Document:

Exhibit 10.2

 

TAX RECEIVABLE AGREEMENT

 

by and among

 

VERRA MOBILITY CORPORATION,

 

THE STOCKHOLDERS IDENTIFIED HEREIN,

 

and

 

PE GREENLIGHT HOLDINGS, LLC,

 

IN ITS CAPACITY AS THE STOCKHOLDER REPRESENTATIVE

 

Dated as of [·], 2018

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I.   DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
1.1
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
1.2
    	
Terms Generally
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE II.   DETERMINATION OF CERTAIN REALIZED TAX BENEFIT
    	
10
    
	
 
    	
 
    	
 
    
	
2.1
    	
Tax Benefit Schedule
    	
10
    
	
 
    	
 
    	
 
    
	
2.2
    	
Procedure; Amendments
    	
11
    
	
 
    	
 
    	
 
    
	
2.3
    	
Consistency with Tax   Returns
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE III.   TAX BENEFIT PAYMENTS
    	
12
    
	
 
    	
 
    	
 
    
	
3.1
    	
Payments
    	
12
    
	
 
    	
 
    	
 
    
	
3.2
    	
Duplicative Payments
    	
13
    
	
 
    	
 
    	
 
    
	
3.3
    	
Stock and Stockholders   of the Corporate Taxpayer
    	
13
    
	
 
    	
 
    	
 
    
	
3.4
    	
Interest Amount   Limitation
    	
13
    
	
 
    	
 
    	
 
    
	
3.5
    	
Day Count Convention
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE IV.   TERMINATION
    	
13
    
	
 
    	
 
    	
 
    
	
4.1
    	
Early Termination and   Breach of Agreement
    	
13
    
	
 
    	
 
    	
 
    
	
4.2
    	
Early Termination   Notice
    	
14
    
	
 
    	
 
    	
 
    
	
4.3
    	
Payment upon Early   Termination
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE V.   SUBORDINATION AND LATE PAYMENTS
    	
16
    
	
 
    	
 
    	
 
    
	
5.1
    	
Subordination
    	
16
    
	
 
    	
 
    	
 
    
	
5.2
    	
Late Payments by the   Corporate Taxpayer
    	
16
    
	
 
    	
 
    	
 
    
	
5.3
    	
Payment Deferral
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE VI.   CERTAIN COVENANTS
    	
17
    
	
 
    	
 
    	
 
    
	
6.1
    	
Participation in the   Corporate Taxpayer’s Tax Matters
    	
17
    
	
 
    	
 
    	
 
    
	
6.2
    	
Consistency
    	
17
    
	
 
    	
 
    	
 
    
	
6.3
    	
Cooperation
    	
17
    
	
 
    	
 
    	
 
    
	
6.4
    	
Future Indebtedness
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE VII.   MISCELLANEOUS
    	
17
    
	
 
    	
 
    	
 
    
	
7.1
    	
Notices
    	
17
    
	
 
    	
 
    	
 
    
	
7.2
    	
Counterparts
    	
18
    
	
 
    	
 
    	
 
    
	
7.3
    	
Entire Agreement; Third   Party Beneficiaries
    	
19
    
	
 
    	
 
    	
 
    
	
7.4
    	
Severability
    	
19
    

 

i

 

	
7.5
    	
Successors; Assignment;   Amendments; Waivers
    	
19
    
	
 
    	
 
    	
 
    
	
7.6
    	
Titles and Subtitles
    	
19
    
	
 
    	
 
    	
 
    
	
7.7
    	
Governing Law
    	
20
    
	
 
    	
 
    	
 
    
	
7.8
    	
Consent to   Jurisdiction; Waiver of Jury Trial
    	
20
    
	
 
    	
 
    	
 
    
	
7.9
    	
Reconciliation
    	
20
    
	
 
    	
 
    	
 
    
	
7.10
    	
Withholding
    	
21
    
	
 
    	
 
    	
 
    
	
7.11
    	
Admission of the   Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets
    	
21
    
	
 
    	
 
    	
 
    
	
7.12
    	
Confidentiality
    	
21
    
	
 
    	
 
    	
 
    
	
7.13
    	
Change in Law
    	
22
    
	
 
    	
 
    	
 
    
	
7.14
    	
Independent Nature of   Stockholders’ Rights and Obligations
    	
22
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
Form of Joinder
    	
 
    
	
 
    	
 
    	
 
    
	
Schedule   1
    	
Stockholders
    	
 
    
				

 

ii

 

This TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of [CLOSING DATE], is hereby entered into by and among Verra Mobility Corporation, a Delaware corporation (the “Corporate Taxpayer”), the persons identified as “Stockholders” on Schedule 1 hereto (each, including its assignees, a “Stockholder” and together the “Stockholders”) and PE Greenlight Holdings, LLC, a Delaware limited liability company, solely in its capacity as the stockholders’ representative thereunder (the “Stockholder Representative”) (the Corporate Taxpayer, Stockholders and Stockholder Representative, collectively the “Parties”).

 

RECITALS

 

WHEREAS, the Stockholders listed on Schedule 1 hereto are certain of the historic owners of the stock of Greenlight Holding II Corporation, a Delaware corporation (“Greenlight”);

 

WHEREAS, on June 21, 2018, Greenlight, the Corporate Taxpayer, the Stockholder Representative, AM Merger Sub I, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Corporate Taxpayer (“First Merger Sub”), and AM Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Corporate Taxpayer (“New ATS”), entered into the certain Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which First Merger Sub will merge with and into Greenlight, the separate corporate existence of First Merger Sub will cease and Greenlight as the surviving corporation will become a wholly-owned subsidiary of the Corporate Taxpayer (the “First Merger”) and, as part of an integrated transaction, immediately following the First Merger, Greenlight will merge with and into New ATS, the separate corporate existence of Greenlight will cease and New ATS as the surviving company will continue as a wholly-owned subsidiary of the Corporate Taxpayer (the “Second Merger”, and together with the First Merger, the “Mergers”);

 

WHEREAS, the acquisition of Highway Toll Administration, LLC (“Highway Toll”) by ATS Consolidated, Inc. (an indirect Subsidiary of Greenlight) pursuant to the certain unit purchase agreement, dated February 3, 2018 (the “Historical Transaction”), resulted in an increase to the tax basis of certain intangible assets of Highway Toll;

 

WHEREAS, the income, gain, loss, deduction and other Tax items of the Corporate Taxpayer and its wholly owned Subsidiaries (as defined below) may be affected by the Additional Basis Recovery (as defined below) relating to the Historical Transaction; and

 

WHEREAS, the Parties desire to make certain arrangements with respect to the effect of the Additional Basis Recovery on the actual liability for Taxes of the Corporate Taxpayer;

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective covenants and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

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ARTICLE I.

 

DEFINITIONS

 

1.1                               Definitions.  As used in this Agreement, the terms set forth in this ARTICLE I have the following meanings.

 

“Additional Basis Recovery” means any (a) amortization deductions for Tax purposes attributable to the increase in tax basis of each Applicable Asset resulting from the Historical Transaction (whether as a result of Section 1012, 743, 734 of the Code and the Treasury Regulations thereunder or otherwise) (including, for the avoidance of doubt, any tax basis of assets described in clause (ii) of the definition of Applicable Asset attributable to such increase in tax basis) and (b) without duplication, any reduction of items of gain or income or increase in items of loss or deductions attributable to such increase in tax basis of amortizable assets.

 

“Advisory Firm” means any accounting firm or any law firm that, in either case, is nationally recognized as being expert in tax matters.

 

“Affiliate” means, with respect to any specified Person, (a) any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person, (b) a Member of the Immediate Family of such specified Person, and (c) any investment fund advised or managed by, or under common control or management with, such specified Person.

 

“Agreed Rate” means LIBOR plus 100 basis points.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Amended Schedule” has the meaning set forth in Section 2.2(b).

 

“Applicable Asset” means (i) any intangible asset that is amortizable under Section 197, or other provision, of the Code that was held by Highway Toll or its Subsidiaries immediately after the Historical Transaction and (ii) any asset that is “substituted basis property” as defined in the Code with respect to any asset described in clause (i) (or any other asset described in this clause (ii)); provided, that Applicable Asset does not include any asset or portion thereof as to which there was a Divesture or that is “substituted basis property” with respect to any asset (or portion thereof) as to which there was a Divestiture, in each case, beginning on the effective date of the Divestiture.

 

“Assumed State and Local Tax Rate” means, with respect to any Taxable Year, the product of (a) the excess of (i) one hundred percent (100%) over (ii) the highest U.S. federal corporate income tax rate for such Taxable Year multiplied by (b) the sum, with respect to each state and local jurisdiction in which the Corporate Taxpayer files Tax Returns, of the products of (i) the Corporate Taxpayer’s Tax apportionment rate(s) for such jurisdiction for such Taxable Year multiplied by (ii) the highest corporate Tax rate(s) for such jurisdiction for such Taxable Year, provided that, to the extent that state and local income taxes become non-deductible in whole or in part as a result of a change in U.S. federal income tax law with respect to a Taxable

 

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Year, the Assumed State and Local Tax Rate for such Taxable Year shall be equitably adjusted to reflect such change in law.

 

“Board” means the Board of Directors of the Corporate Taxpayer.

 

“Business Day” means any day, other than Saturday, Sunday or any other day on which banks located in the State of New York are authorized or required to close.

 

“Change in Control” shall be deemed to have occurred upon:

 

(a)                                 the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the Corporate Taxpayer’s assets (determined on a consolidated basis) to any person or group (as such term is used in Section 13(d)(3) of the Exchange Act) other than to (i) any Subsidiary of the Corporate Taxpayer or (ii) an entity if the Voting Securities of the Corporate Taxpayer outstanding immediately prior thereto represent at least 50.1% of the total voting power represented by the Voting Securities of such entity outstanding immediately after such sale, lease or transfer; provided, that, for clarity and notwithstanding anything to the contrary, neither the approval of nor consummation of a transaction treated for U.S. federal income tax purposes as a liquidation into the Corporate Taxpayer of its wholly owned Subsidiaries or merger of such entities into one another will constitute a “Change in Control”;

 

(b)                                 the merger, reorganization or consolidation of the Corporate Taxpayer with any other person, other than a merger, reorganization or consolidation which would result in the Voting Securities of the Corporate Taxpayer outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 50.1% of the total voting power represented by the Voting Securities of the Corporate Taxpayer or such surviving entity outstanding immediately after such merger or consolidation;

 

(c)                                  the liquidation or dissolution of the Corporate Taxpayer other than a liquidation or dissolution which substantially all of the Corporate Taxpayer’s assets (determined on a consolidated basis) are transferred to an entity if the Voting Securities of the Corporate Taxpayer outstanding immediately prior thereto represent at least 50.1% of the total voting power represented by the Voting Securities of such entity outstanding immediately after such liquidation or dissolution; or

 

(d)                                 the acquisition, directly or indirectly, by any person or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporate Taxpayer or (ii) a corporation or other entity owned, directly or indirectly, by the stockholders of the Corporate Taxpayer in substantially the same proportions as their ownership of stock of the Corporate Taxpayer) of more than 50.1% of the aggregate voting power of the Voting Securities of the Corporate Taxpayer other than an acquisition by an entity if the Voting Securities of the Corporate Taxpayer outstanding immediately prior thereto represent at least 50.1% of the total voting power represented by the Voting Securities of such entity outstanding immediately after such acquisition.

 

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“Closing Date” means the date on which the closing of the transactions contemplated by the Merger Agreement occur.

 

“Code” means the Internal Revenue Code of 1986, as amended and any successor U.S. federal income tax law.  References to a section of the Code include any successor provision of Law.

 

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of Voting Securities, by contract or otherwise.

 

“Corporate Taxpayer” has the meaning set forth in the Preamble.

 

“Corporate Taxpayer Group” means any of the Corporate Taxpayer and its Subsidiaries.

 

“Corporate Taxpayer Return” means the U.S. federal, state or local Tax Return, as applicable, of the Corporate Taxpayer or any wholly owned Subsidiary of the Corporate Taxpayer (and any Tax Return filed for a consolidated, affiliated, combined or unitary group of which the Corporate Taxpayer or any Subsidiary of the Corporate Taxpayer is a member) filed with respect to Taxes for any Taxable Year.

 

“Cumulative Net Realized Tax Benefit” means, for a Taxable Year, the cumulative amount of Realized Tax Benefits for all Taxable Years or portions thereof, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period, increased pursuant Section 3.1(d) (to the extent applicable).  The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year or portion thereof shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination. If a Cumulative Net Realized Tax Benefit is being calculated with respect to a portion of a Taxable Year, then calculations of the Cumulative Net Realized Tax Benefit (including determinations relating to Additional Basis Recovery to the extent applicable) shall be made as if there were an interim closing of the books and the Taxable Year had closed on the relevant date.

 

“Default Rate” means LIBOR plus 500 basis points.

 

“Determination” has the meaning ascribed to such term in Section 1313(a) of the Code or similar provisions of state and local Tax Law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax.

 

“Divestiture” means any sale, disposition or transfer of all or a portion of a direct or indirect interest in an Applicable Asset if (i) after and as a result of such sale, disposition or transfer, the full amount of Additional Basis Recovery has not been recovered and is not recoverable by the Corporate Taxpayer or its wholly owned Subsidiaries in respect of such Applicable Asset or portion thereof (or a successor asset) through amortization or otherwise for U.S. federal income tax purposes, or (ii) some or all of the gain or loss is not recognized with respect to such sale, disposition or transfer pursuant to a non-recognition provision of the Code

 

4

 

and such sale, disposition or transfer is to an entity that is not a wholly owned Subsidiary and that is not part of the Corporate Taxpayer’s U.S. federal consolidated tax group (provided that, in the case of any such entity that is a partnership, a Divestiture shall not be deemed to occur with respect to any portion of such Applicable Asset in respect of which the Corporate Taxpayer or its wholly owned Subsidiaries can continue to recover the Additional Basis Recovery in respect of such Applicable Asset through amortization for U.S. federal income tax purposes), in each case, other than any such sale, disposition or transfer that constitutes a Change in Control.

 

“Divestiture Acceleration Payment” has the meaning set forth in Section 4.3(c).

 

“Early Termination Date” means (i) subject to clause (ii), the date of an Early Termination Notice for purposes of determining the Early Termination Payment and (ii) in the event of a Divestiture the effective date of such Divestiture.

 

“Early Termination Effective Date” has the meaning set forth in Section 4.2.

 

“Early Termination Notice” has the meaning set forth in Section 4.2.

 

“Early Termination Payment” has the meaning set forth in Section 4.3(b).

 

“Early Termination Rate” means LIBOR plus 100 basis points.

 

“Early Termination Schedule” has the meaning set forth in Section 4.2.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Expert” has the meaning set forth in Section 7.9.

 

“First Merger” has the meaning set forth in the Recitals.

 

“First Merger Sub” has the meaning set forth in the Recitals.

 

“Governmental Entity” means any court, tribunal, arbitrator, authority, agency, commission, legislative body or official of the United States or any state, or similar governing entity, in the United States or in a foreign jurisdiction.

 

“Greenlight” has the meaning set forth in the Recitals.

 

“Historical Transaction” has the meaning set forth in the Recitals.

 

“Hypothetical Tax Liability” means with respect to any Taxable Year, the liability for Taxes for such Taxable Year or portion thereof of the Corporate Taxpayer and its wholly owned Subsidiaries (including for the sake of clarity Greenlight and its Subsidiaries), calculated using the same methods, elections, conventions and similar practices used in calculating the actual liability for Taxes of the Corporate Taxpayer and its Subsidiaries on the relevant Corporate Taxpayer Return, but (i) without taking into account any Additional Basis Recovery (ii) for purposes of determining the liability for U.S. federal income Taxes for a Taxable Year, without taking into account the deduction of state or local Taxes of the Corporate Taxpayer or its

 

5

 

wholly owned Subsidiaries, and (iii) for purposes of determining the liability for state and local Taxes for a Taxable Year, the combined tax rate for state and local Taxes shall be the Assumed State and Local Tax Rate for such Taxable Year; provided, that, for the avoidance of doubt, no Tax item shall be excluded pursuant to (i) to the extent that such Tax item was taken into account in the determination of the Final Tax Overpayment/Underpayment Amount (as defined in the Merger Agreement).  If a Hypothetical Tax Liability is being calculated with respect to a portion of a Taxable Year, then calculations of the Hypothetical Tax Liability shall be made as if there were an interim closing of the books of the Corporate Taxpayer and its Subsidiaries and the Taxable Year had closed on the relevant date.

 

“Interest Amount” has the meaning set forth in Section 3.1(c).

 

“IRS” means the Internal Revenue Service.

 

“Law” means any statute, law (including common law), code, treaty, ordinance, rule or regulation of any Governmental Entity.

 

“LIBOR” means during any period, an interest rate per annum equal to the one-year LIBOR reported, on the date two days prior to the first day of such period, on the Reuters Screen page “LIBOR01” (or if such screen shall cease to be publicly available, as reported by any other publicly available source of such market rate) for London interbank offered rates for U.S. dollar deposits for such period.

 

“Merger Agreement” has the meaning set forth in the Recitals.

 

“Maximum Rate” has the meaning set forth in Section 3.4.

 

“Member of the Immediate Family” means, with respect to any Person who is an individual, (a) each parent, spouse (but not including a former spouse or a spouse from whom such Person is legally separated) or child (including those adopted) of such individual and (b) each trust naming only one or more of the Persons listed in clause (a) above as beneficiaries.

 

“Mergers” has the meaning set forth in the Recitals.

 

“Net Tax Benefit” has the meaning set forth in Section 3.1(b).

 

“New ATS” has the meaning set forth in the Recitals.

 

“Objection Notice” has the meaning set forth in Section 2.2(a).

 

“Ownership Percentage” with respect to a Stockholder, means the percentage set forth opposite such Stockholder’s name on Schedule 1.

 

“Parties” has the meaning set forth in the Preamble.

 

“Payment Date” with respect to any payment required hereunder is the date such payment is actually made.

 

6

 

“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, Governmental Entity or other entity.

 

“Realized Tax Benefit” means, for a Taxable Year (or portion thereof) beginning after the Closing Date, the excess, if any, of the Hypothetical Tax Liability for such Taxable Year (or portion thereof) over the actual liability for Taxes of the Corporate Taxpayer and its wholly owned Subsidiaries for such Taxable Year (or portion thereof).  If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.  If an “actual liability” for Taxes is being calculated with respect to a portion of a Taxable Year, then calculations of such actual liability (including determinations relating to Additional Basis Recovery to the extent applicable) shall be made as if there were an interim closing of the books of the relevant entity and its Subsidiaries and the Taxable Year had closed on the relevant date.

 

“Realized Tax Detriment” means, for a Taxable Year (or portion thereof) beginning after the Closing Date, the excess, if any, of the actual liability for Taxes of the Corporate Taxpayer and its wholly owned Subsidiaries for such Taxable Year (or portion thereof), over the Hypothetical Tax Liability for such Taxable Year (or portion thereof).  If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.  If an “actual liability” for Taxes is being calculated with respect to a portion of a Taxable Year, then calculations of such actual liability (including determinations relating to Additional Basis Recovery to the extent applicable) shall be made as if there were an interim closing of the books of the relevant entity and its Subsidiaries and the Taxable Year had closed on the relevant date.

 

“Realized Tax Benefit or Detriment” has the meaning set forth in Section 2.1(a).

 

“Reconciliation Dispute” has the meaning set forth in Section 7.9.

 

“Reconciliation Procedures” has the meaning set forth in Section 2.2(a).

 

“Schedule” means any of the following: (i) a Tax Benefit Schedule or (ii) the Early Termination Schedule, and, in each case, any amendments thereto.

 

“Second Merger” has the meaning set forth in the Recitals.

 

“Second Merger Sub” has the meaning set forth in the Recitals.

 

“Senior Obligations” has the meaning set forth in Section 5.1.

 

“Stockholder” has the meaning set forth in the Preamble.

 

“Stockholder Representative” has the meaning set forth in the Preamble.

 

7

 

“Subsidiary” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than fifty percent (50%) of the voting power or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

 

“Tax Benefit Payment” has the meaning set forth in Section 3.1(b).

 

“Tax Benefit Schedule” has the meaning set forth in Section 2.1(a).

 

“Tax Return” means any return, declaration, election, report or similar statement filed or required to be filed with a Taxing Authority with respect to Taxes (including any attached schedules), including any information return, claim for refund, declaration of estimated Tax, and amendments of any of the foregoing.

 

“Taxable Year” means a “taxable year” (as defined in Section 441(b) of the Code (or comparable provisions of state or local Tax Law)) of the Corporate Taxpayer or any Subsidiary thereof, ending after the date hereof.

 

“Tax” and “Taxes” means any and all U.S. federal, state and local taxes, assessments or similar charges that are based on or measured with respect to net income or profits, and any interest related to such Tax.

 

“Taxing Authority” means any domestic, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

 

“TRA Payment” means a Tax Benefit Payment, an Early Termination Payment and any Divestiture Acceleration Payment.

 

“Treasury Regulations” means the final, temporary and (to the extent they can be relied upon) proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

 

“Valuation Assumptions” means, as of an Early Termination Date, the assumptions that (a) in each Taxable Year ending after such Early Termination Date, the Corporate Taxpayer and its wholly owned Subsidiaries will have taxable income sufficient to fully utilize the deductions described in clause (a) of the definition of Additional Basis Recovery arising during such Taxable Year or future Taxable Years in which such deductions would become available, (b) the U.S. federal income tax rates and state and local income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other Law as in effect on the Early Termination Date (but taking into account for the applicable Taxable Years adjustments to the tax rates that have been enacted as of the Early Termination Date with a delayed effective date) and (c) any loss carryovers generated by deductions described in clause (a) of the definition of Additional Basis Recovery that are available as of the Early Termination Date will be used by the Corporate Taxpayer on a pro rata basis beginning in the Taxable Year including the Early Termination Date and ending in the Taxable Year that includes the fifteenth anniversary of the Historical Transaction, (d) to the

 

8

 

extent that (A) an asset described in clause (i) of the definition of Applicable Asset is not held by the Corporate Taxpayer or a wholly owned Subsidiary as of the Early Termination Date, and (B) a non-depreciable or non-amortizable asset described in clause (ii) of the definition of Applicable Asset that is received in exchange for the asset described in Clause (A) is held by the Corporate Taxpayer or a wholly owned Subsidiary, any such non-depreciable or non-amortizable asset will be disposed of on the later of (i) the fifteenth anniversary of the Historical Transaction or (ii) the Early Termination Date, for an amount sufficient to fully utilize the tax basis with respect to such asset; provided, that in the event of a Change in Control which includes a taxable sale of such asset (including the sale of equity interests in a wholly owned Subsidiary classified as a partnership or disregarded entity that directly or indirectly owns such asset), such asset shall be deemed disposed of at the time of the Change in Control, and (e) the Corporate Taxpayer will make a Tax Benefit Payment on the due date (without taking into account automatic extensions) for each Taxable Year for which a Taxable Benefit Payment would be due.

 

“Voting Securities” means any securities of the Corporate Taxpayer which are entitled to vote generally in matters submitted for a vote of the Corporate Taxpayer’s stockholders or generally in the election of the Board.

 

1.2                               Terms Generally.  In this Agreement, unless otherwise specified or where the context otherwise requires:

 

(a)                                 the headings of particular provisions of this Agreement are inserted for convenience only and will not be construed as a part of this Agreement or serve as a limitation or expansion on the scope of any term or provision of this Agreement;

 

(b)                                 words importing any gender shall include other genders;

 

(c)                                  words importing the singular only shall include the plural and vice versa;

 

(d)                                 the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”;

 

(e)                                  the words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement;

 

(f)                                   references to “Articles,” “Exhibits,” “Sections” or “Schedules” shall be to Articles, Exhibits, Sections or Schedules of or to this Agreement;

 

(g)                                  references to the “Corporate Taxpayer Group” are references to members of the Corporate Taxpayer Group individually and collectively;

 

(h)                                 references to any Person include the successors and permitted assigns of such Person;

 

(i)                                     the use of the words “or,” “either” and “any” shall not be exclusive;

 

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(j)                                    wherever a conflict exists between this Agreement and any other agreement between the Parties, this Agreement shall control but solely to the extent of such conflict;

 

(k)                                 references to “$” or “dollars” means the lawful currency of the United States of America;

 

(l)                                     references to any agreement, contract or schedule, unless otherwise stated, are to such agreement, contract or schedule as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof;

 

(m)                             references to any law, statute, regulation or other government rule is to it as amended, consolidated, replaced, supplemented or interpreted from time to time and, as applicable, is to corresponding provisions of successor laws, statutes regulations or other government rules; and

 

(n)                                 the Parties have participated collectively in the negotiation and drafting of this Agreement; accordingly, in the event an ambiguity or question of intent or interpretation arises, it is the intention of the Parties that this Agreement shall be construed as if drafted collectively by the Parties, and that no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

ARTICLE II.

 

DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

 

2.1                               Tax Benefit Schedule.

 

(a)                                 Tax Benefit Schedule.  Within ninety (90) calendar days after the due date (taking into account valid extensions) of the U.S. federal income Tax Return of the Corporate Taxpayer for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment (collectively, a “Realized Tax Benefit or Detriment”), the Corporate Taxpayer shall provide to the Stockholder Representative a schedule showing in reasonable detail the calculation of the Realized Tax Benefit or Detriment for such Taxable Year, the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year and any Tax Benefit Payment due in respect of such Taxable Year (a “Tax Benefit Schedule”).   The Tax Benefit Schedule provided by the Corporate Taxpayer will become final as provided in Section 2.2(a) and shall be subject to amendment as provided in Section 2.2(b).

 

(b)                                 Applicable Principles.  The Realized Tax Benefit or Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability for Taxes of the Corporate Taxpayer and its wholly owned Subsidiaries for such Taxable Year (or portion thereof) attributable to the Additional Basis Recovery determined using a “with and without” methodology.  For the avoidance of doubt, the actual liability for Taxes of the Corporate and its wholly owned Subsidiaries will take into account any items attributable to Additional Basis Recovery (and any carryovers and carrybacks attributable thereto), and the Hypothetical Tax Liability shall not take into account any such items (including carryovers and carryback attributable thereto).  Carryovers or carrybacks of any Tax item attributable to the Additional

 

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Basis Recovery shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local Tax Law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type.

 

2.2                               Procedure; Amendments.

 

(a)                                 Procedure.  Every time the Corporate Taxpayer delivers to the Stockholder Representative an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.2(b), including any Early Termination Schedule or amended Early Termination Schedule, the Corporate Taxpayer shall also allow the Stockholder Representative reasonable access, at the Corporate Taxpayer’s sole cost, to the appropriate representatives, as determined by the Corporate Taxpayer, at the Corporate Taxpayer and the Advisory Firm that prepared the relevant Corporate Taxpayer Returns and Schedule in connection with a review of such Schedule. Without limiting the application of the preceding sentence, the Corporate Taxpayer shall, upon request, deliver to the Stockholder Representative work papers providing reasonable detail regarding the computations reflected in such Schedule.  An applicable Schedule or amendment thereto shall, subject to the final sentence of this Section 2.2(a), become final and binding on the Stockholder Representative and each Stockholder thirty (30) calendar days from the first date on which the Corporate Taxpayer sent the Stockholder Representative the applicable Schedule or amendment thereto unless (i) the Stockholder Representative within thirty (30) calendar days after the date the Corporate Taxpayer sent such Schedule or amendment thereto provides the Corporate Taxpayer with written notice of a material objection to such Schedule made in good faith and setting forth in reasonable detail the Stockholder Representative’s material objection along with a letter from an Advisory Firm supporting such objection, if such objection relates to the application of Tax Law (an “Objection Notice”) or (ii) the Stockholder Representative provides a written waiver of the right to provide any Objection Notice with respect to such Schedule or amendment thereto within the period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver is received by the Corporate Taxpayer.  If the Corporate Taxpayer and the Stockholder Representative are unable to resolve the issues raised in such Objection Notice within thirty (30) calendar days after receipt by the Corporate Taxpayer of the Objection Notice, the Corporate Taxpayer and the Stockholder Representative shall employ the reconciliation procedures described in Section 7.9 (the “Reconciliation Procedures”).

 

(b)                                 Amended Schedule.  The applicable Schedule for any Taxable Year shall be amended from time to time by the Corporate Taxpayer or at the request of the Stockholder Representative (i) in connection with a Determination affecting such Schedule, (ii) to correct inaccuracies in the Schedule identified after the date the Schedule was provided to the Stockholder Representative, (iii) to comply with an Expert’s determination under the Reconciliation Procedures, (iv) to reflect a change in the Realized Tax Benefit or Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other Tax item to such Taxable Year or (v) to reflect a change in the Realized Tax Benefit or Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year (any such Schedule, an “Amended Schedule”).

 

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2.3                               Consistency with Tax Returns.  Notwithstanding anything to the contrary herein, all calculations and determinations hereunder (other than, where the context does not permit, the Hypothetical Tax Liability), including the Additional Basis Recovery, the Schedules, and the determination of the Realized Tax Benefit or Detriment, shall be made in accordance with any elections, methodologies or positions taken on the relevant Corporate Taxpayer Returns.

 

ARTICLE III.

 

TAX BENEFIT PAYMENTS

 

3.1                               Payments.

 

(a)                                 Payments.  Except as provided in Section 5.3, within five (5) Business Days after a Tax Benefit Schedule with respect to a Taxable Year delivered to the Stockholder Representative pursuant to this Agreement becomes final in accordance with ARTICLE II, the Corporate Taxpayer shall pay or cause to be paid to each Stockholder the Tax Benefit Payment (if any) determined pursuant to Section 3.1(b).  Such Tax Benefit Payment shall be made, at the sole discretion of the Corporate Taxpayer, by wire or Automated Clearing House transfer of immediately available funds to the bank account previously designated by the Stockholder Representative to the Corporate Taxpayer or as otherwise agreed by the Corporate Taxpayer and Stockholder Representative (except to the extent that such amounts are required to be paid in the form of Parent Class A Stock pursuant to Section 2.11(i) of the Merger Agreement).

 

(b)                                 A “Tax Benefit Payment” in respect of a Stockholder means an amount (which shall not be less than zero) equal to such Stockholder’s Ownership Percentage of the Net Tax Benefit and the Interest Amount.  Subject to Section 3.2, the “Net Tax Benefit” for a Taxable Year shall be an amount equal to the excess, if any, of 50% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year (or portion thereof) over the total amount of Tax Benefit Payments previously made under Section 3.1(a).

 

(c)                                  The “Interest Amount” for a Taxable Year (or portion thereof) shall equal interest on the Net Tax Benefit with respect to such Taxable Year (or portion thereof) calculated at the Agreed Rate compounded annually from the due date (without extensions) for filing U.S. federal income Tax Return of the Corporate Taxpayer for such Taxable Year until the Payment Date.

 

(d)                                 Certain Adjustments.  To the extent any items attributable to Additional Basis Recovery are disallowed pursuant to a Determination or are otherwise not permitted to be taken into account in calculating “actual liability” for Taxes for purposes of determining Realized Tax Benefit or Realized Tax Detriment, and the Corporate Taxpayer or any of its Affiliates have actually recovered any amounts in respect of such items under an indemnification pursuant to the HTA Purchase Agreement (as defined in the Merger Agreement), then the Cumulative Net Realized Tax Benefit shall be increased in an amount equal to such recovery (net of any reasonable, out-of-pockets costs (including Taxes) incurred in connection with obtaining such recovery).

 

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3.2                               Duplicative Payments.  It is intended that the provisions of this Agreement will not result in a duplicative payment of any amount required under this Agreement.  It is also intended that the provisions of this Agreement, subject to ARTICLE IV and Section 7.15, will result in an amount equal to 50% of the Cumulative Net Realized Tax Benefit as of any determination date having been paid to the Stockholders pursuant to this Agreement, plus interest as provided herein; provided, that, for the avoidance of doubt, the foregoing shall not be construed as creating a clawback obligation in the event that more than 50% of the Cumulative Net Realized Tax Benefit has been paid to the Stockholders as a result of a subsequent reduction in the Cumulative Net Realized Tax Benefit pursuant to a Determination or otherwise.  The provisions of this Agreement shall be construed in the appropriate manner to ensure such intentions are realized.

 

3.3                               Stock and Stockholders of the Corporate Taxpayer.  TRA Payments and any other payments hereunder are not conditioned on the Stockholders holding any stock of the Corporate Taxpayer (or any successor thereto).

 

3.4                               Interest Amount Limitation.  Notwithstanding anything herein to the contrary, if at any time the applicable Agreed Rate or Default Rate shall exceed the maximum lawful interest rate that may be contracted for, charged, taken, received or reserved in accordance with applicable Law (the “Maximum Rate”), the Agreed Rate and Default Rate (as applicable) shall be limited to the Maximum Rate; provided, that any amounts unpaid as a result of such limitation (other than with respect to an Early Termination Payment) shall be paid (together with interest calculated at the Agreed Rate or the Default Rate (as applicable) with respect to the period such amounts remained unpaid) on subsequent payment dates to the extent not exceeding the legal limitation.

 

3.5                               Day Count Convention.  All computations using the Agreed Rate, Default Rate or Termination Rate shall use the “Actual/360” day count convention.

 

ARTICLE IV.

 

TERMINATION

 

4.1                               Early Termination, Change in Control, Breach of Agreement and Divestiture.

 

(a)                                 The Corporate Taxpayer may, with the prior written consent of a majority of the disinterested members of the Board, terminate this Agreement with respect to all amounts payable to all the Stockholders (including, for the avoidance of doubt, any transferee pursuant to Section 7.5(a)) at any time by paying or causing to be paid to such Stockholders an Early Termination Payment; provided, however, that this Agreement shall terminate with respect to any such Stockholder only upon the payment of such Early Termination Payment to such Stockholder; provided, further, that the Corporate Taxpayer may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid.  Upon payment of an Early Termination Payment to a Stockholder the Corporate Taxpayer shall not have any further payment obligations in respect of such Stockholder under this Agreement, other than for any Tax Benefit Payment (i) agreed to by the Corporate Taxpayer and such Stockholder as due and payable but unpaid as of the Early

 

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Termination Date, (ii) that is the subject of an Objection Notice, which will be payable in accordance with resolution of the issues identified in such Objection Notice pursuant to this Agreement, and (iii) due for the Taxable Year ending with or including the Early Termination Date (except to the extent that the amounts described in clauses (i), (ii) or (iii) above are included in the calculation of the Early Termination Payment).

 

(b)                                 In the event of a Change in Control or in the event that the Corporate Taxpayer materially breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder or by operation of Law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations hereunder shall be accelerated, and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such Change in Control or breach, as applicable, to the Stockholder Representative and shall include, but not be limited to, (i) the Early Termination Payment with respect to such Stockholder calculated as if an Early Termination Notice had been delivered on the date of such Change in Control or breach (and the Corporate Taxpayer shall provide the Stockholder Representative with an Early Termination Schedule, which shall become final in accordance with the procedures set forth in Section 4.2), (ii) any Tax Benefit Payment agreed to by the Corporate Taxpayer and such Stockholder as due and payable but unpaid as of the date of such Change in Control or breach, as applicable (iii) any Tax Benefit Payment that is the subject of an Objection Notice, which will be payable in accordance with resolution of the issues identified in such Objection Notice pursuant to this Agreement and (iv) any Tax Benefit Payment due for the Taxable Year ending with or including the date of such Change in Control or breach, as applicable (except to the extent that the amounts described in clauses (ii), (iii) and (iv) above are included in the calculation of the amount described in clause (i) above).  Notwithstanding the foregoing, (A) in the event of a Change in Control, each Stockholder may waive the acceleration of payments with respect to such Stockholder hereunder pursuant to this Section 4.1(b), in which case for each Taxable Year ending on or after the date of the Change in Control, all TRA Payments in respect of such Stockholder shall be calculated by applying clauses (a) and (c) of the definition of “Valuation Assumptions,” substituting in each case the term “the date of the Change in Control” for “the Early Termination Date”, and (B) in the event that the Corporate Taxpayer materially breaches this Agreement, each Stockholder shall be entitled to elect to receive the amounts set forth in clauses (i), (ii), (iii) and (iv) above or to seek specific performance of the terms hereof.  The Parties agree that it will not be considered to be a material breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within thirty (30) calendar days of the date such payment is due (for the avoidance of doubt, taking into account Section 3.4, 5.2 and 5.3).

 

(c)                                  Divestiture Acceleration Payment.  In the event of a Divestiture, the Corporate Taxpayer shall pay to the Stockholders the Divestiture Acceleration Payment in respect of such Divestiture, which shall be calculated utilizing the Valuation Assumptions.

 

4.2                               Early Termination Notice.  If the Corporate Taxpayer chooses to exercise its right of early termination under Section 4.1, the Corporate Taxpayer shall deliver to the Stockholder Representative, notice of such intention to exercise such right (“Early Termination Notice”) and a schedule (the “Early Termination Schedule”) specifying the Corporate Taxpayer’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination

 

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Payment for each Stockholder.  The Early Termination Schedule will become final and binding with respect to the Stockholder Representative and each Stockholder thirty (30) calendar days from the first date on which the Corporate Taxpayer sent the Stockholder Representative such Early Termination Schedule unless (a) the Stockholder Representative within thirty (30) calendar days after the date the Corporate Taxpayer sent such Schedule or amendment thereto provides the Corporate Taxpayer with an Objection Notice with respect to such Early Termination Schedule or (b) the Stockholder Representative provides a written waiver of the right to provide any Objection Notice with respect to such Schedule or amendment thereto within the period described in clause (a) above, in which case such Schedule or amendment thereto becomes binding on the date the waiver is received by the Corporate Taxpayer. If the Corporate Taxpayer and the Stockholder Representative, for any reason, are unable to resolve the issues raised in such Objection Notice within thirty (30) calendar days after receipt by the Corporate Taxpayer of the Objection Notice, the Corporate Taxpayer and the Stockholder Representative shall employ the Reconciliation Procedures.  The date on which every Early Termination Schedule under this Agreement becomes final with respect to all Stockholders in accordance with this Section 4.2 shall be the “Early Termination Effective Date”.

 

4.3                               Payment upon Early Termination.

 

(a)                                 Within five (5) Business Days after the Early Termination Effective Date or the effective date of the applicable Divestiture, as applicable, the Corporate Taxpayer shall pay or cause to be paid to each Stockholder an amount equal to its Early Termination Payment or Divestiture Acceleration Payment, as applicable.  Such payment shall be made, at the sole discretion of the Corporate Taxpayer, by wire or Automated Clearing House transfer of immediately available funds to a bank account or accounts designated by the applicable Stockholder or as otherwise agreed by the Corporate Taxpayer and such Stockholder (except, in each case, to the extent that such amounts are required to be paid with shares of Parent Class A Stock pursuant to Section 2.11(i) of the Merger Agreement).

 

(b)                                 An “Early Termination Payment” in respect of a Stockholder shall equal the net present value, discounted at the Early Termination Rate as of the Early Termination Date, of all Tax Benefit Payments that would be required to be paid by the Corporate Taxpayer to such Stockholder under Section 3.1(a) beginning from the Early Termination Date assuming that the Valuation Assumptions are applied.

 

(c)                                  A “Divestiture Acceleration Payment” in respect of a Stockholder, shall equal the net present value, discounted at the Early Termination Rate as of the Early Termination Date, of all Tax Benefits Payments resulting solely from the Applicable Assets (or portion thereof) that are the subject of the Divestiture (or, without duplication, any other portion of such Applicable Asset or other Applicable Asset to the extent that the Additional Basis Recovery attributable thereto is not recoverable for U.S. federal income tax purposes after the applicable Divestiture) that would be required to be paid by the Corporate Taxpayer to such Stockholder under Section 3.1(a) beginning from the Early Termination Date assuming the Valuation Assumptions are applied.  The computation of the Divestiture Acceleration Payment shall be subject to the Reconciliation Procedures.

 

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ARTICLE V.

 

SUBORDINATION AND LATE PAYMENTS

 

5.1                               Subordination.  Notwithstanding any other provision of this Agreement to the contrary, any TRA Payment (or portion thereof) required to be made to a Stockholder under this Agreement shall rank subordinate and junior in right of payment to any principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or the reorganization of the Corporate Taxpayer or any Subsidiary thereof), fees, premiums, charges, expenses, attorneys’ fees or other obligations in respect of indebtedness for borrowed money of the Corporate Taxpayer (and its wholly-owned Subsidiaries, if applicable) (“Senior Obligations”) and shall rank pari passu with all current or future unsecured obligations of Corporate Taxpayer (and its wholly-owned Subsidiaries, as applicable) that are not Senior Obligations.

 

5.2                               Late Payments by the Corporate Taxpayer.  The amount of all or any portion of any TRA Payment not made to the Stockholders when due under the terms of this Agreement (taking into account any deferral under Section 5.3) shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such TRA Payment was due and payable.

 

5.3                               Payment Deferral.

 

(a)                                 Notwithstanding anything to the contrary provided herein, to the extent that, at the time any TRA Payment becomes due and payable hereunder, (i) the Corporate Taxpayer Group is not permitted, pursuant to the terms of any outstanding or committed indebtedness for borrowed money to make such TRA Payment (not including an Early Termination Payment, other than one in connection with a Change in Control or Breach), or if, after making such TRA Payment, the Corporate Taxpayer Group would be in breach or default under the terms of any such indebtedness, or (ii) (A) the Corporate Taxpayer does not have the cash on hand to make such TRA Payment, and (B) the Corporate Taxpayer is not able to obtain cash from the Corporate Taxpayer Group to fund such TRA Payment because (1) the Corporate Taxpayer Group is not permitted, pursuant to the terms of any such indebtedness, to make tax distributions or similar payments to the Corporate Taxpayer to allow it to make such TRA Payment, or if, after making such TRA Payment, the Corporate Taxpayer Group would be in breach or default under the terms of any such indebtedness or (2) the applicable members of the Corporate Taxpayer Group do not have the cash on hand to make the payment described in clause (1) above, then, in each case, upon prior notice to the Stockholder Representative, the Corporate Taxpayer shall be permitted to defer such TRA Payment until the condition described in clauses (i) or (ii) above is no longer applicable.

 

(b)                                 If the Corporate Taxpayer defers any TRA Payment (or portion thereof) pursuant to Section 5.3(a), such deferred amount shall accrue interest at the Agreed Rate, from the date that such amounts originally became due and owing pursuant to the terms hereof to the Payment Date, compounded annually, and such deferred amounts shall not be treated as late payments or as a breach of any obligation under this Agreement, provided that, for the avoidance of doubt, if Section 5.2 becomes applicable because the conditions described in

 

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clauses (i) and (ii) in Section 5.3(a) are no longer applicable and such TRA Payment (or portion thereof) still has not been paid to the Stockholders, then Section 5.2, and not this Section 5.3(b), shall apply for the period commencing on the date on which such conditions are no longer applicable.

 

ARTICLE VI.

 

CERTAIN COVENANTS

 

6.1                               Participation in the Corporate Taxpayer’s Tax Matters.  Except as otherwise provided herein, the Corporate Taxpayer shall have full responsibility for, and sole discretion over, all Tax matters concerning the Corporate Taxpayer and its Subsidiaries, including the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes.  Notwithstanding the foregoing, the Corporate Taxpayer shall notify the Stockholder Representative of, and keep the Stockholder Representative reasonably informed with respect to, the portion of any audit of the Corporate Taxpayer and its Subsidiaries by a Taxing Authority the outcome of which is reasonably expected to affect the rights and obligations of the Stockholders under this Agreement, and shall provide to the Stockholder Representative reasonable opportunity to provide information and other input to the Corporate Taxpayer and its respective advisors concerning the conduct of any such portion of such audit.

 

6.2                               Consistency.  The Corporate Taxpayer and each Stockholder agree to report and cause to be reported for all purposes, including federal, state and local Tax purposes, all Tax-related items (including the Additional Basis Recovery and each Tax Benefit Payment) in a manner consistent with that specified by the Corporate Taxpayer in any Schedule provided by or on behalf of the Corporate Taxpayer under this Agreement unless otherwise required by Law based on written advice of an Advisory Firm.

 

6.3                               Future Indebtedness.  If the Corporate Taxpayer Group incurs any indebtedness after the date hereof, the Corporate Taxpayer shall, and shall cause each other member of the Corporate Taxpayer Group to, use commercially reasonable efforts to ensure that such indebtedness does not prohibit, at any time in which no default or event of default thereunder has occurred and is continuing: (a) in the case of the Corporate Taxpayer, TRA Payments to be made in full when due, and (b) in the case of any other member of the Corporate Taxpayer Group, payments to be made directly or indirectly to the Corporate Taxpayer to enable the Corporate Taxpayer to make TRA Payments in full when due on terms and conditions at least as favorable to the Corporate Taxpayer as those as are then market (in the good faith determination of the Corporate Taxpayer) for indebtedness of such type. The Stockholder Representative may, in its sole discretion, waive the requirements of this Section 9.4, in whole or in part.

 

ARTICLE VII.

 

MISCELLANEOUS

 

7.1                               Notices.  Any notice, request, demand, waiver, consent, approval or other communication that is required or permitted hereunder shall be in writing and shall be deemed given:  (a) on the date established by the sender as having been delivered personally, (b) on the

 

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date delivered by a private courier as established by the sender by evidence obtained from the courier, (c) on the date sent by facsimile, with confirmation of transmission, or (d) on the fifth Business Day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.  Such communications, to be valid, must be addressed as follows:

 

If to the Corporate Taxpayer, to:

 

Verra Mobility

1150 N. Alma School Road

Mesa, AZ 85201

Attn: General Counsel

Email: Rebecca.Collins@verramobility.com

 

with a required copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP
 201 Redwood Shores Parkway
 Redwood Shores, CA 94065
 Attention:                 Kyle C. Krpata
                                                                         James R. Griffin
 Fax:                                               (650) 802-3100

Email: kyle.krpata@weil.com / james.griffin@weil.com

 

If to the Stockholder Representative, to:

 

c/o Platinum Equity Advisors, LLC
 360 North Crescent Drive
 Beverly Hills, CA 91210
 Attention:  Eva Kalawski, Executive V.P. and General Counsel
 Email:        ekalawski@platinumequity.com

 

with a required copy (which shall not constitute notice) to:

 

Gibson, Dunn & Crutcher LLP
 333 South Grand Avenue 
 Los Angeles, CA 90071
 Attention:  Matthew B. Dubeck
 Email:        mdubeck@gibsondunn.com

 

Any Party may change its address, fax number or e-mail by giving the other Party written notice of its new address or fax number in the manner set forth above.

 

7.2                               Counterparts.  This Agreement may be executed in counterparts, and any Party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.  This Agreement shall become effective when each Party shall have received a counterpart of such document signed by the other Parties.  The Parties agree that the

 

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delivery of this Agreement may be effected by means of an exchange of facsimile or electronically transmitted signatures.

 

7.3                               Entire Agreement; Third Party Beneficiaries.  This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof (other than, for the avoidance of doubt, Section 2.11(i) of the Merger Agreement).  This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

7.4                               Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms of such illegal, invalid or unenforceable provision as may be possible.

 

7.5                               Successors; Assignment; Amendments; Waivers.

 

(a)                                 A Stockholder is freely permitted to transfer any of its rights (in whole or in part) without the consent of the Corporate Taxpayer or any other Person upon execution and delivery by the transferee of a joinder to this Agreement, in form and substance substantially similar to Exhibit A to this Agreement, in which the transferee agrees to become a “Stockholder” for all purposes of this Agreement, except as otherwise provided in such joinder.  Schedule 1 shall be amended to reflect any permitted transfer hereunder.

 

(b)                                 No provision of this Agreement may be amended unless such amendment is approved in writing by the Corporate Taxpayer and the Stockholders.  No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

 

(c)                                  All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the Parties and their respective successors, permitted assigns, heirs, executors, administrators and legal representatives.  The Corporate Taxpayer shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporate Taxpayer, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporate Taxpayer would be required to perform if no such succession had taken place (except to the extent expressly provided by this Agreement).

 

7.6                               Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

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7.7                               Governing Law.  This Agreement shall be governed by and interpreted and enforced in accordance with the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Laws rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

 

7.8                               Consent to Jurisdiction; Waiver of Jury Trial.  Each Party irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (unless the Federal courts have exclusive jurisdiction over the matter, in which case the United States District Court for the District of Delaware, or the Court of Chancery of the State of Delaware does not have jurisdiction, in which case the Superior Court of the State of Delaware) for the purposes of any legal proceeding arising out of this Agreement, and agrees to commence any such legal proceeding only in such courts.  Each Party further agrees that service of any process, summons, notice or document by United States registered mail to such Party’s respective address set forth herein shall be effective service of process for any such legal proceeding.  Each Party irrevocably and unconditionally waives any objection to the laying of venue of any legal proceeding out of this Agreement in such courts, and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such legal proceeding brought in any such court has been brought in an inconvenient forum.  EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING OR COUNTERCLAIM (WHETHER AT LAW, IN EQUITY, BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

7.9                               Reconciliation.  In the event that the Corporate Taxpayer and the Stockholder Representative are unable to resolve a disagreement with respect to the matters governed by ARTICLE II or ARTICLE IV within the relevant period designated in this Agreement (“Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to such Parties.  The Expert shall be a partner or principal in a nationally recognized accounting or law firm, and (unless the Corporate Taxpayer and the Stockholder Representative agree otherwise) the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporate Taxpayer or the Stockholder Representative or their Affiliates or other actual or potential conflict of interest.  If the Parties are unable to agree on an Expert within fifteen (15) calendar days of the end of the thirty (30) calendar-day period set forth in Sections 2.2 or 4.2, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise.  The Expert shall resolve any matter relating to the Early Termination Schedule or an amendment thereto within thirty (30) calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days or, in each case, as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution.  If the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement), the undisputed amount shall be paid on the date prescribed by this Agreement, subject to adjustment upon resolution.  For the avoidance of doubt, this Section 7.9 shall not restrict the ability of the Corporate Taxpayer or its Affiliates to determine when or whether to file or amend any Tax Return.  The costs and expenses relating to the engagement of such Expert or amending any Tax

 

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Return shall be borne equally by the Corporate Taxpayer and the Stockholders (on a pro rata basis based on relative proportion of all Early Termination Payments under this Agreement, measured by present value of payments due under this Agreement, using the present value calculation and assumptions described under Section 4.3(b) assuming for such purpose the Early Termination Date is the date the Reconciliation Dispute is resolved) participating in the Reconciliation Dispute.  The Corporate Taxpayer may withhold payments under this Agreement to collect amounts due under the preceding sentence.  Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.9 shall be decided by the Expert.  The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporate Taxpayer, and the Stockholder Representative, as applicable, participating in the Reconciliation Dispute and may be entered and enforced in any court having jurisdiction.

 

7.10                        Withholding.  The Corporate Taxpayer shall be entitled to deduct and withhold or cause to be deducted and withheld from any payment payable pursuant to this Agreement such amounts required to be deducted and withheld with respect to the making of such payment under the Code or any other applicable tax Law, provided, that the Corporate Taxpayer shall use commercially reasonable efforts to notify the Stockholder Representative and any applicable Stockholder of its intent to withhold at least ten (10) Business Days prior to withholding such amounts.

 

To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by the Corporate Taxpayer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to such Stockholder.

 

7.11                        Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets.  If the Corporate Taxpayer and its wholly owned Subsidiaries are or become members of a combined, consolidated, affiliated or unitary group that files a consolidated, combined or unitary income tax return pursuant to Sections 1501 et seq. of the Code or any corresponding provisions of state or local Law, then: (a) the provisions of this Agreement shall be applied with respect to the relevant group as a whole; and (b) TRA Payments, Net Tax Benefit, Cumulative Net Realized Tax Benefit, Realized Tax Benefit or Detriment and other applicable items hereunder shall be computed with reference to the consolidated (or combined or unitary, where applicable) taxable income, gain, loss, deduction and attributes of the relevant group as a whole.

 

7.12                        Confidentiality.  Each Stockholder and each of its assignees acknowledge and agree that the information of the Corporate Taxpayer is confidential and agrees that such Stockholder (or assignee) shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters acquired pursuant to this Agreement of the Corporate Taxpayer and its Affiliates and successors, learned by the Stockholder heretofore or hereafter, except in the course of performing any duties as necessary for the Corporate Taxpayer and its Affiliates, as required by Law or legal process or to enforce the terms of this Agreement.  This Section 7.12 shall not apply to (a) any information that has been made publicly available by the Corporate Taxpayer or any of its Affiliates, becomes public knowledge (except as a result of an act of the Stockholder in violation of this Agreement) or is generally known to the business community, (b) any information independently determined by a Stockholder or provided to a Stockholder by

 

21

 

a third party on a non-confidential basis and (c) the disclosure of information to the extent necessary for the Stockholder to prepare and file its Tax Returns, to respond to any inquiries regarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such Tax Returns.  Notwithstanding anything to the contrary herein or in any other agreement, the Stockholders and each of their assignees (and each employee, representative or other agent of the Stockholders or their assignees, as applicable) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure and any related tax strategies of or relating to the Corporate Taxpayer and its Affiliates, the Stockholder or its assignee, and any of their transactions or agreements, and all materials of any kind (including opinions or other tax analyses) that are provided to the Stockholder or its assignee relating to such tax treatment and tax structure and any related tax strategies.

 

If a Stockholder or an assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, the Corporate Taxpayer and its Affiliates shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Corporate Taxpayer or its Affiliates and the accounts and funds managed by the Corporate Taxpayer and that money damages alone shall not provide an adequate remedy to such Persons.  Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

 

7.13                        Change in Law.  Notwithstanding anything herein to the contrary, if, in connection with an actual or proposed change in Law, a Stockholder reasonably believes that the existence of this Agreement could cause income (other than income arising from receipt of a payment under this Agreement) recognized by such Stockholder (or its direct or indirect owners) to be treated as ordinary income rather than capital gain (or otherwise taxed at ordinary income rates) for U.S. federal income tax purposes or could have other material adverse tax consequences to such Stockholder (or its direct or indirect owners), then at the election of such Stockholder and the receipt by such Stockholder of the written consent of the Corporate Taxpayer (such consent not to be unreasonably withheld, conditioned or delayed) and to the extent specified by such Stockholder, this Agreement shall cease to have further effect with respect to such Stockholder.

 

7.14                        Independent Nature of Stockholders’ Rights and Obligations.  The rights and obligations of each Stockholder are independent of the rights and obligations of any other Stockholder. No Stockholder shall be responsible in any way for the performance of the obligations of any other Stockholder, nor shall any Stockholder have the right to enforce the rights or obligations of any other Stockholder. The obligations of each Stockholder are solely for the benefit of, and shall be enforceable solely by, the Corporate Taxpayer. The decision of each Stockholder to enter into this Agreement has been made by such Stockholder independently of any other Stockholder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Stockholder pursuant hereto or thereto, shall be deemed to constitute the Stockholders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Stockholders are in any way acting in concert or as a group with respect to such rights or obligations or the transactions contemplated

 

22

 

hereby, and the Corporate Taxpayer acknowledges that the Stockholders are not acting in concert or as a group and will not assert any such claim with respect to such rights or obligations or the transactions contemplated hereby.

 

7.15                        Stockholder Representative.

 

(a)                                 The Stockholder Representative shall act as the representative of the Stockholders in respect of all matters arising under this Agreement, and shall be authorized to act, or refrain from acting, in each case as the Stockholder Representative believes is necessary or appropriate under this Agreement, for and on behalf of the Stockholders. The Stockholders shall be bound by all such actions taken by the Stockholder Representative and no Stockholder shall be permitted to take any such actions. The Stockholder Representative is serving as the Stockholder Representative solely for purposes of administrative convenience, and is not personally liable (except in its capacity as a Stockholder hereunder) for any of the obligations of any Stockholders hereunder, and the Corporate Taxpayer (on behalf of itself and its Affiliates) agrees that it will not look to the Stockholder Representative or the underlying assets of the Stockholder Representative for the satisfaction of any obligations of any of the Stockholders. The Stockholder Representative shall not be liable for any error of judgment, or any action taken, suffered or omitted to be taken, in connection with the performance by the Stockholder Representative of the Stockholder Representative’s duties or the exercise by the Stockholder Representative of the Stockholder Representative’s rights and remedies under this Agreement, except in the case of its bad faith or willful misconduct. No bond shall be required of the Stockholder Representative. The Stockholder Representative may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts. The Stockholder Representative shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement. Without limiting the generality of the foregoing, the Stockholder Representative shall have the full power and authority to interpret all the terms and provisions of this Agreement, and to consent to any amendment hereof or thereof on behalf of all Stockholders and their respective successors. The Corporate Taxpayer shall be entitled to rely on all statements, representations, decisions of, and actions taken or omitted to be taken by, the Stockholder Representative relating to this Agreement.

 

(b)                                 The Stockholders will indemnify and hold harmless the Stockholder Representative from and against any and all Losses (as defined in the Merger Agreement) arising out of or in connection with the Stockholder Representative’s execution and performance of this Agreement, in each case as such Loss is suffered or incurred; provided, that in the event that any such Loss is finally adjudicated to have been directly caused by the gross negligence or willful misconduct of the Stockholder Representative, the Stockholder Representative will reimburse the Stockholders the amount of such indemnified Loss to the extent attributable to such gross negligence or willful misconduct. In no event will the Stockholder Representative be required to advance its own funds on behalf of the Stockholders or otherwise. The Stockholders acknowledge and agree that the foregoing indemnities will survive the resignation or removal of the Stockholder Representative or the termination of this Agreement.

 

23

 

 

(c)                                  The Stockholder Representative may resign at any time by giving 30 days’ notice to the Corporate Taxpayer and the Stockholders; provided, however, in the event of the resignation or removal of the Stockholder Representative, a new Stockholder Representative (who shall be reasonably acceptable to the Corporate Taxpayer) shall be appointed by the vote or written consent of PE Greenlight Holdings, LLC.

 

[Signature page follows]

 

24

 

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the date first written above.

 

	
 
    	
CORPORATE TAXPAYER:
    
	
 
    	
 
    
	
 
    	
Verra Mobility Corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
Title:
    	
[·]
    
	
 
    	
 
    	
 
    
	
 
    	
STOCKHOLDERS:
    
	
 
    	
 
    	
 
    
	
 
    	
PE Greenlight Holdings, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
Title:
    	
[·]
    
	
 
    	
 
    	
 
    
	
 
    	
STOCKHOLDER REPRESENTATIVE
    
	
 
    	
 
    	
 
    
	
 
    	
PE Greenlight Holdings, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[·]
    
	
 
    	
 
    	
Title:
    	
[·]
    

 

[Signature Page to Tax Receivable Agreement]

 

25

 

EXHIBIT A

 

Form of Joinder to the Tax Receivable Agreement

 

This JOINDER (this “Joinder”) to the Tax Receivable Agreement (as defined below), dated as of [·], by and among Gores Holdings II, Inc., a Delaware corporation (the “Corporate Taxpayer”), and [·] (the “Permitted Transferee”).

 

WHEREAS, on [·], the Permitted Transferee acquired (the “Acquisition”) from [·] (the “Transferor”) the right to receive any and all payments that may become due and payable to the Transferor under the Tax Receivable Agreement (as defined below); and WHEREAS, the Transferor, in connection with the Acquisition, has required the Permitted Transferee to execute and deliver this Joinder pursuant to Section 7.5 of the Tax Receivable Agreement, dated as of [·], 2018, by and between the Corporate Taxpayer, the Stockholders (as defined therein) (the “Tax Receivable Agreement”).

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Permitted Transferee hereby agrees as follows:

 

Section 1.1.                                 Definitions.  To the extent capitalized words used in this Joinder are not defined in this Joinder, such words have the respective meanings set forth in the Tax Receivable Agreement.

 

Section 1.2.                                 Joinder.  The Permitted Transferee hereby acknowledges and agrees to become a “Stockholder” (as defined in the Tax Receivable Agreement) for all purposes of the Tax Receivable Agreement with respect to the Applicable Interests.

 

Section 1.3.                                 Notice.  Any notice, request, consent, claim, demand, approval, waiver or other communication hereunder to the Permitted Transferee shall be delivered or sent to the Permitted Transferee at the address set forth on the signature page hereto in accordance with Section 7.1 of the Tax Receivable Agreement.

 

Section 1.4.                                 Governing Law.  This Joinder shall be governed by and interpreted and enforced in accordance with the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Laws rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

 

[Signature page follows]

 

26

 

IN WITNESS WHEREOF, the undersigned have duly executed this Joinder as of the date first above written.

 

	
 
    	
CORPORATE TAXPAYER:
    
	
 
    	
 
    
	
 
    	
Gores Holdings II, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
PERMITTED TRANSFEREE:
    
	
 
    	
 
    	
 
    
	
 
    	
[·]
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Joinder to Tax Receivable Agreement]

 

 

SCHEDULE 1

 

StockholdersExhibit 10.1

 

REAL GOODS SOLAR, INC. 2018 LONG-TERM
INCENTIVE PLAN

 

 

Section 1. Purpose.   The purpose of this
Plan is to advance the interests of Real Goods and its shareholders by providing incentives to certain Eligible Persons who contribute
significantly to the strategic and long-term performance objectives and growth of the Company.

 

Section 2. Definitions.   Certain capitalized
terms applicable to this Plan are set forth in Appendix A.

 

Section 3. Administration. The Committee shall administer
this Plan and shall have all the powers vested in it by the terms of this Plan, such powers to include exclusive authority to select
the Eligible Persons to be granted Awards under this Plan, to determine the type, size, terms and conditions of the Award to be
made to each Eligible Person selected, to modify or waive the terms and conditions of any Award that has been granted, to determine
the time when Awards will be granted, to establish performance objectives, to make any adjustments necessary or desirable as a
result of the granting of Awards to Eligible Persons located outside the United States and to prescribe the form of the agreements
evidencing Awards made under this Plan. Awards may, in the discretion of the Committee, be made under this Plan in assumption of,
or in substitution for, outstanding Awards previously granted by the Company, or an entity acquired by the Company or with which
the Company combines. The number of Class A Shares underlying such substitute Awards shall be counted against the aggregate number
of shares of Class A Shares available for Awards under this Plan. The Committee is authorized to interpret this Plan and the Awards
granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, and to make any other
determinations that it deems necessary or desirable for the administration of this Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems
necessary or desirable to carry it into effect. Any decision of the Committee in the interpretation and administration of this
Plan, as described in this Plan, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on
all parties concerned. The Committee may act only by a majority of its members in office, except that the Committee may authorize
any one or more of its members or any officer of the Company to execute and deliver documents or to take any other ministerial
action on behalf of the Committee with respect to Awards made to Participants or to be made to Eligible Persons. Notwithstanding
the foregoing or any other provision of this Plan, the Committee shall not have the authority to (i) accelerate the vesting of
any outstanding Award under the Plan except in the case of change in control, disability, or death, (ii) reprice, directly or indirectly,
any Award under the Plan without stockholder approval, or (iii) accelerate or delay the time or schedule of any payment in a manner
which is not permitted under Code Section 409A, or to grant or amend any Award in any manner which would result in an inclusion
of any amount in gross income under Code Section 409A(a)(1). No member of the Committee and no officer of the Company shall be
liable for anything done or omitted to be done by such member or officer, by any other member of the Committee or by any officer
of the Company in connection with the performance of duties under this Plan, except for such member’s or officer’s
own willful misconduct or as expressly provided by law. In addition to all other rights of indemnification and reimbursement to
which a member of the Committee and an officer of the Company may be entitled, Real Goods shall indemnify and hold harmless each
such member or officer who was or is a party or is threatened to be made a party to any threatened, pending or completed proceeding
or suit in connection with the performance of duties under this Plan against expenses (including reasonable attorneys’ fees),
judgments, fines, liabilities, losses and amounts paid in settlement actually and reasonably incurred by him in connection with
such proceeding or suit, except for his own willful misconduct or as expressly provided otherwise by law. Expenses (including reasonable
attorneys’ fees) incurred by such a member or officer in defending any such proceeding or suit shall be paid by Real Goods
in advance of the final disposition of such proceeding or suit upon receipt of a written affirmation by such member or officer
of his good faith belief that he has met the standard of conduct necessary for indemnification and a written undertaking by or
on behalf of such member or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified
by Real Goods as authorized in this Section.

 

     

     

    

 

 

Section 4. Participation.   Consistent
with the purposes of this Plan, the Committee shall have exclusive power to select the Eligible Persons who may participate in
this Plan and be granted Awards under this Plan. Eligible Persons may be selected individually or by groups or categories, as determined
by the Committee in its discretion.

 

Section 5. Awards under this Plan.

 

(a) Types of Awards.   Awards
under this Plan may include, but need not be limited to, one or more of the following types, either alone or in any combination
thereof: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Restricted Stock Units, (v) Performance
Grants and (vi) any other type of Award deemed by the Committee in its discretion to be consistent with the purposes of this Plan
(including, but not limited to, Awards of or options or similar rights granted with respect to unbundled stock units or components
thereof, and Awards to be made to Participants who are foreign nationals or are employed or performing services outside the United
States).

 

(b) Maximum Number of Shares that May
be Issued. The maximum aggregate number of Class A Shares that may be issued and outstanding, or subject to Awards outstanding,
under the Plan cannot exceed 1,300,000 Class A Shares, subject to adjustment as provided in Section 15. No Eligible Person may
receive Awards under this Plan for more than 500,000 Class A Shares in any one fiscal year of the Company, subject to adjustment
as provided in Section 15. Class A Shares issued pursuant to this Plan may be either authorized but unissued shares, treasury shares,
reacquired shares or any combination thereof. If any Class A Shares issued as Restricted Stock, Restricted Stock Units or otherwise
subject to repurchase or forfeiture rights are reacquired by the Company pursuant to such rights or, if any Award is canceled,
terminates or expires unexercised, any Class A Shares that would otherwise have been issuable pursuant thereto will be available
for issuance under new Awards.

 

(c) Rights with Respect to Class A Shares
and Other Securities. Except as provided in subsection 8(c) with respect to Awards of Restricted Stock and unless otherwise
determined by the Committee in its discretion, a Participant to whom an Award is made (and any person succeeding to such a Participant’s
rights pursuant to this Plan) shall have no rights as a shareholder with respect to any Class A Shares or as a holder with respect
to other securities, if any, issuable pursuant to any such Award until the date of the issuance of a book entry or stock certificate
to such Participant for such Class A Shares or other instrument of ownership, if any. Except as provided in Section 15, no adjustment
shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities,
other property or other forms of consideration, or any combination thereof) for which the record date is prior to the date such
book entry or stock certificate or other instrument of ownership, if any, is required to be issued based upon the date any Award
was exercised. In all events, a Participant with whom an Award agreement is made to issue Class A Shares in the future shall have
no rights as a shareholder with respect to such Class A Shares related to such agreement until issuance to such Participant of
a book entry or stock certificate representing such shares.

 

(d) Minimum Vesting Schedule. Except
as set forth below, a vesting period of at least one (1) year shall apply to all Awards issued under the Plan. Notwithstanding
the foregoing, up to 5% of the Class A Shares reserved for issuance under the Plan may be issued pursuant to Awards that are do
not comply with such minimum one (1) year vesting period.

 

(e) No Dividends or Dividend Equivalents
on Unvested Awards. No ordinary dividends or distributions declared with respect to Restricted Stock Awards under the Plan
(or Dividend Equivalents with respect to Restricted Stock Units or other Awards under the Plan) shall be paid to any Participant
unless and until the Participant vests in such underlying Award. All unvested dividends or Dividend Equivalents shall be forfeited
by the Participants to the extent their underlying Awards are forfeited.

 

Section 6. Stock Options.   The Committee
may sell Purchased Options or grant other Stock Options either alone, or in conjunction with other Awards, either at the time of
grant or by amendment thereafter. Each Stock Option granted or sold under this Plan shall be evidenced by an agreement in such
form as the Committee shall prescribe from time to time in accordance with this Plan and shall comply with the applicable terms
and conditions of this Plan, and with such other terms and conditions, including, but not limited to, restrictions upon the Stock
Option or the Class A Shares issuable upon exercise thereof, as the Committee, in its discretion, shall establish.

 

     

     

    

 

(a)   The exercise price
of a Stock Option may be equal to or greater than the Fair Market Value of the Class A Shares subject to such Stock Option at the
time the Stock Option is granted, as determined by the Committee; provided, however, a Stock Option may be granted with an exercise
price less than the Fair Market Value of the Class A Shares subject to such Stock Option if such Stock Option is granted pursuant
to an assumption or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code and
provided that such grant does not result in the Stock Option being subject to the requirements of Section 409A of the Code.

 

(b)   The Committee shall
determine the number of Class A Shares to be subject to each Stock Option. In the case of a Stock Option awarded in conjunction
with another Award, the number of Class A Shares subject to an outstanding Stock Option may be reduced on an appropriate basis
to the extent that the other Award has been exercised, paid to or otherwise received by the Participant, as determined by the Committee.

 

(c)   Any Stock Option may
be exercised during its term only at such time or times and in such installments as the Committee may establish.

 

(d)   A Stock Option shall
not be exercisable:

 

(i) after the expiration of ten
years from the date it is granted; and

 

(ii) unless payment in full is
made for the shares being acquired thereunder at the time of exercise as provided in subsection 6(i).

 

(e)   The Committee shall
determine in its discretion and specify in each agreement evidencing a Stock Option the effect, if any, the termination of the
Participant’s employment with or performance of services for the Company shall have on the exercisability of the Stock Option;
provided, however, that if a Participant’s employment is terminated for a reason other than “cause” (as defined
in such Participant’s Award agreement or employment agreement, if any), then such Participant’s right to exercise his
or her Stock Options (to the extent that the Participant is entitled to exercise on the date employment terminates) shall continue
until the earlier of the expiration date of the Stock Option and (i) at least six (6) months from the date of termination if termination
was caused by death or disability or (ii) at least thirty (30) days from the date of termination if termination was caused by other
than death or disability.

 

(f)   It is the intent of
Real Goods that Nonqualified Stock Options granted under this Plan not be classified as incentive stock options as defined in Section
422 of the Code.

 

(g)   A Purchased Option
may contain such additional terms not inconsistent with this Plan, including but not limited to the circumstances under which the
purchase price of such Purchased Option may be returned to the holder of the Purchased Option, as the Committee may determine in
its sole discretion.

 

(h)   For purposes of payments
made to exercise Stock Options, such payment shall be made in such form (including, but not limited to, cash, Class A Shares, the
surrender of all or part of an Award or another outstanding Award under this Plan or any combination thereof) as the Committee
may determine in its discretion.

 

Section 7. Stock Appreciation Rights.   The
Committee may grant Stock Appreciation Rights either alone, or in conjunction with other Awards, either at the time of grant or
by amendment thereafter. Each Award of Stock Appreciation Rights granted under this Plan shall be evidenced by an agreement in
such form as the Committee shall prescribe from time to time in accordance with this Plan and shall comply with the applicable
terms and conditions of this Plan, and with such other terms and conditions, including, but not limited to, restrictions upon the
Award of Stock Appreciation Rights or the Class A Shares issuable upon exercise thereof, as the Committee, in its discretion, shall
establish.

 

(a)   The Committee shall
determine the number of Class A Shares to be subject to each Award of Stock Appreciation Rights. In the case of an Award of Stock
Appreciation Rights awarded in conjunction with another Award, the number of Class A Shares subject to an outstanding Award of
Stock Appreciation Rights may be reduced on an appropriate basis to the extent that the other Award has been exercised, paid to
or otherwise received by the Participant, as determined by the Committee.

 

     

     

    

 

(b)   The Committee shall
determine in its discretion and specify in each agreement evidencing an Award of Stock Appreciation Rights the effect, if any,
the termination of the Participant’s employment with or performance of services for the Company shall have on the exercisability
of the Award of Stock Appreciation Rights.

 

(c)   An Award of Stock Appreciation
Rights shall entitle the holder to exercise such Award or to surrender unexercised another Award (or any portion of such other
Award) to Real Goods and to receive from Real Goods in exchange thereof, without payment to Real Goods, that number of Class A
Shares having an aggregate value equal to (or, in the discretion of the Committee, less than) the excess of the Fair Market Value
of one share, at the time of such exercise, over the exercise price, times the number of shares subject to the Award, or portion
thereof, that is so exercised or surrendered, as the case may be. The Committee shall be entitled in its discretion to elect to
settle the obligation arising out of the exercise of a Stock Appreciation Right by the payment of cash or Other Real Goods Securities
or property, or other forms of payment or any combination thereof, as determined by the Committee, equal to the aggregate value
of the Class A Shares it would otherwise be obligated to deliver. Any such election by the Committee shall be made as soon as practicable
after the receipt by the Committee of written notice of the exercise of the Stock Appreciation Right.

 

(d)   A Stock Appreciation
Right may provide that it shall be deemed to have been exercised at the close of business on the business day preceding the expiration
date of the Stock Appreciation Right or of the related Stock Option (or other Award), or such other date as specified by the Committee,
if at such time such Stock Appreciation Right has a positive value. Such deemed exercise shall be settled or paid in the same manner
as a regular exercise thereof as provided in subsection 7(d) of this Agreement.

 

Section 8. Restricted Stock and Restricted Stock Units.   The
Committee may grant Awards of Restricted Stock and Restricted Stock Units either alone, or in conjunction with other Awards, either
at the time of grant or by amendment thereafter. Each Award of Restricted Stock or Restricted Stock Units under this Plan shall
be evidenced by an agreement in such form as the Committee shall prescribe from time to time in accordance with this Plan and shall
comply with the applicable terms and conditions of this Section and this Plan, and with such other terms and conditions as the
Committee, in its discretion, shall establish.

 

(a)   The Committee shall
determine the number of Class A Shares to be issued to a Participant pursuant to the Award of Restricted Stock or Restricted Stock
Units, and the extent, if any, to which they shall be issued in exchange for cash, other consideration, or both.

  

(b)   Until the expiration
of such period as the Committee shall determine from the date on which the Award is granted and subject to such other terms and
conditions as the Committee in its discretion shall establish (the “Restricted Period”), a Participant to whom
an Award of Restricted Stock is made shall be issued, but shall not be entitled to the delivery of, a book entry or stock certificate
representing the Class A Shares subject to such Award.

 

(c)   Unless otherwise determined
by the Committee in its discretion, a Participant to whom an Award of Restricted Stock has been made (and any person succeeding
to such a participant’s rights pursuant to this Plan) shall have, after issuance of a certificate for the number of Class
A Shares awarded and prior to the expiration of the Restricted Period, ownership of such Class A Shares, including the right to
vote such Class A Shares and to receive dividends or other distributions made or paid with respect to such Class A Shares (provided
that such Class A Shares, and any new, additional or different shares, or Other Real Goods Securities or property, or other forms
of consideration that the Participant may be entitled to receive with respect to such Class A Shares as a result of a stock split,
stock dividend or any other change in the corporation or capital structure of Real Goods, shall be subject to the restrictions
set forth in this Plan as determined by the Committee in its discretion), subject, however, to the options, restrictions and limitations
imposed thereon pursuant to this Plan.

 

(d)   The Committee shall
determine in its discretion and specify in each agreement evidencing an Award of Restricted Stock or Restricted Stock Units the
effect, if any, the termination of the Participant’s employment with or performance of services for the Company during the
Restricted Period shall have on such Award of Restricted Stock.

 

     

     

    

 

(e) The Committee may grant Awards of Dividend
Equivalents to Participants in connection with Awards of Restricted Stock Units. The Committee may provide, at the date of grant
or thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in
additional Class A Shares, or other investment vehicles as the Committee may specify; provided that Dividend Equivalents shall
be subject to all conditions and restrictions of the underlying Restricted Stock Units to which they relate.

 

Section 9. Performance Grants.   The Committee
may grant Awards of Performance Grants either alone, or in conjunction with other Awards, either at the time of grant or by amendment
thereafter. The Award of a Performance Grant to a Participant will entitle him to receive a specified amount determined by the
Committee (the “Actual Value”), if the terms and conditions specified in this Plan and in the Award are satisfied.
Each Award of a Performance Grant shall be subject to the applicable terms and conditions of this Plan, and to such other terms
and conditions, including but not limited to, restrictions upon any cash, Class A Shares, Other Real Goods Securities or property,
or other forms of payment, or any combination thereof, issued with respect to the Performance Grant, as the Committee, in its discretion,
shall establish, and shall be embodied in an agreement in such form and substance as is determined by the Committee.

 

(a)   The Committee shall
determine the value or range of values of a Performance Grant to be awarded to each Participant selected for an Award and whether
or not such a Performance Grant is granted in conjunction with another Award. As determined by the Committee, the maximum value
of each Performance Grant (the “Maximum Value”) shall be: (i) an amount fixed by the Committee at the time the
Award is made or amended thereafter, (ii) an amount that varies from time to time based in whole or in part on the then current
value of the Class A Shares, Other Real Goods Securities or property, or other securities or property, or any combination thereof
or (iii) an amount that is determinable from criteria specified by the Committee. Performance Grants may be issued in different
classes or series having different names, terms and conditions. In the case of a Performance Grant awarded in conjunction with
another Award, the Performance Grant may be reduced on an appropriate basis to the extent that the other Award has been exercised,
paid to or otherwise received by the Participant, as determined by the Committee.

 

(b)   The award period (“Award
Period”) related to any Performance Grant shall be a period determined by the Committee. At the time each Award is made
or within the first 90 days of any performance period, the Committee shall establish performance objectives to be attained within
the Award Period as the means of determining the Actual Value of such a Performance Grant. The performance objectives shall be
based on such measure or measures of performance, which may include, but need not be limited to, the performance of the Participant,
the Company or one or more of its divisions or units, or any combination of the foregoing, as the Committee shall determine, and
may be applied on an absolute basis or be relative to industry or other indices or any combination thereof. The Actual Value of
a Performance Grant shall be equal to its Maximum Value only if the performance objectives are attained in full, but the Committee
shall specify the manner in which the Actual Value of Performance Grants shall be determined if the performance objectives are
met in part. Such performance measures, the Actual Value or the Maximum Value, or any combination thereof, may be adjusted in any
manner by the Committee in its discretion at any time and from time to time during or as soon as practicable after the Award Period,
if it determines that such performance measures, the Actual Value or the Maximum Value, or any combination thereof, are not appropriate
under the circumstances.

 

(c)   The Committee shall
determine in its discretion and specify in each agreement evidencing a Performance Grant the effect, if any, the termination of
the Participant’s employment with or performance of services for the Company during the Award Period shall have on such Performance
Grant.

 

(d)   The Committee shall
determine whether the conditions of a Performance Grant have been met and, if so, shall ascertain the Actual Value of the Performance
Grant. If the Performance Grant has no Actual Value, the Award and such Performance Grant shall be deemed to have been canceled
and the associated Award, if any, may be canceled or permitted to continue in effect in accordance with its terms. If the Performance
Grant has any Actual Value and:

 

     

     

    

 

(i) was not awarded in conjunction
with another Award, the Committee shall cause an amount equal to the Actual Value of the Performance Grant earned by the Participant
to be paid to him or his permitted assignee or Beneficiary; or

 

(ii) was awarded in conjunction
with another Award, the Committee shall determine, in accordance with criteria specified by the Committee (A) to cancel the Performance
Grant, in which event no amount with respect thereto shall be paid to the Participant or his permitted assignee or Beneficiary,
and the associated Award may be permitted to continue in effect in accordance with its terms, (B) to pay the Actual Value of the
Performance Grant to the Participant or his permitted assignee or Beneficiary as provided below, in which event the associated
Award may be canceled or (C) to pay to the Participant or his Beneficiary, the Actual Value of only a portion of the Performance
Grants, in which event all or a portion of the associated Award may be permitted to continue in effect in accordance with its terms
or be canceled, as determined by the Committee.

 

Such determination by the Committee shall
be made as promptly as practicable following the end of the Award Period or upon the earlier termination of employment or performance
of services, or at such other time or times as the Committee shall determine, and shall be made pursuant to criteria specified
by the Committee.

 

(e)   Payment of any amount
with respect to the Performance Grants that the Committee determines to pay as provided above shall be made by Real Goods as promptly
as practicable after the end of the Award Period or at such other time or times as the Committee shall determine, and may be made
in cash, Class A Shares, Other Real Goods Securities or property, or other forms of payment, or any combination thereof or in such
other manner, as determined by the Committee in its discretion. Notwithstanding anything in this Section to the contrary, the Committee
may, in its discretion, determine and pay out the Actual Value of the Performance Grants at any time during the Award Period.

 

Section 10. Deferral of Compensation.   The
Committee shall determine whether or not an Award shall be made in conjunction with the deferral of the Participant’s salary,
bonus or other compensation, or any combination thereof, and whether or not such deferred amounts may be:

 

(i) forfeited to Real Goods or to other
Participants or any combination thereof, under certain circumstances (which may include, but need not be limited to, certain types
of termination of employment or performance of services for the Company);

 

(ii) subject to increase or decrease in
value based upon the attainment of or failure to attain, respectively, certain performance measures; and/or

 

(iii) credited with income equivalents (which
may include, but need not be limited to, interest, dividends or other rates of return) until the date or dates of payment of the
Award, if any.

 

Notwithstanding the foregoing or any other
provision of this Plan, any deferral of compensation under this Section 10 must comply with the provisions of Code Section 409A,
and no deferral of compensation under this Section 10 which would result in an inclusion of any amount in gross income under Code
Section 409A(a)(1) is permitted.

 

Section 11. Deferred Payment of Awards.   The
Committee may specify that the payment of all or any portion of cash, Class A Shares, Other Real Goods Securities or property,
or any other form of payment, or any combination thereof, under an Award shall be deferred until a later date. Deferrals shall
be for such periods or until the occurrence of such events, and upon such terms, as the Committee shall determine in its discretion,
provided however, that any such deferral shall comply with the requirements of Code Section 409A. Deferred payments of Awards may
be made by undertaking to make payment in the future based upon the performance of certain investment equivalents (which may include,
but need not be limited to, government securities, Class A Shares, other securities, property or consideration, or any combination
thereof), together with such additional amounts of income equivalents (which may be compounded and may include, but need not be
limited to, interest, dividends or other rates of return or any combination thereof) as may accrue thereon until the date or dates
of payment, such investment equivalents and such additional amounts of income equivalents to be determined by the Committee in
its discretion.

 

     

     

    

 

Section 12. Transferability of Awards.   A
Participant’s rights and interest under this Plan or any Award may not be assigned or transferred, hypothecated or encumbered
in whole or in part either directly or by operation of law or otherwise, including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner; provided, however, the Committee may permit such transfer to
a Permitted Transferee.

 

Section 13. Amendment or Substitution of Awards under this
Plan. The terms of any outstanding Award under this Plan may be amended or modified from time to time by the Committee in its
discretion in any manner that it deems appropriate if the Committee could grant such amended or modified Award under the terms
of this Plan at the time of such amendment or modification; provided that no such amendment or modification shall adversely affect
in a material manner any right of a Participant under the Award without such Participant’s written consent, unless the Committee
determines in its discretion that there have occurred or are about to occur significant changes in the Participant’s position,
duties or responsibilities, or significant changes in economic, legislative, regulatory, tax, accounting or cost/benefit conditions
that are determined by the Committee in its discretion to have or to be expected to have a substantial effect on the performance
of the Company, or any affiliate, division or department thereof, on this Plan or on any Award under this Plan and provided further
that the Committee shall not have the authority to (i) accelerate the vesting of any outstanding Award under the Plan except in
the case of change in control, disability, or death, (ii) reprice, directly or indirectly, any Award under the Plan without stockholder
approval, or (iii) accelerate or delay the time or schedule of any payment in a manner which is not permitted under Code Section
409A, or to grant or amend any Award in any manner which would result in an inclusion of any amount in gross income under Code
Section 409A(a)(1). The Committee may, in its discretion, permit holders of Awards under this Plan to surrender outstanding Awards
in order to exercise or realize the rights under other Awards, or in exchange for the grant of new Awards, or require holders of
Awards to surrender outstanding Awards as a condition precedent to the grant of new Awards under this Plan; provided, however,
that none of the foregoing shall be permitted if it would result, directly or indirectly, in the repricing of an Award without
stockholder approval.

 

Section 14. Termination of a Participant.   For
all purposes under this Plan, the Committee shall determine whether a Participant has terminated employment with, or the performance
of services for, the Company, provided, however, an absence or leave approved by the Company, to the extent permitted by applicable
provisions of the Code, shall not be considered an interruption of employment or performance of services for any purpose under
this Plan.

 

Section 15. Dilution and Other Adjustments.   If
any change in the outstanding Class A Shares of the Company occurs by reason of any stock split, reverse stock split, stock dividend,
split-up, split-off, spin-off, recapitalization, merger, consolidation, rights offering, reorganization, combination, subdivision
or exchange of shares, any distribution to shareholders other than a normal cash dividend, or other extraordinary or unusual event,
the Committee shall make such adjustment in: (i) the aggregate number of shares that may be delivered under the Plan as described
in Section 5(b) and the individual Award maximums under Section 5(b); (ii) the number and exercise price of outstanding Stock Options
and outstanding Stock Appreciation Rights; (iii) the number of outstanding Restricted Stock Units; and (iv) the number of shares
subject to any other Awards granted under the Plan (provided that the number of shares subject to Awards shall always be a whole
number), in each case as may be determined to be appropriate by the Committee, and such adjustments shall be final, conclusive
and binding for all purposes of the Plan. The Committee may also provide for the adjustment and settlement of outstanding Awards
as it deems appropriate and consistent with the Plan’s purpose in the event of a change in control of Real Goods, and such
adjustments or settlements shall be final, conclusive and binding for all purposes of the Plan.

 

Section 16. Designation of Beneficiary by Participant.   A
Participant may name a beneficiary to receive any payment to which such Participant may be entitled with respect to any Award under
this Plan in the event of death, on a written form to be provided by and filed with the Committee, and in a manner determined by
the Committee in its discretion (a “Beneficiary”). The Committee reserves the right to review and approve Beneficiary
designations. A Participant may change his Beneficiary from time to time in the same manner, unless such Participant has made an
irrevocable designation. Any designation of a Beneficiary under this Plan (to the extent it is valid and enforceable under applicable
law) shall be controlling over any other disposition, testamentary or otherwise, as determined by the Committee in its discretion.
If no designated Beneficiary survives the Participant and is living on the date on which any amount becomes payable to such a Participant’s
Beneficiary, such payment will be made to the legal representatives of the Participant’s estate, and the term “Beneficiary”
as used in this Plan shall be deemed to include such person or persons. If there are any questions as to the legal right of any
Beneficiary to receive a distribution under this Plan, the Committee in its discretion may determine that the amount in question
be paid to the legal representatives of the estate of the Participant, in which event the Company, the Board, the Committee, the
Designated Administrator (if any), and the members thereof, will have no further liability to anyone with respect to such amount.

 

     

     

    

 

Section 17. Financial Assistance.   If
the Committee determines that such action is advisable, the Company may assist any Participant in obtaining financing from the
Company (or under any program of the Company approved pursuant to applicable law), or from a bank or other third party, on such
terms as are determined by the Committee, and in such amount as is required to accomplish the purposes of this Plan, including,
but not limited to, to permit the exercise of an Award, the participation therein, and/or the payment of any taxes with respect
thereto. Such assistance may take any form that the Committee deems appropriate, including, but not limited to, a direct loan from
the Company, a guarantee of the obligation by the Company or the maintenance by the Company of deposits with such bank or third
party.

 

Section 18. Miscellaneous Provisions.

 

(a)   Any proceeds from Awards
shall constitute general funds of Real Goods.

 

(b)   Except as otherwise
determined by the Committee, no fractional shares may be delivered under an Award, but in lieu thereof a cash or other adjustment
may be made as determined by the Committee in its discretion.

 

(c)   No Eligible Person
or other person shall have any claim or right to be granted an Award under this Plan. Determinations made by the Committee under
this Plan need not be uniform and may be made selectively among Eligible Persons under this Plan, whether or not such Eligible
Persons are similarly situated. Neither this Plan nor any action taken hereunder shall be construed as giving any Eligible Person
any right to continue to be employed by or perform services for the Company, and the right to terminate the employment of or performance
of services by Eligible Persons at any time and for any reason is specifically reserved.

 

(d)   No Participant or other
person shall have any right with respect to this Plan, the Class A Shares reserved for issuance under this Plan or in any Award,
contingent or otherwise, until written evidence of the Award shall have been delivered to the recipient and all the terms, conditions
and provisions of this Plan and the Award applicable to such recipient (and each person claiming under or through him) have been
met.

 

(e)   No Class A Shares,
Other Company Securities, other securities or property or other forms of payment shall be issued hereunder with respect to any
Award unless counsel for Real Goods shall be satisfied that such issuance will be in compliance with applicable law and any applicable
rules of any stock exchange or other market quotation system on which Class A Shares are listed.

 

(f)   It is the intent of
Real Goods that this Plan comply in all respects with any applicable provisions of Rule 16b 3 and Section 162(m) with respect to
Awards granted to executive officers of Real Goods, that any ambiguities or inconsistencies in construction of this Plan be interpreted
to give effect to such intention and that if any provision of this Plan is found not to be in compliance with any applicable provisions
of Rule 16b 3 or Section 162(m), such provision shall be deemed null and void with respect to Awards granted to executive officers
of the Company to the extent required to permit such Awards to comply with Rule 16b 3 and Section 162(m). It is the intent of Real
Goods that Awards (including any amendment or revision of such Awards) either comply in all respects with any applicable provisions
of Code Section 409A or satisfy the requirements of an applicable exception to the requirements of Code Section 409A, that any
ambiguities or inconsistencies in construction of this Plan be interpreted to give effect to such intention, and that, if any provision
of this Plan or an Award is found not to be in compliance with any applicable provisions of Code Section 409A, such Plan or Award
provision shall be deemed null and void to the extent required to permit such Awards to either comply with any applicable provisions
of Code Section 409A or satisfy the requirements of an applicable exception thereto. Specifically, the Committee shall not have
the authority to accelerate or delay the time or schedule of any payment in a manner which is not permitted under Code Section
409A or the regulations issued thereunder, or to grant or amend any Award in any manner which would result in an inclusion of any
amount in gross income under Code Section 409A(a)(1).

 

     

     

    

 

(g)   The Company shall have
the right to deduct from any payment made under this Plan any federal, state, local or foreign income or other taxes required by
law to be withheld with respect to such payment. It shall be a condition to any obligation of Real Goods to issue Class A Shares,
Other Real Goods Securities or property, other securities or property, or other forms of payment, or any combination thereof, upon
exercise, settlement or payment of any Award under this Plan, that the Participant (or any Beneficiary or person entitled to act)
pay to Real Goods, upon its demand, such amount as may be required by the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the amount requested is not paid, Real Goods may refuse to
issue Class A Shares, Other Real Goods Securities or property, other securities or property, or other forms of payment, or any
combination thereof. Notwithstanding anything in this Plan to the contrary, the Committee may, in its discretion, permit a Participant
(or any Beneficiary or person entitled to act) to elect to pay a portion or all of the amount requested by the Company for such
taxes with respect to such Award, at such time and in such manner as the Committee shall deem to be appropriate (including, but
not limited to, by authorizing Real Goods to withhold, or agreeing to surrender to Real Goods on or about the date such tax liability
is determinable, Class A Shares, Other Real Goods Securities or property, other securities or property, or other forms of payment,
or any combination thereof, owned by such person or a portion of such forms of payment that would otherwise be distributed, or
have been distributed, as the case may be, pursuant to such Award to such person, having a Fair Market Value equal to the amount
of such taxes).

 

(h)   The expenses of this
Plan shall be borne by Real Goods; provided, however, Real Goods may recover from a Participant or his Beneficiary, heirs or assigns
any and all damages, fees, expenses and costs incurred by the Company arising out of any actions taken by a Participant in breach
of this Plan or any agreement evidencing such Participant’s Award.

 

(i)   This Plan shall be
unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets
to assure the payment of any Award under this Plan, and rights to the payment of Awards shall be no greater than the rights of
the Company’s general creditors.

 

(j)   By accepting any Award
or other benefit under this Plan, each Participant and each person claiming under or through such Participant shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any action taken under this Plan by the Company, the
Board, the Committee or the Designated Administrator (if applicable).

 

(k)   The appropriate officers
of the Company shall cause to be filed any reports, returns or other information regarding Awards hereunder of any Class A Shares
issued pursuant hereto as may be required by applicable law and any applicable rules of any stock exchange or other market quotation
system on which Class A Shares are listed.

 

(l)   The validity, construction,
interpretation, administration and effect of this Plan, and of its rules and regulations, and rights relating to this Plan and
to Awards granted under this Plan, shall be governed by the substantive laws, but not the choice of law rules, of the State of
Colorado.

 

(m)   Records of the Company
shall be conclusive for all purposes under this Plan or any Award, unless determined by the Committee to be incorrect.

 

(n)   If any provision of
this Plan or any Award is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining
provisions of this Plan or any Award, but such provision shall be fully severable, and this Plan or Award, as applicable, shall
be construed and enforced as if the illegal or invalid provision had never been included in this Plan or Award, as applicable.

 

(o)   The terms of this
Plan shall govern all Awards under this Plan and in no event shall the Committee have the power to grant any Award under this
Plan that is contrary to any of the provisions of this Plan. 

 

(p)   For purposes of interpretation
of this Plan, the masculine pronoun includes the feminine and the singular includes the plural wherever appropriate.

 

Section 19. Plan Amendment or Suspension.   This
Plan may be amended or suspended in whole or in part at any time from time to time by the Board. No amendment of this Plan shall
adversely affect in a material manner any right of any Participant with respect to any Award previously granted without such Participant’s
written consent, except as permitted under Section 13.

 

Section 20. Plan Termination.   This Plan
shall terminate upon the earlier of the following dates or events to occur:

 

(a)   the adoption of a resolution
of the Board terminating this Plan; or

 

(b)   the close of business
on the tenth anniversary of the Effective Date; provided, however, that the Board may, prior to such date, extend the term of this
Plan for an additional period of up to five years for the grant of Awards. No termination of this Plan shall materially alter or
impair any of the rights or obligations of any Participant, without such Participant’s consent, under any Award previously
granted under this Plan, except that subsequent to termination of this Plan, the Committee may make amendments or modifications
permitted under Section 13. Notwithstanding anything in this Plan to the contrary, the Committee shall not grant any Award pursuant
to this Plan after the tenth anniversary of the earlier to occur of  (i) the date this Plan is adopted by the Board and
(ii) the Effective Date.

 

Section 21. Effective Date.   This Plan
shall be effective, and Awards may be granted under this Plan, on or after the Effective Date.

 

     

     

    

 

 

APPENDIX A

 

The following terms shall have the meaning indicated:

 

“Actual Value” has the meaning set forth
in Section 9.

 

“Award” shall mean an award of rights to
an Eligible Person under this Plan.

 

“Award Period” has the meaning set forth
in subsection 9(b).

 

“Beneficiary” has the meaning set forth in
Section 16.

 

“Board” shall mean the board of directors
of Real Goods.

 

“Class A Shares” shall mean shares of Class
A Common Stock, par value $.0001 per share, of Real Goods and stock of any other class into which such shares may thereafter be
changed.

 

“Code” shall mean the Internal Revenue Code
of 1986, as it now exists or may be amended from time to time, and the rules and regulations promulgated thereunder, as they may
exist or may be amended from time to time.

 

“Code Section 409A” shall mean Section 409A
of the Code, any rules or regulations promulgated thereunder, as they may exist or may be amended from time to time, and any successor
to such section.

 

“Committee” shall mean the person or persons
responsible for administering this Plan. The Board shall constitute the Committee until the Board appoints a Board Committee, after
which time the Board Committee shall constitute the Committee, provided, however, that at any time the Board may designate itself
as the Committee or designate itself to administer certain of the Committee’s authority under this Plan, including administering
certain Awards under this Plan, subject to satisfying the requirements of Rule 16b-3 and Section 162(m), if applicable. The Board
or the Board Committee may designate a Designated Administrator to constitute the Committee or to administer certain of the Committee’s
authority under this Plan, including administering certain Awards under this Plan, subject to the right of the Board or the Board
Committee, as applicable, to revoke such designation at any time and to make such designation on such terms and conditions as it
may determine in its discretion. For purposes of this definition, the “Board Committee” shall mean a committee
of the Board designated by the Board to administer this Plan. Except as otherwise determined by the Board, the Board Committee
(i) shall be comprised of not fewer than two directors, (ii) shall meet any applicable requirements under Rule 16b-3, including
any requirement that the Board Committee consist of  “nonemployee directors” (as defined in Rule 16b-3), (iii)
shall meet any applicable requirements under Section 162(m), including any requirement that the Board Committee consist of 
“outside directors” (as defined in Treasury Regulation §1.162-27(e)(3)(i) or any successor regulation), and (iv)
shall meet any applicable requirements of any stock exchange or other market quotation system on which Class A Shares are listed.
For purposes of this definition, the “Designated Administrator” shall mean one or more persons designated by
the Board or a Board Committee to act as a Designated Administrator pursuant to this Plan. Except as otherwise determined by the
Board, a Designated Administrator shall only be appointed if Rule 16b 3 and Section 162(m) permits such appointment and the exercise
of any authority without adversely affecting the ability of Awards to officers of Real Goods to comply with the conditions for
Rule 16b 3 or Section 162(m). The resolutions of the Board or Board Committee designating the authority of the Designated Administrator
shall (i) specify the total number of Class A Shares subject to Awards that may be granted pursuant to this Plan by the Designated
Administrator, (ii) may not authorize the Designated Administrator to designate him or herself as the recipient of any Awards pursuant
to this Plan and (iii) shall otherwise comply with the requirements of applicable law.

 

“Company” shall mean Real Goods and any parent,
subsidiary or affiliate of Real Goods.

 

“Dividend Equivalents” shall mean an Award
of cash or other Awards with a Fair Market Value equal to the dividends which would have been paid on the Class A Shares underlying
an outstanding Award or Restricted Stock Units had such Class A Shares been outstanding.

 

“Effective Date” shall mean June 21, 2018.

 

     

     

    

 

“Eligible Person(s)” shall mean those persons
who are full or part-time employees of the Company or other individuals who perform services for the Company, including, without
limitation, directors who are not employees of the Company and consultants and advisors who perform services for the Company.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as it now exists or may be amended from time to time, and the rules promulgated thereunder, as they may exist
or may be amended from time to time.

 

“Fair Market Value” shall mean such value
rounded up to the nearest cent as determined by the Committee by reasonable application of a reasonable valuation method in accordance
with applicable law, including Code Section 409A.

  

“Maximum Value” has the meaning set forth
in subsection 9(a).

 

“Nonqualified Stock Option” shall mean a
Stock Option that is not an incentive stock option as defined in Section 422 of the Code. Nonqualified Stock Options are subject,
in part, to the terms, conditions and restrictions described in Section 6.

 

“Other Real Goods Securities” shall mean
Real Goods securities (which may include, but need not be limited to, unbundled stock units or components thereof, debentures,
preferred stock, warrants, securities convertible into Class A Shares or other property) other than Class A Shares.

 

“Participant” shall mean an Eligible Person
to whom an Award has been granted under this Plan.

 

“Performance Grant” shall mean an Award subject,
in part, to the terms, conditions and restrictions described in Section 9, pursuant to which the recipient may become entitled
to receive cash, Class A Shares, Other Real Goods Securities or property, or other forms of payment, or any combination thereof,
as determined by the Committee.

 

“Permitted Transferee” means, except as otherwise
determined by the Committee (i), any person defined as an employee in the Instructions to Registration Statement Form S-8 promulgated
by the Securities and Exchange Commission, as such Form may be amended from time to time, which persons include, as of the date
of adoption of this Plan, executors, administrators or beneficiaries of the estates of deceased Participants, guardians or members
of a committee for incompetent former Participants, or similar persons duly authorized by law to administer the estate or assets
of former Participants, (ii) Participants’ family members who acquire Awards from the Participant other than for value,
through a gift or a domestic relations order, and (iii) any trust established for the benefit of any person described in clause
(i) above. For purposes of this definition, “family member” includes any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other
than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation
in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the
Participant) own more than fifty percent of the voting interests. For purposes of this definition, neither (i) a transfer under
a domestic relations order in settlement of marital property rights; nor (ii) a transfer to an entity in which more than fifty
percent of the voting interests are owned by family members (or the Participant) in exchange for an interest in that entity is
considered a transfer for “value”.

 

“Plan” shall mean this Real Goods Solar,
Inc. 2018 Long-Term Incentive Plan.

 

“Purchased Option” shall mean a Stock Option
that is sold to an Eligible Person at a price determined by the Committee. Purchased Options are subject, in part, to the terms,
conditions and restrictions described in Section 6.

 

“Real Goods” shall mean Real Goods Solar,
Inc., a Colorado corporation.

 

“Restricted Period” has the meaning set forth
in subsection 8(b).

 

     

     

    

 

“Restricted Stock” shall mean an Award of
Class A Shares that is issued subject, in part, to the terms, conditions and restrictions described in Section 8.

 

“Restricted Stock Units” shall mean an Award
of a right to receive Class A Shares that is issued subject, in part, to the terms, conditions and restrictions described in Section
8.

 

“Rule 16b-3” shall mean Rule 16b-3 promulgated
by the Securities and Exchange Commission under the Exchange Act and any successor rule.

 

“Section 162(m)” shall mean §162(m)
of the Code, any rules or regulations promulgated thereunder, as they may exist or may be amended from time to time, or any successor
to such section.

 

“Stock Appreciation Right” shall mean an
Award of a right to receive (without payment to Real Goods) cash, Class A Shares, Other Real Goods Securities or property, or other
forms of payment, or any combination thereof, as determined by the Committee, based on the increase in the value of the number
of Class A Shares specified in the Stock Appreciation Right. Stock Appreciation Rights are subject, in part, to the terms, conditions
and restrictions described in Section 7.

 

“Stock Option” shall mean an Award of a right
to purchase Class A Shares. The term Stock Option shall include Nonqualified Stock Options and Purchased Options.

 

“Ten Percent Employee” shall mean an employee
of the Company who owns stock representing more than ten percent of the voting power of all classes of stock of Real Goods or any
parent or subsidiary of Real Goods.

 

“Treasury Regulation” shall mean a final,
proposed or temporary regulation of the Department of Treasury under the Code and any successor regulation.

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