Document:

Exhibit 10.1

	
 
    
	
 
    
	
TRANSITION SERVICES AGREEMENT
    
	
 
    
	
between
    
	
 
    
	
HERTZ GLOBAL HOLDINGS, INC.
    
	
 
    
	
and
    
	
 
    
	
HERC HOLDINGS INC.
    
	
 
    
	
Dated as of June 30, 2016
    
	
 
    

 

 

TABLE OF CONTENTS

 

	
ARTICLE I
    	
2
    
	
 
    	
 
    
	
DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
Section 1.1 Table   of Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
Section 1.2   Certain Defined Terms
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
4
    
	
 
    	
 
    
	
TRANSITION   SERVICES
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.1   Project Statements
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.2   Identified Services
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.3   Additional Services
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.4   Disputes Over Requested Services
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.5   Financial Obligation
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.6 Means   of Providing Services
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.7 Access   to Facilities and Equipment
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.8 Cooperation
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
Section 2.9 SOX   and Audit Access
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
6
    
	
 
    	
 
    
	
PERSONNEL
    	
6
    
	
 
    	
 
    	
 
    
	
 
    	
Section 3.1   Services Managers
    	
6
    
	
 
    	
 
    	
 
    
	
 
    	
Section 3.2   Supplier Employees
    	
6
    
	
 
    	
 
    	
 
    
	
 
    	
Section 3.3   Contractors
    	
6
    
	
 
    	
 
    	
 
    
	
 
    	
Section 3.4   Compliance with Policies; Safety of Personnel
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
7
    
	
 
    	
 
    
	
SERVICE   LEVELS
    	
7
    
	
 
    	
 
    	
 
    
	
 
    	
Section 4.1   Service Levels
    	
7
    
	
 
    	
 
    	
 
    
	
 
    	
Section 4.2   Exceptions
    	
7
    
	
 
    	
 
    	
 
    
	
 
    	
Section 4.3 No   Warranty
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
8
    
	
 
    	
 
    
	
PAYMENT   FOR SERVICES
    	
8
    

 

i

 

	
 
    	
Section 5.1 Costs   and Charges
    	
8
    
	
 
    	
 
    	
 
    
	
 
    	
Section 5.2   Invoices and Payment
    	
8
    
	
 
    	
 
    	
 
    
	
 
    	
Section 5.3 Taxes
    	
8
    
	
 
    	
 
    	
 
    
	
 
    	
Section 5.4 Other   Expenses
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
Section 5.5   Interest Payable on Amounts Past Due
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
Section 5.6   Records
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
9
    
	
 
    	
 
    
	
PROPRIETARY   RIGHTS
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
Section 6.1   Equipment
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
Section 6.2   Intellectual Property
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
10
    
	
 
    	
 
    
	
TERM   AND TERMINATION
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
Section 7.1 Term
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
Section 7.2   Termination of a Service
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
Section 7.3 Termination   of Transition Services Agreement
    	
10
    
	
 
    	
 
    	
 
    
	
 
    	
Section 7.4 No   Abandonment for Dispute
    	
11
    
	
 
    	
 
    	
 
    
	
 
    	
Section 7.5 Costs   upon Termination
    	
11
    
	
 
    	
 
    	
 
    
	
 
    	
Section 7.6 Return   of Buyer Data; Return of Materials
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    	
12
    
	
 
    	
 
    
	
INDEMNITY   AND DAMAGES
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
Section 8.1   Limitations of Liability
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
Section 8.2   Mitigation of Damages
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
Section 8.3 Buyer   Indemnity
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
Section 8.4   Supplier Indemnity
    	
12
    
	
 
    	
 
    	
 
    
	
 
    	
Section 8.5   Indemnity Procedure
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    	
13
    
	
 
    	
 
    
	
CONFIDENTIALITY
    	
13
    
	
 
    	
 
    	
 
    
	
 
    	
Section 9.1   Confidential Information
    	
13
    
	
 
    	
 
    	
 
    
	
 
    	
Section 9.2   Permissible Disclosure
    	
13
    
	
 
    	
 
    	
 
    
	
 
    	
Section 9.3   Survival of Confidentiality Obligations
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE X
    	
14
    
	
 
    	
 
    
	
GENERAL
    	
14
    

 

ii

 

	
 
    	
Section 10.1   Dispute Resolution
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.2 Force   Majeure
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.3   Relationship of the Parties
    	
14
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.4   Assignment
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.5   Third-Party Beneficiaries
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.6   Entire Agreement; No Reliance; Amendment
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.7   Waiver
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.8   Notices
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.9   Counterparts
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.10   Severability
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.11   Interpretation
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.12   Governing Law
    	
16
    
	
 
    	
 
    	
 
    
	
 
    	
Section 10.13   Precedence
    	
16
    

 

iii

 

TRANSITION SERVICES AGREEMENT

 

TRANSITION SERVICES AGREEMENT (this “Transition Services Agreement”), dated as of June 30, 2016 (the “Effective Date”), between Hertz Global Holdings, Inc., a Delaware corporation (f/k/a Hertz Rental Car Holding Company, Inc., “New Hertz Holdings”), and Herc Holdings Inc., a Delaware corporation (f/k/a Hertz Global Holdings, Inc., “Herc Holdings”).  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Separation Agreement (as defined below).

 

RECITALS

 

A.            New Hertz Holdings and Herc Holdings have entered into the Separation and Distribution Agreement (the “Separation Agreement”), dated as of the date hereof, pursuant to which Herc Holdings intends to distribute to its stockholders, on a pro rata basis, all of the outstanding shares of common stock, par value $0.01 per share, of New Hertz Holdings owned by Herc Holdings (the “Distribution”).

 

B.            Following the Distribution, New Hertz Holdings will own and conduct, directly and indirectly, the Car Rental Business, and Herc Holdings will own and conduct, directly and indirectly, the Equipment Rental Business (the “Separation”).

 

C.            New Hertz Holdings was incorporated on August 28, 2015 under the name “Hertz Rental Car Holding Company, Inc.,” for the purpose of serving as the top-level holding company for the Car Rental Business in connection with the Separation.

 

D.            Herc Holdings was previously named “Hertz Global Holdings, Inc.” and historically served as the holding company for the consolidated Car Rental Business and Equipment Rental Business.

 

E.             Herc Holdings will serve as the top-level holding company of the Equipment Rental Business in connection with the Separation.

 

F.              In connection with the transactions contemplated by the Separation Agreement and in order to ensure a smooth transition following the Separation, each party desires that the other party provide, or cause its Affiliates or Contractors to provide, certain transition Services in exchange for the consideration stated in this Transition Services Agreement and in accordance with the terms and subject to the conditions set forth in this Transition Services Agreement.

 

G.            The Services to be provided hereunder will be specified in separate Project Statements that will set forth the scope of the Services to be provided as well as the party who will provide or cause to be provided the Services (the “Supplier” as further defined herein) to the other party (the “Buyer” as further defined herein).

 

H.           Each party in its capacity as a Buyer wishes to receive such specified Services for use in connection with its Business in order to ensure a smooth transition following the Separation as well as certain other Services that Buyer may select, and each party in its capacity as a Supplier has agreed to provide such Services in accordance with the terms specified herein.

 

AGREEMENT

 

In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows, effective as of the Distribution Date:

 

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ARTICLE I

 

DEFINITIONS

 

Section 1.1 Table of Definitions. The following terms have the meanings set forth in the sections of this Transition Services Agreement referenced below:

 

	
Definition
    	
 
    	
Section
    
	
Additional Services
    	
 
    	
2.4(a)
    
	
Allocated Cost
    	
 
    	
5.2
    
	
Confidential Information
    	
 
    	
9.1(a)
    
	
Contractor
    	
 
    	
3.3
    
	
Dispute
    	
 
    	
10.1
    
	
Distribution
    	
 
    	
Recitals
    
	
Effective Date
    	
 
    	
Preamble
    
	
Force Majeure
    	
 
    	
10.2
    
	
Herc Holdings
    	
 
    	
Preamble
    
	
Identified Services
    	
 
    	
2.2
    
	
Improvements
    	
 
    	
6.2
    
	
IP
    	
 
    	
6.2
    
	
Liabilities
    	
 
    	
8.3
    
	
New Hertz Holdings
    	
 
    	
Preamble
    
	
Non-Breaching Party
    	
 
    	
7.2(b)
    
	
Project Statement
    	
 
    	
2.1
    
	
Sales Taxes
    	
 
    	
5.4
    
	
Separation
    	
 
    	
Recitals
    
	
Separation Agreement
    	
 
    	
Recitals
    
	
Services Manager
    	
 
    	
3.1
    
	
Services Termination Notice
    	
 
    	
7.2(a)
    
	
Term
    	
 
    	
7.1
    
	
Transition Services Agreement
    	
 
    	
Preamble
    

 

Section 1.2 Certain Defined Terms. For the purposes of this Transition Services Agreement:

 

“Business” means, with respect to Herc Holdings and its Affiliates, the Equipment Rental Business, and, with respect to New Hertz Holdings and its Affiliates, the Car Rental Business.

 

“Buyer” means with respect to a Service specified in a Project Statement, the party receiving such Service as specified in the Project Statement.

 

“Buyer Data” means data relating to the operation of the Business of Buyer and that is the subject of a particular Service provided by Supplier, owned by Buyer, including as a result of the allocation of assets pursuant to the Separation Agreement, and in the possession or control of Supplier.

 

“Change of Control” means, with respect to each party,

 

(a)         any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than twenty percent (20%) of the total voting power of the Voting Stock of such party;

 

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(b)         such party merges or consolidates with or into, or sells or transfers (in one or a series of related transactions) all or substantially all of the assets of such party and its Subsidiaries to another Person and any “person” (as defined in clause (a) above) is or becomes the “beneficial owner” (as so defined), directly or indirectly, of more than twenty percent (20%) of the total voting power of the Voting Stock of the surviving Person in such merger or consolidation, or the transferee Person in such sale or transfer of assets, as the case may be; or

 

(c)          at any time individuals who at the Effective Date were members of the board of directors of such party (together with any new members thereof whose election by such board of directors or whose nomination for election by holders of capital stock of such party was approved by a vote of a majority of the members of such board of directors then still in office who were either members thereof at the Effective Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of such board of directors then in office.

 

“CI Recipients” means, with respect to a party hereto, its Affiliates, and its and their directors, officers, employees, agents and advisors (including, with respect to the Supplier, the Representatives).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Maximum Transition Period” means the two-year period beginning on the Effective Date.

 

“New Service” means a Service not provided or supplied by Supplier or its Representatives for the Business of Buyer during the 12 months preceding the Effective Date.

 

“Representative” means an Affiliate, Contractor or other Person providing Services hereunder on behalf of Supplier.

 

“Services” means collectively the Identified Services and any Additional Services described in mutually agreed Project Statements.

 

“Supplier” means with respect to a Service specified in a Project Statement, the party providing such Service as specified in the Project Statement.

 

“Transition Period” means the maximum period of time set forth in the applicable Project Statement for a Service, as such Transition Period may be adjusted by mutual written agreement of the parties from time to time; provided, however, that in no event will the Transition Period exceed the Maximum Transition Period.

 

“Variable Allocated Cost” means the fully allocated cost for providing Services calculated in a manner consistent with past practice and as may be more specifically set forth on an applicable Project Statement, including the following (to the extent allocable to the provision of the Services): (a) the cost of licenses for software or other intellectual property (or other cost associated with obtaining rights to use software or intellectual property), including any termination, transfer, sublicensing, access, upgrade or conversion fees, (b) the cost of maintenance and support, including user support, (c) the fully loaded cost of employees and other Representatives directly involved in the provision of the Services, including the cost of employees and other Representatives retained, displaced or transferred (excluding severance costs for Supplier employees), as set forth on the applicable Project Statement, (d) the cost of equipment, (e) the cost of disaster recovery services and backup services, (f) the cost of facilities and space, (g) the cost of supplies (including consumables), (h) the cost of utilities (HVAC, electricity, gas, etc.), (i) the cost of networking and connectivity, (j) reasonable legal fees associated with any advice, activities or agreements related to the foregoing areas, (k) any reasonable out-of-pocket expenses incurred by Supplier with third

 

3

 

parties (including Contractors) in connection with the provision of Services (including one-time set-up costs, license fees, costs to enter into or amend existing third-party agreements, costs to exit third-party agreements, termination fees, and other costs incurred in connection with Contractors engaged in compliance with this Transition Services Agreement), and (l) the allocated depreciation costs of capitalized hardware, software and consulting services (to the extent allocable to the provision of the Services). Travel expenses must be reasonable and incurred in accordance with Supplier’s normal travel policy. Overhead allocations must be calculated consistently with Supplier’s practice as then generally used by Supplier in its applicable, respective geographic business.

 

“Voting Stock” of an entity means all classes of capital stock of such entity then outstanding and normally entitled to vote in the election of directors or all interests in such entity with the ability to control the management or actions of such entity.

 

ARTICLE II

 

TRANSITION SERVICES

 

Section 2.1 Project Statements.  The scope of each agreed upon Service to be provided under the terms of this Transition Services Agreement will be set forth in a Project Statement substantially in the form set forth in Annex A (a “Project Statement”), including, as applicable, (a) the party that is the Supplier of the Service and the party that is the Buyer of the Service, (b) a Transition Period for such Service, (c) the location of such Service, (d) each party’s Services Manager for such Project Statement, (e) any details regarding the cost for such Service, (f) payment terms, and (g) any specifications applicable to such Service, if different from the specifications defined in this Transition Services Agreement. No Project Statement (other than the initial Project Statements with respect to the Identified Services) will be binding or effective unless signed by both parties to such Project Statement. Supplier will use commercially reasonable efforts to provide, or cause one or more of its Representatives to provide, to Buyer the Services described in effective Project Statements in accordance therewith and subject to the terms and conditions of this Transition Services Agreement, and Buyer agrees to purchase and pay for such Services as provided for in Article V.

 

Section 2.2 Identified Services.  Each Project Statement entered into as of the Effective Date is attached to this Transition Services Agreement in Annex B, and the Services identified in such Project Statements are referred to in this Transition Services Agreement, collectively, as the “Identified Services.”

 

Section 2.3 Additional Services.

 

(a)         If Buyer desires to receive any services that are not Identified Services, or that represent a significant or material change to an Identified Service (including any extension thereof), Buyer will provide Supplier with a reasonably detailed written request for such proposed services (the “Additional Services”) (such request sufficiently detailed to enable Supplier to weigh the risks and assess the feasibility of such request and attempt to estimate the resources and effort required to provide such proposed services). Within thirty (30) days following such request, Supplier will, to the extent reasonably feasible, assess the request in good faith and provide notice of whether it will endeavor to provide the requested Additional Service. If Supplier does not respond to such request within thirty (30) days following such request, then Supplier will be deemed to have refused such request.

 

(b)         If a requested Additional Service is reasonably necessary to effect the Separation of the Car Rental Business and Equipment Rental Business, then Supplier will accept the request to provide the proposed Additional Service if it can feasibly provide such Additional Service without undue

 

4

 

burden in light of Supplier’s resource constraints and obligations. Supplier will have no obligation to provide an Additional Service or to provide the Additional Service under any specific terms, and may decline to provide such requested Additional Service in its sole and absolute discretion, if any of the following apply: (i) the requested Additional Service is not reasonably necessary to effect the Separation of the Car Rental Business and Equipment Rental Business; (ii) the requested Additional Service is a New Service; (iii) the requested Additional Service could be obtained from other commercial service providers in a commercially reasonable manner; (iv) Buyer will not agree to pay the costs for such Additional Services; or (v) the Transition Period for the requested Additional Service extends beyond the Maximum Transition Period.

 

(c)          If Supplier accepts a request to provide an Additional Service, it will, to the extent reasonably feasible, provide a good faith estimate of the costs, timing and resources required to provide such Additional Services, which may be (i) a fixed fee, and include a mark-up, or (ii) the Variable Allocated Cost of providing the Services, in each case as reasonably determined by Supplier. The parties will then promptly negotiate in good faith a Project Statement by which the proposed Additional Services would be provided under this Transition Services Agreement.

 

Section 2.4 Disputes Over Requested Services.  In the event that Buyer alleges that Supplier (or a proposed Supplier) has violated its obligation to consider or provide a requested Service hereunder, or has acted in bad faith in negotiating the terms applicable to a Service, such Dispute will be subject to the dispute resolution procedures identified in Section 10.1.

 

Section 2.5 Financial Obligation.  In providing the Services, Supplier and its Representatives will not be obligated to perform any of the following actions unless Buyer agrees to pay the Variable Allocated Cost of such actions and the performance of such actions is reasonably within the control of Supplier and its Representatives: (a) maintain the employment of any specific employee; (b) purchase, lease or license any additional equipment or software, except any replacement for existing equipment or software owned or licensed by Supplier and necessary to provide the Services pursuant to the terms of this Transition Services Agreement, to the extent such replacement equipment and/or software is available on commercially reasonable terms consistent with the terms on which it was previously available to Supplier; (c) pay any costs related to the conversion of the Buyer Data from one format to another; or (d) pay any costs necessary to integrate Buyer’s systems for purposes of receiving the Services.

 

Section 2.6 Means of Providing Services.  Supplier will, in its sole discretion, determine the means and resources used to provide the Services in accordance with its business judgment and subject to Article IV. Supplier will have sole discretion and responsibility for staffing, instructing and compensating its personnel and third parties who perform the Services.

 

Section 2.7 Access to Facilities and Equipment.  To the extent reasonably required to perform the Services hereunder, Buyer will provide (or, as necessary, will cause its Affiliates to provide) Supplier with reasonable access to and use of Buyer’s and its Affiliates’ applicable facilities and equipment.

 

Section 2.8 Cooperation. Supplier and Buyer will use commercially reasonable efforts to assist and cooperate with respect to the provision of Services pursuant to this Transition Services Agreement. Buyer acknowledges that some Services to be provided under this Transition Services Agreement require instructions and information from Buyer, which Buyer will provide to Supplier sufficiently in advance in order to enable Supplier or its Representatives to provide or procure such Services in a timely manner.  Buyer will provide all information reasonably required or requested by Supplier to perform its obligations under this Transition Services Agreement.  Supplier will not be liable for any delays resulting from or

 

5

 

caused by Buyer’s failure to provide such instructions or information in a timely manner, and Buyer will pay any reasonable additional costs or expenses, including labor, resulting therefrom.

 

Section 2.9 SOX and Audit Access. If requested by Buyer, Supplier will permit Buyer reasonable access, upon reasonable advance notice and during normal business hours, to Supplier’s records, books, computer data, other data and information, personnel, systems and facilities for the purpose of Buyer’s testing and verification of the effectiveness of controls with respect to the Services as is reasonably necessary to enable the management of Buyer to comply with its obligations under §404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Securities and Exchange Commission promulgated thereunder and to enable Buyer’s independent public accounting firm to complete the integrated audit of the Buyer including the audit of Buyer’s internal controls over financial reporting as required by Buyer’s external auditors. Supplier is not required to furnish Buyer access to any information pursuant to this Section 2.9 other than information that relates specifically to the Services.  Buyer shall reimburse Supplier for the reasonable and documented out-of-pocket expenses, if any, incurred in providing such information and access.  Nothing in this Section 2.9 shall require the disclosure of any information that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine, the common interest and joint defense doctrines or other applicable privileges.  Any information furnished pursuant to this Section 2.9 shall be subject to the confidentiality provisions hereof.

 

ARTICLE III

 

PERSONNEL

 

Section 3.1 Services Managers.  Each party will select a separate services manager (a “Services Manager”) for each Project Statement, with each such Services Manager to be identified in the applicable Project Statement, to act as its primary contact person for the provision or receipt, as applicable, of the Services hereunder. All communications relating to the provision of the Services will be directed to the Services Manager of the other party. The Services Managers of the parties will meet periodically to discuss the status of the Services.

 

Section 3.2 Supplier Employees.  Except as otherwise set forth in the Separation Agreement or the Employee Matters Agreement, for the avoidance of doubt, this Transition Services Agreement does not impose an obligation on Supplier or any of its Affiliates to second or procure the secondment to Buyer of any employee in connection with the provision of the Services. The parties agree that such employees of Supplier and its Affiliates providing Services are employees of Supplier or its Affiliates, as applicable. All labor matters relating to any employees of Supplier and its Affiliates will be within the exclusive direction, control and supervision of Supplier and its Affiliates, and Buyer will take no action affecting such matters, and Supplier and its Affiliates will have the sole right to exercise all authority with respect to the employment, termination, assignment, and compensation of such employees. Supplier and its Affiliates will be solely responsible for the payment of all salary and benefits, social security taxes, unemployment compensation tax, workers’ compensation tax, other employment taxes or withholdings and premiums and remittances with respect to employees of Supplier and its Affiliates used to provide Services, and all employees of Supplier and its Affiliates providing Services under this Transition Services Agreement will be deemed to be employees solely of Supplier or its Affiliates, as applicable, for purposes of all compensation and employee benefits and not to be employees, representatives or agents of Buyer.

 

Section 3.3 Contractors.  The Services may be provided in whole or in part by (a) Affiliates of Supplier, or (b) third-party contractors or subcontractors (each, a “Contractor”) capable of providing the required level of service set forth in Article IV.  Supplier shall in all cases retain responsibility for the

 

6

 

provision of Services by Affiliates or Contractors of Supplier, to the extent Supplier would otherwise be liable pursuant to the terms of this Transition Services Agreement.

 

Section 3.4 Compliance with Policies; Safety of Personnel.

 

(a)         For any work performed on premises of Buyer, Supplier and its Representatives will comply with all reasonable security, confidentiality, safety and health policies of Buyer (as applicable to the provision of Services) if and to the extent Buyer informs Supplier of such policies in advance in writing.

 

(b)         Buyer acknowledges that Supplier has instituted and will continue to institute and revise a variety of policies and procedures for its Business. All Services must be reasonably capable of being performed in a manner that is consistent with the policies and procedures of Supplier applicable to its Business, including those relating to antitrust laws and health, safety, labor, employment and environmental laws and otherwise in compliance with applicable law. Supplier will use commercially reasonable efforts to provide Buyer with advance written notice in the event it believes any Service is not consistent with such policies or procedures where the same would materially affect the Services to be provided. To the extent Services are performed on site, Supplier will be permitted to withdraw any Representatives providing Services at that site if Supplier reasonably concludes that such Representatives face any risk to their personal safety and prior written notice (to the extent practicable) has been given to Buyer.

 

ARTICLE IV

 

SERVICE LEVELS

 

Section 4.1 Service Levels.  Supplier will (a) use commercially reasonable efforts to continue to provide, or cause to be provided, those Services being supplied for Buyer’s Business as of the Effective Date at a relative service level substantially similar to that provided to Buyer’s Business in the twelve (12) months preceding the Effective Date, taking into account the effects of the Separation on Supplier’s ability to provide the Services, unless inconsistent with any service level with respect to a Service as specified in the applicable Project Statement; or (b) use commercially reasonable efforts to provide, or cause to be provided, New Services consistent with the specifications, if any, set forth in an applicable Project Statement.

 

Section 4.2 Exceptions.  It will not be deemed to be a breach of this Transition Services Agreement if Supplier or its Representatives fail to meet the service levels set forth in Section 4.1 because of (a) the failure of Buyer to cooperate with or provide access, information, services or decisions to Supplier or its Representatives as required hereunder, (b) failure caused by any act or omission of Buyer or its facilities, equipment, hardware or software, (c) changes reasonably deemed to be required by changes in law, technology or the availability of reasonably commercially available products and services, (d) changes otherwise permitted hereunder, (e) failures by third-party service providers not retained by Supplier, or (f) Force Majeure as further provided in Section 10.2.

 

Section 4.3 No Warranty.  EXCEPT AS EXPRESSLY STATED IN THIS TRANSITION SERVICES AGREEMENT OR IN AN APPLICABLE PROJECT STATEMENT, (A) THE SERVICES WILL BE PROVIDED ON AN “AS IS” AND “WITH ALL FAULTS” BASIS AND (B) SUPPLIER DOES NOT MAKE ANY WARRANTY WITH RESPECT TO THE SERVICES, WHETHER EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES, WHETHER OF MERCHANTABILITY, SUITABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE FOR SAID SERVICES.

 

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ARTICLE V

 

PAYMENT FOR SERVICES

 

Section 5.1 Costs and Charges.  Supplier will charge Buyer the allocated cost for the Services as set forth in the attached Project Statements, which may be (i) a fixed fee, and include a mark-up, or (ii)  the Variable Allocated Cost of providing the Services, in each case as indicated on the applicable Project Statements.

 

Section 5.2 Invoices and Payment.  Supplier will invoice Buyer either (i) on a monthly basis in arrears with respect to Services priced on a fixed-fee basis or (ii) on a periodic basis with respect to Services priced on the basis of Variable Allocated Costs of providing such Services, as reasonably determined by Supplier. Invoices will be sent in a format and containing a level of detail reasonably sufficient for Buyer to determine the accuracy of the computation of the amount charged and that such amount is being calculated in a manner consistent with this Transition Services Agreement. Reasonable documentation will be provided for all out-of-pocket expenses consistent with Supplier’s practices. All amounts will be due and payable within thirty (30) days of the date of invoice; provided, however, that, notwithstanding anything to the contrary in this Section 5.2, (a) with respect to any material purchases identified in a Project Statement or other attachment, such amounts will be due and payable in advance of the date that such Services are provided as set forth therein and (b) Buyer and Supplier may specify in a Project Statement alternative invoicing and payment arrangements with respect to certain Services. Upon Buyer’s reasonable request, Supplier will provide explanations, answer questions, and provide additional documentation regarding invoiced amounts. Unless otherwise specifically agreed in writing by the parties hereto, all payments due hereunder will be made by wire transfer of immediately available funds to the account or accounts designated in writing from time to time by Supplier.  If Buyer disputes any portion of any invoice, Buyer must notify Supplier in writing of the nature and the basis of the dispute within thirty (30) days after the date of the applicable invoice, after which time Buyer will have waived any rights to dispute such amount; provided, however, that Buyer’s dispute as to any portion of any invoice shall in no way affect Buyer’s obligation to timely pay any invoiced amount pursuant to this Section 5.2.

 

Section 5.3 Taxes.  In addition to any amounts otherwise payable pursuant to this Transition Services Agreement, Buyer will be responsible for any and all sales, use, excise, services or similar taxes imposed on the provision of goods and services by Supplier or its Representatives to Buyer pursuant to this Transition Services Agreement (“Sales Taxes”) and will either (a) remit such Sales Taxes to Supplier (and Supplier will remit the amounts so received to the applicable taxing authority), (b) provide Supplier with a certificate or other proof, reasonably acceptable to Supplier, evidencing an exemption from liability for such Sales Taxes or (c) pay directly or reimburse or indemnify Supplier for such Sales Taxes. For the avoidance of doubt, all amounts under this Transition Services Agreement are expressed exclusive of Sales Taxes.  The parties agree to cooperate with each other in determining the extent to which any Sales Tax is due and owing under the circumstances, and will provide and make available to each other any resale certificate, information regarding out of state use of materials, services or sales, and other exemption certificates or information reasonably requested by either party. The parties further agree to work together to structure the provision of the Services in a lawful manner to eliminate or minimize applicable Sales Taxes.  For the avoidance of doubt, (i) there shall be no mark-up on any Sales Taxes or other Taxes payable by Buyer under this Transition Services Agreement, and (ii) Buyer shall have no responsibility for any income Taxes of any Supplier attributable or related to any Services.

 

If Supplier or its Representatives (i) receives any refund (whether by payment, offset, credit or otherwise) or (ii) utilizes any overpayment of Taxes that are borne by Buyer pursuant to this Transition Services Agreement, then Supplier shall promptly pay, or cause to be paid, to Buyer an amount equal to the deficiency or excess, as the case may be, with respect to the amount that Buyer has borne if the

 

8

 

amount of such refund or overpayment (including, for the avoidance of doubt, any interest or other amounts received with respect to such refund or overpayment) had been included originally in the determination of the amounts to be borne by Buyer pursuant to this Transition Services Agreement, net of any additional Taxes and costs Supplier incurs or will incur as a result of the receipt of or in obtaining such refund or such overpayment.

 

Section 5.4 Other Expenses.  After the Effective Date, except as otherwise specified in this Transition Services Agreement or a Project Statement, each party hereto will pay its own legal, accounting, out-of-pocket and other expenses incident to this Transition Services Agreement and to any action taken by such party in carrying this Transition Services Agreement into effect.

 

Section 5.5 Interest Payable on Amounts Past Due.  All late payments due under this Transition Services Agreement will bear interest at a rate equal to the prime rate (as published in the Wall Street Journal from time to time) plus three (3) percentage points, from the invoice due date to the date of payment.

 

Section 5.6 Records.  Supplier will keep reasonably detailed records, consistent with past practice, for any expenses that constitute a component upon which the price for Services is determined. Supplier will maintain the records in accordance with its then-current record retention policies. At reasonable intervals during the Term and for two (2) years thereafter, Buyer will, upon no less than five (5) Business Days prior notice, or, if critical, upon reasonable shorter notice under the circumstances, have reasonable access for the review of such records to verify the invoices submitted to Buyer hereunder, notwithstanding the termination of any Project Statement. The costs of all such reviews will be borne by Buyer. The confidentiality provisions in Article IX of this Transition Services Agreement will govern all such reviews by Buyer.

 

ARTICLE VI

 

PROPRIETARY RIGHTS

 

Section 6.1 Equipment.  Except with respect to those items of equipment, systems, tools, facilities and other resources allocated to Buyer pursuant to the Separation Agreement, all equipment, systems, tools, facilities and other resources used by Supplier and any of its Affiliates in connection with the provision of Services hereunder will remain the property of Supplier and its Affiliates and, except as otherwise provided in this Transition Services Agreement, will at all times be under the sole direction and control of Supplier and its Affiliates.

 

Section 6.2 Intellectual Property.  To the extent Supplier or its Representatives use any know-how, processes, technology, trade secrets or other intellectual property owned by or licensed to Supplier or any of its Representatives (“IP”) in providing the Services, such IP (other than such IP licensed to Supplier by Buyer or its Affiliates, if any) and any derivative works of, or modifications or improvements to such IP conceived or created as part of the provision of Services (“Improvements”) will, as between the parties, remain the sole property of Supplier unless such Improvements were specifically created for Buyer or its Affiliates pursuant to a specific Service as specifically indicated in the applicable Project Statement. The applicable party will and hereby does assign to the applicable owner designated above, and agrees to assign automatically in the future upon first recordation in a tangible medium or first reduction to practice, all of such party’s right, title and interest in and to all Improvements, if any. All rights not expressly granted herein are reserved. Notwithstanding the foregoing, if there is any conflict between the terms of this Section 6.2, on the one hand, and specific terms of the Separation Agreement or Intellectual Property Agreement, on the other hand, then the terms of the Separation Agreement or Intellectual Property Agreement, as applicable, will prevail.

 

9

 

ARTICLE VII

 

TERM AND TERMINATION

 

Section 7.1 Term.  Buyer will use commercially reasonable efforts to end its need to use the Services as soon as reasonably practicable after the Effective Date; provided, however, that Supplier will not be required to provide the Services later than the Maximum Transition Period or any earlier applicable Transition Period. This Transition Services Agreement commences on the Effective Date and terminates upon the termination of all Services, unless sooner terminated by the parties in accordance with Section 7.3 (the “Term”); provided, however, that Article V (Payment for Services), Article VI (Proprietary Rights), Article VIII (Indemnity and Damages), Article IX (Confidentiality) and Article X (General) of this Transition Services Agreement shall survive any such termination.

 

Section 7.2 Termination of a Service.

 

(a)         Buyer may elect to terminate a Service, in whole or in part, at any time by providing Supplier with written notice indicating the effective date of termination of such Service, which effective date shall be the last day of a given month. The number of days notice in advance of termination provided will be reasonable and in no event shorter than (i) thirty (30) days, (ii) any longer required notice period specified in a Project Statement, and (iii) any greater minimum notice period as may be provided under applicable arrangements with Contractors and of which Buyer is provided notice. Following receipt of such notice (the “Services Termination Notice”), Supplier will provide, not later than fifteen (15) days following Supplier’s receipt of the Services Termination Notice, to Buyer written notice regarding the impact of such termination, including any impact on any other Services. In the event that Buyer still wishes to proceed with termination, then (A) Buyer will provide Supplier with written notice thereof prior to the effective date of termination, (B) the affected Services will terminate effective as of the date of termination, and (C) Supplier will not be liable for any consequences of such termination, whether included in Supplier’s prior notice or otherwise.

 

(b)         Without prejudice to any other rights or remedies of either party, Supplier or Buyer (the “Non-Breaching Party”) may also elect to terminate one or more Services, in whole or in part, or this Transition Services Agreement and all Services, at any time, upon written notice to the other party, if (i) such other party will have failed to perform any of its material obligations under this Transition Services Agreement relating to one or more Service(s) (including, with respect to Buyer, failure to pay any amount when due hereunder), (ii) the Non-Breaching Party has notified the other party in writing of such failure, and (iii) for a period of thirty (30) days after receipt by the other party of written notice of such failure, such failure will not have been cured.

 

(c)          A Service will terminate automatically at the end of its applicable Transition Period, or if no Transition Period is specified, at the end of the Maximum Transition Period.

 

Section 7.3 Termination of Transition Services Agreement.  Either party may terminate this Transition Services Agreement and all Services immediately upon written notice to the other party if (a) the other party files for bankruptcy protection or has an involuntary petition for bankruptcy filed against it which is not dismissed within sixty (60) days thereafter, becomes insolvent or generally unable to pay its bills when due, makes an assignment for the benefit of creditors, dissolves or liquidates, has a liquidator or receiver appointed by a court, or is a party of any other similar legal proceedings, if in any such case termination is permitted by applicable law, or (b) there occurs any Change of Control with respect to the other party.

 

10

 

Section 7.4 No Abandonment for Dispute.  In the event of a pending Dispute between the parties as to whether Supplier had the right to terminate one or more Services or this Transition Services Agreement and all Services pursuant to Section 7.2(b), Supplier will not have the right to suspend, withhold, interrupt or terminate (and Buyer will continue to pay for) any Service involved in such Dispute, unless and until such Dispute is resolved in a manner which authorizes or orders such suspension, withholding, interruption or termination; provided, however, that the foregoing will in no event require Supplier to provide any (a) requested Services that are not being provided as of the date the Dispute arises or (b) Services beyond the applicable Transition Period or, if no Transition Period is specified, the Maximum Transition Period.

 

Section 7.5 Costs upon Termination.

 

(a)         Upon any termination, Buyer will pay all amounts outstanding for Services provided by Supplier or its Contractors. Any termination of Services will be final, and monthly charges will be appropriately prorated to the extent the Transition Services Agreement or any Services are terminated other than on the last day of a given month.

 

(b)         Upon any termination of Services by Buyer pursuant to Section 7.2(a) or by Supplier pursuant to Section 7.2(b) or Section 7.3, Buyer will be liable for all out-of-pocket costs, stranded costs or other costs incurred by Supplier that are not otherwise recoverable by Supplier in connection with termination or winding up of terminated Services, including (i) costs under third-party contracts for services, software or other items, including breakage fees or termination fees, (ii) costs relating to any of Supplier’s employees or other Representatives which are affected by termination of a Service, (iii) fees associated with facilities, hardware or equipment affected by the terminated Service, including fees related to terminated leases, (iv) costs relating to or in connection with the termination of any related or linked Services, and (v) costs of any materials or third-party services that, before notice of termination, Supplier paid for or obligated itself to pay for in connection with providing the Services, if and to the extent that Supplier cannot through reasonable commercial efforts obtain a refund for or terminate its obligation to pay for such materials and services.

 

Section 7.6 Return of Buyer Data; Return of Materials.

 

(a)         Upon termination of a Service for any reason, Supplier will promptly provide Buyer with a copy of any Buyer Data relating to such terminated Service (excluding any Buyer Data that has previously been provided to Buyer or that is otherwise already in the possession of Buyer). Such Buyer Data will be provided in its then current form, in an electronic format and media to be reasonably agreed upon by the parties. The foregoing obligation of Supplier is absolute, and Supplier will not be entitled to withhold such Buyer Data for any reason, including due to Buyer’s breach of this Transition Services Agreement (provided that if Buyer is in breach of this Transition Services Agreement, then Buyer shall pay Supplier prior to delivery for any reasonable costs incurred by Supplier to comply with its obligation to provide the Buyer Data). Upon providing Buyer with an electronic media copy of the Buyer Data, Supplier will have no further responsibility with respect to such data, including maintaining a backup or archive for Buyer, except as otherwise expressly provided in a Project Statement.

 

(b)         The parties will, at the disclosing party’s request and upon termination of this Transition Services Agreement, use commercially reasonable efforts to, at the disclosing party’s election, promptly return to the disclosing party, or destroy and deliver to the disclosing party written confirmation of the destruction of, all documents and materials in tangible or electronic form containing any Confidential Information in the possession or control of the party to which such information was disclosed. Notwithstanding the foregoing, the parties hereto acknowledge that certain systems

 

11

 

utilized by Supplier may not permit the purging or deletion of data, and in such case Supplier shall not be obligated to return or destroy such data pursuant to the preceding sentence and agrees to maintain copies of affected data containing Confidential Information of Buyer for the minimum amount of time permitted by such systems and not to use such Confidential Information for any other purposes.

 

ARTICLE VIII

 

INDEMNITY AND DAMAGES

 

Section 8.1 Limitations of Liability.

 

(a)         Neither party nor any of its Affiliates will be liable to the other party or any related parties for any special, punitive, consequential, incidental or exemplary damages (including lost or anticipated revenues or profits relating to the same and attorneys’ fees) arising from any claim relating to this Transition Services Agreement or any of the Services to be provided under this Transition Services Agreement or the Project Statements, or the performance of or failure to perform such party’s obligations under this Transition Services Agreement or the Project Statements, whether such claim is based on warranty, contract, tort (including negligence or strict liability) or otherwise, and regardless of whether such damages are foreseeable or an authorized representative of such party is advised of the possibility or likelihood of such damages.

 

(b)         The aggregate liability of Supplier arising out of or in connection with this Transition Services Agreement will be limited by each specific Service, such that the aggregate liability of Supplier arising out of or in connection with each specific Service will not exceed an amount equal to the aggregate amount of fees (which fees will exclude any pass-through costs of Contractors) paid or payable to Supplier for such specific Service under this Transition Services Agreement.

 

(c)          The limitations of liability set forth in this Section 8.1 do not apply to either party’s breach of the confidentiality obligations set forth in Article IX or Buyer’s indemnification obligations under Section 8.3.

 

Section 8.2 Mitigation of Damages.  The parties will, in all circumstances, use commercially reasonable efforts to mitigate and otherwise minimize damages, whether direct or indirect, due to, resulting from or arising in connection with any failure to comply fully with the obligations under this Transition Services Agreement.

 

Section 8.3 Buyer Indemnity.  Buyer agrees to indemnify, defend and hold Supplier and each of its Representatives and Affiliates harmless against all damages, claims, actions, fines, penalties, expenses or costs (including court costs and reasonable attorneys’ fees) (collectively, “Liabilities”) attributable to any third-party claims asserted against Supplier or its Representatives or Affiliates arising from or relating to Supplier’s or any of its Representatives’ provision of or failure to provide the Services as provided hereunder, except for any third-party claims to the extent Buyer and its Affiliates would be entitled to indemnification with respect thereto pursuant to Section 8.4.

 

Section 8.4 Supplier Indemnity.  Supplier agrees to indemnify, defend and hold Buyer and each of its Affiliates harmless against all Liabilities attributable to any third-party claims asserted against Buyer or its Affiliates arising from or relating to Supplier’s or any of its Representatives’ provision of or failure to provide the Services as provided hereunder, to the extent arising from or related to the gross negligence, willful misconduct or fraud of Supplier, any of its Representatives or any of its or their respective employees, officers or directors.

 

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Section 8.5 Indemnity Procedure.  All claims for indemnification under this Article VIII will be made in accordance with the procedures set forth in Article V of the Separation Agreement.

 

ARTICLE IX

 

CONFIDENTIALITY

 

Section 9.1 Confidential Information.

 

(a)         Each party will, and will cause its CI Recipients that receive Confidential Information to, hold as confidential and not disclose to any other party any information received by such party or its CI Recipients from the other party or its Affiliates under this Transition Services Agreement that relates to the other party’s business or that relates to the other party’s activities or deliverables under this Transition Services Agreement (“Confidential Information”). “Confidential Information” includes: (i) the Project Statements; (ii) the IP and Improvements; (iii) the Buyer Data; and (iv) any information obtained or reviewed by a party or its CI Recipients in the course of reviewing the other party’s records in accordance with this Transition Services Agreement, regardless of whether it is marked as “Confidential.”

 

(b)         “Confidential Information” does not include any information that: (i) is or becomes publicly known, other than as a result of disclosure by the receiving party or its CI Recipients in breach of this Transition Services Agreement; (ii) is known to the receiving party or its CI Recipients before disclosure under this Transition Services Agreement, as documented by business records (and ownership of such information has not been allocated to the disclosing party pursuant to the Separation Agreement); (iii) is disclosed to the receiving party or its CI Recipients by a third party having no obligation of confidentiality to the disclosing party or is Affiliates; or (iv) is independently developed by the receiving party or its CI Recipients without use of or reference to the disclosing party’s Confidential Information as documented by reasonable evidence.

 

Section 9.2 Permissible Disclosure.

 

(a)         Notwithstanding Section 9.1, each party may disclose the other party’s Confidential Information to its CI Recipients who reasonably need to know such information for the purposes of providing or receiving the Services hereunder, as the case may be, and each party and its CI Recipients may (i) disclose the other party’s Confidential Information if legally requested or compelled to do so, in accordance with the terms and conditions of Section 9.2(b) below; (ii) disclose the Project Statements as reasonably necessary in connection with efforts to resolve a Dispute; and (iii) disclose the Project Statements to third parties for strategic due diligence purposes if the third party has signed a confidentiality agreement covering the disclosure.

 

(b)         In the event that either receiving party or any of its CI Recipients is required by law or court, regulatory or governmental order or demand or requested by any court or regulatory or governmental body to disclose any of the Confidential Information, such receiving party agrees that it, to the extent permitted by law, will provide the disclosing party with prompt written notice of such requirement or request so that the disclosing party may seek a protective order or other appropriate remedy and to cooperate with the disclosing party (at the disclosing party’s sole expense) to obtain any such order or remedy. If such protective order or other remedy is not obtained or the disclosing party grants a waiver hereunder, the receiving party or such CI Recipient may furnish only that portion of the Confidential Information which the receiving party or such CI Recipient determines, upon advice of counsel, that it is legally requested or compelled to disclose; provided, however, that the receiving party and its CI Recipients shall use their

 

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commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Confidential Information so disclosed.

 

(c)          The receiving party shall cause all of its CI Recipients to comply with the applicable terms of this Article IX and shall be fully responsible for any and all failures of such CI Recipients to comply with the terms of this Article IX applicable to such CI Recipients.

 

Section 9.3 Survival of Confidentiality Obligations.  The parties’ obligations under this Article IX will continue for a period of five (5) years after the termination of this Transition Services Agreement.

 

ARTICLE X

 

GENERAL

 

Section 10.1 Dispute Resolution.  Any controversy or claim arising out of or relating to this Transition Services Agreement (a “Dispute”), will be resolved in accordance with the following dispute resolution procedures:

 

(a)         The parties shall attempt in good faith to resolve the Dispute in the ordinary course of business through (i) personal meetings and/or communications between the Service Managers responsible for the functional area that is the subject of the Dispute and (ii) thereafter, personal meetings and/or communications of the supervisors or managers of such Service Managers; and

 

(b)         If the informal resolution set forth in clause (a) fails or does not take place within a reasonable time after the Dispute first arises, either party may submit the controversy or claim for resolution in accordance with the dispute resolution procedures set forth in the Separation Agreement.

 

Section 10.2 Force Majeure.  Neither party will be liable for any failure of performance attributable to acts or events (including war, terrorist activities, conditions or events of nature, industry wide supply shortages, civil disturbances, work stoppage, power failures, failure of telephone or data lines and equipment, fire and earthquake, or any law, order, proclamation, regulation, ordinance, demand or requirement of any governmental authority) beyond its reasonable control which impair or prevent in whole or in part performance by such party hereunder (“Force Majeure”). If either party is unable to perform its obligations hereunder as a result of a Force Majeure event, it will, as promptly as reasonably practicable, give notice of the occurrence of such event to the other party.  If Supplier is unable to perform its obligations hereunder as a result of a Force Majeure event, it will use commercially reasonable efforts to resume the Services at the earliest practicable date; provided, however, that upon any failure of Supplier to provide Services under this Section 10.2, Buyer, in its sole discretion, may terminate its receipt of such Service effective upon notice to Supplier and will not be obligated to pay for Services not performed by Supplier due to an event of Force Majeure. The time for performance of any obligation hereunder (including a Transition Period applicable to a suspended Service, provided that the Transition Period as so extended shall in no event exceed the Maximum Transition Period) shall be automatically extended by the period during which a Force Majeure event shall be continuing.

 

Section 10.3 Relationship of the Parties.  Except as specifically provided herein, neither party will act or represent or hold itself out as having authority to act as an agent or partner of the other party, or in any way bind or commit the other party to any obligations. Nothing contained in this Transition Services Agreement will be construed as creating a partnership, joint venture, agency, trust or other association of any kind, each party being individually responsible only for its obligations as set forth in this Transition Services Agreement.

 

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Section 10.4 Assignment.  Except as otherwise provided in this Transition Services Agreement, including Section 3.3, neither this Transition Services Agreement, any Project Statement, nor any of the rights, interests or obligations of any party under this Transition Services Agreement or any Project Statement shall be assigned, in whole or in part, by operation of law or otherwise, by either of the parties without the prior written consent of the other party.  Subject to the foregoing, the provisions of this Transition Services Agreement and the obligations and rights hereunder will inure to the benefit of and be enforceable against each party and their respective successors and permitted assigns.

 

Section 10.5 Third-Party Beneficiaries.  Except as otherwise provided hereunder in Article VIII with respect to indemnification of third parties, nothing contained in this Transition Services Agreement shall be construed to create any third-party beneficiary rights in any individual.

 

Section 10.6 Entire Agreement; No Reliance; Amendment.  This Transition Services Agreement (including all annexes or other attachments) and the Separation Agreement constitute the entire agreement with respect to the subject matter hereof, and any prior agreements, oral or written, are no longer effective. In deciding whether to enter into this Transition Services Agreement, the parties have not relied on any representations, statements, or warranties other than those explicitly contained in this Transition Services Agreement and the Separation Agreement. No amendments or modifications to this Transition Services Agreement or any Project Statement are valid unless in writing, signed by both parties to such agreement.

 

Section 10.7 Waiver.  Except as otherwise provided in Section 5.2, neither party waives any rights under this Transition Services Agreement by delaying or failing to enforce such rights. No waiver by any party of any breach or default hereunder shall be deemed to be a waiver of any subsequent breach or default. Any agreement on the part of any party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party.

 

Section 10.8 Notices.  All notices or other communications required to be sent or given under this Transition Services Agreement will be in writing and will be delivered personally, by commercial overnight courier, by facsimile or by electronic mail, directed to the addresses set forth below. Notices are deemed properly given as follows: (a) if delivered personally, on the date delivered, (b) if delivered by a commercial overnight courier, one (1) Business Day after such notice is sent, and (c) if delivered by facsimile or electronic mail, on the date of transmission, with confirmation of transmission; provided, however, that if the notice is sent by facsimile or electronic mail, the notice must be followed by a copy of the notice being delivered by a means provided in (a) or (b).

 

	
(A)
    	
 
    	
 
    	
 
    	
If to New Hertz Holdings:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Hertz Global Holdings, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
8105 Williams Road
    
	
 
    	
 
    	
 
    	
 
    	
Estero, FL 33928
    
	
 
    	
 
    	
 
    	
 
    	
Attention: Richard J. Frecker
    
	
 
    	
 
    	
 
    	
 
    	
Fax: (866) 888-3765
    
	
 
    	
 
    	
 
    	
 
    	
E-mail: rfrecker@hertz.com
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(B)
    	
 
    	
 
    	
 
    	
If to Herc Holdings:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Herc Holdings, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
27500 Riverview Center Blvd.
    
	
 
    	
 
    	
 
    	
 
    	
Bonita Springs, FL 34134
    

 

15

 

	
 
    	
 
    	
 
    	
 
    	
Attention: Maryann Waryjas
    
	
 
    	
 
    	
 
    	
 
    	
Fax: (239) 301-1109
    
	
 
    	
 
    	
 
    	
 
    	
E-mail: mwaryjas@hertz.com
    

 

Section 10.9 Counterparts.  This Transition Services Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement.  The exchange of copies of this Transition Services Agreement and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Transition Services Agreement as to the parties hereto and may be used in lieu of the original Transition Services Agreement for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 10.10 Severability.  If any provision of this Transition Services Agreement is held to be invalid or unenforceable by a court of competent jurisdiction or other authoritative body, such invalidity or unenforceability will not affect any other provision of this Transition Services Agreement. Upon such determination that a provision is invalid or unenforceable, the parties will negotiate in good faith to modify this Transition Services Agreement so as to effect the original intent of the parties as closely as possible.

 

Section 10.11 Interpretation.  Unless the context dictates otherwise, references herein to this Transition Services Agreement refer to this Transition Services Agreement together with all effective Project Statements. The headings contained in this Transition Services Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Transition Services Agreement. The provisions of this Transition Services Agreement will be construed according to their fair meaning and neither for nor against either party irrespective of which party caused such provisions to be drafted. The terms “include” and “including” do not limit the preceding terms. Each reference to “$” or “dollars” is to United States dollars. Each reference to “days” is to calendar days.

 

Section 10.12 Governing Law.  This Transition Services Agreement and all disputes or controversies arising out of or relating to this Transition Services Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal Laws of the State of New York, without regard to the Laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of New York.

 

Section 10.13 Precedence.  Except as provided in Section 6.2 with respect to ownership of IP and Improvements, (a) if there is any conflict between the terms of this Transition Services Agreement, on the one hand, and specific terms of the Separation Agreement, the Intellectual Property Agreement or any other Ancillary Agreement to the Distribution, on the other hand, then the terms of this Transition Services Agreement will prevail and (b) if there is any conflict between the terms of this Transition Services Agreement, the Separation Agreement, the Intellectual Property Agreement or any other Ancillary Agreement to the Distribution, on the one hand, and specific terms of any Project Statement, on the other hand, the terms of the Project Statement will prevail.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties have caused this Transition Services Agreement to be executed by their duly authorized representatives.

 

	
 
    	
HERTZ GLOBAL   HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard J. Frecker
    
	
 
    	
Name: Richard J.   Frecker
    
	
 
    	
Title: Senior Vice   President, Deputy General Counsel, Secretary and Acting General Counsel
    
	
 
    	
 
    
	
 
    	
HERC HOLDINGS INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lawrence H. Silber
    
	
 
    	
Name: Lawrence H.   Silber
    
	
 
    	
Title: President and   Chief Executive Officer
    

 

[Signature Page to Transition Services Agreement]Exhibit 10.2

 

TAX MATTERS AGREEMENT

 

by and among

 

Herc Holdings Inc.,

 

The Hertz Corporation,

 

Herc Rentals Inc.

 

and

 

Hertz Global Holdings, Inc.

 

Dated as of June 30, 2016

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    
	
 
    
	
DEFINITIONS
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
General
    	
2
    
	
Section 1.02
    	
Additional Definitions
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
ALLOCATION, PAYMENT AND INDEMNIFICATION
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Responsibility for   Taxes; Indemnification
    	
8
    
	
Section 2.02
    	
2016 Consolidated Tax   Payments
    	
10
    
	
Section 2.03
    	
Transaction Taxes
    	
11
    
	
Section 2.04
    	
Preparation of Tax   Returns
    	
11
    
	
Section 2.05
    	
Payment of Sales, Use   or Similar Taxes
    	
12
    
	
Section 2.06
    	
Audits and Proceedings
    	
12
    
	
Section 2.07
    	
Amended Returns;   Carrybacks
    	
13
    
	
Section 2.08
    	
Refunds
    	
14
    
	
Section 2.09
    	
Earnings and Profits   Allocation
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
TAX-FREE STATUS OF THE DISTRIBUTION
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Representations and   Warranties
    	
14
    
	
Section 3.02
    	
Restrictions Relating   to the Distribution
    	
15
    
	
Section 3.03
    	
Procedures Regarding   Opinions and Rulings
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
COOPERATION
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
General Cooperation
    	
18
    
	
Section 4.02
    	
Retention of Records
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    
	
Section 5.01
    	
Dispute Resolution
    	
20
    

 

i

 

	
Section 5.02
    	
Tax Sharing Agreements
    	
20
    
	
Section 5.03
    	
Interest on Late   Payments
    	
20
    
	
Section 5.04
    	
Survival of Covenants
    	
21
    
	
Section 5.05
    	
Termination
    	
21
    
	
Section 5.06
    	
Severability
    	
21
    
	
Section 5.07
    	
Entire Agreement
    	
21
    
	
Section 5.08
    	
Assignment; No Third-Party   Beneficiaries
    	
21
    
	
Section 5.09
    	
Specific Performance
    	
22
    
	
Section 5.10
    	
Amendment
    	
22
    
	
Section 5.11
    	
Rules of   Construction
    	
22
    
	
Section 5.12
    	
Counterparts
    	
23
    
	
Section 5.13
    	
Employee Matters
    	
23
    
	
Section 5.14
    	
Effective Date
    	
23
    
	
Section 5.15
    	
Notices
    	
23
    
	
Section 5.16
    	
Applicable Law
    	
24
    

 

ii

 

TAX MATTERS AGREEMENT

 

THIS TAX MATTERS AGREEMENT (this “Agreement”), dated as of June 30, 2016, is by and between Herc Holdings Inc. (f/k/a Hertz Global Holdings, Inc.), a Delaware corporation (“HERC Parent”), The Hertz Corporation, a Delaware corporation (“THC”), Herc Rentals Inc. (f/k/a Hertz Equipment Rental Corporation), a Delaware corporation (“HERC”) and Hertz Global Holdings, Inc. (f/k/a Hertz Rental Car Holding Company, Inc.), a Delaware corporation (“RAC Parent”).  Each of HERC Parent, THC, HERC and RAC Parent is sometimes referred to herein as a “Party” and, collectively, as the “Parties.”

 

WHEREAS, HERC Parent, through its various subsidiaries, is engaged in the Car Rental Business (as defined below) and the Equipment Rental Business (as defined below);

 

WHEREAS, the board of directors of HERC Parent has determined that it is in the best interests of HERC Parent, its shareholders and RAC Parent to create a separate publicly-traded company that will operate the Car Rental Business;

 

WHEREAS, HERC Parent and RAC Parent have entered into the Distribution Agreement, pursuant to which (i) HERC Parent and its subsidiaries will undertake certain internal restructuring transactions, (ii) HERC Parent will contribute certain entities conducting the Car Rental Business to RAC Parent and (iii) all of the stock of RAC Parent will be distributed by HERC Parent to its stockholders on a pro rata basis (the “Distribution”);

 

WHEREAS, prior to consummation of the Distribution, HERC Parent was the common parent corporation of an affiliated group of corporations within the meaning of Section 1504 of the Code of which each of THC, HERC and RAC Parent was a member;

 

WHEREAS, the Parties intend that, for federal income Tax purposes, each of the Spin-Offs will qualify as tax-free to HERC Parent and its subsidiaries, RAC Parent and HERC Parent’s stockholders pursuant to Sections 355 and (to the extent applicable) 368 and related provisions of the Code; and

 

WHEREAS, the Parties wish to (a) provide for the payment of Tax liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes, and (b) set forth certain covenants and indemnities relating to the preservation of the tax-free status of the Spin-Offs.

 

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the Parties mutually covenants and agrees as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                             General.  As used in this Agreement, the following terms shall have the following meanings:

 

“Accounting Firm” has the meaning set forth in Section 5.01.

 

“Affiliate” has the meaning set forth in the Distribution Agreement.

 

“Affiliated Group” means an affiliated group of corporations, within the meaning of Section 1504(a) of the Code, including the common parent corporation, and any member of such group.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Ancillary Agreements” has the meaning set forth in the Distribution Agreement.

 

“Car Rental Business” has the meaning set forth in the Distribution Agreement.

 

“Closing Date” means the date on which the Distribution occurs.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Consolidated Taxes” means (i) United States federal income Taxes and (ii) any other income Taxes determined on a consolidated, combined, unitary or similar basis.

 

“Counsel” means Debevoise & Plimpton LLP.

 

“Disqualifying Action” means a HERC Parent Disqualifying Action or a RAC Parent Disqualifying Action.

 

“Distribution” has the meaning set forth in the recitals to this Agreement.

 

“Distribution Agreement” means the Separation and Distribution Agreement by and between RAC Parent and HERC Parent dated as of June 30, 2016.

 

“Due Date” means (i) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (ii) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to Tax.

 

“Effective Time” means the time at which the Distribution is effective pursuant to the Distribution Agreement.

 

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“Employee Matters Agreement” means the Employee Matters Agreement by and between RAC Parent and HERC Parent dated as of June 30, 2016.

 

“Equipment Rental Business” has the meaning set forth in the Distribution Agreement.

 

“Extraordinary Transaction” shall mean any action that is not in the ordinary course of business, but shall not include any action that is undertaken pursuant to the Spin-Offs.

 

“Fifty-Percent or Greater Interest” has the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

 

“Final Determination” means the final resolution of liability for any Tax for any taxable period, by or as a result of (i) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, that resolves the entire Tax liability for any taxable period; (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax; or (iv) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.

 

“HERC” has the meaning set forth in the preamble to this Agreement.

 

“HERC Parent” has the meaning set forth in the preamble to this Agreement.

 

“HERC Parent Consolidated Group” means the Affiliated Group of which HERC Parent is the common parent corporation.

 

“HERC Parent Consolidated Return” shall mean any Tax Return filed by HERC Parent or any HERC Subsidiary as the common parent in respect of Consolidated Taxes.

 

“HERC Parent Disqualifying Action” means (i) any action (or the failure to take any action) within its control by HERC Parent or any HERC Subsidiary (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, (ii) any event (or series of events) involving the capital stock of HERC Parent, any assets of HERC Parent or any assets of any HERC Subsidiary that, or (iii) any breach by HERC Parent or any HERC Subsidiary of any representation, warranty or covenant made by them in this Agreement that, in each case, would negate the Tax-Free Status of the Transactions; provided, however, the term “HERC Parent Disqualifying Action” shall not include any action described in the

 

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Distribution Agreement or any Ancillary Agreement or that is undertaken pursuant to the Spin-Offs.

 

“HERC Parent Group” means, individually or collectively, as the case may be, HERC Parent and any HERC Subsidiary.

 

“HERC Parent Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by HERC Parent management or shareholders, is a hostile acquisition, or otherwise, as a result of which HERC Parent would merge or consolidate with any other Person or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from HERC Parent and/or one or more holders of outstanding shares of HERC Parent capital stock, as the case may be, a number of shares of HERC Parent capital stock that would, when combined with any other changes in ownership of HERC Parent capital stock pertinent for purposes of Section 355(e) of the Code, compose 40% or more of (A) the value of all outstanding shares of stock of HERC Parent as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of voting stock of HERC Parent as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series.  Notwithstanding the foregoing, a HERC Parent Proposed Acquisition Transaction shall not include (A) the adoption by HERC Parent of a shareholder rights plan or any modification thereof or (B) issuances by HERC Parent that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d).  This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly.  Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

 

“HERC Parties” means HERC Parent and HERC.

 

“HERC Subsidiary” means any Subsidiary of HERC Parent immediately after the Effective Time.

 

“Indemnifying Party” means the Party from which the other Party is entitled to seek indemnification pursuant to the provisions of Section 2.01.

 

“Indemnified Party” means the Party that is entitled to seek indemnification from the other Party pursuant to the provisions of Section 2.01.

 

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“Internal Reorganization” has the meaning set forth in the Distribution Agreement.

 

“IRS” means the U.S. Internal Revenue Service or any successor thereto, including its agents, representatives and attorneys.

 

“IRS Ruling” means the federal income tax ruling, and any supplements thereto, issued to HERC Parent by the IRS in connection with the Spin-Offs.

 

“Law” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).

 

“Notified Action” has the meaning set forth in Section 3.03(a).

 

“Opinions” means the opinions of Counsel and of KPMG, LLP with respect to certain Tax aspects of the Spin-Offs.

 

“Party” has the meaning set forth in the preamble to this Agreement.

 

“Person” has the meaning set forth in the Distribution Agreement.

 

“Post-Closing Period” means any taxable period (or portion thereof) beginning after the Closing Date.

 

“Pre-Closing Period” means any taxable period (or portion thereof) ending on or before the Closing Date.

 

“Pre-Closing Payment Amount” has the meaning set forth in Section 2.02(a).

 

“Proposed Acquisition Transaction” means a HERC Parent Proposed Acquisition Transaction or a RAC Parent Proposed Acquisition Transaction.

 

“Restriction Period” has the meaning set forth in Section 3.02(b).

 

“SAG” has the meaning ascribed to the term “separate affiliated group” in Section 355(b)(3)(B) of the Code.

 

“RAC Parent” has the meaning set forth in the preamble to this Agreement.

 

“RAC Parent Disqualifying Action” means (i) any action (or the failure to take any action) within its control by RAC Parent or any RAC Subsidiary (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, (ii) any event (or series of events) involving the capital stock of RAC Parent, any assets of RAC Parent or any assets of any RAC

 

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Subsidiary that, or (iii) any breach by RAC Parent or any RAC Subsidiary of any representation, warranty or covenant made by them in this Agreement that, in each case, would negate the Tax-Free Status of the Transactions; provided, however, the term “RAC Parent Disqualifying Action” shall not include any action described in the Distribution Agreement or any Ancillary Agreement or that is undertaken pursuant to the Spin-Offs.

 

“RAC Parent Group” means, individually or collectively, as the case may be, RAC Parent and any RAC Subsidiary.

 

“RAC Parent Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by RAC Parent management or shareholders, is a hostile acquisition, or otherwise, as a result of which RAC Parent would merge or consolidate with any other Person or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from RAC Parent and/or one or more holders of outstanding shares of RAC Parent capital stock, as the case may be, a number of shares of RAC Parent capital stock that would, when combined with any other changes in ownership of RAC Parent capital stock pertinent for purposes of Section 355(e) of the Code, compose 40% or more of (A) the value of all outstanding shares of stock of RAC Parent as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of voting stock of RAC Parent as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series.  Notwithstanding the foregoing, a RAC Parent Proposed Acquisition Transaction shall not include (A) the adoption by RAC Parent of a shareholder rights plan or any modification thereof or (B) issuances by RAC Parent that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d).  This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly.  Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.

 

“RAC Parties” means RAC Parent and THC.

 

“RAC Subsidiary” means any Subsidiary of RAC Parent immediately after the Effective Time.

 

“Section 3.02(d) Acquisition Transaction” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definitions of HERC Parent

 

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Proposed Acquisition Transaction and RAC Parent Proposed Acquisition Transaction were 25% instead of 40%.

 

“Spin-Offs” means the First Internal Spin-Off and the Second Internal Spin-Off (as each of such terms are used with respect to the Internal Reorganization) and the Distribution.

 

“Standalone Taxes” means Taxes other than Consolidated Taxes.

 

“Subsidiary” has the meaning set forth in the Distribution Agreement.

 

“Tax” means (i) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or local or foreign governmental authority, including income, gross receipts, excise, property, sales, use, license, capital stock, transfer, franchise, payroll, withholding, social security, value added and other taxes of any kind whatsoever, (ii) any interest, penalties or additions attributable thereto and (iii) all liabilities in respect of any items described in clause (i) or (ii) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).

 

“Tax-Free Status of the Transactions” means the tax-free treatment accorded to the Spin-Offs as set forth in the IRS Ruling and the Opinions.

 

“Taxing Authority” means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

 

“Tax Item” shall mean any item of income, gain, loss, deduction, expense or credit, or other attribute that may have the effect of increasing or decreasing any Tax.

 

“Tax Materials” has the meaning set forth in Section 3.01(a).

 

“Tax Matter” has the meaning set forth in Section 4.01.

 

“Tax Notice” has the meaning set forth in Section 2.06(a).

 

“Tax Return” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) supplied or required to be supplied to, or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax and any amended Tax return or claim for refund.

 

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“THC” has the meaning set forth in the preamble to this Agreement.

 

“Transaction Taxes” shall mean (i) any Tax resulting from any income or gain recognized by HERC Parent, RAC Parent or their Affiliates as a result of any of the Spin-Offs failing to qualify for tax-free treatment under Sections 355 and 368 and related provisions of the Code or corresponding provisions of other applicable Tax Laws and (ii) any Tax resulting from any income or gain recognized by HERC Parent or its Affiliates under Treasury Regulation Section 1.1502-13 or 1.1502-19 (or any corresponding provisions of other applicable Tax Laws) as a result of any of the Spin-Offs.

 

“Transfer Taxes” means all sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes imposed on any of the transactions contemplated by the Distribution Agreement that are effective at or before the Effective Time and not, for the avoidance of doubt, any Taxes incurred as a result of any changes to the legal entities of the members of the HERC Parent Group or the operation of the Equipment Rental Business following the Effective Time.

 

“Transition Services Agreement” means the Transition Services Agreement by and between RAC Parent and HERC Parent dated as of [ ], 2016.

 

“Treasury Regulations” means the final and temporary (but not proposed) income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

“Unqualified Tax Opinion” means a “will” opinion, without substantive qualifications, of a nationally-recognized law firm to the effect that a transaction will not affect the Tax-Free Status of the Transactions.

 

“U.S.” means the United States of America.

 

Section 1.02                             Additional Definitions.  Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Distribution Agreement.

 

ARTICLE II

 

ALLOCATION, PAYMENT AND INDEMNIFICATION

 

Section 2.01                             Responsibility for Taxes; Indemnification.

 

(a)                                 The HERC Parties shall indemnify and hold harmless the RAC Parent Group for all Tax liabilities (and any loss, cost, damage or expense, including reasonable attorneys’ fees and costs, incurred in connection therewith) attributable to (i) any Taxes of HERC Parent or any member of the HERC Parent Consolidated Group imposed upon the RAC Parent Group by reason of the RAC Parent Group being severally liable for

 

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such Taxes pursuant to Treasury Regulation Section 1.1502-6 or any analogous provision of state or local Law, except to the extent attributable to Taxes for which any member of the RAC Parent Group is responsible under this Agreement; (ii) HERC Parent’s portion of any Transaction Taxes determined pursuant to Section 2.03; (iii) HERC Parent’s portion of any Transfer Taxes determined pursuant to Section 2.05; (iv) any Taxes of the RAC Parent Group resulting from the breach of any obligation or covenant of HERC Parent under this Agreement; (v) any Taxes of the HERC Parent Group for any Post-Closing Period; and (vi) any Standalone Taxes of HERC Parent or any HERC Subsidiary for any Tax period.

 

(b)                                 The RAC Parties shall indemnify and hold harmless the HERC Parent Group for all Tax liabilities (and any loss, cost, damage or expense, including reasonable attorneys’ fees and costs, incurred in connection therewith) attributable to (i) any Taxes of the RAC Parent Group for any Post-Closing Period other than Taxes described in Section 2.01(a); (ii) any Consolidated Taxes of the RAC Parent Group (applying the principles of the last sentence of Section 2.02(a)) for any Pre-Closing Period in excess of the Pre-Closing Payment Amount (as adjusted under Section 2.02(b)); (iii) any Taxes of the HERC Parent Group resulting from the breach of any obligation or covenant of RAC Parent under this Agreement; (iv) RAC Parent’s portion of any Transaction Taxes determined pursuant to Section 2.03; (v) RAC Parent’s portion of any Transfer Taxes determined pursuant to Section 2.05; and (vi) any Standalone Taxes of RAC or any RAC Subsidiary for any Tax period.

 

(c)                                  For the avoidance of doubt, any Tax liability calculated pursuant to this Section 2.01, Section 2.02 or Section 2.03 shall be determined after the utilization of any net operating loss, capital loss or similar Tax attribute, and the Parties agree that no loss or diminution of any such Tax attribute shall be compensated hereunder. If the Indemnifying Party is required to indemnify the Indemnified Party pursuant to this Section 2.01, the Indemnified Party shall submit its calculations of the amount required to be paid pursuant to this Section 2.01, showing such calculations in reasonable detail and supplying supporting documentation. Subject to the following sentence, the Indemnifying Party shall pay to the Indemnified Party, no later than thirty (30) days after the Indemnifying Party receives the Indemnified Party’s calculations, the amount that the Indemnifying Party is required to pay the Indemnified Party under this Section 2.01.  If the Indemnifying Party disagrees with such calculations, it shall notify the Indemnified Party of its disagreement and set forth the basis for such disagreement in writing within ten (10) business days of receiving such calculations.

 

(d)                                 For purposes of this Agreement, any liability for Taxes attributable to a taxable period that begins before and ends after the Closing Date shall be apportioned between the portion of such period ending on the Closing Date and the portion beginning on the day after the Closing Date (i) in the case of real and personal property Taxes, by apportioning such Taxes on a per diem basis and (ii) in the case of all other Taxes, on the

 

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basis of a closing of the books as of the close of business on the Closing Date, provided that exemptions, allowances or deductions that are calculated on an annual basis shall be apportioned on a per diem basis.

 

(e)                                  All indemnity payments pursuant to this Section 2.01 shall be treated as relating to periods ending on or prior to the Effective Time and shall be treated for all tax purposes as (i) a contribution of cash to RAC Parent pursuant to the Distribution Agreement or (ii) a reduction to the cash deemed to be contributed pursuant to clause (i), or to the extent the aggregate net indemnity payments to the HERC Parent Group and its Affiliates would exceed the amount of such deemed contributed cash, as a distribution with respect to stock of RAC Parent.

 

Section 2.02                             2016 Consolidated Tax Payments.

 

(a)                                 On or prior to the Closing Date, HERC Parent shall, in good faith, estimate the Tax liability, if any, of the RAC Parent Group for Consolidated Taxes for which HERC Parent or any HERC Subsidiary is liable as the common parent, in each case for the taxable year ending on the Closing Date, and if any such liability is estimated, then the RAC Parent Group shall pay to HERC Parent an amount equal to the excess of such estimated liability over all amounts previously paid to HERC Parent by any members of the RAC Parent Group or paid to RAC Parent pursuant to any assignment of such payment by HERC Parent to RAC Parent for Consolidated Taxes for such taxable year (the amount of such payment, together with the amounts of such prior payments and assignments, the “Pre-Closing Payment Amount”).  Such Tax liability shall be computed solely by reference to the members of the RAC Parent Group that are members of the HERC Parent Consolidated Group prior to the Closing Date, and shall be determined as though such members filed on a consolidated basis with RAC Parent as the common parent, taking into account the utilization of any net operating loss carryforward or other tax attribute of the RAC Parent Group determined as though such members had always filed on such basis.  Notwithstanding the preceding sentence, in the case of any state or local Consolidated Taxes, such Tax liability shall be computed by multiplying the income or loss determined by reference to the members of the RAC Parent Group that are members of the HERC Parent Consolidated Group prior to the Closing Date by the apportionment or allocation factors (e.g., property, payroll, sales or similar factors) as reflected on the Tax Return for such Consolidated Tax for the relevant Tax period.

 

(b)                                 Following the filing of the HERC Parent Consolidated Returns for the taxable year including the Closing Date, HERC Parent shall calculate the Tax liability, if any, of the RAC Parent Group for Consolidated Taxes for such taxable year as reflected in such HERC Parent Consolidated Returns, and the RAC Parent Group shall pay to HERC Parent an amount equal to the difference between (x) the amount of such Liability and (y) the Pre-Closing Payment Amount, or if such difference is a negative number, HERC Parent shall pay, or cause to be paid, to RAC Parent an amount equal to such

 

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difference. Such Tax liability shall be computed in the same manner as the estimated Tax liability determined under Section 2.02(a).

 

(c)                                  HERC Parent shall prepare and deliver to RAC Parent a schedule showing in reasonable detail HERC Parent’s calculation of any amount payable by HERC Parent to RAC Parent pursuant to Section 2.02(b) or any amount payable by RAC Parent to HERC Parent pursuant to Section 2.02(a) or (b), as the case may be, and, subject to Section 5.01, RAC Parent shall pay to HERC Parent, or HERC Parent shall pay to RAC Parent, as applicable, the amount shown on such schedule no later than thirty (30) days following the delivery of such schedule by HERC Parent to RAC Parent.

 

Section 2.03                             Transaction Taxes.  Any Transaction Taxes attributable to a HERC Parent Disqualifying Action (but not any RAC Parent Disqualifying Action) shall be borne 100% by HERC Parent.  Any Transaction Taxes attributable to a RAC Parent Disqualifying Action (but not any HERC Parent Disqualifying Action) shall be borne 100% by RAC Parent. Any Transaction Taxes (i) not attributable to any Disqualifying Action or (ii) attributable to both a HERC Parent Disqualifying Action and a RAC Parent Disqualifying Action shall be borne by HERC Parent and by RAC Parent in proportion to the relative fair market values of the stock of HERC Parent and of RAC Parent, based upon the 10-day volume-weighted average trading price (beginning with the trading day immediately following the Closing Date) of the stock of HERC Parent and RAC Parent.  Notwithstanding the foregoing provisions of this Section 2.03, if (A) HERC Parent knowingly makes a false written representation on or prior to the Effective Time to KPMG LLP or Counsel, and such misrepresentation causes a HERC Parent Disqualifying Action, or (B) a HERC Parent Disqualifying Action relates solely to a representation made, or action taken, prior to the Effective Time and is not described in clause (A) of this sentence, then Transaction Taxes attributable to a matter described in clause (A) of this sentence shall be borne 100% by RAC Parent and Transaction Taxes attributable to a matter described in clause (B) of this sentence shall be borne by HERC Parent and RAC Parent in the proportions described in clause (ii) of the immediately preceding sentence.  THC may make payments to RAC Parent in respect of any Transaction Taxes imposed on RAC Parent that are borne by RAC Parent pursuant to this Agreement, and HERC may make payments to HERC Parent in respect of any Transaction Taxes imposed on HERC Parent that are borne by HERC Parent pursuant to this Agreement.

 

Section 2.04                             Preparation of Tax Returns.

 

(a)                                 Subject to the Transition Services Agreement, HERC Parent shall prepare and timely file (taking into account applicable extensions) all HERC Parent Consolidated Returns, and shall pay all Taxes (subject to any indemnification rights it may have against RAC Parent).  HERC Parent shall provide copies of all HERC Parent Consolidated Returns for Pre-Closing Periods to RAC Parent for RAC Parent’s review and comment not less than 30 days prior to the due date for filing such HERC Parent Consolidated Returns (taking into account extensions).  If HERC Parent and RAC Parent

 

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cannot reach agreement on any item with respect to such HERC Parent Consolidated Returns, such disagreement shall be resolved in accordance with Section 5.01.  Each of HERC Parent and RAC Parent shall be responsible for filing Tax Returns of the members of the HERC Parent Group and of the RAC Parent Group, respectively, in respect of Standalone Taxes.

 

(b)                                 Unless otherwise required by a Taxing Authority, the Parties agree to prepare and file all Tax Returns, and to take all other actions, in a manner consistent with this Agreement.

 

(c)                                  Notwithstanding anything to the contrary in this Agreement, for all Tax purposes, the Parties shall report any Extraordinary Transactions that are caused or permitted by RAC Parent or any RAC Subsidiary on the Closing Date after the completion of the Distribution as occurring on the day after the Closing Date pursuant to Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) or any similar or analogous provision of state, local or foreign Law.  HERC Parent shall not make a ratable allocation election pursuant to Treasury Regulation Section 1.1502-76(b)(2)(ii)(D) or any similar or analogous provision of state, local or foreign Law.

 

(d)                                 RAC Parent shall make all decisions regarding any election (including a protective election) under Section 336(e) of the Code (and any corresponding provision under state or local tax law) with respect to the Spin-Offs and the HERC Parties shall cooperate as requested by RAC Parent in connection with making any such election.

 

Section 2.05                             Payment of Sales, Use or Similar Taxes.  All Transfer Taxes shall be borne equally by the HERC Parties on the one hand and RAC Parties on the other.  Notwithstanding anything in Section 2.03 to the contrary, the Party required by applicable Law shall remit payment for any Transfer Taxes and duly and timely file such Tax Returns, subject to any reimbursement rights it may have against the other Party, which shall be paid in accordance with Section 2.01(c).  RAC Parent, HERC Parent and their respective Affiliates shall cooperate in (i) determining the amount of such Taxes, (ii) providing all requisite exemption certificates and (iii) preparing and timely filing any and all required Tax Returns for or with respect to such Taxes with any and all appropriate Taxing Authorities.

 

Section 2.06                             Audits and Proceedings.

 

(a)                                 Notwithstanding any other provision hereof, if after the Closing Date, an Indemnified Party or any of its Affiliates receives any notice, letter, correspondence or claim from any Taxing Authority (a “Tax Notice”) and, upon receipt of such Tax Notice, believes it has suffered or potentially could suffer any Tax liability for which it is indemnified pursuant to Section 2.01 in respect of Consolidated Taxes, the Indemnified Party shall promptly deliver such Tax Notice to the Indemnifying Party; provided, that HERC Parent shall deliver to RAC Parent any Tax Notice in respect of Transaction Taxes

 

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and provided further that the failure of the Indemnified Party to provide the Tax Notice to the Indemnifying Party shall not affect the indemnification rights of the Indemnified Party pursuant to Section 2.01, except to the extent that the Indemnifying Party is materially prejudiced by the Indemnified Party’s failure to deliver such Tax Notice.  HERC Parent shall have the right to handle, defend, conduct and control, at its own expense, any Tax audit or other administrative or judicial proceeding that relates to such Tax Notice; provided that RAC Parent shall have the right to handle, defend, conduct and control, at its own expense, the portion of any Tax audit or administrative or judicial proceeding (i) relating to Transaction Taxes or (ii) which could give rise to an indemnity claim against the RAC Parties pursuant to Section 2.01 (and HERC Parent shall have the right to participate, at its own expense, in any such audit or proceeding described in clauses (i) and (ii)).  The party controlling such Tax audit or administrative or judicial proceeding shall have the right to compromise or settle any such Tax audit or proceeding that it has subject, in the case of a compromise or settlement that would materially and adversely affect the other party, to such party’s consent, which consent shall not be unreasonably withheld, provided that such consent shall not be required if the party controlling such Tax audit or proceeding agrees to indemnify the other party for any liabilities for Taxes resulting from such compromise or settlement.  If the Indemnifying Party fails within a reasonable time after notice to defend any such Tax Notice or the resulting audit or administrative or judicial proceeding as provided herein, the Indemnifying Party shall be bound by the results obtained by the Indemnified Party in connection therewith.  The Indemnifying Party shall pay to the Indemnified Party the amount of any Tax liability within 30 days after a Final Determination of such Tax liability.  For the avoidance of doubt, in the case of any such liability pertaining to a state or local Consolidated Tax, such liability will be determined pursuant to the principles set forth in the last sentence of Section 2.02(a), including apportionment factors, as recomputed pursuant to such Final Determination.

 

(b)                                 Each of HERC Parent and RAC Parent shall handle, defend, conduct and control Tax audits or administrative or judicial proceedings of any member of the HERC Parent Group and RAC Parent Group, respectively, in respect of Standalone Taxes.

 

Section 2.07                             Amended Returns; Carrybacks.

 

(a)                                 Except as required by Law, without the prior written consent of RAC Parent or one of its Affiliates, HERC Parent may not amend or cause to be amended any HERC Parent Consolidated Return with respect to any Pre-Closing Period to the extent such amendment would reasonably be expected adversely to affect the Tax liability of any member of the RAC Parent Group, provided that such consent shall not be required if HERC Parent agrees to indemnify RAC Parent for any liabilities for Taxes resulting from such amendment.  If RAC Parent requests that HERC Parent amend any HERC Parent Consolidated Return with respect to any Pre-Closing Period, HERC Parent shall promptly make such amendment unless (i) such amendment is not permitted by applicable Law, (ii)

 

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such amendment would result in a carryback of a federal income Tax Item as described in Section 2.07(b) (in which case such amendment shall be subject to Section 2.07(b)), or (iii) such amendment would reasonably be expected adversely to affect the Tax liability of any member of the HERC Parent Group, provided that HERC Parent shall make an amendment described in clause (iii) if RAC Parent agrees to indemnify HERC Parent for any liabilities for Taxes resulting from such amendment.

 

(b)                                 To the extent permitted by applicable Law, no member of the RAC Parent Group shall carry back any Tax Item in respect of Consolidated Taxes to a Pre-Closing Period.  To the extent any such carryback is required by applicable Law, RAC Parent shall be entitled to the benefit of any resulting refund in accordance with Section 2.08.

 

(c)                                  Each of HERC Parent and RAC Parent may amend any Tax Returns of any member of the HERC Parent Group and RAC Parent Group, as the case may be, in respect of Standalone Taxes.

 

Section 2.08                             Refunds.  Any refund of Consolidated Taxes received from a Taxing Authority by any member of the HERC Parent Group or the RAC Parent Group with respect to a HERC Parent Consolidated Return shall be the property of the HERC Parent Group, except to the extent that such Tax refund relates to any Taxes for which the RAC Parent Group is responsible under this Agreement.  Each of HERC Parent and RAC Parent shall be entitled to any Tax refunds of the members of the HERC Parent Group and RAC Parent Group, respectively, in respect of Standalone Taxes.  If HERC Parent or its Affiliates, or RAC Parent and its Affiliates, receives a refund to which the other Party and its Affiliates is entitled pursuant to this agreement, the Party receiving such refund shall promptly pay to the other Party the amount of such refund, net of any out-of-pocket costs (including Taxes) incurred in connection with securing and receiving such refund.  If any such refund is subsequently disallowed by the relevant Taxing Authority, the applicable Party shall promptly make a reconciling payment to the other Party.

 

Section 2.09                             Earnings and Profits Allocation.  HERC Parent will advise RAC Parent in writing of the decrease in HERC Parent earnings and profits attributable to the Distribution under Section 312(h) of the Code on or before the first anniversary of the Distribution.

 

ARTICLE III

 

TAX-FREE STATUS OF THE DISTRIBUTION

 

Section 3.01                             Representations and Warranties.

 

(a)                                 RAC Parent. RAC Parent hereby represents and warrants or covenants and agrees, as appropriate, that the facts presented and the representations made in (i) the IRS Ruling, (ii) the Opinions, (iii) each submission to the IRS in connection with the IRS

 

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Ruling, (iv) the representation letters from HERC Parent and RAC Parent addressed to Counsel and to KPMG, LLP supporting the Opinions, and (v) any other materials delivered or deliverable by HERC Parent or RAC Parent in connection with the rendering of the Opinions and the issuance by the IRS of the IRS Ruling (all of the foregoing, collectively, the “Tax Materials”), to the extent descriptive of the RAC Parent Group (including the plans, proposals, intentions and policies of the RAC Parent Group), are, or will be from the time represented or made through and including the Effective Time and thereafter as relevant, true, correct and complete in all respects.

 

(b)                                 HERC Parent.  HERC Parent hereby represents and warrants or covenants and agrees, as appropriate, that the facts presented and the representations made in the Tax Materials, to the extent descriptive of the HERC Parent Group (including the plans, proposals, intentions and policies of the HERC Parent Group), are, or will be from the time represented or made through and including the Effective Time and thereafter as relevant, true, correct and complete in all respects.

 

(c)                                  No Contrary Knowledge.  Each of HERC Parent and RAC Parent represents and warrants that it knows of no fact (after due inquiry) that may cause the Tax treatment of the Spin-Offs to be other than the Tax-Free Status of the Transactions.

 

(d)                                 No Contrary Plan.  Each of HERC Parent and RAC Parent represents and warrants that neither it, nor any of its Affiliates, has any plan or intent to take any action that is inconsistent with any statements or representations made in the Tax Materials.

 

Section 3.02                             Restrictions Relating to the Distribution.

 

(a)                                 General.  Neither HERC Parent nor RAC Parent shall, nor shall HERC Parent or RAC Parent permit any HERC Subsidiary or any RAC Subsidiary, respectively, to take or fail to take, as applicable, any action that constitutes a Disqualifying Action described in the definitions of HERC Parent Disqualifying Action and RAC Parent Disqualifying Action, respectively.

 

(b)                                 Restrictions.  Prior to the first day following the second anniversary of the Distribution (the “Restriction Period”), the following restrictions shall apply, respectively, to HERC Parent and RAC Parent:

 

(i)                                     each of HERC Parent and RAC Parent shall continue and cause to be continued the active conduct of the Equipment Rental Business and the Car Rental Business, respectively, (as such terms are defined in the submissions to the IRS in connection with the IRS Ruling), in each case taking into account Section 355(b)(3) of the Code, in all cases as conducted immediately prior to the Distribution.

 

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(ii)                                  neither HERC Parent nor RAC Parent shall voluntarily dissolve or liquidate (including any action that is a liquidation for federal income tax purposes).

 

(iii)                               neither HERC Parent nor RAC Parent shall (A) enter into any HERC Parent Proposed Acquisition Transaction or RAC Parent Proposed Acquisition Transaction (as applicable) or, to the extent HERC Parent or RAC Parent (as applicable) has the right to prohibit any HERC Parent Proposed Acquisition Transaction or RAC Parent Proposed Acquisition Transaction (as applicable), permit any such HERC Parent Proposed Acquisition Transaction or RAC Parent Proposed Acquisition Transaction to occur, (B) redeem or otherwise repurchase (directly or through an Affiliate) any stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48), (C) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, in each case, to the extent affecting the relative voting rights of its capital stock (including through the conversion of any capital stock into another class of capital stock), (D) merge or consolidate with any other Person or (E) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Tax Materials) that in the aggregate (and taking into account any other transactions described in this Section 3.02(b)(iii)) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in HERC Parent or RAC Parent (as applicable) or otherwise jeopardize the Tax-Free Status of the Transactions.

 

(iv)                              Neither HERC Parent nor RAC Parent shall, and neither shall permit any member of its respective SAG to, sell, transfer, or otherwise dispose of or agree to sell, transfer or otherwise dispose (including in any transaction treated for federal income tax purposes as a sale, transfer or disposition) of assets (including any shares of capital stock of a Subsidiary) that, in the aggregate, constitute more than 30% of the gross assets of RAC Parent or HERC Parent, as applicable, or more than 30% of the consolidated gross assets of RAC Parent or HERC Parent, as applicable, and members of their respective SAG.  The foregoing sentence shall not apply to (A) sales, transfers, or dispositions of assets in the ordinary course of business, (B) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (C) any assets transferred to a Person that is disregarded as an entity separate from the transferor for federal income tax purposes or (D) any mandatory or optional repayment (or pre-payment) of any indebtedness of RAC Parent or HERC Parent (or any member of their respective SAG).  The percentages of gross assets or consolidated gross

 

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assets of RAC Parent, HERC Parent or their respective SAG, as the case may be, sold, transferred, or otherwise disposed of, shall be based on the fair market value of the gross assets of RAC Parent or HERC Parent, as applicable, and the members of their respective SAG as of the Closing Date.  For purposes of this Section 3.02(b)(iv), a merger of RAC Parent or HERC Parent (or a member of their respective SAG) with and into any Person shall constitute a disposition of all of the assets of RAC Parent, HGH or such member, as applicable.

 

(c)                                  Notwithstanding the restrictions imposed by Section 3.02(b), during the Restriction Period, each of the Parties may proceed with any of the actions or transactions described therein, if (i) such Party obtains an Unqualified Tax Opinion, reasonably satisfactory to the other Parties, to the effect that such action or transaction will not affect the Tax-Free Status of the Transactions, (ii) HERC Parent obtains a supplemental ruling from the IRS (in the case of an action or transaction with respect to the RAC Parent Group, at RAC Parent’s request and expense) that such action or transaction will not affect the Tax-Free Status of the Transactions or (iii) the other Parties shall have waived in writing the requirement to obtain such ruling or opinion.

 

(d)                                 Notice of Certain Transactions.  If HERC Parent or RAC Parent proposes to enter into any Section 3.02(d) Acquisition Transaction or, to the extent HGH or RAC Parent (as applicable) has the right to prohibit any Section 3.02(d) Acquisition Transaction, proposes to permit any Section 3.02(d) Acquisition Transaction to occur, in each case, during the Restriction Period, HERC Parent or RAC Parent (as applicable) shall provide the other party, no later than ten (10) days following the signing of any written agreement with respect to any Section 3.02(d) Acquisition Transaction, with a written description of such transaction (including the type and amount of capital stock to be issued in such transaction).

 

(e)                                  Tax Reporting.  Each of HERC Parent and RAC Parent covenants and agrees that it will not take, and will cause the HERC Subsidiaries or the RAC Subsidiaries, as applicable, to refrain from taking, any position on any income or franchise Tax Return that is inconsistent with the Tax-Free Status of the Transactions.

 

Section 3.03                             Procedures Regarding Opinions and Rulings.

 

(a)                                 If RAC Parent notifies HERC Parent that it desires to take one of the actions described in Section 3.02(b) (a “Notified Action”), HERC Parent shall cooperate with RAC Parent and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a supplemental ruling from the IRS or an Unqualified Tax Opinion (including by making any representation or reasonable covenant or providing any materials requested by the IRS or the law firm issuing such opinion) for the purpose of permitting RAC Parent to take the Notified Action unless HERC Parent shall have waived the requirement to obtain such ruling or opinion; provided that HERC Parent shall not be required to make (or cause a HERC Subsidiary to make) any representation or covenant

 

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that is inconsistent with historical facts or as to future matters or events over which it has no control.  If such a ruling is to be sought, HERC Parent shall apply for such ruling and HERC Parent and RAC Parent shall jointly control the process of obtaining such ruling.  In no event shall HERC Parent be required to file any ruling request under this Section 3.03(a) unless RAC Parent represents that (i) it has read such ruling request, and (ii) all information and representations, if any, relating to any member of the RAC Parent Group contained in such ruling request documents are (subject to any qualifications therein) true, correct and complete.  RAC Parent shall reimburse HERC Parent for all reasonable costs and expenses incurred by the HERC Parent Group in obtaining a ruling or Unqualified Tax Opinion requested by RAC Parent within thirty (30) days after receiving an invoice from HERC Parent therefor.

 

(b)           If HERC Parent notifies RAC Parent that it desires to take a Notified Action, RAC Parent shall (and shall cause each RAC Subsidiary to) cooperate with HERC Parent and take any and all actions reasonably requested by HERC Parent in connection with obtaining such ruling or opinion (including by making any representation or reasonable covenant or providing any materials requested by the IRS or the law firm issuing such opinion); provided that RAC Parent shall not be required to make (or cause a RAC Subsidiary to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control.  In connection with obtaining such ruling, HERC Parent shall apply for such ruling and HERC Parent and RAC Parent shall jointly control the process of obtaining such ruling.  HERC Parent shall reimburse RAC Parent for all reasonable costs and expenses incurred by the RAC Parent Group in obtaining a ruling or Unqualified Tax Opinion requested by HERC Parent within thirty (30) days after receiving an invoice from RAC Parent therefor.

 

(c)           Except as provided in Sections 3.03(a) and (b), neither RAC Parent nor HERC Parent (or any Affiliate thereof) shall seek any guidance from the IRS or any other Taxing Authority (whether written, verbal or otherwise) at any time concerning the Spin-Offs (including the impact of any transaction on the Spin-Offs) without the consent of the other Party, such consent not to be unreasonably withheld.

 

ARTICLE IV

 

COOPERATION

 

Section 4.01          General Cooperation.  The Parties shall each cooperate (and each shall cause its respective Subsidiaries to cooperate) with all reasonable requests in writing from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns, claims for Tax refunds, Tax proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment

 

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of any reserve required in connection with any financial reporting (a “Tax Matter”).  Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter and shall include, at each Party’s own cost:

 

(a)           the provision of any Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;

 

(b)           the execution of any document (including any power of attorney) in connection with any Tax proceedings of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Tax refund claim of the Parties or any of their respective Subsidiaries;

 

(c)           the use of the Party’s reasonable best efforts to obtain any documentation in connection with a Tax Matter;

 

(d)           the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or their Subsidiaries; and

 

(e)           in the case of participation in any audit or administrative proceeding as provided in Section 2.06 by any Party, the Party controlling such audit or proceeding shall provide the participating Party with copies of the relevant portions of all correspondence with the relevant Taxing Authority and other relevant documentation, and shall permit the participating Party to attend, but not control, such audits and proceedings.

 

Each Party shall make its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis in connection with the foregoing matters.

 

Section 4.02          Retention of Records.  HERC Parent and RAC Parent shall retain or cause to be retained all Tax Returns, schedules and workpapers, and all material records or other documents relating thereto in their possession, until sixty (60) days after the expiration of the applicable statute of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax Returns and other documents relate, provided, for the avoidance doubt, that in the case of records or documents relating to a net operating loss or capital loss carryforward, such records shall be maintained until sixty (60) days after the expiration of the statute of limitations for the taxable period to which such loss is carried and utilized, or until the expiration of any additional period that any Party reasonably requests, in writing, with respect to specific material records or

 

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documents.  A Party intending to destroy any material records or documents shall provide the other Party with reasonable advance notice and the opportunity to copy or take possession of such records and documents.  The Parties hereto will notify each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.

 

ARTICLE V

 

MISCELLANEOUS

 

Section 5.01          Dispute Resolution.  The Parties shall appoint a nationally-recognized independent public accounting firm (the “Accounting Firm”) to resolve any dispute as to matters covered by this Agreement.  In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by the Parties and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination only in favor of either the HERC Parties or the RAC Parties.  The Parties shall require the Accounting Firm to resolve all disputes no later than thirty (30) days after the submission of such dispute to the Accounting Firm, but in no event later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final, conclusive and binding on the Parties.  The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the past practices of HERC Parent and its Subsidiaries, except as otherwise required by applicable Law.  The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination.  The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Party.

 

Section 5.02          Tax Sharing Agreements.  All Tax sharing, indemnification and similar agreements, written or unwritten, as between HERC Parent or a HERC Subsidiary, on the one hand, and RAC Parent or a RAC Subsidiary, on the other (other than this Agreement, the Distribution Agreement and any other Ancillary Agreement), shall be or shall have been either (a) terminated no later than the Effective Time and, after the Effective Time, none of HERC Parent or a HERC Subsidiary, or RAC Parent or a RAC Subsidiary shall have any further rights or obligations under any such Tax sharing, indemnification or similar agreement or (b) assumed by members of the RAC Parent Group.

 

Section 5.03          Interest on Late Payments.  With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the rate in effect for underpayments under Section 6621 of the Code from

 

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such due date to and including the earlier of the ninetieth (90th) day or the payment date and thereafter will accrue interest at a rate per annum equal to 9% if it is higher.

 

Section 5.04          Survival of Covenants.  Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms; provided, however, that the representations and warranties and all indemnification for Taxes shall survive until sixty (60) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification; provided, further, that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.

 

Section 5.05          Termination.  Notwithstanding any provision to the contrary, this Agreement may be terminated at any time prior to the Effective Time by and in the sole discretion of HERC Parent without the prior approval of any Person, including RAC Parent.  In the event of such termination, this Agreement shall become void and no Party, or any of its officers and directors shall have any liability to any Person by reason of this Agreement.  After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties to this Agreement.

 

Section 5.06          Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall remain in full force and effect.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.

 

Section 5.07          Entire Agreement.  Except as otherwise expressly provided in this Agreement, this Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matter of this Agreement and supersedes all prior agreements and undertakings, both written and oral, among or on behalf of the Parties hereto with respect to the subject matter of this Agreement.  In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the Distribution Agreement, the provisions of this Agreement shall govern and control.

 

Section 5.08          Assignment; No Third-Party Beneficiaries.  This Agreement shall not be assigned by any Party without the prior written consent of the other Parties hereto, except that such Party may assign (i) any or all of its rights and obligations under this Agreement to any of its Affiliates and (ii) any or all of its rights and obligations under this Agreement in connection with a sale or disposition of any assets or entities or lines of business of such Party; provided, however, that, in each case, no such assignment shall release such Party from any liability or obligation under this Agreement.  Except as

 

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provided in Article II with respect to indemnified Parties, this Agreement is for the sole benefit of the Parties to this Agreement and their respective Subsidiaries and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 5.09          Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived by the Parties to this Agreement.

 

Section 5.10          Amendment.  No provision of this Agreement may be amended or modified except by a written instrument signed by the Parties to this Agreement.  No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.

 

Section 5.11          Rules of Construction.  Interpretation of this Agreement shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) references to the terms Article, Section, and clause are references to the Articles, Sections and clauses of this Agreement unless otherwise specified; (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement; (iv) references to “$” shall mean U.S. dollars; (v) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (vi) the word “or” shall not be exclusive; (vii) references to “written” or “in writing” include in electronic form; (viii) provisions shall apply, when appropriate, to successive events and transactions; (ix) the headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (x) HGH and RAC Parent have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the Parties hereto and no presumption or burden of proof shall arise favoring or burdening any Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (xi) a reference to any Person includes such Person’s successors and permitted assigns.

 

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Section 5.12          Counterparts.  This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format (PDF) shall be as effective as delivery of a manually-executed counterpart of this Agreement.

 

Section 5.13          Employee Matters.  Any items of deduction in respect of equity-based awards to employees of the HERC Parent Group or the RAC Parent Group arising in Post-Closing Periods shall be the property of the relevant employer and its Affiliates, and the Parties shall file their Tax Returns accordingly.  To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes are set forth in the Employee Matters Agreement, such Taxes shall be governed exclusively by the Employee Matters Agreement and not by this Agreement.

 

Section 5.14          Effective Date.  This Agreement shall become effective only upon the occurrence of the Distribution.

 

Section 5.15          Notices.  All notices and other communications hereunder shall be in writing, shall reference this Agreement and shall be hand delivered or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other addresses for a Party as shall be specified by like notice) and will be deemed given on the date on which such notice is received:

 

To HERC Parent:

 

Herc Holdings Inc.
 27500 Riverview Center Blvd.
 Bonita Springs, FL 34134
 Attention: Maryann Waryjas
 Marlin Shaw
 Fax: (239)-301-1109
 mwaryjas@hertz.com
 marlin.shaw@hertz.com

 

To RAC Parent:

 

Hertz Global Holdings, Inc.
  8501 Williams Road
 Estero, FL 33928
 Attention: Richard J. Frecker
 William J. Murphy
 Fax: (866) 888-3765
 rfrecker@hertz.com
 wjmurphy@hertz.com

 

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Section 5.16          Applicable Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

 

	
 
    	
Herc Holdings   Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lawrence H. Silber
    
	
 
    	
 
    	
Name: Lawrence   H. Silber
    
	
 
    	
 
    	
Title: President   and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Herc Rentals   Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lawrence H. Silber
    
	
 
    	
 
    	
Name: Lawrence   H. Silber
    
	
 
    	
 
    	
Title: President   and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
The Hertz   Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard J. Frecker
    
	
 
    	
 
    	
Name: Richard   J. Frecker
    
	
 
    	
 
    	
Title: Senior   Vice President, Deputy General Counsel,
    
	
 
    	
 
    	
Secretary and Acting General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Hertz Global   Holdings, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard J. Frecker
    
	
 
    	
 
    	
Name: Richard   J. Frecker
    
	
 
    	
 
    	
Title: Senior   Vice President, Deputy General Counsel,
    
	
 
    	
 
    	
Secretary and Acting General Counsel
    

 

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