WTH FUNDING LIMITED PARTNERSHIP FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

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NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the respective covenants and agreements hereinafter contained, the parties hereto covenant and agree as follows:

ARTICLE 1
DEFINITIONS

1.1

Definitions

For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, the following terms have the following meanings:

“Accumulation Date” means:

	(a)		in respect of the Series 2003-1 Bonds, March 20, 2006 unless the STARS Limited Partner and the General Partners agree that they do not wish the Accumulation Date for the Series 2003-1 Bonds to occur on such date, in which case the Accumulation Date for the Series 2003-1 Bonds shall be such date after March 20, 2006 as the STARS Limited Partner and the General Partners designate in writing as the “Accumulation Date” for the Series 2003-1 Bonds; and
	(b)		in respect of any other series of Bonds, the date specified as the “Accumulation Date” in the series supplement to the trust indenture pursuant to which such series of Bonds is issued;

“Act” means the Limited Partnerships Act (Ontario);

“Additional Amount” has the meaning ascribed thereto in Section 9.7(c);

“Additional General Partner” has the meaning ascribed thereto in Section 8.3(a);

“Affiliate” means, when used with reference to a specified Person, any Person who directly or indirectly controls or is controlled by or is under common control with the specified Person and for these purposes “control” means the right to elect a majority of the board of directors of a Person that is a corporation or the governing authority of a Person that is not a corporation, whether through the ownership of voting securities or by contract or otherwise;

“Agreement” means this Agreement of limited partnership, including the Schedules hereto, as it exists at the date hereof and as it may from time to time be supplemented or amended as herein provided;

“Alternate Rate” means, for the Bay Street Limited Partner and any Remittance Period during which any Portion of the Bay Street Limited Partner’s Funded Amount is being funded under its Liquidity Agreement, an interest rate per annum specified as the Alternate Rate in the letter agreement dated the date hereof between the Avis General Partner and the Bay Street Securitization Agent;

“Amortized Avis Taxable Amount” means, initially, nil and, subsequently, the sum of the amounts determined pursuant to Subsection 4.13(b)(ii) and part B of Subsection 4.14(b) for all prior Fiscal Periods until such time (the “Class 16 Date" ) as such sum is greater than 98% of the Avis Taxable Adjustment at which time the Amortized Avis Taxable Amount shall mean the Avis Taxable Adjustment;

“Annual Notional Return” in respect of a General Partner, means an amount equal to the sum of the Notional Returns for each of the Settlement Periods in the related Fiscal Period for such General Partner;

“Annual Relative Revenue Contribution” for any Fiscal Period and for any General Partner means the proportion of the sum of Rental Revenues generated through the operations of such General Partner on behalf of the Partnership for all of the Settlement Periods in the related Fiscal Period over the total aggregate Rental Revenues for all of the Settlement Periods in the related Fiscal Period;

“Applicable Law” means all statutes, laws, by-laws, regulations, ordinances, orders and rules and requirements of government or other public authorities having jurisdiction, and all amendments thereto, at any time and from time to time in force;

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“Applicable Yield Rate” means for the Bay Street Limited Partner’s Funded Amount and any Remittance Period, (a) with respect to any Portion of the Bay Street Limited Partner’s Funded Amount outstanding during such Remittance Period that is funded through the issuance of Notes of the Bay Street Limited Partner, the Commercial Paper Rate for such Remittance Period, and (b) with respect to any Portion of Bay Street Limited Partner’s Funded Amount outstanding during such Remittance Period that is funded under its Liquidity Agreement, the Alternate Rate for such Remittance Period;

“Approved Dealers” means Vehicle dealers to whom Manufacturers sell new Vehicles for resale;

“Assignment and Assumption Agreement” means the assignment and assumption agreement entered into by the Avis General Partner and the Partnership on January 8, 1998 pursuant to which the Avis General Partner sold, assigned and transferred to the Partnership, and the Partnership purchased from the Avis General Partner, the Purchased Assets (as defined therein);

“Auditors” means Deloitte & Touche, Chartered Accountants or any other national firm of chartered accountants of recognized standing appointed by the General Partners as auditor for the Partnership for the time being, whether or not such firm of chartered accountants is regularly retained by a General Partner;

“Available Aggregate Call Amount” means the aggregate of the Available Call Amounts for each Limited Partner;

“Available Call Amount” means, in respect of a Limited Partner, the amount by which (a) the sum of $350,000,000 and the aggregate Principal Amount of Bonds issued by such Limited Partner outstanding at such time exceeds (b) the balance of the Limited Partner’s Capital Account of such Limited Partner at such time; provided that on and after the occurrence of a Funding Termination Event for such Limited Partner, the Available Call Amount for such Limited Partner shall be deemed to be zero;

“Avis or Budget System Member” means a licensee of the General Partners or one of the Affiliates of the General Partners authorized to operate its own rental vehicle business in Canada under the “Avis” or “Budget” name;

“Avis GP Adjustment” has the meaning ascribed thereto in Section 4.13(b);

“Avis Taxable Adjustment” means an amount equal to the aggregate net book value under Canadian GAAP of the Vehicles owned by the Partnership less the aggregate of the undepreciated capital cost (as defined in subsection 13(21) of the Income Tax Act (Canada)), determined as if the Fiscal Period ended on the day immediately preceding the day that Budget became a General Partner of the Partnership and on the assumption that the maximum capital cost allowance has been claimed, of each class of Vehicles of the Partnership all as determined on the date immediately preceding the date that the Budget General Partner became a General Partner of the Partnership;

“Bay Street Securitization Agent” means Scotia Capital Inc.;

“Best” means A.M. Best Company, Inc.;

“BMO” means Bank of Montreal and its successors and assigns;

“Bond Accumulation Amount” means:

	(a)		in respect of the Series 2003-1 Bonds, the Principal Amount for the Series 2003-1 Bonds divided by 4 or, if the STARS Limited Partner and the General Partners have designated the Accumulation Date for the Series 2003-1 Bonds to be a date after March 20, 2006, by such number of Remittance Dates in the period commencing after such date until and including the Expected Final Payment Date (as such term is defined in the series supplement to the trust indenture pursuant to which the Series 2003-1 Bonds are issued); and
	(b)		in respect of any other series of Bonds with an Accumulation Date, the amount specified as the “Bond Accumulation Amount” in the series supplement to the trust indenture pursuant to which such series of Bonds is issued;

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“Bond Interest Amount” means, (a) in respect of each series of Bonds with an Accumulation Date and which are outstanding during a Remittance Period, the amount of accrued and unpaid interest outstanding on such series of Bonds in respect of such Remittance Period, provided that if the next occurring Interest Payment Date is in the immediately following Remittance Period, the “Bond Interest Amount” for such series of Bonds shall be equal to the amount of the accrued and unpaid interest on such series of Bonds for such Remittance Period less the Interest Earned Amount for such series of Bonds for the period since the previously occurring Interest Payment Date or in the case of the first Interest Payment Date for such series of Bonds, for the period since the date of issue of such series of Bonds and (b) in respect of each series of Bonds with a Controlled Amortization Date and which are outstanding during a Remittance Period, the amount of accrued and unpaid interest outstanding on such series of Bonds in respect of such Remittance Period;

“Bond Interest Earned Amount” means, in respect of each series of Bonds, the aggregate net investment income (net of investment losses) earned by the relevant Limited Partner on the aggregate Bond Payment Amount for such series of Bonds received by it pursuant to Section 4.7(b)(iv) after the Accumulation Date for such series of Bonds;

“Bond Outstanding Amount” means, in respect of each series of Bonds, the amount obtained when the aggregate amounts paid to the relevant Limited Partner pursuant to Section 4.7(b)(iv) in respect of the Bond Payment Amount for such series of Bonds is subtracted from the Principal Amount for such series of Bonds;

“Bond Payment Amount” means, (a) in respect of each series of Bonds with an Accumulation Date, (i) on any Remittance Date other than the Expected Final Payment Date for such series of Bonds an amount equal to the sum of the Bond Accumulation Amount for such series of Bonds for such Remittance Date plus any existing Deficit Bond Accumulation Amount for such series of Bonds, and (ii) on the Remittance Date occurring on the Expected Final Payment Date for such series of Bonds, the amount referred to in (i) above less the Bond Interest Earned Amount for such series of Bonds and (b) in respect of each series of Bonds with a Controlled Amortization Date, the aggregate of the Controlled Amortization Amount for such series of Bonds and any existing Deficit Controlled Amortization Amount for such series of Bonds for each Remittance Date after such Controlled Amortization Date;

“Bonds” means any series of bonds (which, for greater certainty, shall not include Notes or funding under a Liquidity Agreement) issued by a Limited Partner to fund portions of such Limited Partner’s capital contributions from time to time;

“Business Day” means any day other than a Saturday, a Sunday and a day when chartered banks are not open for business in Toronto, Ontario;

“Canadian GAAP” means Canadian generally accepted accounting principles applicable to the undertaking of the Partnership or the General Partners, as the case may be, applied on a basis consistent with prior periods;

“Capital Accounts” means, collectively, the General Partner’s Capital Account for each General Partner and the Limited Partner’s Capital Account for each Limited Partner;

“Capital Call” has the meaning ascribed thereto in Section 3.3(a);

“Capital Call Notice” has the meaning ascribed thereto in Section 3.3(a);

“Chrysler” means DaimlerChrysler Canada Ltd. and its Canadian Affiliates;

“Class 16 Date” has the meaning ascribed thereto in the definition of Amortized Avis Taxable Amount;

“Commercial Paper Rate” means, for the Bay Street Limited Partner and any Remittance Period during which any Portion of the Bay Street Limited Partner’s Funded Amount is being funded with the proceeds of Notes of the Bay Street Limited Partner, the rate per annum (expressed as a percentage and an interest yield equivalent and calculated on the basis of a 365-day year and the actual days elapsed) equal to the weighted average of the interest rates or discount rates (converted to interest bearing equivalent rates per annum) paid or payable by the Bay Street Limited Partner in respect of Notes of the Bay Street Limited Partner outstanding during such Remittance Period that are allocated, in whole or in part, by the Bay Street Limited Partner to fund or maintain such Portion of the Bay Street Limited Partner’s Funded Amount during such

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Remittance Period, in each case, rounded to the nearest one hundredth of one percent (with 0.005 per cent being rounded upward), as determined by the Bay Street Limited Partner and reported to the Avis General Partner;

“Contract” means any agreement, indenture, contract, lease, deed of trust, licence, option, instrument or other commitment whether written or oral;

“Controlled Amortization Amount” means, in respect of any series of Bonds with a Controlled Amortization Date, the amount specified as the “Controlled Amortization Amount” in the series supplement to the trust indenture pursuant to which such series of Bonds is issued;

“Controlled Amortization Date” means, in respect of any series of Bonds with a Controlled Amortization Date, the date specified as the “Controlled Amortization Date” in the series supplement to the trust indenture pursuant to which such series of Bonds is issued;

“Current Book Value” means, in respect of a Partnership Vehicle at any time, its Original Book Value less accumulated Depreciation at such time;

“DBRS” means Dominion Bond Rating Service Limited;

“Declaration” means the declaration of partnership filed and recorded in respect of the Partnership pursuant to the Act;

“Deficit Bond Accumulation Amount” means, in respect of each series of Bonds with an Accumulation Date, (a) on the first Remittance Date after the Accumulation Date for such series of Bonds, the excess, if any, of the Bond Accumulation Amount for such series of Bonds payable on such Remittance Date over the amount paid to the relevant Limited Partner pursuant to Section 4.7(b)(iv) on such Remittance Date in respect of such series of Bonds, and (b) on each subsequent Remittance Date after the Accumulation Date for such series of Bonds, the excess, if any, of the Bond Accumulation Amount for such series of Bonds payable on such Remittance Date plus any then existing Deficit Bond Accumulation Amount for such series of Bonds, over the amount paid to the relevant Limited Partner pursuant to Section 4.7(b)(iv) on such Remittance Date in respect of such series of Bonds;

“Deficit Controlled Amortization Amount” means, in respect of each series of Bonds with a Controlled Amortization Date, (a) on the first Remittance Date after the Controlled Amortization Date for such series of Bonds, the excess, if any, of the Controlled Amortization Amount for such series of Bonds payable on such Remittance Date over the amount paid to the relevant Limited Partner pursuant to Section 4.7(b)(iv) on such Remittance Date in respect of such series of Bonds, and (b) on each subsequent Remittance Date after the Controlled Amortization Date for such series of Bonds, the excess, if any, of the Controlled Amortization Amount for such series of Bonds payable on such Remittance Date plus any then existing Deficit Controlled Amortization Amount for such series of Bonds, over the amount paid to the relevant Limited Partner pursuant to Section 4.7(b)(iv) on such Remittance Date in respect of such series of Bonds;

“Depreciation” means, when used in reference to a Partnership Program Vehicle, the daily depreciation charge set forth by an Eligible Manufacturer in the applicable Repurchase Agreement, and, when used in reference to a Partnership Non-program Vehicle, depreciation at a rate to be determined from time to time by the General Partners in accordance with Canadian GAAP but in no event less than 2% per month applied on a straight line basis to the Original Book Value of such Partnership Non-program Vehicle;

“Designated Representative” has the meaning ascribed thereto in Section 1.11;

“Dollar” or “$” , in respect of all amounts referred to in this Agreement, unless otherwise expressly stated, shall mean Canadian dollars;

“Eligible Institution” means a depositary institution which at all times (a) has either (i) a long-term unsecured debt rating of at least AA (low) or an equivalent rating from the Rating Agency or an equivalent rating from Moody’s and S&P or such lower rating as the Rating Agency may approve or (ii) a short-term rating of at least R-1 (middle) or an equivalent rating from the Rating Agency, or a rating of P-1 from Moody’s and A-1+ from S&P or such lower rating as the Rating Agency may approve, or (b) has its

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obligations with respect to the relevant matter guaranteed by an institution with either of the ratings referred to in (a)(i) or (ii);

“Eligible Investments” means book-based securities, negotiable instruments or securities maturing not later than the Business Day preceding the next succeeding Remittance Date after such date represented by instruments in bearer or registered form which evidence any of:

	(a)		direct obligations of, or obligations fully guaranteed as to the timely payment of principal and interest by, the Government of Canada;
	(b)		direct obligations of, or obligations fully guaranteed as to the timely payment of principal and interest by, the government of a province of Canada;
	(c)		direct obligations of, or obligations fully guaranteed as to the timely payment of principal and interest by banks or trust companies chartered or licensed under the laws of Canada or any province thereof which bank or trust company has a short-term debt rating of at least R-1 (middle) or an equivalent rating from the Rating Agency, or a rating of P-1 from Moody’s and A-1+ from S&P;
	(d)		commercial paper and any other securities having, at the time of the investment or contractual commitment to invest therein, a rating of at least R-1 (middle) or an equivalent rating from the Rating Agency, or a rating of P-1 from Moody’s and A-1+ from S&P;
	(e)		notes issued and bankers’ acceptances accepted by, overnight repurchase agreements with and call loans to, any bank or trust company referred to in (c) above;
	(f)		term deposits with an entity, the short-term debt or deposits of which have a rating of at least R-1 (middle) or an equivalent rating from the Rating Agency, or a rating of P-1 from Moody’s and A-1+ from S&P; and
	(g)		any other class of investments approved in writing by the Rating Agency (other than those set out in (a) to (f) above),

provided, however , that the aggregate amount of Eligible Investments that may be represented by the securities of any single issuer (other than obligations of or fully guaranteed by the Government of Canada) shall not exceed the greater of (i) $1,000,000 and (ii) 10% of total Eligible Investments. For greater certainty, if otherwise qualified in accordance with the foregoing clauses of this definition, securities of a Limited Partner, a Securitization Agent, Bank of Montreal, The Bank of Nova Scotia and any Affiliate of the foregoing are Eligible Investments;

“Eligible Manufacturer” means any of Chrysler, Ford or GM or any additional Manufacturer approved in writing from time to time by each Securitization Agent and the Rating Agency (a) whose unsecured long-term debt is rated BBB or its equivalent or higher by two or more of the Rating Agency, S&P and Moody’s, or (b) if its unsecured long-term debt is not so rated, where a General Partner has at its own expense obtained credit enhancement satisfactory in form, source and amount to each Securitization Agent and the Rating Agency in respect of the credit exposure to the Partnership represented by Repurchase Agreements with that Manufacturer;

“Estimation Date” means, the first day of each Settlement Period, provided that if such day is not a Business Day, the Estimation Date shall occur as the next Business Day;

“Estimation Report” means a monthly report provided by the General Partners to each Limited Partner substantially in the form of Schedule A;

“Estimation Reserve” means, in respect of any Settlement Period, an amount equal to 10% of the sum of estimated Depreciation, Net Loss on Dispositions and Funding Required Amount contained in the Estimation Report for such Settlement Period; provided, however, that Estimation Reserve shall never be less than zero, and, provided, further, that if for any three out of 12 consecutive Settlement Periods the Estimation Test exceeds zero, then thereafter the Estimation Reserve shall be equal to the product of (a) the greater of

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(i) 10% and (ii) 150% of the largest Estimation Test in the preceding 12 months and (b) the sum of estimated Depreciation, Net Loss on Dispositions and Funding Required Amount contained in the Estimation Report for such Settlement Period;

“Estimation Test” means, in respect of any Settlement Period, the result (expressed as a percentage) of the following calculation (but never less than zero):

([D _S   +  LD _S   – GD _S ]  –  A)  ÷  A,

where:

A equals (D _E  +  NLD _E );

D _E means the estimated Depreciation contained in the Estimation Report for such Settlement Period;

NLD _E means the aggregate estimated Net Loss on Dispositions contained in the Estimation Report for such Settlement Period;

D _S means Depreciation within such Settlement Period;

LD _S means Loss on Dispositions within such Settlement Period; and

GD _S means Gain on Dispositions within such Settlement Period;

“ETA” means Excise Tax Act (Canada);

“Excluded Capital” means, in respect of a General Partner at any time, the aggregate of (a) all capital contributions made or deemed to be made by such General Partner pursuant to Section 3.3(g) prior to such time and (b) all amounts paid by the Partnership prior to such time in respect of transfer fees, license fees, registration fees or other similar government fees or charges and transfer Taxes (other than VAT) in connection with the transfer of the relevant assets pursuant to a Licensee Vehicle Assignment Agreement where the vendor thereunder is a General Partner;

“Expenses” means the aggregate of all costs and expenses of the Partnership, including:

	(a)		all Organizational Expenses and expenses incurred to maintain the registrations or qualifications of the Partnership under Applicable Law or to obtain or maintain exemptions under such laws;
	(b)		all applicable Taxes;
	(c)		all costs and expenses of, or incidental to, the preparation and dispatch to Partners of all cheques, reports, circulars, financial statements, forms and notices, and any other documents which in the opinion of the General Partners, acting reasonably, are necessary or desirable in connection with the business and administration of the Partnership;
	(d)		all costs and expenses incidental to the preparation of amendments to this Agreement as referred to in Section 7.2;
	(e)		any costs and expenses of litigation involving the Partnership and the amount of any judgment or settlement paid in connection therewith, excluding, however, the costs and expenses of litigation, judgment or settlement in which the conduct of any General Partner is found to have violated the standard of conduct required by Section 5.2, the costs and expenses of such litigation, judgment or settlement being for the personal account of the General Partners;
	(f)		reasonable audit fees of the Partnership; and
	(g)		any other costs and expenses in connection with the administration of the Partnership that may be authorized by this Agreement;

“Fiscal Period” means the fiscal period of the Partnership as determined in accordance with Section 2.5;

“Fleet Report” means a report concerning the Partnership Vehicles substantially in the form of Schedule B;

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“Ford” means Ford Motor Company of Canada, Limited and its Canadian Affiliates;

“Fuel Revenues” means all monetary receipts (other than sales, value added and other similar Taxes collected on behalf of a governmental authority) from the sale of fuel to customers and by customers choosing the prepaid gas option, all in connection with the rental by such customer of a Partnership Vehicle;

“Funded Amounts” means, collectively, the General Partner’s Funded Amount for each General Partner and the Limited Partner’s Funded Amount for each Limited Partner;

“Funding Discount Amount” means, in respect of a Remittance Date and the related Remittance Period:

(a)

in respect of the STARS Limited Partner:

 

(i)

the product of:

 

(A)

the sum of:

 

	(I)		the weighted average amount of the STARS Limited Partner’s Funded Amount (excluding any amounts funded through the issuance of Bonds) that was outstanding during such Remittance Period;  and
	(II)		the excess, if any of (i) the STARS Limited Partner’s Funding Discount Amount for the preceding Remittance Date over (ii) the amount that was actually distributed to the STARS Limited Partner in respect of such Funding Discount Amount on such preceding Remittance Date;

 

	(B)		the weighted average discount rate or interest rate at which such Notes were issued, plus the Program Fee Rate; and
	(C)		the ratio obtained by dividing the number of days in such Remittance Period by 365; and

 

(ii)

any amounts paid or payable by the STARS Limited Partner during or in respect of such Remittance Period pursuant to any Hedging Transaction in respect of such Notes less any amount paid to or owing to the STARS Limited Partner during such Remittance Period pursuant to any Hedging Transaction in respect of such Notes; and

 

(b)

in respect of the Bay Street Limited Partner, the sum of the following amounts:

 

(i)

for each Portion of the Bay Street Limited Partner’s Funded Amount funded through the issuance of Notes during such Remittance Period, the product of:

 

(A)

the sum of:

 

	(I)		the weighted average amount of such Portion of the Bay Street Limited Partner’s Funded Amount that was outstanding during such Remittance Period; and
	(II)		the excess, if any of (i) the Bay Street Limited Partner’s Funding Discount Amount for such Portion of the Bay Street Limited Partner’s Funded Amount and the preceding Remittance Date over (ii) the amount that was actually distributed to the Bay Street Limited Partner in respect of such Funding Discount Amount on such preceding Remittance Date;

 

(B)

the Applicable Yield Rate plus the Program Fee Rate for such Portion of the Bay Street Limited Partner’s Funded Amount and such Remittance Period; and

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(C)

the ratio obtained by dividing the number of days in such Remittance Period by 365; and

 

(ii)

for each Portion of the Bay Street Limited Partner’s Funded Amount funded under its Liquidity Agreement, the product of:

 

(A)

the sum of:

 

	(I)		the weighted average amount of such Portion of the Bay Street Limited Partner’s Funded Amount that was outstanding during such Remittance Period; and
	(II)		the excess, if any of (i) the Bay Street Limited Partner’s Funding Discount Amount for such Portion of the Bay Street Limited Partner’s Funded Amount and the preceding Remittance Date over (ii) the amount that was actually distributed to the Bay Street Limited Partner in respect of such Funding Discount Amount on such preceding Remittance Date;

 

	(B)		the Applicable Yield Rate plus the Program Fee Rate for such Portion of the Bay Street Limited Partner’s Funded Amount and such Remittance Period; and
	(C)		the ratio obtained by dividing the number of days in such Remittance Period by 365; and

 

(iii)

any amounts paid or payable by the Bay Street Limited Partner during or in respect of such Remittance Period pursuant to any Hedging Transaction in respect of the Limited Partner’s Funded Amount of the Bay Street Limited Partner less any amount paid to or owing to the Bay Street Limited Partner during such Remittance Period pursuant to any Hedging Transaction in respect of the Limited Partner’s Funded Amount of the Bay Street Limited Partner;

“Funding Required Amount” means, in respect of a Remittance Period or a Settlement Period, the aggregate Funding Discount Amount for all Notes or funding under the Liquidity Agreements outstanding during such period and the aggregate accrued interest on all series of Bonds outstanding during such period;

“Funding Termination Event” means, in respect of a Limited Partner, the occurrence of (a) the Normal Course Termination Date for such Limited Partner, (b) a Liquidity Event in respect of such Limited Partner, (c) the breach of the covenant contained in subsection 5.2(i) which breach continues for five Business Days after a Settlement Date and provided that within 30 days of the occurrence of such breach the General Partners at their own expense have obtained for the benefit of the Partnership credit enhancement that is not satisfactory in form, source and amount to the Securitization Agent for such Limited Partner and such Securitization Agent has provided notice of such determination to the General Partners and the other Limited Partner, or (d) a material adverse change since the date hereof in the financial condition or operations of a General Partner or the Partnership which, in the opinion of the Securitization Agent for such Limited Partner, after consultation with the Rating Agency and which opinion has been communicated in writing to the General Partners and the Limited Partners, could reasonably be expected to result in a General Partner being unable to satisfy its obligations hereunder, becoming a bankrupt, or seeking the protection of Insolvency Legislation;

“Gain on Dispositions” means, for any period, the amount, if any, by which Proceeds of Disposition received by the Partnership in such period exceed the Current Book Value of the subject Vehicles;

“General Motors” means General Motors of Canada Limited and its Canadian Affiliates;

“General Partner’s Capital Account” and “General Partners’ Capital Accounts” have the meanings ascribed thereto in Section 3.5(b);

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“General Partners’ Capital Commitment” has the meaning ascribed thereto in Section 3.3(e);

“General Partner’s Funded Amount” means, in respect of the Avis General Partner or the Budget General Partner, as applicable, at any time, the General Partner’s Capital Account for such General Partner at such time (calculated on the assumption that all Net Income of the Partnership up to such time has been allocated to the Partners at such time), minus the Excluded Capital for such General Partner at such time, minus the amount of any capital contributed by such General Partner pursuant to Section 4.8 prior to such time;

“Gross-Up” has the meaning ascribed thereto in Section 9.5;

“Grossed-Up Payment” has the meaning ascribed thereto in Section 9.5;

“GP Financial Statements” means the balance sheet of the Avis General Partner as at December 31, 2004 and the statements of income, retained earnings and sources and application of funds for the Avis General Partner for the period beginning January 1, 2004 and ending December 31, 2004;

“GP Losses” for any Settlement Period means the aggregate of the losses allocated pursuant to subparagraphs 4.11(a)(i) and (ii) for such Settlement Period;

“GST” means all amounts payable pursuant to Section 165(1) of the ETA;

“HST” means all amounts payable pursuant to Section 165(2) of the ETA;

“Hedge Counterparty” means a counterparty under a Hedging Transaction;

“Hedge Payables” means all net amounts, other than Hedge Unwinding Costs, payable by the Partnership under Hedging Transactions to Hedge Counterparties;

“Hedge Receipts” means all net amounts paid to the Partnership under Hedging Transactions, including amounts as a result of the termination of all or a portion of a Hedging Transaction;

“Hedge Unwinding Costs” means any net amounts required to be paid by the Partnership, including any unwinding costs, as a result of the termination of all or a portion of a Hedging Transaction;

“Hedging Transaction” means any rate swap transaction, basis swap, forward rate transaction, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, letter of credit or any other hedging transaction (including any option with respect to any of these transactions) or any combination of such transactions;

“Indemnified Amounts” has the meaning described thereto in Section 9.1;

“Indemnified Parties” has the meaning ascribed thereto in Section 9.1;

“Insolvency Legislation” means the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) and any other Applicable Law under which indebtedness may be compromised;

“Interest Earned Amount” means, in respect of a series of Bonds for any period, the aggregate net investment income (net of any investment losses) earned during such period by the relevant Limited Partner in respect of any Bond Interest Amount for such series of Bonds paid to such Limited Partner pursuant to Section 4.6(c)(ii);

“Interest Funding Account” means, in respect of each series of Bonds, an account established in the name of the Limited Partner issuing such Bonds at the Eligible Institution determined by such Limited Partner, which account will be separate and segregated from the other assets of such Limited Partner, shall bear interest and which shall be designated as the “Interest Funding Account” for such series of Bonds;

“Interest Payment Date” means, in respect of each series of Bonds, each date specified as an “Interest Payment Date” in the series supplement to the trust indenture pursuant to which such series of Bonds is issued;

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“Licensee Vehicle Assignment Agreement” means, where the vendor is a General Partner, an agreement to be entered into between the Partnership and such General Partner in the form set out in Schedule J with such modifications as may be approved in writing by the Rating Agency, and where the vendor is an Avis or Budget System Member, an agreement to be entered into between the Partnership and such Avis or Budget System Member in the form set out in Schedule K, with such modifications as may be approved by the Rating Agency;

“Licensee Vehicles” means any Vehicles owned by (a) Avis or Budget System Members or (b) a General Partner where such Vehicles have been acquired, directly or indirectly, by such General Partner from Avis or Budget System Members;

“Limited Partner’s Capital Account” and “Limited Partners’ Capital Accounts” have the meanings ascribed thereto in Section 3.5(c);

“Limited Partner’s Funded Amount” means, with respect to a Limited Partner and at any time, the aggregate amount (without duplication) of the funds that have been contributed by such Limited Partner to the Partnership as capital pursuant to Sections 3.1, 3.2, 3.3, 4.7(a) and 4.8 prior to such time minus all amounts (without duplication) distributed or paid to such Limited Partner as a return of capital pursuant to Sections 4.7(b)(v), 4.7(b)(vi), 4.8 and 8.5(b)(vi) prior to such time, provided that if the Limited Partner’s Funded Amount shall have been reduced by any distribution or payment and thereafter all or a portion of such distribution or payment is rescinded or must otherwise be returned for any reason, such Limited Partner’s Funded Amount shall be increased by the amount of such rescinded or returned distribution or payment, as though it had not been made;

“Limited Partnership Interest” means, in respect of a Limited Partner, the interest of such Limited Partner in the Partnership;

“Liquidity Agreement” means, in respect of the STARS Limited Partner, the liquidity agreement in respect of STARS Trust dated as of June 30, 1997 between STARS Trust, BMO and the banks and other financial institutions whose names appear on Schedule I to such agreement, as amended, supplemented or otherwise modified from time to time and, in respect of the Bay Street Limited Partner, means the liquidity asset purchase agreement dated as of April 20, 2005 between The Bank of Nova Scotia and the other banks and other financial institutions party thereto from time to time, as liquidity purchasers, The Bank of Nova Scotia, as liquidity agent, and the Bay Street Limited Partner, as amended, supplemented or otherwise modified from time to time;

“Liquidity Event” means, in respect of a Limited Partner, the expiry of the Liquidity Agreement to which such Limited Partner is a party following the reasonable best efforts of the STARS Securitization Agent or the Bay Street Securitization Agent, as applicable, to renegotiate that agreement and the STARS Securitization Agent or the Bay Street Securitization Agent, as applicable, giving notice in writing to the General Partners and the other Limited Partner of such expiry;

“Loss on Dispositions” means, for any period, the amount, if any, by which Proceeds of Disposition received by the Partnership in such period are less than the Current Book Value of the subject Vehicles and, when a Vehicle is written off as a result of theft, fire, accident or act of God and the General Partners fail to make the additional capital contribution required by Section 5.7 in respect thereof, the amount of the write-off;

“Manufacturer” means any of Chrysler, Ford, General Motors, Nissan, Toyota and any additional manufacturer of Vehicles;

“Miscellaneous Add On Revenues” means all monetary receipts (other than sales, value added and other similar Taxes collected on behalf of a governmental authority) from customers in respect of additional products and services relating to the renting by such customer of a Partnership Vehicle, including such monetary receipts arising from child safety seats, ski racks, additional driver approvals and similar products and services;

“Moody’s” means Moody’s Investors Service, Inc.;

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“Net Income” or “Net Loss” means, in respect of any period, respectively, the net income or net loss of the Partnership in respect of such period, as determined in accordance with Canadian GAAP;

“Net Loss on Dispositions” means, in respect of any Settlement Period, the sum of:

(NLD _P x VD _P ) + (NLD _NP x VD _NP )

where:

NLD _NP means the greatest NLSP _NP in the last 12 consecutive Settlement Periods;

NLD _P means the greatest NLSP _P in the last 12 consecutive Settlement Periods;

VD _P means the number of Partnership Program Vehicles that the General Partners estimate to be disposed of in such Settlement Period;

NLSP _P means the quotient of (a) Loss on Dispositions less Gain on Dispositions for all Partnership Program Vehicles disposed of within a Settlement Period divided by (b) the number of Partnership Program Vehicles disposed of within such Settlement Period, provided, however, that NLSP _P shall not be less than zero;

NLSP _NP means the quotient of (a) Loss on Dispositions less Gain on Dispositions for all Partnership Non-program Vehicles disposed of within a Settlement Period divided by (b) the number of Partnership Non-program Vehicles disposed of within such Settlement Period, provided, however , that NLSP _NP shall not be less than zero; and

VD _NP means the number of Partnership Non-program Vehicles that the General Partners estimate to be disposed of in such Settlement Period;

“Nissan” means Nissan Canada, Inc.;

“Normal Course Termination Date” means:

	(a)		in respect of the STARS Limited Partner, April 30, 2010, subject to the extension of that date until April 30, 2011 if on or before October 31, 2009 the General Partners request an extension by notice in writing to the STARS Limited Partner and the STARS Limited Partner on or before December 31, 2009 notifies the General Partners in writing that it agrees to such extension; and
	(b)		in respect of the Bay Street Limited Partner, April 30, 2010, subject to the extension of that date until April 30, 2011 if on or before October 31, 2009 the General Partners request an extension by notice in writing to the Bay Street Limited Partner and the Bay Street Limited Partner on or before December 31, 2009 notifies the General Partners in writing that it agrees to such extension;

“Notes” means, (a) in respect of the STARS Limited Partner, short-term debt obligations of the STARS Limited Partner with a maximum weighted average 42 days until maturity, issued by the STARS Limited Partner from time to time to fund certain of the STARS Limited Partner’s capital contributions to the Partnership and (b) in respect of the Bay Street Limited Partner, short-term debt obligations of the Bay Street Limited Partner, issued by the Bay Street Limited Partner from time to time to fund certain of the Bay Street Limited Partner’s capital contributions to the Partnership;

“Notional Return” has the meaning ascribed thereto in subparagraph 4.10(d)(i);

“One Way Fee Revenues” means all monetary receipts (other than sales, value added and other similar Taxes collected on behalf of a governmental authority) from customers returning a Partnership Vehicle to a rental location other than the rental location from which such Partnership Vehicle was rented;

“Option Closing Date” has the meaning ascribed thereto in Section 8.4(c);

“Option Purchase Price” has the meaning ascribed thereto in Section 8.4(c);

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“Organizational Expenses” means all fees, costs and expenses incurred in respect of the formation and organization of the Partnership and its registration and qualification under Applicable Law;

“Original Book Value” means, in respect of a Partnership Vehicle, the full cash purchase price to the Partnership of such Vehicle, without any allowance for trade-in of a Vehicle and without deduction for cash allowances or rebates from the relevant Manufacturer unless such cash allowances or rebates reduce the purchase price of Vehicles under the relevant Repurchase Agreement, in which case “Original Book Value” shall be reduced by the amount of such allowance or rebate. For greater certainty, “full cash purchase price” does not include VAT or any amounts paid by the Partnership in respect of transfer fees, license fees, registration fees or other similar government fees or charges and transfer Taxes but does include, if applicable, up to but not in excess of $300 per Vehicle, in the case of a Partnership Program Vehicle, and $500, in the case of a Partnership Non-program Vehicle, in aggregate for dealer mark-up, pre-delivery inspection, air conditioning tax, weight tax, battery tax, “gas guzzler” tax and other similar costs and taxes. Where a Partnership Vehicle has been purchased by the Partnership from an Avis or Budget System Member or from a General Partner, “Original Book Value” for the purposes of calculating Depreciation means the full cash purchase price paid by the Partnership to the Avis or Budget System Member or the relevant General Partner, as the case may be;

“Parent” means Cendant Corporation;

“Parent Guarantee” means the amended and restated guarantee dated the date hereof made by the Parent in favour of each Limited Partner pursuant to which the Parent guarantees certain of the General Partners’ obligations hereunder;

“Partners” means, collectively, the Avis General Partner, the Budget General Partner, the STARS Limited Partner, the Bay Street Limited Partner and the Additional General Partner (if any);

“Partnership” means WTH Funding Limited Partnership, a partnership organized under the laws of the Province of Ontario as a limited partnership;

“Partnership Interest Option Notice” has the meaning ascribed thereto in Section 8.4(c);

“Partnership Non-program Vehicle” means a Partnership Vehicle that is not a Partnership Program Vehicle;

“Partnership Program Vehicle” means a Partnership Vehicle eligible for repurchase under a Repurchase Agreement;

“Partnership Vehicle” means a Vehicle owned by the Partnership;

“Payout Date” means a Tranche Date for Notes issued by the STARS Limited Partner on which the General Partners have notified each Limited Partner that some or all of the aggregate Limited Partner’s Funded Amounts for all Limited Partners is to be repaid in accordance with subsections 4.7(b)(v) or (vi); provided however, (a) a Payout Date shall occur no more frequently than weekly, unless an additional Payout Date is requested by the General Partners and approved by each of the Limited Partners, (b) the date hereof shall be a Payout Date, (c) the closing date for the issuance of any series of Bonds shall be a Payout Date and (d) during any period in which the Deficit Bond Accumulation Amount or the Deficit Controlled Amortization Amount is greater than zero, a Payout Date may not occur;

“Payout Excess” shall have the meaning ascribed thereto in Section 3.3(f);

“Payout Report” means a report substantially in the form of Schedule C provided by the General Partners to each Limited Partner pursuant to Section 4.2;

“Payout Reporting Date” means, in respect of a Payout Date, the day which is two Business Days prior to such Payout Date;

“Person” includes an individual, corporation, partnership, joint venture, association, syndicate, trust, unincorporated organization or other entity or any trustee, executor, administrator or other legal representative;

“PNV Excess” has the meaning ascribed thereto in Section 5.4(d);

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“Portion of the Bay Street Limited Partner’s Funded Amount” means, each portion of the aggregate of the Bay Street Limited Partner’s Funded Amount comprising or invested in its Limited Partner’s Capital Account, which portions shall equal, in the aggregate, the then outstanding Funded Amount for the Bay Street Limited Partner, and each portion of which and the amount thereof which shall be determined by reference to its source of funding through the issuance of the Bay Street Limited Partner’s Notes or under the Liquidity Agreement for the Bay Street Limited Partner;

“Principal Amount” means, in respect of each series of Bonds, the aggregate initial principal amount outstanding under such series of Bonds;

“Principal Funding Account” means, in respect of each series of Bonds, an account established in the name of the Limited Partner issuing such Bonds at the Eligible Institution determined by such Limited Partner, which account will be separate and segregated from the other assets of such Limited Partner, shall bear interest and which shall be designated as the “Principal Funding Account” for such series of Bonds;

“Proceeds of Disposition” means the cash or other monetary consideration received by the Partnership from the sale of Partnership Vehicles, including from insurance in respect of Partnership Vehicles written off by the Partnership as a result of theft, fire, accident or act of God;

“Program Fee Rate” means, (a) in respect of any Notes issued by the STARS Limited Partner, the rate specified as such in the letter agreement dated the date hereof between the Avis General Partner and the STARS Securitization Agent and, (b) in respect of the Bay Street Limited Partner and any Portion of the Bay Street Limited Partner’s Funded Amount, the rate specified as the Program Fee Rate for the Bay Street Limited Partner in the letter agreement dated the date hereof between the Avis General Partner and the Bay Street Securitization Agent;

“Program Negotiation Vehicles” has the meaning ascribed thereto in Section 5.4(a);

“Purchase Right” has the meaning ascribed thereto in Section 8.4(c);

“Purchased Assets” shall have the meaning ascribed thereto in the Assignment and Assumption Agreement;

“QST” means all amounts payable pursuant to an act respecting Quebec Sales Tax;

“Qualified PMSI” means a purchase money security interest (“PMSI”) in a Partnership Vehicle granted by the Partnership to, or reserved by, an Approved Dealer or Manufacturer (a “holder" ) under terms that the PMSI will expire automatically upon payment by the Partnership to the holder of the full cash purchase price of the Vehicle, which payment must be made according to the agreement under which the PMSI arises within 30 days of the date when the PMSI arose;

“Rating Agency” means Dominion Bond Rating Service Limited and its successors and, at any particular time after the date hereof, may include any other nationally recognized credit rating agency or agencies then authorized by the STARS Securitization Agent or the Bay Street Securitization Agent to rate securities issued by the relevant Limited Partner;

“Relative Revenue Contribution” for any Settlement Period and for any General Partner means the proportion of Rental Revenues generated through the operations of such General Partner on behalf of the Partnership for such Settlement Period over the total aggregate Rental Revenues for such Settlement Period;

“Remittance Date” means the 20th day of each calendar month, provided if such day is not a Business Day, the Remittance Date shall occur on the next Business Day;

“Remittance Period” means the period beginning on a Remittance Date and ending on the day prior to the next occurring Remittance Date, provided that the first Remittance Period after the amendment and restatement contemplated herein will begin on the date hereof and end on the day prior to the next occurring Remittance Date; for any Remittance Date, the “related Remittance Period” is the Remittance Period ending on the day immediately prior to such Remittance Date;

“Rental Account” has the meaning ascribed thereto in Section 4.6(a);

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“Rental Account Prepaid Amount” has the meaning ascribed thereto in Section 4.5;

“Rental Revenues” means all monetary receipts (other than sales, value added and other similar Taxes collected on behalf of a governmental authority) received after January 1998 from time and kilometre charges for the rental of Partnership Vehicles, all Fuel Revenues, all Miscellaneous Add On Revenues and all One Way Fee Revenues, as provided for in the relevant Vehicle Rental Agreements, whether in the form of remittances from credit card or debit card issuers, cash payments, bank drafts, cheques, wire transfers or otherwise;

“Repurchase Agreements” means any agreements entered into between the Partnership and Eligible Manufacturers or Approved Dealers or assigned to the Partnership pursuant to which such Eligible Manufacturers or Approved Dealers will be obligated to purchase Partnership Vehicles from the Partnership which have been approved in writing by the Rating Agency;

“Securitization Agents” means, collectively, the Bay Street Securitization Agent and the STARS Securitization Agent, and “Securitization Agent” means either one of them;

“S&P” means Standard & Poors Ratings Group;

“Selling Limited Partner” has the meaning ascribed thereto in Section 8.4(c);

“Servicer” has the meaning ascribed thereto in Section 8.3(e);

“Settlement Date” means the second Business Day prior to the Remittance Date;

“Settlement Period” in respect of any Settlement Date, means the most recently completed calendar month prior to such Settlement Date;

“Settlement Report” means a monthly report substantially in the form of Schedule D provided by the General Partners to each Limited Partner pursuant to Section 4.3;

“STARS Securitization Agent” means BMO Nesbitt Burns Inc.;

“Successor Corporation” has the meaning ascribed thereto in Section 2.8(c);

“Tax” or “Taxes” includes all present and future taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings and other charges of any nature (including income, corporate, capital (including large corporations), net worth, sales, consumption, use, transfer, goods and services, value-added, stamp, registration, franchise, withholding, payroll, employment, health, education, excise, business, school, property, occupation, customs, anti-dumping and countervailing taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings and other charges) imposed by any national, federal, provincial, territorial, state, colonial, municipal, local, foreign or other governmental authority, together with any penalties, fines, interest or other additions on, to, in lieu of, for non-collection of or in respect of such taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings and other charges;

“Tax Credit” has the meaning ascribed thereto in Section 9.5;

“Taxable Income” or “Tax Loss” means, in respect of any Fiscal Period, respectively, the amount of net income or loss of the Partnership for such period as determined by the General Partners (and reviewed by the Auditors) in accordance with the provisions of the Income Tax Act (Canada) (including the amount of the taxable capital gain or allowable capital loss from the disposition of each capital property of the Partnership as determined by the General Partners in accordance with the provisions of the Income Tax Act (Canada));

“Temporary GP Contributions” means amounts contributed to the Partnership by a General Partner on a temporary basis from time to time pending Capital Calls to fund the purchase of Partnership Vehicles up to but not in excess of the Original Book Value of such Vehicles and not required to make the aggregate balance of the General Partners’ Capital Accounts equal in value to the General Partners’ Capital Commitment;

“Toyota” means Toyota Canada Inc.;

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“Tranche” means an issuance of Notes by the STARS Limited Partner used to fund the making of a Capital Call or to refund or repay any such Notes at maturity;

“Tranche Date” means the day on which a Tranche matures or otherwise becomes due and payable; provided however, if at any time a Trigger Event has occurred, the Tranche Date for all Tranches of Notes issued after the date of such occurrence shall be a Remittance Date;

“Trigger Event” has the meaning ascribed thereto in Section 8.1;

“Utilization Fee” means, in respect of the STARS Limited Partner, the fee specified as such in the letter agreement dated the date hereof between the Avis General Partner and the STARS Securitization Agent, and in respect of the Bay Street Limited Partner, the fee specified as such in the letter agreement dated the date hereof between the Avis General Partner and the Bay Street Securitization Agent;

“VAT” means, collectively, GST, HST and QST and any amounts payable under any similar value-added Tax legislation in any jurisdiction in Canada;

“VAT Account” has the meaning ascribed thereto in Section 4.8;

“Vehicle” means an automobile, minivan, sport utility vehicle, truck, van or service vehicle having an Original Book Value not greater than $90,000, in the case of automobiles, minivans and sport utility vehicles and $115,000, in the case of trucks, vans and service vehicles;

“Vehicle Account” has the meaning ascribed thereto in Section 4.7(a);

“Vehicle Account Prepaid Amount” has the meaning ascribed thereto in Section 4.5; and

“Vehicle Rental Agreements” means the agreements pursuant to which a General Partner, as agent for an undisclosed principal, rents Partnership Vehicles to retail, commercial and leisure customers, substantially in the form of the agreements used by such General Partner for such purposes prior to the date hereof.

1.2

Other Rules of Interpretation

For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires:

	(a)		any reference to a designated “Article”, “Section” or other subdivision or to a “Schedule” is to the designated Article, Section or other subdivision of or Schedule to this Agreement;
	(b)		the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision of or Schedule to this Agreement;
	(c)		the headings are for convenience of reference only and do not form part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof;
	(d)		the word “including” is not to be construed to limit a general statement, term or matter to the items set forth following such word but rather refers to all other items or matters that could reasonably fall within the scope of such general statement, term or matter;
	(e)		any reference herein to a particular percentage of Partnership Vehicles is a reference to a percentage of the aggregate Current Book Value of such Vehicles at the relevant time and not to a percentage of the number of such Vehicles;
	(f)		all accounting terms not otherwise defined herein have the meanings assigned to them by, and all calculations to be made hereunder are to be made in accordance with Canadian GAAP as it may exist from time to time;
	(g)		any reference to a statute is a reference to such statute and to the regulations made pursuant thereto, with all amendments made thereto and in force from time to time, and to any statute

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			or regulation that may be passed which have the effect of supplementing or superseding such statute or regulations;
	(h)		any reference to an entity is also a reference to any entity that is a successor to such entity, provided that all restrictions on assignability and transfer set forth herein are complied with;
	(i)		any reference to an “approval”, “authorization” or “consent” of a party means the written approval, written authorization or written consent of such party; and
	(j)		words importing the masculine gender include the feminine or neuter gender and words in the singular include the plural, and vice versa.

 

1.3

Strict Performance of Covenants

The failure of any party to seek redress for a violation of, or to insist upon strict performance of, any provision hereof shall not prevent a subsequent act, which would have originally constituted a violation of such provision or any other provision hereof, from having the effect of an original violation of such provision or any other provision hereof.

1.4

Non-Business Days

Unless expressly provided otherwise, whenever payment to be made hereunder shall be stated to be made or any action to be taken hereunder shall be stated to be required to be taken on a day other than a Business Day, such payment shall be made or such action shall be taken on the next succeeding Business Day and, in the case of the payment of any monetary amount, the extension of time shall be included for the purposes of the computation of interest, if any, thereon.

1.5

Governing Law

This Agreement and the application or interpretation hereof shall be governed exclusively by its terms and by the laws of the Province of Ontario and each Partner irrevocably attorns to the jurisdiction of the courts of the Province of Ontario.

1.6

Time of Essence

Time shall be of the essence hereof.

1.7

Currency

Unless otherwise indicated, all dollar amounts referred to in this Agreement are expressed in Canadian dollars, and all payments to be made under this Agreement shall be made in such currency.

1.8

Entire Agreement

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, expressed or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as herein provided.

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1.9

Schedules

The following are the Schedules to this Agreement:

 

1.10

Joint and Several Liability

The obligations and liabilities of the General Partners hereunder shall be joint and several.

1.11

One Voice Rule

The General Partners shall at all times jointly appoint one of them to act as the agent and designated representative of the General Partners hereunder (the “Designated Representative” ). The General Partners hereby appoint the Avis General Partner to be the Designated Representative. The General Partners may, upon notice to each Limited Partner, change the Designated Representative. All actions to be taken, documents to be executed, determinations or estimates to be made, notices or reports to be provided or such other matters to be undertaken by the General Partners hereunder shall be taken, executed, made, provided or undertaken by the Designated Representative and shall be binding on the General Partners. Each Limited Partner shall be entitled to rely on the actions, executions, determinations, estimates, notices or reports of the Designated Representative without further inquiry. All notices or reports to be provided by a Limited Partner to the General Partners hereunder may be provided solely to the Designated Representative. The General Partner who is not the Designated Representative hereby nominates, constitutes and appoints the Designated Representative as its agent and true and lawful attorney to act on its behalf with full power and authority in its name, place and stead for the purposes of this Section 1.11.

1.12

Limited Partners

For greater certainty, the obligations and liabilities of each Limited Partner hereunder shall be several and no Limited Partner shall be entitled to take any actions on behalf of the other Limited Partner.

ARTICLE 2
CONTINUANCE OF PARTNERSHIP AND RELATIONSHIP BETWEEN PARTNERS

2.1

Continuance

The General Partners and the Limited Partners hereby confirm the continuance of a limited partnership under the Act. The rights, restrictions and liabilities of the Partners shall be as provided in the Act except as herein otherwise expressly provided.

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2.2

Name

The name of the Partnership shall continue to be “WTH Funding Limited Partnership” or such other name or names as the General Partners may from time to time deem appropriate to comply with the laws of any jurisdiction in which the Partnership may carry on business. The Partnership may use as a French language name “Société en commandité de financement WTH”.

2.3

Business of Partnership

The Partnership shall carry on the business of (i) purchasing, owning and renting Vehicles throughout Canada and (ii) selling Vehicles that it has owned as rental Vehicles. The Partnership shall be further authorized to exercise all powers ancillary and incidental thereto or reasonably in furtherance thereof and not specifically excluded by the terms of this Agreement. The Partnership shall not carry on any business not permitted by this Section 2.3.

2.4

Principal Place of Business

The principal place of business of the Partnership shall be 1 Convair Drive East, Etobicoke, Ontario M9W 6Z9, or such other address within the Province of Ontario as the General Partners, after giving not less than 30 days’ notice to each Limited Partner, may designate.

2.5

Fiscal Period

The first Fiscal Period of the Partnership shall commence on December 5, 1997 and end on December 31, 1997 and thereafter each Fiscal Period shall commence on January 1 and end on December 31 of each calendar year or such other date as determined by the General Partners and approved by each Limited Partner, acting reasonably. For greater certainty, a Limited Partner may refuse to approve a change of the Fiscal Period if such change would have an adverse tax or administrative impact on such Limited Partner.

2.6

Title to Partnership Assets

Title to the assets of the Partnership, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the assets of the Partnership shall be held in the name of the Partnership or, in the case of Vehicles purchased by the Partnership pursuant to Licensee Vehicle Assignment Agreements where the vendor is a General Partner or if the holding of title by the Partnership is prohibited by Applicable Law, a General Partner. Each of the General Partners hereby declares and warrants that any Partnership assets for which legal title is held in the name of a General Partner shall be held by the relevant General Partner, as agent in trust for the Partnership for the use and benefit of the Partnership in accordance with the provisions of this Agreement. All assets of the Partnership shall be recorded as property of the Partnership on its books and records, irrespective of the name in which legal title to such Partnership assets is held.

2.7

Representation and Warranties of General Partners

Each of the General Partners represents and warrants to each Limited Partner that:

	(a)		Organization. Each General Partner is a corporation validly existing under the laws of Canada and has the corporate power to own or lease its property, to carry on its business as now being conducted by it and to enter into this Agreement and to perform its obligations hereunder. Each General Partner is duly qualified as a corporation to do business in each province of Canada in which it owns or leases any material property or conducts any material business.
	(b)		Authorization. This Agreement has been duly authorized, executed and delivered by each General Partner and is a legal, valid and binding obligation of such General Partner, enforceable against such General Partner by each Limited Partner in accordance with its

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			terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.
	(c)		No Violation. The execution and delivery of this Agreement by each General Partner and the consummation of the transactions herein provided for will not result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the acceleration of any obligation of such General Partner under (i) any Contract to which such General Partner is a party or by which it is or its properties are bound, (ii) any provision of the constating documents or by-laws or resolutions of the board of directors (or any committee thereof) or shareholders of such General Partner, (iii) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over such General Partner, (iv) any licence, permit, approval, consent or authorization held by such General Partner necessary to the operation of such General Partner’s business, or (v) any Applicable Law, which breach, violation, default, conflict or acceleration could reasonably be expected to have a material adverse effect on the ability of such General Partner to carry out its obligations hereunder.
	(d)		No Litigation, Etc. There are no actions, suits, proceedings or investigations commenced or, to the knowledge of each General Partner after due inquiry, contemplated or threatened against or affecting such General Partner at law or in equity before or by any governmental department, commission, board, bureau, court, agency, arbitrator or instrumentality, domestic or foreign, of any kind, which in any case would prevent or hinder the consummation of the transactions contemplated by this Agreement or which could reasonably be expected to have a material adverse effect on the ability of such General Partner to carry out its obligations hereunder other than as set out in Schedule E.
	(e)		GP Financial Statements. The GP Financial Statements have been prepared in accordance with Canadian GAAP and the GP Financial Statements present fairly and disclose in all material respects the financial condition, assets and liabilities of the Avis General Partner as at the respective dates of the GP Financial Statements and the sales, earnings and results of operations for the Avis General Partner for the respective periods covered by the relevant GP Financial Statements. There has been no material adverse change in the results of operations, financial position or condition of the Avis General Partner since the date of the most recent balance sheet for the Avis General Partner forming part of the GP Financial Statements.
	(f)		Obligations and Liabilities. Each General Partner does not have any material obligations or liabilities of any kind whatsoever, whether accrued, contingent or otherwise, other than:

 

	(i)		obligations or liabilities disclosed on, reflected in or provided for in the GP Financial Statements, in the case of the Avis General Partner, or Schedule L, in the case of the Budget General Partner; and
	(ii)		obligations or liabilities incurred in the ordinary course of business of the Avis General Partner since December 31, 2004, none of which has been materially adverse to the nature of the Avis General Partner’s business, results of operations, assets, financial position or condition.

 

(g)

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

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	(h)		Business Premises. Each General Partner has provided to each Limited Partner a list of all business premises from which such General Partner (or a franchisee or licensee thereof which is an Avis or Budget System Member) carries on the business of renting Vehicles and such General Partner has a valid leasehold or fee interest in all such premises operated by such General Partner (or license in the case of premises at certain airports) and neither such General Partner nor the lessor, sub-lessor or licensor of such premises, as the case may be, is in breach of any material provision of any agreement pursuant to which such General Partner occupies any such premises.
	(i)		Communications and Computer Systems. Each General Partner’s communications and computer systems are adequate for the conduct of the Partnership’s business and the use thereof by such General Partner does not infringe the rights of any other Person.
	(j)		No Strikes, Work Stoppages, Etc. Each General Partner is not experiencing any strike, work stoppage, slow-down or other material interference with or impairment of its business by labour, and, to such General Partner’s knowledge, no such strike, work stoppage, slow-down or other material interference or impairment is threatened. Each General Partner is not a party to or the subject of any unfair labour practice complaint and is not a party to or the subject of any prosecution, order or complaint relating to employment standards or human rights before any governmental agency.
	(k)		Insurance. The casualty loss and third party liability insurance carried by each General Partner in respect of its business, business premises and Vehicles is as described in Schedule F. Such insurance is provided by third party underwriters whose claims paying ability or similar measure is rated not lower than A (low) (or such lower rating as may be approved by the Rating Agency) or the equivalent by as many of DBRS, S&P, Moody’s and Best’s as rate it or, if such ability or other measure is not rated by at least one of DBRS, S&P, Moody’s and Best’s, whose profitability ranking has the highest rating from T.R.A.C. Insurance Services Ltd. Each General Partner self insures against the first $1,000,000 of claims relating to third party liability and collisions, has at its own expense made such self insurance available to the Partnership and has taken adequate reserves in respect of such self insurance.
	(l)		Consents and Approvals. There is no requirement to make any filing with, give any notice to or to obtain a licence, permit, certificate, registration, authorization, consent or approval of, any governmental or regulatory authority as a condition to the lawful consummation of the transactions contemplated by this Agreement, except for notifications, consents and approvals which have been given or obtained, as the case may be. There is no requirement under any Contract to which any General Partner is a party or by which it is bound to give any notice to, or to obtain the consent or approval of, any party to such Contract, relating to the consummation or transactions contemplated by this Agreement, except for notifications, consents and approvals which have been given or obtained, as the case may be.
	(m)		Solvency, Etc. Each General Partner is not insolvent and has not: (i)  admitted its inability to pay its debts generally as they become due or failed to pay its debts generally as they become due, (ii) proposed a compromise or arrangement to its creditors, (iii) had any petition for a receiving order or bankruptcy filed against it, (iv) consented to have itself declared bankrupt or wound up, (v) consented to have a receiver, liquidator or trustee appointed over any part of its assets, (vi) had any encumbrancer take possession of any of its property, (vii) had any execution or distress become enforceable or become levied upon any of its property which could reasonably be expected to have a material adverse effect on the ability of such General Partner to carry out its obligations hereunder, or (viii) had any unsatisfied judgment outstanding against it for more than 15 days which could reasonably be expected to have a material adverse effect on the ability of such General Partner to carry out its obligations hereunder.

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	(n)		Ownership and Control. Each General Partner is an indirect wholly-owned subsidiary of, and is controlled in fact by, the Parent.
	(o)		Residency. Each General Partner is not a “non-resident” of Canada for purposes of the Income Tax Act (Canada).
	(p)		VAT Registrations. The Avis General Partner is a registrant for purposes of the ETA and the QST whose registration numbers are 105750632 and 1000099321, respectively. The Budget General Partner is a registrant for purposes of the ETA and the QST whose registration numbers are 88064 3820 RT0001 and 1086666192 TQ0001, respectively.
	(q)		Full Disclosure. Neither this Agreement nor any document to be delivered by the General Partners nor any certificate, report, statement or other document furnished by the General Partners to a Limited Partner, the STARS Securitization Agent, the Bay Street Securitization Agent or the Rating Agency in connection with the negotiation of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which the statements were made.

 

2.8

Covenants of General Partners

Each General Partner covenants and agrees with each Limited Partner that:

	(a)		Corporate Existence. Each General Partner shall maintain its corporate existence in good standing.
	(b)		Compliance with Applicable Laws. Each General Partner shall in the conduct of the Partnership’s business comply with all Applicable Laws and obtain and maintain in good standing all licences, permits, qualifications and approvals from any and all governments and governmental agencies in any jurisdiction in which it carries on business except to the extent that failure to so comply, obtain or maintain does not materially affect the business or financial condition of the Partnership.
	(c)		No Reconstruction, Reorganization, Etc. Each General Partner shall not enter into any transaction (whether by way of reconstruction, reorganization, arrangement, consolidation, amalgamation, merger, transfer, sale, lease or otherwise) whereby all or any material part of the undertaking, property and assets of such General Partner would become the property of any Person other than such General Partner or, in the case of any amalgamation involving such General Partner, of the continuing company resulting therefrom, unless all of the following conditions are met:

 

	(i)		such other Person or continuing company is a body corporate (herein called the “Successor Corporation” );
	(ii)		the Successor Corporation executes, prior to or contemporaneously with the consummation of such transaction, such agreements supplemental hereto and any other instruments as are satisfactory to each Limited Partner, acting reasonably, and the Rating Agency and, in the opinion of counsel to each Limited Partner, necessary or advisable, to evidence the assumption by the Successor Corporation of all obligations and liabilities of the Person entering into such transaction;
	(iii)		immediately after the consummation of such transaction, no condition or event shall exist which constitutes or which would, after the lapse of time or the giving of notice or both, constitute a Trigger Event hereunder;  and
	(iv)		such transaction is upon such terms as to preserve substantially and not to impair materially any of the rights or powers of each Limited Partner hereunder;

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			and whenever the conditions of this clause have been duly observed and performed, the Successor Corporation shall be entitled to all of the benefits to which such General Partner is entitled hereunder.
	(d)		Ownership and Control. Each General Partner shall at all times during the term hereof be a direct or indirect wholly-owned subsidiary of, and controlled in fact by, the Parent.
	(e)		No Liabilities. Each General Partner shall not, without the prior written consent of each Limited Partner and the Rating Agency, have incurred or incur any liabilities or enter into any obligations for or on behalf of the Partnership, other than those arising under or contemplated by this Agreement, the Assignment and Assumption Agreement, any Licensee Vehicle Assignment Agreements and/or any other Contract contemplated hereby or thereby or those arising in the normal course of the business of the Partnership, provided that, for greater certainty, this Section 2.8(e) shall not restrict in any manner whatsoever the conduct of the business or affairs of such General Partner unrelated to the Partnership.
	(f)		No Defaults. Each General Partner shall promptly notify the Rating Agency and each Securitization Agent of any defaults of which it is aware under this Agreement, the Assignment and Assumption Agreement, any Licensee Vehicle Assignment Agreements, the Parent Guarantee or any Repurchase Agreement.
	(g)		Vehicle Dealer Registrations. The General Partners shall cause the Partnership to be registered as a “vehicle dealer” under any applicable motor vehicle dealer, highway traffic or other legislation where such registration is reasonably determined by the General Partners to be necessary or desirable. Such registrations are to be made promptly and, in any event, within 90 days of the date hereof in respect of jurisdictions in which the Partnership carries on business as of the date hereof, and within 60 days from the date on which the Partnership commences to carry on business in respect of any other jurisdiction.

 

2.9

Representations and Warranties of Limited Partners

Each Limited Partner represents and warrants to the General Partners, on a several basis and in respect of itself only, that:

	(a)		Organization. Such Limited Partner is a trust validly formed and existing under the laws of the Province of Ontario and it has the power and authority to enter into this Agreement and to perform such Limited Partner’s obligations hereunder. The trustee of such Limited Partner is a corporation validly existing under the laws of Canada and is duly qualified to act as trustee of such Limited Partner.
	(b)		Authorization. This Agreement has been duly authorized, executed and delivered by such Limited Partner and is a legal, valid and binding obligation of such Limited Partner, enforceable against such Limited Partner by the General Partners in accordance with its terms, except that enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may only be granted in the discretion of a court of competent jurisdiction.
	(c)		No Violation. The execution and delivery of this Agreement by such Limited Partner and the consummation of the transactions herein provided for will not result in the breach or violation of, or constitute a default under, or conflict with or cause the acceleration of any obligation of such Limited Partner under (a) the declaration of trust of such Limited Partner, (b) any Contract to which such Limited Partner is a party or by which it is bound, (c) any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over such Limited Partner, or (d) any Applicable Law, which breach, violation, default, conflict or acceleration could reasonably be expected to have a material adverse effect on the ability of such Limited Partner to carry out its obligations hereunder.