Document:

Exhibit 4.9.20

 

 

INSURANCE AGREEMENT

 

Among

 

AMBAC
ASSURANCE CORPORATION,
as
Insurer,

 

HERTZ
VEHICLE FINANCING LLC,
as Issuer,

 

and

 

BNY
MIDWEST TRUST COMPANY,
as Trustee

 

$225,000,000
Series 2005-2 Floating Rate Rental Car Asset Backed Notes, Class A-1,

$200,000,000
Series 2005-2 4.930% Rental Car Asset Backed Notes, Class A-2,

$275,000,000
Series 2005-2 Floating Rate Rental Car Asset Backed Notes, Class A-3

$100,000,000
Series 2005-2 5.010% Rental Car Asset Backed Notes, Class A-4

$1,125,000,000
Series 2005-2 Floating Rate Rental Car Asset Backed Notes, Class A-5

$225,000,000
Series 2005-2 5.080% Rental Car Asset Backed Notes, Class A-6

$250,000,000
Series 2005-3 Variable Funding Rental Car Asset Backed Notes, Class A-1

$1,000,000,000
Series 2005-3 Variable Funding Rental Car Asset Backed Notes, Class A-2

 

Dated as of December 21,2005

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
  ARTICLE I

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Representation and Warranties of
  the Issuer

  	
  7

  
	
  Section 2.02.

  	
  Affirmative Covenants of the
  Issuer

  	
  10

  
	
  Section 2.03.

  	
  Negative Covenants of the Issuer

  	
  16

  
	
  Section 2.04.

  	
  Representations, Warranties and
  Covenants of Trustee.

  	
  17

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  THE
  POLICIES; REIMBURSEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Issuance of the Policies

  	
  18

  
	
  Section 3.02.

  	
  Payment of Fees and Premium.

  	
  20

  
	
  Section 3.03.

  	
  Reimbursement and Additional
  Payment Obligation.

  	
  21

  
	
  Section 3.04.

  	
  Indemnification.

  	
  22

  
	
  Section 3.05.

  	
  Payment Procedure

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  FURTHER
  AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Effective Date; Term of the
  Insurance Agreement

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 4.02.

  	
  Obligations Absolute.

  	
  26

  
	
  Section 4.03.

  	
  Assignments; Reinsurance;
  Third-Party Rights.

  	
  27

  
	
  Section 4.04.

  	
  Liability of the Insurer

  	
  28

  
	
  Section 4.05.

  	
  Parties Will Not Institute Insolvency
  Proceedings

  	
  28

  
	
  Section 4.06.

  	
  Parties To Join in Enforcement
  Action

  	
  29

  
	
  Section 4.07.

  	
  Further Assurances and
  Corrective Instruments

  	
  29

  
	
  Section 4.08.

  	
  Subrogation

  	
  29

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
  DEFAULTS;
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Defaults

  	
  29

  
	
  Section 5.02.

  	
  Remedies; No Remedy Exclusive.

  	
  31

  
	
  Section 5.03.

  	
  Waivers.

  	
  31

  
				

 

 

	
  ARTICLE VI

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Amendments, Etc

  	
  32

  
	
  Section 6.02.

  	
  Notices

  	
  32

  
	
  Section 6.03.

  	
  Severability

  	
  33

  
	
  Section 6.04.

  	
  Governing Law

  	
  33

  
	
  Section 6.05.

  	
  Consent to Jurisdiction.

  	
  33

  
	
  Section 6.06.

  	
  Counterparts

  	
  34

  
	
  Section 6.07.

  	
  Headings

  	
  34

  
	
  Section 6.08.

  	
  Trial by Jury Waived

  	
  34

  
	
  Section 6.09.

  	
  Limited Liability

  	
  34

  
	
  Section 6.10.

  	
  Entire Agreement

  	
  35

  
	
  Section 6.11.

  	
  Certain Opinions

  	
  35

  
	
  Section 6.12.

  	
  Certain Definitions

  	
  35

  
	
  Section 6.13.

  	
  Eligible Program Manufacturer

  	
  35

  
	
  Section 6.14.

  	
  Series 2005-2 and Sereis 2005-3
  Rating Agency Condition

  	
  35

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  ACKNOWLEDGEMENT
  AND CONSENT OF THE HERTZ CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  ACKNOWLEDGMENT
  AND CONSENT OF HERTZ VEHICLES LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  ACKNOWLEDGMENT
  AND CONSENT OF HERTZ GENERAL INTEREST LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  ACKNOWLEDGMENT
  AND CONSENT OF HERTZ FUNDING CORPORATION

  	
   

  
				

 

 

INSURANCE AGREEMENT

 

THIS INSURANCE AGREEMENT, dated as of December 21, 2005, among
HERTZ VEHICLE FINANCING LLC, as the Issuer, AMBAC
ASSURANCE CORPORATION and BNY
MIDWEST TRUST COMPANY, as Trustee and Securities
Intermediary.

 

WHEREAS, the Indenture relating to the Notes provides for, among other
things, the issuance of the Notes and Ambac has issued the Policies that
guarantee certain payments on the Notes; and

 

WHEREAS, the Insurer shall be paid an insurance premium pursuant to the
Indenture and the details of such premium are set forth herein; and

 

WHEREAS, the Issuer has undertaken certain obligations in consideration
for the Insurer’s issuance of the Policies;

 

NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows.

 

ARTICLE I

DEFINITIONS

 

The terms defined in this Insurance Agreement shall have the meanings
provided herein for all purposes of this Insurance Agreement, unless the
context clearly requires otherwise, in both singular and plural form, as
appropriate. Unless the context clearly requires otherwise, all capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to them in the Indenture. All words used herein shall be construed to
be of such gender or number as the circumstances require. This “Insurance
Agreement” shall mean this Insurance Agreement as a whole and as the same may,
from time to time hereafter, be amended, supplemented or modified. The words “herein,”
“hereby,” “hereof,” “hereto,” “hereinabove” and “hereinbelow,” and words of
similar import, refer to this Insurance Agreement as a whole and not to any
particular paragraph, clause or other subdivision hereof, unless otherwise
specifically noted. Any reference herein to any agreement or instrument shall
mean such agreement or instrument as the same may, from time to time be
amended, supplemented or modified in accordance with its terms.

 

“Acknowledgment and Consent” means
each Acknowledgment and Consent dated the date hereof of each Hertz Company,
HFC and of HGI.

 

“Agreement Relating to Ambac” means
any clause or section of a Transaction Document which grants a right to, or
provides for a right of, the Insurer in its capacity as an

 

 

Enhancement Provider, requires that the Insurer
receive notice of a certain event, or requires the Insurer’s consent with
respect to certain events.

 

“Ambac” means AMBAC Assurance Corporation.

 

 “Assignment
Agreements” shall have the meaning ascribed thereto in the
Base Indenture.

 

“Base Indenture” means the Amended and
Restated Base Indenture, dated as of December 21, between the Trustee and the
Issuer.

 

“Business Day” means any day other
than (a) a Saturday or a Sunday, (b) a day on which the Insurer is closed or
(c) a day on which banking institutions in New York City or in the city in
which the corporate trust office of the Trustee under the Indenture is located
are authorized or obligated by law or executive order to close.

 

“Collateral” shall have the meaning
ascribed thereto in the Base Indenture.

 

“Collateral Agency Agreement” means
the Amended and Restated Collateral Agency Agreement dated as of December 21, 2005 among Hertz Vehicle Financing
LLC, as a grantor, Hertz General Interest LLC, as a grantor, The Hertz
Corporation, as Servicer and as a secured party, BNY Midwest Trust Company, as
a secured party, as Trustee and as Collateral Agent.

 

“Collateral Agent” shall have the
meaning ascribed thereto in the Base Indenture.

 

“Commission” means the Securities and Exchange
Commission.

 

“Date of Issuance” means the date
on which the Policies are issued as specified therein.

 

“Default” means any event which results,
or which with the giving of notice or the lapse of time or both would result,
in an Event of Default.

 

“Event of Default” means any
Event of Default specified in Section 5.01 hereof.

 

“Fee Letter” means the fee letter
dated December 21, 2005 among the Issuer, the Trustee and the Insurer relating
to the insurance premium and expenses payable to the Insurer.

 

“Fiscal Agent” means the Fiscal
Agent, if any, designated by the Insurer pursuant to the terms of the related
Policy.

 

“Fitch” means Fitch, Inc. and any
successor thereto, and, if such corporation shall for any reason no longer
perform the functions of a securities rating agency, “Fitch” shall be deemed to
refer to any other nationally recognized rating agency designated the Insurer.

 

2

 

“HFC” means Hertz Funding Corporation, a
Delaware corporation, and its successors.

 

“HFC Nominee Agreement” means the Vehicle
Title Nominee Agreement, dated as of December 21, 2005, among HFC, HVF, Hertz
and the Collateral Agent, as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms.

 

“HGI” means Hertz General
Interest LLC, a Delaware limited liability company.

 

“HVF Credit Facility” shall have
the meaning ascribed thereto in the Base Indenture.

 

“HVLLC” means Hertz Vehicles LLC,
a Delaware limited liability company.

 

“Hertz” means The Hertz
Corporation, a Delaware corporation.

 

“Hertz Companies” means Hertz, as
Lessee, as Administrator, and as Servicer, and HVLLC.

 

“Hertz Nominee Agreement” means the
Vehicle Title Nominee Agreement, dated as of December 21, among Hertz, HVF and
the Collateral Agent, as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms.

 

“Indenture” means the Base
Indenture together with the Supplement.

 

“Initial Purchasers” means Lehman
Brothers Inc., Deutsche Bank AG, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman Sachs Credit Partners L.P. and J.P. Morgan Securities
Inc.

 

“Insurance Agreement” means this
agreement.

 

“Insurer” means Ambac.

 

“Issuer” means Hertz Vehicle Financing
LLC.

 

“Interest Rate Hedge Agreement”
shall have the meaning ascribed to “Series 2005-2 Interest Rate Hedge” in the
Supplements.

 

“Investment Company Act” means
the Investment Company Act of 1940, including, unless the context otherwise
requires, the rules and regulations thereunder, as amended.

 

“Issuer Organizational Document” means
the HVF LLC Agreement.

 

“Late Payment Rate” means, for
any date of determination, the rate of interest as it is publicly announced by
Citibank, N.A. at its principal office in New York, New York as its prime rate
(any change in such prime rate of interest to be effective on the date such
change is

 

3

 

announced by Citibank, N.A.) plus 2%. The Late Payment
Rate shall be computed on the basis of a year of 365 days calculating the
actual number of days elapsed. In no event shall the Late Payment Rate exceed
the maximum rate permissible under any applicable law limiting interest rates.

 

“Lease Agreement” means the
Amended and Restated Master Motor Vehicle Operating Lease and Servicing
Agreement dated as of December 21, 2005 among the Lessor, as lessor, the
Lessee, as lessee and the Servicer, as servicer.

 

“Lessee” means The Hertz
Corporation in its capacity as Lessee under the Lease Agreement.

 

“Lessor” means Hertz Vehicle
Financing LLC, in its capacity as Lessor under the Lease Agreement.

 

“Losses” means (i) any actual
out-of-pocket loss paid by the Insurer, each of its parents, subsidiaries and
affiliates, or any shareholder, director, officer, employee, agent or any “controlling
person” (within the meaning of the Securities Act or the Securities Exchange
Act) of the Insurer or any of the foregoing, and (ii) any actual out-of-pocket
costs and expenses paid by such party, including reasonable fees and expenses
of its counsel, to the extent not paid, satisfied or reimbursed from funds
provided by any other Person (provided that the foregoing shall not create or
imply any obligation to pursue recourse against any such other Person).

 

“Material Adverse Change” means,
in respect of any Person, a material adverse change in (i) the business,
financial condition, results of operations or properties of such Person or
(ii) the ability of such Person to perform its obligations under any of
the Transaction Documents.

 

“Moody’s” means Moody’s Investors
Service, Inc., a Delaware corporation, and any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a
securities rating agency, “Moody’s” shall be deemed to refer to any other
nationally recognized rating agency designated by the Insurer.

 

“Note Purchase Agreements” means,
collectively, the Series 2005-2 Note Purchase Agreement and the Series 2005-3
Note Purchase Agreement.

 

“Notes” means the Series 2005-2
Notes and the Series 2005-3 Notes issued under the Supplements.

 

“Offering Document” means the
final Offering Circular dated December 15, 2005 in respect of the Series 2005-2
Notes together with the final Supplement to Offering Circular dated December
15, 2005 in respect of the Series 2005-2 Notes.

 

4

 

“Opinion Facts and Assumptions”
means the facts and assumptions contained in the opinions addressing bankruptcy
and insolvency matters dated on or about the Date of Issuance of Cravath,
Swaine & Moore LLP insofar as they relate to the Issuer.

 

“Owners” means the registered
holders of Notes.

 

“Person” means an individual,
joint stock company, trust, unincorporated association, joint venture,
corporation, business or owner trust, limited liability company, partnership or
other organization or entity (whether governmental or private).

 

“Policies” means, collectively,
the Series 2005-2 Policy and the Series 2005-3 Policy.

 

“Premium” means the premium due
to the Insurer in accordance with Section 3.02 hereof.

 

“Purchase Agreement” means the
Amended and Restated Participation, Purchase and Sale Agreement dated as of December
21, 2005 among The Hertz Corporation, Hertz General Interest LLC and Hertz
Vehicle Financing LLC.

 

“S&P” means Standard &
Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor
thereto, and, if such division shall for any reason no longer perform the
functions of a securities rating agency, “S&P” shall be deemed to refer to
any other nationally recognized rating agency designated by the Insurer.

 

“Securities Act” means the
Securities Act of 1933, including, unless the context otherwise requires, the
rules and regulations thereunder, as amended from time to time.

 

“Securities Exchange Act” means
the Securities Exchange Act of 1934, including, unless the context otherwise
requires, the rules and regulations thereunder, as amended from time to time.

 

“Series 2005-2 Note Purchase Agreement”
means the Purchase Agreement dated as of December 21, 2005 among the Issuer and
the Initial Purchasers, related to the Series 2005-2 Notes.

 

“Series 2005-2 Policy” means the
note guaranty insurance policy number 47437, issued by Ambac, guaranteeing
certain payments on the Series 2005-2 Notes.

 

“Series 2005-2 Supplement” means the Series 2005-2 Supplement
between the Trustee and the Issuer relating to the 3 year, 4 year and 5 year
$2,150,000,000 Hertz Vehicle Financing LLC Series 2005-2 Rental Car Asset
Backed Notes and Floating Rental Car Asset Backed Notes

 

5

 

“Series 2005-3 Note Purchase Agreement”
means the Purchase Agreement dated as of December 21, 2005 among the Issuer and
the Initial Purchasers, related to the Series 2005-3 Notes.

 

“Series 2005-3 Policy” means the
note guaranty insurance policy number 47444, issued by Ambac, guaranteeing
certain payments on the Series 2005-3 Notes.

 

“Series 2005-3 Supplement” means the Series 2005-3 Supplement
between the Trustee and the Issuer relating to the 3 year and 5 year
$250,000,000 Hertz Vehicle Financing LLC Series 2005-3 Variable Funding Rental
Car Asset Backed Notes and Floating Rental Car Asset Backed Notes.

 

“Servicer” means The Hertz
Corporation in its capacity as Servicer under the Lease and the Collateral
Agency Agreement.

 

“Supplement” or “Supplements” means, collectively, the Series
2005-2 Supplement and the Series 2005-3 Supplement.

 

“Term of the Insurance Agreement”
shall be determined as provided in Section 4.01 hereof.

 

“Transaction” means the
transactions contemplated by the Transaction Documents, including the
transactions described in the Offering Document.

 

“Transaction Documents” means
this Insurance Agreement, the Fee Letter, the Lease Agreement, the Indenture,
the Notes, the Note Purchase Agreements, the Assignment Agreements, the
Administration Agreement, the Collateral Agency Agreement, the HVF Credit
Facility, the Nominee Agreement, the Hertz Nominee Agreement, the HFC Nominee
Agreement, the Indemnification Agreement, the Purchase Agreement, any Interest
Rate Hedge Agreement, any Series 2005-2 Letter of Credit, the Issuer
Organizational Document and each Acknowledgment and Consent, as said documents
may be amended, supplemented, restated or otherwise modified from time to time
in accordance with their respective terms.

 

“Trustee” means BNY Midwest Trust
Company, as trustee and securities intermediary under the Indenture, and any
successor to the Trustee under the Indenture.

 

“Trust Indenture Act” means the
Trust Indenture Act of 1939, including, unless the context otherwise requires,
the rules and regulations thereunder, as amended from time to time.

 

“Nominee
Agreement” means the Amended and Restated Vehicle
Title Nominee Agreement dated as of September 18, 2002 among Hertz Vehicles
LLC, Hertz Vehicle

 

6

 

Financing LLC, Hertz General Interest LLC and BNY Midwest Trust
Company, as Collateral Agent.

 

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 2.01. 
Representation and
Warranties of the Issuer. The Issuer represents and warrants
as of the Date of Issuance and covenants as follows:

 

(a)           Due Organization and Qualification.
The Issuer is a limited liability company, duly organized, validly existing and
in good standing under the laws of Delaware. The Issuer is duly qualified to do
business, is in good standing and has obtained all licenses, permits, charters,
registrations and approvals (together, “approvals”)
necessary for the conduct of its business as currently conducted and as
described in the Offering Document and necessary for the performance of its
obligations under the Transaction Documents, in each jurisdiction in which the
failure to be so qualified or to obtain such approvals would render any
Transaction Document unenforceable in any respect or would have a material
adverse effect upon the Transaction.

 

(b)           Power and Authority.
The Issuer has all necessary power and authority to conduct its business as
currently conducted and as described in the Offering Document and to execute,
deliver and perform its obligations under the Transaction Documents.

 

(c)           Due Authorization.
The execution, delivery and performance by the Issuer of the Transaction
Documents to which it is a party have been duly authorized by all necessary
action and do not require any additional approval or consent, or other action
by or any notice to or filing with any Person, including, without limitation,
any governmental entity or the Issuer’s members, as the case may be, (i) which
has not previously been obtained or given, or (ii) the absence of which is
reasonably likely to result in a Material Adverse Change with respect to the
Issuer.

 

(d)           Noncontravention. Neither
the execution and delivery of the Transaction Documents by the Issuer, the
consummation by the Issuer of the transactions contemplated thereby nor the
satisfaction by the Issuer of the terms and conditions of the Transaction
Documents:

 

(i)            conflicts with or
results in any material breach or violation of any provision of the Issuer
Organizational Document or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award

 

7

 

currently in
effect having applicability to the Issuer or any of its material properties,
including regulations issued by an administrative agency or other governmental
authority having supervisory powers over the Issuer;

 

(ii)           constitutes a
default by the Issuer under or a breach of any provision of any loan agreement,
mortgage, indenture or other agreement or instrument to which the Issuer is a
party or by which any of its properties is or may be bound or affected, which
is individually or in the aggregate material to the Issuer; or

 

(iii)          results in or
requires the creation of any lien upon or in respect of any assets of the
Issuer, except as permitted by the Transaction Documents.

 

(e)           Legal Proceedings.
There is no action, proceeding or investigation by or before any court,
governmental or administrative agency or arbitrator against or affecting the
Issuer or any properties or rights of the Issuer or any of its subsidiaries,
pending or, to the Issuer’s knowledge after reasonable inquiry, threatened,
which, in any case, could reasonably be expected to result in a Material
Adverse Change with respect to the Issuer.

 

(f)            Valid and Binding Obligations.
The Notes, when executed, authenticated and issued in accordance with the
Indenture, and the Transaction Documents to which the Issuer is a party (other
than the Notes), when executed and delivered by the Issuer, will constitute the
legal, valid and binding obligations of the Issuer, as applicable, enforceable
against the Issuer in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and
general equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws.

 

(g)           Compliance With Law, Etc.
No practice, procedure or policy employed, or proposed to be employed, by the
Issuer in the conduct of its business violates any law, regulation, judgment,
agreement, order or decree applicable to it that, if enforced, could reasonably
be expected to result in a Material Adverse Change with respect to the Issuer.

 

(h)           Taxes. The Issuer has
filed prior to the date hereof all federal and state tax returns that are
required to be filed by it and paid all taxes, including any assessments
received by it, that are not being contested in good faith, to the extent that
such taxes have become due, except for any failures to file or pay that,
individually or

 

8

 

in the
aggregate, would not result in a Material Adverse Change with respect to the
Issuer.

 

(i)            Accuracy of Information.
Neither the Transaction Documents, nor any other written information relating
to the operations or the financial condition of the Issuer (collectively, the “Documents”), as amended, supplemented or superseded,
furnished to the Insurer, taken as a whole, contain any statement of a material
fact which was untrue or misleading in any material adverse respect when made.
The Issuer has no knowledge of circumstances that could reasonably be expected
to cause a Material Adverse Change with respect to the Issuer. Since the
furnishing of the Documents, there has been no change nor any development or
event involving a prospective change known to the Issuer that would render the
Documents, taken as a whole, untrue or misleading in a material respect other
than as disclosed to the Insurer after the furnishing of the Documents.

 

(j)            Compliance With Securities Laws.
The offer and sale of the Notes comply in all material respects with all
requirements of law, including all registration requirements of applicable
securities laws. Without limitation of the foregoing, the Offering Document
does not contain any untrue statement of a material fact and does not omit to
state a material fact necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading; provided,
however, that no representation is made with respect to the information in
Offering Document set forth under the heading “DESCRIPTION OF CREDIT
ENHANCEMENT—The Policy and the Insurer” or the consolidated financial
statements of the Insurer incorporated by reference in the Offering Document.
The Issuer is not required to be registered as an “investment company” under
the Investment Company Act.

 

(k)           Transaction Documents.
Each of the representations and warranties of the Issuer contained in the
Transaction Documents is true and correct in all material respects, and the
Issuer hereby makes each such representation and warranty to, and for the
benefit of, the Insurer as if the same were set forth in full herein. The
Issuer is in compliance in all material respects with, and the issuance of the
Notes is in compliance with, all provisions of the Transaction Documents to
which the Issuer is a party or by which the Issuer is bound.

 

(l)            Solvency. The Issuer
is solvent and will not be rendered insolvent by the Transaction and, after
giving effect to the Transaction, the Issuer will be solvent. As used in this
paragraph, the term “solvent” means, with respect to a particular date, that on
such date (i) the present fair market value (or present fair saleable value) of
the assets of the Issuer is not less than the total amount required to pay the
probable liabilities of the Issuer on its total existing debts and liabilities
(including contingent

 

9

 

liabilities)
as they become absolute and matured, (ii) the Issuer is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of business,
(iii) the Issuer is not incurring debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (iv) the Issuer is not engaged in
any business or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small capital
after giving due consideration to the prevailing practice in the industry in
which the Issuer is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability. The Issuer does not contemplate the commencement
of insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of any of the Hertz Companies, the Issuer or any of their assets.

 

(m)          Opinion Facts and Assumptions.
The Opinion Facts and Assumptions insofar as they relate to the Issuer are true
and correct as of the Date of Issuance.

 

(n)           No Default. No
Default or Event of Default has occurred or would result from the issuance of
the Notes.

 

(o)           Enhancement Agreement.
This Insurance Agreement is an “Enhancement Agreement” and a “Related Document”
under the Indenture.

 

(p)           HVF Credit Facility.
The HVF Credit Facility is not secured by any assets of the Issuer.

 

Section
2.02.  Affirmative Covenants of the Issuer. The
Issuer hereby agrees that during the Term of this Insurance Agreement unless
the Insurer shall otherwise expressly consent in writing:

 

(a)           Compliance With Agreements and
Applicable Laws. The Issuer shall comply with its obligations
under this Insurance Agreement, the Supplements and the other Transaction
Documents. The Issuer shall comply in all material respects with all
requirements of any law, rule or regulation applicable to it.

 

(b)           Existence. The Issuer
shall maintain its existence and shall at all times continue to be duly
organized under the laws of its respective jurisdiction of organization and
duly qualified and duly authorized (as described in subsections 2.01(a), (b)
and (c) hereof) and shall operate and conduct its business in accordance

 

10

 

with the terms
of the Issuer Organizational Document and the Opinion Facts and Assumptions.

 

(c)           Financial Statements; Accountants’ Reports; Other Information. The Issuer shall
keep or cause to be kept in reasonable detail books and records of account of
its assets and business, including, but not limited to, books and records
relating to the Transaction. The Issuer shall furnish to the Insurer:

 

(i)            Initial and Continuing Reports. The Issuer
shall deliver to the Insurer not later than 5:00 p.m., New York City time, (A)
on the day that is four Business Days prior to each Payment Date the Monthly
Servicing Certificate required by Section 4.1(c) of the Base Indenture and the
Monthly Noteholders’ Statement required by Section 4.1(d) of the Base Indenture
and (B) on or before each Payment Date the Monthly Collateral Certificate
required by Section 4.1(e) of the Base Indenture. Upon the request of the
Insurer, the Issuer shall deliver to the Insurer within one Business Day of its
request, copies of any Daily Collection Report required by Section 4.1(a) of
the Base Indenture.

 

(ii)           Other Information. Promptly upon receipt
thereof, copies of all schedules, financial statements or other similar
reports, notices, opinions, certificates, or other items delivered to or by the
Issuer or the Trustee pursuant to the terms of the Transaction Documents
(including copies of each item required to be delivered to the Trustee and the
Rating Agencies pursuant to Sections 4.1(f), and (h) and Section 8.2 of the
Base Indenture) and, promptly upon request, such other data as the Insurer may
reasonably request with respect to the Notes.

 

(d)           Compliance Certificate.
The Issuer shall deliver to the Insurer, quarterly on the Payment Date in each
March, June, September, and December beginning in March 2006 one or more
certificates addressed to the Insurer and signed by an officer of the Issuer
authorized to execute such certificates on behalf of the Issuer containing the
certifications required by Section 4.1(f) of the Base Indenture and stating
that:

 

(i)            the ratings
assigned by the Rating Agencies in respect of any outstanding series of notes
have not been withdrawn or downgraded since the date of the related Series
Supplement,

 

(ii)           no Rating Agency
has determined that the amount of Enhancement for any outstanding series of
notes must be increased in order to maintain the then current rating of such
Series or, if any Rating Agency has

 

11

 

made such a
determination, the amount of additional Enhancement that would be required in
order to maintain such current rating,

 

(iii)          no change in the
Manufacturer Program of any Manufacturer in respect of any new model year shall
have given rise to any request known to the Issuer on the part of any Rating
Agency that any modification be made to any Transaction Document, and

 

(iv)          the Issuer has
apprised the Rating Agencies and the Insurer of all material changes in the
Manufacturer Programs known to the Issuer occurring since the date of this
Insurance Agreement.

 

(e)           Access to Records; Discussions With
Officers and Accountants. The Issuer shall, upon the reasonable
request of the Insurer and as often as the Insurer may reasonably request (but,
prior to the occurrence of a Potential Amortization Event or an Amortization
Event, not more than twice in any year), permit the Insurer or its authorized
agents:

 

(i)            to inspect the
properties, books and records of the Issuer as they may relate to the Notes,
the obligations of the Hertz Companies under the Transaction Documents, and the
Transaction;

 

(ii)           to discuss the
affairs, finances and accounts of the Issuer with the chief operating officer,
the chief financial officer or other relevant officers of the Issuer; and

 

(iii)          to discuss in the
presence of the Issuer the affairs, finances and accounts of the Issuer with
the Issuer’s independent accountants.

 

Such inspections and
discussions shall be conducted during normal business hours and upon reasonable
notice. The books and records of the Issuer will be maintained at the address
of the Issuer designated herein for receipt of notices, unless it shall
otherwise advise the parties hereto in writing. After the occurrence of an
Amortization Event, the costs of such inspections with the Issuer or of similar
inspections with any Hertz Company or with HGI provided for in the Transaction
Documents shall be at the expense of the Issuer and included in the
Reimbursable Amounts.

 

(f)            Notice of
Material Events. The Issuer shall promptly inform the Insurer in
writing of the occurrence of any of the following to the extent any of the
following relate to it or, if related to a Hertz Company, insofar as such
occurrences are actually known to the Issuer:

 

12

 

(i)            the submission of
any claim or the initiation or threat of any legal process, litigation or
administrative or judicial investigation, or rule making or disciplinary
proceeding by or against any Hertz Company or the Issuer that would result in a
Material Adverse Change with respect to any Hertz Company or the Issuer, or the
promulgation of any proceeding or any proposed or final rule which would result
in a Material Adverse Change with respect to any Hertz Company or the Issuer,

 

(ii)           the submission of
any claim or the initiation or threat of any legal process, litigation or
administrative or judicial investigation in any federal, state or local court
or before any arbitration board, or any such proceeding threatened by any
government agency, which, if adversely determined, would have a material
adverse effect on the Issuer, the Owners or the Insurer.

 

(iii)          any change in the
location of any Hertz Company’s or the Issuer’s principal offices or any change
in the location of any Hertz Company’s or the Issuer’s books and records;

 

(iv)          the issuance of a
new series of notes pursuant to the Base Indenture;

 

(v)           the replacement,
resignation or removal (or proposed replacement, resignation or removal) of the
Trustee or the Collateral Agent;

 

(vi)          any act, situation
or occurrence as to which the Rating Agency Condition is sought or required to
be satisfied by the Issuer with respect to the Notes;

 

(vii)         the occurrence of
any Default or Event of Default or of any Material Adverse Change with respect
to any Hertz Company;

 

(viii)        the commencement of
any proceedings by or against any Hertz Company or the Issuer under any
applicable bankruptcy, reorganization, liquidation, rehabilitation, insolvency
or other similar law now or hereafter in effect or of any proceeding in which a
receiver, liquidator, conservator, trustee or similar official shall have been
appointed or requested for any Hertz Company or the Issuer or any of their or
its assets;

 

(ix)           the receipt of
notice that (A) any Hertz Company or the Issuer is being placed under
regulatory supervision, (B) any material license, permit, charter, registration or
approval necessary for the conduct of any Hertz

 

13

 

Company’s or
the Issuer’s business is to be suspended or revoked, or (C) any Hertz Company
or the Issuer is required by any governmental authority to cease and desist any
practice, procedure or policy employed by such Hertz Company or the Issuer in
the conduct of its business, and such cessation would result in a Material
Adverse Change with respect to such Hertz Company or the Issuer; or

 

(x)            the occurrence of
an event that results in amounts due under Hertz’s Senior Credit Facilities
becoming immediately due and payable whether or not the event that been waived
by the lenders under such facilities.

 

(g)           Financing Statements and Further
Assurances. The Issuer will file or cause to be filed all
financing statements or other instruments, and any amendments or continuation
statements relating thereto, necessary to be kept and filed in such manner and
in such places as may be required by law to preserve and protect fully the
interest of the Trustee on behalf of the Owners and the Insurer in the
Indenture Collateral and the interest of the Collateral Agent in the Vehicle
Collateral. The Issuer agrees to cooperate with S&P, Moody’s and Fitch in
connection with any review of the Transaction that may be undertaken by
S&P, Moody’s or Fitch after the date hereof and to provide all information
reasonably requested by S&P, Moody’s or Fitch.

 

(h)           Maintenance of Licenses.
The Issuer shall maintain all licenses, permits, charters and registrations
which are material to the conduct of its business.

 

(i)            Redemption of Notes.
The Issuer shall instruct the Trustee, upon redemption of the Notes pursuant to
the Indenture, to furnish to the Insurer a notice of such redemption and, upon
a redemption or other payment of all of the Notes to surrender the Policies to
Ambac for cancellation.

 

(j)            Disclosure Document.
Each Offering Document delivered with respect to the Notes shall clearly
disclose that neither Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York Insurance Law.

 

(k)           Third Party Beneficiary.
The Issuer and the Trustee agree that the Insurer shall have all rights of a
third party beneficiary of, and pursuant to, the Supplements. The Issuer hereby
agrees the Insurer shall have all rights of a third-party beneficiary of, and
pursuant to, each Agreement Relating to Ambac of the Issuer in any of the
Transaction Documents. Each Agreement Relating to Ambac of the Issuer in the
Transaction Documents shall be performed by the Issuer in accordance with the
terms of the Transaction Documents for the benefit of the Insurer.

 

14

 

(l)            Maintenance of Interest.
On or before each March 31 beginning in 2006, the Issuer shall provide to the
Insurer, without any additional request by the Insurer, the Opinion of Counsel
referenced in Section 8.11(d) of the Base Indenture. On or before each March 31
beginning in 2006, so long as any of the Notes are outstanding, the Issuer
shall furnish to the Insurer and the Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, rerecording and refiling of any financing
statements and continuation statements as is necessary to maintain the interest
of the Trustee and the interest of the Collateral Agent in the Collateral and
reciting the details of such action or stating that, in the opinion of such
counsel, no such action is necessary to maintain such interests. Such Opinion
of Counsel shall also describe the recording, filing, rerecording and refiling
of any financing statements and continuation statements that will be required
to maintain the interest of the Trustee in the Indenture Collateral and the
interest of the Collateral Agent in the Vehicle Collateral until the date such
next Opinion of Counsel is due.

 

(m)          Closing Documents.
The Issuer shall provide or cause to be provided to the Insurer a copy of each
document executed in connection with the Transaction within 30 days after the
Date of Issuance. Promptly following the execution of any Transaction Document
or amendment thereto, the Issuer shall provide to the Insurer a copy thereof.

 

(n)           Indemnification. The
Issuer hereby agrees to indemnify and hold harmless the Insurer (including its
directors, officers, employees and agents) from and against any and all losses,
liabilities (including liabilities for penalties), claims, demands, actions,
suits, judgments, reasonable out-of-pocket costs and expenses arising out of or
resulting from the assignment granted by the Indenture or by the Collateral
Agency Agreement or any Assignment Agreement, whether arising by virtue of any
act or omission on the part of the Issuer or otherwise, including, without
limitation, the reasonable out-of-pocket costs, expenses and disbursements
(including reasonable attorneys’ fees and expenses) incurred by the Insurer in
enforcing the Indenture or preserving any of its rights to, or realizing upon,
any of the Collateral; provided, however, the foregoing indemnification shall
not extend to any action by the Insurer which constitutes gross negligence or
willful misconduct by the Insurer or any other indemnified person related to
the Insurer hereunder or under the Indenture. This indemnification shall
survive the termination of this Insurance Agreement, the Indenture, the 2005-2
Series Supplement, the 2005-3 Series Supplement, the Collateral Agency
Agreement or any Assignment Agreement.

 

(o)           Certificates of Title Audits.
Within thirty (30) days after receipt by the Issuer of each report described in
either Section 4.1(h) of the Base Indenture or in

 

15

 

clause (ii) of
the next sentence, Hertz and the Issuer will provide to the Insurer written
notice of how each exception identified in such report is being resolved,
whether by correcting the Certificate of Title, transferring an affected HVF
Vehicle or otherwise. If the number of exceptions cited in any report delivered
pursuant to Section 4.1(h) of the Base Indenture exceeds five percent (5%) of
the vehicle records sampled in such report, then Hertz and the Issuer will (i)
provide to the Insurer within thirty (30) days a written explanation of the
causes of such exceptions and what measures have been taken or are proposed to
be taken to resolve such causes and (ii) cause an additional verification of
title to be conducted and delivered in the manner described in Section 4.1(h) of
the Base Indenture prior to the next May 30, provided that neither Hertz nor
the Issuer will be required to do another title audit if the exception rate in
excess of 5% is due to Hertz and the Issuer having failed to receive the
Certificate of Title, and such failure is cured prior to the next November 30.
An exception will be determined to exist if the Certificate of Title (or, if a
Certificate of Title has not been received, the registration card, application
receipt or title inquiry report therefor) does not correctly list HVLLC as
owner and the Collateral Agent as first lienholder (an exception may include
the existence of an Initial Hertz Vehicle, a Kansas Vehicle or a Service
Vehicle).

 

(p)           Hertz Senior Credit Facilities
Compliance Reporting. The Issuer shall cause Hertz to provide to
the Insurer written periodic compliance reports as such reports are prepared
and delivered to the banks under the credit agreements for the Hertz’s Senior
Credit Facilities.

 

Section 2.03. 
Negative Covenants of the
Issuer. The Issuer hereby agrees that during the Term of the
Insurance Agreement, unless the Insurer shall otherwise expressly consent in
writing:

 

(a)           Impairment of Rights.
The Issuer shall not take any action if such action may reasonably be expected
to interfere in any material respect with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The Issuer shall
give the Insurer written notice of any such action on the earlier of: the date
upon which any publicly available filing or release is made with respect to
such action or promptly prior to the date of consummation of such action.

 

(b)           Waiver, Amendments, Etc.
The Issuer shall not waive, modify or amend, or consent to any waiver,
modification or amendment of, any of the terms, provisions or conditions of or
assign any of its rights, duties or obligations under the Transaction Documents
except in accordance with the terms thereof. The Issuer shall promptly provide
the Insurer with written notice of any such waiver, modification or amendment.
The Issuer shall not, without the consent of the Insurer, amend, supplement,
waive or otherwise modify any provision of the Supplements, such consent

 

16

 

not to be
unreasonably withheld or delayed. The Issuer will not enter into any amendment
to the Indemnification Agreement unless the Rating Agency Condition with
respect to the Notes (without giving effect to either Policy) shall have been
satisfied with respect thereto. The Issuer will not enter into any amendment to
the HVF Credit Facility unless the Rating Agency Condition with respect to the
Notes (without giving effect to either Policy) shall have been satisfied with
respect thereto. The Issuer shall not enter into any assignment of the
Administration Agreement unless the Rating Agency Condition with respect to the
Notes (without giving effect to either Policy) shall have been satisfied with
respect thereto.

 

(c)           Use of Insurer’s Name.
The Issuer agrees not to use or permit any of its Affiliates to use the Insurer’s
name (other than to indicate that the Notes are insured by the Insurer) or any
information as to the details of the Transaction in any public document (other
than a Securities Act or Exchange Act filing) including, without limitation, a
press release or presentation, announcement or forum without the Insurer’s
prior consent, such consent not to be unreasonably withheld or delayed. In the
event that the Issuer or any of its Affiliates is advised by counsel that such
party has a legal obligation to disclose the Insurer’s name in any press
release, public announcement or other public document (other than a Securities
Act or Exchange Act filing), such party shall provide the Insurer with at least
three business days prior written notice of such party’s intent to use the
Insurer’s name together with a copy of the proposed use of the Insurer’s name
and of any description of a transaction with the Insurer and shall obtain the
Insurer’s prior consent as to the form and substance of the proposed use of the
Insurer’s name and any such description, such consent not to be unreasonably
withheld or delayed.

 

(d)           HVF Credit Facility.
The Issuer shall not grant or permit to exist any Lien on its assets to secure
the HVF Credit Facility.

 

Section
2.04.  Representations, Warranties and
Covenants of Trustee.

 

(a)           Representations and Warranties.
As of the Date of Issuance, each of the representations and warranties of the
Trustee set forth in the Transaction Documents are true and correct in all
material respects and the Trustee makes each such representation and warranty
to, and for the benefit of, the Insurer as if the same were set forth in full
herein.

 

(b)           Compliance and Amendments.
The Trustee shall comply in all material respects with the terms and conditions
of the Transaction Documents to which it is a party and the Trustee shall not
agree to any amendment to or modification of the terms of any of the
Transaction Documents except in accordance with the terms thereof and of the
Base Indenture.

 

17

 

ARTICLE III

THE POLICIES; REIMBURSEMENT

 

Section
3.01.  Issuance of the Policies. The
Insurer agrees to issue the Policies on the Closing Date subject to
satisfaction of the conditions precedent set forth below:

 

(a)           Payment of Initial Premium and
Expenses. The Insurer shall have been paid, by the Issuer, that
portion of a nonrefundable Premium payable on the Closing Date and the Issuer
shall agree to reimburse or pay directly other fees and expenses identified in
Section 3.02 as then payable to or in respect of the Insurer.

 

(b)           Transaction Documents.
The Insurer shall have received a copy of each of the Transaction Documents, in
form and substance satisfactory to it and its counsel, duly authorized,
executed and delivered by each party thereto.

 

(c)           Certified Documents and Resolutions.
The Insurer shall have received a copy of (i) the certificate of incorporation
and bylaws, limited partnership agreement, or limited liability company
agreement of each of the Hertz Companies and the Issuer and (ii) the
resolutions of each of the governing boards of each of the Hertz Companies and
the Issuer authorizing the issuance of the Notes and the execution, delivery
and performance by the Hertz Companies and the Issuer of the Transaction
Documents and the transactions contemplated thereby, as applicable to it,
certified by the Secretary or an Assistant Secretary of such Hertz Company or
the Issuer, as applicable (which certificate shall state that such certificate
of incorporation, agreements, bylaws and resolutions are in full force and
effect without modification on the Date of Issuance).

 

(d)           Incumbency Certificate.
The Insurer shall have received a certificate of the Secretary or an Assistant
Secretary of each of the Hertz Companies and the Issuer certifying the names
and signatures of the officers of each of the Hertz Companies and the Issuer
authorized to execute and deliver the Transaction Documents and that
shareholder or member, as applicable, consent to the execution and delivery of
such documents is not necessary or has been obtained.

 

(e)           Representations and Warranties;
Certificate. The representations and warranties of each of the
Hertz Companies and the Issuer set forth or incorporated by reference in the
Transaction Documents shall be true and correct in all material respects as of
the Date of Issuance as if made on the Date of Issuance and the Insurer shall
have received a certificate of an appropriate officer of each of the Hertz
Companies and the Issuer to that effect.

 

18

 

(f)            Opinions of Counsel.

 

(i)            The law firm of
Cravath, Swaine & Moore LLP shall have issued its favorable opinion, in
form and substance acceptable to the Insurer and its counsel, regarding the
validity and enforceability of the Transaction Documents against the Hertz
Companies, HFC and HGI.

 

(ii)           The law firm of
Cravath, Swaine & Moore LLP shall have furnished its opinions, in form and
substance acceptable to the Insurer and its counsel, regarding certain
bankruptcy and insolvency matters, the characterization of the Lease as a “true
lease” for bankruptcy purposes and the tax treatment of payments on the Notes
under federal and state tax laws.

 

(iii)          The law firm of
Richards, Layton & Finger shall have issued its favorable opinion, in form
and substance acceptable to the Insurer and its counsel, regarding the priority
and perfection of security interests and certain bankruptcy and insolvency
matters.

 

(iv)          Internal counsel to
each of the Hertz Companies, HFC and HGI shall have issued favorable opinions,
in form and substance acceptable to the Insurer and its counsel, regarding the
corporate or limited liability company existence and authority of each of the
Hertz Companies, HFC and HGI, respectively.

 

(v)           The Insurer shall
have received such other opinions of counsel, in form and substance acceptable
to it and its counsel, addressing such other matters as the Insurer may
reasonably request.

 

(g)           No Litigation, Etc.
No suit, action or other proceeding, investigation or injunction, or final
judgment relating thereto, shall be pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with the Transaction Documents or the
consummation of the Transaction.

 

(h)           Legality. No statute,
rule, regulation or order shall have been enacted, entered or deemed applicable
by any government or governmental or administrative agency or court that would
make the transactions contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation thereof.

 

(i)            Satisfaction of Conditions of the
Note Purchase Agreements. All conditions in the Note Purchase
Agreements shall have been satisfied.

 

19

 

(j)            Issuance of Ratings.
The Insurer shall have received confirmation that the risk secured by its
Policies is an investment grade risk rated at least BBB by S&P and at least
Baa2 by Moody’s.

 

(k)           No Default. No
Default or Event of Default shall have occurred and be continuing.

 

(l)            Additional Items. The
Insurer shall have received such other documents, instruments, approvals or
opinions reasonably requested by the Insurer as may be reasonably necessary to
effect the Transaction, including, but not limited to, evidence satisfactory to
the Insurer that the conditions precedent, if any, in the Transaction Documents
have been satisfied.

 

(m)          Note Purchase Agreements.
The Insurer shall have received copies of each of the documents required to be
delivered to the Initial Purchasers pursuant to the Note Purchase Agreements.

 

(n)           Conform to Documents.
The Insurer and its counsel shall have determined that all instruments to be
furnished to the Trustee in connection with the Notes conform to the
requirements of the Indenture.

 

(o)           Acknowledgment and Consent.
The Insurer shall have received from each Hertz Company and HGI an
Acknowledgment and Consent consenting to the terms hereof substantially in the
form attached hereto as Exhibit A, B, C or D, as applicable.

 

Section
3.02.  Payment of Fees and Premium.

 

(a)           Legal and Accounting Fees.
The Issuer shall pay or cause to be paid, within ten (10) business days of the
Date of Issuance, reasonable legal fees and disbursements incurred by the
Insurer in connection with the issuance of the Policies and any reasonable fees
of the Insurer’s auditors in accordance with the terms of the Fee Letter. Any
reasonable fees of the Insurer’s auditors or attorneys payable in respect of
any amendment or supplement to the Offering Document or any other Offering
Document incurred after the Date of Issuance shall be paid by the Issuer within
ten (10) business days of the Issuer’s receipt of a written invoice or request
for payment of such amounts. The Insurer shall, upon written request, furnish
to the Issuer a written estimate of the anticipated fees for such auditors and
attorneys.

 

(b)           Premium. In
consideration of the issuance by the Insurer of the Policies, the Insurer shall
be entitled to receive the Premium as and when due in accordance with the terms
of the Fee Letter (i) in the case of Premium due on or before the Date of
Issuance, directly from the Issuer and (ii) in the case of Premium due after

 

20

 

the Date of
Issuance, first, pursuant to the Indenture, and second, to the extent the
amounts in subclause first are not
sufficient, directly from the Issuer. The Premium paid hereunder or under the
Indenture shall be nonrefundable without regard to whether the Insurer makes
any payment under the Policies or any other circumstances relating to the Notes
or provision being made for payment of the Notes prior to maturity. The Issuer
and the Trustee (with respect to the Trustee, to the extent the Trustee is
paying the premium on behalf of the Issuer in accordance with either Indenture)
shall make all payments of Premium to be made by them by wire transfer to an
account designated from time to time by the Insurer by written notice to the Issuer
and the Trustee.

 

Section
3.03.  Reimbursement and Additional
Payment Obligation.

 

(a)           In accordance with
the priorities established in Article II of the Supplements, the Insurer shall
be entitled to reimbursement for any payment made by it under the Policies,
which reimbursement shall be due and payable on the date that any amount is
paid pursuant to a Notice (as defined in the relevant Policy), in an amount
equal to the amount so paid and all amounts previously paid that remain
unreimbursed.

 

(b)           The Issuer agrees to
pay to the Insurer as follows: any and all charges, fees, costs and expenses
that the Insurer may reasonably pay or incur, including, but not limited to,
attorneys’ and accountants’ fees and expenses, in connection with

 

(i)            the enforcement,
defense or preservation of any rights in respect of any of the Transaction
Documents, including, without limitation, defending, monitoring or
participating in any litigation or proceeding (including any insolvency or
bankruptcy proceeding in respect of any Transaction participant or any
affiliate thereof) relating to any of the Transaction Documents, any party to
any of the Transaction Documents, in its capacity as such a party, or the
Transaction,

 

(ii)           any action,
proceeding or investigation affecting the Issuer, the Issuer’s assets, the
Collateral or the rights or obligations of the Insurer under the Transaction
Documents, including, without limitation, any judgment or settlement entered
into affecting the Insurer or the Insurer’s interests,

 

(iii)          any consent,
amendment, waiver or other action with respect to, or related to, any
Transaction Document, whether or not executed or completed or

 

(iv)          any occurrence of
any Default under this Agreement (“Reimbursable Amounts”).

 

21

 

Notwithstanding anything to the contrary in any Section of this
Insurance Agreement, to the extent a dispute, action, proceeding or
investigation is between the Insurer and HGI, HFC , the Issuer or a Hertz
Company and HGI, HFC , the Issuer or the applicable Hertz Company prevails (as
determined by a court of competent jurisdiction) in such dispute, action,
proceeding or investigation, each party to such a dispute, action, proceeding
or investigation shall pay its own fees, costs and expenses related thereto.
Reimbursable Amounts due to the Insurer shall bear interest as provided in
subclause (e) of this Section 3.03. In the event that the Issuer fails to
pay the Insurer any Reimbursable Amounts, the Insurer shall be entitled to
reimbursement of such amount together with interest thereon as part of the
Insurer Reimbursement Amounts. The Insurer reserves the right to charge a fee
as a condition to executing any material waiver, consent or amendment proposed
in respect of any of the Transaction Documents.

 

(c)           The Issuer agrees to
pay to the Insurer as follows: any payments made by the Insurer on behalf of,
or advanced to, any of the Hertz Companies or the Issuer, respectively, in
connection with the Notes or any other Transaction Documents, if such payment
was made by the Insurer in order to avoid a claim on the related Policy which
was reasonably likely, including, without limitation, any amounts payable by
any of the Hertz Companies pursuant to the Notes or any other Transaction
Documents.

 

(d)           Following
termination of the Indenture pursuant to Section 11.1(b) of the Base Indenture
or Section 6.13 of the relevant Supplement, the Issuer agrees to reimburse the
Insurer for any Insured Payments required to be made pursuant to the related
Policy subsequent to the date of such termination.

 

(e)           The Issuer agrees to
pay to the Insurer as follows: interest on any and all amounts described in
subclauses (a), (b), (c) and (d) of this Section 3.03 (to the extent permitted
by law, if in respect of any unreimbursed amounts representing interest) and
any and all amounts described in Section 3.02 from the date due until payment
thereof in full (after as well as before judgment), in each case, payable to
the Insurer at the Late Payment Rate per annum. Any amount described in clauses
(b), (c), (d) or (e) of this Section 3.03 shall be due ten (10) business days
after demand therefor.

 

Section
3.04.  Indemnification.

 

(a)           In addition to any
and all rights of indemnification or any other rights of the Insurer pursuant
hereto or under law or equity or under any Transaction Document, the Issuer
agrees to pay, and to protect, indemnify and save harmless, the Insurer, each
of its parents, subsidiaries and affiliates and any officer, director,
shareholder, employee or agent of any of the foregoing, and each person who
controls the Insurer or any of the foregoing within the meaning of either
Section 15 of the

 

22

 

Securities Act
or Section 20 of the Securities Exchange Act from and against any and all
Losses whatsoever paid by the Insurer or other indemnified person of any nature
arising out of or by reason of:

 

(i)            any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Document or in any amendment or supplement thereto or arising out of
or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such Losses arise out of or are based upon any
such untrue statement or omission or allegation thereof based upon information
set forth in the Offering Document under the caption (A) ”DESCRIPTION OF
CREDIT ENHANCEMENT—The Policies and the Insurer,” or (B) in the financial
statements of the Insurer, including any information in any amendment or
supplement to the Offering Document furnished by the Insurer in writing
expressly for use therein that amends or supplements such information;

 

(ii)           to the extent not
covered by clause (i) above, any act or omission of the Issuer in connection
with the offering, issuance, sale or delivery of the Notes other than by reason
of false or misleading information provided by the Insurer in writing for
inclusion in the Offering Document as specified in clause (i) above or the
allegation thereof or by reason of the Insurer’s gross negligence or willful
misconduct;

 

(b)           In addition to any
and all rights of indemnification or any other rights of the Insurer pursuant
hereto or under law or equity or under any Transaction Document, the Issuer
agrees to pay, and to protect, indemnify and save harmless, the Insurer and its
officers, directors, shareholders, employees, agents, and each person, if any,
who controls the Insurer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act from and against
any and all claims, losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or reasonable expenses (including, without limitation,
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) or obligations whatsoever paid by the
Insurer or other indemnified person of any nature arising out of or relating to
the transactions contemplated by the Transaction Documents by reason of

 

(i)            the misfeasance or
malfeasance of, or negligence or theft committed by, any director, officer,
employee or agent of the Issuer;

 

23

 

(ii)           the violation by
the Issuer of any federal or state securities, banking or antitrust laws, rules
or regulations in connection with the issuance, offer and sale of the Notes or
the transactions contemplated by the Transaction Documents;

 

(iii)          the breach by the
Issuer of any of its obligations under this Agreement or any of the Transaction
Documents; and

 

(iv)          the breach by the
Issuer of any representation or warranty on the part of the Issuer contained in
the Transaction Documents or in any certificate or report furnished or
delivered to the Insurer thereunder; provided, however, that any such
indemnified amounts arising for the account of an indemnified person shall not
include amounts to the extent caused by such person’s own gross negligence or
willful misconduct.

 

(c)           Any party which
proposes to assert the right to be indemnified under this Section 3.04 will
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to be made under
this Section 3.04, notify the Issuer of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served. In case any action, suit
or proceeding shall be brought against any indemnified party and it shall
notify the Issuer of the commencement thereof, the Issuer shall be entitled to
participate in, and, to the extent that it shall wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the Issuer to such indemnified party of its election so to
assume the defense thereof, the Issuer shall not be liable to such indemnified
party for any legal expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in
any such action the defense of which is assumed by the Issuer in accordance
with the terms of this subsection (c), but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by the indemnified party at the Issuer’s expense has been
authorized in writing by the Issuer, (ii) the Issuer has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action or (iii) the named parties
to any such action include the Issuer on the one hand and, on the other hand,
the indemnified party, and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them (in which case if such indemnified party notifies the Issuer in writing
that it elects to employ separate counsel at the expense of the Issuer, the
Issuer shall not have the right to assume the defense of such action or
proceeding on such indemnified party’s behalf), in each of which cases the
reasonable fees and expenses of counsel (including one local counsel

 

24

 

for all
indemnified parties in any action or group of related actions) to the
indemnified party will be at the expense of the Issuer, and all such fees and
expenses will be reimbursed promptly as they are incurred. The Issuer shall not
under any circumstances be liable for any settlement of any action or claim
effected without its prior written consent.

 

(d)           This indemnity
provision shall survive the termination of this Agreement and shall survive
until the statute of limitations has run on any causes of action which arise from
one of these reasons and until all suits filed as a result thereof have been
finally concluded.

 

Section
3.05.  Payment Procedure. In the
event of any payment by the Insurer, the Trustee and the Issuer agree to accept
the vouchers or other evidence of payment in accordance with this Insurance
Agreement and properly approved by the Insurer as prima facie evidence of the
propriety thereof and the liability therefor to the Insurer. All payments to be
made to the Insurer under this Insurance Agreement shall be made to the Insurer
in lawful currency of the United States of America in immediately available
funds at the notice address for the Insurer as specified in the Indenture on
the date when due or as the Insurer shall otherwise direct by written notice to
the other parties hereto. In the event that the date of any payment to the
Insurer or the expiration of any time period hereunder occurs on a day which is
not a Business Day, then such payment or expiration of time period shall be
made or occur on the next succeeding Business Day with the same force and
effect as if such payment was made or time period expired on the scheduled date
of payment or expiration date. Payments to be made to the Insurer under this
Insurance Agreement shall bear interest at the Late Payment Rate from the date
fifteen days after demand is made therefore to the date paid.

 

ARTICLE IV

FURTHER AGREEMENTS

 

Section
4.01.  Effective Date; Term of the Insurance
Agreement. This Insurance Agreement shall take effect on the
Date of Issuance and shall remain in effect until the later of (a) such
time as the Insurer is no longer subject to a claim under the Policies and the
Policies shall have been surrendered to the Insurer for cancellation and (b)
all amounts payable to the Insurer by the Issuer or from any other source under
the Transaction Documents or any Acknowledgment and Consent and all amounts
payable under the Notes have been paid in full; provided, however, that the
provisions of Sections 3.03 and 3.04 hereof shall survive any termination
of this Insurance Agreement.

 

25

 

Section
4.02.  Obligations Absolute.

 

(a)           The obligations of
the Issuer hereunder shall be absolute and unconditional and shall be paid or
performed strictly in accordance with this Insurance Agreement under all
circumstances irrespective of:

 

(i)            any lack of
validity or enforceability of, or any amendment or other modifications of, or
waiver, with respect to any of the Transaction Documents, the Notes or the
Policies;

 

(ii)           any exchange or
release of any other obligations hereunder;

 

(iii)          the existence of
any claim, setoff, defense, reduction, abatement or other right that any of the
Hertz Companies or the Issuer may have at any time against the Insurer or any
other Person;

 

(iv)          any document
presented in connection with either Policy proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;

 

(v)           any payment by the
Insurer under a Policy against presentation of a certificate or other document
that does not strictly comply with terms of the Policy;

 

(vi)          any failure of the
Issuer to receive the proceeds from the sale of the Notes; or

 

(vii)         any breach by any of
the Hertz Companies or the Issuer of any representation, warranty or covenant
contained in any of the Transaction Documents.

 

(b)           The Issuer and any
and all others who are now or may become liable for all or part of the
obligations of the Issuer under this Insurance Agreement agree to be bound by
this Insurance Agreement and:

 

(i)            to the extent
permitted by law, waive and renounce any and all redemption and exemption
rights and the benefit of all valuation and appraisement privileges against the
indebtedness and obligations evidenced by any Transaction Document or by any
extension or renewal thereof;

 

(ii)           waive presentment
and demand for payment, notices of nonpayment and of dishonor, protest of
dishonor and notice of protest;

 

26

 

(iii)          waive all notices
in connection with the delivery and acceptance hereof and all other notices in
connection with the performance, default or enforcement of any payment
hereunder, except as required by the Transaction Documents;

 

(iv)          waive all rights of
abatement, diminution, postponement or deduction, or any defense other than
payment, or to any right of setoff or recoupment arising out of any breach
under any of the Transaction Documents, by any party thereto or any beneficiary
thereof, or out of any obligation at any time owing to any of the Hertz
Companies or the Issuer;

 

(v)           agree that its
liabilities hereunder shall, except as otherwise expressly provided in this
Section 4.02, be unconditional and without regard to any setoff, counterclaim
or the liability of any other Person for the payment hereof

 

(vi)          agree that any
consent, waiver or forbearance hereunder with respect to an event shall operate
only for such event and not for any subsequent event;

 

(vii)         consent to any and
all extensions of time that may be granted by the Insurer with respect to any
payment hereunder or other provisions hereof and to the release of any security
at any time given for any payment hereunder, or any part thereof, with or
without substitution, and to the release of any Person or entity liable for any
such payment; and

 

(viii)        consent to the
addition of any and all other makers, endorsers, guarantors and other obligors
for any payment hereunder, and to the acceptance of any and all other security
for any payment hereunder, and agree that the addition of any such obligors or
security shall not affect the liability of the parties hereto for any payment
hereunder.

 

Section
4.03.  Assignments; Reinsurance;
Third-Party Rights.

 

(a)           This Insurance
Agreement shall be a continuing obligation of the parties hereto and shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The Issuer may not assign its
rights under this Insurance Agreement, or delegate any of its duties hereunder,
without the prior written consent of the Insurer; any assignment made in
violation of this Insurance Agreement shall be null and void.

 

(b)           The Insurer shall
have the right to give participations in its rights under this Insurance
Agreement and to enter into contracts of reinsurance with respect to the

 

27

 

Policies upon
such terms and conditions as it may in its discretion determine; provided,
however, that no such participation or reinsurance agreement or arrangement
shall relieve the Insurer of any of its obligations hereunder or under the
Policies.

 

(c)           In addition, the
Insurer shall be entitled to assign or pledge to any bank or other lender
providing liquidity or credit with respect to the Transaction or the
obligations of the Insurer in connection therewith any of its rights under the
Transaction Documents or with respect to any real or personal property or other
interests pledged to it, or in which it has a security interest, in connection
with the Transaction.

 

(d)           In the event of an
assignment of this Insurance Agreement and/or any Acknowledgment and Consent
effected without the Issuer’s consent, the Issuer (and in the case of an
assignment of an Acknowledgment and Consent, the affected Hertz Company or
HGI), shall only be required to deal with the Insurer on all matters pertaining
to the assigned agreement.

 

(e)           Except as provided
herein with respect to participants and reinsurers, nothing in this Insurance
Agreement shall confer any right, remedy or claim, express or implied, upon any
Person, including, particularly, any Owner, other than the Insurer against the
Issuer, and all the terms, covenants, conditions, promises and agreements
contained herein shall be for the sole and exclusive benefit of the parties
hereto and their successors and permitted assigns. Neither the Trustee nor any
Owner shall have any right to payment from any Premiums paid or payable
hereunder or under the Indenture or from any other amounts paid by any of the
parties hereto or any Hertz Company pursuant to Sections 3.02, 3.03 or 3.04
hereof or any Acknowledgment and Consent.

 

Section
4.04.  Liability of the Insurer. Neither
the Insurer nor or any of its officers, directors or employees shall be liable
or responsible for: (a) the use that may be made of the Policies by the Trustee
or for any acts or omissions of the Trustee in connection therewith; or the
validity, sufficiency, accuracy or genuineness of documents delivered to the
Insurer (or its Fiscal Agent or any other Person) in connection with any claim
under either Policy, or of any signatures thereon, even if such documents or
signatures should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged (unless an officer or employee of the
Insurer with responsibility for the administration hereof shall have actual
knowledge thereof). In furtherance and not in limitation of the foregoing, the
Insurer (or its Fiscal Agent) may accept documents that appear on their face to
be in order, without responsibility for further investigation.

 

Section
4.05.  Parties Will Not Institute Insolvency
Proceedings. So long as this Agreement is in effect, and for
one year and one day following its termination, and for a period

 

28

 

of one year and one day following payment in
full of all series of notes of the Issuer issued under the Base Indenture the
parties hereto will not file any involuntary petition or otherwise institute
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy or
similar law against the Issuer.

 

Section
4.06.  Parties To Join in Enforcement Action. To
the extent necessary to enforce any right of the Insurer in or remedy of the
Insurer with respect to the Collateral, the parties hereto agree to join in any
action initiated by the Insurer for the protection of such right or exercise of
such remedy.

 

Section
4.07.  Further Assurances and Corrective
Instruments. To the extent permitted by law, the parties
hereto agree that they will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as the Insurer may request and as may be
required in the Insurer’s judgment to carry into effect the purposes of this
Insurance Agreement or to better assure and confirm to the Insurer its rights,
powers and remedies hereunder.

 

Section
4.08.  Subrogation. To the extent
of any payments under the Policies, Ambac shall be fully subrogated to any
remedies against the Issuer or any Hertz Company available to the Trustee under
its Indenture or any other Transaction Document. The Trustee acknowledges such
subrogation and, further, agrees to execute such instruments prepared by the
Insurer and to take such reasonable actions as are necessary to evidence such
subrogation and to perfect the rights of the Insurer to receive any moneys paid
or payable under the Indenture or any other Transaction Document.

 

ARTICLE V

DEFAULTS; REMEDIES

 

Section
5.01.  Defaults. The occurrence of
any of the following events shall constitute an Event of Default hereunder:

 

(a)           Any representation
or warranty made by the Issuer hereunder or under the Transaction Documents, or
in any certificate furnished hereunder or under the Transaction Documents,
shall prove to be untrue or incomplete in any material respect as of the date
made or deemed to be made;

 

(b)           The Issuer shall
fail to pay within five (5) business days after the due date therefor any
amount payable by the Issuer hereunder or a legislative body has enacted any
law that declares or a court of competent jurisdiction shall find or rule that
this Insurance Agreement, the Lease or the Indenture is not valid and binding
on any of the Hertz Companies, the Issuer or the Trustee;

 

29

 

(c)           Any failure on the
part of the Issuer duly to observe or perform in any material respect any other
of the covenants or agreements on the part of the Issuer contained in this
Insurance Agreement or in any other Transaction Document which continues
unremedied for a period of 30 days with respect to this Insurance Agreement,
or, with respect to any other Transaction Document, beyond any cure period
provided for therein, after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Issuer by the
Insurer (with a copy to the Trustee) or by the Trustee (with a copy to the
Insurer);

 

(d)           A decree or order of
a court or agency or supervisory authority having jurisdiction in the premises
in an involuntary
case under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or liquidator or
other similar official in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Issuer and such
decree or order shall have remained in force undischarged or unstayed for a
period of 60 consecutive days;

 

(e)           Any of the Hertz
Companies or the Issuer shall consent to the appointment of a conservator or
receiver or liquidator or other similar official in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to any of the Hertz Companies or the Issuer or of or
relating to all or substantially all of the property of either;

 

(f)            Any of the Hertz
Companies or the Issuer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of or otherwise
voluntarily commence a case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;

 

(g)           The occurrence and
continuance, with respect to the Series 2005-2 Notes, of an Amortization Event,
a Lease Event of Default, a Liquidation Event of Default or a Limited
Liquidation Event of Default; or

 

(h)           The occurrence and
continuance, with respect to the Series 2005-3 Notes, of an Amortization Event,
a Lease Event of Default, a Liquidation Event of Default or a Limited Liquidation
Event of Default.

 

30

 

Section
5.02.  Remedies; No Remedy Exclusive.

 

(a)           Upon the occurrence
of an Event of Default, the Insurer may exercise any one or more of the rights
and remedies set forth below:

 

(i)            declare all
indebtedness of every type or description then owed by the Issuer to the
Insurer to be immediately due and payable, and the same shall thereupon be
immediately due and payable;

 

(ii)           to the extent
permitted by the Transaction Documents, exercise any rights and remedies of the
Insurer under the Transaction Documents in accordance with the terms of the
Transaction Documents or direct the Trustee to exercise such remedies in
accordance with the terms of the Transaction Documents; or

 

(iii)          to the extent
permitted by the Transaction Documents, take whatever action at law or in
equity as may appear necessary or desirable in its judgment to collect the
amounts then due to the Insurer under this Insurance Agreement, the Indenture
or any other Transaction Document.

 

(b)           Unless otherwise
expressly provided, no remedy herein conferred upon or reserved is intended to
be exclusive of any other available remedy, but each remedy shall be cumulative
and shall be in addition to other remedies given under this Insurance
Agreement, the Indenture, any other Transaction Document, any Acknowledgment
and Consent or existing at law or in equity. No delay or omission to exercise
any right or power accruing under this Insurance Agreement or the Indenture
upon the happening of any event set forth in Section 5.01 hereof shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Insurer to exercise any remedy
reserved to it in this Article, it shall not be necessary to give any notice,
other than such notice as may be required in this Article.

 

Section
5.03.  Waivers.

 

(a)           No failure by the
Insurer to exercise, and no delay by the Insurer in exercising, any right
hereunder shall operate as a waiver thereof.

 

(b)           The Insurer shall
have the right, to be exercised in its complete discretion, to waive any Event
of Default hereunder, by a writing setting forth the terms, conditions and
extent of such waiver signed by the Insurer and delivered to the Issuer and the
Trustee. Unless such writing provides to the contrary, any waiver so granted
shall extend only to the specific event or occurrence which gave rise to the

 

31

 

Event of
Default so waived and not to any other similar event or occurrence which occurs
subsequent to the date of such waiver.

 

ARTICLE VI

 

MISCELLANEOUS

 

Section
6.01.  Amendments, Etc. This
Insurance Agreement may be amended, modified or terminated only by written
instrument or written instruments signed by the parties hereto. No act or
course of dealing shall be deemed to constitute an amendment, modification or
termination hereof.

 

Section
6.02.  Notices. All demands,
notices and other communications to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or express mail or personally delivered or telecopied to the
recipient as follows:

 

To the
Insurer:      Ambac Assurance Corporation

One State
Street Plaza

New York, New
York 10004

Attention:
Portfolio Risk Management— (Hertz Vehicle Financing LLC [Series 2005-2][Series
2005-3] Rental Car Asset Backed Notes)

 

Facsimile No.:
(212) 658-7408

Confirmation
No.: (212) 363 1459

 

(in each case in which notice or other
communication to Ambac refers to an Event of Default, a claim on the Policies
or with respect to which failure on the part of Ambac to respond shall be
deemed to constitute consent or acceptance, then two copies of such notice or
other communication should be sent, one to the attention of Portfolio Risk
Management and the other to the attention of the General Counsel of Ambac and
each shall be marked to indicate “URGENT MATERIAL ENCLOSED.”)

 

To the Issuer:       Hertz
Vehicle Financing LLC

225 Brae
Boulevard

Park Ridge, NJ
07656

Attention:
Treasury Department

Facsimile No.:
(201) 307-2746

Confirmation
No.: (201) 307-2000

 

32

 

To the
Trustee:     BNY Midwest Trust Company

2 La Salle
Street, Suite 1020

Chicago, 1L
60602

Attention:
Structured Finance Group

Facsimile No.:
(312) 827-8562

Confirmation
No.: (312) 827-8569

 

A party may specify an additional or
different address or addresses by writing mailed or delivered to the other
parties as aforesaid. All such notices and other communications shall be
effective upon receipt.

 

Section 6.03. 
Severability. In
the event that any provision of this Insurance Agreement shall be held invalid
or unenforceable by any court of competent jurisdiction, the parties hereto
agree that such holding shall not invalidate or render unenforceable any other
provision hereof. The parties hereto further agree that the holding by any
court of competent jurisdiction that any remedy pursued by any party hereto is
unavailable or unenforceable shall not affect in any way the ability of such
party to pursue any other remedy available to it.

 

Section 6.04. 
Governing Law. THIS
INSURANCE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICT OF LAW
PRINCIPLES.

 

Section
6.05.  Consent to Jurisdiction.

 

(a)           The parties hereto
hereby irrevocably submit to the jurisdiction of the United States District
Court for the Southern District of New York and any court in the State of New
York located in the City and County of New York, and any appellate court from
any thereof, in any action, suit or proceeding brought against it and to or in
connection with any of the Transaction Documents or the transactions
contemplated thereunder or for recognition or enforcement of any judgment, and
the parties hereto hereby irrevocably and unconditionally agree that all claims
in respect of any such action or proceeding may be heard or determined in such
New York state court or, to the extent permitted by law, in such federal court.
The parties hereto agree that a final judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. To the extent
permitted by applicable law, the parties hereto hereby waive and agree not to
assert by way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such courts, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that the
related documents or the subject matter thereof may not be litigated in or by
such courts.

 

33

 

(b)           To the extent
permitted by applicable law, the parties hereto shall not seek and hereby waive
the right to any review of the judgment of any such court by any court of any
other nation or jurisdiction which may be called upon to grant an enforcement
of such judgment.

 

(c)           Except as provided
in Section 4.05, nothing contained in this Insurance Agreement shall limit or
affect the Insurer’s right to serve process in any manner permitted by law or
to start legal proceedings relating to any of the Transaction Documents against
any of the Hertz Companies or the Issuer or its or their property in the courts
of any jurisdiction.

 

Section
6.06.  Counterparts. This
Insurance Agreement may be executed in counterparts by the parties hereto, and
all such counterparts shall constitute one and the same instrument.

 

Section
6.07.  Headings. The headings of
Articles and Sections and the Table of Contents contained in this Insurance Agreement
are provided for convenience only. They form no part of this Insurance
Agreement and shall not affect its construction or interpretation. Unless
otherwise indicated, all references to Articles and Sections in this Insurance
Agreement refer to the corresponding Articles and Sections of this Insurance
Agreement.

 

Section
6.08.  Trial by Jury Waived. Each
party hereto hereby waives, to the fullest extent permitted by law, any right
to a trial by jury in respect of any litigation arising directly or indirectly
out of, under or in connection with any of the Transaction Documents or any of
the transactions contemplated thereunder. Each party hereto (a) certifies that
no representative, agent or attorney of any party hereto has represented,
expressly or otherwise, that it would not, in the event of litigation, seek to
enforce the foregoing waiver and (b) acknowledges that it has been induced to
enter into the Transaction Documents to which it is a party by, among other
things, this waiver.

 

Section
6.09.  Limited Liability. No
recourse under this Insurance Agreement shall be had against, and no personal
liability shall attach to, any officer, employee, director, affiliate, member
or shareholder of any party hereto, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise in respect of this Insurance Agreement or either Policy, it being
expressly agreed and understood that this Insurance Agreement is solely a
corporate or limited liability company obligation of each party hereto, and
that any and all personal liability, either at common law or in equity, or by
statute or constitution, of every such officer, employee, director, affiliate,
shareholder or member for breaches by any party hereto of any obligations under
this Insurance Agreement is hereby expressly waived as a condition of and in
consideration for the execution and delivery of this Insurance Agreement.

 

34

 

Section
6.10.  Entire Agreement. This
Insurance Agreement and the Policies set forth the entire agreement between the
parties with respect to the subject matter thereof, and this Insurance
Agreement supersedes and replaces any agreement or understanding that may have
existed between the parties prior to the date hereof in respect of such subject
matter.

 

Section
6.11.  Certain Opinions. The
Issuer shall cause to be addressed to and delivered to the Insurer in respect
of each new Class A Letter of Credit, legal opinions in substantially the form
delivered on the Date of Issuance with respect to the initial Class A Letters
of Credit.

 

Section
6.12.  Certain Definitions. Any
change in the definition of the following terms in the Definitions List
attached as Schedule 1 to the Base Indenture (including any change in the
definition of any term used in any such definition), any change in any
Agreement relating to Ambac shall require the consent of the Insurer: “Aggregate
Asset Amount,” “Aggregate Asset Amount Deficiency,” “Eligible Manufacturer Program,”
“Eligible Manufacturer, “Eligible Program Manufacturer,” “Ineligible Asset
Amount,” “Limited Liquidation Event of Default,” “Liquidation Event of Default,”
“Manufacturer Event of Default” and “Manufacturer Program.”

 

Section
6.13.  Eligible Program Manufacturer. No
Person who is not an Eligible Program Manufacturer on the date hereof shall be
an Eligible Program Manufacturer for any purpose under the Transaction
Documents unless, at any time of determination, such Person has a long-term
unsecured debt rating of at least “BBB-” from S&P and “Baa3” from Moody’s
and unless otherwise agreed to by Fitch, “BBB-” from Fitch, and has been
previously approved by the Insurer, such approval not to be unreasonably
withheld or delayed.

 

Section
6.14.  Series 2005-2 and Series 2005-3 Rating Agency
Condition. No action which is subject to the satisfaction of
the Series 2005-2 Rating Agency Condition or the Series 2005-3 Rating Agency
Condition shall be taken or become effective without the prior written consent
of the Insurer (such consent not to be unreasonably withheld or delayed) unless
each Rating Agency shall have notified the Insurer that such action will not
result in a reduction or withdrawal of the ratings of the related Notes without
giving effect to the related Policy.

 

[Remainder of page intentionally left blank]

 

35

 

IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the
day and year first above mentioned.

 

	
  AMBAC ASSURANCE
  CORPORATION

  
	
  as an
  Insurer

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Michael
  Babick

  	
   

  
	
  Name

  	
  Michael
  Babick

  	
   

  
	
  Title

  	
  First Vice
  President

  	
   

  
	
   

  
	
  HERTZ VEHICLE FINANCING
  LLC

  
	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Robert
  H. Rillings

  	
   

  
	
  Name

  	
  Robert H.
  Rillings

  	
   

  
	
  Title

  	
  Vice
  President and Treasurer

  	
   

  
	
   

  	
   

  
	
  BNY
  MIDWEST TRUST COMPANY

  
	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Eric A.
  Lindahl

  	
   

  
	
  Name

  	
  Eric A.
  Lindahl

  	
   

  
	
  Title

  	
  Vice President

  	
   

  

 

36Exhibit 4.9.21

 

NOTE
GUARANTY INSURANCE POLICY

 

Policy No: 47437

 

OBLIGATIONS:              Hertz
Vehicle Financing LLC

 

$500,000,000 Series 2005-1
Floating Rate Rental Car Asset Backed Notes, Class A-1

$275,000,000 Series 2005-1
Floating Rate Rental Car Asset Backed Notes, Class A-2

$100,000,000 Series 2005-1
Rental Car Asset Backed Notes, Class A-3

$1,150,000,000 Series 2005-1
Floating Rate Rental Car Asset Backed Notes, Class A-4

$125,000,000 Series 2005-1
Rental Car Asset Backed Notes, Class A-5

 

MBIA Insurance Corporation (the “Insurer”),
in consideration of the payment of the premium and subject to the terms of this
Note Guaranty Insurance Policy (this “Policy”),
hereby unconditionally and irrevocably guarantees to each Series 2005-1 Class A
Noteholder that an amount equal to each full and complete Insured Payment will
be received by BNY Midwest Trust Company, or its successor, as trustee for the Series 2005-1
Class A Noteholders (the “Trustee”),
on behalf of the Series 2005-1 Class A Noteholders from the Insurer,
for distribution by the Trustee to such Series 2005-1 Class A
Noteholder of such Series 2005-1 Class A Noteholder’s share of the
Insured Payment. The Insurer’s obligations hereunder with respect to a
particular Insured Payment shall be discharged to the extent funds equal to the
applicable Insured Payment are received by the Trustee, whether or not such
funds are properly applied by the Trustee. Insured Payments shall be made only
at the time set forth in this Policy, and no accelerated Insured Payments shall
be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Insurer. The Insured Payments do not
include and this Policy does not insure any distributions of any Class A-1
Controlled Distribution Amounts, any Class A-2 Controlled Distribution
Amounts, any Class A-3 Controlled Distribution Amounts, any Class A-4
Controlled Distribution Amounts or any Class A-5 Controlled Distribution
Amounts.

 

Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Issuer or the Trustee
for withholding taxes, if any (including interest and penalties in respect of
any such liability).

 

The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return
of such Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer,
irrevocably assigning to the Insurer all rights and claims of the applicable Series 2005-1
Class A Noteholder relating to or arising under the Obligations against
the debtor which made such preference payment or otherwise with respect to such
preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Series 2005-1 Class A
Noteholder in any legal proceeding related to such preference payment, such
instruments being in a form satisfactory to the Insurer, provided that if
such documents are received after 12:00 noon, New York City time, on such
Business Day, they will be deemed to be received on the following Business Day.
Such payments shall be disbursed to the receiver or trustee in bankruptcy named
in the final order of

 

 

the court exercising jurisdiction on behalf
of the applicable Series 2005-1 Class A Noteholder and not to such Series 2005-1
Class A Noteholder directly unless such Series 2005-1 Class A
Noteholder has returned principal or interest paid on the Obligations to such
receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Series 2005-1 Class A Noteholder.

 

The Insurer will pay any other amount payable hereunder no later than
12:00 noon, New York City time, on the later of the Payment Date on which the
related Deficit Amount is due or the second Business Day following receipt in
New York, New York on a Business Day by U.S. Bank Trust National Association,
as Fiscal Agent for the Insurer or any successor fiscal agent appointed by the
Insurer (the “Fiscal Agent”) of a Notice
(as described below); provided that if such Notice is received after 12:00
noon, New York City time, on such Business Day, it will be deemed to be
received on the following Business Day. If any such Notice received by the
Fiscal Agent is not in proper form or is otherwise insufficient for the
purpose of making a claim hereunder, it shall be deemed not to have been
received by the Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise the Trustee
and the Trustee may submit an amended Notice.

 

Insured Payments due hereunder, unless otherwise stated herein, will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Series 2005-1
Class A Noteholders by wire transfer of immediately available funds in the
amount of the Insured Payment less, in respect of Insured Payments related to
Preference Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.

 

The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to Series 2005-1 Class A Noteholders for
any acts of the Fiscal Agent or any failure of the Insurer to deposit, or cause
to be deposited, sufficient funds to make payments due under this Policy.

 

Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Series 2005-1 Class A Noteholder to receive
payments under the Obligations to the extent of any payment by the Insurer
under this Policy.

 

As used herein, the following terms shall have the following meanings:

 

“Agreement” means the Amended
and Restated Base Indenture dated as of December 21, 2005 between Hertz
Vehicle Financing LLC and the Trustee, as amended and supplemented by the Series 2005-1
Supplement thereto dated as of December 21, 2005, as in effect on the Series 2005-1
Closing Date and as amended, modified or supplemented from time to time in
accordance with its terms.

 

“Business Day” means any day
other than (a) a Saturday or a Sunday or (b) a day on which the
Insurer or banking institutions in New York City or in the city in which the
corporate trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.

 

2

 

“Deficit Amount” means (a) with
respect to any Payment Date, the sum of (i) the excess, if any, of (A) the
Series 2005-1 Adjusted Monthly Interest over (B) the sum of amounts
in the Series 2005-1 Accrued Interest Account and the Class A
Liquidity Amount as of such Payment Date and (ii) the Insured Principal
Deficit Amount in respect of such Payment Date and (b) with respect to the
Three-Year Notes Legal Final Payment Date, the Four-Year Notes Legal Final
Payment Date or the Five-Year Notes Legal Final Payment Date, as applicable,
the Class A-1 Outstanding Principal Amount, the Class A-2 Outstanding
Principal Amount, the Class A-3 Outstanding Principal Amount, the Class A-4
Outstanding Principal Amount or the Class A-5 Outstanding Principal
Amount, as applicable, to the extent unpaid on the Three-Year Notes Legal Final
Payment Date, the Four-Year Notes Legal Final Payment Date or the Five-Year
Notes Legal Final Payment Date, as applicable, after application of all funds
available for reduction of principal of the Series 2005-1 Class A
Notes, on such Payment Date pursuant to the Agreement.

 

“Insured Payment” means (i) any
Deficit Amount and (ii) any Preference Amount.

 

“Notice” means the telephonic
or telegraphic notice, promptly confirmed in writing by telecopy substantially
in the form of Exhibit A attached hereto, the original of which is
subsequently delivered by registered or certified mail, from the Trustee
specifying the Insured Payment which shall be due and owing on the applicable
Payment Date.

 

“Preference Amount” means any
amount previously distributed to a Series 2005-1 Class A Noteholder
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.

 

“Series 2005-1 Adjusted Monthly Interest”
means (a) for the initial Payment Date, (i) $9,671,222.22 and (b) for
any other Payment Date, the sum of (i) with respect to the Series 2005-1
Interest Period ending on the day preceding such Payment Date, the sum of (A) an amount
equal to the product of (1) the Class A-1 Note Rate for such Series 2005-1
Interest Period and (2) the Class A-1 Outstanding Principal Amount on
the first day of such Series 2005-1 Interest Period, after giving effect
to any principal payments made on such date, and (3) a fraction, the
numerator of which is the number of days in such Series 2005-1 Interest
Period and the denominator of which is 360, (B) an amount equal to
the product of (1) the Class A-2 Note Rate for such Series 2005-1
Interest Period and (2) the Class A-2 Outstanding Principal Amount on
the first day of such Series 2005-1 Interest Period, after giving effect
to any principal payments made on such date, and (3) a fraction, the
numerator of which is the number of days in such Series 2005-1 Interest
Period and the denominator of which is 360 (C) an amount equal to the
product of (1) one-twelfth of the Class A-3 Note Rate and (2) the
Class A-3 Outstanding Principal Amount on the first day of such Series 2005-1
Interest Period, after giving effect to any principal payments made on such
date, (D) an amount equal to the product of (1) the Class A-4
Note Rate for such Series 2005-1 Interest Period and (2) the Class A-4
Outstanding Principal Amount on the first day of such Series 2005-1
Interest Period, after giving effect to any principal payments made on such
date, and (3) a fraction, the numerator of which is the number of days in
such Series 2005-1 Interest Period and the denominator of which is 360,
and (E) an amount equal to the product of (1) one-twelfth of the Class A-5
Note Rate and (2) the

 

3

 

Class A-5 Outstanding Principal Amount
on the first day of such Series 2005-1 Interest Period, after giving
effect to any principal payments made on such date, and (ii) an amount
equal to the amount of any unpaid Class A Deficiency Amounts as of the
preceding Payment Date (together with any accrued interest on such Class A
Deficiency Amounts at the applicable Series 2005-1 Note Rate).

 

“Series 2005-1 Class A Noteholder”
means each registered holder of a Class A-1 Note, Class A-2 Note, Class A-3
Note, Class A-4 Note or Class A-5 Note who, on the applicable Payment
Date, is entitled under the terms of such Class A-1 Note, Class A-2
Note, Class A-3 Note, Class A-4 Note or Class A-5 Note to
payment thereunder.

 

Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.

 

Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trustee.

 

The notice address of the Fiscal Agent is 15th Floor, 61
Broadway, New York, New York 10006 Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Trustee
in writing.

 

This Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.

 

The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the
New York Insurance Law.

 

This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.

 

No defenses, set-offs and counterclaims of any kind available to the
Insurer so as to deny payment of any amount due in respect of this Policy will
be valid and the Insurer hereby waives and agrees not to assert any and all
such defenses, set-offs and counterclaims so as to deny payment of any amount
due in respect of this Policy.

 

4

 

IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested this 21st day of December, 2005.

 

	
   

  	
  MBIA INSURANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Neil Y. Budnick

  
	
   

  	
  President

  
	
   

  	
   

  
	
  Attest:

  	
  /s/ Authorized Signatory

  
	
   

  	
   

  	
  Assistant Secretary

  

 

5

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