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EXHIBIT 10.31
BUDGET GROUP, INC.
EXECUTIVE AGREEMENT
This Executive Agreement ("Agreement") is dated as of January 1, 2000,
and is entered into by and between [▇▇▇▇▇/▇▇▇▇▇▇] ("Executive") and Budget
Group, Inc. ("Budget" or "Company"). Executive and Budget hereby agree to the
following terms and conditions:
1. Purpose of Agreement. The purpose of this Agreement is to
provide Executive specified benefits in the event of Executive's termination
under certain circumstances. It is believed that the existence of these
potential benefits will benefit Budget by discouraging turnover among
executives with Agreements, as well as causing such executives to be more able
to respond to the possibility of a "Change in Control" (as defined in Section
9) without being influenced by the potential effect of a Change in Control on
their job security.
2. Other Rights and Obligations. The rights and obligations of
Executive with respect to Executive's employment by Budget shall be whatever
rights and obligations are negotiated between Budget and Executive from time to
time. The existence of this Agreement, which deals only with certain rights and
obligations subsequent to a termination, shall not be treated as raising any
inference with respect to what rights and obligations exist prior to a
termination, or, except as specifically addressed in this Agreement, what
rights and obligations may exist after termination. Further, Executive shall
not, at any time after termination, be obligated to seek other employment in
mitigation of the amounts payable or other benefits provided for under any
provision of this Agreement and the obtaining of any such other employment
shall in no event effect any reduction of Budget's obligation to make the
payments and to provide the benefits required to be made and provided under
this Agreement, except to the extent provided for in Paragraph 7(c)(4).
3. Benefits Payable Upon Qualifying Termination and Execution of
a Release Agreement.
(a) Subject to Section 3(b), if a Qualifying Termination (as defined
in Section 4 below) occurs, the benefits described in Sections 6 and 7,
shall become payable to Executive. In that event, and notwithstanding
Section 11, this Agreement shall remain in effect until Executive receives
the various benefits to which Executive has become entitled under the
terms of this Agreement. If Executive's employment terminates and such
termination is not a Qualifying Termination, then this Agreement shall be
of no further force or effect.
(b) Notwithstanding any other provision of this Agreement, unless
Executive executes a Release Agreement (acceptable to Budget and
substantially in the form set forth in Exhibit I) within 21 days after a
Qualifying Termination (and does not
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revoke the Release Agreement within 7 days after signing it), (1) no
benefits under Section 6 or Section 7(d), or (f) of this Agreement shall
be paid or provided under any circumstances, (2) the benefits described in
Section 7(c) and (e) shall only be paid or provided for 30 days after a
Qualifying Termination , and (3) this Agreement shall be of no further
force and effect. Notwithstanding anything in this Agreement to the
contrary, if Executive fails or refuses to comply with the obligations
provided for in Sections 2 and 3 of the Release Agreement, or is in
violation of the representations and warranties provided for in Sections
4, 5 and 6 of the Release Agreement, Budget's obligations as provided for
in this Agreement shall immediately cease and terminate.
4. Qualifying Termination. If, during the term of this Agreement,
Executive's employment terminates, such termination shall be considered a
Qualifying Termination if any of the following events occurs:
(a) If Executive voluntarily terminates employment, for Good
Reason, within one year after the event giving rise to Good Reason or
Executive's employment terminates due to death or disability during such
one-year period. For purposes of this Agreement, "Disability" shall be
defined in accordance with Budget's long term disability plan and "Good
Reason" shall mean the occurrence of one of the following events without
Executive's prior written consent:
(1) The assignment to Executive of any duties
inconsistent in any material respect with Executive's
position, authority, duties and responsibilities as they
existed in their most significant form immediately prior to
such assignment or any other action by Budget which results
in a material diminution in such position, authority, duties
and responsibilities as they existed in their most
significant form immediately prior to such action, excluding
for purposes of this paragraph (1), (x) an assignment of
substantially equivalent position, authority, duties and
responsibilities; or (y) an isolated, insubstantial and
inadvertent assignment or action which is remedied by Budget
promptly after receipt of notice thereof given by Executive;
(2) Any reduction in (i) Executive's base salary; (ii)
Executive's ability to participate in or to receive benefits
from (without any incremental cost to Executive) incentive
plans, employee benefit plans, expense reimbursement
policies, or other fringe benefits, excluding changes by
Budget with respect to any such benefits which apply to all
executives; or (iii) incentive payments made pursuant to any
incentive program (which shall be deemed to be reduced
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if the annual incentive payments are less than the average
annual incentive paid to Executive during the term of this
Agreement); provided that, (x) an isolated, insubstantial and
inadvertent reduction in an element of Executive's total
compensation which is promptly remedied after notice by
Executive shall not be deemed a violation of this paragraph
(2), and (y) a reduction in one element of Executive's total
compensation shall not be deemed a violation of this
paragraph (2) if a counterbalancing increase in another
element of Executive's total compensation simultaneously
occurs;
(3) The transfer of Executive's job location from the
metropolitan Chicago area;
(4) A failure of Budget to comply with any of the
material provisions of the Employment Letter with Executive or
any subsequent or other employment arrangements with
Executive, which failure has not been cured within 30 days
after written notice from Executive to Budget.
(b) Executive is involuntarily terminated without "Cause"
during the term of this Agreement. For purposes of this Section, "Cause"
shall mean (1) an act or acts of dishonesty by Executive in connection with
Executive's employment; (2) any significant misconduct with or against
another employee, customer or other person, including conduct involving
moral turpitude, which causes or is likely to cause Budget embarrassment,
liability or damage; or (3) Executive's willful or gross negligent failure
to perform his assigned duties and/or to fulfill his responsibilities; or
(c) Executive terminates Executive's employment for any
reason whatsoever, including termination due to death or disability,
provided that the Termination Date occurs within one year after a Change in
Control occurs.
5. Notice of Termination. Any termination by Executive for Good
Reason, by Budget for Cause, or by Executive without any reason following a
Change in Control (other than termination due to Executive's death or
disability) shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 16. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the
provision so indicated and (iii) if the date of termination ("Termination
Date") is other than the date of receipt of such notice, specifies the
Termination Date. The Termination Date shall be the date of receipt of the
Notice or such later date specified in the Notice, which shall not be later
than 90 days after the giving of such Notice. The failure by Executive or
Budget to set forth in the Notice
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of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of Executive or Budget hereunder or
preclude Executive or Budget from asserting such fact or circumstance in
enforcing Executive's or Budget's rights hereunder. If Executive shall disagree
with the Notice of Termination, he may submit the dispute to arbitration in the
manner set forth in paragraph 15 hereafter.
6. Severance Payment. Subject to Section 3(b), in the event of a
Qualifying Termination, Budget shall pay Executive an amount equal to 3 times
the sum of (1) Executive's highest annual base salary rate in effect since
January 1, 2000 plus (2) the greater of i) annual average incentive payments
and bonuses (including those that are performance based, discretionary or
otherwise, but excluding those paid under any long-term incentive and stock
option plans) paid to Executive during the three years preceding the
Termination Date (provided that, if this Agreement has not been effect for
three years, the incentive payments and bonuses shall be based on the incentive
payments and bonuses paid to Executive since January 1,2000); and ii) the
Executive's annual target bonus or incentive opportunity established for the
year in which the Executive's Termination Date occurs. The amounts due
hereunder ("Severance Payment") shall be paid in cash to Executive in a single
lump sum (less applicable payroll deductions) within 30 days of the Termination
Date, and shall be in lieu of any other severance payment that Executive might
otherwise be entitled to from Budget under the terms of any other severance pay
arrangement or employment agreement.
7. Other Benefits. Subject to Section 3(b), in the event of a
Qualifying Termination, Executive shall be entitled to:
(a) Receive Executive's base salary and a pro rata portion of
Executive's target bonus through the Termination Date, less applicable
payroll deductions.
(b) Receive any unused vacation and holiday pay through the
Termination Date, less applicable payroll deductions.
(c) (1) Except as provided by law (including any
nondiscrimination rules) or by the relevant insurance carrier (after
reasonable efforts by the Company to provide coverage), continue
Executive's participation (and, where applicable, participation of
Executive's eligible dependents) in the medical, dental, life and
disability insurance benefit programs of Budget which had been made
available to Executive before the Qualifying Termination. This ability
to participate shall continue for a period of 36 months after the
Termination Date ("Completion Date"); if Executive dies prior to the
Completion Date, Executive's dependents, where applicable, may
continue participation until the Completion Date. In order to so
participate, Executive (or dependents, where applicable) shall pay to
Budget (with grace periods analogous to COBRA) the employee portion of
the cost of such benefits (such portion to be
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determined in the same manner as for any other executive participants).
Thereafter, Executive (or Executive's dependents, where applicable)
shall be entitled to elect COBRA coverage.
(2) If the law or the insurance carrier prevents Executive from
participating in a program described in this clause (c), Budget shall
make monthly cash payments to Executive (or Executive's dependents,
where applicable) equal to 102% of the entire monthly premium
(excluding the employee portion) applicable to such program until the
Completion Date. Executive (or Executive's dependents, where
applicable) shall be permitted to elect COBRA coverage for such
program (if allowed under the program).
(3) When coverage under each applicable plan expires, Executive
(or Executive's dependents, where applicable) shall retain the right
to purchase individual conversion policies with respect to any or all
of the benefits provided under said benefit plans to the maximum
extent permitted by law or by the group insurance policies providing
such benefits.
(4) Notwithstanding anything contained herein to the contrary,
the benefits provided for in this subparagraph (c), shall cease prior
to the Completion Date in the event Executive has available
substantially similar benefits at a comparable cost from a subsequent
employer.
(d) Receive contributions under the Budget Defined Contribution
Retirement Plan and Budget SavingsPlus (401(k)) Plan (the "Retirement
Plans") if required by the terms for the year in which the Qualifying
Termination occurs. In addition, to the extent any contributions to the
Retirement Plans are not made on behalf of Executive, but would have been
made had Executive remained employed until and including the Completion
Date and made the maximum Section 401(k) contributions under the Plan,
Budget shall pay directly to Executive cash in an amount and at the times
consistent with contributions made for other employees of Budget and in
accordance with the guidelines of the Retirement Plans. Other than the
foregoing, Executive is entitled to no other contribution on Executive's
behalf by Budget to any Budget pension or other retirement plan.
(e) Use of two (2) current model year luxury vehicles (the
"Vehicles") through the earlier of the Completion Date or Executive's
death; if Executive dies prior to the Completion Date, Executive's spouse,
if any, may continue to use one such Vehicle through the Completion Date.
During such period, Budget shall (1) provide Executive with collision
(with no deductible if the accident is not the fault of Executive and with
a $250 deductible if the accident is the fault of Executive) and
comprehensive automobile coverage during the time Executive has the
Vehicles, as well as primary automobile liability coverage in
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the amount of $50,000 bodily injury per person, $100,000 bodily injury
per accident and $25,000 property damage per accident, and (2) pay for
reasonable maintenance costs incurred by Executive with respect to the
Vehicles, including but not limited to periodic oil changes.
(f) Receive professional outplacement services, which services
shall be provided by a vendor of Budget's choice.
In the event of Executive's death, any cash payments due hereunder shall be
made to the beneficiary or beneficiaries so designated by Executive in a
writing delivered to the Secretary of Budget. If no such beneficiary has been
so designated, or if no designated beneficiary is in existence at the date of
Executive's death, payment shall be made to Executive's surviving spouse, if
any, or to Executive's estate if Executive has no surviving spouse.
8. Gross Up Provision.
(a) If any payment or benefit received or to be received by
Executive in connection with a Change in Control of Budget or the
termination of Executive's employment (whether payable pursuant to the
terms of this Agreement, a stock option plan or any other plan or
arrangement with Budget or with any person whose actions result in a
Change in Control of Budget or with any person affiliated with Budget or
such person (together with the Severance Payment, the "total payments")
will be subject to the excise tax imposed by Section 4999 of the Code,
Budget will pay to Executive, within 30 days of any payments giving rise
to the excise tax, an additional amount (the "gross up payment") such that
the net amount retained by Executive, after deduction of any excise tax on
the total payments and any federal and state and local income and
employment tax and excise tax on the gross up payment provided for in this
section, will equal the total payments.
(b) For purposes of determining the amount of the gross-up
payment, Executive will be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year that
the payment is to be made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of Executive's
residence on the date of termination or the date that excise tax is
withheld by Budget, net of the maximum reduction in federal income taxes
that could be obtained by deducting such state and local taxes.
(c) For purposes of determining whether any of the total payments
would not be deductible by Budget and would be subject to the excise
tax, and the amount of such excise tax, (1) total payments will be treated
as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all parachute payments in excess of the base amount within the
meaning of Section 280G(b)(3) will be treated as subject to the excise tax
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unless, in the opinion of tax counsel selected by Budget's independent
auditors prior to the Change in Control and acceptable to Executive, such
total payments (in whole or in part) are not parachute payments, or such
parachute payments in excess of the base amount (in whole or in part) are
otherwise not subject to the excise tax, and (2) the value of any non-cash
benefits or any deferred payment will be determined by Budget's
independent auditors in accordance with Sections 280B(d)(3) and (4) of the
Code.
(d) If the excise tax is subsequently determined to be less than
the amount originally taken into account hereunder, Executive will repay to
Budget, when such reduction in excise tax is finally determined, the
portion of the gross-up payment attributable to such reduction plus
interest on the repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. If the excise tax is determined to exceed the amount originally
taken into account hereunder (including by reason of any payment the
existence or amount of which cannot be determined at the time of the
gross-up payment), Budget will make an additional gross-up payment in
respect of such excess (plus any interest payable with respect to such
excess) when such excess is finally determined.
9. Change in Control. For the purpose of this Agreement, a
"Change in Control" shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A as in effect
on the date hereof, under the Securities Exchange Act of 1934, as amended,
provided that, without limitation, such a Change in Control shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange of
▇▇▇ ▇▇▇▇, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 30% or more of either (1) the then outstanding shares of common
stock of Budget (the "Outstanding Budget Common Stock") or (2) the
combined voting power of then outstanding voting securities of Budget
entitled to vote generally in the election of directors (the "Outstanding
Budget Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change in Control: (1) any acquisition
by the Budget Group, (2) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Budget Group or (3) any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation,
the conditions described in paragraphs (1) and (2) of subsection (c) of
this Section 9 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the Board
of Budget (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
who becomes a director subsequent to the date hereof whose election, or
nomination for election by Budget's
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shareholders, was approved by a vote of at least a majority of the
directors of the Incumbent Board (including Board members previously
elected pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; but excluding, for this
purpose, any such individual whose initial assumption of office occurs as
a result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consent by
or on behalf of a Person other than the Board; or
(c) Approval by the shareholders of Budget of a reorganization,
merger or consolidation (a "transaction"), unless, following such
transaction in each case, (1) more than 80% of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
transaction and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Budget Common Stock and
Outstanding Budget Voting Securities immediately prior to such transaction
and (2) no Person (excluding the Budget Group, any employee benefit plan
(or related trust) of Budget Group and any Person beneficially owning,
immediately prior to such transaction, directly or indirectly, 20% or more
of the Outstanding Budget Common Stock or Outstanding Budget Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such transaction or the combining voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors; or
(d) Approval by the shareholders of Budget of (1) a complete
liquidation or dissolution of Budget or (2) the sale or other
disposition of all or substantially all of the assets of Budget, unless
such assets are sold to a corporation and following such sale or other
disposition, the conditions described in paragraphs (1) and (2) of
subsection (c) of this Section 9 are satisfied.
10. Waiver of Invalidity; No Offset.
(a) Inasmuch as the injury caused to Executive in the event
Executive's employment is terminated is difficult or incapable of
accurate estimation at the date of this Agreement, the amounts provided to
be paid hereunder are intended to be severance compensation and not a
penalty, and therefore constitute a good faith forecast of the harm which
might be expected to be caused to Executive. Accordingly, Budget waives
any right to assert against Executive the invalidity of any payment
hereunder by reason of Executive's failure to seek other employment or
otherwise, and to reduce the amount of any payment hereunder by
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reason of any compensation earned by Executive as the result of
employment by another employer after the Termination Date or otherwise.
(b) Budget's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which Budget may have against Executive or others.
11. Term of Agreement. This Agreement shall be effective from the
date hereof through September 30, 2002 and may not be amended or terminated
during such period except pursuant to an instrument in writing executed by all
of the parties hereto. The Board of Directors of Budget may, in its sole
discretion and for any reason, provide written notice of termination (or
amendment), effective as of the then applicable expiration date, to Executive
no later than six (6) months before the expiration date of this Agreement. If
written notice is not so provided, this Agreement shall be automatically
extended for an additional twelve months past the applicable expiration date.
This Agreement shall continue to be automatically extended for an additional
twelve months at the end of such twelve month period and each subsequent twelve
month period unless notice is given in the manner described in this Section.
Notwithstanding the preceding sentences of this Agreement, this Agreement shall
automatically be extended past an otherwise applicable expiration date if a
Change in Control, or an event giving rise to Good Reason, has occurred within
twelve (12) months prior to such expiration date. The extension referred to in
the preceding sentence shall be for one year after the Change in Control, or an
event giving rise to Good Reason. For purposes hereof, the "expiration date"
shall be the last effective date of this Agreement, after having given effect
to all of the extension provisions of this Section.
12. Successors. The rights and obligations of Budget under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Budget.
13. Governing Law. Except to the extent that federal law is
applicable, this Agreement is made and entered into in the State of Florida,
and the substantive laws of Florida, without regard to conflict of law
provisions, shall govern its validity and interpretation in the performance by
the parties hereto of their respective duties and obligations hereunder.
14. Entire Agreement. This Agreement (and the Release Agreement)
constitute the entire agreement between the parties respecting the benefits due
Executive (and the obligations of Executive) in the event of a Qualifying
Termination, and there are no representations, warranties or commitments, other
than those set forth herein, which relate to such benefits. This is an
integrated agreement. No provision of this Agreement may be amended or waived
except by written agreement signed by the parties.
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15. Arbitration. Any and all controversies, claims or disputes
arising out of or in any way relating to this Agreement shall be resolved by
final and binding arbitration in Chicago, Illinois, before a single arbitrator
licensed to practice law and in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA"). The arbitration
shall be commenced by filing a demand for arbitration, along with a statement
of claim setting forth the specifics of the claim sought to be arbitrated, with
the AAA within sixty (60) days after the occurrence of the facts giving rise to
any such controversy, claim or dispute. The arbitrator shall decide all issues
relating to arbitrability. If the arbitrator determines that (x) Budget has
breached this Agreement or (y) Budget was unjustified in failing to make the
payments required under this Agreement to Executive, Budget shall pay to
Executive, Executive's costs and expenses, including attorneys' fees,
associated with any such arbitration proceeding and, as liquidated damages and
not as a penalty, an additional amount equal to 10% of the amount involved in
the arbitration with respect to this Agreement.
16. Notices. Any notice or communications required or permitted to
be given to the parties hereto shall be delivered personally or be sent by
United States registered or certified mail, postage prepaid and return receipt
requested, and addressed or delivered to the last known address of Budget or
Executive, as appropriate, or to such other address as either party may direct
by notice to the other pursuant to this section.
17. Captions. The captions of this Agreement are inserted for
convenience and do not constitute a part hereof.
18. Severability.
(a) The parties agree that Section 3(b) of this Agreement and
Sections 2 through 6 of the Release Agreement are a material part of
this Agreement. The parties believe that all provisions of this Agreement
(including Section 3(b)) and the Release Agreement (if executed and not
revoked within 7 days after execution) are legal, binding and fully
enforceable.
(b) If Section 3(b) of this Agreement or Section 2, 3, 4, 5 or 6
of the Release Agreement (or any material part thereof) are determined
by any court of competent jurisdiction to be invalid by virtue of, or as a
result of, a judicial proceeding initiated by Executive, then this
Agreement and the Release Agreement shall be null and void.
(c) Subject to subsection (b) above, in case any one or more of
the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein and there shall be deemed substituted such other provision as will
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nearly accomplish the intent of the parties to the extent permitted by
the applicable law.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
IN WITNESS HEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first
written above.
BUDGET GROUP, INC.
By ___________________________
EXECUTIVE
______________________________
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