- --------------------------------------------------------------------------------
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-13647
--------------------
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 73-1356520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5330 East 31st Street, Tulsa, Oklahoma 74135
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (918) 660-7700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No
The number of shares outstanding of the registrant's Common Stock as of
November 13, 1998 was 24,127,980.
- --------------------------------------------------------------------------------
<PAGE>
-2-
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
FORM 10-Q
<TABLE>
<CAPTION>
CONTENTS
Page
<S> <C>
PART I - FINANCIAL INFORMATION.................................................3
ITEM 1. FINANCIAL STATEMENTS.........................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...............11
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK........................................18
PART II - OTHER INFORMATION...................................................18
ITEM 1. LEGAL PROCEEDINGS...........................................18
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...................19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.............................19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........19
ITEM 5. OTHER INFORMATION...........................................19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................20
SIGNATURES....................................................................23
INDEX TO EXHIBITS.............................................................24
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Dollar Thrifty Automotive Group, Inc.:
We have reviewed the accompanying consolidated balance sheet of Dollar Thrifty
Automotive Group, Inc. and subsidiaries as of September 30, 1998, and the
related consolidated statements of operations for the three-month and nine-month
periods ended September 30, 1998 and 1997 and the condensed consolidated
statements of cash flows for the nine-month periods ended September 30, 1998 and
1997. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, 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 such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Dollar Thrifty Automotive Group,
Inc. and subsidiaries as of December 31, 1997, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 5, 1998, except
for the last two paragraphs of Note 15, as to which the date is March 4, 1998,
we expressed an unqualified opinion on those consolidated financial statements.
DELOITTE & TOUCHE LLP
Tulsa, Oklahoma
October 22, 1998
<PAGE>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands Except Share and Per Share Data)
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
----------------- -----------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 65,175 $ 56,074
Restricted cash and investments 42,876 137,980
Account and notes receivable, net 106,683 89,105
Due from Chrysler 32,875 60,596
Prepaid expenses and other assets 41,246 34,127
Revenue-earning vehicles, net 1,626,472 1,319,490
Property and equipment, net 64,456 62,042
Deferred income taxes 6,158 6,428
Intangible assets, net 172,652 176,368
----------------- -----------------
$ 2,158,593 $ 1,942,210
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable 48,445 88,923
Accrued liabilities 94,616 78,249
Income taxes payable 16,273 12,238
Public liability and property damage 78,272 75,687
Debt and other obligations 1,608,960 1,418,687
----------------- -----------------
Total liabilities 1,846,566 1,673,784
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value;
Authorized 10,000,000 shares; none outstanding -- --
Common stock, $.01 par value;
Authorized 50,000,000 shares; issued and outstanding 241 236
24,127,980 and 23,625,000, respectively
Additional capital 705,459 695,716
Accumulated deficit (393,673) (427,526)
----------------- -----------------
312,027 268,426
----------------- -----------------
$ 2,158,593 $ 1,942,210
================= =================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
UNAUDITED
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
----------------------------- ----------------------------
1998 1997 1998 1997
REVENUES:
<S> <C> <C> <C> <C>
Vehicle rentals $ 197,424 $ 195,229 $ 491,795 $ 483,348
Vehicle leasing 59,782 49,782 153,620 124,020
Fees and services 14,796 14,489 40,514 37,905
Other 2,699 2,918 7,281 7,129
-------------- ------------- ------------- -------------
Total revenues 274,701 262,418 693,210 652,402
-------------- ------------- ------------- -------------
COSTS AND EXPENSES:
Direct vehicle and operating 81,091 80,939 218,255 217,090
Vehicle depreciation, net 83,981 88,482 221,731 207,452
Selling, general and administrative 40,324 37,225 119,874 113,042
Interest expense, net of interest
income of $1,470 and $312 for the three
months ended September 30, 1998 and 1997
and $5,107 and $2,596 for the nine
months ended September 30, 1998
and 1997 25,936 25,784 67,253 65,756
Amortization of cost in excess of net
assets acquired 1,349 1,502 4,046 4,504
-------------- ------------- ------------- -------------
Total costs and expenses 232,681 233,932 631,159 607,844
-------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 42,020 28,486 62,051 44,558
INCOME TAX EXPENSE 17,869 12,115 27,865 20,338
-------------- ------------- ------------- -------------
NET INCOME $ 24,151 $ 16,371 $ 34,186 $ 24,220
============== ============= ============= =============
Basic and diluted earnings per share $ 1.00 $ 0.82 $ 1.42 $ 1.21
============== ============= ============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
UNAUDITED
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months
Ended September 30
-----------------------------------
1998 1997
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 259,445 $ 229,878
CASH FLOWS FROM INVESTING ACTIVITIES:
Revenue-earning vehicles:
Purchases (1,499,334) (1,466,676)
Proceeds from sales 970,590 878,709
Restricted cash and investments, net 95,104 75,446
Property and equipment:
Purchases (12,674) (7,307)
Proceeds from sale 985 1,283
Acquisition of businesses, net of cash acquired (1,014) -
--------------- ---------------
Net cash used in investing activities (446,343) (518,545)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Debt and other obligations:
Proceeds 1,193,277 1,102,575
Payments (1,003,194) (801,391)
Cash management/working capital - Chrysler, net - (10,778)
Issuance of common shares in public offering 9,648 -
Vehicle financing issue costs (3,732) -
--------------- ---------------
Net cash provided by financing activities 195,999 290,406
--------------- ---------------
CHANGE IN CASH AND CASH EQUIVALENTS 9,101 1,739
CASH AND CASH EQUIVALENTS:
Beginning of period 56,074 3,425
--------------- ---------------
End of period $ 65,175 $ 5,164
=============== ===============
SUPPLEMENTAL DISCLOSURE OF NONCASH
OPERATING AND FINANCING ACTIVITIES -
Issuance of common stock for director compensation $ 100 $ -
=============== ===============
Issuance of note receivable for sale of franchise $ 150 $ -
=============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include
the accounts of Dollar Thrifty Automotive Group, Inc. and its
subsidiaries (the "Company"). In the opinion of management, the
accompanying unaudited consolidated financial statements include all
adjustments, consisting only of normal adjustments, necessary for the
fair presentation of the financial position at September 30, 1998, and
the results of operations for the three-month and nine-month periods
ended September 30, 1998 and 1997 and cash flows for the nine-month
periods ended September 30, 1998 and 1997. The results of operations
for the interim periods are not indicative of the results for a full
year. These interim financial statements should be read in conjunction
with the Company's audited annual financial statements and notes
thereto.
Certain amounts in the 1997 statement of operations have been
reclassified to conform with current year presentation.
2. NEW ACCOUNTING STANDARD
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 ("SFAS No. 130"), "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is comprised of the following:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------------------- -------------------------------
1998 1997 1998 1997
(In thousands)
<S> <C> <C> <C> <C>
Net Income $ 24,151 $ 16,371 $ 34,186 $ 24,220
Foreign currency translation adjustment (200) (61) (333) (120)
--------------- --------------- -------------- -------------
Comprehensive income $ 23,951 $ 16,310 $ 33,853 $ 24,100
=============== =============== ============== =============
</TABLE>
3. ACQUISITION
Effective March 1, 1998, Dollar Rent A Car Systems, Inc. ("Dollar")
acquired certain assets and assumed certain liabilities of its former
San Diego franchisee. Dollar paid approximately $1,500,000 and assumed
net liabilities of approximately $15,000. The transaction has been
accounted for using the purchase method of accounting and operating
results from the date of acquisition, which are not material, are
included in the consolidated statement of operations.
<PAGE>
4. DEBT AND OTHER OBLIGATIONS
Debt and other obligations as of September 30, 1998 and December 31,
1997 consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
----------------- -----------------
(In Thousands)
Vehicle Debt and Obligations
<S> <C> <C>
Asset backed notes, net of discount $ 1,307,684 $ 1,369,077
Commercial paper 235,471 --
Deferred vehicle rent 61,068 43,654
Chrysler Financial Corporation 4,464 5,519
----------------- -----------------
1,608,687 1,418,250
Other Notes Payable 273 437
----------------- -----------------
Total debt and other obligations $ 1,608,960 $ 1,418,687
================= =================
</TABLE>
On March 4, 1998, the Company, through a newly formed special purpose
financing subsidiary, Dollar Thrifty Funding Corp., established a
$615,000,000 Commercial Paper Program as a part of its existing asset
backed note program. Proceeds are used for financing of vehicle
purchases and for periodic refinancing of asset backed notes.
Concurrently with the establishment of the Commercial Paper Program,
the Company also entered into a 364-day $545,000,000 Liquidity Facility
to support the Commercial Paper Program. The Liquidity Facility
provides the Commercial Paper Program with an alternative source of
funding if the Company is unable to refinance maturing commercial paper
by issuing new commercial paper.
5. STOCKHOLDERS' EQUITY
On January 15, 1998, 498,105 over allotment shares were issued by the
Company at $20.50 per share. Net proceeds of this issuance were
$9,648,294. The proceeds from the offering were used to provide
collateral for financing of revenue-earning vehicles.
6. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period.
Diluted earnings per share is based on the combined weighted average
number of common shares and common share equivalents outstanding which
include, where appropriate, the assumed exercise of options. In
computing diluted earnings per share, the Company has utilized the
treasury stock method.
On September 24, 1998, the Company approved the granting of 478,000
stock options to approximately 170 employees, including each of the
executive officers at an exercise price of $10.50 per share. These
options vest in three equal annual installments commencing on
September 30, 1999 and expire on September 30, 2008. Under certain
circumstances, including a change of control of the Company, the
options would be exercisable immediately.
<PAGE>
The computation of weighted average common and common equivalent shares
used in the calculation of basic and diluted earnings per share ("EPS")
is shown below.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------------ -----------------------------
1998 1997 1998 1997
(in thousands except share and per share data)
<S> <C> <C> <C> <C>
Net Income $ 24,151 $ 16,371 $ 34,186 $ 24,220
Basic EPS:
Weighted average common shares 24,127,980 20,000,000 24,102,061 20,000,000
Basic EPS $ 1.00 $ 0.82 $ 1.42 $ 1.21
============ ============= ============ ============
Diluted EPS:
Weighted average common shares 24,127,980 20,000,000 24,102,061 20,000,000
Shares contingently issuable-
Stock options 4,925 - 4,961 -
Performance awards 23,232 - 23,232 -
------------ ------------- ------------ ------------
Shares applicable to diluted 24,156,137 20,000,000 24,130,254 20,000,000
------------ ------------- ------------ ------------
Diluted EPS $ 1.00 $ 0.82 $ 1.42 $ 1.21
============ ============= ============ ============
</TABLE>
At September 30, 1998, options to purchase 1,153,530 shares of common
stock were outstanding but were not included in the computation of
diluted earnings per share because the options exercise price was
greater than the average market price of the common shares.
7. CONTINGENCIES
Various claims and legal proceedings have been asserted or instituted
against the Company, including some purporting to be class actions, and
some which demand large monetary damages or other relief which could
result in significant expenditures. Litigation is subject to many
uncertainties, and the outcome of individual matters is not predictable
with assurance. The Company is also subject to potential liability
related to environmental matters. The Company establishes reserves for
litigation and environmental matters when the loss is probable and
reasonably estimable. It is reasonably possible that the final
resolution of some of these matters may require the Company to make
expenditures, in excess of established reserves, over an extended
period of time and in a range of amounts that cannot be reasonably
estimated. The term "reasonably possible" is used herein to mean that
the chance of a future transaction or event occurring is more than
remote but less than likely. Although the final resolution of any such
matters could have a material effect on the Company's consolidated
operating results for the particular reporting period in which an
adjustment of the estimated liability is recorded, the Company believes
that any resulting liability should not materially affect its
consolidated financial position.
8. OTHER
On July 23, 1998, the Company adopted a stockholder rights plan. The
rights were issued on August 3, 1998, to stockholders of record on that
date, and will expire on August 3, 2008, unless earlier redeemed,
exchanged or amended by the Board of Directors.
<PAGE>
The plan provides for the issuance of one right for each outstanding
share of the Company's common stock. Upon the acquisition by a person
or group of 15 percent or more of the Company's outstanding common
stock, the rights generally will become exercisable and allow the
stockholder, other than the acquiring person or group, to acquire
common stock at a discounted price. An exception was made for an
institutional investor whose holdings currently exceed 15 percent.
The plan also includes an exchange option after the rights become
exercisable. The Board of Directors may effect an exchange of part or
all of the rights, other than rights that have become void, for shares
of the Company's common stock for each right. The Board of Directors
may redeem all rights for $.01 per right, generally at any time prior
to the rights becoming exercisable.
The issuance of the rights has no dilutive effect on the number of
common shares outstanding and does not affect earnings per share.
On September 29, 1998, the Company entered into an Employment
Continuation Agreement with the Company's Chairman and Chief Executive
Officer. The agreement provides for benefits to be paid to the
Company's Chairman and Chief Executive Officer upon termination of his
employment following a change of control of the Company subject to the
agreement requirements.
On September 29, 1998, the Company established the Employment
Continuation Plan for Key Employees of Dollar Thrifty Automotive Group,
Inc. The plan provides for benefits to be paid to certain employees
upon termination of their employment following a change in control of
the Company subject to plan requirements. This plan currently covers 42
employees of the Company.
9. SUBSEQUENT EVENTS
Effective October 1, 1998, Dollar acquired the car rental operations of
its former Phoenix franchisee for approximately $4,000,000. The
transaction will be accounted for using the purchase method of
accounting and operating results from the date of acquisition will be
included in the consolidated statement of operations.
* * * * * * * *
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company owns two vehicle rental companies, Dollar Rent A Car
Systems, Inc. ("Dollar") and Thrifty Rent-A-Car System, Inc. ("Thrifty"). The
Company, Dollar, Thrifty and their respective subsidiaries are sometimes
referred to in this report collectively as the "Group." The majority of Dollar's
revenue is derived from renting vehicles to customers from company-owned stores,
while the majority of Thrifty's revenue is generated from leasing vehicles and
providing services to franchisees.
Results of Operations
The following table sets forth for the three months and nine months
ended September 30, 1998 and 1997, the percentage of operating revenues
represented by certain items in the Company's consolidated statement of
operations:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------------------- ---------------------------------
1998 1997 1998 1997
---------------- ---------------- --------------- ----------------
(Percentage of revenues) (Percentage of revenues)
Revenues:
<S> <C> <C> <C> <C>
Vehicle rentals 71.9% 74.4% 70.9% 74.1%
Vehicle leasing 21.8 19.0 22.2 19.0
Fees and services 5.4 5.5 5.8 5.8
Other 0.9 1.1 1.1 1.1
---------------- ---------------- ---------------- ----------------
Total revenues 100.0% 100.0% 100.0% 100.0%
================ ================ ================ ================
Costs and expenses:
Direct vehicle and operating 29.5% 30.8% 31.5% 33.3%
Vehicle depreciation, net 30.6 33.7 32.0 31.8
Selling, general and administrative 14.7 14.2 17.3 17.3
Interest expense, net 9.4 9.8 9.7 10.1
Amortization of cost in excess of
net assets acquired 0.5 0.6 0.6 0.7
---------------- ---------------- ---------------- ----------------
Total costs and expenses 84.7% 89.1% 91.1% 93.2%
---------------- ---------------- ---------------- ----------------
Income before income taxes 15.3 10.9 8.9 6.8
Income tax expense 6.5 4.6 4.0 3.1
---------------- ---------------- ---------------- ----------------
Net income 8.8% 6.3% 4.9% 3.7%
================ ================ ================ ================
</TABLE>
The Company's major sources of revenue are as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------------------- ------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
(in thousands) (in thousands)
Vehicle rental revenue:
<S> <C> <C> <C> <C>
Dollar $187,114 $174,834 $466,237 $432,793
Thrifty 10,310 20,395 25,558 50,555
-------------- -------------- -------------- --------------
$197,424 $195,229 $491,795 $483,348
============== ============== ============== ==============
Vehicle leasing revenue:
Dollar $ 9,865 $ 10,898 $ 25,495 $ 26,396
Thrifty 49,917 38,884 128,125 97,624
-------------- -------------- -------------- --------------
$ 59,782 $ 49,782 $153,620 $124,020
============== ============== ============== ==============
</TABLE>
<PAGE>
The following table sets forth certain selected operating data of the
Company for the three months and nine months ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
----------------------------- -----------------------------
1998 1997 1998 1997
Company-Owned Stores Data
(U.S. and Canada)
<S> <C> <C> <C> <C>
Average number of vehicles operated 63,104 62,371 55,505 55,198
Number of rental transactions 914,357 891,607 2,545,254 2,554,592
Average revenue per transaction $ 216 $ 219 $ 193 $ 189
Monthly average revenue per vehicle $ 1,043 $ 1,043 $ 984 $ 973
Vehicle Leasing Data
(U.S. and Canada)
Average number of vehicles leased 43,121 37,575 38,298 32,120
Monthly average revenue per vehicle $ 462 $ 442 $ 446 $ 429
</TABLE>
Three Months Ended September 30, 1998 compared with Three Months Ended
September 30, 1997
Revenues
Total revenues increased 4.7% compared to third quarter 1997. The
increase in total revenue was due to an increase in leasing revenue of 20.1%
over the 1997 third quarter and growth in vehicle rental revenue of 1.1%.
Increased leasing revenue resulted from Thrifty's 22.7% increase in the average
number of vehicles leased to franchisees along with a 4.8% increase in the
vehicle leasing rates. The rental revenue increase consisted of a 7.0% increase
at Dollar and a 49.4% decline at Thrifty. The increase in rental revenue was due
to a 2.6% increase in the number of transactions partially offset by a 1.4%
decrease in revenue per transaction. Vehicle rental revenue and vehicle leasing
revenue were impacted by the re-franchising of company-owned stores at Thrifty
and by franchisee acquisitions at Dollar.
Expenses
Total expenses of $232.7 million in 1998 decreased 0.5% from
$233.9 million in 1997. As a percent of revenue, total expenses improved
to 84.7% as compared to 89.1% in 1997.
Direct and vehicle operating expenses for the three months ended
September 30, 1998 increased 0.2%, compared to the three months ended September
30, 1997. These expenses improved to 29.5% of revenue in the third quarter of
1998 compared to 30.8% of revenue in the third quarter of 1997 due primarily to
a decrease in the proportion of total revenue generated from vehicle rentals at
company-owned stores, which carry additional costs not associated with vehicle
leasing revenue. The shift in revenue from vehicle rentals to vehicle leasing
resulted primarily from re-franchising several Thrifty company-owned stores.
Net vehicle depreciation expenses declined 5.1% to $84.0 million in the
third quarter of 1998. The decrease is primarily due to a 9.1% decline in the
average depreciation rate partially offset by a 4.2% increase in depreciable
fleet as compared to the third quarter of 1997. During the third quarter of
1997, the Company recorded an additional $10.2 million of depreciation expenses
and losses on the disposal of non-program vehicles due to a significant decline
in used car prices. During the third quarter of 1998, the Company recorded
higher depreciation rates on non-program vehicles which were partially offset by
a $2.7 million gain on disposal of non-program vehicles.
Selling, general and administrative expenses were 14.7% of revenue in
the third quarter of 1998 compared to 14.2% of revenue in the third quarter of
1997. Expenses in the third quarter of 1997 decreased by $1.9 million due to the
elimination of a reserve related to the sale of Snappy Car Rental in 1994.
Net interest expense increased 0.6% to $25.9 million, but decreased as
a percent of revenue from 9.8% in the third quarter of 1997 to 9.4% in the third
quarter of 1998. The increase in expense is due to the effect of increased
vehicle debt levels partially offset by a decrease in vehicle interest rates.
The tax provision for the third quarter of 1998 was $17.9 million. The
effective tax rate of 42.5% for the third quarter of 1998 differs from the U.S.
statutory rate due primarily to non-deductible amortization costs in excess of
net assets acquired and losses relating to Thrifty's Canadian subsidiary for
which no benefit was recorded.
Interim reporting requirements for applying the separate, annual
effective income tax rates to U.S. and Canadian operations, combined with the
seasonal impact of the Canadian operations, will cause significant variations in
the Company's quarterly consolidated effective income tax rates.
Net Income
The Company had net income of $24.2 million in the third quarter
of 1998, or $1.00 per share compared to a 1997 third quarter income of $16.4
million, or $.82 per share.
Nine Months Ended September 30, 1998 compared with Nine Months Ended
September 30, 1997
Revenues
Total revenues for the nine months ended September 30, 1998 increased
6.3% compared to the same period for 1997. The increase in total revenue was due
to an increase in leasing revenue of 23.9% over the nine month period of 1997
and growth in vehicle rental revenue of 1.7%. Fees and services revenue
increased $2.6 million due to a final payment received related to Dollar's
terminated EuroDollar franchise agreement and higher franchise fees and other
revenue fees from franchisees. Increased leasing revenue resulted from Thrifty's
26.3% increase in average number of vehicles leased to franchisees along with a
4.0% increase in vehicle leasing rates. The increase in rental revenue was due
to a 2.1% increase in revenue per transaction partially offset by a 0.4%
decrease in the number of transactions.
Expenses
Total expenses of $631.2 million for the nine months ended September
30, 1998 increased 3.8% from $607.8 million for the same period in 1997
primarily due to an increase in depreciation expense and one-time cost
reductions in 1997. Total expenses as a percentage of revenues decreased to
91.1% in 1998 from 93.2% in 1997.
Direct and vehicle operating expenses for the nine months ended September
30, 1998 increased by $1.2 million, or 0.5%,compared to the nine months ended
September 30, 1997. This increase resulted from higher personnel costs, airport
concession fees and tour account incentives at Dollar offset by a reduction of
expenses at Thrifty as a result of the re-franchising of several company-owned
stores. These expenses improved as a percentage of revenue primarily due to a
decrease in the proportion of total revenue generated from vehicle rentals at
company-owned stores, which carry additional costs not associated with vehicle
leasing revenue. The shift in revenue from vehicle rentals to vehicle leasing
resulted primarily from re-franchising several Thrifty company-owned stores in
late 1997 and early 1998.
Net vehicle depreciation expenses were 32.0% of revenue for the nine
months ended September 30, 1998 as compared to 31.8% for the same period in
1997. The 6.9% increase in depreciation was due to a 6.2% increase in the
depreciable fleet and a 0.5% increase in the average depreciation rates. The
increase in depreciation rates was due to higher program-vehicle depreciation
rates partially offset by lower non-program vehicle depreciation rates.
Selling, general and administrative expenses of $119.9 million for the
nine months ended September 30, 1998 increased by 6.0% from $113.0 million over
the same period in 1997 and remained at 17.3% of revenue. Higher selling,
general and administrative expenses arose primarily from increases in personnel
and benefit costs in 1998 in addition to one-time cost reductions during the
nine months ended September 30, 1997 of $1.5 million related to the settlement
of a condemnation claim and $1.9 million due to the elimination of a reserve
related to the sale of Snappy Car Rental in 1994.
Net interest expense increased 2.3% to $67.3 million, but decreased as
a percent of revenue from 10.1% in 1997 to 9.7% in 1998. The increase in expense
is due to the effect of increased vehicle debt levels partially offset by a
decrease in vehicle interest rates.
The tax provision for the nine months ended September 30, 1998 was
$27.9 million. The effective rate of 44.9% in 1998 differs from the U.S.
statutory rate due primarily to non-deductible amortization costs in excess of
net assets acquired and losses relating to Thrifty's Canadian subsidiary for
which no benefit was recorded.
Interim reporting requirements for applying the separate, annual
effective income tax rates to U.S. and Canadian operations, combined with the
seasonal impact of the Canadian operations, will cause significant variations in
the Company's interim consolidated effective income tax rates.
Net Income
The Company had net income of $34.2 million for the nine months ended
September 30, 1998, or $1.42 per share compared to net income of $24.2 million,
or $1.21 per share for the same period in 1997.
Liquidity and Capital Resources
The Group's U.S. and Canadian operations are funded by cash provided
from operations and its financing arrangements. The Group's primary use of funds
is for the acquisition of revenue-earning vehicles. For the nine months ended
September 30, 1998, the Group's expenditures for revenue-earning vehicles were
$1.5 billion, which were partially offset by $970.3 million in proceeds from the
sale of used vehicles. For the nine months ended September 30, 1998, the Group's
non-vehicle capital expenditures were $13.7 million.
At September 30, 1998, the Group had $65.2 million in cash and $70
million in working capital available under its $215 million five-year, senior
secured, revolving credit facility (the "Revolving Credit Facility"). The
Revolving Credit Facility is used to provide letters of credit with a sublimit
of $190 million and cash for operating activities with a sublimit of $70
million. The Group had letters of credit outstanding of approximately $35
million and no working capital borrowings at September 30, 1998. The Group has
significant requirements for bonds and letters of credit to support its
insurance programs and airport concession obligations. At September 30, 1998,
the Group had approximately $102 million in bonds outstanding.
The Company acquires its U.S. revenue-earning vehicles with secured
vehicle financing consisting of $1.31 billion in asset backed notes and up to
$615 million in commercial paper. The Canadian vehicle fleet is financed under a
lease agreement with CFI Auto Lease Trust (the "Trust"), which has committed to
$91.0 million of funding through June 2000, which is supported by underlying
bank financing that is required to be renewed annually by the Trust.
The asset backed note program is comprised of $1.31 billion in asset
backed notes with maturities ranging from 1998 to 2005. Borrowings under the
asset backed notes are secured by eligible vehicle collateral and bear interest
at fixed rates on $1,056.6 million ranging from 6.25% to 6.80% and floating
rates on $251.8 million ranging from LIBOR plus .70% to LIBOR plus 1.25%.
Proceeds from the asset backed notes that are temporarily unutilized for
financing vehicles and certain related receivables are maintained in restricted
cash and investment accounts, which were approximately $42.9 million at
September 30, 1998.
The Company established the commercial paper program on March 4, 1998
of up to $615 million (the "Commercial Paper Program") and concurrently,
established a $545 million liquidity facility to support the Commercial Paper
Program. Borrowings under this program are secured by eligible vehicle
collateral and bear interest based on market-dictated commercial paper rates. At
September 30, 1998, the Group had $235.5 million in commercial paper outstanding
under this program.
The Company expects to continue to acquire its revenue-earning vehicles
with secured vehicle financing.
Seasonality
The vehicle rental operation is a seasonal business and is impacted by
the leisure travel segment. The third quarter, which includes the peak summer
travel months, has historically been the strongest quarter of the year. During
the peak season, the Group increases its rental fleet and workforce to
accommodate increased rental activity. As a result, any occurrence that disrupts
travel patterns during the summer period could have a material adverse effect on
the annual performance of the Company. The first and fourth quarters for the
Group's rental operations are generally the weakest, when there is limited
leisure travel and a greater potential for adverse weather conditions. Many of
the operating expenses such as rent, general insurance and administrative
personnel are fixed and cannot be reduced during periods of decreased rental
demand.
Year 2000
Introduction
The Year 2000 issue ("Y2K") relates to potential problems with computer
systems or any equipment employing technology that uses dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any date
recording mechanism within the computer system, including date sensitive
software, which uses only two digits to represent the year may recognize a date
using 00 as the year 1900 rather than the year 2000. If this occurs, it could
cause system failures or miscalculations resulting in disruption of operations.
The Company's management recognizes the importance of ensuring that its
operations and material relationships with third parties will not be negatively
affected by interruptions caused from failure to be Y2K compliant. The Company
has formed committees to address Y2K compliance of its separate operating
entities.
State of Readiness
A formalized project began in 1997, in which the Company identified
mission-critical areas of information technology ("IT") for Y2K compliance
review. Hardware, software applications and other technologies, which in the
event of a failure would have a material adverse impact on the Company's
business, financial condition, or results of operations, are considered
mission-critical. These include fleet systems, reservation systems, counter
systems, revenue management systems, and financial systems.
The Company is using a five-phase process to review each of its
systems, which includes awareness, assessment, renovation, validation, and
implementation. During the awareness phase, the Company inventories each system
to identify the components that require modification to become Y2K compliant.
Once identified, each component is assessed for its risk of failure and the
impact of potential failure to the Company's operations. During the next phase,
renovation, each system component is either modified or replaced in order to
meet Y2K requirements. Each system is then validated by installing it in a
separate testing environment that will simulate the Year 2000 and test for
compliance. Once the results of the validation phase verify that the date change
does not cause operational problems, the system is moved to the final phase of
implementation, at which time it is considered to be Y2K compliant and returned
to normal operation.
The Company has completed the awareness and assessment phases and is
currently in the renovation and validation phases of its mission-critical IT
systems. The renovation and validation phases are expected to be completed in
the second quarter of 1999. With regard to non-IT systems such as phone systems,
security systems, and elevator operations, the Company is currently in the
awareness and assessment phases of remediation. All mission-critical systems
that are not already Y2K compliant will be modified, upgraded or replaced and
are anticipated to be compliant no later than September 30, 1999.
During the first quarter of 1998, the Company began sending inquiries
to third parties with whom it transacts significant business requesting
assurances of Y2K compliance. The Company continues to make additional inquiries
to third parties seeking Y2K assurances as well as collecting responses,
discussing concerns, and sending follow-up inquiries requesting status of
remediation plans. Dollar and Thrifty have also been advising their independent
franchisees of the need to conduct their own Y2K assessments.
Costs
The Company's costs to remediate Y2K issues are projected to total $6.1
million. Of this total, $1.9 million has been incurred as of September 30, 1998,
$1.4 million is expected to be incurred in the fourth quarter of 1998 and $2.8
million during 1999. Certain IT projects to enhance systems and improve
operating efficiencies are being delayed due to Y2K compliance efforts. The
Company's Y2K costs for 1998 and 1999 represent approximately 14% and 12%,
respectively, of the total annual IT budget and will be funded through its
internal cash flow.
Risks
Like many organizations, the Company relies on third parties such as
telecommunication companies, airlines, vehicle manufacturers, travel agents,
credit card processors, banks, utilities, and also its independent franchisees.
The Company recognizes that failure to resolve Y2K issues could result in
disruptions in operations. In the worst case, non-compliance by the Company
regarding Y2K issues may result in significant interruptions in business flow
including failure to process rental transactions efficiently and inability to
invoice or process payments. Third party failures may result in additional
business interruptions such as airline, FAA, travel agent, and tour company
failures causing reduction of travel and tourism revenues, telecommunication
failures resulting in inability to process reservations and service clientele,
and vehicle manufacturer or vehicle delivery source failures causing shortages
of vehicles. Failure of independent franchisees to be Y2K compliant could result
in disruptions in the Dollar and Thrifty vehicle rental systems, and potentially
affect fees and vehicle leasing revenues received from these independent
parties. Accordingly, third party Y2K failures could significantly limit the
Company's revenue-earning potential and result in a material adverse effect on
the Company's business, financial condition, and results of operations.
Contingency Plans
The Company is in the process of developing basic contingency plans to
cover all mission-critical processes that could result in a material adverse
impact on the Company's operations. The Company plans to continually refine
these plans as more information becomes available from third parties and through
completion of the validation phase of the Company's remediation plan. The
Company intends to have a formalized contingency plan in place no later than the
third quarter of 1999.
Management believes that the Company is taking adequate actions to
remediate all of its mission-critical IT and its non-IT systems. Nevertheless,
since it is impossible to anticipate all future outcomes, especially when third
parties are involved, there can be no assurance that the Company will not
experience disruptions in operations that could materially and adversely affect
the Company's business, results of operations, and financial condition.
New Accounting Standards
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This SOP provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. This SOP requires that entities capitalize certain internal-use software
costs once certain criteria are met. The Company is currently evaluating SOP
98-1, but does not expect it to have a material impact on its consolidated
financial statements. This SOP is effective for financial statements for fiscal
years beginning after December 15, 1998. Earlier application is encouraged in
fiscal years for which annual financial statements have not been issued.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires all derivatives be recognized as either assets or liabilities in the
statement of financial position and be measured at fair value. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
Initial application should be as of the beginning of a fiscal quarter. Earlier
application is encouraged, but is permitted only as of the beginning of any
fiscal quarter that begins after the issuance date of SFAS No. 133.
Forward Looking Information
Some of the statements contained herein under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Company believes such
forward-looking statements are based on reasonable assumptions, such statements
are not guarantees of future performance and certain factors could cause results
to differ materially from current expectations. These factors include: economic
and competitive conditions in markets and countries where our customers reside
and where our companies and their franchisees operate; changes in capital
availability or cost; costs and other terms related to the acquisition and
disposition of automobiles; the ability of the Company and its third party
providers, vendors, suppliers and independent franchisees to adequately address
the Year 2000 issue; and certain regulatory and environmental matters. The
Company undertakes no obligation to update or revise forward-looking statements
to reflect changed assumptions, the occurrence of unanticipated events or
changes to future operating results over time.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following information about the Group's market sensitive financial
instruments constitutes a "forward-looking" statement. The Group's primary
market risk exposure is changing interest rates, primarily in the United States.
The Group's policy is to manage interest rates through use of a combination of
fixed and floating rate debt. A portion of the Group's borrowings are
denominated in Canadian dollars which exposes the Group to market risk
associated with exchange rate fluctuations. The Group has entered into no
hedging or derivative transactions. All items described are non-trading and are
stated in U.S. Dollars.
Reference is made to the Group's quantitative disclosures about market risk
as of December 31, 1997 included under Item 7 of the Company's most recent Form
10-K/A.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 2, 1994, the City of San Jose, California filed an action
in the Superior Court of California, against Chevron, Dollar and others, seeking
unspecified compensatory and punitive damages and injunctive relief. The City of
San Jose has not served process on Dollar. The suit relates to pollution at a
site currently occupied by Dollar and formerly occupied by Chevron. Dollar has
partially remediated the affected soil, but not the allegedly affected ground
water. Dollar believes that prior uses of the site resulted in any remaining
contamination at the site.
On October 2, 1997, a purported class action suit was filed in the
Circuit Court of Coosa County, Alabama, against Dollar, Thrifty and other car
rental companies. The plaintiffs in this suit alleged violations of state law in
connection with the sale by the car rental companies of certain insurance
products. Dollar and Thrifty have filed answers denying the alleged violations.
The case has been removed to the U.S. District Court for the Middle District of
Alabama. Plaintiffs filed an amended complaint on February 16, 1998, dropping
their fraud allegations, but adding a claim for a refund of the amounts paid for
insurance. Dollar, Thrifty and other car rental companies have filed a motion to
dismiss the conspiracy claim portion of the suit.
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 subsidiaries involved.
Although the amount of liability with respect to these matters cannot be
ascertained, potential liability is not expected to materially affect the
consolidated financial position or results of operations of the Company.
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
There is no information to report for the third quarter ended September
30, 1998.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the third quarter
ended September 30, 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
third quarter ended September 30, 1998.
ITEM 5. OTHER INFORMATION
On September 24, 1998, the Company approved the granting of 478,000
stock options to approximately 170 employees, including each of the executive
officers at an exercise price of $10.50 per share. These options vest in three
equal annual installments commencing on September 30,1999 and expire on
September 30, 2008. Under certain circumstances, including a change of control
of the Company, the options would be exercisable immediately.
On September 29, 1998, the Company entered into an Employment
Continuation Agreement with Joseph E. Cappy, the Company's Chairman and Chief
Executive Officer. The agreement provides for benefits to be paid to Joseph E.
Cappy upon termination of his employment following a change of control of the
Company subject to the agreement requirements.
On September 29, 1998, the Company established the Employment
Continuation Plan for Key Employees of Dollar Thrifty Automotive Group, Inc. The
plan provides for benefits to be paid to certain employees upon termination of
their employment following a change in control of the Company subject to plan
requirements. This plan currently covers 42 employees of the Company.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index of Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.1 Certificate of Incorporation of the Company,filed as
the same numbered exhibit with the Company's
Registration Statement on Form S-1, as amended,
Registration No. 333-39661, which became effective
December 16, 1997*
3.2 By-Laws of the Company, as amended, which became
effective September 24, 1998.**
4.1 Form of Certificate of Common Stock, filed as the
same numbered exhibit with the Company's Registration
Statement on Form S-1, as amended, Registration No.
333-39661, which became effective December 16, 1997*
4.2 Base Indenture dated as of December 13, 1995 between
Thrifty Car Rental Finance Corporation and Bankers
Trust Company, filed as the same numbered exhibit
with the Company's Registration Statement on Form
S-1, as amended, Registration No. 333-39661, which
became effective December 16, 1997*
4.3 Series 1995-1 Supplement to Base Indenture dated as
of December 13, 1995 between Thrifty Car Rental
Finance Corporation and Bankers Trust Company, filed
as the same numbered exhibit with the Company's
Registration Statement on Form S-1, as amended,
Registration No. 333-39661, which became effective
December 16, 1997*
4.4 Master Motor Vehicle Lease and Servicing Agreement
dated as of December 13, 1995 between Thrifty Car
Rental Finance Corporation and Thrifty, filed as the
same numbered exhibit with the Company's Registration
Statement on Form S-1, as amended, Registration No.
333-39661, which became effective December 16, 1997*
4.5 Master Collateral Agency Agreement dated as of
December 13, 1995 between Thrifty Car Rental Finance
Corporation and Bankers Trust Company, filed as the
same numbered exhibit with the Company's Registration
Statement on Form S-1, as amended, Registration No.
333-39661, which became effective December 16, 1997*
4.6 Form of Revolving Credit Agreement among the Company,
Dollar, Thrifty and the Institutions named therein,
filed as the same numbered exhibit with the Company's
Registration Statement on Form S-1, as amended,
Registration No. 333-39661, which became effective
December 16, 1997*
4.7 Form of Series 1997-1 Supplement to Base Indenture
between Rental Car Finance Corp. and Bankers Trust
Company, filed as the same numbered exhibit with the
Company's Registration Statement on Form S-1, as
amended, Registration No. 333-39661, which became
effective December 16, 1997*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4.8 Form of Master Motor Vehicle Lease and Servicing
Agreement among the Company, Dollar, Thrifty and
Rental Car Finance Corp., filed as the same numbered
exhibit with the Company's Registration Statement on
Form S-1, as amended, Registration No. 333-39661,
which became effective December 16, 1997*
4.9 Commitment Letter dated November 19, 1997, among
Credit Suisse First Boston, The Chase Manhattan Bank,
Chase Securities Inc., Dollar, Thrifty and the
Company regarding a $230,000,000 Revolving Credit
Facility and a $545,000,000 Commercial Paper
Liquidity Facility and related Term Sheet, filed as
the same numbered exhibit with the Company's
Registration Statement on Form S-1, as amended,
Registration No. 333-39661, which became effective
December 16, 1997*
4.10 Amended and Restated Master Collateral Agency
Agreement dated as of December 23, 1997 among the
Company, Rental Car Finance Corp., Thrifty, Dollar
and Bankers Trust Company, filed as the same numbered
exhibit with the Company's Form 8-K, filed March 16,
1998*
4.11 Chrysler Support Letter of Credit and Reimbursement
Agreement dated as of December 23, 1997 among
Chrysler, Dollar, Thrifty, the Company, TRAC Team,
Inc. and DTAG Services, Inc., filed as the same
numbered exhibit with the Company's Form 8-K, filed
March 16, 1998*
4.12 Series 1998-1 Supplement to Base Indenture dated as
of March 4, 1998 between Rental Car Finance Corp.
and Bankers Trust Company, filed as the same
numbered exhibit with the Company's Form 8-K, filed
March 16, 1998*
4.13 Master Motor Vehicle Lease and Servicing Agreement
dated as of March 4, 1998 among the Company, Dollar,
Thrifty and Rental Car Finance Corp., filed as the
same numbered exhibit with the Company's Form 8-K,
filed March 16, 1998*
4.14 Note Purchase Agreement dated as of March 4, 1998
among Rental Car Finance Corp. Dollar Thrifty Funding
Corp. and Credit Suisse First Boston, filed as the
same numbered exhibit with the Company's Form 8-K,
filed March 16, 1998*
4.15 Liquidity Agreement dated as of March 4, 1998 among
Dollar Thrifty Funding Corp., Certain Financial
Institutions and Credit Suisse First Boston, filed as
the same numbered exhibit with the Company's
Form 8-K, filed March 16, 1998*
4.16 Depository Agreement dated as of March 4, 1998
between Dollar Thrifty Funding Corp. and Bankers
Trust Company, filed as the same numbered exhibit
with the Company's Form 8-K, filed March 16, 1998*
4.17 Collateral Agreement dated as of March 4, 1998 among
Dollar Thrifty Funding Corp., Credit Suisse First
Boston Corporation and Bankers Trust Company, filed
as the same numbered exhibit with the Company's
Form 8-K, filed March 16, 1998*
4.18 Dealer Agreement dated as of March 4, 1998 among
Dollar Thrifty Funding Corp., the Company, Credit
Suisse First Boston Corporation and Chase Securities,
Inc., filed as the same numbered exhibit with the
Company's Form 8-K, filed March 16, 1998*
4.19 Rights Agreement (including a Form of Certificate of
Designation of Series A Junior Participating
Preferred Stock as Exhibit A thereto, a Form of Right
Certificate as Exhibit B thereto and a Summary of
Rights to Purchase Preferred Stock as Exhibit C
thereto) dated as of July 23, 1998 between Dollar
Thrifty Automotive Group, Inc. and Harris Trust and
Savings Bank, as Rights Agent, filed as the same
numbered exhibit with the Company's Form 8-K, filed
July 24, 1998*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.1 Vehicle Supply Agreement between Chrysler and Dollar,
filed as the same numbered exhibit with the Company's
Registration Statement on Form S-1, as amended,
Registration No. 333-39661, which became effective
December 16, 1997*
10.2 Amended and Restated Vehicle Supply Agreement between
Chrysler and Thrifty, filed as the same numbered
exhibit with the Company's Registration Statement on
Form S-1, as amended, Registration No. 333-39661,
which became effective December 16, 1997*
10.3 Employment Continuation Agreement between Dollar
Thrifty Automotive Group, Inc. and Joseph E. Cappy
dated September 29, 1998.**
10.4 Employment Continuation Plan for Key Employees of
Dollar Thrifty Automotive Group, Inc., which became
effective September 29, 1998.**
10.5 [Reserved]
10.6 [Reserved]
10.7 [Reserved]
10.8 Pentastar Transportation Group, Inc. Deferred
Compensation Plan, filed as the same numbered exhibit
with the Company's Registration Statement on
Form S-1, as amended, Registration No. 333-39661,
which became effective December 16, 1997*
10.9 Pentastar Transportation Group, Inc. Executive
Retention Plan, filed as the same numbered exhibit
with the Company's Registration Statement on Form
S-1, as amended, Registration No. 333-39661, which
became effective December 16, 1997*
10.10 Dollar Thrifty Automotive Group, Inc. Long-Term
Incentive Plan, filed as the same numbered exhibit
with the Company's Registration Statement on Form
S-1, as amended, Registration No. 333-39661, which
became effective December 16, 1997*
10.11 Tax Sharing and Disaffiliation Agreement between
Chrysler Corporation and Dollar Thrifty Automotive
Group, Inc., filed as the same numbered exhibit with
the Company's Registration Statement on Form S-1, as
amended, Registration No. 333-39661, which became
effective December 16, 1997*
10.12 Form of Indemnification Agreement between the Company
and Chrysler, filed as the same numbered exhibit with
the Company's Registration Statement on Form S-1, as
amended, Registration No. 333-39661, which became
effective December 16, 1997*
23.2 Consent of Debevoise & Plimpton (included in
Exhibit 5), filed as the same numbered exhibit with
the Company's Registration Statement on Form S-1, as
amended, Registration No. 333-39661, which became
effective December 16, 1997*
23.3 Consent of Donovan Leisure Newton & Irvine LLP, filed
as the same numbered exhibit with the Company's
Registration Statement on Form S-1, as amended,
Registration No. 333-39661, which became effective
December 16, 1997*
27.1 Financial Data Schedule ** (EDGAR version only)
</TABLE>
- ----------
* Incorporated by reference
** Filed herewith
(b) Reports on Form 8-K
On July 24, 1998, the Company filed a report on Form 8-K to report the
July 23, 1998 adoption of a stockholder rights plan.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned; thereunto duly authorized, in the City of Tulsa, Oklahoma, on
November 13, 1998.
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
By: /s/ JOSEPH E. CAPPY
-----------------------
Name: Joseph E. Cappy
Title: President and Principal Executive Officer
By: /s/ STEVEN B. HILDEBRAND
-------------------------
Name: Steven B. Hildebrand
Title: Vice President, Principal Financial Officer
and Chief Accounting Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
3.2 By-Laws of the Company, as amended, which became
effective September 24, 1998.
10.3 Employment Continuation Agreement between Dollar Thrifty
Automotive Group, Inc. and
Joseph E. Cappy, dated September 29, 1998.
10.4 Employment Continuation Plan for Key Employees of
Dollar Thrifty Automotive Group, Inc.,
which became effective September 29, 1998.
27.1 Financial Data Schedule (EDGAR version only)
Revised as of September 24, 1998
EXHIBIT 3.1
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meetings. An annual meeting of stockholders shall be held
to elect directors and transact any other business properly brought before the
meeting. The Board of Directors shall designate the date, time and place of the
meeting.
Section 2. Special Meetings. Special meetings of stockholders may be called
by the Board of Directors, the Chairman of the Board, or a Vice Chairman of the
Board for any proper purpose or purposes. The Board of Directors or the officer
calling the meeting shall designate the date, time and place of the meeting.
Only the business stated in the meeting notice shall be conducted at a special
meeting.
Section 3. Notice of Meeting. The Secretary shall give written notice of an
annual or special meeting to stockholders of record entitled to vote at the
meeting. The notice shall be directed to the stockholder's address as it appears
on the Corporation's records and shall state the date, time and place of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called. Unless otherwise provided by law, the notice shall be
given not less than ten nor more than sixty days before the date of the meeting.
When a meeting of stockholders is adjourned to another date, time or place,
notice need not be given of the adjourned meeting if the date, time and place
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the adjournment is for more than thirty days or if,
after the adjournment, a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. At the adjourned meeting any business may be
transacted which may have been transacted at the original meeting.
Section 4. Quorum. The holders of a majority of the shares of capital stock
issued and outstanding and entitled to vote at the meeting, present in person or
by proxy, shall constitute a quorum for all purposes, unless a larger number
shall be required by law, the Certificate of Incorporation or these By-Laws. In
the absence of a quorum, the holders of a majority of the shares so present may
adjourn the meeting from time to time as provided in Section 3 of this Article,
until a quorum is obtained.
Section 5. Qualifications to Vote. Only stockholders whose shares are
registered in their names on the Corporation's stock transfer records at the
close of business on the record date fixed in accordance with Article V of these
By-Laws for a stockholders meeting shall be entitled to vote at such meeting.
The Secretary shall prepare at least ten days before every meeting of
stockholders a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
The list shall be available for inspection by stockholders during ordinary
business hours, for any purpose germane to the meeting, for at least ten days
before the meeting. The list shall be available at the meeting site or at
another place within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting. The list shall be available for
inspection at the meeting site during the meeting.
Section 6. Organization. The Chairman of the Board or, in his absence, a
Vice Chairman of the Board shall preside over stockholder meetings. In the
absence of those individuals, the stockholders present at the meeting shall
elect a person to preside as chairman of the meeting. The Secretary of the
Corporation shall act as secretary of all meetings of stockholders. In the
absence of the Secretary, the chairman of the meeting may appoint any person to
act as secretary of the meeting.
Section 7. Voting. Except as otherwise provided by law or the Certificate
of Incorporation, a stockholder entitled to vote at a meeting of stockholders
shall be entitled to one vote for each share of stock registered in the
stockholder's name on the Corporation's stock transfer records at the close of
business on the record date established for the meeting. Directors shall be
elected by a plurality of the votes cast at the meeting. Unless otherwise
provided by law, the Certificate of Incorporation or these By-Laws, any other
matter shall be decided by the affirmative vote of the holders of a majority of
the total number of shares of stock present in person or represented by proxy
and entitled to vote on such matter. The vote for Directors and, upon the demand
of any stockholder, the vote upon any other matter before the meeting, shall be
by ballot. No proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
Section 8. Inspectors. At each meeting of stockholders, the polls shall be
opened and closed, the proxies and ballots shall be received and taken in
charge, and all questions touching the qualifications of voters, the validity of
proxies and the acceptance or rejection of votes shall be decided by two or more
Inspectors. Such Inspectors shall be appointed by the Board of Directors before
the meeting or, if no such appointment shall have been made, then by the
presiding officer at the meeting. If, for any reason, any of the Inspectors
previously appointed shall fail to attend, or refuse or be unable to serve,
Inspectors in place of any so failing to attend, or refusing or unable to
attend, shall be appointed in like manner.
Section 9. Procedures Governing Business of Meetings of Stockholders. At an
annual meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly brought
before an annual meeting, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary. To be timely, a stockholder's notice must
be delivered to or mailed and received at the principal executive offices of the
Corporation, not less than 60 days nor more than 90 days prior to the
anniversary of the last annual meeting of the stockholders; provided, however,
that in the event that less than 70 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in these By-Laws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 9. The Chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section 9, and if he should so determine, the Chairman shall
so declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
Section 10. Notice of Stockholder Nominations. Only persons who are
nominated in accordance with the procedures set forth in this Section 10 shall
be eligible for election as Directors by the stockholders. Nominations of
persons for election to the Board of Directors of the Corporation may be made at
a meeting of stockholders by or at the direction of the Board of Directors or by
any stockholder of the Corporation entitled to vote for the election of
Directors at the meeting who complies with the notice procedures set forth in
this Section 10. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 60 days nor more than 90 days prior to the anniversary of the last
annual meeting of stockholders; provided, however, that in the event that less
than 70 days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the 10th day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or re-election as
a Director, (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the Corporation which are beneficially owned by
such person and (iv) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of Directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including without limitation such
person's written consent to being named in the proxy statement as a nominee and
to serving as a Director if elected); and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Corporation's books, of
such stockholder and (ii) the class and number of shares of the Corporation
which are beneficially owned by such stockholder. At the request of the Board of
Directors any person nominated by the Board of Directors for election as a
Director shall furnish to the Secretary, that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a Director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 10. The
Chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the procedures
prescribed by these By-Laws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
Section 11. Action by Consent. (a) Unless otherwise provided in the
Certificate of Incorporation, any action which is required to be or may be taken
at any annual or special meeting of stockholders of the Corporation, subject to
the provisions of subsections (b), (c), (d) and (e) of this Section 11, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall have been
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or to take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation as provided in this Section 11. Prompt
notice of the taking of the corporate action without a meeting and by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated written consent received by the Corporation in accordance with
this Section 11, a written consent or consents signed by a sufficient number of
holders to take such action are delivered to the Corporation in the manner
prescribed in this Section-11.
(c) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors shall fix a record date. Any stockholder of record seeking to have the
stockholders authorize or take corporate action by written consent without a
meeting shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. Upon receipt of such a request, the Secretary
shall, as promptly as practicable, call a special meeting of the Board of
Directors to be held as promptly as practicable, but in any event not more than
10 days following the date of receipt of such a request. At such meeting, the
Board of Directors shall fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which date shall not be more than 10 days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. Notice of the record date shall be published in accordance with the
rules and policies of the principal stock exchange in the United States on which
securities of the Corporation are then listed. If no record date has been so
fixed by the Board of Directors pursuant to this Section 11 or otherwise within
10 days of the date on which such a request is received, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the Delaware General Corporation Law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation pursuant to this Section 11. If no record date has
been fixed by the Board of Directors following observance of the procedures
described in this Section 11 and prior action by the Board of Directors is
required by the Delaware General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action.
(d) In the event of the delivery to the Corporation of a written consent or
consents, in the manner provided in this Section 11, purporting to represent the
requisite voting power to authorize or take corporate action and/or related
revocations, the Secretary shall provide for the safekeeping of such consents
and revocations and shall as promptly as practicable, engage nationally
recognized independent Inspectors for the purpose of promptly performing a
ministerial review of the validity of the consents and revocations. No action by
written consent without a meeting shall be effective until such Inspectors have
completed their review, determined that the requisite number of valid and
unrevoked consents delivered to the Corporation in accordance with this Section
11 has been obtained to authorize or take the action specified in the consents,
and certified such determination for entry in the records of the Corporation
kept for the purpose of recording the proceedings of meetings of stockholders.
Nothing contained in this Section 11 shall in any way be construed to suggest or
imply that the Board of Directors or any stockholder shall not be entitled to
contest the validity of any consent or revocation thereof, whether before or
after such certification by the independent Inspectors, or to take any other
action (including, without limitation, the commencement, prosecution, or defense
of any litigation with respect thereto, and the seeking of injunctive relief in
such litigation).
(e) For purposes of this Section 11, delivery to the Corporation shall be
effected by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The number of Directors shall be
fixed from time to time by the Board of Directors by resolution and the number
so fixed shall constitute the whole Board of Directors. Directors need not be
stockholders. Except as otherwise provided in the Certificate of Incorporation
or these By-Laws, Directors shall be elected by ballot at the annual meeting of
stockholders and shall continue in office until the next annual meeting and
until their successors shall have been elected and shall qualify. If the Board
of Directors increases the number of Directors at any time or from time to time,
the additional offices so created may be filled as vacancies by affirmative vote
of a majority of the Directors in office at the time such increase becomes
effective. The Directors elected to such additional offices shall serve until
the next annual meeting of stockholders and until their successors have been
elected and shall qualify.
Section 2. Removal and Vacancies. The stockholders may, at any special
meeting the notice of which shall state that it is called for that purpose,
remove any Director and fill the vacancy. Any vacancy not caused by such
removal, and any vacancy caused by such removal and not filled by the
stockholders at the meeting at which such removal shall have been made, may be
filled by the affirmative vote of a majority of the Directors in office,
although less than a quorum, when such vote is taken. The Director elected to
fill the vacancy shall serve until the next annual meeting of stockholders and
until his successor has been elected and shall qualify.
Section 3. Meetings and Consents in Lieu of Meetings. Meetings of the Board
of Directors shall be held on such dates, at such times and at such places
within or without the State of Delaware as the Board by resolution may from time
to time determine or as called by or at the order of the Chairman of the Board
or a Vice Chairman of the Board or by one-third of the Directors then in office.
The Secretary shall give notice of the date, time and place of each meeting by
mailing the same at least two days before the meeting, to each Director, but
such notice may be waived by any Director. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a meeting
if each of the Directors consents thereto in writing and the writing or writings
are filed with the minutes of proceedings of the Board.
Section 4. Quorum. One-third of the whole Board of Directors shall
constitute a quorum for the transaction of business and the vote of a majority
of the Directors present at a meeting at which a quorum is present shall be the
act of the Board. If at any meeting of the Board there be less than a quorum
present, a majority of those present may adjourn the meeting from time to time
without notice other than announcement at the meeting, until a quorum shall be
obtained. All Directors present at any meeting of the Board may be counted in
determining the presence of a quorum for all purposes and for all matters before
the meeting regardless of the interest a Director may have in any matter brought
before the meeting.
Section 5. Organization. At all meetings of the Board of Directors, the
Chairman of the Board or, in his absence, a Vice Chairman of the Board shall
preside. In the absence of the Chairman of the Board and a Vice Chairman of the
Board, the Directors present shall appoint a Chairman of the meeting.
Section 6. Compensation of Directors. Each Director not an officer or an
employee of the Corporation shall be entitled to receive such compensation for
his services as a director as the Board of Directors by resolution may from time
to time determine. Each Director, whether or not an officer or employee of the
Corporation, shall be entitled to reimbursement for all expenses incurred by him
in attending any meeting of the Board of Directors. Such compensation and
reimbursement for expenses shall be payable even though the meeting is adjourned
because of the absence of a quorum.
Section 7. Independent Directors. (a) A majority of the persons nominated
by the Board of Directors or any stockholder for election as Directors at the
annual meeting or any special meeting of stockholders of the Corporation shall
be, on the earlier of the date of their nomination or designation as nominees,
eligible to be classified as Independent Directors.
(b) If the Board of Directors acts to increase the number of Directors
pursuant to Section 1 of this Article or to fill vacancies pursuant to Section 2
of this Article, the majority of all Directors holding office immediately after
such action shall have been eligible to be classified as Independent Directors
on the earlier of the date of their nomination or designation as nominees for
election as Directors.
(c) For purposes of this Section 7, "Independent Director" shall mean a
Director who is not:
(i) an officer or senior executive employee of the Corporation (which, for
purposes of this Section 7, shall include all corporations a majority of the
voting stock of which is owned, directly or indirectly, by the Corporation) and
who has not been an officer or senior executive employee of the Corporation
within five years preceding the date of such person's nomination;
(ii) affiliated with any entity having a business relationship with the
Corporation so as to require description of such relationship pursuant to 17 CFR
229.404(b)(1)(2)(4) or (5), as in effect on June 10, 1993, in any proxy
statement utilized to solicit proxies for the election of Directors at the
annual meeting or any special meeting of stockholders of the Corporation;
(iii) a party or related to a party to a personal services contract with
the Corporation so as to require description of such contract pursuant to 17 CFR
229.404(a), as in effect on June 10, 1993, in any proxy statement utilized to
solicit proxies for the election of Directors at the annual meeting or any
special meeting of stockholders of the Corporation;
(iv) affiliated, as contemplated by the Securities Exchange Act of 1934, as
amended, with a tax-exempt entity that, during the Corporation's last fiscal
year, received contributions from the Corporation in excess of the lesser of
either three percent of the consolidated gross revenues of the Corporation
during its last fiscal year or five percent of the total contributions received
by such tax-exempt entity during its last fiscal year; or
(v) the spouse, parent, sibling or child of any person who, if such person
is or were to become a Director, would not qualify as an Independent Director
under (i), (ii) or (iv) above; and who is free of any other relationship which
would, in the opinion of the Board of Directors, interfere with the exercise of
independent judgment by such Director.
(d) The Board of Directors shall have the exclusive right, power and
authority to interpret and apply the provisions of this Section 7 and, in
interpreting and applying these provisions, the Board of Directors shall be
entitled to rely on the completeness and accuracy of information furnished by or
on behalf of any nominee for the purpose of enabling the Board of Directors to
make such interpretations and applications. Any such interpretations and
applications made in good faith shall be binding and conclusive upon all
stockholders of the Corporation.
ARTICLE III
COMMITTEES
Section 1. Committees. The Board of Directors, by a resolution passed by a
majority of the whole Board, may create from time to time one or more committees
to be constituted in such manner and to have such organization and powers as the
Board of Directors in such resolution shall provide. All of the members of any
such committee having any of the powers of the Board of Directors shall be
Directors, and the members of any such committee not having any of the powers of
the Board of Directors need not be Directors.
Section 2. Alternate Members. The Board of Directors, by a resolution
passed by a majority of the whole Board, may designate alternate members of any
committee who shall possess the same qualifications for eligibility as regular
members and who may replace any absent or disqualified member at any meeting of
the committee in the order, if any, designated in the resolution appointing such
alternate members.
Section 3. Committee Proceedings. A quorum for transacting business by any
committee shall be one-third of the number of members of the committee as then
constituted, not including the number of alternate members, but the alternate
members present at any meeting shall be counted for the purpose of determining
if a quorum is present at the meeting. The vote of a majority of the members,
including alternate members sitting as members, present at a meeting at which a
quorum is present shall be the act of the committee. All members present at any
meeting of a committee may be counted in determining the presence of a quorum
for all purposes and for all matters before the meeting regardless of the
interest a member may have in any matter brought before the meeting. Each of the
committees may appoint a secretary of the committee, who need not be a Director.
Each of the committees shall have power to fix the date, time and place of
holding its meetings and the method of giving notice thereof and to adopt its
own rules of procedure. Each of them shall keep minutes of all its meetings
which shall be open to the inspection of any Director at any time.
Section 4. Compensation. Each member of a committee, and each alternate
member of a committee, who is not an officer or an employee of the Corporation
shall be entitled to receive, for his services as a member or as an alternate
member of such committee, compensation in such amounts as the Board of Directors
by resolution may from time to time determine. Each member of a committee, and
each alternate member of a committee, whether or not an officer or an employee
of the Corporation, shall be entitled to reimbursement for all expenses incurred
by him in attending any meeting of such committee.
ARTICLE IV
OFFICERS
Section 1. Officers. The executive officers of the Corporation shall be a
Chairman of the Board, one or more Vice Chairmen of the Board, a President, one
or more Executive Vice Presidents, one or more Vice Presidents, a Controller, a
Treasurer and a Secretary. Any number of offices may be held by the same person.
All such officers shall be elected by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
stockholders. The Board of Directors may elect such other officers as they deem
necessary, who shall have such authority and shall perform such duties as the
Board of Directors from time to time prescribe. In its discretion, the Board of
Directors may leave any office unfilled.
Except as otherwise expressly provided in a contract duly authorized by the
Board of Directors, all officers and agents shall be subject to removal at any
time by the affirmative vote of a majority of the whole Board of Directors, and
all officers, agents and employees other than officers elected by the Board of
Directors shall hold office at the discretion of the Committee or of the
officers appointing them. Salaried officers shall devote their entire time,
skill and energy to the business of the Corporation unless the contrary is
expressly assented to by resolution of the Board of Directors.
Section 2. Powers and Duties of the Chairman of the Board. The Chairman of
the Board shall be the chief executive and policy officer of the Corporation
and, subject to the control of the Board of Directors, shall have general charge
and control of all the business and affairs of the Corporation. The Chairman
shall (i) preside at all meetings of stockholders and of the Board of Directors,
(ii) from time to time secure information concerning the business and affairs of
the Corporation and promptly communicate such information to the Board, (iii)
communicate to the Board all matters presented by any officer for its
consideration, and (iv) from time to time communicate to the officers such
action of the Board of Directors as may affect the performance of their official
duties.
Section 3. Powers and Duties of the Vice Chairmen of the Board. Each Vice
Chairman of the Board shall have such powers and perform such duties as may from
time to time be assigned to such office by these By-Laws, the Board of Directors
or the Chairman of the Board.
Section 4. Powers and Duties of the President. The President shall have
such powers and perform such duties as may from time to time be assigned to such
office by these By-Laws, the Board of Directors or the Chairman of the Board.
Section 5. Powers and Duties of the Executive Vice Presidents. Each
Executive Vice President shall have such powers and perform such duties as may
from time to time be assigned to such office by these By-Laws, the Board of
Directors or the Chairman of the Board.
Section 6. Powers and Duties of the Vice Presidents. Each Vice President
shall have such powers and perform such duties as may from time to time be
assigned to such office by these By-Laws, the Board of Directors or the Chairman
of the Board.
Section 7. Powers and Duties of the Controller. The Controller shall be the
principal officer in charge of the accounts of the Corporation, and shall
perform such duties as from time to time may be assigned to such office by the
Board of Directors or the Chairman of the Board.
Section 8. Powers and Duties of the Treasurer. The Treasurer shall have
custody of all the funds and securities of the Corporation and shall perform all
acts incident to the position of Treasurer, subject to the control of the Board
of Directors. When necessary or proper, the Treasurer may endorse or cause to be
endorsed on behalf of the Corporation for collection, checks, notes and other
obligations and shall deposit the same to the credit of the Corporation in such
bank or banks or depository or depositories as may have been designated by the
Board of Directors or by any officer authorized by the Board of Directors to
make such designation. Whenever required by the Board of Directors, the
Treasurer shall render a statement of the funds and securities of the
Corporation in his or her custody.
Section 9. Powers and Duties of the Secretary. The Secretary shall keep the
minutes of all meetings of the Board of Directors and the minutes of all
meetings of stockholders in books to be kept for that purpose. The Secretary
shall attend to the giving or serving of all notices of the Corporation and may
sign with any executive officer in the name of the Corporation, all contracts
authorized by the Board of Directors or by any committee of the Corporation
having the requisite authority and, when so ordered by the Board of Directors or
such committee, shall affix the seal of the Corporation thereto. The Secretary
shall have charge of the stock certificate books, transfer books and stock
ledgers and such other books and papers as the Board of Directors shall direct,
all of which shall at all reasonable times be open to the examination of any
Director at the offices of the Corporation during business hours. The Secretary
shall in general perform all the duties incident to the office of Secretary,
subject to the control of the Board of Directors.
Section 10. Powers and Duties of Additional Officers. The Board of
Directors or the Executive Committee may from time to time by resolution
delegate to any Assistant Controller or Controllers, any Assistant Treasurer or
Treasurers and/or any Assistant Secretary or Secretaries, elected by the Board,
any of the powers or duties herein assigned to the Controller, the Treasurer or
the Secretary, respectively.
Section 11. Giving of Bond by Officers. All officers of the Corporation, if
required to do so by the Board of Directors, shall furnish bonds to the
Corporation for the faithful performance of their duties, in such penalties and
with such conditions and security as the Board may require.
Section 12. Voting Upon Stocks. Unless otherwise ordered by the Board of
Directors, any executive officer shall have full power and authority on behalf
of the Corporation to attend, in person or by proxy, and to act and to vote at
any meetings of stockholders of any corporation in which the Corporation may
hold stock, and at or in connection with any such meetings shall possess and may
exercise any and all rights and powers incident to the ownership of such stock
which, as the owner thereof, the Corporation might have possessed and exercised
if present. The Board of Directors may, by resolution, from time to time, confer
like powers upon any other person or persons.
Section 13. Compensation of Officers. The officers shall be entitled to
receive such compensation for their services as may be determined from time to
time by the Board of Directors or, if the Board of Directors shall so authorize
and direct, by a committee of the Board of Directors.
ARTICLE V
CAPITAL STOCK -- SEAL -- FISCAL YEAR
Section 1. Certificates for Shares. Certificates for shares of the capital
stock of the Corporation shall be in such form not inconsistent with the
Certificate of Incorporation as shall be approved by the Board of Directors. The
certificates shall be signed by the Chairman of the Board or a Vice Chairman of
the Board and also by the Treasurer or an Assistant Treasurer and shall not be
valid unless so signed. If a certificate is countersigned (1) by a transfer
agent other than the Corporation or its employee, or (2) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be a facsimile. If any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as though such
person were such officer, transfer agent or registrar at the date of issue.
All certificates shall be consecutively numbered. The name of the person
owning the shares represented thereby with the number of such shares and the
date of issue thereof shall be entered in the Corporation's books.
Except as hereinafter provided, all certificates surrendered to the
Corporation shall be canceled and no new certificates shall be issued until
former certificates for the same number of shares of the same class shall have
been surrendered and canceled.
Section 2. Replacing Lost, Stolen, Destroyed or Escheated Stock
Certificates. The Board of Directors or any officer to whom the Board of
Directors has delegated authority, may authorize any transfer agent to issue at
any time and from time to time until otherwise directed new stock certificates
in the place of certificates previously issued by the Corporation, alleged to
have been lost, stolen or destroyed, upon receipt by the transfer agent of (a)
evidence of loss, theft or destruction (which may be the affidavit of the
applicant), (b) an undertaking to indemnify the Corporation and any transfer
agent and registrar of stock of the Corporation against claims that may be made
against it or them on account of the lost, stolen or destroyed certificate or
the issue of a new certificate, of such kind and in such amount (which may be
either a fixed or open amount) as the Board of Directors or authorized officer
or officers shall have authorized the transfer agent to accept, and (c) any
other documents or instruments that the Board of Directors or an authorized
officer may from time to time require.
The Board of Directors or any officer to whom the Board of Directors has
delegated authority, may authorize any transfer agent to issue at any time and
from time to time until otherwise directed new stock certificates, in the place
of certificates previously issued by the Corporation, representing shares of
stock of the Corporation which, together with all unclaimed dividends thereon,
are claimed and demanded by any State of the United States in accordance with
its escheat laws regarding unclaimed or abandoned property.
Section 3. Transfer of Shares. A stock transfer book shall be kept by the
Corporation or by one or more agents appointed by it, in which the shares of the
capital stock of the Corporation shall be transferred. Such shares shall be
transferred on the books of the Corporation by the holder thereof in person or
by his attorney duly authorized in writing, upon surrender and cancellation of
certificates for a like number of shares.
Section 4. Regulations. The Board of Directors shall have power and
authority to make all such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the Corporation.
The Board of Directors may appoint one or more transfer agents and
registrars of transfers and may require all stock certificates to bear the
signature of one of the transfer agents and of one of the registrars of
transfers so appointed.
Section 5. Fixing of Record Dates. In order to determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action (other than action by consent, which is the subject of
Article 1, Section 11 of these By-Laws), the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting, provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 6. Dividends. Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may declare dividends
from the surplus of the Corporation or from the net profits arising from its
business. Subject to the provisions of the Certificate of Incorporation of the
Corporation, the dividends on any class of stock of the Corporation, if
declared, shall be payable on dates to be fixed by the Board of Directors. If
the date fixed for the payment of any dividend shall in any year fall upon a
legal holiday, then the dividend payable on such date shall be paid on the next
day not a legal holiday.
Section 7. Corporate Seal. The Board of Directors shall provide a suitable
seal, containing the name of the Corporation, which seal shall be in the charge
of the Secretary. If and when so directed by the Board of Directors, a duplicate
of the seal may be kept and be used by the Treasurer, any Assistant Secretary or
any Assistant Treasurer.
Section 8. Fiscal Year. The fiscal year of the Corporation shall begin on
the first day of January and terminate on the thirty-first day of December in
each year.
ARTICLE VI
SIGNING OF CHECKS, NOTES, ETC.
All checks, drafts, bills of exchange, notes or other obligations or orders
for the payment of money shall be signed by such officer or officers or employee
or employees of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors or by any officer of the
Corporation authorized by resolution of the Board of Directors to make such
determinations.
ARTICLE VII
AMENDMENTS
These By-Laws may be altered, amended or repealed, or new By-Laws may be
adopted, by the Board of Directors or by the stockholders as provided in the
Certificate of Incorporation.
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
Joseph E. Cappy (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
sue 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 sue 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/ JOSEPH E. CAPPY
-------------------
Executive
Dollar Thrifty Automotive Group, Inc.
By:/s/ STEVEN B. HILDEBRAND
---------------------------
Title: Vice-President and
Chief Financial Officer
<PAGE>
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.
<PAGE>
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 Joseph E. Cappy (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
EMPLOYMENT CONTINUATION PLAN FOR KEY EMPLOYEES
OF
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
1. General Statement of Purpose. With the high level of
corporate acquisition and restructuring activity over the past several years,
employees are understandably concerned about their careers and their personal
financial security. As a result, even rumors of acquisitions and restructuring
cause employees to consider major career changes in an effort to assure
financial security for themselves and their families.
This Employment Continuation Plan for Key Employees of Dollar
Thrifty Automotive Group, Inc. (the "Plan") is designed to assure fair treatment
of Key Employees (as defined below) in the event of a Change in Control (as
defined below). In such circumstances, it would permit Key Employees to make
critical career decisions in an atmosphere free of time pressure and financial
uncertainty, increasing their willingness to remain with Dollar Thrifty
Automotive Group, Inc. (the "Company") notwithstanding the outcome of a possible
Change in Control.
2. Effective and Termination Dates. The Plan shall be
effective as of September 29, 1998, and will automatically terminate as of the
later of (i) the close of business on December 31, 1999, or (ii) the expiration
of the Employment Continuation Period (the "Term"); provided, however, that (A)
commencing on January 1, 2000 and each January 1 thereafter, the Term will
automatically be extended for an additional year unless, not later than
September 30 of the immediately preceding year, the Company shall have given
notice that it does not wish to have the Term extended.
3. Definitions. Where the following words and phrases appear
in the Plan, they shall have the respective meanings set forth below, unless
their context clearly indicates otherwise:
a. Base Pay. The term "Base Pay" means, with respect to each
Key Employee, the greatest of (i) the Key Employee's annual fixed or
base salary as in effect for the Key Employee immediately prior to the
occurrence of a Change in Control, or (ii) an amount equal to the
average of the Key Employee's annual fixed or base compensation as in
effect for the Key Employee during the two fiscal years immediately
preceding the fiscal year in which the Change in Control occurs, or
(iii) the Key Employee's annual fixed or base salary as in effect for
the Key Employee immediately prior to his termination of employment.
b. Board. The term "Board" shall mean the board of directors
of the Company.
c. Cause. The term "Cause" shall mean that, prior to any
termination of employment pursuant to Section 4(b), the Key Employee
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;
(ii) intentional wrongful damage to property of the
Company; or
(iii) intentional wrongful disclosure of secret
processes or confidential information of the Company;
and any such act shall have been materially harmful to the Company or
any Subsidiary. For purposes of the Plan, no act or failure to act on
the part of the Key Employee 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 Key
Employee 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 Key Employee shall not be deemed to
have been terminated for "Cause" hereunder unless and until there shall
have been delivered to the Key Employee 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 Key Employee and an opportunity
for the Key Employee, together with his counsel (if the Key Employee
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
Key Employee had committed an act constituting "Cause" as herein
defined and specifying the particulars thereof in detail. Nothing
herein will limit the right of the Key Employee or his beneficiaries to
contest the validity or propriety of any such determination.
d. Change in Control. The term "Change in Control" shall mean
the occurrence 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 3(d)(iii) or
3(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 3(d)(iii) or 3(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. The term "Competitive Activity" shall
mean 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. Code. The term "Code" shall mean the Internal Revenue Code
of 1986, as amended.
g. Committee. The term "Committee" shall mean the Human
Resources and Compensation Committee of the Board.
h. Company. The term "Company" shall mean the Company and its
Subsidiaries.
i. Employee Benefits. The term "Employee Benefits" shall mean
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 the Key Employee 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.
j. Employment Continuation Pay. The term "Employment
Continuation Pay" shall mean the amount payable as set forth in Section
5(a) of the Plan.
k. Employment Continuation Period. The term "Employment
Continuation Period" shall mean 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 Key Employee's death.
l. ERISA. The term "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
m. Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
n. Incentive Pay. "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
Key Employee (whether or not funded) of the Company, or any successor
thereto.
o. Key Employee. The term "Key Employee" shall mean any
employee of the Company who is (i) identified on Annex A or (ii)
identified on Annex B hereto, and who consents in writing to be subject
to the provisions of Section 9(b) and (c) of the Plan. Notwithstanding
the foregoing, employees who would otherwise be Key Employees shall not
be Key Employees for purposes of the Plan if they have entered into an
employment agreement, employment continuation agreement or similar
arrangement (other than the Dollar Thrifty Automotive Group, Inc.
Employment Continuation Plan) with the Company providing for the
payment of employment continuation compensation in specified
circumstances following a Change in Control. In addition, the term "Key
Employee" shall include such other employees of the Company as shall be
designated in writing by, or in minutes of the actions of, the
Committee.
p. Retirement Plans. The term "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 Key Employee.
q. Subsidiary. The term "Subsidiary" shall mean a Company,
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.
4. Eligibility Under The Plan.
a. Subject to the limitations described below, the Plan
applies to Key Employees who are employed on the date that a Change in
Control occurs. Subject to Section 2, the Company (acting through the
Committee) reserves the right, at any time prior to the occurrence of a
Change in Control, to amend, modify, change or terminate the Plan with
or without notice or any liability to Key Employees, provided, however,
that no such amendment, modification, change or termination which
adversely affects the rights of any Key Employee shall be effective
with respect to such Key Employee if such amendment, modification,
change or termination otherwise would become effective following the
commencement of any action by or discussion with a third person that
ultimately results in a Change in Control for purposes of this Plan. A
Key Employee will be eligible for Employment Continuation Pay and other
benefits under the Plan ("Employment Continuation Compensation") in
accordance with Sections 4(b) and 4(c).
b. A Key Employee who is listed on Annex A will be eligible
for Employment Continuation Compensation if, within three years after
the occurrence of a Change in Control:
(i) The Key Employee's employment with the Company is
terminated by the Company other than for Cause.
(ii) The Key Employee voluntarily terminates his
employment with the Company following the occurrence of any of the
following events:
(A) Failure to elect or reelect or otherwise
to maintain the Key Employee in the office or the
position, or a substantially equivalent office or
position, of or with the Company (or any successor
thereto by operation of law of or otherwise), as the
case may be, which the Key Employee held immediately
prior to a Change in Control, or the removal of the
Key Employee as a Director of the Company (or any
successor thereto) if the Key Employee shall have
been a Director of the Company immediately prior to
the Change in Control;
(B) (1) A significant adverse change in the
nature or scope of the authorities, powers,
functions, responsibilities or duties attached to the
position with the Company which the Key Employee held
immediately prior to the Change in Control, (2) a
reduction in the aggregate of the Key Employee's Base
Pay and Incentive Pay received from the Company, or
(3) the termination or denial of the Key Employee's
rights to employee benefits described in Section 5(b)
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 Key Employee of such change,
reduction or termination, as the case may be;
(C) A determination by the Key Employee
(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 Key Employee was responsible
immediately prior to the Change in Control, which has
rendered the Key Employee substantially unable to
carry out, has substantially hindered Key Employee's
performance of, or has caused the Key Employee to
suffer a substantial reduction in, any of the
authorities, powers, functions, responsibilities or
duties attached to the position held by the Key
Employee immediately prior to the Change in Control,
which situation is not remedied within 10 calendar
days after written notice to the Company from the Key
Employee of such determination;
(D) 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 Plan pursuant to Section 15;
(E) The Company relocates its principal
executive offices (if such offices are the principal
location of Key Employee's work), or the Subsidiary
with which the Key Employee is employed relocates its
principal executive offices, or the Company requires
the Key Employee 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 Key Employee 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 the Key Employee during the three full years
immediately prior to the Change in Control without,
in either case, his prior written consent; or
(F) Without limiting the generality or
effect of the foregoing, any material breach of this
Plan 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 Key Employee of such breach.
c. A Key Employee who is listed on Annex B will be eligible
for Employment Continuation Compensation if, within three years after
the occurrence of a Change in Control, (i) the Key Employee' employment
with the Company is terminated by the Company other than for Cause or
(ii) there occurs a reduction in the aggregate of the Key Employee=s
Base Pay and Incentive Pay received from the Company.
5. Employment Continuation Compensation.
a. Employment Continuation Pay.
(i) Subject to Section 9, each Key Employee who is
listed on Annex A and who is terminated in accordance with
Section 4(b) shall, within five (5) business days after such
termination, receive Employment Continuation Pay from the
Company in a lump sum payment in an amount equal to (A) the
sum of the Key Employee's amount of Base Pay and Incentive
Pay, multiplied by (B) two, provided, however, if the Key
Employee's employment terminates under Section 4(b)(ii)(E),
such Employment Continuation Pay shall equal (X) the sum of
the Key Employee's Base Pay and Incentive Pay, multiplied by
(Y) one.
(ii) Subject to Section 9, each Key Employee who is
listed on Annex B and who is terminated in accordance with
Section 4(c) shall, within five (5) business days after such
termination, receive Employment Continuation Pay from the
Company in a lump sum payment in an amount equal to (A) the
sum of the Key Employee's amount of Base Pay and Incentive
Pay, multiplied by (B) one.
(iii) Without limiting the rights of any Key Employee
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.
b. Health and Life Benefits. For the number of years for which
Employment Continuation Pay is paid in accordance with Section 5(a)
(the "Continuation Period"), the Company will arrange to provide the
Key Employee 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 Key
Employee was receiving or entitled to receive immediately prior to his
termination of employment (or, if greater, immediately prior to the
reduction, termination or denial described in Section 4(b)(ii)(B)),
except at the level of any such Employee Benefits to be provided to the
Key Employee 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 Section, the Key Employee will be required to pay the same cost of
coverage, co-pays, deductibles and other similar payments paid by the
Key Employee immediately prior to the Change in Control. If and to the
extent that any benefit described in this Section 5(b) 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 Key Employee, his
dependants and beneficiaries, of such Employee Benefits along with, in
the case of any benefit described in this Section 5(b) 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 Key Employee or his
dependants 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 Plan, for
purposes of determining the period of continuation coverage to which
the Key Employee or any of his dependants 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 Key Employee's "qualifying event" shall be the
termination of the Continuation Period and the Key Employee shall be
considered to have remain actively employed on a full-time basis
through that date. Without otherwise limiting the purposes or effect of
Section 6, Employee Benefits otherwise received by the Key Employee
pursuant to this Section 5(b) will be reduced to the extent comparable
welfare benefits are actually received by the Key Employee from another
employer during the Continuation Period following the Key Employee's
termination of employment, and any such benefits actually received by
the Key Employee shall be reported by the Key Employee to the Company.
c. Stock Options and Equity Awards. Upon a Key Employee's
termination of employment pursuant to Sections 4(b) or 4(c), as
applicable, all stock options and equity awards granted prior to a
Change in Control to the Key Employee pursuant to the Dollar Thrifty
Automotive Group, Inc. Long-Term Incentive Plan, or any successor or
similar plan, shall be vested.
d. Outplacement Services. Each Key Employee who is terminated
in accordance with Section 4(b) shall be reimbursed by the Company for
reasonable expenses incurred for outplacement counseling (i) which are
pre-approved by the Administrator, (ii) which do not exceed 20% of the
Key Employee's Base Pay and (iii) which are incurred by the Key
Employee within twelve (12) months following such termination.
e. Company Car. During the Continuation Period, the Company
will arrange to provide each Key Employee 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.
6. Certain Additional Payments by the Company.
a. Anything in this Plan to the contrary notwithstanding, in
the event that this Plan 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 Key
Employee, whether paid or payable or distributed or distributable
pursuant to the terms of this Plan 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
Key Employee 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
Plan, 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
Key Employee 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 Key Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
b. Subject to the provisions of Section 6(f), all
determinations required to be made under this Section 6, including
whether an Excise Tax is payable by the Key Employee and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid
by the Company to the Key Employee 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 Key Employee in his sole
discretion. The Key Employee shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Company and the Key Employee 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 Key Employee. If the Accounting
Firm determines that any Excise Tax is payable by the Key Employee, the
Company shall pay the required Gross-Up Payment to the Key Employee
within five business days after receipt of such determination and
calculations with respect to any Payment to the Key Employee 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 payments shall
reduce the amount of the Gross-Up Payment payable to the Key Employee.
If the Accounting Firm determines that no Excise Tax is payable by the
Key Employee, it shall, at the same time as it makes such
determination, furnish the Company and the Key Employee an opinion that
the Key Employee 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 6(f) and the Key
Employee thereafter is required to make a payment of any Excise Tax,
the Key Employee 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 Key Employee as promptly as possible. Any such Underpayment
shall be promptly paid by the Company to, or for the benefit of, the
Key Employee within five business days after receipt of such
determination and calculations.
c. The Company and the Key Employee shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Key Employee, 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 6(b). Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and the Key
Employee.
d. The federal, state and local income or other tax returns
filed by the Key Employee 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 Key Employee. The Key Employee 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 Key Employee'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 Key Employee 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 6(b) shall be borne by the Company. If such
fees and expenses are initially paid by the Key Employee, the Company
shall reimburse the Key Employee the full amount of such fees and
expenses within five business days after receipt from the Key Employee
of a statement therefor and reasonable evidence of his payment thereof.
f. The Key Employee 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 Key Employee
actually receives notice of such claim and the Key Employee 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 Key Employee). The Key Employee 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 Key Employee in writing prior to
the expiration of such period that it desires to contest such claim,
the Key Employee 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
Key Employee, 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
6(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 6(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 Key
Employee may participate therein at his own cost and expense) and may,
at its option, either direct the Key Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner,
and the Key Employee 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 Key
Employee to pay the tax claimed and sue for a refund, the Company shall
advance the amount of such payment to the Key Employee on an
interest-free basis and shall indemnify and hold the Key Employee
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 Key Employee 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 Key Employee 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 Key Employee of an amount
advanced by the Company pursuant to Section 6(f), the Key Employee
receives any refund with respect to such claim, the Key Employee shall
(subject to the Company's complying with the requirements of Section
6(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 Key Employee of an amount advanced by the Company
pursuant to Section 6(f), a determination is made that the Key Employee
shall not be entitled to any refund with respect to such claim and the
Company does not notify the Key Employee 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 Key Employee
pursuant to this Section 6.
7. Mitigation. A Key Employee shall not be required to
mitigate the amount of any payment or benefit provided for in the Plan by
seeking other employment or otherwise.
8. Timing of Employment Continuation Pay, etc. Employment
Continuation Pay shall not be included as earnings for the purpose of
calculating contributions or benefits under any employee benefit plan of the
Company. Employment Continuation Pay shall not be made from any benefit plan
funds, and shall constitute an unfunded unsecured obligation of the Company.
Employment Continuation Pay shall be paid in a lump sum on the date of
termination or promptly thereafter. Employment Continuation Pay shall be net of
any income, excise or employment taxes which are required to be withheld from
such payment.
9. Competitive Activity; Confidentiality; Nonsolicitation. (a)
During the Continuation Period, if the Key Employee shall have received or shall
be receiving Employment Continuation Pay under Section 5, the Key Employee 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 Plan.
(b) During the Term, the Company has disclosed to the Key
Employee its confidential or proprietary information (as defined in this Section
9(b)) to the extent necessary for the Key Employee to carry out his obligations
to the Company. As a condition to his receipt of benefits pursuant to the Plan,
each Key Employee shall covenant and agree that he will not, without the prior
written consent of the Company, during the Continuation Period 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 Plan, 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 the Key Employee'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 Key Employee, generally known to the public or (iii) if the Key
Employee is required by law to make disclosure (after giving the Company notice
and an opportunity to contest such requirement).
(c) As a condition to his receipt of benefits pursuant to the
Plan, each Key Employee shall covenant and agree that during the Continuation
Period the Key Employee will not, without the prior written consent of the
Company, which consent shall not unreasonably be withheld, on behalf of the Key
Employee 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. Release. Payment of the employment continuation
compensation set forth in Section 5 and the Additional Payment set forth in
Section 6 is conditioned upon the Key Employee executing and delivering a
Release and Agreement (the "Release") substantially in the form provided in
Annex C.
11. Funding; Professional Fees and Expenses.
(a) It is the intent of the Company that the Key Employees 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 his rights under this Plan by litigation or otherwise because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Key Employees hereunder. Accordingly, if it should appear to any
Key Employee that the Company has failed to comply with any of its obligations
under this Plan or in the event that the Company or any other person takes or
threatens to take any action to declare this Plan void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Key Employee the benefits provided or intended to be provided
to the Key Employee hereunder, the Company irrevocably authorizes the Key
Employee from time to time to retain one or more professionals of the Key
Employee's choice, at the expense of the Company as hereafter provided, to
advise and represent the Key Employee 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 Key Employee's entering into a relationship with any
such professional, and in that connection the Company and the Key Employee agree
that a confidential relationship shall exist between the Key Employee and any
such professional. Without respect to whether the Key Employee 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 feesand related
expenses incurred by the Key Employee in connection with any of the foregoing.
(b) Without limiting the obligations of the Company pursuant
to this Plan, in the event a Change in Control occurs, the performance of the
Company's obligations under this Plan 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 Key Employees pursuant to Section 5, and the
Gross-Up Payment to the Key Employees pursuant to Section 6, and providing that
the reasonable fees and related expenses of one or more professionals selected
from time to time by the Key Employees pursuant to Section 11(a) shall be paid,
or reimbursed to the Key Employees if paid by the Key Employees, either in
accordance with the terms of such trust agreements, or, if not so provided, on a
regular, periodic basis upon presentation by the Key Employees 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 Key
Employees 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) for the benefit of Key Employees listed on Annex
A only, 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 Key
Employees listed on Annex A under the provisions of Sections 5
and 6, such present value to be computed using a discount rate
of 8%, less (II) the balance in the Key Employees' 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 Plan; and
(B) transfer to the trustees to be added to the
principal of the trusts under the trust agreements the sum 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 11(a). Any
payments of the Key Employees' 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 11(a). The Key Employees
understand and acknowledge that the corpus of the trust, or
separate portion thereof, dedicated to the payment of the
Company's obligations under Section 11(a) will be $500,000 and
that such amount will be available to discharge not only the
obligations of the Company to the Key Employees under Section
11(a), but also similar obligations of the Company to other
Key Employees and employees under similar provisions of other
agreements.
(c) Subject to the foregoing, the Key Employees shall have the
status of general unsecured creditors of the Company and shall have no right to,
or security interest in, any assets of the Company or any Subsidiary.
12. Employment Rights. Nothing expressed or implied in the
Plan shall create any right or duty on the part of the Company or any Key
Employee to have the Key Employee remain in the employment of the Company at any
time prior to a Change in Control. Any termination of employment of any Key
Employee or the removal of any Key Employee from the office or position in the
Company prior to a Change in Control but following the commencement of any
discussion with any third person that ultimately results in a Change in Control
shall be deemed to be a termination or removal of the Key Employee after a
Change in Control for purposes of the Plan.
13. Withholding of Taxes. The Company may withhold from any
amounts payable under the Plan all federal, state, city or other taxes as shall
be required pursuant to any law or government regulation or ruling.
14. Coordination with Other Payments. If any Key Employee
becomes entitled to receive payments under the Plan as a result of his
termination of employment, those payments will be in lieu of any and all other
claims or rights that the Key Employee 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), 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).
15. Successors and Binding Effect.
a. The Company shall require any successor, (including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business and/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 the Plan), to assume and agree to perform the obligations under the
Plan in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. The Plan
shall be binding upon and inure to the benefit of the Company and any
successor to the Company, but shall not otherwise be assignable,
transferable or delegable by the Company.
b. The rights under the Plan shall inure to the benefit of and
be enforceable by the Key Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
c. The rights under the Plan are personal in nature and
neither the Company nor any Key Employee shall, without the consent of
the other, assign, transfer or delegate the Plan or any rights or
obligations hereunder except as expressly provided in this Section.
Without limiting the generality of the foregoing, a Key Employee's
right to receive payments hereunder shall not be assignable,
transferable or delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his or her will or
by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section, the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
d. The obligation of the Company to make payments and/or
provide benefits hereunder shall represent an unsecured obligation of
the Company.
e. The Company and each Key Employee recognize that each party
will have no adequate remedy at law for breach by the other of any of
the agreements contained herein and, in the event of any such breach,
the Company and each Key Employee hereby agree and consent that the
other shall be entitled to a decree of specific performance, mandamus
or other appropriate remedy to enforce performance of obligations under
the Plan.
16. Governing Law. The validity, interpretation, construction
and performance of the Plan shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws of such
State.
17. Validity. If any provisions of the Plan or the application
of any provision hereof to any person or circumstance is held invalid,
unenforceable or otherwise illegal, the remainder of the Plan and the
application of such provision to any other person or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
18. Captions. The captions in the Plan are for convenience of
reference only and do not define, limit or describe the scope or intent of the
Plan or any part hereof and shall not be considered in any construction hereof.
19. Construction. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender and the singular shall be
deemed to include the plural, unless the context clearly indicates to the
contrary.
20. Administration of the Plan.
a. In General. The Plan shall be administered by the
Committee, which shall be named fiduciary under the Plan. The Committee
shall have the sole and absolute discretion to interpret where
necessary all provisions of the Plan (including, without limitation, by
supplying omissions from, correcting deficiencies in, or resolving
inconsistencies or ambiguities, in the language of the Plan), to
determine the rights and status under the Plan of Key Employees or
other persons, to resolve questions or disputes arising under the Plan
and to make any determinations with respect to the benefits payable
hereunder and the persons entitled thereto as may be necessary for the
purposes of the Plan. Without limiting the generality of the forgoing,
the Committee is hereby granted the authority (i) to determine whether
a particular employee is a "Key Employee" under the Plan and (ii) to
determine whether a particular Key Employee is eligible for Employment
Continuation Compensation and other benefits under the Plan.
b. Delegation of Duties. The Committee may delegate any of its
administrative duties, including, without limitation, duties with
respect to the processing, review, investigation, approval and payment
of Employment Continuation Compensation, to a named administrator or
administrators (the "Administrator").
c. Regulations. The Committee shall promulgate any rules and
regulations it deems necessary in order to carry out the purposes of
the Plan or to interpret the terms and conditions of the Plan;
provided, however, that no rule, regulation or interpretation shall be
contrary to the provisions of the Plan.
d. Claims Procedure. The Committee shall determine the rights
of any employee of the Company to any Employment Continuation
Compensation hereunder. Any employee or former employee of the Company
who believes that he is entitled to receive Employment Continuation
Compensation under the Plan, including other than that initially
determined by the Committee, may file a claim in writing with the
Administrator. The Committee shall, no later than ninety (90) days
after the receipt of a claim, either allow or deny the claim by written
notice to the claimant. If a claimant does not receive written notice
of the Committee's decision on his claim within such 90-day period, the
claim shall be deemed to have been denied in full.
A denial of a claim by the Committee, wholly or partially, shall be
written in a manner calculated to be understood by the claimant and
shall include:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent Plan provisions
on which the denial is based;
(iii) a description of any additional material or
information necessary for the claimant to perfect the claim
and an explanation of why such material or information is
necessary; and
(iv) an explanation of the claim review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may, within thirty (30) days after receipt of denial of
his claim, request a review of such denial by the Committee by filing
with the Administrator a written request for review of his claim. If
the claimant does not file a request for review with the Administrator
within such 30-day period, the claimant shall be deemed to have
acquiesced in the original decision of the Committee on his claim. If a
written request for review is so filed within such 30-day period, the
Committee shall conduct a full and fair review of such claim. During
such full review, the claimant shall be given the opportunity to review
documents that are pertinent to his claim and to submit issues and
comments in writing. The Committee shall notify the claimant of its
decision on review within sixty (60) days after receipt of a request
for review. Notice of the decision on review shall be in writing. If
the decision on review is not furnished to the claimant within such
60-day period, the claim shall be deemed to have been denied on review.
e. Revocability of Action. Any action taken by the Committee
with respect to the rights or benefits under the Plan of any employee
shall be revocable by the Committee as to payments or distributions not
yet made to such person, and acceptance of Employment Continuation
Compensation under the Plan constitutes acceptance of and agreement to
the Company making any appropriate adjustments in future payments or
distributions to such person to offset any excess or underpayment
previously made to him.
f. Execution of Receipt. Upon receipt of any Employment
Continuation Compensation hereunder, the Committee reserves the right
to require any Key Employee to execute a receipt evidencing the amount
and payment of such Employment Continuation Compensation.
IN WITNESS WHEREOF, Joseph E. Cappy has caused the Plan to be
executed this 29th day of September, 1998.
ATTEST: Dollar Thrifty Automotive Group, Inc.
/s/ STEPHEN W. RAY By: /s/ JOSEPH E. CAPPY
------------------ -----------------------
Stephen W. Ray Title: Chairman and Chief Executive Officer
Secretary
<PAGE>
EMPLOYMENT CONTINUATION PLAN FOR KEY EMPLOYEES
OF
DOLLAR THRIFTY AUTOMOTIVE GROUP
Annex A
Key Employees
Donald M. Himelfarb
Gary L. Paxton
Steven B. Hildebrand
Jeffrey B. Higgs
Peter G. Guptill
John J. Foley
Lloyd St. Clair
R. Scott Anderson
Jay A. Betz
Randall J. Holder
Yves Boyer
<PAGE>
EMPLOYMENT CONTINUATION PLAN FOR KEY EMPLOYEES
OF
DOLLAR THRIFTY AUTOMOTIVE GROUP
Annex B
Key Employees
Richard Halbrook
James Senese
Dean W. Strickland
Vicki J. Vaniman
Frederick Fleischner
Mario L. Nargi
Robert Drvostep
Jeffrey Cerefice
David Sparkman
Todd Shackelford
Pamela S. Peck
James R. Ryan
Thomas Adams
James Duffy
Lynne Pritchard
Daniel Regan
Stewart Brown
Scott Pearson
Matt Pellegrino
Paul Christensen
Lou DeSotel
Martin Hernandez
Alan Mattson
Victor Alonzi
Bob DuPont
Jeffrey Bevis
Robert S. Erickson
Scott Coulter
Bob Thunell
Bill McNeice
Meloyde Blancett-Scott
<PAGE>
Annex C
Form of Release and Agreement
WHEREAS, the Key Employee's employment has been terminated in
accordance with Section 4 of the Employment Continuation Plan for Key Employees
of Dollar Thrifty Automotive Group, Inc. dated as of , 1998, by and between (the
"Key Employee") and Dollar Thrifty Automotive Group, Inc. (the "Plan").
WHEREAS, the Key Employee is required to sign this Release in
order to receive the Employment Continuation Pay as described in Section 5 of
the Plan and the other benefits described in the Plan.
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
Key Employee 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 Key Employee pursuant to the Plan, which the Key Employee
acknowledges are in addition to payments and benefits which the Key Employee
would be entitled to receive absent the Plan, the Key Employee, 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 the Key Employee 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 the Key
Employee'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. The Key Employee 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 the Key Employee ever had or now may have against the Company to
the extent provided in this Release. The Key Employee further agrees and
acknowledges that no representations, promises or inducements have been made by
the Company other than as appear in the Plan.
4. The Key Employee 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 Dollar Thrifty Automotive Group, Inc.
For such revocation to be effective, written notice must be actually
received by the Secretary of Dollar Thrifty Automotive Group, Inc. no
later than the close of business on the seventh day after the Key
Employee executes this Release. If the Key Employee 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 the Key Employee as
set forth in the Plan and all benefits provided to the Key Employee
under the Plan prior to such revocation shall be recoverable by the
Company.
5. The Key Employee agrees that he will never file a lawsuit or other
complaint asserting any claim that is released in this Release.
6. The Key Employee 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. The Key Employee waives and releases any claim that he has or may
have to reemployment after __________________.
8. The Key Employee agrees to hold harmless the Company for and against
any and all costs or losses whatsoever, including reasonable attorney's fees,
caused by the Key Employee's breach of any obligation contained herein or if any
representation herein was false when made.
9. In consideration of being classified as a Key Employee under the
Plan, the undersigned hereby (i) acknowledges that a copy of the Plan has been
delivered to and read by him, and (ii) consents to the application of, and
agrees to be bound by the provisions of, Sections 9(b) and (c) of the Plan.
10. 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 Key Employee has executed and delivered this
Release and Agreement on the date set forth below.
Dated:_____________________ ___________________________________
Key Employee
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets as of September 30, 1998 and Consolidated Statements
of Operations and Condensed Consolidated Statements of Cash Flows for the Three
and Nine Months Ended September 30, 1998 and 1997 and is qualified in its
entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Sep-30-1998
<EXCHANGE-RATE> 1
<CASH> 108,051
<SECURITIES> 0
<RECEIVABLES> 122,091
<ALLOWANCES> 15,408
<INVENTORY> 1,626,472<F2>
<CURRENT-ASSETS> 0<F1>
<PP&E> 110,620
<DEPRECIATION> 46,164
<TOTAL-ASSETS> 2,158,593
<CURRENT-LIABILITIES> 0
<BONDS> 1,608,960
0
0
<COMMON> 241
<OTHER-SE> 311,786
<TOTAL-LIABILITY-AND-EQUITY> 2,158,593
<SALES> 0
<TOTAL-REVENUES> 693,210
<CGS> 0
<TOTAL-COSTS> 439,986
<OTHER-EXPENSES> 4,046
<LOSS-PROVISION> 4,436
<INTEREST-EXPENSE> 67,253
<INCOME-PRETAX> 62,051
<INCOME-TAX> 27,865
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,186
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.42
<FN>
<F1> Registrant's financial statements include an unclassified balance sheet.
<F2> Item refers to Revenue-earning vehicles,net.
</FN>
</TABLE>
