Hertz 2010 Annual Report Download - page 157

Download and view the complete annual report

Please find page 157 of the 2010 Hertz annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 200

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 14—Related Party Transactions
Relationship with Hertz Investors, Inc. and the Sponsors
Stockholders Agreement
In connection with the Acquisition, we entered into a stockholders agreement (as amended, the
‘‘Stockholders Agreement’’) with investment funds associated with or designated by the Sponsors. The
Stockholders Agreement contains agreements that entitle investment funds associated with or
designated by the Sponsors to nominate all of our directors. The director nominees are to include three
nominees of an investment fund associated with CD&R (one of whom shall serve as the chairman or, if
the chief executive officer is the chairman, the lead director), two nominees of investment funds
associated with Carlyle, two nominees of an investment fund associated with BAMLCP (collectively, the
‘‘Sponsor Designees’’) and up to six independent directors (subject to unanimous consent of the
Sponsor Designees, for so long as Hertz Holdings remains a ‘‘controlled company’’ within the meaning
of the New York Stock Exchange rules), subject to adjustment in the case that the applicable investment
fund sells more than a specified amount of its shareholdings in us. In addition, upon Hertz Holdings
ceasing to be a ‘‘controlled company’’ within the meaning of the New York Stock Exchange rules, if
necessary to comply with the New York Stock Exchange rules, the director nominees of the Sponsors
shall be reduced to two nominees of an investment fund associated with CD&R (one of whom shall serve
as the chairman or, if the chief executive officer is the chairman, the lead director), one nominee of
investment funds associated with Carlyle, and one nominee of an investment fund associated with
BAMLCP, and additional independent directors will be elected by our Board of Directors to fill the
resulting director vacancies. The Stockholders Agreement also provides that our chief executive officer
shall be designated as a director, unless otherwise approved by a majority of the Sponsor Designees. In
addition, the Stockholders Agreement provides that one of the nominees of an investment fund
associated with CD&R shall serve as the chairman of the executive and governance committee and,
unless otherwise agreed by this fund, as Chairman of our Board of Directors or lead director. In order to
comply with New York Stock Exchange rules, we will be required to have a majority of independent
directors on our Board of Directors within one year of our ceasing to be a ‘‘controlled company’’ within
the meaning of the New York Stock Exchange rules.
The Stockholders Agreement grants to the investment funds associated with CD&R or to the majority of
the Sponsor Designees the right to remove our chief executive officer. Any replacement chief executive
officer requires the consent of the investment funds associated with CD&R as well as investment funds
associated with at least one other Sponsor. It also contains restrictions on the transfer of our shares, and
provides for tag-along and drag-along rights, in certain circumstances. The rights described above
apply only for so long as the investment funds associated with the applicable Sponsor maintain certain
specified minimum levels of shareholdings in us.
The Stockholders Agreement limits the rights of the investment funds associated with or designated by
the Sponsors that have invested in our common stock and our affiliates, subject to several exceptions, to
own, manage, operate or control any of our ‘‘competitors’’ (as defined in the Stockholders Agreement).
The Stockholders Agreement may be amended from time to time in the future to eliminate or modify
these restrictions without our consent.
Registration Rights Agreement
On December 21, 2005, we entered into a registration rights agreement (as amended, the ‘‘Registration
Rights Agreement’’) with investment funds associated with or designated by the Sponsors. The
Registration Rights Agreement grants to certain of these investment funds the right, to cause us, at our
133