Document:

Exhibit 10.28

 

ADDENDUM TO LETTER OF
UNDERSTANDING

 

MADE BETWEEN

 

VANGUARD RENTAL (UK) LIMITED

 

AND

 

LOMBARD NORTH CENTRAL PLC

 

AND

 

DATED

 

Vanguard Rental (UK) Limited
has requested, and Lombard North Central PLC has agreed, to permit Vanguard
Rental (UK) Limited to use the services of Franchisees subject to the
replacement of the “SUBLETTING APPENDIX” attached to the Letter of
Understanding dated 25th March 2004 with the form attached to this Addendum.

 

Save as varied by this
Addendum the terms of the Letter of Understanding dated 25th March 2004 shall
remain unaltered.

 

	
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  Date

  	
   

  	
  Date

  	
  25th March 2004

  
					

 

 

Letter
of procedure made between Lombard
North Central PLC (“Lombard”)

 

of 3
Princess Way Redhill Surrey RH1 1NP

 

and VANGUARD RENTAL (UK) LTD (the “Hirer”)

 

of JAMES HOUSE, 55 WELFORD ROAD, LEICESTER LE2 7AR

 

and dated

 

Pursuant to an agreement dated 25th March 2004 Lombard and the Hirer have transacted Rental
Agreements in respect of motor cars.

 

Both Lombard and the Hirer
are aware that there are logistical problems in collecting Rental Agreements
from the Hirer and delivering them to Lombard.

 

The Hirer has requested that
Lombard accept signed Rental Agreements by facsimile transmission which request
Lombard is prepared to agree provided that the Hirer agrees to post the
original of the Rental Agreement that has been sent by facsimile transmission
to Lombard on the same day that it is transmitted.

 

From the date of this letter
and until further notice Lombard and the Hirer agree that for each lease;

 

1.               The Hirer will send to Lombard such information
as Lombard requires to prepare a Rental Agreement.

 

2.               Lombard will transmit the form of Rental
Agreement to the Hirer by use of the internet or such other instrument as
Lombard and the Hirer shall agree.

 

3.               The Hirer will print an original Rental
Agreement and will have the Rental Agreement signed for the Hirer.

 

4.               The Hirer will post, by first class letter
post, the original Rental Agreement to Lombard.

 

These
arrangements may be terminated with immediate effect by Lombard or the Hirer by
written notice from each to the other.

 

	
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  Date

  	
   

  	
  Date

  	
  25th March 2004

  
					

 

 

Letter of Understanding made between Lombard
North Central PLC (“Lombard”)

 

of 3 Princess Way Redhill Surrey RH1 1NP

 

and VANGUARD RENTAL (UK) LTD (the “Hirer”)

 

of JAMES HOUSE, 55 WELFORD ROAD, LEICESTER
LE2 7AR

 

and dated

 

The terms
under which Lombard and the Hirer will enter into leasing agreements (each the “Rental
Agreement” and together the “Rental Agreements”) from the date of this
agreement will be as follows:

 

1.                                       Each
Rental Agreement will be entered into in the form attached.

 

2.                                       Each
Rental Agreement will be deemed to incorporate all of the terms attached to
this letter and headed the “Terms of each Rental Agreement” (the “Terms”) as if
those terms were actually printed on the Rental Agreement.

 

3.                                       The
Terms will be modified by the Addenda (if any) attached to this letter the
heading of which and the number of pages of which are shown in this letter. The
Addenda (if any) will apply to
each Rental Agreement written to the terms of this agreement.

 

4.                                       Each
Rental Agreement may be further modified by the attachment of any further Addenda
specifically referring to that Rental Agreement.

 

5.                                       Lombard
will treat Rental Agreements as being operating leases as that term is defined
by exclusion to SSAP21 but Lombard accepts that the accounting treatment of the
Rental Agreements in the Hirer’s individual and consolidated records and
financial statements are at the absolute discretion of the Hirer and its
auditors and neither the Hirer nor its auditors shall have any obligation or
liability whatsoever, whensoever or howsoever arising out of or in connection
with any such treatment. Where the Rental Agreement is categorised as a finance
lease as that term is defined in Section 219 of the Capital Allowances Act
2001, Lombard agrees that it will not increase or decrease rentals payable
under any Rental Agreement arising from the indemnities contained in the Terms
of each Schedule to the Rental Agreement.

 

The attachments
to this letter are:

ADDENDUM TO RENTAL AGREEMENT
(FOR RETURN CONDITIONS)

STANDARD CONDITIONS OF SALE

SUBLETTING APPENDIX

 

Lombard may register details
of this Agreement and any Schedule to Rental Agreement made subject to the
terms of this Agreement and the conduct of the Hirer’s account with any
licensed credit reference agency. This and the information the Hirer has given
may be used to help make credit decisions, to prevent fraud, for tracing
debtors and for recovering Lombard’s property. Lombard may also disclose this
information to any member company of The Royal Bank of Scotland group of
companies, to any company or business associated with Lombard and to any person
acting on Lombard’s behalf for any purpose connected with the group’s business.
Lombard, or those identified above, may also contact the Hirer about services
which may be of interest. The Hirer may choose not to be contacted in this way.

 

	
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  Date

  	
   

  	
  Date

  	
  25th March 2004

  
					

 

 

Terms of each Schedule to the Rental Agreement

 

1.                        Definitions

 

In
this agreement:

 

1.01             “Agreement Date” means the date so called in
the Schedule.

 

1.02             “Equipment” means the equipment described in
the Schedule and includes each item thereof and all component parts,
accessories, additions, alterations and replacement parts thereto together with
all manuals and handbooks.

 

1.03             “Schedule” means the Schedule to this
agreement which shall form part of this agreement.

 

1.04             “Fixed Period” means the period so called in
the Schedule.

 

1.05             “Total Loss” means any loss, theft, seizure,
confiscation or destruction of all (but not subject to the provisions of Clause
9 any part or single item only) of the Equipment or any damage thereto which in
the insurer’s opinion may not be economical to repair.

 

1.06             Reference to any statutory enactment shall
include references to such enactment as it may after the date hereof from time
to time be amended, supplemented or re-enacted.

 

2.                        The Hiring; Rentals; Delivery of
the Equipment

 

2.01             Lombard agrees to hire and the Hirer agrees to
take on hire the Equipment on the terms of this agreement. The hiring will
start on the Agreement Date and will continue for the Fixed Period and at the
rentals shown in the Schedule. It is agreed and declared that the Hirer shall
have no right to terminate the hire earlier than a date 3 months from the Agreement Date.  If the Hirer wishes to terminate the hiring
after that date the Hirer will give Lombard one month’s notice and pay to
Lombard the amounts calculated in accordance with Clause 9.01 on or before the
next rental payment date.

 

2.02             The Hirer will pay Lombard at the address
shown in the Schedule at the times stated in the Schedule together with value
added tax (“VAT”):

 

(a)          the rentals shown in the Schedule or as adjusted under this agreement;

 

(b)         any other sums payable under this agreement.

 

Payments made by post will be at the Hirer’s own risk. Punctual payment
shall be of the essence of this agreement.

 

2.03             The Hirer will accept delivery of the
Equipment only if it is satisfactory. If the Equipment is unsatisfactory the
Hirer will notify Lombard immediately by fax. If Lombard do not receive a fax
from the Hirer within 48 hours of delivery it will be conclusively presumed
that the Hirer has accepted the Equipment and that it is completely
satisfactory.

 

2.04             The Hirer will comply with any reasonable
request from Lombard about the application for and preservation of any
available capital allowances and give Lombard written notice immediately of any happening requiring notification to a
competent taxation authority.

 

3.                        Risk, Care, Title, Use of
Equipment; Indemnity

 

3.01             The Hirer will be responsible for any loss,
theft destruction of or damage to
the Equipment from the date of delivery until it is sold or disposed of.

 

3.02             The Hirer will at its own expense keep the
Equipment properly serviced, maintained and in good repair and operating
condition allowing for fair wear and tear and subject to the provisions of
Clause 5 repair or replace any missing or unfit parts with parts of similar
manufacturing standards and specification as those recommended by the
manufacturer of the Equipment. The Hirer will maintain or cause to be maintained
complete records of all major services and significant repairs to the
Equipment. All replacement parts fixed to the Equipment will belong to the
owner of the Equipment and be subject
to the terms of this agreement.

 

3.03             The Equipment will remain personal and
moveable property. The Hirer will ensure that Lombard or Lombard’s agent will
have a right of access to the Equipment and all related records at all
reasonable times for inspection and removal and at any reasonable time during
the month immediately prior to the date of the expiry of the Fixed Period shown
in the Schedule the Hirer will at Lombard’s request demonstrate the Equipment
to any potential purchaser and allow them to inspect the Equipment and all related
records. The Hirer will tell Lombard immediately if it changes address. The
Hirer will not take the Equipment outside Great Britain without Lombard’s
previous written consent deemed to be given in respect of vehicles for use in
Western Europe for no more than 28 days at any one time.

 

3.04             The Hirer will use reasonable endeavours to
ensure that the Equipment is only used in a careful and proper manner for the
purpose for which the Equipment has been designed and in accordance with any operating
instructions issued by the manufacturer of the Equipment, any government agency
or any statutory authority.

 

3.05             The Hirer will not
let anyone obtain any rights over the Equipment or let anyone take or threaten
to take it to pay any of the Hirer’s debts and, in Lombard’s opinion, such
threat is likely to succeed. The Hirer will keep the Equipment in its possession
and under its control and the Hirer will not sell, transfer, mortgage,

 

 

land,
let, sublet (except in accordance with the terms of the Subletting Appendix
attached to this agreement) or give the Equipment to anyone or otherwise part
with possession of the Equipment without Lombard’s previous written approval
(deemed to be given in respect of temporary use of the Equipment by any United
Kingdom holding company of the Hirer’s or any United Kingdom subsidiary of such
holding company within the meaning of section 736 or 736A of the Companies Act
1985 on terms that such holding company or subsidiary must deliver up
possession of the Equipment to Lombard or the owner immediately on demand or
earlier termination of the hiring under this agreement).

 

3.06                           The Hirer will not knowingly permit or allow
the Equipment to be used contrary to law including any statute or other rule,
regulation or order but, if the Equipment is so used and either the Hirer or
Lombard are aware of such use, it shall be regarded as a repudiation of
this agreement.

 

3.07                           The Hirer will not make any alterations to the
Equipment without Lombard’s prior written consent unless the Hirer is obliged
to do so by law. Any additions, upgrades, accessories, alterations or
replacements will become the property of the owner of the Equipment and subject
to this agreement.

 

3.08                           The Hirer will not change the usual location
of the Equipment from the location shown in the Schedule without Lombard’s
written consent.

 

3.09                           The Hirer will maintain or cause to be
maintained in full force and effect all certificates licences, registrations,
permits and authorisations required by any statutory authority at all times
during this agreement and to ensure that each of the foregoing are in force on
termination of this agreement.

 

3.10                           The Hirer must:

 

(a)                                  not default on the payment of any sum due or
commit any other breach under any schedule to a Rental Agreement which is not
remedied in accordance with clause 7.01 (c) or waived by Lombard. Furthermore
not default on the payment of any sum or commit any other breach under any
other loan, instalment credit, rental, hire or leasing agreement the Hirer may
have with Lombard (whether before or after the date hereof) or any of its subsidiaries
or any member of the The Royal Bank of Scotland group of companies from time to
time (as such expressions are defined in section 736 or 736A of the Companies
Act 1985) and which loan, instalment credit, rental, hire or leasing agreement
has an outstanding aggregate amount not less than the equivalent of Twenty
Million United States Dollars (US$20M) and which default is not cured within
the applicable cure period or waived;

 

(b)                                 not do or allow to be done anything which
Lombard reasonably believe (such belief to be evidenced by the signature of not
less than two directors of Lombard identifying such act or acts) may put at
risk the performance of the Hirer’s obligations under this agreement or
jeopardise Lombard’s interest in the Equipment;

 

(c)                                  if it is a limited company or a partnership,
not cause or allow any change in the Hirer’s control (as defined in section 840
of the Income and Corporation Taxes Act 1988).

 

3.11                           The Hirer will indemnify Lombard against any
liability or loss (including legal costs on a full indemnity basis) arising
from the possession or use of the Equipment by the Hirer or its ownership by
the owner or repossession by Lombard except where such liability or loss arises
as a result of Lombard’s default and negligence or that of the owner.

 

4.                                      Adjustments to Rentals

 

4.01                           The Hirer acknowledges that Lombard have
calculated the rentals payable in the Fixed Period on the assumptions that:

 

(a)                                  either a first year allowance, or if no rate
for this is shown in the Schedule, a writing down allowance will be made to the
owner on the whole of the expenditure incurred on the purchase of the Equipment
in the owner’s accounting period in which the Agreement Date falls; and

 

(b)           a writing down
allowance will be made to the owner on the unrelieved balance of that
expenditure brought forward in each succeeding accounting period of the owner
at the rate or rates shown in the Schedule (but if the Equipment is a private
motor car and the expenditure incurred is more than £12,000 excluding VAT where
appropriate any writing down allowance made to the owner will be restricted to
£3,000 or such other amounts as may be dictated by the relevant legislation
from time to time); and

 

(c)                                  no such first year allowance or writing down
allowance, having been made shall be withdrawn or the benefit of it reduced or
limited in any way whatsoever.

 

(d)                                 there will be no change in the nature, method or application of relevant
taxation in the United Kingdom.

 

(e)                                  if it states in the Schedule that this
assumption applies, Corporation Tax is and will continue to be chargeable at
the rate shown in the Schedule.

 

4.02                           If any of the assumptions referred to in
Clauses 4.01 (a) to (d) is incorrect other than by reason of any Schedule to
the Rental Agreement not being regarded as an Operating Lease by Lombard then if
the Hirer or Lombard require, each rental remaining to be paid in the Fixed
Period will be adjusted to the amount which Lombard certify to the Hirer is the
correct amount necessary to preserve Lombard’s after tax rate of return. If the
last rental payable in the Fixed Period has already been paid the Hirer will
pay

 

 

on request an additional rental or Lombard will pay as soon as
practicable a rebate of rentals, in either case with VAT where appropriate, of
an amount certified on the same basis as above. Any amount certified will be
final and binding on the Hirer. Rentals will not be reduced or a rebate of
rentals paid to reflect any capital allowances (including writing-down
allowances) becoming available to Lombard in respect of the Equipment in
addition to or greater than those referred to in Clause 4.01(a) or at any
earlier time unless the additional or greater allowances are actually received
and can be used by Lombard.

 

4.03                           If
the assumption referred to in Clause 4.01(e) is incorrect the Hirer will pay to
Lombard or vice versa as appropriate an additional payment.  This is calculated by multiplying the total
of the Fixed Period rentals by the percentage shown in the Schedule below the
financial year for which the change taxes place and by multiplying the result
by the change in the percentage rate of Corporation Tax. The change in the
percentage rate will be a negative figure if Corporation Tax reduces and a
positive figure if Corporation Tax increases. If the additional payment is
negative, Lombard will pay it to the Hirer exclusive of VAT. If it is positive,
the Hirer will pay it to Lombard with VAT added. If the additional payment is
less than £50, it will be ignored.

 

4.04                           notwithstanding
any of the provisions of Clause 4.01 allowing Lombard to adjust the rentals
payable in the Fixed Period no adjustments shall be made to such amounts to the
extent that the same would or might otherwise be required by virtue of

 

(a)                                  the
owner failing to claim the full amount of the allowances due in respect of the capital
expenditure within the applicable time limits in respect of the relevant
accounting period and otherwise in accordance with the legislation relating to
the presentation of such claims; or

 

(b)                                 the
owner disclaiming the capital allowances available in respect of the capital
expenditure; or

 

(c)                                  the
owner or the group of which it is a member for the purposes of the provisions
for group relief contained in Income and Corporation Taxes Act 1988 (the “Group”)
having, or proving to have, inadequate taxable profits in respect of the
accounting period in question to enable the owner fully to utilise the capital
allowances available in respect of the capital expenditure or interest paid or
accrued or to surrender losses to other members of the Group of which it is a
member.

 

4.05                           If
the Hirer is of the opinion that any certificate issued by Lombard relating to
any adjustment in the rentals or any claim on the Hirer for payments other than
rentals contains an error Lombard and shall consult to resolve the dispute and
Lombard will provide detailed calculations at the Hirer’s reasonable request in
an effort to resolve such dispute but, if Lombard and the Hirer cannot agree
within 21 days of the issue of a certificate pursuant to Clause 4.02, Lombard
shall refer the certificate and the calculation to Lombard’s external auditors
who, acting as experts and not arbitrators, shall confirm the correctness or
otherwise of any such calculation and certificate. The costs of such referral
shall be borne by the Hirer unless the auditors advise that the total
adjustment should vary by more than the greater of £500 or 0.125% of the
aggregate amount certified pursuant to Clause 4.02 (excluding Value Added Tax)
in which event the costs shall be borne by Lombard;

 

5.                                      Insurance and Damage

 

5.01                           The
Hirer will insure the Equipment under the Hirer’s normal form of insurance and
undertake:

 

(a)                                  to
maintain insurance cover against damage or injury to third parties and to
maintain such insurance over the Equipment as is required by Law; and

 

(b)                                 to
indemnify Lombard and to keep Lombard indemnified at all times against all loss
or damage incurred or sustained by Lombard by reason of any damage to the
Equipment and to third parties by the use, operation or presence of the
Equipment unless by Lombard’s gross negligence or wilful misconduct.

 

6.                                      Total Loss and Termination

 

6.01                           If
there is a Total Loss the Hirer will tell Lombard immediately and Lombard and
the Hirer agree that this agreement will terminate automatically (but if only
one or more items of the Equipment and not all the Equipment suffers such Total
Loss then this agreement will terminate only in relation to the item or items
suffering such Total Loss) and the Hirer will immediately pay to Lombard the
amounts due on termination for Total Loss in respect of such Equipment under
Clause 9. If there is a Total loss of some of the Equipment only then subject
to the Hirer making a payment of such amount due under Clause 9 as
Lombard shall certify to the Hirer is attributable to those items of the
Equipment that have been the subject of a Total Loss the rentals remaining to
be paid by the Hirer in respect of the remaining Equipment shall be reduced by
such amount as Lombard certify to the Hirer to take account thereof. Any
certificate of the amount payable by the Hirer under the provisions of Clause 9
or rentals remaining to be paid following a Total Loss of other than all of the
Equipment shall take account of the value of the Equipment and any residual
value Lombard have assumed of those items the subject of the Total Loss and
those items remaining following such Total Loss and, save for manifest error,
the amounts certified shall be final and binding.

 

 

6.02                           If
there is a Total Loss the Hirer will use its best endeavours to ensure prompt payment of any insurance proceeds
to Lombard.

 

7.                                      Repudiation

 

7.01                           The
Hirer will be treated as having repudiated this agreement if it:

 

(a)                                  fails
for more than 28 days to pay any rental or other sum due under this agreement;
or

 

(b)                                 breaches Clause 3.04, 3.05 or 3.10; or

 

(c)                                  fails for more than 30 days after a request
from Lombard to remedy any other breach of this agreement.

 

(d)                                 abandons
the Equipment or does anything which in Lombard’s opinion based on reasonable grounds
might jeopardise Lombard’s rights over the Equipment taken as a whole;

 

8.                                      Default;
Bankruptcy and Termination

 

8.01                           This
agreement and the hiring:

 

(a)                                  will
terminate automatically and Lombard may repossess the Equipment at any time if
the Hirer:

 

(i)  has a petition for a
bankruptcy order presented against them or an application is made against the
Hirer for an Interim order under the Insolvency Act 1986 (as amended by the
Enterprise Act 2002) which remains undismissed for a period of (thirty) 30 days
or such longer period as Lombard may specifically agree;

 

(ii)  files a petition to take
advantage of any insolvency, reorganisation, bankruptcy, receivership or
similar law, make an assignment for the benefit of creditors; commence a
proceeding for the appointment of a receiver, trustee, liquidator or
conservator for the Hirer or for the whole or any substantial portion of the
Hirer’s property;

 

(iii)  has a court of competent
jurisdiction enter an order, judgement or decree appointing a custodian,
receiver, trustee, liquidator or conservator for the Hirer or for a substantial
portion of the Hirer’s property and such order, judgement or decree continues
unstayed for a period of (thirty) 30 days or such longer period as Lombard may
specifically agree.

 

(iv)  has a court of competent
jurisdiction assume custody or control over them or the whole or a substantial
portion of the Hirer’s properties under any other law for the relief or aid of
debtors, which control is not relinquished within (thirty) 30 days or such
longer period as Lombard may specifically agree; and

 

(b)                                 may
be terminated by Lombard at any time by repossessing the Equipment or in any other way if the
Hirer repudiates this agreement.

 

9.                                      Payments on Termination

 

9.01                           On
any termination (including Total Loss) at this
agreement earlier than the date of expiry of the full Fixed Period of this
agreement shown in the Schedule (but in the case of a Total Loss of other than
all of the Equipment such proportion of the sums calculated in accordance with
this clause as Lombard shall certify to the Hirer under the provisions of
Clause 6.01 in accordance with the terms hereof) the Hirer will immediately
(but if termination is due to other than a breach of the agreement by the Hirer
on the next due date) pay Lombard, together with VAT, the aggregate of:

 

(a)                                  all
arrears of rentals and other sums due under this agreement together with
interest thereon calculated at the same rate as that stated in Clause 14.02;

 

(b)                                 as
compensation for Lombard’s full financial
loss a sum calculated as follows:

 

(i)  all rentals which would but
for termination of this agreement have become due and payable from the date of
such termination down to the end of the full Fixed Period;

 

(ii) such sum (if any) as Lombard shall certify to the Hirer to be the
difference between: 

 

(aa) the net proceeds of sale of the Equipment which Lombard would
expect to have become due to them from the buyer on completion of the sale of
the Equipment by Lombard following expiry of the full Fixed Period if this
agreement had continued for the full Fixed Period and the Hirer had strictly
observed and performed all the terms and conditions of this agreement, and 

 

(bb) the net proceeds of sale of the Equipment actually realised by
Lombard on the sale of the Equipment by Lombard following the said early
termination of this agreement which shall, if (aa) exceeds (bb) be payable by
the Hirer in addition to the sum referred to in sub-clause (b)(i) above or, if
(bb) exceeds (aa), be deducted from the said sum;

 

(iii) Lombard will allow a discount for accelerated payment on each
rental or other sum received by Lombard under this sub-clause (b) so that the
amount payable shall be such amount as Lombard shall certify to be the correct
amount necessary to preserve their rate of return on the after tax cashflow of
the Schedule to the Rental Agreement; and

 

(c)                                  Lombard’s
costs:

 

(i)  in relation to the said
early termination and of repossession, storage, insurance and disposal of the
Equipment;

 

 

(ii)
 of servicing, providing replacement
parts and carrying out repairs which are needed to put the Equipment in good
condition following its return or repossession; or

 

(iii)
 resulting from any accidental,
deliberate or negligent damage to the Equipment;

 

(d)                                 where the event giving rise to the termination
is a Total Loss, the insurance proceeds received by Lombard will be deemed to be the sale proceeds for the purpose of
calculating the amounts due on
termination for Total Loss.

 

9.02                           Any certification of a sum or amount made by
Lombard pursuant to Clause 9.01 above will be conclusive and binding on the
Hirer, save in respect of manifest error.

 

9.03                           The Hirer’s obligations under Clause 9.01 will
be treated as if they had arisen immediately before and not after termination.

 

10.                               End of Fixed Period;
Extension of Rental and Return of Equipment

 

10.01                     Unless terminated under Clause 8.01 this
agreement will terminate automatically on expiration of the Fixed Period shown
in the Schedule and the Hirer will return the Equipment to Lombard as required by
Clause 10.03. If Lombard do not require the Hirer to provide storage in
accordance with Clause 10.04 or
any agreed storage arrangements have come to an end and the Hirer fails to
return the Equipment to Lombard on time the Hirer will pay to Lombard, together
with VAT thereon, an additional rental charge for each day from the date of
termination of this agreement to the date on which the Equipment is returned to
Lombard as required by Clause 10.03. The said rental charge will be calculated
by:

 

(a)                                  adding together all the rentals paid and
payable during the Fixed Period; and

 

(b)                                 multiplying the resulting figure by 150%; and

 

(c)                                  dividing the resulting figure by the number of
days which comprise the Fixed Period and for the purpose of this calculation a
year shall be deemed to comprise 360 days and a month shall be deemed to
comprise 30 days.

 

Such
additional rental shall be due on demand.

 

10.02                     If the Hirer wishes to use the Equipment after
expiry of the Fixed Period the Hirer must write to Lombard at
least one month before the date of expiry of the Fixed Period to request this.
Lombard will be under no obligation to agree to the Hirer’s request although
Lombard will notify the Hirer of Lombard’s decision as soon as possible.

 

10.03                     Immediately after termination of the hiring
the Hirer will return the Equipment to Lombard at any place within the United
Kingdom which Lombard may reasonably require.  All decommissioning, transportation, handling
and storage costs are to be borne by the Hirer and the Hirer will insure the Equipment
whilst in transit on the terms set out in Clause 5. The Equipment must be
returned in the same original, complete working condition that it was in when
originally supplied new and in particular (but without limitation), in a
condition and manner which complies with the requirements set out in the “Addendum
to Rental Agreement (for return conditions)” attached to this agreement.

 

10.04                     If Lombard shall so require the Hirer will
provide free and secure storage and insurance (on the terms set out in Clause 5)
for the Equipment for a period not exceeding 180 days after termination of the hiring
under this agreement. The Hirer will not use or allow anyone else to use the
Equipment during this period.  During
this period the Equipment must remain totally operational and the Hirer shall
provide adequate electrical power, lighting, heat, water and any other relevant
utility facilities. During the storage period the Hirer will permit Lombard or
any persons designated by Lombard, including the representatives of any
prospective purchaser of the Equipment, to inspect the Equipment and the
records maintained therewith. If requested to do so the Hirer will demonstrate
the Equipment to any prospective purchaser. 
If an auction of the Equipment is necessary, Lombard shall be permitted to
auction the Equipment on-site and in situ at a time reasonable to Lombard and
the Hirer.

 

11.                               Manufacturer’s or Supplier’s
Warranties and Exclusion of Liability

 

11.01                     If the Hirer does not obtain direct from the
manufacturer or supplier express warranties about the Equipment Lombard will at
the Hirer’s request and cost and on Lombard’s terms transfer to the Hirer so
far as possible the benefit of any manufacturer’s or supplier’s express
warranties of fitness and performance of the Equipment given to Lombard.

 

11.02                     (a)                                  EXCEPT AS MENTIONED IN SUB-CLAUSE (b) BELOW,
SINCE THE EQUIPMENT HAS BEEN CHOSEN BY THE HIRER AND HAS NOT BEEN INSPECTED BY
LOMBARD, LOMBARD DOES NOT MAKE OR GIVE ANY REPRESENTATION OR UNDERTAKING
EXPRESS OR IMPLIED AS TO THE CONDITION, DESCRIPTION, QUALITY OR PERFORMANCE OF
THE EQUIPMENT OR AS TO ITS FITNESS FOR ANY OR ANY PARTICULAR PURPOSE.  ALL SUCH REPRESENTATIONS AND UNDERTAKINGS ARE
SPECIFICALLY EXCLUDED.

 

(b)                                 NO LIABILITY (EXCEPT FOR DEATH OR PERSONAL
INJURY RESULTING FROM LOMBARD’S NEGLIGENCE) WILL ATTACH TO LOMBARD IN CONTRACT
OR IN TORT. FOR LOSS, INJURY OR DAMAGE SUSTAINED BY ANY REASON OF ANY DEFECT IN
THE EQUIPMENT WHETHER LATENT OR APPARENT AND HOWEVER CAUSED.

 

 

11.03                     Lombard
will not be obliged to supply any replacement for the Equipment and will not be
liable for any loss including loss of earnings or profits suffered by the Hirer
if the Equipment is or becomes
unusable.

 

12.                               Sales Agency

 

12.01                     Up
until a date three months after the expiry
of the Fixed Period (or such later date as Lombard shall notify the Hirer
provided the Hirer has made the payment to Lombard as required in Clause 12.07)
or the date of any earlier termination of the hiring under this agreement but
not otherwise, the Hirer will use all reasonable endeavours to sell the
Equipment for the highest value possible acting as Lombard’s agent within the
three months ending with such expiry or termination. If the Hirer has not sold the
Equipment within the said three months then the Hirer will return the Equipment
to Lombard or otherwise deal with the Equipment (as Lombard may require) in
accordance with Clause 10 of this agreement.

 

(a)                                  in
the event of a termination of the hiring under this agreement pursuant to
Clause 8.01, if Lombard are in possession of the Equipment Lombard shall try
and sell it, or if the Hirer is still in possession of the Equipment Lombard
may at their option require the Hirer use all reasonable endeavours to sell the
Equipment for the highest value possible within an agency period specified by
Lombard

 

(b)                                 the
sale of the Equipment by the Hirer shall be in the name of the Hirer, either to
a buyer who requires the Equipment for business use who is not connected or
associated with either the Hirer or any sub-lessee of the Equipment and who is willing
and able to buy the Equipment for cash for at least its fair market value in
which case the sale will comply will Lombard’s applicable Standard Conditions
of Sale, a copy of the current form is attached hereto (or such other
conditions as Lombard may advise in writing), or at a public auction.

 

(c)                                  the
sale will be for a price greater than the Minimum Sale Price shown in the Schedule to the Rental
Agreement exclusive of VAT where appropriate or such other minimum sale price as
Lombard may agree with the Hirer in writing from time to time, or for such
lesser price without Lombard’s prior written permission, provided that the
Hirer makes good the shortfall.

 

(d)                                 it
is agreed and acknowledged that if the Hirer does not accept the change in the
minimum sale price for the Equipment from time to time and on receipt of such
notice the Hirer may at the Hirer’s option return the Equipment to Lombard at the
expiry of the Fixed Period and the Hirer will no longer act as Lombard’s agent
for the sale of the Equipment.

 

12.02                     At
Lombard’s request, the Hirer will provide Lombard with copies of the Hirer’s
VAT invoice or invoices to the purchaser or copies of the sales invoice from
the auctioneer as appropriate. Lombard shall issue the Hirer with an invoice
for the sale price of the Equipment plus VAT (if applicable) or the Hirer will
raise a Self-Billed Invoice upon Lombard should the Hirer be approved by H.M
Customs and Excise to do so and where the Equipment is a motor car, such
invoice must be issued no later than the last working day of the month in which
the Hirer sells the motor car as Lombard’s agent and must be sent to Lombard so
that Lombard receives it within 10 days of that month end.

 

12.03                     if in the case of termination under
Clauses 2.01, 6.01 or 8.01 of this agreement the Hirer has complied with Clause
9.01 or the Hirer has paid Lombard any sums due under the provisions of 12.07
Lombard will pay to the Hirer a Rebate of Rentals which is the amount by which
the proceeds of sale exceeds the Minimum Sale Price shown in the Schedule to
the Rental Agreement but, in the case of a payment under the provisions of
Clause 12.07 the Minimum Sale Price shall be deemed to be zero.

 

12.04                     The
net proceeds of sale of the Equipment will be as defined in Clause 14.13 of
this agreement.

 

12.05                     The
Hirer’s obligations under Clauses 10.01,10.02 and 10.04 of this agreement will
commence on the expiry of this agency for sale or Lombard’s earlier termination
of such agency.

 

12.06                     If
during any period of three consecutive months ending on the 31 March, 30 June,
30 September and 31 December in any year the Net Proceeds of Sale of Equipment
sold by the Hirer under the provisions of this Clause should fall short of the
Minimum Sale Price the Hirer will, at the end of such period, immediately pay
to Lombard a sum equal to the amount by which the Net Proceeds of Sale of such
Equipment falls short of the Minimum Sale Price provided that the aggregate of
such shortfalls paid to Lombard shall be limited to the aggregate of the Rebates
of Rentals paid in respect of each and every item of Equipment sold by the
Hirer under this Clause in such period. For the purposes of this Clause the Net
Sales Proceeds of an item of Equipment the subject of a voluntary termination
or a Total Loss shall be deemed to be the Minimum Sale Price provided the Hirer
has paid to Lombard all sums due to them in respect of that item of Equipment;

 

12.07                     (a)
In order that the Hirer shall not be regarded as in breach of the terms of the
Schedule to the Rental Agreement the Hirer will pay to Lombard on the date
shown in the Schedule to the Rental Agreement as the Payment Date on account of
the actual Sales Proceeds of an Equipment Account Monies equivalent to the
Minimum Sale Price which Lombard shall not be obligated to repay under any circumstances.
The payment of these Account Monies shall be in addition to any rental or other payment properly payable to
Lombard.

 

 

(b)  The Hirer undertakes,
promptly on disposal of each item of the Equipment, but in any event no later
than 10 days after the end of the calendar month following the disposal of each
item of the Equipment to account to Lombard in full for the actual Sales
Proceeds of an item of the Equipment and shall be entitled to deduct from the
actual Sales Proceeds any Account Monies paid in respect of the relevant item
of the Equipment.

 

(c)  If the Hirer has paid such
Account Monies to Lombard then, provided all of the Equipment on the Schedule
to the Rental Agreement is sold on or before the first anniversary of the year
end of Lombard following the Agreement Date of the Schedule to the Rental
Agreement (as advised by Lombard if so required by the Hirer) there shall be no
additional Fixed Period Rental under the Schedule to the Rental Agreement
payable by the Hirer and those Account Monies shall be regarded as the rental applicable
from the date of payment until the date the Equipment is disposed of.

 

(d)  If the Hirer has not
disposed of an item of the Equipment on or before the first anniversary of the
year end of Lombard following the Agreement Date of the Schedule to the Rental
Agreement (as advised by Lombard if so required by the Hirer) the Hirer shall
pay to Lombard, if demanded by Lombard, on the next day an additional Fixed
Period Rental of the amount specified in the Schedule multiplied by the
Expenditure incurred as advised by Lombard and divided by 1000. Lombard will make
such a demand only in respect of that Equipment that has not been sold prior to
this date.

 

(e)  Lombard are willing to
aggregate the Actual Sales Proceeds used in the calculation of the additional
Fixed Period Rental pursuant to Clause 13 and, as such, Lombard will perform
the calculations at the end of the calendar quarter in which the first
anniversary of the Agreement Date falls in respect of all Equipment sold prior
to that time and not previously the subject of the calculation of the Additional
Fixed Rental pursuant to Clause 13, and at the end of each calendar quarter
thereafter until all of the Equipment the subject of a Schedule to Rental
Agreement is sold. Such aggregation shall only include those Schedules to
Rental Agreements which have Agreement Dates in the same calendar quarter.

 

13.                               Disposal Value Assumptions.

 

13.01                     The
rentals shown in the Schedule to the Rental Agreement payable during the Fixed
Period of the Schedule to the Rental Agreement are, in addition to the
provisions of Clause 4, calculated on the assumption that the Disposal Value
will not be less than the Assumed Percentage as at the date of the sale or other
disposal of the Equipment after termination of the Schedule to the Rental
Agreement.

 

13.02                     If
the assumption referred to in 13.01 is incorrect the Hirer will within seven
days of receipt of written demand made by Lombard shall pay to Lombard an additional
Fixed Period rental (with V.A.T.) of an amount calculated by working the
following formula:-

 

	
  Amount of the additional Fixed Period rental

  	
  =

  	
  (AA x EI) x
  (AP - AcP)

  
	
   

  	
   

  	
  1000

  	
   

  

 

13.03                     The
contents of a written demand made
by Lombard pursuant to 13.02 shall, save for manifest error, be final and
binding on the Hirer and their obligation to pay the additional rental so
demanded shall survive termination of the Schedule to the Rental Agreement.

 

13.04.                  For the purposes of this Clause

 

(i)  “Expenditure Incurred” (or “EI”)
means the amount of the expenditure incurred by the owner of the Equipment on purchase of the Equipment.

 

(ii) “Disposal Value” means the disposal value to be brought into
account by the owner of the Equipment following the sale or other disposal of
the Equipment after termination of the Schedule to the Rental Agreement.

 

(iii)  “Assumed Percentage” (or “AP”)
means at the date of the demand made by Lombard, the figure, expressed as a
number, shown in the Schedule to Rental Agreement next to the number of
complete months expired since the Agreement Date of the Schedule to the Rental
Agreement.

 

(iv)  “Adjusted Amount” (or “AA”)
means at the date of the demand made by Lombard the amount shown in the
Schedule to Rental Agreement next to the number of complete months expired
since the Agreement Date of the Schedule to the Rental Agreement

 

(v)  “Actual Percentage” (or “AcP”)
means the figure expressed as a number, ascertained by dividing the Disposal
Value by the Expenditure incurred and multiplying the result by one hundred.

 

14.                               General

 

14.01                     The
Hirer confirms that the information provided by the Hirer and shown in the
Schedule is true and the Hirer acknowledges and agrees that such information
will be treated as if it were terms of this agreement.

 

14.02                     If
the Hirer fail to pay any sum due on time Lombard will charge the Hirer daily
interest on that sum at the rate Finance House Base Rate from time to time for
the first 10 days of non payment and thereafter at Finance House Base Rate plus
5%. Interest will be charged from the date for payment until
actual

 

 

payment.
This provision will apply both before and after any court judgement Lombard may
obtain against the Hirer and will survive and apply after termination.

 

14.03                     If the Hirer incurs any liability (whether
liquidated or unliquidated) under any rental agreement but not otherwise to
Lombard or Lombard’s holding company or any of Lombard's subsidiaries (as such
expressions are defined in section 736 or 736A of the Companies Act 1985) Lombard
may set off such liability against any sum that would otherwise be due to the
Hirer under any other rental agreement.

 

14.04                     All notices and other communications under
this agreement shall be in writing and shall be deemed to be given

 

(i)
when delivered in person, or

 

(ii)
when sent by telecopier, telex, or other telegraphic means (with receipt
confirmed), or

 

(iii)
on receipt after being sent by express mail or delivery service guaranteeing
overnight delivery  provided
that in each of (i), (ii) and (iii) a copy is mailed by first class registered
or certified mail, postage
prepaid, return receipt requested, in each case addressed as follows:

 

	
  if to the
  Hirer

  	
   

  	
  Vanguard
  Rental (UK) Ltd

  
	
   

  	
   

  	
  James House

  
	
   

  	
   

  	
  55 Welford
  Road

  
	
   

  	
   

  	
  Leicester

  
	
   

  	
   

  	
  LE2 7AR

  
	
   

  	
   

  	
   

  
	
  end solely
  in the case of clause 8

  	
   

  	
  Vanguard Car
  Rental EMEA Holdings Limited

  
	
   

  	
   

  	
  James House

  
	
   

  	
   

  	
  55 Welford
  Road

  
	
   

  	
   

  	
  Leicester

  
	
   

  	
   

  	
  LE2 7AR

  
	
   

  	
   

  	
  For the
  attention of the Legal Counsel

  
	
   

  	
   

  	
   

  
	
  if to
  Lombard

  	
   

  	
  Lombard
  North Central Plc

  
	
   

  	
   

  	
  3 Princess
  Way

  
	
   

  	
   

  	
  Redhill

  
	
   

  	
   

  	
  Surrey

  
	
   

  	
   

  	
  RH1 1NP

  
	
   

  	
   

  	
  England

  
	
   

  	
   

  	
  Attention:
  Managing Director Lombard Business Finance Telecopier: 01737-776324

  

 

or
to such other person or address as any such party shall furnish by notice to
the other parties in writing. Notices need not be given or made by an officer
of either party but shall be deemed sufficiently given if made by the counsel
of such party, and all of such notices shall be deemed in compliance hereof
provided only that they be given in the manner specified herein.

 

14.05                     If the Hirer is more than one person the Hirer’s
obligations will be binding on each person separately and all persons jointly.

 

14.06                     Lombard’s rights under this agreement will not
be affected by any forbearance or concession made by Lombard to the Hirer.

 

14.07                     In negotiations for this agreement only
persons expressly authorised in writing by Lombard have had authority to act as
Lombard’s agent.

 

14.06                     This agreement contains all the terms agreed
between Lombard and the Hirer except variations recorded in writing and signed
by Lombard’s authorised employee and the Hirer.

 

14.09                     The Hirer will not assign this agreement.
Lombard may only assign this agreement to a member of The Royal Bank of
Scotland group of companies from time to time.

 

14.10                     For the purposes of UK taxation and
irrespective of the accounting treatment adopted by the Hirer, the Hirer is not
entitled to claim capital allowances on the Equipment.

 

14.11                     The Hirer’s obligation to indemnify Lombard
under Clause 3.11 to pay Lombard interest under Clause14.02 and to pay Lombard
an additional rental or payment under Clause 4.02, 4.03 or 10.01 will not be
affected by any termination of this agreement.

 

14.12                     The Hirer will pay Lombard on demand Lombard’s
charges for changing the terms of this agreement or providing additional
services at the Hirer’s request and for reminding the Hirer about or dealing
with any failure by Lombard to comply with the terms of this agreement. Details
of Lombard’s charges are available on request and will be notified to the Hirer
in any event before the Hirer is charged.

 

14.13                     For the purpose of Clause 9.01 the net
proceeds of sale of the Equipment will be the proceeds from selling the
Equipment after deducting VAT, any costs of repossession, repair, storage,
insurance, sale and delivery to the buyer, and any other costs incurred.

 

 

14.14                     As
an intermediary with the European Investment Bank (“EIB”) Lombard may be able
to obtain partial funding from the EIB in respect of this agreement, whereupon
clause 14.15 will apply.

 

14.15                     If
partial funding from the EIB is obtained in accordance with clause 14.14, the
Hirer irrevocably agrees to European Investment Bank personnel (accompanied by
Lombard’s representatives) visiting the location of the Equipment from time to
time and upon reasonable prior notice being given in order to appraise
themselves of the general nature of the transaction and the use of the
Equipment;

 

14.16                     Reference
in this agreement to a statutory enactment is deemed to be a reference to any
re-enactment thereof in force for the time being.

 

14.17                     The
Hirer will respect national and EC regulations with regard to protection of the
environment at the location in which the Equipment is situated.

 

14.18                     The
Hirer must not be a party in any legal proceedings brought by the EC
Commission.

 

14.19                     This
agreement will also incorporate the terms of any Addenda signed by the Hirer
and Lombard.

 

 

Standard Conditions of Sale

 

Part 1 -
Consumer Sales

 

1.                                       Nothing in these conditions of sale affects
either the statutory rights of the Buyer in respect of the Equipment or the
Seller’s liability for death or personal injury to the Buyer resulting from the
Seller’s negligence.

 

2.                                       Title to the Equipment shall pass to the Buyer
upon payment to the Seller of the purchase price, but if payment is made by cheque
title shall not pass to the Buyer until the cheque has been honoured.

 

3.                                       If before the sale the Equipment have been
supplied by the Seller to a lessee (“the Lessee”) under a leasing agreement the
Buyer warrants (and it is a condition of any sale to him) that the Buyer is not
the Lessee or an agent, trustee or nominee of the Lessee, or an associate of,
or a person connected with, the Lessee nor will the Buyer subsequently sell the
Equipment to any such person or to the Lessee.

 

4.                                  The Buyer will at the Buyer’s cost remove the
Equipment, wherever located, within 14 days of the sale.

 

5.                                  English law is the law applicable to the sale.

 

6.                                  The foregoing conditions contain all the terms
agreed except any written variations signed by an authorised signatory of the
Seller and the Buyer.

 

Part 2 -
Business Sales

 

1.                                       The Buyer warrants that the Equipment are
being purchased in the course of the Buyer’s business.

 

2.                                       The Equipment are not sold with the benefit of
or subject to any condition or warranty express or implied by statute or
otherwise.

 

3.                                       The Buyer shall indemnify the Seller on a full
indemnify basis against any liability (other than liability for death or
personal injury resulting from the negligence of the Seller) or loss (including
legal costs) arising at any time from the sale of the Equipment. The Buyer
agrees that where the Equipment are vehicles the Buyer will not use the
Equipment on a road in Great Britain in such a condition that their use in that
condition would be unlawful.

 

4.                                       Title to the Equipment shall pass to the Buyer
upon payment to the Seller of the purchase price, but if payment is made by
cheque title shall not pass to the Buyer until the cheque has been honoured.

 

5.                                       If before the sale the Equipment have been
supplied by the Seller to a lessee (“the Lessee”) under a leasing agreement the
Buyer warrants (and it is a condition of any sale to him) that the Buyer is not
the Lessee or an agent, trustee or nominee of the Lessee, or an associated
company or an associate of, or a person connected with, the Lessee nor will the
Buyer subsequently sell the Equipment to any such person or to the Lessee.

 

6.                                       In the negotiations for the sale no third
party not expressly authorised in writing by the Seller has any authority to
act as the Seller’s agent.

 

7.                                       If requested by the Seller the Buyer will give
an undertaking in such form as the Seller shall require about the location and
use of the Equipment to enable the Seller to comply with any undertaking
required of it by any Governmental or other authority.

 

8.                                       The Buyer will at the Buyer’s cost remove the
Equipment, wherever located, within 14 days of the sale and indemnifies the
Seller against any resultant damage caused to third parties.

 

9.                                       English law is the law applicable to the sale.

 

10.                                 The foregoing conditions contain all the terms
agreed except any written variations signed by an authorised signatory of the
Seller and the Buyer.

 

 

Addendum to Rental
Agreement (for return conditions)

 

the following shall be the conditions for the
return of the Equipment as referred to in clause 10.03 of the Agreement:

 

1.                                      General

 

a)                                      Non Compliance with these Return
Conditions

 

i)                                         If
when returned the Equipment does not satisfy the conditions set out herein,
Lombard shall be entitled to have any necessary restoration work carried out
and the Hirer agrees to pay all costs, charges and fees that may relate to that
restoration.

 

b)                                      Overall
condition

 

i)                                         The
Equipment must be returned thoroughly valeted and in good repair and condition
allowing for fair wear and tear.

 

c)                                      Servicing and documentation

 

i)                                         The
Equipment instruction book, full service record, maintenance agreements,
current certificates, licences, registrations, permits and authorisations,
required by any United Kingdom or European Community statutory authority and
any other documents relating to the Equipment are the Hirer’s responsibility
and must be intact and available. All documents must be in the Equipment on its
return including any details of radio codes.

 

ii)                                      The
Equipment shall comply with all legal requirements required by any United
Kingdom or European Community statutory authority and be fit for use on the
roads of Great Britain and shall have a current valid Ministry of Transport
Test Certificate appropriate for the class of Equipment with a minimum of six
months until expiry

 

d)                                      Additional equipment

 

i)                                         If
accessories such as telephones, radios or other non-standard equipment have
been installed and then removed, any holes or damage should be made good to a
professional standard. Aerials must be left in place or the hole repaired.

 

ii)                                      All
standard equipment including any tools and spare wheel (or replacements) as
originally equipped must also be returned secured property.

 

e)                                      Badges and labels

 

i)                                         Non-standard
badges, labels decals, or advertising fitted to the bodywork or glass of the
Equipment must be removed, with any damage caused by their attachment or
removal made good. Any paint work colour fade due to the attachment of
advertising will be chargeable to the Hirer. Signwriting must never be painted
directly onto the Equipment.

 

f)                                        Keys
and security

 

i)                                         If
the Equipment was originally supplied with a security system, this must be
intact and fully operational.

 

ii)                                      Any
additional security system must be fitted according to a recognized standard,
i.e. the Vehicle Security Installation Board (VSIB).

 

iii)                                   The
following security equipment must be returned with the Equipment:

 

a)                                      A
full set of keys including appropriate fully functional key fobs, if the locking
system is remote.

 

b)                                     A
note of all key numbers.

 

c)                                      Any
master key which controls the engine management system of the Equipment.

 

2.                                      Exterior

 

a)                                      Body
damage

 

i)                                         Any
damage must be repaired as and when it occurs. All work must be completed to a
professional standard, ensuring that any applicable anti-corrosion guarantees
are not invalidated. Obvious evidence of repair such as colour, mismatch or
misalignment between panels is unacceptable.

 

b)                                      Dents

 

i)                                         Minor
dents (up to 10 mm long) are acceptable provided the paint surface has not been
penetrated so that bare metal is visible or corrosion has set in. If multiple
dents occur on a single panel, no matter how small, the panel should be
repaired or replaced.

 

 

c)                                      Paintwork

 

i)                                         Small
areas of stone chipping, door edge chipping and light scratches (up to 25 mm
long) are acceptable, relative to the age and mileage of the Equipment, as long as they have not penetrated through
to the base metal and caused corrosion. If stone chippings have penetrated
through the metal, suitable touching up should be carried out immediately to
prevent further paint deterioration. Exterior paintwork should be free from
major abrasions (more than 25 mm long) and have good gloss and colour. Colour
mismatch between panels, or poorly fitting panels, are unacceptable. All
repairs to the body work must be suitably re-rust proofed to the manufacturers
recommended standards.

 

d)                                      Bumper sections and rubbing
strips

 

i)                                         Provided
these are not broken, cracked or deformed a limited amount of scuffing and
score marks is acceptable.

 

e)                                      Window and mirror glass

 

i)                                         Cracks
or damage to the windscreen within the driver’s sight line are not acceptable
and the Hirer must replace the windscreen or, if relatively minor, repair using
resin impregnation to M.O.T. standards. Light scratches and minor chipping
around the periphery of the windscreen is accepted as fair wear and tear.

 

ii)                                      All
other windows and mirrors, which are defaced, cracked, damaged, broken or
missing must be replaced. 

 

f)                                        Lamp
glasses/lens

 

i)                                         All
lamps including service lamps must operate correctly. Minor scuff marks or
scratches are acceptable, but holes or cracks in the glass or plastic covers
are not and must be replaced.

 

3.                                      Interior

 

a)                                      Interior trim

 

i)                                         The
interior should be clean and tidy with no visible burns, tears or permanent
staining to the seats, headlining or carpets. Wear and solling through normal
use is accepted, as are any repairs that are not readily visible.

 

b)                                      Luggage area

 

i)                                         Surface
scoring and light blemishes that reflect normal use are acceptable, but floor
coverings and surrounding trim
panels should not be torn or split.

 

c)                                      Car
derived vans

 

i)                                         For
car derived vans it is recommended that the Hirer fits at their cost a lining
in the load area to prevent serious damage to panels and doors of the Equipment.

 

d)                                      Door
aperture tread area

 

i)                                         A
reasonable amount of scuffing to the door and luggage area treads and sills is
acceptable provided paintwork has not been damaged down to bare metal and
aperture seals are not torn.

 

e)                                      Controls

 

i)                                         All
original controls must be intact and operate correctly. If replacement has been
necessary, e.g. due to theft, then equipment of a similar value and
specification, preferably of the same manufacture as the original, should have
been fitted.

 

f)                                        Rubber
seals

 

i)                                         If
a seal becomes displaced it should be refitted immediately to avoid it becoming
trapped or torn and any evidence of neglect or abuse is unacceptable.

 

4.                                      Underside

 

a)                                      Underside

 

i)                                         Minor
dents and deformation, such as stones damage, is acceptable as long as it has
not caused major corrosion. Any suspected impact damage should be investigated
and dealt with professionally, as significant damage or distortion to chassis
components is not acceptable.

 

b)                                      Exhaust
system

 

i)                                         The
system should be properly suspended and in efficient working order, with no gas
leaks or evidence of blowing from the exhaust system joints and in an undamaged
condition. The exhaust system should be in a condition to meet the MOT
requirements in all aspects, particularly if fitted with a catalytic converter
(CAT). CAT failure is unacceptable and preventable through:

 

a)                                      using
the correct fuel

b)                                     regular
servicing and maintenance

c)                                      immediately
investigating any poor running symptoms

d)                                     towing or bump starting the Equipment

 

 

c)                                      Oil leaks

 

i)                                         Any serious oil leakage should be rectified
at the earliest opportunity. Some minor oil misting or dampness around seals or
gaskets is acceptable, provided oil drips are not present.

 

d)                                      Wheels and wheel trims

 

i)                                         Dents or damage to the rim or main body of the wheels are not
acceptable. All wheel trims must be intact, with no more than minor scuffing
due to everyday use. If mudflaps are standard equipment they must all be intact
and properly attached.  The spare wheel, jack
and appropriate wheel tools must be stowed properly and be in good working
order.

 

e)                                      Tyre wear and damage

 

i)                                         All tyres, including the spare, must be in a
legal condition and comply with the Equipment manufacturer’s recommendations of
tyre type, size and speed rating and shall have no less than 3 mm of the
original tyre tread depth remaining across the tread width. There should be no
obvious damage to sidewalls or tread caused by ‘kerbing’ or other heavy abuse.

 

5.                                      Mechanical Condition

 

a)                                      Servicing

 

i)                                         The following examples are conditions usually
caused by neglect or abuse and therefore are not regarded as fair wear and tear:

 

a)                                      Brakes: Grooved brake discs caused by metal
to metal contact.

b)                                     Engine: Seized due to running with
insufficient coolant, lubricating oil or with broken internal components.

c)                                      Transmission: Slipping, erratic gear
changing, clutch slipping, noisy transmission or ineffective synchromesh.

 

b)                                      Batteries

 

All
batteries must be maintained in a clean condition and must be capable of
holding a full charge for at least 24 hours so as to enable any engine to be
started from cold. It must be sound by industry standards with no dead cells,
cracked or leaking casings or evidence of corrosion and must be correctly
filled with a proper electrolyte solution.

 

 

Subletting Appendix

 

The following
are the terms under which Lombard agrees that Sub-Letting will be permitted:

 

1.                                       The
Hirer will indemnify Lombard and keep Lombard indemnified at all times against
all loss or damage howsoever caused as a result of Lombard granting this
consent.

 

2.                                       Possession
of the Equipment shall only be given to the Hirer’s customers from time to time
(each the “Sub Lessee”)  after the Sub
Lessee has entered into a sub-letting agreement (“the Sub Letting Agreement”)
with the Hirer in respect of the Equipment in the form approved by Lombard from
time to time such approval not to be unreasonably withheld.

 

3.                                       The
duration of the Sub-Letting Agreement shall not extend for a period longer than
the Fixed Period then unexpired of the Schedule less one day.

 

4.                                       The
Hirer agrees not to deal in the Equipment in such a manner that would prejudice
Lombard’s title in the Equipment.

 

5.                                       during
the currency of the Sub-Letting Agreement but not otherwise Lombard is prepared
to waive its requirement that the Hirer insures the Equipment provided that

 

(i)                                     the
Hirer requires in the Sub-Letting Agreement and procures that throughout the
period of the Sub-Letting Agreement the Sub-Lessee will insure

 

(a) the Equipment and keep them effectively insured during the currency
of the Sub-Letting Agreement to their full replacement value under a policy of
insurance without restriction or excess (and that Lombard’s interest as owners
of the Equipment is noted on such policy); and

 

(b) the Hirer and the Sub-Lessee against all liability to the employees
of the Sub-Lessee and to third parties for damage caused by the Equipment or
the use or operation of them; and

 

(ii) the Hirer will Indemnify Lombard and keep Lombard fully
indemnified against all loss or damage incurred or sustained by Lombard by
reason of any loss, injury or damage to the Equipment or to third parties by
the use or operation or presence of the Equipment or as a result of Lombard
agreeing to such modification;

 

6.                                       Lombard
reserves the right to carry out an audit from time to time of all of the
relevant books and records concerning the Schedule and the Equipment upon
Lombard giving reasonable notice for the purpose of ensuring that the Hirer is
complying with all of its obligations
under the Schedule.Exhibit 10.29

 

 

ASSET FINANCE

 

Specialist Finance

City House

City Road

Chester

CH88 3AN

 

Vanguard
Rental (UK) Limited 

James
House 

55
Welford Road 

Leicester

LE2
7AR

 

For
the attention of Ian Wardle

 

3
December 2004

 

Dear
Sirs,

 

LETTER OF OFFER

 

Operating Lease Facility, Hire Purchase Facility and Guarantee Facility

 

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

 

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

 

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

 

1.             Amount and Purpose of
the Facility

 

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

 

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

 

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

 

	
   

  	
  Bank of
  Scotland Asset Finance

  
	
   

  	
  is a
  trading style of the

  
	
  www.bankofscotland.co.uk/business

  	
  companies
  listed overleaf.

  

 

 

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

 

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

 

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

 

2.             The Vehicles

 

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

 

(a)           self-drive hire cars;

 

(b)           LCVs;

 

(c)           Staff Cars;

 

(d)           Short-Term Hire Cars; and

 

(e)           Courtesy Buses.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3.             Facility Expiry

 

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

 

2

 

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

 

4.             Non Utilisation

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 paid in Sterling.

 

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

 

5.             Vehicle Terms

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.4                                 With respect to VAT:

 

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

 

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

 

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

 

4

 

6.             Conditions Precedent

 

The
availability of the Facility is subject to:

 

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

 

(i)                                     the Debenture;

 

(ii)                                  the Accession Agreements;

 

(iii)                               the Intercreditor Deed;

 

(iv)                              the Subordination Agreement;

 

(v)                                 the Vanguard Parent Undertaking;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

7.             Vanguard Undertakings

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

(a)                                  the Lombard Fleet Funding Facility; and

 

(b)                                 the Working Capital Facility, 

 

remains available for utilisation by Vanguard.

 

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

 

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

 

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

 

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

 

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

 

8.             The Guarantee Facility

 

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

 

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

 

8.1           Amount and Purpose of
Guarantee Facility

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

8.2           Conditions Precedent

 

The
availability of the Guarantee Facility is subject to:

 

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

 

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

 

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

 

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

 

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

 

8

 

(f)                                    each of:

 

(i)                                     the Lombard Fleet Funding Facility; 

 

(ii)                                  the German Fleet Funding Facility, and 

 

(iii)                               the Working Capital Facility

 

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

 

8.3           The Vehicles

 

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

 

8.4           Facility, Expiry Date

 

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

 

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

 

8.5           Financial Information

 

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

 

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

 

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

 

9.             Events of Default

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

10.           Change of Circumstances

 

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

 

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

 

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

 

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

 

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

 

11.           Miscellaneous

 

11.1         Legal Costs

 

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

 

16

 

11.2         Confidentiality

 

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

 

11.3         Facility Fee

 

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

 

11.4         Amendment

 

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

 

11.5         Severability

 

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

 

11.6         Successors and Assigns

 

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

 

11.7         Third Party Rights

 

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

 

11.8         Vanguard Warranty

 

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

 

11.9         Governing Law and
Jurisdiction

 

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

 

17

 

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

 

11.9         Governing Law and Jurisdiction

 

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

 

12.           Terms and Acceptance

 

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

 

Yours faithfully,

 

 

	
  /s/
  G.K. Stanley

  	
   

  
	
  CAPITAL
  BANK plc

  
	
  for
  itself as principal and as

  
	
  agent
  on behalf of the Lessors

  

 

 

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

 

 

	
  /s/ [ILLEGIBLE]

  	
   

  
	
  For and on behalf of

  
	
  Vanguard Rental (UK)
  Limited

  
	
  Date: 3 December 2004

  

 

 

We consent to the terms of this Letter of
Offer.

 

 

	
  /s/ [ILLEGIBLE]

  	
   

  
	
  For and on behalf of

  
	
  Vanguard Rental (Holdings)
  Limited

  
	
  Date: 3 December 2004

  

 

18

 

APPENDIX 1

 

The Lessors

 

CAPITAL
BANK LEASING 1 LIMITED

CAPITAL
BANK LEASING 2 LIMITED

CAPITAL
BANK LEASING 3 LIMITED

CAPITAL
BANK LEASING 4 LIMITED

CAPITAL
BANK LEASING 5 LIMITED 

CAPITAL
BANK LEASING 6 LIMITED 

CAPITAL
BANK LEASING 7 LIMITED 

CAPITAL
BANK LEASING 8 LIMITED 

CAPITAL
BANK LEASING 9 LIMITED 

CAPITAL
BANK LEASING 10 LIMITED 

CAPITAL
BANK LEASING 11 LIMITED 

CAPITAL
BANK LEASING 12 LIMITED 

CAPITAL
BANK PLC 

ILC
ASSET FINANCE LIMITED 

ILC
HARVEST FINANCE LIMITED 

ILC
LEASING LIMITED 

ILC
OPERATING LEASING LIMITED

 

19

 

APPENDIX 2

 

Part 1

 

Definitions

 

	
  “Accession Agreements”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Affiliate”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Aggregate Facility Limit”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Bank of Scotland”

  	
   

  	
  means the Governor and
  Company of the Bank of Scotland;

  
	
   

  	
   

  	
   

  
	
  “Business Day”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “CAPITAL”

  	
   

  	
  means CAPITAL BANK plc;

  
	
   

  	
   

  	
   

  
	
  “Cerberus”

  	
   

  	
  means Cerberus Capital
  Management, L.P.;

  
	
   

  	
   

  	
   

  
	
  “Change of Control”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Courtesy Bus”

  	
   

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

  

 

20

 

	
  “Debenture”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  ‘Economic Adverse Effect”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Event of Default”

  	
   

  	
  means the occurrence of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)   any event or circumstance described in:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

21

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Euro” or “€”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Expiry Date”

  	
   

  	
  means 3 December 2007;

  
	
   

  	
   

  	
   

  
	
  “Facility”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Facility Limit”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Financial Statements”

  	
   

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

  

 

22

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Fund”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “German Fleet Funding Facility”

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Group”

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Guarantee”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Guarantee Facility”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Guarantee Facility Limit”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Guarantor”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Guarantor Change of Control”

  	
   

  	
  means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

23

 

	
   

  	
   

  	
  “control” of the Guarantor means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Control” of the Guarantor means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

24

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Holding Company”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Initial Public Offering”

  	
   

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

  

 

25

 

	
  “ILC Companies”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Intercreditor Deed”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “LCVs”

  	
   

  	
  means self-drive hire
  light commercial vehicles;

  
	
   

  	
   

  	
   

  
	
  “Lessors”

  	
   

  	
  means each of the
  companies named in schedule 1;

  
	
   

  	
   

  	
   

  
	
  “Lombard Fleet Funding
  Facility”

  	
   

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

  
	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Master HP Agreement”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Master HP Owner”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Master HP Hirer”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Material Adverse Effect”

  	
   

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

  

 

26

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “MOLA”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “MOLA Accession Agreement”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “MOLA Companies”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “MOLA Lessees”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Permitted Holder”

  	
   

  	
  means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

27

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Potential
  Event of Default”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Quarter”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “RBS
  Germany”

  	
   

  	
  means RBS Deutschland
  Leasing GmbH;

  
	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Relevant
  Percentage”

  	
   

  	
  has the meaning given to
  such term in clause 7.5;

  
	
   

  	
   

  	
   

  
	
  “Sale-and-Lease-Back
  Master Agreement”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Self-Drive
  Hire Accession Agreement”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Self-Drive
  Hire Master Agreement”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Self-Drive
  Lessee”

  	
   

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

  

 

28

 

	
  “Self-Drive Lessors”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Short-Term Hire Cars”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Staff Cars”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Sterling” or “£”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Subordination Agreement”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Subsidiary”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “UK GAAP” 

  	
   

  	
  means generally accepted
  accounting principles in the United Kingdom;

  
	
   

  	
   

  	
   

  
	
  “Utilisation Test Date” 

  	
   

  	
  has the meaning given to
  such term in clause 4.1;

  
	
   

  	
   

  	
   

  
	
  “Utilisation Percentage” 

  	
   

  	
  has the meaning given to
  such term in clause 4.1;

  
	
   

  	
   

  	
   

  
	
  “Vanguard”

  	
   

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

  

 

29

 

	
  “Vanguard Change of Control”

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For the purposes of this
  definition: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “control” of Vanguard means:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Vanguard Germany”

  	
   

  	
  means Vanguard
  Autovermietung GmbH & Co KG;

  
	
   

  	
   

  	
   

  
	
  “Vanguard Parent Undertaking”

  	
   

  	
  means the letter of
  undertaking from Worldwide Excellerated Leasing Ltd

  

 

30

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “VAT”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Vehicle Funding Documents”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Vehicles”

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Working Capital Facility”

  	
   

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

  

 

Part 2 

 

Construction

 

In
this Letter of Offer: 

 

(a)           any reference to:

 

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

 

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

 

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

 

31

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