INTERNATIONAL FRANCHISE AGREEMENT

of

HERTZ EQUIPMENT RENTAL SYSTEM

by and between

HERTZ EQUIPMENT RENTAL CORPORATION

and

MONGOLIA EQUIPMENT RENTAL CORPORATION

(the “Parties)

HERTZ EQUIPMENT RENTAL SYSTEM

INTERNATIONAL FRANCHISE AGREEMENT

TABLE OF CONTENTS

EXHIBIT A - Product Line

EXHIBIT B - Additional Locations

EXHIBIT C - Performance Requirements

EXHIBIT D - Guaranty and Undertaking

EXHIBIT E - OpCo Joinder Letter

- i -

HERTZ EQUIPMENT RENTAL SYSTEM

FRANCHISE AGREEMENT

WITNESSETH:

WHEREAS, Franchisor and its affiliates conduct, and license others to conduct, the business of renting, leasing, selling and maintaining the classes of personal property (the “Product Line”) described below, principally for use in construction, materials handling, and commercial and industrial activities, under a unique plan or system (the “System”), which is identified by the Proprietary Marks (defined below) (each an “Equipment Rental Business”);

WHEREAS, the System is characterized and distinguished by Franchisor’s standards and specifications for the Product Line and other equipment; special marketing techniques; methods and techniques for record keeping, reporting, advertising, and sales promotion; and such other features as are conceived or developed by Franchisor for authorized use as part of the System;

WHEREAS, Franchisor has the exclusive right to grant licenses to use the System;

WHEREAS,  HERTZ SYSTEM, INC. (“Hertz”), a corporation organized and existing under the laws of the State of Delaware, United States of America, with its principal office in Park Ridge, New Jersey 07656, U.S.A., is the owner of the Proprietary Marks and has the right to grant licenses to use those Proprietary Marks; and

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NOW, THEREFORE, the parties, in consideration of the undertakings and commitments of each party to the other party set forth herein, the sufficiency of which is hereby acknowledged, mutually agree as follows:

I.

GRANT OF NON-EXCLUSIVE LICENSE

A.

B.

Franchisee shall, in connection with the operation of the Franchised Business, rent, lease and maintain only the Product Line set out in Exhibit A to this Agreement, as it may be modified by Franchisor from time to time; provided, however, Exhibit A may be amended from time to time as mutually agreed by Franchisor and Franchisee.

C.

Franchisee expressly acknowledges and agrees that Franchisor retains and reserves all rights not expressly granted to Franchisee in this Agreement.  Franchisor shall retain, for itself, and its, parents, subsidiaries, and affiliates (together, its “Affiliates”) the right, among others, to use, and to license others to use, the System and the Proprietary Marks within and outside the Franchisee’s Area of Responsibility; and to develop, use and license the use of other proprietary marks within and outside the Franchisee’s Area of Responsibility in connection with the sale, rental, lease, or other use of the same, similar or different products and services, in each case except with respect to the Equipment Rental Business for which Franchisee is being granted an exclusive right and license as described in Paragraph I.A above, on any terms and conditions Franchisor may deem advisable, and without granting Franchisee any right therein.  Franchisee expressly acknowledges and agrees that Franchisor and its Affiliates may develop, use and license methods, plans, programs or procedures for the operation of equipment renting businesses which are not part of the System and that Franchisee has no rights therein unless such methods, plans, programs or procedures are expressly made part of the System by Franchisor.

D.

Without limiting generality of the foregoing reservation of rights by Franchisor, Franchisee agrees that it has no rights under this Agreement:

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(1)

To rent, lease or sell any vehicles that are determined by Franchisor to be primarily designed, used or maintained for the transportation of property or goods (a “Truck Rental Business”), subject to Franchisee’s right of first refusal pursuant to Paragraph I.F.3. below, except for the rental or leasing of trucks that are in the Product Line and used in connection with the operation of the Franchised Business;

(2)

(3)

To lease any cars under any lease agreements, or to rent any cars, including for transient rental purposes, for insurance and mechanical related vehicle replacement purposes, or in connection with or through any self-service program or car-sharing service (a “Car Rental Business”); and

(4)

Except as expressly granted to Franchisee in this Agreement pursuant to Paragraph I.A. above, to use any trademark (including other trademarks that contain “HERTZ”) or any system (including other systems that are similar to or contain elements or features of the System) owned, developed, or acquired by Franchisor or its Affiliates.

E.

Franchisee further acknowledges and agrees that nothing in this Agreement shall prohibit Franchisor or its Affiliates from:

(1)

Operating (or licensing others to operate) businesses and systems within (except for another Equipment Rental Business) or without the Area of Responsibility;

(2)

Operating (or licensing others to operate) an Equipment Rental Business under the Proprietary Marks or other trademarks outside the Area of Responsibility;

(3)

Operating (or licensing others to operate) a Truck Rental Business, Vehicle or Equipment Sales Business, or Car Rental Business under the Proprietary Marks or other trademarks within or without the Area of Responsibility, subject to Franchisee’s right of first refusal pursuant to Paragraph I.F.3. below with respect to the Truck Rental Business; or

(4)

Selling any of their assets, engaging in a public offering or private placement of ownership interests, merging with or acquiring other corporations or entities, or being acquired by another corporation or entity (including a corporation or entity which may own or operate systems or chains which may be competitive with or similar to the System).

Franchisee shall, at Franchisee’s expense, acquire or lease the following location or locations for the Franchised Business:

(1)

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(2)

The additional location(s) for the Franchised Business described in Exhibit B hereto (which, together with the Initial Franchised Premises, shall each constitute the “Franchised Premises” hereunder), which must be opened and in operation by the date(s) specified in Exhibit B.  Franchisee’s failure to meet the schedule for opening the additional locations constitutes grounds for termination of this Agreement; provided, however, that Franchisor may, at its option and in lieu of termination, reduce, modify, revise, or reclaim the Area of Responsibility upon notice to Franchisee.

(3)

Franchisor hereby agrees that, so long as Franchisee shall be in full compliance with this Agreement and with all other agreements (if any) between Franchisee and Franchisor,  during the term of this Agreement, and subject to the provisions of this Paragraph I.F.(3), Franchisor will not establish or license another to establish a Truck Rental Business under the System at a location within the Area of Responsibility without first having afforded Franchisee, for a period of one hundred and eighty (180) days, a non-transferrable right of first refusal to establish a Truck Rental Business under the System within the Area of Responsibility.  Franchisee agrees that Franchisor shall have no obligation to establish or to license another to establish a business under the System within the Area of Responsibility if Franchisee elects not to exercise its right of first refusal.  Franchisee shall exercise its right of first refusal by execution of the then-current form of Hertz franchise agreement for the Truck Rental Business, and such other ancillary agreements as Franchisor may then require; provided, however, that the amount of the initial fee, license fee, advertising fee, sales promotion fee, and any other fees to be provided for in the franchise agreement, as well as the length of the term of such franchise agreement, the scope of any territorial provisions, and the grant of any right to establish additional franchised businesses, shall be the subject of negotiation between the Franchisor and the Franchisee.

F.

(1)

To accommodate certain legal and structuring considerations, Franchisor hereby agrees to allow Franchisee to appoint, and the Franchisee agrees that it shall as soon as possible following the date of this Agreement but in any event within 3 calendar months of the Commencement Date, incorporate a company organized and existing under the laws of Mongolia (“OpCo”) to operate the Franchised Business on the express conditions (which conditions shall apply throughout the term of this Agreement) that:  (i) Franchisee shall at all times control and oversee the effective management and operations of OpCo, including all aspects of OpCo’s operations related to the Franchised Business; (ii) Franchisee shall cause OpCo to fully comply with all of the obligations of OpCo set forth in this Agreement and any other agreement with Franchisor; (iii) Franchisee must provide to Franchisor all ownership and operation information and documents that Franchisor may reasonably require with regard to OpCo, including but not limited to information, representations, warranties and agreements about OpCo, and true and complete copies of any available organizational documents of OpCo; and (iv) save for where Franchisor has given its express permission, OpCo shall be an operating company whose primary purpose shall be the issuing, receiving and settling of trade and other payments through a bank account.

(2)

OpCo will operate the Franchised Business, and perform such activities with respect to the operation of the Franchised Business, which as a matter of applicable law must be carried out by OpCo rather than Franchisee, including but not limited to:  employing

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staff and processing visas, applying for local licenses and permits, subscriptions to utilities, obtaining commercial leases, payment of employees’ wages, payment of local taxes, maintaining local books of account and making necessary filings with government bodies.  Franchisee or one or more of its owners must own one hundred percent of ownership interest in OpCo.  OpCo shall limit, and its organizational documents shall limit, its activities to the operation of the Franchised Business.

(3)

OpCo shall be authorized to use the Proprietary Marks and other elements of the System, but only to the extent necessary to perform the obligations delegated to OpCo under this Agreement, and only in compliance with all of the terms and conditions of this Agreement.

(4)

The references to “Franchisee” in this Agreement shall be deemed to include both “Franchisee” and “OpCo,” and Franchisee shall provide, upon incorporation of OpCo, that OpCo shall jointly and severally, directly, unconditionally and irrevocably join in and agree to be bound (as if a party hereto) by, and liable for the breach of, all of Franchisee’s liabilities and obligations under this Agreement by issue of a letter in the form set out in Exhibit E.  Without limiting the generality of the foregoing, OpCo shall be bound by the governing law and arbitration provisions in Article XXII.

II.

TERM AND RENEWAL

A.

B.

The license granted to Franchisee under this Agreement may be renewed for two (2) successive five (5) year terms, provided that at the end of the Initial Term (and, as applicable, the end of the first renewal period):

(1)

Franchisee has given Franchisor written notice of its election to renew not more than twelve (12) months nor less than nine (9) months prior to the end of the Initial Term (and, as applicable, the end of the first renewal period);

(2)

Franchisee is not in default of any provision of this Agreement, any amendment hereof or successor hereto, or any other agreement between Franchisee and Franchisor or its Affiliates (whether or not related to this Agreement), and has substantially complied with all the terms and conditions of this Agreement and such other agreements during the terms thereof;

(3)

Franchisee has paid all amounts owed to Franchisor on or before the dates on which they were due;

(4)

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(5)

(6)

Franchisee shall have complied with Franchisor’s then-current qualification and training requirements;

(7)

Franchisee shall refurbish, repair, replace or obtain, at Franchisee’s expense, such equipment, computer systems, signs, interior and exterior decor items, fixtures, furnishings, supplies and other products and materials required for the operation of the Franchised Business as Franchisor may reasonably require and shall otherwise modernize the Franchised Business to reflect the then-current standards and image of the System as specified in the Manual;

(8)

(9)

III.

SERVICES OF FRANCHISOR

A.

Franchisor shall, upon request of Franchisee, consult with Franchisee concerning advertising, sales and publicity, and promotion of the Franchised Business.

B.

Franchisor may, at its option and upon such terms as it deems advisable, provide Franchisee with continuing advisory assistance in the operation of the Franchised Business.  Franchisor may from time to time offer to Franchisee, at Franchisee’s expense, materials and bulletins on sales, marketing developments, and operating techniques.

C.

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described in Paragraph VII. hereof, the contents of which Manual may be amended or supplemented by Franchisor from time to time.

D.

Franchisor shall include such information as Franchisor deems appropriate about Franchisee and other System franchisees on Franchisor’s Website (as defined below) and in such other electronic and other sales promotion material as may from time to time be determined by Franchisor.

E.

Franchisor may, from time to time and at its sole discretion, offer certain products and services to Franchisee, for purchase at Franchisee’s option, including Hertz Equipment Rental System Standard Rental Agreements, other forms, stationery, standard Hertz Equipment Rental signs, sales promotional materials, and decalcomania, upon such price, terms, and conditions as Franchisor may determine.

F.

Franchisor shall, as may be deemed appropriate by Franchisor, include on Franchisor’s Website such information with respect to rates, equipment and conditions under which the Product Line may be rented from System franchisees.

G.

Franchisor shall, at its sole discretion, make available to Franchisee, such programs as Franchisor may from time to time develop or designate to facilitate the purchase of various equipment and materials required in the Franchised Business (at Franchisor’s sole discretion, from Franchisor, its Affiliates, or third party suppliers), upon such price, terms and conditions as Franchisor may determine, and to the extent permitted by law.

H.

I.

J.

Franchisee acknowledges and agrees that any designee, employee, regional/branch offices, contractor or agent of Franchisor may perform any duty or obligation imposed on Franchisor by this Agreement, as Franchisor may designate.

IV.

FEES

A.

In consideration of the license granted herein, Franchisee shall pay to Franchisor the following fees:

(1)

An initial fee of Forty Five Thousand Dollars ($45,000.00) upon execution of this Agreement, of which thirty Thousand Dollars($30,000.00) shall be for costs heretofore incurred by Franchisor in connection with this Agreement and Fifteen Thousand Dollars ($15,000.00) shall be for costs incurred by Franchisor in furnishing assistance and services to Franchisee during the initial phase of the Franchised Business, which are to defray Franchisor’s

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costs of any kind or nature by way of reimbursement or otherwise.  Franchisee acknowledges and agrees that the initial fee shall be deemed fully earned upon execution of this Agreement as consideration for Franchisor’s lost or deferred opportunity to license others and to defray Franchisor’s costs. If Franchisor permits Franchisee to defer payment of a portion of the initial fee and this Agreement is terminated at any time before the initial fee has been paid in full, the balance of the initial fee shall immediately become due to Franchisor.

(2)

A continuing monthly license fee in an amount equal to six percent (6%) of the Gross Revenue, as hereinafter defined, derived from the Franchised Business, but not less than $135,000 per annum.  The minimum annual amount shall be applied beginning 12 months from the Commencement Date and shall be adjusted pro rata in the case of a partial year, and all payments of the minimum annual amounts shall commence and be due to Franchisor upon the submission of the annual statements required under Paragraph IX.C.(1) hereof.

(3)

B.

C.

D.

“Gross Revenue,” for the purposes of this Agreement, shall mean and include the gross amount of all sums, whether such sums are cash or credit, billed or charged by Franchisee (whether or not the same shall have been paid or collected) as time, mileage, or use charges, loss and collision damage waiver charges, personal accident or other insurance charges (net of the portion of such charges which is payable by Franchisee to the insurance carrier issuing the

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E.

F.

Franchisee shall provide Franchisor within one hundred eighty days (180) days of the Commencement Date a standby letter of credit, in form and substance satisfactory to Franchisor in the amount of _________________, from a leading commercial bank approved by Franchisor.  

V.

DUTIES OF FRANCHISEE

A.

Franchisee understands and acknowledges the importance of maintaining the excellent reputation of Franchisor and its System, and recognizes the need to comply with the System as now constituted and as the same may from time to time be changed by Franchisor, and that such compliance is important to Franchisee, Franchisor and other franchisees in order to develop and maintain high quality and uniform operating standards, and to protect Franchisor’s reputation and goodwill.

B.

Franchisee shall continuously offer, energetically advertise, and otherwise actively promote the Product Line so as to develop the largest possible market for the Product Line within the Area of Responsibility; and shall otherwise devote Franchisee’s best efforts to the conduct and operation of the Franchised Business.

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C.

D.

E.

Franchisor may, at its sole option, hold periodic conventions or seminars for System franchisees, which may include programs on sales and marketing techniques, performance specifications, advertising programs and training suggestions, among other things.  Franchisee’s attendance at each such convention or seminar is mandatory and Franchisee shall pay all expenses of attending, including travel, lodging, meals and entertainment.

F.

All sales and marketing activities of Franchisee shall conform to the standards, methods and procedures which may be prescribed from time to time by Franchisor in writing.  Franchisee shall maintain a sufficient supply of, and use at all times in its operation hereunder, only such promotional, sales, and marketing supplies and materials as conform with Franchisor’s image, standards and such specifications as Franchisor may prescribe from time to time.  In addition, Franchisee agrees to list the Franchised Business, as directed by Franchisor, in paper and electronic directories applicable to the Area of Responsibility.  Franchisee authorizes Franchisor, at Franchisor’s discretion, to appoint any qualified agent or agency to place telephone directory and electronic listings, at Franchisee’s expense, in the uniform manner prescribed by Franchisor.  Franchisee agrees to pay for such listings in the manner prescribed by Franchisor from time to time.

G.

Franchisee shall operate the Franchised Business only from the Franchised Premises.  Franchisee agrees to use the Franchised Premises solely for the purpose of operating the Franchised Business, except as otherwise agreed to by Franchisor in writing; and to keep the Franchised Premises open and in normal operation for such minimum hours and days as Franchisor may reasonably prescribe from time to time.  Franchisee shall actively and continuously operate the Franchised Business at each of the Franchised Premises in accordance with Paragraph I.F. above throughout the term of this Agreement.

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H.

Franchisee agrees to maintain the Franchised Premises in a clean, attractive condition and in good repair, and in connection therewith, shall make such reasonable additions, repairs and replacements thereto as may be required for that purpose, including, without limitation, such periodic repainting, repairs to impaired equipment, and such other repairs and renovation as Franchisor may reasonably direct from time to time.

I.

Franchisee agrees to rent, lease and maintain only the equipment included in the Product Line set out in Exhibit A to this Agreement and specified in the Manual; to repair and maintain the Product Line as prescribed by Franchisor; to replace individual components of such Product Line at such reasonable intervals as Franchisor may require; to incorporate in or delete from the Product Line such categories of equipment as Franchisor may specify; and to maintain such quantities of equipment in each equipment category as Franchisor may require; to keep and maintain all equipment in excellent mechanical and running order, and in a safe, efficient, clean and presentable condition, and to promptly respond to manufacturer’s recalls and to comply with the manufacturer’s instructions related thereto.

J.

Franchisee shall maintain and operate the Franchised Business in conformity with such standards, specifications and procedures as Franchisor may from time to time prescribe in the Manual or otherwise in writing, including but not limited to the following obligations:

(1)

(2)

(3)

To purchase and install such signs, fixtures, furnishings, appliances and equipment as Franchisor may direct from time to time to comply with standards and specifications required by the System; and to refrain from installing or permitting to be installed any signs, fixtures, furnishings, appliances or equipment not meeting Franchisor’s standards and specifications.  Franchisee agrees to refurbish and upgrade the Franchised Premises as may be reasonably required by Franchisor to maintain or improve the appearance of the Franchised Premises, to accommodate new or additional equipment or equipment related requirements, and

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to conform to Franchisor’s current standards and specifications as Franchisor may from time to time prescribe in the Manual or otherwise in writing.  Franchisee agrees to display, at Franchisee’s expense, the mark HERTZ EQUIPMENT RENTAL and such other Proprietary Marks as Franchisor designates on all signage, forms, uniforms, stationery and any other items that Franchisor designates for display of such Proprietary Marks.  In the event that Franchisor changes its Proprietary Marks, or trade dress, Franchisee shall have a reasonable period of time (as Franchisor may from time to time prescribe in the Manual or otherwise in writing) to make such modifications pursuant to this Paragraph.

(4)

To carry out and report to Franchisor such customer satisfaction tracking techniques as Franchisor requires and to achieve throughout the term of this Agreement the performance requirements set forth and described in Exhibit C hereto.

(5)

To require that employees of Franchisee, while working at the Franchised Business, wear uniforms, provided by Franchisee at Franchisee’s expense, of such color, design and other specifications as Franchisor may require.  Franchisee’s employees shall present a neat and clean appearance at all times and render competent and courteous service to all customers of the Franchised Business.  Franchisee shall employ (or the Representative serve as) a manager who shall devote his full time to the management and operation of the Franchised Business.

(6)

To decorate, in a manner satisfactory to Franchisor, the interior and exterior of the Franchised Premises with the colors and other trade dress prescribed by Franchisor from time to time; and to paint and letter the Product Line and other personal property utilized in the Franchised Business in the uniform manner prescribed by Franchisor from time to time.

(7)

To cooperate with all other franchisees and Equipment Rental Businesses operated by Franchisor’s parent and to comply with all policies and procedures set forth in the Manual.

(8)

To use, in connection with the renting of the Product Line, at Franchisee’s expense, only the Hertz Equipment Rental System Standard Rental Agreement forms from time to time specified by Franchisor and no modifications, alterations or additions shall be made to such forms without Franchisor’s prior written consent (save that the forms may be translated into any relevant language if the Franchisee so requires).  Franchisee shall purchase from Franchisor’s approved suppliers the Hertz Equipment Rental System Standard Rental Agreement forms that meet Franchisor’s then-current specifications.

(9)

To afford each renter of the Product Line, in accordance with the Hertz Equipment Rental System Standard Rental Agreement, the option, by payment of an additional charge specified by Franchisee, to effect the waiver of certain claims by Franchisee against such renter for loss of or damage to the rented personal property, subject, however, to all the terms, conditions, and limitations contained in the Hertz Equipment Rental System Standard Rental Agreement and applicable laws.

(10)

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(11)

(12)

To maintain the type of time, use, mileage or other rates promoted or prescribed by Franchisor from time to time; to furnish Franchisor with a complete schedule of Franchisee’s charges and rates; and to maintain the types and levels (maximum or minimum) of rates promoted or prescribed from time to time by Franchisor to the extent allowed by applicable law which, in Franchisor’s sole discretion, and business judgment, Franchisor determines best serve the competitive and other business interests of the System.  In Franchisor’s sole discretion, such rates may include or exclude a separate charge or charges for mileage, the insurance referred to in Paragraph V.J.(9) hereof, gasoline, oil, maintenance or any other item.

(13)

(14)

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electronic address of any website and agrees to immediately transfer, without charge, the ownership of any domain names containing the Proprietary Marks including hertzmongolia.com and mongoliahertz.com to Franchisor upon demand.  As used herein, “Website” means any interactive electronic document, contained in a network of electronic devices linked by communications software, that Franchisor operates or authorizes others to operate and that refers to the Franchised Business, the Proprietary Marks, or the System.

(15)

To comply with all of the terms and conditions of all customer complaint programs that Franchisor may from time to time prescribe in the Manual or otherwise in writing.  Pursuant to such programs, Franchisor shall have the right to resolve customer complaints on Franchisee’s behalf and to receive reimbursement from Franchisee for the costs of resolving such complaints, and Franchisee agrees to abide by all customer complaint decisions rendered by Franchisor.

(16)

To refrain from engaging in any practices which tend to mislead the public in any way.

K.

Franchisee shall permit Franchisor and its agents to enter the Franchised Premises at any reasonable time and on reasonable prior notice and as often as Franchisor may elect for the purpose of conducting inspections and audits to determine Franchisee’s compliance with this Agreement; shall cooperate fully with Franchisor’s representatives in such inspections and audits by rendering such assistance as they may reasonably request; and, upon notice from Franchisor or its agents, and without limiting Franchisor’s other rights under this Agreement, shall take such steps as may be necessary immediately to correct and/or pay promptly any deficiencies detected during such inspections and audits.

L.

If Franchisee is unable to rent or lease under the System any product or service desired by an actual or prospective customer, Franchisee shall use all reasonable efforts to refer that customer to another business operated under the mark HERTZ which rents or leases the desired product or service, such as another Hertz Equipment Rental Business, a Truck Rental Business, or a Car Rental Business.

M.

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N.

Franchisee shall comply with the standards and procedures developed by Franchisor for the System, in the manner directed by Franchisor in the Manual or otherwise, with regard to Franchisee’s authorization to use, and use of, blogs, common social networks (such as Facebook®), professional networks (such as Linked-In®), live blogging tools (such as Twitter®), virtual worlds, file, audio and video sharing sites and other similar social networking media or tools (together, “Social Media”) that in any way references the Proprietary Marks or involves the System or the Franchised Business.

O.

Franchisor may (but is not required to) develop an Intranet network through which Franchisor and its franchisees can communicate by e-mail or similar electronic means.  Franchisee agrees to use the facilities of the Franchisor’s Intranet network in strict compliance with the standards, protocols and restrictions that Franchisor may from time to time prescribe in the Manual or otherwise in writing (including, without limitation, standards, protocols and restrictions relating to the encryption of confidential information and prohibitions against the transmission of libelous, derogatory or defamatory statements).

P.

VI.

PROPRIETARY MARKS

A.

With respect to Franchisee’s licensed use of the Proprietary Marks pursuant to this Agreement, Franchisee agrees that:

(1)

(2)

Franchisee shall use the Proprietary Marks only for the operation or conduct of the Franchised Business, only within the Area of Responsibility, and only at the Franchised Premises.

(3)

During the term of this Agreement, Franchisee shall identify itself as the

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(4)

(5)

Franchisee shall not use the Proprietary Marks as part of its corporate or other legal name, nor shall Franchisee purchase, sell, license or register equipment or the Product Line under a name that includes the Proprietary Marks in any manner whatsoever.

(6)

(7)

(8)

(9)

Franchisee shall, upon request by Franchisor and/or Hertz, execute a specific trademark license agreement, registered user agreement or any other document necessary to meet the requirements of the laws of any country, province, district, or other political subdivision in which Franchisee operates, for purposes of recordal or otherwise, and to pay the actual costs thereof. Upon the termination or expiration of this Agreement, Franchisee agrees to do everything necessary to ensure that Franchisee ceases to be a registered user of the Proprietary Marks, and Franchisee hereby appoints Franchisor and Hertz  as Franchisee’s attorney to execute any documents and to do such things as may be necessary for this purpose and agrees to pay the actual costs associated with the cancellation of the registered user agreement.

B.

Franchisee expressly understands and acknowledges that:

(1)

Hertz is the owner of all right, title and interest in and to the Proprietary

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Marks and the goodwill associated with and symbolized by them.

(2)

The Proprietary Marks are valid and serve to identify the System and those who are licensed under the System.

(3)

Franchisee shall not directly or indirectly contest the validity or the ownership of the Proprietary Marks.

(4)

Franchisee’s use of the Proprietary Marks pursuant to this Agreement does not give Franchisee any ownership interest or other interest in or to the Proprietary Marks, except the license granted herein.

(5)

(6)

The right and license to use the Proprietary Marks granted hereunder to Franchisee is non-exclusive.

C.

VII.

THE MANUAL

A.

B.

Franchisee shall at all times treat the Manual, any other operational directives created or approved by Franchisor for use in the operation of the Franchised Business, and the information contained therein, as confidential; and shall use all reasonable efforts to maintain such information as secret and confidential.  Franchisee shall not at any time, without Franchisor’s prior written consent, copy, duplicate, record or otherwise reproduce the foregoing

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C.

D.

(1)

(2)

Franchisee shall ensure that, before any employee or independent contractor begins work on translating the Manual or any revisions or modifications thereto, each such employee or contractor (and, in turn, said contractors' employees and contractors) shall obtain the agreement (in the form specified by Franchisor) of such persons and entities to maintain the confidentiality of the contents of the Manual (and/or any revisions or modifications thereto), and that such individual irrevocably assigns to Franchisor, with no monetary consideration paid by Franchisor, any and all intellectual property right such individual may have in the translated version of the Manual (and/or any revisions or modifications thereto). Franchisee shall immediately provide the original copy of each such document to Franchisor.

VIII.

CONFIDENTIAL INFORMATION

A.

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or Hertz’ ownership or to provide such other assistance to secure Franchisor’s intellectual property rights in such information and techniques.

B.

IX.

ACCOUNTING AND RECORDS

A.

B.

Franchisee shall submit to Franchisor, on a monthly or other periodic basis prescribed by Franchisor, a statement or statements in the form prescribed by Franchisor, showing such descriptive information as Franchisor may require of each item of equipment and other personal property in the Product Line owned, used, under repair or kept by Franchisee for use in the Franchised Business in the preceding month and the Gross Revenue generated by the Franchised Business, during such period.  Such statements shall be signed by Franchisee.  At the request of Franchisor and at Franchisee’s sole cost and expense, Franchisee agrees to swear to the truth of such statements by means of an affidavit executed before  a Consul of the United States of America, or before a Notary Public and/or by providing Franchisor with a statement of a Certified Public or Chartered Accountant as deemed appropriate by Franchisor.

C.

Franchisee shall submit the following statements to Franchisor:

(1)

As soon as available, but in any event within ninety (90) days after the end of each calendar year of the Franchised Business, a statement certified by a Certified Public or Chartered Accountant in a generally recognized international accounting firm, showing: (i) the total Product Line and the total amount of Gross Revenue generated by the Franchised Business during such calendar year or portion thereof; and (ii) a computation of the amount that Franchisee was required to spend under Paragraph X.C. below for advertising and promotion and the amount actually expended by Franchisee; and

(2)

At Franchisor’s request, audited financial statements certified by a Certified Public or Chartered Accountant in a generally recognized international accounting firm for the Franchised Business within ninety (90) days after the end of each calendar year.

Upon submission of such statements, Franchisee shall remit therewith all sums not theretofore paid which shall be due to Franchisor in accordance with the provisions of this Agreement (including the payment of the minimum annual license fee required under Paragraph IV.A.(2)

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hereof).  If any amounts are then overdue, such overdue sums shall be subject to late fees pursuant to Paragraph IV.C. hereof.

D.

Franchisee shall also submit to Franchisor, for review or auditing, to determine Franchisee’s compliance with this Agreement, such other forms, reports, records, information and data as Franchisor may reasonably designate, in the manner and at the times and places reasonably required by Franchisor, upon request and as specified from time to time by Franchisor in writing.

E.

X.

ADVERTISING AND SALES PROMOTION

Recognizing the value of advertising and sales promotion, the importance of the standardization of advertising programs to the furtherance of the goodwill and public image of the System, and the significance of sales promotion activities, the parties agree as follows:

A.

B.

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(1)

Franchisor shall direct all such advertising and sales promotion programs, with sole discretion over the planning of such programs; the creative and strategic concepts, materials and media used in such programs; and the placement and allocation thereof.  Franchisee agrees and acknowledges that the funds are intended to maximize recognition and acceptance of the Proprietary Marks and the System, and the promotion and exploitation thereof, and that Franchisor undertakes no obligation in administering the funds to make expenditures for Franchisee which are equivalent or proportionate to Franchisee’s contribution, or to ensure that any particular franchisee benefits directly or pro rata from the placement of advertising or the promotion of sales.

(2)

Franchisee agrees that the funds may be used to meet any and all costs of maintaining, administering, directing and preparing advertising and sales promotion activities, including, without limitation, the cost of preparing and conducting television, radio, magazine, internet, Social Media, and newspaper advertising campaigns and other public relations activities; the Website; employing advertising agencies to assist therein; sales programs and activities; and providing certain promotional brochures and other marketing materials to System franchisees.  Sums paid by Franchisee to the advertising and sales promotion funds may be used by Franchisor to defray any of Franchisor’s operating expenses and overhead reasonably related to the administration, direction or operation of the advertising and sales promotion funds, programs, and activities.

C.

In addition to any other expenditures required under this Paragraph X, Franchisee shall spend annually an amount equal to not less than one percent (1%) of the Gross Revenue of the Franchised Business for the year for local advertising and promotion of the Franchised Business within the Area of Responsibility.  Subject to such changes or other requirements of Franchisor as it reasonably determines to be appropriate, as used herein “local advertising and promotion” shall consist only of the direct costs of purchasing and producing advertising materials (including, but not limited to, camera ready advertising and point of sale materials), media (space or time), and those direct out of pocket expenses related to costs of advertising and sales promotion spent by Franchisee in the Area of Responsibility, including advertising agency fees and expenses.  “Local advertising and promotion” shall not include any of the following: (1) salaries and expenses of any employees of Franchisee, including salaries or expenses for attendance at advertising meetings or activities, or incentives provided or offered to such employees, including discount coupons; (2) charitable, political, or other contributions or donations; and (3) the value of discounts provided to consumers.

XI.

INSURANCE

A.

Franchisee shall, if available, procure, prior to the commencement of business,

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and maintain in full force and effect during the term of this Agreement, at Franchisee’s expense, an insurance policy or policies protecting Franchisee and Franchisor and their shareholders, Affiliates, officers, directors, partners and employees, against any loss, liability, personal injury, death, property damage, loss of business income, or expense whatsoever arising or occurring upon or in connection with the Franchised Business.  Franchisor shall be named an additional insured in such policy or policies with respect to liability arising out of the operation of the Franchised Business.  The policy or policies shall contain a waiver of subrogation by Franchisee’s insurance carriers.  In addition, Franchisee agrees to seek compensation solely from Franchisee’s insurance carriers to the extent that any loss may be covered by Franchisee’s insurance policy or policies.

B.

Such policy or policies shall be written by an insurance company satisfactory to Franchisor and shall be in a form satisfactory to Franchisor in accordance with standards and specifications set forth herein as well as others which Franchisor may reasonably specify from time to time; and shall include at a minimum (except as additional coverages and higher policy limits may be reasonably specified from time to time by Franchisor in writing) the following:

(1)

Commercial General Liability (“CGL”) Insurance, including Products and Completed Operations and Contractual Liability Coverage, with a combined single limit of liability of not less than two million dollars ($2,000,000) per occurrence for bodily injury, including death, personal injury, and property damage.  Such insurance shall be written on a primary and noncontributory basis.

(2)

(3)

Automobile Liability Insurance for all owned, non-owned, leased, rented, borrowed, and/or hired vehicles (Symbol 1) insuring against liability for bodily injury and death and property damage in an amount not less than one million dollars ($1,000,000) per occurrence.  

(4)

Excess Liability Insurance with a combined single limit of not less than four million dollars ($4,000,000) per occurrence in excess of the underlying CGL, Employer’s Liability, and Automobile Liability Insurance requirements set forth in Paragraph XI.B.(1), (2), and (3) above.

C.

Franchisee shall, prior to the commencement of business hereunder, provide to Franchisor a certificate of insurance which verifies the coverages described herein, identifies the additional insureds provided for herein, and confirms that such insurance shall not be terminated or the amount or type of coverage altered without the insurance carrier giving Franchisor thirty (30) days’ prior written notice, which shall be sent to the attention of the Insurance Manager at the address stated at Paragraph XIX. hereof, or to such other address as Franchisor may specify from time to time in writing.

D.

Franchisee’s obligation to obtain and maintain the foregoing policy or policies in

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the amounts specified shall not be limited in any way by reason of any insurance which may be maintained by Franchisor, nor shall Franchisee’s performance of that obligation relieve it of liability under the indemnity provisions set forth in Paragraph XVII.C. hereof.

E.

Should Franchisee, for any reason, fail to procure or maintain the insurance required by this Agreement, as revised from time to time for all franchisees in writing, Franchisor shall have the right and authority (without, however, any obligation to do so) to (1) procure such insurance and to charge the cost of same to Franchisee, which charges, together with a reasonable fee for Franchisor’s expenses in so acting, shall be payable by Franchisee immediately upon notice, or (2) terminate this Agreement as provided in Paragraph XIII.C. hereof.

XII.

TRANSFERABILITY OF INTEREST

A.

Transfer by Franchisor:

Franchisor shall have the right to delegate, transfer, or assign all or any part of its rights or obligations herein to any person or legal entity.

B.

Transfer by Franchisee:

(1)

Franchisee shall be, at all times, a wholly owned subsidiary of [             ], a Delaware corporation (“Owner”). A complete list of the Officers and Directors of Owner, as well as persons and entities having an Ownership Interest of more than 5% in Owner (each, a “Control Person”), is set forth in the form set out at the end of this Agreement (the “Control Person Schedule”).  Franchisee represents and warrants that such ownership information form is current, complete and accurate.  Franchisor understands that Owner is involved in, owns and operates other unrelated businesses in and out of Mongolia and that its wide shareholder base changes, to some degree, from time to time. Franchisee shall update the Control Person Schedule on a quarterly basis after the date of this Agreement, and at any time as reasonably requested in writing from Franchisor. Any purported sale, assignment, conveyance, gift, pledge, mortgage or other transfer or encumbrance of, or change in,  the Owner’s Ownership Interest in Franchisee without the prior consent of Franchisor, shall be deemed to be an unauthorized assignment of the license granted under this Agreement and shall constitute a material breach of this

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Agreement for which this Agreement shall automatically terminate without notice or opportunity to cure, pursuant to Paragraph XIII.A. hereof.  For the purpose of this Agreement, the term “Ownership Interests” shall mean all forms of ownership, whether legal or beneficial, voting or non-voting, including stock, partnership interests, limited liability company membership or ownership interests, joint tenancy interests, proprietorship interests, trust beneficiary interests, proxy interests, power-of-attorney interests, and all options, warrants and instruments convertible into such other interests.  

(3)

If Franchisee at any time during the term hereof desires to transfer the Franchised Business, and provided Franchisee is not in default hereunder, Franchisor hereby agrees to issue to the transferee of the Franchised Business designated by Franchisee a then-current standard form Hertz Equipment Rental System International Franchise Agreement, granting such transferee the right to use the System in the conduct of the Franchised Business in the Area of Responsibility specified in Paragraph I.A. hereof, upon the same terms and conditions then being offered by Franchisor under such Hertz Equipment Rental System International Franchise Agreement, except as to any initial fee, license fee, minimum fee and any other fees and assessments to be paid by such transferee to Franchisor under such Hertz Equipment Rental System International Franchise Agreement, as well as the length of the term thereof, all of which shall remain within the sole discretion of Franchisor; provided, however, that such transferee shall have first applied to and been approved by Franchisor as a franchisee (which approval shall not be unreasonably withheld) and shall have agreed to and accepted all the terms and conditions of such franchise offered to him by Franchisor, as described above, including the payment of any initial fee, license fee and any other fees and assessments as therein provided.  

(4)

Prior to any transfer to a transferee approved by Franchisor, Franchisor may, in its sole discretion, as conditions precedent to such transfer, require that:

(a)

(b)

Transferee execute (and/or, upon Franchisor’s request, cause all interested parties to execute) such ancillary agreements as Franchisor may require for the Franchised Business, including, but not limited to, an agreement to guarantee payment of amounts owed by Franchisee to Franchisor, its Affiliates, third party suppliers, and to other franchisees.

(c)

Neither transferee nor any of its affiliates (including owners) is a Restricted Person (as defined in Paragraph XVI.C.(3) below.

C.

Sale of Assets to Franchisor:

Franchisor shall have the right of first refusal, upon application to Franchisor for approval of a transferee pursuant to Paragraphs XII.B(2) or XII.C hereof, to purchase from

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Franchisee all of the assets employed in the Franchised Business for the same purchase price and conditions of payment as proposed by the prospective transferee pursuant to a bona fide written offer to purchase, a true copy of which shall be delivered to Franchisor, who shall have sixty (60) days from receipt of such copy within which to accept the same offer, with Franchisor having the right of access at reasonable times to the books, records, equipment, leases and other assets utilized in the operation of the Franchised Business to enable Franchisor to evaluate, as Franchisor deems appropriate, whether or not to exercise such right of first refusal; and an additional sixty (60) days thereafter to consummate this transaction in accordance with the provisions of Paragraphs XIV.J(1) to XIV.J(4) hereof. Franchisor shall have the unrestricted right to assign this right of first refusal to its designee (an Affiliate or unaffiliated third party) separate and apart from the remainder of this Agreement.

D.

Non-Waiver of Claims:

F.

Franchisor’s Review of Securities Offering and Financing Documents:

(1)

(2)

Any such private or public investment offering circular or prospectus issued by Franchisee or any of its affiliates where any of the Proprietary Marks appears, or a reference to this Agreement appears, shall contain a disclaimer in bold face type substantially as follows:  “THE BORROWER IS A PARTY TO CERTAIN FRANCHISE AGREEMENT WITH HERTZ EQUIPMENT RENTAL CORPORATION (“FRANCHISOR”) TO OPERATE AN EQUIPMENT RENTAL BUSINESS.  NEITHER FRANCHISOR NOR ITS AFFILIATES OWN SUCH BUSINESS OR ARE A PARTICIPANT IN THIS OFFERING AND HAVE NOT

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(3)

G.

No Responsibility:

Franchisor assumes no responsibility, liability or obligation whatsoever to review or comment on any offering circular, prospectus or financing documents of Franchisee or any of its affiliates, and Franchisor may rely solely and exclusively upon Franchisee’s disclaimers and certificates required in the preceding sections.  Franchisee acknowledges that Franchisor’s review, if any, of any offering circular, prospectus or financing documents shall (a) be limited solely to the subject of the factual accuracy of the representations as to the relationship between Franchisee and Franchisor, including the use of the Proprietary Marks in the documents and the disclaimer required therein, (b) not constitute a review for compliance with applicable law, and (c) not constitute any kind of authorization, acceptance, agreement, endorsement or ratification of the offering, prospectus or the financing, either express or implied. Franchisor shall be entitled to indemnification pursuant to Paragraph XVII.C regardless of whether Franchisor has made any review or comment with respect to any offering circular, prospectus or financing documents of Franchisee or its affiliates.

XIII.

DEFAULT AND TERMINATION

A.

Franchisee shall be deemed to be in default under this Agreement, and this Agreement and all rights granted Franchisee hereunder shall automatically terminate without notice to Franchisee, if any of the following events occur:

(1)

If Franchisee becomes insolvent or is dissolved; if a receiver or trustee for the business of Franchisee is appointed; or if Franchisee files a voluntary petition in bankruptcy or an involuntary petition is filed by any other person, and such involuntary petition is not dismissed within sixty (60) days of filing;

(2)

B.

Franchisee shall be deemed to be in default and Franchisor may, at its option, upon written notice to Franchisee, terminate this Agreement and all rights granted hereunder,

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without affording Franchisee any opportunity to cure the default, if any of the following events occur:

(1)

If Franchisee fails to commence active operation of the Franchised Business within twelve (12) months from the Commencement Date of this Agreement;

(2)

If Franchisee without the Franchisor’s prior written consent fails or ceases to actively and continuously operate the Franchised Business at all of the Franchised Premises pursuant to Paragraph I.F. above throughout the term of this Agreement;

(3)

If Franchisee is convicted of a felony, a crime involving moral turpitude, or any other crime or offense that is reasonably likely, in the sole opinion of Franchisor, to adversely affect the System, the Proprietary Marks, the goodwill associated therewith, or Franchisor’s interest therein;

(4)

If Franchisee discloses or divulges the contents of the Manual or other trade secrets or confidential or proprietary information provided to Franchisee by Franchisor, contrary to Paragraphs VII. or VIII. hereof;

(5)

If Franchisee fails to comply with the covenants in Paragraph XV. hereof;

(6)

If Franchisee knowingly maintains falsified books or records, or submits false reports to Franchisor;

(7)

If Franchisee fails on three (3) or more separate occasions, during any twelve (12) month period, to comply with provisions of this Agreement, including Franchisee’s obligation promptly to pay any monies owing to Franchisor or its Affiliates or other franchisees when due, even though the defaults were cured after notice to Franchisee;

(8)

(9)

(10)

If Franchisee is in default under any agreement of the type identified in Paragraph V.P.; or

(11)

If Franchisor or its Affiliates terminate any other agreement between Franchisee and Franchisor or its Affiliates.

C.

Except as provided in Paragraphs XIII.A. and XIII.B. hereof, Franchisee shall have thirty (30) days after Franchisor’s written notice of termination within which to remedy any other default as described in this Paragraph XIII.C., and to provide evidence thereof to Franchisor.  If any such default is not so cured within that period, or such longer period as

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(1)

Franchisee’s failure, refusal or neglect promptly to pay any monies owing to Franchisor or its Affiliates when due, to pay when due any monies otherwise incurred or owing in connection with the operation of the Franchised Business, or to submit the financial or other information required by Franchisor under this Agreement;

(2)

Franchisee’s failure to maintain the standards specified by Franchisor in the Manual or otherwise in writing;

(3)

Franchisee’s failure to maintain the rates promoted or described by Franchisor as required by this Agreement;

(4)

Franchisee’s failure, refusal or neglect to obtain Franchisor’s prior written approval or consent as required by this Agreement;

(5)

Franchisee’s misuse or unauthorized use of the Proprietary Marks or other material impairment of the goodwill associated therewith or Franchisor’s rights therein;

(6)

Franchisee’s default under any agreement of the type identified in Paragraph V.P.; or

(7)

D.

E.

The parties acknowledge and agree that a court order shall not be required to give effect to any termination of this Agreement.

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XIV.

OBLIGATIONS UPON TERMINATION OR EXPIRATION

Upon termination or expiration, this Agreement and all rights granted hereunder to Franchisee shall forthwith terminate; provided, however, that Franchisee shall remain liable for any damage to Franchisor arising from Franchisee’s breach of or failure to perform any of the covenants, obligations or undertakings herein contained.  In addition, upon termination or expiration:

A.

Franchisee shall immediately cease operating under the System and the Proprietary Marks.

B.

Franchisee’s name shall be withdrawn as soon as possible from all published lists of persons operating businesses under the System.  Franchisee shall not hold itself out to the public as a present or former System franchisee.

C.

Franchisee shall immediately cease and terminate all use in any manner whatsoever of the mark HERTZ EQUIPMENT RENTAL and any other Proprietary Marks licensed hereunder, or colorable imitations thereof, and shall take any steps necessary to disassociate itself from such marks, including the withdrawal of all advertising matter (including from Websites and Social Media), the destruction of all letterheads, and the removal of all signs and any other articles which display the Proprietary Marks or trade dress associated with the System.  If Franchisee is using any e-mail address or Internet domain name registration which contains the mark HERTZ or any other Proprietary Mark of Hertz, Franchisee shall immediately take such action as may be necessary to cease use of any such e-mail address and to transfer any such Internet domain name registration to Hertz.

D.

E.

Franchisee shall promptly pay all sums owing to Franchisor and Franchisor’s Affiliates and other franchisees.  In the event of termination for any default of Franchisee, such

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F.

G.

H.

I.

Franchisee shall immediately advise Franchisor of all inventory or other items (excluding those items described in Paragraph XIV.G hereof and excluding the Product Line) bearing Franchisor’s Proprietary Marks.  Franchisor shall have the right (but not the duty), to be exercised by written notice of intent provided to Franchisee within thirty (30) days after termination, to purchase any of such items at Franchisee’s cost or fair market value, whichever is less.  If the parties cannot agree on fair market value within a reasonable time, an independent appraiser shall be designated by Franchisor, and his determination shall be binding.  If Franchisor elects to exercise any option to purchase herein provided, it shall have the right to set off all amounts due from Franchisee under this Agreement, and the cost of the appraisal, if any, against any payment therefor.

J.

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this option to purchase to its designee (an Affiliate or unaffiliated third party) separate and apart from the remainder of this Agreement.

(1)

The purchase and sale shall be implemented by a formal contract containing warranties and representations by the seller at the time of sale with respect to full ownership and transferability of the assets to be sold, the absence of liens and encumbrances thereon, the seller’s full authority to effect such sales and transfers, the working condition and repair of physical assets, and such other warranties, representations and agreements as shall be appropriate in a transaction of such nature.

(2)

The closing date for the purchase and sale shall be no later than the ninetieth (90th) day after Franchisor’s written notice of intention to purchase.

(3)

The assets to be sold or transferred shall include all personal property owned and employed by Franchisee in such Franchised Business (including leased property and excluding such personal property that Franchisor specifically declines to purchase) together with other assets used by Franchisee in connection with the conduct of such Franchised Business, including, without limitation, all real property, leases, and tenancies, equipment lease, rental agreements in which seller is the lessor, other contracts and agreements (except employment agreements) to which the seller is a party, all leasehold improvements, furniture, fixtures, machinery, equipment and signs, inventories of tires, fuel, supplies and parts on hand, all of which shall be determined by Franchisor or its nominee on and after the closing date.

(4)

The seller’s transfer and conveyance shall be free and clear of all liens, claims, and encumbrances and seller shall obtain and deliver to Franchisor or its nominee on or before the closing date any and all consents of third parties to the assignment or transfer of leases and contracts where such consent is required to effectuate a valid transfer or assignment as aforesaid.

(5)

The total purchase price to be paid by Franchisor to Franchisee and accepted by Franchisee pursuant to this Paragraph XIV.J shall be the lesser of (x) five (5) times the average annual net income (after provision for income tax) of the Franchised Business for the three (3) most recently completed fiscal years of such Franchised Business, determined in accordance with generally accepted accounting principles in effect in the Area of Responsibility or the United States as determined by Franchisor, or one hundred percent (100%) of net tangible asset value of the Franchised Business as of the date of sale, whichever is greater; or (y) one hundred twenty five percent (125%) of the net tangible asset value of the Franchised Business, as of the date of sale, determined in accordance with generally accepted accounting principles in effect in the Area of Responsibility or the United States as determined by Franchisor .  In determining such purchase price pursuant to this Paragraph XIV.J(5), the physical assets shall be depreciated at rates and in accordance with standard accounting methods employed by Franchisor or its successor at the time Franchisor or its nominee shall purchase the same, provided that such methods are in accordance with generally accepted accounting principles in effect in the Area of Responsibility or the United States as determined by Franchisor.  In making calculations of net tangible asset value as of the date of sale, vehicles and other physical assets which shall have been fully depreciated shall be valued at the fair market value thereof as of the date of sale.  The value, before depreciation, assigned to the Product Line to be sold and

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transferred hereunder, shall not exceed prices which were paid or which would have been paid by Franchisor or its nominee in accordance with its customary business practices for the same or comparable assets at the time and place when purchased by Franchisee.  All other physical assets to be sold and transferred, except real estate, shall be valued for the purposes hereof at seller’s cost less depreciation calculated at rates as above set forth.  Real estate, if any, shall be valued at the fair market value thereof, as of the date of sale.  No value or payment shall be attributed to intangible assets, such as leases, tenancies, equipment rental and lease agreements, and other contracts and agreements.  Notwithstanding anything herein contained, if any asset to be sold and transferred to Franchisor or its nominee pursuant hereto shall then be subject to a right of purchase by Franchisee’s customer thereof, the price to be paid by Franchisor or its nominee therefor shall in no event exceed the price at which such customer is entitled to purchase the same.

K.

Franchisee shall take all steps necessary to transfer to Franchisor or its designee all telephone numbers, facsimile and electronic communication lines, used by it in the conduct of its Franchised Business, and, upon Franchisor’s request, advise the telephone company and any third party service providers who provide telephone number, facsimile and electronic communication lines used in the Franchised Business that Franchisee has no further interest in such telephone numbers, facsimile and electronic communication lines, and to approve their transfer to Franchisor or its designee.

L.

Franchisee shall comply with the covenants contained in Paragraph XV. hereof.

XV.

COVENANTS

A.

B.

C.

Franchisee acknowledges that the methods of doing business and other elements comprising the System are unique and distinctive and have been developed by Franchisor at great effort, time and expense; that Franchisee has regular and continuing access to valuable confidential information, proprietary material, and training regarding the System; and that Franchisee recognizes his obligation to encourage the use of Hertz world-wide equipment rental services, to fully develop the largest possible market for the Product Line within the Area of Responsibility.  Franchisee accordingly agrees that, during the term of this Agreement, Franchisee shall not, without the prior written consent of Franchisor, either directly or indirectly, for himself, or through, on behalf of, or in conjunction with any person, partnership, corporation, limited liability company or other entity:

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(1)

(2)

Employ or seek to employ any person who is at that time employed by Franchisor, or by any other franchisee of Franchisor, or otherwise directly or indirectly seek to induce such person to leave his or her employment; or

(3)

Own, maintain, engage in, operate, conduct, solicit, have any interest in, or provide any advisory or operational assistance to any other equipment renting business similar to the Equipment Rental Business.

D.

Franchisee covenants that, without written consent of Franchisor, for a period of one (1) year after the expiration or termination of this Agreement, regardless of the cause of termination, Franchisee shall not, either directly or indirectly, for himself or through, on behalf of, or in conjunction with any other person, partnership, corporation, limited liability company or other entity:

(1)

Employ or seek to employ any person who is at that time employed by Franchisor, or by any other franchisee of Franchisor, or otherwise directly or indirectly seek to induce such person to leave his or her employment; or

(2)

Own, maintain, engage in, operate, conduct, solicit, have any interest in, or provide any advisory or operational assistance to any other equipment rental business similar to the Equipment Rental Business:

(a)

Within the Area of Responsibility;

(b)

Within seventy-five (75) miles of the border of the Area of Responsibility;

(c)

Within the area of responsibility of any other System franchisee;

(d)

Within a ten (10) mile radius of the border of the area of responsibility of any other System franchisee; or

(e)

Within a ten (10) mile radius of any Equipment Rental Business operated by Franchisor or its Affiliates under the System.  

If Franchisee fails or refuses to abide by any of the foregoing covenants, and Franchisor obtains enforcement in a judicial or arbitration proceeding, the obligations under the breached covenant will be tolled during the period(s) of time that the covenant is breached and/or Franchisor seeks to enforce it, and will continue in effect for a period of one (1) year after the date of the order enforcing the covenant.

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E.

Franchisee acknowledges that Franchisee’s violation of the terms of this Paragraph XV. would result in irreparable injury to Franchisor for which no adequate remedy at law may be available, and Franchisee, accordingly, consents to the issuance of an injunction prohibiting any conduct by Franchisee in violation of the terms of this Paragraph XV.  Franchisor may further avail itself of any other legal or equitable rights and remedies which it may have under this Agreement or otherwise.

F.

Franchisee expressly agrees that the existence of any claim it may have against Franchisor, whether or not arising from this Agreement, shall not constitute a defense to the enforcement by Franchisor of the covenants in this Paragraph XV.

G.

It is agreed that each of the foregoing covenants and the subjects thereof shall be construed as being independent of any other covenant, subpart or provision of this Agreement.  If all or any portion of a covenant in this Paragraph XV. is held unreasonable or unenforceable by a court or agency having valid jurisdiction in a final decision to which Franchisor is a party, Franchisee expressly agrees to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Paragraph XV.

H.

Franchisee understands and acknowledges that Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant or subpart thereof set forth in this Paragraph XV. without Franchisee’s consent, effective immediately upon notice by Franchisor, and Franchisee agrees that it shall comply forthwith with any covenant as so modified, which shall be fully enforceable notwithstanding any other provision of this Agreement.

I.

This Paragraph XV. shall not apply to any ownership by Franchisee of less than a one percent (1%) beneficial interest of the outstanding equity securities of any publicly held corporation.

XVI.

A.

(1)

Franchisee acknowledges that this Agreement contemplates that Franchisor will not be responsible for any taxes with respect to any transactions or payments contemplated by or pursuant to this Agreement except as provided in this Paragraph XVI.A.

(2)

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(3)

(4)

Each payment to be made by Franchisee under this Agreement shall be made free and clear of, and without reduction for, any consumption, value added, sales or similar taxes; and in the event any such taxes on payments to Franchisor are imposed or withheld, Franchisee shall increase each payment to ensure that Franchisor shall receive each payment as if no such taxes were paid or withheld.

B.

C.

In the conduct and operation of the Franchised Business, Franchisee shall fully comply with all applicable laws, including:

(1)

(2)

(3)

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Nations, regional or national trade or financial sanctions.

(4)

(5)

The United States Foreign Corrupt Practices Act, 15 U.S.C. §78dd-2 (“FCPA”) and all applicable laws of similar effect or nature.  In particular, Franchisee understands the FCPA’s prohibition of the payment or the gift of any item of value, either directly or indirectly, by a company organized under the laws of the United States of America or any of its states to an official, employee, or officer of, or person acting in an official capacity for, a government or international organization for the purpose of influencing any action or decision, or inducing him to use his influence with the government or organization in a manner contrary to his position or creating an improper advantage to assist Franchisor (or any agent, Affiliate or representative) in obtaining or retaining business for, with, or in that country or organization or directing business to any person.  Further, Franchisee represents and warrants that Franchisee and its affiliates do and shall comply with all applicable legal requirements and Franchisor’s policies against corrupt business practices, against money laundering and against facilitating or supporting persons who conspire to commit crimes or acts of terror against any person or government.

D.

In the event of any bona fide dispute as to liability for taxes assessed or other indebtedness, Franchisee may contest the validity or the amount of the tax or indebtedness in accordance with procedures of the taxing authority or applicable law; however, in no event shall Franchisee permit a tax sale or seizure by levy of execution or similar writ or warrant, or attachment by a creditor, to occur against the premises of the Franchised Business, or any improvements thereon.

XVII.

INDEPENDENT CONTRACTOR AND INDEMNIFICATION

A.

B.

It is understood and agreed that nothing in this Agreement authorizes Franchisee to make any contract, agreement, warranty, or representation on Franchisor’s behalf, or to incur

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any debt or other obligation in Franchisor’s name; and that Franchisor shall in no event assume liability for, or be deemed liable hereunder as a result of, any such action, or by reason of any act or omission of Franchisee in its conduct of the Franchised Business, or any claim or judgment arising therefrom against Franchisee.

C.

Franchisee shall indemnify and hold Franchisor (and its Affiliates, and employees, officers and directors thereof) harmless from and against any and all liabilities, claims, actions, fines, damages, losses, costs, and expenses (including reasonable attorneys’ fees) arising out of, caused by or connected directly or indirectly with the operation of the Franchised Business, or the performance or nonperformance of Franchisee’s obligations hereunder, irrespective of whether such claims or suits shall be against Franchisor solely or as a defendant with Franchisee and/or other parties, and irrespective of whether any such claims or suits allege negligence on the part of Franchisor, and regardless of the jurisdictions in which any such claims or suits may be brought.

XVIII.

APPROVALS AND WAIVERS

A.

Whenever this Agreement requires the prior approval or consent of Franchisor, Franchisee shall make a timely written request to Franchisor therefor, and such approval or consent shall be obtained in writing.  Franchisor will also consider, in its sole discretion, other reasonable requests individually submitted in writing by Franchisee for Franchisor’s consent to a waiver of any obligation imposed by this Agreement.

B.

Franchisor makes no warranties or guarantees upon which Franchisee may rely, and assumes no liability or obligation to Franchisee, by providing any waiver, approval, consent or suggestion to Franchisee in connection with this Agreement, or by reason of any neglect, delay or denial of any request therefor.

C.

No failure of Franchisor to execute any power reserved to it by this Agreement, or to insist upon strict compliance by Franchisee with any obligation or condition hereunder, and no custom or practice of the parties at variance with the terms hereof, shall constitute a waiver of Franchisor’s right to demand exact compliance with any of the terms herein.  Waiver by Franchisor of any particular default by Franchisee shall not affect or impair Franchisor’s rights with respect to any subsequent default of the same, similar or different nature, nor shall any delay, forbearance or omission of Franchisor to exercise any power or right arising out of any breach or default by Franchisee of any of the terms, provisions or covenants hereof, affect or impair Franchisor’s right to exercise the same, nor shall such constitute a waiver by Franchisor of any right hereunder, or the right to declare any subsequent breach or default and to terminate this license prior to the expiration of its term.  Subsequent acceptance by Franchisor of any payments due to it hereunder shall not be deemed to be a waiver by Franchisor of any preceding breach by Franchisee of any terms, covenants or conditions of this Agreement.

XIX.

NOTICES

Any notice required or permitted to be given pursuant to this Agreement shall be in writing and shall be effective on the earlier of: (a) one business day after it is sent by a commercially recognized (e.g., FedEx or UPS) or postal service next business day delivery

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service; or (b) the fifth (5th) business day after it is sent by registered air mail (return receipt requested) to the appropriate party at the following notice address, or such other notice address as may be designated by the party to be notified.

The Franchisor’s notice address is:

Franchise Development Manager

Hertz Equipment Rental Corporation

225 Brae Boulevard

Park Ridge, New Jersey  07656

U.S.A

Franchisor’s agent for service of process in the State of New York (USA):

CT Corporation Systems

111 Eighth Avenue

New York, New York 10011

U. S. A.

The Franchisee’s notice address is:

Mongolia Equipment Rental Corporation

2300 W. Sahara Ave

Suite 800

Las Vegas, NV 89102

USA

With additional notice to be sent to:

Hogan Lovells (Ulaanbaatar) LLC

Suite 401, New Century Plaza

Sukhbaatar District, 1st Khoroo

Chinggis Avenue-15

Ulaanbaatar 211213

Mongolia

XX.

ENTIRE AGREEMENT

This Agreement, when fully executed, shall supersede and cancel any and all prior and existing agreements, understandings, representations, or statements either oral or in writing, between the parties hereto with respect to the subject matter hereof, and contains all of the covenants and agreements between the parties with respect to the subject matter hereof.  Any amendment or modification of this Agreement is invalid unless made in writing, specifies with

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particularity the nature of such modification or amendment, and is signed by the parties hereto.  Franchisee acknowledges that neither Franchisor nor anyone on behalf of Franchisor has made any representations, inducements, promises or agreements, orally or otherwise, respecting the subject matter of this Agreement which are not embodied herein, and that no other representations induced Franchisee to execute this Agreement.

XXI.

SEVERABILITY AND CONSTRUCTION

A.

Each paragraph, part, term, and/or provision of this Agreement shall be considered severable; and if, for any reason, any paragraph, part, term, and/or provision herein is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction, such shall not impair the operation of, or have any other effect upon, such other paragraphs, parts, terms, and/or provisions of this Agreement as may remain otherwise intelligible, and the latter shall continue to be given full force and effect and bind the parties hereto; and such invalid paragraphs, parts, terms, and/or provisions shall be deemed not to be a part of this Agreement.

B.

Except as specified to the contrary herein, nothing in this Agreement is intended, nor shall be deemed, to confer upon any person or legal entity other than Franchisor or Franchisee, and such of their respective successors and assigns as may be contemplated by Paragraph XII. hereof, any rights or remedies under or by reason of this Agreement.

C.

All captions in this Agreement are intended solely for the convenience of the parties, and none shall be deemed to affect the meaning or construction of any provision hereof.

D.

All references herein in the singular shall be construed to include the plural where applicable, and the masculine to include the neuter gender; and all covenants, agreements, and obligations herein assumed by Franchisee shall be deemed to be joint and several covenants, agreements, and obligations of the several persons named herein as Franchisee.

E.

This Agreement may be executed in triplicate, and each copy so executed shall be deemed an original.

XXII.

DISPUTE RESOLUTION

A.

COSTS AND ATTORNEYS’ FEES

If Franchisor incurs costs and expenses due to Franchisee’s failure to pay when due amounts owed to Franchisor, to submit when due any reports, information, or supporting records, or otherwise comply with this Agreement, Franchisee agrees, whether or not Franchisor initiates any action or proceeding, to reimburse Franchisor for all of the costs and expenses that Franchisor incurs, including, without limitation, reasonable accounting, attorneys’, arbitrators’ and related fees.

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B.

GOOD FAITH EFFORTS TO RESOLVE DISPUTE

Prior to the initiation of any arbitration proceeding set forth in Paragraph XXII.C., below, any dispute shall first be discussed in a face-to-face meeting between Franchisee and a corporate representative of Franchisor, each authorized to make binding commitments on behalf of their respective parties.  This meeting shall be held in person at Franchisor’s then current headquarters (presently in Park Ridge, New Jersey) and within thirty (30) days after the date of written notice given by either Franchisee or Franchisor to the other proposing such a meeting, unless Franchisor and Franchisee agree otherwise.  Franchisor and Franchisee agree that the written notice proposing such a meeting shall be subject to, and shall be dated prior to the expiration of the limitations period set forth in Paragraph XXII.G. below.

C.

ARBITRATION

Franchisee and Franchisor agree that all controversies, disputes, or claims between Franchisor and/or Franchisor’s Affiliates (and their respective equity holders, officers, directors, agents, and/or employees) and Franchisee and/or Franchisee’s affiliates (and their respective owners, officers, directors, agents, guarantors, and/or employees), if any, arising out of or related to:

(1)

This Agreement or any other agreement between Franchisor and Franchisee;

(2)

Franchisor’s relationship with Franchisee; or

(3)

The scope and validity of this Agreement or any other agreement between Franchisor and Franchisee or any provision of such agreements (including, but not limited to, the validity and scope of the arbitration obligations under this Paragraph, which the parties acknowledge is to be determined by an arbitrator and not a court);

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The arbitrator shall have the right to award or include in his or her award any relief which he or she deems proper including, but not limited to, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and attorneys’ fees and costs, provided that the arbitrator may not declare any Proprietary Marks generic or otherwise invalid or, except as expressly provided in Paragraph XXII.F. below, award any punitive or exemplary damages against either party which such damages the parties hereby expressly waive to the fullest extent permitted by law.

Other than as may be required by law, the entire arbitration proceeding (including, but not limited to, any rulings, decisions or orders of the arbitrator) shall remain confidential and not be disclosed to anyone other than the parties to this Agreement.

Franchisor and Franchisee agree to be bound by the provisions of any limitation on the period of time in which claims must be brought under applicable law or this Agreement, whichever expires earlier.  Franchisor and Franchisee further agree that, in any arbitration proceeding, each shall submit or file any claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedure) within the same proceeding as the claim to which it relates.  Any claim which is not submitted or filed as required is forever barred.  The arbitrator may not consider any settlement discussions or settlement offers that might have been made by either Franchisor or Franchisee.  Franchisor reserves the right, but has no obligation, to advance Franchisee’s share of the costs of any arbitration proceeding in order for such arbitration proceeding to take place and by doing so shall not be deemed to have waived or relinquished Franchisor’s right to seek the recovery of those costs in accordance with Paragraph XXII.A.

Franchisor and Franchisee agree that arbitration shall be conducted on an individual, not a class-wide, basis and that an arbitration proceeding between Franchisor and/or Franchisor’s Affiliates (and their respective equity holders, officers, directors, agents, and/or employees) and Franchisee and/or Franchisee’s affiliates (and their respective owners, officers, directors, agents, guarantors, and/or employees), if any, may not be consolidated with any other arbitration proceeding between Franchisor and any other person.  Notwithstanding the foregoing or anything to the contrary in this Paragraph, if any court or arbitrator determines that all or any part of the preceding sentence is unenforceable with respect to a dispute that otherwise would be subject to arbitration under this Paragraph XXII.C., then the parties agree that this arbitration clause shall not apply to that dispute and that such dispute shall be resolved in a judicial proceeding in accordance with this Paragraph XXII (excluding this Paragraph XXII.C.).

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to seek relief (including, without limitation, temporary restraining orders, temporary, preliminary or permanent injunctive relief or other equitable remedies) from a court of competent jurisdiction.

D.

GOVERNING LAW

E.

WAIVER OF PUNITIVE DAMAGES

EXCEPT FOR FRANCHISEE’S OBLIGATION TO INDEMNIFY FRANCHISOR FOR THIRD PARTY CLAIMS UNDER PARAGRAPH XVII.C., FRANCHISOR AND FRANCHISEE WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE THAT, IN THE EVENT OF A DISPUTE BETWEEN FRANCHISOR AND FRANCHISEE, EACH PARTY SHALL BE LIMITED TO EQUITABLE RELIEF AND TO RECOVERY OF ANY ACTUAL DAMAGES IT SUSTAINS.

F.

LIMITATIONS OF CLAIMS

Except for claims arising from Franchisee’s non-payment or underpayment of amounts Franchisee owes Franchisor, any and all claims and actions arising out of or relating to this Agreement brought by either party against the other, whether in an arbitration or in a legal action, shall be commenced within the time period in which claims shall be brought under applicable law, or one (1) year from the occurrence of the facts giving rise to such claim or

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action, whichever expires earlier, or such claim or action shall be barred; provided, however, that the one-year period for commencing an arbitration shall be tolled for a period not to exceed thirty (30) days while the parties seek to resolve the dispute under Paragraph XXII.B. if the notice required under Paragraph XXII.B. is given prior to the expiration of the one (1) year period referred to in this Paragraph XXII.G.

G.

RIGHTS OF PARTIES ARE CUMULATIVE

Franchisor’s and Franchisee’s rights under this Agreement are cumulative, and Franchisor’s or Franchisee’s exercise or enforcement of any right or remedy under this Agreement shall not preclude Franchisor’s or Franchisee’s enforcement of any other right or remedy that Franchisor or Franchisee are entitled by law to enforce.

XXIII.

ACKNOWLEDGMENTS

A.

Franchisee acknowledges that it has conducted an independent investigation of the business franchised hereunder, and recognizes that the business venture contemplated by this Agreement involves business risks and that its success will be largely dependent upon the ability of Franchisee as an independent businessperson.  Franchisor expressly disclaims the making of, and Franchisee acknowledges that it has not received, any warranty or guarantee, express or implied, as to the potential volume, profits or success of the business venture contemplated by this Agreement.

B.

Franchisee acknowledges that it has received, read and understood this Agreement and the Exhibits hereto; that Franchisor has fully and adequately explained the provisions of each to Franchisee’s satisfaction; and that Franchisor has accorded Franchisee ample time and opportunity to consult with advisors of Franchisee’s own choosing about the potential benefits and risks of entering into this Agreement.  

XXIV.

 MISCELLANEOUS

A.

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B.

C.

D.

E.

The parties shall cooperate with each other on all press releases and other public statements relating to this Agreement and marketing, promotional, and solicitation materials relating to this Agreement.  Neither party shall issue any press release or other public statement relating to this Agreement without the prior written approval of the other party, except for any public statement required under applicable laws (including reporting requirements applicable to public companies).  With respect to any public statement required under applicable laws

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F.

G.

H.

Franchisee shall execute a general release, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its Affiliates and their officers, directors and employees, in their corporate and individual capacities, for claims arising before the signing of this Agreement, including, without limitation, claims arising under all local laws, rules, and ordinances.

IN WITNESS WHEREOF, the parties hereto have duly executed these presents, on the day and year first above written in this Agreement.

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CONSENT BY HERTZ SYSTEM, INC.

Hertz System, Inc., a Delaware, U.S.A., corporation having its principal office in Park Ridge, New Jersey, U.S.A., in consideration of the execution of the foregoing Agreement by the Franchisee named therein and the performance by such Franchisee of its obligations thereunder, hereby agrees to permit Franchisee, during the term of said Agreement, to use in the conduct of the Franchised Business, the Proprietary Marks (as defined therein) in accordance with the terms of said Agreement, PROVIDED THAT Franchisee shall not use, cause to be used, or attempt to use any Proprietary Marks, including the name "Hertz", as a corporate or other business name or as any part of a corporate or business name, or to purchase, sell, license or register vehicles or equipment under a name that includes any Proprietary Marks, including the name "Hertz," in any manner whatsoever.

IN WITNESS WHEREOF, Hertz System, Inc. has duly executed and delivered this Consent this 21 day of March, 2013.

HERTZ SYSTEM, INC.

       Vice President

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