Exhibit 10.1


 


EXECUTION COPY


 







ASSET PURCHASE AGREEMENT



by and among





ANC RENTAL CORPORATION,



and



THE OTHER DEBTORS LISTED ON SIGNATURE PAGES HEREOF,



debtors-in-possession



and



CAR ACQUISITION COMPANY LLC 



and 



CERBERUS CAPITAL MANAGEMENT, L.P.



dated as of June 12, 2003


 

















 


Table Of Contents


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ASSET PURCHASE AGREEMENT

  	
  1

  
	
   

  	
   

  	
   

  
	
  RECITALS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  2

  
	
  Section 1.1

  	
  Defined Terms.

  	
  2

  
	
  Section 1.2

  	
  Other Definitional and Interpretive Matters

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE OF ACQUIRED ASSETS

  	
  20

  
	
  Section 2.1

  	
  Purchase and Sale of Acquired Assets

  	
  20

  
	
  Section 2.1A

  	
  Designated Affiliates

  	
  24

  
	
  Section 2.2

  	
  Excluded Assets

  	
  25

  
	
  Section 2.3

  	
  Assumed Liabilities

  	
  26

  
	
  Section 2.4

  	
  Excluded Liabilities

  	
  27

  
	
  Section 2.5

  	
  Purchase Price

  	
  28

  
	
  Section 2.6

  	
  Purchase Price Allocation

  	
  34

  
	
  Section 2.7

  	
  Deposit

  	
  35

  
	
  Section 2.8

  	
  The Closing

  	
  35

  
	
  Section 2.9

  	
  Deliveries at Closing

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

  	
  37

  
	
  Section 3.1

  	
  Organization and Qualification

  	
  37

  
	
  Section 3.2

  	
  Due Authorization; Enforceability

  	
  37

  
	
  Section 3.3

  	
  Capitalization

  	
  37

  
	
  Section 3.4

  	
  SEC Reports

  	
  38

  
	
  Section 3.5

  	
  Financial Statements; No Undisclosed Liabilities

  	
  38

  
	
  Section 3.6

  	
  No Conflicts or Violations; Consents

  	
  39

  
	
  Section 3.7

  	
  Title to Property

  	
  40

  
	
  Section 3.8

  	
  Absence of Certain Changes

  	
  41

  
	
  Section 3.9

  	
  Compliance with Laws

  	
  42

  
	
  Section 3.10

  	
  Litigation

  	
  43

  
	
  Section 3.11

  	
  Permits

  	
  43

  
	
  Section 3.12

  	
  Commitments

  	
  44

  
	
  Section 3.13

  	
  Employee Benefit Matters

  	
  45

  
	
  Section 3.14

  	
  Labor Relations and Employment

  	
  47

  
	
  Section 3.15

  	
  Environmental Matters

  	
  48

  
	
  Section 3.16

  	
  Intellectual Property

  	
  49

  
	
  Section 3.17

  	
  Taxes

  	
  50

  
	
  Section 3.18

  	
  Brokers

  	
  52

  
	
  Section 3.19

  	
  Vehicles

  	
  52

  
	
  Section 3.20

  	
  Affiliate Transactions

  	
  53

  



 


i

















 


	
  Section 3.21

  	
  Airport Concessions

  	
  53

  
	
  Section 3.22

  	
  Business Records

  	
  54

  
	
  Section 3.23

  	
  Franchisee Matters

  	
  54

  
	
  Section 3.24

  	
  Vehicle Return Pursuant to Repurchase Programs; Vehicle Orders

  	
  54

  
	
  Section 3.25

  	
  Securitization Matters

  	
  55

  
	
  Section 3.26

  	
  Insurance

  	
  55

  
	
  Section 3.27

  	
  Exclusivity of Representations and Warranties

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CCM AND PURCHASER

  	
  57

  
	
  Section 4.1

  	
  Organization and Qualification

  	
  57

  
	
  Section 4.2

  	
  Due Authorization

  	
  57

  
	
  Section 4.3

  	
  Consents; No Violations

  	
  57

  
	
  Section 4.4

  	
  Litigation

  	
  58

  
	
  Section 4.5

  	
  Sufficiency of Funds

  	
  58

  
	
  Section 4.6

  	
  Revolving Credit Facility

  	
  58

  
	
  Section 4.7

  	
  Information

  	
  58

  
	
  Section 4.8

  	
  Brokers

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE V CERTAIN COVENANTS

  	
  58

  
	
  Section 5.1

  	
  Conduct of Business by Seller and the Subsidiaries Pending the
  Closing

  	
  58

  
	
  Section 5.2

  	
  Access to Information; Cooperation; Confidentiality

  	
  65

  
	
  Section 5.3

  	
  Commercially Reasonable Efforts; Notification

  	
  67

  
	
  Section 5.4

  	
  HSR Act Filings; Competition Approvals

  	
  68

  
	
  Section 5.5

  	
  Public Announcement

  	
  69

  
	
  Section 5.6

  	
  Further Assurances

  	
  69

  
	
  Section 5.7

  	
  Submission for Bankruptcy Court Approval

  	
  69

  
	
  Section 5.8

  	
  Transfer Taxes

  	
  71

  
	
  Section 5.9

  	
  Employment

  	
  72

  
	
  Section 5.10

  	
  National and Alamo Names

  	
  75

  
	
  Section 5.11

  	
  Transfers Not Effected as of Closing

  	
  75

  
	
  Section 5.12

  	
  Assigned Contracts; Negotiation of Cure Costs

  	
  75

  
	
  Section 5.13

  	
  Inter-Company Debt

  	
  76

  
	
  Section 5.14

  	
  Vehicle Return Pursuant To Repurchase Programs; Disposition Of
  Vehicles

  	
  76

  
	
  Section 5.15

  	
  Tax Matters

  	
  76

  
	
  Section 5.16

  	
  Indemnification and Tax Returns

  	
  77

  
	
  Section 5.17

  	
  Tax Cooperation

  	
  79

  
	
  Section 5.18

  	
  Section 338(h)(10) Election

  	
  79

  
	
  Section 5.19

  	
  Treatment of Tax Indemnity Payments

  	
  79

  
	
  Section 5.20

  	
  ARG II Consent Procedures

  	
  79

  
	
  Section 5.21

  	
  Transitional Services Agreement

  	
  80

  
	
  Section 5.22

  	
  Internal Restructuring Transactions

  	
  80

  
	
  Section 5.23

  	
  Certain Subsidiaries

  	
  80

  
	
  Section 5.24

  	
  Payment of Interest

  	
  80

  



 


ii

















 


	
  ARTICLE VI CONDITIONS

  	
  81

  
	
  Section 6.1

  	
  General Conditions

  	
  81

  
	
  Section 6.2

  	
  Conditions to Obligations of Purchaser and CCM

  	
  81

  
	
  Section 6.3

  	
  Conditions to Obligation of Debtors

  	
  82

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII TERMINATION

  	
  83

  
	
  Section 7.1

  	
  Termination

  	
  83

  
	
  Section 7.2

  	
  Effect of Termination

  	
  85

  
	
  Section 7.3

  	
  Non-Survival of Representations and Warranties; Survival of Covenants
  and Agreements

  	
  86

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS PROVISIONS

  	
  86

  
	
  Section 8.1

  	
  Notices

  	
  86

  
	
  Section 8.2

  	
  Fees and Expenses

  	
  87

  
	
  Section 8.3

  	
  Waiver of Provisions

  	
  87

  
	
  Section 8.4

  	
  Amendment of Agreement

  	
  87

  
	
  Section 8.5

  	
  Entire Agreement

  	
  88

  
	
  Section 8.6

  	
  Successors and Assigns; Binding Effect

  	
  88

  
	
  Section 8.7

  	
  Severability

  	
  88

  
	
  Section 8.8

  	
  Governing Law

  	
  88

  
	
  Section 8.9

  	
  Consent to Jurisdiction

  	
  88

  
	
  Section 8.10

  	
  Waiver of Jury Trial

  	
  88

  
	
  Section 8.11

  	
  Execution in Counterparts

  	
  88

  
	
  Section 8.12

  	
  No Third Party Beneficiaries

  	
  88

  
	
  Section 8.13

  	
  No Strict Construction

  	
  89

  



 


iii

















 


Schedules


 


	
  Schedule 1

  	
  Debtor Subsidiaries

  
	
  Schedule 1.2(e)

  	
  Knowledge Employees 

  
	
  Schedule 2.1(a)

  	
  Acquired Subsidiaries

  
	
  Schedule 2.1(b)

  	
  Acquired Franchise/Sales Agreements 

  
	
  Schedule 2.1(c)

  	
  Acquired Sales Agency, Travel Agency and Tour Operator Commitments

  
	
  Schedule 2.1(d)

  	
  Acquired Commitments with Vehicle Manufacturers and Repurchase
  Programs

  
	
  Schedule 2.1(e)

  	
  Acquired Vehicle Lease Commitments

  
	
  Schedule 2.1(f)

  	
  Acquired Fuel Supply Commitments

  
	
  Schedule 2.1(g)

  	
  Acquired Collective Bargaining Commitments and Benefit Plans

  
	
  Schedule 2.1(h)

  	
  Acquired Airport Concessions and Licenses

  
	
  Schedule 2.1(i)

  	
  Acquired Marketing and Barter Commitments

  
	
  Schedule 2.1(j)

  	
  Acquired Association Commitments

  
	
  Schedule 2.1(k) 

  	
  Acquired Joint Venture, LLC and Partnership Commitments

  
	
  Schedule 2.1(l)

  	
  Acquired Affiliation Commitments

  
	
  Schedule 2.1(m)

  	
  Acquired Vendor Commitments

  
	
  Schedule 2.1(n)

  	
  Acquired Insurance Commitments

  
	
  Schedule 2.1(o)

  	
  Acquired Real Property Lease and Sublease Commitments

  
	
  Schedule 2.1(q)

  	
  Acquired National Corporate and Sales Accounts

  
	
  Schedule 2.1.(u)

  	
  Acquired Owned Real Property

  
	
  Schedule 2.1(x)

  	
  Acquired Intellectual Property Contracts

  
	
  Schedule 2.1(aa)

  	
  Acquired Insurance Proceeds, Awards, Claims and Causes of Action

  
	
  Schedule 2.1(cc)

  	
  Acquired Operating or Capitalized Lease Commitments

  
	
  Schedule 2.1 (mm)

  	
  Acquired Intellectual Property of Spirit Rent-A-Car, Inc.

  
	
  Schedule 2.2(a)

  	
  Equity Securities Not Included in Acquired Assets

  
	
  Schedule 2.2(j) 

  	
  Excluded Commitments

  
	
  Schedule 2.2(l)

  	
  ALM Business Asset

  
	
  Schedule 2.3(i)

  	
  Assigned MBIA Contracts

  
	
  Schedule 2.3(f)

  	
  Assumed Litigation Liabilities

  
	
  Schedule 2.1(g)

  	
  Assumed Benefits and COBRA Liabilities

  
	
  Schedule 2.4

  	
  Specified Excluded Liabilities

  
	
  Schedule 3.3(a)

  	
  Equity Securities of all Subsidiaries

  
	
  Schedule 3.3 (b)

  	
  Rights and Transfer Restrictions Relating to Equity Securities of
  Acquired Subsidiaries

  
	
  Schedule 3.4

  	
  Exceptions to SEC Reports

  
	
  Schedule 3.5(b)

  	
  Foreign Subsidiaries’ Financial Statements

  
	
  Schedule 3.5(c)

  	
  Securitization Subsidiaries’ Financial Statements

  
	
  Schedule 3.5(d)

  	
  Undisclosed Liabilities of Acquired Subsidiaries 

  
	
  Schedule 3.6

  	
  Conflicts or Violations; Required Third Party Consents

  
	
  Schedule 3.7(a)(i) 

  	
  Acquired Subsidiaries’ Real Property Leases 

  
	
  Schedule 3.7(a)(ii)

  	
  Acquired Subsidiaries’ Owned Real Property

  
	
  Schedule 3.7(a)(iii)

  	
  Exceptions to Title

  



 


iv

















 


	
  Schedule 3.7(b)

  	
  Third Party Options to Acquire Interests in Acquired Assets

  
	
  Schedule 3.7(c)

  	
  Real Property Leases in Default

  
	
  Schedule 3.7(e)

  	
  Unassignable Real Property Leases

  
	
  Schedule 3.7(f)

  	
  Materially Defective Real Property

  
	
  Schedule 3.8

  	
  Certain Changes

  
	
  Schedule 3.9(a)

  	
  Exceptions to Compliance with Law

  
	
  Schedule 3.9(b)

  	
  Unresolved Regulatory Complaints and Investigations

  
	
  Schedule 3.10

  	
  Litigation, Orders

  
	
  Schedule 3.11(a)

  	
  Material Permits

  
	
  Schedule 3.11(b)

  	
  Material Defaults on Permits

  
	
  Schedule 3.12(a)

  	
  Exceptions to Commitments 

  
	
  Schedule 3.12(b)

  	
  Acquired Subsidiaries Commitments

  
	
  Schedule 3.12(c)(i)

  	
  Previously Assumed Contracts

  
	
  Schedule 3.12(c)(ii)

  	
  Commitments Subject to Assumption Motions

  
	
  Schedule 3.12(d)

  	
  Unassignable Contracts

  
	
  Schedule 3.13(a)

  	
  Employee Benefit Plans

  
	
  Schedule 3.13(c)

  	
  Benefit Plans Subject to ERISA 

  
	
  Schedule 3.13(d)

  	
  Multiemployer Plans

  
	
  Schedule 3.13(e)

  	
  ERISA Liabilities

  
	
  Schedule 3.13(i)

  	
  Potential Disqualifications of Benefit Plans 

  
	
  Schedule 3.13(j)

  	
  Litigation Relating to Benefit Plans

  
	
  Schedule 3.13(k)

  	
  Payments and Benefits Increases to Employees Resulting from
  Transaction

  
	
  Schedule 3.13(l)

  	
  Benefits Beyond Retirement or Termination of Employment

  
	
  Schedule 3.13(n)

  	
  Foreign Benefit Plans

  
	
  Schedule 3.14(a)(i)

  	
  Unfair Labor Practices and Discrimination Claims 

  
	
  Schedule 3.14(a)(ii)

  	
  Collective Bargaining Agreements

  
	
  Schedule 3.14(a)(iii)

  	
  Union Organizing Activity

  
	
  Schedule 3.14(c)

  	
  Employment, Consulting and Severance Agreements

  
	
  Schedule 3.14(e)

  	
  WARN Act

  
	
  Schedule 3.15(a)(i)

  	
  Compliance with Environmental Laws

  
	
  Schedule 3.15(a)(ii)

  	
  Environmental Permits

  
	
  Schedule 3.15(b)

  	
  Environmental Claims

  
	
  Schedule 3.15(c)

  	
  Assumed or Retained Environmental Claims

  
	
  Schedule 3.15(d)

  	
  Environmental Claims Involving Hazardous Materials

  
	
  Schedule 3.15(e)

  	
  Releases

  
	
  Schedule 3.16(a)

  	
  Intellectual Property Licenses

  
	
  Schedule 3.16(b)

  	
  Infringements by the Seller or any Subsidiary of Intellectual
  Property Rights of Any Person

  
	
  Schedule 3.16(c)

  	
  Infringements by any Person of Intellectual Property Rights of Seller
  or any Subsidiary

  
	
  Schedule 3.16(d)

  	
  Intellectual Property and Intellectual Property Contracts

  
	
  Schedule 3.17

  	
  Tax Returns

  
	
  Schedule 3.17(h)

  	
  Treatment of Acquired Subsidiaries for Tax Purposes

  
	
  Schedule 3.18

  	
  Brokers of Seller

  
	
  Schedule 3.19

  	
  Existing Vehicles

  



 


v

















 


	
  Schedule 3.20

  	
  Affiliate Transactions

  
	
  Schedule 3.21(a)

  	
  Airport Concessions

  
	
  Schedule 3.21(b)

  	
  Exceptions to Airport Concessions 

  
	
  Schedule 3.21(c)

  	
  Airport Concession Required Consents

  
	
  Schedule 3.23(b)

  	
  Franchise Exceptions and Litigation 

  
	
  Schedule 3.24(b)

  	
  Vehicle Lease and Purchase Orders

  
	
  Schedule 3.25(c)

  	
  Amortization Events

  
	
  Schedule 3.26(a)

  	
  Insurance Policies

  
	
  Schedule 3.26(b)

  	
  Business Risks

  
	
  Schedule 3.26(c)

  	
  Ancillary Counter Insurance Products

  
	
  Schedule 4.3

  	
  Consents; No Violations

  
	
  Schedule 5.1(a)

  	
  Conduct of Business Prior to Closing 

  
	
  Schedule 5.1(a)(xxviii)

  	
  Subsidiaries for Consolidating Financial Statements

  
	
  Schedule 5.1(a)(xxxiii)

  	
  Fleet Parameters

  
	
  Schedule 5.1(a)(xxxv)

  	
  New Franchise/Sale Agreements

  
	
  Schedule 5.1(a)(xlii)

  	
  Workforce Restructuring Plan

  
	
  Schedule 6.2(b)

  	
  Consents for Closing

  
	
   

  	
   

  
	
  Exhibits

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Canada-US Normal Course Transactions

  
	
  Exhibit B

  	
  EMEA-US Normal Course Transactions

  
	
  Exhibit C

  	
  Capital Expenditures Plan

  
	
  Exhibit D

  	
  Form of Escrow Agreement

  
	
  Exhibit E

  	
  Baseline Working Capital Statement and Current Assets and Current
  Liabilities as of March 31, 2003

  
	
  Exhibit F

  	
  New Severance Plan

  
	
  Exhibit G

  	
  Bidding Procedures Order

  
	
  Exhibit H

  	
  Target Amount, Target Balance Sheets and Target Working Capital
  Statement

  
	
  Exhibit I

  	
  Projected Weekly Cash Flows

  
	
  Exhibit J

  	
  Revenue Amount

  
	
  Exhibit K

  	
  Agreed Upon Procedures

  
	
  Exhibit L

  	
  Bonus Pool

  



 


vi

















 


ASSET
PURCHASE AGREEMENT


 


This Asset
Purchase Agreement (this “Agreement“), dated as of June 12, 2003, is entered
into by and among ANC Rental Corporation, a Delaware corporation (“Seller“),
the Subsidiaries set forth on Schedule 1 (Seller and such Subsidiaries
collectively referred to as the “Debtors“), CAR Acquisition Company LLC, a
Delaware limited liability company (“Purchaser“), Cerberus Capital Management,
L.P., a Delaware limited partnership (“CCM”) and, solely with respect to
Section 2.5, Lehman Commercial Paper Inc., a New York corporation (“Lehman”). Capitalized
terms used herein (and in the Exhibits hereto) without definition shall have
the meaning ascribed to such terms in Article I hereof.


 


RECITALS


 


WHEREAS,
Seller and the Subsidiaries primarily own and operate car rental businesses and
license the right to operate car rental businesses in the airport and
off-airport leisure and business travel rental markets mainly throughout the
United States, Canada and Europe, under the brand names Alamo, National and Guy
Salmon (excluding the ALM Business, the “Business“);


 


WHEREAS,
Debtors are debtors and debtors-in-possession under Chapter 11 of Title 11 of
the United States Code, 11 U.S.C. §§ 101-1330 (as amended, the “Bankruptcy
Code“), having each commenced voluntary cases (Case No. 01-11200 et al.,
Jointly Administered) on November 13, 2001 (the “Petition Date“) in the United
States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court“)
(which cases, together with all legal proceedings instituted in the Bankruptcy
Court in connection with the transactions described herein or otherwise
involving Debtors are referred to collectively herein as the “Bankruptcy Case“);
and


 


WHEREAS,
Debtors desire to sell, assign, transfer, convey and deliver to Purchaser, and
Purchaser desires to purchase and acquire from Debtors, all of the Acquired
Assets, and Purchaser is willing to assume the Assumed Liabilities, on the
terms and subject to the conditions set forth herein and in accordance with
Sections 105, 363 and 365 of the Bankruptcy Code.


 


NOW,
THEREFORE, in consideration of the mutual agreements and covenants herein
contained and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows (subject,
in the case of Debtors, to approval of this Agreement by the Bankruptcy Court):


 

















 


ARTICLE I



DEFINITIONS


 


Section 1.1             Defined
Terms.


 


For the
purposes of this Agreement, the following terms shall have the following
meanings:


 


“Adjustment
Amount” shall initially be zero. The Adjustment Amount shall be increased to
the extent that the dollar amount (if positive) of Permitted Cash Distributions
from March 31, 2003 to the Closing Date from the Acquired Subsidiaries (and the
subsidiaries of the Acquired Subsidiaries) to Debtors, net of Permitted Cash
Investments by Debtors during such period in the Acquired Subsidiaries (and the
subsidiaries of the Acquired Subsidiaries) from March 31, 2003 to the Closing
Date, exceeds the net amount projected therefor during such period in the
projected Weekly Cash Flows attached as Exhibit I hereto and set forth in
paragraphs B4, B5 and B6 of the Agreed Upon Procedures, and the Adjustment
Amount shall be reduced to the extent that the dollar amount (if positive) of
Permitted Cash Investments by Debtors in the Acquired Subsidiaries (and the
subsidiaries of the Acquired Subsidiaries) from March 31, 2003 to the Closing
Date, net of Permitted Cash Distributions to Debtors during such period by the
Acquired Subsidiaries (and the subsidiaries of the Acquired Subsidiaries),
exceeds the net amount projected therefor during such period in the Weekly Cash
Flows as set forth in paragraphs B4, B5 and B6 of the Agreed Upon Procedures. The
Adjusted Amount shall be increased to the extent that the dollar amount of
Extraordinary Cash Distributions from March 31, 2003 to the Closing Date
exceeds the dollar amount of Extraordinary Cash Investments from March 31, 2003
to the Closing Date, and shall be decreased to the extent that the dollar
amount of the Extraordinary Cash Investments from March 31, 2003 to the Closing
Date exceeds the dollar amount of Extraordinary Cash Distributions from March
31, 2003 to the Closing Date. The Adjustment Amount shall be decreased to the
extent up to U.S. $2,500,000 (actual amount to be determined by actual cash
paid and the current exchange rate) is paid from Republic Industries Automotive
Group (Switzerland) AG to National Car Rental Canada Inc. The Adjusted Amount
shall be increased to the extent that, as of the close of any monthly
measurement period, any payable (including any payable determined in a manner
consistent with the Debtors’ current methodology pursuant to and reflected in
the line item “Fleet Financing and Lease Payments”) then existing by any Debtor
to any Acquired Subsidiary (or any subsidiary of an Acquired Subsidiary) that
was projected to be paid in the Weekly Cash Flow on or prior to the close of
such measurement period, has not been paid, and the Adjusted Amount shall be
decreased to the extent that, as of the close of any monthly measurement
period, any receivable (including any receivable determined in a manner
consistent with the Debtors’ current methodology pursuant to and reflected in
the line item “Fleet Financing and Lease Payments”) then existing of any Debtor
from any Acquired Subsidiary (or any subsidiary of any Acquired Subsidiary)
that was projected to be paid in the Weekly Cash Flow on or prior to the close
of such measurement period, has not been paid. Notwithstanding the foregoing,
that no adjustment shall be made to the Adjustment Amount pursuant to this
definition to the extent such adjustment is duplicative of an adjustment
otherwise made pursuant to this definition.


 


2

















 


“Affiliate” of
any Person shall mean any Person that controls, is controlled by, or is under
common control with such Person. As used herein, the term “control” (including
the terms “controlling,” “controlled by” and “under common control with”) means
the possession, directly or indirectly, of the power to direct or to cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or other interests, by contract or otherwise.


 


“Agreed Upon
Procedures Definitions” shall mean, collectively, the following defined
terms:  ALM Business, Bankruptcy-Related
Professional Fees, Baseline Working Capital, Current Assets, Current Liabilities,
Target Amount, Adjustment Amount, ARG I, ARG II, Securitization Subsidiaries,
IAG, EMEA-US Normal Course Transactions, Canada-US Normal Course Transactions,
Extraordinary Cash Distributions, Extraordinary Cash Investments, Permitted
Cash Distributions, Permitted Cash Investments and Target Working Capital
Statement.


 


“ALM Business”
shall mean the car rental business previously operated by Spirit Rent-A-Car,
Inc. and its predecessors in the car replacement market throughout the United
States under one or more of the brand names “Spirit”, “CarTemps USA” or “Alamo
Local”.


 


“Amortization
Event”, with respect to a Securitization Transaction, shall have the meaning
specified in the related Securitization Documents.


 


“Antitrust
Laws” shall mean antitrust, merger control or competition Laws.


 


“ARG I” shall
mean ARG Funding Corp., a Delaware corporation.


 


“ARG II” shall
mean ARG Funding Corp. II, a Delaware corporation.


 


“Assigned
Contracts” shall mean (a) all Commitments relating to the Business entered into
by Debtors on or after the Petition Date, (b) all Commitments relating to the
Business entered into prior to the Petition Date that Debtors have assumed
prior to the date hereof pursuant to Section 365 of the Bankruptcy Code and
that are identified on Schedule 3.12(c)(i) hereto as a “previously assumed
contract” and (c) all other Commitments relating to the Business entered into
prior to the Petition Date, other than those Commitments that Purchaser does
not intend to assume in accordance with Sections 2.2(j) and 5.12 of this
Agreement; provided, that the Commitments referred to in subsections (a), (b)
and (c) are limited to (i) those Commitments listed on Schedules 2.1(b) through
(o), (q), (x), (cc), (mm) and (nn) as such Schedules are updated from time to time
for Commitments entered into after the date hereof in accordance with Section
5.1, (ii) the Commitments of the type described in Sections 2.1(p), (hh),
(kk) and (ll), and (iii) any Commitment referred to in clause (a) above
that is cancelable by the Debtor party thereto (and Purchaser as its assignee)
without penalty, premium or liability thereunder on not more than 90 days
notice or involving payments to or from any Debtor of not more than $100,000
annually or $250,000 in the aggregate over the remaining term of such
Commitment, whether or not such Commitment is listed on a Schedule hereto. Without
limiting the foregoing, the Assigned Contracts shall not include any Commitment
relating to indebtedness for borrowed money, mortgages or security interests,
except for Commitments relating to the


 


3

















 


DIP Credit Agreement, the
Liberty Bonding Commitment and the capitalized lease Commitments set forth on
Schedule 2.1(cc).


 


“Assigned MBIA
Contracts” shall mean those documents listed on Schedule 2.3(i) hereto.


 


“AutoNation
Settlement Agreement” shall mean the Settlement Agreement and Mutual Release,
dated May 13, 2003 and included as an exhibit in Seller and Debtors’ Motion for
an Order Pursuant to Bankruptcy Code Section 105 and Section 9019 Approving the
Settlement Among the Debtors, AutoNation and the Creditors’ Committee dated
April 15, 2003.


 


“AutoNation
Side Letter” shall mean the side letter dated May 8, 2003 entered into by
Seller and AutoNation in conjunction with the AutoNation Settlement Agreement.


 


“Bankruptcy-Related
Professional Fees” shall mean the fees and expenses (including out of pocket
expenses) whether or not billed, of the following professionals who were
retained in connection with the Bankruptcy Case pursuant to orders of the
Bankruptcy Court: (i) Fried, Frank, Harris, Shriver & Jacobson, counsel for
the Debtors; (ii) Blank Rome Comisky & McCauley, LLP, counsel for the
Debtors; (iii) Lazard Freres & Co., financial advisors to the Debtors; (iv)
AlixPartners, financial advisors to the Debtors; (v) Alvarez & Marsal,
Inc., financial advisors to Congress Financial Corporation; (vi) Wilmer, Cutler
& Pickering, counsel for the Official Committee of Unsecured Creditors (the
“Committee”); (vii) Young Conaway Stargatt & Taylor, LLP, counsel for the
Committee; (viii) CONSOR Intellectual Asset Management, consultants to the
Committee; (ix) Berger & Epstein, P.A., accountants to the Committee; (x)
FTI Consulting, Inc., financial advisors to the Committee; (xi) Brown Brothers
Harriman & Co., financial advisors to the Debtors; (xii) Donlin, Recano
& Company, Inc., agent for creditor correspondence and claim
distribution/collection; (xii) PriceWaterhouseCoopers, LLP, financial advisors
to the Committee; (xiv) Cohen & Company, accountants for the ALM Business;
(xv) the United States Trustee; and (xvi) professional fees and expenses for
Lehman Commercial Paper Inc.


 


“Baseline
Working Capital” shall mean the excess of Current Assets over Current
Liabilities as of March 31, 2003 as set forth in the Baseline Working Capital
Statement.


 


“Baseline
Working Capital Statement” shall mean the statement delivered by Seller to
Purchaser pursuant to Section 3.5(e), setting forth in reasonable detail the
Current Assets and Current Liabilities as of March 31, 2003 as derived from the
March 31, 2003 financial statements delivered to Purchaser pursuant to Section
3.5(a).


 


“Business Day”
shall mean a day, other than a Saturday or Sunday, on which banks are open for
business in New York City, New York.


 


“Business
Records” shall mean all books, records, ledgers and files or other similar
information used or held for use in the operation or conduct of the Business by
any Debtor or Acquired Subsidiary, including price lists, customer lists, vendor
lists, mailing lists, warranty information, catalogs, sales promotion
literature, advertising materials, brochures, records of operation, standard
forms of documents, manuals of operations or business procedures, research
materials, Tax Returns, contracts, instruments, filings, administrative and


 


4

















 


pricing manuals, records
(including, without limitation, claim records, sales records, underwriting
records, financial records, compliance records and Tax records), personnel
records, corporate minute books and other materials to the extent relating,
directly or indirectly, to the Acquired Assets (or the assets of any Acquired
Subsidiary), whether or not in the possession of any Debtor or Acquired
Subsidiary or their respective representatives, stored in hardcopy form or on
magnetic, optical or other media.


 


“Canada-US
Normal Course Transactions” means the transactions of the type listed on
Exhibit A.


 


“Capital
Expenditures Plan” shall mean the capital expenditure plan of the Seller and
its Subsidiaries, as set forth in Exhibit C attached hereto.


 


“Claims” shall
mean any and all rights, claims, credits, allowances, rebates, causes of
action, known or unknown, pending or threatened (including all causes of action
arising under Sections 510, 544 through 551 and 553 of the Bankruptcy Code or
under similar state Laws, including preferences and fraudulent conveyance
claims, and all other causes of action of a trustee and debtor-in-possession
under the Bankruptcy Code) or rights of set-off.


 


“Closing
Working Capital” shall mean the Working Capital as of the Closing Date.


 


“Closing
Working Capital Statement” shall mean a statement setting forth the Closing
Working Capital.


 


“COBRA” shall
mean the continuation coverage plan under Section 4980B of the Code or Part 6
of Title I of ERISA enacted as part of the Consolidated Omnibus Budget
Reconciliation Act of 1985.


 


“Code” shall
mean the Internal Revenue Code of 1986, as amended.


 


“Collateral
Installment Payments” shall have the meaning ascribed to such term in the
Supplemental Term Sheet for Liberty Mutual Insurance Company Bonding for ANC
Rental Corp., et al, Debtors in
possession.


 


“Commitments”
shall mean any contract (including Intellectual Property Contracts), lease, sublease,
capitalized lease, agreement, license, Benefit Plan, collective bargaining
agreement, or binding understanding, arrangement or commitment, including all
amendments thereof and supplements thereto.


 


“Competition
Approvals” shall mean all approvals, consents, certificates, waivers and other
authorizations required to be obtained from, or filings or other notices
required to be made with or to, any Governmental Bodies relating to Antitrust
Laws having jurisdiction over the business of Seller or any Subsidiary in order
to consummate the transactions contemplated by this Agreement, including the
expiration or termination of any waiting period (or any extension thereof)
under the HSR Act.


 


5

















 


“Confidentiality
Agreement” shall mean the agreement between Seller and CCM, dated March 2,
2003.


 


“Current
Assets” shall mean the following assets of Debtors as of the Closing Date
determined in accordance with GAAP, and on an unconsolidated combined
basis:  cash and cash equivalents; net
receivables (but excluding receivables from Seller or any Subsidiary);
inventory; fleet-DNR salvage reserve (contra-asset portion only); fleet-warrant
reserve (contra-asset portion only); fleet-reject reserve (contra-asset portion
only); fleet-excess mileage reserve (contra-asset portion only); prepaid tags
and licenses; prepaid insurance (other than prepaid directors and officers
liability insurance) and refunds to Purchaser of premiums relating to prepaid
insurance; prepaid marketing (barter); prepaid marketing (non-barter); prepaid
rent; prepaid property and other taxes; prepaid airport concessions; prepaid
service vehicles; prepaid – other; deposits – Liberty Mutual; deposits –
National Union; deposits – Rosedale Dodge (lease deposits); deposits – AIG
collateral; deposits – Royal Indemnity; deposits – Travelers; deposits - rent;
deposits – airport bids; deposits - other; provided that, for purposes of
calculating Estimated Closing Working Capital and Final Closing Working
Capital, Current Assets shall be reduced, on a dollar for dollar basis, by the
amount of the proceeds received by Debtors from the sale or other disposition
after March 31, 2003 and prior to the Closing Date of any asset (other than a
Current Asset) that would have been included in the Acquired Assets but for
such sale or disposition. The Current Assets do not include the current assets
of Debtors attributable to the ALM Business (except as set forth in Schedule
2.2(l)) or any Excluded Assets.


 


“Current
Liabilities” shall mean the following liabilities of Debtors as of the Closing
Date determined in accordance with GAAP, and on an unconsolidated combined
basis:  accounts payable (excluding any
portion thereof that constitutes Pre-Petition Liabilities, any portion thereof
attributable to Bankruptcy-Related Professional Fees and any portion thereof
that constitutes any payables to Seller or any Subsidiary); accrued payroll and
benefits (excluding any unpaid Key Employee Retention Plan payments,
Pre-Petition Liabilities, and liabilities for post-retirement medical and life
insurance benefits to retirees and active employees); the following accrued
liabilities: other, primarily seasonality change; capital leases; accrued legal
(excluding any portion thereof that constitute Pre-Petition Liabilities not
being assumed by Purchaser and Bankruptcy-Related Professional Fees); accrued
airport concessions (net of receivables) (excluding any portion thereof that
constitutes Pre-Petition Liabilities); accrued equipment lease (excluding any
portion thereof that constitutes Pre-Petition Liabilities); accrued advertising
(excluding any portion thereof that constitutes Pre-Petition Liabilities);
commissions; accrued rental liability (barter) (excluding any portion thereof
that constitutes Pre-Petition Liabilities); accrued real estate taxes
(excluding any portion thereof that constitutes Pre-Petition Liabilities);
accrued audit and tax fees (excluding any portion thereof that constitutes
Pre-Petition Liabilities); sales and use taxes payable (excluding any portion
thereof that constitutes Pre-Petition Liabilities); state, county and city
surcharges (excluding any portion thereof that constitutes Pre-Petition
Liabilities); accrued fleet reserves (turn back reserves); customer deposits;
deferred revenue; accrued rent (excluding any portion thereof that constitutes
Pre-Petition Liabilities); accrued taxes (motor vehicle rental, state/local
fuel excluding income taxes); accrued travel partners rebates; accrued
insurance (general liability and other accrued insurance); other accruals –
monthly IT accrual (but excluding any portion thereof that constitutes
Pre-Petition Liabilities); other accrual – commissions (but excluding any
portion thereof attributable to Pre-Petition Liabilities); other accrual –
Emerald Club; other accrual-Miscellaneous invoices


 


6

















 


not received (but excluding any
portion thereof attributable to Pre-Petition Liabilities); other accrual –
miscellaneous (but excluding any portion thereof attributable to Pre-Petition
Liabilities); other accrual-bank service fees; other accrual – Mitsubishi and
Chrysler operating lease payment; and other accrual – benefits reserve; and the
following self-insurance accruals: workers’ compensation; health; and auto
liability (including for the ALM Business) provided that for purposes of
determining Estimated Working Capital and Final Working Capital, accruals for
auto liability (including for the ALM Business) shall be determined pursuant to
Section 2.5(f). The Current Liabilities do not include any Cure Costs or
any Excluded Liabilities; any liability under the Bonus Plan; any liability
that remains unpaid as of the Closing under the New Severance Plan; any amounts
payable to any Acquired Subsidiary (or any direct or indirect subsidiary
thereof); accrued environmental reserve; accrued merger reserve; the current
liabilities of Debtors attributable to the ALM Business (other than for
self-insurance accruals for auto liability); debt; accrued interest; other accrual
– adjusted fleet clearing; other accrual – AMT valuation reserve; other accrual
– unclaimed property; other accrual – Eurodollar acquisition reserve; city
closure reserve; other accrual – excess accrued legal fees; other accrual –
money collected on behalf of German bankrupt entity; deferred gain on
sale/leaseback transaction; deferred revenue related to Perot; interest rate
hedges with West LB; and the indebtedness under the DIP Credit Agreement.


 


“Cure Costs”
shall mean the amounts necessary to cure or remedy all defaults of Debtors
under the Assigned Contracts arising or accruing prior to the Petition Date
(without giving effect to any acceleration clauses relating to bankruptcy or
insolvency) that must be cured pursuant to Section 365 of the Bankruptcy Code
prior to an assumption of such Assigned Contracts.


 


“Cure Costs
Statement” shall mean a statement setting forth the Cure Costs.


 


“Cure Costs
Threshold” shall mean the sum of (i) $6,000,000 plus (ii) the dollar amount of
any reduction in the principal amount outstanding under the DIP Credit
Agreement from the sale or other disposition after March 31, 2003 and prior to
the Closing Date of any asset that would have been an Excluded Asset but for
such sale or disposition plus (iii) Cure Costs, if any, associated with Perot
Systems Corporation .


 


“Deductible
Amount” shall mean $15,000,000.


 


“DIP Credit
Agreement” shall mean the Loan and Security Agreement, dated as of March 17,
2003, by and among Seller, the guarantors named therein and DaimlerChrysler
Corporation, as amended, supplemented, modified or any substitutions therefor.


 


“EMEA-US
Normal Course Transactions” means the transactions of the type listed on
Exhibit B.


 


“Encumbrance”
shall mean any lien, claim, charge, encumbrance, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, covenant
or other similar restriction or right (whether on voting, sale, transfer,
disposition, or otherwise) affecting, or interest in, against, or with respect
to any tangible or intangible property or rights, whether imposed by agreement,
understanding, law, equity, or otherwise.


 


7

















 


“Environmental
Claims” refers to any complaint, summons, citation, notice, directive, order, claim,
litigation, investigation, notice of violation, judicial or administrative
proceeding, judgment, letter or other communication from any governmental
agency, department, bureau, office or other authority, or any Third Party
involving violations of Environmental Laws or Releases of Hazardous Materials
from  any assets, properties or
businesses of Seller, or any of the Subsidiaries from or onto any facilities
which received Hazardous Materials generated by Seller or any of the
Subsidiaries.


 


“Environmental
Laws” includes the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et  seq., as amended; the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et  seq., as
amended; the Clean Air Act, 42 U.S.C. 7401 et  seq., as amended;
the Clean Water Act, 33 U.S.C. 1251 et  seq., as amended; the
Occupational Safety and Health Act, 29 U.S.C. 655 et  seq., and
any other international, European, federal, state, local or municipal laws,
treaties, statutes, regulations, rules, codes of practice, guidance notes,
circulars or ordinances of any jurisdiction (whether foreign or domestic)
imposing liability or establishing standards of conduct for protection of the
environment.


 


“Environmental
Liabilities” shall mean any monetary obligations, losses, liabilities
(including strict liability), damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable out-of-pocket
fees, disbursements and expenses of counsel, out-of-pocket expert and consulting
fees and out-of-pocket costs for environmental site assessments, remedial
investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any Environmental Claim filed by any
Governmental Body or any Third Party which relate to any violations of
Environmental Laws, Remedial Actions, Releases or threatened Releases of
Hazardous Materials from or onto (i) any property presently or formerly owned
or occupied by Debtors or any Acquired Subsidiary, or (ii) any facility which
received Hazardous Materials generated by Debtors or any Acquired Subsidiary.


 


“Equity
Securities” shall mean, with respect to any Person, (i) capital stock of,
partnership interests, membership interests or other equity interests in, such
Person, (ii) securities convertible into or exchangeable for shares of capital
stock, voting securities or other equity interests in such Person or (iii)
options, warrants or other rights to acquire the securities described in
clauses (i) and (ii), whether fixed or contingent, matured or unmatured,
contractual, legal, equitable or otherwise.


 


“ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as amended.


 


“ERISA
Affiliate” shall mean all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control and all
other entities which, together with any of Debtors, are treated as a single
employer under any and all of Sections 414(b), (c), (m) or (o) of the Code on
either the date of this Agreement or the Closing Date.


 


“Estimated
Closing Working Capital” shall mean the Purchaser’s estimate of Working Capital
as of the Closing Date prepared in accordance with Section 2.5(d).


 


8

















 


“Estimated
Closing Working Capital Statement” shall mean a statement setting forth the
Estimated Closing Working Capital, delivered by Purchaser pursuant to
Section 2.5(d).


 


“Estimated
Cure Costs” shall mean Purchaser’s estimate of Cure Costs as of the Closing
Date prepared in accordance with Section 2.5(d).


 


“Estimated
Cure Costs Statement” shall mean a statement setting forth the Estimated Cure
Costs, delivered by Purchaser pursuant to Section 2.5(d).


 


“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, or any successor
federal statute, and the rules and regulations of the SEC thereunder, all as
the same shall be in effect at the time. Reference to a particular section of
the Securities Exchange Act of 1934, as amended, shall include reference to the
comparable section, if any, of any such successor federal statute.


 


“Expense
Reimbursement Order” shall mean the order of the Bankruptcy Court entered on
April 3, 2003 granting Debtors’ Motion filed on March 14, 2003 pursuant to
Sections 105(a) and 363(b) of the Bankruptcy Code Authorizing Debtors to
Reimburse Prospective Purchasers for Due Diligence Expenses Incurred in
Connection with Potential Sale of All or Substantially All of Debtors’ Assets
which order is a Final Order.


 


“Extraordinary
Cash Distributions” means, with respect to the Acquired Subsidiaries (or any
subsidiaries thereof) cash distributions and payments from such companies to
the Debtors that do not constitute Permitted Cash Distributions. The term “Extraordinary
Cash Distributions” does not include cash payments from the Acquired
Subsidiaries (or any subsidiaries thereof) by the Debtors for EMEA-US Normal
Course Transactions and Canada-US Normal Course Transactions and cash payments
and distributions from the Securitization Subsidiaries to the Debtors in a
manner consistent with Debtors’ current methodology pursuant to and reflected
in the line item “Fleet Financing and Lease Payments.”


 


“Extraordinary
Cash Investments” means, with respect to the Acquired Subsidiaries (or any
subsidiaries thereof) cash investments in and payments to such companies by the
Debtors that do not constitute Permitted Cash Investments. The term “Extraordinary
Cash Investments” does not include payments to the Acquired Subsidiaries (or
any subsidiaries thereof) to the Debtors for EMEA-US Normal Course Transactions
and Canada-US Normal Course Transactions and cash investments in and payments
to the Securitization Subsidiaries by the Debtors in a manner consistent with
Debtors’ current methodology pursuant to and reflected in the line item “Fleet
Financing and Lease Payments.”


 


“Final Order”
shall mean an order or judgment of the Bankruptcy Court as to which the time to
appeal, petition for certiorari, or move for reargument or rehearing has
expired and as to which no appeal, petition for certiorari, or other
proceedings for reargument or rehearing shall then be pending or in the event
that an appeal, writ of certiorari, reargument, or rehearing thereof has
been sought, such order of the Bankruptcy Court shall have been determined by
the highest court to which such order was appealed, or certiorari,
reargument or rehearing shall have been denied and the time to take any further
appeal, petition for certiorari, or move for reargument or rehearing
shall have expired.


 


9

















 


“Fixtures”
shall mean all furniture, furnishings, computers and other tangible personal
property, whether affixed or moveable, owned or leased by any Debtors and
located on the Transferred Real Property or the premises leased by Debtors
pursuant to any Assigned Contract.


 


“Foreign
Pension Plan” shall mean any Foreign Plan which provides retirement income for
any employee or former employee of Seller or any of the Subsidiaries employed
outside of the United States, results in a deferral of income for such
employees in contemplation of retirement or provides payments to be made to
such employees upon termination of employment or retirement.


 


“Foreign Plan”
shall mean any benefit arrangement of the type described in Section 3.13(a)
maintained or contributed to primarily for the benefit of any employee or
former employee of Seller or any of the Subsidiaries employed outside of the
United States, and which plan is not subject to ERISA or the Code.


 


“Foreign
Subsidiaries” shall mean any Subsidiary organized in a jurisdiction outside the
United States.


 


“Franchisee”
shall mean any franchisee, licensee or sub-licensee counterparty of any Debtor
or Acquired Subsidiary to a Franchise/Sales Agreement.


 


“Franchise/Sales
Agreements” shall mean each agreement, license, sublicense, arrangement or
understanding pursuant to which Seller or any of its Subsidiaries has granted a
franchise or exclusive right to operate, sublicense, develop or act as sales
agent for the Business in any jurisdiction.


 


“GAAP” shall
mean U.S. generally accepted accounting principles consistently applied.


 


“Governmental
Body” shall mean (i) any legislative, executive, judicial or administrative
unit of any governmental entity (foreign, federal, state or local) or any
department, commission, board, agency, bureau, official or other regulatory,
administrative or judicial authority thereof, (ii) any self-regulatory
organization, agency or commission or (iii) any court or arbitral tribunal.


 


“Hazardous
Materials” shall include, without regard to amount and/or concentration (a) any
element, compound, or chemical that is defined, listed or otherwise classified
as a contaminant, pollutant, toxic pollutant, toxic or hazardous substances,
extremely hazardous substance or chemical, hazardous waste, medical waste,
biohazardous or infectious waste, special waste, or solid waste under
Environmental Laws; (b) petroleum, petroleum-based or petroleum-derived
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic including but not limited to corrosivity,
ignitibility, toxicity or reactivity as well as any radioactive or explosive
materials; and (e) any raw materials, building components, including but not
limited to asbestos-containing materials and manufactured products containing
Hazardous Materials.


 


10

















 


“HSR Act”
shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.


 


“IAG” means
International Automotive Group Insurance Company, Ltd.


 


“Intellectual
Property” shall mean (i) inventions and discoveries, whether patentable or not,
all patents, patent applications, together with all patent disclosures,
reissuances, continuations, continuations-in-part, divisions, revisions,
extensions and reexaminations thereof, trademarks, tradenames, service marks,
trade dress, logos, domain names and designs, and other indicia of origin, and
all goodwill associated therewith, and all applications, registrations,
extensions, modifications and renewals in connection therewith, all published
and unpublished works of authorship, whether copyrightable or not, copyrights
and copyright applications and all registrations and renewals and all
extensions, restorations and reversions thereof, in connection therewith; (ii)
all know-how, trade secrets and confidential business information, customer and
supplier lists; (iii) all IT Systems; (iv) all other intangible proprietary
rights; and (v) all Commitments related to any of the foregoing.


 


“Intellectual
Property Contracts” shall mean all Commitments concerning the Seller
Intellectual Property owned or licensed by or to Debtors or any Acquired
Subsidiary, including without limitation agreements granting rights to use any
such Seller Intellectual Property, and any trademark coexistence, consent and
non-assertion agreements relating to the Seller Intellectual Property.


 


“Internet
Domain Name Deed” shall mean the information (e.g. user name and password) or
documentation (e.g. registrar transfer form or letter of consent) required to
transfer title with the applicable registrar of the Transferred Domain Names
from a Debtor to Purchaser.


 


“IT Systems”
means any electronic data processing, information, record keeping,
communications, telecommunications, account management, inventory management
and other computer systems (including all computer programs, software,
databases, firmware, hardware and related documentation) and Internet websites
and related content, including without limitation, the “Legacy” system.


 


“Law” shall
mean any national, foreign, federal, state, provincial or local law, statute,
ordinance, rule, regulation, code, order, judgment, injunction or decree of any
jurisdiction (whether foreign or domestic).


 


“Liabilities”
shall mean any and all debts, liabilities, commitments and obligations, whether
or not fixed, contingent or absolute, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whether or not required
by GAAP to be reflected in financial statements or disclosed in the notes
thereto.


 


“Liberty
Bonding Commitment” shall mean the Order of the Bankruptcy Court dated March
13, 2002 (the “March 13th Order”) and the “Summary of Terms and
Conditions of Liberty Bond Services Post-Petition Bonding,” attached to and
approved by the March 13th Order (“Term Sheet I”), providing, among
other things, for the Debtors to obtain certain post-petition bonding under
certain circumstances and subject to certain conditions, and authorizing and
granting certain liens, collateral, rights, and other protections for the
benefit of Liberty. The


 


11

















 


March 13th Order and
Term Sheet I were modified in certain respects pursuant to certain subsequent
orders dated May 10, 2002, and by order dated June 28, 2002, and as
subsequently modified by the Order dated March 19, 2003, pursuant to which that
certain document entitled the “Supplemental Term Sheet” between Liberty and the
Debtors was approved, and which provided, among other things, for further
continued post-petition bonding and additional liens, collateral, rights and
other protections being granted to Liberty.


 


“M & A
Qualified Beneficiary” shall have the meaning set forth in Treasury Regulation
Section 54.4980B-9, and specifically includes, to the extent Debtors no longer
maintain a group health plan after the Closing Date, individuals who remain
employed by Debtors after the Closing Date in order to provide transition
services regardless of how long such individuals remain employed to provide
these services.


 


“Material
Adverse Effect” shall mean any change, effect, event, occurrence, development,
circumstance or state of facts materially adverse to the business, properties,
operations, financial condition or results of operations of the Acquired Assets
and the Business taken as a whole or which materially impair the ability of
Debtors to perform their obligations under this Agreement or any Related
Document or have a material adverse effect on or prevent or materially delay
the consummation of the transactions contemplated hereby and thereby; provided,
however, that the following shall be excluded from any determination as
to whether a “Material Adverse Effect” has occurred:  (i) any change, effect, event,
occurrence, development, circumstance or state of facts in general economic or
political conditions, conditions in the United States or worldwide capital
markets and any act of terrorism or any outbreak of hostilities or war and
(ii) any failure by Seller to meet published revenue or earnings
projections (but not any change underlying such failure to meet published
revenue or earnings projections to the extent such change or effect would
otherwise constitute a Material Adverse Effect).


 


“New Severance
Plan” means the severance plan of the Debtors attached hereto as Exhibit F.


 


“Non-Filing
Subsidiaries” shall mean, collectively, the Subsidiaries that are not debtors
in the Bankruptcy Case as of the date hereof.


 


“Noteholder”
shall mean any holder of Notes.


 


“Notes” shall
mean the outstanding asset-backed notes issued in a Securitization Transaction.


 


“Offering
Memoranda” shall mean each of the final offering circulars relating to the
Notes.


 


“Ordinary
Course of Business” shall mean the ordinary course of business consistent with
past practices of Seller and the Subsidiaries, taking into consideration
conduct or actions required as a result of the Bankruptcy Case, and shall
include any actions taken in furtherance of any order of the Bankruptcy Court.


 


“Pension Plan”
shall mean each “employee pension benefit plan” as defined in Section 3(2)
of ERISA.


 


12

















 


“Permitted
Cash Distributions” means (i) with respect to the Securitization
Subsidiaries, cash distributions and payments from the Securitization
Subsidiaries to the Debtors in a manner consistent with Debtors’ current
methodology pursuant to and reflected in the line item “Fleet Purchases and
Enhancement”, (ii) with respect to IAG, cash distributions and payments
from IAG to the Debtors in a manner consistent with Debtors’ current
methodology pursuant to and reflected in the line item entitled “Transaction/Variable-Other
Insurance”, (iii) with respect to ANC Rental Corporation (Holdings)
Limited and its subsidiaries, cash distributions and payments from such
companies to the Debtors in a manner consistent with Debtors’ current
methodology pursuant to and reflected in the line item “Potential Funds
to/Receipt from Europe and Canada” and (iv) with respect to Alamo Rent-A-Car
(Canada) Inc., National Car Rental (Canada) Inc. and their respective
subsidiaries, cash distributions and payments from such companies to the
Debtors in a manner consistent with Debtors’ current methodology pursuant to
and reflected in the line item “Potential Funds to/Receipt from Europe and
Canada.”  The term “Permitted Cash
Distributions” does not include cash payments and distributions from the
Acquired Subsidiaries (or any subsidiaries thereof) to the Debtors for EMEA-US
Normal Course Transactions and Canada-US Normal Course Transactions and cash
payments and distributions from the Securitization Subsidiaries to the Debtors
in a manner consistent with Debtors’ current methodology pursuant to and
reflected in the line item “Fleet Financing and Lease Payments.”


 


“Permitted
Cash Investments” means (i) with respect to the Securitization
Subsidiaries, cash investments in and payments to the Securitization
Subsidiaries by the Debtors in a manner consistent with Debtors’ current
methodology pursuant to and reflected in the line item entitled “Fleet
Purchases and Enhancement”, (ii) with respect to IAG, cash investments in
and payments to IAG by the Debtors in a manner consistent with Debtors’ current
methodology pursuant to and reflected in the line item entitled “Transaction/Variable-Other
Insurance”, (iii) with respect to ANC Rental Corporation (Holdings)
Limited and its subsidiaries, cash investments in and payments to such
companies by the Debtors in a manner consistent with Debtors’ current
methodology pursuant to and reflected in the line item “Potential Funds
to/Receipt from Europe and Canada” and (iv) with respect to Alamo Rent-A-Car
(Canada) Inc., National Car Rental (Canada) Inc. and their respective
subsidiaries, cash investments in and payments to such companies by the Debtors
in a manner consistent with Debtors’ current methodology pursuant to and
reflected in the line item “Potential Funds to/Receipt from Europe and Canada.”  The term “Permitted Cash Investments” does
not include cash payments to the Acquired Subsidiaries (or any subsidiaries
thereof) by the Debtors for EMEA-US Normal Course Transactions and Canada-US
Normal Course Transactions and cash investments in and payments to the
Securitization Subsidiaries by the Debtors in a manner consistent with Debtors’
current methodology pursuant to and reflected in the line item “Fleet Financing
and Lease Payments.”


 


“Permitted
Encumbrance” shall mean (i) statutory liens for current Taxes not yet due and
payable; (ii) mechanics, carriers, workers, materialmen’s, warehousemen’s liens
incurred in the Ordinary Course of Business for sums not due and payable or
payments, (iii) with respect to any Real Property Leases, the Encumbrances
contained in the corresponding lease and any Encumbrance on the title of the
fee owner; (iv) local, state and federal laws, ordinances or governmental
regulations including, without limitation, building and zoning laws, ordinances
and regulations now or hereafter in effect; and (v) zoning restrictions,
adverse claims, easements,


 


13

















 


leases, rights-of-way,
encroachments, defects, Encumbrances and similar restrictions relating to real
estate that do not result in a Material Adverse Effect.


 


“Perot
Agreement” shall mean one or more agreements in form and substance satisfactory
to the Purchaser in its sole discretion concerning the outsourcing of
information technology services relating to the Business with Perot Systems
Corporation.


 


“Person” shall
mean any individual, corporation, partnership, firm, association, joint
venture, joint stock company, trust, unincorporated organization or other
entity, any Governmental Body, or any government or regulatory, administrative
or political subdivision or agency, department or instrumentality thereof.


 


“Pre-Petition
Liability” shall mean any “claim” against or obligation of any of Debtors, as
such term is defined in Section 101(5) of the Bankruptcy Code, arising or
occurring on or before the Petition Date, which claim or obligation has not
been assumed by Debtors in the Bankruptcy Case pursuant to Section 365 of the
Bankruptcy Code, waived, or otherwise satisfied in accordance with the
applicable provisions of the Bankruptcy Code and Bankruptcy Rules or order of
the Bankruptcy Court.


 


“Prime Rate”
shall mean the U.S. “prime rate” as reported daily by The Wall Street Journal.


 


“Qualified Bid”
has the meaning specified in Section 5.7(d).


 


“Real Estate
Deed” shall mean each deed transferring title to Transferred Real Property from
a Debtor to Purchaser.


 


“Registered”
shall mean issued, registered, renewed or the subject of a pending application.


 


“Related
Document” shall mean any agreement or document executed or delivered in
connection with the consummation of the transactions contemplated hereby.


 


“Release” shall
mean any spilling, leaking, pumping, emitting, emptying, discharging,
injecting, escaping, leaching, migrating, dumping, or disposing of Hazardous
Materials (including the abandonment or discarding of barrels, containers or
other closed receptacles containing Hazardous Materials) into the environment.


 


“Remedial
Action” shall mean all actions taken to (i) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate or in any other way address Hazardous
Materials in the indoor or outdoor environment; (ii) prevent or minimize a
Release or threatened Release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (iii) perform pre-remedial studies and investigations and
post-remedial operation and maintenance activities; or (iv) any other actions
authorized by 42 U.S.C. 9601.


 


“Rental
Vehicle” means any vehicle owned, leased or operated by any Debtor for the
purpose of renting such vehicle to customers of the Business.


 


14

















 


“Representatives”
shall mean with respect to any Person, any officer, director or employee of, or
any investment banker, attorney or other advisor, agent or representative of
such Person.


 


“Repurchase
Program” shall mean a program pursuant to which a Vehicle Manufacturer or an
Affiliate thereof has agreed with Debtors or any Acquired Subsidiary to
repurchase or guarantee the auction sale price of vehicles manufactured by such
Vehicle Manufacturer or any of its Affiliates.


 


“Sale Approval
Order” shall mean an order of the Bankruptcy Court in form and substance
reasonably satisfactory to Purchaser approving this Agreement and consummation
of the transactions contemplated hereunder, under Sections 105, 363, 365 and
1146(c) of the Bankruptcy Code. The Sale Approval Order shall provide, among
other things:  (a) that the transfer of
the Acquired Assets by Debtors to Purchaser or its designated Affiliates and
the assumption thereof by Purchaser from Debtors:  (i) is or will be a legal, valid and
effective transfer of the Acquired Assets, (ii) vests or will vest Purchaser
with good title to the Acquired Assets free and clear of all Liabilities and
Encumbrances, except those expressly assumed or permitted by Purchaser
hereunder and (iii) constitutes reasonably equivalent value and fair
consideration under the Bankruptcy Code and applicable Law; (b) that all
Persons having Claims or Encumbrances of any kind or nature whatsoever against
or on any Debtor or the Acquired Assets shall be forever barred, estopped and
permanently enjoined from pursuing such Claims or asserting such Encumbrances
against Purchaser, any of its assets, property, successors or assigns, or the
Acquired Assets, other than with regard to the Assumed Liabilities and
Permitted Encumbrances; (c) that the transactions contemplated by this
Agreement are undertaken by Purchaser in good faith, as that term is used in
Section 363(m) of the Bankruptcy Code; and (d) except as specifically provided
for in this Agreement, for the assumption by Debtors, and assignment to
Purchaser, of all Assigned Contracts pursuant to Sections 105 and 365 of the
Bankruptcy Code and state:  (i) that all
defaults of Debtors under the Assigned Contracts arising or accruing prior to
the date of the Sale Approval Order (without giving effect to any acceleration
clauses or any default provisions in such contracts of a kind specified in
Section 365(b)(2) of the Bankruptcy Code) have been cured or will be promptly
cured by Debtors and (ii) that Purchaser shall have no liability or obligation
with respect to any default arising or accruing with respect thereto prior to
Closing.


 


“SEC” shall
mean the Securities and Exchange Commission.


 


“Securities
Act” shall mean the Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations of the SEC thereunder, all as
the same shall be in effect at the time. Reference to a particular section of
the Securities Act shall include reference to the comparable section, if any,
of such successor federal statute.


 


“Securitization
Documents” shall mean, with respect to a Securitization Transaction, the
indenture, indenture supplement, any credit enhancement documents, and any
other transaction documents or agreements relating to the issuance of the
related Notes, and any documents or agreements directly or indirectly pledged
as collateral for the applicable Issuer’s obligations under such Notes
(including but not limited to any master lease agreement, note or manufacturer
repurchase agreement).


 


15

















 


“Securitization
Subsidiaries” shall mean Alamo Financing L.P., Alamo Financing L.L.C., National
Car Rental Financing Limited Partnership, National Car Rental Financing
Corporation, CarTemps Financing L.P., CarTemps Financing L.L.C., ARG I and
ARG II.


 


“Securitization
Transaction” shall mean each of the transactions pursuant to which (a) ARG I
issued its Asset Backed Notes, Series 1991-1, Series 1999-3, Series 2000-4 and
Series 2001-2, and (b) ARG II issued its Asset Backed Notes, Series 2002-2, and
any similar transaction entered into by Seller or any of its Subsidiaries after
the date hereof.


 


“Seller
Intellectual Property” shall mean all Intellectual Property (a) owned by Seller
or any Subsidiary (individually referred to herein as the “Seller Owned
Intellectual Property”), and/or (b) that is necessary for the conduct of the
Businesses of Seller and/or any of the Subsidiaries, as applicable, as
currently conducted, in each case, excluding any Seller Intellectual Property
used exclusively in connection with the ALM Business, except for any Seller
Intellectual Property listed on Schedule 2.1(mm).


 


“Subsidiaries”
shall mean any entities (i) the accounts of which would be consolidated with
those of Seller in Seller’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP; or (ii) of which securities,
membership interests or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests or more than
50% of the profits or losses of which are owned, controlled or held by Seller
or one or more direct or indirect Subsidiaries.


 


“Support
Vehicles” shall mean all trucks, vans, buses, dollies and other vehicles
(including those held for employees’ benefit and marketing purposes), owned,
leased or operated by Debtors and not constituting Rental Vehicles but used by
Debtors in the Business.


 


“Target Amount”
shall mean the target Working Capital, for the applicable month, as set forth
in the Target Working Capital Statements as adjusted pursuant to Section 2.5(c).
“Target Working Capital Statement” shall mean the Working Capital Statements
attached as Exhibit H to this Agreement.


 


“Tax” or “Taxes”
shall mean any federal, state, local, foreign or other taxes, assessments,
duties or charges of any kind whatsoever, including, without limitation,
franchise, income, sales, use, ad valorem, gross receipts, value added,
profits, license, capital gains, transfer (including stamp duty and stamp duty
reserve tax), minimum, alternative minimum, environmental, withholding,
payroll, employment, excise, property, customs and occupation taxes, including
any interest, fine, penalty or addition thereto, whether disputed or not, and
including any liability for the payment of any of the above amounts as a result
of being a member of an affiliated, consolidated, combined, unitary or similar
group or as a result of transferee or successor liability.


 


“Tax Return”
shall mean any federal, state, local, foreign or other return, declaration,
report, claim for refund, information return or statement relating to Taxes,
including any schedule or attachment thereto.


 


16

















 


“Telephone
Numbers” means all operating telephone numbers for the offices owned and/or
leased by Debtors (that constitute Acquired Assets) and/or the Acquired
Subsidiaries and all other telephone numbers relating to the Business and
controlled (by agreement, lease or otherwise) by Debtors (with respect to
Acquired Assets) and/or the Acquired Subsidiaries on the date hereof and which
under existing agreements, regulations and Law, may be transferred to Purchaser
on the Closing Date.


 


“Third Party”
shall mean any Person not an Affiliate of the other referenced Person or
Persons.


 


“Transferred
Domain Names” shall mean any and all Internet domain names that are Registered
and owned by a Debtor, excluding those used exclusively in connection with the
ALM Business.


 


“Transferred
Marks” shall mean any and all trade marks that are registered and owned by a
Debtor, excluding those used exclusively in connection with the ALM Business.


 


“Transferred
Real Property” shall mean the real property set forth on Schedule 2.1(u).


 


“Trade Mark
Deeds” shall mean a duly executed short-form assignment transferring title to
one or more Transferred Marks from a Debtor to Purchaser.


 


“Treasury
Regulations” shall mean the United States Income Tax Regulations, including
Temporary Regulations, promulgated under the Code.


 


“Vehicle
Manufacturers” shall mean the manufacturers of vehicles used by Seller or any
of the Subsidiaries in connection with the Business.


 


“WARN Act” shall
mean the Worker Adjustment and Retraining Notification Act (29 U.S.C. Sections
2101, et  seq.).


 


“Working
Capital” shall mean (i) the Current Assets minus the Current Liabilities less
(ii) the Adjustment Amount, if positive and plus (iii) the absolute value
of the Adjustment Amount, if negative.


 


Additional
Defined Terms . For purposes of this Agreement,
the following terms shall have the meanings specified in the Sections indicated
below:


 


	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  2002 Extended Return

  	
   

  	
  Section 5.16(c)

  
	
  2003 Year

  	
   

  	
  Section 3.17(o)

  
	
  Accountants

  	
   

  	
  Section 2.5(c)

  
	
  Acquired Assets

  	
   

  	
  Section 2.1

  
	
  Acquired Subsidiaries

  	
   

  	
  Section 2.1(a)

  
	
  Affiliated Group

  	
   

  	
  Section 3.17(a)

  



 


17

















 


	
  Agreed Upon Procedures

  	
   

  	
  Section 2.5(c)

  
	
  Agreed Upon Procedures Report

  	
   

  	
  Section 2.5(c)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Airport Concessions

  	
   

  	
  Section 3.21(a)

  
	
  Allocation Statement

  	
   

  	
  Section 2.6

  
	
  Alternative Transaction

  	
   

  	
  Section 5.7(g)

  
	
  Aon

  	
   

  	
  Section 2.5(e)(i)

  
	
  Aon Closing Report

  	
   

  	
  Section 2.5(e)(iv)

  
	
  Aon Estimated Report

  	
   

  	
  Section 2.5(e)(i)

  
	
  Aon March Report

  	
   

  	
  Section 2.5(e)(i)

  
	
  ARAC

  	
   

  	
  Section 5.23(b)

  
	
  Asset Backed Notes

  	
   

  	
  Section 5.2(b)

  
	
  Assumed Liabilities

  	
   

  	
  Section 2.3

  
	
  Auction

  	
   

  	
  Section 5.7(f)(i)

  
	
  Bankruptcy Case

  	
   

  	
  Recitals

  
	
  Bankruptcy Code

  	
   

  	
  Recitals

  
	
  Bankruptcy Court

  	
   

  	
  Recitals

  
	
  Benefit Plans

  	
   

  	
  Section 3.13(a)

  
	
  Bid

  	
   

  	
  Section 5.7(c)

  
	
  Bid Deadline

  	
   

  	
  Section 5.7(c)

  
	
  Bidding Procedures

  	
   

  	
  Section 5.7(a)

  
	
  Bidding Procedures Order

  	
   

  	
  Section 5.7(a)

  
	
  Bonus Pool

  	
   

  	
  Section 5.9(g)(ii)

  
	
  Business

  	
   

  	
  Recitals

  
	
  CCM

  	
   

  	
  Preamble

  
	
  Closing

  	
   

  	
  Section 2.8

  
	
  Closing Date

  	
   

  	
  Section 2.8

  
	
  Closing Date Amount

  	
   

  	
  Section 2.5(a)

  
	
  Closing Escrow Deposit

  	
   

  	
  Section 2.5(a)

  
	
  Comment Period

  	
   

  	
  Section 2.5(c)

  
	
  Concessionaire

  	
   

  	
  Section 3.21(a)

  
	
  Consents, Approvals and Filings

  	
   

  	
  Section 3.6

  
	
  Debtors

  	
   

  	
  Preamble

  
	
  Definitive Sale Documentation

  	
   

  	
  Section 5.7(c)

  
	
  Deposit

  	
   

  	
  Section 2.7

  
	
  Determination Date

  	
   

  	
  Section 2.5(e)(iii)

  
	
  Determination Date Amount

  	
   

  	
  Section 2.5(e)(iii)

  
	
  Determination Date Statement

  	
   

  	
  Section 2.5(e)(iii)

  
	
  Differential

  	
   

  	
  Section 2.5(f)(ii)

  
	
  Dispute Notice

  	
   

  	
  Section 2.5(e)(ii)

  
	
  Dispute Notice Period

  	
   

  	
  Section 2.5(e)(ii)

  
	
  Drop Dead Date

  	
   

  	
  Section 7.1(a)(vii)

  
	
  Escrow Agreement

  	
   

  	
  Section 2.7

  
	
  Escrow Holder

  	
   

  	
  Section 2.7

  
	
  Escrow Release Event

  	
   

  	
  Section 2.7

  
	
  Excluded Assets

  	
   

  	
  Section 2.2

  



 


18

















 


	
  Excluded Liabilities

  	
   

  	
  Section 2.4

  
	
  Existing Vehicles

  	
   

  	
  Section 3.19(a)

  
	
  Final Closing Working Capital Statement

  	
   

  	
  Section 2.5(e)(iii)

  
	
  Final Cure Costs Statement

  	
   

  	
  Section2.5(e)(iii)

  
	
  Interest Rate

  	
   

  	
  Section 2.5(e)(iii)(A)

  
	
  Internal Restructuring Transactions

  	
   

  	
  Section 5.22

  
	
  Knowledge of Seller

  	
   

  	
  Section 1.2(e)

  
	
  Lehman

  	
   

  	
  Preamble

  
	
  Litigation

  	
   

  	
  Section 3.10(a)

  
	
  Management Accrual Amount

  	
   

  	
  Section 2.5(f)(i)

  
	
  March Management Accrual Amount

  	
   

  	
  Section 2.5(f)(ii)

  
	
  Material Commitment

  	
   

  	
  Section 5.1(xli)

  
	
  Negotiation Period

  	
   

  	
  Section 2.5(e)(ii)

  
	
  Objection Notice

  	
   

  	
  Section 2.5(c)

  
	
  Owned Real Property

  	
   

  	
  Section 3.7

  
	
  Permits

  	
   

  	
  Section 3.11(a)

  
	
  Petition Date

  	
   

  	
  Recitals

  
	
  Policies

  	
   

  	
  Section 3.26(a)

  
	
  Purchase Price

  	
   

  	
  Section 2.5(a)

  
	
  Purchaser

  	
   

  	
  Preamble

  
	
  Purchaser Savings Plan

  	
   

  	
  Section 5.9(e)

  
	
  Purchaser Tax Indemnitee

  	
   

  	
  Section 5.16(a)

  
	
  Qualified Bid

  	
   

  	
  Section 5.7(d)

  
	
  Qualified Bidder

  	
   

  	
  Section 5.7(c)

  
	
  Real Property Leases

  	
   

  	
  Section 3.7

  
	
  Related Party Agreements

  	
   

  	
  Section 3.20

  
	
  Sale

  	
   

  	
  Section 5.7(a)

  
	
  Sale Hearing

  	
   

  	
  Section 5.7(b)

  
	
  SEC Reports

  	
   

  	
  Section 3.4

  
	
  Section 338 Election

  	
   

  	
  Section 5.18

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller Owned Intellectual Property

  	
   

  	
  Section 1.1

  
	
  Seller Tax Indemnitee

  	
   

  	
  Section 5.16(a)

  
	
  Statement

  	
   

  	
  Section 5.16(c)

  
	
  Straddle Period

  	
   

  	
  Section 5.16(b)

  
	
  Tax Asset

  	
   

  	
  Section 5.15

  
	
  Tax Structure

  	
   

  	
  Section 5.2(d)

  
	
  Terminating Purchaser Breach

  	
   

  	
  Section 7.1(a)(iii)

  
	
  Terminating Seller Breach

  	
   

  	
  Section 7.1(a)(iv)

  
	
  Termination Fee

  	
   

  	
  Section 5.7(g)

  
	
  Transfer Tax Returns

  	
   

  	
  Section 5.8

  
	
  Transfer Taxes

  	
   

  	
  Section 5.8

  
	
  Transferred Employee

  	
   

  	
  Section 5.9(a)

  



 


19

















 


Section 1.2             Other
Definitional and Interpretive Matters . Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
shall apply:


 


(a)           Gender
and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.


 


(b)           Headings.
The provisions of the Table of Contents, the division of this Agreement into
Articles, Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing
or interpreting this Agreement. All references in this Agreement to any “Section”
are to the corresponding Section of this Agreement unless otherwise specified.


 


(c)           Herein.
The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to
this Agreement as a whole and not merely to a subdivision in which such words
appear unless the context otherwise requires.


 


(d)           Including.
The word “including” or any variation thereof means “including, without
limitation” and shall not be construed to limit any general statement that it
follows to the specific or similar items or matters immediately following it.


 


(e)           Knowledge.
The phrase “Knowledge of Seller” (or words of similar import) shall mean the
actual knowledge after due inquiry of the employees of Seller or any of the
Subsidiaries who are primarily responsible for the relevant area as to which Knowledge
is qualified, as set forth on Schedule 1.2(e);.


 


(f)            Schedules
and Exhibits. The Schedules and Exhibits attached to this Agreement shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein. While Debtors have attempted
in good faith to cross reference between Schedules and Exhibits as applicable,
the parties hereto agree that any item disclosed in any particular Schedule or
Exhibit shall be deemed disclosed for purposes of any other Schedule or Exhibit
with respect to which it is reasonably apparent from a reading of such
information on such first Schedule or Exhibit that such information is
applicable to such other Schedule or Exhibit.


 


ARTICLE II



PURCHASE AND SALE OF ACQUIRED ASSETS


 


Section 2.1             Purchase
and Sale of Acquired Assets . Upon the terms and subject to the
conditions hereof, at the Closing, Debtors will sell, assign, transfer, convey
and deliver to Purchaser, free and clear of all Encumbrances (other than Permitted
Encumbrances) and Purchaser will, and CCM will cause Purchaser to, purchase,
acquire and accept from Debtors, all of Debtors’ legal and beneficial right,
title and interest in and to all of their business, properties, assets,
goodwill, contracts, rights and claims of whatever kind or nature, real or
personal, tangible or intangible, whether known or unknown, actual or
contingent, wherever located, other than the Excluded Assets (collectively, the
“Acquired Assets”). The Acquired Assets shall


 


20

















 


include, but shall not be limited to, all right, title and interest of
any Debtor in, to and under all of the following:


 


(a)           the
Equity Securities of each of the Non-Filing Subsidiaries listed on Schedule 2.1(a)
(such Non-Filing Subsidiaries are referred to herein as the “Acquired
Subsidiaries”);


 


(b)           all
Franchise/Sales Agreements to which any Debtor is a party listed in Schedule
2.1(b), and any such Commitments entered into on or after the date hereof and
prior to the Closing Date in accordance with Section 5.1;


 


(c)           all
general sales agency, travel agency and tour operator Commitments to which any
Debtor is a party listed in Schedule 2.1(c), and any such Commitments entered
into on or after the date hereof and prior to the Closing Date in accordance
with Section 5.1;


 


(d)           all
Commitments with Vehicle Manufacturers and Repurchase Programs to which any
Debtor is a party listed in Schedule 2.1(d), and any such Commitments entered
into on or after the date hereof and prior to the Closing Date in accordance
with Section 5.1;


 


(e)           all
vehicle lease Commitments to which any Debtor is a party listed in Schedule
2.1(e), and any such Commitments entered into on or after the date hereof and
prior to the Closing Date in accordance with Section 5.1;


 


(f)            all
fuel supply Commitments to which any Debtor is a party listed in Schedule
2.1(f), and any such Commitments entered into on or after the date hereof and
prior to the Closing Date in accordance with Section 5.1;


 


(g)           all
collective bargaining Commitments to which any Debtor is a party listed in
Schedule 2.1(g) and all Benefit Plans to which any Debtor is a party listed in
Schedule 2.1(g);


 


(h)           all
Commitments for Airport Concessions to which any Debtor is a party listed in
Schedule 2.1(h), and any such Commitments entered into on or after the date
hereof and prior to the Closing Date in accordance with Section 5.1;


 


(i)            all
marketing and barter Commitments to which any Debtor is a party listed in Schedule
2.1(i), and any such Commitments entered into on or after the date hereof and
prior to the Closing Date in accordance with Section 5.1;


 


(j)            all
association Commitments to which any Debtor is a party listed in Schedule
2.1(j), and any such Commitments entered into on or after the date hereof and
prior to the Closing Date in accordance with Section 5.1;


 


(k)           all
joint venture, limited liability company and partnership Commitments to which
any Debtor is a party listed in Schedule 2.1(k), and any such 


 


21

















 


Commitments entered into on or
after the date hereof and prior to the Closing Date in accordance with Section
5.1;


 


(l)            all
affiliation Commitments to which any Debtor is a party listed in Schedule
2.1(l), and any such Commitments entered into on or after the date hereof and
prior to the Closing Date in accordance with Section 5.1;


 


(m)          all
vendor Commitments to which any Debtor is a party, including all vendor
allowances, including volume and promotional incentive allowances and any other
credits of any Debtor received by or accruing to such Debtor related to such
vendor Commitments listed in Schedule 2.1(m), and any such Commitments entered
into on or after the date hereof and prior to the Closing Date in accordance
with Section 5.1;


 


(n)           to
the extent legally assignable, all insurance or reinsurance Commitments and/or
policies and similar arrangements for the period covering the years 2002 and
2003 under which any Debtor is a party listed on Schedule 2.1(n), all other
similar Commitments for the periods prior to the year 2002 and any such
Commitments entered into on or after the date hereof and prior to the Closing
Date in accordance with Section 5.1;


 


(o)           all
real property lease and sublease Commitments under which any Debtor is a party
listed in Schedule 2.1(o), and any such Commitments entered into after the date
hereof and prior to the Closing Date in accordance with Section 5.1;


 


(p)           any
other Commitments to which any Debtor is a party not otherwise covered by this
Section 2.1 relating to the Business designated by Purchaser as an Assigned
Contract not less than five Business Days prior to the date scheduled for the
Bankruptcy Court hearing on the Sale Approval Order;


 


(q)           all
national corporate and sales accounts to which any Debtor is a party listed in
Schedule 2.1(q) and any such Commitments entered into on or after the date
hereof and prior to the Closing Date in accordance with Section 5.1;


 


(r)            all
vehicles (including Rental Vehicles and Support Vehicles) owned by any Debtor
used in the Business;


 


(s)           all
other tangible personal property of any Debtor used in the Business, including,
without limitation, all tangible personal property located at the premises set
forth in Schedule 2.1(o) and 2.1(u);


 


(t)            (i)
all accounts receivable or other receivables as of the Closing Date of any
Debtor arising out of the operation of the Business, including, without
limitation, (A) credit card receivables, direct bill receivables, tour
receivables, Vehicle Manufacturer receivables, Franchisee receivables, notes
receivable and subrogation receivables (except for receivables relating
exclusively to Commitments that are not Assigned Contracts), (B) customer
deposits, Franchisee deposits, dealer deposits, security and collateral,
(C) all receivables from Acquired Subsidiaries and their direct and
indirect subsidiaries, and (D) all causes of action relating or pertaining to
the foregoing and (ii) all other Current Assets as of the Closing Date and
all causes of action relating or pertaining thereto;


 


22

















 


(u)           all
real property owned by any Debtor listed on Schedule 2.1(u) and the Fixtures
and appurtenances located within the bounds of such real property;


 


(v)           all
Business Records of any Debtor (other than the corporate minute books, stock
transfer and similar records and corporate seals of the Debtors);


 


(w)          any
interest in and to any refund of Taxes, but only to the extent (i) the Taxes to
be refunded were paid at any time by Purchaser or its Affiliate or paid after
the Closing Date by an Acquired Subsidiary (or a direct or indirect subsidiary
of an Acquired Subsidiary) or such Taxes were reflected as an asset on the
Final Closing Working Capital Statement and (ii) such Taxes were not reflected
as a liability on the Final Closing Working Capital Statement;


 


(x)            all
Seller Owned Intellectual Property of any Debtor, including, without
limitation, the “Alamo”, “National” and “Guy Salmon” names and marks (including
word marks and design marks, whether registered or unregistered), and all
derivations thereof and all Internet domain names owned by any Debtor, whether
or not used in the Business, including, without limitation, all IT Systems used
by the Debtors in the Business and all Intellectual Property Contracts of any
Debtor listed on Schedule 2.1(x), and any such Intellectual Property Contracts
entered into on or after the date hereof and prior to the Closing Date in
accordance with Section 5.1;


 


(y)           to
the extent legally assignable, all Permits of the Debtors;


 


(z)            the
following, to the extent that they relate to any Assumed Liability or Acquired
Asset: claims, credits, security or other deposits (including recoverable
deposits), prepayments, prepaid assets, prepaid expenses (including garage
space and gas inventory), prepaid rent, deferred charges, refunds or claims for
refunds (except as excluded in Section 2.2(i)), causes of action, defenses,
counterclaims, rights of recovery, rights of setoff and rights of recoupment of
any Debtor (and, in each case, security interests relating thereto), as
applicable, as of the Closing Date;


 


(aa)         all
insurance proceeds, awards, claims and causes of action of any Debtor with
respect to or arising in connection with (i) any Assumed Liability, (ii) any
real property owned by any Debtor, (iii) any Acquired Asset (including any
Assigned Contract) or the Business, (iv) to the extent not legally assignable
pursuant to Section 2.1(n), any Commitment of the type specified in Section
2.1(n) that is not an Assigned Contract or (v) the matters listed in
Schedule 2.1(aa);


 


(bb)         all
cash, cash equivalents and short term investments of Debtors reflected in
Current Assets, including all restricted cash and all collateral (including
cash and short term investments) supporting the insurance programs or surety
bonding programs of any Debtor or any Acquired Subsidiary;


 


(cc)         all
operating or capitalized lease Commitments relating to tangible personal property
(other than vehicles) to which any Debtor is a party listed on Schedule
2.1(cc), and any such Commitments entered into on or after the date hereof and
prior to the Closing Date in accordance with Section 5.1(a);


 


23

















 


(dd)         all
goodwill of any Debtor associated with the Acquired Assets, together with the
right to represent to third parties that Purchaser is the successor to the
Business;


 


(ee)         all
rights, title and interest of Debtors in and to the Telephone Numbers;


 


(ff)           all
assets, properties, goodwill, rights and claims of any Debtor of any kind and
nature related to the Business (other than Excluded Assets) not otherwise
described above;


 


(gg)         all
tools, machinery, replacement and spare parts and supplies of any Debtor
relating to the Business;


 


(hh)         all
confidentiality and similar agreements entered into by any Debtor or any of
their respective Representatives in connection with a sale of the Acquired
Assets or the Business;


 


(ii)           all
preference or avoidance claims or actions of any Debtor arising out of Sections
544 through 553, inclusive, of the Bankruptcy Code (i) against the Acquired
Subsidiaries, (ii) against Purchaser or its Affiliates or (iii) relating to an
Assigned Contract or a Current Asset as of the Closing Date;


 


(jj)           all
bank accounts, to the extent legally assignable, deposits accounts and lock-box
accounts of Debtors relating to the Business or the Acquired Assets;


 


(kk)         the
DIP Credit Agreement;


 


(ll)           the
Liberty Bonding Commitment;


 


(mm)       the
Intellectual Property of Spirit Rent-A-Car, Inc. listed on Schedule 2.1(mm);
and


 


(nn)         any
other Commitments to which any Debtor is a party relating to the Business
listed on Schedule 2.1(nn) and any such Commitments entered into on or after
the date hereof and prior to the Closing Date in accordance with Section 5.1.


 


Section 2.1A         Designated
Affiliates. Purchaser may, at any time prior to the Closing at its sole
discretion but upon timely prior notice, assign its rights to purchase any or
all of the Acquired Assets or any other rights under this Agreement to one or
more of its wholly-owned subsidiaries or other Affiliates; provided, however,
that such Person assumes and agrees to perform, discharge and satisfy all of
Purchaser’s liabilities, duties and obligations hereunder; and provided,
further, that such assignment shall not release or relieve Purchaser or
CCM from any of their respective duties, liabilities or obligations hereunder. For
purposes of this Agreement, Purchaser and its wholly-owned subsidiaries or
Affiliates, if applicable, shall collectively be referred to herein as “Purchaser.”


 


24

















 


Section 2.2             Excluded
Assets . Notwithstanding anything to the contrary in this Agreement,
the Acquired Assets shall not include any of the following assets of Debtors
(the “Excluded Assets“):


 


(a)           the
Equity Securities of the Subsidiaries listed on Schedule 2.2(a);


 


(b)           all
cash, restricted cash, and cash equivalents and short term investments (other
than collateral supporting the insurance programs or surety bonding programs of
any Debtor or any Acquired Subsidiary) not reflected in Current Assets;


 


(c)           the
rights of Debtors under this Agreement and the proceeds of the Purchase Price;


 


(d)           any
item expressly excluded pursuant to the provisions of Section 2.1 above;


 


(e)           any
Commitment that is not an Assigned Contract (including, without limitation, any
Commitment relating to the ALM Business) and receivables relating exclusively
to such Commitments;


 


(f)            any
Commitment terminated or expired prior to the Closing;


 


(g)           all
preference or avoidance claims and actions of any Debtor arising under Sections
544 through 553, inclusive, of the Bankruptcy Code that are not specified in
Section 2.1(ii);


 


(h)           insurance
proceeds, awards, claims and causes of action not of the type not contemplated
by Section 2.1(aa);


 


(i)            any
interest in and to any refund of Taxes but only to the extent (i) the Taxes to
be refunded were paid at any time by any Debtor or paid on or before the
Closing Date by an Acquired Subsidiary (or a direct or indirect subsidiary of
an Acquired Subsidiary) and such Taxes were not reflected as an asset on the
Final Closing Working Capital Statement or (ii) such Taxes were reflected as a
liability on the Final Closing Working Capital Statement;


 


(j)            any
Commitment set forth in Schedule 2.2(j), and any additional Commitments
(whether or not listed on a Schedule to this Agreement on the date hereof) that,
pursuant to Section 5.12 herein, Purchaser notifies Seller after the date
hereof that Purchaser does not intend to assume, so long as such notice is
provided to Debtors no later than five Business Days prior to the date
scheduled for the Bankruptcy Court hearing on the Sale Approval Order; provided,
however, that the Purchaser cannot make any such notification with
respect to (1) any Commitment entered into after the Petition Date and on or
prior to the date hereof and disclosed on the Schedules hereto (as they exist
on the date hereof and without supplementation) or not required to be disclosed
on such Schedules because such Commitment is of the type specified in clause
(iii) of the proviso in the definition of the term Assigned Contracts, (2) any
Commitment entered into after the date hereof provided that such Commitment was
entered into in accordance with Section 5.1, (3) any Commitment that was


 


25

















 


previously assumed by any of the Debtors pursuant to Section 365
of the Bankruptcy Code and disclosed on Schedule 3.12(c)(i) or (4) the Liberty
Bonding Commitment;


 


(k)           any
real property owned by a Debtor not listed on Schedule 2.1(u) and the fixtures
and appurtenances located on such owned real property;


 


(l)            the
assets relating exclusively to the ALM Business except for those listed on
Schedule 2.1(mm) and those included in Schedule 2.2(l); and


 


(m)          any
claim to, or any interest in, any payments to the Trust (as defined in the
AutoNation Settlement Agreement) pursuant to the AutoNation Settlement
Agreement.


 


Section 2.3             Assumed
Liabilities  . Upon the terms and subject to the conditions of
this Agreement, at the Closing, Purchaser shall, and CCM shall cause Purchaser
to, assume only those Liabilities of Debtors set forth or described in
paragraphs (a) through (i) below (collectively, the “Assumed Liabilities“):


 


(a)           Liabilities
under the DIP Credit Agreement;


 


(b)           Liabilities
under the Liberty Bonding Commitment;


 


(c)           Liabilities
under Assigned Contracts;


 


(d)           Liabilities
relating to or incurred in connection with the Acquired Assets (other than the
Assigned Contracts which are covered by Section 2.3(c) herein) that arise after
the Closing Date;


 


(e)           Current
Liabilities as of the Closing Date and reflected on the Final Closing Working
Capital Statement;


 


(f)            (i)
Liabilities incurred after the Petition Date with respect to those Litigations
(other than those relating to accidents involving vehicles of the Business
(which are covered by Section 2.3(g))) to which any Debtor is a party set forth
in Schedule 2.3(f), (ii)  allowed post-petition administrative priority
claims under Sections 503(b) and 507(a)(1) of the Bankruptcy Code with respect
to Litigation (other than those relating to accidents involving vehicles of the
Business (which are covered by Section 2.3(g)) that are identified on Schedule
2.3(f) as being covered by this clause (ii), and (iii) Litigation relating to
the Business or Acquired Assets arising after the date hereof in the Ordinary
Course of Business;


 


(g)           Liabilities
(except for vicarious Pre-Petition Liabilities arising from pre-petition auto
accidents) relating to accidents involving the vehicles of the Business and the
ALM Business (i) reflected on or of a category reserved against on the March
31, 2003 consolidated balance sheet of Seller and outstanding on the Closing
Date or (ii) incurred in the Ordinary Course of Business after March 31, 2003;


 


(h)           Liabilities
related to COBRA solely for the purposes of benefit plans that are listed on
Schedule 3.13(a) for M&A Qualified Beneficiaries regardless of whether


 


26

















 


such Liabilities arise prior to, on or after the Closing Date, to the
extent that Debtors no longer maintain a group health plan after the Closing
Date and Liabilities relating to or incurred in connection with Benefit Plans
that are listed on Schedule 2.1(g); and


 


(i)            Liabilities under the Assigned MBIA Contracts.


 


Section 2.4             Excluded
Liabilities . The parties acknowledge and agree that, other than the
Assumed Liabilities, Purchaser is not assuming and shall not be responsible or
liable for, and Debtors shall retain, and shall indemnify, hold harmless and
defend Purchaser from, all Liabilities of any Debtor (collectively, “Excluded
Liabilities“). The Excluded Liabilities shall include, without limitation, the
following:


 


(a)           all
Liabilities set forth in Schedule 2.4;


 


(b)           all
Liabilities associated with any Excluded Assets;


 


(c)           all
Liabilities for expenses of Debtors (i) for the negotiation and preparation of
this Agreement, (ii) relating to the transactions contemplated hereby
(including, but not limited to, Bankruptcy-Related Professional Fees) or (iii)
incurred in connection with the commencement and continuance of the Bankruptcy
Case;


 


(d)           all
Taxes of Seller or any Subsidiary not constituting an Acquired Subsidiary
except to the extent such Taxes were reflected as Liabilities on the Final
Closing Working Capital Statement;


 


(e)           all
Liabilities associated with Commitments that are not Assigned Contracts;


 


(f)            all
Liabilities relating to Pre-Petition Liabilities, except for Cure Costs and
except as set forth in Sections 2.3(c), (e), (g), (h) and (i);


 


(g)           all
Liabilities arising out of, or served by or related to, or any Encumbrance on
any Acquired Asset, other than Liabilities secured by Permitted Encumbrances;


 


(h)           except
as provided in Sections 2.3(f) and 2.3(h), any Liabilities of Debtors to
current or former employees of Debtors related to or arising out of any period
prior to the Closing arising out of any unlawful discrimination, wrongful
termination, violations of Law, breach of terms of any Benefit Plan or failure
to pay or discharge such employees wages or benefits when due, except to the
extent that such Liabilities may be satisfied by payment from a Benefit Plan
set forth on Schedule 2.1(g), but only to the extent of the original amount or
benefit that should have been made when due;


 


(i)            except
as provided in Sections 2.3(f) and 2.3(h), any Liability of any Debtor that
constitutes, or is alleged to constitute, a violation of Law;


 


(j)            any
Liabilities of any Debtor relating to (i) indebtedness for borrowed money,
(ii) evidenced by bonds, debentures, notes and similar instruments,
(iii) related to indebtedness of others guaranteed by any Debtor, and
(iv) in respect of letters of credit, letters


 


27

















 


of guaranty or similar instruments, in each case other than Liabilities
under the DIP Credit Agreement, the Liberty Bonding Commitment and the Assigned
Contracts; and


 


(k)           all
Liabilities of any Debtor relating to any Benefit Plans not listed on Schedule
2.1(g) (other than as provided in Section 2.3(h)) including the Key Employee
Retention Plan, the 401(k) Plan, the Company Health and Welfare Plan, the New
Severance Plan and all Liabilities of any Debtor under FAMPACT.


 


The listing of
any specific item or matter as an Excluded Liability shall in no respect
(i) limit the generality of the first sentence of this Section 2.4 or (ii)
create any implication that any item or matter not so listed is an Assumed
Liability.


 


Section 2.5             Purchase
Price . (a)   Upon the terms and subject to the
conditions hereof, in consideration of the sale, transfer, assignment,
conveyance and delivery by Debtors of the Acquired Assets to Purchaser or its
designated Affiliates, Purchaser or its designated Affiliates shall, and CCM
shall cause Purchaser or Purchaser’s designated Affiliates to, (x) pay to Debtors,
at the Closing, an amount equal to $230,000,000 less the aggregate amount of
the letters of credit outstanding under the Congress Financial facility that
are not fully cash collateralized as of the date hereof, as further adjusted
pursuant to this Section 2.5 (as adjusted, the “Purchase Price“), and (y)
assume the Assumed Liabilities. The Purchase Price payable pursuant to clause
(x) above shall be paid by Purchaser to Seller on behalf of Debtors at Closing
(A) by delivery to Seller of the Deposit and any interest accrued thereon
in accordance with the Escrow Agreement, (B) by delivery of the Indemnity
Escrow Amount to the escrow agent for the Indemnity Escrow Amount as set forth
in Section 2.5(h) and (C) the balance (i.e. the difference between the Purchase
Price and payments under clause (A) and (B) herein, as adjusted by Section
2.5(b)) by wire transfer of immediately available same day funds, in each case
to an account or accounts designated by Seller at least two (2) Business Days
prior to the Closing Date. The amount paid by Purchaser to Seller on the
Closing Date (which shall be deemed to include the Escrow Indemnity Amount)
pursuant to this Section 2.5(a) is referred to as the “Closing Date Amount“.


 


(b)           The
amount of cash to be delivered to Seller by Purchaser at Closing shall be: (i)
if the Estimated Cure Costs are greater than the Cure Costs Threshold, reduced
by such excess and (ii)(A) if the Estimated Closing Working Capital is less
than the Target Amount for the month end at which the Closing occurs, reduced
by such shortfall or (B) if the Estimated Closing Working Capital is greater
than the Target Amount for the month end at which the Closing occurs, increased
by such excess and provided that an adjustment shall be made pursuant to clause (ii)
in favor of Seller or Purchaser, as the case may be, only to the extent that
the aggregate of such adjustments exceeds the Deductible Amount. In addition,
in the event that the amount of cash to be delivered to Seller at Closing is
reduced pursuant to clause (ii)(A) of this Section 2.5(b), and the preliminary
estimated closing working capital calculated by Seller pursuant to Section
2.5(d)(i) is greater than the Estimated Closing Working Capital, Purchaser
shall deposit an amount equal to such excess in an escrow account pursuant to
the terms of the Escrow Agreement as defined in Section 2.7; provided, that the
amount of the escrow deposit shall in no event exceed the difference between
(i) $230,000,000 and (ii) the sum of (A) the cash paid by Purchaser to Seller
at Closing, (B) the aggregate amount of letters of credit outstanding under the
Congress Financial facility that are not fully cash collateralized on the date
hereof and


 


28

















 


(C) the Estimated Cure Costs in excess of the Cure Cost Threshold. The
amount so deposited into escrow on the Closing Date shall be referred to as the
“Closing Escrow Deposit“.


 


(c)           (i) Promptly
following the entry of the Bidding Procedures Order, Seller shall deliver a copy
of the Baseline Working Capital Statement, the Target Working Capital
Statements, the Weekly Cash Flows and the Agreed Upon Procedures to KPMG LLP
or, if KPMG LLP is unwilling or unable to perform, such other accounting firm
as Seller, Lehman and Purchaser shall jointly select (KPMG or such other
accounting firm, the “Accountants”), which shall be retained by Purchaser and
Seller to promptly conduct a review, in accordance with the Agreed Upon
Procedures set forth on Exhibit K, as may be modified in good faith by
agreement of Purchaser, Seller and Lehman after discussions with the
Accountants (the “Agreed Upon Procedures“), of the Baseline Working Capital
Statement and the Target Working Capital Statement to determine, in addition to
the matters specified in the Agreed Upon Procedures, whether (i) the
adjustments to the March 31, 2003 balance sheets of the Debtors, furnished to
Purchaser pursuant to Section 3.5(a) and reflected in the Baseline Working
Capital Statement, and (ii) the adjustments made to the Target Working
Capital Statements to determine the Target Amount, were made in a manner
consistent with the Agreed Upon Procedures and the definitions of Current
Assets, Current Liabilities, ALM Business, Target Amount and Securitization
Subsidiaries set forth herein. The fees and expenses of the Accountants shall
be borne 50% by Purchaser and 50% by Seller (to the extent Seller does not pay
all or any of its portion of such fees and expenses, Lehman shall pay such fees
and expenses and shall be entitled to promptly recover such amount from Seller
as an immediately payable administrative claim). The Accountants shall be
instructed to issue a preliminary report to Purchaser, Seller and Lehman, which
shall set forth in reasonable detail whether the Baseline Working Capital
Statement and the adjustments to the Target Working Capital Statements were
prepared in a manner consistent with Agreed Upon Procedures and such
definitions within 15 days of their retention, setting forth the nature of any
inconsistency. The performance of the Agreed Upon Procedures will not result in
any adjustment to the dollar values reflected in the unaudited financial
statements of the Debtors at March 31, 2003 or, other than to correct any
inconsistency with the methodology required by the Agreed Upon Procedures and
the definitions herein, in the Target Working Capital Statements. Each of
Purchaser, Seller and Lehman may, within five Business Days of the delivery of
the preliminary report (the “Comment Period“), deliver to the Accountants in
writing its views as to why it believes the preliminary report is not correct
(and if it shall do so, then it shall furnish a copy thereof to each of
Purchaser, Seller and Lehman) (an “Objection Notice“). Each party shall have
the right, within two Business Days following the expiration of the Comment
Period, to deliver to the Accountants (with a copy to each other party, as
above) its comments on any Objection Notice delivered by any other party. Within
five Business Days following the expiration of the Comment Period, the
Accountants shall deliver to Purchaser, Seller and Lehman its final report (the
“Agreed Upon Procedures Report“) as to the consistency of (x) the adjustments
to the March 31, 2003 balance sheets of Sellers furnished to Purchaser pursuant
to Section 3.5(a) and reflected in the Baseline Working Capital Statement and
(y) the adjustments made to the Target Working Capital Statements, were made in
accordance with the Agreed Upon Procedures and the definitions of Current
Assets, Current Liabilities, ALM Business, Target Amount and Securitization
Subsidiaries. Such report shall be final and binding upon the Purchaser,
Debtors and Lehman. To the extent that the Agreed Upon Procedures Report shall
state that there is any inconsistency, then the Seller shall issue a revised
Baseline Working Capital Statement and revised Target Working Capital
Statements, which shall be accompanied


 


29

















 


by a report of the Accountants that such Baseline Working Capital
Statement and adjustments to Target Working Capital Statements are prepared in
a manner consistent with the Agreed Upon Procedures and the definitions of
Current Assets, Current Liabilities, ALM Business, Target Amount and
Securitization Subsidiaries, which statements shall be final and binding upon
Purchaser, Debtors and Lehman, and such revised Baseline Working Capital
Statement and revised Target Working Capital Statements shall be deemed the “Baseline
Working Capital Statement” and the “Target Working Capital Statements” attached
to this Agreement as Exhibits E and H, respectively.


 


(ii)           Seller
shall furnish to Purchaser, Lehman and the Accountants as promptly as
practicable (and in any event on or prior to the 21st day of the
succeeding month, except on or prior to June 30, 2003 with respect to the April
2003 and May 2003 month-end reporting periods) following the closing of each of
its month-end reporting periods ending after April 30, 2003 and prior to the
Closing Date, detailed schedules (the “Month End Working Capital Schedules”)
setting forth a computation of Working Capital, Current Assets, Current
Liabilities and Adjustment Amount as of the end of such month, including
(A) a comparison of each line item included in Current Asset and Current
Liabilities to the corresponding line item in the Target Working Capital
Statement for such month-end, (B) a comparison of each line item included
in Permitted Cash Distributions and Permitted Cash Investments to the
corresponding line item in the Weekly Cash Flows for such period, (C) a
schedule setting forth each Extraordinary Cash Distribution and each
Extraordinary Cash Investment and (D) a schedule setting forth the computation
of the Adjustment Amount. Promptly following the receipt of the Month End Working
Capital Schedule, the Accountants shall conduct a review in accordance with the
Agreed Upon Procedures, of the Month End Working Capital Statement to determine
whether Working Capital, Current Assets, Current Liabilities and Adjustment
Amount were determined in a manner consistent with the Agreed Upon Procedures
and the definitions thereof set forth herein. The Accountants shall be
instructed to issue a preliminary report to Purchaser, Seller and Lehman, which
shall set forth in reasonable detail whether the Month End Working Capital
Statement and the components thereof were prepared in a manner consistent with
the Agreed Upon Procedures and such definitions within 10 days of the delivery
of the Month End Working Capital Statement, setting forth the nature of any
inconsistency.


 


(d)           (i)  Not later than 3:00 p.m. on the 5th
Business Day immediately preceding the Closing Date, Debtors shall prepare and
deliver to Purchaser the preliminary estimated closing working capital
statement and estimated cure costs statement, prepared in accordance with this
Agreement, together with a schedule to each statement setting forth in
reasonable detail the calculations of the estimated closing working capital and
estimated cure costs, respectively, supporting Debtors computations thereof,
and accompanied by a certificate of the chief accounting officer of Seller as to the accuracy of such
estimated closing working capital statement and estimated cure costs statement.


 


(ii)           Not
later than 9:00 a.m. on the Business Day immediately preceding the Closing
Date, Purchaser shall prepare and deliver to Seller and Lehman the Estimated
Closing Working Capital Statement and the Estimated Cure Costs Statement,
prepared in accordance with this Agreement, together with a schedule to each
statement setting forth in reasonable detail the calculations of Estimated
Closing Working Capital and the Estimated Cure


 


30

















 


Costs, respectively, supporting Purchaser’s computations thereof, and
accompanied by a certificate of a senior officer of Purchaser as to the
accuracy of such Estimated Closing Working Capital Statement and Estimated Cure
Costs Statement.


 


(e)           (i)  Within 75 days following the Closing Date,
Purchaser shall deliver to Seller and Lehman a Closing Working Capital
Statement and Cure Costs Statement, prepared in accordance with this Agreement,
together with a schedule to each statement setting forth in reasonable detail
the calculations of Closing Working Capital and Cure Costs respectively,
supporting Purchaser’s computations thereof, and accompanied by a certificate
of a senior officer of Purchaser as to the accuracy of such Closing Working
Capital Statement and Cure Costs Statement. Such Closing Working Capital
Statement, at Purchaser’s election, may or may not be accompanied by a report
of an independent public accounting firm thereon; provided that such report may
not be issued by the Accountants unless Seller and Lehman shall have previously
consented to their retention by Purchaser.


 


(ii)           Promptly
following receipt of the Closing Working Capital Statement and the Cure Costs
Statement, Seller and Lehman shall review the same and, within 30 days after
such receipt (the “Dispute Notice Period“), Seller and Lehman may deliver to
Purchaser a notice (a “Dispute Notice“) in the event that Seller and Lehman
determine in good faith that the Closing Working Capital Statement misstates
the Closing Working Capital and/or the Cure Costs Statement misstates the Cure
Costs. If either Seller or Lehman fail to deliver a Dispute Notice within the
Dispute Notice Period, Seller and Lehman will be deemed to have irrevocably
waived its right to deliver a Dispute Notice. Any Dispute Notice must specify
in reasonable detail those items or amounts as to which Seller or Lehman
disagree and the basis for their disagreement. Seller and Lehman will be deemed
to have agreed with all other items and amounts contained in the Closing
Working Capital Statement and the Cure Costs Statement, as applicable, to which
no specific objection has been made or no specific basis for an objection has
been given. If Seller or Lehman delivers a Dispute Notice within the Dispute
Notice Period, Seller, Lehman and Purchaser will negotiate in good faith to
agree upon the Closing Working Capital and the Cure Costs. If Seller, Lehman
and Purchaser fail to agree to such matters within 30 calendar days (the “Negotiation
Period“) after the Dispute Notice is delivered to Purchaser, matters described
in the Dispute Notice will be resolved by submission no later than five
Business Days following the expiration of the Negotiation Period to the
Accountants for determination of Closing Working Capital and/or Cure Costs
within 45 calendar days after the items in dispute are submitted to the
Accountants. If items in dispute are submitted to the Accountants for
resolution, (x) each party will furnish to the Accountants (and to the other
party) such work papers and other documents and information relating to the
disputed issues as the Accountants may request and are available to that party
(or its independent public accountants), and will be afforded the opportunity
to present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (y) the determination by the
Accountants, as set forth in a notice delivered to Debtors, Lehman and
Purchaser by the Accountants will be binding and conclusive on Debtors, Lehman
and Purchaser; and (z) Debtors, on the one hand, and Purchaser, on the other,
will each bear 50% of the fees of the Accountants for such determination.


 


(iii)          The
date on which the Closing Working Capital Statement and the Cure Costs
Statement are accepted or finally determined in accordance with this Section 2.5(e)



 


31

















 


is referred to as the “Determination Date“. The Closing Working Capital
Statement as accepted or finally determined in accordance with this Section
2.5(e) is referred to as the “Final Closing Working Capital Statement“ and the
Cure Costs Statement as accepted or finally determined in accordance with this
Section 2.5(e) is referred to as the “Final Cure Costs Statement“. On the fifth
Business Day following the Determination Date, Purchaser shall deliver to
Seller a statement (the “Determination Date Statement“) setting forth the final
computation of the cash portion of Purchase Price as follows:  (1) $230,000,000 less the aggregate
amount of letters of credit outstanding under the Congress Financial facility
that are not fully cash collateralized as of the date hereof, minus (2) the
excess, if any, of Cure Costs over the Cure Cost Threshold, plus (3), if
Closing Working Capital is greater than the Target Amount, an amount equal to
such excess, minus (4), if Closing Working Capital is less the
Target Amount, an amount equal to such shortfall; provided that the
amount determined pursuant to clause (3) or (4) shall be reduced by the
Deductible Amount. The cash portion of the Purchase Price as computed pursuant
to the preceding sentence is referred to herein as the “Determination Date
Amount“. On the Business Day immediately following the delivery of the
Determination Date Statement, the following payment shall be made to an account
specified by the recipient prior to such date:


 


(A)          If
the Determination Date Amount exceeds the Closing Date Amount, Purchaser shall,
and CCM shall cause Purchaser to, pay to Debtors, out of the Closing Escrow
Deposit and, with respect to any remaining balance, from other funds an amount
in immediately available same day funds equal to such excess, together with
interest on such amount at an annual rate equal to the Prime Rate calculated on
a 365-day year (the “Interest Rate“) from the Closing Date to the date of the
payment of such amount to Debtors; or


 


(B)           If
the Closing Date Amount exceeds the Determination Date Amount, Debtors shall
pay Purchaser, out of the Closing Escrow Deposit and, with respect to any
remaining balance, from other funds an amount in immediately available same day
funds equal to such excess, together with interest on such amount at the
Interest Rate from the Closing Date to the date of the payment of such amount
to Purchaser.


 


(f)            (i)  Prior to the Closing Date, Seller shall
deliver to Aon Risk Services (“Aon“) the Month End Working Capital Statement as
of the month-end of the month prior to the Closing Date (the “Estimate Date”),
prepared in accordance with the Agreed Upon Procedures, and shall cause Aon to
prepare an actuarial report (the “Aon Estimated Report“) regarding the
adequacy, as at the Estimate Date, of the Debtors’ accruals in such financial
statements in respect of auto liability self-insurance exposures for the
Business and the ALM Business (other than Large Auto Liability Claims), in a
manner consistent with the preparation of the report which Aon delivered to
Seller on or about March 31, 2003 regarding the adequacy of such accruals as at
February 28, 2003 (the “Aon March Report“) (provided, however, that Aon
shall be instructed to (i) take into account, in preparing the Aon Estimated
Report, the reserves of IAG in respect of such self-insurance exposures and
(ii) to take into account the effects of bankruptcy on the terms of settlements
and adequacy of accruals to the same extent it did so in preparing the Aon
March Report). Such Aon Estimated Report shall set forth the range of such
accruals that Aon believes to be appropriate as of the Estimate Date. The Aon
Estimated Report shall be furnished to Seller, Purchaser and Lehman. In
addition, not less than the 5th Business Day immediately preceding
the Closing Date, Seller shall deliver to Purchaser and Lehman a


 


32

















 


schedule setting forth the accrual required in respect of auto
liability self-insurance exposures for the Business and the ALM Business that
involve claims of $1 million or more (“Large Auto Liability Claims”) (such
accrual shall be determined in a manner consistent with past practice and shall
take into account the effects of bankruptcy on the terms of settlement and adequacy
of accruals to the same extent as Seller did so in establishing accruals for
Large Auto Liability Claims at March 31, 2003) (the “Management Accrual Amount“).


 


(ii)           To
the extent that the accruals in respect of auto liability self-insurance
exposures as of March 31, 2003 included in the Baseline Working Capital
Statement differs from the sum of (A) the mid-point of the range of accruals
proposed by the Aon March Report and (B) the accruals established as of March
31, 2003 in respect of Large Auto Liability Claims (the “March Management
Accrual Amount“), the amount of such difference shall be referred to as the “Differential.”


 


(iii)          For
purposes of calculating Current Liabilities in the Estimated Closing Working
Capital Statement, the amount of accruals in respect of auto liability
self-insurance exposures shall be the sum of (A) the mid point of the range of
accruals proposed by the Aon Estimated Report and (B) the March Management
Accrual Amount; provided, however, that, if the accruals as at March 31
(as reflected in the Baseline Working Capital Statement) exceeded the sum of
(A) the mid-point of the range proposed by the Aon March Report and (B) the
March Management Accrual Amount, the amount of such accruals in the Estimated
Closing Working Capital Statement shall be decreased by the Differential or, if
the accruals as at March 31 (as reflected in the Baseline Working Capital
Statement) were less than the sum of (A) mid-point of the range proposed by the
Aon March Report and (B) the March Management Accrual Amount, the amount of
such accruals in the Estimated Closing Working Capital Statement shall be
increased by the Differential.


 


(iv)          Promptly
following the Closing Date, Purchaser shall cause Aon to prepare an actuarial
report (the “Aon Closing Report“) regarding the adequacy, as at the Closing
Date, of the Debtors’ accruals that are reflected on the Closing Working
Capital Statement in respect of auto liability self-insurance exposures for the
Business and the ALM Business (other than Large Auto Liability Claims), in a
manner consistent with the preparation of the Aon March Report (provided,
however, that Aon shall be instructed to take into account, in preparing the
Aon Closing Report, the reserves of IAG in respect of such self-insurance
exposures). Such Aon Closing Report shall set forth the range of such accruals
that Aon believes to be appropriate as of the Closing Date. The Aon Closing
Report shall be furnished to Purchaser and Lehman. In addition, promptly
following the Closing Date Purchaser shall deliver to Seller and Lehman a
schedule setting forth the accrual required in respect of Large Auto Liability
Claims (such accrual shall be determined in a manner consistent with past
practice and shall take into account the effects of bankruptcy and the terms of
settlement and adequacy of accruals to the same extent as Seller did so in
establishing the March Management Accrual Amount (the “Closing Management
Accrual Amount”).


 


(v)           For
purposes of calculating Current Liabilities in the Closing Date Working Capital
Statement, the amount of accruals in respect of auto liability self-insurance
exposures shall be the sum of (A) the mid-point of the range of accruals
proposed by the Aon Closing Report and (B) the Closing Management Accrual
Amount; provided, however,


 


33

















 


that, if the accruals as at March 31 (as reflected in the Baseline
Working Capital Statement) exceeded the sum of (A) the mid-point of the range
proposed by the Aon March Report and (B) the March Management Accrual Amount,
the amount of such accruals in the Closing Date Working Capital Statement shall
be decreased by the Differential or, if the accruals as at March 31 (as
reflected in the Baseline Working Capital Statement) were less than the sum of
(A) the mid-point of the range proposed by the Aon March Report and (B) the
March Management Accrual Amount, the amount of such accruals in the Closing
Date Working Capital Statement shall be increased by the Differential.


 


(g)           The
Seller (and after the Closing, Purchaser)shall fully cooperate with Purchaser,
Lehman, their respective representatives, the Accountants, Aon (and after the
Closing, Seller) and shall provide Purchaser, Lehman, their respective
representatives, the Accountants, Aon (and after the Closing, Seller) with
reasonable access, upon reasonable prior notice, during normal business hours,
to the assets, properties, offices and other facilities, officers, employees,
Commitments and books and records of Seller and any Subsidiary, in connection
with their review of the Baseline Working Capital Statement, the Target Working
Capital Statements, the Month End Working Capital Statements, the estimated
statements delivered pursuant to Section 2.5(d)(i) and (ii) and the
determination of appropriate self-insurance accruals.


 


(h)           The Debtors, Purchaser and Lehman agree that
the amount of cash to be delivered to Seller by Purchaser at Closing shall be
further reduced by $6 million (“Indemnity Escrow Amount”) which shall be
governed by an escrow agreement to be mutually agreed upon by Purchaser, Lehman
and Seller (the “Indemnity Escrow Agreement”) unless the issues relating to the
state Tax liability set forth in the indemnity letter delivered to Purchaser on
the date hereof (the “Indemnity Letter”) are resolved prior to the Closing Date
(it being understood that an agreement on apportionment by the applicable state
authority and the payment of the state Tax liability to the jurisdiction set
forth in the Indemnity Letter shall be deemed to be a full and complete
resolution of the issue giving rise to the escrow arrangement).   The
scope of the indemnification and the material terms of the escrow arrangement
are set forth in the Indemnity Letter.  Lehman shall have the option, at any
time during the term of the Indemnity Escrow Agreement, to substitute an
indemnification agreement (based on the same terms set forth in the Indemnity
Letter) between Purchaser and Lehman for the remaining term of the Indemnity
Escrow  Agreement at which time all monies held pursuant to the Indemnity
Escrow Agreement shall be released.


 


Section 2.6             Purchase
Price Allocation . Purchaser and Debtors agree that the Purchase Price
and other relevant items will be allocated to the Acquired Assets for Tax
purposes in a manner consistent with Section 1060 of the Code and the Treasury
Regulations thereunder (and the corresponding provisions, if any, of applicable
non-U.S., state and local Tax Law). As promptly as practicable after the
Closing Date (or before the Closing Date with respect to certain assets, if
required by applicable Tax Law), Purchaser shall deliver to Seller a statement
that allocates the Purchase Price and other relevant items in accordance with
this Section 2.6 (the “Allocation Statement“). An independent, nationally
recognized valuation firm selected by Purchaser in its discretion shall be
instructed to prepare or review the Allocation Statement, as appropriate; provided,
however, that Seller will have the right to raise reasonable objections
to the valuation firm selected by Purchaser in a written notice delivered to
Purchaser no later than


 


34

















 


five (5) calendar days after Seller receives notice of such selection. Seller
shall pay any incremental costs associated with Purchaser’s selection of a
different valuation firm if Seller objects as described in this Section 2.6. The
Allocation Statement shall be adjusted in a manner consistent with this Section
2.6 to reflect any adjustments to the Purchase Price. Purchaser and Debtors
shall file all Tax Returns (including amended returns and claims for refund)
and information reports in a manner consistent with the Allocation Statement
and shall not take any position in any Tax proceeding that is inconsistent with
the Allocation Statement.


 


Section 2.7             Deposit .
Upon the entry of the Bidding Procedures Order, Purchaser shall, and CCM shall
cause Purchaser to, promptly, but in any event within one Business Day of such
date, deposit into escrow with JP Morgan Chase Bank (the “Escrow Holder“) an
amount equal to $11,500,000 (the “Deposit“) in immediately available funds, to
be held and disbursed pursuant to the escrow agreement among Debtors, CCM
Purchaser and the Escrow Holder (the “Escrow Agreement“) in the form attached
hereto as Exhibit D. Such Escrow Agreement shall include the provisions set
forth in this Section 2.7, including any provisions incorporated by reference
herein. Upon receipt of the Deposit, the Escrow Holder shall immediately
deposit the Deposit into an interest-bearing account. The Deposit shall only
become nonrefundable upon the earlier of (x) the Closing Date, (y) the
termination of this Agreement pursuant to Section 7.1(a)(iii)(A) or
(z) the last day of the month that all of the conditions set forth in Section
6.2 (with such date replacing the term “Closing” or “Closing Date” in Section
6.2) have been satisfied or waived and Purchaser fails to consummate the
transactions contemplated by this Agreement (an event specified in clause (y)
or (z), an “Escrow Release Event”). In the event the Deposit becomes
non-refundable by reason of a Escrow Release Event, the Escrow Holder shall
deliver the Deposit to Debtors in accordance with the Escrow Agreement. Such
payment shall not limit Seller’s rights to pursue any claims against Purchaser
or CCM for a breach of this Agreement. At the Closing, the Deposit (and any
interest accrued thereon) shall be credited toward payment of the Purchase
Price. If this Agreement is terminated for any reason other than an Escrow
Release Event, the Escrow Holder shall return to Purchaser the Deposit (and any
interest accrued thereon) in accordance with the Escrow Agreement  The Escrow Holder’s escrow fees and charges
shall be paid by Purchaser.


 


Section 2.8             The
Closing . The closing of the purchase and sale of the Acquired Assets
and the Assumed Liabilities hereunder and the other transactions contemplated
hereby (the “Closing“) shall take place at the offices of Schulte Roth &
Zabel LLP, 919 Third Avenue, New York, New York 10022, at a date (the “Closing
Date“) and time to be mutually agreed by Debtors and Purchaser, which shall be
(unless the parties otherwise agree) the last Business Day of the month in
which all of the conditions set forth in Article VI (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver by the party entitled hereunder to waive any such
condition of those conditions at the Closing).


 


Section 2.9             Deliveries
at Closing .


 


(a)           At
the time of the Closing, Debtors shall deliver, or cause to be delivered, to
Purchaser or its designated Affiliates, the following:


 


(i)            the
stock certificates, duly endorsed in blank or accompanied by a duly executed
transfer form in blank or other applicable instrument of transfer,


 


35

















 


together with, for each of the non-U.S. Subsidiaries, a power of
attorney in respect thereof in a form reasonably satisfactory to the Purchaser
and/or other appropriate documents representing the Equity Securities of the
Acquired Subsidiaries (together with all required stock transfer tax stamps
affixed, if any);


 


(ii)           assignments
and bill of sales to validly transfer title to the Acquired Assets to Purchaser
or its designated Affiliates, in form and substance reasonably satisfactory to
Purchaser;


 


(iii)          all
consents, waivers and approvals obtained by Debtors that are required by the
terms of this Agreement;


 


(iv)          a
copy of the entered Sale Approval Order;


 


(v)           such
other duly executed documents, instruments and certificates as may be necessary
or appropriate to be delivered by Debtors pursuant to this Agreement, including
without limitation, to the extent requested by Purchaser, resignations of the
officers and directors of the Acquired Subsidiaries;


 


(vi)          duly
executed Real Estate Deeds for each Owned Real Property listed on Schedule
2.1(u) in form acceptable for recording in the jurisdiction where the
respective Owned Real Property is located;


 


(vii)         Trade
Mark Deeds and Internet Domain Name Deeds as defined herein;


 


(viii)        the
certificates contemplated by Sections 6.2(a) and 6.2(b); and


 


(ix)           to
the extent applicable, the Certificates of Incorporation or other
organizational documents, common seal, share register and share certificate
book (with any unissued share certificates) and all minute books and other
statutory books (which shall be written-up to, but not including, the Closing
Date) of each Acquired Subsidiary.


 


(b)           At
the Closing, Purchaser shall deliver, and CCM shall cause to be delivered, to
Debtors or to the third parties designated by Debtors at least two Business
Days prior to the Closing Date, the following:


 


(i)            an
amount of cash equal to the Purchase Price, (A) less the amount of the
Deposit and any interest accrued thereon and (B) less any shortfall of the
Estimated Closing Working Capital from the Target Amount for the month in which
the Closing occurs or plus any excess of the Estimated Closing Working Capital
over the Target Amount for the month in which the Closing occurs, by wire
transfer of immediately available same day funds to an account or accounts
designated by Debtors at least two Business Days prior to the Closing Date;


 


36

















 


(ii)           assumption
agreements to effect the assumption by Purchaser or its designated Affiliates
of the Assumed Liabilities in form and substance reasonably satisfactory to
Seller;


 


(iii)          all
consents, waivers and approvals obtained by Purchaser or its Affiliates that
are required by the terms of this Agreement; and


 


(iv)          such
other duly executed documents, instruments and certificates as may be necessary
or appropriate to be delivered by Purchaser pursuant to this Agreement.


 


(c)           At
Closing, or as promptly as practicable thereafter, Purchaser shall deliver, and
CCM shall cause to be delivered, to the holders of the Assigned Contracts, an
amount of cash equal to the applicable Cure Costs thereunder as determined by
the Bankruptcy Court.


 


ARTICLE III



REPRESENTATIONS AND WARRANTIES OF SELLER


 


Seller hereby
represents and warrants to CCM and Purchaser as follows:


 


Section 3.1             Organization
and Qualification . Seller is duly organized, validly existing, and in
good standing under the Laws of the State of Delaware. Each of the Subsidiaries
is duly organized, validly existing and in good standing under the Laws of the
state or jurisdiction of its organization. Seller and each of the Subsidiaries
have all requisite power and authority to own or lease their respective assets
and to conduct the Business. Seller and each of the Subsidiaries, is duly
qualified to do business and is in good standing in each jurisdiction where the
conduct of its business or the ownership or lease of its assets requires such
qualification, except where the failure to be so qualified would not result in
or would not reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.


 


Section 3.2             Due
Authorization; Enforceability . Assuming the entry of the Sale
Approval Order, (a) each Debtor has the requisite corporate power and authority
to enter into, execute and deliver this Agreement and each Related Document to
which it is a party, and to consummate the transactions contemplated hereby and
thereby, (b) the execution and delivery by each Debtor of this Agreement, the
compliance by each Debtor with each of the provisions of this Agreement and
each Related Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby are within the corporate power and
authority of each Debtor and have been duly authorized by all necessary
corporate action of each Debtor, (c) this Agreement and each Related Document
to which it is a party has been validly executed and delivered by each Debtor,
and (d) assuming due authorization, and valid execution and delivery by
Purchaser of this Agreement and each Related Document to which Purchaser is a
party, this Agreement shall constitute a valid and binding agreement of such
Debtor enforceable against it in accordance with its terms, except for
limitations imposed by general principles of equity.


 


Section 3.3             Capitalization .
(a)     Schedule 3.3(a)
sets forth the authorized, issued and outstanding Equity Securities of each of
the Subsidiaries as of the date hereof,


 


37

















 


together with the identity of each holder of the Equity Securities of
the Acquired Subsidiaries. Debtors own all of the Equity Securities of the
Acquired Subsidiaries beneficially and of record. Upon delivery to Purchaser or
its designated Affiliates of the certificates, if any, and/or relevant
instruments of transfer in respect of the outstanding Equity Securities of the
Acquired Subsidiaries, at the Closing, Purchaser or its designated Affiliates
will acquire good and valid title to such Equity Securities of the Acquired
Subsidiaries, free and clear of any Encumbrances, other than Encumbrances under
the DIP Credit Agreement and the Liberty Bonding Commitment. As of the date
hereof, all of the outstanding Equity Securities of Seller and Subsidiaries
have been duly authorized and are validly issued, and are fully paid and
nonassessable (in jurisdictions where such concept is recognized).


 


(b)           Other
than pursuant to this Agreement and except as set forth in Schedule 3.3(b), there
are no outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other Commitments or rights of any type or other
securities (i) requiring the issuance, sale, transfer, repurchase, redemption
or other acquisition of the Equity Securities of the Acquired Subsidiaries,
(ii) except for restrictions under the DIP Credit Agreement and the Liberty
Bonding Commitment (neither of which shall restrict the transfer of the Equity
Securities of the Acquired Subsidiaries to Purchaser) and such restrictions
that will be inapplicable following the Closing Date, restricting the transfer
of any of the Equity Securities of the Acquired Subsidiaries or (iii) relating
to the voting of any of the Equity Securities of the Acquired Subsidiaries. There
are no issued or outstanding bonds, debentures, notes or other indebtedness of
any Acquired Subsidiary having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote), upon the happening of a
certain event or otherwise, on any matters on which the equity holders of any
Acquired Subsidiary may vote.


 


(c)           Except
as set forth in Schedule 3.3(a), neither Seller nor any Subsidiary owns or
controls any equity interest, or any interest convertible or exchangeable into
an equity interest, in any Person other than Seller or any Subsidiary.


 


Section 3.4             SEC
Reports . Except as set forth in Schedule 3.4, Seller has filed with
the SEC all reports, proxy statements, registration statements and other
documents Seller is required to file under the Securities Act and the Exchange
Act since January 1, 2001 (collectively, the “SEC Reports”). On the date of its
filing, each SEC Report (a) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (b) complied in all material
respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be.


 


Section 3.5             Financial
Statements; No Undisclosed Liabilities . (a)     Each of the consolidated balance sheets of
Seller (including the related notes and schedules) as of December 31, 2001,
December 31, 2002 and March 31, 2003, copies of which have been provided to
Purchaser, fairly presents, in all material respects, the consolidated
financial position of Seller and the Subsidiaries as of its date; and each of
Seller’s consolidated statements of results of operations, retained


 


38

















 


earnings and cash flows of Seller (including the related notes and
schedules) for the years ended December 31, 2001 and 2002 and the three months
ended March 31, 2003 fairly presents, in all material respects, the
results of operations, retained earnings and cash flows, as the case may be, of
Seller on a consolidated basis for the periods or as of the dates, as the case
may be, in each case in accordance with GAAP applied on a consistent basis
throughout the periods covered (except as stated therein or in the notes
thereto and except in the case of unaudited interim statements, which interim
statements: (i) are subject to normal year-end audit adjustments that are not
material and (ii) do not contain all of the footnote disclosures required by
GAAP).


 


(b)           Each
of the Profit and Loss Account, Statement of Total Recognized Gains and Losses,
Balance Sheet and Reconciliation of Shareholders’ Funds (including the related
notes and schedules) of ANC Rental Corporation (Holdings) Limited,  copies of which have been furnished to
Purchaser, for the fiscal year ended December 31, 2002 fairly present, in all
material respects, the consolidated financial position, the results of
operations and other financial data of the ANC Rental Corporation for the years
ended December 31, 2001 and 2002, in each case in accordance with the Companies
Act 1985 applied on a consistent basis throughout the periods covered.


 


(c)           Schedule 3.5(c) contains a list of the financial
statements (true, correct and complete copies of which have been furnished to
Purchaser) of each of the Securitization Subsidiaries for the fiscal year ended
December 31, 2002 and the three months ended March 31, 2003. Such financial
statements are prepared from the books and records of the Securitization
Subsidiaries and fairly present (but for the absence of allocation of overhead,
deferred taxes or equity method accounting), in all material respects, the
financial position and results of operations of the Securitization Subsidiaries
covered thereby for the year ended December 31, 2002 and the three months ended
March 31, 2003, and are prepared on a consistent basis throughout the periods
covered.


 


(d)           None
of the Acquired Subsidiaries has any claims, liabilities, indebtedness or
obligations of any nature (whether known or unknown, accrued, absolute,
contingent, asserted, liquidated or otherwise), except (a) as disclosed in
Schedule 3.5(d) or any other Schedules to this Agreement; (b) as reflected and
reserved against on the December 31, 2002 balance sheet or in the notes
thereto; (c) as incurred subsequent to December 31, 2002 and prior to the date
hereof in the Ordinary Course of Business (d) as incurred on or after the date
hereof in accordance with Section 5.1 of this Agreement or (e) liabilities that
would not result in, or would not reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.


 


(e)           The
Current Assets as of March 31, 2003, as derived from the unaudited March 31,
2003 financial statements provided to Purchaser pursuant to Section 3.5(a), and
the Current Liabilities as of March 31, 2003, as derived from the unaudited
March 31, 2003 financial statements provided to Purchaser pursuant to Section
3.5(a), are each as set forth in Exhibit E; and the Baseline Working Capital is
a deficit of $331,738,000.


 


Section 3.6             No
Conflicts or Violations; Consents . Except as set forth in Schedule
3.6, neither the execution, delivery or performance by any Debtor of this
Agreement or any Related Document to which any of them is a party nor, upon the
entry of the Sale Approval Order, the consummation of the transactions
contemplated hereby and thereby shall: (a) conflict with, or result in a breach
or a violation of, any provision of the certificate of incorporation or


 


39

















 


bylaws or other organizational documents of Seller or any of the
Subsidiaries; (b) constitute, with or without notice or the passage of time or
both, a breach, violation or default, create any Liability or Encumbrance
(other than Permitted Encumbrances), or give rise to any right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, (i) under any Law applicable to or binding on Seller or any
of the Subsidiaries or any of their respective properties or assets,
(ii) under any of the terms, conditions or provisions of (x) any
Commitment to which Seller or any Subsidiary is a party or by which any of their
respective properties or assets (including the Acquired Assets) is bound or (y)
any Permit listed on Schedule 3.11(a) or filing to which Seller or any
Subsidiary is subject or by which any of their respective properties or assets
(including the Acquired Assets) is bound, except in the case of Commitments and
Permits, those breaches, violations, defaults, or rights of termination,
modification, cancellation, prepayment, suspension, revocation or acceleration
that are excused by or are unenforceable as a result of the Bankruptcy Case or
the applicability of the Bankruptcy Code (but only to the extent such excuse,
lack of enforceability or application of the Bankruptcy Code will continue to
apply in favor of Purchaser following the Closing) or (c) except for (i) any
required filings under the Exchange Act or the Securities Act, (ii) the
Competition Approvals, and (iii) any consents of third parties set forth in
Schedule 3.6 (clauses (i) through (iii) referred to collectively as “Consents,
Approvals and Filings“), require any consent, approval or authorization of,
notification to, filing with, or exemption or waiver by, any Governmental Body
or any other Person on the part of Seller or any of the Subsidiaries, except in
the case of clause (b) and (c) above, for such breaches, violations, defaults
or Consents, Approvals and Filings which the failure of Seller or any of the
Subsidiaries to make or obtain would not result in or would not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect.


 


Section 3.7             Title
to Property . (a)    
Schedule 3.7(a)(i) lists all currently effective real property lease and
sublease Commitments related to the use and occupancy of real property entered
into by the Acquired Subsidiaries at the locations described thereon (together
with the real property lease and sublease Commitments listed in Schedule
2.1(o), the “Real Property Leases”). Schedule 3.7(a)(ii) lists all of the real
property owned by the Acquired Subsidiaries and the locations of such real
properties are described thereon (together with the owned real property listed
in Schedule 2.1(u), the “Owned Real Property”). Except as set forth in Schedule
3.7(a)(iii), Seller or its Subsidiaries have, (x) in the case of Owned Real
Property, good, valid and marketable title to, (y) in the case of Real Property
Leases, valid and binding leasehold interests or license in, and (z) in
the case of tangible personal property, good title to, or a valid lease or
licenses to use, all of their respective material assets, including, without
limitation, the Acquired Assets, and properties, including, without limitation,
the Owned Real Property and properties subject to the Real Property Leases,
free and clear of any Encumbrances, except, in each case, for Permitted
Encumbrances.


 


(b)           Except
as set forth in Schedule 3.7(b), no options or rights of first offer or rights
of first refusal or similar rights or options have been granted by Seller or
any Subsidiary to any Person (other than Purchaser) that are enforceable
despite the continuation of the Bankruptcy Case to (i) purchase, lease or
otherwise acquire any interest in any of the Acquired Assets, Owned Real
Property or Real Property Leases, (ii) become a Franchisee (or operate the
automotive rental business as Franchisee in any territory other than the
territory for


 


40

















 


which such Franchisee is currently licensed by Seller or any
Subsidiary) or (iii) use any Seller Intellectual Property.


 


(c)           Except
as set forth on Schedule 3.7(c), neither Seller nor any Subsidiary is in
material default under any material Real Property Leases.


 


(d)           The
assets to be transferred pursuant to this Agreement are all the properties and
assets (i) owned by Debtors (other than the Excluded Assets) and (ii) material
to the operation of the Business as currently conducted. There are no material
properties or assets relating to the Business owned by any Subsidiary of the
Seller that is not a Debtor, an Acquired Subsidiary or a direct or indirect
subsidiary of an Acquired Subsidiary.


 


(e)           Subject
to the entry of the Sale Approval Order, except as set forth on Schedule
3.7(e), all Real Property Leases listed in Schedule 2.1(o) are assumable by
Debtors and assignable by Debtors to Purchaser.


 


(f)            Except
as set forth on Schedule 3.7(f), to the Knowledge of Seller, all buildings,
structures and other improvements on any of the Owned Real Property or the Real
Property Leases are structurally sound with no material defects.


 


(g)           The
Owned Real Property complies, in all material respects, with all laws,
ordinance, zoning and other land use requirements.


 


Section 3.8             Absence
of Certain Changes . Except as set forth in Schedule 3.8 or the SEC
Reports filed prior to the date of this Agreement and for the continuation of
the Bankruptcy Case and the transactions contemplated by this Agreement, (i)
Seller and Subsidiaries, taken as a whole, have in all material respects
conducted their respective businesses in the Ordinary Course of Business since
March 31, 2003, (ii) Seller and Subsidiaries have not taken any actions, and no
events, changes or developments have occurred since March 31, 2003 that would
result in or would reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect and (iii) the Business has not experienced
any material damage (whether or not physical), destruction or loss (whether or
not covered by insurance) to its material tangible property, software or
electronic systems. Without limiting the generality of the foregoing, except as
set forth in Schedule 3.8, since March 31, 2003 and through the date hereof,
the Debtors and Acquired Subsidiaries have:


 


(a)           made
all capital expenditures with respect to the Business substantially required to
be made through May 31, 2003 in accordance with the Capital Expenditures Plan;


 


(b)           not
(1) declared, set aside or paid any dividend or other distribution payable in
cash, stock or property with respect to any shares of any class or series of
its Equity Securities or caused any Acquired Subsidiary to loan or advance any
funds to any Debtors, (2) redeemed, purchased or otherwise acquired directly or
indirectly any shares of any class or series of its Equity Securities, or any
instrument or security which consists of or includes a right to acquire such
securities or (3) formed or established any new Subsidiaries or Affiliates or
entered into any new joint venture, limited liability company agreement,
partnership agreement or similar agreement;


 


41

















 


(c)           not
terminated (other than as a result of the expiration of a term not subject to
renewal at the option of Seller or any Subsidiary), canceled or amended, or
caused the termination, cancellation or amendment of, any insurance coverage
(and any surety bonds, letters of credit, cash collateral or other deposits
related thereto required to be maintained with respect to such coverage)
maintained by it or them with respect to the Business which is not replaced by
a comparable insurance coverage, other than in the Ordinary Course of Business;


 


(d)           not
entered into any settlement or release with respect to any Litigation relating
to or affecting the Acquired Assets (unless such Litigation constitutes an
Excluded Asset or an Excluded Liability), other than in the Ordinary Course of
Business or as required by Law;


 


(e)           not
entered into any (1) Related Party Agreement, (2) options, warrants,
convertible securities, stock appreciation rights or similar securities with an
exercise or conversion privilege at a price related to, or derived from the
value of, any equity or debt security or (3) interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
floor agreement, interest rate exchange agreement, currency exchange agreement,
forward contract, repurchase and reverse repurchase contract, or any other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency values, including any arrangement whereby, directly or
indirectly, the party thereto has the right to receive periodic payments
calculated by applying either a fixed or floating rate of interest on a stated
notional amount in exchange for periodic payments made by such party calculated
by applying a fixed or floating rate of interest on the same notional amount or
otherwise (other than interest rate protection agreements entered into in
connection with or required pursuant to the DIP Credit Agreement and the
Securitization Transactions and Commitments related to indebtedness for
borrowed money of the Acquired Subsidiaries);


 


(f)            not
purchased, acquired or leased any vehicles;


 


(g)           continued
to sell or dispose of the Existing Vehicles in the Ordinary Course of Business
in all material respects and in accordance with the provisions of Section 3.24;


 


(h)           not
(1) entered into any new Franchise/Sales Agreements or barter agreements; or
(2) opened new automotive rental business locations; and


 


(i)            except
in accordance with the Airport Concession consolidation program (1) not
consented to the termination of any Airport Concession with respect to premises
located within any airport, (2) used commercially reasonable efforts to
maintain, keep and renew each existing Airport Concession in full force and
effect, and (3) paid all rents and fees currently due and payable in accordance
with the terms thereof and made and maintained all required deposits relating
to each such Airport Concession (other than with respect to rents, fees or deposits
arising prior to the Petition Date with respect to Airport Concessions not
assumed as of the date hereof in the Bankruptcy Case).


 


Section 3.9             Compliance
with Laws . (a)    
Except as set forth in Schedule 3.9(a), (i) Seller and each of the
Subsidiaries is in compliance with the requirements of all Laws,


 


42

















 


except in instances (A) where failure to so comply would not result in
or would not reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Effect, (B) with respect to matters arising under
Environmental Laws, which are treated exclusively under Section 3.15, (C) where
compliance with such Law is excused or stayed by the Bankruptcy Code or by an
order of the Bankruptcy Court, and (ii) no material investigation or review by
any Governmental Body with respect to the Acquired Assets or the Assumed
Liabilities is or was pending, or, to the knowledge of Seller, threatened,
against Seller or any Subsidiary, nor has any Governmental Body indicated in
writing an intention to conduct the same, that would result in or would
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect.


 


(b)           Except
as set forth in Schedule 3.9(b) and except with respect to matters arising
under Environmental Laws, which are treated exclusively under Section 3.15,
neither Seller nor any Subsidiary has any unresolved regulatory complaints or
investigations (including, without limitation, any initiated by one or more
Franchisees or a customer of Seller or any Subsidiary or a Governmental Body)
relating to the Acquired Assets or the Business, except for unresolved
complaints or investigations which would not result in or would not reasonably
be expected to result in, individually or in the aggregate, a Material Adverse
Effect.


 


Section 3.10           Litigation .
Except as disclosed in documents filed prior to the date hereof in connection
with the Bankruptcy Case or as set forth in Schedule 3.10, as of the date
hereof:


 


(a)           other
than Litigation relating to accidents involving the vehicles of the Business,
there is no claim, action, suit, investigation or proceeding (collectively, “Litigation“)
pending or, to Seller’s Knowledge, threatened against Seller or any of the Subsidiaries
or any of their respective assets or the Business, which if resolved adversely
to Seller or any of the Subsidiaries, would result in or which would reasonably
be expected to result in, individually or in the aggregate, a Material Adverse
Effect; and


 


(b)           there
is no outstanding order, writ, injunction or decree of any Governmental Body
against Seller or any of the Subsidiaries, any of the Businesses, the Acquired
Assets or any of the Assumed Liabilities which would result in or would
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect.


 


Section 3.11           Permits .
(a)     Except as set
forth in Schedule 3.11(a) and except with respect to Permits arising under
Environmental Laws, which are treated exclusively under Section 3.15, Seller
and each of the Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease, and operate their
properties and assets (including, but not limited to the Acquired Assets) and
to carry on the Business (collectively, the “Permits“), other than Permits that
are not material to the operation of the Business or the use, holding or
ownership of the Acquired Assets. All Permits material to the operation of the
Business have been duly obtained from the appropriate Government Body in each
applicable jurisdiction and are in full force and effect. A true and correct
list of all the Permits material to the operation of the Business is set forth
on Schedule 3.11(a).


 


43

















 


(b)           Each
holder of a Permit has operated in all material respects in compliance with all
terms thereof. No event has occurred which permits the revocation or
termination of any of the Permits or the imposition of any restriction thereon,
or that would prevent any of the Permits from being renewed on a routine basis
or in the Ordinary Course of Business except for any revocation, termination or
restriction that would not result in or would not reasonably be expected to
result in, individually or in the aggregate, a Material Adverse Effect. Except
as set forth in Schedule 3.11(b), neither Seller nor any Subsidiary is in
default (either with the giving of notice or lapse of time or the occurrence of
any other condition, event or circumstance) under any such Permit in any
material respect.


 


Section 3.12           Commitments .
(a)    Except as set forth in Schedule 3.12(a) and subject to
the payment of Cure Costs, as of the date hereof, (i) all Commitments of
Debtors and the Acquired Subsidiaries are valid, binding, in full force and
effect and enforceable by the applicable Debtor or Acquired Subsidiary, except
to the extent that any failure to be binding, in full force and effect or
enforceable, would not result in or would not reasonably be expected to result
in, individually or in the aggregate, a Material Adverse Effect, (ii) there
does not exist under any Commitment any violation, breach or event of default, or
conflict or event or condition that, after notice or lapse of time or both,
would constitute a violation, breach or event of default or lost benefit
thereunder or result in the termination of or a right of termination or
cancellation under, accelerate the performance required by, or result in the
creation of any Encumbrance upon any of the Acquired Assets or the respective
properties or assets of the Acquired Subsidiaries, on the part of Debtors or
any of the Acquired Subsidiaries, or to the Knowledge of Seller, any other
Person, except to the extent that such violation, breach or event of default
would not result in or would not reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect, and (iii) no
Commitment contains any change in control or other terms or conditions that
will become applicable or inapplicable as a result of the consummation of the
transactions contemplated by this Agreement, except for a change of control or
other term or condition that would not result in or would not reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Effect.


 


(b)           Debtors
have delivered or made available to Purchaser true and correct and in all
material respects complete copies of (i) all Commitments listed on
Schedules 2.1(b) through (o), (q), (x), (cc), (mm) and (nn) and all Commitments
of the type described in Sections 2.1(hh) and 3.16(d) (other than any
Commitment that involves payments to or from any Debtor of less than $100,000
annually and $250,000 in the aggregate or that is terminable by the Debtor
party thereto (and Purchaser as its assignee) on 90 days or less notice without
penalty, premium or other liability to such Debtor), (ii) each Commitment of
the type listed on Schedules 2.1(b) through (o), (q), (x), (cc), (mm) and (nn)
and each Commitment of the type described in Sections 2.1(hh) and 3.16(d), to
which any Acquired Subsidiary is a party as of the date hereof (which
Commitments are listed on Schedule 3.12(b), other than any such Commitment that
involves payments to or from any Acquired Subsidiary of less than $100,000
annually and $250,000 in the aggregate or that is terminable by any Acquired
Subsidiary party thereto on 90 days or less notice without penalty, premium or
other liability to such Acquired Subsidiary) and (iii) with respect to any
of the Acquired Subsidiaries, any Commitments as of the date hereof relating to
indebtedness for borrowed money, letters of credit, the deferred purchase price
of property, conditional sale arrangements, capital lease obligations,
obligations secured by Encumbrances or interest rate or currency hedging
activities (which Commitments are listed on


 


44

















 


Schedule 3.12(b)). Other than the Commitments described in clauses (i),
(ii) and (iii) above there are no other Commitments as of the date hereof to
which any Debtor or any Acquired Subsidiary is a party or bound that are,
individually or in the aggregate, material to the Business.


 


(c)           Schedule
3.12(c)(i) hereto contains a complete list of all Commitments as of the date
hereof that have been assumed by Debtors after the Petition Date and through
the date hereof. Schedule 3.12(c)(ii) hereto contains a list of all Commitments
that as of the date hereof are subject to pending assumption motions in the
Bankruptcy Case.


 


(d)           Subject
to the entry of the Sale Approval Order and except as set forth on Schedules
3.7(e) or 3.12(d), all Assigned Contracts to be transferred pursuant to this
Agreement are assumable by Debtors and assignable by Debtors to Purchaser.


 


Section 3.13           Employee
Benefit Matters .


 


(a)           Schedule
3.13(a) hereto contains a list of (i) each current “employee benefit plan,” as
defined in Section 3(3) of ERISA, covering current employees of Seller or any
Subsidiary, or which Seller or any Subsidiary maintains or has an obligation to
contribute; and (ii) each current stock purchase, stock option, stock
appreciation or other stock-based compensation, salary continuation, tuition
assistance, life or other insurance, severance, death benefit, vacation, sick
leave, change-in-control, welfare, fringe benefit, bonus, retention, incentive
and deferred compensation plan, agreement, program, policy or other arrangement
covering current employees of Seller or any Subsidiary, or which Seller or any
Subsidiary maintains or sponsors or to which it contributes. All such plans,
agreements, programs, policies and arrangements, other than Foreign Plans,
shall be collectively referred to as the “Benefit Plans”.


 


(b)           With
respect to each Benefit Plan and each Foreign Plan, complete and correct copy
of each of the following documents (if applicable and available) has been
provided or made available to Purchaser: 
(i) the most recent plan and related trust documents, and all amendments
thereto; (ii) the most recent summary plan description, and all related
summaries of material modifications; (iii) the most recent Form 5500 (including
schedules); and (iv) the most recent IRS determination letter.


 


(c)           Except
as set forth on Schedule 3.13(c) and Schedule 3.13(d) hereto, none of the
Benefit Plans are subject to Title IV of ERISA or Section 412 of the Code.


 


(d)           Except
as set forth on Schedule 3.13(d), neither Seller nor any Subsidiary or any of
their respective ERISA Affiliates is, or to the Knowledge of Seller, was,
during the preceding six years, obligated to contribute to, or contributes to,
any “multiemployer plan” within the meaning of Section 3(37) of ERISA.


 


(e)           Except
as set forth on Schedule 3.13(e) hereto, to the Knowledge of Seller, neither
Seller, any Subsidiary nor any of their respective ERISA Affiliates, has any
liability (contingent or otherwise) or potential liability (including, but not
limited to withdrawal liability with respect to a multi employer plan) to any
entity arising under Title IV of ERISA or Section 412 of the Code except as
would not result in or would not reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.


 


45














 


(f)            The
Benefit Plans and their related trusts that are intended to qualify under
Sections 401 and 501(a) of the Code, respectively, have been determined by
the IRS to qualify under such Sections and, to the Knowledge of Seller, nothing
has occurred since the time of such favorable determination to cause the loss
of such qualified status.


 


(g)           To
the Knowledge of Seller, all contributions required to have been made under any
Benefit Plan or any Law to any trusts established thereunder or in connection
therewith have been made by the due date therefor (including any valid
extensions).


 


(h)           The
Benefit Plans have been maintained in compliance with their terms and
applicable Laws, including but not limited to the timely filing of applicable
reports, documents and notices with the Department of Labor, the Internal
Revenue Service and the Pension Benefit Guaranty Corporation, other than any
incidents of noncompliance which would not, individually or in the aggregate,
have a Material Adverse Effect. There has been no “prohibited transaction”
(including without limitation as a result of any of the transactions
contemplated hereby) within the meaning of Section 4975(c) of the
Code or Section 406 of ERISA involving the assets of any Benefit Plan
after giving effect to the exemptions set forth in Section 4975(d) of
the Code and Section 408(b) of ERISA.


 


(i)            Except
as set forth in Schedule 3.13(i) hereto, neither Debtors nor any of
their respective ERISA Affiliates has used the services or workers provided by
Third Party contract labor suppliers, temporary employees, “leased employees”
(as that term is defined in Section 414(n) of the Code), or persons who
have provided services as independent contractors, to an extent that could
reasonably be expected to result in the disqualification of any Benefit Plan
under applicable Law, or the imposition of penalties or excise Taxes with
respect to any Benefit Plan by the Internal Revenue Service, the Department of
Labor, the Pension Benefit Guaranty Corporation or any other Governmental Body.


 


(j)            Except
(i) as disclosed in Schedule 3.13(j) hereto or (ii) claims for
benefits under the claims procedures of any Benefit Plans, there are no pending
or, to the Knowledge of Seller, threatened in writing, actions, claims or
proceedings against Seller or Subsidiary or any Benefit Plan or its assets with
respect to such plan.


 


(k)           Except
as disclosed in Schedule 3.13(k) hereto, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereunder will (i) increase any benefits under any Benefit
Plan or Foreign Plan or (ii) result in the acceleration of the time of
payment or vesting of any such benefits. In addition, except as disclosed and
described in Schedule 3.13(k) hereto, no Benefit Plan or agreement,
program, policy or other arrangement by or to which Seller or any Subsidiary is
a party, is bound or is otherwise liable, by its terms or in effect would or
could possibly require any payment or transfer of money, property or other
consideration on account of or in connection with the transactions contemplated
by this Agreement, including but not limited to any employee (current, former
or retired) of Seller or any Subsidiary (whether or not any such payment would
constitute a “parachute payment” or excess parachute payment within the meaning
of Section 280G of the Code).


 


46

















 


(l)            Except
as disclosed in Schedule 3.13(l) hereto and as required by Section 4980B
of the Code or Part 6 of Title I of ERISA, neither Seller nor any
Subsidiary has any obligation to provide medical, disability or death benefits
(whether or not insured) with respect to their respective current or former
employees beyond their retirement or other termination of employment. Except as
disclosed in Schedule 3.13(l) hereto, any continuation coverage provided
under any welfare benefit plan complies with Section 4980B of the Code or
the applicable requirements of Part 6 of Title I of ERISA and is at the
expense of the participant or beneficiary.


 


(m)          Except
as required by collective bargaining Commitments, or as required by applicable
Law, each Benefit Plan or Foreign Plan may be amended and terminated without
advance notice at any time after the Closing Date.


 


(n)           Schedule 3.13(n)
hereto contains a complete list of each Foreign Plan, except for those required
by applicable Law. Each Foreign Plan has been established, operated and
administered in all material respects in accordance with its terms and with the
requirements of applicable Law. All material contributions required to be made
under the terms of any Foreign Plan as of the Closing Date have been made or
will be timely made on or prior to the Closing Date. Neither Seller nor any
Subsidiary has incurred any obligations in connection with the termination of
or withdrawal from any Foreign Pension Plan except as required by operation of
applicable Law and set forth on Schedule 3.13(n) hereto, and do not have
any unfunded liability with respect to benefits under any Foreign Pension Plan
except as set forth on Schedule 3.13(n). With respect to any Foreign
Pension Plan for which GAAP or applicable Law requires that the reserves be
recorded on a statement of financial position, reserves have been so recorded
in a manner which is consistent with GAAP, or applicable Law. With respect to
any funded Foreign Pension Plan, the plan has been funded in accordance with
applicable Law and the terms of such plans. There are no pending or, to
Knowledge of Seller, threatened actions which have been asserted in writing or
instituted (other than in respect of benefits due in the ordinary course which,
in the aggregate are not material) against the assets of any of the Foreign
Plans or against Seller or any Subsidiary or any ERISA Affiliate or any fiduciary
of the Foreign Plans with respect to the Foreign Plans.


 


Section 3.14           Labor
Relations and Employment.


 


(a)           (i) Except
as set forth in Schedule 3.14(a)(i), there are no claims, charges,
complaints, or proceedings pending or, to the Knowledge of Seller, threatened,
against Seller or any Subsidiary relating to unfair labor practices,
discrimination, or under any legislation relating to employees, nor, to the
Knowledge of Seller, are there any valid basis for any such charges, claims or
complaints except for claims or proceedings which would not result in or would
not reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect, (ii) except as set forth in Schedule 3.14(a)(ii),
neither Seller nor any Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to Persons employed by
Seller or any Subsidiary, (iii) except as set forth in Schedule 3.14(a)(iii),
there is no activity or, to the Knowledge of Seller, any threatened activity
the purpose of which is to achieve representation of Persons employed by Seller
or any Subsidiary (including, but not limited to, an attempt by a union to
organize or represent the labor force of Seller or any Subsidiary) and (iv) there
are no strikes, slowdowns, work stoppages, lockouts, material labor


 


47

















 


disputes or grievances, or, to
the Knowledge of Seller, threats thereof, by or with respect to any employees
of Seller or any Subsidiary.


 


(b)           Except
as would not result in or would not reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect, Seller and each
Subsidiary are in substantial compliance with all Laws respecting employment,
employment practices, labor, terms and conditions of employment and wages and
hours, in each case, with respect to employees.


 


(c)           Except
as otherwise set forth on Schedule 3.14(c), there are no written or oral
employment, consulting or severance agreements to which Seller or any Subsidiary
is a party or by which it is bound. Except for the arrangements set forth in Schedule 3.14(c),
or as otherwise prohibited or regulated by applicable Law or applicable
collective bargaining agreement, the employment of each employee of Seller or
any Subsidiary may be terminated at any time and for any reason, without
notice, and such employees have the right to resign their employment at any
time.


 


(d)           Neither
Seller nor any Subsidiary is materially delinquent in payments to any of its or
their current employees or any former employees for any wages, salaries,
commissions, bonuses or other direct or indirect compensation for any services
performed by them, or for amounts required to be reimbursed to their current
employees or former employees.


 


(e)           Except
as set forth on Schedule 3.14(e) and except for any events that may
be caused by the Purchaser’s decision not to hire certain employees of Debtors
employed in the Business, there has been no event that has caused or required
the Seller or its Subsidiaries to issue the applicable notices under the WARN
Act or other similar Law requiring advance notification for the termination of
employees, and in the event that such an event has occurred, such event would
not result in Liabilities under the WARN Act or any other similar Law requiring
advance notification for the termination of employees.


 


Section 3.15           Environmental
Matters.


 


(a)           Except
as set forth in Schedule 3.15(a)(i), Seller and the Subsidiaries are in
compliance with all applicable Environmental Laws and Seller and each
Subsidiary has obtained and is in compliance with all Permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof, except where such
non-compliance would not result in or would not reasonably be expected to
result in, individually or in the aggregate, a Material Adverse Effect. Schedule 3.15(a)(ii) is
a true and correct list of the environmental Permits material to the operation
of the Business.


 


(b)           Except
as set forth in Schedule 3.15(b), there are no Environmental Claims
pending or, to the Knowledge of Seller, threatened against Seller or any of the
Subsidiaries or, to the Knowledge of Seller, against any Person whose liability
for any Environmental Claim, Seller or any of the Subsidiaries has or may have
retained or assumed either contractually or by operation of Law, in each case,
except for such Environmental Claims


 


48

















 


as would not result in or would
not reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect.


 


(c)           Except
as set forth in Schedule 3.15(c), to the Knowledge of Seller, there are no
circumstances, conditions, events or incidents that could form the basis of any
Environmental Claim against Seller or any of the Subsidiaries or against any
Person whose liability for any Environmental Claim Seller or any of the
Subsidiaries has or may have retained or assumed either contractually or by
operation of Law, in each case, except for such Environmental Claims as would
not result in or would not reasonably be expected to result in, individually or
in the aggregate, a Material Adverse Effect.


 


(d)           Except
as set forth in Schedule 3.15(d), to the Knowledge of Seller, no
Environmental Claims have been asserted against any facilities that may have
received Hazardous Materials generated by Seller or any Subsidiary or any
predecessor in interest nor has there been a release at such facility which is
reasonably likely to result, individually or in the aggregate, in a Material
Adverse Effect.


 


(e)           Except
as set forth in Schedule 3.15(e), there has been no Release at any of the
properties owned or operated by Seller or any Subsidiary or a predecessor in
interest, which is reasonably likely to result, individually or in the
aggregate, in a Material Adverse Effect.


 


(f)            Except
as set forth in Schedule 3.15(a)(i), 3.15(b), 3.15(c), 3.15(d) and
3.15(e), to the Knowledge of Seller, there are no Environmental Liabilities
associated with the Acquired Assets or the assets, business or properties
(presently or formerly owned or occupied) of the Acquired Subsidiaries, whether
accrued, contingent, absolute, determinable or otherwise, that are reasonably
likely to result in a Material Adverse Effect and, to the Knowledge of Seller,
there are no current facts, conditions, situations or set of circumstances
which would reasonably be expected to result in such Environmental Liabilities,
except as would not result in or would not reasonably be expected to result in,
individually or in the aggregate, in a Material Adverse Effect.


 


(g)           Debtors
have made available for inspection by Purchaser true and, in all material
respects, complete copies of all material environmental reports, studies,
investigations or correspondence regarding any Environmental Liabilities of
Seller and the Subsidiaries, or any environmental conditions at any of the
properties which are in possession of Seller or any Subsidiary or their
respective agents.


 


Section 3.16           Intellectual
Property.


 


(a)           Seller
and each of the Subsidiaries own and have the right to use (subject to any
licenses granted therein that are set forth in Schedule 3.16(a)) or, in
the case of licensed rights, have valid rights to use, all Intellectual
Property material to the operation of the Business as currently conducted, free
and clear of all Encumbrances (other than Permitted Encumbrances and licenses
that are set forth in Schedule 3.16(a)). All such Intellectual Property
that is Seller Owned Intellectual Property is valid and enforceable in all
material respects.


 


49

















 


(b)           Except
as set forth in Schedule 3.16(b), or as would not reasonably be expected
to be material to the operation of the Business as currently conducted, the
Business does not infringe upon, violate, or misappropriate the Intellectual
Property rights of any Person. Except as set forth in Schedule 3.16(b), no
Litigation is pending or, to the Knowledge of Seller, threatened, concerning
any claim or position that Seller or any Subsidiary has violated any
Intellectual Property rights.


 


(c)           Except
as set forth in Schedule 3.16(c), (i) to the Knowledge of Seller,
there is no infringement or unauthorized use by any Person of any Seller Owned
Intellectual Property, and (ii) Seller Owned Intellectual Property
(including the validity and title thereto) has not been questioned in or the
subject of any prior Litigation, is not being questioned in or the subject of
any pending Litigation, and, to the Knowledge of Seller, is not the subject of
any threatened or proposed Litigation. No Debtor has received actual notice
that the Seller Intellectual Property other than the Seller Owned Intellectual
Property has been questioned in, or the subject of any prior, pending,
threatened or proposed Litigation.


 


(d)           Schedule 3.16(d) sets
forth a true and in all material respects complete list of all (i) Registered
or otherwise material Seller Intellectual Property as of the date hereof and (ii) material
Intellectual Property Contracts as of the date hereof. Except as set forth in Schedule 3.16(c),
no material Seller Owned Intellectual Property, and no Debtor has received
notice that any other Seller Intellectual Property, has been abandoned,
canceled or adjudicated invalid (excepting any expirations in the ordinary
course), or is subject to any outstanding order, judgment or decree restricting
its use or adversely affecting or reflecting the rights of Seller or any
Subsidiary thereto, or is subject to any challenge or opposition.


 


(e)           Seller
and each Subsidiary has timely made all filings and payments with the
appropriate foreign and domestic agencies required to maintain in subsistence
all Seller Owned Intellectual Property that is Registered, and has diligently
pursued all applications for registration forming part of the Seller Owned
Intellectual Property that is Registered, except where failure to make such
filings and payments, or to pursue such applications, is intentional based on
the sound business judgment of the applicable Seller or any Subsidiary, or
where such failure would not be material to the conduct of the business of the
applicable Seller or any Subsidiary.


 


Section 3.17           Taxes.
Except as set forth on Schedule 3.17,


 


(a)           Seller,
each Subsidiary and any affiliated, consolidated, combined or unitary group
(under any federal, state, local or foreign Tax Law) of which any Seller or any
Subsidiary is or has been a member (each, an “Affiliated Group”) has (i) timely
filed all material Tax Returns required to be filed by it, and all such Tax
Returns are true, correct and complete in all material respects and (ii) timely
paid in full all Taxes due and payable or claimed to be due and payable from it
by any Tax authority.


 


(b)           There
are no liens for Taxes (other than statutory liens for Taxes not yet due and
payable) on any of the Acquired Assets or the assets of any Acquired Subsidiary
(or any subsidiary of an Acquired Subsidiary).


 


50

















 


(c)           There
are no United States federal, state, local or foreign audits, examinations or
inquiries pending with respect to any Taxes or Tax Returns of Seller, any
Subsidiary, any Affiliated Group or any Acquired Subsidiary (including any
audits, examinations or inquiries which could result in a Tax liability for
which any Acquired Subsidiary or any direct or indirect subsidiary of an
Acquired Subsidiary could be jointly or severally liable under Treasury
Regulations Section 1.1502-6 or any comparable state, local or foreign Tax
provision), and no written notification has been received by Seller, any
Subsidiary, any Affiliated Group or any Acquired Subsidiary that such an audit
or other proceeding is pending or threatened with respect to any such Taxes or
Tax Returns.


 


(d)           No
deficiency with respect to Taxes has been proposed, asserted or assessed in
writing against Seller, any Subsidiary, any Affiliated Group or any Acquired
Subsidiary that has not been resolved and, if applicable, paid in full, and
there are no outstanding agreements or waivers extending the statutory period
of limitations applicable to any material Tax Returns required to be filed with
respect to Seller, any Subsidiary, any Affiliated Group or any Acquired
Subsidiary.


 


(e)           No
Seller, Subsidiary, Affiliated Group or Acquired Subsidiary has requested any
extension of time within which to file any material Tax Return, which Tax
Return has not yet been filed.


 


(f)            Seller,
each Subsidiary and each Acquired Subsidiary has complied in all material
respects with all applicable Laws relating to the payment and withholding of
Taxes from the wages or salaries of employees and independent contractors, and
has paid over to the proper governmental authorities all amounts required to be
so withheld and is not liable for any Taxes for failure to comply with such
Laws.


 


(g)           Each
Acquired Subsidiary (and each direct and indirect subsidiary of an Acquired
Subsidiary) has (i) timely filed all material Tax Returns required to be
filed by it, and all such Tax Returns are true, correct and complete in all material
respects and (ii) timely paid in full all Taxes due and payable or claimed
to be due and payable from it by any Tax authority.


 


(h)           Each
Acquired Subsidiary (and each direct and indirect subsidiary of an Acquired
Subsidiary) has been included only in the affiliated, consolidated, combined,
unitary or similar groups for United States federal, state, local or foreign
Tax purposes described in Schedule 3.17(h) hereto.


 


(i)            To
the knowledge of the directors and officers of the Seller and any Acquired Subsidiary
(or any direct or indirect subsidiary of an Acquired Subsidiary), no
jurisdiction where any Acquired Subsidiary (or any direct or indirect
subsidiary of an Acquired Subsidiary) does not file a Tax Return has made a
claim that such Acquired Subsidiary (or such subsidiary of an Acquired
Subsidiary) is required to file a Tax Return in such jurisdiction.


 


(j)            No
Acquired Subsidiary (and no direct or indirect subsidiary of an Acquired
Subsidiary) is a party to, is bound by, or has an obligation under, any Tax
sharing agreement, Tax indemnification agreement or similar contract and no
Acquired Subsidiary (and


 


51

















 


no subsidiary of an Acquired
Subsidiary) has a potential liability or obligation to any Person as a result
of, or pursuant to, any such contract.


 


(k)           No
Acquired Subsidiary (and no direct or indirect subsidiary of an Acquired
Subsidiary) has agreed to, or is required to, include in income any adjustment
pursuant to Section 481(a) of the Code (or any similar provision of
state, local or foreign Law) by reason of a change in accounting method or
otherwise (nor has any Tax authority proposed in writing any such adjustment or
change of accounting method).


 


(l)            No
consent or election under Section 341 of the Code has been made for any
Acquired Subsidiary or any direct or indirect subsidiary of an Acquired
Subsidiary.


 


(m)          The
acquisition of Equity Securities of any Acquired Subsidiary or any other
Acquired Assets will not be a factor causing any payments to be made by an
Acquired Subsidiary (or any direct or indirect subsidiary of an Acquired
Subsidiary) to be nondeductible (in whole or in part) pursuant to Section 280G
or 162(m) of the Code, and neither any Acquired Subsidiary nor any direct or
indirect subsidiary of an Acquired Subsidiary is a party to any agreement or
understanding that could require it to pay any amount that would not be
deductible under either Section.


 


(n)           Neither
any Acquired Subsidiary nor any direct or indirect subsidiary of an Acquired
Subsidiary has filed with respect to any item a disclosure statement pursuant
to Section 6662 of the Code or any comparable disclosure with respect to
state, local or foreign Tax statutes.


 


(o)           The
net operating loss carryover available under Section 172(a) of the
Code to the affiliated group of which Seller is the common parent for United
States federal income tax purposes for the taxable year of such group that
began on January 1, 2003 (the “2003 Year) is not less than $520,000,000,
excluding the effect of filing amended Tax Returns as required under the
AutoNation Settlement Agreement and AutoNation Side Letter. Except as otherwise
contemplated by this Agreement (including, for the avoidance of doubt, any
Internal Restructuring Transactions approved by Purchaser under Section 5.22)
or as required under the AutoNation Settlement Agreement and AutoNation Side
Letter, since January 1, 2003, neither Seller nor any Subsidiary (or any
Affiliate of Seller or any Subsidiary) has acted or failed to act in any way
that would materially reduce the availability of such net operating losses for
the 2003 Year.


 


Section 3.18           Brokers.
Except as set forth on Schedule 3.18, no agent, broker, investment banker,
financial advisor or other Person is or will be entitled to any broker’s or
finder’s fee or any other commission or similar fee from Seller or any
Subsidiary in connection with any of the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Seller or any
Subsidiary or Affiliate.


 


Section 3.19           Vehicles.


 


(a)           Schedule 3.19
contains the following information which is correct in all material respects as
of the dates set forth in such Schedule (except that no information need
be provided under clause (ii)(C), (D), (E), (F) or (G) with respect
to leased Existing Vehicles):


 


52

















 


(i) a list of all vehicles
owned, leased or operated by Seller or Subsidiary for purposes of renting such
vehicle to customers of the Business (the “Existing Vehicles”); and (ii) for
each Existing Vehicle, (A) Seller or Subsidiary owner or lessee thereof, (B) whether
such Existing Vehicle is owned or leased, (C) the original purchase price
thereof, (D) the date such vehicle was delivered to Purchaser thereof, (E) the
current net book value thereof, (F) the current monthly depreciation
charges in respect thereof (expressed as a percentage of the original purchase
price), (G) the respective vehicle identification number or equivalent
thereof, (H) the manufacturer and model year and (I) the mileage thereof.


 


(b)           None
of the Existing Vehicles listed on Schedule 3.19 have been the subject of
theft, loss, casualty, or destruction, or have been sold or otherwise disposed
of (except for such thefts, losses, casualties, destruction, sales or
dispositions which are within the range customarily experienced in the Ordinary
Course of Business).


 


(c)           Seller
and the Subsidiaries have adequate information systems to determine the
location (or, if rented, the location to which it is assigned) of each Existing
Vehicle used or held for use by Seller or any Subsidiary in connection with the
Business.


 


Section 3.20           Affiliate
Transactions. Schedule 3.20 hereto sets forth a description in
reasonable detail of (a) all transactions between an Acquired Subsidiary,
on the one hand, and a Debtor, on the other hand, after December 31, 2001
and through May 31, 2003; (b) all indebtedness of the Acquired
Subsidiaries to Debtors at May 31, 2003; (c) all indebtedness of
Debtors to all Acquired Subsidiaries at May 31, 2003; (d) all other
material Commitments and other material arrangements as of the date hereof
between an Acquired Subsidiary (or a direct or indirect subsidiary of an
Acquired Subsidiary), on the one hand and a Debtor, on the other hand, after December 31,
2001 and through the date hereof; and (e) all transactions occurring after
December 31, 2002 and prior to the date hereof that would be required to
be disclosed pursuant to Item 404 of Regulation S–K (collectively, “Related
Party Agreements”).


 


Section 3.21           Airport
Concessions. (a)    Schedule 3.21(a) contains a
correct and, in all material respects, complete list of all airport concessions
or licenses (whether evidenced in the form of a Commitment or otherwise)
entered into by, granted, to or applicable to Seller or any Subsidiary as of
the date hereof and which relate to the Business (collectively, “Airport
Concessions”). Prior to the date hereof true, correct and, in all material
respects, complete copies of all Airport Concessions have been made available
by Debtors to Purchaser. Except as set forth in Schedule 3.21(a), all
Airport Concessions are valid, binding and in full force and effect and are
enforceable by Seller and/or applicable Subsidiary as concessionaire (or
licensee, however designated, the “Concessionaire”) thereunder.


 


(b)           Except
as set forth in Schedule 3.21(b), each Airport Concession grants the
applicable Concessionaire (i) the right to use and occupy the counter
areas, if any, in the terminals on an exclusive basis and the right to use and
occupy the rental operations area and related parking areas designated therein
and (ii) non-exclusive right to use and occupy such other areas of the
applicable airport as may be necessary for the operation of the Business at
such airport. Except as set forth in Schedule 3.21(b), all material
covenants to be performed by Seller and/or the applicable Subsidiary and, to
the Knowledge of Seller, all material covenants to be


 


53

















 


performed by (x) the applicable
airport authority or airport operator or (y) the applicable Franchisee under
each Airport Concession, have been performed in all material respects, and no
event has occurred or circumstance exists which, with the delivery of notice or
the passage of time or both, would constitute a breach or default under the
applicable Airport Concession, or which would permit the termination,
modification or revocation of such Airport Concession, except that Debtors have
not made certain payments under certain Airport Concessions in connection with
or in anticipation of the Bankruptcy Cases.


 


(c)           Subject
to the entry of the Sale Approval Order, except as set forth in Schedule 3.21(c),
no consent is required for the assignment of any Airport Concession contemplated
hereby.


 


Section 3.22           Business
Records. Seller and each Subsidiary has at all times since January 1,
2002 maintained Business Records which accurately reflect all its material
transactions, and have at all time maintained accounting controls, policies and
procedures reasonably designed to provide that such transactions are executed
in accordance with its management’s general or specific authorization, and
recorded in a manner which permits the preparation of financial statements in
accordance with GAAP (or in the case of a Foreign Subsidiary reconciliation of
financial statements to GAAP) and applicable regulatory accounting requirements
and other account and financial data, and the documentation pertaining thereof
is retained, protected and duplicated in accordance with applicable regulatory
requirements.


 


Section 3.23           Franchisee
Matters. (a)    
Debtors have delivered or made available to Purchaser a true and, in all
material respects, complete copy of the current uniform franchise offering circular
and other disclosure statements of Seller and the Subsidiaries in connection
with its sale of franchises to subfranchisors and Franchisees, both U.S. and
foreign. As of their respective dates, such documents complied in all material
respects with the requirements of the Federal Trade Commission Act of 1914, as
amended, to the extent applicable.


 


(b)           Except
as set forth in Schedule 3.23(b), to the Knowledge of Seller, (i) each
Franchisee operates substantially in accordance with the policies, procedures
and guidelines of the Business as the same may be, or have been, in effect from
time to time and (ii) as of the date hereof there is no Litigation pending
or threatened against any such Franchisee by Seller or any of the Subsidiaries
in connection with the conduct of the Business.


 


Section 3.24           Vehicle
Return Pursuant to Repurchase Programs; Vehicle Orders.


 


(a)           Since
March 31, 2003 and through the date hereof, Seller and each Subsidiary has
sold, returned or otherwise disposed of, each vehicle subject to a Repurchase
Program (other than a vehicle that has been the subject of theft, loss,
casualty, or destruction) to the related manufacturer official auction or other
facility designated by the relevant Vehicle Manufacturer or Affiliate thereof
at the relevant lessee’s sole expense after the minimum term or mileage limit
under such Repurchase Program for such vehicle is achieved, but prior to the
expiration of the maximum term and/or prior to reaching the maximum mileage
limit under such Repurchase Program for such vehicle, other than (i) isolated
cases not exceeding more than 50


 


54

















 


vehicles in any calendar month
on average and (ii) vehicles redesignated as “non-program vehicles” in
accordance with the applicable Securitization Documents.


 


(b)           Schedule 3.24(b) sets
forth, in all material respects, as of the dates set forth in such Schedule,
each outstanding vehicle purchase or lease order placed by Seller or any
Subsidiary with Vehicle Manufacturers relating to the Acquired Assets
specifying (i) the date of the relevant order, (ii) the number, type
and year model of the vehicles covered by such order, (iii) the purchase
price per vehicle and (iv) the expected date of delivery thereof.


 


Section 3.25           Securitization
Matters. (a)     None
of the Offering Memoranda, nor any report, statement and certificate delivered
to any Noteholders pursuant to any Securitization Document, contained at the
time delivered any untrue statement of a material fact or omitted to state a material
fact required to be stated otherwise or necessary to make the statements
therein, in the light of circumstances under which they were made, not
misleading.


 


(b)           Debtors
have delivered or made available to Purchaser true and complete copies of (i) all
material Securitization Documents with respect to each Securitization
Transaction and (ii) all material reports, communications and certificates
furnished by Seller or any Subsidiary to any Noteholders or the trustee for any
Securitization Transaction. None of the provisions of any Securitization
Document has been waived, supplemented or amended.


 


(c)           Other
than the Amortization Events caused by the commencement of the Bankruptcy Case
by Debtors or as set forth on Schedule 3.25(c), no Amortization Event (or
event which, but for the giving of notice or the passage of time, would become
an Amortization Event) has occurred with respect to any Securitization
Transaction.


 


Section 3.26           Insurance.


 


(a)           Schedule 3.26(a) contains
a true, accurate and, in all material respects, complete description of all
policies of collision, fire, casualty, liability, workmen’s compensation and
other forms of insurance, reinsurance and similar arrangements as of the date
hereof (other than any such arrangements covered by Section 3.13(a))
collectively, the “Policies”) pursuant to which Seller or any Subsidiary seeks
to limit, or transfer to a Third Party, financial or other risk, owned or held
by Seller or any of the Subsidiaries, applicable to Seller or Subsidiary or any
of their respective assets, in each case relating to or in connection with the
Business. Except as set forth in Schedule 3.26(a), as of the date hereof,
all Policies are in full force and effect, all premiums with respect thereto
covering all periods through the dates specified on Schedule 3.26(a) have
been paid, or are current with respect to agreed-upon installment plans, and no
notice of cancellation or termination has been received with respect to any
such policy. For each such Policy, Schedule 3.26(a) provides:  (i) the date of such Policy; (ii) the
name of the insurer; (iii) the risks covered thereby; and (iv) expiration
date. Such Policies (or replacement Policies providing substantially equivalent
coverage) (v) are sufficient, as of the date hereof, for compliance in all
material respects with Law and of all Commitments to which Seller or any of its
Subsidiaries is a party, (w) are valid, outstanding and enforceable policies,
(x) provide adequate insurance coverage for the assets and operations of Seller
and each of its Subsidiaries, and (y) will remain in full force and effect
through the respective dates set forth in Schedule 3.26(a) without
payment of additional premiums except pursuant to negotiated


 


55

















 


installment payments, auditable
Policies, premium financing agreements and retrospectively rated Policies. Prior
to the date of this Agreement, Seller has provided or made available to
Purchaser a list of all claims made under the Policies with respect to which
Debtors have retained risk and of all payments made to the insured party or
parties thereunder since January 1, 2002 through March 31, 2003, it
being understood that the information contained in such list is true, accurate
and, in all material respects complete.


 


(b)           Schedule 3.26(b) identifies
all risks with respect to the Business which Seller and the Subsidiaries have
been specifically designated as being self insured or self fronted with respect
to which Debtors have retained risk (other than arrangements covered by Section 3.13(a)).


 


(c)           Schedule 3.26(c) identifies:  (i) each type of ancillary counter
insurance product offered by Seller and/or the Subsidiaries to renters of
Rental Vehicles; and (ii) a description of the material terms of any
insurance or reinsurance purchased in respect thereof. Seller has provided or
made available to Purchaser true and, in all material respects, complete copies
of (x) all materials pursuant to which such ancillary counter insurance product
coverage is offered to customers of the Business and (y) the policies of such
insurance or reinsurance. Prior to the date of this Agreement, Seller has
provided Purchaser with a true, correct and, in all material respects, complete
claims history since January 1, 2002 and through March 31, 2003 in
respect of each such type of insurance coverage offered to customers of the
Business with respect to which Debtors have retained risk.


 


(d)           Except
as set forth in Schedule 3.26(c), each of the policies being transferred
to Purchaser pursuant to Section 2.1(n) provides insurance coverage for
the exclusive benefit of the Business, including Persons granted rights
thereunder as additional insured in the Ordinary Course of Business.


 


Section 3.27           Exclusivity
of Representations and Warranties. No representations or warranties are
made by the Sellers, including, without limitation, any implied warranties as
to merchantability or fitness for a particular purpose or any other implied
warranties, other than as expressly set forth in this Agreement. The Sellers
hereby disclaim any such other or implied representations or warranties,
notwithstanding the delivery of disclosure to the Purchaser or its officers,
directors, employees, agents or representatives of any documentation or other
information (including any financial projections or other supplemental data not
included in this Agreement).


 


56

















 


ARTICLE IV



REPRESENTATIONS AND WARRANTIES OF CCM AND PURCHASER


 


CCM and
Purchaser hereby jointly and severally represent and warrant to Seller, as
follows:


 


Section 4.1             Organization
and Qualification. Each of CCM and Purchaser is duly organized, validly
existing, and in good standing under the Laws of the state or jurisdiction of
its organization, and has all requisite power and authority to own, lease, and
operate its assets and to conduct its business.


 


Section 4.2             Due
Authorization. Each of Purchaser and CCM has the requisite power and
authority to enter into, execute and deliver this Agreement and each Related
Document to which it is a party to consummate the transactions contemplated
hereby and thereby. The execution and delivery by Purchaser and CCM of this
Agreement and each Related Document to which either is a party, the compliance
by Purchaser and CCM with each of the provisions of this Agreement and each
Related Document to which either is a party, and the consummation by Purchaser
and CCM of the transactions contemplated hereby and thereby are within the
power and authority of Purchaser and CCM and have been duly authorized by all
necessary action on the part of Purchaser and CCM. This Agreement and each
Related Document to which either is a party has been validly executed and
delivered by Purchaser and CCM. Assuming due authorization and valid execution and
delivery by Debtors of this Agreement and each Related Document to which any of
them are a party, this Agreement and each Related Document to which Purchaser
or CCM is a party shall constitute a valid and binding agreement of Purchaser
or CCM enforceable against Purchaser or CCM in accordance with its terms,
except as such enforcement is limited by bankruptcy, insolvency and other
similar Laws affecting the enforcement of creditors’ rights generally and for
limitations imposed by general principles of equity.


 


Section 4.3             Consents;
No Violations. Neither the execution, delivery or performance by Purchaser
or CCM of this Agreement and each Related Document to which either is a party
nor the consummation by Purchaser or CCM of the transactions contemplated
hereby and thereby will:  (a) conflict
with, or result in a breach or violation of, any provision of the
organizational documents of Purchaser or CCM; (b) constitute, with or
without notice or the passage of time or both, a breach, violation or default,
create an Encumbrance, or give rise to any right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration,
under any Law or any provision of any Commitment to which Purchaser or CCM is a
party, or to which Purchaser or CCM or any of their respective assets or
properties is subject, except, with respect to the matters set forth in clause (b) of
this Section 4.3, for breaches, violations, defaults, Encumbrances, or
rights of termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration, which would not result in or would not
reasonably be expected to result in, individually or in the aggregate, a
material adverse effect on the ability of Purchaser or CCM to consummate the
transactions contemplated hereby; or (c) except as set forth in Schedule 4.3
and except for the Competition Approvals, require any consent, approval or
authorization of, notification to, filing with, or exemption or waiver by, any
Governmental Body or any other Person on the part of Purchaser or CCM.


 


57

















 


Section 4.4             Litigation.
There is no Litigation pending, or to the knowledge of Purchaser or CCM,
threatened, before any court, arbitrator, or other Governmental Body which
would or would reasonably be expected to adversely affect the ability of
Purchaser or CCM to consummate the transactions contemplated by this Agreement.


 


Section 4.5             Sufficiency
of Funds. CCM has made sufficient funds or financing available to Purchaser
for the payment of the Purchase Price and the consummation of the transactions
contemplated by this Agreement.


 


Section 4.6             Revolving
Credit Facility. CCM has committed to provide Purchaser with a $150 million
revolving credit facility immediately following the Closing, secured by a lien
on all of the Acquired Assets, subordinated only to the liens created by the
DIP Credit Agreement and the Liberty Bonding Commitment.


 


Section 4.7             Information.
CCM and Purchaser acknowledge that they have conducted their own investigation
of the business finances and operations of Seller and Subsidiaries and the
relevant materials relating to the consummation of the transactions
contemplated hereby. CCM, Purchaser or their Representatives have had an
opportunity to review all materials made available to them relating to the
business, finances and operations of Seller and Subsidiaries and relevant
materials relating to the sale of the Acquired Assets and the assumption of the
Assumed Liabilities which have been provided to CCM, Purchaser or their
Representatives in response to their request. CCM, Purchaser and their
Representatives have been afforded the opportunity to ask questions of Debtors’
management concerning Seller and the Subsidiaries.


 


Section 4.8             Brokers.
No agent, broker, investment banker, financial advisor or other Person is or
will be entitled to any broker’s or finder’s fee or any other commission or
similar fee from Seller or any of the Subsidiaries in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of CCM, Purchaser or any of their Affiliates.


 


ARTICLE V



CERTAIN COVENANTS


 


Section 5.1             Conduct
of Business by Seller and the Subsidiaries Pending the Closing.


 


(a)           Subject
to any obligations as a debtor in possession under the Bankruptcy Code and
except as set forth in Schedule 5.1(a), during the period from the date
hereof and continuing until the earlier of the termination of this Agreement in
accordance with its terms or the Closing, unless Purchaser otherwise agrees in
writing (such consent not to be unreasonably withheld or delayed in the case of
the matters specified in clauses (viii), (ix), (xv), (xix), (xx), (xxxv),
(xxxvi), (xl), (xli) and (xliv)), Seller shall, and shall cause each of the
Subsidiaries to:


 


(i)            except
as may be required in order to comply with the provisions of this Agreement,
conduct the Business in the Ordinary Course of Business;


 


58

















 


(ii)           except
as may be required in order to comply with the provisions of this Agreement,
use commercially reasonable efforts to preserve and maintain its relationships
with its Franchisees, customers, suppliers, partners, lessors, licensors,
licensees, contractors, distributors, bonding sources, agents, and other
non-Affiliated Persons, in each case, with which Seller or such Subsidiary has
significant business relationships or that are otherwise material to the
Business;


 


(iii)          use
commercially reasonable efforts to preserve and maintain, in all material
respects, the Acquired Assets (or, in the case of any Acquired Subsidiary or
any subsidiary of an Acquired Subsidiary, its assets) in the condition in which
they existed on the date hereof, ordinary wear and tear excepted, other than
assets no longer used or useful in the Business;


 


(iv)          make
all capital expenditures with respect to the Business substantially in
accordance with the Capital Expenditures Plan;


 


(v)           maintain
its Business Records in the Ordinary Course of Business and in accordance with
GAAP or, in the case of a Foreign Subsidiary, in accordance with generally
accepted accounting principles of the jurisdiction of organization of such
Foreign Subsidiary and in a manner sufficient to permit reconciliation to GAAP;


 


(vi)          comply
in all material respects with applicable Laws;


 


(vii)         [intentionally
omitted];


 


(viii)        not
terminate (other than at the expiration of a term not subject to renewal at the
option of Seller or any Subsidiary), release, assign any rights under or
discharge any other party thereunder of any of their obligations under any
Assigned Contract (or, in the case of any Acquired Subsidiary or any direct or
indirect subsidiary of an Acquired Subsidiary, any Commitment to which it is a
party), and, subject to the provisions of clause (xli), not amend any of the
terms and conditions thereof, in each case except in the Ordinary Course of
Business;


 


(ix)           except
with respect to any Commitment that Purchaser has designated to be a rejected
Commitment pursuant to Section 5.12, timely comply with all monetary and
non-monetary Liabilities under each Commitment (including Assigned Contracts
(except for breaches and defaults of the type referred to in Section 365(b)(2) of
the Bankruptcy Code with respect to Assigned Contracts not yet assumed in the
Bankruptcy Case)) or, in the case of the Acquired Subsidiaries, the Commitments
to which they are a party, as in effect on the date hereof, and not file any
notice or otherwise seek to assume or reject any Commitment (including Assigned
Contracts);


 


(x)            not
(1) amend in any material respect its certificate of incorporation or
by-laws or similar organizational documents, (2) allot, issue, sell,
transfer, pledge, dispose of or encumber any shares of any class or series of
its Equity Securities or voting debt, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire or subscribe for, any shares of any class or series of its
Equity Securities or any voting debt, (3) declare, set aside or pay any
dividend or other distribution


 


59

















 


payable in cash, stock or
property with respect to any shares of any class or series of its Equity
Securities or cause any Acquired Subsidiary to do so, or cause any Acquired
Subsidiary to loan or advance any funds to any Debtors, (4) split, combine
or reclassify any shares of any class or series of its Equity Securities, (5) redeem,
purchase or otherwise acquire directly or indirectly any shares of any class or
series of its Equity Securities, or any instrument or security which consists
of or includes a right to acquire such securities or (6) form or establish
any new Subsidiaries or Affiliates;


 


(xi)           not
permit, other than in the Ordinary Course of Business, any of the Acquired
Assets (or, in the case of any Acquired Subsidiary or any direct or indirect
subsidiary of an Acquired Subsidiary, its assets) including the Owned Real
Property and the property demised by the Real Property Leases or the assets of
any Acquired Subsidiary to be sold, licensed, mortgaged, leased, subleased,
licensed, transferred, terminated, varied, surrendered or subjected to any
Encumbrance (other than Permitted Encumbrances);


 


(xii)          not
(1) increase the compensation provided to any employee of the Business
(except in accordance with collective bargaining agreements or pay increases
associated with the filling of open positions not subject to the limitations of
clause (6) below), (2) change payroll periods in respect of any
employee of the Business, (3) increase the benefits or vacation accruals
in respect of any employee of the Business (except routine increases in
benefits and vacation accruals in accordance with written policies of the
Seller and its Subsidiaries in effect on the date hereof and previously
disclosed to Purchaser), (4) except (A) with respect to non-U.S.
employees in the Ordinary Course of Business in accordance with policies of the
Seller and its Subsidiaries in effect on the date hereof and previously
disclosed to Purchaser, (B) with respect to non-union employees of
Debtors, in accordance with the New Severance Plan or (C) with respect to
union employees of Debtors in accordance with the applicable collective
bargaining agreements and excluding employees’ participation in Benefit Plans
in accordance with the terms thereof and applicable Law, establish, increase or
enter into any retention, severance, deferred compensation, pension retirement,
profit sharing or sales bonus arrangement with any employee of the Business, (5) hire
any employee in the U.S. designated as an “exempt employee” or (6) fill
any open employee position in the U.S. above grade level 13 with an existing
employee;


 


(xiii)         not
establish any new Benefit Plan or, except as required by applicable Law or to
maintain the Tax qualification of any Benefit Plan, amend or modify any
existing Benefit Plan, to the extent such action would affect any employee of
the Business or make any sales bonus payments to any employee of the Business
other than commission payments made in the Ordinary Course of Business;


 


(xiv)        use
commercially reasonable efforts to obtain and renew all material Permits held
by or in connection with the Business;


 


(xv)         administer
insurance claims involving or relating to the Business and the Acquired Assets
in the Ordinary Course of Business. The claims administration performed by
Seller and the Subsidiaries regarding and with respect to the Business
(including the Business conducted by the Acquired Subsidiaries) and Acquired
Assets shall include, but not be limited to: 
(1) the provisions of forms necessary for submission and


 


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processing of claims; (2) the
receipt of notices and review of all claims, and the creation and maintenance
of files with respect to, and administration to final disposition and payment
of, each such claim; (3) acknowledgment to claimants of the receipt of
notices received from claimants in connection with any claim to the extent
required by applicable Law as promptly as practicable; (4) investigation
of any claim, as necessary, to determine its validity and compensability,
including verification of coverage as promptly as practicable; (5) performance
of appropriate administrative and clerical work in connection with any claim; (6) notification
to claimants of declined claims and the reasons for such declinations; (7) provision
of the services of claim experts on matters relating to claims; (8) compliance
with claims file maintenance, record retention and reconciliation requirements
in conformity with ordinary course standards; (9) subject to settlement of
claims in accordance with Section 5.1(xx), prosecution and defense of
disputes involving claims; (10) engagement and direction, consistent with
past practice of outside counsel, consultants or other professionals in
connection with the processing and handling of claims; (11) the establishment
of adequate reserves in respect of claims; and (12) payment of claims
processed in accordance with the foregoing procedures subject, with respect to
Pre-Petition claims, to the orders of the Bankruptcy Court, dated December 5,
2001 and June 17, 2002, it being understood that each of these items may
not be substantially satisfied as to each claim but will be substantially
complied with when taking claims in the totality;


 


(xvi)        not
change, in any material respect, any of its or their accounting principles,
practices, methods or policies (including any reserving and depreciation
methods, practices and policies) used by it or them, in each case except as may
be required as a result of a change in Law or GAAP (or, in the case of a
Foreign Subsidiary, as a result of a change in Law or generally accepted
accounting principles of the jurisdiction of organization of such Foreign
Subsidiary);


 


(xvii)       not
terminate (other than at the expiration of a term not subject to renewal at the
option of Seller or any Subsidiary), cancel or amend, or cause the termination,
cancellation or amendment of, any insurance coverage (and any surety bonds,
letters of credit, cash collateral or other deposits related thereto required
to be maintained with respect to such coverage) maintained by it or them with
respect to the Business which is not replaced by a comparable insurance
coverage;


 


(xviii)      use
commercially reasonable efforts to preserve and protect all material Seller
Owned Intellectual Property;


 


(xix)         not
enter into any new collective bargaining agreements or amend or modify any
existing collective bargaining agreements, in each case, applicable to employees
of the Business except as required by Law;


 


(xx)          except
as set forth in Sections 5.1(a)(xv) and (xxxvi), not enter into any settlement
or release with respect to any Litigation relating to or affecting the Business
or the Acquired Assets (unless such Litigation constitutes an Excluded Asset or
an Excluded Liability) other than in the Ordinary Course of Business or as
required in the Bankruptcy Case;


 


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(xxi)         not
grant, terminate (other than at the expiration of a term not subject to renewal
at the option of Seller or any Subsidiary), transfer, or otherwise materially
alter any material licenses or other Commitments relating to any proprietary
Seller Intellectual Property except with respect to new Franchise/Sale
Agreements in accordance with Schedule 5.1(a)(xxxv);


 


(xxii)        not
enter into any new joint venture, limited liability company agreement,
partnership agreement or similar agreement;


 


(xxiii)       not
enter into any (1) Related Party Agreement, (2) any transaction
between a Debtor or any Subsidiary thereof operating in the United States, on
the one hand, and any Subsidiary of Seller operating in Canada, on the other, (3) any
transaction between a Debtor or any Subsidiary thereof operating in the United
States, on the one hand, and any Subsidiary of Seller (other than IAG) on the
other, operating outside of the United States and Canada, (4) options,
warrants, convertible securities, stock appreciation rights or similar
securities with an exercise or conversion privilege at a price related to, or
derived from the value of, any equity or debt security or (5) interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate floor agreement, interest rate exchange agreement, currency
exchange agreement, forward contract, repurchase and reverse repurchase
contract, or any other agreement or arrangement designed to protect against
fluctuations in interest rates or currency values, including any arrangement
whereby, directly or indirectly, the party thereto has the right to receive
periodic payments calculated by applying either a fixed or floating rate of
interest on a stated notional amount in exchange for periodic payments made by
such party calculated by applying a fixed or floating rate of interest on the
same notional amount or otherwise (other than interest rate protection
agreements entered into in connection with or required pursuant to the DIP
Credit Agreement and the Securitization Transactions and Commitments related to
indebtedness for borrowed money of the Acquired Subsidiaries);


 


(xxiv)       except
as provided in Section 5.22, not make or change any material Tax election,
file any amended Tax Return (except as required under the AutoNation Settlement
Agreement and AutoNation Side Letter), enter into any closing agreement or
request a Tax ruling from a Tax authority, settle any Tax claim or assessment,
surrender any right to claim a refund of Taxes, or consent to any extension or
waiver of the limitation period applicable to any Taxes, Tax Return or Tax
claim, in each case with respect to any Acquired Subsidiary (or any direct or
indirect subsidiary of an Acquired Subsidiary) or Acquired Assets;


 


(xxv)        except
as set forth on Schedules 3.17(a) and (c), (1) prepare and timely file
all Tax Returns required to be filed by Seller and each Subsidiary in a manner
consistent with past practice, (2) timely pay all Taxes due and payable in
respect of any Tax Returns of Seller and Subsidiaries and (3) promptly
notify Purchaser of any federal, state, local or foreign Tax audit, inquiry or
proceeding pending or threatened in writing against or with respect to Seller
or any Subsidiary (or any significant developments with respect to any ongoing
material Tax matters);


 


(xxvi)       except
for the sale of Acquired Assets contemplated hereby and an Internal
Restructuring Transaction approved by Purchaser pursuant to Section 5.22,
not permit Seller or any Subsidiary to adopt a plan of complete or partial
liquidation, dissolution,


 


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merger, consolidation,
restructuring, recapitalization, reorganization or any comparable transaction;


 


(xxvii)      not,
at any time during the Bankruptcy Case, file a motion or otherwise seek to
convert to a case under Chapter 7 of the Bankruptcy Code;


 


(xxviii)     within
30 days from the last day of each calendar month, deliver to Purchaser
consolidated (and consolidating with respect to the Subsidiaries set forth on Schedule 5.1(a)(xxviii))
statements of income for the calendar month then ended, and the related balance
sheets of Seller and Subsidiaries as of the end of such calendar month, in each
case prepared in accordance with GAAP (other than the absence of footnote
disclosures and subject to normal year end audit adjustments and other than
financial statements of Foreign Subsidiaries not regularly prepared in
accordance with GAAP, which financial statements shall be prepared in
accordance with the generally accepted accounting principles of the
jurisdiction of organization of such Foreign Subsidiary) and accompanied by (w)
a schedule of all capital expenditures made by Seller and the Subsidiaries
during such calendar month, (x) a schedule of payments made during such
calendar month by Seller and the Subsidiaries under or pursuant to Related
Party Agreements, (y) a schedule of all intercompany balances and
obligations of Seller and the Subsidiaries as of the end of such calendar month
and (z) a certificate of the chief accounting officer of Seller stating that
such financial statements fairly present in all material respects the financial
condition and results of operations of Seller and the Subsidiaries and that the
other information accompanied thereto is true, accurate and correct in all
material respects;


 


(xxix)       within
five Business Days of the delivery thereof, copies of all monthly vehicles
statements and quarterly non-program vehicle reports required to be delivered
pursuant to vehicle leases or agreements;


 


(xxx)        within
five Business Days of the delivery thereof to the applicable lessor, trustee,
holder or lender under any Commitment relating to any amount outstanding under
the DIP Credit Agreement or any Securitization Transaction, copies of all
statements, reports, certificates, financial statements and other information required
to be delivered pursuant to such Commitments;


 


(xxxi)       within
five Business Days of entering into any amendment, modification or supplement
to any Commitment relating to any amount outstanding under the DIP Credit
Agreement, Debtors shall deliver a copy of each such amendment, modification or
supplement to Purchaser;


 


(xxxii)      five
Business Days prior to the Closing Date, deliver to Purchaser a detailed report
of all amounts estimated to be outstanding under the DIP Credit Agreement that
will be outstanding at Closing, accompanied by a certificate of the chief
financial officer of Seller stating that the information contained in such
report is true, accurate and correct in all material respects;


 


(xxxiii)     not
purchase, acquire or lease any vehicles, except in accordance with Schedule 3.24(b) and
the fleet parameters set forth on Schedule 5.1(a)(xxxiii);


 


(xxxiv)     not
enter into any capital leases;


 


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(xxxv)      not
(1) enter into any new Franchise/Sales Agreements or barter agreements; or
(2) open new automotive rental business locations;


 


(xxxvi)     except
in accordance with the Airport Concession consolidation program (1) not
consent to the termination or variation of any Airport Concession with respect
to premises located within any airport, (2) use commercially reasonable
efforts to maintain, keep and renew each existing Airport Concession in full
force and effect, (3) pay all rents and fees currently due and payable in
accordance with the terms thereof and make and maintain all required deposits
relating to each such Airport Concession (other than with respect to such
Airport Concessions that arose prior to the Petition Date with respect to
Airport Concessions not yet assumed in the Bankruptcy Case) and (4) use
commercially reasonable efforts to resolve or settle all existing and future
disputes or Litigation with respect to Airport Concessions in a manner that
would secure Airport Concessions following the resolution or settlement of any
such dispute or Litigation with respect to the operation of any automotive
rental location within any airport;


 


(xxxvii)    not
enter into, amend, modify or (other than at the expiration of a Commitment not
subject to renewal at the option of Seller or any Subsidiary) terminate any
Commitment with any Vehicle Manufacturer;


 


(xxxviii)   (1) not
amend, modify or supplement the terms and conditions of any Commitment relating
any amount outstanding under the DIP Credit Agreement or the Liberty Bonding
Commitment; in each case to the extent any such amendment, modification or
supplement could be reasonably expected to adversely affect Purchaser; and (2) not
permit any Acquired Subsidiary to enter into any Securitization Transaction or
to incur any indebtedness for borrowed money other than working capital
borrowing under facilities in effect on the date hereof;


 


(xxxix)      make
all scheduled Collateral Installment Payments to Liberty Mutual Insurance
Company prior to the Closing Date;


 


(xl)           use
commercially reasonable efforts to obtain the consent of each party to a new
Commitment relating to the Business, or any amendment or modification to an
existing Commitment relating to the Business to the assignment of such
Commitment to Purchaser upon consummation of the transactions contemplated
hereby;


 


(xli)          not
(A) enter into any new Commitment relating to the Business or any
amendment or modification to an existing Commitment, involving payments to or
from Seller or any of the Subsidiaries in excess of: (1) $500,000 annually
on average or $2,000,000 total during the remaining term of the agreement for
the minimum annual guaranty in an airport concession agreement; (2) $500,000
annually or $5,000,000 total during the remaining term of the agreement for
rent in an airport service facility or quick turnaround facility agreement; (3) $500,000
annually or $1,000,000 total during the remaining term of the agreement for
anticipated revenue under a tour agreement; (4) $2,500,000 annually or
$7,500,000 total during the remaining term of the agreement for anticipated
revenue under a corporate rental agreement; (5) $2,000,000 annually or
$6,000,000 total during the remaining term of the agreement for anticipated
revenue under a travel agency consortia agreement; (6)


 


64

















 


$1,000,000 annually or
$3,000,000 total during the remaining term of the agreement for anticipated
revenue under an affiliation or association agreement; (7) $1,000,000
annually or $3,000,000 total during the remaining term of the agreement for
payments under a vendor agreement; (8) $300,000 annually on average or
$900,000 total during the remaining term of the agreement for rent in a
non-airport real property lease; (9) $1,000,000 annually or $3,000,000
total during the remaining term of the agreement for payments under a telecom
agreement; or (10) $500,000 annually or $500,000 total during the
remaining term of the agreement for payments under any other agreement; and (B) enter
into any information technology, non-telecom agreement (each of the foregoing,
a “Material Commitment”);


 


(xlii)         effectuate
the Workforce Restructuring Plan set forth on Schedule 5.1(a)(xlii) in
accordance with its terms;


 


(xliii)        except
as otherwise contemplated by this Agreement (including, for the avoidance of
doubt, any Internal Restructuring Transactions approved by Purchaser under Section 5.22)
or as required under the AutoNation Settlement Agreement and AutoNation Side
Letter, not act or fail to act in any way that would materially reduce the
availability of net operating losses (as described in Section 3.17(o)) for
the 2003 Year; and


 


(xliv)       not
enter into any compromise or settlement of any post-petition administrative
priority claims relating to the Litigations specified in Section 2.3(f)(ii).


 


(b)           Without
limiting the generality of the foregoing, except as expressly contemplated by
this Agreement, between the date hereof and the Closing Date, Seller shall not,
and shall cause each of the Subsidiaries not to, take any action that is
reasonably likely to result in (other than such failure to take action by
reason of Purchaser not granting any consent requested by Seller pursuant to Section 5.1(a))
(i) any of the representations and warranties set forth in Article III
becoming false or inaccurate in any material respect (without regard to the
Material Adverse Effect qualifications set forth therein) or (ii) the
failure of any of the conditions set forth in Article VI to be satisfied.


 


(c)           Except
for the provisions which shall be governed by Section 5.22, any request
for consent (such consent not to be unreasonably delayed) pursuant to Section 5.1(a) shall
be made in writing to the designated representatives of Purchaser (who shall
initially be Lenard Tessler and William Lobeck, until their successors are
designated by Purchaser in a written notice delivered to Seller) and delivered
to the address of the Purchaser set forth in Section 8.1. Any response to
such request shall not be unreasonably delayed; provided that any such request
shall be deemed denied unless granted by one of the designated representatives
of Purchaser within five Business Days of delivery to Purchaser of such request
for consent.


 


Section 5.2             Access
to Information; Cooperation; Confidentiality.


 


(a)           Between
the date hereof and the Closing, Debtors shall, and shall cause each of the
Subsidiaries to (i) afford Purchaser and Purchaser’s Representatives
reasonable access, upon reasonable prior notice, during normal business hours,
to the assets, properties, offices and other facilities, officers, employees,
Commitments and books and records of Seller and each Subsidiary, (ii) notify
Purchaser of any material business development of Seller or any


 


65

















 


Subsidiary, and (iii) consult
regularly with Purchaser on the operation of the Business prior to Closing. In
addition, each Debtor shall, and shall cause each Subsidiary to, furnish to
Purchaser any such other information concerning all assets, properties and
personnel and the Business as Purchaser may reasonably request at any time and
from time to time and which can be made available to Purchaser without undue
burden or expense. No investigation by Purchaser shall diminish or obviate in
any way any of the representations, warranties, covenants or agreements of
Debtors under this Agreement.


 


(b)           Prior
to the Closing, Seller agrees that it and its Subsidiaries will cooperate with
CCM, Purchaser and their Representatives and provide information reasonably
required by CCM, Purchaser and their Representatives in connection with the
offer, sale and placement of, or obtaining commitments for the purchase of,
asset-backed securities secured by the Rental Vehicles located in the United
States and other financings (collectively, “Asset Backed Notes”) that may take
place immediately following the Closing. Such cooperation will include, without
limitation, (i) the assistance in the preparation of an offering circular
or private placement memorandum with respect to any offering of Asset Backed
Notes, (ii) the delivery of such financial and statistical information
relating to Seller and its Subsidiaries and the Rental Vehicles as may be
reasonably requested and (iii) using commercially reasonable efforts to
assist in the marketing and sale of any Asset Backed Notes, including making
appropriate officers of Seller and its Subsidiaries available for due diligence
meetings and for participation in the road show and meetings with prospective
purchasers of the Asset Backed Notes, it being understood that all reasonable
out-of-pocket expenses incurred by Seller and the Subsidiaries in connection
with this provision shall be paid by, or promptly reimbursed to Seller by,
Purchaser and CCM.


 


(c)           Prior
to Closing, the parties will cooperate with each other and provide information
reasonably required by the other party or its representatives necessary, (i) to
complete any filings with or notices to any Governmental Body with respect to
the transfer or assignment of Permits as contemplated by Section 2.1(y)
and (ii) to obtain authorizations, licenses, permits, certificates,
approvals or orders by any Governmental Body or third party to carry on the
Business following the Closing and to complete the acquisition by Purchaser of
the Acquired Assets.


 


(d)           Any
information disclosed to Purchaser in connection with the investigations
contemplated by this Section 5.2 shall be subject to the terms of the
Confidentiality Agreement. NOTWITHSTANDING ANYTHING IN THE FOREGOING OR
ANYTHING ELSE CONTAINED IN THIS AGREEMENT TO THE CONTRARY, EACH PARTY (AND ANY
EMPLOYEE, REPRESENTATIVE OR OTHER AGENT THEREOF) MAY DISCLOSE TO ANY AND
ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX
STRUCTURE OF THE TRANSACTION AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS
AND OTHER TAX ANALYSES) THAT ARE PROVIDED TO THE PARTIES RELATING TO SUCH TAX
TREATMENT AND TAX STRUCTURE. FOR THIS PURPOSE, “TAX STRUCTURE) “ MEANS ANY
FACTS THAT MAY BE RELEVANT TO UNDERSTANDING THE PURPORTED OR CLAIMED
FEDERAL INCOME TAX TREATMENT OF THE TRANSACTION.


 


(e)           After
the Closing, CCM shall, and shall cause Purchaser and its affiliates designated
pursuant to Section 2.1A to, afford Seller and Seller’s representatives,
to the


 


66

















 


extent necessary for the
administration of Debtors’ estate, reasonable access, upon reasonable prior
notice and during normal business hours and in a manner that will not
unreasonably interfere with the operation of the Business, to officers and
employees of the Business and the Business Records in existence on the Closing
Date required to be retained under current retention policies and to make such
Business Records available after the Closing Date for inspection and copying by
Seller or Seller’s representatives, at Seller’s expense.


 


Section 5.3             Commercially
Reasonable Efforts; Notification.


 


(a)           Upon
the terms and subject to the conditions set forth in this Agreement, each of
the parties shall use their commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as
practicable, the transactions contemplated by this Agreement in accordance with
the terms hereof and to bring about the satisfaction of all other conditions to
the other party’s obligations hereunder; provided, however, that
nothing in this Agreement shall obligate any Debtor, or Purchaser, or any of
their respective Affiliates, to waive or modify any of the terms and conditions
of this Agreement or any documents contemplated hereby, except as expressly set
forth herein.


 


(b)           (i) Seller
shall give notice to Purchaser as soon as practicable upon (x) becoming aware
of any event, circumstance, condition, fact, effect, or other matter that
resulted in, or that would be reasonably likely to result in, (A) any
representation or warranty set forth in Article III being or becoming
untrue or inaccurate in any material respect as of any date on or after the
date hereof (as if then made, except to the extent such representation or warranty
is expressly made only as of a specific date, in which case as of such date), (B) the
failure by Debtors to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by Debtors
under this Agreement or (C) any change, effect, event, occurrence, state
of facts or development of which it becomes aware that would result in or would
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect or (y) entering into, amending or modifying any
Material Commitment after the date hereof and prior to the Closing Date and
shall update the applicable Schedule set forth in Section 2.1; (ii) Seller
shall give notice to Purchaser at least one Business Day prior to filing any pleading
in the Bankruptcy Case that is related to or affects the Business, the Acquired
Assets, Acquired Subsidiaries or the transactions contemplated under this
Agreement by delivery to Purchaser of a copy of any such proposed pleading,
together with all exhibits and attachments thereto (in substantially final
form); and (iii) Purchaser shall give written notice to Seller as soon as
practicable upon becoming aware of any event, circumstance, condition, fact,
effect, or other matter that has resulted in, or that would reasonably be
likely to result in, (A) any representation or warranty set forth in Article IV
being or becoming untrue or inaccurate in any material respect with respect to
Purchaser or CCM as of any date on or after the date hereof (as if then made,
except to the extent such representation or warranty is expressly made only as
of a specific date, in which case as of such date), (B) failure by
Purchaser or CCM to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by Purchaser
or CCM under this Agreement, or (C) any change, effect, event, occurrence,
state of facts or development of which Purchaser or CCM becomes aware that
would result in or would reasonably be expected to result in, individually or
in the aggregate, a material adverse effect on the ability of Purchaser or CCM
to consummate the transactions contemplated by this


 


67

















 


Agreement, provided, however,
that no such notification shall affect or cure a breach of any of the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.


 


Section 5.4             HSR
Act Filings; Competition Approvals.


 


(a)           Each
of Seller and Purchaser shall (and Seller shall cause the Subsidiaries to) (i) promptly
make or cause to be made the filings, if any, required of such party under the
HSR Act and any other Antitrust Laws with respect to the transactions
contemplated by this Agreement (except for filings that are required to be made
prior to the date hereof, which have been made as of the date hereof), (ii) comply
at the earliest practicable date with any request under the HSR Act or such
other Antitrust Laws for additional information, documents, or other material
received by such party or any of the Subsidiaries from the Federal Trade
Commission or the Department of Justice or any other Governmental Body in
respect of such filings or the transactions contemplated hereby, and (iii) cooperate
with the other party in connection with any such filing and in connection with
resolving any investigation or other inquiry of any such agency or other
Governmental Body under any Antitrust Laws with respect to such filing or the
transactions contemplated hereby. Each of Seller, the Subsidiaries and
Purchaser shall promptly inform the other of any communication with, and any
proposed understanding, undertaking, or agreement with, any Governmental Body
regarding any such filings or the transactions contemplated hereby.


 


(b)           Each
of Seller and Purchaser shall (and Seller shall cause the Subsidiaries to) use
all reasonable best efforts to resolve such objections, if any, as may be
asserted by any Governmental Body with respect to the transactions provided for
in this Agreement under the Antitrust Laws. In connection therewith, if any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) challenging the transactions provided for in this Agreement as
violative of any Antitrust Law, each of Seller, the Subsidiaries and Purchaser
shall cooperate and use all reasonable best efforts vigorously to contest and
resist any such action or proceeding and to have vacated, lifted, reversed, or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents, or
restricts consummation of the transactions contemplated hereby. Each of Seller
and Purchaser shall (and Seller shall cause the Subsidiaries to) use all
reasonable best efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws with
respect to the transactions contemplated hereby as promptly as possible after the
execution of this Agreement.


 


(c)           Each
of the parties agrees to use all reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable the transactions contemplated by this Agreement, including, but not
limited to, (i) obtaining all other necessary actions or nonactions,
waivers, consents and approvals from Governmental Bodies and the making of all
other necessary registrations and filings (including other filings with
Governmental Bodies, if any), (ii) obtaining all necessary consents,
approvals or waivers from Third Parties, and (iii) executing and
delivering any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.


 


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Section 5.5             Public
Announcement. CCM and Purchaser, on the one hand, and Debtors, on other
hand, shall consult with each other before issuing any press release or public
announcement pertaining to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
announcement without the prior written consent of the other, which consent
shall not be unreasonably withheld, except as may required by applicable Law,
in which case the party required to issue such press release or make such
public announcement shall use its reasonable efforts to consult in good faith
with the other party before issuing any such press releases or making any such
public announcements.


 


Section 5.6             Further
Assurances. At any time and from time to time after the date of this
Agreement, Debtors and Purchaser agree to use their respective reasonable
efforts to cooperate with each other and (a) at the reasonable request of
the other party, execute and deliver any instruments or documents, and (b) take,
or cause to be taken, all such further action as the other party may reasonably
request in order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.


 


Section 5.7             Submission
for Bankruptcy Court Approval. On May 30, 2003, Debtors filed with the
Bankruptcy Court, a motion seeking the approval of this Section 5.7 and
authorizing the observance and performance of such terms by Debtors and
Purchaser and seeking approval of the Sale Approval Order.


 


(a)           Debtors
acknowledge that this Agreement is the culmination of an extensive process
undertaken by Debtors to identify and negotiate a transaction with a bidder who
was prepared to pay the highest and best purchase price for the Acquired Assets
while assuming or otherwise satisfying the Assumed Liabilities in order to
maximize the value of those assets. Set forth below are the bidding procedures
(the “Bidding Procedures”) to be employed with respect to this Agreement
concerning the sale of the Acquired Assets to Purchaser (the “Sale”); provided,
that Purchaser reserves the right to further comment on the form of the order
of the Bankruptcy Court approving the Bidding Procedures (the “Bidding
Procedures Order”). The Bidding Procedures may be as amended, modified or
supplemented with the consent of the Purchaser.


 


(b)           The
Sale is subject to competitive bidding only as set forth herein and approval by
the Bankruptcy Court at a hearing under Sections 105, 363 and 365 of the
Bankruptcy Code (the “Sale Hearing”). The following overbid provisions and
related bid protections are designed to reimburse Purchaser for its efforts and
agreements to date and to facilitate a full and fair process designed to
maximize the value of the Acquired Assets for the benefit of Debtors’ creditors
and stakeholders.


 


(c)           Bid
Deadline. All Bids (as defined below) must be submitted to Debtors c/o
Lazard Frères & Co., LLC, 30 Rockefeller Plaza, New York, New York,
10020, Attention:  Perk Hixon so as to be
received not later than 11:00 a.m., eastern time on the date which is
three Business Days prior to the date scheduled by the Bankruptcy Court for the
Sale Hearing (the “Bid Deadline”). Debtors will immediately distribute by
facsimile transmission, personal delivery or reliable overnight courier service
in accordance with Section 8.1, a copy of each Bid upon receipt
to counsel to Purchaser. For purposes of this Agreement, “Bid” shall mean
one or more letters from one or more Persons whom the respective Board of
Directors of


 


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Debtors have determined in the
exercise of their fiduciary duty are financially able to consummate the
purchase of the Acquired Assets (a “Qualified Bidder”) stating that (i) such
Qualified Bidder offers to purchase all or a portion of the Acquired Assets
upon the terms and conditions set forth in a copy of this Agreement, together
with all Exhibits and Schedules hereto (the “Definitive Sale Documentation”),
marked to show those amendments and modifications to the Definitive Sale
Documentation, including, but not limited to, price and the time of closing,
that such Qualified Bidder proposes, (ii) such Qualified Bidder is
prepared to enter into and consummate the transaction not later than December 31,
2003, and (iii) each such Qualified Bidder’s offer is binding until the
closing of a purchase of the Acquired Assets.


 


(d)           Qualified
Bid. Only Qualified Bids will qualify for consideration at the Auction (as
defined below). For purposes of this Agreement, a “Qualified Bid”  is a Bid that:


 


(i)            complies
in all respects with this Section 5.7;


 


(ii)           is
a proposal which Debtors determine, in the good faith opinion of their
respective Boards of Directors or managers, as the case may be, after
consultation with the independent financial advisor of Debtors, is not
materially more burdensome or conditional than the terms of this Agreement and
has a value greater than or equal to the sum of (x) the value, as reasonably
determined by the independent financial advisor of Debtors, of Purchaser’s
offer plus (y) the amount of the Termination Fee plus (z) in the
case of the initial Qualified Bid and in the case of any subsequent Qualified
Bids, one half of one percent (1/2%), over the preceding Qualified Bid;


 


(iii)          is
substantially on the same or better terms and conditions as those set forth in
a copy of the Definitive Sale Documentation;


 


(iv)          is
accompanied by satisfactory evidence of committed financing or other ability to
perform; and


 


(v)           is
accompanied by a deposit (by means of a certified bank check from a U.S. bank
or by wire transfer) equal to or greater than the Termination Fee.


 


(e)           If
Debtors do not receive any Qualified Bids, Debtors will report the same to the
Bankruptcy Court and will proceed with a sale and assignment of the Acquired
Assets to Purchaser pursuant to the terms of this Agreement. This Agreement
executed by Purchaser shall constitute a Qualified Bid for all purposes.


 


(f)            Auction,
Bidding Increments, and Bids Remaining Open.


 


(i)            If
Debtors receive a Qualified Bid, Debtors will conduct an auction (the “Auction”)
at the offices of Fried, Frank, Harris, Shriver & Jacobson, on the
date that is one Business Day prior to the date scheduled by the Bankruptcy
Court for the Sale Hearing, beginning at 11:00 a.m. (EDT) or such later
time or other place as Debtors shall notify all Qualified Bidders who have
submitted Qualified Bids. Only Purchaser, Debtors, Representatives of Lazard,
Representatives of Lehman, Liberty, MBIA, any representative of the creditors’
committee appointed in the Bankruptcy Case and any Qualified Bidders who have


 


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timely submitted Qualified Bids
shall be entitled to attend the Auction, and only Purchaser and Qualified
Bidders will be entitled to make any subsequent Qualified Bids at the Auction. Bidding
at the Auction will continue until such time as the highest and best Qualified
Bid is determined. Debtors may announce at the Auction additional procedural rules that
are reasonable under the circumstances (e.g., the amount of time
allotted to make subsequent overbids) for conducting the Auction so long as
such rules are not inconsistent with these Bidding Procedures.


 


(ii)           At
least one Business Day prior to the Auction, Debtors will give Purchaser and
all other Qualified Bidders a copy of the highest and best Qualified Bid
received and copies of all other Qualified Bids. In addition, Debtors will
inform Purchaser and each Qualified Bidder who has expressed its intent to
participate in the Auction the identity of all Qualified Bidders that may
participate in the Auction.


 


(g)           Termination
Fee. In the event that Debtors (i) accept a Bid, other than that of
Purchaser, as the highest and best offer, (ii) sell, transfer, lease or
otherwise dispose directly or indirectly, including through an asset sale,
stock sale, merger, reorganization or other similar transaction (by any Debtor
or otherwise), all or substantially all or a material portion of the Acquired
Assets (or agree to do any of the foregoing) in a transaction or series of
transactions to a party or parties other than Purchaser within one year from
the date hereof, or (iii) choose not to sell, transfer, lease or otherwise
dispose of, directly or indirectly, including through an asset sale, stock sale,
merger, reorganization or other similar transaction (by any Debtor or
otherwise), all or substantially all or a material portion of the Acquired
Assets (or agree to do any of the foregoing) to Purchaser whether as a result
of the proposal of a stand-alone plan of reorganization or otherwise (either of
clause (i), (ii) or (iii), an “Alternative Transaction”), Debtors shall
pay to Purchaser an amount equal to: (x) $12,500,000, plus (y) its
reasonable, actual out-of-pocket costs and expenses (including, without
limitation, expenses of counsel, expenses of financial advisor and expenses of
other consultants and the HSR Act filing fee or other fees paid in connection
with any notices or fillings made pursuant to Antitrust Laws) incurred by CCM
and Purchaser in connection with this Agreement and the transactions
contemplated hereby in excess of those expenses paid pursuant to the Expense
Reimbursement Order, not to exceed $1,500,000 (together, the “Termination Fee”);
provided, however, that in no event shall the Termination Fee be
payable to Purchaser (1) if Purchaser terminates this Agreement pursuant
to Section 7.1(a)(vi), the proviso to Section 7.1(a)(viii)(3), Section 7.1(a)(ix) or
Section 7.1(a)(x), (2) if this Agreement is terminated by Debtors
pursuant to Section 7.1(a)(iii)(A), (3) if this Agreement is
terminated pursuant to Section 7.1(a)(i) or (4) if on the last
day of the month that all of the conditions set forth in Section 6.2 (with
such date replacing the terms “Closing” and “Closing Date” in Section 6.2)
have been satisfied or waived without the Closing having occurred Purchaser
fails to consummate the transactions contemplated by this Agreement. The
Termination Fee shall be paid as an administrative priority expense of Debtors
under Section 503(b)(1) of the Bankruptcy Code upon the termination
of this Agreement.


 


Section 5.8             Transfer
Taxes. To the extent provided in the Sale Approval Order, in accordance
with Section 1146(c) of the Bankruptcy Code, the instruments
transferring the Acquired Assets to Purchaser shall contain the following
endorsement:


 


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“Because this [instrument] has been
authorized pursuant to Order of the United States Bankruptcy Court for the
District of Delaware relating to a chapter 11 plan of the Grantor, it is exempt
from transfer taxes, stamp taxes or similar taxes pursuant to 11 U.S.C. Section 1146(c).”


 


To the extent
the foregoing endorsement is not applicable or effective, Seller and Purchaser
shall each pay 50% of any real property transfer or gains Tax, sales Tax, use
Tax, excise Tax, stamp Tax, stock transfer Tax or, registration Tax,
documentary Tax or other similar Tax incurred in connection with the
transactions contemplated by this Agreement (collectively, “Transfer Taxes”). No
later than 15 days prior to the date any Tax return that must be filed by
Seller (or the applicable Subsidiary) in connection with Transfer Taxes
required to be paid pursuant to this Section 5.8 (such Tax returns, “Transfer
Tax Returns”) is due, Seller (or the applicable Subsidiary) shall prepare, on a
basis consistent with the allocations determined in accordance with Section 2.6,
all Transfer Tax Returns and provide copies of such Transfer Tax Returns to
Purchaser for its review and consent, which consent shall not be unreasonably
withheld or delayed. Seller (or the applicable Subsidiary) shall file any such
Transfer Tax Return prepared pursuant to this Section 5.8 that is required
to be filed under applicable Law.


 


Notwithstanding
anything to the contrary in this Agreement, if Seller’s portion of such
Transfer Taxes are not paid on or prior to the Closing, Purchaser shall be
entitled to escrow (on reasonable terms) from the Purchase Price an amount
sufficient to secure Seller’s and the Subsidiaries’ obligations under this Section 5.8.


 


Section 5.9             Employment.


 


(a)           Hiring
of Employees. Purchaser shall offer employment as of the Closing Date to at
least 90% of the employees of
Debtors who are employed in the Business (whether salaried or hourly, union or
non-union, and full-time or part-time), whether or not actively employed on the
Closing Date (e.g., including employees on vacation and leave of
absence, including maternity, family, sick or short-term disability leave, and
leave under the Family Medical Leave Act) at substantially the same location
where such employee was employed immediately prior to the Closing Date on at
least the same compensation and levels of responsibility, and on such other
terms and conditions (including premium pay, shift differentials, and benefit
plan and incentive plan coverages but excluding any equity-based compensation)
that are in the aggregate not less favorable than those in effect immediately
prior to the Closing Date. Each such employee who accepts Purchaser’s offer of
employment is hereinafter referred to as a “Transferred Employee.”
Notwithstanding the foregoing, Purchaser shall not be prohibited by this Section 5.9
from terminating the employment of any Transferred Employee following the
Closing Date. For avoidance of doubt, nothing in this Agreement shall create a
contract of employment or alter the at-will status of any employee of the
Business.


 


(b)           Continuing
Benefit Plans. Purchaser shall assume, honor and continue to perform all
obligations of any Debtor under any Benefit Plan listed on Schedule 2.1(g) and
will cause Acquired Subsidiaries to fund and continue to perform obligations
under any Foreign Plan, subject to the terms of the plans.


 


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(c)           Pursuant
to Sections 3121(a), 3302(e) and 3306(b) of the Code, for the period
beginning January 1, 2003 and ending on the Closing Date, Debtors shall
transfer to Purchaser and Purchaser shall accept (as successor to Debtors
solely with respect to this Section 5.9(c)) with respect to the employees,
(i) the obligation of Debtors to file Forms W-2, Wage and Tax Statement
and (ii) credit for Social Security and Medicare wage Taxes (FICA
payments), federal unemployment Taxes (FUTA payments) and applicable state
unemployment Taxes.


 


(d)           Effective
on or immediately after the Closing Date, Purchaser shall cover Transferred
Employees in one or more employee welfare benefit plans which shall provide
welfare benefits (including, but not limited to, medical, dental, vision,
prescription drug, disability and life benefits) to the Transferred Employees
and their dependents, which are substantially comparable to the welfare
benefits which were provided to such Transferred Employees and their dependents
by the plans covering them immediately prior to the Closing Date, excluding any
post-employment welfare benefits including but not limited to, retiree medical
or retiree life insurance benefits and, medical, dental and vision benefits
provided to disabled former employees. Transferred Employees shall be entitled
to participate in such Purchaser welfare benefit plans by applying their
service with Seller and its Subsidiaries to any eligibility service period
required under Purchaser’s plans. Transferred Employees shall receive credit
under Purchaser’s plans for deductibles paid by them for the plan year
coinciding with the Closing Date current plan year while they were covered
under Seller’s welfare benefit plans. Debtors (or their designees) shall
provide continuation coverage under COBRA to all “M& A Qualified
Beneficiaries” for so long as the Debtor or its Subsidiaries maintain a group
health plan. Thereafter, the Purchaser shall provide COBRA coverage in
accordance with applicable Law. During the period that Debtors (or their
designee) or the Purchaser provide continuation coverage pursuant to COBRA,
Debtors (or their designees) or the Purchaser shall charge persons who elect
such coverage the maximum premium permitted under COBRA.


 


(e)           Effective
on or immediately after the Closing Date, the Purchaser shall maintain a
defined contribution plan for the benefit of Transferred Employees (the “Purchaser
Savings Plan”) that is substantially comparable to the defined contribution
plan provided by the Seller. The Purchaser Savings Plan shall provide the
Transferred Employees with the opportunity to defer compensation pursuant to Section 401(k)
of the Code and the Purchaser shall make matching contributions to the
Purchaser Savings Plan, in each case, in such amounts as the ANC Rental
Corporation 401(k) Plan provided immediately prior to the Closing Date. Transferred
Employees shall be entitled to participate in such Purchaser Savings Plan by
applying their service with Seller and its Subsidiaries to any eligibility
service period or vesting service period required under Purchaser Savings Plan
and the Purchaser Savings Plan will accept direct rollover contributions,
including loans from Transferred Employees, in accordance with the terms of the
Purchaser Savings Plan and applicable Law.


 


(f)            Transferred
Employee and M & A Qualified Beneficiary Information. Seller shall
provide to Purchaser in a format reasonably acceptable to the Purchaser and as
permitted under applicable Law, the name, social security number and years of
service, most recent job position, seniority and most recent annual salary or
wage rate of each Transferred Employee and each M & A Qualified
Beneficiary. Debtors shall provide to Purchaser additional information with
regard to employees, former employees and retirees of


 


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Debtors as Purchaser may
reasonably request in connection with any obligation Purchaser may have to such
employees, former employees and retirees of the Debtors after the Closing Date.


 


(g)           Bonus
Programs.


 


(i)            On
the first payroll date following the Closing Date, Purchaser shall pay each
non-union Transferred Employee (other than a general manager) below grade level
14 with a bonus equal to one week’s salary, and Seller shall pay to (and
Purchaser shall reimburse Seller for) each non-union employee of the Debtors
below grade level 14 who is in good standing and employed in the Business on
the Closing Date who is not a Transferred Employee with a bonus equal to one
week’s salary (whether or not such person is employed by any Debtor on the date
of payment.)


 


(ii)           The
Purchaser shall establish a bonus pool (the “Bonus Pool”) all salaried
employees of Debtors who are grade level 14 or higher or who are general
managers determined in accordance with Exhibit L. As promptly as practicable
following the determination of the Purchase Price pursuant to Section 2.5(e),
the Purchaser shall determine the amount of the bonus pool and shall pay to
each Transferred Employee who, immediately prior to the Closing was a salaried
employee of grade level 14 or higher, such Transferred Employee’s allocated
share of such Bonus Pool (as determined below), and Seller shall pay (and
Purchaser shall reimburse Seller for) to each employee of the Debtors who is in
good standing and employed in the Business on the Closing Date who is not a
Transferred Employee with a bonus equal to such employee’s allocated share of
such Bonus Pool (whether or not such person is employed by any Debtor or
Purchaser on the date of payment). The allocated share of the Bonus Pool of any
Transferred Employee or other employee eligible to receive a bonus pursuant to
this Section shall be equal to the base salary immediately prior to the
Closing of such Transferred Employee or other employee, annualized, as a
percentage of the aggregate base salary immediately prior to the Closing Date
of all of such Transferred Employees and other employees eligible to receive
the bonus annualized. All payments to Transferred Employees and other employees
pursuant to this Section 5.9(g) shall be net of applicable
withholding Taxes.


 


(h)           WARN.
In the event that the termination of employees who are not Transferred
Employees under Section 5.9(a) results in an event that is subject to
the WARN Act, Purchaser shall reimburse the Debtors for the payment of amounts
due under the WARN Act in the event there is not sufficient time to give the
required notice of such terminations of employees under the WARN Act; provided,
however, that, subject to the receipt of the necessary information from
Purchaser, the Debtors, if the Debtors are responsible for delivery of notice,
have made all reasonable efforts to comply with the delivery of notice to the
affected employees and the appropriate Governmental Bodies.


 


(i)            New
Severance Plan. On the date of this Agreement, the Seller shall adopt the
New Severance Plan and such New Severance Plan shall completely supersede and
replace any severance provisions offered to non-union employees and non-union
former employees of the Debtors under any Benefit Plan or under any other
severance plan, program or agreement, whether written or oral. The Debtors
shall take appropriate action to terminate any severance plan, program or
agreement, whether written or oral, applicable to non-union employees and
non-union former employees of the Debtors prior to the date of this Agreement;


 


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provided that, any non-union
former employee who became entitled to severance under the Debtors’ severance
plan or program prior to the date of this Agreement, shall continue to receive
any owed payments of severance in accordance with the terms of such severance
plan or program. The Debtors shall not amend, suspend or terminate the New
Severance Plan, without the express written consent of Purchaser, unless this
Agreement is terminated pursuant to Article VII hereby.


 


Section 5.10           National
and Alamo Names. From and after the Closing Date, Seller and each
Subsidiary (other than the Acquired Subsidiaries) shall discontinue the use of
Seller Intellectual Property in any manner whatsoever; provided, however,
that Seller and Subsidiaries may use Seller Intellectual Property for purposes
of filings required by applicable Law, including, but not limited to, (i) filings
with the SEC, (ii) with the Bankruptcy Court or (iii) for a period
not to exceed 60 days following the Closing Date, in connection with effecting
an orderly transition for such period.


 


Section 5.11           Transfers
Not Effected as of Closing. Nothing herein shall be deemed to require the
conveyance, assignment or transfer of any Acquired Asset that by its terms or
by operation of applicable Law cannot freely be conveyed, assigned, transferred
or assumed. To the extent the parties hereto have been unable to obtain any
Third Party consents or approvals required for the transfer of any Acquired
Asset and to the extent not otherwise prohibited by the terms of any Acquired
Asset, to the extent requested by Purchaser, Seller or the relevant Subsidiary
shall continue to be bound by the terms of such applicable Acquired Asset, and
Purchaser shall pay, perform and discharge fully all of the obligations of
Seller or the relevant Subsidiary, and Purchaser shall pay, perform and
discharge fully all of the obligations of Seller or the relevant Subsidiary
under such Acquired Asset from and after the Closing to the extent that the
corresponding benefit is received by Purchaser. Seller shall, and shall cause
the Subsidiaries to, without consideration therefor, pay, assign and remit to
Purchaser all monies, rights and other consideration received in respect of
such performance. Seller shall, and shall cause the Subsidiaries to, exercise
or exploit their rights in respect of such Acquired Assets only as reasonably
directed by Purchaser and at Purchaser’s expense. For so long as Seller and the
Subsidiaries continue to exist as legal entities following the Closing Date,
the parties hereto shall continue to use their commercially reasonable efforts
to obtain, at the earliest practicable date, all such consents or approvals
that have not been obtained at the Closing Date but were required to be
obtained. If and when any such consents or approvals shall be obtained, Seller
shall, or shall cause the Subsidiaries to, promptly assign their rights and
obligations thereunder to Purchaser without payment of consideration and
Purchaser shall, without payment of any consideration therefor, assume such
rights and obligations. The parties shall execute such good and sufficient
instruments as may be necessary to evidence such assignment and assumption.


 


Section 5.12           Assigned
Contracts; Negotiation of Cure Costs. Purchaser shall notify Seller in
writing no later than five Business Days prior to the date scheduled for the
Bankruptcy Court hearing on the Sale Approval Order of all Commitments entered
into prior to the Petition Date which have not been assumed by any Debtor as of
the date hereof (or after the date hereof with the consent of Purchaser) that
Purchaser does not intend to assume. Purchaser may enter into agreements to
settle Cure Costs with respect to any Assigned Contract with the consent of
Seller (not to be unreasonably withheld or delayed). Any such settlement
agreement shall become an Assigned Contract. Debtors and Purchaser shall
cooperate with each other in


 


75

















 


arranging and entering into
such settlement agreements. Purchaser shall negotiate Cure Costs in good faith
with a view towards mitigating Cure Costs, consistent with the ongoing
requirements of the Business.


 


Section 5.13           Inter-Company
Debt. At Closing, Debtors shall assign to Purchaser the indebtedness then
owed by the Acquired Subsidiaries (or the direct or indirect subsidiaries
thereof) to Debtors or one or more of their Affiliates (excluding the Acquired
Subsidiaries and the direct or indirect subsidiaries thereof). At Closing,
Purchaser shall assume any indebtedness owed by Debtors or one or more of their
Affiliates (excluding the Acquired Subsidiaries and the direct or indirect
subsidiaries thereof) to one or more of the Acquired Subsidiaries (or the
direct or indirect subsidiaries thereof) that Purchaser elects to assume. Purchaser
shall notify Seller, in writing no later than five Business Days prior to the
date scheduled for the Bankruptcy Court hearing on the Sale Approval Order, of
the indebtedness that Purchaser intends to assume. Except as otherwise provided
in this Section 5.13, Seller and Subsidiaries shall satisfy or terminate
(by a contribution to capital or in such other manner as determined in Sellers’
and Subsidiaries’ sole discretion), at no expense to the Acquired Subsidiaries
or Purchaser, all other Related Party Agreements (not constituting Assigned
Contracts) in existence at Closing. Notwithstanding anything to the contrary in
Section 3.17(o) or Section 5.15 regarding the reduction of any Tax
Asset, the parties acknowledge that the satisfaction or termination of any
indebtedness as provided in this Section 5.13 may reduce the availability
of net operating losses (as described in Section 3.17(o)) for the 2003 Year.
This Section 5.13 shall not otherwise affect the applicability of Section 5.15.


 


Section 5.14           Vehicle
Return Pursuant To Repurchase Programs; Disposition Of Vehicles. Seller and
each Subsidiary shall:  (a) sell or
return each vehicle subject to a Repurchase Program (other than a vehicle that
has been the subject of theft, loss, casualty or destruction) to the nearest
related manufacturer official auction or other facility designated by the
relevant Vehicle Manufacturer or Affiliate thereof at the relevant lessee’s
sole expense after the minimum term or mileage limit under such Repurchase
Program for such vehicle is achieved, but prior to the expiration of the
maximum term and/or prior to reaching the maximum mileage limit under such
Repurchase Program for such vehicle, other than (i) isolated cases not
exceeding 50 vehicles in any calendar month on average or (ii) vehicles
designated as “non-program” vehicles in accordance with the Securitization
Documents; and (b) sell or dispose of all vehicles not subject to a
Repurchase Program in accordance with the provisions of the applicable lease or
agreement. Each such lessee agrees that the vehicles submitted for turn-in will
be (other than immaterial instances of non-compliance) in vehicle turn-in
condition as specified in the applicable Repurchase Program.


 


Section 5.15           Tax
Matters. Without the prior written consent of Purchaser (including consent
provided pursuant to Section 5.22, neither Seller (or any Affiliate of
Seller) nor any Subsidiary (or any Affiliate of a Subsidiary) shall, to the
extent it may adversely affect or relate to any Acquired Subsidiary, any
Subsidiary of an Acquired Subsidiary, the Acquired Assets or the Business, make
or change any Tax election, change any annual Tax accounting period, adopt or
change any method of Tax accounting, file any amended Tax Return (except as
required under the AutoNation Settlement Agreement and AutoNation Side Letter),
enter into any closing agreement, settle any Tax claim or assessment, surrender
any right to claim a Tax refund, consent to any extension or waiver of the
limitation period applicable to any Tax claim or


 


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assessment or take or omit to
take any other action, if any such action or omission would have the effect of
increasing the Tax liability or reducing any Tax Asset of any (direct or
indirect) Acquired Subsidiary, any subsidiary of an Acquired Subsidiary,
Purchaser or any Affiliate of Purchaser. For purposes of this Agreement, “Tax
Asset” shall mean any net operating loss, net capital loss, Tax credit or other
Tax attribute which could reduce Taxes (including, without limitation,
deductions and credits related to alternative minimum Taxes). Seller shall also
make or cause the relevant Acquired Subsidiary to make or cooperate with
Purchaser in making any lawful Tax election or application with respect to any
Acquired Subsidiary (or any subsidiary of an Acquired Subsidiary) as reasonably
requested by Purchaser.


 


Section 5.16           Indemnification
and Tax Returns.


 


(a)           Seller
shall indemnify and hold harmless Purchaser, each Acquired Subsidiary, each
direct and indirect subsidiary of an Acquired Subsidiary and their respective
directors, officers, employees, agents and Affiliates (each, a “Purchaser Tax
Indemnitee”) with respect to any and all Taxes that may be imposed on any
Purchaser Tax Indemnitee or in respect of the business or assets of any
Purchaser Tax Indemnitee (i) with respect to any taxable period of any
Acquired Subsidiary, any direct or indirect subsidiary of an Acquired
Subsidiary or any Affiliated Group ending on or prior to the Closing Date or
allocated to Seller pursuant to Section 5.8 and the following paragraph of
this Section 5.16, (ii) to the extent such Taxes arise as a result of
a breach or inaccuracy of any representation contained in Section 3.17, (iii) under
Treasury Regulation Section 1.1502-6 or any comparable state, local or
foreign Tax provision and (iv) as a result of making any Section 338
Election; provided, however, that Seller shall be liable only to the extent
that such Taxes are in excess of the amount, if any, reserved for such Taxes on
the Final Closing Working Capital Statement. Purchaser shall indemnify and hold
harmless Seller, the Subsidiaries that are not Acquired Subsidiaries and each
direct and indirect subsidiary of such Subsidiaries and their respective
directors, officers, employees, agents and Affiliates (each, a “Seller Tax
Indemnitee”) with respect to any and all Taxes that may be imposed on (and have
not been refunded to) any Seller Tax Indemnitee or in respect of the Business
or assets of any Seller Tax Indemnitee (i) with respect to any taxable
period of any Acquired Subsidiary and any direct or indirect subsidiary of an
Acquired Subsidiary beginning after the Closing Date or allocated to Purchaser
pursuant to Section 5.8 and the following paragraph of this Section 5.16;
and (ii) with respect to liability for Taxes of any Acquired Subsidiary
and any direct or indirect subsidiary of an Acquired Subsidiary resulting from
any transaction involving such entities that occurs on the Closing Date but
after the Closing that is not pursuant to this Agreement.


 


(b)           If,
for any federal, state, local or foreign Tax purposes, the taxable period of an
Acquired Subsidiary or a direct or indirect subsidiary of an Acquired
Subsidiary does not terminate on the Closing Date (any such period, a “Straddle
Period”), Taxes, if any, attributable to such Straddle Period shall be
allocated to (i) Seller for the portion of such Straddle Period up to and
including the Closing Date and (ii) Purchaser (or its designated
Affiliate) for the portion of such Straddle Period subsequent to the Closing
Date. For purposes of the preceding sentence, Taxes for the portion of each
Straddle Period up to and including the Closing Date and for the portion of
such Straddle Period subsequent to the Closing Date shall be determined on the
basis of an interim closing of the books as of the close of business on the
Closing Date as if such Straddle Period consisted of one taxable period ending
on the Closing Date followed by a taxable period beginning on the day following
the Closing Date or under such other reasonable method


 


77

















 


as the parties may agree. For
purposes of this Section 5.16(b), exemptions, allowances or deductions
that are calculated on an annual basis, such as the deduction for depreciation,
shall be apportioned on a daily basis. For purposes of this Section 5.16
and the representations contained in Section 3.17, any Tax that is based
in whole or in part on income earned during a particular taxable period shall
be deemed to be a Tax attributable to and imposed in respect of such taxable
period; provided, that for purposes of this sentence, the term “taxable
period” shall include any portion of a taxable period that ends on and includes
the Closing Date.


 


(c)           Seller
shall prepare and file all Tax Returns of each Acquired Subsidiary and each
direct and indirect subsidiary of an Acquired Subsidiary for all taxable
periods of each Acquired Subsidiary and each direct and indirect subsidiary of
an Acquired Subsidiary that end on or prior to the Closing Date; provided,
however, that with respect to such Tax Returns (not including, for the
avoidance of doubt, Tax Returns of any Affiliated Group of which an Acquired
Subsidiary or a direct or indirect subsidiary of an Acquired Subsidiary is a
member) that have due dates, including all applicable extensions, after the
Closing Date (any such return, a “2002 Extended Return”), Seller shall use its
reasonable best efforts to prepare and file such 2002 Extended Returns before
the Closing Date. If, after using its reasonable best efforts, Seller is unable
to file any 2002 Extended Return, then Seller shall notify Purchaser in writing
and Purchaser shall be responsible for filing such 2002 Extended Return. All
such Tax Returns shall be prepared on a basis that is consistent with the
manner in which Seller prepared or filed such Tax Returns for prior periods. Purchaser
(or its designated Affiliate) shall be responsible for filing all Tax Returns
required to be filed by or on behalf of each Acquired Subsidiary and each
direct and indirect subsidiary of an Acquired Subsidiary for taxable periods
ending after the Closing Date. With respect to any Tax Return required to be
filed by Purchaser (or its designated Affiliate) pursuant to this Section 5.16(c) for
a Straddle Period of any Acquired Subsidiary or any direct or indirect
subsidiary of an Acquired Subsidiary, Purchaser (or its designated Affiliate)
shall provide Seller with copies of such completed Tax Return and a statement
setting forth the amount of Tax shown on such Tax Return that is allocable to
Debtors pursuant to Section 5.16(b) (the “Statement”) at least 30
days prior to the due date for the filing of such Tax Return for Seller’s
review, comment and consent, which consent shall not be unreasonably withheld
or delayed. Seller and Purchaser agree to consult and to attempt to resolve in
good faith any disputes with respect to such Tax Return and the Statement. Not
later than five days before the due date for the payment of Taxes with respect
to such Tax Return, Seller shall pay to Purchaser (or its designated Affiliate)
an amount equal to the Taxes shown on the Statement as being allocable to
Seller pursuant to Section 5.16(b). If Seller and Purchaser cannot agree
on the amount of Taxes owed by Seller as reflected on the Statement, Seller
shall pay to Purchaser the amount of Taxes shown as due on the Statement. Within
10 days after such payment, Purchaser and Seller shall refer the matter to the
Accountants. Purchaser and Seller shall equally share the fees and expenses of
the Accountants. The determination of the Accountants with respect to such Tax
Return and Statement shall be final, conclusive, and binding on all parties to
this Agreement. Within five days after the determination by the Accountants, if
necessary, either Purchaser or Seller shall pay the other any amount which is
determined by the Accountants to be owed.


 


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Section 5.17           Tax
Cooperation.


 


(a)           Seller
and Purchaser agree to furnish or cause to be furnished to each other, upon
request, as promptly as practicable, such information (including access to
books and records) and assistance relating to the Acquired Assets and the
Acquired Subsidiaries (and any of their direct and indirect subsidiaries) as is
reasonably requested for the filing of Tax Returns and for the preparation for
any audit, inquiry or judicial proceeding related to Taxes or any Tax Return,
or to otherwise understand the Tax Liabilities or potential Tax Liabilities of
the Acquired Subsidiaries and their direct and indirect subsidiaries for all
periods (or portions thereof) ending on or before the Closing.


 


(b)           Seller
shall deliver to Purchaser as promptly as practicable the following information
(including supporting documentation when requested):  (i) the adjusted tax basis of each asset
owned by any Acquired Subsidiary (and any direct or indirect subsidiary of an
Acquired Subsidiary) and Seller’s (and any affiliate of Seller’s) adjusted tax
basis in the stock of each Acquired Subsidiary (and each direct and indirect
subsidiary of an Acquired Subsidiary); and (ii) any and all information
reasonably requested by Purchaser in connection with determining the expected
Tax consequences under the Treasury Regulations promulgated under Section 1502
of the Code resulting from the transactions contemplated by this Agreement. Any
and all information provided pursuant to this Section 5.17(b) shall
be provided at Seller’s expense and shall be the most current information
available.


 


Section 5.18           Section 338(h)(10) Election.
If Purchaser so requests by written notice delivered not later than 90 days
after the Closing Date, then Seller and each appropriate affiliate of Seller
shall join with Purchaser in making a timely election under Section 338(h)(10) of
the Code and any analogous provision of state, local or foreign Tax Law (each
such election, a “Section 338 Election”) with respect to the purchase of
the stock of each Acquired Subsidiary and any deemed purchase of any direct or
indirect subsidiary of any Acquired Subsidiary (it being understood that
Purchaser may make such requests separately with respect to Section 338
Elections under the Code and under state, local and foreign Tax law and with
respect to any Acquired Subsidiary and any direct or indirect subsidiary of an
Acquired Subsidiary). If Purchaser requests that one or more Section 338
Elections be made with respect to any Acquired Subsidiary or any direct or
indirect subsidiary of an Acquired Subsidiary, then Purchaser shall determine
the allocation of the Purchase Price and other relevant items among the assets
of the Acquired Subsidiary and, if applicable, one or more of its direct or
indirect subsidiaries.


 


Section 5.19           Treatment
of Tax Indemnity Payments. For United States federal income Tax purposes,
Purchaser and Seller shall treat any payments made pursuant to Section 5.16
as adjustments to the Purchase Price.


 


Section 5.20           ARG
II Consent Procedures. The parties agree to use commercially reasonable
efforts on and after the date hereof and prior to the Closing Date to obtain
the consent of all of the Noteholders of the Series 2002-2 Notes issued by
ARG II to the sale of the Equity Securities of ARG II to Purchaser; provided,
that if the parties are unable to obtain such consents Purchaser will seek to
effect a re-financing of the Series 2002-2 Notes immediately following the
Closing, and Seller and its Subsidiaries will cooperate with Purchaser in
connection with such re-financing in accordance with the provisions of Section 5.2(b).


 


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Section 5.21           Transitional
Services Agreement. Purchaser and Seller shall as promptly as practicable,
negotiate in good faith an agreement for the provision after the Closing, on an
arm’s length basis, of transitional services to each other in order to
facilitate an orderly separation from Seller and transition to ownership by
Purchaser of the Acquired Assets, and for the administration of the Seller’s
remaining assets and estate following the Closing Date.


 


Section 5.22           Internal
Restructuring Transactions. Purchaser acknowledges that Seller and the
Subsidiaries desire to engage in a series of transactions prior to the Closing
(including making or changing Tax elections, adopting a plan of complete or
partial liquidation, dissolving, merging, consolidating, restructuring,
recapitalizing, reorganizing or any comparable transaction) (collectively, the “Internal
Restructuring Transactions”) designed in part to reduce or minimize Seller’s or
the Subsidiaries’ Tax liability in connection with the Bankruptcy Case. Seller
shall provide to Purchaser, no later than fourteen (14) days prior to engaging
in an Internal Restructuring Transaction (or any portion thereof), a written
notice that includes a description of the Internal Restructuring Transaction
(or such portion thereof) contemplated and its proposed effective date. Neither
Seller nor any Subsidiary shall engage in any Internal Restructuring
Transaction (or any portion thereof) without the prior written consent of
Purchaser, in its sole discretion. If Purchaser approves any Internal
Restructuring Transaction (or any portion thereof), then Seller shall provide
Purchaser with written confirmation that such transaction (or such portion
thereof) has occurred promptly after its completion (including all
documentation related to such transaction (or such portion thereof)).


 


Section 5.23           Certain
Subsidiaries. (a)   Purchaser sha1l have the right to
designate the Equity Securities of each of (i) Republic Industries
Automotive Rental Group (Belgium) Inc. and (ii) National Car Rental Hawaii
as an Excluded Asset by written notice to Seller not later than five Business
Days prior to the date scheduled for the Bankruptcy Court hearing on the Sale
Approval Order.


 


(b)   If
the Purchaser so elects in writing, Purchaser and Seller shall negotiate in
good faith to make Alamo Rent-A-Car (Canada) Inc. (“ARAC”), a party to this
agreement for the sale and assumption of its assets and liabilities (it being
understood that the failure to so include ARAC as a party to the Agreement
shall not be a condition to Purchaser or CCM to close the transactions
contemplated by this Agreement or give rise to a right for Purchaser or CCM to
terminate this Agreement).


 


Section 5.24           Payment
of Interest. Immediately prior to the Closing Date, Debtors shall pay all
interest accrued during the month in which the Closing occurs on the following
facilities:  (a) Amended and
Restated Credit Agreement dated as of June 30, 2000 , among ANC Rental
Corporation, the several banks and other financial institutions or entities
from time to time parties thereto, Lehman Brothers Inc. and Lehman as
syndication agent and administrative agent; (b) Amended and Restated
Senior Loan Agreement, dated as of June 30, 2000, among ANC Rental
Corporation, Lehman Brothers Inc. and Lehman Commercial Paper Inc., as
syndication agent and administrative agent and (c) Amended and Restated Credit Agreement, dated as of June 30, 2000,
among ANC Rental Corporation, the several banks and other financial
institutions or entities from time to time parties thereto, Lehman Brothers
Inc., Lehman, as syndication agent, Bankers Trust Company, as documentation
agent, and Congress Financial Corporation (Florida), as administrative agent
and collateral agent.


 


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ARTICLE VI



CONDITIONS


 


Section 6.1             General
Conditions. The respective obligations of Purchaser and CCM, on the one
hand, and Debtors, on the other hand, to effect the Closing are subject to the
satisfaction or waiver by each of the parties, as the case may be, prior to or
at the Closing, of each of the following conditions:


 


(a)           No
statute, rule or regulation or order, judgment or decree of any
Governmental Body shall be in effect that stays, enjoins, prevents or prohibits
consummation of the transactions contemplated by this Agreement; and


 


(b)           The
waiting period under the HSR Act relating to the consummation of the
transactions contemplated by this Agreement, shall have expired or been
terminated and all other Competition Approvals shall have been obtained.


 


Section 6.2             Conditions
to Obligations of Purchaser and CCM. The obligation of Purchaser and CCM to
consummate the transactions contemplated hereby shall be subject to the
fulfillment to the satisfaction of Purchaser and CCM unless waived by Purchaser
or CCM at or prior to the Closing of each of the following conditions:


 


(a)           The
representations and warranties of Debtors contained in this Agreement shall be
true and correct in all respects (with respect to representations and
warranties qualified by materiality or Material Adverse Effect, disregarding
any such qualifications) as of the Closing (except to the extent such
representations and warranties are made as of a particular date, in which case
such representations and warranties shall have been true and correct as of such
date) unless, with respect to any failure of a representation or warranty to be
true and correct as of the Closing Date (or such other particular date), such
failure, together with all other failures, would not result in or would not
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect; and Purchaser shall have received at Closing a
certificate to the foregoing effect, dated as of the Closing Date and executed
by the Chief Executive Officer of Seller on behalf of Debtors.


 


(b)           Debtors
shall have performed, satisfied and complied in all material respects with each
of its respective covenants and agreements set forth in this Agreement to be
performed, satisfied and complied with on or after the date hereof and prior to
or at the Closing, and Debtors and the Acquired Subsidiaries (or their direct
or indirect Subsidiaries) shall have obtained all those consents for the
assignment to Purchaser of the Assigned Contracts, and with respect to
Commitments to which any Acquired Subsidiary (or any Subsidiary thereof) is a
party, for the change in control of the Acquired Subsidiary (or such Subsidiary
thereof) contemplated hereby (other than the consent of the Noteholders of the Series 2002-2
Notes, the obtaining of which shall not be deemed a closing condition), in each
case the absence of which individually or in the aggregate with any such
absences, in the good faith determination of Purchaser, could result in or
could reasonably be likely to result in, individually or in the aggregate, a
Material Adverse Effect (without taking into account the failure to obtain the
consent of the Noteholders of the Series 2002–2 Notes). The consents
required by this


 


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Section 6.2(b) shall
include, without limitation, the consents listed on Schedule 6.2(b) (without
regard to whether the failure to obtain any such consent could result in a
Material Adverse Effect).


 


(c)           The
Sale Approval Order shall have been entered and shall have become a Final Order
provided, however, that, in the event an appeal of the Sale Approval Order has
been filed which results in the failure of this condition to be met but no stay
of the Sale Approval Order has been granted, this condition shall be
irrevocably waived if Purchaser does not exercise its termination right under Section 7.1(a)(viii)(3) within
20 days from the date the notice of appeal of the Sale Approval Order is filed.


 


(d)           Between
the date hereof and the Closing Date, no event or condition of any character
shall have occurred which, individually or in the aggregate, could reasonably
be likely to result in a Material Adverse Effect; and Purchaser shall have
received at Closing a certificate to the foregoing effect, dated the Closing
Date and executed by the Chief Executive Officer of Seller on behalf of
Debtors.


 


(e)           Other
than the Amortization Events caused by the commencement of the Bankruptcy Case
by Debtors or the transactions contemplated hereby or set forth on Schedule 3.25(c),
no Amortization Event (or event which, due to the giving of notice or the
passage of time, would become an Amortization Event) shall have occurred and be
continuing with respect to any Securitization Transaction.


 


(f)            Each
Debtor shall furnish to Purchaser a copy of a statement, dated not more than 30
days prior to the Closing Date, issued pursuant to Section 1445 of the
Code and the Treasury Regulations thereunder, certifying as to such Debtor’s
non-foreign status.


 


(g)           The
combined revenues of the Debtors from fees from rentals, sale of related
insurance products and franchise fees for the period May 1, 2003 through
the Closing Date shall exceed the amount set forth on Exhibit J.


 


Section 6.3             Conditions
to Obligation of Debtors. The obligation of Debtors to consummate the
transactions contemplated hereby shall be subject to the fulfillment to the
satisfaction of Debtors unless waived by Debtors at or prior to the Closing of
each of the following conditions:


 


(a)           The
representations and warranties of Purchaser and CCM contained in this Agreement
shall be true and correct in all respects (with respect to representations and
warranties qualified by materiality or material adverse effect disregarding any
such qualifications) as of the Closing (except to the extent such
representations and warranties are made as of a particular date, in which case
such representations and warranties shall have been true and correct as of such
date) unless, with respect to any failure of a representation or warranty to be
true and correct as of the Closing Date (or such other particular date), such
failure together with all other failures would not result in or would not
reasonably be expected to result in, individually or in the aggregate, a
material adverse effect on the ability of Purchaser to consummate the
transactions contemplated hereby; and Seller shall have received at


 


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Closing a certificate to the
foregoing effect, dated as of the Closing Date and executed by an officer of
Purchaser.


 


(b)           Purchaser
and CCM shall have performed, satisfied and complied in all material respects
with each of its respective covenants and agreements set forth in this
Agreement to be performed, satisfied and complied with on or after the date
hereof and prior to or at the Closing.


 


(c)           The
Sale Approval Order shall have been entered and shall not have been stayed,
vacated or reversed.


 


ARTICLE VII



TERMINATION


 


Section 7.1             Termination.


 


(a)           This
Agreement may be terminated at any time prior to the Closing:


 


(i)            by
mutual written agreement of Purchaser and Seller;


 


(ii)           by
either party, in the event that Seller accepts a Qualified Bid, other than that
of Purchaser, as the highest and best offer;


 


(iii)          by
Debtors, (A) upon a breach of any covenant or agreement on the part of
Purchaser or CCM set forth in this Agreement or if any representation or
warranty of Purchaser or CCM set forth in this Agreement shall not be true and
correct, in either case such that the conditions set forth in Section 6.3(a) or
6.3(b) would not be satisfied or the representations and warranties of
Purchaser and CCM shall not have been true and correct in all material respects
on the date hereof (a “Terminating Purchaser Breach”); provided, that
such Terminating Purchaser Breach shall not have been waived by Debtors or, to
the extent curable, cured within the earlier of 30 days after written notice of
such Terminating Purchaser Breach is given to Purchaser and CCM by Debtors or
the Drop Dead Date; or (B) if any condition to Debtors’ obligations to
close at the Closing set forth in Article VI is or becomes impossible to
fulfill (other than because of the failure of Debtors to comply with its
obligations under this Agreement or any Related Documents), and Debtors have
not waived such condition;


 


(iv)          by
Purchaser, (A) upon a breach of any covenant or agreement on the part of
Debtors set forth in this Agreement or if any representation or warranty of
Debtors set forth in this Agreement shall not be true and correct, in either
case such that the conditions set forth in Section 6.2(a) or 6.2(b) would
not be satisfied or the representations and warranties of Seller shall not be
true and correct in all material respects on the date hereof (a “Terminating
Seller Breach”); provided, that such Terminating Seller Breach shall not
have been waived by Purchaser or, to the extent curable, cured within 30 days
after written notice of such Terminating Seller Breach is given to Seller by
Purchaser or the Drop Dead Date; or (B) if any condition to the
obligations of Purchaser and CCM to close set forth in Article VI is or
becomes


 


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impossible to fulfill (other
than because of the failure of Purchaser and CCM to comply with their
obligations under this Agreement), and Purchaser and CCM has not waived such
condition;


 


(v)           by
Purchaser, (A) upon the commencement of any action to liquidate Seller of
any or its Subsidiaries or any of their respective assets under Chapter 7 of
the Bankruptcy Code or otherwise, or (B) upon the approval of the
Bankruptcy Court or the comparable provisions of Law applicable to any Foreign
Subsidiary of any action commenced by any other Person to liquidate Seller or
any of the Subsidiaries or any of their respective assets or for the
appointment of a trustee or examiner with managerial powers under Bankruptcy
Code or comparable provisions of Law applicable to any Foreign Subsidiary;


 


(vi)          by
Purchaser, so long as Purchaser and CCM are not then in breach of their
obligations under this Agreement, if the Bidding Procedures Order substantially
in the form attached as Exhibit G and otherwise in form and substance
reasonably satisfactory to Purchaser shall not have been entered by the
Bankruptcy Court by June 30, 2003; provided, however, that
if the Bankruptcy Court has not entered the Bidding Procedures Order within
such time, and Purchaser does not exercise its right to terminate this
Agreement pursuant to this Section 7.1(a)(vi) within 10 days after June 30,
2003, then Purchaser shall be deemed to have irrevocably waived its right to
terminate this Agreement pursuant to this Section 7.1(a)(vi);


 


(vii)         by
either Debtors or Purchaser, if the Closing Date has not occurred by December 31,
2003 (the “Drop Dead Date”);


 


(viii)        by
Purchaser, if


 


(1)           any
event or condition of any character shall have occurred which would result in
or would reasonably be likely to result in, individually or in the aggregate, a
Material Adverse Effect;


 


(2)           the
Bankruptcy Court has not entered the Sale Approval Order by August 31,
2003;


 


(3)           the
Sale Approval Order has not become a Final Order by September 10, 2003
(provided, however, that, in the event an appeal of the Sale Approval Order has
been filed which results in the failure of this condition to be met but no stay
of the Sale Approval Order has been granted and remains in effect, Purchaser
shall be deemed to have irrevocably waived its rights to terminate this
Agreement pursuant to this Section 7.1(a)(viii)(3) if it does not
exercise its right to terminate this Agreement pursuant to Section 7.1(a)(viii)(3) within
30 days from the date notice of appeal of the Sale Approval Order is filed), or
if the Sale Approval Order has been revoked, rescinded or modified in any
material respect;


 


(4)           if
the Bankruptcy Court enters an order that authorizes an Alternative
Transaction;


 


(5)           if
Debtors become a proponent or co-proponent of any plan of reorganization under
the Bankruptcy Code filed with the Bankruptcy Court which does not contemplate
the acquisition of the Acquired Assets by Purchaser on substantially the terms
set forth herein; or


 


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(6)           if
the Bankruptcy Case is converted from a case under Chapter 11 of the
Bankruptcy Code to a case under Chapter 7 of the Bankruptcy Code or is
dismissed, if a trustee is appointed in the Bankruptcy Case, or if the periods
of exclusivity under Sections 1121(b) and 1121(c) of the Bankruptcy
Code are terminated or reduced by the Bankruptcy Court pursuant to Section 1121(d) in
the Bankruptcy Case;


 


(ix)           by
Purchaser on or prior to June 30, 2003 (or such later date, not later than
July 11, 2003, as Seller shall agree to in writing), if (1) MBIA
shall not have permanently waived the Amortization Event resulting from the
Bankruptcy Case and the transactions contemplated hereby and shall not have
entered into a commitment relating to additional fleet financing, in each case
on terms and conditions satisfactory to Purchaser in its sole discretion, (2) the
Perot Agreement, in form and substance satisfactory to Purchaser in its sole
discretion has not been executed and delivered by Perot, or (3) General
Motors Corporation and Chrysler Corporation have not each executed and
delivered multi-year Commitments for fleet supply and repurchase programs for
the Business, to become effective on the Closing Date in form and substance
satisfactory to Purchaser; provided, however, that if Purchaser shall not
exercise its right to terminate this Agreement pursuant to this Section 7.1(a)(ix) on
or prior to 5:00 p.m., New York City time on such date, then Purchaser
shall be deemed to have irrevocably waived its right to terminate this
Agreement pursuant to this Section 7.1(a)(ix);


 


(x)            by
Purchaser on or prior to 5:00 p.m., New York City time on June 17,
2003, if Debtors shall have not delivered to Purchaser on or prior to 5:00 p.m.,
New York City time on June 14, 2003, Schedules to this Agreement in form
and substance satisfactory to Purchaser in its sole discretion; or


 


(xi)           by
Seller (after consultation with Lehman), if the amounts determined by Purchaser
pursuant to clause (ii) of Section 2.5(b) would result in a
reduction of the Purchase Price by more than $25,000,000; provided that Seller
may not terminate this Agreement pursuant to this clause (xi) unless (A) Seller
shall have first given Purchaser written notice not later than 5:00 p.m.
on the Business Day immediately preceding the Closing Date of its intention to
terminate this Agreement pursuant to this clause (xi) and (B) Purchaser
shall have not delivered to Seller not later than 9:00 a.m. on the
Business Day on which the Closing Date is to occur a written notice fixing the
amount of the reduction of the Purchase Price pursuant to clause (ii) of Section 2.5(b) at
$25,000,000.


 


Section 7.2             Effect
of Termination. If this Agreement is terminated by any party pursuant to Section 7.1
and the transactions contemplated hereby are not consummated, this Agreement
shall become null and void and of no further force and effect and there shall
be no liability on the part of any party hereto (or any shareholder, director,
officer, partner, employee, agent, consultant or representative of such party),
except as set forth in Section 5.7 and this Section 7.2; provided,
any termination of this Agreement shall not relieve any party hereto from any
liability for any breach of any provisions of this Agreement (including the
right to receive the Deposit). The parties agree that Debtor’s right to damages
from Purchaser and CCM hereunder shall not be limited to the Deposit (or
appropriate percentage thereof). The Confidentiality Agreement, this Section 7.2
and the Termination Fee provided for in Section 5.7 shall survive
termination of this Agreement in accordance with its terms.


 


85

















 


Section 7.3             Non-Survival
of Representations and Warranties; Survival of Covenants and Agreements. The
representations and warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall not survive the Closing. The
covenants and agreements of the parties set forth in Article V that require
performance by a party after the Closing Date shall survive the Closing for the
period set forth therein.


 


ARTICLE VIII


 


MISCELLANEOUS
PROVISIONS


 


Section 8.1             Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given upon receipt if (i) mailed by certified or
registered mail, return receipt requested, (ii) sent by Federal Express or
other express carrier, fee prepaid, (iii) sent via facsimile with receipt
confirmed, (iv) sent by e-mail to the e-mail address indicated below
(flagged as urgent) or (v) delivered personally, addressed as follows or
to such other address or addresses of which the respective party shall have
notified the other.


 


(a)           If
to Debtors, to:


 


	
  ANC Rental Corporation

  
	
  200 South Andrews Avenue

  
	
  Fort Lauderdale, Florida 33301

  
	
  Attention: 
  Howard Schwartz, Esq.

  
	
  Facsimile: 
  (954) 320-4158

  
	
  E-mail: 
  schwartzh@ancrental.com

  
	
   

  
	
  With copies to:

  
	
   

  
	
  Fried, Frank, Harris, Shriver &
  Jacobson

  
	
  One New York Plaza

  
	
  New York, New York 10004

  
	
  Attention: 
  Jeffrey Bagner, Esq.

  
	
  Facsimile: 
  (212) 859-4000

  
	
  E-mail: 
  jeffrey.bagner@ffhsj.com

  



 


(b)           If
to CCM or Purchaser to:


 


	
  CAR Acquisition Company LLC

  c/o Cerberus Capital Management, L.P.

  450 Park Avenue

  New York, New York 10022

  
	
  Attention: 
  Lenard Tessler

  
	
  Facsimile: 
  (212) 755-3009

  
	
  E-mail: 
  ltessler@cerberuspartners.com

  
	
  or William Lobeck

  
	
  Email: 
  wmlobeck@aol.com

  



 


86

















 


	
  With copies to:

  
	
   

  
	
  Schulte Roth & Zabel LLP

  
	
  919 Third Avenue

  
	
  New York, New York 10022

  
	
  Attention: Stuart D. Freedman, Esq.

  
	
  Facsimile: 
  (212) 593-5955

  
	
  E-mail: stuart.freedman@srz.com

  



(c)           


	
  Lehman Commercial Paper Inc.

  
	
  745 7th Avenue

  
	
  New York, New York 10019

  
	
  Attention:

  	
  James P. Seery,

  
	
   

  	
  Senior Vice President

  
	
  Facsimile: 
  (646) 758-2209

  
	
  E-mail: jseery@lehman.com

  



 


With copies to:


 


	
  Simpson Thatcher & Bartlett LLP

  
	
  425 Lexington Avenue

  
	
  New York, New York 10017

  
	
  Attention: 
  Mark Thompson, Esq.

  
	
  Facsimile: 
  (212) 455-2502

  
	
  E-mail: mthompson@stblaw.com

  



 


Section 8.2             Fees
and Expenses. Except for the payment of the Expense Reimbursement of
$250,000 by Debtors to Purchaser, receipt of which is acknowledged by
Purchaser, and the release of the Deposit from the Escrow Holder in accordance
with the terms of the Escrow Agreement, and subject in all respects to the
payment by Debtors to Purchaser of the Termination Fee in accordance with Section 5.7,
each party to this Agreement shall bear its own respective, expenses, costs and
fees incurred in connection with the transactions contemplated hereby,
including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the transactions hereby shall be
consummated.


 


Section 8.3             Waiver
of Provisions. Any term or condition hereof may be waived at any time by
the party hereto which is entitled to the benefits thereof, whether before or
after the action of such party; provided, however, that such
action shall be evidenced by a written instrument duly executed on behalf of
such party by its duly authorized officer or employee. The failure of any party
to enforce at any time any provision of this Agreement shall not be construed
to be a waiver of such provision nor shall it in any way affect the validity of
this Agreement or the right of such party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.


 


Section 8.4             Amendment
of Agreement. This Agreement may be modified or amended with respect to any
term or provision contained herein at any time by action of the


 


87

















 


parties hereto; provided,
however, that such amendment shall be evidenced by a written instrument
duly executed on behalf of each party by its duly authorized officer or
employee.


 


Section 8.5             Entire
Agreement. This Agreement (including the Schedules and Exhibits hereto) and
the Confidentiality Agreement set forth the entire agreement and understanding
between the parties and supersede any prior agreement or understanding, written
or oral, relating to the subject matter of this Agreement.


 


Section 8.6             Successors
and Assigns; Binding Effect. This Agreement shall bind and inure to the
benefit of Debtors, on one hand, and to CCM and Purchaser, on the other hand,
and their respective successors, transferees and assigns. Purchaser, without
the consent of Debtors, may assign all or any portion of its rights and
obligations hereunder, in whole or in part, to any one or more of its
wholly-owned subsidiaries or Affiliates.


 


Section 8.7             Severability.
The provisions of this Agreement are severable, and in the event that any one
or more provisions are deemed invalid, illegal or unenforceable by any rule of
law or public policy the remaining provisions shall remain in full force and
effect unless the deletion of such provision shall cause this Agreement to
become adverse to any party.


 


Section 8.8             Governing
Law. This Agreement shall be governed by and construed, interpreted and
enforced first in accordance with and governed by the Bankruptcy Code and the
applicable case law under the Bankruptcy Code and, to the extent that the
Bankruptcy Code and the applicable case law under the Bankruptcy Code do not
address the matter at hand, then this Agreement shall be governed by and
construed and interpreted in accordance with the Laws of the State of Delaware
applicable to contracts entirely made and performed there.


 


Section 8.9             Consent
to Jurisdiction. The parties hereby agree that without limitation of any
party’s right to appeal any order of the Bankruptcy Court, (a) the
Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of
this Agreement and to decide any claims or disputes that may arise or result
from, or be connected with, this Agreement, any breach or default hereunder, or
the transactions contemplated herein, and (b) any and all claims, causes
of action, suits and proceedings relating to the foregoing shall be filed and
maintained only in the Bankruptcy Court, and the parties hereby consent and
submit to jurisdiction of the Bankruptcy Court.


 


Section 8.10           Waiver
of Jury Trial. Each of the parties hereto hereby waives any right they may
have to a trial by jury in respect of any action, proceeding or litigation
directly or indirectly arising out of, under or in connection with this
Agreement.


 


Section 8.11           Execution
in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


Section 8.12           No
Third Party Beneficiaries. This Agreement shall be for the sole benefit of
the parties hereto (and their respective successors, assigns and legal
representatives), not intended (nor shall it be construed) to give any other
Person any legal or equitable right, benefit, remedy or claim hereunder
(including to bring a suit at law or equity).


 


88

















 


Section 8.13           No
Strict Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement. Consequently, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provision of this Agreement. Notwithstanding anything to the contrary,
any representation or warranty by Seller as to delivery or making available
documents or information shall be deemed to be satisfied if such document or
information has been made available or delivered prior to 5:00 p.m. New
York City time on June 14, 2003.


 


89

















 


IN WITNESS
WHEREOF, each party has caused this Asset Purchase Agreement to be duly
executed on its behalf by its duly authorized officer as of the date first
written above.


 


	
   

  	
  PURCHASER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CAR ACQUISITION COMPANY LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Lenard B. Tessler

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Lenard B. Tessler

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CERBERUS CAPITAL MANAGEMENT, L.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Lenard B. Tessler

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Lenard B. Tessler

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ANC RENTAL CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Howard D. Schwartz

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Howard D. Schwartz

  	
   

  
	
   

  	
  Title:

  	
  Sr. Vice President

  	
   

  
								



 

















 


	
   

  	
  OTHER DEBTORS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Alamo
  International Sales, Inc.

  	
   

  
	
   

  	
  Alamo
  Rent-A-Car Management, LP

  	
   

  
	
   

  	
  Alamo
  Rent-A-Car, LLC

  	
   

  
	
   

  	
  ANC
  Aviation, Inc.

  	
   

  
	
   

  	
  ANC
  Collector Corporation

  	
   

  
	
   

  	
  ANC
  Financial Corporation

  	
   

  
	
   

  	
  ANC
  Financial GP Corporation

  	
   

  
	
   

  	
  ANC Financial
  Properties LLC

  	
   

  
	
   

  	
  ANC
  Financial LP

  	
   

  
	
   

  	
  ANC-GP, Inc.

  	
   

  
	
   

  	
  ANC
  Information Technology, Inc.

  	
   

  
	
   

  	
  ANC
  Information Technology Holding, Inc.

  	
   

  
	
   

  	
  ANC
  Information Technology, L.P.

  	
   

  
	
   

  	
  ANC IT
  Collector Corporation

  	
   

  
	
   

  	
  ANC Management Services
  Corporation

  	
   

  
	
   

  	
  ANC Management Services LP

  	
   

  
	
   

  	
  ANC
  Payroll Administration, LLC

  	
   

  
	
   

  	
  ANC-TM
  Management LP

  	
   

  
	
   

  	
  ARC-GP.
  Inc.

  	
   

  
	
   

  	
  ARC-TM.
  Inc.

  	
   

  
	
   

  	
  ARC-TM
  Properties LLC

  	
   

  
	
   

  	
  ARG
  Reservation Services, LLC

  	
   

  
	
   

  	
  ARI Fleet Services, Inc.

  	
   

  
	
   

  	
  Auto Rental Inc.

  	
   

  
	
   

  	
  Car Rental Claims, Inc.

  	
   

  
	
   

  	
  Claims Management Center, Inc.

  	
   

  
	
   

  	
  Guy Salmon USA, Inc.

  	
   

  
	
   

  	
  Liability Management Companies
  Holding, Inc.

  	
   

  
	
   

  	
  National Car Rental Licensing, Inc.

  	
   

  
	
   

  	
  National Car Rental System, Inc.

  	
   

  
	
   

  	
  NCR Affiliate Servicer
  Properties LLC

  	
   

  
	
   

  	
  NCR Affiliate Servicer, Inc.

  	
   

  
	
   

  	
  NCRAS Management, LP

  	
   

  
	
   

  	
  NCRAS-GP, Inc.

  	
   

  
	
   

  	
  NCRS Insurance Agency, Inc.

  	
   

  
	
   

  	
  Post Retirement Liability
  Management, Inc.

  	
   

  
	
   

  	
  Rental Liability Management
  Holdings, LLC

  	
   

  
	
   

  	
  Rental Liability Management, Inc.

  	
   

  
	
   

  	
  Republic Fiduciary, Inc.

  	
   

  
	
   

  	
  Republic Guy Salmon Partner, Inc.

  	
   

  
	
   

  	
  Spirit Leasing, Inc.

  	
   

  
	
   

  	
  Spirit Rent-A-Car

  	
   

  
	
   

  	
  SRAC Management, LP

  	
   

  
	
   

  	
  SRAC-GP, Inc.

  	
   

  
	
   

  	
  SRAC-TM, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Howard D. Schwartz

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Howard D. Schwartz

  	
   

  
	
   

  	
  Title:

  	
  Secretary

  	
   

  
						



 

















 


	
   

  	
  LEHMAN:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  As to Section 2.5 Only

  	
   

  
	
   

  	
  LEHMAN COMMERCIAL PAPER INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ James P. Seery, Jr.

  	
   

  	
   

  
	
   

  	
  Name:

  	
  James P. Seery, Jr.

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signatory