Document:

Parent Guarantee of Avis Budget Car Rental LLC to BNY Trust Company of Canada

     

    Exhibit
      10.4

     

    PARENT
      GUARANTEE

     

    TO: BNY
      TRUST
      COMPANY OF CANADA, IN ITS CAPACITY AS TRUSTEE OF STARS TRUST (the "STARS
      Limited Partner")

     

    AND
      TO: MONTREAL
      TRUST COMPANY OF CANADA, IN ITS CAPACITY AS TRUSTEE OF BAY STREET FUNDING TRUST
      (the "Bay
      Street Limited Partner",
      and
      collectively with the STARS Limited Partner, the "Limited
      Partners")

     

    WHEREAS
      the Limited Partners, Aviscar Inc. ("Avis")
      and
      Budgetcar Inc. ("Budget")
      have
      entered into a fourth amended and restated limited partnership agreement made
      as
      of the 20th
      day of
      April, 2005, as amended by amending agreements between the parties dated October
      11, 2005, July 7, 2006 and December 11, 2006 (collectively, and, as further
      amended, supplemented, modified, restated or replaced from time to time, the
      "LP
      Agreement")
      relating to WTH Funding Limited Partnership (the "Partnership");

     

    AND
      WHEREAS, pursuant to the LP Agreement, Avis and Budget (collectively, the
      "General Partners") have been appointed, and have agreed to act, as general
      partners of the Partnership under, and in accordance with, the LP
      Agreement;

     

    AND
      WHEREAS 1708437 Ontario Inc. has been appointed, and has agreed to act, as
      a
      standby general partner of the Partnership under, and in accordance with, the
      LP
      Agreement;

     

    AND
      WHEREAS Avis Budget Car Rental, LLC (the "Guarantor")
      has
      agreed to guarantee certain obligations of the General Partners on the terms
      and
      conditions set out herein;

     

    NOW
      THEREFORE THIS AGREEMENT WITNESSES that in consideration of the Limited Partners
      entering into the LP Agreement and for other consideration (the receipt and
      sufficiency of which are acknowledged), the Guarantor agrees with each Limited
      Partner as follows:

     

    1.  Definitions.

     

    (a)  In
      this
      Guarantee:

     

    "CCRG
      Undertaking"
      means
      the undertaking of Avis Budget Car Rental Canada ULC (formerly CCRC Canada
      ULC)
      dated April 20, 2005 in favour of the Limited Partners and the
      Partnership;

     

    "Event
      of Default"
      shall
      have the meaning ascribed thereto in Section 14;

     

    "Guarantee"
      means
      this guarantee as amended, supplemented, modified, restated or replaced from
      time to time;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Guarantor
      Financial Statements"
      means
      the audited balance sheet of the Guarantor as at September
      30, 2006
      and the
      statements of income, retained earnings and sources and application of funds
      for
      the year ended December
      31, 2005
      and the
      unaudited balance sheet of the Guarantor as at October
      31, 2006 and
      the
      statements of income, retained earnings and sources and application of funds
      for
      the three-month period ending September
      30, 2005
      as
      reported on Form 10-K and Form 10-Q, respectively, and, if applicable, Form
      8-K,
      filed with the Securities Exchange Commission;

     

    "Guarantor's
      Obligations"
      means
      all, and any part, of the guarantees, indemnities and obligations of the
      Guarantor to each Limited Partner under this Guarantee;

     

    "Indemnifiable
      Tax"
      means
      any tax other than a tax that would not be imposed in respect of any payment
      under this Guarantee but for a present or former connection between the
      jurisdiction of the government or taxation authority imposing such tax and
      the
      relevant Limited Partner or a person related to such Limited Partner (including,
      without limitation, a connection arising from such Limited Partner or related
      person being or having been organized, present or engaged in a trade or business
      in such jurisdiction, but excluding a connection arising solely from such
      Limited Partner or related person having executed or delivered documents in
      respect of, performed its obligations in respect of, or received payment of,
      or
      enforced, the Servicer Obligations);

     

    "Servicer
      Obligations"
      means
      the existing and future obligations of any kind of any of the General Partners
      to each Limited Partner under those sections of the LP Agreement listed in
      Schedule A annexed hereto and the obligations of Avis Budget Car Rental Canada
      ULC to each Limited Partner pursuant to the CCRG Undertaking, whether direct
      or
      indirect, absolute or contingent, matured or not; and

     

    "Subsidiary"
      has the
      meaning ascribed to such term in Section 2(5) of the Canada
      Business Corporations Act,
      as
      amended.

     

    (b)  Unless
      otherwise defined in subsection 1.1(a) (or elsewhere in this Guarantee), all
      capitalized terms used in this Guarantee shall have the same meanings ascribed
      thereto in, or incorporated by reference in, the LP Agreement.

     

    2.  Guarantee.

     

    Subject
      to the provisions hereof, the Guarantor unconditionally and irrevocably
      guarantees in favour of each Limited Partner the punctual performance of all
      of
      the Servicer Obligations. The Guarantor also agrees to pay all reasonable costs
      and expenses incurred by each Limited Partner in enforcing its rights under
      this
      Guarantee, including the reasonable fees and disbursements of counsel for such
      Limited Partner incurred in connection with such enforcement (for greater
      certainty, nothing in this Guarantee shall create or constitute (i) a monetary
      payment, reimbursement or financial obligation of any kind on the Guarantor
      unless the Guarantor fails to perform the aforementioned obligations pursuant
      to
      the terms hereof, in which case each Limited Partner shall be entitled to sue
      for monetary damages or (ii) an obligation of the Guarantor to perform any
      future obligations which any Additional General Partner may owe to the Limited
      Partner from time to time). If the expenses of any action, suit or proceeding
      in
      enforcing rights 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    under
      this Guarantee are to be paid by the Guarantor, the Limited Partners shall
      conduct such action, suit or proceeding through the same legal counsel
      acceptable to both Limited Partners, provided that a Limited Partner may employ
      separate legal counsel if representation by the same legal counsel would be
      inappropriate due to actual or potential differing interests between the Limited
      Partners.

     

    3.  Guarantee
      Absolute.

     

    Subject
      to the provisions hereof, the liability of the Guarantor hereunder shall be
      absolute and unconditional irrespective of:

     

    
      	(a)  	
              any
                amendment, release, discharge or waiver of, or any consent to departure
                from or any extension of time, indulgence, compromise or dealing
                in
                respect of the LP Agreement or the CCRG
                Undertaking;

            

    

     

    
      	(b)  	
              any
                change in the name, objects, capital, constating documents or by-laws
                of a
                General Partner or Avis Budget Car Rental Canada
                ULC;

            

    

     

    
      	(c)  	
              the
                invalidity, unenforceability, irregularity, informality or illegality,
                in
                whole or in part, of the LP Agreement or the CCRG
                Undertaking;

            

    

     

    
      	(d)  	
              any
                amalgamation, merger or reorganization of a General Partner or Avis
                Budget
                Car Rental Canada ULC;

            

    

     

    
      	(e)  	
              the
                bankruptcy, winding-up, liquidation or dissolution of a General Partner
                or
                Avis Budget Car Rental Canada ULC;
                or

            

    

     

    
      	(f)  	
              any
                other circumstance whatsoever, whether similar or not to the foregoing,
                which might in any manner or to any extent (A) vary the risk of the
                Guarantor, (B) constitute a legal or equitable release or discharge
                of the
                Guarantor, or (C) otherwise diminish the liability of the Guarantor
                hereunder.

            

    

     

    The
      Servicer Obligations are hereby guaranteed notwithstanding that it may have
      been
      in excess of the powers of a General Partner to enter into the LP Agreement
      or
      to perform its obligations thereunder or of Avis Budget Car Rental Canada ULC
      to
      enter into the CCRG Undertaking or to perform its obligations thereunder or
      that
      a General Partner or Avis Budget Car Rental Canada ULC shall be the subject of
      any incapacity, disability or lack or limitation of status in respect thereof.
      The Servicer Obligations are hereby guaranteed notwithstanding any incapacity,
      disability or lack or limitation of status or power of a General Partner to
      enter into the LP Agreement or to perform its obligations thereunder or of
      Avis
      Budget Car Rental Canada ULC to enter into the CCRG Undertaking or to perform
      its obligations thereunder.

     

    4.  Dealings
      with a General Partner and Others.

     

    (a)  Each
      Limited Partner may, without giving notice (other than any notice required
      to be
      given to the Guarantor pursuant to the LP Agreement) to or obtaining the consent
      of the Guarantor if no Trigger Event has occurred and each Limited Partner
      may
      upon written notice to the Guarantor if a Trigger Event has occurred and is
      continuing:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	(i)  	
              grant
                extensions of time and other
                indulgences;

            

    

     

    
      	(ii)  	
              take
                and give up security interests;

            

    

     

    
      	(iii)  	
              accept
                compositions;

            

    

     

    
      	(iv)  	
              grant
                releases and discharges, whether full, partial, conditional or
                otherwise;

            

    

     

    
      	(v)  	
              perfect,
                fail to perfect or fail to maintain the perfection of any security
                interests;

            

    

     

    
      	(vi)  	
              release
                any undertaking, property or assets charged by any security interests
                to
                third parties;

            

    

     

    
      	(vii)  	
              hold
                any monies received from a General Partner or
                others;

            

    

     

    
      	(viii)  	
              apply
                such monies against such part of the Servicer Obligations and change
                any
                such application in whole or in part at any time and from time to
                time;
                

            

    

     

    and,

     

    (b)  each
      Limited Partner may upon written notice to the Guarantor:

     

    
      	(i)  	
              consent
                to or otherwise permit any assignment of a General Partner's rights
                or
                obligations under the LP Agreement in compliance with the LP
                Agreement;

            

    

     

    
      	(ii)  	
              assign
                its own rights or obligations under the LP Agreement and the CCRG
                Undertaking in compliance with the LP Agreement;
                or

            

    

     

    
      	(iii)  	
              delay
                in taking any action or otherwise deal or fail to deal with a General
                Partner, Avis Budget Car Rental Canada ULC or others (including the
                Guarantor),

            

    

     

    all
      as
      such Limited Partner may see fit, without prejudice to or in any way discharging
      or diminishing the Guarantor's Obligations, and no loss of or in respect of
      any
      other guarantees, indemnities or security interests received by such Limited
      Partner from any other persons in respect of the Servicer Obligations, whether
      occasioned through the fault of such Limited Partner or otherwise, shall in
      any
      way discharge or diminish the Guarantor's Obligations.

     

    5.  Subrogation.

     

    The
      Guarantor shall have no right to be subrogated to the rights of a Limited
      Partner under the LP Agreement or the CCRG Undertaking in respect of the
      Guarantor's performance under this Guarantee in respect of the Servicer
      Obligations until such time as all of the Servicer Obligations have been fully
      performed or satisfied. In case of the liquidation, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    dissolution,
      winding-up, insolvency or bankruptcy of a General Partner or Avis Budget Car
      Rental Canada ULC (whether voluntary or involuntary) or in the event that a
      General Partner or Avis Budget Car Rental Canada ULC shall make an arrangement
      or composition with its creditors, each Limited Partner shall have the right
      to
      rank in priority to the Guarantor for such Limited Partner's full claims in
      respect of the Guarantor's Obligations not then satisfied, and if any amount
      shall be paid to the Guarantor in such circumstances when all of the Guarantor's
      Obligations have not been paid or satisfied in full, such amounts shall be
      held
      in trust for the benefit of such Limited Partner and shall be forthwith paid
      to
      such Limited Partner on account of such unpaid Guarantor's Obligations. If
      the
      Guarantor shall perform or satisfy any or all of the Servicer Obligations and
      all of the Guarantor's Obligations shall have been performed or satisfied in
      full, each Limited Partner will, at the Guarantor's request and expense,
      forthwith execute and deliver to the Guarantor appropriate documents, without
      recourse and without representation and warranty, necessary to evidence the
      transfer by subrogation to the Guarantor of any of such Limited Partner's rights
      under the LP Agreement or the CCRG Undertaking in respect of the Servicer
      Obligations performed or satisfied by the Guarantor. If any amount shall be
      paid
      to the Guarantor on account of any subrogation rights at any time when all
      of
      the Guarantor's Obligations have not been paid or satisfied in full, such
      amounts shall be held in trust for the benefit of each Limited Partner and
      shall
      be forthwith paid to such Limited Partner on account of such unpaid Guarantor's
      Obligations.

     

    6.  Continuing
      Guarantee.

     

    This
      Guarantee is a continuing guarantee and shall apply to and secure the
      performance of any and all of the Servicer Obligations. This Guarantee may
      not
      be terminated or determined by the Guarantor at any time.

     

    7.  Performance
      by the Guarantor.

     

    Notwithstanding
      Section 3, in honouring this Guarantee, the Guarantor shall be entitled to
      perform or satisfy any Servicer Obligation on the same terms and conditions
      and
      subject to the same rights and limitations as would have been applicable to
      the
      carrying out of such obligations by a General Partner under the LP Agreement
      or
      by Avis Budget Car Rental Canada ULC under the CCRG Undertaking.

     

    8.  Notice
      of Default.

     

    If
      a
      General Partner or Avis Budget Car Rental Canada ULC defaults in the performance
      of any of the Servicer Obligations and such default is continuing, each Limited
      Partner is entitled to require the Guarantor to honour this Guarantee by
      personally performing such Servicer Obligations forthwith. A Limited Partner
      shall not be bound or obliged to pursue any remedy or exhaust its recourse
      against a General Partner or Avis Budget Car Rental Canada ULC or any other
      person or any securities in respect of such default before being entitled to
      require the Guarantor to honour this Guarantee in respect of such Servicer
      Obligation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.  Additional
      Guarantees.

     

    This
      Guarantee is in addition and without prejudice to any guarantees or securities
      of any kind (including guarantees whether or not in the same form as this
      Guarantee) now or hereafter held by a Limited Partner in respect of the Servicer
      Obligations.

     

    10.  No
      Waiver; Remedies.

     

    No
      Limited Partner shall by any act, delay, omission or otherwise be deemed to
      have
      waived any of its rights or remedies under this Guarantee and no waiver shall
      be
      valid unless it is in writing and signed by each Limited Partner, and then
      only
      to the extent therein set forth. A waiver by the Limited Partners of any right
      or remedy under this Guarantee on any one occasion shall not be construed as
      a
      bar to any right or remedy which the Limited Partners would otherwise have
      on
      any future occasion. No failure to exercise nor any delay in exercising on
      the
      part of a Limited Partner any right, power or privilege under this Guarantee,
      shall operate as a waiver thereof; nor shall any single or partial exercise
      of
      any right, power or privilege under this Guarantee preclude any other or further
      exercise thereof or the exercise of any other right, power or privilege. The
      rights and remedies provided under this Guarantee are cumulative and may be
      exercised singly or concurrently, and are not exclusive of any rights or
      remedies provided by Applicable Law.

     

    11.  Release
      and Discharge.

     

    Once
      all
      of the Guarantor's Obligations have been performed or satisfied, this Guarantee
      and the rights granted in it shall cease and be null and void, and each of
      the
      Limited Partners shall, at the request and at the expense of the Guarantor,
      execute and deliver to the Guarantor the documents required to release and
      discharge this Guarantee.

     

    12.  Representations
      and Warranties of the Guarantor.

     

    The
      Guarantor represents and warrants to each Limited Partner on the date hereof
      that:

     

    
      	(a)  	
              Organization.
                The Guarantor is a limited liability company validly existing under
                the
                laws of the State of Delaware and
                has the power to own or lease its property, to carry on its business
                as
                now being conducted by it and to enter into this Guarantee and to
                perform
                its obligations hereunder;

            

    

     

    
      	(b)  	
              Authorization.
                This Guarantee has been duly authorized, executed and delivered by
                the
                Guarantor and is a legal, valid and binding obligation of the Guarantor,
                enforceable against the Guarantor by each Limited Partner in accordance
                with its terms, except to the extent that enforcement may be limited
                by
                bankruptcy, insolvency and other laws affecting the rights of creditors
                generally and except that equitable remedies may be granted only
                in the
                discretion of a court of competent
                jurisdiction;

            

    

     

    
      	(c)  	
              No
                Violation.
                The execution and delivery of this Guarantee by the Guarantor and
                the
                consummation of the transactions herein provided for will not result
                in
                the 

            

    

     

    
       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      	  	
              material
                breach or material violation of any of the provisions of, or constitute
                a
                material default under, or conflict with or cause the acceleration
                of any
                obligation of the Guarantor under (i) any Contract to which the Guarantor
                is a party or by which it is or its properties are bound, (ii) any
                provision of the constating documents or by-laws or resolutions of
                the
                board of directors (or any committee thereof) or shareholders of
                the
                Guarantor, (iii) any judgment, decree, order or award of any court,
                governmental body or arbitrator having jurisdiction over the Guarantor,
                (iv) any licence, permit, approval, consent or authorization held
                by the
                Guarantor necessary to the operation of the Guarantor's business,
                or (v)
                any Applicable Law, which breach, violation, default, conflict or
                acceleration could reasonably be expected to have a material adverse
                effect on the Guarantor;

            

    

     

    
      	(d)  	
              No
                Litigation, Etc.
                Other than as disclosed in the most recent Form 10-K, Form 10-Q and,
                if
                applicable, Form 8-K, filed by the Guarantor with the Securities
                Exchange
                Commission, there are no material actions, suits, proceedings or
                investigations commenced or, to the knowledge of the Guarantor,
                contemplated or threatened against or affecting the Guarantor at
                law or in
                equity before or by any governmental department, commission, board,
                bureau, court, agency, arbitrator or instrumentality, domestic or
                foreign,
                of any kind, which in any case would prevent or hinder the consummation
                of
                the transactions contemplated by this Guarantee or which could reasonably
                be expected to have a material adverse effect on the
                Guarantor;

            

    

     

    
      	(e)  	
              Guarantor
                Financial Statements.
                The Guarantor Financial Statements have been prepared in accordance
                with
                U.S. GAAP and present fairly and disclose in all material respects
                the
                financial condition, assets and liabilities of the Guarantor as at
                the
                respective dates of the Guarantor Financial Statements and the sales,
                earnings and results of operations for the Guarantor for the respective
                periods covered by the Guarantor Financial Statements. There has
                been no
                material adverse change in the results of operations, financial position
                or condition of the Guarantor since the date of the most recent balance
                sheet forming part of the Guarantor Financial
                Statements;

            

    

     

    
      	(f)  	
              Compliance
                with Applicable Laws.
                The Guarantor has conducted and is conducting its business in compliance
                with all Applicable Laws of each jurisdiction in which any material
                portion of its business is carried on and has all required licences,
                permits, registrations and qualifications under the laws of each
                such
                jurisdiction to carry on its business, except to the extent that
                failure
                to so conduct its business or to have such licences, permits,
                registrations or qualifications could not reasonably be expected
                to have a
                material adverse effect on the
                Guarantor;

            

    

     

    
      	(g)  	
              Consents
                and Approvals.
                There is no requirement to make any filing with, give any notice
                to or to
                obtain a licence, permit, certificate, registration, authorization,
                consent or approval of, any governmental or regulatory authority
                as a
                condition to the lawful consummation of the transactions contemplated
                by
                this Guarantee the failure of which would have a material adverse
                effect
                on the Guarantor;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(h)  	
              Solvency,
                Etc.
                The Guarantor is not insolvent and has not (i) admitted its inability
                to
                pay its debts generally as they become due or failed to pay its debts
                generally as they become due, (ii) proposed a compromise or arrangement
                to
                its creditors, (iii) had any petition for a receiving order or bankruptcy
                filed against it, (iv) consented to have itself declared bankrupt
                or wound
                up, (v) consented to have a receiver, liquidator or trustee appointed
                over
                any part of its assets, (vi) had any encumbrancer take possession
                of any
                of its property, (vii) had any execution or distress become enforceable
                or
                become levied upon any of its property which could reasonably be
                expected
                to have a material adverse effect on the ability of the Guarantor
                to carry
                out its obligations hereunder, or (viii) had any unsatisfied judgment
                outstanding against it for more than 15 days which could reasonably
                be
                expected to have a material adverse effect on the ability of the
                Guarantor
                to carry out its obligations
                hereunder;

            

    

     

    
      	(i)  	
              Ownership
                of General Partners and Avis Budget Car Rental Canada
                ULC.
                The Guarantor directly or indirectly owns all of the issued and
                outstanding shares of each General Partner and Avis Budget Car Rental
                Canada ULC; and

            

    

     

    
      	(j)  	
              Full
                Disclosure.
                Neither this Guarantee nor any document to be delivered by the Guarantor
                nor any certificate, report, statement or other document furnished
                by the
                Guarantor to the Limited Partners, the Securitization Agents or the
                Rating
                Agency in connection with the negotiation of this Guarantee contains
                or
                will contain any untrue statement of a material fact or omits or
                will omit
                to state a material fact necessary to make the statements contained
                herein
                or therein not misleading.

            

    

     

    13.  Covenants
      of the Guarantor.

     

    The
      Guarantor covenants and agrees with each Limited Partner that:

     

    
      	(a)  	
              The
                Guarantor shall preserve and maintain its existence (except in the
                case of
                a merger, consolidation, dissolution or liquidation if the surviving
                entity assumes all of the Guarantor's obligations hereunder), rights,
                franchises and privileges and shall qualify and remain qualified
                to carry
                on business in each jurisdiction in which the failure to do so would
                have
                a material adverse effect on the Guarantor; provided, however, nothing
                in
                this clause shall prohibit or limit in any respect transactions in
                the
                ordinary course of business of the Guarantor or any of its
                Subsidiaries.

            

    

     

    
      	(b)  	
              Ownership
                of General Partners and Avis Budget Car Rental Canada
                ULC.
                The Guarantor shall own, directly or indirectly, all of the shares
                of each
                General Partner and Avis Budget Car Rental Canada
                ULC.

            

    

     

    
      	(c)  	
              No
                Defaults.
                The Guarantor shall promptly notify the Rating Agency and each
                Securitization Agent of any events of default of which it is aware
                under
                this Guarantee and any Trigger Events of which it is aware under
                the LP
                Agreement.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(d)  	
              Guarantor
                Financial Statements.
                The Guarantor shall deliver to each Limited Partner within 60 days
                of the
                end of the first three fiscal quarters of each fiscal period of the
                Guarantor a copy of the unaudited income and cash flow statements
                and the
                unaudited balance sheet of the Guarantor as at and for the period
                then
                ended and, as soon as available but no later than 120 days after
                the end
                of each fiscal year of the Guarantor a copy of the audited income
                and cash
                flow statements and the audited balance sheet of the Guarantor as
                at and
                for the period then ended.

            

    

     

    14.  Events
      of Default.

     

    The
      occurrence or existence of any one or more of the following events or facts
      which is continuing (each an "Event
      of Default"),
      shall
      constitute an Event of Default under this Guarantee:

     

    
      	(a)  	
              the
                failure by the Guarantor to perform or observe any Guarantor Obligation,
                provided that if such failure is capable of being remedied, such
                failure
                shall not constitute an Event of Default unless it remains unremedied
                for
                five Business Days after written notice from a Limited
                Partner;

            

    

     

    
      	(b)  	
              the
                inaccuracy when made of a representation or warranty of the Guarantor
                hereunder in any material respect, provided that if such inaccuracy
                is
                capable of being remedied, then it shall not constitute an Event
                of
                Default unless it remains unremedied for ten Business Days after
                written
                notice from a Limited Partner;

            

    

     

    
      	(c)  	
              the
                Guarantor failing to pay when due any obligation (the "underlying
                obligation")
                for a sum certain in excess of U.S.$25,000,000 and such failure continuing
                for three Business Days after (i) written notice to the Guarantor
                from the
                party to whom the underlying obligation is owed if there is no grace
                period applicable to the underlying obligation or (ii) the expiry
                of any
                grace period applicable to the underlying
                obligation;

            

    

     

    
      	(d)  	
              the
                Guarantor failing generally to pay its debts as they become due or
                admitting its inability to do so or making a general assignment for
                the
                benefit of creditors or being adjudicated a bankrupt or insolvent
                or
                seeking the protection of Insolvency Legislation;
                or

            

    

     

    
      	(e)  	
              proceedings
                being taken by a third party against the Guarantor under Insolvency
                Legislation or a receiver being appointed over, or execution being
                levied
                against, any material portion of the assets of the Guarantor, unless
                such
                proceedings are withdrawn or terminated with prejudice to the applicant
                within 60 days of having been
                commenced.

            

    

     

    
      	15.  	
              Guarantor
                to Investigate Financial Condition of General Partners and Avis Budget Car
                Rental Canada ULC.

            

    

     

    The
      Guarantor acknowledges that it has fully informed itself about the financial
      condition of the General Partners. The Guarantor assumes full responsibility
      for
      keeping fully 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    informed
      of the financial condition of the General Partners and Avis Budget Car Rental
      Canada ULC and all other circumstances affecting each General Partner's or
      Avis
      Budget Car Rental Canada ULC's ability to perform the Servicer Obligations
      and
      the Guarantor's ability to perform its obligations hereunder, and agrees that
      no
      Limited Partner has a duty to report to the Guarantor any information which
      such
      Limited Partner has or receives about the financial condition of the General
      Partners or Avis Budget Car Rental Canada ULC or any circumstances bearing
      on
      each General Partner's or Avis Budget Car Rental Canada ULC's ability to perform
      the Servicer Obligations.

     

    16.  Termination.

     

    This
      Guarantee and the Guarantor's Obligations are irrevocable. The Guarantor may
      not
      determine its liability in respect of any of Servicer Obligations, including
      Servicer Obligations incurred in the future.

     

    17.  Tax
      Indemnity.

     

    All
      sums
      payable by the Guarantor to each Limited Partner under this Guarantee shall
      be
      made free and clear of, and without deduction for, any taxes or duties of
      whatsoever nature imposed, levied, collected, withheld or assessed by any
      authority having power to tax, unless the withholding or deduction of such
      taxes
      or duties is required by Applicable Law. If the Guarantor is so required to
      deduct, then it shall promptly notify the relevant Limited Partner of such
      requirement and pay to the relevant taxing authority the full amount required
      to
      be deducted (including the amount required to be deducted from any additional
      payment made pursuant to the immediately following clause) and, provided that
      such taxes or duties are Indemnifiable Taxes, pay such additional amount as
      will
      result in the receipt by such Limited Partner of such amounts as would have
      been
      received by it had no such taxes or duties been required to be deducted. The
      Guarantor will indemnify and hold harmless each Limited Partner from and against
      any and all claims, damages and liabilities to which such Limited Partner may
      become subject due to the failure of the Guarantor to deduct such taxes or
      duties and remit same to any relevant taxing authority. The obligations under
      this Section 17 shall survive the termination of this Guarantee.

     

    18.  Notices.

     

    Any
      notice, report, demand or other communication required or permitted to be given
      or made hereunder shall be in writing and shall be sufficiently given or made
      for all purposes if delivered personally or transmitted by fax to the party
      or
      to an officer of the party to whom the same is directed, addressed as
      follows:

     

    (a) if
      to the
      Guarantor, addressed to it at:

     

    Avis
      Budget Car Rental, LLC

    6
      Sylvan
      Way

    Parsippany,
      N.J.

    USA
      07054

     

    Attention:
       Treasurer
      

    Fax
      No.:   (973)
      496-3560

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    and

     

    Attention: Legal
      Department

    Fax
      No.: (973)
      496-3444

     

    with
      a
      copy to:

     

    Avis
      Budget Group, Inc. 

    6
      Sylvan
      Way

    Parsippany,
      N.J.

    USA
      07054

     

    Attention:
       Treasurer

    Fax
      No.:   (973)
      496-3560

     

    (b) if
      to the
      STARS Limited Partner, addressed to it at:

     

    STARS
      Trust

     

    c/o
      BNY
      Trust Company of Canada

     

    4
      King
      Street West

     

    Suite
      1101

     

    Toronto,
      ON M5H 1B6

     

    Attention: George
      Bragg,

     

    President
      and Chief Executive Officer

     

    Fax
      No.: (416)
      360-1711

     

    and

     

    Attention: Patricia
      Benjamin

     

    Assistant
      Treasurer and Trust Officer

     

    Fax
      No.: (416)
      360-1711

     

     

    with
      a
      copy to the STARS Securitization Agent, addressed to it at:

     

    BMO
      Nesbitt Burns Inc.

     

    1
      First
      Canadian Place

     

    3rd
      Floor
      Podium

     

    Toronto,
      ON M5X 1H3

     

    Attention: Executive
      Managing Director, 

    Securitization
      and Structured Finance

    Fax
      No.: (416)
      359-1910

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(c)  	
              if
                to the Bay Street Limited Partner, addressed to it
                at:

            

    

     

    Bay
      Street Funding Trust

     

    c/o
      Montreal Trust Company of Canada

     

    100
      University Avenue

     

    11th
      Floor

     

    Toronto,
      ON M5J 2Y1

     

    Attention: Account
      Administrator

     

    Fax
      No.: (416)
      981-9777

     

    with
      a
      copy to the Bay Street Securitization Agent, addressed to it at:

     

    Scotia
      Capital Inc.

     

    68th
      Floor,
      Scotia Plaza

     

    40
      King
      Street West

     

    P.O.
      Box
      4085, Station "A"

     

    Toronto,
      ON M5W 2X6

     

    Attention: Director,
      Securitization

     

    Fax
      No.: (416)
      945-4534

     

    (d) and
      if to
      the Rating Agency, addressed to it at:

     

    Dominion
      Bond Rating Service Limited

     

    200
      King
      Street West

     

    Suite
      1304

     

    Sun
      Life
      Centre, West Tower

     

    P.O.
      Box
      34

     

    Toronto,
      ON M5H 3T4

     

    Attention: Executive
      Vice President - Structured Finance

     

    Fax
      No.: (416)
      593-8432

     

    Any
      such
      notice that is given by personal delivery shall be deemed to have been received
      on the day of actual delivery thereof and any notice given by fax shall be
      deemed to have been received on the first Business Day after the transmittal
      thereof. A Limited Partner may change its address or fax number by giving
      written notice of such change to the Guarantor or the Guarantor may change
      its
      address or fax number by giving such notice thereof to each Limited
      Partner.

     

    19.  Governing
      Law; Submission to Jurisdiction; Waiver of Immunities.

     

    This
      Guarantee shall be governed by and construed in accordance with the laws of
      the
      Province of Ontario and of Canada applicable therein and shall be treated in
      all
      respects as an Ontario contract. The Guarantor hereby irrevocably submits to
      the
      non-exclusive jurisdiction of any court sitting in the Province of Ontario
      in
      any action or proceeding arising out of or relating to this Guarantee and the
      Guarantor irrevocably agrees that all claims in respect of any such

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    action
      or
      proceeding may be heard and determined in such Ontario court. The Guarantor
      hereby irrevocably waives, to the extent permitted by Applicable Law, the
forum
      non conveniens
      defence
      to the maintenance of any such action or proceeding. The Guarantor agrees that
      a
      final judgment in any action or proceeding shall be conclusive and may be
      enforced in other jurisdictions by suit on the judgment or in any other manner
      provided by Applicable Law. Nothing in this Section 19 shall affect the right
      of
      a Limited Partner to serve legal process in any other manner permitted by
      Applicable Law or affect its right to bring any action or proceeding against
      the
      Guarantor or its property and assets in the courts of any other
      jurisdiction.

     

    20.  Further
      Assurances.

     

    The
      Guarantor shall at all times do, execute, acknowledge and deliver or cause
      to be
      done, executed, acknowledged or delivered all such further acts, deeds,
      transfers, assignments and assurances as a Limited Partner may reasonably
      require in order to give effect to the provisions of this
      Guarantee.

     

    21.  Amendment
      in Writing.

     

    This
      Guarantee may only be amended or supplemented by a written agreement signed
      by
      the Guarantor and each Limited Partner and agreed to in writing by the Rating
      Agency.

     

    22.  Benefit
      and Binding Nature; Assignment.

     

    This
      Guarantee shall bind the Guarantor, its successors and permitted assigns and
      enure to the benefit of and be enforceable by each Limited Partner and its
      respective successors and permitted assigns. None of the Limited Partners or
      the
      Guarantor may assign any of its rights or obligations under this Guarantee
      without the prior written consent of the others.

     

    23.  Entire
      Agreement.

     

    This
      Guarantee constitutes the entire agreement between the parties with respect
      to
      the subject matter hereof and supersedes all prior agreements, understandings,
      negotiations and discussions, whether written or oral. There are no
      representations, warranties, conditions, other agreements or acknowledgements,
      whether direct or collateral, express or implied, that form part of or affect
      this Guarantee except as specifically set forth herein. The execution of this
      Guarantee has not been induced by, nor does the Guarantor rely upon or regard
      as
      material, any representations, warranties, conditions, other agreements or
      acknowledgements expressly made in this Guarantee, or the agreements and other
      documents to be delivered pursuant hereto.

     

    24.  Waiver
      of Notice of Acceptance.

     

    The
      Guarantor waives notice of acceptance of this instrument.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF the Guarantor has executed this Guarantee this 11th
      day of
      December, 2006.

     

    
      

       

      
        	 	 	 	
                
                  AVIS
                    BUDGET CAR RENTAL, LLC 

                

                 

              	 
	 	 	
                by:

              	
                /s/
                  David B. Wyshner

              	 
	 	 	 	
                Name:
                  David B. Wyshner

                Title:
                  Executive Vice President, Chief Financial Officer and Treasurer
                  

              	 

      

      

    

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    SCHEDULE
      A

     

    SERVICER
      OBLIGATIONS

     

    2.8 Covenants
      of General Partners

     

    (a)  Each
      General Partner shall at all times during the term of the LP Agreement be a
      direct or indirect wholly-owned subsidiary of, and be controlled in fact by,
      the
      Guarantor.

     

    (b)  Each
      General Partner shall not, without the prior written consent of each Limited
      Partner and the Rating Agency, have incurred or incur any liabilities or enter
      into any obligations for or on behalf of the Partnership, otherwise than those
      arising under or contemplated by the LP Agreement, the Assignment and Assumption
      Agreement, any Licensee Vehicle Assignment Agreements and/or any other Contract
      contemplated thereby or those arising in the normal course of the business
      of
      the Partnership.

     

    (c)  Each
      General Partner shall promptly notify the Rating Agency and each Securitization
      Agent of any defaults of which it is aware under the LP Agreement, the
      Assignment and Assumption Agreement, any Licensee Vehicle Assignment Agreements,
      this Guarantee or any Repurchase Agreement.

     

    (d)  The
      General Partners shall cause the Partnership to be registered as a "vehicle
      dealer" under any applicable motor vehicle dealer, highway traffic or other
      legislation where such registration is reasonably determined by the General
      Partners to be necessary or desirable. Such registrations are to be made
      promptly and, in any event, within 90 days of the date of the LP Agreement
      in
      respect of the jurisdictions in which the Partnership carries on business as
      of
      such date, and within 60 days from the date on which the Partnership commences
      to carry on business in respect of any other jurisdiction.

     

    4.1 Estimation
      Report

     

    Not
      later
      than 12:00 noon (Toronto time) on each Estimation Date, the General Partners
      shall provide to each Limited Partner an Estimation Report containing the items
      set out in Section 4.1 of the LP Agreement.

     

    4.2 Payout
      Report

     

    Not
      later
      than 12:00 noon (Toronto time) on each Payout Reporting Date, the General
      Partners shall provide to each Limited Partner a Payout Report containing the
      items set out in Section 4.2 of the LP Agreement.

     

    4.3 Settlement
      Report

     

    Not
      later
      than 12:00 noon (Toronto time) on each Settlement Date, the General Partners
      shall provide to each Limited Partner a Settlement Report containing the items
      set out in Section 4.3 of the LP Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.4 Collections
      of Rental Revenues

     

    Subject
      to the following sentence, the General Partners shall deposit all Rental
      Revenues into the Rental Account as promptly as possible upon receipt, and,
      in
      any event, no later than the first Business Day following receipt. So long
      as no
      Trigger Event has occurred and is continuing, notwithstanding the foregoing
      sentence, the General Partners may make a single deposit of Rental Revenues
      into
      the Rental Account no later than 12:00 noon (Toronto time) on each Remittance
      Date. All deposits of Rental Revenues into the Rental Account shall be made
      in
      immediately available funds.

     

    4.5 Prepayments

     

    So
      long
      as the General Partners are entitled to remit Rental Revenues on a monthly
      basis, as opposed to a daily basis, pursuant to Section 4.4 of the LP Agreement,
      the General Partners shall deposit into the Rental Account and the Vehicle
      Account the respective amounts set out in Section 4.5 of the LP
      Agreement.

     

    4.6 Rental
      Account

     

    (a)  The
      General Partners shall manage for and in the name of Partnership the Rental
      Account. The General Partners shall deposit all Rental Revenues as received
      to
      the Rental Account in accordance with Section 4.4 of the LP Agreement. The
      General Partners shall deposit all Hedge Receipts as received to the Rental
      Account.

     

    (b)  Subject
      to Section 8.5 of the LP Agreement, on each Remittance Date, the General
      Partners shall distribute cash from the Rental Account as set out in subsection
      4.6(c) of the LP Agreement.

     

    (c)  Notwithstanding
      subsection 4.6(c) of the LP Agreement, insofar as Expenses consist of VAT
      payable upon the purchase of Partnership Vehicles, the General Partners shall
      pay such Expenses directly from the VAT Account when the VAT Account is not
      commingled with the Rental Account or from the Rental Account when the Rental
      Account and the VAT Account are commingled, or may first transfer the necessary
      amounts from the Rental Account or the VAT Account, as the case may be, to
      the
      Vehicle Account to be remitted with the purchase of new Vehicles.

     

    4.7 Vehicle
      Account

     

    (a)  The
      General Partners shall manage for and in the name of Partnership, the Vehicle
      Account.

     

    (b)  Subject
      to Section 8.5 of the LP Agreement, the General Partners shall distribute cash
      from the Vehicle Account as set out in subsection 4.7(b) of the LP
      Agreement.

     

    4.8 VAT
      Account

     

    The
      General Partners shall manage for and in the name of the Partnership the VAT
      Account. The General Partners shall deposit to the VAT Account all amounts
      collected by 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    the
      Partnership on behalf of a governmental authority in respect of VAT as a result
      of the rental or sale of Vehicles by the Partnership or the provision of any
      other goods or services by the Partnership and any amount received by the
      Partnership from a governmental authority as a refund of VAT.

     

    For
      greater certainty, the obligations of the General Partners to make capital
      contributions in the event of a shortfall as described in the Section 4.8 of
      the
      LP Agreement is not a Servicer Obligation.

     

    4.9 Eligible
      Investments

     

    Pending
      the distribution required or allowed in the LP Agreement, the General Partners
      may use funds in the Rental Account, the Vehicle Account and the VAT Account
      to
      purchase Eligible Investments for the Partnership. The General Partners agree
      to
      ensure the amounts on deposit in such account shall be available in same day
      funds on the Business Day immediately preceding such Remittance Date (except
      that any amounts used to purchase Eligible Investments issued by BMO shall
      be
      made available in same day funds on the Remittance Date).

     

    5.2 Powers
      and Duties of General Partners

     

    (a)  In
      managing the business and affairs of the Partnership, the General Partners
      shall
      utilize their own employees, business premises, owned or leased, and
      communications and computer systems and these shall not be, and shall not be
      held out to be, the employees, premises or systems of the
      Partnership.

     

    (b)  The
      General Partners shall exercise their powers and discharge their duties under
      the LP Agreement, honestly, in good faith and in the best interest of the
      Partnership and in connection therewith shall exercise the degree of care,
      diligence and skill that a reasonably prudent Person would exercise in
      comparable circumstances, but subject to the foregoing shall not be liable
      to
      the Limited Partners for any act, omission or error in judgment made in good
      faith.

     

    (c)  Neither
      the General Partners nor any Affiliate of the General Partners shall carry
      on
      any activities outside the Partnership in a manner detrimental to the interests
      of the Partnership, including without limitation that neither the General
      Partners nor any Affiliate of the General Partners shall directly or indirectly
      own, invest in or operate a rental car business or businesses in Canada which
      competes with the car rental business of the Partnership provided that the
      Budget General Partner may have an interest in the Budget Vancouver licensee
      or
      such other entities that each Limited Partner approves, acting
      reasonably.

     

    (d)  Unless
      a
      different standard is required by the terms of the LP Agreement, the General
      Partners shall manage the business and affairs of the Partnership in a manner
      consistent with the management by the Avis General Partner of its vehicle rental
      business prior to June 1, 2004.

     

    (e)  Without
      limiting the generality of Section 5.1 of the LP Agreement, the General Partners
      shall have the full power and authority to, and shall, on behalf and in the
      name
      of the Partnership:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(i)  	
              acquire,
                insure and sell Vehicles;

            

    

     

    
      	(ii)  	
              operate
                the Rental Account, the Vehicle Account and the VAT
                Account;

            

    

     

    
      	(iii)  	
              pay
                the Expenses;

            

    

     

    
      	(iv)  	
              commence
                or defend any action or proceeding in connection with the
                Partnership;

            

    

     

    
      	(v)  	
              file
                on behalf of the Partnership returns required by any governmental
                or like
                authority and make all related remittances and receive all related
                refunds
                and credits;

            

    

     

    
      	(vi)  	
              maintain
                as valid and effective all registrations, qualifications, licences
                and
                permits necessary or desirable for the Partnership in the conduct
                of its
                business; and

            

    

     

    
      	(vii)  	
              do
                such other things as are in furtherance of or incidental to the business
                of the Partnership or that are provided for in the LP
                Agreement.

            

    

     

    (f)  The
      General Partners shall take all actions required to qualify, continue and keep
      in good standing the Partnership as a limited partnership and to maintain the
      limited liability of each Limited Partner in each jurisdiction where the
      Partnership may carry on business or own property and to cause the Partnership
      to register as a "motor vehicle dealer" in those provinces of Canada where
      it is
      necessary or advisable for the Partnership to be so registered.

     

    (g)  The
      General Partners shall enter into Vehicle Rental Agreements in their own names
      on behalf of the Partnership as undisclosed principal.

     

    (h)  The
      General Partners will, (i) in the conduct of the affairs of the Partnership,
      put
      all Approved Dealers, Manufacturers and other Persons with whom the Partnership
      does business in its own name on notice that each Limited Partner is not liable
      for the obligations the Partnership, and (ii) include in all Contracts entered
      into in the name of the Partnership a notice or the provision to the effect
      that
      the Partnership is a limited partnership (each of which conditions may be
      satisfied by contracting in the name of the Partnership as a limited
      partnership).

     

    (i)  The
      General Partners shall ensure at all times that the mix of Partnership Vehicles
      are as set out in subsection 5.2(i) of the LP Agreement.

     

    (j)  In
      buying
      Vehicles for the Partnerships, other than pursuant to the Assignment and
      Assumption Agreement, the General Partners shall buy such Vehicles in accordance
      with subsection 5.2(j) of the LP Agreement.

     

    (k)  The
      General Partners agree that in operating the business of the Partnership they
      shall at all times in all material respects comply with and perform each term,
      condition, representation, warranty and covenant required to be complied with
      or
      performed by the lessor under each Vehicle Rental Agreement and will not take
      or
      omit to take any action that would 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    cause
      any
      failure by the Partnership to so comply with and perform in all material
      respects each such term, condition, representation, warranty and covenant
      required to be complied with or performed by the lessor under each Vehicle
      Rental Agreement.

     

    (l)  The
      General Partners shall do or cause to be done all such acts and things as a
      reasonable and prudent operator of a Vehicle rental business would do in order
      to maintain, use, operate and manage the property, assets and undertaking of
      such business which are necessary or of advantage to the proper conduct of
      the
      business including all such acts and things referred to in subsection 5.2(l)
      of
      the LP Agreement.

     

    (m)  The
      General Partners shall at their own expense maintain the Partnership Vehicles
      in
      good repair, working order and condition and, in the case of a Vehicle subject
      to a Repurchase Agreement, to the standard required by the relevant Repurchase
      Agreement.

     

    (n)  The
      General Partners shall indemnify and hold harmless the Partnership against
      any
      obligation of the Partnership to reimburse a Manufacturer for any allowance
      or
      rebate paid by a Manufacturer to a General Partner in connection with the sale
      of Partnership Vehicles to the Partnership.

     

    (o)  The
      General Partners shall at their own expense provide insurance for the business
      of the Partnership and for the Partnership Vehicles, as set out in subsection
      5.2(o) of the LP Agreement. The General Partners shall indemnify and hold
      harmless the Partnership against all claims, losses and expenses within the
      deductible amounts under such insurance policies.

     

    (p)  Each
      General Partner shall continue to self insure and maintain adequate reserves
      in
      respect of such self insurance as set out in subsection 5.2(p) of the LP
      Agreement.

     

    5.3 Restrictions
      on Operations and Activities

     

    The
      General Partners will manage and conduct all aspects of the day-to-day
      operations and other activities of the Partnership, subject, however, to the
      restrictions that are in Section 5.3 of the LP Agreement; and the Partnership's
      sole assets being as set out in subsection 5.3(f) of the LP
      Agreement.

     

    5.4 Program
      Negotiation Vehicles

     

    The
      General Partners shall deliver a signed copy of any letter of undertaking
      referred to in subsection 5.4(a) of the LP Agreement to each Securitization
      Agent and the Rating Agency as soon as reasonably practicable and, in any event,
      prior to the Partnership purchasing Program Negotiation Vehicles from the
      relevant Eligible Manufacturer.

     

    5.5 Commingling
      of Partnership Assets

     

    Subject
      to any monthly remittance of Rental Revenues pursuant to Section 4.4 of the
      LP
      Agreement, the funds and assets of the Partnership shall not be commingled
      with
      the funds or assets of any other Person (including those of the General
      Partners).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.1 Books
      of Account

     

    The
      General Partners will keep and maintain full, complete and accurate books of
      account and records of the business of the Partnership. The Partnership books
      shall be kept at the principal office from time to time of the Avis General
      Partner. During the existence of the Partnership and for a period of three
      years
      thereafter, such books of account and records shall be made available for
      inspection by each Limited Partner or by its duly authorized representatives
      during normal business hours at the principal office of the Avis General
      Partner.

     

    6.2 Annual
      Report and Income Tax Information

     

    (a)  In
      addition to the reports required by Article 4 of the LP Agreement, within 60
      days after the end of each Fiscal Period, the General Partners shall deliver
      to
      each Limited Partner (i) an annual report in respect of such Fiscal Period
      prepared in accordance with and containing the items set out in paragraph
      6.2(a)(i) of the LP Agreement and (ii) information concerning the amount of
      Taxable Income or Taxable Loss and credits and charges to capital accounts
      allocated to each Limited Partner and such other information as is necessary
      to
      enable such Limited Partner to file income tax returns and partnership returns
      with respect to such Limited Partner's income or loss from the Partnership
      in
      respect of such Fiscal Period.

     

    (b)  Within
      120 days of the end of each Fiscal Period, the General Partners shall deliver
      to
      each Limited Partner the statements referred to in subparagraphs 6.2(a)(i)(A)
      and (B) of the LP Agreement with the report of the Auditors
      thereon.

     

    6.3 Fleet
      Reports

     

    On
      each
      Settlement Date, the General Partners will make available a Fleet Report to
      each
      Limited Partner.

     

    6.4 Financial
      Reports of the Partnership

     

    The
      General Partners shall deliver to each Limited Partner within 60 days of the
      end
      of each of the first three fiscal quarters of each Fiscal Period a copy of
      the
      unaudited income and cash flow statements and the unaudited balance sheet of
      the
      Partnership as at and for the period then ended.

     

    6.5 Financial
      Report of the General Partners and Avis Budget Car Rental Canada
      ULC

     

    Each
      General Partner shall deliver to each Limited Partner within 60 days of the
      end
      of each of the first three fiscal quarters of each fiscal period of such General
      Partner a copy of the unaudited income and cash flow statements and the
      unaudited balance sheet of such General Partner as at and for the period then
      ended and, as soon as available but not later than 120 days after the end of
      each fiscal period of such General Partner, a copy of the unaudited income
      and
      cash flow statements and the unaudited balance sheet of such General Partner
      as
      at and for the period then ended. Each General Partner shall cause Avis Budget
      Car Rental Canada ULC to deliver to each Limited Partner within 60 days of
      the
      end of each of the first three fiscal quarters of each fiscal period of Avis
      Budget Car Rental Canada ULC a copy of the unaudited income and cash flow
      statements and the unaudited balance sheet of Avis Budget Car Rental

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Canada
      ULC as at and for the period then ended and, as soon as available but not later
      than 120 days after the end of each fiscal period of Avis Budget Car Rental
      Canada ULC, a copy of the audited income and cash flow statements and the
      audited balance sheet of Avis Budget Car Rental Canada ULC as at and for the
      period then ended.

     

    6.6 Repurchase
      Agreements

     

    The
      General Partners shall provide to each Securitization Agent and the Rating
      Agency copies of all Repurchase Agreements entered into by the Partnership
      promptly after they have been entered into by the Partnership and, in any event,
      within 30 days after they have been entered into by the
      Partnership.

     

    8.5 Distribution
      of Amounts in Accounts Upon Trigger Event

     

    After
      the
      occurrence of a Trigger Event, the General Partners shall distribute cash from
      the Rental Account and from the Vehicle Account as set out in Section 8.5 of
      the
      LP Agreement.

     

    8.9 Liquidation
      of the Partnership's Assets

     

    In
      connection with the dissolution of the Partnership, the General Partners shall
      act as a receiver and liquidator of the assets of the Partnership and shall
      settle the accounts of the Partnership and liquidate its assets, if
      any.

     

    9.1 Indemnification
      by the General Partners

     

    Without
      limiting any other rights which the Limited Partners may have under the LP
      Agreement or under Applicable Law, each General Partner agrees to indemnify
      each
      Limited Partner and its respective trustees, employees, officers, directors,
      agents and assigns (collectively, the "Indemnified Parties") from and against
      any and all damages, losses, claims, liabilities and related costs and expenses,
      including reasonable legal fees and disbursements (all the foregoing being
      collectively referred to as "Indemnified Amounts") awarded against or reasonably
      incurred by any of the Indemnified Parties arising out of or as a result of
      (a)
      the liability of such Limited Partner not being limited in the manner provided
      in Section 2.14 of the LP Agreement (unless the liability of such Limited
      Partner is not so limited as a result of any act or omission of such Limited
      Partner) or (b) a breach or violation of those sections of the LP Agreement
      set
      out in this Schedule A by a General Partner, excluding, however, damages,
      losses, claims, liabilities, costs and expenses resulting from gross negligence
      or wilful misconduct on the part of such Limited Partner. The obligations of
      each General Partner in Section 9.1 of the LP Agreement shall survive any
      termination thereof. Without limiting the generality of the foregoing but
      subject to the exclusions referenced in (a) and (b), each General Partner shall
      indemnify the Indemnified Parties for Indemnified Amounts awarded or incurred
      as
      aforesaid relating to or resulting from:

     

    
      	(i)  	
               by
                the General Partners pursuant thereto, which shall have been false,
                incorrect or inaccurate in any material respect when
                made;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              by
                the General Partners pursuant thereto, which shall have been false,
                incorrect or inaccurate in any material respect when
                made;

            

    

     

    
      	(ii)  	
              the
                failure of a General Partner to comply with any Applicable Law with
                respect to any Partnership Vehicle or Vehicle Rental Agreement or
                the
                non-conformity of any Vehicle Rental Agreement with any Applicable
                Law;

            

    

     

    
      	(iii)  	
              any
                claim for personal injury, death, property damage or product liability
                which may arise by reason of, result from or be caused by, or relate
                to
                the use, operation, maintenance or ownership of, the Partnership
                Vehicles;
                and

            

    

     

    
      	(iv)  	
              any
                material failure of a General Partner to perform its covenants or
                obligations set out in this Schedule A in accordance with the provisions
                of the LP Agreement.

            

    

     

    9.2 Notification
      of Potential Liabilities

     

    Each
      of
      the Partners will, upon learning of potential situations involving possible
      liability under Article 9 of the LP Agreement, promptly notify the other
      Partners thereof.

     

    9.3 Litigation

     

    At
      the
      request of a Limited Partner, each General Partner shall, at its expense,
      co-operate with such Limited Partner in any action, suit or proceeding brought
      by or against such Limited Partner relating to any of the transactions
      contemplated by the LP Agreement, any Partnership Vehicles or Vehicle Rental
      Agreements (other than an action, suit or proceeding by one Partner against
      another Partner). In addition, each General Partner agrees to notify each
      Limited Partner, at the General Partners' expense, promptly upon learning of
      any
      pending or threatened action, suit or proceeding, if the judgment or expenses
      of
      defending such action, suit or proceeding would be covered by Section 9.1 of
      the
      LP Agreement and (except for an action, suit or proceeding by one Partner
      against another Partner) to consult with such Limited Partner, concerning the
      defence and prior to settlement.

     

    9.4 Tax
      Indemnity

     

    Each
      General Partner agrees to defend and save the Indemnified Parties harmless
      from
      and against any and all liabilities arising out of the transactions contemplated
      by the LP Agreement with respect to or resulting from any delay in paying or
      any
      omission to pay any Taxes otherwise required under the LP Agreement to be paid
      or withheld and remitted by or on behalf of such General Partner on its own
      behalf, on behalf of a Limited Partner, on behalf of the Partnership or on
      behalf of any Vehicle rental customers. If such General Partner shall be
      required by Applicable Law to deduct or withhold any Taxes from or in respect
      of
      any sum payable by or on behalf of the Partnership to a Limited Partner under
      the LP Agreement or in connection with the execution, delivery, filing or
      recording of the LP Agreement and of the other documents to be delivered under
      the LP Agreement and the consummation of the transactions contemplated by the
      LP
      Agreement, or if a Limited Partner shall be required to pay any Taxes in respect
      of any sums received by the LP from the Partnership under the LP
      Agreement:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	(a)  	
              such
                General Partner shall make such deductions or withholdings;
                and

            

    

     

    
      	(b)  	
              such
                General Partner shall pay forthwith the full amount deducted or withheld
                to the relevant taxation authority or other authority in accordance
                with
                Applicable Law and will provide to such Limited Partner copies of
                such
                forms as are required to be provided to such authority evidencing
                the
                payment by such General Partner.

            

    

     

    9.7 Change
      in Circumstances

     

    If
      any of
      the circumstances set out in Section 9.7 of the LP Agreement occurs, the
      Partnership shall, from time to time upon demand by the relevant Limited
      Partner, pay to such Limited Partner or the applicable Affected Person,
      simultaneously with the payment of the Funding Discount Amount or the Bond
      Interest Amount, as the case may be, the amount of any such increased cost
      incurred, expenses or liabilities incurred, reduction in amounts received or
      receivable, reduction in rate of return or required payment made or to be
      made.EMCORE: DR. HONG HOU OFFER LETTER

     

    
      

      
EXHIBIT
      10.1

    

    

    EMCORE
      CONFIDENTIAL

    December
      14, 2006

    

    Dr.
      Hong
      Hou

     

    Dear
      Hong: 

    

    It
      is
      with pleasure that, on behalf of the Board of Directors, I extend this offer
      to
      you to become EMCORE’s President and Chief Operating Officer, reporting to the
      Chief Executive Officer. In addition to the position of President and Chief
      Operating Officer, the Nominating Committee of the Board of Directors has
      recommended, and the Board has approved, your appointment as a Class C Director.
      Your start date in these positions will be effective immediately upon your
      acceptance of this offer letter. In addition, effective following the annual
      shareholders meeting in February 2008 and the current Chief Executive Officer
      moving into the role of Chairman of the Board, the Board also offers you the
      position of Chief Executive Officer. In connection with your new positions,
      the
      Compensation Committee of the Board of Directors has approved, effective upon
      your acceptance of this offer letter, an increase in your annual base salary
      to
      $400,000 per year. You will continue to be paid on our bi-weekly payroll. All
      operational Vice Presidents will report directly to you. 

     

    Bonus
      Plan.
      You
      will also be eligible for the 2007 Bonus Plan. Your bonus target will be 80%
      of
      your base salary and is based upon Company-wide performance parameters, as
      well
      as individual performance, as determined by the Compensation Committee of the
      Board of Directors. We expect that the 2007 Executive Bonus Plan will be adopted
      by the Compensation Committee in the next few months. Additionally, you must
      be
      an employee in good standing on the date EMCORE pays the bonus under the Plan
      in
      order to qualify for the bonus.

    

    Stock
      Option Grant.
      Conditioned upon your acceptance of this offer, the Compensation Committee
      of
      the Board of Directors has approved a grant to you of 245,000 stock options
      under an Incentive Stock Option Agreement, which will entitle you to purchase
      EMCORE stock (the “Initial Grant”).   In addition, the Compensation
      Committee has approved an additional grant to you of 255,000 stock options
      to be made in calendar year 2007 as soon as such options may be granted without
      exceeding the Award Limit under Section 6(k) of the EMCORE Corporation 2000
      Stock Option Plan (the “Plan”) and further subject to compliance with applicable
      securities laws and other provisions of such Plan (the “Additional Grant”). The
      Initial Grant will be priced in accordance with the Incentive Stock Option
      Grant
      Policy adopted by the Board on November 13, 2006.  Assuming you accept this
      offer today (December 14, 2006), and because the Compensation Committee has
      approved this grant today, your Initial Grant will have a strike price equal
      to
      the mean of the highest and lowest sale prices for a share of Stock on the
      composite tape or in Nasdaq National Market trading as reported in The
      Wall Street Journal
      (or, if
      not so reported, such other nationally recognized reporting source as the
      Committee shall select) on December 14, 2006. Your
      Additional Grant will be priced on the date of grant in 2007 in accordance
      with
      the Plan. You
      will
      also receive your formal Incentive Stock Option Agreement (the "Agreement").
       Regarding vesting for the Additional Grant to be made in 2007, the
      Compensation Committee has approved a four year vesting for the 255,000 stock
      options with the first options vesting on the one-year anniversary of your
      promotion and equal amounts thereafter on each anniversary. The terms of your
      options, including terms of exercise and expiration, are governed by the Plan,
      as amended, and the Agreement. Copies of the Plan prospectus and form Agreement
      will be provided, and the general description above is qualified in all respects
      by the terms of the Plan and Agreement.  If you have any questions about
      our stock option program, please contact me.

    

    Employee
      Group Health Benefits.
      You
      will continue to participate in EMCORE’s executive benefit plans. 

    

    Paid
      Time Off and Holidays.
      EMCORE
      does not offer PTO to its executives. 

    EMCORE
      observes ten (10) paid holidays per calendar year. Nine (9) of the Company
      observed holidays are the same each year with one (1) “floating” holiday that is
      determined by the Company annually. 

    

    At-Will
      Employment.
      This
      offer should not be construed as a guarantee of employment for any specific
      duration.  All employees of EMCORE are employed on an at-will basis.

    

    I
      would
      appreciate your considering our offer and advising me of your decision by
      December 14, 2006. Should you decide to accept our offer, please indicate your
      acceptance by signing in the space provided below and return to me. Please
      also
      provide a copy to our Chief Legal Officer by fax at 732-302-9783.  If you
      have any questions regarding Emcore or any aspects of this offer, please feel
      free to contact me. 

     

    Sincerely,
      

    

    EMCORE
      CORPORATION

    

     /s
      Reuben F. Richards, Jr.          

     
                           
                     
           

    Reuben
      F. Richards, Jr. 

    President
      and CEO

    

    OFFER
      ACCEPTED BY:

     

    I,
      Hong
      Q. Hou (print name), understand and accept the provisions of this employment
      offer as set forth above. Furthermore, I acknowledge that there are no legal
      restrictions to my employment at EMCORE.

     

    /s
      Hong
      Q. Hou   12/14/2006   12/14/2006

    Signature   
Date   Actual
      Start Date

     

    Witness:

     

    /s
      Monica
      Van Berkel  12/14/2006

    ____________________________________

    Signature   Date

    

    EMCORE
      is an Equal Opportunity Employer

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