Stockholders Agreement Dated July 7, 1993

Certain confidential portions of this Exhibit have been omitted, as indicated by an * on the margin or in the text, and filed with the Commission)


STOCKHOLDERS AGREEMENT


STOCKHOLDERS AGREEMENT dated as of July 7, 1993, among Ford Motor
Company, a Delaware corporation ("Ford"), Park Ridge Limited
Partnership, a Delaware limited partnership (the "Partnership"), Ford
Motor Credit Company, a Delaware corporation ("FMCC"), AB Volvo, a
Swedish corporation ("Volvo"), Commerzbank Aktiengesellschaft, a bank
organized under the laws of the Federal Republic of Germany
("Commerzbank"), The Hertz Corporation, a Delaware corporation
("Hertz"), Park Ridge Corporation, a Delaware corporation ("Park
Ridge"), and the persons that become parties to this Agreement
pursuant to Paragraph 8 hereof (the "Participants").
WHEREAS, Ford, FMCC, the Partnership, Volvo and Commerzbank together own all of the issued and outstanding capital stock of Park Ridge; and
WHEREAS, Park Ridge owns all of the issued and outstanding capital stock of Hertz; and
WHEREAS, Park Ridge and Hertz have entered into an Agreement and Plan of Merger pursuant to which Park Ridge will merge with and into Hertz with Hertz as the surviving corporation (the "Merger"); and


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WHEREAS, pursuant to the Merger the holders of capital stock of Park Ridge will become holders of capital stock of Hertz; and
WHEREAS, Ford, FMCC, the Partnership, Volvo, Commerzbank and Park Ridge are parties to a Stockholders Agreement dated as of December 30, 1987, as amended as of July 27, 1988 (the "Park Ridge Stockholders Agreement"); and
WHEREAS, the parties hereto desire to confirm in writing the terms of the understanding among them with respect to Hertz upon and following the Merger.
NOW, THEREFORE, in consideration of the premises and of the representations, warranties, covenants, agreements and conditions contained herein, the parties hereto agree as follows: 1. Definitions.
As used herein the following terms have the following respective meanings:
"Adjusted Rate" means * * * * *
"Affiliate" means, with respect to any company or corporation, any director, officer or employee of such


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3 company or corporation directly or indirectly controlling or controlled by or under direct or indirect common control with such individual, company or corporation.
"Agreement" means this Stockholders Agreement.
"Class A Stock" means the Class A Common Stock described in Paragraph 2.1(d) hereof.
"Class A Stock Initial Share" has the meaning set forth in Paragraph 6.1(b)(ii) hereof.
"Class B Stock" means the Class B Common Stock described in Paragraph 2.1(e) hereof.
"Class C Stock" means the Class C Common Stock described in Paragraph 2.1(f) hereof.
"Classified Stock" means Class A Stock, Class B Stock and Class C Stock.
"Closing" has the meaning assigned to it in the Park Ridge Stockholders Agreement.
"Commission" has the meaning set forth in Paragraph 4.1(a) hereof.
"Distribution Date" has the meaning set forth in Paragraph 6.1(b) hereof.
"Equity Securities" means Classified Stock or New Common Stock or any evidence of indebtedness, shares of capital stock (other than Classified Stock or New Common Stock) or other securities convertible into, exchangeable


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4 for or giving the holder thereof the right to acquire shares of Classified Stock or New Common Stock.
"Escrow" has the meaning set forth in Paragraph 4.1(b) hereof.
"Forfeitable Shares" has the meaning set forth in Paragraph 5.1(a) hereof.
"IPO" has the meaning set forth in Paragraph 4.1(b) hereof.
"Market Price" has the meaning set forth in Paragraph 4.1(e) hereof.
"New Common Stock" means the Common Stock described in Paragraph 2.1(g) hereof.
"Participants" has the meaning set forth in paragraph 8 hereof.
"Partnership Note" means the promissory note of the partnership substantially in the form of Attachment IIA hereto.
"Preferred Stock" means Series A Preferred and Series B Preferred.
"Preferred/B & C Minimum" has the meaning set forth in Paragraph 6.l(b)(i) hereof.
"Pricing Date" has the meaning set forth in Paragraph 4.1(e) hereof.


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"Primary Shares" has the meaning set forth in Paragraph 4.1(b) hereof.
"Public Company" means Hertz or its successor at any time after it has registered any of its Equity Securities under Section 5 of the Securities Act of 1933.
"Residual Shares" has the meaning set forth in Paragraph 6.1(a) hereof.
"Secondary Shares" has the meaning set forth in Paragraph 4.l(b)(ii) hereof.
"Series A Preferred" means the Series A Preferred Stock described in Paragraph 2.1(b) hereof.
"Series B Preferred" means the Series B Preferred Stock described in Paragraph 2.1(c) hereof.
"Stockholders" means the stockholders of Hertz (including Participants) who are or become parties to this Agreement.
"Total Stockholder Value" has the meaning set forth in Paragraph 6.1(a) hereof. 2. Merger.
2.1(a) Amendment of Certificate of Incorporation. Effective upon consummation of the Merger, the Certificate of Incorporation of Hertz will provide for the following classes of capital stock, containing the terms and provisions described below, as more fully set forth in the


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6 form of Restated Certificate of Incorporation (the "Restated Charter") attached as Attachment I hereto.
(b) Series A Preferred Stock. The Series A Preferred has a total par value of $450 million, consists of 4,500,000 shares of the par value of $100 each and shall be entitled, when, as and if declared by the Board of Directors of Hertz, to cumulative annual dividends, but payable only out of funds legally available therefor, compounded annually (if in arrears). The annual dividend rate through December 31, 1998 shall be 10% and commencing January 1, 1999 the annual dividend rate shall be the Adjusted Rate which shall be reset once annually as of each succeeding January 1. Each share of Series A Preferred issued pursuant to the Merger shall, upon such issuance, be entitled to receive, when and as declared by the Board of Directors of Hertz out of funds legally available for the payment of dividends, cumulative cash dividends equal to the amount of cash dividends accrued but not declared and paid on a share of 10% Cumulative Series A Preferred Stock, par value $100 per share, of Park Ridge at the time of the Merger. The Series A Preferred shall be redeemable by its terms at the option of Hertz at any time. The Series A Preferred shall not have any voting rights, except that it shall have the right to


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7 elect two directors in the event of a default as provided in the Restated Charter.
(c) Series B Preferred Stock. The Series B Preferred has a total par value of $100 million, consists of 1,000,000 shares of the par value of $100 each and shall be entitled, when, as and if declared by the Board of Directors of Hertz, to cumulative annual dividends, but payable only out of funds legally available therefor, compounded annually (if in arrears). The annual dividend rate through December 31, 1998 shall be the applicable rates specified in Attachment II hereto under the column entitled "Variable Rate" and commencing January 1, 1999 shall be the Adjusted Rate which shall be reset once annually as of each succeeding January 1. Each share of Series B Preferred issued pursuant to the Merger shall, upon such issuance, be entitled to receive, when and as declared by the Board of Directors of Hertz out of funds legally available for the payment of dividends, cumulative cash dividends equal to the amount of cash dividends accrued but not declared and paid on a share of Variable Rate Cumulative Series B Preferred Stock, par value $100 per share, of Park Ridge at the time of the Merger. The Series B Preferred shall be redeemable by its terms at the option of Hertz at any time. The Series B Preferred shall not have any voting rights; provided,


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8 however, that if Hertz (x) shall have a net operating loss for Federal tax purposes for any taxable year and (y) forecast in good faith that it also expects to have significant and continuing net operating losses for Federal tax purposes, the Stockholders shall, at Ford's request, take all necessary action to provide Ford, as the holder of the Series B Preferred, with sufficient voting rights, when added to the voting rights of the Class C Stock, to permit Ford to consolidate Hertz for Federal tax purposes in a succeeding period which shall not be less than 60 months in duration; and provided, further, that if Ford shall have so consolidated Hertz and Hertz shall after such consolidation period (x) have gross income in excess of deductions for Federal tax purposes for any taxable year and (y) forecast in good faith that it also expects to have gross income in excess of deductions for the taxable year immediately following such taxable year, the Stockholders shall, at the request of Hertz, take all necessary action to eliminate the voting rights of the Series B Preferred; and such voting rights shall be subject to reinstatement, in the event of such a net operating loss for any subsequent taxable year, in accordance with the first proviso in this sentence but not earlier than the first day of the 61st month beginning after the commencement of Hertz' first taxable year in which


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9 it ceased to be a member of Ford's affiliated group or such earlier date as of which Ford is legally entitled to file a Federal consolidated income tax return that includes Hertz. The Stockholders presently anticipate that such tax consolidation will not be effected in circumstances such that Hertz has such a loss for tax purposes but has profits for book purposes. For any year when Ford shall consolidate Hertz for Federal income tax purposes, Ford and Hertz shall agree upon a tax sharing agreement which shall appropriately reflect the value of current losses or other tax benefits to Ford as compared to the value to Hertz. If Ford and Hertz are unable to agree upon such a tax sharing agreement, the terms thereof shall be referred to and decided by a panel of three arbitrators appointed by the American Arbitration Association, and a decision of a majority of such arbitrators shall be binding on the parties in a court of law. As to other tax matters, it is agreed that if with respect to the Class A Stock (or the New Common Stock issued in exchange therefor), Hertz or any of its affiliates actually receives a deduction for Federal, state or local income tax purposes, Hertz or such affiliate shall pay to the Partnership an amount such that, after taking into account the tax benefit actually received by Hertz or such affiliate as a result of such deduction (and the deduction


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10 of payment pursuant to this sentence), Hertz is in no worse an after-tax position than if no such deduction were allowable. It is further agreed that if with respect to the Series A Preferred, the Series B Preferred or the Class C Stock (or the New Common Stock issued in exchange therefor), Hertz or any of its affiliates actually receives a deduction for Federal, state or local income tax purposes, Hertz or such affiliate shall pay to Ford an amount such that, after taking into account the tax benefit actually received by Hertz or such affiliate as a result of such deduction (and the deduction of payment pursuant to this sentence), Hertz is in no worse an after-tax position than if no such deduction were allowable.
(d) Class A Common Stock. The Class A Stock has one vote per share and no special preferences.
(e) Class B Common Stock. The Class B Stock has one vote per share and no special preferences.
(f) Class C Common Stock. The Class C Stock has one vote per share and shall have the right to designate four directors, until such time as fewer than 40 shares thereof (adjusted for stock splits and the like as provided in the Restated Charter) shall be outstanding; provided, however, that the Class C Stock shall in any event have 40% of the general voting power and the right to elect not less


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11 than 40% of the members of such Board of Directors, until such time as fewer than 40 shares thereof (as so adjusted) shall be outstanding. The Class C Stock shall be convertible into Class B Stock on a share for share basis at any time at the holder's option. The 40 shares of Class C Stock retained by Ford pursuant to paragraph 4.l(b)(i) hereof also shall be convertible into shares of New Common Stock at the holder's option, using the same conversion ratio as was applied under Paragraph 4.l(b)(i) for exchanging New Common Stock for Class C Stock.
(g) New Common Stock. * * * * *
2.2 [Reserved].
2.3 Refinancing. It is anticipated that from time to time Hertz will refinance a portion of its indebtedness and at a future date might possibly decide also to refinance its obligations with respect to the Preferred Stock. Subject to the limitations provided in agreements, instruments and documents governing or evidencing indebtedness of Hertz, the net proceeds of any such Preferred Stock refinancing which are not paid to third


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12 parties shall be applied pro rata to the repurchase or redemption of outstanding shares of the Preferred Stock or to the pro rata payment of dividend arrearages thereon (if declared by the Board of Directors of Hertz and if funds are legally available therefor). Any such payment (and any payment by Park Ridge pursuant to Section 2.3 of the Park Ridge Stockholders Agreement) shall have the effect of reducing the Preferred/B & C Minimum as provided in Paragraph 6.1(b)(i) hereof. Preferred Stock shall not be repurchased or redeemed by Hertz, without the consent of the holder of the Class A Stock, from funds which have a higher cost to Hertz than the before-tax equivalent cost of the Preferred Stock being so repurchased or redeemed.
3. Corporate Governance.
3.1 Board of Directors. (a) Upon effectiveness of the Merger, the Board of Directors of Hertz shall consist of nine members and thereafter may be increased to provide appropriate representation on the Board of Directors of the Stockholders.
(b) The Stockholders shall vote the shares of Classified Stock owned by them so as to elect two directors designated by the Partnership as owner of the Class A Stock, for so long as the Partnership shall own at least 200 shares of Class A Stock.


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(c) The Stockholders shall vote the shares of Classified Stock owned by them so as to provide the same representation on the Board of Directors to any holder of 200 or more shares of the Class B Stock as the representation provided to the Partnership as owner of the Class A Stock.
(d) The Class C Stock (held by Ford) shall have the right to designate directors as provided in paragraph 2.1(f) hereof.
(e) No director shall be removed, except for cause, without the consent of the party that designated such director; provided, however, that, if the Board of Directors of Hertz determines that it would be in the best interest of Hertz to replace a director, the Stockholders shall replace the director with a person designated by the party which has designated the director being removed. If any vacancy should occur through death, resignation or removal of a director, the party which designated such director shall be entitled to designate his replacement.
(f) The Stockholders shall vote their shares of Classified Stock to achieve the Board representation called for by this Paragraph 3. If at any meeting of the Board of Directors of Hertz any of the directors representing the party entitled to designate the majority of the directors


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14 shall not be present, the other party or parties shall use their best efforts to the end that a sufficient number of directors representing them abstain so that if any party designated the majority of the directors, such party may be able to cast a majority of the votes cast.
3.2 Approval Rights of Directors. None of the actions listed in Attachment III to this Agreement may be taken by Hertz without the approval or favorable recommendation of at least * of the members of the Board of Directors of Hertz, and none of the actions marked with an * in Attachment III hereto may be taken unless there is included in such * at least one of the members designated by the holder or holders of the Class * Stock.
3.3 Audit Committee. The Board of Directors of Hertz shall at all times have an Audit Committee thereof consisting of at least two members of the Board of Directors none of which is an officer of Hertz. Such Committee shall have such duties and responsibilities as may be delegated to it by the Board of Directors of Hertz.
3.4 Certain Transactions. Each Stockholder agrees to conduct its various transactions with Hertz in accordance with the requirements of Delaware corporate law and in a manner designed to avoid any substantial adverse


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15 effect on the Partnership as a minority stockholder of Hertz or on any other Stockholder.
4. Initial Public Offering. * * * * * * * * * * * * * * * * * * * *


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