SECOND AMENDED SCHEDULE I
                                                              TO THE BASE

INDENTURE

                                                        AS OF SEPTEMBER 15, 1998

                                DEFINITIONS LIST

      "Accrued Amounts" means, with respect to any Series of Notes (or any class
of such Series of Notes), on any date of determination, the sum of (i) accrued
and unpaid interest on the Notes of such Series of Notes (or the applicable
class thereof) as of such date, plus any Swap Payments payable by AFC-II with
respect to such Series of Notes and (ii) the product of (A) the sum of all other
accrued and unpaid Trustee fees and other fees and expenses and indemnity
amounts, if any, payable by AFC-II under the Indenture and/or the Related
Documents on such date, times (B) a fraction, the numerator of which is the
Invested Amount of such Series of Notes (or the applicable class thereof) on
such date and the denominator of which is the Aggregate Invested Amount of all
Series of Notes on such date.

      "Accumulation Period" means, with respect to any Series of Notes, the
period, if any, specified in the applicable Supplement.

      "Administration Agreement" means the Administration Agreement, dated as of
July 30, 1997, by and among the Administrator, AESOP Leasing, AESOP Leasing II,
AFC-II and the Trustee, as amended, modified or supplemented from time to time
in accordance with its terms.

      "Administrator" means ARAC, in its capacity as administrator under the
Administration Agreement, or any successor Administrator thereunder.

      "Administrator Default" means any of the events described in Section 13(c)
of the Administration Agreement.

      "AESOP Exchange Agreement Termination Event" has the meaning assigned to
such term in the Master Exchange Agreement.

      "AESOP I Finance Lease Loan Agreement" means the Loan Agreement, dated as
of July 30, 1997, between AFC-II, as lender thereunder, and AESOP Leasing, as
the borrower thereunder, relating to the financing of Vehicles to be leased
under the Finance Lease, as such Loan Agreement may be amended, supplemented,
restated or otherwise modified from time to time in accordance with its terms.

      "AESOP I Finance Lease Loan Agreement Borrowing Base" means, on any date
of determination, the sum of the AESOP I Finance Lease Loan Agreement Program
Vehicle
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Borrowing Base and the AESOP I Finance Lease Loan Agreement Non-Program Vehicle
Borrowing Base on such date.

      "AESOP I Finance Lease Loan Agreement Non-Program Vehicle Borrowing Base"
means, on any date of determination, without duplication, the sum of (i) the
Capitalized Cost of new Non-Program Vehicles being leased under the Finance
Lease on such date and the Net Book Value of all Non-Program Vehicles (other
than new Vehicles) leased under the Finance Lease that are Eligible Vehicles on
such date, plus (ii) all amounts receivable, as of such date, by ARAC or AESOP
Leasing from any person or entity in connection with the auction, sale or other
disposition of Non-Program Vehicles leased under the Finance Lease that were at
the time of disposition Eligible Vehicles, plus (iii) all accrued and unpaid
Monthly Base Rent and Supplemental Rent with respect to Non-Program Vehicles
leased under the Finance Lease (other than amounts specified in clause (ii)
above), minus (iv) the Finance Lease Non-Program Vehicle Ineligible Asset
Amount, if any.

      "AESOP I Finance Lease Loan Agreement Program Vehicle Borrowing Base"
means, on any date of determination, without duplication, the sum of (i) the
Capitalized Cost of new Program Vehicles being leased under the Finance Lease on
such date and the Net Book Value of all Program Vehicles (other than new
Vehicles) leased under the Finance Lease that are Eligible Vehicles on such
date, plus (ii) all amounts receivable, as of such date, by ARAC or AESOP
Leasing from Manufacturers under and in accordance with their respective
Eligible Manufacturer Programs with respect to Program Vehicles leased under the
Finance Lease that were at the time of disposition Eligible Vehicles, plus (iii)
all amounts (other than amounts specified in clause (ii) above) receivable, as
of such date, by ARAC or AESOP Leasing from any person or entity in connection
with the auction, sale or other disposition of Program Vehicles leased under the
Finance Lease that were at the time of disposition Eligible Vehicles, plus (iv)
all accrued and unpaid Monthly Base Rent and Supplemental Rent with respect to
Program Vehicles leased under the Finance Lease (other than amounts specified in
clauses (ii) and (iii) above), minus (v) the Finance Lease Program Vehicle
Ineligible Asset Amount, if any.

      "AESOP I Finance Lease Loan Collateral" means all the property and rights
on or in which a Lien is granted to the Lender to secure all or any of the
Liabilities under the AESOP I Finance Lease Loan Agreement pursuant to Section
7.1(a) of the AESOP I Finance Lease Loan Agreement, or under any other
instruments, agreements or documents provided for in the AESOP I Finance Lease
Loan Agreement or delivered or to be delivered thereunder or in connection
therewith.

      "AESOP I Finance Lease Loan Event of Default" means any of the events
described in Section 12.1 of the AESOP I Finance Lease Loan Agreement.

      "AESOP I Loan Agreements" means the AESOP I Operating Lease Loan Agreement
and the AESOP I Finance Lease Loan Agreement.

      "AESOP I Loan Collateral" means the AESOP I Operating Lease Loan
Collateral and the AESOP I Finance Lease Loan Collateral.
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      "AESOP I Loan Event of Default" means an AESOP I Operating Lease Loan
Event of Default or an AESOP I Finance Lease Loan Event of Default.

      "AESOP I Operating Lease" means the Master Motor Vehicle Operating Lease
Agreement, dated as of July 30, 1997, among AESOP Leasing, as the lessor
thereunder, ARAC, as a lessee thereunder and as Administrator, and any other
Person who becomes a party thereto pursuant to Section 24 thereof, as a lessee
thereunder, and ARC, as the guarantor thereunder, as amended and restated as of
September 15, 1998, and as it may be further amended, modified or supplemented
from time to time in accordance with its terms.

      "AESOP I Operating Lease Commencement Date" is defined in Section 3.2 of
the AESOP I Operating Lease.

      "AESOP I Operating Lease Event of Default" is defined in Section 18.1 of
the AESOP I Operating Lease.

      "AESOP I Operating Lease Expiration Date" is defined in Section 3.2 of the
AESOP I Operating Lease.

      "AESOP I Operating Lease Loan Agreement" means the Loan Agreement, dated
as of July 30, 1997, among AFC-II, as lender thereunder, AESOP Leasing, as the
borrower thereunder, and PVHC and Quartx, each as a Permitted Nominee of AESOP
Leasing, relating to the financing of Vehicles to be leased under the AESOP I
Operating Lease, as amended and restated as of September 15, 1998, and as it may
be amended, supplemented, restated or otherwise modified from time to time in
accordance with its terms.

      "AESOP I Operating Lease Loan Agreement Borrowing Base" means, on any date
of determination, the sum of the AESOP I Operating Lease Loan Agreement Program
Vehicle Borrowing Base and the AESOP I Operating Lease Loan Agreement
Non-Program Vehicle Borrowing Base on such date.

      "AESOP I Operating Lease Loan Agreement Non-Program Vehicle Borrowing
Base" means, on any date of determination, without duplication, the sum of (i)
the Capitalized Cost of new Non-Program Vehicles being leased under the AESOP I
Operating Lease on such date and the Net Book Value of all Non-Program Vehicles
(other than new Vehicles) leased under the AESOP I Operating Lease that are
Eligible Vehicles on such date, plus (ii) all amounts receivable, as of such
date, by AESOP Leasing from any person or entity in connection with the auction,
sale or other disposition of Non-Program Vehicles leased under the AESOP I
Operating Lease that were at the time of disposition Eligible Vehicles, plus
(iii) all accrued and unpaid Monthly Base Rent and Supplemental Rent with
respect to Non-Program Vehicles leased under the AESOP I Operating Lease (other
than amounts specified in clause (ii) above), minus (iv) the AESOP I Operating
Lease Non-Program Vehicle Ineligible Asset Amount, if any.

      "AESOP I Operating Lease Loan Agreement Program Vehicle Borrowing Base"
means, on any date of determination, without duplication, the sum of (i) the
Capitalized
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Cost of new Program Vehicles being leased under the AESOP I Operating Lease on
such date and the Net Book Value of all Program Vehicles (other than new
Vehicles) leased under the AESOP I Operating Lease that are Eligible Vehicles on
such date, plus (ii) all amounts receivable, as of such date, by AESOP Leasing
from Manufacturers under and in accordance with their respective Eligible
Manufacturer Programs with respect to Program Vehicles leased under the AESOP I
Operating Lease that were at the time of disposition Eligible Vehicles and not
Relinquished Vehicles, plus (iii) with respect to Relinquished Vehicles, the
lesser of (x) $125,000,000 and (y) the Relinquished Vehicle Borrowing Base
Component on such date, plus (iv), all amounts receivable, as of such date, by
AESOP Leasing from Manufacturers under and in accordance with their respective
Eligible Manufacturer Programs in respect of Reconveyed Receivables, plus (v)
all amounts (other than amounts specified in clauses (ii), (iii)and (iv) above)
receivable, as of such date, by AESOP Leasing from any person or entity in
connection with the auction, sale or other disposition of Program Vehicles
leased under the AESOP I Operating Lease that were at the time of disposition
Eligible Vehicles, plus (vi) all accrued and unpaid Monthly Base Rent and
Supplemental Rent with respect to Program Vehicles leased under the AESOP I
Operating Lease (other than amounts specified in clauses (ii), (iii), (iv) and
(v) above), minus (vii) the AESOP I Operating Lease Program Vehicle Ineligible
Asset Amount, if any.

      "AESOP I Operating Lease Loan Collateral" means all the property and
rights on or in which a Lien is granted to the Lender to secure all or any of
the Liabilities under the AESOP I Operating Lease Loan Agreement pursuant to
Section 7.1(a) of the AESOP I Operating Lease Loan Agreement, or under any other
instruments, agreements or documents provided for in the AESOP I Operating Lease
Loan Agreement or delivered or to be delivered thereunder or in connection
therewith; other than any such property released from such lien pursuant to
Section 7.3 of the AESOP I Operating Lease Loan Agreement.

      "AESOP I Operating Lease Loan Event of Default" means any of the events
described in Section 12.1 of the AESOP I Operating Lease Loan Agreement.

      "AESOP I Operating Lease Non-Program Vehicle Ineligible Asset Amount"
means, as of any date of determination, an amount equal to the sum, without
duplication, of (a) the aggregate of all amounts specified in clause (ii) of the
definition of "AESOP I Operating Lease Loan Agreement Non-Program Vehicle
Borrowing Base" which are unpaid more than thirty (30) days past the applicable
disposition date, plus (b) the aggregate of all amounts specified in clause
(iii) of the definition of "AESOP I Operating Lease Loan Agreement Non-Program
Vehicle Borrowing Base" which are past due as of such date.

      "AESOP I Operating Lease Program Vehicle Ineligible Asset Amount" means,
as of any date of determination, an amount equal to the sum, without
duplication, of (a) the aggregate of all amounts receivable as of such date by
AESOP Leasing under and in accordance with a Manufacturer Program with respect
to Program Vehicles that were leased under the AESOP I Operating Lease from a
Manufacturer with respect to which a Manufacturer Event of Default has occurred,
plus (b) the aggregate of all amounts specified in clauses (iii) and (iv) of the
definition of "AESOP I Operating Lease Loan Agreement Program Vehicle Borrowing
Base" that are payable by a Manufacturer with respect to 
<PAGE>

which a Manufacturer Event of Default has occurred, plus (c) the aggregate of
all amounts receivable as of such date by AESOP Leasing under and in accordance
with a Manufacturer Program with respect to Program Vehicles that were leased
under the AESOP I Operating Lease from a Manufacturer which amounts are unpaid
more than ninety (90) days past the applicable Turnback Date, plus (d) the
aggregate of all amounts specified in clause (v) of the definition of "AESOP I
Operating Lease Loan Agreement Program Vehicle Borrowing Base" which are unpaid
more than thirty (30) days past the applicable disposition date, plus (e) the
aggregate of all amounts specified in clause (vi) of the definition of "AESOP I
Operating Lease Loan Agreement Program Vehicle Borrowing Base" which are past
due as of such date.

      "AESOP I Operating Lease Vehicle Deficiency" means, on any date of
determination, the amount by which the aggregate Required AESOP I Operating
Lease Vehicle Amounts with respect to all Series of Notes exceeds the AESOP I
Operating Lease Loan Agreement Borrowing Base on such date.

      "AESOP I Operating Lease Vehicle Percentage" means, with respect to any
Series of Notes, the percentage specified in the applicable Supplement.

      "AESOP I Segregated Account" is defined in Section 7.8 of each of the
AESOP I Operating Lease Loan Agreement and the AESOP I Finance Lease Loan
Agreement.

      "AESOP II Ineligible Asset Amount" means, as of any date of determination,
an amount equal to the sum, without duplication, of (a) the aggregate of all
amounts receivable as of such date by AESOP Leasing II under and in accordance
with a Manufacturer Program with respect to Program Vehicles leased under the
AESOP II Operating Lease from a Manufacturer with respect to which a
Manufacturer Event of Default has occurred, plus (b) the aggregate of all
amounts receivable as of such date by AESOP Leasing II under and in accordance
with a Manufacturer Program with respect to Program Vehicles leased under the
AESOP II Operating Lease from a Manufacturer which amounts are unpaid more than
ninety (90) days past the applicable Turnback Date, plus (c) the aggregate of
all amounts specified in clause (iii) of the definition of "AESOP II Loan
Agreement Borrowing Base" which are unpaid more than thirty (30) days past the
applicable disposition date, plus (d) the aggregate of all amounts specified in
clause (iv) of the definition of "AESOP II Loan Agreement Borrowing Base" which
are past due as of such date.

      "AESOP II Loan Agreement" means the Loan Agreement, dated as of July 30,
1997, among AFC-II, as lender thereunder, AESOP Leasing II, as the borrower
thereunder, and Original AESOP, as Permitted Nominee of AESOP Leasing II, as
amended, supplemented, restated or otherwise modified from time to time in
accordance with its terms.

      "AESOP II Loan Agreement Borrowing Base" means, on any date of
determination, without duplication, the sum of (i) the Capitalized Cost of new
Program Vehicles leased under the AESOP II Operating Lease on such date and the
Net Book Value of Program Vehicles (other than new Vehicles) leased under the
AESOP II Operating Lease on such date, plus (ii) all amounts receivable, as of
such date, by AESOP Leasing II from 
<PAGE>

Manufacturers under and in accordance with their respective Eligible
Manufacturer Programs with respect to Program Vehicles leased under the AESOP II
Operating Lease, plus (iii) all amounts (other than amounts specified in clause
(ii) above) receivable, as of such date, by AESOP Leasing II from any person or
entity in connection with the auction, sale or other disposition of Program
Vehicles leased under the AESOP II Operating Lease, plus (iv) all accrued and
unpaid Monthly Base Rent and Supplemental Rent under the AESOP II Operating
Lease (other than amounts specified in clauses (ii) and (iii) above), minus (vi)
the AESOP II Ineligible Asset Amount, if any.

      "AESOP II Loan Collateral" means all property and rights on or in which a
Lien is granted to the Lender to secure all or any of the Liabilities under the
AESOP II Loan Agreement pursuant to Section 7.1(a) of the AESOP II Loan
Agreement, or under any other instruments, agreements or documents provided for
in the AESOP II Loan Agreement or delivered or to be delivered thereunder or in
connection therewith.

      "AESOP II Loan Event of Default" means any of the events described in
Section 12.1 of the AESOP II Loan Agreement.

      "AESOP II Management Agreement" means the Management Agreement, dated as
of July 30, 1997, between the Managing Agent and AESOP Leasing II.

      "AESOP II Management Fee" is defined in Section 2 of the AESOP II
Management Agreement.

      "AESOP II Operating Lease" means the Master Motor Vehicle Operating Lease
Agreement, dated as of July 30, 1997, among AESOP Leasing II, as the lessor
thereunder, ARAC, individually as a lessee and as Administrator, and any other
Person who becomes a party thereto pursuant to Section 24 thereof, as a lessee
thereunder, and ARC, as the guarantor thereunder, as amended, modified or
supplemented from time to time in accordance with its terms.

      "AESOP II Operating Lease Commencement Date" is defined in Section 3.2 of
the AESOP II Operating Lease.

      "AESOP II Operating Lease Event of Default" is defined in Section 18.1 of
the AESOP II Operating Lease.

      "AESOP II Operating Lease Expiration Date" is defined in Section 3.2 of
the AESOP II Operating Lease.

      "AESOP II Segregated Account" is defined in Section 7.8 of the AESOP II
Loan Agreement.

      "AESOP Leasing" means AESOP Leasing L.P., a Delaware limited partnership.
<PAGE>

      "AESOP Leasing Limited Partnership Agreement" means the Limited
Partnership Agreement of AESOP Leasing, dated as of July 21, 1997, between
Original AESOP, as general partner, and AESOP Leasing, as limited partner, as
amended, modified or supplemented from time to time in accordance with its
terms.

      "AESOP Leasing II" means AESOP Leasing Corp. II, a Delaware corporation.

      "AESOP Trust Account" has the meaning assigned to such term in the Master
Exchange Agreement.

      "AFC" means AESOP Funding Corp., a Delaware corporation.

      "AFC-II" means AESOP Funding II L.L.C., a Delaware limited liability
company.

      "AFC-II Agreements" means the AFC-II Limited Liability Company Agreement,
the Loan Agreements, the Loan Notes, the Assignment Agreements, the Indenture,
the Administration Agreement, the Termination Services Agreement, the AFC-II
Account Control Agreements, any Swap Agreement, any Enhancement Agreement and
any other agreements to which AFC-II is a party.

      "AFC-II Limited Liability Company Agreement" means the Limited Liability
Company Agreement of AFC-II, dated as of July 21, 1997, between AESOP Leasing
and Original AESOP, as amended, modified or supplemented from time to time in
accordance with its terms.

      "AFC-II Management Agreement" means the Management Agreement, dated as of
July 30, 1997, between the Managing Agent and AFC-II.

      "AFC-II Management Fee" is defined in Section 2 of the AFC-II Management
Agreement.

      "AFC-II Obligations" means all principal and interest, at any time and
from time to time, owing by AFC-II on the Notes and all costs, fees and expenses
payable by, or obligations of, AFC-II under the Indenture and/or the Related
Documents.

      "AFC-II Securities Account Control Agreements" means (i) the Securities
Account Control Agreement dated as of July 30, 1997 among AFC-II, the Trustee
and Harris Trust and Savings Bank, as Securities Intermediary, relating to the
Collection Account and (ii) the Securities Account Control Agreement dated as of
July 30, 1997 among AFC-II and Harris Trust and Savings Bank, as Series 1997-1
Agent and as Securities Intermediary, relating to the Series 1997-1 Reserve
Account.

      "Affiliate" means, with respect to any specified Person, another Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified. For purposes
of this definition, "control" means the power to direct the management and
policies of a Person, directly or indirectly, whether 
<PAGE>

through ownership of voting securities, by contract or otherwise; and
"controlled" and "controlling" have meanings correlative to the foregoing. For
purposes of the Loan Agreements, the Lender shall not be considered to be an
Affiliate of either AESOP Leasing or AESOP Leasing II.

      "Agent" means any Registrar or Paying Agent.

      "Aggregate Asset Amount" means, as of any date of determination, an amount
equal to the sum of (without duplication) (a) the aggregate Loan Principal
Amount of Loans outstanding under the Loan Agreements on such date and (b) cash
and Permitted Investments on deposit in the Collection Account on such date
minus an amount equal to the sum of (x) any Aggregate Asset Amount Decline and
(y) amounts credited to the Collection Account on such date that are payable to
the Intermediary or the Lender Agent in accordance with the Intercreditor
Agreement.

      "Aggregate Asset Amount Decline" means the aggregate amount of all Monthly
Loan Principal Amount payments then or previously due but not paid with respect
to the Loans under all the Loan Agreements.

      "Aggregate Asset Amount Deficiency" means, with respect to any date of
determination, the amount, if any, by which the Required Aggregate Asset Amount
on such date exceeds the Aggregate Asset Amount on such date.

      "Aggregate Invested Amount" means the sum of the Invested Amounts with
respect to all Series of Notes then outstanding.

      "Amortization Commencement Date" means, with respect to a Series of Notes,
the date on which an Amortization Event for such Series is deemed to have
occurred pursuant to Section 9.1 of the Base Indenture.

      "Amortization Event" with respect to each Series of Notes, has the meaning
specified in Section 9.1 of the Base Indenture.

      "Amortization Period" means, with respect to any Series of Notes, the
period following the Revolving Period (as defined in any related Supplement)
which shall be the Accumulation Period, the Controlled Amortization Period, or
the Rapid Amortization Period, each as defined in the related Supplement.

      "Annual Noteholders' Tax Statement" is defined in Section 6.4(b) of the
Base Indenture.

      "Approved Lockbox Account" means a lockbox account that is: (i) maintained
with a Qualified Institution, (ii) established and maintained pursuant to an
agreement that is approved in writing by the Trustee and each Enhancement
Provider, (iii) pledged to the Trustee and over which no other Person has rights
of withdrawal.
<PAGE>

      "ARAC" means Avis Rent A Car System, Inc., a Delaware corporation.

      "ARAC Securities Account Control Agreement" means the Securities Account
Control Agreement dated as of July 30, 1997 among AFC-II and Harris Trust and
Savings Bank, as Trustee and as Securities Intermediary, relating to the
Termination Services Reserve Account.

      "ARC" means Avis Rent A Car, Inc., a Delaware corporation.

      "Assets" means any interest of any kind in any assets or property of any
kind (including, without limitation, any security interest in Vehicles),
tangible or intangible, real, personal or mixed, now owned or hereafter acquired
by AFC-II, AFC, AESOP Leasing, AESOP Leasing II or such other Person as the
context may require.

      "Assigned Special Default Payments" has the meaning assigned to such term
in the Master Exchange Agreement.

      "Assignment Agreement" means the agreement with respect to each
Manufacturer and its Manufacturer Program, entered into or to be entered into
among AFC-II, ARAC, AESOP Leasing, AESOP Leasing II and the Trustee and
acknowledged by such Manufacturer, assigning to the Trustee certain of AESOP
Leasing's, AESOP Leasing II's and ARAC's right, title and interest in and to
such Manufacturer's Manufacturer Program as it relates to Vehicles purchased
from such Manufacturer.

      "Authorized Officer" means (a) as to Original AESOP, PVHC, Quartx and
AESOP Leasing II, any of the President, any Vice President, the Secretary or any
Assistant Secretary, (b) as to AESOP Leasing, any of the President, any Vice
President, the Secretary or any Assistant Secretary of Original AESOP, (c) as to
AFC-II, any Manager, and (d) as to ARC, ARAC or any Lessee, those officers,
employees and agents of ARC, ARAC or such Lessee whose signatures and incumbency
shall have been certified in such certificates as may be delivered by ARC, ARAC
or such Lessee to AESOP Leasing or AESOP Leasing II, as the case may be, from
time to time as duly authorized to execute and deliver the applicable Leases and
any instruments, certificates, notices and other documents in connection
herewith on behalf of ARC, ARAC or such Lessee and to take, from time to time,
all other actions on behalf of ARC, ARAC or such Lessee in connection therewith.

      "Average Daily Loan Balance" means, for any Loan Interest Period, (i) with
respect to Loans made under the AESOP I Operating Lease Loan Agreement, the
average daily outstanding Loan Principal Amount of all such Loans at any time
during such Loan Interest Period, (ii) with respect to Loans made under the
AESOP I Finance Lease Loan Agreement, the average daily outstanding Loan
Principal Amount of all such Loans at any time during such Loan Interest Period
and (iii) with respect to Loans made under the AESOP II Loan Agreement, the
average daily outstanding Loan Principal Amount of all such Loans at any time
during such Loan Interest Period. 
<PAGE>

      "Bankruptcy Code" means The Bankruptcy Reform Act of 1978, as amended from
time to time, and as codified as 11 U.S.C. Section 101 et seq.

      "Base Indenture" means the Amended and Restated Base Indenture, dated as
of July 30, 1997, between AFC-II and the Trustee, as amended, modified or
supplemented from time to time, exclusive of Supplements creating a new Series
of Notes.

      "Board of Directors" means the Board of Directors of AFC, AESOP Leasing
II, Original AESOP, PVHC, Quartx, the Guarantor, any Lessee, as applicable, or
any authorized committee of the Board of Directors.

      "BONY" means The Bank of New York, a New York banking corporation.

      "BONY Nominee Agreement" means the Vehicle Lienholder Nominee Agreement,
dated as of July 30, 1997, among BONY, ARAC, ARC, AESOP Leasing and the Trustee,
as amended, modified or supplemented from time to time in accordance with its
terms.

      "Book-Entry Notes" means beneficial interests in the Notes, ownership and
transfers of which shall be evidenced or made through book entries by a Clearing
Agency as described in Section 2.16 of the Base Indenture; provided that after
the occurrence of a condition whereupon book-entry registration and transfer are
no longer permitted and Definitive Notes are issued to the Note Owners, such
Definitive Notes shall replace Book-Entry Notes.

      "Borrower" means (i) AESOP Leasing, in its capacity as the borrower under
each of the AESOP I Loan Agreements, and (ii) AESOP Leasing II, in its capacity
as the borrower under the AESOP II Loan Agreement.

      "Borrowing Date" means the date a Loan is made to a Borrower under the
Loan Agreement to which such Borrower is a party.

      "Business Day" means any day other than a Saturday, Sunday or other day on
which banks are authorized or required by law to be closed in New York City, New
York or Chicago, Illinois.

      "Capitalized Cost" means, with respect to each Vehicle purchased by AESOP
Leasing (including any Vehicle acquired pursuant to the Master Exchange
Agreement), AESOP Leasing II or ARAC, as the case may be, directly from a
dealer, the price paid for such Vehicle by AESOP Leasing (including any Vehicle
acquired pursuant to the Master Exchange Agreement), AESOP Leasing II or ARAC,
as applicable, to the dealer selling such Vehicle, including dealer profit and
delivery charges but excluding taxes and any registration or titling fees.

      "Carrying Charges" means, as of any day, (i) the aggregate of all Trustee
fees and other costs, fees and expenses and indemnity amounts, if any, payable
by the Lender under the Indenture or the Related Documents which have accrued
since the then most recent 
<PAGE>

Payment Date, plus (ii) the Monthly Administration Fee payable by the Lender
under the Administration Agreement on the next succeeding Payment Date plus
(iii) without duplication, all other operating expenses of AFC-II (including,
without limitation, the AFC-II Management Fee and all costs, fees, expenses and
other amounts payable by AFC-II to any Enhancement Provider) (other than amounts
payable by AESOP Leasing pursuant to Section 13.4 or 13.5 of the AESOP I Loan
Agreements and by AESOP Leasing II pursuant to Section 13.4 or 13.5 of the AESOP
II Loan Agreement) which have accrued since the then most recent Payment Date.

      "Carryover Controlled Amortization Amount" means, with respect to each
Series of Notes, the amount specified as such in the related Supplement.

      "Cash Collateral Account" is defined, with respect to any Series, in the
related Supplement.

      "Casualty" means, with respect to any Vehicle, that (i) such vehicle is
destroyed, seized or otherwise rendered permanently unfit or unavailable for use
and is not tendered to and accepted for repurchase by the applicable
Manufacturer within 90 days following the occurrence thereof, (ii) such Vehicle
is lost or stolen and is not recovered, tendered to and accepted for repurchase
by the applicable Manufacturer within 180 days following the occurrence thereof,
(iii) the return of such Vehicle (if a Program Vehicle) to the applicable
Manufacturer during the applicable Repurchase Period cannot be, or is not,
effected for any reason (provided that such Vehicle will not be deemed a
Casualty if the Lessee of such Vehicle redesignates it as a Non-Program Vehicle
pursuant to Section 2.7 of the AESOP I Operating Lease or the Finance Lease) or
(iv) the applicable Manufacturer did not accept such Vehicle (if a Program
Vehicle) for repurchase for any reason unless the Lessee of such Vehicle
reasonably believes such Manufacturer will accept such Vehicle for repurchase
upon a subsequent return (provided that such Vehicle will not be deemed a
Casualty if the Lessee of such Vehicle redesignates it as a Non-Program Vehicle
pursuant to Section 2.7 of the AESOP I Operating Lease or the Finance Lease).

      "Cede" means Cede & Co., a nominee of DTC.

      "Cedel" means Cedel Bank, societe anonyme.

      "Cendant Indemnity" means the Indemnity Agreement, dated as of July 30,
1997, by and among AESOP Leasing, AESOP Leasing II and Cendant Corporation (as
successor to HFS Incorporated), as amended, modified or supplemented from time
to time in accordance with its terms; any reference in any Related Document to
the "HFS Indemnity" shall be deemed a reference to the Cendant Indemnity.

      "Certificate of Title" means, with respect to each Vehicle, the
certificate of title applicable to such Vehicle duly issued in accordance with
the certificate of title act or statute of the jurisdiction applicable to such
Vehicle.
<PAGE>

      "Chairman of the Managers" is defined in Section 1.1 of the AFC-II Limited
Liability Company Agreement.

      "Chrysler" means Chrysler Corporation, a Delaware corporation.

      "Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act or any successor provision thereto
or Euroclear and Cedel. The initial Clearing Agencies shall be DTC, Euroclear
and Cedel.

      "Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.

      "Closing Date" means the Initial Closing Date or any Series Closing Date.

      "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, and any successor statute of similar
import, in each case as in effect from time to time. References to sections of
the Code also refer to any successor sections.

      "Collateral" is defined in Section 3.1 of the Base Indenture.

      "Collection Account" is defined in Section 5.1 of the Base Indenture.

      "Collections" means (i) all payments by or on behalf of the Borrowers
under the Loan Agreements (except to the extent constituting Assigned Special
Default Payments), (ii) all payments on the Collateral, including payments made
by or on behalf of any Manufacturer or auction dealer, under the related
Manufacturer Program with respect to Vehicles (excluding, however, any amounts
constituting proceeds of Relinquished Vehicle Receivables), (iii) all payments
by or on behalf of any other Person as proceeds from the sale of Vehicles or
payments of insurance proceeds and warranty payments which the Borrowers are
required to deposit into the Collection Account, whether such payments are in
the form of cash, checks, wire transfers or other forms of payment and whether
in respect of principal, interest, repurchase price, fees, expenses or
otherwise, (iv) all payments by the Intermediary to the Trustee of funds
released from the Trust Accounts pursuant to the Master Exchange Agreement in
accordance with the terms thereof, (v) all payments by or on behalf of ARAC or
ARC under the Vehicle Title and Lienholder Nominee Agreements with respect to
Vehicles, (vi) all payments by or on behalf of Cendant Corporation under the
Cendant Indemnity and (vii) all amounts earned on Permitted Investments of funds
in the Collection Account. To the extent so specified in a Supplement,
Collections also shall include all proceeds from the sale of the Notes issued
under such Supplement.

      "Commercial Paper Notes" means the promissory notes of AFC issued by AFC
in the commercial paper market pursuant to a depositary agreement.
<PAGE>

      "Company Order" and "Company Request" means a written order or request
signed in the name of AFC-II by any one of its Authorized Officers and delivered
to the Trustee.

      "Computer Services Agreement" means the Computer Services Agreement, dated
as of July 30, 1997, by and between ARAC and WizCom International, Ltd., as
amended, supplemented, restated or otherwise modified from time to time in
accordance with its terms.

      "Condition Report" means a condition report with respect to a Program
Vehicle, signed and dated by the applicable Lessee and a Manufacturer or its
agent in accordance with the applicable Manufacturer Program.

      "Consolidated Subsidiary" means, at any time, any Subsidiary or other
entity the accounts of which would be consolidated with those of ARC in its
consolidated financial statements as of such time.

      "Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (a) with respect to
any indebtedness, lease, dividend, letter of credit or other obligation of
another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof or (b) under any letter of credit issued for the account of that Person
or for which that Person is otherwise liable for reimbursement thereof.
Contingent Obligation shall include (a) the direct or indirect guarantee,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another and (b) any liability of such Person for the
obligations of another through any agreement (contingent or otherwise) (i) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), (ii) to maintain the solvency of any balance sheet item, level of
income or financial condition of another or (iii) to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, if in the case of any agreement described under subclause (i)
or (ii) of this sentence the primary purpose or intent thereof is as described
in the preceding sentence. The amount of any Contingent Obligation shall be
equal to the amount of the obligation so guaranteed or otherwise supported.

      "Contractual Obligation" means, with respect to any Person, any provision
of any security issued by that Person or of any indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its properties is bound or to which it or
any of its properties is subject.

      "Controlled Amortization Period" means, with respect to any Series of
Notes, the period specified in the applicable Supplement.
<PAGE>

      "Controlled Distribution Amount" means, with respect to any Class of
Notes, the amount (or amounts) specified in any applicable Supplement.

      "Controlled Group" means, with respect to any Person, such Person, whether
or not incorporated, and any corporation, trade or business that is, along with
such Person, a member of a controlled group of corporations or a controlled
group of trades or businesses as described in Sections 414(b) and (c),
respectively, of the Code.

      "Corporate Trust Office" shall mean the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date of the execution of the Base Indenture is located at
311 West Monroe Street, 12th Floor, Chicago, Illinois 60606, Attention:
Indenture Trust Administration, or at any other time at such other address as
the Trustee may designate from time to time by notice to the Noteholders and
AFC-II.

      "CP Rating Agency Condition" means, with respect to any action and so long
as any Commercial Paper Notes are outstanding, that each Rating Agency shall
have notified AFC, ARAC, the administrative agent for the liquidity lenders with
respect to the Commercial Paper Notes and the Trustee in writing that such
action will not result in a reduction or withdrawal of the rating (in effect
immediately before the taking of such action) of the Commercial Paper Notes with
respect to which it is a Rating Agency.

      "Daily Report" is defined in Section 4.1(a) of the Base Indenture.

      "Default Amount" means, with respect to (i) any Guaranteed Depreciation
Program, zero, (ii) Nissan's or Nissan Hawaii's Manufacturer Program, $10
million, (iii) Mazda's Manufacturer Program, $10 million and (iv) any other
Manufacturer's Manufacturer Program, $25 million.

      "Defaulting Manufacturer" is defined (i) for purposes of the AESOP I
Operating Lease in Section 19 thereof, (ii) for purposes of the AESOP II
Operating Lease in Section 19 thereof and (iii) for purposes of the Finance
Lease in Section 19 thereof.

      "Definitions List" means this Definitions List, as amended or modified
from time to time.

      "Definitive Notes" is defined in Section 2.16(d) of the Base Indenture.

      "Deposited Funds" means all funds on deposit in the Collection Account.

      "Depreciation Charge" means, with respect to (a) any Program Vehicle
subject to the GM Repurchase Program, the rate determined by dividing (x) 100%
minus the repurchase price percentage specified in respect of such Vehicle
pursuant to the terms of the GM Repurchase Program for the Designated Period
applicable to such Vehicle by (y) the number of days in such Designated Period
(or, if such Vehicle is held past the Designated Period set forth in the Loan
Request relating to the Loan in respect of such Vehicle, the
<PAGE>

applicable depreciation charge set forth in the GM Repurchase Program for such
Vehicle calculated on a daily basis), (b) any Program Vehicle subject to an
Eligible Manufacturer Program other than the GM Repurchase Program (but
including any other Eligible Manufacturer Program provided by GM), the
applicable depreciation charge set forth in the related Manufacturer Program for
such Vehicle with respect to such Vehicle calculated on a daily basis and (c)
any Non-Program Vehicle, the scheduled daily depreciation charge for such
Vehicle set forth by AESOP Leasing in the Depreciation Schedule for such
Vehicle. If such charge is expressed as a percentage, the daily Depreciation
Charge for such Vehicle shall be such percentage multiplied by the Capitalized
Cost for such Vehicle calculated on a daily basis. For Vehicles not held for a
full month in the month of acquisition, the Depreciation Charges shall be
prorated by multiplying the applicable depreciation amount by a fraction, the
numerator of which is the number of days from the date depreciation related to
such Vehicle begins to the first day of the next month and the denominator of
which is the number of days in such month. For the month in which a Program
Vehicle is turned back to the applicable Manufacturer, the Depreciation Charge
shall be prorated by multiplying the applicable depreciation amount by a
fraction, the numerator of which is the number of days from the first day of
such month to the Turnback Date for such Vehicle and the denominator of which is
the number of days in such month. In the event a Vehicle is sold (other than
pursuant to the Manufacturer Program of a Manufacturer), the Depreciation Charge
shall be prorated by multiplying the applicable depreciation amount by a
fraction, the numerator of which is the number of days from the first day of
such month to the date proceeds were received by the Trustee from the sale of
such Vehicle and the denominator of which is the number of days in such month.

      "Depreciation Schedule" means the initial schedule of estimated daily
depreciation prepared by AESOP Leasing based on a depreciation rate of 1.67% per
calendar month with respect to each type of Non-Program Vehicle that is an
Eligible Vehicle, as revised from time to time by AESOP Leasing; provided,
however, that the effectiveness of any such revision shall be subject to
satisfaction of the Rating Agency Consent Condition.

      "Designated Period" shall mean, with respect to any Program Vehicle
subject to GM's Repurchase Program, the period designated by AESOP Leasing or
AESOP Leasing II, as the case may be, in the applicable Loan Request relating to
the Loan used to finance such Vehicle as the period of time for which AESOP
Leasing or AESOP Leasing II, as applicable, expects such Vehicle to be subject
to the related Loan.

      "Determination Date" means the date five days prior to each Distribution
Date.

      "Disposition Proceeds" means the net proceeds (other than the portion of
the Repurchase Price (i) payable by the Manufacturer pursuant to an Eligible
Manufacturer Program or (ii) with respect to Non-Program Vehicles, by the
applicable Lessee pursuant to the relevant Lease) from the sale or disposition
of a Vehicle to any Person, whether at an auction or otherwise.

      "Distribution Account" means, with respect to any Series of Notes, an
account established as such pursuant to the related Supplement.
<PAGE>

      "Distribution Date" means, unless otherwise specified in any Supplement
for the related Series of Notes, the twentieth day of each calendar month, or,
if such day is not a Business Day, the next succeeding Business Day, commencing
August 20, 1997.

      "Dollar" and the symbol "$" mean the lawful currency of the United States.

      "DTC" means The Depository Trust Company.

      "Early Termination Payments" is defined (i) for purposes of the AESOP I
Operating Lease in Section 13.4 thereof, (ii) for purposes of the AESOP II
Operating Lease in Section 13.4 thereof and (iii) for purposes of the Finance
Lease in Section 13.4 thereof.

      "Eligible Manufacturer Program" means, at any time, a Manufacturer Program
that is in full force and effect with an Eligible Program Manufacturer (i)
pursuant to which the repurchase price or guaranteed auction sale price is at
least equal to (a) with respect to the GM Repurchase Program, a specified
percentage of the Capitalized Cost of each Vehicle, such percentage being
determined for each Vehicle based upon the model year of such Vehicle and the
calendar month in which such Vehicle is returned to the Manufacturer, minus
Excess Mileage Charges, minus Excess Damage Charges, or (b) with respect to any
Manufacturer Program other than the GM Repurchase Program (but including any
other Eligible Manufacturer Program provided by GM), the Capitalized Cost of
each Vehicle, minus all Depreciation Charges accrued with respect to such
Vehicle prior to the date that the Vehicle is submitted for repurchase, minus
Excess Mileage Charges, minus Excess Damage Charges, (ii) that cannot be amended
or terminated with respect to any Vehicle after the purchase of that Vehicle,
and (iii) the assignment of the benefits of which to AFC-II and to the Trustee
for the benefit of the Secured Parties has been acknowledged in writing by the
related Manufacturer and AFC-II and the Trustee have been provided with an
opinion of counsel reasonably satisfactory to them that AFC-II and the Trustee
can enforce the applicable Manufacturer's obligations thereunder; provided that
(a) with respect to any new Manufacturer Program (including a new model year
Manufacturer Program of an Eligible Program Manufacturer and a Manufacturer
Program of a new Eligible Program Manufacturer) that is proposed for
consideration after the date hereof as an Eligible Manufacturer Program, prior
to such new Manufacturer Program constituting an "Eligible Manufacturer Program"
hereunder, the Rating Agencies have been given 30 days' notice (or such shorter
period of time as shall be acceptable to the Rating Agencies) of a draft of such
new Manufacturer Program as it then exists at the time of such notice (and shall
be provided a final copy of such Manufacturer Program promptly upon its being
available) and the inclusion of such new Manufacturer Program as an "Eligible
Manufacturer Program" hereunder shall be conditioned on satisfaction of the
Rating Agency Consent Condition and the CP Rating Agency Condition, and (b) with
respect to any change (other than as specified in clause (a) above) in the terms
of any existing Eligible Manufacturer Program, prior to such Manufacturer
Program constituting an "Eligible Manufacturer Program" hereunder, the Rating
Agencies shall have been notified of such change and such change shall be
conditioned on satisfaction of the Rating Agency Consent Condition and the CP
Rating Agency Condition; provided further that in either case described in
clause (a) or (b) above, if such new Manufacturer Program or such change in the
terms of an existing
<PAGE>

Manufacturer Program would have a material adverse effect on the interests of
the Secured Parties, prior to any such Manufacturer Program constituting an
"Eligible Manufacturer Program", AFC-II shall have obtained the written consent
of the Trustee thereto.

      "Eligible Non-Program Manufacturer" means each Eligible Program
Manufacturer, Subaru, Mitsubishi, Hyundai, Suzuki and any other Manufacturer
that (i) has been approved by the Rating Agencies or has been reviewed by the
Rating Agencies and the Rating Agencies have indicated that the inclusion of
such Manufacturer as an Eligible Non-Program Manufacturer will not adversely
affect the current rating of any Series of Notes, (ii) has been approved by each
Enhancement Provider and (iii) to the extent any Series of Notes supporting
Commercial Paper Notes are outstanding, has been approved by the Majority Banks
(as defined in the applicable Supplement).

      "Eligible Program Manufacturer" means GM, Chrysler, Ford, Mazda, Nissan,
Nissan Hawaii, Toyota and any other Manufacturer that (i) has been approved by
the Rating Agencies or has been reviewed by the Rating Agencies and the Rating
Agencies have indicated that the inclusion of such Manufacturer as an Eligible
Program Manufacturer will not adversely affect the current rating of any Series
of Notes, (ii) has been approved by each Enhancement Provider and (iii) to the
extent any Series of Notes supporting Commercial Paper Notes are outstanding,
has been approved by the Majority Banks (as defined in the applicable
Supplement); provided, however, that upon the occurrence of a Manufacturer Event
of Default with respect to any such Eligible Program Manufacturer, such
Manufacturer shall no longer qualify as an Eligible Program Manufacturer and
provided, further, that if so specified in the applicable Supplement for a
Series of Notes, a Manufacturer may be considered an Eligible Program
Manufacturer only with respect to a portion of the Vehicles acquired from such
Manufacturer that are eligible under its Manufacturer Program.

      "Eligible Rental Car Company" means any direct or indirect Wholly-Owned
Subsidiary of ARC.

      "Eligible Vehicle" means an automobile or light truck that (i) either is a
Program Vehicle (other than a light truck manufactured by Chrysler that is
subject to a nine-month or longer minimum hold period under the Guaranteed
Depreciation Program with Chrysler) or a Non-Program Vehicle manufactured by an
Eligible Non-Program Manufacturer or other Manufacturer, in each case at the
time of leasing under the relevant Lease, (ii) is owned by AESOP Leasing, AESOP
Leasing II or ARAC, as applicable, free and clear of all Liens other than
Permitted Liens, and (iii) with respect to which the Trustee is noted as the
first lienholder on the Certificate of Title (other than with respect to
Certificates of Title for (i) the Initial PVT Vehicles and the Initial Financed
Vehicles (which Certificates of Title will show BONY as the first lienholder),
(ii) the Franchisee Vehicles (which Certificates of Title will show the nominee
lienholder under the related Franchisee Nominee Agreement as the first
lienholder) and (iii) Vehicles located in the states of Ohio, Oklahoma and
Nebraska) therefor, or the Certificate of Title has been submitted to the
appropriate state authorities for such notation (other than with respect to
Certificates of Title for Vehicles located in the states of Ohio, Oklahoma and
Nebraska).
<PAGE>

      "Enhancement" means, with respect to any Series of Notes, the rights and
benefits provided to the Note-holders of such Series of Notes pursuant to any
letter of credit, surety bond, cash collateral account, overcollateralization,
issuance of subordinated Notes, spread account, guaranteed rate agreement,
maturity guaranty facility, tax protection agreement, interest rate swap or any
other similar arrangement.

      "Enhancement Agreement" means any contract, agreement, instrument or
document governing the terms of any Enhancement or pursuant to which any
Enhancement is issued or outstanding.

      "Enhancement Agreement Event of Default" means with respect to any Series
of Notes any event of default under any Enhancement Agreement specified in the
related Supplement.

      "Enhancement Amount" is defined, with respect to any Series of Notes, in
the related Supplement.

      "Enhancement Deficiency" is defined, with respect to any Series of Notes,
in the related Supplement.

      "Enhancement Percentage" means, with respect to any Series of Notes or
class of Notes, the percentage, if any, specified in the applicable Supplement.

      "Enhancement Provider" means the Person providing any Enhancement as
designated in the applicable Supplement, other than any Noteholders the Notes of
which are subordinated to any Series of Notes.

      "Enhancement Provider Account" is defined, with respect to any Series of
Notes, in the related Supplement.

      "Enhancement Provider's Office" is defined, with respect to any Series of
Notes, in the related Supplement.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, in each case as in effect
from time to time. References to sections of ERISA also refer to any successor
sections.

      "Euroclear" means Euroclear System.

      "Event of Bankruptcy" shall be deemed to have occurred with respect to a
Person if:

      (a) a case or other proceeding shall be commenced, without the application
      or consent of such Person, in any court, seeking the liquidation,
      reorganization, debt arrangement, dissolution, winding up, or composition
      or readjustment of debts of such Person, the appointment of a trustee,
      receiver, custodian, liquidator, assignee, sequestrator or the like for
      such Person or all or any substantial part of its assets, or any similar
      action with respect to such Person
<PAGE>

      under any law relating to bankruptcy, insolvency, reorganization, winding
      up or composition or adjustment of debts, and such case or proceeding
      shall continue undismissed, or unstayed and in effect, for a period of 60
      consecutive days; or an order for relief in respect of such Person shall
      be entered in an involuntary case under the federal bankruptcy laws or
      other similar laws now or hereafter in effect; or

      (b) such Person shall commence a voluntary case or other proceeding under
      any applicable bankruptcy, insolvency, reorganization, debt arrangement,
      dissolution or other similar law now or hereafter in effect, or shall
      consent to the appointment of or taking possession by a receiver,
      liquidator, assignee, trustee, custodian, sequestrator (or other similar
      official) for such Person or for any substantial part of its property, or
      shall make any general assignment for the benefit of creditors; or

      (c) the board of directors of such Person (if such Person is a corporation
      or similar entity) shall vote to implement any of the actions set forth in
      clause (b) above.

      "Event of Default" means any occurrence of an event of default pursuant to
the relevant agreement.

      "Excess Damage Charges" means, with respect to any Program Vehicle, the
amount charged to AESOP Leasing, AESOP Leasing II or ARAC, as the case may be,
or deducted from the Repurchase Price, by the Manufacturer of such Vehicle due
to damage over a prescribed limit and, if applicable, damage not subject to a
prescribed limit and missing equipment, in each case with respect to such
Vehicle at the time that such Vehicle is turned in to such Manufacturer or its
agent for repurchase pursuant to the applicable Manufacturer Program.

      "Excess Mileage Charges" means, with respect to any Program Vehicle, the
amount charged to AESOP Leasing, AESOP Leasing II or ARAC, as the case may be,
or deducted from the Repurchase Price, by the Manufacturer of such Vehicle due
to the fact that such Vehicle has mileage over a prescribed limit at the time
that such Vehicle is turned in to such Manufacturer or its agent for repurchase
pursuant to the applicable Manufacturer Program.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Exchange Date" is defined in Section 2.9 of the Base Indenture.

      "Exchange Agreement Termination Event" means an AESOP Exchange Agreement
Termination Event or an Intermediary Exchange Agreement Termination Event.
<PAGE>

      "Excluded Payments" means, with respect to each Lease, as applicable, any
payments due from the respective Lessee or the Guarantor to the Lessor in
respect of (i) the portion of Monthly Base Rent allocable to dividends accrued
on the outstanding Preferred Stock of AESOP Leasing II (including any applicable
tax gross-up), determined in accordance with the certificates of designation
relating to such Preferred Stock, (ii) amounts due and payable pursuant to
Section 16.2 of the Leases as such amounts relate to claims, demands,
liabilities, and related costs and expenses arising under Section 16.1.2 of the
Leases, (iii) amounts due and payable pursuant to Section 16.2 of the Leases
(other than the amounts described in clause (ii) above) to the Lessor's
stockholders, officers and directors (with respect to the Lessor's officers and
directors, only to the extent such officer or director is not an Affiliate of
the related Lessee or the Guarantor) or (iv) amounts due and payable pursuant to
Section 4.2 of the AESOP I Operating Lease in respect of Special Service
Charges.

      "Expected Final Distribution Date" means, with respect to any applicable
Series of Notes, the date stated in the related Supplement as the date on which
such Series of Notes is expected to be paid in full.

      "FGL" means The First Gray Line Corporation, a Delaware corporation, that
prior to July 31, 1998 was a Wholly-Owned Subsidiary of ARAC and the holder of
all of the issued and outstanding capital stock of FGL West.

      "FGL West" means The First Gray Line West Corporation, a Delaware
corporation that prior to July 31, 1998 was a Wholly-Owned Subsidiary of FGL and
the holder of all of the issued and outstanding capital stock of Grand.

      "Financed Vehicle" means a Vehicle subject to the Finance Lease.

      "Financed Vehicle Amount" means, as of any date of determination, the
aggregate Net Book Value of all Financed Vehicles on such day.

      "Finance Lease" means the Master Motor Vehicle Finance Lease Agreement,
dated as of July 30, 1997, among AESOP Leasing, as the lessor thereunder, ARAC,
as the lessee thereunder, and ARC, as the guarantor thereunder, as amended,
modified or supplemented from time to time in accordance with its terms.

      "Finance Lease Commencement Date" is defined in Section 3.2 of the Finance
Lease.

      "Finance Lease Event of Default" is defined in Section 18.1 of the Finance
Lease.

      "Finance Lease Expiration Date" is defined in Section 3.2 of the Finance
Lease.
<PAGE>

      "Finance Lease Non-Program Vehicle Ineligible Asset Amount" means, as of
any date of determination, an amount equal to the sum, without duplication, of
(a) the aggregate of all amounts specified in clause (ii) of the definition of
"AESOP I Finance Lease Loan Agreement Non-Program Vehicle Borrowing Base" which
are unpaid more than thirty (30) days past the applicable disposition date, plus
(b) the aggregate of all amounts specified in clause (iii) of the definition of
"AESOP I Finance Lease Loan Agreement Non-Program Vehicle Borrowing Base" which
are past due as of such date.

      "Finance Lease Program Vehicle Ineligible Asset Amount" means, as of any
date of determination, an amount equal to the sum, without duplication, of (a)
the aggregate of all amounts receivable as of such date by ARAC or AESOP Leasing
under and in accordance with a Manufacturer Program with respect to Program
Vehicles leased under the Finance Lease from a Manufacturer with respect to
which a Manufacturer Event of Default has occurred, plus (b) the aggregate of
all amounts receivable as of such date by ARAC or AESOP Leasing under and in
accordance with a Manufacturer Program with respect to Program Vehicles leased
under the Finance Lease from a Manufacturer which amounts are unpaid more than
ninety (90) days past the applicable Turnback Date, plus (c) the aggregate of
all amounts specified in clause (iii) of the definition of "AESOP I Finance
Lease Loan Agreement Program Vehicle Borrowing Base" which are unpaid more than
thirty (30) days past the applicable disposition date, plus (d) the aggregate of
all amounts specified in clause (iv) of the definition of "AESOP I Finance Lease
Loan Agreement Program Vehicle Borrowing Base" which are past due as of such
date.

      "Financial Officer" means, with respect to any corporation, the chief
financial officer, vice-president-finance, principal accounting officer,
controller or treasurer of such corporation.

      "Financing Provider" is defined in Section 2.3(b)(ii) of the Base
Indenture.

      "Ford" means Ford Motor Company, a Delaware corporation.

      "Franchisee Nominee Agreement" means, with respect to any Franchisee
Vehicle, a Vehicle Title and Lienholder Nominee Agreement substantially in the
form of the PVHC/BONY Nominee Agreement (with such differences as are necessary
to reflect the identities of the nominees), dated on or prior to the date of the
inclusion of such Franchisee Vehicle under the Finance Lease, among ARAC, ARC,
AESOP Leasing, the holder of record title to such Franchisee Vehicle, the
lienholder shown on the Certificate of Title with respect to such Franchisee
Vehicle and the Trustee, pursuant to which, among other things, (i) AESOP
Leasing shall appoint the holder of record title to such Franchisee Vehicle as
its nominee titleholder and the Trustee shall appoint the lienholder shown on
the Certificate of Title with respect to such Franchisee Vehicle as its nominee
lienholder, (ii) ARAC shall indemnify AESOP Leasing and its permitted assignees
(including the Trustee) for any losses that occur as a consequence of any claim
made on such Franchisee Vehicle by a creditor or purchaser from the entity that
owned such Vehicle prior to ARAC's acquisition thereof, as a result of such
<PAGE>

entity's prior ownership of such Vehicle or as a result of the notation of the
lien on the Certificates of Title with respect to such Vehicle not being in the
Trustee's name, (iii) ARC shall guarantee ARAC's obligations thereunder and (iv)
the holder of record title to such Franchisee Vehicle and the lienholder shown
on the Certificate of Title with respect to such Franchisee Vehicle shall each
covenant and agree that, prior to the date which is one year and one day after
the payment in full of the latest maturing Note, it will not institute against,
or join with any other Person in instituting, against AFC-II, AESOP Leasing,
AESOP Leasing II, Original AESOP, PVHC, Quartx, AFC or any other Permitted
Nominee under any Franchisee Agreement, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings;
provided, that in the case of the Grand Franchisee Vehicles, the Franchisee
Nominee Agreement shall mean the Franchisee Nominee Lienholder Agreement
executed and delivered on the date of the Grand Merger.

      "Franchisee Vehicle" means any Eligible Vehicle (which need not be a new
Vehicle) acquired by ARAC from any Person on or within six (6) months after the
closing date of a transaction in which ARAC acquires such Person or
substantially all of the assets of such Person; provided that such Person shall
have been a franchisee of Cendant Car Rental, Inc. and Wizard Co., Inc.
immediately prior to such acquisition; and further provided, that, pursuant to
the Related Documents, the foregoing six (6) month limit was waived in the case
of the Grand Franchisee Vehicles.

      "Franchisee Vehicle Leasing Condition" means, with respect to any
Franchisee Vehicle, the delivery to AESOP Leasing, AFC-II and the Trustee on or
prior to the date of inclusion of such Franchisee Vehicle under the Finance
Lease of the following items:

            (1) an executed copy of a Franchisee Nominee Agreement with respect
      to such Franchisee Vehicle;

            (2) a written search report from a Person satisfactory to AESOP
      Leasing, AFC-II and the Trustee listing all effective financing statements
      that name the holder of record title to such Franchisee Vehicle as debtor
      or assignor, and that are filed in the jurisdictions in which filings were
      made pursuant to clause (3) below, together with copies of such financing
      statements, and tax and judgment lien search reports from a Person
      satisfactory to AESOP Leasing, AFC-II and the Trustee showing no evidence
      of liens filed against such holder of record title to such Franchisee
      Vehicle that purport to affect such Franchisee Vehicle;

            (3) a purchase agreement, pledge agreement or similar agreement,
      pursuant to which such holder of record title to such Franchisee Vehicle
      will grant a security interest in its right, title and interest in and to
      such Vehicle to AESOP Leasing, AFC-II and the Trustee;

            (4) an opinion of counsel stating that such Franchisee Nominee
      Agreement and the agreement referred to in clause (3) above are legal,
      valid and binding
<PAGE>

      agreements of such holder of record title to such Franchisee Vehicle,
      enforceable in accordance with their respective terms, subject to
      bankruptcy, insolvency, reorganization, moratorium and other similar laws
      affecting creditors' rights generally and to general principles of equity;

            (5) evidence of the filing of proper financing statements on Form
      UCC-1 naming such holder of record title to such Franchisee Vehicle, as
      debtor, and AESOP Leasing as secured party covering such Franchisee
      Vehicle;

            (6) evidence of the filing of proper financing statements on Form
      UCC-1 naming such holder of record title to such Franchisee Vehicle, as
      debtor, and the Trustee as secured party covering such Franchisee Vehicle;
      and

            (7) any additional documentation that AESOP Leasing, AFC-II or the
      Trustee may reasonably require.

      With respect to the Grand Franchisee Vehicles, the references in clause
(2) above to "holder of record title" shall mean Grand prior to the Grand
Merger, and the references in clauses (3) through (6) above to "holder of record
title" shall mean ARAC.

      "GAAP" means the generally accepted accounting principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors and
successors from time to time.

      "GM" means General Motors Corporation, a Delaware Corporation.

      "GM Repurchase Program" means the General Motors Corporation Passenger and
Light Duty Truck Repurchase Program for Daily Rental Operations, as amended from
time to time, and pursuant to which the repurchase price is calculated based
upon a specified percentage of the Capitalized Cost of a Vehicle as set forth in
such program.

      "Governmental Authority" means any Federal, state, local or foreign court
or governmental department, commission, board, bureau, agency, authority,
instrumentality or regulatory body.

      "Grand" means Grand Rent a Car, a California corporation, that prior to
July 31, 1998 was an indirect, wholly-owned subsidiary of ARAC.

      "Grand Merger" means the series of simultaneous transactions on July 31,
1998, whereby Grand was merged into FGL West, FGL West was merged into FGL, and
FGL was merged into ARAC.

      "Grand Franchisee Vehicles" means the Eligible Vehicles owned by Grand on
the date of the Grand Merger.
<PAGE>

      "Group of Relinquished Vehicles" has the meaning assigned to such term in
the Master Exchange Agreement.

      "Guaranteed Depreciation Program" means a guaranteed depreciation program
pursuant to which a Manufacturer has agreed with AESOP Leasing, AESOP Leasing II
or ARAC, as the case may be, to (a) cause Vehicles manufactured by it or one of
its Affiliates that are turned back during the specified Repurchase Period to be
sold by an auction dealer, (b) cause the proceeds of any such sale to be paid to
AESOP Leasing, AESOP Leasing II or ARAC, as the case may be, by such auction
dealer within seven days of such sale and (c) pay to AESOP Leasing, AESOP
Leasing II or ARAC, as the case may be, the excess, if any, of the guaranteed
payment amount with respect to any such Vehicle calculated as of the Turnback
Date in accordance with the provisions of such guaranteed depreciation program
over the amount paid to AESOP Leasing, AESOP Leasing II or ARAC, as the case may
be, by an auction dealer pursuant to clause (b) above.

      "Guaranteed Obligations" is defined (i) for purposes of the AESOP I
Operating Lease in Section 26.1 thereof, (ii) for purposes of the AESOP II
Operating Lease in Section 26.1 thereof and (iii) for purposes of the Finance
Lease in Section 26.1 thereof.

      "Guarantor" means ARC, in its capacity as guarantor of the Lessees'
obligations under (i) the Leases and (ii) any applicable Enhancement Agreement.

      "Guaranty" is defined (i) for purposes of the AESOP I Operating Lease in
Section 26.1 thereof, (ii) for purposes of the AESOP II Operating Lease in
Section 26.1 thereof and (iii) for purposes of the Finance Lease in Section 26.1
thereof.

      "Hyundai" means Hyundai Motor America Corporation, a California
corporation.

      "Identification Period" has the meaning assigned to such term in the
Master Exchange Agreement.

      "Identification Period Component" means, on any date of determination, the
aggregate of the amounts, without duplication, calculated with respect to each
Group of Relinquished Vehicles for which the Identification Period shall not
have ended as of the third preceding Business Day, of the sum of (A) all amounts
receivable, as of such date of determination, by the Intermediary from
Manufacturers under their respective Eligible Manufacturer Programs with respect
to each such Group of Relinquished Vehicles as to which no Receivables Funding
Loan shall have been made against the amounts receivable from Manufacturers in
respect thereof (unless there shall have been a determination of payment in full
of such Receivables Funding Loan pursuant to Section 6(c) of the Intercreditor
Agreement), plus (B), any amount on deposit in the respective AESOP Trust
Account on such date of determination that was paid by any such Manufacturer
with respect to each Group of Relinquished Vehicles described in the foregoing
clause (A), plus (C) any amount on deposit in the respective AESOP Trust Account
on such date of determination representing the proceeds of Receivables Funding
Loans, plus (D) any amount on deposit in the respective AESOP
<PAGE>

Trust Account on such date of determination representing amounts released from
the corresponding Lender Trust Account for such Group of Relinquished Vehicles
following payment in full of all principal and interest on the Receivables
Funding Loan related to such Group of Relinquished Vehicles; plus (E) any amount
on deposit in the AESOP Trust Accounts on such date representing investment
earning on the amounts described in the foregoing clauses (B) , (C), and (D).

      "Indebtedness", as applied to any Person, means, without duplication, (a)
all indebtedness for borrowed money, (b) that portion of obligations with
respect to any lease of any property (whether real, personal or mixed) that is
properly classified as a liability on a balance sheet in conformity with GAAP,
(c) notes payable and drafts accepted representing extensions of credit whether
or not representing obligations for borrowed money, (d) any obligation owed for
all or any part of the deferred purchase price for property or services, which
purchase price is (i) due more than six months from the date of the incurrence
of the obligation in respect thereof or (ii) evidenced by a note or similar
written instrument, (e) all indebtedness secured by any Lien on any property or
asset owned by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person, and (f) all Contingent Obligations of such Person in respect of
any of the foregoing.

      "Identified Relinquished Vehicle" has the meaning assigned to such term in
the Master Exchange Agreement.

      "Identified Replacement Vehicle" has the meaning assigned to such term in
the Master Exchange Agreement.

      "Indemnified Liabilities" is defined (i) for purposes of the AESOP I
Operating Lease Loan Agreement in Section 13.5 thereof, (ii) for purposes of the
AESOP I Finance Lease Loan Agreement in Section 13.5 thereof and (iii) for
purposes of the AESOP II Loan Agreement in Section 13.5 thereof.

      "Indemnified Persons" is defined (i) for purposes of the AESOP I Operating
Lease in Section 16.1 thereof, (ii) for purposes of the AESOP II Operating Lease
in Section 16.1 thereof and (iii) for purposes of the Finance Lease in Section
16.1 thereof.

      "Indenture" means the Base Indenture, together with all Supplements, as
the same may be amended, modified or supplemented from time to time.

      "Independent Director" means,

      (a) with respect to AESOP Leasing II, an individual who is not, and,
      except for having previously acted as a director of AESOP Leasing II,
      Original AESOP, Original AFC-II or AFC, never was,
<PAGE>

            (i) a stockholder, member, partner, director, officer, employee,
            affiliate, associate, customer, supplier, creditor or independent
            contractor of, or any person that has received any benefit
            (excluding, however, any compensation received by an Independent
            Director in such person's capacity as a director of AESOP Leasing II
            or in such person's capacity as a director of Original AESOP,
            Original AFC-II or AFC during a period which occurred prior to July
            31, 1997) in any form whatever from, or any person that has provided
            any service (excluding, however, any service provided by a director
            in such person's capacity as a director of AESOP Leasing II or in
            such person's capacity as an Independent Director of Original AESOP,
            Original AFC-II or AFC during a period which occurred prior to July
            31, 1997) in any form whatever to, AESOP Leasing II, ARC, AFC,
            AFC-II, ARAC, AESOP Leasing, Original AESOP, Original AFC-II or any
            of their affiliates or associates, or

            (ii) any person owning beneficially, directly or indirectly, any
            outstanding shares of common stock, any limited liability company
            interests or any partnership interests, as applicable, of AESOP
            Leasing II, ARC, AFC, AFC-II, ARAC, AESOP Leasing, Original AESOP,
            Original AFC-II or any of their affiliates, or a stockholder,
            member, partner, director, officer, employee, affiliate, associate,
            customer, supplier, creditor or independent contractor of, or any
            person that has received any benefit (excluding, however, any
            compensation received by a director in such person's capacity as an
            Independent Director of AESOP Leasing II or in such person's
            capacity as a director of Original AESOP, Original AFC-II or AFC
            during a period which occurred prior to July 31, 1997) in any form
            whatever from, or any person that has provided any service
            (excluding, however, any service provided by a director in such
            person's capacity as a director of AESOP Leasing II or in such
            person's capacity as an Independent Director of Original AESOP,
            Original AFC-II or AFC during a period which occurred prior to July
            30, 1997) in any form whatever to, such beneficial owner or any of
            such beneficial owner's affiliates or associates, or

            (iii) a member of the immediate family of any person described
            above.

      (b) with respect to Original AESOP, an individual who is not, and, except
      for having previously acted as a director of Original AESOP, Original
      AFC-II or AFC, never was,

            (i) a stockholder, member, partner, director, officer, employee,
            affiliate, associate, customer, supplier, creditor or independent
            contractor of, or any person that has received any benefit
            (excluding, however, any compensation received by a director in such
            person's capacity as a director of Original AESOP or in such
            person's capacity as an Independent Director of AFC or Original
            AFC-II during a period which occurred prior to July 31, 1997) in any
<PAGE>

            form whatever from, or any person that has provided any service
            (excluding, however, any service provided by a director in such
            person's capacity as an Independent Director of Original AESOP or in
            such person's capacity as a director of AFC or Original AFC-II
            during the period occurring prior to July 31, 1997) in any form
            whatever to, Original AESOP, ARC, AFC, AFC-II, ARAC, AESOP Leasing,
            AESOP Leasing II, Original AFC-II or any of their affiliates or
            associates, or

            (ii) any person owning beneficially, directly or indirectly, any
            outstanding shares of common stock, any limited liability company
            interests or any partnership interests, as applicable, of Original
            AESOP, ARC, AFC, AFC-II, ARAC, AESOP Leasing, AESOP Leasing II,
            Original AFC-II or any of their affiliates, or a stockholder,
            member, partner, director, officer, employee, affiliate, associate,
            customer, supplier, creditor or independent contractor of, or any
            person that has received any benefit (excluding, however, any
            compensation received by a director in such person's capacity as an
            Independent Director of Original AESOP or in such person's capacity
            as a director of AFC or Original AFC-II during the period occurring
            prior to July 31, 1997) in any form whatever from, or any person
            that has provided any service (excluding, however, any service
            provided by a director in such person's capacity as a director of
            Original AESOP or in such person's capacity as an Independent
            Director of AFC or Original AFC-II during the period occurring prior
            to July 30, 1997) in any form whatever to, such beneficial owner or
            any of such beneficial owner's affiliates or associates, or

            (iii) a member of the immediate family of any person described
            above.

      (c) with respect to AFC, an individual who is not, and never was,

            (i) a stockholder, member, partner, director, officer, employee,
            affiliate, associate, customer, supplier, creditor or independent
            contractor of, or any person that has received any benefit in any
            form whatever from, or any person that has provided any service in
            any form whatever to, ARC, ARAC or any of their affiliates or
            associates, or

            (ii) any person owning beneficially, directly or indirectly, any
            outstanding shares of common stock, any limited liability interests
            or any partnership interests, as applicable, of ARC, ARAC or any of
            their affiliates, or a stockholder, member, partner, director,
            officer, employee, affiliate, associate, customer, supplier,
            creditor or independent contractor of, or any person that has
            received any benefit in any form whatever from, or any person that
            has provided any service in any form whatever to, such beneficial
            owner or any of such beneficial owner's affiliates or associates, or

            (iii) a member of the immediate family of any person described
            above;
<PAGE>

      provided, however, that in the event there is a director of AFC meeting
      the above clauses (i), (ii) and (iii) then "Independent Director" with
      respect to AFC shall mean an individual who is not,

            (i) a stockholder, member, partner, director, officer, employee,
            affiliate, associate, customer, supplier, creditor or independent
            contractor of, or any person that has received any benefit in any
            form whatever from, or any person that has provided any service in
            any form whatever to, AFC, AFC-II, AESOP Leasing, AESOP Leasing II,
            Original AESOP, Original AFC-II or any of their affiliates or
            associates, or

            (ii) any person owning beneficially, directly or indirectly, any
            outstanding shares of common stock, any limited liability company
            interests or any partnership interests, as applicable, of AFC,
            AFC-II, AESOP Leasing, AESOP Leasing II, Original AESOP, Original
            AFC-II or any of their affiliates, or a stockholder, member,
            partner, director, officer, employee, affiliate, associate,
            customer, supplier, creditor or independent contractor of, or any
            person that has received any benefit in any form whatever from, or
            any person that has provided any service in any form whatever to,
            such beneficial owner or any of such beneficial owner's affiliates
            or associates, or

            (iii) a member of the immediate family of any person described
            above.

      "Independent Manager" is defined in Section 1.1 of the AFC-II Limited
Liability Company Agreement.

      "Ineligible Vehicle" means a Vehicle that is not an Eligible Vehicle.

      "Initial AESOP Vehicle" means any Vehicle previously subject to the
Original Operating Lease and made subject to the AESOP II Operating Lease on the
Initial Closing Date.

      "Initial ARAC Vehicle" means any Vehicle previously subject to the
Original Synthetic Lease and made subject to the AESOP I Operating Lease on the
Initial Closing Date.

      "Initial Closing Date" means the date on which the initial Loans are made
by the Lender under the Loan Agreements.

      "Initial Financed Vehicle" means any Vehicle owned by ARAC and made
subject to the Finance Lease on the Initial Closing Date.

      "Initial Invested Amount" means, with respect to any Series of Notes, the
aggregate initial principal amount specified in the applicable Supplement.
<PAGE>

      "Initial Leased Vehicle" is defined (i) for purposes of the AESOP I
Operating Lease in Section 2.1 thereof, (ii) for purposes of the AESOP II
Operating Lease in Section 2.1 thereof and (iii) for purposes of the Finance
Lease in Section 2.1 thereof.

      "Initial PVT Vehicle" means any Vehicle previously subject to the Original
PVT Lease and made subject to Lease on the Initial Closing Date.

      "Initial Vehicle" means an Initial AESOP Vehicle, an Initial ARAC Vehicle,
an Initial PVT Vehicle or an Initial Financed Vehicle, as the context may
require.

      "Intercreditor Agreement" means the agreement, dated as of September 15,
1998, among the Trustee, AFC-II, AESOP Leasing, the Administrator, the
Intermediary and the Receivables Lender Agent.

      "Interest Collections" means on any date of determination, all Collections
which, pursuant to the Loan Agreements, represent payments of Loan Interest and
Supplemental Interest plus any amounts earned on Permitted Investments in the
Collection Account which are available for distribution on such date.

      "Interest Period" means, with respect to any Series of Notes, the period
specified in the related Supplement.

      "Intermediary" means the Person acting in the capacity of Qualified
Intermediary pursuant to the Master Exchange Agreement, which initially shall be
Bank One, Texas, National Association.

      "Intermediary Exchange Agreement Termination Event" has the meaning
assigned to such term in the Master Exchange Agreement.

      "Invested Amount" means, with respect to each Series of Notes, the amount
specified in the applicable Supplement.

      "Invested Percentage" means, with respect to any Series of Notes, the
percentage specified in the applicable Supplement.

      "Investment Company Act" means the Investment Company Act of 1940, as
amended.

      "Issuer" means AFC-II, as issuer of the Notes, unless a successor replaces
it and, thereafter, means the successor.

      "Lease Event of Default" means an AESOP I Operating Lease Event of
Default, an AESOP II Operating Lease Event of Default or a Finance Lease Event
of Default.

      "Lease Guide" means the Black Book Official Finance/Lease Guide.
<PAGE>

      "Lease Payment Deficit" with respect to a Series shall be defined in the
Supplement for such Series.

      "Leases" means the Operating Leases and the Finance Lease.

      "Lease's Share" means, with respect to each Lease on any date of
determination, a fraction expressed as a percentage, the numerator of which is
equal to the Net Book Value of Vehicles subject to such Lease and the
denominator of which is equal to the sum of the Net Book Value of all Vehicles
subject to the Leases, each as of such date of determination; provided, however,
that on any date of determination on which the Net Book Value of Vehicles
subject to each Lease is zero, the Lease's Share with respect to (i) the AESOP I
Operating Lease shall be 67.5%, (ii) the Finance Lease shall be 10% and (iii)
the AESOP II Operating Lease shall be 22.5%.

      "Legal Reserve Funding Date" means (i) in the event that the closing of
the initial public offering of the common stock of ARC (as described in
Registration Statement on Form S-1 (No. 333-28609), as amended, filed with the
Securities and Exchange Commission) occurs prior to December 31, 1997, the date,
if any, on which the total stockholders' equity of ARC and its Consolidated
Subsidiaries is reduced to an amount equal to or less than 65% of such total
stockholders' equity on the date of such closing (after giving effect to the
issuance of such common stock on such date) and (ii) otherwise, December 31,
1997.

      "Legal Reserve Release Condition" means in the event that the closing of
the initial public offering of the common stock of ARC (as described in
Registration Statement on Form S-1 (No. 333-28609), as amended, filed with the
Securities and Exchange Commission) occurs prior to December 31, 1997, the total
stockholders' equity of ARC and its Consolidated Subsidiaries is greater than
65% of such total stockholders' equity on the date of such closing (after giving
effect to the issuance of such common stock on such date).

      "Lender" means AFC-II, in its capacity as lender under the Loan
Agreements.

      "Lender Party" is defined (i) for purposes of the AESOP I Operating Lease
Loan Agreement in Section 13.5 thereof, (ii) for purposes of the AESOP I Finance
Lease Loan Agreement in Section 13.5 thereof and (iii) for purposes of the AESOP
II Loan Agreement in Section 13.5 thereof.

      "Lender Trust Account" has the meaning assigned to such term in the Master
Exchange Agreement.

      "Lender's Carrying Cost Interest Rate" means for any Loan Interest Period
an interest rate equal to the percentage equivalent of a fraction, (i) the
numerator of which is equal to the sum of (A) the amount of interest accrued
during such Loan Interest Period with respect to all Series of Notes, plus (B)
the sum of any Swap Payments
<PAGE>

payable by AFC-II on the next succeeding Payment Date, minus (C) the sum of any
Swap Payments payable to AFC-II on the next succeeding Payment Date, minus (D)
any accrued earnings on Permitted Investments in the Collection Account which
are available for distribution on the last Business Day of such Loan Interest
Period, and (ii) the denominator of which is equal to the Average Daily Loan
Balance for all Loans under the Loan Agreements with respect to such Loan
Interest Period; provided, however that the Lender's Carrying Cost Interest Rate
after the occurrence of a Event of Bankruptcy with respect to ARC, ARAC or any
other Lessee shall equal an interest rate equal to (x) with respect to the AESOP
I Operating Lease Loan Agreement, the percentage equivalent of a fraction, (I)
the numerator of which is equal to the product of (A) the sum specified in
clause (i) above and (B) a fraction, the numerator of which is the AESOP I
Operating Lease Loan Agreement Borrowing Base and the denominator of which is
the sum of the AESOP I Operating Lease Loan Agreement Borrowing Base, the AESOP
I Finance Lease Loan Agreement Borrowing Base and the AESOP II Loan Agreement
Borrowing Base, each determined as of the first day of such Loan Interest
Period, and (II) the denominator of which is equal to the Average Daily Loan
Balance for all Loans under the AESOP I Operating Lease Loan Agreement with
respect to such Loan Interest Period and (y) with respect to the AESOP I Finance
Lease Loan Agreement and the AESOP II Loan Agreement, the percentage equivalent
of a fraction, (I) the numerator of which is equal to the product of (A) the sum
specified in clause (i) above and (B) a fraction, the numerator of which is the
sum of the AESOP I Finance Lease Loan Agreement Borrowing Base and the AESOP II
Loan Agreement Borrowing Base and the denominator of which is the sum of the
AESOP I Operating Lease Loan Agreement Borrowing Base, the AESOP I Finance Lease
Loan Agreement Borrowing Base and the AESOP II Loan Agreement Borrowing Base,
each determined as of the first day of such Loan Interest Period, and (II) the
denominator of which is equal to the Average Daily Loan Balance for all Loans
under the AESOP I Finance Lease Loan Agreement and the AESOP II Loan Agreement
with respect to such Loan Interest Period.

      "Lessee" means, as applicable, (i) each of ARAC and each Eligible Rental
Car Company that becomes a party to the AESOP I Operating Lease pursuant to the
provisions of Section 24 thereof, in its capacity as a lessee under the AESOP I
Operating Lease, (ii) each of ARAC and each Eligible Rental Car Company that
becomes a party to the AESOP II Operating Lease pursuant to the provisions of
Section 24 thereof, in its capacity as a lessee under the AESOP II Operating
Lease and (iii) ARAC, in its capacity as the lessee under the Finance Lease.

      "Lessee Agreements" is defined (i) for purposes of the AESOP I Operating
Lease in Section 2(b) thereof, (ii) for purposes of the AESOP II Operating Lease
in Section 2(b) thereof and (iii) for purposes of the Finance Lease in Section
2(b) thereof.

      "Lessee's Share" means, with respect to each Lessee under a particular
Lease on any date of determination, a fraction expressed as a percentage, the
numerator of which is equal to the Net Book Value of all Vehicles leased by such
Lessee under such
<PAGE>

Lease and the denominator of which is equal to the sum of the Net Book Value of
all Vehicles leased under such Lease, each as of such date of determination.

      "Lessor" means (i) AESOP Leasing, in its capacity as the lessor under each
of the AESOP I Operating Lease and the Finance Lease, and (ii) AESOP Leasing II,
in its capacity as the lessor under the AESOP II Operating Lease.

      "Liabilities" means (i) with respect to the AESOP I Operating Lease Loan
Agreement, all obligations to the Lender of AESOP Leasing arising under or in
connection with the AESOP I Operating Lease Loan Agreement or the related Loan
Note, in each case howsoever created, arising or evidenced, whether direct or
indirect, joint or several, absolute or contingent, or now or hereafter
existing, or due or to become due including, without limitation, Loan Interest
accruing after the filing of a bankruptcy petition whether or not allowed as a
claim, (ii) with respect to the AESOP I Finance Lease Loan Agreement, all
obligations to the Lender of AESOP Leasing arising under or in connection with
the AESOP I Finance Lease Loan Agreement or the related Loan Note, in each case
howsoever created, arising or evidenced, whether direct or indirect, joint or
several, absolute or contingent, or now or hereafter existing, or due or to
become due including, without limitation, Loan Interest accruing after the
filing of a bankruptcy petition whether or not allowed as a claim and (iii) with
respect to the AESOP II Loan Agreement, all obligations to the Lender of AESOP
Leasing II arising under or in connection with the AESOP II Loan Agreement or
the related Loan Note, in each case howsoever created, arising or evidenced,
whether direct or indirect, joint or several, absolute or contingent, or now or
hereafter existing, or due or to become due including, without limitation, Loan
Interest accruing after the filing of a bankruptcy petition whether or not
allowed as a claim.

      "Licensing Agreement" means the Master License Agreement, dated as of July
30, 1997, among Cendant Car Rental, Inc. (formerly known as HFS Car Rental,
Inc.), ARAC and Wizard Co., Inc., as amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms.

      "Lien" means, when used with respect to any Person, any interest in any
real or personal property, asset or other right held, owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation, and shall include any mortgage, lien, pledge, encumbrance, charge,
retained security title of a conditional vendor or lessor, or other security
interest of any kind, whether arising under a security agreement, mortgage,
lease, deed of trust, chattel mortgage, assignment, pledge, retention or
security title, financing or similar statement, or notice or arising as a matter
of law, judicial process or otherwise.

      "Limited Liquidation Event of Default" means, with respect to any Series
of Notes, any event specified as such in the related Supplement.

      "Liquidation Event of Default" means, so long as such event or condition
continues, any of the following: (a) any event or condition with respect to
AFC-II,
<PAGE>

AESOP Leasing, AESOP Leasing II, Original AESOP, PVHC, Quartx, ARAC, any Lessee
or ARC of the type described in Section 9.1(d) of the Base Indenture, (b) a
payment default by AFC-II under the Base Indenture as specified in Sections
9.1(a) and (b) of the Base Indenture, (c) an event specified in Section
9.1(e)(i), (k), (l) or (m) of the Base Indenture, (d) a payment default by ARAC,
any Lessee or ARC under any Enhancement Agreement, as specified therein, (e) a
payment default by any Lessee under Section 18.1.1 of the AESOP I Operating
Lease, (f) a payment default by any Lessee under Section 18.1.1 of the AESOP II
Operating Lease or (g) a payment default by the Lessee under Section 18.1.1 of
the Finance Lease.

      "Loan" is defined (i) for purposes of the AESOP I Operating Lease Loan
Agreement in Section 2.1 thereof, (ii) for purposes of the AESOP I Finance Lease
Loan Agreement in Section 2.1 thereof and (iii) for purposes of the AESOP II
Loan Agreement in Section 2.1 thereof.

      "Loan Agreements" means the AESOP I Loan Agreements and the AESOP II Loan
Agreement.

      "Loan Agreement's Share" means, with respect to each Loan Agreement on any
date of determination, a fraction expressed as a percentage, the numerator of
which is equal to the Loan Principal Amount of Loans outstanding under such Loan
Agreement and the denominator of which is equal to the sum of the Loan Principal
Amounts of all Loans outstanding under the Loan Agreements, each as of such date
of determination; provided, however, that on any date of determination on which
the Loan Principal Amount of Loans outstanding under each Loan Agreement is
zero, the Loan Agreement's Share with respect to each Loan Agreement shall equal
the Lease's Share with respect to the Related Lease as of such date.

      "Loan Collateral" means the AESOP I Loan Collateral and the AESOP II Loan
Collateral.

      "Loan Commitment" is defined (i) for purposes of the AESOP I Operating
Lease Loan Agreement in Section 2.1 thereof, (ii) for purposes of the AESOP I
Finance Lease Loan Agreement in Section 2.1 thereof and (iii) for purposes of
the AESOP II Loan Agreement in Section 2.1 thereof.

      "Loan Commitment Termination Date" means the date on which all Notes shall
have been paid in full and the Base Indenture shall have terminated pursuant to
Section 11.1 thereof.

      "Loan Event of Default" means an AESOP I Loan Event of Default or an AESOP
II Loan Event of Default.

      "Loan Interest" (i) with respect to Loans made under the AESOP I Operating
Lease Loan Agreement, is defined in Section 4.1 thereof, (ii) with respect to
Loans made under the AESOP I Finance Lease Loan Agreement, is defined in Section
4.1
<PAGE>

thereof and (iii) with respect to Loans made under the AESOP II Loan Agreement,
is defined in Section 4.1 thereof.

      "Loan Interest Period" means, with respect to any Distribution Date, the
period from and including the preceding Distribution Date to but excluding the
current Distribution Date, provided, however, that the initial Loan Interest
Period shall commence on the Initial Closing Date and the final Loan Interest
Period shall end on the date following the Loan Commitment Termination Date on
which all Loans under the Loan Agreements shall have been paid in full.

      "Loan Note" means, (i) with respect to Loans made under the AESOP I
Operating Lease Loan Agreement, is defined in Section 3.1 thereof, (ii) with
respect to Loans made under the AESOP I Finance Lease Loan Agreement, is defined
in Section 3.1 thereof and (iii) with respect to Loans made under the AESOP II
Loan Agreement, is defined in Section 3.1 thereof.

      "Loan Payment Allocation Percentage" means, (i) with respect to the AESOP
I Operating Lease Loan Agreement on any date of determination, a fraction
expressed as a percentage (which percentage shall never exceed 100%), the
numerator of which is equal to the Loan Principal Amount of Loans outstanding
under the AESOP I Operating Lease Loan Agreement and the denominator of which is
equal to the AESOP I Operating Lease Loan Agreement Borrowing Base, each as of
such date of determination, (ii) with respect to the AESOP I Finance Lease Loan
Agreement on any date of determination, a fraction expressed as a percentage
(which percentage shall never exceed 100%), the numerator of which is equal to
the Loan Principal Amount of Loans outstanding under the AESOP I Finance Lease
Loan Agreement and the denominator of which is equal to AESOP I Finance Lease
Loan Agreement Borrowing Base, each as of such date of determination, and (iii)
with respect to the AESOP II Loan Agreement, 100%.

      "Loan Principal Amount" means, as of any date, (i) with respect to Loans
made under the AESOP I Operating Lease Loan Agreement, the aggregate principal
amount outstanding of such Loans, (ii) with respect to Loans made under the
AESOP I Finance Lease Loan Agreement, the aggregate principal amount outstanding
of such Loans and (iii) with respect to Loans made under the AESOP II Loan
Agreement, the aggregate principal amount outstanding of such Loans.

      "Loan Request" means a loan request, substantially in the form of Exhibit
B-1 to each Loan Agreement, executed by an Authorized Officer of the relevant
Borrower.

      "Loan Request Response" means a loan request response, substantially in
the form of Exhibit B-2 to each Loan Agreement, executed by an Authorized
Officer of the Lender.

      "Lockbox Agreement" means each agreement establishing an Approved Lockbox
Account.
<PAGE>

      "Luxembourg Agent" is defined in Section 2.4(c) of the Base Indenture.

      "Manager" is defined in Section 1.1 of the AFC-II Limited Liability
Company Agreement.

      "Managing Agent" means Lord Securities Corporation, a Delaware
corporation.

      "Mandatorily Redeemable Obligations" means, as applied to a Person, an
obligation of such Person to the extent that it is redeemable, payable or
required to be purchased or otherwise retired or extinguished (a) at a fixed or
determinable date, whether by operation of a sinking fund or otherwise, (b) at
the option of any Person other than such Person or (c) upon the occurrence of a
condition not solely within the control of such Person, such as a redemption
required to be made out of future earnings.

      "Manufacturer" means a manufacturer of passenger automobiles and/or light
trucks.

      "Manufacturer Event of Default" means, with respect to any Manufacturer,
(i) the failure by such Manufacturer (or in the case of a Guaranteed
Depreciation Program, the failure by such Manufacturer or any related auction
dealers) to pay any amount due under such Manufacturer's Manufacturer Program
with respect to a Vehicle turned in to such Manufacturer (including any
Relinquished Vehicle); provided, however, that (a)(I), in the case of an
Eligible Manufacturer Program, such failure continues for more than ninety (90)
days following the Turnback Date for such Vehicle or (II) in the case of any
other Manufacturer Program, such failure continues for more than thirty (30)
days following the Turnback Date for such Vehicle and (b) in the case of an
Eligible Manufacturer Program only, the aggregate of any such amounts not paid
(each, a "Past Due Amount") are equal to or in excess of the lesser of the
Default Amount with respect to such Manufacturer Program and the then
outstanding aggregate amount of repurchase obligations of the Manufacturer under
such Manufacturer Program, in each case net of Past Due Amounts that are the
subject of a good faith dispute as evidenced by a writing by AESOP Leasing,
AESOP Leasing II or ARAC, as applicable, or the Manufacturer questioning the
accuracy of amounts paid or payable in respect of certain Vehicles tendered for
repurchase under a Manufacturer Program (as distinguished from any dispute
relating to the repudiation by such Manufacturer generally of its obligations
under such Manufacturer Program or the assertion by such Manufacturer of the
invalidity or unenforceability as against it of such Manufacturer Program); (ii)
the occurrence of an Event of Bankruptcy with respect to such Manufacturer; or
(iii) the termination of such Manufacturer's Manufacturer Program or the failure
of an Eligible Program Manufacturer's Manufacturer Program to meet the
requirements of an Eligible Manufacturer Program.
<PAGE>

      "Manufacturer Program" means any Repurchase Program or Guaranteed
Depreciation Program.

      "Market Value" means, with respect to any Vehicle as of any date of
determination, the market value of such Vehicle as specified in the Related
Month's published NADA Guide for the model class and model year of such Vehicle
based on the average equipment and the average mileage of each vehicle of such
model class and model year; provided, that if the NADA Guide is being published
but such Vehicle is not included therein, the Market Value shall mean the
Capitalized Cost of such Vehicle less depreciation charges equal to 1.67% per
month of the Capitalized Cost of such Vehicle since the date of such Vehicle's
purchase; provided, further, that if the NADA Guide was not published in the
Related Month, the Market Value of such Vehicle shall be based on an independent
third-party data source approved by each Rating Agency that is rating any Series
of Notes or the Commercial Paper Notes at the request of AFC-II or ARAC based on
the average equipment and average mileage of each Vehicle of such model class
and model year or based upon such other methodology approved by each such Rating
Agency.

      "Market Value Average" means, as of any day on or after the third
Determination Date, the percentage equivalent of a fraction, the numerator of
which is the average of the Non-Program Fleet Market Value as of such preceding
Determination Date and the two Determination Dates precedent thereto and the
denominator of which is the average of the aggregate Net Book Value of
Non-Program Vehicles leased under the AESOP I Operating Lease and the Finance
Lease as of such preceding Determination Date and the two Determination Dates
precedent thereto.

      "Master Exchange Agreement" means the Master Exchange Agreement, dated as
of September 15, 1998, between AESOP Leasing and Bank One, Texas, National
Association, as Intermediary.

      "Material Adverse Effect" means, with respect to any occurrence, event or
condition:

      (i) a materially adverse effect on the financial condition, prospects,
      business, assets or operations of the Guarantor and its Consolidated
      Subsidiaries;

      (ii) a materially adverse effect on the ability of (a) the Guarantor,
      ARAC, any other Lessee, AESOP Leasing, AESOP Leasing II, Original AESOP,
      PVHC or Quartx to perform its obligations under any of the Related
      Documents or (b) the Lender to perform its obligations under any of the
      Related Documents; or

      (iii) an adverse effect on (a) the enforceability of any Related Document
      or (b) on the priority or perfection of the Lender's or the Trustee's Lien
      on any Loan Collateral or the Collateral.
<PAGE>

      "Maximum Financed Vehicle Amount" means, as of any Determination Date or
Payment Date, the lowest Maximum Financed Vehicle Amount specified in any
Supplement under which Notes are Outstanding as of such date.

      "Maximum Invested Amount" means, with respect to each Series of Notes, the
amount, if any, specified in the applicable Supplement.

      "Maximum Manufacturer Amount" means, as of any Determination Date or
Payment Date, with respect to a particular Manufacturer or group of
Manufacturers, the lowest Maximum Manufacturer Amount specified in any
Supplement under which Notes are Outstanding as of such date.

      "Maximum Non-Eligible Manufacturer Amount" means, as of any Determination
Date or Payment Date, the lowest Maximum Non-Eligible Manufacturer Amount
specified in any Supplement under which Notes are Outstanding as of such date.

      "Maximum Non-Program Vehicle Amount" means, as of any Determination Date
or Payment Date, the lowest Maximum Non-Program Vehicle Amount specified in any
Supplement under which Notes are Outstanding as of such date.

      "Maximum Specified States Amount" means, as of any Determination Date or
Payment Date, the lowest Maximum Specified States Amount specified in any
Supplement under which Notes are Outstanding as of such date.

      "Maximum Term" is defined (i) for purposes of the AESOP I Operating Lease
in Section 3.1 thereof, (ii) for purposes of the AESOP II Operating Lease in
Section 3.1 thereof and (iii) for purposes of the Finance Lease in Section 3.1
thereof.

      "Mazda" means, collectively, Mazda Motor Corporation and Mazda Motor of
America, Inc.

      "Measurement Month" with respect to any date, means collectively, each of
the three periods most closely preceding such date, each of which periods shall
consist of one calendar month or the smallest number of consecutive calendar
months, in which (a) at least 250 Non-Program Vehicles were sold at auction or
otherwise and (b) at least one-twelfth of the aggregate Net Book Value of the
Non-Program Vehicles leased under the AESOP I Operating Lease and the Finance
Lease as of the last day of each such period were sold at auction or otherwise;
provided, however, that no calendar month included in a Measurement Month shall
be included in any other Measurement Month; and, further provided, that
Redesignated Program Vehicles shall be excluded for purposes of the foregoing
determination.

      "Measurement Month Average" means, with respect to any Measurement Month,
the percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Disposition Proceeds of all Non-Program Vehicles sold at auction or
<PAGE>

otherwise during such Measurement Month (excluding any Redesignated Program
Vehicles) and the denominator of which is the aggregate Net Book Value of such
Vehicles on the dates of their respective sales.

      "Merger Agreement" is defined in the recitals to the Base Indenture.

      "Minimum Term" is defined (i) for purposes of the AESOP I Operating Lease
in Section 3.1 thereof, (ii) for purposes of the AESOP II Operating Lease in
Section 3.1 thereof and (iii) for purposes of the Finance Lease in Section 3.1
thereof.

      "Mitsubishi" means Mitsubishi Motors Corp., a Delaware corporation.

      "Monthly Administration Fee" means, with respect to each Payment Date,
one-twelfth of the product of (i) in the case of the Monthly Administration Fee
payable by AESOP Leasing in respect of Vehicles subject to the AESOP I Operating
Lease and the Finance Lease, 0.40% and the Net Book Value of such Vehicles as of
the first day of the applicable Related Month; (ii) in the case of the Monthly
Administration Fee payable by AESOP Leasing II in respect of Vehicles subject to
the AESOP II Operating Lease, 0.40% and the Net Book Value of such Vehicles as
of the first day of the applicable Related Month; and (iii) in the case of the
Monthly Administration Fee payable by AFC-II, 0.10% and the Net Book Value of
all Vehicles leased under the Leases as of the first day of the applicable
Related Month; provided, however, that if an Amortization Event with respect to
any Series of Notes shall have occurred and be continuing, the Monthly
Administration Fee for each Payment Date will equal the greater of (A) the
product of (x) $20.00 and (y) the number of Vehicles subject to the Leases as of
the first day of the applicable Related Month, and (B) the sum of the amounts
described in the clauses (i), (ii) and (iii) of this definition; and provided,
further, that if the Monthly Administration Fee is determined as provided in
clause (A), such Monthly Administration Fee shall be payable by AESOP Leasing,
AESOP Leasing II and AFC-II in the same relative proportions that would have
been payable had such Monthly Administration Fee been determined as provided in
clauses (i), (ii) and (iii) of this definition.

      "Monthly Base Rent" means, with respect to each Lease on a Payment Date,
without duplication, the sum of (a) the Loan Interest and Supplemental Interest
with respect to the Loan(s) made to finance the Vehicles subject to such Lease
that is due and payable on such Payment Date, plus (b) the accrued Depreciation
Charges for the Related Month for all Vehicles (x) subject to such Lease as of
the end of the Related Month or (y) that, without double counting, while subject
to such Lease either became Ineligible Vehicles, suffered a Casualty or were
sold by or on behalf of the applicable Lessor to any Person other than to a
Manufacturer pursuant to a Manufacturer Program or to a third party pursuant to
an auction conducted through a Guaranteed Depreciation Program, in each case,
during the Related Month, plus (c) in the case of the AESOP I Operating Lease or
the Finance Lease, all upfront incentive payments paid by Manufacturers during
the Related Month in respect of purchases of Non-Program Vehicles leased under
such Lease, plus (d) the Monthly Administration Fee payable by
<PAGE>

the applicable Lessor under the Administration Agreement with respect to such
Payment Date; plus (e) in the case of the AESOP II Operating Lease, an amount
equal to the dividends accrued during the Related Month on the outstanding
Preferred Stock of AESOP Leasing II (including any applicable tax gross-up),
determined in accordance with the certificates of designation relating to such
Preferred Stock, plus (f) the applicable Loan Agreement's Share (determined as
of the beginning of the Related Month) with respect to the Related Loan
Agreement of Carrying Charges, (g) in the case of the AESOP II Operating Lease,
the monthly portion of the AESOP II Management Fee and any other amounts payable
by AESOP Leasing II under the AESOP II Management Agreement, plus (h) in the
case of the AESOP I Operating Lease or the Finance Lease, the monthly portion of
the Original AESOP Management Fee, allocated to each such Lease pro rata, based
upon the applicable Lease's Share (determined as of the beginning of the Related
Month), (i) in the case of the AESOP I Operating Lease or the Finance Lease, an
amount equal to 1% of the sum of (A) the Net Book Value of the Non-Program
Vehicles subject to such Lease as of the first day of the Related Month, (B) the
Capitalized Cost of each new Non-Program vehicles leased thereunder since the
first day of the Related Month and (C) the Net Book Value of each Program
Vehicle subject to such Lease redesignated as a Non-Program Vehicle since the
first day of the Related Month; and (j) indemnity payments paid by the
applicable Lessor pursuant to any Vehicle Title and Lienholder Nominee Agreement
to which such Lessor is a party.

      "Monthly Certificate" is defined in Section 4.1(b) of the Base Indenture.

      "Monthly Loan Principal Amount" (i) with respect to Loans made under the
AESOP I Operating Lease Loan Agreement, is defined in Section 5.1 thereof, (ii)
with respect to Loans made under the AESOP I Finance Lease Loan Agreement, is
defined in Section 5.1 thereof and (iii) with respect to Loans made under the
AESOP II Loan Agreement, is defined in Section 5.1 thereof.

      "Monthly Noteholders Statement" means a statement substantially in the
form of Exhibit E to the Indenture.

      "Moody's" means Moody's Investors Service, Inc.

      "NADA Guide" means the National Automobile Dealers Association, Official
Used Car Guide, Eastern Edition.

      "Net Book Value" means, with respect to each Vehicle, such Vehicle's
Capitalized Cost, minus, in the case of any Non-Program Vehicle, the amount of
any upfront incentive fees paid by a Manufacturer in respect of the purchase of
such Vehicle, minus the aggregate Depreciation Charges accrued with respect to
such Vehicle through the last day of the Related Month.

      "Nissan" means Nissan Motor Corporation in U.S.A., Inc., a California
corporation.
<PAGE>

      "Nissan Hawaii" means Nissan Motor Corporation in Hawaii, Ltd., a Hawaii
corporation.

      "Non-Eligible Manufacturer Amount" means, as of any date of determination,
the aggregate Net Book Value of all Vehicles leased under the Leases on such day
that were manufactured by Manufacturers other than Eligible Non-Program
Manufacturers.

      "Non-Program Fleet Market Value" means, with respect to all Non-Program
Vehicles (excluding any Redesignated Program Vehicles) as of any date of
determination, the sum of the respective Market Values of each Non-Program
Vehicle subject to the AESOP I Operating Lease or the Finance Lease. For
purposes of computing the Non-Program Fleet Market Value, the "Market Value" of
a Non-Program Vehicle means the market value of such Non-Program Vehicle as
specified in the most recently published NADA Guide for the model class and
model year of such Non-Program Vehicle based on the average equipment and the
average mileage of each Non-Program Vehicle of such model class and model year
then leased under the AESOP I Operating Lease and the Finance Lease. If such
Non-Program Vehicle is not listed in the most recently published NADA Guide,
then the "Market Value" of a Non-Program Vehicle means the Capitalized Cost of
such Non-Program Vehicle less depreciation charges accrued in respect of such
Non-Program Vehicle in accordance with the applicable Depreciation Schedule
since the date of such Non-Program Vehicle's purchase. Notwithstanding the
foregoing, if a Non-Program Vehicle is subject to a Manufacturer Program and for
so long as no Manufacturer Event of Default has occurred with respect to the
related Manufacturer, the Market Value of such Non-Program Vehicle as of any
date of determination, will equal the Repurchase Price on such date with respect
to such Vehicle under such Manufacturer Program.

      "Non-Program Vehicle" means a Vehicle that is not subject to an Eligible
Manufacturer Program.

      "Non-Program Vehicle Amount" means, as of any date of determination, the
aggregate Net Book Value of all Non-Program Vehicles leased under the Leases on
such day, excluding, however, any Redesignated Program Vehicle.

      "Non-Program Vehicle Percentage" means, as of any date of determination, a
fraction, expressed as a percentage, (a) the numerator of which is the aggregate
Net Book Value of all Non-Program Vehicles leased under the Leases on such day
and (b) the denominator of which is the aggregate Net Book Value of all Vehicles
leased under the Leases on such day.

      "Non-Program Vehicle Special Default Payments" is defined (i) for purposes
of the AESOP I Operating Lease in Section 13.3 thereof and (ii) for purposes of
the Finance Lease in Section 13.3 thereof.
<PAGE>

      "Noteholder" and "Holder" means the Person in whose name a Note is
registered in the Note Register.

      "Note Owner" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).

      "Note Rate" means, with respect to any Series of Notes, the annual rate at
which interest accrues on the Notes of such Series of Notes (or formula on the
basis of which such rate shall be determined) as stated in the applicable
Supplement.

      "Note Register" means the register maintained pursuant to Section 2.6(a)
of the Base Indenture, providing for the registration of the Notes and transfers
and exchanges thereof.

      "Notes" is defined in the recitals to the Base Indenture.

      "Officer's Certificate" means a certificate signed by an Authorized
Officer of, AFC, AFC-II, AESOP Leasing, AESOP Leasing II, Original AESOP, PVHC,
Quartx, ARAC or any Lessee, as the case may be.

      "Operating Leases" means the AESOP I Operating Lease and the AESOP II
Operating Lease.

      "Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to
AFC-II, AESOP Leasing, AESOP Leasing II, Original AESOP, PVHC, Quartx, ARAC, any
Lessee or ARC, as the case may be, unless the Requisite Investors shall notify
the Trustee of objection thereto.

      "Original AESOP" means AESOP Leasing Corp., a Delaware corporation.

      "Original AESOP Management Agreement" means the Amended and Restated
Management Agreement, dated as of July 30, 1997, between the Managing Agent and
Original AESOP.

      "Original AESOP Management Fee" is defined in Section 2 of the Original
AESOP Management Agreement.

      "Original AESOP Nominee Agreement" means the Vehicle Title Nominee
Agreement, dated as of July 30, 1997, among Original AESOP, the Trustee, ARAC,
ARC and AESOP Leasing II, as amended, modified or supplemented from time to time
in accordance with its terms.

      "Original AFC-II" means AESOP Funding Corp. II, a Delaware corporation.
<PAGE>

      "Original Operating Lease" means the Master Motor Vehicle Operating Lease
and Servicing Agreement, dated as of May 1, 1996, among Original AESOP, as the
lessor thereunder, ARAC, as the lessee thereunder, and HFS Car Rental, Inc., as
the guarantor thereunder, as amended, modified or supplemented from time to time
in accordance with its terms.

      "Original PVT Lease" means the Restated Third Amendment and Restatement to
Lease, dated as of September 21, 1987, among Bankers Trust Company, as trustee
for Prime Vehicles Trust, as the lessor thereunder, ARAC, as the lessee
thereunder, and HFS Car Rental, Inc., as the guarantor thereunder, as amended,
modified or supplemented from time to time in accordance with its terms.

      "Original Synthetic Lease" means the Master Motor Vehicle Lease and
Servicing Agreement, dated as of May 1, 1996, among Original AESOP, as the
lessor thereunder, ARAC, as the lessee thereunder, and HFS Car Rental, Inc., as
the guarantor thereunder, as amended, modified or supplemented from time to time
in accordance with its terms.

      "Outstanding" is defined, with respect to any Series, in the related
Supplement.

      "Paired Series" is defined in Section 5.5 of the Base Indenture.

      "Paying Agent" is defined in Section 2.6(a) of the Base Indenture.

      "Payment Date" means the 20th day of each month, or if such date is not a
Business Day, the next succeeding Business Day, commencing August 20, 1997.

      "Pension Plan" means any "employee pension benefit plan", as such term is
defined in ERISA, which is subject to Title IV of ERISA (other than a
"multiemployer plan", as defined in Section 4001 of ERISA) and to which any
company in the Controlled Group has liability, including any liability by reason
of having been a substantial employer within the meaning of Section 4063 of
ERISA for any time within the preceding five years or by reason of being deemed
to be a contributing sponsor under Section 4069 of ERISA.

      "Permanent Global Note" is defined in Section 2.5(b) of the Base
Indenture.

      "Permitted Encumbrances" means: (a) a Lien securing a tax, assessment or
other governmental charge or levy (excluding any Lien arising under any of the
provisions of ERISA) or the claim of a materialman, mechanic, carrier,
warehouseman or landlord for labor, materials, supplies or rentals incurred in
the ordinary course of business, and foreclosure, distraint, sale or other
similar proceedings shall not have been commenced; (b) a Lien on the properties
and assets of a Subsidiary of ARC, other than a Lessee, securing Indebtedness
owing to ARC or any Lessee; (c) a Lien consisting of a deposit or pledge made,
in the ordinary course of business, in
<PAGE>

connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance or similar legislation; (d) a Lien
constituting an encumbrance in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property which does not
materially detract from the value of such property or impair the use thereof in
the business of ARC or any Subsidiary; (e) a Lien constituting a lease or
sublease granted by ARC or any Lessee to others in the ordinary course of
business; (f) a Lien existing on (i) property of any Person at the time such
Person becomes a Consolidated Subsidiary of ARC or (ii) any asset prior to the
acquisition thereof by ARC or a Consolidated Subsidiary, but only, in the case
of either clause (i) or (ii), if such Lien was not created in contemplation
thereof and so long as the obligation secured by such Lien is not in default and
such Lien is and will remain confined to the property subject to it at the time
such Person becomes a Consolidated Subsidiary of ARC or such property is
acquired and to fixed improvements thereafter erected on such property; (g) a
Lien securing Purchase Money Indebtedness but only if, in the case of each such
Lien: (i) such Lien shall at all times be confined solely to the asset the
purchase price of which was financed through the incurrence of the Purchase
Money Indebtedness secured by such Lien and to fixed improvements then or
thereafter erected on such asset; (ii) such Lien attached to such asset within
90 days of the acquisition of such property; and (iii) the aggregate principal
amount of Purchase Money Indebtedness secured by such Lien at no time exceeds an
amount equal to the lesser of (A) the cost (including the principal amount of
such Indebtedness, whether or not assumed) to ARC or a Consolidated Subsidiary
of the asset subject to such Lien and (B) the fair value of such asset at the
time of such acquisition; (h) a Lien constituting a renewal, extension or
replacement of a Lien constituting a Permitted Encumbrance by virtue of clause
(f) or (g) of this definition, but only, in the case of each such renewal,
extension or replacement Lien, to the extent that the principal amount of
indebtedness secured by such Lien does not exceed the principal amount of such
indebtedness so secured at the time of the extension, renewal or replacement,
and that such renewal, extension or replacement Lien is limited to all or a part
of the property that was subject to the Lien extended, renewed or replaced and
to fixed improvements then or thereafter erected on such property; (i) Liens on
property of non-U.S. Subsidiaries including those in Puerto Rico and the U.S.
Virgin Islands; and (j) a Lien arising pursuant to an order of attachment,
distraint or similar legal process arising in connection with legal proceedings,
but only if and so long as the execution or other enforcement thereof is not
unstayed for more than 20 days. For this purpose "Purchase Money Indebtedness"
means Indebtedness of ARC or any Consolidated Subsidiary that, within 90 days of
such purchase, is incurred to finance part or all of (but not more than) the
purchase price of a tangible asset in which neither ARC nor any Subsidiary had
at any time prior to such purchase any interest other than a security interest
or an interest as lessee under an operating lease and renewals, extensions or
refundings, thereof, but not any increases in the principal amounts thereof or
interest rates thereon, except for increases in interest rates upon the occasion
of any such renewal, extension or refunding that are commercially reasonable at
such time.

      "Permitted Investments" means negotiable instruments or securities
maturing on or before the Distribution Date next occurring after the investment
therein, payable
<PAGE>

in Dollars, issued by an entity organized under the laws of the United States of
America and represented by instruments in bearer or registered or in book-entry
form which evidence (i) obligations the full and timely payment of which are to
be made by or is fully guaranteed by the United States of America other than
financial contracts whose value depends on the values or indices of asset
values; (ii) demand deposits of, time deposits in, or certificates of deposit
issued by, any depositary institution or trust company incorporated under the
laws of the United States of America or any state thereof whose short-term debt
is rated P-1 or higher by Moody's and A-1 or higher by Standard & Poor's and
subject to supervision and examination by Federal or state banking or depositary
institution authorities; provided, however, that at the earlier of (x) the time
of the investment and (y) the time of the contractual commitment to invest
therein, the certificates of deposit or short-term deposits, if any, or
long-term unsecured debt obligations (other than such obligation whose rating is
based on collateral or on the credit of a Person other than such institution or
trust company) of such depositary institution or trust company shall have a
credit rating from Standard & Poor's of "A-1+", in the case of certificates of
deposit or short-term deposits, or a rating from Standard & Poor's not lower
than "AA", in the case of long-term unsecured debt obligations; (iii) commercial
paper having, at the earlier of (x) the time of the investment and (y) the time
of the contractual commitment to invest therein, a rating from Standard & Poor's
of "A-1+"; (iv) bankers' acceptances issued by any depositary institution or
trust company described in clause (ii) above; (v) investments in money market
funds rated "AAm" by Standard & Poor's or otherwise approved in writing by
Standard & Poor's; (vi) Eurodollar time deposits having a credit rating from
Standard & Poor's of "A-1+"; (vii) repurchase agreements involving any of the
Permitted Investments described in clauses (i) and (vi) above and the
certificates of deposit described in clause (ii) above which are entered into
with a depository institution or trust company, having a commercial paper or
short-term certificate of deposit rating of "A-1+" by Standard & Poor's and P-1
by Moody's or which otherwise is approved as to collateralization by the Rating
Agencies; and (viii) any other instruments or securities, if the Rating Agencies
confirm in writing that the investment in such instruments or securities will
not adversely affect any ratings with respect to any Series of Notes.

      "Permitted Liens" means (i) Liens for current taxes not delinquent or for
taxes being contested in good faith and by appropriate proceedings, and with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP, (ii) mechanics', materialmen's, landlords',
warehousemen's and carrier's Liens, and other Liens imposed by law, securing
obligations arising in the ordinary course of business that are not more than
thirty days past due or are being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves have been established,
and are being maintained, in accordance with GAAP, (iii) Liens in favor of the
Lessors pursuant to each of the Leases; (iv) Liens in favor of the Lender in
respect of the Liabilities pursuant to the Loan Agreements, (iv) the Liens in
favor of the Trustee pursuant to the Indenture, and (v) Liens in favor of an
Enhancement Provider, provided, however, that such Liens are subordinate to the
Liens in favor of the Trustee and have been consented to by the Trustee.
<PAGE>

      "Permitted Nominee" means, with respect to AESOP Leasing, AESOP Leasing II
or ARAC, the nominee titleholder(s) for such Person appointed pursuant to the
Vehicle Title and Lienholder Nominee Agreements to which it is a party.

      "Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company, joint
stock company, corporation, trust, unincorporated organization or Government
Authority.

      "Placement Agency Agreement" means any agreement pursuant to which a
Placement Agent agrees with AFC-II to place Notes with investors.

      "Placement Agent" means any Person in its capacity as placement agent
under a Placement Agency Agreement.

      "Pool Factor" means, unless any Series of Notes is issued in more than one
class as stated in any related Supplement, a number carried out to eight
significant decimals representing the ratio of the applicable Invested Amount as
of the end of the Related Month to the applicable Initial Invested Amount.

      "Post-Identification Period Component" means, on any date of
determination, the aggregate of the amounts, without duplication, calculated
with respect to each Group of Relinquished Vehicles for which the Identification
Period shall have ended but the Post-Identification Period Termination Date
shall not have occurred as of the third preceding Business Day, of the sum of
(A) all amounts receivable, as of such date of determination, by the
Intermediary from Manufacturers under their respective Eligible Manufacturer
Programs with respect to each such Group of Relinquished Vehicles as to which no
Receivables Funding Loan shall have been made against the amounts receivable
from Manufacturers in respect thereof (unless there shall have been a
determination of payment in full of such Receivables Funding Loan pursuant to
Section 6(c) of the Intercreditor Agreement), excluding any such amounts that
are unpaid more than ninety (90) days past the applicable Turnback Date, plus
(B), any amount on deposit in the respective AESOP Trust Account on such date of
determination that was paid by any such Manufacturer with respect to each Group
of Relinquished Vehicles described in the foregoing clause (A), plus (C) any
amount on deposit in the respective AESOP Trust Account on such date of
determination representing the proceeds of Receivables Funding Loans, plus (D)
any amount on deposit in the respective AESOP Trust Account on such date of
determination representing amounts released from the corresponding Lender Trust
Account for such Group of Relinquished Vehicles following payment in full of all
principal and interest on the Receivables Funding Loan related to such Group of
Relinquished Vehicles; plus (E) any amount on deposit in the AESOP Trust
Accounts on such date representing investment earning on the amounts described
in the foregoing clauses (B), (C), and (D).
<PAGE>

      "Post-Identification Period Termination Date" means for each Group of
Relinquished Vehicles with respect to which the Identification Period shall have
ended prior to the receipt by AESOP Leasing of the last Replacement Vehicle with
respect to such Group of Relinquished Vehicles, the earlier of the date on which
the Exchange Period with respect to such Group of Relinquished Vehicles shall
end and the date on which the last Replacement Vehicle with respect to such
Group of Relinquished Vehicles shall have been received by AESOP Leasing.

      "Potential AESOP I Finance Lease Loan Event of Default" means any
occurrence or event which, with the giving of notice, the passage of time or
both, would constitute an AESOP I Finance Lease Loan Event of Default.

      "Potential AESOP I Loan Event of Default" means a Potential AESOP I
Operating Lease Loan Event of Default or a Potential AESOP I Finance Lease Loan
Event of Default.

      "Potential AESOP I Operating Lease Event of Default" means any occurrence
or event which, with the giving of notice, the passage of time or both, would
constitute an AESOP I Operating Lease Event of Default.

      "Potential AESOP I Operating Lease Loan Event of Default" means any
occurrence or event which, with the giving of notice, the passage of time or
both, would constitute an AESOP I Operating Lease Loan Event of Default.

      "Potential AESOP II Loan Event of Default" means any occurrence or event
which, with the giving of notice, the passage of time or both, would constitute
an AESOP II Loan Event of Default.

      "Potential AESOP II Operating Lease Event of Default" means any occurrence
or event which, with the giving of notice, the passage of time or both, would
constitute an AESOP II Operating Lease Event of Default.

      "Potential Amortization Event" means any occurrence or event which, with
the giving of notice, the passage of time or both, would constitute an
Amortization Event.

      "Potential Enhancement Agreement Event of Default" means an event which,
with the giving of notice, the passage of time or both, would constitute an
Enhancement Agreement Event of Default under any Enhancement Agreement.

      "Potential Finance Lease Event of Default" means any occurrence or event
which, with the giving of notice, the passage of time or both, would constitute
a Finance Lease Event of Default.

      "Potential Lease Event of Default" means an event which, with the giving
of notice, the passage of time or both, would constitute a Lease Event of
Default.
<PAGE>

      "Potential Loan Event of Default" means an event which, with the giving of
notice, the passage of time or both, would constitute a Loan Event of Default.

      "Potential Manufacturer Event of Default" means an event which, with the
giving of notice, the passage of time or both, would constitute a Manufacturer
Event of Default.

      "Power of Attorney" means a power of attorney in the form of Attachment C
to any Lease.

      "Predecessor Companies" means Avis Rent A Car Systems Holdings, Inc. and
Subsidiaries, Avis International, Ltd. and Subsidiaries, Avis Enterprises, Inc.
and Subsidiaries, Pathfinder Insurance Company and Global Excess & Reinsurance,
Ltd.

      "Preferred Stock" means, as of any date, the issued and outstanding Series
A Preferred Stock, together with any other issued and outstanding preferred
stock, of AESOP Leasing II on such date.

      "Principal Collections" means any Collections other than Interest
Collections.

      "Principal Terms" is defined in Section 2.3 of the Base Indenture.

      "Prior Indenture" is defined in the recitals to the Base Indenture.

      "Program Size" means, with respect to any Series of Notes, the amount
specified in the applicable Supplement.

      "Program Vehicle" means a Vehicle subject to an Eligible Manufacturer
Program.

      "Program Vehicle Special Default Payments" is defined (i) for purposes of
the AESOP I Operating Lease in Section 13.3 thereof and (ii) for purposes of the
Finance Lease in Section 13.3 thereof.

      "PVHC" means PV Holding Corp., a Delaware corporation.

      "PVHC/BONY Nominee Agreement" means the Vehicle Title and Lienholder
Nominee Agreement, dated as of July 30, 1997, among PV Holding Corp., BONY,
ARAC, ARC, AESOP Leasing and the Trustee, as amended, modified or supplemented
from time to time in accordance with its terms.

      "Qualified Institution" means a depositary institution or trust company
(which may include the Trustee) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia; provided,
however, that at all times such depositary institution or trust company is a
member of the FDIC and has (i) from Standard & Poor's a long-term indebtedness
rating not lower than AA- and a
<PAGE>

short-term indebtedness rating of A-1+ and from Moody's a long-term indebtedness
rating not lower than A2 and a short-term indebtedness rating of P-1, or (ii)
such other rating which satisfies the Rating Agency Consent Condition.

      "Qualified Intermediary" means a Person satisfying the requirements for a
"qualified intermediary" within the meaning of Section 1031 of the Code and the
regulations thereunder.

      "Quartx" means Quartx Fleet Management Inc., a Delaware corporation.

      "Quartx Nominee Agreement" means the Vehicle Title Nominee Agreement,
dated as of July 30, 1997, among Quartx Fleet Management Inc., the Trustee,
ARAC, ARC and AESOP Leasing, as amended, modified or supplemented from time to
time in accordance with its terms.

      "Rating Agency" means, (i) with respect to each outstanding Series of
Notes, any rating agency or agencies then issuing a rating for such Series of
Notes at the request of AFC-II or ARAC, or (ii) with respect to the Commercial
Paper Notes, collectively S&P, Moody's and any other nationally recognized
rating agency approved by the administrative agent for the liquidity lenders
with respect to the Commercial Paper Notes, ARAC and the Required Secured
Parties.

      "Rating Agency Confirmation Condition" means, with respect to any action,
that (i) each Rating Agency shall have notified AFC-II, AESOP Leasing, AESOP
Leasing II, ARAC, each Lessee, any Enhancement Provider and the Trustee in
writing that such action will not result in a reduction or withdrawal of the
rating (in effect immediately before the taking of such action) of any
outstanding Series of Notes with respect to which it is a Rating Agency and (ii)
each Rating Agency shall have notified any applicable Enhancement Provider
entitled to such notification pursuant to the relevant Supplement in writing
that such action will not result in a reduction or withdrawal of the rating
(without regard to the presence of the Enhancement provided by each such
Enhancement Provider and in effect immediately before the taking of such action)
of any outstanding Series of Notes issued pursuant to such related Supplement
and, with respect to the issuance of a Series of Notes, the "Rating Agency
Confirmation Condition" also means, in addition to the above, that each Rating
Agency that is referred to in the related Supplement as being required to
deliver its rating with respect to such Series of Notes shall have notified
AFC-II, AESOP Leasing, AESOP Leasing II, ARAC, each Lessee, any Enhancement
Provider and the Trustee in writing that such rating has been issued by such
Rating Agency.

       "Rating Agency Consent Condition" means, with respect to any action, that
(i) each Rating Agency shall have notified AFC-II, AESOP Leasing, AESOP Leasing
II, ARAC, each Lessee, any Enhancement Provider and the Trustee in writing that
such action will not result in a reduction or withdrawal of the rating (in
effect immediately before the taking of such action) of any outstanding Series
of Notes with respect to which it is a Rating Agency and, with respect to the
issuance of a Series of Notes, the
<PAGE>

"Rating Agency Consent Condition" also means that each Rating Agency that is
referred to in the related Supplement as being required to deliver its rating
with respect to such Series of Notes shall have notified AFC-II, AESOP Leasing,
AESOP Leasing II, ARAC, each Lessee, any Enhancement Provider and the Trustee in
writing that such rating has been issued by such Rating Agency and (ii) any
Enhancement Provider entitled to consent pursuant to the related Supplement
shall have consented in writing to such action.

      "Receivables Financing Agreement" means each agreement pursuant to which
financing may be extended to the Intermediary for the purchase of Replacement
Vehicles as to which the Rating Agency Consent Condition has been satisfied and
as to which, if there shall be any Series of Notes outstanding supporting
Commercial Paper Notes, the CP Rating Agency Condition has been satisfied and
the approval of the Majority Banks (as defined in the applicable Supplement) has
been obtained, and which initially shall mean the Receivables Financing
Agreement, dated as of September 15, 1998, among the Intermediary and Atlantic
Asset Securitization Corp., Lyon Short Term Funding Corp., and Credit Lyonnais
New York Branch, individually and as agent.

      "Receivables Funding Documents" means each Receivables Financing Agreement
and each note or other document delivered pursuant thereto.

      "Receivables Funding Loans" means loans made by the Receivables Lender
pursuant to the Receivables Financing Agreement for the purpose of acquiring
Replacement Vehicles on the terms and subject to the conditions of the Master
Exchange Agreement.

      "Receivables Lender" means, the financial institutions from time to time
party to each Receivables Financing Agreement, which initially shall mean,
collectively, Atlantic Asset Securitization Corp., Lyon Short Term Funding
Corp., and Credit Lyonnais New York Branch, and their respective successors and
assigns.

      "Receivables Lender Agent" means the financial institution from time to
time serving as lender agent for the Receivables Lender, which initially shall
be Credit Lyonnais New York Branch.

      "Receivables Lender Collateral" has the meaning assigned to such term in
the Master Exchange Agreement.

      "Reconveyed Receivables" means Relinquished Vehicle Receivables that have
been reconveyed by the Intermediary to AESOP Leasing pursuant to Section 2.4,
8.1 or 8.2 of the Master Exchange Agreement.

      "Record Date" means, with respect to any Distribution Date, the last day
of the Related Month.
<PAGE>

      "Redesignated Program Vehicle" means a Program Vehicle that is rejected as
ineligible for repurchase by the related Manufacturer (or for sale at auction
under the applicable Manufacturer Program) and that is not expected to be
accepted upon a subsequent return, or that at the time of its intended
disposition is determined by the relevant Lessee as likely to be so rejected;
provided, however, that after such rejection or determination such Vehicle will
not be used in the operating fleet of the relevant Lessee.

      "Registrar" is defined in Section 2.6(a) of the Base Indenture.

      "Regulation S" is defined in Section 2.5(b) of the Base Indenture.

      "Related Documents" means, collectively, the Indenture, the Notes, any
Enhancement Agreement, the Loan Agreements, the Assignment Agreements, the
Vehicle Title and Lienholder Nominee Agreements, the Administration Agreement,
the Cendant Indemnity, the Termination Services Agreement, the Securities
Account Control Agreements, the Loan Notes, any Placement Agency Agreement, any
agreements relating to the issuance or the purchase of any of the Notes, the
Leases, the Supplemental Documents relating to the Leases, each Lockbox
Agreement, the Master Exchange Agreement, the Intercreditor Agreement, and the
Receivables Funding Documents.

      "Related Lease" means (i) with respect to the AESOP I Operating Lease Loan
Agreement, the AESOP I Operating Lease, (ii) with respect to the AESOP I Finance
Lease Loan Agreement, the Finance Lease and (iii) with respect to the AESOP II
Loan Agreement, the AESOP II Operating Lease.

      "Related Loan Agreement" means (i) with respect to the AESOP I Operating
Lease, the AESOP I Operating Lease Loan Agreement, (ii) with respect to the
AESOP I Finance Lease, the AESOP I Finance Lease Loan Agreement and (iii) with
respect to the AESOP II Operating Lease, the AESOP II Loan Agreement.

      "Related Month" means, (i) with respect to any Payment Date, Determination
Date or Distribution Date, the most recently ended calendar month, (ii) with
respect to any other date, the calendar month in which such date occurs and
(iii) with respect to an Interest Period, the month in which such Interest
Period commences; provided, however, that with respect to the above clause (i),
the initial Related Month shall be the period from and including the date of
issuance of the first Series of Notes to and including the last day of the
calendar month in which such issuance occurs.

      "Relinquished Vehicle" has the meaning assigned to such term in the Master
Exchange Agreement.

      "Relinquished Vehicle Borrowing Base Component" means, on any date of
determination, the sum of (i) the Identification Period Component and (ii) the
lesser of (A) $25,000,000 and (B) the Post-Identification Period Component on
such date.
<PAGE>

      "Relinquished Vehicle Property" means (i) the rights to sell or otherwise
dispose of Relinquished Vehicles under the relevant Manufacturer Programs, (ii)
any and all proceeds of such Relinquished Vehicles (other than Reconveyed
Receivables), and (iii) solely to the extent assigned pursuant to the Master
Exchange Agreement, as provided in the definition of the term "Assigned Special
Default Payments" set forth therein, any Special Default Payments payable in
respect of such Relinquished Vehicles, any rights under the Guaranty with
respect to such Special Default Payments and any rights to exercise remedies to
enforce collection of any of the foregoing.

      "Relinquished Vehicle Receivables"means the amounts payable by the
Manufacturers of Relinquished Vehicles as the purchase price thereof pursuant to
the relevant Repurchase Program, other than Reconveyed Receivables.

      "Replacement Vehicle" has the meaning assigned to such term in the Master
Exchange Agreement.

      "Repurchase Amount" means, with respect to any Series of Notes, the amount
specified in the applicable Supplement.

      "Repurchase Period" means, with respect to any Program Vehicle, the period
during which such Vehicle may be turned in to the Manufacturer thereof for
repurchase or sale at auction pursuant to the applicable Manufacturer Program.

      "Repurchase Price" with respect to any Vehicle (i) subject to a Repurchase
Program means the price paid or payable by the Manufacturer thereof to
repurchase such Vehicle pursuant to its Manufacturer Program and (ii) subject to
a Guaranteed Depreciation Program means the amount which the Manufacturer
thereof guarantees will be paid to AESOP Leasing (or the Intermediary, pursuant
to the Master Exchange Agreement), AESOP Leasing II or ARAC, as the case may be,
as the seller of such Vehicle by such Manufacturer and/or the related auction
dealers upon the disposition of such Vehicle pursuant to its Manufacturer
Program.

      "Repurchase Program" means a program pursuant to which a Manufacturer has
agreed with AESOP Leasing (or the Intermediary, pursuant to the Master Exchange
Agreement), AESOP Leasing II or ARAC, as the case may be, to repurchase Vehicles
manufactured by such Manufacturer or one of its Affiliates during the specified
Repurchase Period.

      "Required AESOP I Operating Lease Vehicle Amount" means, with respect to
each Series of Notes, the amount specified in the applicable Supplement.

      "Required Aggregate Asset Amount" means on any date of determination the
Aggregate Invested Amount on such date.
<PAGE>

      "Required Enhancement Amount" is defined, with respect to any Series, in
the related Supplement.

      "Required Noteholders" means Noteholders holding in excess of 50% of the
aggregate Invested Amount of a Series of Notes (excluding, for the purposes of
making the foregoing calculation, any Notes held by (i) AFC-II or any Affiliate
of AFC-II and (ii) ARC or any Affiliate of ARC).

      "Required Secured Parties" is defined with respect to any Series in the
related Supplement.

      "Requirements of Law" means, with respect to any Person or any of its
property, the certificate of incorporation or articles of association and
by-laws or other organizational or governing documents of such Person or any of
its property, and any law, treaty, rule or regulation, or determination of any
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject, whether Federal, state or local (including, without
limitation, usury laws, the Federal Truth in Lending Act and retail installment
sales acts).

      "Requisite Investors" means Noteholders holding in excess of 50% of the
aggregate Invested Amount of all outstanding Series of Notes (excluding, for the
purposes of making the foregoing calculation, any Notes held by (i) AFC-II or
any Affiliate of AFC-II and (ii) ARC or any Affiliate of ARC).

      "Residual Value Payment" shall mean, with respect to a Vehicle as of the
date of calculation, an amount equal to the Termination Value of such Vehicle,
provided, however, that in no event shall the sum of the net present value of
the Monthly Base Rent paid or accrued with respect to such Vehicle to the date
of calculation plus the net present value of the Termination Value of such
Vehicle exceed 88 percent of the Capitalized Cost of such Vehicle, with such net
present value calculated to the Vehicle Finance Lease Commencement Date for such
Vehicle with the discount rate equal to the interest rate utilized to calculate
the interest component of the Monthly Base Rent heretofore paid or accrued for
such Vehicle to the date of calculation. This Residual Value Payment will be
reduced (but not below zero) by the proceeds received by the Lessor on the sale
of the Vehicle including any sale pursuant to any Manufacturer Program.

      "Restricted Global Note" is defined in Section 2.5(a) of the Base
Indenture.

      "Revolving Period" means, with respect to any Series of Notes, the period
specified in the applicable Supplement.

      "Rule 144A" is defined in Section 2.5(a) of the Base Indenture.

      "S&P" or "Standard & Poor's" means Standard & Poor's Ratings Service, a
division of The McGraw-Hill Companies, Inc.
<PAGE>

      "Secured Parties" is defined in Section 3.1 of the Base Indenture.

      "Securities Account Control Agreements" means the AFC-II Securities
Account Control Agreements and the ARAC Securities Account Control Agreement.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Segregated Series" is defined in Section 2.3(b) of the Base Indenture.

      "Series A Preferred Stock" means the Adjustable Rate Cumulative
Participating Preferred Stock ($1 par value), Series A, of AESOP Leasing II
issued on the Initial Closing Date.

      "Series Closing Date" means, with respect to any Series of Notes, the date
of issuance of such Series of Notes, as specified in the related Supplement.

      "Series of Notes" or "Series" means each Series of Notes issued and
authenticated pursuant to the Base Indenture and a related Supplement.

      "Series-Specific Collateral" is defined in Section 2.3(b) of the Base
Indenture.

      "Series Termination Date" means, with respect to any Series of Notes, the
date stated in the related Supplement as the termination date.

      "Special Default Payments" is defined (i) for purposes of the AESOP I
Operating Lease in Section 13.3 thereof, (ii) for purposes of the AESOP II
Operating Lease in Section 13.3 thereof and (iii) for purposes of the Finance
Lease in Section 13.3 thereof.

      "Special Service Charges" means any and all charges assessed to the
Lessees pursuant to the AESOP I Operating Lease with respect to the fees,
expenses, indemnities and other amounts payable by AESOP Leasing (without giving
effect to any recourse limitation applicable to AESOP Leasing, including the
limitation set forth in Section 8.14 of the Master Exchange Agreement) to the
Intermediary pursuant to the Master Exchange Agreement.

      "Specified States Amount" means, as of any date of determination, the
aggregate Net Book Value of all Vehicles leased under the Operating Leases on
such day that are titled in the States of Ohio, Oklahoma and Nebraska.

      "Standard Casualty" means, with respect to any Vehicle, that (i) such
Vehicle is destroyed, seized or otherwise rendered permanently unfit or
unavailable for use and, if such Vehicle is a Program Vehicle, is not tendered
to and accepted for repurchase by the applicable Manufacturer within 90 days
following the occurrence thereof or (ii) such Vehicle is lost or stolen and is
not recovered and, if such Vehicle is
<PAGE>

a Program Vehicle, not tendered to and accepted for repurchase by the applicable
Manufacturer within 180 days following the occurrence thereof.

      "Subaru" means Subaru of America Inc., a Nebraska corporation.

      "Sublease Notice" is defined in Section 7 of the Finance Lease.

      "Subsidiary" means, with respect to any Person (herein referred to as the
"parent"), any corporation, partnership, association or other business entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or more than 50% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the parent or (b) that is, at the time any
determination is being made, otherwise controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.

      "Supplement" means a supplement to the Base Indenture complying (to the
extent applicable) with the terms of Section 2.3 or Article 12 of the Base
Indenture.

      "Supplemental Carrying Charges" means, with respect to each Loan Interest
Period for which the Average Daily Loan Balance under each Loan Agreement is
zero, an amount equal to the sum of (A) the amount of interest accrued during
such Loan Interest Period with respect to all Series of Notes, plus (B) the sum
of any Swap Payments payable by AFC-II on the next succeeding Payment Date,
minus (C) the sum of any Swap Payments payable to AFC-II on the next succeeding
Payment Date.

      "Supplemental Documents" is defined (i) for purposes of the AESOP I
Operating Lease in Section 2.1 thereof, (ii) for purposes of the AESOP II
Operating Lease in Section 2.1 thereof and (iii) for purposes of the Finance
Lease in Section 2.1 thereof.

      "Supplemental Interest" is defined (i) for purposes of the AESOP I
Operating Lease Loan Agreement in Section 4.2 thereof, (ii) for purposes of the
AESOP I Finance Lease Loan Agreement in Section 4.2 thereof and (iii) for
purposes of the AESOP II Loan Agreement in Section 4.2 thereof.

      "Supplemental Rent" means, with respect to each of the Leases, any and all
amounts due thereunder other than Monthly Base Rent.

      "Suzuki" means American Suzuki Motor Corporation, a California
corporation.

      "Swap Agreement" means one or more interest rate swap contracts, interest
rate cap agreements or similar contracts entered into by AFC-II in connection
with the issuance of a Series of Notes, as specified in the related Supplement,
providing limited protection against interest rate risks.
<PAGE>

      "Swap Payments" means amounts payable to or receivable by AFC-II pursuant
to any Swap Agreement.

      "Temporary Global Note" is defined in Section 2.5(b) of the Base
Indenture.

      "Term" is defined (i) for purposes of the AESOP I Operating Lease in
Section 3.2 thereof, (ii) for purposes of the AESOP II Operating Lease in
Section 3.2 thereof and (iii) for purposes of the Finance Lease in Section 3.2
thereof.

      "Termination Services Agreement" means the Termination Services Agreement,
dated as of July 30, 1997, by and among WizCom, ARAC, AFC-II and the Trustee, as
amended, modified or supplemented from time to time in accordance with its
terms.

      "Termination Services Reserve Account" is defined in Section 3 of the
Administration Agreement.

      "Termination Services Reserve Draw Amount" means, as of any date of
determination, the lesser of (i) the amount then due to WizCom from ARAC
pursuant to the Termination Services Agreement and (ii) the amount on deposit in
the Termination Services Reserve Account on such date.

      "Termination Value" means, with respect to any Vehicle, as of any date, an
amount equal to (i) the Capitalized Cost of such Vehicle, minus (ii) unless
otherwise deducted in the calculation of "Capitalized Cost", all Depreciation
Charges for such Vehicle accrued prior to such date, minus (iii) in the case of
any Non-Program Vehicle, the amount of any upfront incentive fees paid by the
Manufacturer of such Vehicle in respect of the purchase of such Vehicle.

      "Toyota" means Toyota Motor Sales, U.S.A., Inc., a California Corporation.

      "Transfer Agent" is defined in Section 2.9(a)(iii) of the Base Indenture.

      "Trust Accounts" has the meaning assigned to such term in the Master
Exchange Agreement.

      "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

      "Trust Officer" means, with respect to the Trustee, any Senior Vice
President, Vice President, Assistant Vice President, Assistant Secretary or
Assistant Treasurer of the Corporate Trust Office, or any trust officer, or any
officer customarily performing functions similar to those performed by the
person who at the time shall be such officers, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with a particular
subject, or any successor thereto responsible for the administration of the Base
Indenture.
<PAGE>

      "Trustee" means the party named as such in the Indenture until a successor
replaces it in accordance with the applicable provisions of the Indenture and
thereafter means the successor serving thereunder.

      "Turnback Date" means, with respect to any Program Vehicle or Non-Program
Vehicle subject to a Manufacturer Program, the date on which such Vehicle is
accepted for return by a Manufacturer or its agent pursuant to its Manufacturer
Program and the Depreciation Charges cease to accrue pursuant to its
Manufacturer Program.

      "UCC" means the Uniform Commercial Code as in effect from time to time in
the specified jurisdiction.

      "United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.

      "U.S. Government Obligations" means direct obligations of the United
States of America, or any agency or instrumentality thereof for the payment of
which the full faith and credit of the United States of America is pledged as to
full and timely payment of such obligations.

      "Variable Funding Note" is defined in Section 2.5(c) of the Base
Indenture.

      "Vehicle" means a passenger automobile or light truck leased by any Lessee
pursuant to a Lease and when used in a Lease means a vehicle leased pursuant to
such Lease.

      "Vehicle Acquisition Schedule" means a schedule in the form of Attachment
B to each Operating Lease and the Finance Lease.

      "Vehicle Finance Lease Commencement Date" is defined in Section 3.1 of the
Finance Lease.

      "Vehicle Finance Lease Expiration Date" is defined in Section 3.1 of the
Finance Lease.

      "Vehicle Operating Lease Commencement Date" (i) with respect to Vehicles
subject to the AESOP I Operating Lease is defined in Section 3.1 thereof and
(ii) with respect to Vehicles subject to the AESOP II Operating Lease is defined
in Section 3.1 thereof.

      "Vehicle Operating Lease Expiration Date" (i) with respect to Vehicles
subject to the AESOP I Operating Lease is defined in Section 3.1 thereof and
(ii) with respect to Vehicles subject to the AESOP II Operating Lease is defined
in Section 3.1 thereof.

      "Vehicle Order" (i) with respect to Vehicles subject to the AESOP I
Operating Lease is defined in Section 2.1 thereof, (ii) with respect to Vehicles
subject to the
<PAGE>

AESOP II Operating Lease is defined in Section 2.1 thereof and (iii) with
respect to Vehicles subject to the Finance Lease is defined in Section 2.1
thereof.

      "Vehicle Perfection and Documentation Requirements" means, (i) with
respect to a Vehicle (other than an Initial Vehicle), submission of an
application for the issuance of a certificate of title for such Vehicle with the
department of registry of motor vehicles of the applicable state in which such
Vehicle is to be registered, which application shall reflect the following:
AESOP Leasing or its Permitted Nominee (in the case of Vehicles subject to the
AESOP I Operating Leases), AESOP Leasing II or its Permitted Nominee (in the
case of Vehicles subject to the AESOP II Operating Lease) and ARAC or its
Permitted Nominee (in the case of Vehicles subject to the Finance Lease), as the
registered owner and the Trustee as the first lienholder (except that with
respect to Vehicles titled in the states of Ohio, Oklahoma and Nebraska, the
Trustee will not be noted as the first lienholder on the Certificates of Title
relating to such Vehicles), (ii) with respect to each Initial PVT Vehicle and
each Initial Financed Vehicle, BONY will be noted as the first lienholder on the
Certificates of Title relating to such Vehicles and (iii) with respect to each
Franchisee Vehicle, the nominee lienholder under the related Franchisee Nominee
agreement will be noted as the first lienholder on the Certificate of Title
relating to such Vehicle.

      "Vehicle Purchase Price" (i) with respect to Vehicles subject to the AESOP
I Operating Lease is defined in Section 2.5 thereof, (ii) with respect to
Vehicles subject to the AESOP II Operating Lease is defined in Section 2.5
thereof and (iii) with respect to Vehicles subject to the Finance Lease is
defined in Section 2.5 thereof.

      "Vehicle Purchase Surplus Amount" means, with respect to Vehicles subject
to the Finance Lease, as of any Payment Date, an amount equal to the sum of (1)
the excess, if any, of (x) the aggregate of the Vehicle Purchase Price for all
Vehicles purchased by the Lessee pursuant to Section 2.5(a) of the Finance Lease
or sold to third parties pursuant to Section 2.6 of the Finance Lease, in each
case during the Related Month over (y) the aggregate of the Termination Values
for all Vehicles so purchased or sold during such Related Month, and (2) the
excess, if any, of (x) the aggregate Repurchase Price for Vehicles returned to a
Manufacturer during the Related Month and which had a Repurchase Price in excess
of the Termination Value for such Vehicles over (y) the aggregate Termination
Value for all such Vehicles.

      "Vehicle Return Default" (i) with respect to Vehicles subject to the AESOP
I Operating Lease is defined in Section 18.6 thereof, (ii) with respect to
Vehicles subject to the AESOP II Operating Lease is defined in Section 18.6
thereof and (iii) with respect to Vehicles subject to the Finance Lease is
defined in Section 18.6 thereof.

      "Vehicle Term" (i) with respect to Vehicles subject to the AESOP I
Operating Lease is defined in Section 3.1 thereof, (ii) with respect to Vehicles
subject to the AESOP II Operating Lease is defined in Section 3.1 thereof and
(iii) with respect to Vehicles subject to the Finance Lease is defined in
Section 3.1 thereof.
<PAGE>

      "Vehicle Title and Lienholder Nominee Agreements" means the PVHC/BONY
Nominee Agreement, the Quartx Nominee Agreement, the Original AESOP Nominee
Agreement, the BONY Nominee Agreement and any Franchisee Nominee Agreements.

      "Vehicle Turn-In Condition" (i) with respect to Vehicles subject to the
AESOP I Operating Lease is defined in Section 13.1 thereof, (ii) with respect to
Vehicles subject to the AESOP II Operating Lease is defined in Section 13.1
thereof (iii) with respect to Vehicles subject to the Finance Lease is defined
in Section 13.1 thereof.

      "VIN" means vehicle identification number.

      "Wholly-Owned Subsidiary" means, with respect to any Person (herein
referred to as the "parent"), any corporation, partnership, association or other
business entity of which securities or other ownership interests representing
100% of the equity or 100% of the ordinary voting power or 100% of the general
partnership interests are, at the time any determination is being made, owned,
controlled or held by the parent.

      "WizCom" means WizCom International, Ltd., a Delaware corporation.

      "Working Capital Facility" means the Credit Agreement, dated as of July
30, 1997, among ARC, ARAC, the lenders parties thereto from time to time, The
Chase Manhattan Bank and Lehman Commercial Paper Inc., as amended Supplemented,
restated or otherwise modified from time to time in accordance with the terms
thereof.

      "written" or "in writing" means any form of written communication,
including, without limitation, by means of telex, telecopier device, telegraph
or cable.