EMPLOYMENT CONTINUATION AGREEMENT
THIS EMPLOYMENT CONTINUATION AGREEMENT (this "Agreement"),
dated as of September 29, 1998, is made and entered by and between Dollar
Thrifty Automotive Group, Inc., a Delaware corporation (the "Company"), and
Xxxxxx X. Xxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company or
one or more of its Subsidiaries and has made and is expected to continue to make
major contributions to the short- and long-term profitability, growth and
financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both present
and future continuity of management and desires to establish certain minimum
employment continuation benefits for certain of its senior executives, including
the Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior
executives are not practically disabled from discharging their duties in respect
of a proposed or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement
for the Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as
follows:
1. Certain Defined Terms. In addition to terms defined
elsewhere herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:
(a) "Base Pay" means the greatest of (i) the Executive's
annual fixed or base salary as in effect for the Executive immediately
prior to the occurrence of a Change in Control, or (ii) an amount equal
to the average of the Executive's annual fixed or base compensation as
in effect for the Executive during the two fiscal years immediately
preceding the fiscal year in which the Change in Control occurs, or
(iii) the Executive's annual fixed or base salary as in effect for the
Executive immediately prior to his Termination Date.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that, prior to any termination pursuant to
Section 3(b) or Section 3(c), the Executive shall have committed:
(i) a criminal violation involving fraud, embezzlement
or theft in connection with his duties or in the course of his
employment with the Company or any Subsidiary;
(ii) intentional wrongful damage to property of the
Company or any Subsidiary;
(iii) intentional wrongful disclosure of secret processes
or confidential information of the Company or any Subsidiary;
or
(iv) intentional wrongful engagement in any Competitive
Activity;
and any such act shall have been demonstrably and materially harmful to
the Company. For purposes of this Agreement, no act or failure to act
on the part of the Executive shall be deemed "intentional" if it was
due primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done or omitted to be done by the
Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for "Cause" hereunder unless and until there shall
have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of the
Board then in office at a meeting of the Board called and held for such
purpose, after reasonable notice to the Executive and an opportunity
for the Executive, together with his counsel (if the Executive chooses
to have counsel present at such meeting), to be heard before the Board,
finding that, in the good faith opinion of the Board, the Executive had
committed an act constituting "Cause" as herein defined and specifying
the particulars thereof in detail. Nothing herein will limit the right
of the Executive or his beneficiaries to contest the validity or
propriety of any such determination.
(d) "Change in Control" means the occurrence during the Term
of any of the following events:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or other legal
person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting
power of the then-outstanding securities entitled to vote
generally in the election of directors ("Voting Stock") of
such corporation or person immediately after such transaction
is held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and as a result of such sale or transfer
less than a majority of the combined voting power of the
then-outstanding Voting Stock of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 35% or more of the combined voting power of the Voting
Stock then outstanding after giving effect to such
acquisition;
(iv) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred
or will occur in the future pursuant to any then-existing
contract or transaction; or
(v) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a Director
subsequent to the date hereof whose election or nomination for
election by the Company's shareholders, was approved by a vote
of at least two-thirds of the Directors then comprising the
Incumbent Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is
named as a nominee for Director, without objection to such
nomination) shall be deemed to be or have been a member of the
Incumbent Board.
Notwithstanding the foregoing provisions of Section 1(d)(iii) or
1(d)(iv), unless otherwise determined in a specific case by majority
vote of the Board, a "Change in Control" shall not be deemed to have
occurred for purposes of Section 1(d)(iii) or 1(d)(iv) solely because
(A) the Company, (B) a Subsidiary, or (C) any Company-sponsored
employee stock ownership plan or any other employee benefit plan of the
Company or any Subsidiary either files or becomes obligated to file a
report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess
of 35% or otherwise, or because the Company reports that a change in
control of the Company has occurred or will occur in the future by
reason of such beneficial ownership.
(e) "Competitive Activity" means the Executive's
participation, without the written consent of any officer at the
Executive Vice President level or above who is elected by the Board, in
the management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company and such
enterprise's sales of any product or service competitive with any
product or service of the Company amounted to 10% of such enterprise's
net sales for its most recently completed fiscal year and if the
Company's net sales of said product or service amounted to 10% of the
Company's net sales for its most recently completed fiscal year.
"Competitive Activity" will not include (i) the mere ownership of
securities in any corporation or other entity listed for trading on a
national securities exchange or NASDAQ of less than 5% of the issued
and outstanding shares of capital stock, or in the case of bonds or
other securities, less than 5% of the aggregate principal amount
thereof issued and outstanding, and the exercise of rights appurtenant
thereto, or (ii) participation in the management of any business
enterprise other than in connection with the competitive operations of
such enterprise.
(f) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which Executive is entitled to participate, including
without limitation any Retirement Plan, stock option, performance
share, performance unit, stock purchase, stock appreciation, savings,
pension, supplemental executive retirement, or other retirement income
or welfare benefit, deferred compensation, incentive compensation,
group or other life, health, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company),
disability, salary continuation, expense reimbursement and other
employee benefit policies, plans, programs or arrangements that may now
exist or any equivalent successor policies, plans, programs or
arrangements that may be adopted hereafter by the Company or a
Subsidiary, providing perquisites, benefits and service credit for
benefits at least as great in the aggregate as are payable thereunder
prior to a Change in Control.
(g) "Employment Continuation Period" means the period of time
commencing on the date of the first occurrence of a Change in Control
and continuing until the earlier of (i) the third anniversary of the
occurrence of the Change in Control or (ii) the Executive's death.
(h) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(j) "Incentive Pay" means the greatest of (i) an annual amount
equal to the average of the annual bonus made, in regard to services
rendered in any fiscal year, during the two fiscal years immediately
preceding the fiscal year in which the Change in Control occurs, (ii)
the amount of the annual bonus made or to be made in regard to services
rendered for the fiscal year immediately preceding the fiscal year in
which the Change in Control occurs, or (iii) the target bonus
opportunity for the fiscal year in which the Change in Control occurs
pursuant to the annual bonus program applicable to the Executive
(whether or not funded) of the Company, or any successor thereto.
(k) "Retirement Plans" means (i) all "employee pension benefit
plans," as defined in Section 3(2) of ERISA, including without
limitation all pension, thrift, savings, profit-sharing, retirement
income, target benefit, supplemental executive retirement, and excess
benefits plans, and (ii) all supplemental insurance plans, programs and
arrangements applicable to the Executive.
(l) "Subsidiary" means a corporation, company or other entity
(i) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are, or (ii) which does not have outstanding shares
or securities (as may be the case in a partnership, joint venture or
unincorporated association), but more than 50% of whose ownership
interest representing the right generally to make decisions for such
other entity is, now or hereafter, owned or controlled, directly or
indirectly, by the Company.
(m) "Term" means the period commencing as of the date hereof
and expiring as of the later of (i) the close of business on December
31, 1999, or (ii) the expiration of the Employment Continuation Period;
provided, however, that (A) commencing on January 1, 2000 and each
January 1 thereafter, the term of this Agreement will automatically be
extended for an additional year unless, not later than September 30 of
the immediately preceding year, the Company or the Executive shall have
given notice that it or the Executive, as the case may be, does not
wish to have the Term extended and (B) subject to the last sentence of
Section 10, if, prior to a Change in Control, the Executive ceases for
any reason to be an employee of the Company and its Subsidiaries,
thereupon without further action the Term shall be deemed to have
expired and this Agreement will immediately terminate and be of no
further effect. For purposes of this Subsection, the Executive shall
not be deemed to have ceased to be an employee of the Company and its
Subsidiaries by reason of the transfer of Executive's employment
between the Company and any Subsidiary, or among any Subsidiaries.
(n) "Termination Date" means the date on which the Executive's
employment is terminated (the effective date of which shall be the date
of termination, or such other date that may be specified by the
Executive if the termination is pursuant to Section 3(b) or Section
3(c)).
2. Operation of Agreement. This Agreement will be effective
and binding immediately upon its execution, but, anything in this
Agreement to the contrary notwithstanding, this Agreement will not be
operative unless and until a Change in Control occurs. Upon the
occurrence of a Change in Control at any time during the Term, without
further action, this Agreement shall become immediately operative.
3. Termination Following a Change in Control.
(a) If the Executive's employment is terminated by the Company
or any Subsidiary during the Employment Continuation Period, the
Executive shall be entitled to the benefits provided by Section 4
unless such termination is the result of the occurrence of one or more
of the following events:
(i) The Executive's death;
(ii) The Executive becomes permanently disabled within
the meaning of, and begins actually to receive disability
benefits pursuant to, the long-term disability plan in effect
for, or applicable to, the Executive immediately prior to the
Change in Control; or
(iii) Cause.
(b) If the Executive terminates his employment with the
Company and its Subsidiaries during the Employment Continuation Period,
the Executive shall be entitled to the benefits provided by Section 4
if such termination follows the occurrence of one or more of the
following events (regardless of whether any other reason, other than
Cause as hereinabove provided, for such termination exists or has
occurred, including without limitation other employment):
(i) Failure to elect or reelect or otherwise to
maintain the Executive in the office or the position, or a
substantially equivalent office or position, of or with the
Company and/or a Subsidiary (or any successor thereto by
operation of law of or otherwise), as the case may be, which
the Executive held immediately prior to a Change in Control,
or the removal of the Executive as a Director of the Company
and/or a Subsidiary (or any successor thereto) if the
Executive shall have been a Director of the Company and/or a
Subsidiary immediately prior to the Change in Control;
(ii) (A) A significant adverse change in the nature
or scope of the authorities, powers, functions,
responsibilities or duties attached to the position with the
Company and any Subsidiary which the Executive held
immediately prior to the Change in Control, (B) a reduction in
the aggregate of the Executive's Base Pay and Incentive Pay
received from the Company and any Subsidiary, or (C) the
termination or denial of the Executive's rights to Employee
Benefits or a reduction in the scope or value thereof, any of
which is not remedied by the Company within 10 calendar days
after receipt by the Company of written notice from the
Executive of such change, reduction or termination, as the
case may be;
(iii) A determination by the Executive (which
determination will be conclusive and binding upon the parties
hereto provided it has been made in good faith and in all
events will be presumed to have been made in good faith unless
otherwise shown by the Company by clear and convincing
evidence) that a change in circumstances has occurred
following a Change in Control, including, without limitation,
a change in the scope of the business or other activities for
which the Executive was responsible immediately prior to the
Change in Control, which has rendered the Executive
substantially unable to carry out, has substantially hindered
Executive's performance of, or has caused Executive to suffer
a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties attached to the position
held by the Executive immediately prior to the Change in
Control, which situation is not remedied within 10 calendar
days after written notice to the Company from the Executive of
such determination;
(iv) The liquidation, dissolution, merger,
consolidation or reorganization of the Company or transfer of
all or substantially all of its business and/or assets, unless
the successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which
all or substantially all of its business and/or assets have
been transferred (by operation of law or otherwise) assumed
all duties and obligations of the Company under this Agreement
pursuant to Section 13;
(v) The Company relocates its principal executive
offices (if such offices are the principal location of
Executive's work), or the Subsidiary with which the Executive
is employed relocates its principal executive offices, or the
Company or any Subsidiary requires the Executive to have his
principal location of work changed, to any location that, in
either case, is in excess of 50 miles from the location
thereof immediately prior to the Change in Control, or
requires the Executive to travel away from his office in the
course of discharging his responsibilities or duties hereunder
at least 20% more (in terms of aggregate days in any calendar
year or in any calendar quarter when annualized for purposes
of comparison to any prior year) than the average number of
days of travel that were required of Executive during the
three full years immediately prior to the Change in Control
without, in either case, his prior written consent; or
(vi) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the
Company or any successor thereto which is not remedied by the
Company within 10 calendar days after receipt by the Company
of written notice from the Executive of such breach.
(c) Notwithstanding anything contained in this Agreement to
the contrary, in the event of a Change in Control, the Executive may
terminate employment with the Company for any reason, or without
reason, during the 30-day period immediately following the date six
months after the first occurrence of a Change in Control with the right
to employment continuation compensation as provided in Section 4.
(d) Subject to Section 7, a termination by the Company
pursuant to Section 3(a) (other than as described in Section 3(a)(i),
(ii) or (iii)) or by the Executive pursuant to Section 3(b) or Section
3(c) will not affect any rights that the Executive may have pursuant to
any agreement, policy, plan, program or arrangement of the Company or
any Subsidiary providing Employee Benefits, which rights shall be
governed by the terms thereof.
4. Employment Continuation Compensation.
(a) Subject to Section 9, employment continuation benefits to
which the Executive is entitled pursuant to Section 3 are described on
Annex A. The Company will pay to the Executive the amounts described in
Paragraphs (1) and (2) of Annex A within five business days after the
Termination Date or, if later, upon the expiration of the revocation
period provided for in Annex B. The benefits and perquisites described
in Paragraphs (3), (4), (5), (6) and (7) of Annex A will be provided to
the Executive as described therein.
(b) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the
Company will pay interest on the amount or value thereof at an
annualized rate of interest equal to the so-called composite "prime
rate" as quoted from time to time during the relevant period in the
Southwest Edition of The Wall Street Journal. Such interest will be
payable as it accrues on demand. Any change in such prime rate will be
effective on and as of the date of such change.
(c) Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under this
Section 4 and under Sections 5, 8 and 9 will survive any termination or
expiration of this Agreement or the termination of the Executive's
employment following a Change in Control for any reason whatsoever.
5. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that this Agreement shall become
operative and it shall be determined (as hereafter provided) that any
payment or distribution by the Company or any of its affiliates to or
for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock
option, performance share, performance unit, stock appreciation right
or similar right, or the lapse or termination of any restriction on, or
the vesting or exercisability of, any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision thereto) by reason of being considered "contingent
on a change in ownership or control" of the Company, within the meaning
of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with
any such interest and penalties, being hereafter collectively referred
to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment or payments (collectively, a "Gross-Up
Payment"); provided, however, that no Gross-up Payment shall be made
with respect to the Excise Tax, if any, attributable to (i) any
incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement, or (ii) any stock
appreciation or similar right, whether or not limited, granted in
tandem with any ISO described in clause (i). The Gross-Up Payment shall
be 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 any 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 Payment.
(b) Subject to the provisions of Section 5(f), all
determinations required to be made under this Section 5, including
whether an Excise Tax is payable by the Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid
by the Company to the Executive and the amount of such Gross-Up
Payment, if any, shall be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be
requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company
shall pay the required Gross-Up Payment to the Executive within five
business days after receipt of such determination and calculations with
respect to any Payment to the Executive, provided, however, that the
Company can estimate and pay any Excise Tax to any applicable taxing
authority if the Company determines in its sole discretion that such
amount is due and payable prior to the date such determination is made
by the Accounting Firm, and such payment shall reduce the amount of the
Gross-Up Payment payable to the Executive. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall, at
the same time as it makes such determination, furnish the Company and
the Executive an opinion that the Executive has substantial authority
not to report any Excise Tax on his federal, state or local income or
other tax return. As a result of the uncertainty in the application of
Section 4999 of the Code (or any successor provision thereto) and the
possibility of similar uncertainty regarding applicable state or local
tax law at the time of any determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Company exhausts or fails to pursue its remedies
pursuant to Section 5(f) and the Executive thereafter is required to
make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company
to, or for the benefit of, the Executive within five business days
after receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Section 5(b). Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and the
Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the
Excise Tax payable by the Executive. The Executive shall make proper
payment of the amount of any Excise Payment, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting
Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to the
Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Section 5(b) shall be borne by the Company. If such
fees and expenses are initially paid by the Executive, the Company
shall reimburse the Executive the full amount of such fees and expenses
within five business days after receipt from the Executive of a
statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as promptly as
practicable but no later than ten business days after the Executive
actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid (in each case, to the extent known
by the Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the thirty calendar-day period
following the date on which he gives such notice to the Company and
(ii) the date that any payment of amount with respect to such claim is
due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall:
(i) provide the Company with any written records or
documents in his possession relating to such claim reasonably
requested by the Company;
(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
competent in respect of the subject matter and reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to 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 interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against 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 limiting the foregoing provisions of this Section
5(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 5(f) 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 (provided, however, that the
Executive may participate therein at his own cost and expense) and may,
at its option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and
the 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, however, that if the Company directs the Executive to pay the
tax claimed and xxx for a refund, the Company shall advance the amount
of such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income or other tax, including interest or penalties
with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which the contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the
Company's control of any such contested claim shall be limited to
issues with respect to which a Gross-Up Payment would be payable
hereunder and the 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.
(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(f), the Executive
receives any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section
5(f)) within 10 business days after receiving such refund pay to the
Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant
to Section 5(f), a determination is made that the Executive shall not
be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such
denial or refund prior to the expiration of thirty calendar days after
such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of any such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required
to be paid by the Company to the Executive pursuant to this Section 5.
6. No Mitigation Obligation. The Company hereby acknowledges
that it will be difficult and may be impossible for the Executive to
find reasonably comparable employment following the Termination Date
and that the non-competition covenant contained in Section 9 will
further limit the employment opportunities for the Executive. In
addition, the Company acknowledges that its employment continuation
pay plans applicable in general to its salaried employees do not
provide for mitigation, offset or reduction of any employment
continuation payment received thereunder. Accordingly, the payment of
the employment continuation compensation by the Company to the
Executive in accordance with the terms of this Agreement is hereby
acknowledged by the Company to be reasonable, and the Executive will
not be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise, except as expressly
provided in Section 7 and in the last sentence of Paragraph (4) of
Annex A.
7. Coordination with Other Payments. If the Executive becomes
entitled to receive payments under this Agreement as a result of
termination of his employment, those payments will be in lieu of any and
all other claims or rights that the Executive may have for severance,
separation and/or salary continuation pay upon that termination of
employment, including without limitation any claims under the Severance
Benefit Plan for Employees of the Company (effective January 1, 1998), the
Severance Benefit Plan for Employees of Dollar Rent A Car Systems, Inc.
(effective November 1, 1996) and the Severance Benefit Plan for Employees
of Thrifty Rent-A-Car System, Inc. (effective November 1, 1995).
8. Funding; Professional Fees and Expenses.
(a) It is the intent of the Company that the Executive not be
required to incur fees and related expenses for the retention of
attorneys, accountants, actuaries, consultants, and/or other
professionals ("professionals") in connection with the interpretation,
enforcement or defense of Executive's rights under this Agreement by
litigation or otherwise because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if it should appear to the Executive
that the Company has failed to comply with any of its obligations under
this Agreement or in the event that the Company or any other person
takes or threatens to take any action to declare this Agreement void or
unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Executive the
benefits provided or intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time
to time to retain one or more professionals of the Executive's choice,
at the expense of the Company as hereafter provided, to advise and
represent the Executive in connection with any such interpretation,
enforcement or defense, including without limitation the initiation or
defense of any litigation or other legal action, whether by or against
the Company or any Director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any
existing or prior relationship between the Company and such
professional, the Company irrevocably consents to the Executive's
entering into a relationship with any such professional, and in that
connection the Company and the Executive agree that a confidential
relationship shall exist between the Executive and any such
professional. Without respect to whether the Executive prevails, in
whole or in part, in connection with any of the foregoing, the Company
will pay and be solely financially responsible for any and all
reasonable fees and related expenses incurred by the Executive in
connection with any of the foregoing.
(b) Without limiting the obligations of the Company pursuant
to this Agreement, in the event a Change in Control occurs, the
performance of the Company's obligations under this Agreement may be
secured by amounts deposited or to be deposited in trust pursuant to
certain trust agreements to which the Company shall be a party,
providing, among other things for the payment of employment
continuation compensation to the Executive pursuant to Section 4, and
the Gross-Up Payment to the Executive pursuant to Section 5, and
providing that the reasonable fees and related expenses of one or more
professionals selected from time to time by the Executive pursuant to
Section 8(a) shall be paid, or reimbursed to the Executive if paid by
the Executive, either in accordance with the terms of such trust
agreements, or, if not so provided, on a regular, periodic basis upon
presentation by the Executive to the trustee of a statement or
statements prepared by such professional in accordance with its
customary practices. Any failure by the Company to satisfy any of its
obligations under this Subsection shall not limit the rights of the
Executive hereunder. Upon the earlier to occur of (i) a Change of a
Control or (ii) a declaration by the Board that a Change in Control is
imminent, the Company shall promptly to the extent it has not
previously done so:
(A) transfer to trustees of such trust agreements to
be added to the principal of the trusts a sum equal to (I) the
present value on the date of the Change in Control (or on such
fifth business day if the Board has declared a Change in
Control to be imminent) of the payments to be made to the
Executive under the provisions of Sections 4 and 5, such
present value to be computed using a discount rate of 8%, less
(II) the balance in the Executive's accounts provided for in
such trust agreements as of the most recent completed
valuation thereof, as certified by the trustee under each
trust agreement; provided, however, that if the trustee under
any trust agreement, respectively, does not so certify by the
end of the fourth business day after the earlier of such
Change in Control or declaration, then the balance of such
respective account shall be deemed to be zero. Any payments of
employment continuation compensation or other benefits
hereunder by the trustee pursuant to any trust agreement
shall, to the extent thereof, discharge the Company's
obligation to pay employment continuation compensation and
other benefits hereunder, it being the intent of the Company
that assets in such trusts be held as security for the
Company's obligation to pay employment continuation
compensation and other benefits under this Agreement; and
(B) transfer to the trustees to be added to the
principal of the trusts under the trust agreements the sum
(including deposits pursuant to the Employee Continuation Plan
for Key Employees of Dollar Thrifty Automotive Group, Inc.) of
FIVE HUNDRED THOUSAND DOLLARS ($500,000) less any principal in
such trusts on such fifth business day dedicated to the
payment of the Company's obligations under Section 8(a). Any
payments of the Executive's reasonable professional fees and
related expenses by the trustees pursuant to the trust
agreements shall, to the extent thereof, discharge the
Company's obligation hereunder, it being the intent of the
Company that assets in such trust be held as security for the
Company's obligation under Section 8(a). The Executive
understands and acknowledges that the corpus of the trust, or
separate portion thereof, dedicated to the payment of the
Company's obligations under Section 8(a) will be $500,000 and
that such amount will be available to discharge not only the
obligations of the Company to the Executive under Section
8(a), but also similar obligations of the Company to other
executives and employees under similar provisions of other
agreements.
(c) Subject to the foregoing, the Executive shall have the
status of a general unsecured creditor of the Company and shall have no
right to, or security interest in, any assets of the Company or any
Subsidiary.
9. Competitive Activity; Confidentiality; Nonsolicitation. (a)
During the Continuation Period (as defined in Annex A), if the Executive shall
have received or shall be receiving employment continuation compensation under
Section 4, the Executive shall not, without the prior written consent of the
Company, which consent shall not be unreasonably withheld, engage in any
Competitive Activity, provided that the Company is not in material breach of its
obligations under this Agreement.
(b) During the Term, the Company agrees that it will disclose
to Executive its confidential or proprietary information (as defined in this
Section 9(b)) to the extent necessary for Executive to carry out his obligations
to the Company. The Executive hereby covenants and agrees that he will not,
without the prior written consent of the Company, during the Term or thereafter
disclose to any person not employed by the Company, or use in connection with
engaging in competition with the Company, any confidential or proprietary
information of the Company. For purposes of this Agreement, the term
"confidential or proprietary information" will include all information of any
nature and in any form that is owned by the Company and that is not publicly
available (other than by Executive's breach of this Section 9(b)) or generally
known to persons engaged in businesses similar or related to those of the
Company. Confidential or proprietary information will include, without
limitation, the Company's financial matters, customers, employees, industry
contracts, strategic business plans, product development (or other proprietary
product data), marketing plans, and all other secrets and all other information
of a confidential or proprietary nature. For purposes of the preceding two
sentences, the term "Company" will also include any Subsidiary (collectively,
the "Restricted Group"). The foregoing obligations imposed by this Section 9(b)
will not apply (i) during the Term, in the course of the business of and for the
benefit of the Company, (ii) if such confidential or proprietary information
will have become, through no fault of the Executive, generally known to the
public or (iii) if the Executive is required by law to make disclosure (after
giving the Company notice and an opportunity to contest such requirement).
(c) The Executive hereby covenants and agrees that during the
Term and during the Continuation Period, the Executive will not, without the
prior written consent of the Company, which consent shall not unreasonably be
withheld, on behalf of Executive or on behalf of any person, firm or company,
directly or indirectly, attempt to influence, persuade or induce, or assist any
other person in so persuading or inducing, any employee of the Restricted Group
to give up, or to not commence, employment or a business relationship with the
Restricted Group.
10. Employment Rights. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or any
Subsidiary prior to or following any Change in Control. Any termination of
employment of the Executive or the removal of the Executive from the office or
position in the Company or any Subsidiary following the commencement of any
action by or discussion with a third person that ultimately results in a Change
in Control shall be deemed to be a termination or removal of the Executive after
a Change in Control for purposes of this Agreement entitling the Executive to
employment continuation compensation provided by Section 4.
11. Release. Payment of the employment continuation
compensation set forth in Section 4 is conditioned upon the Executive executing
and delivering a release (the "Release") substantially in the form provided in
Annex B.
12. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any law or government regulation
or ruling.
13. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the
Company, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement will be
binding upon and inure to the benefit of the Company and any successor
to the Company, including without limitation any persons acquiring
directly or indirectly all or substantially all of the business or
assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement), but will not
otherwise be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 13(a) and 13(b).
Without limiting the generality or effect of the foregoing, the
Executive's right to receive payments hereunder will not be assignable,
transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Executive's will or
by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section 13(c), the
Company shall have no liability to pay any amount so attempted to be
assigned, transferred or delegated.
14. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier service
such as Federal Express, UPS, or Purolator, addressed to the Company (to the
attention of Secretary of the Company) at its principal executive office and to
the Executive at his principal residence, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except
that notices of changes of address shall be effective only upon receipt.
15. Governing Law. The validity, interpretation, construction
and performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Delaware, without giving
effect to the principles of conflict of laws of such State.
16. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances will not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
17. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. References to Sections are to references to
Sections of this Agreement.
18. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.
/s/ XXXXXX X. XXXXX
-------------------
Executive
Dollar Thrifty Automotive Group, Inc.
By:/s/ XXXXXX X. XXXXXXXXXX
---------------------------
Title: Vice-President and
Chief Financial Officer
Annex A
Employment Continuation Compensation
1. Base Pay and Annual Bonus. A lump sum payment in an amount
equal to (a) any unpaid regular salary through the Executive's Termination Date,
(b) any unpaid bonus for any year prior to the year in which the Executive's
Termination Date occurs, and (c) the prorated portion of the annual bonus
payable in the year in which the Executive's Termination Date occurs, determined
at the greater of actual or target in accordance with the provisions of the
annual bonus program applicable to the Executive or any successor plan.
2. Employment Continuation Pay. A lump sum payment in an
amount equal to (a) the sum of the Executive's Base Pay and Incentive Pay,
multiplied by (b) three, provided, however, that if the Executive's employment
is terminated under Section 3(c), a lump sum payment in an amount equal to (x)
the sum of the Executive's Base Pay and Incentive Pay, multiplied by (y) two and
one-half, and provided, further, however, that if the Executive's employment is
terminated under Section 3(b)(v), a lump sum payment in an amount equal to (X)
the sum of the Executive's Base Pay and Incentive Pay, multiplied by (Y) two.
3. Performance Awards: All performance awards granted prior to
a Change in Control under the Dollar Thrifty Automotive Group, Inc. Long-Term
Incentive Plan or any successor plan, if any, for the open performance periods
will be paid in accordance with the provisions of such Plan at the greater of
the actual or target performance on the Executive's Termination Date.
4. Health and Life Benefits. For three years (or for two and
one-half years in the event that the Executive's employment is terminated under
Section 3(c), or for two years in the event that the Executive's employment is
terminated under Section 3(b)(v)) (the "Continuation Period"), the Company will
arrange to provide the Executive with Employee Benefits that provide health and
life benefits (but not disability, stock option, performance share, performance
unit, stock purchase, stock appreciation or similar compensatory benefits)
substantially similar to those that the Executive was receiving or entitled to
receive immediately prior to the Termination Date (or, if greater, immediately
prior to the reduction, termination, or denial described in Section 3(b)(ii)),
except that the level of any such Employee Benefits to be provided to the
Executive may be reduced in the event of a corresponding reduction generally
applicable to all recipients of or participants in such Employee Benefits.
During any period of continued coverage pursuant to this paragraph, the
Executive will be required to pay the same cost of coverage, co-pays,
deductibles and other similar payments paid by the Executive immediately prior
to the Change in Control. If and to the extent that any benefit described in
this Paragraph 4 is not or cannot be paid or provided under any policy, plan,
program or arrangement of the Company or any Subsidiary, as the case may be,
then the Company will itself pay or provide for the payment to the Executive,
his dependents and beneficiaries, of such Employee Benefits along with, in the
case of any benefit described in this Paragraph 4 which is subject to tax
because it is not or cannot be paid or provided under any such policy, plan,
program or arrangement of the Company or any Subsidiary, an additional amount
such that after payment by the Executive, or his dependents or beneficiaries, as
the case may be, of all taxes so imposed, the recipient retains an amount equal
to such taxes. Notwithstanding the foregoing, or any other provision of the
Agreement, for purposes of determining the period of continuation coverage to
which the Executive or any of his dependents is entitled pursuant to Section
4980B of the Code (or any successor provision thereto) under the Company's
medical, dental and other group health plans, or successor plans, the
Executive's "qualifying event" shall be the termination of the Continuation
Period and the Executive shall be considered to have remained actively employed
on a full-time basis through that date. Without otherwise limiting the purposes
or effect of Section 5, Employee Benefits otherwise receivable by the Executive
pursuant to this Paragraph 4 will be reduced to the extent comparable welfare
benefits are actually received by the Executive from another employer during the
Continuation Period following the Executive's Termination Date, and any such
benefits actually received by the Executive shall be reported by the Executive
to the Company.
5. Outplacement Services. Outplacement services for a period
of up to 12 months by a firm selected by the Executive, at the expense of the
Company in an amount up to 20% of the Executive's Base Pay.
6. Stock Options and Equity Awards. Upon the Executive's
termination pursuant to Sections 3(b) or 3(c), all stock options and equity
awards granted prior to a Change in Control to the Executive pursuant to the
Dollar Thrifty Automotive Group, Inc. Long-Term Incentive Plan, or any successor
or similar plan, shall be vested.
7. Company Car. During the Continuation Period, the Company
will arrange to provide the Executive with one or more cars in accordance with
the policies and procedures of the Company regarding the provision of cars to
its employees existing immediately prior to the Change in Control.
Annex B
Form of Release
WHEREAS, the Executive's employment has been terminated in
accordance with Section 3(a) (other than as described in Section 3(a)(i), (ii)
or (iii)), Section 3(b) or Section 3(c) of the Employment Continuation Agreement
dated as of September 29, 1998, by and between Xxxxxx X. Xxxxx (the "Executive")
and Dollar Thrifty Automotive Group, Inc. (the "Agreement").
WHEREAS, the Executive is required to sign this Release in
order to receive the employment continuation compensation as described in Annex
A of the Agreement and the other benefits described in the Agreement.
NOW THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Executive agrees as follows:
1. This Release is effective on the date hereof and will continue in
effect as provided herein.
2. In consideration of the payments to be made and the benefits to be
received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payments and benefits which the Executive would
be entitled to receive absent the Agreement, the Executive, for himself and his
dependents, successors, assigns, heirs, executors and administrators (and his
and their legal representatives of every kind), hereby releases, dismisses,
remises and forever discharges Dollar Thrifty Automotive Group, Inc., its
predecessors, parents, subsidiaries, divisions, related or affiliated companies,
officers, directors, stockholders, members, employees, heirs, successors,
assigns, representatives, agents and counsel (the "Company") from any and all
arbitrations, claims, including claims for attorney's fees, demands, damages,
suits, proceedings, actions and/or causes of action of any kind and every
description, whether known or unknown, which Executive now has or may have had
for, upon, or by reason of any cause whatsoever ("claims"), against the Company,
including but not limited to:
(a) any and all claims arising out of or relating to
Executive's employment by or service with the Company and his
termination from the Company;
(b) any and all claims of discrimination, including but not
limited to claims of discrimination on the basis of sex, race, age,
national origin, marital status, religion or handicap, including,
specifically, but without limiting the generality of the foregoing, any
claims under the Age Discrimination in Employment Act, as amended,
Title VII of the Civil Rights Act of 1964, as amended and the Americans
with Disabilities Act and any applicable state law provisions; and
(c) any and all claims of wrongful or unjust discharge or
breach of any contract or promise, express or implied.
3. Executive understands and acknowledges that the Company does not admit
any violation of law, liability or invasion of any of his rights and that any
such violation, liability or invasion is expressly denied. The consideration
provided for this Release is made for the purpose of settling and extinguishing
all claims and rights (and every other similar or dissimilar matter) that
Executive ever had or now may have against the Company to the extent provided in
this Release. Executive further agrees and acknowledges that no representations,
promises or inducements have been made by the Company other than as appear in
the Agreement.
4. Executive further agrees and acknowledges that:
(a) The release provided for herein releases claims to and
including the date of this Release;
(b) He has been advised by the Company to consult with legal
counsel prior to executing this Release, has had an opportunity to
consult with and to be advised by legal counsel of his choice, fully
understands the terms of this Release, and enters into this Release
freely, voluntarily and intending to be bound;
(c) He has been given a period of 21 days to review and
consider the terms of this Release, prior to its execution and that he
may use as much of the 21 day period as he desires; and
(d) He may, within seven days after execution, revoke this
Release. Revocation shall be made by delivering a written notice of
revocation to the Secretary of the Dollar Thrifty Automotive Group,
Inc. For such revocation to be effective, written notice must be
actually received by the Secretary of the Dollar Thrifty Automotive
Group, Inc. no later than the close of business on the seventh day
after Executive executes this Release. If Executive does exercise his
right to revoke this Release, all of the terms and conditions of the
Release shall be of no force and effect, the Company shall not have any
obligation to make payments or provide benefits to Executive as set
forth in Sections 4, 5 and 8 of the Agreement and all benefits provided
to Executive under the Agreement prior to such revocation shall be
recoverable by the Company.
5. Executive agrees that he will never file a lawsuit or other
complaint asserting any claim that is released in this Release.
6. Executive does not by this Release relinquish any right whatsoever
to any vested, deferred benefit in any employee benefit plan which provides for
deferred compensation, retirement, pension, savings, thrift and/or employee
stock ownership, as same are defined in the Employee Retirement Income Security
Act, 29 U.S.C. " 1001, et seq., maintained by the Company.
7. Executive waives and releases any claim that he has or may have to
reemployment after __________________.
8. Executive agrees to hold harmless the Company for and against any
and all costs or losses whatsoever, including reasonable attorney's fees, caused
by the Executive's breach of any obligation contained herein or if any
representation herein was false when made.
9. Moreover, the provisions of this Release are severable and if any
part of it is found to be unenforceable, the other paragraphs shall remain full,
valid and enforceable.
IN WITNESS WHEREOF, the Executive has executed and delivered
this Release on the date set forth below.
Dated:_____________________ ___________________________________
Executive
