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[CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AS INDICATED BY AN * AND SEPARATELY FILED WITH THE
COMMISSION]
Exhibit 10.20
October 8, 1996
Mr. X. Xxxxx Xxxx
Vice Chairman and CEO
Alamo Rent A Car, Inc.
110 S.E. 6th Street
Ft. Lauderdale, FL 33301
Dear Xx. Xxxx:
This letter will confirm the agreement ("Agreement") reached between Alamo Rent
A Car, Inc., ("Alamo") and General Motors ("GM") regarding Alamo's purchase or
lease of GM vehicles for model year 1997 through model year 2000. The details of
this Agreement are as follows:
1997 MODEL YEAR
1. Alamo will purchase or lease from GM dealers of their choice * 1997 model
GM vehicles under the terms and conditions of GM's 1997 Model Year Daily
Rental Fleet Program (refer ATTACHMENT 1). Alamo has agreed to purchase
these GM vehicles in a mix which includes a considerable number of GM's
higher priced vehicles and which represents a higher percentage of these
units than Alamo otherwise would purchase. The agreed mix of units is as
follows:
Metro * Bonneville *
Prizm * LeSabre *
Cavalier * DeVille *
Cavalier Cvt. * Lumina Minivan *
Sunfire * Trans Sport *
Sunfire Cvt. * Astro Van *
Malibu * Safari Van *
Grand Am * Blazer *
Skylark * Xxxxx *
Achieva * Chevy Full-size Van *
Lumina * GMC Full-size Van *
Monte Carlo * Tracker *
Grand Prix * -----
Supreme * Total Units: *
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Xx. X.X. Xxxx
October 8, 1996
Page 2
2. Alamo agrees that in all advertising and promotional materials which Alamo
undertakes for the 1997 Model Year (September 1, 1996 through August 31,
1997), Alamo will feature only General Motors products where any vehicle is
featured or promoted. During the term of this Agreement, Alamo agrees to
allow such space and include such tag lines as is in accordance with custom
of the trade and industry. In exchange for this Agreement to advertise and
promote the number of 1997 models and in a vehicle mix satisfactory to GM,
as described in Paragraph 1, GM will provide Alamo * in addition to any
incentives due under terms and conditions of GM's 1997 Model Year Daily
Rental Fleet Program.
3. The pro rata portion of the sum described in Paragraph 2, will be paid to
Alamo by the 25th of the month following vehicle delivery and receipt of a
diskette/electronic media transmission by GM provided GM receives Alamo's
diskette/electronic media transmission by the last business day of the
month. A diskette/electronic transmission received after the last business
day of the month will be paid by the 25th of the following month. This
diskette/electronic media transmission must include VIN numbers on the
portion of the * delivered in the preceding month and not covered in
previous payments. Attachment 2 details data transmission and record format
requirements and should be used when reporting vehicle acquisitions. The
report of vehicle acquisitions should be transmitted by EDS Elite to the GM
Consolidated Fleet Redistribution Department or diskettes sent to the
following address:
Attention: X.X. XxXxxx, Director-Finance
NAO Fleet Operations
MC 000-000-000
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
In the event that Alamo does not purchase or lease the agreed number of
vehicles at the agreed mix, all payments made to Alamo as described in
Paragraph 3 by General Motors will be reimbursed to GM on demand subject to
Paragraph 5.
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Xx. X.X. Xxxx
October 8, 1996
Page 3
4. GM agrees to make the sum earned, as described in paragraph 2, available to
Alamo through GM's Electronic Funds Transfer (EFT) Payment System;
otherwise GM will mail a paper check to Alamo on the due date stated in
Paragraph 3. The provisions of GM's EFT system will allow funds to be
available to Alamo three (3) calendar days from the time period specified
in paragraph 3. If the electronic fund payment date is a non- banking day,
the electronic fund transfer will occur the following banking day. For
example, if the payment date is Wednesday, the 25th of the month, the
electronic fund payment date would normally be scheduled for Saturday, the
28th. However, the electronic fund transfer will be made on Monday,
assuming Monday is a banking day. "Banking Day", for the purposes of this
Agreement, shall mean the day in which both GM's originating bank and
Alamo's Depository Institution shall be available to transmit and receive
electronic fund transfers.
5. All volume and mix requirements are subject to reasonable minor adjustments
based on mutual agreement between the parties when the exact circumstances
faced by both parties are known at the time of vehicle delivery. It is
understood that these adjustments may require Alamo to purchase a
comparably priced mix of product. In the event that either party cannot
fulfill any terms of this Agreement due to events beyond its control, such
as acts of God, labor disputes, and severe economic downturns, the parties
will enter negotiations with the intent of allowing both to continue
business without substantial penalty.
6. Alamo agrees to provide to GM, at the beginning of each month, a schedule
of anticipated purchases of 1997 model year vehicles (model year fleet
plan) by division and car line, by month and model year. Alamo agrees to
provide to GM, at the end of the each month, a schedule of 1996 and 1997
model vehicle returns by vehicle size (e.g., economy, midsize, etc.) by
month for the 1996 and 1997 calendar years. Receipt of the information
described in this paragraph is an additional condition of payment of the
amounts discussed in this Agreement.
7. Alamo agrees to retain any documents or records relevant to vehicles
purchased under this Agreement or any GM program and/or claims submitted
for payment under this Agreement or any other GM program for two years
after the close of the program. Alamo agrees to permit any designated
representative of GM to examine, audit and take copies of any accounts and
records Alamo is to maintain under this Agreement. Alamo agrees to make
such accounts and records readily available at its facilities during
regular business hours. GM agrees to furnish Alamo with a list of any
reproduced records.
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Xx. X.X. Xxxx
October 8, 1996
Page 4
GM agrees to assist Alamo in vehicle financing by providing the following at the
request of Alamo:
a. *
b. GM agrees to execute an amendment to the General Motors Corporation
Repurchase Agreement dated August 22, 1994, as amended from time to
time, in order to clarify that GM's obligations thereunder will be
applicable to 1997 through 2000 model year vehicles. The terms of the
GM Daily Rental Repurchase Guidelines and the GM National Fleet
Purchase Program Guidelines for the 1997 model year will be
incorporated into the amendment.
The Reclassification Program for the 1997 model year is under development and
will be mailed under a separate cover.
MODEL YEAR 1998 THROUGH 2000
This letter will also confirm the Agreement reached between Alamo and GM
regarding Alamo's purchase or lease GM vehicles for model year 1998 through
model year 2000. The details of this Agreement are as follows:
8. GM agrees to commit to Alamo the availability of the 100% Repurchase
Program through model year 2000.
9. GM agrees to extend the terms and conditions of GM=s 1997 Model Year Daily
Rental Fleet Program (refer ATTACHMENT 1) for Model Year 1998 through Model
Year 2000.
GM reserves the right to place "new" models (as defined by GM) on any of
the four (4) 1997 MY repurchase percentage tiers or create a new tier.
Additionally, GM also reserves the right to shift vehicles on to higher
percentage tiers, (e.g. shift from repurchase tier 1 to tier 2, thus
lowering Alamo's vehicle depreciation cost).
Notwithstanding the above items, should GM alter the terms and conditions
of its repurchase program, then Alamo would be granted the option of
choosing which program is more beneficial to its business.
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10. GM agrees that Alamo may purchase or lease from GM dealers of its choice *
during each model year of this Agreement. GM and Alamo agree that mix
provided in the future model years must be mutually satisfactory to both
parties.
11. Alamo agrees to maintain a minimum GM share penetration of 51%. Further,
during the term of this Agreement, Alamo agrees that all advertising and
promotional materials which Alamo undertakes for the future model years,
Alamo will feature only General Motors products where any vehicle is
featured or promoted. Accordingly, Alamo agrees to allow such space and
include such tag lines as in accordance with the custom of the trade and
industry. In exchange, GM will provide Alamo with * during each year of
this Agreement. These sums are in addition to any incentives due under the
terms and conditions of GM's Model Year Daily Rental Fleet Programs, if any
are available.
On behalf of the General Motors' Car and Truck Divisions, I would like to
express my appreciation for your business and hope this Agreement will continue
to strengthen our business relationship.
Please return a copy of this letter acknowledging your agreement to the above.
Very truly yours,
/s/ Xxxxxxx X. Xxx
--------------------------------
Xxxxxxx X. Xxx
Executive Director
Fleet Operations
/s/ X. Xxxxx Xxxx 10/22/96
------------------------------ --------------------------------
Acknowledged and Agreed Date
Alamo Rent A Car, Inc.
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1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
Attachment 1 - Part 1 of 2
GENERAL MOTORS CORPORATION
1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
1. PROGRAM NAME AND NUMBER:
1997 Model Year Passenger Car and Light Duty Truck 100% Repurchase
Program for Daily Rental Operators - Program No. 97-02.
2. PROGRAM DESCRIPTION:
To provide General Motors dealers certain repurchase information on
selected 1997 model year passenger cars and light duty trucks sold and
delivered by GM dealers to qualified daily rental operators and
eligible for repurchase by General Motors in accordance with the
guidelines herein.
3. PROGRAM ALLOWANCES:
The repurchase amount shall be calculated as a percent of dealer
invoice including freight. The repurchase percentage varies month by
month and is determined by the month the vehicle is RETURNED TO AND
ACCEPTED BY GENERAL MOTORS in accordance with GM Auction Guidelines.
- Vehicles are assigned into one of the four tier groups. (Refer
Attachment "A" for tier composition and Attachment "B" for
respective tier monthly repurchase percentage)
- The daily repurchase rate equals the change in the monthly
rate divided by the number of calendar days for that month.
- Out-of-service date shall be the date the vehicle is returned
to an approved auction location provided the rental company
meets all program parameters and completes the sign-off
procedures.
Damage allowance varies by return and acceptance date. (Refer
Attachment "B")
Vehicles are not eligible for Preferred Equipment Group (P.E.G.)/Option
Group discounts.
The following models are not eligible: Cavalier Z24, Corvette, Astro
and Safari Cargo Vans, Suburban, Tahoe, Yukon, Van Conversions
(including Hi-Cube and Stepvan), and Full Size Cargo Vans.
Vehicles delivered from dealer inventory and NOT eligible for
enrollment in the 1997 Repurchase Program.
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1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
Dealers will receive seven (7) additional days following the expiration
of transit time before the invoice is due for payment, in lieu of
interest credit days. Vehicle payment is due upon delivery to the fleet
customer (if prior to invoice interest commencement date). By providing
this additional allowance, interest reimbursements WILL NOT BE MADE for
vehicles arriving one (1) to seven (7) days after the expiration of
transit time. Vehicles arriving more than ten (10) days after the
interest commencement date are eligible for reimbursement under the GM
In-Transit Credit Program.
4. DELIVERY/ORDER/IN-SERVICE/PRODUCTION PERIOD:
Order-beginning with announcement of the 1997 model year program and
ending when dealers are notified that 1997 model year orders are no
longer being accepted.
Production, Delivery, In-Service - 1997 model year.
IMPORTANT - Acceptance of an order on any vehicle line does not
constitute a commitment to build or to build in a requested time frame.
Minimum In-Service Period - None.
Maximum In-Service Period - 24 months or July 31, 1999 (whichever
occurs first).
Repurchase Mileage Requirements:
- No maximum mileage limitations.
- Excess mileage penalty of $0.07 per mile over maximum free
mileage levels that vary by month. (Refer Attachment "B").
All units to be repurchased by General Motors Corporation under this
program must be returned and accepted by July 31, 1999. NON-RETURNED
VEHICLES PURCHASED UNDER THIS PROGRAM MUST REMAIN IN SERVICE A MINIMUM
OF SIX (6) MONTHS (180 DAYS). Documented frame, fire, and/or
water-damaged vehicles, which are ineligible for repurchase, have no
minimum in-service period.
5. ELIGIBLE MODELS/REQUIRED OPTIONS AND/OR ORDER TYPES:
All new and unused 1997 General Motors models, specified on Attachment
"A", with required minimum factory installed equipment levels specified
on Attachment "C" and processing options ordered for qualified daily
rental operators for use as daily rental vehicles and delivered by GM
dealers. (Refer to 10A).
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1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDLINES
-------------------------------------------------
All qualified fleet orders for eligible models received from dealers
must contain a valid Fleet Order Type.
Ordering Instructions: All repurchase orders must contain fleet
processing option VN9 and your customer UPC processing code. Vehicles
must be ordered with minimum option requirements specified on
Attachment "C".
Dealer must take full responsibility for including the proper
processing option on all orders. Should errors occur in the ordering of
vehicles, resulting in diversions or reinvoicing, the dealer may be
charged an administrative fee.
All qualified fleet orders for eligible models received from the dealer
MUST contain the Fleet Account Number (FAN) of record and account name.
Dealer Order Acknowledgments must be checked to verify accuracy of
order submitted.
Dealer orders currently on hand or in the system that qualify under
this program, except that they do not contain the appropriate
processing options, can be amended or canceled and reordered if they
have not been released to production. THIS IS THE ORDERING DEALER'S
RESPONSIBILITY.
Fleet orders submitted with Fleet Processing Option VN9 and
incompatible retail incentive options will be rejected with an error
message.
Colors Not Eligible for Repurchase - Refer Mandatory Optional
Equipment.
Required Options - Processing Option VN9 and your customer assigned UPC
processing code must be ordered by the dealer on repurchase vehicles to
be enrolled in the 1997 Model Year Daily Rental 100% Repurchase
Program. PROCESSING OPTION VN9 WILL PROVIDE A NET INVOICE - LESS
HOLDBACK AND ADVERTISING.
6. COMPATIBLE INCENTIVE/ALLOWANCE PROGRAMS:
Vehicles enrolled in the 1997 Model Year 100% Repurchase Program are
NOT eligible for any other fleet/retail program, including, but not
limited to, the Dealer Fleet Ordering Assistance Program (VQ), Price
Assurance and Price Protection. Chevrolet GEO Dealer Rent A Car System
units (CGDRACS) and General Motors Dealer Rent A Car System units
(GMDRACS) are not eligible for the 1997 Model Year 100% Repurchase
Program.
7. METHOD OF APPLICATION: Not Applicable.
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1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDELINES
--------------------------------------------------
8. METHOD OF PAYMENT:
Check to titleholder or financial institution upon receipt and
clearance of proper paperwork at auction site and General Motors
Corporation.
Repurchase payment is made in the form of a check to the titleholder or
financial institution at the address shown on the title, unless prior
arrangements are made.
The Payment Modification System (PMS) provides an effective method to
redirect repurchase checks to lending institutions as co-payee with the
titled owner.
If a lender and a daily rental operator desire co-payee/redirection,
please direct requests for additional information in writing to:
NAO Dealer Accounting
Mail Code 000-000-000
P.O. Box 436014
Pontiac, MI 48343-6014
9. FINAL DATE FOR SUBMISSION OF APPLICATIONS AND RESOLUTION OF ALL
APPLICABLE REJECTS: Not Applicable.
10. OTHER PROGRAM GUIDELINES:
A. This is the General Motors guideline regarding the definition
of a "rental" vehicle: "The bona fide rental of a vehicle
involving use and payment by a customer on an hourly, daily,
weekly or monthly basis. Usage of any such vehicle(s) by a
customer for a period of four (4) consecutive months or longer
shall be deemed to constitute leasing and not rental and will
make the vehicle ineligible for repurchase."
In the event a vehicle enrolled in the 100% Repurchase Daily
Rental Program is found to be on-rent (lease) to a customer in
excess of the above guideline, or if the customer
consecutively rents multiple enrolled vehicles for an
aggregate term of four (4) or more months, all vehicles
involved in such transactions will not be considered rental
and will be ineligible for repurchase. GENERAL MOTORS HAS THE
RIGHT TO AUDIT THE CUSTOMER TO ENSURE COMPLIANCE WITH THE
PROGRAM GUIDELINES.
B. All dealers are responsible for maintaining a copy of a
current General Motors dealer allowance incentive programs
administrative manual, and, as such, all guidelines and terms
contained therein will be applied to this program.
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1997 MY DAILY RENTAL REPURCHASE PROGRAM GUIDLEINES
--------------------------------------------------
C. Unless otherwise specified, all eligible units must be
purchased from General Motors and delivered to the ultimate
customer through a General Motors dealership. Purchases or
deliveries made through any other entity or individual are
ineligible for payment.
D. All deliveries to customers with a valid Fleet Account Number
(FAN) must be reported as fleet deliveries regardless of order
type.
X. Xxxxxxx to comply with these guidelines may result in the
dealer being disqualified for future participation in fleet
programs and termination of dealer sales and service
agreement.
F. Orders not produced during the 1997 model production period
will be canceled. There are no provisions for dealers to
receive any allowance for canceled orders.
G. Capitalized cost shall be calculated at dealer cost of base
vehicle and optional equipment, plus freight, less Hawaii
excise tax and tire weight tax, if applicable.
11. GENERAL POLICY GUIDELINES:
A. All General Motors general guidelines and definition of terms
relative to incentive programs (refer to General Motors Dealer
Sales Allowance and Incentive Manual Articles 2 and 3) that
were supplied to your dealership apply to this program.
B. General Motors reserves the right to cancel, amend, revise, or
revoke any program at any time based on its sole business
judgments. Final decisions in all matters relative to the
interpretation of any rule or phase of this activity rests
solely with General Motors.