the aggregate unpaid principal amount of all Loans and Letter of Credit Outstandings outstanding during the period in which such Borrowing Base Amount is in effect under the terms of the Credit Agreement, without requiring any mandatory prepayments and/or cash collateralization under clause (b) of Section 3.1.1 of the Credit Agreement; provided that the Borrowing Base Amount is not less than $225,000,000 as of the last day of February 2002; and (d) consent that the 13-Week Consolidated Cash Flow Projections for the period commencing with the week ending March 1, 2002, as furnished to the Lenders on March 4, 2002, shall satisfy the requirement in clause (p) of Section 8.1.1 of the Credit Agreement to provide a 13-Week Consolidated Cash Flow Projection on or prior to March 8, 2002. ARTICLE III CONDITIONS TO EFFECTIVENESS -5- This Amendment, and the amendments and modifications contained herein, shall be and shall become effective as of the date hereof subject to the satisfaction of each of the conditions set forth in this Article III to the satisfaction of the Administrative Agent. SECTION 3.1. Execution of Counterparts. The Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered on behalf of the Borrower and each of the requisite Lenders. SECTION 3.2. Effective Date Certificate. The Administrative Agent shall have received, with counterparts for each Lender, a certificate, dated the effective date of this Amendment (the "Eleventh Amendment Effective Date"), appropriately completed and duly executed and delivered by an Authorized Officer of the Borrower in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower made as of such date and, at the time such certificate is delivered, such statements shall in fact be true and correct. SECTION 3.3. Execution of Affirmation and Acknowledgment. The Administrative Agent shall have received an affirmation and acknowledgment, dated the effective date of this Amendment and in form and substance satisfactory to it, duly executed and delivered by each Guarantor and any other Obligor that has granted a Lien pursuant to any Loan Document. SECTION 3.4. Fees and Expenses. The Borrower shall have paid to the Administrative Agent (and all other Persons entitled thereto) all fees and expenses due and payable on or prior to the Eleventh Amendment Effective Date pursuant to Section 5.5 (to the extent then invoiced) and pursuant to the Credit Agreement (including all previously invoiced fees and expenses). ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.1. Representations and Warranties. In order to induce the requisite Lenders and the Administrative Agent to enter into this Amendment, the Borrower hereby represents and warrants to the Administrative Agent, the Issuer and each Lender, as of the date hereof, as follows: (a) the representations and warranties set forth in Article VII of the Credit Agreement (excluding, however, those contained in Section 7.6 and Section 7.7 of the Credit Agreement) and in each other Loan Document are, in each case, true and correct (unless stated to relate solely to an earlier date, in which case such representations and warranties are true and correct as of such earlier date); (b) except as disclosed by the Borrower pursuant to reports on Form 10-Q and Form 10-K filed with the Securities and Exchange Commission prior to the date hereof, -6- there has been no material adverse change in the business, property, operations, assets, liabilities, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, since December 31, 1997; (c) except as disclosed by the Borrower to the Agents, the Issuer and the Lenders pursuant to Section 7.7 of the Credit Agreement (i) no labor controversy, litigation, arbitration or governmental investigation or proceeding is pending or, to the best knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries which might materially adversely affect the Borrower's consolidated business, operations, assets, revenues, properties or prospects or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document; and (ii) no development has occurred in any labor controversy, litigation, arbitration or governmental investigation or proceeding disclosed pursuant to Section 7.7 of the Credit Agreement which might materially adversely affect the consolidated businesses, operations, assets, revenues, properties or prospects of the Borrower and its Subsidiaries; (d) after giving effect to this Amendment, no Default has occurred and is continuing, and neither the Borrower nor any of its Subsidiaries nor any other Obligor is in material violation of any law or governmental regulation or court order or decree; (e) this Amendment has been duly authorized, executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except to the extent the enforceability hereof may be limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors generally and (ii) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law; and (f) the execution, delivery and performance by the Borrower and its Subsidiaries of this Amendment and each other Loan Document executed or to be executed by any of them in connection therewith are within the Borrower's and each such Subsidiary's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower's or such Subsidiary's Organic Documents, (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower or such Subsidiary or (iii) result in, or require the creation or imposition of, any Lien (other than the Liens created under the Loan Documents in favor of the Administrative Agent for the benefit of the Secured Parties) on any of the Borrower's or such Subsidiary's properties. -7- SECTION 4.2. Full Disclosure. Except as corrected by written information delivered to the Agents and the Lenders reasonably prior to the date on which this representation is made, all factual information heretofore or contemporaneously furnished by the Borrower in writing to any Agent, the Issuer or any Lender for purposes of or in connection with this Amendment or any transaction contemplated hereby is true and accurate in every material respect and such information is not incomplete by omitting to state any material fact necessary to make such information not misleading. All projections delivered to any Agent or any Lender by or on behalf of the Borrower have been prepared in good faith by the Borrower and represent the best estimates of the Borrower, as of the date hereof, of the reasonably expected future performance of the businesses reflected in such projections. SECTION 4.3. Compliance with Credit Agreement. After giving effect to this Amendment, each Obligor is in compliance with all the terms and conditions of the Credit Agreement and the other Loan Documents to be observed or performed by it thereunder, and no Default has occurred and is continuing. Without limiting the effect of any of the representations and warranties of this Article IV, the Borrower has no reason to believe that it and its Subsidiaries will not be in compliance with all the terms and conditions of the Credit Agreement and the other Loan Documents during the period from the Eleventh Amendment Effective Date through and including April 1, 2002, including the covenant that each lessee under a Lease will make all payments required to be made by it thereunder on the date such payments are required to be made thereunder and that each such lessee will comply in all respects with each of its other obligations thereunder. ARTICLE V MISCELLANEOUS SECTION 5.1. Full Force and Effect; Limited Amendment. Except as expressly provided herein, all of the representations, warranties, terms, covenants, conditions and other provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are in all respects hereby ratified and confirmed. The amendments, waivers and consents set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein, waived hereby or consented to hereby and shall not be deemed to be an amendment to, waiver of, consent to or modification of any other term or provision of the Credit Agreement, any other Loan Document referred to therein or herein or of any transaction or further or future action on the part of the Borrower or any other Obligor which would require the consent of any of the Lenders under the Credit Agreement or any of the other Loan Documents. SECTION 5.2. Loan Document Pursuant to Credit Agreement. This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall be construed, administered and applied in accordance with all of the terms and provisions of the Credit Agreement (and, following the date hereof, the Amended Credit Agreement). Any breach of any representation or -8- warranty or covenant or agreement contained in this Amendment shall be deemed to be an immediate Event of Default for all purposes of the Credit Agreement and the other Loan Documents. SECTION 5.3. Further Assurances. The Borrower hereby agrees that it will take any action that from time to time may be reasonably necessary to effectuate the amendments contemplated herein. SECTION 5.4. Extension Fee. If the condition set forth in Section 3.1 shall have been satisfied and in consideration for extending the waivers and consents specifically set forth in Section 2.2 from April 1, 2002 through April 8, 2002, the Borrower shall pay, without setoff, deduction or counterclaim, a non-refundable extension fee for the account of each Lender that has executed and delivered (including delivery by way of facsimile) a copy of this Amendment to the attention of Kenneth Suh at Mayer, Brown, Rowe & Maw, 1675 Broadway, New York, New York 10019 (19th Floor), telecopy number 212-262-1910 at or prior to 6:00 p.m., New York time, on March 7, 2002 (as such time may be extended by the Borrower), in the amount of 10 basis points of such Lender's Commitment as of the date hereof. The aggregate amount of such extension fee shall be paid in cash at or prior to 1:00 p.m., New York time, on April 1, 2002 to the Administrative Agent for the pro rata account of the Lenders entitled to receive such extension fee. SECTION 5.5. Fees and Expenses. The Borrower shall pay all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment and the documents and transactions contemplated hereby, including the reasonable fees and disbursements of Mayer, Brown, Rowe & Maw, counsel for the Administrative Agent, and Wachtell, Lipton, Rosen & Katz, special restructuring counsel for the Administrative Agent. SECTION 5.6. Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. SECTION 5.7. Execution in Counterparts. This Amendment may be executed by the parties hereto in counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. SECTION 5.8. Cross-References. References in this Amendment to any Article or Section are, unless otherwise specified or otherwise required by the context, to such Article or Section of this Amendment. SECTION 5.9. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions -9- of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 5.10. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 5.11. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -10- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers or general partners (or their respective officers) thereunto duly authorized as of the day and year first above written. BUDGET GROUP, INC. By --------------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON, as a Lender and the Administrative Agent By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: BANK OF AMERICA, N.A. By --------------------------------------- Name: Title: BANK OF MONTREAL By --------------------------------------- Name: Title: S-1 THE BANK OF NEW YORK By --------------------------------------- Name: Title: THE BANK OF NOVA SCOTIA By --------------------------------------- Name: Title: THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH By --------------------------------------- Name: Title: BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A. GROUP, NEW YORK BRANCH By --------------------------------------- Name: Title: WASHINGTON MUTUAL BANK, F.A. (as successor in interest to BANK UNITED) By --------------------------------------- Name: Title: S-2 BANKERS TRUST COMPANY By --------------------------------------- Name: Title: BNP PARIBAS By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: PB CAPITAL CORPORATION By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: CERBERUS PARTNERS L.P. By --------------------------------------- Name: Title: S-3 CREDIT INDUSTRIEL ET COMMERCIAL By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: COMMERZBANK AKTIENGESELLSCHAFT, CHICAGO BRANCH By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: CREDIT AGRICOLE INDOSUEZ By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: CREDIT LYONNAIS CHICAGO BRANCH By --------------------------------------- Name: Title: S-4 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: FLEET BANK, N.A. By --------------------------------------- Name: Title: S-5 IMPERIAL BANK By --------------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION By --------------------------------------- Name: Title: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By --------------------------------------- Name: Title: NATEXIS BANQUE By --------------------------------------- Name: Title: By --------------------------------------- Name: Title: S-6 PAM CAPITAL FUNDING L.P. By: Highland Capital Management, L.P., as Collateral Manager By ------------------------------------ Name: Title: SATELLITE DISTRESSED CREDITS FUND, LLC By: Satellite Asset Management, L.P., its Investment Manager By ------------------------------------ Name: Title: SOUTHERN PACIFIC BANK By --------------------------------------- Name: Title: SUMITOMO MITSUI BANKING CORPORATION By --------------------------------------- Name: Title: S-7 SUNTRUST BANK By --------------------------------------- Name: Title: DK ACQUISITION PARTNERS LP By --------------------------------------- Name: Title: HZ SPECIAL OPPORTUNITIES LLC By: Highbridge Capital Management, LLC By ------------------------------------ Name: Daniel Zwirn Title: Portfolio Manager S-8 EX-21.1 10 g74374ex21-1.txt SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21.1 LIST OF SUBSIDIARIES OF THE REGISTRANT
JURISDICTION OF NAMES UNDER WHICH SUBSIDIARY INCORPORATION DOING BUSINESS - ---------- ------------- ----------------- Autohansa Autovermietung E. Siebert GmbH Autovermietung Westfehling GmbH France Avenir Location S.A France BGI Airport Parking, Inc. Delaware BGI Shared Services, Inc. Delaware BGI Shared Services, LLC Delaware BRAC (Bermuda) Holdings Limited Bermuda BRAC Credit Corporation Delaware BRAC Limited (Scotland) Scotland BRAC Reinsurance Company Ltd. Bermuda BRAC SOCAL Funding Corporation Delaware BRACRENT, S.A Spain BTI (U.K.) plc England Budget Car Sales, Inc. Indiana Budget Deutschland GmbH Germany Budget Fleet Finance Corporation Delaware Budget France, S.A France Budget Funding Corporation Delaware Budget Group Capital Trust Delaware Budget Italia S.p.A Italy Budget Lease Management (Car Sales) Ltd. New Zealand Budget Leasing Ltd. England Budget Locacao de Veiculos Ltda Brazil Budget Nice S.A France Budget Rent a Car Asia-Pacific, Inc. Delaware Budget Rent a Car Australia Pty. Ltd. Australia Budget Rent a Car Caribe Corporation Delaware Budget Rent a Car Corporation Delaware Budget Rent a Car Espana, S.A Spain Budget Rent a Car Limited New Zealand Budget Rent a Car Ltd. (Ireland) England Budget Rent a Car of Canada Limited Canada Budget Rent A Car of Japan, Inc. Delaware Budget Rent a Car of St. Louis, Inc. Missouri Budget Rent a Car Operations Pty Ltd. Australia Budget Rent-A-Car International, Inc. Delaware Budget Rent-A-Car of the Midwest, Inc. Missouri Budget Rent-A-Car Systems, Inc. Delaware Budget Sales Corporation Delaware
JURISDICTION OF NAMES UNDER WHICH SUBSIDIARY INCORPORATION DOING BUSINESS - ---------- ------------- ----------------- Budget Storage Corporation Delaware Budget-Storage USA Joint Venture, LLC Business Rent a Car GmbH Austria BVM, Inc. Ohio Camfox Pty Ltd Cariex Sarl France Carson Chrysler Plymouth Dodge Jeep Eagle, Inc. Indiana Compact Rent a Car Ltd. Canada Control Risk Corporation Illinois Dayton Auto Lease Company, Inc. Delaware Directors Row Management Company, LLC Indiana Expansive Soperfi France Financiere Orix France IN Motors VI, LLC Indiana JSR Ltd. Mastering the Move Realty, Inc. Florida Mosiant Car Sales, Inc. Louisiana NYRAC Inc. New York Paul West Ford, Inc. Florida Philip Jacobs Insurance Agency, Inc. California Polyhire Ltd. Premier Car Rental LLC Georgia Reservation Services, Inc. Texas Ritz Services, Inc. d/b/a Granada Travel Agency Florida Ryder Move Management, Inc. Oregon Ryder Relocation Services, Inc. Florida Ryder TRS, Inc. Delaware S.A. Groupe Collinet France Societe Financiere et de Participation France Target Rent a Car Ltd. New Zealand TCS Properties, LLC Indiana Team Car Sales of Charlotte, Inc. Delaware Budget Car Sales Team Car Sales of Dayton, Inc. Delaware Budget Car Sales Team Car Sales of Philadelphia, Inc. Delaware Budget Car Sales Team Car Sales of Richmond, Inc. Delaware Budget Car Sales Team Car Sales of San Diego, Inc. Delaware Budget Car Sales Team Car Sales of Southern California, Inc. Delaware Budget Car Sales Team Claims Services, Inc. Team Fleet Financing Corporation Delaware Team Fleet Services Corporation Delaware Team Holdings Corp. Illinois
JURISDICTION OF NAMES UNDER WHICH SUBSIDIARY INCORPORATION DOING BUSINESS - ---------- --------------- ----------------- Team Realty Services, Inc. Delaware The Move Shop, Inc. Florida Transportation and Storage Associates California ValCar Rental Car Sales, Inc. Indiana Vehicle Rental Access Company, LLC Warren Wooten Ford, Inc. Florida
EX-23.1 11 g74374ex23-1.txt CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS As independent certified public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into Budget Group, Inc.'s previously filed Registration Statement File Nos. 333-41093, 333-47079, 333-49819, 333-58477, 333-59049, 333-59385, 333-61429, 333-82501, 333-82749, 333-38306, 333-50080 and 333-50086. /s/ Arthur Andersen Orlando, Florida, April 8, 2002 EX-99.1 12 g74374ex99-1.txt LETTER FROM THE REGISTRANT EXHIBIT 99.1 Budget Group, Inc. 125 Basin Street Suite 210 Daytona Beach, Florida 32114 Letter to Commission pursuant to Temporary Note 3T April 8, 2002 Securities and Exchange Commission 450 Fifth Street N.W. Washington D.C. 20549 Ladies and Gentlemen: Pursuant to Temporary Note 3T to Article 3 of Regulation S-X, the Budget Group Inc. Audit Committee of the Board of Directors has obtained a letter of representation from Arthur Andersen LLP ("Andersen") stating that the December 31, 2001 audit was subject to their quality control system for the U.S. accounting and audit practice to provide reasonable assurance that the engagement was conducted in compliance with professional standards, that there was appropriate continuity of Andersen personnel working on the audit, availability of national office consultation and availability of personnel at foreign affiliates of Andersen to conduct the relevant portions of the audit. Sincerely, Budget Group, Inc. /s/ William Johnson - ---------------------------- William Johnson Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----