UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) Ju ly 7 , 2016 ( June 30 , 2016)

 

HERTZ GLOBAL HOLDINGS , INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE

 

001-37665

 

61-1770902

(State of incorporation)

 

(Commission File Number)

 

(I.R.S Employer Identification No.)

 

8501 Williams Road

Estero, Florida 33928

(Address of principal executive
offices, including zip code)

 

(239) 301-7000

(Registrant’s telephone number,
including area code)

 

Hertz Rental Car Holding
Company, Inc.

(Former name or former address, if
changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

ITEM 1 .0 1 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT .

 

Completion of Spin-Off

 

On June 30, 2016 (the “Distribution Date”), former Hertz Global Holdings, Inc. (now Herc Holdings Inc., or “Herc Holdings”) completed a spin-off (the “Spin-Off”) of its car rental business through a dividend to its stockholders of all of the issued and outstanding common stock of Hertz Rental Car Holding Company, Inc. (“New Hertz”), which was re-named Hertz Global Holdings, Inc.

 

New Hertz filed a Registration Statement on Form 10 with the Securities and Exchange Commission (the “SEC”) describing the Spin-Off that was declared effective on June 6, 2016.  New Hertz is now an independent company, and its common stock is listed on the New York Stock Exchange under the symbol “HTZ”.  Herc Holdings changed its trading symbol to “HRI”. The Information Statement, dated June 6, 2016 (the “Information Statement”), which describes for stockholders the details of the Spin-Off, is attached hereto as Exhibit 99.1 and the information under the section titled “The Spin-Off” is incorporated by reference herein.

 

Separation and Distribution Agreement

 

On June 30, 2016, New Hertz and Herc Holdings entered into a separation and distribution agreement (the “Separation Agreement”). The Separation Agreement sets forth New Hertz’s agreements with Herc Holdings regarding the principal actions taken in connection with the Spin-Off. It also sets forth other agreements that govern aspects of New Hertz’s relationship with Herc Holdings following the Spin-Off.

 

Internal Reorganization and Related Financing Transactions

 

The Separation Agreement provides for the transfers of entities and assets and assumptions of liabilities necessary to complete the Spin-Off, including the series of internal reorganization transactions such that New Hertz holds the entities associated with former Hertz Global Holdings, Inc.’s global car rental business, including The Hertz Corporation (“THC”), and Herc Holdings holds the entities associated with former Hertz Global Holdings, Inc.’s global equipment rental business, including Herc Rentals Inc. (“Herc”).

 

Pursuant to the Separation Agreement, Herc made certain cash transfers in the total amount of approximately $2.0 billion to THC and its subsidiaries. New Hertz and THC expect to use the cash proceeds from these transfers to pay down a portion of THC’s corporate debt.

 

Legal Matters and Claims; Sharing of Certain Liabilities

 

Subject to any specified exceptions, each party to the Separation Agreement has assumed the liability for, and control of, all pending and threatened legal matters related to its own business, as well as assumed or retained liabilities, and will indemnify the other party for any liability arising out of or resulting from such assumed legal matters.

 

The Separation Agreement provides for certain liabilities to be shared by the parties. New Hertz and Herc Holdings are each responsible for a portion of these shared liabilities. The division of these shared liabilities are set forth in the Separation Agreement. New Hertz will generally be responsible for managing the settlement or other disposition of such shared liabilities.

 

Other Matters

 

In addition to those matters discussed above, the Separation Agreement, among other things, (i) governs the transfer of assets and liabilities generally, (ii) terminates all intercompany arrangements between New Hertz and Herc Holdings except for specified agreements and arrangements that will continue following the Spin-Off, (iii) contains further assurances, terms and conditions that require New Hertz and Herc Holdings to use commercially reasonable efforts to consummate the transactions contemplated by the Separation Agreement and the ancillary agreements, (iv)

 

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releases certain claims between the parties and their affiliates, successors and assigns, (v) contains mutual indemnification clauses and (vi) allocates expenses of the Spin-Off between the parties.

 

The foregoing description of the Separation Agreement is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Separation Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Transition Services Agreement

 

On June 30, 2016, New Hertz and Herc Holdings entered into a Transition Services Agreement (the “Transition Services Agreement”) pursuant to which New Hertz or its affiliates will provide Herc Holdings specified services on a transitional basis to help ensure an orderly transition following the Spin-Off, though New Hertz may request certain transition services to be performed by Herc Holdings. The services to be provided by New Hertz or its affiliates primarily include:

 

·                                           information technology and network and telecommunications systems support;

 

·                                           human resources, payroll and benefits;

 

·                                           accounting and finance;

 

·                                           treasury;

 

·                                           tax matters; and

 

·                                           administrative services.

 

The Transition Services Agreement generally provides for a term of up to two years following the Distribution Date. With certain exceptions, New Hertz and Herc Holdings have agreed to charge for the services rendered, the allocated costs associated with rendering these services,   and may include a mark-up for certain services.

 

New Hertz has generally agreed to use commercially reasonable efforts to continue to provide to Herc Holdings the services that are the subject of the Transition Services Agreement at a relative level of service substantially similar to that provided in the twelve months preceding the Distribution Date. New Hertz and Herc Holdings have also generally agreed to use commercially reasonable efforts to end their respective needs for the transition services as soon as is reasonably possible.

 

The supplier of services under the Transition Services Agreement has generally agreed to indemnify the recipient of such services against all liabilities attributable to any third-party claims asserted against the recipient or its affiliates arising from or relating to the supplier’s provision of or failure to provide the services, to the extent arising from or related to the gross   negligence, willful misconduct or fraud of the supplier. The recipient of services under the Transition Services Agreement has generally agreed to indemnify the supplier of such services against all liabilities attributable to any third-party claims asserted against the supplier or its affiliates arising from or relating to the supplier’s provision of or failure to provide the services, other than claims for which the supplier would have to indemnify the recipient pursuant to the preceding sentence.

 

The foregoing description of the Transition Services Agreement is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Transition Services Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Tax Matters Agreement

 

On June 30, 2016, New Hertz, THC, Herc Holdings and Herc entered into a Tax Matters Agreement (the “Tax Matters Agreement”) that governs the parties’ rights, responsibilities and obligations after the Spin-Off with respect

 

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to tax liabilities and benefits, tax attributes, tax contests and other tax matters regarding income taxes, other taxes and related tax returns. Among other matters, New Hertz will continue to have following the Spin-Off joint and several liability with Herc Holdings to the U.S. Internal Revenue Service and certain U.S. state tax authorities for Herc Holdings’ U.S. federal income and state taxes for the taxable periods in which New Hertz was part of former Hertz Global Holdings, Inc.’s consolidated group. However, the Tax Matters Agreement specifies the portion of this liability for which New Hertz and Herc Holdings bear responsibility, and each party has agreed to indemnify the other against any amounts for which such other party is not responsible. The Tax Matters Agreement provides that New Hertz will generally assume liability for and indemnify Herc Holdings against all U.S. federal, state, local and foreign tax liabilities attributable to New Hertz’s assets or operations for all tax periods prior to the Spin-Off, while Herc Holdings will indemnify New Hertz against all U.S. federal, state, local and foreign tax liabilities attributable to Herc Holdings’ assets or operations for all tax periods prior to the Spin-Off.  Though valid as between the parties, the Tax Matters Agreement is not binding on the U.S. Internal Revenue Service or any state, local or foreign taxing authority.

 

The Tax Matters Agreement also provides special rules for allocating tax liabilities in the event that the Spin-Off, together with related transactions, is not tax-free. The Tax Matters Agreement provides for covenants that may restrict Herc Holdings’ ability to pursue strategic or other transactions that might otherwise maximize the value of its business and may discourage or delay a change of control that may be considered favorable.

 

The foregoing description of the Tax Matters Agreement is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Tax Matters Agreement, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Employee Matters Agreement

 

On June 30, 2016, New Hertz and Herc Holdings entered into an Employee Matters Agreement (the “Employee Matters Agreement”) to allocate liabilities and responsibilities relating to employment matters, employee compensation, benefit plans and programs and other related matters. The Employee Matters Agreement governs New Hertz’s and Herc Holdings’ obligations with respect to such matters for current and former employees of the car rental business and the equipment rental business.

 

Unless otherwise agreed to, the Employee Matters Agreement provides that Herc Holdings retains or assumes all employment, compensation and benefits liabilities relating to employees who are employed by Herc Holdings following the Spin-Off and former employees whose last employment was with the equipment rental business. Similarly, unless otherwise agreed to, the Employee Matters Agreement provides that New Hertz retains or assumes all employment, compensation and benefits liabilities relating to employees who are employed by New Hertz following the Spin-Off and former employees whose last employment was with the car rental business. The Employee Matters Agreement also addresses equity compensation matters, including the treatment of outstanding equity awards granted by former Hertz Global Holdings, Inc.

 

In general, the Employee Matters Agreement provides that Herc Holdings and New Hertz will credit each employee with his or her service with former Hertz Global Holdings, Inc. prior to the Spin-Off for all purposes under the benefit plans maintained or established by New Hertz and Herc Holdings as of the Spin-Off, so long as such crediting does not result in a duplication of benefits. Additionally, the Employee Matters Agreement provides that no employee will be considered to have terminated employment from his or her post-Spin-Off employer as a result of the Spin-Off or any associated employment transfer.

 

In addition to those matters discussed above, the Employee Matters Agreement, among other things, (i) establishes and determines participation in retirement and non-qualified deferred compensation plans of Herc Holdings and New Hertz after the Spin-Off, (ii) contains provisions requiring contributions by Herc Holdings for Herc Holdings employees participating in multiemployer plans and contributions by New Hertz for New Hertz employees participating in New Hertz multiemployer plans, (iii) establishes and determines the participation of active and former employees in the health and welfare plans of Herc Holdings and New Hertz after the Spin-Off, (iv)

 

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determines the responsibility of Herc Holdings and New Hertz to provide severance benefits to current and former employees after the Spin-Off, (v) determines the responsibility of Herc Holdings and New Hertz for the payment of incentive compensation after the Spin-Off and (vi) provides for Herc Holdings and New Hertz to retain or assume individual employment agreements with Herc Holdings and New Hertz employees, respectively, after the Spin-Off.

 

The foregoing description of the Employee Matters Agreement is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Employee Matters Agreement, which is attached as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Intellectual Property Agreement

 

On June 30, 2016, THC, Hertz System, Inc. and Herc entered into an Intellectual Property Agreement (the “Intellectual Property Agreement”) that provides for ownership, licensing and other arrangements regarding the trademarks and related intellectual property that New Hertz and Herc Holdings use in conducting their respective businesses.

 

The Intellectual Property Agreement allocates ownership between New Hertz and Herc Holdings of all trademarks, domain names and certain copyrights that former Hertz Global Holdings, Inc. or its subsidiaries owned immediately prior to the Distribution Date. The Intellectual Property Agreement generally allocates to New Hertz the trademarks that primarily relate to or are primarily used in the global car rental business, including the Hertz , Dollar , Thrifty , Donlen and  Firefly  brand names, while Herc Holdings is allocated trademarks that primarily relate to or are primarily used in the global equipment rental business, but are not otherwise associated with the marks being allocated to New Hertz. The Intellectual Property Agreement allocates ownership of domain names between New Hertz and Herc Holdings in a similar manner and allocates ownership of certain copyrights associated with the Hertz brand to New Hertz.

 

The Intellectual Property Agreement provides that Herc Holdings will continue to have the right to use certain intellectual property associated with the Hertz brand for a period of four years on a no royalty basis. The Intellectual Property Agreement also provides that, for so long as Herc Holdings continues to use certain intellectual property associated with the Hertz brand, Herc Holdings will not directly or indirectly engage in the business of renting and leasing cars, subject to certain exceptions, including that Herc Holdings may continue to rent vehicles to the extent HERC has done so immediately prior to the Spin-Off.

 

The foregoing description of the Intellectual Property Agreement is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Intellectual Property Agreement, which is attached as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Icahn Agreements

 

On June 30, 2016, New Hertz entered into a confidentiality agreement (the “Confidentiality Agreement”) with Carl C. Icahn and certain related parties (the “Icahn Group”). Pursuant to the Confidentiality Agreement, Vincent J. Intrieri, Samuel Merksamer and Daniel A. Ninivaggi, each of whom was appointed as a director of New Hertz, are designees of the Icahn Group on the New Hertz board of directors. Until the date that the Icahn Group no longer has a designee on the New Hertz board of directors, the Icahn Group agrees to vote all of its shares of common stock of New Hertz in favor of the election of all of New Hertz’s director nominees at each annual or special meeting of New Hertz.

 

The foregoing description of the Confidentiality Agreement is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Confidentiality Agreement, which is attached as Exhibit 10.5 to this Current Report on Form 8-K and is incorporated by reference herein.

 

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In addition, New Hertz, High River Limited Partnership, Icahn Partners LP and Icahn Partners Master Fund LP entered into a registration rights agreement, dated June 30, 2016 (the “Registration Rights Agreement”).  Pursuant to the Registration Rights Agreement, among other things, and subject to certain exceptions, New Hertz agreed to effect up to two demand registrations with respect to shares of New Hertz common stock held by members of the Icahn Group.  New Hertz also agreed to provide, with certain exceptions, certain piggyback registration rights with respect to common stock held by members of the Icahn Group.

 

The foregoing description of the Registration Rights Agreement is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Registration Rights Agreement, which is attached as Exhibit 10.6 and incorporated by reference herein.

 

THC Financing Arrangements

 

Senior Facilities

 

Overview

 

On June 30, 2016, THC, as parent borrower, entered into a credit agreement with Barclays Bank PLC, as administrative agent, collateral agent and swing line lender, Credit Agricole Corporate and Investment Bank, as syndication agent, Bank of America, N.A., Bank of Montreal, BNP Paribas, Citibank, N.A., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A. and Royal Bank of Canada, as co-documentation agents, and the banks and other financial institutions party thereto from time to time, with respect to a new senior secured term facility (the “Senior Term Facility”) and a new senior secured revolving credit facility (the “Senior Revolving Facility” and, together with the Senior Term Facility, the “Senior Facilities”).  At THC’s option and subject to certain conditions, certain of THC’s domestic subsidiaries may also become party to the Senior Facilities from time to time, as subsidiary borrowers.  The Senior Term Facility consists of a $700 million term loan facility.  The Senior Revolving Facility consists of a $1,700 million revolving credit facility, with a portion of the Senior Revolving Facility available for the issuance of letters of credit and the issuance of swing line loans.  Subject to the satisfaction of certain conditions and limitations, the Senior Facilities allow for the addition of incremental term and/or revolving loan commitments and incremental term and/or revolving loans.  The full amount of the Senior Facilities was available on June 30, 2016 (the “Closing”).  At Closing, THC utilized approximately $700 million of borrowings under the Senior Term Facility to refinance certain existing indebtedness.  No borrowings were made at Closing under the Senior Revolving Facility.

 

Maturity; Prepayments

 

The Senior Term Facility will mature on June 30, 2023 and will amortize in equal quarterly installments equal to 1% per annum of the original principal amount of the term loans until the maturity date.  Voluntary prepayments of borrowings under the Senior Term Facility are permitted at any time, without premium or penalty, except that certain prepayments in connection with certain refinancing transactions within 6 months after the Closing will be subject to a prepayment premium of 1% of the principal amount prepaid. Subject to certain exceptions, the Senior Term Facility is subject to mandatory prepayment in an amount equal to the net cash proceeds of certain asset sales and certain insurance recovery and condemnation events.

 

The Senior Revolving Facility will mature on June 30, 2021.  If at any time the sum of the amount outstanding under the Senior Revolving Facility (including revolving loans, letters of credit outstanding and swing line loans thereunder) exceeds the total amount of lenders’ revolving commitments thereunder (or 105% of such amount in the case of excesses by reason of any change in exchange rates), prepayments of revolving loans will be required in an amount equal to such excess.

 

Guarantees; Collateral/Security

 

THC’s obligations under the Senior Facilities are guaranteed by its direct parent and each of its domestic subsidiaries, with certain exceptions, including special purpose securitization subsidiaries and captive insurance subsidiaries.  In addition, the Senior Facilities and the guarantees thereunder are secured by security interests in

 

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certain material assets of THC and the guarantors, including U.S. intellectual property, pledges of all the capital stock of all the material domestic subsidiaries of THC and the guarantors and up to 65% of the capital stock of each of their direct foreign subsidiaries, material domestic owned real property, receivables relating to rental of vehicles by the rental car business to customers and certain other assets and/or related rights, subject to certain exceptions, including assets securing certain fleet financings.  Also, subject to certain limitations and conditions, the Senior Facilities permit the incurrence of future secured debt on a basis either pari passu with or subordinated to the liens securing the Senior Facilities.

 

Interest

 

The interest rate applicable to the loans under the Senior Term Facility is based on a floating rate (subject to a LIBOR floor of 0.75%) that varies depending on THC’s consolidated total corporate leverage ratio.  The interest rates applicable to the loans under the Senior Revolving Facility are based on a floating rate that varies depending on THC’s consolidated total leverage ratio and corporate ratings.

 

Covenants

 

The Senior Facilities are subject to a number of covenants that, among other things, limit or restrict the ability of THC and the guarantors to dispose of assets, incur additional vehicle indebtedness, prepay subordinated indebtedness, make dividends, investments and other restricted payments, create liens, engage in mergers (in the case of THC and the subsidiary borrowers), engage in certain transactions with affiliates, and enter into certain restrictive agreements limiting the ability to pledge assets.

 

The foregoing descriptions of the Senior Facilities and the guarantee and collateral/security agreements thereunder are qualified in their entirety by reference to the complete terms and conditions of Senior Facilities and the guarantee and collateral/security agreements, which are attached as Exhibits 10.7 and 10.8 to this Current Report on Form 8-K and are incorporated by reference herein.

 

Like-Kind Exchange Agreements

 

On June 30, 2016, THC, Hertz Vehicle Financing LLC, Hertz General Interest LLC, Hertz Car Sales LLC and Hertz Car Exchange Inc. entered into the (i) Fourth Amended and Restated Master Exchange Agreement with DB Services Americas, Inc. (the “Master Exchange Agreement”) and (ii) Fourth Amended and Restated Escrow Agreement with Deutsche Bank Trust Company Americas (the “Escrow Agreement”).  The Master Exchange Agreement provides for, among other provisions, the processes to exchange vehicles under THC’s Like-Kind Exchange Program (“LKE Program”) in order for taxes to be deferred on the sale of such vehicles pursuant to section 1031 of the Internal Revenue Code of 1986, as amended. The Escrow Agreement provides that, among other provisions, Deutsche Bank Trust Company Americas will act as escrow agent in connection with THC’s LKE Program.  Under the Escrow Agreement, Deutsche Bank Trust Company Americas is obligated to apply funds deposited in escrow through the sale of vehicles in a manner which serves to implement the LKE Program, including the requirements of the Master Exchange Agreement, unless otherwise required by the specific terms and conditions of the Escrow Agreement.

 

The foregoing descriptions of the Master Exchange Agreement and Escrow Agreement are qualified in their entirety by reference to the complete terms and conditions of  the Master Exchange Agreement and Escrow Agreement, which are attached as Exhibits 4.1 and 4.2 to this Current Report on Form 8-K and are incorporated by reference herein.

 

ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

 

In connection with the Spin-Off, on June 30, 2016, THC, in each case as parent borrower, terminated (i) its existing credit agreement, dated as of March 11, 2011,  as amended, with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, the banks and other financial institutions party thereto from time to time, Wells Fargo Bank, National Association, as syndication agent, and Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Credit Agricole Corporate and Investment Bank and JPMorgan Chase Bank, N.A., as co-

 

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documentation agents, governing THC’s existing senior secured term and synthetic letter of credit facility and (ii) its existing credit agreement, dated as of March 11, 2011, as amended, with Herc (former Hertz Equipment Rental Corporation), as borrower, Matthews Equipment Limited, Western Shut-Down (1995) Limited and Hertz Canada Equipment Rental Partnership, as Canadian borrowers, the banks and other financial institutions party thereto from time to time, Deutsche Bank AG New York Branch, as administrative agent and collateral agent, Deutsche Bank AG Canada Branch, as Canadian agent and Canadian collateral agent, Wells Fargo Bank, National Association, as co-collateral agent, Wells Fargo Capital Finance, LLC as syndication agent, and Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Credit Agricole Corporate and Investment Bank and JPMorgan Chase Bank, N.A., as co-documentation agents, governing THC’s existing senior secured asset-based revolving credit facility.

 

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

 

The information included in Item 1.01 under “Completion of Spin-Off” is incorporated by reference herein.

 

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

 

The information included in Item 1.01 under “THC Financing Arrangements” is incorporated by reference herein.

 

ITEM 3.03 MATERIAL MODIFICATIONS TO RIGHTS OF SECURITY HOLDERS.

 

The information included in Item 5.03 is incorporated by reference herein.

 

ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

 

On June 30, 2016, Thomas C. Kennedy was removed from the New Hertz Board of Directors and David A. Barnes, Carl T. Berquist, Michael J. Durham, Carolyn N. Everson, Vincent J. Intrieri, Linda Fayne Levinson, Samuel J. Merksamer and Daniel A. Ninivaggi, were appointed as members of the New Hertz Board of Directors.  John P. Tague and Henry R. Keizer are also directors of New Hertz. Linda Fayne Levinson was appointed as non-executive Chair of the Board of New Hertz.  The biographies of each of the directors is contained in the Definitive Proxy Statement on Schedule 14A of former Hertz Global Holdings, Inc. (File No. 001-33139), filed with the SEC on March 30, 2016 under “Proposal 1: Election of Directors,” which is incorporated by reference herein.

 

Information required with respect to Item 404(a) of Regulation S-K is contained within the section entitled “Part III—Item 13. Certain Relationships and Related Transactions, and Director Independence” in the Annual Report on Form 10-K of former Hertz Global Holdings, Inc. (File No. 001-33139) for the year ended December 31, 2015 filed on February 29, 2016, as amended by Amendment No. 1 filed on March 4, 2016 (the “Form 10-K”), which section is incorporated by reference herein.

 

The information in Item 1.01 under “Icahn Agreement” is incorporated by reference herein.

 

The directors, other than Mr. Tague, will participate in the Hertz Global Holdings, Inc. Director Compensation Plan.  Each non-employee director, the non-executive Chair and chair or member of the Audit Committee, Compensation Committee and Nominating and Governance Committee will receive the amounts which are described in the Definitive Proxy Statement on Schedule 14A of former Hertz Global Holdings, Inc. (File No. 001-33139), filed with the SEC on March 30, 2016 under “Director Compensation” which is incorporated by reference herein.  The chair of the Financing Committee and chair of the Technology Committee will receive an annual chair fee of $25,000 and

 

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each member of the Financing Committee and each member of the Technology Committee will receive an annual member fee of $12,500.

 

As of June 30, 2016, the New Hertz Board has five standing committees, Audit, Compensation, Financing, Nominating and Governance and Technology. The members of the New Hertz Board and its committees are set forth in the table below:

 

Name

 

Audit

 

Compensation

 

Financing

 

Nom. & Gov.

 

Technology

Carl T. Berquist

 

 

 

Chair

 

X

 

 

 

 

David A. Barnes

 

X

 

 

 

 

 

 

 

Chair

Michael J. Durham

 

X

 

 

 

Chair

 

 

 

X

Carolyn N. Everson

 

 

 

X

 

 

 

X

 

X

Vincent J. Intrieri

 

X

 

 

 

X

 

 

 

 

Herny R. Keizer

 

Chair

 

 

 

 

 

X

 

 

Linda Fayne Levinson

 

 

 

X

 

X

 

Chair

 

 

Samuel J. Merksesamer

 

 

 

 

 

X

 

X

 

 

Daniel A. Ninivaggi

 

 

 

X

 

 

 

 

 

X

John P. Tague

 

 

 

 

 

X

 

 

 

 

 

Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan

 

Prior to the completion of the Spin-Off, the Board of Directors of New Hertz and the sole stockholder approved the Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan (the “2016 Omnibus Plan”).  The 2016 Omnibus Plan contains 6,600,000 shares which can be granted pursuant to the terms and conditions of the 2016 Omnibus Plan and an unspecified number of Distribution Awards (as defined in the 2016 Omnibus Plan).  The terms and conditions of the 2016 Omnibus Plan are substantially similar to New Hertz’s former Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan that was in place previous to the Spin-Off.

 

The foregoing description of the 2016 Omnibus Plan is a summary and is qualified in its entirety by reference to the complete terms and conditions of the 2016 Omnibus Plan, which is attached as Exhibit 99.1 to the Registration Statement on Form S-8 of New Hertz (File No. 333-212249), filed with the SEC on June 24, 2016 and is incorporated by reference herein.

 

Hertz Global Holdings, Inc. Senior Executive Bonus Plan

 

Prior to the completion of the Spin-Off, the Board of Directors of New Hertz and the sole stockholder approved the Hertz Global Holdings, Inc. Senior Executive Bonus Plan (the “Bonus Plan”), effective May 18, 2016.  The Bonus Plan provides that the Chief Executive Officer of New Hertz is eligible to receive 1.0% of New Hertz’s EBITDA and each other participant is eligible to receive 0.5% of New Hertz’s EBITDA.  The Compensation Committee has the ability to use its negative discretion to reduce the amount of the award under the Bonus Plan.  The terms and conditions of the Bonus Plan are substantially similar to New Hertz’s former Hertz Global Holdings, Inc. Senior Executive Bonus Plan that was in place previous to the Spin-Off.

 

The foregoing description of the Bonus Plan is a summary and is qualified in its entirety by reference to the complete terms and conditions of the Bonus Plan, which is attached as Exhibit 10.10 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Severance Plan for Senior Executives

 

Prior to the completion of the Spin-Off, the Board of Directors of New Hertz approved the assumption of the Hertz Global Holdings, Inc. Severance Plan for Senior Executives (the “Severance Plan”), effective June 30, 2016.  The Severance Plan provides for severance for certain executives in the event of a qualifying termination.

 

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The material terms and conditions of the Severance Plan is described in the Definitive Proxy Statement on Schedule 14A of former Hertz Global Holdings, Inc. (File No. 001-33139), filed with the SEC on March 30, 2016 under “Employment Agreements, Change in Control Agreements and Separation Agreements—Severance Plan for Senior Executives,” which is incorporated by reference herein.

 

Adoption of Executive Contracts

 

On June 30, 2016, New Hertz adopted employment agreements and arrangements entered into with former Hertz Global Holdings, Inc. related to the following executives of New Hertz:

 

·                                           John P. Tague

 

·                                           Thomas C. Kennedy

 

·                                           Jeffrey T. Foland

 

·                                           Tyler A. Best

 

The material terms and conditions of these employment agreements and arrangements are described in the Definitive Proxy Statement on Schedule 14A of former Hertz Global Holdings, Inc. (File No. 001-33139), filed with the SEC on March 30, 2016 under “Employment Agreements, Change in Control Agreements and Separation Agreements— Employment Agreement with John P. Tague”, “Employment Agreements, Change in Control Agreements and Separation Agreements—Employment Arrangements with Thomas C. Kennedy”, “Employment Agreements, Change in Control Agreements and Separation Agreements—Employment Arrangements with Jeffrey T. Foland” and “Employment Agreements, Change in Control Agreements and Separation Agreements—Employment Arrangements with Tyler A. Best”  which are incorporated by reference herein.

 

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.

 

On June 30, 2016, New Hertz filed an amended and restated certificate of incorporation (the “Certificate of Incorporation”) with the Secretary of State of Delaware.  The Certificate of Incorporation provides for, among other things: (i) the capitalization of New Hertz, which consists of 400,000,000 shares of Common Stock, par value $0.01 per share and 40,000,000 shares of Preferred Stock, $0.01 par value per share, (ii) that stockholders may not act by written consent; (iii) that stockholders which beneficially own 35% or more of the outstanding Common Stock for a 30-day period may call a special meeting of stockholders; (iv) that any rights plan adopted by the Board must have a triggering “acquiring ownership” threshold of 20% or higher and (v) that Delaware shall be the exclusive forum for the adjudication of certain disputes, unless New Hertz consents to a different jurisdiction.

 

The foregoing description of the Certificate of Incorporation is a summary and is qualified in its entirety by reference to the complete text of the Certificate of Incorporation, which is attached as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated by reference herein.

 

On June 30, 2016, New Hertz adopted Amended and Restated By-laws.  The Amended and Restated By-laws provide for, among other things, the procedures for annual meeting of stockholders, election and duties of directors and officers and other procedures for the governance of New Hertz.

 

The foregoing description of the Amended and Restated By-laws is a summary and is qualified in its entirety by reference to the complete text of the Amended and Restated Bylaws, which is attached as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated by reference herein.

 

10



 

ITEM 8.01 OTHER EVENTS.

 

On June 30, 2016, New Hertz issued a press release announcing the completion of the Spin-Off and the terms of New Hertz’s share repurchase program.  A copy of the press release is attached as Exhibit 99.2 and incorporated by reference herein.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

 

(b )  Pro Forma Financial Information.

 

The unaudited pro forma condensed consolidated statement of operations for the years ended December 31, 2015, 2014, and 2013, unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2016, unaudited pro forma condensed consolidated balance sheet as of March 31, 2016, and the notes related thereto, are filed as Exhibit 99.3 to this report and incorporated by reference herein.

 

(d)  Exhibits. The following exhibit s are filed as part of this report:

 

Exhibit

 

Description

 

 

 

2.1

 

Separation and Distribution Agreement, dated June 30, 2016, by and between Hertz Global Holdings, Inc. and Herc Holdings Inc.

 

 

 

3.1

 

Amended and Restated Certificate of Incorporation of Hertz Global Holdings, Inc., effective June 30, 2016.

 

 

 

3.2

 

Amended and Restated By-laws of Hertz Global Holdings, Inc., effective June 30, 2016.

 

 

 

4.1

 

Fourth Amended and Restated Master Exchange Agreement, dated as of June 30, 2016, among The Hertz Corporation, Hertz Vehicle Financing LLC, Hertz General Interest LLC, Hertz Car Sales LLC, Hertz Car Exchange Inc., and DB Services Americas, Inc.

 

 

 

4.2

 

Fourth Amended and Restated Escrow Agreement, dated as of June 30, 2016, among The Hertz Corporation, Hertz Vehicle Financing LLC, Hertz General Interest LLC, Hertz Car Sales LLC, Hertz Car Exchange Inc., and Deutsche Bank Trust Company Americas.

 

 

 

10.1

 

Transition Services Agreement, dated June 30, 2016, by and between Hertz Global Holdings, Inc. and Herc Holdings Inc.

 

 

 

10.2

 

Tax Matters Agreement, dated June 30, 2016, among Herc Holdings Inc., The Hertz Corporation, Herc Rentals Inc. and Hertz Global Holdings, Inc.

 

 

 

10.3

 

Employee Matters Agreement, dated June 30, 2016, by and between Hertz Global Holdings, Inc. and Herc Holdings Inc.

 

 

 

10.4

 

Intellectual Property Agreement, dated June 30, 2016, among The Hertz Corporation, Hertz System, Inc. and Herc Rentals Inc.

 

 

 

10.5

 

Confidentiality Agreement, dated June 30, 2016, by and between Hertz Global Holdings, Inc. and the entities listed in the agreement.

 

 

 

10.6

 

Registration Rights Agreement, dated June 30, 2016, by and between Hertz Global Holdings, Inc. and the entities listed in the agreement.

 

 

 

10.7

 

Credit Agreement, dated as of June 30, 2016, among The Hertz Corporation, the subsidiary borrowers from time to time party thereto, the several banks and other financial institutions from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent.

 

 

 

10.8

 

Guarantee and Collateral Agreement, dated as of June 30, 2016, made by Rental Car Intermediate

 

11



 

 

 

Holdings, LLC, The Hertz Corporation and certain of its subsidiaries from time to time party thereto, in favor of Barclays Bank PLC, as collateral agent and administrative agent.

 

 

 

10.9

 

Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan (Incorporated by reference to Exhibit 99.1 to Hertz Global Holdings, Inc.’s Registration Statement on Form S-8 (File No. 333-212249), filed on June 24, 2016).

 

 

 

10.10

 

Hertz Global Holdings, Inc. Senior Executive Bonus Plan, effective May 18, 2016.

 

 

 

99.1

 

Information Statement dated June 6, 2016.

 

 

 

99.2

 

Press Release dated June 30, 2016.

 

 

 

99.3

 

Pro Forma Financial Statements.

 

12



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

HERTZ GLOBAL HOLDINGS, INC.

 

(Registrant)

 

 

 

 

 

 

 

By:

/s/   THOMAS C. KENNEDY

 

Name:

Thomas C. Kennedy

 

Title:

Senior Executive Vice President and Chief Financial Officer

 

Date:  July 7, 2016

 

13


Exhibit 2.1

 

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

between

 

HERTZ GLOBAL HOLDINGS, INC.

 

and

 

HERC HOLDINGS INC.

 

Dated as of June 30, 2016

 

 



 

TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

1

 

 

 

Section 1.1

Table of Definitions

1

Section 1.2

Certain Defined Terms

2

 

 

 

ARTICLE II THE SEPARATION

17

 

 

 

Section 2.1

Internal Reorganization; Transfer of Assets and Assumption of Liabilities

17

Section 2.2

Governmental Approvals and Consents; Transfers, Assignments and Assumptions Not Effected Prior to the Distribution

17

Section 2.3

Termination of Intercompany Agreements

18

Section 2.4

Novation of Hertz Liabilities

19

Section 2.5

Novation of HERC Holdings Liabilities

19

Section 2.6

Treatment of Cash

20

Section 2.7

Replacement of Credit Support

20

Section 2.8

Disclaimer of Representations and Warranties

21

Section 2.9

Credit Facilities; HERC Financing Arrangements; HERC Cash Transfers

21

 

 

 

ARTICLE III THE DISTRIBUTION

22

 

 

 

Section 3.1

Actions Prior to the Distribution

22

Section 3.2

Conditions to Distribution

23

Section 3.3

The Distribution

24

Section 3.4

Fractional Shares; Unclaimed Shares

24

Section 3.5

Sole Discretion of the Old Hertz Holdings Board

25

 

 

 

ARTICLE IV FURTHER ASSURANCES; ADDITIONAL AGREEMENTS

25

 

 

 

Section 4.1

Further Assurances

25

Section 4.2

Shared Liabilities

26

Section 4.3

Certain Shared Contracts

27

Section 4.4

Certain Shared Accounts

27

Section 4.5

Insurance Matters

27

Section 4.6

Misdirected Customer Payments and Vendor Invoices

29

 

 

 

ARTICLE V MUTUAL RELEASES; INDEMNIFICATION

29

 

 

 

Section 5.1

Release of Pre-Distribution Claims

29

Section 5.2

Indemnification by New Hertz Holdings

31

Section 5.3

Indemnification by HERC Holdings

32

Section 5.4

Notice and Payment of Direct Claims

32

Section 5.5

Third-Party Claims

32

Section 5.6

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

35

 



 

Section 5.7

Remedies Cumulative

36

Section 5.8

Survival of Indemnities

36

 

 

 

ARTICLE VI EXCHANGE OF INFORMATION; LITIGATION MANAGEMENT; CONFIDENTIALITY

36

 

 

 

Section 6.1

Agreement for Exchange of Information

36

Section 6.2

Access to Information

36

Section 6.3

Litigation Management and Support; Production of Witnesses

37

Section 6.4

Reimbursement

38

Section 6.5

Retention of Records

38

Section 6.6

Privileged Information

38

Section 6.7

Confidentiality

39

Section 6.8

Joint Defense

40

 

 

 

ARTICLE VII DISPUTE RESOLUTION

40

 

 

 

Section 7.1

Step Process

40

Section 7.2

Negotiation; Mediation; Arbitration

40

Section 7.3

Equitable Relief

42

Section 7.4

Expenses

42

 

 

 

ARTICLE VIII MISCELLANEOUS

42

 

 

 

Section 8.1

Coordination with Ancillary Agreements; Conflicts

42

Section 8.2

Expenses

42

Section 8.3

Termination

43

Section 8.4

Third Party Beneficiaries

43

Section 8.5

Entire Agreement; No Reliance; Amendment

43

Section 8.6

Waiver

43

Section 8.7

Notices

44

Section 8.8

Counterparts

44

Section 8.9

Severability

44

Section 8.10

Interpretation

44

Section 8.11

Governing Law

45

Section 8.12

Assignment

45

Section 8.13

Payment

45

Section 8.14

Parties’ Obligations

45

 

ii



 

SCHEDULES

 

Number

 

Schedule

Schedule 1.2(1)

 

HERC Holdings Actions

Schedule 1.2(2)

 

HERC Holdings Assets

Schedule 1.2(3)

 

HERC Holdings Equity Interests

Schedule 1.2(4)

 

HERC Holdings Liabilities

Schedule 1.2(5)

 

HERC Holdings Group Indebtedness

Schedule 1.2(6)

 

HERC Holdings Information Statement Disclosure

Schedule 1.2(7)

 

Certain Shared Form 10 / Information Statement Disclosure

Schedule 1.2(8)

 

HERC Holdings Known Environmental Liabilities

Schedule 1.2(9)

 

HERC Holdings Properties

Schedule 1.2(10)

 

HERC Holdings Discontinued Businesses

Schedule 1.2(11)

 

Hertz Actions

Schedule 1.2(12)

 

Hertz Assets

Schedule 1.2(13)

 

New Hertz Holdings Equity Interests

Schedule 1.2(14)

 

Hertz Group

Schedule 1.2(15)

 

Hertz Liabilities

Schedule 1.2(16)

 

Hertz Group Indebtedness

Schedule 1.2(17)

 

New Hertz Holdings Form 10 Disclosure

Schedule 1.2(18)

 

New Hertz Holdings Properties

Schedule 1.2(19)

 

New Hertz Holdings Discontinued Businesses

Schedule 1.2(20)

 

Known Environmental Liabilities

Schedule 1.2(21)

 

Certain Shared Contracts

Schedule 1.2(22)

 

Certain Shared Liabilities

Schedule 2.3(b)(iv)

 

Surviving Intercompany Agreements

Schedule 3.1(g)

 

New Hertz Holdings Board

 



 

SEPARATION AND DISTRIBUTION AGREEMENT

 

SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), dated as of June 30, 2016, 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 ”).

 

RECITALS

 

A.                                     Prior to the Separation and Distribution, HERC Holdings was named “Hertz Global Holdings, Inc.” and served as the holding company for the consolidated Car Rental Business and Equipment Rental Business.  HERC Holdings is referred to herein, prior to the Distribution, as “ Old Hertz Holdings .”

 

B.                                     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 of the Car Rental Business in connection with the Separation and Distribution.

 

C.                                     HERC Holdings will serve as the top-level holding company of the Equipment Rental Business in connection with the Separation and Distribution.

 

D.                                     The Old Hertz Holdings Board has determined that it is appropriate, desirable and in the best interests of Old Hertz Holdings and its stockholders to separate Old Hertz Holdings into two independent publicly traded companies: (a) New Hertz Holdings, which following the Distribution will own and conduct, directly and indirectly, the Car Rental Business; and (b) HERC Holdings, which following the Distribution will own and conduct, directly and indirectly, the Equipment Rental Business.

 

E.                                      On the Distribution Date and subject to the terms and conditions of this Agreement, Old Hertz Holdings shall distribute to the Record Holders, on a pro rata basis, all the outstanding shares of common stock, par value $0.01 per share, of New Hertz Holdings (“ New Hertz Holdings Common Stock ”) owned by Old Hertz Holdings (the “ Distribution ”).

 

F.                                       The Distribution is intended to qualify as a tax-free spin-off pursuant to Section 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”).

 

AGREEMENT

 

In consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE I
 DEFINITIONS

 

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

 

Definition

 

Section

Agreement

 

Preamble

Code

 

Recitals

Confidential Information

 

Section 6.7(a)

Consent Settlement

 

Section 5.5(b)

 



 

CPR

 

Section 7.2(b)

D&O Policies

 

Section 4.5(c)

Dispute

 

Section 7.1

Dispute Notice

 

Section 7.2(a)

Distribution

 

Recitals

Distribution Expenses

 

Section 8.2

Distributions

 

Section 3.2(a)

Executive List

 

Section 7.2(a)

HERC Cash Transfers

 

Section 2.9(c)

HERC Holdings

 

Preamble

HERC Holdings Credit Support Instruments

 

Section 2.7(b)

HERC Holdings Indemnified Parties

 

Section 5.2

HERC Holdings Portion

 

Section 4.3

Hertz Credit Support Instruments

 

Section 2.7(a)

Hertz Indemnified Parties

 

Section 5.3

Hertz Portion

 

Section 4.3

Indemnified Party

 

Section 5.4

Indemnifying Party

 

Section 5.4

Indemnity Payment

 

Section 5.6(a)

Litigation Matters

 

Section 6.6(a)

Managing Party

 

Section 4.2(a)

Mediation Trigger Date

 

Section 7.2(b)

New Hertz Holdings

 

Preamble

New Hertz Holdings Common Stock

 

Recitals

Non-Managing Party

 

Section 4.2(a)

Old Hertz Holdings

 

Recitals

Privileged Information

 

Section 6.6(a)

Restatement

 

Section 5.1(c)(iii)

Retained Information

 

Section 6.5

Third Party

 

Section 5.5(a)

Third Party Claim

 

Section 5.5(a)

 

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

 

Action ” means any claim, demand, action, suit, countersuit, audit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority or any United States or non-United States federal, state, provincial, territorial, local or international arbitration or mediation tribunal.

 

Affiliate ” of any Person means a Person that controls, is controlled by, or is under common control with such Person; provided , however , that for purposes of this Agreement and the Ancillary Agreements (except as otherwise provided in any such Ancillary Agreement), none of the HERC Holdings Entities shall be deemed to be an Affiliate of any Hertz Entity and none of the Hertz Entities shall be deemed to be an Affiliate of any HERC Holdings Entity.  As used in this definition of “Affiliate,” “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.

 

Agent ” means Computershare Investor Services LLC.

 

Ancillary Agreements ” means the Employee Matters Agreement, the Intellectual Property Agreement, the Tax Matters Agreement and the Transition Services Agreement and any other

 

2



 

instruments, assignments, documents and agreements executed (but to which no Third Party is a party) in connection with the implementation of the transactions contemplated by this Agreement, including the Internal Reorganization.

 

Applicable HERC Holdings Proportion ” means with respect to any Shared Liability, fifteen percent (15%).

 

Applicable Hertz Proportion ” means with respect to any Shared Liability, eighty-five percent (85%).

 

Applicable Proportion ” means (a) as to New Hertz Holdings, the Applicable Hertz Proportion and (b) as to HERC Holdings, the Applicable HERC Holdings Proportion.

 

Assets ” means all assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other Third Parties or elsewhere), whether real, personal or mixed, tangible, intangible, corporeal, incorporeal or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, including the following:

 

(a)                                  all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form;

 

(b)                                  all apparatus, computers and other electronic data processing equipment, fixtures, machinery, equipment, including vehicle and equipment fleet, industrial, construction and material handling equipment, furniture, office equipment, automobiles, trucks, aircraft, motor vehicles and other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property;

 

(c)                                   all inventories of materials, parts, supplies, raw materials, work-in-process and finished goods and products;

 

(d)                                  all interests in real property of whatever nature, including easements and rights-of-way, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee, concessionaire or otherwise, and copies of all related documentation;

 

(e)                                   all interests in any capital stock or other equity, partnership, membership, joint venture or similar interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

 

(f)                                    all license agreements, franchise agreements, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the sale of products, agreements with original equipment manufacturers for the supply of vehicles, equipment or products or the guaranteed purchase or repurchase of vehicles, equipment or products and other contracts, agreements or commitments;

 

(g)                                   all deposits, letters of credit and performance and surety bonds;

 

3



 

(h)                                  all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals, and materials and analyses prepared by consultants and other Third Parties;

 

(i)                                      all domestic and foreign patents, copyrights, trade names, trademarks, service marks and registrations and applications for any of the foregoing, mask works, trade secrets, formulae, know-how, domain names, social media accounts and addresses, inventions, other proprietary information and licenses from Third Parties granting the right to use any of the foregoing;

 

(j)                                     all computer hardware and applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation and instructions;

 

(k)                                  all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, records pertaining to customers and customer accounts, customer and vendor data, correspondence and lists, product literature, artwork, design, development and manufacturing files, vendor and customer drawings, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

 

(l)                                      all prepaid expenses, trade accounts and other accounts and notes receivable;

 

(m)                              all rights under contracts or agreements, all claims or rights against any Person arising from the ownership of any Asset, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent;

 

(n)                                  all insurance proceeds, copies of all documentation related to insurance policies and rights under insurance policies and all other rights in the nature of insurance, indemnification or contribution;

 

(o)                                  all licenses, permits, concessions, approvals, registrations and authorizations that have been issued by any Governmental Authority and all pending applications therefor;

 

(p)                                  all cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and

 

(q)                                  all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.

 

Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

 

Car Rental Business ” means:

 

(a)                                  the business and operations conducted by Old Hertz Holdings and its Subsidiaries prior to the Distribution comprising what is referred to in the Form 10-Q as the U.S. Car Rental, International Car Rental and All Other Operations segments, including the rental of cars, crossovers and light trucks on a global basis and the operation of Donlen’s fleet leasing and management services; and

 

(b)                                  any other businesses or operations conducted primarily through the use of the Hertz Assets.

 

4



 

For the avoidance of doubt, this definition of “Car Rental Business” shall not be construed to transfer to any member of either Group any trademark or other intellectual property governed by the Intellectual Property Agreement.

 

Cash Equivalents ” means (a) cash and (b) marketable securities, short-term instruments and other cash equivalents, demand deposits or similar accounts.

 

CI Recipients ” means, with respect to a party hereto, the other members of its Group, and its and their directors, officers, employees, agents and advisors.

 

Consents ” means any consents, waivers or approvals from, or notification requirements to, any Person other than a member of either Group.

 

Credit Support Instruments ” means surety bonds, letters of credit or similar assurances or other credit support, including any such support for insurance or self-insurance obligations; provided , however, that “Credit Support Instruments” shall, for the avoidance of doubt, not include any guarantees of one party (or a member of its Group) for Liabilities of the other party (or a member of its Group), which guarantees are the subject of Section 2.4 and Section 2.5 hereof.

 

Distribution Date ” means the date, determined by the Old Hertz Holdings Board, on which the Distribution occurs.

 

Distribution Ratio ” means the number of shares of New Hertz Holdings Common Stock distributed in respect of each share of Old Hertz Holdings Common Stock in the Distribution, which ratio shall have been determined by the Old Hertz Holdings Board prior to the Record Date.

 

Donlen ” means Donlen Corporation, an Illinois corporation.

 

Employee Matters Agreement ” means the Employee Matters Agreement, dated as of the date hereof, between New Hertz Holdings and HERC Holdings, as the same may be amended or modified from time to time.

 

Environmental Laws ” means all Laws, including all judicial and administrative orders, determinations, and consent agreements or decrees, that (a) relate to pollution, protection of the environment or human exposure to Hazardous Substances, (b) classify, list, designate or define any waste, chemical, substance or material as a Hazardous Substance or (c) call for the remediation of or require reporting with respect to Hazardous Substances or regulate the use, manufacture, generation, handling, labeling, testing, transport, treatment, storage, processing, discharge, disposal, release, threatened release, control or cleanup of Hazardous Substances or materials containing Hazardous Substances.

 

Environmental Liabilities ” means any Liabilities, arising out of or resulting from any Environmental Law, contract or agreement relating to the environment, Hazardous Substances or human exposure to Hazardous Substances, including (a) fines, penalties, judgments, awards, settlements, losses, damages (including consequential damages), costs, fees (including attorneys’ and consultants’ fees), expenses and disbursements, (b) costs of defense and other responses to any administrative or judicial action (including notices, claims, complaints, suits and other assertions of liability) and (c) responsibility for any investigation, remediation, monitoring or cleanup costs, injunctive relief, natural resource damages, and any other environmental compliance or remedial measures, in each case known or unknown, foreseen or unforeseen.

 

Equipment Rental Business ” means:

 

5



 

(a)                                  the business and operations conducted by Old Hertz Holdings and its Subsidiaries prior to the Distribution comprising what is referred to in the Form 10-Q as the Worldwide Equipment Rental segment, including the rental of industrial, construction and material handling equipment on a global basis; and

 

(b)                                  any other businesses or operations conducted primarily through the use of the HERC Holdings Assets.

 

For the avoidance of doubt, this definition of “Equipment Rental Business” shall not be construed to transfer to any member of either Group any trademark or other intellectual property governed by the Intellectual Property Agreement.

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

Finally Determined ” means, with respect to any Action or threatened Action or other matter in respect of which indemnification may be sought pursuant to Section 5.2 or Section 5.3 , that the outcome or resolution of that Action or threatened Action or other matter has either (a) been decided by an arbitrator or Governmental Authority of competent jurisdiction by judgment, order, award or other ruling or (b) been settled or voluntarily dismissed and, in the case of each of clauses (a) and (b), the claimants’ rights to maintain that Action or threatened Action or other matter have been finally adjudicated, waived, discharged or extinguished, and that judgment, order, ruling, award, settlement or dismissal (whether mandatory or voluntary, but if voluntary that dismissal must be final, binding and with prejudice as to all claims specifically pleaded in that Action) is subject to no further appeal, vacatur proceeding or discretionary review.

 

Form 10 ” means the registration statement on Form 10 filed by New Hertz Holdings with the SEC pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time.

 

Form 10-Q ” means the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016 filed by Old Hertz Holdings with the SEC on May 9, 2016.

 

GAAP ” means United States generally accepted accounting principles applied on a consistent basis.

 

Governmental Approvals ” means any notices, reports or other filings to be given to or made with, or any releases, Consents, substitutions, approvals, amendments, registrations, permits, concessions or authorizations to be obtained from, any Governmental Authority.

 

Governmental Authority ” means any United States or non-United States federal, state, provincial, territorial, local, tribal or international court, government, department, commission, board, bureau, agency, official or other legislative, judicial, regulatory, administrative or governmental authority.

 

Group ” means the Hertz Group or the HERC Holdings Group, as the context requires.

 

Hazardous Substances ” means all materials, wastes or substances defined by or regulated under any Environmental Laws as contaminants or as hazardous, restricted or toxic.

 

HERC ” means Herc Rentals Inc., formerly known as Hertz Equipment Rental Corporation, a Delaware corporation and wholly owned subsidiary of HERC Holdings.

 

6



 

HERC Credit Facility ” means the Credit Agreement, dated as of June 30, 2016, among HERC and certain other subsidiaries of HERC, Citibank, N.A., as administrative agent and collateral agent, Citibank, N.A., as Canadian administrative agent and Canadian collateral agent, Bank of America, N.A., as co-collateral agent, Capital One, National Association, ING Capital LLC and Wells Fargo Bank, National Association, as senior managing agents, Barclays Bank PLC, Bank of Montreal, BNP Paribas, Credit Agricole Corporate and Investment Bank, Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Regions Bank, as co-documentation agents, and the other financial institutions party thereto from time to time.

 

HERC Financing Arrangements ” means the financing arrangements and agreements (other than the HERC Credit Facility) to be entered into on or prior to the Distribution Date, pursuant to which HERC shall be entitled to borrow, have access to or issued debt securities in respect of a principal amount of approximately $1,235,000,000 in the aggregate.

 

HERC Holdings Action ” means (a) Actions arising out of or related exclusively to the HERC Holdings Assets or the Equipment Rental Business and (b) the Actions arising out of or related to both the HERC Holdings Assets or the Equipment Rental Business and the Hertz Assets or the Car Rental Business, in each case of this clause (b), that are described on Schedule 1.2(1) .

 

HERC Holdings Assets ” means:

 

(a)                                  (i) all of the Assets used, held for use or acquired or developed for use by Old Hertz Holdings or any direct or indirect Subsidiary of Old Hertz Holdings exclusively in the Equipment Rental Business, (ii) the Assets used, held for use or acquired or developed for use by Old Hertz Holdings or any direct or indirect Subsidiary of Old Hertz Holdings in both the Car Rental Business and the Equipment Rental Business listed or described on Schedule 1.2(2)  and (iii) all other Assets that are expressly provided in this Agreement or any Ancillary Agreement as Assets to be transferred to or retained by any member of the HERC Holdings Group, including any corporate books and records and other Information that primarily relates to (A) the Equipment Rental Business, (B) the HERC Holdings Group’s former businesses, (B) the HERC Holdings Assets or (D) the HERC Holdings Liabilities;

 

(b)                                  all interests in the capital stock of, or any other equity interests in, the members of the HERC Holdings Group (other than HERC Holdings), and the capital stock and other equity, partnership, membership, joint venture and similar interests listed on Schedule 1.2(3) ;

 

(c)                                   all Assets reflected as assets of the members of the HERC Holdings Group on the HERC Holdings Balance Sheet and any Assets acquired by or for any member of the HERC Holdings Group subsequent to the date of the HERC Holdings Balance Sheet that, had they been acquired on or before such date and owned as of such date, would have been reflected on the HERC Holdings Balance Sheet if prepared in accordance with GAAP, subject to any dispositions of any such Assets subsequent to the date of the HERC Holdings Balance Sheet;

 

(d)                                  all licenses, permits, concessions, approvals, registrations and authorizations issued by any Governmental Authority that relate exclusively to the Equipment Rental Business or the HERC Holdings Assets and are held in the name of any member of the Hertz Group;

 

(e)                                   all rights, interests and claims of either party or the members of its respective Group under the HERC Holdings Contracts;

 

(f)                                    all Assets owned or held immediately prior to the Distribution by Old Hertz Holdings or any of its Subsidiaries that primarily relate to or are primarily used in the Equipment Rental

 

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Business (the intention of this clause (f) is only to rectify any inadvertent omission of transfer or conveyance of any Asset that, had the parties given specific consideration to such Asset as of the date of this Agreement, would have otherwise been classified as a HERC Holdings Asset; no Asset shall be a HERC Holdings Asset solely as a result of this clause (f) unless a claim with respect thereto is made by HERC Holdings on or prior to the date that is eighteen (18) months after the Distribution); and

 

(g)                                   all recoveries or other Assets (net of any expenses) received by any member of either Group with respect to any HERC Holdings Action.

 

Notwithstanding the foregoing, the HERC Holdings Assets shall not include any Assets governed by the Tax Matters Agreement.  In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a HERC Holdings Asset, any item explicitly included in clause (a), (b) or (g) of the definition of “Hertz Assets” shall take priority over any of clauses (c) through (f) of this definition of “HERC Holdings Assets” and clause (f) of the definition of “Hertz Assets” shall take priority over clause (c) of this definition of “HERC Holdings Assets.”

 

HERC Holdings Balance Sheet ” means the unaudited combined balance sheet of HERC Holdings, including the notes thereto, as of March 31, 2016, included in the Information Statement.

 

HERC Holdings Board ” means the board of directors of HERC Holdings.

 

HERC Holdings Contracts ” means the following contracts, agreements, arrangements, commitments or understandings to which either party or any member of its respective Group is a party or by which it or its Assets is bound, whether or not in writing, in each case as of the Distribution:

 

(a)                                  any contract, agreement, arrangement, commitment or understanding that relates exclusively to the Equipment Rental Business; and

 

(b)                                  the HERC Holdings Portion of any Shared Contract, as provided in Section 4.3 .

 

HERC Holdings Entities ” means the members of the HERC Holdings Group.

 

HERC Holdings Group ” means HERC Holdings, HERC and each other Person that will be a direct or indirect Subsidiary of HERC Holdings immediately after the Distribution and each Person that is or becomes a member of the HERC Holdings Group after the Distribution, including any Person that is or was merged into HERC Holdings or any such direct or indirect Subsidiary.

 

HERC Holdings Liabilities ” means:

 

(a)                                  (i) the Liabilities related to both the HERC Holdings Assets and the Hertz Assets that are listed or described on Schedule 1.2(4)  and (ii) all other Liabilities that are expressly provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed by any member of the HERC Holdings Group, and all obligations and Liabilities of any member of the HERC Holdings Group under this Agreement or any of the Ancillary Agreements;

 

(b)                                  all Liabilities relating to, arising out of or resulting from the indebtedness of Old Hertz Holdings and its Subsidiaries listed on Schedule 1.2(5)  (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such indebtedness, in its capacity as such), or relating to, arising out of or resulting from the indebtedness of any member of the HERC Holdings Group

 

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incurred in connection with the Distribution, including the HERC Credit Facility and the HERC Financing Arrangements;

 

(c)                                   all Liabilities reflected as liabilities or obligations on the HERC Holdings Balance Sheet, and all Liabilities arising or assumed after the date of the HERC Holdings Balance Sheet that, had they arisen or been assumed on or before such date and been existing obligations as of such date, would have been reflected on the HERC Holdings Balance Sheet if prepared in accordance with GAAP, subject to any discharge of such Liabilities subsequent to the date of the HERC Holdings Balance Sheet;

 

(d)                                  all Liabilities relating to, arising out of or resulting from any HERC Holdings Action;

 

(e)                                   all Liabilities relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in (i) the Form 10 relating to the Equipment Rental Business and (ii) the Information Statement relating to the Equipment Rental Business, including but not limited to the items specified on Schedule 1.2(6) , and in each case other than the other items specified on Schedule 1.2(7) ;

 

(f)                                    all Known Environmental Liabilities set forth on Schedule 1.2(8) ;

 

(g)                                   all Unknown Environmental Liabilities associated with any current or former properties used in the operation of the Equipment Rental Business, including the facilities listed or described on Schedule 1.2(9) ;

 

(h)                                  all Liabilities to the extent relating to, arising out of or resulting from businesses or operations of Old Hertz Holdings or any of its Subsidiaries or any of their respective Predecessors terminated, divested or discontinued less than six (6) years prior to the date of this Agreement, in each case, that are listed or described on Schedule 1.2(10) ;

 

(i)                                      all Liabilities, except Shared Liabilities, to the extent relating to, arising out of or resulting from:

 

(i)                                      the operation or conduct of the Equipment Rental Business, as conducted at any time prior to the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such person’s authority), which act or failure to act relates to the Equipment Rental Business);

 

(ii)                                   the operation or conduct of any business conducted by any member of the HERC Holdings Group at any time after the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such person’s authority));

 

(iii)                                any HERC Holdings Asset; or

 

(iv)                               any Environmental Liability resulting from any properties included in or associated with the HERC Holdings Assets (including any business, operations or properties, and any Liability resulting from off-site disposal of waste from such business, operations or properties, for which a current or future owner or operator of the HERC Holdings Assets or the Equipment Rental Business may be alleged to be responsible as a matter of Law, contract or otherwise due to such ownership or

 

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operation of the HERC Holdings Assets or the Equipment Rental Business) arising on or after the Distribution; and

 

(j)                                     the Applicable HERC Holdings Proportion of any Shared Liability.

 

Notwithstanding the foregoing, the HERC Holdings Liabilities shall not include any Liabilities governed by the Tax Matters Agreement.  In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a HERC Holdings Liability, any item explicitly included in clause (a), (b), (d), (e), (f), (g) or (h) of the definition of “Hertz Liabilities” shall take priority over any of clauses (c) and (i) of this definition of “HERC Holdings Liabilities.”

 

Hertz ” means The Hertz Corporation, a Delaware corporation and wholly owned subsidiary of New Hertz Holdings.

 

Hertz Action ” means (a) Actions arising out of or related exclusively to the Hertz Assets or the Car Rental Business and (b) the Actions arising out of or related to both the Hertz Assets or the Car Rental Business and the HERC Holdings Assets or the Equipment Rental Business, in each case of this clause (b), that are described on Schedule 1.2(11) .

 

Hertz Assets ” means:

 

(a)                                  (i) all of the Assets used, held for use or acquired or developed for use by Old Hertz Holdings or any direct or indirect Subsidiary of Old Hertz Holdings exclusively in the Car Rental Business, (ii) the Assets used, held for use or acquired or developed for use by Old Hertz Holdings or any direct or indirect Subsidiary of Old Hertz Holdings in both the Car Rental Business and the Equipment Rental Business listed or described on Schedule 1.2(12) and (iii) all other Assets that are expressly provided in this Agreement or any Ancillary Agreement as Assets to be transferred to or retained by any member of the Hertz Group, including any corporate books and records and other Information that primarily relates to (A) the Car Rental Business, (B) the Hertz Group’s former businesses, (C) the Hertz Assets or (D) the Hertz Liabilities;

 

(b)                                  all interests in the capital stock of, or any other equity interests in, the members of the Hertz Group (other than New Hertz Holdings), and the capital stock and other equity, partnership, membership, joint venture and similar interests set on Schedule 1.2(13) ;

 

(c)                                   all Assets reflected as assets of the members of the Hertz Group on the New Hertz Holdings Balance Sheet and any Assets acquired by or for any member of the Hertz Group subsequent to the date of the New Hertz Holdings Balance Sheet that, had they been acquired on or before such date and owned as of such date, would have been reflected on the New Hertz Holdings Balance Sheet if prepared in accordance with GAAP, subject to any dispositions of any such Assets subsequent to the date of the New Hertz Holdings Balance Sheet;

 

(d)                                  all licenses, permits, concessions, approvals, registrations and authorizations issued by any Governmental Authority that relate exclusively to the Car Rental Business or the Hertz Assets and are held in the name of any member of the HERC Holdings Group;

 

(e)                                   all rights, interests and claims of either party or the members of its respective Group under the Hertz Contracts;

 

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(f)                                    all Assets owned or held immediately prior to the Distribution by Old Hertz Holdings or any of its Subsidiaries that primarily relate to or are primarily used in the Car Rental Business (the intention of this clause (f) is only to rectify any inadvertent omission of transfer or conveyance of any Asset that, had the parties given specific consideration to such Asset as of the date of this Agreement, would have otherwise been classified as a Hertz Asset; no Asset shall be a Hertz Asset solely as a result of this clause (f) unless a claim with respect thereto is made by New Hertz Holdings on or prior to the date that is eighteen (18) months after the Distribution); and

 

(g)                                   all recoveries or other Assets (net of any expenses) received by any member of either Group with respect to any Hertz Action.

 

Notwithstanding the foregoing, the Hertz Assets shall not include any Assets governed by the Tax Matters Agreement.  In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a Hertz Asset, any item explicitly included in clause (a), (b) or (g) of the definition of “HERC Holdings Assets” shall take priority over any of clauses (c) through (f) of this definition of “Hertz Assets” and clause (f) of the definition of “HERC Holdings Assets” shall take priority over clause (c) of this definition of “Hertz Assets.”

 

Hertz Contracts ” means the following contracts, agreements, arrangements, commitments or understandings to which either party or any member of its respective Group is a party or by which it or its Assets is bound, whether or not in writing, in each case as of the Distribution:

 

(a)                                  any contract, agreement, arrangement, commitment or understanding that relates exclusively to the Car Rental Business; and

 

(b)                                  the Hertz Portion of any Shared Contract, as provided in Section 4.3 .

 

Hertz Entities ” means the members of the Hertz Group.

 

Hertz Group ” means New Hertz Holdings, Hertz and each other Person that will be a direct or indirect Subsidiary of New Hertz Holdings immediately prior to the Distribution (but after giving effect to the Internal Reorganization), including the entities listed on Schedule 1.2(14) , and each Person that is or becomes a member of the Hertz Group after the Distribution, including in all circumstances any Person that is or was merged into New Hertz Holdings or any such direct or indirect Subsidiary.

 

Hertz Liabilities ” means:

 

(a)                                  (i) Liabilities related to both the HERC Holdings Assets and the Hertz Assets that are listed or described on Schedule 1.2(15) and (ii) all other Liabilities that are expressly provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed by any member of the Hertz Group, and all obligations and Liabilities of any member of the Hertz Group under this Agreement or any of the Ancillary Agreements;

 

(b)                                  all Liabilities relating to, arising out of or resulting from the indebtedness of Old Hertz Holdings and its Subsidiaries listed on Schedule 1.2(16) (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such indebtedness, in its capacity as such), or relating to, arising out of or resulting from the indebtedness of any member of the Hertz Group incurred in connection with the Distribution, including the New Hertz Financing Arrangements;

 

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(c)                                   all Liabilities reflected as liabilities or obligations on the New Hertz Holdings Balance Sheet, and all Liabilities arising or assumed after the date of the New Hertz Holdings Balance Sheet that, had they arisen or been assumed on or before such date and been existing obligations as of such date, would have been reflected on the New Hertz Holdings Balance Sheet if prepared in accordance with GAAP, subject to any discharge of such Liabilities subsequent to the date of the New Hertz Holdings Balance Sheet;

 

(d)                                  all Liabilities relating to, arising out of or resulting from any Hertz Action;

 

(e)                                   all Liabilities relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to (i) all information contained in the Form 10 relating to the Car Rental Business, including but not limited to the items specified on Schedule 1.2(17) , and (ii) the Information Statement relating to the Car Rental Business, in each case other than any items specified on Schedule 1.2(7) ;

 

(f)                                    all Known Environmental Liabilities, except for those set forth on Schedule 1.2(8) ;

 

(g)                                   all Unknown Environmental Liabilities associated with any current or former properties used in the operation of the Car Rental Business, including the facilities listed or described on Schedule 1.2(18) ;

 

(h)                                  all Liabilities to the extent relating to, arising out of or resulting from businesses or operations of Old Hertz Holdings or any of its Subsidiaries or any of their respective Predecessors terminated, divested or discontinued less than six (6) years prior to the date of this Agreement, in each case, that are listed or described on Schedule 1.2(19) ;

 

(i)                                      all Liabilities, except Shared Liabilities, to the extent relating to, arising out of or resulting from:

 

(i)                                      the operation or conduct of the Car Rental Business, as conducted at any time prior to the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such person’s authority), which act or failure to act relates to the Car Rental Business);

 

(ii)                                   the operation or conduct of any business conducted by any member of the Hertz Group at any time after the Distribution (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such person’s authority));

 

(iii)                                any Hertz Asset; or

 

(iv)                               any Environmental Liability resulting from any properties included in or associated with the Hertz Assets (including any business, operations or properties, and any Liability resulting from off-site disposal of waste from such business, operations or properties, for which a current or future owner or operator of the Hertz Assets or the Car Rental Business may be alleged to be responsible as a matter of Law, contract or otherwise due to such ownership or operation of the Hertz Assets or the Car Rental Business), arising on or after the Distribution; and

 

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(j)                                     the Applicable Hertz Proportion of any Shared Liability.

 

Notwithstanding the foregoing, the Hertz Liabilities shall not include any Liabilities governed by the Tax Matters Agreement.  In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a Hertz Liability, any item explicitly included in clause (a), (b), (d), (e), (f), (g) or (h) of the definition of “HERC Holdings Liabilities” shall take priority over any of clauses (c) and (i) of this definition of “Hertz Liabilities.”

 

Information ” means all records, books, contracts, instruments, computer data and other data and information.

 

Information Statement ” means the Information Statement, attached as an exhibit to the Form 10, sent or otherwise made available to each Old Hertz Holdings Stockholder in connection with the Distribution, as such Information Statement may be amended or supplemented from time to time.

 

Insurance Proceeds ” means those monies received by or on behalf of an insured from a Third Party insurance carrier or paid by a Third Party insurance carrier on behalf of the insured.

 

Intellectual Property Agreement ” means the Intellectual Property Agreement, dated as of the date hereof, among Hertz System, Inc., Hertz and HERC Holdings, and all agreements exhibited thereto and executed as of the date hereof, including the Trademark, Trade Name, Domain and Related Rights License Agreement, Trademark Assignment Agreement, Coexistence Agreement and Domain Name Assignment, in each case as the same may be amended or modified from time to time.

 

Intercompany Agreement ” means any agreement, arrangement, commitment or understanding, whether or not in writing, between or among any Hertz Entity, on the one hand, and any HERC Holdings Entity, on the other hand.  Notwithstanding the foregoing, none of this Agreement and the Ancillary Agreements to be entered into by any of the parties or any Hertz Entities and HERC Holdings Entities shall be an Intercompany Agreement.

 

Internal Reorganization ” means all of the transactions, other than the Distribution, described in the document entitled “Detailed Transaction Steps,” dated as of the date of this Agreement, exchanged between New Hertz Holdings and HERC Holdings.

 

Internal Spin-Off ” means all of the transactions described in Annex A of the document entitled “Detailed Transaction Steps,” dated as of the date of this Agreement, exchanged between New Hertz Holdings and HERC Holdings.

 

Known Environmental Liabilities ” means those Environmental Liabilities listed on Schedule 1.2(20) relating to events or conditions occurring or arising during the period prior to the Distribution.

 

Law ” means any statute, law, regulation, ordinance, rule, judgment, rule of common law, order, decree, government approval, concession, grant, franchise, license, agreement, directive, guideline, policy, requirement or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority, whether in effect on or after the date of this Agreement, in each case, as amended.

 

Liabilities ” means any and all losses, claims, charges, debts, demands, Actions, damages, obligations, payments, costs and expenses, sums of money, bonds, indemnities and similar

 

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obligations, penalties, covenants, contracts, controversies, agreements, promises, omissions, guarantees, make whole agreements and similar obligations, and other liabilities, including all contractual obligations, whether absolute or contingent, inchoate or otherwise, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and including those arising under any Law, Action, threatened or contemplated Action (including the costs and expenses of demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all costs and expenses incurred in investigating, preparing or defending against any such Actions or threatened or contemplated Actions), order or consent decree of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking, including those arising under this Agreement or any Ancillary Agreement or incurred by a party hereto or thereto in connection with enforcing its rights to indemnification hereunder or thereunder, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person.

 

New Hertz Financing Arrangements ” means the refinancing of that certain Credit Agreement, dated as of March 11, 2011, among Hertz, the several lenders from time to time parties thereto, Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, Wells Fargo Bank, National Association, as Syndication Agent, Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., Credit Agricole Corporate and Investment Bank and JPMorgan Chase Bank, N.A., as Co-Documentation Agents, Deutsche Bank Securities Inc., Barclays Capital, Citigroup Global Markets Inc., Credit Agricole Corporate and Investment Bank, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Bookrunning Managers to be entered into on or prior to the Distribution Date.

 

New Hertz Holdings Balance Sheet ” means the unaudited pro forma condensed consolidated balance sheet of Old Hertz Holdings, including the notes thereto, as of March 31, 2016, included in the Current Report on Form 8-K filed by Old Hertz Holdings on June 2, 2016.

 

New Hertz Holdings Board ” means the board of directors of New Hertz Holdings.

 

NYSE ” means the New York Stock Exchange.

 

Old Hertz Holdings Board ” means the board of directors of Old Hertz Holdings.

 

Old Hertz Holdings Common Stock ” means the common stock, par value $0.01 per share, of Old Hertz Holdings.

 

Old Hertz Holdings Stockholders ” means the stockholders of record of Old Hertz Holdings.

 

Person ” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.

 

Predecessor ” means an entity whose rights, interests, assets, obligations, liabilities and duties the current entity has assumed, either through acquisition, merger or by operation of law.

 

Record Date ” means 5:00 p.m., New York City time, on the date determined by the Old Hertz Holdings Board as the record date for determining the Old Hertz Holdings Stockholders entitled to receive shares of New Hertz Holdings Common Stock in the Distribution.

 

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Record Holders ” means the Old Hertz Holdings Stockholders as of the Record Date.

 

SEC ” means the Securities and Exchange Commission.

 

Security Interest ” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer or other encumbrance of any nature whatsoever.

 

Separation ” means (a) the Internal Reorganization, (b) any other actions to be taken pursuant to Article II and (c) any other transfers of Assets and assumptions of Liabilities, in each case, between a member of one Group and a member of the other Group, provided for in this Agreement or any Ancillary Agreement.

 

Shared Account ” means an account receivable or account payable relating to both the Car Rental Business and the Equipment Rental Business.

 

Shared Contract ” means any contract, agreement, arrangement, commitment or understanding, whether or not in writing, of any member of either Group, in each case as of the Distribution, (a) that relates to both the Car Rental Business and the Equipment Rental Business and (b) either (i) the respective rights and obligations under and in respect of which the parties specifically intended to amend or divide, modify, partially assign or replicate (in whole or in part) prior to the Distribution, including any such contracts, agreements, arrangements, commitments or understandings set forth on Schedule 1.2(21) , but were not able to do so prior to the Distribution, or (ii) the existence of which either party discovers prior to the date that is eighteen (18) months after the Distribution and had the parties given specific consideration to such contract, agreement, arrangement, commitment or understanding they would have amended or divided, modified, partially assigned or replicated (in whole or in part) the respective rights and obligations under and in respect of such contract, agreement, arrangement, commitment or understanding; provided , however , that any contracts, agreements, arrangements, commitments or understandings that relate to debt instruments, insurance arrangements or employee benefit plans or programs shall not be considered Shared Contracts unless and only to the extent expressly provided for under the terms of this Agreement and any Ancillary Agreement.

 

Shared Insurance Liabilities ” means any Liabilities for which New Hertz Holdings, on the one hand, and HERC Holdings, on the other hand, have recourse to the same pool of insurance funds and where there is a reasonable likelihood that such Liabilities will exceed the pool or where the pool of insurance funds has been exhausted.

 

Shared Liability ” means any of the following:

 

(a)                                  any Liability relating to, arising out of or resulting from:

 

(i)                                      any Action by any Third Party, including any stockholder derivative demand or action, asserted against any member of either Group directly based on any act or omission, or alleged act or omission, taken to effect the Distribution and the other transactions contemplated by this Agreement and the Ancillary Agreements, other than any item included in clause (a), (b), (d) or (e) of the definition of “Hertz Liabilities” or clause (a), (b), (d) or (e) of the definition of “HERC Holdings Liabilities;”

 

(ii)                                   any stockholder derivative demand or action or securities class action (A) that is brought by any current or former equity security holder of Old Hertz Holdings or, from and after the Distribution, HERC Holdings, and (B) to the extent that it arises from any acts, omissions,

 

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disclosures, or lack of disclosure occurring prior to the Distribution (other than any omission, disclosure or lack of disclosure made after the Distribution by any member of the HERC Holdings Group, which in the case of disclosures only, are not also made by any member of the Hertz Group unless such subsequent omission, disclosure or lack of disclosure is not alleged to have created any additional liability), irrespective of the facts alleged, including any disclosure or lack of disclosure contained in the sections of the Form 10 and Information Statement set forth on Schedule 1.2(7) , but excluding any item included in clause (a), (b), (d) or (e) of the definition of “Hertz Liabilities” or clause (a), (b), (d) or (e) of the definition of “HERC Holdings Liabilities”; or

 

(iii)                                those Liabilities set forth on Schedule 1.2(22) ; or

 

(b)                                  any Liability (i) relating to, arising out of or resulting from any business or operations of any member of either Group or any of their Predecessors that (A) was discontinued, abandoned, completed or otherwise terminated (in whole or in part) prior to the Distribution and (B) is not included in the Car Rental Business or the Equipment Rental Business or listed or described on Schedule 1.2(10)  or Schedule 1.2(19) and (ii) that is not listed in clauses (a) through (h) of the definition of “Hertz Liabilities” or clauses (a) through (h) of the definition of “HERC Holdings Liabilities.”

 

Notwithstanding the foregoing, Shared Liabilities shall not include any Liabilities governed by the Tax Matters Agreement.  In the event of any inconsistency or conflict that may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a Shared Liability, any item described in clause (a) of this definition of “Shared Liabilities” shall take priority over any of clauses (a) through (e) and clauses (h) and (i) of the definition of “Hertz Liabilities” and clauses (a) through (e) and clauses (h) and (i) of the definition of “HERC Holdings Liabilities,” except as otherwise indicated in clauses (a)(i) and (a)(ii) of this definition of “Shared Liabilities.”

 

Subsidiary ” of any Person means any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided , however , that no Person that is not directly or indirectly wholly owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person.

 

Tax ” has the meaning set forth in the Tax Matters Agreement.

 

Tax Advisors ” means each of KPMG LLP and Debevoise & Plimpton LLP.

 

Tax Matters Agreement ” means the Tax Matters Agreement, dated as of the date hereof, by and among HERC Holdings, Hertz, HERC and New Hertz Holdings, as the same may be amended or modified from time to time.

 

Transition Services Agreement ” means the Transition Services Agreement, dated as of the date hereof, between New Hertz Holdings and HERC Holdings, as the same may be amended or modified from time to time.

 

Unknown Environmental Liabilities ” means those Environmental Liabilities that are not Known Environmental Liabilities arising out of the business or operations of any member of either Group during the period prior to the Distribution.

 

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ARTICLE II
 THE SEPARATION

 

Section 2.1                                     Internal Reorganization; Transfer of Assets and Assumption of Liabilities .

 

(a)                                  Prior to the Distribution, the parties shall cause the Internal Reorganization to be completed, and shall, and shall cause their respective Subsidiaries to, execute all such instruments, assignments, documents and other agreements necessary to effect the Internal Reorganization.

 

(b)                                  Prior to the Distribution, the parties shall, and shall cause their respective Subsidiaries to, (i) execute such instruments of assignment and transfer and take such other corporate actions as are necessary to (A) transfer to one or more members of the Hertz Group all of the right, title and interest of the HERC Holdings Group in and to all Hertz Assets and (B) transfer to one or more members of the HERC Holdings Group all of the right, title and interest of the Hertz Group in and to all HERC Holdings Assets and (ii) take all actions necessary to (A) cause one or more members of the Hertz Group to assume all of the Hertz Liabilities to the extent such Hertz Liabilities would otherwise remain obligations of any member of the HERC Holdings Group and (B) cause one or more members of the HERC Holdings Group to assume all of the HERC Holdings Liabilities to the extent such HERC Holdings Liabilities would otherwise remain obligations of any member of the Hertz Group, in each case to the extent not effected pursuant to the Internal Reorganization.  Notwithstanding anything to the contrary herein (x) neither party shall be required to make a physical or electronic transfer of any Information except as required by Article VI hereof or any Ancillary Agreement and (y) this Agreement and the Ancillary Agreements do not purport to transfer any insurance policy.

 

Section 2.2                                     Governmental Approvals and Consents; Transfers, Assignments and Assumptions Not Effected Prior to the Distribution .

 

(a)                                  To the extent that any of the transactions contemplated by this Agreement or any Ancillary Agreement requires any Governmental Approval or Consent, the parties will use their commercially reasonable efforts to obtain such Governmental Approval or Consent.

 

(b)                                  To the extent that any transfer or assignment of Assets or assumption of Liabilities contemplated by this Agreement or any Ancillary Agreement shall not have been consummated prior to the Distribution, the parties shall use their commercially reasonable efforts to effect, and shall cause the other members of their Group to effect, such transfers as soon after the Distribution as shall be practicable.  In the event that any such transfer of Assets or assumption of Liabilities has not been consummated, from and after the Distribution until such time as such Asset is transferred or such Liability is assumed (i) the party retaining such Asset shall thereafter hold such Asset for the use and benefit of the party entitled to it (at the expense of the party entitled to it) and (ii) the party intended to assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the party retaining such Liability for all amounts paid or incurred in connection with the retention of such Liability.  In addition, the party retaining such Asset or Liability shall, insofar as reasonably practicable and to the extent permitted by applicable Law, treat such Asset or Liability in the ordinary course of business consistent with past practice and take such other actions as may be reasonably requested by the party entitled to such Asset or by the party intended to assume such Liability in order to place such party, insofar as reasonably practicable, in the same position as if such Asset or Liability had been transferred or assumed as contemplated by this Agreement or by any Ancillary Agreement and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, and control over such Asset or Liability, are to inure from and after the Distribution to the member or members of the Group entitled to such Asset or intended to assume such Liability.  In furtherance of the foregoing, the parties agree that, as of the Distribution, each party shall be deemed to

 

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have acquired beneficial ownership over all of the Assets, together with all rights and privileges incident thereto, and shall be deemed to have assumed all of the Liabilities, and all duties, obligations and responsibilities incident thereto, that such party is entitled to acquire or intended to assume pursuant to the terms of this Agreement or the applicable Ancillary Agreement.  Subject to compliance with the foregoing obligations set forth in this Section 2.2(b) , nothing in this Agreement shall be deemed to require the transfer (or provision of use or benefit) of any Assets or the assumption of any Liabilities that by their terms or operation of Law cannot or should not be transferred, assigned or assumed (or for which such provision of use or benefit thereof is not permitted or possible by their terms or operation of law).

 

(c)                                   If and when the applicable Consents, Governmental Approvals and/or conditions referred to in Section 2.2(b)  are obtained or satisfied, the transfer or assumption of the applicable Asset or Liability shall be effected in accordance with and subject to the terms of this Agreement or the applicable Ancillary Agreement.

 

(d)                                  The party retaining any Asset or Liability due to the deferral of the transfer of such Asset or the deferral of the assumption of such Liability pursuant to Section 2.2(b)  or otherwise shall not be obligated, in connection with this Section 2.2 , to expend any money or take any action that would require the expenditure of money unless the party entitled to such Asset or the party intended to assume such Liability advances the necessary funds.

 

(e)                                   From and after the Distribution, the parties agree to treat, for U.S. federal, state, local and non-U.S. income tax purposes, any Asset or Liability that is not transferred prior to the Distribution and is subject to the provisions of Section 2.2(b)  as owned by the member of the Group to which such Asset or Liability was intended to be transferred.  The parties shall not take any position inconsistent with this Section 2.2(e)  unless otherwise required by applicable Law.

 

Section 2.3                                     Termination of Intercompany Agreements .

 

(a)                                  Except as set forth in Section 2.3(b) , the Hertz Entities, on the one hand, and the HERC Holdings Entities, on the other hand, hereby terminate any and all Intercompany Agreements, effective as of the Distribution.  No terminated Intercompany Agreement (including any provision thereof that purports to survive termination) shall be of any further force or effect from and after the Distribution.  Each party shall, at the reasonable request of any other party, take, or cause to be taken, such other actions as may be necessary to effect the provisions of this Section 2.3(a) .  The parties, on behalf of the members of their respective Groups, hereby waive any advance notice provision or other termination requirements with respect to any Intercompany Agreement.

 

(b)                                  The provisions of Section 2.3(a)  shall not apply to any of the following Intercompany Agreements (or to any of the provisions thereof):

 

(i)                                      any Intercompany Agreement to which any non-wholly owned Subsidiary of New Hertz Holdings or HERC Holdings, as the case may be, is a party (it being understood that directors’ qualifying shares or similar interests will be disregarded for purposes of determining whether a Subsidiary is wholly owned);

 

(ii)                                   any other Intercompany Agreement that this Agreement or any Ancillary Agreement expressly contemplates will survive the Distribution;

 

(iii)                                any agreements, arrangements, commitments or understandings to which any Third Party is a party; and

 

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(iv)                               any Intercompany Agreement listed or described on Schedule 2.3(b)(iv) .

 

(c)                                   Except as otherwise expressly and specifically provided in this Agreement or any Ancillary Agreement, the relevant members of the HERC Holdings Group and the Hertz Group shall satisfy all intercompany receivables, payables, loans and other accounts between any HERC Holdings Entity, on the one hand, and any Hertz Entity, on the other hand, in existence as of immediately prior to the Distribution and after giving effect to the Internal Reorganization no later than the Distribution by (i) forgiveness by the relevant obligee or (ii) one or a related series of repayments, distributions of and/or contributions to capital, in each case as determined by Old Hertz Holdings.

 

Section 2.4                                     Novation of Hertz Liabilities .

 

(a)                                  Each of New Hertz Holdings and HERC Holdings, at the written request of the other party within eighteen (18) months after the Distribution, shall use its commercially reasonable efforts to obtain, or to cause to be obtained, any release, Consent, substitution or amendment required to novate or assign all rights and obligations under any agreements, leases, licenses and other obligations or Liabilities of any nature whatsoever that constitute Hertz Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements other than any Hertz Entities, which shall include the removal of any Security Interest on or in any HERC Holdings Asset that may serve as collateral or security for such Hertz Liabilities, so that, in any such case, New Hertz Holdings and the other Hertz Entities will be solely responsible for such Hertz Liabilities; provided , however , that the party receiving the request (or any members of its respective Group) shall not be obligated to (i) pay any consideration or surrender, release or modify any rights or remedies therefor to any Third Party from which such releases, Consents, substitutions and amendments are requested except as expressly set forth in this Agreement or any Ancillary Agreement or (ii) take any action pursuant to this Section 2.4 to the extent such action would result in an undue burden on such party or the other members of its Group or would unreasonably interfere with any of its or such other members’ employees’ normal functions and duties.

 

(b)                                  If New Hertz Holdings or HERC Holdings is unable to obtain, or to cause to be obtained, any required release, Consent, substitution or amendment, the applicable HERC Holdings Entity will continue to be bound by the applicable underlying agreement, lease, license or other obligation or other Liabilities and, unless not permitted by Law or the terms thereof, New Hertz Holdings shall pay, perform and discharge fully all the obligations or other Liabilities of such HERC Holdings Entity thereunder.  New Hertz Holdings shall indemnify each HERC Holdings Indemnified Party and hold it harmless against any Liabilities arising in connection therewith.  HERC Holdings shall pay and remit, or cause to be paid or remitted, to the applicable Hertz Entity, all money, rights and other consideration received by any HERC Holdings Entity (net of any applicable expenses) in respect of such performance by such Hertz Entity (unless any such consideration is a HERC Holdings Asset).  If and when any such release, Consent, substitution or amendment shall be obtained or such agreement, lease, license or other rights, obligations or other Liabilities shall otherwise become assignable or able to be novated, HERC Holdings shall thereafter assign, or cause to be assigned, all the HERC Holdings Entities’ rights, obligations and other Liabilities thereunder to the applicable Hertz Entity without payment of any further consideration and the applicable Hertz Entity shall, without payment of any further consideration, assume such rights, obligations and other Liabilities.

 

Section 2.5                                     Novation of HERC Holdings Liabilities .

 

(a)                                  Each of New Hertz Holdings and HERC Holdings, at the written request of the other party within eighteen (18) months after the Distribution, shall use its commercially reasonable efforts to obtain, or to cause to be obtained, any release, Consent, substitution or amendment required to novate or assign all rights and obligations under any agreements, leases, licenses and other obligations or

 

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Liabilities of any nature whatsoever that constitute HERC Holdings Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements other than any HERC Holdings Entities, which shall include the removal of any Security Interest on or in any Hertz Asset that may serve as collateral or security for such HERC Holdings Liabilities, so that, in any such case, HERC Holdings and the other HERC Holdings Entities will be solely responsible for such HERC Holdings Liabilities; provided , however , that the party receiving the request (or any members of its respective Group) shall not be obligated to (i) pay any consideration or surrender, release or modify any rights or remedies therefor to any Third Party from which such releases, Consents, substitutions and amendments are requested except as expressly set forth in this Agreement or any Ancillary Agreement or (ii) take any action pursuant to this Section 2.5 to the extent such action would result in an undue burden on such party or the other members of its Group or would unreasonably interfere with any of its or such other members’ employees’ normal functions and duties.

 

(b)                                  If New Hertz Holdings or HERC Holdings is unable to obtain, or to cause to be obtained, any required release, Consent, substitution or amendment, the applicable Hertz Entity will continue to be bound by the applicable underlying agreement, lease, license or other obligation or other Liabilities and, unless not permitted by Law or the terms thereof, HERC Holdings shall pay, perform and discharge fully all the obligations or other Liabilities of such Hertz Entity thereunder.  HERC Holdings shall indemnify each Hertz Indemnified Party and hold it harmless against any Liabilities arising in connection therewith.  New Hertz Holdings shall pay and remit, or cause to be paid or remitted, to the applicable HERC Holdings Entity, all money, rights and other consideration received by any Hertz Entity (net of any applicable expenses) in respect of such performance by such HERC Holdings Entity (unless any such consideration is a Hertz Asset).  If and when any such release, Consent, substitution, approval or amendment shall be obtained or such agreement, lease, license or other rights, obligations or other Liabilities shall otherwise become assignable or able to be novated, New Hertz Holdings shall thereafter assign, or cause to be assigned, all the Hertz Entities’ rights, obligations and other Liabilities thereunder to the applicable HERC Holdings Entity without payment of any further consideration and the applicable HERC Holdings Entity shall, without payment of any further consideration, assume such rights, obligations and other Liabilities.

 

Section 2.6                                     Treatment of Cash .  From the date of this Agreement until the Distribution, except as separately provided pursuant to the Internal Reorganization with respect to the Cash Equivalents distributed or paid to the Hertz Entities in connection with the HERC Cash Transfers, which are to be a Hertz Asset upon the completion of the Internal Reorganization and from and after the Distribution, Old Hertz Holdings shall be entitled to use, retain or otherwise dispose of all Cash Equivalents generated by the Car Rental Business and the Hertz Assets in accordance with the ordinary course operation of Old Hertz Holdings’ cash management systems.  All Cash Equivalents held by any member of the Hertz Group as of the Distribution shall be a Hertz Asset and all Cash Equivalents held by any member of the HERC Holdings Group as of the Distribution shall be a HERC Holdings Asset.

 

Section 2.7                                     Replacement of Credit Support .

 

(a)                                  New Hertz Holdings shall use commercially reasonable efforts to arrange, at its cost and expense and effective at or prior to the Distribution, the replacement of all Credit Support Instruments to the extent relating to the Car Rental Business and provided by or through any member of the HERC Holdings Group for the benefit of any member of the Hertz Group (the “ Hertz Credit Support Instruments ”) with alternate arrangements that do not require any credit support from any member of the HERC Holdings Group, and shall use commercially reasonable efforts to obtain from the beneficiaries of such Hertz Credit Support Instruments written releases indicating that the applicable member of the HERC Holdings Group will, effective upon the Distribution, have no liability with respect to such Hertz Credit Support Instruments.  In the event that New Hertz Holdings is unable to obtain any such alternative

 

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arrangements for any Hertz Credit Support Instrument prior to the Distribution, it shall have responsibility for the payment and performance of the obligations underlying such Hertz Credit Support Instrument.

 

(b)                                  HERC Holdings shall use commercially reasonable efforts to arrange, at its cost and expense and effective at or prior to the Distribution, the replacement of all Credit Support Instruments to the extent relating to the Equipment Rental Business and provided by or through any member of the Hertz Group for the benefit of any member of the HERC Holdings Group (the “ HERC Holdings Credit Support Instruments ”) with alternate arrangements that do not require any credit support from any member of the Hertz Group, and shall use commercially reasonable efforts to obtain from the beneficiaries of such HERC Holdings Credit Support Instruments written releases indicating that the applicable member of the Hertz Group will, effective upon the Distribution, have no liability with respect to such HERC Holdings Credit Support Instruments.  In the event that HERC Holdings is unable to obtain any such alternative arrangements for any HERC Holdings Credit Support Instrument prior to the Distribution, it shall have responsibility for the payment and performance of the obligations underlying such HERC Holdings Credit Support Instrument.

 

Section 2.8                                     Disclaimer of Representations and Warranties .  Each of HERC Holdings (on behalf of itself and each other HERC Holdings Entity) and New Hertz Holdings (on behalf of itself and each other Hertz Entity) understands and agrees that, except as expressly set forth in this Agreement or in any Ancillary Agreement, no party (including its Affiliates) to this Agreement, any Ancillary Agreement or any other agreement or document contemplated by this Agreement, any Ancillary Agreement or otherwise, makes any representations or warranties relating in any way to the Assets, businesses or Liabilities transferred or assumed as contemplated hereby or thereby, to any Consent required in connection therewith, to the value or freedom from any Security Interests of, or any other matter concerning, any Assets of such party, or to the absence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other Asset, including any accounts receivable, of any party, or to the legal sufficiency of any assignment, document or instrument delivered hereunder to convey title to any Asset or thing of value upon the execution, delivery and filing hereof or thereof.  Except as may expressly be set forth in this Agreement or in any Ancillary Agreement, (a) the parties and the members of their respective Groups are transferring all such Assets on an “as is,” “where is” basis, (b) the parties are expressly disclaiming any implied warranty of merchantability, fitness for a specific purpose or otherwise, (c) the respective transferees shall bear the economic and legal risks that any conveyance shall prove to be insufficient to vest in the transferee good and marketable title, free and clear of any Security Interest and (d) none of the HERC Holdings Entities or the Hertz Entities (including their respective Affiliates) or any other Person makes any representation or warranty with respect to any information, documents or material made available in connection with the Separation or the Distribution, or the entering into of this Agreement or any Ancillary Agreement or the transactions contemplated hereby or thereby, except as expressly set forth in this Agreement or any Ancillary Agreement.

 

Section 2.9                                     Credit Facilities; HERC Financing Arrangements; HERC Cash Transfers .

 

(a)                                  Credit Facilities .  Prior to the Distribution, HERC shall enter into the HERC Credit Facility.

 

(b)                                  HERC Financing Arrangements .  Prior to the Distribution, the HERC Financing Arrangements, which may include the issuance by HERC of one or more series of senior notes, shall have been consummated.

 

(c)                                   HERC Cash Transfers .  Prior to the Distribution, HERC will, using the proceeds from draws under the HERC Credit Facility and/or the HERC Financing Arrangements, make the cash transfers (the “ HERC Cash Transfers ”) specified in the Internal Reorganization.

 

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(d)                                  Preparation of Materials .  Prior to the Distribution, the parties will use commercially reasonable efforts to cooperate in the preparation of all materials as may be necessary or advisable to execute the HERC Credit Facility and the HERC Financing Arrangements.

 

ARTICLE III
THE DISTRIBUTION

 

Section 3.1                                     Actions Prior to the Distribution .

 

(a)                                  Subject to the conditions specified in Section 3.2 and subject to Section 3.5 , each of the parties shall use its commercially reasonable efforts to consummate the Distribution.  Such actions shall include those specified in this Section 3.1 .

 

(b)                                  Prior to the Distribution, each of the parties will execute and deliver all Ancillary Agreements to which it is a party, and will cause the other HERC Holdings Entities and Hertz Entities, as applicable, to execute and deliver any Ancillary Agreements to which such Persons are parties.

 

(c)                                   Prior to the Distribution, the parties will prepare and cause to be filed with the SEC the Form 10 and Information Statement and use their commercially reasonable efforts to cause such Form 10 to become effective, including by responding to SEC comments thereto and appropriately amending the Form 10 and Information Statement.

 

(d)                                  Prior to the Distribution, Old Hertz Holdings shall mail the Information Statement to the Record Holders.

 

(e)                                   Each of the parties shall take all such actions as may be necessary or appropriate under the securities or blue sky Laws of the states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution.

 

(f)                                    The parties shall prepare and cause to be filed, and shall use commercially reasonable efforts to have approved prior to the Distribution, an application for the listing on the NYSE of the New Hertz Holdings Common Stock to be distributed in the Distribution, subject to official notice of listing, and shall use commercially reasonable efforts to give the NYSE not less than ten (10) days’ advance notice of the Record Date in compliance with applicable Law.

 

(g)                                   In connection with the Distribution, (i) the existing directors on the Old Hertz Holdings Board shall duly elect or appoint to the HERC Holdings Board those individuals identified in the Information Statement to become members of the HERC Holdings Board effective as of the Distribution, and such existing directors on the Old Hertz Holdings Board shall resign as necessary such that the individuals elected or appointed shall become the members of the HERC Holdings Board, effective as of the Distribution, and (ii) the existing directors on the New Hertz Holdings Board shall duly elect or appoint to the New Hertz Holdings Board those individuals identified in Schedule 3.1(g)  to become members of the New Hertz Holdings Board effective as of the Distribution, and such existing directors on the New Hertz Holdings Board shall resign as necessary such that the individuals elected or appointed shall become the members of the New Hertz Holdings Board, effective as of the Distribution; provided , however , that to the extent required by any Law or requirement of the NYSE, one independent director shall be elected or appointed to the New Hertz Holdings Board and begin his or her term prior to the Distribution in accordance with such Law or requirement.

 

(h)                                  In connection with the Distribution, (i) each individual who will be an employee of any HERC Holdings Entity after the Distribution and who is a director or officer of any Hertz Entity

 

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shall have resigned or been removed from each such Hertz Entity directorship and office held by such person, effective no later than immediately prior to the Distribution and (ii) each individual who will be an employee of any Hertz Entity after the Distribution and who is a director or officer of any HERC Holdings Entity shall have resigned or been removed from each such HERC Holdings Entity directorship and office held by such person, effective no later than immediately prior to the Distribution.

 

(i)                                      Immediately prior to the Distribution, New Hertz Holdings’ Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, each in form and substance satisfactory to the parties, shall be in effect.

 

(j)                                     HERC Holdings shall enter into a distribution agent agreement with the Agent or otherwise provide instructions to the Agent regarding the Distribution.

 

(k)                                  The parties shall, subject to Section 3.5 , take all reasonable steps necessary and appropriate to cause the conditions set forth in Section 3.2 to be satisfied and to effect the Distribution on the Distribution Date.

 

Section 3.2                                     Conditions to Distribution .  Pursuant to Section 3.5 , the Old Hertz Holdings Board has sole and absolute discretion to at any time and from time to time until the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution if, for example, it determines that the Separation is not in the best interests of Old Hertz Holdings and the Old Hertz Holdings Stockholders.  In addition, the obligations of the parties to consummate the Distribution shall be conditioned on the satisfaction, or waiver by the Old Hertz Holdings Board (except with respect to clauses (d) and (e) below), of the following conditions:

 

(a)                                  The private letter ruling that Old Hertz Holdings received from the Internal Revenue Service to the effect that, subject to the accuracy of and compliance with certain representations, assumptions and covenants, (i) the Distribution will qualify as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code and (ii) the internal spin-off transactions (collectively with the Distribution, the “ Distributions ”) and certain related transactions in connection with the Distributions will be tax-free to the parties to those spin-offs and related transactions, shall not have been revoked or modified in any material respect as of the Distribution Date.

 

(b)                                  Old Hertz Holdings shall have received the opinions of its Tax Advisors that the Distributions will qualify as tax-free transactions under Section 355 of the Code, subject to the accuracy of and compliance with certain representations, assumptions and covenants.

 

(c)                                   Old Hertz Holdings shall have received a written solvency opinion from a financial advisor acceptable to Old Hertz Holdings, which confirms the solvency and financial viability of Old Hertz Holdings before the consummation of the Distribution and each of HERC Holdings and New Hertz Holdings after the consummation of the Distribution and is in form and substance acceptable to Old Hertz Holdings.

 

(d)                                  The SEC shall have declared the Form 10 effective under the Exchange Act, no stop order suspending the effectiveness of the Form 10 shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the SEC.

 

(e)                                   All statutory requirements for the consummation of the Distributions shall have been satisfied, and no injunction, court order, Law or regulation by any Governmental Authority shall be in effect preventing the completion of the Distributions.

 

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(f)                                    The Internal Reorganization shall have been completed and HERC shall have entered into the HERC Credit Facility and HERC Financing Arrangements and completed the HERC Cash Transfers.

 

(g)                                   The NYSE shall have approved the New Hertz Holdings Common Stock for listing, subject to official notice of issuance.

 

(h)                                  Any material Consents necessary for the Distribution must have been obtained, without any conditions that would have a material adverse effect on HERC Holdings or New Hertz Holdings.

 

(i)                                      The actions set forth in Sections 3.1(b) , (d) , (h) , (i) , (j)  and (k)  shall have been completed.

 

The foregoing conditions may only be waived by the Old Hertz Holdings Board, in its sole and absolute discretion, are for the sole benefit of Old Hertz Holdings and shall not give rise to or create any duty on the part of the Old Hertz Holdings Board to waive or not waive such conditions or in any way limit the right of termination of this Agreement set forth in Section 8.3 or alter the consequences of any such termination from those specified in Section 8.3 .  Any determination made by the Old Hertz Holdings Board prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 3.2 shall be conclusive.

 

Section 3.3                                     The Distribution .

 

(a)                                  New Hertz Holdings shall cooperate with Old Hertz Holdings to accomplish the Distribution and shall, at the direction of Old Hertz Holdings, use its commercially reasonable efforts to promptly take any and all actions necessary or desirable to effect the Distribution.  Each of the parties will provide, or cause the applicable member of its Group to provide, to the Agent all documents and information required to complete the Distribution.

 

(b)                                  Subject to the terms and conditions set forth in this Agreement, (i) on or prior to the Distribution Date, for the benefit of and distribution to the Record Holders, Old Hertz Holdings will deliver to the Agent all of the issued and outstanding shares of New Hertz Holdings Common Stock owned by Old Hertz Holdings and book-entry authorizations for such shares and (ii) on the Distribution Date, Old Hertz Holdings shall instruct the Agent to (A) distribute to each Record Holder (or such Record Holder’s bank, brokerage firm or other nominee on such Record Holder’s behalf) electronically, by direct registration in book-entry form, the number of whole shares of New Hertz Holdings Common Stock to which such Record Holder is entitled based on the Distribution Ratio and (B) receive and hold for and on behalf of each Record Holder, the number of fractional shares, if applicable, of New Hertz Holdings Common Stock to which such Record Holder is entitled based on the Distribution Ratio.  The Distribution shall be effective at 5:00 p.m. New York City time on the Distribution Date.  On or as soon as practicable after the Distribution Date, the Agent will mail to each Record Holder an account statement indicating the number of whole shares of New Hertz Holdings Common Stock that have been registered in book-entry form in such Record Holder’s name.

 

Section 3.4                                     Fractional Shares; Unclaimed Shares .

 

(a)                                  Notwithstanding anything to the contrary herein, no fractional shares of New Hertz Holdings Common Stock shall be issued in the Distribution, and any such fractional share interests to which a Record Holder would otherwise be entitled shall not entitle such Record Holder to vote or to any other rights as a stockholder of New Hertz Holdings.  The Agent, HERC Holdings and New Hertz

 

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Holdings shall, as soon as practicable after the Distribution Date, (a) determine the number of fractional shares of New Hertz Holdings Common Stock that each Record Holder is entitled to receive in the Distribution, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then-prevailing trading prices on behalf of Record Holders to whom fractional share interests were distributed in the Distribution and (c) distribute to each such Record Holder, or for the benefit of each beneficial owner of fractional shares, such Record Holder’s or beneficial owner’s ratable share of the net proceeds of such sales, based upon the average gross selling price per share of New Hertz Holdings Common Stock after making appropriate deductions for any amount required to be withheld under applicable Tax Law and less any brokers’ charges, commissions or transfer Taxes.  The Agent, in its sole discretion, will determine the timing and method of selling such shares, the selling price of such shares and the broker-dealer to which such shares will be sold; provided , however , that the designated broker-dealer is not an Affiliate of New Hertz Holdings or HERC Holdings.  Neither HERC Holdings nor New Hertz Holdings will pay any interest on the proceeds from the sale of such shares.

 

(b)                                  With respect to shares of New Hertz Holdings Common Stock or cash in lieu of fractional shares remaining with the Agent one hundred and eighty (180) days after the Distribution Date, if any, the Agent shall deliver any such shares and/or cash as directed by New Hertz Holdings, with the consent of HERC Holdings (which consent shall not be unreasonably withheld or delayed).

 

Section 3.5                                     Sole Discretion of the Old Hertz Holdings Board .  The Old Hertz Holdings Board shall, in its sole and absolute discretion, determine the Record Date, the Distribution Date and all terms of the Distribution, including the form, structure and terms of any transactions and/or offerings to effect the Distribution and the timing of and conditions to the consummation thereof.  In addition, and notwithstanding anything to the contrary set forth herein or in any Ancillary Agreement, the Old Hertz Holdings Board, in its sole and absolute discretion, may at any time and from time to time until the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution.

 

ARTICLE IV
 FURTHER ASSURANCES; ADDITIONAL AGREEMENTS

 

Section 4.1                                     Further Assurances .

 

(a)                                  In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties shall, and shall cause its Subsidiaries to, subject to Section 3.5 , use its commercially reasonable efforts, prior to, on and after the Distribution Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Law, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements; provided , however , that neither party (nor its respective Subsidiaries) shall be obligated under this Section 4.1 to pay any consideration or surrender, release or modify any rights or remedies therefor to any Third Party.

 

(b)                                  Without limiting Section 4.1(a) , prior to, on and after the Distribution Date, each party shall, and shall cause its Subsidiaries to, cooperate with the other party and its Subsidiaries, and without any further consideration, but at the expense of the requesting party, to (i) execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including any instruments of conveyance, assignment and transfer as such party may be reasonably requested to execute and deliver to the other party, (ii) make, or cause to be made, all filings with, and obtain, or cause to be obtained, all Consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument, (iii) seek, obtain or cause to

 

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be obtained, any Governmental Approvals or other Consents required to effect the Separation or the Distribution and (iv) take all such other actions as such party may reasonably be requested to take by any other party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements, the transfers of the Hertz Assets and the HERC Holdings Assets, the assignment and assumption of the Hertz Liabilities and the HERC Holdings Liabilities and the other transactions contemplated hereby and thereby.  Without limiting Section 4.1(a) , each party shall, and shall cause its Subsidiaries to, at the reasonable request, cost and expense of any other party, take such other actions as may be reasonably necessary to vest in such other party good and marketable title, if and to the extent it is practicable to do so.

 

Section 4.2                                     Shared Liabilities .

 

(a)                                  New Hertz Holdings (or one or more members of the Hertz Group designated by New Hertz Holdings) shall be the “ Managing Party ” of each Shared Liability.  HERC Holdings shall be the “ Non-Managing Party ” of each Shared Liability.  The Managing Party shall be responsible for managing, and shall have the authority to manage, the defense and resolution (including, subject to Section 5.5(b)(iv) , settlement) of a Shared Liability.  The Non-Managing Party shall not be entitled to raise as a defense to its obligations to pay any amount in respect of any Shared Liability that the Non-Managing Party was not consulted in the response to or defense thereof (except to the extent such consultation was required under this Agreement), that such party’s views or opinions as to the conduct of such response to or defense or the reasonableness of any settlement were not accepted or adopted, that such party does not approve of the quality or manner of the response to or defense thereof or that such Shared Liability was incurred by reason of a settlement rather than by a judgment or other determination of liability.

 

(b)                                  Any amount owed in respect of any Shared Liability shall be remitted within thirty (30) days after the party entitled to such amount provides an invoice (including reasonable supporting information with respect thereto) to the party owing such amount.

 

(c)                                   The Non-Managing Party agrees, with respect to any Shared Liability or any Action or other facts related to any Shared Liability, that none of its public announcements and none of its reports filed with the SEC shall make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.  Prior to making any public statement or filing any report with the SEC that references a Shared Liability or any Action or other fact related to a Shared Liability, or responding to any comments of the SEC staff with respect thereto, the Non-Managing Party shall promptly provide the Managing Party with an opportunity to review and comment on such statement, filing or response and shall in good faith consider for inclusion in such statement, filing or response comments reasonably and timely proposed by the Managing Party; provided , however , that the Non-Managing Party shall not be obligated to provide the Managing Party with such opportunity if such statement or report contains solely disclosure with respect to the applicable Shared Liability or Action that is substantially similar in all respects to disclosure previously made in accordance with the terms hereof.  Without limiting the generality of the foregoing, if any inaccuracy or omission of information relating to any Shared Liability or any Action or other facts related to any Shared Liability is discovered by the Managing Party or the Non-Managing Party, the correction of which should be set forth in an amendment or supplement to any public statement or report filed with the SEC in order that such public statement or report not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, the Non-Managing Party shall promptly file with the SEC an appropriate amendment or supplement describing such information.

 

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Section 4.3                                     Certain Shared Contracts .  The parties shall, and shall cause their respective Subsidiaries to, use their respective commercially reasonable efforts to work together (and, if necessary and desirable, to work with the Third Party to such Shared Contract) in an effort to divide, partially assign, modify and/or replicate (in whole or in part) the respective rights and obligations under and in respect of any Shared Contract, such that (a) a member of the Hertz Group is the beneficiary of the rights and is responsible for the obligations under that portion of such Shared Contract relating to the Car Rental Business (the “ Hertz Portion ”), which rights shall be a Hertz Asset and which obligations shall be a Hertz Liability and (b) a member of the HERC Holdings Group is the beneficiary of the rights and is responsible for the obligations under that portion of such Shared Contract relating to the Equipment Rental Business (the “ HERC Holdings Portion ”), which rights shall be a HERC Holdings Asset and which obligations shall be a HERC Holdings Liability.  If the parties, or their respective Subsidiaries, as applicable, are not able to enter into an arrangement to formally divide, partially assign, modify and/or replicate such Shared Contract as contemplated by the previous sentence, then the parties shall, and shall cause their respective Subsidiaries to, cooperate in any lawful arrangement to provide that a member of the Hertz Group shall receive the interest in the benefits and obligations of the Hertz Portion under such Shared Contract and a member of the HERC Holdings Group shall receive the interest in the benefits and obligations of the HERC Holdings Portion under such Shared Contract; provided , however , that no party or its respective Subsidiaries shall be required pursuant to this Section 4.3 to (i) assign or amend any Shared Contract in its entirety or assign a portion of any Shared Contract that is not assignable or cannot be amended by its terms or (ii) pay any consideration or surrender, release or modify any rights or remedies therefor to any Third Party for the benefit of the other party or its respective Subsidiaries unless such party advances the necessary funds; provided , further , that the arrangements described in this Section 4.3 shall terminate on the termination of the applicable Shared Contract or, if later the associated Liability thereunder.

 

Section 4.4                                     Certain Shared Accounts .  Except as may otherwise be agreed by the parties and except as otherwise contemplated by any Ancillary Agreement, the parties shall not seek to assign any Shared Account.  Except as may otherwise be agreed by the parties and except as otherwise contemplated by any Ancillary Agreement, New Hertz Holdings and HERC Holdings shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause (a) the Assets associated with that portion of each Shared Account that relates to the Car Rental Business to be enjoyed by New Hertz Holdings or a member of the Hertz Group; (ii) the Liabilities associated with that portion of each Shared Account that relates to the Car Rental Business to be borne by New Hertz Holdings or a member of the Hertz Group; (iii) the Assets associated with that portion of each Shared Account that relates to the Equipment Rental Business to be enjoyed by HERC Holdings or a member of the HERC Holdings Group; and (iv) the Liabilities associated with that portion of each Shared Account that relates to the Equipment Rental Business to be borne by HERC Holdings or a member of the HERC Holdings Group; provided , however , that no party or its respective Subsidiaries shall be required pursuant to this Section 4.4 to pay any consideration or surrender, release or modify any rights or remedies therefor to any Third Party for the benefit of the other party or its respective Subsidiaries unless such party advances the necessary funds.

 

Section 4.5                                     Insurance Matters .

 

(a)                                  Until the Distribution, each member of either Group shall (i) cause itself and its employees, officers and directors to continue to be covered as insured parties under existing policies of insurance and (ii) permit the members of the other Group and their respective employees, officers and directors to submit claims arising from or relating to facts, circumstances, events or matters that occurred at or prior to the Distribution to the extent permitted under such policies.  From and after the Distribution, except as otherwise provided in this Section 4.5 and without limitation of Section 5.5(d)(v) , (A) no member of either Group will have responsibility to obtain coverage for any member of the other Group,

 

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(B) each member of either Group shall have the right to remove any member of the other Group and its employees, officers and directors as insured parties under any policy of insurance issued by any insurance carrier effective immediately following the Distribution and (C) neither party will be entitled following the Distribution to make any claims for insurance coverage under the other insurance policies of the members of the other Group to the extent such claims are based upon facts, circumstances, events or matters occurring after the Distribution.  No member of either Group shall be deemed to have made any representation or warranty as to the availability of any coverage under any such insurance policy.

 

(b)                                  After the Distribution, each member of each Group and each of their respective current, former and future directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing, shall have the right to assert claims arising from or relating to facts, circumstances, events or matters that occurred prior to the Distribution under any applicable insurance policies of the members of either Group, including if any Asset transferred pursuant to this Agreement suffers or has suffered any damage, destruction or other casualty loss that arises or has arisen prior to the Distribution and for which no insurance claim has yet been made as of the Distribution, to the extent permitted under the insurance policies up to the full available limits of such policies.  Where indemnification is not available under Article V , each member of each Group shall be responsible for pursuing and administering its own insurance claims arising from or relating to facts, circumstances, events or matters that occurred at or prior to the Distribution and any other member of either Group shall provide such reasonable cooperation as is appropriate with respect to notice of those claims and otherwise, and, with respect to those claims, in the event any member of either Group elects to pursue insurance coverage through litigation or other action against an insurer, the member pursuing such litigation or other action will be responsible for its own costs and fees in connection therewith, in addition to any and all costs as a result of making claims under any insurance provided pursuant to this Section 4.5(b) , including any deductibles and self-insured retention associated with such claims, retrospective, retroactive or prospective premium adjustments associated with the applicable insurance policies, catastrophic coverage charges, overhead, claim handling and administrative costs, Taxes, surcharges, state assessments, reinsurance costs and other related costs.  The Hertz Group or the HERC Holdings Group, as the case may be, shall have primary control over those insurance claims arising from or relating to facts, circumstances, events or matters that occurred at or prior to the Distribution for which the Hertz Group or the HERC Holdings Group, respectively, bears the underlying loss, subject to the terms and conditions of the relevant policy of insurance governing such control and the Managing Party shall have primary control over any insurance claim relating to any Shared Liability.

 

(c)                                   After the Distribution, to the extent that any claims have been duly reported at or before the Distribution under the directors and officers liability insurance policies or fiduciary liability insurance policies (collectively, “ D&O Policies ”) maintained by or for the benefit of the members of each Group and their respective directors, officers and other fiduciaries, the members of each Group shall not take any action that would limit the coverage of the individuals who acted as directors, officers or fiduciaries of any member of either Group at or prior to the Distribution under any D&O Policies maintained by or for the benefit of the members of either Group and their respective directors, officers and other fiduciaries.  The members of each Group shall reasonably cooperate with the individuals who acted as directors, officers or fiduciaries of any member of either Group at or prior to the Distribution in their pursuit of any coverage claims under such D&O Policies that could inure to the benefit of such individuals.  The members of each Group shall allow one another and their agents and representatives, upon reasonable prior notice and during regular business hours, to examine and make copies of the relevant D&O Policies and shall provide such cooperation as is reasonably requested by the members of the other Group, their directors, their officers and their fiduciaries.

 

(d)                                  Effective as of the Distribution, the existing HERC Holdings D&O Policies covering directors and officers and fiduciaries of the members of each Group will be converted to a six-

 

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year run-off policy, or a new tail policy shall be obtained having the same terms and conditions as the D&O Policies, in either case with such policy limits as shall be established by Old Hertz Holdings and covering acts or omissions occurring prior to the Distribution.  Each of the members of either Group shall be responsible for obtaining its own D&O Policies for acts or omissions occurring on or after the Distribution.  The costs and expenses associated with conversion of such existing D&O Policies to a run-off insurance policy, or obtaining a new tail policy (after application of any credit for such policy as a result of the conversion or early termination of the existing D&O Policies), shall be borne eighty-five percent (85%) by New Hertz Holdings and fifteen percent (15%) by HERC Holdings.

 

(e)                                   Nothing in this Agreement shall prohibit any member of either Group from agreeing to modify or compromise insurance rights (including by means of commutation, novation, rescission, reformation, policy buyback or otherwise) with an insurer that has been placed in liquidation, rehabilitation, conservation, supervision or similar proceedings, provided that, where those insurance rights potentially also would have benefited any member of the other Group, whether by virtue of any indemnification obligations, by virtue of any insurance rights under the policy at issue, or otherwise, then New Hertz Holdings and HERC Holdings must both agree in advance and in writing to any modification or compromise of those insurance rights.

 

Section 4.6                                     Misdirected Customer Payments and Vendor Invoices .  If after the Distribution a member of either Group receives any funds properly belonging to a member of the other Group in accordance with the terms of this Agreement or any Ancillary Agreement, the receiving Group member shall, or shall cause another member of its Group to, promptly advise HERC Holdings, if the funds belong to a member of the HERC Holdings Group, or New Hertz Holdings, if the funds belong to a member of the New Hertz Group, shall hold such funds in trust for the benefit of such other Group and shall promptly deliver such funds to an account or accounts designated in writing by HERC Holdings, if the funds belong to a member of the HERC Holdings Group, or New Hertz Holdings, if the funds belong to a member of the New Hertz Group.  If after the Distribution a member of either Group receives any invoice addressed to any member of the other Group, the receiving Group member shall, or shall cause another member of its Group to, promptly deliver to HERC Holdings, if the invoice is addressed to a member of the HERC Holdings Group, or New Hertz Holdings, if the invoice is addressed to a member of the New Hertz Group. The party receiving any misdirected payment or invoice pursuant to this Section 4.6 shall use commercially reasonable efforts to correct such misdirection with the applicable customer or vendor, as applicable.

 

ARTICLE V
 MUTUAL RELEASES; INDEMNIFICATION

 

Section 5.1                                     Release of Pre-Distribution Claims .

 

(a)                                  Except (i) as provided in Section 5.1(c) , (ii) as may be otherwise provided in this Agreement or any Ancillary Agreement and (iii) for any matter for which any Hertz Indemnified Party is entitled to indemnification pursuant to this Article V , effective as of the Distribution, New Hertz Holdings does hereby, for itself and each other Hertz Entity and their respective Affiliates, Predecessors, successors and assigns, and, to the extent New Hertz Holdings legally may, all Persons that at any time prior or subsequent to the Distribution have been stockholders, directors, officers, members, agents or employees of New Hertz Holdings or any other Hertz Entity (in each case, in their respective capacities as such), remise, release and forever discharge each HERC Holdings Entity, its Affiliates, successors and assigns, and all Persons that at any time prior to the Distribution have been stockholders, directors, officers, members, agents or employees of HERC Holdings or any other HERC Holdings Entity (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity, whether arising under any

 

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contract or agreement, by operation of Law or otherwise, existing or arising from or relating to any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, whether or not known as of the Distribution Date, including in connection with the transactions and all other activities to implement the Separation or the Distribution.

 

(b)                                  Except (i) as provided in Section 5.1(c) , (ii) as may be otherwise provided in this Agreement or any Ancillary Agreement and (iii) for any matter for which any HERC Holdings Indemnified Party is entitled to indemnification pursuant to this Article V , HERC Holdings does hereby, for itself and each other HERC Holdings Entity and its Affiliates, Predecessors, successors and assigns, and, to the extent HERC Holdings legally may, all Persons that at any time prior to the Distribution have been stockholders, directors, officers, members, agents or employees of HERC Holdings or any other HERC Holdings Entity (in each case, in their respective capacities as such), remise, release and forever discharge each Hertz Entity, their respective Affiliates, successors and assigns, and all Persons that at any time prior to the Distribution have been stockholders, directors, officers, members, agents or employees of New Hertz Holdings or any other Hertz Entity (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity, whether arising under any contract or agreement, by operation of Law or otherwise, existing or arising from or relating to any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, whether or not known as of the Distribution Date, including in connection with the transactions and all other activities to implement the Separation or the Distribution.

 

(c)                                   Nothing contained in Section 5.1(a)  or Section 5.1(b)  shall impair any right of any Person to enforce this Agreement or any Ancillary Agreement, including the applicable Schedules hereto and thereto, or any arrangement that pursuant to Section 2.3(b)  is not to terminate as of the Distribution, or any Liability with respect to any of the foregoing.  In addition, nothing contained in Section 5.1(a)  or 5.1(b)  shall release:

 

(i)                                      any Person from any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement;

 

(ii)                                   any Person from any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 5.1 ; provided , that the parties agree not to bring suit or permit any of their Subsidiaries to bring suit against any Person with respect to any Liability to the extent that such Person would be released with respect to such Liability by this Section 5.1 but for the provisions of this clause (ii); or

 

(iii)                                any Persons (other than each HERC Holdings entity and its successors and assigns and each Hertz Entity and its successors and assigns) that at any time prior to the Distribution have been current or former stockholders, directors, officers, members, agents or employees of HERC Holdings, or any other HERC Holdings Entity, or New Hertz Holdings, or any Hertz Entity (in each case, in their respective capacities as such), or their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity, whether arising under any contract or agreement, by operation of Law or otherwise, existing or arising from or relating to (A) the restatement of Old Hertz Holdings’ and The Hertz Corporation’s financial statements for the years ended December 31, 2013, 2012 and 2011, as well as for the three and six months ended June 30, 2015 (the “ Restatement ”), or any disclosure or lack of disclosure with respect to the Restatement occurring prior to the Distribution Date; (B) the breach of any duty owed to HERC Holdings, or any other HERC Holdings Entity, or New Hertz Holdings, or any Hertz Entity; (C) clawback or other recovery of compensation,

 

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including any clawback right arising under any Law, or any policy of Old Hertz Holdings, New Hertz Holdings or HERC Holdings; or (D) breach of any employment or agency contract, agreement or other arrangement.

 

(d)                                  New Hertz Holdings shall not make, and shall not permit any other Hertz Entity to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim for indemnification, against any HERC Holdings Entity, or any other Person released pursuant to Section 5.1(a) , with respect to any Liabilities released pursuant to Section 5.1(a) .  HERC Holdings shall not, and shall not permit any other HERC Holdings Entity to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim for indemnification, against any Hertz Entity, or any other Person released pursuant to Section 5.1(b) , with respect to any Liabilities released pursuant to Section 5.1(b) .

 

(e)                                   At any time, at the request of any other party, each party shall cause each member of its respective Group to execute and deliver releases in form reasonably satisfactory to the other party reflecting the provisions of this Section 5.1 .

 

(f)                                    Nothing contained in this  Section 5.1  shall release HERC Holdings, or any other HERC Holdings Entity, or New Hertz Holdings, or any Hertz Entity, from honoring its obligations existing prior to the Distribution Date to indemnify any director, officer or employee of HERC Holdings, or any other HERC Holdings Entity, or New Hertz Holdings, or any Hertz Entity, who was a director, officer or employee of Old Hertz Holdings or any Subsidiary thereof on or prior to the Distribution Date, to the extent such director, officer or employee was entitled in such capacity to such indemnification pursuant to obligations existing prior to the Distribution Date;  provided  that if a director, officer or employee of one Group receives indemnification payments from HERC Holdings, or any other HERC Holdings Entity, or New Hertz Holdings, or any Hertz Entity, as the case may be, with respect to a particular Liability for which such director, officer or employee is entitled to indemnification, such director, officer or employee shall not be entitled to receive indemnification payments from another party with respect to the same Liability to the extent of the indemnification payments previously received by such director, officer or employee from HERC Holdings, or any other HERC Holdings Entity, or New Hertz Holdings, or any Hertz Entity, as the case may be;  provided further , that (A) to the extent the events underlying an indemnification claim pursuant to the foregoing would give rise to a HERC Holdings Liability, then such indemnification claim shall be treated as a HERC Holdings Liability hereunder; (B) to the extent the events underlying an indemnification claim pursuant to the foregoing would give rise to a Hertz Liability, then such indemnification claim shall be treated as a Hertz Liability hereunder; and (C) to the extent the events underlying an indemnification claim pursuant to the foregoing would give rise to a Shared Liability, then such indemnification claim shall be treated as a Shared Liability hereunder.

 

Section 5.2                                     Indemnification by New Hertz Holdings .  Subject to Section 5.4 , Section 5.5 and Section 5.6 , following the Distribution, New Hertz Holdings shall indemnify, defend and hold harmless HERC Holdings, each HERC Holdings Entity and each of their respective current, former and future directors, officers and employees, and each of the heirs, administrators, executors, successors and assigns of any of the foregoing (collectively, the “ HERC Holdings Indemnified Parties ”), from and against any and all Liabilities of the HERC Holdings Indemnified Parties relating to, arising out of or resulting from any of the following items (with corresponding credits for recovered or reimbursed payments):

 

(a)                                  the Hertz Liabilities; and

 

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(b)                                  any breach by any Hertz Entity of this Agreement or any of the Ancillary Agreements (other than the Tax Matters Agreement and the Transition Services Agreement, each of which shall be subject to the provisions contained therein).

 

Section 5.3                                     Indemnification by HERC Holdings .  Subject to Section 5.4 , Section 5.5 and Section 5.6 , following the Distribution, HERC Holdings shall indemnify, defend and hold harmless New Hertz Holdings, each Hertz Entity and each of their respective current, former and future directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Hertz Indemnified Parties ”), from and against any and all Liabilities of the Hertz Indemnified Parties relating to, arising out of or resulting from any of the following items (with corresponding credits for recovered or reimbursed payments):

 

(a)                                  the HERC Holdings Liabilities; and

 

(b)                                  any breach by any HERC Holdings Entity of this Agreement or any of the Ancillary Agreements (other than the Tax Matters Agreement and the Transition Services Agreement, each of which shall be subject to the provisions contained therein).

 

Section 5.4                                     Notice and Payment of Direct Claims .  If any Hertz Indemnified Party or any HERC Holdings Indemnified Party (an “ Indemnified Party ”) determines that it is or may be entitled to indemnification by any party (an “ Indemnifying Party ”) under this Agreement or any Ancillary Agreement (other than in connection with any Action subject to Section 5.5 ), the Indemnified Party shall deliver to the Indemnifying Party a written notice specifying, to the extent reasonably practicable, the basis for its claim for indemnification and, if then reasonably quantifiable, the amount for which the Indemnified Party reasonably believes it is or may be entitled to be indemnified.  Within sixty (60) days after receipt of such notice, the Indemnifying Party shall pay the Indemnified Party that amount in cash or other immediately available funds unless the Indemnifying Party objects to the claim for indemnification or the amount of the claim.  If the Indemnifying Party does not give the Indemnified Party written notice objecting to that indemnity claim and setting forth in reasonable detail the grounds for the objection within such sixty (60) day period, the Indemnifying Party shall be deemed to have agreed to such indemnity claim.  If there is an objection by the Indemnifying Party, the Indemnifying Party shall pay to the Indemnified Party in cash the amount, if any, that is Finally Determined to be required to be paid by the Indemnifying Party in respect of that indemnity claim within fifteen (15) days after that indemnity claim has been so Finally Determined.

 

Section 5.5                                     Third-Party Claims .

 

(a)                                  Within ten (10) days (or sooner if the nature of the Third-Party Claim so requires) after the earlier of receipt of (i) notice that any Person (other than a Taxing Authority (as defined in the Tax Matters Agreement)) that is not a Hertz Entity or a HERC Holdings Entity (a “ Third Party ”) has commenced an Action against or otherwise involving any Indemnified Party or (ii) information from a Third Party alleging the existence of a claim against an Indemnified Party, in either case, with respect to which indemnification may be sought (in whole or in part) under this Agreement or any Ancillary Agreement (a “ Third-Party Claim ”), the Indemnified Party shall give the Indemnifying Party written notice of the Third-Party Claim, which notice shall describe the Third-Party Claim in reasonable detail and include copies of all relevant notices and documents (including court papers) received by the Indemnified Party related to such Third-Party Claim.  The failure of the Indemnified Party to give timely notice as provided in this Section 5.5 shall not relieve the Indemnifying Party of its obligations under this Agreement, except to the extent that the Indemnifying Party is actually prejudiced by the failure to give such notice.

 

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(b)                                  With respect to any Third-Party Claim that is a Shared Liability:

 

(i)                                      If the Managing Party determines in its reasonable discretion that a Third-Party Claim constitutes a Shared Liability, the Managing Party shall assume the defense of such Third-Party Claim as soon as reasonably practicable following delivery or receipt, as applicable, of the notice of such Third-Party Claim in accordance with Section 5.5(a) ; provided , however , that in the event the Managing Party has so determined that a Third-Party Claim constitutes a Shared Liability and a Dispute arises as to whether such Third-Party Claim constitutes a Shared Liability that may be assumed by the Managing Party, the Managing Party may not agree to any settlement or compromise of such Third-Party Claim without the prior written consent of the Non-Managing Party, such consent not to be unreasonably withheld, conditioned or delayed, until such time as such Dispute is resolved in accordance with the procedures set forth in Article VII ; provided , that the Managing Party may agree to any settlement or compromise without the prior written consent of the Non-Managing Party during such period if such settlement or compromise (A) contains an unconditional release of the Non-Managing Party from all claims that are the subject of such Third-Party Claim, (B) does not subject the Non-Managing Party to non-monetary relief to which the Managing Party is not also subject, and (C) does not include an admission of liability by the Non-Managing Party.  The Non-Managing Party shall cooperate, at the reasonable request of the Managing Party, in the defense of any Third-Party Claim that is a Shared Liability.  The Non-Managing Party shall have no authority to settle or compromise any Third-Party Claim that is a Shared Liability.

 

(ii)                                   (A) A party’s costs and expenses of assuming the defense of, and/or seeking to settle or compromise, any Third-Party Claim that is a Shared Liability, (B) the Non-Managing Party’s costs and expenses incurred in connection with its cooperation in the defense of any such Third-Party Claim, and (C) the Managing Party’s and Non-Managing Party’s out-of-pocket costs and expenses incurred in connection with the compliance with any non-monetary relief imposed on the parties pursuant to any settlement or other disposition of a Shared Liability in accordance with the terms hereof, in each case shall be included in the calculation of the amount of the applicable Shared Liability in determining the obligations of the parties with respect thereto.

 

(iii)                                The Managing Party shall consult with the Non-Managing Party prior to taking any action (other than a settlement or compromise, which shall be governed by clause (iv) below) with respect to any Third-Party Claim that is a Shared Liability if the Managing Party’s action could reasonably be expected to have a significant adverse impact (financial or non-financial) on the Non-Managing Party, including a significant adverse impact on the rights, obligations, operations, standing or reputation of the Non-Managing Party (or its Subsidiaries or Affiliates), and the Managing Party shall not take such action without the prior written consent of the Non-Managing Party, which consent shall not be unreasonably withheld, delayed or conditioned.

 

(iv)                               The Managing Party shall promptly give notice to the Non-Managing Party regarding the substance of any settlement related discussions or proposals with respect to any Third-Party Claim that is a Shared Liability if the resulting settlement could reasonably be expected (A) not to contain an unconditional release of the Non-Managing Party from all claims that are the subject of such Third-Party Claim, (B) to subject the Non-Managing Party to non-monetary relief to which the Managing Party is not also subject, or (C) to include an admission of liability by the Non-Managing Party (any such consent in (A), (B) or (C), a “ Consent Settlement ”).  The Managing Party shall not make any Consent Settlement without the prior written consent of the Non-Managing Party, which consent shall not be unreasonably withheld, delayed or conditioned.  In all other instances, the Non-Managing Party shall agree to any such settlement proposal.

 

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(v)                                  The parties hereby agree that if the Managing Party presents the Non-Managing Party with a proposal pursuant to clause (iii) or (iv) above and the Non-Managing Party does not respond in any manner to the Managing Party within thirty (30) days (or within any such shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the Non-Managing Party shall be deemed to have consented to the terms of such proposal.

 

(c)                                   With respect to any Third-Party Claim that is or may be a Shared Insurance Liability, New Hertz Holdings and HERC Holdings: (i) shall maintain open communications on the status of such claim; (ii) shall permit one another reasonable access to nonprivileged information on such claim; and (iii) agree, upon exhaustion of the shared pool of insurance funds, to re-balance, at least annually, the insurance recovery for such Shared Insurance Liabilities to make each Group’s share of the Insurance Proceeds proportional to such Group’s share of the total amount paid in settlements and/or judgments by insurance and the parties with respect to such Shared Insurance Liabilities.

 

(d)                                  With respect to any Third-Party Claim that is not a Shared Liability governed by Section 5.5(b) :

 

(i)                                      Within thirty (30) days after receipt of the notice given by the Indemnified Party pursuant to Section 5.5(a) , the Indemnifying Party may either (A) assume and control the defense (including claims administration) of such Third-Party Claim at its sole cost and expense by giving written notice to that effect to the Indemnified Party or (B) object to the claim for indemnification set forth in such notice.  If the Indemnifying Party does not within the thirty (30)-day period give the Indemnified Party written notice electing to assume and control the defense of such Third-Party Claim, the Indemnified Party shall have the right to continue to control the defense of such Third-Party Claim.  If the Indemnifying Party has assumed the defense of a Third-Party Claim in accordance with this Section 5.5(d)(i) , the defense of the Third-Party Claim shall be controlled by the Indemnifying Party and counsel retained by the Indemnifying Party, and the Indemnifying Party shall promptly pay or reimburse the Indemnified Party’s reasonable attorneys’ fees and other costs and expenses incurred in investigating, preparing or defending such Third Party Claim prior to the Indemnifying Party’s assumption of the defense of such Third Party Claim.

 

(ii)                                   A party may settle or compromise a Third-Party Claim of which it controls the defense with the prior consent of the other party, such consent not to be unreasonably withheld, conditioned or delayed; provided , that no such consent shall be required if the applicable settlement or compromise (A) contains an unconditional release of the other party from all claims that are the subject of such Third-Party Claim, (B) does not subject the other party to non-monetary relief to which the settling or compromising party is not also subject, and (C) does not include an admission of liability by the other party.  The parties hereby agree that if a party presents the other party with a proposal to settle or compromise a Third-Party Claim for which either party is seeking to be indemnified hereunder and the party receiving such proposal does not respond in any manner to the party presenting such proposal within thirty (30) days (or within any such shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the party receiving such proposal shall be deemed to have consented to the terms of such proposal.

 

(iii)                                An Indemnified Party that does not conduct and control the defense of any Third-Party Claim, or an Indemnifying Party that has failed to elect to defend any Third-Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as necessary) of its own choosing to monitor and participate in (but not control) the defense of any Third-Party Claim for which it is a potential Indemnified Party or Indemnifying Party, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Indemnifying Party, as the case may be.  Notwithstanding the foregoing, such party shall cooperate with the party entitled to

 

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conduct and control the defense of such Third-Party Claim in such defense in accordance with Section 6.3(b) .  In addition to the foregoing, if any Indemnified Party shall in good faith determine, upon the advice of counsel, that such Indemnified Party and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnified Party shall have the right to employ separate counsel (including local counsel as necessary) and to participate in (but not control) the defense, compromise, or settlement thereof, and the Indemnifying Party shall bear the reasonable fees and expenses of such counsel for all Indemnified Parties.

 

(iv)                               If there is a timely objection by the Indemnifying Party pursuant to Section 5.5(d)(i) , the Indemnified Party shall be entitled to exercise any remedies available under Article VII for a determination as to whether the Indemnified Party may be entitled to indemnification.  If it has been Finally Determined that the Indemnified Party is entitled to indemnification, the Indemnifying Party shall, upon request from the Indemnified Party, promptly pay to the Indemnified Party the amount of any expense, loss or other amount subject to indemnification resulting from the Third-Party Claim for which the Indemnifying Party’s responsibility has been so Finally Determined.

 

(v)                                  The Indemnified Party shall take all necessary action to keep and maintain in force all insurance that applies to any claim for which indemnification is sought.  The Indemnified Party shall also use reasonable efforts to ensure that Insurance Proceeds received with respect to claims, costs and expenses under insurance policies in force shall be paid to reduce the net exposure of the Indemnified Party.

 

Section 5.6                                     Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

 

(a)                                  Each of New Hertz Holdings (on behalf of itself and each other member of the Hertz Group) and HERC Holdings (on behalf of itself and each other member of the HERC Holdings Group) intends that any Liability subject to indemnification or reimbursement pursuant to this Agreement will be net of Insurance Proceeds and other amounts received that actually reduce the amount of the Liability for which indemnification is sought.  Accordingly, the amount which any Indemnifying Party is required to pay to any Indemnified Party will be reduced by any Insurance Proceeds and other amounts theretofore actually recovered by or on behalf of the Indemnified Party in reduction of the related Liability.  If an Indemnified Party receives a payment (an “ Indemnity Payment ”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds or other amounts therefor, then the Indemnified Party will promptly pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or other amounts had been received, realized or recovered.

 

(b)                                  In the case of any Shared Liability, any Insurance Proceeds actually received, realized or recovered by any party in respect of the Shared Liability will be shared between the Hertz Group and the HERC Holdings Group in accordance with their respective Applicable Proportions, regardless of which Group may actually receive, realize or recover such Insurance Proceeds.

 

(c)                                   An insurer that would otherwise be obligated to defend or make payment in response to any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions of this Agreement, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other Third Party shall be entitled to a “windfall” (i.e., a benefit it would not be entitled to receive in the absence of the indemnification provisions of this Agreement) by virtue of the indemnification provisions of this Agreement.  It is understood that the retention of insurance policies by an Indemnifying Party or an Indemnified Party is in

 

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no way intended to limit, inhibit or preclude any right to insurance coverage for any Liability or any other rights under any insurance policy by HERC Holdings, New Hertz Holdings or any other member of their respective Groups under any insurance policy for insurance coverage, defense, reimbursement, subrogation or otherwise.

 

Section 5.7                                     Remedies Cumulative .  The remedies provided in this Article V shall be cumulative and, subject to Article VII , shall not preclude any Indemnified Party from asserting any other rights or from seeking any and all other remedies against any Indemnifying Party.

 

Section 5.8                                     Survival of Indemnities .  The rights and obligations of each of New Hertz Holdings and HERC Holdings and their respective Indemnified Parties under this Article V shall survive (a) any party’s sale or other transfer of any Assets or businesses or assignment of any Liabilities and (b) any merger, consolidation, business combination, sale of all or substantially all Assets, restructuring, reorganization or similar transaction involving either party or any of its respective Subsidiaries.

 

ARTICLE VI
 EXCHANGE OF INFORMATION; LITIGATION MANAGEMENT;
CONFIDENTIALITY

 

Section 6.1                                     Agreement for Exchange of Information .  Prior to or as promptly as practicable after the Distribution and from time to time as reasonably requested by either party, the party receiving the request shall deliver to the requesting party: (a) any corporate books and records of any member of the requesting party’s Group in the possession of the party receiving the request or any member of its Group and (b) originals or copies of any corporate books and records of the Group of the party receiving the request that primarily relate to the requesting party’s business, its former businesses, its Assets or its Liabilities.  From and after the Distribution, all such books, records and copies (where copies are delivered in lieu of originals), whether or not delivered, shall be the property of the members of the requesting party’s Group; provided , however , that all such Information contained in such books, records or copies relating to the other party’s Group constituting Confidential Information shall be subject to the applicable confidentiality provisions and restricted use provisions contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by applicable Law.  Each party may retain copies of any original books and records delivered to the other party pursuant to this Section 6.1 ; provided , however , that all such Information contained in such books, records or copies (whether or not delivered to the requesting party) relating to the requesting party’s Group constituting Confidential Information shall be subject to the applicable confidentiality provisions and restricted use provisions contained in this Agreement or the Ancillary Agreements and any confidentiality restrictions imposed by applicable Law.

 

Section 6.2                                     Access to Information .

 

(a)                                  In addition to the provisions set forth in Section 6.1 and except in the case of an adversarial Action or threatened adversarial Action by any member of one Group against any member of the other Group (which shall be governed by such discovery rules as may be applicable thereto), from and after the Distribution and upon reasonable notice, a member of either Group may request, on behalf of itself or its representatives, at the expense of the requesting party, reasonable access and duplicating rights during normal business hours to all Information developed or obtained prior to the Distribution within the possession of any member of the other Group and to the personnel of any member of the other Group, in each case, to the extent such access relates to the requesting party or its businesses, its former businesses, its Assets or Liabilities, this Agreement or any Ancillary Agreement.  In each case, the requesting party shall cooperate with the other party to minimize the risk of unreasonable interference with the other party’s business.  The party receiving the request shall have the right to deny access to the Information if

 

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such party determines in good faith that the exchange of such Information is reasonably likely to violate any Law or binding agreement, or waive or jeopardize any attorney-client privilege or attorney work product protection; provided , however , that the parties shall, and shall cause their respective Subsidiaries to, take all reasonable measures to permit the sharing of such Information in a manner that avoids any such harm or consequence.  In the event access is granted to any Information in this Agreement or in the Ancillary Agreements to which access is restricted by Law or otherwise, the parties shall, and shall cause their respective Subsidiaries to, take such actions as are reasonably necessary, proper or advisable to have such restrictions removed or to seek an exemption therefrom or to otherwise provide the requesting party with the benefit of the Information to the same extent such actions would have been taken on behalf of the requesting party had such a restriction not existed and the Distribution not occurred.

 

(b)                                  Each of New Hertz Holdings and HERC Holdings agrees that it will only process personal data provided to it by the members of the other Group in accordance with all applicable privacy and data protection law obligations and will implement and maintain at all times appropriate technical and organizational measures to protect such personal data against unauthorized or unlawful processing and accidental loss, destruction, damage, alteration and disclosure.  In addition, each party agrees to provide reasonable assistance to the other party in respect of any obligations under privacy and data protection legislation affecting the disclosure of such personal data to the other party and will not knowingly process such personal data in such a way to cause the other party to violate any of its obligations under any applicable privacy and data protection legislation.

 

(c)                                   The parties acknowledge and agree that Information located at any off-site storage facility as of the Distribution shall continue to be held at such off-site storage facility following the Distribution pursuant to arrangements administered by New Hertz Holdings or another Hertz Entity.  HERC Holdings may from time to time request that New Hertz Holdings retrieve Information of the HERC Holdings Group and deliver such Information to HERC Holdings.  The retrieval and delivery of such Information shall be at the sole expense of HERC Holdings.  Once so removed, such Information shall be maintained by HERC Holdings and shall not be returned to New Hertz Holdings or the applicable off-site storage facility.  From and after the expiration of the applicable retention periods set forth in its record retention policy as in effect on the Distribution Date or as amended after the Distribution Date in accordance with Section 6.5 or such longer period as required by Law, no Hertz Entity shall have any further obligations with respect to Information of the HERC Holdings Group and may destroy any such Information.

 

Section 6.3                                     Litigation Management and Support; Production of Witnesses .

 

(a)                                  From and after the Distribution, New Hertz Holdings (or an applicable member of the Hertz Group) shall be responsible for managing, and shall have the authority to manage, the defense or prosecution, as applicable, and resolution (including settlement) of any Hertz Action, and HERC Holdings (or an applicable member of the HERC Holdings Group) shall be responsible for managing, and shall have the authority to manage, the defense or prosecution, as applicable, and resolution (including settlement) of any HERC Holdings Action.

 

(b)                                  Notwithstanding any provisions of Section 6.2 to the contrary, after the Distribution, each member of the Hertz Group and the HERC Holdings Group shall use commercially reasonable efforts to assist the other with respect to any Third-Party Claim or potential Third-Party Claim.  In addition, any member of either Group shall have the right to request in writing that a member of the other Group make available for consultation or witness purposes, its directors, officers, employees, consultants or agents who have expertise or knowledge with respect to the requesting party’s business or products or matters in litigation or alternative dispute resolution to the extent that the requesting party believes any such persons may reasonably be useful or required in connection with any legal,

 

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administrative or other proceedings in which the requesting party may from time to time be involved.  Upon such request, the affected members of the applicable Group shall select a person or persons to provide the requested assistance after conferring in good faith to determine which person or persons should provide such assistance.  Upon such determination, the requested party agrees to make the designated person or persons available to the requesting party upon reasonable notice to the same extent such requested party would have made such person available if the Distribution had not occurred.  The requesting party agrees to cooperate with the requested party in giving consideration to such persons’ business demands.

 

Section 6.4                                     Reimbursement .  Except to the extent otherwise contemplated by this Agreement or any Ancillary Agreement, the party requesting Information, consulting or witness services under this Article VI shall reimburse the recipient for the reasonable and documented out-of-pocket costs and expenses, if any, incurred in providing such Information, consulting or witness services to the requesting party.

 

Section 6.5                                     Retention of Records .  Except as otherwise required by Law or agreed to in writing, or as otherwise provided in this Agreement or any Ancillary Agreement, each member of the Hertz Group and each member of the HERC Holdings Group shall use its commercially reasonable efforts to retain, for the retention periods set forth in its record retention policy as in effect on the Distribution Date or as amended after the Distribution Date in accordance with the following sentence or such longer period as required by Law, this Agreement or the Ancillary Agreements, all Information in such party’s possession substantially relating to the other party or its businesses, its former businesses, its Assets or Liabilities, this Agreement or the Ancillary Agreements (the “ Retained Information ”).  Each member of the Hertz Group or the HERC Holdings Group may amend its record retention policy after the Distribution Date so long as (a) the amended policy complies with applicable Law, (b) the amended policy treats the Retained Information in the same manner as such member’s other Information and (c) the amended policy does not allow for the destruction of any Retained Information prior to the earliest date after the Distribution on which such member would have been able to destroy such Retained Information under the policy in effect as of the Distribution.

 

Section 6.6                                     Privileged Information .  In furtherance of the rights and obligations of the parties set forth in this Article VI :

 

(a)                                  Each of New Hertz Holdings (on behalf of itself and the other members of the Hertz Group) and HERC Holdings (on behalf of itself and the other members of the HERC Holdings Group) acknowledges that: (i) each member of the Hertz Group and the HERC Holdings Group has or may obtain 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 (“ Privileged Information ”); (ii) actual, threatened or future litigation, investigations, proceedings (including arbitration proceedings), claims or other legal matters have been or may be asserted by or against, or otherwise affect, some or all members of the Hertz Group or the HERC Holdings Group (“ Litigation Matters ”); (iii) members of the Hertz Group and the HERC Holdings Group have or may in the future have a common legal interest in Litigation Matters, in the Privileged Information and in the preservation of the protected status of the Privileged Information; and (iv) each of New Hertz Holdings and HERC Holdings (on behalf of itself and the other members of its Group) intends that the transactions contemplated by this Agreement and the Ancillary Agreements and any transfer of Privileged Information in connection herewith or therewith shall not operate as a waiver of any applicable privilege or protection afforded Privileged Information.

 

(b)                                  Each of New Hertz Holdings and HERC Holdings agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose or otherwise waive any privilege or

 

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protection attaching to any Privileged Information relating to a member of the other Group or relating to or arising in connection with the relationship between the Groups prior to the Distribution, without providing prompt written notice to and obtaining the prior written consent of the other, such consent not to be unreasonably withheld or delayed.

 

(c)                                   Upon any member of the Hertz Group or the HERC Holdings Group receiving any subpoena or other compulsory disclosure notice from a court, other Governmental Authority or otherwise that requests disclosure of Privileged Information belonging to a member of the other Group, the recipient of the notice shall promptly provide to HERC Holdings, in the case of receipt by a member of the Hertz Group, or to New Hertz Holdings, in the case of receipt by a member of the HERC Holdings Group, a copy of such notice, the intended response and all materials or information relating to the other Group that might be disclosed.  In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in Article VII , the members of the Hertz Group and members of the HERC Holdings Group shall cooperate to assert all defenses to disclosure claimed, at the cost and expense of the members of the Group claiming such defenses to disclosure, and shall not disclose any disputed documents or information until all legal defenses and claims of privilege have been Finally Determined.

 

Section 6.7                                     Confidentiality .

 

(a)                                  From and after the Distribution, each party will, and will cause its CI Recipients that receive Confidential Information to, hold as confidential and not disclose to any other Person any confidential and proprietary Information concerning or belonging to the members of the other Group obtained by it prior to the Distribution or furnished to it by any member of the other Group pursuant to this Agreement or any Ancillary Agreement (“ Confidential Information ”).  “Confidential Information” includes: (i) this Agreement and any Ancillary Agreement and their terms and conditions and (ii) 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 Agreement or any Ancillary Agreement, regardless of whether it is marked as “Confidential.”  “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 Agreement or any Ancillary Agreement; (ii) is known to the receiving party or its CI Recipients before disclosure under this Agreement or any Ancillary Agreement, as documented by business records (provided that information with respect to which ownership has been allocated to the disclosing party pursuant to this Agreement or any Ancillary Agreement shall constitute Confidential Information notwithstanding its prior disclosure to the receiving party or its CI Recipients); (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.

 

(b)                                  Notwithstanding Section 6.7(a) , each party may disclose the other party’s Confidential Information to its CI Recipients who reasonably need to know such information in their capacities as such, 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 6.7(c)  below; (ii) disclose this Agreement and any Ancillary Agreement as reasonably necessary in connection with efforts to resolve a Dispute; and (iii) disclose this Agreement and any Ancillary Agreement to third parties for strategic due diligence purposes if the third party has signed a confidentiality agreement covering the disclosure.

 

(c)                                   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 Governmental Authority

 

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

 

(d)                                  The receiving party shall cause all of its CI Recipients to comply with the applicable terms of this Section 6.7 and shall be fully responsible for any and all failures of such CI Recipients to comply with the terms of this Section 6.7 applicable to such CI Recipients.

 

(e)                                   The parties will, at the disclosing party’s request, use commercially reasonable efforts to, at the disclosing party’s election and expense, 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 utilized by each party, in its capacity as a receiving party of Confidential Information hereunder, may not permit the purging or deletion of data, and in such case such receiving party 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 the disclosing party for the minimum amount of time permitted by such systems and not to use such Confidential Information for any other purposes.

 

Section 6.8                                     Joint Defense .  In the event that both a member of the HERC Holdings Group and a member of the Hertz Group are defendants in the same proceeding, upon reasonable request, the appropriate member or members of each such Group shall enter into a written joint defense agreement in a form reasonably acceptable to such parties.

 

ARTICLE VII
 DISPUTE RESOLUTION

 

Section 7.1                                     Step Process .  Except with respect to the Tax Matters Agreement, which shall be subject to the provisions contained therein, any controversy or claim arising out of or relating to this Agreement or any Ancillary Agreements, or the breach thereof (a “ Dispute ”), shall be resolved: (a) first, by negotiation as provided in Section 7.2(a) ; (b) then, if negotiation fails, by mediation as provided in Section 7.2(b) ; and (c) then, if negotiation and mediation fail, by binding arbitration as provided in Section 7.2(c) .  Each party agrees on behalf of itself and each member of its respective Group that the procedures set forth in this Article VII shall be the exclusive means for resolution of any Dispute.  The initiation of mediation or arbitration hereunder will toll the applicable statute of limitations for the duration of any such proceedings.

 

Section 7.2                                     Negotiation; Mediation; Arbitration .

 

(a)                                  Promptly following the date hereof, each party shall distribute to the other a list (as supplemented and amended, the “ Executive List ”) setting forth by name and title the senior executives with the requisite authority to resolve any Dispute that should arise with respect to each of this Agreement and the Ancillary Agreements (other than the Tax Matters Agreement), and his or her contact

 

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information.  Each party may supplement and amend the Executive List from time to time by providing written notice to the other party.  The parties shall attempt in good faith to resolve in the normal course of business any Dispute promptly by negotiation between senior executives set forth on the Executive List. Any party may give the other party written notice of any Dispute not resolved in the normal course of business (a “ Dispute Notice ”). Within fifteen (15) days after delivery of such Dispute Notice, the receiving party shall submit to the other a written response to the Dispute. The Dispute Notice and response shall include (i) a written statement of that party’s position and a summary of facts, documents and arguments supporting that position and (ii) the identification of the executive and his or her title and any other persons that will accompany the executive to discuss and attempt to resolve the Dispute.  Within thirty (30) days after delivery of the initial Dispute Notice, the executives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the Dispute. All reasonable requests for information made by one party to the other will be honored.  All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

 

(b)                                  If a Dispute has not been resolved by negotiation as provided in Section 7.2(a)  above within forty-five (45) days after delivery of the initial Dispute Notice requesting negotiation, or if the parties failed to meet within thirty (30) days after delivery of the initial Dispute Notice, the parties shall endeavor to settle the Dispute by nonbinding mediation in accordance with the CPR Institute for Dispute Resolution (“ CPR ”) Mediation Procedure then currently in effect; provided , however , that if one party fails to participate in the negotiation as provided in this Section 7.2(a)  above, the other party can initiate mediation prior to the expiration of the forty-five (45) day period (the date on which either party may or shall be obligated to submit to mediation being referred to herein as the “ Mediation Trigger Date ”). Unless otherwise agreed, the parties will select a mediator from the CPR Panels of Distinguished Neutrals.  The parties shall select the mediator within thirty (30) days after the Mediation Trigger Date and will conduct the mediation within forty-five (45) days after the selection of the mediator.

 

(c)                                   Any Dispute which has not been resolved pursuant to Section 7.2(a)  or Section 7.2(b)  above within the time frames set forth therein, shall be finally resolved by arbitration in accordance with this Section 7.2(c) ; provided , however , that if one party fails to participate in either the negotiation or mediation as agreed herein, the other party can commence arbitration prior to the expiration of the time periods set forth above.  New Hertz Holdings and HERC Holdings will agree upon the rules of the arbitration prior to the arbitration and based upon the nature of the Dispute. To the extent that the parties cannot agree on the rules of the arbitration, then the CPR Rules for Non-Administered Arbitrations in effect at the time arbitration is sought or invoked will apply.  The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof.  As a minimum set of rules in the arbitration the Parties agree as follows:

 

(i)                                      The arbitration shall be held before a single arbitrator if the amount at stake is less than $10,000,000, in which case the parties will work together to select an arbitrator that is mutually satisfactory to both parties.  If the parties are unable to reach agreement as to the selection of the single arbitrator within thirty (30) days, then the single arbitrator will be chosen by CPR from CPR’s Panels of Distinguished Neutrals.  The arbitrator will be knowledgeable regarding the businesses of the parties or otherwise be acceptable to the parties.  The arbitration shall be held before a panel of three arbitrators if the amount at stake is greater than or equal to $10,000,000, in which case the panel will consist of one arbitrator selected by New Hertz Holdings, the other selected by HERC Holdings, and the third selected by those two arbitrators.  If the party-appointed arbitrators cannot agree on a third arbitrator within thirty (30) days of their appointment, then the third arbitrator shall be chosen by CPR from CPR’s Panels of Distinguished Neutrals, which arbitrator shall be knowledgeable regarding the businesses of the parties or the nature of the Dispute.

 

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(ii)                                   The decision of the arbitrator(s) will be considered as a final and binding resolution of the disagreement, will not be subject to appeal and may be entered as an order in any court of competent jurisdiction in the United States; provided that this Agreement confers no power or authority upon the arbitrators to render any decision that is based on clearly erroneous findings of fact, that manifestly disregards the Law, or exceeds of the powers of the arbitrator(s), and no such decision will be eligible for confirmation. Each party agrees to submit to the jurisdiction of any such court for purposes of the enforcement of any such order.  No party will sue the other except for enforcement of the arbitrators’ decision if the other party is not performing in accordance with the arbitrators’ decision. The provisions of this Agreement will be binding on the arbitrators.

 

(iii)                                Any arbitration proceeding will be conducted on a confidential basis.

 

(iv)                               The arbitrators’ discretion to fashion remedies hereunder will be no broader or narrower than the legal and equitable remedies available to a court, unless the parties expressly state elsewhere in this Agreement or any Ancillary Agreement that parties will be subject to broader or narrower legal and equitable remedies than would be available under the Law governing this Agreement or any Ancillary Agreement.

 

(v)                                  The place of arbitration shall be New York, New York, unless the parties mutually agree to hold the arbitration in another location.

 

(vi)                               The arbitrator is authorized to streamline the proceedings, limit discovery, limit the number of witnesses, and provide for hearings and reports submitted by teleconference or video conference to minimize travel times, costs and expenses and to accommodate schedules.

 

Section 7.3                                     Equitable Relief .  Nothing in this Article VII will prevent either party from resorting to judicial proceedings if interim or other equitable relief from a court is necessary to prevent irreparable damages to a party.

 

Section 7.4                                     Expenses .  Each party shall bear its own costs, expenses and attorneys’ fees in pursuit and resolution of any Dispute and shall share equally the fees of the mediator or arbitrator(s).

 

ARTICLE VIII
 MISCELLANEOUS

 

Section 8.1                                     Coordination with Ancillary Agreements; Conflicts .  Except as otherwise expressly provided in this Agreement, in the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of an Ancillary Agreement, the provisions of the Ancillary Agreement shall control over the inconsistent provisions of this Agreement as to matters specifically addressed in the Ancillary Agreement.  The Tax Matters Agreement shall govern all matters (including any indemnities and payments among the parties and each other member of their respective Groups and the allocation of any rights and obligations pursuant to agreements entered into with Third Parties) relating to Taxes or otherwise specifically addressed in the Tax Matters Agreement.

 

Section 8.2                                     Expenses .  Except as otherwise expressly provided in this Agreement or in any Ancillary Agreement, the fees, costs and expenses paid or incurred by any member of either Group prior to the Distribution in connection with the Separation and the Distribution and the performance of this Agreement and any Ancillary Agreement (the “ Distribution Expenses ”), shall be shared as follows: (a) Distribution Expenses paid or incurred to enable HERC Holdings and the HERC Group to operate as a standalone consolidated entity shall be allocated one hundred percent (100%) to HERC Holdings; (b)

 

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Distribution Expenses paid or incurred that constitute costs, expenses and commissions associated with establishing debt facilities or incurring indebtedness in connection with the Distribution shall be allocated one hundred percent (100%) to the party establishing such facilities or incurring such indebtedness; and (c) all general Distribution Expenses paid or incurred but not allocated in accordance with (a) or (b) above shall be allocated eighty-five percent (85%) to New Hertz Holdings and fifteen percent (15%) to HERC Holdings.  Except as otherwise expressly set forth in this Agreement or in any Ancillary Agreement, all other fees, costs and expenses paid or incurred in connection with the Separation and the Distribution and the performance of this Agreement and any Ancillary Agreement, whether performed by a Third Party or internally, will be paid by the party incurring such fees or expenses.  For the avoidance of doubt, to the extent not accrued prior to the Distribution, (a) HERC Holdings will be responsible for (i) any transfer fees (including any pricing increases) related to the transfer of any HERC Holdings Assets to any member of the HERC Holdings Group (including all fees and expenses payable by a member of either Group in connection with the transfer of any Assets pursuant to clause (d) of the definition of “HERC Holdings Assets”), (ii) the cost of any replacement for any Asset that is not a HERC Holdings Asset and (iii) all costs, expenses and commissions associated with the HERC Credit Facility and HERC Financing Arrangements and (b) New Hertz Holdings will be responsible for (i) any fees to the NYSE, (ii) any transfer fees (including any pricing increases) related to the transfer of any Hertz Assets to any member of the Hertz Group (including all fees and expenses payable by a member of either Group in connection with the transfer of any Assets pursuant to clause (d) of the definition of “Hertz Assets”), (iii) the cost of any replacement for any Asset that is not a Hertz Asset and (iv) all costs, expenses and commissions associated with the New Hertz Financing Arrangements.

 

Section 8.3                                     Termination .  This Agreement and any Ancillary Agreement may be terminated by the Old Hertz Holdings Board, in its sole and absolute discretion, at any time prior to the Distribution.  In the event of any termination of this Agreement prior to the Distribution, no party (or any member of its Group or any of its or their respective directors or officers) shall have any Liability or further obligation to any other party (or any member of its Group) with respect to this Agreement or such Ancillary Agreement.

 

Section 8.4                                     Third Party Beneficiaries .  Except as otherwise provided (a) hereunder in Article V with respect to Indemnified Parties and in Section 5.1 with respect to the release of any Person pursuant thereto, or (b) otherwise in any Ancillary Agreement with respect to Third Parties entitled to indemnification thereunder, nothing contained in this Agreement or any Ancillary Agreement shall be construed to create any third-party beneficiary rights in any individual.

 

Section 8.5                                     Entire Agreement; No Reliance; Amendment .  This Agreement (including all Schedules hereto) and the Ancillary Agreements constitute the entire agreement with respect to the subject matter hereof, and any prior agreements, oral or written, are no longer effective, except as otherwise set forth herein. In deciding whether to enter into this Agreement and the Ancillary Agreements, the parties have not relied on any representations, statements, or warranties other than those explicitly contained in this Agreement and the Ancillary Agreements. No amendments or modifications to this Agreement or any Ancillary Agreements are valid unless in writing, signed by both parties to such agreement.

 

Section 8.6                                     Waiver .  Except as otherwise provided in this Agreement or any Ancillary Agreement, neither party waives any rights under this Agreement or any Ancillary Agreement by delaying or failing to enforce such rights.  No waiver by any party of any breach or default hereunder or under any Ancillary Agreement 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.

 

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Section 8.7                                     Notices .  All notices or other communications required to be sent or given under this Agreement or any Ancillary 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.
8501 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
Attention: Maryann Waryjas
Fax: (239) 301-1109
E-mail: mwaryjas@hertz.com

 

Section 8.8                                     Counterparts .  This Agreement and any Ancillary 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 Agreement or any Ancillary Agreement and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement or any Ancillary Agreement as to the parties hereto and may be used in lieu of the original version of this Agreement or any Ancillary Agreement for all purposes.  Signatures of the parties hereto or to any Ancillary Agreement transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 8.9                                     Severability .  If any provision of this Agreement or any Ancillary 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 Agreement or any Ancillary Agreement. Upon such determination that a provision is invalid or unenforceable, the parties will negotiate in good faith to modify this Agreement or the applicable Ancillary Agreement so as to effect the original intent of the parties as closely as possible.

 

Section 8.10                              Interpretation .  When a reference is made in this Agreement to a Section, Article, Annex, Schedule or Exhibit, such reference shall be to a Section, Article, Annex, Schedule or Exhibit of this Agreement unless otherwise indicated.  The table of contents and headings contained in this Agreement or in any Exhibit are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  All words used in this Agreement will be construed to be of such gender or number as the circumstances require.  Any capitalized terms used in any Schedule, Annex or Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement

 

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or the Ancillary Agreement to which such Schedule, Annex or Exhibit is attached, as applicable.  All Schedules, Annexes and Exhibits annexed hereto or referred to in this Agreement are hereby incorporated in and made a part of this Agreement as if set forth in this Agreement.  The provisions of this 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.

 

Section 8.11                              Governing Law .  This Agreement and any Ancillary Agreements and all disputes or controversies arising out of or relating to this Agreement or any Ancillary Agreements or the transactions contemplated hereby or thereby 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 8.12                              Assignment .  Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated, in whole or in part, by operation of Law or otherwise, by any party without the prior written consent of the other party to this Agreement, and any such assignment without such prior written consent shall be null and void; provided , however , that if any party to this Agreement (or any of its successors or permitted assigns) (a) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (b) shall transfer all or substantially all of its properties and/or Assets to any Person, then, and in each such case, the party (or its successors or permitted assigns, as applicable) shall ensure that such Person assumes all of the obligations of such party (or its successors or permitted assigns, as applicable) under this Agreement, in which case the consent described in the previous sentence shall not be required; provided , further , that no permitted assignment pursuant to this Section 8.12 shall release the assigning party from liability for the full performance of its obligations under this Agreement.

 

Section 8.13                              Payment .  Except as expressly provided in this Agreement or any Ancillary Agreement, (a) any amount payable pursuant to this Agreement or any Ancillary Agreement by one party (or any member of such party’s Group) shall be paid within thirty (30) days after presentation of an invoice or a written demand by the party entitled to receive such payments, which demand shall include documentation setting forth in reasonable detail the basis for the amount payable, and (b) any payment not made within thirty (30) days of the written demand for such payment shall 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 8.14                              Parties’ Obligations .  Except as expressly provided in this Agreement or any Ancillary Agreement, each of New Hertz Holdings (on behalf of itself and the other members of the Hertz Group) and HERC Holdings (on behalf of itself and the other members of the HERC Holdings Group) acknowledges and agrees that such party’s obligations under this Agreement shall include obligations of each member of its respective Group and each of its and their respective employees.  Each of New Hertz Holdings and HERC Holdings agrees to cause the members of its Group to take any action or refrain from taking any action required of such members under this Agreement and any Ancillary Agreement.

 

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

 

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IN WITNESS WHEREOF, the parties have caused this Separation and Distribution 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 Separation and Distribution Agreement]

 


Exhibit 3.1

 

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
HERTZ RENTAL CAR HOLDING COMPANY, INC.

 

HERTZ RENTAL CAR HOLDING COMPANY, INC., a corporation organized and existing under the laws of the State of Delaware (the “ Corporation ”), hereby certifies as follows:

 

1.                     The name of the Corporation is Hertz Rental Car Holding Company, Inc.  The name of the Corporation will change to Hertz Global Holdings, Inc. when this Amended and Restated Certificate of Incorporation becomes effective.

 

2.                     The original Certificate of Incorporation was filed on August 28, 2015.

 

3.                     This Amended and Restated Certificate of Incorporation was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware and by the written consent of its sole stockholder in accordance with Section 228 of the General Corporation Law of the State of Delaware, and is to become effective as of 5:00 p.m. Eastern Time on June 30, 2016.

 

4.                     This Amended and Restated Certificate of Incorporation amends and restates the Certificate of Incorporation to read in its entirety as follows:

 

FIRST.  Name .  The name of the Corporation is Hertz Global Holdings, Inc.

 

SECOND.  Registered Office; Registered Agent .  The Corporation’s registered office in the State of Delaware is located at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle 19801.  The name of its registered agent at such address is The Corporation Trust Company.

 

THIRD.  Purpose .  The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

 

FOURTH.  Capital Stock .  The total number of shares of stock which the Corporation shall have authority to issue is 440,000,000 shares, consisting of:  (x) 400,000,000 shares of common stock, par value $0.01 per share (the “ Common Stock ”), and (y) 40,000,000 shares of preferred stock, par value $0.01 per share (the “ Preferred Stock ”), issuable in one or more series as hereinafter provided.

 

(a)  Common Stock .  Except as may otherwise be provided in this Amended and Restated Certificate of Incorporation, in a Preferred Stock Designation (as hereinafter defined), or as required by law, the holders of outstanding shares of Common Stock shall have the right to vote on all questions to the exclusion of all other stockholders, each holder of record of Common Stock being entitled to one vote for each share of Common Stock standing in the name of the stockholder on the books of the Corporation.

 



 

(b)  Preferred Stock .  Shares of Preferred Stock may be issued from time to time in one or more series.  The Board of Directors of the Corporation (the “ Board of Directors ”) (or any committee to which it may duly delegate the authority granted in this Article Fourth) is hereby empowered to authorize the issuance from time to time of shares of Preferred Stock in one or more series, for such consideration and for such corporate purposes as the Board of Directors (or such committee thereof) may from time to time determine, and by filing a certificate (hereinafter referred to as a “ Preferred Stock Designation ”) pursuant to applicable law of the State of Delaware as it presently exists or may hereafter be amended to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof to the fullest extent now or hereafter permitted by this Amended and Restated Certificate of Incorporation and the laws of the State of Delaware, including, without limitation, voting rights (if any), dividend rights, dissolution rights, conversion rights, exchange rights and redemption rights thereof, as shall be stated and expressed in a resolution or resolutions adopted by the Board of Directors (or such committee thereof) providing for the issuance of such series of Preferred Stock.  The authority of the Board of Directors (or such committee thereof) with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:

 

(i)                                      the designation of the series, which may be by distinguishing number, letter or title;

 

(ii)                                   the number of shares of the series, which number the Board of Directors (or such committee thereof) may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding);

 

(iii)                                the amounts payable on and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative;

 

(iv)                               the dates on which dividends, if any, shall be payable;

 

(v)                                  the redemption rights and price or prices, if any, for shares of the series;

 

(vi)                               the terms and amount of any sinking fund provided for the purchase or redemption of shares of the series;

 

(vii)                            the amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

 

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(viii)                         whether the shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series or such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made;

 

(ix)                               restrictions on the issuance of shares of the same series or of any other class or series; and

 

(x)                                  the voting rights, if any, of the holders of shares of the series.

 

FIFTH.  Management of Corporation.  The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and for the purpose of creating, defining, limiting and regulating the powers of the Corporation and its directors and stockholders:

 

(a)  The directors of the Corporation, subject to any rights of the holders of shares of any class or series of Preferred Stock to elect directors, shall be elected by the stockholders entitled to vote thereon at each annual meeting of stockholders and shall hold office until the next annual meeting of stockholders and until each of their successors shall have been elected and qualified.

 

(b)  Subject to any special rights of any holders of any class or series of Preferred Stock to elect directors, the precise number of directors of the Corporation shall be fixed, and may be altered from time to time, only by resolution of the Board of Directors.  No decrease in the number of directors shall shorten the term of any incumbent director.

 

(c)  Subject to this Article Fifth, the election of directors may be conducted in any manner approved by the officer of the Corporation presiding at a meeting of the stockholders or the directors, as the case may be, at the time when the election is held and need not be by written ballot.

 

(d)  All corporate powers and authority of the Corporation (except as at the time otherwise provided by law, by this Amended and Restated Certificate of Incorporation or by the By-Laws) shall be vested in and exercised by the Board of Directors.

 

(e)  The Board of Directors shall have the power without the assent or vote of the stockholders to adopt, amend, alter or repeal the By-Laws of the Corporation.

 

(f)  To the fullest extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended, a director of the

 

3



 

Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.  If the General Corporation Law of the State of Delaware is amended after the date of the filing of this Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended from time to time.  Any amendment or repeal of this clause (f) of this Article Fifth shall not adversely affect any right or protection of a director of the Corporation existing at the time of such amendment or repeal.

 

(g)  To the fullest extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended, the Corporation shall indemnify and advance expenses to the directors of the Corporation, provided that, except as otherwise provided in the By-Laws of the Corporation, the Corporation shall not be obligated to indemnify or advance expenses to a director of the Corporation in respect of an action, suit or proceeding (or part thereof) instituted by such director, unless such action, suit or proceeding (or part thereof) has been authorized by the Board of Directors.  The rights provided by this clause (g) of this Article Fifth shall not limit or exclude any rights, indemnities or limitations of liability to which any director of the Corporation may be entitled, whether as a matter of law, under the By-Laws of the Corporation, by agreement, vote of the stockholders, approval of the directors of the Corporation or otherwise.  Any amendment or repeal of this clause (g) of this Article Fifth shall not adversely affect any right or protection of a director of the Corporation existing at the time of such amendment or repeal.

 

SIXTH.  Stockholder Action by Written Consent; Stockholder Nominations and Proposals .  Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.  The By-Laws may establish procedures, in addition to those specified in Article Seventh, regulating the submission by stockholders of nominations and proposals for consideration at meetings of stockholders of the Corporation.

 

SEVENTH.  Special Meetings .

 

(a) Subject to the terms of any class or series of Preferred Stock and except as required by law, special meetings of the stockholders of the Corporation may be called only by: (i) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption); (ii) the Chair of the Board; (iii) the Chief Executive Officer; and shall be held at such place, if any, and on such date, and at such time as they shall fix; or (iv) subject to the provisions of this Article Seventh and the other applicable provisions of this Amended and Restated Certificate of Incorporation, a special meeting of the stockholders shall be called by the Secretary of

 

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the Corporation upon the written request (a “ Stockholder Requested Special Meeting ”) of one or more stockholders of record of the Corporation that together have continuously held, for their own account or on behalf of others, beneficial ownership of at least a thirty-five percent (35%) “net long position” of the outstanding Common Stock (the “ Requisite Percent ”) for at least thirty (30) days as of the Delivery Date (as defined below).

 

(b)  For purposes of determining the Requisite Percent, “net long position” shall be determined with respect to each requesting holder in accordance with the definition thereof set forth in Rule 14e-4 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”); provided , that (x) for purposes of such definition, (1) “the date that a tender offer is first publicly announced or otherwise made known by the bidder to the holders of the security to be acquired” shall be the date of the relevant Special Meeting Request (as defined below), (2) the “highest tender offer price or stated amount of the consideration offered for the subject security” shall refer to the closing sales price of the Common Stock on the New York Stock Exchange (or such other securities exchange designated by the Board of Directors if the Common Stock is not listed for trading on the New York Stock Exchange) on such date (or, if such date is not a trading day, the next succeeding trading day), (3) the “person whose securities are the subject of the offer” shall refer to the Corporation, and (4) a “subject security” shall refer to the outstanding Common Stock; and (y) the “net long position” of such holder shall be reduced by the number of shares of Common Stock as to which the Board of Directors determines that such holder does not, or will not, have the right to vote or direct the vote at the special meeting or as to which the Board of Directors determines that such holder has entered into any derivative or other agreement, arrangement or understanding that hedges or transfers, in whole or in part, directly or indirectly, any of the economic consequences of ownership of such shares.

 

(c)  Whether the requesting holders have complied with the requirements of this Article Seventh and related provisions of this Amended and Restated Certificate of Incorporation shall be determined in good faith by the Board of Directors, which determination shall be conclusive and binding on the Corporation and its stockholders.

 

(d)  In order for a Stockholder Requested Special Meeting to be called, one or more requests for a special meeting (each, a “ Special Meeting Request ,” and collectively, the “ Special Meeting Requests ”) must be signed by the Requisite Percent of stockholders submitting such request and by each of the beneficial owners, if any, on whose behalf the Special Meeting Request is being made and must be delivered to the Secretary of the Corporation.  The Special Meeting Request(s) shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation by overnight express courier or registered mail, return receipt requested.  Each Special Meeting Request shall (i) set forth a statement of the specific purpose(s) of the meeting and the matters proposed to be acted on at it, (ii) bear the date of signature of each such stockholder signing the Special Meeting Request, (iii) set forth (1) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request and the beneficial owners, if any, on whose behalf such request is made, and

 

5



 

(2) the class, if applicable, and the number of shares of Common Stock that are owned of record and beneficially (within the meaning of Rule 13d-3 under the Exchange Act) by each such stockholder and the beneficial owners, if any, on whose behalf such request is made, (iv) include documentary evidence that the stockholders requesting the special meeting own the Requisite Percent as of the Delivery Date; provided , that if the stockholders are not the beneficial owners of the shares constituting all or part of the Requisite Percent, then to be valid, the Special Meeting Request must also include documentary evidence (or, if not simultaneously provided with the Special Meeting Request, such documentary evidence must be delivered to the Secretary of the Corporation within ten (10) days after the Delivery Date) that the beneficial owners on whose behalf the Special Meeting Request is made beneficially own such shares as of the Delivery Date, (v) an agreement by each of the stockholders requesting the special meeting and each beneficial owner, if any, on whose behalf the Special Meeting Request is being made to notify the Corporation promptly in the event of any decrease in the “net long position” held by such stockholder or beneficial owner following the delivery of such Special Meeting Request and prior to the special meeting and an acknowledgement that any such decrease shall be deemed to be a revocation of such Special Meeting Request by such stockholder or beneficial owner to the extent of such reduction, and (vi) contain all of the information required by the By-Laws to be disclosed pursuant to the By-Laws as if the stockholders requesting the special meeting and the beneficial owners, if any, on whose behalf the Special Meeting Request is being made were proposing business to be considered at an annual meeting of stockholders, provided that (1) all references to “Proposing Person” in the By-Laws shall, for purposes of this clause (d) of this Article Seventh, mean (x) the stockholders of record making the Special Meeting Request and (y) any beneficial owner or beneficial owners, if different, on whose behalf the Special Meeting Request is being made and (2) all references to “Associated Person” in the By-Laws shall, for purposes of this clause (d) of this Article Seventh, mean any affiliate or associate (each within the meaning of Rule 12b-2 under the Exchange Act for purposes of these By-Laws) of a Proposing Person.  The stockholders of record and beneficial owners making the Special Meeting Request shall update the information required by clause (d)(vi) of this Article Seventh at such times and in the manner contemplated by the By-Laws as if the stockholders requesting the special meeting and the beneficial owners, if any, on whose behalf the Special Meeting Request is being made were proposing business to be considered at an annual meeting of stockholders.  Each stockholder making a Special Meeting Request and each beneficial owner, if any, on whose behalf the Special Meeting Request is being made is required to update the notice delivered pursuant to this Article Seventh in accordance with the applicable provisions of the By-Laws.  Any requesting stockholder may revoke his, her or its Special Meeting Request at any time prior to the special meeting by written revocation delivered to the Secretary of the Corporation at the principal executive offices of the Corporation.  If at any time after sixty (60) days following the earliest dated Special Meeting Request, the unrevoked (whether by specific written revocation by the stockholder or pursuant to clause (d)(v) of this Article Seventh) valid Special Meeting Requests represent in the aggregate less than the Requisite Percent, then the requesting stockholder(s) or beneficial owner(s) shall be deemed to have withdrawn such request (in connection

 

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with which the Board of Directors may cancel the meeting).

 

In determining whether a special meeting of stockholders has been requested by stockholders holding in the aggregate at least the Requisite Percent, multiple Special Meeting Requests delivered to the Secretary of the Corporation will be considered together only if each Special Meeting Request identifies substantially the same purpose or purposes of the special meeting and substantially the same matters proposed to be acted on at the special meeting (in each case as determined in good faith by the Board of Directors), and such Special Meeting Requests have been delivered to the Secretary of the Corporation within sixty (60) days of the earliest dated Special Meeting Request.

 

(e)  Except as provided in the next sentence, a special meeting requested by stockholders shall be held at such date, time and place within or without the State of Delaware as may be fixed by the Board of Directors; provided , however , that the date of any such special meeting shall be not more than ninety (90) days after the date on which valid Special Meeting Request(s) constituting the Requisite Percent are delivered to the Secretary of the Corporation (such date of delivery being the “ Delivery Date ”).  Notwithstanding the foregoing, the Secretary of the Corporation shall not be required to call a special meeting of stockholders if (i) the Board of Directors calls an annual meeting of stockholders, or a special meeting of stockholders at which a Similar Item (as defined below) is to be presented pursuant to the notice of such meeting, in either case to be held not later than sixty (60) days after the Delivery Date; (ii) the Delivery Date is during the period commencing one hundred twenty (120) days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the earlier of (1) the date of the next annual meeting and (2) thirty (30) days after the first anniversary of the date of the immediately preceding annual meeting; or (iii) the Special Meeting Request(s) (1) contain an identical or substantially similar item (as determined in good faith by the Board of Directors, a “ Similar Item ”) to an item that was presented at any meeting of stockholders held not more than one hundred and twenty (120) days before the Delivery Date (and for purposes of this clause (iii), the election of directors shall be deemed a Similar Item with respect to all items of business involving the election or removal of directors); (2) relate to an item of business that is not a proper subject for action by the stockholders under applicable law and this Article Seventh; (3) were made in a manner that involved a violation of Regulation 14A under the Exchange Act or other applicable law; or (4) do not comply with the provisions of this Article Seventh.

 

(f)  Business transacted at any Stockholder Requested Special Meeting shall be limited to the purpose(s) stated in the Special Meeting Request for such special meeting; provided , that the Board of Directors shall have the authority in its discretion to submit additional matters to the stockholders and to cause other business to be transacted pursuant to the Corporation’s notice of meeting.  If none of the stockholders who submitted a Special Meeting Request appears (in person or by proxy) at or sends a duly authorized representative to the Stockholder Requested Special Meeting to present the matters to be presented for consideration that were specified in the Special

 

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Meeting Request, the Corporation need not present such matters for a vote at such meeting.

 

EIGHTH.  Section 203 of the General Corporation Law .  The Corporation elects not to be governed by Section 203 of the General Corporation Law of the State of Delaware.

 

NINTH.  Rights Plans .  Any Rights Plan adopted by the Board of Directors shall have a triggering “Acquiring Person” ownership threshold of 20% or higher.  If the Board of Directors adopts a Rights Plan, such Rights Plan will be put to a vote of stockholders within 135 days of the date of adoption of such Rights Plan (the “ 135th Day Deadline ”).  If the Company fails to hold a stockholder vote on or prior to the 135th Day Deadline, then the Rights Plan shall automatically terminate on the 135th Day Deadline.  If a stockholder vote is held on the Rights Plan and it is not approved by the holders of a majority of shares voted, then the Rights Plan shall expire on a date not later than the 135th Day Deadline.  The term “ Rights Plan ” shall mean any plan or arrangement of the sort commonly referred to as a “rights plan” or “stockholder rights plan” or “shareholder rights plan” or “poison pill” that is designed to increase the cost to a potential acquirer of exceeding the applicable ownership thresholds through the issuance of new rights, common stock or preferred stock (or any other security or device that may be issued to stockholders of the Corporation other than ratably to all stockholders of the Corporation) that carry severe redemption provisions, favorable purchase provisions or otherwise, and any related rights agreement that effectuates the Rights Plan.

 

TENTH.  Exclusive Forum .  Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the General Corporation Law of the State of Delaware or this Amended and Restated Certificate of Incorporation or the By-Laws (as either may be amended from time to time), or (d) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).  Any person or entity purchasing or otherwise acquiring any interests in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article Tenth.

 

ELEVENTH.  Amendment .  In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware as they presently exist or may be amended, the Corporation may from time to time alter, amend, repeal or adopt, in whole or in part, any provisions of this Amended and Restated Certificate of Incorporation.

 

8



 

IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Amended and Restated Certificate of Incorporation of the Corporation on the 30th day of June, 2016. HERTZ GLOBAL HOLDINGS, INC.

 

 

HERTZ RENTAL CAR HOLDING COMPANY, INC.

 

 

 

 

 

 

 

By

/s/ Richard J. Frecker

 

 

Name:

Richard J. Frecker

 

 

Title:

Senior Vice President, Deputy General Counsel, Secretary and Acting General Counsel

 

9


Exhibit 3.2

 

 

HERTZ GLOBAL HOLDINGS, INC.

 

AMENDED AND RESTATED BY-LAWS

 

 



 

Table of Contents

 

Section

 

Page

 

 

 

ARTICLE I STOCKHOLDERS

 

1

 

 

 

Section 1.01. Annual Meetings

 

1

Section 1.02. Special Meetings

 

1

Section 1.03. Participation in Meetings by Remote Communication

 

1

Section 1.04. Notice of Meetings; Waiver of Notice

 

1

Section 1.05. Quorum

 

2

Section 1.06. Voting

 

2

Section 1.07. Voting Lists

 

2

Section 1.08. Adjournment

 

3

Section 1.09. Proxies

 

3

Section 1.10. Organization; Procedure; Inspection of Elections

 

3

Section 1.11. No Stockholder Action by Written Consent

 

4

Section 1.12. Notice of Stockholder Business and Nominations

 

4

 

 

 

ARTICLE II BOARD OF DIRECTORS

 

10

 

 

 

Section 2.01. General Powers

 

10

Section 2.02. Number and Term of Office

 

11

Section 2.03. Annual and Regular Meetings: Notice

 

11

Section 2.04. Special Meetings; Notice

 

12

Section 2.05. Quorum

 

12

Section 2.06. Voting

 

12

Section 2.07. Adjournment

 

12

Section 2.08. Action Without a Meeting

 

12

Section 2.09. Regulations; Manner of Acting

 

12

Section 2.10. Action by Telephonic Communications

 

13

Section 2.11. Resignations

 

13

Section 2.12. Removal of Directors

 

13

Section 2.13. Vacancies and Newly Created Directorships

 

13

Section 2.14. Director Fees and Expenses

 

13

Section 2.15. Reliance on Accounts and Reports, etc.

 

13

 

 

 

ARTICLE III COMMITTEES

 

14

 

 

 

Section 3.01. How Constituted

 

14

Section 3.02. Powers

 

14

Section 3.03. Proceedings

 

14

Section 3.04. Quorum and Manner of Acting

 

14

Section 3.05. Action by Telephonic Communications

 

14

Section 3.06. Resignations

 

15

Section 3.07. Removal

 

15

Section 3.08. Vacancies

 

15

 

i



 

Table of Contents

(continued)

 

 

 

Page

 

 

 

ARTICLE IV OFFICERS

 

15

 

 

 

Section 4.01. Number

 

15

Section 4.02. Election

 

15

Section 4.03. Salaries

 

15

Section 4.04. Removal and Resignation; Vacancies

 

16

Section 4.05. Authority and Duties of Officers

 

16

Section 4.06. Chair of the Board

 

16

Section 4.07. Chief Executive Officer

 

16

Section 4.08. Vice President

 

16

Section 4.09. Secretary

 

17

Section 4.10. Chief Financial Officer

 

18

Section 4.11. Treasurer

 

18

Section 4.12. General Counsel

 

18

Section 4.13. Controller

 

18

Section 4.14. Additional Officers

 

19

Section 4.15. Security

 

19

 

 

 

ARTICLE V CAPITAL STOCK

 

19

 

 

 

Section 5.01. Certificates of Stock; Uncertificated Shares

 

19

Section 5.02. Signatures; Facsimile

 

19

Section 5.03. Lost, Stolen or Destroyed Certificates

 

20

Section 5.04. Transfer of Stock

 

20

Section 5.05. Registered Stockholders

 

20

Section 5.06. Transfer Agent and Registrar

 

20

 

 

 

ARTICLE VI INDEMNIFICATION

 

20

 

 

 

Section 6.01. Nature of Indemnity

 

20

Section 6.02. Successful Defense

 

21

Section 6.03. Determination That Indemnification Is Proper

 

21

Section 6.04. Advance of Expenses

 

21

Section 6.05. Procedure for Indemnification of Directors and Officers

 

22

Section 6.06. Contract Right; Non-Exclusivity; Survival

 

22

Section 6.07. Insurance

 

23

Section 6.08. Subrogation

 

23

Section 6.09. Employees and Agents

 

23

Section 6.10. Interpretation, Severability

 

23

 

 

 

ARTICLE VII OFFICES

 

23

 

 

 

Section 7.01. Registered Office

 

23

Section 7.02. Other Offices

 

24

 

ii



 

Table of Contents

(continued)

 

 

 

Page

 

 

 

ARTICLE VIII GENERAL PROVISIONS

 

24

 

 

 

Section 8.01. Dividends

 

24

Section 8.02. Reserves

 

24

Section 8.03. Execution of Instruments

 

24

Section 8.04. Voting as Stockholder

 

24

Section 8.05. Fiscal Year

 

25

Section 8.06. Seal

 

25

Section 8.07. Books and Records; Inspection

 

25

Section 8.08. Electronic Transmission

 

25

 

 

 

ARTICLE IX AMENDMENT OF BY-LAWS

 

25

 

 

 

Section 9.01. Amendment

 

25

 

 

 

ARTICLE X CONSTRUCTION

 

26

 

 

 

Section 10.01. Construction

 

26

 

iii



 

HERTZ GLOBAL HOLDINGS, INC.

 

AMENDED AND RESTATED BY-LAWS

 

Effective as of June 30, 2016

 

ARTICLE I

 

STOCKHOLDERS

 

Section 1.01.  Annual Meetings .  The annual meeting of the stockholders of the Corporation for the election of directors (each, a “ Director ”) to succeed Directors whose terms expire and for the transaction of such other business as properly may come before such meeting shall be held each year, either within or without the State of Delaware, at such place, if any, and on such date and at such time, as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting.

 

Section 1.02.  Special Meetings  Special meetings of the stockholders may be called only in accordance with the provisions of Article Seventh of the Certificate of Incorporation (defined below).

 

Section 1.03.  Participation in Meetings by Remote Communication .  The Board of Directors, acting in its sole discretion, may establish guidelines and procedures in accordance with applicable provisions of the General Corporation Law of the State of Delaware, as amended from time to time (the “ DGCL ”), and any other applicable law for the participation by stockholders and proxyholders in a meeting of stockholders by means of remote communications, and may determine that any meeting of stockholders will not be held at any place but will be held solely by means of remote communication.  Stockholders and proxyholders complying with such procedures and guidelines and otherwise entitled to vote at a meeting of stockholders shall be deemed present in person and entitled to vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication.

 

Section 1.04.  Notice of Meetings; Waiver of Notice .

 

(a)  The Secretary or any Assistant Secretary shall cause notice of each meeting of stockholders to be given in writing in a manner permitted by the DGCL not less than 10 nor more than 60 days prior to the meeting, to each stockholder of record entitled to vote at such meeting, subject to such exclusions as are then permitted by the DGCL.  The notice shall specify ( i ) the place, if any, date and time of such meeting of the stockholders, ( ii ) the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, ( iii ) in the case of a special meeting, the purpose or purposes for which such meeting is called and ( iv ) such other information as may be required by law or as may be deemed appropriate by the Board of Directors, the Chief Executive Officer or the Secretary of the Corporation.  If the stockholder list referred to in Section 1.07 of these By-Laws is made accessible on an electronic network, the notice of meeting must indicate how the stockholder list can be accessed.  If a stockholder meeting is to be held solely by means of

 

1



 

electronic communications, the notice of such meeting must provide the information required to access such stockholder list.

 

(b)  A written waiver of notice of meeting signed by a stockholder or a waiver by electronic transmission by a stockholder, whether given before or after the meeting, is deemed equivalent to notice.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a waiver of notice.  The attendance of any stockholder at a meeting of stockholders is a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business at the meeting on the ground that the meeting is not lawfully called or convened.

 

Section 1.05.  Quorum .  Except as otherwise required by law or by the Amended and Restated Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”), the presence in person or by proxy of the holders of record of a majority of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting, provided , however , that where a separate vote by a class or series is required, the holders of a majority in voting power of all issued and outstanding stock of such class or series entitled to vote on such matter, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such matter.  In the absence of a quorum, the stockholders so present may, by a majority in voting power thereof, adjourn the meeting from time to time in the manner provided in Section 1.08 of these By-Laws until a quorum shall attend.

 

Section 1.06.  Voting .  Except as otherwise provided in the Certificate of Incorporation or by law, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each such share outstanding in his or her name on the books of the Corporation at the close of business on the record date for such vote.  If no record date has been fixed for a meeting of stockholders, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote (unless otherwise provided by the Certificate of Incorporation or by law) for each such share of stock outstanding in his or her name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.  Except as otherwise required by law, the Certificate of Incorporation, these By-Laws, the rules and regulations of any stock exchange applicable to the Corporation or pursuant to any other rule or regulation applicable to the Corporation or its stockholders, the vote of a majority of the shares entitled to vote at a meeting of stockholders on the subject matter in question represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting.  The stockholders do not have the right to cumulate their votes for the election of Directors.

 

Section 1.07.  Voting Lists .  The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare, at least 10 days before every meeting of the stockholders (and before any adjournment thereof for which a new record date has been set), a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. 

 

2



 

This list shall be open to the examination of any stockholder prior to and during the meeting for any purpose germane to the meeting in the manner required by the DGCL and other applicable law.  The stock ledger shall be the only evidence as to who are the stockholders entitled by this section to examine the list required by this section or to vote in person or by proxy at any meeting of stockholders.

 

Section 1.08.  Adjournment .  Any meeting of stockholders may be adjourned from time to time, by the chairperson of the meeting or by the vote of a majority of the shares of stock present in person or represented by proxy at the meeting, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the place, if any, and date and time thereof (and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting) are announced at the meeting at which the adjournment is taken unless the adjournment is for more than 30 days or a new record date is fixed for the adjourned meeting after the adjournment, in which case notice of the adjourned meeting in accordance with Section 1.04 of these By-Laws shall be given to each stockholder of record entitled to vote at the meeting.  At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.

 

Section 1.09.  Proxies .  Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy.  A stockholder may authorize a valid proxy by executing a written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by transmitting or authorizing an electronic transmission setting forth an authorization to act as proxy to the person designated as the holder of the proxy, a proxy solicitation firm or a like authorized agent.  No proxy may be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period.  Every proxy is revocable at the pleasure of the stockholder executing it unless the proxy states that it is irrevocable and applicable law makes it irrevocable.  A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary.  Proxies by electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.  Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

 

Section 1.10.  Organization; Procedure; Inspection of Elections .

 

(a)  At every meeting of stockholders the presiding officer shall be the Chair of the Board or, in the event of his or her absence or disability, the Chief Executive Officer or, in the event of his or her absence or disability, a presiding officer chosen by resolution of the Board of Directors.  The Secretary, or in the event of his or her absence or disability, any Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an

 

3



 

appointee of the presiding officer, shall act as secretary of the meeting.  The Board of Directors may make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient.  Subject to any such rules and regulations, the presiding officer of any meeting shall have the right and authority to prescribe rules, regulations and procedures for such meeting and to take all such actions as in the judgment of the presiding officer are appropriate for the proper conduct of such meeting.  Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding person of the meeting, may include, without limitation, the following: ( i ) the establishment of an agenda or order of business for the meeting; ( ii ) rules and procedures for maintaining order at the meeting and the safety of those present; ( iii ) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; ( iv ) restrictions on entry to the meeting after the time fixed for the commencement thereof; and ( v ) limitations on the time allotted to questions or comments by participants.  The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter of business not properly brought before the meeting shall not be transacted or considered.  Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

(b)  Preceding any meeting of the stockholders, the Board of Directors may, and when required by law shall, appoint one or more persons to act as inspectors of elections, and may designate one or more alternate inspectors.  If no inspector or alternate so appointed by the Board of Directors is able to act, or if no inspector or alternate has been appointed and the appointment of an inspector is required by law, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting.  No Director or nominee for the office of Director shall be appointed as an inspector of elections.  Each inspector, before entering upon the discharge of the duties of an inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.  The inspectors shall discharge their duties in accordance with the requirements of applicable law.

 

Section 1.11.  No Stockholder Action by Written Consent Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders.

 

Section 1.12.  Notice of Stockholder Business and Nominations .

 

(a)  Annual Meetings of Stockholders.  (i) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only ( A ) as specified in the Corporation’s notice of the meeting (or any supplement thereto), ( B ) by or at the direction of the Board of Directors or a Committee appointed by the Board for such purpose, or ( C ) by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures and

 

4



 

other provisions set forth in this Section 1.12(a) as to such nominations or other business and who was a stockholder of record at the time of the giving of the stockholder’s notice required in this Section 1.12(a) to the Secretary of the Corporation and on the record date for the determination of stockholders entitled to vote at the meeting.  For the avoidance of doubt, the foregoing clause (C) shall be the exclusive means for a stockholder to make nominations of persons for election to the Board of Directors or propose business to be considered (other than business properly brought under and in compliance with Rule 14a-8 (or any successor thereof) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and included in the Corporation’s proxy statement that has been prepared to solicit proxies for such annual meeting) at an annual meeting of stockholders.

 

(ii)  For any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to subclause (C) of Section 1.12(a)(i) of these By-Laws, (x) the stockholder must have given timely notice thereof in writing and in proper form to the Secretary of the Corporation, (y) the stockholder must provide to the Secretary of the Corporation any updates or supplements to such notice at the times and in the forms specified in this Section 1.12(a) and (z) any such proposed business other than nominations must constitute a proper matter for stockholder action.  To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided that if the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than 120 days prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation; provided further that with respect to the Corporation’s 2017 annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the 30th day following the day on which public announcement of the date of such meeting is first made by the Corporation.  To be in proper form, a stockholder’s notice (whether given pursuant to this Section 1.12(a)(ii) or Section 1.12(b)) shall set forth:

 

(A)                                as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a Director, ( 1 ) all information relating to such person that would be required to be disclosed in a proxy statement or any other filings required to be made in connection with solicitations of proxies for the election of such person as a Director in a contested election pursuant to and in accordance with Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, ( 2 ) such person’s written consent to serving as a Director if elected, ( 3 ) a description of all direct and indirect compensation and other material agreements, arrangements and understandings during the past three years, and any other material relationships, between or among any Proposing Person (as defined in Section 1.12(c)(vi)), any Associated Person (as defined in Section 1.12(c)(vii)) thereof, or any other person or persons (including their names) acting in concert therewith, on the one hand, and each proposed nominee or any of his or her respective “affiliates” and “associates” (each within the meaning of Rule 12b-2 under the Exchange Act), on the other hand, including all information that would be required to be disclosed

 

5



 

pursuant to Item 404 of Regulation S-K promulgated under the Exchange Act if the Proposing Person, Associated Person thereof, or any other person or persons acting in concert therewith were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant, ( 4 ) all information with respect to such person that would be required to be set forth in a stockholder’s notice pursuant to this Section 1.12 if such person (x) was a stockholder or beneficial owner on whose behalf the nomination was made and (y) was submitting a notice providing for the nomination of a person or persons for election as a Director or Directors of the Corporation in accordance with this Section 1.12 and ( 5 ) a signed statement from such person that, if elected as a Director, he or she would tender, promptly following his or her election, an irrevocable resignation effective upon such person’s failure to receive the required vote for reelection at the next meeting at which he or she would face reelection and upon acceptance of such resignation by the Board of Directors, in accordance with the policies and procedures adopted by the Nominating and Governance Committee for such purpose pursuant to Section 2.02 of these By-Laws and the Corporation’s Corporate Governance Guidelines;

 

(B)                                if the stockholder’s notice relates to any business other than the nomination of a Director or Directors that the stockholder proposes to bring before the meeting, ( 1 ) a brief description of the business desired to be brought before the meeting (including the text of any resolution proposed for consideration and if such business includes proposed amendments to the Certificate of Incorporation or By-Laws, the text of the proposed amendments), the reasons for conducting such business at the meeting and any material interest in such business of any Proposing Person or Associated Person thereof and ( 2 ) a description of all agreements, arrangements and understandings between any Proposing Person or Associated Person thereof and any other person or persons (including their names) in connection with the proposal of such business;

 

(C)                                as to each Proposing Person, ( 1 ) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books), ( 2 ) the class or series and number of shares of the Corporation which are, directly or indirectly, “beneficially owned” (within the meaning of Rule 13d-3 under the Exchange Act) (provided that a person shall in all events be deemed to beneficially own any shares of any class or series and number of shares of the Corporation as to which such person has a right to acquire beneficial ownership at any time in the future) and owned of record by such Proposing Person or any Associated Person thereof, ( 3 ) the class or series, if any, and number of options, warrants, puts, calls, convertible securities, stock appreciation rights or similar rights, commitments or obligations with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares or other securities of the Corporation or with a value derived in whole or in part from the value of any class or series of shares or other securities of the Corporation, whether or not such instrument, right, obligation or commitment shall be subject to settlement in the underlying class or series of shares or other securities of the Corporation (each, a “Derivative Instrument”) that are, directly or indirectly, beneficially owned by such Proposing Person or any Associated Person thereof, ( 4 ) a description of all agreements, arrangements, understandings or relationships, including any repurchase or similar so-called “stock borrowing” agreement or arrangement and any short interest,

 

6



 

engaged in, directly or indirectly, by such Proposing Person or any Associated Person thereof, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of capital stock or other securities of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such Proposing Person or any Associated Person thereof with respect to any class or series of shares or other securities of the Corporation, or that provide, directly or indirectly, the opportunity to profit from any decrease in the price or value of any class or series of capital stock or other securities of the Corporation, ( 5 ) a description of any other direct or indirect opportunity for such Proposing Person or any Associated Person thereof to profit or share in any profit (including any performance-based fees) derived from any increase or decrease in the value of any class or series of shares or other securities of the Corporation, ( 6 ) a description of any proxy, contract, arrangement, understanding or relationship pursuant to which such Proposing Person or any Associated Person thereof has a right to vote any shares or other securities of the Corporation, ( 7 ) a description of any rights to dividends on the shares of the Corporation owned beneficially by such Proposing Person or any Associated Person thereof that are separated or separable from the underlying shares of the Corporation, ( 8 ) a description of any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such Proposing Person or any Associated Person thereof is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, if any, ( 9 ) a description of all agreements, arrangements and understandings between any Proposing Person or Associated Person thereof and any other person or persons (including their names) in connection with or related to the ownership or voting of shares of the Corporation or Derivative Instruments, ( 10 ) a representation as to whether such Proposing Person intends or is part of a group which intends ( x ) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or ( y ) otherwise to solicit proxies from stockholders in support of such proposal or nomination and ( 11 ) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal of other business and/or the election of Directors in an election contest pursuant to and in accordance with Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (whether or not such Proposing Person intends to deliver a proxy statement or conduct its own proxy solicitation); and

 

(D)                                as to the stockholder giving the notice, a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination.

 

The notice and updating requirements of this Section 1.12(a) shall not apply to a stockholder with respect to (and only with respect to) business properly brought under Rule 14a-8 (or any successor thereof) if the stockholder has notified the Corporation of his, her or its intention to present a proposal with respect to such particular business at an annual meeting pursuant to and

 

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in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act and such stockholder’s proposal with respect to such particular business has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.  The Corporation may also require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent Director of the Corporation, or that could be material to a stockholder’s understanding of the independence, or lack thereof, of such nominee.

 

(iii)  Notwithstanding anything in the second sentence of Section 1.12(a)(ii) of these By-Laws to the contrary, in the event that the number of Directors to be elected to the Board of Directors at an annual meeting is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice under this Section 1.12(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

 

(iv)  A stockholder providing notice of a proposed nomination or other business proposed to be brought before a meeting (whether given pursuant to Section 1.12(a) or Section 1.12(b)) shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than five business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof).

 

(b)  Special Meetings of Stockholders .  At any special meeting of the stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting.  To be properly brought before a special meeting, proposals of business must be (x) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (y) otherwise properly brought before the special meeting by or at the direction of the Board of Directors or (z) specified in the Corporation’s notice of meeting (or any supplement thereto) given by the Corporation pursuant to a valid stockholder request in accordance with Article Seventh of the Certificate of Incorporation.  Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which Directors are to be elected pursuant to the Corporation’s notice of meeting ( i ) by or at the direction of the Board of Directors or ( ii ) provided that the Board of Directors has determined

 

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that Directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures and other provisions set forth in this Section 1.12 as to such nomination and who was a stockholder of record at the time of the giving of the stockholder’s notice required in this Section 1.12(b) to the Secretary of the Corporation and on the record date for the determination of stockholders entitled to vote at the special meeting.  For the avoidance of doubt, the foregoing clause (ii) shall be the exclusive means for a stockholder to make nominations of persons for election to the Board of Directors at a special meeting of stockholders except in the case of Sections 2.12 and 2.13.  In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more Directors of the Corporation, any stockholder entitled to vote at such meeting may nominate a person or persons, as the case may be, for election to such position(s) as specified in the Corporation’s notice of meeting only if ( x ) the stockholder delivers notice in writing to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than 120 days prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting, ( y ) such notice sets forth all of the information and other items that would have been required in a notice under Section 1.12(a)(ii) of these By-Laws (including the information and other items specified in subclauses (A), (C) and (D) thereof) if the stockholder (or any beneficial owner on whose behalf the nomination is made) was proposing to nominate such person or persons, as the case may be, for election as a Director at an annual meeting and ( z ) the stockholder provides to the Secretary of the Corporation any updates or supplements to such notice at the times and in the forms specified in Section 1.12(a)(iv).

 

(c)  General.  (i)  Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the presiding officer of a meeting of stockholders shall have the power and duty ( x ) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.12 (including whether the Proposing Person solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with the representation required by clause (a)(ii)(C)(10) of this Section 1.12), and (y) if any proposed nomination or business was not made or proposed, as the case may be, in compliance with this Section 1.12, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted.

 

(ii)  Notwithstanding anything to the contrary in this Section 1.12, if the stockholder (or a qualified representative of the stockholder) making a nomination or proposal of business under this Section 1.12 does not appear (in person or by proxy) at a meeting of stockholders to present such nomination or proposed business, the nomination shall be disregarded and the proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Section 1.12, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and

 

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such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

 

(iii)  For purposes of this Section 1.12, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

 

(iv)  Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with any and all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 1.12; provided, however, that (except as explicitly provided in the penultimate sentence of Section 1.12(a)(ii) of these By-Laws) any references in these By-Laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to, and shall not, limit the separate and additional requirements set forth in these By-Laws with respect to nominations or proposals as to any other business to be considered pursuant to this Section 1.12.  Nothing in this Section 1.12 shall be deemed to affect any rights of (x) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor thereof) under the Exchange Act or (y) the holders of any series of preferred stock to elect Directors pursuant to any applicable provisions of the Certificate of Incorporation or of the relevant preferred stock certificate of designation.

 

(v)  In no event shall the announcement of an adjournment or postponement of an annual or special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice of a stockholder nomination or a stockholder proposal as described in this Section 1.12.

 

(vi)  For purposes of this Section 1.12, the term “ Proposing Person ” means (x) the stockholder providing the notice of a proposed nomination or other business proposed to be brought before a meeting and (y) any beneficial owner or beneficial owners on whose behalf the proposed nomination or other business proposed to be brought before a meeting is made.

 

(vii)  For purposes of this Section 1.12, the term “ Associated Person ” means, with respect to any Proposing Person, any “affiliate” or “associate” (each within the meaning of Rule 12b-2 under the Exchange Act) of such Proposing Person.

 

ARTICLE II

 

BOARD OF DIRECTORS

 

Section 2.01.  General Powers .  Except as may otherwise be provided by law, by the Certificate of Incorporation or by these By-Laws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers and authority of the Corporation.

 

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Section 2.02.  Number and Term of Office .  Subject to any special rights of any holders of any class or series of preferred stock to elect Directors, the precise number of Directors who shall constitute the Board of Directors shall be the number (which shall not be less than three) that is fixed from time to time exclusively by resolution of the Board of Directors. Each Director (whenever elected) shall hold office until his or her successor is duly elected and qualified, or until such Director’s earlier death, resignation or remov al.  No decrease in the number of Directors shall shorten the term of any incumbent Director.  At each meeting of the stockholders for the election of Directors, provided a quorum is present, each Director subject to election shall be elected by a majority of the votes validly cast with respect to that Director in such election, provided that if the number of nominees exceeds the number of Directors to be elected, the Directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at such meeting and entitled to vote on the election of directors. For purposes of this Section 2.02, a majority of the votes cast means that the number of shares voted “for” a Director must exceed the number of votes cast “against” that Director.  The Corporation’s Corporate Governance Guidelines shall provide that, and the Nominating and Governance Committee shall establish procedures under which, any nominee shall tender a contingent resignation to the Board of Directors.  The Nominating and Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject the resignation, or whether other action should be taken. The Board of Directors will act on such Committee’s recommendation and publicly disclose its decision, along with the rationale for such decision, within 90 days from the date of the certification of the election results. In making their decision, the Nominating and Governance Committee and the Board of Directors will evaluate the best interests of the Corporation and its stockholders and shall consider all factors and information that they deem relevant.

 

Section 2.03.  Annual and Regular Meetings: Notice .  The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held on (or as soon as possible following) the date of the annual meeting of the stockholders either ( i ) at the place of such annual meeting of the stockholders, in which event notice of such annual meeting of the Board of Directors need not be given, or ( ii ) at such other time and place as shall have been specified in advance notice given to members of the Board of Directors of the date, place and time of such meeting.  Any such notice shall be given at least 48 hours in advance if sent by to each Director by facsimile, by email or by any other form of electronic transmission approved by such Director (each, a “ Specified Transmission ”), or delivered to him or her personally, or at least five days’ in advance, if notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address.  Any such notice need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting.

 

The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or without the State of Delaware) and the date and time of such meetings.  Advance notice of regular meetings need not be given; provided if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be given to each member of the Board of Directors of the place, date and time of such meeting which shall be at least 48 hours’ notice, if such notice is sent by

 

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Specified Transmission, to each Director, or delivered to him or her personally, or at least five days’ notice, if such notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address.  Notice of such a meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting.

 

Section 2.04.  Special Meetings; Notice .  Special meetings of the Board of Directors shall be held whenever called by any member of the Board of Directors, at such place (within or without the State of Delaware), date and time as may be specified in the respective notices or waivers of notice of such meetings.  Special meetings of the Board of Directors may be called on 48 hours’ notice, if such notice is sent by Specified Transmission, to each Director, or delivered to him or her personally, or on five days’ notice, if notice is mailed to each Director, addressed to him or her at his or her usual place of business or other designated address.  Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice (including by Specified Transmission), whether before or after such meeting.  Any business may be conducted at a special meeting.

 

Section 2.05.  Quorum .  A quorum for meetings of the Board of Directors shall consist of a majority of the total authorized membership of the Board of Directors.

 

Section 2.06.  Voting .  Except as otherwise required by law, the Certificate of Incorporation or these By-Laws, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

 

Section 2.07.  Adjournment .  A majority of the Directors present, whether or not a quorum is present, may adjourn any meeting of the Board of Directors to another date, time or place, provided such adjourned meeting is no earlier than 48 hours after written notice (in accordance with these By-Laws) of such postponement has been given to the Directors (or such notice is waived in accordance with these By-Laws), and, at any such postponed meeting, a quorum shall consist of a majority of the total authorized membership of the Board of Directors.

 

Section 2.08.  Action Without a Meeting .  Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by Specified Transmission, and such writing or writings or Specified Transmissions are filed with the minutes of proceedings of the Board of Directors.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 2.09.  Regulations; Manner of Acting .  To the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate.  In addition to the election of the Chair of the Board, the Board may elect one or more vice-chairpersons or lead Directors to perform such other duties as may be designated by the Board.

 

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Section 2.10.  Action by Telephonic Communications .  Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

 

Section 2.11.  Resignations .  Any Director may resign at any time by submitting a Specified Transmission or by delivering a written notice of resignation to the Chair of the Board, the Chief Executive Officer or the Secretary.  Such resignation shall take effect upon delivery unless the resignation specifies a later effective date or an effective date determined upon the happening of a specific event.

 

Section 2.12.  Removal of Directors .  Subject to any special rights of any holders of any class or series of preferred stock to elect Directors, any Director may be removed at any time for or without cause, upon the affirmative vote of holders of at least a majority of the votes to which all the stockholders of the Corporation would be entitled to cast in any election of Directors, acting at a meeting of the stockholders in accordance with the DGCL, the Certificate of Incorporation and these By-Laws.

 

Section 2.13.  Vacancies and Newly Created Directorships .  Subject to any special rights of any holders of any class or series of preferred stock to elect Directors, any vacancy in the Board of Directors that results from the death, disability, resignation, disqualification, removal of any Director or from any other cause shall be filled solely by a majority of the total number of Directors then in office, even if less than a quorum, or by a sole remaining Director.  Notwithstanding the foregoing, any vacancy in the Board of Directors that results from the removal of a Director in accordance with the DGCL and Section 2.12 of these By-Laws may be filled by the stockholders at a special meeting of the stockholders called in accordance with the provisions of Article Seventh of the Certificate of Incorporation.  A Director elected to fill a vacancy or newly created Directorship shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.

 

Section 2.14.  Director Fees and Expenses .  The amount, if any, that each Director shall be entitled to receive as compensation for his or her services shall be fixed from time to time by the Board of Directors or a duly authorized Committee.  The Corporation will cause each non-employee Director serving on the Board of Directors to be reimbursed for all reasonable out-of-pocket costs and expenses incurred by him or her in connection with such service.

 

Section 2.15.  Reliance on Accounts and Reports, etc .  A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or Committees designated by the Board of Directors, or by any other person as to the matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

 

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ARTICLE III

 

COMMITTEES

 

Section 3.01.  How Constituted .  The Board of Directors shall have such committees as the Board of Directors may determine (collectively, the “ Committees ”).  Each Committee shall consist of such number of Directors as from time to time may be fixed by a majority of the total authorized membership of the Board of Directors, and any Committee may be abolished or re-designated from time to time by the Board of Directors. Each member of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his or her successor shall have been designated or until he or she shall cease to be a Director, or until his or her earlier death, resignation or removal.

 

Section 3.02.  Powers Any Committee, to the extent provided in a resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require such seal, but no Committee shall have power or authority in reference to the following matters: ( i ) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or ( ii ) adopting, amending or repealing the By-Laws of the Corporation.

 

Section 3.03.  Proceedings .  Each Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time, provided that the Board of Directors may adopt other rules and regulations for the governance of any Committee not inconsistent with the provisions of these By-Laws.  Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors following any such proceedings.

 

Section 3.04.  Quorum and Manner of Acting .  Except as may be otherwise provided in the resolution creating such Committee, at all meetings of any Committee the presence of members constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business.  The act of the majority of the members present at any meeting at which a quorum is present shall be the act of such Committee.  Any action required or permitted to be taken at any meeting of any such Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing or by Specified Transmission, and such writing or writings or Specified Transmission or Specified Transmissions are filed with the minutes of the proceedings of the Committee.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.  The members of any such Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such.

 

Section 3.05.  Action by Telephonic Communications .  Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or similar communications equipment by means of which all persons

 

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participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

 

Section 3.06.  Resignations .  Any member of any Committee may resign at any time by submitting a Specified Transmission or by delivering a written notice of resignation to the Chair of the Board, the Chief Executive Officer or the Secretary.  Unless otherwise specified therein, such resignation shall take effect upon delivery.

 

Section 3.07.  Removal .  Any member of any Committee may be removed from his or her position as a member of such Committee at any time, either for or without cause, by resolution adopted by a majority of the whole Board of Directors.

 

Section 3.08.  Vacancies .  If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members shall continue to act, and any such vacancy may be filled by the Board of Directors subject to Section 3.01 of these By-Laws.

 

ARTICLE IV

 

OFFICERS

 

Section 4.01.  Number .  The officers of the Corporation shall be chosen by the Board of Directors and, subject to the last sentence of this Section 4.01, shall be a Chair of the Board, a Chief Executive Officer, one or more Vice Presidents, a Secretary, a Chief Financial Officer, a Treasurer, a General Counsel and a Controller, and any other officers appointed pursuant to Section 4.14.  The Board of Directors also may elect and the Chief Executive Officer may appoint one or more Assistant Secretaries, Assistant Treasurers and Assistant Controllers in such numbers as the Board of Directors or the Chief Executive Officer may determine who shall have such authority, exercise such powers and perform such duties as may be specified in these By-Laws or determined by the Board of Directors.  Any number of offices may be held by the same person, except that one person may not hold both the office of Chief Executive Officer and Secretary.  The Chair of the Board (whether or not an officer) shall be a Director, but no other officer need be a Director.  The Board of Directors may determine that the Chair of the Board will not be an officer of the Corporation.

 

Section 4.02.  Election .  Unless otherwise determined by the Board of Directors, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors at which his or her successor has been elected and qualified.  In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors.  Each officer shall hold office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

 

Section 4.03.  Salaries .  The salaries of all officers of the Corporation shall be fixed or established in the manner authorized by the Board of Directors, subject to any applicable legal or regulatory requirements.

 

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Section 4.04.  Removal and Resignation; Vacancies .  Any officer may be removed for or without cause at any time by the Board of Directors or by the Chief Executive Officer as permitted pursuant to Section 4.07.  Any officer may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Chair of the Board, the Chief Executive Officer or the Secretary.  Unless otherwise specified therein, such resignation shall take effect upon delivery.  Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors, or, if the Chief Executive Officer has authority pursuant to Section 4.07 of these By-Laws to fill such office, then by the Chief Executive Officer subject to Section 4.07 of these By-Laws or by the Board of Directors.

 

Section 4.05.  Authority and Duties of Officers .  The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these By-Laws or in a resolution of the Board of Directors, except that in any event each officer shall exercise such powers and perform such duties as may be required by law.

 

Section 4.06.  Chair of the Board .  The Chair of the Board shall preside at all meetings of the Board of Directors and stockholders at which he or she is present.

 

Section 4.07.  Chief Executive Officer .  The Chief Executive Officer shall, subject to the direction of the Board of Directors, be the chief executive officer of the Corporation, shall have general control and supervision of the policies and operations of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.  He or she shall manage and administer the Corporation’s business and affairs and shall also perform all duties and exercise all powers usually pertaining to the office of a chief executive officer, president or chief operating officer, of a corporation, including, without limitation under the DGCL.  He or she shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and any other documents and instruments in connection with the business of the Corporation, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation may need to be affixed.  Except as otherwise determined by the Board of Directors, he or she shall have the authority to cause the employment or appointment of such employees (other than the Chief Executive Officer) and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation and to remove or suspend any such employees or agents elected or appointed by the Chief Executive Officer or the Board of Directors.  Except as otherwise determined by the Board of Directors, he or she shall also have the authority to remove any officer of the Corporation with, if the Chief Executive Officer is not the Chair of the Board, the approval of the Chair of the Board, or, if the Chief Executive Officer is the Chair of the Board, the approval of the lead Director or such other Director designated by the Board for such purpose.  The Chief Executive Officer shall perform such other duties and have such other powers as the Board of Directors or the Chair of the Board may from time to time prescribe.

 

Section 4.08.  Vice President .  Except as otherwise determined by the Board of Directors, each Vice President shall perform such duties and exercise such powers as may be assigned to him or her from time to time by the Chief Executive Officer.  Except as otherwise determined by the Board of Directors, in the absence of the Chief Executive Officer, the duties of the Chief

 

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Executive Officer shall be performed and his or her powers may be exercised by such Vice President as shall be designated by the Chief Executive Officer, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office; subject in any case to review and superseding action by the Chief Executive Officer.

 

Section 4.09.  Secretary .  Except as otherwise determined by the Board of Directors, the Secretary shall have the following powers and duties:

 

(a)  He or she shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors and all Committees of which a secretary has not been appointed in books provided for that purpose.

 

(b)  He or she shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law.

 

(c)  Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, he or she shall furnish a copy of such resolution to the members of such Committee.

 

(d)  He or she shall be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed he or she may attest the same.

 

(e)  He or she shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the Certificate of Incorporation or these By-Laws.

 

(f)  He or she shall have charge of the stock books and ledgers of the Corporation and shall cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names (alphabetically arranged) and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each became such holder of record.

 

(g)  He or she shall sign (unless the Treasurer, an Assistant Treasurer or an Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors.

 

(h)  He or she shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By-Laws or as may be assigned to him or her from time to time by the Board of Directors, or the Chief Executive Officer.

 

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Section 4.10.  Chief Financial Officer .  Except as otherwise determined by the Board of Directors, the Chief Financial Officer shall be the chief financial officer of the Corporation and shall have the following powers and duties:

 

(a)  He or she shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and shall keep or cause to be kept full and accurate records of all receipts of the Corporation.

 

(b)  He or she shall render to the Board of Directors, whenever requested, a statement of the financial condition of the Corporation and of all his or her transactions as Chief Financial Officer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so.

 

(c)  He or she shall be empowered from time to time to require from all officers or agents of the Corporation reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation.

 

(d)  He or she shall perform, in general, all duties incident to the office of chief financial officer and such other duties as may be specified in these By-Laws or as may be assigned to him or her from time to time by the Board of Directors or the Chair of the Board.

 

Section 4.11.  Treasurer .  Except as otherwise determined by the Board of Directors, the Treasurer shall have the following powers and duties:

 

(a)  He or she may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors.

 

(b)  He or she shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to him or her from time to time by the Board of Directors, the Chair of the Board or the Chief Financial Officer.

 

Section 4.12.  General Counsel .  Except as otherwise determined by the Board of Directors, the General Counsel shall have the following powers and duties:

 

(a)  He or she shall have general supervision of all matters of a legal nature concerning the Corporation.

 

(b)  He or she shall perform all such duties incident to his or her office and such other duties as may be specified in these By-Laws or as may be assigned to him or her by the Board of Directors, the Chair of the Board or the Chief Executive Officer.

 

Section 4.13.  Controller .  Except as otherwise determined by the Board of Directors, the Controller shall have the following powers and duties:

 

18



 

(a)  He or she shall keep and maintain the books of account of the Corporation in such manner that they fairly present the financial condition of the Corporation and its subsidiaries.

 

(b)  He or she shall perform all such duties incident to the office of controller and such other duties as may be specified in these By-Laws or as may be assigned to him or her by the Board of Directors, the Chair of the Board or the Chief Financial Officer.

 

Section 4.14.  Additional Officers .  The Board of Directors may appoint such other officers and agents as it may deem appropriate, and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors.  The Board of Directors from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties.  Any such officer or agent may remove any such subordinate officer or agent appointed by him or her, for or without cause.

 

Section 4.15.  Security .  The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board of Directors.

 

ARTICLE V

 

CAPITAL STOCK

 

Section 5.01.  Certificates of Stock; Uncertificated Shares .  The shares of the Corporation shall be represented by certificates, except to the extent that the Board of Directors has provided by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares.  Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.  Every holder of stock in the Corporation represented by certificates shall be entitled to have, and the Board may in its sole discretion permit a holder of uncertificated shares to receive upon request a certificate signed by the appropriate officers of the Corporation, representing the number of shares registered in certificate form.  Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws.

 

Section 5.02.  Signatures; Facsimile .  All signatures on the certificates referred to in Section 5.01 of these By-Laws may be in facsimile, engraved or printed form, to the extent permitted by law.  In case any officer, transfer agent or registrar who has signed, or whose facsimile, engraved or printed signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

19



 

Section 5.03.  Lost, Stolen or Destroyed Certificates .  A new certificate may be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, only upon delivery to Corporation of an affidavit of the owner or owners (or their legal representatives) of such certificate, setting forth such allegation, and a bond or undertaking as may be satisfactory to a financial officer of the Corporation to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

 

Section 5.04.  Transfer of Stock .  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.  Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the DGCL.  Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

 

Section 5.05.  Registered Stockholders .  The Corporation may treat the registered owner of shares of the Corporation as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of such, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests.

 

Section 5.06.  Transfer Agent and Registrar .  The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.

 

ARTICLE VI

 

INDEMNIFICATION

 

Section 6.01.  Nature of Indemnity .  The Corporation shall indemnify, to the fullest extent permitted by the DGCL and other applicable law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (each, a “proceeding”), by reason of the fact that he or she is or was or has agreed to become a Director or officer of the Corporation, or while serving as a Director or officer of the Corporation, is or was serving or has agreed to serve at the request of the Corporation as a Director, officer, employee, manager or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding had no

 

20



 

reasonable cause to believe his or her conduct was unlawful; provided that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (i) such indemnification shall be limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (ii) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.  Notwithstanding the foregoing, but subject to Section 6.05 of these By-Laws, the Corporation shall not be obligated to indemnify a Director or officer of the Corporation in respect of a proceeding (or part thereof) instituted by such Director or officer, unless such proceeding (or part thereof) has been authorized in the specific case by the Board of Directors.

 

The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal proceeding, had reasonable cause to believe that his or her conduct was unlawful.

 

Section 6.02.  Successful Defense .  To the extent that a present or former Director or officer of the Corporation has been successful on the merits or otherwise in defense of any proceeding referred to in Section 6.01 of these By-Laws or in defense of any claim, issue or matter therein, he or she shall be indemnified by the Corporation against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

 

Section 6.03.  Determination That Indemnification Is Proper .  Any indemnification of a present or former Director or officer of the Corporation under Section 6.01 of these By-Laws (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of such person is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws.  Any such determination shall be made, with respect to a person who is a Director or officer at the time of such determination ( i ) by a majority vote of the Directors who are not parties to such proceeding, even though less than a quorum, or ( ii ) by a Committee of such Directors designated by majority vote of such Directors, even though less than a quorum, or ( iii ) if there are no such Directors, or if such Directors so direct, by independent legal counsel in a written opinion, or ( iv ) by the stockholders.

 

Section 6.04.  Advance of Expenses .  Expenses (including attorneys’ fees) incurred by a present or former Director or officer in defending any civil, criminal, administrative or investigative proceeding shall be paid by the Corporation prior to the final disposition of such proceeding upon written request by such person and delivery of an undertaking by such person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation under this Article or applicable law; provided that the Board of Directors may not require such Director or officer to post any bond or otherwise provide any security for such undertaking.  The Corporation or, in respect of a present Director or officer, the

 

21



 

Board of Directors may authorize the Corporation’s counsel to represent (subject to applicable conflict of interest considerations) such present or former Director or officer in any proceeding, whether or not the Corporation is a party to such proceeding.

 

Section 6.05.  Procedure for Indemnification of Directors and Officers .  Any indemnification of a Director or officer of the Corporation under Sections 6.01 and 6.02 of these By-Laws, or advance of expenses to such persons under Section 6.04 of these By-Laws, shall be made promptly, and in any event within 30 days, upon the written request by or on behalf of such person (together with supporting documentation).  If a determination by the Corporation that such person is entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within 60 days to a written request for indemnity, the Corporation shall be deemed to have approved such request.  If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article shall be enforceable by such person in any court of competent jurisdiction.  Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation.  It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of these By-Laws where the required undertaking, if any, has been received by or tendered to the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of these By-Laws, but the burden of proving such defense shall be on the Corporation.  Neither the failure of the Corporation (including its Board of Directors or any Committee thereof, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors or any Committee thereof, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

 

Section 6.06.  Contract Right; Non-Exclusivity; Survival .

 

(a)  The rights to indemnification and advancement of expenses provided by this Article shall be deemed to be separate contract rights between the Corporation and each Director and officer who serves in any such capacity at any time while these provisions as well as the relevant provisions of the DGCL are in effect and any repeal or modification thereof shall not adversely affect any right or obligation then existing with respect to any state of facts then or previously existing or any proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts.  Such “contract rights” may not be modified retroactively as to any present or former Director or officer without the consent of such Director or officer.

 

(b)  The rights to indemnification and advancement of expenses provided by this Article shall continue as to a person who has ceased to be a Director or officer and shall not be deemed exclusive of any other rights to which a present or former Director or officer of the

 

22



 

Corporation seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested Directors, or otherwise.

 

(c)  The rights to indemnification and advancement of expenses provided by this Article to any present or former Director or officer shall inure to the benefit of the heirs, executors and administrators of such a person.

 

Section 6.07.  Insurance .  The Corporation shall purchase and maintain insurance on behalf of any person who is or was or has agreed to become a Director or officer of the Corporation, or is or was serving at the request of the Corporation as a Director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or on his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article, provided that such insurance is available on commercially reasonable terms consistent with the then prevailing rates in the insurance market.

 

Section 6.08.  Subrogation .  In the event of payment under this Article VI, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the indemnitee, who shall execute all documents, and do all acts, that as the Corporation may reasonably request to secure such rights, including the execution of such documents as the Corporation may reasonably request to enable the Corporation effectively to bring suit to enforce such rights.

 

Section 6.09.  Employees and Agents .  The Board, or any officer authorized by the Board generally or in the specific case to make indemnification decisions, may cause the Corporation to indemnify any present or former employee or agent of the Corporation in such manner and for such liabilities as the Board may determine, up to the fullest extent permitted by the DGCL and other applicable law.

 

Section 6.10.  Interpretation, Severability .  Terms defined in Sections 145(h) or (i) of the DGCL have the meanings set forth in such sections when used in this Article.  If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Director or officer as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any proceeding, whether civil, criminal, administrative, investigative or otherwise, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.

 

ARTICLE VII

 

OFFICES

 

Section 7.01.  Registered Office .  The registered office of the Corporation in the State of Delaware shall be located at the location provided in the Certificate of Incorporation of the Corporation.

 

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Section 7.02.  Other Offices .  The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

 

ARTICLE VIII

 

GENERAL PROVISIONS

 

Section 8.01.  Dividends .  Subject to any applicable provisions of law and the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation’s capital stock.

 

A member of the Board of Directors, or a member of any Committee designated by the Board of Directors shall be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or Committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid.

 

Section 8.02.  Reserves .  There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Corporation’s stockholders and the Board of Directors may similarly modify or abolish any such reserve.

 

Section 8.03.  Execution of Instruments .  Except as otherwise provided by law or the Certificate of Incorporation, the Board of Directors or the Chief Executive Officer may authorize the Chief Executive Officer or any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation.  Any such authorization may be general or limited to specific contracts or instruments.

 

Section 8.04.  Voting as Stockholder .  Unless otherwise determined by resolution of the Board of Directors, the Chair of the Board or the Chief Executive Officer or any Vice President or any officer of the Corporation authorized by any of them shall have full power and authority on behalf of the Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock at any such meeting, or through action without a meeting.  The Board of Directors may by resolution from time to time confer such power and authority (in general or confined to specific instances) upon any other person or persons.

 

24



 

Section 8.05.  Fiscal Year .  The fiscal year of the Corporation shall commence on the first day of January of each year and shall terminate in each case on December 31.

 

Section 8.06.  Seal .  The seal of the Corporation shall be circular in form and shall contain the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”.  The form of such seal shall be subject to alteration by the Board of Directors.  The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

 

Section 8.07.  Books and Records; Inspection .  Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors.

 

Section 8.08.  Electronic Transmission .  “Electronic transmission”, as used in these By-laws, means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

ARTICLE IX

 

AMENDMENT OF BY-LAWS

 

Section 9.01.  Amendment .  Subject to the provisions of the Certificate of Incorporation, these By-Laws may be amended, altered or repealed:

 

(a)  by resolution adopted by a majority of the Board of Directors at any special or regular meeting of the Board of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting, or

 

(b)  at any regular or special meeting of the stockholders upon the affirmative vote of the holders of a majority of the combined voting power of the outstanding shares of the Corporation entitled to vote in any election of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting.

 

Notwithstanding the foregoing, no amendment, alteration or repeal of Article VI shall adversely affect any right or protection existing under these By-Laws immediately prior to such amendment, alteration or repeal, including any right or protection of a Director thereunder in respect of any act or omission occurring prior to the time of such amendment.

 

25



 

ARTICLE X

 

CONSTRUCTION

 

Section 10.01.  Construction .  In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of the Certificate of Incorporation of the Corporation as in effect from time to time, the provisions of such Certificate of Incorporation shall be controlling.

 

26


Exhibit 4.1

 

EXECUTION VERSION

 

 

FOURTH AMENDED AND RESTATED MASTER EXCHANGE AGREEMENT

 

dated as of June 30, 2016

 

among

 

THE HERTZ CORPORATION,
as a Legal Entity and Exchangor,

 

HERTZ VEHICLE FINANCING LLC,
as a Legal Entity and Exchangor,

 

HERTZ GENERAL INTEREST LLC,
as a Legal Entity and Exchangor

 

HERTZ CAR SALES LLC,
as a Legal Entity and Exchangor

 

HERTZ CAR EXCHANGE INC.,
as Qualified Intermediary

 

and

 

DB SERVICES AMERICAS, INC.,
as Owner

 

 



 

Table of Contents

 

 

 

Page

 

ARTICLE I

 

Definitions

SECTION 1.01.

Definitions

2

SECTION 1.02.

Rules of Construction

10

 

ARTICLE II

 

General Exchange Provisions

 

 

 

SECTION 2.01.

Appointment of the QI

11

SECTION 2.02.

Exchange of Property

11

SECTION 2.03.

Disposition and Transfer of Relinquished Property; Transfer of Relinquished Property Subject to Liabilities

13

SECTION 2.04.

Acquisition and Transfer of Replacement Property

14

SECTION 2.05.

Assignment of Agreements

14

SECTION 2.06.

Notice to Purchasers and Sellers

16

SECTION 2.07.

Direct Transfers

16

SECTION 2.08.

Exclusivity

16

SECTION 2.09.

Records

16

SECTION 2.10.

Non-Matched Properties

17

SECTION 2.11.

Matching of Relinquished and Replacement Property

17

SECTION 2.12.

Disclosure of Relationship

17

 

 

 

ARTICLE III

 

Identification

 

 

 

SECTION 3.01.

Identification of Replacement Property

17

SECTION 3.02.

Manner of Written Identification

18

SECTION 3.03.

Content of Written Identification

18

SECTION 3.04.

Revocation of Identification

18

 

 

 

ARTICLE IV

 

Accounts

 

 

 

SECTION 4.01.

Accounts

19

SECTION 4.02.

Separation and Application of Funds in Joint Collection Accounts and Exchange Accounts; Proceeds from Transfer of Relinquished Property by the QI

21

SECTION 4.03.

Payment for Replacement Property

25

SECTION 4.04.

Investment of Funds in the Exchange Accounts

27

 



 

Table of Contents
(continued)

 

 

 

Page

 

 

 

SECTION 4.05.

Restrictions upon Funds

27

SECTION 4.06.

Disbursements from Account

28

SECTION 4.07.

Disbursement Occurrence

28

 

 

 

ARTICLE V

 

Indemnity By Hertz

 

 

 

SECTION 5.01.

No Personal Liability

29

SECTION 5.02.

Indemnity

29

SECTION 5.03.

Survival

29

 

 

 

ARTICLE VI

 

Representations, Warranties And Covenants

 

 

 

SECTION 6.01.

Representations and Warranties of the QI

30

SECTION 6.02.

Representations and Warranties of Owner

31

SECTION 6.03.

Representations and Warranties of Each Legal Entity

32

SECTION 6.04.

Survival of Representations and Warranties

33

SECTION 6.05.

Maintenance of Separate Existence

33

SECTION 6.06.

Ownership by Owner; Mergers

36

SECTION 6.07.

Organizational Documents

36

SECTION 6.08.

No Other Agreements

36

SECTION 6.09.

Other Business

36

SECTION 6.10.

QI Sale

36

SECTION 6.11.

Trademark License

37

SECTION 6.12.

Confidentiality

38

 

 

 

ARTICLE VII

 

Term And Compensation; Escrow Agreement Termination

 

 

 

SECTION 7.01.

Term, Termination and Special Termination

39

SECTION 7.02.

Compensation

42

SECTION 7.03.

Escrow Agreement Termination

42

 

 

 

ARTICLE VIII

 

Miscellaneous

 

 

 

SECTION 8.01.

Pending Litigation

43

SECTION 8.02.

Notices

43

SECTION 8.03.

Amendments

45

SECTION 8.04.

Successors and Assigns; No Third-Party Beneficiaries

45

SECTION 8.05.

Governing Law, Venue, Jury Trial Waiver

46

 



 

Table of Contents
(continued)

 

 

 

Page

 

 

 

SECTION 8.06.

Indebtedness

46

SECTION 8.07.

Strict Performance

47

SECTION 8.08.

Severability; Interpretation

47

SECTION 8.09.

Dates, Descriptions, Values, and Matching

47

SECTION 8.10.

Counterparts

47

SECTION 8.11.

Entire Agreement

47

SECTION 8.12.

Electronic Execution

47

SECTION 8.13.

Acknowledgment of Independent Relationship

48

SECTION 8.14.

Headings

48

SECTION 8.15.

Force Majeure

48

SECTION 8.16.

Consequential Damages

48

SECTION 8.17.

Investment Losses

48

SECTION 8.18.

Treasury Regulations Disclosure Requirements

48

SECTION 8.19.

No Petitions

49

SECTION 8.20.

Servicer Capacities

49

 

 

 

Exhibit A

Form of Accession Agreement

 

 



 

This FOURTH AMENDED AND RESTATED MASTER EXCHANGE AGREEMENT (as may be amended, restated or otherwise modified in accordance with the terms hereof, this “ Agreement ”) is entered into as of June 30, 2016, by and among, HERTZ CAR EXCHANGE INC., a Delaware corporation (the “ QI ”), DB SERVICES AMERICAS, INC., a Delaware limited liability company (“ DB Services ”), THE HERTZ CORPORATION, a Delaware corporation (“ Hertz ”), HERTZ VEHICLE FINANCING LLC, a Delaware limited liability company (“ HVF ”), HERTZ GENERAL INTEREST LLC, a Delaware limited liability company (“ HGI ”) and HERTZ CAR SALES LLC (“HCS”), a Delaware limited liability company.

 

W I T N E S S E T H :

 

WHEREAS, the QI, DB Services, Hertz, HVF and HGI entered into a Third Amended and Restated Master Exchange Agreement dated as of November 25, 2013 (as amended prior to the date hereof, the “ Prior Agreement ”);

 

WHEREAS, the QI, DB Services, Hertz, HVF, HGI and HCS desire to amend and restate the Prior Agreement in its entirety as set forth herein;

 

WHEREAS, HVF, HGI and HCS are single member limited liability companies, solely owned by Hertz, and therefore disregarded entities for purposes of the Code and the Treasury Regulations;

 

WHEREAS, each action taken by a Legal Entity in its individual capacity pursuant to this Agreement shall, for purposes of the Code and the Treasury Regulations, have been taken by Exchangor;

 

WHEREAS, Exchangor desires to exchange certain Vehicles that are held for productive use in its trade or business and that constitute Relinquished Property for other vehicles to be held for productive use in its trade or business that are like-kind to the Relinquished Property;

 

WHEREAS, the Relinquished Property will be sold to various buyers (each a “ Buyer ”) from time to time, including Manufacturers and purchasers at auctions;

 

WHEREAS, the Replacement Property as they are purchased from time to time will be purchased from various sellers (each a “ Seller ”);

 

WHEREAS, it is the intention of the parties that each Exchange of Relinquished Property for Replacement Property, and the transactions related thereto, be effectuated pursuant to the terms of this Agreement;

 

WHEREAS, Exchangor and the QI desire and intend that the Exchanges accomplished by Exchangor and the QI under this Agreement (the “ LKE Program ”) satisfy the requirements of a “like kind exchange program” pursuant to Section 3.02 of Revenue Procedure 2003-39;

 



 

WHEREAS, Exchangor desires to effectuate each Exchange in a manner that will qualify as a like-kind exchange within the meaning of Section 1031 of the Code and the treasury regulations (the “ Treasury Regulations ”) promulgated thereunder (and any applicable corresponding provisions of state tax legislation) pursuant to one or more of the “safe harbors” described in Section 1.1031(k)-1(g) of the Treasury Regulations, and Revenue Procedure 2003-39;

 

WHEREAS, the QI is willing to act as a “qualified intermediary” within the meaning of Section 1031 of the Code and Section 1.1031(k)-1(g)(4) of the Treasury Regulations (such entity, a “ Qualified Intermediary ”) in order to facilitate Exchanges of Relinquished Property for Replacement Property;

 

WHEREAS, it is the intention of the parties to maintain Joint Collection Accounts, Exchange Accounts and Joint Disbursement Accounts so that for purposes of the Treasury Regulations Exchangor is not determined to be in actual or constructive receipt of proceeds (including any earnings thereon) from the disposition of any Relinquished Property;

 

WHEREAS, Exchangor and the QI desire and intend this Agreement to satisfy the requirement of a written agreement referred to in Section 1.1031(k)-1(g)(4)(iii)(B) of the Treasury Regulations with respect to the applicable Relinquished Property and the applicable Replacement Property;

 

WHEREAS, each Legal Entity will continue to comply with its obligations under the Related Documents to which it is a party;

 

WHEREAS, the Collection Account has been established in the name of, and under the control of a Trustee, which Trustee is unrelated to Exchangor, and shall be maintained solely for the benefit of the Noteholders;

 

WHEREAS, one or more Segregated Collection Accounts in the name of, and under the control of a Trustee, which Trustee is unrelated to Exchangor, and shall each be established and maintained solely for the benefit of the Segregated Series Noteholders; and

 

WHEREAS, Relinquished Property Proceeds transferred to a Collection Account or a Segregated Collection Account shall be applied by the Trustee solely for the repayment of liabilities of Relinquished Property Subject to Liabilities that are required to be paid with such Relinquished Property Proceeds;

 

NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements set forth herein, each Legal Entity and the QI hereby agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.                                    Definitions .  Capitalized terms used herein and not otherwise defined herein shall have the meaning set forth in Schedule I to the Base Indenture; provided that , if any such capitalized term is defined in the Base Indenture, but has a corresponding

 

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Segregated Series-specific definition set forth in the related Segregated Series Supplement, the capitalized term set forth herein shall have the meaning of the corresponding Segregated Series-specific definition set forth in the applicable Segregated Series Supplement in all contexts relating to the HVF Segregated Vehicles, HVF Segregated Vehicle Collateral or other Series-Specific Collateral with respect to such Segregated Series; provided further that , if any capitalized term is defined in each of the Base Indenture and the HGI Lease, the definition of such capitalized term set forth in the HGI Lease shall apply in all contexts relating to the HGI Vehicles and HGI Vehicle Collateral.  The following terms used in this Agreement shall have the following meanings, unless otherwise expressly provided herein:

 

Accounts ” shall mean any Exchange Account, any Joint Collection Account or any Joint Disbursement Account, as the context requires.

 

Accession Agreement ” has the meaning specified in Section 6.10(d) .

 

Additional Subsidies ” means funds deposited in or held in any Account other than funds that currently constitute Relinquished Property Proceeds.

 

Affiliate Issuer Series of Notes ” means a series of notes issued by an Affiliate Issuer that is secured by any Segregated Series of Notes.

 

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

 

Asset Class ” means a separate grouping of assets consisting solely of items of Tangible Personal Property all of which are either “like class” or “like kind” within the meaning of Treasury Regulations §1.1031(a)-2.

 

Assignment Agreement ” means any agreement with respect to each Manufacturer and its Manufacturer Program, among any Exchangors party to such Manufacturer Program and the Collateral Agent and acknowledged by such Manufacturer, assigning to the Collateral Agent such Exchangor’s rights, title and interest in such Manufacturer Program.

 

Automated Clearing House ” means a facility that processes debit and credit transactions under rules established by a Federal Reserve Bank operating circular on automated clearing house items or under rules of an automated clearing house association.

 

Base Indenture ” means the Fourth Amended and Restated Base Indenture, dated as of November 25, 2013, between HVF and The Bank of New York Mellon, N.A., as trustee.

 

Business ” means the Exchangor’s business operations, including the leasing of Tangible Personal Property.

 

Business Day ” means any day except a Saturday, Sunday or legal holiday on which the offices of the Trustee, any Legal Entity, the QI or, with respect to any matter involving any Account, the Escrow Agent (or any successor thereto) are not open for business.

 

Buyer ” has the meaning specified in the Recitals hereto.

 

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Code ” means the Internal Revenue Code of 1986.

 

Collateral Agency Agreement ” means the Fourth Amended and Restated Collateral Agency Agreement, dated as of the date hereof, among HVF, HGI, Hertz and the Trustee.

 

Deemed Identification Procedures ” means the procedures pursuant to the last sentence of Section 1.1031(k)-1(c)(1) of the Treasury Regulations and Section 4.02 of Rev. Proc. 2003-39 by which one or more Rep