Exhibit 10.12


 


Execution Copy


 




 





GUARANTEE AND COLLATERAL AGREEMENT


 


made by


 


VANGUARD CAR RENTAL USA HOLDINGS INC.,


 


and certain of its Subsidiaries


 


 


in favor of


 


GOLDMAN SACHS CREDIT PARTNERS L.P.,


as Administrative Agent


 


 


dated as of June 14, 2006




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1.
  DEFINED TERMS

  	
   

  	
  1

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
  1.2

  	
  Other
  Definitional Provisions

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.
  GUARANTEE

  	
  5

  
	
   

  	
  2.1

  	
  Guarantee

  	
  5

  
	
   

  	
  2.2

  	
  Rights
  of Reimbursement, Contribution and Subrogation

  	
  6

  
	
   

  	
  2.3

  	
  Amendments,
  etc. with respect to the Borrower Obligations

  	
  8

  
	
   

  	
  2.4

  	
  Guarantee
  Absolute and Unconditional

  	
  8

  
	
   

  	
  2.5

  	
  Reinstatement

  	
  9

  
	
   

  	
  2.6

  	
  Payments

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.
  GRANT OF SECURITY INTEREST

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 4.
  REPRESENTATIONS AND WARRANTIES

  	
  10 

  
	
   

  	
  4.1

  	
  Representations
  in Credit Agreement

  	
  10

  
	
   

  	
  4.2

  	
  Title;
  No Other Liens

  	
  11

  
	
   

  	
  4.3

  	
  Perfected
  First Priority Liens

  	
  11

  
	
   

  	
  4.4

  	
  Jurisdiction
  of Organization; Chief Executive Office

  	
  12

  
	
   

  	
  4.5

  	
  Inventory
  and Equipment

  	
  12

  
	
   

  	
  4.6

  	
  Farm
  Products

  	
  12

  
	
   

  	
  4.7

  	
  Investment
  Property

  	
  12

  
	
   

  	
  4.8

  	
  Receivables

  	
  12

  
	
   

  	
  4.9

  	
  Material
  Contracts

  	
  13

  
	
   

  	
  4.10

  	
  Intellectual
  Property

  	
  13

  
	
   

  	
  4.11

  	
  Instruments
  and Chattel Paper

  	
  14

  
	
   

  	
  4.12

  	
  Letter-of-Credit
  Rights

  	
  14

  
	
   

  	
  4.13

  	
  Commercial
  Tort Claims

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.
  COVENANTS

  	
  15

  
	
   

  	
  5.1

  	
  Covenants
  in Credit Agreement

  	
  15

  
	
   

  	
  5.2

  	
  Delivery
  and Control of Instruments and Chattel Paper Investment Property and Deposit
  Accounts

  	
  15

  
	
   

  	
  5.3

  	
  Maintenance
  of Insurance

  	
  16

  
	
   

  	
  5.4

  	
  Payment
  of Obligations

  	
  17

  
	
   

  	
  5.5

  	
  Maintenance
  of Perfected Security Interest; Further Documentation

  	
  17

  
	
   

  	
  5.6

  	
  Changes
  in Name, etc

  	
  17

  
	
   

  	
  5.7

  	
  Notices

  	
  17

  
	
   

  	
  5.8

  	
  Investment
  Property

  	
  18

  
	
   

  	
  5.9

  	
  Receivables

  	
  19

  
	
   

  	
  5.10

  	
  Intellectual
  Property

  	
  19

  
	
   

  	
  5.11

  	
  Commercial
  Tort Claims

  	
  21

  
	
   

  	
  5.12

  	
  Vehicles

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.
  REMEDIAL PROVISIONS

  	
  21

  
	
   

  	
  6.1

  	
  Certain
  Matters Relating to Receivables

  	
  21

  
	
   

  	
  6.2

  	
  Communications
  with Obligors; Grantors Remain Liable

  	
  22

  
	
   

  	
  6.3

  	
  Pledged
  Stock

  	
  22

  
					



 

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4

  	
  Proceeds
  to be Turned Over To Administrative Agent

  	
  23

  
	
   

  	
  6.5

  	
  Application
  of Proceeds

  	
  23

  
	
   

  	
  6.6

  	
  Code
  and Other Remedies

  	
  24

  
	
   

  	
  6.7

  	
  Registration
  Rights

  	
  24

  
	
   

  	
  6.8

  	
  Deficiency

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.
  THE ADMINISTRATIVE AGENT

  	
  25

  
	
   

  	
  7.1

  	
  Administrative
  Agent’s Appointment as Attorney-in-Fact, etc

  	
  25

  
	
   

  	
  7.2

  	
  Duty
  of Administrative Agent

  	
  27

  
	
   

  	
  7.3

  	
  Filing
  of Financing Statements

  	
  27

  
	
   

  	
  7.4

  	
  Authority
  of Administrative Agent

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.
  MISCELLANEOUS

  	
  28

  
	
   

  	
  8.1

  	
  Amendments
  in Writing

  	
  28

  
	
   

  	
  8.2

  	
  Notices

  	
  28

  
	
   

  	
  8.3

  	
  No
  Waiver by Course of Conduct; Cumulative Remedies

  	
  28

  
	
   

  	
  8.4

  	
  Enforcement
  Expenses; Indemnification

  	
  28

  
	
   

  	
  8.5

  	
  Successors
  and Assigns

  	
  29

  
	
   

  	
  8.6

  	
  Set-Off

  	
  29

  
	
   

  	
  8.7

  	
  Counterparts

  	
  29

  
	
   

  	
  8.8

  	
  Severability

  	
  29

  
	
   

  	
  8.9

  	
  Section Headings

  	
  30

  
	
   

  	
  8.10

  	
  Integration

  	
  30

  
	
   

  	
  8.11

  	
  GOVERNING LAW

  	
  30

  
	
   

  	
  8.12

  	
  Submission
  To Jurisdiction; Waivers

  	
  30

  
	
   

  	
  8.13

  	
  Acknowledgements

  	
  30

  
	
   

  	
  8.14

  	
  Additional
  Grantors

  	
  31

  
	
   

  	
  8.15

  	
  Releases

  	
  31

  
	
   

  	
  8.16

  	
  WAIVER OF JURY TRIAL

  	
  31

  
					



 

















 


	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
   

  	
  Notice
  Addresses of Grantors

  
	
  Schedule 2

  	
   

  	
  Description
  of Investment Property and Deposit Accounts

  
	
  Schedule 3

  	
   

  	
  Filings
  and other Actions Required to Perfect Security Interest

  
	
  Schedule 4

  	
   

  	
  Jurisdiction
  of Organization, Identification Number and Location of Chief Executive Office

  
	
  Schedule 5

  	
   

  	
  Locations
  of Inventory and Equipment

  
	
  Schedule 6

  	
   

  	
  Intellectual
  Property

  
	
  Schedule 7

  	
   

  	
  Instruments
  and Chattel Paper

  
	
  Schedule 8

  	
   

  	
  Letter-of-Credit
  Rights

  
	
  Schedule 9

  	
   

  	
  Commercial
  Tort Claims

  
	
  Schedule 10

  	
   

  	
  Oklahoma
  Development Financing Collateral

  
	
   

  	
   

  	
   

  
	
  Annexes

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex
  I

  	
   

  	
  Assumption
  Agreement

  
	
  Annex
  II

  	
   

  	
  Acknowledgment
  and Consent

  



 


iii

















 


GUARANTEE AND COLLATERAL AGREEMENT, dated as of June 14, 2006,
made by VANGUARD CAR RENTAL USA HOLDINGS INC., a Delaware corporation (the “US
Borrower”), and each of the other signatories hereto (together with any
other entity that may become a party hereto as provided herein, each a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”, in favor
of GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”), as Administrative Agent (in
such capacity, together with its successors and permitted assigns in such
capacity, the “Administrative Agent”) for the banks and other financial
institutions (the “Lenders”) from time to time parties to the Credit
Agreement, dated as of June 14, 2006 (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
US Borrower, National Car Rental (Canada) Inc., a Canada corporation (the “Canadian
Borrower” and together with the US Borrower the “Borrowers”) the
Lenders, the Administrative Agent, GSCP, J.P. Morgan Securities Inc. and Lehman
Brothers Inc., as Sole Joint Lead Arrangers and Joint Bookrunners, GSCP and
JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Bank of Montreal, as
Canadian Agent and Lehman Commercial Paper Inc., Bank of Montreal and Wachovia
Bank, National Association as Co-Documentation Agents. Capitalized terms used
herein shall have the meanings set forth in Section 1 hereof.


 


W  I  T  N  E  S  S  E  T  H:


 


WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to each of the US Borrower and the Canadian
Borrower upon the terms and subject to the conditions set forth therein;


 


WHEREAS, the Borrowers are members of an affiliated group of companies
that includes the Borrowers and each Guarantor;


 


WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the US Borrower to make valuable
transfers to one or more of the Guarantors in connection with the operation of
their respective businesses;


 


WHEREAS, certain of the Qualified Counterparties may enter into,
or may have entered into prior to the date hereof, Specified Hedge
Agreements with the US Borrower;


 


WHEREAS, the Borrowers and the Guarantors are engaged in related
businesses, and each Guarantor will derive substantial direct and indirect
benefit from the extensions of credit to each of the US Borrower and the Canadian
Borrower under the Credit Agreement and from the Specified Hedge Agreements;
and


 


WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrowers under the Credit
Agreement that the US Borrower and the Guarantors shall have executed and
delivered this Agreement to the Administrative Agent;


 


NOW, THEREFORE, in consideration of these premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the
Borrowers thereunder, the US Borrower and each Guarantor hereby agrees with the
Administrative Agent, for the benefit of the Secured Parties as follows:


 


SECTION 1.                                DEFINED TERMS


 


1.1                                 Definitions. (a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement and the


 

















 


following terms are used herein as defined in the New York UCC:
Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims,
Commodity Account, Commodity Contract, Electronic Chattel Paper, Equipment,
Farm Products, General Intangibles, Goods, Instruments, Inventory,
Letter-of-Credit Rights, Money, Securities Entitlements, Supporting
Obligations, Tangible Chattel Paper and Uncertificated Security.


 


(b)                                 The following terms shall have the following
meanings:


 


“Agreement”: this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.


 


“Borrower Obligations”: the collective reference to the
Obligations (as defined in the Credit Agreement).


 


“Claim”: any and all Accounts, Chattel Paper, General
Intangibles, Indebtedness, Instruments, rights to payment and claims of any
kind or nature, whether liquidated or unliquidated, matured or unmatured, fixed
or contingent, disputed or undisputed, legal or equitable, secured or
unsecured, in each case owed to any Grantor by any other Grantor.


 


“Collateral”: as defined in Section 3.


 


“Collateral Account”: any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.


 


“Copyright License”: any written agreement naming any Grantor as
licensor or licensee (including those listed in Schedule 6), granting
any right under any Copyright, including, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright.


 


“Copyrights”: (i) all copyrights arising under the laws of
the United States, any other country, union of countries, or any political
subdivision thereof, whether registered or unregistered and whether published
or unpublished (including those listed in Schedule 6 as such schedule may be
amended or supplemented from time to time), all Mask Works (as defined in 17
U.S.C. 901 of the U.S. Copyright Act), all protectable designs, all software,
and all works of authorship and other intellectual property rights embodied
therein and all right to make and exploit derivative works based on, or adopted
from, works covered by such copyrights, and with respect to any and all of the
foregoing, all (ii) registrations and recordings thereof, and all
applications in connection therewith, including, all registrations, recordings
and applications in the United States Copyright Office, and (iii) all
rights to, and to obtain, all renewals thereof.


 


“Deposit Account”: as defined in the New York UCC and, in any
event, including, any demand, time, savings, passbook or similar account
maintained with a bank.


 


“Foreign Subsidiary Voting Stock”: the voting Capital Stock of
any Foreign Subsidiary.


 


“Grantors”:
the collective reference to the US Borrower and each Subsidiary Guarantor.


 


“Guarantor Obligations”: with respect to any Guarantor, the
collective reference to all obligations and liabilities of such Guarantor which
may arise under or in connection with this Agreement (including, Section 2)
or any other Loan Document to which such Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, all reasonable fees and
disbursements of counsel to the Administrative


 


2

















 


Agent or to any Secured Party that are required to be paid by such
Guarantor pursuant to the terms of this Agreement or any other Loan Document).


 


“Intellectual Property”: the collective reference to all rights,
priorities and privileges relating to all intellectual property and other
proprietary rights, whether arising under United States, multinational or
foreign laws or otherwise, including, (i) the Copyrights, (ii) the
Copyright Licenses, (iii) the Patents, (iv) the Patent Licenses, (v) the
Trademarks, (vi) the Trademark Licenses, (vii) the Trade Secrets, (viii) the
Trade Secret Licenses, and with respect to any of the foregoing, (ix) all
rights to sue at law or in equity for any past, present or future infringement
or other impairment thereof, (x) the right to receive all proceeds and damages
therefrom, including, licenses, royalties, income, payments, claims, damages,
and proceeds of suit, and (xi) all common law and other rights throughout the
world in and to all of the foregoing.


 


“Investment Property”: the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the New York
UCC (other than any Foreign Subsidiary Voting Stock excluded from the
definition of “Pledged Stock” in this Section 1.1) and (ii) whether
or not constituting “investment property” as so defined, all Pledged Debt and
all Pledged Stock.


 


“Issuers”: the collective reference to each issuer of any
Investment Property.


 


“New York UCC”: the Uniform Commercial Code as from time to
time in effect in the State of New York.


 


“Obligations”: the Borrower Obligations and the Guarantor
Obligations.


 


“Oklahoma Development Financing Collateral”: as defined in Schedule 10.


 


“Parent Guarantor”: the US Borrower, solely in its capacity as
guarantor for the Canadian Obligations under Section 2 hereof.


 


“Patents”: (i) all letters patent of the United States, any
other country, or union of countries, or any political subdivision thereof, all
reissues and extensions thereof, including any of the foregoing referred to in Schedule 6,
(ii) all applications for letters patent of the United States or any other
country or union of countries and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing referred to
in Schedule 6, (iii) all inventions and improvements described
in any patent or patent application, including any of the foregoing listed in Schedule 6,
and (iv) all rights to, and to obtain any reissues or extensions of the
foregoing.


 


“Patent License”: all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use
or sell any invention covered in whole or in part by a Patent, including,
any of the foregoing referred to in Schedule 6.


 


“Pledged Debt” shall mean, with respect to any Grantor, all
indebtedness owed to such Grantor, including, all indebtedness described on Schedule 2
under the heading “Pledged Debt” (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such indebtedness, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
indebtedness.


 


“Pledged Securities”: the collective reference to the Pledged
Debt and the Pledged Stock.


 


3

















 


“Pledged Stock”: all equity interests of Capital Stock held by
any Grantor in each Issuer, including, all interests listed on Schedule 2
(as such schedule may be amended or modified from time to time) and
the certificates, if any, representing such equity interests and any interest
of any Grantor on the books and records of such Issuer or on the books and
records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such equity interest that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect; provided that in no event
shall (i) more than 65% of the total outstanding Foreign Subsidiary Voting
Stock of any Foreign Subsidiary be required to be pledged hereunder and (ii) any
general partnership interests held by any Grantor in any Finance Company be
required to be pledged hereunder.


 


“Proceeds”: all “proceeds” as such term is defined in Section 9-l02(a)(64)
of the New York UCC and, in any event, including, all dividends or other income
from the Investment Property, collections thereon or distributions or payments
with respect thereto.


 


“Receivable”: any right to payment for goods or other property
sold, leased, licensed, assigned or otherwise disposed of, or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, any
Account).


 


“Secured Parties”: the collective reference to the Agents, the
Lenders under the Term Loan Facility and the Revolving Credit Facility
(including any Issuing Lender in its capacity as Issuing Lender) and any
Qualified Counterparties and shall include, all former Agents, Lenders and
Qualified Counterparties to the extent that any Obligations owing to such Persons
were incurred while such Persons were Agents, Lenders or Qualified
Counterparties and such Obligations have not been paid or satisfied in full.


 


“Securities Act”: the Securities Act of 1933, as amended.


 


“Subsidiary Guarantors”: as defined in the preamble.


 


“Trademarks”: (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
trade styles, service marks, Internet domain names, logos, slogans and other
source or business identifiers (and all translations, adaptations, derivations
and combinations of the foregoing), and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country, union of countries, or
any political subdivision thereof, or otherwise, and all common-law rights
related thereto, including any of the foregoing referred to in Schedule 6,
and (ii) the right to obtain all renewals thereof.


 


“Trademark License”: any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, any of the foregoing referred to in Schedule 6.


 


“Trade Secret License”: any written agreement providing for the
grant by or to any Grantor of any right to use any Trade Secret, including any
of the foregoing referred to in Schedule 6.


 


“Trade Secrets”: all trade secrets and all confidential and
proprietary information, including know-how, manufacturing and production
processes and techniques, inventions, research and development information,
technical data, financial, marketing and business data, pricing and cost


 


4

















 


information, business and marketing plans, and customer and supplier
lists and information, whether or not reduced to a writing or other tangible
form, including, any of the foregoing referred to in Schedule 6.


 


“Vehicles”: all cars, trucks, trailers, construction and earth
moving equipment and other Equipment of any nature covered by a certificate of
title law of any jurisdiction and all tires and other appurtenances to any of
the foregoing.


 


“Uniform Commercial Code”: the Uniform Commercial Code
as in effect from time to time in any applicable jurisdiction.


 


1.2                                 Other Definitional Provisions. (a) The words “hereof,” “herein,” “hereto”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement
unless otherwise specified.


 


(b)                                 The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such
terms.


 


(c)                                  References to “Sections,” “Exhibits” and “Schedules”
shall be to Sections, Exhibits and Schedules, as the case may be, of this
Agreement unless otherwise specifically provided. Section headings in this
Agreement are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose or be given any substantive
effect.


 


(d)                                 The use herein of the word “include” or “including”,
when following any general statement, term or matter, shall not be construed to
limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, but rather
shall be deemed to refer to all other items or matters that fall within the
broadest possible scope of such general statement, term or matter.


 


(e)                                  If any conflict or inconsistency exists
between this Agreement and the Credit Agreement, the Credit Agreement shall
govern.


 


(f)                                    All references herein to provisions of the
New York UCC shall include all successor provisions under any subsequent
version or amendment to any Article of the New York UCC.


 


(g)                                 Where the context requires, terms relating to
the Collateral or any part thereof, when used in relation to a Grantor,
shall refer to such Grantor’s Collateral or the relevant part thereof.


 


SECTION 2.                                GUARANTEE


 


2.1                                 Guarantee. (a) The Subsidiary Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantee to the Administrative
Agent, for the ratable benefit of the Secured Parties and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
and performance by the US Borrower and the Canadian Borrower when due (whether
at stated maturity, by acceleration or otherwise) of the Borrower Obligations.


 


(b)                                 The US Borrower hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Secured Parties and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
and performance by the Canadian Borrower when due (whether at stated maturity,
by acceleration or otherwise) of the Canadian Obligations.


 


5

















 


(c)                                  Anything herein or in any other Loan Document
to the contrary notwithstanding, the maximum liability of each Guarantor
hereunder and under the other Loan Documents shall in no event exceed the
amount which can be guaranteed by such Guarantor under applicable federal and
state laws relating to fraudulent conveyances or transfers or the insolvency of
debtors (after giving effect to the right of contribution established in Section 2.2).


 


(d)                                 Each Guarantor agrees that the Borrower
Obligations may at any time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing the guarantee of such
Guarantor contained in this Section 2 or affecting the rights and
remedies of the Administrative Agent or any Secured Party hereunder.


 


(e)                                  Subject to Section 8.15 hereof,
the guarantee contained in this Section 2 shall remain in full
force and effect until all the Obligations (other than Obligations in respect
of Specified Hedge Agreements) shall have been satisfied by full and final
payment in cash, no Letter of Credit shall be outstanding and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement the Borrowers may be free from any Borrower Obligations
and any or all of the Guarantors may be free from their respective
Guarantor Obligations.


 


(f)                                    No payment made by either the US Borrower or
the Canadian Borrower, any of the Guarantors, any other guarantor or any other
Person or received or collected by the Administrative Agent or any Secured
Party from either the US Borrower or the Canadian Borrower, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time
in reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
under this Section 2 which shall, notwithstanding any such payment
(other than any payment made by such Guarantor in respect of the Borrower
Obligations or any payment received or collected from either the US Borrower or
the Canadian Borrower, in respect of the Borrower Obligations), remain liable
for the Borrower Obligations up to the maximum liability of such Guarantor
hereunder until the Borrower Obligations (other than Obligations in respect of
Specified Hedge Agreements) are fully and finally paid in cash, no Letter of
Credit shall be outstanding and the Commitments are terminated.


 


2.2                                 Rights of Reimbursement, Contribution and
Subrogation. In case any
payment is made on account of the Obligations by any Guarantor or is received
or collected on account of the Obligations from any Guarantor or its property:


 


(a)                                  If such payment is made by the US Borrower or
from its property, then, if and to the extent such payment is made on account
of Obligations arising from or relating to a Loan made to the US Borrower or a
Letter of Credit issued for account of the US Borrower, the US Borrower shall
not be entitled (A) to demand or enforce reimbursement or contribution in
respect of such payment from any other Guarantor or (B) to be subrogated
to any claim, interest, right or remedy of any Secured Party against any other
Person, including any other Guarantor or its property, in each case, until
payment in full of the Obligations.


 


(b)                                 If such payment is made by a Subsidiary
Guarantor or from its property, such Subsidiary Guarantor shall be entitled,
subject to and upon payment in full of the Obligations, (A) to demand and
enforce reimbursement for the full amount of such payment from either the US
Borrower or the Canadian Borrower, as applicable, and (B) to demand and
enforce contribution in respect of such payment from each other Subsidiary
Guarantor which has not paid its fair share of such payment, as necessary to
ensure that (after giving effect to any enforcement of reimbursement rights
provided hereby) each Subsidiary Guarantor pays its fair share of the
unreimbursed portion of such payment. For this purpose, the fair share of each
Subsidiary Guarantor as to any unreimbursed payment shall be determined based
on an equitable apportionment of such unreimbursed payment among all Subsidiary
Guarantors


 


6

















 


based on the relative value of their assets and any other equitable
considerations deemed appropriate by the court.


 


(c)                                  If such payment is made by the US Borrower or
from its property, and to the extent such payment is made on account of the Canadian
Obligations, the US Borrower shall be entitled, subject to and upon payment in
full of the Obligations, (A) to demand and enforce reimbursement for the full
amount of such payment from the Canadian Borrower and (B) to demand and
enforce contribution in respect of such payment from each other Guarantor which
has not paid its fair share of such payment, as necessary to ensure that (after
giving effect to any enforcement of reimbursement rights provided hereby) each
Guarantor pays its fair share of the unreimbursed portion of such payment. For
this purpose, the fair share of each Guarantor as to any unreimbursed payment
shall be determined based on an equitable apportionment of such unreimbursed
payment among all Guarantors based on the relative value of their assets and
any other equitable considerations deemed appropriate by the court.


 


(d)                                 If and whenever (after payment in full of the
Obligations) any right of reimbursement or contribution becomes enforceable by
any Guarantor against any other Guarantor under Sections 2.2(a), 2.2(b) and
2.2(c), such Guarantor shall be entitled, subject to and upon payment in
full of the Obligations, to be subrogated (equally and ratably with all other
Guarantors entitled to reimbursement or contribution from any other Guarantor
as set forth in this Section 2.2) to any security interest that may then
be held by the Administrative Agent upon any Collateral granted to it in this
Agreement. Such right of subrogation shall be enforceable solely against the
Guarantors, and not against the Secured Parties, and neither the Administrative
Agent nor any other Secured Party shall have any duty whatsoever to warrant, ensure
or protect any such right of subrogation or to obtain, perfect, maintain, hold,
enforce or retain any Collateral for any purpose related to any such right of
subrogation. If subrogation is demanded by any Guarantor, then (after payment
in full of the Obligations) the Administrative Agent shall deliver to the Guarantors
making such demand, or to a representative of such Guarantors or of the
Guarantors generally, an instrument satisfactory to the Administrative Agent
transferring, on a quitclaim basis without any recourse, representation,
warranty or obligation whatsoever, whatever security interest the Administrative
Agent then may hold in whatever Collateral may then exist that was
not previously released or disposed of by the Administrative Agent.


 


(e)                                  All rights and claims arising under this Section 2.2
or based upon or relating to any other right of reimbursement, indemnification,
contribution or subrogation that may at any time arise or exist in favor
of any Guarantor as to any payment on account of the Obligations made by it or
received or collected from its property shall be fully subordinated in all
respects to the prior payment in full of all of the Obligations. Until payment
in full of the Obligations, no Guarantor shall demand or receive any collateral
security, payment or distribution whatsoever (whether in cash, property or
securities or otherwise) on account of any such right or claim. If any such
payment or distribution is made or becomes available to any Guarantor in any
bankruptcy case or receivership, insolvency or liquidation proceeding, such
payment or distribution shall be delivered by the person making such payment or
distribution directly to the Administrative Agent, for application to the
payment of the Obligations. If any such payment or distribution is received by
any Guarantor, it shall be held by such Guarantor in trust, as trustee of an
express trust for the benefit of the Secured Parties, and shall forthwith be
transferred and delivered by such Guarantor to the Administrative Agent, in the
exact form received and, if necessary, duly endorsed.


 


(f)                                    The obligations of the Guarantors under the Loan
Documents, including their liability for the Obligations and the enforceability
of the security interests granted thereby, are not contingent upon the
validity, legality, enforceability, collectibility or sufficiency of any right
of reimbursement, contribution or subrogation arising under this Section 2.2.
The invalidity, insufficiency, unenforceability or uncollectibility of any such
right shall not in any respect diminish, affect or impair any such obligation
or any other claim, interest, right or remedy at any time held by any Secured
Party


 


7

















 


against any Guarantor or its property. The Secured Parties make no
representations or warranties in respect of any such right and shall have no
duty to assure, protect, enforce or ensure any such right or otherwise relating
to any such right.


 


(g)                                 Each Guarantor reserves any and all other
rights of reimbursement, contribution or subrogation at any time available to
it as against any other Guarantor, but (i) the exercise and enforcement of
such rights shall be subject to Section 2.2(e) and (ii) neither
the Administrative Agent nor any other Secured Party shall ever have any duty
or liability whatsoever in respect of any such right, except as provided in Section 2.2(d).


 


2.3                                 Amendments, etc. with respect to the Borrower
Obligations. Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of
rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by
the Administrative Agent or any Secured Party may be rescinded by the
Administrative Agent or such Secured Party and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, increased, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Secured Party, and the Specified Hedge Agreements, the Credit Agreement and the
other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated,
in whole or in part, as the Administrative Agent (or the Required Lenders or
all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time
held by the Administrative Agent or any Secured Party for the payment of the
Borrower Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Secured Party shall, except
to the extent set forth in, and for the benefit of the parties to, the
agreements and instruments governing such Lien or guarantee, have any
obligation to protect, secure, perfect or insure any Lien at any time held by
it as security for the Borrower Obligations or for the guarantees contained in
this Section 2 or any property subject thereto.


 


2.4                                 Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Borrower Obligations
and notice of or proof of reliance by the Administrative Agent or any Secured
Party upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all
dealings between the Borrowers and any of the Guarantors, on the one hand, and
the Administrative Agent and the Secured Parties, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrowers or any of the Guarantors with respect to
the Borrower Obligations. Each Guarantor understands and agrees that the
guarantee of such Guarantor contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment and
performance without regard to (a) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Borrower Obligations or
any collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or
any Secured Party, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to
or be asserted by the Borrowers or any other Person against the Administrative
Agent or any Secured Party, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrowers or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrowers for the Borrower Obligations or of such Guarantor
under the guarantee of such Guarantor contained in this


 


8

















 


Section 2. in bankruptcy or in any other instance.
When making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against any Guarantor, the Administrative Agent or any Secured Party
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrowers, any
other Guarantor or any other Person or against any collateral security or
guarantee for the Borrower Obligations or any right of offset with respect
thereto, and any failure by the Administrative Agent or any Secured Party to
make any such demand, to pursue such other rights or remedies or to collect any
payments from the Borrowers, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrowers, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability under this Section 2,
and shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Administrative Agent or any
Secured Party against any Guarantor. For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.


 


2.5                                 Reinstatement. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if
at any time payment, or any part thereof, of any of the Borrower
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the US Borrower, the Canadian
Borrower or any Guarantor, or upon or as a result of the appointment of a receiver,
intervener or conservator of, or trustee or similar officer for, the US
Borrower, the Canadian Borrower or any Guarantor or any substantial part of
their respective property, or otherwise, all as though such payments had not
been made.


 


2.6                                 Payments. Each Guarantor hereby guarantees that payments by it hereunder will be
paid to the Administrative Agent without set-off or counterclaim in Dollars at
the Payment Office specified in the Credit Agreement.


 


SECTION 3. GRANT OF SECURITY INTEREST


 


Each Grantor hereby collaterally assigns, transfers and grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a
security interest in, all of the following property now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively,
the “Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor’s Obligations:


 


	
  (a)

  	
   

  	
  all
  Accounts;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  all
  Chattel Paper;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  all
  Deposit Accounts including all cash held in such Deposit Accounts and all
  certificates or instruments representing the same;

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  all
  Documents;

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  all
  Equipment;

  
	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  all
  General Intangibles;

  
	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  all
  Instruments;

  



 


9

















 


	
  (h)

  	
   

  	
  all
  Intellectual Property;

  
	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  all
  Inventory;

  
	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  all
  Investment Property;

  
	
   

  	
   

  	
   

  
	
  (k)

  	
   

  	
  all
  Letter-of-Credit Rights;

  
	
   

  	
   

  	
   

  
	
  (1)

  	
   

  	
  all
  Money;

  
	
   

  	
   

  	
   

  
	
  (m)

  	
   

  	
  all
  Claims;

  
	
   

  	
   

  	
   

  
	
  (n)

  	
   

  	
  all
  Commercial Tort Claims to the extent they have been notified to the
  Administrative Agent pursuant to Sections 4.14 and 5.11;

  
	
   

  	
   

  	
   

  
	
  (o)

  	
   

  	
  all
  Goods and other property not otherwise described above; 

  
	
   

  	
   

  	
   

  
	
  (p)

  	
   

  	
  all
  books and records pertaining to the Collateral; and

  
	
   

  	
   

  	
   

  
	
  (q)

  	
   

  	
  to
  the extent not otherwise included, all other property of the Grantor and all
  Proceeds (including cash and Cash Equivalents) and products, accessions,
  rents and profits of any and all of the foregoing, all Supporting Obligations
  in respect of any of the foregoing and all collateral security and guarantees
  given by any Person with respect to any of the foregoing.

  



 


Notwithstanding anything herein to the contrary, in
no event shall the security interest granted under this Section 3
attach to, and Collateral shall not include, (i) more than 65% of the
total outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary, (ii) the
Grantor’s rights under contracts and agreements (other than (A) accounts
and general intangibles for money due or to become due thereunder and (B) any
contract as to which consent for the Lien created hereby has been obtained)
which by their terms validly prohibit the granting of a security interest or
assignment thereof and are not subject to the provisions of Article 9 of
the New York UCC rendering such prohibitions ineffective, (iii) any U.S.
trademark applications or service mark applications to the extent the security
interest granted hereunder would cause the invalidation of such application, it
being understood that the Administrative Agent shall not record its security
interest in such trademark or service mark applications, in each case until such
time as statement to allege use (or the equivalent) in respect thereof has been
filed with, and accepted by, the United States Patent and Trademark Office (it
being understood that the applicable Grantor will notify the Administrative
Agent in accordance with Section 5.10(k) once any such statement to allege
use (or the equivalent) is filed with, and accepted by, the United States
Patent and Trademark Office), (iv) any (A) stock or other equity
interests of any Person that is a general partner or managing member of any
Finance Company or (B) equity interests of any Finance Company that
represent the general partner interests or managing member interests therein,
or (v) any Oklahoma Development Financing Collateral.


 


SECTION 4. REPRESENTATIONS AND WARRANTIES


 


To induce the Agents and the Lenders to enter into the Credit Agreement
and to induce the Lenders to make their respective extensions of credit to the
Borrowers thereunder, each Grantor hereby represents and warrants to the
Administrative Agent and each Lender that:


 


4.1                                 Representations in Credit Agreement. In the case of each Grantor, the
representations and warranties set forth in Section 4 of the Credit
Agreement as they relate to such


 


10

















 


Grantor
or to the Loan Documents to which such Grantor is a party, each of which is
hereby incorporated herein by reference, are true and correct, and the
Administrative Agent and each Lender shall be entitled to rely on each of them
as if they were fully set forth herein, provided that each reference in each
such representation and warranty to the US Borrower’s knowledge shall, for the
purposes of this Section 4.1, be deemed to be a reference to such
Grantor’s knowledge.


 


4.2                                 Title; No Other Liens. Except for the security interest granted to
the Administrative Agent for the ratable benefit of the Secured Parties
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to a part of the
Collateral which would perfect another secured party’s interest in the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, pursuant to this Agreement or as are permitted by the Credit
Agreement. For the avoidance of doubt, it is understood and agreed that any Grantor
may, in the ordinary course of business and consistent with past practice,
grant licenses of Intellectual Property that such Grantor owns, develops or has
rights in to third-party franchisees to use solely in connection with the
development and operation of franchises of the business of such Grantor in
particular territories as permitted under the applicable licenses. Each of the
Administrative Agent and each Secured Party and the US Borrower agree that such
licenses to franchisees are the only licenses that may be exclusive to the
applicable licensees, provided, however, that such exclusivity is limited
solely to use in a particular territory. For purposes of this Agreement and the
other Loan Documents, such licenses are the only licenses of Intellectual
Property that may contain exclusivity provisions and not constitute a “Lien”
on such Intellectual Property.


 


4.3                                 Perfected First Priority Liens. The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions
specified in Section 4.19(a) of the Credit Agreement and on Schedule 3
hereto (all of which, in the case of all filings and other documents referred to
on said Schedule, have been delivered to the Administrative Agent in duly
executed form, as applicable, and may be filed by the Administrative Agent
at any time) constitute valid perfected security interests in all of the
Collateral (except for any Intellectual Property arising under laws other than
the laws of the United States and Canada) in favor of the Administrative Agent,
for the ratable benefit of the Secured Parties, as collateral security for such
Grantor’s Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral
in existence on the date hereof except for Liens permitted by the Credit
Agreement which have priority over the Liens on the Collateral by operation of
law. Without limiting the foregoing, each Grantor has taken all actions
necessary or desirable, including those specified in and to the extent required
by Section 5.2 to: (i) establish the Administrative Agent’s “control”
(within the meanings of Sections 8-106 and 9-106 of the UCC) as required by the
terms hereof over any portion of the Investment Property constituting
Certificated Securities, Uncertificated Securities, Securities Accounts, Securities
Entitlements or Commodity Accounts (each as defined in the UCC), (ii) establish
the Administrative Agent’s “control” (within the meaning of Section 9-104
of the UCC) as required by the terms hereof over all Deposit Accounts, (iii) establish
the Administrative Agent’s “control” (within the meaning of Section 9-107
of the UCC) as required by the terms hereof over all Letter of Credit Rights, (iv) establish
the Administrative Agent’s control (within the meaning of Section 9-105 of
the UCC) as required by the terms hereof over all Electronic Chattel Paper and (v) establish
the Administrative Agent’s “control” (within the meaning of Section 16 of
the Uniform Electronic Transaction Act as in effect in the applicable
jurisdiction “UETA”) as required by the terms hereof over all “transferable
records” (as defined in UETA), and in each case unless otherwise provided in Section 5.2
or the Credit Agreement. Notwithstanding anything to the contrary contained
herein or in any other Loan Documents, in no event shall the Grantors or their


 


11

















 


Affiliates be required to pay or to reimburse the Administrative Agent
for the cost of perfecting its Lien in any Intellectual Property outside the
United States or Canada.


 


4.4                                 Jurisdiction of Organization; Chief Executive
Office. On the date hereof,
such Grantor’s jurisdiction of organization, identification number from the
jurisdiction of organization (if any), and the location of such Grantor’s chief
executive office or sole place of business or principal residence, as the case may be,
are specified on Schedule 4. Such Grantor has furnished to the
Administrative Agent a certified charter, certificate of incorporation or other
organization document and long-form good standing certificate as of a date
which is recent to the date hereof (it being agreed that a certified charter, certificate
of incorporation or other organization document and long-form good
standing certificates dated within 30 days of the date hereof shall be
sufficiently recent).


 


4.5                                 Inventory and Equipment. On the date hereof, the Inventory and the
Equipment (other than mobile goods, Inventory in transit, and Inventory and
Equipment, the fair market value of which does not exceed $500,000 at that
location) are kept at the locations listed on Schedule 5.


 


4.6                                 Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.


 


4.7                                 Investment Property. (a) Part I of Schedule 2
hereto sets forth all of the Pledged Stock owned by any Grantor and such
Pledged Stock constitutes the percentage of issued and outstanding shares of
Capital Stock of the respective Issuers thereof indicated on such schedule. Part II
of Schedule 2 hereto sets forth all of the Pledged Debt owned by
any Grantor. Part III, IV and V of Schedule 2 hereto sets
forth all of the Securities Accounts, Commodities Accounts and Deposit Accounts
in which each Grantor has an interest. Each Grantor is the sole entitlement
holder or customer of each such account, and no Grantor has consented to or is
otherwise aware of any person having “control” (within the meanings of Sections
8-106, 9-106 and 9-104 of the Uniform Commercial Code of any jurisdiction)
over, or any other interest in, any such Securities Account, Commodity Account
or Deposit Account, in each case in which such Grantor has an interest, or any
securities, commodities or other property credited thereto.


 


(b)                                 The shares of Pledged Stock pledged by such
Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding
Foreign Subsidiary Voting Stock of each relevant Issuer.


 


(c)                                  All the shares of the Pledged Stock have been
duly and validly issued and are fully paid and nonassessable.


 


(d)                                 To the actual knowledge of such Grantor, the
Pledged Debt constitutes the legal, valid and binding obligation of the obligor
with respect thereto, enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors’ rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.


 


(e)                                  Such Grantor is the record and beneficial
owner of, and has good and marketable title to, the Investment Property pledged
by it hereunder, free of any and all Liens or options in favor of, or claims
of, any other Person, except the security interest created by this Agreement.


 


4.8                                 Receivables. (a) No amount payable to such Grantor under or in connection
with any Receivable is evidenced by any Instrument or Chattel Paper which has
not been delivered to the Administrative Agent to the extent required by Section 5.2.


 


12

















 


(b)                                 None of the obligors on any Receivable is a
Governmental Authority, except for Receivables constituting not more than 5% of
the face amount of all Receivables.


 


(c)                                  The amounts represented by such Grantor to
the Secured Parties from time to time as owing to such Grantor in respect of
the Receivables will at such times be accurate in all material respects.


 


4.9                                 Material Contracts. (a) No consent of any party (other
than such Grantor) to any Material Contract is required, or purports to be
required, in connection with the execution, delivery and performance of this
Agreement.


 


(b)                                 Each Material Contract is in full force and
effect and constitutes a valid and legally enforceable obligation of each
Grantor party thereto, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.


 


(c)                                  No consent or authorization of, filing with
or other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or enforceability
of any of the Material Contracts by any Grantor party thereto other than (x)
those consents, authorizations, filings or other acts which have been duly
obtained, made or performed and are in full force and effect or (y) those
consents, authorizations, filings or other acts, the lack of which could reasonably
be expected to have a Material Adverse Effect.


 


(d)                                 Neither such Grantor nor (to the best of such
Grantor’s knowledge) any of the other parties to the Material Contracts is in
default in the performance or observance of any of the terms thereof in any
manner that, in the aggregate, could reasonably be expected to have a Material
Adverse Effect.


 


(e)                                  The right, title and interest of such Grantor
in, to and under the Material Contracts are not subject to any defenses,
offsets, counterclaims or claims that, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.


 


(f)                                    No amount payable to such Grantor under or in
connection with any Material Contract is evidenced by any Instrument or Chattel
Paper which is required to be delivered hereunder, except for those which have
been delivered to the Administrative Agent.


 


(g)                                 None of the parties to any Material Contract
is a Governmental Authority.


 


4.10                           Intellectual Property.  (a)    Schedule 6
sets forth a true and complete list of all registered Intellectual Property and
all unregistered Intellectual Property that is material to the conduct of the
business owned by such Grantor in its own name on the date hereof and all other
Intellectual Property registered or unregistered licensed by such Grantor from
a third party that is material to such Grantor. Except as set forth in Schedule 6,
such Grantor is the sole and exclusive owner of the entire right, title, and
interest in and to all such Intellectual Property owned by such Grantor and is
otherwise entitled to use, and grant to others the right to use, all such
Intellectual Property. Such Grantor has a valid and enforceable right to use
all Intellectual Property which it uses in its business, but does not own.


 


(b)                                 On the date hereof, all Intellectual Property
owned by such Grantor, and, to such Grantor’s knowledge, all Intellectual
Property licensed by such Grantor, is valid, subsisting, unexpired, and
enforceable and has not been abandoned. To such Grantor’s knowledge, neither
the operation of such Grantor’s business as currently conducted nor the use of
any Intellectual Property in connection therewith


 


13

















 


conflicts
with, infringes upon, misappropriates, dilutes, or otherwise violates the
Intellectual Property rights of any other person.


 


(c)                                  Except as set forth in Schedule 6,
on the date hereof, none of the Intellectual Property used in the conduct of
the business of such Grantor is the subject of any licensing agreement pursuant
to which such Grantor is the licensor. To such Grantor’s knowledge no person is
engaging in any activity that infringes upon, or is otherwise an unauthorized
use of, any Intellectual Property owned by such Grantor that is material to the
conduct of the business of such Grantor.


 


(d)                                 No holding, decision or judgment has been
rendered by any Governmental Authority which would limit, cancel or question
the validity, enforceability, registration, ownership or use of, or such
Grantor’s rights in, any material Intellectual Property owned by such Grantor
and used in the conduct of such Grantor’s business in any respect that could
reasonably be expected to have a Material Adverse Effect.


 


(e)                                  No action or proceeding is pending, or, to
the knowledge of such Grantor, has been threatened, on the date hereof (i) seeking
to limit, cancel or question the validity, enforceability, registration,
ownership or use of any material Intellectual Property owned by such Grantor,
or (ii) which, if adversely determined, would have a Material Adverse
Effect on the value of such Intellectual Property.


 


(f)                                    Such Grantor has performed all acts and has
paid all required fees and taxes in the ordinary course of business to maintain
each and every item of Intellectual Property owned by such Grantor that is
material to the conduct of such Grantor’s business in full force and effect and
to protect and maintain its interest therein. The consummation of the
transactions contemplated by this Agreement (including the enforcement of
remedies) will not result in the termination or impairment of any of the material
Intellectual Property used in the conduct of the Grantor’s business.


 


(g)                                 To such Grantor’s knowledge, none of the
Trade Secrets owned by such Grantor that are material to the business of such
Grantor have been divulged or disclosed, used or appropriated, in each case, to
the detriment of such Grantor for the benefit of any other person, and no
employee, independent contractor or agent of such Grantor is in default or
breach of any term of any employment agreement, non-disclosure agreement,
assignment of inventions agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of Intellectual
Property owned by such Grantor that is material to the conduct of the business
of the Company.


 


4.11                           Instruments and Chattel Paper. Schedule 7 contains a complete
and correct list of all Instruments and Chattel Paper owned by each Grantor as
of the date hereof with a value in excess of $500,000.


 


4.12                           Letter-of-Credit Rights. (a) No Grantor is a beneficiary or
assignee under any letter of credit with a face value in excess of $500,000
other than the letters of credit described on Schedule 8 hereto.


 


(b)                                 Each Grantor has obtained the consent of each
issuer of any letter of credit listed on Schedule 8 hereto to the
assignment of proceeds of the letter of credit to the Administrative Agent


 


4.13                           Commercial Tort Claims. No Grantor has any commercial tort claims
which it reasonably believes to be in excess of $500,000 except as set forth on
Schedule 9 hereto.


 


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SECTION 5.           COVENANTS


 


Each Grantor covenants and agrees with the Administrative Agent and the
Secured Parties that, from and after the date of this Agreement until the
Obligations (other than Obligations in respect of Specified Hedge Agreements)
shall have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated:


 


5.1                                 Covenants in Credit Agreement. In the case of each Grantor, such Grantor
shall take, or shall refrain from taking, as the case may be, each action
that is necessary to be taken or not taken, as the case may be, so that no
Default or Event of Default is caused by the failure to take such action or to
refrain from taking such action by such Grantor or any of its Subsidiaries.


 


5.2                                 Delivery and Control of Instruments and
Chattel Paper Investment Property and Deposit Accounts. (a)  If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instrument, Certificated Security, Negotiable Document or Tangible Chattel Paper,
such Instrument, Certificated Security, Negotiable Document or Tangible Chattel
Paper shall be promptly (but in any event within 5 Business Days of the
acquisition thereof) delivered to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement; provided, that the Grantors shall not be
obligated to deliver to the Administrative Agent any (x) Instruments, Certified
Securities, Negotiable Documents or Tangible Chattel Paper held by any Grantor
at any time to the extent that the aggregate face amount of all such Instruments,
Certified Securities, Negotiable Documents and Tangible Chattel Paper held by
all Grantors at such time does not exceed $500,000 or (y) checks and other
payment Instruments received in the ordinary course of business which are not
expected to be held by the applicable Grantor for a period in excess of 30
days.


 


(b)                                 If any of the Collateral is or shall become “Electronic
Chattel Paper” such Grantor shall ensure that (i) a single authoritative
copy exists which is unique, identifiable, unalterable (except as provided in
clauses iii, iv and v of this paragraph), (ii) that such authoritative
copy identifies the Administrative Agent as the assignee and is communicated to
and maintained by the Administrative Agent or its designee, (iii) that copies
or revisions that add or change the assignee of the authoritative copy can only
be made with the participation of the Administrative Agent, (iv) that each
copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy and not the authoritative copy and (v) any revision of the
authoritative copy is readily identifiable as an authorized or unauthorized revision
provided, that the Grantors shall not be obligated to comply with this
clause (b) for any Electronic Chattel Paper held by any Grantor at any
time to the extent that the aggregate face amount of all such Electronic
Chattel Paper held by all Grantors at such time does not exceed $500,000.


 


(c)                                  If any of the Collateral is or shall become
evidenced or represented by an Uncertificated Security, such Grantor shall at
any time cause the Issuer thereof either (i) to register the Administrative
Agent as the registered owner of such Uncertificated Security, upon original
issue or registration of transfer or (ii) to agree in writing with such
Grantor and the Administrative Agent that such Issuer will comply with
instructions with respect to such Uncertificated Security originated by the Administrative
Agent without further consent of such Grantor, such agreement to be in form and
substance reasonably satisfactory to the Administrative Agent provided,
that the Grantors shall not be obligated to comply with this clause (c) for
any Uncertificated Security held by any Grantor at any time to the extent that
the aggregate value of all such Uncertificated Security held by all Grantors at
such time does not exceed $500,000.


 


(d)                                 With respect to any Collateral consisting of
Securities Accounts or Securities Entitlements, such Grantor shall cause the
securities intermediary maintaining such Securities Account or Securities
Entitlement to enter into an agreement in form and substance satisfactory
to the Administrative


 


15

















 


Agent
pursuant to which it shall agree to comply with the Administrative Agent’s “entitlement
orders” without further consent by such Grantor. With respect to any Collateral
consisting of Deposit Accounts, such Grantor shall cause the depositary
institution maintaining such account to enter into an agreement in form and
substance satisfactory to the Administrative Agent pursuant to which the
depositary institution shall agree to comply with the Administrative Agent’s “instructions”
directing disposition of funds from such Deposit Accounts without further
consent by such Grantor. Notwithstanding the foregoing, it is agreed that the
Administrative Agent shall not give the securities intermediary or depository
institution maintaining any Deposit Accounts or Securities Accounts, as the
case may be, instructions directing the disposition of funds unless an
Event of Default shall have occurred and be continuing. Each Grantor shall
maintain Securities Entitlements, Securities Accounts and Deposit Accounts only
with financial institutions that have agreed to comply with entitlement orders
and instructions issued or originated by the Administrative Agent without
further consent of such Grantor, such agreement to be in form and
substance reasonably satisfactory to the Administrative Agent. Notwithstanding
the foregoing, the Grantors shall not be required to comply with the
requirements of this clause (d) in respect of (x) Securities Accounts,
Securities Entitlements or Deposit Account that have an average aggregate
monthly balance of $500,000 or less, (y) Deposit Accounts that are used
exclusively to fund payroll, or (z) accounts holding cash and Cash Equivalents
which are not required to be maintained in the Concentration Account pursuant
to Section 4.22 of the Credit Agreement.


 


(e)                                  If any of the Collateral is or shall become
evidenced or represented by a Commodity Contract, such Grantor shall cause the
Commodity Intermediary with respect to such Commodity Contract to agree in
writing with such Grantor and the Administrative Agent that such Commodity
Intermediary will apply any value distributed on account of such Commodity
Contract as directed by the Administrative Agent without further consent of
such Grantor, such agreement to be in form and substance satisfactory to
the Administrative Agent.


 


(f)                                    In addition to and not in lieu of the
foregoing, if any Issuer of any Investment Property is organized under the law
of, or has its chief executive office in, a jurisdiction outside of the United
States, each Grantor shall take commercially reasonable actions, including
causing the issuer to register the pledge on its books and records, as may be
necessary or as may be reasonably requested by the Administrative Agent,
under the laws of such jurisdiction to insure the validity, perfection and
priority of the security interest of the Administrative Agent under the laws of
such foreign jurisdiction.


 


(g)                                 In the case of any Letter-of-Credit Rights
with a face value in excess of $500,000, each Grantor shall use commercially
reasonable efforts to obtain the consent of any issuer thereof to the transfer
of such Letter-of-Credit Rights to the Administrative Agent.


 


5.3                                 Maintenance of Insurance. Such Grantor will maintain, with
financially sound and reputable companies, insurance policies required by Section 6.5
of the Credit Agreement and such insurance shall name the Administrative Agent
as insured party or loss payee, as is customary or appropriate with respect to
any given policy.


 


16

















 


5.4                                 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all material taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including claims for labor,
materials and supplies) against or with respect to the Collateral, except that
no such charge need be paid if the amount or validity thereof is currently
being contested in good faith by appropriate proceedings, reserves in conformity
with GAAP with respect thereto have been provided on the books of such Grantor
and such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.


 


5.5                                 Maintenance of Perfected Security Interest;
Further Documentation. (a)     Such Grantor shall maintain the security interest created by this
Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against
the claims and demands of all Persons whomsoever.


 


(b)                                 Such Grantor will furnish to the
Administrative Agent and the Lenders from time to time statements and schedules
further identifying and describing the assets and property of such Grantor and
such other reports in connection with the Collateral as the Administrative
Agent may reasonably request, all in reasonable detail.


 


(c)                                  At any time and from time to time, upon the
written request of the Administrative Agent, and at the sole expense of such
Grantor, such Grantor will promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further actions
as the Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, (i) the filing of any financing or continuation
statements under the Uniform Commercial. Code (or other similar laws) with
respect to the security interests created hereby and (ii) in the case of
Investment Property, Deposit Accounts and Letter-of-Credit Rights, taking any
actions necessary to enable the Administrative Agent to obtain “control” (within
the meaning of the applicable Uniform Commercial Code) with respect
thereto (including, if requested by the Administrative Agent, the execution and
delivery to the Administrative Agent of an acknowledgment of the pledge of any
Pledged Securities substantially in the form of Annex II hereto), but only
to the extent required by this Agreement.


 


5.6                                 Changes in Name, etc. Such Grantor will not, except upon 5
Business Days’ prior written notice to the Administrative Agent and delivery to
the Administrative Agent of all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain
the validity, perfection and priority of the security interests provided for
herein:


 


(i)                                     change its jurisdiction of organization or
the location of its chief executive office or sole place of business or
principal residence from that referred to in Section 4.4; or


 


(ii)                                  change its name.


 


5.7                                 Notices. Such Grantor will advise the Administrative Agent promptly, after a Responsible
Officer knows or has reason to know, in reasonable detail, of:


 


(a)                                  any Lien (other than security interests
created hereby or Liens permitted under the Credit Agreement) on any material
Collateral which would adversely affect the ability of the Administrative Agent
to exercise any of its remedies hereunder; and


 


17

















 


(b)                                 the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate value
of the Collateral taken as a whole or on the security interests created hereby.


 


5.8                                 Investment Property. (a) Such Grantor shall become entitled
to receive or shall receive any certificate (including, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer (in the case of Investment Property that is not issued by a
Subsidiary of the US Borrower, only to the extent the aggregate value of all
such certificates, options or rights held by all Grantors exceeds $500,000),
whether in addition to, in substitution of, as a conversion of, or in exchange
for, any shares of the Pledged Stock, or otherwise in respect thereof, such
Grantor shall accept the same as the agent of the Administrative Agent and the
Secured Parties, hold the same in trust for the Administrative Agent and the
Secured Parties and deliver the same forthwith to the Administrative Agent in
the exact form received, duly indorsed by such Grantor to the
Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor to be held by
the Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of any Issuer shall be
paid over to the Administrative Agent to be held by it hereunder as additional
collateral security for the Obligations, and in case any distribution of
capital shall be made on or in respect of the Investment Property, or any
property shall be distributed upon or with respect to the Investment Property
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of
the Administrative Agent, be delivered to the Administrative Agent to be held by
it hereunder as additional collateral security for the Obligations. If any sums
of money or property so paid or distributed in respect of the Investment
Property shall be received by such Grantor, such Grantor shall, until such
money or property is paid or delivered to the Administrative Agent, hold such
money or property in trust for the Secured Parties, segregated from other funds
of such Grantor, as additional collateral security for the Obligations.
Notwithstanding the foregoing, the Grantors shall not be required to pay over
to the Administrative Agent or deliver to the Administrative Agent as
Collateral any proceeds of any liquidation or dissolution of any Issuer, or any
distribution of capital or property in respect of any Investment Property, to the
extent that (i) such liquidation, dissolution or distribution, if treated
as a Disposition of the relevant Issuer, would be permitted by the Credit
Agreement and (ii) the proceeds thereof are applied toward prepayment of
Loans and reduction of Commitments to the extent required by the Credit
Agreement.


 


(b)                                 Without the prior written consent of the
Administrative Agent, which shall not be unreasonably withheld, conditioned or
delayed, such Grantor will not (i) vote to enable, or take any other
action to permit, any Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of any
nature of any Issuer, unless such securities are delivered to the
Administrative Agent, concurrently with the issuance thereof, to be held by the
Administrative Agent as Collateral, (ii) sell, assign, transfer, exchange,
or otherwise dispose of, or grant any option with respect to, the Investment
Property or Proceeds thereof except pursuant to a transaction expressly
permitted by the Credit Agreement, (iii) create, incur or permit to exist
any Lien or option in favor of, or any claim of any Person with respect to, any
of the Investment Property or Proceeds thereof, or any interest therein, except
for the security interests created by this Agreement or otherwise expressly
permitted by Section 7.3 of the Credit Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Grantor
or the Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.


 


18

















 


(c)                                  In the case of each Grantor which is an
Issuer, such Issuer agrees that (i) it will be bound by the terms of this
Agreement relating to the Pledged Securities issued by it and will comply with
such terms insofar as such terms are applicable to it, (ii) it will notify
the Administrative Agent promptly in writing of the occurrence of any of the
events described in Section 5.8(a) with respect to the Pledged
Securities issued by it and (iii) the terms of Sections 6.3(c) and
6.7 shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it pursuant to Section 6.3(c) or
6.7 with respect to the Pledged Securities issued by it.


 


(d)                                 Each Issuer that is a partnership or a
limited liability company (i) confirms that none of the terms of any
equity interest issued by it provides that such equity interest is a “security”
within the meaning of Sections 8-102 and 8-103 of the New York UCC (a “Security”),
(ii) agrees that it will take no action to cause or permit any such equity
interest to become a Security, (iii) agrees that it will not issue any
certificate representing any such equity interest and (iv) agrees that if,
notwithstanding the foregoing, any such equity interest shall be or become a
Security, such Issuer will (and the Grantor that holds such equity interest
hereby instructs such Issuer to) comply with instructions originated by the Administrative
Agent without further consent by such Grantor.


 


5.9                                  Receivables. (a) After the occurrence of and during the continuance of an
Event of Default, such Grantor will not, other than in the ordinary course of
business, (i) grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable
for the payment of any Receivable, (iv) allow any credit or discount
whatsoever on any Receivable or (v) amend, supplement or modify any
Receivable in any manner that could materially adversely affect the value
thereof.


 


(b)                                  Such Grantor will deliver to the
Administrative Agent a copy of each material demand, notice or document
received by it that questions or calls into doubt the validity or
enforceability of more than 5% of the aggregate amount of the then outstanding
Receivables.


 


5.10                            Intellectual Property.  (a)  Such Grantor (either itself or through
licensees) will (i) continue to use each material Trademark owned by such
Grantor on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price lists in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable Requirements of Law, (iv) not adopt or use
any mark which is confusingly similar or a colorable imitation of such
Trademark unless the Administrative Agent, for the ratable benefit of the
Secured Parties, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.


 


(b)                                    Except to the extent the failure to do so
could not reasonably be expected to cause a Material Adverse Effect, such
Grantor (either itself or through licensees) will not do any act, or omit to do
any act, whereby any material Patent owned by such Grantor may become
forfeited, abandoned or dedicated to the public.


 


(c)                                     Except to the extent the failure to do so
could not reasonably be expected to cause a Material Adverse Effect, such
Grantor (either itself or through licensees) (i) will not (and will not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any material portion of the Copyrights owned by such Grantor may become
invalidated or otherwise impaired and (ii) such Grantor will not (either
itself or through licensees) do any act whereby any material portion of such
Copyrights may fall into the public domain.


 


19

















 


(d)                                 Such Grantor (either itself or through
licensees) will not do any act that knowingly uses any material Intellectual
Property to infringe the Intellectual Property rights of any other Person.


 


(e)                                  Such Grantor will notify the Administrative
Agent and the Lenders promptly if it knows, or has reason to know, that any
application or registration relating to any material Intellectual Property
owned by such Grantor may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding such Grantor’s
ownership of, or the validity of, any such Intellectual Property or such
Grantor’s right to register the same or to own and maintain the same.


 


(f)                                    Whenever such Grantor, either by itself or
through any agent, employee, licensee or designee, shall file an application
for the registration of any item of Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the Administrative Agent
within ten (10) Business Days after the last day of the fiscal quarter in
which such filing occurs. Upon request of the Administrative Agent, such
Grantor shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Administrative Agent may reasonably
request to evidence the Administrative Agent’s and the Secured Parties’
security interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.


 


(g)                                 Such Grantor will take all reasonable and
necessary steps, including in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to
maintain and pursue each application relating to any material Intellectual
Property filed by such Grantor (and to obtain the relevant registration) and to
maintain each registration of material Intellectual Property, owned by such Grantor
including, filing of applications for renewal, affidavits of use and affidavits
of incontestability, except to the extent the failure to do so could not
reasonably be expected to cause a Material Adverse Effect.


 


(h)                                 In the event such Grantor has reason to
believe that any material Intellectual Property owned by such Grantor is being
infringed, misappropriated or diluted by a third party, such Grantor shall take
such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and if such Intellectual
Property is of material economic value, promptly notify the Administrative
Agent after it learns thereof and sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution.


 


(i)                                     Such Grantor (either itself or through
licensees) shall not, without the prior written consent of the Administrative
Agent, discontinue use of or otherwise abandon any of its Intellectual Property,
unless such Grantor shall have previously determined that such use or the
pursuit or maintenance of such Intellectual Property is no longer desirable in
the conduct of such Grantor’s business and that the loss thereof could not
reasonably be expected to have a Material Adverse Effect.


 


(j)                                     Such Grantor shall not license any of its
Intellectual Property, except in the ordinary course of business.


 


(k)                                  Such Grantor agrees that, should it obtain an
ownership interest in any item of Intellectual Property which is not, as of the
Closing Date, a part of the Collateral (the “After-Acquired


 


20

















 


Intellectual
Property”), (i) the
provisions of Section 3 shall automatically apply thereto, (ii) any
such After-Acquired Intellectual Property, and in the case of Trademarks, the
goodwill of the business connected therewith or symbolized thereby, shall
automatically become part of the Collateral (subject to Section 3)
and (iii) it shall give prompt (and, in any event within ten Business Days
after the last day of the fiscal quarter in which such Grantor acquires such
ownership interest) written notice thereof to the Administrative Agent in
accordance herewith, and provide the Administrative Agent with an amended Schedule 6
and execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Administrative Agent may reasonably
request to evidence the Administrative Agent’s and the Secured Parties’
security interest in such After-Acquired Intellectual Property.


 


5.11                           Commercial Tort Claims. If any Grantor shall at any time commence a
suit, action or proceeding with respect to any Commercial Tort Claim held by it
with a value which such Grantor reasonably believes to be of $1,000,000 more, such
Grantor shall promptly notify the Administrative Agent thereof in a writing
signed by such Grantor and describing the details thereof and shall grant to
the Administrative Agent for the benefit of the Secured Parties in such writing
a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to the Administrative Agent.


 


5.12                           Vehicles. With respect to any Vehicles acquired by such Grantor subsequent to the
date hereof, other than any Vehicle subject to a capital lease expressly
permitted by the Credit Agreement, within 45 days after the date of acquisition
thereof, all applications for certificates of title or ownership indicating the
Administrative Agent’s first priority security interest in the Vehicle covered
by such certificate, and any other necessary documentation, shall be filed in
each office in each jurisdiction in which the Administrative Agent shall deem
it advisable to perfect its security interests in the Vehicles.


 


SECTION 6.                                REMEDIAL PROVISIONS


 


6.1                                 Certain Matters Relating to Receivables. (a) The Administrative Agent shall
have the right, at any time after the occurrence and during the continuance of
an Event of Default, to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Administrative
Agent may require in connection with such test verifications. At any time
and from time to time after the occurrence and during the continuance of an
Event of Default, upon the Administrative Agent’s request and at the expense of
the relevant Grantor, such Grantor shall cause independent public accountants
or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.


 


(b)                                 The Administrative Agent hereby authorizes
each Grantor to collect such Grantor’s Receivables, subject to the
Administrative Agent’s direction and control after the occurrence and during
the continuance of an Event of Default, and the Administrative Agent may curtail
or terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Secured Parties only as
provided in Section 6.5, and (ii) until so turned over, shall
be held by such Grantor in trust for the Administrative Agent and the Secured
Parties, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.


 


21

















 


(c)                                  Upon the occurrence and during the
continuance of an Event of Default, at the Administrative Agent’s request, each
Grantor shall deliver to the Administrative Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables, including, all original orders, invoices and
shipping receipts.


 


(d)                                 At any time after the occurrence and during
the continuance of an Event of Default, each Grantor will cooperate with the
Administrative Agent to establish a system of lockbox accounts, under the sole
dominion and control of the Administrative Agent, into which all Receivables shall
be paid and from which all collected funds will be transferred to a Collateral
Account.


 


6.2                                 Communications with Obligors; Grantors Remain
Liable.  (a)   The
Administrative Agent in its own name or in the name of others may at any
time communicate with obligors under the Receivables to verify with them to the
Administrative Agent’s satisfaction the existence, amount and terms of any
Receivables.


 


(b)                                 Upon the request of the Administrative Agent
at any time after the occurrence and during the continuance of an Event of
Default, each Grantor shall notify obligors on the Receivables that the
Receivables have been assigned to the Administrative Agent for the ratable
benefit of the Secured Parties and that payments in respect thereof shall be
made directly to the Administrative Agent.


 


(c)                                  Anything herein to the contrary
notwithstanding, each Grantor shall remain liable under each of the Receivables
(or any agreement giving rise thereto) to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Administrative Agent nor any Secured Party shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by reason
of or arising out of this Agreement or the receipt by the Administrative Agent
or any Secured Party of any payment relating thereto, nor shall the
Administrative Agent or any Secured Party be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of
any performance by any party thereunder, to present or file any claim, to take
any action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at
any time or times.


 


6.3                                 Pledged Stock.   (a)    Unless
an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have given notice to the relevant Grantor of the Administrative
Agent’s intent to exercise its corresponding rights pursuant to Section 6.3(b),
each Grantor shall be permitted to receive all cash dividends paid in respect
of the Pledged Stock and all payments made in respect of the Pledged Debt, in
each case paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Credit Agreement,
and to exercise all voting and corporate rights with respect to the Pledged
Securities; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which, in the Administrative
Agent’s reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document.


 


(b)                                 If an Event of Default shall occur and be
continuing and the Administrative Agent shall give notice of its intent to
exercise such rights to the relevant Grantor or Grantors, (i) the
Administrative Agent shall have the right to receive any and all cash
dividends, payments or other Proceeds paid in respect of the Pledged Securities
and make application thereof to the Obligations in the order set forth in Section 6.5,
and (ii) any or all of the Pledged Securities shall be registered in the
name of the Administrative Agent or its nominee, and the Administrative Agent
or its nominee may thereafter exercise (x) all voting, corporate and other
rights pertaining to such Pledged Securities at any meeting of


 


22

















 


shareholders
of the relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, the right to exchange at its discretion any and all of the
Pledged Securities upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of any Issuer, or upon
the exercise by any Grantor or the Administrative Agent of any right, privilege
or option pertaining to such Pledged Securities, and in connection therewith,
the right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Administrative Agent may determine),
all without liability except to account for property actually received by it,
but the Administrative Agent shall have no duty to any Grantor to exercise any
such right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.


 


(c)                                  Each Grantor hereby authorizes and instructs
each Issuer of any Pledged Securities pledged by such Grantor hereunder to (i) comply
with any instruction received by it from the Administrative Agent in writing
that (x) stales that an Event of Default has occurred and is continuing and (y)
is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent.


 


(d)                                 The Administrative Agent hereby acknowledges
that its rights and remedies under this Section 6 are limited by
clauses (a), (b), (c) and (d) of the Letter, dated as of June 14,
2006, addressed to MBIA Insurance Corporation, Ambac Assurance Corporation,
Assured Guaranty Corp., The Bank of New York, as ARG Trustee, The Bank of New
York, as Alamo Trustee, The Bank of New York, as NFLP Trustee, Vanguard Car
Rental USA Inc., Alamo Financing L.P., Alamo Financing L.L.C., National Car
Rental Financing Limited Partnership, and National Car Rental Financing
Corporation from the Administrative Agent.


 


6.4                                 Proceeds to be Turned Over To Administrative
Agent. In addition to the
rights of the Administrative Agent and the Secured Parties specified in Section 6.1
with respect to payments of Receivables, if an Event of Default shall occur and
be continuing, all Proceeds received by any Grantor consisting of cash, checks
and Instruments shall be held by such Grantor in trust for the Administrative Agent
and the Secured Parties, segregated from other funds of such Grantor, and
shall, forthwith upon receipt by such Grantor, be turned over to the Administrative
Agent in the exact form received by such Grantor (duly indorsed by such
Grantor to the Administrative Agent, if required). All Proceeds received by the
Administrative Agent hereunder shall be held by the Administrative Agent in a
Collateral Account maintained under its sole dominion and control. All Proceeds
while held by the Administrative Agent in a Collateral Account (or by such
Grantor in trust for the Administrative Agent and the Secured Parties) shall
continue to be held as collateral security for all the Obligations and shall
not constitute payment thereof until applied as provided in Section 6.5.


 


6.5                                 Application of Proceeds. At such intervals as may be agreed
upon by the US Borrower and the Administrative Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the
Administrative Agent’s election, the Administrative Agent may apply all or
any part of Proceeds constituting Collateral, whether or not held in any
Collateral Account, and any proceeds of the guarantee set forth in Section 2,
in payment of the Obligations in the following order:


 


First, to pay incurred and unpaid reasonable fees
and expenses of the Administrative Agent under the Loan Documents;


 


23

















 


Second, to the Administrative Agent, for
application by it towards payment of amounts then due and owing and remaining
unpaid in respect of the Obligations, prorata among the Secured Parties
according to the amounts of the Obligations then due and owing and remaining
unpaid to the Secured Parties;


 


Third, to the Administrative Agent, for
application by it towards prepayment of the Obligations, pro  rata
among the Secured Parties according to the amounts of the Obligations then held
by the Secured Parties; and


 


Fourth, any balance of such Proceeds remaining
after the Obligations shall have been paid in full, no Letters of Credit shall
be outstanding (or if outstanding are not cash collateralized) and the
Commitments shall have terminated shall be paid over to the US Borrower or to
whomsoever may be lawfully entitled to receive the same.


 


6.6                                 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Secured Parties, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to
the Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person (all
and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give option or options to purchase, or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales,
at any exchange, broker’s board or office of the Administrative Agent or any
Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Administrative
Agent or any Secured Party shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor, which right or equity is hereby
waived and released. Each Grantor further agrees, at the Administrative Agent’s
request, to assemble the Collateral and make it available to the Administrative
Agent at places which the Administrative Agent shall reasonably select, whether
at such Grantor’s premises or elsewhere. The Administrative Agent shall apply
the net proceeds of any action taken by it pursuant to this Section 6.6
with respect to any Grantor’s Collateral, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to
the care or safekeeping of any of the Collateral of such Grantor or in any way
relating to the Collateral of such Grantor or the rights of the Administrative
Agent and the Secured Parties hereunder with respect thereto, including,
reasonable attorneys’ fees and disbursements, to the payment in whole or in part of
the Obligations of such Grantor, in the order specified in Section 6.5,
and only after such application and after the payment by the Administrative Agent
of any other amount required by any provision of law, including, Section 9-615(a)(3) of
the New York UCC, need the Administrative Agent account for the surplus, if
any, to any Grantor. To the extent permitted by applicable law, each Grantor
waives all claims, damages and demands it may acquire against the
Administrative Agent or any Secured Party arising out of the exercise by them
of any rights hereunder. If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition.


 


6.7                                 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 6.6, and if in the opinion of the Administrative
Agent it is necessary or advisable to have the Pledged Stock, or that portion
thereof to be


 


24

















 


sold,
registered under the provisions of the Securities Act, the relevant Grantor
will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may be,
in the opinion of the Administrative Agent, necessary or advisable to register
the Pledged Stock, or that portion thereof to be sold, under the provisions of
the Securities Act, (ii) use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of the Pledged
Stock, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or “Blue Sky”
laws of any and all jurisdictions which the Administrative Agent shall
designate and to make available to its security holders, as soon as practicable,
an earnings statement (which need not be audited) which will satisfy the
provisions of Section 1l(a) of the Securities Act.


 


(b)                                 Each Grantor recognizes that the
Administrative Agent may be unable to effect a public sale of any or all
the Pledged Stock, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than
if such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time necessary to
permit the Issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.


 


(c)                                  Each Grantor agrees to use its best efforts
to do or cause to be done all such other acts as may be necessary to make
such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 6.7
valid and binding and in compliance with any and all other applicable
Requirements of Law. Each Grantor further agrees that a breach of any of the
covenants contained in this Section 6.7 will cause irreparable
injury to the Administrative Agent and the Secured Parties, that the
Administrative Agent and the Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.7 shall be specifically enforceable against
such Grantor, and such Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.


 


6.8                                 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Secured Party to collect such deficiency.


 


SECTION 7.                                THE ADMINISTRATIVE AGENT


 


7.1                                 Administrative Agent’s Appointment as Attorney-in-Fact,
etc. (a) Each Grantor
hereby irrevocably constitutes and appoints the Administrative Agent and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and
all appropriate action and to


 


25

















 


execute
any and all documents and instruments which may be necessary or desirable
to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Administrative Agent
the power and right, on behalf of such Grantor, without notice to or assent by
such Grantor, to do any or all of the following:


 


(i)                                     in the name of such Grantor or its own name,
or otherwise, take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or take
any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent for the purpose of collecting
any and all such moneys due under any Receivable or with respect to any other
Collateral whenever payable;


 


(ii)                                  in the case of any Intellectual Property,
execute and deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Administrative Agent may request to evidence
the Administrative Agent’s and the Secured Parties’ security interest in such
Intellectual Property and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;


 


(iii)                               pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by the
terms of this Agreement and pay all or any part of the premiums therefor
and the costs thereof;


 


(iv)                              execute, in connection with any sale provided for in Section 6.6
or 6.7, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Collateral;


 


(v)                                 (1) direct any party liable for any
payment under any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (2) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any
Collateral; (3) sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (4) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (5) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions, and
in such manner, as the Administrative Agent shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent’s and the Secured Parties’ security
interests therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do; and


 


(vi)                              license or sublicense whether on an exclusive or non-exclusive basis, any
Intellectual Property for such term and on such conditions and in such manner as
the


 


26

















 


Administrative Agent shall in its sole judgment determine and, in
connection therewith, such Grantor hereby grants to the Administrative Agent
for the benefit of the Secured Parties a royalty-free, world-wide irrevocable
license of its Intellectual Property.


 


Anything in this Section 7.1 (a) to the contrary notwithstanding, the Administrative
Agent agrees, except as provided in Section 7.1(b) that it
will not exercise any rights under the power of attorney provided for in this Section 7.1(a) unless
an Event of Default shall have occurred and be continuing.


 


(b)                                 If any Grantor fails to perform or
comply with any of its agreements contained herein, the Administrative Agent,
at its option, but without any obligation so to do, may perform or comply,
or otherwise cause performance or compliance, with such agreement; provided,
however, that unless an Event of Default has occurred and is continuing
or time is of the essence, the Administrative Agent shall not exercise this
power without first making demand on the Grantor and the Grantor failing to comply
therewith promptly.


 


(c)                                  The expenses of the Administrative Agent
incurred in connection with actions undertaken as provided in this Section 7.1,
together with interest thereon at a rate per annum equal to the rate per annum
at which interest would then be payable on past due Base Rate Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to
the Administrative Agent on demand.


 


(d)                                 Each Grantor hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.


 


7.2                                 Duty of Administrative Agent. The Administrative Agent’s sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be
to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. Neither the Administrative Agent, any Secured
Party nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative
Agent and the Secured Parties hereunder are solely to protect the Administrative
Agent’s and the Secured Parties’ interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Secured Party to exercise
any such powers. The Administrative Agent and the Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own bad faith, gross negligence or willful
misconduct.


 


7.3                                 Filing of Financing Statements. Pursuant to any applicable law, each
Grantor authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral in such form and in such offices as the Administrative
Agent determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. Each Grantor authorizes the Administrative
Agent to use the collateral description “all personal property” or “all assets”
in any such financing statements. Each Grantor hereby ratifies and authorizes
the filing by the Administrative Agent of any financing statement with respect
to the Collateral made prior to the date hereof.


 


27

















 


7.4                                 Authority of Administrative Agent. Each Grantor acknowledges that the rights
and responsibilities of the Administrative Agent under this Agreement with
respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them,
but, as between the Administrative Agent and the Grantors, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority. Notwithstanding any other provision herein or in any
Loan Document, the only duty or responsibility of the Administrative Agent to
any Qualified Counterparty under this Agreement is the duty to remit to such
Qualified Counterparty any amounts to which it is entitled pursuant to Section 6.5.


 


SECTION 8. MISCELLANEOUS


 


8.1                                 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by the US Borrower, each affected
Guarantor and the Administrative Agent, provided that any provision of
this Agreement imposing obligations on either the US Borrower, the Canadian
Borrower or any Subsidiary Guarantor may be waived by the Administrative
Agent in a written instrument executed by the Administrative Agent. No consent
of any Qualified Counterparty shall be required for any waiver, amendment,
supplement or other modification to this Agreement.


 


8.2                                 Notices. All notices, requests and demands to or upon the Administrative
Agent, the US Borrower, the Canadian Borrower or any Subsidiary Guarantor
hereunder shall be effected in the manner provided for in Section 10.2
of the Credit Agreement; provided that any such notice, request or demand
to or upon any Subsidiary Guarantor shall be addressed to such Subsidiary
Guarantor at its notice address set forth on Schedule 1.


 


8.3                                 No Waiver by Course of Conduct: Cumulative Remedies. Neither the Administrative Agent nor any
Secured Party shall by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Secured Party, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Secured Party would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.


 


8.4                                 Enforcement Expenses; Indemnification. (a) The US Borrower and each Guarantor
agrees to pay, or reimburse each Secured Party and the Administrative Agent
for, all its costs and out of pocket expenses incurred in collecting against
the US Borrower or such Guarantor under the guarantee contained in Section 2
or otherwise enforcing or preserving any rights under this Agreement and the
other Loan Documents to which the US Borrower or such Guarantor is a party,
including, the reasonable fees and disbursements of counsel to each Secured
Party and of counsel to the Administrative Agent.


 


28

















 


(b)                                 Each Grantor agrees to pay, and to save the
Administrative Agent and the Secured Parties harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.


 


(c)                                  Each Guarantor agrees to pay, and to save the
Agents and the Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrowers would be required to do so pursuant to Section 10.5
of the Credit Agreement.


 


(d)                                 The agreements in this Section shall
survive repayment of the Obligations and all other amounts payable under the
Credit Agreement and the other Loan Documents.


 


8.5                                 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the US Borrower and each Subsidiary Guarantor and
shall inure to the benefit of the Agents and the Secured Parties and their
successors and assigns; provided that none of the US Borrower, or any
Subsidiary Guarantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.


 


8.6                                 Set-Off. The US Borrower and each Subsidiary Guarantor hereby irrevocably authorizes
the Administrative Agent and each Secured Party at any time and from time to
time while an Event of Default shall have occurred and be continuing or
following acceleration of the maturity of the Loans, without notice to the US
Borrower or any Subsidiary Guarantor, any such notice being expressly waived by
the US Borrower or such Subsidiary Guarantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Administrative Agent or
such Secured Party to or for the credit or the account of the US Borrower or
any such Subsidiary Guarantor, or any part thereof in such amounts as the
Administrative Agent or such Secured Party may elect, against and on
account of the obligations and liabilities of the US Borrower or any such
Subsidiary Guarantor to the Administrative Agent or such Secured Party
hereunder and claims of every nature and description of the Administrative
Agent or such Secured Party against the US Borrower or any such Subsidiary Guarantor,
in any currency, whether arising hereunder, under the Credit Agreement, any
other Loan Document or otherwise, as the Administrative Agent or such Secured Party
may elect, whether or not the Administrative Agent or any Secured Party
has made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. The Administrative Agent and each Secured
Party shall notify the US Borrower or any such Subsidiary Guarantor promptly of
any such set-off and the application made by the Administrative Agent or such
Secured Party of the proceeds thereof, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Secured Party under this Section are
in addition to other rights and remedies (including, other rights of set-off)
which the Administrative Agent or such Secured Party may have.


 


8.7                                 Counterparts. This Agreement may be executed and
delivered by one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.


 


8.8                                 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such


 


29

















 


prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


8.9                                 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.


 


8.10                           Integration. This Agreement and the other Loan Documents represent the agreement
of the US Borrower, the Subsidiary Guarantors, the Administrative Agent, the
Secured Parties with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by any Agent or
any Secured Party relative to the subject matter hereof and thereof not
expressly set forth or referred to herein or in the other Loan Documents.


 


8.11                           GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.


 


8.12                           Submission To Jurisdiction; Waivers. The US Borrower, each Subsidiary Guarantor,
and by its acceptance hereof, the Administrative Agent and each Secured Party,
hereby irrevocably and unconditionally:


 


(a)                                  submits for itself and its property in any
legal action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;


 


(b)                                 consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;


 


(c)                                  agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail), postage
prepaid, to it at its address referred to in Section 10.2 of the
Credit Agreement or at such other address of which the parties hereto shall
have been notified pursuant thereto;


 


(d)                                 agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and


 


(e)                                  waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary, punitive or
consequential damages.


 


8.13                           Acknowledgements. The US Borrower, and each Subsidiary
Guarantor hereby acknowledges that:


 


(a)                                  it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other Loan
Documents to which it is a party;


 


(b)                                 none of the Agents or any Secured Party has
any fiduciary relationship with or duty to the US Borrower or any Subsidiary
Guarantor arising out of or in connection with this Agreement


 


30

















 


or
any of the other Loan Documents, and the relationship between the US Borrower,
the Subsidiary Guarantors, on the one hand, and the Agents and Secured Parties,
on the other hand, in connection herewith or therewith is solely that of debtor
and creditor; and


 


(c)                                  no joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Secured Parties or among the US Borrower, the
Subsidiary Guarantors, and the Secured Parties.


 


8.14                           Additional Grantors. Each Subsidiary of the US Borrower that is
required to become a party to this Agreement pursuant to Section 6.10(c) of
the Credit Agreement shall become a Guarantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex I hereto.


 


8.15                           Releases. (a) At such time as the Loans, the Reimbursement Obligations and
the other Obligations (other than Obligations in respect of Specified Hedge
Agreements) shall have been paid in full, the Commitments have been terminated
and no Letters of Credit shall be outstanding (or if outstanding are fully cash
collateralized in an amount satisfactory to the issuer thereof, which shall not
exceed 105% of the face amount thereof), the Collateral shall be released from
the Liens created hereby, and this Agreement and all obligations (other than
those expressly stated to survive such termination) of the Agents and the US
Borrower, and each Guarantor hereunder shall terminate, all without delivery of
any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Administrative Agent shall deliver
to such Grantor any Collateral held by the Administrative Agent hereunder, and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.


 


(b)                                 If any of the Collateral shall be sold,
transferred or otherwise disposed of by any Grantor in a transaction permitted
by the Credit Agreement, then the Administrative Agent, at the request and sole
expense of such Grantor, shall execute and deliver to such Grantor all releases
or other documents reasonably necessary or desirable for the release of the
Liens created hereby on such Collateral. At the request and sole expense of the
US Borrower, a Subsidiary Guarantor shall be released from its obligations
hereunder in the event that all the Capital Stock of such Subsidiary Guarantor
shall be sold, transferred or otherwise disposed of in a transaction permitted
by the Credit Agreement; provided that the US Borrower shall have
delivered to the Administrative Agent, at least ten Business Days prior to the
date of the proposed release, a written request for release identifying the
relevant Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the US Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.


 


(c)                                  No consent of any Qualified Counterparty
shall be required for any release of Collateral or Guarantors pursuant to this
Section.


 


8.16                           WAIVER OF JURY TRIAL. THE US BORROWER, EACH GUARANTOR,
AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH AGENT AND EACH SECURED PARTY,
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.


 


31

















 


IN WITNESS WHEREOF, each of the
undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written.


 


	
   

  	
  VANGUARD
  CAR RENTAL USA
  HOLDINGS

  
	
   

  	
  INC., as Borrower

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name: 

  	
  Gerard
  J. Kennell

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ALAMO
  RENTAL (US) INC.,
  as Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name: 

  	
  Gerard
  J. Kennell

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ALAMO
  RENT-A-CAR (CANADA) INC., as

  
	
   

  	
  Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name:

  	
  Gerard J. Kennell

  
	
   

  	
  Title:

  	
  Senior Vice President &
  Treasurer

  
	
   

  	
   

  
	
   

  	
  NATIONAL
  RENTAL (US) INC.,
  as Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name:

  	
  Gerard
  J. Kennell

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
  VANGUARD
  CAR RENTAL CLAIMS INC., as

  
	
   

  	
  Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name:

  	
  Gerard
  J. Kennell

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Treasurer

  
					



 


Guarantee and Collateral Agreement


 

















 


	
   

  	
  VANGUARD
  REAL ESTATE HOLDINGS

  
	
   

  	
  LLC, as Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name:

  	
  Gerard
  J. Kennell

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
  VANGUARD
  TRADEMARK HOLDINGS USA

  LLC, as Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name:

  	
  Gerard
  J. Kennell

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
  VANGUARD
  CAR RENTAL USA INC.,
  as

  
	
   

  	
  Grantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard J. Kennell

  	
   

  
	
   

  	
  Name: 

  	
  Gerard
  J. Kennell

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Treasurer

  
					



 


Guarantee and Collateral Agreement


 


 

















 


	
   

  	
  GOLDMAN SACHS CREDIT PARTNERS L.P.,

  
	
   

  	
  as
  Collateral Agent

  
	
   

  	
   

  
	
   

  	
  Authorized
  Signatory:

  	
  /s/ William W. Archer

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William
  W. Archer

  
	
   

  	
   

  	
  Title:
  

  	
  Managing
  Director

  
					



 


Guarantee and Collateral Agreement