EXHIBIT 4.69
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
ANC RENTAL CORPORATION, et al., ) Case No. 01-11200 (MFW)
) (Jointly Administered)
Debtors. )
) Re: Dkt. No. 4062
CORRECTED FINAL ORDER PURSUANT TO, INTER ALIA, BANKRUPTCY RULE 4001 AND 11
U.S.C.SS.364 (A) AUTHORIZING THE DEBTORS TO OBTAIN FURTHER POST PETITION SURETY
BONDING FROM LIBERTY MUTUAL INSURANCE COMPANY, (B) PROVIDING FOR ADDITIONAL
COLLATERAL AND (C) GRANTING RELATED RELIEF
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Upon the motion dated February 14, 2003 (the "Initial Motion") and the
amended motion dated March 1, 2003 (the "Amended Motion", and together with the
Initial Motion, the "Motions") of the above captioned debtors and debtors in
possession (collectively, the "Debtors"),(1) seeking, INTER ALIA, (i) Entry of
Orders Pursuant to Sections 105, 363, and 364, of the Bankruptcy Code, Rule 4001
of the Federal Rules of Bankruptcy Procedure and Rule 4001-2(b) Delaware
Bankruptcy Local Rules for the Debtors to (a) Obtain Post-Petition Surety
Bonding from Liberty Mutual Insurance Company ("Liberty"), and (b) provide
certain protections to Liberty in connection with the issuance and continuation
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(1) The Debtors include the following entities: ANC Rental Corporation, Alamo
International Sales, Inc., Alamo Rent A Car (Canada), Inc., Alamo Rent A
Car Management, LP, Alamo Rent A Car, I]LC, ANC Aviation, Inc., ANC
Collector Corporation, ANC Financial Corporation, ANC Financial GP
Corporation, ANC Financial Properties LLC, ANC Financial, LP, ANC GP,
Inc., ANC Information Technology, Inc., ANC Information Technology
Holding, Inc., ANC Information Technology, L.P., ANC IT Collector
Corporation, ANC Management Services Corporation, ANC Management Services,
LP, ANC Payroll Administration, LLC, ANC TM Properties LP, ARC GP, Inc.,
ARC TM, Inc., ARC TM Properties LLC, ARG Reservation Services, LLC, ARI
Fleet Services, Inc., Auto Rental Inc., Car Rental Claims, Inc., Claims
Management Center, Inc., Guy Salmon USA, Inc., Liability Management
Companies Holding, Inc., National Car Rental Hawaii, National Car Rental
Licensing, Inc., National Car Rental System, Inc., NCR Affiliate Servicer
Properties LLC, NCR Affiliate Servicer, Inc., NCRAS Management, LP, NCRAS
GP, Inc., NCRS Insurance Agency, Inc.,, Post Retirement Liability
Management, Inc., Rental Liability Management Holdings, LLC, Rental
Liability Management, Inc., Republic Fiduciary, Inc., Republic Guy Salmon
Partner, Inc., Republic Industries Automotive Rental Group (Belgium),
Inc., Snappy Fleet Finance Corporation, Spirit Leasing, Inc., Spirit Rent
A Car, Inc., SRAC Management, LP, SRAC GP, Inc., and SRAC TM, Inc.
of surety bonds; and (ii) the Scheduling of hearings in connection with the
Motions; and hearings having been conducted by this Court on March 7 and 11,
2003 (the "Hearings"); and upon the certification of counsel for the Debtors
that no objections, not otherwise waived or withdrawn, have been timely
interposed to the entry of any orders in connection with the Motions;
And it appearing that the relief requested is in the best interests of
the Debtors, their creditors and their estates; and good and sufficient cause
appearing therefore; it is hereby
ORDERED, FOUND AND DETERMINED AND DECREED, that:
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C.
ss.ss. 157 and 1334 and that this matter is a core proceeding pursuant to 28
U.S.C. ss. 157(b)(2)(A), (B), (D), (G), (K), (M) and (O);
2. Notice of the Initial Motion and of the Amended Motion and of the
relief requested has been given to, among others, (i) the Office of the United
States Trustee; (ii) counsel for Congress (as hereinafter defined); (iii)
counsel for Lehman Brothers, Inc. and/or affiliates, as agent for the lenders
under the Term Loan and Senior Loan Agreement; (iv) counsel for Liberty Mutual
Insurance Company, the Debtors' principal surety provider; (v) counsel for the
Official Committee of Unsecured Creditors; (vi) counsel for DaimlerChrysler
Corporation and (vii) all parties that have filed a request for notice pursuant
to Bankruptcy Rule 2002 in these chapter 11 cases;
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3. Good, adequate and sufficient notice has been provided and any
otherwise applicable requirement for notice be and hereby is waived and
dispensed with, and no further notice need be given.
4. Pursuant to, INTER ALIA, 11 U.S.C. ss.ss. 105, 363, 364 and Rule
4001 of the Federal Rules of Bankruptcy Procedure, the Motions be, and hereby
are, authorized and approved in all respects as provided for herein, and the
Debtors are authorized to incur the post petition senior secured indebtedness
provided for in the Supplemental Term Sheet ( as defined below).
5. The terms, conditions, agreements and provisions set forth in the
term sheet annexed hereto and made a part hereof as Exhibit "A", (the
"Supplemental Term Sheet" or "STS") are hereby authorized and approved in all
respects as provided for herein, and are incorporated into this Order by
reference thereto as if each of the terms, conditions, agreements and provisions
of the STS, as their context provides or allows, was set forth herein as a
finding, determination, decree and ordered provision of this Order, and all
capitalized terms referred to in this Order not otherwise defined herein shall
have the meaning ascribed to such terms in such STS, and the rules of
construction applicable to the STS shall be equally applicable to this Order. To
the extent of any conflict or inconsistency of the terms and conditions of the
STS and this Order, the terms and conditions of this Order shall control. The
STS shall not be amended except upon motion on notice to those parties
identified in paragraph "2" of this order.
6. Pursuant to prior orders of this Court, this Court authorized the
settlement of certain disputes between the Debtors and Liberty, and provided,
INTER ALIA, for the Debtors to obtain post-petition bonding under certain
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circumstances and subject to certain conditions, and authorized certain liens,
security and other protections for the benefit of Liberty.
7. The Debtors have advised the Court that they continue to be unable
to obtain the credit necessary to be able to obtain post-petition bonding either
on an unsecured basis or as an expense of administration allowable under 11
U.S.C. ss. 503(b)(1), on any terms equal to or better than the terms provided
for under the STS (which provides for priming liens pursuant to 11 U.S.C. ss.
364(d) to the extent set forth in and under the terms and conditions provided
herein), and have further advised the Court that further and additional surety
bonding is essential to the Debtors' ability to continue their operations and to
pursue a successful reorganization of their bankruptcy cases.
8. The Debtors have requested that Liberty continue to provide certain
surety bonding under and pursuant to the terms of the Supplemental Term Sheet
and have advised the Court that they believe that the terms and conditions of
the Supplemental Term Sheet are in the best interests of the Debtors and their
estates.
9. Good cause has been shown for the entry of this Order and the
authorization and empowerment to consummate the terms of the Supplemental Term
Sheet will materially enhance the Debtors ability to service their customers,
conduct their business operations and to seek reorganization of their
businesses. The relief sought is supported by good business reasons, is
reasonable and appropriate under the circumstances, and will aid in effecting a
reorganization. The Supplemental Term Sheet has been negotiated and entered into
in good faith.
10. Simultaneously with the entry of this order, the Debtors intend to
submit an order identified as "Final Order Authorizing Debtors To (A) Obtain
Postpetition Financing, (B) Grant Liens And Priority Administrative Expense
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Status and (C) Modify The Automatic Stay," pursuant to which the Debtors will be
authorized, INTER ALIA, to obtain debtor-in-possession financing from
DaimlerChrysler Corporation (the "DIP Financing Order").
11. The Debtors hereby are authorized and directed to take such further
actions and execute and deliver, and to cause their subsidiaries and affiliates
to take such action and to cause them to execute and deliver, such further
documents as may be reasonably necessary to effectuate the relief provided for
herein and in the Supplemental Term Sheet and to implement the terms,
conditions, agreements and provisions of the Supplemental Term Sheet.
12. Nothing in this Order or the Supplemental Term Sheet shall be
deemed to terminate, modify or release any obligation to Liberty of any
guarantor, surety, insurer, indemnitor or entity providing financial
accommodations to or for the benefit of Liberty or the Debtors.
13. All of Liberty's equitable or common law surety rights and
remedies, whether arising by virtue of equitable lien, equitable subrogation or
otherwise, are fully reserved, with the security interests, liens and rights
granted to Liberty pursuant to the STS being in addition to, and not in
substitution of, such rights.
14. This Order shall be sufficient and conclusive evidence of the
priority, perfection and validity of the security interests and liens granted
hereby and pursuant to the Supplemental Term Sheet, without the necessity of a
filing, recording or the serving of any financing statements, mortgages, or
other documents which may be otherwise required under any law, regulation or
rule, including federal or state law or the taking of any action, including
taking possession, to validate and perfect the security interests and liens
granted hereby or pursuant to the Supplemental Term Sheet. If Liberty, in its
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discretion, shall elect to file or record such documents, notices of liens or
similar instruments or otherwise confirm perfection of such liens and security
interests, the Debtors are authorized and directed to cooperate and assist in
such process and to execute and deliver financing statements or other documents
reasonably requested by Liberty, and restrictions resulting from the imposition
of the automatic stay provisions of 11 U.S.C. 362 shall be and hereby are
modified to permit Liberty and the Debtors to take such steps as necessary to
implement and effectuate this Order.
15. Notwithstanding any provision of the Supplemental Term Sheet, the
administrative priority claims granted to any of the Noteholder Group pursuant
to the Vehicle Financing Orders dated February 6, 2002 [docket no. 752], May 10,
2002 [docket no. 1838] and November 5, 2002 [docket no. 3524] and any subsequent
similar vehicle financing order with the Noteholder Group ("Subsequent Fleet
Financing Orders") shall rank pari passu with, not junior to, the administrative
priority claims granted to Liberty in connection with this Order and the
Supplemental Term Sheet; and any Subsequent Fleet Financing Order or subsequent
order providing for continued post-petition bonding by Liberty shall provide
that any administrative priority claim granted to the Noteholder Group or to
Liberty shall be pari passu with the administrative priority claim of the other.
16. Notwithstanding anything to the contrary in any prior order of this
Court, in this order, in the DIP Financing Order or in the STS, Liberty's right
in and to the following are protected by senior post-petition first priority
liens in accordance with Bankruptcy Code Section 364(d)(1): (i) the Liberty Post
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Petition Cash Collateral (including all Supplemental Cash Collateral); (ii) the
Pre-Petition Liberty Cash Collateral; (iii) any payments actually received by
Liberty as cash collateral as referred to in Section 3.2 of the STS; (iv) the
Collateral Replenishment Obligations (excepting only as set forth in paragraph
16(d) of the DIP Financing Order and only as between Liberty and Congress (as
hereinafter defined) as set forth therein); (v) the Collateral Installment
Payments actually received by Liberty; (vi) those liens and the assets subject
thereto set forth in Section 3.9(a) through 3.9(d) of the STS (PROVIDED that
with respect only to the rights of Congress (as hereinafter defined) with
respect to such liens and assets, the reference in this paragraph "16(vi)" to
Sections 3.9(a) through 3.9(d) of the STS shall be limited to Sections 3.9(a)
through 3.9(c) of the STS); (vii) the Fleet Equity; and (viii) those interests
granted to Liberty in the order of this court dated June 28, 2002 [docket no.
2489]. Such senior post-petition first priority liens shall not be (a)
subordinated, pursuant to 11 U.S.C. ss. 510(a) or otherwise, or by the
incurrence at any time from and after the date hereof of senior indebtedness
pursuant to Section 364 of the Bankruptcy Code, or otherwise; or (b) altered or
affected by any plan of reorganization (or liquidation) filed by or on behalf of
the Debtors or one or more third parties, or otherwise, except as provided in
Section 6 of the STS. Except for the senior liens set forth in items "(i)"
through "(viii)" above, all other liens granted to Liberty in the Supplemental
Term Sheet shall (x) be subject and subordinate only to those interests
described in, and only to the extent provided in, Section 2.b.ii of the March 13
Term Sheet, and (y) be subject and subordinate to the extent provided in the
Cash Collateral Orders (as defined in the DIP Financing Order) entered through
and including the Order dated February 6, 2003 [docket no. 4035] and such
further cash collateral orders as may be entered, PROVIDED THAT such further
cash collateral orders are granted upon the same terms and conditions as set
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forth in the existing Cash Collateral Orders, or are otherwise entered upon the
consent of Liberty in its sole discretion (as to which Congress reserves its
rights), with respect solely to the Replacement Liens (as defined in April 10,
2002 Cash Collateral Order) granted to the Secured Creditors (as defined in the
prior Cash Collateral Orders) except that such subordination shall not apply to
the extent of rights Liberty may have in its capacity as a secured creditor
under and relating to Pre-Petition Security Interests under any Pre-Petition
Secured Creditor Agreements). In the event of any inconsistency between the
terms of any cash collateral order (including, without limitation, the Cash
Collateral Orders) and the terms of this order, the terms of this order shall
govern.
17. The entry of this Order shall be a determination by the Bankruptcy
Court that the terms of the STS were negotiated in good faith and at arms
length, and all credit, financial accommodations, loans, advances and surety
bonds which are caused by Liberty to be issued, renewed, extended, continued,
increased or modified are deemed to have been extended in good faith as that
term is referred to in Section 364(e) of the Bankruptcy Code, and Liberty shall
be entitled to the full protections of Section 364(e) of the Bankruptcy Code,
and, in addition, shall be entitled to all of the protections provided for in
this Order, in the event this Order or any term of the STS as shall be
incorporated into this Order is hereafter vacated, reversed or modified,
including, in furtherance, or by virtue, of an appeal or otherwise.
18. The Court has considered all objections that were timely filed, or
interposed at or prior to the Hearings held in connection with the Motions, and
to the extent such objections have not been withdrawn, such objections are
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overruled and denied, with prejudice. Without limiting the foregoing, Congress
Financial Corporation (Florida), as agent (in such capacity, "Congress"), under
the Amended and Restated Credit Agreement, dated as of June 30, 2000 (as
amended, supplemented or otherwise modified from time to time, sometimes
referred to as the "Borrowing Base Facility") among, ANC Rental Corporation, and
certain financial institutions or entities from time to time parties thereto
(hereinafter such financial institutions or entities are sometimes collectively
referred to as the "Borrowing Base Lenders"), has consented to all of Liberty's
liens, rights and protections as provided for in the STS Approval Order.
Furthermore, all parties, including: the Debtors; Liberty; Congress; Lehman
Commercial Paper, Inc., individually and in any representative capacity
("LCPI"); Lehman Brothers Inc., individually and in any representative capacity
("Lehman"); the Official Committee Of Unsecured Creditors ("Creditors'
Committee"), AutoNation, Inc.; Bank of Tokyo, Mitsubishi Trust Company, Fleet
Capital Corp. and Provident Bank (sometimes referred to as the "Supplemental
Facility Lenders") and DaimlerChrysler Corporation, have consented to the entry
of this Order and have agreed to not challenge or oppose (and based upon such
consent, shall be forever barred from challenging or opposing) any of the
rights, liens or protections granted to Liberty in the Liberty Order or in this
Order based upon the terms of (a) that certain document (as amended,
supplemented or otherwise modified from time to time) entitled "Amended and
Restated Intercreditor Agreement" dated as of August 30, 2001 between, among
others, Congress, ANC Rental Corporation, Lehman Commercial Paper, Inc.,
Wilmington Trust Company, as trustee and Liberty (the "Pre-Petition
Intercreditor Agreement"), or (b) any post-petition order entered prior to the
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date hereof (except (i) as may be provided in the DIP Financing Order with
respect to certain rights of Congress, or (ii) with respect to certain rights of
the fleet financing lenders in those certain prior orders dated February 6, 2002
(Docket No. 752), April 4, 2002 (Docket No. 1511), May 10, 2002 (Docket No.
1838), June 28, 2002 (Docket No. 2489), August 23, 2002 (Docket No. 3057),
November 5, 2002 (Docket No. 3524), and February 20, 2003 (Docket No. 4088), all
of which relate to "Fleet Financing").
19. The 10 day stay otherwise provided for under Bankruptcy Rule
6004(g) is hereby waived and shall not apply to the transactions and relief
hereby authorized.
20. The terms and provisions of paragraph 15 the Third MBIA Order are
hereby incorporated by reference thereto and shall be equally effective as if
fully set forth herein, except that (a) the reference therein to the "Liberty
Term Sheet" shall mean both (i) the March 13 Term Sheet and (ii) the STS; (b)
the term "Order" shall mean this Order; (c) reference to the "Liberty Order"
shall mean the Liberty Order and the STS Approval Order.
21. Without limiting any rights of Liberty set forth in the STS, any
reference in the STS to Liberty's rights, liens and protections with respect to
"Shared Foreign Subsidiaries" shall include all of those rights, liens and
protections set forth in paragraph 16(b) of the DIP Financing Order.
22. The STS is hereby amended to delete Section 2.8 in its entirety.
23. Notwithstanding anything to the contrary set forth in the Liberty
Order or this Order, with regard to avoidance actions or proceeds thereof, to
the extent that any Secured Lender (whether pre- or post-petition, as defined in
the DIP Financing Order) received or holds a lien or administrative claim
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(superpriority or otherwise) in the proceeds of avoidance actions (whether
obtained through litigation or settlement) under Chapter 5 of the Bankruptcy
Code, such lender releases said liens or administrative claim (superpriority or
otherwise), provided that (a) no other entity shall be granted any lien or
administrative priority (superpriority or otherwise) interest in such avoidance
actions or proceeds, and (b) if any other entity shall hold such a lien or
administrative priority interest, the aforesaid releases shall be void and of no
further force or effect. To the extent that any Secured Lender (whether pre- or
post-petition) has an unsecured claim, whether by deficiency or otherwise, each
shall share pari passu with all other general unsecured creditors with respect
to all distributions on account of the proceeds of avoidance actions.
24. This order (a) shall be effective immediately upon its entry; (b)
is a final order entered pursuant to Rule 4001 of the Rules of Bankruptcy
Procedure ("Bankruptcy Rules"), following a "final hearing" within the meaning
of Bankruptcy Rule 4001(c)(2), and is also approved as a final order pursuant to
Rule 4001(d)(4) of the Bankruptcy Rules.
Dated: March 17, 2003.
Wilmington, Delaware
/s/ Mary F. Walrath
-----------------------------
THE HONORABLE MARY F. WALRATH
United States Bankruptcy Judge
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SUPPLEMENTAL TERM SHEET FOR
LIBERTY MUTUAL INSURANCE COMPANY
SURETY BONDING FOR ANC RENTAL CORP., ET AL, DEBTORS IN POSSESSION
This Supplemental Term Sheet (the "STS") is made between Liberty Bond Services,
an unincorporated division of Liberty Mutual Insurance Company ("Liberty") and
ANC Rental Corporation ("ANC") and any of its subsidiaries and affiliates which
are debtors in possession in proceedings under the Bankruptcy Code (together
with ANC collectively referred to as the "Debtors"); and is subject to the entry
of an order of the Bankruptcy Court approving its terms as agreed to by ANC and
Liberty, (the "Approval Order" and together with this STS, the "STS Approval
Order").
SECTION 1 1. Except as expressly provided herein, the provisions
of this STS shall supplement and not supersede the
provisions of that certain Order dated March 13, 2002 ,
PREAMBLE Docket No. 1259 (the "March 13 Order") and the Summary
of Terms and Conditions of Liberty Bond Services
Post-Petition Bonding, attached to and approved by the
March 13 Order (the "March 13 Term Sheet") (the March 13
Order and the March 13 Term Sheet, as modified by
Bankruptcy Court Orders dated May 10, 2002 [Docket No.
1838] and June 28, 2002 [Docket No. 2489], collectively
are referred to as the "Liberty Order"). Each and every
term, provision and section of the Liberty Order, except
as specifically identified as being modified or
clarified by this STS, shall continue in full force and
effect and are to be equally applicable to the
provisions of this STS as if set forth herein. Without
limiting the generality of the foregoing, the liens,
collateral, rights, findings, determinations and other
protections granted to Liberty pursuant to the Liberty
Order (and, together with the liens, collateral, rights,
findings, determinations and other protections provided
to Liberty under the STS Approval Order, the "Liberty
Protections") shall continue in full force and effect,
as supplemented by the provisions of this STS.
2. Unless otherwise defined herein, capitalized terms
set forth in this STS shall have the meaning ascribed to
them in the March 13 Term Sheet.
3. The Approval Order may be in one or more orders,
including an interim order, provided that any such
orders shall be subject to Liberty's prior review and
consent in its sole discretion.
SECTION 2 Liberty and ANC hereby agree that, so long as the
Debtors shall not be in default of any of the provisions
of the Liberty Order or the STS Approval Order, and no
BONDING event which would constitute an Event of Default if not
PROGRAM cured within the applicable cure period shall have
EXTENSION occurred under the Liberty Order or the STS Approval
Order that remains uncured, and subject to all other
terms and conditions herein:
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1. Through and including December 31, 2003, Liberty shall
refrain and forebear from canceling any of the surety
bonds issued by Liberty on behalf of ANC or any of its
subsidiaries or affiliates, except (a) upon the request
or at the consent of ANC, or (b) as set forth in Section
2.10, below.
2. Subject to paragraphs 2.3, 2.4, 2.7 and 2.10, below,
through and including December 31, 2003, Liberty shall,
at ANC's request: (a) replace, reinstate, renew or
continue surety bonds including Liberty Post Petition
Bonds; (b) issue change riders and/or increase or adjust
bond penal sums; (c) issue new bonds; and (d) issue
Consolidation Bonding (regardless of the status of any
prior bond issued for the rejected concession agreement
on dual-to-dual consolidations), PROVIDED THAT, with
respect to all of the foregoing: (1) the bond comes due,
by its express terms, for reinstatement, renewal, or
continuation on or before December 31, 2003; (2) any
reinstatement, renewal, continuation, change rider or
new bond shall provide for a bond coverage period no
longer that one year from the last expiration, renewal,
continuation or premium anniversary date; (3) Liberty
shall not be required to issue, increase, renew, extend
or continue any surety bond more than thirty (30) days
prior to the date such bonding is due to be issued,
increased, renewed, extended or continued according to
its terms or according to the terms of the contract or
other obligation that is the subject of the bond
(Liberty may, in its sole discretion, issue such bonding
at an earlier date or time if requested by the Debtors);
(4) Liberty shall not be required to issue any new bond
unless Liberty has been given at least ten (10) business
days in which to review the proposed bond form requested
and, at Liberty's option, the underlying contract that
is the subject of the bond, and shall not be obligated
to issue any such new bond unless and until such bond
form is acceptable to Liberty; and (5) ANC shall not ask
Liberty to issue bonds or increases that ANC would use
to replace or increase existing bonds currently issued
and outstanding by another surety company ("Replacement
Bonding"), unless ANC provides to Liberty, prior to
Liberty's issuance of any Replacement Bonding, the
greater of: (x) one hundred percent (100%) of any cash
or cash equivalent collateral held by the prior surety
company in connection with said bonds, or (y) cash or
cash equivalent collateral in the amount of fifty
percent (50%) of the requested Replacement Bonding, such
collateral to be credited to ANC's next due Collateral
Installment Payment (as set forth in Section 3, below).
Subject to the foregoing, Liberty acknowledges and
agrees that some bonds will come due for reinstatement,
renewal, or continuation more than one time on or before
December 31, 2003, and Liberty agrees to reinstate,
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renew or continue said bonds as many times as they come
due, by their terms, on or before December 31, 2003.
3. For purposes of this STS, the term "Penal Maximum" shall
mean $126 million, and the term "Adjusted Penal Maximum"
shall mean $96.5 million. ANC and Liberty agree that the
aggregate amount of all penal sums of all bonds not
identified as "closed" and/or "canceled" on Liberty's
line card (as determined by Liberty) shall at no time
exceed the "Penal Maximum."
4. With respect to any requests by ANC for any replacement,
reinstatement, renewal, or continuation of any existing
bond, or any increase rider or new bond, or any
Consolidation Bonding, (all of the foregoing referred to
collectively hereafter as "Requested Bonding"), the
capacity available for such Requested Bonding shall be
determined by the following formula: the Adjusted Penal
Maximum, LESS the Current Penal Total (as defined
hereafter). The "Current Penal Total" shall be defined
as and equal to, at any time, the aggregate amount of
all penal sums of all bonds not identified as "closed"
and/or "canceled" on Liberty's line card (as determined
by Liberty), EXCLUSIVE of the AIG Retro Bond (defined in
Section 2.10, below). If at any time, there is capacity
available for any Requested Bonding, then Liberty agrees
to issue such Requested Bonding as requested by ANC, on
condition that: (i) the Adjusted Penal Maximum would not
be exceeded; (ii) the bonds requested are of the type
and character that Liberty has routinely issued on
behalf of ANC or its subsidiaries or affiliates in the
past (as determined by Liberty); (iii) the Debtors are
in full compliance with each of the collateral
requirements set forth in Section 3, below; and (iv) in
the event that Liberty has granted ANC an Installment
Credit(s) as defined in Section 3.4, below, then Debtors
shall be required to provide Liberty with additional
cash collateral sufficient to provide Liberty with cash
collateral equal to fifty percent (50%) of the Current
Penal Total as increased to reflect the issuance of the
Requested Bonding, to be delivered prior to the issuance
of the Requested Bonding.
5. ANC and Liberty have exchanged line card information and
worked in good faith to reconcile the discrepancies
between their respective line cards, and shall continue
to do so, on not less than a monthly basis going
forward.
6. Upon obtaining the Final STS Approval Order, as defined
below, (a) any and all obligations on the part of
Liberty to issue any surety bonding shall be governed by
this STS, and any provisions of the Liberty Order with
respect to any such obligations shall be deemed
superceded; (b) Debtors shall be deemed to have released
any and all claims or causes of action arising from or
in connection with any assertion that Liberty failed to
fully perform any of its obligations under the Liberty
Order; (c) subject to all of the terms and conditions of
this STS, Liberty and ANC will work in good faith to
address the issuance of all surety bonds reasonably
determined by ANC to be urgent within three (3) business
days of ANC's request; and (d) subject to all of the
terms and conditions of this STS, Liberty and ANC will
work in good faith to issue other bonds as covered by
this STS within ten (10) business days of the ANC's
request for such bonding. Prior to obtaining the Final
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STS Approval Order, Liberty and the Debtors each reserve
their respective rights as to their mutual obligations
under the Liberty Order, EXCEPT THAT during the Interim
Period (see Section 2.11 below), as may be extended, any
obligation of Liberty to issue, renew, continue, extend
or increase any surety bonding shall be governed by the
terms set forth in Section 2.11, EXCEPTING, FURTHER,
that for any bonding requested by ANC during such
Interim Period as to which Liberty agrees that it is
obligated to furnish such bonding under the March 13
Term Sheet, such bonding shall be provided by Liberty
without payment of additional cash collateral so long as
all other terms of this STS, including Section 2.11, are
complied with and satisfied. For purposes of this STS,
the Final STS Approval Order shall be the Approval Order
that is entered following the final hearing pursuant to
Rule 4001 of the Federal Rules of Bankruptcy Procedure
and which shall have become a Final Order.
7. Notwithstanding anything contained herein, Liberty shall
not be required to issue any new "Retro Bonds" or to
increase any existing "Retro Bonds." A "Retro Bond" is
defined as any bond on which an insurer is the obligee,
including any bond issued for or on behalf of ANC or any
of its subsidiaries or affiliates to secure the payment
of premiums and/or deductibles and/or other fees or
obligations by the principal to the obligee pursuant to
payment agreements associated with insurance policies.
8. Any bonding that is not included within the terms set
forth in Sections 2.2, 2.3 and 2.4, above, may be
considered by Liberty, and if approved by Liberty in its
sole discretion, shall be issued only upon such
additional collateral terms as determined by Liberty, in
its sole discretion, which collateral shall become, at
Liberty's option, part of and cross-collateralized with
the Liberty Post-Petition Cash Collateral but which
shall not be applied to reduce any of the Collateral
Installment Payments set forth in Section 3, below, or
any Cash Replenishment Obligations.
9. Liberty retains the right to approve, in its sole
discretion, any change, modification or alteration in
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the terms and conditions of any bond form requested by
ANC or the bond obligee.
10. Through and including December 31, 2003, Liberty will
not cancel, and Liberty will renew as it comes due, the
Payment Agreement Bond, bond No. 015-009-619, executed
November 9, 2001, in favor of National Union Fire Ins.
Co. of Pittsburgh, Pa (the "AIG Retro Bond") under the
same terms set forth herein upon its renewal date in
November, 2003, provided that: (a) no amendment or
modification to the conditions, terms or provisions of
such bond shall be requested or made; (b) that certain
Indemnity Agreement dated as of August 30, 2001 by
AutoNation, Inc. in favor of Liberty, as amended (the
"AutoNation Indemnity") remains in full force and effect
as of said renewal date, as confirmed by AutoNation to
the satisfaction of Liberty in its sole discretion as of
said renewal date; and (c) as of thirty (30) days prior
to said renewal date, AutoNation's corporate credit
rating shall remain above BB- as rated by Standard &
Poor's.
11. During the period following the entry of any initial
interim order approving this STS, which period shall not
exceed two weeks (unless extended by Liberty in its sole
discretion) and shall automatically expire upon the
entry of a Final STS Approval Order, as defined below,
(the "Interim Period"), Liberty shall issue Requested
Bonding as requested by ANC provided that: (a) Liberty
shall receive, in advance of the issuance of any such
Requested Bonding, cash collateral equal to fifty
percent (50%) of the penal sum of such Requested
Bonding, (b) the issuance of the Requested Bonding would
not cause the Penal Maximum or the Adjusted Penal
Maximum to be exceeded; (c) the bonds requested are of
the type and character that Liberty has routinely issued
on behalf of ANC or its subsidiaries or affiliates in
the past (as determined by Liberty). Cash collateral
paid to Liberty under this Section 2.11 shall be
considered Liberty Post-Petition Cash Collateral, and
the provisions of Section 3.2 of this STS shall become
effective upon the commencement of the Interim Period.
Upon the Debtors' obtaining the Final STS Approval
Order, such cash collateral paid to Liberty during the
Interim Period shall be credited against the first
Collateral Installment Payment due. The Interim Period
may be extended at Liberty's sole discretion; however,
should the Interim Period be extended beyond the date
upon which any Collateral Installment Payment is due
under this STS, then such Collateral Installment Payment
shall be made by the Debtors according to the terms of
this STS and credit shall be granted against such
Collateral Installment Payments for the amounts of such
fifty percent (50%) collateral payments made by Debtors
to Liberty during the period prior to the due date of
each such Collateral Installment Payment.
5
SECTION 3 1. It is agreed and confirmed that: (a) the Assumed
Indemnity Obligations and the Liberty Post-Petition
INDEMNITY Bonds have been assumed by the Debtors; (b) the Liberty
AND Protections shall be equally applicable to all surety
COLLATERAL bonding issued, renewed, extended, continued or replaced
under the terms of this STS; (c) the Assumed Indemnity
Obligations shall include and apply to, at any given
time, all bonds that are not identified as "closed"
and/or "canceled" on Liberty's line card (as determined
by Liberty); (d) a reference in the STS Approval Order
or the Liberty Order to a lien on any assets shall
include the proceeds of such assets and shall apply
regardless of where such assets are located; and (e) a
reference in the STS Approval Order or the Liberty Order
to a lien shall be deemed to include security interests,
pledges and/or any similar rights or interests, however
created.
2. As of January 31, 2003, the Debtors have transferred
cash collateral to Liberty in the amount of $11,000,000,
plus $300,000 on account of Orange County bond number
15-012-270 and $65,338 on account of Denver bond number
15-010-967. In addition, Liberty has earned dividend
income on said cash collateral in the amount of
$112,628, and Liberty holds a Letter of Credit from ANC
in the amount of $1,000,000. The total of the foregoing
cash, dividend income and Letter of Credit collateral as
of January 31, 2003 is: $12,477,966. ANC and Liberty
hereby agree that the $365,338 that heretofore
collateralized only the Orange County and Denver bonds
shall, effective immediately, be available to
cross-collateralize all bonds not identified as "closed"
and/or "canceled" on Liberty's line card (as determined
by Liberty), as does the other cash, dividend income and
Letter of Credit collateral referenced in this
paragraph.
3. The Assumed Indemnity Obligations, in addition to the
collateral set forth in the Liberty Order, are to be
further collateralized by additional cash collateral to
be paid to Liberty (or Letters of Credit in a form and
substance and from an issuing bank acceptable to Liberty
in its sole discretion), with such cash collateral
payments to be made by wire transfer (or Letters of
Credit received and accepted by Liberty), on the
following schedule (the "Collateral Installment
Payments") unless otherwise modified (a) pursuant to the
terms of this STS, or (b) with the prior written consent
of Liberty, to be granted in its sole discretion:
a. $7,522,034 by the earliest of: (i) March 31,
2003 or (ii) the payment of interest to Lehman
Brothers on account of the pre-petition "Bridge
Loan;"
b. $6 million by June 30, 2003;
c. $6 million by August 4, 2003;
6
d. $8 million by September 8, 2003; and
e. $8 million by October 6, 2003.
ANC will be entitled to receive a credit against each of
the foregoing installment payments for the interest
and/or dividend income that has accrued on collateral
held by Liberty, excluding however any accrued interest
or dividend income that has been previously credited to
ANC in connection with a prior collateral payment.
Liberty shall provide ANC with the dollar amount and
documentation of such available credit(s) promptly upon
ANC's written request.
4. To the extent that the Current Penal Total is less than
the Adjusted Penal Maximum, then the Debtors' Collateral
Installment Payments shall be reduced by fifty percent
(50%) of the difference between the Adjusted Penal
Maximum and the Current Penal Total. (This reduction is
hereafter referred to as an "Installment Credit").
Installment Credits shall be applied against the
Collateral Installment Payments in reverse order of
scheduled payment. If, at the time ANC becomes entitled
to an Installment Credit, all of the Collateral
Installment Payments have been made, then Liberty shall
remit such Installment Credit to ANC within five (5)
business days of receipt of ANC's written request.
5. Once a Collateral Installment Payment is made, it shall
not be subject to disgorgement for any reason (other
than in accordance with Section 3.4, above, or upon
Liberty's written acknowledgment that Liberty's
exposure, liquidated and unliquidated, contingent or
non-contingent, equals zero). Without limiting the
foregoing, such Collateral Installment Payments shall be
treated as the payment of collateral on account of an
allowed super-priority administrative expense pursuant
to Sections 503(b) and 507(a)(1) and (b) of the
Bankruptcy Code, for which Liberty shall hold a first
priority senior lien in accordance with Section
364(d)(1) of the Bankruptcy Code. Unpaid Collateral
Installment Payments shall be treated as allowed
super-priority administrative expenses pursuant to
Sections 503(b) and 507(a)(1) and (b) of the Bankruptcy
Code, for which Liberty shall hold a first priority
senior lien in accordance with Section 364(d)(1) of the
Bankruptcy Code, which shall be upon the same terms, and
including the same protections, collateral and
subordinations as provided in Section 2 of the March 13
Term Sheet, and further provided that unpaid Collateral
Installment Payments shall be subject to and subordinate
to the senior DIP lien to be granted to DaimlerChrysler
in connection with the DIP financing facility, as
defined in the Debtors' Motion dated February 14, 2003,
Docket No. 4064, seeking the entry of an order, INTER
ALIA, authorizing the Debtors to obtain post-petition
financing and seeking related relief.
7
6. a. The following provisions of the March 13 Term Sheet
are hereby amended, modified and/or supplemented as
follows:
(i) Section 2, paragraph 1.d.ii of the March
13 Term Sheet is hereby amended to provide:
"ii. Each time that Liberty has drawn a total of
$1 million upon the Liberty Post-Petition Cash
Collateral in connection with the Assumed
Indemnity Obligations, the Debtors, jointly and
severally, shall cause the Liberty Post-Petition
Cash Collateral to be replenished by making a cash
collateral payment to Liberty in the amount of $1
million, by wire transfer or check (at Liberty's
option), issued not later than five (5) business
days following receipt of Liberty's written demand
for replenishment and documentation of same, which
replenishment, if in the form of a check, shall be
sent by overnight mail to the attention of Nina
Durante, Liberty Bond Services, 450 Plymouth Road,
Suite 400, Plymouth Meeting, PA, 19462, or to such
other person or place as Liberty may designate in
writing."
(ii) Section 2, paragraph 1.d.iii of the
March 13 Term Sheet is hereby amended to provide:
"iii. The replenishment of the Liberty
Post-Petition Cash Collateral pursuant to
subparagraph "ii" immediately above shall occur a
maximum of fourteen (14) times during the period
following February 24, 2003 (for a total
replenishment obligation during said period of $14
million), PROVIDED, HOWEVER, that the Debtors
shall not be required to provide more than two (2)
such replenishment payments of one million dollars
($1 million) each during any thirty-day period
EXCEPTING THAT (x) with respect to the last four
replenishment payments, totaling $4 million, the
Debtors shall not be required to provide more than
two (2) such replenishment payments of one million
dollars ($1 million) each during any fifteen-day
period; and (y) in the event that the balance of
the MBIA Cash Collateral Account (as referred to
in the Second Order Authorizing Debtors To (A)
Lease Automobiles And (B) Provide Protection In
Connection With Master Lease Agreements, dated May
10, 2002 (the "Second MBIA Order"), and Third
Order Authorizing Debtors To (A) Lease Automobiles
And (B) provide Protection In Connection With
master Lease Agreements, dated November 5, 2002
(the "Third MBIA Order", which, collectively with
the Second MBIA Order, is referred to as the "MBIA
Orders") has been or is increased following May
10, 2002 by at least $ 34.5 million, the Debtors
shall be obligated to accelerate the next four (4)
Unpaid Replenishment Obligation payments, in the
total sum of $4 million, to Liberty in respect of
Debtors' Collateral Replenishment Obligations.
b. For purposes of clarification, the
provisions of paragraph 18(ii) of the DeutscheBank
Order, paragraph 18(II)(x) of the Second MBIA Order and
8
paragraph 15(a)(II)(x) of the Third MBIA Order, are
restated and reflected in the above subparagraph "a" of
this Section 3.6 above.
7. All Collateral Replenishment Obligations (which, when
referred to in this STS, includes Collateral
Replenishment Obligation payments actually received by
Liberty, and any such payments that are due but not yet
paid, and any such payments that have not yet become
due, all of which collectively shall not exceed,
exclusive of any such payments heretofore received, in
the aggregate, $14 million) shall be independent of the
Debtors' obligations with respect to the Collateral
Installment Payments. Each individual payment received
by Liberty on account of the Collateral Replenishment
Obligations shall be referred to in this STS as a
"Replenishment." All Collateral Replenishment
Obligations that are not yet paid (whether or not due),
for any reason, as of any point in time on any given
date shall be referred to, collectively and in the
aggregate, as the "Unpaid Replenishment Obligations."
8. All dividend income and/or interest earned on the cash
collateral held by Liberty shall accrue and constitute
additional Liberty Post-Petition Cash Collateral, and
shall be credited (to the extent not applied by Liberty
to satisfy ANC's Assumed Indemnity Obligations) toward
ANC's Collateral Installment Payments as set forth in
Section 3.3 above. At such time as all liability
(contingent or otherwise) of Liberty shall have been
extinguished, discharged or terminated, as determined by
Liberty in its sole discretion, any such dividend and/or
interest income still held by Liberty will be
immediately returned to ANC.
9. Notwithstanding anything to the contrary in the Liberty
Order, or in any prior or subsequent order of the
Bankruptcy Court (other than the STS Approval Order),
including any order authorizing the Debtors' to use cash
collateral or to obtain debtor-in-possession financing,
Liberty has, and shall have, an exclusive, valid and
perfected senior first priority lien and security
interest upon all of the following, including any
proceeds thereof: (a) 100% of the Debtors' equity in
"IAG" (defined in Section 6 below); (b) 35% of the
Debtors' equity in the "Shared Foreign Subsidiaries" as
defined below; (c) the Debtors' interests in the "Other
Foreign Subsidiaries" (as defined below); and (d) any
other assets upon which liens were granted to Liberty
pursuant to the Liberty Order. Upon request, ANC shall
provide Liberty with physical possession of
documentation of the foregoing liens and security
interests, and ANC shall execute all instruments
9
necessary to effectuate and enable Liberty to enjoy the
benefits of this Section 3.9. The liens and security
interests in (a) through (d) shall be senior in all
respects, including in right of distribution, and shall
not be subordinated, altered or affected in any way,
including, by any plan of reorganization (or
liquidation) filed by or on behalf of the Debtors or one
or more third parties, or otherwise, or by the
incurrence at any time of indebtedness pursuant to 11
U.S.C.ss. 364, or otherwise, except as otherwise
provided in Section 6 herein. For purposes of this STS,
"Shared Foreign Subsidiaries" shall mean each of the
following entities: (i) Alamo Rent-A-Car Locadora De
Automoveis LTDA; (ii) ANC Rental (Europe); (iii) ANC
Rental Corporation (Holdings) Limited; (iv) Guy Salmon
USA, Inc.; (v) National Car Rental (Canada), Inc.; (vi)
Republic Guy Salmon Partner, Inc.; and (vii) Republic
Industries Automotive Rental Group (Switzerland) AG. For
purposes of this STS, the term "Other Foreign
Subsidiaries" shall mean each of the following entities:
(viii) Republic Industries (German Holdings) Gmbh; (ix)
Alamo Rent-A-Car (Vienna) Gmbh; (x) National Car Rental
System (New Zealand) Limited; (xi) National Car Rental
System (Germany) GMBH; (xii) National Car Rental Hong
Kong Limited; and (xiii) National Car Rental do Brasil
Empreendimentos Ltda. The "Shared Foreign Subsidiaries"
and the "Other Foreign Subsidiaries" are collectively
referred to as the "Foreign Subsidiaries." Any
references to Shared Foreign Subsidiaries, Other Foreign
Subsidiaries or Foreign Subsidiaries shall include
successor entities or assigns.
10. Notwithstanding any prior or subsequent order of the
Bankruptcy Court, unless otherwise consented to by
Liberty in writing, if at any time there is a
liquidation or other disposition of assets out of the
ordinary course of business against which assets Liberty
holds a security interest, and to the extent that
Liberty would be entitled to a distribution resulting
from the sale or other disposition of such asset but for
an assertion by or on behalf of the Debtors that such
distribution need not be made to Liberty on the basis
that Liberty is otherwise "adequately protected"
(including within the meaning of 11 U.S.C 361), the
Debtors specifically waive the right to seek any relief,
and the Court shall not enter any order or grant any
relief, which restricts the distribution of such
proceeds to Liberty on the basis of adequate protection.
The foregoing includes liens which attach to proceeds of
a sale or other disposition of assets, including
pursuant to 11 U.S.C. ss. 363(f).
SECTION 4 1. Liberty shall subordinate its security interests and
liens in the Collateral as defined in the Loan And
SUB- Security Agreement Between ANC, as Borrower, and
ORDINATION DaimlerChrysler Corporation ("Chrysler"), as Lender,
TO DIP dated March __, 2003, pursuant to which Chrysler has
LENDER agreed to provide debtor-in-possession financing (as
originally approved by the Bankruptcy Court and without
regard to any subsequent amendments or modifications
thereto, the "Chrysler Agreement"), to all obligations
owed by the Debtors under a Debtor-in-Possession
financing agreement to be approved by the Bankruptcy
10
Court with DaimlerChrysler not to exceed 62.5 million
dollars, on the condition that Congress and Lehman
Commercial Paper are subordinated to the same extent and
degree. Notwithstanding the foregoing, Liberty shall not
subordinate any of its liens, interests or rights in and
to (i) the Pre-Petition Liberty Cash Collateral; (ii)
the Liberty Post-Petition Cash Collateral (including all
Supplemental Cash Collateral); (iii) the Collateral
Installment Payments actually received by Liberty; (iv)
the Collateral Replenishment Obligations; (v) those
liens and the assets subject thereto set forth in
Section 3.9(a) through 3.9(d) of this STS; and (vi) the
Fleet Equity (as hereafter defined), except as otherwise
set forth in this STS with respect to the. Fleet Equity.
As used in this STS, Fleet Equity shall mean: (i) the
Finance Company Equity Interests (as defined in the
Collateral Agreement, dated as of August 30, 2001, among
ANC, Liberty, Wilmington Trust Company and Lehman
Commercial Paper), and (ii) all rights and interests
Liberty received pursuant to paragraphs 5, 8, 9 and
14-17 of the Deutsche Bank Order (as hereafter defined),
including with respect to ARG II Funding Corp., and
(iii) whether or not included in the foregoing subparts
"i" and "ii" of this definition, the equity interests in
and stock of ARG Funding Corp., ARG II Funding Corp, and
the Lessor SPE's (as defined in the DeutscheBank Order,
defined below).
2. Nothing in the approved Chrysler Agreement, or the Order
of the Bankruptcy Court approving and authorizing such
agreement, shall bar, delay or prevent the Debtors from
performing any and all obligations to Liberty under the
STS Approval Order, the Liberty Order or the Assumed
Indemnity Obligations.
3. Under no circumstances shall any Liberty Protections be
diminished, subordinated, delayed or otherwise impaired
to or for the benefit of any secured creditor senior to
Liberty in order to obtain the consent of, or provide
adequate protection to, such senior secured creditor in
connection with the approval of any DIP financing
facility.
4. Except as set forth in this Section 4 and Section 8.4,
Liberty shall have no other obligation to consent to
subordinate any of its liens, protections or rights to
any financing sought or obtained by the Debtors, and any
such previously existing obligation, including pursuant
to Section 2.3 of the March 13 Term Sheet, shall be
deemed wholly satisfied and of no further effect.
SECTION 5 1. This will confirm that:
SECURED a. the Debtors' obligations to Liberty pursuant to
SUPER- the Liberty Order and the STS
11
PRIORITY Approval Order constitute allowed secured
ADMIN- super-priority administrative expenses pursuant
ISTRATIVE to 11 U.S.C.ss.ss. 503(b)(1), 507(a)(1), 507(b)
EXPENSE and 364(c), (d) and (e), in the full aggregate
amount of: (i) the aggregate amount of all penal
sums of all bonds not identified as "closed"
and/or "canceled" on Liberty's line card (as
determined by Liberty) (hereinafter referred to
as the "Liberty/ANC Bonds"), which, as of
February 26, 2003 is approximately $126 million;
plus (ii) any amounts now or hereafter due
pursuant to the Assumed Indemnity Obligations;
plus (iii) any unpaid or accrued premiums, fees
(including reasonable legal fees and financial
advisor or other consultant fees) and expenses
payable or reimbursable to or on behalf of
Liberty (with all of the foregoing in this
Section 5.1(a) being referred to herein as the
"Liberty Secured Administrative Expense Claim").
Notwithstanding the foregoing, but subject to
Section 5.1.f of this STS, the Liberty Secured
Administrative Expense Claim will be subject to
the same subordination as provided for under
Section 2.1.b.ii of the March 13 Term Sheet.
b. The Liberty Secured Administrative Expense Claim
shall not be subject to any of the provisions of
11 U.S.C.ss.502.
c. The Liberty Secured Administrative Expense Claim
may only be reduced upon the receipt by Liberty
of an indefeasible payment to Liberty on account
of the Liberty Secured Administrative Expense
Claim, or when there has been an indefeasible
discharge and termination of a Liberty/ANC Bond
in a form acceptable to Liberty in its sole
discretion, in which case, such reduction shall
be limited to the amount of such payment or such
discharged bond penal sum amount.
d. Except as specifically set forth in this STS,
Liberty shall have no obligation to, and no
order shall be sought or entered requiring
Liberty to, disgorge, surrender, convey,
transfer, terminate, subordinate, delay or
compromise any of the following heretofore or
hereafter received: collateral; security
interest; right; fee; Collateral Installment
Payment; reimbursement; or Replenishment.
e. Until such time as all risks, expenses and
liabilities (whether contingent, unliquidated or
otherwise) of Liberty under all Liberty/ANC
Bonds have been terminated and fully discharged
(as determined by Liberty in its sole
discretion), the Liberty Secured Administrative
Expense Claim shall be treated as liquidated and
not contingent.
f. Notwithstanding anything in any prior order of
this Court or in the STS Approval Order to the
contrary, Liberty's right in and to (i) the
Liberty Post Petition Cash Collateral; (ii) the
Pre-Petition Liberty Cash Collateral (iii) any
12
payments actually received by Liberty on account
of the Collateral Installment Payments; and (iv)
the Collateral Replenishment Obligations, are
protected by senior first priority liens in
accordance with Bankruptcy Code Section
364(d)(1) and such senior first priority liens
shall not be subordinated, altered or affected
by any plan of reorganization (or liquidation)
filed by or on behalf of the Debtors or one or
more third parties, or otherwise, or by the
incurrence at any time from and after the date
hereof of indebtedness pursuant to Section 364
of the Bankruptcy Code, or otherwise. By way of
clarification, the Debtors' obligations to make
any unfunded Collateral Replenishment Obligation
payments, whether or not a payment is due,
constitute senior first priority secured claims
granted pursuant to 11 U.S.C. ss. 364(d), senior
in all respects, including right of
distribution, and are not subject to
subordination, as against all assets of the
Debtors' estate, including as against the
proceeds realized upon the liquidation of such
assets, such that under all circumstances,
Liberty will receive the first proceeds from the
liquidation of any assets of the Debtors'
estates to satisfy the unfunded amount of the
Collateral Replenishment Obligations, to be held
or applied by Liberty against the Liberty
Secured Administrative Expense Claim.
SECTION 6 1. In the event the Debtors shall (a) seek to confirm one
or more reorganization plans pursuant to 11
PLAN OF U.S.C.ss.1129 (a "Plan"), including a Plan that
REORGAN- incorporates a sale of a material portion of the assets
IZATION of the Debtors, or (b) enter into, or seek Bankruptcy
approval of, one or more asset purchase (or similar)
agreements, including pursuant to 11 U.S.C. ss. 363; and
provided that under either (a) or (b) above: (i) such
Plan or sale(s) results in the continued operation of
the business of the Debtors using substantially the same
assets as are being utilized by the Debtors as of the
date hereof (exclusive of assets disposed of in
compliance with Section 8 herein) and operating under
agreements and contracts that are the subject of the
existing Liberty/ANC Bonds as of the date hereof which
account for not less than ninety percent (90%) of the
aggregate bond penal sums of the Liberty/ANC bonds as of
the date hereof (after giving effect to reductions in
the aggregate total penal sums of the Liberty/ANC bonds
effectuated through permanent discharge and satisfaction
of bond liabilities resulting from such sale or plan
without any loss or other payment being made under such
bonds by Liberty) (with the foregoing circumstance,
whether effectuated pursuant to a Plan or by sale(s),
being referred to herein as a "Reorganization
Scenario"); (ii) the Successor Entity (as defined below)
assumes all the responsibilities, obligations and
13
liabilities of the Debtors as provided for in the STS
Approval Order and the Liberty Order; and (iii) the
provisions of either Section 6.1.I or 6.1.II, below, are
satisfied in full; then Liberty agrees that: (x) the
Successor Entity shall be permitted to assume the rights
and obligations of the Debtors provided for in the STS
Approval Order; and (y) the provisions of 11 U.S.C. ss.
1129(a)(9)(A) will be deemed satisfied with respect to
the treatment of the Liberty Secured Administrative
Expense Claim. Nothing in the STS Approval Order will
require Liberty to consent to any Plan or any motion to
sell assets that does not satisfy all of the conditions
set forth above.
I. REORGANIZATION/SALE OPTION #1.
a. all Collateral Installment Payments (whether
or not due), fees, expenses, premiums, and
other payments (including any payments due
under Section 8 of this STS (the "Sale
Payments")) that are unpaid as of the date
of the entry of an order confirming such
Plan or approving such sale(s) will be
accelerated, and shall be due and paid not
later than: (i) with respect to a sale, the
date such sale first closes, and (ii) with
respect to a Plan, the earlier of (x) the
date such Plan becomes effective, or (y) the
date of any distribution on account of
administrative, secured or unsecured claims
(the "Effective Date"). Liberty shall
continue to retain all cash collateral held
by it (including the Pre-Petition Liberty
Cash Collateral, Liberty Post-Petition Cash
Collateral, Replenishments and Collateral
Installment Payments and Supplemental Cash
Collateral), subject to the terms and
conditions set forth in the other Sections
of this STS; and as against which Liberty
will have a senior first priority lien and
security interest, which shall not be
altered, affected or subject to
subordination at any time and which will
constitute cash collateral securing, and be
available to be applied against, all
obligations to Liberty of the Debtors, the
reorganized Debtors and the Successor
Entity, including the obligations on account
of the Liberty Secured Administrative
Expense Claim (for the purposes of this STS,
the term "Successor Entity" shall mean the
person or entity that is the successor or
acquirer under the Plan or any sales
agreement, to or of the Debtors' rights and
interests in and to the operating assets and
agreements pursuant to which the Debtors
currently operate their businesses, whether
considered a successor in interest by
operation of law, agreement or statute, or
by virtue of practical application);
b. the obligation to pay the Collateral
Replenishment Obligations will be assumed
(in a form and substance acceptable to
Liberty in its sole discretion) by the
Successor Entity;
c. the Successor Entity must assume the
Debtors' obligations under the Assumed
Indemnity Agreements and, at Liberty's
option in Liberty's sole discretion, the
Successor Entity must execute a General
Agreement of Indemnity in form and content
acceptable to Liberty; and
d. all liens and security interests as provided
for pursuant to the Liberty Order as
modified or supplemented pursuant to the STS
Approval Order shall continue as liens and
security interests against the same assets
and at no lower level of priority than
14
exists as of the day following the entry of
the STS Approval Order, and whether or not
such assets are acquired by the Successor
Entity. If any such non-acquired assets are
otherwise sold, Liberty's liens and security
interests shall attach to the proceeds of
such sale, and shall be treated as though it
were a Transaction under a Liquidation
Scenario (as these terms are defined in
Section 7, below).
II. REORGANIZATION/SALE OPTION #2.
a. All fees, expenses, premiums and Collateral
Installment Payments that are unpaid as of
the Effective Date will be accelerated and
shall be immediately due and paid to Liberty
not later than the Effective Date, and
Liberty shall continue to retain all cash
collateral held by it subject to the
provisions of subparagraph 6.1.II(b) below
(including the Pre-Petition Liberty Cash
Collateral, Liberty Post-Petition Cash
Collateral (including Supplemental Cash
Collateral), Replenishments and the
Collateral Installment Payments), as against
which Liberty will have a senior first
priority lien and security interest, and
which shall not be altered, affected or
subject to subordination at any time and
which will constitute cash collateral
securing, and be available to be applied
against, all obligations to Liberty of the
Debtors, the reorganized Debtors and the
Successor Entity, including obligations on
account of the Liberty Secured
Administrative Expense Claim;
b. Liberty shall receive not later than the
Effective Date an additional cash collateral
payment such that the total amount of cash
collateral being held by Liberty (excluding
Supplemental Cash Collateral already in
Liberty's possession and any Replenishments
received by Liberty) shall be equal to 75%
of the Adjusted Penal Maximum, and it is
hereby agreed that, upon receipt of the
foregoing, the amount of such 75% cash
collateral that exceeds 50% of the Adjusted
Penal Maximum shall be treated as
Supplemental Cash Collateral, and all of the
additional cash collateral provided pursuant
to this Section 6.1.II.b shall be entitled
to the same protections as provided for in
Section 6.1.II(a) above. Such 75% cash
collateral shall not be subject to any
Installment Credit at any time,
notwithstanding any other provisions set
forth in this STS, except that should the
Successor Entity and Liberty agree in
writing that the Adjusted Penal Maximum will
be permanently reduced, then as part of said
agreement Liberty shall return to the
Successor Entity any cash collateral
(excluding Supplemental Cash Collateral) in
excess of the amount that shall be 50% of
the new, reduced Adjusted Penal Maximum;
c. the obligation to pay Collateral
Replenishment Obligations (which shall not
be included in the calculation of the 75%
Cash Collateral referred to in Section
6.1.II(b) above), will be assumed (in a form
and substance acceptable to Liberty in its
sole discretion) by the Successor Entity;
d. The Successor Entity must assume the
Debtors' obligations under the Assumed
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Indemnity Agreement and, at Liberty's option
in Liberty's sole discretion, the Successor
Entity must execute a General Agreement of
Indemnity in form and content acceptable to
Liberty; and
e. Liberty shall have exclusive, valid and
perfected first priority liens on and
security interests in (i) the stock of
International Automotive Group Insurance
Company, Ltd. ("IAG") and (ii) that portion
of the stock of the Foreign Subsidiaries
which was not physically pledged on or prior
to August 30, 2001 and which is not now in
the possession of Congress Financial
Corporation (Florida), exclusive of those of
the Foreign Subsidiaries sold in compliance
with the provisions of this STS prior to the
date of any transaction with respect to
which this Section 6 is or becomes
operative, which in the case of both (i) and
(ii) shall (A) be senior first priority
liens and security interests pursuant to 11
U.S.C.ss.364(d), which liens and security
interests may not be altered, affected or
subordinated at any time by the incurrence
at any time of any indebtedness pursuant to
Section 364 of the Bankruptcy Code, or
otherwise, and (B) simultaneously with the
closing of any transaction with respect to
which this Section 6 becomes operative,
including consummation of a Plan, continue
to be exclusive, valid and perfected first
priority liens in the same assets and the
Successor Entity shall execute any and all
agreements and acknowledgement deemed
appropriate by Liberty, in its sole
discretion, to confirm, record or perfect
same. Except for the aforesaid liens in IAG
and the Foreign Subsidiaries and Liberty's
rights and interests in the cash collateral
referred to in Section 6.1.II(a), (b) and
(c), upon the satisfaction of all conditions
and provisions set forth in this Section
6.1.II, Liberty will consent to the release
of all other liens and security interests of
Liberty in other assets of the Debtors
estates, and shall consent in writing to
release the Debtors from the provisions of
paragraphs 5, 8, 9 and 14-17 of the June 28,
2002 Corrected Amended Deutsche Bank Order
[Docket No. 2489] (the "DeutscheBank
Order").
2. Upon the occurrence of any transaction with respect
to which this Section 6 is or becomes operative, (a)
all references in the STS Approval Order and in the
Liberty Order to the Debtors or any of them shall be
deemed modified to include the Successor Entity, and
(b) in addition to those Events of Default set forth
in the March 13 Term Sheet and this STS, any default
under the Liberty Indemnity Agreements shall
constitute an Event of Default under this STS without
regard to those modifications to the Liberty
Indemnity Agreements set forth in Sections 3.2, 3.3
and 3.4 of the March 13 Term Sheet.
SECTION 7 1. Any event, occurrence or transaction (a
"Transaction") that does not constitute a
LIQUIDATION Reorganization Scenario as described in Section
6.1(a) above, which provides for, or results in, a
sale, transfer, assignment or other
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disposition of assets or interests of one or more of
the Debtors against which assets or interests Liberty
holds a security interest, shall be considered a
"Liquidation Scenario", whether such Transaction is
effectuated under or pursuant to a Plan confirmed
under section 1129 of the Bankruptcy Code or pursuant
to sections 105, 363 or 365 of the Bankruptcy Code,
or otherwise, and whether pursuant to Chapter 11 or
Chapter 7 of the Bankruptcy Code.
2. Any proceeds resulting from a Transaction shall first
be applied to pay all Unpaid Replenishment
Obligations to Liberty, and thereafter, any funds in
excess of the amounts necessary to satisfy the
secured claims of the entities holding valid,
perfected and unavoidable security interests in such
assets senior to those of Liberty: (i) shall be paid
to, and shall become the property of, Liberty to the
extent of any liquidated, non-contingent due and
owing obligation of the Debtors to Liberty or due and
owing claim of Liberty against the Debtors, and (ii)
shall, subject to Section 7.3 below, to the extent of
any contingent or unliquidated claim of Liberty or
obligation of the Debtors, be paid to Liberty equal
in amount to the Liberty Secured Administrative
Expense Claim (after crediting the amount of other
cash collateral being held by Liberty at such time),
until such time as there shall be no further
contingent or unliquidated claims or obligations
owing to Liberty.
3. To the extent any contingent or unliquidated claims
of Liberty against the Debtors or obligations of the
Debtors to Liberty become actually liquidated (and
not deemed liquidated as per this STS), any cash
collateral held by Liberty may be applied against
such claims or obligations. Liberty may also use such
cash collateral to obtain a discharge and release of
its obligations under or relating to any Liberty/ANC
Bonds. All dividend income and/or interest earned on
funds held by Liberty shall accrue and will
constitute additional cash collateral. At such time
as all liability (contingent or otherwise) of Liberty
shall have been extinguished, discharged and
terminated, any amounts remaining shall be returned
to the Debtors or held by Liberty subject to the
entry of further order by the Bankruptcy Court, or
may, at Liberty's option be deposited with the Clerk
of the Court, and in such case Liberty shall have not
further obligation or liability in connection with
such funds. In a Liquidation Scenario, in no event
will any holder of a claim or interest which is
subordinate to Liberty in any collateral or right of
payment be entitled to receive any distribution until
Liberty has been paid or cash collateralized in full.
SECTION 8 1. On any sale of the Debtors' assets in one or more
transactions outside of the ordinary course of
ASSET SALES business, (other than sales of the Debtors' interests
in IAG, the Foreign Subsidiaries or the Fleet Equity
which are governed by Section 8.2, 8.3 and 8.4
below), the Net Proceeds (as defined below) shall be
applied and delivered as follows: (i) first to those
creditors, if any, which have valid, perfected liens
in the assets sold senior to Liberty, as a permanent
reduction in the Debtors' obligations to those
17
creditors; and (ii) second, to Liberty, as
accelerated payments of unpaid Collateral Installment
Payments, in reverse order of scheduled payment,
PROVIDED, HOWEVER, that once all Collateral
Installment Payments have been paid, the Debtors
shall be permitted to utilize the Net Proceeds
without regard to this Section 8.1. PROVIDED FURTHER,
HOWEVER, that this Section 8.1 shall be null and void
if at the time of any sale of an asset described in
this Section 8.1, the Debtors are not operating their
businesses in the ordinary course of business, or if
the Debtors, a trustee or a successor to or agent of
the Debtors is pursuing a liquidation of the assets
of the estate, including under either Chapter 7 or 11
of the Bankruptcy Code.
2. With respect to any Interest Sale (as defined below)
by the Debtors of either IAG or any of the Foreign
Subsidiaries: (i) in the case of an Interest Sale of
the Shared Foreign Subsidiaries, 17.5% of the Net
Proceeds, and in the case of an Interest Sale of any
of the Other Foreign Subsidiaries or of IAG, 50% of
the Net Proceeds, shall be delivered to Liberty as
Supplemental Cash Collateral (see Section 8.7 below),
and (ii) in the case of an Interest Sale of any of
the Shared Foreign Subsidiaries, up to an additional
17.5% of Net Proceeds, and in the case of an Interest
Sale of any of the Other Foreign Subsidiaries or of
IAG, up to an additional 50% of the Net Proceeds, not
to exceed the then aggregate amount of all unpaid
Collateral Installment Payments, shall be delivered
to Liberty and applied against said payments in
reverse order of scheduled payment, PROVIDED,
HOWEVER, that once all Collateral Installment
Payments have been paid, the Debtors shall be
permitted to utilize the remaining Net Proceeds that
would otherwise have been payable to Liberty under
this Section 8.2(ii). Nothing in this Section 8.2
shall in any way diminish, affect or modify Liberty's
subordinated liens and security interests or
otherwise affect the Liberty Protections with respect
to the remainder of the considerations generated by
reason of an Interest Sale of the Foreign
Subsidiaries. PROVIDED FURTHER, HOWEVER, if at the
time of any sale of an asset described in this
Section 8.2, the Debtors are not operating their
businesses in the ordinary course of business, or if
the Debtors, a trustee or a successor to or agent of
the Debtors is pursuing a liquidation of the assets
of the estate, including under either Chapter 7 or 11
of the Bankruptcy Code, then the Debtors shall not be
entitled to and shall not receive any of the net
proceeds otherwise payable to them under this Section
8.2, all of which shall be paid to Liberty. Under
such circumstances, no person other than Liberty
shall have any rights to or interest in the net
proceeds specified in this Section 8.2.
3. Additionally, if the "Base Net Equity" of IAG or the
Foreign Subsidiaries (which is defined as the
respective Net Worth of IAG and the Foreign
Subsidiaries as set forth on each of their December
18
31, 2002 Balance Sheets) is ever reduced by ten
percent (10%) or more, and said reduction results
from circumstances other than the payment of losses
in the normal course of business (an "Equity
Transaction"), then the Net Proceeds generated by
said Equity Transaction(s) shall be subject to the
provisions of Section 8.2 (i) and (ii), above. For
the avoidance of doubt, Equity Transactions include,
without limitation, intercompany loans and the fees
paid to any affiliate of any of the Debtors, or any
officer or director of any of the Debtors or of any
affiliate of any of the Debtors, or the payment of
dividends.
4. With respect to any Interest Sale of Fleet Equity,
the Debtors shall deliver to Liberty cash collateral
equal to the difference between 75% of the Adjusted
Penal Maximum and the amount of cash collateral
(excluding Supplemental Cash Collateral and excluding
any Replenishments received by Liberty), PROVIDED,
HOWEVER, under no circumstances shall Debtors be
required to deliver cash collateral in excess of the
Penal Maximum. Such amounts received by Liberty
pursuant to this Section 8.4 shall be considered
Supplemental Cash Collateral (see Section 8.7 below).
Upon receipt by Liberty of the sums required by this
Section 8.4, Liberty will consent to the release of
its liens and interest in the Fleet Equity, and shall
release the Debtors from the provisions of paragraphs
5, 8, 9 and 14-17 of the DeutscheBank Order. Liberty
also agrees to consent to being primed on its Fleet
Equity interest by a financing the purpose of which
is to obtain funds to provide Liberty with the cash
collateral payments set forth in this Section 8.4,
provided that any order or agreement relating to such
financing and/or priming specifically provides, to
the satisfaction of Liberty, that as a condition
therefor Liberty shall receive such payments in full.
5. For purposes of this Section of the STS, "Net
Proceeds" shall mean all cash, cash equivalents or
other considerations of any kind, nature or
description whatsoever, as and when the same are
liquidated to cash or cash equivalents, less all
reasonable, direct costs and expenses incurred in
connection with such sale including, by way of
example and not limitation, reasonable professional
fees, broker's commissions, transfer or similar
taxes, title insurance costs and recording fees.
"Interest Sale" shall mean any sale or other
transaction by which the Debtors' liquidate or
monetize all or any portion of the assets or the
economic value of, or their equity interests in, IAG,
any of the Foreign Subsidiaries or Fleet Equity.
6. Notwithstanding anything in the STS Approval Order to
the contrary, upon Liberty's receipt of any Net
Proceeds pursuant to this Section 8, such proceeds
19
shall be treated as both Liberty Post-Petition Cash
Collateral and Supplemental Cash Collateral.
7. Supplemental Cash Collateral (a) shall not be
credited towards any of the Collateral Installment
Payments or any of the Collateral Replenishment
Obligations; (b) shall be Liberty Post-Petition Cash
Collateral upon receipt; (c) may not be utilized to
generate an entitlement on the part of the Debtors to
an Installment Credit, or taken into account in any
of the calculations related to cash collateral
matters set forth in Section 2, Sections 3.3 or 3.4,
or in Sections 6 or 8; and (d) notwithstanding any
other provisions of this STS, may continuously be
retained and held by Liberty, without any obligation
on the part of Liberty to return any part thereof to
the Debtors until (i) Liberty has been fully
discharged and released of all risks and liabilities
under all Liberty/ANC Bonds (as determined by
Liberty, in its sole discretion), or (ii) the total
amount of cash collateral held by Liberty exceeds
100% of the Penal Maximum, in which case such
Supplemental Cash Collateral shall be returned to the
Debtors to the extent of such excess.
SECTION 9 1. ANC shall continue to pay all costs, expenses and
fees, including reasonable fees and disbursements of
BOND attorneys, financial advisors or other consultants,
PREMIUMS incurred by Liberty (referred to collectively
AND EXPENSES hereafter as the "Liberty Costs"). In lieu of any
procedures heretofore authorized, and without the
necessity of any notice or further order of the
Bankruptcy Court, (i) on not more than a monthly
basis, Liberty shall submit one or more statements
setting forth the Liberty Costs to ANC, accompanied
by documentation of same; and (ii) ANC shall remit to
Liberty the amount of said Liberty Costs by check
issued not later than ten (10) days following receipt
of same, sent by overnight mail to the attention of
Molly Morris, Liberty Bond Services, 450 Plymouth
Road, Suite 400, Plymouth Meeting, PA, 19462, or such
other person or place as Liberty may designate in
writing.
2. Commencing February 24, 2003, the Bond premium rate
shall be $15.00 per thousand for all bonds that are
issued, increased, renewed, continued, reinstated or
replaced, including all bond transactions still
pending from the Liberty Order. This rate shall also
apply to all annual premiums on "continuous (until
canceled)" bonds, including those annual premiums
that are past due but which have not yet been billed
to ANC.
SECTION 10 The following shall be conditions precedent to the STS
Approval Order becoming effective and binding on Liberty and
CONDITIONS the Debtors, any or all of which may be waived by Liberty in
PRECEDENT its sole discretion:
1. AutoNation shall consent in writing, on or prior to
the date that this STS is considered for approval by
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the Bankruptcy Court, to all of the terms of this
STS, and agree that its indemnity for the AIG Retro
Bond remains in full force and effect. AutoNation
shall also consent to the form of the STS Approval
Order and any interim orders.
2. Any orders of the Bankruptcy Court relating to the
approval of the STS, whether interim or otherwise,
shall be subject to Liberty's consent, in its sole
discretion.
3. Any orders of the Bankruptcy Court approving the
Chrysler Agreement or any Debtor-in-Possession
financing facility shall have been consented to by
Liberty, in its sole discretion.
4. The STS Approval Order shall have become a Final
Order, unless waived in writing by Liberty.
5. If the STS is approved on an interim basis only, the
order referred to herein as the Final STS Approval
Order must be approved by the Bankruptcy Court no
later than March 19, 2003, and become the Final STS
Approval Order no later than March 29, 2003.
Notwithstanding anything in this Section 10 to the Contrary,
if an interim order approving the STS is entered with
Liberty's consent, the relief provided for therein will not be
affected in the event that Liberty does not consent to any
further orders or this STS does not continue to be effective
due to the failure of a condition precedent which failure is
not waived by Liberty.
SECTION 11 Each of the following shall constitute an "Event of Default"
hereunder (after the time periods in section 4 of the March 13
EVENTS OF Term Sheet have elapsed with respect to the Events of Default
DEFAULT set forth therein, and after the time periods set forth in
Section 12 of this STS have elapsed with respect to the Events
of Default set forth herein):
1. each of the Events of Default set forth in the March
13 Term Sheet;
2. the Debtor's failure to (a) close upon an interim DIP
financing facility acceptable to Liberty, in its sole
discretion, by March 16, 2003; and (2) close upon a
finally approved DIP financing facility by March 31,
2003;
3. The cessation of continued funding (or rollover of
notes) by MBIA or of other existing vehicle financing
facilities, IF either (a) the Debtors fail to close
upon a replacement facility within thirty (30) days
of such cessation, or (b) Liberty notifies the
Debtors that Liberty has determined, in the exercise
of good faith, that the terms upon which Debtors
propose to secure a replacement facility materially
increase Liberty's risk as surety when compared to
the terms of the MBIA or other predecessor facility;
4. The sending of a "notice of acceleration" or similar
notice triggering collateral liquidation by any
entity that provided or provides pre-petition or
21
post-petition fleet financing to or for the benefit
of any of the Debtors or any of their subsidiaries or
affiliates and/or any of the lessor, lessee or issuer
special purpose entities involved in the fleet
utilized by any of the Debtors or any of their
subsidiaries or affiliates;
5. The Debtor's failure to deliver any Collateral
Installment Payment or any Collateral Replenishment
Obligation when due;
6. any default of the borrowers that has not been cured
within the applicable periods, or has not been waived
by the lenders, with respect to any postpetition
lending and/or financing agreement, including but not
limited to any DIP lending agreement, and any vehicle
financing agreement;
7. any (a) violation or alleged violation by the Debtors
of a then currently applicable order authorizing the
use of cash collateral, regardless of whether such
violation is challenged or contested by Debtors so
long as no determination as to the existence of such
violation has been made or rendered by the court; and
(b) termination or expiration of the Debtors'
authorization to use cash collateral, or the entry of
any order or finding by the court that the Debtors
have violated the terms of an order authorizing the
use of cash collateral;
8. the Debtors' failure to remit to Liberty any premium
or expense reimbursement when due;
9. the Debtors' sale or other disposition of any
material asset or portion of their assets, or of all
or substantially all of their assets (individually or
as a group) without fully complying with Section 6,
Section 7 or Section 8 of this STS;
10. except on the terms set forth in this STS, if one or
more of the Debtors shall file a plan of
reorganization, or shall fail to object to any plan
of reorganization filed by another party, or if
notwithstanding such objection, such plan is
confirmed over Liberty's objection, which does not
provide for (x) payment of cash collateral to Liberty
equal to 100% of the Liberty Secured Administrative
Expense Claim, and (y) Liberty to hold (or apply) all
such cash collateral until all outstanding surety
bonds, risks or exposure of Liberty has been
indefeasibly discharged and terminated;
11. if, at any time, the Maximum Penal Amount exceeds
$126 million, and ANC has failed to cure this default
within the cure period established in Section 12,
below;
12. the Debtors file one or more plans of reorganization
that is not fully consistent with the provisions of
Section 6.1.I. or II. of this STS; and
13. in the event of a Liquidation Scenario as provided
for under Section 7 of this STS, or of the filing of
a motion in furtherance of a Liquidation Scenario,
which Liquidation Scenario or motion is not fully
consistent with the provisions of Section 7 of this
STS;
22
14. the entry of any order that violates Section 4.2 or
4.3 of this STS;
15. Any breach of Sections 8.2 or 8.3 of this STS;
16. any representation or warranty made by any of the
Debtors herein or in any other document, certificate,
filing, financial or other statement furnished or
filed by it at any time under or in connection with
this STS, Debtors' Bankruptcy Cases or in connection
with the procurement of any surety bonding, shall
have been incorrect in any material respect on or as
of the date made or deemed made.
Liberty may, however, in its sole discretion, waive any one or
more defaults, or extend any period within which to cure such
defaults, without in any way diminishing or waiving its right
to enforce fully the terms of this STS with respect to any and
all defaults or other or subsequent defaults.
SECTION 12 1. Immediately upon the occurrence of any Event of
Default set forth in Section 11 of this STS, numbered
REMEDIES AND paragraphs 1, 2, 3, 4, 5, 6, 7 , 9, 10, 12, 13, 14,
RIGHTS UPON 15 and 16, or upon the occurrence of any Event of
EVENT OF Default set forth in Section 11, numbered UPON EVENT
DEFAULT OF DEFAULT paragraphs 8 and 11 of this STS which
remains uncured for five (5) business days following
the date of transmission of notice of such default to
ANC, then, in addition to any of Liberty's rights
under the Liberty Order, without any notice to any
other party and without further order of the
Bankruptcy Court:
a) The full amount of the all Unpaid
Replenishment Obligations shall be
accelerated and due immediately.
b) All Collateral Installment Payments not yet
paid shall be accelerated and due
immediately.
c) Notwithstanding anything to the contrary in
the Liberty Order or the STS Approval Order,
Liberty may cancel any and all surety bonds
issued by Liberty on behalf of ANC, its
subsidiaries or affiliates without the prior
consent of ANC or further order of the
court, EXCEPT THAT without affecting in any
way the applicability of subparts (a), (b),
(d) and (e) of this Section 12, Liberty
shall not, absent any other default, cancel
outstanding surety bonds without ANC's
consent (A) with respect to Section 11.4,
during the period after the sending of any
"notice of acceleration" and prior to
commencement of any collateral liquidation
or the issuance of a determination or
acknowledgment of the validity of the
"notice of acceleration," and (B) with
respect to Section 11.7, during the period
after any event described in Section 11.7(a)
and prior to the occurrence of any event,
described in Section 11.7(b).
d) Notwithstanding anything to the contrary in
the Liberty Order or the STS Approval Order,
23
Liberty shall no longer have any obligation
to renew, continue, extend, issue or
increase any surety bonds.
e) The provisions of Sections 3.4, Section 6
and of Sections 8.1 and 8.2 of this STS
shall no longer be effective or enforceable
as against Liberty, at Liberty's option and
sole discretion. Such sections shall remain
fully enforceable against the Debtors,
regardless of whether Liberty exercises its
option under this paragraph with respect to
any of such sections.
2. Liberty and the Debtors shall be entitled to an
emergency court hearing on the merits within no later
than five (5) days after the filing and service on
respective counsels for the Debtors, Liberty, MBIA,
Congress, Lehman and the Creditors Committee of any
motion by the Debtors or Liberty for a determination
that an Event of Default exists or does not exist.
Notice may be made by overnight mail, facsimile or
email transmission.
3. Nothing herein will affect the remedies and rights
upon Event of Default set forth in Section 4 of the
March 13 Term Sheet.
SECTION 13 All ANC non-debtor subsidiaries and/or affiliates that
executed any Surety Bond Guarantee and Assumption Agreement in
connection with the Liberty/ANC Pre-Petition Agreement or the
NON-DEBTORS Pre-Petition Secured Creditor Agreements shall
execute an agreement, in a form and substance acceptable to
Liberty in its sole discretion, confirming that neither the
execution nor the implementation of this STS (including all
actions and documents contemplated or permitted by this STS)
shall in any way affect, impair, alter or modify their
obligations and liabilities under the Surety Bond Guarantee
and Assumption Agreement. Within twenty (20) business days
after the entry of the STS Approval Order, ANC shall cause all
non-Debtor subsidiaries and/or affiliates to execute and
deliver to Liberty the agreements described herein, and any
other document necessary to effectuate the terms of the STS.
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