Considering the litigation disclosed in Item 3, what impact might this have on a Budget franchisee's ability to operate within their designated territory (Item 12)?

Budget grants licenses to operate a Budget Franchise to persons with the ability to operate and promote a Budget Franchise in a particular geographic territory. Budget will assign you a territory in which to operate under the Budget License Agreement and in which you choose your business locations, subject to Budget's approval (see Item 11) Because the size of the licensed territory depends on factors like population, the presence or absence of an airport, and your operational abilities and experience, it is not possible to specify the minimum area granted to a Budget Franchise. The territory is usually described by political boundaries (for example, part of a city or county), but in certain areas might be a circle with your location at the center. Budget may use accepted industry parameters, census tracts, population densities, zip code boundaries, buying patterns, traffic counts, and projected commercial and residential growth to determine the territory's boundaries. However, a territory will not usually include a population of less than 25,000 people. During the term of your Budget License Agreement and subject to your compliance with all of your other obligations under the Budget License Agreement, Budget will not operate on its own behalf, or grant a license to another party to operate, a Budget Franchise within your territory.

You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.

Nothing in the Budget License Agreement prohibits Budget or its parent company, subsidiaries, or affiliates from: (a) engaging in the activities referred to above; (b) operating or granting others the right to operate, Budget Rent A Car businesses in the licensed territory that offer to rental vehicle other than the Vehicles including, but not limited to, renting or leasing motor vehicles that are designed, used or maintained for the transportation of property, cargo or goods (collectively defined as "Trucks"); or (c) selling their assets, engaging in a public offering or private placement of ownership interests, merging with or acquiring other corporations or entities, or being acquired by another corporation or entity (including a corporation or entity that owns or operates systems or chains that may be competitive with or similar to the Network).

Budget reserves all rights not expressly granted to you under your Budget License Agreement, including the rights of Budget and its affiliates to: (1) operate, and grant others the right to operate Budget Franchises outside your licensed territory and, under certain circumstances (for National Accounts or if

you fail to comply with the Budget License Agreement, as described below), inside the licensed territory, on any terms and conditions Budget deems appropriate; (2) hire and/or appoint sales persons and general sales agents and negotiate and enter into local, regional, national, and international sales and marketing agreements with persons or entities located within your licensed territory; (3) use Budget's Proprietary Marks for any purpose within your licensed territory, other than for the operation of a Budget Rent A Car business location offering for rental the vehicles offered through your Budget Franchise ("Vehicles"), subject to Budget's rights under the Budget License Agreement; and (4) operate, and grant others the right to operate, businesses (including businesses that offer for rent or sale Vehicles and other motorized and non-motorized equipment and parking business) outside and within the licensed territory under trademarks different than Budget's Proprietary Marks.

Budget and its affiliates have established, and may in the future establish, other franchises or company-owned outlets or other channels of distribution selling or leasing products or services similar to those of a Budget Franchise under different trademarks or under Budget's Proprietary Marks. You may not use alternative distribution channels to make sales and you will receive no compensation for our sales through alternative distribution channels.

As described in Item 1, our affiliates currently operate and grant franchises for businesses that rent vehicles without drivers to the general public. Such affiliates' business locations might be located in your licensed territory, and these locations (whether within or outside your licensed territory) may solicit and accept orders from customers within your licensed territory. Likewise, your Budget Franchise may solicit and accept orders from customers and potential customers of our affiliates' business locations, without compensation to you. Budget is under no obligation to take any action if conflicts arise concerning Budget Franchise owners and our affiliates' business operators.

If you fail to: (i) open and continue operating the required minimum number of locations for your Budget Franchise, including requirements to develop additional rental offices at Budget's request; (ii) achieve and/or maintain average market penetration quotas Budget periodically establishes in the Budget License Agreement for automobile penetration; or (iii) participate in and comply with mandatory programs; then Budget may, in lieu of terminating your Budget License Agreement and in its sole discretion on 30 days' notice to you: (a) terminate the Budget License Agreement with respect to the portion of the licensed territory that Budget determines you have failed to develop; or (b) convert your exclusive rights in the geographic market that Budget determines is underdeveloped, and/or your rights with respect to those products and services that Budget determines are underdeveloped, to become non-exclusive in nature.

You may serve any customer without regard to his or her domicile. You may not operate your Budget Franchise or any part of it from a location outside the licensed territory. You may not pick up customers who reside outside your Budget Franchise's territory unless authorized by Budget in writing. Otherwise, there are no restrictions on your accepting customers who reside outside your licensed territory or on other Network members' accepting customers who reside inside your licensed territory. You must obtain Budget's prior written consent for your initial location, any change in your location, or construction of additional facilities (see Item 11).

You have no options, rights of first refusal or similar rights to acquire additional franchises within your licensed territory or contiguous territories. As described above in this Item, your exclusive right to the licensed territory depends on your meeting market penetration quotas for automobile rental and otherwise complying with your Budget License Agreement. In addition, if you do not meet minimum fleet and royalty requirements set forth in the Budget License Agreement, you may risk termination of your Budget Franchise. Budget may negotiate development terms for the Budget License Agreements it offers to Budget Licensees.

You may not relocate your Budget Franchise without Budget's prior written approval. You may apply for the right to open additional Budget Franchises under separate franchise agreements, but we have

no obligation to allow you to open additional Budget Franchises. Budget does not compensate you for soliciting or accepting orders from persons residing in your licensed territory.