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As filed with the Securities and Exchange Commission on August 29, 2005
Registration No. 333-125764
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 

THE HERTZ CORPORATION
(Exact name of registrant as specified in its charter)
 
         
Delaware   7514   13-1938568
(State of Incorporation)   (Primary Standard Industrial   (I.R.S. Employer Identification No.)
    Classification Code Number)    
 
225 Brae Boulevard
Park Ridge, New Jersey 07656-0713
(201) 307-2000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Harold E. Rolfe, Esq.
Senior Vice President, General
Counsel and Secretary
The Hertz Corporation
225 Brae Boulevard
Park Ridge, New Jersey 07656-0713
(201) 307-2000

(Name, address, including zip code, and telephone number, including area code, of agent for service)
With copies to:
     
Alan D. Schnitzer, Esq.   Lisa L. Jacobs, Esq.
Simpson Thacher & Bartlett LLP   Shearman & Sterling LLP
425 Lexington Avenue   599 Lexington Avenue
New York, New York 10017-3954   New York, New York 10022-6069
(212) 455-2000   (212) 848-4000
           Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
          If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. o
          If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o _________
          If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o _________
          If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o _________
          If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o
 
CALCULATION OF REGISTRATION FEE
                 
 
        Proposed Maximum Aggregate     Amount of  
  Title of Each Class of Securities to be Registered     Offering Price(1)(2)     Registration Fee  
 
Class A common stock, par value $0.01 per share(3)
             
 
Equity Units(4)
    $100,000,000     $11,770(7)  
 
Purchase contracts(5)
             
 
Senior notes due 2015(6)
             
 
Total
    $100,000,000     $11,770(7)  
 
  (1)   Estimated solely for the purpose of calculating the registration fee under Rule 457(o) of the Securities Act of 1933, as amended (the “Securities Act”).
 
  (2)   Exclusive of accrued interest, if any.
 
  (3)   In addition to the offering of Class A common stock, also includes the shares of Class A common stock that may be issued to holders of the Equity Units upon settlement or termination of the Equity Units. The actual number of shares of Class A common stock will not be determined until the date of settlement or termination of the related purchase contracts.
 
  (4)   Each Equity Unit will consist of a purchase contract, described under note (5) below, and a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount senior note, described under note (6) below.
 
  (5)   The purchase contracts are offered as a component of the Equity Units for no additional consideration.
 
  (6)   The senior notes are offered as a component of the Equity Units for no additional consideration.
 
  (7)   Previously paid.
           The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 
 

 


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Explanatory Note
This Registration Statement contains a prospectus relating to an offering of shares of our Class A common stock, together with separate prospectus pages relating to a concurrent offering of our Equity Units. The complete prospectus for the offering of Class A common stock follows immediately. Following the Class A common stock prospectus are alternate pages for the prospectus for the Equity Units offering, including:
    the front and back cover pages;
 
    pages for the “Prospectus summary” section describing the offering of Equity Units;
 
    pages containing risk factors applicable only to the offering of Equity Units;
 
    pages containing a description of the Equity Units;
 
    pages containing descriptions of the senior notes and purchase contracts that constitute the Equity Units;
 
    pages describing U.S. federal income tax consequences of holding the Equity Units;
 
    pages describing ERISA considerations associated with holding the Equity Units; and
 
    pages comprising the section entitled “Underwriting” relating to the offering of the Equity Units.
The complete prospectus for each of the Class A common stock offering and Equity Units offering will be filed with the Securities and Exchange Commission in accordance with Rule 424 under the Securities Act of 1933.

 


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where an offer or sale is not permitted.

Subject to completion, dated                     , 2005
Preliminary Prospectus
Shares
(HERTZ LOGO)
Class A Common Stock
 
We are offering to sell            shares of Class A common stock. This is the initial public offering of our shares of Class A common stock.
Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share will be between $      and $      . We will apply to list the Class A common stock on the New York Stock Exchange under the symbol “HTZ.”
We are an indirect wholly owned subsidiary of Ford Motor Company. Upon completion of this offering, Ford Motor Company will indirectly beneficially own       % of the outstanding Class A common stock (       % if the underwriters’ over-allotment option is exercised in full) and 100% of the outstanding shares of our Class B common stock (which has five votes per share), a class of common stock separate from the Class A common stock (which has one vote per share). Following the offering, the outstanding shares of Class A common stock to be offered will represent       % of the combined voting power of all classes of voting stock and       % of the economic interest (or rights of holders of common equity to participate in distributions in respect of the common equity) in us (       % and       %, respectively, if the underwriters’ over-allotment option is exercised in full). The remainder of the voting power and economic interest in us will be beneficially held by Ford Motor Company. See “Risk factors––Risks related to our business––Ford controls us and may have conflicts of interest with us or you in the future” and “Description of capital stock.”
The underwriters have reserved for sale, at the initial public offering price, shares of Class A common stock for certain of our employees and retirees and employees of our affiliates and licensees. Such persons are expected to purchase, in the aggregate, not more than       % of the shares of Class A common stock offered in the offering.
Concurrently with this offering, we are offering, by means of a separate prospectus, $       of our       % Equity Units. Each Equity Unit will have a stated amount of $25 and will initially consist of a contract to purchase shares of our Class A common stock and an interest in a      % senior note which initially matures on November 16, 2015, subject to adjustment, issued by us. The offering of Equity Units is contingent upon the completion of this offering.
Investing in our Class A common stock involves risks. See “Risk factors” beginning on page 13.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
                 
    Per Share     Total  
Initial public offering price
  $       $    
Underwriting discounts and commissions
  $       $    
Proceeds to us, before expenses
  $       $    
To the extent the underwriters sell more than       shares of our Class A common stock, the underwriters have an option to purchase up to an additional       shares of our Class A common stock from us at the initial public offering price less the underwriting discounts and commissions. We intend to use our net proceeds from any shares sold pursuant to this option to pay an additional dividend to Ford.
The underwriters expect to deliver the shares to purchasers on or about       , 2005.
Joint Book-Running Managers
         
JPMorgan
  Citigroup   Goldman, Sachs & Co.
 
                             , 2005

 


You should rely only on information contained in this prospectus. Neither we, Ford Motor Company nor the underwriters have authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
 
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“Hertz,” “Hertz Equipment Rental,” “HERC,” “Hertz #1 Club Gold,” “Hertz #1 Club” and “Hertz NeverLost” are our trademarks or service marks. All other trademarks, service marks or brand names appearing in this prospectus are the property of their respective holders.

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Prospectus summary
This summary highlights selected information contained in this prospectus, but it may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the “Risk factors” section and the financial statements and notes related thereto, which are included in this prospectus.
Unless the context otherwise requires, (i) references in this prospectus to the “issuer,” “the company,” “we,” “our” and “us” mean The Hertz Corporation and its consolidated subsidiaries and its predecessors, (ii) “HERC” means Hertz Equipment Rental Corporation, our wholly owned subsidiary, and our various other wholly owned international subsidiaries that conduct our industrial, construction and material handling equipment rental business, (iii) “Ford” means Ford Motor Company and its consolidated subsidiaries (other than us), including Ford Holdings LLC, (iv) “cars” means cars and light trucks (including sport utility vehicles and, in Europe, light commercial vehicles) and (v) “equipment” means industrial, construction and material handling equipment.
Our company
We and our independent licensees and associates represent what we believe is the largest worldwide general use car rental brand and one of the largest equipment rental businesses in North America, both based upon revenues. Our Hertz brand name is recognized worldwide as a leader in quality rental services and products. We and our independent licensees and associates currently accept reservations for the rental of cars at approximately 7,400 locations in over 150 countries. We also rent equipment from over 340 branches in North America, France and Spain. We have been in the car rental business since 1918 and in the equipment rental business for over 40 years. Currently, we are an indirect wholly owned subsidiary of Ford. Our significant segments consist of our car rental and equipment rental businesses.
For the six months ended June 30, 2005, we generated revenues, income before income taxes and minority interest and net income of $3.5 billion, $190.0 million and $120.1 million, respectively. For the year ended December 31, 2004, we generated revenues, income before income taxes and minority interest and net income of $6.7 billion, $502.6 million and $365.5 million, respectively. Our business is highly seasonal with the second and third quarters of the year having historically been stronger than the first and fourth quarters.
Car rental
We maintain a substantial network of company-operated car rental locations both in the United States and internationally, and what we believe to be the largest number of company-operated on-airport car rental locations in the world, enabling us to provide consistent quality and service worldwide. For the year ended December 31, 2004, we derived approximately 74% of our worldwide car rental revenues from on-airport locations. Our licensees and associates also operate rental locations in over 140 countries, including most of the countries in which we have company-operated rental locations.
Our worldwide car rental operations generated $2.9 billion and $5.5 billion in revenues and $133.4 million and $437.6 million in income before income taxes and minority interest during the six months ended June 30, 2005 and the year ended December 31, 2004, respectively.

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Equipment rental
HERC currently operates what we believe to be the third largest equipment rental business in North America and the fourth largest general equipment rental business in each of France and Spain, based upon revenues. HERC rents a broad range of earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, pumps, small tools, compaction equipment and construction-related trucks. HERC also derives revenue from the sale of new equipment and consumables.
Our worldwide equipment rental operations generated $630.2 million and $1.2 billion in revenues and $71.9 million and $87.8 million in income before income taxes during the six months ended June 30, 2005 and the year ended December 31, 2004, respectively.
Strengths
Premier brand
The “Hertz” brand is one of the most recognized brands in the world. In 2004, it was listed in Business Week ’s “100 Most Valuable Global Brands” – the only travel company brand to appear on the list. The “Hertz” brand has appeared on this list every year since the list’s inception in 2001. Moreover, our customer surveys indicate that in the United States, “Hertz” is the car rental brand most associated with the highest quality service. This is consistent with numerous published best-in-class car rental awards that we have won, both in the United States and internationally, over many years.
We have sought to support our reputation for quality and customer service in car rental through a variety of innovative service offerings, such as our customer loyalty program (Hertz #1 Club), our global expedited rental program (Hertz #1 Club Gold), our one-way rental program (Rent-it-Here/Leave-it-There), our national-scale luxury rental program (Prestige Collection) and our in-car navigational services (Hertz NeverLost). In 2004, participants in our Hertz #1 Club Gold program accounted for approximately 41% of our car rental transactions worldwide. Similarly, we have positioned HERC as a leader in equipment rental through the development of an extensive national account program with leading construction and industrial companies, a substantial investment in sales force automation and the operation of a diverse fleet consisting of what we believe are comparatively young units of rental equipment.
We believe that our premier brand and management of our business in support of the brand have allowed us to create and maintain a loyal customer base and often command premium pricing in car and equipment rental. These strengths in turn have helped us to earn a pre-tax profit in every year since our incorporation in 1967.
Leading market positions
In the United States, we maintain the overall leading market share of airport car rentals where we have company-operated locations. We had approximately a 30% market share in 2004, by revenues, at the 180 largest U.S. airports where we operate, over nine percentage points of share higher than that of the closest competing brand. We also believe that we have the largest airport market share, by revenues on a collective basis, at the 68 major airports in Europe where we have company-operated locations and which provide data regarding car rental concessionaire activity. We are actively expanding in the U.S. off-airport car rental market, and we believe that we already hold the second largest share in this growing market. HERC is, by revenues, the third

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largest equipment rental company in North America. Additionally, we believe HERC is the fourth largest general equipment rental company in each of France and Spain. Our leading market positions allow us to have first choice of car rental facilities at many airports and to spread our fixed costs in both car and equipment rental across a larger base.
Global footprint and business mix
We and our independent licensees and associates accept car rental reservations for approximately 7,400 locations in more than 150 countries. We are the only car rental company that has an extensive network of company-operated car rental locations both in the United States and in all the major markets of Europe. We also have a company-operated car rental presence in Canada, Australia, New Zealand, Brazil, Puerto Rico and the U.S. Virgin Islands. Because of our extensive worldwide presence, we are capable of capitalizing on business from global tourist and travel organizations and multinational corporations. We believe that our extensive worldwide ownership of our operations (including a 95% company-owned fleet in the United States) gives us an advantage in the areas of service consistency, strategic pricing, cost control, fleet utilization and yield management.
In addition to our global footprint, our mix of business segments (car and equipment rental), car rental markets served (airport and off-airport) and customers (business and leisure in car rental, and construction, industrial and government in equipment rental) adds stability to our business.
Proprietary strategic information systems and centralized administration
We conducted almost 30 million rental transactions in 2004 across our two business segments. We utilize information technology comprehensively in the areas of reservations, fleet and rate management, customer relations, sales and marketing, as well as all aspects of billing, finance, accounting and other reporting systems. We have made substantial investments in our proprietary information systems to permit us to conduct our business efficiently and effectively. We believe that our significant investment in technology enhances our ability to offer innovative services.
Our use of technology has helped us to concentrate our reservations, customer relations, information systems, billing, collection and accounting functions for the United States and Europe, along with certain administrative functions for our other corporate operations, at centers in Oklahoma and Ireland. This centralization, which we believe is unique in the car and equipment rental industries, permits us to provide superior end-to-end service to customers, spread administrative costs over a larger base and maintain a high level of control over our geographically dispersed operations.
Travel industry partnerships
We have established business partnerships with over 60 airlines, railroads and hotel chains worldwide, as well as with American Express and leading traditional and on-line travel agencies, such as Expedia and, in Europe, Opodo. These partnerships include such features as promotion of each other’s products, reservation transfer programs and discounts for each other’s customers. In some cases, we have exclusive relationships with our partners. For example, we are the exclusive car rental partner for the American Automobile Association (AAA), North America’s largest motoring and leisure travel organization, as well as for a number of key motor clubs in Europe and Australia. In Europe, we have also been the sole rental car marketing partner of Air France since 1989 and the sole rental car business partner of Ryanair, a leading European low cost carrier, since 1998. We believe that our global network of business partnerships is

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unmatched by any of our competitors. Our business partnerships generate significant car rental revenue and expand our customer base.
Depth of management team
We have an experienced management team with extensive knowledge of the car and equipment rental industries. We have employed our ten most senior members of management for an average of 26 years. Our regional and country managers also have a great deal of experience, having been employed by us for an average of 19 years and having been in their current positions for an average of seven years. Our management team has a strong track record of maintaining pre-tax profitability through economic cycles and successful and disciplined execution of our business strategy.
Flexible business model
While our businesses are capital-intensive, most of that capital is invested in revenue-earning cars and equipment. Most of our cars are subject to repurchase arrangements with their manufacturers, and well organized, liquid markets exist for any used cars that are not subject to repurchase arrangements, as well as for used equipment. We believe these repurchase agreements and markets would permit us to rapidly decrease or increase our fleet size if necessary. Our collective bargaining agreements and other labor arrangements in North America and, except as limited by law, in Europe permit us to rapidly reduce the size of our workforce if conditions warrant that action. Moreover, a significant portion of our debt obligations are short-term. As a consequence, we can adjust substantial portions of our cost structure in reaction to external events much more quickly than companies in industries characterized by large investments in illiquid fixed assets or rigid labor arrangements, including many other types of travel service providers.
Strategy
Our strategy in both the global car rental and equipment rental markets is as follows.
Maintain and strengthen our premier car rental brand and differentiated product offering
The Hertz brand is recognized for its superior customer service and a differentiated, premium product. We intend to maintain our position as a premier company through an intense focus on service, quality and product innovation. In the past we have been the first in the car rental market to offer such innovations as our customer loyalty program (Hertz #1 Club), our global expedited rental program (Hertz #1 Club Gold), our national-scale premium rental program (Prestige Collection) and our in-car navigational services (Hertz NeverLost). We believe that continuing to invest consistently in our core business activities, particularly in the areas of brand, facilities, technology and training, will help us maintain our premium product and pricing.
Continue the disciplined pursuit of off-airport growth opportunities
We intend to expand our presence in the off-airport portion of the car rental market in the United States and internationally. Our plan in the United States, where we believe the off-airport rental market is nearly as large as the airport rental market, is to increase our share of insurance replacement rentals through the establishment of a national footprint, as well as to increase our share of other off-airport business and leisure rentals. By leveraging our existing operations, we believe we will increase our penetration of this market and generate attractive margins over time. Internationally, our objective is to increase our penetration of the replacement market by focused sales efforts and a modest expansion of our off-airport network. We believe that a larger

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presence in off-airport car rental will increase the stability, across both seasons and economic cycles, of our financial performance and diversify our revenue base.
Capitalize on emerging trends and underserved markets in the European car rental business
We believe that the European market presents airport rental growth opportunities resulting from the growth of European air travel due in large part to the emergence and increasing penetration of high volume, low cost air carriers and the increasing use of the Internet throughout the continent. We intend to take advantage of these market changes in part through the business partnerships we maintain with travel providers in Europe, including Air France, Ryanair, American Express Travel, Carlson Wagonlit, Expedia and Opodo. Beyond airport rentals, our other anticipated growth areas in Europe include light commercial vehicle rentals and special fleet rentals, as well as rental programs for the intra-European and long-haul leisure markets. We also intend to continue to develop business opportunities with other key intermediaries in non travel-related markets such as automobile clubs, road-side assistance providers, leasing companies and car manufacturers.
Continue to gain share in the fragmented North American equipment rental market
We believe that our diverse and comparatively young rental fleet, emphasis on customer service, large national account base and prominent brand name will position us to continue gaining market share in the fragmented North American equipment rental market. After several years of declining nonresidential construction markets, an ongoing recovery that began in 2004 is leading to improved industry pricing and volume in North America.
We are capitalizing on these improving markets by expanding our equipment rental footprint with the planned addition of 7 to 9 new locations in North America in 2005. These additional locations would bring our total North American equipment rental location count to over 265 by the end of the year. We also intend to continue to increase our presence in the specialty equipment and general rental markets by offering more pumps, power generation and small equipment and renovating locations to facilitate walk-in business. We believe that our expansion plans, coupled with our emphasis on a high quality, well-maintained fleet, will continue to drive our growth in the equipment rental business.

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The offering
         
Class A common stock offered by us
      shares
 
       
Common stock to be outstanding immediately after this offering:
       
Class A common stock
      shares
Class B common stock
      shares
Total common stock outstanding
      shares
 
       
Common stock to be held by Ford immediately after this offering:
       
Class A common stock
      shares
Class B common stock
      shares
Total number of shares of common stock
      shares
 
       
Percentage of the combined voting power of all of our outstanding common stock to be held by Ford immediately after this offering
      %
 
       
     
Over-allotment option
              shares of Class A common stock to be offered by us if the underwriters exercise the over-allotment option in full
 
   
Use of proceeds
  The proceeds to us from the offering, after the deduction of underwriting discounts, commissions and expenses payable by us, are estimated to be $($      if the underwriters’ over-allotment option is exercised in full). Substantially all of the proceeds from this offering and from the offering of Equity Units are expected to be used to repay the subordinated promissory notes that we issued to Ford on each of June 10, 2005 and       , 2005 in the amounts of $1,185.0 million and $       , respectively, which we refer to collectively as the “Intercompany Notes” and pay an additional dividend to Ford. See “Use of proceeds.”
 
   
Equity Units Offering
  Concurrently with this offering, we are also offering, by means of a separate prospectus, $           of our “Equity Units” which are units comprised of senior notes issued by us and a forward contract obligating holders to purchase a number of shares of our Class A common stock. While this offering is not contingent on the offering of Equity Units, the

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  offering of Equity Units is contingent upon the completion of this offering.
 
   
Voting rights
  The holders of our Class A common stock and Class B common stock will be entitled to share equally on a per share basis in all dividends and other distributions declared by our Board of Directors. However, the holders of our Class A common stock are entitled to one vote per share and the holders of our Class B common stock are entitled to five votes per share. Under certain circumstances, shares of our Class B common stock can be converted into an equivalent number of shares of our Class A common stock. See “Relationship with Ford” and “Description of capital stock—Common stock—Voting rights.”
 
   
Dividend policy
  Our Board of Directors currently intends to declare quarterly dividends on our common stock. It is expected that the first quarterly dividend payment will be $       per share (an indicated rate of $       per share annually), with the initial dividend to be declared and paid in 2005. The declaration and payment of dividends are subject to the discretion of our Board of Directors. Any determination as to the payment of dividends will depend upon, among other things, general business conditions, our financial results, contractual, legal and regulatory restrictions regarding the payment of dividends by us and our subsidiaries, our credit ratings and such other factors as the Board of Directors may consider to be relevant.
 
   
 
  We did not pay any dividends during the part of the year 2005 ended June 9, 2005 or the years ended December 31, 2004, 2003 or 2002. On June 10, 2005 and       , 2005, we paid dividends of $1,185.0 million and $              , respectively, on our common stock to Ford in the form of the Intercompany Notes. We intend to pay additional dividends to Ford out of the proceeds of shares sold pursuant to the over-allotment option for this offering and out of the proceeds of Equity Units sold pursuant to the over-allotment option for the Equity Units offering. To the extent that the over-allotment option for this offering is not subscribed for in full, we intend to pay a dividend to Ford in the form of Class A common stock.

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  Certain debt and other instruments to which we are a party restrict our ability to pay dividends. See “Dividend policy.”
 
   
Controlling stockholder
  Currently, Ford indirectly owns all of our common stock. For information regarding the relationship between us and Ford, see “Relationship with Ford.”
 
   
Risk factors
  For a discussion of certain considerations relevant to an investment in our Class A common stock, see “Risk factors.”
 
   
Proposed New York Stock Exchange symbol for our Class A common stock
  HTZ
Unless otherwise indicated, all information throughout this prospectus assumes the over-allotment option in this offering has not been exercised and that we issue additional shares of Class A common stock to Ford pursuant to a stock dividend that we will declare prior to the consummation of this offering (the terms of which will require us to issue to Ford, shortly after the expiration of the over-allotment option, a number of shares equal to       (which is the maximum number of shares subject to the over-allotment option) minus the actual number of shares the underwriters purchase from us pursuant to the over-allotment option). This information excludes       shares of Class A common stock issuable upon the exercise of stock options that have been reserved for issuance pursuant to employee benefit plans, as well as shares of Class A common stock that we will be required to issue to settle the purchase contracts included in our Equity Units.

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Relationship with Ford
Currently, Ford, through its wholly owned subsidiary Ford Holdings LLC, is our only stockholder. Upon completion of this offering, Ford will beneficially own      % of the outstanding Class A common stock (   % if the underwriters’ over-allotment option is exercised in full) and 100% of the outstanding Class B common stock (which Class B common stock is entitled to five votes per share on any matter submitted to a vote of our stockholders). Upon completion of this offering, the common stock beneficially owned by Ford will represent in the aggregate      % of the combined voting power of all of our outstanding common stock (or      % if the underwriters’ over-allotment option is exercised in full). For as long as Ford continues to beneficially own (directly or indirectly) shares of common stock representing more than 50% of the combined voting power of our outstanding common stock, Ford will be able to direct the election of all of the members of our Board of Directors and exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations involving us, the acquisition or disposition of assets by us, the incurrence of indebtedness by us, the issuance of any additional common stock or other equity securities, the repurchase or redemption of common stock or preferred stock and the payment of dividends. Similarly, Ford will have the power to determine or significantly influence the outcome of matters submitted to a vote of our stockholders, including the power to prevent an acquisition or any other change in control of us and could take other actions that might be favorable to Ford. See “Description of capital stock.”
Ford has indicated to us that it expects, subject to market conditions, to completely divest its ownership in us. Ford is not subject to any obligation, contractual or otherwise, to retain its controlling interest in us, except that we and Ford, our directors, executive officers and certain other employees have agreed, subject to certain exceptions and limitations, not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of Class A common stock or Class B common stock or any of our securities which are substantially similar to shares of our common stock for a period of 180 days after the date of this prospectus without the prior written consent of the joint book-running managers, subject to certain limitations and limited extensions. As a result, there can be no assurance concerning the period of time during which Ford will maintain its beneficial ownership of our common stock owned by it following this offering. See “Underwriting.”
Ford will also have an option available to it to purchase additional shares of Class B common stock and/or nonvoting capital stock to maintain its then-existing percentage of the total voting power and value of us. Additionally, with respect to shares of nonvoting capital stock, Ford will have an option to purchase such additional shares so as to maintain ownership of 80% of each outstanding class of such stock.
For a description of certain provisions of our Restated Certificate of Incorporation concerning the allocation of business opportunities that may be suitable for both us and Ford, see “Description of capital stock—Certain certificate of incorporation and by-law provisions—Corporate opportunities.”
 
Our principal executive offices are located at 225 Brae Boulevard, Park Ridge, New Jersey 07656. Our main telephone number is (201) 307-2000. Our principal U.S. website is www.hertz.com . Information contained on our website or that can be accessed through our website is not incorporated by reference in this prospectus.

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Summary consolidated financial data
The following table presents summary consolidated financial information and other data for our business. The summary consolidated statement of operations data presented below for the years ended December 31, 2003, 2002, 2001 and 2000 and the six months ended June 30, 2004, have been restated. For a discussion of the restatement, see note (a) below and note 1A to the notes to our audited consolidated financial statements and our unaudited condensed consolidated financial statements included in this prospectus. The summary condensed consolidated statement of operations data for the six months ended June 30, 2005 and June 30, 2004 (as restated) and the condensed consolidated balance sheet data as of June 30, 2005 presented below were derived from our unaudited condensed consolidated financial statements and the related notes thereto included in this prospectus. The summary consolidated statement of operations data for each of the years in the three-year period ended December 31, 2004 and the consolidated balance sheet data at December 31, 2004 and 2003 presented below were derived from our audited consolidated financial statements and the related notes thereto included in this prospectus. The operating results for the six months ended June 30, 2005 and June 30, 2004 include all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair statement of the results for such interim periods. The interim results are not necessarily an indication of the results for the full year.
You should read the following information in conjunction with the section of this prospectus entitled “Management’s discussion and analysis of financial condition and results of operations,” our unaudited condensed consolidated financial statements and our audited consolidated financial statements and related notes beginning on page F-1 of this prospectus.

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    Six Months                      
    Ended, or as of June 30,             Year Ended, or as of December 31,    
            2004 (a)             2003 (a)     2002 (a)     2001 (a)     2000 (a)  
    2005     Restated     2004     Restated     Restated     Restated     Restated  
    (Dollars in millions)
Statement of Operations
                                                       
Revenues
                                                       
Car rental
  $ 2,824.5     $ 2,551.9     $ 5,430.8     $ 4,819.3     $ 4,537.6     $ 4,366.6     $ 4,553.9  
Equipment rental
    630.1       522.3       1,162.0       1,037.8       1,018.7       1,128.7       1,106.3  
Other (b)
    48.3       38.2       83.2       76.6       82.1       101.6       137.5  
 
                                         
Total revenues
    3,502.9       3,112.4       6,676.0       5,933.7       5,638.4       5,596.9       5,797.7  
 
                                         
Expenses
                                                       
Direct operating
    2,025.5       1,781.8       3,734.4       3,316.1       3,093.0       3,248.0       3,019.2  
 
                                                       
Depreciation of revenue earning equipment (c)
    756.4       713.8       1,463.3       1,523.4       1,499.5       1,462.3       1,323.5  
Selling, general and administrative
    318.9       292.4       591.3       501.7       463.1       479.2       459.3  
Interest, net of interest income (d)
    212.0       182.7       384.4       355.0       366.4       404.7       414.8  
 
                                         
Total expenses
    3,312.9       2,970.7       6,173.4       5,696.2       5,422.0       5,594.2       5,216.8  
 
                                         
Income before income taxes and minority interest
    190.0       141.7       502.6       237.5       216.4       2.7       580.9  
(Provision) benefit for taxes on income (e)
    (64.9 )     (49.5 )     (133.9 )     (78.9 )     (72.4 )     20.6       (222.5 )
Minority interest
    (5.0 )           (3.2 )                        
 
                                         
Income before cumulative effect of change in accounting principle
    120.1       92.2       365.5       158.6       144.0       23.3       358.4  
Cumulative effect of change in accounting principle (f)
                            (294.0 )            
 
                                         
Net income (loss)
  $ 120.1     $ 92.2     $ 365.5     $ 158.6     $ (150.0 )   $ 23.3     $ 358.4  
 
                                         
 
 
Balance Sheet Data
                                                       
Revenue earning equipment, net
                                                       
Cars
  $ 9,271.5     $ 8,476.6     $ 7,597.2     $ 6,462.0     $ 5,998.3     $ 5,220.4     $ 5,186.2  
Other equipment
    1,893.8       1,465.7       1,525.7       1,331.3       1,427.6       1,631.3       1,736.3  
Total assets
    15,752.0       14,691.5       14,096.4       12,579.0       11,128.9       10,158.4       10,620.0  
Total debt
    10,760.1       9,200.5       8,428.0       7,627.9       7,043.2       6,314.0       6,676.0  
Stockholder’s equity (g)
    1,499.1       2,285.4       2,670.2       2,225.4       1,921.9       1,984.4       1,984.1  
 
 
Selected Operating Data
                                                       
Car Rental Operations:
                                                       
Average number of owned cars operated during period
    426,100       393,500       413,000       373,500       369,500       373,800       359,300  
Transaction days (in thousands)
    58,431       54,352       115,246       102,281       99,240       104,015       103,279  
 
                                                       
Equipment Rental Operations:
                                                       
Average acquisition cost of rental equipment operated during period
  $ 2,460.6     $ 2,212.1     $ 2,305.7     $ 2,281.8     $ 2,327.6     $ 2,381.4     $ 2,157.4  
 
(a)   We have restated our previously issued consolidated statements of operations for the quarters ended March 31, 2004 and June 30, 2004 and the years ended December 31, 2003, 2002, 2001 and 2000. We will be restating our previously issued consolidated statement of operations for the quarter ended September 30, 2004. An explanation of the Restatement appears in note 1A to the notes to our audited consolidated financial statements and our unaudited condensed consolidated financial statements included in this prospectus. The Restatement resulted in previously reported revenues and expenses being increased by equal amounts with no change in our previously reported income before income taxes and minority interest and net income (loss).
 
(b)   Includes fees and expense reimbursements from licensees and revenues from car leasing operations, telecommunications services through 2001 and claim management services. Certain foreign car leasing operations were transferred to an affiliated company on August 31, 2000.

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(c)   For the six months ended June 30, 2005 and 2004 and the years ended December 31, 2004, 2003, 2002, 2001, and 2000, depreciation of revenue earning equipment includes net gains of $41.2 million, $25.4 million, $57.2 million, a net loss of $0.8 million, a net gain of $10.8 million, a net loss of $1.6 million and a net gain of $54.5 million, respectively, from the disposal of revenue earning equipment.
 
(d)   For the six months ended June 30, 2005 and 2004 and the years ended December 31, 2004, 2003, 2002, 2001 and 2000, interest income was $16.9 million, $9.0 million, $23.7 million, $17.9 million, $10.3 million, $9.0 million and $13.5 million, respectively.
 
(e)   Includes benefits of $46.6 million for the year ended December 31, 2004 relating to net adjustments to federal and foreign tax accruals and includes benefits of $30.2 million for the year ended December 31, 2001 from certain foreign tax credits.
 
(f)   Cumulative effect of change in accounting principle represents a non-cash charge for the year ended December 31, 2002, related to impairment of goodwill in our equipment rental business, recognized in accordance with the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”
 
(g)   Includes the declaration and payment on June 10, 2005 of a dividend totaling $1.2 billion on our outstanding common stock to Ford in the form of an Intercompany Note.

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Risk factors
Before you invest in our Class A common stock you should carefully consider the following risks, as well as other information set forth in this prospectus. If any of the following risks actually occurs, our business, financial condition or results of operations may suffer. As a result, the trading price of our Class A common stock could decline, and you could lose all or part of your investment. In addition to the risks described below, we may encounter risks that are not currently known to us, which may also impair our business operations and your investment in our Class A common stock .
Risks related to our business
An economic downturn could result in a decline in business and leisure travel and non-residential capital investment, which could harm our business.
Our results of operations are affected by many economic factors, including the level of economic activity in the markets in which we operate. A decline in economic activity either in the United States or in international markets may have a material adverse effect on us. In the car rental business, a decline in economic activity typically results in a decline in both business and leisure travel and, accordingly, a decline in the volume of car rental transactions. In the equipment rental business, a decline in economic activity typically results in a decline in activity in construction and other businesses in which our equipment rental customers operate and, therefore, results in a decline in the volume of equipment rental transactions. In the case of a decline in car or equipment rental activity, we may reduce rental rates to meet competitive pressures, which could have a material adverse effect on our results of operations. A decline in economic activity also may have a material adverse effect on residual values realized on the disposition of our revenue earning cars and/or equipment.
We face intense competition that may lead to downward pricing, or an inability to increase prices, which could have a material adverse impact on our results of operations.
The markets in which we operate are highly competitive. See “Business—Worldwide car rental—Competition” and “Business—Equipment rental—Competition.” We believe that price is one of the primary competitive factors in the car and equipment rental markets. Our competitors, some of whom may have access to substantial capital, may seek to compete aggressively on the basis of pricing. To the extent that we match competitors’ downward pricing, it could have a material adverse impact on our results of operations. To the extent that we do not match or remain within a reasonable competitive margin of our competitors’ pricing, it could also have a material adverse impact on our results of operations, as we may lose rental volume. The Internet has increased pricing transparency among rental car companies by enabling cost conscious customers, including business travelers, to more easily obtain the lowest rates available from rental car companies for any given trip. This transparency may increase the prevalence and intensity of price competition in the future. For the year ended December 31, 2004, and the first six months of 2005, major U.S. car rental brands experienced downward pressure on pricing, as measured through time and mileage rates they charged.
Our car rental business is dependent on the air travel industry, and disruptions in air travel patterns could harm our business.
We estimate that approximately 74% of our worldwide car rental revenues in 2004 were generated at our airport rental locations. Significant airfare increases (e.g., due to an increase in fuel costs) could result in reduced air travel and have a material adverse effect on our results of operations. In addition, any event that disrupts or reduces business or leisure air travel could have a material adverse effect on our results of

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operations. In particular, certain U.S. airlines have recently experienced economic distress, including the recent bankruptcy proceedings of US Airways Group, Inc. and United Air Lines, Inc. Any further deterioration in the economic condition of U.S. and international airlines could exacerbate reductions in air travel. Other events that impact air travel could include work stoppages, military conflicts, terrorist incidents, epidemic diseases or the response of governments to any of these events. For example, shortly before the September 11, 2001 terrorist attacks, we estimated that we would earn pre-tax income of approximately $250 million in 2001; by contrast, our actual pre-tax income for 2001 was only $3 million, and we continued to feel the adverse effects of the attacks well into the following year. On a smaller scale, the 2003 outbreak of Severe Acute Respiratory Syndrome, or “SARS,” in the Toronto, Canada area and parts of Asia, significantly reduced our 2003 results of operations in Canada.
Our business is highly seasonal, and a disruption in rental activity during our peak season could materially adversely affect our results of operations.
In our businesses, the second and third quarters of the year have historically been our strongest quarters due to the increased level of leisure travel and construction activity. In 2004, the second and third quarters accounted for approximately 25% and 28% of overall revenue and 29% and 50% of income before income taxes and minority interest, respectively. Any occurrence that disrupts rental activity during the second or third quarters could have a disproportionately material adverse effect on our results of operations. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources.”
We may not be successful in our business strategy to expand into the off-airport rental market, including marketing to replacement renters and insurance companies that reimburse or pay for such rentals.
We have been increasing our presence in the off-airport car rental market in the United States. We currently intend to add more off-airport locations in 2005 and subsequent years. In order to increase revenues at our new off-airport locations, we will need to successfully market to insurance companies and other companies that provide rental referrals to those needing cars while their vehicles are being repaired or are temporarily unavailable for other reasons, as well as to the renters themselves. To do so we believe that we will need to serve the market areas covered by nearly all national and regional insurance companies of significant size, which we believe could involve as many as 2,000 locations. We incur minimal non-fleet costs in opening our new off-airport locations, but new off-airport locations, once opened, take time to generate their full potential revenues. As a result, revenues at new locations do not initially cover their start-up costs and often do not, for some time, cover the costs of their ongoing operation. See “Business—Worldwide car rental—Operations.” The results of the strategy and the success of our implementation of this strategy will not be known for a number of years. If we are unable to implement our strategy to expand our off-airport network successfully, properly react to changes in market conditions or successfully market to replacement renters and the insurance companies covering the cost of their rentals, our financial condition, results of operations and cash flows could be materially adversely affected.
Our access to the debt markets has been impaired and may be further impaired by downgrades in our debt ratings. Without adequate access to the debt markets, we may not have sufficient liquidity to operate our business.
We satisfy our funding requirements principally through the issuance of medium and long-term debt, the sale of commercial paper and other short-term borrowings primarily from banks. As of June 30, 2005, our commercial paper borrowings and other short-term indebtedness were $4.1 billion. At various times during April 2005 and the following four months, each of the major rating agencies placed our debt

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ratings under review or reduced its outlook or debt ratings with respect to us. See “Management’s discussion and analysis of financial condition and results of operations––Liquidity and capital resources––Debt ratings.” In most cases, the actions with respect to us were taken in conjunction with actions with respect to the debt ratings of Ford. On April 20, 2005, Ford announced that it was evaluating its long-term strategic options for its investment in us. Since that date, our ability to sell unsecured commercial paper has been adversely affected. Our ability to sell commercial paper was impacted by the Ford announcement as well as recent downgrades of Ford’s and our debt ratings. Any further downgrade of our debt ratings may increase our borrowing costs and further impact our ability to sell commercial paper and otherwise access capital markets.
On May 26, 2005, we entered into a short-term senior credit facility, referred to as the “Interim Credit Facility,” with an aggregate availability of up to $3.0 billion with the joint book-running managers of this offering and/or their affiliates. As of June 30, 2005, we had outstanding borrowings of approximately $1.0 billion and C$575.0 million under the Interim Credit Facility. The Interim Credit Facility will mature on November 23, 2005. We are required to prepay loans and permanently reduce commitments under the Interim Credit Facility under certain circumstances, including at the time Ford controls less than 25% of us or any other person or group has equal or greater control of us than Ford.
To the extent that we are unable to access the commercial paper market or otherwise finance our borrowing needs in the public or private markets upon acceptable terms, including to pay back all or a portion of the Interim Credit Facility or any other indebtedness, we would seek to satisfy our liquidity requirements through borrowings under our credit facilities, arranging new facilities or through the issuance of additional asset backed securities. We cannot assure you that our existing credit facilities will provide sufficient liquidity to us under all conditions. Even if the existing facilities provide us with sufficient liquidity, our costs of capital would likely increase as a result of their utilization. To the extent we do not pass on our increased borrowing costs to our customers, our profitability, and potentially our ability to raise capital, could be materially adversely affected. In such circumstances, we might seek to issue equity securities, although our ability to do so could be constrained by market conditions and/or other reasons, including a lock-up agreement related to this offering, or Ford’s possible desire not to be diluted as long as it controls us.
Any deterioration in Ford’s financial condition could adversely affect our access to the credit markets.
Ford Motor Company’s debt rating is currently rated below investment grade by Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, Inc., or “S&P,” and Moody’s Investors Service, Inc., or “Moody’s.” Other debt rating agencies also have recently downgraded their ratings of Ford. We cannot assure you that any future downgrading of Ford’s debt ratings would not have an adverse impact on our debt ratings. Therefore, for so long as Ford maintains a significant interest in us, a deterioration in the financial condition of Ford could have the effect of increasing our borrowing costs and/or impairing our access to the capital markets. To the extent we do not pass on our increased borrowing costs to our customers, our profitability, and potentially our ability to raise capital, could be materially adversely affected. Also, so long as Ford maintains a significant interest in us, Ford will have the ability to enter into agreements or adopt policies that limit our ability to incur debt, issue equity securities and meet our liquidity needs. See “Relationship with Ford.”

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We are subject to risks from increases in interest rates, which will increase our borrowing costs and may also lead to a decline in equipment rental demand.
An increase in interest rates and related interest expense may have a material adverse impact on our profitability. In addition, an increase in interest rates may result in a decline in activity in construction and other businesses in which our equipment rental customers operate and, accordingly a decline in the volume of equipment rental transactions. Our total outstanding debt of $10.8 billion as of June 30, 2005 included interest rate sensitive debt of $5.8 billion (either by its original terms or through the use of interest rate derivatives), which had a weighted average interest rate of 4.1% per annum, and non-interest rate sensitive debt of $5.0 billion, which had a weighted average fixed interest rate of 6.4% per annum. During our seasonal borrowing peak in 2004, outstanding interest rate sensitive debt totaled $4.9 billion, with a weighted average interest rate of 2.4% per annum. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources.”
We face risks of increased costs of cars and equipment and of decreased profitability, including as a result of limited supplies of competitively priced cars or equipment.
We believe we are one of the largest private sector purchasers of new cars in the world for our rental fleet, and during 2004, our approximate average holding period for a rental car was 11 months in the United States and eight months in our international car rental operations. In recent years, the average cost of new cars has increased. We expect increases in car costs and modest increases in equipment costs in the near term. We expect a significant increase in car costs for the 2006 model year, which will adversely affect our results of operations beginning in the fourth quarter of 2005.
Historically, we have purchased more of the cars we rent from Ford than from any other automobile manufacturer. Under a master supply and advertising agreement, or the “Master Supply and Advertising Agreement,” Ford has agreed to develop fleet offerings in the United States that are generally competitive with terms and conditions of similar offerings by other automobile manufacturers. The Master Supply and Advertising Agreement expires in 2010. See “Relationship with Ford—Master Supply and Advertising Agreement.” We cannot assure you that we will be able to extend the Master Supply and Advertising Agreement beyond its current term. In the future, we expect to buy a smaller proportion of our car rental fleet from Ford than we have in the past. If Ford does not offer us competitive terms and conditions, and we are not able to purchase sufficient quantities of cars from other automobile manufacturers on competitive terms and conditions, then we may be forced to purchase cars at higher prices, or on terms less competitive, than for cars purchased by our competitors.
To date we have not entered into any long-term car supply arrangements with other manufacturers. In addition, certain automobile manufacturers, including Ford, have adopted strategies to de-emphasize sales to the rental car industry which they view as less profitable due to historic sales incentive and other discount programs that tended to lower the average cost of cars for fleet purchasers such as us. Reduced or limited supplies of equipment together with increased prices are risks that we also face in our equipment rental business. We cannot assure you that we will be able to pass on increased costs of cars or equipment to our rental customers. Failure to pass on significant cost increases to our customers would have a material adverse impact on our results of operations and financial condition.
We face risks related to decreased acquisition or disposition of cars through repurchase programs.
During 2004, 81% of the cars purchased for our U.S. and international car rental fleet were subject to repurchase by automobile manufacturers under contractual guaranteed repurchase programs. Under these

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programs, automobile manufacturers agree to repurchase cars at a specified price during a specified time period, typically subject to certain car condition and mileage requirements. These repurchase programs limit the risk to us that the market value of a car at the time of its disposition will be less than its estimated residual value at such time. We refer to this risk as residual risk. For these reasons, cars purchased by car rental companies under repurchase programs are sometimes referred to by industry participants as “non-risk,” “buy-back” or “program” cars.
Conversely, those cars not purchased under repurchase programs for which the car rental company is exposed to residual risk are sometimes referred to as “risk” cars. Repurchase programs enable us to determine our depreciation expense in advance. Depreciation is a significant cost factor in our operations. We expect the percentage of our car rental fleet subject to repurchase programs to decrease due primarily to anticipated changes in the terms to be offered by automobile manufacturers under repurchase programs and because we expect car manufacturers to offer fewer program cars to us as part of their announced efforts to de-emphasize sales to rental car companies. Accordingly, we expect to bear increased risk relating to the residual market value of our car rental fleet and car depreciation.
In addition, repurchase programs generally provide us with flexibility to reduce the size of our fleet by returning cars sooner than originally expected without risk of loss in the event of an economic downturn or to respond to changes in demand. This flexibility will be reduced to the extent the percentage of non-risk cars in our car rental fleet decreases. See “Management’s discussion and analysis of financial condition and results of operations—Overview” and “Business—Worldwide car rental—Fleet.”
Automobile manufacturers could modify or eliminate their repurchase programs or change their return policies (which include condition and mileage requirements for returned cars) from one program year to another to make it disadvantageous to acquire certain cars. Any such modification or elimination would expose us to the risks described in the preceding paragraphs.
We could be harmed by a decline in the results of operations or financial conditions of the manufacturers of our cars, particularly if they are unable to repurchase program cars from us.
A severe or persistent decline in the results of operations or financial condition of a manufacturer of cars that we own could reduce the cars’ residual values, particularly to the extent that the manufacturer unexpectedly announced the eventual elimination of its models or nameplates or ceased manufacturing them altogether. Such a reduction could cause us to sustain a loss on the ultimate sale of those cars or require us to depreciate those cars on a more rapid basis while we own them. In addition, if a decline in results or conditions were so severe as to cause a manufacturer to default on an obligation to repurchase program cars we own, we would have to find an alternate method of disposition of those cars, which could significantly increase our expenses and decrease our proceeds on sales. Any such default might also leave us with a substantial unpaid claim against the manufacturer with respect to program cars that were sold and returned to the car manufacturer but not paid for. A decline in the economic and business prospects of manufacturers, including any economic distress impacting the suppliers of automobile components to manufacturers, could also cause them to raise the prices we pay for cars or reduce their supply to us.
Manufacturer safety recalls could create risks to our business.
Our cars may be subject to safety recalls by their manufacturers. Under certain circumstances, the recalls may cause us to attempt to retrieve cars from renters or to decline to re-rent returned cars until we can arrange for the steps described in the recalls to be taken. If a large number of cars are the subject of simultaneous recalls, or if needed replacement parts are not in adequate supply, we may not be able to re-rent recalled cars for a significant period of time. We could also face liability claims if recalls affect cars

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that we have already sold. Depending on the severity of the recall, it could materially adversely affect our revenues, create customer service problems, reduce the residual value of the cars involved and harm our general reputation.
We face risks arising from our heavy reliance on communications networks and centralized information systems.
We rely heavily on information systems to accept reservations, process rental and sales transactions, manage our fleets of cars and equipment, account for our activities and otherwise conduct our business. We have centralized our information systems in two facilities in Oklahoma City, Oklahoma, and we rely on communications services providers to link our systems with the business locations these systems serve. A failure of a major system, or a major disruption of communications between the system and the locations it serves, could cause a loss of reservations, interfere with our ability to manage our fleet, slow rental and sales processes and otherwise materially adversely affect our ability to manage our business effectively. Our systems designs, business continuity plans and insurance programs are designed to mitigate such a risk, not to eliminate it. In addition, because our systems contain information about millions of individuals and businesses, our failure to maintain the security of the data we hold, whether the result of our own error or the malfeasance of others, could harm our reputation or give rise to legal liabilities leading to lower revenues, increased costs and other material adverse effects on our results of operations.
Claims that the software products and information systems that we rely on are infringing on the intellectual property rights of others could increase our expenses or inhibit us from offering certain services, which could adversely affect our results of operations.
A number of entities, including some of our competitors, have sought, or may in the future obtain, patents and other intellectual property rights that cover or affect software products and other components of information systems that we rely on to operate our business. For example, Enterprise Rent-A-Car Company, or “Enterprise,” has asserted that certain systems we use to conduct insurance replacement rentals would infringe on patent rights it would obtain if it were granted certain patents for which it has applied.
Litigation may be necessary to determine the validity and scope of third-party rights or to defend against claims of infringement. If a court determines that one or more of the software products or other components of information systems we use infringe on intellectual property owned by others or we agree to settle such a dispute, we may be liable for money damages. In addition, we may be required to cease using those products and components unless we obtain licenses from the owners of the intellectual property, redesign those products and components in such a way as to avoid infringement or cease altogether the use of those products and components. Each of these alternatives could increase our expenses materially or impact the marketability of our services. Any litigation, regardless of the outcome, could result in substantial costs and diversion of resources and could have a material adverse effect on our business. In addition, a third party intellectual property owner might not allow us to use its intellectual property at any price, or on terms acceptable to us, which could materially affect our competitive position and our results of operations. For example, if Enterprise were to obtain the patent rights referred to above and after that pursue and prevail on claims of infringement similar to those it has previously asserted, it could have a material adverse effect on our ability to grow our insurance replacement business and, in turn, our off-airport business.

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The concentration of our reservations, accounting and information technology functions at a limited number of facilities in Oklahoma, Alabama and Ireland creates risks for us.
We have concentrated our reservations functions for the United States in two facilities, one in Oklahoma City, Oklahoma, and one in Saraland (Mobile County), Alabama, and we have concentrated our accounting functions for the United States in two facilities in Oklahoma City. Similarly, we have concentrated reservations and accounting functions for our European operations in a single facility near Dublin, Ireland. In addition, our major information systems are centralized in two of our facilities in Oklahoma City. A disruption of normal business at any of our principal facilities in Oklahoma City, Saraland or Dublin, whether as the result of localized conditions (such as a fire or explosion) or as the result of events or circumstances of broader geographic impact (such as an earthquake, storm, flood, epidemic, strike, act of war, civil unrest or terrorist act), could materially adversely affect our business by disrupting normal reservations, customer service, accounting and systems activities. Our systems designs, business continuity plans and insurance programs are designed to mitigate those risks, not to eliminate them, and this is particularly true with respect to events of broad geographic impact.
Ford controls us and may have conflicts of interest with us or you in the future.
Immediately prior to this offering, Ford, through a subsidiary, is our only stockholder. Upon completion of this offering, Ford will beneficially own      % of our outstanding Class A common stock (         % if the underwriters’ over-allotment option is exercised in full) and 100% of our outstanding Class B common stock (which Class B common stock is entitled to five votes per share on any matter submitted to a vote of our stockholders). Upon completion of this offering, the common stock beneficially owned by Ford will represent in the aggregate      % of the combined voting power of all of our outstanding common stock (or      % if the underwriters’ over-allotment option is exercised in full). For as long as Ford continues to beneficially own shares of common stock representing more than 50% of the combined voting power of our common stock, Ford will be able to direct the election of all of the members of our Board of Directors and exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations involving us, the acquisition or disposition of assets by us, the incurrence of indebtedness by us, the issuance of any additional common stock or other equity securities, the repurchase or redemption of common stock or preferred stock and the payment of dividends. Similarly, Ford will have the power to determine or significantly influence the outcome of matters submitted to a vote of our stockholders, including the power to prevent an acquisition or any other change in control of us and could take other actions that might be favorable to Ford. See “Description of capital stock” and “Relationship with Ford.”
In addition, so long as we are entitled to do so (which under current rules means that so long as Ford continues to own in the aggregate more than 50% of the combined voting power of all of our outstanding common stock), we intend to use the “controlled company” exception under the New York Stock Exchange rules. This exception eliminates the requirements that such a controlled company have a majority of independent directors on its board of directors and that it has compensation and nominating and corporate governance committees composed entirely of independent directors. As a result, you will not have the same protections afforded to stockholders of non-controlled companies that are subject to all of the corporate governance requirements of the New York Stock Exchange.
Ford will also have an option available to it to purchase additional shares of Class B common stock and/or nonvoting capital stock to maintain its then-existing percentage of the total voting power and value of us. Additionally, with respect to shares of nonvoting capital stock, Ford will have an option to purchase such additional shares so as to maintain ownership of 80% of each outstanding class of such stock.

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Beneficial ownership of at least 80% of the total voting power and 80% of each class of nonvoting capital stock, if any, is required in order for Ford to effect a tax-free spin-off of us (as discussed under “Description of capital stock––Common stock––Conversion”) or certain other tax-free transactions.
Each member of a consolidated group for federal income tax purposes is severally liable for the federal income tax liability of each other member of the consolidated group. Each member of the Ford controlled group, which currently includes Ford, us and Ford’s other subsidiaries, is also jointly and severally liable for pension and benefit funding and termination liabilities of other group members, as well as certain benefit plan taxes. Accordingly, we could be liable under such provisions in the event any such liability is incurred, and not discharged, by any other member of the Ford consolidated or controlled group for any period during which we were included in the Ford consolidated or controlled group. After this offering, we will no longer be included in Ford’s consolidated group for federal tax purposes, and there is no assurance that our tax position will not be less favorable than it is at present. See “Relationship with Ford.”
In addition, by virtue of its controlling beneficial ownership and the terms of a tax-sharing agreement between us and Ford, Ford effectively controls all of our tax decisions for periods ending on or prior to the date of this offering. Under the tax-sharing agreement, Ford has sole authority to respond to and conduct all tax proceedings (including tax audits) relating to our federal and combined state returns, to file all such returns on behalf of us and to determine the amount of our liability to (or entitlement to payment from) Ford under the tax-sharing agreement. See “Relationship with Ford––Tax-Sharing Agreement.” This arrangement may result in conflicts of interests between us and Ford. For example, under the tax-sharing agreement, Ford may choose to contest, compromise or settle any adjustment or deficiency proposed by the relevant taxing authority in a manner that may be beneficial to Ford and detrimental to us. Although Ford does not plan or intend to effectuate a spin-off of our stock to Ford stockholders, the tax-sharing agreement, which we and Ford will amend in connection with this offering, will provide that in the event that Ford effectuates a spin-off of our common stock that it owns and such spin-off is not tax-free pursuant to Section 355 of the Internal Revenue Code of 1986, as amended, or the “Code,” we will generally be responsible for any taxes incurred by Ford or its stockholders if such taxes result from certain of our actions or omissions. If the taxes incurred by Ford or its stockholders do not result from certain of our actions or omissions, and do not result from certain of Ford’s actions or omissions, then we generally will be responsible for a percentage of such taxes equal to the quotient of the fair market value of our issued and outstanding common stock, divided by the sum of the fair market value of our issued and outstanding common stock and the fair market value of Ford’s issued and outstanding common stock.
For a description of certain provisions of the Restated Certificate of Incorporation concerning the allocation of business opportunities that may be suitable for both us and Ford, see “Description of capital stock—Certain certificate of incorporation and by-law provisions—Corporate opportunities.”
We face risks related to Ford’s change in ownership of us.
Certain of our airport concession agreements require the consent of the airport authority in connection with changes in ownership of us. We will seek those consents in connection with this offering except where not obtaining them will not, in our view, have a material adverse effect on our consolidated financial position or results of operations. In the event that Ford seeks to sell any of our common stock that it owns following this offering, additional consents will be required. Certain of our credit facilities impose consolidated net worth tests on us if Ford ceases to own at least 51% of the voting control of all of our capital stock then outstanding as described under “Restrictive covenants––Minimum consolidated net worth and maximum consolidated senior debt to consolidated net worth ratio.”

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Certain intercompany agreements and arrangements exist between Ford and us. See “Relationship with Ford.” We cannot assure you that the products, services and other benefits Ford provides to or purchases from us under such agreements will continue to be provided or purchased, and if not, whether, or on what terms, such products, services or other benefits provided to us could be replicated and sales thereof to Ford replaced. During 2004, approximately 41% of the cars acquired by us domestically were manufactured by Ford and its subsidiaries. See “—We face risks of increased costs of cars and equipment and of decreased profitability, including as a result of limited supplies of competitively priced cars or equipment.”
We face risks related to liabilities and insurance.
Our businesses expose us to claims for personal injury, death and property damage resulting from the use of the cars and equipment rented or sold by us and for workers’ compensation claims and other employment-related claims by our employees. Currently, we generally self-insure up to $10 million per occurrence in the United States and Europe for vehicle and general liability exposures and maintain insurance with unaffiliated carriers in excess of such levels up to $185 million per occurrence, or in the case of equipment rental in Europe and international operations outside of Europe, in such amounts as we deem adequate given the risks. We cannot assure you that we will not be exposed to uninsured liability at levels in excess of our historical levels resulting from multiple payouts or otherwise, that liabilities in respect of existing or future claims will not exceed the level of our insurance, that we will have sufficient capital available to pay any uninsured claims or that insurance with unaffiliated carriers will continue to be available to us on economically reasonable terms or at all. See “Business—Risk management” and “Business—Legal proceedings.” In addition, we are currently insured for certain liabilities under insurance policies maintained by Ford. We cannot assure you that such insurance coverage will continue to be provided by Ford after this offering, and if it is not, whether, or on what terms, such insurance coverage will be replaced. To the extent Ford terminates our coverage under an insurance policy, we may be uninsured for liabilities incurred but not reported pursuant to such policy.
Environmental regulations could subject us to liability for fines or damages.
We are regulated by federal, state, local and foreign environmental laws and regulations in connection with our operations, including, among other things, with respect to the ownership and operation of tanks for the storage of petroleum products, such as gasoline, diesel fuel and motor and waste oils. We have established a compliance program for our tanks that is intended to ensure that the tanks are properly registered with the state or other jurisdiction in which the tanks are located and have been either replaced or upgraded to meet applicable leak detection and spill, overfill and corrosion protection requirements. However, we cannot assure you that these tank systems will at all times remain free from undetected leaks or that the use of these tanks will not result in significant spills.
We have made, and will continue to make, expenditures to comply with environmental laws and regulations, including, among others, expenditures for the cleanup of contamination at our owned and leased properties, as well as contamination at other locations at which our wastes have reportedly been identified. We cannot assure you that compliance with existing or future environmental legislation and regulations will not require material expenditures by us or otherwise have a material adverse effect on our consolidated financial position, results of operations or cash flow. See “Business—Governmental regulation and environmental matters” and “Business––Legal proceedings.”

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Changes in the U.S. and foreign legal and regulatory environment that impact our operations, including laws and regulations relating to the insurance products we sell, customer privacy, data security and insurance rates, could disrupt our business, increase our expenses or otherwise could have a material adverse effect on our results of operations.
We are subject to a wide variety of laws and regulations in the United States and the other countries and jurisdictions in which we operate, and changes in the level of government regulation of our business have the potential to materially alter our business practices or our profitability. Depending on the jurisdiction, those changes may come about through new legislation, the issuance of new laws and regulations or changes in the interpretation of existing laws and regulations by a court, regulatory body or governmental official. Sometimes those changes may have not just prospective but also retroactive effect, which is particularly true when a change is made through reinterpretation of laws or regulations that have been in effect for some time. Moreover, changes in regulation that may seem neutral on their face may have either more or less impact on us than on our competitors, depending on the circumstances.
The optional liability insurance policies and products providing insurance coverage in our domestic car rental operations are conducted pursuant to limited licenses or exemptions under state laws governing the licensing of insurance producers. In our international car rental operations, our offering of optional products providing insurance coverage historically has not been regulated. Any changes in U.S. or foreign law that change our operating requirements with respect to insurance could increase our costs of compliance or make it uneconomical to offer such products, which would lead to a reduction in revenue. For instance, in the countries of the European Union and Australia, the regulatory environment for insurance intermediaries is rapidly evolving, and we cannot assure you either that we will be able to continue offering such coverage without substantial changes in our offering process or in the terms of the coverage or that such changes, if required, would not render uneconomic our continued offering of the coverage. Due to a change in law in Australia, we have suspended sales of certain insurance products there; we are currently exploring ways to resume offering those products. See “Business––Risk management” for further discussion regarding how changes in the regulation of insurance intermediaries may affect us internationally.
Laws in many countries and jurisdictions limit the types of information we may collect about individuals with whom we deal or propose to deal, as well as how we collect, retain and use the information that we are permitted to collect. In addition, the centralized nature of our information systems requires the routine flow of information about customers and potential customers across national borders, particularly into the United States. If this flow of information were to become illegal, or subject to onerous restrictions, our ability to serve our customers could be seriously impaired for an extended period of time. Other changes in the regulation of customer privacy and data security could likewise have a material adverse effect on our business. Privacy and data security are rapidly evolving areas of regulation, and additional regulation in those areas, some of it potentially difficult for us to accommodate, is frequently proposed and occasionally adopted. Thus, changes in the worldwide legal and regulatory environment in the areas of customer privacy, data security and cross-border data flows could have a material adverse effect on our business, primarily through the impairment of our marketing and transaction processing activities.
Further, the substantive regulation of the rates we charge car renters, either through direct price regulation or a requirement that we disregard a customer’s source market (location or place of residence) for rate purposes, could reduce our revenues or increase our expenses. We set rates based on a variety of factors including the sources of rental reservations geographically and by the means through which the reservations were made, all of which are in response to various market factors and costs. The European Commission is currently considering a directive that could eventually require us to disregard the country of residence of European Union residents for rate purposes, and bills have been introduced into the New York State legislature that similarly would prevent us from charging higher rates to renters residing in

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certain boroughs of New York City. The adoption of any of these measures could have a material adverse impact on our revenues and results of operations.
Risks related to this offering
There is no existing market for our Class A common stock, and we do not know if one will develop to provide you with adequate liquidity.
Currently there is no public market for our Class A common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market on the New York Stock Exchange or otherwise or how liquid that market might become. The initial public offering price for the shares will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering.
Future dispositions of common stock by Ford, us or others may depress the market price of our Class A common stock.
Subject to applicable federal securities laws and the restrictions set forth below, after completion of this offering, Ford may dispose of any or all of the shares of the common stock beneficially owned by it. Dispositions by Ford of substantial amounts of common stock in the public market or to its stockholders, or the perception that such dispositions could occur, could adversely affect prevailing market prices for our Class A common stock. Ford is not subject to any obligation, contractual or otherwise, to retain or dispose of its controlling interest, except that we and Ford, our directors, executive officers and certain other employees have agreed, subject to certain exceptions, not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of common stock or any of our securities which are substantially similar to shares of our common stock for a period of 180 days after the date of this prospectus without the prior written consent of the joint book-running managers, subject to certain limitations and limited extensions. See “Underwriting.” As a result, we cannot predict the period of time during which Ford will maintain its beneficial ownership of common stock owned by it following this offering. Ford has indicated that it expects, subject to market conditions, to completely divest its ownership in us. As a result, subject to the lock-up arrangements described above, Ford could dispose of all or a substantial portion of the remaining interest in our common stock in the near future. See “Shares eligible for future sale.” Ford will have registration rights with respect to the shares of the common stock owned by it following this offering, which would facilitate any future disposition. See “––Risks related to our business––Ford controls us and may have conflicts of interest with us or you in the future,” “Relationship with Ford—Corporate Agreement” and “Shares eligible for future sale.”
The market price of our Class A common stock could decline as a result of dispositions by Ford or any future issuances by us of a large number of shares of common stock in the market after the offering or the perception that such dispositions could occur. These dispositions, or the possibility that these dispositions may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
After this offering, we will have approximately            shares of Class A common stock and shares of Class B common stock outstanding. Of those shares, the approximately       shares of Class A common stock sold in this offering (assuming no exercise of the over-allotment option) will be freely tradable. The approximately            shares of Class A common stock that are held by Ford, and any shares of Class A common stock into which shares of Class B common stock are converted at Ford’s option, will be eligible for resale from time to time after the expiration of the 180-day lock-up period, subject to contractual restrictions and restrictions under the Securities Act of 1933, as amended, or the “Securities Act.” These shares may be sold subject to the volume, manner of sale and other conditions of

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Rule 144 or pursuant to a registered public offering. In addition, the purchase contracts included in the Equity Units being offered concurrently with this offering will require us to issue up to shares of our Class A common stock between the third and fourth anniversaries of the consummation of this offering (or sooner if holders exercise their rights to settle early) subject to certain conditions. We expect that shares of Class A common stock issued upon settlement of the purchase contracts relating to the Equity Units will be freely tradable upon issuance.
The market price of our Class A common stock may be volatile, which could cause the value of your investment to decline.
Securities markets worldwide, and especially equity markets, experience significant price and volume fluctuations. This market volatility, as well as general economic conditions, could reduce the market price of our Class A common stock in spite of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors, and in response, the market price of our Class A common stock could decrease significantly. You may be unable to sell your shares of Class A common stock at or above the initial public offering price.
Provisions in our amended and restated certificate of incorporation and bylaws may discourage a takeover attempt.
Certain provisions of our restated certificate of incorporation and by-laws may render more difficult, or have the effect of discouraging, unsolicited takeover bids from third parties or the removal of our incumbent management. See “Description of capital stock—Certain certificate of incorporation and by-law provisions.” Although such provisions do not have a substantial practical significance to investors while Ford controls us, such provisions could have the effect of depriving stockholders of an opportunity to sell their shares at a premium over prevailing market prices should Ford’s combined voting power decrease to less than 50%.

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Special note regarding forward-looking statements
Certain statements contained in this prospectus are “forward looking statements.” These statements give our current expectations or forecasts of future events and our future performance and do not relate directly to historical or current events or our historical or current performance. Most of these statements contain words that identify them as forward-looking, such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or other words that relate to future events, as opposed to past or current events.
Forward-looking statements are based on the then-current expectations, forecasts and assumptions of our management and involve risks and uncertainties, some of which are outside of our control that could cause actual outcomes and results to differ materially from current expectations. For some of the factors that could cause such differences, see “Risk factors.”
We cannot assure you that the assumptions made in preparing any of the forward-looking statements will prove accurate or that any projections will be realized. It is expected that there will be differences between projected and actual results.
These forward-looking statements speak only as of the date of this prospectus, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We caution prospective purchasers not to place undue reliance on the forward-looking statements. All forward-looking statements attributable to us are expressly qualified in their entirety by the cautionary statements contained herein.

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Use of proceeds
The proceeds to us from the offering, after the deduction of underwriting discounts, commissions and expenses payable by us, are estimated to be $          ($          if the underwriters’ over-allotment option is exercised in full). We expect to use substantially all of these proceeds, as well as the proceeds from the offering of Equity Units, to repay the Intercompany Notes issued by us to Ford in the aggregate amount of $          . The Intercompany Notes each mature on June 10, 2010 and may be prepaid at any time. The Intercompany Note issued on June 10, 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of 200 basis points and the Intercompany Note issued on           , 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of basis points. See “Relationship with Ford—Intercompany Notes.” In addition, we intend to use the proceeds from any shares sold pursuant to the over-allotment option for this offering and from any Equity Units sold pursuant to the over-allotment option for the Equity Unit offering, less underwriting discounts, to pay additional dividends of up to $          and $          , respectively, to Ford that will be declared prior to the consummation of this offering and that will be limited to net proceeds we actually receive from the sale of such shares and Equity Units. This offering of our Class A common stock is not conditioned on the consummation of the concurrent offering of our Equity Units.
Dividend policy
Our Board of Directors currently intends to declare quarterly dividends on both our Class A common stock and Class B common stock. It is expected that the first quarterly dividend payment will be $     per share (an indicated rate of $     per share annually), with the initial dividend to be declared and paid in 2005. The declaration and payment of dividends are subject to the discretion of our Board of Directors. Any determination as to the payment of dividends will depend upon, among other things, general business conditions, our financial results, contractual, legal and regulatory restrictions regarding the payment of dividends by us and our subsidiaries, our credit ratings and such other factors as the Board of Directors may consider to be relevant.
Certain debt and other instruments under which we have issued, or may in the future issue, debt securities restrict our ability to pay dividends. Such restrictions generally provide that we may not pay dividends, purchase, redeem or invest in our shares or permit purchases, redemptions or investments by Restricted Subsidiaries, as such term is defined in the applicable debt instruments, in our shares subsequent to a specified date if, together with total investments by us and our Restricted Subsidiaries in subsidiaries that are not Restricted Subsidiaries made subsequent to such specified date, the aggregate of any such dividends or investments exceeds the sum of (i) $185,000,000, plus (or minus in the case of a deficit) (ii) the consolidated net income (or net loss) of us and our Restricted Subsidiaries earned subsequent to December 31, 1985, plus (iii) the aggregate net proceeds received from capital stock, including rights or warrants to purchase capital stock and indebtedness converted into capital stock, issued subsequent to December 31, 1985. After giving effect to this offering, the concurrent offering of Equity Units and related use of proceeds together with the contemporaneous transactions described under “Capitalization,” approximately $          of consolidated stockholder’s equity is expected to be free of such limitations. The Interim Credit Facility and the purchase contract agreement related to the Equity Units contain additional restrictions on our ability to pay dividends. See “Description of indebtedness––Restrictive covenants,” “Description of indebtedness––Senior credit facilities” and “Description of Equity Units.”
We did not pay any dividends during the part of the year 2005 ended June 9, 2005 or the years ended December 31, 2004, 2003 or 2002. On June 10, 2005 and          , 2005, we paid dividends of $1,185.0 million and $          , respectively, on our common stock to Ford in the form of the Intercompany Notes. We intend to pay additional dividends to Ford

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out of the proceeds of shares sold pursuant to the over-allotment option for this offering and out of the proceeds of Equity Units sold pursuant to the over-allotment option for the Equity Units offering. To the extent that the over-allotment option for this offering is not subscribed for in full, we intend to pay a dividend to Ford in the form of Class A common stock.
We previously announced a plan to commence paying semi-annual dividends to Ford in June 2005. That plan was based on the assumption that Ford would continue to own 100% of our outstanding capital stock. As a result of this offering, the dividend policy set forth above will supersede that plan.

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Capitalization
The following table sets forth our capitalization as of June 30, 2005:
    on an actual basis;
 
    on an as adjusted pre-offering basis, after giving effect to our issuance of the second Intercompany Note on      , 2005 as a dividend to Ford and the issuance of the Cumulative Preferred Stock to Ford as described below; and
 
    on an as adjusted post-offering basis, after giving effect to the items just described, plus this offering, the offering of Equity Units, the repayment of the Intercompany Notes with the proceeds of those offerings and the redemption of the Cumulative Preferred Stock from Ford described below.
You should read the information in this table in conjunction with our audited consolidated financial statements and our unaudited condensed consolidated financial statements and the notes to those statements included in this prospectus and “Use of proceeds,” “Dividend policy,” “Selected historical financial data,” and “Management’s discussion and analysis of financial condition and results of operations.”
                         
    As of June 30, 2005  
            As adjusted     As adjusted  
    Actual     pre-offerings     post-offerings  
    (Unaudited)  
    (Dollars in thousands)  
Cash, cash equivalents and short-term investments (1)
  $ 1,000,349     $       $    
 
                 
 
                       
Debt:
                       
Notes payable, including commercial paper
  $ 1,483,075     $       $    
Interim Credit Facility (2)
    1,459,521                  
Intercompany Notes (3)
    1,185,000                  
 
                       
Promissory senior notes (including current portion)
    5,198,142                  
Senior Notes due 2015(4)
                     
Foreign subsidiaries debt:
                       
Short-term borrowings:
                       
Banks
    869,186                  
Commercial Paper
    317,500                  
Other borrowings
    247,654                  
 
                 
Total debt
    10,760,078                  
 
                 
Stockholders’ equity:
                       
Actual and as adjusted pre-offering: common stock, par value $0.01 per share; 3,000 shares authorized, 100 shares issued; as adjusted post-offering: Class A common stock and Class B common stock, each par value $0.01 per share;      shares authorized,      shares of Class A common stock and     shares of Class B common stock issued (5)
                     
Cumulative Preferred Stock (6)
                     
Additional capital paid-in (6)
    983,132                  
Retained earnings (3)
    414,292                  

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    As of June 30, 2005  
            As adjusted     As adjusted  
    Actual     pre-offerings     post-offerings  
    (Unaudited)  
    (Dollars in thousands)  
Accumulated other comprehensive income
    101,714                  
 
                 
Total stockholders’ equity (7)
    1,499,138                  
 
                 
Total capitalization
  $ 12,259,216     $       $    
 
                 
 
(1)   As of June 30, 2005, our cash and equivalents totaled $703.9 million and our short-term investments totaled $296.4 million.
 
(2)   On May 26, 2005, we entered into the Interim Credit Facility with an aggregate availability of up to $3.0 billion with the joint book-running managers of this offering and/or their affiliates. The Interim Credit Facility will mature on November 23, 2005. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Credit facilities.” Amounts include borrowings by our Canadian subsidiary that have been fully and unconditionally guaranteed by The Hertz Corporation.
 
(3)   On June 10, 2005 and           , 2005, we paid dividends of $1,185.0 million and $          , respectively, on our common stock to Ford in the form of the Intercompany Notes. We intend to repay the Intercompany Notes with the proceeds of this offering.
 
(4)   The senior notes are being issued as a component of the Equity Units being offered.
 
(5)   In connection with this offering, we will undertake a change to our capital structure so that all of the shares of common stock outstanding prior to this offering will be changed into and reclassified to           shares of Class A common stock and           shares of Class B common stock, all to be held by Ford, to be outstanding after this offering. Amounts do not include the Class A common stock issuable upon settlement of the purchase contracts included in the Equity Units being offered concurrently with this offering.
 
(6)   On     , 2005, we issued to Ford           shares of our Cumulative Preferred Stock, $0.01 par value per share, for $           . Our Cumulative Preferred Stock has a liquidation preference amount of $1,000,000 per share, accrues dividends at a rate of      % per annum on the liquidation preference amount and is redeemable at our option in whole at any time or in part from time to time at a price equal to the liquidation preference amount plus accrued and unpaid dividends. Simultaneous with this offering, we will be redeeming these shares of Cumulative Preferred Stock from Ford for $           plus accrued and unpaid dividends, with cash on hand.
 
(7)   Reflects an adjustment of $           representing the present value of the contract adjustment payments payable in connection with the purchase contracts included in the Equity Units being offered.

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Selected historical financial data
The following table presents selected consolidated financial information and other data for our business. The selected consolidated statement of operations data presented below for the years ended December 31, 2003, 2002, 2001 and 2000 and the six months ended June 30, 2004 have been restated. For a discussion of the Restatement, see note (a) below and note 1A to the notes to our audited consolidated financial statements and our unaudited condensed consolidated financial statements included in this prospectus. The selected condensed consolidated statement of operations data for the six months ended June 30, 2005 and June 30, 2004 (as restated) and the condensed consolidated balance sheet data as of June 30, 2005 presented below were derived from our unaudited condensed consolidated financial statements and the related notes thereto included in this prospectus. The selected consolidated statement of operations data for each of the years in the three-year period ended December 31, 2004 and the consolidated balance sheet data at December 31, 2004 and 2003 presented below were derived from our audited consolidated financial statements and the related notes thereto included in this prospectus. The operating results for the six months ended June 30, 2005 and June 30, 2004 include all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair statement of the results for such interim periods. The interim results are not necessarily an indication of the results for the full year.
You should read the following information in conjunction with the section of this prospectus entitled “Management’s discussion and analysis of financial condition and results of operations,” our unaudited condensed consolidated financial statements and our audited consolidated financial statements and related notes beginning on page F-1 of this prospectus.

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    Six Months        
    Ended, or as of June 30,     Year Ended, or as of December 31,  
            2004 (a)             2003 (a)     2002 (a)     2001 (a)     2000 (a)  
    2005     Restated     2004     Restated     Restated     Restated     Restated  
    (Dollars in millions, unless otherwise noted)  
Statement of Operations
                                                       
Revenues
                                                       
Car rental
  $ 2,824.5     $ 2,551.9     $ 5,430.8     $ 4,819.3     $ 4,537.6     $ 4,366.6     $ 4,553.9  
Equipment rental
    630.1       522.3       1,162.0       1,037.8       1,018.7       1,128.7       1,106.3  
Other (b)
    48.3       38.2       83.2       76.6       82.1       101.6       137.5  
 
                                         
Total revenues
    3,502.9       3,112.4       6,676.0       5,933.7       5,638.4       5,596.9       5,797.7  
 
                                         
Expenses
                                                       
Direct operating
    2,025.5       1,781.8       3,734.4       3,316.1       3,093.0       3,248.0       3,019.2  
Depreciation of revenue earning equipment (c)
    756.4       713.8       1,463.3       1,523.4       1,499.5       1,462.3       1,323.5  
Selling, general and administrative
    318.9       292.4       591.3       501.7       463.1       479.2       459.3  
Interest, net of interest income (d)
    212.0       182.7       384.4       355.0       366.4       404.7       414.8  
 
                                         
Total expenses
    3,312.9       2,970.7       6,173.4       5,696.2       5,422.0       5,594.2       5,216.8  
 
                                         
Income before income taxes and minority interest
    190.0       141.7       502.6       237.5       216.4       2.7       580.9  
(Provision) benefit for taxes on income (e)
    (64.9 )     (49.5 )     (133.9 )     (78.9 )     (72.4 )     20.6       (222.5 )
Minority interest
    (5.0 )           (3.2 )                        
 
                                         
Income before cumulative effect of change in accounting principle
    120.1       92.2       365.5       158.6       144.0       23.3       358.4  
Cumulative effect of change in accounting principle (f)
                            (294.0 )            
 
                                         
Net income (loss)
  $ 120.1     $ 92.2     $ 365.5     $ 158.6     $ (150.0 )   $ 23.3     $ 358.4  
 
                                         
Pro forma net income (loss) per share (in dollars) (g)
  $               $                                    
 
                                                   
 
                                                       
 
Balance Sheet Data
                                                       
Revenue earning equipment, net
                                                       
Cars
  $ 9,271.5     $ 8,476.6     $ 7,597.2     $ 6,462.0     $ 5,998.3     $ 5,220.4     $ 5,186.2  
Other equipment
    1,893.8       1,465.7       1,525.7       1,331.3       1,427.6       1,631.3       1,736.3  
Total assets
    15,752.0       14,691.5       14,096.4       12,579.0       11,128.9       10,158.4       10,620.0  
Total debt
    10,760.1       9,200.5       8,428.0       7,627.9       7,043.2       6,314.0       6,676.0  
Stockholder’s equity (h)
    1,499.1       2,285.4       2,670.2       2,225.4       1,921.9       1,984.4       1,984.1  
 
                                                       
 
Selected Operating Data
                                                       
Car Rental Operations:
                                                       
Average number of owned cars operated during period
    426,100       393,500       413,000       373,500       369,500       373,800       359,300  
Transaction days (in thousands)
    58,431       54,352       115,246       102,281       99,240       104,015       103,279  
 
                                                       
Equipment Rental Operations:
                                                       
Average acquisition cost of rental equipment operated during period
  $ 2,460.6     $ 2,212.1     $ 2,305.7     $ 2,281.8     $ 2,327.6     $ 2,381.4     $ 2,157.4  
 
(a)   We have restated our previously issued consolidated statements of operations for the quarters ended March 31, 2004 and June 30, 2004 and the years ended December 31, 2003, 2002, 2001 and 2000. We will be restating our previously issued consolidated statement of operations for the quarter ended September 30, 2004. An explanation of the Restatement appears in note 1A to the notes to our audited consolidated financial statements and our unaudited condensed consolidated financial statements included in this prospectus. The Restatement resulted in previously reported revenues and expenses being increased by equal amounts with no change in our previously reported income before income taxes and minority interest and net income (loss).
 
(b)   Includes fees and expense reimbursements from licensees and revenues from car leasing operations, telecommunications services through 2001 and claim management services. Certain foreign car leasing operations were transferred to an affiliated company on August 31, 2000.
 
(c)   For the six months ended June 30, 2005 and 2004 and the years ended December 31, 2004, 2003, 2002, 2001 and 2000, depreciation of revenue earning equipment includes net gains of $41.2 million, $25.4 million, $57.2 million, a net loss of $0.8 million, a net gain of $10.8 million, a net loss of $1.6 million and a net gain of $54.5 million, respectively, from the disposal of revenue earning equipment.

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(d)   For the six months ended June 30, 2005 and 2004 and the years ended December 31, 2004, 2003, 2002, 2001 and 2000, interest income was $16.9 million, $9.0 million, $23.7 million, $17.9 million, $10.3 million, $9.0 million and $13.5 million, respectively.
 
(e)   Includes benefits of $46.6 million for the year ended December 31, 2004 relating to net adjustments to Federal and foreign tax accruals and includes benefits of $30.2 million for the year ended December 31, 2001 from certain foreign tax credits.
 
(f)   Cumulative effect of change in accounting principle represents a non-cash charge for the year ended December 31, 2002, related to impairment of goodwill in our equipment rental business, recognized in accordance with the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”
 
(g)   Pro forma amounts are computed based on            shares of Class A common stock and      shares of Class B common stock outstanding after this offering applied to our historical net income (loss). Due to the changes in our capital structure, historical share and per share data will not be comparable to, or meaningful in the context of, future periods. See “Capitalization.”
 
(h)   Includes the declaration and payment on June 10, 2005 of a dividend totaling $1.2 billion on our outstanding common stock to Ford in the form of an Intercompany Note.

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Management’s discussion and analysis of
financial condition and results of operations
The statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk factors.” Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with the sections entitled “Risk factors,” “Special note regarding forward-looking statements,” “Selected historical financial data” and our unaudited condensed consolidated and audited consolidated financial statements and related notes included in this prospectus .
Restatement of consolidated statements of operations
We have restated our previously issued consolidated statements of operations for the years ended December 31, 2003 and 2002 and the quarters ended March 31, 2004 and June 30, 2004, and we will be restating our quarterly statement of operations for the quarter ended September 30, 2004. The Restatement was reported in our Annual Report on Form 10-K for the year ended December 31, 2004, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, as well as in this prospectus. The Restatement will also be reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. The restated amounts for the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004 and for all quarters of 2003 are presented in note 13 to the notes to our audited consolidated financial statements included in this prospectus. The Restatement also affects periods prior to 2002. The Restatement corrected certain of our historical accounting policies to conform with generally accepted accounting principles, or “GAAP.”
Before the Restatement, our consolidated statements of operations reflected historical accounting policies, under which (1) amounts charged by us to our car rental customers to reimburse us for certain operating expenses (principally concession fees incurred for the privilege of operating at airports and certain other locations and vehicle licensing fees) were netted against related operating expenses, (2) amounts charged by us to our car rental and equipment rental customers for fueling of vehicles and equipment were netted against related operating expenses, (3) costs incurred in connection with the sale of consumables and dealer inventory from our equipment rental business were netted against revenues and (4) other immaterial items of revenues and expenses were presented on a net basis.
We have determined that the historical accounting policies described above were not in accordance with the Financial Accounting Standards Board Emerging Issues Task Force, or “EITF,” Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent” and EITF Issue No. 01-14, “Income Statement Characterization of Reimbursement Received for Out-of-Pocket Expenses Incurred.” EITF No. 99-19 and No. 01-14 employ multi-factor tests to determine whether amounts charged to customers in respect of certain expenses incurred should be included in revenues or netted against such expenses. Accordingly, we restated our previously issued consolidated statements of operations to reclassify revenues and expenses in accordance with GAAP, with particular regard to the requirements of EITF No. 99-19 and No. 01-14.
In view of this error in the application of GAAP, we determined that, as of December 31, 2004, a material weakness existed in our internal control over financial reporting with respect to the selection and application of GAAP to our financial statements. We considered the impact of the material weakness as

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of December 31, 2004 and June 30, 2005, and determined that the magnitude of any actual or potential misstatement in our financial statements was limited to an increase by identical amounts in revenue and expense in the relevant statements of operations, with no changes to income before income taxes or net income (loss) and no effect on consolidated balance sheets or consolidated statements of cash flows. Since December 31, 2004, we have taken a series of steps designed to improve the control processes regarding the selection and application of GAAP and preparation and review of the consolidated financial statements. Specifically, key personnel involved in our financial reporting processes have enhanced the process through which authoritative guidance will be monitored on a regular basis. On-going reviews of authoritative guidance will be conducted in order to ensure that new guidance is being complied with in the preparation of the financial statements, related disclosures and periodic filings with the Securities and Exchange Commission, or “SEC.” Additionally, when we became aware of the misapplication of EITF No. 99-19 and No. 01-14, our management reviewed all applicable authoritative guidance issued since 1999 in relation to all consolidated financial statements which had been filed with the SEC. Our management believes that the corrective actions which have been implemented address the identified deficiencies in our disclosure controls and procedures. Our management will continue to apply these process improvements to our disclosure controls and procedures.
As a result of the Restatement, total revenues and total expenses in the previously issued consolidated statements of operations have each been increased by $725.8 million and $670.3 million for the years ended December 31, 2003 and 2002, respectively and by $386.7 million for the six months ended June 30, 2004. Because previously reported revenues and expenses for each of the affected periods were increased by equal amounts, the Restatement has not resulted in a change in our previously reported income (loss) before income taxes and minority interest, income (loss) before cumulative effect of change in accounting principle or net income (loss), nor has it changed our liquidity or financial condition. The Restatement had no effect on our consolidated balance sheets or consolidated statements of cash flows.
A summary of the effects of the Restatement on the previously issued consolidated statements of operations is as follows (in thousands of dollars):
                                                 
    Six Months Ended              
    June 30, 2004     Year Ended December 31, 2003     Year Ended December 31, 2002  
    As Previously             As Previously     As     As Previously     As  
    Reported     As Restated     Reported     Restated     Reported     Restated  
Revenues:
                                               
Car rental
  $ 2,240,400     $ 2,551,919     $ 4,239,244     $ 4,819,255     $ 4,005,620     $ 4,537,607  
Equipment rental
    453,423       522,257       904,582       1,037,754       892,646       1,018,759  
Other
    31,861       38,190       64,103       76,661       69,873       82,076  
 
                                   
Total revenues
    2,725,684       3,112,366       5,207,929       5,933,670       4,968,139       5,638,442  
 
                                   
Expenses:
                                               
Direct operating
    1,398,343       1,781,829       2,596,727       3,316,101       2,428,820       3,093,024  
Depreciation of revenue earning equipment
    713,742       713,742       1,523,391       1,523,391       1,499,568       1,499,568  
Selling, general and administrative
    289,173       292,369       495,276       501,643       456,986       463,085  
Interest, net of interest income
    182,706       182,706       355,043       355,043       366,371       366,371  
 
                                   
Total expenses
    2,583,964       2,970,646       4,970,437       5,696,178       4,751,745       5,422,048  
 
                                   
Income before income taxes
    141,720       141,720       237,492       237,492       216,394       216,394  
Provision for taxes on income
    (49,537 )     (49,537 )     (78,877 )     (78,877 )     (72,346 )     (72,346 )
 
                                   
Income before cumulative effect of change in accounting principle
    92,183       92,183       158,615       158,615       144,048       144,048  
Cumulative effect of change in accounting principle
                            (294,000 )     (294,000 )
 
                                   
Net income (loss)
  $ 92,183     $ 92,183     $ 158,615     $ 158,615     $ (149,952 )   $ (149,952 )
 
                                   
All prior period amounts included in this prospectus affected by the Restatement are presented on a restated basis.

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Overview
We are engaged principally in the businesses of renting cars and renting equipment.
Our revenues principally are derived from rental and related charges and consist of:
    Car rental revenues (revenues from all company-operated car rental operations, including charges to customers for the reimbursement of costs incurred relating to airport concession fees and vehicle license fees, the fueling of vehicles and the sale of loss or collision damage waivers, liability insurance coverage and other products);
 
    Equipment rental revenues (revenues from all company-operated equipment rental operations, including amounts charged to customers for the fueling and delivery of equipment and sale of loss damage waivers); and
 
    Other revenues (fees and certain cost reimbursements from our licensees and revenues from our claim management services).
Our equipment rental business also derives revenues from the sale of new equipment and consumables.
Our expenses consist of:
    Direct operating expenses (primarily wages and related benefits; commissions and concession fees paid to airport authorities, travel agents and others; facility, self-insurance and reservations costs; the cost of new equipment and consumables purchased for resale; and other costs relating to the operation and rental of the revenue earning equipment, such as damage, maintenance and fuel costs);
 
    Depreciation expense relating to revenue earning equipment (including net gains or losses on the disposal of such equipment). Revenue earning equipment includes cars and equipment;
 
    Selling, general and administrative expenses (including advertising); and
 
    Interest expense relating primarily to the funding of the acquisition of revenue earning equipment.
The car and equipment rental industries are significantly influenced by general economic conditions. The car rental industry is also significantly influenced by developments in the travel industry, and, particularly in, airline passenger traffic. Our profitability is primarily a function of the volume and pricing of rental transactions and the utilization of cars and equipment. Significant changes in the purchase price of cars and equipment or interest rates can also have a significant effect on our profitability depending on our ability to adjust pricing for these changes. We expect increases in car costs and modest increases in equipment costs in the near term. We expect a significant increase in car costs for the 2006 model year, which will adversely affect our results of operations beginning in the fourth quarter of 2005 because we do not expect rental price increases in the near term to offset these car cost increases. Our business requires significant expenditures for cars and equipment, and consequently we require substantial liquidity to finance such expenditures.
Car rental and equipment rental operations are seasonal businesses, with decreased levels of business in the winter months and heightened activity during the spring and summer. To accommodate increased demand, we increase our available fleet and staff during the second and third quarters. As business demand declines, fleet and staff are decreased accordingly. However, certain operating expenses, including minimum concession fees, rent, insurance, and administrative overhead, remain fixed and cannot be adjusted for seasonal demand.

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In the United States, industry revenues from airport rentals have only recently returned to levels seen before the 2001 recession and the September 11, 2001 terrorist attacks. During the first half of 2005, the major U.S. car rental brands have reported that pricing for rental cars, as measured by rental rates charged, declined slightly, while our pricing essentially remained equal to our pricing in the same period last year. Industry pricing performance is consistent with the downward pressure on pricing for the major U.S. car rental brands in the first half of 2005. Also, we believe most European car rental companies’ pricing moved downward in 2004. During the first half of 2005, we experienced strong transaction day growth in our European operations, but our rental car pricing was below the pricing during the same period last year.
In each of the years ended December 31, 2003 and 2004, we increased the number of our staffed off-airport rental locations in the United States by approximately 200, to over 1,200 off-airport locations as of December 31, 2004. As of June 30, 2005, we had 1,329 off-airport locations. We intend to add more off-airport locations in the United States in the remainder of 2005 and in subsequent years. Accordingly, we expect the percentage of our overall U.S. rental revenues and transactions represented by our off-airport operations to grow. When we open a new off-airport location, we incur a number of costs, including those relating to site selection, lease negotiation, recruitment of employees, selection and development of managers, initial sales activities and integration of our systems with those of the companies who will reimburse the location’s replacement renters for their rentals. New off-airport locations, once opened, take time to generate their full potential revenues, and as a result revenues at new locations do not initially cover their start-up costs and often do not, for some time, cover the costs of their ongoing operation.
From 2001 to 2003, the industrial and construction equipment rental industry experienced downward pricing, measured by the per-period rates charged by rental companies. For the year ended December 31, 2004 and the first half of 2005, we believe industry pricing, measured in the same way, has improved in North America but has continued to decline in France and Spain, albeit at a reduced rate. HERC has also experienced higher equipment rental volumes worldwide for the year ended December 31, 2004 and the first half of 2005. HERC slightly contracted its North American network of industrial and construction equipment rental locations during the 2001 to 2003 downturn in construction activities. In 2005, we currently expect that HERC will add 7 to 9 new locations in major markets across the United States. In this expansion, we expect that HERC will incur non-fleet start-up costs of approximately $900,000 per location and additional fleet acquisition costs over an initial twelve-month period of approximately $4.9 million per location.
We expect moderate demand in the car rental business and continued strong demand in the industrial and construction equipment rental business during the remainder of 2005. We anticipate our full year 2005 income before income taxes and minority interest will be similar to 2004 levels.
The following discussion and analysis provides information that management believes to be relevant to understanding our consolidated financial condition and results of operations. This discussion should be read in conjunction with the financial statements and the related notes thereto contained in our audited consolidated financial statements and unaudited condensed consolidated financial statements included in this prospectus.
Critical accounting policies and estimates
Our discussion and analysis of financial condition and results of operations are based upon our audited consolidated financial statements and our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes.

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We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements and changes in these judgments and estimates may impact future results of operations and financial condition. For additional discussion of our accounting policies, see note 1 to the notes to our audited consolidated financial statements included in this prospectus.
Revenue earning equipment
Our principal assets are revenue earning equipment, or “REE,” which represents 71% of total assets as of June 30, 2005. REE consists of vehicles utilized in car rental operations and equipment utilized in equipment rental operations. During 2004, 81% of the vehicles purchased for our U.S. and international car rental fleet were subject to repurchase by automobile manufacturers under contractual guaranteed repurchase programs, subject to certain manufacturers’ car condition and mileage requirements, at a specific price during a specified time period. These programs limit our residual risk with respect to vehicles purchased under the programs. For all other vehicles, as well as equipment acquired by our equipment rental business, we use historical experience and monitor market conditions to set depreciation rates. When REE is acquired, we estimate the period that we will hold the asset. Depreciation is recorded on a straight-line basis over the estimated holding period, with the objective of minimizing gain or loss on the disposition of the REE. Upon disposal of the REE, depreciation expense is adjusted for the difference between the net proceeds received and the remaining book value. As market conditions change, we adjust our depreciation rates prospectively, over the remaining holding period, to reflect these changes in market conditions.
Public liability and property damage
The obligation for public liability and property damage, or “PL/PD,” on self-insured U.S. and international vehicles and equipment represents an estimate for both reported accident claims not yet paid, and claims incurred but not yet reported. The related liabilities are recorded on a non-discounted basis. Reserve requirements are based on actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. The adequacy of the liability is regularly monitored based on evolving accident claim history. If our estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.
Pensions
Our employee pension costs and obligations are dependent on our assumptions used by actuaries in calculating such amounts. These assumptions include discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense and recorded obligation in such future periods. While we believe that the assumptions used are appropriate, significant differences in actual experience or significant changes in assumptions would affect our pension costs and obligations. See note 6 to the notes to our audited consolidated financial statements included in this prospectus.

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Goodwill
We review goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of the goodwill may not be recoverable, and also review goodwill annually in accordance with Statement of Financial Accounting Standards, or “SFAS,” No. 142, “Goodwill and Other Intangible Assets.” Our annual review is conducted in the second quarter of each year. Under SFAS No. 142, goodwill impairment is deemed to exist if the carrying value of goodwill exceeds its fair value. In addition, SFAS No. 142 requires that goodwill be tested at least annually using a two-step process. The first step is to identify any potential impairment by comparing the carrying value of the reporting unit to its fair value. If a potential impairment is identified, the second step is to compare the implied fair value of goodwill with its carrying amount to measure the impairment loss. We estimate the fair value of our reporting units using a discounted cash flow methodology. A significant decline in the projected cash flows used to determine fair value could result in a goodwill impairment charge. See note 2 to the notes to our audited consolidated financial statements included in this prospectus.
Results of operations
The following table sets forth for each of the periods indicated, the percentage of operating revenues represented by certain items in our consolidated statement of operations:
                                         
    Percentage of Revenues  
    Six Months Ended     Year Ended  
    June 30,     December 31,  
            2004             2003     2002  
    2005     Restated     2004     Restated     Restated  
Revenues:
                                       
Car rental
    80.6 %     82.0 %     81.3 %     81.2 %     80.5 %
Equipment rental
    18.0       16.8       17.4       17.5       18.1  
Other
    1.4       1.2       1.3       1.3       1.4  
 
                             
 
    100.0       100.0       100.0       100.0       100.0  
 
                             
Expenses:
                                       
Direct operating
    57.8       57.2       55.9       55.9       54.9  
Depreciation of revenue earning equipment
    21.6       22.9       21.9       25.7       26.6  
Selling, general and administrative
    9.1       9.4       8.9       8.4       8.2  
Interest, net of interest income
    6.1       5.9       5.8       6.0       6.5  
 
                             
 
    94.6       95.4       92.5       96.0       96.2  
 
                             
Income before income taxes and minority interest
    5.4       4.6       7.5       4.0       3.8  
Provision for taxes on income
    (1.9 )     (1.6 )     (2.0 )     (1.3 )     (1.3 )
Minority interest
    (0.1 )                        
 
                             
Net income
    3.4 %     3.0 %     5.5 %     2.7 %     2.5 %
 
                             
Six months ended June 30, 2005 compared with six months ended June 30, 2004
Revenues . Total revenues for the six months ended June 30, 2005 of $3,502.9 million increased by 12.5% from $3,112.4 million for the six months ended June 30, 2004. Revenues from car rental operations of $2,824.5 million for the six months ended June 30, 2005 increased by $272.6 million, or 10.7%, from $2,551.9 million for the six months ended June 30, 2004. The increase was primarily the result of a 7.5% increase in car rental volume worldwide and the effects of foreign currency translation of approximately $37.3 million, partly offset by a 1.1% decrease in pricing worldwide.
Revenues from equipment rental operations of $630.1 million for the six months ended June 30, 2005 increased by $107.8 million, or 20.6%, from $522.3 million for the six months ended June 30, 2004. The increase was due to improved pricing in the United States, higher worldwide rental volume, and the effects of foreign currency translation of approximately $9.3 million.

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Revenues from all other sources of $48.3 million for the six months ended June 30, 2005 increased by $10.1 million, or 26.4%, from $38.2 million for the six months ended June 30, 2004, primarily due to the increase in car rental licensee revenue and the effects of foreign currency translation.
Expenses. Total expenses of $3,312.9 million for the six months ended June 30, 2005 increased by 11.5% from $2,970.6 million for the six months ended June 30, 2004, and total expenses as a percentage of revenues decreased to 94.6% for the six months ended June 30, 2005 compared with 95.4% for the six months ended June 30, 2004.
Direct operating expenses of $2,025.5 million for the six months ended June 30, 2005 increased by 13.7% from $1,781.8 million for the six months ended June 30, 2004. The increase was primarily the result of increases in wages and benefits, facility expenses, gasoline costs and concession fees in car rental operations, the effects of foreign currency translation and $7.0 million received in 2004 regarding insurance claims made by us relating to the terrorist attacks of September 11, 2001.
Depreciation of revenue earning equipment for car rental operations of $649.7 million for the six months ended June 30, 2005 increased by 7.7% from $603.4 million for the six months ended June 30, 2004. The increase was primarily due to the increase in the average number of vehicles worldwide and the effects of foreign currency translation. This increase was partly offset by higher net proceeds received in excess of book value on the disposal of used vehicles and a $10.1 million reduction in depreciation for domestic car rental operations resulting from a decrease in depreciation rates to reflect changes in the estimated residual values of vehicles. Depreciation of revenue earning equipment for equipment rental operations of $106.7 million for the six months ended June 30, 2005 decreased by 3.3% from $110.3 million for the six months ended June 30, 2004 due to higher net proceeds received in excess of book value on the disposal of used equipment in the United States, and the effects of changes in depreciation rates of equipment.
Selling, general and administrative expenses of $318.9 million for the six months ended June 30, 2005 increased by 9.1% from $292.4 million for the six months ended June 30, 2004. The increase was primarily due to increases in administrative and sales promotion expenses and the effects of foreign currency translation.
Interest expense, net of interest income, of $212.0 million for the six months ended June 30, 2005 increased by 16.1% from $182.7 million for the six months ended June 30, 2004, primarily due to increases in the weighted average debt outstanding, the weighted average interest rate and the effects of foreign currency translation, partly offset by an increase in interest income.
The provision for taxes on income of $64.9 million for the six months ended June 30, 2005 increased by 31.1% from $49.5 million for the six months ended June 30, 2004, primarily due to an increase in pre-tax income for the six months ended June 30, 2005. The effective tax rate for the six months ended June 30, 2005 was 34.2% as compared to 35.0% in six months ended June 30, 2004. See Note 5 to the Notes to our condensed consolidated financial statements included in this prospectus.
Minority interest of $5.0 million for the six months ended June 30, 2005 represents the minority interest’s share (35%) of Navigation Solutions LLC’s net income for the six months ended June 30, 2005. See Note 1 to the Notes to our condensed consolidated financial statements included in this prospectus.
Net Income. We had net income of $120.1 million for the six months ended June 30, 2005, representing an increase of $27.9 million, or 30.3% from $92.2 million for the six months ended June 30, 2004. The increase in net income was primarily due to higher rental volume in our worldwide car rental business and improved results in our North American equipment rental operations, partly offset by lower pricing in our worldwide car rental business, as well as the net effect of other contributing factors noted above.

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Year ended December 31, 2004 compared with year ended December 31, 2003
Revenues. Total revenues of $6,676.0 million for the year ended December 31, 2004 increased by 12.5% from $5,933.7 million for the year ended December 31, 2003.
Revenues from car rental operations of $5,430.8 million for the year ended December 31, 2004 increased by 12.7% from $4,819.3 million for the year ended December 31, 2003. This increase of $611.5 million was primarily the result of higher car rental volumes worldwide and the effects of foreign currency translation of approximately $143.6 million, partly offset by a 2.6% decrease in time and mileage rates worldwide. The impact of changes in exchange rates on net income was mitigated by the fact that not only foreign revenues but also most foreign expenses were incurred in local currencies.
Revenues from equipment rental operations of $1,162.0 million for the year ended December 31, 2004 increased by 12.0% from $1,037.8 million for the year ended December 31, 2003. This $124.2 million increase was principally due to improved pricing in the United States, higher equipment rental volumes worldwide and the effects of foreign currency translation of approximately $22.1 million.
Revenues from all other sources of $83.2 million for the year ended December 31, 2004 increased by 8.5% from $76.6 million for the year ended December 31, 2003, due to an increase in licensee revenues.
Expenses. Total expenses of $6,173.4 million for the year ended December 31, 2004 increased by 8.4% from $5,696.2 million for the year ended December 31, 2003, and total expenses as a percentage of revenues decreased to 92.5% for the year ended December 31, 2004 compared to 96.0% for the year ended December 31, 2003.
Direct operating expenses of $3,734.4 million for the year ended December 31, 2004 increased by 12.6% from $3,316.1 million for the year ended December 31, 2003. The increase was primarily the result of the effects of foreign currency translation, increases in wages and benefits, commissions, concession fees, facility expense, vehicle damage expense and gasoline costs in car rental operations. The increase was partly offset by favorable credit and collection and PL/PD claims experience. Current period expenses were further reduced by $7.0 million received for the year ended December 31, 2004 for claims made by us on our insurance policies for business interruption losses resulting from the terrorist attacks of September 11, 2001 and a final gain of $7.5 million for the year ended December 31, 2004 from the condemnation of a car rental and support facility in Florida. (An initial gain of $8.0 million related to the condemnation was recorded for the year ended December 31, 2003.)
Depreciation of revenue earning equipment for car rental operations of $1,228.6 million for the year ended December 31, 2004 decreased by 2.4% from $1,258.3 million for the year ended December 31, 2003. The decrease was primarily due to the decrease in the United States average cost per vehicle and higher net proceeds received in excess of book value on the disposal of used vehicles worldwide, partly offset by the effects of foreign currency translation, an increase in the average number of vehicles operated worldwide and a one-time refund of $7.8 million for the year ended December 31, 2003. The refund resulted from a special transitional credit for car rental companies instituted by the Australian Taxation Office for Goods and Services Tax. Taxes paid were previously included in the capitalized cost

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of the vehicles in our Australian car rental fleet. Depreciation of revenue earning equipment for equipment rental operations of $234.7 million for the year ended December 31, 2004 decreased by 11.5% from $265.1 million for the year ended December 31, 2003, primarily due to higher net proceeds received in excess of book value on the disposal of used equipment in the United States.
Selling, general and administrative expenses of $591.3 million for the year ended December 31, 2004 increased by 17.9% from $501.7 million for the year ended December 31, 2003. The increase was principally due to the effects of foreign currency translation and increases in administrative and advertising expenses. The increase in administrative expenses was attributable to increases in salaries and in incentive compensation expense relating to the improvement in earnings for the year ended December 31, 2004. The increase in advertising was due to expanded media advertising, primarily in television.
Interest expense, net of interest income, of $384.4 million for the year ended December 31, 2004 increased 8.3% from $355.0 million for the year ended December 31, 2003, primarily due to an increase in average debt outstanding and foreign currency translation, partly offset by a decrease in the weighted average interest rate and higher interest income.
The provision for taxes on income of $133.9 million for the year ended December 31, 2004 increased 69.7% from $78.9 million for the year ended December 31, 2003. The increase in the provision for taxes on income was primarily the result of an increase in pre-tax income for the year ended December 31, 2004, partly offset by net favorable tax adjustments totaling $46.6 million, principally relating to the evaluation of certain federal and foreign tax accruals and foreign tax credits. The effect of the net tax adjustments caused a decrease in the effective tax rate from 35.9% to 26.6% as compared to 33.2% for the year ended December 31, 2003. See notes 1 and 9 to the notes to our audited consolidated financial statements included in this prospectus.
On July 1, 2004, we increased our joint venture ownership interest in Navigation Solutions from 40% to 65%. Minority interest of $3.2 million for the year ended December 31, 2004 represents the minority interest’s share (35%) of Navigation Solutions’ net income for the period July 1, 2004 through December 31, 2004. See note 5 to the notes to our audited consolidated financial statements included in this prospectus.
Income before cumulative effect of change in accounting principle. We had income before cumulative effect of change in accounting principle of $365.5 million for the year ended December 31, 2004, representing an increase of $206.9 million from $158.6 million for the year ended December 31, 2003. The increase reflects higher rental volume in our worldwide car and equipment rental businesses, lower fleet costs, higher proceeds received in excess of book value on the disposal of used vehicles and equipment and net favorable tax adjustments, partly offset by lower pricing in our worldwide car rental business, as well as the net effect of other contributing factors noted above.
Year ended December 31, 2003 compared with year ended December 31, 2002
Revenues. Total revenues of $5,933.7 million for the year ended December 31, 2003 increased by 5.2% from $5,638.4 million for the year ended December 31, 2002.
Revenues from car rental operations of $4,819.3 million for the year ended December 31, 2003 increased by 6.2% from $4,537.6 million for the year ended December 31, 2002. This increase of $281.7 million was primarily the result of the effects of foreign currency translation of approximately $197.7 million and higher rental volume worldwide, partly offset by a 1.5% decrease in time and mileage rates. The impact of changes in exchange rates on net income was mitigated by the fact that not only foreign revenues but also most foreign expenses were incurred in local currencies.

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Revenues from equipment rental operations of $1,037.8 million for the year ended December 31, 2003 increased by 1.9% from $1,018.7 million for the year ended December 31, 2002. This $19.1 million increase was principally due to the effects of foreign currency translation, mostly offset by a decrease in rental volume in the United States which was the result of depressed capital spending for new non-residential construction and its impact on the equipment rental industry.
Revenues from all other sources of $76.6 million for the year ended December 31, 2003 decreased by 6.6% from $82.1 million for the year ended December 31, 2002, due to a decrease in license and management fees earned from Axus International, Inc., or “Axus.” Axus was a wholly owned vehicle leasing subsidiary of Ford Motor Credit Company, or “Ford Credit,” to which we had licensed the Hertz name and provided management services prior to the completion of the sale of Axus by Ford Credit and termination of the Hertz license in the quarter ended March 31, 2003.
Expenses. Total expenses of $5,696.2 million for the year ended December 31, 2003 increased by 5.1% from $5,422.0 million for the year ended December 31, 2002, and total expenses as a percentage of revenues remained relatively constant at 96.0% for the year ended December 31, 2003 compared to 96.2% for the year ended December 31, 2002.
Direct operating expenses of $3,316.1 million for the year ended December 31, 2003 increased by 7.2% from $3,093.0 million for the year ended December 31, 2002. The increase was primarily the result of the effects of foreign currency translation, increases in wages and benefits, self insurance, concession fees, facility expense and gasoline costs in car rental operations, partly offset by an initial gain of $8.0 million from the condemnation of a car rental and support facility in Florida.
Depreciation of revenue earning equipment for car rental operations of $1,258.3 million for the year ended December 31, 2003 increased by 2.4% from $1,228.5 million for the year ended December 31, 2002. The increase was due to the effects of foreign currency translation. This increase was partly offset by a one-time refund of $7.8 million which resulted from a special transitional credit for rental car companies instituted by the Australian Taxation Office for Goods and Services Tax. Taxes paid were previously included in the capitalized cost of the vehicles in our Australian car rental fleet. Depreciation of revenue earning equipment for equipment rental operations of $265.1 million for the year ended December 31, 2003 decreased by 2.2% from $271.0 million for the year ended December 31, 2002 due to a decrease in the size of the equipment rental fleet partly offset by lower net proceeds received in excess of book value on the disposal of equipment in the United States.
Selling, general and administrative expenses of $501.7 million for the year ended December 31, 2003 increased by 8.3% from $463.1 million for the year ended December 31, 2002. The increase was principally due to the effects of foreign currency translation and increases in administrative and sales promotion expenses. Administrative expenses for the year ended December 31, 2003 included $6.0 million of stock-based employee compensation expense which resulted from the adoption of the fair value recognition provisions of SFAS No. 123, effective January 1, 2003. See notes 1 and 7 to the notes to our audited consolidated financial statements included in this prospectus.
Interest expense, net of interest income, of $355.0 million for the year ended December 31, 2003 decreased 3.1% from $366.4 million for the year ended December 31, 2002, primarily due to a decrease in the weighted-average interest rate and an increase in interest income for the year ended December 31, 2003, partly offset by higher average debt levels.
The tax provision of $78.9 million for the year ended December 31, 2003 increased 9.0% from $72.4 million for the year ended December 31, 2002. The effective tax rate for the year ended December 31, 2003 was 33.2% as compared to 33.4% for the year ended December 31, 2002. The increase in the tax

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provision was primarily the result of higher income before income taxes for the year ended December 31, 2003. See notes 1 and 9 to the notes to our audited consolidated financial statements included in this prospectus.
Income before cumulative effect of change in accounting principle. We had income before cumulative effect of change in accounting principle of $158.6 million for the year ended December 31, 2003, representing an increase of $14.6 million from $144.0 million for the year ended December 31, 2002. The increase reflects improved car rental volume worldwide partly offset by lower pricing in our U.S. car rental business and the impact of the Iraqi conflict and SARS had on the travel industry for the year ended December 31, 2003 as well as the net effect of other contributing factors noted above.
Cumulative effect of change in accounting principle. We recorded a non-cash charge of $294.0 million to adjust goodwill upon the adoption of SFAS No. 142, effective January 1, 2002. The charge related to the equipment rental segment. The goodwill write-off was the result of a reduction in projected cash flows used to determine fair value due to the unfavorable economic conditions as of the date of adoption, which reduced demand for equipment in North America. See notes 1 and 2 to the notes to our audited consolidated financial statements included in this prospectus.
Liquidity and capital resources
As of June 30, 2005, we had cash and equivalents of $703.9 million, an increase of $23.0 million from December 31, 2004. As of June 30, 2005, cash and equivalents includes $7.4 million of restricted cash to be used for the purchase of revenue earning vehicles or for the repayment of outstanding indebtedness under our Asset Backed Securitization, or “ABS,” program. As of December 31, 2004, we had cash and cash equivalents of $680.9 million, an increase of $70.9 million from December 31, 2003, which includes $2.9 million of restricted cash to be used for the purchase of revenue earning vehicles or for the repayment of outstanding indebtedness under the ABS program. As of December 31, 2003, we had cash and equivalents of $610.0 million, an increase of $8.7 million from December 31, 2002. In addition, we have made short-term investments with a related party investment fund that pools and invests excess cash balances of certain Ford subsidiaries to maximize returns. These short-term investments totaled $296.4 million as of June 30, 2005, $557.0 million as of December 31, 2004 and $500.1 million as of December 31, 2003. These funds are held until they are required for operating purposes or used to reduce indebtedness.
Our domestic and foreign operations are funded by cash provided by operating activities and by extensive financing arrangements maintained by us in the United States, Europe, Australia, New Zealand, Canada and Brazil. Net cash provided by operating activities during the six months ended June 30, 2005 was $1,665.5 million, an increase of $3.0 million from the six months ended June 30, 2004, primarily due to timing differences in the receipts and payments of receivables, amounts due from affiliates and accounts payable. Net cash provided by operating activities was $2,251.4 million for the year ended December 31, 2004, an increase of $352.1 million from the year ended December 31, 2003, primarily due to the increase in net income. Net cash provided by operating activities was $1,899.3 million for the year ended December 31, 2003, an increase of $21.8 million from the year ended December 31, 2002, primarily due to an increase in net income. Revenue earning equipment expenditures and proceeds from the disposal of such equipment have been reclassified from operating activities to investing activities for all periods presented in our consolidated statement of cash flows.
Our primary use of cash in investing activities is for the acquisition of revenue earning equipment, which consists of cars and equipment. Net cash used in investing activities during the six months ended June 30, 2005 was $2,924.8 million, a decrease of $125.3 million from the six months ended June 30, 2004. The decrease is primarily due to the net increase in the proceeds from sales of short-term investments,

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partly offset by net revenue earning equipment expenditures. Net cash used in investing activities was $2,843.0 million for the year ended December 31, 2004, an increase of $612.4 million from the year ended December 31, 2003. Net cash used in investing activities was $2,230.6 million for the year ended December 31, 2003, an increase of $167.1 million from the year ended December 31, 2002. The increases during 2004 and 2003 were primarily due to an increase in net expenditures for revenue earning equipment. For the six months ended June 30, 2005, our expenditures for revenue earning equipment were $7,640.6 million, partially offset by proceeds from the disposal of such equipment of $4,611.7 million. For the year ended December 31, 2004, our expenditures for revenue earning equipment were $11,310.0 million, partially offset by proceeds from the disposal of such equipment of $8,740.9 million. For the year ended December 31, 2003, our expenditures for revenue earning equipment were $9,436.6 million, partially offset by proceeds from the disposal of such equipment of $7,874.4 million. These assets are purchased by us in accordance with the terms of programs negotiated with car and equipment manufacturers.
For the six months ended June 30, 2005, our capital expenditures for property and non-revenue earning equipment were $186.8 million. For the year ended December 31, 2004, our capital expenditures for property and non-revenue earning equipment were $286.4 million. For the year ended December 31, 2003, our capital expenditures for property and non-revenue earning equipment were $226.7 million. For the year ending December 31, 2005, we anticipate a slightly increased level of net expenditures for revenue earning equipment and property and equipment compared to the year 2004.
Car rental and equipment rental operations are seasonal businesses with decreased levels of business in the winter months and heightened activity during the spring and summer. This is particularly true of our on-airport car rental operations and equipment rental operations. To accommodate this increased demand, we maintain a larger fleet by holding vehicles and equipment and purchasing additional fleet which increases our financing requirements in the second and third quarter. These seasonal financing needs are funded by increasing the utilization of our commercial paper programs and our bank credit facilities. As business demand moderates during the winter, we reduce our fleet accordingly and dispose of vehicles and equipment. The disposal proceeds are used to reduce short-term debt.
Financing
To finance our domestic operations, we maintain active unsecured and asset backed commercial paper programs. We are also active in the domestic unsecured medium-term and long-term debt markets and the domestic asset backed medium-term debt market, and maintain credit facilities described under “— Credit facilities” below.
During 2002, we established the ABS program for our domestic car rental fleet to reduce our borrowing costs and enhance our financing resources. All debt issued under the ABS program is collateralized by the assets of the special purpose financing entities, consisting of revenue earning vehicles used by us in our car rental business, restricted cash and certain receivables related to the revenue earning vehicles. The ABS program provided for the initial issuance of asset backed commercial paper (up to $1.0 billion) and the subsequent issuance of asset backed medium-term notes. These notes are issued by wholly owned and consolidated special purpose financing entities and are included in “Debt” in our consolidated balance sheet. As of June 30, 2005, $849.5 million of asset backed commercial paper and $600.0 million of asset backed medium-term notes were outstanding. As of December 31, 2004, $297.6 million of asset backed commercial paper and $600.0 million of asset backed medium-term notes were outstanding.
The asset backed commercial paper notes have ratings of A-1 by S&P, Prime-1 by Moody’s and F1 by Fitch Ratings, or “Fitch.” Under certain conditions, the commercial paper notes may be repaid by draws under a related bank liquidity facility ($814.0 million), which expires in June 2006 or a related letter of credit issued under a letter of credit facility ($215.0 million), which expires in June 2007.

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On September 30, 2003, we issued $500.0 million of 4.7% Senior Promissory Notes, or the “4.7% Notes,” due on October 2, 2006. On June 3, 2004, we issued $600.0 million of 6.35% Senior Promissory Notes, or the “6.35% Notes,” due on June 15, 2010. Effective September 30, 2003 and June 3, 2004, we entered into interest rate swap agreements relating to the 4.7% Notes and 6.35% Notes, respectively. Under these agreements, we pay interest at a variable rate in exchange for fixed rate receipts, effectively transforming the 4.7% Notes and the 6.35% Notes to floating rate obligations with effective interest rates as of June 30, 2005 of 5.25% and 5.24%, respectively. See note 7 to the notes to our unaudited condensed consolidated financial statements and note 3 to the notes to our audited consolidated financial statements included in this prospectus.
On March 31, 2004, we issued $600.0 million of asset backed medium-term notes, or the “Medium-Term Notes,” under the ABS program. Of the $600.0 million of the Medium-Term Notes, $500.0 million has fixed interest rates ranging from 2.4% to 3.2% and maturities ranging from 2007 to 2009 and the remaining $100.0 million has a variable interest rate based on the one-month LIBOR rate plus nine basis points (3.4% as of June 30, 2005) and matures in 2007. Payments of principal and interest relating to the Medium-Term Notes are insured to the extent provided in a note guaranty insurance policy issued by MBIA Insurance Corporation. The Medium-Term Notes have ratings of AAA by S&P, Aaa by Moody’s and AAA by Fitch.
On July 2, 2004, we established a Euro Medium-Term Program under which we and/or Hertz Finance Centre plc, or “HFC,” a wholly owned subsidiary of ours, can issue up to 650.0 million in medium-term notes, or the “Euro Notes.” On July 16, 2004, HFC issued 200.0 million of Euro Notes under this program. These Euro Notes are fully guaranteed by us, mature in July 2007 and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points. As of June 30, 2005, the interest rate on the Euro Notes was 3.24%.
On August 5, 2004, we issued $500.0 million of promissory notes consisting of $250.0 million of floating rate notes at the three-month LIBOR rate plus 120 basis points due on August 5, 2008, and $250.0 million 6.90% senior fixed rate notes due on August 15, 2014. As of June 30, 2005, the interest rate on the $250.0 million floating rate notes was 4.42%.
As the need arises, it is our intention to issue unsecured senior, senior subordinated, junior subordinated or asset backed securities on terms to be determined at the time the securities are offered for sale. The total amount of unsecured medium-term and long-term debt outstanding as of June 30, 2005 and December 31, 2004 was $5.4 billion and $6.0 billion, respectively, excluding the Intercompany Note payable to Ford of $1,185.0 million discussed below, having fixed and floating rates ranging from 2.38% to 9.28% as of June 30, 2005, and having maturities ranging from 2005 to 2028. From time to time, we file with the SEC shelf registration statements to allow for the issuance of such unsecured senior, senior subordinated and junior subordinated debt securities on terms to be determined at the time such securities are offered for sale. As of June 30, 2005, we had $1.9 billion available for issuance under effective registration statements, so long as the SEC’s conditions for issuance are satisfied. Among those conditions is one that, at the time of issuance, the securities being issued are placed in a generic rating category signifying investment grade by at least one nationally recognized statistical rating organization (such as S&P, Moody’s, Fitch and Dominion Bond Rating Service, or “DBRS”). See “—Debt ratings.”
Borrowing for our international operations also consists of loans obtained from local and international banks, and commercial paper programs established in Ireland, Canada, the Netherlands, Belgium and Australia. We guarantee only the commercial paper borrowings of our subsidiaries in Ireland, Canada,

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the Netherlands and Belgium, and we guarantee commercial paper and short-term bank loans of our subsidiary in Australia. All borrowings by international operations are either in the international operation’s local currency or, if in non-local currency, hedged to minimize foreign exchange exposure. As of June 30, 2005, total debt for the foreign operations was $1,896.7 million, of which $1,649.1 million was short-term (original maturity of less than one year) and $247.6 million was long-term. As of June 30, 2005, the total amounts outstanding under the commercial paper programs in Ireland, Canada, the Netherlands and Belgium were $243.5 million, $31.0 million, $27.2 million and $15.8 million, respectively. As of December 31, 2004, total debt for the foreign operations was $1,733.7 million, of which $1,455.3 million was short-term and $278.4 million was long-term. As of December 31, 2004, the total amounts outstanding under the commercial paper programs in Ireland, Canada, the Netherlands and Belgium were $384.5 million, $320.9 million, $54.3 million and $28.0 million, respectively.
On each of June 10, 2005 and           , 2005, we issued Intercompany Notes to Ford in the amounts of $1,185.0 million and $           , respectively, as dividends on all of our then outstanding common stock. The Intercompany Notes are subordinated in right of payment to all of our existing and future senior indebtedness. The Intercompany Notes each mature on June 10, 2010, but may be prepaid in whole at any time or in part from time to time. Interest on each of the Intercompany Notes will be payable in cash quarterly or on or before the maturity date of the Intercompany Notes, subject to certain limitations on payment contained in the Interim Credit Facility. The Intercompany Note issued on June 10, 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of 200 basis points and the Intercompany Note issued on      , 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of      basis points. As of June 30, 2005 the interest rate on the Intercompany Note issued on June 10, 2005 was 5.4%. We intend to repay the Intercompany Notes with the proceeds of this offering and the concurrent offering of Equity Units.
On April 20, 2005, Ford first announced that it was evaluating its long-term strategic options for its investment in us. Since the announcement by Ford, our ability to sell unsecured commercial paper has been adversely affected. Our ability to sell unsecured commercial paper may have been impacted by the announcement by Ford or by the recent developments, described under “—Debt ratings” below, regarding Ford’s and our debt ratings.
Credit facilities
As of June 30, 2005, we had committed credit facilities totaling $2.8 billion.
A portion of our committed credit facilities are represented by a combination of multi-year, 364-day global and other committed credit facilities provided by 20 participating banks which as of June 30, 2005 totaled $1.3 billion in commitments. In addition to direct borrowings by us, the multi-year and 364-day global facilities allow certain of our subsidiaries to borrow on the basis of a guarantee by us.
    The multi-year facilities were renegotiated effective July 1, 2005 and as of June 30, 2005 totaled $952.5 million in commitments with expirations as follows: $35.0 million on June 30, 2006, $108.0 million on June 30, 2007, $102.0 million on June 30, 2008, $81.0 million on June 30, 2009 and $626.5 million on June 30, 2010. The multi-year facilities that expire in 2010 have an evergreen feature, which provides for the automatic extension of the expiration date one year forward unless the bank provides timely notice.
 
    During 2005, the 364-day global committed credit facilities, which totaled $94.0 million as of June 16, 2005, were renegotiated and currently expire on June 15, 2006. Under the terms of the 364-day facilities, we are permitted to convert any amount outstanding prior to expiration into a two-year loan.

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    The other committed facilities totaled $178.9 million as of June 30, 2005 and expire at various times during 2005 and 2006.
Some of our committed credit facilities are represented by facilities that support our ABS program, which as of June 30, 2005 totaled $1.0 billion:
    Effective September 18, 2002, as part of the ABS program, we transferred a portion of the 364-day global committed credit facilities to the ABS program. As part of the agreement to transfer these commitments, we have waived the right to transfer them back to the 364-day global committed credit facilities without the consent of the participating banks. As of June 30, 2005, $814.0 million was committed under this facility which expires in June 2006.
 
    In addition to the transfer of the 364-day commitments, we raised committed credit support through an ABS letter of credit from banks that participate in our multi-year global committed credit facilities, which totaled $215.0 million as of June 30, 2005 and expires in June 2007. In exchange for this credit support, we agreed to reduce the banks’ multi-year facility commitment by one half of the amount of their ABS letter of credit participation.
In addition to these committed credit facilities, in February 1997, Ford extended to us a line of credit of $500.0 million, which currently expires June 30, 2007. This line of credit has an evergreen feature that provides on an annual basis for automatic one-year extensions of the expiration date, unless notice is provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminates, however, at any time Ford ceases to own, directly or indirectly, our capital stock having more than 50% of the total voting power of all our capital stock outstanding and all loans and accrued interest under this facility would become immediately due and payable. Our obligations under this agreement would rank pari passu with our senior debt securities. A quarterly commitment fee of 0.2% is payable to Ford on the average daily unused available credit. On May 2, 2005, we borrowed $250.0 million under this line of credit, which we repaid on May 31, 2005 with borrowings under the Interim Credit Facility described below.
On May 26, 2005, we entered into the Interim Credit Facility with an aggregate availability of up to $3.0 billion with the joint book-running managers of this offering and/or their affiliates as the arrangers and initial lenders, JPMorgan Chase Bank, N.A. as the U.S. administrative agent and JPMorgan Chase Bank, N.A., Toronto Branch as the Canadian administrative agent. The Interim Credit Facility, as amended July 5, 2005, provides a term facility of up to $1,650.0 million and a revolving credit facility of up to $700.0 million available to The Hertz Corporation and a term facility of up to $350.0 million and a revolving credit facility of up to $300.0 million available to our Canadian subsidiary, Hertz Canada Limited, guaranteed by The Hertz Corporation, with unutilized capacity under the Canadian tranches available to be borrowed by The Hertz Corporation. Amounts under the term facilities are available to be borrowed from May 26, 2005 to July 26, 2005 and were fully drawn. Amounts under the revolving facilities are available to be borrowed throughout the term of the Interim Credit Facility. The Interim Credit Facility matures on November 23, 2005. We may elect a combination of per annum interest rates on the Interim Credit Facility including the federal funds rate plus 0.50%, JPMorgan Chase Bank, N.A.’s prime rate, LIBOR and, for loans made to Hertz Canada Limited, a Canadian base rate or Canadian prime rate, plus, in each case, a margin based on our then-current S&P and Moody’s debt ratings. We are also required to pay to the lenders a quarterly facility fee equal to a rate per annum of 0.175% of the total amount of the Interim Credit Facility (such rate based upon our current S&P and Moody’s debt ratings). As of June 30, 2005, we had outstanding borrowings of approximately $1.0 billion and C$575.0 million under the Interim Credit Facility.

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We are required to prepay loans and permanently reduce commitments under the Interim Credit Facility under certain limited circumstances, including certain issuances of securities (not including this offering), certain sales of assets and when Ford controls less than 25% of us or any other person or group has equal or greater control of us than Ford. Effective July 26, 2005, $1,825.0 million of the Interim Credit Facility commitments provided by the three initial external financial institutions were syndicated and allocated to eight additional external financial institutions. The Interim Credit Facility has terms, including restrictive covenants, substantially similar to the terms of our other current committed credit facilities. In addition, the Interim Credit Facility contains restrictions on the payment of any indebtedness to, or investments other than in the ordinary course of business in, Ford, other than as noted above, and our ability to pay future dividends, other than the dividend to Ford of the Intercompany Notes or additional stock, payments pursuant to certain stock option plans or other benefit plans, or any dividend in connection with this offering or the concurrent offering of Equity Units. We have used and continue to use the amounts borrowed under the Interim Credit Facility to refinance existing, short-term indebtedness and for general corporate purposes. We intend to repay the Interim Credit Facility from the proceeds received from a combination of issuances of additional asset backed securities under our ABS program, accessing the commercial paper market and issuing unsecured senior debt securities.
We maintain agreements with Ford Financial Services, Inc., or “FFS,” a NASD registered broker/dealer and an indirect wholly owned subsidiary of Ford, whereby FFS acts as a sales agent for our secured and unsecured domestic commercial paper programs. We pay fees to FFS, which range from 0.03% to 0.05% per annum of commercial paper placed depending upon the monthly average dollar value of the notes outstanding in the portfolios. For the six months ended June 30, 2005, we paid fees to FFS of $74,096. For the year ended December 31, 2004, we paid FFS $89,148 of such fees. FFS is under no obligation to purchase any of the notes for its own account. On July 13, 2005, we entered into a letter agreement with FFS which amended the agreements to provide that they will automatically terminate at any time Ford ceases to own shares having more than 50% of the total voting power of all of our outstanding capital stock. Through our subsidiary Hertz Australia Pty. Limited, we also have a similar agreement with Ford Credit Australia Limited, also an indirect wholly owned subsidiary of Ford. Hertz Australia Pty. Limited no longer maintains an active commercial paper program.
Contractual obligations
As of December 31, 2004, our contractual cash obligations were as follows:
                                         
            Payments Due by Period  
            Less than 1                     More than  
Contractual Obligations   Total     Year     1-3 Years     3-5 Years     5 Years  
    (Dollars in millions)  
Debt(1)
  $ 8,435.8     $ 3,054.3     $ 1,795.7     $ 1,185.6     $ 2,400.2  
Operating leases and concession agreements(2)
    1,270.2       259.7       389.0       198.2       423.3  
Purchase obligations(3)
                                       
Ford and subsidiaries
    2,757.2       2,757.2                    
All others
    3,704.1       3,668.3       35.8              
 
                             
Total purchase obligations
    6,461.3       6,425.5       35.8              
 
                             
 
                                       
Total
  $ 16,167.3     $ 9,739.5     $ 2,220.5     $ 1,383.8     $ 2,823.5  
 
                             
 
(1)   Amounts represent debt obligations included in “Debt” in our consolidated balance sheet and include $2,444.1 million of commercial paper and other short-term borrowings, excluding obligations for interest and estimated payments under interest rate swap agreements. See note 3 to the notes to our audited consolidated financial statements included in this prospectus.

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(2)   Includes obligations under various concession agreements, which provide for payment of rents and a percentage of revenue with a guaranteed minimum, and lease agreements for real estate, revenue earning equipment and office and computer equipment. Such obligations are reflected to the extent of their minimum non-cancelable terms. See note 10 to the notes to our audited consolidated financial statements included in this prospectus.
 
(3)   Purchase obligations represent agreements to purchase goods or services that are legally binding on us and that specify all significant terms, including fixed or minimum quantities; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Only the minimum non-cancelable portion of purchase agreements and related cancellation penalties are included as obligations. In the case of contracts, which state minimum quantities of goods or services, amounts reflect only the stipulated minimums; all other contracts reflect estimated amounts. Of the total purchase obligations as of December 31, 2004, $6,288.9 million represent fleet purchases where contracts have been signed or are pending with committed orders under the terms of such arrangements. We do not regard our employment relationships with our employees as “agreements to purchase services” for these purposes.
Other than our entry into the Interim Credit Facility and issuance of the Intercompany Note on June 10, 2005, we are not aware of any material changes outside the ordinary course of our business in the contractual obligations set forth on the table above as of June 30, 2005. See “Capitalization” for a discussion of these contractual obligations and the effects of this offering and the offering of Equity Units.
Debt ratings
Our short and long-term debt is rated by four of the nationally-recognized statistical rating organizations: Fitch; Moody’s; S&P; and DBRS. Debt ratings reflect an assessment by the rating agencies of the credit risk associated with particular securities issued by us. Lower ratings generally result in higher borrowing costs and reduced access to capital markets. Long- and short-term debt ratings of BBB- and F3 or higher by Fitch, Baa3 and Prime-3 or higher by Moody’s, BBB- and A3 or higher by S&P, and BBB and R-2 or higher by DBRS are considered “investment grade.” However, debt ratings are not recommendations to buy, sell, or hold securities and are subject to revision or withdrawal at any time by the assigning rating agency. Each rating agency may have different criteria in evaluating the risk associated to a company, and therefore ratings should be evaluated independently for each rating agency.
In April 2005 and the four following months, our debt ratings or outlook were downgraded by all four rating agencies, generally in conjunction with downgrades of Ford and Ford Credit. Our current ratings are as follows:
             
    Debt Ratings    
    Long-Term   Short-Term   Outlook/Trend
Moody’s
  Baa3   Prime-3   Developing outlook
S&P
  BBB-   A3   CreditWatch – developing
Fitch
  BBB-   F2   Rating watch – evolving
DBRS
  BBB   R-2 (middle)(1)   Under review – developing
 
(1)   Relates to commercial paper of Hertz Canada Limited, one of our wholly owned subsidiaries.
Other factors
Foreign currency. Our decision to withdraw earnings or investments from foreign countries is, in some cases, influenced by exchange controls and the utilization of foreign tax credits, and may also be affected by fluctuations in exchange rates for foreign currencies and by revaluation of such currencies in relation

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to the U.S. dollar by the governments involved. Foreign operations have been financed to a substantial extent through loans from local lending sources in the currency of the countries in which such operations are conducted. Car rental operations in foreign countries are, from time to time, subject to governmental regulations imposing varying degrees of currency restrictions. Currency restrictions and other regulations historically have not had a material impact on our operations as a whole.
Ford ownership. Prior to this offering by virtue of its 100% ownership interest in us, Ford has the right to make any changes that it deems appropriate in our assets, corporate structure, capitalization, operations, properties and policies (including dividend policies). On April 20, 2005, Ford announced that it will consider options regarding its future ownership of us, which includes this offering and the concurrent offering of Equity Units.
Capital expenditures
The table below shows revenue earning equipment and property and equipment capital expenditures and related disposal proceeds received by quarter for 2005, 2004 and 2003.
                                         
    Revenue Earning Equipment     Property and Equipment        
    Capital     Disposal     Capital     Disposal     Net Capital  
    Expenditures     Proceeds     Expenditures     Proceeds     Expenditures  
    (Dollars in millions)
2005
                                       
First Quarter
  $ 3,600.2     $ (2,307.4 )   $ 81.3     $ (9.0 )   $ 1,365.1  
Second Quarter
    4,040.4       (2,304.3 )     105.5       (21.3 )     1,820.3  
 
                             
Total
  $ 7,640.6     $ (4,611.7 )   $ 186.8     $ (30.3 )   $ 3,185.4  
 
                             
 
                                       
2004
                                       
First Quarter
  $ 2,916.1     $ (1,860.7 )   $ 61.2     $ (11.7 )   $ 1,104.9  
Second Quarter
    3,804.1       (1,921.2 )     82.8       (20.9 )     1,944.8  
Third Quarter
    2,179.0       (2,321.8 )     74.6       (19.4 )     (87.6 )
Fourth Quarter
    2,410.9       (2,637.2 )     67.8       (7.3 )     (165.8 )
 
                             
Total Year
  $ 11,310.1     $ (8,740.9 )   $ 286.4     $ (59.3 )   $ 2,796.3  
 
                             
 
                                       
2003
                                       
First Quarter
  $ 2,951.4     $ (2,557.3 )   $ 51.3     $ (9.0 )   $ 436.4  
Second Quarter
    2,338.3       (1,153.7 )     56.6       (23.6 )     1,217.6  
Third Quarter
    1,611.5       (1,656.2 )     54.4       (13.1 )     (3.4 )
Fourth Quarter
    2,535.4       (2,507.2 )     64.4       (8.9 )     83.7  
 
                             
Total Year
  $ 9,436.6     $ (7,874.4 )   $ 226.7     $ (54.6 )   $ 1,734.3  
 
                             
For the year ending December 31, 2005, we anticipate a level of net expenditures for revenue earning equipment and property and equipment slightly higher than our net expenditures in 2004. These anticipated capital expenditures reflect expected increases in the prices of 2006 model year vehicles to be acquired beginning in the fourth quarter of 2005, together with capital expenditures relating to the planned expansion of off-airport and HERC locations.
Off-balance sheet commitments
As of June 30, 2005, December 31, 2004 and December 31, 2003, the following guarantees were issued and outstanding:

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Indemnifications
In the ordinary course of business, we execute contracts involving indemnifications standard in the relevant industry and indemnifications specific to a transaction such as the sale of a business. These indemnifications might include claims against any of the following: environmental and tax matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other commercial contractual relationships; and financial matters. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third party claim. We regularly evaluate the probability of having to incur costs associated with these indemnifications and have accrued for expected losses that are probable and estimable. The types of indemnifications for which payments are possible include the following.
Environmental. We have indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which we may be held responsible could be substantial. The probable losses that we expect to incur for such matters have been accrued, and those losses are reflected in our consolidated financial statements. As of June 30, 2005, December 31, 2004 and December 31, 2003, the aggregate amounts accrued for environmental liabilities reflected in our consolidated balance sheet in “Accrued liabilities” were $5.2 million, $5.4 million and $5.9 million, respectively. The accrual represents the estimated cost to study potential environmental issues at sites deemed to require investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-going maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the site. For many sites, the remediation costs and other damages for which we ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as our connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).
Tax. We provide various tax-related indemnifications as part of the transactions giving rise to the indemnification obligations. The indemnified party typically is protected from certain events that result in a tax treatment different from that originally anticipated. In some cases, a payment under a tax indemnification may be offset in whole or in part by refunds from the applicable governmental taxing authority. We are party to a number of tax indemnifications, and many of these indemnities do not limit potential payment; therefore, we are unable to estimate a maximum amount of potential future payments that could result from claims made under these indemnities.
Risk management
For a discussion of additional risks arising from our operations, including vehicle liability, general liability and property damage insurable risks, see “Business-Risk management.”
Market risks
We are exposed to a variety of market risks, including the effects of changes in interest rates and foreign currency exchange rates. We manage our exposure to these market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management tools and are not used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage our exposure to counterparty nonperformance on such instruments. For more information on these exposures see note 14 to the notes to our audited consolidated financial statements included in this prospectus.

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Interest rate risk
From time to time, we enter into interest rate swap agreements to manage interest rate risk. Effective September 30, 2003, we entered into interest rate swap agreements relating to the issuance of our 4.7% Notes due October 2, 2006. Effective June 3, 2004, we entered into interest rate swap agreements relating to the issuance of our 6.35% Notes due June 15, 2010. Under these agreements, we pay interest at a variable rate in exchange for fixed rate receipts, effectively transforming these notes to floating rate obligations. See note 3 to the notes to our audited consolidated financial statements included in this prospectus. We have assessed our exposure to changes in interest rates by analyzing the sensitivity to our earnings assuming various changes in market interest rates. Assuming a hypothetical increase of one percentage point in interest rates on the existing debt portfolio as of December 31, 2004, net of interest income on investments, our net income would decline by approximately $15.8 million over a 12-month period.
Foreign currency risk
We manage our foreign currency risk primarily by incurring operating and financing expenses in the local currency in the countries in which we operate, including making fleet and equipment purchases and borrowing for working capital needs. Also, we have purchased foreign exchange options to manage exposure to fluctuations in foreign exchange rates for selected marketing programs. The effect of exchange rate changes on these financial instruments would not materially affect our consolidated financial position, results of operations or cash flows. Our risks with respect to currency option contracts are limited to the premium paid for the right to exercise the option and the future performance of the option’s counterparty. Premiums paid for options outstanding as of December 31, 2004, were approximately $0.7 million, and we limit counterparties to financial institutions that have strong credit ratings.
We also manage exposure to fluctuations in currency risk on intercompany loans we make to certain of our foreign subsidiaries by entering into foreign currency forward contracts at the time of the loans. The forward rate is reflected in the intercompany loan rate to the foreign subsidiaries, and as a result, the forward contracts have no impact on earnings.
Inflation
The increased acquisition cost of vehicles is the primary inflationary factor affecting us. Many of our other operating expenses are also expected to increase with inflation, including health care costs. Management does not expect that the effect of inflation on our overall operating costs will be greater for us than for our competitors.
Employee retirement benefits
Pension
We sponsor defined benefit pension plans worldwide. Pension obligations give rise to significant expenses that are dependent on assumptions discussed in note 6 of the notes to our audited consolidated financial statements included in this prospectus. Based on present assumptions, 2005 worldwide pre-tax pension expense is expected to be approximately $38.3 million, which is an increase of $7.6 million from 2004 primarily attributable to the decrease in the discount rate in the United States from 6.25% to 5.75% and in the United Kingdom from 5.50% to 5.25%, a pension settlement loss of $1.1 million relating to the Supplemental Executive Retirement Plan, as well as the effects of foreign currency translation.

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The funded status (i.e., the amount by which the present value of projected benefit obligations exceeded the market value of pension plan assets) of our U.S. qualified plan, in which most domestic employees participate, improved as of December 31, 2004, compared with December 31, 2003. The primary factors that contributed to the improvement in the funded status was a discretionary contribution by us of $48.0 million and an increase in the actual return on plan assets, partly offset by a decrease in the discount rate.
Included in our “stockholder’s equity” was a $15.1 million adjustment, net of tax, for worldwide minimum pension liability as of December 31, 2004. The increase of $4.0 million in the pension adjustment from the prior year is primarily attributable to unfunded plans in the United States and Germany and decreases in the discount rates as of December 31, 2004 used to calculate the present value of benefit obligations, in each case compared with the prior year.
We review our pension assumptions regularly and from time to time make contributions beyond those legally required. For example, discretionary contributions of $48.0 million and $54.0 million were made to the U.S. qualified plan for the years ended December 31, 2004 and 2003, respectively. After giving effect to these contributions, based on current interest rates and on our return assumptions and assuming no additional contributions, we do not expect to be required to pay any variable-rate premiums to the Pension Benefit Guaranty Corporation before 2010.
We participate in various “multiemployer” pension plans administrated by labor unions representing some of our employees. We make periodic contributions to these plans to allow them to meet their pension benefit obligations to their participants. In the event that we withdrew from participation in one of these plans, then applicable law could require us to make an additional lump-sum contribution to the plan, and we would have to reflect that on our balance sheet. Our withdrawal liability for any multiemployer plan would depend on the extent of the plan’s funding of vested benefits. We currently do not expect to incur any withdrawal liability in the near future. However, in the ordinary course of our renegotiation of collective bargaining agreements with labor unions that maintain these plans, we could decide to discontinue participation in a plan, and in that event we could face a withdrawal liability. Some multiemployer plans, including one in which we participate, are reported to have significant underfunded liabilities. Such underfunding could increase the size of our potential withdrawal liability.
Other postretirement benefits
We provide limited postretirement health care and life insurance for employees of our domestic operations with hire dates prior to January 1, 1990. There are no plan assets associated with this plan. We provide for these postretirement costs through monthly accruals. The net periodic postretirement benefit cost for the year ended December 31, 2004 was $1.6 million and the accumulated benefit obligation as of December 31, 2004 was $17.3 million compared to postretirement benefit cost of $1.3 million and an accumulated benefit obligation of $14.1 million as of December 31, 2003. The increase in cost and the accumulated benefit obligation was primarily attributable to the decrease in the discount rate from 6.25% as of December 31, 2003 to 5.75% as of December 31, 2004 and higher than expected medical cost increases.

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Recent accounting pronouncements
In January 2003, the Financial Accounting Standards Board, or “FASB,” issued Interpretation No. 46, or “FIN 46,” “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51,” which expands upon and strengthens existing accounting guidance concerning when a company should include in its financial statements the assets, liabilities and activities of another entity. Prior to the issuance of FIN 46, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 now requires a Variable Interest Entity, or “VIE,” as defined in FIN 46, to be consolidated by a company if that company is the primary beneficiary. The primary beneficiary is the entity subject to a majority of the risk of loss from the VIE’s activities or entitled to receive a majority of the VIE’s residual returns, or both. FIN 46 also requires disclosures about VIEs that a company is not required to consolidate but in which it has a significant variable interest. We adopted FIN 46 as of July 1, 2003 and the Revised Interpretation, FIN 46-R, as of December 15, 2003. The adoption of FIN 46 and FIN 46-R did not affect our financial position, results of operations or cash flows.
In December 2003, the FASB issued SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” SFAS No. 132, as revised, improves financial statement disclosures for defined benefit plans. The change replaces existing SFAS No. 132 disclosure requirements for pensions and other postretirement benefits and revises employers’ disclosures about pension plans and other postretirement benefit plans. It does not change the measurement of recognition of those plans required by SFAS No. 87, “Employers’ Accounting for Pensions,” SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” and SFAS No. 132, as revised, retains the disclosure requirements contained in the original SFAS No. 132, but requires additional disclosures about the plan assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. SFAS No. 132, as revised, was effective for annual and interim periods with fiscal years ending after December 15, 2003. See note 6 to the notes to our audited consolidated financial statements included in this prospectus.
In December 2004, the FASB revised SFAS No. 123, or “SFAS No. 123R,” “Accounting for Stock-Based Compensation.” SFAS No. 123R establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services, particularly transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is to be recognized over the period during which the employee is required to provide service in exchange for the award. Changes in fair value during the requisite service period are to be recognized as compensation cost over that period. The provisions of SFAS No. 123R are effective for financial statements issued for the first annual reporting period beginning after June 15, 2005. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or “SAB No. 107,” regarding the SEC staff’s interpretation of SFAS No. 123R. SAB No. 107 provides the SEC staff’s views regarding interactions between SFAS No. 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. As we are currently accounting for employee stock-based compensation awards in accordance with SFAS No. 123, adoption of SFAS No. 123R is not expected to have a significant effect on our financial position, results of operations or cash flows.
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3.” Previously, APB No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” required the inclusion of the cumulative effect of changes in accounting principle in net income of the period of the change. SFAS No. 154 requires companies to recognize changes in accounting principle, including changes required by a new accounting pronouncement when the pronouncement does not include specific transition provisions, retrospectively to prior periods’ financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We are required to adopt the provisions of SFAS No. 154, as applicable, beginning in fiscal year 2006.

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Business
Our company
We and our independent licensees and associates represent what we believe is the largest worldwide general use car rental brand and one of the largest equipment rental businesses in North America, both based upon revenues. Our Hertz brand name is recognized worldwide as a leader in quality rental services and products. We and our independent licensees and associates currently accept reservations for the rental of cars at approximately 7,400 locations in over 150 countries. We also rent equipment from over 340 branches in North America, France and Spain. We have been in the car rental business since 1918 and in the equipment rental business for over 40 years. Currently, we are an indirect wholly owned subsidiary of Ford.
For the six months ended June 30, 2005, we generated revenues, income before income taxes and minority interest and net income of $3.5 billion, $190.0 million and $120.1 million, respectively. For the year ended December 31, 2004, we generated revenues, income before income taxes and minority interest and net income of $6.7 billion, $502.6 million and $365.5 million, respectively. Our business is highly seasonal with the second and third quarters of the year having historically been stronger than the first and fourth quarters.
Our business consists of two significant segments, car rental and equipment rental. We also operate a third-party claim management service. See note 9 to the notes to our unaudited condensed consolidated financial statements and note 11 to the notes to our audited consolidated financial statements included in this prospectus.
Car rental
We maintain a substantial network of company-operated car rental locations both in the United States and internationally, and what we believe to be the largest number of company-operated on-airport car rental locations in the world, enabling us to provide consistent quality and service worldwide. For the year ended December 31, 2004, we derived approximately 74% of our worldwide car rental revenues from on-airport locations. Our licensees and associates also operate rental locations in over 140 countries, including most of the countries in which we have company-operated rental locations.
Our worldwide car rental operations generated $2.9 billion and $5.5 billion in revenues and $133.4 million and $437.6 million in income before income taxes and minority interest during the six months ended June 30, 2005 and the year ended December 31, 2004, respectively.
Equipment rental
HERC currently operates what we believe to be the third largest equipment rental business in North America and the fourth largest general equipment rental business in each of France and Spain, each based upon revenues. HERC rents a broad range of earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, pumps, small tools, compaction equipment and construction-related trucks. HERC also derives revenue from the sale of new equipment and consumables.
Our worldwide equipment rental operations generated $630.2 million and $1.2 billion in revenues and $71.9 million and $87.8 million in income before income taxes during the six months ended June 30, 2005 and the year ended December 31, 2004, respectively.

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Corporate history
We are a successor to corporations that have been engaged in the automobile and truck rental and leasing business since 1918 and the equipment rental business since 1965. We were incorporated in Delaware in 1967. Ford first acquired an ownership interest in us in 1987. Previously, we were a subsidiary of UAL Corporation (formerly Allegis Corporation), which had acquired our outstanding capital stock from RCA Corporation in 1985.
We became a wholly owned subsidiary of Ford as a result of a series of transactions in 1993 and 1994. We continued as a wholly owned subsidiary of Ford until April 1997. In 1997, we completed a public offering of approximately 50.6% of a class of our common stock, which represented approximately 19.1% of the economic interest in us, and listed that class of common stock for trading on the New York Stock Exchange. In March 2001, Ford FSG, Inc., or “FSG,” an indirect wholly owned subsidiary of Ford that then owned an approximate 81.5% economic interest in us, acquired all of our outstanding common stock that it did not already own for $35.50 per share, or approximately $735 million. As a result of FSG’s acquisition, our common stock ceased to be traded on the New York Stock Exchange. However, because certain of our debt securities were sold through public offerings, we continue to file periodic reports under the Securities Exchange Act of 1934, or the “Exchange Act.” In 2003, FSG was dissolved, and the shares of our common stock owned by FSG were distributed to Ford and Ford Holdings LLC. In February 2004, Ford Holdings LLC became the sole owner of all of our common stock.
Strengths
Premier brand
The “Hertz” brand is one of the most recognized brands in the world. In 2005, it was listed in Business Week ’s “100 Most Valuable Global Brands” – the only travel company brand to appear on the list. The “Hertz” brand has appeared on this list every year since the list’s inception in 2001. Moreover, our customer surveys indicate that in the United States, “Hertz” is the car rental brand most associated with the highest quality service. This is consistent with numerous published best-in-class car rental awards that we have won, both in the United States and internationally, over many years.
We have sought to support our reputation for quality and customer service in car rental through a variety of innovative service offerings, such as our customer loyalty program (Hertz #1 Club), our global expedited rental program (Hertz #1 Club Gold), our one-way rental program (Rent-it-Here/Leave-it-There), our national-scale luxury rental program (Prestige Collection) and our in-car navigational services (Hertz NeverLost). In 2004, participants in our Hertz #1 Club Gold program accounted for approximately 41% of our car rental transactions worldwide. Similarly, we have positioned HERC as a leader in equipment rental through the development of an extensive national account program with leading construction and industrial companies, a substantial investment in sales force automation and the operation of a diverse fleet consisting of what we believe are comparatively young units of rental equipment.
We believe that our premier brand and management of our business in support of the brand have allowed us to create and maintain a loyal customer base and often command premium pricing in car and equipment rental. These strengths in turn have helped us to earn a pre-tax profit in every year since our incorporation in 1967.

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Leading market positions
In the United States, we maintain the overall leading market share of airport rentals where we have company-operated locations. We had approximately a 30% market share in 2004, by revenues, at the 180 largest U.S. airports where we operate, over nine percentage points of share higher than that of the closest competing brand. We also believe that we have the largest airport market share, by revenues on a collective basis, at the 68 major airports in Europe where we have company-operated locations and which provide data regarding car rental concessionaire activity. We are actively expanding in the U.S. off-airport car rental market, and we believe that we already hold the second largest share in this growing market. HERC is, by revenues, the third largest equipment rental company in North America. Additionally, we believe HERC is the fourth largest general equipment rental company in each of France and Spain. Our leading market positions allow us to have first choice of car rental facilities at many airports and to spread our fixed costs in both car and equipment rental across a larger base.
Global footprint and business mix
We and our independent licensees and associates accept car rental reservations for approximately 7,400 locations in more than 150 countries. We are the only car rental company that has an extensive network of company-operated car rental locations both in the United States and in all the major markets of Europe. We also have a company-operated car rental presence in Canada, Australia, New Zealand, Brazil, Puerto Rico and the U.S. Virgin Islands. Because of our extensive worldwide presence, we are capable of capitalizing on business from global tourist and travel organizations and multinational corporations. We believe that our extensive worldwide ownership of our operations (including a 95% company-owned fleet in the United States) gives us an advantage in the areas of service consistency, strategic pricing, cost control, fleet utilization and yield management.
In addition to our global footprint, our mix of business segments (car and equipment rental), car rental markets served (airport and off-airport) and customers (business and leisure in car rental, and construction, industrial and government in equipment rental) adds stability to our business.
Proprietary strategic information systems and centralized administration
We conducted almost 30 million rental transactions in 2004 across our two business segments. We utilize information technology comprehensively in the areas of reservations, fleet and rate management, customer relations, sales and marketing, as well as all aspects of billing, finance, accounting and other reporting systems. We have made substantial investments in our proprietary information systems to permit us to conduct our business efficiently and effectively. We believe that our significant investment in technology enhances our ability to offer innovative services.
Our use of technology has helped us to concentrate our reservations, customer relations, information systems, billing, collection and accounting functions for the United States and Europe, along with certain administrative functions for our other corporate operations, at centers in Oklahoma and Ireland. This centralization, which we believe is unique in the car and equipment rental industries, permits us to provide superior end-to-end service to customers, spread administrative costs over a larger base and maintain a high level of control over our geographically dispersed operations.
Travel industry partnerships
We have established business partnerships with over 60 airlines, railroads and hotel chains worldwide, as well as with American Express and leading traditional and on-line travel agencies, such as Expedia and, in Europe, Opodo. These partnerships include such features as promotion of each other’s products, reservation transfer programs and discounts for each other’s customers. In some cases, we have exclusive relationships with our partners. For example, we are the exclusive car rental partner for the American

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Automobile Association (AAA), North America’s largest motoring and leisure travel organization, as well as for a number of key motor clubs in Europe and Australia. In Europe, we have also been the sole rental car marketing partner of Air France since 1989 and the sole rental car business partner of Ryanair, a leading European low cost carrier, since 1998. We believe that our global network of business partnerships is unmatched by any of our competitors. Our business partnerships generate significant car rental revenue and expand our customer base.
Depth of management team
We have an experienced management team with extensive knowledge of the car and equipment rental industries. We have employed our ten most senior members of management for an average of 26 years. Our regional and country managers also have a great deal of experience, having been employed by us for an average of 19 years and having been in their current positions for an average of seven years. Our management team has a strong track record of maintaining pre-tax profitability through economic cycles and successful and disciplined execution of our business strategy.
Flexible business model
While our businesses are capital-intensive, most of that capital is invested in revenue-earning cars and equipment. Most of our cars are subject to repurchase arrangements with their manufacturers, and well organized, liquid markets exist for any used cars that are not subject to repurchase arrangements, as well as for used equipment. We believe these repurchase agreements and markets would permit us to rapidly decrease or increase our fleet size if necessary. Our collective bargaining agreements and other labor arrangements in North America and, except as limited by law, in Europe also permit us to rapidly reduce the size of our workforce if conditions warrant that action. Moreover, a significant portion of our debt obligations are short-term. As a consequence, we can adjust substantial portions of our cost structure in reaction to external events much more quickly than companies in industries characterized by large investments in illiquid fixed assets or rigid labor arrangements, including many other types of travel service providers.
Strategy
Our strategy in both the global car rental and equipment rental markets is as follows.
Maintain and strengthen our premier car rental brand and differentiated product offering
The Hertz brand is recognized for its superior customer service and a differentiated, premium product. We intend to maintain our position as a premier company through an intense focus on service quality and product innovation. In the past we have been the first in the car rental market to offer such innovations as our customer loyalty program (Hertz #1 Club), our global expedited rental program (Hertz #1 Club Gold), our national-scale premium rental program (Prestige Collection) and our in-car navigational services (Hertz NeverLost). We believe that continuing to invest consistently in our core business activities, particularly in the areas of brand, facilities, technology and training, will help us maintain our premium product and pricing.
Continue the disciplined pursuit of off-airport growth opportunities
We intend to expand our presence in the off-airport portion of the car rental market in the United States and internationally. Our plan in the United States, where we believe the off-airport rental market is nearly as large as the airport rental market, is to increase our penetration of insurance replacement rentals through the establishment of a national footprint, as well as to increase our share of other off-airport business and leisure rentals. By leveraging our existing operations, we believe we will increase our penetration of this market and generate attractive margins over time. Internationally, our objective is to

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increase our penetration of the replacement market by focused sales efforts and a modest expansion of our off-airport network. We believe that a larger presence in off-airport rental will increase the stability, across both seasons and economic cycles, of our financial performance and diversify our revenue base.
Capitalize on emerging trends and underserved markets in the European car rental business
We believe that the European market presents airport rental growth opportunities resulting from the growth of European air travel due in large part to the emergence and increasing penetration of high volume, low cost air carriers and the increasing use of the Internet throughout the continent. We intend to take advantage of these market changes in part through the business partnerships we maintain with travel providers in Europe, including Air France, Ryanair, American Express Travel, Carlson Wagonlit, Expedia and Opodo. Beyond airport rentals, our other anticipated growth areas in Europe include light commercial vehicle rentals and special fleet rentals, as well as rental programs for the intra-European and long-haul leisure markets. We also intend to continue to develop business opportunities with other key intermediaries in non travel-related markets such as automobile clubs, road-side assistance providers, leasing companies and car manufacturers.
Continue to gain share in the fragmented North American equipment rental market
We believe that our diverse and comparatively young rental fleet, emphasis on customer service, large national account base and prominent brand name will position us to continue gaining market share in the fragmented North American equipment rental market. After several years of declining nonresidential construction markets, an ongoing recovery that began in 2004 is leading to improved industry pricing and volume in North America.
We are capitalizing on these improving markets by expanding our equipment rental footprint with the planned addition of 7 to 9 new locations in North America in 2005. These additional locations would bring our total North American equipment rental location count to over 265 by the end of the year. We also intend to continue to increase our presence in the specialty equipment and general rental markets by offering more pumps, power generation and small equipment and renovating locations to facilitate walk-in business. We believe that our expansion plans, coupled with our emphasis on a high quality, well-maintained fleet, will continue to drive our growth in the equipment rental business.
Business segments
Our business consists of two significant segments: car rental and equipment rental. In addition, “corporate and other” includes general corporate expenses, as well as other business activities, such as claim management services. Set forth below are charts showing revenues and operating income (loss), by segment, and revenues by geographic area, all for the year ended December 31, 2004, and revenue earning equipment at cost, net, as of December 31, 2004 (the majority of our international operations are in Europe).

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(PIE CHART)   (PIE CHART)
     
(PIE CHART)   (PIE CHART)
 
(1)   Operating income (loss) represents pre-tax income (loss) before interest expense and minority interest. The above chart excludes an operating loss of $15.5 million attributable to our Corporate and Other activities.
For further information on our business segments, including financial information for the six months ended June 30, 2005 and the year ended December 31, 2004, see note 9 to the notes to our unaudited condensed consolidated financial statements and note 11 to the notes to our audited consolidated financial statements included in this prospectus.
Worldwide car rental
Industry overview
The principal business of the car rental industry is to rent cars to individuals needing them for short-term business or leisure use. The industry is significantly influenced by general economic conditions as well as developments in the travel industry and particularly in airline passenger traffic. Historically, the car rental industry has also been highly seasonal, with many industry participants’ annual profitability being linked to activities in the second and third quarters when leisure and business travel peak. The industry derives the majority of its revenues from car rentals and the sale of ancillary products such as loss or

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damage waivers, fueling charges and rental-related insurance. The car rental industry is most developed in the United States and Europe, but it exists in some form in many other countries in the world.
Market data indicates that total annual U.S. rental revenues for the car rental industry exceeded $17 billion in 2004, with rentals by airline travelers taking place at or near airports, or “airport rentals,” constituting a slightly larger portion of the market than rentals taking place at central business district and suburban locations, or “off-airport rentals.” We believe that in recent years, industry revenues from off-airport rentals have grown faster than revenues from airport rentals, with U.S. airport rental revenues only recently returning to levels seen before the 2001 recession and the September 11, 2001 terrorist attacks.
After the United States, Western Europe is the region where the car rental industry generates the most revenue. Within Europe the largest markets are Germany, France and the United Kingdom. Based on market data, we estimate that total rental revenues for the car rental industry in Europe in 2003, the most recent year for which this information is available, exceeded $10 billion in the nine countries (France, Germany, Italy, the United Kingdom, Spain, the Netherlands, Switzerland, Belgium and Luxembourg) where we have company-operated rental locations and $2 billion in eight other countries (Greece, Ireland, Portugal, Sweden, Norway, Denmark, Austria and Finland) where our brand is present through our licensees.
In addition to Europe, we have company-operated rental locations in Australia, Canada, New Zealand, Puerto Rico, Brazil and the U.S. Virgin Islands. The structure of those markets is generally similar to that of the United States or Europe.
Car rental companies often acquire cars pursuant to fleet repurchase programs established by automobile manufacturers. Under these programs, the manufacturers agree to repurchase cars at a specified price during established repurchase periods, subject to certain car condition and mileage requirements. Repurchase prices under repurchase programs are based on either (i) a predetermined percentage of original car cost and the month in which the car is returned or (ii) the original capitalized cost less a set daily depreciation amount. Repurchase programs limit rental companies’ residual risk with respect to cars purchased under the programs and allow them to determine depreciation expense in advance. With the exception of Enterprise we believe that most cars in the fleets of the principal car rental industry participants in the United States and Europe, have been purchased under repurchase programs. We borrow extensively to obtain the capital we need to purchase cars.
Competition among car rental industry participants is intense and frequently takes the form of price competition. In the year ended December 31, 2004 and the first six months of 2005, most major U.S. and European car rental brands have experienced downward pressure on pricing, as measured by the time and mileage rates they charge.
Operations
We rent a wide variety of makes and models of cars, nearly all of which are the current or previous year’s models. We generally accept reservations only for a class of vehicles, although we accept reservations for specific makes and models of luxury vehicles in our Prestige Collection luxury rental program. We rent cars on a daily, weekend, weekly, monthly or multi-month basis, with rental charges computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge. Our rates vary at different locations depending on local market conditions and other competitive and cost factors. While cars are usually returned to the locations from which they are rented, we also allow one-way rentals from and to certain locations. In addition to car rentals and licensee fees, we generate revenues from reimbursements by customers of airport concession fees and vehicle licensing costs; fueling charges; and charges for ancillary customer products and services such as supplemental equipment (child seats and ski racks), loss or collision damage waiver, theft protection, liability and personal accident/effects insurance coverage, Hertz NeverLost navigation systems and satellite radios.

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Our “company-operated” rental locations are those through which we, or an agent of ours, rent cars that we own. We have company-operated rental locations both in the United States and internationally. The international car rental operations that generated the highest volumes of business from our company-operated locations for the year ended December 31, 2004 were, in descending order of revenues, those conducted in France, Germany, Italy, the United Kingdom, Australia, Canada and Spain.
As of June 30, 2005, we had over 1,750 staffed rental locations in the United States, of which approximately one-quarter were airport locations and three-quarters were off-airport locations, and we regularly rented cars from over 850 other locations that were not staffed. As of June 30, 2005, we had over 900 staffed rental locations internationally, of which approximately one-fifth were airport locations and four-fifths were off-airport locations, and we regularly rented cars from over 75 other locations that were not staffed. We believe that our extensive U.S. and international network of company-operated locations contributes to the consistency of our service, cost control, fleet utilization, yield management, competitive pricing and ability to offer one-way rentals.
In order to operate airport rental locations, we have obtained concession or similar leasing, licensing or permitting agreements or arrangements, or “concessions,” granting us the right to conduct a car rental business at all major, and many other, airports with regularly scheduled passenger service in each country where we have company-operated rental locations, except for airports where our licensees operate rental locations and Orlando International Airport in Orlando, Florida. Our concessions were obtained from the airports’ operators, which are typically governmental bodies or authorities, following either negotiation or bidding for the right to operate a car rental business there. The terms of an airport concession typically require us to pay the airport’s operator concession fees based upon a specified percentage of the revenue we generate at the airport, subject to a minimum annual fee. Under some concessions, we must also pay fixed rent for terminal counters or other leased properties and facilities. Some concessions are for a fixed length of time, while others create operating rights and payment obligations that, as a formal matter, are terminable at any time.
The terms of our concessions typically do not forbid, and in a few instances actually require, us to seek reimbursement from customers of concession fees we pay; however, in certain jurisdictions the law limits or forbids our doing so. Where we are required or permitted to seek such reimbursement, it is our general practice to do so. The number of car rental concessions available at airports varies considerably, but except at small, regional airports, it is rarely less than four. At Orlando International Airport, where we do not have a car rental concession, we operate an airport rental location at a facility located near the airport’s premises and pick up and drop off our customers at the airport under a permit from the airport’s operator. Certain of our concession agreements require the consent of the airport’s operator in connection with changes in ownership of us, including this offering and the concurrent offering of Equity Units. See “Relationship with Ford.”
In the United States, we had an almost 30% market share, by revenues in 2004, at the 180 largest airports where we operated, over nine percentage points of share higher than that of the closest competing brand. Out of approximately 150 major airports in the European countries in which we had company-operated rental locations in 2004, 68 provided us data regarding car rental concessionaire activity. Based upon this data, we believe that we were the largest airport car rental company, measured by aggregate airport rental revenues in 2004, at those 68 airports, taken together. For a further description of our competitors, market share and competitive position see “––Competition” below.

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At our major airport rental locations, as well as at some smaller airport and off-airport locations, customers participating in our Hertz #1 Club Gold program are able to rent vehicles in an expedited manner. In the United States, participants in Hertz #1 Club Gold often bypass the rental counter entirely and proceed directly to their vehicles upon arrival at our facility. In 2004, rentals by Hertz #1 Club Gold members accounted for approximately 41% of our worldwide rental transactions. We believe the Hertz #1 Club Gold program provides a significant competitive advantage to us, particularly among frequent travelers, and we have, through travel industry relationships, targeted such travelers for participation in the program.
In addition to our airport locations, we operate off-airport locations offering car rental services to a variety of customers. Our off-airport rental customers include people wishing to rent cars closer to home for business or leisure purposes, as well as those needing to travel to or from airports. Our off-airport customers also include people who have been referred by, or whose rental costs are being wholly or partially reimbursed by, insurance companies following accidents in which their cars were damaged, those expecting to lease cars that are not yet available from their leasing companies and those needing cars while theirs are being repaired or are temporarily unavailable for other reasons; we sometimes call these customers replacement renters. At many of our off-airport locations we will provide pick-up and delivery services in connection with rentals.
When compared to our airport rental locations, an off-airport rental location typically deals with more types of customers, uses smaller rental facilities with fewer employees, conducts pick-up and delivery services and deals with replacement renters using specialized systems and processes. In addition, on average, off-airport locations generate fewer transactions per period than airport locations. At the same time, though, our airport and off-airport rental locations employ common car fleets, are supervised by common country, regional and local area management, use many common systems and rely on common maintenance and administrative centers. Moreover, airport and off-airport locations, outside the area of replacement rentals, are supported by a common commercial sales force, benefit from many common marketing activities and have many of the same customers. As a consequence, we regard both types of locations as aspects of a single, unitary, car rental business.
We believe that an expanded presence in the off-airport portion of the rental market can provide us several benefits. First, it can provide customers utilizing air transportation a more convenient network of rental locations to facilitate their travel to and from airports. Second, it can give us a more balanced revenue profile by reducing our reliance on airport rental volume and the attendant risk from external events that may disrupt air travel. Third, replacement rental volume is far less seasonal than that of other business and leisure rentals, which permits efficiencies in both fleet and manpower planning. Finally, cross selling opportunities exist for us to promote off-airport rentals among frequent airport Hertz #1 Club renters and, conversely, to promote airport rentals to off-airport renters. In view of those benefits, along with our belief that our market share for off-airport rentals is generally smaller than our market share for airport rentals, we have been seeking to expand our participation in the off-airport rental market, both in the United States and internationally.
Over the two year period ended December 31, 2004, we increased the number of our staffed off-airport rental locations in the United States by approximately 50% to over 1,200 locations. We currently intend to add more U.S. off-airport locations in 2005 and subsequent years until we find that we, together with our licensees, can serve market areas covered by nearly all national insurance companies and regional insurance companies of significant size, which we believe could eventually involve as many as 2,000 locations. In the United States during 2004, approximately one-third of our rental revenues at off-airport locations were related to replacement rentals. After we increase our market presence as discussed above, the proportion of replacement rental revenues would be expected to increase. As we move forward, our selection of areas in which to expand our U.S. off-airport presence will be based upon a combination of

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factors, including the concentration of target insurance company policy holders, car dealerships, auto body shops and other clusters of retail and commercial activity. We also intend to increase the number of our staffed off-airport rental locations internationally on the basis of similar criteria, although on a percentage basis we expect the increases to be considerably smaller.
In addition to renting cars, in Germany we also rent trucks of 8 tons and over, including truck tractors. Our truck rental fleet in Germany consists of over 2,500 vehicles, all of which have been purchased under repurchase programs similar to those under which we purchase program cars. We believe we are a market leader in truck rental in Germany. Also, we are engaged in a car leasing business in Brazil. Our truck rental activities in Germany and our car leasing activities in Brazil are treated as part of our international car rental business in our consolidated financial statements.
Customers
In almost all cases, when we rent a car, we rent it directly to an individual who is identified in a written rental agreement that we prepare. Except when we are accommodating someone with a disability, the individual to whom we rent a car is required to have a valid driver’s license and meet other rental criteria (including minimum age and creditworthiness requirements) that vary on the basis of location and type of rental. Our rental agreements permit only the individual renting the car, people signing additional authorized operator forms and certain defined categories of other individuals (such as fellow employees, garage attendants and in some cases spouses or domestic partners) to operate the car.
Customers rent cars from us for many reasons. Customers who rent from us for “business” purposes include those who require cars in connection with the commercial activities of companies and individuals or the activities of governments and other organizations. We also include replacement renters in the category of business renters. Most business renters rent cars from us on terms that we have negotiated with their employers or other entities with which they are associated. Those terms may differ substantially from the terms on which we rent cars to the general public. We have negotiated arrangements relating to car rental with many large businesses, governments and other organizations, including more than half of the Fortune 500 companies.
Our insurance replacement rental business principally involves our rental of cars to individuals who are referred, and whose rental charges are wholly or partially paid or reimbursed, by insurance companies. In order to obtain these renters, we must establish agreements with the referring insurers establishing the relevant rental terms, including the arrangements made for billing and payment. In the United States, we have identified approximately 170 insurance companies, ranging from local or regional carriers to large, national companies, as our target insurance replacement market. While we believe that many of these companies are receptive to our replacement rental offerings, our share of this market, as a percentage of estimated rental revenue volume in 2004, has only been approximately 6%. We believe that gaps in the geographic coverage of our U.S. off-airport locations, as well as exclusive dealing arrangements that certain insurers have entered into with Enterprise, have limited our growth, particularly with national-scale companies. With the expected closing of many geographic coverage gaps in 2005, we believe our share of the U.S. insurance replacement market, both with national insurance companies and generally, will grow. We already are an approved supplier of replacement rental services for seven of the ten largest national insurance companies in the United States, based on their estimated car rental needs.
Customers who rent from us for “leisure” purposes include not only individual travelers booking vacation travel rentals with us but also people whose rentals have been arranged through tour operators. Leisure rentals, taken as a whole, are longer in duration and generate more revenue per transaction than do business rentals, although some types of business rentals, such as rentals to replace temporarily unavailable cars, have a long average duration. Business rentals and leisure rentals have different

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characteristics and place different types of demands on our operations. We believe that maintaining an appropriate balance between business and leisure rentals is important to the profitability of our business and the consistency of our operations.
We conduct active sales and marketing programs to attract and retain customers. Our commercial sales force calls on companies and other organizations whose employees and associates need to rent cars for business purposes, as well as on membership associations, tour operators, travel companies and other groups whose members, participants and customers rent cars for either business or leisure purposes. A specialized sales force calls on companies with replacement rental needs, including insurance and leasing companies and car dealers. We also advertise our car rental offerings through a variety of traditional media, such as television and newspapers, direct mail and the Internet. In addition to advertising, we also conduct a variety of other forms of marketing and promotion, including travel industry business partnerships and press and public relations activities. For a discussion of our business partnerships, see “––Strengths––Travel industry partnerships.”
With rare exceptions, individuals renting cars from us are personally obligated to pay all amounts due under their rental agreements. They typically pay us with a charge, credit or debit card issued by a third party, although certain customers use a Hertz charge account that we have established for them, usually as part of an agreement between us and their employer. All amounts charged to Hertz charge accounts established in the United States, and approximately 96% of amounts charged to Hertz charge accounts established by our international subsidiaries, are billed directly to a company or other organization or are guaranteed by a company. The remainder of the amounts charged to Hertz charge accounts established by our international subsidiaries are billed to individual account holders whose obligations are not guaranteed by the holder’s employer or any other organization associated with the account holder. We also issue rental vouchers and certificates that may be used to pay rental charges for mostly prepaid and tour-related rentals. In addition, when the law requires us to do so, we will rent on a cash basis.
In the United States for the year ended December 31, 2004, 87% of our car rental revenues came from customers who paid us with third-party charge, credit or debit cards, while 7% came from customers using Hertz charge accounts, 2% from cash transactions and 4% from customers using rental vouchers or another method of payment. In our international operations for the year ended December 31, 2004, 49% of our car rental revenues came from customers who paid us with third-party charge, credit or debit cards, while 47% came from customers using Hertz charge accounts and 4% came from customers who paid using cash, rental vouchers or another method of payment. For the year ended December 31, 2004, we had a bad debt expense of 0.1% of car rental revenues for our U.S. operations and 0.2% of car rental revenues for our international operations.
Mix of Business
We believe it is useful for an understanding of our business to know the proportion of our car rental revenues or transactions that came from a particular type of customer (business or leisure) or arose at a particular type of rental location (airport or off-airport). The table below sets forth, for the year ended December 31, 2004, the percentages of rental revenues and rental transactions derived in our U.S. and international operations from business and leisure rentals and from airport and off-airport rentals.

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    U.S.   International
Type of Rental   Revenues   Transactions   Revenues   Transactions
By Customer:
                               
 
                               
Business
    47 %     50 %     46 %     51 %
Leisure
    53       50       54       49  
 
                                 
 
    100 %     100 %     100 %     100 %
 
                                 
 
                               
By Location:
                               
 
                               
Airport
    81 %     82 %     56 %     57 %
Off-airport
    19       18       44       43  
 
                               
 
    100 %     100 %     100 %     100 %
 
                               
Reservations
Customers may make reservations for the rental of cars from us and our licensees and associates worldwide through travel agents and third-party travel websites, many of which in turn utilize computerized reservations systems, also known as global distribution systems, or “GDSs,” operated by third parties to make the reservations with us. There are currently four principal GDSs, and we have contracts with all of them providing that we will process reservation requests made through the GDSs. Historically, GDSs were owned and operated by airlines and were subject to extensive regulation along with their airline owners. In recent years, however, airlines have greatly reduced their ownership interests in GDSs and the level of regulation to which GDSs are subject has substantially decreased. One of the four principal GDSs is now owned by Cendant Corporation, which also owns car rental companies that compete with us.
In major countries, including the United States and all other countries with company-operated locations, customers may also reserve cars for rental from us and our licensees worldwide through local, national or toll-free telephone calls to our reservations centers, directly through our rental locations or, in the case of replacement rentals, through proprietary automated systems serving the insurance industry. Additionally, we accept reservations for rentals from us and our licensees worldwide through our websites. Our websites, which also allow customers to enroll in loyalty programs, obtain copies of bills for past transactions and obtain information about our rental offerings, have grown significantly in importance as a reservations channel in recent years. Third-party travel websites have also grown in importance to us as a reservations channel.
For the year ended December 31, 2004, approximately 37% of the worldwide reservations we accepted came through travel agents using GDSs, while 37% came through phone calls to our reservations centers, 18% through our websites, 6% through third-party websites and 2% through local booking sources.
Fleet
We believe we are one of the largest private sector purchasers of new cars in the world. During 2004, we operated a peak rental fleet in the United States of approximately 300,000 cars and a combined peak rental fleet in our international operations of approximately 160,000 cars, in each case exclusive of our licensees’ fleets. During the year 2004, our approximate average holding period for a rental car was 11 months in the United States and eight months in our international operations.
We acquire, subject to availability, a majority of our cars pursuant to various fleet repurchase programs established by automobile manufacturers. Under these programs, automobile manufacturers agree to repurchase cars at a specified price during established repurchase periods, subject to certain car condition and mileage requirements. Repurchase prices under the repurchase programs are based on either (i) a

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predetermined percentage of original car cost and the month in which the car is returned or (ii) the original capitalized cost less a set daily depreciation amount. These repurchase programs limit our residual risk with respect to cars purchased under the programs. For these reasons, cars purchased by car rental companies under repurchase programs are sometimes referred to by industry participants as “non-risk,” “buy-back” or “program” cars. Conversely, those cars not purchased under repurchase programs for which the car rental company is exposed to residual risk are sometimes referred to as “risk” cars. During 2004, program cars as a percentage of all cars purchased by our U.S. operations and international operations were approximately 85% and 74%, respectively.
Over the five years ended December 31, 2004, approximately 55% of the cars acquired by us for our U.S. car rental fleet, and approximately 29% of the cars acquired by us for our international fleet, were manufactured by Ford and its subsidiaries. During 2004, approximately 41% of the cars acquired by us domestically were manufactured by Ford and its subsidiaries and approximately 32% of the cars acquired by us for our international fleet were manufactured by Ford and its subsidiaries, which represented the largest percentage of any automobile manufacturer in that year. The percentage of the fleet which we purchase from Ford may decline as a result of recent changes to the vehicle supply arrangements between us. See note 12 to the notes to our condensed consolidated financial statements included in this prospectus and “Relationship with Ford.”
Purchases of cars are financed through funds provided from operations and by active and ongoing global borrowing programs. See “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources.”
We maintain automobile maintenance centers at certain airports and in certain urban and off-airport areas, providing maintenance facilities for our rental fleet. Many of these facilities, which include sophisticated car diagnostic and repair equipment, are accepted by automobile manufacturers as eligible to perform and receive reimbursement for warranty work. Collision damage and major repairs are generally performed by independent contractors.
We dispose of risk cars, as well as program cars that have for any reason become ineligible for manufacturer repurchase, through a variety of disposition channels, including auctions, brokered sales, sales to wholesalers and, to a lesser extent and primarily in the United States, sales at retail through a network of 36 company-operated car sales locations dedicated exclusively to the sale of used cars from our rental fleet. During the year ended December 31, 2004, we sold approximately 71% of our cars that were not repurchased by manufacturers at auction, while 23% were sold at retail and 6% through other channels.
Licensees
We believe that our extensive worldwide ownership of rental operations contributes to the consistency of our high-quality service, cost control, fleet utilization, yield management, competitive pricing and our ability to offer one-way rentals. However, in certain predominantly smaller U.S. and international markets, we have found it more efficient to utilize independent licensees, which rent cars that they own. Our licensees operate locations in over 140 countries, including most of the countries where we have company-operated locations. As of December 31, 2004, we owned 95% of all the cars in the combined company-owned and licensee-owned fleets in the United States.
We believe that our licensee arrangements are important to our business because they enable us to offer expanded national and international service and a broader one-way rental program. Licenses are issued principally by our wholly owned subsidiaries, Hertz System, Inc., or “System,” and Hertz International, Ltd. under franchise arrangements to independent licensees and affiliates who are engaged in the car rental business in the United States and in many foreign countries.

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Licensees generally pay fees based on a percentage of their revenues or the number of cars they operate. The operations of all licensees, including the purchase and ownership of vehicles, are financed independently by the licensees, and we do not have any investment interest in the licensees or their fleets. System licensees share in the cost of our U.S. advertising program, reservations system, sales force and certain other services. Our European and other international licensees also share in the cost of our reservations system, sales force and certain other services. In return, licensees are provided the use of the Hertz brand name, management and administrative assistance and training, reservations through our reservations channels, the Hertz #1 Club program, our one-way rental program and other services. In addition to car rental, certain licensees outside the United States engage in car leasing, chauffeur-driven rentals and renting camper vans under the Hertz name.
System licensees ordinarily are limited as to transferability without our consent and are terminable by us only for cause or after a fixed term. Licensees in the United States may generally terminate for any reason on 90 days’ notice. In Europe and certain other international jurisdictions, licensees typically do not have early termination rights. Initial license fees or the price for the sale to a licensee of a company-owned location may be payable over a term of several years. We continue to issue new licenses and, from time to time, to purchase licensee businesses.
Competition
In the United States, our principal car rental industry competitors are Cendant Corporation, or “Cendant,” which operates the “Avis” and “Budget” brands, Vanguard Car Rental USA Group, or “Vanguard,” which operates the “National Car Rental” and “Alamo” brands, Dollar Thrifty Automotive Group, Inc., or “DTG,” which operates the “Dollar” and “Thrifty” brands, and Enterprise, which operates the “Enterprise” brand.
The following table lists our market share, and the market shares of our principal competitors and their licensees, at the 180 largest U.S. airports at which we have company-operated locations, determined on the basis of revenue reported to the airports’ operators on which concession or off-airport permit fees are determined for the indicated years.
                                         
Brand Name   2004     2003     2002     2001     2000  
Hertz
    29.6 %     29.0 %     29.2 %     29.5 %     28.7 %
 
                                       
Avis
    20.2       21.2       22.3       21.6       22.3  
Budget
    10.2       10.4       10.8       11.8       11.8  
 
                                       
Cendant Brands(1)
    30.4       31.6       33.1       33.4       34.1  
 
                                       
National/Alamo (Vanguard Brands)(2)
    19.8       20.8       21.8       25.4       26.0  
 
                                       
Dollar
    7.7       7.4       7.2       7.1       6.9  
Thrifty
    4.5       4.4       3.2       1.8       1.9  
 
                                       
DTG Brands
    12.2       11.8       10.4       8.9       8.8  
 
                                       
Enterprise
    6.0       5.0       3.9       2.0       1.4  
 
                                       
Other
    2.0       1.8       1.6       0.8       1.0  
 
                                       
 
                                       
Total
    100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
 
                                       
 
(1)   Cendant acquired all of the outstanding shares of Avis Group Holdings, Inc. on March 1, 2001 and acquired substantially all of the domestic assets of the vehicle rental business of Budget Group, Inc. on November 22, 2002.
 
(2)   National and Alamo have been owned by Vanguard since October 2003.

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The off-airport rental market has historically been dominated by Enterprise. We now have a significant presence in the off-airport market, and Cendant’s brands also are present. Many smaller companies also operate in the airport and off-airport rental markets.
In Europe, in addition to us, the principal pan-European participants in the car rental industry are Avis Europe plc (which is not an affiliate of Cendant but is operating under a license from Cendant), which operates the “Avis” and “Budget” brands, and Europcar, a subsidiary of Volkswagen AG, which operates the “Europcar” brand. In certain European countries, there are also other companies and brands with substantial market shares, including Sixt AG (operating the “Sixt” brand) in Germany, Vanguard (operating both the “National Car Rental” and “Alamo” brands) in the United Kingdom and Germany, and through franchises in Spain, Italy and France, and Enterprise (operating the “Enterprise” brand) in the United Kingdom, Ireland and Germany. In every European country, there are also national, regional or other, smaller companies operating in the airport and off-airport rentals markets. Apart from Enterprise-branded operations, all of which Enterprise owns, the other major car rental brands are present in European car rental markets through a combination of company-operated and franchisee- or licensee-operated locations.
Competition among car rental industry participants is intense and frequently takes the form of price competition. For the year ended December 31, 2004 and the first six months of 2005, most U.S. and European car rental companies have experienced downward pressure on pricing, as measured by the time and mileage rates they charged.
Our competitors, some of which may have access to substantial capital, may seek to compete aggressively on the basis of pricing. To the extent that we match downward competitor pricing, it could have an adverse impact on our results of operations. To the extent that we are not willing to match or remain within a reasonable competitive margin of our competitors’ pricing, it could also have an adverse impact on our results of operations as we may lose market share. As a result of increased use of the Internet as a travel distribution channel, pricing transparency is continually increasing. See “Risk factors—Risks related to our business––We face intense competition that may lead to downward pricing, which could have a material adverse impact on our results of operations.” We believe, however, that the prominence and service reputation of the “Hertz” brand and our extensive worldwide ownership of car rental operations provide us with a competitive advantage.
Equipment rental
Industry overview
We, through HERC, operate an equipment rental business in the United States, Canada, France and Spain. It is difficult for us to estimate the size of the equipment rental market in any of those countries. Market data indicate that equipment rental in North America generates revenues of approximately $25.0 billion annually, but the part of the rental industry dealing with equipment of the type HERC rents is considerably smaller than that. Other market data indicate that the equipment rental industries in France and Spain generate roughly $4.0 billion and $2.0 billion in annual revenues, respectively, although the portions of those markets in which HERC competes are smaller.

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In each of the four countries where HERC operates, the equipment rental industry is highly fragmented, with large numbers of companies operating on a regional or local scale. The number of industry participants operating on a national scale is, however, much smaller. HERC is one of the principal national-scale industry participants in each of the four countries where it operates. HERC operations in North America represented 88% of our worldwide equipment rental revenues in 2004. We believe HERC is the third largest equipment rental company in North America. Additionally, we believe HERC is the fourth largest general equipment rental company in both France and Spain, in each case based on revenues. HERC has operated in the United States for over 40 years.
Operations
HERC’s principal business is the rental of equipment. HERC offers a broad range of equipment for rental; major categories include earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, pumps, small tools, compaction equipment and construction-related trucks.
HERC’s comprehensive line of equipment enables it to supply equipment to a wide range of customers from local contractors to large industrial plants. Also, larger companies, particularly those with industrial plant operations, now require single source vendors, not only for equipment rental, but also for management of their total equipment needs. These arrangements may include maintenance of the tools and equipment they own, supplies and rental tools for their labor force and custom management reports. HERC supports this through its dedicated in-plant operations, tool trailers and plant management systems.
As of June 30, 2005, HERC operated 344 equipment rental branches, of which 232 were in 40 states within the United States, 31 were in Canada, 70 were in France and 11 were in Spain. HERC generated same store, year over year revenue growth for each of the last eight quarters. HERC’s rental locations generally are situated in industrial or commercial zones. A growing number of locations have highway or major thoroughfare visibility. The typical location is approximately three acres in size, though smaller in Europe, and includes a customer service center, an equipment service area and storage facilities for equipment. The branches are built or conform to the specifications of the HERC prototype branch, which stresses efficiency, safety and environmental compliance. Most branches have stand-alone maintenance and fueling facilities and showrooms.
HERC slightly contracted its North American network of equipment rental locations during the 2001 to 2003 downturn in construction activities. In the last six months of 2005, we expect HERC will add 4 to 6 new locations in major markets across the United States. In this expansion, we expect HERC will incur non-fleet start-up costs of approximately $900,000 per location and additional fleet acquisition costs over an initial twelve-month period of approximately $4.9 million per location.
Starting in 2004, HERC began to broaden its equipment line in the United States to include equipment with an acquisition cost of under $10,000 per unit, ranging from air compressors and generators down to small tools and accessories, in order to supply customers who are local contractors with a greater proportion of their overall equipment rental needs. As of June 30, 2005, these activities, referred to as “general rental activities,” were conducted at over 30% of HERC’s U.S. rental locations. Before it begins to conduct general rental activities at a location, HERC typically renovates the location to make it more appealing to walk-in customers and adds staff and equipment in anticipation of subsequent demand.
HERC’s operations generated revenues of $630.2 million and $1,162.0 million, respectively, for the six months ended June 30, 2005, and for the year ended December 31, 2004.

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Customers
HERC’s customers consist predominantly of commercial accounts and represent a wide variety of industries, such as construction, petrochemical, automobile manufacturing, railroad, power generation and shipbuilding. Serving a number of different industries enables HERC to reduce its dependence on a single or limited number of customers in the same business and somewhat reduces the seasonality of HERC’s revenues and its dependence on construction cycles. HERC primarily targets customers in medium to large metropolitan markets. For the year ended December 31, 2004, no customer of HERC accounted for more than 1.5% of its revenues. Of HERC’s 2004 revenues, roughly half were derived from customers operating in the construction industry, while the remaining revenues were derived from rentals to industrial, governmental and other types of customers.
Unlike in our car rental business, where we enter into rental agreements with the people who will operate the cars being rented, HERC ordinarily enters into a rental agreement with the legal entity — typically a company, governmental body or other organization — seeking to rent a piece of HERC’s equipment. Moreover, unlike in our car rental business, where our cars are normally picked up and dropped off by customers at our rental locations, HERC delivers much of its rental equipment to its customers’ job sites and retrieves the equipment from the job sites when the rentals conclude. Finally, unlike in our car rental business, HERC extends many of its customer’s credit terms to pay for rentals. Thus, for the year ended December 31, 2004, 91% of HERC’s revenues came from customers who were invoiced by HERC for rental charges, while 4% came from customers paying with third-party charge, credit or debit cards and 5% came from customers who paid with cash or used another method of payment. For the year ended December 31, 2004, HERC had bad debt expense of 0.6% of its revenues.
Fleet
HERC acquires its equipment from a variety of manufacturers. The equipment is typically new at the time of acquisition and is not subject to any repurchase program. The per-unit acquisition costs of units of rental equipment in HERC’s fleet vary from over $200,000 to under $100. As of December 31, 2004, the average per-unit acquisition cost (excluding small equipment purchased for less than $5,000 per unit) for HERC’s fleet in North America was $33,000. As of June 30, 2005, the average age of HERC’s rental fleet in North America was 29 months. We believe that this fleet is significantly younger than that of any of HERC’s principal competitors in North America. A younger fleet gives HERC a competitive advantage in North America by providing the latest technology, safety features and operator use enhancements. Having a younger fleet also reduces maintenance expenses, which generally escalate as equipment ages. As of June 30, 2005, the average age of HERC’s rental fleet in Europe was 36 months, which we believe is roughly comparable to the average ages of the fleets of HERC’s principal European competitors.
HERC disposes of its used equipment through a variety of channels, including negotiated sales to customers and other third parties, sales to wholesalers, brokered sales and auctions. Ancillary to its rental business, HERC is also a dealer of certain brands of new equipment in the United States and Canada, and sells consumables such as gloves and masks at many of its rental locations.
Competition
HERC’s competitors in the equipment rental industry range from other large national companies to small regional and local businesses. In each of the four countries where HERC operates, the equipment rental industry is highly fragmented, with large numbers of companies operating on a regional or local scale. The number of industry participants operating on a national scale is, however, much smaller. HERC is one of the principal national-scale industry participants in each of the four countries where it operates. In

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North America, the other principal national-scale industry participants are United Rentals, Inc. and RSC Equipment Rental, a division of the Atlas Copco Group. A number of individual Caterpillar dealers also participate in the North American equipment rental market. In France, the other principal national-scale industry participants are Loxam, Kiloutou and Laho, while in Spain, the other principal national-scale industry participants are GAM, Euroloc and Vilatel.
Competition in the equipment rental industry is intense, and it often takes the form of price competition. HERC’s competitors, some of which may have access to substantial capital, may seek to compete aggressively on the basis of pricing. To the extent that HERC matches downward competitor pricing, it could have an adverse impact on our results of operations. To the extent that HERC is not willing to match competitor pricing, it could also have an adverse impact on our results of operations due to lower rental volume. The industry experienced a number of years of downward pricing, measured by the per-period rates charged by rental companies, starting in 2001. During the year 2004 and the first six months of 2005, we believe industry pricing, measured in the same way, improved in North America but continued to decline in France and Spain, albeit at a reduced rate. In addition, we expect most industry participants to experience modest increases in equipment costs in the next twelve months. We believe that HERC’s competitive success has been primarily the product of its 40 years of experience in the equipment rental industry, its systems and procedures for monitoring, controlling and developing its branch network, its capacity to maintain a comprehensive rental fleet and its established national accounts program.
Other operations
Our wholly owned subsidiary, Hertz Claim Management Corporation, or “HCM,” provides claim administration services to us and, to a lesser extent, to outside customers. These services include investigating, evaluating, negotiating and disposing of a wide variety of claims, including third party, first party, bodily injury, property damage, general liability and product liability, but not the underwriting of risks. HCM conducts business at nine regional offices in the United States. Separate subsidiaries of ours conduct similar operations in eight countries in Europe.
Seasonality
Car rental and equipment rental are seasonal businesses, with decreased levels of business in the winter months and heightened activity during the spring and summer. To accommodate increased demand, we increase our available fleet and staff during the second and third quarters. As business demand declines, fleet and staff are decreased accordingly. However, certain operating expenses, including minimum concession fees, rent, insurance and administrative overhead, remain fixed and cannot be adjusted for seasonal demand. See “Risk factors—Risks related to our business––Our business is highly seasonal, and a disruption in rental activity during our peak season could materially adversely affect our results of operations.” The following tables set forth this seasonal effect by providing quarterly revenues and income (loss) before income taxes and minority interest for each of the quarters in the year ended December 31, 2004 and the quarters ended March 31, 2005 and June 30, 2005.

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(BAR CHART)
  (BAR CHART)
Employees
As of June 30, 2005, we employed approximately 32,900 persons, consisting of 23,300 persons in our U.S. operations and 9,600 persons in our international operations. Labor contracts covering the terms of employment of approximately 7,750 employees in the United States are presently in effect under 146 active contracts with local unions, affiliated primarily with the International Brotherhood of Teamsters and the International Association of Machinists (AFL-CIO). Labor contracts covering approximately 830 of these employees will expire during the remainder of 2005. We may be unable to negotiate new labor contracts on terms advantageous to us or without labor interruptions. Employee benefits in effect include group life insurance, hospitalization and surgical insurance, pension plans and a defined contribution plan. Overseas employees are covered by a wide variety of union contracts and governmental regulations affecting, among other things, compensation, job retention rights and pensions. We have had no material work stoppage as a result of labor problems during the last 10 years. We believe our labor relations to be good.
In addition to the employees referred to above, we employ a substantial number of temporary workers, and engage outside services, as is customary in the industry, principally for the non-revenue movement of the rental fleet between locations.

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Risk management
Three types of generally insurable risks arise in our operations:
    legal liability arising from the operation of our vehicles (vehicle liability);
 
    legal liability to members of the public from causes other than the operation of our vehicles (general liability); and
 
    risk of property damage.
In addition, we offer optional liability insurance and other products providing insurance coverage, which create additional risk exposures for us. Our risk of property damage is also increased when we waive the provisions in our rental contracts that hold a renter responsible for damage or loss under an optional loss or damage waiver that we offer. We bear these and other risks, except to the extent the risks are transferred through insurance or contracts.
In many cases we self-insure our risks or reinsure risks through a wholly owned insurance subsidiary. We mitigate our exposure to large liability losses by maintaining excess insurance coverage, subject to deductibles, through unaffiliated carriers with respect to our domestic operations and our car rental operations in Europe. For our international operations outside Europe and for HERC’s operations in Europe, we maintain some liability insurance coverage with unaffiliated carriers. We also maintain property insurance with unaffiliated insurance carriers domestically and in Europe, subject to deductibles.
Third-party liability
In our domestic operations, we are required by applicable financial responsibility laws to maintain insurance against legal liability for bodily injury (including death) or property damage to third parties arising from the operation of our vehicles (sometimes called “vehicle liability”) in stipulated amounts. In most places, we satisfy those requirements by qualifying as a self-insurer, a process that typically involves governmental filings and demonstration of financial responsibility, which sometimes requires the posting of a bond or other security. In the remaining places, we obtain an insurance policy from an unaffiliated insurance carrier and indemnify the carrier for any amounts paid under the policy. As a result of such arrangements, we bear economic responsibility for domestic vehicle liability, except to the extent we successfully transfer such liability to others through insurance or contractual arrangements.
For our car rental operations in Europe, we have established two wholly owned insurance subsidiaries, Probus Insurance Company Europe Limited, or “Probus,” a direct writer of insurance domiciled in Ireland, and Hertz International RE Limited, or “HIRE,” a reinsurer organized in Ireland. In most European countries with company-operated locations, we purchase from Probus the vehicle liability insurance required by law, and Probus reinsures the risks under such insurance with HIRE. In the remaining countries in Europe with company-operated locations, we obtain the coverage from unaffiliated insurance carriers, which reinsure their risks with HIRE. Thus, as with our domestic operations, we bear economic responsibility for vehicle liability in our European car rental operations, except to the extent that we transfer such liability to others through insurance or contractual arrangements. For our international operations outside Europe and for HERC’s operations in Europe, we maintain some form of vehicle liability insurance coverage. The nature of such coverage, and our economic responsibility for covered losses, varies considerably. In all cases, though, we believe the amounts and nature of the coverage we obtain is adequate in light of the respective potential hazards.
Both domestically and in our international operations, from time to time in the course of our business we become legally responsible to members of the public for bodily injury (including death) or property damage arising from causes other than the operation of our vehicles (sometimes known as “general liability”). As with vehicle liability, we bear economic responsibility for general liability losses, except to the extent we transfer such losses to others through insurance or contractual arrangements.

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To mitigate our exposure to large vehicle and general liability losses domestically and in our car rental operations in Europe, we maintain excess insurance coverage with unaffiliated insurance carriers against such losses to the extent they exceed $10 million per occurrence (for occurrences domestically before December 15, 2002, and in Europe before December 15, 2003, to the extent such losses exceeded $5 million per occurrence). The coverage provided under such excess insurance policies is limited to $185 million for the current policy year ending December 14, 2005 (for occurrences between December 15, 2003 and December 14, 2004, $150 million; for occurrences between December 15, 2002 and December 14, 2003, $675 million; and for occurrences between December 15, 2001 and December 14, 2002, $725 million). For our international operations outside Europe and for HERC’s operations in Europe, we also maintain liability insurance coverage with unaffiliated carriers in such amounts as we deem adequate in light of the respective potential hazards, where such insurance is obtainable on commercially reasonable terms.
Our domestic rental contracts, both for car rental and for equipment rental, typically provide that the renter will indemnify us for liability arising from the operation of the rented vehicle or equipment (for car rentals in certain places, though, only to the extent such liability exceeds the amount stipulated in the applicable financial responsibility law). In addition, many of HERC’s domestic rental contracts require the renter to maintain liability insurance under which HERC is entitled to coverage. While such provisions are sometimes effective to transfer liability to renters, their value to us, particularly in cases of large losses, may be limited. The rental contracts used in our international operations sometimes contain provisions relating to insurance or indemnity, but they are typically more limited than those employed in our domestic operations.
In our domestic car rental operations, we offer an optional liability insurance product, Liability Insurance Supplement, or “LIS,” that provides vehicle liability insurance coverage substantially higher than state minimum levels to the renter and other authorized operators of a rented vehicle. LIS coverage is provided under excess liability insurance policies issued by an unaffiliated insurance carrier, the risks under which are reinsured with a subsidiary of ours. As a consequence of those reinsurance arrangements, rental customers’ purchases of LIS do not reduce our economic exposure to vehicle liability. Instead, our exposure to vehicle liability is potentially increased when LIS is purchased, because insured renters and other operators may have vehicle liability imposed on them in circumstances and in amounts where the applicable rental agreement or applicable law would not, absent the arrangements just described, impose vehicle liability on us.
In both our domestic car rental operations and our company-operated international car rental operations in many countries, we offer an optional product or products providing insurance coverage, or “PAI/PEC” coverage, to the renter and the renter’s immediate family members traveling with the renter for accidental death or accidental medical expenses arising during the rental period or for damage or loss of their property during the rental period. PAI/PEC coverage is provided under insurance policies issued by unaffiliated carriers or, in some parts of Europe, by Probus, and the risks under such policies either are reinsured with HIRE or another subsidiary of ours or are the subject of indemnification arrangements between us and the carriers. Rental customers’ purchases of PAI/PEC coverage create additional risk exposures for us, since we would not typically be liable for the risks insured by PAI/PEC coverage if that coverage had not been purchased.
Our offering of LIS and PAI/PEC coverage in our domestic car rental operations is conducted pursuant to limited licenses or exemptions under state laws governing the licensing of insurance producers. In our international car rental operations, our offering of PAI/PEC coverage historically has not been regulated;

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however, in the countries of the European Union and Australia, the regulatory environment for insurance intermediaries is rapidly evolving, and we cannot assure you either that we will be able to continue offering PAI/PEC coverage without substantial changes in its offering process or in the terms of the coverage or that such changes, if required, would not render uneconomic our continued offering of the coverage. Due to a change in law in Australia, we have suspended the sales of certain insurance products there; we are currently exploring ways to resume offering those products.
Provisions on our books for self-insured vehicle and other liability losses are made by charges to expense based upon evaluations of estimated ultimate liabilities on reported and unreported claims. As of June 30, 2005 and December 31, 2004, this liability was estimated at $355.3 million and $391.7 million, respectively, for our combined domestic and international operations.
Damage to our property
We bear the risk of damage to our property, unless such risk is transferred through insurance or contractual arrangements.
To mitigate our risk of large, single-site property damage losses domestically and in Europe, we maintain property insurance with unaffiliated insurance carriers, generally with a per-occurrence deductible of $3.0 million domestically and $2.5 million in Europe. For our international operations outside Europe, we also maintain property insurance coverage with unaffiliated carriers in such amounts as we deem adequate in light of the respective hazards, where such insurance is available on commercially reasonable terms.
Our rental contracts typically provide that the renter is, subject to certain exceptions, responsible for damage to or loss (including loss through theft) of rented vehicles or equipment. We generally offer an optional rental product, known in various countries as loss damage waiver, collision damage waiver, theft protection or accident excess reduction, under which we waive or limit our right to make a claim for such damage or loss. This product is not regulated as insurance, but it is subject to specific laws in roughly half of the domestic jurisdictions where we operate.
Collision damage costs and the costs of stolen or unaccounted-for vehicles and equipment, along with other damage to our property, are charged to expense as incurred.
Other risks
To manage other risks associated with our businesses, or to comply with applicable law, we purchase other types of insurance carried by business organizations, such as worker’s compensation and employer’s liability (for which we, through contracts with insurers domestically, bear the risk of the first $5 million of loss from any occurrence), commercial crime and fidelity, performance bonds and directors’ and officers’ liability insurance, from unaffiliated insurance companies in amounts deemed by us to be adequate in light of the respective hazards, where such coverage is obtainable on commercially reasonable terms. In certain cases, such insurance is obtained under policies procured by Ford.
Governmental regulation and environmental matters
Throughout the world, we are subject to numerous types of governmental controls, including those relating to prices and advertising, privacy and data protection, currency controls, labor matters, charge card operations, insurance, environmental protection, used car sales and licensing.

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Environmental
The environmental legal and regulatory requirements applicable to our operations pertain to (i) the operation and maintenance of cars, trucks and other vehicles, such as heavy equipment, buses and vans; (ii) the ownership and operation of tanks for the storage of petroleum products, including gasoline, diesel fuel and used oil; and (iii) the generation, storage, transportation and disposal of waste materials, including used oil, vehicle wash sludge and waste water. We have made, and will continue to make, expenditures to comply with applicable environmental laws and regulations.
The use of cars and other vehicles is subject to various governmental requirements designed to limit environmental damage, including those caused by emissions and noise. Generally, these requirements are met by the manufacturer, except in the case of occasional equipment failure requiring repair by us. Measures are taken at certain locations in states that require the installation of Stage II Vapor Recovery equipment to reduce the loss of vapor during the fueling process.
We operate approximately 400 underground tanks and 1,700 aboveground tanks in the United States and Canada to store petroleum products, and we believe our tanks are maintained in material compliance with environmental regulations, including federal and state financial responsibility requirements for corrective action and third-party claims due to releases. Our compliance program for our tanks is intended to ensure that (i) the tanks are properly registered with the state or other jurisdiction in which the tanks are located and (ii) the tanks have been either replaced or upgraded to meet applicable leak detection and spill, overfill and corrosion protection requirements.
We are also incurring and providing for expenses for the investigation and cleanup of contamination from the discharge of petroleum substances at our owned and leased properties, as well as contamination at other locations at which our wastes have reportedly been identified. The amount of any such expenses or related natural resource damages for which we may be held responsible could be substantial. The probable losses that we expect to incur for such matters have been accrued, and those losses are reflected in our consolidated financial statements. As of June 30, 2005, December 31, 2004 and December 31, 2003, the aggregate amounts accrued for environmental liabilities reflected in our consolidated balance sheet in “Accrued liabilities” were $5.2 million, $5.4 million and $5.9 million, respectively. The accrual represents the estimated cost to study potential environmental issues at sites deemed to require investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-going maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the site. For many sites, the remediation costs and other damages for which we ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as our connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).
With respect to cleanup expenditures for the discharge of petroleum substances at our owned or leased properties, we have received reimbursement, in whole or in part, from certain states that maintain underground storage tank petroleum cleanup reimbursement funds. Such funds have been established to assist tank owners in the payment of cleanup costs associated with releases from registered tanks. With respect to off-site locations at which our wastes have reportedly been identified, we have been and continue to be required to contribute to cleanup costs due to strict joint and several cleanup liability imposed by the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and comparable state superfund statutes.

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Environmental legislation and regulations and related administrative policies have changed rapidly in recent years, both in the United States and in other countries. There is a risk that governmental environmental requirements, or enforcement thereof, may become more stringent in the future and that we may be subject to legal proceedings brought by government agencies or private parties with respect to environmental matters. In addition, with respect to cleanup of contamination, additional locations at which wastes generated by us may have been released or disposed, and of which we are currently unaware, may in the future become the subject of cleanup for which we may be liable, in whole or part. Further, at airport-leased properties, we may be subject to environmental requirements imposed by airports that are more restrictive than those obligations imposed by environmental regulatory agencies. Accordingly, while we believe that we are in substantial compliance with applicable requirements of environmental laws, there can be no assurance that our future environmental liabilities will not be material to our consolidated financial position, results of operations or cash flows.
Dealings with renters
In the United States, car and equipment rental transactions are generally subject to Article 2A of the Uniform Commercial Code, which governs “leases” of tangible personal property. Car rental is also specifically regulated in more than half of the states of the United States. The subjects of state regulation include the methods by which we advertise, quote and charge prices, the consequences of failing to honor reservations, the terms on which we deal with vehicle loss or damage (including the protections we provide to renters purchasing loss or damage waivers) and the terms and method of sale of the optional insurance coverage that we offer. Some states (including California, New York, Nevada and Illinois) regulate the price at which we may sell loss or damage waivers, and many state insurance regulators have authority over the prices and terms of the optional insurance coverage we offer. See “—Risk management” for further discussion regarding the loss or damage waivers and optional insurance coverage that we offer renters. Internationally, regulatory regimes vary greatly by jurisdiction, but they do not generally prevent us from dealing with customers in a manner similar to that employed in the United States.
Both in the United States and internationally, we are subject to increasing regulation relating to customer privacy and data protection. In general, we are limited in the uses to which we may put data that we collect about renters, including the circumstances in which we may communicate with them. In addition, we are generally obligated to take reasonable steps to protect customer data while it is in our possession. Our failure to do so could subject us to substantial legal liability or seriously damage our reputation.
Changes in regulation
Changes in government regulation of our business have the potential to alter our business practices, or our profitability, materially. Depending on the jurisdiction, those changes may come about through new legislation, the issuance of new regulations or changes in the interpretation of existing laws and regulations by a court, regulatory body or governmental official. Sometimes those changes may have not just prospective but also retroactive effect; this is particularly true when a change is made through reinterpretation of laws or regulations that have been in effect for some time. Moreover, changes in regulation that may seem neutral on their face may have either more or less impact on us than on our competitors, depending on the circumstances. Recent or potential changes in law or regulation that affect us relate to insurance intermediaries, customer privacy and data security and rate regulation, each as described under “Risk factors––Risks related to our business––Changes in the U.S. and foreign legal and regulatory environment that impact our operations, including laws and regulations relating to the insurance products we sell, customer privacy, data security and insurance rates, could disrupt our business, increase our expenses or otherwise materially adversely affect our results of operations.”

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In addition, our operations, as well as those of our competitors, also could be affected by any limitation in the fuel supply or by any imposition of mandatory allocation or rationing regulations. We are not aware of any current proposal to impose such a regime in the United States or internationally. Such a regime could, however, be quickly imposed if there were a serious disruption in supply for any reason, including an act of war, terrorist incident or other problem affecting petroleum supply, refining, distribution or pricing.
Properties
We operate car rental locations at or near airports and in central business districts and suburban areas of major cities in North America (the United States, including Puerto Rico and the U.S. Virgin Islands, and Canada), Europe (France, Germany, Italy, the United Kingdom, Spain, the Netherlands, Switzerland, Belgium and Luxembourg), the Pacific (Australia and New Zealand) and Brazil, as well as retail used car sales locations in the United States and France. We operate equipment rental locations in North America (the United States and Canada) and Europe (France and Spain). We also operate headquarters, sales offices and service facilities in the foregoing countries in support of our car rental and equipment rental businesses, as well as small car rental sales offices and service facilities in a select number of other countries in Europe and Asia.
Of such locations, fewer than 10% are owned by us. The remaining locations are leased or operated under concessions from governmental authorities and private entities. Those leases and concession agreements typically require the payment of minimum rents or minimum concession fees and often also require us to pay or reimburse operating expenses; to pay additional rent, or concession fees above guaranteed minimums, based on a percentage of revenues or sales arising at the relevant premises; or to do both. See note 10 to the notes to our audited consolidated financial statements included in this prospectus.
We own four major facilities in the vicinity of Oklahoma City, Oklahoma at which reservations for our car rental operations are processed, global information systems are serviced and major domestic and international accounting functions are performed. We also have an owned reservation and financial center near Dublin, Ireland, at which we have centralized our European car rental reservation and customer relations and accounting functions, and we lease a reservation center in Saraland (Mobile County), Alabama to supplement the capacity of our Oklahoma City car rental reservation center. We maintain our executive offices in an owned facility in Park Ridge, New Jersey, and lease a European headquarters office near London, England.
Legal proceedings
On August 1, 2002, Jennifer Myers, an individual and on behalf of all others similarly situated, v. The Hertz Corporation was filed in the United States District Court for the Eastern District of New York. The complaint alleges a nationwide “opt-in collective action” on behalf of all Senior Station Managers, Station Managers and “B” Station Managers employed by us throughout the United States, contesting their exempt classification and seeking payment of overtime compensation under the federal Fair Labor Standards Act and seeks attorneys’ fees and costs. The complaint also contains a subclass for all such managers employed in New York for alleged violations of state labor laws. Plaintiffs have not yet been permitted to obtain a nationwide “opt-in,” as discovery has been thus far limited to the location where the plaintiffs are employed in an effort by the court to determine the viability of a nationwide action. Our motion for summary judgment was denied in March 2005, and further motion practice with respect to class certification has now commenced.

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On August 28, 2003, Naomi R. Henderson, individually and on behalf of all others similarly situated, v. The Hertz Corporation was commenced in the Superior Court of New Jersey, Essex County. Henderson purported to be a class action on behalf of all persons who purchased optional insurance products in the State of New Jersey or in other states from or through us at times that we did not have licenses to sell such insurance. The plaintiff sought unspecified compensatory damages, punitive damages, attorneys’ fees, interest and costs and an order declaring such sales of insurance to be illegal, thereby voiding or making voidable the relevant contracts. In January 2004, our motion to dismiss was granted and an order of dismissal was thereafter entered. The plaintiff has appealed the dismissal, and that appeal has now been briefed, argued and submitted to the Superior Court of New Jersey, Appellate Division for a decision.
On December 22, 2003, Stephen Moore, on behalf of himself and all others similarly situated, v. The Hertz Corporation was commenced in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida, in and for Hillsborough County. Moore purported to be a class action on behalf of persons who rented vehicles from us in Florida and were allegedly overcharged for the recovery of a tire and battery solid waste management fee and the recovery of registration fees for the issuance of Florida license plates. Similar lawsuits were separately commenced by the same plaintiff against Avis Rent A Car System Inc. and Budget Rent A Car System, Inc. In February 2004, the plaintiff filed an amended class action complaint which alleged that, in addition to the initial causes of action, we deceptively collected an improper “federal excise tax” on frequent flyer mileage awards to class members. The plaintiff sought unspecified damages for the alleged improper and wrongful acts, attorneys’ fees, costs and injunctive relief. We answered the amended complaint and discovery commenced. In January 2005, we filed a motion for summary judgment and the plaintiff filed a revised motion for class certification. In June 2005, our motion for summary judgment was granted and the plaintiff’s revised motion for class certification was denied. A final judgment was thereafter entered. In July 2005, the plaintiff filed a notice of appeal.
On March 15, 2004, Jose M. Gomez, individually and on behalf of all other similarly situated persons, v. The Hertz Corporation was commenced in the 214 th Judicial District Court of Nueces County, Texas. Gomez purports to be a class action filed alternatively on behalf of all persons who were charged a Fuel and Service Charge, or “FSC,” by us or all Texas residents who were charged a FSC by us. The complaint alleged that the FSC is an unlawful penalty and that, therefore, it is void and unenforceable. The plaintiff seeks compensatory damages, with the return of all FSC paid or the difference between the FSC and our actual costs, disgorgement of unearned profits, attorneys’ fees and costs. In response to various motions by us, the plaintiff has filed two amended complaints which scaled back the putative class from a nationwide class to a class of all Texas residents who were charged a FSC by us or by our Corpus Christi licensee. A new cause of action was also added for conversion for which the plaintiff is seeking punitive damages. After some limited discovery, we filed a motion for summary judgment in December 2004. That motion was denied in January 2005. More extensive discovery will now commence.
On November 18, 2004, Keith Kochner, individually and on behalf of all similarly situated persons, v. The Hertz Corporation was commenced in the District Court in and for Tulsa County, State of Oklahoma. As with the Gomez case , Kochner purports to be a class action, this time on behalf of Oklahoma residents who rented from us and incurred our FSC. The petition alleged that the imposition of the FSC is a breach of contract and amounts to an unconscionable penalty or liquidated damages in violation of Article 2A of the Oklahoma Uniform Commercial Code. The plaintiff seeks compensatory damages, with the return of all FSC paid or the difference between the FSC and our actual costs, disgorgement of unearned profits, attorneys’ fees and costs. In March 2005, the trial court granted our motion to dismiss the action but also granted the plaintiff the right to replead. In April 2005, the plaintiff filed an amended class action petition, newly alleging that our FSC violates the Oklahoma Consumer Protection Act and that we have been unjustly enriched, and again alleging that our FSC is unconscionable under Article 2A of the Oklahoma Uniform Commercial Code. In May 2005, we filed a motion to dismiss the amended class action petition.

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On June 29, 2005, Rene Potkay and Sylvia W. Thompson on behalf of themselves and all others similarly situated, v. The Hertz Corporation was commenced in the Circuit Court of the Twentieth Judicial Circuit in and for Lee County, Florida. Potkay purports to be a class action on behalf of all consumers who rented a vehicle from us in Florida and all consumers whose rental of a vehicle from us was initiated outside of Florida but who resided in Florida at the time of the rental who were allegedly charged a rate which is higher than the rate quoted at the time of reservation. The complaint alleges that our invoicing actions constitute a breach of contract and violate the Florida Deceptive and Unfair Trade Practices Act. The plaintiffs are seeking unspecified monetary damages, costs and disbursements, including reasonable attorney’s fees and an injunction requiring us to cease our current methods of unfair competition and to modify our invoicing practices so as not to be unfair or fraudulent. We have not yet answered the complaint.
In addition, we are currently a defendant in numerous actions and have received numerous claims on which actions have not yet been commenced for bodily injury, including death, and property damage, referred to as “PL/PD,” arising from the operation of motor vehicles and equipment rented from us and our licensees. In the aggregate, we can be expected to expend material sums to defend and settle PL/PD actions and claims or to pay judgments resulting from them.
Among the PL/PD pending actions against us are a total of 134 actions filed in Mississippi and Texas on behalf of 4,927 plaintiffs seeking damages for silicosis, which the plaintiffs allegedly sustained from the use of equipment (primarily air compressors) rented from HERC. The complaints name HERC as one of approximately 88 co-defendants (including the manufacturers of the equipment allegedly rented from HERC). PL/PD claims and actions are provided for within our PL/PD program.
In February 2005, the Hazardous Materials Division of the San Diego Department of Environmental Health, or the “Department,” indicated in writing that it was preparing to bring an administrative action against us due to an alleged noncompliance related to secondary containment testing for certain underground storage tanks located at one of our facilities. The Department verbally proposed a monetary penalty of approximately $113,000. We have responded to the Department in an effort to commence settlement discussions concerning the alleged violations.
We believe that we have meritorious defenses in the foregoing matters and will defend ourselves vigorously.
In addition to the foregoing, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries. Litigation is subject to many uncertainties, and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings, including those discussed above, could be decided unfavorably to us or any of our subsidiaries involved. Although the amount of liability with respect to these matters cannot be ascertained, potential liability in excess of related accruals is not expected to materially affect our consolidated financial position, results of operations or cash flows.

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Management
Set forth below are the names, ages and number of years employed by our company as of June 30, 2005 and current positions of our executive officers and current and proposed directors. Upon the closing of this offering, we expect to appoint additional directors to our Board of Directors. See ” — Composition of the Board of Directors after this offering” below.
                     
            Number of    
            years    
            employed    
Name   Age   by us   Position
Craig R. Koch
    58       34     Chairman of the Board and Chief Executive Officer and Director
 
                   
Paul J. Siracusa
    60       36     Executive Vice President and Chief Financial Officer and Director
 
                   
Joseph R. Nothwang
    58       29     Executive Vice President and President, Vehicle Rental and Leasing, The Americas and Pacific
 
                   
Brian J. Kennedy
    63       21     Executive Vice President, Sales & Marketing
 
                   
Gerald A. Plescia
    49       25     Executive Vice President and President, HERC
 
                   
Michel Taride
    49       19     Executive Vice President and President, Hertz Europe Limited
 
                   
Harold E. Rolfe
    47       6     Senior Vice President, General Counsel & Secretary
 
                   
Irwin Pollack
    49       26     Senior Vice President, Employee Relations
 
                   
Charles L. Shafer
    61       39     Senior Vice President, Quality Assurance & Administration
 
                   
Claude B. Burgess III
    50       25     Senior Vice President, Technology & e-Business
 
                   
Richard J. Foti
    59       26     Controller
 
                   
Robert H. Rillings
    64       43     Treasurer
 
                   
Donat R. Leclair
    53       -     Director
 
                   
Greg C. Smith
    53       -     Director
 
                   
Michael E. Bannister
    55       -     Director

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Mr. Koch was elected Chairman of the Board and Chief Executive Officer on January 1, 2004. From January 2000 until December 31, 2003 he served as President and Chief Executive Officer. From August 1993 until December 1999 he served as President and Chief Operating Officer. From February 1988 until August 1993 he served as Executive Vice President and President of North America Car Rental Operations. From May 1987 to February 1988 he served as a President and Chief Operating Officer. From October 1983 until May 1987 he served as Executive Vice President and General Manager of our Car Rental Division. From March 1980 until October 1983 he served as Vice President and General Manager. Mr. Koch has been a director on our Board of Directors since June 1994 and previously served as a director from May 1987 to July 1993 and from October 1983 to September 1985.
Mr. Siracusa has served as Executive Vice President and Chief Financial Officer since August 1997. From January 1996 to August 1997 he served as Vice President, Finance and Chief Financial Officer, Hertz International Ltd., based in England. He served as Staff Vice President and Controller Worldwide Rent A Car from August 1994 until December 1995 and has served in various other financial positions with us since 1969. Mr. Siracusa has been a director on our Board of Directors since January 2004.
Mr. Nothwang has served as Executive Vice President and President of Vehicle Rental and Leasing, The Americas and Pacific, since January 2000. From September 1995 until December 1999 he was Executive Vice President and General Manager, U.S. Car Rental Operations. From August 1993 until August 1995 he was Vice President and General Manager U.S. Car Rental Operations. Prior to that he was Division Vice President, Region Operations since 1985. He served in various other operating positions with us between 1976 and 1985.
Mr. Kennedy has served as Executive Vice President, Sales & Marketing since February 1988. From May 1987 through January 1988 he served as Executive Vice President and General Manager of our Car Rental Division, prior to which, from October 1983, he served as Senior Vice President, Marketing.
Mr. Plescia has served as Executive Vice President and President, HERC since July 1997. From September 1991 until June 1997 he served as Division Vice President, Field Operations, HERC and has served in various other operations and financial positions with us since 1979.
Mr. Taride has served as Executive Vice President and President, Hertz Europe Limited since January 2004. From January 2003 until December 2003 he served as Vice President and President, Hertz Europe Limited. From April 2000 until December 2002 he served as Vice President and General Manager, Rent A Car, Hertz Europe Limited. Form July 1998 to March 2000, he was General Manager, Rent A Car France and HERC Europe. Previously, he served in various other operating positions in Europe from 1985 to 1998.
Mr. Rolfe has served as Senior Vice President and General Counsel since October 1998 and as Secretary since May 1999. Previously he served as Vice President and General Counsel, Corporate Property Investors, New York, New York from June 1991 until September 1998.
Mr. Pollack has served as Senior Vice President, Employee Relations since January 2005. From July 1999 until December 2004 Mr. Pollack served as Division Vice President, Employee Relations, Vehicle Rental and Leasing, The Americas and Pacific. He served in various other Employee Relations positions with us from 1978 to 1999.

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Mr. Shafer has served as Senior Vice President, Quality Assurance & Administration, since January 2003. From February 1998 until December 2002 he had served as Vice President and President, Hertz Europe Limited. From January 1991 until January 1998 he was Division Vice President, Western Region Rent A Car Operations. He served in various other operating positions with us from 1966 to 1990.
Mr. Burgess has served as Senior Vice President, Technology and e-Business since February 2003. From March 2000 until January 2003 he served as Vice President, Technology and e-Business. From May 1997 until February 2000 he served as Staff Vice President, Acquisitions and Diversified Businesses. Prior to that he served as Division Vice President, Florida Rent A Car Operations from September 1993 until May 1997. He served in various other operating positions, both domestically and internationally, from 1979 to 1997.
Mr. Foti has served as Controller since July 1997. Previously he served as Staff Vice President, Internal Audit from February 1990 until June 1997. Previously he served in various other financial positions with us since 1978.
Mr. Rillings has served as Treasurer since November 1986. Previously he served in various other positions with us since 1961.
Mr. Leclair has served as Executive Vice President and Chief Financial Officer, Ford Motor Company since August 2003. Mr. Leclair has been employed by Ford or its subsidiaries in one or more additional capacities during the past five years.
Mr. Smith has served as Executive Vice President, Ford Motor Company (President, The Americas) since April 2004. Mr. Smith has been employed by Ford or its subsidiaries in one or more additional capacities during the past five years.
Mr. Bannister has served as Group Vice President, Ford Motor Company (Chairman and Chief Executive Officer, Ford Motor Credit Company) since April 2004. Mr. Bannister has been employed by Ford or its subsidiaries in one or more additional capacities during the past five years.
Composition of the Board of Directors after this offering
All directors are elected annually to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Prior to the consummation of this offering, we intend to restructure our Board of Directors. Our Board of Directors will consist of directors. We intend to appoint additional directors subject to the consummation of this offering. Each of these directors has consented to so serve. We anticipate that      , and            will be independent as determined by our Board of Directors under the applicable securities law requirements and listing standards. Ford will have the ability to change the size and composition of our Board of Directors and committees of the Board of Directors. See “Relationship with Ford.”
So long as we are entitled to do so, we intend to use the “controlled company” exception under the New York Stock Exchange rules, which eliminates the requirements that a company has a majority of independent directors on its board of directors and that has compensation and nominating and corporate governance committees composed entirely of independent directors.
Committees of the Board of Directors
The standing committees of our Board of Directors will consist of an audit committee and a compensation committee.

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Audit committee
The audit committee will consist of the following three independent directors:         , and      , and we anticipate that            will be designated by our Board of Directors as the audit committee financial expert. The audit committee will operate according to the audit committee charter to be duly adopted by our Board of Directors.
Upon completion of this offering, among other functions, the principal duties and responsibilities of our audit committee will be as follows:
    to monitor our financial reporting process and internal control system;
 
    to appoint and, if necessary, replace our independent registered public accountants from time to time, determine their compensation and other terms of engagement and oversee their work;
 
    to oversee the performance of our internal audit function;
 
    to establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters and the confidential anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and
 
    to oversee our compliance with legal, ethical and regulatory matters.
The audit committee will be required to report regularly to our Board of Directors to discuss any issues that arise with respect to the quality or integrity of our financial statements, the effectiveness of our internal control over financial reporting, our compliance with legal or regulatory requirements, the performance and independence of our independent registered public accountants, and the performance of the internal audit function.
We have adopted written Standards of Business Conduct that apply to all our employees, including our Chief Executive Officer, Chief Financial Officer and Controller. In connection with this offering, our Board of Directors will formally approve the Standards of Business Conduct and apply it to all of our directors, officers and employees. The Standards of Business Conduct will be posted on our website. We will also post any amendments to the Standards of Business Conduct, and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange, on our website.
Compensation committee
The compensation committee will consist of the following directors:         . The compensation committee will operate according to the compensation committee charter to be duly adopted by our Board of Directors.
Upon completion of this offering, among other functions, the principal duties and responsibilities of the compensation committee will be as follows:
    provide oversight on the development and implementation of the compensation policies, strategies, plans and programs for our key employees and outside directors and disclosure relating to these matters; and

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    to review and approve the compensation of our chief executive officer and our other executive officers.
Director compensation
We do not currently pay any compensation to any of our directors. In conjunction with this offering, we will be adding independent directors to our Board of Directors and plan to pay our independent directors an annual cash retainer of $      . We also plan to pay a fee for acting as committee chair or presiding director and we may grant stock options to independent directors.
Executive compensation
We have established executive compensation plans that link compensation with the performance of our company. We will periodically review our executive compensation programs to ensure that they are competitive. We are in the process of evaluating our employment compensation and stock option plans and intend to amend our existing plans and/or establish new plans in connection with this offering.
Summary compensation table
The following table shows the compensation of our Chief Executive Officer and four other most highly compensated executive officers based on salary, whom we refer to as the “named executive officers” for the years indicated.
                                                             
                                Long-Term Compensation
    Annual Compensation (1)   Awards   Payouts    
                                Restricted   Securities        
                        Other Annual   Stock   Underlying   LTIP   All Other
Name and Principal       Salary   Bonus   Compensation   Award(s)   Options   Payouts   Compensation
Position   Year   ($) (2)   ($) (3)   ($) (4)(5)   ($) (6)   # (7)   ($) (8)   ($) (9)
Craig R. Koch
  2004     910,000       2,202,200       104,754             161,000       1,600,000       6,500  
Chairman of the Board and CEO
  2003     893,846       946,400       109,911             161,000       578,400       6,000  
 
  2002     850,000       1,602,250       97,085             161,000       900,000       5,500  
 
Joseph R. Nothwang
  2004     515,000       845,115                   103,000       800,000       6,500  
Executive Vice President
  2003     502,308       392,430       6,000             103,000       289,200       6,000  
 
  2002     485,000       760,601       9,211             103,000       500,000       5,500  
 
Paul J. Siracusa
  2004     454,231       804,650       2,100             64,000       600,000       6,500  
Executive Vice President and
  2003     444,519       323,960       1,800             64,000       192,800       6,000  
Chief Financial Officer
  2002     420,000       554,190       3,150             64,000       360,000       5,500  
 
Michel Taride
  2004     475,254       757,460       163,930             52,000       240,000        
Executive Vice President
  2003     410,000       367,032       225,001             52,000       57,840        
 
  2002     314,190       226,914       102,051             12,000       60,000        
 
Gerald Plescia
  2004     373,077       613,613                   45,000       400,000       6,500  
Executive Vice President
  2003     365,000       148,044       4,287             45,000       115,680       6,000  
 
  2002     341,923       268,330       2,391             45,000       240,000       5,500  
 
(1)   Mr. Taride’s annual compensation is paid in pounds sterling which have been converted at an average exchange rate for each year (2002 — £1.00 = $1.5033; 2003 — £1.00 = $1.6400; 2004 — £1.00 = $1.8279).
 
(2)   Amounts included consist of salary payments for the respective year and amounts deferred pursuant to section 401(k) of the Internal Revenue Code of 1986, as amended, or the Code.
 
(3)   Includes bonuses earned for the respective year and paid in the subsequent year.

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(4)   For 2002, 2003 and 2004, amounts paid to Mr. Koch include personal use of our aircraft in the amounts of $73,365, $94,438 and $92,473, respectively, and tax gross-up payments related to personal use of our aircraft in the amounts of $8,189, $15,473 and $9,531, respectively. For information regarding our security policy and executive use of our aircraft, See “Security policy and valuing the use of our aircraft.”
 
(5)   Country club memberships were reimbursed to Mr. Koch ($13,031 in 2002) and Mr. Nothwang ($5,650 in 2002 and $6,000 in 2003). Amounts reimbursed for financial advice under a financial assistance program for 2002, 2003 and 2004 were as follows: Mr. Koch — $2,500, $0, $2,750; Mr. Nothwang — $3,561, $0, $0; Mr. Siracusa — $3,150, $1,800, $2,100; and Mr. Plescia - $2,391, $4,287, $0. Amounts paid to Mr. Taride include $33,824 in housing allowances, $39,159 for housing benefits, $25,189 for tax gross-up payments related to housing benefits and $3,879 in fuel allowances for 2002; $118,080 for tax equalization, $62,059 for housing benefits, $40,631 for tax gross-up payments related to housing benefits and $4,231 in fuel allowances for 2003; $43,870 for tax equalization, $68,418 for housing benefits, $46,926 for tax gross-up payments related to housing benefits and $4,716 in fuel allowances for 2004.
 
(6)   We did not grant or issue any restricted stock during the years covered by this table.
 
(7)   See “ — Stock options.”
 
(8)   Includes long term incentive bonuses earned for the respective year and paid in the subsequent year.
 
(9)   Represents the amounts contributed by us to the Income Savings Plan for the respective year. Mr. Taride does not participate in this plan.
Security policy and valuing the use of our aircraft
We own an aircraft for the purpose of encouraging and facilitating business travel by senior executives, primarily Mr. Koch, generally for travel in the United States and, less frequently, internationally. The pilots who fly our aircraft are our salaried employees. Our security policy calls for Mr. Koch to use our aircraft for most domestic travel and, where feasible and advisable, certain international travel. We believe that this policy provides several business benefits to us. Our policy is intended to ensure the personal safety of Mr. Koch, who maintains a significant public role as the leader of our company. In addition, our policy is intended to facilitate Mr. Koch’s availability and to maximize his time available for company business. The methodology that we use to value personal use of our aircraft as a perquisite calculates the incremental cost to us of providing the benefits based on the actual cost of fuel, crew expenses, on-board catering and other, small variable costs. Because our aircraft is used primarily for business travel, this valuation methodology excludes the fixed costs which do not change based on usage, such as pilots’ salaries, the purchase cost of the aircraft and fixed maintenance costs.
Stock options
The Ford Motor Company 1998 Long-Term Incentive Plan, or the “1998 Plan,” allows grants of stock options and other rights relating to Ford’s common stock. In general, whether exercising stock options is

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profitable depends on the relationship between Ford’s common stock market price and the options’ exercise price, as well as on the grantee’s investment decisions. Options that are “in the money” on a given date can become “out of the money” if the price changes on the stock market. For these reasons, we believe that placing a current value on outstanding options is highly speculative and may not represent the true benefit, if any, that may be realized by the grantee.
We also maintain the Hertz Long-Term Equity Compensation Plan, or the “1997 Plan” pursuant to which certain of our employees hold options to purchase shares of common stock of Ford. The 1997 Plan is administered by our board of directors, and no new grants have been made under this plan since Ford acquired all of our outstanding common stock in 2001. Our board of directors may allow cashless option exercises permitted under applicable laws and regulations. The number of shares issued or reserved pursuant to outstanding awards granted under this plan is subject to adjustment on account of certain corporate events. Our board of directors may amend, alter or discontinue this plan in any respect at any time, but no amendment may diminish any of the rights of a participant under any awards previously granted, without his or her written consent.
The following two tables give more information on Ford stock options granted to our named executive officers under the 1997 Plan and the 1998 Plan. Options granted in the last fiscal year were granted under the Ford Motor Company 1998 Long-Term Incentive Plan.
Option Grants in Last Fiscal Year(1)
                                         
    Individual Grants    
    Number of   % of Total                
    Securities   Options                
    Underlying   Granted to   Exercise or           Grant Date
    Options   Employees in   Base Price   Expiration   Present
Name   Granted (#)   Fiscal Year (3)   ($/Sh)   Date(4)   Value(2)(4)
Craig R. Koch
    161,000       10.8 %     13.26       3/11/14     $ 743,820  
Joseph R. Nothwang
    103,000       6.9 %     13.26       3/11/14       475,860  
Paul J. Siracusa
    64,000       4.3 %     13.26       3/11/14       295,680  
Michel Taride
    52,000       3.5 %     13.26       3/11/14       240,240  
Gerald Plescia
    45,000       3.0 %     13.26       3/11/14       207,900  
 
(1)   The exercise price of the stock options is the average of the high and low selling prices of Ford’s common stock on the New York Stock Exchange on the grant date. In general, 33% of a stock option grant can be exercised one year after the grant date, 66% after two years, and 100% after three years. Any unexercised options expire after ten years.
 
    If a grantee retires, becomes disabled, or dies, his or her options continue to be exercisable up to the normal expiration date. In most other instances of employment termination, all options generally end upon termination of employment or are exercisable for a specified period.
 
    Options are subject to certain conditions, including not engaging in competitive activity. Options generally cannot be transferred except through inheritance.
 
(2)   These values were determined using the Black-Scholes methodology and the assumptions described in note 7 to the notes to our audited consolidated financial statements included in this prospectus. The ultimate value of the options, if any, will depend on the future value of the Ford common stock and the grantee’s investment decisions, neither of which can be accurately predicted.
 
(3)   Represents percentage of options granted (1,490,500) to all of Hertz participating employees for the year ended December 31, 2004.
 
(4)   Under the 1998 Plan, once we cease to be a subsidiary of Ford, these options will expire on the fifth anniversary of our ceasing to be a subsidiary. The expiration date and grant date present value shown above have been determined without regard to this.

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Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
                                 
                    Number of Securities    
                    Underlying Unexercised   Value of Unexercised In-
                    Options at FY-End   the-Money Options at
    Shares           (#)   FY-End($)(1)
    Acquired on   Value Realized   Exercisable/   Exercisable/
Name   Exercise(#)   ($)   Unexercisable   Unexercisable
Craig R. Koch
                640,866/323,610       376,692/986,978  
Joseph R. Nothwang
                443,507/207,030       240,989/631,421  
Paul J. Siracusa
                282,063/128,640       149,741/392,339  
Michel Taride
                67,375/90,920       121,664/318,776  
Gerald Plescia
                188,989/90,450       105,287/275,864  
 
(1)   These year-end values represent the difference between the fair market value of Ford common stock subject to options (based on the Ford common stock’s closing price of $14.64 on the New York Stock Exchange on December 31, 2004) and the exercise prices of the options. “In-the-money” means that the fair market value of the stock is greater than the option’s exercise price on the valuation date.
Long-term incentive plan awards
In 1991, we established an Executive Long-Term Incentive Plan for certain officers and other key employees. The grant of awards and the size are determined by the achievement of certain qualitative and quantitative performance targets. A new five year performance cycle begins on each January 1. Performance for a specific year generally is measured against performance for the prior four year period and awards will be made in cash for performance years ending in 2005 and 2006 at the end of each performance period. The measurement criteria used for the performance year 2004 included our net income relative to the net income average for the S&P 500 and market share.
Long-Term Incentive Plan Awards in Last Fiscal Year
                                         
            Performance                    
    Number of     or Other                    
    Shares, Units     Period Until     Estimated Future Payouts under  
    or Other     Maturation     Non-Stock Price-Based Plans  
Name   Rights(#)     or Payout (1)     Threshold     Target     Maximum  
Craig R. Koch
              $ 0     $ 800,000     $ 1,600,000  
Joseph R. Nothwang
                0       400,000       800,000  
Paul J. Siracusa
                0       300,000       600,000  
Michel Taride
                0       120,000       240,000  
Gerald Plescia
                0       200,000       400,000  
 
(1)   Target and maximum award grants in place for performance year 2004 are included in the above table for the named executive officers. Payouts for performance year 2004 are included in the Summary compensation table.
Target award grants have also been made for the performance years 2005, 2006 and 2007 versus performance for the previous four year periods, respectively. The amount of the payments for the performance years subsequent to 2004 can range from zero to two times the amount of the target. Such target award grants made for performance years 2005, 2006 and 2007, respectively, to the named executive officers are as follows: Mr. Koch — $800,000, $800,000, and $800,000; Mr. Nothwang - $400,000, $400,000 and $400,000; Mr. Siracusa — $300,000, $300,000 and $300,000; Mr. Taride — $180,000, $240,000 and $240,000 and Mr. Plescia — $200,000, $200,000 and $200,000.

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Employment agreement
Mr. Koch currently serves us under an employment agreement which expires on April 30, 2010. The employment agreement is automatically extended for one additional year on May 1 of each year unless, not later than December 31st of the preceding year, we or Mr. Koch shall have given notice not to extend the agreement.
Under the employment agreement, Mr. Koch is currently employed as our Chairman and Chief Executive Officer, and the employment agreement provides that we have the absolute right to change Mr. Koch’s duties and position at any time.
The employment agreement also provides that Mr. Koch shall receive a base salary as reviewed and increased by us from time to time, subject to the condition that once increased, the base salary cannot be reduced below such increased amount for the remainder of the term of Mr. Koch’s employment agreement. In addition, the employment agreement provides that Mr. Koch shall be entitled to participate in our incentive compensation plan, retirement, savings and stock option plans and fringe benefits or perquisites policy in effect from time to time.
The employment agreement allows us to terminate Mr. Koch’s employment before the expiration of the agreement’s term for “cause” (a narrowly defined list of bad acts set forth in the agreement) or due to his “disability” (as defined below), or upon his death. Upon a termination of Mr. Koch’s employment for “cause,” he would be paid his accrued annual base salary through the date of termination and all other obligations we have under the employment agreement will cease.
If Mr. Koch becomes disabled from full-time employment for six consecutive months, and he shall not have returned to full-time performance of his duties within 30 days after written notice of termination, he may be terminated for disability. During such period of absence, he would receive his annual base salary, incentive compensation and participate in retirement, savings and stock option plans. Thereafter, he would participate in retirement, savings and stock option plans in accordance with our disability insurance plans and policies. If Mr. Koch dies, all compensation and benefits then accrued shall be paid to his estate or designated beneficiaries.
The employment agreement does not allow us or Mr. Koch to terminate the employment agreement for any reason other than as described above. However, a separate change in control agreement, discussed below, does provide for certain compensation in the event of certain terminations of employment following a change in control of us.
Under the employment agreement, Mr. Koch has also agreed, during and after the term of his employment, not to disclose any secret or confidential information relating to us, Ford or any subsidiaries or affiliates of us or Ford.
Change in control and non-compete agreements
We and Ford have entered into agreements with each of the named executive officers which provide for certain compensation and benefits upon certain terminations of employment following a “change in control” of us, as described below, and provide for certain non-compete and non-solicitation terms that the executives have agreed to for our benefit. Each of the agreements only applies to a change in control which occurs within three years of the effective date of each agreement. However, if prior to either the occurrence of a change in control or the expiration of each agreement, a public offering of our shares occurs, then the terms of each agreement shall continue to apply for an initial period of two years following the date of the public offering; if no change in control occurs during this initial period, each agreement will be automatically extended each year for additional one-year periods, unless we or the executive give 180 days written notice that the terms will not be extended. A “change in control” means the direct or indirect acquisition by any person or group within a 24-month period of our securities entitling such person or group to exercise 50% or more of the combined voting power of our securities, the transfer by sale, merger or otherwise of all or substantially all of our business or assets to any person or group within a 24-month period or the adoption of a plan of liquidation or dissolution applicable to us. However, a change in control will not occur as a result of a public offering of our shares, a spin-off of us by Ford, any acquisition or transfer of us to Ford or any affiliate of Ford or a management buy-out where the executive has contributed at least 1% of the purchase price from his own funds and immediately following such a purchase, the executive and our other senior managers as a group, separate and apart from any other financing parties involved in such a purchase, have a non-forfeitable ownership interest in us of at least 25% of our outstanding equity interests.

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Each change in control agreement provides that the executive will be entitled to the severance benefits described below if we terminate the executive’s employment following a change in control for any reason other than death, long-term disability or “cause,” or if the executive terminates the executive’s employment for “good reason.” “Cause” under the agreements consists of (i) an act of dishonesty or knowing or willful breach of fiduciary duty intended to result in the executive’s enrichment or gain at the expense of us or any of our affiliates, (ii) the commission of a felony involving moral turpitude or unlawful, dishonest or unethical conduct damaging to our reputation or image or improper and unacceptable conduct, (iii) material violation of our standards of business conduct that warrants termination, (iv) refusal to comply with the lawful directions of the executive’s superiors, (v) a deliberate, willful or intentional act that causes us substantial harm, loss or injury or (vi) material failure or inability to perform duties in a satisfactory and competent manner or to achieve reasonable profit or performance goals or objectives following warning and a reasonable opportunity to cure; provided, however, that no such failure or inability may be deemed to occur if the executive performs the duties he is reasonably expected to perform to achieve such goals or objectives. “Good reason” under the agreements consists of (i) the occurrence, without the executive’s written consent, during the two year period after a change in control of a reduction in the executive’s annual base salary, (ii) our failure to pay the executive any portion of the executive’s aggregate compensation, including annual bonus, long-term incentive and any portion of his compensation deferred under any plan, agreement or arrangement with us within 30 days, (iii) failure by us to afford the executive annual bonus and long-term cash incentive compensation target opportunities with a value that in the aggregate, is at least equal to 80% of the aggregate value of annual bonus and long-term cash incentive compensation target opportunities made available to the executive immediately prior to a change in control, (iv) certain changes in the executive’s principal work location, (v) a material diminution in the executive’s title or responsibilities, (vi) changes or terminations, in the aggregate materially adverse to the executive, in or of the terms of the health, life insurance and disability insurance benefits provided by us to the executive (or, in the case of health benefits, to the executive’s dependents) from those in effect immediately prior to the change in control or (vii) an adverse change or termination, as to the executive, of the terms of, or of the executive’s participation in, any retirement plan provided by us in which the executive participates or would, upon normal retirement, be entitled to participate or (viii) the failure of a successor to us to assume our obligations under the agreements.
Under the terms of each change in control agreement, the severance benefits we would be obligated to pay or provide upon termination of the executive’s employment in the manner described are as follows:
    a lump sum cash payment reflecting accrued but unpaid compensation equal to the sum of (i) the executive’s annual base salary earned but not paid through the date of termination, the amount of such salary attributable to vacation earned but not taken and unreimbursed expenses incurred by the executive through the date of termination, and (ii) (x) one-twelfth of the average of the annual bonuses payable to the executive, including any amounts deferred at the election of the executive, with respect to the three calendar years preceding the change in control, or (y) in the event the executive has not been eligible to earn an annual bonus from us in his position as a senior executive officer for three full calendar years preceding the change in control, one-twelfth of 100% of the target annual bonus the executive is eligible to earn in respect of the fiscal year in which the change in control occurs, or if no target annual bonus has yet been established for such fiscal year, 100% of the target annual bonus for the prior fiscal year (z) in each case multiplied by the number of full and partial months from the beginning of the calendar year during which the termination occurs;

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    a lump sum cash payment equal to a multiple, as set forth below for each executive, of the sum of (i) the executive’s annual base salary in effect immediately prior to the date of termination and (ii) (x) the average of the annual bonuses payable to the executive, including any amounts deferred at the election of the executive, with respect to the three calendar years preceding the change in control or (y) in the event the executive has not been eligible to earn an annual bonus from us in his position as a senior executive officer for three full calendar years preceding the change in control, 100% of the target annual bonus the executive is eligible to earn in respect of the fiscal year in which the change in control occurs, or if no target annual bonus has yet been established for such fiscal year, 100% of the target annual bonus for the prior fiscal year;
 
    receipt of future payouts in accordance with any Long Term Incentive Plan in which the executive participated immediately prior to the date of termination, based on the performance results at the end of each performance period in respect of which there was a Long Term Incentive Plan grant in place for the executive as of the date of termination, as if the executive had retired in a company-approved retirement;
 
    (i) maintenance, without any change in terms that is adverse to the executive, of any retirement plan of, or provided by us in which the executive, immediately prior to the date of termination, participated or would, upon normal retirement (as such term is defined in the applicable retirement plan), be entitled to participate, and (ii) credit of an additional number of years, as set forth below, to the executive’s years of age and “Years of Service” for all purposes under our SERP II (which is described below under “ – Retirement Plans”);
 
    continuation of (i) all health benefits with respect to the executive (and, to the extent applicable, the executive’s dependents) for an additional period of years, as set forth below, following the date of termination (with health benefits thereafter being available, but at the executive’s expense, until the earlier of (x) the date the executive becomes reemployed and is (along with the executive’s applicable dependents) covered, without qualification for preexisting conditions, under another employer’s health plan and (y) the date on which the executive and the executive’s spouse become eligible for coverage under any other comprehensive health benefit plan including Medicare), and (ii) all life insurance benefits, until the expiration of a set number of years, as set forth below, from the date of termination, provided, that any coverage for life insurance benefits shall cease on the date the executive becomes reemployed and receives at least an equal amount of life insurance coverage under another employer’s benefit plan;
 
    participation in our postretirement assigned car benefit plan following termination without change to the terms and conditions of our postretirement assigned car benefit plan that is adverse to the executive; and
 
    within the twelve months following the termination date, outplacement assistance up to maximum of $25,000 paid directly to an outplacement service provider.
For the purposes of the provisions above, the multiples and number of years for the following executives are: Mr. Koch, three times and three years; Mr. Nothwang, Mr. Siracusa, Mr. Taride and Mr. Plescia two and a half times and two and a half years. In addition, under the terms of each agreement, in the event that the compensation provided for in the agreement or in any other plan or arrangement covering the named executive is subject to excise tax imposed by Section 4999 of the Code, or any interests or penalties thereon, the executive will be entitled to receive a gross-up payment in an amount such that after payment by the executive of all taxes on the gross-up payment, the executive shall retain a portion of the gross-up payment equal to the excise tax. However, to the extent compensation under the agreement does not exceed 110% of the specified statutory threshold amount giving rise to excise tax, then no additional payment will be paid and the compensation will be reduced below such statutory threshold.

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In addition, in the event of a change in control, any outstanding Ford options to purchase common stock issued under Ford’s 1990 Long-Term Incentive Plan, Ford’s 1998 Long-Term Incentive Plan and our Long-Term Equity Compensation Plan are intended to be treated under such plans as continuing in effect until the earlier of five years after the date of termination or the expiration date of the applicable stock option, subject to certain conditions. However, any outstanding options granted to an executive on or after March 10, 2000 shall become immediately vested upon a termination of the executive’s employment by reason of a change in control.
Under the non-competition terms of each agreement, each named executive has agreed that while employed by us and for a period of one year following termination of employment due to a resignation, other than for a good reason under the agreement, or for cause, the executive will not directly or indirectly work, invest in or associate with any “competing enterprise,” consisting of any entity that engages in the car or equipment rental business, subject to limited exceptions. In addition, pursuant to each agreement, for a period of two years after an executive’s termination, each executive has agreed not to solicit any of our or our affiliates’ employees.
In addition, Hertz Europe Limited and Mr. Taride have entered into a Non-Compete Agreement which provides that for the twelve months after leaving employment with us, Mr. Taride will not (i) compete with us in the countries in which we operated or actively made arrangements to plan to operate during the twelve months preceding such termination of employment or (ii) solicit or entice away any key employees from us. Hertz Europe Limited would be required to give Mr. Taride twelve months notice to terminate his employment for any reason other than misconduct.
Retirement plans
Our retirement plan for U.S. employees, The Hertz Corporation Account Balance Defined Benefit Pension Plan, or the “Hertz Retirement Plan,” was established on August 30, 1985. Previously, our employees participated in the retirement plan for the employees of RCA Corporation, or the “RCA Plan.”
The Hertz Retirement Plan is tax-qualified. Contributions were made by the employees and by us up to June 30, 1987. Effective July 1, 1987, we pay the entire cost.
The benefit an employee receives under the Hertz Retirement Plan is based on a combination of the following factors:
    a percentage of final average compensation (using the highest five consecutive of the last ten years of covered compensation);
 
    years of credited service up to July 1, 1987; and
 
    the accrued value of a cash account after July 1, 1987 which gets credited each year at a predetermined percentage of compensation.
Compensation for these purposes includes salary or wages, bonuses, commissions, premium rate pay and vacation pay.
We also have non-qualified pension plans for certain of our executives, including the named executive officers, which provides benefits in excess of the qualified plans which include (1) the Benefit Equalization Plan, or “BEP,” that provides equalization benefits that cannot be provided under the Hertz Retirement Plan due to limitations imposed by the Code and (2) the Supplemental Retirement and

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Savings Plan, or “SERP,” and Supplemental Executive Retirement Plan, or “SERP II,” that, when combined with the Hertz Retirement Plan, provides a benefit generally similar to those that would have been provided if the pre-July 1, 1987 benefit formula had remained in effect until the employee’s normal retirement date. As a result of a prior change in our corporate ownership which triggered a change in control provision, the SERP may not be amended or terminated, except if necessary to maintain the qualified status of The Hertz Corporation Income Savings Plan under Section 401(a) of the Code.
Benefits payable under the plans are not reduced for Social Security or other offsets.
The following table shows the annual pension benefits payable under the Hertz Retirement Plan, or BEP, SERP and SERP II including amounts attributable to employee contributions from the RCA plan. The table indicates benefits for employees at various rates of final average compensation and years of service, based on retirement at age 65.
Pension Plan Table
                                                 
         
    Final     Years of Credited Service  
    Average      
    Compensation     20     25     30     35     40  
 
  $ 200,000     $ 62,800     $ 78,500     $ 94,200     $ 110,000     $ 125,700  
 
    400,000       126,800       158,500       190,200       222,000       253,700  
 
    600,000       190,800       238,500       286,200       334,000       381,700  
 
    800,000       254,800       318,500       382,200       446,000       509,700  
 
    1,000,000       318,800       398,500       478,200       558,000       637,700  
 
    1,200,000       382,800       478,500       574,200       670,000       765,700  
 
    1,400,000       446,800       558,500       670,200       782,000       893,700  
 
    1,600,000       510,800       638,500       766,200       894,000       1,021,700  
 
    1,800,000       574,800       718,500       862,200       1,006,000       1,149,700  
 
    2,000,000       638,800       798,500       958,200       1,118,000       1,277,700  
Pension benefits are annual lifetime benefits with five years of payments guaranteed.
Qualified pension and SERP benefits are computed by averaging the employee’s highest five consecutive years of compensation in the ten years immediately before retirement. SERP II benefits are computed by averaging the employee’s highest five years of compensation (not necessarily consecutive) in the ten years immediately before retirement.
As of December 31, 2004, the total credited years of service under the plans for each of the named executive officers were as follows: Mr. Koch, 31 years; Mr. Nothwang, 28 years; Mr. Siracusa, 32 years and Mr. Plescia, 18 years.
In addition, under a predecessor RCA Corporation executive deferred compensation plan, Mr. Koch is eligible to receive a supplemental retirement benefit of approximately $4.4 million payable in 180 monthly installments commencing November 2011. In the event Mr. Koch dies prior to the commencement of this benefit, a portion of such amount will be paid to Mr. Koch’s beneficiary in 120 monthly installments.
Mr. Taride participates in the two plans applicable to certain of our employees in Europe, the Hertz (UK) 1972 Pension Plan and the Hertz (UK) Supplementary Unapproved Pension Scheme. These two plans are generally similar defined benefit plans that provide for, in the case of Mr. Taride, 1/30 th of his final salary

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for each year of service in the plans subject to a maximum of two-thirds of his final salary at the time of his retirement. Under these plans, Mr. Taride has a right to retire at age 60. As of December 31, 2004, Mr. Taride had total credited years of service under these plans of 5 years.
We also have a postretirement assigned car benefit plan available to our officers at the level of senior vice president and above. Participation in the plan requires participation in the demonstration vehicle evaluation program as an active employee, a minimum of 20 years service with us and retirement at the age of 58 or above. Under the program we provide the participant with a car from our fleet and insure the car on the participant’s behalf. The benefit is only available for a maximum of 15 years postretirement or until the participant reaches the age of 80, whichever is greater. Upon the death of the participant the vehicle then assigned to the participant will pass to the participant’s surviving spouse.
Income Savings Plan
Our Income Savings Plan, or the “Hertz Savings Plan,” was established on August 30, 1985. Prior to that date, qualified employees participated in the RCA Income Savings Plan. The assets and liabilities maintained under that plan were transferred as of September 1, 1985 to the Hertz Savings Plan.
 
The Hertz Savings Plan is a defined contribution plan and is available to certain full-time and part-time employees who have been credited with at least 1,000 hours of service during any calendar year. Employees covered by a collective bargaining agreement are not eligible unless their collective bargaining agreement makes the Hertz Savings Plan applicable to them.
 
Effective June 3, 2002, eligible employees may generally elect to contribute 1% to 30% of their annual eligible pretax compensation. Contributions are subject to certain limitations by Internal Revenue regulations. We contribute 50% of the first 6% of the employee’s contribution for a maximum matched contribution of 3% of the employee’s eligible compensation.
 
Our employees are immediately fully vested in their contributions and related earnings. Effective January 1, 2002, our contributions made to employees after that date become fully vested after the employee completes three or more years of service. Prior to January 1, 2002, employees became fully vested in the amount contributed by us and related earnings after completing five years of service.
 
Each plan member determines to which fund, or funds, their contributions will be applied. The funds include a variety of equity and fixed income funds.

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Ownership of common stock
Ford Holdings LLC, a wholly owned subsidiary of Ford, currently owns            shares of Class A common stock and            shares of Class B common stock, 100% of our common stock. Upon completion of this offering, Ford will indirectly beneficially own      % of the outstanding Class A common stock (       % if the underwriters exercise their option to purchase additional shares) and 100% of the outstanding Class B common stock and, accordingly, will own common stock representing approximately      % of the economic interest in us and representing approximately      % of the combined voting power of our outstanding common stock. See “Relationship with Ford.”
The principal executive offices of Ford are located at One American Road, Dearborn, Michigan 48121.

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Relationship with Ford
Immediately prior to this offering, Ford through its wholly owned subsidiary, Ford Holdings LLC, is our only stockholder. Upon completion of this offering, Ford will beneficially own       % of the outstanding Class A common stock (       % if the underwriters’ over-allotment option is exercised in full) and      % of the outstanding Class B common stock (which Class B common stock is entitled to five votes per share on any matter submitted to a vote of our stockholders). Upon completion of this offering, the common stock beneficially owned by Ford will represent in the aggregate      % of the combined voting power of all of our outstanding common stock (or      % if the underwriters’ over-allotment option is exercised in full). For as long as Ford continues to beneficially own shares of common stock representing more than 50% of the combined voting power of our common stock, Ford will be able to direct the election of all of the members of our Board of Directors and exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations involving us, the acquisition or disposition of assets by us, the incurrence of indebtedness by us, the issuance of any additional common stock or other equity securities, the repurchase or redemption of common stock or preferred stock and the payment of dividends. Similarly, Ford will have the power to determine or significantly influence the outcome of matters submitted to a vote of our stockholders, will have the power to prevent a change in control of us and could take other actions that might be favorable to Ford. See “Description of capital stock.”
Ford has indicated to us that it expects, subject to market conditions, to completely divest its ownership in us. Ford is not subject to any obligation, contractual or otherwise, to retain its controlling interest in us, except that we and Ford, our directors, executive officers and certain other employees have agreed, subject to certain exceptions, not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of common stock or any of our securities which are substantially similar to shares of common stock for a period of 180 days after the date of this prospectus without the prior written consent of the joint book-running managers, subject to certain limitations and limited extensions. As a result, there can be no assurance concerning the period of time during which Ford will maintain its beneficial ownership of our common stock owned by it following this offering. See “Underwriting.”
Beneficial ownership of at least 80% of the total voting power and 80% of the total number of shares of each class of nonvoting capital stock, if any, is required in order for Ford to be able to effect a tax-free spin-off or certain other tax-free transactions with respect to us.
Ford will also have an option available to it to purchase additional shares of Class B common stock and/or nonvoting capital stock to maintain its then-existing percentage of the total voting power and value of us. Additionally, with respect to shares of nonvoting capital stock, Ford will have an option to purchase such additional shares so as to maintain ownership of 80% of each outstanding class of such stock.
Certain of our airport concession agreements require the consent of the airport authority in connection with changes in ownership of us. We will seek those consents in connection with this offering except where not obtaining them will not, in our view, have a material adverse effect on our consolidated financial position or results of operations. In the event that Ford seeks to dispose of any of its common stock following this offering, additional consents will be required. For a description of certain provisions of the Restated Certificate of Incorporation concerning the allocation of business opportunities that may be suitable for both us and Ford, See “Description of capital stock—Certain certificate of incorporation and by-law provisions—Corporate opportunities.” Certain of our credit facilities impose consolidated net worth tests on us if Ford ceases to own at least 51% of the voting control of all of our capital stock then outstanding as described under “Restrictive covenants––Minimum consolidated net worth and maximum consolidated senior debt to consolidated net worth ratio.”

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Set forth below are descriptions of certain agreements, relationships and transactions between us and Ford.
Master Supply and Advertising Agreement
On July 5, 2005, we, one of our wholly owned subsidiaries and Ford signed a Master Supply and Advertising Agreement, effective July 5, 2005 and expiring August 31, 2010, that covers the 2005 through 2010 vehicle model years. This agreement replaces and supersedes the joint advertising and vehicle supply agreements that would have expired August 31, 2007.
The terms of the Master Supply and Advertising Agreement only apply to our fleet requirements and advertising in the United States and to “Ford,” “Lincoln” or “Mercury” brand vehicles, or “Ford Vehicles,” and include Ford’s agreement to pay to us one-half of our advertising costs each year subject to a minimum purchase obligation by us and the number of Ford Vehicles acquired. Under the Master Supply and Advertising Agreement, Ford has agreed to supply to us and we have agreed to purchase from Ford, during each of the 2005 through 2010 vehicle model years, a specific number of Ford Vehicles. To be eligible for cost reimbursement under the Master Supply and Advertising Agreement, the advertising must meet certain conditions, including the condition that we feature Ford Vehicles in a manner and with a prominence that is reasonably satisfactory to Ford. It further provides that the amounts Ford will be obligated to pay to us for our advertising costs will be increased or reduced according to the number of Ford Vehicles acquired by us in any model year, provided Ford will not be required to pay any amount for our advertising costs for any year if the number of Ford Vehicles acquired in the corresponding model year is less than a specified minimum except to the extent that our failure to acquire the specified minimum number of Ford Vehicles is attributable to the availability of Ford Vehicles or Ford vehicle production is disrupted for reasons beyond the control of Ford.
We anticipate that the advertising contributions payable by Ford beginning with the 2005 vehicle model year will be less than the advertising contributions we received from Ford for the 2004 model year. We do not expect that the reductions in Ford’s advertising contributions will have a material adverse effect on our results of operations.
Under the terms of the Master Supply and Advertising Agreement we will be able to enter into vehicle advertising and supply agreements with other automobile manufacturers in the United States and in other countries, and we intend to explore those opportunities. However, we cannot assure you that we will be able to obtain advertising contributions from other automobile manufacturers that will mitigate the anticipated reduction in Ford’s advertising contributions.
Corporate Agreement
The Corporate Agreement will provide that we will grant to Ford a continuing option, assignable to any of its subsidiaries, to purchase, under certain circumstances, additional shares of Class B common stock or shares of nonvoting capital stock of us, referred to as the “Stock Option.” The Stock Option may be exercised simultaneously with the issuance of any equity security by us (other than in this offering or upon the exercise of the underwriters’ over-allotment option), with respect to Class B common stock, only to the extent necessary to maintain its then-existing percentage of the total voting power and value of us and, with respect to shares of nonvoting capital stock, to the extent necessary to own 80% of each outstanding class of such stock. The purchase price of the shares of Class B common stock purchased upon any exercise of the Stock Option, subject to certain exceptions, will be based on the market price of the Class A common stock, and the purchase price of nonvoting capital stock will be the price at which such stock may be purchased by third parties. The Stock Option expires in the event that Ford reduces its beneficial ownership of common stock in us to less than 20% of the value of the total outstanding shares of common stock.

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The Corporate Agreement will also provide that, upon the request of Ford, we will use our best efforts to effect the registration under the applicable federal and state securities laws of any of the shares of common stock and nonvoting capital stock (and any other securities issued in respect of or in exchange for either) beneficially owned by Ford for sale in accordance with Ford’s intended method of disposition thereof, and will take such other actions as may be necessary to permit the sale thereof in other jurisdictions, subject to certain specified limitations. Ford will also have the right which, subject to certain limitations, it may exercise at any time and from time to time, to include the shares of common stock beneficially owned by it in certain other registrations of our common equity securities initiated by us or on our behalf or on behalf of our other stockholders. We will agree to pay all out-of-pocket costs and expenses in connection with each such registration that Ford requests or in which Ford participates. Subject to certain limitations specified in the Corporate Agreement, such registration rights will be assignable by Ford and its assigns. The Corporate Agreement will contain indemnification and contribution provisions (i) by Ford and its permitted assigns for the benefit of us and related persons and (ii) by us for the benefit of Ford and the other persons entitled to effect registrations of common stock (and other securities) pursuant to its terms and related persons.
The Corporate Agreement will also provide that for so long as Ford (directly or indirectly) owns shares of capital stock having more than 50% of the total voting power of all capital stock outstanding of us, we may not take any action or enter into any commitment or agreement which may reasonably be anticipated to result, with or without notice and with or without lapse of time, or otherwise, in a contravention (or an event of default) by Ford of: (i) any provision of applicable law or regulation, including but not limited to provisions pertaining to the Code or the Employee Retirement Income Security Act of 1974, as amended; (ii) any provision of Ford’s certificate of incorporation or by-laws; (iii) any credit agreement or other material instrument binding upon Ford or its assets or (iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction over Ford or its assets.
In addition, pursuant to the Corporate Agreement, we have entered into a merger agreement with two wholly-owned, newly created subsidiaries, The Hertz Holdings Corporation and Hertz Merger Subsidiary, Inc., and with Ford in order to provide that upon the satisfaction of certain conditions and in connection with a tax-free spin-off, Ford may elect to cause us to implement a holding company structure pursuant to Section 251(g) of the Delaware General Corporation Law without a stockholder vote, all as described under “Description of capital stock—Merger agreement.”
Tax-Sharing Agreement
Prior to this offering, we have been included in Ford’s federal consolidated income tax group, and our federal income tax liability has been included in the consolidated federal income tax liability of Ford and its subsidiaries. In certain circumstances, certain of our subsidiaries have been included with certain Ford subsidiaries in combined, consolidated or unitary income tax groups for state and local tax purposes. We and Ford have entered into a tax-sharing agreement, or the “Tax-Sharing Agreement,” which we and Ford will amend in connection with this offering. Pursuant to the amended Tax-Sharing Agreement, we and Ford will make payments to each other such that, with respect to any period ending on or prior to the date of this offering, the amount of taxes to be paid by us, or the amount of tax benefit to be refunded to us by Ford, subject to certain adjustments, will be determined as though we were to file separate federal, state and local income tax returns (including, except as provided below, any amounts determined to be due as a result of a redetermination of the tax liability of Ford arising from an audit or otherwise) as the common parent of an affiliated group of corporations filing combined, consolidated or unitary (as applicable) federal, state and local returns rather than a consolidated subsidiary of Ford with respect to federal, state

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and local income taxes. Moreover, with respect to periods beginning after the date of this offering (or beginning on or prior to and ending after such date), Ford will pay us for the unused net operating losses of such hypothetical affiliated group with us as the common parent for periods ending on or prior to the date of this offering. With respect to foreign tax credits, our right to reimbursement will be determined based on the usage of such foreign tax credits by the Ford consolidated group. To the extent that we are allocated any tax assets of the Ford consolidated group that exceed the amounts reflected on our balance sheet as of the date of this offering, we will make a payment to Ford in an amount equal to the tax benefit of such excess.
In determining the amount of tax-sharing payments under the amended Tax-Sharing Agreement, Ford will prepare or cause to be prepared pro forma returns with respect to federal and applicable state and local income taxes that reflect the same positions and elections used by Ford in preparing the returns for Ford’s consolidated group and other applicable groups. Ford will continue to have all the rights of a parent of a consolidated group (and similar rights provided for by applicable state and local law with respect to a parent of a combined, consolidated or unitary group), will be the sole and exclusive agent for us in any and all matters relating to the income, franchise and similar liabilities of us, will have sole and exclusive responsibility for the preparation and filing of consolidated federal and consolidated or combined state and local income tax returns (or amended returns), and will have the power, in its sole discretion, to contest or compromise any asserted tax adjustment or deficiency and to file, litigate or compromise any claim for refund on behalf of us related to such return.
Each member of a consolidated group is severally liable for the federal income tax liability of each other member of the consolidated group. Accordingly, although the amended Tax-Sharing Agreement will allocate tax liabilities between us and Ford, for any period during which we were included in Ford’s consolidated group, we could be liable for tax liabilities not allocated to us under the Tax-Sharing Agreement in the event that any federal tax liability is not discharged by any other member of Ford’s consolidated group. See “Risk factors—Risks related to our business––Ford controls us and may have conflicts of interest with us or you in the future.”
We will not be included in Ford’s federal consolidated income tax group after this offering.
Pursuant to the amended Tax-Sharing Agreement, we will agree that, until Ford and its affiliates own 50% or less of the total combined voting power of our outstanding capital stock, we (i) will not knowingly take or fail to take any action that could reasonably be expected to preclude Ford’s ability to effectuate a tax-free spin-off of our common stock that it owns pursuant to Section 355 of the Code and (ii) will not issue any of our stock (or instruments convertible, exercisable or exchangeable into any of our stock) in an acquisition or offering if, immediately after such issuance, Ford would, or would reasonably be expected to, not own the requisite amount of our stock that is necessary to effectuate such a tax-free spin-off. Pursuant to the amended Tax-Sharing Agreement, in the event that Ford effectuates a spin-off of our stock that it owns, we will agree that, during the two year period following such spin-off, we will not, without the consent of Ford, take certain actions without first obtaining a tax opinion or ruling that such actions will not result in increased taxes for Ford or its stockholders as a result of the failure of Ford’s spin-off of our stock to be tax-free pursuant to Section 355 of the Code. In the event that Ford effectuates a spin-off of our common stock that it owns and such spin-off is not tax-free pursuant to Section 355 of the Code, the taxes incurred by Ford or its stockholders will generally be borne by Ford if the taxes result from certain actions or omissions of Ford, and will generally be borne by us if the taxes result from certain of our actions or omissions. If the taxes incurred by Ford or its stockholders do not result from certain actions or omissions of Ford, and do not result from certain of our actions or omissions, then we will generally be responsible for a percentage of such taxes equal to the quotient of the fair market value of our issued and outstanding common stock, divided by the sum of the fair market value of our issued and outstanding common stock and the fair market value of Ford’s issued and outstanding common stock.

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Commercial paper dealer agreements
We maintain agreements with Ford Financial Services, Inc., or “FFS,” a NASD registered broker/dealer and an indirect wholly owned subsidiary of Ford, whereby FFS acts as a sales agent for our secured and unsecured domestic commercial paper programs. We pay fees to FFS, which range from 0.03% to 0.05% per annum of commercial paper placed depending upon the monthly average dollar value of the notes outstanding in the portfolios. For the six months ended June 30, 2005, we paid fees to FFS of $74,096. For the year ended December 31, 2004, we paid FFS $89,148 of such fees. FFS is under no obligation to purchase any of the notes for its own account. On July 13, 2005, we entered into a letter agreement with FFS which amended the agreements to provide that they will automatically terminate at any time Ford ceases to own shares having more than 50% of the total voting power of all of our outstanding capital stock. Through our subsidiary Hertz Australia Pty. Limited, we also have a similar agreement with Ford Credit Australia Limited, also an indirect wholly owned subsidiary of Ford. Hertz Australia Pty. Limited no longer maintains an active commercial paper program.
Line of credit
Ford has extended to us a $500.0 million line of credit, which currently expires June 30, 2007. This line of credit has an evergreen feature that provides on an annual basis for automatic one year extensions of the expiration date, unless notice is provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminates however, at any time Ford ceases to own, directly or indirectly, shares of our capital stock having more than 50% of the total voting power of all capital stock outstanding of us. Our obligations under this line of credit rank pari passu with our senior unsecured debt securities. A commitment fee of 0.2% per annum is payable on the unused available credit. On May 2, 2005, we borrowed $250.0 million under the line of credit which we repaid on May 31, 2005 with borrowings under our Interim Credit Facility.
Intercompany Notes
On each of June 10, 2005 and      , 2005, we issued Intercompany Notes to Ford in the amounts of $1,185.0 million and $      , respectively, as dividends on all of our then outstanding common stock. The Intercompany Notes are subordinated in right of payment to all of our existing and future senior indebtedness. The Intercompany Notes each mature on June 10, 2010, but may be prepaid in whole at any time or in part from time to time. Interest on each of the Intercompany Notes will be payable in cash quarterly or on or before the maturity date of the Intercompany Notes, subject to certain limitations on payment contained in the Interim Credit Facility. The Intercompany Note issued on June 10, 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of 200 basis points and the Intercompany Note issued on         , 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of            basis points. We intend to repay the Intercompany Notes with the proceeds of this offering and the offering of the Equity Units.
Other relationships and transactions
We and Ford also engage in other transactions in the ordinary course of our respective businesses. These transactions include HERC’s providing equipment rental services to Ford, our providing insurance claim management services to Ford and our providing car rental services to Ford. We are named as an additional insured under certain of Ford’s insurance policies for which we pay our allocated portion of the premiums.

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Description of indebtedness
In connection with the funding of our domestic operations, we maintain committed credit facilities, unsecured and asset backed medium-term and long-term debt and active unsecured and asset backed commercial paper programs. For additional information regarding our indebtedness, see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources,” note 7 to the notes to our unaudited condensed consolidated financial statements, and note 3 to the notes to our audited consolidated financial statements included in this prospectus.
Senior credit facilities
As of June 30, 2005, we had committed credit facilities totaling $2.8 billion.
A portion of our committed credit facilities are represented by a combination of multi-year, 364-day global and other committed credit facilities provided by 20 participating banks, which as of June 30, 2005 totaled $1.3 billion in commitments. In addition to direct borrowings by us, the multi-year and 364-day global facilities allow certain of our subsidiaries to borrow on the basis of a guarantee by us.
    The multi-year facilities were renegotiated effective July 1, 2005 and as of June 30, 2005 totaled $952.5 million in commitments with expirations as follows: $35.0 million on June 30, 2006, $108.0 million on June 30, 2007, $102.0 million on June 30, 2008, $81.0 million on June 30, 2009 and $626.5 million on June 30, 2010. The multi-year facilities that expire in 2010 have an evergreen feature, which provides for the automatic extension of the expiration date one year forward unless the bank provides timely notice.
 
    During 2005, the 364-day global committed credit facilities, which totaled $94.0 million as of June 16, 2005, were renegotiated and currently expire on June 15, 2006. Under the terms of the 364-day facilities, we are permitted to convert any amount outstanding prior to expiration into a two-year loan.
 
    The other committed facilities totaled $178.9 million as of June 30, 2005 and expire at various times during 2005 and 2006.
Some of our committed credit facilities are represented by facilities that support our ABS program, which as of June 30, 2005 totaled $1.0 billion:
    Effective September 18, 2002, as part of the ABS program, we transferred a portion of the 364-day global committed credit facilities to the ABS program. As part of the agreement to transfer these commitments, we have waived the right to transfer them back to the 364-day global committed credit facilities without the consent of the participating banks. As of June 30, 2005, $814.0 million was committed under this facility which expires in June 2006.
 
    In addition to the transfer of the 364-day commitments, we raised committed credit support through an ABS letter of credit from banks that participate in our multi-year global committed credit facilities, which totaled $215.0 million as of June 30, 2005 and expires in June 2007. In exchange for this credit support, we agreed to reduce the banks’ multi-year facility commitment by one half of the amount of their ABS letter of credit participation.

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In addition to these committed credit facilities, in February 1997, Ford extended to us a line of credit of $500.0 million, which currently expires June 30, 2007. This line of credit has an evergreen feature that provides on an annual basis for automatic one-year extensions of the expiration date, unless notice is provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminates however, at any time Ford ceases to own, directly or indirectly, our capital stock having more than 50% of the total voting power of all our capital stock outstanding and all loans and accrued interest under this facility would become immediately due and payable. Our obligations under this agreement would rank pari passu with our senior debt securities. A quarterly commitment fee of 0.2% is payable to Ford on the average daily unused available credit. On May 2, 2005, we borrowed $250.0 million under this line of credit, which we repaid on May 31, 2005 with borrowings under the Interim Credit Facility discussed below.
On May 26, 2005, we entered into the Interim Credit Facility with an aggregate availability of up to $3.0 billion with the joint book-running managers of this offering and/or their affiliates as the arrangers and initial lenders, JPMorgan Chase Bank, N.A. as the U.S. administrative agent and JPMorgan Chase Bank, N.A., Toronto Branch as the Canadian administrative agent. The Interim Credit Facility, as amended on July 5, 2005, provides a term facility of up to $1,650.0 million and a revolving credit facility of up to $700.0 million available to The Hertz Corporation and a term facility of up to $350.0 million and a revolving credit facility of up to $300.0 million available to our Canadian subsidiary, Hertz Canada Limited, guaranteed by The Hertz Corporation, with unutilized capacity under the Canadian tranches available to be borrowed by The Hertz Corporation. Amounts under the term facilities are available to be borrowed from May 26, 2005 to July 26, 2005 and were fully drawn. Amounts under the revolving facilities are available to be borrowed throughout the term of the Interim Credit Facility. The Interim Credit Facility matures on November 23, 2005. We may elect a combination of per annum interest rates on the Interim Credit Facility including the federal funds rate plus 0.50%, JPMorgan Chase Bank, N.A.’s prime rate, LIBOR and, for loans made to Hertz Canada Limited, a Canadian base rate or Canadian prime rate, plus, in each case, a margin based on our then-current S&P and Moody’s debt ratings. We are also required to pay to the lenders a quarterly facility fee equal to a rate per annum of 0.175% of the total amount of the Interim Credit Facility (such rate based upon our current S&P and Moody’s debt ratings). As of June 30, 2005, we had outstanding borrowings of approximately $1.0 billion and C$575.0 million under the Interim Credit Facility.
We are required to prepay loans and permanently reduce commitments under the Interim Credit Facility under certain limited circumstances, including certain issuances of securities (not including this offering), certain sales of assets and when Ford controls less than 25% of us or any other person or group has equal or greater control of us than Ford. Effective July 26, 2005, $1,825.0 million of the Interim Credit Facility commitments provided by the three initial external financial institutions were syndicated and allocated to eight additional external financial institutions. The Interim Credit Facility has terms, including restrictive covenants, substantially similar to the terms of our other current committed credit facilities. In addition, the Interim Credit Facility contains restrictions on the payment of any indebtedness to, or investments other than in the ordinary course of business in, Ford, other than as noted above, and our ability to pay future dividends, other than the dividend to Ford of the Intercompany Notes or additional stock, payments pursuant to certain stock option plans or other benefit plans, or any dividend in connection with this offering or the concurrent offering of Equity Units. We have used and continue to use the amounts borrowed under the Interim Credit Facility to refinance existing, short-term indebtedness and for general corporate purposes. We intend to repay the Interim Credit Facility from the proceeds received from a combination of issuances of additional asset backed securities under our ABS program, accessing the commercial paper market and issuing unsecured senior debt securities.

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Senior notes
As of June 30, 2005, we had outstanding approximately $4.6 billion aggregate principal amount of senior debt securities issued under, and subject to the terms of, the senior indentures described below under “— Restrictive covenants.” The senior debt securities are unsecured obligations, having fixed and floating interest rates ranging from 4.4% to 9.3% as of June 30, 2005, and having maturities ranging from July 2005 to January 2028.
Intercompany Notes
On each of June 10, 2005 and      , 2005, we issued Intercompany Notes to Ford in the amounts of $1,185.0 million and $            , respectively, as dividends on all of our then outstanding common stock. The Intercompany Notes are subordinated in right of payment to all of our existing and future senior indebtedness. The Intercompany Notes each mature on June 10, 2010, but may be prepaid in whole at any time or in part from time to time. Interest on each of the Intercompany Notes will be payable in cash quarterly or on or before the maturity date of the Intercompany Notes, subject to certain limitations on payment contained in the Interim Credit Facility. The Intercompany Note issued on June 10, 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of 200 basis points and the Intercompany Note issued on         , 2005 has a per annum interest rate equal to three-month LIBOR plus a spread of            basis points. We intend to repay the Intercompany Notes with the proceeds of this offering and the concurrent offering of the Equity Units.
Asset backed securitization program
During 2002, we established an ABS program to reduce borrowing costs and enhance financing resources for our domestic car rental fleet. All debt issued under the ABS program is collateralized by the assets of the special purpose entities consisting of revenue earning vehicles used by us in our car rental business, restricted cash and certain receivables related to revenue earning vehicles. The ABS program provided for the initial issuance of asset backed commercial paper (up to $1.0 billion) and the subsequent issuance of asset backed medium-term notes.
On March 31, 2004 we issued $600.0 million of asset backed Medium-Term Notes under the ABS program. Of the $600.0 million of the Medium-Term Notes, $500.0 million has fixed interest rates ranging from 2.4% to 3.2% and maturities ranging from 2007 to 2009 and the remaining $100.0 million has a variable interest rate based on the one-month LIBOR rate plus nine basis points (3.4% as of June 30, 2005) and matures in 2007. As of June 30, 2005, $600.0 million aggregate principal amount of Medium-Term Notes was outstanding. Payments of principal and interest relating to the Medium-Term Notes are insured to the extent provided in a note guaranty insurance policy issued by MBIA Insurance Corporation.
As of June 30, 2005, $849.5 million of asset backed commercial paper was outstanding under the ABS program. The average interest rate as of June 30, 2005 was 3.2%. The collateralized commercial paper has a maximum term of 58 days when issued. As of June 30, 2005, the outstanding commercial paper and Medium-Term Notes were collateralized by $1,431.1 million net book value of revenue earning vehicles, $49.0 million of receivables and $7.4 million of restricted cash. The restricted cash is to be used for the purchase of revenue earning vehicles or for the repayment of outstanding indebtedness under the ABS program. Restricted cash is included in “Cash and equivalents” in the consolidated balance sheet.

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Debt of foreign operations
Borrowing for our international operations also consists of loans obtained from local and international banks and commercial paper programs established in Ireland, Canada, the Netherlands, Belgium and Australia. We guarantee only the commercial paper borrowings of our subsidiaries in Ireland, Canada, the Netherlands and Belgium, and guarantee commercial paper and short-term bank loans of our subsidiary in Australia. All borrowings by international operations either are in the international operation’s local currency or, if in non-local currency, hedged to minimize foreign exchange exposure. As of June 30, 2005, total debt for the foreign operations was $1,896.7 million, of which $1,649.1 million was short-term (original maturity of less than one year) and $247.6 million was long-term. As of June 30, 2005 total amounts outstanding under the commercial paper programs in Ireland, Canada, the Netherlands and Belgium were $243.5 million, $31.0 million, $27.2 million and $15.8 million, respectively.
Euro medium-term note program
On July 2, 2004, we established a Euro Medium-Term Note Program under which we and/or HFC can issue up to €650.0 million in Euro Notes. On July 16, 2004, HFC issued €200.0 million of Euro Notes under this program. The Euro Notes are fully guaranteed by us, mature in July 2007, and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points. As of June 30, 2005, the interest rate on the Euro Notes was 3.24%.
Restrictive covenants
We have issued senior debt securities, including the senior debt securities described under “—Senior notes” above, (i) under an indenture, dated April 1, 1986, as amended and supplemented, between us and JPMorgan Chase Bank, N.A., as trustee, which we refer to as the 1986 Senior Indenture (approximately $205 million outstanding as of June 30, 2005), (ii) under an indenture, dated December 1, 1994, between us and Wachovia Corporate Trust, as trustee, which we refer to as the 1994 Senior Indenture (approximately $2.0 billion outstanding as of June 30, 2005), and (iii) under an indenture, dated as of March 16, 2001, between us and The Bank of New York, as trustee, which we refer to as the 2001 Senior Indenture (approximately $2.4 billion outstanding as of June 30, 2005). Collectively, we refer to the 1986 Senior Indenture, the 1994 Senior Indenture and the 2001 Senior Indenture as the Senior Indentures. We may in the future issue additional senior debt securities under the 2001 Senior Indenture. We may in the future issue senior subordinated debt securities under an indenture, dated as of June 1, 1989, between us and The Bank of New York, as trustee, which we refer to as the Senior Subordinated Indenture. We may in the future issue junior subordinated debt securities under an indenture, dated as of July 1, 1993, between us and Citibank, N.A., as trustee, which we refer to as the Junior Subordinated Indenture. Collectively, we refer to the Senior Subordinated Indenture and the Junior Subordinated Indenture as the Subordinated Indentures.
We are subject to the following restrictive covenants, each of which appears in one or more of the Senior Indentures, the Subordinated Indentures, our global committed credit facilities and the fiscal agency agreement under which notes have been and may in the future be issued under the Euro Medium-Term Note Program. In addition, we will be subject to certain restrictive covenants under our Interim Credit Facility discussed above under “—Senior credit facilities.”

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Limitations on dividends
Our ability to pay dividends is restricted. Such restriction provides that we may not pay dividends, purchase, redeem or invest in our own shares or permit purchases, redemptions or investments by Restricted Subsidiaries, as defined below, in our shares subsequent to December 31, 1985 if, together with total investments by us and our Restricted Subsidiaries in subsidiaries that are not Restricted Subsidiaries made subsequent to such specified date, the aggregate of any such dividends or investments exceeds the sum of (i) $185,000,000, plus (or minus in the case of a deficit) (ii) the consolidated net income (or net loss) of us and our Restricted Subsidiaries earned subsequent to December 31, 1985, plus (iii) the aggregate net proceeds received from capital stock, including rights or warrants to purchase capital stock and indebtedness converted into capital stock, issued subsequent to December 31, 1985. We have identified certain subsidiaries as “Restricted Subsidiaries.” In addition, our Board of Directors can, after the date of an indenture, designate additional subsidiaries as Restricted Subsidiaries. Under certain circumstances Restricted Subsidiaries may be redesignated as unrestricted. Notwithstanding the limitations above, we are permitted to pay any management, administrative, general overhead or similar charge to any of our controlling stockholders or other affiliates, or pay to any member of the same consolidated group for tax purposes any amounts in lieu of taxes. After giving effect to this offering, the concurrent offering of Equity Units and related use of proceeds together with the contemporaneous transactions described under “Capitalization,” approximately $        of consolidated stockholder’s equity is expected to be free of such limitations. The Interim Credit Facility contains additional restrictions on our ability to pay dividends. See “Description of indebtedness—Senior credit facilities.”
Limitations on mergers
We may not, subject to certain exceptions, consolidate with, merge into, or sell, convey or transfer our properties and assets substantially as an entirety to another person, if, as a result thereof, any property owned by us or a Restricted Subsidiary, immediately prior thereto would become subject to any security interest, unless the applicable debt securities issued by us under the applicable indenture are secured equally and ratably with (or prior to) the debt secured by such security interest.
Limitations on certain loans and advances
We may not, and may not permit any Restricted Subsidiary to, make or permit to exist any loan or advance to any person owning more than 50% of the outstanding voting stock of us or to any affiliate of such person (other than us or a Restricted Subsidiary) if the aggregate outstanding amount of senior indebtedness of us and our Restricted Subsidiaries exceeds 400% of the consolidated net worth and subordinated indebtedness of us and our Restricted Subsidiaries.
Limitations on secured debt
Subject to certain exceptions, including those set forth below, we may not create, incur, assume or guarantee, and may not cause, suffer or permit a Restricted Subsidiary to create, incur, assume or guarantee, any secured indebtedness without making effective provisions whereby the debt securities then outstanding issued under the applicable indentures and any other indebtedness of or guaranteed by us or such Restricted Subsidiary then entitled thereto, subject to applicable priorities of payment, shall be secured by the security interest securing such secured indebtedness equally and ratably with any and all other obligations and indebtedness thereby secured (subject, however, to applicable priorities of payment) so long as such secured indebtedness remains outstanding. However, the foregoing prohibition will not be applicable to:
  (i)   any security interest in favor of us or a Restricted Subsidiary;
 
  (ii)   certain pre-existing security interests;

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  (iii)   security interests existing on property at the time it is acquired by us or a Restricted Subsidiary, provided, such security interest is limited to all or part of the property so acquired;
 
  (iv)   (a) any security interest existing on the property of or on the outstanding shares or indebtedness of a corporation at the time such corporation shall become a Restricted Subsidiary or (b) subject to the provisions referred to above under “—Limitations on mergers,” any security interest on property of a corporation existing at the time such corporation is merged into or consolidated with us or a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of a corporation as an entirety or substantially as an entirety to us or a Restricted Subsidiary (provided, in each such case, that such security interest does not extend to any property owned prior to such transaction by us or any Restricted Subsidiary which was a Restricted Subsidiary prior to such transaction);
 
  (v)   mechanics’, materialmen’s, carriers’ or other like liens arising in the ordinary course of business;
 
  (vi)   certain tax liens or assessments, and certain judgment liens;
 
  (vii)   certain security interests in favor of the United States of America or any state or any agency of the United States of America;
 
  (viii)   security interests on certain business equipment;
 
  (ix)   in the case of property (other than rental equipment) acquired after certain dates by us or a Restricted Subsidiary, any security interest which secures an amount not in excess of the lesser of the purchase price or fair value of such property at the time of acquisition, provided that such security interest is limited to the property so acquired;
 
  (x)   security interests on properties financed through tax-exempt municipal obligations, provided that the security interest is limited to the property so financed; and
 
  (xi)   any refunding, renewal, extension or placement (or successive refundings, renewals, extensions or replacements), in whole or in part, of any security interest referred to in the preceding clauses (i) through (x), provided that the principal amount of indebtedness secured in such refunding, renewal, extension or replacement does not exceed that secured at the time by such security interest and that such refunding, renewal, extension or replacement is limited to all or part of the same property subject to the security interest being refunded, renewed, extended or replaced.
Notwithstanding the foregoing provisions, we and any one or more Restricted Subsidiaries may issue, assume or guarantee secured indebtedness which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with all other secured indebtedness of us and our Restricted Subsidiaries which would otherwise be subject to the foregoing restrictions (not including indebtedness permitted to be secured as described under “—Limitations on secured debt” above), and the aggregate value of the sale and leaseback transactions in existence at such time (not including sale and leaseback transactions the proceeds of which have been or will be applied in accordance with clause (ii) under “—Limitations on sale and leaseback transactions” below), do not at the time of incurrence exceed 10% of the consolidated net worth and subordinated indebtedness of us and our Restricted Subsidiaries.

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Limitations on sale and leaseback transactions
We may not, and may not permit any Restricted Subsidiary to, engage in any sale and leaseback transaction unless (i) we or such Restricted Subsidiary would be entitled, without reference to the provisions described under “—Limitations on secured debt” above, to incur secured indebtedness in an amount equal to the amount realized or to be realized upon the sale or transfer involved in such sale and leaseback transaction, secured by a security interest on the property to be leased without equally and ratably securing certain outstanding debt securities as provided under “—Limitations on secured debt” or (ii) we or a Restricted Subsidiary apply, within 120 days after such sale or transfer, an amount equal to the fair value of the property so leased (as determined by our Board of Directors) to the repayment of senior indebtedness of us or of any Restricted Subsidiary (other than senior indebtedness owed to us or any Restricted Subsidiary) then prepayable.
Minimum consolidated net worth and maximum consolidated senior debt to consolidated net worth ratio
Based on the terms of our global committed credit facilities, if Ford ceases to own at least 51% of the voting control of all of our capital stock then outstanding and (i) our senior debt credit ratings are below A- by S&P and A-3 by Moody’s, we must maintain a minimum consolidated net worth of $500.0 million and (ii) our senior debt credit ratings are below BBB+ by S&P and Baa1 by Moody’s, our consolidated senior debt to consolidated net worth ratio must not exceed 8.5 to 1.
Other restrictive covenants applicable to certain of our subsidiaries
Under the fiscal agency agreement under which notes have been and may in the future be issued under the Euro Medium-Term Note Program, HFC is subject to limitations on secured debt, limitations on sale and leaseback transactions, and limitations on mergers, all of which are comparable to those to which we are subject, except that references to Restricted Subsidiaries which appear in the descriptions of the corresponding limitations on us are not applicable to the limitations on HFC.
Under a base indenture, dated as of September 18, 2002, as amended, under which rental car asset backed notes have been and may in the future be issued under the ABS program, our subsidiary Hertz Vehicle Financing LLC is subject to numerous restrictive covenants, including restrictive covenants with respect to liens, indebtedness, benefit plans, consolidations and mergers, disposition of assets, acquisition of assets, distributions, payment of wages or salaries, loans, investments, agreements and the types of business it may conduct. Our subsidiary, Hertz Fleet Funding LLC is subject to comparable restrictive covenants under a liquidity agreement, dated as of September 18, 2002, as amended, under which it may issue asset backed commercial paper under the ABS program.
Certain of the individual credit facilities which have been extended to our international subsidiaries impose restrictive covenants and/or requirements with respect to ownership or financial ratios on those subsidiaries.

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Description of capital stock
The following is a description of the material provisions of our capital stock, as well as other material terms of our amended and restated certificate of incorporation and bylaws, as they will be in effect as of the consummation of the offering. We refer you to a form of our amended and restated certificate of incorporation, as amended, and to a form of our amended and restated bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part.
General
Our authorized capital stock consists of (i)    shares of Class A common stock, par value $0.01 per share, and            shares of Class B common stock, par value $0.01 per share, and (ii) shares of preferred stock, par value $0.01 per share. Of the            shares of Class A common stock, shares are being offered in this offering (excluding            shares subject to the underwriters’ option to purchase additional shares),             shares will be reserved for issuance upon conversion of Class B common stock into Class A common stock,       shares issuable upon the exercise of stock options have been reserved for issuance pursuant to employee benefit plans and            shares will be reserved for issuance upon settlement of the purchase contracts included in the Equity Units being offered concurrently with this offering. See “Management.” Of the            shares of Class B common stock,             shares will be outstanding and indirectly beneficially owned by Ford as of the closing date of the offering. As of the closing date of the offering, there will be no preferred stock outstanding. We will issue all shares of our capital stock in uncertificated form unless our board of directors determines that any particular series will be issued in certificated form. A description of the material terms and provisions of our restated certificate of incorporation affecting the relative rights of the Class A common stock, the Class B common stock and the preferred stock is set forth below. The following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to the form of our restated certificate of incorporation filed with the registration statement of which this prospectus forms a part and to Delaware corporate law.
Common stock
Voting rights
The holders of Class A common stock and Class B common stock generally have identical rights except that holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are entitled to five votes per share on all matters to be voted on by stockholders, subject to the right of Ford or the Class B Transferee (as defined below), as the case may be, to reduce from time to time the number of votes per share of Class B common stock by written notice to us specifying the reduced number of votes per share. Holders of shares of Class A common stock and Class B common stock are not entitled to cumulate their votes in the election of directors. Accordingly, the holders of more than 50% of the voting rights attaching to our common stock can, if they choose to do so, elect all the directors.
Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of Class A common stock and Class B common stock present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any preferred stock. Except as otherwise provided by law, and subject to any voting rights granted to holders of any outstanding preferred stock, amendments to the restated certificate of incorporation and certain reorganization, consolidation or merger transaction must be approved by a majority of the combined voting power of all Class A common stock and Class B

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common stock, voting together as a single class. However, amendments to our restated certificate of incorporation that would alter or change the powers, preferences or special rights of the Class A common stock or the Class B common stock so as to affect them adversely also must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class. Notwithstanding the foregoing, any amendment to our restated certificate of incorporation to increase or decrease the authorized shares of any class shall be approved upon the affirmative vote of the holders of a majority of the common stock, voting together as a single class. In addition, as described under “–Certain certificate of incorporation and by-law provisions—Corporate opportunities,” until the time that Ford ceases to own beneficially common stock representing at least 20% of the total voting power of all outstanding common stock, the affirmative vote of the holders of more than 80% of the total voting power of outstanding common stock shall be required to alter, amend or repeal in a manner adverse to the interests of Ford and its subsidiaries (other than us), or adopt any provision adverse to the interests of Ford and its subsidiaries (other than us), and inconsistent with, the corporate opportunity provisions set forth in our rested certificate of incorporation. Also, as described under “–Certain certificate of incorporation and by-law provisions—Provisions that may have an anti-takeover effect,” the affirmative vote of the holders of at least 75% of the total voting power of all outstanding common stock is required to amend, repeal or adopt any provision inconsistent with certain anti-takeover provisions of the restated certificate of incorporation and to alter, amend or repeal the by-laws (in addition to our Board of Directors’ right to alter, amend or repeal the by-laws).
Dividends
Holders of Class A common stock and Class B common stock will be entitled to share equally on a per share basis in all dividends if, as and when dividends are declared from time to time by our Board of Directors out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock, as described below, if any. Dividends consisting of shares of Class A common stock and Class B common stock may be paid only as follows: (i) shares of Class A common stock may be paid only to holders of shares of Class A common stock, and shares of Class B common stock may be paid only to holders of Class B common stock; and (ii) shares shall be paid proportionally with respect to each outstanding share of Class A and Class B common stock.
 
Our dividend policy following this offering is described under “Dividend policy.”
 
We may not subdivide or combine shares of either class of common stock without at the same time proportionally subdividing or combining shares of the other class.
Conversion
Each share of Class B common stock is convertible while held by Ford, any of its subsidiaries or the Class B Transferee, if any, at the option of the holder thereof into one share of Class A common stock. Following the occurrence of a distribution, if any, of shares of Class B common stock to stockholders of Ford in a transaction intended to be tax-free under section 355 of the Code, a tax-free spin-off, shares of Class B common stock shall not be convertible into shares of Class A common stock at the option of the holder thereof.
Except as provided below, any shares of Class B common stock transferred to a person other than Ford or any of its subsidiaries or the Class B Transferee or any of its subsidiaries shall automatically convert to shares of Class A common stock upon such disposition. Shares of Class B common stock representing more than a 50% economic interest in us transferred by Ford or any of its subsidiaries in a single transaction to one unrelated person, referred to as the “Class B Transferee,” shall not automatically convert to shares of Class A common stock upon such disposition. Any shares of Class B common stock

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retained by Ford or any of its subsidiaries following any such disposition to the Class B Transferee shall automatically convert to shares of Class A common stock upon such disposition. Shares of Class B common stock transferred to stockholders of Ford or stockholders of the Class B Transferee as a distribution intended to be a tax-free spin-off shall not convert to shares of Class A common stock upon the occurrence of a tax-free spin-off. Following a tax-free spin-off, we can initiate a conversion of shares of Class B common stock into shares of Class A common stock, at any time, provided that we have received an opinion of counsel or a favorable private letter ruling from the Internal Revenue Service, in either case satisfactory to Ford in its sole and absolute discretion, which shall be exercised in good faith solely to preserve the tax-free status of the spin-off (and in determining whether an opinion or ruling is satisfactory, Ford may consider, among other factors, the appropriateness of any underlying assumptions and representations if used as a basis for the opinion or ruling and Ford may determine that no opinion or ruling would be acceptable to Ford), to the effect that such conversion will not affect the tax-free treatment of the spin-off. If such an opinion or ruling is received, approval of such conversion may be submitted to a vote of the holders of our common stock. Approval of such conversion will require the affirmative vote of the holders of a majority of the shares of both the Class A common stock and Class B common stock present and voting, voting together as a single class, with each share entitled to one vote for such purpose. No assurance can be given that such conversion would be initiated or consummated. Although Ford has no current plans with respect to a tax-free spin-off of us, it will have the flexibility to effect a tax-free spin-off of us in the future.
All shares of Class B common stock shall automatically convert into Class A common stock if a tax-free spin-off has not occurred and the number of outstanding shares of Class B common stock beneficially owned by Ford or the Class B Transferee, as the case may be, falls below 20% of the aggregate number of outstanding shares of common stock. This will prevent Ford or the Class B Transferee, as the case may be, from decreasing its economic interest in us to less than 20% while still retaining control of more than 55% of our voting power. Automatic conversion of the Class B common stock into Class A common stock if a tax-free spin-off has not occurred and Ford or the Class B Transferee, as the case may be, decreases its economic interest in us to less than 20% is intended to ensure that Ford or the Class B Transferee, as the case may be, retains voting control by virtue of its ownership of Class B common stock only if it has a significant economic interest in us.
The Class B common stock shall only be convertible into Class A common stock, as contemplated above or otherwise, on a share-for-share basis.
Other rights
In the event of any merger or consolidation of us with or into another company in connection with which shares of common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash).
On liquidation, dissolution or winding up of us, after payment in full of the amounts required to be paid to holders of preferred stock, if any, all holders of common stock are entitled to share equally on a per share basis in any assets available for distribution to holders of shares of common stock.
No shares of common stock are subject to redemption or have preemptive rights to purchase additional shares of common stock.
Upon consummation of the offering, all the outstanding shares of Class A common stock will be legally issued, fully paid and nonassessable.

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Preferred stock
Our preferred stock is issuable from time to time in one or more series and with such designations and preferences for each series as shall be stated in the resolutions providing for the designation and issue of each such series adopted by our Board of Directors. The Board of Directors is authorized by our restated certificate of incorporation to determine, among other things, the voting, dividend, redemption, conversion and liquidation powers, rights and preferences and the limitations thereon pertaining to such series. The Board of Directors, without stockholder approval, may issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have certain anti-takeover effects. On      , 2005, we issued to Ford            shares of our Cumulative Preferred Stock, $0.01 par value per share. Our Cumulative Preferred Stock has a liquidation preference amount of $1,000,000 per share, accrues dividends at a rate of      % per annum on the liquidation preference amount and is redeemable at our option in whole at any time or in part from time to time at a price equal to the liquidation preference amount plus accrued and unpaid dividends. Simultaneous with this offering, we will be redeeming these shares of Cumulative Preferred Stock from Ford, including accrued and unpaid dividends, with cash on hand.
We have no present plans to issue any other shares of preferred stock. The ability of the Board of Directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change in control of us or the removal of existing management.
Merger agreement
Pursuant to the Corporate Agreement with Ford, The Hertz Corporation has entered into a merger agreement with two wholly owned, newly created subsidiaries, The Hertz Holdings Corporation, referred to as “Holdings,” and Hertz Merger Subsidiary, Inc., and with Ford in order to provide that upon the satisfaction of certain conditions and in connection with a tax-free spin-off, Ford may elect to cause us to implement a holding company structure. Pursuant to the merger agreement, Holdings would become the holding company for us. The holding company organizational structure would be effected through a merger conducted pursuant to Section 251(g) of the Delaware General Corporation Law, which provides for the formation of a holding company structure without a vote of the stockholders of the corporation in the position of The Hertz Corporation.
Pursuant to the merger agreement, each share of Class A common stock and each share of Class B common stock of The Hertz Corporation would be converted into one share of Class A common stock of Holdings and one share of Class B common stock of Holdings, respectively. As a result, each stockholder of The Hertz Corporation would become a holder of the common stock of Holdings, evidencing the same proportional interests and having the same designations, rights, powers and preferences and qualifications, limitations and restrictions as those securities that the stockholder held in The Hertz Corporation. In the merger, Hertz Merger Subsidiary, Inc. would merge with and into The Hertz Corporation, with The Hertz Corporation continuing as the surviving corporation and a wholly owned subsidiary of Holdings. In accordance with Section 251(g) of the Delaware General Corporation Law, the provisions of the certificate of incorporation, including, without limitation, those relating to the authorized capital stock and the bylaws of Holdings would be identical to those of The Hertz Corporation prior to the merger. The directors and the executive officers of Holdings would be the same individuals who were directors or executive officers of The Hertz Corporation immediately prior to the merger.
After the merger, the Class A common stock of Holdings would be listed and traded on the New York Stock Exchange under the symbol “HTZ” without interruption. In addition, Holdings would be able to succeed as registrant under the Securities Act and Exchange Act after the merger to the registration status of The Hertz

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Corporation immediately prior to the merger. We believe that under current law, the merger would constitute a tax-free transaction to stockholders for federal income tax purposes.
In connection with the merger, Holdings would adopt and assume all of our rights and obligations as (i) the primary obligor under our employment, severance, change of control or other agreements maintained by us with employees, officers, directors and independent contractors and (ii) the primary sponsor and/or plan administrator of each of our employee pension and welfare plans maintained by us immediately prior to the merger, in each case as our officers and the officers of Holdings may mutually determine is necessary or desirable. Holdings would also assume as obligor the outstanding debt and credit facilities of The Hertz Corporation immediately prior to the merger, with The Hertz Corporation continuing on as a co-obligor.
The merger agreement will be entered into among all the parties in connection with the consummation of this offering. However, the merger will only occur pursuant to the merger agreement upon Ford’s election to proceed with the merger and distribution of the stock of Holdings and the satisfaction of certain conditions, including that (i) the merger shall qualify as a reorganization within the meaning of Section 368(a) of the Code and/or a transaction described in Section 351 of the Code, (ii) the consummation of the merger and the transactions contemplated by the merger agreement shall not be prohibited or illegal under any applicable law, court order or similar restraint, and (iii) there will not have been any change in law, regulation or interpretation (formal or informal) or any order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order, in any event enacted, entered, promulgated, made public or enforced by any court or governmental or regulatory authority or instrumentality, such that we or our stockholders would be materially and adversely effected if the merger were to proceed. The parties to the merger agreement have agreed that we would be materially and adversely affected if Holdings were not able to succeed to our registration and other regulatory status under the Securities Act, the Exchange Act or any other applicable securities laws and regulations.
Certain certificate of incorporation and by-law provisions
Corporate opportunities
Our restated certificate of incorporation provides that Ford shall have no duty to refrain from engaging in the same or similar activities or lines of business as us, and neither Ford nor any officer or director thereof (except as provided below) shall be liable to us or our stockholders for breach of any fiduciary duty by reason of any such activities of Ford. In the event that Ford acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both Ford and us, Ford shall have no duty to communicate or offer such corporate opportunity to us and shall not be liable to us or our stockholders for breach of any fiduciary duty as our stockholder by reason of the fact that Ford pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to us.

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In the event that a director or officer of us who is also a director or officer of Ford acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both us and director or officer and our stockholders with respect to such corporate opportunity if such director or officer acts in a manner consistent with the following policy:
  (i)   a corporate opportunity offered to any person who is an officer of the company, and who is also a director but not an officer of Ford, shall belong to us;
 
  (ii)   a corporate opportunity offered to any person who is a director but not an officer of the company, and who is also a director or officer of Ford, shall belong to us if such opportunity is expressly offered to such person in writing solely in his or her capacity as a director of the company, and otherwise shall belong to Ford; and
 
  (iii)   a corporate opportunity offered to any person who is an officer of both the company and Ford shall belong to us if such opportunity is expressly offered to such person in writing solely in his or her capacity as an officer of the company, and otherwise shall belong to Ford.
For purposes of the foregoing:
  (i)   A director of the company who is Chairman of the Board of Directors of the company or of a committee thereof shall not be deemed to be an officer of the company by reason of holding such position (without regard to whether such position is deemed an officer of the company under the by-laws of the company), unless such person is a full-time employee of the company; and
 
  (ii)   (A) The term “company” shall mean us and all corporations, partnerships, joint ventures, associations and other entities in which we beneficially own (directly or indirectly) 50% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests, and (B) the term “Ford” shall mean Ford and all corporations, partnerships, joint ventures, associations and other entities (other than us, defined in accordance with clause (A) of this section (ii)) in which Ford beneficially owns (directly or indirectly) 50% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests.
The foregoing provisions of our restated certificate of incorporation shall expire on the date that Ford ceases to own beneficially common stock representing at least 20% of the total voting power of all outstanding common stock and no person who is a director or officer of us is also a director or officer of Ford or any of its subsidiaries (other than us).
In addition to any vote of the stockholders required by our restated certificate of incorporation, until the time that Ford ceases to own beneficially common stock representing at least 20% of the total voting power of all outstanding common stock, the affirmative vote of the holders of more than 80% of the total voting power of outstanding common stock shall be required to alter, amend or repeal in a manner adverse to the interests of Ford and its subsidiaries (other than us), or adopt any provision adverse to the interests of Ford and its subsidiaries (other than us), and inconsistent with, the corporate opportunity provisions described above. Accordingly, so long as Ford beneficially owns common stock representing at least 20% of the total voting power of all classes of outstanding common stock, it can prevent any such alteration, amendment, repeal or adoption.
Any person purchasing or otherwise acquiring common stock will be deemed to have notice of, and to have consented to, the foregoing provisions of our restated certificate of incorporation.

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Provisions that may have an anti-takeover effect
Certain provisions of our restated certificate of incorporation and by-laws summarized below may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider to be in its best interest, including attempts that might result in a premium being paid over the market price for the shares of common stock held by stockholders. In addition, these provisions may adversely affect the prevailing market price of the shares of Class A common stock.
Our restated certificate of incorporation provides that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of our directors will be not more than twelve nor less than three, with the exact number to be fixed from time to time as provided in the by-laws. The by-laws provide that, subject to any rights of holders of preferred stock to elect directors under specified circumstances, the number of directors will be fixed from time to time exclusively by resolution of the Board of Directors adopted by the vote of directors constituting a majority of the total number of directors that we would have if there were no vacancies on our Board of Directors. In addition, the restated certificate of incorporation and by-laws provide that, subject to any rights of holders of preferred stock, and unless our Board of Directors otherwise determines, any vacancies will be filled by the affirmative vote of a majority of the remaining members of the Board of Directors, though less than a quorum, or by a sole remaining director; except as otherwise provided by law, any such vacancy may not be filled by the stockholders.
Our by-laws provide for an advance notice procedure for the nomination, other than by or at the direction of the Board of Directors, of candidates for election as directors as well as for other stockholder proposals to be considered at annual meetings of stockholders. In general, notice of intent to nominate a director or raise matters at such meetings will have to be received in writing by us not less than 60 nor more than 90 days prior to the anniversary of the previous year’s annual meeting of stockholders, and must contain certain information concerning the person to be nominated or the matters to be brought before the meeting and concerning the stockholder submitting the proposal. Our restated certificate of incorporation and by-laws also provide that special meetings of stockholders may be called only by certain specified officers of us or by any such officer at the request in writing of the Board of Directors; special meetings of stockholders cannot be called by stockholders. In addition, our restated certificate of incorporation provides that any action required or permitted to be taken by stockholders may be effected by written consent; provided, however, that on and after the date on which neither Ford nor the Class B Transferee does not continue to beneficially own 50% or more of the total voting power of all outstanding common stock, any action required or permitted to be taken by stockholders may be effected only at a duly called annual or special meeting of stockholders and may not be effected by a written consent by stockholders in lieu of such a meeting.
Our restated certificate of incorporation also provides that the affirmative vote of the holders of at least 75% of the total voting power of all outstanding common stock is required to amend, repeal or adopt any provision inconsistent with the foregoing provisions of the restated certificate of incorporation. The restated certificate of incorporation and by-laws will further provide that the by-laws may be altered, amended or repealed by our Board of Directors or by the affirmative vote of the holders of at least 75% of the total voting power of all outstanding common stock.
In addition to the foregoing, certain of our airport concession agreements require the consent of the airport authority in connection with transfers of varying percentages of our common stock. See “Relationship with Ford.”

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Section 203 of the Delaware General Corporation Law
We are a Delaware corporation subject to Section 203 of the Delaware General Corporation Law, or the “Delaware Law.” Section 203 provides that, subject to certain exceptions specified therein, a corporation shall not engage in any “business combination” with any “interested stockholder” for a three-year period following the time that such stockholder becomes an interested stockholder unless:
    prior to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
 
    upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares); or
 
    on or subsequent to such time, the business combination is approved by the board of directors of the corporation and by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder. Except as specified in Section 203 of the Delaware Law, an “interested stockholder” is defined to include (x) any person that is the owner of 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation, at any time within three years immediately prior to the relevant date and (y) the affiliates and associates of any such person.
Under certain circumstances, Section 203 of the Delaware Law makes it more difficult for an “interested stockholder” to effect various business combinations with a corporation for a three-year period, although the stockholders may elect to exclude a corporation from the restrictions imposed thereunder. By virtue of its ownership of 15% or more of our outstanding voting stock for more than a three-year period, Ford and its subsidiaries are not themselves restricted from engaging in a business combination with us pursuant to Section 203 of the Delaware Law.
Limitations on directors’ liability
Our restated certificate of incorporation provides that none of our directors shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) in respect of certain unlawful dividend payments or stock redemptions or repurchases or (iv) for any transaction from which the director derived an improper personal benefit. The effect of these provisions will be to eliminate our rights and the rights of our stockholders (through stockholders’ derivative suits on behalf of us) to recover monetary damages against a director for breach of fiduciary duty as a director (including breaches resulting from grossly negligent behavior), except in the situations described above.
Transfer agent and registrar
The transfer agent and registrar for the common stock will be Computershare Investor Services, LLC.
Listing
We intend to apply for listing on the New York Stock Exchange under the symbol “HTZ.”

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Description of the Equity Units
Summary
Concurrently with this offering, we are offering, by means of a separate prospectus, $ of our % Equity Units. The Equity Units will be issued in the form of Corporate Units. Each Corporate Unit initially will consist of:
    a contract to purchase shares of our Class A common stock, which we refer to as the stock purchase contracts; and
 
    a 1/40, or 2.5%, undivided beneficial ownership interest in $1,000 principal amount of our % senior notes, which initially mature on November 16, 2015, subject to adjustment, which we refer to as the notes.
The stock purchase contract that is a component of an Equity Unit requires the holder to purchase, and us to sell, for $25, on a purchase contract settlement date (scheduled to occur on November 16, 2008, subject to deferral for up to four quarterly periods until November 16, 2009 if remarketing attempts are not successful), which we refer to as the purchase contract settlement date, a number of newly issued shares of our Class A common stock equal to a settlement rate based on the average trading price of our Class A common stock at November 16, 2008. We will also pay quarterly contract adjustment payments on each stock purchase contract at an annual rate of      % of the stated amount of $25 per Equity Unit.
Subject to the terms of the remarketing agreement, the remarketing agents agree to use their commercially reasonable efforts to sell the notes underlying the Corporate Units at a price that results in proceeds of at least 100.5% of the aggregate principal amount of the notes, which amount will include a remarketing fee payable to the remarketing agents.
Upon a failed final remarketing, holders of all notes will have the right to put their notes to us at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest. Holders of notes underlying any Corporate Unit will have a right to put their notes to us on the purchase contract settlement date after a failed final remarketing and will be deemed to have exercised such put right unless they settle the related purchase contracts with separate cash. Holders of notes that are not part of a Corporate Unit may exercise their put right upon a failed final remarketing by providing written notice within 20 business days after the failed final remarketing, and the put price will be paid to such holders on the 23rd business day after the failed final remarketing.
The stock purchase contracts
Each purchase contract underlying a Corporate Unit or Treasury Unit, see “—Creation of Treasury Units,” will obligate the holder of the purchase contract to purchase, and us to sell, on the purchase contract settlement date, for an amount in cash equal to the stated amount of the Corporate Unit or Treasury Unit, a number of newly issued shares of our Class A common stock equal to the “settlement rate.” If the initial remarketing attempt is not successful, then the purchase contract settlement date will be deferred for up to four quarterly periods, and the remarketing agents will attempt to remarket the notes on subsequent remarketing dates. The settlement rate for a deferred purchase contract settlement date will be the same rate as would have been used for the initial purchase contract settlement date. The settlement rate, subject to anti-dilution adjustments, will be calculated as described below:

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    if the applicable market value of our Class A common stock is equal to or greater than $         , which we refer to as the threshold appreciation price, the settlement rate will be             shares of our Class A common stock, which is the number of shares of our Class A common stock equal to $25 divided by the threshold appreciation price;
 
    if the applicable market value of our Class A common stock is less than the threshold appreciation price but greater than $       , which we refer to as the reference price, the settlement rate will be a number of shares of our Class A common stock equal to $25 divided by the applicable market value; and
 
    if the applicable market value of our Class A common stock is less than or equal to the reference price, the settlement rate will be shares of our Class A common stock, which is the number of shares of our Class A common stock equal to $25 divided by the reference price.
The “applicable market value” means the average of the closing price per share of our Class A common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding November 16, 2008 (regardless of whether the purchase contract settlement date is deferred beyond November 16, 2008), subject to anti-dilution adjustments. The reference price will be equal to the initial public offering price of our Class A common stock. The threshold appreciation price represents a      % appreciation over the reference price.
On the purchase contract settlement date, unless:
    a holder of Corporate Units or Treasury Units has settled the related purchase contracts prior to the purchase contract settlement date through the early delivery of cash to the purchase contract agent;
 
    a holder of Corporate Units that include applicable ownership interests in notes has settled the related purchase contracts with separate cash on the fifth business day immediately preceding a purchase contract settlement date; or
 
    a termination event has occurred,
then, the settlement of the stock purchase contracts will occur as follows:
    in the case of Corporate Units where the treasury portfolio has replaced the notes underlying the Corporate Units because of a tax event redemption, proceeds equal to the stated amount of $25 per Corporate Unit when paid at maturity of the appropriate applicable ownership interests of the treasury portfolio will automatically be applied to satisfy in full the holder’s obligation to purchase common stock under the related purchase contracts;
 
    in the case of Corporate Units where there has been a successful remarketing of the notes on the remarketing date, the portion of the proceeds from the remarketing equal to the principal amount of the notes remarketed will automatically be applied to satisfy in full the holder’s obligation to purchase shares of our Class A common stock under the related purchase contracts;
 
    in the case of Corporate Units where there has been a failed final remarketing of the notes, holders of all Corporate Units will be deemed to have automatically exercised their right to put their notes to us on the purchase contract settlement date at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest in satisfaction of such holder’s obligations to us under the related purchase contracts, thereby satisfying such obligations in full, unless, prior to 11:00 a.m., New York City time, on the second business day immediately preceding the purchase contract settlement date, such holder provides a written notice of an intention to settle the related purchase contract with separate cash and on or prior to the business day immediately preceding the purchase contract settlement date delivers to the collateral agent the purchase price in cash; and

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    in the case of Treasury Units, the principal amount of the related treasury securities, when paid at maturity, will automatically be applied to satisfy in full the holder’s obligation to purchase common stock under the related purchase contracts.
The common stock will then be issued and delivered to the holder or the holder’s designee, upon presentation and surrender of the certificate evidencing the Corporate Units or Treasury Units and payment by the holder of any transfer or similar taxes payable in connection with the issuance of the Class A common stock to any person other than the holder.
The notes that are components of the Corporate Units will be pledged to us to secure the holders’ obligations to purchase our Class A common stock from us under the stock purchase contracts.
The stock purchase contracts and the obligations of both us and the holders of the Equity Units under the stock purchase contracts automatically terminate without any further action upon certain events relating to our bankruptcy, insolvency or reorganization.
Early settlement of stock purchase contracts
Holders of Equity Units may elect to settle the stock purchase contracts early by delivering $25 in cash at any time on or prior to the fifth business day immediately preceding the purchase contract settlement date in the case of Corporate Units or any time through the second business day immediately preceding a remarketing date using cash. Optional early settlement of the stock purchase contracts results in the issuance of a number of shares of our Class A common stock equal to the minimum settlement rate, which is the same number that would be issued on the purchase contract settlement date if the applicable market value was equal to or greater than the threshold appreciation price of $      , regardless of the actual market value of our Class A common stock at the time of the optional early settlement.
If we are involved in a merger in which at least 30% of the consideration for our Class A Common Stock consists of cash or cash equivalents, then each holder of an Equity Unit will have the right to settle the component stock purchase contract at the settlement rate in effect immediately before the closing of the cash merger, based on the applicable market value of our Class A Common Stock as if the closing date of the merger was the purchase contract settlement date, by delivering $25 in cash. We refer to this as cash merger early settlement. If a holder elects cash merger early settlement, we will deliver to such holder on the cash merger early settlement date the kind and amount of securities, cash or other property that such holder would have been entitled to receive in the cash merger if it had settled the stock purchase contract immediately before the cash merger.
Following either optional early settlement or cash merger early settlement, the Equity Units of which the settled stock purchase contracts were a component will be cancelled and the related note or treasury security will be released to the holder and then will be separately transferable. Both optional early settlement and cash merger early settlement are subject to the condition that if required under the U.S. federal securities laws, we have a registration statement under the Securities Act of 1933 in effect and a prospectus available covering the Class A common stock deliverable upon settlement of a stock purchase contract. We will agree to use our commercially reasonable efforts to have a registration statement in effect and to provide a prospectus covering such Class A common stock and other securities, if any, if so required by the U.S. federal securities laws.

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Remarketing
Unless a tax event redemption date has occurred or will occur prior to the applicable remarketing date, to provide holders of Corporate Units with the proceeds necessary to be applied in the settlement of their purchase contract obligations, the notes underlying the Corporate Units will be sold in a remarketing, unless a holder elects not to participate in the remarketing. The cash proceeds from the remarketing will be used to satisfy the holders’ obligations to purchase shares of our Class A common stock on the purchase contract settlement date and any remaining proceeds will be remitted to the holders. Holders of notes held separately, and not as part of Corporate Units, may elect to participate in the remarketing as described below.
We have appointed J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Goldman, Sachs & Co. as remarketing agents and will enter into a remarketing agreement with them, which provides that we may substitute any remarketing agent at least 30 calendar days prior to any remarketing date. Subject to the terms of the remarketing agreement, the remarketing agents agree to use their commercially reasonable efforts to sell the notes underlying the Corporate Units at a price that results in proceeds of at least 100.5% if the aggregate principal amount of the notes, including a remarketing fee to be paid to the remarketing agents. To obtain that price, the remarketing agent may reset the interest rate, on a floating or fixed interest rate basis, on the notes as described below. The initial “remarketing date” will be the third business day immediately preceding November 16, 2008. If this remarketing is successful, settlement will occur on the purchase contract settlement date of November 16, 2008 (or, if such date is not a business day, settlement will occur on the following business day).
In connection with any remarketing of the notes, the remarketing agents may reset the interest rate on the notes on a floating or fixed interest rate basis, as instructed by us. The interest rate on the notes will be reset in the remarketing to whatever interest rate is necessary to induce purchasers to purchase all the notes remarketed for at least 100.5% of the aggregate principal amount of such notes.
In connection with any remarketing, we may elect, in our sole discretion, to change the stated maturity of the notes to any date not earlier than the second anniversary of the purchase contract settlement date and not later than the tenth anniversary of the purchase contract settlement date and to specify a date, not earlier than the second anniversary of the purchase contract settlement date, on and after which the notes will be redeemable at our option. In addition, we may also elect to change the interest payment dates and may add any additional financial covenants as we may determine. Any such election would take effect, upon a successful remarketing, on the purchase contract settlement date.
If the remarketing agents cannot remarket the notes on a remarketing date prior to the final scheduled remarketing date at a price that results in proceeds equal to at least 100.5% of the aggregate principal amount of the notes, then:
    the interest rate on the notes will not be reset;
 
    the remarketing agents will thereafter attempt to establish a new reset rate meeting the requirements described above and remarket the notes on subsequent remarketing dates, which will be the third business day immediately preceding February 16, 2009, May 16, 2009, August 16, 2009 and November 16, 2009;
 
    the proceeds received upon maturity of the treasury securities pledged as collateral for any Treasury Units will be used to settle the applicable purchase contracts, and any remaining cash proceeds will be remitted to the holders of the Treasury Units, and any cash pledged by holders of Corporate Units choosing not to participate in the remarketing will also be used to settle the applicable purchase contracts and the purchase contract settlement date will not be further deferred with respect to these purchase contracts, regardless of whether the remarketing attempt at that time is successful; and

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    the purchase contract settlement date for all remaining purchase contract will be deferred until the next remarketing settlement date.
Any subsequent remarketing of the notes will settle (if successful) on the corresponding purchase contract settlement date. Such remarketings will be subject to the conditions and procedures described above and holders will have the right to elect not to participate in any subsequent remarketings.
If the remarketing agents are unable to remarket the notes for settlement on or before the third business day immediately preceding November 16, 2009, a “failed final remarketing” will be deemed to have occurred. In that case:
    The interest rate on the notes will not be reset and the notes will continue to bear cash distributions at the initial rate of      % per year, payable quarterly in arrears.
 
    Holders of all notes will have the right to put their notes to us at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest.
 
    Holders of Corporate Units will be deemed to have automatically exercised this put right with respect to the notes underlying such Corporate Units unless, prior to 11:00 a.m., New York City time, on the second business day immediately preceding the purchase contract settlement date, such holder provides a written notice of an intention to settle the related purchase contract with separate cash and on or prior to the business day immediately preceding the purchase contract settlement date delivers to the collateral agent the purchase price in cash. Unless a Corporate Unit holder has settled the related purchase contracts with separate cash on or prior to the purchase contract settlement date, such holder will be deemed to have elected to apply a portion of the proceeds of the put price equal to the principal amount of the notes underlying such Corporate Units against such holder’s obligations to us under the related purchase contracts, thereby satisfying such obligations in full, and we will deliver to such holder our Class A common stock pursuant to the related purchase contracts.
Creation of Treasury Units
Unless the treasury portfolio has replaced the notes underlying the Corporate Units as a result of a tax event redemption prior to the purchase contract settlement date, each holder of Corporate Units will have the right, at any time on or prior to the applicable remarketing settlement date, except in connection with a remarketing, to substitute for the related notes held by the collateral agent, zero-coupon treasury securities that mature on the applicable settlement date, each of which we refer to as a treasury security, in a total principal amount at maturity equal to the aggregate principal amount of the notes underlying the applicable ownership interests in notes for which substitution is being made, thereby creating Treasury Units. The treasury security that underlies the Treasury Units will be pledged to us to secure the holder’s obligations under the stock purchase contract. Holders of Treasury Units may recreate Corporate Units at any time on or prior to the seventh business day preceding the purchase contract settlement date by substituting notes having a principal amount equal to the aggregate principal amount at stated maturity of the treasury securities for which substitution is being made. The components of the Corporate Units and the Treasury Units are not separately transferable while a part of the unit. Stock purchase contracts are never transferable except as part of a Corporate Unit or Treasury Unit. Notes are not transferable except as part of a Corporate Unit unless they are separated from the Corporate Unit, either through collateral substitution and creation of a Treasury Unit or following settlement of the stock purchase contracts. Treasury securities that are a component of a Treasury Unit are not transferable except as part of such Treasury Unit.

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Notes
Initially, interest on the notes will be payable quarterly at the annual rate of      % of the principal amount of the notes, to, but excluding the purchase contract settlement date. Holders of Corporate Units will receive their pro rata share of interest payments on the notes underlying their Corporate Units.
The initial maturity date of the notes will be November 16, 2015. In connection with any remarketing of the notes, we may elect, in our sole discretion, to change the stated maturity of the notes to any date not earlier than the second anniversary of the purchase contract settlement date and not later than the tenth anniversary of the purchase contract settlement date. Additionally, in connection with any remarketing, we may elect to add optional redemption provisions to the terms of the notes, provided that the notes will not be redeemable at our option prior to the second anniversary of the purchase contract settlement date. We may also elect to change the interest payment dates and may add any additional financial covenants as we may determine. Any such election would take effect, upon a successful remarketing, on the purchase contract settlement date. If no successful remarketing of the notes occurs, the maturity date of the notes will remain November 16, 2015.
In connection with the remarketing of the notes, the remarketing agents may reset the interest rate on the notes on a floating or fixed interest rate basis, as instructed by us. The interest rate on the notes will be reset in the remarketing to whatever interest rate is necessary to induce purchasers to purchase all the notes remarketed for at least 100.5% of the aggregate principal amount of such notes. The reset rate will apply to all outstanding notes, whether or not their holders participated in the remarketing and will become effective on the settlement date of the remarketing. Following a successful remarketing, from the reset effective date, interest payments on all notes will be paid in arrears on interest payment dates to be selected by us, which payment dates may be monthly, quarterly or semi-annual. If no successful remarketing of the notes occurs, interest payments on all notes will remain payable quarterly in arrears on the original quarterly interest payment dates.
Upon a failed final remarketing, holders of all notes will have the right to put their notes to us at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest. Holders of notes underlying any Corporate Units will have a right to put their notes to us on the purchase contract settlement date after a failed final remarketing and will be deemed to have exercised such put right as described under “Description of purchase contracts – Remarketing,” unless they settle the related purchase contracts with separate cash. Holders of notes that are not part of a Corporate Unit may exercise their put right upon a failed final remarketing by providing written notice within 20 business days after the failed final remarketing, and the put price will be paid to such holder on the 23rd business day after the failed final remarketing.
The notes are redeemable at our option, in whole but not in part, upon the occurrence and continuance of certain tax events. If any tax event redemption occurs prior to the earlier of a successful remarketing or a purchase contract settlement date, the redemption price for the notes that underlie the Corporate Units will be paid to the collateral agent holding the notes as security for the obligations of the holders under the purchase contracts, who will apply such redemption price to purchase a portfolio of U.S. treasury securities. Thereafter, the applicable ownership interests in such treasury portfolio will replace the notes as a component of the Corporate Units and will be pledged to us. Holders of notes that do not underlie the Corporate Units will receive the redemption price in the tax event redemption. If a tax event

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redemption occurs after the purchase contract settlement date, we may redeem the notes at par plus accrued and unpaid interest.
The notes will rank on a parity with our other senior debt securities. The indenture under which the notes will be issued will not limit our ability to issue or incur other unsecured debt or issue preferred stock.
Listing
The Corporate Units have been approved for listing on the New York Stock Exchange under the symbol “HTZ PrE,” subject to official notice of issuance.

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Shares eligible for future sale
Prior to this offering, there has been no market for the Class A common stock, and no prediction can be made as to the effect, if any, that large numbers of outstanding shares of common stock beneficially owned by Ford following this offering, or the availability of such shares for sale, will have on the market price of the Class A common stock prevailing from time to time. Nevertheless, dispositions of substantial amounts of common stock beneficially owned by Ford in the public market following this offering, or the perception that such dispositions could occur, could adversely affect prevailing market prices for the Class A common stock offered in this offering. These factors also could impair our ability to raise capital through future offerings of shares.
Upon completion of this offering, we will have            shares of Class A common stock issued and outstanding (      if the underwriters’ over-allotment option is exercised in full) and            shares of Class B common stock issued and outstanding. All of the shares of Class A common stock to be sold in this offering will be freely tradeable without restrictions or further registration under the Securities Act, except for any shares purchased by an “affiliate” of us (as that term is defined in Rule 144 adopted under the Securities Act, or “Rule 144”), which will be subject to the resale limitations of Rule 144. The outstanding shares of Class A common stock and            outstanding shares of Class B common stock that are beneficially owned by Ford have not been registered under the Securities Act and may not be sold in the absence of an effective registration statement under the Securities Act other than in accordance with Rule 144 or another exemption from registration. Ford has certain rights to require us to effect registration of shares of common stock owned by Ford, which rights may be assigned. See “Relationship with Ford—Corporate Agreement.”
The purchase contracts included in the Equity Units being offered concurrently with this offering will require us to issue up to            shares of our Class A common stock between the third and fourth anniversaries of the consummation of this offering (or sooner if holders exercise their rights to settle early) subject to certain conditions. We expect that shares of Class A common stock issued upon settlement of the purchase contracts relating to the Equity Units will be freely tradable upon issuance.
Rule 144 and Rule 144A
In general, under Rule 144, a person (or persons whose shares are required to be aggregated) who has beneficially owned shares of common stock for at least one year, including a person who may be deemed an “affiliate,” is entitled to sell, within any three-month period, a number of shares that does not exceed the greater of one percent of the total number of shares of the class of stock sold or the average weekly reported trading volume of the class of stock being sold during the four calendar weeks preceding such sale. A person who is not deemed an “affiliate” of us at any time during the three months preceding a sale and who has beneficially owned shares for at least two years is entitled to sell such shares under Rule 144 without regard to the volume limitations described above. As defined in Rule 144, an “affiliate” of an issuer is a person that directly or indirectly through the use of one or more intermediaries controls, is controlled by, or is under common control with, such issuer.
Rule 144A under the Securities Act, or “Rule 144A,” provides a non-exclusive safe harbor exemption from the registration requirements of the Securities Act for specified resales of restricted securities to certain institutional investors. In general, Rule 144A allows unregistered resales of restricted securities to a “qualified institutional buyer,” which generally includes an entity, acting for its own account or for the account of other qualified institutional buyers, that in the aggregate owns or invests at least $100 million in securities of unaffiliated issuers. Rule 144A does not extend an exemption to the offer or sale of securities that, when issued, were of the same class as securities listed on a national securities exchange or

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quoted on an automated quotation system. The shares of our common stock outstanding as of the date of this prospectus would be eligible for resale under Rule 144A because such shares, when issued, were not of the same class as any listed or quoted securities. The foregoing summary of Rule 144 and Rule 144A is not intended to be a complete description thereof.
Lock-up agreement
Ford has indicated that it expects, subject to market conditions, to completely divest its ownership in us. Ford is not subject to any obligation, contractual or otherwise, to retain its controlling interest, except that we and Ford, our directors, executive officers and certain other employees have agreed, subject to certain exceptions, not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of common stock or any of our securities which are substantially similar to shares of common stock for a period of 180 days after the date of this prospectus without the prior written consent of the joint book-running managers, subject to certain limitations and limited extensions. As a result, there can be no assurance concerning the period of time during which Ford will maintain its beneficial ownership of common stock owned by it following this offering. See “Underwriting.”

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Certain United States federal income and
estate tax consequences to non-U.S. holders
The following is a summary of certain U.S. federal income and estate tax consequences of the purchase, ownership and disposition of our Class A common stock as of the date hereof. Except where noted, this summary deals only with Class A common stock that is held as a capital asset by a non-U.S. holder.
A “non-U.S. holder,” for the purposes of this discussion, means a person (other than a partnership) that is not for U.S. federal income tax purposes any of the following:
    an individual citizen or resident of the United States;
 
    a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
 
    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
 
    a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
This summary is based upon provisions of the Code and regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of U.S. federal income and estate taxes and does not deal with foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their personal circumstances. In addition, it does not represent a detailed description of the U.S. federal income and estate tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws (including if you are a U.S. expatriate, “controlled foreign corporation,” “passive foreign investment company,” corporation that accumulates earnings to avoid U.S. federal income tax, pass-through entity or an investor in a pass-through entity). We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary.
If a partnership holds our Class A common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our Class A common stock, you should consult your tax advisors.
If you are considering the purchase of our Class A common stock, you should consult your own tax advisers concerning the particular U.S. federal income and estate tax consequences to you of the ownership of the common stock, as well as the consequences to you arising under the laws of any other taxing jurisdiction.
Dividends
Dividends paid to a non-U.S. holder of our Class A common stock generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a

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trade or business by the non-U.S. holder within the United States (and, where a tax treaty applies, are attributable to a U.S. permanent establishment of the non-U.S. holder) are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a United States person as defined under the Code, unless an applicable income tax treaty provides otherwise. Any such effectively connected dividends received by a foreign corporation may be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
A non-U.S. holder of our Class A common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required to (a) complete Internal Revenue Service Form W-8BEN (or other applicable form) and certify under penalty of perjury that such holder is not a United States person as defined under the Code and is eligible for treaty benefits or (b) if our Class A common stock is held through certain foreign intermediaries, satisfy the relevant certification requirements of applicable U.S. Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals.
A non-U.S. holder of our Class A common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service.
Gain on disposition of Class A common stock
Any gain realized on the disposition of our Class A common stock generally will not be subject to U.S. federal income tax unless:
    the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder);
 
    the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or
 
    we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes.
An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States. If a non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.
We believe we are not and do not anticipate becoming a “United States real property holding corporation” for U.S. federal income tax purposes.

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Federal estate tax
Class A Common stock held by an individual non-U.S. holder at the time of death will be included in such holder’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.
Information reporting and backup withholding
We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty.
A non-U.S. holder will be subject to backup withholding for dividends paid to such holder unless such holder certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a United States person as defined under the Code), or such holder otherwise establishes an exemption.
Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our Class A common stock within the United States or conducted through certain U.S.-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code), or such owner otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability provided the required information is furnished to the Internal Revenue Service.

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Underwriting
We are offering the shares of Class A common stock described in this prospectus through a number of underwriters. J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Goldman, Sachs & Co. are acting as joint book-running managers of the offering and as representatives of the underwriters, in the United States and internationally. We and Ford have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares of Class A common stock listed next to its name in the following table:
         
    Number  
Name   Shares  
J.P. Morgan Securities Inc.
       
Citigroup Global Markets Inc.
       
Goldman, Sachs & Co.
       
ABN AMRO Rothschild LLC
       
Barclays Bank Capital
       
Bear, Stearns & Co. Inc.
       
BNP Paribas Securities (USA) Inc.
       
Calyon Securities (USA) Inc.
       
Comerica Securities, Inc.
       
Credit Suisse First Boston LLC
       
Daiwa Securities America Inc.
       
Deutsche Bank Securities
       
Dresdner Kleinwort Wasserstein
       
Harris Nesbitt Corp.
       
HSBC Securities (USA) Inc.
       
ING Financial Markets LLC
       
Lehman Brothers Inc.
       
Mellon Financial Markets, LLC
       
Merrill Lynch, Pierce, Fenner & Smith Incorporated
       
Mizuho International plc
       
Morgan Stanley & Co. Incorporated
       
Mitsubishi Securities International plc
       
RBC Capital Markets Corporation
       
BNY Capital Markets, Inc.
       
Scotia Capital (USA) Inc.
       
UBS Investment Bank
       
Wachovia Capital Markets, LLC
       
WestLB AG
       
 
     
 
Total
       
 
     
The underwriters are committed to purchase all the Class A common stock offered by us if they purchase any shares. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.

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The underwriters propose to offer the Class A common shares directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $        per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $        per share from the initial public offering price. After the initial public offering of the shares, the offering price and other selling terms may be changed by the underwriters. Sales of shares made outside of the United States may be made by affiliates of the underwriters. The representatives have advised us that the underwriters do not intend to confirm discretionary sales in excess of 5% of the common stock offered in this offering.
At our request, the underwriters have reserved up to 5% of the shares of Class A common stock for sale at the initial public offering price to certain of our employees, retirees, directors and officers and employees, directors and officers of our affiliates and our licensees through a directed share program. The number of shares of Class A common stock available for sale to the general public in the offering will be reduced by the number of directed shares purchased by participants in the program. Any directed shares not purchased will be offered to the general public on the same basis as other shares offered hereby. We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, in connection with the sales of the reserved shares. Purchasers in the directed share program have agreed that, for a period of 25 days from the date of this prospectus (or 180 days if they are officers or directors), they will not, without the prior written consent of the joint book-running managers, dispose of or hedge any shares of our Class A common stock acquired by them in this offering.
The underwriters have an option to buy up to            additional shares of Class A common stock from us to cover sales of shares by the underwriters which exceed the number of shares specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this over-allotment option. If any shares are purchased with this over-allotment option, the underwriters will purchase shares in approximately the same proportion as shown in the table above. If any additional shares of Class A common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.
The underwriting fee is equal to the public offering price per share of Class A common stock less the amount paid by the underwriters to us per share of Class A common stock. The underwriting fee is $  per share. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.
                 
    Without     With full  
    over-allotment     over-allotment  
    exercise     exercise  
Per Share
  $       $    
Total
  $       $    
We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $       .
A prospectus in electronic format may be made available by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.

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We, our directors, executive officers, certain other employees and Ford have agreed, without the prior written consent of the joint book-running managers, not to, for a period of 180 days after the date of this prospectus, (1) offer, sell, contract to sell, pledge or otherwise dispose of any shares of our common stock or any of our securities which are substantially similar to shares of our common stock, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, shares of our common stock or any such substantially similar securities; or (2) enter into any swap, option, future, forward or other agreement that transfers, in whole or in part, the economic consequence of ownership of shares of our common stock or any securities substantially similar to shares of our common stock, whether any transaction described above in clauses (1) or (2) above is to be settled by delivery of our common stock or such other securities, in cash or otherwise. Additionally, we have agreed not to file with the SEC a registration statement under the Securities Act relating to any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock during such 180-day restricted period. Notwithstanding the foregoing, if:
    during the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to us occurs; or
 
    prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,
the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.
Notwithstanding our lock-up agreement described above, the underwriters have agreed in the underwriting agreement that we may (i) issue shares of our common stock pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this prospectus, (ii) issue shares of our common stock in connection with the transactions described in this prospectus, (iii) issue Equity Units in connection with the concurrent offering thereof. In addition, notwithstanding the lock-up agreement described above, the underwriters have agreed that our executive officers and directors may transfer shares of common stock (i) to a spouse, child or other dependent or member of immediate family or pursuant to a domestic relations order of a court of competent jurisdiction, provided that each recipient of such securities agrees to be subject to the restrictions set forth in the lock-up agreement, (ii) to any trust, family partnership or similar entity for the direct or indirect benefit of the executive officer, provided that the trust, partnership or similar entity agrees to be bound by the restrictions set forth in the lock-up agreement or (iii) in connection with the exchange or surrender of shares of common stock by stockholders to us in satisfaction or payment of the exercise price of stock options or to satisfy any tax withholding obligations of such stockholder in respect of such option exercise.
We and Ford have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.
We will apply to have our Class A common stock approved for listing on the New York Stock Exchange under the symbol “HTZ.” In order to meet the requirements for listing the shares of Class A common stock on that exchange, the underwriters have undertaken to sell lots of 100 or more shares of Class A common stock to a minimum number of 2,000 beneficial owners.
No action has been or will be taken in any jurisdiction (except the United States) that would permit a public offering of shares of our Class A common stock, or the possession, circulation or distribution of this prospectus or any material relating to us or shares of our Class A common stock in any jurisdiction where action for that purpose is required. Accordingly, the shares of our Class A common stock included

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in this offering may not be offered or sold, directly or indirectly, and neither this prospectus or any other offering material or advertisements in connection with this offering may be distributed or published, in or from any such country or jurisdiction, except in compliance with any applicable rules or regulations of any such country or jurisdiction.
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, as defined below each, a “Relevant Member State”, each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State the “Relevant Implementation Date” it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares of Class A common stock which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
  (a)   to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;
 
  (b)   to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or
 
  (c)   in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of shares to the public” in relation to any Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares of our Class A common stock to be offered so as to enable an investor to decide to purchase or subscribe for the shares of our Class A common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. The expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Each underwriter has represented, warranted and agreed that: (i) it has not made or will not make an offer of shares to the public in the United Kingdom within the meaning of section 102B of the Financial Services and Markets Act 2000, as amended, or “FSMA,” except to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances which do not require the publication by the company of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any shares of our Class A common stock included in this offering in circumstances in which section 21(1) of the FSMA does not apply to us; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.

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The shares of our Class A common stock included in this offering may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares of our Class A common stock may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of our Class A common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation or subscription or purchase, of the shares of our Class A common stock may not be circulated or distributed, nor may the shares of our Class A common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than under circumstances in which such offer, sale or invitation does not constitute an offer or sale, or invitation for subscription or purchase, of the shares of our Class A common stock to the public in Singapore.
The shares of our Class A common stock included in this offering have not been and will not be registered under the Securities and Exchange Law of Japan, or the “Securities and Exchange Law,” and each underwriter has agreed that it will not offer or sell any shares of our Class A common stock, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Certain of the underwriters are not registered as broker-dealers under Section 15 of the Exchange Act and have agreed that, in connection with this offering, they will not offer or sell any shares of our Class A common stock in, or to persons who are nationals or residents of, the United States other than through registered broker-dealers.
In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of Class A common stock in the open market for the purpose of preventing or retarding a decline in the market price of the Class A common stock while this offering is in progress. These stabilizing transactions may include making short sales of the Class A common stock, which involves the sale by the underwriters of a greater number of shares of Class A common stock than they are required to purchase in this offering, and purchasing shares of Class A common stock on the open market to cover positions created by short sales. Short sales may be

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“covered” shorts, which are short positions in an amount not greater than the underwriters’ over-allotment option referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the over-allotment option. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.
The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the Class A common stock, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase Class A common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.
These activities may have the effect of raising or maintaining the market price of the Class A common stock or preventing or retarding a decline in the market price of the Class A common stock, and, as a result, the price of the Class A common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.
Prior to this offering there has been no public market for our Class A common stock. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors, including:
    the information set forth in this prospectus and otherwise available to the representatives;
 
    the history of and prospects for the industries in which we compete;
 
    an assessment of our management;
 
    our prospects for future earnings;
 
    the general condition of the securities markets at the time of this offering;
 
    the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and
 
    other factors deemed relevant by the underwriters and us.
Neither we nor the underwriters can assure investors that an active trading market will develop for our Class A common stock, or that the shares will trade in the public market at or above the initial public offering price.

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The joint book-running managers and certain of the other underwriters and their affiliates have provided in the past to us, Ford and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us, Ford and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. Concurrently with this offering, we are also offering Equity Units for which the underwriters of this offering are also acting as underwriters under a separate underwriting agreement.
On May 26, 2005, we entered into the Interim Credit Facility with an aggregate availability of up to $3.0 billion with the joint book-running managers and/or their affiliates as the arrangers and initial lenders, JPMorgan Chase Bank, N.A. as the U.S. administrative agent and JPMorgan Chase Bank, N.A., Toronto Branch as the Canadian administrative agent. The Interim Credit Facility matures on November 23, 2005 and, under certain circumstances, we may be required to prepay all or a portion of the amounts outstanding thereunder. For further information, see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Credit facilities.” In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.
Robert E. Rubin, a member of the Office of the Chairman of Citigroup Inc., the parent company of Citigroup Global Markets Inc., is a director of Ford Motor Company. Richard A. Manoogian, a director of JPMorgan Chase & Co., is also a director of Ford Motor Company.

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Validity of the shares
The validity of the issuance of the shares of Class A common stock to be sold in this offering will be passed upon for us by Simpson Thacher & Bartlett LLP, New York, New York and for the underwriters by Shearman & Sterling LLP, New York, New York. Shearman & Sterling LLP have in the past provided, and may continue to provide, legal services to Ford and its subsidiaries.
Independent registered public accounting firm
The consolidated financial statements of us and our subsidiaries as of December 31, 2004 and 2003 and for each of the three years in the period ended December 31, 2004 and the related financial statement schedule included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to the restatement of our financial statements as described in Note 1A to the financial statements) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
With respect to the unaudited financial information of us and our subsidiaries for the six month period ended June 30, 2005 and 2004 included in this prospectus, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated August 5, 2005 appearing herein states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act for their report on the unaudited financial information because that report is not a “report” or a “part” of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Securities Act.
Where you can find additional information
We have filed with the SEC a Registration Statement on Form S-1 (together with all amendments, exhibits, schedules and supplements thereto, the Registration Statement), under the Securities Act and the rules and regulations thereunder, for the registration of the Class A common stock to be sold in this offering. This prospectus, which forms a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain parts of which have been omitted as permitted by the rules and regulations of the SEC. For further information with respect to us and the Class A common stock to be sold in this offering, please refer to the Registration Statement. Statements contained in this prospectus as to the contents of any contract or other document referred to herein are not necessarily complete and, where such contract or other document is an exhibit to the Registration Statement, each such statement is qualified in all respects by the provisions of such exhibit, to which reference is hereby made. You may read and copy any document we file at the SEC’s public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-888-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from the SEC’s website at www.sec.gov or from our website at www.hertz.com. However, neither the information we file with the SEC nor the information on our website constitutes a part of this prospectus.
We will apply to list the Class A common stock on the New York Stock Exchange under the symbol “HTZ.” Copies of the Registration Statement and reports and other information will be available for inspection and copying at the office of the New York Stock Exchange at 20 Broad Street, New York New York 10005.

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We are currently subject to abbreviated informational requirements of the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” in accordance with General Instruction I(1)(a) and (b) to Form 10-K and in accordance therewith file reports and other information with the SEC. Such reports and other information can be inspected and copied at the offices of the SEC set forth above. Copies of such material can be obtained from the Public Reference Section of the SEC at the address set forth above at prescribed rates. In addition, such material is publicly available through the SEC’s site on the Internet located at the address set forth above. As a result of the offering, we will become subject to the full informational requirements of the Exchange Act. We will fulfill our obligations with respect to such requirements by filing periodic reports and other information with the SEC.

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Index to financial statements
         
Interim unaudited condensed consolidated financial statements
       
    F-2  
    F-3  
    F-4  
    F-5  
    F-6 – 16  
 
       
Annual audited consolidated financial statements
       
    F-17  
    F-18  
    F-19  
    F-20  
    F-21 – 22  
    F-23 – 53  
    F-54  

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Report of Independent Registered Public Accounting Firm
To the Board of Directors and
     Stockholder of The Hertz Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of The Hertz Corporation and its subsidiaries (the “Company”) as of June 30, 2005, and the related condensed consolidated statements of operations and of cash flows for the six-month periods ended June 30, 2005 and June 30, 2004. These interim financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2004, and the related consolidated statements of operations, of stockholder’s equity and of cash flows for the year then ended (not presented herein), and in our report dated March 21, 2005, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2004 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.
As discussed in Note 1A to the condensed consolidated financial statements, the Company has restated its condensed consolidated statement of operations for the six-month period ended June 30, 2004.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
August 5, 2005

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THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands of Dollars)
Unaudited
                 
    June 30,     December 31,  
    2005     2004  
ASSETS
               
 
               
Cash and equivalents (Notes 3 and 7
  $ 703,947     $ 680,866  
Short-term investments (Notes 3 and 11)
    296,402       556,997  
Receivables, less allowance for doubtful accounts of $25,763 and $30,447 (Note 7)
    1,130,391       1,282,290  
Due from affiliates (Note 11)
    377,263       445,235  
Inventories, at lower of cost or market
    94,040       83,287  
Prepaid expenses and other assets (Note 7)
    161,530       144,168  
Revenue earning equipment, at cost (Notes 6, 7 and 11):
               
Cars
    10,073,730       8,380,688  
Less accumulated depreciation
    (802,210 )     (783,499 )
Other equipment
    2,677,373       2,378,673  
Less accumulated depreciation
    (783,551 )     (852,947 )
 
           
Total revenue earning equipment
    11,165,342       9,122,915  
 
           
Property and equipment, at cost:
               
Land, buildings and leasehold improvements
    1,313,920       1,296,196  
Service equipment
    1,297,185       1,232,739  
 
           
 
    2,611,105       2,528,935  
Less accumulated depreciation
    (1,332,978 )     (1,292,764 )
 
           
Total property and equipment
    1,278,127       1,236,171  
 
           
Goodwill and other intangible assets (Note 4)
    544,927       544,445  
 
           
Total assets
  $ 15,751,969     $ 14,096,374  
 
           
 
               
LIABILITIES AND STOCKHOLDER’S EQUITY
               
 
               
Accounts payable (Note 11)
  $ 1,301,329     $ 786,037  
Accrued liabilities (Note 7)
    771,550       835,680  
Accrued taxes
    149,178       130,062  
Debt (Notes 7 and 11)
    10,760,078       8,428,031  
Public liability and property damage
    355,318       391,696  
Deferred taxes on income
    907,400       849,700  
 
           
Total liabilities
    14,244,853       11,421,206  
 
           
 
Minority interest (Note 1)
    7,978       4,921  
Stockholder’s equity (Notes 7 and 11):
               
Common Stock, $0.01 par value, 3,000 shares authorized, 100 shares issued
           
Additional capital paid-in
    983,132       983,132  
Retained earnings
    414,292       1,479,217  
Accumulated other comprehensive income (Note 10)
    101,714       207,898  
 
           
Total stockholder’s equity
    1,499,138       2,670,247  
 
           
Total liabilities and stockholder’s equity
  $ 15,751,969     $ 14,096,374  
 
           
The accompanying notes are an integral part of this statement.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands of Dollars)
Unaudited
                 
    Six Months  
    Ended June 30,  
    2005     2004  
 
          Restated
Revenues:
               
Car rental
  $ 2,824,539     $ 2,551,919  
Industrial and construction equipment rental
    630,094       522,257  
Other
    48,269       38,190  
 
           
Total revenues (Note 1A)
    3,502,902       3,112,366  
 
           
Expenses:
               
Direct operating
    2,025,483       1,781,829  
Depreciation of revenue earning equipment (Note 6)
    756,437       713,742  
Selling, general and administrative
    318,905       292,369  
Interest, net of interest income of $16,863 and $9,010 (Note 7)
    212,044       182,706  
 
           
Total expenses (Note 1A)
    3,312,869       2,970,646  
 
           
Income before income taxes and minority interest
    190,033       141,720  
Provision for taxes on income (Note 5)
    (64,937 )     (49,537 )
Minority interest (Note 1)
    (5,021 )      
 
           
Net income
  $ 120,075     $ 92,183  
 
           

 

The accompanying notes are an integral part of this statement.

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THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands of Dollars)
Unaudited
                 
    Six Months  
    Ended June 30,  
    2005     2004  
Cash flows from operating activities:
               
Net income
  $ 120,075     $ 92,183  
Adjustments to reconcile net income to net cash provided by operating activities
    1,545,470       1,570,327  
 
           
Net cash provided by operating activities (Note 1)
    1,665,545       1,662,510  
 
           
 
               
Cash flows from investing activities:
               
Proceeds from sales (purchases) of short-term investments, net
    260,595       (2,324 )
Revenue earning equipment expenditures
    (7,640,642 )     (6,720,161 )
Proceeds from disposal of revenue earning equipment
    4,611,722       3,781,921  
Property and equipment expenditures
    (186,803 )     (144,048 )
Proceeds from disposal of property and equipment
    30,287       32,566  
Available-for-sale securities:
               
Purchases
          (5,566 )
Sales
    85       5,516  
Changes in investment in joint venture
          2,000  
 
           
Net cash used in investing activities (Note 1)
    (2,924,756 )     (3,050,096 )
 
           
 
               
Cash flows from financing activities:
               
Issuance of an intercompany note (Notes 7 and 11)
    1,185,000        
Proceeds from issuance of long-term debt
    9,286       1,207,967  
Repayment of long-term debt
    (505,676 )     (6,283 )
Short-term borrowings:
               
Proceeds
    1,866,998       658,355  
Repayments
    (427,877 )     (403,503 )
Ninety day term or less, net (Note 11)
    387,683       198,769  
Dividends paid (Notes 7 and 11)
    (1,185,000 )      
 
           
Net cash provided by financing activities
    1,330,414       1,655,305  
 
           
 
               
Effect of foreign exchange rate changes on cash
    (48,122 )     (17,402 )
 
           
 
               
Net increase in cash and equivalents during the period
    23,081       250,317  
 
               
Cash and equivalents at beginning of year
    680,866       609,986  
 
           
 
               
Cash and equivalents at end of period
  $ 703,947     $ 860,303  
 
           
 
               
Supplemental disclosures of cash flow information:
               
Cash paid (received) during the period for:
               
Interest (net of amounts capitalized)
  $ 208,419     $ 176,653  
Income taxes
    7,464       (6,006 )
The accompanying notes are an integral part of this statement.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note 1 — Basis of Presentation
The Hertz Corporation, together with its subsidiaries, referred to herein as “we,” “our” and “us,” is an indirect wholly owned subsidiary of Ford Motor Company, or “Ford.” See Note 11 — Relationship with Ford.
The summary of accounting policies set forth in Note 1 to our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, or the “10-K,” filed with the Securities and Exchange Commission, or “SEC,” on March 21, 2005, has been followed in preparing the accompanying condensed consolidated financial statements.
In our opinion, all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of operations for the interim periods have been made. Results for interim periods are not necessarily indicative of results for a full year.
Certain prior period amounts have been reclassified to conform with current reporting. For the period ended June 30, 2004, revenue earning equipment expenditures and proceeds from disposals have been reclassified from operating activities to investing activities in our condensed consolidated statement of cash flows. A summary of the reclassifications in our condensed consolidated statement of cash flows is as follows (in thousands of dollars):
                 
    Six Months Ended  
    June 30, 2004  
    As Previously     As  
    Reported     Reclassified  
Net cash flows (used in) provided by operating activities
  $ (1,275,730 )   $ 1,662,510  
Net cash used in investing activities
  $ (111,856 )   $ (3,050,096 )
Net increase in cash and equivalents during the period
  $ 250,317     $ 250,317  
On July 1, 2004, we increased our joint venture ownership interest in Navigation Solutions LLC, or “Navigation Solutions,” from 40% to 65%. This change resulted from an equity distribution by Navigation Solutions to the other member of Navigation Solutions, effectively reducing its ownership interest to 35%. Based upon this ownership change, we began consolidating 100% of the balance sheet and results of operations of Navigation Solutions into our financial statements and deducting the minority interest share relating to the 35% member. For those periods prior to July 1, 2004, the results of operations and investment in this joint venture had been reported using the equity method of accounting.
Note 1A — Restatement of Consolidated Statement of Operations
In our 10-K, we announced that we were restating our previously issued consolidated statements of operations for the years ended December 31, 2003 and 2002 and the condensed consolidated statements of operations for the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004, or the “Restatement.” The Restatement corrected certain of our historical accounting policies to conform with generally accepted accounting principles.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As a result of the Restatement, total revenues and expenses in the previously issued condensed consolidated statement of operations for the six months ended June 30, 2004 has been increased by $386.7 million. Because previously reported revenues and expenses for the quarter and six months ended June 30, 2004 were increased by equal amounts, the Restatement did not result in a change in our previously reported income before income taxes and minority interest or net income nor has it changed our liquidity or financial condition. Additionally, the Restatement had no effect on our condensed consolidated balance sheet or statement of cash flows. A more complete description of the Restatement is set forth in Note 1A to our consolidated financial statements contained in our 10-K.
A summary of the effects of the Restatement on our previously issued condensed consolidated statement of operations is as follows (in thousands of dollars):
                 
    Six Months Ended  
    June 30, 2004  
    As Previously     As  
    Reported     Restated  
Revenues:
               
Car rental
  $ 2,240,400     $ 2,551,919  
Industrial and construction equipment rental
    453,423       522,257  
Other
    31,861       38,190  
 
           
Total revenues
    2,725,684       3,112,366  
 
           
 
               
Expenses:
               
Direct operating
    1,398,343       1,781,829  
Depreciation of revenue earning equipment
    713,742       713,742  
Selling, general and administrative
    289,173       292,369  
Interest, net of interest income of $9,010
    182,706       182,706  
 
           
Total expenses
    2,583,964       2,970,646  
 
           
 
               
Income before income taxes
    141,720       141,720  
Provision for taxes on income
    (49,537 )     (49,537 )
 
           
Net income
  $ 92,183     $ 92,183  
 
           
Note 2 — Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board, or “FASB,” revised Statement of Financial Accounting Standards, or “SFAS,” No. 123, or “SFAS No. 123R,” “Accounting for Stock-Based Compensation.” SFAS No. 123R establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services, particularly transactions in which an entity obtains employee services in share-based payment transactions. SFAS No. 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is to be recognized over the period during which the employee is required to provide service in exchange for the award. Changes in fair value during the requisite service period are to be recognized as compensation cost over that period. The provisions of SFAS No. 123R are effective for financial statements issued for the first annual reporting period beginning after June 15, 2005. In March 2005, the SEC issued Staff Accounting Bulletin, or “SAB No. 107,” regarding the SEC Staff’s interpretation of SFAS No. 123R. SAB No. 107 provides the Staff’s views regarding interactions between SFAS No. 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. As we are currently accounting for our employee stock-based compensation awards in accordance with SFAS No. 123, adoption of SFAS No. 123R is not expected to have a significant effect on our financial position, results of operations or cash flows.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3.” Previously, APB No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements” required the inclusion of the cumulative effect of changes in accounting principle in net income of the period of the change. SFAS No. 154 requires companies to recognize changes in accounting principle, including changes required by a new accounting pronouncement when the pronouncement does not include specific transition provisions, retrospectively to prior periods’ financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We are required to adopt the provisions of SFAS No. 154, as applicable, beginning in fiscal year 2006.
Note 3 — Cash and Equivalents and Short-term Investments
Cash and equivalents includes time deposits, marketable securities and other investments that are readily convertible into cash and have original maturities of three months or less. As of June 30, 2005 and December 31, 2004, our short-term investments of $296.4 million and $557.0 million, respectively, consisted of investments with a related party investment fund that pools and invests excess cash balances of certain Ford subsidiaries to maximize returns. See Note 11 — Relationship with Ford.
Note 4 — Goodwill and Other Intangible Assets
We account for goodwill under SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill is no longer amortized, but instead must be tested for impairment at least annually. We conducted the required annual goodwill impairment test in the second quarter of 2005, and determined that there was no impairment. Other intangible assets are amortized over their estimated useful lives.
The following summarizes the changes in our goodwill, by segment, and other intangible assets (in thousands of dollars):
                         
    December 31,             June 30,  
    2004     Change(1)     2005  
Goodwill
                       
Car rental
  $ 365,607     $ (1,580 )   $ 364,027  
Industrial and construction equipment rental
    177,268       (7,175 )     170,093  
 
                 
Total Goodwill
    542,875       (8,755 )     534,120  
Other intangible assets
    1,570       9,237       10,807  
 
                 
 
                       
Total
  $ 544,445     $ 482     $ 544,927  
 
                 
 
(1)   The change in goodwill resulted primarily from the translation of foreign currencies at different exchange rates on December 31, 2004 and June 30, 2005. The change in other intangible assets resulted from the acquisitions of domestic car rental licensees and the amortization of certain other intangible assets. The largest acquisition of a domestic car rental licensee in 2005 resulted in $9.0 million of other intangibles which are not subject to amortization.
Note 5 — Income Taxes
The provision for taxes on income is based upon the expected effective tax rate applicable to the full year. The effective tax rate for the six months ended June 30, 2005 of 34.2%, is slightly lower than the U.S. federal statutory rate of 35% primarily due to the mix of pretax operating results among countries with different tax rates.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6 — Depreciation of Revenue Earning Equipment
Depreciation of revenue earning equipment includes the following (in thousands of dollars):
                 
    Six Months Ended  
    June 30,  
    2005     2004  
Depreciation of revenue earning equipment
  $ 788,773     $ 732,197  
Adjustment of depreciation upon disposal of the equipment
    (41,240 )     (25,424 )
Rents paid for vehicles leased
    8,904       6,969  
 
           
 
               
Total
  $ 756,437     $ 713,742  
 
           
The adjustment of depreciation upon disposal of revenue earning equipment for the six months ended June 30, 2005 and 2004 included net gains of $22.1 million and $12.9 million, respectively, on the disposal of equipment in our industrial and construction equipment rental operations and net gains of $19.1 million and $12.5 million, respectively, in our car rental operations. Effective April 1, 2005, depreciation rates being used to compute the provision for depreciation of revenue earning equipment in our domestic car rental operations were decreased to reflect changes in the estimated residual values to be realized when the vehicles are sold. As a result of this change, depreciation of revenue earning equipment for the quarter ended June 30, 2005 decreased $10.1 million.
Note 7 — Debt
Debt as of June 30, 2005 and December 31, 2004 consisted of the following (in thousands of dollars):
                 
    June 30,     December 31,  
    2005     2004  
Notes payable, including commercial paper, average interest rate: 2005, 4.1%; 2004, 2.4%
  $ 2,480,198     $ 993,856  
Promissory notes, average interest rate: 2005, 6.2%; 2004, 6.1% (effective average interest rate: 2005, 6.2%; 2004, 6.1%); net of unamortized discount: 2005, $9,858; 2004, $10,964; due 2005 to 2028
    5,198,142       5,700,443  
Intercompany Note Payable to Ford Holdings LLC, average interest rate: 5.4%; due 2010
    1,185,000        
Foreign subsidiaries’ debt, including commercial paper: in millions (2005, $317.5; 2004, $787.7); and other borrowings; average interest rate: 2005, 3.6%; 2004, 3.0%
    1,896,738       1,733,732  
 
           
 
               
Total
  $ 10,760,078     $ 8,428,031  
 
           
The aggregate amounts of payments to be made upon the maturity of debt for each of the twelve-month periods ending June 30, in millions, are as follows: 2006, $4,488.4 (including $4,123.4 of commercial paper, demand and other short-term borrowings); 2007, $773.8; 2008, $1,106.5; 2009, $720.4; 2010, $1,885.1; after 2010, $1,800.1.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On September 30, 2003, we issued $500.0 million of 4.7% Senior Promissory Notes, or the “4.7% Notes,” due on October 2, 2006. On June 3, 2004, we issued $600.0 million of 6.35% Senior Promissory Notes, or the “6.35% Notes,” due on June 15, 2010. Effective September 30, 2003 and June 3, 2004, we entered into interest rate swap agreements, or “Swaps,” relating to the 4.7% Notes and 6.35% Notes, respectively. Under these agreements, we pay interest at a variable rate in exchange for fixed rate receipts, effectively transforming the 4.7% Notes and the 6.35% Notes to floating rate obligations with effective interest rates as of June 30, 2005 of 5.25% and 5.24%, respectively. The Swaps are designated as fair value hedges with no ineffectiveness, as defined by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The carrying amounts of the Swaps are adjusted to their fair value for changes in market interest rates, with an offsetting adjustment to the fixed rate debt. As of June 30, 2005, the fair value adjustments relating to the Swaps on the 4.7% Notes and the 6.35% Notes were $8.5 million and $9.6 million, respectively. The fair value adjustment relating to the Swap on the 4.7% Notes was reflected in the condensed consolidated balance sheet in “Accrued liabilities” with an offsetting decrease in “Debt.” The fair value adjustment related to the Swap on the 6.35% Notes was reflected in the condensed consolidated balance sheet in “Prepaid expenses and other assets” with an offsetting increase in “Debt.”
During 2002, we established an Asset Backed Securitization, or “ABS,” program to reduce our borrowing costs and enhance financing resources for our domestic car rental fleet. All debt issued under the ABS program is collateralized by the assets of the special purpose entities consisting of revenue earning vehicles we use in our car rental business, restricted cash and certain receivables related to revenue earning vehicles. The ABS program provided for the initial issuance of asset backed commercial paper (up to $1.0 billion) and the subsequent issuance of asset backed medium-term notes. These instruments are issued by wholly owned and consolidated special purpose entities and are included in “Debt” in our condensed consolidated balance sheet.
On March 31, 2004, we issued $600.0 million of asset backed medium-term notes, or the “Medium-Term Notes,” under the ABS program. Of the $600.0 million of the Medium-Term Notes, $500.0 million has fixed interest rates ranging from 2.4% to 3.2% and maturities ranging from 2007 to 2009 and the remaining $100.0 million has a variable interest rate based on the one-month LIBOR rate plus nine basis points (3.4% as of June 30, 2005) and matures in 2007. Payments of principal and interest relating to the Medium-Term Notes are insured to the extent provided in a note guaranty insurance policy issued by MBIA Insurance Corporation.
As of June 30, 2005, $849.5 million of asset backed commercial paper was outstanding under the ABS program. The average interest rate as of June 30, 2005 was 3.2%. The collateralized commercial paper has a maximum term of 58 days when issued. As of June 30, 2005, $600.0 million of asset backed Medium-Term Notes were outstanding. The average interest rate as of June 30, 2005 was 2.9%. As of June 30, 2005, the outstanding commercial paper and Medium-Term Notes were collateralized by $1,431.1 million net book value of revenue earning vehicles, $49.0 million of receivables and $7.4 million of restricted cash. The restricted cash is to be used for the purchase of revenue earning vehicles or for the repayment of outstanding indebtedness under the ABS program. Restricted cash is included in “Cash and equivalents” in our condensed consolidated balance sheet.
On July 2, 2004, we established a Euro Medium-Term Note Program under which we and/or Hertz Finance Centre plc, or “HFC,” a wholly owned subsidiary of ours, can issue up to Euro 650.0 million in Medium-Term Notes, or the “Euro Notes.” On July 16, 2004, HFC issued Euro 200.0 million of Euro Notes under this program. The Euro Notes are fully guaranteed by us, mature in July 2007, and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points. As of June 30, 2005, the interest rate on the Euro Notes was 3.24%.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On August 5, 2004, we issued $500.0 million of Promissory Notes consisting of $250.0 million of floating rate notes at the three-month LIBOR rate plus 120 basis points due on August 5, 2008, and $250.0 million of 6.90% fixed rate notes due on August 15, 2014. As of June 30, 2005, the interest rate on the $250.0 million floating rate notes was 4.42%.
On May 26, 2005, we entered into a Credit Agreement, or the “Interim Credit Facility,” with an aggregate availability of up to $3.0 billion from external financial institutions. The Interim Credit Facility, as amended on July 5, 2005, provides a term facility of up to $1,650.0 million and a revolving credit facility of up to $700.0 million available to The Hertz Corporation and a term facility of up to $350.0 million and a revolving credit facility of up to $300.0 million available to our Canadian subsidiary, Hertz Canada Limited, guaranteed by The Hertz Corporation, with unutilized capacity under the Canadian tranches available to be borrowed by The Hertz Corporation. Amounts under the term facilities were available to be borrowed from May 26, 2005 to July 26, 2005 and were fully drawn. Amounts under the revolving facilities are available to be borrowed throughout the term of the Interim Credit Facility. Effective July 26, 2005, $1,825.0 million of the Interim Credit Facility commitments provided by the three initial external financial institutions were syndicated and allocated to eight additional external financial institutions. The Interim Credit Facility matures on November 23, 2005. We may elect a combination of per annum interest rates on the Interim Credit Facility including the federal funds rate plus 0.50%, JPMorgan Chase Bank, N.A.’s prime rate, LIBOR and, for loans made to Hertz Canada Limited, a Canadian base rate or Canadian prime rate, plus, in each case, a margin based on our then-current Standard & Poors Rating Services, a division of McGraw-Hill Companies, Inc., or “S&P,” and Moody’s Investors Service, Inc., or “Moody’s,” debt ratings. We are also required to pay to the lenders a quarterly facility fee equal to a rate per annum of 0.175% of the total amount of the Interim Credit Facility (such rate based upon our current S&P and Moody’s debt ratings). As of June 30, 2005, we had net outstanding borrowings of approximately $1.0 billion and C$575.0 million under the Interim Credit Facility.
On June 10, 2005, we declared and paid a dividend of $1,185.0 million on our outstanding common stock to our sole shareholder, Ford Holdings LLC, in the form of an Intercompany Note, or the “Intercompany Note.” So long as the Interim Credit Facility remains in effect, the Intercompany Note is subordinated in right of payment to all of our existing and future senior indebtedness. The Intercompany Note matures on June 10, 2010, but may be prepaid in whole at any time or in part from time to time. Interest on the Intercompany Note will be payable in cash quarterly or on or before the maturity date of the Intercompany Note, subject to certain limitations on payment contained in the Interim Credit Facility. The Intercompany Note has a per annum interest rate equal to three-month LIBOR plus a spread of 200 basis points. See Note 11 — Relationship with Ford.
As of June 30, 2005, approximately $100.2 million of our consolidated stockholder’s equity was free of dividend limitations pursuant to our existing debt agreements. See Note 11 — Relationship with Ford.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8 — Employee Retirement Benefits
The following table sets forth net periodic pension and postretirement health care and life insurance expense (in millions of dollars):
                                                 
    Six Months Ended June 30,  
                                    Health Care & Life  
    Pension Benefits     Insurance (U.S.)  
    2005     2004     2005     2004  
    U.S.     Non-U.S.     U.S.     Non-U.S.                  
Components of Net Periodic Benefit Cost:
                                               
Service cost
  $ 12.2     $ 3.5     $ 9.5     $ 2.8     $ 0.2     $ 0.2  
Interest cost
    9.8       3.3       8.2       2.9       0.5       0.4  
Expected return on plan assets
    (10.7 )     (2.7 )     (8.2 )     (2.4 )            
Amortization:
                                               
Amendments
    0.2             0.2                    
Losses and other
    1.9       1.0       0.4       0.7       0.1       0.1  
Settlement loss
    1.1                                
 
                                   
 
                                               
Net pension/post retirement expense
  $ 14.5     $ 5.1     $ 10.1     $ 4.0     $ 0.8     $ 0.7  
 
                                   
Our policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations, and union agreements. For the six months ended June 30, 2005, we contributed $7.0 million to our worldwide pension plans including benefit payments made through unfunded plans.
We have non-qualified pension plans for certain of our executives that provide benefits in excess of The Hertz Corporation Account Balance Defined Benefit Pension Plan. For one of these plans, the Supplemental Executive Retirement Plan, a pension settlement loss of $1.1 million was recognized in the quarter ended June 30, 2005 in accordance with the provisions of SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits.”
Note 9 — Segment Information
We follow SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” The statement requires companies to disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. The segment revenue information below for 2004 has been restated to reflect the effect of our Restatement as discussed in Note 1A – Restatement of Consolidated Statement of Operations.
We have identified two significant segments: rental of cars and light trucks, or “car rental” and rental of industrial, construction and material handling equipment, or “industrial and construction equipment rental.” The contributions of these segments, as well as “corporate and other,” to revenues and income before income taxes and minority interest for the six months ended June 30, 2005 and 2004 are summarized below (in thousands of dollars). Corporate and other includes general corporate expenses, certain interest expense, as well as other business activities such as claim management services.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 
    Six Months Ended June 30,  
                    Income (Loss) Before  
                    Income Taxes and  
    Revenues     Minority Interest  
            2004              
    2005     Restated     2005     2004  
Car rental
  $ 2,869,013     $ 2,586,998     $ 133,351 (a)   $ 147,322 (b)
Industrial and construction equipment rental
    630,198       522,255       71,872       6,004  
Corporate and other
    3,691       3,113       (15,190 )     (11,606 )
 
                       
 
Total
  $ 3,502,902     $ 3,112,366     $ 190,033     $ 141,720  
 
                       
 
(a)   Includes $10.1 million decrease in depreciation expense related to a change in revenue earning vehicle depreciation rates in our domestic car rental operations.
 
(b)   Includes $7.0 million received from business interruption claims we made relating to the terrorist attacks of September 11, 2001.
The increase in total assets from December 31, 2004 to June 30, 2005 in our condensed consolidated balance sheet was primarily due to an increase in revenue earning vehicles in our car rental segment.
Note 10 — Comprehensive Income
Accumulated other comprehensive income as of June 30, 2005 and December 31, 2004 includes an accumulated translation gain (in thousands of dollars) of $116,820 and $223,018, respectively. Comprehensive income for the six months ended June 30, 2005 and 2004 was as follows (in thousands of dollars):
                 
    Six Months  
    Ended June 30,  
    2005     2004  
Net income
  $ 120,075     $ 92,183  
 
           
 
               
Other comprehensive income (loss), net of tax:
               
Foreign currency translation adjustments
    (106,198 )     (31,885 )
Unrealized gain (loss) on available-for-sale securities
    14       (318 )
 
           
Total other comprehensive loss
    (106,184 )     (32,203 )
 
           
 
               
Comprehensive income
  $ 13,891     $ 59,980  
 
           
Note 11 — Relationship with Ford
We are an indirect wholly owned subsidiary of Ford. We and certain of our subsidiaries have entered into contracts, or other transactions or relationships, with Ford or subsidiaries of Ford, the most significant of which are described below.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Car purchases and repurchases
We and Ford are parties to a car supply agreement, which commenced on September 1, 1997, for a period of ten years. Under the agreement, we and Ford have agreed to negotiate in good faith on an annual basis with respect to the supply of cars. For each model year, Ford must supply cars to us on terms and conditions that are no less favorable than those offered by Ford to other daily car rental companies. Effective September 1, 2004, we and Ford amended the agreement with respect to the 2005 through 2007 vehicle model years. As amended, the agreement only applies to our fleet requirements in the United States and to “Ford,” “Lincoln” or “Mercury” brand vehicles. The original agreement was global in scope. As a result of the changes that were made, on a per model year basis, we may purchase fewer vehicles than we had under the original agreement. See Note 12 — Subsequent Events.
During the six months ended June 30, 2005, we purchased cars from Ford and its subsidiaries at a cost of approximately $3,320.0 million and sold cars to Ford and its subsidiaries under various repurchase programs for approximately $1,572.5 million.
Advertising
We are a party to a joint advertising agreement with Ford, which commenced on September 1, 1997, for a period of ten years. The agreement was amended effective September 1, 2004. Pursuant to the agreement, Ford participates in some of the cost of certain of our advertising programs featuring the Ford name or products in the United States (and abroad through August 31, 2004). Based on the changes to the advertising agreement effective September 1, 2004, we anticipate that the advertising contributions payable by Ford during the 2005 vehicle model year will be less than the advertising contributions we received from Ford for the 2004 vehicle model year. See Note 12 — Subsequent Events.
Stock option plan
Certain of our employees participate in the stock option plan of Ford under Ford’s 1998 Long-Term Incentive Plan.
Financial arrangements
In February 1997, Ford extended to us a line of credit of $500.0 million, which currently expires June 30, 2007. This line of credit has an evergreen feature that provides on an annual basis for automatic one-year extensions of the expiration date, unless notice is provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminates however, at any time Ford ceases to own, directly or indirectly, our capital stock having more than 50% of the total voting power of all capital stock outstanding of us. Our obligations under this agreement would rank pari passu with our senior debt securities. A commitment fee of 0.2% per annum is payable on the unused available credit. On May 2, 2005, we borrowed $250.0 million under this line of credit, which we repaid on May 31, 2005 with borrowings under the Interim Credit Facility. As of June 30, 2005, the line of credit was not being utilized.
We maintain agreements with Ford Financial Services, Inc, or “FFS,” a NASD registered broker/dealer and an indirect wholly owned subsidiary of Ford, whereby FFS acts as sales agent for our secured and unsecured domestic commercial paper programs. On July 13, 2005, we entered into a letter agreement with FFS which amended the agreements to provide that they will automatically terminate at any time Ford ceases to own shares having more than 50% of the total voting power of all of our outstanding capital stock. We, through our subsidiary Hertz Australia Pty. Limited, have a similar agreement with Ford Credit Australia Limited, also an indirect wholly owned subsidiary of Ford. Hertz Australia Pty. Limited no longer maintains an active commercial paper program.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of June 30, 2005 and December 31, 2004, Ford owed us and our subsidiaries $377.3 million and $445.2 million, respectively, the majority of which relates to various car repurchase and warranty programs. The balance as of June 30, 2005 and December 31, 2004, also includes $251.3 million and $250.7 million, respectively, which represents amounts due under a tax sharing agreement with Ford discussed below. As of June 30, 2005 and December 31, 2004, we and our subsidiaries owed Ford $232.3 million and $76.5 million, respectively (which amounts are included in “Accounts payable” in our condensed consolidated balance sheet), relating to vehicles purchased, and includes the liability for Ford stock-based employee compensation.
We have made short-term investments with a related party investment fund that pools and invests excess cash balances of certain Ford subsidiaries to maximize returns. These short-term investments totaled $296.4 million and $557.0 million as of June 30, 2005 and December 31, 2004, respectively, and will be held until the funds are required for operating purposes or used to reduce indebtedness.
Taxes
We and our domestic subsidiaries file consolidated Federal income tax returns with Ford. We have entered into a tax sharing agreement with Ford, dated as of March 10, 1997, which provides that we and Ford will make payments to each other such that, with respect to any period, the amount of taxes to be paid by us (subject to certain adjustments) will be determined as though we were to file separate federal, state and local income tax returns as the common parent of an affiliated group of corporations filing combined, consolidated or unitary federal, state and local returns, rather than as a consolidated subsidiary of Ford, with respect to federal, state and local income taxes. With respect to foreign tax credits, the agreement provides that our right to reimbursement will be determined based on usage of such foreign tax credits by the consolidated group.
Other relationships
We also engage in other transactions in the ordinary course of our respective businesses with Ford. These include our rental to Ford of cars and industrial and construction equipment and the financing of purchases, by Ford Motor Credit Company, of used cars sold by us at retail. In addition, we are named as an additional insured under certain of Ford’s insurance policies, for which we pay our allocated portion of the premiums, and have granted affiliates of Ford franchises to operate car and industrial and construction equipment rental businesses in certain Scandinavian countries.
Ford’s Investment In Us
Consistent with Ford’s announcement on April 20, 2005 that they were evaluating long-term strategic objectives for us, on June 13, 2005, we filed a Form S-1 Registration Statement with the SEC for an initial public offering, or “IPO,” of a portion of Ford’s economic interest in us. Following any IPO, Ford would intend to divest their remaining ownership interest in us. As an alternative to an IPO, Ford may dispose of their interest in us in a private sale to a third party.
Dividends
On June 10, 2005, we declared and paid a dividend of $1,185.0 million on our outstanding common stock to our sole shareholder, Ford Holdings LLC, in the form of the Intercompany Note. So long as the Interim Credit Facility remains in effect, the Intercompany Note is subordinated in right of payment to all of our existing and future senior indebtedness. The Intercompany Note matures on June 10, 2010, but may be prepaid in whole at any time or in part from time to time. Interest on the Intercompany Note will be payable in cash quarterly or on or before the maturity date of the Intercompany Note, subject to certain limitations on payment contained in the Interim Credit Facility. The Intercompany Note has a per annum interest rate equal to three-month LIBOR plus a spread of 200 basis points.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We previously announced a plan to commence paying semi-annual dividends to Ford in June 2005. That plan was based on the assumption that Ford would continue to own 100% of our outstanding capital stock. As a result of Ford’s planned divestiture of us, the dividend plan was suspended.
Note 12 — Subsequent Events
On July 5, 2005, we, one of our wholly owned subsidiaries and Ford signed a Master Supply and Advertising Agreement, effective July 5, 2005 and expiring August 31, 2010, that covers the 2005 through 2010 vehicle model years. This agreement replaces and supersedes existing joint advertising and vehicle supply agreements that would have expired August 31, 2007.
The terms of the Master Supply and Advertising Agreement only apply to our fleet requirements and advertising in the United States and to “Ford,” “Lincoln” or “Mercury” brand vehicles, or “Ford Vehicles,” and include Ford’s agreement to pay to us one-half of our advertising costs each year subject to a minimum purchase obligation by us and the number of Ford Vehicles acquired. Under the Master Supply and Advertising Agreement, Ford has agreed to supply to us and we have agreed to purchase from Ford, during each of the 2005 through 2010 vehicle model years, a specific number of Ford Vehicles. To be eligible for cost reimbursement under the Master Supply and Advertising Agreement, the advertising must meet certain conditions, including the condition that we feature Ford Vehicles in a manner and with a prominence that is reasonably satisfactory to Ford. It further provides that the amounts Ford will be obligated to pay to us for our advertising costs will be increased or reduced according to the number of Ford Vehicles acquired by us in any model year, provided Ford will not be required to pay any amount for our advertising costs for any year if the number of Ford Vehicles acquired in the corresponding model year is less than a specified minimum except to the extent that our failure to acquire the specified minimum number of Ford Vehicles is attributable to the availability of Ford Vehicles or Ford vehicle production is disrupted for reasons beyond the control of Ford.
We anticipate that the advertising contributions payable by Ford during the 2005 vehicle model year under the Master Supply and Advertising Agreement will be less than the advertising contributions we received from Ford for the 2004 model year. We do not expect that this reduction in Ford’s advertising contributions will have a material adverse effect on our results of operations for 2005. Based on the Master Supply and Advertising Agreement, advertising contributions in future years could be lower.
Under the terms of the Master Supply and Advertising Agreement we will be able to enter into vehicle advertising and supply agreements with other automobile manufacturers in the United States and in other countries, and we intend to explore those opportunities. However, there can be no assurance that we will be able to obtain advertising contributions from other automobile manufacturers that will mitigate the reduction in Ford’s advertising contributions.

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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors
     and Stockholder of The Hertz Corporation:
In our opinion, the consolidated financial statements listed in the index on page F-1 present fairly, in all material respects, the financial position of The Hertz Corporation and its subsidiaries (the “Company”) at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index on page F-1 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure,” effective January 1, 2003.
As discussed in Notes 1 and 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” effective January 1, 2002.
As discussed in Note 1A to the consolidated financial statements, the Company has restated its consolidated statement of operations for the years ended December 31, 2003 and 2002.
PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
March 21, 2005

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THE HERTZ CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
                 
    December 31,  
    2004     2003  
    Dollars in thousands  
ASSETS
               
Cash and equivalents (Note 14)
  $ 680,866     $ 609,986  
Short-term investments (Notes 14 and 15)
    556,997       500,108  
Receivables, less allowance for doubtful accounts of $30,447 and $35,758 (Note 3)
    1,282,290       1,238,853  
Due from affiliates (Note 15)
    445,235       520,842  
Inventories, at lower of cost or market
    83,287       73,354  
Prepaid expenses and other assets (Notes 3, 4 and 5)
    144,168       135,922  
Revenue earning equipment, at cost (Notes 3, 8 and 15):
               
Cars
    8,380,688       7,168,688  
Less accumulated depreciation
    (783,499 )     (706,719 )
Other equipment
    2,378,673       2,214,901  
Less accumulated depreciation
    (852,947 )     (883,623 )
 
           
Total revenue earning equipment
    9,122,915       7,793,247  
 
           
Property and equipment, at cost:
               
Land, buildings and leasehold improvements
    1,296,196       1,221,423  
Service equipment
    1,232,739       1,114,875  
 
           
 
    2,528,935       2,336,298  
Less accumulated depreciation
    (1,292,764 )     (1,166,529 )
 
           
Total property and equipment
    1,236,171       1,169,769  
 
           
Goodwill and other intangible assets (Note 2)
    544,445       536,929  
 
           
 
Total assets
  $ 14,096,374     $ 12,579,010  
 
           
 
               
LIABILITIES AND STOCKHOLDER’S EQUITY
               
Accounts payable (Note 15)
  $ 786,037     $ 757,869  
Accrued salaries and other compensation
    348,594       287,676  
Other accrued liabilities (Notes 3 and 12)
    487,086       448,690  
Accrued taxes
    130,062       111,432  
Debt (Notes 3, 14 and 15)
    8,428,031       7,627,930  
Public liability and property damage
    391,696       398,822  
Deferred taxes on income (Note 9)
    849,700       721,200  
Commitments and contingencies (Notes 10, 12 and 14)
               
 
           
Total liabilities
    11,421,206       10,353,619  
 
           
 
               
Minority interest (Note 5)
    4,921        
 
               
Stockholder’s equity (Notes 1, 3 and 15):
               
Common stock, $0.01 par value, 3,000 shares authorized, 100 shares issued
           
Additional capital paid-in
    983,132       983,132  
Retained earnings
    1,479,217       1,113,746  
Accumulated other comprehensive income (Note 4)
    207,898       128,513  
 
           
Total stockholder’s equity
    2,670,247       2,225,391  
 
           
 
               
Total liabilities and stockholder’s equity
  $ 14,096,374     $ 12,579,010  
 
           
The accompanying notes are an integral part of this statement.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
                         
    Years ended December 31,  
            2003     2002  
    2004     Restated     Restated  
    Dollars in thousands  
Revenues:
                       
Car rental
  $ 5,430,805     $ 4,819,255     $ 4,537,607  
Industrial and construction equipment rental
    1,161,955       1,037,754       1,018,759  
Other (Note 5)
    83,192       76,661       82,076  
 
                 
Total revenues (Note 1A)
    6,675,952       5,933,670       5,638,442  
 
                 
Expenses:
                       
Direct operating
    3,734,361       3,316,101       3,093,024  
Depreciation of revenue earning equipment (Note 8)
    1,463,258       1,523,391       1,499,568  
Selling, general and administrative
    591,317       501,643       463,085  
Interest, net of interest income of $23,707, $17,881 and $10,339 (Note 3)
    384,464       355,043       366,371  
 
                 
Total expenses (Note 1A)
    6,173,400       5,696,178       5,422,048  
 
                 
Income before income taxes and minority interest
    502,552       237,492       216,394  
 
                       
Provision for taxes on income (Note 9)
    (133,870 )     (78,877 )     (72,346 )
 
                       
Minority interest (Note 5)
    (3,211 )            
 
                 
 
                       
Income before cumulative effect of change in accounting principle
    365,471       158,615       144,048  
 
                       
Cumulative effect of change in accounting principle (Note 2)
                (294,000 )
 
                 
 
                       
Net income (loss)
  $ 365,471     $ 158,615     $ (149,952 )
 
                 
The accompanying notes are an integral part of this statement.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY
                                         
                            Accumulated        
            Additional             Other     Total  
    Common     Capital     Retained     Comprehensive     Stockholder’s  
    Stock     Paid-In     Earnings     Income (Loss)     Equity  
Balance at:
                                       
DECEMBER 31, 2001
  $     $ 983,132     $ 1,105,083     $ (103,835 )   $ 1,984,380  
Comprehensive Income
                                       
Net loss
                    (149,952 )             (149,952 )
Translation adjustment changes
                            93,537       93,537  
Unrealized holding gains on securities, net of tax of $53
                            475       475  
Minimum pension liability adjustment, net of tax of $3,040
                            (6,553 )     (6,553 )
 
                                     
Total Comprehensive Loss
                                    (62,493 )
 
                             
DECEMBER 31, 2002
          983,132       955,131       (16,376 )     1,921,887  
Comprehensive Income
                                       
Net income
                    158,615               158,615  
Translation adjustment changes
                            149,037       149,037  
Unrealized holding losses on securities, net of tax of $61
                            (551 )     (551 )
Minimum pension liability adjustment, net of tax of $1,748
                            (3,597 )     (3,597 )
 
                                     
Total Comprehensive Income
                                    303,504  
 
                             
DECEMBER 31, 2003
          983,132       1,113,746       128,513       2,225,391  
Comprehensive Income
                                       
Net income
                    365,471               365,471  
Translation adjustment changes
                            83,420       83,420  
Unrealized holding losses on securities, net of tax of $8
                            (82 )     (82 )
Minimum pension liability adjustment, net of tax of $1,076
                            (3,953 )     (3,953 )
 
                                     
Total Comprehensive Income
                                    444,856  
 
                             
DECEMBER 31, 2004
  $     $ 983,132     $ 1,479,217     $ 207,898     $ 2,670,247  
 
                             
The accompanying notes are an integral part of this statement.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
                         
    Years ended December 31,  
    2004     2003     2002  
    Dollars in thousands  
Cash flows from operating activities:
                       
Net income (loss)
  $ 365,471     $ 158,615     $ (149,952 )
Non-cash expenses:
                       
Cumulative effect of change in accounting principle
                294,000  
Depreciation of revenue earning equipment
    1,463,258       1,523,391       1,499,568  
Depreciation of property and equipment
    177,597       151,706       155,424  
Amortization of intangibles
    607       1,024       1,346  
Stock-based employee compensation
    5,584       6,039        
Provision for public liability and property damage
    153,139       178,292       145,010  
Provision for losses for doubtful accounts
    14,133       23,053       15,570  
Minority interest
    3,211              
Deferred income taxes
    129,576       260,848       106,340  
Changes in assets and liabilities:
                       
Receivables
    57,303       (95,527 )     (3,179 )
Due from affiliates
    75,607       (269,543 )     (107,997 )
Inventories and prepaid expenses and other assets
    (20,275 )     (3,981 )     (27,990 )
Accounts payable
    (58,318 )     182,264       1,099  
Accrued liabilities
    50,831       (111,439 )     88,481  
Accrued taxes
    12,315       49,825       (19,713 )
Payments of public liability and property damage claims and expenses
    (178,654 )     (155,241 )     (120,486 )
 
                 
Net cash flows provided by operating activities (Note 1)
  $ 2,251,385     $ 1,899,326     $ 1,877,521  
 
                 
The accompanying notes are an integral part of this statement.

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Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
                         
    Years ended December 31,  
    2004     2003     2002  
    Dollars in thousands  
Cash flows from investing activities:
                       
Purchase of short-term investments, net
  $ (56,889 )   $ (500,108 )   $  
Revenue earning equipment expenditures
    (11,310,032 )     (9,436,581 )     (9,946,271 )
Proceeds from disposal of revenue earning equipment
    8,740,920       7,874,414       8,065,848  
Property and equipment expenditures
    (286,428 )     (226,747 )     (221,227 )
Proceeds from disposal of property and equipment
    59,253       54,638       32,035  
Available-for-sale securities:
                       
Purchases
    (11,261 )     (12,114 )     (4,587 )
Sales
    19,448       10,246       4,082  
Changes in investment in joint venture
    2,000       5,640       6,560  
 
                 
Net cash used in investing activities (Note 1)
    (2,842,989 )     (2,230,612 )     (2,063,560 )
 
                 
 
                       
Cash flows from financing activities:
                       
Proceeds from issuance of long-term debt
    1,985,981       510,853       809,426  
Repayment of long-term debt
    (913,635 )     (712,057 )     (559,858 )
Short-term borrowings:
                       
Proceeds
    1,382,587       1,094,152       730,731  
Repayments
    (973,659 )     (721,333 )     (557,755 )
Ninety-day term or less, net
    (846,780 )     130,294       127,767  
 
                 
Net cash provided by financing activities
    634,494       301,909       550,311  
 
                 
Effect of foreign exchange rate changes on cash
    27,990       38,100       22,994  
 
                 
Net increase in cash and equivalents during the year
    70,880       8,723       387,266  
Cash and equivalents at beginning of year
    609,986       601,263       213,997  
 
                 
Cash and equivalents at end of year
  $ 680,866     $ 609,986     $ 601,263  
 
                 
 
                       
Supplemental disclosures of cash flow information:
                       
Cash paid (received) during the year for:
                       
Interest (net of amounts capitalized)
  $ 377,279     $ 357,585     $ 389,893  
Income taxes
    (4,149 )     31,481       (3,854 )
The accompanying notes are an integral part of this statement.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Summary of Significant Accounting Policies
Background
The Hertz Corporation (together with its subsidiaries, referred to herein as “Hertz” or the “Company”) is an indirect wholly owned subsidiary of Ford Motor Company (“Ford”).
The Company, which was incorporated in Delaware in 1967, is a successor to corporations that have been engaged in the automobile and truck rental and leasing business since 1918. Ford first acquired an ownership interest in the Company in 1987. Previously, the Company had been a subsidiary of UAL Corporation (formerly Allegis Corporation), which had acquired the Company’s outstanding capital stock from RCA Corporation in 1985.
Hertz became a wholly owned subsidiary of Ford as a result of a series of transactions in 1993 and 1994. Hertz continued as a wholly owned subsidiary of Ford until April 1997. In 1997, Hertz completed a public offering of approximately 50.6% of its Class A Common Stock (the “Class A Common Stock”), which represented approximately 19.1% of the economic interest in Hertz. In March 2001, Ford FSG, Inc. (“FSG”), an indirect wholly owned subsidiary of Ford that then owned an approximate 81.5% economic interest in the Company, acquired all of the Company’s outstanding Class A Common Stock that it did not already own for $35.50 per share, or approximately $735 million. As a result of FSG’s acquisition, the Company’s Class A Common Stock ceased to be traded on the New York Stock Exchange. However, because certain of the Company’s debt securities were sold through public offerings, the Company continues to file periodic reports under the Securities Exchange Act of 1934.
In 2003, FSG was dissolved and the shares of the Company’s Common Stock owned by FSG were distributed to Ford and Ford Holdings LLC. In February 2004, Ford Holdings LLC became the sole owner of the Company’s Common Stock.
Principles of Consolidation
The consolidated financial statements include the accounts of The Hertz Corporation and its domestic and foreign subsidiaries. All significant intercompany transactions have been eliminated.
Revenue Recognition
Rental and rental-related revenue (including cost reimbursements from customers where the Company considers itself to be the principal versus an agent) are recognized over the period the revenue earning equipment is rented based on the terms of the rental or leasing contract.
Cash and Equivalents
The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Depreciable Assets
The provisions for depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the respective assets, as follows:
     
Revenue Earning Equipment (REE):
   
Cars
  3 to 6 years
Other equipment
  3 to 10 years
Buildings
  20 to 50 years
Capitalized internal use software
  1 to 10 years
Service cars and service equipment
  3 to 25 years
Intangible assets
  5 to 15 years
Leasehold improvements
  The shorter of their economic lives or
 
  the lease term.
Hertz follows the practice of charging maintenance and repairs, including the cost of minor replacements, to maintenance expense accounts. Costs of major replacements of units of property are charged to property and equipment accounts and depreciated on the basis indicated above. Gains and losses on dispositions of property and equipment are included in income as realized. When REE is acquired, the Company estimates the period it will hold the asset. Depreciation is recorded on a straight-line basis over the estimated holding period, with the objective of minimizing gain or loss on the disposition of the REE. Upon disposal of the REE, depreciation expense is adjusted for the difference between the net proceeds received and the remaining book value. As market conditions change, the Company adjusts its depreciation rates prospectively, over the remaining holding period, to reflect these changes in market conditions.
Environmental Liabilities
The use of automobiles and other vehicles is subject to various governmental controls designed to limit environmental damage, including that caused by emissions and noise. Generally, these controls are met by the manufacturer, except in the case of occasional equipment failure requiring repair by Hertz. To comply with environmental regulations, measures are taken at certain locations to reduce the loss of vapor during the fueling process and to maintain, upgrade and replace underground fuel storage tanks. Hertz also incurs and provides for expenses for the cleanup of petroleum discharges and other alleged violations of environmental laws arising from the disposition of waste products. Hertz does not believe that it will be required to make any material capital expenditures for environmental control facilities or to make any other material expenditures to meet the requirements of governmental authorities in this area. Liabilities for these expenditures are recorded at undiscounted amounts when it is probable that obligations have been incurred and the amounts can be reasonably estimated.
Public Liability and Property Damage
Provisions for public liability and property damage on self-insured domestic and international claims are made by charges to expense based upon evaluations of estimated ultimate liabilities on reported and unreported claims. The related liabilities are recorded on a non-discounted basis. Reserve requirements are based on actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pensions
The Company’s employee pension costs and obligations are dependent on the Company’s assumptions used by actuaries in calculating such amounts. These assumptions include discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. Actual results that differ from the Company’s assumptions are accumulated and amortized over future periods and, therefore, generally affect the Company’s recognized expense and recorded obligation in such future periods. While the Company believes that the assumptions used are appropriate, significant differences in actual experience or significant changes in assumptions would affect the Company’s pension costs and obligations.
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rate of exchange prevailing during the year. The related translation adjustments are reflected in “Accumulated other comprehensive income” in the stockholder’s equity section of the consolidated balance sheet. The accumulated foreign currency translation gain was $223.0 million at December 31, 2004 and the accumulated foreign currency translation gain was $139.6 million at December 31, 2003. Foreign currency gains and losses resulting from transactions are included in earnings.
Income Taxes
The Company and its domestic subsidiaries file consolidated Federal income tax returns with Ford. The Company provides for current and deferred taxes as if it filed a separate consolidated tax return with its domestic subsidiaries, except that under a tax sharing arrangement with Ford, the Company’s right to reimbursement for foreign tax credits is determined based on the usage of such foreign tax credits by the consolidated group. As of December 31, 2004, U.S. income taxes have not been provided on $502.2 million in undistributed earnings of foreign subsidiaries that have been or are intended to be indefinitely reinvested outside the United States or are expected to be remitted free of taxes.
Advertising
Advertising and sales promotion costs are expensed as incurred.
Impairment of Long-Lived Assets and Intangibles
The Company evaluates the carrying value of goodwill for impairment at least annually in accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets.” See Note 2 — Goodwill and Other Intangible Assets. Long-lived assets, other than goodwill, are reviewed for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Under SFAS No. 144, these assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amounts of long-lived assets exceed their fair value. The fair values of the assets are based upon Company estimates of the undiscounted cash flows that are expected to result from the use and eventual disposition of the assets. An impairment charge is recognized for the amount, if any, by which the carrying value of an asset exceeds its fair value. The Company’s adoption of SFAS No. 144 as of January 1, 2002 did not have a material effect on the Company’s financial position, results of operations or cash flows.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock Options
Certain employees of the Company participate in the stock option plan of Ford under Ford’s 1998 Long-Term Incentive Plan. Effective January 1, 2003, the Company adopted the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” Under the modified prospective method of adoption selected by the Company under the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure,” stock-based employee compensation expense recognized in 2003 is the same as that which would have been recognized had the fair value recognition provisions of SFAS No. 123 been applied to all awards from its original effective date. Prior to January 1, 2003, the Company applied the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related Interpretations, in accounting for the plan. Prior to January 1, 2003, no stock-based employee compensation expense has been reflected in earnings as all options granted under the plan have an exercise price equal to the market value of the underlying common stock on the date of grant. See Recent Accounting Pronouncements, below.
The following table illustrates the effect on net income (loss) as if the fair value based method had been applied to all outstanding and unvested stock options in each period (in thousands of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Net income (loss), as reported
  $ 365,471     $ 158,615     $ (149,952 )
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects
    3,630       3,925        
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects
    (3,630 )     (3,925 )     (7,228 )
 
                 
Pro forma net income (loss)
  $ 365,471     $ 158,615     $ (157,180 )
 
                 
The fair values for these options were estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions used for grants in 2004, 2003 and 2002: risk-free interest rate of 3.4%, 3.7% and 5.22%, respectively; volatility factors of 42%, 39% and 35%, respectively; dividend yields of 3.0%, 5.3% and 2.37%, respectively; and an average expected life of the options of seven years for 2004, 2003 and 2002. For purposes of pro forma disclosures, the estimated fair values of the options are amortized to expense over the options’ vesting periods.
Use of Estimates and Assumptions
Use of estimates and assumptions as determined by management is required in the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates and assumptions.
Reclassifications
Certain prior year amounts have been reclassified to conform with current reporting. For the year ended December 31, 2004, revenue earning equipment expenditures and proceeds from disposals have been reclassified from operating activities to investing activities in the Company’s consolidated statement of cash flows.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the reclassifications in the consolidated statement of cash flows follows (in thousands of dollars):
                                 
    Year Ended     Year Ended  
    December 31, 2003     December 31, 2002  
    As Previously             As Previously        
    Reported     As Reclassified     Reported     As Reclassified  
Net cash flows provided by (used in) operating activities
  $ 337,159     $ 1,899,326     $ (2,902 )   $ 1,877,521  
Net cash used in investing activities
  $ (668,445 )   $ (2,230,612 )   $ (183,137 )   $ (2,063,560 )
Net increase in cash and equivalents during the year
  $ 8,723     $ 8,723     $ 387,266     $ 387,266  
Recent Accounting Pronouncements
In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51,” which expands upon and strengthens existing accounting guidance concerning when a company should include in its financial statements the assets, liabilities and activities of another entity. Prior to the issuance of FIN 46, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 now requires a Variable Interest Entity (“VIE”), as defined in FIN 46, to be consolidated by a company if that company is the primary beneficiary. The primary beneficiary is the entity subject to a majority of the risk of loss from the VIE’s activities or entitled to receive a majority of the VIE’s residual returns, or both. FIN 46 also requires disclosures about VIEs that a company is not required to consolidate but in which it has a significant variable interest. The Company adopted FIN 46 as of July 1, 2003 and the Revised Interpretation (“FIN 46R”) as of December 15, 2003. The adoption of FIN 46 and FIN 46R did not affect the Company’s financial position, results of operations or cash flows.
In December 2003, the FASB issued SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” SFAS No. 132, as revised, improves financial statement disclosures for defined benefit plans. The change replaces existing SFAS No. 132 disclosure requirements for pensions and other postretirement benefits and revises employers’ disclosures about pension plans and other postretirement benefit plans. It does not change the measurement of recognition of those plans required by SFAS No. 87, “Employers’ Accounting for Pensions,” and SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits.” SFAS No. 132, as revised, retains the disclosure requirements contained in the original SFAS No. 132, but requires additional disclosures about the plan assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. SFAS No. 132, as revised, was effective for annual and interim periods with fiscal years ending after December 15, 2003. See Note 6 — Employee Retirement Benefits.
In December 2004, the FASB revised its SFAS No. 123 (“SFAS No. 123R”), “Accounting for Stock-Based Compensation.” The revision establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services, particularly transactions in which an entity obtains employee services in share-based payment transactions. The revised statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is to be recognized over the period during which the employee is required to provide service in exchange for the award. Changes in fair value during the requisite service period are to

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
be recognized as compensation cost over that period. The provisions of the revised statement are effective for financial statements issued for the first interim or annual reporting period beginning after June 15, 2005. As the Company is currently accounting for its employee stock-based compensation awards in accordance with SFAS No. 123, adoption of SFAS No. 123R is not expected to have a significant effect on the Company’s financial position, results of operations or cash flows.
Note 1A — Restatement of Consolidated Statements of Operations
The Company is restating its previously issued consolidated statements of operations for the years ended December 31, 2003 and 2002 and the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004 (the “Restatement.”) The restated amounts for these quarters and the corresponding interim periods of 2003 are presented in Note 13- Quarterly Financial Information (Unaudited). The Restatement also affects periods prior to 2002. The Restatement corrected certain of the Company’s historical accounting policies to conform with generally accepted accounting principles (“GAAP”).
Before the Restatement, the Company’s consolidated statements of operations reflected its historical accounting policies, under which (1) amounts charged by the Company to its car rental customers to reimburse the Company for certain operating expenses (principally concession fees incurred for the privilege of operating at airports and certain other locations and vehicle licensing fees) were netted against related operating expenses, (2) amounts charged by the Company to its car rental and industrial and construction equipment rental customers for fueling of vehicles and equipment were netted against related operating expenses, (3) costs incurred in connection with the sale of consumables and dealer inventory from its industrial and construction equipment rental business were netted against revenues and (4) other, immaterial, items of revenues and expenses were presented on a net basis.
The Company has determined that the historical accounting policies described above were not in accordance with the Financial Accounting Standards Board Emerging Issues Task Force (“EITF”) Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent” and EITF Issue No. 01-14, “Income Statement Characterization of Reimbursement Received for Out-of-Pocket Expenses Incurred.” EITF No. 99-19 and No. 01-14 employ multi-factor tests to determine whether amounts charged to customers in respect of certain expenses incurred should be included in revenues or netted against such expenses. Accordingly, the Company has restated its previously issued consolidated statements of operations to reclassify revenues and expenses in accordance with GAAP, with particular regard to the requirements of EITF No. 99-19 and No. 01-14.
As a result of the Restatement, total revenues and total expenses in the previously issued consolidated statements of operations have each been increased by $725.8 and $670.3 million for the years ended December 31, 2003 and 2002, respectively. Because previously reported revenues and expenses for each of the affected periods were increased by equal amounts, the Restatement has not resulted in a change in the Company’s previously reported income before income taxes and minority interest, income before cumulative effect of change in accounting principle or net income (loss), nor has it changed the Company’s liquidity or financial condition. The Restatement has had no effect on the Company’s consolidated balance sheets or consolidated statements of cash flows. A summary of the effects of the Restatement on the previously issued consolidated statements of operations is as follows (in thousands of dollars):

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                 
    Year ended December 31, 2003     Year ended December 31, 2002  
    As Previously             As Previously        
    Reported     As Restated     Reported     As Restated  
Revenues:
                               
Car rental
  $ 4,239,244     $ 4,819,255     $ 4,005,620     $ 4,537,607  
Industrial and construction equipment rental
    904,582       1,037,754       892,646       1,018,759  
Other
    64,103       76,661       69,873       82,076  
 
                       
Total revenues
    5,207,929       5,933,670       4,968,139       5,638,442  
 
                       
 
                               
Expenses:
                               
Direct operating
    2,596,727       3,316,101       2,428,820       3,093,024  
Depreciation of revenue earning equipment
    1,523,391       1,523,391       1,499,568       1,499,568  
Selling, general and administrative
    495,276       501,643       456,986       463,085  
Interest, net of interest income of $17,881 and $10,339
    355,043       355,043       366,371       366,371  
 
                       
Total expenses
    4,970,437       5,696,178       4,751,745       5,422,048  
 
                       
Income before income taxes
    237,492       237,492       216,394       216,394  
Provision for taxes on income
    (78,877 )     (78,877 )     (72,346 )     (72,346 )
 
                       
Income before cumulative effect of change in accounting principle
    158,615       158,615       144,048       144,048  
Cumulative effect of change in accounting principle
                (294,000 )     (294,000 )
 
                       
Net income (loss)
  $ 158,615     $ 158,615     $ (149,952 )   $ (149,952 )
 
                       
Note 2 — Goodwill and Other Intangible Assets
The Company accounts for its goodwill under SFAS No. 142 “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill is no longer amortized, but instead must be tested for impairment at least annually. Other intangible assets continue to be amortized over their useful lives.
The Company adopted SFAS No. 142 beginning January 1, 2002. Upon its adoption, the Company recorded a one-time, non-cash charge of $294 million to reduce the carrying value of its goodwill. The Company recognized this impairment charge effective as of January 1, 2002 as a cumulative effect of change in accounting principle.
The goodwill impairment charge represented a portion of the goodwill of the industrial and construction equipment rental segment. The goodwill write-off was the result of a reduction in projected cash flows used to determine fair value due to the unfavorable economic conditions as of the date of adoption, which reduced demand for industrial and construction equipment in North America. The Company conducted the required annual goodwill impairment test in the second quarter of 2004, and determined that there was no additional impairment.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following summarizes the changes in the Company’s goodwill, by segment, and other intangible assets for the years ended December 31, 2004 and 2003 (in thousands of dollars):
                                         
    Goodwill              
            Industrial and             Other        
            construction             intangible        
    Car rental     equipment rental     Total goodwill     assets     Total  
Balance December 31, 2002
  $ 360,919     $ 156,054     $ 516,973     $ 2,048     $ 519,021  
Other changes (1)
    3,241       14,912       18,153       (245 )     17,908  
 
                             
Balance December 31, 2003
    364,160       170,966       535,126       1,803       536,929  
Other changes (1)
    1,447       6,302       7,749       (233 )     7,516  
 
                             
Balance December 31, 2004
  $ 365,607     $ 177,268     $ 542,875     $ 1,570     $ 544,445  
 
                             
 
(1)   Consists of changes primarily resulting from the translation of foreign currencies at different exchange rates from the beginning of the year to the end of the year and amortization of certain intangible assets.
Note 3 — Debt
Debt of the Company and its subsidiaries (in thousands of dollars) consists of the following:
                 
    December 31,  
    2004     2003  
Notes payable, including commercial paper, average interest rate: 2004, 2.4%; 2003, 1.3%
  $ 993,856     $ 1,187,142  
Promissory notes, average interest rate: 2004, 6.1%; 2003, 6.2% (effective average interest rate: 2004, 6.1%; 2003, 6.2%); net of unamortized discount: 2004, $10,964; 2003, $11,676; due 2005 to 2028
    5,700,443       4,895,180  
Foreign subsidiaries’ debt in foreign currencies:
               
Short-term borrowings:
               
Banks, average interest rate: 2004, 3.5%; 2003, 3.6%
    667,678       502,573  
Commercial paper, average interest rate: 2004, 2.5%; 2003, 2.7%
    787,660       1,034,912  
Other borrowings, average interest rate: 2004, 3.3%; 2003, 12.7%
    278,394       8,123  
 
           
Total
  $ 8,428,031     $ 7,627,930  
 
           
The aggregate amounts of maturities of debt, in millions, are as follows: 2005, $3,054.3 (including $2,444.1 of commercial paper, demand and other short-term borrowings); 2006, $757.9; 2007, $1,037.8; 2008, $615.1; 2009, $570.5; after 2009, $2,400.2.
During the year ended December 31, 2004, short-term borrowings, in millions, were as follows: maximum amounts outstanding $2,851.8 commercial paper and $755.3 banks; monthly average amounts outstanding $2,140.9 commercial paper (weighted-average interest rate 2.0%) and $542.4 banks (weighted-average interest rate 3.3%).
During the year ended December 31, 2003, short-term borrowings, in millions, were as follows: maximum amounts outstanding $3,059.8 commercial paper and $528.7 banks; monthly average amounts outstanding $2,301.2 commercial paper (weighted-average interest rate 2.1%) and $429.3 banks (weighted-average interest rate 3.5%).
The net amortized discount charged to interest expense for the years ended December 31, 2004, 2003 and 2002 relating to debt and other liabilities, in millions, was $2.3, $2.1 and $2.1, respectively.
On September 30, 2003, the Company issued $500 million of 4.7% Senior Promissory Notes (the “4.7% Notes”) due on October 2, 2006. On June 3, 2004, the Company issued $600 million of 6.35% Senior Promissory Notes (the “6.35% Notes”) due on June 15, 2010. Effective September

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
30, 2003 and June 3, 2004, the Company entered into interest rate swap agreements (“swaps”) relating to the 4.7% Notes and 6.35% Notes, respectively. Under these agreements, the Company pays interest at a variable rate in exchange for fixed rate receipts, effectively transforming the 4.7% Notes and the 6.35% Notes to floating rate obligations with effective interest rates at December 31, 2004 of 4.15% and 4.32%, respectively. The swaps are designated as fair value hedges with no ineffectiveness, as defined by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The carrying amounts of the interest rate swaps are adjusted to their fair value for changes in market interest rates, with an offsetting adjustment to the fixed rate debt. As of December 31, 2004, the fair value adjustments relating to the interest rate swaps on the 4.7% Notes and the 6.35% Notes were $7.0 million and $11.5 million, respectively. The fair value adjustment relating to the interest rate swap on the 4.7% Notes was reflected in the consolidated balance sheet in “Other accrued liabilities” with an offsetting decrease in “Debt”. The adjustment related to the interest rate swap on the 6.35% Notes was reflected in the consolidated balance sheet in “Prepaid expenses and other assets” with a corresponding increase in “Debt.”
During 2002, the Company established an Asset Backed Securitization (“ABS”) program to reduce its borrowing costs and enhance financing resources for its domestic car rental fleet. All debt issued under the ABS program is collateralized by the assets of the special purpose entities consisting of revenue earning vehicles used by the Company in its car rental business, restricted cash and certain receivables related to revenue earning vehicles. The ABS program provided for the initial issuance of asset backed commercial paper (up to $1.0 billion) and the subsequent issuance of asset backed medium-term notes. These instruments are issued by wholly owned and consolidated special purpose entities and are included in “Debt” in the consolidated balance sheet.
On March 31, 2004, the Company issued $600 million of asset backed medium-term notes (“the Medium-Term Notes”) under the ABS program. Of the $600 million of the Medium-Term Notes, $500 million has fixed interest rates ranging from 2.4% to 3.2% and maturities ranging from 2007 to 2009 and the remaining $100 million has a variable interest rate based on the one-month LIBOR rate plus nine basis points (2.5% as of December 31, 2004) and matures in 2007. Payments of principal and interest relating to the Medium-Term Notes are insured to the extent provided in a note guaranty insurance policy issued by MBIA Insurance Corporation.
At December 31, 2004, $297.6 million of asset backed commercial paper was outstanding under the ABS program. The average interest rate as of December 31, 2004 was 2.3%. The collateralized commercial paper has a maximum term of 58 days when issued. At December 31, 2004, $600.0 million of asset backed Medium-Term Notes was outstanding. The average interest rate as of December 31, 2004 was 2.6%. At December 31, 2004, the outstanding commercial paper and Medium-Term Notes were collateralized by $889.1 million net book value of revenue earning vehicles, $54.6 million of receivables and $2.9 million of restricted cash. The restricted cash is to be used for the purchase of revenue earning vehicles or for the repayment of outstanding indebtedness under the ABS program. Restricted cash is included in “Cash and equivalents” in the consolidated balance sheet.
On July 2, 2004, the Company established a Euro Medium-Term Note Program under which the Company and/or Hertz Finance Centre plc (“HFC”), a wholly owned subsidiary of the Company, can issue up to Euro 650 million in Medium-Term Notes (“Euro Notes”). On July 16, 2004, HFC issued Euro 200 million of Euro Notes under this program. The Euro Notes are fully guaranteed by the Company, mature in July 2007, and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points. As of December 31, 2004, the interest rate on the Euro Notes was 3.25%.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On August 5, 2004, the Company issued $500 million of Promissory Notes consisting of $250 million of floating rate notes at the three-month LIBOR rate plus 120 basis points due on August 5, 2008, and $250 million of 6.90% fixed rate notes due on August 15, 2014. As of December 31, 2004, the interest rate on the $250 million floating rate notes was 3.40%.
At December 31, 2004, the Company had committed credit facilities totaling $2.8 billion.
Currently, $1.3 billion of the committed credit facilities are represented by a combination of multi-year, 364-day global and other committed credit facilities provided by 23 participating banks. In addition to direct borrowings by the Company, the multi-year and 364-day global facilities allow certain subsidiaries of the Company to borrow on the basis of a guarantee by the Company. The multi-year facilities were renegotiated effective July 1, 2004 and currently total $999 million with expirations as follows: $46 million on June 30, 2005, $35 million on June 30, 2006, $108 million on June 30, 2007, $102 million on June 30, 2008 and $708 million on June 30, 2009. The multi-year facilities that expire in 2009 have an evergreen feature, which provides for the automatic extension of the expiration date one year forward unless the bank provides timely notice. Effective June 17, 2004, the 364-day global committed credit facilities, which total $94 million, were renegotiated and currently expire on June 16, 2005. Under the terms of the 364-day facilities, the Company is permitted to convert any amount outstanding prior to expiration into a two-year loan. The other committed facilities total $175 million and expire at various times during 2005.
Effective September 18, 2002, as part of the ABS program, the Company transferred $928 million of the 364-day global committed credit facilities to the ABS program. As part of the agreement to transfer these commitments, the Company has waived the right to transfer them back to the 364-day global committed credit facilities without the consent of the participating banks. As of December 31, 2004, $814 million is currently available which expires in June 2005. In addition to the transfer of the 364-day commitments, the Company raised $215 million of committed credit support through an ABS letter of credit from banks that participate in the Company’s multi-year global committed credit facilities which expires in June 2007. In exchange for this credit support, the Company agreed to reduce the bank’s multi-year facility commitment by one half of the amount of their ABS letter of credit participation.
In addition to these bank credit facilities, in February 1997, Ford extended to the Company a line of credit of $500 million, which currently expires June 30, 2006. This line of credit has an evergreen feature that provides on an annual basis for automatic one-year extensions of the expiration date, unless notice is provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminates however, at any time Ford ceases to own, directly or indirectly, capital stock of the Company having more than 50% of the total voting power of all capital stock outstanding of the Company. Obligations of the Company under this agreement would rank pari passu with the Company’s senior debt securities. A commitment fee of 0.2% per annum is payable on the unused available credit.
The Company maintains a Sales Agency Agreement with Ford Financial Services, Inc. (“FFS”), a NASD registered broker/dealer and an indirect wholly owned subsidiary of Ford, whereby FFS acts as a dealer for the Company’s domestic commercial paper programs. The Company pays fees to FFS, which range from 0.03% to 0.05% per annum of commercial paper placed depending

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
upon the monthly average dollar value of the notes outstanding in the portfolios. In 2004, the Company paid FFS $89,148 of such fees. FFS is under no obligation to purchase any of the notes for its own account. The Company, through its subsidiary Hertz Australia Pty. Limited, has a similar agreement with Ford Credit Australia Limited, also an indirect wholly owned subsidiary of Ford.
Borrowing for the Company’s international operations also consists of loans obtained from local and international banks and commercial paper programs established in Ireland, Canada, the Netherlands, Belgium and Australia. The Company guarantees only the commercial paper borrowings of its subsidiaries in Ireland, Canada, the Netherlands and Belgium, and guarantees commercial paper and short-term bank loans of its subsidiary in Australia. All borrowings by international operations either are in the international operation’s local currency or, if in non-local currency, hedged to minimize foreign exchange exposure. At December 31, 2004, total debt for the foreign operations was $1,734 million, of which $1,455 million was short-term (original maturity of less than one year) and $279 million was long-term. At December 31, 2004 total amounts outstanding (in millions of U.S. dollars) under the commercial paper programs in Ireland, Canada, the Netherlands and Belgium were $385, $321, $54 and $28, respectively.
Based on the terms of an indenture dated April 1, 1986, under which the Company has issued debt securities, the Company’s ability to pay dividends is restricted. Such restriction provides that the Company may not pay dividends, invest in its own shares or permit investments by certain subsidiaries of the Company (“Restricted Subsidiaries”) in the Company’s shares subsequent to a specified date if, together with total investments by the Company and its Restricted Subsidiaries in subsidiaries that are not Restricted Subsidiaries made subsequent to such specified date, the aggregate of any such dividends or investments exceeds the sum of (i) a specified dollar amount, (ii) the aggregate net income of the Company and its Restricted Subsidiaries earned subsequent to such specified date and (iii) net proceeds received from capital stock issued subsequent to such specified date. At December 31, 2004, approximately $1,172 million of consolidated stockholder’s equity was free of such limitations. The foregoing amount was not affected by the Restatement described in Note 1A — Restatement of Consolidated Statements of Operations.
Note 4 — Available-for-Sale Securities
As of December 31, 2004 and 2003, “Prepaid expenses and other assets” in the consolidated balance sheet includes available-for-sale securities at fair value. The fair value is calculated using information provided by independent quotation services as of December 31, 2004. These securities consisted solely of government debt obligations whereas at December 31, 2003 corporate debt obligations were also included. For the years ended December 31, 2004, 2003 and 2002, proceeds, in millions, of $19.4, $10.3 and $4.1, respectively, were received from the sale of available-for-sale securities, and in thousands of dollars, gross realized gains of $196, $413, and $134 and gross realized losses of $193, $54 and $29, respectively, were included in earnings. Actual cost was used in computing the realized gain and loss on the sale. Unrealized gains and losses are included in “Accumulated other comprehensive income” in the consolidated balance sheet.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following is a summary of available-for-sale securities at December 31, 2004 and December 31, 2003 (in thousands):
                                 
            Gross     Gross        
            Unrealized     Unrealized     Estimated  
    Cost     Gains     Losses     Fair Value  
December 31, 2004
                               
Government debt obligations
  $ 2,795     $ 19     $ (28 )   $ 2,786  
 
                       
Total
  $ 2,795     $ 19     $ (28 )   $ 2,786  
 
                       
December 31, 2003
                               
Government debt obligations
  $ 2,619     $ 15     $ (44 )   $ 2,590  
Corporate debt obligations
    8,068       137       (27 )     8,178  
 
                       
Total
  $ 10,687     $ 152     $ (71 )   $ 10,768  
 
                       
The cost and estimated fair value of available-for-sale securities at December 31, 2004 are as follows (in thousands):
                 
            Estimated  
    Cost     Fair Value  
Due in one year or less
  $ 276     $ 270  
Due after one year through five years
    2,341       2,338  
Due after five years through ten years
    178       178  
 
           
Total
  $ 2,795     $ 2,786  
 
           
Note 5 — Purchases and Sales of Operations
Effective January 1, 2000, Hertz International, Ltd., (“Hertz International”), entered into license and management services agreements with Axus International, Inc. (“Axus”), a wholly owned vehicle leasing subsidiary of Ford Motor Credit Company (“Ford Credit”), under which Hertz International licensed the Hertz name and agreed to provide management services to Axus for a five-year term. On August 31, 2000, the Company transferred substantially all the net assets of its leasing operations in Australia, New Zealand and the United Kingdom to Axus for $99.2 million. In the fourth quarter of 2002, Ford Credit sold the Axus operations in Australia and New Zealand and in the first quarter of 2003, Axus operations in Europe were sold. Hertz International continued to license the Hertz name and provide management services until these operations were sold. During 2003 and 2002, fees earned by the Company from these agreements were approximately $1.8 million and $11.5 million, respectively. The Company continues to maintain leasing operations in Brazil.
In June 1999, the Company entered into a Limited Liability Company Agreement (“LLC Agreement”) with a subsidiary of Orbital Sciences Corporation (“Orbital”), whereby Navigation Solutions, L.L.C. (“Navigation Solutions”), a limited liability company, was formed to purchase NeverLost vehicle navigation systems from another subsidiary of Orbital for installation in selected vehicles in the Company’s North American fleet. In July 2001, Orbital’s subsidiary sold its membership interest in the limited liability company to a subsidiary of Thales North America, Inc. (“Thales”), which also acquired the Orbital subsidiary from whom the NeverLost vehicle navigation systems are purchased. During 2003 and 2002, the Company received distributions of $5.6 million and $6.6 million, respectively, under the LLC Agreement, which represents a 40% ownership interest. The net investment of $6.9 million as of December 31, 2003, (included in “Prepaid expense and other assets” in the consolidated balance sheet) is accounted for using the equity method of accounting. In January 2004, the Company and Thales amended the LLC Agreement to provide for the Company to increase its ownership interest to 65% and for the

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
limited liability company to purchase additional NeverLost vehicle navigation systems. Prior to July 1, 2004, the Company received distributions totaling $2.0 million. On July 1, 2004, the Company increased its ownership interest in Navigation Solutions from 40% to 65%. This change resulted from an equity distribution by Navigation Solutions to the other member of Navigation Solutions, effectively reducing its ownership interest to 35%. Based upon this ownership change, the Company began consolidating 100% of Navigation Solutions’ balance sheet and results of operations into its financial statements and deducting the minority interest share relating to the 35% member.
Note 6 — Employee Retirement Benefits
Qualified U.S. employees, after completion of specified periods of service, are eligible to participate in The Hertz Corporation Account Balance Defined Benefit Pension Plan (“Hertz Retirement Plan”), a cash balance plan. Under this qualified Hertz Retirement Plan, the Company pays the entire cost and employees are not required to contribute.
Most of the Company’s foreign subsidiaries have defined benefit retirement plans or participate in various insured or multi-employer plans. In certain countries, when the subsidiaries make the required funding payments, they have no further obligations under such plans.
Company plans are generally funded, except for certain unqualified U.S. defined benefit plans and in Germany, where unfunded liabilities are recorded.
The Company sponsors defined contribution plans for certain eligible U.S. and non-U.S. employees. The Company matches contributions of participating employees on the basis specified in the plans.
The Company also sponsors postretirement health care and life insurance benefits for a limited number of employees with hire dates prior to January 1, 1990. The postretirement health care plan is contributory with participants’ contributions adjusted annually. An unfunded liability is recorded.
The Company uses a December 31 measurement date for the majority of its plans.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables set forth the funded status and the net periodic pension cost of the Hertz Retirement Plan, other postretirement benefit plans for health care and life insurance covering domestic (“U.S.”) employees and the retirement plans for foreign operations (“Non-U.S.”), together with amounts included in the consolidated balance sheet and statement of operations (in millions of dollars):
                                                 
    Pension Benefits     Health Care &  
    U.S. Plans     Non-U.S. Plans     Life Insurance (U.S.)  
    2004     2003     2004     2003     2004     2003  
Change in Benefit Obligation
                                               
Benefit obligation at January 1
  $ 276.2     $ 235.9     $ 97.6     $ 69.4     $ 14.1     $ 10.3  
Service cost
    21.1       17.3       5.3       3.3       0.4       0.4  
Interest cost
    17.7       15.5       5.4       4.1       0.9       0.8  
Employee contributions
                1.2       1.2       0.1       0.1  
Benefits paid
    (6.6 )     (6.9 )     (2.2 )     (2.2 )     (0.4 )     (0.8 )
Foreign exchange translation
                9.0       10.0              
Actuarial loss
    30.8       14.4       15.9       11.8       2.2       3.3  
 
                                   
Benefit obligation at December 31
  $ 339.2     $ 276.2     $ 132.2     $ 97.6     $ 17.3     $ 14.1  
 
                                   
Change in Plan Assets
                                               
Fair value of plan assets at January 1
  $ 200.5     $ 123.9     $ 63.8     $ 38.6     $     $  
Actual return on plan assets
    27.8       26.9       7.1       7.3              
Company contributions
    49.4       56.6       8.2       14.4       0.3       0.7  
Employee contributions
                1.2       1.2       0.1       0.1  
Benefits paid
    (6.6 )     (6.9 )     (2.2 )     (2.2 )     (0.4 )     (0.8 )
Foreign exchange translation
                5.8       4.4              
Other
    (0.6 )                 0.1              
 
                                   
Fair value of plan assets at December 31
  $ 270.5     $ 200.5     $ 83.9     $ 63.8     $     $  
 
                                   
Funded Status of the Plan
                                               
Plan assets less than benefit obligation
  $ (68.7 )   $ (75.7 )   $ (48.3 )   $ (33.8 )   $ (17.3 )   $ (14.1 )
Unamortized:
                                               
Transition obligation
                0.2       0.2              
Prior service cost
    4.1       4.6       0.1       0.1              
Net losses and other
    41.7       22.0       39.5       25.4       4.5       2.6  
 
                                   
Net amount recognized
  $ (22.9 )   $ (49.1 )   $ (8.5 )   $ (8.1 )   $ (12.8 )   $ (11.5 )
 
                                   
Amounts Recognized in the Balance Sheet Assets/(Liabilities)
                                               
Intangible assets (including prepaid assets)
  $ 10.6     $ 3.6     $ 0.8     $     $     $  
Accrued liabilities
    (40.1 )     (57.4 )     (24.2 )     (19.9 )     (12.8 )     (11.5 )
Deferred Income Tax
    2.3       1.6       4.1       3.7              
Accumulated other comprehensive loss, net of tax
    4.3       3.1       10.8       8.1              
 
                                   
Net amount recognized
  $ (22.9 )   $ (49.1 )   $ (8.5 )   $ (8.1 )   $ (12.8 )   $ (11.5 )
 
                                   
Pension Plans in Which Accumulated Benefit Obligation Exceeds Plan Assets at December 31
                                               
Projected benefit obligation
  $ 53.3     $ 39.0     $ 127.4     $ 93.7                  
Accumulated benefit obligation
    40.1       33.2       103.9       80.0                  
Fair value of plan assets
                80.3       60.2                  
 
                                               
Accumulated Benefit Obligation at December 31
  $ 277.6     $ 229.1     $ 107.2     $ 83.0                  
 
                                               
Weighted-average assumptions as of December 31
                                               
Discount rate
    5.75 %     6.25 %     5.14 %     5.52 %     5.75 %     6.25 %
 
                                               
Expected return on assets
    8.75 %     8.75 %     6.90 %     6.93 %     N/A       N/A  
 
                                               
Average rate of increase in compensation
    4.4 %     4.4 %     3.3 %     3.4 %     N/A       N/A  
Initial health care cost trend rate
                            11.0 %     10.0 %
Ultimate health care cost trend rate
                            5.0 %     5.0 %
Number of years to ultimate trend rate
                            9       10  

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                                                         
    Years ended December 31,  
    Pension Benefits     Health Care & Life  
    2004     2003     2002     Insurance (U.S.)  
    U.S.     Non-U.S.     U.S.     Non-U.S.     U.S.     Non-U.S.     2004     2003     2002  
Components of Net Periodic Benefit Cost:
                                                                       
Service cost
  $ 21.1     $ 5.4     $ 17.3     $ 3.3     $ 16.3     $ 2.9     $ 0.4     $ 0.4     $ 0.2  
Interest cost
    17.7       5.4       15.5       4.1       14.1       3.7       1.0       0.8       0.7  
Expected return on plan assets
    (17.9 )     (4.5 )     (15.9 )     (2.8 )     (13.3 )     (3.1 )                  
Amortization:
                                                                       
Transition
                      0.7             0.1                    
Amendments
    0.5             0.5             0.4                            
Losses(gains) and other
    1.8       1.2       2.1       1.2       (0.6 )     0.3       0.2       0.1        
 
                                                     
Net pension/ postretirement expense
  $ 23.2     $ 7.5     $ 19.5     $ 6.5     $ 16.9     $ 3.9     $ 1.6     $ 1.3     $ 0.9  
 
                                                     
 
                                                                       
Weighted-average discount rate for expense
    6.25 %     5.52 %     6.75 %     5.73 %     7.25 %     5.75 %     6.25 %     6.75 %     7.25 %
 
                                                                       
Weighted-average assumed long-term rate of return on assets
    8.75 %     6.93 %     8.75 %     6.94 %     9.50 %     7.42 %                        
 
                                                                       
Initial health care cost trend rate
                                        10.0 %     10.0 %     8.5 %
Ultimate health care cost trend rate
                                        5.0 %     5.0 %     5.0 %
Number of years to ultimate trend rate
                                        10       11       5  
Changing the assumed health care cost trend rates by one percentage point is estimated to have the following effects in whole dollars:
                 
    One Percentage     One Percentage  
    Point Increase     Point Decrease  
Effect on total of service and interest cost components
  $ 107,000     $ 93,000  
Effect on postretirement benefit obligation
    1,148,000       1,007,000  
The estimated cost for postretirement health care and life insurance benefits is accrued on an actuarially determined basis. Retirement rate and salary increase assumptions were changed in 2003 to reflect historical experience, the effect of which was not considered material. The 2003 increase in the number of years to ultimate trend rate resulted from changes in trend assumptions.
The provisions charged to income for the years ended December 31, 2004, 2003 and 2002 for all other pension plans were approximately (in millions) $7.8, $7.3 and $7.2, respectively.
The provisions charged to income for the years ended December 31, 2004, 2003 and 2002 for the defined contribution plans were approximately (in millions) $13.7, $12.3 and $11.4, respectively.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Plan Assets
The Company’s major U.S. and Non-U.S. pension plans’ weighted-average asset allocations at December 31, 2004 and 2003, by asset category, are as follows:
                                 
    Plan assets  
    U.S.     Non U.S.  
    2004     2003     2004     2003  
Asset Category
                               
Equity securities
    72.4 %     64.1 %     84.6 %     85.0 %
Fixed income securities
    27.6       35.8       15.4       15.0  
Other
          0.1              
 
                       
Total
    100.0 %     100.0 %     100.0 %     100.0 %
 
                       
The Company has a long-term investment outlook for the assets held in its Company sponsored plans, which is consistent with the long-term nature of each plan’s respective liabilities. The Company has two major plans which reside in the United States and the United Kingdom.
The U.S. Plan (the “Plan”) currently has a target asset allocation of 70% equity and 30% fixed income. The equity portion of the Plan is invested in one passively managed index fund, one actively managed U.S. small/midcap fund and one actively managed international portfolio. The fixed income portion of the Plan is actively managed by a professional investment manager and is benchmarked to the Lehman Long Govt/Credit Index. The Plan currently assumes a 8.75% rate of return on assets which represents the expected long-term annual weighted-average return for the Plan in total. The annualized long-term performance of the Plan has generally been in excess of the long-term rate of return assumptions.
The U.K. Plan currently invests in a professionally managed Balanced Consensus Index Fund which has the investment objective of achieving a total return relatively equal to its benchmark. The benchmark is based upon the average asset weightings of a broad universe of U.K. pension funds invested in pooled investment vehicles and each of their relevant indices. The asset allocation as of December 31, 2004, was 84.6% equity and 15.4% fixed income. The U.K. Plan currently assumes a rate of return on assets of 7.0%, which represents the expected long-term annual weighted-average return.
Contributions
The Company’s policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations, and union agreements. The Company from time to time makes contributions beyond those legally required. In 2004 and 2003, the Company made discretionary cash contributions of $48.0 million and $54.0 million, respectively, to the U.S. pension plan. In 2005, the Company expects to contribute, at a minimum, approximately $23.8 million to its worldwide pension plans, including contributions required by funding regulations, discretionary contributions and benefit payments for unfunded plans.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Estimated Future Benefit Payments
The following table presents estimated future benefit payments (in millions of dollars):
                 
            Healthcare & Life
    Pension Benefits   Insurance (U.S.)
2005
  $ 12.5     $ 0.6  
2006
    14.6       0.7  
2007
    17.0       0.9  
2008
    18.4       1.0  
2009
    22.7       1.1  
2010-2014
    153.2       7.0  
Note 7 — Stock-Based Employee Compensation
Certain employees of the Company participate in the stock option plan of Ford under Ford’s 1998 Long-Term Incentive Plan (the “Plan”). Grants may be made under the Plan through April 2008. Options granted under the Plan become exercisable 33% after one year from the date of grant, 66% after two years and in full after three years. Options under the Plan expire after 10 years from the date of grant.
A summary of option transactions is presented below:
                                                 
    2004     2003     2002  
            Weighted             Weighted             Weighted  
            Average             Average             average  
    Number of     Exercise     Number of     Exercise     Number of     Exercise  
    Shares     Price     Shares     Price     Shares     Price  
Outstanding at January 1
    7,227,817     $ 25.10       5,994,339     $ 29.43       4,647,127     $ 33.46  
Granted
    1,490,500     $ 13.26       1,473,625     $ 7.55       1,499,900     $ 16.91  
Expired or canceled
    (239,673 )   $ 23.59       (240,147 )   $ 25.38       (152,688 )   $ 24.84  
Exercised
    (41,811 )   $ 7.55                          
 
                                         
Outstanding at December 31
    8,436,833     $ 23.14       7,227,817     $ 25.10       5,994,339     $ 29.43  
 
                                         
 
                                               
Options exercisable at Dec. 31
    5,608,824     $ 28.74       4,305,981     $ 30.57       3,015,727     $ 35.35  
Weighted-average fair value of options granted during year
          $ 4.62             $ 1.90             $ 6.01  
The following table summarizes information about stock options at December 31, 2004:
                                         
    Options Outstanding     Options Exercisable
            Weighted                
            Average           Number of        
    Number of     Remaining   Weighted Average   Shares     Weighted Average
Range of Exercise Prices   Shares     Contractual Life   Exercise Price   Exercisable     Exercise Price
$41.40 — $42.52
    651,556       3.3     $ 41.42       651,556     $ 41.42  
$35.66
    1,059,793       5.1     $ 35.66       1,059,793     $ 35.66  
$35.19
    946,887       4.1     $ 35.19       946,887     $ 35.19  
$27.42 — $30.19
    1,598,975       6.1     $ 27.79       1,598,975     $ 27.79  
$16.91
    1,371,350       7.2     $ 16.91       905,091     $ 16.91  
$13.07 — $13.26
    1,455,175       9.2     $ 13.26              
$7.55
    1,353,097       8.2     $ 7.55       446,522     $ 7.55  

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8 — Revenue Earning Equipment
Revenue earning equipment consists of rental cars and industrial and construction equipment and leased cars under closed-end leases where the disposition of the cars upon termination of the lease is for the account of the Company.
Depreciation of revenue earning equipment includes the following (in thousands of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Depreciation of revenue earning equipment
  $ 1,506,988     $ 1,504,482     $ 1,492,292  
Adjustment of depreciation upon disposal of the equipment
    (57,212 )     808       (10,801 )
Rents paid for vehicles leased
    13,482       18,101       18,077  
 
                 
Total
  $ 1,463,258     $ 1,523,391     $ 1,499,568  
 
                 
The adjustment of depreciation upon disposal of revenue earning equipment for the years ended December 31, 2004, 2003 and 2002 included (in millions) a net gain of $25.8, a net loss of $1.9 and a net gain of $7.1, respectively, on the disposal of industrial and construction equipment, and net gains of $31.4, $1.1 and $3.7, respectively, on the disposal of cars used in the car rental and car leasing operations.
Note 9 — Taxes on Income
The provision (benefit) for taxes on income consists of the following (in thousands of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Current:
                       
Federal
  $ (22,950 )   $ (214,487 )   $ (37,368 )
Foreign
    16,679       22,341       6,085  
State and local
    10,565       10,175       (2,711 )
 
                 
Total current
    4,294       (181,971 )     (33,994 )
 
                 
Deferred:
                       
Federal
    132,877       270,248       91,940  
Foreign
    (11,801 )     (6,400 )     3,300  
State and local
    8,500       (3,000 )     11,100  
 
                 
Total deferred
    129,576       260,848       106,340  
 
                 
Total provision
  $ 133,870     $ 78,877     $ 72,346  
 
                 

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The principal items in the deferred tax provision (benefit) are as follows (in thousands of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Difference between tax and book depreciation
  $ 489,202     $ 145,208     $ 464,653  
Accrued and prepaid expense deducted for tax purposes when paid or incurred
    (41,640 )     (32,267 )     (3,078 )
Tax operating loss (carryforwards) utilized
    (341,090 )     288,783       (365,982 )
Foreign tax credit (carryforwards) utilized
    (8,556 )     (105,980 )     8,595  
Federal and state alternative minimum tax credit (carryforwards) utilized
    (3,288 )     (34,896 )     2,152  
Increase in valuation allowance
    34,948              
 
                 
Total deferred provision
  $ 129,576     $ 260,848     $ 106,340  
 
                 
The principal items in the deferred tax liability at December 31, 2004 and 2003 are as follows (in thousands of dollars):
                 
    2004     2003  
Difference between tax and book depreciation
  $ 1,680,024     $ 1,190,822  
Accrued and prepaid expense deducted for tax purposes when paid or incurred
    (262,970 )     (220,254 )
Tax operating loss carryforwards
    (423,585 )     (82,495 )
Foreign tax credit carryforwards, net of valuation allowance
    (105,585 )     (131,977 )
Federal and state alternative minimum tax credit carryforwards
    (38,184 )     (34,896 )
 
           
Total
  $ 849,700     $ 721,200  
 
           
At December 31, 2004 the Company had operating loss carryforwards for federal, state and foreign tax purposes totaling $423.6 million, of which $391.5 million expire through 2024. The remaining $32.1 million may be carried forward indefinitely. It is anticipated that such operations will become profitable in the future and the carryforwards will be fully utilized. The foreign tax credit carryforwards, net of valuation allowance, at December 31, 2004 of $105.6 million expire through 2014 and are expected to be fully utilized in the consolidated U.S. tax return of Ford. In connection with the filing of the 2003 consolidated tax return, net operating losses of the Company were carried back to prior periods, which increased the amount of foreign tax credit carryforwards. The federal and state alternative minimum tax credit carryforwards of $38.2 million may be used indefinitely to reduce federal and state income taxes.
In October 2004, President Bush signed the “American Job Creation Act of 2004” (the “Act”), which contains provisions related to the distribution of the earnings of foreign subsidiaries. There are currently significant uncertainties as to how these provisions will actually be implemented. The Company is in the process of evaluating the impact of the provisions of the Act.
The principal items accounting for the difference in taxes on income computed at the U.S. statutory rate of 35% and as recorded are as follows (in thousands of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Computed tax at statutory rate
  $ 175,893     $ 83,122     $ 75,738  
State and local income taxes, net of Federal income tax benefit
    12,392       4,664       5,453  
Income taxes on foreign earnings at effective rates different from the U.S. statutory rate, including the anticipated realization of certain foreign tax benefits and the effect of subsidiaries’ gains and losses and exchange adjustments with no tax effect
    (7,529 )     (9,949 )     (5,989 )
Increase in valuation allowance
    34,948              
Adjustments made to Federal and foreign tax accruals in connection with tax audit evaluations
    (69,834 )            
Favorable foreign tax adjustments relating to tax return filings
    (11,684 )            
All other items, net
    (316 )     1,040       (2,856 )
 
                 
Total provision
  $ 133,870     $ 78,877     $ 72,346  
 
                 

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10 — Lease and Concession Agreements
Hertz has various concession agreements, which provide for payment of rents and a percentage of revenue with a guaranteed minimum , and real estate leases under which the following amounts were expensed (in thousands of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Rents
  $ 100,243     $ 90,421     $ 80,857  
Concession fees:
                       
Minimum fixed obligations
    227,535       230,443       215,385  
Additional amounts, based on revenues
    182,069       132,860       139,918  
 
                 
Total
  $ 509,847     $ 453,724     $ 436,160  
 
                 
As of December 31, 2004, minimum obligations under existing agreements referred to above are approximately as follows (in thousands of dollars):
                 
    Rents     Concessions  
Years ended December 31,
               
2005
  $ 77,994     $ 166,108  
2006
    66,028       140,355  
2007
    53,083       117,098  
2008
    42,541       74,372  
2009
    30,524       50,564  
Years after 2009
    101,843       321,485  
Many of the Company’s concession agreements and real estate leases require it to pay or reimburse operating expenses, such as common area charges and real estate taxes, to pay concession fees above guaranteed minimums or additional rent based on a percentage of revenues or sales (as defined in those agreements) arising at the relevant premises, or both. Such obligations are not reflected in the table of minimum future obligations appearing immediately above.
In addition to the above, Hertz has various leases on revenue earning equipment and office and computer equipment under which the following amounts were expensed (in thousands of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Revenue earning equipment
  $ 13,482     $ 18,101     $ 18,077  
Office and computer equipment
    15,338       13,075       11,732  
 
                 
Total
  $ 28,820     $ 31,176     $ 29,809  
 
                 

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of December 31, 2004, minimum obligations under existing agreements referred to above that have a maturity of more than one year are as follows (in thousands): 2005, $15,587; 2006, $9,905; 2007, $2,515; 2008, $134; 2009, $81; after 2009, $29.
Note 11 — Segment Information
The Company follows SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. The statement requires companies to disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. The segment revenues information below for 2003 and 2002 has been restated to reflect the effect of the Company’s Restatement as discussed in Note 1A — Restatement of Consolidated Statements of Operations.
The Company has identified two significant segments: rental of cars and light trucks (“car rental”); and rental of industrial, construction and materials handling equipment (“industrial and construction equipment rental”). The contribution of these segments, as well as “corporate and other,” for each of the three years ended December 31, 2004 are summarized below (in millions of dollars). Corporate and other includes general corporate expenses, certain interest expense, as well as other business activities, such as claim management and, prior to 2003, telecommunication services.
                         
    Years ended December 31,  
    2004     2003     2002  
Revenues (Restated)
                       
Car rental
  $ 5,508     $ 4,889     $ 4,610  
Industrial and construction equipment rental
    1,162       1,038       1,019  
Corporate and other
    6       7       9  
 
                 
Total
  $ 6,676     $ 5,934     $ 5,638  
 
                 
 
                       
Income (loss) before income taxes and minority interest
                       
Car rental
  $ 438     $ 279     $ 264  
Industrial and construction equipment rental
    88       (22 )     (38 )
Corporate and other
    (23 )     (20 )     (10 )
 
                 
Total
  $ 503     $ 237     $ 216  
 
                 
 
                       
Depreciation of revenue earning equipment
                       
Car rental
  $ 1,228     $ 1,258     $ 1,229  
Industrial and construction equipment rental
    235       265       271  
Corporate and other
                 
 
                 
Total
  $ 1,463     $ 1,523     $ 1,500  
 
                 
 
                       
Depreciation of property and equipment
                       
Car rental
  $ 136     $ 111     $ 116  
Industrial and construction equipment rental
    37       36       35  
Corporate and other
    5       5       4  
 
                 
Total
  $ 178     $ 152     $ 155  
 
                 
Amortization of intangibles
                       
Car rental
  $ 1     $     $  
Industrial and construction equipment rental
          1       1  
Corporate and other
                 
 
                 
Total
  $ 1     $ 1     $ 1  
 
                 
Operating income (loss): pre-tax income (loss) before interest expense and minority interest
                       
Car rental
  $ 742     $ 551     $ 530  
Industrial and construction equipment rental
    160     $ 54       52  
Corporate and other
    (15 )     (12 )     1  
 
                 
Total
  $ 887     $ 593     $ 583  
 
                 

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                         
    Years ended December 31,  
    2004     2003     2002  
Total assets at end of year
                       
Car rental
  $ 10,351     $ 9,310     $ 8,354  
Industrial and construction equipment rental
    2,157       1,891       1,965  
Corporate and other
    1,588       1,378       810  
 
                 
Total
  $ 14,096     $ 12,579     $ 11,129  
 
                 
Revenue earning equipment, net, at end of year
                       
Car rental
  $ 7,597     $ 6,462     $ 5,998  
Industrial and construction equipment rental
    1,526       1,331       1,428  
Corporate and other
                 
 
                 
Total
  $ 9,123     $ 7,793     $ 7,426  
 
                 
Revenue earning equipment and property and equipment
                       
Car rental
                       
Expenditures
  $ 10,885     $ 9,292     $ 9,891  
Proceeds from disposals
    (8,554 )     (7,701 )     (7,901 )
 
                 
Net expenditures
  $ 2,331     $ 1,591     $ 1,990  
 
                 
Industrial and construction equipment rental
                       
Expenditures
  $ 708     $ 368     $ 272  
Proceeds from disposals
    (246 )     (228 )     (197 )
 
                 
Net expenditures
  $ 462     $ 140     $ 75  
 
                 
Corporate and other
                       
Expenditures
  $ 3     $ 3     $ 4  
Proceeds from disposals
                 
 
                 
Net expenditures
  $ 3     $ 3     $ 4  
 
                 
The Company operates in the United States and in foreign countries. Foreign operations are substantially in Europe. The operations within major geographic areas are summarized as follows (in millions of dollars):
                         
    Years ended December 31,  
    2004     2003     2002  
Revenues (Restated)
                       
United States
  $ 4,678     $ 4,256     $ 4,221  
Foreign
    1,998       1,678       1,417  
 
                 
Total
  $ 6,676     $ 5,934     $ 5,638  
 
                 
Income before income taxes and minority interest
                       
United States
  $ 323     $ 132     $ 131  
Foreign
    180       105       85  
 
                 
Total
  $ 503     $ 237     $ 216  
 
                 
Depreciation of revenue earning equipment
                       
United States
  $ 1,107     $ 1,241     $ 1,252  
Foreign
    356       282       248  
 
                 
Total
  $ 1,463     $ 1,523     $ 1,500  
 
                 
Depreciation of property and equipment
                       
United States
  $ 137     $ 114     $ 124  
Foreign
    41       38       31  
 
                 
Total
  $ 178     $ 152     $ 155  
 
                 
Amortization of intangibles
                       
United States
  $     $ 1     $ 1  
Foreign
    1              
 
                 
Total
  $ 1     $ 1     $ 1  
 
                 
Operating income: pre-tax income before interest expense and minority interest
                       
United States
  $ 661     $ 449     $ 461  
Foreign
    226       144       122  
 
                 
Total
  $ 887     $ 593     $ 583  
 
                 
Total assets at end of year
                       
United States
  $ 10,099     $ 9,014     $ 8,423  
Foreign
    3,997       3,565       2,706  
 
                 
Total
  $ 14,096     $ 12,579     $ 11,129  
 
                 

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                         
    Years ended December 31,  
    2004     2003     2002  
Revenue earning equipment, net, at end of year
                       
United States
  $ 6,705     $ 5,873     $ 5,908  
Foreign
    2,418       1,920       1,518  
 
                 
Total
  $ 9,123     $ 7,793     $ 7,426  
 
                 
Revenue earning equipment and property and equipment
                       
United States
                       
Expenditures
  $ 7,928     $ 6,801     $ 7,714  
Proceeds from disposals
    (5,818 )     (5,453 )     (5,995 )
 
                 
Net expenditures
  $ 2,110     $ 1,348     $ 1,719  
 
                 
Foreign
                       
Expenditures
  $ 3,668     $ 2,862     $ 2,453  
Proceeds from disposals
    (2,982 )     (2,476 )     (2,103 )
 
                 
Net expenditures
  $ 686     $ 386     $ 350  
 
                 
Note 12 — Litigation and Guarantees
Litigation — Pending
On March 1, 2002, Bowdoin Square, L.L.C. v. Winn-Dixie Montgomery, Inc., Wal-Mart Stores East, Inc., The Hertz Corporation, et al. was commenced in the Circuit Court for Madison County, Alabama. The complaint alleges that the Company, Wal-Mart Stores East, Inc. and other defendants violated certain private land use restrictions and intentionally interfered with plaintiff’s contractual relationship with its tenant, Winn-Dixie Montgomery, Inc., when the Company subleased a former Wal-Mart store located in a shopping center in Saraland (Mobile County), Alabama. The complaint also alleges that the Company and other defendants negligently and wantonly injured the value of plaintiff’s interest in the shopping center. A motion to transfer the case to the Circuit Court for Mobile County was granted in September 2002, and the Company filed its answer to the complaint. The plaintiff’s claims against Winn-Dixie Montgomery, Inc. have been severed and will be tried separately from the claims against Wal-Mart and the Company. A trial of the claims against Wal-Mart and the Company is scheduled to begin in April 2005.
On August 1, 2002, Jennifer Myers, an individual and on behalf of all others similarly situated, v. The Hertz Corporation was filed in the United States District Court for the Eastern District of New York. The complaint alleges a nationwide “opt-in collective action” on behalf of all Senior Station Managers, Station Managers and “B” Station Managers employed by the Company throughout the United States, contesting their exempt classification and seeking payment of overtime compensation under the federal Fair Labor Standards Act (“FLSA”).The complaint also contains a subclass for all such managers employed in New York for alleged violations of state labor laws. Plaintiffs have not yet been permitted to obtain a nationwide “opt-in,” as discovery has been thus far limited to the location where the plaintiffs are employed in an effort by the court to determine the viability of a nationwide action. To that end, depositions were completed, and in July 2004 the Company fully briefed and filed a motion for summary judgment, which was denied in March 2005.
On June 16, 2003, Wide World Tours of Mission Valley, Inc., Travel Support Systems, Inc., Vacation Marketing Group of Hawaii., Cecilia Pedroza, and International Travel Bureau, Inc. v. Avis Rent A Car System, Inc., Budget Rent A Car System, Inc., Dollar Rent A Car, Inc., Enterprise Rent-A-Car Company, The Hertz Corporation, and Thrifty Rent-A-Car System, Inc. was commenced in Superior Court of the State of California, for the County of San Diego. Wide

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
World Tours purports to be a class action on behalf of certain U.S. travel agents and agencies that regularly book customers with the major rental car companies. The complaint alleges that the defendant rental car companies breached their unwritten contracts with the plaintiffs by knowingly and deliberately under-reporting and underpaying the commissions due to the plaintiffs, that in so doing the defendants engaged in deceit and that the defendants engaged in unfair competition by deducting processing fees or other administrative fees from payments they make to travel agents. After the defendants filed misjoinder motions, an amended complaint was filed against the Company with a separate new lawsuit commenced against Avis. After a hearing in April 2004, the judge certified a class of “California only” travel agencies. In November 2004, the Company and the representative plaintiffs, following mediation, agreed to a nationwide settlement. Under the terms of the settlement, the plaintiffs will file an amended complaint on behalf of a nationwide class of travel agents and the Company, without admitting liability and in return for a general release, will provide members of the settlement class with car rental certificates the majority of which, when utilized by customers of the class members, will result in the payment of a bonus commission to the sponsoring members. In addition, the Company has agreed to pay the fees of the plaintiffs’ attorneys. In March 2005, the court granted preliminary approval to the settlement.
On August 28, 2003, Naomi R. Henderson, individually and on behalf of all others similarly situated, v. The Hertz Corporation was commenced in the Superior Court of New Jersey, Essex County. Henderson purports to be a class action on behalf of all persons who purchased optional insurance products in the State of New Jersey or in other states from or through the Company at times that the Company did not have required licenses to sell such insurance. In January 2004, the Company’s motion to dismiss was granted and an order of dismissal was thereafter entered. The plaintiff has appealed the dismissal, and that appeal has now been briefed, argued and submitted to the New Jersey Appellate Division for a decision.
On December 22, 2003, Stephen Moore, on behalf of himself and all others similarly situated, v. The Hertz Corporation was commenced in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida, in and for Hillsborough County. Moore purports to be a class action on behalf of persons who rented vehicles from the Company in Florida and were allegedly overcharged for the recovery of a tire and battery solid waste management fee and the recovery of registration fees for the issuance of Florida license plates. Similar lawsuits were separately commenced by the same plaintiff against Avis Rent A Car System Inc. and Budget Rent A Car System, Inc. In February 2004, the plaintiff filed an amended class action complaint which alleges that, in addition to the initial causes of action, the Company deceptively collected an improper “federal excise tax” on frequent flyer mileage awards to class members. The Company answered the amended complaint and discovery commenced. In January 2005, the Company filed a motion for summary judgment and the plaintiff filed a revised motion for class certification. Rulings on these motions are expected in the second quarter of 2005.
On March 15, 2004, Jose M. Gomez, individually and on behalf of all other similarly situated persons, v. The Hertz Corporation was commenced in the 214 th Judicial District Court of Nueces County, Texas. Gomez purports to be a class action filed alternatively on behalf of all persons who were charged a Fuel and Service Charge (“FSC”) by the Company or all Texas residents who were charged a FSC by the Company. The complaint, alleges that the FSC is an unlawful penalty and that, therefore, it is void and unenforceable. In response to various motions by the Company, the plaintiff has filed two amended complaints which scaled back the putative class from a nationwide class to a class of all Texas residents who were charged a FSC by the Company or by its Corpus Christi Licensee. A new cause of action was also added for

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
conversion. After some limited discovery, the Company filed a motion for summary judgment in December 2004. That motion was denied in January 2005. More extensive discovery will now commence.
On November 18, 2004, Keith Kochner, individually and on behalf of all similarly situated persons, v. The Hertz Corporation was commenced in the District Court in and for Tulsa County, State of Oklahoma. As with the Gomez case , Kochner purports to be a class action, this time on behalf of Oklahoma residents who rented from the Company and incurred the Company’s FSC. The petition alleges that the imposition of the FSC is a breach of contract and amounts to an unconscionable penalty or liquidated damages in violation of Article 2A of the Oklahoma Uniform Commercial Code. In March 2005, the trial court granted the Company’s motion to dismiss the action but also granted the plaintiff the right to replead.
In addition, the Company is currently a defendant in numerous actions and has received numerous claims on which actions have not yet been commenced for bodily injury, including death, and property damage (“PL/PD”) arising from the operation of motor vehicles and equipment rented from the Company and its licensees. In aggregate, the Company can be expected to expend material sums to defend and settle PL/PD actions and claims or to pay judgments resulting from them.
Among the PL/PD pending actions against the Company are a total of 142 actions filed in Mississippi on behalf of 4,176 plaintiffs seeking damages for silicosis, which the plaintiffs allegedly sustained from the use of equipment rented from HERC. The complaints name HERC as one of approximately 88 co-defendants. PL/PD claims and actions are provided for within the Company’s PL/PD program.
The Company believes it has meritorious defenses in the foregoing matters and will defend itself vigorously.
In addition to the foregoing, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against the Company and its subsidiaries. Litigation is subject to many uncertainties, and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings, including those discussed above, could be decided unfavorably to the Company or the subsidiary involved. Although the amount of liability with respect to these matters cannot be ascertained, potential liability in excess of related accruals is not expected to materially affect the consolidated financial position, results of operations or cash flows of the Company.
Litigation — Recently Resolved
James Han, individually and on behalf of all others similarly situated v. The Hertz Corporation. (Previously discussed on pages 9 and 10 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.)The Appellate Division of the New York Supreme Court, First Department, affirmed the trial court’s dismissal of Han . The time period for further appeal has now expired.

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Guarantees
At December 31, 2004, the following guarantees were issued and outstanding.
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Indemnifications: In the ordinary course of business, the Company executes contracts involving indemnifications standard in the relevant industry and indemnifications specific to a transaction such as sale of a business. These indemnifications might include claims against any of the following: environmental and tax matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other commercial contractual relationships; and financial matters. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third party claim. The Company regularly evaluates the probability of having to incur costs associated with these indemnifications and has accrued for expected losses that are probable. The types of indemnifications for which payments are possible include the following:
Environmental: The Company has indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such costs or damages for which the Company may be held responsible could be substantial. The probable losses that the Company expects to incur in connection with many of these sites have been accrued and those losses are reflected in the Company’s consolidated financial statements. At December 31, 2004, the aggregate amount accrued for environmental liabilities reflected in the Company’s consolidated balance sheet in “Other accrued liabilities” is $5.4 million. The accrual represents the estimated cost to study potential environmental issues at sites deemed investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-going maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the site.
For many sites, the remediation costs and other damages for which the Company ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as the Company’s connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation). As a result, the Company is unable to estimate a maximum amount for costs or other damages for which it is potentially responsible in connection with these indemnifications, which are generally uncapped.
Tax: The Company provides various tax-related indemnifications as part of transactions. The indemnified party typically is protected from certain events that result in a tax treatment different from that originally anticipated. In some cases, a payment under a tax indemnification may be offset in whole or in part by refunds from the applicable governmental taxing authority. The Company is party to a number of tax indemnifications and many of these indemnities do not limit potential payment; therefore, the Company is unable to estimate a maximum amount of potential future payments that could result from claims made under these indemnities.
Note 13 — Quarterly Financial Information (Unaudited)
The following quarterly results of operations for 2004 and 2003 have been restated to reflect the effect of the Restatement as discussed in Note 1A — Restatement of Consolidated Statements of Operations (in thousands of dollars):

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                                                 
    First Quarter 2004     Second Quarter 2004 (1)     Third Quarter 2004 (5)              
    As             As             As             Fourth     Year ended  
    Previously             Previously             Previously             Quarter     Dec. 31,  
    Reported     As Restated     Reported     As Restated     Reported     As Restated     2004(2)(5)     2004  
Revenues:
                                                               
Car rental
  $ 1,053,242     $ 1,198,213     $ 1,187,158     $ 1,353,706     $ 1,363,814     $ 1,538,357     $ 1,340,529     $ 5,430,805  
Industrial and construction, equipment rental
    209,956       240,268       243,467       281,989       277,047       316,331       323,367       1,161,955  
Other
    14,750       17,763       17,111       20,427       20,239       24,509       20,493       83,192  
 
                                               
Total revenues
    1,277,948       1,456,244       1,447,736       1,656,122       1,661,100       1,879,197       1,684,389       6,675,952  
 
                                               
 
                                                               
Expenses:
                                                               
Direct operating
    688,436       865,145       709,907       916,684       778,384       994,164       958,368       3,734,361  
Depreciation of revenue earning equipment
    359,958       359,958       353,784       353,784       370,738       370,738       378,778       1,463,258  
Selling, general and administrative
    146,587       148,174       142,586       144,195       158,742       161,059       137,889       591,317  
Interest, net of interest income
    87,963       87,963       94,743       94,743       102,372       102,372       99,386       384,464  
 
                                               
Total expenses
    1,282,944       1,461,240       1,301,020       1,509,406       1,410,236       1,628,333       1,574,421       6,173,400  
 
                                               
 
                                                               
Income (loss) before income taxes and minority interest
    (4,996 )     (4,996 )     146,716       146,716       250,864       250,864       109,968       502,552  
(Provision) benefit for taxes on income
    1,713       1,713       (51,250 )     (51,250 )     (64,968 )     (64,968 )     (19,365 )     (133,870 )
Minority interest
                            (1,456 )     (1,456 )     (1,755 )     (3,211 )
 
                                               
Net income (loss)
  $ (3,283 )   $ (3,283 )   $ 95,466     $ 95,466     $ 184,440     $ 184,440     $ 88,848     $ 365,471  
 
                                               
                                                                                 
                                                                    Year Ended  
    First Quarter 2003 (3)     Second Quarter 2003 (3)(4)     Third Quarter 2003     Fourth Quarter 2003     Dec. 31, 2003  
    As             As             As             As             As        
    Previously     As     Previously     As     Previously     As     Previously     As     Previously     As  
    Reported     Restated     Reported     Restated     Reported     Restated     Reported     Restated     Reported     Restated  
Revenues:
                                                                               
Car rental
  $ 938,850     $ 1,068,230     $ 1,033,668     $ 1,178,900     $ 1,225,400     $ 1,384,089     $ 1,041,326     $ 1,188,036     $ 4,239,244     $ 4,819,255  
Industrial and construction equipment rental
    194,087       220,261       220,710       256,000       245,966       280,517       243,819       280,976       904,582       1,037,754  
Other
    14,723       17,579       15,431       18,815       18,178       21,997       15,771       18,270       64,103       76,661  
 
                                                           
Total revenues
    1,147,660       1,306,070       1,269,809       1,453,715       1,489,544       1,686,603       1,300,916       1,487,282       5,207,929       5,933,670  
 
                                                           
 
                                                                               
Expenses:
                                                                               
Direct operating
    621,369       778,215       625,522       807,682       690,701       885,871       659,135       844,333       2,596,727       3,316,101  
Depreciation of revenue earning equipment
    363,026       363,026       373,037       373,037       396,808       396,808       390,520       390,520       1,523,391       1,523,391  
Selling, general and administrative
    131,213       132,777       122,204       123,950       125,486       127,375       116,373       117,541       495,276       501,643  
Interest, net of interest income
    88,888       88,888       89,422       89,422       88,966       88,966       87,767       87,767       355,043       355,043  
 
                                                           
Total expenses
    1,204,496       1,362,906       1,210,185       1,394,091       1,301,961       1,499,020       1,253,795       1,440,161       4,970,437       5,696,178  
 
                                                           
 
                                                                               
Income (loss) before income taxes
    (56,836 )     (56,836 )     59,624       59,624       187,583       187,583       47,121       47,121       237,492       237,492  
(Provision) benefit for taxes on income
    19,144       19,144       (20,034 )     (20,034 )     (60,888 )     (60,888 )     (17,099 )     (17,099 )     (78,877 )     (78,877 )
 
                                                           
Net income (loss)
  $ (37,692 )   $ (37,692 )   $ 39,590     $ 39,590     $ 126,695     $ 126,695     $ 30,022     $ 30,022     $ 158,615     $ 158,615  
 
                                                           
 
(1)   Includes $7.0 million received in the second quarter of 2004 regarding claims made by the Company on its insurance policies for business interruption losses resulting from the terrorist attacks of September 11, 2001.
 
(2)   Includes a final gain of $7.5 million in the fourth quarter of 2004 from the condemnation of a car rental and support facility in Florida.
 
(3)   Includes a credit totaling $7.8 million in the first and second quarter of 2003 from a one-time refund of Goods and Service Tax related to the Company’s Australian car rental operations.
 
(4)   Includes an initial gain of $8.0 million in the second quarter of 2003 from the condemnation of a car rental and support facility in Florida.
 
(5)   Includes favorable foreign tax adjustments of $23.3 million in the third quarter of 2004 and net favorable domestic and foreign tax adjustments of $23.3 million in the fourth quarter of 2004.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 14 — Financial Instruments
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash equivalents, short-term investments and trade receivables. The Company places its cash equivalents with a number of financial institutions and investment funds to limit the amount of credit exposure to any one financial institution. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company’s customer base, and their dispersion across different businesses and geographic areas. As of December 31, 2004, the Company had no significant concentration of credit risk.
Cash and Equivalents
Fair value approximates cost indicated on the balance sheet at December 31, 2004 because of the short-term maturity of these instruments.
Short-Term Investments
Fair value approximates cost indicated on the balance sheet at December 31, 2004 because of the short-term maturity of these instruments. The balance at December 31, 2004, of $557.0 million consists of investments with a related party investment fund that pools and invests excess cash balances of Ford and certain Ford subsidiaries.
Debt
For borrowings with an initial maturity of 93 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 the Company for loans with similar terms and average maturities. The fair value of all debt at December 31, 2004 and December 31, 2003 approximated $8.63 billion and $7.89 billion, respectively, compared to carrying value of $8.43 billion and $7.63 billion, respectively.
Derivative Financial Instruments
From time to time, the Company and its subsidiaries enter into arrangements to manage exposure to fluctuations in interest rates. These arrangements consist of interest-rate swap agreements. The differential paid or received on these agreements is recognized as an adjustment to interest expense. These agreements are not entered into for speculative or trading purposes. Effective September 30, 2003, the Company entered into interest rate swap agreements relating to the issuance of its 4.7% Senior Promissory notes due October 2, 2006. Effective June 3, 2004, the Company entered into interest rate swap agreements relating to the issuance of its 6.35% Senior Promissory notes due June 15, 2010.Under these agreements, the Company pays interest at a variable rate in exchange for fixed rate receipts, effectively transforming these notes to floating rate obligations.
The Company and its subsidiaries have entered into arrangements to manage exposure to fluctuations in foreign exchange rates, for selected marketing programs. These arrangements consist of the purchase of foreign exchange options. At December 31, 2004, the total notional amount of these instruments was $24.9 million, maturing at various dates in 2005 and 2006, and

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the fair value of all outstanding contracts, was approximately $0.3 million. The fair value of the foreign currency instruments was estimated using market prices provided by financial institutions. Gains and losses resulting from changes in the fair value of these instruments are included in earnings. The total notional amount included options to sell British Pounds, Canadian dollars, Yen and Euro, in the notional amounts of $17.5 million, $3.2 million, $2.7 million and $1.5 million, respectively.
The Company and its subsidiaries manage exposure to fluctuations in currency risk on intercompany loans the Company makes to certain of its foreign subsidiaries by entering into foreign currency forward contracts (“forwards”) at the time of the loans. The forward rate is reflected in the intercompany loan rate to the foreign subsidiaries, and as a result, the forward contracts have no impact on earnings. At December 31, 2004, the total notional amount of these forwards was $140.3 million, maturing within one to three months. The total notional amount includes forwards to sell Australian dollars, Euro, Swiss Francs and British Pounds in the notional amounts of $55.2 million, $41.1 million, $23.7 million and $20.3 million, respectively.
Note 15 — Relationship with Ford
The Company is an indirect wholly owned subsidiary of Ford. The Company and certain of its subsidiaries have entered into contracts, or other transactions or relationships, with Ford or subsidiaries of Ford, the most significant of which are described below.
Car purchases and repurchases
Over the three years ended December 31, 2004, on a weighted-average basis, approximately 51% of the cars acquired by the Company for its U.S. car rental fleet, and approximately 31% of the cars acquired by the Company for its international fleet, were manufactured by Ford and subsidiaries. During 2004, approximately 41% of the cars acquired by the Company domestically were manufactured by Ford and subsidiaries and approximately 32% of the cars acquired by the Company for its international fleet were manufactured by Ford and subsidiaries, which represented the largest percentage of any automobile manufacturer in that year.
The Company and Ford are parties to a vehicle supply agreement, which commenced on September 1, 1997, for a period of ten years. Under the agreement, Ford and the Company have agreed to negotiate in good faith on an annual basis with respect to the supply of cars. For each model year, Ford must supply cars to the Company on terms and conditions that are no less favorable than those offered by Ford to other daily car rental companies. Effective September 1, 2004, the Company and Ford amended the agreement with respect to the 2005 through 2007 vehicle model years. As amended, the agreement only applies to the Company’s fleet requirements in the United States and to “Ford,” “Lincoln” or “Mercury” brand vehicles. The original agreement was global in scope. As a result of the changes that were made, on a per model year basis, the Company may purchase fewer vehicles than it had under the original agreement.
During the years ended December 31, 2004, 2003 and 2002, the Company purchased cars from Ford and its subsidiaries at a cost of approximately (in billions) $4.4, $4.9 and $5.1, respectively, and sold cars to Ford and its subsidiaries under various repurchase programs for approximately $3.3, $3.8 and $3.8, respectively.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Advertising
The Company is a party to a joint advertising agreement with Ford, which commenced on September 1, 1997, for a period of ten years. The agreement was amended effective September 1, 2004.Pursuant to the agreement, Ford participates in some of the cost of certain of the Company’s advertising programs featuring the Ford name or products in the United States (and abroad through August 31, 2004).The amounts contributed by Ford for the years ended December 31, 2004, 2003 and 2002 were (in millions) $38.1, $47.9 and $48.4, respectively. Based on the changes to the advertising agreement effective September 1, 2004, the Company anticipates that the advertising contributions payable by Ford during the 2005 vehicle model year will be less than the advertising contributions the Company received from Ford for the 2004 vehicle model year. The Company incurred net advertising expense for the years ended December 31, 2004, 2003 and 2002 of (in millions) $164.0, $123.4 and $114.8, respectively.
Stock option plan
Certain employees of the Company participate in the stock option plan of Ford under Ford’s 1998 Long-Term Incentive Plan.
Financial arrangements
In February 1997, Ford extended to the Company a line of credit of $500 million, which currently expires June 30, 2006. This line of credit has an evergreen feature that provides on an annual basis for automatic one-year extensions of the expiration date, unless notice is provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminates however, at any time Ford ceases to own, directly or indirectly, capital stock of the Company having more than 50% of the total voting power of all capital stock outstanding of the Company. Obligations of the Company under this agreement would rank pari passu with the Company’s senior debt securities. A commitment fee of 0.2% per annum is payable on the unused available credit.
The Company maintains a Sales Agency Agreement with Ford Financial Services, Inc, (“FFS”), a NASD registered broker/dealer and an indirect wholly owned subsidiary of Ford, whereby FFS acts as a dealer for the Company’s domestic commercial paper programs. The Company, through its subsidiary Hertz Australia Pty. Limited, has a similar agreement with Ford Credit Australia Limited, also an indirect wholly owned subsidiary of Ford.
As of December 31, 2004 and 2003, Ford owed the Company and its subsidiaries $445.2 million and $520.8 million, respectively, the majority of which relates to various car repurchase and warranty programs. The balance at December 31, 2004, also includes $250.7 million which represents amounts due under a tax sharing agreement with Ford. As of December 31, 2004, and 2003, the Company and its subsidiaries owed Ford $76.5 million and $119.9 million, respectively (which amounts are included in “Accounts payable” in the Company’s consolidated balance sheet), relating to vehicles purchased, and includes the liability for Ford stock-based employee compensation.
The Company has made short-term investments with a related party investment fund that pools and invests excess cash balances of certain Ford subsidiaries to maximize returns. These short-term investments totaled $557.0 million at December 31, 2004 and will be held until the funds are required for operating purposes or used to reduce indebtedness.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Taxes
The Company and its domestic subsidiaries file consolidated Federal income tax returns with Ford. The Company has entered into a tax sharing agreement with Ford providing that the Company and Ford will make payments between them such that, with respect to any period, the amount of taxes to be paid by the Company (subject to certain adjustments) will be determined as though the Company were to file separate federal, state and local income tax returns as the common parent of an affiliated group of corporations filing combined, consolidated or unitary federal, state and local returns, rather than a consolidated subsidiary of Ford, with respect to federal, state and local income taxes. With respect to foreign tax credits, the agreement provides that the Company’s right to reimbursement will be determined based on usage of such foreign tax credits by the consolidated group.
Dividends
The Company expects to begin paying semi-annual dividends to Ford, commencing in June 2005, in aggregate amounts that would cause the Company to maintain an estimated prospective 3.5-to-1 full-year average debt-to-equity ratio, after dividend payments, computed on a monthly average basis (with no dividends to be paid if such ratio would exceed 3.5-to-1).
Other relationships
The Company and Ford also engage in other transactions in the ordinary course of their respective businesses. These include the Company’s rental to Ford of cars and industrial and construction equipment and Ford Credit’s financing of purchases of used cars sold by the Company at retail.
In addition, the Company is named as an additional insured under certain of Ford’s insurance policies, for which the Company pays its allocated portion of the premiums.

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THE HERTZ CORPORATION AND SUBSIDIARIES
Schedule II — Valuation and Qualifying Accounts
For the Years Ended December 31, 2004, 2003 and 2002
                                         
            Additions                
    Balance at                            
    Beginning of     Charged to     Translation             Balance at  
    Year     Expense     Adjustments     Deductions     End of Year  
            (Dollars in thousands)          
2004:
                                       
Allowance for doubtful accounts
  $ 35,758     $ 14,133     $ 1,123     $ 20,567 (a)   $ 30,447  
 
                             
2003:
                                       
Allowance for doubtful accounts
  $ 29,047     $ 23,053     $ 3,646     $ 19,988 (a)   $ 35,758  
 
                             
2002:
                                       
Allowance for doubtful accounts
  $ 38,886     $ 15,570     $ 2,900     $ 28,309 (a)   $ 29,047  
 
                             
 
(a)   Amounts written off, net of recoveries.

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Shares
(HERTZ LOGO)
Class A Common Stock
 
Prospectus
 
Joint Book-Running Managers
         
JPMorgan
  Citigroup   Goldman, Sachs & Co.
 
Until      , 2005 (25 days after the date of this prospectus), all dealers that buy, sell or trade our Class A common stock, whether or not participating in this offer, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
              , 2005

 


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement field with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where an offer or sale is not permitted.

Alternate page for Equity Units Prospectus
Subject to completion, dated           , 2005
Preliminary Prospectus
Equity Units
(HERTZ LOGO)
(Initially Consisting of           Corporate Units)
% Equity Units
Each Equity Unit will have a stated amount of $25 and will consist of a purchase contract issued by us and a 1/40, or 2.5%, undivided beneficial ownership interest in $1,000 principal amount of our senior notes, which initially mature on November 16, 2015, subject to adjustment, which we refer to as a Corporate Unit.
    The purchase contract will obligate you to purchase from us on the purchase contract settlement date for a price of $25 in cash, the following number of shares of our Class A common stock, subject to anti-dilution adjustments:
    if the average closing price of our Class A common stock over the 20-trading day period ending on the third trading day prior to November 16, 2008 equals or exceeds $         ,           shares of our Class A common stock;
 
    if the average closing price of our Class A common stock over the same period is less than $        but greater than $          , a number of shares of our Class A common stock having a value, based on the average closing price, equal to $25; and
 
    if the average closing price of our Class A common stock over the same period is less than or equal to $           ,           shares of our Class A common stock.
    The purchase contract settlement date is expected to be November 16, 2008 (or, if this date is not a business day, the following business day), but could be deferred for up to four quarterly periods until November 16, 2009 (or, if this date is not a business day, the following business day).
 
    We will also pay you quarterly contract adjustment payments at a rate of      % per year of the stated amount of $25 per Equity Unit, or $            per year, subject to our right to defer contract adjustment payments, as described in this prospectus.
 
    The senior notes will initially bear interest at a rate of      % per year, payable, initially, quarterly. The senior notes will be remarketed as described in this prospectus. Following a successful remarketing, the interest rate on the senior notes may be reset, the interest payment dates may be changed and the maturity may be adjusted as described in this prospectus.
 
    If a tax event redemption described in this prospectus occurs prior to the purchase contract settlement date, the senior notes comprising a part of the Corporate Units will be replaced by the treasury portfolio described in this prospectus.
 
    You can create Treasury Units from Corporate Units by substituting treasury securities for the senior notes and you can recreate Corporate Units by substituting senior notes or the applicable ownership interests in the treasury portfolio for the treasury securities comprising a part of the Treasury Units.
 
    Your ownership interest in a senior note or, if substituted for the ownership interest in a senior note, the treasury securities or the applicable ownership interest in the treasury portfolio, as the case may be, will be pledged to us to secure your obligation under the related purchase contract.
 
    The Corporate Units will initially be sold by the underwriters in minimum increments of 40 units.
We are offering, by means of a separate prospectus,           shares of our Class A common stock.
The Corporate Units have been approved for listing on the New York Stock Exchange under the symbol “HTZ PrE,” subject to official notice of issuance. Our Class A common stock have been approved for listing on the New York Stock Exchange under the symbol “HTZ,” subject to official notice of issuance.
Investing in the Equity Units involves risks. See “Risk Factors” beginning on page • of this prospectus.
                 
    Per Unit     Total  
Initial public offering price
  $       $    
Underwriting discounts and commissions
  $       $    
Proceeds to us, before expenses
  $       $    
To the extent that the underwriters sell more than           Corporate Units, the underwriters have the option to purchase, not later than 13 days after the initial issuance of the Corporate Units, up to an additional           Corporate Units from us at the initial public offering price less the underwriting discount. We intend to use our net proceeds from the Corporate Units sold pursuant to this option to pay an additional dividend to Ford.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The Corporate Units will be ready for delivery in book-entry form only through The Depository Trust Company on or about      , 2005.
Joint Book-Running Managers
JPMorgan   Citigroup   Goldman, Sachs & Co.
 
          , 2005

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The offering
What are Equity Units?
Equity Units may be either Corporate Units or Treasury Units as described below. The Equity Units offered will initially consist of Corporate Units, each with a stated amount of $25. You can create Treasury Units from the Corporate Units in the manner described below under “How Can I Create Treasury Units from Corporate Units?”
What are the components of a Corporate Unit?
Each Corporate Unit consists of a purchase contract and a 1/40, or 2.5%, undivided beneficial ownership interest in $1,000 principal amount of our senior notes, which initially mature on November 16, 2015, subject to adjustment, which we call the applicable ownership interest in senior notes. The senior notes will be issued in minimum denominations of $1,000 and integral multiples thereof, except in certain limited circumstances. The applicable ownership interest in senior notes underlying a Corporate Unit is owned by you, but it initially will be pledged to us to secure your obligation under the related purchase contract. If a tax event redemption occurs prior to the earlier of a successful remarketing or a purchase contract settlement date as described in this prospectus, the senior notes underlying the Corporate Units will be replaced by the treasury portfolio described below under “What is the Treasury Portfolio?” and the applicable ownership interest in the treasury portfolio will then be pledged to us through the collateral agent to secure your obligation under the related purchase contract.
What is a purchase contract?
Each purchase contract underlying an Equity Unit obligates the holder of the purchase contract to purchase, and obligates us to sell, on November 16, 2008 (or, if this date is not a business day, the following business day) or such date as is required to be deferred as a result of one or more failed remarketings for quarterly periods until November 16, 2009 (or, if this date is not a business day, the following business day), which we refer to as the purchase contract settlement date, for $25 in cash, a number of newly issued shares of our Class A common stock equal to the “settlement rate.” The settlement rate will be calculated, subject to adjustment under the circumstances set forth in “Description of the purchase contracts—Anti-dilution adjustments,” as follows:
    if the applicable market value of our Class A common stock is equal to or greater than $          , which we refer to as the threshold appreciation price, the settlement rate will be shares of our Class A common stock, which is the number of shares of our Class A common stock equal to $25 divided by the threshold appreciation price;
 
    if the applicable market value of our Class A common stock is less than the threshold appreciation price but greater than $           , which we refer to as the reference price, the settlement rate will be a number of shares of our Class A common stock equal to $25 divided by the applicable market value; and
 
    if the applicable market value of our Class A common stock is less than or equal to the reference price, the settlement rate will be            shares of our Class A common stock, which is the number of shares of our Class A common stock equal to $25 divided by the reference price.
The “applicable market value” means the average of the closing price per share of our Class A common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding

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November 16, 2008 (regardless of whether the purchase contract settlement date is deferred beyond November 16, 2008), subject to anti-dilution adjustments. The reference price will be equal to the initial public offering price of our Class A common stock. The threshold appreciation price represents a % appreciation over the reference price.
If a tax event redemption occurs prior to the earlier of a successful remarketing or a purchase contract settlement date, the purchase contract settlement date will occur three business days after the date of the previously scheduled remarketing attempt.
Can I settle the purchase contract early?
You can settle a purchase contract for cash prior to the purchase contract settlement date, subject to certain exceptions described under “Description of the purchase contracts—Early settlement.” If a purchase contract is settled early, the number of shares of our Class A common stock to be issued per purchase contract will be the stated amount of $25 divided by the threshold appreciation price, initially             shares. In addition, if we are involved in a merger in which at least 30% of the consideration for our Class A common stock consists of cash or cash equivalents, you will have the right to accelerate and settle the purchase contract early at the settlement rate in effect immediately prior to the closing of that merger.
Your early settlement right is subject to the condition that, if required under the U.S. federal securities laws, we have a registration statement under the Securities Act of 1933 in effect covering the shares of Class A common stock deliverable upon settlement of a purchase contract. We have agreed that, if required by U.S. federal securities laws, we will use our commercially reasonable efforts to have a registration statement in effect covering those shares of Class A common stock and other securities, if any, to be delivered in respect of the purchase contracts being settled.
What is a Treasury Unit?
A Treasury Unit is a unit created from a Corporate Unit and consists of a purchase contract and a 1/40, or 2.5%, undivided beneficial interest in a zero-coupon U.S. treasury security with a principal amount of $1,000 described under “Description of Equity Units — Creating Treasury Units,” which we refer to as a treasury security. The ownership interest in the treasury security that is a component of a Treasury Unit will be owned by you, but will be pledged to us through the collateral agent to secure your obligation under the related purchase contract.
How can I create Treasury Units from Corporate Units?
Unless the treasury portfolio has replaced the senior notes underlying the Corporate Units in connection with a tax event redemption, each holder of Corporate Units will have the right to substitute for the underlying senior notes held by the collateral agent treasury securities in a total principal amount at maturity equal to the aggregate principal amount of the senior notes underlying the Corporate Units with respect to which substitution is being made. Because treasury securities and senior notes are issued in integral multiples of $1,000, holders of Corporate Units may make this substitution only in integral multiples of 40 Corporate Units. Each of these substitutions will create Treasury Units, and the senior notes underlying the applicable ownership interests in senior notes will be released to the holder and be tradable separately from the Treasury Units.
How can I recreate Corporate Units from Treasury Units?
Unless the treasury portfolio has replaced the senior notes underlying the Corporate Units in connection with a tax event redemption, each holder of Treasury Units will have the right to substitute for the related treasury securities held by the collateral agent senior notes having a principal amount equal to the aggregate principal amount at stated maturity of the treasury securities for which substitution is being

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made. Because treasury securities and senior notes are issued in integral multiples of $1,000, holders of Treasury Units may make these substitutions only in integral multiples of 40 Treasury Units. Each of these substitutions will recreate Corporate Units and the applicable treasury securities will be released to the holder and be separately tradable from the Corporate Units.
What payments am I entitled to as a holder of Corporate Units?
Holders of Corporate Units will be entitled to receive quarterly cash distributions consisting of their pro rata share of interest payments on the senior notes, equivalent to the rate of           % per year on the applicable ownership interests in senior notes (or distributions on the applicable ownership interests in the treasury portfolio if the senior notes have been replaced by the treasury portfolio), and contract adjustment payments payable by us at the rate of      % per year on the stated amount of $25 per Corporate Unit, subject to our right to defer the contract adjustment payments as described below.
What payments will I be entitled to if I convert my Corporate Units to Treasury Units?
Holders of Treasury Units will be entitled to receive quarterly contract adjustment payments payable by us at the rate of      % per year on the stated amount of $25 per Treasury Unit, subject to our right to defer the contract adjustment payments as described below. There will be no distributions in respect of the treasury securities that are a component of the Treasury Units but the holders of the Treasury Units will continue to receive the scheduled quarterly interest payments on the senior notes that were released to them when they created the Treasury Units as long as they continue to hold the senior notes.
Do we have the option to defer current payments?
We have the right to defer the payment of contract adjustment payments until no later than the purchase contract settlement date; provided, however, that in an early settlement upon a cash merger or any other early settlement of the purchase contracts, we will pay deferred contract adjustment payments through the cash merger settlement date or the most recent quarterly payment date, as applicable. Any deferred contract adjustment payments would accrue additional contract adjustment payments at the rate of      % per year (which is equal to the sum of the contract adjustment payment rate and the interest rate of the senior notes) until paid, compounded quarterly, to but excluding the earlier of the purchase contract settlement date and the date of any earlier settlement of the purchase contract. We are not entitled to defer payments of interest on the senior notes.
In the event that we exercise our option to defer the payment of contract adjustment payments, then until the deferred contract adjustment payments have been paid, we will not, with certain exceptions, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of Hertz’s capital stock.
What are the payment dates for the Corporate Units?
The payments described above in respect of the Corporate Units will be payable quarterly in arrears on February 16, May 16, August 16 and November 16 of each year, commencing on November 16, 2005 (if any of these dates are not a business day, these payments will be payable on the following business day), subject to, in the case of that portion of the current payment attributable to contract adjustment payments, the deferral provisions described in this prospectus.
What is remarketing?
Unless a tax event redemption date has occurred or will occur prior to the applicable remarketing date, if you hold Corporate Units, to provide you with the proceeds necessary to be applied in the settlement of your purchase contract obligations, the senior notes underlying your Corporate Units will be sold in a remarketing, unless you elect not to participate in the remarketing by following the procedures described

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below under “— Notice to settle with cash.” The cash proceeds from the remarketing will be used to satisfy your obligations to purchase shares of our Class A common stock on the purchase contract settlement date and any remaining proceeds will be remitted to you. If you hold senior notes separately and not as part of Corporate Units, you may elect to participate in the remarketing as described below. We and our affiliates will not participate as bidders for the senior notes in any remarketing.
On the issuance date of the Corporate Units, we will enter into a remarketing agreement with the purchase contract agent and the remarketing agents. Subject to the terms of the remarketing agreement, the remarketing agents will agree to use their commercially reasonable efforts to sell the senior notes underlying the Corporate Units, unless you elect not to participate in the remarketing, at a price that results in proceeds of at least 100.5% of the aggregate principal amount of such senior notes, which amount will include a remarketing fee payable to the remarketing agents. Accrued and unpaid interest on the senior notes will not be paid from remarketing proceeds because each remarketing is scheduled to settle on a date that is a regular interest payment date, and therefore we will pay the scheduled interest payment on the senior notes. To obtain that price, the remarketing agents may reset the interest rate, on a floating or fixed interest rate basis, on the senior notes as described below. The remarketing date will be the third business day immediately preceding November 16, 2008. If this remarketing is successful, the purchase contract settlement date will be November 16, 2008 (or, if this date is not a business day, the remarketing settlement date will be on the following business day).
In connection with the remarketing of the senior notes, the remarketing agents may reset the interest rate on the notes on a floating or fixed interest rate basis, as instructed by us. The interest rate on the senior notes will be reset in the remarketing to whatever interest rate is necessary to induce purchasers to purchase all the senior notes remarketed for at least 100.5% if the aggregate principal amount of such senior notes. The reset rate will apply to all outstanding senior notes, whether or not their holders participated in the remarketing and will become effective on the settlement date of the remarketing.
In connection with any remarketing, we may elect, in our sole discretion, to change the stated maturity of the senior notes to any date not earlier than the second anniversary of the purchase contract settlement date and not later than the tenth anniversary of the purchase contract settlement date and to specify a date, not earlier than the second anniversary of the purchase contract settlement date, on and after which the senior notes will be redeemable at our option. In addition, we may also elect to change the interest payment dates and may add any additional financial covenants as we may determine. Any such election would take effect, upon a successful remarketing, on the purchase contract settlement date.
What happens if the remarketing of the senior notes is not successful?
If the remarketing agents cannot remarket the senior notes for at least 100.5% of their aggregate principal amount, on or before the third business day immediately preceding to November 16, 2008, then:
    the purchase contract settlement date will be deferred until the next scheduled remarketing date, for up to four quarterly periods until November 16, 2009 (or, if this date is not a business day, the following business day);
 
    the interest rate on the senior notes will not be reset;
 
    the senior notes will continue to bear interest at the rate of      % per year, payable quarterly in arrears;
 
    the proceeds received upon maturity of the treasury securities pledged as collateral for any Treasury Units will be used to settle the applicable purchase contracts, and any remaining cash proceeds will be remitted to the holders of the Treasury Units, and any cash pledged by holders of Corporate Units choosing not to participate in the remarketing

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      will also be used to settle the applicable purchase contracts and the purchase contract settlement date will not be further deferred with respect to these purchase contracts, regardless of whether the remarketing attempt at that time is successful;
 
    the remarketing agents will attempt to remarket the senior notes on subsequent remarketing dates and establish a reset rate meeting the requirements described above; the subsequent remarketing dates will be the third business day immediately preceding February 16, 2009, May 16, 2009, August 16, 2009 and November 16, 2009.
Any subsequent remarketing will be subject to the conditions and procedures described above, and will settle, if successful, on the corresponding purchase contract settlement date.
What happens if the remarketing agents cannot remarket the senior notes on or before the third business day immediately preceding November 16, 2009?
If the remarketing agents fail to remarket the senior notes on or before the final scheduled remarketing on the third business day immediately preceding to November 16, 2009, which we refer to as a “failed final remarketing,” the interest rate on the senior notes will not be reset, the senior notes will continue to bear interest at the rate of      % per year, payable quarterly in arrears, and the senior notes will mature on November 16, 2015.
Upon a failed final remarketing, holders of all senior notes will have the right to put their senior notes to us for purchase at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest. A holder of a senior note underlying a Corporate Unit will be deemed to have automatically exercised this put right unless, prior to 11:00 a.m., New York City time, on the second business day immediately preceding the purchase contract settlement date, such holder provides a written notice of an intention to settle the related purchase contract with separate cash and on or prior to the business day immediately preceding the purchase contract settlement date delivers to the collateral agent the purchase price in cash. Unless a Corporate Unit holder has settled the related purchase contracts with separate cash on or prior to the purchase contract settlement date, such holder will be deemed to have elected to apply a portion of the proceeds of the put price equal to the principal amount of the senior notes underlying such Corporate Units against such holder’s obligations to us under the related purchase contracts, thereby satisfying such obligations in full, and we will deliver to such holder our Class A common stock pursuant to the related purchase contracts.
Do I have to participate in the remarketing?
You may elect not to participate in any remarketing and to retain the senior notes underlying the applicable ownership interests in senior notes comprising part of your Corporate Units by (1) creating Treasury Units at any time prior to the business day preceding any remarketing date or (2) notifying the purchase contract agent of your intention to pay cash to satisfy your obligation under the related purchase contracts on or prior to the second business day before such remarketing date and delivering the cash payment required under the purchase contracts to the collateral agent on or prior to the business day before such remarketing date.
If I am holding a senior note as a separate security from the Corporate Units, can I still participate in a remarketing of the senior notes and do I also have a put right in the event that there is no successful remarketing on or prior to the final remarketing date?
Holders of senior notes that are not part of the Corporate Units may elect, in the manner described in this prospectus, to have their senior notes remarketed by the remarketing agents along with the senior notes included in the Corporate Units. See “Description of the Senior Notes—Optional Remarketing.” Such holders may also participate in any remarketing by recreating Corporate Units from their Treasury Units at any time on or prior to the second business day immediately prior to any remarketing date.

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Holders of senior notes that are not part of a Corporate Unit may exercise their put right upon a failed final remarketing by providing written notice within 20 business days after the failed final remarketing. The put price will be paid to such holders who have provided such notice on the 23rd business day after the failed final remarketing.
Besides participating in a remarketing, how else can I satisfy my obligation under the purchase contracts?
Holders of Corporate Units or Treasury Units may also satisfy their obligations, or their obligations will be terminated, under the purchase contracts as follows:
    through early settlement as described under “Can I settle the purchase contract early?” above;
 
    through cash settlement prior to any remarketing date in the case of holders of Corporate Units, unless the treasury portfolio has replaced the senior notes underlying the Corporate Units, by notifying the purchase contract agent on or prior to the second business day prior to such remarketing date and delivering the cash payment required under the related purchase contracts on or prior to the business day before the purchase contract settlement date;
 
    through the automatic application of the proceeds of the treasury securities in the case of the Treasury Units or proceeds from the treasury portfolio equal to the principal amount of the senior notes in the case of Corporate Units if the treasury portfolio has replaced the senior notes as a component of the Corporate Units;
 
    through exercise of the put right as described under “What happens if the senior notes are not successfully remarketed prior to the final remarketing date?” if no successful remarketing has occurred and none of the above events has taken place; or
 
    without any further action, upon the termination of the purchase contracts as a result of our bankruptcy, insolvency or reorganization.
What interest payments will I receive on the senior notes or on the applicable ownership interests in senior notes?
Interest on the senior notes will be payable initially quarterly in arrears at the annual rate of           % of the principal amount of $1,000 to, but excluding, the reset effective date, which will be the purchase contract settlement date. Following a successful remarketing, the senior notes will bear interest from the reset effective date at the reset rate to, but excluding, November 16, 2015 (and, if this date is not a business day, also excluding the following business day) or, if the maturity of the senior notes is adjusted on the reset effective date, such adjusted maturity date. If there is not a successful remarketing of the senior notes, the interest rate will not be reset and the senior notes will continue to bear interest at the initial interest rate, payable quarterly in arrears.
What are the interest payment dates on the senior notes?
On or prior to the reset effective date, interest payments will be payable quarterly in arrears on each February 16, May 16, August 16 and November 16, commencing November 16, 2005, except that if any of these dates is not a business day, then interest payments will be payable on the following business day.
From the reset effective date, interest payments on all senior notes will be paid in arrears on interest payment dates to be selected by us, which payment dates may be monthly, quarterly or semi-annual. If no successful remarketing of the senior notes occurs, interest payments on all senior notes will remain payable quarterly in arrears on the original quarterly interest payment dates.

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When will the interest rate on the senior notes be reset and what is the reset rate?
The interest rate on the senior notes will be reset on the date of a successful remarketing and the reset rate will become effective on the purchase contract settlement date. The reset rate will be the interest rate determined by the remarketing agents as the rate the senior notes should bear in order for the senior notes underlying the Corporate Units to have an approximate aggregate market value on the remarketing date of 100.5% of the aggregate principal amount of the senior notes being remarketing. The interest rate on the senior notes will not be reset if there is not a successful remarketing. Any reset rate may not exceed the maximum rate, if any, permitted by applicable law.
When is the maturity of the senior notes?
The initial maturity date of the senior notes will be November 16, 2015. In connection with any remarketing of the senior notes, we may elect, in our sole discretion, to change the maturity of the senior notes to any date not earlier than the second anniversary of the purchase contract settlement date and not later than the tenth anniversary of the purchase contract settlement date. Such adjusted maturity date, if any, will be selected on the remarketing date and will become effective on the reset effective date. Additionally, in connection with any remarketing, we may elect to add optional redemption provisions to the terms of the senior notes, provided that the senior notes will not be redeemable at our option prior to the second anniversary of the purchase contract settlement date. Any such election would take effect, upon a successful remarketing, on the purchase contract settlement date. If the senior notes are not successfully remarketed on or before the third business day prior to November 16, 2009, the maturity of the senior notes will remain November 16, 2015, and the holders of senior notes underlying a Corporate Unit will have a right to put their senior notes to us on the purchase contract settlement date and the holders of senior notes that are not part of a Corporate Unit will have a right to put their senior notes to us on the 23rd business day after the failed final remarketing.
When may the senior notes be redeemed?
In connection with any remarketing, we may elect to add optional redemption provisions to the terms of the senior notes, provided that the senior notes will not be redeemable at our option prior to the second anniversary of the purchase contract settlement date. Such election would take effect, upon a successful remarketing, on the purchase contract settlement date. Upon a failed final remarketing, any outstanding senior notes are redeemable at our option, in whole but not in part, at any time on or after November 16, 2011. In either case, the redemption price for the senior notes would be equal to 100% of the outstanding principal amount of the notes being redeemed plus accrued and unpaid interest, if any.
Additionally, the senior notes are redeemable at our option, in whole but not in part, upon the occurrence and continuation of a tax event as described in this prospectus under “Description of the senior notes—Optional redemption—Tax event.” Following any such tax event redemption of the senior notes prior to a successful remarketing, the redemption price for the senior notes that underlie the Corporate Units will be paid to the collateral agent who will purchase the tax event treasury portfolio and remit any remaining proceeds to the holders. Thereafter, the applicable ownership interests in the tax event treasury portfolio will replace the applicable ownership interests in senior notes as a component of the Corporate Units and will be pledged to us through the collateral agent. Holders of senior notes that do not underlie Corporate Units will receive the redemption price paid in such tax event redemption in full. If a tax event redemption occurs after the purchase contract settlement date, we may redeem the notes at par plus accrued and unpaid interest.
What is the treasury portfolio?
If a tax event redemption described under “Description of the senior notes—Optional redemption—Tax event” occurs prior to the earlier of a successful remarketing or a purchase contract settlement date, the

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senior notes will be redeemed and replaced by the treasury portfolio. The treasury portfolio is a portfolio of U.S. treasury securities consisting of:
    U.S. treasury securities that mature on or prior to November 15, 2008 in an aggregate amount equal to the principal amount of the senior notes underlying the Corporate Units, and
 
    for each scheduled interest payment date on the senior notes that occurs after the tax event redemption date and on or prior to November 16, 2008, U.S. treasuries maturing on or prior to that interest payment date in an amount equal to the interest payment due on the senior notes underlying the Corporate Units assuming no tax event redemption and accruing from and including the immediately preceding interest payment date.
If a tax event redemption occurs prior to the earlier of a successful remarketing or a purchase contract settlement date, the purchase contract settlement date will occur three business days after the date of the previously schedule remarketing attempt.
What is the ranking of the senior notes?
The senior notes will rank on a parity with our other senior debt securities. The indenture under which the senior notes will be issued will not limit our ability to issue or incur other unsecured debt or issue preferred stock. See “Description of the Senior Notes.”
What are your expected uses of proceeds from the offering of the Equity Units?
We expect to receive net proceeds from this offering, assuming no exercise of the underwriters’ option to purchase up to           additional Corporate Units, of approximately $           million. We intend to use these proceeds to repay one or more intercompany notes issued by us to Ford in connection with the declaration of dividends.
What are the principal United States federal income tax consequences related to Corporate Units, Treasury Units and senior notes?
If you own Corporate Units, you will be required to include in gross income interest payments made on the senior notes underlying the Corporate Units when such amounts are received or accrued in accordance with your regular method of tax accounting. If you own Treasury Units, you will be required to include in gross income your allocable share of any original issue discount or acquisition discount on the treasury securities that accrues in such year. We intend to report purchase contract payments on the stock purchase contracts as income to you, but you may want to consult your tax advisor concerning possible alternative characterizations. See “Certain United States Federal Income Tax Consequences.”
What are the rights and privileges of the Class A common stock?
The shares of our Class A common stock that you will be obligated to purchase under the purchase contracts have one vote per share, while holders of our Class B common stock are entitled to five votes per share. The holders of our Class A common stock and Class B common stock will be entitled to share equally on a per share basis in all dividends and other distributions declared by our Board of Directors. Under certain circumstances, shares of our Class B common stock can be converted into an equivalent number of shares of our Class A common stock. For more information, please see the discussion of our Class A common stock in this prospectus under the heading “Risk Factors” and “Description of our capital stock.” Upon completion of this offering and the concurrent offering of Class A common stock, Ford will beneficially own 100% of our outstanding Class B common stock.

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The offering — Explanatory diagrams
The following diagrams demonstrate some of the key features of the purchase contracts, applicable ownership interests in senior notes, Corporate Units and Treasury Units, and the transformation of Corporate Units into Treasury Units and senior notes.
The following diagrams assume that the senior notes are successfully remarketed on the third business day immediately preceding November 16, 2008 and the interest rate on the senior notes is reset, early settlement does not occur and there are no adjustments to the settlement rate. If the initial remarketing attempt is not successful, then the purchase contract settlement date will be deferred for up to four quarterly periods, and the remarketing agents will attempt to remarket the notes on subsequent remarketing dates. The settlement rate for a deferred purchase contract settlement date will be the same rate as would have been used for the initial scheduled purchase contract settlement date of November 16, 2008.
Purchase Contract
Corporate Units and Treasury Units both include a purchase contract under which the holder agrees to purchase shares of our Class A common stock on the purchase contract settlement date. In addition, these purchase contracts include unsecured contract adjustment payments as shown in the diagrams on the following pages.
     
Value of Delivered Shares   Number of Shares Delivered
Upon Settlement of a Purchase Contract   Upon Settlement of a Purchase Contract
(CHART)   (CHART)
 
Notes:    
(1) If the applicable market value of our Class A common stock is less than or equal to the reference price of $          , the number of shares of our Class A common stock to be delivered to a holder of an Equity Unit will be calculated by dividing the stated amount of $25 by the reference price.

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(2) If the applicable market value of our Class A common stock is between the reference price and the threshold appreciation price of $           , the number of shares of our Class A common stock to be delivered to a holder of an Equity Unit will be calculated by dividing the stated amount of $25 by the applicable market value.
(3) If the applicable market value of our Class A common stock is greater than or equal to the threshold appreciation price, the number of shares of our Class A common stock to be delivered to a holder of an Equity Unit will be calculated by dividing the stated amount of $25 by the threshold appreciation price of $           .
(4) The reference price will be equal to the initial public offering price of our Class A common stock.
(5) The threshold appreciation price represents a      % appreciation over the reference price.
(6) The “applicable market value” means the average of the closing price per share of our Class A common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding November 16, 2008 (regardless of whether the purchase contract settlement date is deferred beyond November 16, 2008), subject to anti-dilution adjustments. For purposes of any deferred purchase contract settlement date, “applicable market value” and the resulting settlement rate will be the same as if the purchase contracts were being settled on the initially scheduled purchase contract settlement date.
Corporate Units
A Corporate Unit consists of two components as described below:
     
    1/40 Ownership Interest in
Purchase Contract   Senior Note(1)(2)
 
 
 
(Owed to Holder)
  (Owed to Holder)
Class A common stock
  Interest
+
  % per year paid quarterly
Contract Adjustment Payment
   
% per year
  (at reset rate following a successful
paid quarterly
  remarketing and paid monthly, quarterly or
 
  semi-annually thereafter)
 
 
 
   
(Owed to Hertz)
  (Owed to Holder)
$25 at Settlement
  $25 at Maturity
 
 
(November 16, 2008)
  (November 16, 2015,
 
 
unless adjusted)
 
       
 
Notes:    
(1) Each holder will own a 1/40, or 2.5%, undivided beneficial ownership interest in, and will be entitled to a corresponding portion of each interest payment payable in respect of, a $1,000 principal amount senior note.
(2) Senior notes will be issued in minimum denominations of $1,000 and integral multiples thereof.

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  The holder of a Corporate Unit owns the 1/40 undivided beneficial ownership interest in the senior note but will pledge it to us to secure the holder’s obligation under the related purchase contract.
 
  If the treasury portfolio has replaced the senior notes as a result of a tax event redemption prior to the earlier of a successful remarketing or a purchase contract settlement date, the applicable ownership interest in the treasury portfolio will also replace the applicable ownership interest in senior notes as a component of the Corporate Unit.
Treasury Units
A Treasury Unit consists of two components as described below:
     
    1/40 Ownership Interest in
Purchase Contract   Treasury Security
 
 
     
(Owed to Holder)
   
Class A common stock
   
+
   
Contract Adjustment Payment
   
% per year
   
paid quarterly
   
 
     
 
   
(Owed to Hertz)
  (Owed to Holder)
$25 at Settlement
  $25 at Maturity
 
(November 16, 2008)
  (November 16, 2008)
 
     
  The holder owns the 1/40 ownership interest in the treasury security that forms a part of the Treasury Unit but will pledge it to us through the collateral agent to secure the holder’s obligations under the related purchase contract. Unless the purchase contract is terminated as a result of our bankruptcy, insolvency or reorganization or the holder recreates a Corporate Unit, the treasury security will be used to satisfy the holder’s obligation under the related purchase contract.
 
  Treasury Units can only be created with integral multiples of 40 Corporate Units.

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Senior Notes
Senior notes have the terms described below:
         
 
  Senior Note    
 
 
   
         
 
  (Owed to Holder)    
 
  Interest    
 
  % per year paid quarterly

(at reset rate following a successful remarketing and
paid monthly, quarterly or semi-annually thereafter)

         
   
         
 
  (Owed to Holder)    
 
  $1,000 at Maturity

   
 
  (November 16, 2015, unless adjusted)    
         
Transforming Corporate Units into Treasury Units and Senior Notes
  Because the senior notes and the treasury securities are issued in minimum denominations of $1,000, holders of Corporate Units may only create Treasury Units in integral multiples of 40 Corporate Units.
 
  To create 40 Treasury Units, a holder separates 40 Corporate Units into their two components – 40 purchase contracts and a senior note—and then combines the purchase contracts with a treasury security that matures on the day immediately preceding the purchase contract settlement date.
 
  The senior note, which is no longer a component of Corporate Units and has a principal amount of $1,000, is released to the holder and is tradable as a separate security.
 
  A holder owns the treasury security that forms a part of the Treasury Units but will pledge it to us through the collateral agent to secure its obligation under the related purchase contract.
 
  The treasury security together with the 40 purchase contracts constitute 40 Treasury Units.

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        1/40 Ownership               1/40 Ownership       1/40 Ownership
        Interest in               Interest in       Interest in
Purchase Contract       Senior Note(1)(2)       Purchase Contract       Treasury Security       Senior Note(1)(2)
 
 
(Owed to Holder)
      (Owed to Holder)       (Owed to Holder)               (Owed to Holder)
Class A common
      Interest       Class A common stock               Interest
stock
      % per year paid       +               % per year paid
+
      quarterly       Contract Adjustment               quarterly
Contract Adjustment
              Payment                
Payment
% per year
paid quarterly
  +   (at reset rate following a successful remarketing and paid monthly, quarterly or semi-annually thereafter)   ®   % per year
paid quarterly
  +       +   (at reset rate following a successful remarketing and paid monthly, quarterly or semi-annually thereafter)
 
 
                               
(Owed to Hertz)
      (Owed to Holder)       (Owed to Hertz)       (Owed to Holder)       (Owed to Holder)
$25 at Settlement
      $25 at Maturity       $25 at Settlement       $25 at Maturity       $25 at Maturity
 
                               
(November 16, 2008)
      (November 16, 2015,       (November 16, 2008)       (November 15, 2008)       (November 16, 2015,
 
      unless adjusted)                       unless adjusted)
         
 
                               
Corporate Unit
      Treasury Unit
       
    Following a tax event redemption, the applicable ownership interests in the treasury portfolio, rather than the senior note, will be released to the holder upon the transformation of a Corporate Unit into a Treasury Unit and will be tradable separately.
 
    The holder can also transform 40 Treasury Units and a $1,000 principal senior note (or, following a tax event redemption, the applicable ownership interest in the treasury portfolio) into 40 Corporate Units. Following that transformation, the treasury security, which will no longer be a component of the Treasury Unit, will be released to the holder and will be tradable as a separate security.
 
    If, following a tax event redemption, the applicable ownership interest in the treasury portfolio has replaced the senior notes underlying the Corporate Units, you will no longer be permitted to create any Treasury Units from Corporate Units or recreate any Corporate Units from Treasury Units.
 
Notes:    
(1) Each holder will own a 1/40, or 2.5%, undivided beneficial ownership interest in, and will be entitled to a corresponding portion of
     each interest payment payable in respect of, a $1,000 principal amount senior note.
(2) Senior notes will be issued in minimum denominations of $1,000 and integral multiples thereof.

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Risks related to this offering
You assume the risk that the market value of our Class A common stock may decline.
Although as a holder of Corporate Units or Treasury Units you will be the beneficial owner of the related applicable ownership interests in senior notes, Treasury securities or the applicable ownership interests in the Treasury portfolio, as the case may be, you do have an obligation to buy shares of our Class A common stock pursuant to the purchase contract that is a part of the Corporate Units and Treasury Units. Unless you pay cash to satisfy your obligation under the purchase contracts or the purchase contracts are terminated due to our bankruptcy, insolvency or reorganization, on the purchase contract settlement date, in the case of Corporate Units, either the principal of the appropriate applicable ownership interests in the Treasury portfolio when paid at maturity, the proceeds attributable to the applicable ownership interest in senior notes derived from the successful remarketing of the senior notes or, if no successful remarketing has occurred, the put price paid upon the automatic put of the senior notes to us, or in the case of Treasury Units, the principal of the related Treasury securities when paid at maturity, will automatically be used to purchase a specified number of shares of our Class A common stock on your behalf.
The number of shares of our Class A common stock that you will receive upon the settlement of a purchase contract is not fixed initially but instead will depend on the average of the closing price per share of our Class A common stock on the 20 consecutive trading days ending on the third trading day immediately preceding the purchase contract settlement date, which we refer to as the applicable market value. If the purchase contract settlement date has not occurred on November 16, 2008 because of a failed remarketing, the settlement rate will be fixed based on the applicable market value as of the November 16, 2008 measurement date for the purchase contract settlement date which will occur on one of the four quarterly periods until November 16, 2009. There can be no assurance that the market value of Class A common stock received by you on the purchase contract settlement date will be equal to or greater than the price per share paid by you for our Class A common stock. If the applicable market value of the Class A common stock is less than $    , the market value of the Class A common stock issued to you pursuant to each purchase contract on the purchase contract settlement date (assuming that the market value is the same as the applicable market value of the Class A common stock) will be less than the effective price per share paid by you for the Class A common stock on the date of issuance of the Equity Units. Accordingly, you assume the risk that the market value of the Class A common stock may decline and that the decline could be substantial.
The opportunity for equity appreciation provided by an investment in the Equity Units is less than that provided by a direct investment in our Class A common stock.
Your opportunity for equity appreciation afforded by investing in the Equity Units is less than your opportunity for equity appreciation if you directly invested in our Class A common stock. This opportunity is less because the market value of the Class A common stock to be received by you pursuant to the purchase contract on the purchase contract settlement date (assuming that the market value is the same as the applicable market value of the Class A common stock) will only exceed the price per share paid by you for our Class A common stock on the purchase contract settlement date if the applicable market value of the Class A common stock exceeds the threshold appreciation price (which represents an appreciation of      % over the reference price). If the applicable market value of our Class A common stock exceeds the reference price but falls below the threshold appreciation price, you realize no equity appreciation of the Class A common stock for the period during which you own the purchase contract. Furthermore, if the applicable market value of our Class A common stock equals or exceeds the threshold appreciation price, you would receive on the purchase contract settlement date only approximately      % of the value of the shares of Class A common stock you could have purchased with $     25.00 at the reported last sale price of our Class A common stock on the date of issuance of the Equity Units.

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The trading prices for the Corporate Units and Treasury Units will be directly affected by the trading prices of our Class A common stock.
The trading prices of Corporate Units and Treasury Units in the secondary market will be directly affected by the trading prices of our Class A common stock, the general level of interest rates and our credit quality. It is impossible to predict whether the price of the Class A common stock or interest rates will rise or fall. Trading prices of the Class A common stock will be influenced by our operating results and prospects and by economic, financial and other factors. In addition, general market conditions, including the level of, and fluctuations in the trading prices of stocks generally, and sales of substantial amounts of Class A common stock by us in the market after the offering of the Equity Units, or the perception that such sales could occur, could affect the price of our Class A common stock. Fluctuations in interest rates may give rise to arbitrage opportunities based upon changes in the relative value of the Class A common stock underlying the purchase contracts and of the other components of the Equity Units. Any such arbitrage could, in turn, affect the trading prices of the Corporate Units, Treasury Units, senior notes and our Class A common stock.
If you hold Corporate Units or Treasury Units, you will not be entitled to any rights with respect to our Class A common stock, but you will be subject to all changes made with respect to our Class A common stock.
If you hold Corporate Units or Treasury Units, you will not be entitled to any rights with respect to our Class A common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on the Class A common stock), but you will be subject to all changes affecting the Class A common stock. You will only be entitled to rights on the Class A common stock if and when we deliver shares of Class A common stock in exchange for Corporate Units or Treasury Units on the purchase contract settlement date, or as a result of early settlement, as the case may be, and the applicable record date, if any, for the exercise of rights occurs after that date. For example, in the event that an amendment is proposed to our certificate of incorporation or by-laws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to delivery of the Class A common stock, you will not be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our Class A common stock.
We may issue additional shares of Class A common stock and thereby materially and adversely affect the price of our Class A common stock.
The number of shares of Class A common stock that you are entitled to receive upon any settlement date or as a result of early settlement of a purchase contract is subject to adjustment for certain events arising from stock splits and combinations, cash or stock dividends and certain other actions by us that modify our capital structure. We will not adjust the number of shares of Class A common stock that you are to receive upon settlement of a purchase contract for other events, including offerings of Class A common stock for cash by us or in connection with acquisitions, or any dividend to Ford in connection with the over-allotment options for the Class A common stock offering. We are not restricted from issuing additional Class A common stock during the term of the purchase contracts and have no obligation to consider your interests for any reason. If we issue additional shares of Class A common stock, it may materially and adversely affect the price of our Class A common stock and, because of the relationship of the number of shares to be received on the purchase contract settlement date to the price of the Class A common stock, such other events may adversely affect the trading price of the Corporate Units or Treasury Units.

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You may have to pay taxes with respect to distributions on our Class A common stock that you do not receive.
The number of shares of Class A common stock that you are entitled to receive on the purchase contract settlement date or as a result of early settlement of a purchase contract is subject to adjustment for certain events arising from stock splits and combinations, stock dividends, cash dividends and certain other actions by us that modify our capital structure. See “Description of the purchase contracts—Anti-dilution adjustments.” If the settlement rate is adjusted as a result of a distribution that is taxable to our Class A common stockholders, such as a cash dividend, you would be required to include an amount in income for federal income tax purposes, notwithstanding the fact that you do not actually receive such distribution. Non-U.S. holders of the Equity Units may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal withholding tax requirements. See “United States federal income tax consequences—Adjustment to settlement rate.”
The secondary market for the Corporate Units, Treasury Units or senior notes may be illiquid.
It is not possible to predict how Corporate Units, Treasury Units or senior notes will trade in the secondary market or whether the market will be liquid or illiquid. There is currently no secondary market for either our Corporate Units, Treasury Units or senior notes. We have applied to list the Corporate Units on the New York Stock Exchange under the symbol “HTZ PrE.” If the Treasury Units or the senior notes are separately traded to a sufficient extent that applicable exchange listing requirements are met, we will try to list the Treasury Units or the senior notes on the same exchange as the Corporate Units. There can be no assurance as to the liquidity of any market that may develop for the Corporate Units, the Treasury Units or the senior notes, your ability to sell these securities or whether a trading market, if it develops, will continue. In addition, in the event a sufficient number of holders of Corporate Units were to convert their Treasury Units to Corporate Units or their Corporate Units to Treasury Units, as the case may be, the liquidity of Corporate Units or Treasury Units could be adversely affected. There can be no assurance that the Corporate Units will not be delisted from the New York Stock Exchange or that trading in the Corporate Units will not be suspended as a result of your election to create Treasury Units by substituting collateral, which could cause the number of Corporate Units to fall below the requirement for listing securities on the New York Stock Exchange.
Your rights to the pledged securities will be subject to our security interest and delivery of pledged securities is subject to delay if we become subject to a bankruptcy proceeding.
Although you will be the beneficial owner of the applicable ownership interests in senior notes, Treasury securities or applicable ownership interests in the Treasury portfolio, as applicable, those securities will be pledged to us through the collateral agent to secure your obligations under the related purchase contracts. Thus, your rights to the pledged securities will be subject to our security interest. Additionally, notwithstanding the automatic termination of the purchase contracts, in the event that we become the subject of a case under the U.S. Bankruptcy Code, the delivery of the pledged securities to you may be delayed by the imposition of the automatic stay under Section 362 of the U.S. Bankruptcy Code and claims arising out of the senior notes, like all other claims in bankruptcy proceedings, will be subject to the equitable jurisdiction and powers of the bankruptcy court.

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We may redeem the senior notes upon the occurrence of a tax event.
We have the option to redeem the senior notes on not less than 30 days nor more than 60 days prior written notice, in whole but not in part, if a tax event occurs and continues under the circumstances described in this prospectus, which we call a tax event redemption. If we exercise this option to redeem the senior notes, we will pay the redemption price, as described herein, in cash to the holders of the senior notes. The redemption price payable to you as a holder of Corporate Units will be distributed to the collateral agent, who in turn will apply a portion of the redemption price to purchase the Treasury portfolio on your behalf, and will remit the remainder of the redemption price, if any, to you, and the Treasury portfolio will be substituted for the senior notes as collateral to secure your obligations under the purchase contracts related to the Corporate Units. If your senior notes do not underlie Corporate Units, you will receive the redemption payment directly. There can be no assurance as to the effect on the market price for the Corporate Units if we substitute the Treasury portfolio as collateral in place of any senior notes so redeemed. A tax event redemption will be a taxable event to the holders of the senior notes, see “United States federal income tax consequences—Tax event redemption of the senior notes” in this prospectus.
The purchase contract and pledge agreement will not be qualified under the Trust Indenture Act and the obligations of the purchase contract agent are limited.
The purchase contract and pledge agreement between us and the purchase contract agent will not be qualified as an indenture under the Trust Indenture Act of 1939, and the purchase contract agent will not be required to qualify as a trustee under the Trust Indenture Act. Thus, you will not have the benefit of the protection of the Trust Indenture Act with respect to the purchase contract and pledge agreement or the purchase contract agent. The senior notes constituting a part of the Corporate Units will be issued pursuant to an indenture which will be qualified under the Trust Indenture Act. Accordingly, if you hold Corporate Units, you will have the benefit of the protections of the Trust Indenture Act only to the extent applicable to the applicable ownership interests in senior notes included in the Corporate Units. The protections generally afforded the holder of a security issued under an indenture that has been qualified under the Trust Indenture Act include:
    disqualification of the indenture trustee for “conflicting interests,” as defined under the Trust Indenture Act;
 
    provisions preventing a trustee that is also a creditor of the issuer from improving its own credit position at the expense of the security holders immediately prior to or after a default under such indenture; and

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    the requirement that the indenture trustee deliver reports at least annually with respect to certain matters concerning the indenture trustee and the securities.
The trading price of the senior notes may not fully reflect the value of their accrued but unpaid interest.
The senior notes may trade at a price that does not fully reflect the value of their accrued but unpaid interest.

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Ratio of earnings to fixed charges
The following are consolidated ratio of earnings to fixed charges for each of the periods indicated.
                         
    Six Months      
    Ended June      
    30,   Year Ended December 31,
    2005   2004   2003   2002   2001   2000
Ratio of Earnings to Fixed Charges (1)
  1.6   1.9   1.5   1.4   1.0   2.1
 
(1) Earnings have been calculated by adding interest expense and the portion of rentals estimated to represent the interest factor to income before income taxes. Fixed charges include interest (including capitalized interest) and the portion of rentals estimated to represent the interest factor.

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Description of the Equity Units
The following description is a summary of some of the terms of the Equity Units. This summary, together with the summary of some of the provisions of the related documents described below, contains a description of all of the material terms of the Equity Units but is not necessarily complete. We refer you to the copies of those documents that have been or will be filed and incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.
We will issue the Equity Units under the purchase contract and pledge agreement between us and         , who we refer to as the purchase contract agent. Equity Units may be either Corporate Units or Treasury Units. The Equity Units initially will consist of            Corporate Units, each with a stated amount of $25.
Corporate Units
Each Corporate Unit will consist of a unit comprising:
  (a)   a purchase contract, under which:
  (1)   you will agree to purchase from us, and we will agree to sell to you on the purchase contract settlement date (scheduled to occur on November 16, 2008, subject to deferral for up to four quarterly periods until November 16, 2009 if remarketing attempts are not successful; provided that if any such date is not a business day, settlement will occur on the following business day), or upon early settlement, for $25 in cash, a number of newly issued shares of our Class A common stock equal to the settlement rate described below under “Description of the purchase contracts—Purchase of Class A common stock” or “Description of the purchase contracts—Early settlement,” as the case may be, subject to anti-dilution adjustments, and
 
  (2)   we will pay you quarterly contract adjustment payments at the rate of      % per year on the stated amount of $25, or $           per year, subject to our right to defer any contract adjustment payments, and
  (b)   either:
  (1)   a 1/40, or 2.5%, undivided, beneficial ownership interest in a $1,000 principal amount senior note issued by us, or
 
  (2)   following the occurrence of a tax event redemption, the applicable ownership interest in a portfolio of U.S. treasury securities, which we refer to as the treasury portfolio.
The “applicable ownership interest” means, with respect to a Corporate Unit and the U.S. treasury securities in the treasury portfolio,
    a 1/40, or 2.5%, undivided, beneficial ownership interest in $1,000 face amount of U.S. treasury securities included in the treasury portfolio that matures on the business day immediately prior to the purchase contract settlement date; and

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    for each scheduled interest payment date on the senior notes that occurs after the tax event redemption date and on or prior to the purchase contract settlement date, an undivided beneficial ownership interest in a $1,000 U.S. treasury security that matures on or prior to that interest payment date in an amount equal to the interest payment that would be due on a 1/40, or 2.5%, beneficial ownership interest in the principal amount of the senior notes that would have been components of the Corporate Units assuming no tax event redemption and accruing from and including the immediately preceding interest payment date.
The purchase price of each Equity Unit will be allocated between the related purchase contract and the related applicable ownership interest in senior notes in proportion to their respective fair market values at the time of issuance. We have determined that, at the time of issuance, the fair market value of the applicable ownership interest in senior notes will be $        and the fair market value of each purchase contract will be $      . We agree and each holder, by purchasing an Equity Unit, agrees to treat the holder of the Equity Unit as the owner of the senior note and to treat the fair market value per unit of the holder’s ownership interest in senior notes as $              and the fair market value of each purchase contract as $             .

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As long as a unit is in the form of a Corporate Unit, any ownership interest in a senior note or any appropriate applicable ownership interest in the treasury portfolio, as applicable, forming a part of the Corporate Unit will be pledged to us through the collateral agent to secure your obligation to purchase Class A common stock under the related purchase contract.
Creating Treasury Units
Unless the treasury portfolio has replaced the senior notes underlying the Corporate Units as a result of a tax event redemption prior to the purchase contract settlement date, you will have the right, at any time on or prior to the applicable remarketing settlement date, except in connection with a remarketing as described below, to substitute for the related senior notes held by the collateral agent, zero-coupon treasury securities (as described below) that mature on the applicable settlement date, each of which we refer to as a treasury security, in a total principal amount at maturity equal to the aggregate principal amount of the senior notes underlying the applicable ownership interests in senior notes for which substitution is being made.
     
Applicable Settlement Date   CUSIP No.
November 15, 2008
  912820DK0
February 15, 2009
  912820JW8
May 15, 2009
  912820DV6
August 15, 2009
  912820EA1
November 15, 2009
  912800AA7
The “applicable settlement date” is the first date that occurs after the date of substitution among November 15, 2008, February 15, 2009, May 15, 2009, August 15, 2009 and November 15, 2009.
Because treasury securities and the senior notes are issued in integral multiples of $1,000, holders of Corporate Units may make this substitution only in integral multiples of 40 Corporate Units.
Each of these substitutions will create Treasury Units, and the applicable senior notes will be released to you and will be separately tradable from the Treasury Units. Each Treasury Unit will consist of a unit with a stated amount of $25 comprising:
  (a)   a purchase contract under which
  (1)   you will agree to purchase from us, and we will agree to sell to you, not later than the purchase contract settlement date, for $25 in cash, a number of newly issued shares of our Class A common stock equal to the settlement rate, subject to anti-dilution adjustments, and
 
  (2)   we will pay you quarterly contract adjustment payments at the rate of      % per year on the stated amount of $25, or $         per year, subject to our right to defer any contract adjustment payments, and
  (b)   a 1/40, or 2.5%, undivided beneficial interest in a treasury security with a principal amount of $1,000.

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To create 40 Treasury Units, you will:
    deposit with the collateral agent a treasury security that has a principal amount payable on the business day prior to the applicable settlement date of $1,000 which must be purchased on the open market at your expense (unless otherwise owned by you), and
 
    transfer 40 Corporate Units to the purchase contract agent accompanied by a notice stating that you have deposited a treasury security with the collateral agent and requesting the release to you of the senior notes relating to the 40 Corporate Units.
Upon the deposit and receipt of an instruction from the purchase contract agent, the collateral agent will release the related senior note from the pledge under the pledge agreement, free and clear of our security interest, to the purchase contract agent. The purchase contract agent then will:
    cancel the 40 Corporate Units,
 
    transfer the related $1,000 principal amount of senior note to you, and
 
    deliver 40 Treasury Units to you.
The treasury security will be substituted for the senior note and will be pledged to us through the collateral agent to secure your obligation to purchase Class A common stock under the related purchase contracts. The related senior note released to you thereafter will trade separately from the resulting Treasury Units.
Recreating Corporate Units
Unless the treasury portfolio has replaced the senior notes underlying the Corporate Units, if you hold Treasury Units you will have the right at any time on or prior to the seventh business day immediately preceding the applicable settlement date to substitute for the related treasury securities held by the collateral agent, the senior notes having a principal amount equal to the aggregate principal amount at stated maturity of the treasury securities for which substitution is being made.
Because treasury securities and senior notes are issued in integral multiples of $1,000, you may make these substitutions only in integral multiples of 40 Treasury Units.
Each of these substitutions will recreate Corporate Units, and the applicable treasury securities will be released to you and be separately tradable from the Corporate Units.
To create 40 Corporate Units, unless the treasury portfolio has replaced the senior notes underlying the Corporate Units, you will:
    deposit with the collateral agent a $1,000 principal amount senior note, which must be purchased in the open market at your expense unless otherwise owned by you, and
 
    transfer 40 Treasury Unit certificates to the purchase contract agent accompanied by a notice stating that you have deposited a $1,000 principal amount senior note with the collateral agent and requesting the release to you of the treasury security relating to the Treasury Units.

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Upon the deposit and receipt of an instruction from the purchase contract agent, the collateral agent will release the related treasury security from the pledge under the pledge agreement, free and clear of our security interest, to the purchase contract agent. The purchase contract agent will then:
    cancel the 40 Treasury Units,
 
    transfer the related treasury security to you, and
 
    deliver 40 Corporate Units to you.
The substituted senior note will be pledged to us through the collateral agent to secure your obligation to purchase Class A common stock under the related purchase contracts.
If you elect to substitute pledged securities, thereby creating Treasury Units or recreating Corporate Units, you will be responsible for any fees or expenses payable in connection with the substitution.
Current payments
Holders of Corporate Units will be entitled to receive quarterly cash distributions consisting of their pro rata share of interest payments on the senior notes calculated at the rate of         % per year on the senior notes (or distributions on the applicable ownership interests in the treasury portfolio if the senior notes have been replaced by the treasury portfolio), and contract adjustment payments payable by us at the rate of      % per year on the stated amount of $25 per Corporate Unit, subject to our right to defer contract adjustment payments until the earliest of the purchase contract settlement date, the cash merger early settlement date (as described in “Description of the purchase contracts—Early settlement upon cash merger”) and the most recent quarterly payment date on or before any other early settlement of the related purchase contracts.
Holders of Treasury Units will be entitled to receive quarterly contract adjustment payments payable by us at the rate of      % per year on the stated amount of $25 per Treasury Unit, subject to our right to defer contract adjustment payments until the earliest of the purchase contract settlement date, the cash merger early settlement date (as described in “Description of the purchase contracts—Early settlement upon cash merger”) and the most recent quarterly payment date on or before any other early settlement of the related purchase contracts. There will be no distributions in respect of the treasury securities underlying the Treasury Units but the holders of the Treasury Units will continue to receive the scheduled quarterly interest payments on the senior notes that were released to them when the Treasury Units were created for as long as they hold the senior notes.
Ranking
The senior notes will rank on a parity with our other senior debt securities. The indenture under which the senior notes will be issued will not limit our ability to issue or incur other unsecured debt or issue preferred stock. See “Description of the Senior Notes.”
Our obligations with respect to the contract adjustment payments will be subordinate in right of payment to our senior indebtedness. “Senior indebtedness” with respect to the contract adjustment payments means indebtedness of any kind unless the instrument under which such indebtedness is incurred expressly provides that it is on a parity in right of payment with or subordinate in right of payment to the contract adjustment payments.

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Voting and certain other rights
Holders of purchase contracts forming part of the Corporate Units or Treasury Units, in their capacities as such holders, will have no voting or other rights in respect of the Class A common stock.
Listing of the securities
The Corporate Units have been approved for listing on the New York Stock Exchange under the symbol “HTZ PrE,” subject to official notice of issuance. Unless and until substitution has been made as described in “—Creating Treasury Units” or “—Recreating Corporate Units,” none of the senior notes, the applicable ownership interests in senior notes or the applicable ownership interests in the treasury portfolio will trade separately from the Corporate Units. The applicable ownership interests in senior notes or the applicable ownership interests in the treasury portfolio component will trade as a unit with the purchase contract component of the Corporate Units. If the senior notes or the Treasury Units are separately traded to a sufficient extent that applicable exchange listing requirements are met, we will use commercially reasonable efforts to cause the senior notes to be listed on the same exchange as the Corporate Units are then listed, including, if applicable, the New York Stock Exchange.
Miscellaneous
We or our affiliates may from time to time purchase any of the securities offered by this prospectus that are then outstanding by tender, in the open market, by private agreement, or otherwise. However, we and our affiliates will not participate as bidders for the senior notes in any remarketing.

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Description of the purchase contracts
The following description is a summary of some of the terms of the purchase contract and pledge agreement, purchase contracts and remarketing agreement. This summary, together with the summary of some of the provisions of the related documents described below, contains a description of all of the material terms of the purchase contract and pledge agreement, purchase contracts and remarketing agreement but is not necessarily complete. We refer you to the copies of those documents that have been or will be filed and incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.
Purchase of Class A common stock
Each purchase contract underlying a Corporate Unit or Treasury Unit will obligate you to purchase, and us to sell, on the purchase contract settlement date, for an amount in cash equal to the stated amount of the Corporate Unit or Treasury Unit, a number of newly issued shares of our Class A common stock equal to the “settlement rate.” If the initial remarketing attempt is not successful, then the purchase contract settlement date will be deferred for up to four quarterly periods, and the remarketing agents will attempt to remarket the notes on subsequent remarketing dates. The settlement rate for a deferred purchase contract settlement date will be the same rate as would have been used for the initial purchase contract settlement date. The settlement rate will be calculated, subject to adjustment under the circumstances described in “—Anti-dilution adjustments,” as follows:
    If the applicable market value of our Class A common stock is equal to or greater than the threshold appreciation price of $           , the settlement rate will be        shares of our Class A common stock (the “minimum settlement rate”), which is the number of shares equal to $25 divided by the threshold appreciation price.
Accordingly, if the market value for the Class A common stock increases between the date of this prospectus and the period during which the applicable market value is measured (which period will not extend beyond November 16, 2008 regardless of whether the purchase contract settlement date is deferred beyond November 16, 2008) and the applicable market value is greater than the threshold appreciation price, the aggregate market value of the shares of Class A common stock issued upon settlement of each purchase will be higher than the stated amount, assuming that the market price of the Class A common stock on the purchase contract settlement date is the same as the applicable market value of the Class A common stock. If the applicable market value is the same as the threshold appreciation price, the aggregate market value of the shares issued upon settlement will be equal to the stated amount, assuming that the market price of the Class A common stock on the purchase contract settlement date is the same as the applicable market value of the Class A common stock.
    If the applicable market value of our Class A common stock is less than the threshold appreciation price but greater than the reference price of $          , the settlement rate will be a number of shares of our Class A common stock equal to $25 divided by the applicable market value.

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Accordingly, if the market value for the Class A common stock increases between the date of this prospectus and the period during which the applicable market value is measured (which period will not extend beyond November 16, 2008 regardless of whether the purchase contract settlement date is deferred beyond November 16, 2008), but the applicable market value is less than the threshold appreciation price, the aggregate market value of the shares of Class A common stock issued upon settlement of each purchase contract will be equal to the stated amount, assuming that the market price of the Class A common stock on the purchase contract settlement date is the same as the applicable market value of the Class A common stock.
    If the applicable market value of our Class A common stock is less than or equal to the reference price, the settlement rate will be shares of our Class A common stock (the “maximum settlement rate”), which is the number of shares equal to $25 divided by the reference price.
Accordingly, if the market value for the Class A common stock decreases between the date of this prospectus and the period during which the applicable market value is measured (which period will not extend beyond November 16, 2008 regardless of whether the purchase contract settlement date is deferred beyond November 16, 2008), and the applicable market value is less than the reference price, the aggregate market value of the shares of Class A common stock issued upon settlement of each purchase contract will be less than the stated amount, assuming that the market price on the purchase contract settlement date is the same as the applicable market value of the Class A common stock. If the applicable market value is the same as the reference price, the aggregate market value of the shares will be equal to the stated amount, assuming that the market price of the Class A common stock on the purchase contract settlement date is the same as the applicable market value of the Class A common stock.
If you elect to settle your purchase contract early in the manner described under “—Early settlement,” the number of shares of our Class A common stock issuable upon settlement of such purchase contract will be        , the minimum settlement rate, subject to adjustment as described under “—Anti-dilution adjustments.” We refer to the minimum settlement rate and the maximum settlement rate collectively as the fixed settlement rates.
The “applicable market value” means the average of the closing price per share of our Class A common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding November 16, 2008 (regardless of whether the purchase contract settlement date is deferred beyond November 16, 2008), subject to adjustment as set forth in “—Anti-dilution adjustments.” The reference price will be equal to the initial public offering price of our Class A common stock. The threshold appreciation price represents a      % appreciation over the reference price.
“Closing price” of the Class A common stock on any date of determination means the closing sale price per share (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid prices and the average ask prices) of the Class A common stock on the New York Stock Exchange on that date or, if the Class A common stock is not listed for trading on the New York Stock Exchange on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Class A common stock is so listed. If the Class A common stock is not so listed on a United States national or regional securities exchange, the closing price means the last closing sale price of the Class A common stock as reported by the Nasdaq National Market, or, if the Class A common stock is not so reported, the last quoted bid price for the Class A common stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization. If the bid price is not available, the closing price means the market value of the Class A common stock on the date of determination as determined by a nationally recognized independent investment banking firm retained by us for this purpose.

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A “trading day” means a day on which the Class A common stock
    is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and
 
    has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Class A common stock.
We will not issue any fractional shares of Class A common stock pursuant to the purchase contracts. In lieu of fractional shares otherwise issuable (calculated on an aggregate basis) in respect of purchase contracts you are settling, you will be entitled to receive an amount of cash equal to the fraction of a share times the closing price per share of Class A common stock on the trading day immediately preceding the purchase contract settlement date.
On the purchase contract settlement date, unless:
    you have settled the related purchase contracts prior to the purchase contract settlement date through the early delivery of cash to the purchase contract agent in the manner described under “—Early settlement” or “—Early settlement upon cash merger,”
 
    you have that settled the related purchase contracts with separate cash on the third business day immediately preceding a remarketing date pursuant to prior notice given in the manner described under “—Notice to settle with cash,” or
 
    an event described under “—Termination” has occurred, then, the settlement of the stock purchase contracts will occur as follows:
 
    in the case of Corporate Units where the treasury portfolio has replaced the senior notes underlying the Corporate Units because of a tax event redemption, proceeds equal to the stated amount of $25 per Corporate Unit when paid at maturity of the appropriate applicable ownership interests of the treasury portfolio automatically will be applied to satisfy in full your obligation to purchase common stock under the related purchase contracts;
 
    in the case of Corporate Units where there has been a successful remarketing of the senior notes on the remarketing date, the portion of the proceeds from the remarketing equal to the principal amount of the senior notes remarketed automatically will be applied to satisfy in full your obligation to purchase shares of our Class A common stock under the related purchase contracts;
 
    in the case of Corporate Units where there has been a failed final remarketing of the senior notes, you will be deemed to have automatically exercised your right to put your senior notes to us on the purchase contract settlement date at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest in satisfaction of such holder’s obligations to us under the related purchase contracts, thereby satisfying such obligations in full, unless, prior to 11:00 a.m., New York City time, on the second business day immediately preceding the purchase contract settlement date, you provide a written notice of an intention to settle the related purchase contract with separate cash and on or prior to the business day immediately preceding the purchase contract settlement date deliver to the collateral agent the purchase price in cash; and

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    in the case of Treasury Units, the principal amount of the related treasury securities, when paid at maturity, automatically will be applied to satisfy in full your obligation to purchase common stock under the related purchase contracts.
The common stock will then be issued and delivered to you or your designee, upon presentation and surrender of the certificate evidencing the Corporate Units or Treasury Units and payment by you of any transfer or similar taxes payable in connection with the issuance of the Class A common stock to any person other than you.
By acceptance of these securities, you will be deemed to have:
    irrevocably agreed to be bound by the terms and provisions of the related purchase contracts and the purchase contract and pledge agreement and to have agreed to perform your obligations thereunder for so long as you remain a holder of the Corporate Units or Treasury Units; and
 
    duly appointed the purchase contract agent as your attorney-in-fact to enter into and perform the related purchase contracts and purchase contract and pledge agreement on your behalf and in your name.
In addition, as a beneficial owner of Corporate Units or Treasury Units, by acceptance of the beneficial interest therein, you will be deemed to have agreed to treat:
    yourself as the owner of the related senior notes underlying the Corporate Units, applicable ownership interests in the treasury portfolio or the treasury securities, as the case may be, and
 
    the senior notes as indebtedness of the Company for all United States federal income tax purposes.
Remarketing
Senior notes underlying Corporate Units will be remarketed in the remarketing unless you elect not to participate in the remarketing by following the procedures described below under “—Notice to Settle with Cash.” In the event of a successful remarketing, the cash proceeds from that remarketing will be used to satisfy your obligation to purchase Class A common stock on the purchase contract settlement date and any remaining proceeds will be remitted to you. If you hold senior notes separately and not as part of Corporate Units, you may elect to participate in the remarketing as described below under “Description of senior notes—Optional remarketing.”
The initial “remarketing date” will be the third business day immediately preceding November 16, 2008. If this remarketing is successful, settlement will occur on November 16, 2008 (or, if such date is not a business day, settlement will occur on the following business day).
The remarketing agents will use their commercially reasonable efforts to obtain a price for the senior notes to be remarketed which results in proceeds of at least 100.5% of their aggregate principal amount, which amount will include a remarketing fee payable to the remarketing agents. Accrued and unpaid interest on the senior notes will not be paid from remarketing proceeds because each remarketing is scheduled to settle on a date that is a regular interest payment date, and therefore we will pay the scheduled interest payment on the senior notes. To obtain that price, the remarketing agents may reset the rate on the senior notes as described below. The reset rate will apply to all outstanding senior notes, whether or not the holders of such senior notes participate in the remarketing, and will become effective on the settlement date of the remarketing.

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In connection with any remarketing of the notes, the remarketing agents may reset the interest rate on the notes on a floating or fixed interest rate basis, as instructed by us. The interest rate on the notes will be reset in the remarketing to whatever interest rate is necessary to induce purchasers to purchase all the notes remarketed for at least 100% if the aggregate principal amount of such senior notes.
In connection with any remarketing, we may elect, in our sole discretion, to change the stated maturity of the senior notes to any date not earlier than the second anniversary of the purchase contract settlement date and not later than the tenth anniversary of the purchase contract settlement date and to specify a date, not earlier than the second anniversary of the purchase contract settlement date, on and after which the senior notes will be redeemable at our option. In addition, we may also elect to change the interest payment dates and may add any additional financial covenants as we may determine. Any such election would take effect, upon a successful remarketing, on the purchase contract settlement date.
We will provide notice of the remarketing to the purchase contract agent, the trustee, and the record holder of senior notes (which is DTC in any event), and the purchase contract agent will give holders of Corporate Units, the trustee will give holders of separate senior notes, and we will request that DTC give its participants holding Corporate Units or separate senior notes, notice of remarketing at least seven days prior to any remarketing date. Such notice will set forth:
    any of our proposed changes to the terms of the senior notes that will become effective upon a successful remarketing, including, if applicable, any change to the stated maturity of the senior notes, the date on and after which we will have the right to redeem the senior notes at our option, and any change to the interest payment dates;
 
    the procedures you must follow if you hold your senior notes as a component of Corporate Units to elect not to participate in the remarketing and the date by which such election must be made;
 
    the procedures you must follow if you hold senior notes separately to elect to participate in the remarketing as described below under “Description of senior notes—Optional remarketing,” and
 
    only in the case of a remarketing for settlement on November 16, 2009 (or, if this date is not a business day, the following business day), the procedures you must follow in the event of a failed final remarketing if you hold the senior notes separately to exercise your put right with respect to your senior notes.
The remarketing agents will remit any proceeds remaining after the application of such net proceeds in satisfaction of holders’ obligations under the purchase contracts, to holders participating in the remarketing on the remarketing settlement date.
If the remarketing agents cannot remarket the senior notes on the remarketing date at a price that results in proceeds equal to at least 100.5% of the aggregate principal amount of the senior notes, then:
    the interest rate on the senior notes will not be reset;
 
    the remarketing agents will thereafter attempt to establish a new reset rate meeting the requirements described above and remarket the senior notes on subsequent remarketing dates, which will be the third business day immediately preceding February 16, 2009, May 16, 2009, August 16, 2009 and November 16, 2009;

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    the proceeds received upon maturity of the treasury securities pledged as collateral for any Treasury Units will be used to settle the applicable purchase contracts, and any remaining cash proceeds will be remitted to the holders of the Treasury Units, and any cash pledged by holders of Corporate Units choosing not to participate in the remarketing will also be used to settle the applicable purchase contracts and the purchase contract settlement date will not be further deferred with respect to these purchase contracts, regardless of whether the remarketing attempt at that time is successful; and
 
    the purchase contract settlement date for all remaining purchase contract will be deferred until the next remarketing settlement date.
Any subsequent remarketing of the senior notes will settle (if successful) on the third business day following such remarketing. Any subsequent remarketings will be subject to the conditions and procedures described above, and you will have the right to elect not to participate in any subsequent remarketings with respect to your senior notes underlying Corporate Units by following the procedures described below under “—Notice to Settle with Cash.”
If the remarketing agents are unable to remarket the senior notes for settlement on or before the third business day immediately preceding November 16, 2009, a “failed final remarketing” will be deemed to have occurred. In that case:
    The interest rate on the senior notes will not be reset and the senior notes will continue to bear cash interest at the initial rate of      % per year, payable quarterly in arrears.
 
    If you hold senior notes, you will have the right to put your senior notes to us at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest.
 
    If you hold Corporate Units, you will be deemed to have automatically exercised this put right with respect to the senior notes underlying such Corporate Units unless, prior to 11:00 a.m., New York City time, on the second business day immediately preceding the purchase contract settlement date, you provide a written notice of your intention to settle the related purchase contract with separate cash and on or prior to the business day immediately preceding the purchase contract settlement date deliver to the collateral agent the purchase price in cash. Unless you have settled the related purchase contracts with separate cash on or prior to the purchase contract settlement date, you will be deemed to have elected to apply a portion of the proceeds of the put price equal to the principal amount of the senior notes underlying such Corporate Units against your obligations to us under the related purchase contracts, thereby satisfying such obligations in full, and we will deliver to you our Class A common stock pursuant to the related purchase contracts.
We will cause notice of any unsuccessful remarketings and of a failed final remarketing to be published by a press release to any appropriate new agency, including Bloomberg Business News and the Dow Jones News Service.
We have appointed J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Goldman, Sachs & Co. as remarketing agents and, on the issuance date of the Corporate Units, will enter into a remarketing agreement with them, which provides that we may substitute any remarketing agent at least 30 calendar days prior to any remarketing date. We will covenant in the purchase contract agreement to use our commercially reasonable efforts to effect the remarketing of the senior notes as described in this prospectus. If a registration statement is required to effect the remarketing of the senior notes, we will use our commercially reasonable efforts to ensure that a registration statement covering the full principal

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amount of the senior notes to be remarketed will be effective in a form that will enable the remarketing agents to rely on it in connection with the remarketing process. Alternatively, we will effect such remarketing pursuant to Rule 144A under the Securities Act or any other available exemption from applicable registration requirements under the Securities Act in the judgment of our counsel and counsel to the remarketing agents. If we do not have an available registration statement and we cannot effect the remarketing in a manner exempt from the Securities Act, we will be unable to remarket the senior notes.
In connection with a remarketing, holders of senior notes that do not underlie the Corporate Units may elect to have their senior notes remarketed as described under “Description of the senior notes—Optional remarketing.”
You may elect not to participate in any remarketing and to retain the principal amount of senior notes underlying the applicable ownership interests in senior notes comprising part of your Corporate Units by (1) creating Treasury Units at any time prior to the business day preceding any remarketing date or (2) if there has not been a successful remarketing prior to the final remarketing date, notifying the purchase contract agent of your intention to pay cash to satisfy your obligation under the related purchase contracts on or prior to the second business day before a remarketing date and delivering the cash payment required under the purchase contracts to the collateral agent on or prior to the business day before a remarketing date. If you elect not to participate in any remarketing, your purchase contracts will be settled either with the proceeds received upon maturity of the treasury securities pledged as collateral for any Treasury Units (and any remaining cash proceeds will be remitted to the holders of the Treasury Units) or with the cash so delivered by holders of Corporate Units choosing not to participate in the remarketing, and the purchase contract settlement date will not be further deferred with respect to these purchase contracts, regardless of whether the remarketing attempt at that time is successful.
Early settlement
Subject to the conditions described below, you may settle the related purchase contracts in cash at any time on or prior to the second business day immediately preceding a scheduled remarketing date by presenting and surrendering the related Corporate Unit or Treasury Units certificate, if they are in certificated form, at the offices of the purchase contract agent with the form of “Election to Settle Early” on the reverse side of such certificate completed and executed as indicated, accompanied by payment to us in immediately available funds of an amount equal to
    the stated amount times the number of purchase contracts being settled, plus
 
    if the delivery is made with respect to any purchase contract during the period from the close of business on any record date next preceding any payment date to the opening of business on such payment date, an amount equal to the contract adjustment payments payable on the payment date with respect to the purchase contract, minus
 
    the amount of any deferred contract adjustment payments payable by us to you on the payment date with respect to the purchase contract.
Holders of Corporate Units will not be permitted to exercise their early settlement right during any period commencing on and including the business day preceding any remarketing date and ending on and including, in the case of a successful remarketing, the purchase contract settlement date or, if the remarketing is not successful, the business day following such remarketing date.

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If you hold Corporate Units, you may settle early only in integral multiples of 40 Corporate Units, except that if the treasury portfolio has replaced the senior notes underlying the Corporate Units, then you may settle early only in integral multiples of                  Corporate Units. If you hold Treasury Units, you may settle early only in integral multiples of 40 Treasury Units.
So long as the Equity Units are evidenced by one or more global security certificates deposited with DTC, procedures for early settlement will also be governed by standing arrangements between DTC and the purchase contract agent.
The early settlement right is also subject to the condition that, if required under the U.S. federal securities laws, we have a registration statement under the Securities Act of 1933 in effect covering the shares of Class A common stock and other securities, if any, deliverable upon settlement of a purchase contract. We have agreed that, if required under the U.S. federal securities laws, (1) we will use our commercially reasonable efforts to have a registration statement in effect covering those shares of Class A common stock and other securities to be delivered in respect of the purchase contracts being settled, and (2) provide a prospectus in connection therewith, in each case in a form that may be used in connection with the early settlement right.
Upon early settlement of the purchase contracts related to any Corporate Units or Treasury Units:
    except as described below in “—Early settlement upon cash merger” you will receive the minimum settlement rate of newly issued shares of Class A common stock per Corporate Unit or Treasury Unit, subject to adjustment under the circumstances described under “—Anti-dilution adjustments,” accompanied by an appropriate prospectus if required by law,
 
    the senior notes, the applicable ownership interest in the treasury portfolio or the treasury securities, as the case may be, related to the Corporate Units or Treasury Units will be transferred to you free and clear of our security interest,
 
    your right to receive future contract adjustment payments and any accrued and unpaid contract adjustment payments for the period since the most recent quarterly payment date will terminate, and
    no adjustment will be made to or for you on account of any accrued and unpaid contract adjustment payments referred to in the previous bullet.
If the purchase contract agent receives a Corporate Unit certificate, or Treasury Unit certificate if they are in certificated form accompanied by the completed “Election to Settle Early” and required immediately available funds, from you by 5:00 p.m., New York City time, on a business day and all conditions to early settlement have been satisfied, that day will be considered the settlement date. If the purchase contract agent receives the above after 5:00 p.m., New York City time, on a business day or at any time on a day that is not a business day, the next business day will be considered the settlement date.
Upon early settlement of purchase contracts in the manner described above, presentation and surrender of the certificate evidencing the related Corporate Units or Treasury Units if they are in certificated form and payment of any transfer or similar taxes payable by you in connection with the issuance of the related common stock to any person other than the holder of the Corporate Units or Treasury Units, we will cause the shares of Class A common stock being purchased to be issued, and the aggregate principal amount of senior notes underlying the applicable ownership interests in senior notes, the applicable ownership interests in the treasury portfolio or the treasury securities, as the case may be, securing the purchase contracts to be released from the pledge under the pledge agreement described in “—Pledged securities and pledge agreement” and transferred, within three business days following the settlement date, to you or your designee.

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Notice to settle with cash
Unless the treasury portfolio has replaced the senior notes underlying the Corporate Units, if you hold Corporate Units, you may settle the related purchase contract with separate cash. To do so, you must notify the purchase contract agent by presenting and surrendering the Corporate Unit certificate evidencing the Corporate Unit at the offices of the purchase contract agent with the form of “Notice to Settle by Separate Cash” on the reverse side of the certificate completed and executed as indicated on or prior to 5:00 p.m., New York City time, on the fifth business day immediately preceding the purchase contract settlement date and delivering the required cash payment to the collateral agent on or prior to 11:00 a.m., New York City time, on the fourth business day immediately preceding the purchase contract settlement date.
If you have given notice of your intention to settle the related purchase contract with separate cash but fail to deliver the cash to the collateral agent on the fourth business day immediately preceding the purchase contract settlement date, your senior notes will be included in the remarketing of senior notes on the on the third business day immediately preceding the purchase contract settlement date.
The purchase contracts for which a holder has given such notice and has delivered cash will be settled with such cash and the purchase contract settlement date will not be deferred with respect to these purchase contracts, regardless of whether the remarketing attempt at that time is successful, and the senior notes will not remain pledged to secure the holder’s obligations under the purchase contracts.
Early settlement upon cash merger
Prior to the purchase contract settlement date, if we are involved in a merger in which at least 30% of the consideration for our Class A common stock consists of cash or cash equivalents, which we refer to as a cash merger, then following the cash merger, each holder of a purchase contract will have the right to accelerate and settle such contract early at the settlement rate in effect immediately prior to the closing of the cash merger, provided that at such time, if so required under the U.S. federal securities laws, there is in effect a registration statement covering the Class A common stock and other securities, if any, to be delivered in respect of the purchase contracts being settled. We refer to this right as the “merger early settlement right.”
We will provide each of the holders with a notice of the completion of a cash merger within five business days thereof. The notice will specify a date, which shall be ten days after the date of the notice but no later than five business days prior to the purchase contract settlement date by which each holder’s merger early settlement right must be exercised. The notice will set forth, among other things, the applicable settlement rate and the amount of the cash, securities and other consideration receivable by the holder upon settlement. To exercise the merger early settlement right, you must deliver to the purchase contract agent, three business days before the early settlement date, the certificate evidencing your Corporate Units or Treasury Units if they are held in certificated form, and payment of the applicable purchase price in immediately available funds.
If you exercise the merger early settlement right, we will deliver to you on the early settlement date the kind and amount of securities, cash or other property that you would have been entitled to receive if you had settled the purchase contract immediately before the cash merger at the settlement rate in effect at such time in addition to accrued and unpaid contract adjustment payments. You will also receive the senior notes, applicable ownership interests in the treasury portfolio or treasury securities underlying the Corporate Units or Treasury Units, as the case may be. If you do not elect to exercise your merger early settlement right, your Corporate Units or Treasury Units will remain outstanding and subject to normal settlement on the settlement date. We have agreed that, if required under the U.S. federal securities laws,

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we will use our commercially reasonable efforts to (1) have in effect a registration statement covering the Class A common stock and other securities, if any, to be delivered in respect of the purchase contracts being settled and (2) provide a prospectus in connection therewith, in each case in a form that may be used in connection with the early settlement upon a cash merger.
A holder of Corporate Units or Treasury Units may exercise the merger early settlement right only in integral multiples of 40 Treasury Units. If the treasury portfolio has replaced the senior notes underlying the Corporate Units as a result of a tax event redemption prior to the purchase contract settlement date, holders of Corporate Units may exercise the merger early settlement right only in integral multiples of                 Corporate Units.
Contract adjustment payments
Contract adjustment payments in respect of Corporate Units and Treasury Units will be fixed at a rate per year of      % of the stated amount of $25 per purchase contract. Contract adjustment payments payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Contract adjustment payments will accrue from the date of issuance of the purchase contracts and will be payable quarterly in arrears on February 16, May 16, August 16 and November 16 of each year, commencing on November 16, 2005, subject to our right to defer the payment of the contract adjustment payments as described below.
Contract adjustment payments will be payable to the holders of purchase contracts as they appear on the books and records of the purchase contract agent at the close of business on the relevant record dates, which will be on the first day of the month in which the relevant payment date falls. These distributions will be paid through the purchase contract agent, who will hold amounts received in respect of the contract adjustment payments for the benefit of the holders of the purchase contracts relating to the Corporate Units. Subject to any applicable laws and regulations, each such payment will be made as described under “—Book-entry system.”
If any date on which contract adjustment payments are to be made on the purchase contracts related to the Corporate Units or Treasury Units is not a business day, then payment of the contract adjustment payments payable on that date will be made on the next succeeding day which is a business day, and no interest or payment will be paid in respect of the delay. However, if that business day is in the next succeeding calendar year, that payment will be made on the immediately preceding business day, in each case with the same force and effect as if made on that payment date. A “business day” means any day other than a Saturday, Sunday or any other day on which banking institutions and trust companies in the City of New York are permitted or required by any applicable law to close.
Our obligations with respect to contract adjustment payments will be subordinated and junior in right of payment to our obligations under any of our senior indebtedness. “Senior indebtedness” with respect to the contract adjustment payments means indebtedness of any kind unless the instrument under which such indebtedness is incurred expressly provides that it is on a parity in right of payment with or subordinate in right of payment to the contract adjustment payments.
We may, at our option and upon prior written notice to the holders of the Equity Units and the purchase contract agent, defer the payment of contract adjustment payments on the related purchase contracts forming a part of the Equity Units until no later than the purchase contract settlement date; provided, however, that in an early settlement upon a cash merger or any other early settlement of the purchase contracts, we will pay deferred contract adjustment payments through the cash merger settlement date or the most recent quarterly payment date, as applicable. However, deferred contract adjustment payments would accrue additional contract adjustment payments at the rate of      % per year until paid, compounded quarterly, which is equal to the rate of total distributions on the Corporate Units (compounding on each succeeding payment date), to but excluding the earlier of the purchase contract settlement date and the date of any earlier settlement of the purchase contracts. If the purchase contracts

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are terminated (upon the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to Hertz), the right to receive contract adjustment payments and deferred contract adjustment payments will also terminate.
In the event that we exercise our option to defer the payment of contract adjustment payments, then, until the deferred contract adjustment payments have been paid, we will not declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to any of our capital stock provided that the foregoing will not (i) restrict us from declaring or paying our quarterly dividend and (ii) restrict any of our subsidiaries from declaring or paying any dividends, or making any distributions, to us or any of our other subsidiaries.
Anti-dilution adjustments
Each fixed settlement rate will be subject to adjustment, without duplication, upon the occurrence of certain events, including:
  (a)   If we issue shares of Class A common stock as a dividend or distribution on the outstanding shares of Class A common stock, then each fixed settlement rate will be adjusted based on the following formula:
         
                                   OS(1)
    SR(1) = SR(0) x ________
                                   OS(0)
 
  where,    
 
  SR(0) =   the fixed settlement rate in effect immediately prior to such event
 
  SR(1) =   the fixed settlement rate in effect immediately after such event
 
  OS(0) =   the number of shares of our Class A common stock outstanding at the close of business on the date fixed for such determination
 
  OS(1) =   the number of shares of our common stock outstanding at the close of business on the date fixed for such determination plus the total number of shares constituting such dividend or other distribution
  (b)   If we issue to all holders of outstanding shares of Class A common stock of rights, warrants or options (other than pursuant to any dividend reinvestment or share purchase plans) entitling them, for a period of up to 45 days, to subscribe for or purchase shares of Class A common stock at less than the current market price thereof, then each fixed settlement rate will be adjusted based on the following formula:
         
                                OS(0) + X
    SR(1) = SR(0) x __________
                                OS(0) + Y
 
  where,    
 
  SR(0) =   the fixed settlement rate in effect immediately prior to such event
 
  SR(1) =   the fixed settlement rate in effect immediately after such event

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  OS(0) =   the number of shares of our Class A common stock outstanding at the close of business on the date fixed for such determination
 
  X =   the total number of shares of our Class A common stock so offered for subscription or purchase
 
  Y =   the number of shares of our Class A common stock which the aggregate of the offering price of the total number of shares of our Class A common stock so offered for subscription or purchase would purchase at the current market price
  (c)   Subdivisions and splits of shares of Class A common stock, in which event each fixed settlement rate will be proportionately increased, and, conversely, if outstanding shares of our Class A common stock are combined into a smaller number of shares of our Class A common stock, each fixed settlement rate in effect at the opening of business on the day following the day upon which such combination becomes effective will be proportionately decreased.
 
  (d)   If we distribute evidences of our indebtedness, shares of capital stock, securities, cash or property (excluding any dividend or distribution covered by clause (a) or (b) above and any dividend or distribution paid exclusively in cash covered by clause (e) below) to all holders of outstanding shares of Class A common stock, then each fixed settlement rate will be adjusted based on the following formula:
         
                                         SP(0)
    SR(1) = SR(0) x _______________
                                   SP(0) — FMV
 
  where,    
 
  SR(0) =   the fixed settlement rate in effect immediately prior to such distribution
 
  SR(1) =   the fixed settlement rate in effect immediately after such distribution
 
  SP(0) =   the current market price of our Class A common stock
 
  FMV =   the fair market value, as determined by our board of directors, of the portion of the distribution applicable to one share of Class A common stock
With respect to an adjustment pursuant to this clause (d) where there has been a distribution to all holders of our Class A common stock consisting of capital stock of, or similar equity interests in, a subsidiary or other business unit of ours, each fixed settlement rate in effect immediately before the close of business on the record date fixed for determination of shareholders entitled to receive the distribution will be adjusted based on the following formula:
         
                                  FMV + MP(0)
    SR(1) = SR(0) x _______________
                                      MP(0)
 
  where,    
 
  SR(0) =   the fixed settlement rate in effect immediately prior to such distribution

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  SR(1) =   the fixed settlement rate in effect immediately after such distribution
 
  FMV =   the average of the last reported sale prices of the capital stock or similar equity interest distributed to holders of our Class A common stock applicable to one share of our Class A common stock for the ten trading days commencing on and including the fifth trading day after the “ex-date” for such distribution
 
  MP(0) =   the average of the last reported sale prices of our Class A common stock for the ten trading days commencing on and including the fifth trading day after the “ex-date” for such distribution
  (e)   If we make a distribution consisting exclusively of cash to all holders of our Class A common stock, excluding (1) any cash dividend on our Class A common stock to the extent that the aggregate cash dividend per share of Class A common stock in any quarter does not exceed (i) $        in any fiscal quarter in the case of a quarterly dividend or (ii) $        in the prior twelve months in the case of an annual dividend (each such number, the “dividend threshold amount”) (the dividend threshold amount is subject to adjustment on an inversely proportional basis whenever fixed settlement rates are adjusted, provided that no adjustment will be made to the dividend threshold amount for any adjustment made to each fixed settlement rate pursuant to this clause (e)), and (2) any dividend or distribution in connection with our liquidation, dissolution or termination, then each fixed settlement rate will be adjusted based on the following formula:
         
                                   SP(0)
    SR(1) = SR(0) x __________
                                   SP(0) – C
 
  where,    
 
  SR(0) =   the fixed settlement rate in effect immediately prior to the record date for such distribution
 
  SR(1) =   the fixed settlement rate in effect immediately after the ex dividend date for such distribution
 
  SP(0) =   the current market price of our Class A common stock
 
  C =   the amount per share of such dividend or distribution in excess of the dividend threshold
  (f)   If we or any of our subsidiaries successfully completes a tender or exchange offer for our Class A common stock to the extent that the cash and the value of any other consideration included in the payment per share of Class A common stock exceeds       % of the average of the closing price of our Class A common stock for each of the five consecutive trading days next succeeding the last date on which tenders or exchanges may be made under such tender or exchange offer, then each fixed settlement rate will be adjusted based on the following formula:
         
                                   AC + (SP(1) x OS(1))
    SR(1) = SR(0) x ___________________
                                      SP(1) x OS(0)

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  where,    
 
  SR(0) =   the fixed settlement rate in effect on the date such tender offer or exchange offer expires
 
  SR(1) =   the fixed settlement rate in effect on the day next succeeding the date such tender offer or exchange offer expires
 
  AC =   the fair market value, as determined by our board of directors, of the aggregate consideration payable for all shares of our Class A common stock that we purchase in such tender or exchange offer
 
  OS(0) =   the number of shares of our Class A common stock outstanding, including any such purchased shares
 
  OS(1) =   the number of shares of our Class A common stock outstanding less any such purchased shares
 
  SP(1) =   the closing price of our common stock on the trading day next succeeding the expiration of the tender or exchange offer
The “current market price” per share of Class A common stock on any day means to average of the daily closing prices on each of the 20 consecutive trading days ending the earlier of the day in question and the day before the “ex date” with respect to the issuance or distribution requiring the computation.
The term “ex date,” when used with respect to any issuance or distribution, will mean the first date on which the Class A common stock trades regular way on the applicable exchange or in the applicable market without the right to receive the issuance or distribution.
Notwithstanding the foregoing anti-dilution adjustments, we will not make any adjustments to the fixed settlement rates for any of the cash or Class A common stock dividends to be paid to Ford in connection with this offering or the concurrent public offering of shares of our Class A common stock.
We currently do not have a rights plan with respect to any common stock. To the extent that we have a rights plan in effect upon settlement of a purchase contract, you will receive, in addition to the Class A common stock, the rights under the rights plan, unless, prior to any settlement of a purchase contract, the rights have separated from the Class A common stock, in which case each fixed settlement rate will be adjusted at the time of separation as if we made a distribution to all holders of our Class A common stock as described in clause (d) above.
In the case of certain reclassifications, consolidations, mergers, sales or transfers of assets or other transactions that cause our Class A common stock to be converted into the right to receive other securities, cash or property, each purchase contract then outstanding would, without the consent of the holders of the related Corporate Units or Treasury Units, as the case may be, become a contract to purchase such other securities, cash and property instead of our Class A common stock. Upon the occurrence of any such transaction, on the purchase contract settlement date the settlement rate then in effect will be applied to the value, on the purchase contract settlement date, of the securities, cash or property a holder of one share of our Class A common stock would have received when such transaction occurred.
If at any time we make a distribution of property to our stockholders that would be taxable to the stockholders as a dividend for United States federal income tax purposes ( i.e. , distributions out of our current or accumulated earnings and profits or distributions of evidences of indebtedness or assets, but

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generally not stock dividends or rights to subscribe for capital stock) and, pursuant to the fixed settlement rate adjustment provisions of the purchase contract and pledge agreement, the settlement rate is increased, this increase will likely give rise to a taxable dividend to holders of Corporate Units or Treasury Units; certain other adjustments to the settlement rate may also give rise to a taxable dividend to holders of Corporate Units or Treasury Units, see “United States federal income tax consequences—U.S. holders—Purchase contracts—Adjustment to settlement rate” in this prospectus.
In addition, we may make increases in each fixed settlement rate as our board of directors deems advisable to avoid or diminish any income tax to holders of our capital stock resulting from any dividend or distribution of capital stock (or rights to acquire capital stock) or from any event treated as such for income tax purposes or for any other reasons. We may only make such a discretionary adjustment if we make the same proportionate adjustment to each fixed settlement rate.
Adjustments to each fixed settlement rate will be calculated to the nearest 1/10,000th of a share.
We will be required, within ten business days following the adjustment to each fixed settlement rate, to provide written notice to the purchase contract agent of the occurrence of the adjustment and a statement in reasonable detail setting forth the method by which the adjustment to each fixed settlement rate was determined and setting forth the revised settlement rate.
Each adjustment to each fixed settlement rate will result in a corresponding adjustment to the number of shares of Class A common stock issuable upon early settlement upon cash merger or upon early settlement of a purchase contract. Each adjustment to each fixed settlement rate will also result in an adjustment to the applicable market value solely for purposes of determining which of the three clauses of the definition of the settlement rate will apply on the purchase contract settlement date.
Termination
The purchase contracts, and our rights and obligations and the rights and obligations of the holders of the Corporate Units and Treasury Units under the purchase contracts, including the right and obligation to purchase shares of Class A common stock and the right to receive accrued contract adjustment payments, will immediately and automatically terminate, without any further action, upon the occurrence of our bankruptcy, insolvency or reorganization. In the event of such a termination of the purchase contracts as a result of our bankruptcy, insolvency or reorganization, holders of the purchase contracts will not have a claim in bankruptcy under the purchase contract with respect to our issuance of shares of Class A common stock or the right to receive contract adjustment payments.
Upon any termination, the collateral agent will release the aggregate principal amount of senior notes underlying the applicable ownership interests in senior notes, the applicable ownership interests in the treasury portfolio or the treasury securities, as the case may be, held by it to the purchase contract agent for distribution to the holders, subject, in the case of the applicable ownership interests in the treasury portfolio or the treasury securities, to the purchase contract agent’s disposition of the subject securities for cash, and the payment of this cash to the holders, to the extent that the holders would otherwise have been entitled to receive less than $1,000 principal amount or interest, as the case may be, at maturity of any such security. Upon any termination, however, the release and distribution may be subject to a delay. In the event that we become the subject of a case under the U.S. Bankruptcy Code, the delay may occur as a result of the automatic stay under the U.S. Bankruptcy Code and continue until the automatic stay has been lifted.
If the holder’s purchase contract is terminated as a result of our bankruptcy, insolvency or reorganization, such holder will have no right to receive any accrued contract adjustment payments.

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Pledged securities and the purchase contract and pledge agreement
Pledged securities will be pledged to us through the collateral agent, for our benefit, pursuant to the purchase contract and pledge agreement to secure the obligations of holders of Corporate Units and Treasury Units to purchase shares of Class A common stock under the related purchase contracts. The rights of holders of Corporate Units and Treasury Units to the related pledged securities will be subject to our security interest created by the purchase contract and pledge agreement.
No holder of Corporate Units or Treasury Units will be permitted to withdraw the pledged securities related to the Corporate Units or Treasury Units from the pledge arrangement except:
    to substitute treasury securities for the related senior notes as provided for under “Description of the Equity Units—Creating Treasury Units,”
 
    to substitute senior notes for the related treasury securities, as provided for under “Description of the Equity Units—Recreating Corporate Units,” or
 
    upon the termination, cash settlement or early settlement of the related purchase contracts.
Subject to the security interest and the terms of the purchase contract and pledge agreement, each holder of Corporate Units, unless the treasury portfolio has replaced the senior notes underlying the Corporate Units, will be entitled through the purchase contract agent and the collateral agent to all of the proportional rights of the related senior notes, including voting and redemption rights. Each holder of Treasury Units and each holder of Corporate Units, if the treasury portfolio has replaced the senior notes underlying the Corporate Units, will retain beneficial ownership of the related treasury securities or the applicable ownership interests in the treasury portfolio, as applicable, pledged in respect of the related purchase contracts. We will have no interest in the pledged securities other than our security interest.
Except as described in “Certain provisions of the purchase contracts and the purchase contract and pledge agreement—General,” the collateral agent will, upon receipt, if any, of payments on the pledged securities, distribute the payments to the purchase contract agent, which will in turn distribute those payments, together with contract adjustment payments received from us, to the persons in whose names the related Corporate Units or Treasury Units are registered at the close of business on the record date immediately preceding the date of payment.
Book-entry system
The Depository Trust Company, which we refer to along with its successors in this capacity as the depositary, will act as securities depositary for the Corporate Units and Treasury Units. The Corporate Units and Treasury Units will be issued only as fully registered securities registered in the name of Cede & Co., the depositary’s nominee. One or more fully registered global security certificates, representing the total aggregate number of Corporate Units and Treasury Units, will be issued and will be deposited with the depositary and will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below.
The laws of some jurisdictions may require that some purchasers of securities take physical delivery of securities in definitive form. These laws may impair the ability to transfer beneficial interests in the Corporate Units or the Treasury Units so long as the Corporate Units or the Treasury Units are represented by global security certificates.

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The depositary is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. The depositary holds securities that its participants deposit with the depositary. The depositary also facilitates the settlement among participants of securities transactions, including transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The depositary is owned by a number of its direct participants and by the New York Stock Exchange, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the depositary’s system is also available to others, including securities brokers and dealers, banks and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a direct participant either directly, or indirectly. The rules applicable to the depositary and its participants are on file with the SEC.
We will issue the Corporate Units and Treasury Units in definitive certificated form if the depositary notifies us that it is unwilling or unable to continue as depositary or the depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and a successor depositary is not appointed by us within 90 days. In addition, beneficial interests in a global security certificate may be exchanged for definitive certificated Corporate Units or Treasury Units upon request by or on behalf of the depositary in accordance with customary procedures. The purchase contract and pledge agreement permits us to determine at any time and in our sole discretion that Corporate Units or Treasury Units shall no longer be represented by global certificates. DTC has advised us that, under its current practices, it would notify its participants of our request, but will only withdraw beneficial interests from the global certificates at the request of each DTC participant. We would issue definitive certificates in exchange for any beneficial interests withdrawn. Any global Corporate Unit or Treasury Unit, or portion thereof, that is exchangeable pursuant to this paragraph will be exchangeable for Corporate Unit or Treasury Unit certificates, as the case may be, registered in the names directed by the depositary. We expect that these instructions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global security certificates.
As long as the depositary or its nominee is the registered owner of the global security certificates, the depositary or its nominee, as the case may be, will be considered the sole owner and holder of the global security certificates and all Corporate Units or Treasury Units represented by these certificates for all purposes under the Corporate Units or Treasury Units and the purchase contract and pledge agreement. Except in the limited circumstances referred to above, owners of beneficial interests in global security certificates
    will not be entitled to have such global security certificates or the Corporate Units or Treasury Units represented by these certificates registered in their names,
 
    will not receive or be entitled to receive physical delivery of Corporate Unit or Treasury Unit certificates in exchange for beneficial interests in global security certificates, and
 
    will not be considered to be owners or holders of the global security certificates or any Corporate Units or Treasury Units represented by these certificates for any purpose under the Corporate Units or Treasury Units or the purchase contract and pledge agreement.

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All payments on the Corporate Units or Treasury Units represented by the global security certificates and all transfers and deliveries of related senior notes, treasury portfolio, treasury securities and shares of Class A common stock will be made to the depositary or its nominee, as the case may be, as the holder of the securities.
Ownership of beneficial interests in the global security certificates will be limited to participants or persons that may hold beneficial interests through institutions that have accounts with the depositary or its nominee. Ownership of beneficial interests in global security certificates will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the depositary or its nominee, with respect to participants’ interests, or any participant, with respect to interests of persons held by the participant on their behalf. Procedures for settlement of purchase contracts on the purchase contract settlement date or upon early settlement will be governed by arrangements among the depositary, participants and persons that may hold beneficial interests through participants designed to permit settlement without the physical movement of certificates. Payments, transfers, deliveries, exchanges and other matters relating to beneficial interests in global security certificates may be subject to various policies and procedures adopted by the depositary from time to time. None of us, the purchase contract agent or any agent of ours or of the purchase contract agent will have any responsibility or liability for any aspect of the depositary’s or any participant’s records relating to, or for payments made on account of, beneficial interests in global security certificates, or for maintaining, supervising or reviewing any of the depositary’s records or any participant’s records relating to these beneficial ownership interests.
Although the depositary has agreed to the foregoing procedures in order to facilitate transfer of interests in the global security certificates among participants, the depositary is under no obligation to perform or continue to perform these procedures, and these procedures may be discontinued at any time. We will not have any responsibility for the performance by the depositary or its direct participants or indirect participants under the rules and procedures governing the depositary.
The information in this section concerning the depositary and its book-entry system has been obtained from sources that we believe to be reliable, but we have not attempted to verify the accuracy of this information.

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Certain provisions of the purchase contracts and
the purchase contract and pledge agreement
The following description is a summary of some of the other terms of the purchase contract and pledge agreement and purchase contracts. This summary, together with the summary of some of the provisions of these documents provided above, contains a description of all of the material terms of the purchase contract and pledge agreement and purchase contracts but is not necessarily complete. We refer you to the copies of those documents that have been or will be filed and incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.
General
Except as described in “Description of the purchase contracts—Book-entry system,” payments on the Equity Units will be made, purchase contracts (and documents relating to the Corporate Units, Treasury Units and purchase contracts) will be settled, and transfers of the Corporate Units and Treasury Units will be registrable, at the office of the purchase contract agent in the Borough of Manhattan, The City of New York. In addition, if the Corporate Units and Treasury Units do not remain in book-entry form, payment on the Equity Units may be made by check mailed to the address of the holder entitled to payment as shown on the security register.
Shares of Class A common stock will be delivered on the purchase contract settlement date (or earlier upon early settlement), or, if the purchase contracts have terminated, the related pledged securities will be delivered (potentially after a delay as a result of the imposition of the automatic stay under the U.S. Bankruptcy Code, see “Description of the purchase contracts—Termination”) at the office of the purchase contract agent upon presentation and surrender of the applicable certificate.
If you fail to present and surrender the certificate evidencing the Corporate Units or Treasury Units to the purchase contract agent on or prior to the purchase contract settlement date, the shares of Class A common stock issuable upon settlement of the related purchase contract will be registered in the name of the purchase contract agent. The shares, together with any distributions, will be held by the purchase contract agent as agent for your benefit until the certificate is presented and surrendered or you provide satisfactory evidence that the certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the purchase contract agent and us.
If the purchase contracts terminate prior to the purchase contract settlement date, the related pledged securities are transferred to the purchase contract agent for distribution to the holders, and if a holder fails to present and surrender the certificate evidencing the holder’s Corporate Units or Treasury Units to the purchase contract agent, the related pledged securities delivered to the purchase contract agent and payments on the pledged securities will be held by the purchase contract agent as agent for the benefit of the holder until the applicable certificate is presented or the holder provides the evidence and indemnity described above.
The purchase contract agent will have no obligation to invest or to pay interest on any amounts held by the purchase contract agent pending payment to any holder.
No service charge will be made for any registration of transfer or exchange of the Corporate Units or Treasury Units, except for any tax or other governmental charge that may be imposed in connection with a transfer or exchange.

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Modification
The purchase contract and pledge agreement will contain provisions permitting us, the purchase contract agent and the collateral agent, to modify the purchase contract and pledge agreement without the consent of the holders for any of the following purposes:
    to evidence the succession of another person to our obligations;
 
    to evidence and provide for the acceptance of appointment of a successor purchase contract agent or a successor collateral agent or securities intermediary;
 
    to add to the covenants for the benefit of holders or to surrender any of our rights or powers under those agreements;
 
    to make provision with respect to the rights of holders pursuant to adjustments in the settlement rate due to consolidations, mergers or other reorganization events;
 
    to cure any ambiguity, to correct or supplement any provisions that may be inconsistent, provided that any such amendment made solely to conform the provisions of the purchase contract and pledge agreement to this prospectus will be deemed not to adversely affect the interests of holders; and
 
    to make any other provisions with respect to such matters or questions, provided that such action shall not materially adversely affect the interest of the holders.
The purchase contract and pledge agreement will contain provisions permitting us, the purchase contract agent and the collateral agent, with the consent of the holders of not less than a majority of the purchase contracts at the time outstanding to modify the terms of the purchase contracts or the purchase contract and pledge agreement. Without the consent of the holder of each outstanding purchase contract affected by the modification, however, no such modification may:
    change any payment date;
 
    impair the right of the holder of any pledged securities to receive distributions on the pledged securities or otherwise adversely affect the holder’s rights in or to the pledged securities;
 
    change the place or currency of payment or reduce any contract adjustment payments;
 
    impair the right to institute suit for the enforcement of the purchase contract or payment of any contract adjustment payments;
 
    reduce the number of shares of Class A common stock purchasable under the purchase contract, increase the price to purchase shares of Class A common stock upon settlement of the purchase contract, change the purchase contract settlement date or the right to early settlement or otherwise adversely affect the holder’s rights under the purchase contract; or
 
    reduce the above-stated percentage of outstanding purchase contracts the consent of the holders of which is required for the modification or amendment of the provisions of the purchase contracts or the purchase contract and pledge agreement.

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If any amendment or proposal referred to above would adversely affect only the Corporate Units or the Treasury Units, then only the affected class of holders will be entitled to vote on the amendment or proposal, and the amendment or proposal will not be effective except with the consent of the holders of not less than a majority of the affected class or of all of the holders of the affected classes, as applicable.
No consent to assumption
Each holder of Corporate Units or Treasury Units, by acceptance of these securities, will under the terms of the purchase contract and pledge agreement and the Corporate Units or Treasury Units, as applicable, be deemed expressly to have withheld any consent to the assumption (i.e., affirmance) of the related purchase contracts by us or our trustee if we become the subject of a case under the U.S. Bankruptcy Code or other similar state or federal law provision for reorganization or liquidation.
Consolidation, merger, sale or conveyance
We will covenant in the purchase contract and pledge agreement that we will not merge with and into, consolidate with or convert into any other entity or sell, assign, transfer, lease or convey all or substantially all of our properties and assets to any person or entity, unless (1) the successor entity is an entity organized and existing under the laws of the United States of America or a U.S. state or the District of Columbia and that entity expressly assumes our obligations under the purchase contracts, the purchase contract and pledge agreement and the remarketing agreement and (2) the successor entity is not, immediately after the merger, consolidation, conversion, sale, assignment, transfer, lease or conveyance, in default of its payment obligations under the purchase contracts, the purchase contract and pledge agreement and the remarketing agreement or in material default in the performance of any other covenants under these agreements.
Title
We, the purchase contract agent and the collateral agent may treat the registered owner of any Corporate Units or Treasury Units as the absolute owner of the Corporate Units or Treasury Units for the purpose of making payment and settling the related purchase contracts and for all other purposes.
Replacement of Equity Unit certificates
In the event that physical certificates have been issued, any mutilated Corporate Unit or Treasury Unit certificate will be replaced by us at the expense of the holder upon surrender of the certificate to the purchase contract agent. Corporate Unit or Treasury Unit certificates that have been destroyed, lost or stolen will be replaced by us at the expense of the holder upon delivery to us and the purchase contract agent of evidence of their destruction, loss or theft satisfactory to us and the purchase contract agent. In the case of a destroyed, lost or stolen Corporate Unit or Treasury Unit certificate, security and/or an indemnity satisfactory to the purchase contract agent and us may be required at the expense of the holder of the Corporate Units or Treasury Units evidenced by the certificate before a replacement will be issued.
Notwithstanding the foregoing, we will not be obligated to issue any Corporate Unit or Treasury Unit certificates on or after the business day immediately preceding the purchase contract settlement date (or after early settlement) or after the purchase contracts have terminated. The purchase contract and pledge agreement will provide that, in lieu of the delivery of a replacement Corporate Unit or Treasury Unit certificate following the purchase contract settlement date, the purchase contract agent, upon delivery of the evidence and security or indemnity described above, will deliver the shares of Class A common stock issuable pursuant to the purchase contracts included in the Corporate Units or Treasury Units evidenced by the certificate, or, if the purchase contracts have terminated prior to the purchase contract settlement date, transfer the pledged securities included in the Corporate Units or Treasury Units evidenced by the certificate.

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Governing law
The purchase contract and pledge agreement and the purchase contracts will be governed by, and construed in accordance with, the laws of the State of New York.
Information concerning the purchase contract agent
The Bank of New York will be the purchase contract agent. The purchase contract agent will act as the agent for the holders of Corporate Units and Treasury Units from time to time. The purchase contract and pledge agreement will not obligate the purchase contract agent to exercise any discretionary actions in connection with a default under the terms of the Corporate Units and Treasury Units or the purchase contract and pledge agreement.
The purchase contract and pledge agreement will contain provisions limiting the liability of the purchase contract agent. The purchase contract and pledge agreement will contain provisions under which the purchase contract agent may resign or be replaced. This resignation or replacement would be effective upon the acceptance of appointment by a successor.
The Bank of New York maintains commercial banking relationships with us and is an underwriter in this offering.
Information concerning the collateral agent
                will be the collateral agent. The collateral agent will act solely as our agent and will not assume any obligation or relationship of agency or trust for or with any of the holders of the Corporate Units or Treasury Units except for the obligations owed by a pledgee of property to the owner of the property under the pledge agreement and applicable law.
The purchase contract and pledge agreement will contain provisions limiting the liability of the collateral agent. The purchase contract and pledge agreement will contain provisions under which the collateral agent may resign or be replaced. This resignation or replacement would be effective upon the acceptance of appointment by a successor.
Miscellaneous
The purchase contract and pledge agreement will provide that we will pay all fees and expenses other than underwriters’ expenses (including counsel) related to the offering of the Corporate Units, the retention of the collateral agent and the enforcement by the purchase contract agent of the rights of the holders of the Equity Units.
Should you elect to substitute the related pledged securities, create Treasury Units or recreate Corporate Units, you shall be responsible for any fees or expenses payable in connection with that substitution, as well as any commissions, fees or other expenses incurred in acquiring the pledged securities to be substituted, and we shall not be responsible for any of those fees or expenses.

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Description of the senior notes
The following description is a summary of some of the terms of our senior notes. This summary, together with the summary of some of the provisions of the related documents described below, contains a description of all of the material terms of the senior notes but is not necessarily complete. We refer you to the copies of those documents that have been or will be filed and incorporated by reference as exhibits to the registration statement of which this prospectus forms a part and to the Trust Indenture Act.
General
The senior notes will be issued under an indenture dated as of March 16, 2001 between us and The Bank of New York, as indenture trustee, as amended and supplemented by supplemental indenture No. 1, to be dated as of      , 2005 between us and the indenture trustee (as so amended and supplemented, the “indenture”).
The senior notes will be senior debt securities that will be our direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of our existing and future unsecured senior indebtedness. The senior notes initially will be issued in an aggregate principal amount equal to $ .
The senior notes will not be subject to a sinking fund provision and will not be subject to defeasance. Unless a tax event redemption occurs, the entire principal amount of the senior notes will mature and become due and payable, together with any accrued and unpaid interest thereon, on November 16, 2015; provided, however, that in connection with any remarketing of the senior notes, we may elect, in our sole discretion, to change the stated maturity of the senior notes to any date not earlier than the second anniversary of the purchase contract settlement date and not later than the tenth anniversary of the purchase contract settlement date. Additionally, in connection with any remarketing, we may elect to add optional redemption provisions to the terms of the senior notes, provided that the senior notes will not be redeemable at our option prior to the second anniversary of the purchase contract settlement date. We may also elect to change the interest payment dates and may add any additional financial covenants as we may determine. Any such election would take effect, upon a successful remarketing, on the purchase contract settlement date.
In the event of a failed final remarketing (i.e., the senior notes are not successfully remarketed on or prior to November 16, 2009), the maturity of the senior notes will remain November 16, 2015, the Company has the right to redeem the senior notes on any date on or after November 16, 2011, and the holders of senior notes will have a right to put their senior notes to us at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest. The holders of senior notes underlying a Corporate Unit will have a right to put their senior notes to us on the purchase contract settlement date and the holders of senior notes that are not part of a Corporate Unit will have a right to put their senior notes to us on the 23rd business day after the failed final remarketing.
The indenture trustee will initially be the security registrar and the paying agent for the senior notes. Senior notes forming a part of the Corporate Units will be issued in certificated form, will be in denominations of $1,000 and integral multiples of $1,000, without coupons, and may be transferred or exchanged, without service charge but upon payment of any taxes or other governmental charges payable in connection with the transfer or exchange, at the office described below; provided, however, that upon the release by the collateral agent of senior notes underlying the applicable ownership interests in senior

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notes pledged to secure the Corporate Units holders’ obligations under the related purchase contracts (other than any release of the senior notes in connection with the creation of Treasury Units, an early settlement with separate cash, an early settlement upon a cash merger, or a remarketing, each as described under “Description of purchase contracts”) the senior notes will be issuable in denominations of $25 and integral multiples thereof. Payments on senior notes issued as a global security will be made to the depositary or a successor depositary. Principal and interest with respect to certificated notes will be payable, the transfer of the senior notes will be registrable and senior notes will be exchangeable for notes of a like aggregate principal amount in denominations of $1,000 and integral multiples of $1,000 (unless senior notes have previously been issued in denominations of $25 and integral multiples thereof, in which case senior notes will be exchangeable for a like aggregate principal amount in denominations of $25 and integral multiples of $25), at the office or agency maintained by us for this purpose in The City of New York. We have initially designated the corporate trust office of the indenture trustee as that office. However, at our option, payment of interest may be made by check mailed to the address of the holder entitled to payment or by wire transfer to an account appropriately designated by the holder entitled to payment.
While the covenants contained in the indenture may provide limited protection to holders of senior notes in the event of a highly leveraged transaction involving us, the indenture does not prohibit the incurrence of additional senior, senior subordinated or junior subordinated debt. Subject to certain exceptions described below under “—Limitations on secured debt,” outstanding senior notes and other qualified indebtedness shall be secured equally and ratably, subject to applicable priorities of payment, with any additional secured debt incurred by us. (Section 1004)
Ranking
The senior notes will rank on a parity with our other senior debt securities.
Interest
Each senior note will bear interest initially at the rate of      % per year from the original issuance date to, but excluding, the reset effective date or, if no successful remarketing of the senior notes occurs, November 16, 2015. On or prior to the reset effective date, interest payments will be payable quarterly in arrears on each February 16, May 16, August 16 and November 16, each a “quarterly interest payment date,” commencing November 16, 2005. In addition, if the reset effective date falls on a day that is not also a quarterly interest payment date, holders of senior notes will receive on such reset effective date a payment of accrued and unpaid interest from the most recent quarterly interest payment date to, but excluding, such reset effective date.
The applicable interest rate on the senior notes will be reset to the reset rate upon successful remarketing as described above under “Description of the purchase contracts—Remarketing.” The reset rate will become effective on the reset effective date, which is three business days immediately following a successful remarketing. Following a successful remarketing of the senior notes, the senior notes will bear interest from the reset effective date at the reset rate to, but excluding, November 16, 2015 or, if the maturity of the senior notes is adjusted on the remarketing date, such adjusted maturity date. From the reset effective date, interest payments on all senior notes will be paid either monthly, quarterly or semi-annually, to be determined by us at the time of the remarketing, in arrears. Such interest payments will include interest accrued from and including the immediately preceding interest payment date or, in the case of the first interest payment date following the reset effective date, from the reset effective date.

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If no successful remarketing of the senior notes occurs, the interest rate on the senior notes will not be reset and interest payments on all senior notes will remain payable quarterly in arrears on the original quarterly interest payment dates.
The amount of interest payable on the senior notes for any period will be computed (1) for any full monthly, quarterly or semi-annual period, as applicable, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly or semi-annual period, as applicable, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the senior notes is not a business day, then payment of the interest payable on such date will be made on the next day that is a business day (and without any interest or other payment in respect of any such delay), except that, if such business day is in the next calendar year, then such payment will be made on the preceding business day.
Market reset rate
Unless a tax event redemption has occurred, the interest rate on the senior notes will be reset on the date of a successful remarketing and the reset rate will become effective on the purchase contract settlement date. The reset rate will be the interest rate determined by the remarketing agents as the rate the senior notes should bear in order for the senior notes underlying the Corporate Units to have an approximate aggregate market value on the remarketing date of 100.5% of the aggregate principal amount of the senior notes being remarketed. The interest rate on the senior notes will not be reset if there is not a successful remarketing. Any reset rate may not exceed the maximum rate, if any, permitted by applicable law.
If the senior notes are not successfully remarketed, the interest rate will not be reset and the senior notes will continue to bear interest at the initial annual interest rate of      %.
Optional remarketing
Under the remarketing agreement, on or prior to the fifth business day immediately preceding any remarketing date holders of senior notes not held as part of any Corporate Units may elect to have their senior notes included in the remarketing and remarketed in the same manner and at the same price as the senior notes underlying Corporate Units by delivering their senior notes along with a notice to the collateral agent. The collateral agent will hold these senior notes in an account separate from the collateral account in which the securities pledged to secure the holders’ obligations under the purchase contracts will be held. Holders of the senior notes electing to have their senior notes remarketed will also have the right to withdraw that election on or prior to the fifth business day immediately preceding any remarketing date.
If the remarketing is successful, the remarketing agents will remit to the collateral agent the remaining portion of the proceeds for payment to such participating holders.
If the remarketing agents cannot remarket the senior notes on any remarketing date, the remarketing agents will promptly return the senior notes to the collateral agent for release to the holders.
Holders of Treasury Units that are also holders of senior notes that are not part of the Corporate Units may also participate in any remarketing by recreating Corporate Units from their Treasury Units at any time on or prior to the second business day immediately prior to the applicable remarketing date.

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Put option upon a failed final remarketing
Upon a failed final remarketing, holders of all senior notes will have the right to put their senior notes to us at a put price equal to $1,000 per senior note ($25 per applicable ownership interest) plus accrued and unpaid interest. Holders of senior notes underlying a Corporate Unit Holders of senior notes underlying any Corporate Unit will have a right to put their senior notes to us on the purchase contract settlement date after a failed final remarketing and will be deemed to have exercised such put right as described under “Description of purchase contracts – Remarketing,” unless they settle the related purchase contracts with separate cash. Holders of senior notes that are not part of a Corporate Unit may exercise their put right upon a failed final remarketing by providing written notice within 20 business days after the failed final remarketing, and the put price will be paid to such holder on the 23rd business day after the failed final remarketing.
Limitations on mergers
The indentures provides that we may not consolidate with, merge into, or sell, convey or transfer our properties and assets substantially as an entirety to, another person, if, as a result of such action, any property owned by us or a Restricted Subsidiary immediately prior to such action would become subject to any Security Interest, unless:
    the senior notes (equally and ratably with any of our other indebtedness then entitled to such Security Interest) shall be secured by a prior lien on such property, or
 
    such Security Interest would otherwise be permitted under the indentures. (Section 803)
Limitations on secured debt
The indenture provides that we will not at any time create, incur, assume or guarantee, and will not cause, suffer or permit a Restricted Subsidiary to create, incur, assume or guarantee, any Secured Debt without making effective provisions whereby the debt securities then outstanding under the indenture and any other indebtedness of or guaranteed by us or such Restricted Subsidiary then entitled to such guarantee, subject to                  applicable priorities of payment, shall be secured by the Security Interest securing such Secured Debt equally and ratably with any and all other obligations and indebtedness so secured (subject, however, to applicable priorities of payment) so long as such Secured Debt remains outstanding; provided, however, that the foregoing prohibition will not apply to:
  (a)   any Security Interest in favor of us or a Restricted Subsidiary;
 
  (b)   Security Interests existing on March 16, 2001;
 
  (c)   Security Interests existing on property at the time it is acquired by us or a Restricted Subsidiary, provided such Security Interest is limited to all or part of the property so acquired;
 
  (d)   (i) any Security Interest existing on the property of or on the outstanding shares or indebtedness of a corporation at the time such corporation shall become a Restricted Subsidiary, or (ii) subject to the provisions referred to above under “Limitations on mergers,” any Security Interest on property of a corporation existing at the time such corporation is merged into or consolidated with us or a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of a corporation as an entirety or

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      substantially as an entirety to us or a Restricted Subsidiary, provided, in each such case, that such Security Interest does not extend to any property owned prior to such transaction by us or any Restricted Subsidiary which was a Restricted Subsidiary prior to such transaction;
 
  (e)   mechanics’, materialmen’s, carriers’ or other like liens, arising in the ordinary course of business;
 
  (f)   certain tax liens or assessments, and certain judgment liens;
 
  (g)   certain Security Interests in favor of the United States of America or any state or any agency of the United States of America;
 
  (h)   Security Interests on Business Equipment;
 
  (i)   in the case of property (other than Rental Equipment) acquired after March 16, 2001 by us or any Restricted Subsidiary, any Security Interest which secures an amount not in excess of the purchase price or fair value of such property at the time of acquisition, whichever, in our opinion, shall be less, provided that such Security Interest is limited to the property so acquired;
 
  (j)   Security Interests on properties financed through tax-exempt municipal obligations, provided that such Security Interest is limited to the property so financed; or
 
  (k)   any refunding, renewal, extension or placement (or successive refunding, renewals, extensions, or replacements), in whole or in part, of any Security Interest referred to in the foregoing clauses (a) through (j), provided that the principal amount of indebtedness secured in such refunding, renewal, extension or replacement does not exceed that secured at the time by such Security Interest and that such renewal, refunding, extension or replacement of such Security Interest is limited to all or part of the same property subject to the Security Interest being refunded, renewed, extended or replaced.
Notwithstanding the foregoing provisions, we and any one or more Restricted Subsidiaries may issue, assume, or guarantee Secured Debt which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with all other Secured Debt of ours and of our Restricted Subsidiaries that would otherwise be subject to the foregoing restrictions (not including Secured Debt permitted to be secured under subparagraphs (a) through (k) above), and the aggregate value of the Sale and Leaseback Transactions in existence at such time (not including Sale and Leaseback Transactions the proceeds of which have been or will be applied in accordance with subsection (b) under “Limitations on sale and leaseback transactions” below), do not at the time of incurrence exceed 10% of Consolidated Net Worth and Subordinated Debt (as defined in the indenture). (Section 1004)
Limitations on sale and leaseback transactions
The indenture provides that we may not, and may not permit any Restricted Subsidiary to, engage in any Sale and Leaseback Transaction unless (a) we or such Restricted Subsidiary would be entitled, without reference to the provisions of Section 1004 described in subparagraphs (a) through (k) above, to incur Secured Debt in an amount equal to the amount realized or to be realized upon the sale or transfer involved in such Sale and Leaseback Transaction, secured by a Security Interest on the property to be leased without equally and ratably securing the Debt Securities outstanding under such Indenture as provided under “Limitations on secured debt,” or (b) we or a Restricted Subsidiary shall apply, within 120

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days after such sale or transfer, an amount equal to the fair value of the property so leased (as determined by our Board of Directors) to the repayment of our senior debt or senior debt of any Restricted Subsidiary (other than senior debt owed to us or any Restricted Subsidiary) then prepayable, on a pro rata basis, according to the respective principal amounts of senior debt then held by the various holders of senior debt. (Section 1005)
Certain definitions
“Business Equipment” shall mean all motor vehicles, tractors and trailers, construction equipment, factory, commercial and office equipment and other revenue-earning personalty owned, financed or otherwise held by or for us or any of our Restricted Subsidiaries for rental, lease, sale or disposition in the ordinary course of our business and our Restricted Subsidiaries, other than Rental Equipment.
“Consolidated Net Worth and Subordinated Debt” shall mean the aggregate of:
    our capital and surplus accounts and the capital and surplus accounts of our Restricted Subsidiaries, as shown in our most recent consolidated balance sheet and our Restricted Subsidiaries, prepared in accordance with generally accepted accounting principles, plus
 
    the aggregate outstanding principal amount of our Subordinated Debt (as defined in the indenture) and the aggregate principal amount of Subordinated Debt of Restricted Subsidiaries, as reflected on the same consolidated balance sheet.
“Principal Property” shall mean any building, structure or other facility (including land or fixtures) owned by us or any Restricted Subsidiary having a gross book value in excess of 2% of Consolidated Net Worth and Subordinated Debt, other than any such building, structure or other facility which, in the opinion of our Board of Directors, is not of material importance to the total business conducted by us and our subsidiaries as an entirety.
“Rental Equipment” shall mean all automobiles owned, financed or otherwise held by us or any of our Restricted Subsidiaries which, in the ordinary course of business, are offered for rental within the United States of America for periods of less than 30 days.
“Restricted Subsidiary” shall mean certain of our identified Subsidiaries, and any other Subsidiaries designated after the date of the indenture as a Restricted Subsidiary by our Board of Directors, subject to redesignation by the Board of Directors and to certain other restrictions.
“Sale and Leaseback Transaction” shall mean any sale or transfer by us or one or more Restricted Subsidiaries (except a sale or transfer to us or one or more Restricted Subsidiaries) of any Principal Property, made more than 180 days after the later of the acquisition of such Principal Property or the completion of construction or full commencement of operations of such Principal Property, if such sale or transfer is made with the intention of, or as part of an arrangement involving, the lease of such Principal Property to us or a Restricted Subsidiary (with certain exceptions).
“Secured Debt” shall mean all indebtedness for borrowed money of ours or a Restricted Subsidiary that is secured by a Security Interest upon any assets of ours or any Restricted Subsidiary, including any capital stock or indebtedness of any Restricted Subsidiary.
“Security Interest” shall mean any mortgage, pledge, lien, encumbrance, conditional sales contract, title retention agreement or other similar arrangement that secures payment or performance of an obligation. (Section 101)

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Modification of the indentures
Subject to certain exceptions, the indenture contains provisions permitting us and the trustee, with the consent of the holders of not less than a majority in principal amount of all securities at the time outstanding, or of the holders of the then outstanding debt securities of each series to be affected by such action, to modify the indentures or any supplemental indentures or the rights of the holders of all debt securities under the indenture, or of the senior notes, as the case may be; provided that no such modification shall (i) change the fixed maturity of the principal of, or any installment of principal or interest on, any debt security, or reduce the principal amount of any debt security or the rate of interest, if any, on such debt security, or change the place of payment or the currency in which any debt security or the interest, if any, on such debt security is payable, without the consent of the Holder of each Debt Security affected, or (ii) reduce the aforesaid percentage of debt securities the consent of the holders of which is required for any such modification, without the consent of the holder of each debt security affected. (Section 902)
Events of default
The following events are defined in the indenture as Events of Default with respect to the senior notes:
    failure for 30 days to pay interest on the senior notes when due;
 
    failure to pay principal of the senior notes when due at maturity thereof or otherwise, which failure shall continue unremedied for five business days;
 
    the acceleration of any of our other indebtedness in excess of $25 million, including another series of senior debt securities issued under the indenture, if such acceleration is not rescinded or annulled within ten days after written notice of the acceleration to us;
 
    failure to perform any other covenant in the senior notes within 90 days after written notice of the failure to us specifying the failure and requiring its remedy;
 
    certain events of bankruptcy, insolvency or reorganization; and
 
    failure to pay the put price of any senior notes following the exercise of the put right by any holder of senior notes on the date payment is due, unless the senior notes underlie Corporate Units, in which case our obligation to pay the put price will be netted against such holder’s obligation to pay the purchase price under the related purchase contracts. (Section 501)
We are required to file annually with the trustee an officer’s certificate as to the absence of certain defaults under the terms of the indenture. (Section 1006)
Upon any Event of Default with respect to the senior notes, the trustee or the holders of not less than 25% in aggregate principal amount of the senior notes then outstanding may declare the principal of all the senior notes to be due and payable. (Section 502)
The indenture provides that the holders of not less than a majority in principal amount of the senior notes may on behalf of the holders of all of the senior notes of such series waive any past default under the indenture with respect to the senior notes and its consequences, except a default:
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    in respect of a covenant or provision of the indenture which, under the terms of the indenture, cannot be modified or amended without the consent of the holders of all of the senior notes affected thereby.
The terms of the indenture do not permit any such waiver with respect to senior notes subsequent to the acceleration of principal thereof. (Section 513)
The indenture provides that the trustee may withhold notice to the holders of the senior notes (except a default in the payment of principal or interest) if it determines that the withholding of such notice is in the interest of the holders of the senior notes. (Section 602)
Subject to provisions of indenture relating to the duties of the trustee in case an Event of Default shall occur and be continuing, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any of the holders of the debt securities issued thereunder, unless they shall have offered to the trustee indemnity reasonably satisfactory to the trustee. (Sections 601(a) and 603(e)) Subject to such provisions for the indemnification of the trustee and to certain other limitations, the holders of a majority in principal amount of the senior notes at the time outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the senior notes. (Section 512)
Optional redemption — Post-remarketing
In the event of a successful remarketing, the senior notes are redeemable at our option, in whole but not in part, at any time on or after the two-year anniversary of the purchase contract settlement date. Upon a failed final remarketing, the senior notes are redeemable at our option, in whole but not in part, at any time on or after November 16, 2011. In either case, the redemption price for the senior notes would be equal to 100% of the outstanding principal amount of the notes being redeemed plus accrued and unpaid interest, if any.
Optional redemption — Tax event
If a tax event, as defined below, occurs and is continuing, we may redeem, at our option on any interest payment date, the senior notes in whole, but not in part, at a price equal to, for each senior note, the redemption amount, as defined below, which we refer collectively to as the redemption price, to the date of redemption, which we refer to as the “tax event redemption date.” The redemption price payable in respect of all senior notes included in Corporate Units will be distributed to the collateral agent, which in turn will apply an amount equal to the redemption amount of such redemption price to purchase the tax event treasury portfolio on behalf of the holders of the Corporate Units and remit the remaining portion (net of fees and expenses, if any), if any, of such redemption price to the purchase contract agent for payment to the holders of the Corporate Units. Thereafter, the applicable ownership interests in the treasury portfolio will be substituted for the applicable ownership interests in senior notes and will be pledged to us through the collateral agent to secure the Corporate Unit holders’ obligations to purchase our shares of Class A common stock under the related purchase contract. Holders of senior notes that are not part of Corporate Units will directly receive proceeds from the redemption of the senior notes.
“Tax event” means the receipt by us of an opinion of counsel, rendered by a law firm having a recognized national tax practice, to the effect that, as a result of any amendment to, change in or announced proposed change in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative decision, pronouncement,

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judicial decision or action interpreting or applying such laws or regulations, which amendment or change is effective or which proposed change, pronouncement, action or decision is announced on or after the date of issuance of senior notes, there is more than an insubstantial increase in the risk that interest payable by us on the senior notes is not, or within 90 days of the date of such opinion, will not be, deductible by us, in whole or in part, for United States federal income tax purposes.
“Redemption amount” means, for each senior note, (i) if the tax event occurs prior to the earlier of (x) the date of a successful remarketing or (y) the purchase contract settlement date, the product of the principal amount of such senior note and a fraction, the numerator of which is the treasury portfolio purchase price, as defined below, and the denominator of which is the applicable principal amount, as defined below, and (ii) if the tax event occurs after the date of a successful remarketing or the related purchase contract settlement date, the principal amount, plus accrued and unpaid interest, if any.
“Treasury portfolio purchase price” means the lowest aggregate ask-side price quoted by a primary U.S. government securities dealer to the quotation agent on the third business day immediately preceding the tax event redemption date for the purchase of the tax event treasury portfolio for settlement on the tax event redemption date.
“Applicable principal amount” means the aggregate principal amount of the senior notes that underlie the Corporate Units on the tax event redemption date.
“Tax event treasury portfolio” means a portfolio of U.S. treasury securities (or principal or interest strips thereof) that mature on or prior to the purchase contract settlement date in an aggregate amount at maturity equal to the applicable principal amount and with respect to each scheduled interest payment date on the senior notes that occurs after the tax event redemption date, to and including the purchase contract settlement date, U.S. treasury securities (or principal or interest strips thereof) that mature on or prior to the business day immediately preceding such scheduled interest payment date in an aggregate amount at maturity equal to the aggregate interest payment (assuming no reset of the interest rate) that would be due on the applicable principal amount of the senior notes on such date.
“Quotation agent” means any primary U.S. government securities dealer selected by us.
Agreement by purchasers of certain tax treatment
Each senior note will provide that, by acceptance of the senior note or a beneficial interest therein, you intend to treat the senior note as indebtedness of the Company for all United States federal income tax purposes.
Defeasance of senior notes
We at our option:
  (a)   will be deemed to have paid and discharged the entire indebtedness represented by the outstanding senior notes, and to have satisfied all our other obligations under senior notes (except for obligations relating to the rights of holders to receive payments from the trust fund as described in the indenture, certain obligations to register the transfer and exchange of senior notes, replace stolen, lost or mutilated senior notes, maintain paying agencies, hold moneys for payment in trust and our obligations with respect to Global Securities and defeasance and covenant defeasance generally); or

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  (b)   shall be released from our obligations described above under “— Limitations on mergers ,” “— Limitations on secured debt” and “— Limitations on sale and leaseback transactions” with respect to the outstanding senior notes, if we irrevocably deposit or cause to be deposited with the trustee money or U.S. Government Obligations or a combination of money or U.S. Government Obligations sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification of its opinion delivered to the Trustee, to pay and discharge the principal of (and premium, if any) and interest, if any, on the outstanding senior notes.
Among conditions to exercising any such option, we are required to deliver to the trustee an opinion of counsel (which opinion shall state, in the case of a defeasance described in clause (a) above, that (x) we have received from, or there has been published by, the Internal Revenue Service a ruling, or (y) since the date of the first issuance by us of senior notes pursuant to the indenture, there has been a change in the applicable Federal income tax law) to the effect that the holders of the outstanding senior notes will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance, as the case may be, had not occurred. (Sections 1401, 1402, 1403 and 1404)
Book-entry system
Senior notes which are released from the pledge following substitution or settlement of the purchase contracts will be issued in the form of one or more global certificates, which are referred to as global securities, registered in the name of the depositary or its nominee. Except under the limited circumstances described below or except upon recreation of Corporate Units, senior notes represented by the global securities will not be exchangeable for, and will not otherwise be issuable as, senior notes in certificated form. The global securities described above may not be transferred except by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions may require that some purchasers of securities take physical delivery of the securities in certificated form. These laws may impair the ability to transfer beneficial interests in such a global security.
Except as provided below, owners of beneficial interests in such a global security will not be entitled to receive physical delivery of senior notes in certificated form and will not be considered the holders (as defined in the indenture) thereof for any purpose under the indenture, and no global security representing senior notes shall be exchangeable, except for another global security of like denomination and tenor to be registered in the name of the depositary or its nominee or a successor depositary or its nominee. Accordingly, each beneficial owner must rely on the procedures of the depositary or if such person is not a participant, on the procedures of the participant through which such person owns its interest to exercise any rights of a holder under the indenture.
We will issue the notes in definitive certificated form if the depositary notifies us that it is unwilling or unable to continue as depositary or the depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and a successor depositary is not appointed by us within 90 days. In addition beneficial interests in a global security certificate may be exchanged for definitive certificated notes upon request by or on behalf of the depositary in accordance with customary procedures. The indenture permits us to determine at any time and in our sole discretion that senior notes shall no longer be represented by global certificates. DTC has advised us that, under its current practices, it would notify its participants of our request, but will only withdraw beneficial interests from the global

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certificates at the request of each DTC participant. We would issue definitive certificates in exchange for any beneficial interests withdrawn. Any global security, or portion thereof, that is exchangeable pursuant to this paragraph will be exchangeable for note certificates registered in the names directed by the depositary. We expect that these instructions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global security certificates.
Governing law
The indenture and the senior notes will be governed by, and construed in accordance with, the laws of the State of New York.

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Certain United States federal income and
estate tax considerations
The following is a summary of certain U.S. federal income and estate tax consequences of the ownership of senior notes, Corporate Units, Treasury Units, and the shares of Class A common stock, as of the date hereof. Except where noted, this summary deals only with a Corporate Unit, Treasury Unit, senior note or share of Class A common stock held as a capital asset by a holder who purchased the Corporate Units on original issuance at its initial offering price, and does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:
    a dealer in securities or currencies;
 
    a financial institution;
 
    a regulated investment company;
 
    a real estate investment trust;
 
    a tax-exempt organization;
 
    an insurance company;
 
    a person holding the senior notes, Corporate Units, Treasury Units, or shares of Class A common stock as part of a hedging, integrated, conversion or constructive sale transaction or a straddle;
 
    a trader in securities that has elected the mark-to-market method of accounting for your securities;
 
    a person liable for alternative minimum tax;
 
    a person who is an investor in a pass-through entity; or
 
    a person whose “functional currency” is not the U.S. dollar.
The discussion below is based upon the provisions of the Code, and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be changed, perhaps retroactively, so as to result in U.S. federal income or estate tax consequences different from those discussed below.
If a partnership holds the Corporate Units, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner in a partnership holding the Corporate Units, you should consult your tax advisors.
If you are considering the purchase of Corporate Units, you should consult your own tax advisors concerning the U.S. federal income and estate tax consequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.

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As used herein, the term “U.S. holder” means a holder of Corporate Units that is for U.S. federal income tax purposes:
    an individual citizen or resident of the United States.;
 
    a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
 
    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
 
    a trust if it (i) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
A “Non-U.S. holder” is a beneficial owner of senior notes, Corporate Units, Treasury Units, and the shares of Class A common stock (other than a partnership) that is not a U.S. holder. Special rules may apply to certain non-U.S. holders such as “controlled foreign corporations”, “passive foreign investment companies”, corporations that accumulate earnings to avoid federal income tax or, in certain circumstances, individuals who are U.S. expatriates. Such entities should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.
The Internal Revenue Service or “IRS” issued a ruling addressing the tax considerations relating to instruments similar to the Corporate Units. In the ruling, the IRS concluded that the senior notes issued as part of a unit with a purchase contract were debt for U.S. federal income tax purposes. However, notwithstanding the ruling, there is no assurance that the IRS will agree with the treatment of the ownership of the Corporate Units described below. You should consult your own tax advisor regarding the tax consequences to you of the acquisition, ownership and disposition of Corporate Units, Treasury Units, senior notes and Class A common stock, including the tax consequences under state, local, foreign and other tax laws.
Consequences to U.S. holders
The following is a summary of the U.S. federal income tax consequences that will apply to you if you are a U.S. holder of Corporate Units. Certain consequences to “Non-U.S. holders” of Corporate Units are described under “—Consequences to Non-U.S. holders” below.
Ownership of the Corporate Units
Allocation of purchase price. Your acquisition of the Corporate Units will be treated as an acquisition of the senior note and the purchase contract constituting the Corporate Unit and, by purchasing a Corporate Unit, you will be deemed to have agreed to such treatment. The purchase price of each Corporate Unit will be allocated between the senior note and the purchase contract in proportion to their respective fair market values at the time of purchase. Such allocation will establish your initial tax basis in the senior note and the purchase contract. We will report the fair market value of each senior note as $        and the fair market value of each purchase contract as $         , and by purchasing the Corporate Units, you agree to allocate the purchase price for a Corporate Unit in

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accordance with the respective fair market value. The remainder of this discussion assumes that this allocation of the purchase price will be respected for U.S. federal income tax purposes.
Senior notes—Interest. We expect to treat, and will report accordingly, interest paid on senior notes as qualified stated interest. As a result, such interest will be taxable to you as ordinary interest income at the time it is received or accrued, depending upon the method of accounting applicable to you. However, it is possible that the IRS would disagree with this treatment of the senior notes, including treating the senior notes as contingent payment debt obligations for U.S. federal income tax purposes, which treatment could significantly alter the amount, timing, and character of income and gain you realize on a Corporate Unit. You should consult your tax advisor concerning alternative treatments of the senior notes.
Senior notes—Sale, exchange or other disposition . You will generally recognize gain or loss upon the sale, exchange, retirement or other disposition of a senior note equal to the difference between the amount realized upon the sale, exchange, retirement or other disposition (less any accrued and unpaid interest not previously included in income, which will be taxed as interest income) and the adjusted tax basis of the senior note. Your adjusted tax basis in a senior note will, in general, be the issue price of the senior note. Such gain or loss will be capital gain or loss. If you are an individual and have held the senior note for more than one year, any capital gain will subject to tax at preferential rates. The deductibility of capital losses by individuals and corporations is subject to limitations.
Treasury Units—Substitution of treasury security to create Treasury Units . If you deliver a treasury security to the collateral agent in substitution for the senior note, you generally will not recognize gain or loss upon the delivery of the treasury security or the release of the senior note. You will continue to take into account items of income or deduction otherwise includible or deductible, respectively, with respect to the senior note and treasury security, and your tax basis in the senior note, treasury security and the purchase contract will not be affected by the delivery and release.
Treasury Units—Ownership of treasury securities . By acquiring Treasury Units, you agree to treat yourself as the owner of the treasury security that is a part of the Treasury Units beneficially owned by you. We also agree to treat you as the owner of the treasury security. Your initial tax basis in the treasury security that is a part of the Treasury Units will be equal to the amount paid for the treasury security. Your adjusted tax basis in the treasury security will be increased by the amount of any acquisition discount included in income with respect thereto.
Treasury Units—Interest income and acquisition discount. If you hold Treasury Units you will be required to treat your pro rata portion of the treasury security as a bond that was originally issued on the date acquired and that has acquisition discount equal to your pro rata portion of the excess of the amount payable on such treasury security over the value of the treasury security at the time you acquire it. You, whether on the cash or accrual method of tax accounting, will be required to include original issue discount (other than original issue discount on short-term treasury securities as defined below) in income for U.S. federal income tax purposes as it accrues on a constant yield to maturity basis. The amount of such excess will constitute only a portion of the total amounts payable in respect of the treasury security. Consequently, a portion of each scheduled payment to you will be treated as a return of your investment in the treasury security and will not be considered current income for U.S. federal income tax purposes. In the case of any treasury security with a maturity of one year or less from the date of its issue, or a “short-term treasury security”, in general only accrual basis taxpayers will be required to include original issue discount in income as it accrues. Unless such accrual basis holder

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elects to accrue the original issue discount on a short-term U.S. Treasury security on a constant yield to maturity basis, such original issue discount will be accrued on a straight-line basis.
Treasury Units—Substitution of senior notes to recreate Corporate Units. If you deliver senior notes to the collateral agent to recreate Corporate Units, you generally will not recognize gain or loss upon the delivery of the senior notes or the release of the treasury security. You will continue to take into account items of income or deduction otherwise includible or deductible, respectively, with respect to the treasury security and the senior notes, and your tax basis in the senior notes, the treasury security and the purchase contract will not be affected by the delivery and release.
Purchase contracts—Contract adjustment payments . No direct authority addresses the treatment of the contract adjustment payments under current law, and their treatment is unclear. We intend to take the position that contract adjustment payments constitute taxable income to you when received or accrued, in accordance with your method of tax accounting. To the extent we are required to file information returns with respect to contract adjustment payments, we intend to report such payments as taxable income to you. You should consult your own tax advisor concerning the treatment of contract adjustment payments and the possibility of not including such amounts in income currently. An alternative treatment of contract adjustment payments could affect your tax basis in a purchase contract and in the Class A common stock received under a purchase contract and it could affect your amount realized upon the sale or disposition of a Corporate Unit or a Treasury Unit or the termination of a purchase contract. See “Consequences to U.S. holders—Ownership of the Corporate Units—Purchase contracts—Acquisition of our Class A common stock under a purchase contract,” “Consequences to U.S. holders—Ownership of the Corporate Units—Purchase contracts—Sale or Disposition of Corporate Units or Treasury Units” and “Consequences to U.S. holders—Ownership of the Corporate Units—Purchase contracts—Termination of purchase contract.”
Purchase contracts—Acquisition of our Class A common stock under a purchase contract . You generally will not recognize gain or loss on the purchase of our Class A common stock under a purchase contract, except with respect to any cash paid in lieu of a fractional share of Class A common stock. Subject to the following discussion, your aggregate initial tax basis in our Class A common stock received under a purchase contract generally should equal (a) the purchase price paid for such Class A common stock, plus (b) your tax basis in the purchase contract, if any, and less (c) the portion of such tax basis allocable to the fractional share. In determining the holding period for Class A common stock received under a purchase contract, you begin to count the days on the day after the Class A common stock is acquired.
Purchase contracts—Early settlement of purchase contract. You will not recognize gain or loss on the receipt of your proportionate share of the senior notes or treasury security upon early settlement of a purchase contract, and you will have the same tax basis in such senior notes or treasury security, as the case may be, as before such early settlement.
Purchase contracts—Termination of purchase contract. If a purchase contract terminates, you will recognize capital gain or loss equal to the difference between the amount you realize, if any, upon such termination and your adjusted tax basis, if any, in the purchase contract at the time of such termination. Capital gains of individuals derived in respect of capital assets held for more than one year are subject to tax at preferential rates. The deductibility of capital losses by individuals and corporations is subject to limitations. You will not recognize gain or loss on the receipt of your senior notes or treasury security upon termination of the purchase contract and you will have the same tax basis in such senior notes or treasury security, as the case may be, as before such termination.

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Purchase contracts—Adjustment to settlement rate. You might be treated as receiving a constructive distribution from us if (i) the settlement rate is adjusted and as a result of such adjustment your proportionate interest in our assets or earnings and profits is increased and (ii) the adjustment is not made pursuant to a bona fide, reasonable anti-dilution formula. Certain of the possible settlement rate adjustments provided in the purchase contracts (including, without limitation, adjustments in respect of taxable dividends to holders of our Class A common stock) will not qualify as being pursuant to a bona fide, reasonable anti-dilution formula. If such adjustments are made, you will be deemed to have received a distribution even though you have not received any cash or property as a result of such adjustments. Thus under certain circumstances, an increase in the settlement rate might give rise to a taxable dividend, return of capital or capital gain to you in accordance with the earnings and profits rules under the Code even though you would not receive any cash related thereto. In addition, in certain situations, you may be treated as receiving a constructive distribution if we fail to adjust the settlement rate. It is not clear whether a constructive dividend deemed paid to you would be eligible for the preferential rates of U.S. federal income tax applicable in respect of certain dividends. It is also unclear whether corporate holders would be entitled to claim the dividends received deduction with respect to any such constructive dividends.
Purchase contracts—Sale or disposition of Corporate Units or Treasury Units . Upon a disposition of Corporate Units or Treasury Units, you will be treated as having sold, exchanged or disposed of the purchase contract and the senior note or treasury security, as the case may be, that constitute such Corporate Units or Treasury Units. You generally will have gain or loss equal to the difference between the portion of your proceeds allocable to the purchase contract and the senior note or treasury security, as the case may be, and your respective adjusted tax bases in the purchase contract and the senior note or treasury security. For purposes of determining gain or loss, your proceeds will not include an amount equal to accrued but unpaid interest on the treasury security or senior note not previously included in income, which amount will be treated as ordinary interest income. Further, to the extent you are treated as having received an amount with respect to accrued contract adjustment payments, such amounts may be treated as ordinary income to the extent not previously included in income. Such gain or loss generally will be capital gain or loss. If you are an individual and have held the senior note for more than one year, any capital gain will subject to tax at preferential rates. The deductibility of capital losses by individuals and corporations is subject to limitations. If the disposition of Corporate Units or Treasury Units occurs when the purchase contract has a negative value, you may be considered to have received additional consideration for the senior note or treasury security in an amount equal to such negative value, and to have paid such amount to be released from your obligation under the purchase contract. You should consult your tax advisor regarding a disposition of Corporate Units or Treasury Units at a time when the purchase contract has a negative value.
Purchase contracts—Remarketing of the senior notes . If you elect to have your senior notes remarketed, the remarketing of your senior notes will be taxable in the manner described above under “Consequences to U.S. holders—Ownership of the Corporate Units—Senior notes—Sale, exchange or other disposition.”
Tax event redemption of the senior notes. A tax event redemption of the senior notes will be a taxable event which will be subject to tax in the manner described above under “Consequences to U.S. holders—Ownership of the Corporate Units—Senior Notes—Sale, exchange or other disposition.”

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Ownership of the Treasury Portfolio. Upon a tax event redemption prior to the remarketing settlement date, your Corporate Unit will include a Treasury portfolio instead of a senior note. We and, by acquiring Corporate Units, you agree to treat yourself as the owner, for U.S. federal, state and local income and franchise tax purposes, of the Treasury portfolio that is a part of the Corporate Units beneficially owned by you. Your initial tax basis in its applicable ownership interest of the Treasury portfolio will equal your pro rata portion of the amount paid by the collateral agent for the Treasury portfolio. Your adjusted tax basis in the Treasury portfolio will be increased by the amount of original issue discount included in income with respect thereto and decreased by the amount of cash received in respect of the Treasury portfolio.
Interest income and original issue discount. The Treasury portfolio will consist of stripped treasury securities. Following a tax event redemption of the senior notes, you will be required to treat your pro rata portion of each treasury security in the Treasury portfolio as a bond that was originally issued on the date the collateral agent acquired the relevant treasury securities and that has original issue discount equal to your pro rata portion of the excess of the amounts payable on such treasury securities over the value of the treasury securities at the time the collateral agent acquires them on your behalf. You, whether on the cash or accrual method of tax accounting, will be required to include original issue discount (other than original issue discount on short-term treasury securities as defined below) in income for U.S. federal income tax purposes as it accrues on a constant yield to maturity basis. The amount of such excess will constitute only a portion of the total amounts payable in respect of the Treasury portfolio. Consequently, a portion of each scheduled payment to you will be treated as a return of your investment in the Treasury portfolio and will not be considered current income for U.S. federal income tax purposes. In the case of any treasury security with a maturity of one year or less from the date of its issue in general only accrual basis taxpayers will be required to include original issue discount in income as it accrues. Unless such accrual basis holder elects to accrue the original issue discount on a short-term treasury security on a constant yield to maturity basis, such original issue discount will be accrued on a straight-line basis.
Consequences to Non-U.S. holders
The following is a summary of the U.S. federal income tax consequences that will apply to you if you are a Non-U.S. holder of Corporate Units.
U.S. Federal withholding tax
The 30% U.S. federal withholding tax will generally not apply to any payment of principal or interest (including OID or acquisition discount) on the senior notes or treasury securities under the ‘‘portfolio interest rule,’’ provided that:
    interest paid on the senior note or treasury security is not effectively connected with your conduct of a trade or business in the United States;
 
    you do not (actually or constructively) own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of Section 871(h)(3) of the Code and the Treasury regulations;
 
    you are not a controlled foreign corporation that is related to us (actually or constructively) through stock ownership;
 
    you are not a bank whose receipt of interest on the senior notes or treasury securities is described in section 881(c)(3)(A) of the Code; and

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    (a) you provide your name and address on an IRS Form W-8BEN (or other applicable form), and certify, under penalties of perjury, that you are not a U.S. person, or (b) if you hold your Corporate Units, Treasury Units, senior notes or treasury securities through certain foreign intermediaries, you satisfy the certification requirements of applicable U.S. Treasury regulations.
Special certification requirements apply to certain Non-U.S. holders that are pass-through entities rather than individuals.
If you cannot satisfy the requirements described above, payments of interest (including OID or acquisition discount) made to you will be subject to the 30% U.S. federal withholding tax, unless you provide us with a properly executed:
    IRS Form W-8BEN (or other applicable form) claiming an exemption from, or reduction in the rate of, withholding under an applicable income tax treaty; or
 
    IRS Form W-8ECI (or other applicable form) stating that interest paid on the senior notes or treasury securities is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States.
We will generally withhold tax at a 30% rate on contract adjustment payments and dividends paid on our Class A common stock acquired under a purchase contract (and generally any deemed dividends resulting from certain adjustments or failure to make adjustments, see “Consequences to U.S. holders—Ownership of the Corporate Units—Purchase Contracts—Adjustment to settlement rate”) or such lower rate as may be specified by an applicable income tax treaty. It is possible that U.S. withholding tax on deemed dividends would be withheld from the interest and contract adjustment payments paid to a Non-U.S. holder. However, contract adjustment payments or dividends that are effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States and, where a tax treaty applies, are attributable to a U.S. permanent establishment of the Non-U.S. holder, are not subject to the withholding tax, provided the relevant certification requirements are satisfied, but instead are subject to U.S. federal income tax, as described below.
A Non-U.S. holder of our Class A common stock or a purchase contract who wishes to claim the benefit of an applicable treaty rate for dividends or contract adjustment payments will be required to satisfy certain certification and disclosure requirements described in the fifth bullet point above. A Non-U.S. holder eligible for a reduced rate of U.S. withholding tax on payments pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.
The 30% U.S. federal withholding tax will not apply to any gain that you realize on the sale, exchange or other disposition of the Corporate Units, Treasury Units, treasury securities, senior notes and our Class A common stock acquired under the purchase contract.
U.S. Federal income tax
If you are engaged in a trade or business in the United States and interest (including original issue discount and acquisition discount) on the senior notes or treasury securities, dividends on our Class A common stock, or to the extent they constitute taxable income, contract adjustment payments from the purchase contracts are effectively connected with the conduct of that trade or business, you will be subject to U.S. federal income tax on the interest, dividends or contract adjustment payments on a net income basis (although

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exempt from the 30% withholding tax), in the same manner as if you were a U.S. person as defined under the Code. Certain certification and disclosure requirements must be complied with in order for effectively connected income to be exempt from withholding. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower applicable income tax treaty rate) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with the conduct by you of a trade or business in the United States. Any gain realized on the disposition of a treasury security, senior note, purchase contract or share of our Class A common stock generally will not be subject to U.S. federal income tax unless:
    that gain or income is effectively connected with the conduct of a trade or business by you in the United States; or
 
    you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or
 
    in the case of Corporate Units, Treasury Units or our Class A common stock, we are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes (subject to the discussion below).
An individual Non-U.S. holder described in the first bullet above will be subject to tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates. An individual Non-U.S. holder described in the second bullet point above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by U.S. source capital losses (even though the individual is not considered a resident of the United States). If you are a Non-U.S. holder that is a foreign corporation and is described under the first bullet above, you will be subject to tax on your gain under regular graduated U.S. federal income tax rates and, in addition, may be subject to the branch profits tax equal to 30% of your effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.
We believe we are not and do not anticipate becoming a “United States real property holding corporation” for U.S. federal income tax purposes.
U.S. Federal estate tax
Your estate will not be subject to U.S. federal estate tax on the senior notes or treasury securities beneficially owned by you at the time of your death, provided that any payments made to you on the senior notes or treasury securities would be eligible for exemption from the 30% withholding tax under the rules described above under “Consequences to Non-U.S. holders—U.S. Federal withholding tax”

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without regard to the certification requirement described in the fifth bullet point. Our Class A common stock acquired under a purchase contract and owned by you at the time of your death will be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise. Purchase contracts owned by you at the time of your death may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding
U.S. holders. In general, information reporting requirements will apply to payments on Corporate Units, Treasury Units, notes, treasury securities and our Class A common stock made to you and to the proceeds of the sale or other disposition of such instruments, unless you are an exempt recipient such as a corporation. Backup withholding will apply to such payments if you fail to supply an accurate taxpayer identification number or certification of foreign or other exempt status or otherwise fail to comply with applicable U.S. information reporting or certification requirements. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is furnished to the IRS.
Non-U.S. holders. Generally, we must report to the IRS and to you the amount of any interest on the senior notes, contract adjustment payments, and dividends on Class A common stock and the amount of tax, if any, withheld with respect to those payments. Copies of the information returns reporting such interest payments and any withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty.
In general, no backup withholding will be required regarding payments on the Corporate Units, Treasury Units, senior notes, treasury securities or our Class A common stock (except possibly with respect to contract adjustment payments) that we make to you provided that you have delivered the statement described above under “Consequences to Non-U.S. holders—U.S. Federal withholding tax” and we do not have actual knowledge or reason to know that you are a U.S. person
In addition, no information reporting or backup withholding will be required regarding the proceeds of the sale of senior notes, Corporate Units, Treasury Units, and the shares of Class A common stock made within the United States or conducted through certain U.S.-related financial intermediaries, if the payor receives the statement described above and does not have actual knowledge or reason to know that you are a U.S. person, as defined under the Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is furnished to the IRS.

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Certain ERISA considerations
The following is a summary of certain considerations associated with the acquisition, holding and disposition of Equity Units (or any component security of such units) by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended, or “ERISA”, plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA, referred to collectively as “similar laws,” and entities whose underlying assets are considered to include “plan assets” of such plans, accounts and arrangements, each, a “plan.”
General fiduciary matters
ERISA and the Code impose certain duties on persons who are fiduciaries of a plan subject to Title I of ERISA or Section 4975 of the Code and prohibit certain transactions involving the assets of a plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such a plan or the management or disposition of the assets of such a plan, or who renders investment advice for a fee or other compensation to such a plan, is generally considered to be a fiduciary of the plan.
In considering an investment of a portion of the assets of any plan in the Equity Units (or any component security of such units), a plan fiduciary should determine whether the investment is in accordance with the documents and instruments governing the plan and the applicable provisions of ERISA, the Code or any similar law relating to a fiduciary’s duties to the plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any of the applicable similar laws.
Any insurance company proposing to invest assets of its general account in the Equity Units (or any component security of such units) should consider the extent that such investment would be subject to the requirements of ERISA in light of the U.S. Supreme Court’s decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank and under any subsequent legislation or other guidance that has or may become available relating to that decision, including the enactment of Section 401(c) of ERISA by the Small Business Job Protection Act of 1996 and the regulations promulgated thereunder.
Prohibited transaction issues
Section 406 of ERISA and Section 4975 of the Code prohibit plans subject to Title I of ERISA or Section 4975 of the Code from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of a plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code.
If the Equity Units (or any component security of such units) are acquired by any plan, the acquisition, holding and disposition of the Equity Units (or any component security of such units) may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code if (i) we or any or our affiliates are a party in interest or disqualified person with respect to such plan or (ii) the plan sells or disposes of such Equity Units (or any component security of such units) to a counterparty that is a party in interest or disqualified person with respect to such plan, in each case, unless

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an exemption is available. In this regard, the U.S. Department of Labor, or the “DOL,” has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to these transactions. These class exemptions include, without limitation, PTCE 84-14 (respecting transactions determined by independent qualified professional asset managers), PTCE 90-1 (respecting insurance company pooled separate accounts), PTCE 91-38 (respecting bank collective investment funds), PTCE 95-60 (respecting life insurance company general accounts), PTCE 96-23 (respecting transactions determined by in-house asset managers) and PTCE 75-1 (respecting principal transactions by a broker-dealer), although there can be no assurance that all of the conditions of any such exemptions will be satisfied. Governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA), while not subject to the prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to similar laws. Fiduciaries of any such plans should consult with their counsel before acquiring Equity Units (or any component security of such units).
Accordingly, each purchaser and any subsequent transferee of the Equity Units (or any component security of such units), will be deemed to have represented and warranted on each day from and including the date of its purchase of the Equity Units (or any component security of such units) through and including the date of the satisfaction of the obligation under the new purchase contract and/or the disposition of any such Equity Unit (or any component security of such unit) either (i) that no portion of the assets used by such purchaser or subsequent transferee to acquire the Equity Units (or any component security of such units) constitute the assets of any plan or (ii) that the acquisition, holding and the disposition of any Equity Unit (and any component security of such unit) by such purchaser or subsequent transferee does not and will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or a violation of any applicable similar laws.
Any plan or other entity whose assets include plan assets subject to ERISA, Section 4975 of the Code or substantially similar federal, state or local law should consult their advisors and/or counsel regarding the consequence of an investment in the Equity Units (or any component security of such units).

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Underwriting
We are offering the Corporate Units described in this prospectus through a number of underwriters. J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Goldman, Sachs & Co. are acting as joint book-running managers of the offering and as representatives of the underwriters, in the United States and internationally. We and Ford have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of Corporate Units listed next to its name in the following table:
         
    Number  
Name   Shares  
J.P. Morgan Securities Inc.
       
Citigroup Global Markets Inc.
       
Goldman, Sachs & Co.
       
ABN AMRO Rothschild LLC
       
Barclays Bank Capital
       
Bear, Stearns & Co. Inc.
       
BNP Paribas Securities (USA) Inc.
       
Calyon Securities (USA) Inc.
       
Comerica Securities, Inc.
       
Credit Suisse First Boston LLC
       
Daiwa Securities America Inc.
       
Deutsche Bank Securities
       
Dresdner Kleinwort Wasserstein
       
Harris Nesbitt Corp.
       
HSBC Securities (USA) Inc.
       
ING Financial Markets LLC
       
Lehman Brothers Inc.
       
Mellon Financial Markets, LLC
       
Merrill Lynch, Pierce, Fenner & Smith Incorporated
       
Mizuho International plc
       
Morgan Stanley & Co. Incorporated
       
Mitsubishi Securities International plc
       
RBC Capital Markets Corporation
       
BNY Capital Markets, Inc.
       
Scotia Capital (USA) Inc.
       
UBS Investment Bank
       
Wachovia Capital Markets, LLC
       
WestLB AG
       
 
     
 
Total
       
 
     

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The underwriters are committed to purchase all the Corporate Units offered by us if they purchase any Corporate Units. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.
The underwriters propose to offer the Corporate Units directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $    per Corporate Unit. Any such dealers may resell Corporate Units to certain other brokers or dealers at a discount of up to $    per Corporate Unit from the initial public offering price. After the initial public offering of the Corporate Units, the offering price and other selling terms may be changed by the underwriters. Sales of Corporate Units made outside of the United States may be made by affiliates of the underwriters. The representatives have advised us that the underwriters do not intend to confirm discretionary sales in excess of 5% of the Corporate Units offered in this offering.
The underwriters have an option to buy up to additional Corporate Units from us to cover sales of Corporate Units by the underwriters which exceed the number of Corporate Units specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this over-allotment option. If any Corporate Units are purchased with this over-allotment option, the underwriters will purchase Corporate Units in approximately the same proportion as shown in the table above. If any additional Corporate Units are purchased, the underwriters will offer the additional Corporate Units on the same terms as those on which the Corporate Units are being offered.
The underwriting fee is equal to the public offering price per Corporate Unit less the amount paid by the underwriters to us per Corporate Unit. The underwriting fee is $    per Corporate Unit. The following table shows the per Corporate Unit and total underwriting discounts and commissions to be paid to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase additional Corporate Units.
                 
    Without   With full
    over-allotment   over-allotment
    exercise   exercise
Per Corporate Unit
    $       $  
Total
    $       $  
We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $ .
A prospectus in electronic format may be made available by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.
We, our directors, executive officers, certain other employees and Ford have agreed, without the prior written consent of the joint book-running managers, not to, for a period of 180 days after the date of this prospectus, (1) offer, sell, contract to sell, pledge or otherwise dispose of any shares of our common stock or any of our securities which are substantially similar to shares of our common stock, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, shares of our common stock or any such substantially similar securities; or (2) enter into any swap, option, future, forward or other agreement that transfers, in whole or in part, the economic

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consequence of ownership of shares of our common stock or any securities substantially similar to shares of our common stock, whether any transaction described above in clauses (1) or (2) above is to be settled by delivery of our common stock or such other securities, in cash or otherwise. Additionally, we have agreed not to file with the Securities and Exchange Commission a registration statement under the Securities Act relating to any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock during such 180-day restricted period. Notwithstanding the foregoing, if:
    during the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to us occurs; or
 
    prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,
the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.
Notwithstanding our lock-up agreement described above, the underwriters have agreed in the underwriting agreement that we may (i) issue shares of our common stock pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this prospectus, (ii) issue shares of our common stock in connection with the transactions described in this prospectus, or (iii) issue common stock in connection with the concurrent offering thereof. In addition, notwithstanding the lock-up agreement described above, the underwriters have agreed that our executive officers and directors may transfer shares of common stock (i) to a spouse, child or other dependent or member of immediate family or pursuant to a domestic relations order of a court of competent jurisdiction, provided that each recipient of such securities agrees to be subject to the restrictions set forth in the lock-up agreement, (ii) to any trust, family partnership or similar entity for the direct or indirect benefit of the executive officer, provided that the trust, partnership or similar entity agrees to be bound by the restrictions set forth in the lock-up agreement or (iii) in connection with the exchange or surrender of shares of common stock by stockholders to us in satisfaction or payment of the exercise price of stock options or to satisfy any tax withholding obligations of such stockholder in respect of such option exercise.
We and Ford have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.
The Corporate Units have been approved for listing on the New York Stock Exchange under the symbol “HTZ PrE,” subject to official notice of issuance.
No action has been or will be taken in any jurisdiction (except the United States) that would permit a public offering of our Corporate Units, or the possession, circulation or distribution of this prospectus or any material relating to us or our Corporate Units in any jurisdiction where action for that purpose is required. Accordingly, the Corporate Units included in this offering may not be offered or sold, directly or indirectly, and neither this prospectus or any other offering material or advertisements in connection with this offering may be distributed or published, in or from any such country or jurisdiction, except in compliance with any applicable rules or regulations of any such country or jurisdiction.

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In relation to each Member State of the European Economic Area which has implemented the EU Prospectus Directive, as defined below each, a “Relevant Member State”, each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State the “Relevant Implementation Date” it has not made and will not make an offer of Corporate Units to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Corporate Units which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
  (a)   to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;
 
  (b)   to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000 and (3) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; or
 
  (c)   in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of Corporate Units to the public” in relation to any Corporate Units in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Corporate Units to be offered so as to enable an investor to decide to purchase or subscribe the Corporate Units, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. The expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Each underwriter has represented, warranted and agreed that: (i) it has not made or will not make an offer of Corporate Units to the public in the United Kingdom within the meaning of section 102B of the Financial Services and Markets Act 2000, as amended, or “FSMA,” except to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances which do not require the publication by the company of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA received by it in connection with the issue or sale of any Corporate Units included in this offering in circumstances in which section 21(1) of the FSMA does not apply to us; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.
The Corporate Units included in this offering may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the Corporate Units may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Corporate Units which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

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This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation or subscription or purchase, of the Corporate Units may not be circulated or distributed, nor may the Corporate Units be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than under circumstances in which such offer, sale or invitation does not constitute an offer or sale, or invitation for subscription or purchase, of the Corporate Units to the public in Singapore.
The Corporate Units included in this offering have not been and will not be registered under the Securities and Exchange Law of Japan, or the “Securities and Exchange Law,” and each underwriter has agreed that it will not offer or sell any of our Corporate Units, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Certain of the underwriters are not registered as broker-dealers under Section 15 of the Exchange Act, and have agreed that, in connection with this offering, they will not offer or sell any Corporate Units in, or to persons who are nationals or residents of, the United States other than through registered broker-dealers.
In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling Corporate Units in the open market for the purpose of preventing or retarding a decline in the market price of the Corporate Units while this offering is in progress. These stabilizing transactions may include making short sales of the Corporate Units, which involves the sale by the underwriters of a greater number of Corporate Units than they are required to purchase in this offering, and purchasing Corporate Units on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the underwriters’ over-allotment option referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing Corporate Units in the open market. In making this determination, the underwriters will consider, among other things, the price of Corporate Units available for purchase in the open market compared to the price at which the underwriters may purchase Corporate Units through the over-allotment option. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Corporate Units in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase Corporate Units in the open market to cover the position.
The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the Corporate Units, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase Corporate Units in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those Corporate Units as part of this offering to repay the underwriting discount received by them.

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These activities may have the effect of raising or maintaining the market price of the Corporate Units or preventing or retarding a decline in the market price of the Corporate Units, and, as a result, the price of the Corporate Units may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.
Prior to this offering there has been no public market for our Corporate Units. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors, including:
    the information set forth in this prospectus and otherwise available to the representatives;
    the history of and prospects for the industries in which we compete;
    an assessment of our management;
    our prospects for future earnings;
    the general condition of the securities markets at the time of this offering;
    the recent market prices of, and demand for, publicly traded corporate units of generally comparable companies; and
    other factors deemed relevant by the underwriters and us.
Neither we nor the underwriters can assure investors that an active trading market will develop for our Corporate Units, or that the Corporate Units will trade in the public market at or above the initial public offering price.
The joint book-running managers and certain of the other underwriters and their affiliates have provided in the past to us, Ford and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us, Ford and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. Concurrently with this offering, we are also offering shares of our Class A common stock, for which the underwriters of this offering are also acting as underwriters under a separate underwriting agreement.
On May 26, 2005, we entered into the Interim Credit Facility with an aggregate availability of up to $3.0 billion with the joint book-running managers and/or their affiliates as the arrangers and initial lenders, JPMorgan Chase Bank, N.A. as the U.S. administrative agent and JPMorgan Chase Bank, N.A., Toronto Branch as the Canadian administrative agent. The Interim Credit Facility matures on November 23, 2005 and, under certain circumstances, we may be required to prepay all or a portion of the amounts outstanding thereunder. For further information, see “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Credit facilities.” The Bank of New York, which will be the purchase contract agent and collateral agent with respect to the purchase contracts underlying the Equity Units offered by this prospectus, maintains commercial banking relationships with us and is an underwriter in this offering. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.
Robert E. Rubin, a member of the Office of the Chairman of Citigroup Inc., the parent company of Citigroup Global Markets Inc., is a director of Ford Motor Company. Richard A. Manoogian, a director of JPMorgan Chase & Co., is also a director of Ford Motor Company.

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Equity Units
(HERTZ LOGO)
% Equity Units
 
Prospectus
 
Joint Book-Running Managers
         
JPMorgan
  Citigroup   Goldman, Sachs & Co.
 
Until    , 2005 (25 days after the date of this prospectus), all dealers that buy, sell or trade our Equity Units, whether or not participating in this offer, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
     , 2005

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable in connection with the distribution of the securities being registered. All amounts are estimated except the Securities and Exchange Commission registration fee and the NASD filing fee.
         
Securities and Exchange Commission Registration Fee
  $ 11,770  
NASD Fee
    10,500  
New York Stock Exchange Listing Fees
    150,000  
Blue Sky Fees and Expenses
    25,000  
Printing Expenses
    1,000,000  
Legal Fees and Expenses
    1,200,000  
Accounting Fees
    275,000  
Transfer Agent Fees and Expenses
    15,000  
Agent and Trustee Fees and Expenses
    30,000  
Miscellaneous Expenses
    250,000  
 
     
Total
  $ 2,967,270  
 
     
Item 14. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware (the “Delaware Law”) empowers a Delaware corporation to indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer or director of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such officer or director acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests, and, for criminal proceedings, had no reasonable cause to believe his or her conduct was illegal. A Delaware corporation may indemnify officers and directors against expenses (including attorneys’ fees) in connection with the defense or settlement of an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses which such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Restated Certificate of Incorporation of The Hertz Corporation (the “Company”) contains a provision to limit the personal liability of the directors of the Company for violations of their fiduciary duty. This provision eliminates each director’s liability to the Company or its stockholders for monetary damages except (i) for any breach of the director’s duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware Law providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions or

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(iv) for any transaction from which a director derived an improper personal benefit. The effect of this provision is to eliminate the personal liability of directors for monetary damages for actions involving a breach of their fiduciary duty of care, including any such actions involving gross negligence.
Pursuant to underwriting agreements filed as exhibits to registration statements relating to underwritten offerings of securities, the underwriters parties thereto have agreed to indemnify each officer and director of the Company and each person, if any, who controls the Company within the meaning of the Securities Act of 1933, as amended, against certain liabilities, including liabilities under said Act.
The directors and officers of the Company are covered by directors’ and officers’ insurance policies relating to Ford Motor Company and its subsidiaries (collectively, “Ford”). The Restated Certificate of Incorporation of the Company provides for indemnification of the officers and directors of the Company to the full extent permitted by applicable law.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 15. Recent Sales of Unregistered Securities.
Within the past three years, the Company has issued and sold the following unregistered securities:
On July 2, 2004, the Company established a Euro Medium-Term Program under which the Company and/or Hertz Finance Centre plc (“HFC”), a wholly owned subsidiary of the Company, can issue up to Euro 650,000,000 in medium-term notes. On July 16, 2004, HFC issued Euro 200,000,000 of notes under this program (the “Euro Notes”) and the Company issued full and unconditional guarantees of the Euro Notes. The Euro Notes mature in July 2007, and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points. The Euro Notes and related guarantees were sold through a best efforts offering conducted by Barclays Capital as arranger together with several other agent investment banks, with the agents receiving a commission equal to Euro 350,000. HFC received Euro 199,360,000 in aggregate cash proceeds, net of discount, for the sale of the Euro Notes. The Company believes that the transaction described above was exempt from registration under the Securities Act of 1933 because the subject securities were sold overseas pursuant to the Regulation S under the Securities Act of 1933.
On      , 2005, the Company issued to Ford            shares of its Cumulative Preferred Stock, $0.01 par value per share, with a liquidation preference equal to $1,000,000 per share for $        in cash. The Company believes that this transaction was exempt from registration under Section 4(2) of the Securities Act of 1933 because the subject securities were sold to a single sophisticated investor and parent of the Company who was purchasing for investment without a view to further distribution. No underwriters or other agents were involved in these issuances of securities.

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Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
Reference is made to the information contained in the Exhibit Index filed as part of this Registration Statement, which information is incorporated herein by reference pursuant to Rule 411 of the Securities and Exchange Commission’s Rules and Regulations under the Securities Act of 1933.
(b) Financial Statement Schedules
All applicable financial statement schedule disclosure requirements are included in the prospectus which forms a part of this registration statement, which information is incorporated herein by reference pursuant to Rule 411 of the Securities and Exchange Commission’s Rules and Regulations under the Securities Act of 1933.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offering therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
     The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Park Ridge, State of New Jersey, on August 29, 2005.
         
  THE HERTZ CORPORATION
 
 
  By:   /s/ Paul J. Siracusa    
    Name:   Paul J. Siracusa   
    Title:   Executive Vice President
and Chief Financial Officer 
 
 
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the registration statement has been signed by the following persons in the capacities indicated on August 29, 2005.
     
Signature   Title
*
 
Craig R. Koch
  Chairman of the Board and Chief Executive Officer and Director (Principal Executive Officer)
 
   
/s/ Paul J. Siracusa
 
Paul J. Siracusa
  Executive Vice President and Chief Financial Officer and Director (Principal Financial Officer)
 
   
*
 
Greg C. Smith
  Director
 
   
*
 
Donat R. Leclair
  Director
 
   
*
 
Michael E. Bannister
  Director
 
   
*
 
Richard J. Foti
  Staff Vice President and Controller (Principal Accounting Officer)
         
*By:
  /s/ Paul J. Siracusa    
 
       
 
  Paul J. Siracusa    
 
  Attorney-in-Fact    

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EXHIBIT INDEX
     
Exhibit No.   Description of Exhibit
1.1(1)
  Form of Underwriting Agreement relating to The Hertz Corporation’s Class A common stock
 
   
1.2(1)
  Form of Underwriting Agreement relating to The Hertz Corporation’s Equity Units
 
   
2.1(1)
  Merger Agreement between The Hertz Corporation, The Hertz Holdings Corporation, Hertz Merger Subsidiary, Inc. and Ford Motor Company
 
   
3.1(1)
  Form of Restated Certificate of Incorporation of The Hertz Corporation
 
   
3.2(1)
  Form of Restated By-Laws of The Hertz Corporation to be effective post offering
 
   
4.1
  At June 30, 2005, The Hertz Corporation had various obligations which could be considered as long-term debt, none of which exceeded 10% of the total assets of The Hertz Corporation on a consolidated basis. The Hertz Corporation agrees to furnish to the Securities and Exchange Commission upon request a copy of any such instrument defining the rights of the holders of such long-term debt
 
   
4.2(2)
  Indenture, dated as of March 16, 2001, between The Hertz Corporation and The Bank of New York as trustee
 
   
4.3(1)
  Form of Supplemental Indenture No. 1 between The Hertz Corporation and The Bank of New York, as trustee
 
   
4.4(1)
  Form of Senior Note (included in Exhibit 4.3)
 
   
4.5(1)
  Form of Purchase Contract Agreement between The Hertz Corporation and The Bank of New York, as purchase contract agent
 
 
   
4.6(1)
  Form of Corporate Unit certificate (included in Exhibit 4.5)
 
   
4.7(1)
  Form of Treasury Unit certificate (included in Exhibit 4.5)
 
   
4.8(1)
  Form of Pledge Agreement among The Hertz Corporation, , as collateral agent, custodial agent and securities intermediary, and The Bank of New York, as purchase contract agent
 
   
4.9(1)
  Form of Remarketing Agreement among The Hertz Corporation, The Bank of New York, as purchase contract agent, and J.P. Morgan Securities Inc, Citigroup Global Markets Inc. and Goldman, Sachs & Co., as remarketing agents
 
   
5.1(1)
  Opinion of Simpson Thacher & Bartlett LLP

 


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Exhibit No.   Description of Exhibit
10.1** 
  Master Supply and Advertising Agreement among Ford Motor Company, The Hertz Corporation and Hertz General Interest LLC, dated July 5, 2005
 
10.2(1)
  Corporate Agreement between The Hertz Corporation and Ford Motor Company
 
   
10.3(1)
  Tax Sharing Agreement between The Hertz Corporation and Ford Motor Company
 
   
10.4(3)
  Employment Agreement between The Hertz Corporation and Craig R. Koch
 
   
10.5
  Form of Change in Control Agreement (and certain terms related thereto) among The Hertz Corporation, Ford Motor Company and each of Messrs. Koch, Nothwang, Siracusa, Taride and Plescia
 
   
10.6
  Non-Compete Agreement between Hertz Europe Limited and Michel Taride, dated April 10, 2000
 
   
10.7
  The Hertz Corporation Compensation Supplemental Retirement and Savings Plan
 
   
10.8
  The Hertz Corporation Executive Long Term Incentive Compensation Plan
 
   
10.9
  The Hertz Corporation Supplemental Executive Retirement Plan
 
   
10.10
  The Hertz Corporation Benefit Equalization Plan
 
   
10.11
  The Hertz Corporation Key Officer Postretirement Assigned Car Benefit Plan
 
   
10.12
  The Hertz Corporation Retirement Plan
 
   
10.13
  The Hertz Corporation (UK) 1972 Pension Plan
 
   
10.14
  The Hertz Corporation (UK) Supplementary Unapproved Pension Scheme
 
   
10.15
  RCA Executive Deferred Compensation Plan and Employee Participation Agreement, dated May 29, 1985, between Craig R. Koch and The Hertz Corporation
 
   
10.16(4)
  Credit Agreement among The Hertz Corporation, Hertz Canada Limited, JPMorgan Chase Bank, N.A., JPMorgan Chase Bank, N.A., Toronto Branch, Goldman Sachs Credit Partners L.P., Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and the lenders thereto
 
12.1(5)
  Statement of ratio of earnings to fixed charges
 
   
15.1
  Letter from PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, relating to Financial Information
 
   
21.1
  List of Subsidiaries

 


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Exhibit No.   Description of Exhibit
23.1(1)
  Consent of Simpson Thacher & Bartlett LLP (included as part of its opinion filed as Exhibit 5.1 hereto)
 
   
23.2
  Consent of PricewaterhouseCoopers LLP
 
   
24.1*
  Powers of Attorney
 
   
25.1
  Statement of eligibility of The Bank of New York, as trustee under the indenture, under the Trust Indenture Act of 1939, as amended, on Form T-1
 
 
*   Previously filed.
 
**   Incorporated by reference to Exhibit 10.1 to The Hertz Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2005. Such Exhibit omits certain information that has been filed separately with the Securities and Exchange Commission and submitted pursuant to an application for confidential treatment.
 
(1)   To be filed by amendment.
 
(2)   Incorporated by reference to The Hertz Corporation’s Registration Statement on Form S-3 (File No. 333-57138).
 
(3)   Incorporated by reference to The Hertz Corporation’s Registration Statement on Form S-1 (File No. 333-22517).
 
(4)   Incorporated by reference to Exhibit 10.2 to The Hertz Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.
 
(5)   Incorporated by reference to Exhibit 12 to The Hertz Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and Exhibit 12 to The Hertz Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.

 

EXHIBIT 10.5

FORM OF CHANGE IN CONTROL AGREEMENT (AND CERTAIN TERMS
RELATED THERETO) AMONG THE HERTZ CORPORATION, FORD
MOTOR COMPANY AND EACH OF MESSRS. KOCH, NOTHWANG,
SIRACUSA, TARIDE AND PLESCIA

On July 27, 2005, The Hertz Corporation and Ford Motor Company entered into agreements with certain executive officers of The Hertz Corporation which provide for compensation and benefits upon certain terminations of employment following a "change in control" of The Hertz Corporation. Each Change in Control Agreement is identical for each executive officer with the exception of certain multiples and number of years applicable to computation provisions of the agreement. The form of such Change in Control Agreements is attached hereto.

For the purposes of individual Change in Control Agreements, the multiples and number of years for the following executives are: Mr. Koch, three times and three years; Mr. Nothwang, Mr. Siracusa, Mr. Taride and Mr. Plescia two and a half times and two and a half years.


CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (the "Agreement") effective as of July 27, 2005 (the "Effective Date") is entered into by and among Ford Motor Company, a Delaware corporation ("Parent"), The Hertz Corporation, a Delaware corporation (the "Company") and the individual whose name is set forth on the signature page of this Agreement as "EXECUTIVE" (the "Executive").

WHEREAS, the Company is a wholly-owned subsidiary of Parent; and

WHEREAS, the Company and Parent have determined that it is in the best interests of the Company to secure the continued services and dedication of Executive in the event of any threat or occurrence of a Change in Control (as defined in Section 2.6).

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree as follows:

1. Term of Agreement. Subject to Section 16.6, this Agreement shall be in effect for the period commencing on the Effective Date and ending on the Executive's termination of employment with the Company or its subsidiaries, or any successor employer, other than during a Protected Period (as defined in
Section 2.13).

2. Definitions.

2.1. "Affiliate" of a business entity means any company (or other business entity) controlling, controlled by, or under common control with the business entity.

2.2. "Base Salary" means the Executive's annual rate of salary or wages, including any amounts deferred at the election of the Executive, in effect as of the date immediately prior to the Change in Control.

2.3. "Board" means the Board of Directors of the Company or its successor.


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2.4. "Bonus Amount" means the average of the annual bonuses payable to the Executive, including any amounts deferred at the election of the Executive, with respect to the three calendar years preceding the Change in Control; provided, however, that in the event the Executive has not been eligible to earn an annual bonus from the Company in his position as a senior executive officer of the Company for three full calendar years preceding the Change in Control, the term "Bonus Amount" shall instead mean 100% of the target annual bonus that the Executive is eligible to earn in respect of the fiscal year of the Company in which the Change in Control occurs, or if no target annual bonus has yet been established for such fiscal year, 100% of the target annual bonus for the prior fiscal year.

2.5. "Cause" means the Executive's (i) act of dishonesty or knowing or willful breach of fiduciary duty that is intended to result in the Executive's enrichment or gain at the expense of the Company or any of its Affiliates; or (ii) commission of a felony involving moral turpitude of unlawful, dishonest or unethical conduct that a reasonable person would consider damaging to the reputation or image of the Company or any of its Affiliates or improper and unacceptable conduct of the Executive; (iii) material violation of the Company's published Standards of Business Conduct (Procedure W1-22) (or any successor standard thereto) that warrants termination; (iv) refusal to comply with the lawful directions of the Executive's superiors; or (v) deliberate, willful or intentional act that causes substantial harm, loss or injury to the Company or any of its Affiliates; or (vi) material failure or inability to perform duties in a satisfactory and competent manner or to achieve reasonable profit or performance goals or objectives following warning and a reasonable opportunity to cure; provided, however, that no such failure or inability may be deemed to occur if the Executive performs the duties of the


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position with the Company held by the Executive that the Executive is reasonably expected to perform to achieve such goals or objectives.

2.6. "Change in Control" means:

(a) The direct or indirect acquisition by any Person of beneficial ownership, through a purchase, merger or other acquisition transaction or series of transactions occurring within a 24 month period, of securities of the Company entitling such Person to exercise 50% or more of the combined voting power of the Company's securities;

(b) The transfer, whether by sale, merger or otherwise, in a single transaction or in a series of transactions occurring within a 24 month period, of all or substantially all of the business and assets of the Company in existence as of the date of this Agreement to any Person; or

(c) The adoption of a plan of liquidation or dissolution of the Company.

(d) Notwithstanding the foregoing:

i. A Change in Control under (a) or (b) above shall not be deemed to occur because of an acquisition by or transfer to Parent or another Affiliate of Parent;

ii. A Change in Control under (a) above shall not be deemed to occur solely because of (A) a public offering of the shares of the Company (an "Offering"), even if the Offering results in a change of ownership of more than 50% of the then outstanding voting securities of the Company; or (B) a "spin-off" of the then outstanding voting securities of the Company to the stockholders of Parent; and

iii. A Change in Control shall not be deemed to have occurred as a result of a Management Buy-out, as defined in the next sentence. For purposes of this clause iii, a "Management Buy-out" is a transaction that has all the following attributes: (a) an offer


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to purchase all the equity interests in the Company for cash has been made by the Executive and other senior managers of the Company, acting either alone or with the financial support of financing parties who have been initially sought out by the Executive and such managers for purposes of assisting them in financing such a purchase, (b) such an offer has been accepted by the Company's owners and such a purchase has been consummated,
(c) in connection with such a purchase, the Executive has contributed, from the Executive's own funds (including any amounts paid or payable to the Executive under this Agreement), at least 1% of the purchase price paid and (d) immediately following such a purchase, the Executive and other senior managers of the Company as a group, separate and apart from any other financing parties involved in such a purchase, had a non-forfeitable ownership interest in the Company of at least 25% of the Company's outstanding equity interests.

2.7. "Employer" means, the Company or another Person continuing to employ the Executive after a Change in Control.

2.8. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

2.9. "Good Reason," means the occurrence, without the Executive's express written consent, of any of the following events during the Protected Period:

(a) A reduction by the Employer of the Executive's Base Salary or of such higher base salary as may have been in effect at any time during the Protected Period, except in connection with the termination of the Executive's employment by the Employer for Cause or on account of Long-Term Disability or death;


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(b) Subject to Section 5.3, the failure by the Employer to pay the Executive any portion of his aggregate compensation including, without limitation, annual bonus, long-term incentive and any portion of his compensation deferred under any plan, agreement or arrangement of or with the Employer within thirty (30) days after the date payment of any such compensation is due;

(c) The failure by the Employer to afford the Executive annual bonus and long-term cash incentive compensation target opportunities with a value that in the aggregate, is at least equal to 80% of the aggregate value of annual bonus and long-term cash incentive compensation target opportunities made available to the Executive immediately prior to the Change in Control; provided, however, that, in no event shall this Section 2.9(c) apply in connection with a termination of the Executive's employment by the Employer for Cause or on account of Long-Term Disability or death;

(d) A change in the Executive's principal work location to a location that either (i) is more than 50 miles away from the Executive's principal work location immediately prior to the Change in Control, unless, in connection therewith, the Executive is afforded a full relocation package under the relocation program maintained by the Company for its senior executives immediately prior to the Change in Control, or (ii) is not (A) if the Executive's principal work location immediately prior to the Change in Control is the Employer's world headquarters, the Employer's world headquarters or, if the Executive is the head of a business division, that division's headquarters, (B) if the Executive's principal work location immediately prior to the Change in Control is the Employer's European headquarters, the Employer's European headquarters, and (C) if the Executive's principal work location immediately prior to


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the Change in Control is the Employer's principal administrative center in Oklahoma City, Oklahoma, the Employer's principal administrative center;

(e) A material diminution in the Executive's title or responsibilities;

(f) Changes or terminations, in the aggregate materially adverse to the Executive, in or of the terms of the health, life insurance and disability insurance benefits provided by the Employer to the Executive (or, in the case of health benefits, to the Executive's dependents) from those in effect immediately prior to the Change in Control (the date on which such material changes or terminations occur, the "Benefits Trigger Date"); or

(g) An adverse change or termination, as to the Executive, of the terms of, or of the Executive's participation in, any retirement plan of or provided by the Employer in which the Executive participates or would, upon normal retirement, be entitled to participate, including, without limitation, The Hertz Corporation Supplemental Retirement and Savings Plan ("SERP I"), The Hertz Corporation Supplemental Executive Retirement Plan ("SERP II"), The Hertz Corporation Benefit Equalization Plan ("BEP") and The Hertz Corporation Key Officer - Post Retirement Assigned Car Benefit (the "Retiree Car Plan").

Notwithstanding any other provision of this Agreement, the Executive shall have the right to terminate his employment with the Employer, with such termination being deemed as if a termination for Good Reason during a Protected Period, if any successor to the Company does not assume the obligations of the Employer under this Agreement upon a Change in Control pursuant to Section 14.1 or by operation of law.


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2.10. "Long-Term Disability" has the meaning given to such term in the plan or policy providing long-term disability coverage maintained by the Employer for its employees.

2.11. "Non-Qualifying Termination" means a termination of the Executive's employment: (1) by the Employer for Cause; (2) by the Executive for any reason other than Good Reason; or (3) as a result of the Executive's Long-Term Disability or death.

2.12. "Person" has the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a "group" as defined in Section 13(d) thereof.

2.13. "Protected Period" means the two year period beginning as of the date of a Change in Control. Anything in the prior sentence to the contrary notwithstanding, if prior to the date on which a Change in Control occurs, the Executive's employment with the Company or any of its subsidiaries is terminated without Cause, or the terms and conditions of the Executive's employment are adversely changed, in a manner which would constitute grounds for a termination of employment by the Executive for Good Reason, and it is reasonably demonstrated that such termination of employment or adverse change: (i) was at the request of a third party who has taken or is prepared to take actions reasonably calculated to effect a Change in Control; or (ii) otherwise arose within six months of and in connection with or in anticipation of the Change in Control, then for all purposes of this Agreement the "Protected Period" for the Executive shall begin on the date immediately prior to the date of such termination of employment or adverse change and shall end two years after the date of the Change in Control.

2.14. "Termination Date" shall be the effective date of the Executive's termination of employment during the Protected Period; provided, however, that the date of notice as provided in Article 4 shall be the Termination Date if the notice is given within the


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Protected Period but the actual date of termination pursuant to such notice occurs after the Protected Period.

2.15. "Without Cause", when used in reference to a termination of the Executive's employment with the Employer, shall mean any termination by the Company of the Executive's employment which is not a termination of employment for Cause, Long-Term Disability or death.

3. Effect of Change in Control upon Stock Options. Upon a termination of employment by reason of a Change in Control, the Company and Parent shall take appropriate action to ensure that such termination of employment shall be treated under Parent's 1990 Long-Term Incentive Plan (the "Parent 1990 Plan") Parent's 1998 Long-Term Incentive Plan (the "Parent 1998 Plan") and the Hertz Long-Term Equity Compensation Plan, as applicable, in the same manner as a termination by reason of a "sale or other disposition of a subsidiary" under paragraphs (f)(4) and (f)(8) of Article 5 of the Parent 1998 Plan, subject to the conditions specified therein and in Article 6 of the Parent 1998 Plan. Subject to such conditions, this treatment is intended to allow outstanding options held by the Executive at the time of termination to continue in effect and continue to accrue until the earlier of (i) the date five years after the date of such termination or (ii) the expiration date of the applicable option. Notwithstanding the foregoing, (x) a termination of employment shall not be deemed to occur in the event the Executive transfers to Parent or a majority-owned subsidiary of Parent and (y) any outstanding options granted to the Executive on or after March 10, 2000 shall become immediately vested upon a termination of employment by reason of a Change in Control.


4. Termination of Employment During the Protected Period.

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4.1. Termination by the Employer. During the Protected Period, termination of the Executive by the Employer for Cause, for Long-Term Disability, on account of the Executive's death, or Without Cause shall be in accordance with the following procedures:

(a) Termination of the Executive's employment for Long-Term Disability shall become effective 30 days after a notice of intent to terminate the Executive's employment, specifying Long-Term Disability as the basis for such termination, is given to the Executive by the Employer. Termination of the Executive's employment on account of death shall become effective as of the date of the Executive's death.

(b) The Executive may not be terminated for Cause unless and until the Executive has been given written notice by the Employer of its intention to terminate him for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based.

(c) Termination by the Employer of the Executive's employment Without Cause shall be effective no less than 30 business days after the Employer gives to the Executive written notice thereof, specifying that such termination is Without Cause.

4.2. Termination by the Executive.

During the Protected Period, the Executive shall be entitled to terminate his employment with the Employer and, if such termination is for Good Reason, to receive the benefits provided in Section 5.1. The Executive shall give the Employer written notice of voluntary termination of employment, which notice need specify only Executive's intent to terminate his employment and, if such termination is for Good Reason, set forth in reasonable detail the facts and circumstances claimed by the Executive to constitute Good Reason (such a notice setting forth Good Reason, a "Notice of Good Reason"). The Employer shall have thirty (30) days to cure any


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of the grounds for Good Reason stated by the Executive in the Notice of Good Reason to the extent such cure is possible. If the Employer fails to cure the applicable grounds during such thirty (30) day period, the Executive's employment shall be considered terminated for Good Reason effective as of the end of such 30-day period. Notwithstanding anything set forth in this Agreement to the contrary, the Executive shall only be entitled to claim Good Reason to terminate his employment if the Executive delivers a Notice of Good Reason to the Employer no later than 180 days from the time the Executive first becomes aware of the facts and circumstances claimed by the Executive to constitute Good Reason.

5. Payments Upon Termination of Employment During a Protected Period.

5.1. Termination other than Non-Qualifying Termination. If during the Protected Period, or a period deemed to be a Protected Period pursuant to
Section 2.9(e), a Termination Date occurs with respect to the Executive because the Executive is terminated Without Cause or the Executive resigns for Good Reason, the Employer shall provide the following to the Executive:

(a) Accrued Compensation. Subject to the provisions of Section 16.7, the Employer shall pay to the Executive, within 30 days following the Termination Date, a lump sum cash amount equal to the sum of (i) the full Base Salary (without regard to any reduction constituting Good Reason) earned by the Executive through the Termination Date and unpaid at the Termination Date; (ii) the amount of any Base Salary attributable to vacation earned by the Executive but not taken before the Termination Date; (iii) any unreimbursed expenses incurred by the Executive through the date of termination; and (iv) one twelfth of the Executive's Bonus Amount times the number of calendar months and parts thereof from the beginning of the calendar year in which the Termination Date occurs.


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(b) Severance Payment. Subject to the provisions of Section 16.7, the Employer shall pay to the Executive, not later than 30 days following the Termination Date, a lump sum cash severance payment equal to times the sum of the Executive's (i) Base Salary and (ii) Bonus Amount.

(c) LTIP. For purposes of any long-term incentive award plan of the Employer (including, without limitation, The Hertz Corporation 2005 Executive Long Term Incentive Plan or any successor thereto (the "LTIP")) in which the Executive participated immediately prior to the Termination Date, regardless of the Executive's age, years of service or employment status as of the Termination Date, the termination of the Executive's employment shall be treated as a "company approved retirement" (as such terms is used in the LTIP), entitling the Executive to future payouts in accordance with the LTIP based on the performance results at the end of each performance period in respect of which there was an LTIP grant in place for the Executive as of the Termination Date.

(d) Retirement Plans. At all times following the Termination Date, the Employer shall (i) maintain in full force and effect, without any change in terms that is adverse to the Executive, any retirement plan of, or provided by, the Employer in which the Executive, immediately prior to the Termination Date, participated or would, upon normal retirement (as such term is defined in the applicable retirement plan), be entitled to participate, including, without limitation, SERP I, SERF II, and BEP, except that the Employer may make changes required by law or required to maintain any tax-deferred feature of any such plan or to avoid the imposition on the Executive of a Penalty Tax in respect of benefits payable under such plan and (ii) credit the Executive with an additional years of age and an additional "Years of Service" for all purposes under SERP II.


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(e) Benefits Continuation.

(i) For the year period following the Termination Date, the Employer shall maintain in full force and effect (or otherwise provide) with respect to the Executive (and, to the extent applicable, Executive's dependents) all health benefits upon the same terms (including the Executive's contributions toward the annual costs of such benefits) and otherwise to the same extent as such benefits were in effect immediately prior to the Termination Date (or, in the event the Executive's employment is being terminated by the Executive for Good Reason as described in Section 2.9(f), immediately prior to the Benefits Trigger Date), provided that the Executive's (and, where applicable, the Executive's dependents') continued participation is possible under the applicable benefit provisions of the applicable plan(s). Thereafter, the Executive and Executive's spouse shall be entitled to participate in the health benefits provided from time to time by the Employer to its active employees by contributing the same amount as former employees of the Employer with dependents from time to time contribute when obtaining "COBRA continuation coverage" under
Section 601 et seq. of ERISA and Section 4980B of the Internal Revenue Code of 1986, as amended (the "Code").

(ii) The Employer shall also maintain in full force and effect (or otherwise provide) with respect to the Executive all life insurance benefits upon the same terms (including the Executive's contributions toward the annual costs of such benefits) and otherwise to the same extent as such coverage was in effect immediately prior to the Termination Date (or, in the event the Executive's employment is being terminated by the Executive for Good Reason as described in Section 2.9(f), immediately prior to the Benefits Trigger Date) until the expiration of years from the Termination Date, provided that Executive's continued participation is possible


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under the applicable benefit provisions of the applicable plan(s). In the event that the Executive's (or, where applicable, the Executive's dependents) continued participation in any such health or life benefit plan as provided under this Section 5.1(e)) above is not possible, the Employer shall arrange to provide the Executive (and, where applicable, the Executive's dependents) with benefits substantially similar to those which the Executive (and, where applicable, the Executive's dependents) was entitled to receive under such benefit plan.

(iii) Notwithstanding anything set forth in this Section 5.1(e) to the contrary, (A) any health benefits continued under Section 5.1(e)(i) above shall cease on the first to occur of (1) the date on which the Executive becomes reemployed and is (along with Executive's applicable dependents) covered, without any qualification for preexisting conditions, under another employer's health benefit plan and (2) the date on which the Executive (along with Executive's spouse) becomes eligible for health coverage, without any qualification for preexisting conditions, under any other comprehensive health benefit plan (including, without limitation, the United States Medicare program (or any successor program)) and (B) any life insurance benefits continued under
Section 5.1(e)(ii) above shall cease on the date on which the Executive becomes reemployed and receives at least an equal amount of life insurance coverage under another employer's group life insurance benefit plan. Further, the Executive hereby acknowledges that at such time(s) as the Executive (and Executive's applicable dependents) ceases to be entitled to receive any coverage under Section 5.1(e)(i) or (ii) above, as applicable, either by operation of either such Section(e)(i) or (ii) or by this Section 5.1(e)(iii), as applicable, in no event shall the Executive (nor any of Executive's applicable dependents) again become entitled to receive any such coverage, regardless of whether the Executive (or any of Executive's


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applicable dependents) later ceases to be covered by another employer's benefit plans or otherwise.

(f) Automobile. Subject to the provisions of Section 16.7, (i) at all times following the Termination Date, the Employer shall maintain in full force and effect, without any change in terms that is adverse to the Executive, the Retiree Car Plan, and (ii) for purposes of the Retiree Car Plan, the Employer shall, regardless of the Executive's age, years of service or employment status, deem the Executive to be a retiree eligible for participation in the Retiree Car Plan, or, with the written consent of the Executive, pay leasing, insurance and maintenance costs on a car leased by the Executive providing the Executive with a benefit comparable to that which would be provided under the Retiree Car Plan. The Employer shall also, for so long as the Employer is providing a car or making payments under the preceding sentence, provide to the Executive those rental car privileges that, as of the commencement of the Protected Period (or period that is deemed a Protected Period pursuant to Section 2.9(h)), the Employer had afforded to retired executives of the Employer.

(g) Outplacement. Within the twelve months following the Termination Date, the Employer shall cause outplacement assistance to be provided to the Executive, within a reasonable period of time following receipt from the Executive in writing a request to be so provided. The Employer shall pay the cost of such outplacement assistance up to a maximum of $25,000 directly to the outplacement service provider.

5.2. Non-Qualifying Termination. If during the Protected Period the employment of the Executive shall terminate by reason of a Non-Qualifying Termination, then the Employer shall pay, or cause to be paid, to the Executive (or to the Executive's beneficiary if the Executive dies while any amount would still be payable to the Executive hereunder had the


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Executive continued to live) the normal benefit and compensation entitlement that apply with respect to the Executive under the Employer's customary practices and procedures for the applicable circumstance.

5.3. No Duplication. Notwithstanding any provision in this Agreement to the contrary, if the Executive is entitled upon a termination of employment to any change of control related benefits or payments under an employment or other agreement, or a severance plan, the Executive shall not be entitled upon such termination to any duplicative payment or benefits under this Agreement but instead shall receive only the greater payment or benefit, determined on an item by item basis.

5.4. Excise Taxes. In the event it shall be determined that any payment, benefit or distribution (or combination thereof) by the Employer, any of its affiliates, or one or more trusts established by the Employer for the benefit of its employees, to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise) (a "Payment") is subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax"), the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 5.4, if it shall be determined that the Executive would otherwise be entitled to a


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Gross-Up Payment hereunder, but that the Payments do not exceed 110% of the greatest amount that could be paid to the Executive without giving rise to any Excise Tax (the "Safe Harbor Amount"), then no Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall be reduced so that the Payments, in the aggregate, are reduced to the Safe Harbor Amount. In the event the provisions of this Section 5.4 become applicable, the terms set forth in Appendix A attached to this Agreement shall also apply and are hereby incorporated by reference into this Agreement.

6. Withholding Taxes and Deductions. The Employer may withhold or deduct from all payments due to the Executive, his beneficiary or estate hereunder all taxes which, by applicable federal, state, local or other law, the Employer is required to withhold or deduct therefrom.


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7. Employer and Parent Obligation.

7.1. Payment Obligations are Absolute. Except as otherwise provided in Section 5.3, the Employer's obligations to the Executive to make the payments and the arrangements provided for in this Agreement shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Employer or Parent may have against the Executive or anyone else, except to the extent the Executive must pay, as provided in Section 5.1(e), his share, if applicable, of costs for health benefits or life insurance and fails to do so. All amounts payable by the Employer hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Employer shall be final, and the Employer shall not seek to recover all or any part of such payment from the Executive or from whomsoever may be entitled thereto.

7.2. No Mitigation. The Executive shall not be obligated to seek other employment or take other action by way of mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Employer's obligations to make the payments and arrangements required to be made under this Agreement, except to the extent expressly provided in Section 5.1(e).

7.3. Indemnification. The Employer shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Employer or any of its Affiliates or in any other capacity, including any fiduciary capacity, in which the Executive serves at the request of the Employer to the maximum extent permitted by applicable law and the


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Employer's Charter and By-Laws, provided that in no event shall the protection afforded to the Executive hereunder be less than that afforded under these documents as in effect immediately prior to the Change in Control.

7.4. No Obligations of Parent. Parent is not responsible for any obligations of the Employer or any successor to the Company, to the Executive and his heirs and assigns under this Agreement. In no event shall this Section 7.4 relieve the Company or Parent, as the case may be, from its responsibility under Section 14.1.

7.5. Obligations Must be Satisfied. Notwithstanding the expiration of the term of this Agreement, any obligations of the Employer or a successor to the Company to the Executive arising from events which occurred during the term of the Agreement must be satisfied, and any obligations of the Executive to the Employer or a successor to the Company arising from events which occurred during the term of the Agreement also must be satisfied.

7.6. Amendment of SERP II. To the fullest extent that such action shall not give rise to adverse tax consequences to the Executive or other employees participating in SERP II, the Employer shall promptly, with effect from the Effective Date, amend the terms of Article 3 of SERP II so that, as to the Executive, the vesting of benefits referred to in Section 3.2 shall occur if, and only if, during a Protected Period (or a period deemed to be a Protected Period pursuant to Section 2.9(h) hereof), the Executive's employment is terminated, prior to his attainment of the age of 55 years, Without Cause or on account of resignation for Good Reason.

8. Executive Covenants.

8.1. Unauthorized Disclosure. The Executive agrees and understands that in the Executive's position with the Employer, the Executive will be exposed to and receive information relating to the confidential affairs of the Employer and its Affiliates, including but


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not limited to technical information, business and marketing plans, strategies, customer information, other information concerning the Employer's and its Affiliates' products, promotions, development, financing, expansion plans, business policies and practices, and other forms of information considered by the Employer to be confidential and in the nature of trade secrets. The Executive agrees that during the term of his employment hereunder and thereafter, he will keep such information confidential and will not disclose such information, either directly or indirectly, to any third person or entity without the prior written consent of the Employer except (a) as he reasonably and in good faith believes such disclosure or use is required or appropriate in connection with his work as an employee, officer or director of the Employer,
(b) with respect to confidential information that becomes publicly available or generally known in the car or equipment rental industry other than by a breach of this Section by the Executive, or (c) information that the Executive is legally compelled to disclose. The Executive shall not divulge the contents of this Agreement to any person other than his counsel and spouse, and except as otherwise required by law or as may be necessary to enforce his rights hereunder. This confidentiality covenant has no temporal, geographical or territorial restriction.

8.2. Return of Property. Upon termination of his employment, the Executive will promptly return to the Employer all of its property, keys, computers, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data or any other tangible or intangible property which has been furnished to him by the Employer or any of its Affiliates or otherwise belonging to the Employer or any of its Affiliates.

8.3. Non-Competition. By and in consideration of the Employer's and Parent's entering into this Agreement and the compensation and benefits to be provided by the Employer


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to Executive hereunder, and further in consideration of the Executive's exposure to the confidential and proprietary information of the Employer or any of its Affiliates, the Executive agrees that during the term of his employment with the Employer and for a period of one year following termination thereof due to his resignation (other than for Good Reason) or his termination for Cause, he will not, without the prior written consent of the Board, directly or indirectly, own, manage, operate, join, control, be employed by, participate in the ownership, management, operation or control of, or be connected in any manner, including, but not limited to, holding the position of shareholder, principal, director, officer, consultant, advisor, independent contractor, employee, partner, member or investor, with any competing enterprise; provided, however, that (i) the foregoing shall not prohibit the Executive from investing less than $500,000 in any single business or owning less than 5% (by vote or value) of the securities of any publicly-traded entity and (ii) nothing in this Section 8.3 shall be construed to supersede, modify or affect the terms or provisions of any existing executive or employee benefit plan or award agreement. For purposes of this Section 8.3, the term "competing enterprise" shall mean any person, corporation, partnership or other entity engaged in the car or industrial and construction equipment rental business.

8.4. Non-Solicitation. For a period of two years after his termination, the Executive shall not encourage or solicit any employee of the Employer or any of its Affiliates to terminate his or her employment with the Employer or any of its Affiliates.

8.5. Remedies. The Executive agrees that any breach of the terms of this Article 8 would result in irreparable injury and damage to the Employer for which the Employer would have no adequate remedy at law; the Executive therefore agrees that in the event of said breach or any threat of breach, the Employer shall be entitled to seek an immediate injunction


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and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any and all persons and/or entities acting for and/or with the Executive, without having to prove damages, and to all costs and expenses, including reasonable attorneys' fees and costs (if successful in obtaining an injunction), in addition to any other remedies to which the Employer may be entitled at law or in equity. The terms of this
Section 8.5 shall not prevent the Employer from pursuing any other available remedies for any breach or threatened breach hereof, including but not limited to the recovery of damages from the Executive. The Executive and the Employer further agree that the provisions of the covenant not to compete are reasonable. Should a court determine, however, that any provision of the covenant not to compete is unreasonable, either in period of time, geographical area, or otherwise, the parties hereto agree that the covenant should be interpreted and enforced to the maximum extent which such court deems reasonable.

The provisions of this Article 8 shall survive any termination of the Executive's employment, and the existence of any claim or cause of action by the Executive against the Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of the covenants and agreements of this Section. The preceding sentence of this
Section 8.5 does not in any manner limit the Executive's power to terminate his employment for Good Reason, or otherwise, and exercise his rights thereunder.

9. Notices. All notices required or permitted under this Agreement shall be in writing and shall be effective upon personal delivery or upon receipt if sent by registered or certified mail, postage prepaid, addressed to the other parties at the addresses shown below, or at such other address or addresses as any party shall designate to the other parties in accordance with this Article 9.


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If to the Company:

The Hertz Corporation
225 Brae Boulevard
Park Ridge, NJ 07656

Attention to both: Senior Vice President, General Counsel and Secretary Senior Vice President, Employee Relations

If to Parent:

Ford Motor Company
One American Road
Dearborn, MI 48126
Attention: Vice President,Corporate Human Resources

If to the Executive, to the address appearing under his signature, below.

10. Arbitration of Disputes.

10.1. Any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation or validity hereof (other than disputes or controversies or claims for injunctive relief arising under or in connection with Article 8 of this Agreement which shall be resolved exclusively under Section 8.5) shall be settled exclusively and finally by binding arbitration. It is specifically understood and agreed that any disagreement, dispute or controversy which cannot be resolved between the parties including, without limitation, any matter relating to the interpretation of this Agreement, shall be submitted to arbitration irrespective of the magnitude thereof, the amount in controversy or whether such disagreement, dispute or controversy would otherwise be considered justifiable or ripe for resolution by a court or arbitral tribunal.

10.2. The arbitration shall be conducted in accordance with the Commercial Arbitration Rules (the "Arbitration Rules") of the American Arbitration Association (the "AAA"), except as otherwise provided below.


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10.3. The arbitral tribunal shall consist of three arbitrators selected in accordance with the rules of the AAA. The parties to the arbitration jointly shall directly appoint each such arbitrator within 50 days of initiation of the arbitration. If the parties shall fail to appoint any such arbitrator as provided above, such arbitrator shall be appointed in accordance with the Arbitration Rules of the AAA and shall be a person who (i) maintains his or her principal place of business within 50 miles of the location of the arbitration as set forth in Section 10.4 and (ii) has had substantial experience in executive compensation matters. The Employer shall pay all of the fees and expenses of such arbitrators.

10.4. The arbitration shall be conducted within 50 miles of the Executive's principal work location, or in such other city in the United States of America as the parties to the dispute may designate by mutual written consent.

10.5. The claim shall be decided by a majority vote of the three arbitrators. Equitable remedies shall be available in any arbitration. Punitive damages shall not be awarded. The arbitrators will give effect to the statutes of limitation in determining any claim. Any controversy concerning whether an issue is arbitrable will be determined by the arbitrators. Any decision or award of the arbitral tribunal shall be final and binding upon the parties to this Agreement. The parties hereto hereby waive to the extent permitted by law any rights to appeal or to seek review of such award by any court or tribunal. The parties hereto agree that the arbitral award may be enforced against the parties to the arbitration proceeding or their assets wherever they may be found and that a judgment upon the arbitral award may be entered in any court having jurisdiction. Notwithstanding the applicability of other law to any other provisions of this Agreement, the Federal Arbitration Act, 9 U.S.C.A. Sec. 1 et seq. will apply to the construction and interpretation of this Article 10.


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10.6. Nothing herein contained shall be deemed to give the arbitral tribunal any authority, power, or right to alter, change, amend, modify, add to, or subtract from any of the provisions of this Agreement.

11. Legal Fees. The Employer agrees to pay, to the full extent permitted by law, on a quarterly basis, all legal fees and expenses which the Executive may reasonably incur as a result of any contest in which there is a reasonable basis for the claims or defenses asserted by the Executive and such claims and defenses are asserted by the Executive in good faith (regardless of the outcome thereof) regarding the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by the Executive about the amount of any payment pursuant to Article 5); provided, however, that the Employer shall not be obligated to pay any such fees and expenses, and the Executive shall be obligated to return any such fees and expenses that were advanced plus simple interest on such amount from the date of advancement at the 90-day US Treasury Bill rate as in effect from time to time, compounded annually, if the arbitrators (as provided in Article 10) determine that the Executive was terminated for Cause or that the Executive did not have a good faith basis to assert the claim in question.

12. Entire Agreement. This Agreement constitutes the entire agreement among the parties as of the Effective Date with respect to the subject matter hereof and supersedes all prior agreements and understandings with respect to the subject matter hereof, whether written or oral (including any change in control agreement to which the Company and the Executive are parties). Notwithstanding the preceding sentence, if the Executive has a separate written employment agreement with the Employer, this Agreement shall not supersede that agreement except as specifically provided in Section 5.3.


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13. Amendment. This Agreement may be amended or modified only by a written instrument executed by the parties hereto.

14. Successors and Assignment.

14.1. Successors to the Company. In the event of a Change in Control resulting in a successor to the Company, Parent will use reasonable efforts to obtain the assumption by the successor to the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) of the obligations of the Employer under this Agreement. Upon the assumption by the successor to the Company of such obligations, Parent shall cease to have any further obligations under this Section 14.1. Failure to obtain such assumption upon any such succession shall entitle the Executive to resign and to have such resignation deemed to be, and treated as, a termination for Good Reason during the Protected Period.

14.2. Assignment by the Executive. The obligations of the Executive are personal and shall not be assigned by him, except that this Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive dies while any amount would still be payable to the Executive hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement, to the Executive's beneficiary. If the Executive has not named a beneficiary, then such amounts shall be paid to the Executive's devisee, legatee, or other designee, or if there is no such designee, to the Executive's estate.

15. Governing Law. To the extent not preempted by federal law, this Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New Jersey


26

without reference to the principles of conflict of laws, except that a covenant of good faith and fair dealing shall apply with respect to all obligations created under this Agreement.

16. Miscellaneous.

16.1. No delay or omission by any party in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by a party on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.

16.2. The captions of the Articles and Sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any Article or Section of this Agreement.

16.3. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

16.4. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

16.5. This Agreement does not, and will not, alter the status of the Executive as an employee-at-will.

16.6. Notwithstanding anything contained in this Agreement to the contrary, the terms of this Agreement shall apply only if a Change in Control occurs on or prior to the third anniversary or the Effective Date, and if no Change in Control occurs on or prior to such anniversary, this Agreement shall terminate and be of no further force and effect on such anniversary. However, if, prior to either the occurrence of a Change in Control or the expiration


27

of this Agreement pursuant to the preceding sentence, an Offering occurs, then on and after the effective date of the Offering, the terms of this Agreement shall continue to apply for an initial period of two years following such date (the "Initial Term"). If no Change in Control occurs during the Initial Term, at the end of the Initial Term and on each successive anniversary thereof (each, an "Extension Date"), the terms of this Agreement shall be automatically extended for an additional one-year period, unless the Company or the Executive provides the other party hereto with written notice, no later than one hundred and eighty
(180) days before the applicable Extension Date, that the terms of this Agreement shall not be so extended; in which case, absent the occurrence of a Change in Control or commencement of a Protected Period prior to such Extension Date, this Agreement shall terminate and be of no further force and effect on the date that would otherwise constitute the next applicable Extension Date.

16.7. Notwithstanding anything contained in this Agreement to the contrary, if the provision of any payment, distribution, or benefit that is qualified by this Section 16.7 would result in the imposition on the Executive of the tax described in Section 409A of the Code (the "Penalty Tax"), then the provision of any such payment, distribution or benefit shall instead be made at such time(s) and/or in such manner as may be permitted under Section 409A of the Code in order to avoid the imposition of the Penalty Tax on the Executive, unless such changed provision would materially and adversely affect the Executive's rights to receive such payment, distribution or benefit.

[SIGNATURES ON FOLLOWING PAGE]


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

FORD MOTOR COMPANY

By: /s/ Joe W.Laymon
    ----------------------------------------
Title: Group Vice President, Corporate Human
       Resources and Labor Affairs

THE HERTZ CORPORATION

BY: /s/ Irwin M. Pollack 7/28/05
    ----------------------------------------
Title: Senior Vice President,
       Employee Relations

EXECUTIVE



Address


Address

APPENDIX A

The following provisions shall apply in the event Section 5.4 of the Agreement is applicable:

(a) All determinations required to be made under Section 5.4 of the Agreement, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a national accounting firm retained by the Company (the "Accounting Firm"), which shall provide detailed supporting calculations both to the Company and Executive within ten business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company; provided that for purposes of determining the amount of any Gross-Up Payment, Executive shall be deemed to pay federal income tax at the highest marginal rates applicable to individuals in the calendar year in which any such Gross-Up Payment is to be made and deemed to pay state and local income taxes at the highest effective rates applicable to individuals in the state or locality of Executive's residence or place of employment in the calendar year in which any such Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account limitations applicable to individuals subject to federal income tax at the highest marginal rates. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to Section 5.4 of the Agreement, shall be paid by the Company to Executive (or to the appropriate taxing authority on Executive's behalf) when due. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) Executive was lower than the amount actually due ("Underpayment"). In the event that the Company exhausts its remedies pursuant to clause (b) below and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

(b) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the


30

Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this clause (b), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, further, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; provided, further, that if Executive is required to extend the statute of limitations to enable the Company to contest such claim, Executive may limit this extension solely to such contested amount. The Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(c) If, after the receipt by Executive of an amount paid or advanced by the Company as described above, Executive becomes entitled to receive any refund with respect to a Gross-Up Payment, Executive shall (subject to the Company's complying with the requirements of clause (b) above) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to clause (b) above, a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid.


Exhibit 10.6

10 April 2000

Michel Taride
Hertz Europe Limited

Dear Michel

It is agreed as follows:

1. During your employment

1.1 During your employment with us you must not:

1.1.1 without our prior written consent, be Interested in any other Person where this may interfere, conflict or compete with our interests or the efficient performance of your duties;

1.1.2 Directly or Indirectly, entice away or attempt to entice away from us or otherwise discourage from being employed by us any of our employees.

2. After your employment

2.1 You agree with us that you will not Directly or Indirectly following the date of your resignation or the date that we give you notice of termination (whichever is applicable) for a period of twelve (12) months:

2.1.1 be Interested in any Person providing Services within the Area in competition with us;

2.1.2 solicit or attempt to endeavour to solicit the custom of any Customer in competition with us in order to supply Services within the Area;

2.1.3 supply Services to any Customer in competition with us within Area;

2.1.4 solicit or entice away from us any Key Employee;

2.1.5 offer employment to or employ or enter into partnership or association with (or offer so to do) or retain the services (or offer so do) whether as agent, consultant or otherwise of any Key Employee.


2.2 Each of the restrictions set out in this Clause will be considered separate from one another and it is acknowledged that each sub-clause may contain more than one restriction. For the avoidance of doubt each restriction insofar as it applies to Associated Companies shall be separate from the equivalent restriction as it applies to us.

2.3 The restrictions set out in this Clause and the definitions of "Customers", "Key Employee", "Area" and "Services" as set out in the schedule attached hereto are considered by the parties to be reasonable in all the circumstances. It is however agreed that if any one or more of such restrictions or definitions shall either taken by itself or themselves together be adjudged unreasonable in all the circumstances for the protection of our legitimate interests, but would be adjudged reasonable if any particular restriction or definition were deleted or if any part of the wording of such restriction or definition were deleted, then the parties further agree that the said restrictions and definitions shall apply with such deletions.

3. Your Obligations on Termination

3.1 On your Termination Date you must return to us our Property.

3.2 You must both during your employment and at any time after the Termination Date provide us with such assistance as we may require in the conduct of such proceedings in any Court, Tribunal or other body of competent jurisdiction as may arise in respect of which we believe you may be able to provide assistance. We will pay any reasonable out-of-pocket expenses necessarily incurred in providing such assistance.

3.3 During any period of notice, and if we continue to pay your salary and to provide all of your contractual benefits until the Termination Date, then we may:

3.3.1 require you not to carry out your duties during the remaining period of your employment;

3.3.2 require you to resign immediately from any offices you may hold with us. Any such requirement will not constitute a breach of your contract of employment with us;

3.3.3 require you not to attend your place of work or any of our premises during the remaining period of your employment;

3.3.4 require you to return to us all or any of our Property;

3.3.5 require you to undertake work from your home and/or to carry out exceptional duties or special projects outside the normal scope of your duties and responsibilities;

3.3.6 appoint one or more persons to carry out your duties and/or responsibilities and/or to assume your position.

2

You agree that if you receive an offer of employment or engagement during your employment with us or during the continuance in force of any of the restrictions set out in this Agreement, you will immediately provide to the legal entity making the offer a complete copy of this Agreement.

4. Governing Law

This Agreement shall be subject to the laws of England and Wales and the parties hereby submit to the exclusive jurisdiction of the English courts.

Please sign and return a copy to show your acceptance of its terms and conditions.

SIGNED BY


duly authorised for and on behalf of the Company and the Associated Companies

DATED


SIGNED BY THE EMPLOYEE


DATED


3

Schedule Definitions

In this Agreement, the following words or phrases shall, unless the context requires otherwise, have the following meanings:

"Agreement"             means this agreement including the schedule.

"Area"                  means those countries in which we operated during: the
                        period of twelve (12) months immediately prior to the
                        date of your resignation or the date that we gave you
                        notice of termination (whichever is applicable) and/or
                        any period of notice, and any other country in which we
                        were actively making arrangements to operate at such
                        date provided that you were involved in such
                        arrangements.

"Associated Company"    means The Hertz Corporation and any body corporate
                        which is within the ultimate ownership of The Hertz
                        Corporation.

"Customer"              means any Person who is our customer and any Person
                        with whom or which at any time during: the period of
                        twelve (12) months immediately prior to the date of
                        your resignation or the date that we gave you notice of
                        termination (whichever is applicable) and/or any period
                        of notice, you on our behalf, have been in negotiation
                        or who or which have received a presentation or a
                        competitive pitch with which you were involved with a
                        view to the provision of our Services to such Person.

"Directly or            means (without prejudice to the generality of the
Indirectly"             expression) whether as principal or agent; whether
                        alone, jointly, in partnership with another or for or on
                        behalf of another; whether as a shareholder, director
                        (including a shadow director), agent, principal,
                        partner, consultant, employee or otherwise, or by virtue
                        of providing financial assistance.

"Key Employee"          means a person who was at any time during: during the
                        period of twelve (12) months immediately prior to the
                        date of your resignation or the date that we gave you
                        notice of termination (whichever is applicable) and/or
                        any period of notice, engaged or employed as an
                        employee, director, consultant (other than a
                        professional adviser) or agent of us and who was both:

                        -     a person with whom you personally dealt during
                              your employment by us; and

                        -     employed or engaged in an account handling,
                              financial, managerial, sales, executive,
                              professional or similar capacity.

"Interested"            means employed or engaged by or concerned or interested
                        in (whether Directly or Indirectly) other than as a
                        shareholder holding Directly or Indirectly by way of
                        bona fide investment only and subject to prior
                        disclosure to us of up to three per cent. (3%) in
                        nominal value of the issued shares or other securities
                        of any class of any company.

"Person"                means person, firm, company, association, corporation or
                        other organisation or entity.

"Property"              means all equipment, documents, credit or charge cards,
                        computer disks, computer software and hardware, portable
                        telephones, notes, specifications, minutes and papers,
                        plans, keys, customer lists and data, reports and any
                        other property (including copies, summaries and
                        excerpts) belonging to or relating to our business, or
                        created by you in the course of your employment by us,
                        which are in your possession or under your control.

"Relevant Associated    means any Associated Company to which you have in the
Company"                course of your employment by us rendered services
                        during: the period of twelve (12) months immediately
                        prior to the date of your resignation or the date that
                        we gave you notice of termination (whichever is
                        applicable) and/or any period of notice.

"Services"              means services of a type or which compete with those:

                        -     provided by us in the ordinary course of our
                              business during: the period of twelve (12) months
                              immediately prior to the date of your resignation
                              or the date that we gave you notice of termination
                              (whichever is applicable) and/or any period of
                              notice, and

                        -     the provision of which you were concerned or
                              engaged during your employment with us.

"Termination Date"      means the last day that you worked for us following
                        completion of any notice period.

"we" "us" "ours"        means Hertz Europe Limited and shall include any
                        Associated Company and any Relevant Associated Company
                        where the context so admits:

"you" "You" "your"      means the employee to whom this letter is addressed.
"Your"

2

EXHIBIT 10.7

THE HERTZ CORPORATION

SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN

The Hertz Corporation, with its principal office at 660 Madison Avenue, New York, New York, by action of its Board of Directors, hereby adopts, effective as of July 1, 1987, a supplemental retirement and savings plan (the "Plan") to provide a select group of management and highly compensated employees a program supplementing benefits payable to them under (1) the Retirement Plan for the Employees of the Hertz Corporation (renamed the Hertz Corporation Account Balance Defined Benefit Plan) and (2) The Hertz Corporation Income Savings Plan.

Article 1. Definitions

Words and phrases defined in the Retirement Plan and the Savings Plan shall have the same meaning when used in the Plan unless expressly provided to the contrary herein. In addition, the following definitions shall apply for purposes of this Plan:

Committee - the committee appointed by the Board under Article 5.

Company - The Hertz Corporation.

Deferred Earnings - an amount equal to 90% of the compensation deferred by an Employee for a Plan Year under the Hertz Executive Deferred Compensation Plan.

Employee - an employee of the Company.

Participant - A participant in this Plan.

Retirement Plan - The Retirement Plan for the Employees of the Hertz Corporation (renamed and amended effective as of January 1, 1987 as The Hertz Corporation Account Balance Defined Benefit Pension Plan).

Savings Plan - The Hertz Corporation Income Savings Plan.

Supplemental Savings Account - an account maintained on the books and records of the Company for each Participant reflecting amounts credited under
Section 4.2, as adjusted under Section 4.4

Valuation Date - the last business day of each calendar month.

Article 2. Participation in the Plan

2.1 Subject to Section 2.2, Employees who on June 30, 1987 (a) actively participated in the Retirement Plan by contributing to it and (b) held the office of Staff or Division Vice President or above shall be Participants, provided each is among a group deemed by the Department of Labor to be a select group of management or highly compensated employees.


2.2 Subject to Section 2.3, prior to any Employee becoming a Participant, the Company shall request a ruling from the Department of Labor that the Employees who satisfy the requirements of Section 2.1 are a select group of management or highly compensated employees, thereby exempting the Plan from Parts 2 and 3 and Section 403 of Title I of ERISA. Upon the Department of Labor's ruling that coverage of all (or some) of those Employees (the "Included Employees") under the Plan will allow the Plan to continue to be exempt from Parts 2 and 3 and Section 403 of Title I of ERISA, the Included Employees shall become Participants as of July 1, 1987.

2.3 An Employee who (a) participates in the Executive Deferred Compensation Plan as of June 30, 1987 and (b) satisfies the requirements of clauses (a) and (b) of Section 2.1 shall participate in the Plan as of July 1, 1987, without the necessity of a ruling from the Department of Labor.

Article 3. Supplemental Retirement Benefits

3.1 A Participant's supplemental retirement benefit under the Plan shall be equal to the excess, if any, of (a) over (b).

(a) The nonforfeitable benefit the Participant would receive based on the benefit accrual and vesting provisions of the Retirement Plan in effect on June 30, 1987:

(1) as if the Participant continued to make required contributions to the Retirement Plan after June 30, 1987 (as if there were no amendments to the Retirement Plan after June 30, 1987),

(2) taking into account in computing his benefit under the terms of the Retirement Plan in effect on June 30, 1987 the total of his Earnings and Deferred Earnings (instead of only Earnings) and his service for the entire period he is employed by an Affiliated Company (including the period before the Participant's employer became an Affiliated Company). In determining Earnings and Deferred Earnings, a Participant's compensation history for the entire period that he is employed by an Affiliated Company shall be considered, and

(3) computed without regard to the limitations of Section 415 or the Internal Revenue Code and the limitation on the amount of compensation that may be taken into account under Section 401(a)(17) of the Internal Revenue Code;

(b) the aggregate benefit the Participant is actually entitled to receive under the Retirement Plan and under any other defined benefit plan qualified under section 401(a) of the Internal Revenue Code and maintained by an Affiliated Company (including the portion of the benefit attributable to service before the Affiliated Company became such).

For purposes of this Section 3.1, if any of the benefits described in paragraphs
(a) or (b) are not in the form of an annuity for the life of the


Participant with a five year period certain feature commencing on the first day of the month after the Participant attains age 65, the benefit shall be converted to the actuarial equivalent of that form.

3.2 Benefits shall be payable under the Plan under the same terms and conditions (including the designation of any Beneficiary upon death) as benefits are actually payable under the Retirement Plan. Any election of an option, or failure to elect an option, under the Retirement Plan shall be an election, or failure to make an election, of an option under this Plan.

3.3 No deferred compensation equalization benefit shall be paid under any deferred compensation plan to Participants in this Plan.

Article 4. Supplemental Savings Plan Benefit

4.1 For any Plan Year, if the amount a Participant has elected to contribute to the Savings Plan as Before Tax Savings Contributions and After Tax Savings Contributions would cause the amounts credited to him under the Savings Plan to exceed the maximum annual addition under Section 415(c) of the Internal Revenue Code or would result in a violation of the limitation of Section 415(e) of the Internal Revenue Code, the amount set forth in Section 4.2 shall be credited to his Supplemental Benefits Account. For purposes of this Section 4.1, to the extent amounts credited to a Participant's accounts under the Savings Plan must be reduced to comply with Section 415 of the Internal Revenue Code, the amount of Employer Matching Contributions that would be credited to him shall be reduced before reducing the amounts of his After Tax Savings Contributions and Before Tax Savings Contributions.

4.2 For any Plan Year that a Participant is covered by Section 4.1, his Supplemental Savings Account shall be credited with an amount equal to 66-2/3% of the excess, if any, of (a) the amount (not in excess of 6% of his Compensation) he contributed to the Savings Plan as Before Tax Savings Contributions and After Tax Savings Contributions for that Plan Year over (b) the amount of Employer Matching Contributions actually credited to him under the Savings Plan for that Plan Year.

4.3 The amounts credited under Section 4.2 for a Plan Year shall be credited to a Participant's Supplemental Savings Account in monthly installments over the Plan Year.

4.4 As of each Valuation Date, the credit balance in a Participant's Supplement Savings Account shall be adjusted (before any amounts are credited under Sections 4.2 since the previous Valuation Date) in proportion to the net change in value in the Fixed Income Fund or the General Common Stock Fund under the Savings Plan, depending on the Participant's investment election as of that Valuation Date under the Savings Plan. If as of a Valuation Date, a Participant has elected to have his accounts under the Savings Plan invested 50% in each of the Fixed Income Fund and General Common Stock Fund, 50% of the credit balance in his Supplemental Savings Account will be adjusted in proportion to the net change in value of each of those funds since the previous Valuation Date.

4.5 As soon as practicable after a Participant's Termination of Employment, he shall receive distribution of the credit balance (as of the Valuation Date immediately preceding distribution) in his Supplemental Savings Account as a single cash payment. If the Participant dies before he


receives this distribution, it shall be paid in a single cash payment to his Beneficiary under the savings Plan.

Article 5. Administration

The Plan shall be administered by the Committee composed of the same people who administer the Retirement Plan, and the Plan shall be administered and interpreted in a manner which is as consistent with the interpretations of the Retirement Plan and Savings Plan as the context reasonably permits.

Article 6. Funding

The Plan shall be unfunded. Neither the Company nor the Committee shall segregate any assets in connection with the Plan. Neither the Company nor the Committee shall be deemed to be a trustee of any amounts to be paid under the Plan. Any liability to any person with respect to benefits payable under the Plan shall be based solely upon such contractual obligations of the Company, if any, as may be created by the Plan. Such liability, if any, shall be a claim against the general assets of the Company and shall become a claim only if the Company fails to make a payment due under the Plan. No such liability, or claim, shall be deemed to be secured by any pledge or any other encumbrance or specific property of the Company or held in trust affording protection against creditors of the Company.

Article 7. Amendment and Termination

7.1 Subject to Section 7.2, while the Company intends to maintain this Plan in conjunction with the Retirement Plan and the Savings Plan for so long as desirable, the Company reserves the right to amend or to terminate this Plan by action of its Board of Directors, in its sole discretion, for whatever reason it may deem appropriate.

7.2 Upon a change in control (as defined below) the Plan may not be amended or terminated, except that the provisions of Article 4 may be amended, if necessary, to maintain the qualified status of the Savings Plan under Section 401(a) of the Internal Revenue Code or to conform to any amendments to the Savings Plan. For purposes of this Section 7.2, a "change in control" shall mean the occurrence of any one of the following events:

(a) the time at which 25 percent or more of the combined voting power of the then outstanding voting stock of the Company becomes ultimately beneficially owned, directly or indirectly, by one or more "persons" (as that term is defined in Section 3 of the Securities Exchange Act of 1934) other than Allegis Corporation, any successor to it by merger, consolidation or sale of assets and any affiliate or subsidiary of Allegis Corporation or its successor ("Allegis");

(b) the time at which (i) more than 10 percent, but less than 25 percent, of the combined voting power of the then outstanding voting stock of the Company becomes ultimately beneficially owned, directly or indirectly, by one or more "persons" other than Allegis and (ii) there has occurred a change in a majority of the members of the Board of Directors of the Company during the one year period


following the occurrence of the event described in clause (i) above; or

(c) a merger or consolidation of the Company with or into any other corporation (other than Allegis or a corporation owned more than 25 percent by Allegis) or the acquisition of all or substantially all of the assets and business of the Company by any corporation (other than Allegis or a corporation owned more than 25 percent by Allegis); in each case, other than a transaction solely for the purpose of recapitalizing the Company's capital stock,

provided, however, that, with respect to clauses (a) and (b) above, any change in ownership of the outstanding voting stock of the Company which results in a group (the "Employee Group") consisting of any of one or more employees of the Company or an employee stock ownership plan (as defined in Section 407(d)(6) of the Employee Retirement Income Security Act of 1974 as amended) owning, directly or indirectly, more than 10 percent of the combined voting power of the Company shall not be considered a change in control; and with respect to clause (c) above, any merger or consolidation of the Company into or the sale of all or substantially all of the assets or business of the Company to any corporation, the combined voting power of which is owned more than 10 percent directly or indirectly by the Employee Group, shall not be considered a change in control.

7.3 In the event the Company terminates the Plan, a Participant's supplemental retirement benefit under Section 3.1 shall be determined (a) as if he ceased being an Employee (or an employee of an Affiliated Company) at the time of such termination, on the basis of the Participant's service, Earnings and Deferred Earnings determined as of the date of such termination, and (b) on the basis of the aggregate benefits the Participant is actually entitled to receive under the Retirement Plan and under any other defined benefit plan maintained by an Affiliated Company. Accordingly, after the termination of this Plan, the amount of a Participant's supplemental retirement benefit under
Section 3.1 will decrease to the extent that his actual benefit under the Retirement Plan (and any other defined benefit plan maintained by an Affiliated Company) increases as the result of service and earnings after the termination.

Article 8. General Provisions

8.1 Except as may be required by law, no benefit payable under the Plan is subject in any manner to anticipation, assignment, garnishment, or pledge; and any attempt to anticipate, assign, garnish or pledge the same shall be void. No such benefits will in any manner be liable for or subject to the debts, liabilities, engagement, or torts of any Participant or other person entitled to receive the same, and if such person is adjudicated bankrupt or attempts to anticipate, assign, or pledge any such benefits, the Committee shall have the authority to cause the same or any part thereof to be held or applied to or for the benefit of such Participant, his spouse, children or other dependents, or any of them, in such manner and in such proportion as the Committee may deem proper.

8.2 Notwithstanding anything in this Plan to the contrary if the Committee determines that a Participant while an Employee of the Company has, without the consent of the Committee, engaged in any activity or occupation


which is adverse to or in competition with the Company, after notice by registered mail directed to the Participant's last known address, the Committee may suspend his benefit under this Plan. The suspension shall continue until removed by notice from the Committee. After the suspension has continued for one year, the Committee shall cancel the Participant's (or his Beneficiary's) benefit under this Plan. The action by the Committee shall be final and conclusive.

8.3 Nothing contained in the Plan shall be construed as a contract of employment between the Company and any Participant, or as a right of any Participant to be continued in the employment of the Company, or as a limitation on the right of the Company to terminate the employment of or discharge any of its employees, with or without cause, and with or without notice, at any time, at the option of the Company.

8.4 Any masculine personal pronoun shall be considered to mean also the corresponding female or neuter personal pronoun, as the context requires.

8.5 The provisions of this Plan shall be construed in accordance with the laws of the State of New York.

Dated:

THE HERTZ CORPORATION

by ____________________________


2/3/88

THE HERTZ CORPORATION
SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
AMENDED SECTION 4.2

For any Plan Year that a Participant is covered by Section 4.1, his Supplemental Savings Account shall be credited with an amount equal to 50% of the excess, if any, of (a) the amount (not in excess of 6% of his Compensation) he contributed to the Savings Plan as Before Tax Savings Contributions and After Tax Savings Contributions for that Plan Year over (b) the amount of Employer Matching Contributions actually credited to him under the Savings Plan for that Plan Year.


Effective: 7/6/95

THE HERTZ CORPORATION
SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
AMENDED SECTION 3.2

Benefits can be payable under the Plan under the same terms and conditions (including the designation of any Beneficiary upon death) as benefits are payable under the Retirement Plan. Any election of an option under the Retirement Plan shall not be binding under this Plan. The Participant shall make a separate election as to the manner of payment of benefits payable under this Plan in the manner and form provided by the Committee.


EXHIBIT 10.8
EXECUTIVE
LONG TERM INCENTIVE
COMPENSATION PLAN

THE HERTZ CORPORATION
JANUARY, 2005


THE HERTZ CORPORATION
EXECUTIVE LONG TERM INCENTIVE PLAN

A. PURPOSE:

The purpose of the Hertz Long Term Incentive Plan ("Plan") is to motivate certain executives with compensation conditioned upon the achievement of the Company's financial goals and long-term success.

B. ADMINISTRATION OF THE PLAN:

The Plan is administered by the Compensation Committee of the Board of Directors ("Committee").

The Committee will determine the performance categories to be measured, establish target levels against which performance in each category will be measured, approve aggregate and individual target awards, evaluate performance against the target levels, approve final individual awards, interpret the provisions of the Plan, and establish such rules and procedures as may be necessary to implement and administer the Plan.

C. ELIGIBILITY:

Officers and other key executives of Hertz, as recommended by management and approved by the Committee, are eligible to participate in the Plan.

New participants are eligible for grants (target awards) made on or after the first day of the calendar year in which such participant first becomes eligible. No adjustment will be made to the outstanding grants of persons promoted to a higher level position during a performance period, except as approved by the Committee. Such promotions will be considered in determining the size of the target awards for future performance periods.

D. PERFORMANCE PERIODS:

Performance periods generally will cover five years. The initial five year performance period began on January 1, 1991 and ended on December 31, 1994. A new five year performance period will begin on January 1 of each year thereafter.

E. TARGET AWARD GRANTS:

Dollar values for target awards will be established consistent with competitive long-term incentive and total compensation values. Aggregate target values are set to provide competitive compensation for 100% achievement of the performance target for each performance category.


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Individual target awards will be based on each participant's performance and expected contribution to the company's success. Each participant will be advised of the dollar value of the target award granted to him/her, the performance categories and the target levels of performance established for each category for the performance period.

F. TRANSITION GRANTS:

Transition Grants will be made to new participants, which will "phase-in" the new participant as follows:

- 25% of Target Award Grant in first year of participation

- 50% of Target Award Grant in second year of participation

- 75% of Target Award Grant in third year of participation

- 100% of Target Award Grant in fourth year of participation

Variations in this phase-in schedule may be made with the approval of the Committee.

G. PERFORMANCE CATEGORIES AND PERFORMANCE TARGETS:

Awards under the Plan will be based on achievement of quantitative and qualitative performance targets for the categories of Hertz performance shown below with their respective weights:

PERFORMANCE CATEGORIES                                                             WEIGHT
----------------------                                                             ------
NET INCOME: compound annual percent improvement relative to Net Income averaged       70%
for the S&P 500.

MARKET SHARE: achievement of (a) targeted US Rent A Car market share at the top       30%
twenty airports, and (b) targeted market share gap between Hertz and the leading
competitor at the top twenty airports.

NET INCOME: For each performance period, Hertz' average annual percentage change in net income will be compared with the annual percentage change for S&P 500. To emphasize consistent, long-term growth, results will be weighted as shown below for the initial four-year performance period.


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                                                                      Weight
                                                                      ------
Average change for the full performance period                          35%
Average change for the last four years of the performance period        25%
Average change for the last three years of the performance period       20%
Average change for the last two years of the performance period         20%
                                                                        ---
                                                                       100%

MARKET SHARE - The Committee will evaluate performance in relation to targets established for market share and market share gap to determine the percentage achievement for each year and the total performance period based on quantitative data and other factors it considers to be relevant.

PERFORMANCE TARGETS MAY BE ADJUSTED BY THE COMMITTEE DURING A PERFORMANCE PERIOD CONSIDERING FACTORS IT DEEMS RELEVANT TO MAINTAIN THE INCENTIVE VALUE OF THE PLAN.

H. DETERMINATION OF FINAL AWARDS:

Final awards will be determined and submitted for approval of the Committee as soon as practicable after the end of each performance period. Payments will be made not later than 180 days following the end of a performance period. The award is based on the performance achieved against the target for each performance category and other factors deemed relevant by the Committee. The awards for each performance category can range from 0 to 200% of the target for that category. In each case, performance results and award entitlement in each category stand alone and the sum of awards generated in each category will determine the final award paid to each participant.

I. TERMINATION OF EMPLOYMENT:

If a participant's employment is terminated due to a company approved retirement, disability or death, the participant or their estate will be eligible for future payout based on the performance results at the end of each performance period where there was an approved grant in place. However, in the event of competitive employment (subject to waiver by the Committee), failure to cooperate with the company, or conduct inimical to the best interest of the company, all rights to receive a future award will cease.

If a participant's employment is terminated for any reason except company-approved retirement, disability or death prior to the end of a performance period, all rights to receive a final award for such period would cease as of the date of termination, subject to waiver by the Committee.


EXHIBIT 10.9

THE HERTZ CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Hertz Corporation, with its principal office at 225 Brae Boulevard, Park Ridge, New Jersey, by action of the Compensation Committee of its Board of Directors, adopted, effective January 1, 1999 a Supplemental Executive Retirement Plan (the "Plan") to provide a select group of key executives and highly compensated employees a program supplementing benefits payable to them under The Hertz Corporation Account Balance Defined Benefit Pension Plan (the "Retirement Plan") and other non-qualified benefit plans.

ARTICLE 1

DEFINITIONS

Capitalized words and phrases used herein, but which are not defined herein, shall have the same meaning ascribed to them in the Retirement Plan. In addition, the following definitions shall apply for purposes of this Plan:

1.1. Actuarial Equivalent - Shall mean a benefit or amount that replaces another and has the same value as the benefit or amount it replaces, based on actuarial assumptions set forth in Schedule C of the Retirement Plan.

1.2. Affiliated Company - Shall mean (i) the Company, (ii) a member of a controlled group of corporations of which an Employer is a member, (iii) an unincorporated trade or business which is under common control with an Employer as determined in accordance with Section 414 (c) of the Internal Revenue Code,
(iv) a member of an affiliated service group with any Employer as defined in
Section 414 (m) of the Internal Revenue Code or (v) any other entity that must be aggregated with an Employer under Section 414 (o) (and Income Tax Regulations thereunder) of the Internal Revenue Code. A corporation or an unincorporated trade or business


2

shall not be considered an Affiliated Company for any period while it does not satisfy clause (i), (ii), (iii), (iv) or (v) of this definition. For purposes of this definition, a "controlled group of corporations" is a controlled group of corporations as defined in Section 1563(a) of the Internal Revenue Code (determined without regard to Sections 1563(a)(4) and (e)(3)(c) of the Internal Revenue Code).

1.3. Beneficiary - Shall mean the person so designated to receive distributions upon or after the death of a Participant under the terms set forth in the Retirement Plan.

1.4. BEP - Shall mean The Hertz Corporation Benefit Equalization Plan adopted by the Company effective January 1, 1996, as amended from time to time.

1.5. Board - Shall mean the Board of Directors of the Company.

1.6. Committee - Shall mean the Pension and Welfare Plans Administration Committee appointed by the Board.

1.7. Company - Shall mean The Hertz Corporation.

1.8. Compensation Committee - Shall mean the Compensation Committee of the Board.

1.9. Employee - Shall mean any person employed by an Affiliated Company.

1.10. Final Average Earnings - Shall mean the Participant's average annual compensation for the five (5) consecutive Plan Years while a Member of the Retirement Plan, in which he received the greatest amount of annual compensation within the ten most recent Plan Years. Compensation for this purpose is determined in accordance with the Retirement Plan but without regard to Section
401 (a) (17) of the Internal Revenue Code.

1.11. Normal Retirement Date - Shall mean the first day of the month coincident with or next following a Participant's 65th birthday.


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1.12. Participant - Shall mean an Employee who meets the participation requirements of Article 2.

1.13. Plan Year - Shall mean the calendar year.

1.14. Prior Plan - Shall mean the Retirement Plan for the Employees of the RCA Corporation and Subsidiary Companies as in effect on August 30, 1985.

1.15. Retirement Plan - Shall mean the Retirement Plan for the Employees of The Hertz Corporation (renamed and amended effective as of January 1, 1987 as The Hertz Corporation Account Balance Defined Benefit Pension Plan), as amended from time to time.

1.16. Supplemental Benefit - Shall mean the benefit payable to a Participant or his Beneficiary pursuant to this Plan.

1.17. Years of Benefit Service - Shall mean the sum of the Years of Credited Service accrued under the Retirement Plan through June 30, 1987 and the years and months of service while an active Member of the Retirement Plan after June 30, 1987, where a period of twelve (12) calendar months of service (which need not be consecutive) shall be considered a Year of Benefit Service and a period of less than twelve (12) calendar months shall be credited as a partial Year of Benefit Service equal to a fraction, the numerator of which is the number of such months of service, and the denominator of which is twelve (12). A Participant will be credited with a month of service for each calendar month in which he is credited with an Hour of Service under the Retirement Plan.

ARTICLE 2

PARTICIPATION IN THE PLAN

2.1. An Employee shall become eligible for participation in this Plan if the employee is designated as so eligible by the Company's Senior. Vice President, Employee Relations, in his


4

sole and absolute discretion. An eligible Employee shall become a Participant in the Plan upon the designation of the Company's Chief Executive Officer, in his sole and absolute discretion.

2.2. If a Participant's job responsibilities are altered, the Company's Chief Executive Officer, in his sole and absolute discretion, shall determine whether the Participant shall continue to accrue benefits under this Plan after the date of such change of responsibility.

ARTICLE 3

VESTING

Notwithstanding any provision of this Plan to the contrary, the Supplemental Benefit payable pursuant to Article 4 hereof shall be payable by the Company only with respect to a Participant who has been credited with at least five (5) Vesting Years of Service under the Retirement Plan and whose employment terminates with an Affiliated Company due to death, disability or otherwise terminates employment on or after his attainment of age fifty-five (55).

ARTICLE 4

SUPPLEMENTAL BENEFITS

4.1. A Participant's Supplemental Benefit shall be equal to the excess, if any, of (a) minus (b), plus (c) where:

(a) is the annual benefit payable at Normal Retirement Date (or Retirement) based on the following formula:

$192.00 plus 1.6% of Final Average Earnings over

$15,660 multiplied by Years of Benefit Service;

(1) A Participant who terminates from employment prior to his Normal Retirement Date and elects to defer benefit commencement under the Retirement Plan, shall have the benefit computed in this subsection 4.1 (a) reduced by 1/3 of 1% for each month that the distribution precedes his Normal


5

Retirement Date; and A Participant who terminates from employment prior to his Normal Retirement Date and elects to commence benefits immediately under the Retirement Plan, shall have the benefit computed in the subsection 4.1 (a) reduced in accordance with the following schedule:

Age at Retirement          % Reduction
-----------------          -----------
60 or over                      0%
59                             13%
58                             20%
57                             27%
56                             34%
55                             40%

(2) The benefit in this subsection 4.1(a) is computed without regard to the limitations of Section 415 of the Internal Revenue Code.

(b) is the aggregate benefit (other than the Supplemental Early Retirement Benefit or Optional Supplemental Early Retirement Benefit) the Participant is actually entitled to receive under the Retirement Plan, the Prior Plan, any other defined benefit plan qualified under Section 401(a) of the Internal Revenue Code and maintained by an Affiliated Company (including the portion of the benefit attributable to service before the Affiliated Company became such) and any non-qualified defined benefit plan maintained by an Affiliated Company (including, but not limited to, the BEP).

For purposes of this Section 4.1, if any of the benefits described in paragraphs (a) and (b) are not in the form of an annuity for the life of the Participant with a five (5) year period certain feature, the benefit shall be converted to the Actuarial Equivalent of that form.

(c) is (1) or (2) minus (3) where;

(1) is a supplemental early retirement benefit determined as follows:


6

A Participant who terminates employment after age 60 but before age 65, has at least 15 Years of Service, elects immediate commencement of benefits and: does not elect to receive the optional supplemental early retirement benefit (as stated below) is entitled to receive a supplemental early retirement benefit payable monthly beginning on the day benefit distribution commences and ending on the last day of the month beginning after the month in which he attains age 65 (or, if earlier, dies). The amount of the monthly supplemental early retirement benefit depends on the number of Years of Service as follows:

                         Supplemental Early
 Years of Service        Retirement Benefit
 ----------------        ------------------
15 but less than 20             $55
20 but less than 25             $60
25 but less than 30             $65
30 but less than 35             $70
    35 or more                  $75

(2) is the optional supplemental early retirement benefit determined as follows: A Participant who terminates employment after age 60 but before age 62, elects immediate commencement of benefits, has at least 10 Years of Service and does not elect the supplemental early retirement benefit (stated above), is entitled to receive the optional supplemental early retirement benefit payable monthly beginning on the day benefit distribution commences and ending on the last day of the month in which he attains age 62 (or, if earlier, dies.) The amount of the monthly optional supplemental early retirement benefit depends on the number of Years of Service as follows:


7

                         Optional Supplemental
  Years of Service      Early Retirement Benefit
  ----------------      ------------------------
10 but less than 15             $100
15 but less than 20             $140
20 but less than 25             $180
25 but less than 30             $220
30 or more                      $260

"Years of Service" for purposes of this Section 4.1 (c)(1) and
(2) means, with respect to a Participant who became a Member of the Retirement Plan prior to July 1, 1987, "Years of Credited Service" as defined in Section B.6 (e) of the Retirement Plan. With respect to a Participant who became a Member of the Retirement Plan on or after July, 1, 1987, "Years of Service" means "Vesting Years of Service" as defined in Section 1.50 of the Retirement Plan.

(3) is the Supplemental Early Retirement Benefit or the Optional Supplemental Early Retirement Benefit the Participant is entitled to receive under the Retirement Plan.

4.2. Subject to Section 4.3, Supplemental Benefits shall be payable at the same time and under the same terms and conditions (including the designation of any Beneficiary upon death) as benefits are payable under the Retirement Plan and shall commence as of the Participant's Annuity Starting Date. Notwithstanding the foregoing, any preretirement death benefit shall be payable consistent with the terms and conditions of Schedule F of the Retirement Plan (including benefits accrued after June 30, 1987), provided that a Beneficiary may receive the Actuarial Equivalent thereof.

4.3. The Participant shall make a separate election as to the form of payment of Supplemental Benefits among such forms which are available under the Retirement Plan. Such


8

election shall be made in accordance with such rules and procedures as established by the Committee; provided, however, that unless such election is made prior to the last day of the calendar year which is at least 12 months prior to the Participant's Annuity Starting Date, the Participant's Supplemental Benefit under. this Plan shall automatically be paid in the form of a annuity distribution as soon as practicable after such Annuity Starting Date.

ARTICLE 5

ADMINISTRATION

The Plan shall be administered and interpreted by the Committee. The Committee is authorized from time to time to establish such rules and regulations as it may deem appropriate for the proper administration of the Plan, and to make such determinations under, and such interpretations of, and to take such steps in connection with, the Plan as it may deem necessary or advisable. Each determination, interpretation, or other action by the Committee shall be in its sole discretion and shall be final, binding and conclusive for all purposes and upon all persons.

ARTICLE 6

FUNDING

The benefits payable under this Plan shall constitute an unfunded obligation and an unsecured promise of the Company. The Plan constitutes a mere promise by the Company to make Supplemental Benefit payments in the future. Payments shall be made, when due, from the general funds of the Company. Anything in this Article 6 to the contrary notwithstanding, the Company may establish a grant or trust (or other investment or holding vehicle) to assist it in meeting its obligations under the Plan and may provide for such investments in connection therewith, including the purchase of insurance or annuity contracts, as it may deem desirable; provided that any such investments shall be subject to the claims of the Company's general


9

creditors. No person eligible for a benefit under this Plan shall have any right, title, or interest in any assets held to assist the Company to pay Supplemental Benefits.

ARTICLE 7

CLAIMS PROCEDURE

7.1. A claim for benefits under the Plan shall be made in writing to the Committee. If such claim for benefits is wholly or partially denied by the Committee, the Committee shall, within a reasonable period of time, but not later than sixty (60) days after receipt of the claim, notify the claimant of the denial of the claim. Such notice of denial shall be in writing and shall contain:

(a) the specific reason or reasons for denial of the claim

(b) a reference to the relevant Plan provisions upon which the denial is based;

(c) a description of any additional material or information necessary for the claimant to perfect the claim, together with an explanation of why such material or information is necessary; and

(d) an explanation of the Plan's claim review procedure. If no such notice is provided, the claim shall be deemed denied.

7.2. Upon the receipt by the claimant of written notice of denial of the claim or in the event of a deemed denial, the claimant may within thirty (30) days file a written request to the Committee, requesting review of the denial of the claim, which review shall include a hearing if deemed necessary by the Committee. In connection with the claimant's appeal of the denial of his claim, he may review relevant documents and may submit issues and comments in writing. The Committee shall render a decision on the claim review promptly, but no more than thirty (30) days after the receipt of the claimant's request for review, unless special circumstances


10

(such as the need to hold a hearing) require an extension of time, in which case the thirty (30) day period shall be extended to sixty (60) days. Such decision shall:

(a) include specific reasons for the decision;

(b) be written in a manner calculated to be understood by the claimant, and

(c) contain specific references to the relevant Plan provisions upon both which the decision is based.

The decision of the Committee shall be final and binding in all respects upon both the Committee and the claimant.

ARTICLE 8

AMENDMENT AND TERMINATION

8.1. While the Company currently intends to maintain this Plan in conjunction with the Retirement Plan for so long as is desirable, the Company reserves the right to amend or to terminate this Plan by action of its Compensation Committee, in its sole discretion, for whatever reason it may deem appropriate. No amendment to the Plan, however, shall reduce the Supplemental Benefits accrued as of the effective date of such amendment.

8.2. In the event the Company terminates the Plan, a Participant's Supplemental Benefit shall be the amount determined under Section 4.1 as of the date of such termination.

ARTICLE 9

GENERAL PROVISIONS

9.1. Except as may be required by law, no benefit payable under the Plan is subject in any manner to anticipation, assignment, garnishment, or pledge; and any attempt to anticipate, assign, garnish or pledge the same shall be void. No such benefits will in any manner be liable for or subject to the debts, liabilities, engagement, or torts of any Participant or other person


11

entitled to receive the same, and if such person is adjudicated bankrupt or attempts to anticipate, assign, or pledge any such benefits, the Committee shall have the authority to cause the same or any part thereof to be held or applied to or for the benefit of such Participant, his spouse, children or other dependents, or any of them, in such manner and in such proportion as the Committee may deem proper.

9.2. To the extent permitted by law, the Company shall indemnify the members of the Committee from all claims for liability, loss or damage
(including payment of expenses in connection the defense against such claim) arising from any act or failure to act under the Plan, provided any such member shall give the Company an opportunity, at its own expense, to handle and defend such claims. The provisions of this Section 9.2 shall survive the termination of the Plan.

9.3. If a Participant or Beneficiary entitled to receive any Supplemental Benefits is a minor or is deemed by the Committee or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, payment of Supplemental Benefits will be made to the duly appointed legal guardian or representative of such minor or incompetent or to such other legally appointed person as the Committee may designate. Such payment shall, to the extent made, be deemed a complete discharge of any liability for such payment under the Plan.

9.4. The Company shall have the right to deduct from any Supplemental Benefit payments any taxes required to be withheld with respect to such payments.

9.5. Nothing contained in the Plan shall be construed as a contract of employment between an Affiliated Company and any Participant, or as a right of any Participant to be continued in the employment of an Affiliated Company, or as a limitation on the right of an


12

Affiliated Company to terminate the employment of any of its employees, with or without cause, and with or without notice, at any time, at the option of an Affiliated Company.

9.6. Any masculine personal pronoun shall be considered to mean also the corresponding female or neuter personal pronoun, as the context requires.

9.7. The provisions of this Plan shall be construed in accordance with the internal substantive laws (and not the choice of law rules) of the State of New York, except to the extent pre-empted by ERISA.


Amendment To The Hertz Corporation Supplemental Executive Retirement Plan

The Hertz Corporation Supplemental Executive Retirement Plan (the "SERP II"), effective January 1, 1999, and including amendments through January 1, 2002, is hereby further amended as follows, effective as of October 1, 2002:

ARTICLE 3

VESTING

3.1 Notwithstanding any provision of this Plan to the contrary, the Supplemental Benefit payable pursuant to Article 4 hereof shall be payable by the Company only with respect to a Participant who has been credited with at least five (5) Vesting Years of Service under the Retirement Plan and whose employment terminates with an Affiliated Company due to death, disability or otherwise terminates employment on or after his attainment of age fifty-five (55).

3.2 In the event a Participant with at least five (5) Vesting Years of Service under the Retirement Plan who has not attained age fifty-five (55), is terminated from employment by an Affiliated Company for reasons other than a voluntary termination or for Cause within thirty (30) days prior to or within one (1) year following either (i) a Change in Control or (ii) as a direct result of a sale of assets or stock of an Affiliated Company that employs the Participant that does not constitute a Change in Control of the Company, such Participant shall be vested in any Supplemental Benefit accrued by such Participant to the date of the employment termination without having attained age fifty-five (55) at the time of such termination.

3.3 For the purpose of this Article 3, the term "Cause" shall mean (i) any act of dishonesty or knowing and willful breach of fiduciary duty by a Participant which is intended to result in the Participant's personal enrichment at the expense of the Affiliated Company; (ii) commission of a felony involving moral turpitude or unlawful, dishonest, or unethical conduct that a reasonable person would consider damaging to the reputation of the Affiliated Company or improper and unacceptable conduct by an employee thereof, (iii) insubordination or refusal to perform assigned duties or comply with the directions of the Affiliated Company; or (iv) a material failure or inability to perform duties in a satisfactory and competent manner or to achieve reasonable profit or performance goals or objectives following written warning and a reasonable opportunity to cure.

3.4 For the purpose of this Article 3, the term "Change in Control" shall mean (1), the direct or indirect acquisition by any person or group of persons acting in concert, of beneficial ownership, through a purchase, merger or other acquisition transaction or series of transactions, of securities of the Company entitling such person or group to exercise 50% or more of the combined voting power of the Company's securities; or (ii) the transfer, whether by sale, merger or otherwise, of all or substantially all of the business and assets of the Company to any person or group of persons acting in concert.


Amendment To The Hertz Corporation Supplemental Executive Retirement Plan

The Hertz Corporation Supplemental Executive Retirement Plan (the "SERP II"), effective January 1, 1999, and including amendments through October 1, 2002, is hereby further amended as follows, effective as of January 1, 2005:

Notwithstanding anything contained in this Plan to the contrary, no otherwise permissible distribution is allowed that would trigger taxation of any amount under section 409(A) of the Internal Revenue Code of 1986, as amended.

Amendment To The Hertz Corporation Benefit Equalization Plan

The Hertz Corporation Benefit Equalization Plan (the "BEP"), effective January 1, 1996, is hereby amended as follows, effective as of January 1, 2005:

Notwithstanding anything contained, in this Plan to the contrary, no otherwise permissible distribution is allowed that would trigger taxation of any amount under section 409(A) of the Internal Revenue Code of 1986, as amended.


PROPOSED AMENDMENT TO
THE HERTZ CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Hertz Corporation Supplemental Executive Retirement Plan, adopted effective as of January 1, 1999 (the "Plan"), is hereby amended as follows, effective as of January 1, 2002:

1. Section 1.10 ("Final Average Earnings") is amended to read as follows:

"Final Average Earnings" - Shall mean that the Participant's average annual compensation for the five (5) Plan Years while a Member of the Retirement Plan, whether or not consecutive, in which he received the greatest amount of annual compensation within the most recent ten (10) Plan Years. Compensation for this purpose is determined in accordance with the Retirement Plan but without regard to Section 401(a)(17) of the Internal Revenue Code."

2. A new Section 1.18A ("Supplemental Retirement and Savings Plan") is added after section 1.18 ("Supplemental Benefit") to read as follows:

"`Supplemental Retirement and Savings Plan' - Shall mean The Hertz Corporation Supplemental Retirement and Savings Plan adopted by the Company effective July 1, 1987, as amended from time to time".

3. Section 4.1(b) is amended to read as follows:

"(b) is the aggregate benefit (other than the Supplemental Early Retirement Benefit or Optional Supplemental Early Retirement Benefit) the Participant is actually entitled to receive under the Retirement Plan, the Prior Plan any other defined benefit plan qualified under Section 401(a) of the Internal Revenue Code and maintained by an Affiliated Company (including the portion of the benefit attributable to service before the Affiliated Company became such) and any non-qualified defined benefit plan maintained by an Affiliated Company (including, but not limited, to the BEP and Supplemental Retirement and Savings Plan)."


EXHIBIT 10.10

THE HERTZ CORPORATION
BENEFIT EQUALIZATION PLAN

The Hertz Corporation, with its principal office at 225 Brae Boulevard, Park Ridge, New Jersey, by action of its Board of Directors, adopted, effective January 1, 1996, a Benefit Equalization Plan (the "Plan") to provide a select group of management and highly compensated employees a program supplementing benefits payable to them under The Hertz Corporation Account Balance Defined Benefit Pension Plan (the "Retirement Plan"). This Plan provides equalization benefits that cannot be provided under the tax qualified Retirement Plan because of limitations imposed by Section 415 and Section 401(a)(17) of the Internal Revenue Code.

ARTICLE 1. DEFINITIONS

Capitalized words and phrases used herein, but which are not defined herein, shall have the same meaning ascribed to them in the Retirement Plan. In addition, the following definitions shall apply for purposes of this Plan:

1.1    Committee               -    The Pension and Welfare Plans Administration
                                    Committee appointed by the Board under
                                    Article 4.

1.2    Company                 -    The Hertz Corporation

1.3    Employee                -    An employee of the Company

1.4    Equalization Benefit    -    The benefit payable to a Participant
                                    pursuant to this Plan.

1.5    Limitations             -    Limitations on benefits and compensation
                                    imposed on the tax qualified Retirement
                                    Plan by Section 415 and Section 401(a)(17)
                                    of the Internal Revenue Code.

1.6    Participant             -    An Employee who meets the participation
                                    requirements of Article 2.

1.7    Retirement Plan         -    The Retirement Plan for the Employees of
                                    The Hertz Corporation (renamed and amended
                                    effective as of January 1, 1987 as The Hertz
                                    Corporation Account Balance Defined Benefit
                                    Pension Plan), as amended from time
                                    to time.

1.8    SEP                     -    Supplemental Executive Pension, adopted by
                                    the Company effective January 1, 1992,
                                    as amended from time to time.

1.9    SERP                    -    Supplemental Retirement and Savings Plan of
                                    The Hertz Corporation, adopted by the
                                    Company effective July 1, 1987, as amended
                                    from time to time.


ARTICLE 2. PARTICIPATION IN THE PLAN

An Employee shall become a Participant if, on or after January 1, 1996, his or her Retirement Plan benefits are restricted by the Limitations; provided, however that; a) such Employee does not participate in the SEP or SERP; and b) the Committee does not determine that such Employee is excluded as a member of a "select group of management or highly compensated employees".

ARTICLE 3. EQUALIZATION BENEFITS

3.1 A Participant's Equalization Benefit shall be equal to the difference between the amount that would have been credited to his or her Cash Balance Account under the Retirement Plan without regard to the Limitations and the amount actually credited to his or her Cash Balance Account.

3.2 Subject to Section 3.3, Equalization Benefits shall be payable under the same forms of payment and terms and conditions (including the designation of any Beneficiary upon death) as benefits are payable under the Retirement Plan and shall commence as of the Participant's Annuity Starting Date.

3.3 The Participant shall make a separate election as to the form of payment of Equalization Benefits among such forms which are available under the Retirement Plan. Such election shall be made in accordance with such rules and procedures as established by the Committee; provided, however, that unless such election is made prior to the last day of the calendar year which is at least 12 months prior to the Participant's Annuity Starting Date, the Participant's Equalization Benefit under this Plan shall automatically be paid in the form of a lump sum distribution as soon as practicable after such Annuity Starting Date. Notwithstanding anything in this Plan or the Retirement Plan to the contrary, in the event of the Participant's death, the Participant's Equalization Benefit under this Plan shall automatically be paid to the Participant's Beneficiary in the form of a lump sum distribution as soon as practicable after the Participant's death.

ARTICLE 4. ADMINISTRATION

The Plan shall be administered and interpreted by the Committee composed of the same people who constitute the Pension and Welfare Plans Administration Committee under the Retirement Plan. The Committee is authorized from time to time to establish such rules and regulations as it may deem appropriate for the proper administration of the Plan, and to make such determinations under, and such interpretations of, and to take such steps in connection with, the Plan as it may deem necessary or advisable. Each determination, interpretation, or other action by the Committee shall be in its sole discretion and shall be final, binding and conclusive for all purposes and upon all persons.

ARTICLE 5. FUNDING

The benefits payable under this Plan shall constitute an unfunded obligation and an unsecured promise of the Company. The Plan constitutes a mere promise by the Company to make Equalization Benefit payments in the future. Payments shall be made, when due, from the general funds of the Company. Anything in


this Article 5 to the contrary notwithstanding, the Company may establish a grantor trust (or other investment or holding vehicle) to assist it in meeting its obligations under the Plan and may provide for such investments in connection therewith, including the purchase of insurance or annuity contracts, as it may deem desirable; provided that any such investments shall be subject to the claims of the Company's general creditors. No person eligible for a benefit under this Plan shall have any right, title, or interest in any assets held to assist the Company to pay Equalization Benefits.

ARTICLE 6. AMENDMENT AND TERMINATION

6.1 While the Company intends to maintain this Plan in conjunction with the Retirement Plan for so long as desirable, the Company reserves the right to amend or to terminate this Plan by action of its Board, in its sole discretion, for whatever reason it may deem appropriate. No amendment to the Plan, however, shall reduce the Equalization Benefits accrued as of the effective date of such amendment.

6.2 In the event the Company terminates the Plan, a Participant's Equalization Benefit shall be the amount determined under Section 3.1 as of the date of such termination.

ARTICLE 7. GENERAL PROVISIONS

7.1 Except as may be required by law, no benefit payable under the Plan is subject in any manner to anticipation, assignment, garnishment, or pledge; and any attempt to anticipate, assign, garnish or pledge the same shall be void. No such benefits will in any manner be liable for or subject to the debts, liabilities, engagement, or torts of any Participant or other person entitled to receive the same, and if such person is adjudicated bankrupt or attempts to anticipate, assign, or pledge any such benefits, the Committee shall have the authority to cause the same or any part thereof to be held or applied to or for the benefit of such Participant, his spouse, children or other dependents, or any of them, in such manner and in such proportion as the Committee may deem proper.

7.2 To the extent permitted by law, the Company shall indemnify the members of the Committee from all claims for liability, loss or damage (including payment of expenses in connection with the defense against such claim) arising from any act or failure to act which constitutes a breach of such individual's responsibilities under any applicable law. This shall not include actions which may be held to include criminal liability under applicable law. The provisions of this Section 7.2 shall survive termination of the Plan.

7.3 If a Participant or Beneficiary entitled to receive any Equalization Benefits is a minor or is deemed by the Committee or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, payment of Equalization Benefits will be made to the duly appointed legal guardian or representative of such minor incompetent or to such other legally appointed person as the Committees may designate. Such payment shall, to the extent made, be deemed a complete discharge of any liability for such payment under the Plan.


7.4 The Company shall have the right to deduct from any Equalization Benefits payments any taxes required to be withheld with respect to such payments.

7.5 Nothing contained in the Plan shall be construed as a contract of employment between the Company and any participant, or as a right of any Participant to be continued in the employment of the Company, or as a limitation on the right of the Company to terminate the employment of any of its employees, with or without cause, and with or without notice, at any time, at the option of the Company.

7.6 Any masculine personal pronoun shall be considered to mean also the corresponding female or neuter personal pronoun, as the context requires.

7.7 The provisions of this Plan shall be construed in accordance with the laws of the State of Delaware.


Amendment To The Hertz Corporation Benefit Equalization Plan

The Hertz Corporation Benefit Equalization Plan (the "BEP"), effective January 1, 1996, is hereby amended as follows, effective as of January 1, 2005:

Notwithstanding anything contained, in this Plan to the contrary, no otherwise permissible distribution is allowed that would trigger taxation of any amount under section 409(A) of the Internal Revenue Code of 1986, as amended.


EXHIBIT 10.11

KEY OFFICER - POST RETIREMENT ASSIGNED CAR BENEFIT

POLICY:

- It shall be the policy of The Hertz Corporation to provide the use of an assigned vehicle to selected key Corporate Officers as a post retirement benefit. The conditions pertaining to eligibility and other requirements associated with this benefit are outlined below.

ELIGIBILITY:

Covered classifications - Corporate elected officers at the level of Senior VP and above.

- Participation in demo vehicle evaluation program as active employee

- Minimum of 10 years of company service

- Participant retires from active employment at age 62 or above.

PROGRAM:

- Authorized for use of assigned vehicle from Hertz fleet up to a level consistent with class of vehicle assigned while an active employee or the highest level of vehicle available in the RAC Fleet. Any accessories or options added beyond the standard level provided for this vehicle as part of the RAC fleet would be at the participating retiree's expense.

- The ordering, delivery and disposal of the vehicle will be accomplished through the RAC Fleet Department.

- The taxable value of the vehicle will be established by The Hertz Corporation and provided to the participant for tax reporting purposes.

- Insurance on the vehicle will be provided by the company as will normal maintenance procedures to conform to warranty requirements.

- All other operating expenses will be the responsibility of the participant.

- Participant must maintain and provide proof of a valid driver's license annually or on demand by the company to be eligible for continued participation in this benefit.

- The Company will reserve the right to cancel any individual's participation in this program if there is reason to believe that continued participation would pose an unacceptable and potentially significant liability to The Hertz Corporation.


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- This benefit will apply for a maximum of 15 years post retirement or to age of eighty, whichever is greater, subject to satisfying other requirements of this Program.

- Participant must complete vehicle evaluation summaries on the assigned vehicle as required by the Company.

SURVIVING SPOUSE:

- If a participant should die and his or her spouse was living with him or her at the time, the title will be transferred for the vehicle then assigned to the surviving spouse. Any tax liability associated with this transfer will be the responsibility of the surviving spouse.

ADMINISTRATION:

- The Senior Vice President of Employee Relations for The Hertz Corporation will be responsible for insuring that this policy is properly implemented and administered to comply with the provisions.

- The Hertz Corporation reserves the right to end, suspend, or amend this program at any time, in whole or in part.

- The approval of this initial Program and any subsequent changes to end, suspend or modify this program resides with the Compensation Committee of The Hertz Corporation.


EXHIBIT 10.12

THE HERTZ CORPORATION

ACCOUNT BALANCE
DEFINED BENEFIT PENSION PLAN

(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2000
AND INCLUDING AMENDMENTS THROUGH JANUARY 1, 2002)


TABLE OF CONTENTS

ARTICLE                                                                                                      PAGE
-------                                                                                                      ----
1.     Definitions........................................................................................     1

2.     Membership.........................................................................................    14

3.     Retirement Benefits................................................................................    16

4.     Limitations on Benefits............................................................................    26

5.     Vesting............................................................................................    30

6.     Distribution.......................................................................................    31

7.     Pre-Retirement Death Benefits......................................................................    40

8.     Funding............................................................................................    43

9.     Administration of Plan.............................................................................    44

10.    Management of Trust Fund...........................................................................    48

11.    Benefit Claims Procedure...........................................................................    49

12.    Non-Alienation of Benefits.........................................................................    52

13.    Designation of Beneficiary.........................................................................    54

14.    Amendment..........................................................................................    55

15.    Termination; Merger, Consolidation or Transfer of Assets...........................................    57

16.    Adoption and Withdrawal from Plan by Affiliated Company............................................    59

17.    Top Heavy Provisions...............................................................................    60

18.    Miscellaneous......................................................................................    65


SCHEDULE                                                                                                   PAGE
--------                                                                                                   ----
A      Effective Dates.........................................................................             68

B      Definitions.............................................................................             69

C      Actuarial Assumptions...................................................................             77

D      Sections 3.2 and 3.8....................................................................             81

E      Section 6.4.............................................................................             90

F      Section 7.1 (b).........................................................................             91

G      Sale of Stock of HCM Claim Management Corporation To the Employee Care Corporation......             93


THE HERTZ CORPORATION

ACCOUNT BALANCE DEFINED BENEFIT PENSION PLAN

The Hertz Corporation, with its principal office at 225 Brae Boulevard, Park Ridge, New Jersey, 07656, amends and restates (except as otherwise provided in Schedule A to this Plan) effective as of January 1, 2000 and including amendments through January 1, 2002, The Hertz Corporation Account Balance Defined Benefit Pension Plan (which initially became effective as of August 30, 1985 upon the sale of The Hertz Corporation to UAL, Inc.).

The terms of the Plan, as amended and restated, except as otherwise noted, shall only apply to those Members whose retirement or other termination of service with an Employer occurs on or after January 1, 2000. The right to benefits with respect to any other person shall, except to the extent provided herein, be determined solely on the basis of the terms of the Plan as in effect on the date of his retirement or termination.

The Plan is intended to meet the qualification requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended.

ARTICLE 1. DEFINITIONS

The following definitions and the definitions set forth in Sections 4.1, 6.14 and 17.1, and in Schedule B to this Plan, apply for purposes of this Plan:

1.1 Actuarial or Actuarially Equivalent - a benefit or amount that replaces another and has the same value as the benefit or amount it replaces, based on actuarial assumptions as set forth in Schedule C to this Plan.

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1.2 Actuary - the person appointed by the Board under Section 9.10.

1.3 Affiliated Company - (a) the Company, (b) a member of a "controlled group of corporations" of which an Employer is a member, (c) an unincorporated trade or business which is under common control with an Employer as determined in accordance with Section 414(c) of the Internal Revenue Code or (d) a member of an affiliated service group with any Employer as defined in Section 414(m) or (o) of the Internal Revenue Code. A corporation or an unincorporated trade or business shall not be considered an Affiliated Company for any period it does not satisfy clause (a), (b),
(c) or (d) of this definition. For purposes of this definition, a "controlled group of corporations" is a controlled group of corporations as defined in Section 1563(a) of the Internal Revenue Code (but determined without regard to Sections 1563(a)(4) and (e)(3)(c) of the Code). In determining whether any limitations on benefits under Section 4.2 apply, the percentage in Section 1563(a)(1) of the Internal Revenue Code or in the regulations under Section 414(c) of the Internal Revenue Code shall be deemed to be more than 50% instead of at least 80%.

1.4 Alternate Payee - any spouse, former spouse, child or other dependent of a Member who is recognized by a Qualified Domestic Relations Order as having a right to receive all or a portion of the benefits payable under the Plan with respect to a Member.

1.5 Annual Cash Balance Credit - the amount credited for a Plan Year to a Member's Cash Balance Account under Section 3.4 or 3.5.

1.6 Annuity Starting Date - the first date as of which distribution of Retirement Benefits to a Member is to begin under Section 6.3 or the first date as of which distribution of Preretirement Death Benefits to a Beneficiary is to begin under Section 7.5.

2

1.7 Beneficiary - a person who is entitled to receive distributions under this Plan upon or after the death of a Member or other Beneficiary.

1.8 Board - the Board of Directors of the Company, or a committee of the Board, authorized by, and acting on behalf of, the Board.

1.9 Break in Service - a Plan Year in which an Employee (or former Employee) is not credited with more than 500 Hours of Service. For purposes of determining whether there has been a Break in Service an Employee shall be credited with Hours of Service for the period during which he is on Parental Leave as follows: (a) the Employee shall be credited with the number of Hours of Service he would normally be credited with but for the absence (or if his normal Hours of Service cannot be determined, eight Hours of Service for each day of the absence), (b) the total number of Hours of Service credited for the absence shall not exceed 501 and (c) the Hours of Service credited for the absence shall be credited to the Plan Year in which the absence begins if the Employee would be prevented from incurring a Break in Service in that Plan Year solely because of the crediting of Hours of Service in accordance with clauses (a) and (b) of this definition or in any other case, the immediately following Plan Year.

1.10  Cash Balance Account - an account maintained on the books of the Plan for
      each Member, reflecting amounts credited to him under Sections 3.4, 3.5
      and 3.6.

1.11  Cash Balance Benefit - the portion of a Member's Retirement Benefit that
      is determined under Section 3.3.

1.12  Committee - the Pension and Welfare Plan Administration Committee
      appointed by the Board under Section 9.2.

1.13  Company - The Hertz Corporation or any successor by merger, consolidation
      or sale of assets.

                                                                               3

1.14  Compensation - all cash remuneration paid or made available for any Plan
      Year (or if the context requires for a payroll period) by an Employer to
      an Employee for his services, as salary or wages and including bonuses,
      commissions, pay at premium rates (holiday, overtime or other), vacation
      pay (other than accrued vacation paid upon Termination of Employment or
      Retirement), the amount of his before tax savings contributions under The
      Hertz Corporation Income Savings Plan, his pay conversion credits under
      The Hertz Custom Benefit Program and payments made under salary and wage
      continuation plans and other similar plans providing for payments to
      Employees while absent from work, but excluding (a) any payments on
      account of long-term disability, (b) severance payments, layoff allowances
      and layoff extension benefits, (c) prizes, awards and amounts paid
      (whether or not under an employee benefit plan) to reimburse Employees'
      expenses, such as business and travel allowances, meal allowances, living
      allowances, relocation allowances and foreign service living and

educational allowances, (d) any amounts attributable to stock options, (e) any other amounts paid for that Plan Year on account of the Employee under this Plan or under any other employee pension benefit plan (as defined in
Section 3(2) of ERISA), (f) any incentive payments not related to the Employee's primary job responsibilities, (g) any payments under the Company's Long Term Incentive Program, and (h) any other amounts which are not includible in the Employee's income for federal income tax purposes. In determining Compensation for purposes of Section 3.4 or 3.5, only amounts paid or made available after the later of June 30, 1987 and the time an Employee becomes a Member shall be taken into account. For Plan Years beginning after 1988 and before 1994, an Employee's Compensation shall not exceed $200,000 and for Plan Years beginning after 1993 shall not exceed $150,000; provided, however, that such dollar limitations on recognized compensation for any Plan

4

      Year shall be the adjusted amount prescribed by the Secretary of the
      Treasury under Section 401(a)(17)(B) of the Internal Revenue Code that is
      applicable to such Plan Year. For purposes of Sections 4.1 and 4.2,
      Compensation shall mean compensation as that term is used in Section
      415(b)(3) of the Internal Revenue Code, including, effective for
      limitation years beginning on or after January 1, 1998, any elective
      deferral under section 402(g)(3) of the Code and any amount which is
      contributed or deferred by an Employer of Affiliated Company by reason of
      Sections 125 or 457 of the Code, or, effective for limitations years
      beginning on or after January 1, 2001, by reason of Section 132(f)(4) of
      the Code.

1.15  Defined Benefit Plan - an employee benefit plan (other than the Prior
      Plan), as defined in Section 3(35) of ERISA, that (a) is maintained by an
      Affiliated Company, (b) is qualified under Sections 401 and 501 of the
      Internal Revenue Code and (c) is not a Defined Contribution Plan.

1.16  Defined Contribution Plan - an employee benefit plan, as defined in
      Section 3(34) of ERISA, that (a) is maintained by an Affiliated Company,
      (b) is qualified under Sections 401 and 501 of the Internal Revenue Code
      and (c) provides for an individual account for each Member and for
      benefits based solely on the amounts credited to those accounts.

1.17  Early Retirement Date - the first day of the month coincident or next
      following a Member's 55th birthday or, if later, his being credited with
      five Vesting Years of Service.

1.18  Eligible Employee - an Employee of an Employer who (a) has been credited
      with at least 1,000 Hours of Service for the 12-month period commencing
      with the Employee's first Hour of Service or has been credited with at
      least 1,000 Hours of Service for any subsequent 12-month period commencing
      on the anniversary of the day of his first Hour of Service and (b) is not
      covered by a collective bargaining agreement (unless the

                                                                               5

      collective bargaining agreement expressly provides for inclusion of the
      Employee as a Member). Any Employee of an Employer who is not an Eligible
      Employee on January 1, 1987 shall become an Eligible Employee on the day
      he satisfies the requirement of clause (b) above or the last day of the
      12-month period during which he satisfies the requirements of clause (a)
      above, whichever is later. In order to satisfy the requirement of clause
      (a) above, an individual need not be an Employee on the first or last day
      of a 12-month period or throughout the period. A Rehired Employee shall be
      deemed to be an Eligible Employee as of the day his employment recommences
      if the Employee has satisfied the requirements of this definition by the
      day his employment recommences and the Employee's most recent period of
      service has not been disregarded under Section 2.4(b).

1.19  Employee - any person who is employed by an Employer or an Affiliated

Company, other than:

(a) A Leased Employee of an Employer or an Affiliated Company; or

(b) Any person who directly or indirectly provides services to an Employer or an Affiliated Company pursuant to a contractual or other arrangement, written or otherwise, either with that person or with a third party except if such contract or arrangement specifically provides for designation as an Employee.

If any person pursuant to (a) or (b) above shall be determined by a court, federal, state or local regulatory or administrative authority to have provided services as a common law employee of an Employer or an Affiliated Company, such determination shall not alter such person's exclusion from classification as an Employee for purposes of this Plan.

6

1.20  Employer - the Company or any other Affiliated Company which has adopted
      this Plan under Article 16.

1.21  ERISA - the Employee Retirement Income Security Act of 1974, as it may
      from time to time be amended or supplemented. References to any section of
      ERISA shall be to that section as it may be renumbered, amended,
      supplemented or reenacted.

1.22  Five Percent Owner - an Employee who owns more than five percent of his
      Affiliated Company (within the meaning of Section 416(i)(1)(B)(i) of the
      Internal Revenue Code).

1.23  Hour of Service - an hour for which an Employee directly or indirectly
      receives, or is entitled to receive, remuneration from an Affiliated
      Company in relation to his employment, including hours credited for
      vacation, sickness or disability and hours for which back pay has been
      paid, awarded or agreed to (irrespective of mitigation of damages) by an
      Affiliated Company (which shall be credited to an Employee with respect to
      the period for which remuneration is paid). In addition, an Employee shall
      be credited with Hours of Service in accordance with clause (b) of the
      following sentence for a period of up to 24 months while on an approved
      medical leave of absence. For periods of employment prior to January 1,
      1976, if an Employee's actual Hours of Service cannot be determined, his
      Hours of Service shall be determined as follows: (a) his Employer shall
      approximate his Hours of Service based on any available records or (b) if
      no records are available, he shall be credited with 45 Hours of Service
      for each week worked if he is paid on a weekly basis, 90 Hours of Service
      for each biweekly period worked if he is paid on a biweekly basis, 95
      Hours of Service for each semi-monthly period worked if he is paid on a
      semi-monthly basis, and 190 Hours of Service for each month worked if he
      is paid on a monthly basis. Hours of Service shall be credited to an

                                                                               7

      Employee in accordance with the records of his Affiliated Company and
      Department of Labor Regulations Section 2530.200b-2.

1.24  Internal Revenue Code or Code - the Internal Revenue Code of 1986, as it
      may from time to time be amended or supplemented. References to any
      section of the Internal Revenue Code shall be to that section as it may be
      renumbered, amended, supplemented or reenacted.

1.25  Investment Manager - anyone who (a) is granted the power to manage,
      acquire, or dispose of any asset of the Plan, (b) acknowledges in writing
      that it is a fiduciary with respect to the Plan and (c) is (1) an
      investment adviser registered under the Investment Advisers Act of 1940,
      (2) a bank (as defined in the Investment Advisers Act of 1940) or (3) an
      insurance company qualified under the laws of more than one state to
      manage the assets of employee benefit plans (as defined in Section 3(3) of
      ERISA).

1.26  Leased Employee - means any person who performs services for an Employer
      (other than as an Employee) if: (a) the services are performed pursuant to
      an agreement between an Employer and any other person (the "Leasing
      Organization"); (b) such person has performed services for such Employer
      (including services performed for a related person within the meaning of
      Section 414(n)(6) of the Code) on a substantially full-time basis for a
      period of at least one year; and (c) such services are performed under the
      primary direction or control of the Employer. Contributions or benefits
      provided a Leased Employee by a Leasing Organization which are
      attributable to services performed for the Employer shall be treated as
      provided by the Employer.

1.27  Limitation Year - the Plan Year.

1.28  Member - a member of this Plan as described in Article 2 hereof.

1.29  Merged Plan - any plan designated by the Board as a Merged Plan under
      Section 18.4.

                                                                               8

1.30  Most Recent Date of Hire - the later of: (a) the date as of which a Member
      is first credited with an Hour of Service by an Employer; (b) the date as
      of which a Member who is a Rehired Employee is again credited with an Hour
      of Service by an Employer, or (c) with respect to an Employee who
      transfers to the employment of an Employer from an Affiliated Company
      which is not an Employer or an Employee whose former employer was acquired
      by an Employer, the date determined by the Committee pursuant to Section
      18.3.

1.31  Normal Retirement Date - the first day of the month coincident with or
      next following a Member's 65th birthday.

1.32  Parental Leave - an Employee's leave of absence from employment with an
      Affiliated Company because of pregnancy, birth of the Employee's child,
      placement of a child with the Employee in connection with adoption of the
      child or caring for a child immediately following birth or adoption. The
      Affiliated Company shall determine the first and last day of any Parental
      Leave.

1.33  PBGC - the Pension Benefit Guaranty Corporation.

1.34  Permitted Leave - a Member's approved leave of absence from employment
      with an Affiliated Company. In approving a Permitted Leave, his Employer
      shall determine the date as of which the Permitted Leave begins and ends.

1.35  Plan - The Hertz Corporation Account Balance Defined Benefit Pension Plan,
      as set forth in this document and as it may from time to time be amended
      or supplemented.

1.36  Plan Administrator - the Company, as provided in Section 9.1.

1.37  Plan Year - the calendar year.

1.38  Pre-July, 1987 Benefit - the portion of a Member's Retirement Benefit
      determined under Schedule D to this Plan.

                                                                               9

1.39  Pre-July, 1987 Member - an Employee who was a Member of the Plan on June
      30, 1987 and contributed to the Plan as of that date.

1.40  Pre-Retirement Death Benefit - the death benefit payable under Article 7
      to the Beneficiary of a Member who dies before his Annuity Starting Date.

1.41  Prior Plan - the Retirement Plan for the Employees of the RCA Corporation
      and Subsidiary Companies as in effect on August 30, 1985.

1.42  Qualified Domestic Relations Order - any judgment, decree or order that
      relates to the provisions of child support, alimony payments or marital
      property rights to a spouse, former spouse, child or other dependent of a
      Member, and is made pursuant to a state domestic relations order which
      creates or recognizes the existence of an Alternate Payee's right to, or
      assigns to an Alternate Payee the right to, receive all or a portion of
      the Member's Retirement Benefit and meets the requirements of Section
      414(p) of the Code.

1.43  Qualified Joint and Survivor Annuity - an annuity for the life of a Member
      with a survivor annuity for the life of his spouse, where the survivor
      annuity is 50% of the amount of the annuity payable during the joint lives
      of the Member and his spouse and the joint and survivor annuity is at
      least the Actuarial Equivalent of the most valuable form of benefit under
      the Plan payable on his Annuity Starting Date.

1.44  Qualified Preretirement Survivor Annuity - an immediate survivor annuity
      for the life of the Member's spouse. Each payment under the survivor
      annuity must not be less than the payment that would have been made to the
      spouse under the survivor annuity described below:

      (a)   in the case of a Member who dies after his Early Retirement Date,
            the survivor annuity his spouse would have received if the Member
            had a Termination of

                                                                              10

            Employment on the day before his death and received distribution of
            his benefits in the form of an immediate Qualified Joint and
            Survivor Annuity; or

      (b)   in the case of a Member who dies on or before his Early Retirement
            Date, the survivor annuity his spouse would have received if the
            Member had a Termination of Employment on the day of his death,
            survived to his Early Retirement Date, received distribution of
            benefits in the form of a Qualified Joint and Survivor Annuity
            commencing on his Early Retirement Date and died on the day after
            his Early Retirement Date.

1.45  Rehired Employee - an Employee who is rehired by an Affiliated Company
      after a Termination of Employment or Retirement. The sections which
      include provisions relating to a Rehired Employee are Section 1.18
      (Eligible Employee), Section 1.30 (Most Recent Date of Hire), Section 1.54
      (Vesting Years of Service), Section 2.4 (time of participation), Section
      3.8 (amount of Retirement Benefit), Section 3.9 (cash-out of Cash Balance
      Benefits) and Section 3.10 (suspension of benefit payments).

1.46  Retirement - a Member's termination of employment with an Affiliated
      Company on or after his Early Retirement Date or his Normal Retirement
      Date.

1.47  Retirement Benefit - the monthly benefit that accrues to a Member under
      Article 3.

1.48  Termination of Employment - a Member's termination of employment with an
      Affiliated Company, whether voluntary or involuntary, for any reason,
      including but not limited to quit or discharge, and other than for
      Parental Leave, Permitted Leave, transfer to another Affiliated Company,
      Retirement, or death. Termination of Employment shall include a layoff
      unless the laid off Member elects by written notice to the Committee to
      defer the date of his Termination of Employment to a date no later than
      the last day of his recall period.

                                                                              11

1.49  Trust - the trust established or maintained under the Trust Agreement.

1.50  Trust Agreement - the agreement which provides for the establishment of
      the Trust for the purposes of this Plan, as that agreement may from time
      to time be amended or supplemented.

1.51  Trust Fund - the total of the assets held in the Trust.

1.52  Trustee - anyone serving as trustee under the Trust Agreement.

1.53  Vested Interest - the nonforfeitable portion of a Member's Retirement
      Benefit determined under Article 5.

1.54  Vesting Years of Service - all Years of Service credited to an Employee or
      a participant in a Merged Plan (and any periods that are required by law
      to be credited to the Employee for his period of military service), except
      that the following Years of Service are disregarded:

      (a)   Years of Service preceding a Break in Service, if the Employee has
            no Vested Interest (other than a Vested Interest under Section 5.2)
            and has a number of consecutive Breaks in Service equal to (or
            greater than) the greater of five and the number of his Years of
            Service (excluding Years of Service previously disregarded under
            this clause (a)) preceding the Break in Service;

      (b)   Years of Service preceding a Break in Service if the Rehired
            Employee has not been credited with at least one Year of Service
            after that Break in Service;

      (c)   Years of Service ending before January 1, 1987 with respect to which
            the Employee was not a Member (or a member of the Prior Plan)
            because he declined to make contributions to the Plan or the Prior
            Plan even though he was eligible to do so at any time during that
            Year of Service;

12

(d) Years of Service credited to the Employee before January 1, 1971 unless the Employee has been credited with at least three Years of Service after December 31, 1970;

(e) Years of Service credited to the Employee before January 1, 1976 if those Years of Service would not have been considered under the Prior Plan (1) in the case of an Employee who was not a Member, continuous service and (2) in the case of an Employee who was a Member, credited service;

(f) Years of Service credited to the Employee during which his Employer

            was not at any time during the Year of Service an Affiliated Company
            or an employer maintaining a Merged Plan in which he was a member.

      For purposes of determining Vesting Years of Service under this Section
      1.50, any Employee who is credited with at least 1,000 Hours of Service in
      both the 12-month period commencing with his first Hour of Service and the
      first Plan Year beginning after his first Hour of Service shall be
      credited with two Vesting Years of Service.

1.55  Year of Service - a Plan Year for which an Employee has been credited with
      at least 1,000 Hours of Service.

13

ARTICLE 2. MEMBERSHIP

2.1 Membership as of January 1, 2000. All Employees who were Members as of December 31, 1999 shall continue as Members.

2.2 Membership After January 1, 2000. After January 1, 2000, an Employee automatically shall become a Member on the first day of the month coincident with or next following the month in which he becomes an Eligible Employee.

2.3 Cessation of Membership. A Member shall cease to be a Member as of the later of the last day of the Plan Year in which he ceases to be an Employee and the date that all distributions due to him or his Beneficiary are made.

2.4 Membership Upon Reemployment. The following rules shall apply with respect to the membership of a Rehired Employee:

(a) Subject to Section 2.4(b), if a Rehired Employee is an Eligible Employee as of the date he is reemployed by an Employer, the Rehired Employee shall again become a Member as of that day. If the Rehired Employee is not an Eligible Employee as of the day he is reemployed, the Rehired Employee shall become a Member in accordance with
Section 2.2.

(b) If the Rehired Employee incurred a Break in Service and is reemployed on a basis in which he is not customarily credited with at least 1,000 Hours of Service for a Plan Year, then the Rehired Employee shall not become a Member as provided in Section 2.4(a) until he is credited with at least 1,000 Hours of Service for the 12-month period commencing with his first Hour of Service after reemployment or any subsequent 12-month period commencing on the anniversary of the day of that first Hour of Service.

14

(c) In determining whether a Rehired Employee is an Eligible Employee as of the date the Rehired Employee is reemployed, if the Rehired Employee has no Vested Interest (other than a Vested Interest under
Section 5.2) and has a number of consecutive Breaks in Service equal to (or greater than) the greater of five and the number of his previous Years of Service (excluding Years of Service previously disregarded under this Section 2.4), the Rehired Employee's previous service as an Employee shall be disregarded for purposes of determining when he again becomes an Eligible Employee. For purposes of determining Years of Service under this Section 2.4(c), any Employee who is credited with at least 1,000 Hours of Service in both the 12-month period commencing with his first Hour of Service and the first Plan Year beginning after his first Hour of Service shall be credited with two Years of Service.

(d) For purposes of Sections 2.4(b) and (c), a Break in Service is a 12-month period commencing on the day of an Employee's first Hour of Service or any anniversary of that day in which an Employee is not credited with more than 501 Hours of Service.

15

ARTICLE 3. RETIREMENT BENEFITS

3.1 General. Members' Retirement Benefits shall be determined under this Article 3 (subject to the limitations set forth in Article 4). Each Member shall be entitled to the nonforfeitable portion, as determined under Article 5, of his Retirement Benefit, and shall have no right to any portion of his Retirement Benefit which is not nonforfeitable (nor shall any such portion increase the Retirement Benefit of any other Member). The form and timing of distribution of the Actuarially Equivalent value of the nonforfeitable portion of a Member's Retirement Benefit shall be made in accordance with Article 6.

3.2 Retirement Benefit. Upon a Member's Retirement or Termination of Employment, his Retirement Benefit shall be Actuarially Equivalent in value to the sum of (a) his Cash Balance Benefit under Section 3.3 and (b)

      his Pre-July, 1987 Benefit determined in accordance with the additional
      provisions of this Section 3.2 contained in Schedule D to this Plan.

3.2A  Minimum Benefit. Notwithstanding the benefit described in Sections 3.2
      above, if a Member's Retirement Benefit has accrued so that the accrual
      does not meet the requirements of Section 411(b)(1) of the Code and the
      Treasury Regulations thereunder, the Member's Retirement Benefit payable
      at Normal Retirement Date shall be no less than (1) plus (2), multiplied
      by (3), where (1), (2) and (3) are determined as follows:

      (1)   A Member's Pre-July, 1987 Benefit, determined in accordance with
            Section 3.2 contained in Schedule D of the Plan, plus

      (2)   The Projected Value of a Member's Cash Balance Account, payable as a
            single life annuity with a five-year period certain at Normal
            Retirement Date based on the Actuarial Equivalent factors in the
            Plan as of the Annuity Starting Date. The "Projected Value" of a
            Member's Cash Balance Account shall be determined by

                                                                              16

            calculating the Member's Cash Balance Account at Normal Retirement
            Date assuming such Member had continued to earn Cash Balance Credits
            through his Normal Retirement Date. These additional Cash Balance
            Credits shall be calculated based on the Member's average
            Compensation for the 10 consecutive Plan Years while a Member (or
            such lesser number of Plan Years while a Member if he was a Member
            for less than 10 Plan Years) prior to termination and shall be
            deemed to earn the rates of interest based on the same rate used to
            calculate the Interest Credits in the year of the Member's
            termination.

      (3)   A fraction, the numerator of which is the Years of Benefit Service
            as of the date of termination, and the denominator of which is the

Years of Benefit Service that a Member would have been credited with had he been employed to his Normal Retirement Date. For purposes of this subparagraph (3), Years of Benefit Service shall mean the sum of the Years of Credited Service accrued under the Plan through June 30, 1987 and the years and months of service while an active Member of the Plan after June 30,1987, where a period of twelve (12) calendar months of service (which need not be consecutive) shall be considered a Year of Benefit Service and a period of less than twelve (12) calendar months shall be credited as a partial Year of Benefit Service equal to a fraction, the numerator of which is the number of such months of service, and the denominator of which is twelve (12). A Member will be credited with a month of service for each calendar month in which he is credited with an Hour of Service under the Plan.

17

If a Member's benefit commences prior to his Normal Retirement Date, this Minimum Benefit shall be reduced using the Actuarial Equivalent factors in the Plan as of the Annuity Starting Date.

3.3 Cash Balance Benefit. A Member's Cash Balance Benefit shall be Actuarially Equivalent in value to the aggregate amount credited to his Cash Balance Account under Section 3.4 or 3.5 (whichever is applicable) and 3.6.

3.4 Credits to Cash Balance Account. Subject to Section 3.2A and 3.5, for each Plan Year beginning: (a) July 1, 1987 and ending before December 31, 1995, a Member's Cash Balance Account shall be credited with an Annual Cash Balance Credit equal to 3 % of his Compensation for that Plan Year; (b) January 1, 1996 and ending before December 31, 1997, a Member's Cash Balance Account shall be credited with an Annual Cash Balance Credit equal to: (i) 3 % of his Compensation for that Plan Year in the case of a Member who is credited with less than 60 continuous Months of Service from his Most Recent Date of Hire, or (ii) 4% of his Compensation for that Plan Year in the case of a Member who is credited with 60 or more continuous Months of Service from his Most Recent Date of Hire; in the case of a Member who is first credited with 60 continuous Months of Service after January 1 of a Plan Year, the percentage of his Compensation utilized in determining his Annual Cash Balance Credit for that Plan Year shall be increased to 4%, effective as of the first day of the month coincident with or next following his completion of 60 Months of Service from his Most Recent Date of Hire; (c) January 1, 1998 and ending before December 31, 1999, a Member's Cash Balance Account shall be credited with an Annual Cash Balance Credit equal to: (i) 3 % of his Compensation for that Plan Year in the case of a Member who is credited with less than 60 continuous Months of Service from his Most Recent Date of Hire, or (ii) 5% of his

18

Compensation for that Plan Year in the case of a member who is credited with 60 or more continuous Months of Service from his Most Recent Date of Hire; in the case of a Member who is first credited with 60 continuous Months of Service after January 1 of a Plan Year, the percentage of his Compensation utilized in determining his Annual Cash Balance Credit for that Plan Year shall be increased to 5%, effective as of the first day of the month coincident with or next following his completion of 60 Months of Service from his Most Recent Date of Hire; and (d) January 1, 2000 and thereafter, a Member's Cash Balance Account shall be credited with an Annual Cash Balance Credit equal to: (a) 3 % of his Compensation for that Plan Year in the case of a Member who is credited with less than 60 continuous Months of Service from his Most Recent Date of Hire, (b) 5% of his Compensation for that Plan Year in the case of a Member who is credited with 60 to 119 continuous Months of Service from his Most Recent Date of Hire, or (c) 6.5% of his Compensation for that Plan Year in the case of a Member who is credited with 120 or more continuous Months of Service from his Most Recent Date of Hire. In the case of a Member who is first credited with 60 or 120 continuous Months of Service after January 1 of a Plan Year, the percentage of his Compensation utilized in determining his Annual Cash Balance Credit for that Plan Year shall be increased to 5% or 6.5%, respectively, effective as of the first day of the month coincident with or next following his completion of 60 or 120 continuous Months of Service from his Most Recent Date of Hire. For purposes of this
Section 3.4, a "Month of Service" shall mean a month in which a Member is credited with one Hour of Service.

3.5 Credits to Cash Balance Account for Certain Members. In the case of a Member who as of June 30, 1987 had both attained age 50 and been credited with at least 10 Years of Credited Service (as defined in Schedule B to this plan), his Annual Cash Balance Credit

19

for a Plan Year beginning July 1, 1987 and thereafter, (instead of the Annual Cash Balance Credit under Section 3.4) shall be equal to the sum of
(a) the percentage of Compensation that would have been credited to his Cash Balance Account under Section 3.4 and (b) an additional percentage of his Compensation for that Plan Year based on his age on July 1, 1987, as follows:

Age (last birthday)
  on July 1, 1987                 Additional Percentage
--------------------              ---------------------
   50 through 54                           1 %
   55 through 59                           2 %
    60 and over                            3 %

3.6 Interest on the Cash Balance Account.

(a) As of the last day of each Plan Year beginning with the Plan Year immediately following the crediting under Section 3.4 or 3.5 of an Annual Cash Balance Credit to a Member's Cash Balance Account and ending with the Plan Year immediately preceding the Member's Annuity Starting Date, a Member's Cash Balance Account shall be credited with an amount equivalent to interest (compounded annually) on that Annual Cash Balance Credit. The rate of interest to be credited with respect to an Annual Cash Balance Credit for each Plan Year shall be at an annual rate equal to the set of PBGC deferred interest rates in effect for the December immediately preceding the Plan Year of the Annual Cash Balance Credit. Such rates are as follows with respect to Annual Cash Balance Credits for the 2000 and prior Plan Years:

20

 Plan Year of Annual
Cash Balance Interest                 Plan Year of Interest
       Credit                                Credit                    Rate of Interest Credit
-----------------------               ----------------------           -----------------------
        1987                            1988 through 1994                      6.75%
                                        1995 through 2002                      5.50%
                                         2003 and later                        4.00%
        1988                            1989 through 1995                      7.50%
                                        1996 through 2003                      6.25%
                                         2004 and later                        4.00%
        1989                            1990 through 1996                      7.00%
                                        1997 through 2004                      5.75%
                                         2005 and later                        4.00%
        1990                            1991 through 1997                      6.50%
                                        1998 through 2005                      5.25%
                                         2006 and later                        4.00%
        1991                            1992 through 1998                      6.75%
                                        1999 through 2006                      5.50%
                                         2007 and later                        4.00%
        1992                            1993 through 1999                      6.00%
                                        2000 through 2007                      4.75%
                                         2008 and later                        4.00%
        1993                            1994 through 2000                      5.25%
                                         2001 and later                        4.00%
        1994                             1995 and later                        4.00%
        1995                            1996 through 2002                      5.50%
                                        2003 through 2010                      4.25%
                                         2011 and later                        4.00%
        1996                             1997 and later                        4.00%
        1997                             1998 and later                        4.00%
        1998                             1999 and later                        4.00%
        1999                             2000 and later                        4.00%
        2000                            2001 through 2007                      4.50%
                                         2008 and later                        4.00%
        2001                            2002 through 2008                      4.50%
                                         2009 and later                        4.00%
        2002                             2003 and later                        4.00%

(b) In addition, for the period beginning with the first day of the Plan Year in which a Member's Annuity Starting Date occurs and ending on the Member's Annuity Starting Date the Member's Cash Balance Account shall be credited with an amount equivalent to interest at the rate specified in Section 3.6(a). A separate

21

amount shall be credited to a Member's Cash Balance Account under this Section 3.6 each Plan Year (or portion thereof) with respect to each of his Annual Cash Balance Credits described above in this
Section 3.6. In accordance with this Section 3.6, the Cash Balance Account of a Member who is credited with an Annual Cash Balance Credit for 1987 shall be credited with interest with respect to that Annual Cash Balance Credit as of each December 31 beginning with December 31, 1988 and ending with the December 31 immediately preceding the Member's Annuity Starting Date as the rates (compounded annually) of 6.75% for 1988 through 1994, 5.50% for 1995 to 2002 and 4 % for subsequent years.

3.7 Minimum Retirement Benefit.

(a) In the case of a Member whose Compensation for any Plan Year before 1989 exceeded $200,000, his Retirement Benefit shall be the greater of (i) or (ii) as follows, or (iii) the amount determined in accordance with Section 3.7(b):

(i) the sum of (1) his Retirement Benefit accrued as of December 31, 1988 under this Plan but determined without regard to the annual limit on compensation under Section 401(a)(17) of the Internal Revenue Code ($200,000) that would otherwise apply and (2) his Retirement Benefit accrued under this Plan attributable to service rendered on or after January 1, 1989; and

(ii) his Retirement Benefit determined without regard to this
Section 3.7.

(b) In the case of a Member whose Compensation for any Plan Year before 1994 exceeded $150,000, his Retirement Benefit shall be the greater of (i) or (ii) as follows:

22

(i) the sum of (1) his Retirement Benefit accrued as of December 31, 1993 under this Plan as then in effect and (2) his Retirement Benefit accrued under this Plan attributable to service rendered on or after January 1, 1994;

or

(ii) his Retirement Benefit determined without regard to this
Section 3.7.

3.8 Retirement Benefit of Rehired Employee.

In the case of a Rehired Employee, his Retirement Benefit (or Pre-Retirement Death Benefit if he dies during his period of reemployment) shall be (1) an amount determined under the applicable Section of this Article 3 (or Article 7, if he dies while reemployed), and subject to
Section 3.8 of Schedule D to this Plan (concerning Pre-July 1987 Retirement Benefits) and Section 3.9, computed as of the date of his subsequent Retirement, Termination of Employment or death, less (2) the Actuarial Equivalent of the payments he received prior to his reemployment with an Affiliated Company. In no event shall a Member's Retirement Benefit under this Section 3.8 be less than the Member's Retirement Benefit before he resumed employment with an Affiliated Company.

3.9 Deemed Cash-Out of Cash Balance Benefit.

(a) Subject to Section 3.9(b), in the case of a Member who does not have a nonforfeitable interest in his Cash Balance Benefit upon his Termination of Employment, he shall be deemed to have received distribution of his entire Cash Balance Benefit upon his Termination of Employment.

(b) This Section 3.9(b) applies to a Member described in Section 3.9(a) who resumes employment covered under the Plan. If such a Member resumes employment covered under the Plan prior to the day the Member incurs five consecutive

23

Breaks in Service then he will be deemed to have repaid his distribution and the amount in his Cash Balance Benefit as of the date of his Termination of Employment will be restored with interest credited under Section 3.6 for the period beginning on his Termination of Employment and ending on the day of his reemployment.

3.10 Suspension of Benefit Payments.

(a) If a Member who has retired on an Early Retirement Date resumes employment with an Affiliated Company prior to Normal Retirement Age after payment of his Retirement Benefit has commenced, payment of his Retirement Benefit shall be suspended as of the day he again becomes a Member in accordance with Section 2.4(a) or (b).

(b) If a Member remains in the employment of an Affiliated Company after his Normal retirement Age, or if a Member who has retired on or after his Normal Retirement Age becomes a Rehired Employee after his or her Annuity Starting Date, payment of his Retirement Benefit shall be suspended for each calendar month in which he is credited with forty (40) or more Hours of Service ("ERISA Section 203(a)(3)(B) service").

(c) A Member shall be entitled to resume receiving distribution of his Retirement Benefit in accordance with the following rules: (a) payments determined in accordance with Section 3.8 shall resume no later than the third calendar month after the calendar month in which the Member ceases to be so employed provided the Member has notified the Employer of the cessation, (b) payment shall be retroactive to the day the Member ceased such employment, (c) the Member may elect the form of payment in accordance with Section 6.1. The Plan Administrator shall notify any Member who is

24

affected by this Section 3.10 in accordance with the notification requirements of Department of Labor Regulations Section 2530.203-3(b)(4).

25

ARTICLE 4. LIMITATIONS ON BENEFITS

4.1 Definitions. The following definitions apply for purposes of this Article 4:

(a) Annual Benefit - a benefit which is payable annually in the form of a straight life annuity with no ancillary benefits determined without regard to the Accumulated Pre-July, 1987 Employee Contributions as defined in Schedule B.

(b) Projected Annual Benefit - the projected Retirement Benefit payable in the form of an Annual Benefit to which a Member would be entitled under all Defined Benefit Plans assuming (a) that all relevant factors used to determine benefits under each Defined Benefit Plan remained constant from the last day of the most recent Plan Year in which the Participant was credited with an Annual Cash Balance Credit until his Normal Retirement Date and (b) that distribution of benefits under each Defined Benefit Plan commences on his attainment of his social security retirement age (or current age if later).

4.2 Maximum Retirement Benefit. Notwithstanding any other provision of this Plan:

(a) Subject to Section 4.2(b), the Retirement Benefit of a Member shall be reduced to the extent that it (plus, if applicable, the aggregate retirement benefit, to which the Member is entitled under all other Defined Benefit Plans in which he was a member) exceeds the lesser of (1) $90,000 (or such higher amount as may be permitted under
Section 415(d) of the Internal Revenue Code to reflect increases in the cost of living) and (2) 100% of the Member's average Compensation during the three consecutive Plan Years in which he received the greatest aggregate amount of Compensation. No reduction shall be required under this Section 4.2(a) in the case of a Member who never participated in a Defined Contribution

26

Plan if the Member's Retirement Benefit (plus, if applicable, his aggregate annual benefit under all other Defined Benefit Plans) does not exceed $10,000.

(b) The following adjustments shall be made in applying the limitations of Section 4.2(a) and 4.3:

(1) If a Member's Retirement Benefit (or retirement benefit to which the Member is entitled under any other Defined Benefit Plan) is payable in a form other than an Annual Benefit, the Retirement Benefit shall be adjusted so that it is the Actuarial Equivalent of an Annual Benefit, except that the following shall not be taken into account: (A) any ancillary benefit that is not related to retirement income benefits and (B) the survivor annuity provided under the portion of any annuity that constitutes a Qualified Joint and Survivor Annuity (as defined in Section 417(b) of the Internal Revenue Code).

(2) the dollar limitation set forth in Section 4.2(a)(1) shall be adjusted as follows: (A) if distribution of a Member's Retirement Benefit begins before his social security retirement age as defined in Section 415(b)(8) of the Internal Revenue Code but on or after the Member attains age 62, the limitation shall be reduced by 5/9 of 1% for each of the first 36 months and by 5/12 of 1% for each of the next 24 months by which such commencement date precedes the Member's social security retirement age; and (B) if the Member's Retirement Benefit begins before the Member attains age 62, the limitation shall be adjusted so that so that it equals an Annual Benefit beginning at the time distribution of the Member's Retirement Benefit begins, which is the Actuarial Equivalent of

27

an Annual Benefit equal to the dollar limitation set forth in
Section 4.2(a)(1) beginning at age 62. If distribution of a Member's Retirement Benefit begins after his social security retirement age, the limitation shall be increased so that it equals an Annual Benefit beginning at the time distribution of the Member's Retirement Benefit begins, which is the Actuarial Equivalent of an Annual Benefit equal to the dollar limitation set forth in Section 4.2(a)(1) beginning at the Member's social security retirement age.

(3) in the case of a Member with less than ten years of membership in the Plan or less than ten Years of Service: (A) the dollar limitation set forth in Section 4.2(a)(1) shall be multiplied by a fraction the numerator of which is the aggregate number of the Member's years of membership in the Plan at the time the determination is made and the denominator of which is ten, and (B) the percentage limitation set forth in Section 4.2(a)(2) and the $10,000 minimum benefit referred to in the last sentence of Section 4.2(a)(2) shall be multiplied by a fraction the numerator of which is the aggregate number of the Member's Years of Service at the time the determination is made and the denominator of which is ten.

(4) For purposes of adjusting the Member's Retirement Benefit under Section 4.2(b)(1) or the dollar limitation under this
Section 4.2(b)(2), the interest rate assumption shall be that set forth in Schedule C to this Plan, subject to the limitations on interest rates of Section 415(b)(2)(E) of the Internal Revenue Code.

28

(c) The Retirement Benefit of an Employee who was a Member on or before December 31, 1986 shall not be reduced under any other provision of this Section 4.2 to the extent that it does not exceed his Retirement Benefit accrued as of December 31, 1986, and determined in accordance with the requirements of Section 415 of the Internal Revenue Code in effect on that date and without regard to amendment to the Plan after May 5, 1986.

4.3 Restrictions on 25 Highest Paid Employees

(a) The Retirement Benefit of a Member who is among the 25 most highly paid highly compensated employees (as defined in Section 414(q) of the Internal Revenue Code) and former Employees of the Affiliated Companies shall be subject to the restrictions set forth in Section 4.3(b) unless at least one of the following conditions is met: (1) the aggregate value of the Retirement Benefit payable to the Member does not exceed 1 % of the Plan's current liabilities as that term is defined in Section 412(1)(7) of the Internal Revenue Code, or (2) the Plan assets remaining after the distribution to the Member equals or exceeds 110% of the Plan's current liabilities.

(b) Subject to Section 4.3(c), the annual payments to a Member described in Section 4.3(a) shall not exceed the annual payment to which such Member would be entitled if his Retirement Benefit is distributed in the form of a single life annuity.

(c) Notwithstanding Section 4.3(b), a Member to whom the restrictions of
Section 4.3(b) apply may receive his Retirement Benefit under a payment schedule which otherwise complies with rules promulgated by the Secretary of Treasury.

29

ARTICLE 5. VESTING

5.1 Nonforfeitability. Subject to Section 5.2, a Member's right to receive his Retirement Benefit shall become nonforfeitable upon the earlier of (a) his being credited with five Vesting Years of Service, (b) his 65th birthday if he is an Employee on that day, or (c), effective on or after January 1, 2002, his death.

5.2 Employee Contributions. A Member shall have a nonforfeitable right to the amount of his Accumulated Pre-July 1, 1987 Employee Contributions (as defined in Schedule B to the Plan).

30

ARTICLE 6. DISTRIBUTION

6.1 Election of Form of Distribution. A Member (or Beneficiary) shall be entitled to elect, subject to Section 6.6, to receive distribution of his Vested Interest (if the Actuarial Equivalent present value of that Vested Interest as of the Member's Annuity Starting Date is in excess of $3,500 ($5,000, effective January 1, 2002) by one of the following methods, each of which is Actuarially Equivalent in value to the other:

(a) Life Annuity - an annuity for the life of the Member or Beneficiary.

(b) Life Annuity with a five year period certain - an annuity for the life of the Member, but if the Member dies within 60 months of his Annuity Starting Date, the annuity is payable to the Member's Beneficiary for the remainder of that 60-month period.

(c) Qualified Joint and Survivor Annuity.

(d) Joint and Survivor Annuity - an annuity for the life of the Member with a survivor annuity for the life of his spouse, where the survivor annuity is 100% of the amount payable during the joint lives of the Member and his spouse.

(e) Cash Refund at Death - an annuity for the life of the Member with reduced payments during his life and a single cash payment to his Beneficiary at his death in an amount equal to the excess, if any, of the Actuarial Equivalent value of the Retirement Benefit over the amount paid to the Member during his lifetime.

(f) Lump Sum Distribution - a single cash distribution of the full amount payable.

A Member's election under this Section 6.1 (which includes the designation of a contingent Beneficiary) must be made during the 90-day period preceding the Member's Annuity Starting Date. This election may not be changed, subject to Section 6.6, after the Member's Annuity Starting Date. In the absence of an effective election under this

31

Section 6.1, subject to Section 6.6, a Member shall be deemed to have elected a distribution in the form of a straight life annuity with no ancillary benefits.

6.2 Vested Interest Not in Excess of $3500 ($5,000, effective January 1, 2002). If as of the Member's Annuity Starting Date the Actuarial Equivalent present value of a Member's Vested Interest does not exceed $3,500 ($5,000, effective January 1, 2002), the method of distribution as to that Member shall be as a single cash payment of the full amount payable.

6.3 Timing of Distribution. - Annuity Starting Date. Distribution of a Member's Retirement Benefit shall commence as of his Annuity Starting Date. A Member's Annuity Starting Date shall be the earliest of:

(a) the first day of the month coincident or next following the day of his Retirement,

(b) as soon as practicable after his Termination of Employment if as of that date the Actuarial Equivalent lump sum value of his benefit does not exceed $3,500 ($5,000, effective January 1, 2002) as of the date distribution commences,

(c) the first day of the month coincident or next following his 65th birthday, if he has a Termination of Employment prior to that time, unless he elects under Section 6.4 to commence to receive distribution prior to his 65th birthday, and

(d) effective for all Members, the first day of April immediately following the later of: (i) the calendar year in which the Member attains age seventy and one-half (70-1/2), or (ii) in the case of a Member who is not a Five Percent Owner, the calendar year in which he retires. Notwithstanding the foregoing, a Member who attains age seventy and one-half (70-1/2) in 1997, 1998 or 1999 while employed by an Employer shall receive distributions in accordance with this
Section 6.3(d) as of the first day of April of the calendar year following the calendar year in

32

which he attains age seventy and one-half (70-1/2). Such a Member may elect, subject to the rules of Section 6.1 and 6.6, to receive distribution of his Vested Interest in annual payments determined as
(a) the single cash distribution that would be payable upon Retirement, divided by (b) the applicable life expectancy under
Section 401(a)(9) of the Code. The life expectancy of the Member (or the joint and life and last survivor expectancy of the Member and spouse or Beneficiary) shall not be recalculated for purposes of determining such distribution. Life expectancy and joint and last survivor expectancy shall be computed using the return multiples in Tables V and VI of Regulations 1.72-9. Such election is automatically revoked upon Retirement.

(e) In the case of a Member who receives Retirement Benefits as of the date specified in Section 6.3(d)(ii) above, his Pre-July 1987 Benefit shall be actuarially increased in accordance with the factors set forth in Section 1.1 hereof to take into account the period after April 1 following the year in which he attained age seventy and one-half (70-1/2) for which he was not receiving any retirement income under the Plan; provided, however, that any such actuarial increase shall reduce his additional benefit accruals under Article 3 hereof to the extent permitted by Sections 401(a)(9)(C) and 411(b)(1)(H) of the Internal Revenue Code. The actuarial increase provided by this subparagraph shall not be in addition to but shall be in lieu of any actuarial increase provided by the Plan for benefits payable after Normal Retirement Date.

6.4 Election to Receive Distribution Before Normal Retirement Date. A Member who (1) has a Termination of Employment before he attains age 65 and (2) has a Vested Interest, the Actuarial Equivalent present value of which exceeds $3,500 ($5,000 effective January

33

1, 2002) as of the Participant's Annuity Starting Date may elect to have distribution of his Vested Interest commence before his Normal Retirement Date. Subject to Schedule E to this Plan, in that event, distribution shall commence as of the first day of any month following the election, but distribution of benefits may not commence prior to a Member's Early Retirement Date.

6.5 Reductions for Distribution After Normal Retirement Date. In the case of a Member who (1) remains an Employee after his Normal Retirement Date and (2) is receiving, while an Employee, distribution of his Retirement Benefit, the portion of his Retirement benefit determined as of the last day of any Plan Year attributable to Plan Years beginning after his Normal Retirement Date shall be reduced (but not below zero) by the Actuarial Equivalent value of the total Plan distribution the Member has received as of the last day of the Plan Year determined in accordance with regulations under
Section 411(b)(1)(H) of the Internal Revenue Code.

6.6 Qualified Joint and Survivor Annuity for Married Members. A Member who is married on his Annuity Starting Date shall receive his Retirement Benefit in the form of a Qualified Joint and Survivor Annuity, unless the Member has previously waived his right to receive distribution of benefits in this form. The waiver must be executed and consented to by the Member's spouse in accordance with Section 6.8 during the 90-day period ending on the Members Annuity Starting Date. Both the Member's waiver and the spouse's consent must state the particular optional form of benefit to be distributed and any nonspouse Beneficiary or class of non-spouse Beneficiaries. Alternatively, the spouse's consent may permit the Member to elect any optional form of benefit available under the Plan and to designate any contingent Beneficiary. Such a general consent must acknowledge that the spouse has voluntarily relinquished rights to limit consent to a

34

specific form of benefit or Beneficiaries or both. A Member's waiver of a Qualified Joint and Survivor Annuity under this Section 6.6 may be revoked at any time before the Member's Annuity Starting Date and, once revoked, may be made again before that date. However, if a Member's Annuity Starting Date is the date set forth in Section 6.3(d), then he may revoke and remake a waiver election with respect to the undistributed portion of his Retirement Benefit within the 90-day period ending before his Retirement. A spouse's consent to the waiver once given may not be revoked.

6.7 Notification of Right to Waive Qualified Joint and Survivor Annuity. Within the period beginning no earlier than 90 days before the Member's Annuity Starting Date and no later than 30 days before his Annuity Starting Date, the Committee shall provide each Member (whether or not married) with a notice of the Member's right to elect to waive his right to receive distribution of his Vested Interest in the form of a Qualified Joint and Survivor Annuity. The notice shall contain an explanation, in nontechnical language, of (a) the terms and conditions of the election and its effect upon the Member's Retirement Benefit (in terms of dollars per annuity payment), (b) the requirement that the Member's spouse must consent to the election in accordance with Section 6.8(c), the Member's right to revoke the election in the manner prescribed in regulations promulgated by the Secretary of the Treasury and (d) a general description of the eligibility conditions and other features of the optional forms of benefit under the Plan and sufficient information to explain the relative values of these optional forms of benefits. For purposes of this Section 6.7, a Qualified Joint and Survivor Annuity for an unmarried Member shall be a single life annuity with no ancillary benefits.

6.8 Spousal Consent. A Member's waiver of a Qualified Joint and Survivor Annuity described in Section 6.6 shall be valid only if the Member's spouse executes a written

35

consent to that election acknowledging the effect of the election and the consent is witnessed by a notary public or Plan official. The spouse's consent is not required if (a) the Member establishes that the spouse's consent cannot be obtained because the Member does not have a spouse, the Member's spouse cannot be located or for such other circumstances as may be provided in regulations promulgated by the Secretary of the Treasury, (b) the Member is legally separated from the spouse or (c) the Member has been abandoned by his spouse (within the meaning of local law) and the Member has a court order to that effect. A Member's waiver of a Qualified Joint and Survivor Annuity or Qualified Preretirement Survivor Annuity shall be effective only with respect to the spouse who consents to it as provided in this Section 6.8.

6.9 Minimum Distribution Requirements.

(a) Notwithstanding any provision of this Plan to the contrary, all distributions under the Plan shall be made in accordance with Section 401(a)(9) of the Internal Revenue Code and the regulations promulgated by the Secretary of the Treasury thereunder.

(b) In the case of a Member who (1) remains an Employee after attainment of age 70-1/2 and (2) is receiving, while an Employee, distribution of benefits in the form of an annuity, the payments under the annuity shall be increased as of the first day of each calendar year to reflect any additional Retirement Benefit accrued with respect to the Plan Year ending immediately before the first day of that calendar year and shall be reduced in accordance with Section 6.5 to take into account previous distributions.

(c) If a Member dies after distribution of his benefit has commenced, the remaining portion, if any, of the Member's benefit shall be distributed to the Member's

36

Beneficiary at least as rapidly as it would have been distributed under the method of distribution in effect on the day of the Member's death.

(d) If a Member's Vested Interest is distributed in the form of an annuity other than an annuity for the life of the Member or an annuity for the joint lives of the Member and the Member's spouse or in installments and the Member's Beneficiary is other than the Member's spouse, the distribution must satisfy, the minimum distribution incidental benefit requirements under applicable regulations.

6.10 Annuities. Any distribution of benefits in the form of an annuity may be made directly from the Trust or by the purchase of a nontransferable immediate or deferred payment annuity contract from an insurance company selected by the Committee. If an annuity is purchased and is other than an annuity for the life of the Member or an annuity for the life of his spouse, the actuarial value of the portion of an annuity payable to the Member during his life must be more than 50% of the actuarial value of the aggregate amount of benefits payable under the total annuity.

6.11 Release. Upon any distribution or payment, the Trustee, the Committee, any Affiliated Company or the Plan Administrator may require execution of a receipt and release, in form and substance satisfactory to it, of all claims under this Plan.

6.12 Incapacity. If, in the judgment of the Committee, any person is legally, physically or mentally incapable of personally receiving and executing a receipt for any distribution or payment due him under this Plan, the distribution or payment may be made to the person's guardian or other legal representative (or if none is known to the Company or the Committee, to any other person or institution who has custody of the person) and that distribution or payment shall constitute a full discharge of any obligation with respect to the amount paid or distributed.

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6.13 Lost Member. In the event a Member or Beneficiary cannot be located after reasonable efforts to locate such Member or Beneficiary have been made by the Plan Administrator, the Member's or Beneficiary's Accrued Benefit shall be forfeited. Notwithstanding the foregoing, if such Member or Beneficiary is subsequently located, his Accrued Benefit shall be reinstated and distributed to him in accordance with the terms of Article 6.

6.14 Direct Rollovers. Notwithstanding any provision of the Plan to the contrary, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

For purposes of this Section 6.14, the following terms shall have the meaning indicated:

(a) Eligible rollover distribution: An eligible rollover distribution is any distribution from the Plan of all or any portion of the balance to the credit of the distributee under the Plan, except that an eligible rollover distribution does not include:

(i) Any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more;

(ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code;

(iii) any hardship distribution under Section 401(k)(2)(B)(i)(IV) of the Code;

(iv) the portion of any distribution that is not includable in gross income; and

(v) any distribution of $200 or less.

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(b) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Section 408(a) of the Internal Revenue Code, an individual retirement annuity described in Section 408(b) of the Internal Revenue Code, an annuity plan described in Section 403(a) of the Internal Revenue Code, or a qualified trust described in
Section 401(a) of the Internal Revenue Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution attributable to a deceased Member paid to the surviving spouse of the Member, an eligible retirement plan is only an individual retirement account or individual retirement annuity. Notwithstanding anything in this Section 6.14 to the contrary, only one eligible retirement plan may be designated with respect to any single eligible rollover distribution.

(c) Distributee: A distributee includes a Member. In addition, the surviving spouse of a deceased Member and the former spouse of a Member who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code, are distributees with regard to the interest of the surviving spouse or former spouse.

(d) Direct rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. Notwithstanding anything in this Section 6.14 to the contrary, only one direct rollover may be made with respect to any single eligible rollover distribution.

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ARTICLE 7. PRERETIREMENT DEATH BENEFITS

7.1 Preretirement Death Benefit of Married Member. Subject to Article 4, upon the death of a married Member before his Annuity Starting Date, his spouse shall be entitled to receive a Preretirement Death Benefit Actuarially Equivalent in value to the sum of (a) his Cash Balance Benefit if that benefit is nonforfeitable under Article 5 and (b) in the case of a Pre-July, 1987 Member, the death benefit, if any, he is entitled to receive in accordance with Section 7.1 (b) contained in Schedule F to this Plan. In the case of a Member who had a Vested Interest and is survived by a spouse to whom he was married for at least one year at the time of his death, his spouse's Preretirement Death Benefit described above shall be at least as valuable as the Actuarial Equivalent of the spouse's Qualified Preretirement Survivor Annuity.

7.2 Preretirement Death Benefit of Unmarried Member. Subject to Article 4, upon the death of an unmarried Member before his Annuity Starting Date, his Beneficiary shall be entitled to receive a Preretirement Death Benefit actuarially equivalent in value to the sum of (a) his Cash Balance Benefit if that benefit is nonforfeitable under Article 5 and (b) in the case of a Pre-July, 1987 Member, the death benefit if any, he is entitled to receive in accordance with Section 7.1 (b) contained in Schedule F to this Plan.

7.3 Form of Preretirement Death Benefit. Subject to Section 7.4, the Preretirement Death Benefit of a Member shall be payable to his spouse or Beneficiary in the form of an annuity for his life, unless the Member's spouse or Beneficiary elects (during the period beginning on the day the Member dies and ending on the day distribution of benefits commences) to receive the Preretirement Death Benefit in another form described in
Section 6.1.

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7.4 Preretirement Death Benefit not in excess of $3500 ($5,000, effective January 1, 2002). If the Actuarial Equivalent lump sum value of a Member's Preretirement Death Benefit as of the Annuity Starting Date does not exceed $3,500 ($5,000, effective January 1, 2002), the method of distribution as to the Member's spouse or Beneficiary shall be as a single cash payment of the full amount payable.

7.5 Timing of Distribution - Annuity Starting Date. Distribution of a Member's Preretirement Death Benefit shall commence as of the Annuity Starting Date of the Member's Beneficiary. The Annuity Starting Date of the Member's Beneficiary shall be the earliest of:

(a) in the case of a Member who is not married, as soon as practicable after the Member's death,

(b) in the case of a Member who is married and the Actuarial Equivalent present value of his Preretirement Death Benefit does not exceed $3,500 ($5,000, effective January 1, 2002), as soon as practicable after the Member's death, or

(c) in the case of a Member who is married and the Actuarial Equivalent present value of his Preretirement Death Benefit exceeds $3,500 ($5,000, effective January 1, 2002), the Member's Normal Retirement Date had the Member lived unless the Member's spouse elects under
Section 7.6 to receive distribution prior to that time. Notwithstanding the previous sentence and subject to Section 7.7, distribution of a Beneficiary's Preretirement Death Benefit shall not commence before he files a claim for benefits with the Plan Administrator.

7.6 Election to Receive Preretirement Death Benefit Before Normal Retirement Date. In the case of a married Member who dies before his Normal Retirement Date with a Preretirement Death Benefit the Actuarial Equivalent present value of which exceeds

41

$3,500 ($5,000, effective January 1, 2002), his spouse may elect to receive distribution of the Preretirement Death Benefit before the Member's Normal Retirement Date (had the Member lived), but distribution may not commence prior to the Member's Early Retirement Date (had the Member lived).

7.7 Required Distribution. If a Member's Preretirement Death Benefit is paid in the form of a single cash payment, the Member's entire Preretirement Death Benefit shall be distributed to his Beneficiary within five years of the Member's death or, if later, in the case of a Beneficiary who is the Member's spouse, the December 31 of the year the Member would have attained age 70-1/2. If a Member's Preretirement Death Benefit is distributed in the form of an annuity, distribution shall commence by the December 31 of the year after the year of the Member's death, or, if later, in the case of a Beneficiary who is the Member's spouse, the December 31 of the year the Member would have attained age 70-1/2. Such Preretirement Death Benefit must be distributed over a period not extending beyond the life expectancy of the Beneficiary.

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ARTICLE 8. FUNDING

8.1 Funding Policy. The Plan's funding policy is to make contributions (a) sufficient to maintain for the Plan a non-negative funding standard account balance and (b) not in excess of the amount currently deductible in computing the Company's federal income tax.

8.2 Affiliated Company Contributions. Each Affiliated Company shall contribute to the Trust Fund with respect to Employees for which it has adopted this Plan under Section 16.1 periodic payments under the funding policy established under Section 8.1.

8.3 Timing of Employer Contributions. Contributions by any Employer for each Plan Year shall be paid to the Trustee no later than 2-1/2 months after the close of the Plan Year, or within an additional period not in excess of six months, as may be permitted under Sections 412(c)(10) and 412(d) of the Internal Revenue Code.

8.4 Irrevocability of Employer Contributions. Subject to Sections 8.5 and 15.3, any contribution made by an Employer shall be irrevocable and shall be held and disposed of by the Trustee solely in accordance with the provisions of the Plan and the Trust Agreement.

8.5 Exceptions to Irrevocability. Each contribution made by an Employer shall be deemed to be conditioned on the deductibility of the contribution under
Section 404 of the Internal Revenue Code. If the deduction of all or part of any contribution is disallowed, it shall, to the extent disallowed, be repaid within one year after the date of disallowance. A contribution also will be repaid to an Employer, within one year after the date made, to the extent it was made in error because of a mistake in fact.

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ARTICLE 9. ADMINISTRATION OF PLAN

9.1 The Company. The Company shall be the Plan Administrator of the Plan and its sole named fiduciary under Section 402 of ERISA.

9.2 The Board. The Board shall appoint the members of the Committee and the Trustee and may appoint a chairman of the Committee, and shall be responsible for the establishment of the Trust and the amendment and termination of this Plan and the Trust Agreement.

9.3 The Committee. This Plan shall be administered by the Committee, which shall have the responsibilities, duties and powers delegated to it in this Plan and any responsibilities and duties under this Plan which are not specifically delegated to anyone else, including but not limited to the following powers:

(a) to require any person to furnish such information as it may request as a condition to receiving any benefit under the Plan;

(b) to make and enforce such rules and regulations and prescribe the use of such forms as it shall deem necessary for the efficient administration of the Plan;

(c) to decide on questions concerning the Plan and the eligibility of any Employee to participate in the Plan, in accordance with the provisions of the Plan;

(d) to compute or have computed the amount of benefits which shall be payable to any person in accordance with the provisions of the Plan.

9.4 The Trustee. The Trustee shall have exclusive authority and discretion to manage and control the Trust Fund except to the extent that authority to manage the assets held by the Trust is delegated by the Committee to an Investment Manager. The Trustee may designate agents or others to carry out certain of the administrative responsibilities in connection with management of the Trust.

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9.5 Decisions and Actions of the Committee. The Committee from time to time may establish rules for the administration of this Plan. The Committee shall have sole discretion to make decisions and take any action with respect to any questions arising in connection with the Plan, including, but not limited to, the construction and interpretation of the Plan and the Trust Agreement and the determination of eligibility for participation and benefits under the Plan. Any such decision or action shall be final and binding upon all Members, Beneficiaries and Alternate Payees.

9.6 Membership of the Committee. The Committee shall consist of at least three members. Each person appointed a member of the Committee shall file his acceptance of the appointment with the secretary of the Company. Any member of the Committee may resign by delivering his written resignation to the secretary of the Company; the resignation shall become effective when received by the secretary (or at any other time agreed upon by the member and the Board). The Board may remove any member of the Committee at any time, with or without cause, upon notice to the member being removed. Notice of the appointment, resignation, or removal of a member of the Committee shall be given by the Board to the Trustee and to the members of the Committee.

9.7 Officers and Meetings of the Committee. The Committee shall elect a chairman (if a chairman has not been designated by the Board under Section 9.2) and may elect a secretary and assistant secretary (either of whom need not be a member of the Committee) to keep its records and assist the Committee in performing any of its functions and shall hold meetings upon such notice and at such times and places as it may from time to time determine. Notice of a meeting need not be given to any member of the Committee who submits a signed waiver of notice before or after the meeting or who attends the meeting.

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9.8 Procedures of the Committee. A majority of the total number of members of the Committee shall constitute a quorum for the transaction of business. The vote of a majority of the members of the Committee present at the time of a vote, if a quorum is present at the time, shall be required for action by the Committee. Resolutions may be adopted or other action taken without a meeting upon the written consent of all members of the Committee. Any person dealing with the Committee shall be entitled to rely upon a certificate of any member of the Committee, or its secretary, as to any act or determination of the Committee.

9.9 Subcommittees - Advisors and Agents of the Committee. The Committee may (a) appoint subcommittees with such powers as the Committee shall determine advisable, (b) authorize one or more of its members or an agent to execute any instrument, and (c) utilize the services of Employees and engage accountants, agents, clerks, legal counsel, medical advisers, and professional consultants (any of whom may also be serving an Employer or an Affiliated Company) to assist in the administration of this Plan or to render advice with regard to any responsibility under the Plan.

9.10 Actuary. The Company shall appoint an "enrolled actuary" as defined in
Section 7701(a)(35) of the Internal Revenue Code to perform actuarial services with respect to the Plan.

9.11 Liability of the Committee. The members of the Committee and the Employers shall have no liability with respect to any action or omission made by them in good faith nor for any action made in reliance upon (a) the action of the Trustee, (b) the advice or opinion of any actuary, accountant, legal counsel, medical advisor or other professional consultant or (c) any resolutions of the Board certified by the secretary or assistant secretary of the Company. The Employer shall indemnify and hold harmless each

46

member of the Committee against any and all claims, losses, damages, expenses, including legal fees and other expenses of litigation, and liability arising from any action or failure to act, except when the same is judicially determined to be due to the gross negligence or willful misconduct of such Member.

9.12 Expenses of the Plan; Fidelity Bond. The expenses of evaluating the investment performance of the Plan and of other consulting services to enable the Plan to achieve its investment objectives, to the extent permitted by ERISA, shall be paid from the Trust. All other reasonable administrative expenses relating to the Plan prior to termination of the Plan shall be paid from the Trust. If such expenses are not paid by the Trust, they shall be paid by the Employers. Brokerage commissions, transfer taxes and other charges or expenses in connection with the sale of securities shall be included in the cost of the securities. Any Employee who serves as a Trustee or member of the Committee shall receive no compensation for such service. The Company may require any Trustee or member of the Committee to furnish a fidelity bond satisfactory to the Company; the premium for any fidelity bond shall be an expense of the Plan, except to the extent paid by the Company.

9.13 Service in More than One Capacity. Any person or group of persons may serve the Plan in more than one capacity.

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ARTICLE 10. MANAGEMENT OF TRUST FUND

10.1 The Trust Fund. The Trust Fund shall be held in trust by the Trustee appointed from time to time (before or after termination of the Plan) by the Board pursuant to the Trust Agreement. The Trustee shall have the powers specified in the Trust Agreement.

10.2 Exclusive Benefit. The Trust Fund shall be used in accordance with the provisions of this Plan and for the exclusive purpose of providing benefits for Members and their Beneficiaries and defraying reasonable expenses of the Plan and of the Trust.

10.3 Trustee's Reports. As soon as practicable after the end of each Plan Year the Trustee shall submit to the Board an appropriate report stating the net value of the Trust Fund as of the end of that Plan Year, and containing such other information relating to the Trust Fund as the Board from time to time may request.

10.4 Trust Agreement. The Trust Agreement shall be a part of this Plan and any rights or benefits under this Plan shall be subject to all the terms and provisions of the Trust Agreement.

48

ARTICLE 11. BENEFIT CLAIMS PROCEDURE

11.1 Claim for Benefits. Any claim for benefits under this Plan shall be made in writing to the Committee. The Committee shall notify the Member, Beneficiary or Alternate Payee of its determination within 90 days after receipt of the claim (or within 180 days if special circumstances require an extension of time to review the claim, in which event the Member, Beneficiary or Alternate Payee will be so notified of the circumstances requiring an extension and the date by which a decision is expected). If the Member, Beneficiary or Alternate Payee has not provided sufficient information for the Committee to make a determination with respect to the claim, the Member, Beneficiary or Alternate Payee will be notified within 45 days of the specific information needed to complete the claim, and will be provided with 180 days in which to provide the information. The Member, Beneficiary or Alternate Payee will be notified of the Committee's determination within 45 days of the earlier of the Committee's receipt of the requested information or the expiration of the 180-day period.

11.2 Denial of Claims. If the Committee decides that a Member, Beneficiary or Alternate Payee is not entitled to all or any part of the benefits claimed, the notice of denial shall be written in a manner calculated to be understood by the Member, Beneficiary or Alternate Payee and shall contain
(a) the specific reason or reasons for denial of the claim, (b) a specific reference to the pertinent Plan provisions upon which the denial is based,
(c) a description of any additional material or information necessary to perfect the claim together with an explanation of why such material or information is necessary, (d) an explanation of the claims review procedure and the time limits applicable to such procedures, and (e) effective for claims filed on or after January 1, 2002, a statement of

49

the Member or Beneficiary's right to bring a civil action under Section 502(a) of ERISA if the claim is denied following appeal.

11.3 Review of Claim. Within 60 days after the receipt by the Member, Beneficiary or Alternate Payee of notice of denial of a claim (or at such later time as may be reasonable in view of the nature of the benefit subject to claim and other circumstances), the Member, Beneficiary or Alternate Payee or his or her authorized personal representative may make a written request to the Committee for an appeal of the denial. Any such request may include any written comments, records and any other information relating to the claim and may include a request for "relevant" documents to be provided free of charge.

11.4 Decision After Review. Within 60 days after the receipt of a request for review under Section 11.3, the Committee shall deliver to the Member, Beneficiary or Alternate Payee a written decision with respect to the claim, except that if there are special circumstances (such as the need to hold a hearing) which require more time for processing, the 60-day period shall be extended to 180 days upon notice to the Member, Beneficiary or Alternate Payee to that effect. The decision shall be written in a manner calculated to be understood by the Member, Beneficiary or Alternate Payee and shall (a) include the specific reason or reasons for the decision, (b) contain a specific reference to the pertinent Plan provisions upon which the decision is based, (c) effective for claims filed on or after January 1, 2002, a statement that a Member, Beneficiary or Alternate Payee may receive reasonable access to, and copies of, documents, records and other information relevant to the claim, and (d) effective for claims filed on or after January 1, 2002, a statement of the Member, Beneficiary or Alternate Payee's right to bring a civil action under Section 502(a) of ERISA if the claim is denied following appeal.

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11.5 Relevant Documents. For purposes of Section 11.3, a document, record or other information shall be considered "relevant" to a Member's, Beneficiary's or Alternate Payee's claim filed on or after January 1, 2002 if such document, record or other information (a) was relied upon in making the benefit determination; (b) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record or other information was relied upon in making the benefit determination; or (c) demonstrates compliance with the administrative processes and safeguards required in making the benefit determination.

11.6 Final and Binding Decision. The Committee's decision on claims shall be final, binding and conclusive on all interested persons unless found by a court of competent jurisdiction to be arbitrary or capricious.

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ARTICLE 12. NON-ALIENATION OF BENEFITS

12.1 Non-Alienation. Subject to Section 12.2 and 12.3, any benefits under or interests in this Plan shall not be assignable or subject to alienation, hypothecation, garnishment, attachment, execution, anticipation, sale, transfer, pledge or levy of any kind. Any action in violation of this provision shall be void.

12.2 Qualified Domestic Relations Order. Section 12.1 shall not apply to the creation, assignment or recognition of a right to the Retirement Benefit of a Member pursuant to a Qualified Domestic Relations Order. The Committee shall establish reasonable procedures for determining whether a domestic relations order is a Qualified Domestic Relations Order and for administering distributions under a Qualified Domestic Relations Order.

12.3 Certain Judgments or Settlements. Effective as of August 5, 1997, Section 12.1 shall not apply to any offset of a Member's benefits provided under the Plan against an amount the Member is required to pay to the Plan for certain judgements and settlements as described in Section 401(a)(13)(C) of the Internal Revenue Code, subject to the spousal consent provisions described herein.

12.4 Ceasing of Payments Upon Bankruptcy or Attempted Assignment. If, notwithstanding Section 12.1, any Member or Beneficiary becomes bankrupt or attempts to assign, alienate or hypothecate his Retirement Benefit under this Plan, or if any Retirement Benefit shall be garnished, attached or levied upon, the Committee may determine that distribution or payment of his benefits shall cease and that the Trustee shall provide for the Member or Beneficiary, or the Member's spouse, children or other dependents (in

52

such manner and proportion as the Committee considers appropriate), an amount substantially equal to the amount of his benefits.

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ARTICLE 13. DESIGNATION OF BENEFICIARY

13.1  Designation of Beneficiary. Subject to Section 6.6 and Article 7, Members
      may designate a Beneficiary on the form and in the manner prescribed by
      the Committee. The Committee, in its discretion, may specify conditions or
      other provisions with respect to the designation of a Beneficiary. Subject
      to Section 6.6, any designation of a Beneficiary may be revoked by filing
      a later designation or revocation. In the absence of an effective
      designation of a Beneficiary by a Member or upon the death of all
      Beneficiaries, a Member's Retirement Benefit shall be paid to his estate.

13.2  Effective Date of Designation. Any designation or revocation of a
      designation of a Beneficiary shall become effective when actually received
      by the Committee but shall not affect any distribution previously made
      pursuant to a prior designation.

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ARTICLE 14. AMENDMENT

14.1  Amendment. The Board may amend this Plan at any time but no amendment may
      (a) substantially increase the duties or liabilities of the Trustee
      without its prior written consent, or (b) have the effect of decreasing
      the accrued Retirement Benefit of anyone who is a Member on the date the
      amendment is adopted or becomes effective, whichever is later.

14.2  Amendment to Vesting Provisions. If the vesting provisions set forth in
      Article 5 are amended, any Member who, as of the effective date of the
      amendment had been credited with three or more Years of Service in the
      aggregate, may irrevocably elect to have his nonforfeitable interest
      computed without regard to the amendment. Notice of the amendment and the
      availability of the election shall be given to each such Member, and the
      election may be exercised by the Member by notice to the Committee within
      60 days after the later of (a) his receipt of the notice, (b) the day the
      amendment is adopted or (c) the effective date of the amendment.

14.3  Amendment to Maintain Qualified Status and Other Amendment Powers of
      Committee. Notwithstanding anything to the contrary in Section 14.1,
      effective on the execution date of this Plan restatement, the Committee is
      authorized, in its discretion, to make any modifications or amendments to
      the Plan, either retroactively or prospectively (to the extent not
      otherwise prohibited under the Code or ERISA) that it deems:

      (a)   Appropriate to establish or maintain the Plan and the Trust
            Agreement as a qualified plan and trust under Sections 401 and 501
            of the Internal Revenue Code, respectively; or

      (b)   Appropriate with respect to any Plan provision other than the Plan's
            eligibility, vesting and employer contribution provisions, the
            amendment of any such provisions

                                                                              55

      being reserved exclusively to the Board (except to the extent such an
      amendment implements any contractual commitment entered into the
      Employer).

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ARTICLE 15. TERMINATION; MERGER, CONSOLIDATION OR TRANSFER OF ASSETS

15.1  Full Vesting Upon Plan Termination. Upon the termination (including a
      partial termination) of this Plan, the Retirement Benefits as of the date
      of termination of the Members to which the termination relates shall be
      nonforfeitable (to the extent funded) without any formal action.

15.2  Payment of Benefits Upon Plan Termination. If this Plan is terminated,
      subject to Section 6.6, benefits to Members who are Employees and their
      Beneficiaries shall be paid in accordance with Section 4044 of ERISA and,
      if applicable, Section 414(1) of the Internal Revenue Code. The Committee
      shall determine (and notify the Trustee) whether distribution of benefits
      to each Member shall be made (a) as soon as practicable after termination
      or (b) in accordance with Article 6 as if the termination had not
      occurred.

15.3  Reversion of Excess Assets. If this Plan is terminated and the value of
      the Trust Fund exceeds the benefits allocable to Members and their
      Beneficiaries, the amount of the excess shall be repaid to the Employers
      in accordance with the directions of the Committee.

15.4  Committee and Trustee. If the Plan is terminated, the Committee shall
      continue to function and may fill any vacancies which may occur in its own
      membership (if the Board fails to do so) until the Trustee has rendered
      its final account and that account has been approved (in the manner
      provided in the Trust Agreement).

15.5  Merger, Consolidation or Transfer of Assets. Neither this Plan nor the
      Trust may be merged or consolidated with, nor may its assets or
      liabilities be transferred to, any other plan or trust, unless each Member
      would receive a benefit immediately after the merger, consolidation or
      transfer, if the Plan then terminated, which is equal to or greater than
      the

                                                                              57

      benefit he would have been entitled to receive immediately before the
      merger, consolidation or transfer if this Plan had then been terminated.

58

ARTICLE 16. ADOPTION AND WITHDRAWAL FROM PLAN BY AFFILIATED COMPANY

16.1  Adoption by Affiliated Company. Any Affiliated Company, whether or not
      presently existing, may, with the approval of the Board, adopt this Plan
      by proper corporate action. By such adoption, the Affiliated Company
      automatically delegates to the Board and Committee the full authority to
      amend, alter, modify, interpret or administer the Plan as provided herein.

16.2  Withdrawal. Any Employer may at any time withdraw from the Plan upon
      giving the Board, the Committee and the Trustee at least 30 days notice of
      its intention to withdraw. The Board in its discretion may direct that any
      Employer withdraw from the Plan.

16.3  Segregation of Assets Upon Withdrawal. Upon the withdrawal of an Employer
      under Section 16.2, the Trustee shall in accordance with the directions of
      the Committee and Section 4044 of ERISA and, if applicable, Section 414(1)
      of the Internal Revenue Code, segregate a share of the assets in the Trust
      Fund attributable to the Retirement Benefits of Members who are Employees
      of that Employer.

16.4  Applicability of Withdrawal Provisions. The withdrawal provisions of this
      Article 16 shall be applicable only if the withdrawing Employer continues
      to cover its Members and eligible Employees in a comparable plan and trust
      qualified under Sections 401 and 501 of the Internal Revenue Code.
      Otherwise, the termination provisions of this Plan shall apply.

59

ARTICLE 17. TOP HEAVY PROVISIONS

17.1  Definition. The following definitions apply for purposes of this Article
      17:

      (a)   Average Compensation - a Member's average annual compensation (as
            defined in Treas. Reg. Section 1.415-2(d)(i)) during the five
            consecutive Plan Years in which he received the greatest
            compensation, taking into account only Plan Years (1) during which
            he was a Member, (2) with respect to which he was credited with a
            Vesting Year of Service and (3) ending no later than the last day of
            the last Plan Year during which the Plan was a Top Heavy Plan.

      (b)   Determination Date - with respect to any plan year of the Plan, a
            Defined Benefit Plan or a Defined Contribution Plan, the last day of
            the preceding plan year (or in the case of the first plan year of a
            plan the last day of that plan year).

      (c)   Key Employee - an Employee (or former Employee) who at any time
            during a Plan Year or any of the preceding four Plan Years is or was
            (1) an officer of his Employer with Compensation greater than 50% of
            the amount in effect under Section 415(b)(1)(A) of the Internal
            Revenue Code on the last day of the Plan Year, (2) one of the ten
            Employees with Compensation greater than the amount in effect under
            Section 415(c)(1)(A) of the Internal Revenue Code on the last day of
            the Plan Year and owning the largest percentage (in excess of one
            half of one percent) interest in value of any Affiliated Company,
            (3) a Five Percent Owner and (4) an owner of more than one percent
            of an Employer with Compensation in excess of $150,000. The
            determination of whether an Employee is a Key Employee shall be made
            in accordance with Section 416(i) of the Internal

                                                                              60

            Revenue Code. The Beneficiary of a Key Employee shall be treated as
            a Key Employee.

      (d)   Permissive Aggregation Group of Plans - group of employee benefit
            plans including a Required Aggregation Group of Plans, and any other
            Defined Benefit Plans or Defined Contribution Plans which when
            considered as a group meets the requirements of Sections 401(a)(4)
            and 410 of the Internal Revenue Code.

      (e)   Required Aggregation Group of Plans - a group of employee benefit
            plans including each Defined Benefit Plan and Defined Contribution
            Plan (1) in which any Key Employee is or was a Member or (2) which
            enables a plan described in clause (1) to meet the requirements of
            Section 401(a)(4) or Section 410 of the Internal Revenue Code.

      (f)   Top Heavy Fraction - (1) with respect to the Plan, a fraction for a
            Plan Year the numerator of which is the aggregate of the accrued
            benefits under the Plan as of the applicable Determination Date of
            all Members who are Key Employees and the denominator of which is
            the aggregate of the accrued benefits under the Plan as of the
            applicable Determination Date of all Members or (2) with respect to
            a Required Aggregation Group of Plans or a Permissive Aggregation
            Group of Plans a fraction (A) the numerator of which is the sum of
            (i) the aggregate of the present values of the accrued benefits as
            of the applicable Determination Date of all Members who are Key
            Employees under all Defined Benefit Plans included in that group,
            and (ii) the aggregate account balances as of the applicable
            Determination Date in the accounts of all Members who are Key
            Employees under all Defined Contribution Plans included in the group
            and (B) the denominator of which is the sum of (i) the aggregate of
            the present values of the

                                                                              61

            accrued benefits as of the applicable Determination Date of all
            Members under all Defined Benefit Plans included in the Group and
            (ii) the aggregate account balances as of the applicable
            Determination Date in the accounts of all Members under all Defined
            Contribution Plans included in the group. In computing a Top Heavy
            Fraction for a Plan Year the following rules shall apply: (I) the
            present value of accrued benefits as of a Determination Date under
            each Defined Benefit Plan and the aggregate account balances as of a
            Determination Date under each Defined Contribution Plan shall be
            increased by the aggregate distributions made from that plan to
            members during the five-year period ending on the Determination
            Date, (II) the accrued benefit under any Defined Benefit Plan and
            the account balance under any Defined Contribution Plan of a Member
            who has not performed services for an Employer at any time during
            the five-year period ending on the Determination Date shall be
            disregarded, (III) the present value of accrued benefits under a
            Defined Benefit Plan as of a Determination Date and the account
            balance under a Defined Contribution Plan shall be determined as of
            that plan's valuation date which occurs during the 12-month period
            ending on the Determination Date, (IV) in the case of a Required
            Aggregation Group of Plans or a Permissive Aggregation Group of
            Plans, the Determination Date of each Plan included in the group
            shall be the Determination Date that occurs in the same calendar
            year as the Determination Date of the Plan, (V) in the case of a
            Required Aggregation Group of Plans or a Permissive Aggregation
            Group of Plans, in determining accrued benefits the same actuarial
            assumptions shall be used for all Defined Benefit Plans and (VI) in
            the case of a Required Aggregation Group of Plans or Permissive
            Aggregation Group of Plans the present value of the accrued

                                                                              62

            benefits under all Defined Benefit Plans of Members other than Key
            Employees shall be determined based upon the method used uniformly
            for accrual purposes for all Defined Benefit Plans but if there is
            no uniform method based upon the benefit accrual rate which does not
            exceed the slowest accrual rate permitted under the fractional
            accrual rule of Section 411(b)(1) of the Internal Revenue Code.

      (g)   Top Heavy Plan - the Plan for any Plan Year if the Top Heavy
            Fraction for that Plan Year exceeds 60% (a) for the Plan if the Plan
            is not part of a Required Aggregation Group of Plans, (b) for the
            Required Aggregation Group of Plans, if the Plan is part of a
            Required Aggregation Group of Plans, or (c) for the Permissive
            Aggregation Group of Plans, if the Plan is part of a Permissive
            Aggregation Group of Plans and a Required Aggregation Group of
            Plans.

17.2  When Top Heavy Provisions Apply. Notwithstanding any other provision of
      this Plan, the provisions of this Article 17 shall apply with respect to
      any Plan Year for which the Plan is a Top Heavy Plan.

17.3  Minimum Benefit. Subject to Article 4 and Section 3.2(b) contained in
      Schedule D to this Plan, upon the Retirement or Termination of Employment
      of a Member who is not a Key Employee, his Retirement Benefit shall be
      equal to the excess, if any, of (a) the greater of (1) the Retirement
      Benefit that otherwise would be determined for him under Article 3 if no
      effect were given to this Article 17 and (2) the product of 2% of his
      Average Compensation and the number of his Vesting Years of Service (not
      in excess of 10) commencing after 1983 and credited with respect to Plan
      Years in which the Plan or the Prior Plan is a Top Heavy Plan and he is a
      Member and (b) the Actuarial Equivalent of his aggregate benefit as of
      August 30, 1985 under the Prior Plan. For purposes of

                                                                              63

      determining a Member's Retirement Benefit under this Section 17.3 it shall
      be assumed that payment of the Retirement Benefit shall be in the form of
      a straight life annuity, without ancillary benefits, commencing on his
      Normal Retirement Date.

17.4  Vesting. For any Plan Year the Plan is a Top Heavy Plan, the
      nonforfeitable portion of the Retirement Benefit of a Member, who is
      credited with at least one Hour of Service during that Plan Year under
      Article 5 shall be the greater of the percentage determined under Article

5 and a percentage based on his Vesting Years of Service as follows:

Number of Member's Vesting                    Nonforfeitable
     Years of Service                           Percentage
--------------------------                    --------------
       0                                             0%
       1                                             0
       2                                            20
       3                                            40
       4                                            60
       5                                            80
       6 or more                                   100

17.5  Change From Top Heavy Vesting. If the Plan is a Top Heavy Plan for a Plan
      Year and ceases to be a Top Heavy Plan for the subsequent Plan Year, the
      change in the vesting provision under this Section 17.5 to the vesting
      provision under Article 5 shall for purposes of Section 14.2 be treated as
      an amendment of the vesting provisions of the Plan.

64

ARTICLE 18. MISCELLANEOUS

18.1  No Employment Rights. Nothing in this Plan shall be construed as a
      contract of employment between an Affiliated Company and any Employee, nor
      as a guarantee of any Employee to be continued in the employment of the
      Company, nor as a limitation on the right of an Affiliated Company to
      discharge any of its Employees with or without cause or with or without
      notice at any time at the option of the Company.

18.2  Discretion. Any discretionary acts under this Plan by an Employer or by
      the Committee shall be uniform and applicable to all persons similarly
      situated. No discretionary act shall be taken which constitutes prohibited
      discrimination under the provisions of Section 401(a) of the Internal
      Revenue Code.

18.3  Prior Service. The Committee may, in its discretion and under rules
      applicable to all Employees similarly situated, credit Employees with
      service prior to becoming Employees or Members for determining (a) whether
      an Employee is an Eligible Employee,(b) Vesting Years of Service or (c)
      Most Recent Date of Hire.

18.4  Merged Plan. The Company may for purposes of this Plan (a) designate any
      employee pension benefit plan (as defined in Section 3(2) of ERISA) as a
      Merged Plan and (b) give credit for participation in a Merged Plan to the
      extent the Board determines desirable. The Board shall notify the
      Committee of the designation of any merged Plan, and of credit to be given
      for participation in the Merged Plan.

18.5  No Interest in Trust Fund. Irrespective of the amount of a Member's Vested
      Interest, neither he nor his Beneficiary or any other person shall have
      any interest or right to any of the assets of the Trust Fund except as and
      to the extent expressly provided in this Plan.

18.6  Uniformed Services Employment and Reemployment Rights Act of 1994.
      Notwithstanding any other provision of this Plan to the contrary, benefits
      and service

                                                                              65

      credit with respect to qualified military service will be provided in
      accordance with Section 414(u) of the Internal Revenue Code. This Section
      18.6 shall apply to all veterans who return to work on or after December
      12, 1994.

18.7  Governing Law. The provisions of this Plan shall be governed by and
      construed and administered in accordance with ERISA, the Internal Revenue
      Code, and, where not inconsistent, the laws of the State of Delaware.

18.8  Member Information. Each Member shall notify the Committee of (a) his
      mailing address and each change of mailing address, (b) his, his
      Beneficiary's and, if applicable, his spouse's date of birth and (c) his
      marital status and any change of his marital status. The information
      provided by the Member under this Section 18.8 shall be binding upon the
      Member and his Beneficiary for all purposes of the Plan.

18.9  Statement of Retirement Benefits. A statement of a Member's Retirement
      Benefit shall be furnished to him and his Employer annually by the
      Committee.

18.10 Construction. Any masculine personal pronoun shall be considered to mean also the corresponding female or neuter personal pronoun, as the context requires.

18.11 Severability. If any provision of this Plan is held illegal or invalid for any reason, the other provisions of this Plan shall not be affected.

18.12 Notices. Any notice, request, election, designation, revocation or other communication under this Plan shall be in writing and shall be considered given when delivered personally or mailed by registered mail, return receipt requested, except that any statement furnished pursuant to Section 18.9 or any other communication to all Members shall be considered given when delivered personally or mailed by first class mail.

66

18.13 Headings.The headings in this Plan are for convenience of reference and shall not be given substantive effect.

Dated:

THE HERTZ CORPORATION

By __________________________

Attest:

67

SCHEDULE A - EFFECTIVE DATES

The provisions of this amended and restated Plan are effective as of January 1, 2000 except as otherwise provided below:

(a) The following provisions and schedules are amended and restated effective as of January 1, 1997:

(1) Sections 6.9 (d) and (e) - Minimum Distribution Requirements.

(2) Section 1.14 and Schedule B.3 - Compensation.

(3) Section 3.10 - Suspension of Benefit Payments upon Reemployment or After Normal Retirement Date

(4) Section 9.11 - Liability of the Committee

(5) Section 14.3 - Amendment to Maintain Qualified Status and Other Amendment Powers of Committee

(6) Section 16.1 - Adoption by Affiliated Company

(7) Section 18.3 - Prior Service

(8) Schedule B.4 - Final Average Earnings

(b) The following provisions are amended and restated effective as of August 5, 1997:

(1) Section 12.1 and 12.3 - Non-Alienation of Benefits.

(c) The following provision is amended and restated effective as of December 12, 1994:

(1) Section 18.6 - Uniformed Services Employment and Reemployment Rights Act

(d) The following provisions are amended and restated effective as of January 1, 1999:

(1) Section 6.14 (Direct Rollover)

(2) Schedule D, Section 3.2(c) and (d).

68

SCHEDULE B - DEFINITIONS

The following definitions shall apply with respect to Pre-July, 1987 Members:

B.1   Accumulated Pre-July, 1987 Employee Contributions - the aggregate amount
      of a Pre-July, 1987 Member's contributions to the Plan made after August
      30, 1985 but before July 1, 1987, with interest at the rate specified
      below, compounded annually, on the amount of each of the Member's
      contributions for the period beginning on the January 1 immediately
      following the day the contribution was made and ending on the first day of
      the month in which the Member's Termination of Employment occurs. The
      applicable interest rates shall be as follows: (a) for the period
      beginning with August 30, 1985 and ending on December 1987, 6 %, (b) for
      the period beginning with January 1, 1988, and ending on the date the
      determination is made, 120% of the Federal mid-term rate (as in effect
      under Section 1274 of the Internal Revenue Code for the first month of the
      Plan Year) and (c) for the period beginning with the determination date
      and ending on the Member's Normal Retirement Date, the rate which would be
      used under Section 417(e)(3) of the Internal Revenue Code (as of the
      distribution date).

B.2   Contributory - Annuity Benefit - the monthly benefit that accrues to a
      Pre-July, 1987 Member under Section 3.2(a)(2) contained in Schedule D to
      this Plan.

B.3   Earnings - all cash remuneration paid or made available for any Plan Year
      (or if the context requires for a payroll period) by an Employer to an
      Employee for his services, as salary or wages and including bonuses,
      commissions, pay at premium rates (holiday, overtime or other), vacation
      pay (other than accrued vacation paid upon Termination of Employment or
      Retirement), the amount of his before tax savings contributions under The
      Hertz Corporation Income Savings Plan, his pay conversion credits under
      The Hertz Custom Benefit Program and payments made under salary and wage
      continuation plans

                                                                              69

      and other similar plans providing for payments to Employees while absent
      from work, but excluding (a) any payments on account of long-term
      disability, (b) severance payments, layoff allowances and layoff extension
      benefits, (c) except as otherwise provided by the Committee in its
      discretion, prizes, awards and amounts paid (whether or not under an
      employee benefit plan) to reimburse Employees' expenses, such as business
      and travel allowances, meal allowances, living allowances, relocation
      allowances and foreign service living and educational allowances, (d) any
      amounts attributable to stock options, (e) any other amounts paid for that
      Plan Year on account of the Employee under this Plan or under any other
      employee pension benefit plan (as defined in Section 3(2) of ERISA), (f)
      any incentive payments not related to the Employee's primary job
      responsibilities and (g) any other amounts which are not includible in the
      Employee's income for federal income tax purposes. In the case of an
      Employee who is compensated on the basis of sales commissions, Earnings
      shall mean the greater of the amount of his drawing account for the Plan
      Year or the amount of his commissions for that Plan Year. For Plan Years
      beginning after 1988 and before 1994, Earnings shall not include amounts
      paid or made available in excess of $200,000 and for Plan Years after
      1993, in excess of $150,000, provided, however, that such dollar
      limitations on recognized Earnings for any Plan Year shall be the adjusted
      amount prescribed by the Secretary of the Treasury under Section
      401(a)(17) of the Internal Revenue Code.

      For purposes of determining the Earnings of a Pre-July, 1987 Member for
      periods of leave of absence before July 1, 1987 for (1) service in the
      armed forces of the United States or any other nation designated by an
      Employer, (2) civilian service for the United States government or (3) any
      other reason approved by an Employer, the following special rules shall
      apply:

                                                                              70

      (x)   In the case of a Pre-July, 1987 Member who made contributions to the
            Plan or the Prior Plan during such leave of absence, his Earnings
            for the period of his leave of absence shall be deemed to be equal
            to either (A) if he was not covered by a collective bargaining
            agreement during the leave of absence, his basic annual earnings
            rate (excluding bonuses, overtime, incentive compensation or other
            types of special remuneration) immediately before his leave of
            absence or (B) if he was covered by a collective bargaining
            agreement during the leave of absence, the basic annual earnings
            rate then in effect applicable to his job classification under that
            agreement.

      (y)   In the case of a Pre-July, 1987 Member who did not make
            contributions to the Plan or the Prior Plan during his leave of
            absence, but made such contributions retroactively upon his return
            to active employment from a leave of absence, his Earnings for the
            period of the leave of absence shall be deemed to be either (A) if
            he was not covered by a collective bargaining agreement during the
            leave of absence, the lesser of (i) the average of his basic annual
            earnings rate (excluding bonuses, overtime, incentive compensation
            or other types of special remuneration) during the period of his
            leave of absence, taking into account all general wage or salary
            increases granted to employees in like classification, and (ii) his
            basic annual earnings rate (exclusive of bonus, incentive
            compensation, compensation for overtime, or any other special
            remuneration) upon return to active employment, or (B) if he was
            covered by a collective bargaining agreement during the leave of
            absence, the basic annual earnings rate then in effect applicable to
            his job classification under that agreement.

                                                                              71

B.4   Final Average Earnings - a Pre-July, 1987 Member's average annual Earnings
      for the five consecutive Plan Years while a Member (including Plan Years
      commencing after July 1, 1987) in which he received the greatest amount of
      annual Earnings within the ten most recent Plan Years. For purposes of
      calculating a Members' Final Average Earnings only: (a) if a Member's
      Earnings represent a period of service (other than a Plan Year that is the
      last Plan Year in which a Member is credited with an Hour of Service)
      which is less than a full Plan Year, such Earnings shall be annualized,
      and (b) Plan Years in which a Member is not credited with annual Earnings
      shall not be included.

      If a Pre-July, 1987 Member's Earnings exceeded $150,000 for any Plan Year
      before 1994, his Final Average Earnings shall be the greatest of (a) his
      Final Average Earnings as of December 31, 1988, determined in accordance
      with the Plan as then in effect, (b) his Final Average Earnings as of
      December 31, 1993, determined in accordance with the Plan as then in
      effect, and (c) his Final Average Earnings determined in accordance with
      the preceding sentence, disregarding any Earnings in excess of $150,000
      for any Plan Year before 1994.

B.5   Final Average Earnings Benefit - the monthly benefit which accrues to a
      Pre-July, 1987 Member under Section 3.2(a)(1) contained in Schedule D to
      this Plan.

B.6   Year of Credited Service - a period of 12 calendar months (which need not
      be consecutive) during which a Pre-July, 1987 Member made required
      contributions to the Plan or the Prior Plan. A period of less than 12 such
      calendar months shall be credited as a partial Year of Credited Service
      equal to a fraction the numerator of which is the number of such months
      and the denominator of which is 12. Except as otherwise provided in
      paragraph (e) of this definition, for purposes of determining Years of

                                                                              72

      Credited Service, months beginning after June 30, 1987 shall be excluded.
      The following special rules apply for purposes of determining Years of
      Credited Service:

      (a)   In the case of a Pre-July, 1987 Member who made contributions to the
            Plan or the Prior Plan while on leave of absence the period of the
            leave of absence shall not be included in determining Years of
            Credited Service, unless he returns directly to active employment
            immediately following his leave of absence or dies during his leave
            of absence.

      (b)   Additional Years of Credited Service shall be credited to each
            Member who was an Employee on either November 30, 1976 or December
            31, 1980 and was required to satisfy an eligibility requirement of
            more than one year, provided he became a Member by contributing to
            the Prior Plan within six months of either: (1) the first day he was
            eligible to do so, (2) the day he was most recently reemployed by an
            Employer (or an employer maintaining the Prior Plan) or (3) the day
            he returned to active employment with an Employer (or an employer
            maintaining the Prior Plan) from a layoff or approved leave of
            absence without pay. An Employee described in the previous sentence
            shall be credited with the following: (A) in the case of a Pre-July,
            1987 Member who was an Employee on November 30, 1976, if he had to
            satisfy an eligibility requirement of three years, he shall be
            credited with an additional Year of Credited Service and if he had
            to satisfy an eligibility requirement of at least two years but less
            than three years, he shall be credited with an additional month for
            purposes of determining Years of Credited Service for each month in
            excess of two years before he first became eligible to become a
            Member and (B) in the case of a Pre-July, 1987 Member who was an
            Employee on December 31, 1980 (but first became an Employee after

                                                                              73

            November 30, 1976) if he had to satisfy an eligibility requirement
            of at least two years, he shall be credited with an additional Year
            of Credited Service and if he had to satisfy an eligibility
            requirement of at least one year but less than two years, he shall
            be credited with an additional month for purposes of determining
            Years of Credited Service for each month in excess of one year
            before he first became eligible to become a Member.

      (c)   For purposes of determining Years of Credited Service, any months
            during which a Pre-July, 1987 Member was employed outside the limits
            of the United States, the Commonwealth of Puerto Rico or the
            Territory of Guam shall be excluded, unless the Member was
            originally employed in one of these locations and was sent by his
            Employer to another location with the intention that he return to
            one of these locations.

      (d)   Solely for determining Years of Credited Service for purposes of
            Section 3.2(a)(1) contained in Schedule D to this Plan (Final
            Average Earnings Benefit) and paragraph c contained in Schedule C to
            this Plan (grandfathered lump sum benefit), Years of Credited
            Service shall include credited service after December 31, 1966 under
            Part I of The Hertz Retirement Program for Salaried Employees and
            The Hertz Hourly-Rate Employees' Pension Plan not otherwise
            constituting credited service under the Prior Plan, other than
            periods during which the Member would not have been eligible to
            become a member of the Prior Plan had he been an employee of RCA
            Corporation.

      (e)   Solely for determining Years of Credited Service for purposes of
            Sections 3.2(c) contained in Schedule D to this Pan (supplemental
            early retirement benefit), 3.2(d) contained in Schedule D to this
            Plan (optional supplemental early

                                                                              74

            retirement benefit), 3.2(e) contained in Schedule D to this Plan
            (guaranteed early retirement benefit), 7.1 (b) contained in Schedule
            F to this Plan (spouse's Pre-Retirement Death Benefit), (1) Years of
            Credited Service shall include Vesting Years of Service credited to
            a Pre-July, 1987 Member after 1987, (2) each full month for the
            period from July 1, 1987 through December 31, 1987 during which a
            Pre-July, 1987 Member is employed by the Company shall be taken into
            account in determining Years of Credited Service and (3) Years of
            Credited Service shall include periods of credited service under
            Part I and Part II of The Hertz Retirement Program for Salaried
            Employees and The Hertz Hourly-Rate Employees' Pension Plan not
            otherwise constituting credited service under the Prior Plan, other
            than periods during which the Member would not have been eligible to
            become a Member of this Plan had he been an employee of the Company.

      (f)   Subject to the following sentence, Years of Credited Service of a
            Rehired Employee who received a lump sum distribution of his entire
            nonforfeitable interest in his Pre-July 1987 Benefit upon his
            Termination of Employment shall not include any Years of Credited
            Service prior to his original Termination of Employment. In case of
            an Employee who (i) either resumes covered employment under the Plan
            before January 1, 1992 or does not have a nonforfeitable interest in
            the portion of his Pre-July 1987 Benefit attributable to Employer
            contributions under Section 5.1 and (ii) repays the Plan the amount
            of his distribution of Accumulated Pre-July 1987 Employee
            Contributions as provided in Section 3.8(b) or (c) contained in
            Schedule D to this Plan, his Years

                                                                              75

            of Credited Service before his initial Termination of Employment
            will not be disregarded.

76

SCHEDULE C - ACTUARIAL ASSUMPTIONS

a. Mortality - the UP - 1984 Table.

b. Interest - the immediate annuity interest rate used by the Pension Benefit Guaranty Corporation on the first day of the calendar year in which distribution of benefits commences for purposes of determining a lump sum distribution on plan termination.

c. Special rule for distribution in the form of a single cash payment of the full amount payable to Members who were Employees on February 28, 1983 - In the case of a Member who was employed on February 28, 1983 who receives his Retirement Benefit in the form of a single cash distribution of the full amount payable, the amount of that single cash payment shall be actuarially equivalent in value to the greater of (1) the Retirement Benefit he is entitled to receive based on the provisions of the Plan in effect on the day of his Retirement or Termination of Employment and (2) the excess, if any, of (i) the sum of (A) the Final Average Earnings Benefit he would be entitled to receive determined based on the provisions of the Prior Plan in effect on February 28, 1983 ("Pre-March 1, 1983 Final Average Earnings Benefit") and (B) any benefit payable to him (determined at the time of his actual Retirement or Termination of Employment based on the actuarial assumptions in effect under the Prior Plan as of February 28, 1983) under Section 3.2(c) or (d) contained in Schedule D to this Plan over (ii) his aggregate benefit as of August 30, 1985 under the Prior Plan. A Member's Pre-March 1, 1983 Final Average Earnings Benefit shall be computed (a) based on the actuarial assumptions in effect under the Prior Plan on February 28, 1983 (7 % interest and 1951 Group Annuity Mortality Table) and (b) assuming that for purposes of determining Final Average Earnings, his Earnings for a Plan Year never exceeded the greatest annual Earnings he

77

received under the Prior Plan for any calendar year from 1978 through 1982 (and for the Plan Year of the Member's Termination of Employment or Retirement, his Earnings do not exceed the Earnings described above multiplied by a fraction the numerator of which is the number of his full months of employment during that Plan Year and the denominator of which is 12). A Member's Pre-March 1, 1983 Final Average Earnings Benefit shall be determined based on his Final Average Earnings (as determined under this paragraph) and the number of his Years of Credited Service, as follows:

      Monthly Pre-March 1,                         1983 Final Average
         Final Average                            Earnings Benefit for
       Earnings Per Year                      Each Year of Credited Service
------------------------------                -----------------------------
Less than $12,360                                        $12.00
$12,360 but less than 12,580                            12.25
 12,580 but less than 12,800                            12.50
 12,800 but less than 13,020                            12.75
 13,020 but less than 13,240                            13.00
 13,240 but less than 13,460                            13.25
 13,460 but less than 13,680                            13.50
 13,680 but less than 13,900                            13.75
 13,900 but less than 14,120                            14.00
 14,120 but less than 14,340                            14.25
 14,340 but less than 14,560                            14.50
 14,560 but less than 14,780                            14.75
 14,780 but less than 15,000                            15.00
 15,000 but less than 15,220                            15.25
 15,220 but less than 15,440                            15.50
 15,440 but less than 15,660                            15.75
 15,660 and over                                   16.00 plus 1/12
                                                  of 1.5 % of Final
                                                  Average Earnings
                                                     over $15,660

A Member's Pre-March 1, 1983 Final Average Earnings Benefit shall be offset by any benefit he is entitled to receive attributable to employer contributions made after December 31, 1966 under Part I and Part II of The Hertz Retirement Program for Salaried Employees or The Hertz Hourly-Rate Employees' Pension Plan.

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d. Calculation of Single Sum Distribution Amount - The amount payable will be equal to the greater of: (1) the actuarial present value of the Retirement Benefit (as defined in Article 1.43) using the factors described in (a) and (b) above, and (2) the single sum distribution amount calculated using the Applicable Mortality Table and using the Applicable Interest Rate, as defined in (g) below.

e. Calculation of Actuarial Equivalence for Article 4- For purposes of
Section 4.2(b)(1), the Retirement Benefit shall be adjusted so that it is the Actuarial Equivalent of an Annual Benefit by using the interest and mortality assumptions specified in (a) and (b), or (d) above, for the particular form of benefit payable, or by using the Applicable 415 Rate and the Applicable Mortality Table, whichever assumptions produce the greater benefit. For purposes of Section 4.2(b)(2), the Actuarial Equivalent of an Annual Benefit equal to the dollar limitation set forth in Section 4.2(a)(1) beginning at age 62 shall be calculated by adjusting such limitation using the interest and mortality assumptions specified in
(a) and (b), or (d) above, for the particular form of benefit payable, or 5% and the Applicable Mortality Table, whichever assumptions provide a lower limit. For purposes of Section 4.2(b)(2), the Actuarial Equivalent of an Annual Benefit equal to the dollar limitation set forth in Section 4.2(a)(1) beginning at the Member's social security retirement age shall be calculated by adjusting such limitation using the interest and mortality assumptions specified in (a) and (b), or (d) above, for the particular form of benefit payable, or 5% and the Applicable Mortality Table, whichever assumptions provide a lower limit.

79

f. Calculation of Actuarial Equivalence for Schedule D, Section 3.2(f) and Schedule F, Section 7.1(b)(3) - Actuarial Equivalence shall be determined using the Applicable Interest Rate and the Applicable Mortality Table, as defined in (g), below.

g. For purposes of this Schedule C, the following terms are defined as follows:

"Applicable Interest Rate" means the annual interest rate on 30-year Treasury securities for the November 1 preceding the Plan Year that contains the distribution date.

"Applicable 415 Rate" means the Applicable Interest Rate for lump sums and 5% per annum for annuity forms of distribution.

"Applicable Mortality Table" means the mortality table described in
Section 417(e)(3)(A)(ii)(I) of the Internal Revenue Code.

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SCHEDULE D. SECTIONS 3.2 AND 3.8

3.2 A Pre-July, 1987 Member's Pre-July, 1987 Retirement Benefit shall be determined under Section 3.2(a) contained in this Schedule D, reduced in accordance with Section 3.2(b) to take account of distribution prior to Normal Retirement Date, and in the case of certain Pre-July, 1987 Members who begin receiving distribution of their benefits prior to their Normal Retirement, supplemented under Sections 3.2(c) and (d) contained in this Schedule D. In addition, a minimum Pre-July, 1987 Benefit is provided under Section 3.2(e) for certain Pre-July, 1987 Members. The Pre-July, 1987 Retirement Benefit of a Pre-July, 1987 Member who does not satisfy the vesting requirements of Section 5.1 shall be determined under Section 3.2(f) contained in this Schedule D. Finally, the amount of the actual benefit payments made to a Pre-July, 1987 Member (or his Beneficiary) shall in no event be less than his Accumulated Pre-July, 1987 Contributions as described in Section 3.2(g) contained in this Schedule D.

(a) Subject to Section 3.2(b) contained in this Schedule D, the Pre-July, 1987 Retirement Benefit of a Pre-July, 1987 Member shall be equal to the excess, if any, of (x) the greater of his Final Average Earnings Benefit set forth in Section 3.2(a)(1) contained in this Schedule D and his Contributory Annuity Benefit set forth in
Section 3.2(a)(2) contained in this Schedule D over (y) his aggregate benefit as of August 30, 1985 under the Prior Plan.

(1) A Pre-July, 1987 Member's Final Average Earnings Benefit shall be based on his Final Average Earnings and the number of his Years of Credited Service as follows:

81

                                                    Final Average
                                                  Earnings Benefit
                                                    for Each Year
  Final Average Earnings                         of Credited Service
---------------------------                      -------------------
   Less than $14,120                                  $14.00
   $14,120 but less than 14,340                        14.25
    14,340 but less than 14,560                        14.50
    14,560 but less than 14,780                        14.75
    14,780 but less than 15,000                        15.00
    15,000 but less than 15,220                        15.25
    15,220 but less than 15,440                        15.50
    15,440 but less than 15,660                        15.75
    15,660 and over                             $16.00 plus 1/12 of
                                                  1.6 % of Final
                                                 Average Earnings
                                                   over $15,660

A Pre-July, 1987 Member's Final Average Earnings Benefit shall be offset by any benefit he is entitled to receive attributable to employer contributions made after December 31, 1966 under Part I and Part II of The Hertz Retirement Program for Salaried Employees or The Hertz Hourly-Rate Employees' Pension Plan.

(2) A Pre-July, 1987 Member who was an Employee before March 1, 1980 shall have a Contributory Annuity Benefit equal to the sum of:

(A) the aggregate amount accrued for each of his payroll periods, whether weekly, biweekly, semi-monthly or monthly, beginning after August 29, 1985 and ending before July 1, 1987 and during which he made required contributions to the Plan, where the amount accrued for each such period is equal to the sum of (i) 1.36% of his weekly Earnings up to $173.08, biweekly Earnings up to $346.15, semi-monthly earnings up to $375.00 or monthly

82

earnings up to $750.00 and (ii) 2 % of his weekly, biweekly, semimonthly or monthly Earnings in excess of those amounts, and

(B) the Contributory Annuity Benefit he accrued under the Prior Plan as of August 30, 1985.

For purposes of this Section 3.2(a) it shall be assumed that distribution of a Member's Pre-July, 1987 Retirement Benefit will be made in the form of a straight life annuity, with a 60-month period certain feature and no other ancillary benefits, commencing on his Normal Retirement Date.

(b) A Pre-July, 1987 Member who elects under Section 6.4 contained in Schedule E to this Plan, to have distribution of his Retirement Benefit commence before his Normal Retirement Date shall have his Pre-July, 1987 Retirement Benefit reduced by 1/3 of 1 % for each month that distribution precedes his 65th birthday (or, if a lesser reduction, the reduction based on the actuarial assumptions set forth in Schedule C), except that such a Pre-July, 1987 Member who has been credited with at least 10 Vesting Years of Service and receives distribution of his Retirement Benefit immediately upon Termination of Employment shall have his Pre-July, 1987 Retirement Benefit reduced based on his age when distribution commences as follows:

Age at Distribution                          Percent Reduction
-------------------                          -----------------
      60 or over                                       0%
      59                                              13
      58                                              20
      57                                              27
      56                                              34
      55                                              40

83

In the case of a Pre-July, 1987 Member who commences to receive distribution of his benefit prior to his attainment of age 55, his Pre-July, 1987 Retirement Benefit shall be reduced based on the actuarial assumptions set forth in Schedule C to this Plan.

(c) A Pre-July, 1987 Member who (1) has a Termination of Employment after he attains age 55 but before he attains age 65, (2) is credited with at least 5 Years of Credited Service, (3) elects to begin receiving distribution of his Retirement Benefit immediately upon Termination of Employment and (4) does not elect to receive the optional supplemental early retirement benefit under Section 3.2(d) contained in this Schedule D shall, in addition to the benefit he is entitled to receive under Section 3.2(a) contained in this Schedule D, receive a supplementary early retirement benefit payable monthly during the period beginning on the day distribution of his benefit commences under Section 6.3 and ending on the last day of the month beginning immediately after the month in which he attains age 65 (or, if earlier, dies). The amount of a Pre-July, 1987 Member's supplemental early retirement benefit depends on the number of his Years of Credited Service, as follows:

      Years of                               Supplemental Early
  Credited Service                           Retirement Benefit
-------------------                          ------------------
5 but less than 15                                   $ 0
15 but less than 20                                  $55
20 but less than 25                                   60
25 but less than 30                                   65
30 but less than 35                                   70
35 or more                                            75

The amount of a Pre-July, 1987 Member's supplemental early retirement benefit under this Section 3.2(c) shall be reduced based on his age when distribution of

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his supplemental early retirement benefit begins by the applicable percentage set forth in Section 3.2(b) contained in this Schedule D and shall be further reduced by the Actuarial Equivalent of the amount of the supplemental early retirement benefit, if any, he is entitled to receive under the Prior Plan.

The supplemental early retirement benefit under this Section 3.2(c) is treated as an early retirement benefit that is protected under
Section 411(d)(6) of the Code (other than for purposes of Sections 401(a)(11) and 417 of the Code).

The supplemental early retirement benefit shall be payable in conjunction with the Qualified Joint and Survivor Annuity, and shall be paid after the Member's death on the same terms as the Qualified Joint and Survivor Annuity, but in no event for a period longer than the period for which the supplemental early retirement benefit would have been paid to the Member if the Member had not died.

(d) A Pre-July, 1987 Member who (1) has a Termination of Employment after he attains age 55 but before he attains age 62, (2) elects to receive distribution of his Retirement Benefit immediately upon Termination of Employment, (3) has been credited with at least 5 Years of Credited Service and (4) in the case of a Pre-July, 1987 Member who is entitled to receive a supplemental early retirement benefit under Section 3.2(c) contained in this Schedule D elects instead (in the manner prescribed by the Committee) to receive the benefit under this Section 3.2(d) shall receive an optional supplemental early retirement benefit payable monthly during the period beginning on the day distribution of his benefits commences under Section 6.3 and ending on the last day of the month beginning immediately after the month in which he attains age 62 (or, if earlier, dies). The amount of a Pre-

85

July, 1987 Member's optional supplemental benefit depends on the number of his Years of Credited Service, as follows:

      Years of                              Optional Supplemental
  Credited Service                        Early Retirement Benefit
-------------------                       ------------------------
5 but less than 10                                  $ 60
10 but less than 15                                 $100
15 but less than 20                                  140
20 but less than 25                                  180
25 but less than 30                                  220
     30 or more                                      260

The amount of a Pre-July, 1987 Member's optional supplemental early retirement benefit under this Section 3.2(d) shall be reduced based on his age when distribution of the optional supplemental early retirement benefit begins by the applicable percentage set forth in
Section 3.2(b) contained in this Schedule D and shall be further reduced by the Actuarial Equivalent amount of the optional supplemental early retirement benefit, if any, he is entitled to receive under the Prior Plan.

The optional supplemental early retirement benefit under this
Section 3.2(d) is treated as an early retirement benefit that is protected under Section 411(d)(6) of the Code (other than for purposes of Sections 401(a)(11) and 417 of the Code). The optional supplemental early retirement benefit shall be payable in conjunction with the Qualified Joint and Survivor Annuity, and shall be paid after the Member's death on the same terms as the Qualified Joint and Survivor Annuity, but in no event for a period longer than the period for which the optional supplemental early retirement benefit would have been paid to the Member if the Member had not died.

86

(e) A Pre-July, 1987 Member who (a) has a Termination of Employment after he attains age 60 but before he is first eligible to receive federal old age and survivor benefits under the Social Security Act,
(b) is credited with at least 30 Years of Credited Service and (c) begins receiving distribution of his Retirement Benefit immediately upon Termination of Employment shall be entitled to receive a guaranteed monthly early retirement benefit equal to the sum of (x) $600 and (y) the aggregate amount of his Pre-July, 1987 Retirement Benefit and any supplemental early retirement benefit under Section 3.2(c) contained in this Schedule D, or optional supplemental early retirement benefit under Section 3.2(d) contained in this Schedule D, he is entitled to receive. The guaranteed monthly early retirement benefit shall be payable monthly during the period beginning on the day distribution of the Member's benefit commences under Section 6.3 and ending on the first day of the month beginning immediately after the day he is first eligible to receive old age and survivor benefits under the Social Security Act or, if earlier, his death. The amount of a Pre-July, 1987 Member's guaranteed early retirement benefit under this Section 3.2(e) shall be reduced by the amount, if any, of his guaranteed early retirement benefit under the Prior Plan. For purposes of this Section 3.2(e), it shall be assumed that the Member receives distribution of his Pre-July, 1987 Retirement Benefit in the form of a straight life annuity, with a 60-month period certain feature and no other ancillary benefits, commencing on his Normal Retirement Date.

(f) In the case of a Pre-July, 1987 Member who has a Termination of Employment before he is credited with at least five Vesting Years of Service, he shall be entitled to receive a Pre-July, 1987 Retirement Benefit which is Actuarially

87

Equivalent in value to the amount of his Accumulated Pre-July, 1987 Employee Contributions.

(g) If at the time all payments cease under the method of distribution elected by the Member under Section 6.1, the amount of the actual benefit payments made to the Member and his Beneficiary attributable to the Member's Pre-July, 1987 Benefit is less than the amount of his Accumulated Pre-July, 1987 Employee Contributions (determined as of the day distribution of his benefit commenced), his Beneficiary shall be paid the shortfall in a single payment.

3.8 Retirement Benefit of Rehired Employee.

The following additional provisions apply to a Rehired Employee who was a Pre-July, 1987 Member:

(a) Subject to Section 3.8(b) contained in this Schedule D, the amount of the Pre-July, 1987 Benefit of a Member who receives distribution of his entire nonforfeitable interest in his Pre-July 1987 Benefit (or, if greater, his entire nonforfeitable interest in Accumulated Pre-July, 1987 Employee Contributions) upon a Termination of Employment or Retirement, shall be determined based only on his Years of Credited Service accrued on or after the date the Member is rehired.

(b) This Section 3.8(b) applies only to a Pre-July, 1987 Member who (1) receives a distribution of his entire nonforfeitable interest in his Pre-July, 1987 Benefit as described in Section 3.8(a) contained in this Schedule D, (2) resumes covered employment under the Plan and
(3) either does not have a nonforfeitable interest in the portion of his Pre-July 1987 Benefit attributable to Employer contributions under Section 5.1 or is rehired before January 1, 1992. In the case of such a Pre-

88

July, 1987 Member, his Pre-July, 1987 Benefit attributable to service credited before his original Termination of Employment or Retirement shall not be disregarded if the Member repays to the Plan the full amount of his distribution plus interest. The Member's repayment must occur no later than the earlier of (a) the fifth anniversary of the Member's reemployment and (b) the day the Member incurs five consecutive Breaks in Service.

(c) A Member described in Section 3.8(b) contained in this-Schedule D, may also retroactively repay to the Plan, in accordance with the time period specified in paragraph (b), employee contributions for any period which he is on an approved leave of absence. If the Member does so and returns to employment immediately after the expiration of that leave he will receive credited service for the period of the leave.

89

SCHEDULE E - SECTION 6.4

6.4(a) A Pre-July, 1987 Member (i) who has a Termination of Employment before his Early Retirement Date, (ii) who is credited with at least five Vesting Years of Service and (iii) whose Retirement Benefit exceeds $3,500 ($5,000 effective January 1, 2002), may elect to receive a distribution of the amount of his Accumulated Pre-July, 1987 Employee Contribution as soon as practicable after his Termination of Employment. Subject to Section 6.6, the distribution of the Accumulated Pre-July, 1987 Employee Contributions of a Member who makes an election under the first sentence of this paragraph (a) shall be made in the form described in Sections 6.1(b) or 6.1(c), as applicable, commencing as of the first day of the month following his Termination of Employment, unless the Member elects a single cash payment of the full amount payable. The Cash Balance Benefit and the portion of the Pre-July, 1987 Benefit attributable to Employer contributions of a Member who makes the election under the first sentence of this paragraph (a) shall be distributed in such form and at such time as determined under Article 6 (or Article 7 if he dies before the distribution of his benefits is to commence under
Section 6.3).

(b) A Pre-July, 1987 Member who has a Termination of Employment before his Early Retirement Date and who is not credited with at least five Vesting Years of Service may elect to receive distribution of the amount of his Accumulated Pre-July, 1987 Employee Contributions as soon as practicable after his Termination of Employment. This distribution shall be made either in (1) a single cash payment of the full amount payable or (2) an annuity for the Member's life (if greater than $10 per month), subject to
Section 6.5 if the amount of the Member's Accumulated Pre-July, 1987 Employee Contributions exceeds $3,500 ($5,000 effective January 1, 2002).

90

SCHEDULE F. SECTION 7.1 (b)

7.1(b)(1) Subject to Section 7.1(b)(4), if a Pre-July 1, 1987 Member who is married (i) dies while employed by an Employer after he attains age 55, (ii) has not begun to receive distribution of his benefits in accordance with Section 6.3 and (iii) either (A) has been credited with at least five Years of Credited Service or 10 Vesting Years of Service or (B) the sum of his age and the number of his Years of Credited Service equals at least 70, his spouse shall receive a monthly benefit equal to one-half the monthly Pre-July, 1987 Benefit (determined without regard to Section 3.2(b) contained in Schedule D to this Plan) the Member would have received if he had a Retirement on the day before his death and received distribution of his benefit in the form of an annuity for his life with a 60-month period certain feature. If the Member's spouse is at least five years younger than the Member, the monthly benefit payable to the spouse shall be reduced actuarially (in accordance with the assumptions set forth in Schedule C to this Plan) to take account of the difference in age. If the Preretirement Death Benefit described in either Section 7.1(b)(2) or 7.1(b)(3) of this Schedule F is greater in actuarial value than the Preretirement Death Benefit under this Section 7.1(b)(1), the Member's spouse shall receive the greater of those benefits instead of the benefit under this Section 7.1(b)(1).

(2) Subject to Section 7.1(b)(4) contained in this Schedule F, if a Pre-July, 1987 Member (a) dies after he has been credited with at least five Vesting Years of Service but before the time distribution of his benefits is to commence in accordance with Section 6.3, (b) has been married to his spouse for at least one year at the time of his death and (c) his spouse is not entitled to receive a benefit under
Section 7.1(b)(1) contained in this Schedule F, his spouse shall be entitled to receive a

91

Qualified Preretirement Survivor Annuity based on the Members Pre-July, 1987 Retirement Benefit described in Schedule D to this Plan.

(3) If a Pre-July, 1987 Member dies before distribution of his benefits commences and either (i) he is married and his spouse is not entitled to receive a benefit under Section 7.1(b)(1) or (b)(2) contained in this Schedule F or (ii) he is not married, his spouse (or his Beneficiary, if he is not married) shall be entitled to receive a death benefit which is Actuarially Equivalent in value to the amount of his Accumulated Pre-July, 1987 Employee Contributions.

(4) If the surviving spouse of a Pre-July, 1987 Member who is receiving a Pre-Retirement Death Benefit under Section 7.1(b)(1) or (b)(2) contained in this Schedule F dies before the amount actually distributed equals the amount of the Member's Accumulated Pre-July, 1987 Employee Contributions (determined as of the date of the Member's death), the shortfall shall be paid to the person designated (in the manner prescribed by the Committee) by the Member's spouse. In absence of such a designation, the shortfall shall be paid to the estate of the Member's spouse.

(5) The surviving spouse of a Pre-July, 1987 Member may withdraw the Member's Accumulated Pre-July 1987 Employee Contributions at any time.

92

SCHEDULE G. SALE OF STOCK OF HCM CLAIM MANAGEMENT CORPORATION TO THE EMPLOYEE CARE CORPORATION

Notwithstanding any other provision of the Plan to the contrary, the following provisions shall govern the Retirement Benefit of those Members of the Plan who are employed by HCM Claim Management Corporation ("HCM") on the closing date of the sale of all of the issued and outstanding capital stock of HCM Claim Management Corporation by The Hertz Corporation (the "Seller") to The Employee Care Corporation (the "Purchaser") (the "Effective Date"), the date on which HCM ceases to be an Affiliated Company (as that term is defined in Section 1.3 of the Plan) by reason of such sale, and who continue to be employed by HCM on the day immediately following the Effective Date (or, with respect to such Members who are designated by the Seller as "totally disabled" on the Effective Date, return to HCM within six months after the Effective Date). Such Members shall be known as "HCM Plan Members".

1. All HCM Plan Members will become fully (100%) vested in their Retirement Benefit as of the Effective Date.

2. Any HCM Plan Members shall be considered for purposes of this Plan to have incurred a Termination of Employment (as that term is defined in Section 1.44 of the Plan) as of the Effective Date, and the Retirement Benefit of such HCM Plan Member shall be subject to the distribution provisions of Article 6 of the Plan.

93

THE HERTZ CORPORATION ACCOUNT BALANCE
DEFINED BENEFIT PENSION PLAN

The Hertz Corporation Account Balance Defined Benefit Pension Plan, as amended and restated effective as of January 1, 2000, (the "Plan") is hereby amended, effective as January 1, 2002, as follows:

1. Section 1.14 of the Plan is amended by adding the following paragraphs at the end thereof to read as follows:

"The annual compensation of each Member taken into account in determining benefit accruals in any Plan Year beginning after December 31, 2001, shall not exceed $200,000. Annual compensation means compensation during the Plan Year or such other 12-consecutive month period over which compensation is determined under the Plan (the determination period). The $200,000 limit on annual compensation in the preceding sentence shall be adjusted for cost-of-living increases in accordance with Section 401(a)(17) of the Code. The cost-of-living adjustment in effect for a calendar year applies to the annual compensation for the determination period that begins with or within such calendar year."

2. Section 4.2(a) of the Plan is amended by substituting the figure "$160,000" for "$90,000".

3. Section 4.2(b)(2) of the Plan is amended to read as follows:

"the dollar limitation set forth in Section 4.2(a)(1) shall be adjusted as follows: if distribution of a Member's Retirement Benefit begins prior to age 62, the limitation shall be adjusted so that it equals an Annual Benefit beginning at the time distribution of a Member's Retirement Benefit begins, which is the Actuarial Equivalent of an Annual Benefit equal to the dollar limitation set forth in Section 4.2(a)(1) beginning at age 62. If distribution of a Member's Retirement Benefit begins after age 65, the limitation shall be increased so that it equals an Annual Benefit beginning at the time distribution of a Member's Retirement Benefit begins, which is the Actuarial Equivalent of an Annual Benefit equal to the dollar limitation set forth on Section 4.2(a)(1) beginning at the date the Member attains age 65."

4. Section 6.14(a) of the Plan is amended by adding the following sentence at the end thereof, to read as follows:

"A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax contributions which are not


includible in gross income. However, such portion may only be paid to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in Section 401(a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of a distribution which is includible in gross income and the portion of a distribution which is not so includible."

5. Section 6.14(b) of the Plan is amended by adding the following sentences at the end thereof, to read as follows:

"With respect to distributions made after December 31, 2001, an 'eligible retirement plan' shall also mean an annuity contract described in Section 403(b) of the Code and an eligible retirement plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or a political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. The definition of 'eligible retirement plan' shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code."

6. Section 17.1(c) of the Plan is amended by adding the following paragraph at the end thereof, to read as follows:

"Notwithstanding the foregoing, for Plan Years beginning after December 31, 2001, "Key Employee" means any Employee or former Employee of the Employer (and the beneficiaries of such Employee or former Employee) who at any time during a Plan Year or the preceding four Plan Years was (i) an officer of the Employer having an annual compensation from the Employer greater than $130,000, as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002, (ii) a more than 5 percent owner of the Employer or (iii) a more than 1 percent owner of the Employer who has an annual compensation of more than $150,000."

7. Clause (I) of the second sentence of Section 17.1(f) of the Plan is amended to read as follows:

"(I) the present value of accrued benefits as of a Determination Date under each Defined Benefit Plan and the aggregate Account Balances as of a Determination Date under each Defined Contribution Plan shall be increased by the aggregate distributions made from that plan to Members during the five-year period ending on the Determination Date; provided that, effective for Plan Years beginning after December 31, 2001, the term "one year period" shall be substituted for the term "five-year period" with respect to distributions upon separation from service, death or disability."


8. Clause (II) of the second sentence of Section 17.1(f) of the Plan is amended to read as follows:

"(II) the accrued benefit under any Defined Benefit Plan and the account balance under any Defined Contribution Plan of a Member who has not performed services for an Employer at any time during the five-year period ending on the Determination Date shall be disregarded; provided that effective for Plan Years beginning after December 31, 2001, the term "one year period" shall be substituted for the term "five year period."

9. Section 17.3 of the Plan is amended by adding the following sentence at the end thereof to read as follows:

"Effective for Plan Years beginning after December 31, 2001, any year of service with a Employer shall be disregarded for purposes of determining the minimum accrued benefit hereunder to the extent such service occurs during a Plan Year where the Plan benefits no Key Employee or former Key Employee."

10. Paragraph B.3 of Schedule B to the Plan is amended by adding the following paragraphs after the first paragraph thereof, to read as follows:

"The annual compensation of each Member taken into account in determining benefit accruals in any Plan Year beginning after December 31, 2001, shall not exceed $200,000. Annual compensation means compensation during the Plan Year or such other 12-consecutive month period over which compensation is determined under the Plan (the determination period). The $200,000 limit on annual compensation in the preceding sentence shall be adjusted for cost-of-living increases in accordance with Section 401(a)(17) of the Code. The cost-of-living adjustment in effect for a calendar year applies to the annual compensation for the determination period that begins with or within such calendar year.

In determining benefit accruals in Plan Years beginning after December 31, 2001, the annual compensation limit in the preceding paragraph for determination periods beginning before January 1, 2002 shall be $200,000."


EXHIBIT 10.13

HERTZ (U.K.) LIMITED
1972 PENSION PLAN

SUPPLEMENTAL TRUST
DEED AND RULES

EFFECTIVE 6TH APRIL 1998


DEFINITIVE DEED

ARRANGEMENT OF SECTIONS

PART                                                                             COLOR               PAGE
------------                                                                     ------            ---------
   DEED                                                                          White                 1 - 6
   APPENDIX                                                                                           7 - 10
   THE RULES                                                                                        11 - 139
   PART I          - CONSTRUCTION, INTERPRETATION AND DEFINITIONS                Grey                11 - 30
   PART II         - JOINING AND LEAVING THE PLAN                                Cream               31 - 36
   PART III        - CALCULATION AND PAYMENT OF CONTRIBUTIONS                    Pink                37 - 40
   PART IV         - CALCULATION AND PAYMENT OF BENEFITS                         Blue                41 - 76
   PART V          - MISCELLANEOUS PROVISIONS RELATING TO
                     MEMBERSHIP, CONTRIBUTIONS AND BENEFITS                      Green              77  - 92
   PART VI         - ADMINISTRATION AND MANAGEMENT OF THE PLAN                   Yellow             93 - 102
   PART VII        - SUSPENSION OR TERMINATION OF THE PLAN                       Orange            103 - 112
   PART VIII       - STATUTORY PROVISIONS                                        Mauve             113 - 138
   PART IX         - ALTERATION TO PLAN                                                                  139


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
RULES
I                                                                                                 Grey
CONSTRUCTION,        1.                    TRUST DEED AND RULES
INTERPRETATION
& DEFINITIONS                                                                                                 11
                        (A)                -        construction                                              11
                        (B)                -        interpretation                                            11
                        (C)                -        right to information                                      11
                     2.                    DEFINITIONS                                                        12
II                                                                                                Cream
JOINING AND          3. (A)                -        Joining the Plan                                          31
LEAVING THE PLAN           (1)             full membership - Staff                                            31
                           (2)             -        Executive                                                 31
                           (3)             -        Senior Executive                                          32
                           (4)             Changes between Category                                           32
                           (5)             Life Assurance membership                                          33
                        (B)                -        Treatment of benefits for earlier periods
                                                    of Membership                                             33
                        (C)                -        Leaving the Plan                                          34
                           (1)             full membership                                                    34
                           (2)             Life Assurance membership                                          35
                        (D)                -        Employment with an overseas employer                      35


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
III                                                                                                 Pink
CALCULATION AND      4.                    MEMBER'S CONTRIBUTIONS
PAYMENT OF
CONTRIBUTIONS                                                                                                 37
                        (A)                -        ordinary                                                  37
                        (B)                -        voluntary                                                 37
                           (1)             limits and payment conditions                                      37
                           (2)             period of payment                                                  37
                           (3)             benefits from Voluntary Contributions                              38
                           (4) (a)         segregated Voluntary Contributions                                 38
                               (b)         segregation conditions                                             38
                               (c)         investment                                                         39
                               (d)         expenses                                                           39
                               (e)         methods of securing benefits                                       39
                           (5)             surplus voluntary contributions                                    40
                        (C)                -        collection                                                40
                        (D)                -        unpaid                                                    40
                        (E)                -        maximum yearly contribution                               40
                     5.                    EMPLOYER'S CONTRIBUTIONS                                           40
IV                                                                                                  Blue
CALCULATION AND      6.                    NORMAL RETIREMENT PENSION                                          41
PAYMENT OF           7.                    EARLY RETIREMENT PENSION                                           43
BENEFITS
                     8.                    LATE RETIREMENT PENSION                                            45


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
                     9.                    BENEFITS ON LEAVING THE PLAN                                       46
                         (A)               -        Deferred pension                                          46
                         (B)               -        Alternative date for payment for Deferred
                                                    Pension                                                   48
                         (C)               -        refund of pre-April 1975 contributions
                                                    and calculation of residual Deferred
                                                    Pension                                                   49
                         (D)               -        refund of all contributions                               50
                     10.                   OPTIONS ON LEAVING THE PLAN                                        50
                         (A)               -        statutory option to buy-out or transfer                   50
                         (B)               -        non-statutory transfer to another scheme
                                                    instead of Deferred Pension or refund of
                                                    contributions                                             53
                         (C)               -        non-statutory buy-out option                              53
                         (D)               -        Buy-out Option at Trustees' Discretion                    54
                     11.                   LUMP SUM INSTEAD OF PENSION                                        55
                         (A)               -        normal basis                                              55
                         (B)               -        Member in serious Ill-health                              58
                         (C)               -        Trivial Pensions                                          59
                     12.                   LUMP SUM DEATH BENEFITS                                            59
                         (A)               -        lump sum on death in Service before
                                                    Normal Retiring Date                                      59


                         CLAUSE OR
  PART & TITLE            RULE NO.                                SUBJECT                         COLOUR   PAGE NO.
----------------     ------------------    -----------------------------------------------------  ------   --------
                         (B)               -        lump sum on death after leaving the Plan
                                                    with a deferred pension but before it
                                                    commences                                                 60
                         (C)               -        lump sum on death in Service on or after
                                                    the Normal Retiring Date                                  60
                         (D)               -        lump sum on death of a pensioner                          60
                     13.                   PAYMENT OF LUMP SUM DEATH BENEFIT                                  61
                         (A)               -        benefits payable to personal representatives              61
                         (B)               -        benefits payable under discretionary trusts               61
                     14. (A)               SPOUSE'S PENSION                                                   63
                            (1)            -        death while a Member before Normal Retiring
                                                    Date                                                      64
                            (2)            -        death in Service after Normal Retiring Date               64
                            (3)            -        death after leaving Plan but before pension
                                                    begins                                                    64
                            (4)            -        death after pension begins                                65
                            (5)            -        death after deferred pension begins                       65
                            (6)            additional provisions relating to Spouse's Pension                 66
                         (B)               -        Child's Pension                                           67
                         (C)               -        Dependant's Pension                                       69


                          CLAUSE OR
  PART & TITLE             RULE NO.                             SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
                     15.                   SURRENDER OF A MEMBER'S PENSION TO PROVIDE
                                           DEPENDANT'S PENSION                                                69
                     16. (A)               DISCRETIONARY BENEFITS                                             69
                            (1)            augmentations                                                      69
                            (2)            persons not otherwise entitled to benefit under the
                                           Plan                                                               70
                         (B)               -        membership on special terms                               70
                         (C)               -        periodic review of pensions                               71
                         (D)               -        benefits affected by statutory earnings
                                                    cap                                                       71
                     17.                   PAYMENT OF PENSIONS                                                72
                     18.                   DEDUCTION OF TAX                                                   72
                     19.                   CONDITIONS FOR PAYMENT OF BENEFITS                                 72
                     20.                   PAYMENTS TO WIDOW, WIDOWER OR
                                           OTHER NEXT OF KIN                                                  72
                     21.                   CLAIMANTS UNABLE TO ACT                                            73
                     22.                   POLYGAMOUS                                                         74
                     23.                   NON-ASSIGNABILITY OF BENEFITS                                      74
                     24.                   SECURING BENEFITS OUTSIDE THE
                                           PLAN BY PURCHASE OF POLICIES                                       75


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
V                                                                                                 Green
MISCELLANEOUS        25.                   TEMPORARY ABSENCE FROM WORK
PROVISIONS
RELATING TO                                                                                                   77
MEMBERSHIP,          26.                   MATERNITY ABSENCE                                                  78
CONTRIBUTIONS            (A)               -        application                                               78
AND BENEFITS             (B)               -        refunds of contributions                                  78
                         (C)               -        rights before 23.6.94                                     78
                            (1)            calculation of Pensionable Service                                 79
                            (2)            effect of pay during absence                                       79
                            (3)            death benefits                                                     79
                         (D)               -        rights on and after 23.6.94                               79
                            (1)            calculation of Pensionable Service                                 79
                            (2)            benefits for Pensionable Service                                   79
                            (3)            death benefits                                                     79
                            (4)            Member's Ordinary Contributions                                    80
                     27.                   TRANSFERS FROM ANOTHER SCHEME                                      80
                         (A)               Expressions used                                                   80
                         (B)               -        acceptance                                                81
                         (C)               -        information to be obtained by Trustees                    81
                         (D)               -        benefits                                                  81
                         (E)               -        revaluation of GMP                                        82


                         CLAUSE OR
  PART & TITLE            RULE NO.                               SUBJECT                          COLOUR   PAGE NO.
----------------     ------------------    ----------------------------------------------------   ------   --------
                         (F)               -        transfers including protected rights                      83
                         (G)               -        no offsetting of GMP revaluation                          83
                         (H)               -        transferees not becoming contracted-out                   84
                     28.                   TRANSFERS TO ANOTHER SCHEME                                        84
                         (A)               -        expressions used                                          84
                         (B)               -        general                                                   84
                         (C)               -        information on receiving scheme                           85
                         (D)               -        benefits to be provided by receiving scheme               86
                         (E)               -        transfer of GMPs                                          86
                            (1)            to salary related contracted-out schemes                           86
                            (2)            to money purchase contracted-out schemes                           87
                            (3)            to appropriate personal pension scheme                             87
                            (4)            to overseas schemes                                                87
                         (F)               -        transfers without Members consent                         88
                         (G)               -        interaction with Statutory Transfer Option                88
                         (H)               -        effect of transfer on Plan benefits                       88
                     29.                   RIGHTS OF EMPLOYERS RELATING TO EMPLOYEES                          88
                     30.                   CLAIMS AGAINST TRUSTEES OR EMPLOYERS                               89
                     31.                   LIEN ON BENEFITS                                                   89


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
                     32. (A)               INLAND REVENUE LIMITATIONS                                         90
                         (B)               -        Inland Revenue undertakings                               90
                         (C)               -        optional limits                                           90
VI                                                                                                Yellow
ADMINISTRATION       33.                   RESPONSIBILITY FOR ADMINISTRATION AND MANAGEMENT                   93
AND MANAGEMENT
OF THE PLAN          34.                   APPOINTMENT AND REMOVAL OF TRUSTEES                                93
                     35.                   TRUSTEES' GENERAL POWERS OF DETERMINATION                          94
                     36.                   EXERCISE OF TRUSTEES' POWERS                                       94
                         (A)               -        individual trustees                                       94
                         (B)               -        corporate trustee                                         95
                         (C)               -        trustees decisions                                        95
                     37.                   TRUSTEES LIABILITY                                                 95
                     38.                   EXERCISE OF EMPLOYER'S POWERS                                      96
                     39.                   INVESTMENT OF FUND                                                 96
                         (A)               -        acquisition and disposal of investments                   96
                         (B)               -        permitted investments                                     96
                         (C)               -        additional powers : land and buildings                    97
                         (D)               -        additional powers : personal property                     98


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                            COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------      ------   --------
                         (E)               -        indemnity by trustees in connection with
                                                    investments                                                98
                         (F)               -        nominee to hold investments                                98
                         (G)               -        employer related investments                               98
                     40.                   POWER TO RAISE OR BORROW MONEY                                      98
                     41.                   DONATIONS AND BEQUESTS                                              99
                     42.                   PLAN ACCOUNTS                                                       99
                     43.                   AUDIT OF ACCOUNTS                                                   99
                     44.                   ACTUARIAL INVESTIGATION AND STATEMENT                               99
                     45.                   ASSISTANCE TO TRUSTEES                                              99
                         (A)               -        appointment and removal of officers                        99
                         (B)               -        actuarial advice                                           99
                     46.                   DELEGATION OF TRUSTEES' POWERS                                     100
                     47.                   PLAN EXPENSES                                                      100
                     48.                   ADMISSION OF ASSOCIATED EMPLOYERS                                  100
                     49.                   ARBITRATION                                                        101
VII                                                                                                Orange
SUSPENSION OR        50.                   SUSPENSION OF A PARTICIPATING EMPLOYER'S CONTRIBUTIONS             103
TERMINATION OF


                       CLAUSE OR
  PART & TITLE          RULE NO.                                   SUBJECT                               COLOUR   PAGE NO.
----------------     -------------         --------------------------------------------------------      ------   --------
THE PLAN             51.                   TRUSTEES' POWER TO TREAT SUSPENSION AS TERMINATION                       103
                     52.                   TERMINATION OF CONTRIBUTIONS BY A PARTICIPATING EMPLOYER                 103
                     53.                   TERMINATION OF THE PLAN                                                  105
                         (a)               -        entitlement to benefit                                          105
                         (b)               -        disposal of death benefits                                      105
                         (c)               -        application of Member's Voluntary
                                                    Contributions                                                   105
                         (d)               -        use of Plan assets on wind-up                                   105
                            (1) (a)        pensioners                                                               105
                                (b)        Members who have reached Normal Retiring
                                           Date but whose pension has not commenced                                 106
                            (2)            Members who were contracted-out under old State
                                           Graduated Scheme                                                         106
                            (3)            Guaranteed Minimum Pensions                                              106
                            (4) (a)        Members who have left the Plan with
                                           Deferred Pensions                                                        106
                                (b)        Members in Service before Normal Retiring Date                           106
                                (c)        other persons                                                            107
                            (5)            application of surplus assets                                            107
                            (6)            refund of residual surplus to employers                                  107


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
                            (7)            offsetting benefits under one paragraph against
                                           benefits under another                                            108
                            (8)            order of priority of benefits                                     108
                            (9)            payment of state scheme premiums to secure certain
                                           benefits                                                          108
                         (e)               -        alternative lump sum in certain
                                                    circumstances                                            109
                         (f)               -        expenses of wind-up                                      109
                     54.                   OPTIONAL POWERS ON TERMINATION OF CONTRIBUTIONS                   109
                         (A)               -        continuation of Plan as a closed scheme                  109
                         (B)               -        transfers to another scheme                              110
                         (C)               -        non-statutory buy-out option                             110
                         (D)               -        selective application of options on
                                                    termination of contributions                             111
VIII                                                                                              Mauve
STATUTORY            55.                   GUIDE TO INLAND REVENUE LIMITATIONS                               113
PROVISIONS               (A)               -        expressions used                                         113
                         (B)               -        Member's pension                                         121
                            (1)            Class A Members                                                   121
                            (2)            Class B Members and Class C Members                               122
                         (C)               -        lump sum on retirement                                   124
                            (1)            Class A Members                                                   124


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
                             (2)           Class B Members and Class C Members                               124
                         (D)               -        lump sum death benefits                                  126
                         (E)               -        dependant's pensions                                     126
                         (F)               -        pension increases                                        127
                         (G)               -        late retirement                                          127
                         (H)               -        Controlling Directors                                    127
                         (I)               -        maximum yearly contributions                             128
                         (J)                                                                                 128
                     56. (A)               CONTRACTING-OUT OF THE STATE EARNINGS RELATED
                                           PENSION SCHEME                                                    128
                         (B)                                                                                 128
                         (C)               -        guaranteed minimum pension (GMP)                         128
                         (D)               -        retirement after Pensionable Age                         129
                         (E)               -        revaluation of GMP for early leavers                     129
                         (F) (1)           -        Anti-franking                                            131
                             (2)           -        Member's Anti-franking Minimum                           133
                             (3)           -        widow's/widower's Anti-franking Minimum                  134
                         (G)               -        payment of state pension premiums and
                                                    corresponding reduction of Plan benefits                 135
                         (H)               -        Plan ceasing to be contracted-out                        135


                         CLAUSE OR
  PART & TITLE            RULE NO.                              SUBJECT                           COLOUR   PAGE NO.
----------------     ------------------    --------------------------------------------------     ------   --------
                     57.                   CONTRACTING-OUT OF THE OLD STATE GRADUATED PLAN                   136
IX                                                                                                White
ALTERATION TO
PLAN                 58.                   POWER OF ALTERATION                                               139


Page 1

THIS SUPPLEMENTAL TRUST DEED is made the 4th day of February 1997 BETWEEN HERTZ (U.K.) LIMITED (Company No. 597994) whose registered office is at Radnor House Norbury London (hereinafter called "the Principal Company") of the one part and
PETER ROY GILL STEPHEN JAMES SHIPSIDE RODNEY JAMES CLARKE BRIAN LLEWELLYN and MICHAEL BYRNE (hereinafter called "the Trustees") of the other part

WHEREAS :

(1) This Deed is supplemental to the deeds short particulars of which are set out in the Appendix hereto including the following

(a) a Trust Deed dated 1st January 1972

(b) a Supplemental Trust Deed (hereinafter called "the Definitive Deed") dated 25th October 1976 and

(c) a Supplemental Trust Deed dated 11th June 1985 (hereinafter called "the Supplemental Deed")

(2) The Trustees are the present trustees of the HERTZ (U.K.) 1972 PENSION PLAN (hereinafter called "the Plan") which was by the Definitive Deed confirmed as having come into operation as on and from 1st January 1972

(3) The Trustees with the consent of the Principal Company wish to amend the rules of the Plan set out in the Appendix to the Supplemental Deed (hereinafter called "the Old Rules") in the manner hereinafter set out and have power to do so pursuant to Rule 45 of the Old Rules

NOW THIS DEED WITNESSETH as follows :-

1. The Trustees with the consent of the Principal Company testified by its execution of these presents HEREBY ALTER the provisions of the Old Rules with effect from 6th April 1988 by the deletion of the Old Rules and by the substitution therefor of the Rules contained in the Schedule hereto
(such Rules as so substituted being hereinafter called "the New Rules")

2. The New Rules shall apply to all persons who

(a) on 6th April 1988 are Members under the New Rules and who on the previous day had not attained their Normal Retiring Dates (as defined in the New Rules), or


Page 2

(b) on or after 6th April 1988 become Members under the New Rules, or

(c) derive entitlement or contingent entitlement to benefit under the Plan through a person to whom (a) or (b) above applies, or

(d) not being persons to whom (a), (b) or (c) of this Clause applies first become entitled or prospectively entitled to benefit under the Plan on or after 6th April 1988

and any such person entitled or prospectively entitled to benefit under the Old Rules on special terms or in consequence of a transfer payment having been made to the Plan or in other circumstances appearing to the Trustees to be appropriate shall unless and to such extent as the Trustees with the agreement of the Principal Company otherwise determine continue to be so entitled or prospectively entitled to benefit under the corresponding provisions of the New Rules

3. The provisions of the Plan shall remain unaltered in respect of any person who is entitled or prospectively entitled to a benefit under the Plan and to whom the provisions of Clause 2 do not apply except that

(a) the powers under Sub-rules 10(C), 11(B) and 11(C) and Rules 16, 27 and 28 of the New Rules shall (where appropriate) be available to the Trustees in respect of any such person, and

(b) in the event of the expiration of the Perpetuity Period (as defined in the New Rules) or the cessation of payment of contributions to the Plan by one or more of the Participating Employers (as defined in the New Rules) and whether or not in respect of a specified category of persons the amount of and the terms and conditions appropriate to any benefit applicable under the Plan to any person to whom such cessation of contributions applies but to whom Clause 2 hereof does not apply shall be determined in accordance with the New Rules

4. The provisions of the Plan which relate to the vesting of the management and administration of the [MISSING TEXT] 31 of the Old Rules are deemed to be incorporated in the New Rules and, where inconsistent with the New Rules are deemed to override the New Rules until 21st February 1991, on which date the functions of the Hertz Pensions Management Committee were merged with the functions of the Trustees and the Hertz Pensions Management Committee was discharged

IN WITNESS whereof these presents have been duly executed and delivered as a deed the day and year first above written


Page 3

THE COMMON SEAL of HERTZ (U.K.) LIMITED was
hereunto affixed in the presence of:-

Director

Secretary

SIGNED and DELIVERED as a deed by the above named PETER ROY GILL in the presence of:- Trustee______________________

Witness_________________________________________

Name____________________________________________

Address_________________________________________




Page 4

SIGNED and DELIVERED as a deed by the above named STEPHEN JAMES SHIPSIDE in the presence of:- Trustee______________________

Witness_________________________________________

Name____________________________________________

Address_________________________________________



SIGNED and DELIVERED as a deed by the above named RODNEY JAMES CLARKE in the presence of:- Trustee_____________________

Witness_________________________________________

Name____________________________________________

Address_________________________________________




Page 5

SIGNED and DELIVERED as a deed by the above named BRIAN LLEWELLYN in the presence of:- Trustee_____________________

Witness_________________________________________

Name____________________________________________

Address_________________________________________



SIGNED and DELIVERED as a deed by the above named MICHAEL BYRNE in the presence of:- Trustee_____________________

Witness_________________________________________

Name____________________________________________

Address_________________________________________




Page 6

APPENDIX

TRUST DEEDS

Date                   Description                              Parties
----                   -----------                              -------
1st January 1972       Trust Deed                               (1)       The Principal Company
                                                                (2)       Associated Companies
                                                                (3)       R.P. Frost & other

28th February 1974     Deed of Appointment                      (1)       The Principal Company
                                                                (2)       R.A. Aebi
                                                                (3)       R.P. Frost & P.A.D.Strevens
                                                                (4)       J.E.Randall & R. Cranshaw

17th December 1974     Deed of Appointment                      (1)       The Principal Company
                                                                (2)       J.E.Randall
                                                                (3)       R. Cranshaw
                                                                (4)       R. Gill & others

25th April 1975        Deed of Appointment                      (1)       The Principal Company
                                                                (2)       J.E. Randall & others
                                                                (3)       Bankers Trustee and Executor Company
                                                                          Limited

25th October 1976      Supplemental Trust Deed                  (1)       The Principal Company
                                                                (2)       Associated Companies
                                                                (3)       Bankers Trustee and Executor Company
                                                                          Limited

15th March 1978        Supplemental Trust Deed                  (1)       The Principal Company
                                                                (2)       Bankers Trustee and Executor Company
                                                                          Limited


Page 7

6th April 1981         Supplemental Trust Deed appointing new   (1)       The Principal Company
                       Trustees in place of Retiring Trustees   (2)       Bankers Trustee and Executor
                       and amending Trust Deed and Rules                  Company Limited
                                                                (3)       S.M. Hyman Trustee Company Limited

24th August 1982       Supplemental Trust Deed amending         (1)       The Principal Company
                       Definitive Deed and Rules                (2)       S.M. Hyman Trustee Company Limited

12th March 1984        Supplemental Trust Deed adopting new     (1)       The Principal Company
                       Rules set out in Appendix                (2)       Southampton Place Trustee Company
                                                                          Limited

23rd May 1984          Supplemental Trust Deed amending Rule 4  (1)       The Principal Company
                                                                (2)       Southampton Place Trustee Company
                                                                          Limited

11th June 1985         Supplemental Trust Deed adopting new     (1)       The Principal Company
                       Rules                                              Southampton Place Trustee
                                                                (2)       Company Limited

18th March 1986        Supplemental Trust Deed Amending Rules   (1)       The Principal Company
                                                                (2)       Southampton Place Trustee Company
                                                                          Limited

28th August 1986       Supplemental Trust Deed Amending Rules   (1)       The Principal Company
                                                                (2)       Southampton Place Trustee Company
                                                                          Limited

1st July 1988          Trust Deed amending contracting-out      (1)       The Principal Company
                       provisions on an interim basis prior     (2)       Southampton Place Trustee Company Limited
                       to detailed alteration of the Rules


Page 8

21st February 1991     Supplemental Trust Deed appointing new   (1)       The Principal Company
                       Trustees in place of Retiring Trustees   (2)       Southampton Place Trustee Company Limited
                       and amending Rules                       (3)       P.R. Gill & others

26th November 1991     Deed of Appointment and                  (1)       The Principal Company
                       Removal                                  (2)       P.R. Gill & others
                                                                (3)       B. Llewellyn

5th January 1993       Supplemental Deed appointing new         (1)       The Principal Company
                       Trustee in place of Retiring Trustee     (2)       P.R. Gill & others
                       and amending Rules                       (3)       D.N. Sawers

23rd January 1996      Deed of Appointment and Removal          (1)       The Principal Company
                                                                (2)       P.R. Gill & others
                                                                (3)       D.H. Sawers


Page 9

RULES

THE SCHEDULE

PART I - CONSTRUCTION, INTERPRETATION AND DEFINITIONS

TRUST DEED AND RULES

- construction

1. (A) In the construction of the Plan, unless there is something inconsistent in the subject matter or the context the expressions defined in the Rules shall have the meanings attributed to them by the appropriate definition and words importing the singular shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender. Any reference in the Trust Instrument or the Rules to any Act of Parliament or any part or section of one or any statutory regulations includes

(1) where appropriate, any earlier corresponding legislation,

(2) any statutory modification or re-enactment thereof for the time being in force, and

(3) any corresponding enactment, regulation or order of Northern Ireland.

- interpretation

(B)   (1)   The headings and marginal notes to the Rules and references
            thereto in the Rules shall not affect the interpretation of
            them.

      (2)   Any terms used in the Rules as a measure of annual earnings in
            calculating the benefits and Member's Ordinary Contributions
            of a Class A Member are to be interpreted as limiting those
            earnings to the permitted maximum as defined in Section 590(C)
            of the Act (known as the earnings cap).

- right to information

(C) Any person entitled or prospectively entitled to benefits under the Plan and any independent trade union recognised to any extent for the purposes of collective bargaining in relation to Members and prospective Members is entitled under the Disclosure Requirements, to information about the constitution of the Plan, its administration and finances and the rights and obligations that may arise under it. The Trustees shall make the information available in a manner and on a basis which satisfies the Disclosure Requirements.

DEFINITIONS

2. "Accrued Guaranteed Minimum" means,


Page 10

(a) in relation to a Member that part of his Plan Guaranteed Minimum (excluding any prospective increases in it) which had accrued at the date his Contracted-out Employment ended,

(b) in relation to a Member's widow, half of the amount applicable to the Member under (a) above,

(c) in relation to a Member's widower half of the amount applicable to the Member under (a) above which is attributable to earnings for the 1988/89 Tax Year and later Tax Years.

"the Act" means the Income and Corporation Taxes Act 1988 and approval under the Act means approval as an exempt approved scheme by the Board of Inland Revenue under Chapter I of Part XIV of the Act.

"Actuary" means the actuary or actuaries for the time being appointed or nominated to the Plan under Sub-rule 45(A) (appointment and removal of officers).

"Anti-franking Minimum" means the Anti-franking Minimum as defined in Sub-rule 56(F).

"Associated Employer" means any corporation, company or firm

(a) which is either associated in business with or directly or indirectly controlled by the Principal Company. In the event of any question as to whether a corporation, company or firm is either associated in business with or directly or indirectly controlled by the Principal Company a certificate under the hand of the chairman or any two directors of the Principal Company shall be conclusive evidence of the facts therein stated, or

(b) which the Principal Company has, with the consent of the Board of Inland Revenue, determined shall for any period be treated as an Associated Employer for the purposes of the Plan.

"Associated Scheme" means, in any case where a determination as to any calculation, matter or fact falls to be made

(a) on or after 27th July 1989, Associated Scheme as defined in Sub-rule 55(A) (Inland Revenue Limits), and

(b) before 27th July 1989, in relation to a Member or Life Assurance Member, any retirement benefits scheme as defined in section 611 of the Act relating to service with a Participating Employer, other than the Plan.


Page 11

"Basic Salary" means, in relation to a Member or a Life Assurance Member, the annual rate of his basic salary on the commencement of each Plan Year or, if later, on the date of joining the Plan.

"Child" means, in relation to a Member,

(a) any child of the Member or of his spouse,

(b) any legally adopted child of the Member or of his spouse, and

(c) if the Trustees so decide, any other child in relation to whom, in the opinion of the Trustees, the Member stood in loco parentis at the time of his death.

provided that:

(1) a person shall qualify as a Child only

(a) until the age of 18 years, or

(b) during any period after attaining age 18 and before attaining age 21 during which he is in receipt of full-time education or vocational training unless that education or training is given in the course of employment;

(2) "Children" has a corresponding meaning;

(3) in relation to any Member the expression "Child" shall not, unless the Trustees so decide, include any child born after contributions by the relevant Participating Employer cease under Rule 52, and

(4) the Trustees may decide that any Child (not being the Member's only Child) who in the opinion of the Trustees was not dependent on the Member at the time of his death shall be disregarded.

"Child's Pension" means Child's Pension as defined in Sub-rule 14(B).

"Class A Member", "Class B Member" and "Class C Member" have the meanings shown in Sub-rule 55(A).

"Commencement Date" means 1st January 1972.


Page 12

"Contracted-out Employment" means employment which is treated as contracted-out employment by reference to the Plan for the purposes of the Pensions Act including any period of employment which is so treated for the purposes of section 14(1) thereof by reason of the transfer to the Plan of accrued rights from another scheme.

"Contracting-out Deduction" means, in relation to a Member, an amount determined by the Trustees to be the amount (if any) by which the National Insurance contributions payable by the Member during any period of Contracted-out Employment have fallen short of what would have been payable if the Member had not been in Contracted-out Employment during that period.

"Deferred Pension" means Deferred Pension as defined in Sub-rule 9(A) (Benefits on leaving the Plan).

"Dependent Relative" means, in relation to a person, any one or more of the following:-

(a) a child including a stepchild and a lawfully adopted child of such person who is under the age of 18 years or is for the time being a student engaged in full-time education or vocational training, and

(b) any person who in the opinion of the Trustees was dependent on such first mentioned person for all or any of the ordinary necessaries of life.

"Disclosure Requirements" means the requirements as to disclosure of information about the Plan and the form of that information, contained in section 113 of the Pensions Act and the Occupational Pension Schemes (Disclosure of Information) Regulations 1986.

"Early Retirement Pension" means Early Retirement Pension as defined in Rule 7.

"Eligible Employee" means a person in the service of a Participating Employer whose name is recorded in the register specified in the membership conditions specified in the appropriate part of Sub-rule 3(A) and may include a director of a Participating Employer provided that such inclusion will not prejudice approval of the Plan under the Act and for the purposes of the Plan any such director shall be deemed to be in the service of a Participating Employer.

The decision of the Principal Company as to whether or not a person is in the service of a Participating Employer and whether or not his name shall be recorded or cease to be recorded in any such register shall be conclusive.


Page 13

"Equivalent Pension Benefits" means Equivalent Pension Benefits as defined in Rule 57 (Contracting-out of the old State graduated scheme).

"Executive Member" means a Member who has become a Member under Rule 3(A)(2) and whose name is recorded in a Participating Employer's register of Executive Members.

"Final Contribution Date" means, in relation to a Member, the earlier of

(a) the last day of the month coincident with or, if not coincident with, immediately preceding Normal Retiring Date, and

(b) the date he leaves the Plan.

"Final Pensionable Salary" means

(a) before 1st July 1993, the greatest annual average of a Member's Pensionable Salaries for 3 consecutive Plan Years in the 10 consecutive Plan Years up to the complete Plan Year before the Plan Year in which falls the earlier of the Normal Retiring Date and the date he leaves the Plan;

(b) after 30th June 1993, the greatest annual average of a Member's Pensionable Salaries for 3 consecutive Plan Years in the 10 consecutive Plan Years up to and including the Plan Year in which falls the earlier of the Normal Retiring Date and the date he leaves the Plan.

For the purpose of calculating the Member's Final Pensionable Salary his Pensionable Salary as a Part-time Member shall be multiplied by a fraction the numerator of which shall be the full complement of hours necessary to qualify such service as Full-time Service and the denominator shall be the number of hours worked in a week while a Part-time Member.

"Final Remuneration" has the meaning shown in Sub-rule 55(A).

"First Contribution Date" means, in relation to a Member, the date upon which he became a Member.

"Fund" means the monies and other assets subject to the trust established by the Trust Instrument.

"GMP Increase" means


Page 14

(a) in relation to a Member whose Contracted-out Employment ends before Pensionable Age or whose pension under the Plan is due to commence after Pensionable Age, the difference between his Plan Guaranteed Minimum and his Accrued Guaranteed Minimum;

(b) in relation to the widow or widower of a Member to whom paragraph (a) applies, the difference between the Plan Guaranteed Minimum and the Accrued Guaranteed Minimum.

"Guaranteed Minimum" means, in relation to a Member or a Member's widow or widower, the appropriate guaranteed minimum including any increases and prospective increases in the amount thereof ascertained in accordance with Rule
56 (Contracting-out of the State earnings related pension scheme). For the purposes of calculating the Guaranteed Minimum at any date

(a) any prospective increases under paragraph (2) of Sub-rule 56(C) (which relates to increases after Pensionable Age under section 109 of the Pensions Act) shall be excluded, and

(b) any part of that guaranteed minimum which relates to a period after 5th April 1988 shall be disregarded in the case of a Member who has voluntarily left the Plan under Sub-rule 3(C) and exercised his Statutory Transfer Option inclusive of rights to that part of the guaranteed minimum.

For the purposes of determining whether a yearly pension under the Plan is less than the Guaranteed Minimum the amount of the Guaranteed Minimum shall be the annual equivalent (as determined by the Trustees) of its weekly rate.

"Guaranteed Minimum Pension" means, in relation to a Member or his widow or widower, his or her pension under the Plan to the extent to which its weekly rate is equal to the Guaranteed Minimum and shall to that extent include accrued rights conferring prospective entitlement under the Plan to the pensions to be provided for him and his widow or widower.

"Ill-health" means such partial or total incapacity arising out of accident or mental or physical disability or impairment as the Principal Company shall determine.

"Incapacity" means Ill-health which in the opinion of the Principal Company is sufficiently serious to: (a) prevent a Member or Life Assurance Member from following his normal occupation; and (b) impair seriously his earning ability.


Page 15

If the Principal Company so decides, a Member can be treated as suffering from Incapacity, even though his Ill-health does not satisfy condition (b).

"Index of Retail Prices" means the Central Statistical Office's index of retail prices published by the Department of Employment or any other index approved for the purposes of the Plan by the Board of Inland Revenue.

"Interest" means interest at the rate of 4 per cent. per annum compound calculated from the first day of the Plan Year immediately following the Plan Year in which the relevant contribution was made, up to the date on which Interest is payable under the Rules and compounded annually at the end of each Plan Year.

"Late Retirement Pension" means Late Retirement Pension as defined in Rule 8.

"Life Assurance Member" means a person who has been admitted to the Plan under Sub-rule 3(A)(5) and who has not ceased to be a Life Assurance Member under Sub-rule 3(C)(2).

"Linked Qualifying Service" means the relevant period of service which under the provisions of the Transfer Rules is to be taken into account as linked qualifying service under the Rules.

"Lower Earnings Limit" means, in relation to a Member or Life Assurance Member, his lower earnings limit for the purposes of the Pensions Act.

For the purposes of calculating the Lower Earnings Limit in relation to a period of Part-time Service, the Lower Earnings Limit shall be multiplied by a fraction, the numerator of which shall be the number of hours worked during the last complete week of the Member's Part-time Service and the denominator shall be the Full-time Working Week applicable during such last complete week.

"Member" means

(a) a person who was an Eligible Employee on 6th April 1988 and who on the previous day was a member under the Old Rules, or

(b) any other Eligible Employee who has become a Member under Rule 3,

but subject always to Sub-rule 3(C)(1) (leaving the Plan).


Page 16

"Member's Contributions" means, in relation to a Member, the aggregate of:

(a) any Member's Ordinary Contributions with Interest, and

(b) any Transferred Employee Contributions with Interest, and

(c) (1) his Voluntary Contributions Fund (if any), and

(2) any Member's Voluntary Contributions to which Sub-rule 4(E) (segregated Member's Voluntary Contributions) does not apply.

but excluding any amount which has been refunded to the Member in his lifetime and any part thereof which the Trustees certify to relate to benefits extinguished by the Member having exercised his Statutory Transfer Option or the non-statutory transfer or buy-out option under Sub-rules 10(B) and (C).

Provided that in any case where Member's Voluntary Contributions or Transferred Employee Contributions have been paid or applied on the basis that in the event which happens such contributions shall not be taken into account in calculating the amount of any benefit or benefits under the Plan Member's Contributions shall be reduced by an amount determined by the Trustees to be equal to the amount so paid or applied.

"Member's Ordinary Contributions" means, in relation to a Member his contributions to the Plan under Sub-rule 4(A) and any contributions paid by him as a condition of his membership of the Plan under any rules which governed the Plan before these Rules but excluding any contributions refunded to him in his lifetime.

"Member's Voluntary Contributions" means, in relation to a Member his contributions to the Plan under Sub-rule 4(B) and any voluntary contributions paid by the Member under any rules which governed the Plan before these Rules.

"Money Purchase Fund" means, in relation to a Member, the amount equal to the total of

(1) a notional contribution in respect of each complete Plan Year commencing after 5th April 1988 up to the earlier of the Normal Retiring Date and the date he leaves the Plan of the total of

(a) an amount equal to the Member's Ordinary Contribution for that Plan Year and


Page 17

(b) a percentage (described below) of so much of the Member's Pensionable Salary in such Plan Year as exceeds the Lower Earnings Limit in that Plan Year and does not exceed the Upper Earnings Limit in that Plan Year. The percentage referred to in this paragraph is 3.8 per cent prior to the 6th April 1993 and 3 per cent after the 5th April 1993;

and

(2) interest, at the Money Purchase Interest Rate, added on the first day of each Plan Year up to the end of the Plan Year immediately preceding the Plan Year in which the Member's Normal Retiring Date (or earlier date of retirement falls) calculated on the notional contribution in (1) above which relates to the previous Plan Year and any interest already declared in accordance with this sub-paragraph (2).

"Money Purchase Interest Rate" means the amount which the Trustees determine is the average rate declared during a Plan Year by the Halifax Building Society on its voluntary contributions account (or by such other body and/or in relation to such other account as the Trustees shall determine from time to time for the purposes of this definition).

"Money Purchase Pension" means, for a Member, the amount of pension which the Trustees, having regard to the advice of the Actuary, determine to be equal in value to the Member's Money Purchase Fund at the relevant date.

"National Insurance Act" means the National Insurance Act 1965.

"National Service" means, in relation to an Eligible Employee, any period of service in any of the naval, military or air forces of the Crown or, unless the Trustees otherwise determine, of compulsory employment for war purposes in full-time civil defence or industrial duties pursuant to statute or such other period of service for National purposes as the Trustees shall determine.

"Nominated Dependant" means in relation to a Member, any person (other than the Member's Qualifying Spouse or Children) who is or was dependent upon the Member at the date of the Member's death for all or any of the ordinary necessaries of life and who has been nominated by the Member in writing to the Trustees to receive any Dependant's Pension payable on his death.

"Normal Retirement Pension" means Normal Retirement Pension as defined in Rule 6.


Page 18

"Normal Retiring Date" means the 60th birthday in the case of a female Member or Life Assurance Member who leaves the Plan or reaches age 60 before 1st April 1991, the 60th birthday in the case of an Executive Member or Senior Executive Member, and the 65th birthday in the case of any other Member or Life Assurance Member.

"Old Rules" means the rules of the Plan which were in force on 5th day of April 1988.

"Paid-up Policy" means a policy of insurance or annuity contract in the name of a person or persons (or in the name of trustees of a trust for his or their benefit) entitled or prospectively entitled to a benefit or benefits under the Plan and providing, as may be appropriate, one or more of the following benefits, namely an annuity, a lump sum payable on the date upon which a lump sum was prospectively payable under the Plan, or a lump sum payable on death provided that

(a) the amount of any benefit shall not exceed the amount determined by the Trustees to be the maximum amount which, having regard to Sub-rule 32(A) (Inland Revenue limitations), could have been payable under the Plan by reference to the period of service with a Participating Employer appropriate at the date of purchase or provision of the policy or contract to the employee by reference to whose service the benefit applies,

(b) the policy or contract has been approved by the Board of Inland Revenue or the liabilities undertaken by the insurance company correspond with the benefits under the Plan which the policy or contract is intended to secure,

(c) any lump sum benefit payable on the death of a person shall be payable to his personal representatives or as otherwise arranged with the relevant insurance company,

(d) the policy or contract may be assigned or surrendered only

(1) with the written consent of the Member, and

(2) if the benefits previously secured by the policy or contract become secured or are replaced by benefits under one or more of (i) another policy or contract of a like nature to a Paid-up Policy, and (ii) subject to the conditions specified or referred to in regulation 2 of the Occupational Pension Schemes (Discharge of Liability) Regulations 1985 an occupational pension scheme, a personal pension scheme, or a self-employed pension arrangement,


Page 19

(e) any annuity may be commuted only if

(1) it has become payable and is a Trivial Pension, or

(2) it has become payable and the commutation does not apply to any part of it which represents a Guaranteed Minimum Pension, the Member has requested or consented to the commutation, and either

(A) he has attained the age of 50, or

(B) his earning capacity has been destroyed or seriously impaired, or

(C) he is in exceptional circumstances of serious ill-health; or

(3) any other conditions considered suitable by the Occupational Pensions Board are met,

(f) the relevant insurance company shall assume an obligation to the Member or to the trustees of a trust for his benefit to pay the benefits to him or, where appropriate, to his dependants or to the trustees of such a trust,

(g) the policy or contract shall give effect to provisos (a) to (f) above,

(h) the policy or contract shall be issued by any United Kingdom office or branch of any insurance company which is authorised to carry on ordinary long term insurance business under section 3 or 4 of the Insurance Companies Act 1982,

(i) if the policy or contract is intended to provide Guaranteed Minimum Pension, it shall include, or be endorsed with, terms to the effect that the annuity for the Member or his widow or widower will not be less than the Guaranteed Minimum and that any increase in the Guaranteed Minimum Pension under section 109 of the Pensions Act will result in a similar increase in the annuity,

(j) it contains or is endorsed with either

(1) a statement of the total length of the period or periods of service which gave rise to the benefits secured by it, or


Page 20

(2) where that total length exceeds 2 years a statement to that effect,

(k) for the purposes of this definition "Member" includes any person by reference to whose employment the Trustees have accepted a transfer of assets under the Plan.

"Part-time Member" means a Member or Life Assurance Member who in any period has a contractual working week of basic hours which is shorter than the contractual working week of basic hours for a full-time employee of the Participating Employer who in the opinion of the Participating Employer is in a comparable category of employment to the Member or Life Assurance Member (as appropriate).

"Participating Employer" means the Principal Company or any Associated Employer which is participating in the Plan in accordance with the provisions of Rule 48 and in relation to any Member or Life Assurance Member means the Participating Employer in whose Service he either is or was at the relevant time.

"Pensionable Age" means, in relation to a Member, the date upon which he attains pensionable age for the purposes of the Pensions Act.

"Pensionable Salary" means, in relation to a Member and any Plan Year, his Basic Salary for that Plan Year less the Lower Earnings Limit applicable on the first day of that Plan Year, rounded to the nearest multiple of (pound)12 or if midway between two such multiples the higher of such multiples.

"Pensionable Service" means, in relation to a Member, the aggregate of:-

(a) the number of complete years and months (each complete month counting as one-twelfth of a year) of his Full-time Service as a Member before the earlier of the Normal Retiring Date and the date he leaves the Plan and

(b) the number of complete years and months (each complete month counting as one-twelfth of a year) of his Part-time Service as a Member before the earlier of the Normal Retiring Date and the date he leaves the Plan multiplied by a fraction the numerator of which shall be the number of hours worked during the last complete week of the Member's Part-time Service and the denominator shall be the Full time Working Week applicable during such last complete week.

For the purposes of calculating the benefits under Sub-rule 11(A) (Lump sum instead of pension) any period of complete years and months of Service otherwise excluded by this definition shall count as Pensionable Service.


Page 21

At the request of the Principal Company the Trustees shall notify the Member that any additional period or periods are to be counted as Pensionable Service for some or all of the purposes of the Plan. Any such additional period or periods shall be Pensionable Service to the extent and for the purposes so notified.

"Pensions Act" means the Pension Schemes Act 1993.

"Perpetuity Period" means the period expiring on the twentieth anniversary of the day of the death of the last survivor of the issue living on 1st January 1972 of his late Majesty King George the Fifth or such longer period, during which legislation has made it lawful for the trusts of the Plan to continue.

"Plan" means the Plan which is established by the Trust Instrument and the Rules and which shall be known as the "HERTZ (U.K.) 1972 PENSION PLAN".

"Plan Death Benefit" means the Plan Death Benefit as determined in accordance with Sub-rule 12(A) (lump sum on death in Service before Normal Retiring Date).

"Plan Guaranteed Minimum" means

(a) in relation to a Member, that part of his Guaranteed Minimum which relates to his Contracted-out Employment as a Member

(b) in relation to a Member's widow or widower, half of the amount applicable to the Member under (a) above,

(c) in relation to a Member's widower, half of the amount applicable to the Member under (a) above which is attributable to earnings for the 1988/89 Tax Year and later Tax Years.

"Plan Year" means any period of one year commencing as the case may be on either of the following dates and on each anniversary thereof namely

(a) the Commencement Date, or

(b) any other date which the Trustees may at any time select,


Page 22

and includes an intervening period of more than 6 months but not more than 18 months where the Trustees have selected a different date from which Plan Years are to start and benefits or contributions applicable under the Rules to a Plan Year of more or less than 12 calendar months shall be adjusted.

"Pre-1988 Senior Executive Member" means a Senior Executive Member (other than a Pre-1985 Senior Executive Member) whose period of Pensionable Service as a Senior Executive commenced before 6th April 1988.

"Pre-1985 Senior Executive Member" means a Senior Executive Member whose period of Pensionable Service as a Senior Executive Member commenced before the 1st May 1985.

"Principal Company" means HERTZ (U.K.) LIMITED or, provided that approval of the Plan under the Act is not thereby prejudiced, any corporation, company or firm which, upon any amalgamation, reconstruction or otherwise, shall have covenanted with the Trustees to observe and perform such of the provisions of the Rules as are hereunder to be observed and performed by the Principal Company.

"Qualifying Member" means a Member

(a) whose last or only period of continuous Pensionable Service is at least 2 years. For this purpose:-

(1) two consecutive periods of Pensionable Service shall be treated as continuous and aggregated together if between them there is either no break or a break not exceeding one month;

(2) Linked Qualifying Service not otherwise included is added to Pensionable Service; or

(b) who (1) has completed more than one period of continuous Pensionable Service or, in relation to a Member who leaves the Plan before 28th February 1991, has completed a period of membership of another retirement benefits scheme (as defined in section 611 of the Act) relating to service with a Participating Employer, and (2) has completed 2 years' qualifying service by reference to the Plan for the purposes of paragraph 71 of the Pensions Act, or

(c) for whom the Trustees have accepted a transfer of assets under Rule 27 from a personal pension scheme within the meaning of section 1 of the Pensions Act.

"Qualifying Spouse" means the person (if any) to whom a Member was married at the date of his death.


Page 23

"Revaluation Increase" means:

(1) for a Member who leaves the Plan (other than by death) at least one year before his Normal Retiring Date, and

(2) for the Qualifying Spouse of a Member to whom (1) above applied and who died while receiving a pension from the Plan which commenced at Normal Retiring Date or while prospectively entitled to a pension under Rule 9 (Benefits on leaving the Scheme);

an amount calculated using the formula below appropriate to the date on which the Member leaves the Plan:

Member leaves the Plan before 1st January 1991   Member leaves the Plan after 31st December 1990
---------------------------------------------    -----------------------------------------------
          A x B x (D - E)                                          A x (D - E)
          -----
            C

Where:

A is the percentage specified in the last order made under section 52A of the Pensions Act before the Member's Normal Retiring Date applicable to a revaluation period of the number of complete years in the period beginning on the day after the Member leaves the Plan and ending on his Normal Retiring Date.

B is the Member's Pensionable Service completed after 31st December 1984.

C is the Member's Pensionable Service.

D is

(1) for a Member an amount calculated in accordance with paragraph
(2)(b) of Sub-rule 9(A);

(2) for the Member's Qualifying Spouse, 50 per cent. of the amount specified in (1). The amount so calculated shall be reduced by 2 1/2 per cent. for each year (if any) by which the Member was more than 15 years older than his Qualifying Spouse.


Page 24

E is the Accrued Guaranteed Minimum (if any).

For the purposes of calculating the Revaluation Increase where a notional period is to be included as part of a Member's Pensionable Service:

(a) that period shall be so treated and shall be taken to have ended immediately before his Pensionable Service would otherwise have begun

(b) if that notional period was given because of a transfer to the Plan under the Transfer Rules, E shall include any part of the Guaranteed Minimum (excluding any prospective increases in it) when the Member's Contracted-out Employment ended which is attributable to that transfer

(c) his Early Retirement Pension or Deferred Pension shall be taken to include any resulting additional pension.

"Rules" means these Rules and any special terms for the time being in force under Sub-rule 16(B) and includes any alteration or modification thereof from time to time in force.

"Senior Executive Member" means a Member who has become a Member under the Old Rules or under Rule 3(A)(3) and whose name is recorded in a Participating Employer's register of Senior Executive Members.

"Service" means continuous service with one or more Participating Employers provided that (a) service which is interrupted only by National Service shall be deemed to be continuous service, (b) in the case of a Participating Employer first included in the Plan after the Commencement Date any period of Service with such Participating Employer prior to inclusion in the Plan shall count as Service if and to such extent and for such purposes as the Principal Company shall determine but subject thereto any such period shall be excluded, and (c) the Principal Company shall finally determine, in relation to any Eligible Employee, the date of commencement of Service and the period to be counted as Service.

"Spouse's Pension" means Spouse's Pension as defined in Sub-rule 14(A).

"Staff Member" means a Member who has become a Member under the Old Rules or under Rule 3(A)(1) and whose name is recorded in a Participating Employer's register of Staff Members.


Page 25

"Statutory Transfer Option" means the right conferred by Chapter IV of Part IV to the Pensions Act and which is described in Sub-rule 10(A).

"Tax Year" means tax year for the purposes of the Pensions Act.

"Transfer Rules" means Rule 27 and any provisions permitting a transfer of assets to the Plan from another retirement benefits scheme contained in any provisions which governed the Plan before these Rules.

"Transferred Employee Contributions" means Transferred Employee Contributions as defined in Rule 27 (transfers from another scheme) and includes such part of any amount transferred into the Plan in respect of a Member under the Transfer Rules (other than Rule 27) as may, in accordance therewith, have been deemed by the Trustees to be attributable to employee's contributions.

"Trivial Pension" means, in relation to any person a pension which when added to

(a) all pensions payable under Associated Schemes and

(b) the pension equivalent as determined by the Trustees of all other benefits applicable in respect of such person during his lifetime under the Plan or Associated Schemes,

is not more than (pound)260 per annum or such other amount as may be prescribed from time to time by regulations made under section 21(1) and section 77(b) of the Pensions Act and which will not prejudice approval of the Plan under the Act but so that

(1) for the purposes of deciding at a date earlier than the Normal Retiring Date whether a pension under or arising from the Plan is a Trivial Pension the amount of any pension which includes a guaranteed minimum pension for the purposes of section 14 of the Pensions Act shall be deemed to be the amount which in accordance with the Rules or the rules of any Associated Scheme (as appropriate) will apply at Pensionable Age but disregarding the effect of any provision under the Plan or Associated Schemes for increases in the amount of any such pension prior to Pensionable Age which are not required in order to comply with the contracting-out requirements of the Pensions Act,

(2) no pension under or arising from the Plan shall be a Trivial Pension at a date earlier than the Normal Retiring Date


Page 26

(a) if it or any pension to which the Member is entitled under any Associated Schemes includes a guaranteed minimum pension for the purposes of section 14 of the Pensions Act to which an order under section 148 of the Social Security Administration Act 1992 coming into force after such earlier date may apply, and

(b) unless all Associated Schemes under which the Member is entitled to benefit are being wound-up or he is treated by such Associated Schemes as having retired, as the case may be under the Plan.

"Trust Instrument" means the following:-

(a) a Trust Deed made 1st January 1972 between the Principal Company (under its former name of Y.K.P. (Holdings) Limited) of the first part, Daimler Hire Limited, United Service Transport Company Limited and Hertz Europe Limited of the second part and Robert Philip Frost, Peter Alan Dawson Strevens and Rene Andreas Aebi of the third part

(b) a Deed made 25th October 1976 between the Principal Company of the first part, Daimler Hire Limited, United Transport Company Limited and Hertz Europe Limited of the second part and Bankers Trustee and Executor Company Limited of the third part

(c) any deeds supplemental thereto.

"Trustees" means the trustee or trustees for the time being of the Plan.

"Upper Earnings Limit" means, in relation to a Member, his upper earnings limit for the purposes of the Pensions Act.

"Voluntary Contributions Fund" has the meaning specified in Sub-rule 4(E)(2) (investment of segregated Member's Voluntary Contributions).


Page 27

PART II - JOINING AND LEAVING THE PLAN

- Joining the Plan full membership

- Staff

3. (A) (1) An Eligible Employee shall be eligible for admission to membership of the Plan as a Staff Member if in the opinion of the Trustees he fulfils the following conditions:-

(a) his name is recorded in a Participating Employer's register of permanent Employees, and

(b) he has reached age 21, and

(c) he has not reached age 64, or age 59 in the case of a female Eligible Employee who is admitted to membership before 1st April 1991, and

(d) in his current period of Service he has not voluntarily left the Plan under (C) of this Rule, or failed to become a Member within 12 months of first being able to do so under this Rule.

Any such Eligible Employee shall be admitted to membership of the Plan unless he gives written notice to the Trustees that he does not wish to join the Plan.

The Principal Company may determine in any particular case that any one or more of the conditions set out above shall be waived.

- Executive

(2) An Eligible Employee shall be eligible for admission to membership of the Plan as an Executive Member after the 17th October 1995 if the Principal Company in its absolute discretion directs the Trustees to admit the Eligible Employee to membership of the Plan as an Executive Member.

Any Eligible Employee who is to be admitted to membership under this Sub-rule shall provide such evidence of his health and such other evidence as the Trustees and the Principal Company may require. Any such Eligible Employee who (unless the Trustees otherwise determine) completes and submits within one month of first being invited to join as an Executive Member and in respect of whom the Trustees have accepted, an application for membership of the Plan as an Executive Member in such form as shall be determined by the Trustees, shall be admitted to membership of the Plan. The Principal Company shall notify the Trustees of the date upon which


Page 28

admission to membership as an Executive Member is to take place.

The Principal Company may make the membership of an Eligible Employee who is invited to become an Executive Member subject to any conditions as to participation in all or any of the benefits of the Plan or otherwise which they think appropriate and notify to the Eligible Employee.

- Senior Executive

(3) An Eligible Employee shall be eligible for admission to membership of the Plan as a Senior Executive Member if the Principal Company in its absolute discretion directs the Trustees to admit the Eligible Employee to membership of the Plan as a Senior Executive Member.

Any Eligible Employee who is to be admitted to membership under this Sub-rule shall provide such evidence of his health and such other evidence as the Trustees and the Principal Company may require. Any such Eligible Employee who (unless the Trustees otherwise determine) completes and submits within one month of first being invited to join as a Senior Executive Member and in respect of whom the Trustees have accepted, an application for membership of the Plan as a Senior Executive Member in such form as shall be determined by the Trustees, shall be admitted to membership of the Plan. The Principal Company shall notify the Trustees of the date upon which admission to membership as a Senior Executive Member is to take place.

The Principal Company may make the membership of an Eligible Employee who is invited to become a Senior Executive Member subject to any conditions as to participation in all or any of the benefits of the Plan or otherwise which they think appropriate and notify to the Eligible Employee.

Changes between Category

(4) An eligible Employee who has been admitted to membership of the Plan may at the invitation of the Principal Company (and only at the invitation of the Principal Company) move from one category of membership to another if he satisfies the eligibility conditions for that category of membership.


Page 29

Upon any move between categories of membership the Principal Company will notify the Trustees of the name of the Member, the date from which the move takes effect, and make available such other details (including any evidence of the Member's state of health that the Trustees may require) as the Trustees may require.

- Joining the Plan Life Assurance membership

(5) An employee of a Participating Employer shall be admitted to the Plan for the purposes only of the benefit described is Sub-rule 12(A) (lump sum on death in Service before Normal Retiring Date) if he fulfils the following conditions:

(a) his name is recorded in a Participating Employer's register of permanent employees, and

(b) he has reached age 21, and

(c) he has not reached age 64, or age 59 in the case of a female Eligible Employee who is admitted to membership before 1st April 1991,

and

(d) he is not a Member.

The Principal Company may determine in any particular case that any one or more of the conditions set out above shall be waived.

- Treatment of benefits for earlier periods of Membership

(B)   (1)   If on becoming a Member a person is entitled or prospectively
            entitled to benefits under the Plan for an earlier period of
            membership the provisions of this Sub-rule shall apply unless
            the Trustees with the consent of the Participating Employer
            and the Member otherwise determine.

      (2)   The amount of any benefit or benefits applicable to each
            period of membership shall (subject as hereinafter provided)
            be calculated in accordance with the provisions of the Plan as
            if each such period was the only period of membership.

                                                                   Page 30

      (3)   If on the date he rejoins the Plan the Member is not in
            receipt of a pension under the Plan the following provisions
            shall apply to the intent that the benefits under the Plan
            applicable to each period of membership shall as far as
            practicable be subject to the same terms and conditions,
            namely,

            (a)   any options available under the Plan in respect of
                  benefits relating to an earlier period which have not
                  been exercised on the date he rejoins shall cease to
                  apply during a later period of membership, and

            (b)   options available under the Plan in respect of benefits
                  relating to the last period of membership shall apply in
                  respect of any corresponding benefits to which
                  sub-paragraph (a) above applies as if the benefits
                  related in all respects to one period.

      (4)   If on the date he rejoins the Plan the Member is in receipt of
            a pension under the Plan that pension and any related benefits
            payable on the death of the Member shall continue to be
            payable on the same basis as would have applied had he not
            rejoined the Plan.

- Leaving the Plan full membership

(C) (1) A Member shall leave the Plan in the following events:

(a) if he leaves Service, or

(b) if, although still an Eligible Employee, he elects to leave the Plan. A Member may so elect by giving at least one month's written notice to the Trustees. The Member shall leave the Plan at the end of the day on which the notice expires, or

(c) if he ceases to be an Eligible Employee, or


Page 31

(d) if he is suspended or absent from work for more than 3 years where he is receiving full-time education connected with his employment or is seconded to another employer or 1 year in any other case (or any longer period agreed by the Principal Company if suspension or absence is due to Ill-health or National Service) unless, at the request of the Principal Company and with the approval of the Board of Inland Revenue the Trustees decide that he need not leave the Plan.

The benefits payable during the lifetime of a person who leaves the Plan are specified in Rule 9 (pension or refund of contributions) and Rule 11 (lump sum on retirement) and the benefits payable on his death are specified in Sub-rules 12(B) or (D) (lump sum) and Rule 14 (dependants benefits). His options to have a transfer value paid to another Plan or to a policy are set out in Rule 10.

A person ceases to be a Member on leaving the Plan although referred to as a Member in relation to any benefit to which he or any other person may be entitled or prospectively entitled under the Rules in respect of his membership of the Plan.

- Leaving the Plan Life Assurance membership

(2) A person shall cease to be a Life Assurance Member on his ceasing to satisfy the conditions set out in (A)(5) of this Rule.

- Employment with an overseas employees

(D)   (1)   This Sub-rule (D) applies to employees of Participating
            Employers which are not resident in the employer United
            Kingdom (herein referred to as "Overseas Employers") and
            overrides any other provisions of the Plan which are
            inconsistent with it.

      (2)   Except as provided in (3) and (4) membership of the Plan in
            relation to Service with an Overseas Employer (herein referred
            to as an "Overseas Employment") shall be permissible only
            while the Eligible Employee is chargeable to United Kingdom
            income tax under Case I or II of Schedule E of the Act in
            relation to that Overseas Employment and does not qualify for
            a deduction of 100 per cent. under section 193(1) of the Act.

                                                                   Page 32

      (3)   If it appears to the Trustees that a Member's or Life
            Assurance Member's remuneration from an Overseas Employment
            will cease to be effectively chargeable to United Kingdom
            income tax under Case I of Schedule E because the periods he
            will spend overseas are likely to qualify him for the 100 per
            cent. deduction under section 193(1) of the Act, the Trustees
            may permit his membership of the Plan in relation to that
            Service to remain for up to 3 years or (if earlier) until he
            becomes a member of another occupational scheme providing
            relevant benefits as defined in section 612(1) of the Act, if
            it appears to the Trustees that in that period he will again
            become effectively chargeable to United Kingdom income tax
            under Case I or II of Schedule E.

      (4)   If a Member's or Life Assurance Member's membership of the
            Plan in relation to an Overseas Employment ceases to be
            permissible under (2) or (3) above and that is his only
            employment with the Participating Employers, he shall
            thereupon leave the Plan as provided in (C) of this Rule as if
            he had ceased to be an Eligible Employee, and the Trustees
            shall notify the Member or Life Assurance Member of the fact
            in writing.

      (5)   In calculating the maximum benefits and contributions under
            Sub-rule 32(A) (Inland Revenue limitations) in respect of a
            Member's or Life Assurance Member's Overseas Employment
            account shall be taken only of any period and the remuneration
            relating to it during which he satisfies the conditions set
            out in (2) or (3) above and in calculating the overall maximum
            benefits for a Member to whom this Sub-rule applies his
            Service with an Overseas Employer shall not be aggregated with
            any other period of his Service unless the Board of Inland
            Revenue agrees.

                                                                   Page 33

PART III - CALCULATION AND PAYMENT OF CONTRIBUTIONS

MEMBER'S CONTRIBUTIONS

- ordinary

4. (A) In each Plan Year each Member shall (except as set out below and subject to Rules 25 (Temporary absence from work) and 26 (Absence due to pregnancy)) pay Member's Ordinary Contributions of 5 per cent. of Pensionable Salary.

Where Member's Ordinary Contributions are payable for a period which is not a complete Plan Year, the amount payable shall be proportionately adjusted in a manner to be decided by the Trustees.

No Member's Ordinary Contributions shall be payable before the First Contribution Date or after the Final Contribution Date.

Members' Ordinary Contributions shall be taken into account by the Trustees in calculating the amount payable by each Participating Employer under Rule 5.

- voluntary limits and payment conditions

(B)   (1)   A Member can pay Member's Voluntary Contributions of any
            amount he chooses but subject to the following conditions:

            (a)   the Trustees may require a Member to give written notice
                  (of a period not exceeding 12 months) specifying the
                  amount of Member's Voluntary Contributions he intends to
                  pay or any variation of the rate at which he is paying
                  them, and

            (b)   a Member is not permitted to pay Member's Voluntary
                  Contributions in any Tax Year of less than any minimum
                  amount specified by the Trustees. On and after 6th April
                  1988 that minimum amount will not exceed the greater of
                  3 times the weekly rate of the Lower Earnings Limit for
                  that Tax Year and 0.5 per cent of the Member's earnings
                  from the Participating Employers for that Tax Year
                  excluding any earnings on which Class I National
                  Insurance Contributions are not payable.

period of payment

(2) Unless the Trustees otherwise decide a Member is not permitted to pay Member's Voluntary Contributions before the First Contribution Date or after the Final Contribution Date.


Page 34

benefits from Voluntary
Contributions

(3) After consulting the Member (if he is then living) the Trustees will choose from the list in Sub-rule 16(A)(2) (Discretionary benefits) the benefits to be given for his Member's Voluntary Contributions. The chosen benefits will be subject to the following conditions:

(a) they will be subject to the Inland Revenue limitations referred to in Sub-rule 32(A), and

(b) their amount must be reasonable having regard to the amount of the Member's Voluntary Contributions and (unless the benefit or benefits are money purchase benefits) the value of the other benefits under the Scheme;

(c) they can only include a lump sum payable to the Member when his pension starts if

(1) payment of his Member's Voluntary Contributions started before 8th April 1987, or

(2) his pension under the Scheme would otherwise be a Trivial Pension, or

(3) he is in exceptional circumstances of serious Ill-health, or

(4) that would not prejudice approval of the Scheme under the Act.

For the purpose of deciding whether any Transferred Employee Contributions which represent a Member's voluntary contributions can be used to provide a lump sum payable to him when his pension starts, they will be treated as if he had paid them to the Scheme as Member's Voluntary Contributions.

segregated Voluntary

Contributions

            (4)   (a)   Where the basis on which the Trustees arrange for the
                        application of Member's Voluntary Contributions meets
                        the segregation conditions in (b) below, the additional
                        provisions in this paragraph (4) and in Rule 53(c)
                        (treatment of Member's Voluntary Contributions on
                        winding-up) will apply to those contributions unless the
                        Trustees decide that they will not.


Page 35

segregation conditions

(b) The segregation conditions are:

(1) that the assets (including cash) representing the Member's Voluntary Contributions and the income from them are held by the Trustees separate from all other assets of the Fund, and

(2) that the Member's Voluntary Contributions will be used to provide benefits which are equivalent on a money purchase basis to those contributions and the investment return on them.

investment

(c) The investment under Rule 39 of each Member's Voluntary Contributions will be recorded in a separate account maintained by the Trustees. The amount standing to the credit of the Member in that account at any time (his "Voluntary Contributions Fund") will be calculated on the basis considered by the Trustees to be appropriate having regard to the way in which the Member's Voluntary Contributions are invested.

expenses

(d) Any expenses incurred by the Trustees in investing a Member's Voluntary Contributions or using the Member's Voluntary Contributions Fund to provide benefits will be taken into account in calculating his Member's Voluntary Contributions Fund unless and to the extent that the Principal Employer decides that Rule 47 (Scheme expenses) will apply to those expenses.

methods of securing benefits

(e) The benefits chosen by the Trustees under paragraph (3) above will be provided in one or more of the following ways as the Trustees decide consistent with approval of the Scheme under the Act:

(1) by being paid out of the Member's Voluntary Contribution Fund as and when they are due;

(2) by securing them under the Scheme on the basis that the appropriate part of the Member's Voluntary Contributions Fund will be merged with the other assets of the Fund. That appropriate part will be calculated by the Trustees on the advice of the Actuary;


Page 36

(3) by using all or part of the Member's Voluntary Contributions Fund to secure them under an annuity policy or policy of assurance under Rule 39 (Investment of Fund) or under Rule 24 (Securing benefits outside the Scheme by purchase of policies).

surplus voluntary contributions

(5) In relation to any Member who first receives any retirement benefit under the Scheme after 26th July 1989, this Sub-rule is subject to the provisions of Part III of Schedule 6 to the Finance Act 1989 concerning the return of surplus funds arising from voluntary contributions in the same manner as if those provisions applied directly to the Scheme (whether or not this is the case). The Trustees may also extend the application of those provisions to this Sub-rule in respect of any other Members if approval of the Scheme under the Act would not thereby be prejudiced.

- collection

(C) Each Participating Employer shall collect from the Members in its Service (by deduction from their earnings or otherwise) the contributions payable by such Members under this Rule and pay them to the Trustees in such manner and at such intervals as the Trustees may require.

- unpaid

(D) In any case where contributions being payable by a Member under the Rules in any Plan Year have not been fully paid the amount of any benefit or benefits payable in respect of the Member under the Plan shall be adjusted to such amount as the Trustees shall determine to be appropriate to the circumstances having regard where appropriate to the contracting-out requirements of the Pensions Act.

- maximum yearly contribution

(E) The total contributions payable by a Member are subject to the limitations and restrictions referred to in Sub-rule 32(A).

EMPLOYER'S CONTRIBUTIONS

5. The Participating Employers shall pay to the Plan such contributions in each Plan Year as may from time to time in the opinion of the Trustees (having regard to the advice of the Actuary and after taking into account the assets of the Fund) be required to enable the benefits of the Plan to be maintained.


Page 37

The sums payable by the Participating Employers shall be agreed between them, or (in default of agreement) shall be determined from time to time by the Principal Company, having regard to the Members for the time being in the service of the Participating Employer and the benefits which in the opinion of the Principal Company are related to such service.


Page 38

PART IV - CALCULATION AND PAYMENT OF BENEFITS

Subject to the Rules the following benefits will become payable according to the event which happens except where a Member has been a Part-time Member during part (but not all) of his Pensionable Service. In that case the benefits for and in respect of him under the Plan will be adjusted by the Trustees in a manner which does not prejudice approval of the Plan under the Act having regard to the advice of the Actuary and the contracting-out requirements of the Pensions Act and will be notified in writing to the Member.

NORMAL RETIREMENT PENSION

6. (A) On retirement from Service on the Normal Retiring Date a Member shall be entitled to a yearly pension (herein referred to as the "Normal Retirement Pension") payable as stated in Rule 17 for the remainder of his life.

The Normal Retirement Pension shall be equal to 2/3rds of Final Remuneration or, if less, an amount calculated as:

(1) For a Pre-1985 Senior Executive Member the total of:

(a) 1/30th of Final Pensionable Salary multiplied by his Pensionable Service completed before 6th April 1988; and

(b) the greater of:

(1) 1/30th of Final Pensionable Salary multiplied by his Pensionable Service completed after 5th April 1988; and

(2) the Money Purchase Pension.

(2) For a Pre-1988 Senior Executive Member, the total of:

(a) 1/60th of Final Pensionable Salary multiplied by his Pensionable Service completed as a Staff Member before 6th April 1988;

(b) 1/30th of Final Pensionable Salary multiplied by his Pensionable Service completed as a Senior Executive Member before 6th April 1988; and


Page 39

(c) The greater of:

(1) 1/30th of Final Pensionable Salary multiplied by his Pensionable Service completed as a Senior Executive Member after 5th April 1988; and

(2) the Money Purchase Pension.

(3) For any other Member the total of:

(a) 1/60th of Final Pensionable Salary multiplied by his Pensionable Service (if any) completed before 6th April 1988; and

(b) the greater of:

(1) the total of:

A. 1/60th of Final Pensionable Salary multiplied by his Pensionable Service completed as a Staff Member after 5th April 1988;

B. 1/45th of Final Pensionable Salary multiplied by his Pensionable Service completed as an Executive Member after 5th April 1988; and

C. 1/30th of Final Pensionable Salary multiplied by his Pensionable Service completed as a Senior Executive Member after 5th April 1988;

and

(2) the Money Purchase Pension.


Page 40

(B) If the Member's Contracted-out Employment ends before either Normal Pension Date or Pensionable Age the yearly pension payable under this Rule will, if necessary, be increased from whichever is the later of Normal Pension Date and Pensionable Age so that it is not less than the Member's Anti-franking Minimum calculated in accordance with Sub-rule 56(F).

EARLY RETIREMENT PENSION

7. On retirement from Service before the Normal Retiring Date, then if such retirement occurs

(a) on or after whichever is the later of:

(1) the date which is 10 years before the Normal Retiring Date; and

(2) the date on which the Member completes 10 years' Pensionable Service;

and the Principal Company agrees that the Member may be offered an immediate pension under this Rule, or

(b) on account of Incapacity,

a Member shall subject as herein provided be entitled if he shall so elect, as an alternative to the benefit under Rule 9 (Benefits on leaving the Plan), to a yearly pension (herein referred to as the "Early Retirement Pension"). Except in cases of Incapacity a Member shall not be entitled to elect an Early Retirement Pension unless the amount of the yearly pension otherwise payable to him under Rule 9 at Normal Retiring Date exceeds the Guaranteed Minimum. The Early Retirement Pension shall be payable as stated in Rule 17 for the remainder of the life of the Member.


Page 41

The Early Retirement Pension shall, except as provided below, be the lesser of:

(a) an amount calculated using the formula

A x B

C

Where

A is 2/3rds of Final Remuneration

B is Pensionable Service

C is the period which would have been Pensionable Service had the Member remained in Service and not left the Plan until Normal Retiring Date;

or

(b) an amount calculated in accordance with Sub-rule 6(A)(l) (2) or (3) (Normal Retirement Pension) as appropriate according to category of membership

reduced, except as described in paragraphs (i) to (iv) below, by

(1) 1/3 per cent. for each complete month by which the 55th birthday, or the date of retirement if later, precedes Normal Retiring Date, and

(2) an amount decided by the actuary to be reasonable in respect of each complete month by which the date of retirement precedes the 55th birthday.

Provided that:

(i) this reduction shall not apply to any part of the Early Retirement Pension which is calculated by reference to the Member's Money Purchase Fund; and

(ii) this reduction shall not apply to the Early Retirement Pension payable to a Member who is not more than 10 years' from Normal Retiring Date and is retiring at the request of the Principal Company.

(iii) the Principal Company may in any case direct that no reduction shall apply to the Early Retirement Pension.

If the amount of Early Retirement Pension calculated as herein provided is less than the Guaranteed Minimum the amount of the Early Retirement Pension shall be determined by the Trustees having regard to the advice of the Actuary but so that


Page 42

(a) the amount of the Early Retirement Pension payable in respect of any period after Pensionable Age shall not be less than the Guaranteed Minimum

(b) the aggregate value of the Early Retirement Pension shall be equivalent to a yearly pension of the amount calculated as first provided above

(c) the amount of pension payable in respect of the period before Pensionable Age and after the exercise of any option in respect thereof under the Rules shall not be less than such amount as the Trustees may from time to time determine.

The Early Retirement Pension calculated as set out above will, if necessary, be increased so that its value is not less than the value of the Deferred Pension to which the Member would have been entitled if he had not elected to have an Early Retirement Pension.

At the request of a Member the Trustees (to the intent that the Member's total pension during his retirement may remain of an approximately level annual amount) may determine that the Early Retirement Pension (whilst remaining unchanged in value) shall be payable at an increased rate until the expected date of commencement of any pension to which the Member is prospectively entitled under any scheme of national insurance or social security and at a reduced rate not being less than the Guaranteed Minimum thereafter. The amount of any benefit payable under the Plan on the death of a Member who elects this option shall be determined by the Trustees having regard to the advice of the Actuary.

LATE RETIREMENT PENSION

8. In the event of retirement from Service being postponed until after the Normal Retiring Date, a Member shall be entitled to a yearly pension (herein referred to as the "Late Retirement Pension") on such retirement except that a Member whose retirement has been so postponed shall be treated as having retired for the purposes of this Rule:

(a) in the case of a Member who is a Class B Member or a Class C Member (including a Member who is a Class B Member or Class C Member for the purposes of this paragraph by virtue of Sub-rule 32(C) (Inland Revenue Limits)):

(1) on the Member's 70th birthday in the case of a male or 65th birthday in the case of a female if his retirement is to be postponed beyond such date, unless he elects not to be so treated, or


Page 43

(2) subject to the consent of the Principal Company and at the discretion of the Trustees, on such date occurring on or after the Normal Retiring Date and before his retirement as the Member may select.

(b) in the case of a Member who is a Class A Member (including a Member who is a Class A Member for the purposes of this paragraph by virtue of Sub-rule 32(C)) on the earlier of the actual date of retirement and the Member's 75th birthday except that payment of the Member's Guaranteed Minimum Pension may not be postponed beyond a male Member's 75th birthday or a female Member's 75th birthday without the Member's agreement

The Late Retirement Pension will be payable as stated in Rule 17 for the remainder of the life of the Member and will be an amount calculated in accordance with Rule 6 (Normal Retirement Pension) (but excluding any application of the Anti-franking Minimum) increased by an amount decided by the Trustees on account of payment from a date later than the Normal Retiring Date.

The increase in any part of the pension which is calculated by reference to the Member's Money Purchase Fund shall not be less than the equivalent increase from the Normal Retiring Date calculated by using the Money Purchase Interest Rate.

The amount of a Member's Late Retirement Pension will, if necessary, be increased from its commencement so that it is not less than the Member's Anti-franking Minimum in accordance with Sub-rule 56(F).

BENEFITS ON LEAVING THE PLAN

9. This Rule applies to a Member who leaves the Plan before the Normal Retiring Date, whether voluntarily or because he leaves Service or ceases to be an Eligible Employee, as provided in Sub-rule 3(C), without being entitled to an Early Retirement Pension.

- Deferred Pension

(A) On a Qualifying Member leaving the Plan he shall (subject as hereinafter provided) become entitled to a yearly pension (herein referred to as "the Deferred Pension") payable as stated in Rule 17 from

(1) if the Member is a man, the Normal Retiring Date,

(2) if the Member is a woman, the later of the date she leaves Service and Pensionable Age


Page 44

and will cease to be payable on the Member's death.

The Deferred Pension (including any discretionary increases therein made up to the date it commences) shall be the total of:

(1) during any period which is after Pensionable Age and before Normal Retiring Date, equal to the Guaranteed Minimum,

(2) during any subsequent period an amount equal to the total of:

(a) the Revaluation Increase, plus

(b) the lesser of:

(1) an amount calculated using the formula

A x B

C

Where

A. is 2/3rds of Final Remuneration

B. is Pensionable Service

C. is the period which would have been Pensionable Service had the Member not left the Plan until Normal Retiring Date, and

and

(2) an amount calculated in accordance with Sub-rule
6(A)(1) (2) or (3) (Normal Retirement Pension) as appropriate according to category of membership but ignoring the references to the Money Purchase Pension.


Page 45

Provided that where the Trustees, having regard to the advice of the Actuary, determine that, for a Member to whom this paragraph (2)(b)(2) applies, the Member's Money Purchase Pension at the Normal Retiring Date exceeds the aggregate of:

A. the amount calculated in accordance with Sub-rule 6(A)(1)(b)(1), Sub-rule 6(A)(2)(c)
(1) or Sub-rule 6(A)(3)(b)(1) (as appropriate), and

B. the part of the Revaluation Increase which is attributable to Pensionable Service completed after 5th April 1988,

the Deferred Pension shall be increased by the amount of the excess.

A Member shall become entitled to the Deferred Pension only on his survival to the Normal Retiring Date or as the case may be on his survival to the alternative date selected as provided in (B) of this Rule.

The Deferred Pension will, if necessary, be increased from Normal Retiring Date (or if later from Pensionable Age) so it is not less than the Revaluation Increase (if any) plus the Member's Anti-franking Minimum calculated in accordance with Sub-rule (F)(2) of Rule 56 - (Contracting-out of the State Earnings Related Pension Scheme).

- Alternative date for payment of Deferred Pension

(B) Subject as provided below, the Deferred Pension shall in lieu of being payable from the date specified in (A) of this Rule be payable from such of the following dates as the Member may select by notice in writing to the Trustees before his pension is due to commence under (A) of this Rule namely:

(1) an earlier date, except in cases of Incapacity, not earlier than a date

(a) on or after whichever is the later of

(1) the date which is 10 years before the Normal Retiring Date,


Page 46

(2) the date on which the Member would have completed 10 years' Pensionable Service had he remained in the Plan, and

(3) the date on which the Member reaches age 50.

(2) a later date but not later than the earlier of

(1) in the case of a Member who is a Class B Member or a Class C Member (including a Member who is a Class B Member or a Class C Member for the purposes of this paragraph by virtue of Sub-rule 32(C) (Inland Revenue limits)) his 70th birthday (unless he is still in Service),

(2) in the case of a Member who is a Class A Member (including a Member who is a Class A Member for the purposes of this paragraph by virtue of Sub-rule 32(C)) his 75th Birthday, and

the date he ceases to be in employment

A Member shall not be permitted to select an alternative date under this Sub-rule:

(a) unless the Trustees so agree and he gives them any evidence of his present health which they may require, or

(b) if it would result in the pension payable under the Plan to him or to his widow or widower being less than the Guaranteed Minimum, or

(c) if he is in Service and the alternative date is before his Normal Retiring Date.

If payment of the Deferred Pension begins before or after Normal Retiring Date, its amount and terms and conditions and the amount of any benefit payable on the Member's death shall be determined by the Trustees having regard to the advice of the Actuary and the contracting-out requirements of the Pensions Act and shall be notified in writing to the Member. The value of the benefits payable to or in respect of the Member shall not be less than it would have been if the Deferred Pension had been payable from Normal Retiring Date.


Page 47

- refund of pre April 1975 contributions and calculation of residual Deferred Pension

(C) A Member to whom a Deferred Pension applies who leaves Service before 28th February 1991 may elect to take a refund of Member's Contributions paid before the 6th April 1975 less any tax for which the Trustees may be accountable under Rule 18.

An election to take a refund of Member's Contributions under this Sub-rule shall, subject to the provisions of Rule 26 (Absence due to pregnancy), be made by notice in writing to the Trustees:

(1) before the Member leaves Service, or

(2) on a date selected by the Member occurring after he leaves Service and before the earliest of (a) 28th February 1991, (b) the Normal Retiring Date and (c) the date the Deferred Pension was due to commence

provided that the Member has not then received a cash sum from any Associated Scheme which does not represent a refund of his contributions to that Associated Scheme.

On an election being so made the Trustees shall, as soon as practicable but not before the Member leaves Service, refund the relevant Member's Contributions to him. The Deferred Pension and any benefits payable on the death of a Member who takes a refund of Member's Contributions under this Sub-rule shall be reduced to an amount which in the opinion of the Trustees is appropriate having regard where applicable to the preservation requirements set out in sections 69 to 82 of the Pensions Act and to the contracting-out requirements of the Pensions Act.

- refund of all contributions

(D) On a Member who is not a Qualifying Member leaving the Plan before the Normal Retiring Date he shall (subject as hereinafter provided) become entitled to

(1) a refund of Member's Contributions, less the Contracting-out Deduction and any tax for which the Trustees may be accountable under Rule 18, payable on the date he leaves the Plan or as soon as practicable thereafter, together with

(2) unless a contributions equivalent premium has been paid (or credited as paid) in respect of the Member under section 55(2) of the Pensions Act, a yearly pension payable as stated in Rule 17 from Pensionable Age for the remainder of the Member's life of an amount equal to the Guaranteed Minimum.


Page 48

OPTIONS ON LEAVING THE PLAN
- statutory option to buy-out or transfer

10. (A) A Member who leaves the Plan at least one year before Normal Retiring Date has the right conferred by Chapter IV of Part IV of the Pensions Act ("the Statutory Transfer Option") to take the cash equivalent of part or all of his benefits under the Plan. Unless a Member's Statutory Transfer Option is lost as set out below it remains available until the later of one year before his Normal Retiring Date and the date which is 6 months after he leaves the Plan. A Member's Statutory Transfer Option is lost if:

(1) he rejoins the Plan after not more than one month;

(2) in the case of a female Member who has been absent from work due to pregnancy, her Service again becomes Pensionable Service because she exercises her statutory right to return to work;

(3) any part of his pension or benefit instead of pension becomes payable before Normal Retiring Date;

(4) the Plan is wound up;

(5) the Trustees have purchased a Paid-up Policy for the Member under Sub-rule (D) of this Rule in substitution for all of his benefits under the Plan.

The Statutory Transfer Option is for convenience described below.

A Member's Statutory Transfer Option is to require the Trustees to use his cash equivalent in all or any of the following ways:

(1) to acquire benefits under an occupational pension scheme which satisfies the requirements of the Inland Revenue and, if the cash equivalent is in respect of Guaranteed Minimum Pension benefits, which satisfies the requirements set out in Sub-rule
28(E) (Transfers to another scheme - transfer of GMPs);

(2) to acquire benefits under a personal pension scheme which is approved by the Board of Inland Revenue under Chapter IV, Part XIV, of the Act or otherwise satisfies the requirements of the Inland Revenue;

(3) for purchasing one or more Paid-up Policies.


Page 49

A Member's cash equivalent for the purposes of the Statutory Transfer Option is the cash equivalent (calculated by the Trustees in a manner verified by an actuary as satisfying the statutory requirements) of:

(a) if the Member voluntarily left the Plan after 5th April 1988 but remains an Eligible Employee

(1) the proportion of the benefits which have accrued to or in respect of him under the Plan as a result of his actual Service that his Service after 5th April 1988 is of his total Service, and

(2) any benefits credited to or in respect of him after 5th April 1988 for Service which is notionally attributed to him or treated by the Plan as being longer or shorter than it actually is;

(b) in any other case, the benefits which have accrued to or in respect of him under the Plan excluding any part of them for which he has already taken the cash equivalent referred to in (a) above or taken the non-statutory transfer or buy-out option under (B) or (C) of this Rule.

The cash equivalent is reduced (to nil, where appropriate):

(1) by an amount sufficient to enable the Trustees to meet their liability for the Guaranteed Minimum Pensions of the Member and his or her widow or widower if the Member has not requested the Trustees to use that amount for purchasing a Paid-up Policy or for securing benefits under a contracted-out occupational pension scheme or a personal pension scheme which is appropriate for the purposes of section 7 of the Pensions Act;

(2) to the extent that it represents the Guaranteed Minimum Pensions for the Member and his or her widow or widower liability for which has been extinguished by payment of a contributions equivalent premium under section 55(2) of the Pensions Act.


Page 50

A Member may only exercise his Statutory Transfer Option by application in writing to the Trustees.

The reduced Deferred Pension and the amount of any benefits payable on the death of a Member who has exercised the Statutory Transfer Option in respect only of benefits for Service after 5th April 1988 shall be calculated by the Trustees having regard to the advice of the Actuary.

Any provision in the Rules for the Trustees to purchase or secure a Paid-up Policy or make a transfer payment to another occupational pension scheme or to a personal pension scheme with the Member's consent or at his request in substitution for all or any of a Member's benefits under the Plan does not apply to any benefits in respect of which he has the Statutory Transfer Option. Any such purchase or transfer payment shall only be made pursuant to the exercise by the Member of the Statutory Transfer Option.

non-statutory transfer to another scheme instead of Deferred Pension or refund of contributions

(B) With the consent of the Trustees a Member who is entitled to a Deferred Pension or a refund of Member's Contributions under Sub-rule 9(D) and who

(1) does not have the Statutory Transfer Option, or

(2) voluntarily left the Plan but remains an Eligible Employee and has exercised the Statutory Transfer Option in relation only to benefits which for the purposes of that option are applicable to Service after 5th April 1988 (as described in
(A) of this Rule)

may elect that the Trustees shall make a transfer payment under Rule
28 (Transfers to personal and occupational pension schemes) in substitution for all or some part of the benefits otherwise payable to or in respect of him under the Plan.

- non-statutory buy-out option

(C) With the consent of the Trustees a Member who is entitled to a Deferred Pension or a refund of Member's Contributions under Sub-rule 9(D) and who

(1) does not have the Statutory Transfer Option, or


Page 51

(2) voluntarily left the Plan but remains an Eligible Employee and has exercised the Statutory Transfer Option in relation only to benefits which for the purposes of that option are applicable to Service after 5th April 1988 (as described in
(A) of this Rule)

may elect that the Trustees shall purchase or provide for him a Paid-up Policy instead of the benefits otherwise payable to or in respect of him under the Plan.

In that event:

(a) The Paid-up Policy shall be issued by the insurance company chosen by the Member.

(b) The Member may elect that the benefits payable under the Paid-up Policy shall (to the extent that they exceed the Guaranteed Minimum) be different from those which would otherwise have applied to or in respect of him under the Rules (including any benefits payable on his death) but only if approval of the Plan under the Act would not be prejudiced.

The different benefits may be so provided notwithstanding that one or more persons may thereby cease to be entitled or prospectively entitled to benefit by reference to the Member's period of membership of the Plan or, as the case may be, become entitled or prospectively entitled to benefits of a lesser amount or subject to different terms and conditions.

(c) The Trustees may decide that the option under this Sub-rule shall apply to a part of the benefits applicable to a Member under the Plan on such basis as they may decide but only if approval of the Plan under the Act is not prejudiced and having regard where appropriate to the contracting-out requirements of the Pensions Act.

(d) Where a Paid-up Policy is to be purchased the amount to be applied as a premium under it shall be determined by the Trustees who shall satisfy themselves that it is not less than the value of the benefits which had accrued to or in respect of the Member under the Plan at the date the Paid-up Policy is purchased and which its purchase will extinguish.


Page 52

(e) A Member for whom a Paid-up Policy has been so purchased or provided, his personal representatives and any person claiming through him shall cease to have any right whatsoever to resort to the Fund in respect of the benefits which would otherwise have been payable to or in respect of the Member under the Plan.

Any election under this Sub-rule (C) shall be in such form and subject to such conditions as the Trustees may specify.

- Buy-out Option at Trustees' Discretion

(D) In the case of a Qualifying Member who would not have been a Qualifying Member had the qualifying period been 5 years, the Trustees may, if the conditions set out below are satisfied, purchase for the Member without his consent a Paid-up Policy in substitution for all or some part of the benefits otherwise payable to or in respect of him under the Plan.

The conditions referred to above are:

(1) that more than 12 months have elapsed since the Member left the Plan, and

(2) that at least 30 days before the Paid-up Policy is to be taken out the Trustees have sent by post to the Member's last known address or delivered personally to him, written notice of their intention to take out the Paid-up Policy, unless when the Trustees enter into an agreement with the relevant insurer to take out the Paid-up Policy, the Member has not made an application (which he has not subsequently withdrawn) to the Trustees to exercise his Statutory Transfer Option, and

(3) the Trustees are satisfied that the amount to be applied as a premium under the Paid-up Policy is at least equal to the value of the benefits under the Plan which its purchase will extinguish, and

(4) the benefits which the Paid-up Policy is intended to secure are, to the extent that the Trustees think appropriate, different from the benefits under the Plan which its purchase will extinguish.

A Member for whom a Paid-up Policy has been purchased under this Sub-rule, his personal representatives and any person claiming through him shall cease to have any rights under the Plan in respect of any benefits for which the Paid-up Policy is in substitution.


Page 53

LUMP SUM INSTEAD OF PENSION

- normal basis

11. (A) A Member to whom this Sub-rule applies may, with the consent of the Trustees, convert into a lump sum some or all of his Normal Retirement Pension, Early Retirement Pension, Late Retirement Pension (whether immediate or prospective) or Deferred Pension (as appropriate) in excess of the Guaranteed Minimum. Subject to the proviso at the end of paragraph
(6) of this Sub-rule, the lump sum shall not exceed:

(1) For a Member who is a Class C Member and who retires from Service on or after Normal Retiring Date, the fraction of his Final Pensionable Salary appropriate to his Pensionable Service according to the table below.

Pensionable Service     Fraction of Final Pensionable Salary
-------------------     ------------------------------------
       Years                           80ths
     1 - 8                              3 for each year
         9                             30
        10                             36
        11                             42
        12                             48
        13                             54
        14                             63
        15                             72
        16                             81
        17                             90
        18                             99
        19                            108
     20 or more                       120

Note

The fraction calculated from the above table shall be increased proportionately in respect of each complete month (counting as 1/12th of a year) of Pensionable Service which is additional to the number of the Member's complete years of Pensionable Service but not so as to increase the fraction to more than 120/80ths.


Page 54

(2) For a Member who is a Class B Member (other than a Member who is a Class B Member for limited purposes in accordance with paragraph (1) or (3) of Sub-rule 32(C)) and who retires from Service on or after Normal Retiring Date, an amount calculated using the following formula:

(A - B) x (D - E) + E


(C - B)

Where:

A is the Normal Retirement Pension or Late Retirement Pension as appropriate,

B is 1/60th of Final Pensionable Salary multiplied by the lesser of 40 and Pensionable Service,

C is 1/30th of Final Pensionable Salary multiplied by the lesser of 20 and Pensionable Service,

D is the fraction of Final Pensionable Salary appropriate to the Member's Pensionable Service according to the table in (1) above,

E is 3/80ths of Final Pensionable Salary multiplied by the lesser of 40 and Pensionable Service.

(3) For a Member who is a Class C Member or a Class B Member (other than a Class B Member for limited purposes in accordance with paragraph
(1) or (3) of Sub-rule 32(C)) and who becomes entitled to an Early Retirement Pension because of Incapacity, the amount calculated according to (1) or (2) above but using the Pensionable Service he would have completed if he had not left the Plan until Normal Retiring Date.

(4) For any other Member who is a Class C Member or a Class B Member (other than a Class B Member for limited purposes in accordance with paragraph (1) or (3) of Sub-rule 32(C)), the greater of:

(a) 3/80ths of Final Pensionable Salary multiplied by Pensionable Service, and


Page 55

(b) the proportion of the amount calculated according to (3) above which his Pensionable Service is of the Pensionable Service he would have completed had he not left the Plan until Normal Retiring Date.

(5) For a Member who is a Class A Member and who becomes entitled to an Early Retirement Pension because of Incapacity the greater of

(a) 3/80ths of Final Pensionable Salary multiplied by Pensionable Service he would have completed had he not left the Plan until Normal Retiring Date, and

(b) 2.25 times the yearly amount of the initial pension to which the Member would have become entitled under the Plan if no pension had been exchanged for a cash sum or for any benefits for survivors of the Member.

(6) For any other Member who is a Class A Member the greater of

(a) 3/80ths of Final Pensionable Salary multiplied by Pensionable Service, and

(b) 2.25 times the yearly amount of the initial pension to which the Member would have become entitled under the Plan if no pension had been exchanged for a cash sum or for any benefits for survivors of the Member.

Provided that the Trustees may in any particular case allow a Member to convert more of his pension in excess of the Guaranteed Minimum into a lump sum as long as Inland Revenue limits are observed.

The rate at which pension is converted into lump sum shall be decided by the Trustees and confirmed by the Actuary to be reasonable.

This Sub-rule applies:

(a) to a Member (other than a Member to whom Sub-rule (B) or (C) of this Rule applies) who becomes entitled to a yearly pension under the Plan in which case the date for payment of the lump sum shall be the date upon which the yearly pension is due to commence or as soon as practicable thereafter, and


Page 56

(b) with the consent of the Principal Company and at the discretion of the Trustees to a Member who is a Class C Member or a Class B Member for the purposes of this paragraph and who has remained in Service after Normal Retiring Date and whose pension has not commenced in which case the Member shall be treated for the purposes of this Sub-rule as having become entitled to a Late Retirement Pension on such date as the Member shall select and the date for payment of the lump sum shall be the date selected or as soon as practicable thereafter.

- Member in serious Ill-health

(B) If a Member is in exceptional circumstances of serious Ill-health, the Trustees may at his request before his pension is due to commence, convert into a lump sum so much of it as exceeds the Guaranteed Minimum. The amount of the lump sum shall (subject to Rule 18 (Deduction of tax)) be determined by the Trustees being an amount confirmed by the Actuary to be reasonable. The lump sum shall be payable on the date upon which the pension was due to commence or as soon as practicable thereafter. This Sub-rule shall not apply to a person to- whom Sub-rule (C) of this Rule applies.

- Trivial Pensions

(C) If a person is entitled to a Trivial Pension the Trustees may convert it and (where appropriate and if the Trustees so decide) any Trivial Pension contingently payable under the Plan upon his death into a lump sum to be paid to such person. The amount of the lump sum shall (subject to Rule 18 (Deduction of tax)) be determined by the Trustees being an amount confirmed by the Actuary to be reasonable and upon its payment each person entitled or contingently entitled to a pension so converted shall thereupon cease to be so entitled. The lump sum shall be payable on the date upon which such person's pension was due to commence (or as soon as practicable thereafter) or in the case of a pension which has commenced to be paid on such date as the Trustees may decide provided that approval of the Plan under the Act is not thereby prejudiced.

LUMP SUM DEATH BENEFITS

12. If a Member or Life Assurance Member dies the lump sum benefit (if any) specified in (A), (B), (C) or (D) (as may be appropriate) of this Rule shall be held by the Trustees subject to the provisions of Rule 13 (Payment of lump sum death benefits).

- lump sum on death in Service before Normal Retiring Date

(A) If the Member or Life Assurance Member dies in Service before Normal Retiring Date the lump sum benefit shall be the aggregate of


Page 57

(1) the Plan Death Benefit which shall be

(a) in relation to a Member equal to 4 times, and

(b) in relation to a Life Assurance Member equal to

the annual rate of the Member's basic salary on the date of his death, and

(2) in the case of a single Member who has no children, the Member's Contributions

Provided that

(a) the Plan Death Benefit shall be subject to any special conditions or restrictions from time to time agreed between the Trustees and the Principal Company. The Trustees shall notify the Member of any such conditions or restrictions,

and

(b) unless the Trustees with the consent of the Principal Company otherwise determine, no Plan Death Benefit shall be payable in respect of a Member if though retained in Service

(1) he has ceased to be actively and continuously engaged in Service other than on account of Ill-health for a period exceeding 12 consecutive months or 36 consecutive months if he is in full-time education connected with his employment or seconded to another employer, or

(2) he has left the Plan.

- lump sum on death after leaving the Plan with a deferred pension but before it commences

(B) If the Member dies while prospectively entitled to a yearly pension under Rule 9 (Benefits on leaving the Plan), the lump sum benefit shall be equal to the Member's Contributions plus an amount equal to 2 per cent. of the Member's Ordinary Contributions with Interest.


Page 58

- lump sum on death in Service on or after the Normal Retiring Date

(C) If the Member dies in Service on or after Normal Retiring Date but before his pension under the Plan commences, the lump sum benefit shall be equal to an amount determined by the Trustees as being as nearly as may be equal to the value (calculated as at the date of the Member's death and, if the Trustees so decide, with such allowance for discount as they think fit having regard inter alia to the manner in which the Fund is for the time being invested) of a series of 60 monthly payments each being of the same amount as the first monthly payment of the yearly pension to which the Member would have been entitled if he had retired on the date of and immediately before his death.

Provided always that no benefit shall be payable under this Sub-rule if on the Member's death a Spouse's Pension becomes payable under Sub-rule 14(A).

- lump sum on death of a pensioner

(D) If the Member dies on or after the date of commencement of his pension under the Plan the lump sum benefit shall be an amount determined by the Trustees as being as nearly as may be equal to the value at the date of the Member's death of the remaining instalments of Normal Retirement Pension, Early Retirement Pension, Late Retirement Pension or Deferred Pension to which the Member would have been entitled if he had survived for the period of 5 years from the date his pension commenced. For the purposes of calculating the amount of each instalment any increase in the amount of the Member's pension which would have occurred after the date of the Member's death shall be ignored.

Provided always that no benefit shall be payable under this Sub-rule if on the Member's death a Spouse's Pension becomes payable under Sub-rule 14(A).

PAYMENT OF LUMP SUM DEATH BENEFIT

13. Any sum which is stated to be held by the Trustees subject to the provisions of this Rule shall be held by the Trustees upon and subject to the following trusts, powers and provisions:

- benefits payable to personal representatives

(A) Any benefit which becomes payable on the death in Service on or after the 75th birthday of a Controlling Director as defined in Sub-rule 55(A) (Guide to Inland Revenue limitations) whose pension under the Plan had not commenced to be paid shall be held by the Trustees on trust to pay the same as soon as practicable to his personal representatives.

- benefits payable under discretionary trusts

(B) Any benefit or part thereof to which Sub-rule (A) of this Rule does not apply shall be held by the Trustees upon and subject to the following powers, trusts and provisions:


Page 59

(1) the Trustees shall have the following powers in respect of the whole or any part of the benefit exercisable if they shall in their absolute discretion at any time within eighteen months after the death of the Member so decide namely:

(a) power to pay or apply the same to or for the benefit of (or by way of settlement or otherwise to trustees for the benefit of) such one or more of the Member's Dependants in such shares, upon such trusts and in such manner (including the provision of annuities) but without in any way offending the rule against perpetuities as the Trustees shall decide, and

(b) power to pay the same to the Member's personal representatives.

(2) All or any part of the benefit not paid or applied under (1) above shall be held by the Trustees on trust to pay or apply the same to or for the benefit of (or by way of settlement or otherwise to trustees for the benefit of) such one or more of the Member's Beneficiaries in such shares, upon such trusts and in such manner (including the provision of annuities) but without in any way offending the rule against perpetuities as the Trustees shall decide but so that in the event of there being no Beneficiaries of the Member known to the Trustees within two years after his death the benefit shall be retained by the Trustees for better securing the solvency of the Fund.

(3) The Trustees may decide that the provisions of (2) above shall apply to all or part of any benefit notwithstanding that the period referred to in (1) above has not expired and to the extent that the Trustees do so decide the powers under (1) above shall be released accordingly. Pending payment or application hereunder of any benefit or part thereof the Trustees may vary or revoke any decision made under the trusts, powers and provisions of this Sub-rule.

(4) Any payment or application under this Sub-rule shall be made as soon as practicable within two years after the death of the Member and any amount so paid or applied shall thereupon cease to be part of the Fund provided that the Trustees may deduct therefrom any tax (and any interest thereon) for which they may be accountable before so paying or applying the same.


Page 60

(5) In exercise of their discretions under this Sub-rule and without prejudice to the generality thereof the Trustees may pay the benefit or any part thereof to a person who is an infant or to the trustees of any trust being a trust for the benefit only of any one or more of the Member's Dependants or Beneficiaries whether or not such trust is itself of a discretionary nature or includes a provision allowing the trustees thereof to charge remuneration and a receipt given by any person or persons to whom payment is made shall be a complete discharge to the Trustees for such payment.

(6) If the Trustees so decide any expenses incurred in connection with the trusts, powers and provisions of this Sub-rule or any payment or application hereunder shall be deducted from the relevant benefit or part thereof on such basis as the Trustees shall in their discretion decide.

(7) For the purposes of this Sub-rule:

(a) "Dependants" means in relation to a Member such of the following persons as are living at the date of his death, namely (i) the spouse of the Member, the parents, children and grandchildren of the Member or of the Member's spouse (ii) any persons who in the opinion of the Trustees have at any time been dependent on the Member for the provision of, or have at any time been provided by the Member with, all or any of the ordinary necessaries of life and (iii) any persons (or body of persons whether or not incorporated) of whom the names and particulars, or sufficient details to enable the Trustees to identify the same, have been furnished to the Trustees in writing by the Member as being persons whom the Member wishes the Trustees to consider as possible recipients of any benefit payable on the Member's death. For the purpose of this definition spouse means the wife or husband to whom the Member was married on the date of his death or any former wife or husband of the Member and shall include any wife or husband to whom a Member has at any time been married under a law which as it applied to the particular ceremony and the parties thereto permitted polygamy, and the lawfully adopted child or stepchild of any person shall be treated (as from the date of adoption or the date of becoming such stepchild) as the lawful and natural child of such person.


Page 61

(b) "Beneficiaries" means in relation to a Member (i) such of the following persons as are living at the date of his death, namely, the spouse of the Member, the grandparents, parents, children and grandchildren of the Member or his or her spouse, the brothers and sisters (whether of the whole-blood or half-blood) of the Member or his or her spouse and the children and grandchildren of such brothers and sisters, the uncles and aunts (being brothers and sisters of the whole-blood or half-blood of a parent) of the Member or his or her spouse and the children and grandchildren of any such uncles and aunts, the spouses of any of the above-mentioned grandparents, parents, children, grandchildren, brothers and sisters, uncles and aunts, and (ii) any persons (or body of persons whether or not incorporated) who are entitled to any beneficial interest in the Member's estate under any testamentary disposition made by the Member. For the purposes of this definition the spouse of any person means the wife or husband to whom such person was married at the date of the Member's death and shall include any wife or husband to whom such person was then married under a law which as it applied to the particular ceremony and the parties thereto permitted polygamy, and the lawfully adopted child or stepchild of any person shall be treated (as from the date of adoption or the date of becoming such stepchild) as the lawful and natural child of such person.

(c) The term "Member" shall include a Life Assurance Member.

SPOUSE'S PENSION

14. (A) If a married Member dies his Qualifying Spouse shall be entitled to a yearly pension (herein referred to as "the Spouse's Pension") payable as stated in Rule 17 from the date of the Member's death until the Qualifying Spouse's death.

Subject to paragraph (6) of this Sub-rule, the amount of the Spouse's Pension (including any increases therein made up to the date it commences) shall be:

- death while a Member before Normal Retiring Date

(1) If the Member died in Service before his Normal Retiring Date and before leaving the Plan, equal to 50 per cent. of 2/3rds of his Final Remuneration at the date of his death or, if less, 50 per cent of an amount calculated in accordance with Rule 6(A)(1) (2) or (3) (Normal Retirement Pension) as appropriate according to category of membership but as if:


Page 62

(a) the Member's Pensionable Service was the period he would have completed if he had remained a Member until his Normal Retiring Date; and

(b) the relevant date for the purposes of determining the Money Purchase Pension referred to in Sub-rule
6(A)(1)(b), Sub-rule 6(A)(2)(c) and Sub-rule 6(A)(3)(b) (as appropriate) will be the date of the Member's death.

This amount shall be reduced by 2 1/2 per cent. for each year (if any) by which the Member was more than 15 years older than his Qualifying Spouse.

- death in Service after Normal Retiring Date

(2) If the Member died in Service on or after his Normal Retiring Date, 50 per cent. of the amount calculated in accordance with Rule 8 (Late Retirement Pension) as if he had retired immediately before his death. This amount shall be reduced by 2 1/2 per cent. for each year (if any) by which the Member was more than 15 years older than his Qualifying Spouse.

- death after leaving Plan but before pension begins

(3) If the Member died after leaving the Plan but before his pension under Rule 9 (Benefits on leaving the Plan) commenced, equal to

(a) if the Member was not a Qualifying Member and had taken a refund of Member's Contributions in excess of the Contracting-out Deduction, the Qualifying Spouse's Guaranteed Minimum (subject to Sub-rule 56(G) (payment of state scheme premiums and corresponding reduction of benefits));

(b) in any other case, the sum of:

(1) 50 per cent. of the Member's Deferred Pension calculated as at the date of his death less any part of it which has been extinguished by the payment of a refund of Member's Contributions paid before 6th April 1975 or by the Member exercising his Statutory Transfer Option. The amount so calculated shall be reduced by 2 1/2 per cent for each year (if any) by which the Member was more than 15 years older than his Qualifying Spouse,

and


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(2) Revaluation Increase.

-death after pension begins

(4) If the Member died after becoming entitled to a Normal Retirement Pension, Early Retirement Pension, or Late Retirement Pension 50 per cent. of what would have been the amount of that pension when the Member died if he had not converted any of his pension into a lump sum under Rule 11 or surrendered any of his pension to provide dependant's pension under Rule
15. This amount shall be reduced by 2 1/2 per cent. for each year (if any) by which the Member was more than 15 years older than his Qualifying Spouse.

death after deferred pension begins

(5) If the Member died while receiving a pension under Rule 9 (Benefits on leaving the Plan) payment of which began at Normal Retiring Date, the sum of:

(a) the Revaluation Increase and

(b) subject to Sub-rule 9(C) (refund of pre April 1975 contributions and calculation of residual Deferred Pension), 50 per cent. of the lesser of:

(1) an amount calculated using the formula:

A x B

C

Where

A is 2/3rds of his Final Remuneration

B is Pensionable Service

C is the period Pensionable Service would have been if the Member had not left the Plan until Normal Retiring Date

(2) an amount calculated in accordance with Sub-rule 6(A)(1) (2) or (3) (Normal Retirement Pension) as appropriate according to category of membership but ignoring the references to the Money Purchase Pension.


Page 64

The amount so calculated shall be reduced by 2-1/2 per cent. for each year (if any) by which the Member was more than 15 years older than his Qualifying Spouse.

Provided that where the Trustees, having regard to the advice of the Actuary, determine that, for a Member to whom paragraph (5)(b)(2) above applies, 50 per cent. of the Member's Money Purchase Pension at the Normal Retiring Date exceeded the aggregate of:

A. the amount calculated in accordance with Sub-rule 6(A)(1)(b)
(1), Sub-rule 6(A)(2)(c)(1) or Sub-rule 6(A)(3)(b)(1) (as appropriate), and

B. the part of the Qualifying Spouse's Revaluation Increase which is attributable to Pensionable Service completed after 5th April 1988,

the Spouse's Pension shall be increased by the amount of the excess reduced by 2 1/2 per cent. for each year (if any) by which the Member was more than 15 years older than his Qualifying Spouse.

The Spouse's Pension payable on the death of a Member before the earlier of his Normal Retiring Date and the date his pension commences, shall be subject to any special conditions or restrictions from time to time agreed between the Trustees and the Principal Company. The Trustees shall notify the Member of any such conditions or restrictions.

additional provisions relating to Spouse's Pension

(6) (a) Except where the Member was receiving an Early Retirement Pension when he died and provided the conditions set out in (a) and (b) of paragraph (3) of Sub-rule 56(F) are satisfied the Spouse's Pension payable under this Sub-rule shall, if necessary, be increased so that it is not less than the widow's or widower's (as appropriate) Anti-franking Minimum. If the Member died while receiving a Deferred Pension and the Member's widow or widower is entitled to a Spouse's Pension under paragraph (5) above which includes a Revaluation Increase than that Revaluation Increase shall be added to the Anti-franking Minimum.


Page 65

(b) The Spouse's Pension payable on the death of a Member before the earlier of his Normal Retiring Date and the date his pension commenced, shall be subject to any special conditions or restrictions from time to time agreed between the Trustees and the Principal Company. The Trustees shall notify the Member of any such conditions or restrictions.

- Child's Pension

(B) If a Member dies while in Service on or after his Normal Retiring Date or after his pension under the Plan commences, each of his Children (subject to a maximum of 3 Children at any time shall be entitled to a yearly pension (herein referred to as "the Child's Pension"). Where there are more than 3 Children, the 3 oldest Children from time to time surviving the Member shall each be entitled to a Child's Pension.

The Child's Pension shall be payable as stated in Rule 17 from the Member's death if he dies before his pension commences or otherwise from the date one month after the due date of the last instalment of his pension, until the earlier of the Child's death and his ceasing to qualify as a Child.

The amount of each Child's Pension shall (except as set out below) be from time to time equal to the fraction of the Notional Spouse's Pension specified in the table below according to whether there is in any period a Qualifying Spouse surviving the Member. For the purposes of this Sub-rule the Notional Spouse's Pension is the Spouse's Pension which would have been payable if the Member had died leaving a Qualifying Spouse not more than 15 years younger than himself and for the purpose of calculating its amount the Qualifying Spouse's Revaluation Increase shall be calculated as if she did not have a Guaranteed Minimum.


Page 66

                                       Child's Pension for any period
                                     during which there is a Qualifying   Child's Pension for any period during
                                     Spouse surviving the Member, as a     which there is no Qualifying Spouse
Comparative ages of Children from   percentage of the Notional Spouse's   surviving the Member, as a percentage
  time to time surviving he Member               Pension                    of the Notional Spouse's Pension
          (1)                                     (2)                                    (3)

The eldest or only Child                          50%                                   100%

The second oldest Child                           25%                                    50%

The third oldest Child                            25%                                    50%

Any adjustment in the amount of a Child's Pension resulting from the death of a Qualifying Spouse or Child or a person ceasing to qualify as a Child of the Member, shall have effect from the payment of Child's Pension due immediately following that event so that the amount of the Child's Pension after adjustment shall be the amount which would have applied had such event preceded the Member's death.

The Child's Pension payable if a Member dies in Service before the earlier of his Normal Retiring Date and the date on which his pension under the Plan commences will be subject to any special conditions and restrictions from time to time agreed between the Trustees and the Principal Company. The Trustees shall notify the Member of any such conditions or restrictions.

The Trustees may at any time and for any period vary the amount of Child's Pension for some or all of a Member's Children who qualify for Child's Pensions under this Sub-rule but not so as to alter the aggregate amount of their Child's Pensions from that calculated under this Sub-rule.

- Dependant's Pension

(C) The Trustees may, at their discretion, pay or apply a yearly pension (herein referred to as "the Dependant's Pension") reduced by the Spouse's Guaranteed Minimum (if any) to or for the benefit of a Nominated Dependant.


Page 67

The amount of each Dependant's Pension payable on the Member's death shall, subject to the following paragraph, be such amount as the Trustees determine but so that the aggregate amount, when aggregated with the amount of any Spouse's Pension under (A) of this Rule shall be equal to the amount of the Spouse's Pension which would have been payable under (A) of this Rule if he had been survived by a Spouse and no Dependant's Pension had been payable under this Rule.

The amount terms and conditions of any benefit granted under this Sub-rule will be determined by the Trustees having regard to the advice of the Actuary and the contracting-out requirements of the Pensions Act and will be notified in writing to the Nominated Dependant.

SURRENDER OF A MEMBER'S PENSION TO PROVIDE DEPENDANT'S PENSION

15. The Trustees may, at the request of a Member, determine that, in lieu of any benefit or benefits or part thereof to TO PROVIDE DEPENDANT'S PENSION which the Member may otherwise become entitled under the Plan, there shall be payable to one or more of such Member's spouse and a Dependent Relative a pension or pensions commencing on or after the death of the Member.

The terms and conditions upon which any pension shall become payable under this Rule and the appropriate adjustment in the amount and terms and conditions applicable to any benefit or benefits to which the Member may thereafter become entitled under the Plan shall be determined by the Trustees having regard to the advice of the Actuary and where appropriate to the contracting-out requirements of the Pensions Act.

DISCRETIONARY BENEFITS

16. (A) Upon payment of such additional contributions (if any) as the Trustees may require under Rule 5 (Employer's Contributions), the Trustees shall grant under the Plan such of the following benefits as the Principal Company may request, consistent with approval of the Plan under the Act and subject to Subrule 32(A) (Inland Revenue limitations), namely:

augmentations

(1) an increase in the amount of any pension or other benefit which may become payable to or in respect of a Member or other person under the Plan except that no such increase shall be made in a benefit provided by the exercise of an option under Rule 15 (Surrender of a Member's pension to provide dependant's pension), and


Page 68

persons not otherwise entitled to benefit under the Plan

(2)   (a)   a pension or an increase in the amount of any pension
            payable on or after retirement to a person who has to
            benefit under the Plan completed a period of service
            with a Participating Employer

      (b)   a lump sum payable on or after his retirement to a
            person who has completed a period of service with a
            Participating Employer except that no such lump sum
            shall be payable to a person who has previously received
            a lump sum from the Plan or Associated Schemes

      (c)   a lump sum payable on the death in specified
            circumstances of a person in the service of or formerly
            in the service of a Participating Employer

      (d)   a pension or pensions payable, after the death in
            specified circumstances of a person who has completed a
            period of service with a Participating Employer, in
            respect of such person's widow, widower or a Dependent
            Relative.

The amount of any benefit under this Sub-rule and its terms and conditions shall be notified in writing by the Trustees to the person by reference to whose service the benefit applies or to the person to whom the benefits is to become payable Provided that, in any case where a pension or other benefit is granted under this Sub-rule, the person by reference to whose service such pension or other benefit becomes payable, if not a Member, shall for the purposes of Inland Revenue limitations be deemed to be a Member and the provisions of Rule 55 (Guide to Inland Revenue limitations) shall be read and construed accordingly.

- membership on special terms

(B)   (1)   Upon payment of such additional contributions (if any) as the
            Trustees may require under Rule 5 (Employer's contributions)
            and subject to the provisions of this Sub-rule, a person in
            the service of or who has completed a period of service with a
            Participating Employer may if the Principal Company so
            determines be admitted to membership of the Plan or where
            appropriate his membership thereof may be continued on special
            terms as to contributions, benefits or other relevant matters.

                                                                   Page 69

      (2)   In any case where the Principal Company notifies the Trustees
            that special terms are to apply in respect of any such person
            the Trustees will upon receipt of all such information as they
            may require in relation thereto notify such person in writing
            of such special terms and the date upon which they are to have
            effect. As from such date the Rules shall have effect in
            relation to such person subject to any modifications set out
            or referred to in such notification and pending the issue
            thereof shall have effect subject to such modifications as the
            Trustees shall in their discretion determine to be appropriate
            in order to give effect to such special terms.

            No such modification of the Rules shall have effect:

            (a)   if the Normal Retiring Date would thereby fall before
                  the 60th birthday or after the 75th birthday, or

            (b)   in relation to a Class B Member or a Class C Member if a
                  Member's Normal Retiring Date would thereby be changed
                  to a date earlier than would otherwise have applied and
                  less than 5 years will elapse before that date occurs

without the consent of the Board of Inland Revenue or if the modification would prejudice approval of the Plan under the Act.

- periodic review of pensions

(C) The Principal Company shall review the amount of pensions in payment under the Plan at regular intervals and, having regard to any such review, may instruct the Trustees to increase the amount of all or any of those pensions under and in accordance with (A) of this Rule. The interval between pension reviews under this Sub-rule shall not exceed 3 years and 6 months.

- benefits affected by statutory earnings cap

(D) This Sub-rule applies to any benefit applicable in respect of a Member which is affected by the maximum imposed on statutory earnings cap relevant annual remuneration ("the earnings cap") by Schedule 6 to the Finance Act 1989 or any corresponding requirement for approval of the Scheme under the Act. Any benefit so affected is referred to in this Sub-rule as a capped benefit.


Page 70

Unless the Principal Employer decides otherwise any capped benefit will be deemed to he increased under (A)(2) so that its amount is the same as it would be if the earnings cap did not apply. Any such increase will however be limited so that the capped benefit will not be larger than the maximum referred to in Sub-rule 32(A) (Inland Revenue limitations). That maximum will he calculated having full regard to the earnings cap.

If a capped benefit applicable in respect of a Member is deemed to be increased under (A)(2) his Member's Ordinary Contributions will be increased appropriately. The amount of the increase will be decided by the Trustee having regard to the increase in the capped benefit and the advice of the Actuary.

PAYMENT OF PENSIONS

17. Unless the Trustees otherwise determine any yearly pension under the Plan shall be payable monthly in advance on the same day in each month and the amount of each monthly payment shall be as nearly as may be practicable one-twelfth of the amount of the yearly pension. The first of such monthly payments shall be due on the date on which the Member (or other person) becomes entitled to the yearly pension and the monthly payment due immediately prior to death shall not be apportioned provided that the Trustees may in their discretion postpone making any monthly payment until such date as they shall determine being a date not later than one calendar month following the date on which the monthly payment fell due.

DEDUCTION OF TAX

18. The Trustees shall be entitled to deduct from any payment or repayment under the Plan any tax for which they may be accountable in consequence of such payment or repayment.

CONDITIONS FOR PAYMENT OF BENEFITS

19. All benefits under the Plan (a) shall be subject to deduction of any contributions owing by the Member under the Planor appropriate adjustments in respect thereof and (b) shall be payable in sterling at the registered office of the Principal Company or in such other manner as the Trustees may determine and in particular if an annuity policy or annuity contract or other policy of assurance granted by an insurance company forms part of the Fund the Trustees may from time to time arrange with such insurance company to pay any benefit direct to the person or persons to whom such benefit is payable under the Plan and may cancel any such arrangements.


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Any benefit or part of a benefit to which a person is entitled under the Plan shall be payable as at the due date of payment thereof or as soon as practicable thereafter provided that any such benefit or part thereof for which no claim has been made within the period of six years immediately following the due date shall unless the Trustees otherwise decide be forfeited and the assets representing it shall be retained as part of the Fund except that the Trustees may pay or apply any benefit or part thereof which would otherwise be forfeited to or in respect of one or more of such person's spouse or Dependent Relatives.

PAYMENTS TO WIDOW, WIDOWER OR OTHER NEXT OF KIN

20. Any sum or sums of money amounting to L1500 or less which may become payable under the Plan whether by way of outstanding instalments of pension or otherwise to the personal representatives of a deceased person may, at the discretion of the Trustees be paid to the widow, widower or to any of the next of kin of such deceased person. The Trustees shall not be bound to see to the application of any sum or sums so paid and receipt thereof by the person to whom payment is so made shall be a complete discharge to the Trustees for such payment in the like manner as if it had been paid to the personal representatives of the deceased person and such personal representatives and any person claiming through such deceased person shall not have any right whatsoever to resort to the Fund in respect of any sum or sums so paid.

CLAIMANTS UNABLE TO ACT

21. (A) In any case where a Guaranteed Minimum Pension becomes payable to a widow or widower who is an infant, the Trustees shall (subject to the provisions of (B)(2) of this Rule) pay such benefit to her or to him and receipt thereof by such widow or widower shall be a complete discharge to the Trustees for such payment.

(B) In any case where under the provisions of the Plan:-

(1) a benefit (other than a benefit to which Sub-rule (A) of this Rule applies) becomes payable to a person who is unable to act because he is under age of 18, or

(2) a benefit (including a benefit to which Sub-rule (A) of this Rule applies) becomes payable to a person who in the opinion of the Trustees is unable to act by reason of any physical or mental incapacity


Page 72

the Trustees may in their discretion pay the whole or part of such benefit to such person or may pay or apply the whole or any part thereof in such shares, upon such trusts and in such manner as the Trustees shall determine for the maintenance of such person or any dependant of such person. In particular the Trustees may pay any such benefit or part thereof to the parent or guardian of the person who is under age 18 or otherwise unable to act or to any other person appearing to the Trustees to be for the time being responsible for his or her support or maintenance on the basis that the recipient will use the same to defray the expenses of the household in which the person for the time being resides or otherwise for his or her maintenance as the recipient shall decide.

Any benefit to which this Sub-rule applies not so paid or applied shall be retained by the Trustees for the benefit of such person until, in the opinion of the Trustees he is able to act or, as the case may be, for his estate. Receipt of such benefit or any part thereof by any person, association or corporate body to whom payment is made under this Sub-rule shall be a complete discharge to the Trustees for such payment.

For the purposes of this Sub-rule a certificate from a qualified medical practitioner to the effect that a person is suffering from any physical or mental incapacity may be accepted as conclusive evidence of the fact.

POLYGAMOUS MARRIAGES

22. In any case where it appears to the Trustees that more than one person is or may be eligible to claim a widow's or widower's pension under the Plan on the death of a Member

(a) the Guaranteed Minimum Pension shall be payable to the person (if any) entitled under the Social Security Acts 1975 to a widow's or widower's Category B retirement pension, widowed mother's allowance or widow's pension payable by virtue of the Member's national insurance contributions or who would be so entitled to a widow's or widower's Category B retirement pension but for section 27(6) of the Social Security Act 1975, or, in the case of a female Member, to the person, if any, who is her widower for the purposes of section 17(6) of the Pensions Act, and


Page 73

(b) subject as aforesaid the Trustees may determine that such widow's or widower's pension shall be payable in any such case in whole or in part to or for the benefit of one or more of any persons who have either been through a ceremony of marriage with the Member or in the opinion of the Trustees have at any time been dependent on the Member for or provided by the Member with all or any of the ordinary necessaries of life, and

(c) subject as aforesaid, no widow's or widower's pension shall be payable under the Plan in any such case.

NON-ASSIGNABILITY OF BENEFITS

23. No person may assign or charge in any way his beneficial interest under the Plan or any part thereof and, if a person shall act in contravention of this Rule or do or suffer anything (except as otherwise provided under the Plan) whereby his beneficial interest under the Plan or any part thereof would but for this Rule become vested in or payable to any other person, then (subject to Rules 56 (Contracting-out of the State earnings related pension scheme) and 57 (Contracting-out of the old State graduated scheme) the first-mentioned person's interest shall cease except that the Trustees may in their absolute discretion hold, pay or apply the same to or for the maintenance, personal support or benefit of any one or more of the following persons, namely the first-mentioned person, his spouse and any Dependent Relative provided always that no payment shall be made to an assignee.

SECURING BENEFITS OUTSIDE THE PLAN BY PURCHASE OF POLICIES

24. In any case where:

(a) a Member who does not have the Statutory Transfer Option consents to the provision of a Paid-up Policy under this Rule, or

(b) the Trustees decide it is appropriate in the case of a person in receipt of a pension from the Plan,


Page 74

the Trustees shall purchase or provide (by assignment or otherwise) a Paid-up Policy to secure or intended to secure for such Member or other person a benefit or benefits of the same kind and amount respectively (as nearly as may be) as the benefit or benefits to which the Member or other person is entitled or prospectively entitled under the Plan. A person for whose benefit a Paid-up Policy has been so purchased or provided, his personal representatives and any person claiming through him shall cease to have any right whatsoever to resort to the Fund in respect of the benefit or benefits so secured or intended to be so secured.

The Trustees may determine that the provisions of this Rule shall apply to a part of the benefit to which a person is entitled or prospectively entitled under the Plan on such basis and in all respects as the Trustees shall determine provided that approval of the Plan under the Act is not thereby prejudiced and having regard where appropriate to the contracting-out requirements of the Pensions Act.

This Rule does not apply to a Member who has the Statutory Transfer Option.


Page 75

PART V - MISCELLANEOUS PROVISIONS RELATING TO MEMBERSHIP, CONTRIBUTIONS AND

BENEFITS

TEMPORARY ABSENCE FROM WORK

25. A Member or Life Assurance Member who remains in Service but is suspended from duty or absent from work for a continuous period not exceeding the maximum period specified below shall remain a Member or Life Assurance Member during that period. If a Member or Life Assurance Member who has been so suspended or absent does not cease to be suspended from duty or absent from work before the maximum period expires he shall (unless the Trustees at the request of the Principal Company and subject to the approval of the Board of Inland Revenue otherwise determine) at the end of the maximum period (a) if he is a Member, leave the Plan and the provisions of Rule 9 (Benefits on leaving the Plan) shall apply or (b) cease to be a Life Assurance Member, if he is a Life Assurance Member.

The maximum period shall be ten years in respect of a Member or Life Assurance Member who remains resident in the United Kingdom and three years in respect of any other Member or in any case where such suspension or absence from duty arises from Ill-health or National Service such longer period as the Principal Company shall determine.

The amount of any benefit payable on the death of the Member or Life Assurance Member occurring during or after any such period of suspension or absence shall be subject to any limitations or restrictions set out in the relevant Rule and subject thereto the following provisions shall apply in respect of any contributions payable by and benefits applicable in respect of the Member or Life Assurance Member during such period under the Plan namely:-

(a) in respect of any such period during which remuneration continues to be paid by a Participating Employer the amount of any such contributions and any such benefit shall subject to paragraphs (c) and (d) below continue to be calculated in accordance with Parts III and IV of the Rules by reference to such remuneration

(b) subject to paragraph (d) below in respect of any such period during which no remuneration is paid by a Participating Employer no such contributions shall be payable and any such benefits shall be adjusted as the Trustees consider appropriate


Page 76

(c) the amount of any such contributions and any such benefit which is calculated under the Rules otherwise than by reference to the Member's or Life Assurance Member's remuneration shall be determined by the Trustees

(d) in any case where, under a scheme of a Participating Employer, the Member or Life Assurance Member is entitled to a continuation of the whole or a part of his remuneration in the event of prolonged or permanent disablement the amount of any such contributions and any such benefit shall in lieu of being the amount calculated by reference to paragraphs (a) and (b) above be the amounts applicable under the Rules by reference to the Member's or Life Assurance Member's remuneration immediately before such period commenced, or such other amounts (if any) notified in writing to the members of such scheme generally

and

(e) the Principal Company may determine that the amount of any such contributions and any such benefit shall in lieu of being the amounts calculated by reference to paragraphs (a), (b) or (d) be such greater amounts as the Principal Company may determine (subject in the case of contributions to the agreement of the Member) and notify to the Trustees being amounts not exceeding the amounts applicable under the Rules by reference to the Member's or Life Assurance Member's remuneration immediately before such period commenced increased where appropriate having regard to any increases in remuneration which may have been made during such period in respect of employees of the Participating Employer in the same category of employment.

This Rule does not apply to a female Member or Line Assurance Member to whom Rule 26 applies.

MATERNITY ABSENCE
- application

26. (A) This Rule applies to any female Member or Life Assurance Member who is absent from work wholly or partly because of her pregnancy and who is entitled to rights ("maternity rights") specified in Part III of the Employment Protection (Consolidation) Act 1978 ("the 1978 Act").

- refunds of contributions

(B) For the purpose of deciding whether any option to take a refund of contributions applies a woman will be treated as remaining in Service during any period in which she has maternity rights including any period in which her right to return to work is postponed.


Page 77

- rights before 23.6.94

(C) In the case of a woman with maternity rights expiring before 23rd June 1994:

calculation of Pensionable Service

(1) Pensionable Service up to the beginning of any period of absence with maternity rights will be treated as continuous with that beginning on the date of her return. The period of absence itself will be ignored unless the Principal Company agrees to it being counted.

effect of pay during absence

(2) No payment made to the Member or Life Assurance Member by a Participating Employer in respect of any period of such absence will be taken into account in calculating benefits under the Plan except for the purposes of calculating the Guaranteed Minimum.

death benefits

(3) If a Member or Life Assurance Member who is absent from work with maternity rights dies there will be payable the benefits which would have applied had she died in Service without having left the Plan on the day before her absence began. Any lump sum benefit payable under this will be held by the Trustees as set out in Rule 13.

- rights on and after 23.6.94

(D) In the case of a woman with maternity rights expiring on or after 23rd June 1994:

calculation of Pensionable Service

(1) when calculating Pensionable Service for a woman who is absent from work with maternity rights any part of the period Service of absence which is statutory maternity leave for the purposes of the 1978 Act or during which she was receiving contractual remuneration or statutory maternity pay from the Participating Employer will be counted in full. Any other part of that absence will count only if she has paid the Member's Ordinary Contributions under (4) which she would have paid had she not been absent during that period or if the Principal Company agrees to the period being counted.

If a woman returns to work pursuant to her maternity rights the periods (described in the preceding paragraph) to be counted as Pensionable Service immediately before, during and after her absence will be treated as one unbroken period.


Page 78

benefits for Pensionable Service

(2) In respect of any such absence which counts as Pensionable Service under (1), benefits (and the Member's Money Purchase Fund) will be calculated as though the Member was not absent from work and was working in accordance with her normal practice and receiving her normal earnings.

death benefits

(3) If a Member or Life Assurance Member who is absent with maternity rights dies:

(a) during absence which is statutory maternity leave for the purposes of the 1978 Act or during which she was receiving contractual remuneration or statutory maternity pay from the Participating Company, there will be payable the benefits which would have applied if she had not been absent and had been working in accordance with her normal practice and receiving her normal earnings;

(b) during absence to which (a) does not apply, there will be payable the benefits which would have applied if she had left Service immediately before she died or any greater benefits notified by the Principal Company to the Trustees.

Any lump sum benefit payable under this Sub-rule will be held by the Trustees as set out in Rule 13.

Member's Ordinary Contributions

(4) Member's Ordinary Contributions will be payable (unless the Principal Company decides otherwise) during any period of absence in which she is receiving contractual remuneration or statutory maternity pay from the Participating Employer. Those contributions will be calculated by reference to the amount of contractual remuneration or statutory maternity pay paid to her by the Participating Employer during that period.

No Member's Ordinary Contributions will be payable during any other period in which she is absent with maternity rights. The Member may on her return to work, with the agreement of the Principal Company, arrange with the Trustees to pay the unpaid Member's Ordinary Contributions she would have paid had she not been absent during that period.


Page 79

TRANSFERS FROM ANOTHER SCHEME
Expressions used

27. (A) In this Rule

"personal pension scheme" means a personal pension scheme within the meaning of Section 630 of the Act.

"protected rights" means rights to money purchase benefits under

(1) a personal pension scheme to which the Occupational Pensions Board has issued an appropriate scheme certificate, or

(2) an occupational pension scheme which is or has been contracted-out on a money purchase basis,

which are wholly or partly in substitution for benefits under the State earnings related pension scheme.

"transferring arrangement" means a fund, scheme, arrangement (including a personal pension scheme) or policy or contract of a like nature to a Paid-up Policy.

- acceptance

(B) The Trustees shall if so requested by the Principal Company, accept a transfer of assets from a transferring arrangement but only if it would not prejudice approval of the Plan under the Act.

- information to be obtained by Trustees

(C) In connection with any transfer under this Rule the Trustees shall obtain written details from the trustees or other managers of the transferring arrangement stating:

(1) the extent to which the transfer may be used to provide a lump sum on an employee's retirement including the extent to which any part of the transfer which represents an employee's voluntary contributions to the transferring arrangement may be so used;

(2) the extent (if any) to which the transfer arises from an employee's contributions (herein referred to as "Transferred Employee Contributions"), and the extent to which those contributions were made on a voluntary basis;


Page 80

(3) such details as the Trustees require of the period of service in the employment to which the transferring arrangement applied. That period will be taken into account under the Plan as Linked Qualifying Service and otherwise for such purposes in such manner and to such extent as the Trustees decide, and

(4) any other details required by the Trustees having regard to the contracting-out requirements of the Pensions Act.

- benefits

(D) Any transfer under this Rule will be accepted on the basis that:

(1) one or more specified persons who are entitled or contingently entitled to rights and benefits under the transferring arrangement will be entitled or contingently entitled to such rights and benefits under the Plan (consistent with approval of the Plan under the Act) as the Trustees shall having regard to the advice of the Actuary arrange;

(2) if the transfer is accompanied by a certificate from the trustees or managers of the transferring arrangement to the effect that the transfer is not to be used to provide retirement benefits in lump sum form the benefits arising on retirement from the transfer shall not be paid in lump sum form except to the extent permitted under Sub-rules 11(B) (Member in serious ill-health) and 11(C) (Trivial Pensions) or such other extent which the Trustees are satisfied would not prejudice approval of the Plan under the Act;

(3) in relation to a Member who is a Class B Member or Class C Member any benefit on retirement arising from a transfer (other than a transfer from another scheme of a Participating Employer or an Associated Employer) may be paid as a lump sum only if and not exceeding the extent notified to the Trustees by the trustees or managers of the transferring arrangement under (C) of this Rule increased in proportion to any increase in the Index of Retail Prices since the date the transfer was received, unless the Trustees are satisfied that to use the transfer for that purpose to a greater extent would not prejudice approval of the Plan under the Act;

(4) the Trustees will ensure that to the extent that the transfer arises from an employee's Transferred Employee Contributions (and only to that extent) it will be treated as contributions paid by him to the Plan;


Page 81

- revaluation of GMP

(E) If a transfer accepted under this Rule in the circumstances referred to in section 20 of the Pensions Act represents accrued rights to guaranteed minimum pensions for a period of contracted-out employment for the purposes of the Pensions Act, the following conditions will apply:

(1) if the transferring arrangement is not a policy of insurance or annuity contract any part of the Guaranteed Minimum which relates to that contracted-out employment may be increased on a basis determined by the Trustees and consistent with the requirements of Regulations 44 and 45 of the Occupational Pension Schemes (Contracting-out) Regulations 1984 instead of in accordance with Orders made under section 148 of the Social Security Administration Act 1992;

(2) if the transferring arrangement is a policy of insurance or annuity contract any part of the Guaranteed Minimum which relates to that contracted-out employment will be increased at the rate which would have applied had the transfer not taken place unless the Trustees decide that it will be increased in accordance with Orders made under section 148 of the Social Security Administration Act 1992;

(3) the Trustees may pay or reclaim any limited revaluation premium payable or reclaimable under the Pensions Act in respect of any person to whom the transfer relates.

- transfers including protected rights

(F) Any transfer which includes the value of protected rights may be accepted under this Rule only after 5th April 1990 and if the person for whom the transfer is made ("the transferee") is employed by a Participating Employer or if the transfer is otherwise permissible under the Protected Rights (Transfer Payments) Regulations 1987. The benefits provided under this Rule in consequence of any such transfer shall include Guaranteed Minimum Pensions for the transferee and his widow or widower in respect of the period of employment which gave rise to the protected rights equal to those to which the transferee and his widow or widower would have been treated as being entitled by section 48 of the Pensions Act if the transfer payment had not been made.


Any Guaranteed Minimum Pension provided under this Sub-rule shall be increased for each complete Tax Year which is after the period which gave rise to the protected rights in accordance with Orders made under section 148 of the Social Security Administration Act 1992 unless the Trustees determine that the increases shall be made in accordance with either section 16(3) of the Pensions Act (limited revaluation) or section 55(5) of the Pensions Act (fixed rate revaluation) as modified, in either case, by regulation 4 of the Protected Rights (Transfer Payment) Regulations 1987.

- no offsetting of GMP revaluation

(G) If the Trustees accept a transfer to which Sub-rules (E) or (F) of this Rule applies, and

(1) the person for whom the transfer was accepted does not enter Contracted-out Employment or ceases to be in Contracted-out Employment before Pensionable Age, and

(2) under arrangements made under Sub-rule (D) of this Rule any Guaranteed Minimum Pension applicable at the date of transfer is expressed to form part of a larger amount,

that larger amount shall be increased by the increases in the Guaranteed Minimum under Sub-rule (E) or (F) of this Rule.

- transferees not becoming contracted-out

(H) If any person for whom rights to a guaranteed minimum pension for the purposes of the Pensions Act are transferred to the Plan does not enter contracted-out employment under it, the amounts, dates for payment and conditions attaching to payment of that guaranteed minimum shall comply in all respects with Part I or II (as appropriate) of Schedule 2 to the Contracting-out (Transfer) Regulations 1985. If the transferring arrangement is a policy of insurance or annuity contract, the benefits arranged by the Trustees under Sub-rule (D) of this Rule in respect of the transfer shall include pensions which are of at least equal value to the annuity which would have been payable under the transferring arrangement in respect of guaranteed minimum pensions if the transfer had not taken place.

TRANSFERS TO ANOTHER SCHEME
- expressions used

28. (A) In this Rule:

"receiving scheme" means any fund, scheme or arrangement which is


Page 83

(1) approved under Chapter I, Part XIV, Income and Corporation Taxes Act 1988, or

(2) a personal pension scheme which is approved under Chapter IV,

Part XIV, Income and Corporation Taxes Act 1988, or

(3) approved for the purposes of this Rule by the Board of Inland Revenue.

"appropriate personal pension scheme" means a personal pension scheme to which the Occupational Pensions Board has issued an appropriate scheme certificate so that it may provide money purchase benefits for its members which are wholly or partly in substitution for benefits under the State earnings related pension scheme.

"Transfer Regulations" means the Contracting-out (Transfer) Regulations 1985.

- general

(B) The Trustees may subject to the conditions set out below and to the approval of the Principal Company transfer to any receiving scheme all the assets of the Fund or such part of them as the Trustees think just and equitable having regard to the advice of the Actuary. If the transfer is to be made without the consent of the Member the Trustees shall satisfy themselves that the amount to be transferred is at least equal to the value of the benefits which will be extinguished by the transfer.

- information to receiving scheme

(C)   (1)   On any transfer under this Rule the Trustees shall supply to
            the receiving scheme a statement showing the amount (if any)
            included in the transfer which is attributable to an
            employee's Member's Contributions.

      (2)   If on or after any transfer under this Rule the managers of
            the receiving scheme request a certificate showing the maximum
            lump sum payable on retirement from the transfer in respect of
            a Member who is a Class B Member or a Class C Member, the
            Trustees shall calculate the said maximum lump sum and supply
            the receiving scheme with the certificate requested.

      (3)   If the receiving scheme is a personal pension scheme, the
            Trustees shall provide a certificate of the maximum lump sum
            payable on retirement from the transfer if the person to whom
            the transfer relates:

            (a)   is aged 45 or more at the time the transfer is made, or

                                                                   Page 84

            (b)   has at any time within the 10 years preceding the date
                  on which the right to the transfer arose, been, in
                  respect of any employment to which the transfer or any
                  part of it relates, either

                  (i)   a Controlling Director as defined in Sub-rule
                        55(A) (Guide to Inland Revenue limitations), or

                  (ii)  in receipt of annual remuneration in excess of
                        (pound)60,000 or, if greater, the allowable
                        maximum as defined in Section 640A of the Act for
                        the Tax Year in which the date of the transfer
                        falls, or

            (c)   is entitled to benefits included in the transfer which
                  arise from an occupational pension scheme under which
                  the normal retirement age is 45 or less.

      (4)   For the purpose of paragraphs (2) and (3) of this Sub-rule
            "maximum lump sum" shall mean the amount calculated as at the
            date of transfer (without taking into account any future
            increases) as the amount (if any) prospectively payable to the
            Member under Sub-rule 11(A) or such greater amount as they
            shall determine not exceeding the maximum permissible in
            accordance with Sub-rule 32(A) (Inland Revenue Limitations).

- benefits to be provided by receiving scheme

(D) Before any transfer is made under this Rule arrangements shall be made with the managers of the receiving scheme as to the benefits it will provide in respect of the transfer. If the transfer is to be made at the request or with the consent of any person to whom it relates, those arrangements shall be agreed with that person. If the transfer is to be made without the consent of any person to whom it relates, the arrangements shall be agreed with the Trustees.

- transfer of GMPs

(E) No transfer which represents Guaranteed Minimum Pensions shall be made under this Rule unless at the date of the transfer the receiving scheme is:

to salary related contracted-out schemes

(1) contracted-out on a salary related basis by virtue of satisfying section 9(2) of the Pensions Act (or was formerly so contracted-out and is subject to financial supervision by the Occupational Pensions Board because it retains liability for guaranteed minimum pensions, in which case the transfer shall be approved by the Occupational Pensions Board), and


Page 85

(a) the Member consents to the transfer and has entered employment with an employer who is a contributor to the receiving scheme, or

(b) the circumstances specified in paragraph 2 of Part I, Schedule 1 to the Transfer Regulations (which deals with circumstances in which the Scheme and the receiving scheme apply to the same employment or to employers who are or have been financially connected) apply, or

(c) if the transfer is in respect of (i) an employee who has not entered contracted-out employment under the receiving scheme or (ii) the liability for payment of a Guaranteed Minimum Pension to or in respect of a person who has become entitled to it, the conditions set out in

Part I or Part II of Schedule 2 to the Transfer
Regulations (which specify the amounts, the terms and
conditions attaching to, and the basis of any
revaluation of the Guaranteed Minimum Pension to be
provided by the receiving scheme) are satisfied;

or

to money purchase contracted-out schemes

(2) contracted-out on a money purchase basis by virtue of satisfying section 32(2A) of the Pensions Act (or was formerly so contracted-out and is subject to financial supervision by the Occupational Pensions Board because it retains liability for protected rights) and

(a) the Member consents to the transfer and has entered employment with an employer who is a contributor to the receiving scheme, and

(b) the receiving scheme makes provision for the transfer payment to be applied to provide money purchase benefits for or in respect of the Member, and

(c) if the receiving scheme is not a contracted-out scheme, the transfer payment is approved by the Occupational Pensions Board;

or

to appropriate personal pension scheme

(3) an appropriate personal pension scheme and


Page 86

(a) the Member consents to the transfer, and

(b) the receiving scheme makes provision for the transfer payment to be applied in providing money purchase benefits for or in respect of the Member;

or

to overseas schemes

(4) administered wholly or primarily outside the United Kingdom and

(a) the Member consents to the transfer and has entered employment with an employer who is a contributor to the receiving scheme and the Member's employment is outside the United Kingdom and

(b) the transfer is approved by the Occupational Pensions Board.

Where a Member's accrued rights to Guaranteed Minimum Pensions are transferred to a scheme which is contracted-out on a money purchase basis or to an appropriate personal pension scheme, the sum transferred shall not be less than an amount equal to the cash equivalent of those accrued rights calculated and verified in a manner consistent with Regulations made under section 97 of the Pensions Act for the purposes of the Statutory Transfer Option.

- transfers without Members consent

(F) A transfer may be made under this Rule without the consent of any person in respect of whom it is to be made, except that the consent of the Member shall be required:

(1) in the circumstances specified in Sub-rule (E) of this Rule if the transfer includes a Guaranteed Minimum Pension, or

(2) where the transfer constitutes a complete or partial substitute for short service benefit under the Plan in respect of the Member for the purposes of section 73 of the Pensions Act unless regulations made pursuant to section 73 of the Pensions Act permit the transfer without his consent.


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- interaction with Statutory Transfer Option

(G) The Trustees power to make a transfer under this Rule with the consent of the Member does not apply to a Member who has the Statutory Transfer Option except to the extent that the amount to be transferred exceeds his cash equivalent for the purposes of Chapter IV of Part IV of the Pensions Act. The Trustees may treat any consent or request of the Member in connection with the transfer of his cash equivalent as relating also to the transfer of any such excess under this Rule.

- effect of transfer on Plan benefits

(H) A transfer may be made under this Rule even though it may result in one or more persons ceasing to have any entitlement to benefit by reference to a person's period of membership of the Plan or, as the case may be, having entitlement to benefits which are smaller in amount or subject to different terms and conditions. No person shall have any right whatever to resort to the Fund for any benefit which ceases to be payable or is otherwise affected as a result of a transfer under this Rule.

Any person in respect of whom such a transfer has been made shall not thereafter be entitled to any benefits under the Plan in respect of the assets so transferred and the Trustees shall not be in any way responsible for or required to enquire into the use and application of the assets so transferred.

RIGHTS OF EMPLOYERS RELATING TO EMPLOYEES

29. Nothing in the Plan shall fetter the right of a Participating Employer to dismiss any employee or to reduce any employee's remuneration neither shall the benefit to which a person might claim to be entitled under the provisions of the Plan be used as a ground for increasing damages in any action brought by such person against a Participating Employer.

CLAIMS AGAINST TRUSTEES OR EMPLOYERS

30. No person shall have any claim, right or interest upon, or in respect of, the Fund or any contributions thereto or any interest therein or any claim upon or against the Trustees or a Participating Employer except under and in accordance with the provisions of the Trust Instrument and the Rules.


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LIEN ON BENEFITS

31. All beneficial interest of a Member under the Plan shall, subject to Rule
18 (Deduction of tax), stand charged with all sums (if any) owing in respect of any monetary obligation due to a Participating Employer and arising out of a criminal, negligent or fraudulent act or omission by the Member. On production of a certificate signed by the chairman or any two directors of that Participating Employer that an amount is so owing such certificate shall be accepted as conclusive evidence by the Trustees of the facts therein stated and subject as hereinafter provided the amount so certified shall be deducted from the benefits accordingly and be payable to that Participating Employer whose receipt shall be a complete discharge therefor provided that

(a) this Rule shall not apply to any benefit or part thereof

(1) which arises under the provisions of the Transfer Rules except with the consent of the Occupational Pensions Board

(2) which has operated to exclude the right to or reduce the amount of a redundancy payment to which the Member would otherwise be entitled under the Employment Protection (Consolidation) Act 1978, or

(3) which represents Equivalent Pension Benefits or a Guaranteed Minimum Pension

(b) subject to any different agreement in writing between the Participating Employer and the Member, the amount of such deduction shall be limited to whichever is the lesser of

(1) the amount the Actuary advises to be the actuarial value of the Member's actual or prospective benefits to which this Rule applies, at the time of such deduction, and

(2) the amount of the said monetary obligation

(c) the Trustees shall determine which and the extent to which any benefit or benefits or prospective benefit or benefits is or are to be reduced in amount, terminated or suspended having regard to the amount so deducted

(d) the Member shall be entitled to a certificate showing the amount deducted and its effect on his benefits or prospective benefits


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(e) no amount shall be deducted under this Rule in the event of any dispute as to the amount of such deduction unless and until the obligation has become enforceable under an order of a competent Court or the award of an arbitrator under the Rules, and

(f) any Participating Employer to which a payment is made under this Rule shall indemnify the Trustees against all actions, claims, demands and expenses arising directly or indirectly in consequence of such payment.

INLAND REVENUE LIMITATIONS

32. (A) The Trustees in order to secure and maintain approval of the Plan under the Act shall adjust the amount of any benefit to which any person may become entitled under the Plan and the amount of any contributions payable by and in respect of such person and shall determine that the terms and conditions appropriate to such benefits and contributions shall be deemed to be altered or modified to give effect to such limitations set out in Rule 55 or to such other limitations or restrictions (including any variation in such limitations or restrictions) as the Board of Inland Revenue may in any particular case or generally require or agree.

- Inland Revenue undertakings

(B) The Trustees may enter into such undertakings with the Board of Inland Revenue as they consider appropriate in connection with approval of the Plan under the Act and the provisions of the Plan as set out in the Trust Instrument and the Rules shall be deemed to be altered or modified to such extent as the Trustees shall in their discretion determine in order to give effect to such undertakings.

- optional limits

(C)   (1)   Any Class B Member may elect on or after 27th July 1989 to be
            treated for the purposes of the Rules as a Class A Member
            except that, unless the Trustees otherwise agree with the
            Member, he shall remain a Class B Member for the purposes of
            paragraph (a) of Rule 8, the last paragraph (b) of Sub-rule
            11(A) and paragraph (2)(b) of Sub-rule 55(B).

      (2)   Any Class C Member may, with the consent of the Trustees,
            elect on or after 27th July 1989 to be treated for the
            purposes of the Rules as a Class A Member.

      (3)   Any Class A Member may, with the consent of the Trustees,
            elect to be a Class B Member for the purposes of paragraph (a)
            of Rule 8, the last paragraph (b) of Sub-rule 11(A) and
            paragraph (2)(b) of Sub-rule 55(B). For all other purposes the
            Member will remain a Class A Member.

                                                                   Page 90

      (4)   Any election under paragraph (1) of this Sub-rule is
            irrevocable and shall be made by the Member giving written
            notice to the Trustees in such form as the Trustees may
            prescribe but consistent with the requirements of Part II of
            Schedule 6 to the Finance Act 1989.

      (5)   Any election under paragraph (2) or (3) of this Sub-rule is
            irrevocable and shall be made by the Member giving written
            notice to the Trustees in such form as the Trustees may
            prescribe.

      (6)   Any notice given under paragraph (4) or (5) above must be
            given no later than whichever is the last to occur of

            (a)   the earliest of the date on which any benefit is paid to
                  the Member under the Plan, the date on which any
                  transfer payment is made from the Plan in respect of the
                  Member to any other fund scheme, arrangement, policy or
                  contract and the Member's 75th birthday, and

            (b)   any later date approved for this purpose by the Board of
                  Inland Revenue.

      (7)   No election under this Sub-rule can be made by a Member who
            retired from or left Service prior to 17th March 1987.


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PART VI - ADMINISTRATION AND MANAGEMENT OF THE PLAN

RESPONSIBILITY FOR ADMINISTRATION AND MANAGEMENT

33. The administrator of the Plan will be responsible for its administration and management. The administrator will be

(a) the Trustees, or

(b) any person or corporate body appointed for the time being by the Trustees under this Rule to be the administrator.

The Trustees may at any time appoint a person or corporate body approved for the purpose by the Principal Company and resident in the United Kingdom to be the administrator for the time being and must do so at any time when none of the Trustees are resident in the United Kingdom.

Any appointment will be in writing and must be notified to the Board of Inland Revenue.

Under section 606 of the Act, if the administrator has failed to discharge his duties or to pay any tax due from him by virtue of Chapter I of the Act those responsibilities of the administrator may pass to one or more of the Trustees or participating Employers.

APPOINTMENT AND REMOVAL OF TRUSTEES

34. The power of appointing new and additional trustees shall be vested in the Principal Company which may appoint an additional trustee or additional trustees without limitation as to number and may remove from office any trustee and may appoint a new trustee in place of any trustee who shall die or be removed or retire from office or become incapable of acting. Any such appointment or removal shall be by deed executed by the Principal Company and as the case may be by any new or additional trustee.


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A corporation limited or unlimited and whether or not a trust corporation may be appointed as a trustee and may act either as sole trustee or jointly with one or more other trustees. Section 37(1)(c), Trustee Act 1925 shall not apply and accordingly a trustee who is replaced or removed upon or subsequent to the appointment of any such corporation as a trustee hereof shall thereupon be discharged notwithstanding that there may not be either a trust corporation or at least two individuals to act as trustees to perform the trust. Unless for the time being a corporation or company as aforesaid is a trustee hereof or until the Principal Company shall otherwise determine by instrument in writing the number of trustees shall not be fewer than two.

A trustee or trustees may be appointed as aforesaid and act hereunder upon such terms as to remuneration and generally in all respects as may be agreed from time to time between the Principal Company and the trustee and any corporation, company, firm or person to whom payment of remuneration is made under any such agreement may retain such remuneration beneficially.

Any Trustee being an individual who at the date of his appointment as a Trustee was a director or employee of one or more of the Participating Employers shall on the first date on which he is no longer a director or employee of any of the Participating Employers cease to be a Trustee.

Any trustee who is a Member or (in the case of any trustee being a corporation or a company) any member of the board of the trustee company who is a Member shall be entitled to retain for his own absolute benefit any and all benefits to which he is or becomes entitled by virtue of his membership of the Plan.

TRUSTEES' GENERAL POWERS OF DETERMINATION

35. Subject to the powers to be exercised by a Participating Employer as herein expressed, the Trustees shall have full power to determine whether or not any person is entitled from time to time to any benefit or payment in accordance with the Plan, and in deciding any question of fact they shall be at liberty to act upon such evidence or presumption as they shall in their discretion think sufficient, although the same be not legal evidence or legal presumption. Subject as aforesaid, the Trustees shall also have power conclusively to determine all questions and matters of doubt arising on or in connection with the Plan, and whether relating to the construction thereof or the benefits thereunder or otherwise.

EXERCISE OF TRUSTEES' POWERS

36. (A) Unless a corporation or company is for the time being sole trustee hereof the following provisions shall apply:


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- individual trustees

(1) the Trustees shall appoint a secretary and shall meet at such times, not being less than once a year, and at such place as they shall decide, and shall make regulations for the conduct of their business, the summoning of meetings, the appointment of a chairman, the recording of resolutions, and all other matters in connection with their work. Unless the regulations from time to time made by the Trustees for the conduct of their business provide otherwise:

(a) A special meeting may be called by any one of the Trustees and shall be called by the secretary at the direction of the Trustees or any one of them.

(b) If three of the trustees are present at a meeting they will form a quorum.

(c) At every meeting of the Trustees all questions shall be decided by the votes of the trustees present taken by a show of hands.

(d) In the case of an equality of votes the chairman of the meeting shall have a second or casting vote.

(2) The Trustees shall exercise their powers and execute their duties under the Plan by resolutions passed at meetings of the Trustees provided that a resolution in writing of which notice has been given to each trustee individually shall if signed by a majority of the Trustees for the time being be as effectual as if it had been passed at a meeting of the Trustees, and may consist of one or more documents in similar form each signed by one or more of the Trustees.

- corporate trustee

(3) A corporate trustee may act through any of its directors or through an officer appointed for the purpose and so that any such appointment may be of one person or of one or more persons alternatively identified either by name or by reference to the holding for the time being of a specified office.

- trustees decisions

(4) No decision of or exercise of a power by the Trustees shall be invalidated or questioned on the ground that the Trustees or any of them or any director or officer of a corporation or company being a trustee hereof had a direct or other personal interest in the mode or result of such decision or of exercising such power.


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TRUSTEES LIABILITY

37. Without prejudice to the powers and discretions vested in the Trustees by the other provisions hereof and except as provided below, the Trustees shall be entitled to all the indemnities conferred on trustees by law and shall not be liable for acting on the advice of the auditors appointed under the Rules or on any other advice the Trustees may obtain directly or indirectly from such corporation, company, firm or person as shall in their opinion be qualified by experience or otherwise to advise them, nor shall any Trustee be liable for any acts or omissions not due to his own wilful neglect or default nor shall it be obligatory upon the Trustees to see that any contributions or other moneys payable to them under the Plan are in fact paid.

The Trustees shall be indemnified in respect of expenses incurred in connection with the Plan only to the extent that they are incurred under and strictly in accordance with the Rules.

The Principal Company shall keep the Trustees indemnified against any actions, claims, costs and liabilities arising out of the execution of their duties in relation to the Plan except such as they incur through any gross negligence and any wilful default or breach of trust knowingly and intentionally committed.

EXERCISE OF EMPLOYER'S POWERS

38. Any power, right or discretion conferred on a Participating Employer by the Trust Instrument or the Rules shall be exercisable by that Participating Employer's board of directors or a committee thereof appointed for the purposes of the Trust Instrument and the Rules and a document purporting to be a copy resolution of that board or committee signed by the chairman of the meeting shall (except in the case of a power or right exercisable by deed) be sufficient evidence of the exercise of the power, right or discretion thereby involved.

INVESTMENT OF FUND
- acquisition and disposal of investments

39. (A) The Trustees may retain any investments or property or any interest therein from time to time held by the Trustees and forming part of the Fund or sell or realise or otherwise deal with the same in such manner as they shall in their absolute discretion determine and may invest or apply in manner hereinafter provided any money forming part of the Fund and not immediately required for the payment of benefits and shall have power to sell or realise any investments or property or interest therein whether for providing money required for the payment of such benefits or for reinvestment or otherwise.

- permitted investments

(B) The Trustees may invest or otherwise deal with any money or other assets forming part of the Fund in such manner as they shall in their absolute discretion determine and in particular without prejudice to the generality of the Trustees' powers under this Rule:-


Page 95

(1) The Trustees may invest or apply any moneys forming part of the Fund in or upon the security of any stocks, shares, debentures, debenture stocks, units in unit trusts or mutual or managed funds, bearer securities, any interest in land and any annuity policies and policies of assurance (being annuity policies or policies of assurance issued by any United Kingdom office or branch of any insurance company which is authorised to carry on ordinary long term insurance business under section 3 or 4 of the Insurance Companies Act 1982) or other investments or property whatsoever and wheresoever situate, whether or not involving liability, whether or not producing income and whether or not authorised by law for the investment of trust moneys as the Trustees in their absolute discretion think fit.

(2) The Trustees shall have power to underwrite, sub-underwrite or guarantee the subscription of any funds, securities, bonds, debentures, debenture stocks and stocks and shares of any kind.

(3) The Trustees may place or retain any moneys:-

(a) on deposit or current account at such rate of interest (if any) and upon such terms as they shall think fit with any bank, investment company, building society, local authority, finance company or any United Kingdom office or branch of any insurance company as aforesaid, and

(b) on deposit upon such terms as they shall think fit with any Participating Employer or any other company or undertaking.

The Trustees shall not be chargeable in respect of any interest in excess of the interest (if any) actually paid or credited on any moneys dealt with in accordance with this Rule or otherwise in respect thereof.

(4) The Trustees may enter into any transaction in connection with financial futures, the lawful currency of any country and the purchase or sale of any assets or property for receipt or delivery at a future date and may grant or acquire call or put options over any assets or property.

- additional powers; land and buildings

(C) The Trustees shall in relation to any real property or any interest therein forming part of the Fund have the following additional powers:


Page 96

(1) power to keep any buildings insured against such risks and for such amounts as they think fit;

(2) powers, in addition to the powers of management conferred by law upon trustees holding land upon trust for sale, to sell, exchange, convey, lease, charge, agree to let or otherwise conduct the management of any such property as if the Trustees were absolutely entitled to such property beneficially but so that, in exercising this power, the Trustees shall obtain and act upon such advice as they consider necessary (including advice from an independent valuer or independent valuers) in order to determine and agree the terms and conditions appropriate to each such sale, exchange, conveyance, lease, charge and agreement to let;

(3) power to apply any money for the time being forming part of the Fund in improving or developing any such property or in enlarging, improving, demolishing or rebuilding any building comprised in such property.

- additional powers; personal property

(D) The Trustees shall in relation to any personal property have the power to take such steps as they may think proper for the insurance, repair, protection, removal, custody, carriage and general maintenance of such property or any part thereof.

- indemnity by trustees in connection with investments

(E) The Trustees shall have power to give any indemnity in connection with the exercise of their powers under this Rule and may bind the Fund to give effect thereto.

- nominee to hold investments

(F) The Trustees may appoint any corporate body to act as their nominee for the purposes of this Rule with power for the Trustees at any time or times in like manner to revoke or vary such appointment and any investments of the Fund may be made in the name of or transferred to the corporate body so appointed on the terms that the latter shall hold them as nominee for and on behalf of the Trustees and the Trustees may for this purpose enter into any agreement with such corporate body and may bind the Fund in respect of any indemnity to give effect thereto.

- employer related investments

(G) In exercising their powers under this Rule the Trustees shall comply with the restrictions on investment of Plan's resources in employer related investments referred to in section 112 of the Pensions Act and any regulations made thereunder.


Page 97

POWER TO RAISE OR BORROW MONEY

40. After obtaining the consent of the Principal Company, the Trustees may whenever they think it desirable so to do raise or borrow any sum or sums of money and may secure the repayment of such moneys in such manner and upon such terms and conditions in all respects as they think fit and in particular by charging or mortgaging all or any part of the Fund.

DONATIONS AND BEQUESTS

41. The Trustees may accept donations or bequests from any person or body to be applied for the purposes of the Plan.

PLAN ACCOUNTS

42. The Trustees shall cause true and full accounts to be kept of all moneys passing through their hands and also a record of all persons receiving benefits and of all other matters proper to be recorded so as to show the full facts relating to the Plan.

AUDIT OF ACCOUNTS

43. The Trustees shall cause their accounts for each Plan Year to be audited as soon as reasonably practicable and not more than one year after the end of that Plan Year by the auditors appointed under Sub-rule 45(A), who shall also make and sign a report on the accounts in accordance with the Disclosure Requirements. The accounts and report shall be made available to Members and prospective Members, other beneficiaries under the Plan and independent trade unions, in accordance with the Disclosure Requirements and shall be similarly available to any director or officer of a Participating Employer.

ACTUARIAL INVESTIGATION AND STATEMENT

44. The Trustees shall cause the Actuary to make signed actuarial valuations of and statements about the financial position of the Fund with effective dates separated by intervals of not more than 3 years and 6 months. Any valuation and statement shall satisfy the Disclosure Requirements and be made available to Members and prospective Members, other beneficiaries under the Plan and independent trade unions in accordance with the Disclosure Requirements and shall be similarly available to any director or officer of a Participating Employer.


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ASSISTANCE TO TRUSTEES
- appointment and removal of officers

45. (A) The Trustees shall appoint one or more auditors and shall appoint one or more actuaries or a firm or body corporate which has agreed to nominate one or more of its actuaries as the actuary or actuaries to the Plan. Any actuary so appointed or nominated shall be a Fellow of the Institute of Actuaries or of the Faculty of Actuaries in Scotland. With the agreement of the Principal Company the Trustees may also appoint such other advisers and officers as they consider necessary for the proper management of the Plan. Any appointment under this Sub-rule shall be made upon such terms as to tenure of office, duties and remuneration as the Trustees with the agreement of the Principal Company determine. The Trustees may with the agreement of the Principal Company terminate any appointment under this Sub-rule.

- actuarial advice

(B) The Trustees shall consult and act upon the advice of the Actuary at such time (i) as is required under the provisions of the Trust Instrument or the Rules, and (ii) as they consider it necessary or expedient so to do, and subject thereto the Trustees may consult and act upon the advice of such company, firm or person as shall in the opinion of the Trustees and the Principal Company be qualified by experience or otherwise to advise them.

DELEGATION OF TRUSTEES' POWERS

46. The Trustees may with the consent of the Principal Company delegate all or any of the powers, duties and discretions conferred upon them under the Trust Instrument or the Rules or by statute or otherwise for any period, to any person or persons, whether or not incorporated and whether or not a trustee hereof and shall not be responsible for any loss thereby arising. In particular, without prejudice to the generality of their powers under this Rule, the Trustees may from time to time authorise such person or persons whether or not a trustee hereof as they shall think fit to draw cheques on any banking account or to endorse any cheques or to give receipts and discharges for any moneys or other property payable, transferable or deliverable to the Trustees or any of them, and every such receipt or discharge shall be as valid and effectual as if it were given by the Trustees. The Trustees may also with the consent of the Principal Company revoke any delegation made in accordance with this Rule.

The production of a written authority of the Trustees as aforesaid shall be a sufficient protection to any debtor or other person taking any such receipt or discharge as aforesaid, and unless such debtor or other person shall have received express notice in writing of the revocation of such authority, he shall be entitled to assume and act on the assumption that the authority remains unrevoked.


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PLAN EXPENSES

47. Except as provided in Sub-rule 4(B) (Member's Voluntary Contributions) all expenses in connection with the administration and management of the Plan or the investment of the Fund (including in any such case professional expenses) shall be paid by the Participating Employers in the same proportions as the amounts respectively contributed by them during each Plan Year or otherwise as may be agreed from time to time between them.

ADMISSION OF ASSOCIATED EMPLOYERS

48. At the request of the Principal Company (but not otherwise) the Trustees will admit an Associated Employer to participation in the Plan. Any such Associated Employer must enter into a covenant with the Trustees to comply with the provisions of the Plan from a specified date. The covenant will be in a form specified by the Trustees.

An Associated Employer is not permitted to participate in the Plan if that would prejudice approval of the Plan under the Act. However, this will not preclude the participation of an Associated Employer if, with the agreement of the Principal Company and the Board of Inland Revenue, the Plan in so far as it relates to that Associated Employer will be treated as a separate scheme under section 611(3) of the Act.

The admission of an Associated Employer to the Plan will be subject to any restrictions specified by the Principal Company. The Principal Company can also make the continued participation of a Participating Employer subject to restrictions if it ceases to be associated in business with or directly or indirectly controlled by the Principal Company. In either case the specified restrictions can include, but are not limited to:

(a) a limit on the period of participation;

(b) restrictions on the eligibility of employers to become Members;

(c) alterations to the rate of employer's contributions;

(d) limits on the earnings to be recognised by the Plan for employees of the Associated Employer;

(e) restrictions on any powers exercisable under the Rules by a Participating Employer.

The Trustees will not operate any specified restriction in a way which:


Page 100

1. would reduce the amount of any benefit which accrued in respect of a Member before the date from which the participation of the Associated Employer was made subject to the restriction;

2. would prejudice approval of the Plan under the Act; or

3. is inconsistent with the contracting-out requirements of the Pensions Act.

ARBITRATION

49. Save where by the Trust Instrument or the Rules the decision of the Trustees is made conclusive or a Participating Employer is given discretion or power of final determination, all differences arising out of the Plan which have not been referred to the Pensions Ombudsman by an authorised complainant as defined in section 146(7) of the Pensions Act shall be referred to a single arbitrator to be appointed in writing by the parties to the difference, or if they cannot agree upon a single arbitrator, to several arbitrators, one to be appointed in writing by each party, and such arbitrators before commencing their investigations shall elect an umpire. In all other respects such arbitration shall be subject to the statutory provisions for the time being in force relating to arbitration.


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PART VII - SUSPENSION OR TERMINATION OF THE PLAN

SUSPENSION OF A PARTICIPATING EMPLOYER'S CONTRIBUTIONS

50. A Participating Employer's contributions in respect of some or all benefits under the Plan may be suspended by notice in writing to the Trustees and on notice as aforesaid being given may, subject to Rule 51 (Trustees power to treat suspension as termination), be resumed upon such date as shall be agreed by the Trustees. Such notice (whether relating to suspension or resumption) shall specify (by category or otherwise) the person or persons (referred to in this Rule and Rule 51 as "a Specified Person") in respect of whom and the benefit (referred to in this Rule as "a Specified Benefit") in respect of which the notice relates.

In the event of such suspension

(a) the amount of any Specified Benefit which may become payable on the death of a Specified Person during or after a period of suspension shall be determined by the Trustees having regard to the advice of the Actuary and where appropriate having regard to the contracting-out requirements of the Pensions Act and the amount (if any) of any other Specified Benefit shall be adjusted by such amount as the Trustees shall determine to be appropriate having regard to the contracting-out requirements of the Pensions Act, and

(b) the amount (if any) of contributions payable in respect of such period of suspension by a Specified Person shall be determined by the Trustees provided that approval of the Plan under the Act would not thereby be prejudiced.

TRUSTEES' POWER TO TREAT SUSPENSION AS TERMINATION

51. If the contributions of a Participating Employer in respect of a Specified Person are suspended under Rule 50 for more than two years the Trustees may, by notice in writing to the Participating Employer, treat the suspension under Rule 50 as a termination in respect of the Specified Person under Rule 52 as from the date stated for that purpose in the notice.

TERMINATION OF CONTRIBUTIONS BY A PARTICIPATING EMPLOYER

52. A Participating Employer's contributions

(a) may be terminated at any time by notice in writing to the Trustees and may be similarly terminated only in respect of persons in a specified category or specified categories, and

(b) shall be terminated


Page 102

(1) in the case of an Associated Employer on a date not later than the end of the Plan Year following that in which the Participating Employer ceases to be an Associated Employer, or

(2) at any time in the event of the Participating Employer ceasing to transact business on account of liquidation or otherwise

and thereupon contributions payable by any person in respect of whom the Participating Employer's contributions have ceased shall also terminate.

If the contributions of a Participating Employer are so terminated and Rule 53 (termination of contributions by all Participating Employers) does not apply:

(a) the provisions of Rule 9 (Benefits on leaving the Plan) shall thereupon apply to each Member (or other person to whom a benefit under Sub-rule 16(A) (Discretionary Benefits) or the Transfer Rules applies) who is then in the service of that Participating Employer and, where appropriate, in a category of persons in respect of whom contributions have terminated;

(b) with the approval of the Principal Company, the Trustees may determine that, having regard to the advice of the Actuary, the assets of the Plan and its liabilities for and in respect of persons in the service of or formerly in the service of the Participating Employer whose contributions have ceased, some part of the Fund shall be:

(1) transferred to another fund, scheme or arrangement which is approved under the Act or approved for the purpose by the Board of Inland Revenue, or

(2) paid to that Participating Employer

but only if the transfer or payment would not prejudice approval of the Plan under the Act.

TERMINATION OF THE PLAN
- termination of contributions by all Participating Employers

53. In the event of the contributions of all the Participating Employers being terminated under Rule 52, the Plan shall, subject to Sub-rule 54(A) (continuation of Plan as a closed scheme), determine and on such determination or at the expiration of the Perpetuity Period whichever shall first occur:-


Page 103

- entitlement to benefit

(a) no person shall be entitled to any benefit under the Plan otherwise than under this Rule or Rule 54 (Optional powers on termination of contributions),

- disposal of death benefits

(b) any sum or sums then held by the Trustees in respect of any deceased person shall thereupon be paid or applied in accordance with the provisions of Rule 13 (Payment of lump sum death benefits),

- application of Member's Voluntary Contributions

(c) in the case of a Member who has paid Member's Voluntary Contributions to which paragraph (4) of Sub-rule 4(B) (Segregated Member's Voluntary Contributions) applies the assets held by the Trustees representing the Member's Voluntary Contributions Fund shall (subject to the exercise of any of the powers conferred by Rule 54 and the provisions of paragraph (5) of Sub-rule 4(B) (Surplus Voluntary Contributions)) be realised and applied in the purchase or provision of a Paid-up Policy under Rule 24 (Securing benefits outside the Plan by purchase of policies) to secure any of the benefits set out in paragraphs (1) or (2) of Sub-rule 16(A) on such basis as the Trustees shall determine. A Member who is not a Qualifying Member may elect to take a refund of Member's Contributions less the Contracting-out Deduction, in accordance with paragraph (4)(b) below, and when such an election is made no Paid-up Policy will be purchased or provided in relation to the Member's Voluntary Contributions Fund;

- use of Plan assets on wind-up

(d) the Fund shall (subject to the exercise of any of the powers conferred by Rule 54) be realised and together with any moneys in hand be disposed of (subject to the provisions of paragraphs (e)
(alternative lump sum where pension would be trivial) and (f) (expenses of wind-up) of this Rule) among the persons who on the date upon which the Plan determined or the Perpetuity Period expired as aforesaid are included among the persons specified below by the provision of Paid-up Policies securing benefits of such amounts as shall be determined by the Trustees having regard to the advice of the Actuary to the intent that, as far as the monies available permit:-

pensioners

            (1)   (a)   all Members and other persons in receipt of pensions
                        shall be entitled to Paid-up Policies securing benefits
                        as nearly as may be on the same terms and conditions as
                        and identical in amount with their benefits under the
                        Plan including any pension benefits payable under the
                        Plan on the death of any such Member or other person in
                        receipt of a pension


Page 104

Members who have reached Normal Retiring Date but whose pension has not commenced

(b) all Members not included in (a) whose Normal Retiring Dates have occurred and whose pensions under the Plan have not commenced to be paid shall be entitled to Paid-up Policies securing benefits as nearly as may be on the same terms and conditions as and identical in amount with their benefits under the Plan calculated as if they had retired from Service on the date upon which contributions terminated. The benefits to be so secured shall include any benefits (calculated on the same basis) which would have become payable on their subsequent death.

Members who were contracted-out under old State Graduated Scheme

(2) All Members who have completed a period of non-participating employment for the purposes of the National Insurance Act 1965 shall be entitled to Paid-up Policies securing benefits as nearly as may be on the same terms and conditions as and identical in amount with their benefits under the Plan to the extent that such benefits represent Equivalent Pension Benefits.

Guaranteed Minimum Pensions

(3) All Members who have completed a period of Contracted-out Employment shall be entitled to Paid-up Policies securing benefits as nearly as may be on the same terms and conditions as and identical in amount with their benefits under the Plan to the extent that such benefits represent the Guaranteed Minimum Pensions payable in respect of such Members and prospectively payable on the death of such Members.

Members who have left the Plan with Deferred Pensions

(4)   (a)   All Members who have left the Plan with prospective
            entitlement to pensions under the Plan which have not
            commenced to be payable shall be entitled to Paid-up
            Policies securing benefits as nearly as may be on the
            same terms and conditions as and identical in amount
            with their benefits under the Plan including any
            benefits prospectively payable on the death of any such
            Member.


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Members in Service before Normal Retiring Date

(b) All Members whose Normal Retiring Dates have not occurred, who are in the service of a Participating Employer and are not included in sub-paragraph (a) above shall be entitled to Paid-up Policies securing benefits as nearly as may be on the same terms and conditions as and identical in amount with the benefits to which the Members would have been entitled if they had left the Plan on the date upon which contributions terminated and become entitled to a Deferred Pension calculated as if they were Qualifying Members whether or not this is the case. The benefits to be so secured shall include any benefits (calculated on the same basis) which would have become payable on their subsequent death. A Member who is not a Qualifying Member may elect to take a refund of Member's Contributions less the Contracting-out Deduction, instead of the Paid-up Policy to which he would otherwise be entitled.

other persons

(c) All persons to whom sub-paragraphs (a) and (b) above do not apply who are prospectively or contingently entitled to benefits under the Plan by reference only to Sub-rule
16(A) (Discretionary benefits) or the Transfer Rules shall be entitled to Paid-up Policies securing benefits as nearly as may be on the same terms and conditions as and identical in amount with their benefits under the Plan or, where such entitlement arises in respect of persons who are in the service of a Participating Employer, the benefits to which such persons would have been entitled if they had left Service on the date upon which contributions terminated.

application of surplus assets

(5) All or some part or parts of any balance of the Fund then remaining may if and as the Trustees in their absolute discretion decide

(a) be applied to increase all or any of the benefits provided under this Rule in such shares and in such manner as the Trustees may in their absolute discretion decide, or

(b) be transferred to another fund, scheme or arrangement which is approved under the Act or approved for the purpose by the Board of Inland Revenue

but only if approval of the Plan under the Act would not be prejudiced.


Page 106

refund of residual surplus to employers

(6) Any moneys thereafter remaining shall be paid to the Participating Employers in such proportions as the Trustees shall determine having regard to the contributions paid by such Participating Employers under the Rules or in such other manner as the Trustees shall subject to the approval of the Board of Inland Revenue determine.

offsetting benefits under one paragraph against benefits under another

(7) In calculating the extent to which benefits are to be secured in respect of any person under each paragraph of this Sub-rule account shall be taken of any benefits secured in respect of such person under any preceding paragraph except that no account shall be taken of Equivalent Pension Benefits secured under paragraph (2) in ascertaining the amount of Guaranteed Minimum Pension to be secured under paragraph (3).

order of priority of benefits

(8) Subject to the provisions of this Sub-rule liabilities of the Plan shall be accorded priority in the order in which they appear in paragraphs (1), (2), (3) and (4) of this Sub-rule except that liabilities under each sub-paragraph thereof shall have equal priority. In the event of the monies available being sufficient to provide part but not all of the benefits under paragraph (1), (2), (3) or (4) of this Sub-rule benefits shall be provided in respect of all persons to whom such paragraph applies in proportion except that

(a) where such proportion is in respect of persons to whom paragraph (3) relates the Trustees may determine that benefits under that paragraph may be provided in full as far as the monies available to provide such benefits permit in respect of such persons as the Trustees in their discretion decide, and

(b) liabilities arising under sub-paragraphs (a) and (b) of paragraph (4) may at the discretion of the Trustees be satisfied in such order and to such extent as the Trustees determine having regard to the advice of the Actuary to the intent that equality of treatment is as far as possible achieved among persons to whom paragraph
(4) of this Sub-rule applies after taking into account any Equivalent Pension Benefits secured under paragraph
(2) and Guaranteed Minimum Pensions secured under paragraph (3) of this Sub-rule or extinguished by the payment of a state scheme premium under the Pensions Act.


Page 107

payment of state scheme premiums to secure certain benefits

(9) The Trustees may determine that all or, as the case may be, a part of any benefit applicable under paragraphs (1) and (3) which would otherwise fall to be secured under a Paid-up Policy shall be extinguished by the payment of a state scheme premium under the Pensions Act and Sub-rule 56(G) (payment of state scheme premiums and corresponding reduction of Plan benefits) shall apply accordingly. Subject thereto any liability for the payment of such premiums shall be satisfied after liabilities under paragraphs (1), (2) and, as far as may be, (3) have been fully met.

- alternative lump sum in certain circumstances

(e) In any case where but for the provisions of this paragraph a Paid-up Policy would fall to be provided

(1) to secure a Trivial Pension in respect of any person, or

(2) to secure a pension in respect of a Member whose pension under the Plan has not then commenced to be paid and who in the opinion of the Trustees is in exceptional circumstances of serious Ill-health, but only in so far as the pension to be so secured exceeds the Guaranteed Minimum for the Member or his widow or widower

the Trustees may, instead of providing the appropriate benefits under a Paid-up Policy, convert them and (where and to the extent that the Trustees determine to be appropriate) any pension or other benefit contingently payable on the death of such person, into a lump sum and pay it to such person. The amount of the lump sum shall (subject to Rule 18 (Deduction of tax)) be determined by the Trustees being an amount confirmed by the Actuary to be reasonable. Upon payment of such lump sum each person entitled or contingently entitled to the pension or other benefits that would otherwise have been so secured shall thereupon cease to be so entitled.

- expenses of wind-up

(f) If under Rule 47 the Trustees are unable to recover from a Participating Employer all or any part of the costs, charges and expenses of and incidental to the realisation and distribution of the Fund (including the remuneration of the auditors and any officers appointed under the Rules) such costs, charges and expenses or so much of them as is not recovered from that Participating Employer shall be a first charge upon and shall be payable out of the Fund.


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OPTIONAL POWERS ON TERMINATION OF CONTRIBUTIONS
- continuation of Plan as a closed scheme

54. The Trustees shall have the following powers if the contributions of all the Participating Employers are terminated under Rule 52:

(A) If contributions terminate before the Perpetuity Period ends, the Trustees may determine that instead of disposing of the Fund under Rule 53, they shall continue the Plan for so long as they think it appropriate but not after the end of the Perpetuity Period.

If the Trustees decide to continue the Plan under this Sub-rule the following conditions shall apply:

(1) any continuation of the Plan shall be subject to such conditions as the Trustees think fit;

(2) except as provided in (3) below, the benefits specified in Part IV of the Rules (and, where appropriate, the Transfer Rules) shall continue to be paid while the Plan continues but no benefits shall accrue in respect of any period after contributions terminate except to the extent of the GMP Increase and Revaluation Increase or, if the Trustees decide that accrual shall be so limited, any smaller amounts necessary to comply with the protection of pensions and revaluation of pensions provisions of the Pensions Act;

(3) the amount of any benefit under Part IV of the Rules shall be reduced as the Trustees consider appropriate and in the case of a benefit payable on the death of a person (other than a benefit based only on the Member's Contributions) may, if the Trustees so decide, cease to be payable;

(4) any continuation of the Plan, the terms and conditions on which it is continued and any alteration to the benefits of the Plan shall comply with the contracting-out requirements of the Pensions Act and shall not be such as would prejudice approval of the Plan under the Act.


Page 109

- transfers to another scheme

(B) The Trustees may determine that, in respect of any person or persons for whom the provisions for disposal contained in Rule 53 would otherwise have applied, the provisions of Rule 28 (Transfers to another scheme) shall be applied (save that the approval of the Principal Company shall not be required) to such part of the assets of the Fund as the Trustees shall determine having regard to the advice of the Actuary, being not less than the part of such assets which would otherwise have been applied under Rule 53 (other than paragraph (d)(5)) to provide Paid-up Policies or, as the case may be, cash sums in respect of such person or persons.

- non-statutory buy-out option

(C) The Trustees may permit any person whose benefits under the Plan have not become payable and to whom the provisions for disposal contained in Rule 53 would otherwise have applied and who does not have the Statutory Transfer Option to elect that, instead of such provisions, he shall have a Paid-up Policy in accordance with the provisions of Sub rule 10(C) (non-statutory buy-out option). The premium under any such Paid-up Policy shall be the amount which would otherwise have been applied in respect of him under Rule 53 (other than paragraph (d)(5)) less any amount which the Trustees consider appropriate in respect of expenses.

- selective application of options on termination of contributions

(D) The Trustees may determine that the provisions of (B) or (C) of this Rule shall apply on such basis in all respects as they consider appropriate (having regard to the advice of the Actuary and where appropriate to the contracting-out requirements of the Pensions Act) to part of the benefits which would otherwise fall to be secured in respect of any person or persons under Rule 53 and the assets representing the same.

Sub-rules (B) and (C) of this Rule shall not apply during any period for which the Trustees continue the Plan under (A) of this Rule.


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PART VIII - STATUTORY PROVISIONS

GUIDE TO INLAND REVENUE LIMITATIONS

- expressions used

55. (A) For the purpose of this Rule the following terms shall have the meanings ascribed to them and the term "Member" shall, where appropriate, include a Life Assurance Member:

"Aggregate Retirement Benefit" means the aggregate of:

(1) the Member's pension under the Plan and any Associated Scheme including any amount surrendered to provide a pension for his widow, widower or a Dependent Relative, and

(2) the pension equivalent of the Member's Lump Sum Retirement Benefit.

"Associated Employer" An employer is associated with another employer if one is controlled by the other, or both are controlled by a third party. Control has the meaning in section 840 of the Act, or in the case of a close company, section 416 of the Act.

"Associated Scheme" means any Relevant Scheme providing benefits in respect of Relevant Employment but does not include the Plan.

"Class A Member" means:

(a) any Member who joined the Plan on or after 1st June 1989, other than a Member who is a Class B Member or Class C Member by virtue of paragraph (b) of the definition of Class B Member or paragraph (b) of the definition of Class C Member below, or

(b) any Member who was previously a Class B Member or Class C Member but who is treated as a Class A Member by virtue of an election under Sub-rule 32(C) except that a Class B Member who makes such an election may remain a Class B Member to the limited extent referred to in paragraph (I) of Sub-rule 32(C).

"Class B Member" means:

(a) any Member who joined the Plan on or after 17th March 1987 and before 1st June 1989, or


Page 111

(b) any Member for whom paragraphs 20 and 22 to 26 of Schedule 6 to Finance Act 1989 do not apply by virtue of regulations made pursuant to paragraph 19(2) of that Schedule or who is treated in the same manner in accordance with conditions prescribed by the Board of Inland Revenue,

but who in either case is not a Member who is a Class C Member or treated as a Class A Member by virtue of an election under Sub-rule 32(C) except that such a Member may remain a Class B Member to the limited extent referred to in paragraph (1) of Sub-rule 32(C),

(c) any Member who is a Class B Member to the limited extent referred to in paragraph (3) of Sub-rule 32(C) following an election under that paragraph.

"Class C Member" means:

(a) any Member who joined the Plan before 17th March 1987, or

(b) any Member for whom paragraph 2, 3, 4 and 6 of Schedule 23 to the Act do not apply by virtue of regulations made pursuant to paragraph 1(2) of Schedule 23 to the Act or who is treated in the same manner in accordance with conditions prescribed by the Board of Inland Revenue,

but who in either case is not a Member who is treated as a Class A Member by virtue of an election under Sub-rule 32(C).

"Connected Plan" means any Relevant Scheme which is connected with the Plan in relation to the Member. For this purpose a Relevant Scheme is connected with the Plan if:

(1) there is a period during which the Member has been the employee of two Associated Employers, and

(2) that period counts under both schemes as a period in respect of which benefits are payable, and

(3) the period counts under one scheme for service with one employer and under the other for service with the other employer.


Page 112

"Controlling Director" means a Member who, at any time after 16th March 1987 and in the last 10 years before the Relevant Date has been a director within the definitions of a director in both section 612 of the Act and paragraph (b) of section 417(5) of the Act in relation to the Participating Employer.

Class A Members Class B Members and Class C Members after 16th March 1987

"Final Remuneration" means:

(1) In relation to the retirement, leaving Relevant Service or death of a Class A Member a Class B Member or a Class C Member after 16th March 1987 the greater of:

(a) the highest remuneration for any period of 12 months in the 5 years preceding the Relevant Date being the aggregate of

A. the basic pay for the year in question, and

B. the yearly average over 3 or more consecutive years ending with the expiry of the corresponding basic pay year, of any Fluctuating Emoluments provided that Fluctuating Emoluments of a year other than the basic pay year may be increased in proportion to any increase in the Index of Retail Prices from the last day of that year up to the last day of the basic pay year. Remuneration that is received after the Relevant Date and upon which tax liability has been determined will be treated as a Fluctuating Emolument (providing it was earned or qualified for prior to the Relevant Date). In these circumstances it may be included provided the yearly average of 3 or more consecutive years begins no later than the commencement of the basic pay year, and

(b) the yearly average of the total emoluments for any 3 or more consecutive years ending not earlier than 10 years before the Relevant Date.

Where such emoluments are received after the Relevant Date but are earned or qualified for prior to that date, they may be included provided that in these circumstances the yearly average of 3 or more consecutive years begins no later than the commencement of the year ending with the Relevant Date.


Page 113

(2) For the purposes of (1) of this definition:

(a) except for the purposes of calculating the maximum lump sum death benefit in accordance with Sub-rule (D) of this Rule remuneration and total emoluments shall not include either:

A. any amounts which arise from the acquisition or disposal of shares or an interest in shares or from a right to acquire shares except any amount which is assessed on the Member under Schedule E of the Act in respect of any such acquisition or disposal, interest or right which arose from an entitlement or option created or granted before 17th March 1987, or

B. any amount in respect of which tax is chargeable by virtue of section 148 of the Act;

(b) in relation to a Controlling Director, Final Remuneration shall be the amount ascertained in accordance with sub-paragraph (1)(b) above and sub-paragraph (1)(a) above shall not apply;

(c) subject to sub-paragraph (d) below, in the case of a Member whose remuneration received from the Participating Employers in any year after 5th April 1987 has exceeded (pound)100,000 (or such other sum as may be prescribed in an order made by the Treasury) sub-paragraph (1)(a) above shall not apply and the amount under sub-paragraph (1)(b) above shall be increased to the lesser of (pound)100,000 where it would otherwise fall below that figure and the amount which would otherwise have been calculated under sub-paragraph (1)(a) above;

(d) in relation to any Member for whom the date of termination of Service is before 6th April 1991 who is not a Controlling Director and whose remuneration received from the Participating Employers in any year after 5th April 1987 has exceeded (pound)100,000 (or such other sum as may be prescribed in an order made by the Treasury) Final Remuneration shall notwithstanding paragraph (c) above (but subject to paragraph (f) below) be the greater of the amounts ascertained under sub-paragraphs (a) and (b) of paragraph (1) above subject to a maximum of the greatest of:


Page 114

A. the amount ascertained under sub-paragraph (a) of paragraph (1) above in relation to any year ending before 6th April 1987, and

B. the Member's total emoluments (other than any amount excluded under sub-paragraph (a) above) for the year ending on 5th April 1987 excluding any increase under sub-paragraph (e) below, and

C. the amount ascertained under sub-paragraph (b) of paragraph (1) above;

(e) where Final Remuneration is computed by reference to any year other than the last complete year ending on the Relevant Date, the Member's remuneration (as calculated in sub-paragraph (a) of paragraph (1) above) or total emoluments (for the purposes of sub-paragraph (b) of paragraph (1) above) of any year may be increased in proportion to any increase in the Index of Retail Prices from the last day of that year up to the Relevant Date but in the case of a Class C Member this sub-paragraph shall not apply to the calculation of the maximum Lump Sum Retirement Benefit in accordance with Sub-rule (C) of this Rule unless the member's Aggregate Retirement Benefit is similarly increased beyond the maximum amount which could have been paid but for this paragraph and the proviso to sub-paragraph (1)(a)(B) above and then only to the same proportionate extent;

(f) for the purpose of the calculation of the maximum Lump Sum Retirement Benefit for a Class B Member in accordance with Sub-rule (C) of this Rule, Final Remuneration shall not in any event exceed (pound)100,000 or such other sum as may be specified in an order made by the Treasury;

(g) remuneration and total emoluments shall include any amounts upon which the Member has been assessed under Schedule E of the Act in respect of any benefits in kind other than any amount excluded by sub-paragraph (a) above;

(h) in the case of a Class A Member Final Remuneration shall not exceed the permitted maximum as defined in Section 590C(2) of the Act;


Page 115

(i) an employee who remains, or is treated as remaining, in Service but by reason of incapacity is in receipt of a reduced remuneration for more than 10 years up to the Relevant Date, may calculate Final Remuneration under sub-paragraph (1)(a) or
(b) above with the Final Remuneration calculated at the date of cessation of normal pay and increased in accordance with the Index of Retail Prices, in the manner laid down in sub-paragraph (2)(e) above;

(j) the total amount of any profit related pay (whether relieved from income tax or not) may be classed as remuneration and treated as a Fluctuating Emolument;

(k) an early retirement pension in payment from a Participating Employer may not be included in Final Remuneration;

(l) for the purposes of providing immediate benefits at the Relevant Date it will be permitted to calculate Final Remuneration on the appropriate basis above using remuneration upon which tax liability has not been determined. On determination of this liability Final Remuneration must be recalculated. Should this result in a lower Final Remuneration then benefits in payment should be reduced if this is necessary to ensure that they do not exceed the maximum approvable based on the lower Final Remuneration. Where Final Remuneration is greater it will be possible to augment benefits in payment but such augmentation must take the form of a non-commutable pension.

Where immediate benefits are not being provided or where a transfer payment is to be made in respect of accrued pension benefits then Final Remuneration may only be calculated using remuneration upon which tax liability has been determined.

Class C Members before 17.3.87

(3) In relation to the retirement, leaving Relevant Service or death of a Class C Member before 17th March 1987 the greater of:

(a) the highest remuneration for any period of 12 months in the 5 years preceding the Relevant Date being the aggregate of:

A. the basic pay for the year in question, and


Page 116

B. the yearly average over 3 or more consecutive years ending with the expiry of the corresponding basic pay year, of any fluctuating emoluments provided that fluctuating emoluments of a year other than the basic pay year may be increased in proportion to any increase in the Index of Retail Prices from the last day of that year up to the last day of the basic pay year, and

(b) the yearly average of the total emoluments for any 3 or more consecutive years ending not earlier than 10 years before the Relevant Date.

(4) For the purposes of (3) of this definition:

(a) in relation to a Controlling Director Final Remuneration shall be the amount ascertained in accordance with sub-paragraph (3)
(b) above and sub-paragraph (3) (a) above shall not apply;

(b) where Final Remuneration is computed by reference to any year other than the last complete year ending on the Relevant Date, the Member's remuneration (as calculated in sub-paragraph
(3)(a) above) or total emoluments (as calculated in sub-paragraph (3)(b) above) of any year may be increased in proportion to any increase in the Index of Retail Prices from the last day of that year up to the Relevant Date but this sub-paragraph shall not apply to the calculation of the maximum Lump Sum Retirement Benefit in accordance with Sub-rule (C) of this Rule unless the Member's Aggregate Retirement Benefit is similarly increased beyond the maximum amount which could have been paid but for this sub-paragraph and the proviso to sub-paragraph (3)(a)B. above and then only to the same proportionate extent.

"Fluctuating Emoluments" means the part of an employee's earnings which are not paid on a fixed basis and are additional to the basic wage or salary. They include overtime, commission, bonuses or benefits in kind and profit related pay. Directors' fees may rank as fluctuating emoluments according to the basis on which they are voted.

"Lump Sum Retirement Benefit" means the total value of all retirement benefits payable in any form other than pension under this and any Associated Schemes.

"Relevant Date" means the date of a Member's retirement from Service, leaving Relevant Service or death as the case may be.


Page 117

"Relevant Employment" means employment with a Participating Employer or an Associated Employer or, except in relation to a Class A Member who is a Controlling Director of either employer, an employer who is associated with a Participating Employer only by virtue of a permanent community of interest.

"Relevant Scheme" means any other scheme approved or seeking approval under Chapter I Part XIV of the Act and in respect of a Class A Member who retires from Service or leaves Pensionable Service on or after 31st August 1991 and who is a Controlling Director includes any retirement annuity contract or trust scheme approved under Chapter III Part XIV or any personal pension scheme as approved under Chapter IV Part XIV of the Act insofar as it provides benefits secured by contributions in respect of Relevant Employment.

"Relevant Service" shall have the meaning ascribed to pensionable service by section 70 of the Pensions Act.

"Remuneration" in relation to any year means the aggregate of the total emoluments for the year in question from a Participating Employer but excluding

A any amounts which arise from the acquisition or disposal of shares or an interest in shares or from a right to acquire shares,

B any amount in respect of which tax is chargeable by virtue of section 148 of the Act,

C for a Class A Member any emoluments in excess of the permitted maximum as defined in Section 590C(2) of the Act.

"Retained Death Benefits" means any lump sum benefit (other than a refund of his own contributions and interest thereon) payable on the Member's death in respect of previous employment or periods of self-employment (whether alone or in partnership) and arising from:

(a) retirement benefits schemes approved or seeking approval under Chapter 1 Part XIV of the Act or relevant statutory schemes as defined in section 611A thereof,

(b) funds to which section 608 of the Act applies,


Page 118

(c) retirement benefits schemes which have been accepted by the Inland Revenue as "corresponding" in respect of a claim made on behalf of the Member for the purposes of section 596(2)(b) of the Act,

(d) any lump sum life assurance benefit under retirement annuity contracts or trust schemes approved under Chapter III Part XIV of the Act,

(e) any lump sum life assurance benefit under personal pension schemes approved under Chapter IV Part XIV of the Act,

(f) transfer payments from overseas schemes held in a type of arrangement defined in (a) (d) or (e) above.

If the Retained Death Benefits do not exceed (pound)2,500 in total they may be ignored.

Retained Death Benefits may also be ignored for any Member (other than a Member who at the date of joining the Plan or at any time in the last 10 years before the date of joining the Plan has been a director within the definitions of a director in both section 612 of the Act and paragraph (b) of section 417(5) of the Act in relation to the Participating Employer) who joins the Plan on or after 31st August 1991 and whose total remuneration for the twelve months commencing on the date of joining the Plan does not exceed one-quarter of the permitted maximum as defined in
Section 590C(2) of the Act in force at the date of joining the Plan.

- Member's pension

(B) The Member's Aggregate Retirement Benefit shall not exceed:

Class A Members

(1) for a Class A Member

(a) on retirement at any time between attaining age 50 and attaining age 75, except before Normal Retiring Date on grounds of Incapacity, a pension of 1/60th of Final Remuneration for each year of Relevant Employment (not exceeding 40 years) or such greater amount as will not prejudice approval of the Plan under the Act,

(b) on retirement at any time before Normal Retiring Date on grounds of Incapacity a pension of the amount which could have been provided at Normal Retiring Date in accordance with
(1)(a) of this Sub-rule, Final Remuneration being computed as at the actual date of retirement,


Page 119

(c) on leaving Relevant Service before attaining age 75, a pension of 1/60th of Final Remuneration for each year of Relevant Employment prior to leaving relevant Service (not exceeding 40 years) or such greater amount as will not prejudice approval of the Plan under the Act. The amount so computed may be increased at the rate of 5 per cent. per annum compound or, if greater, in proportion to any increase in the Index of Retail Prices which has occurred between the date of termination of Relevant Service and the date on which the pension begins to be payable. Any further increase necessary to comply with Social Security legislation is also allowable,

(d) benefits for a Class A Member are further restricted to ensure that his total retirement benefit from the Plan and from an Associated Scheme or Connected Scheme does not exceed a pension of 1/30th of the permitted maximum as defined in section 590C(2) of the Act for each year of service, subject to a maximum of 20/30ths. For the purpose of this limit, service is the aggregate of Relevant Employment and any period of service which gives rise to benefits under a Connected Scheme provided that no period is to be counted more than once,

(e) for the purpose of calculating the Aggregate Retirement Benefit or the total retirement benefit in (a) to (d) above, the pension equivalent of any Lump Sum Retirement Benefit is one twelfth of its total cash value.

Class B Members and Class C Members

(2) for a Class B Member and a Class C Member;

(a) on retirement at or before Normal Retiring Date, a pension of 1/60th of Final Remuneration for each year of Relevant Employment (not exceeding 40 years) or such greater amount as will not prejudice approval of the Plan under the Act. Where retirement is due to Incapacity, Relevant Employment shall include the period between the date of retirement and Normal Retiring Date;

(b) on retirement after Normal Retiring Date, a pension of the greatest of:

A. the amount calculated in accordance with (2)(a) of this Sub-rule on the basis that the actual date of retirement was the Member's Normal Retiring Date,


Page 120

B. the amount which could have been provided at Normal Retiring Date in accordance with (2)(a) of this Sub-rule increased either actuarially in respect [Pages 123-124 missing] that the actual date of retirement was the Normal Retiring Date, and

C. the amount which could have been provided at Normal Retiring Date in accordance with (2)(a) of this Sub-rule together with an amount representing interest thereon, and

D. where the Member's total Relevant Employment has exceeded 40 years, the aggregate of 3/80ths of Final Remuneration for each year of Relevant Employment before Normal Retiring Date (not exceeding 40 such years) and of a further 3/80ths of Final Remuneration for each year of Relevant Employment after Normal Retiring Date, with an overall maximum of 45 reckonable years,

Final Remuneration being computed for the purposes of sub-paragraphs A. and C. above as at the actual date of retirement, but subject always to Sub-rule (G) of this Rule;

(c) on leaving Relevant Service before Normal Retiring Date, a lump sum of 3/80ths of Final Remuneration for each year of Relevant Employment prior to leaving Relevant Service (not exceeding 40 years) or such greater amount as will not prejudice approval of the Plan under the Act. The amount computed as aforesaid may be increased in proportion to any increase in the Index of Retail Prices which has occurred between the date of termination of Relevant Service and the date on which the benefit is first paid.


Page 121

Provided that in any case where a Member has been a Part-time Member during part (but not all) of his Pensionable Service and the Board of Inland Revenue so requires, then the Lump Sum Retirement Benefit shall not exceed the aggregate of the lump sums calculated separately as in sub-paragraphs (a), (b) or (c) of paragraph (1) above or sub-paragraphs
(a), (b) or (c) of paragraph (2) above (as appropriate) in respect of each Period, based on Final Remuneration at the end of the Period whether or not such Period ends on the date he leaves the Plan. For this purpose "Period" means any period of Pensionable Service at the start of which either the Member's Pensionable Service commences or he becomes, or ceases to be, a Part-time Member and at the end of which he either ceases to be, or becomes (as appropriate) a Part-time Member or he leaves the Plan, or such greater amount as will not prejudice approval of the Plan under the Act.

The above limitations shall not apply to any lump sum payable by way of a refund of Member's Contributions and interest thereon, by conversion of pension into a lump sum in exceptional circumstances of serious Ill-health or where the pension is a Trivial Pension.

- lump sum death benefits

(E) The lump sum benefit (exclusive of any refund of the Member's own contributions and interest thereon) payable on the death of a Member while in Relevant Employment or (having left Relevant Employment with a deferred pension) before the commencement of his pension shall not, when aggregated with all like benefits under Associated Plans, exceed the greater of:

(1) (pound)5,000, and

(2) four times the greater of Final Remuneration and the annual rate of the Member's basic salary or wages at the date of death or leaving Relevant Service together with the yearly average of Fluctuating Emoluments in the 3 years (or the whole period of Relevant Employment if less) up to the date of death or leaving Relevant Service (but in the case of a Class A Member not exceeding the permitted maximum as defined in Section 590C(2) of the Act),

less Retained Death Benefits.


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Provided that in any case where a Member has been a Part-time Member during a part but not all of his Pensionable Service and he is a Part-time Member at the date of his death, "Final Remuneration" for the purpose of
(2) of this paragraph (D) shall be the Member's basic pay in any 12 months period ending not earlier than 36 months before the Member's date of death, plus the yearly average of any fluctuating emoluments in that 36 months period, but so that fluctuating emoluments of a year other than the 12 months period ending on the date of the Member's death may be increased in proportion to any increase in the Index of Retail Prices from the last day of that year up to the Member's date of death.

- dependant's pensions

(F) Any pension for a widow, widower or Dependent Relative (other than a pension provided by surrender of the Member's own pension), when aggregated with the pensions, other than those provided by surrender of the Member's own pension, payable to that widow, widower or Dependent Relative under all Associated Plans and in the case of Members whose death occurs before 31st August 1991 all Relevant Plans of previous employers shall not exceed an amount equal to 2/3rds of the maximum Aggregate Retirement Benefit which could have been payable to the Member immediately prior to his death calculated as if he was not entitled to any benefit arising from any previous employments and calculated in the case of a Member who was in Service at the date of his death as if he had retired on the grounds of Incapacity immediately prior to his death or such greater amount as will not prejudice approval of the Plan under the Act.

If such pensions are payable to more than one person in respect of a Member, the aggregate of all such pensions payable in respect of him under this and all Associated Plans shall not exceed the full amount of the maximum Aggregate Retirement Benefit calculated as described above in this paragraph or such greater sum as will not prejudice approval of the Plan under the Act.

- pension increases

(G) The maximum amount of a pension ascertained in accordance with this Rule less any pension which has been commuted for a lump sum or the pension equivalent of any benefits in lump sum form or surrendered to provide a pension for the Member's widow, widower or Dependent Relative may be increased at the rate of 3 per cent. per annum compound or, if greater, in proportion to the increase in the Index of Retail Prices since the pension commenced.


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- late retirement

(H) If a Class B Member or Class C Member elects under Rule 8 (Late Retirement Pension) to take any part of his benefits under the Plan in advance of actual retirement, the limits set out in Sub-rules (B) and (C) of this Rule shall apply as if he had retired at the date of the election as aforesaid, no account being taken of subsequent Relevant Employment, save that the maximum amount of any uncommuted pension not commencing immediately may be increased either actuarially in respect of the period of deferment or in proportion to any increase in the Index of Retail Prices during that period.

- Controlling Directors

(I) The preceding provisions of this Rule shall be modified in their application to a Class B Member or Class C Member who is a Controlling Director as follows:

(1) The amount of the maximum Aggregate Retirement Benefit in Sub-rule (B) of this Rule and of the maximum Lump Sum Retirement Benefit in Sub-rule (C) of this Rule shall be reduced, where necessary for approval of the Plan under the Act, so as to take account of any corresponding benefits under either a retirement annuity contract or trust scheme approved under Chapter III Part XIV of the Act or a personal pension scheme approved under Chapter IV Part XIV of the Act or a Personal Pension Plan

(2) If he is a Controlling Director at his Normal Retiring Date:

(a) where retirement takes place after Normal Retiring Date but not later than the Member's 70th birthday, sub-paragraphs
(2)(b)B. and C. of Sub-rule (B) of this Rule and sub-paragraphs (2)(b)B. and C. of Sub-rule (C) of this Rule shall not apply, and if retirement is later than the attainment of that age, the said paragraphs shall apply as if the Member's 70th birthday had been specified in the Rules as his Normal Retiring Date, so as not to treat as Relevant Employment after Normal Retiring Date any Relevant Employment before the Member reaches the age of 70;

(b) where Sub-rule (G) of this Rule applies to him, the rate of the actuarial increase referred to therein in relation to any period of deferment prior to his attaining the age of 70, shall not exceed the percentage increase in the Index of Retail Prices during that period.


Page 124

- maximum yearly contributions

(J) The total contributions paid by a Member in a Tax Year to this and any Relevant Plan providing benefits by virtue of Relevant Employment shall not exceed 15 per cent. of his Remuneration for that Tax Year in respect of that Relevant Employment.

(K) Where the application of the limits set out in this Rule requires the amount of any benefit payable to or in respect of a Member to be restricted and the Member has paid Member's Voluntary Contributions, that restriction shall be first applied to the benefits attributable to the Member's Voluntary Contributions so as to permit the repayment of surplus funds subject to the provisions of section 599A of the Act.

CONTRACTING-OUT OF THE STATE EARNINGS RELATED PENSION SCHEME

56. (A) The provisions of this Rule shall apply if any employment becomes Contracted-out Employment and such provisions shall override all other provisions of the Plan except any that are in accordance with the provisions of the Pensions Act.

(B) The Trustees shall operate the Plan in all respects in accordance with the contracting-out requirements of the Pensions Act.

- guaranteed minimum pension (GMP)

(C)   (1)   If a Member has a guaranteed minimum in relation to the
            pension for him under the Plan in accordance with section 14
            of the Pensions Act

            (a)   the weekly rate of the Member's pension under the Plan
                  from Pensionable Age shall not be less than that
                  guaranteed minimum, and

            (b)   if the Member is male and dies at any time leaving a
                  widow, the weekly rate of her pension under the Plan
                  shall not be less than her guaranteed minimum (if any)
                  which is one-half of the Member's guaranteed minimum
                  including any increases therein arising from increases
                  in the Member's guaranteed minimum under Sub-rule (D) of
                  this Rule, and

            (c)   if the Member is female and dies on or after 6th April
                  1989 leaving a widower, the weekly rate of his pension
                  under the Plan shall not be less than his guaranteed
                  minimum (if any) which is one-half of that part of the
                  Member's guaranteed minimum which is attributable to
                  earnings for the Tax Year 1988-89 and later Tax Years,
                  including any increases therein arising from increases
                  in the Member's guaranteed minimum under Sub-rule (D) of
                  this Rule.

                                                                  Page 125

      (2)   The guaranteed minimum pensions referred to in (1) of this
            Sub-rule shall, to the extent that they are attributable to
            earnings factors for the Tax Year 1988-89 and later Tax Years,
            be increased in accordance with the requirements of section
            109 of the Pensions Act and to the extent of any orders made
            thereunder.

      (3)   In determining whether the weekly rate of the pension payable
            under the Plan to the Member or the widow or widower is less
            than the amount specified in (a), (b) or (c) of (1) above any
            part of such pension which

(a) arises from Member's Voluntary Contributions, or

(b) represents Equivalent Pension Benefits

shall be disregarded.

- retirement after Pensionable Age

(D) If the commencement of the Member's Guaranteed Minimum Pension is postponed for any period after Pensionable Age his guaranteed minimum shall be increased to the extent, if any, specified in section 15 of the Pensions Act.

- revaluation of GMP for early leavers

(E) In the event of any Member's service in Contracted-out Employment being terminated before Pensionable Age the guaranteed minimum which has accrued up to termination will be increased

(1) by the percentage by which earnings factors for the Tax Year in which Contracted-out Employment terminated are increased by the last Order made under section 148 of the Social Security Administration Act 1992 coming into force before the earlier of the Tax Year in which the Member attains Pensionable Age and the Tax Year in which the Member dies, in which event the amount of and the terms and conditions appropriate to any benefit which becomes payable during the lifetime of the Member prior to Pensionable Age shall be determined by the Trustees having regard to the advice of the Actuary, or


Page 126

(2) by either

(a) 5 per cent. compound for each Tax Year after that in which Contracted-out Employment terminated up to and including the last complete Tax Year before Pensionable Age or the earlier death of the Member, or

(b) as in (1) above

whichever makes the lesser increase but so that in the event of a benefit becoming payable under the Plan during the lifetime of the Member and before Pensionable Age or in the event of a Trivial Pension being commuted before Pensionable Age the amount of such benefit or such Trivial Pension shall be calculated as if (a) above applied to the calculation of the increase in the Member's accrued guaranteed minimum, or

(3) in respect of each Tax Year after that in which Contracted-out Employment terminated up to and including the last complete Tax Year before Pensionable Age or the earlier death of the Member by such rate as regulations made under section 55(5) of the Pensions Act specify as being relevant to the date of termination.

Such increases shall be calculated on the basis set out in paragraph
(2) above provided that

(a) where under Sub-rule 27(E) (Transfers from another scheme - revaluation of GMP) the Trustees have determined that any part of the guaranteed minimum shall be increased on a basis otherwise than in accordance with orders made under section 148 of the Social Security Administration Act 1992 such basis shall continue to apply to such part, subject to sub-paragraph
(b) below,

(b) if liability for the guaranteed minimum is transferred to another fund, scheme or arrangement in accordance with Rule 28 (Transfers to another scheme) or the Statutory Transfer Option the Trustees may determine that such guaranteed minimum (and in the circumstances permitted by regulations 44 and 45 of the Occupational Pension Plans (Contracting-out) Regulations 1984 and notwithstanding proviso (a) hereto any part thereof to which the provisions of Sub-rule 27(E) (Transfers from another scheme - revaluation of GMP) apply) shall be increased by reference to one of the alternative bases set out above,


Page 127

(c) except where sub-paragraph (d) below applies, if the Principal Company so requests one of the alternative bases set out above shall be substituted therefor. Any such request shall be made by the Principal Company by notice in writing to the Trustees specifying the alternative basis and the date upon which such alternative basis is to become effective. Upon receipt of such notice the Trustees shall notify the Occupational Pensions Board of the change which shall take effect in respect of all Members whose Contracted-out Employment terminates on and after the effective date specified in such notice,

(d) in the event of the Plan ceasing to be a contracted-out scheme for the purposes of the Pensions Act upon the termination of contributions by all Participating Employers the Trustees may determine that one of the alternative bases set out above shall be substituted therefor in respect of all Members whose Contracted-out Employment thereupon terminates and the Trustees shall then notify the Occupational Pensions Board of the change.

- Anti-franking definitions

(F)   (1)   In this Sub-rule:-

            "Accrued Overall GMP" means the Member's Accrued Guaranteed
            Minimum plus the yearly equivalent of any rights to guaranteed
            minimum pension for the purposes of section 14 of the Pensions
            Act accrued to him under the Transfer Rules on the day after
            his Contracted-out Employment ends

"Contracted-out Pension" means

(a) in relation to a Member, the yearly pension which has accrued to the Member under the Rules on the day after his Contracted-out Employment ends, including any pension under the Transfer Rules. If the Member's Contracted-out Employment ends before Normal Retiring Date, the Contracted-out Pension shall be calculated as if the Normal Retiring Date were the day after his Contracted-out Employment ends


Page 128

(b) in relation to a Member's widow or widower, the yearly pension to which the widow or widower would have been entitled under the Rules (including any pension under the Transfer Rules) had the Member died on the day after his Contracted-out Employment ended and if the Member had then been married to the widow or widower. For the purposes of calculating the Contracted-out Pension where the Member dies in Service any part of that pension which derives from a period of notional service after the date Contracted-out Employment ended shall be ignored.

In any case where any part of the pension referred to in (a) or (b) above is to be the greater of

(1) an amount which is calculated by reference to the Member's earnings, and

(2) an amount which is not calculated by reference to the Member's earnings

the Contracted-out Pension shall be computed as if any such calculation which is not related to the Member's earnings did not apply.

"Later Earnings Addition" means,

(a) in relation to a Member who remains in Pensionable Service after his Contracted-out Employment ends

FPE2 - 1 FPE1

multiplied by the excess of the Contracted-out Pension
over the Accrued Overall GMP.

Where FPE2 is the Member's Final Pensionable Salary or Final Remuneration (as appropriate) used for calculating his pension under the Rules and FPE1 is the corresponding amount at the date his Contracted-out Employment ended

(b) in relation to the widow or widower of a Member to whom
(a) above applies,


Page 129

FPE2 - 1 FPE1

multiplied by the excess of the Contracted-out Pension
over one-half of the Member's Accrued Overall GMP.

Where FPE2 and FPE1 have the same meanings as in (a)
above.

- Member's Anti-franking Minimum

(2) If, upon the termination of a Member's Contracted-out Employment other than by death,

(a) the Contracted-out Pension exceeds the Accrued Overall GMP and

(b) the Member's guaranteed minimum is required to be increased in accordance with either or both of Sub-rules (D) and (E) of this Rule,

the Member shall have an Anti-franking Minimum.

The Member's Anti-franking Minimum is calculated as the total of:-

a. the Contracted-out Pension;

b. any increase in the Member's guaranteed minimum under Sub-rules (D) and (E) of this Rule but excluding any part of the increase which is attributable to guaranteed minimum pension payable under the Transfer Rules and which was first transferred before the 1st January 1985;

c. if the Member is entitled to a Late Retirement Pension, the amount (if any) by which the excess of the Contracted-out Pension over the Accrued Overall GMP is increased by reason of its payment being postponed for any period which is after Contracted-out Employment ends and after Normal Retiring Date, and

d. if the Member remains in Pensionable Service after his Contracted-out Employment ends, the total of


Page 130

(1) an amount calculated in accordance with Rule 6 (Normal Retirement Pension) in relation to the period of Pensionable Service after his Contracted-out Employment ends, and

(2) the Member's Later Earnings Addition.

In any case where the Member's pension is to be compared with the Anti-franking Minimum at a date later than the date his pension commenced, the Anti-franking Minimum shall be reduced by the yearly amount of any Member's pension converted into a lump sum under Rule 11 or surrendered under Rule 15 (Surrender of Member's pension to provide a dependant's pension) or forfeited under either Rule 23 (Non-assignability of benefits) or Rule 31 (Lien on benefits).

- widow's/widower's Anti-franking Minimum

(3) If a Member dies and is survived by a widow or widower,

(a) and the widow's or widower's Contracted-out Pension exceeds one-half of the Member's Accrued Overall GMP, and

(b) at any time when a pension is payable to the widow or widower under the Plan the widow's or widower's Guaranteed Minimum exceeds one-half of the Member's Accrued Overall GMP

the widow or widower shall have an Anti-franking Minimum.

The widow's or widower's Anti-franking Minimum is calculated as the total of:-

a. the Contracted-out Pension;

b. the amount by which the widow's or widower's Guaranteed Minimum exceeds one-half of the Member's Accrued Overall GMP.


Page 131

c. if the Member died after Contracted-out Employment ended and after Normal Retiring Date, the amount (if any) by which the excess of the widow's or widower's Contracted-out Pension over one-half of the Member's Accrued Overall GMP is increased by reason of the payment of the Member's pension being postponed for a period which is after Contracted-out Employment ended and after Normal Retiring Date,

d. if the Member remained in Pensionable Service after his Contracted-out Employment ended, the total of:-

(1) that part of the widow's or widower's pension under Rule 14 which relates to the period of Pensionable Service which is after the Member's Contracted-out Employment ended, and

(2) the widow's or widower's Later Earnings Addition,

reduced by the yearly amount of any widow's or widower's pension forfeited under Rule 23 - (Non-assignability of benefits).

- payment of state scheme premiums and corresponding reduction of Plan benefits

(G)   (1)   If under section 55(2), (3) or (4) of the Pensions Act and
            Part III of the Occupational Pension Plans (Contracting-out)
            Regulations 1984, the Trustees may pay a state scheme premium
            in respect of a Member, they shall be entitled to pay it out
            of the Fund and (2) of this Sub-rule shall thereupon apply.

      (2)   If a state scheme premium other than a limited revaluation
            premium is paid or credited as paid under the Pensions Act in
            respect of a Member or the widow or widower of a Member,

            (a)   Sub-rules (C), (D), (E) and (F) of this Rule shall cease
                  to apply in respect of the Member and his widow or
                  widower, and

                                                                  Page 132

            (b)   any benefit payable or prospectively payable under the
                  Plan to or in respect of the Member or his widow or
                  widower shall be adjusted or extinguished in consequence
                  of the premium having been paid or credited as paid and
                  the amount of the benefit and any change in its terms
                  and conditions shall be determined in each case by the
                  Trustees having regard to the advice of the Actuary.

Any reduction in the amount of pension payable to the Member or his widow or widower under this Sub-rule shall be made on a basis agreed by the Occupational Pensions Board to be reasonable but shall not exceed the Guaranteed Minimum.

- Plan ceasing to be contracted-out

(H)   (1)   In the event of the Plan ceasing to be a contracted-out scheme
            for the purposes of the Pensions Act other than upon the
            termination of contributions by all Participating Employers
            the Principal Company may by notice in writing to the Trustees
            before the expiration of the period of three months commencing
            on the date of such cessation direct that, subject to the
            Rules,

            (a)   Guaranteed Minimum Pensions shall be preserved under the
                  Plan, secured by Paid-up Policies or by payment of state
                  scheme premiums under section 55(1)(a) and (b) of the
                  Pensions Act, or transferred as specified in such
                  notice, and

            (b)   the basis upon which Guaranteed Minimum Pensions shall
                  be increased thereafter shall be changed if and as
                  specified in such notice.

            The Trustees shall do all things necessary to give effect to
            any direction given by the Principal Company under this
            paragraph and shall seek the approval of the Occupational
            Pensions Board under section 50(1) of the Pensions Act to any
            arrangements (except the payment of state scheme premiums
            under section 55(1)(a) and (b) of the Pensions Act) to be made
            in respect of Guaranteed Minimum Pensions in accordance with
            such notice.

                                                                  Page 133

      (2)   Subject to paragraph (1) of this Sub-rule, in the event of the
            Plan ceasing to be a contracted-out scheme for the purposes of
            the Pensions Act the Trustees shall seek the approval of the
            Occupational Pensions Board under section 50(1) of the
            Pensions Act to any arrangements (except the payment of
            state-scheme premiums under section 55(1)(a) and (b) of the
            Pensions Act) made or to be made in respect of Guaranteed
            Minimum Pensions.

CONTRACTING-OUT OF THE OLD STATE GRADUATED PLAN

57. (A) The provisions of the Plan shall have effect subject to the provisions of this Rule and for the purposes of this Rule

(1) "non-participating service" in relation to a Member means service by virtue of which his membership of the Plan can be treated as service in a non-participating employment within the meaning of the National Insurance Act and in relation to which there was in force a certificate issued under the National Insurance Act that it is to be so treated.

(2) "assured of equivalent pension benefits" in relation to a Member means assured of equivalent pension benefits for the purposes of the National Insurance Act

(B) Subject to paragraph (D) (4) of this Rule the benefits to which a Member who has completed a period of non-participating service becomes entitled under the Plan shall, where necessary, be augmented and their terms and conditions modified so that the Member is assured of equivalent pension benefits in respect of that period

(C) Where the exercise by a Member of an option as to the form of his benefits would have the effect of his ceasing to be assured of equivalent pension benefits he may not exercise the option in relation to the whole of the benefits but with the consent of the Trustees may exercise it in relation to such part that he does not cease to be so assured

(D) Where a Member's non-participating service comes to an end before the Normal Retiring Date otherwise than by his death and without his becoming entitled to an immediate pension

(1) the Trustees shall set aside out of the Member's contributions a sum calculated at the rate of 19p in the case of a male and 19p in the case of a female for each week of the period of non-participating service that has come to an end provided

that


Page 134

(a) such rates may be changed by notice in writing to Members as regards non-participating service after the date of such notice, and

(b) the sum set aside as aforesaid shall not exceed a sum equal to the maximum sum in respect of which a right of recovery may be exercised under the National Insurance Act

(2) subject to paragraph (D)(4) the Member shall be entitled to a deferred pension of the amount appropriate to the said sum or of such greater amount as may be required by paragraph (B); where by virtue of paragraph (D)(4) the Member is not entitled to a deferred pension the Trustees shall subject to the exercise of a right of recovery under the National Insurance Act pay the said sum to the Member

(3) account shall he taken of the said sum or the said deferred pension in determining the amount of the benefit to which the Member is or becomes entitled under the Plan

(4) a Member shall not be entitled to a benefit in the form of a deferred pension if the amount thereof would be less than (pound)6

(E) No alteration or modification of the provisions of the Plan and no deduction of any amounts owing by a Member under the Plan from benefits under the Plan shall be made which would have the effect of a Member's ceasing to be assured for equivalent pension benefits.


Page 135

SECTION IX - ALTERATION TO PLAN

POWER OF ALTERATION

58. (A) Subject as hereinafter provided the Trustees may from time to time and at any time with the consent of the Principal Company by any deed or deeds executed by the Trustees and the Principal Company or by any writing effected under hand by the Trustees and the Principal Company alter, modify or add to the provisions of the Plan and any of the trusts powers and provisions of the Trust Deed by which the Plan was established or any other deed or instruments in writing supplemental thereto

Provided that no such alteration modification or addition as aforesaid shall be made which would have the effect of

(1) extending the trust period of the Plan beyond the Perpetuity Period or

(2) varying or affecting adversely any benefits (whether immediate or prospective but not including any Death Benefits as defined below) applicable to Pensionable Service completed before the alteration, modification or addition (upon the basis that the Member's current Pensionable Salary will remain unchanged until the Normal Retiring Date) without the consent in writing of any Member affected thereby.

For the purposes of this Sub-rule "Death Benefits" means any benefit provided under the Plan on the death of a Member in Service on or before Normal Retiring Date.

(B) Notice in writing of the essential particulars of any such alteration modification or addition as aforesaid shall before it takes effect be given to every Member who will be affected thereby Provided that any notice exhibited at the principal office of any Participating Employer shall be deemed duly given to a Member employed by it.


EXHIBIT 10.14

SUPPLEMENTAL UNFUNDED PENSION PLAN

BACKGROUND

On 1st June 1989, the Government introduced a 'cap' on all new (but not existing) pension members, above which, tax relief would not be granted to either an employee or an employer. Originally, it was set at a salary level of
(pound)70,000 pa: with reviews, this is now (pound)87,600 pa. (6th April 1998)

Concurrently, all approved Plans were constrained in the benefits that could be offered to members, having to restrict pensions, and associated benefits, to the level of the 'cap'.

This placed those concerned at a disadvantage compared to other, uncapped staff, and affected the Company's ability to attract senior people, particularly those over, say, 40 years of age.

Accordingly, the Company proposes to introduce a supplementary, 'top-up' scheme effective 1st April 1998, for those in certain nominated positions, to ensure, as far as possible, that they receive benefits similar to those they would receive if not affected, in accordance with the Company's original intention.

THE SUPPLEMENTAL PLAN.

The Company has established a Book Reserve Plan, from which to augment the benefits of designated executives affected by the 'cap'.

THE SCHEME

The Company will identify those individuals concerned (approved by the President, Hertz International, the Vice President, Human Resources, Hertz Europe, the Senior Vice President, Employee Relations, The Hertz Corporation, and the Directors of the Principal Company), and, after consultation with, and receiving calculations from the Plan Actuary, accrue such sums as are necessary on an individual basis, to top-up the pension payable from the Hertz (UK) 1972 Pension Plan to the benefit that would have been received if the individual had not been subject to the 'cap'.

The pension payable to each individual will be subject to the maximum allowed from all sources (the occupational pension plans of previous employers, from private pension plan membership, from current and previous AVC or FSAVC contributions, and payments from the State provisions of any other country, etc., etc.)

However, it is not the intention of the Company to enhance the benefit to compensate for previous membership of less generous schemes.

Supplemental Unfunded Pension Plan 1


ELIGIBILITY

-Eligibility for the Supplemental Unfunded Pension Plan will be restricted to those who :-

a Are senior Vice Presidents or equivalent

b Have been Members of the Hertz (UK) 1972 Pension Plan for a minimum of 2 years

c Are members of the Senior Executive (30ths) Pension Plan

or

d Are senior Vice Presidents or equivalent

e Have transferred into the UK from wholly owned subsidiaries, and who, had they been employed in positions of similar seniority in the UK, could have been expected to have been in the Hertz (UK) Pension Plan for 2 years, and to have been invited into the Senior Executive
(30ths) Pension Plan.

INITIAL POTENTIAL MEMBERSHIP

Subject to satisfying all the criteria above, the following positions were identified as eligible:-

President, HEL
Vice President, Finance and Administration Vice President, Marketing & Sales Vice President, Human Resources Vice President, Fleet and Maintenance Vice President, Regional Operation Director, Legal Affairs, HEL General Manager, Hertz (UK) Limited General Manager, European Leasing

MEMBERSIP

All nominees in the the above named positions as well as potential additional positions must have the prior approval of the Senior Vice President, Employee Relations of the Hertz Corporation and the subsequent approval of the Directors of the Principal Company. All such approvals shall be confirmed in writing.

Supplemental Unfunded Pension Plan 2


CONTRIBUTIONS - EMPLOYEES

The employees contribution will be 5% of full Basic Salary as at the commencement of the Scheme Year (currently 6th April) less the Lower Earnings Level (LEL) at that date.

Note: The level of contribution is not affected immediately by 'the cap', as under Inland Revenue regulations, the maximum permissible Employee Contribution is 15% of the 'cap': as the Employee Contributions under the Hertz Plan are only 5%, contributions on full salary can be made on up to a salary equal to three times 'the cap', plus the LEL (ie, 3 x (pound)87,600 + (pound)3,328 =
(pound)266,128 pa, April 1st 1998)

However, it should also be noted that this will affect the maximum additional amount that the employee may pay in the form of AVC's or FSAVC's, as the maximum 15% of 'the cap' applies to the TOTAL of the contributions whether to an occupational pension plan or an AVC, or an FSAVC scheme

CONTRIBUTIONS - EMPLOYER

The Company Contributions will be at the same percentage as applies to all other Pension Plan Members, to the maximum of the 'cap', payable into the UK (1972) Pension Plan.

Additionally, such annual sum as may be calculated by the Plan Actuary as necessary to provide the supplementary benefit payable for that person, as described below.

This latter sum will be transferred into a 'book reserve' held by the Principal Company.

BENEFITS (TO BE READ IN CONJUNCTION WITH THE PENSION PLAN BOOKLET)

PENSION

The 'book reserve' described above will be used to supplement the 'capped' pension payable by the Plan.

The supplement will enhance the pension payable from the Approved Plan to that which would have been received for the same period of membership in the Senior Executive Pension Plan if one had not been 'capped'.

The payments from the 'book reserve' will be made to the Trustees of the Hertz (UK) 1972 Pension Plan, for onward transmission to the individual, together with the Plan Benefits.

This pension will be subject to the maximum permissible from all sources (including occupational pension plans of previous employers, from private pension plan membership, from current and previous AVC or FSAVC contributions, payments from the State provisions of any other country, etc., etc.)

Supplemental Unfunded Pension Plan 3


CASH COMMUTATION OF PENSION

The commutation of pension for a cash lump sum is only permitted by the Inland Revenue from an Approved Plan, and the normal maxima apply.

Thus, the maximum cash lump sum that may be taken is 2.25 times the Pension resulting from the Hertz (UK) 1972 Pension Plan before the taking of any lump sum.

DEATH IN SERVICE BENEFIT

Death in Service benefit is a provision associated with the Plan, under Inland Revenue regulations: therefore, it is subject to 'the cap'.

Accordingly, in addition to the above, the Employer will insure the individual for that sum necessary to allow payment to the beneficiary of the individual a Death in Service Benefit that would have been received had they not been subject to 'the cap'.

This sum will be paid into a Trust, that is required by law to be separate from the Pension Plan.

Note: The cost of this additional insurance is a Taxable Benefit, payable by the individual, (but paying tax in this way avoids it becoming payable on payment of the Death in Service benefit, as would be the case if the individual does not pay tax).

If the individual does not wish to incur this additional tax liability, this additional benefit may be declined (in which case a Death in Service benefit of four times 'the cap' will be paid ), but, the Trustees will require the individual to sign a statement confirming this decision, and that their dependants have been informed of it.

Also, the provision of such cover is subject to acceptance by the insurance company after medical evidence has been received: in the event of the cover not being accepted by the insurance supplier, the Company accepts no liability for any Death in Service Benefit over and above that provided by the Approved Pension Plan.

LONG TERM DISABILITY PLAN

In the event of a person being seriously disabled through illness or injury, they will be eligible to claim this benefit under the same conditions as apply for membership of the Hertz (UK) 1972 Pension Plan, but based on the uncapped salary. As with the main Plan, this is conditional upon the individual having been accepted for cover by the Company appointed supplier, an insurance company, and the disability being accepted by that supplier, also.

Supplemental Unfunded Pension Plan 4


BENEFITS ON LEAVING COMPANY EMPLOYMENT BEFORE RETIREMENT.

For those leaving the employment of the Company before retirement, only those benefits accruing from the Hertz (UK) 1972 Pension Plan will apply, no benefit accruing from the Supplemental Plan, either regarding rights concerning Deferred Pensions or Transferable Benefits.

However, at the entire discretion of the Company, consideration may be given to those whose employment is being terminated due to ill health, or redundancy. In such cases, individuals identified as being worthy of consideration must be approved by the Vice President, Human Resource, HEL, and the Senior Vice President, Employee Relations, The Hertz Corporation, and then approved by the Directors of the Principal Company, in writing.

Supplemental Unfunded Pension Plan 5


EXHIBIT 10.15

RCA EXECUTIVE DEFERRED COMPENSATION PLAN

1. Eligibility.

Participation in this Plan is limited to (a) nonemployee directors of RCA Corporation ("RCA") and (b) those regular participants in the RCA Incentive Plan who have been approved for participation in this Plan by the Management Compensation, Incentive and Stock Option Committee of the Board of Directors of RCA ("the Committee") or, if the Committee so resolves, by the chief executive officer of RCA.

As a condition of eligibility, each person invited to participate may be required to take a physical examination prescribed by RCA. The Committee may exclude from participation anyone whose life, based on such examination, is not medically insurable by an insurer of RCA's choice at standard premium rates.

2. Deferral of Compensation.

During such period or periods as may from time to time be selected by the Committee each person eligible to participate in the Plan shall be given the opportunity to elect irrevocably to defer a portion of the compensation that may become due such person from RCA and its participating subsidiaries for services rendered thereafter as a director or employee, as the case may be. For a nonemployee director, the length of the period of deferral and the portion of compensation deferred shall be determined by the director but the length of such period shall not be less than one year. For an employee, the length of the period of deferral shall be four years, all deferrals shall be


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in multiples of $1,000, the minimum amount deferred shall be $5,000 a year, and the maximum amount deferred shall be the greater of (i) $10,000 a year and (ii) 10 percent of the employee's annual base salary at the time of the irrevocable election. The amount deferred by an employee participant shall be deferred by means of reductions in the employee's base salary, in an equal amount for each pay period, during the four year deferral period. The amount deferred by a nonemployee director, if less than all, shall be deferred by means of reductions first in directors quarterly fees, in an equal amount each quarter, over the deferral period and then, if necessary, against director's attendance fees.

The opportunity to defer shall be given initially during the period April 4, 1985, through May 15, 1985, with respect to compensation that may become due (i) to each nonemployee director for services rendered after receipt by RCA during this period of the director's irrevocable election to defer and (ii) to employees during the period June 1, 1985, through May 31, 1989. Thereafter such opportunity may be given to persons newly eligible to participate with respect to compensation that may become due them beginning on the first of any month following receipt by RCA of their irrevocable election to defer, but it shall be given to those initially eligible to participate only with respect to compensation that may become due them beginning in a calendar year following the year in which the election is made.


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3. Supplemental Retirement Benefit.

If a nonemployee director participant continues to serve upon the RCA Board of Directors for one year after commencement of the deferral period, or if an employee participant continues in employment or to serve upon the RCA Board of Directors throughout the designated four-year period and the full amount selected by the employee for deferral has been deferred, then the participant shall be entitled to receive from RCA or the participant's employer equal monthly payments hereunder for 180 months in the amount specified as a Supplemental Retirement Benefit in the Participation Agreement. Such payments shall begin on the first day of the month following the participant's 65th birthday or, if later, the end of the four-year period in the case of an employee participant or the one year period in the case of a nonemployee director participant, except that payment shall be delayed for any nonemployee director participant until the first day of the month following the date on which such participant ceases to be a director of RCA. Whenever payment commences later than the first of the month after a participant's 65th birthday, the number of monthly payments may be reduced by the Committee so that the last of such payments will be made in the month in which the participant's 80th birthday will occur and the amount of each payment increased to provide an actuarially equivalent benefit.

If an employee participant continues in the employ of RCA or a participating subsidiary and/or to serve as a director throughout such four-year period but


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the full amount selected for deferral shall not have been deferred by the end of such period because the compensation payable to such participant has proved insufficient to accommodate such full deferral or if such participant retires under the RCA Retirement Plan (or under the retirement plan or policy of a participating subsidiary that is not included in the RCA Retirement Plan) prior to the end of such four-year period or if such participant ceases to be a participant within such four-year period because his or her employer ceases to be a subsidiary of RCA within that period, then the Supplemental Retirement Benefit shall be paid but it shall be reduced by multiplying such Benefit by a fraction the numerator of which shall be the aggregate amount actually deferred prior to termination and the denominator of which shall be the full amount selected for deferral. A participant whose employer ceases to be a subsidiary shall be considered to have terminated his or her employment on the date such employer ceases to be a subsidiary.

If a participant should die after payment of such Supplemental Retirement Benefit begins but before receipt of the last of such payments, the amounts unpaid shall be paid on their due dates to the participant's beneficiary designated in the Participation Agreement or, failing such designation, to the participant's legal representatives.

If a nonemployee director participant's service as a director of RCA terminates for any reason other than death prior to the end of one year from commencement of the deferral period or if an employee participant's employment


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and service as a director terminates for any reason (other than death or retirement under the RCA Retirement Plan or under the retirement plan or policy of a participating subsidiary not included in the RCA Retirement Plan) prior to the end of the four-year period of deferral, then in lieu of the Supplemental Retirement Benefit and the Survivor Benefit there shall be paid to the participant in a lump sum within 45 days of the date of such termination an amount equal to the amount actually deferred by the participant plus interest on each installment thereof from the date of deferral to the date of termination at the rate of 6 percent per annum compounded annually. In computing such lump sum, there shall be added to "the amount actually deferred" and each installment thereof an amount equal to the amount by which Company contributions under the RCA Income Savings Plan in respect of the participant were reduced by reason of such deferral. For the purposes of this Plan, a participant on an approved leave of absence in accordance with an RCA Employee Relations policy shall not be considered to have terminated his or her employment.

4. Survivor Benefit.

If a participant should die prior to commencement of payment of the Supplemental Retirement Benefit, no Supplemental Retirement Benefit shall become payable, but in lieu thereof the Survivor Benefit specified in the Participation Agreement shall be paid to the participant's designated beneficiary or, failing such designation, to the participant's legal


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representatives. Such Benefit shall be paid in 120 equal monthly installments beginning on the first day of the month following the month in which death occurs.

5. Amount of Supplemental Retirement and Survivor Benefits.

The amounts of Supplemental Retirement and Survivor Benefits to be included in Participation Agreements shall be established from time to time by the Committee. The amounts initially so established are set forth in the Schedule attached to this Plan.

6. Deferred Compensation Equalization Benefit.

There shall be payable hereunder a deferred compensation equalization benefit to any participant whose benefits under the RCA Retirement Plan are reduced by reason of a deferral hereunder. The benefit shall be of equivalent actuarial value, as determined by the Committee, to the benefit under the RCA Retirement Plan the participant lost by reason of such deferral less 10 percent thereof. The benefit shall be paid in the same form and manner as the benefit payable to the participant under the RCA Retirement Plan (or, at the option of the participant, in any other form or manner that the participant would be entitled to elect under that Plan) and shall be subject to the same terms and conditions as shall then apply to such retirement benefits except for any term or condition limiting the benefits that may be paid to any individual. An


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application for benefits under the RCA Retirement Plan shall be deemed also to be an application for this deferred compensation equalization benefit.

7. Financing.

RCA and its participating subsidiaries propose to finance their respective obligations under this Plan by the purchase of one or more policies of life insurance upon the lives of participants, with RCA and its participating subsidiaries to be the owners of and beneficiaries under such policies. No participant shall have any right or interest in any such policy or the proceeds thereof or in any other specific fund or asset of RCA or any participating subsidiary as a result of the Plan. The rights of participants to benefit payments hereunder shall be no greater than those of an unsecured creditor. Each participant shall cooperate fully in the application of RCA or the participant's employer for, and in the maintenance of, any policy or policies of insurance upon such participant's life.

8. Amendment or Termination.

The Board of Directors of RCA or the Committee may terminate or amend this Plan at any time. The rights of any participant under a Participation Agreement shall not be impaired by such termination or amendment except that, if the reason therefor is a change in the tax laws adversely affecting the financing of the Supplemental Retirement Benefit or Survivor Benefit under the


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Plan, then RCA and its participating subsidiaries may terminate all (but not less than all) of the then existing Participation Agreements (except any under which benefits are then being paid) and pay to each participant to a terminated Agreement in lieu of any and all other benefits hereunder an amount equal to the amount actually deferred under such Agreement plus interest on each installment thereof from the date of deferral to the date of termination at a rate or rates of interest (not less than 6 percent per annum compounded annually) determined by the Board of Directors of RCA or the Committee to be fair and equitable. Such amount may be paid in a lump sum within 45 days of the date of such termination or in such other manner and at such other time or times as the Committee may reasonably determine. In computing such lump sum, there shall be added to "the amount actually deferred" and each installment thereof an amount equal to the amount by which Company contributions under the RCA Income Savings Plan in respect of the participant were reduced by reason of such deferral.

9. Administration.

The Plan shall be administered by such person or persons as may be appointed from time to time by the Committee. The Committee shall be responsible for any interpretation of the Plan or the Participation Agreement that may be required.


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10. Miscellaneous.

The term "subsidiary" as used herein shall include any corporation, partnership or joint venture controlled directly or indirectly by RCA and the term "participating subsidiary" shall mean any subsidiary that adopts the Plan for its subsidiaries with the consent of the Committee.

No amount payable under the Plan or any Participation Agreement shall be subject to assignment, transfer, sale, pledge, encumbrance, alienation or charge by a participant or the beneficiary of a participant except as may be required by law.


PARTICIPATION AGREEMENT DATA FORM

This form is to be fully completed, dated, signed and returned. The data will be used in the preparation of an individual participation agreement to be executed with your employer.

NAME:

(First) (Middle Initial) (Last)

MOU OR STAFF ACTIVITY:

AMOUNT TO BE DEFERRED: /year for four years

BENEFICIARY DESIGNATION:

(Full Name)

ADDRESS:


SIGNATURE:

DATE:

EMPLOYEE PARTICIPATION AGREEEMENT

1. Election to Defer. In accordance with the terms of the RCA Executive Deferred Compensation Plan (the "Plan"), a copy of which is attached hereto and incorporated herein, I, the undersigned participant, hereby irrevocably elect to defer $56,000 of the compensation that may become due to me as base salary from the undersigned corporation for services to be rendered during the period June 1, 1985, through May 31, 1989, in 104 equal installments for each pay period of $538.46. If I should cease to be an employee but continue as a director of RCA Corporation ("RCA"), this election shall thereupon apply first to compensation paid for my services as a director of RCA (and, if applicable, NBC) at the end of each calendar quarter and then, to the extent necessary, to fees paid to me for attending meetings of the Board of Directors of RCA (and, if applicable, NBC).

2. Supplemental Retirement and Survivor Benefits. In consideration of the foregoing and subject to the terms of the Plan, the undersigned corporation promises to pay the Supplemental Retirement Benefit therein described of $4,387,996.80 in 180 monthly installments of $24,377.76 beginning on the date set forth in the Plan, provided I continue to serve as an employee of RCA or one of its participating subsidiaries or as a director of RCA throughout such four-year period and the deferrals specified above are made. If I retire under the RCA Retirement Plan (or the retirement plan or policy of a subsidiary participating in this Plan but not included in the RCA Retirement Plan) before June 1, 1989, I understand such Benefit will be paid but (i) reduced by multiplying $24,377.76 by a fraction the numerator of which shall be the aggregate amount actually deferred and the denominator of which shall be the full amount selected for deferral and
(ii) adjusted to reflect the length of time between the end of the period of deferral and the beginning of the period of payout. Such payments shall be made to me or, if I die after they begin and before they are completed, to my beneficiary designated herein. The undersigned corporation also agrees that if I die prior to commencement of payment of such Benefit, a Survivor Benefit in the amount shown on the attached Schedule will be paid, in 120 equal monthly installments to my designated beneficiary, in lieu of the Supplemental Retirement Benefit.


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3. Tax Advice. I agree I have been advised by RCA to consult my own tax advisors concerning the income and estate tax consequences of entering into this Agreement and that neither RCA nor the undersigned corporation nor the representatives of either of them have made or make any representations or warranties as to such consequences.

4. Insurance Policies. I understand that RCA Corporation or the undersigned corporation will make application to purchase a life insurance policy on my life, which will be owned by the applicant and under which it will be the sole beneficiary. I agree to provide the applicant with such information as it may require in order to make such application and to cooperate fully with the applicant in respect of such application, including the taking of a physical examination if requested to do so. In this connection, I represent that my date of birth is November 26, 1946. In the event the insurance company to which application is made declines to issue the policy at standard premium rates, this Agreement will be void unless the undersigned corporation decides otherwise and I will promptly be repaid any amount theretofore actually deferred by me plus interest computed as if my employment had terminated and I had ceased to be a director prior to May 31, 1989. Similarly, if I should die prior to the date on which payment of the Supplemental Retirement Benefit commences and the proceeds of the policy on my life are not paid to the undersigned corporation because the information I have furnished in connection with the application is materially false or my death was caused by suicide within two years of the date the policy on my life issues, the undersigned corporation will be under no obligation to pay the Survivor Benefit herein provided and in lieu thereof shall pay to my designated beneficiary an amount equal to the amount theretofore actually deferred without interest.

5. No Employment Commitment. Nothing in this Agreement shall be construed to imply any commitment on the part of RCA or the undersigned corporation to continue me in its employ during the period of deferral or for any other period of time.


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6. Beneficiary. I hereby designate the following person or persons as my beneficiary or beneficiaries under this Agreement.

Debra A. Koch
1708 Meadow Drive
Norristown, Pennsylvania 19401

I reserve the right to change this designation, at any time and for any reason and without notice to or the consent of the beneficiary or beneficiaries, by delivering a writing to that effect to the office of the secretary of the undersigned corporation or its successor.

7. This Agreement shall be governed by the laws of the State of New York.

Date:           5/29/85                              /s/ CRAIG R. KOCH
       ---------------------------         -------------------------------------
                                                         Craig R. Koch


                                           The Hertz Corporation


                                      By:  /s/ DONALD F. STEELE
                                          -------------------------------------


 

           
(PRICEWATERHOUSECOOPERS LOGO)
    Exhibit 15.1
   
           
 
 
    PricewaterhouseCoopers LLP    
    400 Campus Dr.    
    Florham Park NJ 07932    
    Telephone (973) 236 4000    
    Facsimile (973) 236 5000    
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August 29, 2005
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We are aware that our report dated August 5, 2005 on our review of interim financial information of The Hertz Corporation and its subsidiaries (the “Company”) for the six month periods ended June 30, 2005 and June 30, 2004 is included in the Company’s Registration Statement on Form S-1 filed August 29, 2005.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Florham Park, New Jersey

.

.
.

Exhibit 21.1

THE HERTZ CORPORATION & SUBSIDIARIES

                                                                                                 STATE OR JURISDICTION OF
COMPANY                                                                                            INCORPORATION
-------                                                                                            -------------
THE HERTZ CORPORATION                                                                            Delaware
    Brae Holding Corp.                                                                           Delaware
    Executive Ventures, Ltd.                                                                     Delaware
       EVZ LLC                                                                                   Delaware
    Hertz Claim Management Corporation                                                           Delaware
        HCM Marketing Corporation                                                                Delaware
    Hertz Equipment Rental Corporation                                                           Delaware
    Hertz Fleet Funding LLC                                                                      Delaware
    Hertz Funding Corp.                                                                          Delaware
    Hertz General Interest LLC                                                                   Delaware
    Hertz Global Services Corporation                                                            Delaware
    Hertz Local Edition Corp.                                                                    Delaware
        Hertz Local Edition Transporting, Inc.                                                   Delaware
    Hertz System, Inc                                                                            Delaware
    Hertz Technologies, Inc.                                                                     Delaware
    Hertz Transporting, Inc.                                                                     Delaware
    Hertz Vehicles LLC                                                                           Delaware
    Hertz Vehicles Financing LLC                                                                 Delaware
    Hertz Vehicle Sales Corporation                                                              Delaware
    Navigation Solutions L.L.C.-Joint Venture Owned 65% by Hertz                                 Delaware
    Smartz Vehicle Rental Corporation                                                            Delaware
    HIRE (Bermuda) Limited                                                                       Bermuda
    Hertz Europe Service Centre Limited                                                          Ireland
    Hertz Finance Centre plc                                                                     Ireland
    Hertz International RE Limited                                                               Ireland
        Probus Insurance Company Europe Ltd.                                                     Ireland
    Apex Processing Limited                                                                      Ireland
    Hertz International, Ltd.                                                                    Delaware
        Hertz Equipment Rental International, Ltd.                                               Delaware
        Hertz Investments, Ltd.                                                                  Delaware
           Hertz International Car Rental Consulting (Shanghai) Co. Ltd.                         Shanghai, People's
                                                                                                 Republic of China
        Hertz Italy LLC                                                                          Delaware
           Hertz Holland B.V.                                                                    The Netherlands
                  Hertz Holdings South Europe S.r.l.                                             Italy
                  Hertz Claim Management S.r.l.                                                  Italy
                  Hertz Italiana S.p.A.                                                          Italy
                  Hertz AG                                                                       Switzerland
                      S.I. Fair-Play S.A.                                                        Switzerland
                      Zuri-Leu Garage AG                                                         Switzerland
        Hertz Holdings Netherlands B.V.                                                          The Netherlands


Exhibit 21.1

                                                                                                STATE OR JURISDICTION OF
COMPANY                                                                                            INCORPORATION
-------                                                                                            -------------
                  Hertz Canada Limited                                                           Ontario, Canada
                    Hertz Canada Finance Co., Ltd.                                               Ontario, Canada
                    Matthews Equipment Limited                                                   Ontario, Canada
                         Western Shut-Down (1995) Limited                                        Ontario, Canada
                  Hertz Belgium N.V.                                                             Belgium
                  Hertz Claim Management bvba                                                    Belgium
                  Hertz Luxembourg, S.A.                                                         Luxembourg
                  Hertz Claim Management B.V.                                                    The Netherlands
                  Stuurgroep Holland B.V.                                                        The Netherlands
                         Hertz Automobielen Nederland B.V.                                       The Netherlands
                             Van Wijk Beheer B.V.                                                The Netherlands
                                Van Wijk European Car Rental Service B.V.                        The Netherlands
        Hertz Investment (Holdings) Pty. Limited                                                 Victoria, Australia
           Hertz Australia Pty. Limited                                                          Victoria, Australia
               Hertz Asia Pacific Pty. Ltd.                                                      Victoria, Australia
               Hertz Car Sales Pty. Ltd.                                                         Victoria, Australia
               Hertz Superannuation Pty Limited                                                  Victoria, Australia
        Hertz Holdings U.K. Limited                                                              England and Wales
           Hertz Holdings II U.K. Limited                                                        England and Wales
               Hertz Claim Management Limited                                                    England and Wales
               Hertz (U.K.) Limited                                                              England and Wales
                  Daimler Hire Limited                                                           England and Wales
                  Hertz Car Sales Ltd.                                                           England and Wales
                  Hertz Europe Limited                                                           England and Wales
                  Hertz Rent A Car Limited                                                       England and Wales
        Equipole S.A.                                                                            France
           Car Rental Systems Do Brasil Locacao De Veiculos Ltda.                                Brazil
           Equipole Finance Services SAS                                                         France
           Hertz Claim Management SAS                                                            France
           Hertz France LLC                                                                      Delaware
           Hertz France SAS                                                                      France
                Hertz Equipement France, SAS                                                     France
                Hertz Monaco, S.A.                                                               Monaco
           Hertz Autovermietung GmbH                                                             Germany
           Hertz Claim Management GmbH                                                           Germany
        Hertz Do Brasil Ltda.                                                                    Brazil
        Hertz Hong Kong Limited                                                                  Hong Kong
        Dan Ryan Car Rentals Limited                                                             Ireland
        Hertz Asia Pacific (Japan), Ltd.                                                         Japan
        Hertz Latin America, S.A.de C.V.                                                         Mexico
        Hertz New Zealand Limited                                                                New Zealand
        Puerto Ricancars, Inc.                                                                   Puerto Rico
           Puerto Ricancars Transporting, Inc.                                                   Puerto Rico
        Hertz Asia Pacific Pte. Ltd.                                                             Singapore
        Hertz Claim Management SL                                                                Spain
        Hertz de Espana, S.A.                                                                    Spain
           Hertz Alquiler de Maquinaria S.A.                                                     Spain


 

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1 of our report dated March 21, 2005, relating to the financial statements and financial statement schedule of The Hertz Corporation, which appears in such Registration Statement. We also consent to the reference to us under the heading “Independent Registered Public Accounting Firm” in such Registration Statement.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
August 29, 2005