ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On May 4, 2020, Hertz Global Holdings, Inc.
and The Hertz Corporation (collectively, “Hertz” or the “Company”) entered into forbearances and limited
waivers with certain of the Company’s corporate lenders and holders of the Company’s asset-backed vehicle debt. The
forbearances and waivers, described below, provide Hertz with additional time through May 22, 2020 to engage in discussions
with its key stakeholders with the goal to develop a financing strategy and structure that better reflects the economic impact
of the COVID-19 global pandemic and Hertz’ ongoing operating and financing requirements.
As a result of the COVID-19 global pandemic,
Hertz and its subsidiaries have experienced a rapid, sudden and dramatic negative impact on their businesses. While Hertz has taken
aggressive action to eliminate costs, it faces significant ongoing operating expenses, including monthly payments under its Amended
and Restated Master Motor Vehicle Operating Lease and Servicing Agreement (Series 2013-G1) with Hertz Vehicle Financing LLC
(the “Operating Lease”), pursuant to which Hertz leases vehicles used in its United States rental car operations. As
previously reported, on April 27, 2020, Hertz did not make certain payments in accordance with the Operating Lease. This caused
the occurrence of an amortization event on May 1, 2020 under the terms of a series of debt instruments pursuant to which Hertz
and its vehicle finance subsidiaries acquire the leased vehicles.
On May 4, 2020, Hertz, Hertz Vehicle
Financing LLC (“HVF”), Hertz Vehicle Financing II LP (“HVF II”) and DTG Operations, Inc. entered into
a forbearance agreement (the “Forbearance Agreement”). HVF II is a special purpose financing subsidiary that issues
asset-backed notes to finance the acquisition of vehicles, which HVF then leases to Hertz pursuant to the Operating Lease. Hertz
entered into the Forbearance Agreement with holders (the “VFN Noteholders”) of notes (the “Series 2013-A
Notes”) issued by HVF II representing approximately 60% in aggregate principal amount of the Series 2013-A Notes. Pursuant
to the Forbearance Agreement, the VFN Noteholders agreed to forbear from exercising rights to direct a liquidation of vehicles
which serve as collateral supporting the Series 2013-A Notes. The agreement with the VFN Noteholders will expire on May 22,
2020 or, if sooner, the date on which Hertz fails to comply with certain agreements contained in the forbearance agreement or another
amortization event occurs. As a result of the amortization event that occurred on May 1, 2020, and notwithstanding the Forbearance
Agreement, proceeds of the sales of vehicles that collateralize the Series 2013-A Notes must be applied to the payment of
principal and interest and will not be available to finance new vehicle acquisitions for Hertz. However, in light of the impact
of the COVID-19 global pandemic on the travel industry, Hertz believes it will not need to acquire new vehicles for its fleet through
the remainder of 2020.
Concurrently with entering into the Forbearance
Agreement, on May 4, 2020, Hertz entered into limited waiver agreements (collectively, the “Waiver Agreements”)
with certain of the lenders (the “Senior Lenders”) under its (i) senior term loan facility, (ii) letter of
credit facility, (iii) alternate letter of credit facility and (iv) U.S. vehicle revolving credit facility (collectively,
the “Senior Facilities”), pursuant to which the Senior Lenders agreed to (a) waive any default or event of default
that could have resulted from the above referenced missed payment under the Operating Lease, (b) waive any default or event
of default that has arisen as a result of Hertz’s failure to deliver its 2020 operating budget on a timely basis in accordance
with the Senior Facilities and (c) extend the grace period to cure a default with respect to Hertz’s obligation to reimburse
drawings that occur under letters of credit during the waiver period. The Waiver Agreements are effective across the Senior Facilities
and will expire on May 22, 2020 or, if sooner, the date on which Hertz fails to comply with certain agreements contained in
the Waiver Agreements, which include certain limitations on the company’s ability to make certain restricted payments, investments
and prepayments of indebtedness during the waiver period and a requirement to deliver certain financial information to the Senior
Lenders during the waiver period. There can be no assurances that Hertz will be able to successfully negotiate any further forbearance
or waivers extending relief past May 22, 2020.
The foregoing descriptions of the Forbearance
Agreement and Waiver Agreements do not purport to be complete and are subject to, and qualified in their entirety by reference
to, the full text of the Forbearance Agreement or Waiver Agreements, as applicable, copies of which are filed in Exhibits 10.1,
10.2, 10.3, 10.4 and 10.5 to this current report on Form 8-K and are incorporated by reference herein.