Hertz 2012 Annual Report Download - page 181

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For borrowings with an initial maturity of 90 days or less, fair value approximates carrying value because
of the short-term nature of these instruments. For all other debt, fair value is estimated based on quoted
market rates as well as borrowing rates currently available to us for loans with similar terms and average
maturities (Level 2 inputs). The aggregate fair value of all debt at December 31, 2012 was
$16,493.1 million, compared to its aggregate unpaid principal balance of $15,473.8 million. The
aggregate fair value of all debt at December 31, 2011 was $11,832.5 million, compared to its aggregate
unpaid principal balance of $11,400.3 million.
Note 15—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.
Based on current share ownership of the Sponsors, the Stockholders Agreement contains agreements
that entitle investment funds associated with or designated by the Sponsors to nominate 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 Merrill Lynch. 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.
The Stockholders Agreement grants to the investment funds associated with CD&R or to the board, with
the approval of 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
own expense, to use our best efforts to register such securities held by the investment funds for public
resale, subject to certain limitations. The exercise of this right is limited to three requests by the group of
investment funds associated with each Sponsor, except for registrations effected pursuant to Form S-3,
which are unlimited, subject to certain limitations, if we are eligible to use Form S-3. The secondary
offerings of our common stock in June 2007, May 2009, June 2009, March 2011 and December 2012
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