MASTER LICENSE AGREEMENT
MASTER LICENSE AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
Recitals.......................................................... 1
1. DEFINITIONS.............................................. 2
2. GRANT.................................................... 9
3. TERM AND RENEWAL......................................... 12
4. FEES..................................................... 13
5. GENERAL UNDERTAKINGS OF LICENSOR......................... 14
6. GENERAL UNDERTAKINGS OF LICENSEE......................... 15
7. ESTABLISHMENT, USE, AND MAINTENANCE OF LICENSEE'S
FACILITIES............................................... 19
8. LICENSEE TRAINING........................................ 21
9. VEHICLE FLEET AND RENTAL................................. 22
10. PROVISION OF SERVICES BY LICENSEE ON BEHALF OF
LICENSOR................................................. 23
11. AIRPORT LOCATIONS........................................ 24
12. SYSTEM CHANGES AND OPERATIONAL DEVELOPMENTS.............. 24
13. ADVERTISING.............................................. 25
14. COVENANTS................................................ 27
15. TRANSFER OF INTEREST..................................... 29
16. OTHER REQUIREMENTS....................................... 32
17. DEFAULT AND TERMINATION.................................. 32
18. OBLIGATIONS UPON TERMINATION............................. 35
19. CONFIDENTIAL OPERATING MANUAL............................ 39
20. CONFIDENTIAL INFORMATION................................. 40
21. ACCOUNTING AND RECORDS................................... 41
22. INSURANCE................................................ 42
23. PROPRIETARY MARKS........................................ 45
24. TAXES, PERMITS AND INDEBTEDNESS.......................... 47
25. INDEPENDENT CONTRACTOR AND INDEMNIFICATION............... 48
26. APPROVALS AND WAIVERS.................................... 50
27. NOTICES.................................................. 50
28. ENTIRE AGREEMENT......................................... 51
29. MODIFICATIONS OF AGREEMENT............................... 52
30. SEVERABILITY AND CONSTRUCTION............................ 52
31. APPLICABLE LAW; DISPUTE RESOLUTION....................... 53
32. ACKNOWLEDGMENTS.......................................... 55
SCHEDULE 1 - Exclusive Territories
SCHEDULE 1(a) - Acquired Exclusive Territories
SCHEDULE 2 - Services
SCHEDULE 3 - Proprietary Marks and Marks
SCHEDULE 4 - Territories of Other System Licensees
MASTER LICENSE AGREEMENT
This Agreement is made this 30th day of July, 1997, among HFS
Car Rental, Inc., a Delaware corporation, with its principal place of business
at 6 Sylvan Way, Parsippany, New Jersey 07054 ("Licensor"), Avis Rent A Car
System, Inc., a Delaware corporation, with its principal place of business at
900 Old Country Road, Garden City, New York 11530 ("Licensee") and, for
purposes expressly stated in Sections 2, 3, 15, 17, 23 and 31 hereof only,
Wizard Co., Inc., a Delaware corporation, with its principal place of business
at 6 Sylvan Way, Parsippany, New Jersey 07054 ("Wizard Co.").
WITNESSETH:
WHEREAS, Licensee and certain of its subsidiaries currently
conduct the business of owning and managing car rental operations (the "Car
Rental Business") that engage in the business of renting passenger motor
vehicles under the service mark and trade name "Avis" (the "Licensed
Business");
WHEREAS, Licensee owns substantially all of the assets used
in, and business and operations currently conducted by, the Licensed Business,
other than the System (as defined herein) and the business of granting
franchise rights or licenses with respect to the operation of car rental
locations under the System and the Proprietary Marks (as defined herein);
WHEREAS, the franchise and ownership rights of the System
have been transferred (the "Transfer") to Licensor and the Proprietary Marks
are owned by Wizard Co.;
WHEREAS, the distinguishing characteristics of the System
include, without limitation, Licensor's standards and specifications for the
goods and services offered under the System; advertising and promotional
programs and services; specialized methods and techniques for accounting,
record keeping, reporting, and data transfers through written and electronic
means; a reservation referral system; a computerized information and data
processing system; distinctive exterior and
interior design, decor, color schemes, and furnishings; standards,
specifications, and procedures for operations; Licensor's confidential
operating manual; and other programs and procedures designed to promote to the
public, and further the goal of fast, easy, and dependable vehicle rental
services; all of which may be changed, improved, and further developed by
Licensor from time to time;
WHEREAS, Licensor identifies the Licensed Business using the
System by means of the Proprietary Marks and unless specifically designated by
Wizard Co., any additional or other marks shall not be deemed as part of or
included in the System;
WHEREAS, Licensor and certain of its affiliates continue to
develop, use, and control the use of such Proprietary Marks in order to
identify for the public the source of products and services marketed
thereunder, and to represent the System's high standards of quality,
appearance, and service; and
WHEREAS, Licensee desires to be licensed hereunder to operate
its Car Rental Business under the System and Licensee understands and
acknowledges the necessity of operating the Licensed Business under the System
in strict conformity with the standards and specifications established by
Licensor from time to time.
NOW, THEREFORE, in consideration of the premises, and the
commitments of each party to the other as set forth herein, the parties hereto
agree as follows:
1. DEFINITIONS
As used in this Agreement, the terms listed below shall have
the meanings indicated:
1.1 Adjusted EBITDA -- Adjusted EBITDA shall have the meaning
set forth in the Credit Agreement dated as of the date hereof, among Licensee,
Avis Rent A Car, Inc., the lenders party thereto, The Chase Manhattan Bank, as
administrative agent and Lehman Commercial Paper Inc., as syndication agent.
Adjusted EBITDA shall be calculated based on the most recently completed four
full fiscal quarters; provided, however, that for the first three quarters
after the Commencement Date the
2
calculation shall be made from the Commencement Date through the end of the
most recently completed fiscal quarter.
1.2 Airport Concession Agreement -- An agreement between an
agency or entity with authority and control over operations at an airport and
an operator of a vehicle rental business, whereby the airport authority grants
the operator the right to conduct its vehicle rental business at the airport,
utilizing space in the airport terminal, and in some cases, on additional
airport property leased from the airport authority.
1.3 Acquired Exclusive Territory -- Any one of the standard
metropolitan statistical areas set forth on Schedule 1(a) when such area
becomes an Acquired Territory.
1.4 Acquired Territory -- Acquired Territory shall have the
meaning set forth in Section 2.2 hereof.
1.5 Agency Arrangement -- An Agency Arrangement shall mean an
arrangement between the Licensee and another party acting as an agent for the
Licensee in the operation of a vehicle rental location. To qualify for an
Agency Arrangement, such Agent must act on behalf of and be subject to the
control of the Licensee and have no rights under this License Agreement.
1.6 Agency Operators -- An Agency Operator shall be an agent
acting on behalf of the Licensee pursuant to an Agency Arrangement.
1.7 Avis Europe -- Avis Europe shall mean Avis Europe plc.
1.8 Avis Intercity Rules -- Rules and regulations governing
relations between and among Rental Locations operated by Licensee and other
System Licensees with respect to customer rentals at one Rental Location and
returns at another, and other operations under the System, which include,
without limitation, procedures for allocating revenues and expenses in
connection with the maintenance and rental of such vehicles, and procedures for
administering the program referred to as the "Rent It Here Leave It There"
program or other similar programs,
3
which program permits customers to rent a vehicle from one Rental Location and
return the vehicle to another Rental Location regardless of whether the Rental
Locations are located in different territories, or whether the Rental Locations
are operated by, or the vehicle is owned by Licensee, or other System
Licensees.
1.9 Change of Control Event -- A transaction or series of
related transactions by which (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) other than HFS or an
affiliate or successor to HFS, is or becomes after the date hereof the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act
as in effect on the date hereof), of more than 25% of the total voting power of
all voting stock of the Licensee then outstanding when HFS controls 25% or more
of such voting power and otherwise 20% of the total voting power of all voting
stock of the Licensee then outstanding (the "Relevant Percentage"); (b)(1)
another corporation merges into the Licensee or the Licensee consolidates with
or merges into any other corporation or (2) the Licensee conveys, transfers or
leases all or substantially all its assets to any person or group, in one
transaction or a series of related transactions other than a conveyance,
transfer or lease between the Licensee and a wholly owned subsidiary of the
Licensee, with the effect that a person or group, other than a person or group
which is the beneficial owner of more than the Relevant Percentage of the total
voting power of all voting stock of the Licensee immediately prior to such
transaction, becomes the beneficial owner of more than the Relevant Percentage
of the total voting power of all voting stock of the surviving or transferee
corporation of such transaction or series; or (c) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Licensee's Board of Directors (together with any new directors whose
election by the Licensee's Board of Directors, or whose nomination for election
by the Licensee's shareholders, was approved by a vote of a majority of the
Directors then still in office who were either Directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Directors then
in office.
4
1.10 Composite Statement -- With respect to any period,
periodic bookkeeping and accounting statement compiled by Licensee reflecting
all monies and payments owed to Licensee by other System Licensees for the
preceding period, any adjustments to amounts shown on prior Composite
Statements, all monies and payments owed by Licensee to other System Licensees
for the preceding period, and any other charges to or set-offs against monies
owed between Licensee and other System Licensees.
1.11 Computer Services Agreement -- The Computer Services
Agreement dated as of the date hereof between WizCom and Licensee pursuant to
which WizCom is to provide certain computer services to Licensee, as such
agreement may be amended from time to time by the parties in accordance with
the terms thereof.
1.12 Cost Sharing Agreement -- The Cost Sharing Agreement
dated as of the date hereof between WizCom and Avis Rent A Car System, Inc.,
providing for certain matters relating to the sharing of space and support
services, as amended from time to time.
1.13 Exchange Act -- The Securities Exchange Act of 1934, as
amended.
1.14 Exclusive Territory -- Any one of the standard
metropolitan statistical areas set forth on Schedule 1 hereto, the Non-U.S.
Territory and any Acquired Territory.
1.15 Facility -- Any one of a variety of locations from which
the Licensed Business is operated, including, without limitation, those
facilities known as Rental Locations, and such service and repair facilities as
Licensor may specify.
1.16 Fleet -- All of Licensee's Vehicles.
1.17 HFS -- HFS Incorporated, or any successor thereto.
1.18 Gross Revenue -- All income recorded as revenue in the
ordinary course of business consistent with past practice by the Licensed
Business related to the rental of Vehicles, whether for cash or credit, and
regardless of collection in the case of credit, and
5
whether received directly from Licensee's operations or an Agency Operator's or
Sublicensee's operations, including, but not limited to, (a) charges assessed
to rental customers (such as time and mileage, intercity fees, loss damage
waiver ("LDW"), personal accident insurance ("PAI"), additional liability
insurance ("ALI"), personal effects protection ("PEP"), prepaid rental fees and
additional mileage charges), and (b) all other charges assessed by Licensee and
recorded on the Standard Rental Agreement or other rental or sales documents
utilized by Licensee, including, without limitation, charges for rentals of
cellular telephones, child car seats, ski racks, or other equipment; provided,
however, that "Gross Revenue" shall not include, (i) refueling charges or fuel
purchase charges collected by Licensee from customers for refueling services
actually performed; (ii) any taxes, surcharges, fees or other funds collected
by Licensee, which are transmitted to a third party for which the Licensee acts
solely as a conduit of such funds on behalf of such third party; or (iii) any
other sums of money or payments received from Licensee's customers which are
forwarded directly to Licensor, including, without limitation, "customer cash
qualification charges" and such other charges as Licensor may specify in
writing.
1.19 Lease Agreements -- The Lease Agreements and Sublease
Agreements, as the case may be, between WizCom and Licensee providing for the
lease or sublease of space for the executive and other offices of Avis Rent A
Car, Inc. from WizCom, as amended from time to time.
1.20 Legal Requirements -- All laws, ordinances, regulations,
rules, administrative orders, decrees and policies of any territory,
government, governmental agency or department.
1.21 Manual -- Licensor's confidential operating manual or
manuals, as amended, modified or supplemented from time to time, which includes
guidelines, policies, procedures, and standards pertaining to, among other
things, System identity, operation, administration, rental procedures, and the
Avis Intercity Rules and the requirements, standards, specifications and
recommendations of the Licensor relating to the conduct of the Licensed
Business. Licensor may amend, modify, update or supplement the
6
Manual at any time in its sole discretion.
1.22 Non-U.S. Territory -- Non-U.S. Territory shall have the
meaning set forth in Section 2.2 hereof.
1.23 Off-Airport Location -- A Rental Location situated not
on the property of an airport, but sufficiently close to such airport to, in
the reasonable judgment of Licensor, (i) provide reasonably quick shuttle bus
service between the airport terminal and the Rental Location, (ii) provide
adequate service to such airport and (iii) be actively marketed as an airport
location.
1.24 On-Airport Location -- A Rental Location situated on the
property of an airport.
1.25 Prime Rate -- Prime Rate means the rate of interest per
annum publicly announced from time to time by The Chase Manhattan Bank as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
1.26 Promotional Programs -- programs developed, established
and marketed by Licensor or Licensee from time to time and intended to induce
the use of the System and awareness of the Proprietary Marks.
1.27 Proprietary Marks -- Certain trade names, service marks,
trademarks, logos, emblems, trade dress, distinctive color combinations and
other distinctive non- functional elements of design and decor, and other
indicia of origin, including, but not limited to, the marks "AVIS" and "AVIS
RENT A CAR" and such other trade names, trademarks, and service marks as are
now designated (and may hereafter be designated) by Licensor and Wizard Co. for
use by authorized licensees including the Licensee in connection with the
System.
1.28 Rental Location -- The site at which a member of the
public may rent a Vehicle, execute a Standard Rental Agreement, and/or pick up
and drop off the rental Vehicle.
7
1.29 Reservation Agreement -- The Reservation Services
Agreement dated as of the date hereof between HFS and Licensee pursuant to
which HFS is to provide certain reservation services for Licensee, as such
agreement may be amended from time to time by the parties thereto in accordance
with the terms thereof.
1.30 Standard Rental Agreement -- A uniform rental agreement,
in a form presented from time to time by Licensor, between the customer of the
Licensed Business and Licensee.
1.31 Sublicensees -- Sublicensees shall have the meaning set
forth in Section 2.6 hereof.
1.32 System -- The comprehensive system for providing vehicle
rental services to customers for transient rentals and operating a vehicle
rental business serving transient rental customers under the Proprietary Marks
as Licensor specifies which at present includes only the following: (a) the
Proprietary Marks; (b) other intellectual property, including confidential
information, the Manual and know-how, including methods for accounting, record
keeping, reporting and data transfers using written and electronic means; (c)
marketing, advertising, publicity and other promotional materials and programs;
(d) System standards; (e) training programs and materials; (f) quality
assurance inspection and scoring programs; (g) access to the Wizard System; (h)
a credit card program for customers using the Proprietary Marks and third party
marks; (i) an information and data processing system; and (j) distinctive
design, decor, uniform and color schemes. The System shall not include existing
or subsequently developed software or systems which are owned by, or
exclusively licensed to, Licensee by WizCom pursuant to the Computer Services
Agreement or which are developed by Licensee or a third party on behalf of
Licensee and are not integrated with the Wizard System.
1.33 System Licensees -- Licensee and all other parties
authorized by Licensor to operate the Licensed Business.
1.34 Target EBITDA -- The amount of Adjusted EBITDA required
so that the Target EBITDA Ratio is not less than 1.05 to 1.00 at the time of
calculation.
8
1.35 Target EBITDA Ratio -- The ratio of Adjusted EBITDA to
the sum of consolidated non-fleet interest expense, consolidated taxes,
dividends and consolidated capital expenditures equal to the lesser of actual
expenditures or $35 million, adjusted upward per annum by the Consumer Price
Index (as determined by the U.S. Bureau of Labor Statistics) for the most
recently completed four full fiscal quarters for which financial statements are
available; provided, however, for the first three quarters after the
Commencement Date, the calculation shall be made from the Commencement Date
through the end of the most recently completed fiscal quarter.
1.36 Territory -- Territory has the meaning set forth in
Section 2.2 hereof.
1.37 Term -- The Term of this Agreement shall be the term set
forth in Section 3.1 hereof.
1.38 U.S. Territory -- U.S. Territory shall have the meaning
set forth in Section 2.2 hereof.
1.39 Vehicle -- An automobile, passenger van, or 4-wheel
drive vehicle, and any other motor vehicle specified by Licensor, which is
owned, used, leased, under repair, or otherwise kept by Licensee for rental to
customers of the Licensed Business.
1.40 Wizard System -- The on-line, real time vehicle rental
and reservations system owned by WizCom and, utilized in the conduct of the
Licensed Business, permitting the use of equipment located at rental counters
and offices and data displays for reservation and rental transaction processing
purposes, all of which communicate through a communications network with
central site computers.
1.41 WizCom -- WizCom International, Ltd., or any successor
thereto.
2. GRANT
2.1 Licensor hereby grants to Licensee, upon the terms and
subject to conditions herein contained, the non-exclusive right and license,
and Licensee undertakes the obligation, to operate the Licensed Business within
9
the Territory, and Wizard Co. hereby grants to Licensee, upon the terms and
subject to conditions herein contained, the non-exclusive right to use the
Proprietary Marks in the Territory solely in connection therewith. Wizard Co.
hereby grants Avis Rent A Car, Inc. and its wholly owned subsidiaries the right
to use the "Avis" Proprietary Mark in its corporate name.
2.2 The Territory shall include (i) those areas or regions in
the fifty (50) United States, the District of Columbia and the territories and
possessions of the United States that are not the subject, as of the date of
this Agreement, of exclusive Licenses granted to third parties as set forth on
Schedule 4 hereto (the "U.S. Territory"), (ii) those areas of the world other
than the U.S. Territory which are not the subject of the license agreements by
and among Wizard Co., Licensee and Avis Europe to Licensor (the "Non-U.S.
Territory") and (iii) any territories operated under the System that are
acquired, leased or managed by Licensee from, or on behalf of, other System
Licensees, including any territories set forth on Schedule 4 hereto (the
"Acquired Territories"). Subject to Section 7.2, Licensor shall have the right
to grant additional Licenses for locations located in the Territory, provided,
however, that Licensor shall not establish, nor license another to establish, a
vehicle rental business using the Proprietary Marks in the Exclusive
Territories. Other System Licensees may advertise and promote their car rental
business within the Territory, provided that Licensor shall not permit Avis
Europe to advertise in the Territory without the consent of Licensee.
2.3 Except as specifically provided in Section 2.2, this
license is non-exclusive. Licensor and Wizard Co., as the case may be, shall
retain the right, among others:
2.3.1 To use, and to license others to use, the System and
the Proprietary Marks at or from any location other than a location
in an Exclusive Territory;
2.3.2 To operate, and to license others to operate,
businesses specializing in the sale of new or used vehicles,
utilizing the Proprietary Marks, or other proprietary marks, in the
Territory;
10
2.3.3 To solicit business from any potential customer
wherever located, including customers located within the Territory
and to engage in advertising and promotional activity on behalf of
other System Licensees in the Territory;
2.3.4 To develop, use, and license the use, at any
location, of proprietary marks, other than the Proprietary Marks, and
methods of operation the same as or substantially similar to the
System, using the know how and other components of the System in
connection with the operation of a business or system which offers
vehicle rental services which are the same as or similar to those
offered under the System, on any terms and conditions Licensor deems
advisable, and without granting Licensee any rights therein;
2.3.5 To develop, franchise, license, manage, operate,
finance, or lease businesses and/or systems using the Proprietary
Marks, for the provision of goods and services other than those
covered by this Agreement; and
2.3.6 To use, and to license others to use, the Avis Data
(as defined in the Computer Services Agreement), including, without
limitation, all customer lists and potential customer lists relating
to the Licensed Business, subject to all restrictions on the
disclosure and use of customer information expressly required by
corporate accounts, consortiums or tour operators provided Licensee
notifies the Licensor of the information to be restricted and the
nature of such restrictions, provided, however, that Wizard Co. and
Licensor shall not use or license others to use the Avis Data in
connection with a Car Rental Business other than the Licensed
Business.
2.4 The license granted in Section 2.1 hereof pertains only
to the Licensed Business, and except as provided below, Licensee shall not use
the Proprietary Marks or other names or marks using the word "Avis" in
connection with car leasing or truck rental or leasing or any other business
other than the Licensed Business. Notwithstanding the foregoing, Licensee shall
have the right under this Agreement to lease or rent noncommercial light duty
trucks with a GVWR of up to 18,000 pounds.
11
2.5 Licensee shall not operate a business selling new or used
vehicles, at wholesale, or at retail, except for any such operation that sells
vehicles used in the Licensed Business as part of the disposition of the
Licensee's fleet in the ordinary course of business.
2.6 Licensee shall have no right or power to sublicense the
System or the Proprietary Marks under this Agreement, and shall not engage in
the offer or sale of franchises, licenses or contractual arrangements that are
the functional equivalent of a franchise. Notwithstanding the foregoing,
Licensee may, with Licensor's prior approval, enter into sublicense
arrangements with sublicensees acceptable to Licensor ("Sublicensees") provided
such sublicense arrangements license Sublicensees to operate the Licensed
Business only in Non-U.S. Territories; Licensee may also enter into Agency
Arrangements in the Territory.
3. TERM AND RENEWAL
3.1 The term of this Agreement and the license granted herein
shall commence upon the date of execution of this Agreement (the "Commencement
Date"), and, unless earlier terminated pursuant to Section 17 or renewed
pursuant to Section 3.3, shall terminate fifty (50) years after the
Commencement Date.
3.2 Licensee acknowledges and agrees that all rights granted
to Licensee under this Agreement shall terminate on the fiftieth anniversary of
the Commencement Date, unless sooner terminated pursuant to Section 17 herein
or renewed pursuant to Section 3.3.
3.3 Licensee shall have the right to renew this Agreement for
an unlimited number of five (5) year renewal terms, subject to the following
conditions:
(i) Licensee has conducted the Licensed Business in
accordance with the provisions of this Agreement, any amendments hereto, and
the Manual, and is not in material default under this Agreement;
(ii) For each five (5) year renewal term, Licensee executes
and agrees to be bound by Licensor's then current standard license agreement,
including but not limited to Licensee's payment for any additional
12
products and/or services (including new advertising services) provided by
Licensor thereunder which Licensor is not obligated to provide pursuant to this
Agreement; and
(iii) At least 180 days prior to expiration of the term of
this Agreement then in effect, Licensee provides Licensor with written notice
of its intention to exercise its rights to continue the operation of the
Licensed Business in accordance with the above, and certifies that Licensee is
not in material default under this Agreement.
4. FEES
4.1 Licensee shall pay to Licensor a monthly royalty fee of
(a) three percent (3%) of Gross Revenue plus (b) 100% of any reveneue relating
to any royalty or other fees earned by Licensee from each Sublicensee up to,
but not exceeding, three percent (3%) plus the applicable percentage used to
calculate the Supplemental Fee for the applicable period of such Sublicensee's
Gross Revenue (the "Base Fee").
4.2 Licensee shall pay Licensor an additional royalty fee of
one percent (1.0%) of Gross Revenue payable quarterly in arrears which shall be
increased by one-tenth of one percent (0.1%) of Gross Revenue commencing on the
anniversary of the Commencement Date beginning in 1999 and in each of the next
four years thereafter to a maximum of one and one-half percent (1.5%) (the
"Supplemental Fee"). Until the fifth anniversary of the Commencement Date, the
Supplemental Fee or a portion thereof may be deferred to the extent that the
payment of such Fee will result in the Target EBITDA Ratio for the year in
which such Supplemental Fee accrues being less than 1.05 to 1.00. The amount of
any Supplemental Fees deferred pursuant to the previous sentence and any
interest thereon will be paid, in whole or in part, on the date on which such
payment would not result in the Target EBITDA Ratio being less than 1.05 to
1.00. Any amounts of the Supplemental Fee deferred pursuant hereto shall accrue
interest at the Prime Rate plus three percent (3%) per annum from the date such
Supplemental Fee was due, notwithstanding the deferral, until paid.
13
4.3 Unless otherwise specified in writing by Licensor, all
monthly and quarterly payments required by this Section 4 shall be submitted to
Licensor by the twentieth (20th) day of each month or the twentieth (20th) day
following each quarter, as the case may be, together with any reports or
statements required under Section 21. Monthly and quarterly payments required
of Licensee hereunder which are based on Gross Revenue shall be based on Gross
Revenue for the most recently completed calendar month or quarter, as the case
may be. If any payment is overdue, Licensee shall pay to Licensor immediately
upon demand the overdue amount, together with interest thereon from the date it
was due until paid at the rate of the Prime Rate plus 3.5% per annum, or the
maximum rate permitted by law, whichever is less. The foregoing shall be in
addition to any other remedies Licensor may have.
5. GENERAL UNDERTAKINGS OF LICENSOR
In addition to any other functions specified elsewhere in this
Agreement:
5.1 Licensor may take such actions as it deems appropriate to
enhance, improve, update, refine, maintain, and develop the System, including
undertaking sales, promotional, and advertising campaigns, if any, in its
discretion.
5.2 Licensor may establish policies, procedures and standards
for the System, including those pertaining to operations, reservations, service
and product quality, service training and System identity or, in its
discretion, may adopt those which are currently in effect for the System,
subject to such changes from time to time as it may make thereto in its
discretion.
5.3 Licensor shall make vehicle rental reservation referral
services available to Licensee through a service or system administered,
operated, and managed by Licensor, its designee or affiliates. This obligation
shall be fully satisfied by the performance of HFS in accordance with the terms
set forth in the Reservation Agreement.
5.4 Licensor shall make available or shall cause its affiliate
or designee to make available to
14
Licensee the Wizard System, as amended, modified, or altered from time to
time, or any successor system that provides the same functions of managing
vehicle rental transactions and reservations. This obligation shall be fully
satisfied by the performance of WizCom in accordance with the terms set forth
in the Computer Services Agreement.
5.5 Licensor shall provide Licensee, on loan, one copy on
disk of the Manual, and all updates to the Manual issued from time to time.
5.6 Licensor shall provide from time to time such advisory
assistance concerning the Car Rental Business as Licensor deems advisable.
5.7 Licensor reserves the right to assess Licensee a
reasonable fee for any training programs Licensor may, in its sole discretion,
provide to Licensee, as set forth in Section 8.2 hereof.
5.8 Licensor or its affiliates may, from time to time and in
its sole discretion, offer additional products and services to Licensee for
purchase at Licensee's option, including uniforms, equipment, furnishings,
stationery, standard "Avis Rent A Car" signs, advertising materials,
promotional materials, decals, and training programs upon such price, terms,
and conditions as Licensor may determine, in its sole discretion.
5.9 Any express or implied duty or obligation imposed on
Licensor by this Agreement or any other agreement referenced herein may be
performed by any designee, employee, or agent of Licensor or third party
contractor, including Licensee, as Licensor may direct; provided, however, that
Licensor shall remain responsible to perform such duties and obligations other
than the obligations of the Licensee to conduct certain functions of the System
pursuant to Section 10 hereto. Licensee shall conduct certain functions of the
System pursuant to the terms set forth in Section 10 hereof.
6. GENERAL UNDERTAKINGS OF LICENSEE
In addition to any other obligations specified elsewhere in this
Agreement:
15
6.1 Licensee understands and acknowledges that every detail
of the System and the Licensed Business is important to Licensor and the other
System Licensees in order to develop and maintain high operating standards, to
maintain and increase the demand for the services and products offered by all
System Licensees, and to protect Licensor's reputation and goodwill, and the
goodwill of the Proprietary Marks. Licensee shall maintain and operate the
Licensed Business in general and at each Rental Location in strict conformity
with such methods, standards, and specifications as Licensor and, with respect
to the Proprietary Marks, Wizard Co. may from time to time prescribe including,
among other things, System identity requirements and quality assurance
standards which are, to the extent Licensor has the legal authority to do so,
uniformly imposed on all System Licensees.
6.2 Licensee shall maintain compliance with all provisions of
the Manual, as amended, modified, updated or supplemented from time to time.
Failure by Licensee to comply with all material provisions of the Manual shall
constitute a default under this Agreement.
6.3 Licensee shall fully comply with Licensor's Avis
Intercity Rules, including, without limitation, maintaining, servicing,
refueling, and washing vehicles rented to customers by other System Licensees
under the System which may be presented to Licensee, providing vehicle
exchanges, and the re-renting of such vehicles to customers of the Licensed
Business.
6.4 Licensee shall use the Facilities solely for the
operation of the Licensed Business; shall keep the Facilities open and in
normal operation for such minimum hours and days, and shall maintain an
adequate staff of trained rental agents at each Facility as may be necessary to
service the business generated at such Facilities to maintain the reputation
and goodwill associated with the System; and shall refrain from using or
permitting the use of the Facilities for any other purpose or activity at any
time without first obtaining the written consent of Licensor.
6.5 Licensee shall obtain, operate in a safe and efficient
manner, and maintain in good working order
16
and condition and first class appearance, service vehicles, courtesy vehicles,
shuttle buses, and other equipment for use in connection with the Licensed
Business, identified with the Proprietary Marks in such manner as may be
prescribed by Licensor and Wizard Co., of sufficient number and type to provide
the manner and frequency of service to customers required to service the
business generated at each Facility and to maintain the reputation and goodwill
associated with the System.
6.6 Licensee shall maintain in sufficient supply at all
Facilities, and use at all times, only such supplies, forms, products,
advertising, promotional, sales and marketing materials as conform to
Licensor's standards and specifications and as Licensor may approve from time
to time; and shall refrain from using or selling non-conforming items without
Licensor's prior written consent.
6.7 Licensee shall purchase and/or lease all products,
supplies, forms, and other materials bearing the Proprietary Marks or unique to
the System and required for the operation of the Licensed Business and for the
maintenance of Vehicles, solely from suppliers (including manufacturers,
wholesalers, and distributors) who demonstrate to the reasonable satisfaction
of Licensor, the ability to meet Licensor's standards and specifications for
such items; and who possess adequate quality controls and capacity to supply
Licensee's needs promptly and reliably.
6.8 Licensee shall grant Licensor and its agents the right to
enter upon the premises of any Facility at any reasonable time, with or without
advance notice, for the purpose of conducting inspections of each Licensed
Business, including, but not limited to, inspections of the Facilities,
Vehicles, Vehicle service records, other records of the Licensed Business, and
to monitor Licensee's personnel in the performance of their duties; shall
cooperate with Licensor's representatives in such inspections by rendering such
assistance as they may reasonably request; and, upon notice from Licensor or
its agents, and without limiting Licensor's other rights under this Agreement,
shall take such steps as may be necessary to correct promptly the deficiencies
detected during any such inspection. Licensee acknowledges that such
inspections are solely for the purpose of assuring
17
compliance with System standards and procedures, and are not intended to
supplant or replace Licensee's safety inspections of Vehicles and Facilities or
any other inspection relating to compliance with applicable law or insurance
requirements for which Licensee shall be solely responsible.
6.9 Licensee shall have sole discretion in determining any
rates for the Licensed Business and Licensor assumes no liability for any
failure by Licensee or Licensor's other System Licensees to honor any published
rates. Licensee agrees to adhere to and honor any rates it causes to be
published and to adhere to and honor any rates as quoted by Licensee for the
time period for which that quote is applicable. Licensee agrees to adhere to
and honor all rates at the prices quoted in the Wizard System and third-party
computerized reservation systems at the time the customer's reservation is
placed, and agrees not to impose any restrictions on rentals or rates which
Licensee did not disclose to Licensor when the rate(s) were transmitted to
Licensor. Licensee further agrees to comply with such other requirements with
respect to published rates as may be specified from time to time by Licensor.
6.10 Licensee shall comply strictly with all laws and
regulations pertaining to the operation and conduct of the Licensed Business
and shall refrain from engaging in any practice which tends to mislead or
deceive the public in any way, or which a reasonable person may characterize as
unconscionable or which a governmental body claims is an unfair or deceptive
business practice and Licensee shall not discriminate on the basis of race,
religion, citizenship or any other illegal basis in the operation of the
Licensed Business.
6.11 Licensee shall promptly pay to other System Licensees,
to third parties, or to Licensor for reimbursement to other System Licensees
and third parties to the extent paid by Licensor, all sums owing to such
entities, including, without limitation, travel agent commissions, telephone
bills, lease payments, airport concession fees, and frequent traveler fees.
6.12 Licensee shall comply with all other requirements set
forth in this Agreement, in the Manual, and as may be issued by Licensor in its
discretion
18
through written or electronic bulletins.
6.13 Licensee shall disclose to Licensor all ideas, methods,
improvements, services, techniques and products relating to the operation of
the System conceived by Licensee during the Term and grants to Licensor a
perpetual, royalty-free, non-exclusive and world-wide right and license to
incorporate the same in the System for use with all System Licensees and
businesses world-wide and to license the same to Wizard Co. and System
Licensees, to the extent permitted by applicable Legal Requirements.
7. ESTABLISHMENT, USE, AND MAINTENANCE OF LICENSEE'S
FACILITIES
7.1 Licensee may establish additional Facilities or close
existing Facilities within the Territory, provided that the Licensee shall
provide Licensor with at least thirty (30) days written notice prior to any
such action and in the case of the closing of a Facility, specifying the reason
for closing such Facility.
7.2 Licensor may, in its sole discretion, determine that
additional Facilities are required in the Territory, but outside the Exclusive
Territories, to adequately service customers and to promote the benefits of and
services provided under the System. Licensor shall notify Licensee of the
requirement for an additional Facility or Facilities at the location or
locations specified in such notice (the "Right of First Refusal Offer"). Upon
receipt of the Right of First Refusal Offer, the Licensee shall have the right
and the option, within 30 days of receipt of such Offer, to irrevocably accept
such Offer. In the event Licensee accepts such Right of First Refusal Offer,
the Licensee shall commence actions to acquire and construct the necessary
Facilities within 30 days after acceptance of such Offer as may be specified by
Licensor. In the event Licensee does not accept such Right of First Refusal
Offer, or accepts such Right of First Refusal Offer but fails to commence
actions to acquire and construct the Facility(ies) within such 30 day period,
or fails to commence operations at the Facility(ies) within such reasonable
period thereafter as may be specified by Licensor, Licensor may itself, in its
sole discretion and
19
notwithstanding the provisions of Section 2.2 hereof, establish, or license
others to establish, the required Facility(ies) at such location or locations.
Notwithstanding the foregoing, if Licensor does not accept the Right of First
Refusal Offer or otherwise fails to comply with the terms of this Section 7.2,
Licensee shall have the opportunity to present Licensor with its good faith
business reasons why the establishment of such Facility would be detrimental to
the System, and Licensor shall take such reasons into account in making its
decision whether or not to proceed with establishing such Facility.
7.3 In the event HFS or any of its affiliates, including
Licensor, acquires a Car Rental Business that is not related to the Licensed
Business (the "New Business"), Licensor shall notify Licensee of the Rental
Locations of the New Business that are within the Territories (the "New
Business Territories") which notice shall include an offer to Licensee to
operate such New Business Territories and the terms thereof (the "New Business
Offer"). Upon receipt of the New Business Offer, the Licensee shall have the
right and the option, within sixty (60) days of receipt of such New Business
Offer, to irrevocably accept such Offer. In the event Licensee accepts such New
Business Offer, the Licensee shall commence operating such Facilities within
sixty (60) days after acceptance of such Offer. In the event Licensee does not
accept such Offer or fails to commence operating such New Business in the New
Business Territories as specified above, Licensor may itself, in its sole
discretion, operate, or license others to operate, the New Business in the New
Business Territories. Notwithstanding the foregoing, in the event the consent
of a third party is required for Licensee to commence operating a Facility in a
New Business Territory, and Licensee is unable to obtain such consent within
the sixty (60) day period referred to above, the sixty (60) day period shall be
extended for a reasonable period, not to exceed an additional sixty (60) days,
provided Licensee diligently pursues obtaining such consent during such period.
7.4 Licensee shall maintain the Facilities (including
adjacent public areas) in a clean, orderly condition, and in good repair and in
compliance with the requirements set by Licensor hereunder as well as the
20
Legal Requirements of any government authority having jurisdiction over the
Facilities or the Licensed Business; and, in connection therewith, Licensee
shall make such additions, alterations, repairs, and replacements thereto as
may be required for that purpose, including, without limitation, such periodic
repainting, repairing, and replacing of obsolete signs, fixtures, furnishings,
and equipment as Licensor may reasonably direct.
7.5 At Licensor's reasonable request, Licensee shall
refurbish the Facilities from time to time at Licensee's expense, to conform to
the trade dress, color schemes, and presentation of trademarks and service
marks consistent with the then-current public image of the System, including,
without limitation, structural changes, replacement or renovation of equipment,
remodeling, redecoration, and modifications to existing improvements.
7.6 Licensee hereby agrees that any Acquired Territories
shall be subject to the terms of this Agreement.
8. LICENSEE TRAINING
8.1 Licensee shall at all times maintain at each Facility a
competent, conscientious, fully-trained staff, and shall ensure that its
employees preserve good customer relations and goodwill of the System and
comply with such dress and grooming codes as Licensor may prescribe in the
Manual or otherwise in writing. Licensee's employees shall present a neat and
clean appearance at all times and render courteous service to all customers of
the Licensed Business and of the System.
8.2 Licensee and Licensee's rental agents, management
personnel, sales force, and other personnel shall attend additional training
programs as are conducted by Licensee with Licensor's approval from time to
time. Licensee or its employees shall be responsible for any and all expenses
incurred by them in connection with any training programs, including without
limitation, tuition fees, the cost of transportation, lodging, meals, and
wages.
21
9. VEHICLE FLEET AND RENTAL
9.1 Licensee shall maintain only Vehicles in its Fleet which
satisfy such age, mileage, safety, operating, appearance, equipment, and
condition standards and specifications as may be specified by Licensor from
time to time for the System; shall maintain all Vehicles in excellent
mechanical and running order, and in a safe, efficient, clean, and presentable
condition; and shall discontinue using any Vehicle which fails to satisfy
Licensor's specifications. Licensee shall comply with all vehicle
manufacturers' specifications and procedures with respect to safety recalls
issued by the manufacturer, including the withdrawal of Vehicles from service
until all necessary repairs are completed.
9.2 Licensee shall comply with all government recall notices
promptly and shall keep maintenance records for each Vehicle for such period as
may be reasonably specified by Licensor and shall make such records available
for inspection by Licensor.
9.3 In renting Vehicles, Licensee shall use only Licensor's
sequentially-numbered Standard Rental Agreement forms and Standard Rental
Agreement jackets, purchased by Licensee from a source approved by Licensor,
and such other documents as may be specified by Licensor, in the form
prescribed by Licensor. Licensee may alter the Standard Rental Agreement, the
information contained in the Standard Rental Agreement or on the jacket, or the
format or presentation of data on the Standard Rental Agreement, or in any
other document or agreement, only with the prior written consent of Licensor,
which consent shall not be unreasonably withheld. Further, and without limiting
the foregoing, Licensee shall, in assessing and collecting legitimate and
legally permissible taxes and surcharges from customers for remittance to the
appropriate government agencies, identify such taxes and surcharges in the
appropriate places on the Standard Rental Agreement, and shall not impose
additional charges, surcharges, or taxes (which will not be remitted to the
appropriate government agencies) as part of the taxes identified in the
Standard Rental Agreement, or in a manner designed to, or which results in,
confusion or deception of the customer as to the appropriate federal, state, or
local tax imposed with respect to the transaction. Licensee shall maintain
copies of each
22
executed Standard Rental Agreement in accordance with standards specified by
Licensor.
9.4 Licensee shall not rent, or allow customers or other
persons to use a Vehicle for a period in excess of eleven (11) consecutive
months. If a customer desires to rent a Vehicle for a period longer than
thirty (30) consecutive days and less than eleven (11) consecutive
months, Licensee and such customer shall, no later than at the conclusion of
the first thirty (30) day period, execute a "mini-lease" agreement and a
Standard Rental Agreement for the Vehicle for each thirty (30) day period
thereafter during the rental.
9.5 Licensee shall also comply with any requirements of
certain automobile dealers or manufacturers supplying vehicles to Licensee
which may impose more stringent restrictions regarding maximum rental periods
for such Vehicles.
10. PROVISION OF SERVICES BY LICENSEE ON BEHALF OF
LICENSOR
10.1 It is the intention of the parties hereto that Licensee
will undertake to provide certain services to other System Licensees on behalf
of Licensor. Such services include generally, but are not limited to, marketing
and advertising services, training, preparation of Composite Statements and
other accounting and management services, communications to System Licensees
and franchise relations and other services as more specifically set forth in
Schedule 2 attached hereto. Therefore, Licensee hereby agrees to provide, or
shall cause one of its wholly owned subsidiaries to provide, the services set
forth on Schedule 2 attached hereto for the benefit of the System Licensees on
behalf of the Licensor.
Licensee also expressly undertakes to collect all license fees and
other amounts due to Licensor from other System Licensees and remit such fees
in full to Licensor as collected. Licensee shall continue to follow its
established collection procedures in effect as of the Commencement Date.
23
11. AIRPORT LOCATIONS
11.1 Licensee understands and acknowledges that a significant
aspect of the System involves fast, easy, and dependable vehicle rental
services, including providing such services at or from Rental Locations
situated at airports. To that end, Licensee shall utilize its best efforts to
maintain at all times an On- Airport Location at each airport located within
the Territory or an Off-Airport Location if an On-Airport Location is either
not available or not economically feasible.
11.1.1 In the event Licensee fails to
secure an On-Airport Location at an airport or Licensee determines that an
Off-Airport Location would provide substantially the same level of service and
revenue as an On-Airport Location, Licensor may, in its sole discretion,
require Licensee to use its best efforts to establish an Off-Airport Location.
11.2 In the event Licensee fails to secure an On-Airport
Location at a particular airport during the course of two consecutive airport
concession offerings by such airport or an Off-Airport Location with respect to
such airport has not been established pursuant to Section 11.1.1, Licensor may
terminate this Agreement with respect to that airport.
12. SYSTEM CHANGES AND OPERATIONAL DEVELOPMENTS
12.1 Services and products required or suggested to be
offered to customers under the System may be supplemented, improved, and
otherwise modified from time to time by Licensor in response to competition,
technical developments, consumer demands, opportunities, changing vehicle
styles, changing patterns in business, recreational, and personal travel,
governmental regulations, and other factors. Such changes may necessitate
replacement or renovation by Licensee of capital equipment and/or Vehicles,
remodeling, redecorating, and modifications to existing improvements. For
purposes of illustration only, such changes may include, without limitation,
new equipment required on all vehicles, such as passive restraint air bags,
alternative fuel equipment, cellular telephones, or computerized and electronic
location tracking and mapping
24
devices; equipment to accommodate customers with disabilities; computer systems
and other facilities designed for customer rentals through personal computers
and other electronic or telecommunications devices; and the use of "master"
rental agreements to supplement the individualized Standard Rental Agreements.
Licensor shall consult with Licensee before making any such changes; but may
make such changes in its sole discretion.
12.2 Licensor shall notify Licensee, in the Manual or
otherwise in writing, of System changes and/or new or different products and
services which shall be offered to customers under the System. Licensee shall
comply with all requirements concerning implementation of such changes and/or
introduction of such new or different products and services for its customers,
including, without limitation, purchasing, leasing, or renovating capital
equipment and/or Vehicles, and undertaking and completing such changes within
the time periods specified by Licensor. Failure to comply with Licensor's
requirements concerning System changes and operational developments shall be a
default under this Agreement.
13. ADVERTISING
13.1 Licensee shall spend not less than one and two-tenths
percent (1.2%) of its Gross Revenue per year on advertising and promotional
activities to promote the System and the Licensed Business and to maintain the
standards prescribed by Licensor. Subject to Licensor's prior approval pursuant
to Section 13.2, all advertising and promotion by Licensee in any medium shall
be conducted in a dignified manner and shall conform to the standards and
requirements as may be specified by Licensor. Licensee shall promptly
discontinue use of any advertising or promotional plans or materials upon
notice of disapproval from Licensor.
13.2 Not less often than once per year, Licensee shall submit
to Licensor a plan of marketing and promotion, detailing Licensee's programs to
market and promote the System in the succeeding year. Such plan shall include
proposed advertising campaigns (including, by way of example and not of
limitation, storyboards for commercials and prepared print ads), promotional
offers, budgets (including specific information on media spending
25
and production and other promotional expense) and other relevant information
regarding implementation of the marketing and promotional programs. Licensor
shall review such plan and meet with Licensee to discuss the plan and its
elements. Within a reasonable period of time after such meeting, Licensor shall
notify Licensee of its approval or disapproval of such plan, and if such plan
is disapproved, provide Licensee with details of what aspects of such plan are
disapproved. Licensee shall modify such plan to take into account Licensor's
objections. Licensor's review of such plan and approval or disapproval shall
not be unreasonably withheld or delayed, provided that Licensor reserves all
rights to determine, in its sole discretion, if any aspect of such plan would
adversely affect the System or the Proprietary Marks or Licensor's reputation
and goodwill.
13.3 Licensee shall participate in any and all programs,
campaigns or activities, regular or special, relating to advertising, sales
promotion, marketing, reservations, charge or credit cards, travel industry
commissions, or tour arrangements, or any other program, campaign, or activity
which Licensor may from time to time engage in, conduct, or prescribe, as
reasonably determined by Licensor, for the benefit of System Licensees, and
Licensee shall pay assessments and advances therefor on the same basis as other
System Licensees. The amount of said assessment(s) will be determined
periodically by Licensor, in its sole discretion, and will not exceed two
tenths of one percent (0.2%) of Licensee's Gross Revenue per year. In the event
Licensor imposes any assessment(s), Licensor's expenditure advertising
requirement in Section 13.1 hereof will be reduced by the amount of such
assessment(s). Such assessments may be used by Licensor to defray any of
Licensor's operating expenses and overhead directly related to the
administration, direction or operation of such programs, campaigns, or
activities.
13.4 Licensor may conduct advertising, at its own expense,
and in such manner and to such extent, as Licensor sees fit in its sole
discretion. Licensor does not guarantee the distribution of advertising in any
quantity or format, to or for any particular licensee or licensees, or in any
area which includes a particular licensee's licensed territory. The parties
hereto agree
26
that Licensor shall have sole discretion over the placement and format of any
such advertising.
14. COVENANTS
14.1 Licensee covenants that during the term of this
Agreement, except as otherwise approved in writing by Licensor, Licensee shall
devote best efforts to the management and operation of the Licensed Business.
14.2 Licensee covenants that during the term of this
Agreement, except as otherwise approved in writing by Licensor, Licensee shall
not, either directly or indirectly, for itself, or through, on behalf of, or in
conjunction with any person, persons, partnership, corporation or limited
liability company:
14.2.1 Divert or attempt to divert any
business or customer of the Licensed Business or of Licensor or other System
Licensees under the System to any competitor, by direct or indirect inducement
or otherwise, or do or perform, directly or indirectly, any other act injurious
or prejudicial to the goodwill associated with the Proprietary Marks and the
System; and
14.2.2 Own, maintain, advise, help,
manage, invest in, make loans to, be employed by, engage in, or have any
interest in or relationship or association with any business engaged in the
rental of motor vehicles in the United States other than (i) the Licensed
Business, (ii) as is expressly contemplated pursuant to Section 10 hereof, with
respect to other System Licensees or (iii) which is acquired by Licensee and is
immediately converted to operate as part of the Licensed Business, without the
express written consent of Licensor.
14.3 Licensee covenants that, except as otherwise approved in
writing by Licensor, for a continuous, uninterrupted period commencing upon a
transfer permitted under Section 15.2 or 15.3 hereof, or upon the termination
of this Agreement, regardless of the cause for termination, and continuing for
one (1) year thereafter in the event Licensor exercises its rights under
Section 18.9, neither Licensee nor any affiliate of Licensee shall, either
directly or indirectly, for itself, or through, on behalf of, or in conjunction
with
27
any person, persons, partnership, or corporation, own, maintain, advise, help,
manage, invest in, make loans to, be employed by, engage in, or have any
interest in any business engaged in the rental of motor vehicles, if such
business is located at or within five (5) miles of any of the Facilities in
operation at the time of such termination without the express written consent
of Licensor. This Section 14.3 shall not be applicable upon the expiration of
the initial term of this Agreement (specified in Section 3.1) if this Agreement
is not renewed pursuant to Section 3.3, or upon the expiration of any renewal
term if this Agreement is renewed pursuant to Section 3.3.
14.4 Licensee covenants that until all Base Fees and
Supplemental Fees and any deferrals thereof have been paid in full, Licensee
shall not pay any dividends to its parent, other than those dividends which are
necessary to cover the customary expenses of a public holding company.
14.5 Sections 14.2 and 14.3 shall not apply to ownership by
Licensee or an affiliate of Licensee of less than five percent (5%) beneficial
interest in the outstanding equity securities of any corporation registered
with the Securities and Exchange Commission pursuant to the Exchange Act and
traded on a national securities exchange or on a national automated quotation
system (a "Publicly-Held Corporation").
14.6 Licensee understands and acknowledges that Licensor
shall have the right, in its sole discretion, to reduce the scope of any
covenant set forth in Sections 14.2 and 14.3 of this Agreement, or any portion
thereof, without Licensee's consent, to be effective immediately upon receipt
by Licensee of Licensor's written notice thereof, and Licensee agrees that it
shall comply forthwith with any covenant as so modified, which shall be fully
enforceable notwithstanding the provisions of Section 29 hereof.
14.7 Licensee expressly agrees that the existence of any
alleged claims it may have against Licensor, whether or not arising from this
Agreement, shall not constitute an affirmative or equitable defense to the
enforcement by Licensor of the terms in this Section 14.
28
14.8 Licensee acknowledges that Licensee's violation of the
terms of this Section 14 would result in irreparable injury to Licensor for
which no adequate remedy at law may be available, and Licensee accordingly
consents to the issuance of, and agrees to pay all court costs and reasonable
attorneys' fees incurred by Licensor in obtaining, a temporary restraining
order and/or an injunction prohibiting any conduct by Licensee in violation of
the terms of this Section 14. Licensor will not be required to post any bond to
obtain such injunction.
14.9 All covenants, obligations, and agreements of Licensee
which by their terms or by reasonable implication are to be performed, in whole
or in part, after the termination of this Agreement, shall survive such
termination.
15. TRANSFER OF INTEREST
15.1 Transfer by Licensor and Wizard Co.:
Licensor and Wizard Co. shall have the right to transfer or assign
all, but not part, of this Agreement and Licensor's and Wizard Co.'s rights or
obligations herein to any person or legal entity, and such transfer or
assignment shall constitute a novation of this Agreement whereby any designated
assignee of Licensor and Wizard Co. shall be substituted in place of Licensor
and Wizard Co. and shall become solely responsible for all obligations of
Licensor and Wizard Co. under this Agreement from the date of assignment,
provided, however, that no assignment shall be made by Licensor and Wizard Co.
except to an assignee who, in Licensor's and Wizard Co.'s good faith judgment,
is willing and able to assume the obligations of Licensor and Wizard Co. under
this Agreement.
15.2 Transfer by Licensee when Licensee is not
a Publicly-Held Corporation
15.2.1 Licensee understands and
acknowledges that the rights and duties set forth in this Agreement are
personal to Licensee, and that Licensor has granted this license in reliance on
the representations of Licensee concerning the business skill and financial
capacity of Licensee. Accordingly, when Licensee is not
29
a Publicly-Held Corporation, neither Licensee nor any immediate or remote
successor to any part of Licensee's interest in this license nor any
individual(s), partnership, corporation, or other legal entity which directly
or indirectly controls Licensee (for the purpose of this Section 15, the
"transferor"), shall sell, assign, transfer, convey, or give away, in one
transaction or a series of transactions, any interest in this Agreement, in the
rights granted in this Agreement, in Licensee, or in substantially all of the
assets of the Licensed Business, without the prior written consent of Licensor;
provided, however, that the transfer of less than a ten percent (10%) equity
interest in Licensee in a single transaction, which does not have the affect of
transferring control (as "control" is defined in Section 15.2.2 hereof), shall
not require the prior approval of Licensor, provided that Licensee notifies
Licensor in writing of such transfer within thirty (30) days following such
transfer. Any such purported assignment or transfer, by operation of law or
otherwise, not having the written consent of Licensor shall be null and void
and shall constitute a material breach of this Agreement, for which Licensor
may then terminate without opportunity to cure pursuant to Section 17.2 of this
Agreement.
15.2.2 For the purposes of this
Agreement, "control" shall mean the possession, direct or indirect,
individually or with other stockholders, of the power to direct or cause the
direction of the management and policies of a person, corporation, or other
business entity, whether through the ownership of voting securities, by
contract, or otherwise.
15.3 Transfer by Licensee when Licensee is a Publicly-Held
Corporation.
15.3.1 At any time when Licensee is a
Publicly-Held Corporation, Licensee may not sell, assign, transfer, convey, or
give away, in one transaction or a series of transactions, any interest in this
Agreement, in the rights granted in this Agreement, in Licensee, or in
substantially all of the assets of the Licensed Business, without the prior
written consent of Licensor; provided, however, that any transfer that does not
constitute a Change of Control Event, shall not require the prior approval of
Licensor. Any such purported assignment or transfer, by operation of law or
otherwise,
30
without the written consent of Licensor shall be null and void and shall
constitute a material breach of this Agreement, for which Licensor may then
terminate without opportunity to cure pursuant to Section 17.2 of this
Agreement.
15.4 Licensor's Purchase Right:
15.4.1 If any party (the "Seller") who
holds any interest in this Agreement, in Licensee (the transfer of which
interest would have the effect of causing a change of control in the ownership
of the Licensed Business), or in substantially all of the assets of the
Licensed Business, desires to accept any bona fide offer from a third party to
purchase such interest or assets, the Seller shall notify Licensor in writing
of the terms of each such offer, and Licensor shall have the right and option,
exercisable within thirty (30) days after receipt of such written notification,
to send written notice to the Seller that Licensor intends to purchase the
Seller's interest or assets on the same terms and conditions offered by the
third party. In the event that Licensor elects to purchase the Seller's
interest or assets, the closing on such purchase must occur within one hundred
and eighty (180) days from the date of notice to the seller of the election to
purchase by Licensor or such later date as may have been provided in the offer.
If Licensor does not exercise its right to purchase, any material change in the
terms of the third party's offer prior to closing shall constitute a new offer
subject to the same rights of first refusal by Licensor as in the case of the
initial offer. Failure of Licensor to exercise the option afforded by this
Section 15.4 shall not constitute a waiver of any other provision of this
Agreement, including all of the requirements of this Section 15, with respect
to a proposed transfer.
15.4.2 In the event the consideration,
terms, or conditions offered by the Seller are such that Licensor may not
reasonably be required to furnish the same consideration, terms, or conditions,
then Licensor may purchase the interest or assets proposed to be sold for the
reasonable equivalent in cash. If the parties cannot agree within a reasonable
time on the reasonable cash equivalent of the consideration, and upon the terms
or conditions offered by the third party, each of the parties shall designate
an independent appraiser and
31
their determination shall be binding upon the parties. If the appraisers cannot
agree within a reasonable time upon the reasonable cash equivalent of the
consideration, they shall designate a third appraiser whose determination shall
be binding upon the parties. Each party shall bear the costs of its designated
appraiser, and the parties shall share equally the costs of the third
appraiser.
15.5 Non-Waiver of Claims:
Licensor's consent to a transfer of any interest in Licensee, the
Licensed Business, this Agreement, or in the license granted hereby shall not
constitute a waiver of any claims Licensor may have against the transferor, nor
shall it be deemed a waiver of Licensor's right to demand exact compliance with
any of the terms of this Agreement by the transferee.
16. OTHER REQUIREMENTS
16.1 Licensee shall comply with the following
requirements:
16.1.1 Copies of Licensee's Articles of
Incorporation or charter, its Bylaws and other governing documents shall be
furnished to Licensor prior to execution of this Agreement, and any amendments
thereto shall be furnished within ten (10) days of effecting such amendment;
and
16.1.2 Licensee shall not permit its
corporate charter to be revoked or suspended in the state in which Licensee is
organized, or the state or states in which Licensee is qualified to be
business.
17. DEFAULT AND TERMINATION
17.1 Automatic Default and Termination:
17.1.1 Licensee shall be in default under
this Agreement and all rights granted herein shall automatically terminate
without notice to Licensee if Licensee shall become insolvent or if a voluntary
bankruptcy case or proceeding is filed by Licensee or a proceeding is commenced
by Licensee under any provision of Title 11 of the United States Code or under
any other
32
bankruptcy or insolvency law, including, but not limited to, assignments for
the benefit of creditors, moratoria (formal or informal), compositions, or
proceedings seeking reorganization, arrangements, or other similar relief or
the Licensee consents to the entry of an order for relief against it in an
involuntary case or an involuntary bankruptcy case is filed with respect to
Licensee and such involuntary case is not dismissed within 60 days of such
filing; or if a receiver or other custodian (permanent or temporary) of
Licensee's assets or property, or any part thereof, is appointed by any court
of competent jurisdiction; or if execution is levied against Licensee's
business or property; or if suit to foreclose any lien or mortgage against the
premises or equipment of the Licensed Business is instituted against Licensee
and not dismissed within sixty (60) days; or if the real or personal property
of the Licensed Business shall be sold after levy thereupon by any sheriff,
marshal, or constable; provided, that, this provision shall not apply to
proceedings related to any immaterial assets or property of the Licensee.
17.2 Non-Curable Defaults/Termination Upon
Notice:
17.2.1 Licensee shall be in default hereunder, and
Licensor and, with respect to the Proprietary Marks, Wizard Co. may, at their
option, terminate this Agreement and all rights granted hereunder, without
affording Licensee any opportunity to cure the default, upon not less than
thirty (30) days prior written notice, upon the occurrence of any of the
following events:
17.2.2 If Licensee purports to transfer
any rights or obligations under this Agreement, the license granted hereby, or
any interest in Licensee to any third party without compliance with the terms
of Section 15 of this Agreement;
17.2.3 If Licensee fails to comply with
the covenants in Section 14.2 hereof;
17.2.4 If, contrary to Sections 19 or 20
hereof, Licensee discloses or divulges the contents of the Manual or other
trade secret or confidential information provided to Licensee by Licensor or
obtained by Licensee in its operation of the Licensed Business prior to the
Transfer;
33
17.2.5 If Licensee challenges Licensor's
right to license or the ownership of the Proprietary Marks; or
17.2.6 If Licensee has received three or
more prior Notices of Termination (as defined) pursuant to Section 17.3 hereof
for the same, similar, or different defaults in any twelve-month period,
whether or not such defaults have been cured after notice.
17.3 Curable Defaults/Termination Upon Notice:
17.3.1 Except as provided in Sections
17.1 and 17.2 of this Agreement, Licensee shall have thirty (30) days (ten (10)
days in the case of a payment default described in Section 17.3.1.1) after its
receipt from Licensor of a written notice of termination ("Notice of
Termination") within which to remedy any default hereunder and to provide
evidence thereof to Licensor. Other than with respect to payment defaults, in
the event such default is not cured within 30 days but the Licensee is
diligently making efforts to cure such default, the Licensee shall have an
additional 60 days to cure such default. If any such default is not cured
within that time, or such longer period as applicable law may require, this
Agreement shall terminate without further notice to Licensee effective
immediately upon the expiration of the period specified above or such longer
period as applicable law may require. Licensee shall be in default hereunder
for any failure to comply substantially with any of the requirements imposed by
this Agreement, as it may from time to time reasonably be supplemented by the
Manual or otherwise in writing, or for any failure to carry out the terms of
this Agreement in good faith. Such defaults shall include, without limitation,
the occurrence of any of the following events:
17.3.1.2 If Licensee fails, refuses, or neglects
to promptly pay when due any monies owing to Licensor or its affiliates under
this Agreement, the Computer Services Agreement, the Reservation Agreement, the
Lease Agreements or the Cost Sharing Agreement, or to submit, when due, the
financial information or any reports required by
Licensor under this Agreement;
34
17.3.1.3 If Licensee misuses or makes any
unauthorized use of the Proprietary Marks or otherwise
materially impairs the goodwill associated therewith or
Licensor's rights therein;
17.3.1.4 If Licensee engages in any business or
markets any service or product under a name or mark or uses trade dress or
styles which, in Licensor's opinion, is confusingly similar to the Proprietary
Marks; or
17.3.1.5 If Licensee fails to maintain material
compliance with the standards or procedures prescribed by Licensor in this
Agreement, the Manual, or otherwise in writing.
17.3.1.6 With respect to any Facility, if the
Licensee fails to maintain compliance with the standards or procedures
prescribed by Licensor in this Agreement, the Manual, or otherwise in writing
at such Facility.
17.4 Licensee may only terminate this Agreement, with cause,
after giving Licensor written notice of default, specifying the basis therefore
and Licensor fails to cure such default within ninety (90) days after notice is
given, and by providing written notice to Licensor at least one hundred and
eighty (180) days prior to the date Licensee intends to terminate this
Agreement.
18. OBLIGATIONS UPON TERMINATION
Upon termination or expiration of this Agreement, all rights granted
hereunder to Licensee shall forthwith terminate, and:
18.1 Licensee shall immediately cease to operate the Licensed
Business and shall not thereafter, directly or indirectly, represent itself to
the public or hold itself out as a present or former licensee of Licensor.
18.2 Licensee shall immediately and permanently cease to use,
by advertising or in any other manner whatsoever, any confidential methods,
procedures, or techniques associated with the System, and all
35
Proprietary Marks, including any such Proprietary Marks used in the Licensee's
or any of its subsidiaries' corporate names, and distinctive forms, slogans,
signs, symbols, or devices associated with the System. In particular, without
limitation, Licensee shall cease to use all signs, equipment, advertising
materials, stationery, forms, and any other articles which display the
Proprietary Marks; provided, however, that this Section 18.2 shall not apply to
the operation by Licensee of another Avis vehicle rental business pursuant to
another agreement between Licensor and Licensee which is then in effect.
18.3 Licensee shall take such action as may be necessary to
cancel any assumed name or equivalent registration which contains the names
"Avis," "Avis Rent A Car," or any other service mark or trademark of Licensor;
and Licensee shall furnish Licensor with evidence satisfactory to Licensor of
compliance with this obligation within fifteen (15) days after termination or
expiration of this Agreement.
18.4 Licensee agrees, in the event it continues to operate or
subsequently begins to operate any other business, not to use any reproduction,
counterfeit, phonetic equivalent copy, or colorable imitation of the
Proprietary Marks either in connection with such other business or the
promotion thereof, which is likely to cause confusion, mistake, or deception,
or which is likely to dilute Licensor's rights in and to the Proprietary Marks;
and further agrees not to utilize any designation of origin or description or
representation which falsely suggests or represents an association or
connection with Licensor or the Proprietary Marks which constitutes dilution or
unfair competition.
18.5 Licensee shall promptly pay all sums owing to Licensor
and its subsidiaries and affiliates. In the event of termination due to any
default of Licensee or Licensee's termination of this Agreement without legal
cause, such sums shall include all damages, costs, and expenses, including
reasonable attorneys' fees, incurred by Licensor as a result of the default,
which obligation shall give rise to and remain a lien in favor of Licensor
against any and all of the personal property, equipment, inventory, and
fixtures owned by Licensee and on all facilities operated hereunder at the
36
time of default, until paid in full.
18.6 Licensee shall promptly pay to Licensor all sums owing
to other System Licensees and to third parties, if such sums are typically paid
to Licensor, or if nonpayment will affect the on-going operations of Licensee's
terminated business. Such sums owing to third parties shall include, but not be
limited to, travel agent commissions, telephone bills, rent, airport concession
fees, and frequent flier fees.
18.7 Licensee shall immediately turn over to Licensor the
Manual, any and all other confidential and proprietary manuals, records, files,
instructions, bulletins and other materials relating to the operation of the
Licensed Business which are in Licensee's possession, and all copies thereof
(all of which are acknowledged to be Licensor's property).
18.8 Licensee shall notify the telephone companies serving
the Facilities and all listing agencies of the termination of Licensee's right
to use any telephone number and any regular, classified, or other telephone
directory listings associated with the Proprietary Marks and shall authorize
transfer of same to or at the direction of Licensor. Licensee acknowledges that
as between Licensor and Licensee, Licensor has the sole rights to and interest
in all telephone numbers and directory listings associated with the Proprietary
Marks. Licensee authorizes Licensor, and hereby appoints Licensor and any
officer of Licensor as Licensee's attorney-in-fact, which power shall be
coupled with an interest, to direct the telephone company and all listing
agencies to transfer such telephone numbers and directory listings to Licensor,
or at Licensor's direction, should Licensee fail or refuse to do so, the
telephone company and all listing agencies may accept such direction of this
Agreement as conclusive of the exclusive rights of Licensor in and to such
telephone numbers and directory listings and Licensor's authority to direct
their transfer. Licensee shall furnish to Licensor within ten days after the
effective date of termination of this Agreement evidence satisfactory to
Licensor of Licensee's compliance with the obligations contained in this
Section 18.8. Licensor may provide a copy of this Section to any telephone
service provider as proof of its authority.
37
18.9 Licensee shall, at Licensor's option which shall be
exercised within 30 days from termination, sell all of the Licensee's interest
in its assets, including, without limitation, the Licensee's fleet, equipment
and real estate, used in connection with the Licensed Business at a value
agreed upon by Licensee and Licensor within thirty (30) days of the exercise of
such option. To the extent that Licensee and Licensor are unable to agree on
the value of such assets within such thirty (30) day period, then a nationally
recognized investment banking firm selected by Licensee and a nationally
recognized investment banking firm selected by Licensor shall attempt to agree
on the value of such assets. If such investment banking firms are unable to
agree on the value of such assets within thirty (30) days of such matter being
referred to them, then the matter shall be referred to a third nationally
recognized investment banking firm which shall be independent of Licensee and
its affiliates and Licensor and its affiliates and mutually acceptable to
Licensee and Licensor, and which shall determine the value of such assets
within 30 days of the matter being referred to it, which shall be final,
binding and conclusive on the parties hereto. The fees and disbursements of the
investment banking firms initially selected by Licensee and Licensor to
determine the value of the assets shall be borne by the party selecting such
investment banking firm and the fees and disbursements of independent
investment banking firms selected to resolve the dispute of the initial two
investment banking firms shall be borne equally by Licensee and Licensor. In
acting under this Section 18.9, the investment banking firms referred to herein
shall be entitled to the privileges and immunities of arbitrators. In the event
Licensor elects to purchase the Licensee's assets, the Licensee shall:
18.9.1 Assign to Licensor, or Licensor's
designee, Licensee's Airport Concession Agreement(s). Licensee shall execute
all documents reasonably necessary to do such other acts and steps necessary to
transfer the rights under each Airport Concession Agreement, subject to
approval by the airport authority party to such agreement.
18.9.2 Assign to Licensor any interest which
Licensee has in any lease or sublease for any of the premises or Facilities of
the Licensed Business.
38
18.10 In the event Licensor does not elect to exercise its
option to acquire the assets of the Licensee pursuant to this Section 18.9,
Licensee, within the later of thirty (30) days after termination of this
Agreement or thirty (30) days after receipt of notice that Licensor will not
exercise its option pursuant to Section 18.9 hereof but in no event later than
sixty (60) days after termination, shall make such modifications or alterations
to the facilities operated hereunder (including, without limitation, assigning
the telephone number to Licensor, and changing the color scheme, and other
distinctive design features) as may be necessary to prevent the operation of
any business thereon by itself or others in derogation of this Section 18.10,
and shall make such specific additional changes thereto as Licensor may
reasonably request for that purpose.
18.11 Licensee shall transfer immediately to Licensor all
unused current versions of Avis Standard Rental Agreements and forms, signage,
uniforms, and any other equipment or supplies bearing the Proprietary Marks.
Licensor shall purchase any supplies useable by Licensor at Licensee's cost,
based on the most recent invoices received by Licensee.
18.12 Licensee acknowledges that any failure to comply with
the requirements of this Section 18 will cause Licensor irreparable injury, and
Licensee shall pay to Licensor all damages, costs, and expenses, including,
reasonable attorneys' fees, incurred by Licensor subsequent to the termination
of the license herein granted in obtaining injunctive or other relief for the
enforcement of any provisions of this Section 18 without bond.
19. CONFIDENTIAL OPERATING MANUAL
19.1 In order to protect the reputation and goodwill of
Licensor and to maintain uniform standards of operation under the Proprietary
Marks, Licensee shall conduct its business in accordance with the Manual, which
may consist of books, manuals, bulletins, compilations and other materials
relating to operations under the System, including additions and updates
thereto, as published, or disseminated through any means including electronic
or computer systems, by Licensor to Licensee from time to time. Without
limiting the foregoing, the
39
Manual shall consist of, among other things, manuals, bulletins, notices,
letters, information, and other material pertaining to (a) the operation of the
Wizard System, and (b) the Avis Intercity Rules and the Rent It Here Leave It
There program. One copy of the Manual shall be furnished to Licensee on loan
for the term of this Agreement for each Facility or Rental Location.
19.2 Licensee shall at all times treat the Manual and the
information contained therein as confidential, and shall use all reasonable
efforts to maintain such information as secret and confidential. Licensee shall
not at any time copy, duplicate, record, or otherwise reproduce the Manual in
whole or in part, other than for use at the Licensee's Facilities, and shall
not otherwise make the Manual available to any unauthorized person.
19.3 The Manual shall at all time remain the sole property of
Licensor and shall at all times be kept in a secure place at Licensee's primary
office or facility.
19.4 Licensor may from time to time revise the Manual to
reflect changes in System standards, and Licensee expressly agrees to comply
with each new or changed standard. Licensor agrees that any such changes in the
Manual or changes issued through written or electronic bulletins shall be
applied equally to Licensee and to other System Licensees, to the extent
Licensor has the legal authority to impose such requirements on other System
Licensees.
19.5 Licensee shall at all times insure that its copy of the
Manual is kept current and up to date, and in the event of any dispute as to
the contents of the Manual, the terms of the master copy of the Manual
maintained by Licensor at Licensor's home office shall be controlling.
20. CONFIDENTIAL INFORMATION
20.1 Licensee shall not, during the term of this Agreement or
at any time after termination, communicate, divulge, or use for the benefit of
any other person, persons, partnership, association, or corporation any
confidential information, knowledge, or know-how
40
concerning the methods of operation of the Licensed Business which may be
communicated to Licensee, or of which Licensee may be apprised, by virtue of
Licensee's operation under this Agreement or as a result of Licensor's
operation of the System prior to the Transfer. Licensee shall divulge such
confidential information only as required by law or to those of its employees
who must have access to such confidential information on a need-to-know basis
in order to operate the Licensed Business. Any and all information, knowledge,
know-how, and techniques which Licensor designates as confidential shall be
deemed confidential for purposes of this Agreement.
20.2 Licensee acknowledges that any failure to comply with
the requirements of Section 20.1 will cause Licensor irreparable injury, and
Licensee agrees to pay all court costs and reasonable attorneys' fees incurred
by Licensor in obtaining specific performance of, or an injunction against
violation of, the requirements of Section 20.1.
21. ACCOUNTING AND RECORDS
21.1 Licensee shall maintain, and shall preserve for at least
five (5) years from the dates of their preparation, full, complete, and
accurate books, records, and accounts in accordance with generally accepted
accounting principles and in the form and manner as may be prescribed by
Licensor from time to time in the Manual or otherwise in writing, including,
but not limited to, requirements that Licensor may reasonably prescribe with
regard to computer hardware and software, and input of and access to such
information in the Wizard System.
21.2 Licensee shall submit to Licensor within twenty (20)
days following the end of each month, a monthly business and transactions
report setting forth such data for such month then ended as Licensor may
reasonably require along with Licensee's payment of all monthly fees and other
payments required under Section 4 hereof.
21.3 Within forty-five (45) days following each calendar
quarter, Licensee shall, at Licensee's expense, submit to Licensor an unaudited
quarterly profit
41
and loss statement and balance sheet in a form prescribed by and satisfactory
to Licensor, signed by Licensee attesting that it is true and correct.
21.4 Licensee shall, at its expense, provide to Licensor
within ninety (90) days after the end of each fiscal year of the Licensed
Business, audited financial statements, including a profit and loss statement,
a statement of cash flows, and balance sheet, certified by an independent
certified public accountant satisfactory to Licensor, showing the results of
operations of the Licensed Business during said fiscal year, and the comparable
prior year period.
21.5 Licensee shall also submit to Licensor, for review or
audit, such other forms, reports, records, information, and data as Licensor
may reasonably designate, in the form, and at the times and places, including,
if applicable, by telecommunications data transmission methods, as are
reasonably required by Licensor, upon request and as specified from time to
time in the Manual or otherwise in writing.
21.6 Licensor or its designated agents shall have the right
at all reasonable times to examine and copy, at Licensor's expense, the books,
records, microfiche, computer files, other computerized or electronically
sorted data, and business tax returns of Licensee. Licensor shall also have the
right, at any time, to have an independent audit made of the books of Licensee.
If an inspection by Licensor should reveal that any Gross Revenue has been
understated in any report to Licensor, then Licensee shall immediately upon
demand, reimburse Licensor for the costs incurred in such inspection, and pay
to Licensor all royalties and other required payments due on the amount
understated, in addition to interest from the date such royalties and other
payments were due until paid, at the rate of the Prime Rate plus three and
one-half percent (3.5%) per annum or the maximum rate permitted by law,
whichever is less. The foregoing remedies shall be in addition to any other
remedies Licensor may have.
22. INSURANCE
22.1 Licensee shall maintain in full force and effect, at
Licensee's expense, an insurance policy or
42
policies protecting Licensee and Licensor (including its affiliates), and their
officers, directors, partners, and employees (Licensee, Licensor, Wizard Co.
and HFS shall be named insureds), against any claims for loss, liability,
personal injury, death, property damage, breach of contract, or any expense
whatsoever arising out of or in connection with the Licensed Business or
occurring upon the premises where the Facilities are located.
22.2 Such policy or policies shall be written by an insurance
company satisfactory to Licensor or through self insurance by Licensee, which
self insurance retention shall not exceed Five Million Dollars ($5,000,000), in
accordance with standards and specifications set forth in the Manual or
otherwise in writing, and shall include, at a minimum, the following:
22.2.1 Commercial general liability
insurance covering the premises, Facilities and operations of the Car Rental
Business, including coverage for public liability, garage liability, and
extended liability endorsements (including contractual liability, property
damage, products liability, completed operations, and fire legal liability
coverage), with combined single limits per occurrence, primary and excess
combined, of not less than Fifty Million Dollars ($50,000,000). Any pollution
exclusion must include an exception for hostile fire perils.
22.2.2 Comprehensive motor vehicle
liability coverage for both owned and non-owned vehicles, with primary and
excess limits of not less than Fifty Million Dollars ($50,000,000) combined
single limit.
22.2.3 Employer's liability, workers'
compensation, and such other insurance as may be required by statute or rule of
the state or localities in which any Licensed Business is located and operated.
22.2.4 Property and business interruption
insurance, or similar insurance coverage, including coverage for fire,
lightning, the extended coverages, vandalism, malicious mischief, and payments
to Licensor for loss of royalties and other monthly payments specified in
Section 4 hereof, as a result of any interruption in Licensee's business
operations at any
43
Facility.
22.3 Licensee's obligation to obtain and maintain the
foregoing policy or policies in the amounts specified shall not be limited in
any way by reason of any insurance which may be maintained by Licensor, nor
shall Licensee's performance of that obligation relieve Licensee of liability
under the indemnity provisions set forth in Section 25 of this Agreement.
22.4 Upon obtaining the insurance required by this Agreement
and on each policy renewal date thereafter, Licensee shall promptly submit
evidence of satisfactory insurance to Licensor, together with, upon request,
copies of all policies and policy amendments. The evidence of insurance shall
include a statement by the insurer that the policy or policies will not be
cancelled or materially altered without at least thirty (30) days' prior
written notice to Licensor, or such other period of time as required by
applicable state law.
22.5 Should Licensee, for any reason, fail to procure or
maintain the insurance required by this Agreement, as such requirements may be
revised from time to time by Licensor in the Manual or otherwise in writing,
Licensor shall have the right and authority (without, however, any obligation
to do so), immediately to procure such insurance and to charge same to
Licensee, which charges, together with a fee for Licensor's reasonable costs
and expenses in so acquiring the policy or policies, shall be payable by
Licensee immediately upon demand.
22.6 Licensor shall have the right, in its sole discretion,
to require Licensee to maintain additional or different types of insurance, or
to increase the minimum limits of liability in response to identification of
new, changed, or increased risks, upon written notice to Licensee not less than
thirty days prior to such new, changed, or amended requirement.
22.7 All excess and umbrella policies shall be "follow form."
No "cut through" endorsements are acceptable. All insurance carriers must be
rated "A" or better by A.M. Best and be approved by Licensor.
44
23. PROPRIETARY MARKS
23.1 Wizard Co. represents with respect to the Proprietary
Marks that:
23.1.1 Wizard Co., an affiliate of Licensor, is
the owner of all right, title, and interest in and to the Proprietary Marks
with respect to operations under the System and Licensor has been granted
the right to use and to grant others the right to use the Proprietary Marks;
and
23.1.2 Wizard Co. has taken and will take
all steps reasonably necessary to preserve and to protect its right and
interest in and to the Proprietary Marks and preserve the goodwill of the
Proprietary Marks.
23.2 With respect to Licensee's authorized use of the
Proprietary Marks pursuant to this Agreement, Licensee agrees that:
23.2.1 Licensee shall use only the Proprietary
Marks designated by Licensor in Schedule 3 hereto, as amended from time to
time, and shall use them only in the manner authorized and permitted by
Licensor or Wizard Co.;
23.2.2 Licensee shall use the Proprietary Marks
only for the operation of the Licensed Business at the Licensed Locations
specified in this Agreement;
23.2.3 Unless otherwise authorized or required
by Licensor, Licensee shall operate and advertise the Licensed Business only
under the names "AVIS" and "AVIS RENT A CAR," without prefix or suffix;
23.2.4 Licensee shall identify itself as the owner
of the Licensed Business in conjunction with any use of the Proprietary Marks,
including, but not limited to, such use in or on the Standard Rental
Agreements, automobile registrations and permits, stationery, invoices, order
forms, receipts, all contracts, in all dealings and transactions with third
parties, and in any public appearances, as well as at such conspicuous
locations at the Facilities or in Vehicles as Licensor shall designate in
writing. The form and content of such identification shall comply with
45
standards set forth in the Manual;
23.2.5 Licensee's right to use the Proprietary
Marks is limited to such uses as are authorized under this Agreement, and any
unauthorized use thereof shall constitute a willful infringement of Licensor's
rights;
23.2.6 Licensee shall not use the Proprietary
Marks to incur any obligation or indebtedness on behalf of Licensor;
23.2.7 Licensee shall comply with Licensor's
instructions in filing and maintaining the requisite trade name or fictitious
name registrations, and shall execute any documents deemed necessary by
Licensor to obtain protection for the Proprietary Marks or to maintain their
continued validity and enforceability.
23.3 With respect to actual or potential litigation concerning
the Proprietary Marks:
23.3.1 Licensee shall promptly notify
Licensor and Wizard Co. of any unauthorized use of the Proprietary Marks or
marks confusingly similar thereto as well as any challenge to the Proprietary
Marks of which it becomes aware. Licensee acknowledges that Licensor and Wizard
Co. have the sole right to direct and control any administrative proceeding or
litigation involving the ownership or validity of the Proprietary Marks,
including any settlement thereof. Licensor has the right, but not the
obligation, to take action against uses by others that may constitute
infringement of the Proprietary Marks.
23.3.2 In the event Licensor undertakes
any litigation relating to the Proprietary Marks, Licensee agrees to execute
any and all documents and to do such acts and things as may, in the opinion of
Licensor, be necessary to carry out such litigation, including but not limited
to becoming a nominal party to any such litigation.
23.4 Licensee expressly understands and acknowledges that:
46
23.4.1 Wizard Co. is the owner of all right,
title, and interest in and to the Proprietary Marks and the goodwill associated
with and symbolized by them, and Licensor has the right to use and license
others to use the Proprietary Marks;
23.4.2 The Proprietary Marks are valid and serve
to identify the System and those who are licensed to operate a Licensed
Business as part of the System;
23.4.3 Licensee shall not directly or indirectly
contest the validity of, or Wizard Co.'s ownership of, the Proprietary Marks,
or Wizard Co.'s right to use and license others to use the Proprietary Marks;
23.4.4 Licensee's use of the Proprietary
Marks pursuant to this Agreement does not give Licensee any ownership interest
or any security, equitable, beneficial or other interest in or to Proprietary
Marks;
23.4.5 Any and all goodwill arising from
Licensee's use of the Proprietary Marks in the Licensed Business under the
System shall inure solely and exclusively to Wizard Co.'s benefit, and upon
termination or expiration of this Agreement and the license granted hereby, no
monetary amount shall be assigned as attributable to any goodwill associated
with Licensee's use of the system or of the Proprietary Marks;
23.4.6 The license of the Proprietary Marks
granted hereby to Licensee is non-exclusive except as specifically set forth in
Section 2.2; and
23.4.7 Wizard Co. reserves the right to
substitute different Proprietary Marks for use in identifying the System and
the businesses operating thereunder if Wizard Co.'s currently owned Proprietary
Marks no longer can be used, or if Licensor, in its sole discretion, determines
that substitution of different Proprietary Marks could be beneficial to the
System.
24. TAXES, PERMITS AND INDEBTEDNESS
24.1 Licensee shall promptly pay when due all taxes levied
or assessed, including, without limitation,
47
unemployment and sales taxes, and all accounts and other indebtedness of every
kind incurred by Licensee in the conduct of the Licensed Business. Licensee
shall pay to Licensor an amount equal to any sales tax, gross receipts tax, or
similar tax imposed on Licensor with respect to any payments to Licensor
required under this Agreement, except to the extent such tax is credited
against income tax otherwise payable by Licensor.
24.2 In the event of any bona fide dispute as to liability
for taxes assessed or other indebtedness, Licensee may contest the validity or
the amount of the tax or indebtedness in accordance with procedures of the
taxing authority or applicable law; provided, however, in no event shall
Licensee permit a tax sale or seizure by levy of execution or similar writ or
warrant, or attachment by a creditor, to occur against any of the Facilities or
premises, or any improvements thereon.
24.3 Licensee shall comply with all federal, state, and local
laws, rules, and regulations, and shall timely obtain any and all permits,
certificates, or licenses necessary for the full and proper conduct of the
Licensed Business generally and at each Facility, including without limitation,
licenses to do business, fictitious name registrations, sales tax permits, fire
clearances, and Vehicle registrations.
24.4 Licensee shall notify Licensor in writing within five(5)
days of the commencement and resolution of any action, suit, or proceeding, and
of the issuance of any order writ, injunction, award, or decree of any court,
agency, or other governmental instrumentality, which may adversely affect the
operation or financial condition of the Licensed Business.
25. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
25.1 It is understood and agreed by the parties hereto that
this Agreement does not create a fiduciary relationship between them; that
Licensee shall be an independent contractor; and that nothing in this Agreement
is intended to constitute either party an agent, legal representative,
subsidiary, joint venturer, partner, employee, or servant of the other for any
purpose whatsoever.
48
25.2 During the term of this Agreement and any renewal
hereof, Licensee shall hold itself out to the public as an independent
contractor operating the Licensed Business and each Licensed Location pursuant
to a license from Licensor. Licensee agrees to take such affirmative action as
may be necessary to do so, including, without limitation, exhibiting a notice
of that fact in a conspicuous place at each Rental Location or other Facility
as may be specified by Licensor, the content of which Licensor reserves the
right to specify.
25.3 It is understood and agreed that nothing in this
Agreement authorizes Licensee to make any contract, agreement, warranty, or
representation on Licensor's behalf, or to incur any debt or other obligation
on Licensor's name; and, that Licensor shall in no event assume liability for,
or be deemed liable as a result of, any such action, or by reason of any act or
omission of Licensee in its conduct of the Licensed Business or for any claim
or judgment arising therefrom against anyone. Licensee shall indemnify and hold
harmless Licensor and Licensor's officers, directors, employees, affiliates,
agents, successors and assigns against any and all liabilities, claims,
demands, causes of action, damages, costs, expenses and amounts of any type
whatsoever, including, but not limited to environmental claims, whether
expended in settlement, in attorneys' fees' or however expended or disbursed,
which arise directly or indirectly from, as a result of, or in connection with
Licensee's operation of the Licensed Business and each Facility, or in
Licensee's dealings with third parties concerning said Business, this
Agreement, the System, or the Proprietary Marks, including claims in which
Licensor's negligence is alleged. In addition, Licensee shall, at Licensor's
request, defend, at Licensee's expense, Licensor, and Licensor's officers,
directors, employees, affiliates, agents, successors and assigns against such
claims, demands and causes of action; provided, however, that Licensee shall
relinquish such defense to Licensor immediately upon Licensor's request,
although Licensee shall remain obligated to pay Licensor's defense costs. In no
event may Licensee enter into any settlement of any such claim on behalf of
Licensor without Licensor's approval. Any and all claims for which
indemnification is sought hereunder shall be commenced within one (1) year from
the occurrence of the facts giving rise to such
49
claim or action, or such claim or action shall be barred.
25.4 It is understood and agreed that Licensor shall
indemnify and hold harmless Licensee and Licensee's officers, directors,
employees, affiliates, agents, successors and assigns against any and all
liabilities, claims, demands, causes of action, damages, costs, expenses and
amounts of any type whatsoever, which arise from any action against such
parties for infringement relating to the use of the Proprietary Marks in
compliance with System Standards.
26. APPROVALS AND WAIVERS
26.1 Whenever this Agreement requires the prior approval or
consent of Licensor, Licensee shall make a timely written request to Licensor
therefor; and such approval or consent shall be obtained in writing.
26.2 Licensor makes no warranties or guarantees upon which
Licensee may rely, and assumes no liability or obligation to Licensee, by
providing any waiver, approval, consent, or suggestion to Licensee in
connection with this Agreement, or by reason of any neglect, delay, or denial
of any request therefor.
26.3 No delay, waiver, omission, or forbearance on the part
of Licensor to exercise any right, option, duty, or power arising out of any
breach of default by Licensee, or by any other licensee, of any of the terms,
provisions, or covenants hereof, shall constitute a waiver by Licensor to
enforce any such right, option, or power as against Licensee, or as to
subsequent breach or default by Licensee. Subsequent acceptance by Licensor of
any payments due to it hereunder shall not be deemed to be a waiver by Licensor
of any preceding breach by Licensee of any terms, covenants, or conditions of
this Agreement.
27. NOTICES
27.1 Any and all notices required or permitted under this
Agreement shall be in writing and shall be delivered personally, by a
recognized overnight delivery service, or mailed by certified or registered
mail, return receipt requested, to the respective parties at the following
addresses unless and until a different
50
address has been designated by written notice to the other party:
Notices to Licensor: HFS Car Rental, Inc.
c/o HFS Incorporated
6 Sylvan Way
Parsippany, New Jersey 07054
Attention: General Counsel
Notices to Licensee: Avis Rent A Car System, Inc.
900 Old County Road
Garden City, New York 11530
Attention: General Counsel
Notices to Wizard Co.: Wizard Co., Inc.
c/o HFS Incorporated
6 Sylvan Way
Parsippany, NJ 07054
Attention: General Counsel
Any notice by certified or registered mail or by an overnight delivery service
shall be deemed to have been given at the date and time of mailing. Notice
personally delivered or delivered by an overnight delivery service shall be
deemed to have been given at the date and time when received by Licensee or
Licensor.
27.2 Any and all notices required or permitted under this
Agreement as provided for in this Section are designed to serve as a notice
only to the party to whom sent. If a copy of a notice is to be sent to a third
party, this requirement is not a condition precedent but only informational.
28. ENTIRE AGREEMENT
This Agreement, the documents referred to herein, and the Attachments
hereto, constitute the entire, full, and complete Agreement between the parties
concerning the subject matter hereof, and supersede any and all prior
agreements, representations, and arrangements between the parties whether oral
or written, and no other representation has induced Licensee to execute this
Agreement.
51
29. MODIFICATIONS OF AGREEMENT
Except for those permitted to be made unilaterally by Licensor
hereunder, no amendment, change, or variance from this Agreement shall be
binding on the parties unless mutually agreed to by the parties and executed by
themselves or their authorized officers or agents in writing.
30. SEVERABILITY AND CONSTRUCTION
30.1 Except as expressly provided to the contrary herein,
each section, part, term, and provision of this Agreement shall be considered
severable; and if, for any reason, any section, part, term, or provision herein
is determined to be invalid and contrary to, or in conflict with, any existing
or future law or regulation by a court or agency having valid jurisdiction,
such shall not impair the operation of, or have any other effect upon, such
other sections, parts, terms, and provisions of this Agreement as may remain
otherwise intelligible; and, the latter shall continue to be given full force
and effect and bind the parties hereto; and said invalid sections, parts,
terms, or provisions shall be deemed not to be a part of this Agreement.
30.2 Notwithstanding anything to the contrary herein, nothing
in this Agreement is intended, nor shall be deemed, to confer upon any person
or legal entity other than Licensor, Licensee, their officers, directors,
partners, and such of their respective successors and assigns as may be
contemplated by Section 15 hereof, any rights or remedies under or by reason of
this Agreement.
30.3 The parties agree that each of the foregoing provisions
of this Agreement, including, but not limited to, the covenants set forth in
Section 14 hereof, shall be construed as independent of any other covenant or
provision of this Agreement. If all or any portion of this Agreement is held
unreasonable or unenforceable by a court or agency having valid jurisdiction in
an unappealed final decision to which Licensor is a party, Licensee expressly
agrees to be bound by any lesser provision subsumed within the terms of such
Agreement, including, but not limited to, the covenants set forth in Section 14
hereof, that imposes the maximum duty permitted by law, as if the resulting
provision were separately
52
stated in and made a part of this Agreement.
30.4 All captions in this Agreement are intended solely for
the convenience of the parties, and none shall be deemed to affect the meaning
or construction of any provision hereof.
30.5 All references herein to the masculine, neuter, or
singular shall be construed to include the masculine, feminine, neuter, or
plural, where applicable, and all acknowledgments, promises, covenants,
agreements, and obligations herein made or undertaken by Licensee shall be
deemed jointly and severally undertaken by all the parties hereto on behalf of
Licensee.
31. APPLICABLE LAW; DISPUTE RESOLUTION
31.1 This Agreement takes effect upon its acceptance and
execution by the parties hereto in New York, and shall be interpreted and
construed under the laws of the State of New York. In the event of any conflict
of law, the laws of New York shall prevail, without regard to, and without
giving effect to, the application of New York conflict of law rules. If,
however, any provision of this Agreement would not be enforceable under the
laws of New York, and if the Licensed Business is located outside of New York
and such provision would be enforceable under the laws of the state in which
the Licensed Business is located, then such provision shall be interpreted and
construed under the laws of that state. Nothing in this Section 31.1 is
intended by the parties to subject this Agreement to any franchise law or
similar law, rule, or regulation of the State of New York or any other state to
which it would not otherwise be subject. The parties acknowledge that no waiver
by Licensee of Sections 687.4, 687.5 and Article 33 of the New York General
Business Law is contemplated by this Agreement.
31.2 The parties expressly submit and consent in advance to
the non-exclusive jurisdiction of the State and Federal courts sitting in the
City of New York, Borough of Manhattan, State of New York, in any action to
enforce an arbitration agreement or award, or action seeking a pre-arbitral
injunction, pre-arbitral attachment or other order in aid of arbitration. The
parties waive any claim that any such state or federal
53
court is an inconvenient or improper forum.
31.3 Subject to Section 31.7, no right or remedy conferred
upon or reserved to Licensor or Licensee by this Agreement is intended to be,
nor shall be deemed, exclusive of any other right or remedy herein or by law or
equity provided or permitted, but each shall be cumulative of every other right
or remedy.
31.4 Nothing herein contained shall bar Licensor's right to
obtain injunctive relief or other equitable or other judicial relief in aid of
arbitration from a court of competent jurisdiction against threatened conduct
that will cause Licensor loss or damages, under the usual equity rules,
including the applicable rules for obtaining restraining orders and preliminary
injunctions.
31.5 Subject to Section 31.4, resolution of any and all
disputes (except for the dispute referenced in Section 18.9) arising from or in
connection with this Agreement, whether based on contract, tort, statute or
otherwise, including, but not limited to, disputes over arbitrability
(collectively, "Disputes") shall be exclusively governed by and settled in
accordance with the provisions of this Section 31.5.
31.5.1 Licensor, Wizard Co. or Licensee may
commence proceedings hereunder by delivering a written notice to the other
parties providing a reasonable description of the Dispute to the other parties
(the "Demand").
31.5.2 Within 10 days following receipt by a party
hereto of a Demand, the Dispute shall be referred to representatives of the
parties for resolution, each party being represented by a senior executive
officer who has no direct operational responsibility for the matters
contemplated by this Agreement (the "Representatives"). The Representatives
shall promptly meet in a good faith effort to resolve Dispute. If the
Representatives do not agree upon a resolution within thirty (30) calendar days
after receipt by a Party of a Demand, each of Licensor, Wizard Co. and Licensee
shall be free to exercise the remedies available to them under Section 31.5.3.
54
31.5.3 The Parties hereby agree to submit
all Disputes not resolved by negotiation pursuant to Section 31.5.2 for
resolution by arbitration under the terms hereof, which arbitration shall be
final, conclusive and binding upon the parties, their successors and assigns.
The arbitration shall be conducted in New York, New York by three arbitrators
(the "Panel") in accordance with the JAMS/Endispute Comprehensive Arbitration
Rules and Procedures then in effect, as amended herein. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. ss. 1, et seq.
Notwithstanding the foregoing (a) each party to the Dispute shall have the
right to examine the books and records of the other party to the Dispute that
are reasonably related to the Dispute; (b) each party to the Dispute shall
provide to the other, reasonably in advance of any hearing, copies of all
documents which such party intends to present in such hearing; (c) each party
shall be allowed to conduct reasonable discovery through written requests for
information, document requests, requests for stipulation of fact and
depositions, the nature and extent of which discovery shall be determined by
the Panel, taking into account the needs of the parties and the desirability of
making discovery expeditious and cost effective. All hearings shall be
conducted on an expedited schedule, and all proceedings shall be confidential,
except to the extent disclosure is required by applicable securities or
franchise laws, and the rules of any stock exchange on which the securities of
Licensee, Licensor or the parent company of either are listed for trading. The
Panel shall complete all hearings not later than ninety (90) days after its
appointment. The award shall be in writing and shall specify the facts and law
upon which it is based. Judgment upon any award may be entered in any court
having jurisdiction thereof.
32. ACKNOWLEDGMENTS
32.1 Licensee acknowledges that it has conducted an
independent investigation of the Licensed Business, recognizes that the
business venture contemplated by this Agreement involves business risks, and
that its success will be largely dependent upon the ability of Licensee.
Licensor expressly disclaims the making of, and Licensee acknowledges that it
has not received, any warranty or guarantee, express or implied,
55
as to the potential volume, profits, or success of the business venture
contemplated by this Agreement.
32.2 Licensee acknowledges that Licensor has informed
Licensee of the existence of other licensees operating under the System
pursuant to license agreements with Licensor which contain terms, conditions,
and obligations which differ from the terms, conditions, and obligations
contained in this Agreement.
56
IN WITNESS WHEREOF, the parties hereto have duly executed,
and delivered this Agreement on the day and year first above written.
HFS CAR RENTAL, INC.
Licensor
By: /s/ James E. Buckman
Name: James E. Buckman
Title: Vice President
AVIS RENT A CAR SYSTEM, INC.
Licensee
By: /s/ Kevin Sheehan
Name: Kevin Sheehan
Title: Executive Vice President
WIZARD CO., INC.
For purposes of Sections 2, 3,
15, 17, 23 and 31 only
By: /s/ David Mc Nicholas
Name: David mc Nicholas
Title: Vice President
57
Schedule 1
Exclusive Territories
New York, NY PMSA
Chicago, IL PMSA
Boston, MA-NH NECMA
Philadelphia, PA-NJ PMSA
Detroit, MI PMSA
Washington, DC-MD-VA-WV PMSA
Houston, TX PMSA
Atlanta, GA MSA
Nassau-Suffolk, NY PMSA
Riverside-San Benardino, CA PMSA
Minneapolis-St. Paul, MN-WI MSA
St. Louis, MO-IL MSA
Orange County, CA PMSA (other than Disneyland)
Pittsburgh, PA MSA
Baltimore, MD PMSA
Phoenix, Mesa, AZ MSA
Cleveland-Lorain-Elyria, OH PMSA
Oakland, CA PMSA
Tampa-St. Pete-Clearwater, FL MSA
Seattle-Bellevue-Everett, WA PMSA
Miami, FL PMSA
Fort Lauderdale, FL PMSA
West Palm Beach-Boca Raton, FL MSA
Newark, NJ PMSA
San Francisco, CA PMSA
San Jose, CA PMSA
Denver, CO PMSA
Orlando, FL MSA
Schedule 1(a)
Acquired Exclusive Territories
Los Angeles-Long Bech, CA PMSA
Dallas, TX PMSA
San Diego, CA MSA
Las Vegas, NV-AZ MSA
2
Schedule 2
SERVICES
DESCRIPTION OF SERVICES AVIS RENT A CAR, INC. OFFERS TO
DOMESTIC & INTERNATIONAL THIRD PARTY LICENSEES
Domestic
o Reservations - ARAC will continue to subsidize
reservation expenses for third-party licensees.
o Other services provided by ARAC:
o Licensee Relations - ARAC support provided to
licensees (currently one VP and one secretary).
o WizCom - ARAC subsidizes excess WizCom costs,
for services provided to licensees:
transaction processing (currently cost is $.632
per transaction; however WizCom only recovers
$.529 per transaction); communications
equipment; Garden City network backbone
allocation, terminal installations/help desk;
systems enhancements & maintenance-dedicated
and non-dedicated work, production jobs; and
sales support personnel. Following services
are provided at cost to licensees:
communications equipment; terminal
installations & help desk; and systems
enhancements.
o Receivable Processing - Central Billing and
Credit Club recoveries netted against the
following costs:
o Charge card/Wizard
o Credit Department
o CB Customer Service
o Collections
o Bad debt
o Corp/Travel CB Vouchers
o Buy/Sell
o Frequent Flyer
o CCS
o Direct Billing
o I/C Accounting & VAB - allocated time on
composite statements (see attachment 1).
o Purchasing & System Supply & Security/Safety -
allocated time on providing services.
o Sales & Marketing - unallocated costs on sales
& marketing.
o Training/QA - quality assurance, training
overhead and customer satisfaction costs less
3
licensee funding.
o Fleet Warranty.
o Pricing - allocated services for providing
pricing and yield services to licensees.
o Field Operations - overhead associated with
fleet distribution, billing, researching, etc.
o Other - allocate costs for legal, accounting,
insurance, financial planning, audit and fleet.
Note: excludes costs for outside counsel
related to any licensee litigation.
International
o Reservations - ARAC will continue to subsidize
reservation expenses for third-party licensees.
o Services provided by ARAC - International
o Administrative/Financial Operations - Latin America Region (1
director & 2 administrators); Pacific Region (1 director & 1
administrator); WHQ/VAB (accounting, treasury & composite
processing personnel).
o Franchise Sales/Development - coordinate with
HFS prospecting, selection, and negotiation.
o General Consultation & Compliance - policy/procedures, car
rental business methods/strategies, site selection,
intercompany transactions (such as buy/sell), frequent flyer
fees, and network development. Also, periodic visits to
inspect facilities, signage, vehicles, etc.
o Purchasing - assistance in acquisition of uniforms, signage,
rental agreements, rental agreement folders, other
stationary, and printing.
o Training - provide training coordinator, new
hire, & supervisor daily duty programs.
o Liaison Role - between licensees and other
departments/countries to resolve questions/issues on
reservations, customer services, purchasing, etc.
o Preparation and dissemination of system
bulletins and other communications.
o Coordination of tour rates, special accounting pricing, and
retail pricing. Also, provide education on rate structures,
car groups and pricing strategies.
o Advertising & marketing strategies (also assist
in funding certain programs).
o Automation/System advice, including
coordination of installations, and training.
4
o Coordinate & direct regional meetings, conventions and
periodic management seminars (topics include fleet planning,
managing for profit, etc.).
Other
o Licensee shall issue, not less often than annually, for
distribution among System Licensees, travelers, travel agents, customers, and
others, as determined by Licensor in its sole discretion, a directory which
contains the addresses and telephone numbers of Rental Locations operating
under the System, in such format as currently produced or as Licensor may in
its sole discretion approve, and Licensee shall list such System Licensees
whenever deemed appropriate by Licensor in such other sales promotion material
as may from time to time be developed or issued by Licensee. Licensee may, with
the approval of Licensor disseminate such information as described above in the
form of electronically or computer-generated notices and bulletins, or permit
access to such information via electronic, telecommunications or computer
systems by licensees, travelers, travel agents, customers, and others.
o Licensee shall, from time to time, at the request of the
Licensor, hold meetings, conferences and conventions for System Licensees.
Licensee shall attend such meetings, conferences, and conventions at its
expense.
5
Schedule 3
PROPRIETARY MARKS
Licensor shall, pursuant to Section 24 of the License Agreement, cause
Wizard Co., Inc. to permit Licensee to use the following Proprietary Marks in
connection with the Licensed Business:
U.S. Trademark
PENDING
PROPRIETARY MARK REGISTRATION NO. APPLICATION NO.
- ----------------- ----------------- ---------------
AUTO CARTE LOGO(DESIGN) 1,364,881
AUTOCARTE 1,348,490
AUTO-MAIL 75/279,364
AVIS 703,700
AVIS 1,071,131
AVIS 1,121,618
AVIS (SPECIAL FORM) 1,353,304
AVIS (UNDERLINED BY RED BAR) 1,660,119
AVIS ALII CLUB & DESIGN 1,683,263
AVIS AND DESIGN 1,353,305
AVIS CARES 1,681,965
AVIS CARES CONCIERGE SERVICE 74/729,085
AVIS CARES LOGO 1,671,740
AVIS CHAIRMAN'S CLUB 1,835,715
AVIS EXPRESS 1,261,964
AVIS INTERNATIONAL 758,577
AVIS LINK 1,399,851
AVIS LUBE S/7358
AVIS LUBE 1,524,787
AVIS LUBE (PLAIN BLOCK) 1,648,339
AVIS LUBE (STYLIZED) 1,649,696
AVIS LUBE (STYLIZED) 1,646,271
AVIS LUBE FAST OIL CHANGE 1,522,866
CENTER
PENDING
PROPRIETARY MARK REGISTRATION NO. APPLICATION NO.
- ---------------- ---------------- ---------------
AVIS LUBE FAST OIL CHANGE 1,528,583
CENTER
AVIS NEWS 1,011,004
AVIS ON RED RECTANGLE 1,139,027
AVIS PREFERRED 1,885,697
AVIS PREFERRED 1,755,771
AVIS RAPID RETURN 1,629,473
AVIS TRAVELER'S NETWORK 2,018,995
AVISSAVER 1,804,818
AVISSAVER WEEKEND ESCAPES 1,987,590
AVISVISION 180 1,718,922
CITYTRAVELER 1,718,837
CLUB RED 1,979,199
CYBER CITIZEN 75/000,149
CYBER CITIZEN 75/287,985
DRIVEN BY THE CUSTOMER PENDING
DRIVEN FOR DEPENDABILITY 1,531,500
HTV HOME TOWN VIEW 1,899,229
INFORMATION SUPERHIGHWAY 74/667,432
ROAD WARRIOR
PREFERRED EXPRESS 1,733,617
PREFERRED LOGO 1,821,729
PREFERRED RENTER 1,728,190
RENTSAVERS 1,712,287
RES-O-MATIC 75/279,365
RETURN VALET 2,104,729
ROUTE NAVIGATOR 74/688,466
ROVING RAPID RETURN 1,648,373
SATELLITE GUIDANCE 74/646,582
SAVEUS AVIS ONCALL 1,974,634
SUMMER RENT CONTROL 1560/77
PENDING
PROPRIETARY MARK REGISTRATION NO. APPLICATION NO.
- ---------------- ---------------- ---------------
TRAVEL WIZ 74/686,692
TRYING HARDER TOGETHER 1,567,569
VACATION SUNSATION 1,640,802
WATSON (THE WIZARD) COPY- PENDING
RIGHT OF CHARACTER
WE TRY HARDER 1,718,765
WE TRY HARDER (BLOCK) 1,967,829
WE TRY HARDER (LOWER CASE) 1,681,462
WE'RE TRYING HARDER THAN 1,573,885
EVER
WEATHERFAX 75/084,572
WINTER RENT CONTROL 1,605,970
WIZARD 924,856
WIZARD OF AVIS 1,003,355
WIZARD WIZDOM 1,997,917
YOUR PREFERRED CONNNECTION 74/686,693
ZAP 1,459,480
Schedule 4
TERRITORIES OF OTHER SYSTEM LICENSEES
AVIS RENT A CAR SYSTEM, INC.
FRANCHISED LICENSEE LOCATIONS
REVISED 7/1/97
"1955" Type Franchise Agreements 292
"1992" Type Franchise Agreements 17
Letter Agreements (1955) Type 3
Agency Agreements (1955) Type 1
"1955" Type Truck Franchise Agreements 134
CITY-STATE DATE TYPE
---------- ---- ----
1 Birmingham, AL Sep-59 B
Anniston, AL Nov-69 C
Tuscaloosa, AL Mar-66 B
Columbus, GA Aug-83 C
2 Dothan, AL May-74 C
3 Huntsville, AL Apr-56 B
Decatur, AL Feb-64 B
Florence, AL Apr-87 C
4 Mobile, AL May-63 C
Point Clear, AL Aug-69 C
5 Montgomery, AL Oct-51 B
Columbia, SC Oct-59 B
Camden, SC Sep-61 B
Sumter/Selma, AL Oct-73 C
Greenville, AL Feb-79 C
Macon, GA May-96 New Agreement
Greenwood, SC May-96 New Agreement
6 Little Rock, AR Sep-52 B
El Dorado, AR May-68 B
Fayetteville, AR Oct-70 C
CITY-STATE DATE TYPE
---------- ---- ----
Fort Smith, AR Sep-64 B
Harrison, AR Jun-75 C
Hot Springs, AR Jan-62 B
Jonesboro, AR Dec-61 C
Pine Bluff, AR Dec-55 B
Stuttgart, AR Nov-56 C
Texarkana, AR May-72 C
Savannah, GA Jan-87 B
Midland, TX Dec-90 B
Abilene, TX Dec-90 B
San Angelo, TX Dec-90 C
Clovis, NM Dec-90 C
Albany, GA Apr-94 B
7 Los Angeles, CA Jan-53 C
Arcadia, CA Oct-79 C
Alhambra, CA Oct-79 C
Azusa, CA Oct-79 C
Bakersfield, CA Oct-78 B
Beverly Hills, CA May-56 C
Bishop, CA Aug-76 C
Burbank, CA Jan-56 C
Coronado, CA May-56 C
Culver City, CA Jun-61 C
Disneyland, CA Aug-61 C
Glendale, CA May-56 C
Glendora, CA Oct-79 C
Imperial, CA Jul-80 C
Lancaster, CA Jan-56 C
Lennox, CA Dec-77 C
Long Beach, CA Jan-56 C
Marina Del Rey, CA Feb-78 C
CITY-STATE DATE TYPE
---------- ---- ----
Monrovia, CA Oct-79 C
Montebello, CA Oct-79 C
Monterey Parks, CA Oct-79 C
Oceanside, CA Sep-78 B
Oxnard, CA Jul-60 C
Palm Desert, CA Jul-74 C
Palm Springs, CA May-56 C
Pasedena, CA Jan-56 C
Pico Rivera, CA Oct-79 C
Ridgecrest, CA Sep-72 B%
San Diego, Ca Jan-56 C
Santa Barbara, CA Jan-56 C
Santa Monica, CA Jan-56 C
South Gate, CA Jun-61 C
Thousand Oaks, CA Jan-75 C
Van Nuys, CA Nov-67 C
Ventura, CA Mar-61 C
Vernon, CA Jun-61 C
Victorville, CA Sep-72 B
West Covina, CA Oct-79 C
Whittier, CA Oct-79 C
Yuma, AZ Jul-80 B
Las Vegas, NV Jan-56 B
Barstow, CA Nov-87 B
8 McKinleyville, CA Jul-93 C
9 St. Simons Island, GA May-61 C
Brunswick, GA May-61 C
10 Valdosta, GA Nov-77 C
11 Galesburg, IL Mar-82 C
12 Evansville, IN Sep-54 B
13 Valparaiso, IN Feb-71 B
CITY-STATE DATE TYPE
---------- ---- ----
14 Burlington, IA Dec-73 C
15 Cedar Rapids, IA Nov-60 C
16 Davenport, IA May-68 C
Dubuque, IA Jan-75 C
Waterloo, IA May-78 C
Peoria, IL Jan-87 B
Bloomington, IL Jan-87 C
Champaign, IL Jan-87 B
Decatur, IL Jan-87 B
Pekin, IL Jan-87 C
Springfield, IL Jan-87 B
Danville, IL Jan-87 B
17 Dex Moines, IA Jan-63 C
18 Sioux City, IA May-90 C
19 North Platte, NE Apr-89 C
20 Salina, KS Dec-94 C
Hays, KS Dec-96 C
Great Bend, KS Feb-96 C
Independence, KS Dec-95 New Agreement
Topeka, KS Dec-95 New Agreement
McPherson, KS Dec-95 New Agreement
21 Garden City, KS Aug-85 C
Liberal, KS Feb-84 C
22 Lexington, KY Sep-56 B
Frankfort, KY Dec-61 B
23 Alexandria, LA Jan-78 C
Gulfport, MS Feb-84 C
24 Shreveport, LA Aug-54 B
Monroe, LA Jun-57 B
25 Presque Isle, ME Jun-73 C
26 Alpena, MI Aug-71 C
CITY-STATE DATE TYPE
---------- ---- ----
Salt Ste. Marie, MI Jun-74 B
27 Hancock, MI Apr-56 C
28 Iron Mountain, MI Jun-60 C
29 Kalamazoo, MI Feb-72 C
Benton, MI Aug-76 C
Traverse City, MI Jun-73 C
30 Pellston, MI Aug-89 C
Charlevoix, MI Jun-91 C
Gaylord, MI Aug-91 C
31 Duluth, MN Jan-65 B
Rhinelander, WI May-85 C
International Falls, MN Apr-95 New Agreement
Bemidji, MN Apr-95 New Agreement
Hibbing, MN Apr-95 New Agreement
Eveleth, MN Apr-95 New Agreement
Marquette, MI Jun-96 New Agreement
Brainerd, MN Jun-96 New Agreement
32 Rochester, MN Dec-60 B
Stevens Point, WI Aug-81 C
Eau Claire, WI Aug-81 C
Land O'Lakes, WI Aug-81 C
Marshfield, WI Aug-81 C
Wausau, WI Aug-81 C
33 Springfield, MO Mar-70 C
Branson, MO Apr-78 C
Joplin, MO May-84 C
34 Butte, MT Jan-87 C
Helena, MT Jan-90 C
Glacier Park, MT May-94 C
Great Falls, MT May-94 C
35 Glendive, MT Jul-87 C
CITY-STATE DATE TYPE
---------- ---- ----
Sidney, MT Jul-87 C
36 Missoula, MT Sep-89 C
Kalispell, MT Sep-89 C
Billings, MT Feb-95 C
37 McCook, NE Aug-72 C
38 Manchester, NH Jun-75 C
Hampton, NH Apr-78 C
Nashua, NH Jun-75 C
Salem, NH Jun-76 C
Brattleboro, VT Jul-76 C
Merrimack, NH May-82 Letter Agreement
Laconia, NH Oct-82 Letter Agreement
Keene, NH Dec-89 C
39 Matawan, NJ Nov-64 B
Freehold, NJ Oct-60 B
Lakewood, NJ Oct-60 B
Point Pleasant, NJ Oct-60 B
Port Monmouth, NJ Nov-64 B
Sayreville, NJ Dec-62 B
Toms River, NJ Oct-60 B
Red Bank, NJ Jun-91 B
Eatontown, NJ May-93 New Agreement
Wall, NJ Apr-95 New Agreement
40 Piscataway (Plain), NJ Jun-57 B
Cranford, NJ Feb-58 B
Dover, NJ Dec-61 B
East Orange, NJ Aug-74 T
(Truck)
Flemington, NJ Jun-62 B
Fort Lee, NJ Jun-61 T
Hackettstown, NJ Dec-61 B
Linden, NJ Aug-60 B
CITY-STATE DATE TYPE
---------- ---- ----
Madison, NJ May-65 B
Millburn, NJ Aug-74 B
Montclair, NJ Jul-61 B
Morristown, NJ Aug-60 B
New Brunswick, NJ Apr-60 B
Oakland, NJ Aug-74 T
(Truck)
Troy Hills, NJ Aug-74 B
Perth Amboy, NJ Aug-60 B
Rahway, NJ Sep-60 B
Ridgefield, NJ Jul-61 B
Ridgewood, NJ Jul-61 B
Saddle Brook, NJ Aug-74 T
(Truck)
Somerville, NJ Mar-58 B
Springfield, NJ Aug-74 B
Roxbury, NJ Aug-74 B
Summit, NJ May-61 B
Union, NJ Jan-60 B
Port Jervis, NJ Dec-61 B
West Orange, NJ Aug-81 C
41 Roswell, NM Feb-84 C
Santa Fe, NM Apr-65 C
Los Alamos, NM Apr-66 C
Alamogordo, NM Apr-95 New Agreement
42 Albany, NY Dec-64 B
Schenectady, NY Dec-64 B
Troy, Watervliet, NY Dec-64 B
Rutland, VT Sep-91 C
Hanover, NH Oct-95 B
Springfield, VT Aug-96
43 Plattsburgh, NY Sep-82 C
CITY-STATE DATE TYPE
---------- ---- ----
Lake Placid, NY Sep-82 B
44 White Plains, NY Jan-61 B
Larchmont, NY Jan-61 B
Mamaroneck, NY May-76 B
Rye, Tarrytown, NY Jan-61 B
Scarsdale, NY Jan-61 B
45 Wilmington, NC Nov-71 B%
Florence, SC Sep-74 B%
Rocky Mount, NC Sep-86 B
Goldsboro, NC Sep-86 B
Greenville, NC Sep-86 C
Kinston, NC Sep-86 B
Jacksonville, NC Sep-86 C
Morehead City, NC Sep-86 B
New Bern, NC Sep-86 B
46 Bismarck, ND Oct-64 B
47 Fargo, ND Oct-71 C
48 Grand Forks, ND Dec-88 C
49 Jamestown, ND Dec-85 C
50 Minot, ND Jan-81 C
Williston, ND Jun-81 C
Aberdeen, SD Jul-77 C
51 Cambridge, OH Jan-87 C
52 Lima, OH Dec-82 C
53 Enid, OK Jul-63 C
54 Medford, OR Dec-91 C
55 Harrisburg, PA Sep-66 B%
State College, PA Mar-94 New Agreement
Mechanicsburgh, PA Mar-94 New Agreement
Hershey, PA Mar-94 New Agreement
56 Lancaster, PA Mar-57 C
CITY-STATE DATE TYPE
---------- ---- ----
57 New Kensington, PA Apr-59 B
Monroeville, PA Apr-59 B
Oakmont, PA Feb-61 B
Vandergrift, PA Feb-61 T
Wilkensburg, PA Feb-61 B
58 Greensburg, PA Jul-88 B
Waltz Mills, PA Feb-92 Agency Agreement
59 Pierre, SD Apr-79 C
60 Rapid City, SD Feb-92 C
Sioux Falls, SD Aug-95 C
61 Kingsport, TN Apr-81 B%
Greenville, TN Oct-81 C
62 Nashville, TN Jun-65 C
Chattanooga, TN Jun-65 C
Knoxville, TN Oct-76 C
Memphis, TN Jun-65 C
Olive Branch, MS Jul-76 C
63 Amarillo, TX Jan-78 B
Lubbock, TX Jun-75 B
64 Corpus Christi, TX Jan-56 B
Brownsville, TX Jan-56 B
Harlingen, TX Jan-56 B
McAllen, TX Jan-56 B
Rockport, TX Apr-81 C
S. Padre Island, TX May-79 C
Victoria, TX Feb-56 B
Laredo, TX Dec-92 B
65 Dallas, TX Jan-56 B
Austin, TX Apr-56 B
Fort Worth, TX Mar-56 B
San Antonio, TX Jul-57 B
CITY-STATE DATE TYPE
---------- ---- ----
66 Ogden, UT Apr-94 B
67 St. George, UT Oct-74 C
Cedar City, UT Sep-77 C
Page, AZ May-75 C
Vernal, UT Feb-82 C
Ely, NV Mar-82 Letter Agreement
Elko, NV Oct-79 C
68 Burlington, VT Feb-63 C
69 Richmond, VA Mar-56 B
Charlottesville, VA Sep-58 B
Harrisonville, VA Jul-65 B
Lynchburg, VA Dec-61 B
Newport, VA May-57 B
Petersburg, VA Jul-65 B
Waynesboro, VA Apr-60 B
Salisbury, MD May-87 B%
Cambridge, Easton, MD May-87 C
Dover, DE May-87 B%
Seaford, DE May-87 C
70 Roanoke, VA Apr-79 B
Bluefield, WV Feb-81 C
W. Sulpher Sprs, WV Dec-81 C
Clarksburg, WV Aug-83 B
Fairmount, WV Aug-83 B
Morgantown, WV Aug-83 B
Columbus, MS Oct-86 C
Paducah, KY Aug-77 C
Greenville, MS Jan-90 C
Longview, TX Feb-90 C
Tyler, TX Feb-90 C
CITY-STATE DATE TYPE
---------- ---- ----
Killeen, TX Mar-91 C
College Station, TX Jan-91 C
Temple, TX Mar-91 C
Waco, TX Oct-90 C
Meridan, MS Sep-91 B
71 Appleton, WI Oct-58 C
Green Bay, WI Jul-63 C
Madison, WI Jun-72 C
Wisconsin Dells, WI Apr-78 C
Menominee, MI Jan-73 C
Sturgeon Bay, WI Sep-68 C
LaCrosse, WI Mar-85 C
72 Casper, WY Jul-65 C
Laramie, WY Jul-76 C
Riverton, WY Dec-69 B
Cody, WY Mar-89 B
73 Sheridan, WY Jul-78 B
Gillette, WY Jul-78 B%
74 Anchorage, AK Apr-56 B%
Fairbanks, AK Apr-56 B%
Juneau, AK Apr-56 B%
Kodiak, AK Apr-56 B%
75 Craig, CO Sep-68 T
76 Kelso, WA Feb-69 T