Document:

Exhibit 10.4

 

EXECUTION COPY

 

THIRD AMENDMENT TO

ASSET PURCHASE AGREEMENT

 

This Third Amendment,
dated as of October   , 2003 (this “Amendment”),
to the Asset Purchase Agreement, dated as of June 12, 2003, as amended (the “Agreement”),
each by and among ANC Rental Corporation, a Delaware corporation (“Seller”), the
Subsidiaries set forth on the signature page hereto (Seller and such Subsidiaries
collectively referred to as the “Debtors”), CAR Acquisition Company LLC, a Delaware
limited liability company (“Purchaser”), Cerberus Capital Management, L.P., a Delaware
limited partnership (“CCM”), and, solely with respect to Section 2.5, Lehman Commercial
Paper Inc., a New York corporation (“Lehman”).

 

WHEREAS, the parties
to the Agreement desire to enter into this Amendment to amend certain provisions
of the Agreement, as set forth below.

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants and conditions herein
contained, the parties hereto hereby agree as follows:

 

Section 1.               Capitalized
Terms.  All capitalized terms used in
this Amendment and not otherwise defined herein shall have their respective meanings
set forth in the Agreement.

 

Section 2.               Amendments.

 

Section 2.1             Definitions.

 

(a)           Section
1.1 of the Agreement is hereby amended by deleting the following defined terms:  “Adjustment Amount”; “Agreed Upon Procedures Definitions”;
“Baseline Working Capital”; “Baseline Working Capital Statement”; “Canada-US Normal
Course Transactions”; “Closing Date Amount”; “Closing Working Capital”; “Closing
Working Capital Statement”; “Cure Costs Statement”; Cure Costs Threshold”; “Deductible
Amount”; “EMEA-US Normal Course Transactions”; “Estimated Closing Working Capital”;
“Estimated Closing Working Capital Statement”; “Estimated Cure Costs”; Estimated
Cure Costs Statement”; “Extraordinary Cash Distributions”; “Extraordinary Cash Investments”;
“Permitted Cash Distributions”; “Permitted Cash Investments”; “Target Amount”; “Target
Working Capital Statement”; and “Working Capital”.

 

(b)           Section
1.1 of the Agreement is hereby amended by adding the following defined term after
the definition of “9/11 Business Interruption Insurance Claim”:

 

“Accountants” shall
mean a nationally recognized accounting firm jointly agreed to by Purchaser and
Seller.”

 

(c)           The
index of “Additional Defined Terms” set forth in Section 1.1 of the Agreement is
hereby amended (X) by deleting the following defined terms:  “Agreed Upon Procedures”; “Agreed Upon Procedures
Report”; “Aon”; “Aon Closing Report”; “Aon Estimated Report”; “Aon March Report”;
“Closing Escrow Deposit”; “Comment Period”; “Determination Date”; “Determination
Date Amount”; “Determination Date Statement”; “Differential”; “Dispute Notice”;
“Dispute Notice Period”; “Final Closing Working Capital Statement”; “Final Cure
Costs 

 

 

Statement”; “Interest Rate”; “Management Accrual Amount”; “March Management
Accrual Amount”; “Negotiation Period” and “Objection Notice”; and (Y) by adding
the following defined terms and their respective cross references:  “GM Purchase Agreement”, 5.31; Hawaii JV Agreement”,
5.30; “Incremental Taxes”, 5.27(d); “Incremental Tax Statement”, 5.27(d); “Indemnity
Escrow Agreement”, 2.5(b); “Indemnity Escrow Amount”, 2.5(b); “Indemnity Letter”,
2.5(b); “NCRLI”, 5.30; “NCRSI”,  5.31; “Nippon”,
5.30; “Redetermined Incremental Taxes”, 5.27(d); “Tax Contest”, 5.27(d); and “Venture”,
5.30.

 

(d)           Section
1.1 of the Agreement is hereby amended by deleting the definitions of “Current Assets”
and “Current Liabilities” in their entirety and replacing them as follows:

 

“Current Assets”
shall mean the following assets of Debtors as of the Closing Date determined in
accordance with GAAP, and on an unconsolidated combined basis:  cash and cash equivalents; net receivables (but
excluding receivables from Seller or any Subsidiary); inventory; fleet-DNR salvage
reserve (contra-asset portion only); fleet-warrant reserve (contra-asset portion
only); fleet-reject reserve (contra-asset portion only); fleet-excess mileage reserve
(contra-asset portion only); prepaid tags and licenses; prepaid insurance (other
than prepaid directors and officers liability insurance) and refunds to Purchaser
of premiums relating to prepaid insurance; prepaid marketing (barter); prepaid marketing
(non-barter); prepaid rent; prepaid property and other taxes; prepaid airport concessions;
prepaid service vehicles; prepaid – other; deposits – Liberty Mutual; deposits –
National Union; deposits – Rosedale Dodge (lease deposits); deposits – AIG collateral;
deposits – Royal Indemnity; deposits – Travelers; deposits - rent; deposits – airport
bids; deposits - other.  The Current Assets
do not include the current assets of Debtors attributable to the ALM Business (except
as set forth in Schedule 2.2(l)) or any Excluded Assets.

 

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

 

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accrued travel partners rebates;
accrued insurance (general liability and other accrued insurance); other accruals
– monthly IT accrual (but excluding any portion thereof that constitutes Pre-Petition
Liabilities); other accrual – commissions (but excluding any portion thereof attributable
to Pre-Petition Liabilities); other accrual – Emerald Club; other accrual-Miscellaneous
invoices not received (but excluding any portion thereof attributable to Pre-Petition
Liabilities); other accrual – miscellaneous (but excluding any portion thereof attributable
to Pre-Petition Liabilities); other accrual-bank service fees; other accrual – Mitsubishi
and Chrysler operating lease payment; and other accrual – benefits reserve; and
the following self-insurance accruals: workers’ compensation; health; and auto liability
(including for the ALM Business).  The Current
Liabilities do not include any Excluded Liabilities; any liabilities under the “Bonus
Program”; any liability that remains unpaid as of the Closing under the New Severance
Plan; any amounts payable to any Acquired Subsidiary (or any direct or indirect
subsidiary thereof); accrued environmental reserve; accrued merger reserve; the
current liabilities of Debtors attributable to the ALM Business (other than for
self-insurance accruals for auto liability); debt; accrued interest; other accrual
– adjusted fleet clearing; other accrual – AMT valuation reserve; other accrual
– unclaimed property; other accrual – Eurodollar acquisition reserve; city closure
reserve; other accrual – excess accrued legal fees; other accrual – money collected
on behalf of German bankrupt entity; deferred gain on sale/leaseback transaction;
deferred revenue related to Perot; interest rate hedges with West LB; and the indebtedness
under the DIP Credit Agreement.

 

Section 2.2             Purchase
and Sale of Acquired Assets.  (a)  Section 2.1(w) is hereby deleted and replaced
in its entirety to read as follows:

 

“(w)        any
interest in and to any refund of Taxes, but only to the extent the Taxes to be refunded
were paid at any time by Purchaser or its Affiliate or paid after the Closing Date
by an Acquired Subsidiary (or a direct or indirect subsidiary of an Acquired Subsidiary);”

 

(b)           Section
2.1(ii) is hereby deleted and replaced in its entirety to read as follows:

 

“(ii)         all
preference or avoidance claims or actions of any Debtor arising out of Sections
544 through 553, inclusive, of the Bankruptcy Code (i) against the Acquired Subsidiaries,
(ii) against Purchaser or its Affiliates, (iii) against those Persons listed on
Schedule 2.1(ii), or (iv) relating to (x) an Assigned Contract, (y) a Current Asset,
or (z) an agreement, written or oral, for the provision of goods or services by
any vendor of the Debtors, which agreement was assigned to Purchaser either as an
amendment to such agreement or a new agreement, each of (x), (y) and (z) as of the
Closing Date;”

 

Section 2.3             Excluded
Assets.  Section 2.2(i) is hereby deleted
and replaced in its entirety to read as follows:

 

“(i)          any
interest in and to any refund of Taxes but only to the extent the Taxes to be refunded
were paid at any time by any Debtor or paid on or before the Closing Date by an
Acquired Subsidiary (or a direct or indirect subsidiary of an Acquired Subsidiary);”

 

Section 2.4             Assumed
Liabilities.  (a)  Section 2.3(e) is hereby deleted and replaced
in its entirety to read as follows:

 

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“(e)         Current
Liabilities as of the Closing Date, unless otherwise specifically excluded herein;”

 

(b)           Section
2.3(f) is hereby deleted and replaced in its entirety to read as follows:

 

“(f)          (i)
Liabilities incurred after the Petition Date with respect to those Litigations filed
after the Petition Date (other than those relating to accidents involving vehicles
of the Business (which are covered by Section 2.3(g))) to which any Debtor is a
party set forth in Schedule 2.3(f)(i); and (ii) Litigation relating to the Business
or Acquired Assets arising after June 12, 2003 and relating to Liabilities incurred
after the Petition Date in the Ordinary Course of Business;”

 

(c)           Section
2.3(g) is hereby deleted and replaced in its entirety to read as follows:

 

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

 

(d)           Section
2.3(h) is hereby deleted and replaced in its entirety to read as follows:

 

“(h)         (i)
Liabilities related to COBRA solely for the purposes of benefit plans that are listed
on Schedule 3.13(a) for M&A Qualified Beneficiaries regardless of whether such
Liabilities arise prior to, on or after the Closing Date, to the extent that Debtors
no longer maintain a group health plan after the Closing Date and Liabilities relating
to or incurred in connection with Benefit Plans that are listed on Schedule 2.1(g),
and (ii) Liabilities for claims incurred prior to the Closing Date in connection
with the Company Health and Welfare Plan but not paid prior to the Closing Date;”

 

(e)           Section
2.3 of the Agreement is hereby amended by adding the following clauses (j) and after
2.3(i) (and deleting the period at the end of clause (i) and replacing it with a
semicolon):

 

“(j)          Liabilities
in respect of any bonuses payable by the Debtors under that certain “Bonus Program”
implemented in accordance with the Bankruptcy Court’s “Order Pursuant to Sections
105(a), 363(b) and 503(b)(l) of the Bankruptcy Code Authorizing and Approving the
Adoption of the Sale Proceeds Bonus Program” (entered July 21, 2003), as in effect
on August 5, 2003, in the amount of $1,005,000; it being understood that the Purchaser
shall make the full payment of this amount under the Bonus Program and shall not
assume liability or otherwise be responsible for any additional amounts that may
be payable under such Bonus Program; and

 

(k)           Cure
Costs.”

 

4

 

Section 2.5             Excluded
Liabilities.  (a)  Section 2.4(d) of the Agreement is hereby deleted
in its entirety and replaced with the following:

 

“(d)         all
Taxes of Seller or any Subsidiary not constituting an Acquired Subsidiary;”

 

(b)           Section
2.4(k) of the Agreement is hereby deleted in its entirety and replaced with the
following:

 

“(k)         all
Liabilities of any Debtor relating to (i) any Benefit Plans not listed on Schedule
2.1(g) (other than as provided in Section 2.3(h)) including the Key Employee Retention
Plan, the 401(k) Plan and the Company Health and Welfare Plan (other than claims
incurred prior to the Closing Date in connection with the Company Health and Welfare
Plan but not paid prior to the Closing Date), (ii) all Liabilities of any Debtor
under the New Severance Plan and (iii) all Liabilities of any Debtor under FAMPACT.”

 

Section 2.6             Purchase
Price.  Section 2.5 of the Agreement is
hereby deleted in its entirety and replaced with the following:

 

“Section 2.5           Purchase
Price.  (a)  Upon the terms and subject to the conditions hereof,
in consideration of the sale, transfer, assignment, conveyance and delivery by Debtors
of the Acquired Assets to Purchaser or its designated Affiliates, Purchaser or its
designated Affiliates shall, and CCM shall cause Purchaser or Purchaser’s designated
Affiliates to, (x) pay to Debtors, at the Closing, an amount equal to $233,000,000
less the aggregate amount of the letters of credit outstanding under the Congress
Financial facility that are not fully cash collateralized as of the date hereof
(as adjusted, the “Purchase Price”), and (y) assume the Assumed Liabilities.  The Purchase Price payable pursuant to clause
(x) above shall be paid by Purchaser to Seller on behalf of Debtors at Closing (A)
by delivery to Seller of the Deposit and any interest accrued thereon in accordance
with the Escrow Agreement, (B) by delivery of the Indemnity Escrow Amount to the
escrow agent for the Indemnity Escrow Amount as set forth in Section 2.5(b) and
(C) the balance (i.e. the difference between the Purchase Price and payments under
clause (A) and (B) herein) by wire transfer of immediately available same day funds,
in each case to an account or accounts designated by Seller at least two Business
Days prior to the Closing Date.

 

(b)           The
Debtors, Purchaser and Lehman agree that the amount of cash to be delivered to Seller
by Purchaser at Closing shall be further reduced by $6,000,000 (the “Indemnity Escrow
Amount”), which amount shall be deposited with an escrow agent at Closing and shall
be governed by an escrow agreement to be mutually agreed upon by Purchaser, Lehman
and Seller (the “Indemnity Escrow Agreement”) unless the issues relating to the
state Tax liability set forth in the indemnity letter delivered to Purchaser on
the date hereof (the “Indemnity Letter”) are resolved prior to the Closing Date
(it being understood that an agreement on apportionment by the applicable state
authority and the payment of the state Tax liability to the jurisdiction set forth
in the Indemnity Letter shall be deemed to be a full and complete resolution of
the issue giving rise to the foregoing escrow arrangement).   The scope of the indemnification and the material
terms of the escrow arrangement are set forth in the Indemnity Letter.  Lehman shall have the option, at any time during
the term of the Indemnity Escrow Agreement, to substitute an indemnification agreement
(based on the same terms set forth in the

 

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Indemnity Letter) between Purchaser and Lehman for the remaining term of
the Indemnity Escrow Agreement at which time all monies held pursuant to the Indemnity
Escrow Agreement shall be released.”

 

Section 2.7             The
Closing.         Section 2.8 of the Agreement is hereby deleted
in its entirety and replaced with the following:

 

“Section 2.8.          The
Closing.  The closing of the purchase
and sale of the Acquired Assets and the Assumed Liabilities hereunder and the other
transactions contemplated hereby (the “Closing”) shall take place at the offices
of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, at
a date (the “Closing Date”) and time to be mutually agreed by Debtors and Purchaser,
which shall be (unless the parties otherwise agree) the later of (a) September 30,
2003 and (b) the second Business Day after all of the conditions set forth in Article
VI have been satisfied (other than those conditions that by their nature are to
be satisfied a the Closing, but subject to the satisfaction or waiver by the party
entitled hereunder to waive any such condition at the Closing), or such other date
as the parties may mutually agree if on such date the Purchaser is not entitled
to terminate this Agreement pursuant to any of clauses (xii), (xiii) or (xiv) of
Section 7.1(a).”

 

Section 2.8             Deliveries
at Closing.

 

(a)           The
Agreement is hereby amended by deleting Section 2.9(a)(viii) in its entirety and
replacing it with the following:

 

“(viii)      the certificates contemplated
by Sections 6.2(a) and 6.2(d);”.

 

(b)           The
Agreement is hereby amended by deleting Section 2.9(b)(i) in its entirety and replacing
it with the following:

 

“(i)          an
amount of cash equal to the Purchase Price less the amount of the Deposit and any
interest accrued thereon;”

 

Section 2.9             Representations
and Warranties of Seller.

 

(a)           The
Agreement is hereby amended by deleting Section 3.4 in its entirety and replacing
it with the following:

 

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

 

6

 

(b)           The
Agreement is hereby amended by deleting Section 3.5(e) in its entirety; and

 

(c)           The
Agreement is hereby amended by deleting Section 3.8(a) in its entirety and replacing
it with the following:

 

“(a)         [intentionally omitted];”

 

Section 2.10           Covenants.

 

(a)           The
Agreement is hereby amended by deleting Section 5.1(a)(iv) in its entirety and replacing
it with the following:

 

“(iv)        not
make any capital expenditures in excess of $75,000 individually or, with respect
to capital expenditures for amounts less than $75,000, $500,000 in the aggregate;”

 

(b)           The
Agreement is hereby amended by deleting Section 5.1(a)(xliv) in its entirety and
replacing it with the following:

 

“(xliv)     not
enter into any compromise or settlement of any post-petition administrative priority
claims relating to the Litigations specified in Section 5.29.”

 

(c)           The
Agreement is hereby amended by deleting Section 5.8 in its entirety and replacing
it with the following:

 

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

 

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

 

(d)           The
Agreement is hereby amended by deleting Section 5.9(g)(ii) in its entirety and replacing
it with the following:

 

“(ii)         The
Purchaser shall establish a bonus pool (the “Bonus Pool”) all salaried employees
of Debtors who are grade level 14 or higher or who are general managers determined

 

7

 

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

 

(e)           The
Agreement is hereby amended by deleting Section 5.12 in its entirety and replacing
it with the following:

 

“Section 5.12         Assigned
Contracts; Negotiation of Cure Costs. 
Purchaser may enter into agreements to settle Cure Costs with respect to
any Assigned Contract without the consent of Seller.  Any such settlement agreement shall become an
Assigned Contract.  Debtors shall cooperate
with Purchaser in arranging and entering into such settlement agreements.”

 

(f)            The
Agreement is hereby amended by deleting Section 5.13 in its entirety and replacing
it with the following:

 

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

 

(g)           The
Agreement is hereby amended by deleting Section 5.16(a) in its entirety and replacing
it with the following:

 

8

 

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

 

(h)           The
Agreement is hereby amended by adding the following Sections 5.27, 5.28, 5.29 and
5.30 immediately after Section 5.26:

 

“Section 5.27.        Tax
Elections.  (a)  Seller agrees that if requested by Purchaser with
respect to those entities listed on Schedule 5.27(a), it shall take all necessary
action, as directed by Purchaser, to (i) convert such entities (or any of them)
from corporations to limited liability companies, in such manner as may be requested
by Purchaser, (ii) make an election with respect to and/or on behalf of any or all
of such entities to change the classification of such entity or entities for tax
purposes (and shall not thereafter attempt to change or revoke any such election
unless otherwise directed by Purchaser) or (iii) merge such entities (or any of
them) into the entities that are their shareholders, partners or members (or into
a newly formed limited liability company as necessary to achieve the same result).  Any action taken by any Debtor post-Closing pursuant
to this Section 5.27(a) shall be at Purchaser’s sole expense.

 

(b)           Seller
agrees that if requested by Purchaser with respect to those entities listed on Schedule
5.27(b), it shall make an election with respect to and/or on behalf of any or all
of such entities to change the classification of such entity or entities for tax
purposes as directed by Purchaser (and shall not thereafter attempt to change or
revoke any such election unless otherwise directed by Purchaser).  Prior to any election made under this Section
5.27(b), Seller agrees that if requested by Purchaser, it shall cause any intercompany
obligation between Alamo Financing, LP and Alamo Rent-A-Car, LLC to be waived, cancelled
or otherwise contributed as directed by Purchaser and Section 5.13 shall not apply
to such intercompany obligation to the extent that such Section is inconsistent
with this sentence.  Notwithstanding anything
to the contrary in Section 3.17(o) or Section 5.15 regarding the reduction of any
Tax Asset, the parties acknowledge that the satisfaction or termination of any intercompany
obligation as provided in

 

9

 

this Section 5.27(b) may reduce
the availability of net operating losses (as described in Section 3.17(o)) for the
2003 Year.  This Section 5.27(b) shall not
otherwise affect the application of Section 5.15.  Any action taken by any Debtor post-Closing pursuant
to this Section 5.27(b) shall be at Purchaser’s sole expense.

 

(c)           For
purposes of this Agreement, any transaction contemplated by Section 5.27(a) or the
first sentence of Section 5.27(b) constitutes an Internal Restructuring Transaction.  Purchaser hereby approves any such transaction
and waives any obligation of Seller or any Subsidiary as required by the procedures
described in Section 5.22 herein with respect to such transaction.

 

(d)           Purchaser
hereby agrees to reimburse Seller or any Subsidiary for all incremental taxes
(including any penalties and interest) and reasonable costs (“Incremental
Taxes”), in excess of $5,000 individually and $15,000 in the aggregate,
incurred by Seller or any Subsidiary as a result of the consummation of the
transactions contemplated by this Section 5.27 to the extent that such
Incremental Taxes would not have been incurred if such transactions did not
occur; provided, however, that as a condition to Purchaser’s
obligations under this Section 5.27(d), Seller shall deliver to Purchaser a
statement setting forth the amount of any Incremental Tax due on any Tax Return
on which Seller or any Subsidiary intends to report Incremental Taxes and
evidence reasonably satisfactory to Purchaser supporting the determination of
such amount (collectively, the “Incremental Tax Statement”) no later than 35
days prior to the due date for the filing of such Tax Return, and Seller shall
not file any such Tax Return until any objections to the Incremental Tax
Statement have been resolved in accordance with this Section 5.27(d).  If Purchaser objects to any matter set forth
in the Incremental Tax Statement, then Purchaser shall deliver to Seller a
written notice of objection within 10 days after receiving the Incremental Tax
Statement from Seller.  If such a notice
of objection is delivered, then Seller and Purchaser agree to consult and to
attempt to resolve in good faith any disputes with respect to such Incremental
Tax Statement within 10 days after delivery of such notice of objection.  If Purchaser and Seller are unable to resolve
any such dispute, then Purchaser and Seller shall refer the matter to the
Accountants for a determination within 10 days. 
Purchaser and Seller shall equally share the fees and expenses of the
Accountants.  The determination of the
Accountants with respect to such Incremental Tax Statement shall be final,
conclusive and binding on all parties to this Agreement.  Purchaser’s obligation to reimburse Seller
under this Section 5.27(d) shall survive the Closing and continue until 60 days
after the earlier of (x) the expiration of the applicable statute of
limitations or (y) the date of the winding down and/or dissolution of the
entirety of the Debtors’ estate, including the Liquidating Trust (or other similar
entity).  Without limiting the foregoing,
if an audit, review, examination or any other administrative or judicial
proceeding (a “Tax Contest”) has the purpose or effect of redetermining
Incremental Taxes of the Seller or any Subsidiary (the “Redetermined
Incremental Taxes”), then (i) Purchaser shall have the right to participate in
the Tax Contest with respect to any issues involving Redetermined Incremental
Taxes, (ii) Seller shall deliver to Purchaser a revised Incremental Tax
Statement incorporating the effects of the Tax Contest within 20 days of such
Tax Contest becoming final and (iii) either Purchaser or Seller, as the case
may be, shall make a payment to the other party equal to the difference between
the Redetermined Incremental Taxes and the Incremental Taxes within 20 days of
the Seller’s delivery of the revised Incremental Tax Statement.

 

10

 

Section 5.28.          Assigned
Contracts.  For the period from the Closing
Date until the earlier of (a) 120th day following the Closing Date and (b) confirmation
of Debtor’s liquidating plan, Seller shall notify Purchaser in writing not less
than seven Business Days prior to the date that (a) any Debtor files a motion to
reject any Commitment, or (b) any Debtor files a plan of reorganization with the
Bankruptcy Court.  Not later than three Business
Days after any Debtor provides notice as contemplated by the previous sentence,
Purchaser has the right to notify Seller in writing that the applicable Debtor should
assume (i) in the case of clause (a) above, any Commitment as to which Seller has
notified Purchaser that a Debtor intends to reject or (ii) in the case of clause
(b) above, any Commitment as to which Debtor has not prior thereto rejected or assumed
under the Bankruptcy Code.  In the event Purchaser
provides Seller with notice as contemplated by the previous sentence, the applicable
Debtor shall promptly file with the Bankruptcy Court a motion or motions seeking
the assumption by such Debtor and assignment to Purchaser of the Commitments described
in such notice.  The applicable Debtor shall
use commercially reasonable efforts to pursue the approval of such assumption and
assignment motion or motions with the Bankruptcy Court.  Upon the date the Bankruptcy Court approves the
assumption and assignment motion, any Commitments so assumed and assigned shall
be deemed Assigned Contracts.  With respect
to any Commitments Purchaser instructs a Debtor to assume, Purchaser shall reimburse
Seller for amounts paid by any Debtor thereunder, and shall assume the full and
unconditional obligation of any Debtor to pay any amounts accrued thereunder, for
the period from the Closing Date through the earlier of (x) the date of the assumption
and assignment of such Commitment, (y) the 120th day
following the Closing Date and (z) confirmation of Debtor’s liquidating plan.  All Cure Costs and other costs and expenses incurred
by any Debtor with respect to any Commitments assumed by any Debtor and assigned
to Purchaser in accordance with this Section 5.28 shall be the sole obligation of
Purchaser.

 

Section 5.29           Reimbursement
for Certain Claims.  Purchaser shall advance
Debtors for any allowed post-petition administrative priority claims under Sections
503(b) and 507(a)(1) of the Bankruptcy Code and other costs and expenses incurred
by any Debtor with respect to Litigation (other than those relating to accidents
involving vehicles of the Business (which are covered by Section 2.3(g)) that are
identified on Schedule 2.3(f), clause (ii); Purchaser shall have the right to control
the defense and settlement of such Litigation, and must consent to the terms of
any such settlement granting an allowed post-petition administrative priority claim
under Sections 503(b) and 507(a)(1) of the Code.  Debtor’s
consent shall be required with respect to any allowed prepetition non-administrative
priority portion of such settlement.  The
Purchaser’s and Debtor’s respective consent for the settlement of prepetition claim
amounts shall be required, but shall not be unreasonably withheld.

 

Section 5.30           Hawaii.  (a) Seller shall use its commercially reasonable
best efforts to cause National Car Rental Licensing Inc. (“NCRLI”) to acquire prior
to the Closing Date from Nippon Rent-A-Car Hawaii, Inc. (“Nippon”) the 5% of the
National Car Rental Hawaii Venture (the “Venture”) owned by Nippon pursuant to that
certain National Car Rental Hawaii Joint Venture Agreement, dated as of October
19, 1989 (the “Hawaii JV Agreement”).

 

(b)           Upon
NCRLI’s acquisition of Nippon’s 5% ownership interest in the Venture, the Venture
shall be automatically dissolved pursuant to Section 7.1(d) of the Hawaii JV Agreement,
the assets and liabilities of the Venture shall become the assets and liabilities
of 

 

11

 

NCRLI and such assets shall be treated
as “Acquired Assets” or “Excluded Assets” in accordance with the terms of this Agreement,
and such liabilities shall be treated as “Assumed Liabilities” or “Excluded Liabilities”
in accordance with the terms of this Agreement.

 

Section 5.31.          General Motors Environmental Indemnity.  National
Car Rental Systems, Inc., a Debtor (“NCRSI”), hereby agrees to indemnify Purchaser,
to the extent that NCRSI is actually reimbursed by General Motors Corporation, for
any matter which constitutes a Retained Environmental Liability as such term is
defined in that certain Asset Purchase Agreement among NCRSI, General Motors Corporation
and NCR Acquisition Corp., dated April 4, 1995 (the “GM Purchase Agreement”), subject
to the terms and conditions of the GM Purchase Agreement. NCRSI hereby further agrees
to use its commercially reasonable best efforts to pursue any claims for indemnification
and/or remediation with respect to such Retained Environmental Liabilities in accordance
with the terms and conditions of the GM Purchase Agreement and to promptly pay Purchaser
any proceeds received by NCRSI after the Closing Date in respect of such indemnification
claims.  Purchaser hereby agrees to advance
NCRSI for all actual out-of-pocket costs and expenses incurred by NCRSI in connection
with the pursuit of the indemnification and/or remediation claims described in this
Section 5.31.”

 

Section 2.11           Termination.  The Agreement is hereby amended by deleting Section
7.1(a)(xi) in its entirety (and inserting the word “or” at the end of Section 7.1(a)(ix)
and replacing the “; or” at the end of Section 7.1(a)(x) with a period).

 

Section 2.12           Notices. The
Agreement is hereby amended by deleting Section 8.1(b) in its entirety and replacing
it with the following:

 

(b)           If
to CCM or Purchaser to:

 

	
  CAR Acquisition Company LLC 

  c/o Cerberus Capital Management, L.P. 

  299 Park Avenue 

  New York, New York 10171

  
	
  Attention: Lenard Tessler

  
	
  Facsimile: (212) 755-3009

  
	
  E-mail: ltessler@cerberuspartners.com

  
	
  or William Lobeck

  
	
  Email: wmlobeck@aol.com

  
	
   

  
	
  With copies to:

  
	
   

  
	
  Schulte Roth & Zabel LLP

  
	
  919 Third Avenue

  
	
  New York, New York 10022

  
	
  Attention: Stuart D. Freedman, Esq.

  
	
  Facsimile: (212) 593-5955

  
	
  E-mail: stuart.freedman@srz.com

  

 

12

 

Section 2.13           Exhibits
and Schedules.  (a)  The Agreement is hereby amended by deleting the
following Exhibits in their entirety:  Exhibit
A - Canada-US Normal Course Transactions; Exhibit B - EMEA-US Normal
Course Transactions; Exhibit C – Capital Expenditures Plan; Exhibit E
- Baseline Working Capital Statement and Current Assets and Current Liabilities
as of March 31, 2003; Exhibit H - Target Amount, Target Balance Sheets and
Target Working Capital Statement; Exhibit I - Projected Weekly Cash Flows;
Exhibit K – Agreed Upon Procedures.

 

(b)           Upon
NCRLI’s acquisition of Nippon’s 5% interest in the Venture, Schedule 2.1(a) shall
be automatically amended by deleting number 33, National Car Rental Hawaii.

 

(c)           Schedule
2.1(a) is hereby amended by deleting number 25, Ganymed 196 GmbH, and replacing
it with ANC Rental Corporation (German Holdings) GmbH (f/k/a Ganymed 196 GmbH),
and deleting number 26, Ganymed 197 GmbH and replacing it with ANC Rental Corporation
GmbH (f/k/a Ganymed 197 GmbH).

 

(d)           The
Agreement is hereby amended by adding the following schedules:

 

“Schedule 5.27(a)

 

National Car Rental System, Inc.

NCR Affiliate Servicer, Inc.

NCRAS-GP, Inc.

Spirit Rent-A-Car, Inc.

SRAC-TM, Inc.

SRAC-GP, Inc.

ARC-TM, Inc.

ARC-GP, Inc.

ANC-GP, Inc.

ANC Management Services
Corporation

NCRAS Management,
LP

SRAC Management, LP

Alamo Rent-A-Car Management, LP

 

Schedule 5.27(b)

 

Alamo Financing, LP

Alamo Financing, LLC”

 

(e)           Schedule
6.2(b) is hereby amended by deleting the penultimate bullet point in subsection
(2) Other Financing Documents, which is the consent required with respect to United
Dominions Trust of its assignee or other successor, in respect of (1) the Daily
Rental Facilities Letter between United Dominions Trust and ANC dated 15 December
1998; and (2) any related documents.

 

13

 

Section 3.               Miscellaneous.

 

Section 3.1.            Governing
Law.  This Amendment shall be governed by and construed, interpreted and enforced
first in accordance with and governed by the Bankruptcy Code and the applicable
case law under the Bankruptcy Code and, to the extent that the Bankruptcy Code and
the applicable case law under the Bankruptcy Code do not address the matter at hand,
then this Amendment shall be governed
by and construed and interpreted in accordance with the Laws of the State of Delaware
applicable to contracts entirely made and performed there.

 

Section 3.2.            Severability.  The provisions of this Amendment are severable, and in the event
that any one or more provisions are deemed invalid, illegal or unenforceable by
any rule of law or public policy the remaining provisions shall remain in full force
and effect unless the deletion of such provision shall cause this Amendment to become adverse to any party.

 

Section 3.3.            Headings.  The section and paragraph headings and table of
contents contained in this Amendment are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Amendment.

 

Section 3.4.            Counterparts.  This Amendment
may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

 

Section 3.5.            Full Force and Effect.  Except
as expressly amended hereby, the Agreement remains in full force and effect in accordance
with its terms and the parties shall prepare
a composite of the Agreement and this Amendment.

 

Section 3.6             Entire Agreement.  The Agreement
(including the Schedules and Exhibits thereto), this Amendment (including the exhibits
hereto) and the Confidentiality Agreement set forth the entire agreement and understanding
between the parties and supersede any prior agreement or understanding, written
or oral, relating to the subject matter of the Agreement.

 

Section 3.7             Successors and Assigns; Binding Effect.  This
Amendment shall bind and inure to the benefit of Debtors, on one hand, and to CCM
and Purchaser, on the other hand, and their respective successors, transferees and
assigns.  Purchaser, without the consent of
Debtors, may assign all or any portion of its rights and obligations hereunder,
in whole or in part, to any one or more of its wholly-owned subsidiaries or Affiliates.

 

Section 3.8             No Strict Construction.  The parties
have participated jointly in the negotiation and drafting of this Amendment.  Consequently, in the event an ambiguity or question
of intent or interpretation arises, this Amendment shall be construed as if drafted
jointly by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision of
this Amendment.

 

[Remainder of this page intentionally
left blank.  Signature page follows.]

 

14

 

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

 

 

	
   

  	
   

  	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CAR ACQUISITION COMPANY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lenard Tessler

  
	
   

  	
  Name:

  	
   

  	
  Lenard Tessler

  
	
   

  	
  Title:

  	
   

  	
  Senior Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CERBERUS
  CAPITAL MANAGEMENT, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lenard Tessler

  
	
   

  	
  Name:

  	
   

  	
  Lenard Tessler

  
	
   

  	
  Title:

  	
   

  	
  Senior Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ANC RENTAL CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Howard D. Schwartz

  
	
   

  	
  Name:

  	
   

  	
  Howard D. Schwartz

  
	
   

  	
  Title:

  	
   

  	
  Sr. Vice President

  

 

15

 

	
   

  	
  OTHER DEBTORS:

  
	
   

  	
   

  
	
   

  	
  Alamo
  International Sales, Inc.

  Alamo
  Rent-A-Car Management, LP
Alamo
  Rent-A-Car, LLC
ANC
  Aviation, Inc.
ANC
  Collector Corporation
ANC
  Financial Corporation
ANC
  Financial GP Corporation
ANC
  Financial Properties LLC
ANC
  Financial LP
ANC-GP,
  Inc.
ANC
  Information Technology, Inc.
ANC
  Information Technology Holding, Inc.

  ANC Information Technology, L.P.

  ANC IT Collector Corporation

  ANC
  Management Services Corporation

  ANC
  Management Services LP

  ANC Payroll Administration, LLC

  ANC-TM Management LP

  ARC-GP, Inc.

  ARC-TM,
  Inc.
ARC-TM
  Properties LLC
ARG
  Reservation Services, LLC
ARI Fleet Services, Inc.
Auto Rental Inc.
Car Rental Claims, Inc.
Claims Management Center, Inc.
Guy Salmon USA, Inc.
Liability Management Companies Holding,
  Inc.
National Car Rental Licensing, Inc.
National Car Rental System, Inc.
NCR Affiliate Servicer Properties LLC
NCR Affiliate Servicer, Inc.
NCRAS Management, LP
NCRAS-GP, Inc.
NCRS Insurance Agency, Inc.
Post Retirement Liability Management,
  Inc.
Rental Liability Management Holdings,
  LLC
Rental Liability Management, Inc.
Republic Fiduciary, Inc.
Republic Guy Salmon Partner, Inc.
Spirit Leasing, Inc.
Spirit Rent-A-Car, Inc.
SRAC Management, LP
SRAC-GP, Inc.
SRAC-TM, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Howard D. Schwartz

  
	
   

  	
  Name:

  	
   

  	
  Howard D. Schwartz

  
	
   

  	
  Title:

  	
   

  	
  Sr. Vice President

  

 

 

16

 

	
   

  	
  As to Section 2.5 Only

  
	
   

  	
  LEHMAN COMMERCIAL PAPER INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jeff Goodwin

  
	
   

  	
  Name:

  	
   

  	
  Jeff Goodwin

  
	
   

  	
  Title:

  	
   

  	
  Authorized Signatory

  

 

 

17Exhibit 10.5

 

FINANCING AGREEMENT

 

Dated as of October 31, 2003

 

by and between

 

NATIONAL RENTAL GROUP FINANCING INC.,

 

and

 

DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1. DEFINITIONS

  	
  1

  
	
  1.01

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2. THE LOAN

  	
  2

  
	
  2.01

  	
  Commitment of Lender

  	
  2

  
	
  2.02

  	
  Procedure for Advances

  	
  4

  
	
  2.03

  	
  Interest Rates and Late Fee

  	
  4

  
	
  2.04

  	
  Prepayment of the Note

  	
  5

  
	
  2.05

  	
  Payments not on a Business Day

  	
  6

  
	
  2.06

  	
  Means of Payment

  	
  6

  
	
  2.07

  	
  Maximum Interest

  	
  6

  
	
  2.08

  	
  Use of Proceeds

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 3. PRECONDITIONS TO LOAN

  	
  7

  
	
  3.01

  	
  Initial Advance

  	
  7

  
	
  3.02

  	
  All Advances

  	
  10

  
	
  3.03

  	
  Advance for Refinanced Eligible Vehicles

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 4. REPRESENTATIONS AND WARRANTIES

  	
  12

  
	
  4.01

  	
  Corporate Existence and Power

  	
  12

  
	
  4.02

  	
  Ownership of Borrower

  	
  12

  
	
  4.03

  	
  Subsidiaries

  	
  12

  
	
  4.04

  	
  Corporate Authorization

  	
  13

  
	
  4.05

  	
  Binding Effect

  	
  13

  
	
  4.06

  	
  Financial Statements

  	
  13

  
	
  4.07

  	
  Litigation

  	
  13

  
	
  4.08

  	
  Pension and Welfare Plans

  	
  13

  
	
  4.09

  	
  Tax Returns and Payment

  	
  14

  
	
  4.10

  	
  Compliance With Other Instruments; None Burdensome

  	
  14

  
	
  4.11

  	
  Labor Matters

  	
  15

  
	
  4.12

  	
  Title to Property; No Liens, Claims or Encumbrances

  	
  15

  
	
  4.13

  	
  Regulation U

  	
  15

  
	
  4.14

  	
  Multi-Employer Pension Plan Amendments Act of 1980

  	
  15

  
	
  4.15

  	
  Investment Company Act of 1940; Public Utility Holding Company Act of
  1935

  	
  15

  
	
  4.16

  	
  Patents, Licenses, Trademarks, Etc

  	
  16

  
	
  4.17

  	
  Solvency

  	
  16

  
	
  4.18

  	
  Bankruptcy

  	
  16

  
	
  4.19

  	
  No Default

  	
  16

  
	
  4.20

  	
  Employment and Other Agreements

  	
  17

  

 

i

 

	
  4.21

  	
  Environmental, Safety and Health Matters

  	
  17

  
	
  4.22

  	
  Government Contracts

  	
  18

  
	
  4.23

  	
  Purchase and Other Commitments and Outstanding Bids

  	
  18

  
	
  4.24

  	
  Investments

  	
  18

  
	
  4.25

  	
  Disclosure

  	
  19

  
	
  4.26

  	
  Survival of Representations and Warranties

  	
  19

  
	
  4.27

  	
  Commercial Transaction

  	
  19

  
	
  4.28

  	
  Agricultural Use

  	
  19

  
	
  4.29

  	
  Organizational Structure

  	
  19

  
	
  4.30

  	
  Master Lease

  	
  20

  
	
  4.31

  	
  One-Way Rental Documents

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 5. COVENANTS

  	
  20

  
	
  5.01

  	
  Affirmative Covenants

  	
  20

  
	
   

  	
  (a)

  	
  Financial Statements and Other Information

  	
  20

  
	
   

  	
  (b)

  	
  Payment of Indebtedness

  	
  22

  
	
   

  	
  (c)

  	
  Maintenance of Books and Records; Consultations and Inspections

  	
  22

  
	
   

  	
  (d)

  	
  Payment of Taxes

  	
  22

  
	
   

  	
  (e)

  	
  Payment of Claims

  	
  23

  
	
   

  	
  (f)

  	
  Corporate Existence

  	
  23

  
	
   

  	
  (g)

  	
  Maintenance of Property

  	
  23

  
	
   

  	
  (h)

  	
  Performance of Agreements

  	
  23

  
	
   

  	
  (i)

  	
  Compliance with Laws, Regulations, Etc.

  	
  23

  
	
   

  	
  (j)

  	
  Environmental Matters

  	
  23

  
	
   

  	
  (k)

  	
  ERISA Compliance

  	
  25

  
	
   

  	
  (l)

  	
  Notices

  	
  25

  
	
   

  	
  (m)

  	
  Insurance

  	
  26

  
	
   

  	
  (n)

  	
  [Reserved]

  	
  27

  
	
   

  	
  (o)

  	
  [Reserved]

  	
  27

  
	
   

  	
  (p)

  	
  Use of Vehicles

  	
  27

  
	
   

  	
  (q)

  	
  DCMC Vehicles Only

  	
  27

  
	
   

  	
  (r)

  	
  Additional Actions by Lender

  	
  27

  
	
   

  	
  (s)

  	
  No Party as Owner Other Than Borrower

  	
  28

  
	
   

  	
  (t)

  	
  Application for and Delivery of Certificates of Title

  	
  28

  
	
   

  	
  (u)

  	
  Master Lease

  	
  28

  
	
   

  	
  (v)

  	
  Program Requirements

  	
  29

  
	
   

  	
  (w)

  	
  No Party as Lienholder Other than Lender

  	
  29

  
	
   

  	
  (x)

  	
  Capital Contribution

  	
  29

  
	
   

  	
  (y)

  	
  Blocked Account

  	
  29

  
	
   

  	
  (z)

  	
  Further Assurances

  	
  30

  
	
   

  	
  (aa)

  	
  Separate Corporate Existence of the Borrower

  	
  30

  
	
  5.02

  	
  Negative Covenants of Borrower

  	
  31

  
	
   

  	
  (a)

  	
  Limitation on Liens

  	
  31

  
	
   

  	
  (b)

  	
  Consolidation, Merger, Sale of Assets, Dissolution, Etc.

  	
  31

  
	
   

  	
  (c)

  	
  Sale and Leaseback Transactions

  	
  32

  
					

 

ii

 

	
   

  	
  (d)

  	
  Transactions with Affiliates

  	
  32

  
	
   

  	
  (e)

  	
  Changes in Nature of Business

  	
  32

  
	
   

  	
  (f)

  	
  Fiscal Year

  	
  32

  
	
   

  	
  (g)

  	
  Location of Collateral

  	
  32

  
	
   

  	
  (h)

  	
  Master Lease

  	
  32

  
	
   

  	
  (i)

  	
  Pension Plans

  	
  33

  
	
   

  	
  (j)

  	
  Acquisitions

  	
  33

  
	
   

  	
  (k)

  	
  Transactions Not in Ordinary Course of Business

  	
  33

  
	
   

  	
  (l)

  	
  Amendment of Articles of Incorporation or By-Laws

  	
  33

  
	
   

  	
  (m)

  	
  Insolvency, Appointment of Receivers, Etc

  	
  33

  
	
   

  	
  (n)

  	
  Subsidiaries

  	
  33

  
	
   

  	
  (o)

  	
  Ownership of Subsidiaries

  	
  33

  
	
   

  	
   

  	
   

  
	
  SECTION 6. EVENTS OF DEFAULT AND REMEDIES

  	
  34

  
	
  6.01

  	
  Events of Default

  	
  34

  
	
  6.02

  	
  Termination of Funding; Acceleration

  	
  36

  
	
  6.03

  	
  Rights and Remedies Generally

  	
  36

  
	
  6.04

  	
  Entry Upon Premises and Access to Information

  	
  36

  
	
  6.05

  	
  Certain Notification by Lender

  	
  37

  
	
  6.06

  	
  Sale or Other Disposition of Collateral by Lender

  	
  37

  
	
  6.07

  	
  Lender’s Care of Collateral

  	
  38

  
	
  6.08

  	
  Power of Attorney

  	
  38

  
	
  6.09

  	
  Waiver of Demand

  	
  39

  
	
  6.10

  	
  Waiver of Notice

  	
  39

  
	
   

  	
   

  	
   

  
	
  SECTION 7. DEFINITIONS

  	
  39

  
	
  7.01

  	
  Certain Defined Terms

  	
  39

  
	
  7.02

  	
  Accounting Terms and Determinations

  	
  51

  
	
  7.03

  	
  Construction

  	
  51

  
	
  7.04

  	
  Continuance of and Event of Default

  	
  51

  
	
   

  	
   

  	
   

  
	
  SECTION 8. GENERAL

  	
  51

  
	
  8.01

  	
  No Waiver

  	
  51

  
	
  8.02

  	
  Costs and Expenses

  	
  52

  
	
  8.03

  	
  General Indemnity

  	
  52

  
	
  8.04

  	
  Notices

  	
  53

  
	
  8.05

  	
  Lender’s Books and Records

  	
  54

  
	
  8.06

  	
  Governing Law; Amendments

  	
  54

  
	
  8.07

  	
  Headings for Convenience

  	
  54

  
	
  8.08

  	
  Binding Agreement

  	
  54

  
	
  8.09

  	
  Counterparts

  	
  54

  
	
  8.10

  	
  Resurrection of Borrower’s Obligations

  	
  54

  
	
  8.11

  	
  Marshalling

  	
  55

  
	
  8.12

  	
  Equitable Relief

  	
  55

  

 

iii

 

	
  8.13

  	
  Independence of Covenants

  	
  55

  
	
  8.14

  	
  Joint Participation

  	
  55

  
	
  8.15

  	
  Brokers

  	
  55

  
	
  8.16

  	
  Partial Invalidity

  	
  55

  
	
  8.17

  	
  Waiver of Jury Trial; Consent to Jurisdiction

  	
  55

  
	
  8.18

  	
  No Oral Agreements; Entire Agreement

  	
  56

  
	
   

  	
   

  	
   

  
	
  SCHEDULES AND EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Schedule 2.02(b)

  	
  Authorized Individuals

  	
   

  
	
  Schedule 2.06

  	
  Payment Account

  	
   

  
	
  Schedule 4.03

  	
  Subsidiaries

  	
   

  
	
  Schedule 4.07

  	
  Litigation

  	
   

  
	
  Schedule 4.12

  	
  Existing Liens

  	
   

  
	
  Schedule 4.16

  	
  Patents, Trademarks, Copyrights and Trade Names

  	
   

  
	
  Schedule 4.20

  	
  Employment and Other Agreements

  	
   

  
	
  Schedule 4.21

  	
  Environmental, Safety and Health Matters

  	
   

  
	
  Schedule 4.24

  	
  Existing Investments

  	
   

  
	
  Schedule 4.29

  	
  Organizational Structure

  	
   

  
	
  Schedule 4.31

  	
  One-Way Rental Documents

  	
   

  
	
  Schedule 5.01(m)

  	
  Insurance

  	
   

  
	
  Exhibit A

  	
  Promissory Note

  	
   

  
	
  Exhibit B

  	
  Borrowing Notice

  	
   

  
	
  Exhibit C

  	
  Security Agreement

  	
   

  
	
  Exhibit D

  	
  Legal Opinions

  	
   

  
	
  Exhibit E

  	
  Collateral Assignment of Master Motor Vehicle Lease and Servicing
  Agreement

  	
   

  
	
  Exhibit F

  	
  Certificate of Chief Financial Officer

  	
   

  
	
  Exhibit G

  	
  DCMC Guaranteed Depreciation Program as of July 1, 2003

  	
   

  
	
  Exhibit H

  	
  Acknowledgment and Consent to Collateral Assignment of Master Motor
  Vehicle Lease and Servicing Agreement

  	
   

  
	
  Exhibit I

  	
  Security Agreement (Advances)

  	
   

  
	
  Exhibit J

  	
  Vehicle Title and Lienholder Nominee Agreement

  	
   

  
	
  Exhibit K

  	
  Pay Off Letter

  	
   

  

 

iv

 

FINANCING AGREEMENT

 

THIS FINANCING AGREEMENT (this “Agreement”), dated as of the 31st day of October, 2003, by and among NATIONAL
RENTAL GROUP FINANCING INC., a Delaware corporation (“Borrower”) and
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC (“Lender”).

 

WITNESSETH:

 

WHEREAS, Borrower has requested from Lender a revolving credit facility
in a principal amount of up to Eight Hundred Million Dollars ($800,000,000.00)
(hereinafter called the “Loan” and each disbursement of which is hereinafter
called an “Advance”) to finance the Adjusted Purchase Price of Eligible
Vehicles and with respect to the Refinanced Eligible Vehicles, to refinance the
depreciated balance of the purchase price;

 

WHEREAS, Lender is willing to extend the Loan to Borrower upon, and
subject to, the terms, provisions and conditions contained herein;

 

WHEREAS, all of the Eligible Vehicles acquired by Borrower pursuant to
this Agreement shall be leased to Vanguard Car Rental USA Inc., a Delaware
corporation, (“Vanguard” and in its capacity as Lessee, “Lessee”);

 

WHEREAS, Lessee shall lease the Eligible Vehicles to individuals on a
daily rental basis under the trade names of “Alamo” and “National”; and

 

WHEREAS, Alamo Rental (US) Inc. and National Rental (US) Inc. are
wholly-owned subsidiaries of Lessee;

 

WHEREAS, as a condition precedent to Lender entering into this
Agreement, Lender has required that Borrower be adequately capitalized; and

 

WHEREAS, in order to induce Lender to enter into this Agreement Lessee
has agreed to make the Capital Contribution to Borrower on or before the date
of the Initial Advance.

 

NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, Borrower and Lender hereby mutually agree,
represent, warrant and covenant as follows:

 

SECTION 1. DEFINITIONS

 

1.01         Definitions. In
addition to the terms defined elsewhere in this Agreement or in any Transaction
Document, all capitalized words defined in Section 7.01
shall have such defined meanings whenever used in this Agreement or in any
other Transaction Document.

 

 

SECTION 2. THE LOAN

 

2.01         Commitment of Lender.
Upon the terms and subject to the conditions contained herein, Lender hereby
agrees to make Borrower a revolving credit loan in the aggregate principal
amount of up to Eight Hundred Million Dollars ($800,000,000.00). The Loan may
be funded in multiple Advances from time to time on or after the date hereof
until September 1, 2006. Except as otherwise expressly provided in this Section 2.01, no Advances may be
requested or made on the Loan after September 1, 2006. Upon the request of
Borrower, Lender may, at Lender’s sole discretion, extend the Initial Revolving
Credit Period and the Initial Maturity Date of the Loan for two additional
successive terms of one (1) year each and, in the case of the First Extended
Term, if any, Borrower may request Advances pursuant to such terms and
conditions as Borrower and Lender may then agree in writing until the
expiration of the First Extended Revolving Credit Period in which case the Loan
shall mature on the First Extended Maturity Date, and in the case of the Second
Extended Term, if any, Borrower may request Advances pursuant to such terms and
conditions as Borrower and Lender may then agree in writing until the
expiration of the Second Extended Revolving Credit Period in which case the
loan shall mature on the Second Extended Maturity Date. To the extent that
Lender extends the Loan as described herein, the annual interest rate shall be
equal to the Interest Rate as defined in Section
2.03. Principal repaid during the term of the Loan may be
reborrowed in accordance with the terms and conditions of this Agreement. The
maximum principal amount of each Advance on the Loan shall be limited to Ninety
Percent (90%) of Borrower’s Adjusted Purchase Price for the Eligible Vehicles
being purchased with the proceeds of such Advance. The Loan shall be evidenced
by a Promissory Note of Borrower dated the date hereof and payable to the order
of Lender in the principal amount of up to Eight Hundred Million dollars
($800,000,000.00) (the “Note”), in substantially the form attached hereto as Exhibit A
(with appropriate insertions). The Note shall mature on the Initial Maturity
Date, or if the Loan is extended for one (1) year in accordance with the terms
of this Section 2.01, the
First Extended Maturity Date and if the Loan is extended for an additional one
(1) year in accordance with the terms of this Section 2.01, the Second Extended Maturity Date (on which date
all unpaid principal and all accrued and unpaid interest thereon and all other
amounts owing thereunder shall become due and payable). Principal and interest
on the Note shall be payable as follows:

 

(a)           Borrower shall repay
each Advance in not more than fifteen (15) successive monthly installments, due
on the 20th day of the each month commencing with the month immediately
following the month in which such Advance is made followed by a final balloon
payment with respect to each Eligible Vehicle. The amount of each principal
installment payment (excluding the balloon payment) for each Advance shall be
equal to the sum of the monthly rate of depreciation as shown in the “Guaranteed
Depreciation-Eligible Models and Rates” section of the Program for each Eligible
Vehicle financed with such Advance. Monthly principal installment payments with
respect to each Eligible Vehicle will cease as of the last day of the month
preceding the month in which Lender receives notice from DCMC that a Return
Date has occurred. All Auction Proceeds and all other Program Payments with
respect to each Eligible Vehicle shall be paid directly to Lender and applied
to the outstanding balance of the Advance for such Eligible Vehicle when
received by Lender. Lender may, at its discretion, apply any Gain with respect
to an Eligible Vehicle to any and all Shortfalls applicable to any other
Eligible Vehicle(s). The balloon payment with respect to each Eligible Vehicle
shall be equal to the principal balance of the Advance for each Eligible
Vehicle which remains unpaid following 

 

2

 

receipt and application of the
Auction Proceeds and Program Payments, if any, with respect to such Eligible
Vehicle which amount shall be determined by Lender, invoiced to Borrower and
paid to Lender by the 20th day of the month in which the invoice is
received by the Borrower, if received at any time during the first 15 calendar
days of the month or by the 20th day of the month following the calendar month
in which the invoice is received by the Borrower if received between the 16th calendar day and the last calendar day of the
month. Such invoices may be sent to Borrower by telecopy, e-mail, or otherwise.
All payments received by Lender directly from DCMC and applied to the Advances
will be reflected in the monthly statement to Borrower.

 

So long as no Event of Default has occurred and is continuing, Lender
shall, on or before the last day of each calendar month, refund to Borrower any
and all Vehicle Credits shown on Lender’s books and records relating to
Eligible Vehicles with respect to which Lender received and applied the Auction
Proceeds and the Program Payments, if any, during the immediately preceding
calendar month. Lender shall deliver to Borrower, by facsimile, e-mail or
otherwise, information regarding calculation of such Vehicle Credits
identifying the Eligible Vehicles to which they relate. Lender will credit
Borrower with interest on the principal amount of all Vehicle Credits at a rate
equal to the Interest Rate. Credit balances resulting from overpayments by
Borrower or misapplied funds will not be considered Vehicle Credits but will be
reviewed and reconciled monthly by Lender.

 

(b)           Interest shall accrue
on the unpaid balance of the principal amount of the Loan and shall be paid
monthly in arrears on the 20th of each month. Interest shall continue to accrue
and be billed monthly on all outstanding amounts related to each Eligible
Vehicle, even in connection with Eligible Vehicles that have been taken out of
service and returned to DCMC. Lender shall provide to Borrower by telecopy,
e-mail, or otherwise, by the tenth (10th)
of each month an invoice showing both the principal and interest payments due
that month but failure to provide such invoice shall not relieve Borrower of
its obligation to make payments of regularly scheduled interest and principal
payments (excluding the balloon payments).

 

(c)           The first repayment
installment of principal and interest under each Advance shall be due on the
20th day of the month following the month in which the Advance is made.
Subsequent monthly payments of principal and interest shall be due and payable
in accordance with this Agreement on the like day of each succeeding month
thereafter until paid in full.

 

(d)           Lender shall record in
its books and records the date and amount of each Advance made by it to
Borrower under the Note and the date and amount of each payment of principal
and/or interest made by Borrower with respect thereto; provided, however, that
the obligation of Borrower to repay each Advance and the Loan made by Lender to
Borrower under the Note shall be absolute and unconditional, notwithstanding
any failure of Lender to make any such recordation or any mistake by Lender in
connection with any such recordation. The books and records of Lender showing
the account between Lender and Borrower shall be admissible in evidence in any
action or proceeding and shall constitute prima facie proof of the items the
items therein set forth.

 

3

 

(e)           Lender will provide to
Borrower a monthly statement of the Advances, payments and other transactions
pursuant to this Agreement. Such statement shall be deemed correct, accurate,
and binding on Borrower (except for errors discovered by Lender), unless
Borrower notifies the Lender in writing to the contrary within forty-five (45)
days after such statement is rendered. In the event a timely written notice of
objections is given by Borrower, the items to which exception is made will be
considered to be disputed by Borrower.

 

2.02         Procedure for Advances.
(a)  Subject to the terms and conditions of this Agreement, Lender will
make Advances on the Loan at any time and from time to time during the Initial
Revolving Credit Period (and the First Extended Revolving Credit Period and
Second Extended Revolving Credit Period, as applicable, if the Initial Maturity
Date of the Loan is extended pursuant to the terms of Section 2.01) upon timely
prior written notice signed by an Authorized Individual (“Borrowing Notice”)
from Borrower to Lender (i) specifying (A) the desired amount of the
Advance; and (B) the date on which the proceeds of such Advance are to be
made available to Borrower, which must be a Business Day; and (ii) if the
aggregate total of the Down Payments with respect to all Eligible Vehicles then
financed hereunder is less than $20 million, stating the balance in the
Capitalization Account. Such Borrowing Notice shall be in the form of the
notice attached hereto as Exhibit B and shall be accompanied by
invoices, the amortization schedules determined in accordance with Section
2.01(a) and 2.01(c) for the Advance for each Eligible Vehicle financed with
such Advance and other supporting documentation reasonably acceptable to Lender
evidencing Borrower’s intended use of such funds for the purposes set forth in Section 2.08 of this Agreement.
Each Borrowing Notice must be received by Lender no later than Noon (Eastern
time) five Business Days prior to the date on which the Advance is to be made.
Subject to the terms and conditions of this Agreement, provided that Lender has
received the Borrowing Notice, Lender shall (unless Lender determines in its
sole discretion that any applicable condition specified herein has not been
satisfied) pay to Borrower the proceeds of such Advance by crediting the amount
of the Advance to the seller of the Eligible Vehicle financed with such Advance
not later than 3:00 p.m. (Eastern Time) on the Business Day specified in said
Borrowing Notice.

 

(b)           Borrower hereby
irrevocably authorizes Lender to rely on telephonic, telecopy, e-mail or
written instructions of any individual identifying himself or herself as one of
the Authorized Individuals listed on Schedule
2.02(b) (or any other individual from time to time authorized to
act on behalf of Borrower pursuant to a resolution adopted by the Board of
Directors of Borrower and certified by the Secretary of Borrower and delivered
to Lender) with respect to any request to make an Advance or a repayment
hereunder, and on any signature which Lender believes to be genuine, and
Borrower shall be bound thereby in the same manner as if such person were
actually authorized or such signature were genuine.

 

(c)           Each Borrowing Notice
shall become irrevocable on the second Business Day prior to the date the
Advance is required to be made.

 

2.03         Interest Rates and
Late Fee. (a) Subject to the provisions of Section 2.07 of this Agreement,
the outstanding principal balance of the Note shall bear interest at a rate per
annum equal to the Interest Rate, provided, however, that after maturity of the
Note, whether by acceleration or otherwise, or upon the occurrence and during
the continuance of an Event of Default, the Note shall bear interest at a rate
per annum rate equal to the Default Rate. 

 

4

 

The Interest Rate shall be
adjustable by Lender on the 1st and 16th day of each
calendar month to reflect the Prime Rate in effect on such dates. Lender shall
have no obligation to provide to Borrower any notice of any change in the Prime
Rate.

 

(b)           In the event that any
installment of principal and/or interest hereunder is not paid when due,
Borrower shall pay to Lender a late fee equal to two percent (2%) of the unpaid
installment or the maximum amount permitted by law, whichever is less,
provided, however, that no late fee shall be charged or paid on the first two
late payments of principal and/or interest in any consecutive twelve month
period.

 

(c)           Interest on the Note
and all of the other Borrower’s Obligations shall be computed on an actual day,
360-day year basis.

 

2.04         Voluntary Prepayment
of the Note. (a) Borrower shall
have the right to prepay the outstanding principal balance of the Note, in
whole or in part, at any time upon (i) fifteen (15) days’ prior
irrevocable written notice to Lender, if the amount of the prepayment is equal
to or greater than ten percent (10%) of the outstanding principal balance of
the Note or (ii) five (5) days’ prior irrevocable written notice to Lender
if the amount of the prepayment is less than ten percent (10%) of the
outstanding principal balance of the Note, provided, however, that in all cases
Borrower shall also pay to the order of Lender all accrued and unpaid interest
on the principal amount of the Note being paid to and including the date of
prepayment and any and all accrued and unpaid fees and other amounts due and
owing hereunder, under the Note and/or under or pursuant to any of the other
Transaction Documents. With respect to all prepayments other than Mandatory
Prepayments, Borrower may, at its option, specify in writing the Advances
against which such prepayments shall be applied. All prepayments shall be
applied to the installments of an Advance in the inverse order of maturity and
if Borrower fails to specify in writing such Advance at the time such
prepayment is made, Lender may apply such prepayment to the Advance(s) as
Lender shall determine in its sole discretion. No such prepayment or any
provision hereunder or under any other Transaction Document shall in any way be
deemed to alter Borrower’s obligation to pay the amount due on the following
monthly due date.

 

(b)           Mandatory
Prepayments. Notwithstanding the repayment provisions of this Agreement or
any other Transaction Document, Borrower shall pay to Lender, no later than the
20th day of the calendar month immediately
following the occurrence of any event or condition described in (i)-(iii)
herein, the unpaid principal amount of each Advance together with accrued
interest on the Advance to the date of payment with respect to any Eligible
Vehicle that is (i) removed from service of Borrower or Lessee for any
reason (except Eligible Vehicle(s) which are returned to DCMC under the
Program) including, without limitation, the sale, conversion, destruction or
confiscation thereof or a “casualty” or event resulting in a “termination
payment” (each as defined in the Master Lease), or (ii) the subject of
litigation or other dispute so as to impair the value of the Eligible Vehicle
as security for the Advance or a “casualty” or event resulting in a “termination
payment” both as defined in the Master Lease, and/or (iii) in
contravention of this Agreement subject to a lease or any other arrangement,
other than a Permitted Lease, for the use of the Eligible Vehicle for more than
thirty (30) days (each a “Mandatory Prepayment”);

 

5

 

2.05         Payments not on a
Business Day. Whenever any payment of principal, interest or any other
amount due under this Agreement, the Note or any other Transaction Document
shall become due on a day which is not a Business Day, such principal, interest
and other amount shall be payable on the next succeeding Business Day and
interest shall continue to accrue thereon at the rate specified herein during
such extension until payment is received.

 

2.06         Means of Payment.
Payments of the principal, interest, fees and all other amounts due hereunder
or under any of the Transaction Documents shall be made to Lender by wire
transfer not later than 2:00 p.m. (Eastern time) on the date when due and
payable in lawful currency of the United States in Federal or other immediately
available funds to the Payment Account described in Schedule 2.06. Notwithstanding the
foregoing, all payments received by Lender after 2:00 p.m. (Eastern time) shall
be deemed to have been received by the Lender on the following Business Day.

 

2.07         Maximum Interest.
(a) Notwithstanding any provision
contained in this Agreement or the Note to the contrary, if at any time or
times the rate of interest payable hereunder or under the Note or any other
Transaction Document (the “Stated Rate”) would exceed the highest rate
permitted to be charged under any applicable law (the “Maximum Lawful Rate”),
then for so long as the Maximum Lawful Rate would be so exceeded, the rate of
interest payable shall be equal to the Maximum Lawful Rate; provided, that if
at any time thereafter the Stated Rate is less than the Maximum Lawful Rate,
Borrower shall, to the extent permitted by law, continue to pay interest at the
Maximum Lawful Rate until such time as the total interest received by Lender is
equal to the total interest which Lender would have received had the Stated
Rate (but for the operation of this provision) been the interest rate payable
for the period of time that the Stated Rate exceeded the Maximum Lawful Rate.
Thereafter, the interest rate payable shall be the Stated Rate unless and until
the Stated Rate again would exceed the Maximum Lawful Rate, in which event this
provision would again apply.

 

(b)           In
computing interest payable with reference to the Maximum Lawful Rate, such
interest shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is made.

 

(c)           If
Lender receives interest hereunder in excess of the Maximum Lawful Rate, such
excess amount shall be applied to the reduction of the principal balance of the
Note or to other amounts (other than interest) payable hereunder or under the
Note or any other Transaction Document and if no principal or other Borrower’s
Obligations remain outstanding, the balance, if any, shall be refunded to
Borrower.

 

2.08         Use of Proceeds.
Borrower covenants and agrees that (i) the proceeds of the Loan will be
used solely to finance or, solely as provided herein with respect to the
Refinanced Eligible Vehicles, to refinance Borrower’s purchase of Eligible
Vehicles in accordance with the terms and conditions of this Agreement; and
(ii) no part of the proceeds of the Loan will be used in violation of any
applicable law, rule or regulation.

 

6

 

SECTION 3. PRECONDITIONS TO LOAN

 

3.01         Initial Advance.
Notwithstanding any provision contained in this Agreement or any of the other
Transaction Documents to the contrary, Lender shall have no obligation to make
the initial Advance (the “Initial Advance”) of the Loan unless Lender shall
have first received each of the following each in form and substance
satisfactory to Lender in its sole discretion:

 

(a)           this
Agreement, duly executed by Borrower;

 

(b)           the
Note, duly executed by Borrower;

 

(c)           the
Security Agreement in the form attached hereto as Exhibit C, and
all UCC financing statements and evidence of the proper filing of UCC-1
financing statements perfecting first priority security interests in favor of
Lender in all of the Collateral that can be perfected by filing of financing
statements;

 

(d)           the
only executed version of the Master Motor Vehicle Lease and Servicing Agreement
marked “Original” (including, all schedules, exhibits and other attachments
thereto, the “Master Lease”) dated as of the date hereof by and between
Borrower, as lessor and Lessee as lessee with a chattel paper legend required
under Section 5.01(u)
hereof which shall be shall be certified as true, accurate and complete in all
respects by the President of each of Borrower and Lessee;

 

(e)           Blocked
Account Agreement relating to the cash Capital Contribution duly executed by
Borrower and the depository bank;

 

(f)            evidence
of the Cerberus Loan;

 

(g)           evidence
of Borrower’s credit facilities sufficient to support the purchase of all
vehicles other than Eligible Vehicles that are required to operate Borrower’s
fleet and the business of Borrower and Lessee in accordance with the business
and fleet plans approved by Lender;

 

(h)           the
Collateral Assignment of Master Motor Vehicle Lease and Servicing Agreement in
the form attached hereto as Exhibit E, duly executed by Borrower
and Lessee;

 

(i)            the
Acknowledgement and Consent to the Collateral Assignment of Master Motor
Vehicle Lease and Servicing Agreement attached hereto as Exhibit H, duly
executed by Lessee; and

 

(j)            a
copy of all documents providing for use of Eligible Vehicles (other than daily
rental agreements) by any Person other than Lessee, which shall be certified as
true, accurate and complete in all respects by the President of each of
Borrower and Lessee;

 

(k)           a
copy of the resolutions of each of the Boards of Directors of each of Borrower
and Lessee, duly adopted, which authorize the execution, delivery and 

 

7

 

performance of this Agreement,
the Note and all of the other Transaction Documents, certified by the
respective Presidents and Secretaries of Borrower and Lessee;

 

(l)            a
copy of the Articles of Incorporation of each of Borrower and Lessee, including
in each case any amendments thereto, certified by the Secretary of State of the
State of Delaware;

 

(m)          a
copy of the By-Laws of each of Borrower and Lessee, including in each case any
amendments thereto, certified by the respective Secretaries of Borrower and
Lessee;

 

(n)           an
incumbency certificate, executed by the respective Secretaries of Borrower and
Lessee, which shall identify by name and title and bear the signatures of all
of the officers of each of Borrower and Lessee executing any of the Transaction
Documents;

 

(o)           certificates
of corporate good standing of each of Borrower and Lessee, issued by the
Secretary of State of the State of Delaware;

 

(p)           an
opinion or opinions of Schulte Roth & Zabel LLP and/or Weil, Gotshal
& Manges LLP, counsel to Borrower and Lessee, in the form attached hereto
as Exhibit G;

 

(q)           certificate(s)
of insurance (with loss payable endorsements) as required by this Agreement;

 

(r)            evidence
in the form of a receipt of deposit to a financial institution reasonably
satisfactory to Lender of the payment of Capital Contribution to Borrower;

 

(s)           the
Order (the “Order”) pursuant to Section 105(a), 363, and 365 of the Bankruptcy
Code and Rules 2002, 6004, 6006, and 9014 of the Federal Rules of Bankruptcy
Procedure dated August 21, 2003, in the case of In re ANC Rental Corporation, et al. (Case No. 01-011200
(MFW) in the United States Bankruptcy Court for the District of Delaware which
approved the sale of certain assets of ANC and certain other companies to Car
Acquisition Company LLC and permits Borrower to enter into the Loan and the
other Transaction Documents and conduct its business in substantial compliance
with its business plan shall not have been stayed, withdrawn, or amended in any
material respect;

 

(t)            the
information regarding the organizational and legal structure of Borrower set
forth in Schedule 4.29 shall continue to be true, correct, and complete
and the Purchase Agreement providing for the sale of certain assets of ANC to
Borrower shall not have been withdrawn, terminated, cancelled, or amended in
any material respect;

 

(u)           evidence
in the form of a certificate of an officer of Borrower certifying to the
absence of any order or litigation which, in the judgment of the Lender, would
prohibit the making of the Loan or any Advance and absence of litigation which
could reasonably be expected to have a Material Adverse Effect on Borrower;

 

8

 

(v)           a
copy of the resolutions of the Board of Directors of Lessee, duly adopted,
which authorize the Capital Contribution to Borrower and pursuant to this
Agreement and the other Transaction Documents, Lessee’s capitalization of
Borrower and Borrower’s use of the capitalization proceeds, certified by the
Secretary of Lessee;

 

(w)          [Reserved]

 

(x)            [Reserved]

 

(y)           the
Assignment of Proceeds of DaimlerChrysler Motors Corporation Fleet/Daily Rental
Purchase Programs (solely with respect to Eligible Vehicles financed by
Lender), duly executed by Borrower and acknowledged by DCMC;

 

(z)            search
results of UCC filings, judgment liens, tax liens and pending litigation with
respect to Borrower and Lessee showing that Lender has a first priority
security interest in all of the Collateral and that there are no other Liens
affecting any of the Collateral;

 

(aa)         UCC
Financing Statements naming Borrower and Lessee as debtor, filed with the
Delaware Secretary of State;

 

(bb)         UCC
release or termination statements and other documents as may be requested by
Lender evidencing the release of all Liens and/or security interests (other
than those granted by Borrower in favor of Lender) covering the Collateral;

 

(cc)         current
financial statements and pro-forma financial statements of Borrower and Lessee
as Lender may require and all such information as Lender may reasonably request
to confirm the tax, legal and business assumptions made in such financial
statements and pro-forma financial statements;

 

(dd)         such
evidence as Lender may require prior to funding that the transactions
contemplated by this Agreement and the other Transaction Documents do not
violate any law, rule or regulation or otherwise result in Lender’s failing to
receive any of the benefits contemplated under this Agreement or any of the
other Transaction Documents;

 

(ee)         payment
of Lender’s costs and expenses as provided for in Section 8.02; and

 

(ff)           such
other approvals, agreements, documents, instruments and certificates as Lender
may request.

 

Any one or more of the conditions set forth above which have not been
satisfied by Borrower on or prior to Lender’s funding of the Initial Advance of
the Loan shall not be deemed permanently waived unless Lender shall waive the
same in a writing which expressly states that the waiver is permanent, and, in
all cases in which the waiver is not stated to be permanent, Lender may at any
time subsequent thereto insist upon compliance and satisfaction of any such
condition as a condition to any further Advance of the Loan.

 

9

 

3.02         All Advances.
Notwithstanding any provision contained in this Agreement or any of the other
Transaction Documents to the contrary, Lender shall have no obligation to make
any Advance of the Loan hereunder unless Lender shall have received, or
Borrower shall have complied with, as the case may be, each of the following,
each in form and substance satisfactory to Lender in its sole discretion:

 

(a)           a
Borrowing Notice for such Advance as required by Section 2.02, together with the invoice(s) and/or
other supporting documentation acceptable to Lender evidencing Borrower’s
intended use of such funds for the purposes set forth in Section 2.08;

 

(b)           the
Security Agreement in the form attached hereto as Exhibit I, and
all UCC financing statements and evidence of the proper filing of UCC-1
financing statements perfecting first priority security interests in all of the
Collateral that can be perfected by filing of financing statements;

 

(c)           the
schedule to the Master Lease evidencing that the Eligible Vehicles for which
the Advance shall have been requested have been leased to Lessee pursuant to
the Master Lease and in accordance with this Agreement;

 

(d)           Borrower
shall have full and clear title to each Eligible Vehicle free and clear of all
Liens, except for Permitted Liens with respect to the Eligible Vehicles for
which the Advance shall have been requested, subject only to payment of the
Adjusted Purchase Price;

 

(e)           the
Advance in respect of an Eligible Vehicle shall not exceed 90% of the Adjusted
Purchase Price;

 

(f)            payment
by Borrower to Lender of the Down Payment for each Eligible Vehicle being
financed with such Advance;

 

(g)           all
of the representations and warranties of Borrower and Lessee contained in this
Agreement and in the other Transaction Documents shall be true and correct in
all material respects on and as of the date of such Advance as if made on and
as of the date of such Advance, except to the extent that any such
representation or warranty expressly relates solely to an earlier date (in
which case any such representation or warranty shall be true and correct in all
material respects on and as if such earlier date);

 

(h)           no
Material Adverse Effect shall have occurred since the date of this Agreement
and be continuing, provided, however, that the financial losses projected to
occur during the first six-month period after the date of this Agreement
disclosed in writing by Borrower to Lender prior to the date of this Agreement
shall not be considered a Material Adverse Effect;

 

(i)            on
the date of and immediately after giving effect to such Advance, no Default or
Event of Default shall have occurred and be continuing;

 

10

 

(j)            the
Order shall not have been stayed, withdrawn, or amended in any material
respect;

 

(k)           the
Purchase Agreement shall not have been withdrawn, terminated, cancelled or
amended in any material respect; and

 

(l)            payment
of Lender’s costs and expenses as provided for in Section 8.02.

 

Each request for an Advance on the Loan by Borrower hereunder shall be
deemed to be a representation and warranty by Borrower on the date of such
Advance as to the facts specified in clauses (b) – (k) inclusive, of this Section 3.02. Any one or more of
the conditions set forth above which have not been satisfied by Borrower on or
prior to the date of the Advance of the Loan shall not be deemed permanently
waived unless Lender shall waive the same in a writing which expressly states
that the waiver is permanent, and, in all cases in which the waiver is not
stated to be permanent, Lender may at any time subsequent thereto, insist upon
compliance and satisfaction of any such condition as a condition to any further
Advance of the Loan.

 

3.03         Advances for
Refinanced Eligible Vehicles. In addition to the requirements set forth in
Section 3.01 and 3.02, Lender shall have no obligation to make any Advance to
refinance the Refinancing Amount of Refinanced Eligible Vehicles unless Lender
shall have first received and Borrower shall have complied with each of the
following each in a form and substance satisfactory to Lender in its sole
discretion.

 

(a)           (i)            Borrower shall have
full and clear title to each such Refinanced Eligible Vehicle upon the payment
of the amount specified in the related Payoff Letter (as defined below) to or
as directed by Citibank (as defined in Section 3.03(c) below); and

 

(ii)           the
amount of the Advance shall not exceed the Refinancing Amount for each
Refinanced Eligible Vehicle;

 

(b)           the
certificate of title for each Refinanced Eligible Vehicle shall show as of the
repayment date (i) as first and only lienholder “Citibank, N.A., as Agent”
or substantially similar language and (ii) as owner, either National Car
Rental Financing Limited Partnership (“NFLP”) or Alamo Financing L.P. (“AFLP”)
;

 

(c)           the
vehicle title and lienholder nominee agreement, in the form attached hereto as Exhibit
J, (the “Vehicle Title and Lienholder Nominee Agreement”) duly executed by
Borrower, Lessee, Lender, NFLP, AFLP and Citibank, N.A., a national banking
association as agent (“Citibank”) under that certain Sixth Amended and Restated
Master Collateral Agency Agreement, dated as of October 14, 2003  by and among Citibank, Vanguard, NFLP, AFLP,
and the Financing Sources (as defined therein) and Beneficiaries (as defined
therein) party thereto from time to time.

 

(d)           the
payoff letter, in the form attached hereto as Exhibit K, duly executed
by Citibank (the “Payoff Letter”);

 

11

 

(e)           payment
by Borrower to Lender of the Down Payment with respect to each Refinanced
Eligible Vehicle;

 

(f)            opinion
or opinions of Schulte Roth & Zabel LLP, counsel to Borrower and Lessee, in
a form reasonably acceptable to Lender; and

 

(g)           UCC
Financing Statements naming the Person named as owner on any certificate of
title for the Refinanced Eligible Vehicles being financed with such Advance,
filed in the applicable filing offices.

 

Each request for an Advance on the Loan to refinance the Refinancing
Amount for Refinanced Eligible Vehicles by Borrower hereunder shall be deemed
to be a representation and warranty by Borrower on the date of such Advance as
to the facts specified in clauses (a) and (b) of this Section 3.03. Any one or more of the
conditions set forth above which have not been satisfied by Borrower on or
prior to the date of the Advance to refinance Refinanced Eligible Vehicles
shall not be deemed permanently waived unless Lender shall waive the same in
writing which expressly states that waiver is permanent, and in all cases in
which the waiver is not stated to be permanent, Lender may at any time
subsequent thereto insist upon compliance and satisfaction of any such
condition as a condition to any further Advance of the Loan.

 

SECTION 4. REPRESENTATIONS AND WARRANTIES

 

Borrower hereby represents and warrants to Lender that:

 

4.01         Corporate Existence
and Power. Borrower:  (a) is
duly incorporated, validly existing and in good standing under the laws of
Delaware; (b) has all requisite corporate powers and all governmental and
regulatory licenses, authorizations, consents and approvals required to carry
on its business as now conducted; and (c) is qualified to transact
business as a foreign corporation in, and is in good standing under the laws
of, all states in which it is required by applicable law to maintain such
qualification and good standing except for those states in which the failure to
qualify or maintain good standing could not reasonably be expected to have a
Material Adverse Effect.

 

4.02         Ownership of Borrower.
All of the issued and outstanding capital stock of Borrower is owned
beneficially and of record by Lessee and there are no outstanding options or
warrants with respect to any of such capital stock. All of the issued and
outstanding capital stock of Borrower is duly authorized, validly issued, fully
paid and nonassessable.

 

4.03         Subsidiaries.
Borrower has no Subsidiaries other than as identified on Schedule 4.03 attached hereto, as the
same may from time to time be amended, modified or supplemented as provided
herein. Schedule 4.03
attached hereto correctly sets forth, for each Subsidiary, the number of shares
of each class of common and preferred stock authorized for such Subsidiary, the
number of outstanding and the percentage of the outstanding shares of each such
class owned, directly or indirectly, by Borrower or one or more of its
Subsidiaries. All of the issued and outstanding capital stock of each
Subsidiary of Borrower is duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed on Schedule
4.03 attached hereto, neither Borrower nor any of its
Subsidiaries, individually or collectively, owns or holds, directly or
indirectly, any capital stock or equity security of, or any equity interest in,
any 

 

12

 

corporation or business other
than Borrower’s Subsidiaries. Borrower may at any time amend, modify or
supplement Schedule 4.03 by
notifying Lender in writing of any changes thereto, including any formation,
acquisition, merger or liquidation of Subsidiaries or any change in the
capitalization of any Subsidiary, in each case, in accordance with the terms of
this Agreement, and thereby the representations and warranties contained in
this Section 4.03
shall be amended accordingly so long as such amendment, modification or
supplement is made within ten (10) days after the occurrence of any such
changes in the facts stated therein and that such changes reflect transactions
that are permitted.

 

4.04         Corporate
Authorization. The execution, delivery and performance by Borrower of this
Agreement, the Note and the other Transaction Documents are within the
corporate powers of Borrower and have been duly authorized by all necessary
corporate action.

 

4.05         Binding Effect.
This Agreement, the Note and the other Transaction Documents have been duly
executed and delivered by Borrower and constitute the legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws from time to time in effect affecting
creditors’ rights and remedies in general and by general principles of equity.

 

4.06         Financial Statements.
Borrower has furnished Lender with the following financial statements:
(1) unaudited condensed consolidated pro forma balance sheets of Lessee as
of December 31, 2002, and June 30, 2003, and for the twelve months ended
December 31, 2002, the twelve months ended June 30, 2003, and the six months
ended June 30, 2003, and (2) unaudited pro forma balance sheet of Borrower
as of the Closing Date. Borrower further represents and warrants to Lender
that: (1) said pro forma balance sheets and their accompanying notes give
effect to the Acquisition and the other transactions and events described in
the notes thereto and contain adjustments that are based on preliminary
estimates, available information and assumptions that Borrower believes are
reasonable; (2) from August 31, 2003, through the date of this Agreement,
there has been no Material Adverse Effect with respect to Borrower or Lessee;
and (3) as of the date of this Agreement, neither Borrower nor Lessee has
any material direct or contingent liabilities which are not disclosed on said
financial statements or the notes thereto (to the extent such disclosure is
required by GAAP).

 

4.07         Litigation. Except
as disclosed on Schedule 4.07
attached hereto, there is no action, suit, proceeding or investigation pending
or, to the knowledge of Borrower threatened against or affecting Borrower or
any Subsidiary or any of the Collateral before any court, arbitrator or any
governmental, regulatory or administrative body, agency or official which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect. Neither Borrower nor any Subsidiary is in default with respect to any
order, writ, injunction, decision or decree of any court, arbitrator or any
governmental, regulatory or administrative body, agency or official, a default
under which could reasonably be expected to have a Material Adverse Effect.
Except as disclosed on Schedule 4.07, there are no outstanding judgments
against Borrower or any Subsidiary.

 

4.08         Pension and Welfare
Plans. Each Pension Plan and Welfare Plan complies with ERISA and all other
applicable statutes and governmental rules and regulations; 

 

13

 

no Reportable Event has
occurred and is continuing with respect to any Pension Plan; neither Borrower
nor any Subsidiary nor any ERISA Affiliate has withdrawn from any
Multi-Employer Plan in a “complete withdrawal” or a “partial withdrawal” as
defined in Sections 4203 or 4205 of ERISA, respectively; neither Borrower nor
any Subsidiary nor any ERISA Affiliate has entered into an agreement pursuant
to Section 4204 of ERISA; neither Borrower nor any Subsidiary nor any
ERISA Affiliate has any withdrawal liability with respect to a Multi-Employer
Plan; no steps have been instituted by Borrower or any Subsidiary or any ERISA
Affiliate to terminate any Pension Plan; no condition exists or event or
transaction has occurred in connection with any Pension Plan, Multi-Employer
Plan or Welfare Plan which could result in the incurrence by Borrower or any
Subsidiary or any ERISA Affiliate of any liability, fine or penalty; and
neither Borrower nor any Subsidiary nor any ERISA Affiliate is a “contributing
sponsor” as defined in Section 4001(a)(13) of ERISA of a “single-employer
plan” as defined in Section 4001(a)(15) of ERISA which has two or more
contributing sponsors at least two of whom are not under common control.

 

4.09         Tax Returns and
Payment. Borrower has filed all Federal, state, local and other tax returns
which are required to be filed and has paid all taxes which have become due pursuant
to such returns and all other taxes, assessments, fees and other governmental
charges including, without limitation, any documentary or other tax imposed by
any state, upon Borrower and each Subsidiary and upon their respective
Properties, assets, income and franchises which have become due and payable by
Borrower or its Subsidiaries, except those wherein the amount, applicability or
validity are being contested by Borrower or such Subsidiary by appropriate
proceedings being diligently conducted in good faith and in respect of which
adequate reserves in accordance with GAAP have been established. All material
tax liabilities of Borrower and its Subsidiaries were adequately provided for
as of the date hereof, and are now so provided for on the books of Borrower and
each Subsidiary. There is no proposed, asserted or assessed tax deficiency
against Borrower or any Subsidiary, if adversely determined, could reasonably
be expected to have a Material Adverse Effect.

 

4.10         Compliance With Other
Instruments; None Burdensome. Neither Borrower nor any Subsidiary is a
party to any contract or agreement or subject to any charter or other corporate
restriction which could reasonably be expected to have a Material Adverse
Effect and which is not disclosed on Borrower’s financial statements heretofore
submitted to Lender. None of the execution and delivery by Borrower of the
Transaction Documents, the consummation of the transactions therein
contemplated or the compliance with the provisions thereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
Borrower or any Subsidiary, or any of the provisions of Borrower’s Certificate
or Articles of Incorporation or By-Laws or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which Borrower or
any Subsidiary is a party or subject, or by which Borrower or any Subsidiary or
any Property of Borrower or any Subsidiary is bound, or conflict with or
constitute a default thereunder or result in the creation or imposition of any
Lien pursuant to the terms of any such indenture, agreement, document,
instrument or undertaking (other than in favor of Lender pursuant to the
Transaction Documents). No order, consent, approval, permit, license, authorization
or validation of, or filing, recording or registration with, or exemption by,
any governmental, regulatory, administrative or public body or authority, or
any subdivision thereof, or any other Person is required to authorize, or is
required in connection with, the execution, delivery or performance of, or the
legality, validity, 

 

14

 

binding effect or
enforceability of, any of the Transaction Documents other than the filing of
Uniform Commercial Code financing statements as described in Sections 3.01(aa)
and 3.03(h).

 

4.11         Labor Matters.
Borrower is not a party to any labor contract. Neither Borrower nor any
Subsidiary is a party to any pending or threatened labor dispute. There are no
pending or threatened strikes or walkouts relating to any labor contract to
which Borrower or any Subsidiary is subject. Hours worked and payments made to
the employees of Borrower, Lessee or any Subsidiary have not been in violation
of the Fair Labor Standards Act or any other applicable law dealing with such
matters. All payments due from Borrower or any Subsidiary, or for which any
claim may be made against any of them, in respect of wages, employee health and
welfare insurance and/or other benefits have been paid or accrued as a
liability on their respective books. The consummation of the transactions
contemplated by the Transaction Documents will not give rise to a right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which Borrower or any Subsidiary is a party
or by which Borrower or any Subsidiary is bound.

 

4.12         Title to Property; No
Liens, Claims or Encumbrances. Borrower is and will be the sole and
absolute owner of all Eligible Vehicles and other Collateral, free and clear of
all Liens other than the Liens listed on Schedule
4.12 attached hereto and will maintain good and marketable title
to the Collateral, free of all liens, claims, encumbrances or rights of others
(other than Permitted Liens). There is no financing statement (or similar
statement, agreement, pledge, mortgage, notice or registration), lien
(including and federal or state tax lien), suit (including any action,
proceeding or other litigation pending, or to Borrower’s knowledge, threatened)
or judgment (including any award, injunction or order) filed with, registered,
indexed or recorded in any public office, court, arbitration panel,
administrative agency or regulation authority (or intended so to be) directly
or indirectly, identifying or encumbering or covering or involving the
Collateral which could reasonably be expected to have a Material Adverse
Effect. Borrower shall take all actions necessary to terminate any such
financing statement or similar notice other than those relating to a Permitted
Lien, if any.

 

4.13         Regulation U.
Borrower is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of The Board of Governors of
the Federal Reserve System, as amended) and no part of the proceeds of any
Advance on the Loan will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately (i) to purchase or carry margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock, or to refund or repay indebtedness originally incurred for such
purpose or (ii) for any purpose which entails a violation of, or which is
inconsistent with, the provisions of any of the Regulations of The Board of
Governors of the Federal Reserve System, including Regulations G, U, T or X
thereof, as amended. If requested by Lender, Borrower shall furnish to Lender a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.

 

4.14         Multi-Employer Pension
Plan Amendments Act of 1980. Borrower and each Subsidiary is in compliance
with the Multi-Employer Pension Plan Amendments Act of 1980, as amended (“MEPPAA”),
and neither Borrower nor any Subsidiary has any liability for pension
contributions pursuant to MEPPAA.

 

15

 

4.15         Investment Company Act
of 1940; Public Utility Holding Company Act of 1935. Borrower is not an “investment
company” as that term is defined in, and is not otherwise subject to regulation
under, the Investment Company Act of 1940, as amended. Borrower is not a “holding
company” as that term is defined in, and is not otherwise subject to regulation
under, the Public Utility Holding Company Act of 1935, as amended.

 

4.16         Patents, Licenses,
Trademarks, Etc. Except as disclosed on Schedule 4.16 attached hereto, neither Borrower nor any
Subsidiary has any patents, patent applications, patent rights, trademarks,
trademark applications, trademark rights, copyrights, licenses or other
intellectual property which are material to the business of Borrower or any
Subsidiary. Borrower and each Subsidiary possesses all necessary patents,
patent rights, licenses, trademarks, trademark rights, trade names, trade name
rights, copyrights and other intellectual property to conduct its business
without conflict with any patent, patent right, license, trademark, trademark
right, trade name, copyright or other intellectual property of any other Person.

 

4.17         Solvency. Borrower
and each Subsidiary is Solvent and will continue to be Solvent following the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents.

 

4.18         Bankruptcy.
(a) Neither Borrower nor any Subsidiary has:  (i) applied for or consented to the
appointment of, or the taking of possession by, a trustee, receiver, custodian,
liquidator or the like of itself or of all or a substantial portion of its
Property or assets, (ii) admitted in writing its inability to pay (and is
not generally unable to pay) its debts as such debts become due,
(iii) made a general assignment for the benefit of creditors,
(iv) commenced a voluntary case, or filed a petition for relief under, the
Bankruptcy Code, (v) filed a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition of debts or (vi) taken any material steps to effectuate any of
the foregoing; and

 

(b)           No petition or
complaint has been filed against Borrower or any Subsidiary in an involuntary
case under the Bankruptcy Code which has not been dismissed or withdrawn.

 

4.19         No Default. No
Default or Event of Default has occurred and is continuing. There is no
existing default or event of default under or with respect to any indenture,
contract, agreement, lease or other instrument to which Borrower or any
Subsidiary is a party or by which any Property of Borrower or any Subsidiary is
bound or affected, a default under which could reasonably be expected to have a
Material Adverse Effect. Borrower and each Subsidiary has and is in full
compliance with and in good standing with respect to all governmental permits,
licenses, certificates, consents and franchises necessary to continue to
conduct its business as previously conducted by it and to own or lease and
operate its Properties as now owned or leased by it except where such failure
could not reasonably be expected to have a Material Adverse Effect and none of
said permits, certificates, consents or franchises contain any term, provision,
condition or limitation more burdensome than such as are generally applicable
to Persons engaged in the same or similar business as Borrower or such
Subsidiary, as the case may be except those which could not reasonably be
expected to have a Material Adverse Effect. Neither Borrower nor any Subsidiary
is in violation of any applicable statute, law, rule, 

 

16

 

regulation or ordinance of the
United States of America, of any state, city, town, municipality, county or of
any other jurisdiction, or of any agency thereof, a violation of which could
reasonably be expected to have a Material Adverse Effect.

 

4.20         Employment and Other
Agreements. Except for the employment agreements and the other agreements
described in Schedule 4.20
attached hereto, true, complete and accurate copies of which have been
delivered to Lender, there are no (a) employment agreements covering the
management of Borrower or any Subsidiary, (b) collective bargaining
agreements or other labor agreements covering any employees of Borrower or any
Subsidiary or (c) agreements for managerial, consulting or similar
services to which Borrower or any Subsidiary is a party or by which Borrower or
any Subsidiary is bound.

 

4.21         Environmental, Safety
and Health Matters. Except as described in Schedule 4.21 attached hereto:

 

(a)           all
Properties and facilities owned, leased and/or operated by Borrower or any
Subsidiary and the operations conducted therein or thereon have been, are and
at all times will continue to be in compliance with all applicable
Environmental Laws and Occupational Safety and Health Laws, and none of such
Properties or facilities are subject to any existing, pending or threatened
Environmental Claim, action, remedial obligation, suit, investigation, inquiry
or proceeding by any governmental or regulatory authority or other Person under
any Environmental Laws or Occupational Safety and Health Laws;

 

(b)           all
records, notices, permits, licenses and consents, if any, required to be
obtained, maintained or filed in connection with the operation or use of the
Properties, facilities and/or business of Borrower or any Subsidiary, including
notices, permits, licenses, approvals or consents with respect to past or
present discharge, treatment, storage, transport, disposal or Release of any
Hazardous Substances or solid waste into the environment, have been duly
obtained or filed and are maintained as required by all applicable
Environmental Laws, and Borrower, and each Subsidiary is, and at all times will
continue to be, in compliance therewith;

 

(c)           all
Hazardous Substances and solid waste generated at or on any Properties or
facilities owned, leased and/or operated by Borrower or any Subsidiary has at
all times been, and shall continue to be, transported, treated and disposed of
only by carriers maintaining valid permits under RCRA and other applicable
Environmental Laws, and only at treatment, storage and disposal facilities
maintaining valid permits under such laws, which carriers and facilities, to
the best of Borrower’s knowledge, have been and are operating in compliance
with such Environmental Laws;

 

(d)           Borrower
has taken all steps necessary to determine, and has determined, that no
Hazardous Substances or solid waste have been disposed of or otherwise
Released, and there has been no actual or threatened Release of any Hazardous
Substances on, in, under or about any of the Properties or facilities
heretofore or now owned, leased and/or operated by Borrower or any Subsidiary;

 

17

 

(e)           neither
Borrower nor any Subsidiary has any material contingent or other liability in
connection with any Release, or threat of Release, of any Hazardous Substances
or solid waste into the environment;

 

(f)            the
use which Borrower and any Subsidiary make, or intend to make, of the
Properties and facilities owned, leased and/or operated by Borrower or any
Subsidiary will not result in the violation of any Environmental Laws;

 

(g)           there
is no asbestos (friable or otherwise), and there are no storage tanks on, in,
under or about any of the Properties or facilities owned, leased and/or
operated by Borrower or any Subsidiary;

 

(h)           there
are no polychlorinated biphenyls located on, in or about any of the Properties
or facilities owned, leased, chartered and/or operated by Borrower or any
Subsidiary in the form of electrical transformers, fluorescent light fixtures
with ballasts, cooling oils or any other device or form;

 

(i)            there
is no unsafe or unhealthy condition existing at, in or upon any of the
Properties or facilities owned, leased and/or operated by Borrower or any
Subsidiary; and

 

(j)            Neither
Borrower nor any Subsidiary has any knowledge of, and has received or filed any
notice pertaining to, any violation, alleged violation or concern regarding a
possible violation of any Environmental Laws or any Occupational Safety and
Health Laws by Borrower or any Subsidiary. Neither Borrower nor any Subsidiary
has or will transport on any of its motor vehicles or vessels any cargo
constituting or containing Hazardous Substances.

 

4.22         Government Contracts.
Neither Borrower nor any Subsidiary is a party to or bound by any supply
agreements with the Federal government or any state or local government or any
agency thereof, the termination or cancellation of which could reasonably be
expected to have a Material Adverse Effect.

 

4.23         Purchase and Other
Commitments and Outstanding Bids. No material purchase or other commitment
of Borrower or any Subsidiary is in excess of the normal, ordinary and usual
requirements of its business, or was made at any price in excess of the then
current market price, or contains terms and conditions more onerous that those
usual and customary in the applicable industry. There is no outstanding bid,
sales proposal, contract or unfilled order of Borrower or any Subsidiary which
(i) will, or could if accepted, require Borrower or any Subsidiary to
supply goods or services at a cost to Borrower or any Subsidiary in excess of
the revenues to be received therefor or (ii) quotes prices which do not
include a markup over reasonably estimated costs consistent with past markups
on similar business based on market conditions current at that time.

 

4.24         Investments.
Except as disclosed on Schedule 4.24
attached hereto, neither Borrower nor any Subsidiary has any Investments.

 

18

 

4.25         Disclosure. The
copies of the Order and the Purchase Agreement delivered to Lender by Borrower
are true, accurate, and complete copies (without schedules or attachments).
Neither this Agreement nor any other Transaction Document nor any of the
exhibits, schedules or other attachments hereto or thereto nor any certificate,
information, report (including the report of the due diligence investigation of
ANC by PriceWaterhouseCoopers), statement and financial and other data
(including the full and final business and fleet plans of each of Borrower and
Lessee and the monthly projected cash flows and financial statements therein)
furnished to Lender by or on behalf of Borrower, its Affiliates or their
respective agents or representatives pursuant to this Agreement contains any
untrue or incorrect statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading as of the date provided and as of the date hereof. All financial
projections that have been and are hereafter prepared by or on behalf of
Borrower, its Affiliates or other agents and representatives have been and
shall be prepared in good faith and based on reasonable assumptions. To the
best knowledge of Borrower, there is no fact peculiar to Borrower or any
Subsidiary which presently has a Material Adverse Effect or in the future (so
far as Borrower or any Subsidiary can now reasonably foresee) could reasonably
be expected to have a Material Adverse Effect, which has not heretofore been
disclosed by Borrower to Lender in writing.

 

4.26         Survival of
Representations and Warranties. All agreements, representations and
warranties contained in this Agreement and in the other Transaction Documents
or made in writing by or on behalf of Borrower in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement and the making of the Loan and any and all Advances hereunder
and shall be deemed to have been made again by Borrower to Lender on the date
of each Advance and shall be conclusively presumed to have been relied upon by
Lender regardless of any investigation made or information possessed by Lender.
The representations and warranties set forth herein and in each other
Transaction Document shall be cumulative and in addition to any other
representations and warranties which Borrower shall now or hereafter give, or
cause to be given, to Lender.

 

4.27         Commercial Transaction.
The Loan and Advances are being incurred for commercial purposes and are not a “consumer
transaction” or a “consumer-goods transaction” (both as described and defined
in the UCC and the Federal Truth in Lending Act. Advances will be used only for
commercial purposes and not consumer purposes. All of the Collateral is, has
been or will be used, acquired or held for commercial purposes and does not
constitute “consumer goods” (as described and defined in the UCC);

 

4.28         Agricultural Use. Borrower
shall not use any of the Collateral for, and shall not allow any Person leasing
any Eligible Vehicle on a daily rental basis to use the leased Eligible Vehicle
for any agricultural purposes;

 

4.29         Organizational
Structure. Schedule 4.29
fully and accurately states the organizational and legal structure of Borrower
(including, without limitation, the amount of the Investment (expressed as a
percent) of each of Borrower in each Affiliate and its Affiliates in each other
Affiliate).

 

19

 

4.30         Master Lease. The
Master Lease delivered to Lender in connection with this Agreement constitutes
the only executed version of the Master Lease marked “Original” and each
executed copy of the Master Lease contains the chattel paper legend required by
Section 5.01(u).

 

4.31         One-Way Rental
Documents. Schedule 4.31
describes all documents governing Permitted Franchisee Use of the Eligible
Vehicles as of the date of this Agreement and Borrower has delivered to Lender
a true, correct and complete copy of all such documents.

 

SECTION 5. COVENANTS

 

5.01         Affirmative Covenants.
Borrower hereby covenants and agrees that, so long as this Agreement is in
effect or any of Borrower’s Obligations remain unpaid in full:

 

(a)           Financial
Statements and Other Information. Borrower will, and will cause Lessee to
deliver to Lender:

 

(i)            at
least thirty (30) days prior to the beginning of each Fiscal Year of Lessee,
the Annual Budget for such Fiscal Year of Borrower and Lessee combined;

 

(ii)           as
soon as available and in any event within ninety (90) days after the end of
each Fiscal Year of Lessee: 
(A) consolidated balance sheet of Lessee as of the end of such
Fiscal Year and the related consolidated statements of income, retained
earnings and cash flows for such Fiscal Year, setting forth in each case, in
comparative form, the figures for the previous Fiscal Year, all such financial
statements to be prepared in accordance with GAAP consistently applied and
reported on by and accompanied by the unqualified opinion of the Accountants of
Lessee together with (1) a certificate from each such Accountants to the
effect that, in making the examination necessary for the signing of such annual
audit reports, such Accountants have not become aware of any Default or Event
of Default that has occurred and is continuing, or, if such Accountants have
become aware of any such event, describing it and the steps, if any, being
taken to cure it of (such Accountants, however, shall not be liable to anyone
by reason of their failure to obtain knowledge of any Default or Event of
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards);

 

(iii)          as
soon as available and in any event within thirty (30) days after the end of
each Fiscal Month of each Fiscal Year of Lessee (including the last Fiscal
Month of each Fiscal Year of Lessee), summary consolidated balance sheets of
Lessee as of the end of such Fiscal Month and the related consolidated
statements of income, retained earnings and cash flows for such Fiscal Month;

 

(iv)          as
soon as available and in any event within forty-five (45) days after the end of
each of the first three Fiscal Quarters of each Fiscal Year of Lessee):  (A) consolidated balance sheets of
Lessee as of the end of such 

 

20

 

Fiscal Quarter and the related consolidated statements of income,
retained earnings and cash flows for such Fiscal Quarter and for the portion of
each Fiscal Year of Lessee ended at the end of such Fiscal Quarter, setting
forth in each case in comparative form, the figures for the corresponding
Fiscal Quarter and the corresponding portion of the respective previous Fiscal
Year of Lessee, all in reasonable detail and certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP and consistency by
the respective chief financial officer of Lessee;

 

(v)           simultaneously
with the delivery of each set of financial statements referred to in clauses
(ii), (iii) and (iv) above, a certificate of the chief financial officer of
Lessee in the form attached hereto as Exhibit F accompanied by
supporting financial work sheets where appropriate, (A) stating whether
there exists on the date of such certificate (i) any Default or Event of
Default and, if any Default or Event of Default then exists, setting forth the
details thereof and the action which Borrower or Lessee is taking or proposes
to take with respect thereto (ii) any material variance from the combined
Annual Budget of Lessee and Borrower for such Fiscal Year and
(B) certifying that all of the representations and warranties of each of
Borrower and Lessee contained in this Agreement and the other Transaction
Documents are true and correct in all material respects on and as of the date
of such certificate as if made on and as of the date of such certificate,
except to the extent that any such representation or warranty expressly relates
solely to an earlier date (in which case any such representation or warranty
shall be true and correct in all material respects on and as of such earlier
date;

 

(vi)          promptly
upon receipt thereof, any reports submitted to Lessee (other than report
previously delivered pursuant to Section 5.01(a)(ii)
above) by independent Accountants in connection with any annual, interim or
special audit made by them of the books of Lessee;

 

(vii)         promptly
upon transmission thereof, copies of all such financial statements, proxy
statements, notices and reports as Borrower or Lessee shall send to its
stockholders and copies of all registration statements (without exhibits) and
all reports which Borrower or Lessee files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the functions of
the Securities and Exchange Commission); and

 

(viii)        with
reasonable promptness, such further information (financial or otherwise) as
Lender may from time to time reasonably request regarding the business, affairs
and financial condition of Borrower, Lessee or any of the Collateral;

 

Lender is hereby authorized to deliver a copy of any financial
statement or other information made available by Borrower or Lessee or both of
them to any regulatory authority having jurisdiction over Lender, pursuant to
any request therefor.

 

21

 

(b)           Payment
of Indebtedness. Borrower will, and will cause each of its Subsidiaries to
(i) pay and discharge any and all Indebtedness payable in any manner by
Borrower or such Subsidiary, as the case may be, and any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in accordance with the agreement, document
or instrument relating to such Indebtedness and (ii) faithfully perform,
observe and discharge all covenants, conditions and obligations which are
imposed upon Borrower or such Subsidiary, as the case may be, by any and all
agreements, documents, instruments and indentures evidencing, securing or
otherwise relating to such Indebtedness.

 

(c)           Maintenance
of Books and Records;  Consultations and
Inspections. Borrower will, and will cause each of its Subsidiaries to,
maintain books and records in accordance with GAAP and in which full, true and
correct entries shall be made of all dealings and transactions in relation to
its business and activities. Borrower will, and will cause each of its
Subsidiaries to, permit Lender (and any Person appointed by Lender) to visit
and inspect its Properties, to examine and make abstracts or copies from its
books and records, to conduct a collateral and/or other audit and analysis of
the Accounts, Documents, Instruments, Inventory, Equipment and all other items,
information or data related in any way to the Collateral and to discuss its
affairs, finances and accounts with its officers, employees and Accountants,
all at such reasonable times and as often as Lender may reasonably request,
provided that, Lender shall only be entitled to conduct such inspections,
examinations and other reviews twice in any rolling twelve-month period so long
as no Event of Default has occurred and is continuing. Borrower irrevocably
authorizes Lender or such Person to communicate directly with its respective
Accountants and each irrevocably authorizes and directs such Accountants to
disclose to Lender any and all information with respect to the business and
financial condition of Borrower and its Subsidiaries as Lender may from time to
time request in writing. Borrower agrees to reimburse Lender upon demand for
all costs and expenses incurred by Lender in connection with any inspection
examination, consultation or other review hereunder conducted by Lender (and
any Person appointed by Lender) in a manner consistent with Lender’s process
for charging similarly situated borrowers.

 

(d)           Payment
of Taxes. Borrower will, and will cause each of its Subsidiaries to, duly
file all Federal, state and local income tax returns and all other tax returns
and reports of Borrower or such Subsidiary of Borrower, as the case may be,
which are required to be filed and duly pay and discharge promptly all taxes,
including, but not limited to, all taxes for filing any documents, notice or
other information with any state, assessments and other governmental charges
imposed upon either of them or any of its Property; provided, however, that
neither Borrower nor any Subsidiary of Borrower shall be required to pay any
such tax, assessment or other governmental charge the payment of which is being
contested in good faith and by appropriate proceedings being diligently
conducted and for which adequate reserves in accordance with GAAP have been
provided, except that Borrower or such Subsidiary of Borrower, as the case may
be, shall pay or cause to be paid all such taxes, assessments and governmental
charges forthwith upon the commencement of proceedings to foreclose any Lien
which is attached as security therefor, unless such foreclosure is stayed by
the filing of an appropriate bond in a manner satisfactory to Lender.

 

22

 

(e)           Payment
of Claims. Borrower will, and will cause each of its Subsidiaries to,
promptly pay and discharge (i) all trade accounts payable in accordance
with usual and customary business practices (but in no event later than thirty
(30) days after the due date thereof) and (ii) all claims for work, labor
or materials which if unpaid might become a Lien upon any of its Property or
assets; provided, however, that neither Borrower nor any Subsidiary of Borrower
shall be required to pay any such account payable or claim the payment of which
is being contested in good faith and by appropriate proceedings being
diligently conducted and for which adequate reserves in accordance with GAAP
have been provided, except that Borrower or such Subsidiary of Borrower shall
pay or cause to be paid all such accounts payable and claims forthwith upon the
commencement of proceedings to foreclose any Lien which is attached as security
therefor, unless such foreclosure is stayed by the filing of an appropriate
bond in a manner satisfactory to Lender.

 

(f)            Corporate
Existence. Borrower will, and will cause each of its Subsidiaries to, at
all times preserve, renew and keep in full force and effect its corporate existence
and rights and franchises with respect thereto and maintain in full force and
effect all surety, insurance and financial responsibility bonds, letters of
credit and other guarantees, permits, insurance and other licenses, trademarks,
trade names, copyrights, patents, approvals, authorizations, charters, leases,
transportation contracts and other contracts necessary to carry on its business
as the same is presently being carried on and/or as the same is proposed to be
carried on.

 

(g)           Maintenance
of Property. Borrower will, and will cause each of its Subsidiaries to, at
all times, preserve and maintain all of the Property used or useful in the
conduct of its business in good condition, working order and repair.

 

(h)           Performance
of Agreements. Borrower will faithfully perform, observe and discharge all
of the duties and obligations which are imposed upon Borrower, as the case may
be, by any and all contracts and/or agreements (whether oral or written) and
Borrower will preserve, protect and defend all of its rights under such
contracts and/or agreements. Borrower will, and will cause each of its
Subsidiaries to, maintain in full force and effect all concession agreements,
licenses, including, without limitation, insurance licenses, bonds, franchises,
leases, patents, trademarks, trade names, copyrights, contracts and other
rights necessary or desirable to the profitable conduct of its business.

 

(i)            Compliance
with Laws, Regulations, Etc. Borrower will, and will cause Lessee to at all
times comply with all applicable laws, rules, regulations, licenses, permits,
approvals and orders and duly observe all requirements of all foreign, Federal,
state or local governmental or regulatory authority, including all
Environmental Laws and all Occupational Safety and Health Laws except to the
extent that any such noncompliance could not reasonably be expected to have a
Material Adverse Effect.

 

(j)            Environmental
Matters.

 

(i)            Borrower
will, and will cause each of its Subsidiaries to, at all times comply with all
requirements and agreements referred to in Section 4.21
hereof to the extent that any such noncompliance could 

 

23

 

reasonably be expected to have a Material Adverse Effect. Borrower
agrees to protect, indemnify, defend and hold harmless Lender and its officers,
directors, employees, agents, successors and assigns to the maximum extent
permitted by law, from and against any and all claims, demands, causes of
action, suits, losses, damages (including all Environmental Claims and all
penalties and punitive damages), violations (and alleged violations) of any
Environmental Laws, environmental response and/or cleanup costs, fines,
penalties and expenses (including attorneys’ fees and all other costs and
expenses incurred in investigating and defending against the assertion of such
liabilities), of any nature whatsoever, which may be sustained, suffered or
incurred by Lender, based upon, in connection with or relating to, (A) the
ownership and/or operation of the Properties and facilities of Borrower or any
Subsidiary of Borrower and all activities relating thereto, (B) any
misrepresentation or breach of warranty or covenant by Borrower, (C) any
compliance with or investigation, action or proceeding under or violations (or
alleged violations) of any Environmental Laws, (D) the presence,
remediation, cleanup or removal of any Hazardous Substances or evaluation or
investigation of any Release or threat of Release of any Hazardous Substances,
(E) any loss of or damage to natural resources and (F) any private or
governmental suits or court or administrative orders or injunctions relating in
any way to any Hazardous Substances on, in, under or about any of the
Properties or facilities of Borrower or any Subsidiary of Borrower or emanating
therefrom. The specific indemnity contained in this paragraph is in addition to
and should not be construed to restrict the application of any other
indemnities contained in this Agreement or in any of the other Transaction
Documents, notwithstanding any overlap in coverage, and is in addition to any
legal liability or responsibility Borrower otherwise has, and shall survive the
payment of the Note and all of the other Borrower’s Obligations and the
termination of this Agreement.

 

(ii)           Borrower
shall give Lender immediate notice of (A) any Environmental Claim or any
other action or investigation with respect to the existence or potential
existence of any Hazardous Substances instituted or threatened with respect to
Borrower or any Subsidiary of Borrower or any of the Properties or facilities
of Borrower or any Subsidiary of Borrower and (B) any condition or
occurrence on any of the Properties or facilities of Borrower or any Subsidiary
of Borrower which constitutes a violation of any Environmental Laws or which
gives rise to a reporting obligation or requires removal or remediation under
any Environmental Laws. Such notice shall in either case be accompanied by
Borrower’s plan, as the case may be, with respect to removal or remediation and
Borrower agrees to take all action which is reasonably necessary in connection
with such action, investigation, condition or occurrence in accordance with
such plan with due diligence and to complete such removal or remediation as
promptly as possible and in all events within the time required by any
Environmental Laws or any other applicable law, rule or regulation. Borrower
shall promptly provide Lender with copies of all documentation relating
thereto, and such other information with respect to environmental matters as
Lender may request from time to time.

 

24

 

(k)           ERISA
Compliance. If Borrower, any Subsidiary of Borrower or any ERISA Affiliate
shall have any Pension Plan, Borrower, such Subsidiary of Borrower or such
ERISA Affiliate, as the case may be, shall comply with all requirements of
ERISA relating to such Pension Plan. Without limiting the generality of the
foregoing, Borrower will not, and will not cause or permit any its Subsidiaries
or any ERISA Affiliate to:

 

(i)            permit
any Pension Plan maintained by Borrower, any Subsidiary of Borrower or any
ERISA Affiliate to engage in any nonexempt “prohibited transaction,” as such
term is defined in Section 4975 of the Code;

 

(ii)           permit
any Pension Plan maintained by Borrower, any Subsidiary of Borrower or any
ERISA Affiliate to incur any “accumulated funding deficiency”, as such term is
defined in Section 302 of ERISA, 29 U.S.C. § 1082, whether or not
waived;

 

(iii)          terminate
any Pension Plan in a manner which could result in the imposition of a Lien on
any Property of Borrower, any Subsidiary of Borrower or any ERISA Affiliate
pursuant to Section 4068 of ERISA, 29 U.S.C. § 1368; or

 

(iv)          take
any action which would constitute a complete or partial withdrawal from a Multi-Employer
Plan within the meaning of Sections 4203 or 4205 of Title IV of ERISA.

 

(l)            Notices.
Borrower will notify Lender in writing of any of the following within three (3)
Business Days after it learns of the occurrence thereof, describing the same and,
if applicable, the steps being taken by the Person(s) affected with respect
thereto all such notices to be true, accurate and complete in all material
respects:

 

(i)            the
occurrence of any Default or Event of Default;

 

(ii)           the
occurrence of any default or event of default by Borrower, Lessee, any other
Obligor or any Subsidiary of Borrower or Lessee under any note, indenture, loan
agreement, mortgage, deed of trust, security agreement, lease or other similar
agreement, document or Instrument to which Borrower, Lessee, any other Obligor
or any Subsidiary of Borrower or Lessee, as the case may be, is a party or by
which it is bound or to which it is subject;

 

(iii)          the
institution of any litigation, arbitration proceeding or governmental or
regulatory proceeding affecting Borrower, any other Obligor or any Subsidiary
of Borrower, whether or not considered to be covered by insurance, in which the
prayer or claim for relief seeks recovery of an amount in excess of
$10,000,000.00 (or, if no dollar amount is specified in the prayer or claim for
relief, in which there is a reasonable likelihood of recovery of an amount in
excess of $10,000,000.00) or any form of equitable relief;

 

25

 

(iv)          the
entry of any judgment or decree against Borrower, Lessee, any other Obligor or
any Subsidiary of Borrower or Lessee which could reasonably be expected to
involve the payment of $5,000,000 or more;

 

(v)           the
occurrence of a Reportable Event with respect to any Pension Plan; the filing
of a notice of intent to terminate a Pension Plan by Borrower, Lessee, any
ERISA Affiliate or any Subsidiary of Borrower or Lessee; the institution of
proceedings to terminate a Pension Plan by the PBGC or any other Person; the
withdrawal in a “complete withdrawal” or a “partial withdrawal” as defined in
Sections 4203 and 4205, respectively, of ERISA by Borrower, Lessee, any ERISA
Affiliate or any Subsidiary of Borrower or Lessee from any Multi-Employer Plan;
or the incurrence of any material increase in the contingent liability of
Borrower, Lessee or any Subsidiary of Borrower or Lessee with respect to any “employee
welfare benefit plan” as defined in Section 3(1) of ERISA which covers
retired employees and their beneficiaries;

 

(vi)          any
information, notices, requests or reports filed by Borrower or any Subsidiary
of either of them with, or furnished to or received by Borrower, Lessee or any
Subsidiary of either of them from, any insurance agent, broker or underwriter
which is material to Borrower, Lessee, any Subsidiary of either of them or any
of the Collateral;

 

(vii)         the
occurrence of any Material Adverse Effect;

 

(viii)        the
occurrence of any Change of Control Event; and

 

(ix)           any
notices required to be provided pursuant to other provisions of this Agreement
and notice of the occurrence of such other events as Lender may from time to
time reasonably specify.

 

(m)          Insurance. Borrower will maintain adequate insurance,
consistent with past practices of ANC Rental Corporation, which shall include
the maintenance of (i) personal injury damage insurance (including
self-insurance) with respect to the Eligible Vehicles and (ii) insurance
with to its properties and business against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged
in similar businesses. As part of the foregoing, Borrower will maintain, or
cause to be maintained, insurance of the types and in amounts not less than
those specified on Schedule 5.01(m).
All insurance required by this Section 5.01(m)
shall be with insurers as may from time to time be reasonably acceptable to
Lender. All such insurance may be subject to reasonable deductible amounts. The
adequacy of all self-insurance reserves maintained by or on behalf of Borrower
and Lessee shall be reviewed at least quarterly by AON Risk Services (or
another provider acceptable to Lender.

 

26

 

All such policies of property insurance shall contain an endorsement
acceptable to Lender naming Lender as an additional loss payee as its interests
may appear. Such endorsement shall provide that the insurance companies will
give Lender at least thirty (30) days written notice before any such policy or
policies of insurance shall be cancelled. All such policies of insurance shall
provide that all insurers under such policies shall pay all proceeds payable
thereunder jointly to Lender and Borrower as their interests may appear.

 

Borrower irrevocably makes, constitutes and appoints Lender (and all
officers, employees or agents designated by Lender) as Borrower’s true and
lawful attorney (and agent-in-fact) for the purpose of upon the occurrence and
during the continuance of an Event of Default, making, settling and adjusting
claims under such policies of insurance, endorsing the name of Borrower on any
check, draft, instrument or other item of payment of the proceeds of such
policies of insurance and for making all determinations and decisions with
respect to such policies of insurance, in each case solely to the extent that
Lender is entitled to the proceeds of such policies of insurance pursuant to
the terms of this Agreement and the other Transaction Documents. Simultaneously
with each delivery of financial statements under Section 5.01(a), Borrower shall deliver Lender a
certificate of an officer of Borrower specifying the details of all insurance
then in effect and evidence of the payment of all premiums therefor.

 

(n)           [Reserved].

 

(o)           [Reserved].

 

(p)           Use
of Vehicles. All Eligible Vehicles acquired by Borrower hereunder shall at
all times be leased to Lessee pursuant to the Permitted Lease and used by
Lessee in conjunction with Lessee’s daily rental operations and except for
(i) Permitted Leases and (ii) Permitted Franchisee Use shall not be
subject to any lease or other arrangement for the use of such Eligible Vehicle.

 

(q)           DCMC
Vehicles Only. Borrower shall be permitted to request and receive Advances
hereunder solely for vehicles manufactured by DCMC.

 

(r)            Additional
Actions by Lender. Upon the occurrence and during the continuance of an
Event of Default, Lender, at its option, may from time to time perform any
agreement of Borrower hereunder which Borrower shall fail to perform and take
any other action which Lender deems necessary for the maintenance or preservation
of any of the Collateral or its interest therein (including the discharge of
taxes or liens of any kind against the Collateral or the procurement of
insurance or the payment of warehousing charges, landlord’s bills or other
charges), and Borrower agrees to forthwith reimburse Lender for all costs and
expenses incurred by Lender in connection with the foregoing, together with
interest thereon at the Default Rate from the date incurred until reimbursed by
Borrower. Any action taken by Lender hereunder shall not cure any Default or
Event in Default in that regard or constitute a waiver of any right or remedy
available to Lender. Any action taken by Lender hereunder shall not obligate
Lender to continue such action or to take any action in the future, whether
similar or dissimilar, or to notify Borrower with respect thereto.

 

27

 

(s)           No
Party as Owner Other Than Borrower. Notwithstanding anything contained
herein to the contrary, except pursuant to the Master Lease, no Eligible
Vehicle shall be financed, leased, sold, covered by or subject to any lease
agreement or other agreement with a term in excess of thirty (30) days or under
which Lessee or any party other than the Borrower is considered or treated as
the owner of the vehicles for any purpose.

 

(t)            Application
for and Delivery of Certificates of Title. Except for title to Refinanced
Eligible Vehicles the certificates of title for which are held as of the date
hereof by Servicer, as expeditiously as possible and in any event, within 20
days after each Advance, Borrower shall apply for a certificate of title
showing Lender’s first priority security interest in all vehicles purchased
with the proceeds of such Advance. Each Eligible Vehicle shall be titled in the
appropriate state in the name of the Borrower as owner with a lien in favor of
Lender noted thereon except that each Refinanced Eligible Vehicle shall be
titled in the appropriate state in the name of AFLP or NFLP as applicable, as
owner with a lien in favor of Citibank noted thereon. In all cases, Borrower
shall cause delivery to Lender of the certificate of title to each Eligible
Vehicle immediately upon receipt thereof and, in any event, not later than
within three (3) Business Days of receipt thereof, provided, however, that
Borrower shall cause the delivery to Lender of all certificates of title to the
Refinanced Eligible Vehicles which are held by Borrower or Servicer as of the
repayment date of such Refinanced Eligible Vehicle within three (3) Business
Days of such repayment date. At all times while any indebtedness of Borrower to
Lender is unpaid, Lender or at Lender’s sole discretion, its authorized agent,
shall hold all certificates of title to each Eligible Vehicle.

 

(u)           Master
Lease. Borrower shall lease Eligible Vehicles solely to Lessee pursuant to
the Master Lease. Lender shall possess the only executed version of the Master
Lease which shall be marked “Original” and contain a receipt to be executed by
Lender and all schedules, attachments and other exhibits thereto at all times.
Borrower shall not enter into any lease of the Eligible Vehicles other than the
Master Lease, without the prior written consent of Lender. Each executed copy
of the Master Lease shall contain the following chattel paper legend in a form
acceptable to Lender:

 

AS SET FORTH IN SECTION 1(b) HEREOF, THE LESSOR HAS ASSIGNED TO
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC (“DCS”) ALL OF THE LESSOR’S RIGHT,
TITLE AND INTEREST IN AND TO THIS AGREEMENT. TO THE EXTENT, IF ANY, THAT THIS
AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF
ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY DCS
ON THE SIGNATURE PAGE THEREOF. THIS IS NOT THE ORIGINAL, EXECUTED COUNTERPART
NO. 1

 

28

 

(v)           Program
Requirements. At all times while any of Borrower’s Obligations remain
outstanding and unpaid to Lender, Borrower shall comply with all requirements
of the Program and preserve and maintain all Eligible Vehicles as required to
qualify for payments under the Program except with respect to Eligible Vehicles
that have been returned to and accepted by DCMC and except for Eligible
Vehicles that are subject to the provisions of Section 2.04(b). In addition, except for Eligible Vehicles
which have been returned to and accepted by DCMC or are subject to the terms of
pursuant to Section 2.04(b),
Borrower shall, and shall cause Lessee to, promptly return each Eligible
Vehicle to Lender at the time such Eligible Vehicle is required to be returned
to Lender under the terms of the Program.

 

(w)          No
Party as Lienholder Other than Lender. Borrower shall, and shall cause any
Subsidiary of Borrower to, take any and all actions as Lender may reasonably
request to maintain, preserve and/or protect the security interest of Lender in
the Collateral.

 

(x)            Capital
Contribution. Lessee shall make the Capital Contribution to Borrower on or
before the date of the Initial Advance and Borrower agrees and shall not permit
any other Person to distribute or otherwise withdraw the Capital Contribution
or any portion thereof except to fund the purchase of Eligible Vehicles in
connection with an Advance request.

 

(y)           Blocked
Account. Borrower shall establish and maintain throughout the term of this
Agreement a depository account (the “Capitalization Account”) in Borrower’s
name with a bank (a “Depository Bank”) which is acceptable to Lender to which
the Capital Contribution shall be deposited as of the date hereof in accordance
with this Agreement.

 

At all times that the Minimum Capitalization Amount is greater than
zero, Borrower will maintain a cash balance in the Capitalization Account of
not less than the Minimum Capitalization Amount. If at any time the
Capitalization Account balance is less than the Minimum Capitalization Amount,
Borrower shall immediately, without notice from Lender, deposit to the
Capitalization Account, all amounts necessary so that the amount on deposit in
the Capitalization Account equals or exceeds the Minimum Capitalization Amount.
Borrower shall not withdraw or transfer any funds from the Capitalization
Account except that Borrower may, from time to time, so long as no Default or
Event of Default has occurred and is continuing, withdraw such funds from the
Capitalization Account that (i) exceed the Minimum Capitalization Amount,
and (ii) are transferred directly to Lender to be used to make a Down
Payment on Eligible Vehicles.

 

The Depository Bank shall acknowledge, in a manner satisfactory to
Lender, Lender’s security interest in all funds in the Capitalization Account
and shall agree that the Depository Bank has no right of setoff against any or
all of the funds in the Capitalization Account. Upon the occurrence and during
the continuation of an Event of Default, any or all of the funds in either the
Capitalization Account may be applied by Lender to the payment of Borrower’s
Obligations in such order and manner as Lender may elect in its sole
discretion. At no time shall Borrower have any right to withdraw or otherwise
use any funds in the Capitalization Account except as provided in this
Agreement.

 

29

 

(z)            Further
Assurances. Borrower will execute and deliver to Lender, at any time and
from time to time, any and all further agreements, documents and Instruments,
and take any and all further actions which may be required under applicable
law, or which Lender may from time to time reasonably request, in each case at
Borrower’s own expense in order to effectuate the transactions contemplated by
this Agreement and the other Transaction Documents.

 

(aa)         Separate
Corporate Existence of the Borrower. Borrower hereby acknowledges that the
parties to the Transaction Documents are entering into the transactions
contemplated by the Transaction Documents in reliance on the Borrower’s
identity as a legal entity separate from Lessee and all other Persons.
Therefore, from and after the date of execution and delivery of this Agreement,
Borrower will take all reasonable steps to maintain Borrower’s identity as a
separate entity and to make it manifest to third parties that Borrower is an
entity with assets and liabilities distinct from those of any other Person.
From and after the date hereof until one year and one day after all of the
Borrower’s Obligations have been repaid in full:

 

(i)            Borrower
will conduct its business in office space allocated to it and for which it pays
an appropriate rent and overhead allocation;

 

(ii)           Borrower
will maintain corporate records and books of account separate from those of any
other entity and telephone numbers and stationery that are separate and
distinct from those of any other entity;

 

(iii)          Borrower’s
assets will be maintained in a manner that facilitates their identification and
segregation from those of any other entity;

 

(iv)          Borrower
will strictly observe corporate formalities in its dealings with the public and
with any other entity, and funds or other assets of Borrower will not be
commingled with those of any other entity. Borrower will at all times, in its
dealings with the public and with any other entity, hold itself out and conduct
itself as a legal entity separate and distinct from any other entity. Borrower
will not maintain joint bank accounts or other depository accounts to which any
other entity has independent access;

 

(v)           The
duly elected board of directors of Borrower and duly appointed officers of
Borrower will at all times have sole authority to control decisions and actions
with respect to the daily business affairs of Borrower;

 

(vi)          Not
less than one member of the Borrower’s board of directors will be an
Independent Director. Borrower will observe those provisions in its certificate
of incorporation or by-laws that provide that Borrower’s board of directors
will not approve, or take any 

 

30

 

other action
to cause the filing of, a voluntary bankruptcy petition with respect to
Borrower unless the Independent Director and all other members of Borrower’s
board of directors unanimously approve the taking of such action in writing
prior to the taking of such action;

 

(vii)         Borrower
will compensate each of its employees, consultants and agents from its own
funds for services provided to Borrower;

 

(viii)        Borrower
will not hold itself out to be responsible for the debts of any other Person;

 

(ix)           Borrower
will cause all financial statements of each Person other than Borrower that are
consolidated to include Borrower to contain appropriate footnotes clearly
stating that (A) all of Borrower’s assets are owned by Borrower and
(B) Borrower is a separate corporate entity with its own separate
creditors that will be entitled to be satisfied out of Borrower’s assets prior
to any value in Borrower becoming available to Borrower’s shareholders;

 

(x)            Borrower
will take all actions necessary on its part to be taken in order to ensure that
the facts and assumptions relating to the Borrower, Lessee and Vanguard Car
Rental USA Holdings Inc., set forth in the opinion of Schulte Roth & Zabel
LLP of even date herewith relating to substantive consolidation matters will be
true and correct all times.

 

5.02         Negative Covenants of
Borrower. Borrower covenants and agrees that so long as Lender has any
obligation to make any Advance or this Agreement is in effect or any of
Borrower’s Obligations remain unpaid in full:

 

(a)           Limitation
on Liens. Borrower will not, and it will not cause or permit any of its
Subsidiaries to, create, incur or assume, or suffer to be incurred or to exist,
any Lien on any Collateral, whether now owned or hereafter acquired, or upon
any income or profits therefrom, except for Permitted Liens. Except for
Permitted Liens, Borrower has not and will not enter into any agreement or
understanding or take, permit or suffer to exist any action (including the
filing of a financing statement, agreement, pledge, mortgage, notice or
registration) or event (whether by operation of law or otherwise) for the
purpose of, or that may have the effect of, directly or indirectly, granting a
security interest in or lien on (including any state or federal tax lien),
pledging, transferring, assigning, selling, disposing of, or encumbering any
Collateral, any interest therein or rights pertaining thereto.

 

(b)           Consolidation,
Merger, Sale of Assets, Dissolution, Etc. Borrower will not, and it will
not cause or permit any of its Subsidiaries to, (i) directly or
indirectly, merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with Borrower or any of
its Subsidiaries, (ii) sell, assign, lease, transfer, abandon or otherwise
dispose of any Property which constitutes any of the Collateral 

 

31

 

except as provided hereunder or
take or omit to take any action which could impair the rights of Lender in the
Collateral, or (iii) wind up, liquidate or dissolve or agree to do any of
the foregoing.

 

(c)           Sale
and Leaseback Transactions. Borrower will not, and it will not cause or
permit any of its Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby Borrower or such Subsidiary of Borrower shall in one or
more related transactions sell, transfer or otherwise dispose of any Collateral
and then rent or lease, as lessee, such Property or any part thereof for any
period or periods.

 

(d)           Transactions
with Affiliates. Borrower will not, and it will not cause or permit any of
its Affiliates to, enter into or be a party to any transaction or arrangement
with any Affiliates (including the purchase from, sale to or exchange of
Property with, or the rendering of any service by or for, any Affiliates),
except for any transaction or arrangement which (i) is in the ordinary
course of business and pursuant to the reasonable requirements of Borrower or
such Affiliate’s business, (ii) is upon fair and reasonable terms no less
favorable to Borrower or such Affiliates than would be obtained in a comparable
arm’s-length transaction with a Person not an Affiliate or
(iii) constitutes a distribution to its shareholders not otherwise
prohibited by this Agreement.

 

(e)           Changes
in Nature of Business. Borrower will not, and will not cause or permit any
of its Subsidiaries to, engage in any business if, as a result, the general
nature of the business which would then be engaged in by Borrower, and its
Subsidiaries, considered as a whole, would be substantially changed from the
general nature of the business engaged in by Borrower and its respective
Subsidiaries as of the date of this Agreement, which is the business of
acquiring DCMC vehicles for lease to Lessee for Lessee’s use in its daily
vehicle rental business.

 

(f)            Fiscal
Year. Borrower will not, and it will not cause or permit any of its
respective Subsidiaries to, change its Fiscal Year except as required by law or
in accordance with GAAP.

 

(g)           Location
of Collateral. Borrower will not locate nor move, nor allow to be located
or moved, any of the Collateral at any time outside United States nor change
nor allow any change in:  (i) the
state in which any of the Collateral (other than Eligible Vehicle) is located;
or (ii) the state in which any Eligible Vehicle is titled or primarily
garaged, in each case, without the prior written consent of Lender; provided,
however, that nothing in this paragraph is intended to preclude Borrower from
permitting Lessee to engage in one-way rentals of Eligible Vehicle in the
ordinary course of business which may result in Eligible Vehicles being
temporarily located in Canada from time to time. While Borrower has no right to
take any of the actions described in this paragraph without the prior written
consent of Lender, if Borrower does so, Borrower shall immediately notify
Lender of any such actions.

 

(h)           Master
Lease. Borrower shall not and will not cause or permit any of its
Subsidiaries or Lessee to, directly or indirectly, by operation of law or
otherwise, make any change, amendment, modification or other alteration to the
Master Lease without the prior written consent of Lender. Borrower has not
breached and is not in default under the Master 

 

32

 

Lease. Borrower shall not
terminate, fail to renew, breach or be in default under the Master Lease, and
Borrower has no knowledge of any claim of or basis for any claim of any such
termination, nonrenewal, breach or default. Borrower agrees to fully comply, at
Borrower’s own cost and expense, with the terms of the Master Lease (including
any renewal option) and to promptly notify Lender of any materially adverse
development of which Borrower becomes aware with regard to the Master Lease,
including any claim of breach of or default under, or threat of nonrenewal or
termination of, or litigation involving the Master Lease.

 

(i)            Pension
Plans. Borrower shall not, and it will not cause or permit any of its
respective Subsidiaries to, (a) permit any condition to exist in
connection with any Pension Plan which might constitute grounds for the PBGC to
institute proceedings to have such Pension Plan terminated or a trustee
appointed to administer such Pension Plan or (b) engage in, or permit to
exist or occur, any other condition, event or transaction with respect to any
Pension Plan which could result in the incurrence by Borrower, any Subsidiary
of Borrower or any ERISA Affiliate of any material liability, fine or penalty.
Borrower will not, and it will not cause or permit any of its Subsidiaries to,
become obligated to contribute to any Pension Plan or Multi-Employer Plan other
than any such plan or plans in existence on the date hereof.

 

(j)            Acquisitions.
Borrower will not, and will not cause or permit any of its Subsidiaries to,
acquire all or substantially all of the stock or assets of any Person.

 

(k)           Transactions
Not in Ordinary Course of Business. Borrower will not, and will not cause
or permit any of its Subsidiaries to, enter into any transaction not in the
ordinary course of business which could materially and adversely affect either
Borrower or any of its Subsidiaries’ ability to repay Borrower’s Obligations or
any of the Collateral.

 

(l)            Amendment
of Articles of Incorporation or By-Laws. Borrower will not, and will not
cause or permit any of its Subsidiaries to, amend its Certificate or Articles
of Incorporation or By-Laws in any manner which could adversely affect the
rights or obligations of any of the parties to this Agreement or any of the
other Transaction Documents.

 

(m)          Insolvency,
Appointment of Receivers, Etc. Borrower will not, and will not cause or
permit any of its Subsidiaries to, go into voluntary bankruptcy or insolvency,
or apply for or consent to the appointment of a receiver or trustee of itself
or of its Property or make any general assignment for the benefit of its
creditors, or suffer any order adjudicating it to be bankrupt or insolvent or
appointing a receiver or trustee of it or its respective Property.

 

(n)           Subsidiaries.
Borrower will not, and will not cause or permit any of its respective
Subsidiaries to, create or acquire any new Subsidiaries.

 

(o)           Ownership
of Subsidiaries. Borrower will not cause or permit any of its Subsidiaries
to (i) authorize or issue any new types, varieties or classes of capital
stock or any bonds or debentures, subordinated or otherwise, or any stock
warrants or options, (ii) authorize or issue any additional shares of any
existing class of capital stock, (iii) declare any stock dividends or
stock splits or (iv) take any other action which could, directly or
indirectly, decrease Borrower’s ownership interest in any of its Subsidiaries.

 

33

 

SECTION 6. EVENTS OF DEFAULT AND REMEDIES

 

6.01         Events of Default.
The occurrence of any one or more of the following for any reason whatsoever
(whether voluntary or involuntary, by operation of law or otherwise) shall
constitute an Event of Default hereunder:

 

(a)           Borrower
shall fail to make any payment of any installment of the principal of and/or
interest on, or other sum due hereunder or under the Note, as and when such
payments become due and payable according to the terms hereof or the terms of
the Note or otherwise and such failure shall continue unremedied for more than
one (1) Business Day;

 

(b)           Borrower
shall fail to make any payment of any of the other Borrower’s Obligations as
and when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise or shall fail to perform or observe any
term, covenant, or provision contained in Sections 2.04(b) or 5.01(b), and in
each case such failure shall continue unremedied for more than one (1) Business
Day after the earlier of (i) written notice of default is given to
Borrower by Lender, or (ii) an officer of Borrower obtaining knowledge of
such failure;

 

(c)           Any
representation, warranty, certification or statement of Borrower made in this
Agreement, in any other Transaction Document or in any certificate, financial
statement or other agreement, instrument or statement furnished or made or
delivered pursuant hereto or thereto or in connection herewith or therewith, is
false or misleading in any material respect when made or effected and if such
false or misleading representation, warranty certification, or statement is
capable of being remedied, it remains unremedied for more than thirty (30) days
after the earlier of (i) written notice of default is given to Borrower by
Lender, or (ii) an officer of Borrower obtaining knowledge of such failure;

 

(d)           Borrower
shall fail to perform or observe any term, covenant or provision contained in Sections 2.03, 2.08, 5.01(p), 5.01(q), 5.01(s),
5.01(t), 5.01(u), 5.01(v), 5.01(w), 5.01(x), 5.01(y), 5.01(aa), 5.02(b),
5.02(c), 5.02(e), 5.02(i), 5.02(j), 5.02(k), 5.02(l), 5.02(m), 5.02(n) or
5.02(o) of this Agreement;

 

(e)           Borrower
shall fail to perform or observe any other term, covenant or provision
contained in this Agreement or any of the other Transaction Documents (other
than those specified in Sections
6.01(a),(b), (c) or (d) above) and, if such failure is of a type
that can be remedied by Borrower, such failure shall remain unremedied for
thirty (30) days after the earlier of (i) written notice of default is
given to Borrower by Lender or (ii) an officer of Borrower obtaining
knowledge of such default;

 

(f)            This
Agreement or any of the other Transaction Documents shall at any time for any
reason cease to be in full force and effect or shall be declared to be null and
void by a court of competent jurisdiction, or if the validity or enforceability
thereof shall be contested or denied by Borrower or any of its Subsidiaries, or
if the transactions contemplated hereunder or thereunder shall be contested by
Borrower or any of its Subsidiaries, or if Borrower or any of its Subsidiaries
shall deny that it has any further liability or obligation hereunder or
thereunder;

 

34

 

(g)           Any
default or “Event of Default” (as defined therein) shall occur under or within
the meaning of the any of the Transaction Documents;

 

(h)           Borrower,
any other Obligor or any Subsidiary of Borrower or such Obligor shall
(i) apply for or consent to the appointment of or the taking of possession
by a receiver, custodian, trustee, liquidator or the like of itself or of all
or a substantial part of its Property, (ii) admit in writing its
inability, or be generally unable, to pay its debts as such debts become due,
(iii) make a general assignment for the benefit of its creditors,
(iv) commence a voluntary case under the Bankruptcy Code, (v) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition and adjustment of debts,
(vi) fail to controvert in a timely or appropriate manner, or acquiesce in
writing to, any petition filed against itself in an involuntary case under the
Bankruptcy Code, or (vii) take any corporate action for the purpose of
effecting any of the foregoing;

 

(i)            An
involuntary proceeding shall be commenced or an involuntary petition shall be
filed in a court of competent jurisdiction seeking (a) relief in respect
of Borrower, any other Obligor or any Subsidiary of Borrower or such Obligor,
or of a substantial part of the Property or assets of Borrower, any other
Obligor or any Subsidiary of Borrower or such Obligor, under the Bankruptcy
Code or any other Federal, state or foreign bankruptcy, insolvency,
receivership, liquidation or similar law, (b) the appointment of a receiver,
trustee, custodian, sequestrator or similar official of Borrower, any other
Obligor or any Subsidiary of Borrower or such Obligor or of a substantial part
of the Property or assets of Borrower, any other Obligor or any Subsidiary of
Borrower or such Obligor or (c) the winding-up or liquidation of Borrower,
any other Obligor or any Subsidiary of Borrower or such Obligor; and such
appeal proceeding or petition shall continue undismissed for thirty (30)
consecutive days or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for thirty (30) consecutive
days;

 

(j)            The
occurrence of any default or event of default under or within the meaning of
any agreement, document or Instrument evidencing, securing, guaranteeing the
payment of or otherwise relating to any Indebtedness of Borrower, any other
Obligor or any Subsidiary of Borrower or Obligor for borrowed money (other than
the Borrower’s Obligations) having an aggregate outstanding principal balance
in excess of $10,000,000.00;

 

(k)           Borrower
shall have a judgment entered against it by a court having jurisdiction in the
premises involving the payment of $10,000,000 or more and such judgment shall
not be appealed in good faith or satisfied by Borrower within thirty (30) days
after the entry of such judgment;

 

(l)            The
institution by Borrower, any ERISA Affiliate or any Subsidiary of Borrower of
steps to terminate any Pension Plan if, in order to effectuate such
termination, Borrower, such ERISA Affiliate or such Subsidiary of Borrower, as
the case may be, would be required to make a contribution to such Pension Plan,
or would incur a liability or obligation to such Pension Plan; or the
institution by the PBGC of steps to terminate any Pension Plan in each case,
that would be reasonably expected to have a Material Adverse Effect;

 

35

 

(m)          Any
Property of Borrower, any other Obligor or any Subsidiary of Borrower or
Obligor shall be sold for the satisfaction of any Lien thereon or shall be
seized and not released within ten (10) days;

 

(n)           The
Master Lease and/or any of the terms, conditions or provisions therein, shall
at any time for any reason be amended, modified, altered, superseded,
supplemented or otherwise changed by operation of law or otherwise without the
express prior written consent of Lender; or

 

(o)           The
occurrence of any Change of Control Event.

 

6.02         Termination of
Funding; Acceleration. Upon the occurrence and during the continuance of
any Event of Default (other than an Event of Default described in Sections 6.01(h) and 6.01(i)), Lender
may declare that its obligation to make any additional Advances on the Loan has
terminated, whereupon such obligation shall be immediately and forthwith
terminated, and Lender may further declare the entire outstanding principal
balance of, all accrued and unpaid interest on and all fees and other amounts
due under the Note and all of the other Borrower’s Obligations to be forthwith
due and payable, whereupon the entire outstanding principal balance of, all
accrued and unpaid interest on and all fees and other amounts owing under the
Note and all of the other Borrower’s Obligations shall become and be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower, and
Lender may exercise any and all other rights and remedies which it may have
under this Agreement or any of the other Transaction Documents or under
applicable law; provided, however, that upon the occurrence and during the
continuance of any Event of Default described in Sections 6.01(h) and/or 6.01(i), Lender’s obligation to
make any additional Advances on the Loan shall be immediately and forthwith
terminated, and the entire outstanding principal balance of, all accrued and
unpaid interest on and all fees and other amounts owing under the Note and all
of the other Borrower’s Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by Borrower, and Lender may exercise any and
all other rights and remedies which it may have under this Agreement or any of
the other Transaction Documents or under applicable law. In addition, upon the
occurrence and during the continuance of any Event of Default, all payments due
to Borrower under the Program shall be paid directly to Lender.

 

6.03         Rights and Remedies
Generally. Upon the occurrence and during the continuance of any Event of
Default, Lender shall have, in addition to any and all other rights and
remedies contained in this Agreement and in any of the other Transaction
Documents, all of the rights and remedies of a secured party under the UCC of
the relevant state or states and any other applicable law upon default by a
debtor, all of which rights and remedies shall be cumulative and non-exclusive,
to the extent permitted by law.

 

6.04         Entry Upon Premises
and Access to Information. Upon the occurrence and during the continuance
of any Event of Default, Lender shall have the right to enter upon the premises
of Borrower where the Collateral is located (or is believed to be located)
without any obligation to pay rent to Borrower, or any other place or places
where the Collateral is believed to be located and kept, to render the
Collateral usable or salable, to remove the Collateral 

 

36

 

therefrom to the premises of
Lender or any agent of Lender for such time as Lender may desire in order
effectively to collect or liquidate the Collateral, and/or the Lender shall
have the right to require Borrower to assemble the Collateral and make it
available to Lender at a place or places to be designated by Lender which is
reasonably convenient to Borrower and Lender. Upon the occurrence and during
the continuance of any Event of Default, Lender shall have the right to take
possession of the original books and records of each of Borrower, to obtain
access to the data processing equipment, computer hardware and software of each
of Borrower, in each case, relating to the Collateral, and to use all of the
foregoing and the information contained therein in any manner Lender deems
appropriate without charge or liability therefor.

 

6.05         Certain Notification
by Lender. Lender may, in its sole discretion, at any time following the
occurrence and during the continuance of any Event of Default hereunder:  (i) notify all lessees, including
without limitation, Lessee, Account Debtors, obligors, makers and other
counterparties to all of the Collateral of the assignment of the Collateral;
(ii) direct such lessees, including without limitation, Lessee, Account
Debtors, obligors, makers and other counterparties but excluding all lessees
under all Daily Rental Contracts to pay all rentals, payments and proceeds
under the Collateral directly to Lender for application to all amounts due on
Advances; and (iii) instruct such Account Debtors, lessees, including,
without limitation, Lessee, obligors, makers and other counterparties to respond
to direct inquiries and requests for information from Lender with respect to
any and all matters and transactions involving Borrower or Affiliates. Borrower
waives all rights of confidentiality and privacy and instructs such Account
Debtors, lessees, including, without limitation, Lessee, obligors, makers and
other counterparties to provide Lender with whatever information and schedules
Lender may require.

 

6.06         Sale or Other
Disposition of Collateral by Lender. Upon the occurrence and during the
continuance of any Event of Default, Lender shall have the right to sell, lease
or otherwise dispose of all or any part of the Collateral and the sale, lease
or other disposition of the Collateral, or any part thereof, by Lender after an
Event of Default may be for cash, credit or any combination thereof, and Lender
may purchase all or any part of the Collateral at public or, if permitted by
law, private sale, and in lieu of actual payment of such purchase price,
set-off the amount of such purchase price against the Borrower’s Obligations
then owing. Borrower agrees that Lender may, if Lender deems it reasonable,
postpone or adjourn any such sale from time to time by an announcement at the
time and place of sale or by announcement at the time and place of such postponed
or adjourned sale, without being required to give a new notice of sale. Lender
may, in its sole discretion, cause the Collateral to remain on Borrower’s
premises or otherwise or to be removed and stored at premises owned by other
Persons, at Borrower’s expense, pending sale or other disposition of the
Collateral. Lender shall have the right to conduct such sales on Borrower’s
premises, at Borrower’s expense, or elsewhere, on such occasion or occasions as
Lender may see fit. Any notice required to be given by Lender of a sale, lease
or other disposition or other intended action by Lender with respect to any of
the Collateral which is deposited in the United States mails, postage prepaid
and duly addressed to the Borrower at the address specified in Section 8.04 below, at least ten
(10) days prior to such proposed action, shall constitute fair and reasonable
notice to Borrower of any such action. Lender may apply the net proceeds of any
sale, lease or other disposition of any of the Collateral or of any other
collection of the proceeds of any of the Collateral, after deducting all costs
and expenses of every kind incurred therein or incidental to the retaking,
holding, preparing for sale, selling, leasing or 

 

37

 

the like of the Collateral on
Borrower’s premises, or elsewhere, or in any way related to Lender’s rights
hereunder (including Attorneys’ Fees and expenses, court costs, bonds and other
legal expenses, insurance, security guard and alarm expenses incurred in
connection with the holding of the Collateral, advertisements of sale of the
Collateral, and rental and utilities expense on the premises or elsewhere in
connection with storage and sale of the Collateral) to the payment, in whole or
in part, of the Borrower’s Obligations, whether due or not due, absolute or
contingent, and only after payment by Lender of any other amounts required by
any existing or future provision of law need Lender account to Borrower for the
surplus, if any. The proceeds of any sale(s), lease(s) or other disposition(s)
of any of the Collateral and/or of any collection(s) of any of the Collateral
shall be applied by Lender in the following order:  (1) first, to the payment of all costs,
expenses, liabilities and advances made or incurred by Lender in connection
with the collection and enforcement of the Borrower’s Obligations and the sale
or other realization upon the Collateral; provided, however, that nothing
herein is intended to relieve Borrower of its obligation to pay such costs,
expenses, liabilities and Advances; (2) second, to the payment of that
portion of the Borrower’s Obligations constituting accrued and unpaid interest
and fees; (3) third, to the payment of all of the other Borrower’s
Obligations; and (4) fourth, to the payment of any surplus remaining after
the payment of the amounts mentioned, to Borrower or to whomsoever may be
lawfully entitled thereto. Borrower shall remain liable to Lender for the
payment of any deficiency, and Lender may recover the deficiency with interest
at the Default Rate. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect Lender’s
security interest in the Collateral until all of the Borrower’s Obligations are
fully paid and this Agreement has been terminated. Borrower agrees that Lender
has no obligation to preserve rights to the Collateral against any other
parties. Lender is hereby granted a license or other right to use, without
charge, Borrower’s Inventory, Equipment, real estate and advertising matter, or
any property of a similar nature, as it pertains to the Collateral, in
completing advertising for sale or lease and selling or leasing any Inventory
or other Collateral and Borrower’s rights under all licenses, leases and
franchise agreements shall inure to Lender’s benefit until all of the
Obligations are paid in full.

 

6.07         Lender’s Care of
Collateral. Lender shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if it takes such
action for that purpose as Borrower requests in writing, but failure of Lender
to comply with any such request shall not of itself be deemed a failure to
exercise reasonable care, and no failure of Lender to preserve or protect any
rights with respect to such Collateral against prior parties, or to do any act
with respect to the preservation of such Collateral not so requested by
Borrower, shall be deemed a failure to exercise reasonable care in the custody
or preservation of such Collateral.

 

6.08         Power of Attorney.
Borrower hereby makes, constitutes and appoints Lender (and all persons
designated by Lender) the true and lawful agent and attorney-in-fact of
Borrower and its Subsidiaries with full power of substitution (a) if an
Event of Default has occurred, to receive, open and dispose of all mail
addressed to Borrower or any of its Subsidiaries relating to the Collateral,
(b) if an Event of Default has occurred, to notify and direct the United
States Post Office authorities by notice given in the name of Borrower or any
of its Subsidiaries and to sign on behalf of Borrower or such Subsidiary, to
change the address for delivery of all mail addressed to Borrower or such
Subsidiary relating to the Collateral to an address to be designated by Lender,
and to cause such mail to be delivered to such designated address where Lender
may open all such mail and remove therefrom any notes, checks, 

 

38

 

acceptances, drafts, money orders
or other Instruments included in the Collateral in which Lender has a security
interest under the terms of this Agreement, with full power to endorse the name
of Borrower or such Subsidiary upon any such notes, checks, acceptances,
drafts, money orders, Instruments or other documents relating to the Collateral
or security of any kind and to effect the deposit and collection thereof, and
Lender shall have the further right and power to endorse the name of Borrower
or such Subsidiary on any documents relating to the Collateral, (c) to
sign the name of Borrower or such Subsidiary to drafts against its lessees,
including Lessee or other debtors, to notices to such lessees, including Lessee
or other debtors, to assignments and notices of assignments, financing
statements or other public records or notices and all other Instruments and
documents, (d) to do any and all things necessary and take such actions in
the name and on behalf of Borrower or such Subsidiary to carry out the intent
of this Agreement, including the grant of the security interest granted under
the Security Agreement and to perfect and protect the security interest granted
to Lender in respect to the Collateral and the Lender’s rights created under
this Agreement and each of the other Transaction Documents. Borrower agrees
that neither Lender nor any of its agents, designees or attorneys-in-fact will
be liable for any acts of commission or omission (other than for acts of
commission or omission which constitute gross negligence or willful misconduct
as determined by a court of competent jurisdiction in a final, nonappealable
order), or for any error of judgment or mistake of fact or law in respect to
the exercise of the power of attorney granted under this Section. The power of
attorney granted under this Section shall be irrevocable.

 

6.09         Waiver of Demand.
DEMAND, PRESENTMENT, PROTEST AND NOTICE OF DEMAND, PRESENTMENT, PROTEST AND
NONPAYMENT ARE HEREBY WAIVED BY BORROWER. BORROWER ALSO WAIVES THE BENEFIT OF
ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.

 

6.10         Waiver of Notice.
IN THE EVENT OF A DEFAULT OR EVENT OF DEFAULT, BORROWER HEREBY WAIVES ALL
RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY LENDER OF ITS
RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY,
ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. BORROWER
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO
THIS TRANSACTION AND THIS AGREEMENT.

 

SECTION 7. DEFINITIONS

 

7.01         Certain Defined Terms.

 

In addition to the terms defined elsewhere in this Agreement, when used
in this Agreement, the following terms shall have the following meanings (such
meanings shall be equally applicable to the singular and plural forms of the
terms used, as the context requires):

 

“Account Debtor” shall mean any Person who is and/or may become
obligated to Borrower under or on account of an Account.

 

“Accountants” shall mean the independent certified public
accountants of Borrower and Lessee, which accountants shall be Ernst &
Young, PriceWaterhouseCoopers or 

 

39

 

such other independent
certified public accounting firm selected by Borrower or Lessee and acceptable
to Lender.

 

“Accounts” shall mean all of Borrower’s now owned and hereafter
arising or acquired accounts, accounts receivable, margin accounts, futures
positions, book debts, notes, drafts, acceptances, chattel paper, insurance or
sale proceeds and other forms of obligation now or hereafter owned or held by
or payable to Borrower in respect or arising out of or related to any and all
Eligible Vehicles (including all of the foregoing arising from the sale or
lease of Eligible Vehicles (excluding Daily Rental Contracts) or other goods or
the rendering of services by Borrower or howsoever otherwise arising),
including the right to payment of any interest or finance charges with respect
thereto, together with all merchandise represented by any of the Accounts; all
such merchandise that may be reclaimed or repossessed or returned to Borrower;
all of Borrower’s rights as an unpaid vendor or Lessor; all pledged assets and
all letters of credit, guaranty claims, liens and security interests held by or
granted to Borrower to secure payment of any Accounts; all proceeds and
products of all of the foregoing described properties and interests in
properties; and all ledgers, books of account, records, computer programs,
computer disks and tape files, computer printouts, computer runs and other
computer prepared information relating to any of the foregoing.

 

“Acknowledgment and Consent to Collateral Assignment of Master Motor
Vehicle Lease and Servicing Agreement” shall mean that certain
Acknowledgment and Consent to Collateral Assignment of Master Motor Vehicle
Lease and Servicing Agreement executed by lessee and delivered to Lender in
connection herewith.

 

“Adjusted Purchase Price” shall mean the amount paid to DCMC to
purchase such Eligible Vehicle less the amount, if any, of any of the
following: manufacturer’s incentives, Daily Rental Incentive Payments, charges
for any taxes or license, holdback amounts, dealer profit, preparation costs
and other charges.

 

“Affiliate” shall mean with respect to any Obligor, any of
(i) a director or officer of any Obligor, (ii) a spouse, parent,
sibling or descendant of any Obligor (or a spouse, parent, sibling or
descendant of any director or officer of any Obligor) and (iii) any other
Person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with any Obligor.

 

“ANC” shall mean ANC Rental Corporation, a Delaware corporation.

 

“Annual Budget” shall mean, for the applicable Fiscal Year of
Lessee, Lessee’s projected budget for such Fiscal Year providing detailed
information on a quarterly basis of revenue, expense, net income and cash flows
for Lessee, or the case may be, or lessee, on a consolidated basis, to be
delivered to Lender in accordance with Section 5.01(a)(i).

 

“Attorneys’ Fees” shall mean the reasonable fees and expenses
(and costs, charges and expenses related thereto) of the attorneys (and all
paralegals) employed or engaged by Lender from time to time (i) in
connection with the negotiation, preparation, execution, delivery, amendment,
modification, extension, renewal, termination, administration and/or
enforcement of this Agreement or any of the other Transaction Documents,
(ii) to represent 

 

40

 

Lender in any litigation,
contest, dispute, suit or proceeding, or to commence, defend or intervene in
any litigation, contest, dispute, suit or proceeding, or to take any action in
or with respect to any litigation, contest, dispute, suit or proceeding
(whether instituted by Lender, Borrower, any other Obligor or any other Person
and whether in bankruptcy or otherwise) in any way or respect relating to the
Collateral, this Agreement or any of the other Transaction Documents, Borrower
or any other Obligor, (iii) to protect, inspect, examine, collect, lease,
sell, take possession of or liquidate any of the Collateral and (iv) in
connection with the enforcement of any security interest in or other Lien upon
any of the Collateral or any of Lender’s rights under any Transaction Document.

 

“Auction Proceeds” shall mean the net US Dollars received by
DCMC from the sale of such Eligible Vehicle through a Lender-designated auction
together with the fee charged by the auctioneer to DCMC to sell the Eligible
Vehicle through such auction.

 

“Authorized Individual” shall mean any of the persons listed on Schedule 2.02 or any other individual
as provided herein.

 

“Bankruptcy Code” shall mean the Bankruptcy Reform Act of 1978,
as amended from time to time, and any successor statute of similar import,
together with the rules thereunder, in each case as in effect from time to
time. Reference to sections of the Bankruptcy Code shall be construed to also
refer to any successor sections.

 

“Borrower’s Obligations” shall mean any and all indebtedness
(principal, interest, fees and other amounts), indemnities, reimbursements,
liabilities and obligations of Borrower to Lender evidenced by or arising under
this Agreement, the Note, or any of the other Transaction Documents, in each
case whether now existing or hereafter arising, absolute or contingent, joint
and/or several, secured or unsecured, direct or indirect, expressed or implied
in law, contractual or tortious, liquidated or unliquidated, at law or in
equity, or otherwise.

 

“Business Day” shall mean any day on which Lender’s offices are
open for carrying on substantially all of Lender’s business and does not
include any Saturday or Sunday.

 

“Capital Contribution” shall mean the capital contribution made
by Lessee to Borrower in the amount of $20,000,000 in cash made no later than
the date of the Initial Advance.

 

“Cerberus Loan” shall mean the $150,000,000.00 revolving credit
facility provided to Lessee by Cerberus Capital Management, L.P., a Delaware
limited partnership or another lender reasonably acceptable to Lender.

 

“CERCLA” shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. §§9601 et  seq., as
amended from time to time, and regulations promulgated thereunder.

 

“Change of Control Event” shall mean the acquisition after the
date of this Agreement by any Person or group of Persons who are Affiliates (in
any transaction or series of related transactions) of (i) record or
beneficial ownership or more than fifty percent (50%) of any 

 

41

 

class of capital stock of
Borrower, (ii) the power to elect, appoint or cause the election or
appointment of at least a majority of the members of the Board of Directors of
Borrower or (iii) all or substantially all of the assets and Properties of
Borrower.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. Reference to sections
of the Code shall be construed to also refer to any successor sections.

 

“Collateral” shall have the meaning ascribed thereto in each and
every Security Agreement executed by Borrower in favor of Lender and delivered
to Lender in connection with any and all Advances and the Loan hereunder.

 

“Collateral Assignment of Master Motor Vehicle Lease and Servicing
Agreement” shall mean that certain Collateral Assignment of Master Motor
Vehicle Lease and Servicing Agreement dated as of the date hereof by and among
Borrower and Lender.

 

“Control” shall mean the possession, directly or indirectly, or
the power to vote ten percent (10%) or more of any class of voting securities
of any Person or the power to direct or cause the direction of the management
and policies of any Person, whether through the ownership of voting securities,
by contract or otherwise. The terms “Controls” and “Controlled” shall have
correlative meanings.

 

“Daily Rental Contract” shall mean any agreement by and between
Lessee and any Person for the rental of an Eligible Vehicle on an hourly,
daily, weekly or monthly basis (excluding normal taxi cab usage) with no
Eligible Vehicle’s (or combination of Eligible Vehicles’) rental to exceed
three (3) months with any one Person.

 

“Daily Rental Incentive Payment” shall mean with respect to any
Eligible Vehicle any incentive monies paid to the Lessee by DCMC which are not
deducted from the factory invoice and are not deducted by DCMC when calculating
the guaranteed depreciation repurchase price under the Program.

 

“DCMC” shall mean DaimlerChrysler Motors Company.

 

“Default” shall mean an event or condition the occurrence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

 

“Default Rate” shall mean the Interest Rate plus two percent
(2%) or the highest lawful rate, whichever is less.

 

“Document” means document of title, bill of lading, dock
warrant, dock receipt, warehouse receipt or order for the delivery of goods,
and also any other document which in the regular course of business or
financing is treated as adequately evidencing that the person in possession of
it is entitled to receive, hold and dispose of the document and the goods it
covers.

 

“Down Payment” means cash in the amount equal to ten percent
(10%) of the Adjusted Purchase Price of each Eligible Vehicle except that with
respect to each Refinanced 

 

42

 

Eligible Vehicle, the Down
Payment shall mean cash in the amount equal to ten percent (10%) of the
difference between (i) the original purchase price of such Refinanced
Eligible Vehicle and (ii) all reductions in the guaranteed maximum
depreciation amount for such Refinanced Eligible Vehicle through the Advance
Date for such Refinanced Eligible Vehicle calculated in accordance with the
Program.

 

“Eligible Vehicle” shall mean a new motor vehicle manufactured
by DCMC and available for purchase under the DCMC Guaranteed Depreciation
Program as described in that certain DCMC Bulletin No. 2004-08 dated July 1,
2003 attached hereto and incorporated herein as Exhibit G (the “Program”)
(including accessories and attachments thereto) which will be leased by
Borrower to Lessee and by Lessee to others on a daily rental basis.

 

“Environmental Claim” shall mean any administrative, regulatory
or judicial action, judgment, order, consent decree, suit, demand, demand
letter, claim, Lien, notice of noncompliance or violation, investigation or
other proceeding arising (a) pursuant to any Environmental Law or governmental
or regulatory approval issued under any such Environmental Law, (b) from
the presence, use, generation, storage, treatment, Release, threatened Release,
disposal, remediation or other existence of any Hazardous Substance,
(c) from any removal, remedial, corrective or other response action
pursuant to an Environmental Law or the order of any governmental or regulatory
authority or agency, (d) from any third party seeking damages,
contribution, indemnification, cost recovery, compensation, injunctive or other
relief in connection with a Hazardous Substance or arising from alleged injury
or threat of injury to health, safety, natural resources or the environment or
(e) from any Lien against any Property owned, leased, chartered or
operated by Borrower or Lessee or any Subsidiary in favor of any governmental
or regulatory authority or agency in connection with a Release, threatened
Release or disposal of a Hazardous Substance.

 

“Environmental Law” shall mean any and all international,
Federal, state or local statute, law, rule, regulation, order, consent decree,
judgment, permit, license, code, covenant, deed restriction, common law,
treaty, convention, ordinance or other requirement relating to public health,
safety or the environment, including those relating to Releases, discharges or
emissions to air, water, land or groundwater, to the withdrawal or use of
groundwater, to the use and handling of polychlorinated biphenyls or asbestos,
to the disposal, treatment, storage or management of hazardous or solid waste,
Hazardous Substances or crude oil, or any fraction thereof, to exposure to
toxic or hazardous materials, to the handling, transportation, discharge or
release of gaseous or liquid Hazardous Substances and any rule, regulation,
order, notice or demand issued pursuant to such law, statute or ordinance,
including CERCLA, the Solid Waste Disposal Act, the Hazardous Materials
Transportation Act, the Federal Water Pollution Control Act, the Clean Air Act
of 1966, the Toxic Substances Control Act of 1976, the Occupational Safety and
Health Act of 1977, the Emergency Planning and Community Right-to-Know Act of
1986, the National Environmental Policy Act of 1975, the Oil Pollution Act of
1990, in each case as now or hereafter amended, and all rules, regulations, guidance
documents and publications promulgated under any one or more thereof.

 

“Equipment” shall mean all of Borrower’s now owned and hereafter
acquired machinery, equipment, goods and other tangible personal property
(other than Inventory), including processing equipment, conveyors, machine
tools, data processing and computer 

 

43

 

equipment with software and
peripheral equipment, engineering, processing and manufacturing equipment,
office machinery, furniture, furnishings, materials handling equipment, tools,
attachments, accessories, motor vehicles, rolling stock, automotive equipment,
trailers, forklifts, molds, dies, stamps and other machinery and equipment of
every kind and nature, and fixtures not forming a part of real estate, wherever
situated, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor and all manuals, drawings, instructions, warranties and rights with
respect thereto.

 

“ERISA” shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
Reference to sections of ERISA shall be construed to also refer to any
successor sections.

 

“ERISA Affiliate” shall mean any corporation, trade or business
that is, along with Borrower or any Subsidiary of Borrower, a member of
(i) an “affiliated service group” as that term is defined in
Section 414(m) of the Code or (ii) a controlled group of corporations
or a controlled group of trades or businesses, as described in Sections 414(b)
and 414(c), respectively, of the Code or Section 4001(a)(14) of ERISA.

 

“Event of Default” shall have the meaning ascribed thereto in Section 6.01.

 

“First Extended Maturity Date” shall mean August 31, 2008
or such earlier date as the Loan may become due and payable pursuant to the
terms of this Agreement.

 

“First Extended Revolving Credit Period” shall mean the period
commencing as of the date of any first extension of the term of this Agreement
and ending September 1, 2007 unless extended by Lender pursuant to Section 2.01.

 

“First Extended Term” with respect to the Interest Rate shall
mean the period commencing as of the date of the commencement of the First
Extended Revolving Credit Period and ending on the First Extended Maturity
Date.

 

“Fiscal Month” means any month of a Fiscal Year.

 

“Fiscal Quarter” means any quarter of a Fiscal Year.

 

“Fiscal Year” means any period of twelve consecutive calendar
months ending on December 31 or such other date that is required by law or
in accordance with GAAP or as to which Lender shall agree in writing;
references to a Fiscal Year with a number corresponding to any calendar year
(e.g., the “2003 Fiscal Year”) refer to the Fiscal Year ending on the
December 31 (or such other date permitted by Lender) occurring during such
calendar year.

 

“GAAP” shall mean, as to a particular Person, generally accepted
accounting principles as in effect from time to time in the United States
applied on a consistent basis.

 

“Gain” with respect to an Eligible Vehicle shall mean the
amount, if any, by which the Auction Proceeds for the applicable Eligible
Vehicle exceeds the Guaranteed Residual Value applicable to such Eligible
Vehicle.

 

44

 

“Guaranteed Residual Value” shall mean the net capitalized cost
(as defined in the “Example Guaranteed Depreciation Calculation” section of the
Program) minus the product of the Daily Rate (as defined in the “Guaranteed
Depreciation - Eligible Models and Rates” section of the Program) for the
applicable Eligible Vehicle multiplied by the total number of In-Service (as
defined under the Program) days.

 

“Hazardous Substance” shall mean any dangerous, hazardous or
toxic material, substance, chemical waste, pollutant or contaminant which is
defined as a “hazardous substance” or regulated under any Environmental Law.

 

“Independent Director” shall mean an individual who is not, and
never was, (A) a stockholder, director, officer, employee, affiliate,
associate, customer or supplier of, or any person that has received any benefit
(excluding, however, any compensation received by the director or directors, in
such persons’ capacity as such directors, required by Borrower’s Certificate of
Incorporation) in any form whatsoever from, or any person that has provided any
service (excluding, however, any service provided by the director or directors,
in such persons’ capacity as such directors, required by Borrower’s Certificate
of Incorporation) in any form whatever to, Vanguard Car Rental USA Inc. or any
of its affiliates or associates, (B) a member of the immediate family of
any person described above, or (C) any person owning beneficially,
directly or indirectly, any outstanding shares of common stock of Vanguard Car
Rental USA, Inc. or any of its affiliates, or a stockholder, director, officer,
employee, affiliate, associate, customer or supplier of, or any person that has
received any benefit (excluding, however, any compensation received by the
director or directors, in such persons’ capacity as such directors, required by
Borrower’s Certificate of Incorporation) in any form whatsoever from, or any
person that has provided any service (excluding, however, any service provided
by the director or directors, in such persons’ capacity as such directors,
required by Borrower’s Certificate of Incorporation) in any form whatsoever to,
such beneficial owner or any of such beneficial owner’s affiliates or
associates, provided that the ownership of up to 5% of any class of stock
(other than stock of Borrower) listed on a national securities exchange shall
not prevent an individual from meeting the requirements of this definition,
provided further that membership on the board of directors of any affiliate of
Lessee that is an SPE shall not prevent an individual from meeting the
requirements of this definition.

 

“Indebtedness” shall mean, with respect to any Person, without
duplication, all (i) obligations of such Person for borrowed money or
which have been incurred in connection with the acquisition of Property or
assets, (except trade accounts payable in the ordinary course of business),
(ii) obligations secured by any Lien on, or payable out of the proceeds of
production from, any Property or assets owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligations,
(iii) indebtedness, liabilities and obligations of third parties,
including joint ventures and partnerships of which such Person is a venturer or
general partner, recourse to which may be had against such Person, and
(iv) obligations created or arising under any conditional sale or other
title retention agreement with respect to Property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of such Property.

 

45

 

“Initial Maturity Date” shall mean August 31, 2007 or such
earlier date as the Loan may become due and payable pursuant to Sections 6.02 and 6.03 of this
Agreement unless extended by Lender pursuant to Section 2.01.

 

“Initial Revolving Credit Period” shall mean the period
commencing on the date hereof and ending September 1, 2006 unless extended
by Lender pursuant to Section 2.01.

 

“Initial Term” with respect to the Interest Rate shall mean the
period commencing as of the date hereof and ending on the Initial Maturity
Date.

 

“Instrument” means a negotiable instrument or a security or any
writing which evidences a right to the payment of money.

 

“Interest Rate” shall mean the Prime Rate during the Initial
Term and shall mean the Prime Rate plus .50% per annum during the First
Extended Term and the Second Extended Term.

 

“Inventory” shall mean all inventory of every kind and
description, now owned and/or hereafter acquired by or in the custody or
possession, actual or constructive, of the Borrower, wherever located,
including all merchandise, raw materials, parts, supplies, work-in-process and
finished goods intended for sale or lease, together with all the containers,
packing, packaging, shipping and similar materials related thereto, and
including such inventory as is temporarily out of the Borrower’s custody or
possession, including inventory on the premises of others and items in transit,
and including any returns and repossessions upon any accounts, documents,
Instruments or chattel paper relating to or arising from the sale or lease of
inventory, and all substitutions and replacements therefor, and all additions
and accessions thereto, and all ledgers, books of account, records, computer
printouts, computer runs and other computer prepared information relating to
any of the foregoing.

 

“Investment” shall mean any investment by Borrower or any
Affiliate in or to any Person, whether payment therefor is made in cash or
capital stock of Borrower or such Affiliate, and whether such investment is by
acquisition of stock or Indebtedness, or by loan, Advance, transfer of Property
out of the ordinary course of business, capital contribution, equity or profit
sharing interest, extension of credit on terms other than those normal in the ordinary
course of business, or otherwise.

 

“Lessee” shall have the meaning ascribed thereto in the third
recital.

 

“Lien” shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on common law, statute or contract,
including any security interest, mortgage, deed of trust, pledge,
hypothecation, judgment lien, maritime lien or other lien or encumbrance of any
kind or nature whatsoever, any conditional sale or trust receipt and any lease,
consignment or bailment for security purposes. The term “Lien” shall also
include, without limitation, reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property.

 

“Loan” shall have the meaning ascribed thereto in the first
recital.

 

46

 

“Mandatory Prepayments” shall have the meaning ascribed thereto
in Section 2.04(b).

 

“Master Lease” shall have the meaning ascribed thereto in Section 3.01(d).

 

“Material Adverse Effect” shall mean (a) a material adverse
effect on the financial condition of Borrower or Lessee, (b) material
impairment of Borrower’s ability to perform any of its obligations, the Note or
any of the other Transaction Documents or (c) material impairment of the
enforceability of the rights of, or benefits available to, Lender, the Note or
any of the other Transaction Documents provided, however, that the financial
losses projected to occur during the first six-month period after the date of
this Agreement disclosed in writing by Borrower to Lender prior to the date of
this Agreement shall not be considered to have Material Adverse Effect.

 

“Maximum Lawful Rate” shall have the meaning ascribed thereto in
Section 2.07.

 

“Minimum Capitalization Amount” shall mean an amount equal to
Twenty Million Dollars ($20,000,000) less the aggregate total of all Down
Payments for all Eligible Vehicles with respect to which any portion of the
Advance remains unpaid but not less than zero.

 

“Multi-Employer Plan” shall mean a “multi-employer plan” as
defined in Section 4001(a)(3) of ERISA which is maintained for employees
of Borrower, any Subsidiary of Borrower or any ERISA Affiliate or to which
Borrower, any Subsidiary of Borrower or any ERISA Affiliate has contributed in
the past or currently contributes.

 

“Note” shall have the meaning ascribed thereto in Section 2.01.

 

“Obligor” shall mean Borrower and each other Person who is or
shall become primarily or secondarily liable on any of Borrower’s Obligations
or who grants Lender a Lien upon any of the Property or assets of such Person
as security for any of Borrower’s Obligations. “Obligor” shall mean each
and every Obligor.

 

“Occupational Safety and Health Laws” shall mean the
Occupational Safety and Health Act of 1970, as amended, and any other Federal,
state or local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of conduct
concerning employee health and/or safety, as now or at any time hereafter in
effect.

 

“Payment Account” shall mean the account specified on Schedule 2.06 hereof into which all
payments from Borrower shall be made, or such other account as Lender shall
from time to time specify by notice to Borrower.

 

“Payoff Letter” shall have the meaning ascribed thereto in
Section 3.03(d).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.

 

47

 

“Pension Plan” shall mean a “pension plan,” as such term is
defined in Section 3(2) of ERISA, which is established or maintained by
Borrower, any Subsidiary of Borrower or any ERISA Affiliate, other than a
Multi-Employer Plan.

 

“Permitted Franchisee Use” shall mean use at any time and from
time to time of not more that five percent (5%) of all Eligible Vehicles then
financed hereunder by franchisees of Borrower who have come into possession of
such Eligible Vehicles in the ordinary course of Borrower’s one-way rental
business, provided that under the terms of such use Borrower may at any time,
at its sole discretion, obtain the return of such Eligible Vehicles.

 

“Permitted Lease” shall mean only the lease from Borrower to
Lessee of Eligible Vehicles which is (i) satisfactory to Lender in its
sole discretion (ii) evidenced by the Master Lease and (iii) is
expressly subordinated to all interests of Lender in all Eligible Vehicles
covered by the Master Lease.

 

“Permitted Liens” shall mean any of the following:

 

(a)           Liens in favor of
Lender;

 

(b)           the Permitted Lease;
and

 

(c)           Daily Rental Contracts
with respect to Eligible Vehicles.

 

“Person” shall mean any individual, sole proprietorship, general
partnership, limited partnership, limited liability company, joint venture,
joint stock company, trust, bank, trust company, unincorporated organization,
association, corporation, institution, entity, government (whether national,
Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof) or other
organization, whether or not a legal entity.

 

“Prime Rate” is the “Prime Rate” as published in The Wall
Street Journal, Midwest Edition, from time to time in its “Money Rates”
column as the prevailing prime rate, which Prime Rate shall be determined on
the date of Note and adjusted thereafter twice each month on the 1st and 16th day of each month
(each referred to herein as a “Change Date”) during the term of the Note
commencing on the date thereof. In the event any Change Date falls on a day on
which The Wall Street Journal is not published or the “Prime Rate” is
not available, the Prime Rate shall be determined from the immediately preceding
edition of The Wall Street Journal in which the Prime is available.

 

“Program” shall have the meaning ascribed to it under the
definition of Eligible Vehicle.

 

“Program Payments” shall mean, with respect to each Eligible
Vehicle, all payments made under the Program after the Return Date for such
Eligible Vehicle received by Lender, except Auction Proceeds, including,
without limitation, all guaranteed depreciation payments and auction assistance
allowance.

 

48

 

“Property” shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible. “Properties”
shall mean the plural of Property. For purposes of this Agreement, Borrower
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, financing lease or other arrangement
pursuant to which title to the Property has been retained by or vested in some
other Person for security purposes. Notwithstanding any provision herein or in
any Transaction Document to the contrary only Borrower shall be deemed to be
the sole owner of any and all Eligible Vehicles and entitled to all rights and
privileges thereto.

 

“Purchase Agreement” shall mean that certain Asset Purchase
Agreement, dated as of June 12, 2003, by and among ANC Rental Corporation, a
Delaware corporation, and the other Subsidiaries of ANC Rental Corporation that
are signatories thereto, CAR Acquisition Company LLC, a Delaware limited
liability company, Cerberus Capital Management, L.P. and, solely with respect
to Section 2.5, Lehman Commercial Paper Inc., as amended by the First Amendment
to the Asset Purchase Agreement, dated as of June 30, 2003, the Second
Amendment to the Asset Purchase Agreement, dated as of August 5, 2003, and the
Third Amendment to the Asset Purchase Agreement, dated as of October 3,
2003.

 

“RCRA” shall mean the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. §§6901 et  seq., and any future
amendments.

 

“Refinanced Eligible Vehicle” shall mean an Eligible Vehicle
that (a) Borrower or its predecessors financed the initial acquisition of
between August 1, 2003 and December 1, 2003; (b) is owned or is being acquired
by Borrower free and clear of all Liens other than a Permitted Lien; and (c) is
refinanced on or before December 15, 2003, and has not been previously
refinanced by Lender.

 

“Refinancing Amount” shall mean, with respect to each Refinanced
Eligible Vehicle, ninety percent (90%) of the difference between (i) the
original purchase price for such Refinanced Eligible Vehicle and (ii) the
reduction in maximum guaranteed depreciation for such Refinanced Eligible
Vehicle calculated in accordance with the Program through the date of the
Advance made to finance the Refinanced Eligible Vehicle.

 

“Release” shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment, including, the abandonment or discarding of
barrels, drums, containers, tanks and/or other receptacles containing or
previously containing any Hazardous Substance.

 

“Reportable Event” shall mean an event described in Section 4043(c)
of ERISA (other than an event for which notice to the PBGC is waived).

 

“Return Date” shall mean the date on which an Eligible Vehicle
is taken out of service and returned to DCMC and accepted by DCMC in accordance
with the Program.

 

“Second Extended Maturity Date” shall mean August 31, 2009
or such earlier date as the Loan may become due and payable pursuant to the
terms of this Agreement.

 

49

 

“Second Extended Revolving Credit Period” shall mean the period
commencing as of the date of any second extension of the term of this Agreement
and ending on September 1, 2008.

 

“Second Extended Term” with respect to the Interest Rate shall
mean the period commencing as of the commencement of the Second Extended Revolving
Credit Period and ending on the Second Extended Maturity Date.

 

“Security Agreement” shall mean each and every Security
Agreement executed by Borrower in favor of Lender and delivered to Lender in
connection with any and all Advances and the Loan hereunder pursuant to Sections 3.01(c) and 3.02(b), a
copy of each of the forms of which is attached hereto as Exhibit C
and Exhibit I.

 

“Servicer” shall mean as Vanguard Car Rental USA, Inc., in its
capacity as servicer under the Master Lease and any successor thereto in such
capacity.

 

“Shortfall” with respect to an Eligible Vehicle shall mean the
amount, if any, by which the Guaranteed Residual Value for the applicable
Eligible Vehicle exceeds Auction Proceeds.

 

“Solvent” shall mean, when used with respect to any Person, that
(i) the fair market value of its assets is in excess of the total amount
of its liabilities reflected on a balance sheet prepared in accordance with
GAAP, (ii) it is able to pay its debts or obligations in the ordinary course
as they mature and (iii) it has capital sufficient to carry on its
business and all business in which it is about to engage.

 

“SPE” shall mean each of ARG Funding Corp., ARG Funding Corp.,
II, Alamo Financing L.P., National Car Rental Financing Corporation, National
Car Rental Financing Limited Partnership and Vanguard SPE I Inc., and any other
special purpose bankruptcy-remote entity requiring independent directors
pursuant to provisions substantially similar to the provisions of the
Certificate of Incorporation of Borrower and either directly or indirectly
owned by Vanguard Car Rental USA Inc.

 

“Stated Rate” shall have the meaning ascribed thereto in Section 2.07.

 

“Subsidiary” shall mean any corporation, partnership or other
business entity of which fifty percent (50%) or more of the issued and
outstanding capital stock (or other ownership interest) entitled to vote for
the election of directors (managers or other voting members of the governing
body of such entity) (other than by reason of default in the payment of
dividends) is at the time owned directly or indirectly by the Borrower.

 

“Transaction Documents” shall mean this Agreement, the Note, the
Security Agreements, the Master Lease, the Collateral Assignment of Master
Motor Vehicle Lease and Servicing Agreement, the Acknowledgement and Consent to
Collateral Assignment of Master Motor Vehicle Lease and Servicing Agreement,
the Vehicle Title and Lienholder Nominee Agreement, Borrower’s counsel opinions
and all other agreements, documents, instruments and certificates and all
schedules, exhibits and other attachments to any of the foregoing heretofore,
now or hereafter delivered to Lender with respect to or in connection with or
pursuant to this 

 

50

 

Agreement, the Loan made
hereunder or any other of Borrower’s Obligations, and executed by or on behalf
of Borrower, all as the same may from time to time be amended, modified,
extended, renewed, restated or supplemented.

 

“UCC” shall mean the Uniform Commercial Code as enacted in the
state of New York.

 

“US Dollar” and the symbol “$” mean the lawful currency
of the United States of America.

 

“Vanguard” shall have the meaning ascribed thereto in the third
recital to this Agreement.

 

“Vehicle Credit” shall mean, with respect to each Eligible
Vehicle, the amount, if any, by which (a) the Auction Proceeds for the
applicable Eligible Vehicle plus the Program Payments, if any, with respect to
such Eligible Vehicle, exceeds (b) (i) the unpaid balance of the Advance
amount, plus (ii) all unpaid interest, late fees and other amounts due to
Lender under the Transaction Documents, each with respect to such Eligible
Vehicle.

 

“Welfare Plan” shall mean a “welfare plan” as such term is
defined in Section 3(1) of ERISA, which is established or maintained by
Borrower, any Subsidiary of Borrower or any ERISA Affiliate, other than a
Multi-Employer Plan.

 

7.02         Accounting Terms and
Determinations. Except as otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations hereunder shall
be made and all financial statements required to be delivered hereunder shall
be prepared in accordance with GAAP.

 

7.03         Construction.
Except as otherwise specified herein, all references to any of the Transaction Documents
shall mean as the same may hereafter be amended, modified, supplemented,
extended, renewed and/or restated in accordance with the terms hereof and all
references to laws and regulations shall mean as the same may hereafter be
amended or modified. “Including” and other words or phrases of inclusion
contained in this Agreement or any other Transaction Document shall not be
construed as terms of limitation, so that references to “included” matters
shall be regarded as non-exclusive, non-characterizing illustrations. “Herein,”
“hereof,” “hereto,” “hereunder” and similar terms contained in this Agreement
or any other Transaction Document refer to this Agreement or such other
Transaction Document, as the case may be, as a whole and not to any particular section,
paragraph or provision of this Agreement or such other Transactions Document.

 

7.04         Continuance of and
Event of Default. For purposes of this Agreement and the other Transaction
Documents, an Event of Default shall deemed to be continuing until it is waived
in writing by Lender as required by Section 8.06.

 

SECTION 8. GENERAL

 

8.01         No Waiver. Lender’s
failure at any time or times hereafter to require strict performance by
Borrower of any provision of this Agreement shall not waive, affect or 

 

51

 

diminish any right of Lender
thereafter to demand strict compliance and performance therewith. None of the
undertakings, agreements, warranties, covenants and/or representations of
Borrower contained in this Agreement or the other Transaction Documents and no
Default or Event of Default by the Borrower contained in this Agreement or the
other Transactions Documents shall be deemed to have been waived by Lender
unless such waiver is by an instrument in writing signed by Lender and directed
to Borrower. No failure or delay by Lender in exercising any right, remedy,
power or privilege hereunder or under any other Transaction Document shall
operate as a waiver thereof; nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The remedies provided herein and in the
other Transaction Documents are cumulative and not exclusive of any remedies
provided by law. Nothing herein contained shall in any way affect the right of
Lender to exercise any statutory or common law right of lender’s lien or
set-off. Notwithstanding anything contained herein or in any other Transaction
Document to the contrary, Borrower shall have no right and hereby waives any
and all statutory, common law or other right it may have to deduct or set-off
any amounts owed by Lender to Borrower against amounts due from Borrower to
Lender and Borrower’s obligations to make all payments when due hereunder shall
not be discharged or excused, in whole or in part, by any amounts due from time
to time from Lender to Borrower.

 

8.02         Costs and Expenses.
Borrower agrees, whether or not any Advance on the Loan is made hereunder, to
pay Lender upon demand (a) all out-of-pocket costs and expenses and all
reasonable Attorneys’ Fees of Lender in connection with the preparation,
negotiation, delivery, execution, administration, amendment, modification,
extension, renewal, enforcement and/or termination of the Transaction Documents,
(b) all recording, filing, appraisal, records search, title insurance and
fees, costs and expenses incurred in connection with the Transaction Documents,
(c) all out-of-pocket costs and expenses, all reasonable Attorneys’ Fees
incurred in connection with the preparation of any waiver or consent hereunder
or any amendment, modification, extension or renewal of any of the Transaction
Documents or any Event of Default or alleged Event of Default hereunder,
(d) if an Event of Default occurs, all out-of-pocket costs and expenses,
and all reasonable Attorneys’ Fees incurred in connection with such Event of
Default and collection, liquidation and other enforcement proceedings or
actions resulting therefrom and (e) all other Attorneys’ Fees incurred by
Lender relating to or arising out of or in connection with any of the
Transaction Documents. Borrower further agrees to pay or reimburse Lender for
any stamp or other taxes which may be payable with respect to the execution,
delivery, recording and/or filing of any of the Transaction Documents. Borrower
shall pay the estimated amount of all such costs and expenses on the date
hereof and thereafter shall from time to time pay all additional costs and
expenses within ten (10) days of receipt of invoice therefor. All of the
obligations of Borrower under this Section 8.02
shall survive the satisfaction and payment of Borrower’s Obligations and the
termination of this Agreement.

 

8.03         General Indemnity.
In addition to the payment of costs and expenses pursuant to Section 8.02, whether or not any
Advance is made, Borrower agrees to indemnify, pay and hold Lender and any
holder of the Note, and the officers, directors, employees, agents and
affiliates of Lender and such holder(s) (collectively, the “Indemnitees”) harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including reasonable Attorneys’ Fees and
expenses) that may be imposed on, incurred by or asserted 

 

52

 

against the Indemnitees, in any
manner relating to or arising out of any of the Transaction Documents or any
other agreement, document or instrument executed and delivered by Borrower in
connection herewith or therewith, the statements contained in any commitment
letters delivered by Lender to Borrower, Lender’s agreement to make the Loan
hereunder or the use or intended use of the proceeds of the Loan hereunder (collectively,
the “indemnified liabilities”); provided that Borrower shall have no
obligation to an Indemnitee hereunder with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of that Indemnitee as
determined by a court of competent jurisdiction in a final, nonappealable
order. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them. The provisions of the undertakings and
indemnification set out in this Section 8.03
shall survive satisfaction and payment of Borrower’s Obligations and the
termination of this Agreement.

 

8.04         Notices. All
notices, requests and other communications to any party hereunder shall be in
writing (including prepaid overnight courier, facsimile transmission or similar
writing) and shall be given to such party at its address or telecopy number set
forth below, or at such other address or telecopy number as such party may
hereafter specify for the purpose of notice to Lender or Borrower. Each such
notice, request or other communication shall be effective on the day on which
delivered if delivered in person on the first (1st) Business Day after the day on which
sent, if sent by a recognized overnight courier, or sent by facsimile (with
answerback confirmation received), or on the third (3rd) Business Day after the day on which
mailed, if sent by registered or certified mail.

 

	
  Borrower:

  
	
   

  
	
   

  	
  National Rental Group Financing Inc.

  
	
   

  	
  7700 France Avenue South

  
	
   

  	
  Minneapolis, Minnesota 55425

  
	
   

  	
  Telecopy:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Vanguard Car Rental USA, Inc.

  
	
   

  	
  200 S. Andrews Ave., 11th Floor

  
	
   

  	
  Ft. Lauderdale, Florida 33301

  
	
   

  	
  Attention: Leland Wilson

  
	
   

  	
  Telecopy: 954-300-4531

  
	
   

  	
   

  
	
   

  	
  Schulte Roth & Zabel LLP

  
	
   

  	
  919 Third Avenue

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  Attention: Stuart D. Freeman, Esq.

  
	
   

  	
  Telecopy: 212-593-5955

  

 

53

 

	
  Lender:

  
	
   

  
	
   

  	
  DaimlerChrysler Services North America

  
	
   

  	
  27777 Inkster Road

  
	
   

  	
  Farmington Hills, Michigan 48334-5326

  
	
   

  	
  Attention: 

  	
  Richard W. DeJarnett

  
	
   

  	
   

  	
  CIMS 405-23-05

  
	
   

  	
  Telecopy: 

  	
  248-427-6540

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Jan Robey Alonzo

  
	
   

  	
  Thompson Coburn LLP

  
	
   

  	
  One US Bank Plaza, Suite 3400

  
	
   

  	
  St. Louis, Missouri 63101

  
	
   

  	
  Telecopy: (314) 552-7002

  

 

8.05         Lender’s Books and
Records. Lender’s books and records showing the account, any and/or all
Advances and/or Loan and related information between Borrower and Lender shall
be admissible in evidence in any action or proceeding and shall constitute
prima facie proof thereof.

 

8.06         Governing Law;
Amendments. Except as otherwise provided therein, the Transaction Documents
shall be governed by and construed in accordance with the internal laws of the
State of New York. The Transaction Documents may not be changed, nor may any
term, condition or Event of Default be waived, modified, or discharged except
by an agreement in writing, signed by Lender.

 

8.07         Headings for
Convenience. The Section and other headings are furnished for the
convenience of the parties and are not to be considered in the construction or
interpretation of this Agreement.

 

8.08         Binding Agreement.
This Agreement shall be binding upon and inure to the benefit of Borrower and
its successors and Lender and its successors and assigns. Borrower may not
sell, assign, transfer or delegate any of its rights or obligations under this
Agreement or under any of the other Transaction Documents. Lender may sell,
assign, transfer or otherwise dispose of all or any part of its rights under
this Agreement and under the other Transaction Documents to any Person.

 

8.09         Counterparts. This
Agreement and any and/or all other Transaction Documents may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

8.10         Resurrection of
Borrower’s Obligations. To the extent that Lender receives any payment on
account of any of Borrower’s Obligations, and any such payment(s) or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, subordinated and/or required to be repaid to a trustee, receiver or
any other Person under any bankruptcy act, state or Federal law, common law or
equitable cause, then, to the extent of such 

 

54

 

payment(s) received, Borrower’s
Obligations or part thereof intended to be satisfied and any and all Liens upon
or pertaining to any Property or assets of Borrower and theretofore created
and/or existing in favor of Lender as security for the payment of such Borrower’s
Obligations shall be revived and continue in full force and effect, as if such
payment(s) had not been received by Lender and applied on account of Borrower’s
Obligations.

 

8.11         Marshalling.
Lender shall be under no obligation to marshal any assets in favor of the
Borrower or any other party or against or in payment of any or all of the
Borrower’s Obligations.

 

8.12         Equitable Relief.
Borrower recognizes that, in the event the Borrower fails to perform, observe
or discharge any of Borrower’s Obligations, any remedy at law may prove to be
inadequate relief to Lender and Borrower agrees that Lender, if Lender so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.

 

8.13         Independence of
Covenants. All of the covenants contained in this Agreement and the other
Transaction Documents shall be given independent effect so that if a particular
action, event or condition is prohibited by any one of such covenants, the fact
that it would be permitted by an exception to, or otherwise be in compliance
within the provisions of, another covenant shall not avoid the occurrence of a
Default or Event of Default if such action is taken, such event occurs or such
condition exists.

 

8.14         Joint Participation.
Borrower has participated in the drafting of the Transaction Documents and
expressly acknowledges such joint participation, to avoid application of any
rule construing contractual language against the party which drafted the
language.

 

8.15         Brokers. Borrower
represents and warrants to Lender that it has had no dealings with any broker
or agent in connection with this transaction and Borrower covenants and agrees
to pay, hold harmless and indemnify Lender from and against any and all costs,
expenses and/or liabilities for any compensation, commissions and charges
claimed by any broker with respect to the financing described herein.

 

8.16         Partial Invalidity.
The invalidity of any one or more of the provisions of this Agreement and/or
any of the other Transaction Documents shall not affect the remaining
provisions hereof or thereof; and if one or more provisions of this Agreement
and/or any of the other Transaction Documents shall be deemed invalid in whole
or in part by reason of any present or future law of the United States or any
State or any decision of any court, Borrower will execute and deliver such
other and further instruments and do such things as in the opinion of counsel
for the Lender will carry out the true intent and spirit of this Agreement.

 

8.17         WAIVER OF JURY TRIAL;
CONSENT TO JURISDICTION. BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN NEW YORK
COUNTY, MICHIGAN OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE SOUTHERN
DISTRICT OF NEW YORK, AS LENDER MAY ELECT, IN ANY SUIT, 

 

55

 

ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THE TRANSACTION DOCUMENTS OR THE BORROWER’S OBLIGATIONS,
(B) AGREES THAT ALL CLAIMS IN RESPECT TO ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS,
(C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM
THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF ANY OTHER
JURISDICTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE BY REASON OF ITS
PRESENT OR SUBSEQUENT DOMICILES. BORROWER,
AND, BY ITS ACCEPTANCE HEREOF, LENDER, IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY ACTION IN WHICH BORROWER AND LENDER ARE PARTIES
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, ANY
TRANSACTION DOCUMENT OR THE BORROWER’S OBLIGATIONS.

 

8.18         NO
ORAL AGREEMENTS; ENTIRE AGREEMENT. ORAL AGREEMENTS OR COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO
PROTECT BORROWER AND LENDER FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS REACHED BY BORROWER AND LENDER COVERING SUCH MATTERS ARE CONTAINED
IN THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, WHICH AGREEMENT AND
OTHER TRANSACTION DOCUMENTS ARE A COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN BORROWER AND LENDER, EXCEPT AS BORROWER AND LENDER
MAY LATER AGREE IN WRITING TO MODIFY THEM. THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN
BORROWER AND LENDER AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS
(ORAL OR WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF.

 

IN WITNESS WHEREOF, the parties have executed this Financing Agreement
as of the day and year first above written.

 

	
   

  	
  NATIONAL RENTAL GROUP FINANCING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   /s/ Orlando Figueroa

  	
   

  
	
   

  	
  Title:  

  	
  President

  	
   

  
	
   

  	
  Printed Name: 

  	
  Orlando Figueroa

  	
   

  
						

 

56

 

	
   

  	
  DAIMLERCHRYSLER SERVICES NORTH

  
	
   

  	
  AMERICA LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ Paul E. Knauss

  	
   

  
	
   

  	
  Title:

  	
   Vice President

  	
   

  
	
   

  	
  Printed Name: 

  	
  Paul E. Knauss

  	
   

  
						

 

57

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