Exhibit 10.29


 





 


ASSET FINANCE


 


Specialist Finance


City House


City Road


Chester


CH88 3AN


 


Vanguard
Rental (UK) Limited 


James
House 


55
Welford Road 


Leicester



LE2
7AR


 


For
the attention of Ian Wardle


 


3
December 2004


 


Dear
Sirs,


 


LETTER OF OFFER


 


Operating Lease Facility, Hire Purchase Facility and Guarantee Facility


 


Following
recent discussions, CAPITAL, acting on ‘behalf of the Lessors, has pleasure in
confirming its offer to convert the existing £125,000,000 uncommitted
facilities for operating lease and hire purchase to a 3 year committed facility
initially commencing at £160,000,000 and increasing to £200,000,000.


 


Capitalised
terms listed in this Letter of Offer shall have the meanings given to such
terms in part 1 of appendix 2. This Letter of Offer shall be construed in
accordance with part 2 of appendix 2.


 


The
Facility will be made available subject to the terms and conditions set out
below. 


 


1.             Amount and Purpose of
the Facility


 


1.1                                 Subject to the terms of the Vehicle Funding
Documents, the Lessors shall make available to Vanguard operating lease and
hire purchase facilities in an aggregate amount equal to the Facility Limit.


 


1.2                                 Including leasing and hire purchase business
transacted to-date, CAPITAL will from time to time, in accordance with the
other Vehicle Funding Documents and throughout the term of this Facility,
acquire Vehicles up to a maximum cost equal to the Facility Limit.


 


1.3                                 Provided that no Potential Event of Default
has occurred and is continuing, the Facility Limit shall be increased
automatically to:


 


	
   

  	
  Bank of
  Scotland Asset Finance

  
	
   

  	
  is a
  trading style of the

  
	
  www.bankofscotland.co.uk/business

  	
  companies
  listed overleaf.

  



 

















 


1.4                                 On 3 December 2007, the Facility Limit shall
be reduced to £0 or such other amount as CAPITAL may in its sole and absolute
discretion notify Vanguard in writing.


 


1.5                                 Vanguard shall ensure that at no time shall
the balance outstanding to CAPITAL under the Facility exceed the Facility Limit
unless such excess has first been agreed in writing by CAPITAL.


 


1.6                                 Without prejudice to any of its rights or
remedies under the Vehicle Funding Documents, any other agreement or at law, at
any time following the occurrence of an Event of Default which is continuing
CAPITAL may reduce the Facility Limit to £0 on written notice to Vanguard.


 


2.             The Vehicles


 


2.1           CAPITAL may acquire the following
Vehicles from utilisations of the Facility:


 


(a)           self-drive hire cars;


 


(b)           LCVs;


 


(c)           Staff Cars;


 


(d)           Short-Term Hire Cars; and


 


(e)           Courtesy Buses.


 


2.2           Utilisation of the Facility (measured
by the balance of monies outstanding) shall not exceed at any time:


 


(a)           in relation to vehicles for hire
purchase, £60,000,000;


 


(b)           for the funding of LCVs and Staff
Cars, £40,000,000;


 


(c)           for the funding of Short-Term Hire
Cars, £10,000,000; and


 


(d)           for the funding of Courtesy Buses,
£2,000,000


 


each
of the foregoing amounts being referred to as the “Initial Amounts”.


 


2.3                                 Each of the amounts referred to in clause 2.2
shall, provided that no Potential Event of Default has occurred and is
continuing, be increased by 12.5% of the Initial Amount thereof on 3 December
2005 and by a farther 12.5% of the Initial Amount thereof on 3 December 2006
(for the avoidance of doubt, using the Sterling amounts set out in clause 2.2
as the base amounts).


 


3.             Facility Expiry


 


3.1                                 CAPITAL shall not be liable to incur any
further expenditure in respect of Vehicles nor shall it be liable to honour any
utilisation requests at any time on or following the Expiry Date.


 


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3.2                                 Subject to the receipt of credit approval,
CAPITAL intends to review the Facility not less than 60 days prior to the
Expiry Date so that Vanguard may achieve continued utilisation of the Facility
without interruption. However, unless the Facility is expressly renewed,
extended or otherwise modified in writing on or prior to the Expiry Date, the
Facility Limit will be reduced to £0 on the Expiry Date.


 


4.             Non Utilisation


 


4.1                                 On the Business Day prior to each anniversary
of the date of this Letter of Offer (each such date being a “Utilisation Test
Date”), CAPITAL may determine the aggregate utilisation of the Facility and the
Guarantee Facility on each such Utilisation Test Date as a proportion of the
Aggregate Facility Limit (such proportion to be expressed as a percentage and
such percentage being the “Utilisation Percentage”). Upon completing such
determination, CAPITAL shall notify Vanguard in writing of the Utilisation
Percentage and, if on any Utilisation Test Date the Utilisation Percentage is:


 


(a)                                  90% or more, Vanguard shall not be obliged to
pay any fee to CAPITAL in respect of non utilisation;


 


(b)                                 more than 80% but less than 90%, Vanguard
shall pay to CAPITAL a non utilisation fee equal to 0.25% of the unutilised
portion of the Aggregate Facility Limit on the relevant Utilisation Test Date;


 


(c)                                  more than 70% but less than 80%, Vanguard
shall pay to CAPITAL a non utilisation fee equal to 0.375% of the unutilised
portion of the Aggregate Facility Limit on the relevant Utilisation Test Date;
and


 


(d)                                 less than 70%, Vanguard shall pay to CAPITAL
a non utilisation fee equal to 0.5% of the unutilised portion of the Aggregate
Facility Limit on the relevant Utilisation Test Date.


 


4.2           Payment
of non utilisation fees under clause 4.1 shall be:


 


(a)                                  made by Vanguard within 5 Business Days of
being notified in writing of the amount thereof by CAPITAL; and


 


(b)                                 paid in Sterling.


 


4.3                                 Unless the United Kingdom adopts the Euro as
its lawful currency, the utilisation of the Guarantee Facility shall, for the
purposes of clause 4.1, be the Sterling equivalent of the utilisation of the
Guarantee Facility Limit on the relevant Utilisation Test Date (the actual
utilisation of the Guarantee Facility being converted from Euro to Sterling on
the basis of €1 being equal to £0.70).


 


5.             Vehicle Terms


 


5.1           The term of the leasing of the
Vehicles from the Lessors to Vanguard shall be as follows:


 


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(a)           self-drive hire cars: 5 months up to
9 months;


 


(b)           LCVs: 12 months up to 3 0 months;


 


(c)           Staff Cars: 5 months up to 9 months;


 


(d)           Short-Term Hire Cars: 3 months up to
9 months; and


 


(e)           Courtesy Buses: 12 months up to 60
months


 


or
such other periods as CAPITAL and Vanguard may agree from time to time.


 


5.2           The rental payable by Vanguard to the
relevant Lessor with respect to:


 


(a)                                  each Vehicle shall be agreed by CAPITAL and
Vanguard and linked to the relevant Lessor’s cost of funds not less than the
Business Day preceding the date of each utilisation of the Facility;


 


(b)                                 each Vehicle the subject of a Vehicle Funding
Document shall be paid by Vanguard monthly in advance;


 


(c)                                  each Vehicle (other than LCVs, Courtesy Buses
and any Vehicles the subject of the Master HP Agreement), Vanguard will pay a
penultimate rental equal to 10% of the discounted cost price of the relevant
Vehicle; and


 


(d)                                 each Vehicle shall have a rental profile
amortising to a final sum (variously called the “Assumed Net Sales Proceeds”,
the “Advance Payment of Sales Proceeds” or the “final balloon rental” in the
Vehicle Funding Documents.


 


5.3                                 The rentals will be subject to adjustment in
accordance with the terms of the Vehicle Funding Documents if any of the
assumptions set out therein and upon which the transactions contemplated by the
Vehicle Funding Document are based prove to be incorrect whether before or
after the completion of the documentation.


 


5.4                                 With respect to VAT:


 


(a)                                  Lease: Rentals payable by Vanguard for Vehicles the
subject of the MOLA or the Self-Drive Hire Master Agreement shall be subject to
VAT; and


 


(b)                                 Hire Purchase’, for each Vehicle the subject of the Master HP
Agreement, Vanguard shall pay to CAPITAL on utilisation of the Facility as an
initial payment with respect thereto, an amount equal to the VAT on the cost
price of such Vehicle.


 


5.5                                 Vanguard hereby undertakes that, upon the
sale by it of any Vehicle which is subject to the Master Hire Purchase
Agreement, it shall pay the proceeds it receives in respect of such Vehicle to
the relevant Lessor provided that Vanguard’s payment obligation under this
clause 5.5 shall in no event exceed the amount required to discharge the
settlement amount due to the relevant Lessor in respect of such Vehicle.


 


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6.             Conditions Precedent


 


The
availability of the Facility is subject to:


 


(a)           completion
and execution of all relevant documentation in a form and substance
satisfactory to CAPITAL including:


 


(i)                                     the Debenture;


 


(ii)                                  the Accession Agreements;


 


(iii)                               the Intercreditor Deed;


 


(iv)                              the Subordination Agreement;


 


(v)                                 the Vanguard Parent Undertaking;


 


(vi)                              receipt from each of Vanguard and the Vanguard guarantor (in a form
acceptable to CAPITAL) of an officer’s certificate and board resolution
approving the entry into and performance of the transactions contemplated by
the Vehicle Funding Documents;


 


(vii)                           receipt by CAPITAL of a certified true copy of the October 2004
management accounts in respect of the UK Group;


 


and
satisfaction of all conditions precedent to each of those documents;


 


(b)                                 receipt of confirmation by the Guarantor of
(i) the continuing guarantee of Vanguard by the Guarantor for all funding under
the Facility, and (ii) the granting of such guarantee to the ILC Owners (as
such term is defined in the Accession Agreements);


 


(c)                                  receipt by CAPITAL of written confirmation
from Lombard North Central PLC that, (i) the Lombard Fleet Funding Facility has
been renewed for a co-terminus committed 3 year period, (ii) the facility limit
thereunder is £150,000,000, (iii) documentation necessary for the foregoing has
been executed, and (iv) all conditions precedent thereunder have been
satisfied;


 


(d)                                 receipt by CAPITAL of written confirmation
from RBS Germany that, (i) all documentation necessary to establish an
€80,000,000 facility pursuant to the Sale- and-Lease-Back Master Agreements
have been executed, and (ii) all conditions precedent thereunder have been
satisfied;


 


(e)                                  receipt by CAPITAL of written confirmation
from Bank of Scotland that, (i) the Working Capita] Facility has been
established for a committed 3 year period, (ii) that the facility limit
thereunder is £30,000,000, (iii) all documentation necessary for the foregoing
has been executed; and (iv) all conditions precedent thereunder have been
satisfied;


 


(f)                                    the signing of direct debit mandates by
Vanguard in favour of CAPITAL in respect of all rentals payable under the
Vehicle Funding Documents;


 


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(g)                                 receipt by CAPITAL of the October 2004
monthly management accounts (including income statement, balance sheet and cash
flow) on a consolidated basis for the Group and each company incorporated in
the United Kingdom, Germany or Switzerland which, together with the Group, are
known as the UK Bank Group, in each case prepared in accordance with UK GAAP;
and


 


(h)                                 receipt by CAPITAL by no later than 10
December 2004 of a letter of undertaking from Worldwide Excellerated Leasing
Ltd. addressed to the Vehicle Funders and the Lending Bank (such letter of
undertaking to provide for a period of consultation prior to any Initial Public
Offering and to be in the form agreed between CAPITAL and Vanguard on the date
of this Letter of Offer).


 


7.             Vanguard Undertakings


 


The
undertakings in this clause 7 remain in force from the date of this Letter of
Offer for so long as any amount is outstanding under the Vehicle Funding
Documents or any amount is available under the Facility for utilisation by
Vanguard. Failure to comply with the undertakings in this clause 7 shall
constitute an Event of Default.


 


7.1                                 Self-drive hire cars: Vanguard shall provide CAPITAL or the
relevant Lessor with a sales invoice together with (if required to do so by
CAPITAL) copy invoices from bona fide suppliers together with any evidence as
CAPITAL may reasonably require that title to any self-drive hire cars will vest
in a Lessor on or before commencement of the relevant lease.


 


7.2                                 LCVs and Staff Cars: Vanguard shall provide CAPITAL or the
relevant Lessor with a reimbursement invoice together with (if required to do
so by CAPITAL) copy invoices from bona fide suppliers together with any
evidence as CAPITAL may reasonably require that title to LCVs and Staff Cars
will vest in a Lessor on or before commencement of the relevant lease or hire
purchase contract.


 


7.3                                 Registration and Chassis
Numbers: Vanguard shall
provide to CAPITAL the registration and chassis numbers for the Vehicles on or
prior to the relevant utilisation of the Facility.


 


7.4                                 Monthly Reporting- Within 10 Business Days of the relevant mid
and end of month dates, Vanguard shall provide to CAPITAL mid and end of month
reports containing details of all Vehicles sold prior to the expiry of their
relevant underlying lease periods.


 


7.5                                 Relevant Percentage: If, with respect to any Vehicle which is sold
by Vanguard and which is the subject of the Self-Drive Hire Master Agreement,
the “Relevant Percentage” (as defined in clause 1.1.36 of the Self-Drive Hire Master
Agreement) is exceeded by the actual percentage of the “Cost” (as defined in clause
1.1.14 of the Self-Drive Hire Master Agreement), Vanguard shall forthwith make
an early payment to CAPITAL or the relevant Lessor pursuant to the Self- Drive
Hire Master Agreement. The amount of such early payment will return the Relevant
Percentage to nil. The early payment sum will be calculated to reflect the
timing of receipt of such sum having regard to the accounting for any applicable
VAT and the net after tax rate of return of the relevant Lessor.


 


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7.6           Availability of other
Facilities: Vanguard shall ensure that each of:


 


(a)                                  the Lombard Fleet Funding Facility; and


 


(b)                                 the Working Capital Facility, 


 


remains available for utilisation by Vanguard.


 


7.7                                 Financial Information: Vanguard shall procure that the Guarantor
shall provide the following financial information in a form reasonably
satisfactory to CAPITAL:


 


(a)                                  within 30 days of the relevant month end,
monthly management accounts (including income statement, balance sheet and cash
flow) on a consolidated basis for the Group and each company incorporated in
the United Kingdom, Germany or Switzerland which, together with the Group, are
known as the UK Bank Group, in each case prepared in accordance with UK GAAP;


 


(b)                                 in relation to Vanguard and the Guarantor, half-yearly
management accounts in UK GAAP format within 60 days of the end of the relevant
financial half year of the Guarantor; and


 


(c)                                  the Financial Statements of Vanguard and the
Guarantor in UK GAAP format within 120 days of the relevant financial year-end
of the Guarantor.


 


7.8                                 Compliance Certificate: Vanguard shall deliver to CAPITAL within 30
days of the end of each Quarter, a certificate signed by two directors of
Vanguard certifying that no Event of Default has occurred and is continuing
during such Quarter or if the same has occurred, specifying the Event of
Default and the steps being taken to remedy the same, in form and in detail
reasonably acceptable to CAPITAL.


 


8.             The Guarantee Facility


 


In
addition to the Facility, CAPITAL has pleasure in confirming its offer to
convert the existing €35,000,000 guarantee facility to a three year committed
guarantee facility initially commencing at €40,000,000 and increasing to
€50,000,000.


 


The
guarantee facility will be made available on the terms and conditions set out
in this clause 8.


 


8.1           Amount and Purpose of
Guarantee Facility


 


(a)                                  CAPITAL will provide guarantees to each of
Lombard Leasing GmbH and RBS Germany, covering 50% of the aggregate outstanding
lease rental obligations of Vanguard Germany under the Sale-and-Lease-Back
Master Agreements, subject to a maximum amount equal to the Guarantee Facility
Limit.


 


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(b)                                 Provided that no Potential Event of Default
has occurred and is continuing (and provided further that the following amounts
do not exceed 50% of the then maximum facility limit under the RBS
Sale-and-Lease-Back Master Agreement), the Guarantee Facility Limit shall be
increased automatically to:


 


(i)            €45,000,000 on 3 December 2005; and 


 


(ii)            €50,000,000 on 3 December 2006.


 


(c)                                  On the Expiry Date and without prejudice to
any of CAPITAL’S obligations to Lombard Leasing GmbH or RBS Germany on such
date, CAPITAL’S obligation to provide a guarantee facility under this clause 8
shall cease and the Guarantee Facility Limit shall be reduced to €0 or such
other amount as CAPITAL may in its sole and absolute discretion notify Vanguard
in writing.


 


(d)                                 Without prejudice to any of its obligations
to Lombard Leasing GmbH or RBS
Germany or to any of CAPITAL’s rights or remedies under the Vehicle Funding
Documents, any other agreement or at law, at any time following the occurrence
of an Event of Default which is continuing, CAPITAL may, by written notice to
Vanguard, terminate its obligation to provide a guarantee facility under this
clause 8 and may reduce the Guarantee Facility Limit to €0 or such other amount
as CAPITAL may in its sole and absolute discretion notify to Vanguard.


 


8.2           Conditions Precedent


 


The
availability of the Guarantee Facility is subject to:


 


(a)                                  the execution by CAPITAL and Lombard Leasing
GmbH of a second deed of variation to the Guarantee Agreement dated 13 June
2003, from CAPITAL in favour of Lombard Leasing GmbH;


 


(b)                                 the execution by RBS Germany and Vanguard
Germany of the RBS Sale-and-Lease-Back Agreement in form and substance acceptable
to CAPITAL;


 


(c)                                  continuing guarantee of Vanguard Germany by
each of Vanguard and the Guarantor for all payment obligations under leases
written with Lombard Leasing GmbH and written consent to the Guarantee Facility
Limit; and


 


(d)                                 the execution of a guarantee by each of
Vanguard and the Guarantor for all payment obligations of Vanguard Germany
under leases written by RBS Germany pursuant to the RBS Sale-and-Lease-Back
Agreement;


 


(e)                                  prior to each utilisation by Vanguard Germany
of any facility under the Sale-and-Lease-Back Master Agreements, the
continuance in full force and effect of each manufacturer-buy-back agreement (Treuhandvestrag or Ergänzungsvereinbarung) required by
Lombard Germany, RBS Germany or CAPITAL;


 


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(f)                                    each of:


 


(i)                                     the Lombard Fleet Funding Facility; 


 


(ii)                                  the German Fleet Funding Facility, and 


 


(iii)                               the Working Capital Facility


 


remaining available for utilisation by Vanguard or
Vanguard Germany (as applicable).


 


8.3           The Vehicles


 


The Vehicles the subject of
the German Fleet Funding Facility shall be self-drive hire cars only.


 


8.4           Facility, Expiry Date


 


(a)                                  CAPITAL shall not be liable to incur any additional
guarantee obligations in relation to the Guarantee Facility on or after the
Expiry Date.


 


(b)                                 Subject to the receipt of credit approval,
CAPITAL intends to review the Guarantee Facility not less than 60 days prior to
the Expiry Date so that Vanguard may achieve continued utilisation of the
Guarantee Facility without interruption. However, unless the Guarantee Facility
is expressly renewed, extended or otherwise modified in writing on or prior to
the Expiry Date, CAPITAL’s obligation to provide a guarantee facility under
this clause 8 shall cease on the Expiry Date and the Guarantee Facility Limit
shall be reduced to €0 or such other amount as CAPITAL may in its sole and
absolute discretion notify Vanguard in writing.


 


8.5           Financial Information


 


Vanguard
shall provide the following financial information in a form satisfactory to
CAPITAL:


 


(a)                                  monthly management accounts of Vanguard
Germany within 30 days of the end of the relevant month end; and


 


(b)                                 audited financials of Vanguard Germany within
120 days of the relevant financial year-end.


 


9.             Events of Default


 


Each
of the following events in this Clause 9 shall be an Event of Default, and the
parties to this Letter of Offer agree that the events of default and
termination events listed in the relevant paragraphs of the Master HP
Agreement, the MOLA and the Self-Drive Hire Master Agreement (as the case may
be) shall be replaced in their entirety by the following.


 


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9.1                                 Master HP Agreement   In
respect of the obligations and undertakings in the Master HP Agreement, the
events and circumstances set forth in sub-clauses (a) and (b) of clause 7 (Termination) of the Master HP Agreement
shall be deleted in their entirety and the following shall be the events and
circumstances which (i) allows the Master HP Owner to terminate the Master HP
Agreement and (ii) constitute Events of Default under this Letter of Offer:


 


(a)                                  any sum due under the Master HP Agreement
shall not have been paid to the Master HP Owner on its due date, other than as
a result of the failure of the appropriate payment transmission system;
provided that such payment is made to the Master HP Owner within 2 Business
Days of the due date therefor; or


 


(b)                                 any material written information given (and
upon which the Master HP Owner has relied) or any representation or warranty
made or repeated by or on behalf of the Master HP Hirer under the Master HP
Agreement (whether before or after the date of this Letter of Offer) is
incorrect, inaccurate, incomplete or misleading in any material respect and, if
the relevant circumstances are capable of remedy, those circumstances are not
remedied within 10 Business Days after written notice thereof has been given by
the Master HP Owner to the Master HP Hirer calling for its remedy; or


 


(c)                                  the Master HP Hirer fails to comply with any
covenant, undertaking or obligation given or owed by it under the Master HP
Agreement which is not remedied to the reasonable satisfaction of the Master HP
Owner within 14 days after the first to occur of (1) the Master HP Hirer being aware
of the failure or (2) notice by the Master HP Owner calling for its remedy (if
it is capable of being remedied); or


 


(d)                                 the Master HP Hirer or the Guarantor ceases
or threatens to cease to carry on its business or a significant part of it
(except as part of a solvent reconstruction approved by the Master HP Owner) or
suspends or threatens to suspend payment of its debts or is unable or is deemed
to be unable to pay its debts within the meaning of Section 123 (1) of the Insolvency
Act 1986; or


 


(e)                                  a proposal is made or a nominee or supervisor
is appointed for the Master HP Hirer or the Guarantor for a composition in
satisfaction of its debt or for a scheme of arrangement of its affairs or other
arrangement or any proceedings for the benefit of its creditors are commenced
under any law, regulation or procedure relating to the reconstruction or readjustment
of debt; or


 


(f)                                    any step is taken (including, without
limitation, the making of an application or the giving of any notice) by the
Master HP Hirer, the Guarantor or by any other person to appoint an
administrator in respect of the Master HP Hirer or the Guarantor, other than
any petition for an administration order which is presented by an unsecured
creditor of the Master HP Hirer or the Guarantor and which is frivolous or
vexatious


 


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where
the petition is being contested in good faith and is dismissed, discharged or
stayed within 10 days of commencement or (if earlier) the date on which it is
advertised; or


 


(g)                                 any steps are taken (including, without
limitation, the making of an application or the giving of any notice) by the
Master HP Hirer or the Guarantor (without the prior written consent of the
Master HP Owner) or any other person to wind up or dissolve the Master HP Hirer
or the Guarantor or to appoint a liquidator, trustee, receiver, administrative
receiver or similar officer to the Master HP Hirer or the Guarantor or any part
of its undertaking or assets, other than any winding-up petition which is
frivolous or vexatious where the petition is being contested in good faith and
is dismissed, discharged or stayed within 10 days of commencement or (if
earlier) the date on which it is advertised; or


 


(h)                                 any attachment, distress, diligence,
arrestment, execution or other legal process (not being reasonably considered
in good faith by the Master HP Owner to be defensible or vexatious) is levied,
enforced or sued against the Master HP Hirer or the Guarantor or its assets or
any person validly takes possession of the property or assets of the Master HP
Hirer or the Guarantor; or


 


(i)                                     any event occurs or proceedings are taken in
respect of the Master HP Hirer or the Guarantor in any jurisdiction to which it
is subject which has an effect equivalent or similar to any of the events
mentioned in paragraphs (d) to (h) (inclusive) above; or


 


(j)                                     the Master HP Agreement ceases to be legal or
effective (or the Master HP Hirer so alleges) or any consent required to enable
the Master HP Hirer to perform its obligations under the Master HP Agreement
ceases to have effect; or


 


(k)                                  a Change of Control occurs without the prior
written consent of CAPITAL; or


 


(l)                                     any licence, authority, permit, consent,
agreement or contract which is material to the business from time to time of
the Master HP Hirer is terminated, withheld or modified which could reasonably
be expected to have a Material Adverse Effect in respect of the terms of the
Master HP Agreement; or


 


(m)                               any other circumstance or event occurs or arises in respect of the
Master HP Hirer which has or which would reasonably be expected to have a
Material Adverse Effect in respect of the terms of the Master HP Agreement; or


 


(n)                                 the occurrence of any event or circumstance
that constitutes an event of default (howsoever defined) under the MOLA or the
Self Drive Hire Master Agreement (as substituted by this Letter of Offer).


 


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and
each reference in the Master HP Agreement which references the events and
circumstances in sub-clauses (a) and (b) of clause 7 (Termination) of the Master HP Agreement providing for the
right by the Master HP Owner to terminate the Master HP Agreement shall be
deemed to refer to the events and circumstances set forth in this Clause 9.1.


 


9.2                                 MOLA    In respect of the obligations and undertakings
in the MOLA, the events and circumstances set forth, in sub-clauses (a) and (b)
of clause 8 (Termination) of the
MOLA shall be deleted in their entirety and the following shall be the events
and circumstances which (i) allows the MOLA Companies to terminate the MOLA and
(ii) constitute Events of Default under this Letter of Offer:


 


(a)                                  any sum due under the MOLA shall not have
been paid to the applicable MOLA Owner on its due date, other than as a result
of the failure of the appropriate payment transmission system; provided that
such payment is made to such MOLA Owner within 2
Business Days of the due date therefor; or


 


(b)                                 any material written information given (and
upon which a MOLA Owner has relied) or any representation or warranty made or
repeated by or on behalf of any MOLA Lessee under the MOLA (whether before or after
the date of this Letter of Offer) is incorrect, inaccurate, incomplete or
misleading in any material respect and, if the relevant circumstances are
capable of remedy, those circumstances are not remedied within 10 Business Days
after written notice thereof has been given by a MOLA Owner to the MOLA Lessee
calling for its remedy; or


 


(c)                                  any MOLA Lessee fails to comply with any
covenant, undertaking or obligation given or owed by it under the MOLA which is
not remedied to the reasonable satisfaction of the MOLA Companies within 14
days after the first to occur of (1) a MOLA Lessee being aware of the failure or
(2) notice by a MOLA Owner calling for its remedy (if it is capable of being remedied);
or


 


(d)                                 any MOLA Lessee or the Guarantor ceases or
threatens to cease to carry on its business or a significant part of it (except
as part of a solvent reconstruction approved by the MOLA Companies) or suspends
or threatens to suspend payment of its debts or is unable or is deemed to be unable
to pay its debts within the meaning of Section 123 (1) of the Insolvency Act
1986; or


 


(e)                                  a proposal is made or a nominee or supervisor
is appointed for any MOLA Lessee or the Guarantor for a composition in
satisfaction of its debt or for a scheme of arrangement of its affairs or other
arrangement or any proceedings for the benefit of its creditors are commenced
under any law, regulation or procedure relating to the reconstruction or readjustment
of debt; or


 


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(f)                                    any step is taken (including, without
limitation, the making of an application or the giving of any notice) by a MOLA
Lessee, the Guarantor or by any other person to appoint an administrator in respect
of any MOLA Lessee or the Guarantor, other than any petition for an administration
order which is presented by an unsecured creditor of a MOLA Lessee or the
Guarantor and which is frivolous or vexatious where the petition is being
contested in good faith and is dismissed, discharged or stayed within 10 days
of commencement or (if earlier) the date on which it is advertised; or


 


(g)                                 any steps are taken (including, without
limitation, the making of an application or the giving of any notice) by a MOLA
Lessee or the Guarantor (without the prior written consent of the MOLA
Companies) or any other person to wind up or dissolve any MOLA Lessee or the Guarantor
or to appoint a liquidator, trustee, receiver, administrative receiver or
similar officer to any MOLA Lessee or the Guarantor or any part of its
undertaking or assets, other than any winding-up petition which is frivolous or
vexatious where the petition is being contested in good faith and is dismissed,
discharged or stayed within 10 days of commencement or (if earlier) the date on
which it is advertised; or


 


(h)                                 any attachment, distress, diligence,
arrestment, execution or other legal process (not being reasonably considered
in good faith by the MOLA Companies to be defensible or vexatious) is levied,
enforced or sued against any MOLA Lessee or the Guarantor or its assets or any
person validly takes possession of the property or assets of a MOLA Lessee or the
Guarantor; or


 


(i)                                     any event occurs or proceedings are taken in
respect of a MOLA Lessee or the Guarantor in any jurisdiction to which it is
subject which has an effect equivalent or similar to any of the events
mentioned in paragraphs (d) to (h) (inclusive) above; or


 


(j)                                     the MOLA ceases to be legal or effective (or
a MOLA Lessee so alleges) or any consent required to enable a MOLA Lessee to
perform its obligations under the MOLA ceases to have effect; or


 


(k)                                  a Change of Control occurs without the prior
written consent of CAPITAL; or


 


(1)                                  any licence, authority, permit, consent,
agreement or contract which is material to the business from time to time of
any MOLA Lessee is terminated, withheld or modified which could reasonably be
expected to have a Material Advene Effect in respect of the terms of the MOLA;
or


 


(m)                               any other circumstance or event occurs or arises in respect of any MOLA
Lessee which has or which would reasonably be expected to have a Material
Adverse Effect in respect of the terms of the MOLA; or


 


13

















 


(n)                                 the occurrence of any event or circumstance
that constitutes an event of default (howsoever defined) under the Master H.P.
Agreement or (the Self-Drive Hire Master Agreement (as substituted by this
Letter of Offer).


 


and
each reference in the MOLA which references the events and circumstances in
sub-clauses (a) or (b) of clause 8 (Termination)
of the MOLA providing for the right by the MOLA Companies to
terminate the MOLA shall be deemed to refer to the events and circumstances set
forth in this Clause 9.2.


 


9.3                                 Self-Drive Hire Master Agreement    In respect of the obligations
and undertakings in the Self-Drive Hire Master Agreement, the events and
circumstances set forth in sub-clauses 7.1.1 through 7.1.14 of clause 7.1 (Defaults) of the Self-Drive Hire Master
Agreement shall be deleted in their entirety and the following shall be the
events and circumstances which (i) allows the Self-Drive Lessors to determine
the Letting (as defined in the Self-Drive Hire Master Agreement) under the
Self-Drive Hire Master Agreement and (ii) constitute Events of Default under
this Letter of Offer:


 


(a)                                  any sum due under the Self-Drive Hire Master
Agreement shall not have been paid to the applicable Self-Drive Lessor on its
due date, other than as a result of the failure of the appropriate payment
transmission system; provided that such payment is made to such Self-Drive
Lessor within 2 Business Days of the due date therefor; or


 


(b)                                 any material written information given (and
upon which a Self-Drive Lessor has relied) or any representation or warranty
made or repeated by or on behalf of the Self-Drive Lessee under the Self-Drive
Hire Master Agreement (whether before or after the date of this Letter of
Offer) is incorrect, inaccurate, incomplete or misleading in any material
respect and, if the relevant circumstances are capable of remedy, those circumstances
are not remedied within 10 Business Days after written notice thereof has been
given by a Self-Drive Lessor to the Self-Drive Lessee calling for its remedy;
or


 


(c)                                  the Self-Drive Lessee fails to comply with
any covenant, undertaking or obligation given or owed by it under the
Self-Drive Hire Master Agreement which is not remedied to the reasonable
satisfaction of the Self-Drive Lessors within 14 days after the first to occur
of (1) the Self- Drive Lessee being aware of the failure or (2) notice by a
Self-Drive Lessor calling for its remedy (if it is capable of being remedied);
or


 


(d)                                 the Self-Drive Lessee or the Guarantor ceases
or threatens to cease to carry on its business or a significant part of it (except
as part of a solvent reconstruction approved by the Self-Drive Lessors) or
suspends or threatens to suspend payment of its debts or is unable or is deemed
to be unable to pay its debts within the meaning of Section 123 (1) of the Insolvency
Act 1986; or


 


14

















 


(e)                                  a proposal is made or a nominee or supervisor
is appointed for the Self-Drive Lessee or the Guarantor for a composition in
satisfaction of its debt or for a scheme of arrangement of its affairs or other
arrangement or any proceedings for the benefit of its creditors are commenced
under any law, regulation or procedure relating to the reconstruction or readjustment
of debt; or


 


(f)                                    any step is taken (including, without
limitation, the making of an application or the giving of any notice) by the
Self-Drive Lessee, the Guarantor or by any other person to appoint an
administrator in respect of the Self-Drive Lessee or the Guarantor, other than
any petition for an administration order which is presented by an unsecured
creditor of the Self-Drive Lessee or the Guarantor and which is frivolous or
vexatious where the petition is being contested in good faith and is dismissed,
discharged or stayed within 10 days of commencement or (if earlier) the date on
which it is advertised; or


 


(g)                                 any steps are taken (including, without
limitation, the making of an application or the giving of any notice) by the
Self-Drive Lessee or the Guarantor (without the prior written consent of the
Self-Drive Lessors) or any other person to wind up or dissolve the Self-Drive
Lessee or the Guarantor or to appoint a liquidator, trustee, receiver,
administrative receiver or similar officer to the Self-Drive Lessee or the
Guarantor or any part of its undertaking or assets, other than any winding-up
petition which is frivolous or vexatious where the petition is being contested
in good faith and is dismissed, discharged or stayed within 10 days of commencement
or (if earlier) the date on which it is advertised; or


 


(h)           any
attachment, distress, diligence, arrestment, execution or other legal process
(not being reasonably considered in good faith by the Self-Drive Lessors to be
defensible or vexatious) is levied, enforced or sued against the Self-Drive
Lessee or the Guarantor or its assets or any person validly takes possession of
any of the property or assets of the Self-Drive Lessee or the Guarantor or
steps are taken by any person to enforce any Security Right (as defined in the
Self-Drive Hire Master Agreement) against the property or assets of the
Self-Drive Lessee or the Guarantor; or


 


(i)            any
event occurs or proceedings are taken in respect of the Self-Drive Lessee or
the Guarantor in any jurisdiction to which it is subject which has an effect
equivalent or similar to any of the events mentioned in paragraphs (d) to (h)
(inclusive) above; or


 


(j)            the
Self-Drive Hire Master Agreement ceases to be legal or effective (or the
Self-Drive Lessee so alleges) or any consent required to enable the Self-Drive
Lessee to perform its obligations under the Self-Drive Hire Master Agreement
ceases to have effect; or


 


(k)           Change
of Control occurs without the prior written consent of CAPITAL; or


 


15

















 


(l)            any licence, authority, permit, consent,
agreement or contract which is material to the business from time to time of
the Self-Drive Lessee is terminated, withheld or modified which could
reasonably be expected to have a Material Adverse Effect in respect of the
terms of the Self-Drive Hire Master Agreement; or


 


(m)          any other circumstance or event occurs or
arises in respect of the Self-Drive Lessee which has or which would reasonably
be expected to have a Material Adverse Effect in respect of the terms of the
Self-Drive Hire Master Agreement; or


 


(n)           the occurrence of any event or circumstance
that constitutes an event of default (howsoever defined) under the Master HP
Agreement or the MOLA (as substituted by this Letter of Offer).


 


and
each reference in the Self-Drive Hire Master Agreement which references the
events and circumstances in sub-clauses 7.1.1 through 7.1.14 of clause 7.1 (Defaults) of the Self-Drive Hire Master
Agreement providing for the right by the Self-Drive Lessors to determine the
Self-Drive Hire Master Agreement shall be deemed to refer to the events and
circumstances set forth in this Clause 9.3.


 


10.           Change of Circumstances


 


10.1         If as a result of a change (whether such
change has occurred or is scheduled to occur) to:


 


(a)           fiscal law or legislation applicable in the
United Kingdom; or


 


(b)           Inland Revenue or H.M. Customs and Excise
published practice


 


or
the interpretation or application of any of the same, CAPITAL shall notify
Vanguard if CAPITAL reasonably believes that it is reasonably likely that there
will be an Economic Adverse Effect in any material respect. Any failure by
CAPITAL to give such notice shall not prejudice CAPITAL’s rights under the
applicable vehicle financing documentation.


 


10.2         Where Clause 10.1 applies, CAPITAL and
Vanguard shall commence negotiations in good faith with a view to being able to
continue the availability of vehicle financing facilities acceptable to both
Vanguard and Capital on the principles set out in this letter so as to minimise
the Economic Adverse Effect and so as to maintain for Capital Bank a pre-tax
margin on funds employed of 135 basis points.


 


11.           Miscellaneous


 


11.1         Legal Costs


 


Vanguard
will indemnify CAPITAL for all reasonable external legal costs and
out-of-pocket expenses incurred in relation to the preparation, negotiation,
execution and registration of the Vehicle Funding Documents and any document
relating to the Guarantee Facility.


 


16

















 


11.2         Confidentiality


 


Vanguard
will not disclose any details of the Facility or the Guarantee Facility to any
third party except its professional advisers or associated companies for purposes
connected with the transaction, save as required by law.


 


11.3         Facility Fee


 


A
facility fee of £300,000 plus VAT is payable by Vanguard in three equal
instalments, the first such instalment payable within 7 days of invoice from
CAPITAL and the second and third instalments payable on the first and second
anniversaries respectively of the date of this Letter of Offer.


 


11.4         Amendment


 


Any
amendment or waiver of any provision of this Letter of Offer and any waiver of
any default under this Letter of Offer shall only be effective if made in
writing and signed by CAPITAL and, in relation to amendments only, by Vanguard.


 


11.5         Severability


 


If
any provision of this Letter of Offer is prohibited or unenforceable in any
jurisdiction such prohibition or unenforceability shall not invalidate the
remaining provisions hereof or affect the validity or enforceability of such
provision in any other jurisdiction.


 


11.6         Successors and Assigns


 


This
Letter of Offer shall bind and shall inure for the benefit of each of the
parties hereto and each of their respective successors and permitted assigns.


 


11.7         Third Party Rights


 


No
person other than Vanguard, CAPITAL and any Lessor has any right under the
Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit
of any term of this Letter of Offer.


 


11.8         Vanguard Warranty


 


Vanguard
hereby represents and warrants to CAPITAL and the Lessors that, at the date of
this Letter of Offer, Stephen A. Feinberg exercises sole voting and investment
authority on behalf of Cerberus and any Fund managed by Cerberus.


 


11.9         Governing Law and
Jurisdiction


 


This
Letter of Offer is governed by English law and the courts of England have non-exclusive
jurisdiction to settle any dispute arising out of or in connection with this
Letter of Offer (including a dispute regarding the existence, validity or
termination of this Letter of Offer).


 


17

















 


Vanguard
hereby represents and warrants to CAPITAL and the Lessors that at the date of
this Letter of Offer Stephen A. Feinberg exercises sole voting and investment
authority on behalf of Cerberus and any Fund managed by Cerberus.


 


11.9         Governing Law and Jurisdiction


 


This
Letter of Offer is governed by English law and the courts of England have
non-exclusive jurisdiction to settle any dispute arising out of or in
connection with this Letter of Offer (including a dispute regarding the
existence, validity or termination of this Letter of Offer).


 


12.           Terms and Acceptance


 


These
terms are open for acceptance until 3 December 2004 and may only be accepted on
such date by signature and return of the enclosed copy of this Letter of Offer.


 


Yours faithfully,


 


 


	
  /s/
  G.K. Stanley

  	
   

  
	
  CAPITAL
  BANK plc

  
	
  for
  itself as principal and as

  
	
  agent
  on behalf of the Lessors

  



 


 


We acknowledge receipt of your Letter of Offer (of which this is a true
copy) and we agree to and accept the terms thereof.


 


 


	
  /s/ [ILLEGIBLE]

  	
   

  
	
  For and on behalf of

  
	
  Vanguard Rental (UK)
  Limited

  
	
  Date: 3 December 2004

  



 


 


We consent to the terms of this Letter of
Offer.


 


 


	
  /s/ [ILLEGIBLE]

  	
   

  
	
  For and on behalf of

  
	
  Vanguard Rental (Holdings)
  Limited

  
	
  Date: 3 December 2004

  



 


18

















 


APPENDIX 1


 


The Lessors


 


CAPITAL
BANK LEASING 1 LIMITED


CAPITAL
BANK LEASING 2 LIMITED


CAPITAL
BANK LEASING 3 LIMITED


CAPITAL
BANK LEASING 4 LIMITED


CAPITAL
BANK LEASING 5 LIMITED 


CAPITAL
BANK LEASING 6 LIMITED 


CAPITAL
BANK LEASING 7 LIMITED 


CAPITAL
BANK LEASING 8 LIMITED 


CAPITAL
BANK LEASING 9 LIMITED 


CAPITAL
BANK LEASING 10 LIMITED 


CAPITAL
BANK LEASING 11 LIMITED 


CAPITAL
BANK LEASING 12 LIMITED 


CAPITAL
BANK PLC 


ILC
ASSET FINANCE LIMITED 


ILC
HARVEST FINANCE LIMITED 


ILC
LEASING LIMITED 


ILC
OPERATING LEASING LIMITED


 


19

















 


APPENDIX 2


 


Part 1


 


Definitions


 


	
  “Accession Agreements”

  	
   

  	
  means the MOLA Accession
  Agreement and the Self-Drive Hire Accession Agreement;

  
	
   

  	
   

  	
   

  
	
  “Affiliate”

  	
   

  	
  means, in relation to any
  person, a Subsidiary of that person or a Holding Company of that person or
  any other Subsidiary of that Holding Company;

  
	
   

  	
   

  	
   

  
	
  “Aggregate Facility Limit”

  	
   

  	
  means an amount in
  Sterling equal to the aggregate of the Facility Limit and the Guarantee Facility
  Limit from time to time (the Guarantee Facility Limit being converted from
  Euro to Sterling on the basis of €1 being equal to £0.70) unless the United
  Kingdom adopts the Euro as its lawful currency in which case such amount
  shall be an amount in Euro equal to the aggregate of the Facility Limit and
  the Guarantee Facility Limit from time to time;

  
	
   

  	
   

  	
   

  
	
  “Bank of Scotland”

  	
   

  	
  means the Governor and
  Company of the Bank of Scotland;

  
	
   

  	
   

  	
   

  
	
  “Business Day”

  	
   

  	
  means a day other than a
  Saturday or Sunday when financial institutions in London are generally open
  for banking business;

  
	
   

  	
   

  	
   

  
	
  “CAPITAL”

  	
   

  	
  means CAPITAL BANK plc;

  
	
   

  	
   

  	
   

  
	
  “Cerberus”

  	
   

  	
  means Cerberus Capital
  Management, L.P.;

  
	
   

  	
   

  	
   

  
	
  “Change of Control”

  	
   

  	
  means any Vanguard Change
  of Control and any Guarantor Change of Control;

  
	
   

  	
   

  	
   

  
	
  “Courtesy Bus”

  	
   

  	
  means any car or LCV used
  or intended for use primarily at airport locations for the transport of air
  passengers to and/or from their personal vehicles to an airport terminal;

  



 


20

















 


	
  “Debenture”

  	
   

  	
  means a debenture to be
  entered into by Vanguard in favour of Bank of Scotland as security trustee
  for, inter alios, CAPITAL and
  the Lessors in connection with, inter
  alia, the Vehicle Funding Documents;

  
	
   

  	
   

  	
   

  
	
  ‘Economic Adverse Effect”

  	
   

  	
  means, an adverse effect
  on the inherent funding cost to Vanguard of the relevant vehicle financing
  facilities either prospective or retrospectively;

  
	
   

  	
   

  	
   

  
	
  “Event of Default”

  	
   

  	
  means the occurrence of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)   any event or circumstance described in:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)    Clause 9.1 (Master HP Agreement)in respect of the Master HP
  Agreement (as such Clause amends the relevant provisions of the Master HP
  Agreement regarding the rights of the Master HP Owner to terminate the Master
  HP Agreement);

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)   Clause 9.2 (MOLA)in respect of the MOLA (as such Clause amends the relevant
  provisions of the MOLA regarding the rights of the MOLA Companies to
  terminate the MOLA);

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)  Clause 9.3 (Self-Drive Hire Master Agreement)in respect of the Self-Drive
  Hire Master Agreement (as such Clause amends the relevant provisions of the
  Self-Drive Hire Master Agreement regarding the right of the Self-Drive
  Lessors to determine the Self-Drive Hire Master Agreement);

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)   any event of default (however described) under the Working Capital
  Facility,

  



 


21

















 


	
   

  	
   

  	
  (c)   any breach by Vanguard of its obligations or undertakings under this
  Letter of Offer;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)   any breach by the Guarantor of its obligations under the Guarantee;
  or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)   any breach by Vanguard or the Guarantor of any of their respective
  obligations under the guarantees described in paragraphs (c) and (d) of
  clause 8.2 of this Letter of Offer.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the avoidance of
  doubt, the occurrence of an Event of Default shall, to the extent that it has
  resulted from an event or circumstance which relates solely to Vanguard
  Rental (Switzerland) AG, Vanguard Rental (Germany Holdings) GmbH or any of
  their respective Subsidiaries, limited partnerships or general partnerships, be
  deemed not to constitute an Event of Default;

  
	
   

  	
   

  	
   

  
	
  “Euro” or “€”

  	
   

  	
  means the lawful currency
  of any member state of the European Communities that adopts or has adopted
  the euro as its lawful currency in accordance with legislation of the
  European Community relating to Economic and Monetary Union;

  
	
   

  	
   

  	
   

  
	
  “Expiry Date”

  	
   

  	
  means 3 December 2007;

  
	
   

  	
   

  	
   

  
	
  “Facility”

  	
   

  	
  means the operating lease
  and hire purchase facility made available under this Letter of Offer and
  described in clause 1;

  
	
   

  	
   

  	
   

  
	
  “Facility Limit”

  	
   

  	
  means £160,000,000 (or such greater amount as may be
  determined by clause 2) to the extent not cancelled or reduced;

  
	
   

  	
   

  	
   

  
	
  “Financial Statements”

  	
   

  	
  means, in relation to a
  company, the audited annual profit and loss account, balance sheet and cash
  flow statement of the relevant company for each of its financial years (consolidated
  for each financial year during which that

  



 


22

















 


	
   

  	
   

  	
  company has a Subsidiary)
  together with related directors’ and auditors’ reports;

  
	
   

  	
   

  	
   

  
	
  “Fund”

  	
   

  	
  means any fund, trust or
  person the assets of which are managed professionally for investment purposes
  on behalf of investors, shareholders, unit holders, partners, members or
  other participants (howsoever organised or described);

  
	
   

  	
   

  	
   

  
	
  “German Fleet Funding Facility”

  	
   

  	
  means the fleet funding
  facility made available by Lombard Leasing GmbH and RBS Germany under the
  Sale-and-Lease-Back Master Agreements;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Group”

  	
   

  	
  means at any time, Vanguard
  Rental (Holdings) Limited and each of its Subsidiaries at that time and “Group Company”
  is construed accordingly;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Guarantee”

  	
   

  	
  means the guarantee dated
  29 April 2002 and made by the Guarantor in favour of CAPITAL and certain of
  the Lessors;

  
	
   

  	
   

  	
   

  
	
  “Guarantee Facility”

  	
   

  	
  means the guarantee
  facility made available under this Letter of Offer and described in clause 8;

  
	
   

  	
   

  	
   

  
	
  “Guarantee Facility Limit”

  	
   

  	
  means €40,000,000 (or such
  greater amount as may be determined by clause 8.1) to the extent not
  cancelled or reduced;

  
	
   

  	
   

  	
   

  
	
  “Guarantor”

  	
   

  	
  means Vanguard Rental
  (Holdings) Limited (company number 915008);

  
	
   

  	
   

  	
   

  
	
  “Guarantor Change of Control”

  	
   

  	
  means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)   Cerberus or any Permitted Holder ceases to control directly or
  indirectly the Guarantor, or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)   any person or group of persons acting in concert gains direct or indirect
  control of the Guarantor.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the purposes of
  paragraph (a) (but only prior to an Initial Public Offering) and paragraph
  (b) of this definition:

  



 


23

















 


	
   

  	
   

  	
  “control” of the Guarantor means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)    the power (whether by way of ownership of shares, proxy, contract,
  agency or otherwise) to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)   cast, or control the casting of, more than 50% of the maximum number
  of votes that might be cast at a general meeting of the Guarantor; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)   appoint or remove all, or the majority, of the directors or other
  equivalent officers of the Guarantor; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)   give directions with respect to the operating and financial policies
  of the Guarantor with which the directors or other equivalent officers of The
  Guarantor are obliged to comply; and/or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)   the holding beneficially of more than 50% of the issued share capital
  of the Guarantor (excluding any part of that issued share capital that
  carries no right to participate beyond a specified amount in a distribution
  of either profits or capital);

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the purposes of
  paragraph (a) of this definition following an Initial Public Offering:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Control” of the Guarantor means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)            the power (whether by way of ownership of
  shares, proxy, contract, agency or otherwise to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)    cast, or control the casting of more than 29.9% of the maximum
  number of votes that might be cast at a general meeting of the Guarantor; or

  



 


24

















 


	
   

  	
   

  	
  (2)   appoint or remove all, or the majority, of the directors or other
  equivalent officers of the Guarantor; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)   give directions with respect to the operating and financial policies
  of the Guarantor with which the directors or other equivalent officers of the
  Guarantor are obliged to comply; and/or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)           the holding beneficially of more than 29.9%
  of the issued share capital of the Guarantor (excluding any part of that
  issued share capital that carries no right to participate beyond a specified
  amount in a distribution of either profits or capital)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the purposes of
  paragraphs (a) and (b) of this definition

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “acting in concert” means a group of persons who, pursuant to
  an agreement or understanding (whether formal or informal), actively
  co-operate, through the acquisition of shares in the Guarantor by any of
  them, either directly or indirectly, to obtain or consolidate control of the
  Guarantor; and

  
	
   

  	
   

  	
   

  
	
  “Holding Company”

  	
   

  	
  means, in relation to a
  company or corporation, any other company or corporation in respect of which
  it is a Subsidiary;

  
	
   

  	
   

  	
   

  
	
  “Initial Public Offering”

  	
   

  	
  means the listing of any
  shares of the Guarantor or any Holding Company of the Guarantor on any
  recognised stock exchange for listed securities whether effected by way of an
  offer for sale, a new issue of shares, an introduction, a placing or
  otherwise;

  



 


25

















 


	
  “ILC Companies”

  	
   

  	
  means ILC Asset Finance
  Limited (company number 1512381), ILC Harvest Finance Limited (company number
  1564021), ILC Leasing Limited (company number 1352438) and ILC Operating
  Leasing Limited (company number 2221963);

  
	
   

  	
   

  	
   

  
	
  “Intercreditor Deed”

  	
   

  	
  means the intercreditor
  deed dated on or about the date of this Letter of Offer and made between, inter alios, CAPITAL, Lombard, Fortis
  Lease UK Limited, Bank of Scotland and Vanguard;

  
	
   

  	
   

  	
   

  
	
  “LCVs”

  	
   

  	
  means self-drive hire
  light commercial vehicles;

  
	
   

  	
   

  	
   

  
	
  “Lessors”

  	
   

  	
  means each of the
  companies named in schedule 1;

  
	
   

  	
   

  	
   

  
	
  “Lombard Fleet Funding
  Facility”

  	
   

  	
  means the £150,000,000
  fleet funding facility made available by Lombard North Central PLC to
  Vanguard on or about the date of this Letter of Offer;

  
	
   

  	
   

  	
   

  
	
  “Lombard Sale-and-Lease-Back
  Master Agreement”

  	
   

  	
  means the
  sale-and-lease-back master agreement dated 13 June 2003 and made between
  Lombard Leasing GmbH and Vanguard Germany;

  
	
   

  	
   

  	
   

  
	
  “Master HP Agreement”

  	
   

  	
  means the master hire
  purchase agreement dated 14 February 2002 and numbered 0881051 and made
  between CAPITAL and Vanguard (formerly ANC Rental Corporation (UK) Limited);

  
	
   

  	
   

  	
   

  
	
  “Master HP Owner”

  	
   

  	
  means the “Owner” (as defined
  in the Master HP Agreement);

  
	
   

  	
   

  	
   

  
	
  “Master HP Hirer”

  	
   

  	
  means the “Hirer” (as
  defined in the Master HP Agreement);

  
	
   

  	
   

  	
   

  
	
  “Material Adverse Effect”

  	
   

  	
  means, in respect of determining
  the occurrence (or not) of an Event of Default as described in Clauses 9.1(1),
  9.1(m), 9.2(1), 9.2(m), 9.3(1) and 9.3(m), any effect which, in the
  reasonable opinion of the Master HP Owner, the MOLA Companies or the
  Self-Drive

  



 


26

















 


	
   

  	
   

  	
  Lessors (as the case may
  be), is likely to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           adversely affect the ability of the Master
  HP Hirer, any MOLA Lessee or any Self-Drive Lessee (as the case may he), to
  comply with its obligations under the Master HP Agreement, the MOLA or the
  Self-Drive Hire Master Agreement (as the case may be); or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           result in the Master HP Agreement, the MOLA
  or the Self-Drive Hire Master Agreement (as the case may be), not being
  legal, valid and binding on, and enforceable substantially in accordance with
  its terms against any party to that document.

  
	
   

  	
   

  	
   

  
	
  “MOLA”

  	
   

  	
  means the master lease
  agreement dated 14 February 2002 and numbered 0881050 and made between
  CAPITAL acting on behalf of itself and certain other companies and Vanguard;

  
	
   

  	
   

  	
   

  
	
  “MOLA Accession Agreement”

  	
   

  	
  means an accession and
  variation agreement dated on or about the date of this Letter of Offer
  providing for, inter alia, the
  accession to the MOLA by the ILC Companies;

  
	
   

  	
   

  	
   

  
	
  “MOLA Companies”

  	
   

  	
  means “Capital” (as
  defined in the MOLA Agreement) and each of the other named companies which
  are “Owners” (as defined in the MOLA Agreement) under the MOLA Agreement; and
  “MOLA Company” shall mean any of
  them;

  
	
   

  	
   

  	
   

  
	
  “MOLA Lessees”

  	
   

  	
  means the “Lessees” (as
  defined in the MOLA Agreement); and “MOLA Lessee”
  shall mean any of them;

  
	
   

  	
   

  	
   

  
	
  “Permitted Holder”

  	
   

  	
  means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a) any Affiliate of
  Cerberus or Stephen A. Feinberg;

  



 


27

















 


	
   

  	
   

  	
  (b)   any Fund managed by Cerberus or Stephen A. Feinberg;

  
	
   

  	
   

  	
   

  
	
  “Potential
  Event of Default”

  	
   

  	
  means any Event of Default
  or any event or circumstance which would (with the expiry of a grace period,
  the giving of notice, the making of any determination or any combination of
  the foregoing) constitute an Event of Default;

  
	
   

  	
   

  	
   

  
	
  “Quarter”

  	
   

  	
  means 31 March, 30 June,
  30 September and 31 December in each, year, commencing 31 December 2004
  provided that such dates are financial year quarter dates for the Guarantor;

  
	
   

  	
   

  	
   

  
	
  “RBS
  Germany”

  	
   

  	
  means RBS Deutschland
  Leasing GmbH;

  
	
   

  	
   

  	
   

  
	
  “RBS
  Sale-and-Lease-Back Master Agreement”

  	
   

  	
  means the
  sale-and-lease-back master agreement dated on or about the date of this
  Letter of Offer and made between RBS Germany and Vanguard Germany;

  
	
   

  	
   

  	
   

  
	
  “Relevant
  Percentage”

  	
   

  	
  has the meaning given to
  such term in clause 7.5;

  
	
   

  	
   

  	
   

  
	
  “Sale-and-Lease-Back
  Master Agreement”

  	
   

  	
  means the Lombard
  Sale-and-Lease Back Master Agreement and the RBS Sale-and-Lease-Back Master
  Agreement;

  
	
   

  	
   

  	
   

  
	
  “Self-Drive
  Hire Accession Agreement”

  	
   

  	
  means an accession and
  variation agreement dated on or about the date of this Letter of Offer
  providing for, inter alia, the
  accession to the Self-Drive Hire Master Agreement by the ILC Companies;

  
	
   

  	
   

  	
   

  
	
  “Self-Drive
  Hire Master Agreement”

  	
   

  	
  means the self-drive hire
  rental master agreement dated 27 March 1998 and made between CAPITAL and
  certain other companies and Vanguard (formerly National Car Rental Limited);

  
	
   

  	
   

  	
   

  
	
  “Self-Drive
  Lessee”

  	
   

  	
  means the “Lessee” (as
  defined in the Self-Drive Hire Master Agreement);

  



 


28

















 


	
  “Self-Drive Lessors”

  	
   

  	
  means the “Lessors” (as
  defined in the Self-Drive Hire Master Agreement); and “Self-Drive
  Lessor” shall mean any of them;

  
	
   

  	
   

  	
   

  
	
  “Short-Term Hire Cars”

  	
   

  	
  means any motor vehicle
  sub-leased to or to be sub-leased by Vanguard to its customers for periods
  not less than 3 months and not exceeding 9 months;

  
	
   

  	
   

  	
   

  
	
  “Staff Cars”

  	
   

  	
  means any motor vehicle
  allocated to an employee of Vanguard or to an employee of any company which
  is a member of the same group of companies (as defined in section 413(3)(a)
  of the Income and Corporation Taxes Act 1988) as Vanguard and which is a
  United Kingdom resident;

  
	
   

  	
   

  	
   

  
	
  “Sterling” or “£”

  	
   

  	
  means the lawful currency
  of the United Kingdom from time to time;

  
	
   

  	
   

  	
   

  
	
  “Subordination Agreement”

  	
   

  	
  means the subordinated
  agreement dated on or about the date of this Letter of Offer and made
  between, inter alios, CAPITAL,
  Lombard, Fortis Lease UK Limited, Bank of Scotland, Vanguard, the Guarantor
  and Vanguard Car Rental EMEA Holdings Limited;

  
	
   

  	
   

  	
   

  
	
  “Subsidiary”

  	
   

  	
  means, in respect of any
  company, person or entity, any company, person or entity directly or
  indirectly controlled by such company, person or entity (including any
  Subsidiary acquired after the date of this Letter of Offer) and
  “Subsidiaries” shall mean all or any of them, as appropriate;

  
	
   

  	
   

  	
   

  
	
  “UK GAAP” 

  	
   

  	
  means generally accepted
  accounting principles in the United Kingdom;

  
	
   

  	
   

  	
   

  
	
  “Utilisation Test Date” 

  	
   

  	
  has the meaning given to
  such term in clause 4.1;

  
	
   

  	
   

  	
   

  
	
  “Utilisation Percentage” 

  	
   

  	
  has the meaning given to
  such term in clause 4.1;

  
	
   

  	
   

  	
   

  
	
  “Vanguard”

  	
   

  	
  means Vanguard Rental (UK)
  Limited (company number 1089053);

  



 


29

















 


	
  “Vanguard Change of Control”

  	
   

  	
  means Vanguard ceases to
  be a wholly owned subsidiary (as such term is defined in Section 736 of the
  Companies Act 1985) of the Guarantor or the Guarantor ceases to control
  directly or indirectly Vanguard.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the purposes of this
  definition: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “control” of Vanguard means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)   the power (whether by way of ownership of shares, proxy, contract,
  agency or otherwise) to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)    cast, or control the casting of, more than 50% of the maximum number
  of votes that might be cast at a general meeting of Vanguard; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.     appoint or remove all, or the majority, of the directors or other
  equivalent officers of Vanguard; or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.     give directions with respect to the operating and financial policies
  of Vanguard with which the directors or other equivalent officers of Vanguard
  (as applicable) are obliged to comply; and/or

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)   the holding beneficially of more than 50% of the issued share capital
  of Vanguard (excluding any part of that issued share capital that carries no
  right to participate beyond a specified amount in a distribution of either
  profits or capital);

  
	
   

  	
   

  	
   

  
	
  “Vanguard Germany”

  	
   

  	
  means Vanguard
  Autovermietung GmbH & Co KG;

  
	
   

  	
   

  	
   

  
	
  “Vanguard Parent Undertaking”

  	
   

  	
  means the letter of
  undertaking from Worldwide Excellerated Leasing Ltd

  



 


30

















 


	
   

  	
   

  	
  dated on or about the date
  of this Letter of Offer and addressed to, inter
  aloas, CAPITAL, Lombard, Fortis Lease UK Limited and Bank of
  Scotland;

  
	
   

  	
   

  	
   

  
	
  “VAT”

  	
   

  	
  means value added tax as
  provided for in the Value Added Tax Act 1994 and any other tax of a similar
  nature;

  
	
   

  	
   

  	
   

  
	
  “Vehicle Funding Documents”

  	
   

  	
  means the Master HP
  Agreement, the MOLA, the Self-Drive Hire Master Agreement and this Letter of
  Offer and, where the context admits, any security document, surety or
  supplemental document entered into in connection with any of the foregoing;

  
	
   

  	
   

  	
   

  
	
  “Vehicles”

  	
   

  	
  means motor vehicles of
  the type described in clause 2.1; and

  
	
   

  	
   

  	
   

  
	
  “Working Capital Facility”

  	
   

  	
  means the £30,000,000
  working capital facility made available by Bank of Scotland to, inter alios, Vanguard and the Guarantor
  on or about the date of this Letter of Offer.

  



 


Part 2 


 


Construction


 


In
this Letter of Offer: 


 


(a)           any reference to:


 


(i)        “assets” includes present and future
properties, revenues and rights of every description;


 


(ii)      any Vehicle Funding Document or any other
agreement or instrument is a reference to that Vehicle Funding Document or that
other agreement or instrument as amended or novated;


 


(iii)     “indebtedness” includes any obligation
(whether incurred as principal or as surety) for the payment or repayment of
money, whether present or future, actual or contingent;


 


31