Exhibit 10.1
Execution Version
TAX RECEIVABLE PREPAYMENT AGREEMENT
dated June 26, 2009
between
Wright Express Corporation
and
Realogy Corporation
TABLE OF CONTENTS
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Page
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ARTICLE I THE PREPAYMENT
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1
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1.1
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Prepayment
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1
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1.2
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The Closing
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2
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF REALOGY
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2
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2.1
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Organization, Qualification and Corporate Power
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2
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2.2
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Authorization of Transaction
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2
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2.3
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Noncontravention
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3
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2.4
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Ownership of Rights
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3
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2.5
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Contracts
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3
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2.6
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Litigation
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4
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2.7
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Financial Statements
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4
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2.8
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No Additional Representations
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4
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2.9
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Brokers Fees
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4
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF WEX
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4
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3.1
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Organization and Corporate Power
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4
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3.2
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Authorization of the Transaction
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5
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3.3
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Noncontravention
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5
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3.4
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[Reserved]
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5
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3.5
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No Additional Representations
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5
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3.6
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Brokers Fees
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5
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ARTICLE IV CERTAIN COVENANTS
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6
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4.1
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Confidentiality
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6
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ARTICLE V [RESERVED]
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6
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ARTICLE VI POST-CLOSING COVENANTS
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6
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6.1
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Press Releases and Announcements
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6
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6.2
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Private Letter Ruling Request
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6
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6.3
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IRS Position
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6
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6.4
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Access to Information
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6
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ARTICLE VII INDEMNIFICATION
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7
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7.1
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Indemnification by Realogy
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7
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7.2
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Indemnification by WEX
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8
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7.3
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Indemnification Claims
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8
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7.4
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Survival of Representations and Warranties
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11
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7.5
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Limitations
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11
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7.6
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[Reserved]
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11
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7.7
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[Reserved]
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11
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7.8
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Insurance
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11
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Page
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7.9
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Exclusive Remedy
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12
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7.10
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Treatment of Payments
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12
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ARTICLE VIII [RESERVED]
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12
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ARTICLE IX DEFINITIONS
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12
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ARTICLE X MISCELLANEOUS
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15
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10.1
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No Third Party Beneficiaries
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15
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10.2
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Entire Agreement
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15
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10.3
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Succession and Assignment
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15
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10.4
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Counterparts and Facsimile Signature
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15
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10.5
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Headings
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15
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10.6
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Notices
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15
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10.7
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Governing Law
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16
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10.8
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Amendments and Waivers
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16
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10.9
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Expenses
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16
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10.10
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Submission to Jurisdiction
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16
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10.11
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Specific Performance
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17
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10.12
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Construction
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17
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Schedules
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Disclosure Schedule
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-ii-
TAX RECEIVABLE PREPAYMENT AGREEMENT
This Tax Receivable Prepayment Agreement is entered into as of June 26, 2009 by and between
Wright Express Corporation, a Delaware corporation (WEX) and Realogy Corporation, a Delaware
corporation (Realogy).
WHEREAS pursuant to the Separation and Distribution Agreement dated as of July 27, 2006, by
and among Avis Budget Group, Inc. (f/k/a Cendant Corporation) (ABG), Realogy, Wyndham Worldwide
Corporation (Wyndham) and Travelport Inc. (the Separation Agreement), and as ratified pursuant
to the ABG Agreement (as defined below), Realogy has acquired from ABG the right to receive 62.5%
of the payments to ABG under the Tax Receivable Agreement, dated February 22, 2005, among WEX,
Cendant Corporation, and Cendant Mobility Services Corporation (the TRA) and has assumed 62.5% of
the liabilities and obligations of ABG under the TRA;
WHEREAS this Agreement contemplates a transaction in which WEX will prepay to Realogy
contingent obligations to Realogy under the TRA, as specified in the Agreement, and Realogy will
accept prepayment for such contingent rights under the TRA and will release WEX from obligations
thereunder, as specified in this Agreement;
WHEREAS the parties to this Agreement intend to treat all payments by WEX hereunder as part of
the purchase price (and interest thereon under the applicable provisions of the Code) for the
assets transferred by ABG to WEX upon its conversion into a Delaware corporation on February 16,
2005;
WHEREAS contemporaneously with the execution of this Agreement, Apollo Investment Fund VI,
L.P., Apollo Overseas Partners VI, L.P., Apollo Overseas Partners (Delaware) VI, L.P., Apollo
Overseas Partners (Delaware892) VI, L.P. and Apollo Overseas Partners (Germany) VI, L.P., have
entered into a guarantee agreement (the Guarantee Agreement);
NOW, THEREFORE, in consideration of the premises, representations, warranties and covenants
herein contained, the Parties agree as follows:
Capitalized terms used in this Agreement shall have the meanings ascribed to them in Article
IX.
ARTICLE I
THE PREPAYMENT
1.1
Prepayment
. Upon and subject to the terms and conditions of this Agreement, WEX
shall make the payment set forth in Section 1.2 below to Realogy, as prepayment in full of its
remaining contingent obligations to Realogy under Article III of the TRA (the Prepayment).
Except as specifically set forth in Article VII of this Agreement, from and after the Closing, WEX
shall have no further obligations under the TRA to ABG, Realogy or any other person claiming
through ABG or Realogy on account of Realogys interest in the TRA (including under Articles III
and VIII thereof), and Realogy hereby releases, remises and forever discharges WEX, its affiliates,
shareholders and employees from any such obligations, effective as of the
[Signature page to Tax Receivable Prepayment Agreement]
Closing. Except as specifically set forth in Article VII of this Agreement, from and after
the Closing, Realogy shall have no further obligations under the TRA (including Articles III and
VIII thereof) to WEX, or any other person claiming on account of WEXs interest in the TRA, and WEX
hereby releases, remises and forever discharges Realogy, its affiliates, shareholders, and
employees from any such obligations, effective as of the Closing.
1.2
The Closing
.
(a) The Closing shall take place by electronic exchange of documents commencing at 9:00 a.m.
local time on the Closing Date. All transactions at the Closing shall be deemed to take place
simultaneously, and no transaction shall be deemed to have been completed and no documents or
certificates shall be deemed to have been delivered until all other transactions are completed and
all other documents and certificates are delivered.
(b) At the Closing:
(i) WEX shall make a payment of the Aggregate Prepayment Amount less the Expenses (other than
the PLR Fees, with respect to which Realogy has put in place a letter of credit in the amount of
$250,000 with WEX as the beneficiary thereunder) by wire transfer to an account designated by
Realogy;
(ii) Realogy shall have provided evidence satisfactory to WEX of the release of all Security
Interests in its rights, and in the rights of ABG, if any, in the TRA being prepaid hereunder; and
(iii) WEX and Realogy shall execute and deliver to each other a cross-receipt evidencing the
transactions referred to above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF REALOGY
Realogy represents and warrants to WEX that, except as set forth in the Disclosure Schedule,
the statements contained in this Article II are true and correct as of the date of this Agreement.
The Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered
and lettered sections and subsections contained in this Article II. The disclosures in any section
or subsection of the Disclosure Schedule shall qualify the corresponding section or subsection in
this Article II, except that it shall also qualify any other section where such disclosure is
reasonably apparent.
2.1
Organization, Qualification and Corporate Power
. Realogy is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware. Realogy
has all requisite corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it in all material respects.
2.2
Authorization of Transaction
. Realogy has all requisite corporate power and
authority to execute and deliver this Agreement and the ABG Agreement and to perform its
obligations hereunder and thereunder. The execution and delivery by Realogy of this Agreement
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and the ABG Agreement and the performance by Realogy of this Agreement and the ABG Agreement
and the consummation by Realogy of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of Realogy. This Agreement
and the ABG Agreement have been duly and validly executed and delivered by Realogy and such
agreements, together with the TRA and the Separation Agreement, constitute valid and binding
obligations of Realogy, enforceable against Realogy in accordance with their terms, except as such
enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, or similar laws, legal requirements and judicial decisions from
time to time in effect which affect creditors rights generally.
2.3
Noncontravention
. Neither the execution and delivery by Realogy of this Agreement
or the ABG Agreement, nor the consummation by Realogy of the transactions contemplated hereby or
thereby, will (a) conflict with or violate any provision of the Certificate of Incorporation or
by-laws of Realogy, (b) require on the part of Realogy any notice to or filing with, or any permit,
authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a default under, result
in the acceleration of obligations under, create in any party the right to terminate, modify or
cancel, or require any notice, consent or waiver under, any contract or instrument to which Realogy
is a party or by which Realogy is bound or to which any of its assets is subject, except for (i)
any conflict, breach, default, acceleration, termination, modification or cancellation which would
not be material or which would not materially adversely affect the consummation or enforceability
of the transactions contemplated hereby or thereby or (ii) any notice, consent or waiver the
absence of which would not adversely affect the consummation or enforceability of the transactions
contemplated hereby or thereby, or (d) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Realogy or any of its properties or assets.
2.4
Ownership of Rights
. Realogy has the sole and exclusive rights to receive the
payments under the TRA assigned or purported to be assigned to Realogy pursuant to the ABG
Agreement and the Separation Agreement, and to exercise all of the rights assigned or purported to
be assigned to Realogy pursuant to the ABG Agreement and the provisions of the Separation Agreement
that relate to the matters contained in the ABG Agreement, and such rights are free and clear of
all Security Interests other than such Security Interests as shall have been released on or before
Closing.
2.5
Contracts
. Realogy has delivered to WEX a complete and accurate copy of the
Separation Agreement and any other agreements to which Realogy is a party or of which it has
knowledge (including written summaries of any oral agreements) adversely affecting the rights of
WEX under this Agreement. The provisions of the Separation Agreement that relate to the matters
contained in the ABG Agreement are legal, valid, binding on and enforceable against Realogy and in
full force and effect to the extent not modified by the ABG Agreement and Realogy is not in
material breach or in material violation of, or material default under, any such provision, and no
event has occurred, is pending or is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by Realogy or any other party under any
such provision of the Separation Agreement in a manner adverse to WEX.
-3-
2.6
Litigation
. There is no Legal Proceeding which is pending or has been threatened
in writing, or judgment, order or decree outstanding, against or otherwise naming Realogy which in
any manner challenges or seeks, or would if commenced challenge or seek, to prevent, enjoin, alter
or delay the transactions contemplated by this Agreement. To Realogys knowledge, there is no Legal
Proceeding which is pending or has been threatened in writing, or judgment, order or decree
outstanding, against ABG which in any manner challenges or seeks or would if commenced challenge or
seek to prevent, enjoin, alter or delay the transactions contemplated by this Agreement.
2.7
Financial Statements
.
(a) Realogy has filed all registration statements, forms, reports and other documents required
to be filed by Realogy with the United States Securities and Exchange Commission (the SEC) since
January 1, 2008. All such registration statements, forms, reports and other documents are referred
to herein as the Realogy SEC Reports.
(b) The consolidated financial statements (including, in each case, any related notes and
schedules) contained in the 2008 Form 10-K and 2009 Form 10-Q for the first quarter of 2009 at the
time filed (i) were prepared in accordance with United States generally accepted accounting
principles (GAAP) applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of unaudited interim financial
statements, as permitted by the SEC on Form 10-Q under the Exchange Act), and (ii) fairly presented
in all material respects the consolidated financial position of Realogy and its Subsidiaries as of
the dates indicated and the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were subject to normal and
recurring year-end adjustments, none of which are expected to have a material adverse effect on
Realogy.
2.8
No Additional Representations
. Realogy acknowledges that neither WEX nor any
person has made any representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding WEX furnished or made available to Realogy and its
representatives except as expressly set forth in this Agreement.
2.9
Brokers Fees
. Realogy has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions contemplated by this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WEX
WEX represents and warrants to Realogy that the statements contained in this Article III are
true and correct as of the date of this Agreement and will be true and correct as of the Closing as
though made as of the Closing.
3.1
Organization and Corporate Power
. WEX is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. WEX has all requisite
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corporate power and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it.
3.2
Authorization of the Transaction
. WEX has all requisite corporate power and
authority to execute and deliver this Agreement and the ABG Agreement and to perform its
obligations hereunder and thereunder. The execution and delivery by WEX of this Agreement and the
ABG Agreement, the performance by WEX of this Agreement and the ABG Agreement and the consummation
by WEX of the transactions contemplated hereby and thereby have been duly and validly authorized by
all necessary corporate action on the part of WEX. This Agreement and the ABG Agreement have been
duly and validly executed and delivered by WEX and this Agreement, the ABG Agreement and the TRA
constitute valid and binding obligations of WEX, enforceable against WEX in accordance with their
terms, except as such enforcement may be limited by general equitable principles or by applicable
bankruptcy, insolvency, fraudulent transfer, moratorium, or similar laws, legal requirements and
judicial decisions from time to time in effect which affect creditors rights generally.
3.3
Noncontravention
. Neither the execution and delivery by WEX of this Agreement or
the ABG Agreement, nor the consummation by WEX of the transactions contemplated hereby or thereby,
will (a) conflict with or violate any provision of the Certificate of Incorporation or by-laws of
WEX, (b) require on the part of WEX any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, (c) conflict with, result in breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration of obligations
under, create in any party any right to terminate, modify or cancel, or require any notice, consent
or waiver under, any contract or instrument to which WEX is a party or by which it is bound or to
which any of its assets is subject, except for (i) any conflict, breach, default, acceleration,
termination, modification or cancellation which is not material or which would not materially
adversely affect the consummation of the transactions contemplated hereby or (ii) any notice,
consent or waiver the absence of which would not adversely affect the consummation of the
transactions contemplated hereby, or (d) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to WEX or any of its properties or assets.
3.4 [Reserved]
3.5
No Additional Representations
. WEX acknowledges that neither Realogy nor any
person has made any representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding Realogy furnished or made available to WEX and its
representatives except as expressly set forth in this Agreement (which includes the Disclosure
Schedule).
3.6
Brokers Fees
. WEX has no liability or obligation to pay any fees or commissions
to any broker, finder or agent with respect to the transactions contemplated by this Agreement.
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ARTICLE IV
CERTAIN COVENANTS
4.1
Confidentiality
. The parties contemplate public disclosure of this Agreement
(including to the extent each party deems it necessary to include in its required public filings or
to communicate with its investors) and will develop in good faith a separate Confidentiality
Agreement to govern the exchange of other confidential information necessary to implement a request
for a Private Letter Ruling or other further joint activities.
ARTICLE V
[RESERVED]
ARTICLE VI
POST-CLOSING COVENANTS
6.1
Press Releases and Announcements
. Other than public disclosures contemplated by
Section 4.1, neither Party shall issue any press release or public announcement relating to the
subject matter of this Agreement without the prior written approval of the other Party.
6.2
Private Letter Ruling Request
. WEX agrees as soon as practicable following the
Closing to submit a request to the Internal Revenue Service for the Private Letter Ruling;
provided
,
however
, that WEX shall (i) provide Realogy with a timely and detailed
account of each stage of such Private Letter Ruling request; (ii) consult with Realogy and offer
Realogy a reasonable opportunity to comment before submitting such request or any written material
prepared or furnished in connection with such request; and (iii) consult with Realogy before taking
any significant action in connection with such Private Letter Ruling request after it has been
submitted. Realogy shall provide, and shall cause ABG and Wyndham to provide, promptly to WEX such
information, documents and Tax Returns as WEX shall reasonably request in connection with its
preparation and submission to the Internal Revenue Service of the Private Letter Ruling request or
any such written material to be prepared or furnished in connection with such request.
6.3
IRS Position
. Except as required by a TRA Final Determination or as otherwise
required by law, neither WEX nor Realogy shall take any position for Federal, state, or local
income Tax purposes inconsistent with the position that no cancellation or indebtedness income will
arise from the transactions contemplated by this Agreement.
6.4
Access to Information
. Each of the parties shall cooperate fully (and shall cause
its respective Affiliates to cooperate fully) with all reasonable requests from the other party in
connection with providing information relating to the preparation and filing of any of its Tax
Returns, any calculation or determination contemplated by this Agreement, or any other matter
relating to Taxes covered by this Agreement or any other agreements between the parties. Such
cooperation shall include, without limitation, at each partys own expense, (i) the retention until
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the expiration of the applicable statute of limitations (including extensions), and the
provision upon request, of its Tax Returns, books, records, documentation and other information
relating to its Tax Returns and/or the calculations and determinations contemplated under this
Agreement, and (ii) the execution of any document that may be necessary or helpful in connection
with the filing of any partys Tax Returns. Each party shall make its employees and facilities
available on a reasonable basis in connection with the foregoing matters.
ARTICLE VII
INDEMNIFICATION
7.1
Indemnification by Realogy
. Realogy shall indemnify WEX in respect of, and hold
WEX harmless against, any and all Damages incurred or suffered by WEX or any Affiliate thereof
resulting from, relating to or constituting:
(a) any breach, as of the date of this Agreement, of any representation or warranty of Realogy
contained in this Agreement;
(b) so long as WEX is in compliance with Section 6.3, Taxes resulting from any cancellation of
indebtedness income recognized by WEX for federal, state or local income tax purposes as a result
of the transactions contemplated by this Agreement (provided, however, that to the extent that WEX
would be permitted to elect to defer (the Deferral Election) the recognition of any such
cancellation of indebtedness income under Section 108(i) of the Code, then, at its option, Realogy
may elect to (i) pay to WEX the present value of the payment stream of Taxes due as a result of the
Deferral Election at a discount rate equal to the five-year USD US Composite (BBB) rate as
reported by Bloomberg Financial Markets under the ticker symbol C8835Y as of the close of market
one business day prior to the date of such payment, or (ii) pay to WEX the deferral payments on the
dates they would have been due if the Deferral Election had been elected by WEX, whether or not it
in fact had been elected;
provided
,
however
, that Realogy shall have no right to
elect the option described in this clause (ii) if at such time the Guarantee Agreement is not in
effect with respect to the obligations set forth in this paragraph or shall expire or otherwise
terminate with respect thereto within 30 days thereafter, unless (A) Realogy is then rated BB (or
any higher rating) by Standard & Poors Rating Services, a division of the McGraw Hill Companies,
Inc., or (B) Realogy has provided a letter of credit to WEX as security for the payment of such
deferral payments in form and substance reasonably satisfactory to WEX (each of (A) and (B), an
Alternative Security Condition), and
provided
further
, that any deferral payments
that would extend beyond the period during which the Guarantee Agreement covers the obligations set
forth in this paragraph shall be paid at least thirty days prior to the expiration of such period
in an amount equal to the present value of the unpaid amount of the payment stream due as a result
of the Deferral Election, at a discount rate equal to the five-year USD US Composite (BBB) rate
as reported by Bloomberg Financial Markets under the ticker symbol C8835Y as of the close of market
one business day prior to the date of such payment, unless an Alternative Security Condition has
been met;
(c) any claims by or on behalf of Realogy (while in bankruptcy), any creditors of Realogy
(whenever existing), including banks, or any committee of such creditors, or any
-7-
trustee, or any assignee thereof or successor thereto, challenging or otherwise seeking to
avoid or rescind this Agreement or any of the transactions contemplated by this Agreement;
(d) any claims by or on behalf of ABG (while in bankruptcy), any creditors of ABG (whenever
existing), including banks, or any committee of such creditors, or any trustee, or any assignee
thereof or successor thereto, challenging or otherwise seeking to avoid or rescind this Agreement
or the ABG Agreement or any of the transactions contemplated by this Agreement or the ABG
Agreement;
(e) if there is a Basis Final Determination as a result of which any Tax Benefit Payment would
have been reduced,
(i) 62.5% of the excess, if any, of any Original Payment over the Recomputed Tax Benefit
Payment pursuant to Section 3.03 of the TRA, in each case limited to payments made by WEX pursuant
to the TRA prior to the Closing Date, and
(ii) the amount by which the Prepayment would have been reduced had it been calculated by
using the cash flows implied by the Basis Final Determination, discounted at the same rate and
using the same methodology as used to arrive at the Prepayment; and
(f) without duplication, 62.5% of any Taxes and other losses for which ABG indemnified or has
agreed to indemnify WEX and its Affiliates under Section 4.01 of the TRA.
7.2
Indemnification by WEX
. WEX shall indemnify Realogy in respect of, and hold it
harmless against, any and all Damages incurred or suffered by Realogy or any Affiliate thereof
resulting from, relating to or constituting:
(a) any breach, as of the date of this Agreement or as of the Closing Date, of any
representation or warranty of WEX contained in this Agreement or any other agreement or instrument
furnished by WEX to Realogy pursuant to this Agreement;
(b) if there is a Basis Final Determination as a result of which any Tax Benefit Payment would
have been increased,
(i) 62.5% of the excess, if any, of any Recomputed Tax Benefit Payment over the Original
Payment pursuant to Section 3.03 of the TRA, in each case limited to payments made by WEX pursuant
to the TRA prior to the Closing Date, and
(ii) the amount by which the Prepayment would have been increased had it been calculated by
using the cash flows implied by the Basis Final Determination, discounted at the same rate and
using the same methodology as used to arrive at the Prepayment; and
(c) without duplication, 62.5% of any Taxes and other losses for which WEX indemnified or has
agreed to indemnify ABG and its Affiliates under Section 4.01 of the TRA.
7.3
Indemnification Claims
.
-8-
(a) An Indemnified Party shall give written notification to the Indemnifying Party of the
commencement of any Third Party Action. Such notification shall be given within 20 days after
receipt by the Indemnified Party of notice of such Third Party Action, and shall describe in
reasonable detail (to the extent known by the Indemnified Party) the facts constituting the basis
for such Third Party Action and the amount of the claimed damages;
provided
,
however
, that no delay or failure on the part of the Indemnified Party in so notifying the
Indemnifying Party shall relieve the Indemnifying Party of any liability or obligation hereunder
except to the extent of any damage or liability caused by or arising out of such failure. Within
20 days after delivery of such notification, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such Third Party Action with its
own counsel reasonably satisfactory to the Indemnified Party;
provided
that the
Indemnifying Party may not assume control of the defense of any Third Party Action (x) involving
action by the Internal Revenue Service or any other taxing authority, but only if the Indemnified
Party can reasonably demonstrate that the action involves a likelihood of loss to it that is equal
to or greater than the indemnifiable claim, (y) involving criminal liability or (z) if the
Indemnifying Party is in bankruptcy. If the Indemnifying Party does not, or is not permitted under
the terms hereof to, so assume control of the defense of a Third Party Action, the Indemnified
Party shall control such defense,
provided
,
however
, that if the Controlling Party
is not the Indemnifying Party in the case of an action by the Internal Revenue Service or any other
taxing authority, the Controlling Party shall:
(i) promptly deliver to the Indemnifying Party complete copies of all written notices,
requests, or other information received from any taxing authority or judicial or similar body that
could result in a redetermination or other adjustment to any Tax item which could increase the
liability of the Indemnified Party for any Tax for which the Indemnifying Party is or may be liable
under this Agreement (hereinafter a Tax Indemnity Issue);
(ii) not provide any documents or other information to any taxing authority or judicial or
similar body that relate to the Tax Indemnity Issue without the Indemnifying Partys prior review:
(iii) not submit any written response or other written work in respect of any Tax Indemnity
Issue to any taxing authority or judicial or similar body without allowing the Indemnifying Party
to review and revise such written response or other written work to the extent it relates to any
Tax Indemnity issue (with any disagreement as to the ultimate language used in any such written
response or other written work to be resolved by the Controlling Party);
(iv) permit the Indemnifying Party and its representatives, at the Indemnifying Partys sole
expense, to participate fully in all conferences, meetings, proceedings or judicial appearances
with or before any taxing authority or judicial or similar body (whether in person or by telephone)
the subject matter of which is or includes the Tax Indemnity Issue;
(v) consult in good faith with the Indemnifying Party with respect to all aspects of any
action or position to be taken by the Controlling Party that relates to any Tax Indemnity Issue and
take the Indemnifying Partys interests into account;
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(vi) not adopt any position in any proceeding that compromises a Tax Indemnity Issue so as to
gain any advantage with respect to any other issue, including those which are the subject of the
same or any related proceeding; and
(vii) not make any settlement offer to any taxing authority or accept any settlement offer
made by any taxing authority, in each case with respect to any proceeding that is related, in whole
or in part, to any Tax Indemnity Issue without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, conditioned or delayed.
The Non-controlling Party may participate in such defense at its own expense and the Controlling
Party shall keep the Non-controlling Party advised of the status of such Third Party Action and the
defense thereof and shall consider in good faith recommendations made by the Non-controlling Party
with respect thereto. The Non-controlling Party shall furnish the Controlling Party with such
information as it may have with respect to such Third Party Action (including copies of any
summons, complaint or other pleading which may have been served on such party and any written
claim, demand, invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of such Third Party
Action. The fees and expenses of counsel to the Indemnified Party with respect to a Third Party
Action shall be considered Damages for purposes of this Agreement if (i) the Indemnified Party
controls the defense of such Third Party Action pursuant to the terms of this Section 7.3(a) (other
than pursuant to clause (x) above, in which case the parties shall determine an equitable sharing
of counsel costs to reflect the pro rata likelihood of loss referenced in clause (x) above) or (ii)
the Indemnifying Party assumes control of such defense, but the Indemnified Party is named in the
Third Party Action and its counsel reasonably concludes that the Indemnifying Party and the
Indemnified Party have actual conflicts of interest with respect to such Third Party Action. The
Indemnifying Party shall not agree to any settlement of, or the entry of any judgment arising from,
any Third Party Action without the prior written consent of the Indemnified Party, which shall not
be unreasonably withheld, conditioned or delayed. The Indemnified Party shall not agree to any
settlement of, or the entry of any judgment arising from, any such Third Party Action without the
prior written consent of the Indemnifying Party, which shall not be unreasonably withheld,
conditioned or delayed.
(b) In order to seek indemnification under this Article VII, an Indemnified Party shall
deliver a Claim Notice to the Indemnifying Party.
(c) Within 20 days after delivery of a Claim Notice, the Indemnifying Party shall deliver to
the Indemnified Party a Response, in which the Indemnifying Party shall: (i) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in which case the Response
shall be accompanied by a payment by the Indemnifying Party to the Indemnified Party of the Claimed
Amount, by check or by wire transfer), (ii) agree that the Indemnified Party is entitled to receive
the Agreed Amount (in which case the Response shall be accompanied by a payment by the Indemnifying
Party to the Indemnified Party of the Agreed Amount, by check or by wire transfer), or (iii)
dispute that the Indemnified Party is entitled to receive any of the Claimed Amount. During the
30-day period following the delivery of a Response that reflects a Dispute, the Indemnifying Party
and the Indemnified Party shall use good faith efforts to resolve the Dispute. In the absence of
an agreement by the Indemnifying
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Party and the Indemnified Party, such Dispute shall be resolved in
a state or federal court in accordance with Section 10.10.
(d) Notwithstanding the other provisions of this Section 7.3, if a third party asserts (other
than by means of a lawsuit) that an Indemnified Party is liable to such third party for a monetary
or other obligation which may constitute or result in Damages for which such Indemnified Party may
be entitled to indemnification pursuant to this Article VII, and such Indemnified Party reasonably
determines that it has a valid business reason to fulfill such obligation, then (i) such
Indemnified Party shall be entitled to satisfy such obligation, without prior notice to or consent
from the Indemnifying Party, (ii) such Indemnified Party may subsequently make a claim for
indemnification in accordance with the provisions of this Article VII, and (iii) such Indemnified
Party shall be reimbursed, in accordance with the provisions of this Article VII, for any such
Damages for which it is entitled to indemnification pursuant to this Article VII (subject to the
right of the Indemnifying Party to dispute the Indemnified Partys entitlement to indemnification,
or the amount for which it is entitled to indemnification, under the terms of this Article VII).
7.4
Survival of Representations and Warranties
. All representations and warranties
that are covered by the indemnification agreements in Section 7.1(a) and Section 7.2(a) shall
survive the Closing for two years from the date of Closing. The rights to indemnification set
forth in this Article VII shall not be affected by (i) any investigation conducted by or on behalf
of an Indemnified Party or any knowledge acquired (or capable of being acquired) by an Indemnified
Party, whether before or after the date of this Agreement or the Closing Date, with respect to the
inaccuracy or noncompliance with any representation, warranty, covenant or obligation which is the
subject of indemnification hereunder or (ii) any waiver by an Indemnified Party of any closing
condition. For the avoidance of doubt, the indemnification obligations set forth in Sections
7.1(b) through and including 7.1(f) and 7.2(b) through and including 7.2(c) shall survive until the
expiration of all applicable statutes of limitation,
provided
that the indemnification
obligation set forth in Section 7.1(b) shall also expire earlier upon the receipt by WEX of the
Private Letter Ruling.
7.5
Limitations
.
(a) Realogys maximum obligation for Damages under Sections 7.1(a), (b), (c) and (d) shall
equal $75,000,000.
(b) In no event shall any party hereunder recover more than once for any Damages, regardless
of whether alternative theories of recovery exist under this Agreement.
7.6 [Reserved]
7.7 [Reserved]
7.8
Insurance
. Any indemnity payment due and payable by an Indemnifying Party under
this Agreement shall be net of any insurance proceeds received by the other party with respect to
the respective claim.
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7.9
Exclusive Remedy
. As between Realogy and WEX, the indemnification in this Article
VII shall be the exclusive remedy with respect to the subject matter hereof.
7.10
Treatment of Payments
. The parties to this Agreement shall treat all payments by
WEX hereunder as part of the purchase price (and interest thereon under the applicable provisions
of the Code) for the assets transferred by ABG to WEX upon its conversion into a Delaware
corporation on February 16, 2005, unless otherwise required by law.
ARTICLE VIII
[RESERVED]
ARTICLE IX
DEFINITIONS
For purposes of this Agreement, each of the following terms shall have the meaning set forth
below.
ABG
shall have the meaning set forth in the second paragraph of this Agreement.
ABG Agreement
shall mean the agreement duly executed by ABG, Realogy, Wyndham and
WEX contemporaneously herewith.
Affiliate
shall mean any affiliate, as defined in Rule 12b-2 under the Securities
Exchange Act of 1934.
Aggregate Prepayment Amount
shall mean Fifty-One Million Dollars ($51,000,000).
Agreed Amount
shall mean part, but not all, of the Claimed Amount.
Asset(s)
as referenced in this Article IX shall have the meaning set forth in the
TRA.
Basis Final Determination
shall mean a TRA Final Determination with respect to the
Tax basis of any Asset(s) or class thereof immediately after the Stock Sale Closing Date.
Claim Notice
shall mean written notification which contains (i) a description of the
Damages incurred or reasonably expected to be incurred by the Indemnified Party and the Claimed
Amount of such Damages, to the extent then known, (ii) a statement that the Indemnified Party is
entitled to indemnification under Article VII for such Damages and a reasonable explanation of the
basis therefor, and (iii) a demand for payment in the amount of such Damages.
Claimed Amount
shall mean the amount of any Damages incurred or reasonably expected
to be incurred by the Indemnified Party.
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Closing
shall mean the closing of the transactions contemplated by this Agreement.
Closing Date
shall mean June 26, 2009.
Code
shall mean the Internal Revenue Code of 1986, as amended.
Controlling Party
shall mean the party controlling the defense of any Third Party
Action.
Damages
shall mean any and all actual damages, liabilities, obligations, penalties,
fines, judgments, claims and losses, and, for third party claims only, costs and expenses
(including reasonable attorneys fees), but Damages shall not include indirect, special, exemplary
or punitive damages, or any theory of expectation damages or loss based on a multiple of any type
of financial measure.
Disclosure Schedule
shall mean the disclosure schedule provided by Realogy to WEX on
the date hereof and accepted in writing by WEX.
Dispute
shall mean the dispute resulting if the Indemnifying Party in a Response
disputes its liability for all or part of the Claimed Amount.
Expenses
shall mean the out-of-pocket fees and other expenses of WEX reimbursable by
Realogy pursuant to and to the extent permitted under Section 10.9 below.
Governmental Entity
shall mean any court, arbitrational tribunal, administrative
agency or commission or other governmental or regulatory authority or agency.
Guarantee Agreement
shall have the meaning set forth in the fifth paragraph of this
Agreement.
Indemnified Party
shall mean a party entitled, or seeking to assert rights, to
indemnification under Article VII of this Agreement.
Indemnifying Party
shall mean the party from whom indemnification is sought by the
Indemnified Party.
Knowledge
or
knowledge
with respect to an entity shall mean the actual
knowledge of its executive officers.
Legal Proceeding
shall mean any action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity or before any arbitrator.
Non-controlling Party
shall mean the party not controlling the defense of any Third
Party Action.
Original Payment
as referenced in Sections 7.1(e)(i) and 7.2(b)(i) above shall have
the meaning set forth in the TRA.
Parties
shall mean WEX and Realogy.
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PLR Fees
has the meaning set forth in Section 10.9 below.
Prepayment
shall have the meaning set forth in Article I above.
Private Letter Ruling
shall mean a private letter ruling from the Internal Revenue
Service to the effect that the transaction will not result in cancellation of indebtedness income
to WEX for federal income tax purposes.
Realogy
shall have the meaning set forth in the first paragraph of this Agreement.
Recomputed Tax Benefit Payment
as referenced in Sections 7.1(e)(i) and 7.2(b)(i)
above shall have the meaning set forth in the TRA.
Representatives
shall mean the respective officers and other employees involved in
the negotiation of this Agreement, members of the Boards of Directors, and the respective
accountants, attorneys and other advisors (including, with respect to Realogy, representatives of
Apollo Management, L.P.) of the Parties.
Response
shall mean a written response containing the information provided for in
Section 7.3(c).
Security Interest
shall mean any mortgage, pledge, security interest, encumbrance,
charge or other lien (whether arising by contract or by operation of law).
Stock Sale Closing Date
as referenced in this Article IX shall mean the Closing
Date as defined in the TRA.
Tax Benefit Payment
as referenced in Sections 7.1(e) and 7.2(b) above shall have the
meaning set forth in the TRA.
Taxes
shall mean any and all taxes, charges, fees, duties, contributions, levies or
other similar assessments or liabilities in the nature of a tax, including, without limitation,
income, gross receipts, corporation, ad valorem, premium, value-added, net worth, capital stock,
capital gains, documentary, recapture, alternative or add-on minimum, disability, estimated,
registration, recording, excise, real property, personal property, sales, use, license, lease,
service, service use, transfer, withholding, employment, unemployment, insurance, social security,
national insurance, business license, business organization, environmental, workers compensation,
payroll, profits, severance, stamp, occupation, windfall profits, customs duties, franchise and
other taxes of any kind whatsoever imposed by the United States of America or any state, local or
foreign government, or any agency or political subdivision thereof, and any interest, fines,
penalties, assessments or additions to tax imposed with respect to such items or any contest or
dispute thereof.
Tax Indemnity Issue
shall have the meaning set forth in Section 7.3(a)(i) above.
Tax Returns
shall mean any and all reports, returns, declarations, or statements
relating to Taxes, including any schedule or attachment thereto and any related or supporting work
papers or information with respect to any of the foregoing, including any amendment thereof.
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Third Party Action
shall mean any suit or proceeding by a person or entity other
than a Party (or an Affiliate thereof) for which indemnification may be sought by a Party under
Article VII.
TRA
shall have the meaning set forth in the second paragraph of this Agreement.
TRA Final Determination
shall mean a Final Determination as defined in the TRA.
Wyndham
shall have the meaning set forth in the second paragraph of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1
No Third Party Beneficiaries
. This Agreement shall not confer any rights or
remedies upon any person other than the Parties and their respective successors and permitted
assigns.
10.2
Entire Agreement
. This Agreement (including the documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, with respect to the
subject matter hereof.
10.3
Succession and Assignment
. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and permitted assigns. Neither
Party may assign either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party.
10.4
Counterparts and Facsimile Signature
. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed by facsimile signature.
10.5
Headings
. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
10.6
Notices
. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly delivered four business days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, or one business day after it is sent for
next business day delivery via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
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If to Realogy
:
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Copy to
:
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Realogy Corporation
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Wachtell, Lipton, Rosen & Katz
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One Campus Drive
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51 W 52
nd
Street
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Parsippany, NJ 07054
|
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New York, NY 10019
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Tel: (973) 407-2000
|
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Tel: (212) 403-1000
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Attn: Chief Financial Officer
|
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Attn: Igor Kirman
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If to WEX
:
|
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Copy to
:
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Wright Express Corporation
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Wilmer Cutler Pickering Hale and Dorr LLP
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97 Darling Avenue
|
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60 State Street
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South Portland, ME 04016
|
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Boston, MA 02109
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Tel: (207) 773-8171
|
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Tel: (617) 526-6000
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Attn: Chief Financial Officer
|
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Attn: Jeffrey A. Stein
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Either Party may give any notice, request, demand, claim, or other communication hereunder
using any other means (including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Either Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
10.7
Governing Law
. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without giving effect to applicable principles of
conflict of laws.
10.8
Amendments and Waivers
. The Parties may mutually amend any provision of this
Agreement. No amendment of any provision of this Agreement shall be valid unless the same shall be
in writing and signed by each of the Parties. No waiver by either Party of any right or remedy
hereunder shall be valid unless the same shall be in writing and signed by the Party giving such
waiver. No waiver by either Party with respect to any default, misrepresentation, or breach of
warranty or covenant hereunder shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
10.9
Expenses
. Except as set forth in Article VII, each Party shall bear its own
costs and expenses incurred in connection with this Agreement and the transactions contemplated
hereby;
provided
,
however
, that Realogy shall reimburse WEX for (i) legal fees (not
to exceed $500,000) in connection with the preparation and negotiation of this Agreement, (ii)
legal fees (not to exceed an additional $250,000) in connection with the preparation of the
Internal Revenue Service private letter ruling request and Internal Revenue Service private letter
ruling fees (the items in clause (ii), the PLR Fees), and (iii) bank consent fees not to exceed
$1.45 million.
10.10
Submission to Jurisdiction
. Each Party (a) submits to the jurisdiction of any
state or federal court sitting in New York, New York in any action or proceeding arising out of or
relating to this Agreement, (b) agrees that all claims in respect of such action or proceeding may
be heard and determined in any such court, (c) waives any claim of inconvenient forum or other
challenge to venue in such court, (d) agrees not to bring any action or proceeding arising out of
-16-
or relating to this Agreement in any other court and (e) waives any right it may have to a trial by
jury with respect to any action or proceeding arising out of or relating to this Agreement. Each
Party agrees to accept service of any summons, complaint or other initial pleading made in the
manner provided for the giving of notices in Section 10.6, provided that nothing in this Section
10.10 shall affect the right of either Party to serve such summons, complaint or other initial
pleading in any other manner permitted by law
.
10.11
Specific Performance
. Each Party acknowledges and agrees that the other Party
would be damaged irreparably in the event any of the provisions of this Agreement (including
Section 7.1) are not performed in accordance with their specific terms or otherwise are breached.
Accordingly, each Party agrees that the other Party shall be entitled to an injunction or other
equitable relief to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which it may be entitled, at law or in equity.
10.12
Construction
.
(a) The language used in this Agreement shall be deemed to be the language chosen by the
Parties to express their mutual intent, and no rule of strict construction shall be applied against
either Party.
(b) Any reference to any federal, state, local, or foreign statute or law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context requires
otherwise.
(c) Any reference herein to including shall be interpreted as including without
limitation.
(d) Any reference to any Article, Section or paragraph shall be deemed to refer to an Article,
Section or paragraph of this Agreement, unless the context clearly indicates otherwise.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above
written.
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WRIGHT EXPRESS CORPORATION
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By:
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/s/ Melissa D. Smith
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Name:
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Melissa D. Smith
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Title:
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CFO, Executive Vice President, Finance and
Operations
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REALOGY CORPORATION
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By:
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/s/ Anthony Hull
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Name:
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Anthony Hull
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Title:
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CFO
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[Signature page to Tax Receivable Prepayment Agreement]
Exhibit 10.2
Execution Version
Ratification Agreement
This
Ratification Agreement
(this
Agreement
), dated as of June 26, 2009 by and among
Avis Budget Group, Inc., a Delaware corporation (formerly known as Cendant Corporation)
(
ABG
), Realogy Corporation, a Delaware corporation (
Realogy
), Wyndham Worldwide
Corporation, a Delaware corporation (
Wyndham
), and Wright Express Corporation, a Delaware
corporation (
WEX
, collectively with ABG, Realogy and Wyndham, the
parties
and
each individually, a
party
).
Capitalized terms used in this Agreement but not otherwise defined have the meanings set forth
in the TRA (as defined below).
WHEREAS
, WEX, ABG and Cendant Mobility Services Corporation, a Delaware corporation (now known
as Cartus Corporation), are parties to that certain Tax Receivable Agreement, dated as of February
22, 2005 (the
TRA
) which provides for, among other things, certain payments to be made
from WEX to ABG;
WHEREAS
, pursuant to that certain Separation and Distribution Agreement, dated as of July 27,
2006, by and among ABG, Realogy, Wyndham and Travelport Inc. (the
Separation Agreement
),
the payments to be received by ABG under the TRA are a Cendant Contingent Asset (as defined in the
Separation Agreement) to be distributed to Realogy and Wyndham, 62.5% and 37.5%, respectively (the
Applicable Percentages
) and the liabilities and obligations of ABG under the TRA are an
Assumed Cendant Contingent Liability (as defined in the Separation Agreement) to be assumed by
Realogy and Wyndham in accordance with their Applicable Percentages;
WHEREAS
, Section 10.07 of the TRA provides that ABG may assign some or all its rights,
interests or entitlements and obligations under the TRA to any Affiliate (as defined in the TRA)
without the consent of WEX and ABG may assign some or all of its rights (but not its obligations)
under the TRA to another person without the consent of WEX;
WHEREAS
, as of the Effective Time of the Separation Agreement, Realogy and Wyndham were
Affiliates of ABG;
WHEREAS
, pursuant to the Separation Agreement, ABG assigned its rights and obligations under
the TRA to Realogy and Wyndham in accordance with their Applicable Percentages (the Assignment)
and each of Realogy and Wyndham assumed the obligations of ABG under the TRA in accordance with
their Applicable Percentages (the Assumption). In particular, pursuant to Section 2.2 of the
Separation Agreement, ABG assigned (i) to Realogy the Real Estate Assets, which are defined to
include, among other things, the Applicable Realogy Percentage (i.e., 62.5%) of any Cendant
Contingent Asset and (ii) to Wyndham the Hospitality Assets, which are defined to include, among
other things, the Applicable Wyndham Percentage (i.e., 37.5%) of any Cendant Contingent Asset.
Further, pursuant to Section 2.3 of the Separation Agreement, (i) Realogy assumed all of the Real
Estate Liabilities, which are defined to include,
among other things, the Applicable Realogy Percentage (i.e., 62.5%) of any Assumed Cendant
Contingent Liability and (ii) Wyndham assumed all of the Hospitality Liabilities, which are
defined to include, among other things, the Applicable Wyndham Percentage (i.e., 37.5%) of any Assumed
Cendant Contingent Liability;
WHEREAS
, contemporaneously with the execution of this Agreement, WEX and Realogy have entered
into the Tax Receivable Prepayment Agreement (the TRPA); and
WHEREAS
, in furtherance of the arrangements set forth in the Separation Agreement, including
without limitation, the obligations of ABG, Realogy and Wyndham set forth in Sections 2.2 (Transfer
of Assets), 2.3 (Assumption and Satisfaction of Liabilities) and 7.1(a) (Cendant Contingent Assets
and Assumed Cendant Contingent Liabilities) thereof, the parties desire to affirm and ratify the
Assignment and Assumption.
NOW, THEREFORE,
in consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound, the parties hereto agree to the following terms and conditions.
1
Affirmation of Assignment
.
1.1
Affirmation of Assignment of Rights and Obligations Under the TRA
. ABG hereby
affirms and ratifies its assignment, conveyance, and transfer to Realogy and Wyndham pursuant to
the Separation Agreement, in accordance with their respective Applicable Percentages, of all of
ABGs right, title, obligations and interest under the TRA, including, without limitation, the
right in and to all future payments to be made by WEX to ABG under Sections 3.01, 3.02, 3.03, 8.02
and 8.03 of the TRA, any right to indemnification under Section 4.01 of the TRA, any right to the
provision of information pursuant to Section 2.04 (Provision of Information) of the TRA and any
right to cooperation pursuant to Section 6.01 (Cooperation) of the TRA, provided, however that ABG
shall retain all right, title, obligations and interest under Section 2.01 (Cendant Tax Returns) of
the TRA and Section 6.01 (Cooperation) of the TRA (solely with respect to Cendant Returns). Each
of Realogy and Wyndham hereby confirms the acquisition and acceptance of such assignment. Realogy
agrees that any payments made on or after the date hereof by WEX to Realogy or Wyndham under the
TRA or the TRPA shall not be taken into account as adjustments to the Purchase Price pursuant to
Section 2.05(c) of the TRA, or otherwise, for purposes of determining the amount of any further
payments to be made by WEX to Realogy under the TRA or the TRPA.
1.2
Security Interests
. ABG hereby represents and warrants to WEX that upon
completion of its assignment, conveyance and transfer to Realogy and Wyndham of its right, title,
obligations and interest described in Section 1.1 above, to the knowledge of ABG at such time,
such right, title, obligations and interest were free and clear of any material mortgage, pledge,
security interest, or other lien arising as a direct result of an action taken by ABG.
1.3
Amendment of Section 3.01 of the TRA
. Section 3.01 of the TRA is hereby amended
by replacing the text thereof in its entirety with the following:
SECTION 3.01. Estimated Tax Benefit Payments. At least ten (10) days prior to the
installment due date for the payment of any estimated Income Tax under Section 6655 of the
Code or any comparable provision of state or local or other law (Installment Date) with
respect to any WEX Return, WEX shall submit to Wyndham a preliminary determination of (A) the
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liability for Taxes that would be due on such Installment Date assuming the same facts and using
the same methods, elections, conventions and practices used in determining the actual liability for
Taxes on such date; provided, however, that such liability shall be calculated (i) with reference
to the Beginning Tax Basis instead of the Stepped-Up Tax Basis of each Asset or class of Assets, as
shown on the Basis Schedule, (ii) assuming that any losses and/or other Tax attributes for all
Taxable Years are carried forward to future taxable years rather than carried back to prior Taxable
Years, and (iii) excluding any deduction attributable to Imputed Interest (Hypothetical Tax
Liability) and (B) the actual liability for Taxes due on such date with respect to such WEX
Return, provided, however, that such liability shall be calculated assuming that all payments made
by WEX to Realogy solely under the Tax Receivable Prepayment Agreement, dated June 26, 2009,
between WEX and Realogy (
TRPA
) have not been made, but rather, that all payments under
this Tax Receivable Agreement that would have been required to be made but for the TRPA were
actually made by WEX to Realogy at each applicable date (Actual Tax Liability). Upon review by
Wyndham, WEX shall promptly make adjustments to such determination to the extent reasonably
requested by Wyndham. Within five (5) days after finalizing such determination, WEX shall pay
Wyndham 31.875% of the excess, if any, of the Hypothetical Tax Liability over the Actual Tax
Liability.
1.4
Amendment of Section 3.02 of the TRA
. Section 3.02 of the TRA is hereby amended
by replacing the text thereof in its entirety with the following:
SECTION 3.02. True-Ups. Within thirty (30) days after the filing of any WEX Return for
Income Taxes for a Taxable Year (other than a Tax Return with respect to estimated Income Taxes),
WEX shall submit to Wyndham a preliminary determination of (i) the Hypothetical Tax Liability for
such entire Taxable Year and (ii) the Actual Tax Liability for such entire Taxable Year and, upon
review by Wyndham, shall promptly make adjustments to such determination to the extent reasonably
requested by Wyndham. Within five (5) days after finalizing such determination, WEX shall pay to
Wyndham the excess, if any, of (A) 31.875% of the excess, if any, of such Hypothetical Tax
Liability over such Actual Tax Liability over (B) the aggregate amount previously paid by WEX to
Wyndham under Section 3.01 with respect to such Taxable Year. Any excess of (X) the aggregate
amount previously paid by WEX to Wyndham under Section 3.01 with respect to such Taxable Year over
(Y) 31.875% of the excess of such Hypothetical Tax Liability over such Actual Tax Liability shall
offset to the extent of such excess the next succeeding payment(s) otherwise due from WEX to
Wyndham under Sections 3.01 and/or 8.02; provided, however, that if Wyndham and WEX mutually agree
that no further payments could possibly be made pursuant to Section 3.01 hereof, then Wyndham shall
pay to WEX the amount of such excess.
1.5
Intent of Parties; and Interpretation
. With respect to each payment required to
be made by WEX to Wyndham pursuant to this Agreement and the TRA on or after the date hereof, (i)
the parties intend that the amount of each such payment shall be exactly equal to the amount that
would have been required to have been paid by WEX to Wyndham pursuant to this Agreement and the TRA
assuming that (A) WEX and Realogy had not entered into the TRPA and, as a result thereof, no
payments had been made by WEX to Realogy pursuant to the TRPA, (B) Realogy had retained all of its
rights pursuant to this Agreement and the TRA,
including all rights to receive payments pursuant to Sections 3.01, 3.02, 3.03, 8.02 and 8.03
of the TRA and (C) all such payments were actually made by WEX to Realogy and (ii)
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notwithstanding
anything to the contrary contained herein, the TRA or the TRPA, this Agreement and the TRA shall be
interpreted in a manner consistent with clause (i) of this Section 1.5.
1.6
TRPA
. For the avoidance of doubt, Sections 1.3, 1.4 and 1.5 hereof relate solely
to matters between WEX and Wyndham. Nothing herein shall alter the rights and obligations of WEX
and Realogy under the TRPA.
2
Affirmation of Obligations
2.1
Affirmation of Assumption of Obligations Under the TRA
. Each of Realogy and
Wyndham hereby affirms and ratifies for the benefit of the other parties its respective assumption
pursuant to the Separation Agreement of all of ABGs obligations and liabilities under the TRA, in
accordance with its respective Applicable Percentage, including without limitation, ABGs
obligation to make any payments under Section 3.03 of the TRA and any obligation of ABG to
indemnify under Section 4.01 of the TRA; provided, however that ABG shall retain the obligations
set forth under Section 2.01 (Cendant Tax Returns) of the TRA and Section 6.01 (Cooperation) of the
TRA (solely with respect to Cendant Returns). Except for the obligations set forth in the proviso
of the previous sentence, each of Realogy (both on its behalf and on behalf of Cartus Corporation),
Wyndham and WEX hereby releases, remises and forever discharges ABG, its affiliates, shareholders
and employees from any further obligations under the TRA. Except as set forth in Section 2.02 (WEX
Tax Returns) and Section 6.01 (Cooperation) of the TRA, ABG (solely on its behalf, and not on
behalf of Realogy or Wyndham) hereby releases, remises and forever discharges WEX, its affiliates,
shareholders and employees from any further obligations under the TRA.
2.2
Affirmation of Tax Liability and Cost and Expense Sharing Obligations under Tax
Sharing Agreement
. Each of Realogy and Wyndham hereby affirms and ratifies for the benefit of
the other parties its respective obligations under Section 3.2 (Responsibility of Realogy to pay
Taxes), Section 3.3 (Responsibility of Wyndham to pay Taxes) and Section 8.2(f) (Sharing of costs
and expenses related to Pre-2007 Shared Entity Audits) of the Tax Sharing Agreement, dated as of
July 28, 2006, by and among ABG, Realogy, Wyndham and Travelport Inc. as such obligations relate to
ABGs obligations under Section 2.01 (Cendant Tax Returns) of the TRA. For the avoidance of doubt,
nothing in this Section 2.2 shall affect ABGs obligations to WEX under Section 2.01 (Cendant Tax
Returns) of the TRA in a manner adverse to WEX.
3
Miscellaneous
3.1
Entire Agreement
. Each of ABG, Realogy and Wyndham acknowledges and agrees that
the transactions and agreements set forth in this Agreement are intended to further the
arrangements contemplated by the Separation Agreement with respect to the rights and obligations of
ABG under the TRA.
3.2
No Third Party Beneficiaries
. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and permitted assigns,
and nothing in this Agreement, express or implied, is intended to or shall confer upon
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any other
person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
3.3
Counterparts
. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement.
3.4
Governing Law
. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without giving effect to applicable principles of conflict
of laws.
3.5
Successors; Assignments
. Any party may assign any of its rights hereunder without
the consent of any of the other parties. This Agreement will be binding upon, inure to the benefit
of and be enforceable by, the parties and their respective successors and assigns.
3.6
Amendments
. No amendment to this Agreement shall be effective unless it shall be
in writing and signed by each of the parties.
3.7
Titles and Subtitles
. The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in construing this
Agreement.
3.8
Effect of this Agreement
. For the avoidance of doubt, except as expressly
provided in Sections 1.1 and 2.1 of this Agreement, the consummation of the transactions
contemplated by this Agreement shall in no way affect the rights and obligations of the parties
under the Separation Agreement. Each of the parties hereto agrees that ABG shall have no liability
of any kind arising out of the transactions effected pursuant to this Ratification Agreement,
except as expressly set forth in Sections 1.1, 1.2 and 2.1 of this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, ABG, Realogy, Wyndham and WEX have each duly executed this Agreement as of
the date first written above.
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AVIS BUDGET GROUP, INC. (formerly known as
Cendant Corporation)
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By:
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/s/ David B. Wyshner
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Name:
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David B. Wyshner
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Title:
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EVP & CFO
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REALOGY CORPORATION
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By:
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/s/ Anthony Hull
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Name:
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Anthony Hull
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Title:
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CFO
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WYNDHAM WORLDWIDE CORPORATION
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By:
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/s/ Virginia M. Wilson
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Name:
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Virginia M. Wilson
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Title:
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Executive Vice President and Chief
Financial Officer
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WRIGHT EXPRESS CORPORATION
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By:
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/s/ Melissa D. Smith
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Name:
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Melissa D. Smith
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Title:
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CFO, Executive Vice President, Finance and Operations
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[Signature page to Ratification Agreement]